UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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NCR CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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March 17, 2017
Dear Fellow NCR Stockholder:
In 2016, NCR produced impressive business results that consistently exceeded expectations and created new value for our stockholders, our customers and our employees.
This is a testament to our strategic planning and the strength of our business. From software and services to hardware, as well as our leadership in the Omni-Channel market, I have never felt more confident about our market position. We are living the growth we knew we were capable of achieving when we began our journey ten years ago. At that time, we established a clear vision to lead how the world connects, interacts and transacts.
Today, with our foundation firmly in place, NCR is now moving from vision to execution and preparing for the future of Omni-Channel – Omni-Channel 2.0. Through our Vision 2020 strategy, we are growing our strategic revenue streams and driving next-practice leadership in productivity, quality and customer satisfaction. Our Omni-Channel Software Platform, Channel Transformation and Digital Enablement strategic offers are powering efficiency, differentiation, loyalty, competitive advantage and profitable revenue growth for our customers around the globe. And we are evolving our organizational structure around Software, Services and Hardware to more effectively execute our strategy.
Throughout 2016, a common theme for NCR was the underlying momentum in our business, driven by improved operational execution and strategic traction with our Omni-Channel solutions. This led to strong revenue trends and cash flow generation as seen in our 2016 results.
Just a few of our business highlights from 2016 include:
Launching NCR’s Vision 2020 strategy and definingNCR’s Omni-Channel 2.0 architecture, going beyond the transformation and integration of channels to include real-time, insightful access to actionable data to fully enable the digitally-integrated business.
Helping our customers respond to the disruptive changes in globalization, digitization, consumerism and technology.
Announcing the NCR Innovation Lab, a brand new research and development hub, which will focus on cross-functional research, innovation and design thinking. The NCR Innovation Lab will drive a unified Omni-Channel focus and build upon NCR’s position as a leader in the digitally-connected economy.
Unveiling plans tofurther expand our new world headquarters campus under construction in Midtown Atlanta. The expansion will add a second tower to provide the space needed to prepare for
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Announcing thatMark D. Benjamin joined the company as President and Chief Operating Officer. Mark reports to me and is responsible for Sales, Industry Solutions Management, Product Development, Services and Supply Chain Operations.
Investing in our culture and people. Our overall Sustainable Engagement Score this year was up to 83 percent, whichout-performs many other high-tech companies and is a reflection of the iNCRedible culture we are building that engages, enables and energizes employees every day.
Giving backthrough the NCR Foundation, which is dedicated to helping build stronger communities around the world by investing in innovative solutions that help people become self-sufficient. In 2016, we worked with 13 nonprofit partners to develop and support strategic programs within our focus areas of education, disability issues and health support programs across the globe. Additionally, our iNCRedible employees organized a multitude of volunteer events in 2016 donating their time and talents towards making a difference.
Today, the Omni-Channel market has become a large, standalone technology category and the pace of change is unrelenting. We have taken Software, Services and Hardware and built powerfulend-to-end solutions for the next evolution in Omni-Channel – Omni-Channel 2.0 or digitization – when every business, in every industry, races towards building out a digitally-enabled, real-time enterprise.15, 2019
NCR enters 2017 in a very healthy state, well positioned to:
Continue to invest in innovation, the backbone of our company, especially new product and solution development; in fact, we have increased our investment in R&D in 2017, especially as it relates to our NCR Software Platform and bringing new hardware products to market.
Drive Software growth, specifically enterprise software, which fuels recurring revenue streams and higher margins; our 8,000 employees in the Software Line of Business are motivated and driven to execute.
Generate improved Services performance, including a higher mix of managed services, productivity and efficiency improvements, remote diagnostics and repair, and product lifecycle management.
Drive Hardware growth, a key component of NCR’s strategy, as every unit of ATM and Self-Checkout can drive higher-margin Attached Software, Professional Services, Implementation Services and important recurring revenue streams in Software and Hardware maintenance.
Organize and recruit the best talent for the future.
NCR’s vision and strategy are perfectly aligned with the major market trends and customer activity we are seeing, and nobody is better positioned than NCR to help companies with their business challenges. This is the most exciting time at NCR in decades. We have both company and market momentum and are organized for even greater success in 2017. This is our time.Stockholders,
Thank you for your continuedsupport and for welcoming me as I assumed the role of NCR’s President and Chief Executive Officer in April 2018.
Upon joining NCR, one of my first priorities was to meet with many of our employees and customers. During my travels, I was consistently struck by the power of the NCR brand. Everywhere we went, the NCR brand preceded us. NCR has a brand that lets us walk into any bank, any retailer and any restaurant in the world. I also saw the passion and enthusiasm of our 34,000 employees worldwide and the strength and differentiation of our global sales, service and distribution network.
However, I also found many opportunities for needed improvement, including elevating our focus on the customer, simplifying and streamlining NCR and getting high quality products to market in a timely fashion. So, we spent a substantial portion of 2018 getting back to the basics to better align NCR for growth.
We focused on taking care of our customers, improving execution around new product introductions and breaking down organizational silos through our Accelerated Customer Activation Teams (ACATs). ACATs areco-located, cross-functional teams with a single goal – deliver products that are customer referenceable. We also significantly evolved the composition of the NCR Executive Leadership Team. Additionally, we entered 2019 organized for success, focus and accountability by forming new Business Units dedicated to Banking, Retail and Hospitality. These initiatives established the foundation to build a stronger, more efficient NCR and elevated the deep connections that we have with our customers.
Our team also focused on our long-term growth strategy, which we unveiled at the New York Stock Exchange in November 2018. There, we highlighted our plan for creating stockholder value. This plan is driven by three components. First, invest intop-line revenue growth. Second, shift our business mix to recurring revenue streams and software andservices-led offerings. Third, optimize NCR’s spend to improve operating margins.
We will seek to drivetop-line revenue growth by investing in six strategic growth platforms. These platforms are product areas where we believe we have differentiators that we can leverage to achieve our growth objectives. In addition to these growth areas, we will continue to make acquisitions that expand our product offerings, add value to existing products or give us closer connections to our customers through new sales and services channels. For example, our acquisition of JetPay gives us anend-to-end payments platform and unlocks incremental recurring revenue streams.
Our priority for 2019 is clear: return to profitable growth. NCR enters 2019 with improving execution and a very simple goal – keep our customers happy and satisfied so that they come back and buy more.
We have made tremendous progress. I am proud of our team and their commitment to our customers, as well as the energy and excitement they have shown in support of reshaping the future of NCR.
While there is more work left to be done, I believe we are on the right path to returning NCR to growth and elevating the value we offer to our global customers. We are well-positioned to help retailers, banks and restaurants compete in an evolving landscape of physical and digital consumers.
Thank you for your confidence in our companyNCR, as well as your continued feedback and for your support.sharing our vision of NCR’s future.
Sincerely,
William R. Nuti
Michael D. Hayford
Chairman of the BoardPresident and Chief
Chief Executive Officer
NOTICE OF 20172019 ANNUAL MEETING
AND PROXY STATEMENT
March 17, 201715, 2019
Dear Fellow NCR Stockholder:
I am pleased to invite you to attend the 20172019 Annual Meeting of Stockholders (the “Annual Meeting”) for NCR Corporation, a Maryland corporation (“NCR” or the “Company”), that will be held on April 26, 2017,24, 2019, at 9:00 a.m. Eastern Time. This year’s Annual Meeting will again be a virtual meeting of stockholders. You will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by visitingwww.virtualshareholdermeeting.com/NCR2017NCR2019. As in the past, prior to the Annual Meeting you will be able to authorize a proxy to vote your shares atwww.proxyvote.com on the matters submitted for stockholder approval at the Annual Meeting, and we encourage you to do so.
The accompanying notice of the Annual Meeting and proxy statement tell you more about the agenda and procedures for the Annual Meeting. TheyThe proxy statement also describedescribes how the Board of Directors of the Company operates and provideprovides information about our director candidates, director and executive officer compensation and certain corporate governance matters. I look forward to sharing more information with you about NCR at the Annual Meeting.
As in prior years, we are offering our stockholders the option to receive NCR’s proxy materials onvia the Internet. We believe this option allows us to provide our stockholders with the information they need in an environmentally conscious form and at a reduced cost.
Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, I urge you to authorize a proxy to vote your shares as soon as possible. You may authorize a proxy to vote your shares on the Internet or by telephone, or, if you received the proxy materials by mail, you may also authorize a proxy to vote your shares by mail. Your vote will ensure your representation at the Annual Meeting regardless of whether you attend via webcast on April 26, 2017.24, 2019.
Sincerely,
William R. NutiFrank M. Martire
Executive Chairman of the Board and
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NCR CORPORATION
Time:
9:00 a.m. Eastern Time |
Date:
Wednesday, April |
Place:
Virtual Meeting via webcast atwww.virtualshareholdermeeting.com/ |
Purpose:
The holders of shares of common stock, par value $0.01 per share (the “common stock”), and shares of Series A Convertible Preferred Stock, liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), of NCR Corporation, a Maryland corporation (“NCR” or the “Company”) will, voting together as a single class, be asked to: |
Consider and vote upon the election of twoeight directors identified in this proxy statement to hold officeserve until the next annual meeting of stockholders following their election and until their respective successors are duly elected and qualify;
Consider and vote to approve, on an advisory basis, executive compensation (“Say(Say On Pay”)Pay), as described in these proxy materials;
Consider and vote, on an advisory basis, on the frequency of future advisory votes on the compensation of our named executive officers (“Say On Frequency”), as described in these proxy materials;
Consider and vote upon a proposal to approve the amendment and restatement of the NCR Management Incentive Plan for purposes of Internal Revenue Code Section 162(m), as described in these proxy materials;
Consider and vote upon a proposal to approve the NCR Corporation 2017 Stock Incentive Plan, as described in these proxy materials;
Consider and vote upon the ratification of the appointment of PricewaterhouseCoopers LLC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017;2019;
Consider and vote upon a stockholderdirectors’ proposal described in these proxy materials, if properly presented atto amend and restate the meeting;charter of the Company to eliminate the supermajority provisions contemplated by the Maryland General Corporation Law and the Company’s charter and make certain conforming changes to the charter; and
Transact such other business as may properly come before the meetingAnnual Meeting and any postponement or adjournment of the meeting.Annual Meeting.
The holders of the Series A Convertible Preferred Stock will, voting as a separate class, be asked to:
Consider and vote upon the election of one directortwo directors identified in this proxy statement to hold officeserve until the next annual meeting of stockholders following histheir election and until his successor istheir respective successors are duly elected and qualifies.qualify.
Other Important Information:
Record holders of NCR’s common stock and Series A Convertible Preferred Stock at the close of business on February 27, 201722, 2019 may vote at the meeting.
Your shares cannot be voted unless they are represented by proxy or in person by the record holder attending the meeting via webcast. Even if you plan to attend the meeting via webcast, please authorize youra proxy to vote your shares.
If you wish to watchattend the webcast at a location provided by the Company, the Company’s Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202. Please note that no members of management or the Board of Directors will be in attendance at this location. If you wish to viewattend the meeting via webcast at Venable LLP’s office, please follow the directions for doing so set forth on the “2017“2019 Annual Meeting of Stockholders Reservation Request Form” infound at the end of this proxy statement.
By order of the Board of Directors,
Edward GallagherJames M. Bedore
SeniorExecutive Vice President, General Counsel and Secretary
March 17, 201715, 2019
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on April 26, 201724, 2019
This proxy statement and NCR’s 20162018 Annual Report on Form10-K are available atwww.proxyvote.com.
NCR Corporation
3097 Satellite Boulevard864 Spring Street NW
Duluth,Atlanta, Georgia 3009630308-1007
NCR CORPORATION |
20172019 ANNUAL MEETING PROXY STATEMENT
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Proxy Statement – General Information |
What is the purpose of these proxy materials? |
We are making this proxy statement, notice of annual meeting and our 20162018 annual report available to stockholders beginning on or about March 17, 201715, 2019 in connection with the solicitation by the Board of Directors (the “Board”) of NCR Corporation, a Maryland corporation (“NCR,” the “Company,” “we” or “us”), of proxies for the 20172019 Annual Meeting of Stockholders, and any postponements or adjournments thereof (the “Annual Meeting”), to be held via a live webcast at 9:00 a.m. Eastern Time, on April 26, 2017,24, 2019, for the purposes set forth in these proxy materials.
How do I attend the Annual Meeting? |
The Annual Meeting will be a virtual meeting of stockholders.stockholders, which allows stockholders the ability to more easily attend the Annual Meeting without incurring travel costs or other inconveniences. If you are a record stockholder, a proxy for a record stockholder or a beneficial owner of either (i) NCR’s common stock, par value $0.01 per share (the “common stock”), or (ii) NCR’s Series A Convertible Preferred Stock, liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), in either case with evidence of ownership, you will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by visitingwww.virtualshareholdermeeting.com/NCR2017NCR2019., which provides our stockholders rights and opportunities to vote and ask questions equivalent toin-person meetings of stockholders. The meetingAnnual Meeting will convene at 9:00 a.m. Eastern Time, on April 26, 2017.24, 2019.
If you wish to watchattend the webcast at a location provided by the Company, our Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore,
MD 21202. Please note that no members of management or the Board will be in attendance at this location. If you wish to viewattend the Annual Meeting via webcast at Venable LLP’s office, please complete and return the 2019 Annual Meeting of Stockholders Reservation Request Form found at the end of this proxy statement.
How do I access the proxy materials? |
We are providing access to our proxy materials (including this proxy statement, together with a notice of annual meeting and our 20162018 annual report) over the Internet pursuant to rules adopted by the Securities and Exchange Commission (“SEC”). Beginning on or about March 17, 2017,15, 2019, we will send a NoticeNotices of Internet Availability of Proxy Materials (the(each, a “Notice”) by mail to stockholders entitled to notice of or vote at the Annual Meeting. The Notice includes instructions on how to view the electronic proxy materials on the Internet, which will be available to all stockholders beginning on or about March 17, 2017.15, 2019. The Notice also includes instructions on how to elect to receive future proxy materials by email. If you choose to receive future proxy materials by email, next year you will receive an email with a link to the proxy materials and proxy voting site, and will continue to do soreceive proxy materials in this manner until you terminate your election. We encourage you to take advantage of the availability of our proxy materials on the Internet.
Will I receive a printed copy of the proxy materials? |
You will not receive a printed copy of the proxy materials unless you specifically request one. TheEach Notice includes instructions on how to request a printed copy of the proxy materials, including the applicable proxy card, or cards, for the Annual Meeting if you are a record holder, or athe applicable voting instruction form, or forms, if you are a
beneficial owner, at no cost to you. In addition, by following the instructions on the Notice, you can elect to receive future proxy materials in printed form by mail. If you choose to receive future proxy materials in printed form by mail, we will continue to send you printed materials pursuant to that election until you notify us otherwise.
What does it mean if I receive more than one Notice? |
We are taking advantage of the householding rules adopted by the SEC that permit us to deliver only one Notice to stockholders who share an address, unless otherwise requested. This allows us to reduce the expense of delivering duplicate Notices to our stockholders who may have more than one stock account or who share an address with another NCR stockholder.
If you have multiple NCR common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received only one Notice with respect to your common stock or Series A Convertible Preferred Stock, and/or if you share an address with a family member who is an NCR stockholder and have received only one Notice, you may write us at 3097 Satellite Boulevard, Duluth, Georgia 30096, Attn: Investor Relations, or call us at1-800-225-5627, to request separate copies of the proxy materials at no cost to you. If you have received only one copyNotice:
· | you may write us at 864 Spring Street NW, Atlanta, Georgia 30308-1007, Attn: Investor Relations, or call us at1-800-225-5627, to request separate copies of the proxy materials at no cost to you; and |
· | if you do no longer wish to participate in the householding program, please call1-866-540-7095 to“opt-out” or revoke your consent. |
If you have multiple NCR common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received multiple copies of the Notice and you do not wishwith respect to participate in the householding program either your common stock or Series A Convertible Preferred Stock, and/or if you share an address with a family member who is an NCR stockholder and you
have received multiple copies of the Notice, and you do wish to participate in the householding program, please call1-800-542-10611-866-540-7095 to“opt-in,opt-in.”“opt-out”
Please note that if you holdbothcommon stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock. These notices are separate, and will not be combined even if you have opted in or revoke your consent.consented to householding. See “What if I hold both common stock and Series A Convertible Preferred Stock” below.
What am I being asked to vote on? |
The holders of shares of common stock and shares of Series A Convertible Preferred Stock, voting together as a single class, are being asked to consider and vote on the following items:
· | Election of |
· | An advisory vote to approve executive compensation |
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· | Ratification of the appointment of PricewaterhouseCoopers LLC (“PricewaterhouseCoopers”) as our independent registered public accounting firm for the fiscal year ending December 31, |
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The holders of the Series A Convertible Preferred Stock, voting as a separate class, also will consider and vote on the election of one directortwo directors to hold officeserve until the next annual meeting of stockholders
following his election and until his successor is duly elected and qualifies.
Why |
At our 2016 annual meeting of stockholders (the “2016 Annual Meeting”), our stockholders approved a proposal to amend and restate NCR’s charter to eliminate the classification of our Board and instead provide for the annual election of directors. In May 2016, following that approval, we filed Articles of Amendment and Restatement (the “Revised Charter”) with the State Department of Assessments and Taxation of Maryland to implement the proposal. So as not to abrogate, shorten or otherwise affect the existing terms of our directors, the Revised Charter phases out the classification of the Board over a three-year period beginning with the Annual Meeting. As a result, at the Annual Meeting, you are being asked to vote on nominees to replace our three Class C directors, whose terms expire at the Annual Meeting. Our three Class A and three Class B directors will
continue to serve the remainder of their terms, which expire at the 2018 and 2019 annual meetings of stockholders, respectively. Consistent with thede-classification of the Board, the successors to each of our Class A, B and C directors, once duly elected and qualified, will serve forone-year terms ending at the next annual meeting of stockholders following their election.
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A total of threeten director nominees will be voted upon at the Annual Meeting. The holders of shares of common stock and shares of Series A Convertible Preferred Stock, voting together as a single class, are being asked to vote on twoeight of the threeten director nominees to hold officeserve until the next annual meeting of stockholders following their election and until their respective successors are duly elected and qualify: Richard L. Clemmer, andRobert P. DeRodes, Deborah A. Farrington, Michael D. Hayford, Kurt P. Kuehn.Kuehn, Linda Fayne Levinson, Frank R. Martire and Matthew A. Thompson.
The holders of Series A Convertible Preferred Stock, voting separately, as a class, are entitled to elect the thirdtwo of the ten director nominee.nominees. Our outstanding shares of Series A Convertible Preferred Stock were originally issued to certain entities affiliated with The Blackstone Group L.P. (“Blackstone”) under an Investment Agreement dated November 11, 2015, and amended as of March 13, 2017 (the “Investment Agreement”). The Investment Agreement and the terms of the Series A Convertible Preferred Stock provide that Blackstone is entitled, as long as it beneficially owns at least 50% of the common stock that it beneficially owned, on anas-converted basis, at the time of its initial investment, to separately designate two nominees for election as a director, whom the Board shall include in its nominees for election, and that only holders of the Series A Convertible Preferred Stock have the right to vote for either of these nominees. The term of oneeach of those nominees, Gregory R. Blank and Chinh E. Chu, expires at the Annual Meeting, and Blackstone has designated Mr. Blank and Mr. Chu as its “Purchaser Designee”Designees” (as
such term is defined in our charter) to be nominated by the Board as a director to hold officeserve until the next annual meeting of stockholders following his election and until his successor is duly
elected and qualifies. The holders of Series A Convertible Preferred Stock will vote separately, as a class, on the election of Mr.Messrs. Blank and Chu at the Annual Meeting. The term of Blackstone’s other nominee, Chinh E. Chu, expires at the 2019 annual meeting of stockholders.
How does the Board recommend that I vote my shares? |
The Board recommends a vote:
· | FOR the election of each of the |
· | FOR the election of the director |
· | FOR the advisory vote to approve executive compensation |
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· | FOR ratification of the appointment of PricewaterhouseCoopers as the Company’s |
independent registered public accounting firm for the fiscal year ending December 31, |
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Who is entitled to vote at the |
Record holders of our common stock and/or Series A Convertible Preferred Stock at the close of business on the record date for the Annual Meeting, February 27, 201722, 2019 (the “Record Date”), are entitled to notice of and to vote at the Annual Meeting.
How many votes do I have? |
Each record holder of common stock will have one vote for each share of common stock held on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of common stock are entitled to vote. There were 123,032,142118,942,554 shares of common stock outstanding on the Record Date.
Each record holder of Series A Convertible Preferred Stock will have a number of votes equal to the largest number of whole shares of common stock into which such shares are convertible on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of Series A Convertible Preferred Stock are entitled to vote together with common stock as a single class. In addition, each record holder of Series A Convertible Preferred Stock will have one vote for each share of Series A Convertible Preferred Stock on each matter that is properly brought before the Annual Meeting and on which holders of Series A Convertible Preferred Stock are entitled to vote separately, as a class. As of the Record Date, there were 866,934867,869 shares of Series A Convertible Preferred Stock outstanding, which as of such date were convertible into 28,897,51128,928,677 shares of common stock.
Are there any requirements on how the holders of Series A Convertible Preferred Stock must vote? |
Under the Investment Agreement, at the Annual Meeting the holdersBlackstone is required to vote its shares of the Series A Convertible
Preferred Stock are required to vote in favor of each of the two director nominees who are also being voted on by holders of common stock, in favor of the Say On Pay proposal, in favor of the proposal to approve the amendment and restatement of the NCR Management Incentive Plan for purposes of Internal Revenue Code Section 162(m), in favor of the proposal to approve the NCR Corporation 2017 Stock Incentive Plan, and for ratification of the appointment of PricewaterhouseCoopers as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017,2019, as described in these proxy materials. TheBlackstone is entitled to vote in its
discretion on the other proposals described in this proxy statement, and the other holders of the Series A Convertible Preferred Stock are entitled to vote in their discretion on the other proposalsall matters described in this proxy statement.
How do I vote my shares? |
Your vote is important. Your shares can be voted at the Annual Meeting only if you are present in person (via attendance at the virtual meetingAnnual Meeting by webcast) or if your shares are represented by proxy. Even if you plan to attend the Annual Meeting webcast, we urge you to authorize a proxy to vote your shares in advance.
If you hold both common stock and Series A Convertible Preferred Stock, you will need to vote, or authorize a proxy to vote, each class of stock separately. Please be sure to vote or authorize a proxy to vote for each class of stock separately so that all of your votes can be counted. For more information, see “What if I hold both common stock and Series A Convertible Preferred Stock” below.
You can authorize a proxy to vote your shares of common stock or Series A Convertible Preferred Stock electronically by going towww.proxyvote.com, or by calling the toll-free number (for residents of the United States and Canada) listed on yourthe applicable proxy card. Please have your proxy card (or cards) in hand when going online or calling. If you authorize a proxy to vote your shares electronically, you do not need to return yourthe applicableproxy card. If you received proxy materials by mail and choosewant to authorize your proxy by mail, simply mark yourthe applicable proxy card, and then date, sign and return it in the applicable postage-paid envelope provided so it is received no later than April 25, 2017.23, 2019.
Your shares of common stock or Series A Convertible Preferred Stock will be voted at the Annual Meeting as directed by your electronic proxy, the instructions on your proxy card or voting instructions if (i) you are entitled to vote;vote those
shares; (ii) your proxy for those shares was properly
executed or properly authorized electronically; (iii) we received your proxy for those shares prior to the Annual Meeting; and (iv) you did not revoke your proxy for those shares prior to or at the Annual Meeting. The method by which you vote andor authorize a proxy to vote your shares will in no way limit your right to attend and vote at the Annual Meeting webcast if you later decide to do so.
Please note that if you hold any of your shares through a bank, broker or other nominee (i.e., in street name), you may be able to authorize your proxy for those shares by telephone or the Internet as well as by mail. You should follow the instructions you receive from your bank, broker or other nominee to vote these shares. Also, if you hold any of your shares in street name, you must obtain a legal proxy executed in your favor from your bank, broker or nominee to be able to vote those shares in person at the Annual Meeting. Obtaining a legal proxy may take several days.
What if I hold both common stock and Series A Convertible Preferred Stock? |
Some of our stockholders may holdboth common stock and Series A Convertible Preferred Stock. If you are a holder of both common stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock (or a separate set of printed proxy materials if you previously elected to receive proxy materials in printed form).
You will need to vote, or authorize a proxy to vote, each class of stock separately in accordance with the instructions set forth herein and on the applicable proxy cards or voting instruction forms. Voting, or authorizing a proxy to vote, only your common stock will not also cause your shares of Series A Convertible Preferred Stock to be voted, and vice versa.
If you hold both common stock and Series A Convertible Preferred Stock, please be sure to vote or authorize a proxy to vote for each class of stock separately so that all of your votes can be counted.
How do I vote shares held under the NCR Direct Stock Purchase and Sale Plan? |
If you are a participant in the Direct Stock Purchase and Sale Plan (the “DSPP”) administered by our transfer agent, Wells Fargo Bank, N.A.,Equiniti Trust Company, for NCR, any proxy you authorize will also have the authority to vote the shares of NCR common stock held in your DSPP account. Wells Fargo Bank, N.A.,Equiniti Trust Company, as the DSPP administrator, is the stockholder of record of that plan and will not vote those shares unless you provide it with instructions, which you may do by telephone, the Internet or mail.
If I authorized a proxy, can I revoke it and change my vote? |
Yes, you may revoke youra proxy at any time before it is exercised at the Annual Meeting by:
· | authorizing a new proxy on the Internet or by telephone; |
· | properly executing and delivering a later-dated (i.e., subsequent to the date of the original proxy) proxy card so that it is received no later than April |
· | voting by ballot at the Annual Meeting; or |
· | sending a written notice of revocation to the inspector of election in care of the Corporate Secretary of the Company at |
Only the most recent proxy will be countedexercised and all others will be disregarded regardless of the method by which the proxy wasproxies were authorized.
If shares of NCR’s voting securities are held on your behalf by a broker, bank or other nominee, you must contact it to receive instructions as to how you may revoke your proxy instructions.instructions for those shares.
What constitutes a quorum at the Annual Meeting? |
The presence at the Annual Meeting (in person via attendance at the virtual Annual Meeting or by proxy) of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting constitutes a quorum.
What vote is required to approve each proposal? |
A majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the holders of Series A Convertible Preferred Stock voting on anas-converted basis, is required to elect Richard L. Clemmer, andRobert P. DeRodes, Deborah A. Farrington, Michael D. Hayford, Kurt P. Kuehn, (twoLinda Fayne Levinson, Frank R. Martire, and Matthew A. Thompson (eight of the threeten director nominees), to approve the Say on Pay proposal, to approve the amendment and restatement of the NCR Management Incentive Plan for purposes of Internal Revenue Code Section 162(m), to approve the NCR Corporation 2017 Stock Incentive Plan, to ratify the appointment of our independent registered public accounting firm, and to approve the stockholder proposal described in this proxy statement. With regard to the Say on Frequency proposal, the option of one year, two years or three years that receives
the highest number of votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy) will be considered the stockholders’ recommendation as to the frequency of future Say on Pay votes.firm. Under Maryland law, abstentions and broker“non-votes” will not be counted as votes cast and will have no effect on the votes for any of the proposals described above except that underproposals.
With respect to the rulesdirectors’ proposal to amend and restate the Company’s charter to eliminate the supermajority provisions contemplated by the Maryland General Corporation Law and the Company’s charter and make certain conforming changes thereto, the amendments to the Company’s charter (other than the amendment to Section 6.2) must be approved by the affirmative vote of holders entitled to cast not less than eighty percent of the New Yorkvoting power of all shares of outstanding stock of
NCR entitled to vote generally in the election of directors (currently, the common stock and the Series A Convertible Preferred Stock Exchange (“NYSE”)voting on anas-converted basis, together as a single class), abstentionsand the amendment to Section 6.2 requires the affirmative vote of a majority of the voting power of shares of outstanding stock of NCR entitled to vote thereon. Abstentions and brokernon-votes will have the effect of votes against this proposal. If this proposal is approved by the affirmative vote of holders representing eighty percent or more of the voting power of all shares of outstanding stock of NCR entitled to vote generally in the election of directors, the Company will cause to be countedfiled with the State Department of Assessments and Taxation of Maryland the Articles of Amendment and Restatement attached as votes “against”Exhibit A to this proxy statement. If this proposal is approved by the affirmative vote of a majority of the voting power of shares of outstanding stock of NCR and entitled to vote thereon, but less than the affirmative vote of holders entitled to cast eighty percent of the voting power of all shares of outstanding stock of NCR entitled to vote generally in the election of directors, the Company will cause to be filed with the State Department of Assessments and Taxation of Maryland Articles of Amendment and Restatement including the amendment to Section 6.2 of the Charter included in the Articles of Amendment and Restatement attached as Exhibit A to this proxy statement, but such filed Articles of Amendment and Restatement will not include the amendments relating to the elimination of the supermajority voting provisions in this proposal or the changes to approve the NCR Corporation 2017 Stock Incentive Plan.Charter to conform the language more closely to the MGCL.
The affirmative vote of the holders of a majority of the outstanding shares of our Series A Convertible Preferred Stock, voting separately as a class, is required to elect Mr.Messrs. Gregory R. Blank.Blank and Chinh E. Chu. Only the holders of the Series A Convertible Preferred Stock have the right to vote on the election of Mr. Blank. Pursuant to the Company’s charterMessrs. Blank and bylaws, as given effect underChu. Under Maryland law, abstentions and brokernon-votes, if any, by holders of Series A Convertible Preferred
Stock will have the effect of a vote against this director.these nominees.
A broker“non-vote” occurs when a broker returns a properly executed proxy but does not vote on a particular proposal because the broker does not have the discretionary authority to vote on the proposal and has not received voting instructions from the beneficial owner regarding the proposal. Under the rules of the NYSE,New York Stock Exchange, brokers have the discretionary authority to vote on the ratification of our independent registered public accounting firm, but not for the
election of our directors, the Say on Pay proposal the Say On Frequency proposal, the proposal to amend and restate the NCR Management Incentive Plan for purposes of Internal Revenue Code Section 162(m), the proposal to approve the NCR Corporation 2017 Stock Incentive Plan or the stockholder proposal.directors’ proposal regarding amendments to our charter.
When will you publish the results of the |
We will include the results of the votes taken at the Annual Meeting in a Current Report on Form8-K filed with the SEC within four business days following the Annual Meeting.
NCR Stock Ownership |
Officers and Directors |
The following table reflects the NCR common stock beneficially owned, as determined under applicable SEC rules, as of the close of business on February 17, 201715, 2019 (the “Table Date”) by: (i) each executive officerindividual named in the ourSummary Compensation Table below on page 69 (the “named executives”), (ii) eachnon-employee director and nominee, and (iii) all current directors and executive officers as a group. Except to the extent indicated in the footnotes below, to NCR’s knowledge each person named in the table below has sole voting and investment power over the shares reported. As of the Table Date, 122,949,502118,941,326 shares of the Company’s common stock were issued and outstanding.outstanding, and none of the persons named in the table below owned, beneficially or of record, any shares of NCR’s Series A Convertible Preferred Stock. Unless otherwise noted below, the address of each beneficial owner listed in the table is: c/o NCR Corporation, 864 Spring Street NW, Atlanta, Georgia, 30308.
NCR Stock Ownership By Officers and Directors | NCR Stock Ownership By Officers and Directors | NCR Stock Ownership By Officers and Directors | ||||||||||||||||||||||||||||||
Beneficial Owners | Total Shares Beneficially Owned(1)(2) | Percent | Number of Shares Subject to Options Exercisable Within 60 Days of February 17, 2017 | Number of RSUs That Vest Within 60 Days of February 17, 2017(3) | Total Shares Beneficially Owned(1)(2) | Percent |
Number of Shares Subject to Options Exercisable Within 60 Days of February 15, 2019
| Number of RSUs That Vest Within 60 Days of February 15, 2019(3) | ||||||||||||||||||||||||
Non-Employee Directors | ||||||||||||||||||||||||||||||||
Gregory R. Blank, Director(4) | * | — | — | — | * | — | — | |||||||||||||||||||||||||
Edward “Pete” Boykin, Director | 116,044 | * | — | — | ||||||||||||||||||||||||||||
Chinh E. Chu, Independent Lead Director(5) | 8,211 | * | — | — | ||||||||||||||||||||||||||||
Chinh E. Chu, independent Lead Director | 25,168 | * | — | — | ||||||||||||||||||||||||||||
Richard L. Clemmer, Director | 151,785 | * | 61,167 | — | 163,548 | * | 54,015 | — | ||||||||||||||||||||||||
Gary J. Daichendt, Director | 134,836 | * | 54,015 | — | ||||||||||||||||||||||||||||
Robert P. DeRodes, Director | 136,789 | * | 61,167 | — | 144,748 | * | 54,015 | — | ||||||||||||||||||||||||
Deborah A. Farrington, Director | 8,326 | * | — | — | ||||||||||||||||||||||||||||
Kurt P. Kuehn, Director | 40,593 | * | 10,039 | — | 53,270 | * | 10,039 | — | ||||||||||||||||||||||||
Linda Fayne Levinson, Director | 192,703 | * | 64,419 | — | 203,529 | * | 54,015 | — | ||||||||||||||||||||||||
Matthew A. Thompson, Director | 8,962 | * | — | — | ||||||||||||||||||||||||||||
Named Executive Officers | ||||||||||||||||||||||||||||||||
William R. Nuti, Director and Officer | 141,073 | * | 63,552 | 77,521 | ||||||||||||||||||||||||||||
Mark D. Benjamin, Officer | — | * | — | — | ||||||||||||||||||||||||||||
Robert P. Fishman, Officer | 51,253 | * | — | 14,022 | ||||||||||||||||||||||||||||
Frederick J. Marquardt, Officer | 93,531 | * | 16,407 | 12,963 | ||||||||||||||||||||||||||||
Paul E. Langenbahn, Officer | 9,654 | * | — | 7,994 | ||||||||||||||||||||||||||||
Current Directors, Named Executive Officers and remaining Executive Officers as a Group (17 persons) | 1,232,436 | 1.0% | ||||||||||||||||||||||||||||||
Michael D. Hayford, Director and Officer | 18,331 | * | — | — | ||||||||||||||||||||||||||||
Frank R. Martire, Director and Officer | 18,331 | * | — | — | ||||||||||||||||||||||||||||
Owen J. Sullivan, Officer | — | * | — | — | ||||||||||||||||||||||||||||
Andre J. Fernandez, Officer | — | * | — | — | ||||||||||||||||||||||||||||
Daniel W. Campbell, Officer | 48,202 | * | 12,755 | 35,447 | ||||||||||||||||||||||||||||
William R. Nuti, former Director and Officer(5) | — | * | — | — | ||||||||||||||||||||||||||||
Robert P. Fishman, former Officer(5) | 209,247 | * | 17,006 | 115,182 | ||||||||||||||||||||||||||||
Current Directors and Executive Officers as a Group(18 persons) |
| 1,146,721 |
|
| 1.0% |
| 267,745 |
| 304,622 |
|
* Less than 1%.
(1) The number ofIncludes shares beneficially owned bythat each person as of the Table Date includes shares of NCR common stock that such person had the right to acquire on or within 60 days after that date,the Table Date, including, but not limited to, upon the exercise of options and vesting and payment of restricted stock units. This does not includeExcludes these restricted stock units granted as of the Table Date that vest
more than 60 days after the Table Date which, in the case of our named executives, is as follows:Date: Mr. Nuti 1,137,718;Hayford 160,514; Mr. Benjamin 244,183;Martire 74,676; Mr. Sullivan 82,751; Mr. Fernandez 105,597; Mr. Campbell 118,351; and Mr. Fishman 297,746; Mr. Marquardt 246,846; and Mr. Langenbahn 202,904.208,439.
(2) Some of NCR’s executive officers and directors own fractional shares of NCR common stock. For purposes of this Table, allAll fractional shares have been rounded up to the nearest whole number. This column alsoThe total includes 116,044these shares granted to Mr. Boykin; 85,618deferred under our Director Compensation Program: 104,533 shares granted to Mr. Clemmer; 33,34641,217 shares granted to Mr. DeRodes; 28,67441,351 shares granted to Mr. Kuehn; and 8,077 shares granted to Ms. Levinson.
(3) This column reflects thoseReflects shares that the officers and directors have the right to acquire through vesting of restricted stock units on or within 60 days after the Table Date before the(without taking into account share withholding of shares of NCR common stock to cover applicable taxes.taxes). These shares are also included in the Total Shares Beneficially Owned column.
(4) Mr. Blank disclaimed all interest in NCR director compensation payable in 2016 and future years. As a result,Accordingly, he did not receive anyreceived no restricted stock units or shares in 2016,2018, and will not receive any units or shares in 2017,2019 under the NCR Director Compensation Program. While Mr. Blank is an officer of an affiliate of Blackstone, he disclaims beneficial ownership of, and the shares reported in the Table exclude, NCR securities beneficially owned by Blackstone.
(5) While Mr. Chu isNuti, formerly Chairman of the Board of Directors and Chief Executive Officer, ceased serving in these positions in connection with his retirement effective April 30, 2018, and currently serves as our Chairman Emeritus of the Board and as a senior advisorconsultant. On July 24, 2018, Mr. Fishman, formerly Executive Vice President, Chief Financial Officer and Chief Accounting Officer, announced his decision to retire from NCR effective at an affiliate of Blackstone, he disclaims beneficial ownership of, and the shares reportedundetermined time in the table exclude, NCR securities beneficially owned by Blackstone.future. He ceased serving in these positions as of August 29, 2018, and currently serves as our Senior Advisor.
Other Beneficial Owners |
To the Company’s knowledge, and as reported as of the close of business on MarchFebruary 15, 20172019 (except as otherwise specified), the following stockholders beneficially own more than 5% of the Company’s outstanding stock.
Other Beneficial Owners of NCR Stock | Other Beneficial Owners of NCR Stock | Other Beneficial Owners of NCR Stock | ||||||||||||||||||||||||||||||
Common Stock | Series A Convertible Preferred Stock | Common Stock | Series A Convertible Preferred Stock | |||||||||||||||||||||||||||||
Name and Address of Beneficial Owner | Total Number of Shares | Percent of Class | Total Number of Shares | Percent of Class | Total Number of Shares | Percent of Class | Total Number of Shares | Percent of Class | ||||||||||||||||||||||||
Entities affiliated with The Blackstone Group(1) | — | — | 446,855 | 50.8 | % | — | — | 498,425 | 56.65 | % | ||||||||||||||||||||||
345 Park Avenue | ||||||||||||||||||||||||||||||||
New York, NY 10154 | ||||||||||||||||||||||||||||||||
The Vanguard Group(2) | 12,393,189 | 10.07 | % | — | — | 11,125,546 | 9.41 | % | — | — | ||||||||||||||||||||||
100 Vanguard Boulevard | ||||||||||||||||||||||||||||||||
Malvern, PA 19355 | ||||||||||||||||||||||||||||||||
BlackRock Inc.(3) | 10,075,642 | 8.1 | % | — | — | |||||||||||||||||||||||||||
BlackRock, Inc.(3) | 10,318,901 | 8.7 | % | — | — | |||||||||||||||||||||||||||
55 East 52nd Street | ||||||||||||||||||||||||||||||||
New York, NY 10055 | ||||||||||||||||||||||||||||||||
Wells Fargo & Company(4) | 8,234,886 | 6.97 | % | — | — | |||||||||||||||||||||||||||
420 Montgomery Street | ||||||||||||||||||||||||||||||||
San Francisco, CA 94163 | ||||||||||||||||||||||||||||||||
AllianceBernstein L.P.(5) | 6,785,038 | 5.7 | % | — | — | |||||||||||||||||||||||||||
1345 Avenue of the Americas | ||||||||||||||||||||||||||||||||
New York, NY 10105 | ||||||||||||||||||||||||||||||||
Janus Henderson Group plc(6) | 5,927,836 | 5.0 | % | — | — | |||||||||||||||||||||||||||
201 Bishopsgate EC2M 3AE | ||||||||||||||||||||||||||||||||
United Kingdom |
(1) BasedInformation is based in part on information provideda Schedule 13D/A filed with the SEC on March 17, 2017 by The Blackstone Group L.P. (the “Blackstone Group”) and set forth incertain parties affiliated with the Blackstone Group, and on information provided by the Company’s Prospectus Supplement, dated March 13, 2017, filed with the SEC pursuant to Rule 424(b)(3) under the Securities Act of 1933, as amended. The filing reflects that: (i)transfer agent, Equiniti Trust Company. Based on this information, as of March 10, 2017,February 15, 2019, partnerships affiliated with the Blackstone Group beneficially owned 878,855498,425 shares of Series A Convertible Preferred Stock as follows: 1,300734 shares directly held by Blackstone BCP VI SBS ESC Holdco L.P. (“BCP VI”), 654,710371,315 shares directly held by Blackstone NCR Holdco L.P. (“NCR Holdco”), 778435 shares directly held by BTO NCR Holdings -– ESC L.P. (“BTO ESC”), and 222,067125,941 shares directly held by BTO NCR Holdings L.P. (“BTO NCR” and, together with BCP VI, NCR Holdco and BTO ESC, the “Partnerships”); (ii) 342,000 shares of Series A Convertible Preferred Stock were offered for sale by the Partnerships in a secondary offering that is expected to be consummated on or about March 17, 2017, as follows: BCP VI 506 shares, NCR Holdco 254,776 shares, BTO ESC 302 shares and BTO NCR 86,416 shares; (iii) pursuant to a stock repurchase agreement entered into by the Company and the Partnerships, 90,000 shares of Series A Convertible Preferred Stock will be converted into shares of the Company’s common stock, and will be repurchased by the Company simultaneously with or shortly after the closing of the secondary offering; and (iv) following consummation of the secondary offering and share repurchase, the Partnerships will hold 446,855 shares of Series A Convertible Preferred Stock,, which includesdividends-in-kind payable within 60 days after MarchFebruary 15, 2017. See Related Person Transactions on page 111 for further information on these transactions.2019.
The general partner of NCR Holdco is Blackstone NCR Holdco GP L.L.C. The managing member of Blackstone NCR Holdco GP L.L.C. is Blackstone Management Associates VI L.L.C. The sole member of Blackstone Management Associates VI L.L.C. is BMA VI L.L.C. The general partner of BCP VI is BCP VISide-by-Side GP L.L.C. The general partner of each of BTO NCR and BTO ESC is BTO Holdings Manager L.L.C. The managing member of BTO Holdings Manager L.L.C. is Blackstone Tactical Opportunities Associates L.L.C. The sole member of Blackstone Tactical Opportunities Associates L.L.C. is BTOA L.L.C. The sole member of BCP VISide-by-Side GP L.L.C., and the managing member of BTOA L.L.C. and BMA VI L.L.C., is Blackstone Holdings III L.P. The general partner of Blackstone Holdings III L.P. is Blackstone Holdings III GP L.P. The general partner of Blackstone Holdings III GP L.P. is Blackstone Holdings III GP Management L.L.C. The sole member of Blackstone Holdings III GP Management L.L.C. is The Blackstone Group L.P. The general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of such Blackstone entities (other than each of the Partnerships to the extent of their direct holdings) and Mr. Schwarzman may be deemed to beneficially own the shares beneficially owned by the Partnerships directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such shares.
As of the Record Date, the Partnerships held of record 866,934491,666 shares of Series A Convertible Preferred Stock, which were convertible into 28,897,51116,388,702 shares of common stock.
(2) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on March 10, 2017February 11, 2019 by The Vanguard Group (“Vanguard Group”Vanguard”), reporting beneficial ownership of 12,393,18911,125,546 shares of the Company’s stock as of February 28, 2017.December 31, 2018. In this filing, Vanguard Group reported sole dispositive power with respect to 12,311,47111,056,266 of such shares, sole voting power with respect to 72,04663,895 of such shares, shared dispositive power with respect to 81,71869,280 of such shares and shared voting power with respect to 15,70817,508 of such shares. Vanguard Group also reported that Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc. may be deemed to have, is the beneficial ownershipowner of 65,96751,772 of such shares as investment manager of certain collective trust accounts, and that Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., may be deemed to haveis the beneficial ownershipowner of 21,78729,631 of such shares as a result of serving as investment manager of certain Australian investment offerings.
(3) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on January 25, 2017February 6, 2019 by BlackRock, Inc. (“BlackRock”), reporting beneficial ownership of 10,075,64210,318,901 shares of the Company’s stock as of December 31, 2016,2018, as a parent holding company or control person for its subsidiaries, BlackRock (Netherlands) B.V., BlackRock (Singapore) Limited, BlackRock Advisors (UK)Life Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited,(Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland, Limited, BlackRock AssetFinancial Management, North Asia Limited,Inc., BlackRock Asset Management Schweiz AG, BlackRock FinancialInvestment Management, LLC, FutureAdvisor, Inc., BlackRock Fund Advisors,Investment Management (UK) Limited, BlackRock Fund Managers Ltd, BlackRock Institutional Trust Company, N.A., BlackRock InternationalAsset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment ManagementAdvisors (UK) Ltd, BlackRock Investment Management, LLC, BlackRock Japan Co Ltd, BlackRock Life Limited, and FutureAdvisor, Inc.BlackRock Fund Advisors. In this filing, BlackRock reported sole voting power with respect to 9,376,3719,843,457 of such shares, and sole dispositive power with respect to all 10,075,64210,318,901 of such shares.
(4) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on January 22, 2019 by Wells Fargo & Company (“Wells Fargo”), reporting beneficial ownership of 8,234,886 shares of the Company’s stock as of December 31, 2018, on behalf of itself and its subsidiaries, Wells Capital Management Incorporated, Wells Fargo Clearing Services, LLC, Wells Fargo Bank, National Association, Wells Fargo Funds Management, LLC, and Wells Fargo Advisors Financial Network, LLC. In this filing, Wells Fargo reported sole dispositive power with respect to 48,768 of such shares, sole voting power with respect to 48,768 of such shares, shared dispositive power with respect to 8,186,118 of such shares and shared voting power with respect to 6,585,198 of such shares; Wells Capital Management Incorporated reported shared dispositive power with respect to 8,038,467 of such shares, and shared voting power with respect to none of such shares; and Wells Fargo Funds Management, LLC reported shared dispositive power with respect to 6,432,285 of such shares, and shared voting power with respect to 6,429,738 of such shares.
(5) Information, including ownership percentage, is based on a Schedule 13G filed with the SEC on February 13, 2019 by AllianceBernstein L.P. (“AllianceBernstein”), reporting beneficial ownership of 6,785,038 shares of the Company’s stock as of December 31, 2018. In this filing, AllianceBernstein reported sole dispositive power with respect to 6,643,868 of such shares, sole voting power with respect to 5,573,312 of such shares and shared dispositive power with respect to 141,170 of such shares. AllianceBernstein also reported that AllianceBernstein is a majority owned subsidiary of AXA Equitable Holdings, Inc. and an indirect majority owned subsidiary of AXA SA. AllianceBernstein operates under independent management and makes independent decisions from AXA and AXA Equitable Holdings and their respective subsidiaries and AXA and AXA Equitable Holdings calculate and report beneficial ownership separately from AllianceBernstein pursuant to guidance provided by the Securities and Exchange Commission in Release Number34-39538 (January 12, 1998). AllianceBernstein may be deemed to share beneficial ownership with AXA reporting persons by virtue of 141,170 shares of common stock acquired on behalf of the general and special accounts of the affiliated entities for which AllianceBernstein serves as a subadvisor. Each of AllianceBernstein and the AXA entities reporting herein acquired their shares of common stock for investment purposes in the ordinary course of their investment management and insurance businesses.
(6) Information, including ownership percentage, is based on a Schedule 13G filed with the SEC on February 12, 2019 by Janus Henderson Group plc (“Janus Henderson”), reporting beneficial ownership of 5,927,836 shares of the Company’s stock as of December 31, 2018. In this filing, Janus Henderson reported shared dispositive power with respect to 5,927,836 of such shares and shared voting power with respect to 5,927,836 of such shares. Janus Henderson also reported that Janus Henderson has an indirect 97.11% ownership stake in Intech Investment Management LLC (“Intech”) and a 100% ownership stake in Janus Capital Management LLC (“Janus Capital”), Janus Capital International Limited (“JCIL”), Perkins Investment Management LLC (“Perkins”), Geneva Capital Management LLC, Henderson Global Investors Limited and Janus Henderson Global Investors Australia Institutional Funds Management Limited (each an “Asset Manager” and collectively as the “Asset Managers”). Due to the above ownership structure, holdings for the Asset Managers are aggregated for purposes of this filing. Each Asset Manager is an investment adviser registered or authorized in its relevant jurisdiction and each furnishing investment advice to various fund, individual and/or institutional clients (collectively referred to herein as “Managed Portfolios”). As a result of its role as investment adviser orsub-adviser to the Managed Portfolios, Janus Capital may be deemed to be the beneficial owner of 5,911,302 shares or 5.0% of the shares outstanding of NCR Common Stock held by such
Managed Portfolios. However, Janus Capital does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights. As a result of its role as investment adviser orsub-adviser to the Managed Portfolios, JCIL may be deemed to be the beneficial owner of 16,534 shares or 0.0% of the shares outstanding of NCR Common Stock held by such Managed Portfolios. However, JCIL does not have the right to receive any dividends from, or the proceeds from the sale of, the securities held in the Managed Portfolios and disclaims any ownership associated with such rights.
Proposal 1 – Election of |
FOR | The Board of Directors recommends that you vote FOR Gregory R. Blank, Chinh E. Chu, Richard L. Clemmer, |
Proposal Details |
At our 2016 Annual Meeting of Stockholders, our stockholders approved a proposal to amend and restate NCR’s charter to eliminate the classification of our Board and instead provide for the annual election of directors. In May 2016, we filed Articles of Amendment and Restatement with the State Department of Assessments and Taxation of Maryland to implement the proposal. Our amended and restated charter phases out the classification of the Board over a three-year period, beginning with the Annual Meeting.
The current terms for the three directors in Class A and the three directors in Class B of the Board expire at the annual meetings of stockholders in 2018 and 2019, respectively, and the terms for the three directors in Class C of the Board expire at the Annual Meeting. Under our amended and restated charter, the nominees to replace our three Class C directors will be elected at the Annual Meeting to hold office for a term ending at the 2018 annual meeting of stockholders (or sooner if they are filling a vacancy) and until their successors are duly elected and qualify. Our Class A and Class B directors will continue to serve the balance of their existing terms, and upon expiration of their terms, such directors as may be elected to replace them shall serve until the next annual meeting of stockholders following their election and until their successors are duly elected and qualify.
The holders of shares of common stock and Series A Convertible Preferred Stock, voting together as a single class, are being asked to vote on twoeight of the threeten director nominees up for election, to succeed our Class C directors, to hold officeeach serve until the 2018 annual meeting of stockholders2020 Annual Meeting and until their successors are duly elected and qualify. Proxies solicited by the Board and properly authorized will be exercised for the election of each of the two nominees,eight nominees: Richard L. Clemmer, andRobert P. DeRodes, Deborah A. Farrington, Michael D. Hayford, Kurt P. Kuehn, Linda Fayne Levinson, Frank R. Martire and Matthew A. Thompson, unless you elect to withhold your vote on your proxy. The Board has no reason to believe that eitherany of these nominees will be unable to serve. However, if one of them should become unavailable to serve prior to the Annual Meeting, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute nominee, shares represented by proxies will be voted forFOR the substitute nominee.
The holders of Series A Convertible Preferred Stock will vote on onetwo additional director nomineenominees to succeed our third Class Cthe other director nominees up for election, to hold officeserve until the 2018 annual meeting of stockholders2020 Annual Meeting and until his successor istheir successors are duly elected and qualifies.qualify. The nominee,nominees, Gregory R. Blank is aand Chinh E. Chu, are current Board memberdirectors who waswere designated by Blackstone under the terms of the Investment Agreement. The holders of Series A Convertible Preferred Stock will vote separately, as a class, on the election of Mr. Blank.Messrs. Blank and Chu. Only the holders of Series A Convertible Preferred Stock have the right to vote on the election of Mr. Blank.Messrs. Blank and Chu.
The name, age, principal occupation, other business affiliations and certain other information regarding each nominee for election as a director and each director whose term of office continues, isare set forth below.below, along with a description of the qualifications that led the Committee on Directors and Governance to conclude that he or she meets the needs of the Board and supports the advancement of the Company’s long-term strategy. The age reported for each director is as of the filing date of this proxy statement.
Directors to Be Elected by Holders of Common Stock and Series A Convertible Preferred Stock, Voting Together as a Single Class
Class C—Current Term Expiring at Annual Meeting
Richard L. Clemmer, 65,67, is President and Chief Executive Officer of NXP Semiconductors N.V., a semiconductor company, a position he has held since January 1, 2009. Prior to that, he was a senior advisor to Kohlberg Kravis Roberts & Co., a private equity firm, a position he held from May 2007 to December 2008. He previously served as President and Chief Executive Officer of Agere Systems Inc., an integrated circuits components company that was acquired in 2007 by LSI Logic Corporation, from October 2005 to April 2007. Mr. Clemmer is a member of the board of directors of RMG Technologies, Inc., a networking software company. Mr. Clemmer became a director of NCR on April 23, 2008. In determining if
Qualifications. Mr. Clemmer should continue serving as a director of the Company, the Committee on DirectorsClemmer’s qualifications include, among other things, his significant leadership and Governance considered hismanagement experience in his position at NXP and his former positions with Kohlberg Kravis Roberts & Co. and Agere Systems Inc. Mr. Clemmer’s demonstrated management; his technology industry experience independencewith NXP and financial literacy were also attributes that led the Committee on Directors and Governance to conclude thatAgere; his skills would meet the needsknowledge of the Board.
Kurt P. Kuehn, 62, is a member of the Board of Directors of Henry Schein, Inc., and was Chief Financial Officer at United Parcel Service, Inc. (“UPS”), a global leader in logistics, from 2008 until July 2015. Prior to his appointment as CFO at UPS, Mr. Kuehn was Senior Vice President, Worldwide Sales and Marketing, leading the transformation of the sales organization to improve the global customer experience. Mr. Kuehn was UPS’s first Vice President of Investor Relations, taking the company public in 1999 in one of the largest IPOs in U.S. history. Since he joined UPS as a driver in 1977, Mr. Kuehn’s UPS career has included leadership roles in sales and marketing, engineering, operations and strategic cost planning. Mr. Kuehn became a director of NCR on May 23, 2012. In recommending Mr. Kuehn as a nominee for election as a director of the Company, the Committee on Directors and Governance considered his role as CFO at UPS, his previous experience at UPS as Senior Vice President, Worldwide Sales and Marketing, and Vice President of Investor Relations, and the responsibilities associated with these positions. Mr. Kuehn’s demonstrated management experience, independence, and financial literacy were also attributes and skills that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.
Directors to Be Elected Separately by Holders of Series A Convertible Preferred Stock
Class C—Current Term Expiring at Annual Meeting
Gregory R. Blank, 36, is a Managing Director of Blackstone in the Private Equity Group based in New York where he focuses on investments in the technology, media and telecommunications sectors. Since joining Blackstone in 2009, Mr. Blank has been involved in the execution of many of Blackstone’s investments, including most recently in Kronos, JDA, Ipreo and Optiv. Prior to joining Blackstone, Mr. Blank was an associate at Texas Pacific Group (TPG) in San Francisco where he was involved in the evaluation and execution of private equity transactions. Before joining TPG, Mr. Blank worked in investment banking at Goldman, Sachs & Co. focused on technology, media and telecommunications clients. Mr. Blank graduated with a bachelor’s degree in economics from Harvard College and received an MBA from the Harvard Business School. He currently serves as a director of Ipreo, Kronos and Optiv, and previously served as a director of Travelport Worldwide Limited and The Weather Company. Mr. Blank became a director of NCR on December 4, 2015. Only the holders of the Series A Convertible Preferred Stock may vote on the election of Mr. Blank as a director at the Annual Meeting. In addition to the Company’s obligation under the Investment Agreement, in making its nomination the Committee on Directors and Governance considered Mr. Blank’s independence, his experience as a director of other public and private
companies, his experience evaluating and managing acquisitions and investments in the technology and telecommunications industries, his prior service on Travelport’s Audit committee andinternational operations; his financial literacy in concluding thatand expertise; his abilities would meet the needs of the Board.
Directors Whose Terms of Office Continue
The following directors will hold office as disclosed below.
Class A—Current Term Expiring in 2018
William R. Nuti, 53, is NCR’s Chairman of the Boardmergers and Chief Executive Officer,acquisitions experience with NXP and prior to October 2016, Mr. Nuti also served as NCR’s President. Mr. Nuti became Chairman of the Board on October 1, 2007. Before joining NCR in August 2005 Mr. Nuti served as PresidentAgere; and Chief Executive Officer of Symbol Technologies, Inc., an information technology company. Prior to that, he was Chief Operating Officer of Symbol Technologies. Mr. Nuti joined Symbol Technologies in 2002 following a 10 plus year career at Cisco Systems, Inc., where he advanced to the dual role of Senior Vice President of the company’s Worldwide Service Provider Operations and U.S. Theater Operations. Prior to his Cisco experience Mr. Nuti held sales and management positions at International Business Machines Corporation, Netrix Corporation and Network Equipment Technologies. Mr. Nuti is also a director of Coach, Inc., where he is a member of its Human Resources and Compensation Committee, and of United Continental Holdings, Inc., where he is a member of its Human Resources and Compensation, and Public Responsibility committees. Mr. Nuti previously served as a director of Sprint Nextel Corporation. Mr. Nuti is also a member of the Georgia Institute of Technology advisory board and a trustee of Long Island University. Mr. Nuti became a director of NCR on August 7, 2005. In determining if Mr. Nuti should continue serving as a director of the Company, the Committee on Directors and Governance considered his current role as Chief Executive Officer of the Company, his experience as a director of other public companies, his previous experience as President and Chief Executive Officer of Symbol Technologies, his previous experience as Senior Vice President at Cisco Systems, and the responsibilities associated with these positions. Mr. Nuti’s demonstrated management and leadership experience and global sales and operations experience were also skills and attributes that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.independence.
Gary J. Daichendt, 65, has been principally occupied as a private investor since June 2005 and has been a managing member of Theory R Properties LLC, a commercial real estate firm, since October 2002. He served as President and Chief Operating Officer of Nortel Networks Corporation, a global supplier of communication equipment, from March 2005 to June 2005. Prior to that and until his retirement in December 2000, Mr. Daichendt served as Executive Vice President, Worldwide Operations for Cisco Systems, Inc. Mr. Daichendt became a director of NCR on April 26, 2006. Mr. Daichendt also serves on the board of directors of Juniper Networks, Inc., where he is a member of its Compensation committee, and previously served on the board of directors of Polycom Inc., where he served on the Governance committee. In determining if Mr. Daichendt should continue serving as a director of the Company, the Committee on Directors and Governance considered his previous experience as President and Chief Operating Officer of Nortel Networks Corporation, his previous experience as Executive Vice President, Worldwide Operations for Cisco Systems, and the responsibilities associated with these positions. Mr. Daichendt’s demonstrated management experience, financial literacy and independence were also attributes and skills that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.
Robert P. DeRodes, 66,68, leads DeRodes Enterprises, LLC, an information technology, business operations and management advisory firm. Most recently, Mr. DeRodes served from April 2014 to April 2015 as the Executive Vice President and Chief Information Officer for Target, Inc., a general merchandising retailer, leading theirits post-breach information security efforts and developing a long-term technology transformation roadmap. Previously, Mr. DeRodes served as Executive Vice President, Global Operations & Technology, of First Data Corporation, an electronic commerce and payments company, from October 2008 to July 2010. Prior to First Data Corporation, Mr. DeRodes served as Executive Vice President and Chief Information Officer of The Home Depot, Inc., a home improvement retailer, from February 2002 to October 2008 and as President and Chief Executive Officer of Delta Technology, Inc. and Chief Information Officer of Delta Air Lines, Inc., from September 1999 until February 2002. Prior to working at Delta, Mr. DeRodes held various executive positions in the financial services industry with Citibank(1995-99) and with USAA(1983-93). During the 10 years prior to 1983, Mr. DeRodes held technology positions working for regional Midwestern banks. Mr. DeRodes became a director of NCR on April 23, 2008. In determining if
Qualifications. Mr. DeRodes should continue serving as a director ofDeRodes’ qualifications include, among other things, his extensive career and experience in the Company, the Committee on Directors and Governance considered the scope of his previous experience and the responsibilities associated with the aforementioned positions. Mr. DeRodes’s demonstrated management experience, information technology industry, including with Target, First Data and The Home Depot; his expertise on cybersecurity and information security matters; his experience cyber-security expertise,in and understanding of the financial services, retail and transportation industries,industries; his management and leadership experience, particularly in the information technology field; and his independence and financial literacy and independence led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.
Class B—Current Term Expiring in 2019literacy.
Edward “Pete” Boykin,Deborah A. Farrington 78,, 68, is a founder and President of StarVest Management, Inc. and is, and since 1999 has been, a general partner of StarVest Partners, L.P., a venture capital fund that invests primarily in emerging software and business services companies. From 1993 to 1997, Ms. Farrington was President and Chief Executive Officer of Victory Ventures, LLC, a New York-based private equity investment firm. Also during that period, she was a founding investor and Chairman of the Board of Staffing Resources, Inc., a diversified staffing company. Prior to 1993, Ms. Farrington held management positions with Asian Oceanic Group in Hong Kong and New York, Merrill Lynch & Co. Inc. and the Chase Manhattan Bank. Ms. Farrington was Lead Director and Chairman of the Compensation Committee of NetSuite, Inc., a New York Stock Exchange-listed company, until its sale to Oracle Corporation in November 2016 for $9.4 billion. Ms. Farrington is a member of the board of directors of Collectors Universe, Inc., where she is Chairperson of the Compensation Committee and a member of the Audit Committee. Ms. Farrington is also a member of the boards of directors of ConveyIQ, Crowd Twist, Inc., Snag, Inc., and Xignite, Inc., all of which are private companies. Ms. Farrington holds an Executive Masters Professional Director Certification from the American College of Corporate Directors, a director education and credentialing organization. She is a graduate of Smith College and earned an MBA from the Harvard Business School. Ms. Farrington became a director of NCR on November 27, 2017.
Qualifications.Ms. Farrington’s qualifications include, among other things, her significant software industry and entrepreneurial experience as a long-time investor in emerging software and business services companies as a founder and general partner of StarVest Partners; her management experience as President of StarVest Management, as President and Chief Executive Officer of Victory Ventures, and her prior management roles; her leadership experience, including as Lead Director of NetSuite; her current and prior public company board and board committee experience; her financial literacy and expertise; and her independence.
Michael D. Hayford, 59, is President and Chief Executive Officer of NCR, a position he has held since April 2018. Mr. Hayford was most recently Founding Partner of Motive Partners, an investment firm focused on technology-enabled companies that power the financial services industry. From 2009 until his retirement in 2013, Mr. Hayford served as the Executive Vice President and Chief Financial Officer at Fidelity National Information Services Inc. (FIS), a financial services technology company. Prior to joining FIS, Mr. Hayford was with Metavante Technologies, Inc. (Metavante), a bank technology processing company, from 1992 to 2009. He served as the Chief Operating Officer at Metavante from 2006 to 2009 and as the President from 2008 to 2009. From 2007 to 2009, Mr. Hayford also served on the Board of Computer Sciences Corporation (CSC)Directors of Metavante. Mr. Hayford is a member of the Board of Directors and the Audit Committee of Endurance International Group Holdings, Inc. and was a member of the Board of Directors and Chairman of the Audit Committee of West Bend Mutual Insurance Company from 2007 to 2018. Mr. Hayford became a director of NCR on April 30, 2018.
Qualifications.Mr. Hayford’s qualifications include, among other things, his significant leadership and management experience in his previous roles at FIS and Metavante, as well as his current role at NCR; his industry expertise including in the financial services industry and bank technology processing; and his current and prior experience as a director and committee member of other public companies.
Kurt P. Kuehn, an information technology services company he joined in 1966, from July 2001 to June 2003. He was Chair64, is member of the Board of Directors of Capital TEN Acquisition Corp.Henry Schein, Inc., and was Chief Financial Officer at United Parcel Service, Inc. (UPS), a special purpose acquisition company,global leader in logistics, from October 20072008 until July 2015. Prior to May 2008.his appointment as CFO at UPS, Mr. BoykinKuehn was also a director of Teradata Corporation from October 2007 until his retirement in April 2016,Senior Vice President, Worldwide Sales and he was ChairmanMarketing, leading the transformation of the Boardsales organization to improve the global customer experience. Mr. Kuehn was UPS’s first Vice President of Engility Corporation from July 2012 until May 2015.Investor Relations, taking the company public in 1999 in one of the largest IPOs in U.S. history. Since he joined UPS as a driver in 1977, Mr. BoykinKuehn’s UPS career has included leadership roles in sales and marketing, engineering, operations and strategic cost planning. Mr. Kuehn became a director of NCR on June 5, 2002 and was appointed independent Lead Director effective July 25, 2013 and continued to serve in that role through February 22, 2016. In determining if May 23, 2012.
Qualifications.Mr. Boykin should continue servingKuehn’s qualifications include, among other things, his tenure as a director of the Company, the Committee on Directors and Governance considered Mr. Boykin’s independence andCFO at UPS, his previous experience at CSC, a multi-billion dollarUPS as Senior Vice President, Worldwide Sales and Marketing, and Vice President of Investor Relations, and the management and leadership responsibilities associated with these positions; his international operating experience with UPS; his significant financial literacy, knowledge and expertise; his current public company with complex accounting issues, including among other things, his extensive experience evaluating financial statements in his former position as CSC’s President and Chief Operating Officer, his past experience managing major acquisitions at CSCboard experience; and his former role on CSC’s disclosure committee. In addition to these attributes, the Committee on Directors and Governance considered Mr. Boykin’s financial literacy in concluding that his abilities would meet the needs of the Board.independence.
Chinh E. Chu, 50, is a Managing Partner and Founder of CC Capital Management, LLC, a special purpose acquisition company. Before forming CC Capital Management, Mr. Chu was a Senior Managing Director of Blackstone in the Corporate Private Equity Group from January 2000 to November 2015, and currently acts as a senior advisor to Blackstone. Before joining Blackstone in 1990, Mr. Chu worked at Salomon Brothers in the Mergers & Acquisitions Department. Mr. Chu led Blackstone’s investments in AlliedBarton, Celanese, Graham Packaging, Interstate Hotels, Kronos, LIFFE, Nalco, Nycomed, and Stiefel Laboratories. Mr. Chu graduated with a bachelor’s degree in finance from the University of Buffalo. He currently serves as a director of Biomet, Inc., Freescale Semiconductor, Inc., HealthMarkets Inc., and Kronos Incorporated. Mr. Chu became a director of NCR on December 4, 2015 and was appointed
independent Lead Director effective February 22, 2016. In addition to the Company’s obligations under the Investment Agreement, in determining if Mr. Chu should continue serving as a director of the Company, the Committee on Directors and Governance considered Mr. Chu’s independence, his experience as a director of other public and private companies and his extensive experience evaluating and managing acquisitions and investments in multiple industries in concluding that his abilities would meet the needs of the Board.
Linda Fayne Levinson, 75,77 is a director of Jacobs Engineering Group where she serves as the Company’sthat company’s Independent Lead Director, and was Chair of the Board of Hertz Global Holdings, Inc. until January 2, 2017, when she chose to resign.resigned. Ms. Levinson was also a director of IngramMicro Inc. until December 2016 when the companyit was acquired by HNA Group, and a director of The Western Union Company until May 2016 when she retired from that Board.board. Ms. Levinson became a director of NCR on January 1, 1997 and was appointed the independent Lead Director of the Board on October 1, 2007 and continued to serve in that role through July 24, 2013. Ms. Levinson is also on the U.S. advisory board of CVC Capital Partners, and a senior advisor to RRE Ventures, a venture capital firm committed to helping founders build category-defining companies. Ms. Levinson was also a member of The McKinsey New Ventures Advisory Council until it dissolved in 2018. Ms. Levinson was a Partner at GRP Partners, a private equity investment fund investing instart-up and early-stage retail, technology ande-commerce companies, from 1997 to December 2004. Prior to that, she was a Partner in Wings Partners, a private equity firm, an executive at American Express running its leisure travel and tour business, and a Partner at McKinsey & Company. Ms. Levinson was a director of DemandTec, Inc. from June 2005 until February 2012 when it was acquired by International Business Machines Corporation. In determining if
Qualifications. Ms. Levinson should continue serving as a director of the Company, the Committee on Directors and Governance consideredLevinson’s qualifications include, among other things, her long experience as a public company director and a committee chair, starting in 1991, as well as her general management experience at American Express,Express; her strategic experience at McKinsey & Company and her investment experience at GRP Partners and Wings Partners. Ms. Levinson’s extensive managementPartners; her leadership experience, including as a lead independent director and leadership experience,board chair; her broad industry knowledge, independence,knowledge; her independence; and herin-depth knowledge of corporate governance issuesissues.
Frank R. Martire, 71,is Executive Chairman of NCR. Mr. Martire most recently served asNon-Executive Chairman of Fidelity National Information Services Inc. (FIS). From 2015 to 2017, he served as Executive Chairman of FIS, and diversityfrom 2009 to 2015 was President and Chief Executive Officer of perspective wereFIS after its acquisition of Metavante Technologies, Inc. (Metavante). Mr. Martire previously served as Chief Executive Officer of Metavante from 2003 to 2009 and President from 2003 to 2008. Prior to that, he was President and Chief Operating Officer of Call Solutions Inc. from 2001 to 2003, and President and Chief Operating Officer, Financial Institution Systems and Services Group, of Fiserv, Inc. (Fiserv), from 1991 to 2001. Mr. Martire serves as Chairman of the Board of Directors of J. Alexander’s Holdings, Inc. He is also Chairman of the Board of Sacred Heart University, a Board member of the Baptist Health System, Inc., Jacksonville University and Cannae, and a member of the Leadership Foundation of the Mayo Clinic. Mr. Martire holds a Master’s degree in Finance from the University of New Haven, Connecticut, and a Bachelor of Science degree in Economics from Sacred Heart University. Mr. Martire became a director of NCR on May 31, 2018.
Qualifications.Mr. Martire’s qualifications include, among other things, his current and prior experience as a director, including Executive Chairman andNon-Executive Chairman roles, of other public companies; his significant leadership and management experience in his previous roles at FIS, Metavante and Fiserv; and his broad industry expertise including in the financial services industry and bank technology processing.
Matthew A. Thompson, 60, currently serves as Executive Vice President, Worldwide Field Operations, for Adobe Systems Incorporated. Mr. Thompson joined Adobe in January 2007 as Senior Vice President, Worldwide Field Operations. In January 2013, he was promoted to Executive Vice President, Worldwide Field Operations. Prior to joining Adobe, Mr. Thompson served as Senior Vice President of Worldwide Sales at Borland Software Corporation, a software delivery optimization solutions provider, from October 2003 to December 2006. Prior to joining Borland, Mr. Thompson was Vice President of Worldwide Sales and Field Operations for Marimba, Inc., a provider of products and services for software change and configuration management, from February 2001 to January 2003. From July 2000 to January 2001, Mr. Thompson was Vice President of Worldwide Sales for Calico Commerce, Inc., a provider of eBusiness applications. Prior to joining Calico, Mr. Thompson spent six years at Cadence Design Systems, Inc., a provider of electronic design technologies. While at Cadence, from January 1998 to June 2000, Mr. Thompson served as Senior Vice President, Worldwide Sales and Field Operations and from April 1994 to January 1998 as Vice President, Worldwide Professional Services. Mr. Thompson became a director of NCR on October 24, 2017.
Qualifications. Mr. Thompson’s qualifications include, among other things, his experience in and knowledge of the software industry, particularly with respect to SaaS-based software solutions and digital transformation; his skills and attributes that ledexperience in domestic and international software sales and sales strategy, including leading Adobe’s global sales organization; his experience with software customers and customer-facing roles; his leadership experience; and his independence.
Directors to Be Elected Separately by Holders of Series A Convertible Preferred Stock
Gregory R. Blank, 38, is a Senior Managing Director of Blackstone based in New York where he focuses on investments in the Committeetechnology, media and telecommunications sectors. Since joining Blackstone in 2009, Mr. Blank has been involved in the execution of many of Blackstone’s investments, including most recently in Kronos, JDA, Paysafe, Ipreo and Optiv. Prior to joining Blackstone, Mr. Blank was an associate at Texas Pacific Group (TPG) in San Francisco where he was involved in the evaluation and execution of private equity transactions. Before joining TPG, Mr. Blank worked in investment banking at Goldman, Sachs & Co. focused on Directorstechnology, media and Governance to conclude that her abilities would meettelecommunications clients. Mr. Blank graduated with a bachelor’s degree in economics from Harvard College and received an MBA from the needsHarvard Business School. He currently serves as a director of Kronos, and previously served as a director of Travelport Worldwide Limited, Ipreo, Optiv and The Weather Company. Mr. Blank became a director of NCR on December 4, 2015. Mr. Blank is one of the Board.Board Members who was designated by Blackstone under the terms of the Investment Agreement. Only the holders of the Series A Convertible Preferred Stock may vote on the election of Mr. Blank as a director at the Annual Meeting.
Qualifications. Mr. Blank’s qualifications include, among other things, his significant private equity and mergers and acquisitions experience with Blackstone and Goldman Sachs; his experience evaluating and managing acquisitions and investments in the technology and telecommunications industries; his experience as a director of other public and private companies; his financial expertise and literacy; his prior service on Travelport’s Audit Committee; and his independence.
Chinh E. Chu, 52, is the Founder and Managing Partner of CC Capital Partners, LLC, a private investment firm. Mr. Chu is theco-founder of two special purpose acquisition companies, CF Corp. that was acquired by Fidelity & Guaranty Life, a life insurance company where Mr. Chu currently serves asCo-Executive Chairman, and Collier Creek Holdings. Before forming CC Capital, Mr. Chu was a Senior Managing Director of The Blackstone Group, where he worked from 1990 to 2015 and served asCo-Chair of Blackstone’s Private Equity Executive Committee, as a member of the Investment Committee and on the firm’s Executive Committee. Before joining Blackstone in 1990, Mr. Chu worked at Salomon Brothers in the Mergers & Acquisitions Department. Mr. Chu led Blackstone’s investments in AlliedBarton, Celanese, Graham Packaging, Interstate Hotels, Kronos, LIFFE, Nalco, Nycomed, and Stiefel Laboratories. He also currently serves as a director of Stearns Mortgage. Mr. Chu previously served as a director of Catalent, Inc., Kronos Incorporated, SunGard Data Systems, Inc., Freescale Semiconductor, Ltd., Biomet, Inc., Alliant, Celanese Corporation, Nalco Company, Nycomed, Alliant Insurance Services, Inc., the London International Financial Futures and Options Exchange, or LIFFE, Graham Packaging, and AlliedBarton Security Services. Mr. Chu graduated with a bachelor’s degree in finance from the University of Buffalo. Mr. Chu became a director of NCR on December 4, 2015 and was appointed independent Lead Director effective February 22, 2016.
Mr. Chu is one of the Board Members who was designated by Blackstone under the terms of the Investment Agreement. Only the holders of the Series A Convertible Preferred Stock may vote on the election of Mr. Chu as a director at the Annual Meeting.
Qualifications. Mr. Chu’s qualifications include, among other things, his experience as a director of other public and private companies; his private equity experience; his extensive experience evaluating and managing acquisitions and investments in multiple industries with Blackstone and Salomon Brothers; and his independence.
How |
Board Recommendation |
The Board of Directors recommends that you vote FOR Richard L. Clemmer, Robert P. DeRodes, Deborah A. Farrington, Michael D. Hayford, Kurt P. Kuehn, Linda Fayne Levinson, Frank R. Martire, Matthew A. Thompson and, solely with respect to the holders of Series A Convertible Preferred Stock, Gregory R. Blank and Chinh E. Chu, as directors to hold officeserve until the next annual meeting of stockholders following their election and until their respective successors are duly elected and qualify. Proxies received by the Board will be voted FOR all nominees for which the stockholder may vote unless they specify otherwise.
Vote Required for Approval |
A majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the holders of Series A Convertible Preferred Stock voting on anas-converted basis, is required to elect Richard L. Clemmer, andRobert P. DeRodes, Deborah A. Farrington, Michael D. Hayford, Kurt P. Kuehn, (twoLinda Fayne Levinson, Frank R. Martire and Matthew A. Thompson (eight of the threeten director nominees). Abstentions and broker“non-votes” will not be counted as votes cast and will have no effect on the vote required to elect either Mr.Messrs. Clemmer, DeRodes, Hayford, Kuehn, Martire, Thompson or Mr. Kuehn.Mses. Farrington and Levinson.
The vote of the holders of a majority of the outstanding shares of our Series A Convertible Preferred Stock, voting separately as a class, is required to elect Mr.Messrs. Gregory R. Blank the thirdand Chinh E. Chu (the other director nominee.nominees). Only the holders of Series A Convertible Preferred Stock have the right to vote on the election of Mr. Blank. Pursuant to the Company’s charterMessrs. Blank and bylaws, as given effect underChu. Under Maryland law, abstentions and brokernon-votes, if any, by holders of Series A Convertible Preferred Stock will have the effect of votes against Mr. Blank.Messrs. Blank and Chu.
More Information About Our Board of Directors |
The Board oversees the overall performance of the Company on behalf of the stockholders of the Company. Members of the Board stay informed of the Company’s business by participating in Board and committee meetings (including regular executive sessions of the Board), by reviewing materials provided to them prior to meetings and otherwise, and through discussions with the Chief Executive Officer and other members of management and staff.
Corporate Governance |
General |
The Board is elected by the stockholders of the Company (with certain members of the Board being elected solely by the holders of the Series A Convertible Preferred Stock) to oversee and direct the management of the Company. The Board selects the senior management team, which is charged with managing the Company’s business and affairs. Having selected the senior management team, the Board acts as an advisor to senior management and monitors its performance. The Board reviews the Company’s strategies, financial objectives and operating plans. It also plans for management succession of the Chief Executive Officer, as well as other senior management positions, and oversees the Company’s compliance efforts.
To help discharge its responsibilities, the Board has adopted Corporate Governance Guidelines on significant corporate governance issues, including, among other things: the size and composition of the Board; director independence; Board leadership; roles and responsibilities of the Board; risk oversight; director compensation and stock ownership; committee membership and structure, meetings and executive sessions; and director selection, training and retirement. The Corporate Governance Guidelines, as well as the Board’s committee charters, are found under “Corporate Governance” on the “Company” page of NCR’s website athttp://www.ncr.com/company/corporate-governance. You also may obtain a written copy of the Corporate Governance Guidelines, or any of the Board’s committee charters, by writing to NCR’s Corporate Secretary at the address listed on page 527 of this proxy statement.
Independence |
In keeping with the requirements ofpolicy contemplated in our Corporate Governance Guidelines, and the NYSE listing standards, a substantial majority of our Board must be independent.is independent, which exceeds the NYSE listing standards. Under the standards of independence set forth in Exhibit B to the Corporate Governance Guidelines, which meet, and in some cases exceed,reflect the independence standards provided in the NYSE listing standards, a Board member may not be independent unless the Board affirmatively determines that the Board member has no material relationship with the Company (whether directly or indirectly), taking into account, in addition to those other factors it may deem relevant, whether the director:
· | has not been an employee of the Company or any of its affiliates, or otherwise affiliated with the Company or any of its affiliates, within the past five years; |
· | has not been affiliated with or an employee of the Company’s present or former independent auditors or its affiliates for at least five years after the end of such affiliation or auditing relationship; |
· | has not for the past five years been a paid advisor, service provider or consultant to the Company or any of its affiliates or to an executive officer of the Company, or an employee or owner of a firm that is such a paid advisor, service provider or consultant; |
· | does not, directly or indirectly, have a material relationship (such as being an executive officer, director, partner, employee or significant stockholder) with a company that has made payments to or received payments from the Company that exceed, in any of the previous three fiscal years, the greater of $1 million or 2% of the other company’s consolidated gross revenues; |
· | is not an executive officer or director of a foundation, university or othernon-profit entity receiving significant contributions from the Company, including contributions in the previous three years that, in any single fiscal year, exceeded the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues; |
· | has not been employed by another corporation that has (or had) an executive officer of the Company on its board of directors during the past five years; |
· | has not received compensation, consulting, advisory or other fees from the Company, other than Director compensation and expense reimbursement or compensation for prior service that is not contingent on continued service for the past five years; and |
· | is not and has not been for the past five years a member of the immediate family of: (i) an officer of the Company; (ii) an individual who receives or has received during any twelve-month period more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service that is not contingent on continued service; (iii) an individual who, with respect to the Company’s independent auditors or their affiliates, is a current partner or a current employee personally working on the Company’s audit or was a partner or employee and personally worked on the Company’s audit; (iv) an individual who is an executive officer of another corporation that has (or had) an executive officer of the Company on its board of directors; (v) an executive officer of a company that has made payments to, or received payments from, the Company in a fiscal year that exceeded the greater of $1 million or 2% of the other company’s consolidated gross revenues; or (vi) any director who is not considered an independent director. |
Consistent with the Corporate Governance Guidelines and the NYSE listing standards, on an annual basis the Board, with input from the Committee on Directors and Governance, determines whether eachnon-employee Board member is considered independent. In doing so, the Board takes into account the factors listed above and such other factors as it may deem relevant.
The Board has determined that all of the Company’snon-employee directors and nominees, namely Gregory R. Blank, Edward “Pete” Boykin, Chinh E. Chu, Richard L. Clemmer, Gary J. Daichendt, Robert P. DeRodes, Deborah A. Farrington, Kurt P. Kuehn, and Linda Fayne Levinson and Matthew A. Thompson, are independent in accordance with the NYSE listing standards and the Company’s Corporate Governance Guidelines.
Recent Governance Developments |
NCR continues to demonstrate a strong commitment to corporate governance practices and policies that reinforce the Board’s alignment with, and accountability to, our stockholders. In 2016 we eliminated classification of the Board, twice adjourning our annual meeting of stockholders to solicit votes to obtain the requisite stockholder approval. Also in 2016, the Board adopted and implemented a comprehensive, robust and fair proxy access bylaw. We continue to actively engage with our stockholders on a regular basis, our
stockholders have the ability to directly nominate director candidates, and we have established processes and procedures for stockholders to communicate with the Board, the independent Lead Director, the Chairman of the Board, any other individual director, or NCR’s independent directors as a group.
We have also reduced the ownership threshold necessary for stockholders to directly call a special meeting, and in furtherance of our continuing commitment to strong corporate governance policies, on February 20, 2018, the Board authorized and approved amendments to the Company’s bylaws to reduce the percent ownership requirement necessary to allow stockholders to call a special meeting of stockholders from a majority of the votes entitled to be cast at the meeting to 25% of the votes entitled to be cast at the meeting; provided, that unless requested by the stockholders entitled to cast a majority of all the votes entitled to be cast at the meeting, a special meeting need not be called to consider any matter that is substantially the same as a matter voted on at any special meeting of stockholders held in the preceding twelve months.
Since being spun off by AT&T Corp. in 1996, NCR’s stockholders have had the right to call a special meeting. This stands in contrast to the many public companies that continue to afford their stockholders no such rights. And reducing the ownership threshold for calling a special meeting from a majority of the votes entitled to be cast at the meeting to 25% puts the terms of this stockholder right well within market practice for those companies that permit stockholders to call a special meeting. We believe that our revised special meeting right strikes a reasonable and appropriate balance – meaningfully enhancing the right of stockholders to call a special meeting, on the one hand, while, on the other hand, safeguarding against the risk that substantial administrative and financial burdens could be imposed on our company, contrary to the interests of our Board and stockholders, by a special meeting being called that does not have meaningful stockholder interest behind it.
In addition, the Board has included in this proxy statement a proposal to amend and restate the Company charter to eliminate the supermajority voting provisions contemplated thereby and require the affirmative vote of a majority of all the votes entitled to be cast to approve each such matter. While a supermajority vote requirement protects against amendments to key provisions of a charter or bylaws, the removal and subsequent replacement of a director, or the entering into of extraordinary transactions without broad stockholder support, the Board has determined, following its deliberation and consideration regarding the rationale for such provisions in light of current corporate governance standards and practices and as permitted by Maryland law, that requiring only a majority of all the votes entitled to be cast on the matter to amend all provisions of the Company’s charter and to approve the extraordinary transactions described in more detail in the applicable proposal in this proxy statement is advisable and in the best interests of NCR. Similarly, after deliberation and consideration, the Board has determined, also as permitted by Maryland law, that requiring only a majority of all the votes entitled to be cast on the matter to amend all provisions of the Bylaws, to remove a director, and to replace a director after removal, is advisable and in the best interests of NCR, and has included such amendment in the applicable proposal in this proxy statement. The Board also determined it advisable, and included in the applicable proposal in this proxy statement, to amend Section 6.2 of the Company charter to provide that, notwithstanding any provision of law requiring any action to be taken or approved by the affirmative vote of stockholders entitled to cast a greater number of votes, and except as may otherwise be specifically provided, any such action shall be effective and valid if declared advisable by the Board and taken or approved by the affirmative vote of stockholders entitled to cast a majority of all the votes entitled to be cast on the matter. The Board believes the proposal including the amendments to the Company charter described in this paragraph strike the proper balance of protecting against the actions of a few large stockholders while recognizing that broad supermajority provisions are no longer viewed by many parties as consistent with current best practices for corporate governance at U.S. public companies.
Leadership Structure |
As set out in the Corporate Governance Guidelines, the Board does not have a guideline on whether the role of Chairman should be held by anon-employee director. Instead, our Board has the flexibility to select a Chairman as it deems best for the Company from time to time. Under the Corporate Governance Guidelines if the positions of Chairman and Chief Executive Officer are held by the same person, the independent directors of the Board will select a Lead Director from the independent directors. Additionally, if the positions of Chairman of the Board and Chief Executive Officer are held by the same person or if the Chairman is a management employee, the Board has set out the roles of both Chairman and Chief Executive Officer and the independent Lead Director in Exhibit C to the Corporate Governance Guidelines.
Currently the Board has an integrated leadership structure in which WilliamFrank R. NutiMartire serves in the combined roles ofas Executive Chairman, andMichael D. Hayford services as Chief Executive Officer and Chinh E. Chu serves as the Board’s independent Lead Director. The Board believes that this structure promotes greater efficiency through more direct communication of critical information between the Company and the Board. In addition, the Chief Executive Officer’sChairman’s extensive knowledge of the Company uniquely qualifies him, in close consultation with the independent Lead Director, to lead the Board in discussing strategic matters and assessing risks, and focuses the Board on the issues that are most material to the Company. Combining the roles of Chairman and Chief Executive Officer also has allowed the Company to more effectively develop and communicate a unified vision and strategy to the Company’s stockholders, employees and customers.
Consistent with the Corporate Governance Guidelines, the independent Lead Director has broad authority, as follows. The independent Lead Director, among other things: presides at the executive sessions of thenon-employee directors and at all Board meetings at which the Chairman is not present;present, including executive sessions of the independent directors; serves as liaison between the Chairman and the independent directors; frequently communicates with the Chairman and Chief Executive Officer; is authorized to call meetings of the independent directors; obtains Board member and management input and, with the Chief Executive Officer, sets the agenda for the Board; approves meeting schedules to assure that there is sufficient time for discussion of all agenda items; works with the Chief Executive Officer to ensure that Board members receive the right information on a timely basis; stays current on major risks and focuses the Board members on such risks; molds a cohesive Board to support the success of the Chief Executive Officer; works closely with the Committee on Directors and Governance to evaluate Board and committee performance; facilitates communications among directors; assists in the recruiting and retention of new Board members (with the Committee on Directors and Governance, the Chairman and the Chief Executive Officer); in conjunction with the Chairman, the Chief Executive Officer and the Committee on Directors and Governance, ensures that committee structure and committee assignments are appropriate and effective; works with the Committee on Directors and Governance to ensure outstanding governance processes; leads discussions, along with the chair of the Compensation and Human Resource Committee, regarding Chief Executive Officer performance, personal development and compensation; and, if requested by major stockholders of the Company, is available for consultation and direct communication with such stockholders. Additionally, the leadership and oversight of the Board’s other independent directors continues to be strong, and further structural balance is provided by the Company’s well-established corporate governance policies and practices, including its Corporate Governance Guidelines. Independent directors currently account for eight out of nineten of the Board’s members, and make up all of the members of the Board’s Compensation and Human Resource Committee (the “CHRC”), Audit Committee and Committee on Directors and Governance. Additionally, among other things, the Board’snon-employeenon-management directors meet regularly in executive session with only thenon-employeenon-management directors present.
The Board has had over nineten years of successful experience with thisa leadership structure – in which the roles of Chairman and Chief Executive Officer are combinedheld by management employees and an independent Lead Director is selected – and, taking these factors into account, has determined that this leadership structure is the most appropriate and effective for the Company at this time.
The Board’s involvement in risk
Risk Oversight |
As a part of its oversight includes receiving regular reports from members of senior managementresponsibilities, the Board regularly monitors management’s processes for identifying and evaluatingaddressing areas of material risk to the Company, including operational, financial, cybersecurity, legal, regulatory, strategic and reputational risks. In doing so, the Board receives regular assistance and input from its committees, as well as regular reports from members of senior management. While the Board and its committees provide oversight, management is responsible for implementing risk management programs, supervisingday-to-day risk management and reporting to the Board and its committees on these matters.
The Audit Committee of the Board is responsiblehas been designated with primary responsibility for overseeing the assessment of financial, strategic, cybersecurity and other risk, as well asand the Company’s general risk management
programs. In carrying out this responsibility, the Audit Committee regularly evaluates the Company’s risk identification, risk management and risk mitigation strategies and practices.
The Company has established an Enterprise Risk Management team that includes representation from the Company’s various infrastructure functions. The Audit Committee and the full Board receive and review periodic reports prepared by members of the Company’s Enterprise Risk Management team on an annual basis.this team. In
general, the reports identify, analyze, prioritize and provide the status of major risks to the Company. The Audit Committee also receives periodic updates from members of the Enterprise Risk Management team as warranted. In addition, the Audit Committee regularly receives management reports on information security and the enhancements of the cybersecurity protections, including benchmarking assessments, which it then shares with the Board. The full Board receives at least annual reports on this topic directly from management. Included among the members of both the Board and the Audit Committee are directors with substantial expertise in cybersecurity matters, and Board members actively engage in dialogue on the Company’s information security plans, and in discussions of improvements to the Company’s cybersecurity defenses. When, in management’s judgment, a threatened cybersecurity incident has the potential for material impacts, the Audit Committee is advised and management makes regular reports to the committee.
The CHRC regularly considers potential risks related to the Company’s compensation programs, as discussed below, and the Committee on Directors and Governance also considers risks within the context of its responsibilities (as such responsibilities are defined in itsthe committee charter), including legal and regulatory compliance risks. The Committee on Directors and Governance also receives periodic updates on compliance and regulatory risk items from the Company’s Chief Compliance Officer.
After each committee meeting, the Audit Committee, CHRC and Committee on Directors and Governance each reports at the next meeting of the Board all significant items discussed at each committee meeting, which includes a discussion of items relating to risk oversight.
We believe the leadership structure of the Board effectively facilitatesalso contributes to the effective facilitation of risk oversight by the Board as a result of: (i) the role of the Board committees in risk identification and mitigation,mitigation; (ii) the direct link between management and the Board achieved by having one leaderour two management directors serve as Executive Chairman and Chief Executive Officer,Officer; and (iii) the role of our active independent Lead Director whose duties include ensuring the Board reviews and evaluates major risks to the Company, as well as measures proposed by management to mitigate such risks. These
All of these elements work together to ensure an appropriate focus on risk oversight.
Compensation Risk Assessment |
The Company takes a prudent and appropriately risk-balanced approach to its incentive compensation programs to ensure that these programs promote the long-term interests of our stockholders and do not contribute to unnecessary risk-taking. The CHRC regularly evaluates whether the Company’s executive and broad-based compensation programs, contribute to unnecessary risk-taking to achieve above-target results,including the mix of cash and equity, balance of short-term and longer-term performance focus, balance of revenue and profit-based measures, stock ownership guidelines, clawback policies and other risk mitigators. The CHRC directly engages its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FWC”), to assist in this process. Based on this evaluation, the CHRC in its evaluation. In accordance with the CHRC’s direction, FWC performs a compensation risk assessmentconcluded that none of the Company’s executivecompensation policies and broad-based compensation programs and makes an independent report to the CHRC. The last risk assessment from FWC was completed in 2011. At that time, FWC concluded that the Company’s executive and broad-based compensation programs do not present any area of significant risk, noting that the plans are well-aligned withreasonably likely to have a material adverse effect on the CHRC’s compensation design principles. In 2016 and early 2017, the Company conducted its own compensation risk assessment of the incentive compensation programs and concluded that the Company’s executive and broad-based compensation programs do not present any area of significant risk. The only significant changes to our compensation programs since FWC’s 2011 risk assessment were the following, each of which the Company and FWC determined did not present an area of significant risk: (i) the adoption of the NCR Corporation 2011 Economic Profit Plan (which was amended in 2015 with stockholder approval) and the NCR Executive Severance Plan (including amendments); (ii) the 2016 modifications to our long-term incentive program; (iii) the amendment and restatement of the NCR Management Incentive Plan for purposes of Code Section 162(m); (iv) adoption of the NCR Corporation 2017 Stock Incentive Plan; and (v) establishment of the “Bonus Uplift” feature of the 2017 Annual Incentive Plan.Company.
Committees of the Board |
The Board has fourthree standing committees: the Audit Committee, the Compensation and Human Resource Committee and the Committee on Directors and Governance and the Executive Committee. Governance.
The Board has adopted a written charter for each such committee that sets forth the committee’s mission, composition and responsibilities. Each charter can be found under “Corporate Governance” on the “Company” page of NCR’s website athttp://www.ncr.com/company/corporate-governance.
The Board met sixnine times in 20162018 and each incumbent member of the Board attended 75% or more of the aggregate of: (i) the total number of meetings of the Board (held during the period for which such person has beenwas a director), and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served). The Company has no formal policy regarding director attendance at its annual meeting of stockholders. TheAll of the Company’s directors then in office except Mr. Nuti, were not in attendance at the Company’s 20162018 Annual Meeting of Stockholders, which was a virtual, and not anin-person, meeting.
The members of each committee as of the end of fiscal 20162018 and the number of meetings held in fiscal 20162018 are shown below:
Name | Audit Committee | Compensation Human Committee | Committee Directors Governance | Executive Committee | Audit Committee | Compensation and Human Resource Committee | Committee on Directors and Governance | ||||||||||||||||||||||||
Gregory R. Blank | X | X | X | ||||||||||||||||||||||||||||
Edward “Pete” Boykin | X | X | X | ||||||||||||||||||||||||||||
Chinh E. Chu | X | X | X | X | |||||||||||||||||||||||||||
Richard L. Clemmer | X | ||||||||||||||||||||||||||||||
Gary J. Daichendt | X | X | * | X | |||||||||||||||||||||||||||
Richard L. Clemmer(1) | X | Chair | |||||||||||||||||||||||||||||
Robert P. DeRodes | X | X | |||||||||||||||||||||||||||||
Deborah A. Farrington | X | ||||||||||||||||||||||||||||||
Kurt P. Kuehn | X | * | Chair | ||||||||||||||||||||||||||||
Linda Fayne Levinson | X | * | X | X | Chair | X | |||||||||||||||||||||||||
William R. Nuti | X | * | |||||||||||||||||||||||||||||
Number of meetings in 2016 | 9 | 7 | 4 | 0 | |||||||||||||||||||||||||||
Matthew A. Thompson(2) | X | ||||||||||||||||||||||||||||||
Number of meetings in 2018 | 10 | 6 | 4 |
*(1) Effective April 25, 2018, Mr. Clemmer was elected to serve on the Compensation and Human Resource Committee and the Committee on Directors and Governance as Chair, and ceased to serve on the Audit Committee.
(2) Effective April 25, 2018, Mr. Thompson was elected to serve on the Audit Committee.
Audit Committee |
The Audit Committee is the principal agent of the Board in overseeing: (i) the quality and integrity of the Company’s financial statements; (ii) the assessment of financial, strategic, cybersecurity and other risk and risk management programs; (iii) the independence, qualifications, engagement and performance of the Company’s independent registered public accounting firm; (iv) the performance of the Company’s internal auditors; (v) the integrity and adequacy of internal controls; and (vi) the quality and adequacy of disclosures to stockholders. Among other things, the Audit Committee also:
· | selects, evaluates, sets compensation for and, where appropriate, replaces the Company’s independent registered public accounting firm; |
· | pre-approves all audit andnon-audit services to be performed by the Company’s independent registered public accounting firm; |
· | reviews and discusses with the Company’s independent registered public accounting firm its services and quality control procedures and the Company’s critical accounting policies and practices; |
· | regularly reviews the scope and results of audits performed by the Company’s independent registered public accounting firm and internal auditors; |
· | prepares the report required by the SEC to be included in the Company’s annual proxy statement; |
· | meets with management to review the adequacy of the Company’s internal control framework and its financial, accounting, reporting and disclosure control processes; |
· | reviews the Company’s periodic SEC filings and quarterly earnings releases; |
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· | discusses management’s plans with respect to the Company’s major financial, strategic, cybersecurity and other risk exposures and the steps management has taken to monitor and control such exposures; |
· | reviews the Company’s compliance with legal and regulatory requirements; and |
· | reviews the effectiveness of the Internal Audit function, including compliance with theInstitute of Internal Auditors’ International Professional Practices Framework for Internal Auditing consisting of the Definition of Internal Auditing, Code of Ethics and the Standards. |
Each member of the Audit Committee is independent and financially literate as determined by the Board under applicable SEC rules and NYSE listing standards. In addition, the Board has determined that Messrs. Blank, ClemmerKuehn, and KuehnThompson and Ms. Farrington, are each an “audit committee financial expert,” as defined under SEC regulations. The Board has also determined that each member of the Audit Committee is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines, which meet, and in some cases exceed,reflect the listing standards of the NYSE and the applicable rules of the SEC. No member of the Audit Committee may receive any compensation, consulting, advisory or other fees from the Company, other than the Board compensation described below under the caption “DirectorsectionDirector Compensation”, starting on page 29 as determined
in accordance with applicable SEC rules and NYSE listing standards. Members serving on the Audit Committee are limited to serving on no more than two other audit committees of public company boards of directors, of public companies, unless the Board evaluates and determines that these other commitments would not impair the member’s effective service to the Company.
Compensation and Human Resource Committee |
The CHRC provides general oversight of the Company’s management compensation philosophy and practices, benefit programs and strategic workforce initiatives, and oversees the Company’s leadership development plans. In doing so, the CHRC reviews and approves the Company’sexecutive officer total compensation goals, objectives and programs, covering executive officers and key management employees as well as the competitiveness of NCR’s total executive officer compensation practices. Among other things, the CHRC also:
· | evaluates |
· | discusses its evaluation |
· | reviews executive compensation plans and recommends them for Board approval; |
· | oversees our compliance with SEC and NYSE compensation-related rules; |
· | reviews and |
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· | reviews |
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· | oversees |
The CHRC may delegate its authority to the Company’s Chief Executive Officer and/or other appropriate delegates to make equity awards to individuals (other than executive officers) in limited instances.
The CHRC retains and is advised by an independent compensation consultant, Frederic W. Cook & Co., Inc. The CHRC has directly engaged FWC to review the Company’s long-term incentive program, the Stock Incentive Plan (which we refer to as the Stock Plan)(the “Stock Plan”), the Annual Incentive Plan (which includes the Management Incentive Plan and the Customer Success Bonus), the Economic Profit Plan and other key programs related to the compensation of executive officers. As directed by the CHRC, FWC provides a competitive assessment of the Company’sour executive compensation programs relative to our compensation philosophy; reviews our compensation peer group companies; provides expert advice regarding compensation matters for our executive officers, including the Chief Executive Officer; provides information aboutand competitive market rates;rate information relating to executive officer compensation; assists in the design of thedesigning variable incentive, plansperquisite and the establishment ofother compensation programs, including advice regarding performance goals; assists in the design of other compensation programs and perquisites; assists with Section 162(m) and Section 409A compliance with applicable tax laws, disclosure matters and other technical matters; conducts aan annual risk assessment of the Company’sour compensation programs; and is readily available for consultationregularly consults with the CHRC and its members regarding such matters. FWC did not perform any additional work for the Company or its management in 2016. In keeping with NYSE listing standards, the2018. The CHRC retained FWC after taking into considerationreviewing all factors relevant to FWC’sits independence from management. The CHRC has reviewed the independence of FWC in light ofmanagement under applicable SEC rules and NYSE listing standards, regarding compensation consultants and has concludedconcluding that FWC’sFWC was independent and its work for the CHRC is independent and doesdid not raise any conflict of interest.
The Board has determined that each member of the CHRC is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines which meet, and in some cases exceed, thereflect NYSE listing standards of the NYSE and satisfy the additional provisions specific to compensation committee membership set forth in the NYSE listing standards of the NYSE.standards.
Committee on Directors and Governance |
The Committee on Directors and Governance (the “CODG”) is responsible for reviewing the Board’s corporate governance practices and procedures, including the review and approval of each related party transaction under the Company’s Related Person Transaction Policy (unless the Committee on Directors and GovernanceCODG determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board), and the Company’s ethics and compliance program. Among other things, the CHRCCODG also:
· | recommends to the Board the principles of director compensation, |
· | reviews the composition of the Board and the qualifications of persons identified as prospective directors, recommends the candidates to be nominated for election as directors, and, in the event of a vacancy on the Board, recommends any successors; |
· | recommends to the Board the assignment of directors to various committees; |
· | establishes procedures for evaluating the performance of the Board and oversees such evaluation; |
· | reviews the Company’s charter, bylaws and Corporate Governance Guidelines and makes any recommendations for changes, as appropriate; and |
· | monitors compliance with independence standards established by the |
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The Committee on Directors and GovernanceCODG is authorized to engage consultants to review the Company’s director compensation program.
The Board has determined that each member of the Committee on Directors and GovernanceCODG is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines, which meet, and in some cases exceed,reflect the listing standards of the NYSE.
The Executive Committee has the authority to exercise all powers of the full Board, except those reserved to the full Board by applicable law, such as amending the Company’s bylaws, issuing stock, declaring dividends or distributions of stock or approving a merger that requires stockholder approval. The Executive Committee meets between regular Board meetings if urgent action is required.
Selection of Nominees for Directors |
The Committee on Directors and GovernanceCODG and our other directors are responsible for recommending nominees for membership to the Board. The director selection process is described in detail in the Board’s Corporate Governance Guidelines. In determining candidates for nomination, the Committee on Directors and GovernanceCODG will seek the input of the Chairman of the Board and the Chief Executive Officer, and, in the event the positions of Chairman of the Board and Chief Executive Officer are held by the same person, the independent Lead Director, and will consider individuals recommended for Board membership by the Company’s stockholders in accordance with the Company’s bylaws and applicable law. It is a qualification of each ofWith respect to the directors to be elected by the holders of shares of Series A Convertible Preferred Stock, that theysuch nominees are required to have been designated by Blackstone pursuant to the Investment Agreement.
TheExhibit A to the Board’s Corporate Governance Guidelines include qualification guidelines for directors standing forre-election and new candidates for membership on the Board. All candidates are evaluated by the Committee on Directors and Governance
CODG using these qualification guidelines. In accordance with the guidelines, as part of the selection process, in addition to such other factors as it may deem relevant, the Committee on Directors and GovernanceCODG will consider a candidate’s:
· | management experience (including with major public companies with multinational operations); |
· | other areas of expertise or experience that are desirable given the Company’s business and the currentmake-up of the Board (such as expertise or experience in information technology businesses, manufacturing, international, financial or investment banking or scientific research and development); |
· | desirability of range in age to allow staggered replacement of directors of desired skills and experience to permit appropriate Board continuity; |
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· | diversity of thought and perspectives, such as on the basis of age, race, gender, and ethnicity, or on the basis of geographic knowledge, industry experience, board tenure, or culture; |
· | knowledge and skills in accounting and finance, business judgment, general management practices, crisis response and management, industry knowledge, international markets, leadership, and strategic planning; |
· | personal characteristics such as integrity, accountability, financial literacy and high performance standards; |
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· | commitments to other entities, including the number of other public-company boards on which the candidate serves. |
In addition, although there is no specific policy on considering diversity, the Board and the Committee on Directors and Governance believe that Board membership should reflect diversity in its broadest sense, including persons diverse in geography, gender, ethnicity, functional background and professional experience. The Board and the Committee on Directors and GovernanceCODG are committed to finding proven leaders who are qualified to serve as NCR directors and may from time to time engage outside search firms to assist in identifying and contacting qualified candidates.
The directors nominated by the Board for election at the Annual Meeting were recommended by the Committee on Directors and Governance.CODG. All of the candidates for election are currently serving as directors of the Company and, other than Frank R. Martire, NCR’s Executive Chairman and Michael D. Hayford, NCR’s Chief Executive Officer, have been determined by the Board to be independent.
Stockholders wishing to recommend individuals for consideration as directors should contact the Committee on Directors and GovernanceCODG by writing to the Company’s Corporate Secretary at NCR Corporation 250 Greenwich864 Spring Street 35th Floor, New York, NY 10007.NW, Atlanta, Georgia 30308-1007. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates.
Stockholders who wish to nominate directors for inclusion in NCR’s proxy statement pursuant to the proxy access provisions in the Company’s bylaws, or to otherwise nominate directors for election at NCR’s next annual meeting of stockholders, must follow the procedures described in the Company’s bylaws, the current form of which areis available under “Corporate Governance” on the “Company” page of NCR’s website athttp://www.ncr.com/company/corporate-governance. See “ProceduresProcedures for Nominations Using Proxy Access” “Procedures,Procedures for Stockholder Proposals and Nominations for 2020 Annual Meeting Outside of
SEC Rule14a-8”14a-8 andProcedures for Stockholder Proposals and “Stockholder ProposalsNominations for 20182020 Annual Meeting Pursuant to SEC Rule14a-8”14a-8 beginning on page 12389 of this proxy statement for further details regarding how to nominate directors.
Communications with Directors |
Stockholders or interested parties wishing to communicate directly with the Board, the independent Lead Director or any other individual director, the Chairman of the Board, or NCR’s independent directors as a group are welcome to do so by writing to the Company’s Corporate Secretary at NCR Corporation, 250 Greenwich864 Spring Street 35th Floor, New York, NY 10007.NW, Atlanta, Georgia 30308-1007. The Corporate Secretary will forward appropriate communications. Any matters reported by stockholders relating to NCR’s 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 may also be made by writing to this address. For more information on how to contact the Board, please see the Company’s Corporate Governance website athttp://www.ncr.com/company/corporate-governance.
Code of Conduct |
The Company has a Code of Conduct that sets the standard for ethics and compliance for all of its directors and employees. The Code of Conduct is available on the Company’s Corporate Governance website athttp://www.ncr.com/company/corporate-governance/code-of-conduct. To receive a copy of the Code of Conduct, please send a written request to the Corporate Secretary at the address provided above.
Section 16(a) Beneficial Ownership Reporting Compliance |
Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the Company is required to report in this proxy statement any failure to file or late filing occurring during the fiscal year ended December 31, 2016.2018. Based solely on a review of filings furnished to the Company from reporting persons, the Company believes that all of these filing requirements were satisfied by its directors, officers and 10% beneficial owners.
Director Compensation |
Director Compensation Program |
Pursuant to authority granted by our Board, theThe Committee on Directors and Governance adopted the 2017 NCR Director Compensation Program (the “Program”), effective as of April 23, 2013. pursuant to authority granted by our Board. In adopting the Program, the Committee considered peer group director pay practices and other relevant data and considerations, including material provided by FW Cook, the independent compensation consultant for the CHRC. The Program provides for the payment of annual retainers and annual equity grants tonon-employee Board members in accordance with our Stock Plan. Our Stock Plan generally capsnon-employee director pay at $1 million per calendar year (including cash and grant date fair value of the Board.equity).
Mr. Nuti does not receive remuneration for his service as Chairman of the Board. In addition, becauseBecause he has disclaimed all interest in NCR director compensation payable under the Program or otherwise, Mr. Blank received no NCR director compensation in 2016.
On February 24, 2016, Deanna W. Oppenheimer resigned from her positions2018. Mr. Martire does not receive compensation under the Program for his service as a memberExecutive Chairman of the Board. Mr. Nuti did not receive compensation under the Program for his service as Chairman of the Board, and as a member of the Audit Committee of the Board, effective as of the completion of the 2016 Annual Meeting. Upon resignation, Ms. Oppenheimer received no furtherhe does not receive compensation under the Program.Program for his service as Chairman Emeritus. On April 25, 2018, Gary J. Daichendt retired from Board service, and so became ineligible for further compensation as of that date.
Annual Retainer |
In April 2016,2018, the Committee on Directors and Governance recommended, and the Board approved,determined that the value of the annual retainer for eachnon-employee director be increased towould remain unchanged at $80,000, (up from $75,000). and the additional annual retainer for independent Lead Director service would remain unchanged at $40,000. Also remaining unchanged in 2018 were the additional annual retainers under the Program for Committee Chair and Committee member services:
Additional Annual Retainers for Board Committee Service ($) | ||||||||||
Committee | Committee Chair | Committee Members | ||||||||
Audit | 34,000 | 15,000 | ||||||||
Compensation and Human Resource Committee | 27,000 | 11,000 | ||||||||
Committee on Directors and Governance | 18,000 | 8,000 |
The Committee and the Board determined that this increase wasthe foregoing amounts continued to be appropriate based on, among other things, a desire to retain and
attract highly qualified and experienced directors, and athe findings of its review of competitive board pay practices. The additional annual retainer for the independent Lead Director remained at $40,000 for service in such role. Mr. Boykin served as the independent Lead Director until Mr. Chu assumed that role on February 22, 2016.
Also under the Program, directors receive additional annual retainers for their services as Committee Chairs and Committee members, which additional annual retainers remained unchanged in 2016. With respect to Committee Chair services, the Program provides for an additional annual retainer of $34,000 for the Audit Committee Chair: Mr. Kuehn in 2016; $27,000 for the Compensation and Human Resource Committee Chair: Ms. Levinson in 2016; and $18,000 for the Committee on Directors and Governance Chair: Mr. Daichendt in 2016. For Committee member services, the Program provides for an
additional annual retainer of $15,000 for Audit Committee members: Messrs. Clemmer and DeRodes in 2016; $11,000 for Compensation and Human Resource Committee members: Messrs. Chu, Boykin and Daichendt in 2016; and $8,000 for members of the Committee on Directors and Governance: Messrs. Chu, Boykin and Ms. Levinson in 2016. Annual retainers are paid in four equal installments on June 30, September 30, December 31 and March 31. The Program also provides for prorated annualThey may be received at the director’s election in: (i) cash, retainers to directors who join the Board(ii) NCR common shares,mid-year(iii) one-half (that is, from one annual meeting date to the next).cash andone-half
In accordance with the Program, each NCR common shares, or (iv) deferred NCR common shares distributable after director has the option to receive the annual retainer in the form of cash or common stock, or an equal distribution of each. In theDirector Compensation for 2016 Table below, the amounts reported in the first column represent the annual retainer earned by the directors in 2016service ends. For 2018, Mr. DeRodes, Ms. Farrington, Mr. Kuehn and paid in cash. To the extent a directorMr. Thompson elected to receive anycash retainers; Mr. Chu, Mr. Daichendt and Ms. Levinson elected to receiveone-half of the annualtheir retainers in cash andone-half in NCR common shares; and Mr. Clemmer elected to receive his retainer in deferred NCR common stock, the grant date fair value of the common stock, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation – Stock Compensation (“FASB ASC Topic 718”), is reflected in the stock awards column. Before January 1 of each year, directors may elect to defer receipt of the annual retainer until their director service ends.shares.
Annual Equity Grant |
TheUnder the Program, provides that, on the date of each annual meeting of NCR’s stockholders, each continuingnon-employee director is granted restricted stock or restricted stock units (“RSUs”), the value of which is determined by the Committee on Directors and Governance.Governance and the Board determine the value of the annual equity grant made to continuingnon-employee directors at the annual meeting of NCR stockholders. In April 20162018, the Committee recommended, and the Board agreed, that the value of the annual equity grant for eachnon-employee director would be increased to $225,000 (up from $175,000). The Committee and the Board determined that this award
value was appropriate for 2016should remain unchanged at $225,000 for the same reasons noted above for continuing the annual retainer increase approved in 2016.retainers unchanged. Accordingly, on the April 20, 2016, the 201625, 2018 Annual Meeting date, each continuingnon-employeeeligible director received under the Program an annual RSUequity grant of restricted stock units (RSUs) valued at $225,000.$225,000 (except for Mr. Blank due to his disclaimer noted above). Ms. Levinson’s additional restricted stock unitRSU grant in connection with her service as a member of the Board of Directors of our subsidiary, NCR Brasil – Indústria de Equipamentos Para Automação S.A., also remained unchanged and continued to be valued at a value of $40,000. The Program also permitsmid-year
These annual equity grants prorated based on service during the applicable Board year, fornon-employee directors who join our Boardmid-year.
RSUs vest in four equal quarterly installments beginning three months after the grant date. Directorsdate, and may elect to defer shares that otherwise would be received upon vesting of annual equity grants.deferred at the director’s election. In 2016,2018 Messrs. Boykin, Clemmer and Kuehn elected to defer receipt of shares from their 20162018 annual equity grantsgrant shares until their director service ends.
Director Stock Ownership Guidelines |
The Board’s Corporate Governance Guidelines include stock ownership guidelines which operate to promotepromoting commonality of interest betweennon-employee directors andwith our stockholders by encouragingnon-employee directors to accumulate a substantial stake in the Company’sNCR common stock. In April 2016, the Committee recommended, and theThe Board approved, an increase to thenon-employee director stock ownership guidelines. Therecently increased these guidelines, which now encouragenon-employeenon-management directors to accumulate NCR stock ownership equal to five times (up from four times) the amount of his or her annual retainer.retainer amount. The Committee also recommended, and the Board agreed, thatnon-employeeincreased guidelines give newly elected directors should have five years (up from three years) to attain the guideline after election to the Board. For these purposes,this ownership level. Ownership includes shares owned outright, by thenon-employee directors, and interests in restricted stock, RSUs or deferred shares, and excludes stock options. As of December 31, 2016,2018, all of ournon-employeenon-management directors have exceeded thesethe guidelines, except for Mr. Chu who did not become ajoined our Board member until December 4,in 2015, Mr. Thompson and Ms. Farrington who joined our Board in 2017, and Mr. Blank who has disclaimed all interest in NCR directordue to his compensation asdisclaimer noted above.
Director Compensation Tables |
This Table shows 2016 compensation for ournon-employee directors:
Director Compensation for 2016 | ||||||||||||||||||||||||
Director Compensation for 2018 ($) | Director Compensation for 2018 ($) | |||||||||||||||||||||||
Director Name | Fees Earned ($)(1) | Stock Awards ($)(2) | Total ($) | Fees (Annual Retainers) Earned in Cash | Stock Awards(1) | Total | ||||||||||||||||||
Gregory R. Blank | — | — | — |
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
Edward “Pete” Boykin | — | 326,443 | 326,443 | |||||||||||||||||||||
Chinh E. Chu | 139,055 | 291,355 | 430,410 |
|
69,500
|
|
|
294,578
|
|
|
364,078
|
| ||||||||||||
Richard L. Clemmer | — | 318,822 | 318,822 |
|
—
|
|
|
330,573
|
|
|
330,573
|
| ||||||||||||
Gary J. Daichendt | 53,875 | 278,950 | 332,825 | |||||||||||||||||||||
Gary J. Daichendt(2)
|
|
13,625
|
|
|
13,648
|
|
|
27,273
|
| |||||||||||||||
Robert P. DeRodes | 93,750 | 225,019 | 318,769 |
|
95,000
|
|
|
225,024
|
|
|
320,024
|
| ||||||||||||
Deborah A. Farrington
|
|
95,000
|
|
|
225,024
|
|
|
320,024
|
| |||||||||||||||
Kurt P. Kuehn | 112,750 | 225,019 | 337,769 |
|
114,000
|
|
|
225,024
|
|
|
339,024
|
| ||||||||||||
Linda Fayne Levinson | 56,875 | 321,949 | 378,824 |
|
57,500
|
|
|
322,553
|
|
|
380,053
|
| ||||||||||||
Deanna W. Oppenheimer(4) | 22,500 | — | 22,500 | |||||||||||||||||||||
Matthew A. Thompson
|
|
91,250
|
|
|
225,024
|
|
|
316,274
|
|
(1) This column shows annual retainers earned in cash in 2016. Messrs. Boykin and Clemmer elected to receive their retainers in deferred shares in lieu of cash. Ms. Levinson and Mr. Daichendt elected to receiveone-half of their retainers in current shares. These deferred and current shares are reported in the “Stock Awards” column. Messrs. Chu, DeRodes and Kuehn and Ms. Oppenheimer elected to receive their retainers in cash.
(2) This column shows the aggregateAggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of RSU awards,annual equity grants (including deferred grants), and annual cash retainers received as well ascurrent or deferred shares (also referred to as “phantom stock units”). See Note 7 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2018, where we explain assumptions made in valuing equity awards.
(2) Mr. Daichendt retired from NCR Board service effective April 25, 2018.
Grant Date Fair Value(1) of Director 2018 Retainer and Equity Grant Shares ($) | ||||||||||||
Director Name | Annual Equity RSU Grant | Current Stock in lieu of cash | Deferred Stock in lieu of cash | |||||||||
Gregory R. Blank
|
|
—
|
|
|
—
|
|
|
—
|
| |||
Chinh E. Chu
|
|
225,024
|
|
|
69,554
|
|
| —
|
| |||
Richard L. Clemmer
|
|
225,024
|
|
| —
|
|
|
105,549
|
| |||
Gary J. Daichendt(2)
|
| —
|
|
|
13,648
|
|
| —
|
| |||
Robert P. DeRodes
|
|
225,024
|
|
| —
|
|
| —
|
| |||
Deborah A. Farrington
|
|
225,024
|
|
| —
|
|
| —
|
| |||
Kurt P. Kuehn
|
|
225,024
|
|
| —
|
|
| —
|
| |||
Linda Fayne Levinson
|
|
265,004
|
|
|
57,549
|
|
| —
|
| |||
Matthew A. Thompson
| 225,024 |
| —
|
|
| —
|
|
(1) Grant date fair value, as determined in accordance with FASB ASC Topic 718, of annual equity grants (including deferred grants), and annual cash retainers received in the form of current shares paid in lieu of annual cash retainers.or deferred shares (also referred to as “phantom stock units”). See Note 8 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on FormForm 10-K for the year ended December 31, 20162018 for an explanation of the assumptions we make in the valuation of our equity awards.
(3) Because he has disclaimed all interest in(2) Mr. Daichendt retired from NCR director compensation, Mr. Blank did not receive NCR director compensation under the Program in 2016.
(4) On February 24, 2016, Ms. Oppenheimer resigned from her positions as a member of the Board and as a member of the Audit Committee of the Board,service effective as of the completion of the 2016 Annual Meeting. Upon resignation, Ms. Oppenheimer received no further compensation under the Program.
This Table shows the grant date fair values of shares received for retainer payments and RSU awards:April 25, 2018.
Value of Director 2016 Retainer and Equity Grant Shares | ||||||||||||||||||||||||
Shares of NCR Common Stock Underlying Director Equity Awards – as of December 31, 2018 (#) | Shares of NCR Common Stock Underlying Director Equity Awards – as of December 31, 2018 (#) | |||||||||||||||||||||||
Director Name | Annual Equity RSU Grant ($) | Current Stock in lieu of cash ($) | Deferred Stock in lieu of cash ($) | Options Outstanding as of 12/31/18 | RSUs Outstanding as of 12/31/18 | Deferred Shares Outstanding as of 12/31/18 | ||||||||||||||||||
Gregory R. Blank | — | — | — |
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||
Edward “Pete” Boykin | 225,019 | — | 101,424 | |||||||||||||||||||||
Chinh E. Chu | 291,355 | — | — |
|
—
|
|
|
3,605
|
|
|
—
|
| ||||||||||||
Richard L. Clemmer | 225,019 | — | 93,803 |
|
54,015
|
|
|
—
|
|
|
105,155
|
| ||||||||||||
Gary J. Daichendt | 225,019 | 53,931 | — | |||||||||||||||||||||
Gary J. Daichendt(1)
|
|
—
|
|
|
—
|
|
|
—
|
| |||||||||||||||
Robert P. DeRodes | 225,019 | — | — |
|
54,015
|
|
|
3,605
|
|
|
41,217
|
| ||||||||||||
Deborah A. Farrington
|
|
—
|
|
|
3,605
|
|
|
—
|
| |||||||||||||||
Kurt P. Kuehn | 225,019 | — | — |
|
10,039
|
|
|
—
|
|
|
43,154
|
| ||||||||||||
Linda Fayne Levinson | 265,008 | 56,940 | — |
|
54,015
|
|
|
4,246
|
|
|
8,077
|
| ||||||||||||
Deanna W. Oppenheimer(2) | — | — | — | |||||||||||||||||||||
Matthew A. Thompson
|
|
—
|
|
|
3,605
|
|
|
—
|
|
(1) Because he has disclaimed all interest inMr. Daichendt retired from NCR director compensation, Mr. Blank did not receive NCR director compensation under the Program in 2016.Board service effective April 25, 2018.
(2) On February 24, 2016, Ms. Oppenheimer resigned from her positions as a member of the Board and as a member of the Audit Committee of the Board, effective as of the completion of the 2016 Annual Meeting. Upon resignation, Ms. Oppenheimer received no further compensation under the Program.
This Table shows the number of shares underlyingnon-employee director options, RSUs and deferred shares outstanding as of December 31, 2016:
Shares Underlying Director Equity Awards – as of December 31, 2016 | ||||||||||||
Director Name | Options Outstanding 12/31/16 | RSUs Outstanding 12/31/16 | Deferred Outstanding 12/31/16 | |||||||||
Gregory R. Blank(1) | — | — | — | |||||||||
Edward “Pete” Boykin | — | — | 117,877 | |||||||||
Chinh E. Chu | — | 4,344 | — | |||||||||
Richard L. Clemmer | 61,167 | — | 87,451 | |||||||||
Gary J. Daichendt | 64,419 | 3,666 | — | |||||||||
Robert P. DeRodes | 61,167 | 3,666 | 33,346 | |||||||||
Kurt P. Kuehn | 10,039 | — | 30,507 | |||||||||
Linda Fayne Levinson | 64,419 | 4,318 | 8,077 | |||||||||
Deanna W. Oppenheimer(2) | — | — | — |
(1) Because he has disclaimed all interest in NCR director compensation as noted above, Mr. Blank has not received any NCR director compensation under the Program.
(2) On February 24, 2016, Ms. Oppenheimer resigned from her positions as a member of the Board and as a member of the Audit Committee of the Board, effective as of the completion of the 2016 Annual Meeting. Upon resignation, Ms. Oppenheimer received no further compensation under the Program.
Proposal 2 – Say On Pay: Advisory Vote on the Compensation of the |
FOR | The Board of Directors recommends that | ✓ | Robust oversight by the Compensation | |||
you voteFOR the proposal to approve | ✓ | Excellent pay for performance | ||||
the compensation of the named | ✓
| Strong link between management and stockholder | ||||
We currently conduct a Say On Pay vote every year at our annual meeting of stockholders, as required by Section 14A of the Securities Exchange Act of 1934, as amended. While this vote isnon-binding, the Board and the Compensation and Human Resource Committee (the “Committee” as referenced throughout the various sections of this Proposal 2, including theExecutive Compensation – Compensation Discussion & Analysis section) value the opinions of our stockholders. The Committee will consider the outcome of the Say On Pay vote as part of its annual evaluation of our executive compensation program.
Please read the followingExecutive Compensation – CompensationDiscussion & Analysis section and ourExecutive Compensation Tables for information necessary to inform your vote on this proposal.
How |
Board Recommendation |
The Board of Directors recommends that you vote to approve, on anon-binding and advisory basis, the compensation of the named executive compensationofficers as disclosed in these proxy materials. Proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
Vote Required for Approval |
A majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via(via attendance at the virtual meeting or by proxy) is required to approve thenon-binding advisory vote on the compensation of the named executive compensation.officers. Under Maryland law, abstentions and broker“non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal.
Executive Compensation – Compensation Discussion & Analysis |
In 20162018, NCR experienced transformative changes in its leadership structure and its management team that have helped position the Company for long-term growth and success. Through this transitional period the Committee has continued its longstanding practice of linking the total compensation of our named executives to the strategic and financial success of the Company. Our compensation philosophy requires that a significant
portion of total compensation for our Named Executive Officers (the “named executives”) be strongly
aligned with Company performance. We accomplish this by placing a large portion of our executives’ total compensation “at risk” and by requiring our executives to stretch to meet very challenging internal financial metrics annually that, if achieved, translate into shared value creation with our stockholders.
Company |
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✓ | Our | |
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✓ | Our | |
✓ | Services revenue increased 4% to $2,460 million due to our investment in services transformation initiatives | |
✓ | Our recurring revenue (e.g., Software maintenance, Cloud, and hardware maintenance revenue) increased 3% | |
✓ |
| |
✓ | We returned value to stockholders by repurchasing 6.1 million shares of our common stock for $210 million during | |
✓ | While we saw growth in 2018 in Software revenue and Services revenue, we fell short of reaching our threshold performance objectives for our 2018 Long- |
* See “SupplementaryNon-GAAP Information” for a description ofnon-GAAP measures and reconciliations of thosenon-GAAP measures to their most directly comparable GAAP measures.
These charts compare our performance results for 20162018 vs. 2015:*
2017:
* See “SupplementaryNon-GAAP Information” for a description ofnon-GAAP measures and reconciliations of thosenon-GAAP measures to their most directly comparable GAAP measures.
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This chart compares ourone-year, three-year and five-year annualized total stockholder return with the performance of our 2016 compensation peer group and other relevant major indices:
The Company’s 2016 compensation program was consistent with its philosophy and objectives of paying for performance, aligning the interests of executives with the interests of stockholders, attracting and retaining executive talent, and adopting competitive, best-practice compensation programs that are appropriate for our Company. Specific examples of actions taken by the Company in 2016 and early 2017 to carry out this philosophy include:Services Revenue ($Billion)
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Cloud Revenue ($Million)
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Software Revenue ($Billion)
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Our Named Executive Officers |
OurCompensation Discussion & Analysis describes NCR’s 20162018 executive compensation program for our named executives, who are listed below. The Committee has sole authority over the program and
makes all compensation decisions for our named executives. For more about the compensation of our named executives, see theExecutive Compensation Tables (starting on page 69).below.
Michael Hayford– President and Chief Executive Officer beginning April 30, 2018 Frank Martire– Executive Chairman of the Board beginning May 31, 2018 Owen Sullivan– Chief Operating Officer beginning July 23, 2018 Andre Fernandez– Executive Vice President and Chief Financial Officer beginning August 29, 2018 Daniel Campbell– Executive Vice President, NCR Global Sales beginning February 5, 2018
William Nuti – Chairman of the Board and Chief Executive Officer
Robert Fishman – Executive Vice President,
|
Leadership Transformation |
(1) Mr. Langenbahn served in hisThe year 2018 was transformative for NCR’s leadership team and organizational structure. Each of our 2018 named executives was either newly appointed to their role as Senior Vice President & President, Hospitalityor transitioned out of their role during the 2016 performance yearyear. In 2018, severalone-time,new-hire and transition-related compensation decisions were made in connection with this transformation. Accordingly, certain compensation decisions for 2018 reflected these unique circumstances rather than ordinary course.
Named Executive Appointments
Mr. Hayford’s Appointment. On April 30, 2018, the Company announced the appointment of Mr. Hayford as President and CEO effective as of the same date and elected Mr. Hayford to the Board. Mr. Hayford was promotedselected by the Board for numerous reasons, including his proven leadership and deep experience across a range of transaction-driven software and technology solutions businesses.
Mr. Martire’s Appointment. On April 30, 2018, the Board announced the appointment of Mr. Martire as Executive Chairman of the Board effective as of May 31st. Mr. Martire has worked closely with Mr. Hayford at two prior businesses and the Board is confident in the ability of this team to drive the future growth of NCR.
Mr. Sullivan’s Appointment. On July 26, 2018, the Company announced the appointment of Mr. Sullivan as Chief Operating Officer, effective as of July 23, 2018.
Mr. Fernandez’s Appointment. On August 29, 2018, the Company announced the appointment of Andre Fernandez as Executive Vice President Softwareand Chief Financial Officer, effective as of the same date.
Mr. Campbell’s Appointment. Mr. Campbell was appointed as Executive Vice President, NCR Global Sales, effective as of February 5, 2018.
The Committee approved the compensation for each newly hired executive under their negotiated employment agreements, taking into consideration competitive pay levels, pay with prior employers, internal equity and the context of the Company’s leadership transformation. Under these agreements each of Messrs. Hayford, Martire, Sullivan and Fernandez was entitled to a 2018 annual bonus payout of no less than their target bonus,pro-rated for their period of service during 2018, and Mr. Campbell was entitled to asign-on bonus. These minimum bonus levels were negotiated as part of total cash since these executives had not participated in establishing either the strategy or the metrics for the 2018 bonus. These executives do not have any minimum bonuses for 2019.
In addition, beginning with the hire of Mr. Hayford as CEO and Mr. Martire as Executive Chairman, we adjusted our equity grant approach with respect to newly hired executives in 2018 and generally provided the majority of equity grant value for these executives as stock options instead of restricted stock units with performance-based vesting conditions. While the stock options vest with continued service, the awards will only deliver value if our share price increases. The Committee determined that this approach appropriately balanced ourpay-for-performance philosophy with the exigencies of recruiting new executives who were not employed when our 2018 business plan was approved. In 2019, we resumed our historical practice of granting the majority of executive officer long-term incentive awards with performance-based vesting conditions.
Named Executive Transitions
Mr. Nuti’sRetirement. On March 22, 2018, the Company announced that Mr. Nuti would be retiring due to disability from his positions as Chairman and CEO and as a member of the Board after 13 years of service to the Company. Upon his retirement, which was effective as of April 30, 2018, Mr. Nuti was appointed to the honorary position of Chairman Emeritus of the Board, and was also retained on January 1, 2017.a part-time basis as a consultant for transition and continuing advisory services. In connection with these changes, the Committee approved a retirement and consulting agreement for Mr. Nuti. In determining to approve this agreement, the Committee took into consideration the circumstances of Mr. Nuti’s departure, his past strong performance as NCR’s CEO for 13 years, a report prepared by the committee’s independent compensation consultant on
treatment of equity upon retirement at our peers and other public companies, NCR’s prior achievement of the applicable performance criteria pertaining to Mr. Nuti’s equity awards and Mr. Nuti’s efforts to support an effective transition in leadership for NCR’s stockholders, employees and customers.
Mr. Fishman’s Retirement. On July 26, 2018, the Company announced the retirement of Robert Fishman, effective at an undetermined time in the future. Mr. Fishman became our Senior Advisor and ceased holding the positions of Executive Vice President, Chief Financial Officer and Chief Accounting Officer as of August 29, 2018.
The Board and Committee were intensely involved in each of these appointments and transitions and worked to foster a successful leadership transformation, with NCR’s vision to be the leading software andservices-led enterprise provider in the financial services, retail and hospitality industries we serve. This new leadership team is well-positioned to drive NCR’s business strategy of shifting our business mix to more software, services and recurring revenue.
For more information on the compensation and retirement arrangements that were negotiated with these named executives, see the “Agreements with Our Named Executive Officers” section below.
Our Executive Compensation Philosophy |
Our executive compensation program rewards executives for achieving and exceeding the Company’s strategic business and financial goals. We accomplish this by generally linking compensation to Company-wide metrics and operational results for areas that each member of our executive team directly controls. The Committee regularly evaluates the elements of our program to ensure
that they are consistent with
both Company and stockholder short-term and long-term goals, given the dynamic nature of our business and the markets where we compete for talent. The Committee annually approves the design of our executive compensation program, performance objectives, performance and compensation levels and final compensation for our named executives.
Summary of 2018 & 2019 Compensation Program Actions by Our Committee |
The Company’s overall 2018 compensation program was consistent with its philosophy and objectives of paying for performance, aligning the interests of executives with the interests of stockholders, attracting and retaining executive talent, and adopting competitive, best-practice compensation programs that are appropriate for our Company. Specific examples of actions taken by the Committee in 2018 and early 2019 to carry out this philosophy include:
· | 2018 Annual Incentive Plan – Historic Bonus Funding Approach.Similar to 2017, the bonus funding calculation had threshold (40%), target (100%), and maximum (200%) performance goals that had to be achieved for the executive officers to earn the corresponding bonus plan payout. We also continued to useNon-GAAP Operating Income (NGOI), with a Free Cash Flow modifier, as our Core Financial Objectives for the plan. This aligns our performance-based compensation strategy with the key financial metrics that our investors monitor when evaluating our Company’s ongoing performance. This approach also continues to differentiate our Annual Incentive Plan’s financial metrics from the performance goals used in our Long-Term Incentive Program (“LTI Program”). |
· | 2018 LTI Program – Granted Annual LTI Awards with Performance Conditions and Introduced Stock Options. In evaluating our 2018 LTI Program, the Committee introduced stock options as part of our annual LTI equity awards to our named executive officers. Our 2018 annual award mix consisted of 1/3 performance-based RSUs with a three-year performance period, 1/3 performance-vesting RSUs in which no units are earned unless a 2018 performance goal is achieved, and 1/3 stock options with a seven-year term that vest 1/4 each year on the anniversary of the grant date, in each case subject to continued employment through the vesting dates. For our performance-based RSUs, we continued to useNon-GAAP Diluted Earnings Per Share (NGDEPS) and Software-Related Margin Dollars (SRMD) as thetwo-performance metrics that will determine the LTI award payout. For our performance-vesting RSUs, we used SRMD as the performance metric that must be achieved for these RSUs to be eligible to be earned, with vesting subject to continued employment. These performance metrics and vesting conditions link the compensation earned by our named executives with our key strategic measures and continue to differentiate our LTI Program financial metrics from our Annual Incentive Plan metrics. New hire awards in 2018 were generally split between RSUs and stock options with performance-based RSUs introduced for 2019. |
· | 2019 Annual Incentive Plan –Performance-Based Bonus Program. For 2019, the Annual Incentive Plan will continue to use a traditional bonus funding approach. The bonus funding metrics approved by the Committee are EBITDA (80% weighting) and Customer Success — Net Promoter Score (20% weighting). These metrics align our compensation strategy with a key financial metric used by investors to evaluate our performance, and an internal metric to align with our overall customer success survey results. The maximum plan payout is limited to two times the target bonus. |
· | 2019 LTI Program –New LTI Award Mix of Performance-Based RSUs and Stock Options. For 2019, the Committee simplified our LTI award mix for our named executive officers to consist of 65% performance-based RSUs and 35% stock options. Our performance-based RSUs will vest based on the achievement of NCR Revenue (40% weighting) and Adjusted Operating Income (60% weighting) performance metrics. These performance metrics will be measured over aone-year performance period and will vest 1/3 on each anniversary of the grant date subject to the recipient’s continued service through the applicable vesting dates. Our 2019 LTI award program simplifies our design for both internal and external stakeholders and more directly links stockholder long-term interests with performance goals that reward our named executives for sustainable value creation. |
When designing our executive compensation program, the Committee considers actions that:
Reward Execution of our Strategic Growth Platforms Attract, Retain, Develop & Motivate Top Talent Provide Competitive Pay & Target Incentives at risk Guiding Compensation Design Principles Reward Solution Innovation & Customer Experience Align with Stockholder Interests & Reward Value Creation Reward Achieving our Software & Cloud Growth Goals
|
At the 2016 Annual Meeting our stockholders continued their significant support of our executive compensation program with 80.1% of all votes cast approving the 2015 program. The Committee believes that this vote shows continued stockholder confidence in the Committee’spay-for-performance philosophy and the absence of pay practices that stockholders consider in conflict with their best interests.
The Committee continued to apply this philosophy in establishing our 2016 executive compensation program. Also, the Committee considered this significant stockholder support, along with input from our stockholders, when taking subsequent 2016 actions, and in designing our executive compensation program for 2017.
Consistent with our strong commitment to engagement, communication and transparency, we periodically solicitregularly engage with our stockholders’stockholders to understand their perspectives and views on NCR’sour Company, including our executive compensation program, corporate governance and other strategic initiatives and issues. During 2018 and early 2019, we proactively reached out to investors holding a majority of our shares to discuss their thoughts and receive feedback on our compensation philosophy and programs. Members of our management team conducted meetings with investors that responded to our outreach efforts.
During these conversations, we reviewed our overall business strategy, our strategic offerings, and our forward-looking approach to creating stockholder value. We appreciatereviewed how we use our compensation program to further our strategy and regularly review our compensation practices to ensure that they continue to do so.
At our 2018 Annual Meeting, we were pleased with the opportunity to have an open dialoguevery high level of support we received for our Say on Pay vote with 96.4% of votes cast “FOR” our executive compensation program. These results reflect strong stockholder agreement with our stockholders,compensation philosophy and highly value their honest feedback andpay practices. Given the exchangevery high level of ideas and perspectives. The feedback received from our stockholder outreach is regularly communicated to and considered by our Board, and when appropriate,support, based on the Board implements changes in response to stockholder feedback.
The table below summarizes someresults of the recentSay on Pay Vote we continued various key features of our executive compensation program rather than making specific changes to address those results. Based on feedback and input received from our stockholders, however, our compensation programs have evolved over the years, including for example, our selected performance metrics, equity award mix and features, and the introduction in 2018 of stock options as part of our executive LTI program.
The Committee views stockholder engagement and the feedback received duringas essential to developing and improving our 2016 outreach efforts,executive compensation program as well as getting general feedback on governance and our Board’s response:
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During our 2016 stockholder outreach meetings, the stockholders we met with also generally expressed a very positive view of NCR’s business strategy, and nearly all expressed support for:
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We expect to continue our stockholder outreach efforts in 2017 and beyond as part of our annual compensation review process, and have been encouraged by our stockholdersannually, so we can continue to do so.gain valuable feedback obtained during these discussions.
Independent Compensation Consultant |
The Committee retains and is advised by Frederic W. Cook & Co., Inc. (FWC), a national executive compensation consulting firm, to assist in review and oversight of our executive compensation programs. The Committee considers FWC’s advice and recommendations when making executive compensation decisions. FWC is independent of the Company’s management and reports directly to the Committee. FWC representatives attended substantially all meetings of the Committee in 2016.2018. Our CEO is not present during Committee and FWC discussions about CEO compensation. Also, FWC reports on CEO compensation are not shared with our CEO. For more about FWC’s role as advisor to the Committee, see theCompensation and Human Resource Committee section (starting on page 21).above.
The Committee also considers recommendations from our CEO and our Executive Vice President, Chief Administration Office & Chief Human Resources Officer when designing our executive compensation programs, establishing goals for annual and long-term incentive awards, and making executive compensation decisions for executives
other than our CEO. Our CEO attends all Committee meetings and participates in the general discussion at the meetings. However, the CEO and management do not participate in Committee discussions about CEO compensation or otherwise make recommendations about CEO compensation.
Our executive compensation program features many best practices:
WHAT WE DO | WHAT WE DON’T DO | |||||||||||
✓ | Pay for Performance. A significant portion of our named executives’ compensation is | × | No Guaranteed Annual Salary Increase or Bonus. Salary increases are based on individual performance evaluations and certain competitive considerations, while annual cash incentives are generally tied to corporate and individual performance, as well as customer | |||||||||
✓ | Strong Link | × | No Compensation Plans that Encourage Excessive Risk Taking.Based on the Committee’s annual review, none of our pay practices incentivize employees to engage in unnecessary or excessive risk-taking. | |||||||||
✓ | Independent Compensation Consultant. The Committee retains an independent compensation consultant to evaluate and advise on our executive compensation programs and practices, as well as named executive pay mix and levels. | × | No Hedging or Pledging of NCR Securities. Our policies prohibit hedging and pledging of the Company’s equity securities. | |||||||||
✓ | Benchmark Peers with Similar Business Attributes and Business Complexity. The Committee benchmarks our executive compensation program and annually reviews peer group membership with its independent compensation consultant. | × | No Repricing Stock Options. Our Stock Plan prohibits repricing of stock options without prior stockholder approval. | |||||||||
✓ | Strong Compensation Clawback Policy. Executive awards are subject to clawback in specified circumstances. | × | No Excessive Perquisites. We offer only limited perks to be competitive, to attract and retain highly talented executives and ensure their safety and focus on critical business activities. | |||||||||
✓ | Robust Stock Ownership Guidelines. We require named executives to meet our guidelines, which range from two to six times base salary, and to maintain the guideline ownership level after any transaction. | × | No Dividends or Dividend Equivalents Paid on Unvested Equity Awards. Equity awards must vest before dividends are payable. | |||||||||
✓ | Double Trigger Benefits in the Event of a Change in Control. Equity awards do not automatically vest in a change in control of NCR unless employment also ends in a qualifying termination. | × | No Excise Tax | |||||||||
✓ | Reasonable Change in Control Severance.Change in control severance benefits | × | No Special Executive Pension | |||||||||
✓ | Stockholder Outreach.We regularly engage with our stockholders to better understand and consider their views on our executive compensation programs, | × | Trading of NCR Stock.We require that all executive officers trade in NCR common stock only pursuant to a Rule10b5-1 trading plan. |
Key Elements of |
The key elements of our 2016annual 2018 executive compensation program are shown in the chart below. Each element of the program has a specific purpose in furthering our compensation objectives.
Fixed | Variable | |||||||||||||||||||
Base Salary | Annual Incentives | Long-Term
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LTI | |||||||||||||||||
Key Features | – – | Competitive fixed level of cash income
| – | Variable compensation payable annually in cash if performance goals are achieved | –
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Why We Pay This Element | –
– | Provides a base level of competitive cash pay for executive talent Promotes appropriate risk taking | –
– | Motivates and rewards executives for performance on key Company-wide financial metrics and customer satisfaction Executive-specific objectives motivate our team to achieve goals in areas they can influence | –
– | Aligns executive pay and stockholder interests and serves to retain executive talent Motivates executive performance on key long-term measures to build multi-year stockholder value |
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How We Determine Amount | – | Committee approves based on role, | –
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Maximum award as % of Award payout ranges: - Financial Metrics: 0% – 200% - Individual Goals: 0% – 150% - Customer Success: 0% or 10% | –
– |
-1/3 Options Performance threshold of 20%
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The Company’s 2016 executive compensation program was consistent with its philosophy and objectives of paying for performance, aligning the interests of executives with the interests of stockholders, attracting and retaining executive talent, and adopting competitive, best-practice
compensation programs that are appropriate for our Company. For specific examples of actions taken by the Company in 2016 to carry out this philosophy, see theSummary of 2016 Compensation Program Actions by our Committee section starting on page 33.
The portion of performance-based and “at risk” compensation increases directly with an executive’s role and responsibility within the Company, ensuring that our senior executives are held most accountable to our stockholders. The charts below show that a very significant portion (94%) of our CEO’s 2016 target total compensation pay is directly linked to the performance of the Company through quantitative internal performance metrics and qualitative goals that support the strategy of the
organization and are approved each year by the Committee. Our CEO’s pay mix is more performance-based than the pay mix of CEOs in our peer group. The percentage of target total pay that is directly linked to the performance of the Company for our other named executives, which averaged 92% for 2016, is also more performance-based than the pay mix of other named executives in our 2016 peer group.
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For our CEO and our other named executives, the 2016 ratio between performance-based pay (including performance-based equity and annual cash incentives) and fixed pay (base salary and time-based equity) is meaningfully more “at-risk” than the pay mix of other CEOs and named executive officers in our peer group.
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Because such a significant portion of the compensation of our named executives is performance-based and therefore “at risk,” we review the “target” versus the “realizable” compensation levels of our CEO to track the alignment and effectiveness of ourpay-for-performance executive compensation design. To complete this analysis, we compare the value of the targeted compensation levels at the time of grant to the value of the realizable compensation levels each calendar year as a result of the performance of the organization in achieving its short-term and long-term goals and theyear-end price of the Company’s stock. This Table shows the “target” versus “realizable” compensation for the CEO for the previous three fiscal years:
Our CEO’s Target Pay vs. Actual “Realizable” Pay | ||||||||||||||||||||||||||||||||||||||||||
Target Pay (1) ($M) | “Realizable” Pay (2) ($M) | “Realizable” Target Pay | ||||||||||||||||||||||||||||||||||||||||
Year | Base | Target Bonus | RSUs | EPP | Total | Base | Actual Bonus | RSUs | EPP | Total | ||||||||||||||||||||||||||||||||
2016 | $ | 1.0 | $ | 1.5 | $ | 15.0 | $ | 0.0 | $ | 17.5 | $ | 1.0 | $ | 1.0 | $ | 25.4 | $ | 0.0 | $ | 27.4 | 157% | |||||||||||||||||||||
2015 | $ | 1.0 | $ | 1.5 | $ | 8.0 | $ | 1.5 | $ | 12.0 | $ | 1.0 | $ | 0.0 | $ | 7.3 | $ | 2.0 | $ | 10.3 | 86% | |||||||||||||||||||||
2014 | $ | 1.0 | $ | 1.5 | $ | 5.0 | $ | 7.1 | $ | 14.6 | $ | 1.0 | $ | 0.0 | $ | 2.5 | $ | 0.0 | $ | 3.5 | 24% |
(1) Target pay includes: base salary, target annual incentive, grant date fair market value of all equity awards, plus the projected EPP Bonus Credit award based on the financial plan established for 2014 and 2015.
(2) Compensation “realizable” for each year includes: base salary, actual bonus received, the fair market value of outstanding awards granted each year as of December 31, 2016, and any actual EPP Bonus Credit award based on the actual economic profit for the applicable year. The 2014 annual performance-based LTI award granted on February 24, 2014 is reflected at 43.6% of target (payout earned). The 2015 annual performance-based LTI award granted on February 23, 2015 is reflected at 114.5% of target (payout earned). The 2016 annual traditional performance-based LTI award granted on February 24, 2016 is reflected at 148.2% of target, and is subject to the Company achieving atwo-year average ROC threshold of 20% during the performance period. The Vision 2020 LTI Award granted on February 24, 2016 with the $35 price target contingency is reflected at 100% of target (payout earned on December 6, 2016).
The above Table shows that our executive compensation program is designed so that the amount of compensation that our CEO actually receives may be higher or lower than the Target amount approved by the Committee, depending on our stock price performance, level of achievement of financial goals, Committee discretionary reductions and other relevant factors. Because it highlights how clearly our CEO’s actual realizable pay is tied to Company performance, this Table demonstrates the very strong alignment of the interests of our executives with those of our stockholders. This Table is supplementary to, and is not intended to be a substitute for, the Summary Compensation Table included in these proxy materials.
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This Table compares our CEO’s realizable compensation to Company performance over the last three years:
CEO Realizable Pay vs. Company Performance | ||||||||||||||||||||||||
CEO Realizable Pay | Company Performance | |||||||||||||||||||||||
Year | “Realizable” vs. Target Pay | Bonus Payout Earned | Performance LTI Award Earned(1) | NGOI Results ($M) | NCR 1-Year Total Shareholder Return (TSR)(2) | NCR 1-Year TSR Percentile Rank for Peer Group(2) | ||||||||||||||||||
2016 | 157 | % | 68 | % | 148.2 | % | $ | 840 | 66 | % | 100 | % | ||||||||||||
2015 | 86 | % | 0 | % | 114.5 | % | $ | 820 | -16 | % | 33 | % | ||||||||||||
2014 | 24 | % | 0 | % | 43.6 | % | $ | 817 | -14 | % | 0 | % |
(1) The 2014 annual performance-based LTI award granted on February 24, 2014 is reflected at 43.6% of target (payout earned). The 2015 annual performance-based LTI award granted on February 23, 2015 is reflected at 114.5% of target (payout earned). The 2016 annual performance-based LTI award granted on February 24, 2016 is reflected at 148.2% of target, and is subject to the Company achieving atwo-year average ROC threshold of 20% during the performance period. The Vision 2020 LTI Award granted on February 24, 2016 with the $35 price target contingency is reflected at 100% of target (payout earned on December 6, 2016).
(2) The TSR Percentile Rank measurement is from calendaryear-end to calendaryear-end.
The strong correlation between the compensation realizable by our CEO over the past three years, and our performance as measured by total shareholder return, demonstrates the strong alignment between our CEO’s realizable pay and Company performance. The above Table is supplementary to, and is not intended to be a substitute for, the Summary Compensation Table included in these proxy materials.
Our Process for Establishing |
Our Committee has the sole authority to establish compensation levels for our named executives. When making compensation decisions, the Committee carefully examines:
· | External Market Analysis – including reports by the Committee’s independent |
compensation consultant on peer group member |
· | Internal Compensation Analysis – including management reports on comparable internal compensation levels and compensation history; and |
· | Recommendations– from |
executives, except the Committee does not consider recommendations from management about their own compensation, and the Committee does not consider recommendations by management other than the Executive Chairman when making decisions about CEO compensation. |
We use several methods to examine the various elements of our executive compensation program to determine the competitive market and understand current compensation practices. In general, the Committee considers the median of the peer group data described below when establishing base salary, annual incentive and long-term incentive opportunities. The Committee retains the flexibility to make adjustments in order to respond to market conditions, promotions, individual performance and internal equity. The Committee also reviews broad-based survey data prepared by its independent compensation consultant and considers key business decisions that can impact compensation.
Compensation Peer Group Selection.Selection. The Committee reviews the Company’s compensation peer group annually with its independent compensation consultant and makes changes to the group to the extent determined appropriate based on changes in peer business attributes. The consultant then produces for the Committee’s review an independent analysis of the cash and equity compensation for the five highest compensated executives at each company within the final peer group, and a comparison of our similarly ranked named executives to the 25th, 50th and 75th percentiles of the peer group. The analysis also includes comprehensive modeling of long-term incentive costs and resulting levels of stockholder value transfer and dilution, which the Committee considers when developing the aggregate annual budget for equity compensation awards.
The unique combination of industries represented by our core business creates challenges in identifying comparable companies for executive compensation analysis. We select our peer group by examining other companies in terms of industry, size and recruiting in our GICS (Global Industry Classification Standard) industry group that are in the software and services or technology hardware industries, and are of reasonably similar size based on annual revenues, market capitalization, operating income and enterprise value. In addition, we look at variances to these metrics based on unique circumstances. We also consider other companies outside our GICS industry group with whichwhere we compete for talent.
Final 20162018 Peer GroupGroup.. The Committee carefully reviewed our prior peer group, and with the advice of its independent compensation consultant made these changes to our 20152017 peer group for purposes of benchmarking our 20162018 executive compensation program:
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Our 2016
After these changes, our final 2018 peer group therefore consisted of the following companies:
Adobe Systems | ||||
CA Technologies | Intuit | |||
Citrix Systems | Juniper | |||
Diebold Nixdorf | Keysight Technologies | |||
Fidelity Info Services | NetApp | |||
Fiserv |
External Market SurveysSurveys.. The Committee reviewed a comprehensive analysis and assessment prepared by its independent compensation consultant, which showed the competitive position of our named executive pay mix and levels compared to the marketplace using a combination of proxy data from our peer group, as well as general market data provided by the Company. Market survey data includes surveys concentrated on companies in both general and high-tech industries, which encompass the Company’s competitors andnon-competitors. The broad-based surveys give usthe Committee access to market data for numerous companies under a consistent methodology to assist our understanding of market trends and practices. The market surveys used were:
Towers Watson General Industry Executive Compensation Survey – U.S., including data on corporate-wide roles for companies with global corporate revenue of$6-10 billion, and data for other roles for companies with appropriate group/division size based on revenue.
Towers Watson High Tech Executive Compensation Survey– U.S.,including data for companies with appropriate unit size based on revenue.
Aon Hewitt TCM Online ExecutiveRadford Global Technology Survey – U.S.,Global,including data for corporate-wide roles from companies with corporate-wide revenue of$5-10 billion, and data for other roles from companies with appropriate group/division size based on revenue.
The Committee considers market median levels when setting compensation, levels, but retains flexibility to set compensation above or below the median based on individual considerations. When setting 20162018 compensation levels, the Committee considered our peer group’s proxy data for chief executive officer, chief financial officer and chief operating officer with a 100% weighting for Mr. Nuti Mr. Fishman, and Mr. Benjamin. ForFishman. Mr. MarquardtHayford, Mr. Martire, Mr. Sullivan, Mr. Fernandez and Mr. Langenbahn, theCampbell were hired during 2018. The Committee consideredworked with our independent compensation consultant, FWC, and reviewed market median data from our peer group’s proxygroup, and other competitive data, for Unit Heads with a 75% weighting, and general market survey data for similar Sector Heads with a 25% weighting.to determine their initial compensation levels.
Internal Compensation Analysis –Tally Sheets and Internal Equity |
Tally Sheets. At each regular Committee meeting considering compensation changes, the Committee reviews comprehensive internal tally sheets showing the total compensation opportunity provided to our named executives over a three-year period. The tally sheets allow the Committee to review the degree to which historic, current and projected compensation, including unvested equity awards, support the Company’spay-for-performance philosophy and retention objectives. The Committee uses the data in the tally sheets to assess actual and projected compensation levels. The
· | Tally Sheets. At each regular Committee meeting considering compensation changes, the Committee reviews comprehensive internal tally sheets showing the total compensation opportunity provided to our named executives over a three-year period. The tally sheets allow the Committee to review the degree to which historic, current and projected compensation, including unvested equity |
awards, support the Company’spay-for-performance philosophy and retention objectives. The Committee uses the data in the tally sheets to assess actual and projected compensation levels. The tally sheets are also used to compare year-over-year compensation as part of the process of establishing competitive compensation levels for the following year. |
Internal Equity. The Committee also reviews internal reports on named executive base salaries and incentive plan targets compared to internal peers. To maintain a fair balance throughout the executive level at the Company, we strive for a level of consistency in compensation. Differences in compensation are based on degree of judgment and strategic nature of executive roles, as well as individual performance
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Recommendations |
TheIn 2018, the Committee also considersconsidered recommendations from our CEO, Executive Chairman, COO, and our Executive Vice President, Chief Administration Office & Chief Human Resources OfficerCHRO when establishing compensation levels for named executives other than the CEO. The CEO and management dothe Executive Chairman. Management does not participate in any Committee discussions about CEO and Executive Chairman compensation, except that the Executive Chairman participates in Committee discussions about CEO compensation. No member of management provides recommendations regarding his or her own compensation.
Base Salaries for |
We attempt to set base salaries at a level competitive with our peer group. This helps us attract and retain top quality executive talent, while keeping our overall fixed costs at a reasonable level.
For 2016,2018, the Committee approved these base salaries for our named executives:
Summary of 2016 Base Salary Actions | ||||||||||
Named Executive | Effective Date of Most Recent Base Salary Action | Base Salary on December 31, 2016 | Rationale for Base Salary Actions | |||||||
William Nuti | August 8, 2005 | $ | 1,000,000 | No Change – Protect tax deduction under Internal Revenue Code Section 162(m) | ||||||
Robert Fishman | March 26, 2016 | $ | 625,000 | Competitive position, individual performance, and promotion to Executive Vice President | ||||||
Mark Benjamin | October 17, 2016 | (1) | $ | 750,000 | Newly Hired – Competitive | |||||
Frederick Marquardt | March 26, 2016 | $ | 625,000 | Competitive position and individual performance | ||||||
Paul Langenbahn | March 26, 2016 | $ | 475,000 | Competitive position and individual performance |
Summary of 2018 Base Salary Actions | ||||||||||
Named Executive | Effective Date of Most Recent Base Salary Action | Base Salary on December 31, 2018 | Rationale for Base Salary Actions | |||||||
Michael Hayford | April 30, 2018 | $ | 1,000,000 | New Hire – Competitive position | ||||||
Frank Martire | May 31, 2018 | $ | 750,000 | New Hire – Competitive position | ||||||
Owen Sullivan | July 23, 2018 | $ | 725,000 | New Hire – Competitive position | ||||||
Andre Fernandez | August 29, 2018 | $ | 625,000 | New Hire – Competitive position | ||||||
Daniel Campbell | February 5, 2018 | $ | 575,000 | New Hire – Competitive position | ||||||
William Nuti | August 8, 2005 | $ | 1,000,000 | (1) | No Change | |||||
Robert Fishman | March 26, 2016 | $ | 625,000 | (1) | No Change |
(1) Mark Benjamin joined NCRAnnual salary in effect on October 17, 2016 in the roledate of President and Chief Operating Officer.retirement (Mr.Nuti) or position change (Mr.Fishman).
Annual Incentive Plan Opportunity for |
The 2016Except as noted below, the 2018 Annual Incentive Plan opportunity for our named executives was comprised of our:
Management Incentive Plan
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Customer Success Bonus
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Per the negotiated terms of each of their respective new hire employment agreements, Messrs. Hayford, Martire, Sullivan and Fernandez each received a 2018 annual bonus payout of no less than target,pro-rated for their period of 2018 service. Messrs. Hayford’s and Martire’s new hire employment agreements also provided that their full 2018 annual incentives were under the Management Incentive Bonus, without participation in the Customer Success Bonus. Given the timing of their hiring in 2018, the new hire employment agreements of Messrs. Sullivan and Fernandez provided for guaranteed attainment of the Customer Success Bonus for 2018. These bonus terms were negotiated as part of total cash since these executives had not participated in establishing either the strategy or the metrics for the 2018 bonus. These new hire bonus commitments apply only in 2018, the first year of service for these named executives. They do not reflect a change in ourpay-for-performance philosophy with respect to our annual incentive program. These executives do not have any minimum or guaranteed bonuses for 2019.
Setting Annual Incentive Targets |
At the beginning of the performance year or upon hiring, the Committee generally establishes a total target bonus for each named executive as a percentage of their base salary for purposes of both the Management Incentive Plan (“MIP”) and, where applicable, the Customer Success Bonus. This total target bonus percentage generally has three components:
· | MIP—Core Financial Objectives Target Bonus, which is a target bonus percentage that is then multiplied by a Company-wide performance factor generated by achieving aNon-GAAP Operating Income (NGOI) |
· | MIP—Individual Performance Modifier, which is a MIP percentage modifier based on |
· | Customer Success Target Bonus, which is |
Calculating Annual Incentive Awards |
The calculation of Annual Incentive Plan awards includes our MIP and Customer Success Bonus components (as applicable), as follows:
Total Annual Incentive Plan Bonus Opportunity – 20162018
Management Incentive Plan (MIP) | Customer Success Bonus | |||||||||||||||
MIP
| x | Core Financial Objectives | x | Individual Performance Modifier | + | Payout Linked to Our Customer Success Survey Results | = | Actual
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(Range: 0% | (Range: 0% or 10%) |
The Committee established the MIP Financial Objectives for 20162018 based on:
Non-GAAP Operating Income (NGOI)
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Free Cash Flow
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NGOI Objective |
For 2016,2018, the Committee establishedretained NGOI as the primary coreCore Financial Objective. NGOI replacedNon-Pension Operating Income (NPOI), which was used in prior years when ongoing pension expense had more of a significant impact on NCR’s annual financial results. The Company’s aggressive pensionde-risking strategy has reduced the Company’s exposure to pension expense as it relates to our financial performance and operational success.
We use NGOI as the primary MIP bonus funding mechanism because it:it is:
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The Committee retained Adjusted Free Cash Flow as the other Core Financial Objective, which is used as a modifier to the MIP bonus funding mechanism once a thresholdtarget level of NGOI is achieved. We use Adjusted Free Cash Flow because it:
represents another one of our key business imperatives and critical performance measures;
· | represents another one of our key business imperatives and critical performance measures; |
is a measure that tracks the resources available for the Company to invest in new technology and innovation that fuels future growth;
rewards the leadership team for maximizing our cash flow from operations; and
· | tracks the resources available for the Company to invest in new technology and innovation that fuels future growth; |
· | rewards the leadership team for maximizing our cash flow from operations; and |
encourages management to focus on working capital.
· | encourages management to focus on working capital. |
MIP Core Financial Objectives – Definitions and Impacts |
The 20162018 MIP core financial objectives,Core Financial Objectives, including the definitions and impact of each, are shown in this chart:
MIP – Core Financial Objectives for | ||||||||||
Financial Objective | Definition | Impact on Our Financials | Impact on Our Behavior | |||||||
NGOI | Our income (loss) from operations as reported under generally accepted accounting principles in the United States, excluding certain special items as described in our annual financial report (see reconciliation on page | Profit (Loss) on our Income Statement (non-GAAP). | Forces decision-making to produce results aligned to achieving our long-term strategic objectives. Management can | |||||||
Free Cash Flow | Our net cash provided by operating activities and discontinued operations, less capital expenditures for property, plant and equipment, less additions to capitalized software, discretionary pension contributions and pension settlements (see reconciliation on page | Income Statement and Statement of Cash Flows(non-GAAP). | Forces decision-making to provide available cash for investment in our existing businesses, strategic acquisitions and investments, repurchase of NCR stock, and repayment of debt obligations. |
*(1) NGOI and Adjusted Free Cash Flow arenon-GAAP measures. Income from operations and net cash provided by operating activities, respectively, are the most directly comparable GAAP measures.
MIP Core Financial Objectives |
New for 2016,The threshold, target, and maximum funding levels of NGOI, if achieved, would result in preliminary funding of the Committee established aMIP bonus at 40% minimum, 100%, and 200%, respectively. Funding levels are interpolated between these points. No MIP funding for 2016, coupled with a success sharing mechanism that provides additional bonus funding for Company performance achieved above an aggressive performance hurdle. Additional MIP funding above the 40% minimum is earned when the Company achievesoccurs if results above the 2016 NGOI Performance Hurdle, where 50% of every dollar of NGOI earned abovedo not exceed the NGOI Hurdle will be added to the 2016 MIPthreshold. If NGOI exceeds target, accelerated funding and further, where 60% of every dollar of NGOI earned above the NGOI Hurdle will be added to the 2016 MIP fundingoccurs if the Adjusted Free Cash Flow Hurdlegoal is also achieved; butachieved. However, in no event can the 20162018 MIP funding exceed 200%.
On February 22, 2016,23, 2018, the Committee decided when establishing our 20162018 MIP that performance results would be determined on a constant currency basis to eliminate the impact of foreign currency fluctuations during the performance period, based on the same foreign exchange rates used to establish the Company’s 20162018 financial plan.
· | NGOI Performance |
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The Committee’s establishment of challenging MIP performance thresholdshurdles requires our named executives to achieve significant annualized NGOI and Adjusted Free Cash Flow growth in order to receive anya payout, above minimum funding for the MIP portionother than payouts negotiated under new hire employment agreements as part of their annual bonus.our recruitment process.
Absolute Limit on MIP Payouts and Committee Discretion.The annual bonus otherwise payable under the MIP is also subject to an absolute limit based on the Company’s performance. For 2016,2018, the maximum annual bonus payout opportunity iswas 1.5% of Non-Pension Operating Income (NPOI)NGOI for our CEO, and 0.75% of NPOINGOI for our other named executives. Consistent with Section 162(m) of the Internal Revenue Code (the “Code”), theThe Committee retains the discretion to decrease, but not increase, the final Annual Incentive Plan payout earned. For the definition of NPOI, see Proposal 4, page 87 below.
MIP – Management By Objectives (MBOs) |
In addition to the Core Financial Objectives, we establish multiple individual objectives, called MBOs, for each of our named executives. These individual objectives are assigned to our named executives based on their areas of influence, and on objectivesstrategic initiatives that are critical for the Company’s achievement of its overall financial goals and stretch internal objectives.goals. Based on the extent to which a named executive satisfies his or her MBOs, the Committee determines an “individual performance modifier” that increases or decreases the preliminary MIP bonus determined by the Core Financial Objectives. The individual performance modifier can range from 0% for poor performance to 150% for exceptional performance.
The Committee established multiple MBOs for our CEO and Executive Chairman, and in conjunction with the CEO, for each other named executive. The MBOs selected directly complement our 20162018 corporate strategic goals to:
· | Continue to shift focus towards |
· | Deliver revenue growth, margin expansion and our software plan; |
· | Introduce product and solution innovation that continues to delight our |
· | Build enterprise platforms that enable development of disruptive and industry-aligned omni-channel solutions and offerings for our customers; |
· | Forecast accuracy and operational excellence; and |
· | Drive talent, culture and employee engagement. |
Because of the critical importance of customer retention, customer referrals and customer relationships, we retaincontinued to maintain our Customer Success Bonus as a separate component of our Annual Incentive Plan, with its own separate reward structure.structure for each of our named executives except as noted above. We link our Customer Success objective to a semi-annual survey of customers conducted by an independent third party. The actual payout for this component is determined at the discretion of the Committee for our CEO, and at the discretion of the CEO for our other named executives.Committee.
Annual Incentive Plan – |
For 2016,2018, the Committee established MIP annual incentive targets for our named executives based on peer group data and positioning within the senior leadership team. The 20162018 target MIP and Customer Success annual incentive opportunities for our named executives were:
2016 Annual Incentive Plan – Targets and Total Bonus Opportunity (% of Base Salary) | ||||||||||||||||
Named Executive | MIP Target | Customer Success Target | Total Annual Bonus Target (MIP Target + Customer Success Target) | Total Annual Bonus Opportunity | ||||||||||||
William Nuti | 140 | % | 10 | % | 150 | % | 0% to 430% | |||||||||
Robert Fishman | 100 | % | 10 | % | 110 | % | 0% to 310% | |||||||||
Mark Benjamin | 115 | % | 10 | % | 125 | % | 0% to 355% | |||||||||
Frederick Marquardt | 100 | % | 10 | % | 110 | % | 0% to 310% | |||||||||
Paul Langenbahn | 100 | % | 10 | % | 110 | % | 0% to 310% |
2018 Annual Incentive Plan Targets (% of Base Salary) | |||||||||||||||
Named Executive | MIP Target | Customer Success Target | Total Annual Bonus Target (MIP Target + Customer Success Target) | ||||||||||||
Michael Hayford
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150%
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N/A
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150%
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Frank Martire
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150%
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N/A
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150%
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Owen Sullivan
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140%
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10%
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150%
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Andre Fernandez
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115%
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10%
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125%
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Daniel Campbell
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100%
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10%
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110%
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William Nuti(1)
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140%
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10%
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150%
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Robert Fishman
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100%
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10%
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110%
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By way(1) In light of illustration, in the case of our CEO, if the Core Financial Objectives were achieved athis retirement during 2018, Messr. Nuti became ineligible for his 2018 annual incentive bonus opportunity.
For all named executives, the maximum level, this could generatepotential payout is limited to two times their target annual incentive, except that Mr. Nuti, Mr. Fishman and Mr. Campbell’s maximum potential payouts under the MIP were limited to three times their target annual incentives plus a preliminary MIP bonus funding of 280% (200% of10% customer success target opportunity. Mr. Nuti became ineligible for his 140% target bonus). Further, if he were2018 annual incentive opportunity due to achieve the maximum individual performance modifier of 150%, his bonus payout could increase to 420% (150% of his preliminary MIP bonus funding of 280%). If the Customer Success objective (10%) were also met, his total Annual Incentive Plan bonus payout could be as high as 430% of his base salary.
Annual Incentive Plan – Objectives, Results and Payouts for |
MIP Core Financial Objective and Customer Success Results |
The Committee established the 2016 Core Financial Objectives to align with our corporate goals as shown in the Chart below. The Chart below shows the NGOI Core Financial Objective on a constant currency basis as determined appropriate by the Committee when the 2016 MIP was established. Also shown are the MIP performance results, annual incentive payouts earned, and funding approved for our named executives for the 2016 performance year.
NGOI for 20162018 was $840$688 million which did not exceed the NGOI Performance HurdleThreshold of $871$855 million on a constant currency basis. However, AdjustedBecause NGOI Threshold performance was not met, the Free
Cash Flow Goal did not apply as a modifier for the year was $628 million which far exceeded the Adjusted Free Cash Flow Hurdle of $450 million.2018. These performance results against our internal annual incentive plan financial performance achievementsmetrics resulted in the 40% minimum MIP funding beingan earned for 2016. However, given the significant over achievement of Adjusted Free Cash Flow, the Committee approved an additional 20% MIP funding for a total funded payout of 60%0% of target under our 2016 Annual Incentive Plan.Target.
The 20162018 Annual Incentive Plan objectives, results, earned payout and funded payout are shown in this Chart:
2016 Annual Incentive Plan – Performance Hurdles, Results and Funding | ||||||||||
Performance Hurdles & Results ($M)(1) | ||||||||||
Discretionary Objectives | NGOI (% Funded) | NGOI Above Hurdle (% Funded) | NGOI Above Hurdle (Maximum %) | Performance Results | Final Payouts | |||||
Adjusted Free Cash Flow Results “Below” Hurdle? | 40% | 50% of NGOI Results above $871 | 200% | NGOI = $840 (“below” hurdle) AFCF = $628 (“above” hurdle) | Payout “Earned” = 40% Payout “Funded” = 60%(2) | |||||
Adjusted Free Cash Flow Results “Above” Hurdle? | 40% | 60% of NGOI Results above $871 | ||||||||
Customer Success Objective | Payout Linked to Overall Satisfaction of Our Customers | At or Above Expectations | 10% |
2018 Annual Incentive Plan – Performance Objectives, Results and Funding | ||||||||||
MIP Performance Objectives ($M)(1)
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MIP Discretionary Objectives | Threshold (40% Funded) | Target (100% Funded) | Maximum (200% Funded) | MIP Performance Results ($M) | MIP Payout Funding | |||||
Non-GAAP Operating Income
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$855
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$915
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$995
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$688
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Free Cash Flow(2)
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—
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$480
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—
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$223
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Customer Success Objective |
Payout Linked to Overall Satisfaction of Our Customers
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Below
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(1) The NGOI Hurdles isObjectives are shown on a constant currency basis as determined appropriate by the Committee.
(2) WhileBecause the NGOI ResultsTarget objective was not satisfied, Free Cash Flow did not exceed the NGOI Hurdle, the Committee exercised its discretion and increased MIP funding by 20% forapply as a “funded” payout of 60%.modifier.
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While the Committee exercised discretion to increase the “funded” payout by an additional 20% over the amount “earned” for 2016, at the recommendation of the CEO the Committee previously exercised its discretion to reduce “funded” payouts in several prior years where the Company’s financial results were in line with external guidance, but the CEO and the Committee determined that the Company fell short or executed poorly against other key strategic goals for the performance year. A summary of the Committee’s discretion on the bonus payout “funding” in prior years is shown in this chart:
Annual Incentive Plan “Earned” vs. “Funded” Payout History | ||||||
Performance Year | Bonus Payout “Earned” | Committee Discretion Applied | Bonus Payout “Funded” | |||
2015 | 114.1% | (114.1%) | 0% | |||
2014 | 0% | 0% | 0% | |||
2013 | 103.3% | (58.3%) | 45% | |||
2012 | 132.8% | (57.8%) | 75% |
This demonstrates that the CEO and the Committee set aggressive annual financial goals and set very high internal performance expectations. It also demonstrates the Committee’s willingness to utilize its discretion to ensure that both design and execution of the Company’s incentive plans have good alignment with our pay-for-performance philosophy.
Individual Performance Modifier Assessment |
The following is a summaryAlthough the named executives did achieve and exceed many of their 2018 individual objectives, collectively the Company’s financial performance did not meet expectations, and 2018 results fell short of the MBOs established by the Committee and the 2016 MIP payouts approved for each participating named executive for the 2016MIP’s threshold performance year.
William Nuti’s 2016 Objectives:
Mr. Nuti’s objectives for 2016 included successful execution on the next phase of the Vision 2020 strategy including delivering significant growth on software and cloud revenue necessary to achieve 2016 financial plan goals, delivering core financial results at or above the top end of the Company’s guidance provided to investors throughout the year, and continued performance above guidance on capital efficiency and return of capital to stockholders through the Company’s ongoing share repurchase program. Mr. Nuti’s 2016 MBO’s are outlined in more detail below:
Software & Cloud Revenue growth
Financial Performance at or above guidance
Strong Free Cash Flow performance
Successful Margin Expansion
Return of Capital to Stockholders through the ongoing share repurchase program
Omni-Channel Platform Development Road Map
Executive Talent Development
The Committeeobjectives. Therefore, it was determined that, in keeping with ourpay-for-performance philosophy, no MIP awards would be paid to named executives for 2018, other than 2018 annual bonus payout commitments negotiated under new hire agreements as part of our recruitment process. While individual objectives were established for Mr. Nuti’s 2016 individual performance modifier is 110%Nuti, he was not eligible to reflect his individual performance relative to the achievement of the stated 2016 MBOs. This determination was based on the strong growth in software & cloud orders and revenue, exceptional Free Cash Flow results above
guidance, core financial results at the top of the investor guidance range, and key executive talent acquisition and organizational re-alignment to put the Company in position for delivering the stated Vision 2020 strategy over the performance years subsequent to 2016.
Robert Fishman’s 2016 Objectives:
Mr. Fishman’s 2016 MBO’s are outlined below:
Financial Performance at or above guidance
Strong Free Cash Flow performance
Forecast Accuracy
Zero-Based Budgeting (ZBB) Implementation
Return of Capital to Stockholders through the ongoing share repurchase program
Risk Management
Executive Talent Development
The Committee determined that Mr. Fishman’s 2016 individual performance modifier is 105% to reflect his individual performance relative to the achievementreceive any 2018 MIP award because of his stated 2016 MBOs. This determination was based on the exceptional Free Cash Flow results above guidance, successful implementation of the ZBB platform to help drive the efficient deployment and execution of the 2017 financial plan across the enterprise and strong forecast accuracy for the CFO organization.
Mr. Benjamin’s 2016 Objectives:
Mr. Benjamin’s 2016 MIP payout reflects the minimum payout to be made under the terms of his offer to join NCR in October 2016. As such, no individual performance modifier was determined for the 2016 performance year.
Mr. Marquardt’s 2016 Objectives:
Mr. Marquardt’s 2016 MBO’s are outlined below:
Services Revenue growth & Margin Expansion
Operating Income Forecast Accuracy
Services Delivery Execution
Services Customer Loyalty Improvement
Managed Services growth
Enterprise Quality Improvements
Continuous Cost Reduction Improvements
Executive Talent Development
The Committee determined that Mr. Marquardt’s 2016 individual performance modifier is 105% to reflect his individual performance relative to the achievement of his stated 2016 MBOs. This determination was based on the strong Services revenue growth, exceptional operating income forecast accuracy, improvements in Services customer loyalty scores and continuous cost reduction improvements.
Mr. Langenbahn’s 2016 Objectives:
Mr. Langenbahn’s 2016 MBO’s are outlined below:
Hospitality Revenue growth & Margin Expansion
Operating Income Forecast Accuracy
Hospitality Software & Cloud Revenue Growth
Hospitality Customer Loyalty Improvement
Continuous Cost Reduction Improvements
Executive Talent Development
The Committee determined that Mr. Langenbahn’s 2016 individual performance modifier is 110% to reflect his individual performance relative to his MBO’s based on the strong Hospitality software and cloud revenue growth and strong operating income forecast accuracy. However, Mr. Langenbahn did not receive the Customer Success payout as a result of the weakness in our customer loyalty scoresretirement during 2016 for the Hospitality business.2018.
Annual Incentive Plan – Final |
The total annual bonus payments approved for each named executive for the 20162018 performance year were:
2016 Annual Incentive Plan – Final Payout Calculation | ||||||||||||||||||||||||||||
Named Executive | MIP Target (1) | Funded MIP (% of | Funded MIP Payout (Before | Individual Performance Modifier | MIP Payout (After IPM) | Customer Success (10% of Target) | Total Bonus Payout | |||||||||||||||||||||
William Nuti | $ | 1,400,000 | 60 | % | $ | 840,000 | 110 | % | $ | 924,000 | 10 | % | $ | 1,024,000 | ||||||||||||||
Robert Fishman | $ | 613,388 | 60 | % | $ | 368,033 | 105 | % | $ | 386,435 | 10 | % | $ | 447,774 | ||||||||||||||
Mark Benjamin(1) | $ | 215,625 | — | $ | 215,625 | — | $ | 215,625 | 10 | % | $ | 234,375 | ||||||||||||||||
Frederick Marquardt | $ | 613,388 | 60 | % | $ | 368,033 | 105 | % | $ | 386,435 | 10 | % | $ | 447,774 | ||||||||||||||
Paul Langenbahn | $ | 462,227 | 60 | % | $ | 277,336 | 110 | % | $ | 305,070 | 0 | % | $ | 305,070 |
Named Executive | MIP Target (1) | Funded MIP Payout (% of Target) | Individual Performance Modifier | MIP Payout (After IPM) | Customer Success Payout (10% of Target) | Total Bonus Payout | ||||||||||||||||||
Michael Hayford | $ | 1,010,959 | 100 | % | 0 | % | $ | 1,010,959 | N/A | $ | 1,010,959 | (2) | ||||||||||||
Frank Martire | $ | 662,671 | 100 | % | 0 | % | $ | 662,671 | N/A | $ | 662,671 | (2) | ||||||||||||
Owen Sullivan | $ | 450,493 | 100 | % | 0 | % | $ | 450,493 | 10 | % | $ | 482,671 | (2) | |||||||||||
Andre Fernandez | $ | 246,147 | 100 | % | 0 | % | $ | 246,147 | 10 | % | $ | 267,551 | (2) | |||||||||||
Daniel Campbell | $ | 575,000 | 0 | % | 0 | % | $ | 0 | 0 | % | $ | 0 | (3) | |||||||||||
William Nuti | $ | 506,155 | 0 | % | 0 | % | $ | 0 | 0 | % | $ | 0 | ||||||||||||
Robert Fishman | $ | 625,000 | 0 | % | 0 | % | $ | 0 | 0 | % | $ | 0 |
(1) Reflects proration formid-yearBased on actual salary and/orpaid during the year.
(2) As noted above, prorated target bonus changes,amount (based on period of 2018 service) payable pursuant to negotiated new hire employment agreement.
(3) Per his new hire employment agreement, Mr. Campbell was entitled to a $150,000sign-on bonus during 2018.
Mr. Campbell received a discretionary bonus for 2018 that was recommended by the CEO and forapproved by the Committee. Mr. Benjamin, reflects apro-rated amount given his start date of 10/17/2016. Pursuant to his employment offer, Mr. Benjamin will receive a guaranteed minimum bonus award of $215,625Campbell was awarded $350,000 for his periodleadership on certain company-wide strategic directives and the achievement of employment with the Company during 2016.various individual management objectives.
Our Long-Term Incentive Program directlygenerally aligns a largesignificant portion of the total compensation opportunity of our named executives directly with Company performance and changes in stockholder value. In 2016, the Committee granted all long-term incentives to our named executives in the form of equity awards under our Stock Plan. Unlike in prior years, no new Bonus Credit awards were made under the NCR Corporation Economic Profit Plan in 2016.
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The use of equity for our LTI Program links our executives and stockholders to a common goal: sustainable stockholder value creation.
In February 20162018, the Committee approved the 20162018 annual equity awards under
our Stock Plan in the form of a special grantour 1/3 performance-based restricted stock units, 1/3 performance-vesting restricted stock units, and new for 2018, 1/3 nonqualified stock options to further increase management alignment with stockholder long-term interests. In addition to these annual grants to executives employed on the February 2018 award date, certain named executives hired during 2018 receivedad-hoc LTI awards at the time of multi-year Vision 2020 Awards togetherhire under their negotiated new hire agreements. Generally, the majority of these new hire awards were made in the form of stock options. As noted above, while stock options vest with traditionalcontinued service, the awards will only deliver value if our share
price increases. The Committee determined that this approach to new hire awards appropriately balanced ourpay-for-performance philosophy with the exigencies of recruiting new executives who were not employed by the Company when our 2018 business plan was approved. For 2019, the majority of named executive long-term incentive awards were granted with performance-based and time-based RSUs.vesting conditions.
We generally use equity awards in our LTI Program to create commonality of interests with stockholders and to help attract and manage our ability to retain our key executives. These awards also provide a good balance tofor our executives and protection tofor our stockholders, because wealth creation can be “realizable”realized by an executive only when both long-termupon achievement of performance goals, and service-based milestones are achieved. The special grant of Vision 2020 Awards was approved byand/or the Committee in 2016 for the additional reasons described below.long-term Company stock price performance.
2018 Annual LTI |
After an extensive review with its independent compensation consultant, in 2016 the Committee approved a unique, multi-year award for certain executives who are focused on delivering our transformation as part of our annual long-term incentive program. Under the multi-year program, in February 2016 the Committee approved the grant of a portion of 2016 and 2017 long-term award value for certain key members of our executive team, including our named executives, in the form of “Vision 2020 LTI Awards.” These Vision 2020 LTI Awards consisted of certain price-contingent RSUs for our named executives and other eligible executives as described below. These stock units vest only if certain aggressive NCR stock price targets are achieved within a five-year performance period and executive service continues through the vesting date (with certain limited exceptions). The Committee approved the remaining portion of 2016 long-term award value in a mix of our traditional performance-based and time-based RSUs, with the performance-based units being subject to new performance goals tied to critical strategic measures as described below.
The Vision 2020 LTI Awards signal a new direction for the Company in pursuit of its Vision 2020 strategy. The awards are designed to accelerate our transformation efforts, reinforce a sense of urgency among our key executives for delivering significant software revenue and margin growth to unlock the valuation appropriate for NCR as the global market leader in consumer transaction technology, and align with expectations set for NCR’s Vision 2020
strategy. The awards also recognize the unique challenges faced by the Company in its continued transformation, and the critical need to incentivize and retain a core executive team to realize this strategy for the Company and our stockholders. The value ultimately realized from the awards is based on the growth in our share price following the grant date and achievement of the new business performance objectives noted below.
The price-contingent RSUs comprising the Vision 2020 LTI Awards are partially “front-loaded,” that is, they represent half of the 2016 target annual long-term incentive compensation value for each executive, plus half of the target 2017 value that the Committee anticipated it would have granted to each executive in 2017. The target amount for each executive for 2016 and 2017 remained the same, except the timing of half of the anticipated 2017 grants was accelerated.
The Committee determined that partially front-loading the Vision 2020 LTI Awards provides the following benefits to the Company and our stockholders:
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The traditionalkey features of the various types of 2018 LTI equity awards approved by the Committee for our named executives in 2016 were not front-loaded. These traditional awards represent the remaining portion of the 2016 total target annual long-term incentive value for our named executives.
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Price-Contingent RSUs: In a special grant, all named executives were awarded price-contingent RSUs with these terms:
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The five-year performance period for the Vision 2020 LTI Awards was intended to provide a longer-term focus on sustained share price growth. Unless earned based on the stock price hurdles outlined above, all unvested Vision 2020 LTI Awards are forfeited in the event of employment termination, except in the event of death, disability or other limited circumstances as described in the award agreements.
On December 8, 2016, the Committee certified that the $35 per share price hurdle for our Vision 2020 LTI Awards had been satisfied, based on NCR’s stock price closing above $35 per share for twenty consecutive trading days (November 8, 2016 through December 6, 2016). On January 24, 2017, the Committee certified that the $40 per share price hurdle for our Vision 2020 LTI Awards had been satisfied, based on NCR’s stock price closing above $40 per share for twenty consecutive trading days (December 7, 2016 through January 5, 2017). These awards are not currently vested and are subject to continued employment with the Company where 50% of these awards will vest on the three-year anniversary of the grant date and the remaining 50% of the award will vest on the four-year anniversary of the grant date.
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The remaining portion of the 2016 equity award mix for our named executives consisted of 75% performance-based RSUs, and 25% time-based RSUs.are:
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· | Performance-Vesting RSUs vest 1/3 on each anniversary of the grant date, provided that NCR achieves a predetermined level of SRMD for the period of January 1, 2018 through December 31, |
2018, and the executive continues Company service through the applicable vesting |
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· | Time-Based RSUs |
· | Special |
ForUnder our 2016 equity awards,Stock Plan, the number of shares subject to restricted stock units wasRSUs for an award is determined by converting the dollarCommittee approved award value approved by the Committee into a specific number ofto shares based on the grant date closing price of our common stock. The number of stock as provided underoptions for an award is determined using the Committee approved award value and the Black-Scholes valuation method.
One-third of our Stock Plan.annual LTI equity award to named executives employed on the February award date consisted of performance-based RSUs. The performance metrics for these awards were:
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· | ROC Performance Threshold: No performance-based RSUs are earned unless the Company achieves a |
· | ROC Defined: We calculate ROC by dividing NGOI by Controllable Capital, which represents the working capital that our management team has deployed at any given time. |
· | Why We Use ROC: This ROC threshold is a significant hurdle that ensures restricted stock units can be earned only if the Company generates enough ROC during the performance |
Non-GAAP Diluted EPS – Secondary Performance Metric |
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· | Why We Use This Metric: NGDEPS is a good external measure of the Company’s annual performance that investors can compare against our quarterly/annual |
Software-Related Margin Dollars – Secondary Performance Metric |
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Software-Related Margin Dollars Defined: SRMD is determined by taking gross margin for software licenses, software maintenance, cloud and professional services excluding pensionmark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition related intangibles.
Why We Use This Metric: SRMD is a good internal measure of the Company’s annual performance against one of our core strategic financial goals, the growth for which is essential to achieving our Vision 2020 strategy. Also, this is another metric where investors can compare our performance against our quarterly/annual guidance.
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2016 NGDEPS Achieved: NGDEPS achieved for 2016 was $3.02.
2016 SRMD Achieved: SRMD achieved for 2016 was $996 million.
Impact on 2016 Performance-Based Equity Awards: The 2016 NGDEPS of $3.02 exceeded the target NGDEPS of $2.85, resulting in a preliminary award of 90% with respect to 60% of the target number of units granted on February 24, 2016. The 2016 SRMD of $996 million exceeded the target SRMD of $950 million, resulting in a preliminary award of 58.2% with respect to 40% of the target number of units granted on February 24, 2016. These results and weightings resulted in a final award of 148.2% of the total target number of units granted. This RSU payout of 148.2% is now subject to
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· | Why We Use This Metric: SRMD is a good internal measure of the Company’s annual performance against one of our core strategic financial goals, the growth for which is essential to achieving |
2018 Performance-Based RSU Results |
This Chart shows our three-year payout history for annual performance-based equity awards:
· | 2018 NGDEPS Achieved: $2.62 per share. |
Annual LTI Equity Awards: Historical Goals, Results and Payouts
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Award Year | Performance Period | Performance Metric / Weighting | Performance Range ($M) | Return on Capital Results | Performance Metric Results ($M) | Final Calculated Payout | ||||||||||||||||||||||
Threshold | Target | Max | ||||||||||||||||||||||||||
2016 |
2016 – 2017 | NGDEPS – 60% | $ | 2.72 | $ | 2.85 | $ | 3.00 |
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67.1 |
%(1) | $ | 3.02 |
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148.2 |
% | ||||||||||||
SRMD – 40% | $ | 855 | $ | 950 | $ | 1,000 | $ | 996 | ||||||||||||||||||||
2015 | 2015 – 2016 | NPOICC(2) – 100% | $ | 631 | $ | 709 | $ | 750 | 70.1 | % | $ | 721 | 114.5 | % | ||||||||||||||
2014 | 2014 – 2015 | NPOICC(2) – 100% | $ | 665 | $ | 785 | $ | 865 | 67.9 | % | $ | 695 | 43.6 | % |
(1) Our Return on Capital (ROC) for the 2016 performance year was 67.1% (NGOI of $840 million ÷ Controllable Capital of $1,252 million). However, this will be adjusted after the 2017 performance period is completed since the ROC goal of 20% is measured over thetwo-year performance period.
2018 SRMD Achieved: $960 million. Impact of Performance Results on 2018 Performance-Based RSU Awards Vision 2020 LTI Awards: Price-Contingent Traditional Time-Based RSUs William Nuti Robert Fishman Mark Benjamin(4) Frederick Marquardt Paul Langenbahn The 2018 NGDEPS of $2.62 per share and the SRMD of $960 million resulted in an earned payout of 0% for 2018 with respect to both components of the performance-based RSUs granted on February 23, 2018. As a result, these awards were forfeited, and no payout can be earned under these awards regardless of future performance. (2) In 2014 and 2015, our discretionary Performance Metric wasNon-Pension Operating Income Minus Capital Charge (NPOICC).· 2016 Total Annual LTI Equity Award ValuesThis Chart shows the 2016 total annual LTI equity award values for our named executives:2016 Total Annual LTI Equity Awards and Value(1) Named Executive
RSUs(2) Traditional
Performance-
Based RSUs Total 2016
LTI Award
Value(3) $ 9,999,995 $ 3,749,988 $ 1,250,012 $ 14,999,995 $ 3,000,004 $ 1,124,999 $ 374,992 $ 4,499,995 $ 0 $ 0 $ 0 $ 0 $ 2,199,995 $ 825,010 $ 274,996 $ 3,300,001 $ 1,999,993 $ 750,007 $ 250,002 $ 3,000,002 (1) Represents the “grant date fair value” of RSUs, as shown in theGrants of Plan-Based Awards—2016 Table on page 72.(2) Includes half of the total target long-term incentive program value approved by the Committee for our named executives in 2016, plus the “front-loaded” half of the total target long-term incentive program value that the Committee anticipated that it would grant to our named executives in 2017.(3) Represents the 2016 total target long-term incentive program value approved by the Committee for our named executives, plus the front-loaded half of the total target long-term incentive program value that the Committee anticipated it would grant to our named executives in 2017.(4) Mr. Benjamin was not employed by the Company at the time we granted our 2016 annual LTI awards.· 2016 Ad Hoc LTI Awards2018 Performance-Vesting RSUs – Performance Metric2016 Ad Hoc Awards:One-third The Committee approved an Ad Hoc of the annual 2018 LTI equity award during 2016 for Mr. Benjamin in the amount of $8,500,000 which was granted at the time of his hire. Mr. Benjamin’s new hire award was in the form of single-metric performance-based RSUs with Committee-approved SRMD goals, in compliance with our policy that retention awards to executive officers will include performance-based vesting conditions. The award may be earned basednamed executives employed on the Company’s achievementFebruary award date consisted of suchperformance-vesting RSUs. No performance-vesting RSUs are earned unless the 2018 SRMD goals during(as defined above) is achieved. The 2018 SRMD of $960 million exceeded the SRMD performance periods from January 1, 2017 through
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No other named executives received Ad Hoc LTI awards during 2016.
In 2014, we made an annual grantcondition of performance-based$950 million established for the 2018 performance-vesting RSUs, to our named executives, other than Mr. Benjamin who joined the Company in Octoberand 1/3 of 2016. These awards had atwo-year performance period that began January 1, 2014 and ended December 31, 2015. The number of shares earned, based on performance achieved, could range from a threshold of 25% to a maximum of 125% of units granted. In February 2015 the Committee certified that performance for these awards was achieved at 43.6% of target. Because this performance was below target, the Committee determined that these awards would not be increased based on 2015 performance. The awards had a threshold performance target of 20% ROC, which was achieved. These awards will vest 100% on October 24, 2017,each anniversary of the February 23, 2018 grant date, subject to the executive’s continued service with the Company through the applicable vesting date. Earlier vesting can occur because of death, disability or for other limited reasons described in thePotential Payments Upon Termination or Change in Control section (starting on page 77).
In 2014, the Committee approved an Ad Hoc single-metric performance-based RSU award for Mr. Marquardt. Mr. Marquardt’s award was made in recognition of his promotion to his current position, becoming a Section 16 Officer, to increase the retention value of his unvested equity, and to create strong alignment with stockholder interests. Vesting of this award was contingent on the Company achieving a Committee-approved NPOI performance target of $800 million for the
performance period that began January 1, 2015 and ended December 31, 2015. In February 2016, the Committee certified that NPOI achieved for the performance period was $830 million, which exceeded the performance target for this award. As a result, this award will vest 100% on the third anniversary of the grant date (May 1, 2017), as long as Mr. Marquardt continues Company service through that date. Earlier vesting can occur because of death, disability or for other limited reasons described in thePotential Payments Upon Termination or Change in Control section (starting on page 77).dates.
In 2015, we made anThis Chart shows the 2018 total LTI equity award values(1) approved by the Committee for our named executives, including annual awards to named executives employed on the February annual award date, and new hire and otherad-hoc awards (see theAgreements With Our Named Executives Section):
Named Executive | Stock Options | Performance- Based RSUs | Performance- RSUs | Time- Based RSUs | Total 2018 LTI Award Value | |||||||||||||||
Michael Hayford | $ | 7,499,881 | — | — | $ | 5,000,011 | $ | 12,499,892 | ||||||||||||
Frank Martire | $ | 3,750,354 | — | — | $ | 2,249,988 | $ | 6,000,342 | ||||||||||||
Owen Sullivan | $ | 3,749,994 | — | — | $ | 2,250,000 | $ | 5,999,994 | ||||||||||||
Andre Fernandez | $ | 999,998 | — | — | $ | 3,000,011 | $ | 4,000,009 | ||||||||||||
Daniel Campbell | $ | 499,996 | $ | 500,015 | $ | 4,499,996 | — | $ | 5,500,007 | |||||||||||
William Nuti(2) | $ | 2,500,000 | $ | 2,500,008 | $ | 2,500,008 | — | $ | 7,500,016 | |||||||||||
Robert Fishman | $ | 666,665 | $ | 666,675 | $ | 666,643 | — | $ | 1,999,983 |
(1) Represents the grant date fair value of RSUs and stock options, as shown in theGrants of Plan-Based Awards – 2018 Table.
(2) Mr. Nuti’s 2018 LTI equity award was forfeited upon his separation of service from the Company.
2017 LTI Awards |
On February 27, 2017, the Committee granted annual LTI awards to named executives employed on that date consisting of performance-based RSUs to our named executives, other than Mr. Benjamin who joined the Company in October of 2016. These awardsand performance-vesting RSUs. The 2017 performance-based RSUs had atwo-year three-year performance period that began on January 1, 20152017 and ended on December 31, 2016.2019. In 2018, the
Committee certified that required minimum 2017 NGDEPS and SRMD performance for these awards was not achieved, and these awards were forfeited. The number of shares earned, based on performance achieved, could range from a threshold of 25%2017 performance-vesting RSUs were subject to a maximum of 150% of units granted.2017 SRMD goal. In February 20172018, the Committee certified that performance for these awards was achieved, at 114.5%with 1/3 of target. Thesethese awards vest 100%vesting on October 23, 2018, subject toeach anniversary of the executive’s continuedgrant date so long as the executive continues Company service with the Company through the vesting date. Earlier vesting can occur because of death, disability or for other limited reasons described in thePotential Payments Upon Termination or Change in Control section (starting on page 77).
None of our named executives received Ad Hoc LTI awards in 2015.dates.
Economic Profit Plan Awards Before |
In 2016, no new awards were made to any participants underOn February 27, 2019, the Committee terminated the NCR Corporation Economic Profit Plan which is(EPP), a long-term incentive plan that allowsallowed participants to share in a portion of the “Economic Profit” that they helped to create. However,No new EPP awards have been granted since 2016; however, 33% of remaining previously earned EPP amounts are payable pro rata from participant “Bonus Bank” balances in August of the following 3 years,(which held previously earned EPP awards) were subject to annual payout so long as the Company passespassed a cash flow test. In connection with the termination of the EPP, cash flow testparticipants who were actively employed on the EPP elimination date, including Mr. Fishman, will receive any remaining portion of their Bonus Bank balances in a single lump sum distribution after February 28, 2020. Until the date these remaining balances are distributed, the EPP will make distributions in the payout year.normal course (for example, the regular distributions scheduled to be made in August 2019 will be paid at that time, subject to EPP terms). Mr. Nuti and Mr. Fishman are the only NEOs who participated in the EPP. Information on their Bonus Banks are bookkeeping accounts holding prior yearBank balances can be found in the chart below. Notwithstanding the EPP awards. termination, Mr. Nuti’s Bonus Bank balance will be distributed in accordance with the terms of his retirement agreement as noted in the chart below.
As described below, in 2018 the Committee authorized Bonus Bank payments attributable topre-2016
previously earned EPP awards for allMr. Nuti and Mr. Fishman, the only named executives except for Mr. Benjamin who joined the Company in October 2016.with EPP Bonus Bank balances.
Cash Flow Test. The EPP cash flow test requires that our “Cash Flow from Operations” equal or exceed 1% of total revenue. Under the EPP, Cash
Flow from Operations means net cash provided by (used in) operating activities, (in 2016, $894 million), adjusted to exclude any extraordinary cash payments made to or under the Company’s global defined benefit pension and retirement plans in connection with the Company’s strategy to reduce pension liability or increase pension funding. Cash Flow from Operations, as defined by the EPP, is anon-GAAP measure. Net cash provided by operating activities is the most directly comparable GAAP measure.
Payout of Amounts Attributable to Prior Year AwardsAwards.. In On February 2017,7, 2019, prior to the EPP termination, the Committee certified that the Company passed the 20162018 EPP cash flow test, because in 20162018 our total revenues were $6,543$6,405 million, and our Cash Flow from Operations of $894$572 million exceeded 1% of such total revenues (or $65$64 million). Accordingly, the Committee authorized pro rata Bonus Bank payments to be made in August 2017 for these2019. Of our named executives, which payments are entirely attributable toonly Mr. Nuti and Mr. Fishman participate in the EPP, awards made and earned before 2016:the table below details their EPP balances and 2018 payments.
EPP – Payout of Amounts Earned in Prior Years | ||||||||||||||||
Named Executive | 2016 Bonus Credit | Bank Balance (Earned Before 2016 under | 2016 Cash Payout | 2016 Ending (After 2016 | ||||||||||||
William Nuti | $ | 0 | $ | 5,250,944 | $ | 1,732,812 | $ | 3,518,132 | ||||||||
Mark Benjamin(4) | $ | 0 | $ | 0 | $ | 0 | $ | 0 | ||||||||
Robert Fishman | $ | 0 | $ | 1,456,181 | $ | 480,540 | $ | 975,641 | ||||||||
Frederick Marquardt | $ | 0 | $ | 1,500,230 | $ | 495,076 | $ | 1,005,154 | ||||||||
Paul Langenbahn | $ | 0 | $ | 488,189 | $ | 161,102 | $ | 327,087 |
EPP – Payout of Amounts Earned in Prior Years | ||||||||||||
Named Executive | Bank Balance Before 2018 Payments | 2018 Cash Payments | Remaining Bank Balance | |||||||||
William Nuti(1) | $ | 3,518,132 | $ | 2,359,583 | $ | 1,158,549 | ||||||
Robert Fishman | $ | 975,641 | $ | 321,962 | $ | 653,679 |
(1) As noted above, no newMr. Nuti retired as of April 30, 2018 due to disability. In accordance with the EPP Bonus Credit Awards were made to any participants for the 2016 performance year.
(2) 33% of theterms regarding disability, Mr. Nuti’s retirement agreement provides that he will receive his full Bank Balance (before 2016 payout) isunder the 2016 EPP Cash Payout.
(3) The EPP provides that the 2016 Cash Payout will be made in August 2017.
(4) Mr. Benjamin joined the Company in October 2016, and therefore did not participateof $3,518,132, in the EPP.following installments: 11/1/2018 – $2,359,583, 4/30/2019 – $386,183, 10/30/2019 – $386,183, 4/30/2020 – $386,183.
|
For 2017,2019, we returned tohave simplified our more traditional approach on equity award mixannual LTI program for our named executives butto include a mix of 65% performance-based RSUs and 35% stock options. These awards continue to ensure alignment with our stockholders’ long-term interests and also established thatcontinue our approach requiring all annual LTI equity awards forgranted to our executive officers will now require ato include performance conditionconditions for vesting.vesting, or be tied to our stock price performance to create stockholder value. The LTI awards for 2017 consisted of a mix of 75% traditional2019 performance-based RSUs with a performance period that has been extended to three years for 2017 awards. In addition, 25% consisted of a new performance-vesting RSU award that replaces the traditional time-based RSUs. These changes for 2017 reflect the Committee’s efforts to have a significant portion of the long-term incentive awards “at risk” based
onrequire achievement of performance goals that reward our named executive officers for creating sustainable value creation that further aligns management’s compensation with stockholder interests.
The 2017 LTI program is described as follows;
Traditional Performance-Based RSUs awarded in 2017 have a three year performance period (2017-2019) with secondarychallenging performance metrics consistingthat consist of NCR Revenue*Non-GAAP (40% weighting) and Adjusted Operating Income** (60% weighting). These performance metrics will be measured over aone-year Diluted Earnings Per Share with a 60% weighting, and Software-Related Margin Dollars (SRMD) with a 40% weighting. However, no units are earned unless we also achieve a three year average ROC (the primary performance metric) performance threshold for the 2017-2019 period. Any units earned from achievement of these performance goals vest 42 months after granted (on August 27, 2020), so long as the executive continues Company service through the vesting date. The maximum
|
Performance-Vesting RSUs awarded in 2017 will have a three year restriction period, and will vest 1/3 on each anniversary of the grant date provided that NCR achieves a predetermined level of SRMD forsubject to the period of January 1, 2017 through December 31, 2017, and the executive continues Companyrecipient’s continued service through the applicable vesting date.
|
Fordates. In addition, to align more closely with our 2017peer group LTI equitypractices, these awards have been granted with a payout threshold of 50% of target (up from 40% compared to the number of shares2018 performance-based RSU awards). The awards remain subject to RSUs was determined by converting the dollar value approved by the Committee into a specific numbermaximum payout of shares, based200% of target. Stock options that vest 1/4 on each anniversary of the grant date closingwere also awarded, and these provide value to the executives only to the extent that our share price appreciates. These 2019 changes to our annual LTI equity award mix reflect the Committee’s decision to simplify our LTI program and more directly link earned incentives to the achievement of performance goals that reward our common stocknamed executives for creating sustainable value creation in alignment with our stockholders’ long-term interests. The decision to shift to aone-year performance period for 2019 was made in light of the Company’s current transformation, and related to this, the difficulty in setting accurate multi-year performance goals at this time. The Committee also took into consideration the forfeiture of the 2017 and 2018 performance-based RSUs due to applicable goals not being satisfied. As in the past, the Committee expects to review the performance period annually for future equity awards.
* Revenue metric to be adjusted to eliminate the impact of foreign currency and the impact of mergers and acquisitions.
** Adjusted Operating Income metric is our income (loss) from operations as providedreported under our Stock Plan.generally accepted accounting principles in the United States, excluding certain items, as well as adjusted to eliminate the impact of foreign currency and the impact of mergers and acquisitions.
This Chart below shows the 20172019 total annual LTI equity award values for ourgranted to named executives:executives other than Mr. Nuti who retired during 2018, and Mr. Fishman, who did not receive any 2019 award due to his announced retirement:
2017 Total Annual LTI Equity Award Values | ||||||||||||
Named Executives | Traditional Performance Vesting RSUs (25% of value) | Traditional Performance-Based RSUs (75% of value) | Total LTI Award Value(1) | |||||||||
William Nuti | $ | 2,500,000 | $ | 7,500,000 | $ | 10,000,000 | ||||||
Robert Fishman | $ | 375,000 | $ | 1,125,000 | $ | 1,500,000 | ||||||
Mark Benjamin(2) | $ | 875,000 | $ | 2,625,000 | $ | 3,500,000 | ||||||
Frederick Marquardt | $ | 300,000 | $ | 900,000 | $ | 1,200,000 | ||||||
Paul Langenbahn | $ | 625,000 | $ | 1,875,000 | $ | 2,500,000 |
2019 Total Annual LTI Equity Award Values | ||||||||||||
Named Executives | Performance- Based RSU Award (65% of | Stock Option Award (35% | Total Annual LTI Equity Award Value(1) | |||||||||
Michael Hayford | $ | 6,500,000 | $ | 3,500,000 | $ | 10,000,000 | ||||||
Frank Martire | $ | 2,925,000 | $ | 1,575,000 | $ | 4,500,000 | ||||||
Owen Sullivan | $ | 3,900,000 | $ | 2,100,000 | $ | 6,000,000 | ||||||
Andre Fernandez | $ | 2,600,000 | $ | 1,400,000 | $ | 4,000,000 | ||||||
Daniel Campbell | $ | 1,300,000 | $ | 700,000 | $ | 2,000,000 |
(1) Represents the 20172019 total target long-term incentive program dollar value approved by the Committee for our named executives, which considers the LTI award values planned for 2017 as part of the Vision 2020 LTI Award granted in 2016 to our named executives, plus any discretionary additional LTI award value to recognize individual performance and expected critical contribution towards the achievement of our Vision 2020 strategy.executives.
(2) Reflects the 2017 Annual LTI award value committed to Mark Benjamin as part of his offer to join NCR.
Other Employee Benefits |
Like our other full-time salaried U.S. employees, the named executives participate in a variety of 401(k) and health and welfare benefitsbenefit programs designed to attract, retain and motivate our workforce and keep us competitive with other employers. Our 401(k) plan encourages employees to save and prepare financially for retirement. Health and welfare and paidtime-off benefits help our workforce stay healthy, focused and productive.
Of our named executives, only Mr. Fishman had a benefit as of December 31, 20162018 under our frozen, broad-based U.S. pension plans (the “U.S. Pension Plan”) that we closed over a decade ago. Mr. Fishman’s benefit is shown in and described in more detail with ourPension Benefits Table Table below.
The named executives are eligible for other limited benefits that the Committee considers reasonable and
appropriate under our executive compensation philosophy. These benefits, which do not compriserepresent a significant portion of our named executives’ compensation, are intended to attract and retain highly qualified talent, minimize distractions from
critical Company business and ensure the safety and security of our key executives. These benefits are shown in ourPerquisites Table and reported as “All Other Compensation” in ourSummary Compensation Table. They include financial counseling, executive medical exam,exams, relocation benefits, and also with respect to our CEO occasional hotel accommodation,Mr. Hayford, Mr. Martire, and Mr. Nuti, limited personal use of corporate aircraft and security expenses.aircraft. The Committee prohibits all tax reimbursements (or taxgross-ups) with the exception of those provided in connection with relocations required by the Company, which are generally also provided tonon-executive employees, and those that may be provided in the event of a qualifying termination following a change in control of the Company to grandfathered Change in Control Severance Plan participants who entered the plan before January 28, 2010 (as discussed below). In addition, pursuant to Mr. Benjamin’s new hire employment offer to join the Company, the Company agreed to reimburse him for up to $15,000 of legal fees incurred in connection with his review and acceptance of our terms and conditions of employment.employees.
Change in Control Severance Benefits |
If the Company considers potential change in control transactions, we want to ensure that key executives are incentivized to remain with us during this process and evaluate the transactions in an objective and undistracted way that may maximizein order to support stockholder value. For these reasons, we have the Amended and Restated NCR Change in Control Severance Plan (the “Change in Control Severance Plan”) for our senior executive team. Under this plan, we pay only “double-trigger” separation benefits, that is, benefits pay out only if both a change in control occurs and employment ends in a qualifying termination.
Our Change in
Our Change in Control Severance Plan has two benefit levels. The CEO’s and thelevels that apply to our named executives. Our current President and COO’sCEO, Executive Chairman, COO, and CFO’s cash severance benefit is 300% of base salary plus target bonus. For other current named executives, the cash severance benefit is 200% of base salary plus target bonus. There are no taxgross-ups under the plan except for grandfathered participants who joined the plan before January 28, 2010. A grandfathered participant gets nogross-up unless the value of all severance and change in control payments exceeds 110% of the maximum amount that could be paid to the participant under Codeany currently employed named executives.
Section 280G without imposing an excise tax. If this value does not exceed the 110% threshold, we reduce payments to the extent needed to avoid the excise tax. For more about double-trigger benefits, see thePotential Payments Upon Termination or Change in Control section (starting on page 77).below.
Severance Benefits |
We provide our key executives reasonable severance benefits to ensure that we remain competitive with other employers, and to help us attract and retain top
talent. When our CEO was hired, he was offered severance benefits under a negotiated employment agreement in order to attract him to join our Company. We also have ourOur Executive Severance Plan which provides certain severance benefits for eligible executives
in the event employment ends in a qualifying termination not connected to a change in control. For more about these severance benefits, see theAgreements with Our Named Executivessection (starting on page 71), and thePotential Payments Upon Termination or Change In Control section (starting on page 77).below.
In 2016, the Committee significantly increased our stock ownership requirements for all of our named executives, other than the CEO whose ownership requirement continued at a robust six times (6x) base salary. The Committee recognizes that executive stock ownership plays a critical role in aligning the interests of management with those of stockholders. We also believe that our most senior executives should maintain a significant personal financial stake in NCR to promote a long-term perspective in managing our business. For these reasons, we have a formal policy requiringrequire that our named executives to own NCR common stock worth a guideline multiple of base salary. Shares that count toward the guideline include shares owned personally, restricted stock and RSUs, and stock acquired through our Employee Stock Purchase Plan. Stock options do not count toward the guideline. Newly hired or promoted executives
have five years to reach their guideline. The table below shows our increasedcurrent guidelines.
This Table shows thatAs of February 15, 2019, all of ourthe Company’s currently employed named executives exceed our increasedeither met or are on track to meet the stock ownership policy requirements, with the exception ofguidelines. Mr. Benjamin who joined the CompanyFishman, in October 2016:his role as Senior Advisor, is not subject to stock ownership guidelines.
Stock Ownership Guideline as a Multiple of
| ||||||||
Named Executive |
Guideline | |||||||
| 6 | |||||||
Frank Martire | 6 | |||||||
| 5 | |||||||
Andre Fernandez | 4 | |||||||
| ||||||||
| 3 | |||||||
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We have a policy generally providing that short-term and long-term incentive awards to our executive officers are subject to clawback (forfeiture or repayment), as directed by the Committee, if:
· | the payment, grant or vesting of the award was based on achieving financial results that were the subject of a restatement of the Company’s |
· | the Committee determines in its sole discretion that the executive officer’s negligence, fraud or misconduct caused or contributed to the need for the restatement, and that forfeiture or |
repayment is in the best interests of the Company and our stockholders. |
If it is determined that the above conditions are met, then to the full extent permitted by law and as directed by the Committee, the executive officer must also forfeit any outstanding equity awards and repay amounts received from time-based equity award vesting and gains from stock option exercises.
We have a policy that prohibits our employees from trading in derivative securities related to Company stock or debt, including publicly traded options, short sales, puts, calls, strips or similar derivative securities. This policy also generally prohibits pledging NCR securities as collateral for a loan.
Under Federal tax rules in effect for tax years beginning prior to January 1, 2018, compensation over $1 million annually for certain named executives cannotcould not be deducted unless paid under a performance-based plan satisfying Internal Revenueapplicable Code standardssection 162(m) requirements (or otherwise meeting certain IRS requirements). While we generally paypaid compensation intended to be deductible to the extent permitted by applicable tax laws, the Committee has not adopted a policy requiring all pay to be deductible, so as to preserve the ability to awardnon-deductible compensation if determined to be in the best interests of our stockholders. In addition, these tax rules are complexBeginning in 2018, this performance-based compensation exception to the $1 million annual limit on deductions for covered employee compensation, including compensation payable to our named executives, has generally been eliminated (except with regard to certain grandfathered arrangements). The Company understands that compensation payable to our named executives for 2018 and may change (including with retroactive effect), thusfuture years generally will not be fully deductible. As has historically been the case, the Committee continues to have the ability to pay compensation to our named executives in appropriate circumstances, even if such compensation that is intended to be deductible may not qualify.fully deductible.
Board and Compensation and Human Resource Committee Report on Executive Compensation |
The Compensation and Human Resource Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion & Analysis with management. Based on that review and those discussions, the Committee recommended to our Board of Directors that the Compensation Discussion & Analysis be included in these proxy materials.
The Compensation and Human Resource Committee:Committee
Linda Fayne Levinson (Chair)
Edward “Pete” Boykin
Chinh E. Chu
Gary J. DaichendtRichard L. Clemmer
Executive Compensation Tables |
Summary Compensation Table |
Our Summary Compensation Table below shows the total compensation paid to or earned by each of our named executive officersexecutives with respect to the fiscal year ending December 31, 2018, and for those individuals who were then named executives, with respect to the fiscal years ending December 31, 2016, 20152017 and 2014.2016.
Summary Compensation Table ($) | ||||||||||||||||||||||||||||||||
Name and Principal Position (a) | Year (b) | Salary (c) | Bonus (d) | Stock (e)(1) | Non-Equity Incentive Plan Compensation (f)(2) | Change in Value (g)(3) | All Other Compensation (h)(4) | Total (i) | ||||||||||||||||||||||||
William Nuti Chairman of the Board and Chief Executive Officer | 2016 | 1,000,000 | — | 14,999,995 | 2,756,812 | — | 433,460 | 19,190,267 | ||||||||||||||||||||||||
2015 | 1,000,000 | — | 8,000,014 | 2,586,286 | — | 360,391 | 11,946,691 | |||||||||||||||||||||||||
2014 | 1,000,000 | — | 4,999,999 | 2,888,154 | — | 396,744 | 9,284,897 | |||||||||||||||||||||||||
Robert Fishman Executive Vice President and Chief Financial Officer | 2016 | 611,539 | 4,499,995 | 928,314 | 21,666 | 26,645 | 6,088,159 | |||||||||||||||||||||||||
2015 | 575,000 | 100,000 | 1,099,991 | 717,224 | (13,008 | ) | 23,593 | 2,502,800 | ||||||||||||||||||||||||
2014 | 538,502 | — | 750,011 | 352,719 | 42,507 | 24,242 | 1,707,981 | |||||||||||||||||||||||||
Mark Benjamin(5) President and Chief Operating Officer | ||||||||||||||||||||||||||||||||
2016 | 129,808 | 215,625 | 8,500,010 | 18,750 | — | 32,194 | 8,896,387 | |||||||||||||||||||||||||
Frederick Marquardt Executive Vice President, Services, Enterprise Quality and Telecom & Technology | 2016 | 611,539 | 3,300,001 | 942,850 | — | 26,645 | 4,881,035 | |||||||||||||||||||||||||
2015 | 575,000 | 136,500 | 1,499,993 | 738,919 | — | 23,490 | 2,973,902 | |||||||||||||||||||||||||
2014 | 499,038 | 100,000 | 899,994 | 130,891 | — | 23,425 | 1,653,348 | |||||||||||||||||||||||||
Paul Langenbahn(6) Executive Vice President, Software | ||||||||||||||||||||||||||||||||
2016 | 460,193 | 3,000,002 | 466,172 | — | 26,490 | 3,952,857 | ||||||||||||||||||||||||||
Summary Compensation Table ($)
| ||||||||||||||||||||||||||||||||||||
Name and Principal Position (a) | Year (b) | Salary (c) | Bonus (d)(1) | Stock Awards (e)(2) | Option Awards (f)(3) | Non-Equity Incentive Plan Compensation (g)(4) | Change in Pension Value (h)(5) | All Other Compensation (i)(6) | Total (k) | |||||||||||||||||||||||||||
Michael Hayford President & Chief Executive Officer | ||||||||||||||||||||||||||||||||||||
|
2018
|
|
|
634,615
|
|
|
1,010,959
|
|
|
5,000,011
|
|
|
7,499,881
|
|
|
—
|
|
|
—
|
|
|
94,423
|
|
|
14,239,889
|
| ||||||||||
Frank Martire Executive Chairman | ||||||||||||||||||||||||||||||||||||
|
2018
|
|
|
409,616
|
|
|
662,671
|
|
|
2,249,988
|
|
|
3,750,354
|
|
|
—
|
|
|
—
|
|
|
108,116
|
|
|
7,180,745
|
| ||||||||||
Owen Sullivan Chief Operating Officer | ||||||||||||||||||||||||||||||||||||
|
2018
|
|
|
292,789
|
|
|
482,671
|
|
|
2,250,000
|
|
|
3,749,994
|
|
|
—
|
|
|
—
|
|
|
74,071
|
|
|
6,849,525
|
| ||||||||||
Andre Fernandez Executive Vice President & Chief Financial Officer | ||||||||||||||||||||||||||||||||||||
|
2018
|
|
|
187,500
|
|
|
267,551
|
|
|
3,000,011
|
|
|
999,998
|
|
|
—
|
|
|
—
|
|
|
57,867
|
|
|
4,512,927
|
| ||||||||||
Daniel Campbell Executive Vice President, Global Sales | ||||||||||||||||||||||||||||||||||||
|
2018
|
|
|
497,596
|
|
|
500,000
|
|
|
5,000,011
|
|
|
499,996
|
|
|
—
|
|
|
—
|
|
|
9,970
|
|
|
6,507,573
|
| ||||||||||
William Nuti Chairman Emeritus and Consultant; Former Chairman of the Board and Chief Executive Officer |
|
2018
|
|
|
361,539
|
|
|
—
|
|
|
5,000,016
|
|
|
2,500,000
|
|
|
—
|
|
|
—
|
|
|
11,934,051
|
|
|
19,795,606
|
| |||||||||
|
2017
|
|
|
1,000,000
|
|
|
—
|
|
|
9,999,991
|
|
|
—
|
|
|
1,160,984
|
|
|
—
|
|
|
274,043
|
|
|
12,435,018
|
| ||||||||||
|
2016
|
|
|
1,000,000
|
|
|
—
|
|
|
14,999,995
|
|
|
—
|
|
|
2,756,812
|
|
|
—
|
|
|
433,460
|
|
|
19,190,267
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
Robert Fishman Senior Advisor; Former Executive Vice President, | 2018 | 625,000 | — | 1,333,318 | 666,665 | 215,714 | (20,782 | ) | 26,645 | 2,846,560 | ||||||||||||||||||||||||||
|
2017
|
|
|
625,000
|
|
|
—
|
|
|
1,499,998
|
|
|
—
|
|
|
321,962
|
|
|
41,940
|
|
|
26,645
|
|
|
2,515,545
|
| ||||||||||
2016 | 611,539 | — | 4,499,995 | — | 928,314 | 21,666 | 26,645 | 6,088,159 | ||||||||||||||||||||||||||||
(1) This column represents 2018 bonus commitments paid in early 2019 under negotiated new hire employment agreements, except that Mr. Campbell’s amount includes: (i) a negotiated new hiresign-on bonus that he must repay if he resigns during the year after his start date, and (ii) a discretionary bonus recommended by the CEO and approved by the Committee in the amount of $350,000 for his leadership on certainCompany-wide strategic directives and the achievement of various individual management objectives.
(2) This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the stock awards granted to each named executive in the applicable year. See Note 8 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form10-K for the year ended December 31, 2016 (our “2016 Annual Report”)2018 for an explanation of the assumptions we make in the valuation of our equity awards. Assuming achievement of the highest level of performance, the aggregate grant date fair values of the performance-based restricted stock units granted in 2016 are as follows:2018 are: Campbell: $5,500,024; Nuti: $15,624,989;$7,500,024; Fishman: $4,687,503; Benjamin: $8,500,010; Marquardt: $3,437,522;$1,999,994. Mr. Hayford, Mr. Martire, Mr. Sullivan, and Langenbahn; $3,125,015.Mr. Fernandez were hired in 2018, and did not receive performance-based restricted stock units. For additional informationmore about 2018 awards, made in 2016, see theGrants of Plan-Based Awards—2016 TableAwards – 2018 Table.
(3) Represents the grant date fair value of the option awards granted in 2018. See Note 8 of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on page 73Form10-K for the year ended December 31, 2018 for an explanation of this proxy statement.the assumptions we make in valuing our option awards.
(2)(4) Given the $0 payouts under our 2018 Annual Incentive Plan based on performance, the amounts shown for 2018 reflect only Mr. Fishman’s 2018 EPP amount payable in August 2019. The 2018 negotiated new hire bonus commitments to Messrs. Hayford, Martire, Sullivan, Fernandez and Campbell are shown in column (1). The amounts reported for 2017 are comprised of amounts earned in prior years under the EPP that were paid in August 2018. The amounts reported for 2016 are comprised of amounts earned under our 2016 Annual Incentive Plan: Nuti: $1,024,000; Fishman: $447,774; Benjamin: $18,750; Marquardt: $447,774; and Langenbahn $305,070,Plan, plus amounts for performance under the 2016 EPP to bethat were paid in August 2017: Nuti: $1,732,812; Fishman: $480,540; Marquardt: $495,076; and Langenbahn $161,102.2017. The entire amounts reportedCommittee terminated the EPP on February 27, 2019. Consequently, any remaining Bonus Bank balances of participants who were actively employed on the termination date, such as Mr. Fishman, are expected to be distributed in 2015 and 2014 are for EPP.2020 (following any normal course distributions due in 2019). Mr. Benjamin joinedNuti’s EPP balances will be distributed in accordance with his retirement agreement. For more details, see the Company in October 2016, and is not a participant in the EPP.2018 Long-Term Incentives section above.
(3)(5) The aggregate change in actuarial values of the accumulated pension benefit under the Company’s qualified pension benefit plans is applicable only applies to Mr. Fishman and was $21,666.Fishman. For more information regardingabout pension benefits, see the 20162018 Pension Benefits Table on page 75 of this proxy statement..
(4)
(6) The amounts in this column consist of the aggregate incremental cost to the Company of the perquisites provided to the named executives, any insurance premiums paid by the Company with respect to life insurance for the benefit of the named executives, and contributions made by the Company to the Savings Plan, our 401(k) plan, on behalf of the named executives and certain post-termination payments for certain former executives. Additional details regarding these amounts are included in theAll Other Compensation - 2018Table andPerquisites - 2018 Table, both of which can be found below. For Mr. Nuti, this column also includes: consulting payments of $100,000; and the amount of $3,518,132 due under the disability provisions of the EPP. In addition, in connection with Mr. Nuti’s retirement agreement and in accordance with FASB ASC Topic 718, it was necessary to modify certain outstanding stock and awards held by Mr. Nuti as of his April 30, 2018 retirement date. Thus, for Mr. Nuti, this column also includes the amount of $8,213,418 that reflects the additional incremental fair value of all outstanding stock awards and option awards modified as part of Mr. Nuti’s retirement agreement. For more details, see theAgreements with Our Named Executives andPotential Payments Upon Termination or Change in Control sections below.
(5) Mr. Benjamin became President and Chief Operating Officer on October 17, 2016.
(6) Mr. Langenbahn became Executive Vice President, Software, on January 1, 2017. Before that he served as Senior Vice President & President, Hospitality.
All Other Compensation Table |
This Table shows the value of Company-paid perquisites and lifeother personal benefits, insurance premiums, and Company matching contributions to the NCR Savings Plan, our 401(k) plan, on behalf of our named executives in 2016:2018:
All Other Compensation – 2016 ($) | ||||||||||||||||
Named Executive | Perquisites and Other Personal Benefits (1) | Insurance Premiums (2) | Company Contributions to Retirement / 401(k) Plans (3) | Total | ||||||||||||
William Nuti | 423,428 | 1,032 | 9,000 | 433,460 | ||||||||||||
Robert Fishman | 17,000 | 645 | 9,000 | 26,645 | ||||||||||||
Mark Benjamin | 32,000 | 194 | (4) | 0 | 32,194 | |||||||||||
Frederick Marquardt | 17,000 | 645 | 9,000 | 26,645 | ||||||||||||
Paul Langenbahn | 17,000 | 490 | 9,000 | 26,490 |
All Other Compensation – 2018 ($) | ||||||||||||||||||||
Named Executive | Perquisites and Other Personal Benefits(1) | Insurance Premiums(2) | Company Contributions to Retirement / 401(k) Plans(3) | Total | ||||||||||||||||
Michael Hayford | 84,710 | 463 | 9,250 | 94,423 | ||||||||||||||||
Frank Martire | 98,598 | 268 | 9,250 | 108,116 | ||||||||||||||||
Owen Sullivan | 64,665 | 156 | 9,250 | 74,071 | ||||||||||||||||
Andre Fernandez | 48,505 | 112 | 9,250 | 57,867 | ||||||||||||||||
Daniel Campbell | 5,000 | 412 | 4,558 | 9,970 | ||||||||||||||||
William Nuti | 101,469 | 1,032 | — | 102,501 | ||||||||||||||||
Robert Fishman | 16,750 | 645 | 9,250 | 26,645 |
(1) This column shows the Company’s aggregate incremental cost for the perquisites and other personal benefits described in thePerquisites - 2018 Table below.
(2) This column shows the value of Company-paid premiums for life insurance for the benefit of our named executives.
(3) TheThis column shows Company matching contributions to our 401(k) plan, which the Company also makes for ournon-executive employee participants in that plan. Because he separated from Company service before the last pay date of 2018, under the plan terms no such contributions were made for Mr. Nuti.
(4) Mr. Benjamin joined the Company in October 2016. This amount represents three months of Company-paid life insurance premiums.
Perquisites Table |
This Table shows the aggregate incremental cost to the Company for perquisites for our named executives in 2016.2018.
Perquisites – 2016 ($) | ||||||||||||||||||||||||||
Named Executive | Corporate Aircraft Usage (1) | Lodging (2) | Vehicle Security (3) | Legal Expenses (4) | Executive Medical Program (5) | Financial Planning Allowance (6) | Total | |||||||||||||||||||
William Nuti | 324,581 | 778 | 81,069 | — | 5,000 | 12,000 | 423,428 | |||||||||||||||||||
Robert Fishman | — | — | — | — | 5,000 | 12,000 | 17,000 | |||||||||||||||||||
Mark Benjamin | — | — | — | 15,000 | 5,000 | 12,000 | 32,000 | |||||||||||||||||||
Frederick Marquardt | — | — | — | — | 5,000 | 12,000 | 17,000 | |||||||||||||||||||
Paul Langenbahn | — | — | — | — | 5,000 | 12,000 | 17,000 |
Perquisites – 2018 ($) | |||||||||||||||||||||||||||||||||||
Named Executive | Corporate Aircraft Usage(1) | Vehicle and Security(2) | Executive Medical Program(3) | Financial Planning Allowance(4) | Relocation(5) | Other(6) | Total | ||||||||||||||||||||||||||||
Michael Hayford | 15,980 | — | 5,000 | 12,000 | 51,730 | — | 84,710 | ||||||||||||||||||||||||||||
Frank Martire | 34,883 | — | 10,000 | 12,000 | 41,715 | — | 98,598 | ||||||||||||||||||||||||||||
Owen Sullivan | — | — | 5,000 | 12,000 | 47,665 | — | 64,665 | ||||||||||||||||||||||||||||
Andre Fernandez | — | — | 5,000 | 6,000 | 37,505 | — | 48,505 | ||||||||||||||||||||||||||||
Daniel Campbell | — | — | 5,000 | — | — | — | 5,000 | ||||||||||||||||||||||||||||
William Nuti | 44,953 | 28,418 | 5,000 | 12,000 | — | 11,098 | 101,469 | ||||||||||||||||||||||||||||
Robert Fishman | — | — | 5,000 | 11,750 | — | — | 16,750 |
(1) This column shows the Company’s incremental cost for personal usage of the corporate aircraft. We calculated this incremental cost by determining the variable operating cost to the Company, including items such as fuel, landing and terminal fees, crew travel expenses and operational maintenance. Expenses determined to be less variable in nature, such as general administration, depreciation and pilot compensation, were not included in this incremental cost. On occasion, other individualsfamily members and close associates traveled with or at the authorization of our CEO on corporate aircraft; however, the Company incurred de minimis incremental costs as a result of such travel, and no amounts for such travelwhich costs are included in the Table.
(2) This column shows the Company’s cost of providing Mr. Nuti occasional overnight hotel accommodations near our New York City office not in connection with Board meetings or monthly executive team meetings.
(3) This column shows Company payments for the Company-provided car and driver that the Company requiresrequired Mr. Nuti to use for security purposes.
(4) This column shows reimbursement, provided under Mr. Benjamin’s new hire employment offer to join the Company, for legal fees he incurred in connection with review and acceptance of the Company’s employment terms and conditions.
(5)(3) This column shows the Company-paid maximum amount available to named executives for medical diagnostic services under our Executive Medical Exam Program. Though some executives may not use the maximum, for privacy reasons we choose to disclose the maximum benefit (rather than the amount actually used).
(6)(4) This column shows the Company-paid amounts for financial planning assistance under our Executive Financial Planning Allowance Program, which were earned byProgram.
(5) This column shows relocation expenses related to our named executivesexecutives. Included in 2016.
(6) This column represents expenses paid on Mr. Nuti’s behalf related to COBRA coverage from the date of his retirement as of April 30, 2018 through December 31, 2018 under the terms of his Medical Benefits Agreement with the Company.
Agreements with Our Named Executives |
Our named executives have agreements with the Company that generally describe, among other things, their initial base salaries, bonus opportunities and equity awards, as well as benefit plan participation. Changes to named executive compensation may be made from time to time, as noted in theCompensation Discussion & Analysis. Theparticipation and applicable restrictive covenants. These agreements generally are not updated to reflect theselater compensation changes. Mr. Nuti has a retirement agreement as described below.
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Agreement with Our |
Mr. Hayford: Mr. Hayford’s April 27, 2018 employment agreement describes his initial base salary, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. His 2018 new hire equity awards included options and time-based RSUs shown in theOutstanding Equity
Award at Fiscal Year-End 2018 Table below. For 2018, NCR agreed that Mr. Hayford’s MIP payout would be at least target (prorated for 2018 service), and for each of 2019 and 2020 his annual LTI award would have an aggregate grant value of at least $10 million, with $2.5 million more in value for 2019 if our common stock were to trade at $40 per share or more for at least fifteen trading days during the period from May 1, 2018 through February 15, 2019. The agreement also provides for
Mr. Hayford’s Executive Severance Plan participation with a separation benefit of one and
one-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (other than for cause) or if he resigns for good reason, under the agreement Mr. Hayford’s unvested 2018 equity awards vest immediately, and his 2018 options remain exercisable for 1 year (or until earlier expiration). “Cause” generally means grounds for cause under our Change in Control Severance Plan, felony conviction or material Code of Conduct violation. “Good reason” generally means assignment of duties inconsistent with position, authority, duties or responsibilities or diminution in such items, relocation over 40 miles or material breach of employment agreement or 2018 equity agreements.
Agreement with Our Executive Chairman of the Board |
We entered intoMr. Martire’s April 27, 2018 employment agreement describes his initial base salary, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. His 2018 new hire equity awards included options and time-based RSUs shown in theOutstanding Equity Awards at Fiscal Year-End 2018 Table below. For 2018, NCR agreed that Mr. Martire’s MIP payout would be at least target (prorated for 2018 service), and for each of 2019 and 2020 his annual LTI award would have an aggregate grant value of at least $4.5 million, with $1.5 million more in value for 2019 if our common stock were to trade at $40 per share or more for at least fifteen trading days during the period from May 1, 2018 through February 15, 2019. The agreement also provides for Mr. Martire’s Executive Severance Plan participation with a separation benefit of one andone-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (other than for cause) or
if he resigns for good reason, under the agreement Mr. NutiMartire’s unvested 2018 equity awards vest immediately, and his 2018 options remain exercisable for 1 year (or until earlier expiration). “Cause” and “good reason” generally have meanings similar to those noted for Mr. Hayford above.
Agreements with Other Current Executives |
Mr. Sullivan: Mr. Sullivan’s July 18, 2018 employment agreement describes his initial base salary as Chief Operating Officer, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. His 2018 new hire equity awards included options and time-based RSUs as shown in theOutstanding Equity Awards at Fiscal Year-End 2018 Table below. For 2018, NCR agreed that his MIP payout would be at least target (prorated for 2018 service), and for 2019 his annual LTI award would have an aggregate grant value of at least $4.5 million. The agreement also provides for Mr. Sullivan’s Executive Severance Plan participation with a separation benefit of one andone-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (other than for cause) or if he resigns for good reason, under the Agreement Mr. Sullivan’s unvested 2018 equity awards vest immediately, and his 2018 option awards remain exercisable for 1 year (or until earlier expiration). “Cause” and “good reason” generally have the same meanings noted for Mr. Hayford above.
Mr. Fernandez: Mr. Fernandez’s August 27, 2018 employment agreement describes his initial base salary as EVP and Chief Financial Officer, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. His 2018 new hire equity awards included options and time-based RSUs as shown in theOutstanding Equity Awards at Fiscal Year-End 2018 Table below. For 2018, NCR agreed
that his MIP payout would be at least target (prorated for 2018 service), including payment of the target Customer Success component of the MIP, and for 2019 his annual LTI award would have an aggregate grant value of at least $3 million. The agreement also provides for Mr. Fernandez’s Executive Severance Plan participation with a separation benefit of one andone-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If Mr. Fernandez’s employment is terminated (other than for cause) or if he resigns for good reason (i) his unvested 2018 equity awards vest immediately, (ii) his 2018 options remain exercisable for 1 year (or until earlier expiration), (iii) if termination occurs during the period that begins six months after a grant or vesting date for a particular equity grant and that ends 364 days after that same grant or vesting date for a particular equity grant Mr. Fernandez will be entitled to full vesting of the equity tranche for that particular grant that would otherwise vest on July 29,the scheduled vesting date next following the date of termination, with any option tranche so vesting remaining exercisable until the earlier of the first anniversary of the employment termination or the option expiration date, (iv) if termination occurs after the end of a fiscal year, he will receive any unpaid bonus for that year based on Company performance, and (v) if termination occurs in the last half of the year, he will receive a prorated bonus for that year, based on his service and Company performance. “Cause” and “good reason” generally have the same meanings noted for Mr. Hayford above.
Mr. Campbell: Mr. Campbell’s employment agreement dated December 28, 2017 describes his initial base salary as EVP, NCR Global Sales, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. Hissign-on award was a March 1, 2018 award of Performance-Vesting RSUs shown in theOutstanding Equity Awards at Fiscal Year-End 2018 Table below. He also received a cashsign-on bonus
of $150,000 (subject to repayment if he resigns during the first year employed). For 2018, NCR agreed that his annual LTI award would have an aggregate grant value of at least $1.5 million. The agreement also provides for Mr. Campbell’s Executive Severance Plan participation with a separation benefit of one times (1x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier II separation benefit of two times (2x) base salary plus target bonus. If his employment is terminated (other than for cause) or if he resigns for good reason during his first two years of employment, under the agreement Mr. Campbell’s unvested 2018 new hire and 2018 annual equity awards vest immediately (with RSUs subject to performance conditions vesting at “target”). “Cause” and “good reason” have meanings similar to those noted for Mr. Hayford above.
Agreements with Former Executives |
The executives below no longer served as executive officers as of December 31, 2018.
Mr. Nuti: Mr. Nuti’s 2005 when he becameemployment agreement, as amended, described his initial base salary as our former President and Chief Executive Officer. This agreement, which was amended on July 26, 2006Officer, incentive opportunities and December 18, 2008, describes (among other things) his initial base salary, bonus opportunity and equity award, as well asawards, benefit plan participation. The agreement also provides that in the event his employment terminates for any reason, Mr. Nuti is subject to an eighteen-monthnon-competitionparticipation andnon-solicitation provision, plus a confidentiality provision. related items, including noncompete and other restrictive covenants. The terms of the arrangement, whichas amended, were determined through negotiation provide that in the event we terminateand provided for various severance benefits if NCR terminated his employment (other than for cause) or if he voluntarily terminates employmentresigned for good reason, he would receive the severance-related payments and benefits listed below. These amounts are conditioned upon Mr. Nuti signing a release of claims against us and compliance with the restrictive covenants described above:
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Mr. Nuti’s agreement defines “cause” and “good reason” by reference to our Changereason. In 2015, in Control Severance Plan (see page 77), except the following additional reasons qualify as “good reason” for him to terminate employment: (i) a reduction in his job title, (ii) a material adverse change in his position, office or duties (including removal ornon-re-election to the Board), or (iii) a material breachrecognition of his agreement by the Company. In the event Mr. Nuti’s employment terminates in connection with a change in control, he would receive payments and benefits under our Change in Control Severance Plan described on page 77, and not under the agreement. Further, if the Executive Severance Plan described on page 79 provides greater benefits to Mr. Nutileadership role in the event of his termination without cause not connected to a change of control, he would receive benefits under the Executive Severance Plan, and not under the agreement.
On March 5, 2015,Company’s transformation, the Committee approved ana Medical Benefits Agreement for Mr. Nuti providing for continued participation in certain of the Company’s medical benefit plans at such time in the future as he ceases to be employed by the Company. The Committee made this decision in recognition of his leadership of the Company’s transformation to a software and solutions leader in consumer transaction technologies. Under this Agreement, Mr. Nuti will be eligible to participate in the Company’sour active employee medical plan until age 65 (on the same basis as the Company’s active employees), and thereafter he will be eligible to participate in the Company’sourpost-65 retiree Medicare supplement plan which providesproviding for a fixed annual subsidy for qualified Medicare supplement or other qualified medical expenses through a retiree reimbursement account. Mr. Nuti retired from employment and was appointed to the honorary position of Chairman Emeritus of our Board effective April 30, 2018. He was retained on a part-time basis as a consultant for transition and continuing advisory services. His
We entered into anretirement agreement with Mark D. Benjamin on September 16, 2016, pursuant to which he was offeredincluding consultant terms are described underPotential Payments Upon Termination or Change in Control below.
Mr. Fishman: Mr. Fishman’s March 17, 2010 employment as President and Chief Operating Officer of the Company. The agreement provided for andescribes his initial base salary for Mr. Benjamin of $750,000, and a 2016 target bonus opportunity of 125% of base salary (115% MIP plus 10% Customer Success opportunity). The Company also agreed to provide Mr. Benjamin a guaranteed 2016 bonus payment of $215,625 for his period of employment with the Company during 2016. The agreement also provides for a new hire equity award of single-metric performance-based RSUs for Mr. Benjamin as described in these proxy materials, plus eligibility for future annual equity grants under the Company’s LTI Program. For 2017, the Company agreed that Mr. Benjamin’s LTI award would include performance-based and time-based restricted stock units with an aggregate value of no less than $3,500,000. With respect to severance, the agreement provides that Mr. Benjamin would participate in the NCR Executive Severance Plan with a separation benefit equal to one andone-half times (1.5x) his annual base salary and target bonus (as defined in the plan) in the event of a qualifying termination, with termination for “cause” being defined for Mr. Benjamin thereunder as a termination of employment by the Company in connection with: (a) conviction (as defined under the plan) for committing a felony under U.S. federal law or the law of the state or country in which such action occurred, (b) dishonesty in the course of fulfilling employment duties, (c) failure to perform substantially employment duties in any material respect, (d) a material violation of the Company’s Code of Conduct, or (e) such other events as shall be determined by the plan administrator and communicated in writing. The agreement further provides for Mr. Benjamin’s participation in the
Amended and Restated NCR Change in Control Severance Plan with a “Tier I” benefit level equal to three times (3x) his annual base salary and target bonus (as defined in the plan) in the event of a qualifying termination. He will also be entitled to immediate vesting of his new hire equity award and 2017 annual equity award in the event of a qualifying termination, provided applicable performance goals are met. With respect to perquisites, the agreement provides for certain standard executive relocation benefits and medical and financial planning allowances, as well as reimbursement of limited `reasonable legal expenses incurred by Mr. Benjamin in connection with his review and acceptance of the Company’s employment terms and conditions (see the “All Other Compensation” column of the Summary Compensation Table above).
We entered into an agreement with Mr. Fishman on March 17, 2010 when we offered him employment as Senior Vice President and Chief Financial Officer. The agreement describes (among other things)Officer, his initial base salary, bonus opportunityincentive opportunities and equity award, as well asawards, his benefit plan participation.participation and related items, including noncompete and restrictive covenants. The agreement also provides thatfor Mr. Fishman’s Executive Severance Plan participation with a separation benefit of one times
(1x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier II separation benefit of two times (2x) base salary plus target bonus. On July 24, 2018, Mr. Fishman announced his decision to retire from NCR effective at an undetermined time in the event his employment terminates for any reason, Mr. Fishman is subject to a twelve-monthnon-competitionfuture. As of August 29, 2018, he became our Senior Advisor, andnon-solicitation provision, and a confidentiality provision.
We entered into an agreement with Mr. Marquardt on May 1, 2014 when he was promoted to his prior position ceased holding the positions of Executive Vice President, Services, Hardware Solutions & Enterprise Quality. The agreement describes (among other things) his base salary, bonus opportunity,Chief Financial Officer and promotional equity award, as well as benefit plan participation.
We have not enteredChief Accounting Officer. He continues to assist with transition and advisory services, and NCR expects to enter into any separate employmenta retirement agreement with Mr. Langenbahn.him at a later date.
Grants of Plan-Based Awards Table |
The Table below shows the Committee’s equity andnon-equity incentive plan awards to our named executives in 2016.2018. Equity awards were made under our StockPlan. Non-equity awards were made under our Annual Incentive Plan (MIP and Customer Success Bonus)Bonus, as applicable) and, EPP.for Mr. Fishman only, a payout under our EPP earned before 2018. These plans and related awards are described in theCompensation Discussion & Analysis.Analysis.
Grants of Plan-Based Awards – 2016 ($) Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) Estimated Future Payouts Under Equity Incentive Plan Awards(2) Grant Date All Other Stock Awards: Number of Units(3) Grant Date Fair Value of Stock Awards(4) William Nuti Management Incentive Plan Customer Success Economic Profit Plan Vision 2020 Awards-$35 Vision 2020 Awards-$40 Performance-Based RSU Time-Based RSU Robert Fishman Management Incentive Plan Customer Success Economic Profit Plan Vision 2020 Awards-$35 Vision 2020 Awards-$40 Performance-Based RSU Time-Based RSU Mark Benjamin Management Incentive Plan Customer Success Economic Profit Plan Performance-Based RSU Time-Based RSU Frederick Marquardt Management Incentive Plan Customer Success Economic Profit Plan Vision 2020 Awards-$35 Vision 2020 Awards-$40 Performance-Based RSU Time-Based RSU Paul Langenbahn Management Incentive Plan Customer Success Economic Profit Plan Vision 2020 Awards-$35 Vision 2020 Awards-$40 Performance-Based RSU Time-Based RSU Named Executive Award Type Threshold Target Max Threshold Target Max 560,000 1,400,000 4,200,000 — — — — — — 100,000 100,000 — — — — — — 1,732,812 — — — — — — 02/24/16 — — — — 334,896 — — 4,999,998 02/24/16 — — — — 334,896 — — 4,999,997 02/24/16 — — — 40,098 160,393 240,590 — 3,749,988 02/24/16 — — — — — 53,465 1,250,012 245,355 613,388 1,840,164 — — — — — — 61,339 61,339 — — — — — — 480,540 — — — — — — 02/24/16 — — — — 100,469 — — 1,500,002 02/24/16 — — — — 100,469 — — 1,500,002 02/24/16 — — — 12,030 48,118 72,177 — 1,124,999 02/24/16 — — — — — — 16,039 374,992 — — — — — — — — — 18,750 18,750 — — — — — — — — — — — — — 11/01/16 (5) — — — — 244,183 — — 8,500,010 — — — — — — — — 245,355 613,388 1,840,164 — — — — — — 61,339 61,339 — — — — — — 495,076 — — — — — — 02/24/16 — — — — 73,677 — — 1,099,998 02/24/16 — — — — 73,677 — — 1,099,997 02/24/16 — — — 8,822 35,287 52,931 — 825,010 02/24/16 — — — — — — 11,762 274,996 184,891 462,227 1,386,681 — — — — — — 46,223 46,223 — — — — — — 161,102 — — — — — — 02/24/16 — — — — 66,979 — — 999,997 02/24/16 — — — — 66,979 — — 999,996 02/24/16 — — — 8,020 32,079 48,119 — 750,007 02/24/16 — — — — — — 10,693 250,002
Grants of Plan-Based Awards – 2018 ($)
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Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Units | All Other Option Awards: Number of Securities Underlying Options | Exercise ($/Sh) | Grant Date Value of Stock Awards(3) | |||||||||||||||||||||||||||||||||||
Named Executive | Award Type | Grant Date | Threshold | Target | Max | Threshold | Target | Max | ||||||||||||||||||||||||||||||||
Michael Hayford | Management Incentive Plan | 1,010,959 | 1,010,959 | 2,021,918 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock Options | 05/01/18 | 266,634 | 31.15 | 2,499,960 | ||||||||||||||||||||||||||||||||||||
Stock Options | 05/01/18 | — | — | — | — | — | — | — | 533,268 | 31.15 | 4,999,921 | |||||||||||||||||||||||||||||
Time-Based RSU | 05/01/18 | — | — | — | — | — | — | 160,514 | — | — | 5,000,011 | |||||||||||||||||||||||||||||
Frank Martire | Management Incentive Plan | 662,671 | 662,671 | 1,325,342 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Stock Options | 06/01/18 | — | — | — | — | — | — | — | 165,396 | 30.13 | 1,500,141 | |||||||||||||||||||||||||||||
Stock Options | 06/01/18 | — | — | — | — | — | — | — | 248,094 | 30.13 | 2,250,213 | |||||||||||||||||||||||||||||
Time-Based RSU | 06/01/18 | — | — | — | — | — | — | 74,676 | — | — | 2,249,988 | |||||||||||||||||||||||||||||
Owen Sullivan | Management Incentive Plan | 450,493 | 450,493 | 900,986 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Customer Success | — | 32,178 | 32,178 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock Options | 08/01/18 | — | — | — | — | — | — | — | 178,784 | 27.19 | 1,499,997 | |||||||||||||||||||||||||||||
Stock Options | 08/01/18 | — | — | — | — | — | — | — | 268,176 | 27.19 | 2,249,997 | |||||||||||||||||||||||||||||
Time-Based RSU | 08/01/18 | — | — | — | — | — | — | 82,751 | — | — | 2,250,000 | |||||||||||||||||||||||||||||
Andre Fernandez | Management Incentive Plan | 246,147 | 246,147 | 492,294 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Customer Success | — | 21,404 | 21,404 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock Options | 09/01/18 | — | — | — | — | — | — | — | 114,155 | 28.41 | 999,998 | |||||||||||||||||||||||||||||
Time-Based RSU | 09/01/18 | — | — | — | — | — | — | 105,597 | — | — | 3,000,011 | |||||||||||||||||||||||||||||
Daniel Campbell | Management Incentive Plan | 230,000 | 575,000 | 1,725,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Customer Success | — | 57,500 | 57,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock Options | 02/23/18 | — | — | — | — | — | — | — | 51,020 | 32.57 | 499,996 | |||||||||||||||||||||||||||||
Performance-Based RSU | 02/23/18 | — | — | — | 6,141 | 15,352 | 30,704 | — | — | — | 500,015 | |||||||||||||||||||||||||||||
Performance-Vesting RSU | 02/23/18 | — | — | — | 0 | 15,351 | 15,351 | — | — | — | 499,982 | |||||||||||||||||||||||||||||
Performance-Vesting RSU | 03/01/18 | — | — | — | 0 | 90,992 | 90,992 | — | — | — | 3,000,006 | |||||||||||||||||||||||||||||
Performance-Vesting RSU(4) | 05/01/18 | — | — | — | 0 | 32,103 | 32,103 | — | 1,000,008 | |||||||||||||||||||||||||||||||
William Nuti | Management Incentive Plan | 202,462 | 506,154 | 1,518,462 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Customer Success | — | 36,154 | 36,154 | — | — | — | — | — | ||||||||||||||||||||||||||||||||
Equity Award Modification | 8,213,418 | |||||||||||||||||||||||||||||||||||||||
Stock Options | 02/23/18 | — | — | — | — | — | — | — | 255,102 | 32.57 | 2,500,000 | |||||||||||||||||||||||||||||
Performance-Based RSU | 02/23/18 | — | — | — | 30,703 | 76,758 | 153,516 | — | 2,500,008 | |||||||||||||||||||||||||||||||
Performance-Vesting RSU | 02/23/18 | — | — | — | 0 | 76,758 | 76,758 | — | 2,500,008 | |||||||||||||||||||||||||||||||
Robert Fishman | Management Incentive Plan | 250,000 | 625,000 | 1,875,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||
Customer Success | — | 62,500 | 62,500 | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Economic Profit Plan | — | 215,714 | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Stock Options | 02/23/18 | — | — | — | — | — | — | — | 68,027 | 32.57 | 666,665 | |||||||||||||||||||||||||||||
Performance-Based RSU | 02/23/18 | — | — | — | 8,188 | 20,469 | 40,938 | — | — | — | 666,675 | |||||||||||||||||||||||||||||
Performance-Vesting RSU | 02/23/18 | — | — | — | 0 | 20,468 | 20,468 | — | — | — | 666,643 |
(1) This column shows potential award levels based on performance under our 20162018 Annual Incentive Plan, which includes our Management Incentive PlanMIP and our Customer Success bonus (as applicable), plus previously earned amounts under our EPP.EPP for Mr. Fishman. The Customer Success metric is “make or miss.” No new EPP awards were made in 2016,2018, and no additional amounts were credited to participant accounts (Bonus Banks) under the EPP in 2016.2018. However, a portion of EPP Bonus Banks earned and accumulated in prior years is paid out each year to the extent required by the EPP. Because awards are determined under a formula and the Committee does not set a target amount under the EPP, in accordance with SEC guidelines the target amounts shown in the Table are the Bonus Bank amounts that are expected to be paid in August 2017.2019 for Mr. Fishman, subject to the Company’s satisfaction of the EPP Cash Flow test. For more information about our EPP, including details relating to the Committee’s termination of the EPP on February 27, 2019 and final distribution of Bonus Bank balances, see the20162018 Long-Term Incentives section above (starting on page 56).section. Mr. Nuti became ineligible to receive any bonus amount under the MIP and Customer Success component due to his retirement during 2018.
(2) This column shows the threshold, target and maximum shares that could be received for performance-based RSUs and the performance-based Vision 2020 Awards that wereperformance-vesting RSUs awarded in 2016. The Vision 2020 Awards were partially “front-loaded,” representing 50% of the 2016 target long-term value, and 50% of the expected 2017 target long-term incentive value. On December 8, 2016, the Committee certified that the $35 per share price hurdle for the 2016 portion of our Vision 2020 Awards had been satisfied, based on NCR’s stock price closing above $35 per share for twenty consecutive trading days (November 8, 2016 through December 6, 2016). The Vision 2020 Awards are not currently vested and are subject to continued employment with the Company as described in the2016 Long-Term Incentives section above.
(3) This column shows time-based RSUs granted to our named executives in 2016 under our Stock Plan.2018.
(4)(3) This column shows the grant date fair value of equity awards, as determined in accordance with FASB ASC Topic 718. The grant date fair values of performance-based and performance-vesting RSU awards are based on the probable outcome of applicable performance conditions as of the grant date. TheseThe performance-based awards are subject to atwo-year three-year performance period and an additional time-based vesting condition.
(5) This award may becondition; however, as described in the2018 Long-Term Incentives section above, the 2018 fiscal year performance conditions for these performance-based RSUs were not satisfied, and thus 100% of such performance-based RSUs were forfeited. The performance-vesting awards are earned based ononly upon the achievement of Committee-approved SRMD targets during theapre-determined performance periods from January 1, 2017 through June 30, 2017,condition, and January 1, 2017 through December 31, 2017. Ifonce earned, this award vests over three years, with 25% vestingvest 1/3 on the firsteach anniversary of the grant date, 35% vesting on the second anniversary of the grant date, and the remaining 40% vesting on the third anniversary of the grant date,generally subject to Mr. Benjamin’sthe executive’s continued service with the Company through the applicable vesting dates.
(4) Special recognition Ad hoc award subject to the same terms and conditions as the 2018 annual performance-vesting RSUs described above.
The following table sets forth information concerning all of the outstanding LTI awards held by each named executive as of December 31, 2018. Mr. Nuti did not hold any LTI awards as of December 31, 2018.
Outstanding Equity Awards at FiscalYear-End – 2016 | ||||||||||||||||||||||||||||
Option Awards(1) | Restricted Stock Unit Awards | |||||||||||||||||||||||||||
Named Executive | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Stock Have Not Vested (#) | Market Value of Stock Units That Have Not Vested | Equity Incentive Plan Awards: Number of Unearned Stock Units That Have | Equity Incentive Plan Awards: Payout Value of Unearned | ||||||||||||||||||||
William Nuti | 02/24/2016(3) | 53,465 | 2,168,540 | |||||||||||||||||||||||||
02/24/2016(4) | 240,590 | 9,758,330 | ||||||||||||||||||||||||||
02/24/2016(5) | 334,896 | 13,583,382 | ||||||||||||||||||||||||||
02/24/2016(6) | 334,896 | 13,583,382 | ||||||||||||||||||||||||||
02/23/2015(3) | 44,594 | 1,808,733 | ||||||||||||||||||||||||||
02/23/2015(7) | 229,766 | 9,319,309 | ||||||||||||||||||||||||||
02/24/2014(8) | 37,403 | 1,517,066 | ||||||||||||||||||||||||||
02/24/2014(9) | 48,923 | 1,984,317 | ||||||||||||||||||||||||||
02/23/2010 | 63,552 | 12.81 | 02/22/2020 | |||||||||||||||||||||||||
Robert Fishman | 02/24/2016(3) | 16,039 | 650,542 | |||||||||||||||||||||||||
02/24/2016(4) | 72,177 | 2,927,499 | ||||||||||||||||||||||||||
02/24/2016(5) | 100,469 | 4,075,023 | ||||||||||||||||||||||||||
02/24/2016(6) | 100,469 | 4,075,023 | ||||||||||||||||||||||||||
02/23/2015(3) | 6,132 | 248,714 | ||||||||||||||||||||||||||
02/23/2015(7) | 31,593 | 1,281,412 | ||||||||||||||||||||||||||
02/24/2014(8) | 5,610 | 227,542 | ||||||||||||||||||||||||||
02/24/2014(9) | 7,339 | 297,670 | ||||||||||||||||||||||||||
Mark Benjamin | 11/01/2016(10) | 244,183 | 9,904,062 | |||||||||||||||||||||||||
Frederick Marquardt | 02/24/2016(3) | 11,762 | 477,067 | |||||||||||||||||||||||||
02/24/2016(4) | 52,931 | 2,146,881 | ||||||||||||||||||||||||||
02/24/2016(5) | 73,677 | 2,988,339 | ||||||||||||||||||||||||||
02/24/2016(6) | 73,677 | 2,988,339 | ||||||||||||||||||||||||||
02/23/2015(3) | 8,362 | 339,163 | ||||||||||||||||||||||||||
02/23/2015(7) | 43,081 | 1,747,365 | ||||||||||||||||||||||||||
05/01/2014(11) | 8,197 | 332,470 | ||||||||||||||||||||||||||
02/24/2014(8) | 4,862 | 197,203 | ||||||||||||||||||||||||||
02/24/2014(9) | 6,360 | 257,962 | ||||||||||||||||||||||||||
02/23/2010 | 2,311 | 12.81 | 02/22/2020 | |||||||||||||||||||||||||
03/01/2008 | 14,096 | 22.16 | 02/28/2018 | |||||||||||||||||||||||||
10/01/2007 | 3,905 | 23.93 | 09/30/2017 | |||||||||||||||||||||||||
Paul Langenbahn | 02/24/2016(3) | 10,693 | 433,708 | |||||||||||||||||||||||||
02/24/2016(4) | 48,119 | 1,951,707 | ||||||||||||||||||||||||||
02/24/2016(5) | 66,979 | 2,716,668 | ||||||||||||||||||||||||||
02/24/2016(6) | 66,979 | 2,716,668 | ||||||||||||||||||||||||||
02/23/2015(3) | 3,624 | 146,989 | ||||||||||||||||||||||||||
02/23/2015(7) | 18,668 | 757,174 | ||||||||||||||||||||||||||
05/01/2014(8) | 8,197 | 332,470 | ||||||||||||||||||||||||||
02/24/2014(8) | 2,618 | 106,186 | ||||||||||||||||||||||||||
02/24/2014(9) | 3,425 | 138,918 |
Outstanding Equity Awards at FiscalYear-End – 2018
| ||||||||||||||||||||||||||||
Option Awards
|
Restricted Stock Unit Awards
| |||||||||||||||||||||||||||
Named Executive | Grant Date | Number of Securities Underlying Unexercised Options Unexercisable(1) (#) | Option Exercise Price ($) | Option Expiration Date | Number of Stock Units That Have Not Vested (#) | Market Value of Stock Units That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Stock Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Stock Units That Have Not Vested ($) | ||||||||||||||||||||
Michael Hayford
|
05/01/2018
|
|
266,634
|
|
31.15
|
|
04/30/2025
|
| ||||||||||||||||||||
05/01/2018
|
|
533,268
|
|
31.15
|
|
04/30/2025
|
| |||||||||||||||||||||
05/01/2018(3)
|
|
160,514
|
|
|
3,704,663
|
| ||||||||||||||||||||||
Frank Martire
|
06/01/2018
|
|
165,396
|
|
30.13
|
|
05/31/2025
|
| ||||||||||||||||||||
06/01/2018
|
|
248,094
|
|
30.13
|
|
05/31/2025
|
| |||||||||||||||||||||
06/01/2018(3)
|
|
74,676
|
|
|
1,723,522
|
| ||||||||||||||||||||||
Owen Sullivan
|
08/01/2018
|
|
178,784
|
|
27.19
|
|
07/31/2025
|
| ||||||||||||||||||||
08/01/2018
|
|
268,176
|
|
27.19
|
|
07/31/2025
|
| |||||||||||||||||||||
08/01/2018(3)
|
|
82,751
|
|
|
1,909,893
|
| ||||||||||||||||||||||
Andre Fernandez
|
09/01/2018
|
|
114,155
|
|
28.41
|
|
08/31/2025
|
| ||||||||||||||||||||
09/01/2018(3)
|
|
105,597
|
|
|
2,437,179
|
| ||||||||||||||||||||||
Daniel Campbell
|
02/23/2018
|
|
51,020
|
|
32.57
|
|
02/22/2025
|
| ||||||||||||||||||||
02/23/2018(4)
|
|
0
|
|
|
0
|
| ||||||||||||||||||||||
02/23/2018(5)
|
|
15,351
|
|
|
354,301
|
| ||||||||||||||||||||||
03/01/2018(5)
|
|
90,992
|
|
|
2,100,095
|
| ||||||||||||||||||||||
05/01/2018(5)
|
|
32,103
|
|
|
740,937
|
| ||||||||||||||||||||||
Robert Fishman
|
02/23/2018
|
|
68,027
|
|
32.57
|
|
02/22/2025
|
| ||||||||||||||||||||
02/23/2018(4)
|
|
0
|
|
|
0
|
| ||||||||||||||||||||||
02/23/2018(5)
|
|
20,468
|
|
|
472,401
|
| ||||||||||||||||||||||
02/27/2017(6)
|
|
5,088
|
|
|
117,431
|
| ||||||||||||||||||||||
02/24/2016(3)
|
|
5,347
|
|
|
123,409
|
| ||||||||||||||||||||||
02/24/2016(7)
|
|
71,311
|
|
|
1,645,858
|
| ||||||||||||||||||||||
02/24/2016(8)
|
|
100,469
|
|
|
2,318,825
|
| ||||||||||||||||||||||
02/24/2016(8)
|
|
100,469
|
|
|
2,318,825
|
|
(1) These awards, having vested 25%The unvested stock options will vest 1/4 on each anniversary of the grant date, are all now fully vested.generally subject to continued employment with the Company.
(2) The market value of outstanding restricted stock unit awards was calculated by multiplying the number of shares shown in the table by $40.56,$23.08, which was the closing market price of NCR common stock on December 30, 2016,31, 2018, the last trading day of our fiscal year.
(3) For the 2016 awards, pro rata vesting,one-thirdTime-based RSU where 1/3 will vest on each anniversary of the grant date. For 2015 awards,date, generally subject to continued employment with the Company.
(4) Performance-based RSU award where the performance condition for fiscal year 2018 was not achieved, and 100% of the award has been forfeited.
(5) Performance-vesting RSU where the performance condition has been achieved. The earned amount will vest pro rata, withone-thirdvestingone-half on each anniversary of the grant date, generally subject to the named executive’s continued service with the Company through the applicable vesting dates.
(6) Performance-vesting RSU where the performance conditions have been satisfied. One-half will vest on each of the next two anniversaries of the grant date.
(4)(7) Performance-based award with one year of atwo-yearRSU awards where the performance period has ended and the performance conditions have been satisfied. Shown at maximum, or 150% of target. If performance goal achieved, vestsThe 2016 awards will vest 100% on August 24, 2019.2019, generally subject to the named executive’s continued service with the Company through the applicable vesting dates.
(5) The(8) Price-contingent performance-based Vision 2020 Awards, were awarded in 2016. These awards were partially “front-loaded”, representing 50% ofwhere the 2016 target long-term value,performance period has ended and 50% of the expected 2017 target long-term incentive value.performance conditions have been satisfied. The performance criteria for the portionboth portions of the Vision 2020 Awards that relates to the 2016 long-term valueaward have been met, and 100% of the awardtwo portions will vest in full on February 24, 2019, and February 24, 2020, respectively, generally subject to the executive’s continued employment with the Company as described inthrough the2016 Long-Term Incentives section above. applicable vesting dates.
(6) The performance-based Vision 2020 Awards were awarded in 2016. These awards were partially “front-loaded”, representing 50% of the 2016 long-term value, and 50% of the expected 2017 target long-term incentive value. The performance criteria for this portion of the Vision 2020 Awards that relates to the 2017 long-term value were unsatisfied as of December 31, 2016. Subsequently, on January 5, 2017, the performance criteria for the 2017 portion of the Vision 2020 Awards were satisfied, and 100% of this 2017 portion will vest on February 24, 2020.
(7) Performance-based award where the performance period is satisfied. Award vests 100% on October 23, 2018.
(8) Cliff vesting on third anniversary of grant date.
(9) Performance-based award where the performance period is satisfied. Award vests on October 24, 2017.
(10) Performance-based award with six month andone-year performance periods. If performance goals achieved, vests 25% on first anniversary, 35% on second anniversary, and 40% on third anniversary of grant date.
(11) Performance-based award where the performance period is satisfied. Award vests 100% on May 1, 2017.
This table shows 20162018 vesting of RSUs and options exercised by the named executives during 2018. None of Mr. Hayford, Martire, Sullivan, Fernandez or Campbell held any stock options that were exercised or RSUs that vested during 2018.
Option Exercises and Stock Vested – 2018 | ||||||||||||
Options | RSUs | |||||||||||
Named Executive | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | ||||||||
William Nuti | 63,552 | $1,156,011 | 1,246,076 | $ | 38,453,824 | |||||||
Robert Fishman | — | — | 42,548 | $ | 1,167,932 |
(1) Value realized for performance-basedstock option exercises is the difference between the market price of the shares on the exercise date and time-basedthe exercise price of the options and the value realized for restricted stock unit awards made to our named executives. No named executives exercised stock options in 2016.is the fair market value on the vesting date.
Option Exercises and Stock Vested – 2016 | ||||||||||||
Named Executive | Number of Shares | Value Realized on | Number of Shares Acquired on Vesting | Value Realized on Vesting | ||||||||
William Nuti | — | — | 209,982 | $ | 5,861,686 | |||||||
Robert Fishman | — | — | 27,465 | $ | 765,882 | |||||||
Mark Benjamin | — | — | — | — | ||||||||
Frederick Marquardt | — | — | 24,825 | $ | 684,559 | |||||||
Paul Langenbahn | — | — | 14,011 | $ | 389,351 |
The table below shows the present value of Mr. Fishman’s accrued benefit under the U.S. Pension Plan, in which Mr. Fishman participated as of December 31, 20162018 as described below. Because Messrs. Nuti, Benjamin, Marquardt and Langenbahnall other named executives joined
the Company after the U.S. Pension Plan closed to new entrants, they are not eligible for benefits under the U.S. Pension Plan.
U.S. Pension Plan – Mr. Fishman Only |
Our U.S. Pension Plan is anon-contributory,tax-qualified and broad-based pension plan that was
frozen effective December 31, 2006. When this Plan was frozen, participants retained the pension benefits they already had accrued. However, no additional benefits were earned after the effective date of the freeze. This plan pays a basic monthly pension benefit and a cash balance benefit. The
basic monthly benefit is a percentage of a participant’s average plan compensation, determined based on years of benefit service through December 31, 2006 (when basic monthly benefit accruals were frozen).2006. The cash balance benefit is 1.50% of pay per month through December 31, 2006, when cash balance benefit accruals were frozen.2006. The cash balance account is
credited with interest until a participant commences payment of pension benefits. Mr. Fishman is the only named executive who participates in this Plan.
As of December 31, 2016,2018, Mr. Fishman was not eligible for payment of any benefits under this Plan.
Pension Benefits – 2016 | ||||||
Named Executive | Plan Name | Number of Credited Service | Present Accumulated Benefit(1) | |||
Robert Fishman | U.S. Pension Plan | 13.6 | $270,603 |
Pension Benefits – 2018 | ||||||
Named Executive | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefit(2) | |||
Robert Fishman | U.S. Pension Plan | 13.6 | $291,762 |
(1) Mr. Fishman’s credited service under the U.S. Pension Plan was frozen as of December 31, 2006. As a result, his service thereunder is less than his 25 years of employment with the Company.
(1)(2) For more on the assumptions used to quantify benefits under our U.S. Pension Plan, see Note 9 to the Consolidated Financial Statements in our Annual Report on Form10-K for the year ended December 31, 2016.2018.
The compensation and benefits that would have been provided to our named executives (other than Mr. Nuti), in the event of various types of employment terminations on December 31, 2016,2018, are described below and shown in the tables below. The amounts payable to Mr. Nuti in connection with his separation from service are also described below. For more on these items, see theRetirement Benefits,Change in Control Arrangements andSeverance Benefits sections in ourCompensation Discussion & Analysis and theAgreements with our Named Executives Section above.
Change in Control Severance Plan |
Our Amended and Restated NCR Change in Control Severance Plan (the “Change in Control Severance Plan”) provides separation benefits to our named executives only if both a Change in Control occursand employment ends in a qualifying termination. Amounts payable are based on executive “Tier” level, and payment is conditioned on the executive signing a restrictive covenant and release agreement with confidentiality and eighteen-monthnon-competition andnon-solicitation provisions. Under this plan, if the Company terminates the executive’s employment for reasons other than “cause”, death or disability, or if the executive resigns for “good reason” within two years after a Change in Control (or within six months before a Change in Control, if the executive can show that the termination occurred in connection with a Change in Control), then the Company or its successor must provide these benefits:
A lump sum equal to 300 percent of annual base salary and target bonus under the Annual Incentive Plan for Tier I (Mr. NutiHayford, Mr. Martire, Mr. Sullivan, and Mr. Benjamin)Fernandez), and 200 percent of annual base salary and target bonus under the Annual Incentive Plan for Tier II (all other named executives)(Mr. Campbell and Mr. Fishman);
A lump sum equal to a pro rata portion of the current year target bonus under the Annual Incentive Plan, based on the number of days in the year prior to the date of termination;
Three years of medical, dental and life insurance benefits for the executive and dependents at the level in effect at termination for Tier I (Mr. NutiHayford, Mr. Martire, Mr. Sullivan, and Mr. Benjamin)Fernandez), and two years of these benefits for Tier II (all other named executives)(Mr. Campbell and Mr. Fishman);
One year of outplacement assistance; andassistance.
An excise taxgross-up, if applicable, only for individuals who were covered byMr. Nuti retired during 2018, so he no longer participates in the Change in Control Severance Plan before January 28, 2010.Plan.
“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.
“Good reason” generally means: (i) reduction in duties or reporting requirements; (ii) reduction in
base salary; (iii) failure to pay incentive compensation when due; (iv) reduction in target or
maximum incentive opportunities; (v) failure to continue the equity award or other employee benefit programs; (vi) relocation of an executive’s office over forty miles; or (vii) successor’s failure to assume the Change in Control Severance Plan.
“Change in Control” generally means any of the following: (i) third party acquisition of 30% or more of our stock; (ii) a change in our Board members such
that the current incumbents and approved successors no longer make up a majority; (iii) a reorganization, merger, consolidation or sale or other disposition of substantially all of our assets in which any of the following is true—true – the stockholders of NCR immediately before the change in control do not hold at least 50% of the combined enterprise, there is a30%-or-more stockholder of the combined enterprise (other than as a result of conversion of the stockholder’spre-combination interest in the Company), or our Board members (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 |
The general rules for equity treatment for outstanding awards granted through 2018 in the event of a Change in Control are described below. Under employment agreements, certain named executives have varied terms forsign-on or other equity awards, as described in theAgreements With Our Named Executives section and ourGrant of Plan-Based Awards - 2018 Table.
Stock Options and Time-Based RSUs. Under our Stock Plan and award agreements, the timing of any accelerated vesting for unvested stock options and time-based RSUs awarded to our named executives depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they immediately vest and options become exercisable. If the acquirer does assume the awards, they vest and become exercisable if the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that 24 months. Such options generally remain exercisable until the earlier of the first anniversary of employment termination or the
option expiration date.
Traditional Performance-Based RSUs.RSUs.Under our Stock Plan and award agreements, the timing for vesting of unvested traditional performance-based RSUs depends upon whether the acquirer assumes
the awards in the change in control. If the acquirer does not assume the awards, they vest immediately, based on:
· | target performance, if less than |
· | actual results, if at least |
If the acquirer does assume these awards, they vest at the end of the original vesting period based on:
· | target performance, if less than |
· | actual results, if at least |
If the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that24-month period, traditional performance-based RSU awards will vest immediately based on:
· | target performance, if less than |
· | actual results, if at least |
Performance-Vesting RSUs.Under our Stock Plan and award agreements, the timing for vesting of unvested performance-vesting RSUs depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they vest immediately, based on target performance. If the acquirer does assume these awards, they vest at the end of the original vesting period based on actual performance. If the Company terminates the named executive’s
employment within 24 months of the transaction for reasons other than cause or disability, or if the
named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that24-month period, performance-based RSU awards will vest immediately based on target performance.
Vision 2020 LTI Awards.Awards.As of December 31, 2018, Mr. Fishman was the only named executive who held unvested Vision 2020 awards. Under our Stock Plan and award agreements, the timing for vesting of unvested Vision 2020 LTI Awards depends upon whether the acquirer assumes the awards in the change of control.
If the acquirer does not assume the awards, and the change in control price is less than the stock price target of the Vision 2020 LTI Awards, then the RSUs not previously vested will be forfeited. If the change in control price is greater than or equal to the stock price target, then the RSUs not previously vested will vest immediately.
If the acquirer does assume the awards in the change in control, and the change in control price is less than the stock price target of the Vision 2020
LTI Awards, then the RSUs not previously vested will be forfeited. If the change in control price is greater than or equal to the stock price target of the RSUs, then the RSUs not previously vested will remain eligible to continue to vest.
Treatment of Economic Profit Plan Bonus Bank |
As of December 31, 2018, Mr. Nuti and Mr. Fishman were the only named executives with Bonus Bank balances under the EPP. Upon a change in control, named executives will be credited with a Bonus Credit, if any, for any performance period (or portion thereof) during which they participated in the EPP, but for which a Bonus Credit has not yet been received through the date of the change in control. Named executives generally will be paid, within 30 days after the change in control, a lump sum cash payment equal to their entire Bonus Banks without regard to the Cash
Flow Test limitation described in theEconomic Profit Plan Awards Before 20162017section (starting on page 63).
|
An Agreement with Mr. Nuti provides for continued participation in certain ofabove. On February 27, 2019, the Company’s medical benefit plans atCommittee terminated the EPP. For details about final EPP Bonus Bank distributions following such time in the future as he ceases to be employed by the Company. Under this Agreement, Mr. Nuti will be eligible to participate in the Company’s active employee medical plan until age 65 (on the same basis as the Company’s active employees), and thereafter he will be eligible to participate in the Company’spost-65 retiree Medicare supplement plan which provides a fixed annual subsidy for qualified Medicare supplement or other qualified medical expenses through a retiree reimbursement account. For more details on this Agreement,termination, see theAgreements with Our CEO2018 Long-Term Incentives section (starting on page 71).above.
Severance Plan |
EachOur named executive, with the exception of the CEO who has an individual severance agreement with the Company, isexecutives are eligible for our Executive Severance Plan. Under this plan, if a named executive’s employment is terminated by the Company without cause (other than death or disability as defined in the plan), we provide the executive a lump sum equal to one and a half times (1.5x) base salary plus target bonus (as defined in the plan) for Mr. Hayford, Mr. Martire, Mr. Sullivan, and Mr. Fernandez, or one times (1x) base salary plus target bonus for Mr. Campbell and Mr. Fishman. Also, the named executives will receive up to eighteen months of “COBRA” medical, dental and vision coverage, and outplacement services under the Company’s outplacement program in effect on the termination date. Under their employment agreements, in the event of a qualifying termination certain named executives receive additional payments or benefits described in theAgreements With Our Named Executives section.
Treatment of Equity |
Under our Stock Plan, the treatment of outstanding equity awards granted through 2018 when employment ends differs based on the form of equity award, the grant agreement in use at a given time, and the reason for the termination, as summarized below. Under employment agreements, certain named executives have varied terms forsign-on or other specific equity awards, as described in theAgreements With Our Named Executives section and ourGrant of Plan-Based Awards - 2018 Table.
· |
|
|
· | Vision 2020 LTI |
· | Time-Based Restricted Stock Units. |
disability, retirement or Company termination without |
· | Stock Options. |
named executive resigns or is terminated for cause. |
In addition, all unvested equity awards are forfeited and deemed canceled, and the fair market value of previously vested awards is subject to a repayment obligation, if during employment or the twelve monthsyear after employment a named executive competes with the Company, induces or attempts to induce any of our employees to resign or solicits business from firms or companies (including customers) with which the executive worked during the two years before termination.customers all as set forth more specifically in applicable equity award agreements. Equity awards are also forfeited if a named executive fails to keep the terms of the award agreement confidential, or engages, as determined by the Committee, in misconduct in connection with employment.
Treatment of Economic Profit Plan Bonus Bank (Mr. Nuti and Mr. Fishman only) |
Pursuant to the EPP terms in effect on December 31, 2018:
· | Resignation or Termination for Cause. A named executive’s resignation or termination for cause results in immediate forfeiture of the entire Bonus Bank. |
· | Termination |
However, if the relevant Cash Flow Test is not met for the year immediately preceding the year in which any such termination occurs, the first installment payment will be delayed and will continue to be held in the named executive’s Bonus Bank, without interest, until the second installment payment is due, at which time the first and second installment payments will be paid. In addition,addition: (i) if employment termination occurs before August 1 of a
particular year, the amount otherwise payable on August 1 of the termination year is payable (but such payment will offset the grandfathered Bonus Bankdollar-for-dollar), and (ii) if it exceeds the amount payable from the grandfathered Bonus Bank (as offset), the executive will receive a prorated payment of the remaining Bonus Bank (based on days employed during the year), multiplied by 33%, payable on August 1 of the year following the termination year of termination, the named executive will receive a payment equal to the product of: (i) the amount that would have been paid had the named executive remained employed through such August 1, multiplied by (ii) a fraction representing the portion of the year of termination during which the named executive was employed by the Company, provided that such payment will remain subject(subject to the Cash Flow Test described
above under theEconomic Profit Plan Awards Before 2016 section (starting on page 63) above). These modified rules with respect to pro rata payments following termination are effective for Bonus Credits in 2015 and later. After the “grandfathering” period ends (which the Company anticipates to be by 2017 for most participants), the termination-related payments should be substantially less than in similar scenarios prior to the stockholder-approved 2015 amendment and restatement of the EPP.
· | Termination Due to Death or Disability. Upon a termination by reason of |
On February 27, 2019, the Committee terminated the EPP. For details about final EPP Bonus Bank distributions following such termination, see the2018 Long-Term Incentives section above.
|
An AgreementMr. Nuti: Mr. Nuti retired from employment and was appointed to the honorary position of Chairman Emeritus of our Board and began consultant services effective April 30, 2018. His retirement agreement referenced his departure due to disability, confirmed application of restrictive covenants and included a general release. In determining to approve Mr. Nuti’s retirement agreement, the Committee took into consideration the circumstances of Mr. Nuti’s departure, his past strong performance as NCR’s CEO for 13 years, a report prepared by the Committee’s independent compensation consultant on treatment of equity upon retirement at our peers and other public companies, NCR’s prior achievement of the applicable performance criteria pertaining to Mr. Nuti’s equity awards, and his efforts to support
an effective transition in leadership for NCR’s stockholders, employees, and customers. Under the retirement agreement, Mr. Nuti’s 2018 equity awards were forfeited upon his retirement and he received no additional severance. Mr. Nuti’s retirement agreement also includes terms reflecting a Committee approved modification to hispre-2018 outstanding equity awards to provide for full continued vesting beyond thepro-rata disability vesting contemplated by the award agreements. All applicable performance goals pertaining to each amended award had already been achieved as of December 31, 2017. This modification resulted in anon-cash accounting charge of $8.2 million, pertaining to awards that were previously disclosed in the Summary Compensation Table in prior proxy statements (i.e., not new awards nor severance). All other outstanding and/or unpaid amounts were settled upon termination in accordance with the prior award agreements and applicable benefit plan terms, including payout of his EPP Bonus Bank balance ($3,518,132) in installments over 2018-2020 in accordance with EPP disability terms, and exercise of previously vested equity awards (in accordance with their terms as provided for in the case of a disability termination). EPP payouts will be made in accordance with Mr. Nuti provides forNuti’s retirement agreement notwithstanding the committee’s termination of the EPP on February 27, 2019. The retirement agreement further affirmed Mr. Nuti’s rights to vested welfare and pension plan benefits, including previously agreed medical benefit coverage under a prior medical benefits agreement with Mr. Nuti. The amount of $214,948 represents the estimated present value of the current accrued benefit, as provided under this Medical Benefits Agreement, of continued participation in certain of the Company’s medical benefit plans at such time in the future as he ceases to be employed by the Company.plans. This estimated value is based on Company COBRA rates, assumed premiums and usage, assumed demographic adjustments and/or other relevant factors. For more details onabout this Agreement,medical benefit, see theAgreements with Our CEONamed Executives section (startingand Exhibit 10.5 to our Quarterly Report on page 71).Form10-Q for the period ended March 31, 2015. Mr. Nuti also agreed to provide consulting services to NCR on a limited basis for up to two years, with a $150,000 fee during the first year of histwo-year consulting agreement, and a $100,000 fee during the second year.
Potential Payments Upon Termination or Change in Control Table |
This Table shows the estimated amounts each named executive would have received upon the occurrence of the events listed in the table as of December 31, 2016:2018, except that the actual amounts for Mr. Nuti (who retired in early 2018) are described in theFormer Executive Retirement Agreement section above. Mr. Fishman became ineligible for benefits under our Change in Control Severance Plan when he became our Senior Advisor in August 2018.
Potential Payments Upon Termination or Change in Control ($) | Potential Payments Upon Termination or Change in Control ($) | Potential Payments Upon Termination or Change in Control ($) | ||||||||||||||||||||||||||||||||||||||
Named Executive | Termination upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
William Nuti | ||||||||||||||||||||||||||||||||||||||||
Michael Hayford
| ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 7,500,000 | 3,750,000 | — | — | — |
|
7,500,000
|
|
|
3,750,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Pro rata Bonus(3) | 1,500,000 | — | 940,000 | — | — |
|
1,010,959
|
|
|
—
|
|
|
1,010,959
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Restricted Stock Units(4),(5),(6) | 53,605,921 | 13,845,359 | 14,522,994 | — | — | |||||||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6)
|
|
3,704,663
|
|
|
3,704,663
|
|
|
828,140
|
|
|
—
|
|
|
—
|
| |||||||||||||||||||||||||
Welfare Benefits | 299,438 | 263,496 | 230,650 |
|
71,569
|
|
|
35,707
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||
Economic Profit Plan(8) | 5,250,944 | 3,518,132 | 5,250,944 | — | — | |||||||||||||||||||||||||||||||||||
Excise TaxGross-Up(9),(10) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — |
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Total Benefits Payable upon Termination | 68,166,303 | 21,386,987 | 20,944,588 |
|
12,297,191
|
|
|
7,500,370
|
|
|
1,839,099
|
|
Named Executive | Termination upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Robert Fishman | ||||||||||||||||||||||||||||||||||||||||
Frank Martire
| ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 2,625,000 | 1,312,500 | — | — | — |
|
5,625,000
|
|
|
2,812,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Pro rata Bonus(3) | 687,500 | — | 429,372 | — | — |
|
662,671
|
|
|
—
|
|
|
662,671
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Restricted Stock Units(4),(5),(6) | 13,748,299 | 2,802,452 | 2,796,652 | — | ||||||||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6)
|
|
1,723,522
|
|
|
1,723,522
|
|
|
336,526
|
|
|
—
|
|
|
—
|
| |||||||||||||||||||||||||
Welfare Benefits | 45,773 | 33,362 | — | — | — |
|
155
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Economic Profit Plan(8) | 1,456,181 | 975,641 | 1,456,181 | — | — | |||||||||||||||||||||||||||||||||||
Excise TaxGross-Up(9) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — |
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||||
Total Benefits Payable upon Termination | 18,572,753 | 5,133,955 | 4,682,205 | — | — |
|
8,021,348
|
|
|
4,546,022
|
|
|
999,197
|
|
|
—
|
|
|
—
|
|
Named Executive | Termination upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Mark Benjamin | ||||||||||||||||||||||||||||||||||||||||
Owen Sullivan
| ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 5,062,500 | 2,531,250 | — | — | — |
|
5,437,500
|
|
|
2,718,750
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Pro rata Bonus(3) | 192,637 | — | 234,375 | — | — |
|
482,671
|
|
|
—
|
|
|
482,671
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Restricted Stock Units(4),(5),(6) | 9,904,062 | 9,904,062 | 551,738 | — | — | |||||||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6)
|
|
1,909,893
|
|
|
1,909,893
|
|
|
266,619
|
|
|
—
|
|
|
—
|
| |||||||||||||||||||||||||
Welfare Benefits | 69,046 | 33,362 | — | — | — |
|
51,738
|
|
|
24,747
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Economic Profit Plan(8) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Excise TaxGross-Up(9) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — |
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Total Benefits Payable upon Termination | 15,238,245 | 12,478,674 | 786,113 | — | — |
|
7,891,802
|
|
|
4,663,390
|
|
|
749,290
|
|
|
—
|
|
|
—
|
|
Termination upon Change in Control(1) Involuntary Termination Without Cause(2) Death or Disability Voluntary Resignation Termination for Cause Frederick Marquardt Cash Severance Pro rata Bonus(3) Restricted Stock Units(4),(5),(6) Welfare Benefits Economic Profit Plan(8) Excise TaxGross-Up(9) Outplacement Total Benefits Payable upon TerminationNamed Executive Retirement
or 2,625,000 1,312,500 — — — 687,500 — 429,372 — — 11,448,993 2,888,075 2,872,825 — — 32,105 23,111 — — — 1,500,230 1,005,154 1,500,230 — — — — — — — 10,000 10,000 — — — 16,303,828 5,238,840 4,802,427 — —
Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | |||||||||||||||
Andre Fernandez
| ||||||||||||||||||||
Cash Severance
|
|
4,218,750
|
|
|
2,109,375
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Pro rata Bonus(3)
|
|
267,551
|
|
|
—
|
|
|
267,551
|
|
|
—
|
|
|
—
|
| |||||
Equity Awards(4), (5), (6)
|
|
2,437,179
|
|
|
2,437,179
|
|
|
271,282
|
|
|
—
|
|
|
—
|
| |||||
Welfare Benefits
|
|
73,349
|
|
|
35,707
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Outplacement
|
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Total Benefits Payable upon Termination
|
|
7,006,829
|
|
|
4,592,261
|
|
|
538,833
|
|
|
—
|
|
|
—
|
|
Named Executive | Termination upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Paul Langenbahn | ||||||||||||||||||||||||||||||||||||||||
Daniel Campbell
| ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 1,995,000 | 997,500 | — | — | — |
|
2,415,000
|
|
|
1,207,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Pro rata Bonus(3) | 522,500 | — | 277,336 | — | — |
|
632,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Restricted Stock Units(4),(5),(6) | 9,277,045 | 2,014,980 | 1,956,128 | — | — | |||||||||||||||||||||||||||||||||||
Equity Awards(4), (5), (6)
|
|
3,195,333
|
|
|
2,366,577
|
|
|
852,822
|
|
|
—
|
|
|
—
|
| |||||||||||||||||||||||||
Welfare Benefits | 40,442 | 29,596 | — | — | — |
|
48,796
|
|
|
35,707
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Economic Profit Plan(8) | 488,189 | 327,087 | 488,189 | — | — | |||||||||||||||||||||||||||||||||||
Excise TaxGross-Up(9) | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — |
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||||||
Total Benefits Payable upon Termination | 12,333,176 | 3,379,163 | 2,721,653 | — | — |
|
6,301,629
|
|
|
3,619,784
|
|
|
852,822
|
|
|
—
|
|
|
—
|
|
Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | |||||||||||||||
Robert Fishman
| ||||||||||||||||||||
Cash Severance
|
|
1,312,500
|
|
|
1,312,500
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Pro rata Bonus(3)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Equity Awards(4), (5), (6)
|
|
6,996,749
|
|
|
4,280,117
|
|
|
4,280,117
|
|
|
—
|
|
|
—
|
| |||||
Welfare Benefits
|
|
35,707
|
|
|
35,707
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Economic Profit Plan(7)
|
|
653,679
|
|
|
360,242
|
|
|
653,679
|
| |||||||||||
Outplacement
|
|
10,000
|
|
|
10,000
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Total Benefits Payable upon Termination(8)
|
|
9,008,635
|
|
|
5,998,566
|
|
|
4,933,796
|
|
|
—
|
|
|
—
|
|
(1) This column shows payments based on occurrence of a “double trigger” event occurring (a qualifying change in control followed byand a qualifying termination), together with assumption of applicable equity awards in the change in control. In the event that such awards are not assumed, then the equity awards would vest in full immediately before the change in control. In either case, the performance-based RSU awards would vest either at target orcontrol and vesting based on actual performance, depending on when the change in control occurs.performance. For annual performance-based RSU awards, this column reflects that performance was achieved at 43.6% for the 2014 awards, 114.5% for the 2015 awards, and presumes that performance was achieved at 148.2% for the 2016 awards, 0% for the 2017 awards, and 0% for the 2018 awards. For Vision 2020 Awards, and the 2017 and 2018 performance-vesting RSU awards, performance is reflected at 100%.
(2) For Mr. Nuti and Mr. Benjamin,This column shows the amount in this column equals the amount theyexecutive would receive upon a termination without cause or for good reason under the terms of their agreements described inour Executive Severance Plan and an applicable agreement with theAgreements with our Named Executives section on starting page 71 of this proxy statement. For our other named executives, the amount in this column equals the amount they would receive upon an involuntary termination without cause under the terms of our Severance Plan. Company.
(3) This row shows payments based on the MIP 20162018 target bonus forin the event of a Termination Upon Change in Control and actual 20162018 bonus for other termination reasons. Assumes a pro-ratascenarios. No actual bonus as of December 31, 2016was earned or paid based on performance under the MIP for death2018. For Messrs. Hayford, Martire, Sullivan, and disability.Fernandez, this row shows prorated 2018 MIP target bonus (proration based on 2018 service) payable under their negotiated new hire employment agreements.
(4) Equity valuations reflect a closing price of NCR common stock on December 31, 20162018 of $40.56.$23.08.
(5) The payments in this row include only unvested awards.awards for which payment would accelerate in connection with the applicable termination scenario.
(6) The payments in this row reflect annualaccelerated vesting of any applicable performance-based RSU awards, in Change in Control and Termination Without Cause scenarios; performancebased on actual performance. Performance was achieved at 43.6% for 2014 awards, 114.5% for 2015 awards, and is presumed achieved at 148.2% for 2016 awards, and 0% for the 2017 and 2018 performance-based RSU awards. For deathPerformance was achieved at 100% for Vision 2020 Awards and disability scenarios, performance is reflected at target (100%) for all performance-based2017 and 2018 performance-vesting RSU awards.
(7) Includes $230,650 representing the estimated present value of the current accrued benefit, as provided under an Agreement with Mr. Nuti, of continued participation in certain of the Company’s medical benefit plans at such time in the future as he ceases to be employed by the Company. This estimated value is based on Company COBRA rates, assumed premiums and usage, assumed demographic adjustments and/or other relevant factors. For more details about this benefit, see Exhibit 10.5 to our Quarterly Report on Form10-Q for the period ended March 31, 2015.
(8) For payout of the Bonus Bank, this row shows a 67% payout upon involuntary termination without cause, and a 100% payout in the event of death or disability.
(9) Under ourdisability and Termination Upon Change in Control, Severance Plan, the excise taxgross-up does not apply to any participant who enters the plan after January 27, 2010.
(10) Discount rates to determine the present valuesand upon involuntary termination without cause a 33% payment of his outstanding Bonus Bank balance in August 2019 plus a payout of 33% of the accelerated benefit of restricted shares foramount remaining based on service through 12/31/18. On February 27, 2019, the parachute calculation were: (i) Short-Term – 0.89%, (ii)Mid-TermCommittee terminated the EPP. For details about final EPP Bonus Bank distributions following such termination, see the2018 Long-Term Incentives section above. – 1.75%,
(8) Amounts shown in the Termination Upon Change in Control column presume an involuntary termination without cause, with cash severance, welfare benefits and (iii) Long-Term – 2.70%.outplacement provided under the Executive Severance Plan.
This Table shows details about awards outstanding and shares available for issuance as of December 31, 20162018 under our Management Stock Plan that was in effect through April 25, 2006, our NCR Corporation 2011 Amended and Restated Stock Incentive Plan that was in effect through April 24, 2013 (referred to below as the “2011(“2011 Stock Incentive Plan”), our NCR Corporation 2013 Stock Incentive Plan that was in effect through April 30, 2017 (“2013 Stock Plan”), and our NCR Corporation 20132017 Stock Incentive Plan which is our most recently adopted equity compensation plan (referred to in these proxy materialsbelow as our “Stock“2017 Stock Plan”):
Equity Compensation Plan Information – 2016 | |||||||||||||||||||||||||||
Equity Compensation Plan Information – 2018 | Equity Compensation Plan Information – 2018 | ||||||||||||||||||||||||||
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(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities shown in column a) | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities shown in column a) | |||||||||||||||||||||
Equity compensation plans approved by stockholders: | (a) | (b) | (c) | (a) | (b) | (c) | |||||||||||||||||||||
Management Stock Plan(2) | 46,061 | (3) | — | — | 28,415 | (3) | — | — | |||||||||||||||||||
2011 Stock Incentive Plan(4) | 724,457 | (5) | $ | 17.36 | — | ||||||||||||||||||||||
Stock Plan(6) | 8,675,261 | (7) | $ | 21.54 | 4,621,822 | ||||||||||||||||||||||
2011 Stock Plan(4) | 275,889 | (5) | $ | 15.22 | — | ||||||||||||||||||||||
2013 Stock Plan(6) | 2,824,854 | (7) | — | — | |||||||||||||||||||||||
2017 Stock Plan(8) | 6,424,398 | (9) | $30.22 | 12,886,347 | |||||||||||||||||||||||
Equity compensation plans not approved by stockholders | — | — | — | — | — | — | |||||||||||||||||||||
Total | 9,445,779 | $ | 17.69 | 4,621,822 | 9,553,556 | $ | 29.08 | 12,886,347 |
(1) The weighted average exercise price does not take into account outstanding time-based, performance-based and performance-basedperformance-vesting restricted stock unit awards.
(2) We adopted the NCR Management Stock Plan with stockholder approval effective January 1, 1997. We terminated the NCR Management Stock Plan as of April 26, 2006, upon stockholder approval of the 2006 Stock Incentive Plan, which we subsequently amended and restated as the 2011 Stock Incentive Plan. However, termination of the NCR Management Stock Plan did not affect awards previously granted and outstanding under its terms.
(3) Outstanding awards consist of 46,06128,415 restricted stock unit awards.
(4) We adopted the 2006 Stock Incentive Plan with stockholder approval effective April 26, 2006. On April 27, 2011, we amended and restated the 2006 Stock Incentive Plan as the 2011 Stock Incentive Plan. We froze the 2011 Stock Incentive Plan effective April 24, 2013, when stockholders approved our 2013 Stock Plan. AwardsPreviously granted before the date that we froze the 2011 Stock Incentive Plan Awards remain outstanding under itstheir terms.
(5) Outstanding awards consist of 579,406197,034 nonqualified stock options 145,051and 78,855 restricted stock unit awards.
(6) Stockholders approved our 2013 Stock Incentive Plan on April 24, 2013. We froze the 2013 Stock Plan on May 1, 2017, when our 2017 Stock Plan became effective. Previously granted 2013 Stock Plan awards remain outstanding under their terms.
(7) Outstanding awards consist of 7,607,3752,824,854 restricted stock unit awards 49,194including performance-vesting restricted stock options,unit awards payable at 100%, and additional shares that would be issued if outstanding performance-based restricted stock unit awards earned the maximum payout possible under their terms.
(8) Stockholders approved our 2017 Stock Plan on April 26, 2017, and it became effective on May 1, 2017.
(9) Outstanding awards consist of 2,408,596 nonqualified stock options, and 3,282,407 restricted stock unit awards including restricted stock unit awards payable at 100%, and an additional 733,395 shares that would be issued if outstanding performance-based restricted stock unit awards earned the applicable award terms as determined by the Committee.maximum payout possible under their terms.
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PursuantRules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act require us to Section 14Adisclose the ratio of our CEO’s annual total compensation to the annual total compensation of the Securities Exchange Act“median compensated” employee of 1934,all our employees other than the CEO (the “Median Compensated Employee”). The 2018 annual total compensation of the Median Compensated Employee was $61,705. Mr. Hayford’s (our President and CEO as amended,of April 30, 2018) annualized 2018 annual total compensation was $14,605,382. The ratio of these amounts was 1:237.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll records and the methodology described below. Because SEC rules for identifying the Median Compensated Employee and calculating the pay ratio based on his or her annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
As permitted under SEC rules, given that there have been no changes in our employee population or employee compensation arrangements that we are requiredreasonably believe would result in a significant change to ask our stockholders, at least once every six years,pay ratio disclosure we have used the same Median Compensated Employee that we identified last year in calculating our 2018 CEO pay ratio. To identify this Median Compensated Employee last year, we used Target Total Cash, which includes base salary or base wages, target cash bonus incentives and other cash-based incentive allowances, such as housing, automobile, meal and other types of allowances, as reported in our payroll data, to castdetermine our Median Compensated Employee as of October 2, 2017. For hourly employees, we calculated base wages based on a reasonable estimate of hours worked during 2017 and the relevant employee’s hourly wage rate as in effect on October 2, 2017. For salaried employees, we calculated base salary using the relevant employee’s annual salary level as in effect on October 2, 2017. We annualized Target Total Cash for all permanent employees who did not work for all of 2017.
As of October 2, 2017, NCR employed approximately 9,443 US employees and 20,419non-US employees. In determining the Median Compensated Employee, we prepared a listing of approximately 9,442 of ourUS-based employees and approximately 19,011 of ournon-US based employees who were employed as of October 2, 2017. This listing excluded our then-current CEO and approximately 34 employees from Bosnia & Herzegovina, 1 employee from Brunei, 13 employees from the Dominican Republic, 140 employees from Egypt, 30 employees from Ghana, 1 employee from Luxembourg, 121 employees from Nigeria, 92 employees from Pakistan, and 976 employees from the Philippines. The excludednon-US employees, in the aggregate, represented less than 5% of our total employee population. In determining that there had been no changes to our employee population that were reasonably likely to result in a significant change to our pay ratio disclosure for 2018, we considered that this October 2, 2017 employee population also excludes approximately 433 employees that we acquired in connection with 2018 acquisitions. We identified the Median Compensated Employee from the list, who was an advisory voteemployee from Chile. Because the median employee we initially identified had anomalous compensation characteristics, we substituted the identified Median Compensated Employee with a US employee with substantially similar compensation, based on the frequency of future advisory “Say On Pay” votes on NCR executive compensation. Our most recent Say On Frequency vote occurred in 2011, when our stockholders agreed withcompensation measure used to select the Board’s recommendation to hold advisory Say On Pay votes on NCR executiveMedian Compensated Employee and determined this individual’s 2018 compensation on an annual basis. Since 2011, in accordance with this recommendation, we have held annual Say On Pay votes.
We are now asking our stockholders to cast an advisory vote to continue holding future advisory Say On Pay votes on NCR executive compensation on an annual basis (insteadthe requirements of every two years, or every three years)RegulationS-K, Item 402(c)(2)(x).
After careful consideration, the Board unanimously recommends that future advisory Say On Pay votes on NCR executive compensation continue to be held on an annual basis. The Board believes that an annual Say On Pay vote remains the most appropriate option for NCR and its stockholders, as it will allow the most frequent opportunity for our stockholders to evaluate and assess our executive compensation program. In addition, an annual Say On Pay vote provides the Board, and the Compensation and Human Resource Committee (the “Committee”), with the most frequent feedback on our executive compensation program. Annual feedback allows the Board and Committee to have discussions with our stockholders to the extent necessary, and to develop and implement appropriate adjustments to our compensation programs on a yearly basis, as opposed to every two or every three years.
For these reasons, the Board unanimously recommends that you vote “1 Year”on the proposal regarding the frequency of future advisory Say On Pay votes on NCR executive compensation. Stockholders are not voting to approve or disapprove of the Board’s recommendation. Instead, the proxy card provides stockholders with four choices for holding future advisory Say On Pay votes on executive compensation under this proposal:
Every 1 Year (recommended by our Board);
Every 2 Years;
Every 3 Years; or
Abstain.
Although this advisory vote is not binding on the Company, the Board and the Committee highly value the opinions of our stockholders. Accordingly, the Board and the Committee will consider the outcome of the Say On Frequency vote when determining the frequency of future Say On Pay
votes. Notwithstanding the Board’s recommendation and the outcome of the stockholder vote, the Board may in the future decide to conduct Say On Pay votes on a more or less frequent basis.
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The Board recommends that, on anon-binding and advisory basis, you vote “1 Year” for the frequency of future advisory Say On Pay votes on the compensation of the named executives. Proxies received by the Board will be voted for conducting future advisory votes on NCR executive compensation on an annual basis unless they specify otherwise.
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The option of one year, two years or three years that receives the highest number of votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy) will be considered our stockholders’ recommendation as to the frequency of future Say On Pay votes. Under Maryland law, abstentions and broker“non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal.
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At the Company’s 2012 Annual Meeting of Stockholders, our stockholders approved the first Amended and Restated NCR Management Incentive Plan (the “Prior Plan”). The Prior Plan provides for payment of incentive awards to eligible participants in order to motivate performance at the highest levels on key Company-wide financial metrics. Subject to stockholder approval, our Board of Directors has approved the Second Amended and Restated NCR Management Incentive Plan (the “Amended MIP”) effective January 1, 2017, in order to revise certain material plan terms as described below. The Board is recommending that our stockholders approve the revised material terms of the performance goals under the Amended MIP for purposes of Internal Revenue Code Section 162(m), as described below. If stockholder approval is not obtained, the Amended MIP will not be implemented and the Prior Plan will remain in place.
The Board has unanimously approved the Amended MIP to, among other things, update the applicable business criteria for the performance goals and the maximum amount payable thereunder. These changes were designed to align awards under the Amended MIP with the Company’s current key financial metrics by substitutingNon-GAAP Operating Income (NGOI) forNon-Pension Operating Income (NPOI), a metric that is no longer used by the Company. The Board believes that the ability to make awards based on achievement of NGOI will help to attract and motivate executives to perform at the highest levels on current key Company-wide financial metrics.
The Board also believes that the Amended MIP will permit the Company to continue to grant performance-based annual incentives that meet the requirements for tax deductibility under Section 162(m) as described below. Stockholder approval of the material terms of the Amended MIP’s performance goals is required in order to continue to allow performance-based incentive awards thereunder to be fully deductible under Internal Revenue Code Section 162(m).
Section 162(m) limits the deduction for certain compensation paid to “covered employees” in excess of $1 million, unless, in relevant part, such compensation qualifies as “performance-based” under that Section. To qualify, compensation must be paid under a plan for which stockholders have approved these material terms:
The eligible employee group;
The business criteria for performance goals; and
The maximum amount payable to any participant.
The Amended MIP makes no change to the eligible employee group under the Prior Plan, which remains as previously approved by our stockholders. The business criteria for performance goals and the maximum amount payable are revised by the Amended MIP as further described below.
The Board believes it is in the best interest of the Company and its stockholders to approve the material terms that will allow the Committee, in its discretion, to grant performance-based awards that may be deductible under Section 162(m). If stockholders approve the proposal, the Amended MIP will be implemented and the Prior Plan terms will no longer apply effective for new awards made under the Amended MIP on or after January 1, 2017. If stockholder approval is not obtained, the Amended MIP will not be implemented and the Prior Plan will remain in place.
The Amended MIP’s material terms and certain additional principal features are summarized below. This summary is qualified by reference to the full text of the Amended MIP, which is included asAppendix A to these proxy materials. Appendix A also includes important tax information relating to this proposal, which should be reviewed together with this proposal.
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The Board of Directors recommends that you vote “FOR” the proposal to approve the Amended MIP for purposes of Internal Revenue Code Section 162(m). Proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
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The affirmative vote of a majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy) is required for approval of the Amended MIP. Under Section 162(m), the material terms of a performance goal are approved by stockholders if, in a separate vote, a majority of the votes cast on the issue are cast in favor of approval. Pursuant to the Company’s charter and bylaws, as given effect under Maryland law, abstentions and broker“non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal.
Below is a summary of the material terms of the Amended MIP for purposes of Section 162(m):
Eligible Employee Group: the group of executives selected by the Compensation and Human Resource Committee (the “Committee”) for participation from among the individuals designated by the Board as NCR “Executive Officers” for purposes of Section 16 of the Securities Exchange Act of 1934, as amended (the “Act”), which is the same employee group already approved by stockholders for awards under the Prior Plan;
Business Criteria for Performance Goals:Non-GAAP Operating Income (“NGOI”), which replaces the business criteria ofNon-Pension Operating Income (“NPOI”) that applied under the Prior Plan; and
Maximum Amount Payable:
For our Chief Executive Officer, revised to be 1.5% of NGOI (replacing 1.5% of NPOI that applied under the Prior Plan); and
For all other participants, revised to be 0.75% of NGOI (replacing 0.75% of NPOI that applied under the Prior Plan).
Each of these material terms is discussed in more detail below.
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The Committee selects participants in the Amended MIP from among the group of executives who are designated by the Board as NCR “Executive Officers” for purposes of Section 16 of the Act. Participants have the opportunity to earn an annual incentive award under the Amended MIP during a performance period established by the Committee.
Currently, there are nine officers designated by the Board as Section 16 Executive Officers. Each of these Executive Officers, including all of our Named Executive Officers in theSummary Compensation Table included in these proxy materials, were selected for participation in the Prior Plan for the 2016 performance year. Each of these Executive Officers has also been selected for participation in the Amended MIP for the 2017 performance year, subject to stockholder approval of this proposal, as disclosed in these proxy materials.
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This table shows the revised business criteria for performance goals under the Amended MIP:
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Reasons for Revision. The Board approved this revision in order to align awards with the Company’s current key financial metrics by substituting NGOI for NPOI. NPOI is a metric that was used by the Company in prior years when ongoing pension expense had a more significant impact on our annual financial results. However, our aggressive pensionde-risking strategy has reduced our exposure to pension expense as it relates to our annual financial performance and operational success.
Under the Amended MIP, NGOI is defined as: the Company’s net revenue, less product and service costs and marketing, selling, general and administrative, research, and development expenses, excluding pensionmark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other specified special items, including amortization of acquisition related intangibles, after accrual of any amounts for payment under the Amended MIP for the performance period and any other Company plan to the extent provided by the Committee, adjusted to eliminate the effects of charges for restructurings, discontinued operations, any unusual or infrequently occurring items, and the cumulative effect of accounting changes, each as defined by generally accepted accounting principles or identified in the Company’s financial statements, notes to the financial statements or management’s discussion and analysis.
Prior Plan NPOI Business Criteria No Longer Applicable. With stockholder approval of the Amended MIP, the NPOI business criteria under the Prior Plan will no longer apply as the business criteria for new incentive awards granted on and after January 1, 2017.
The Prior Plan defined NPOI as the Company’s net revenue before pension income and expenses, less product and service costs and marketing, selling, general and administrative, research, and development expenses, as reported in our income statement for the applicable performance period, after accrual of any amounts for payment under the Prior Plan for the performance period and any other Company plan where its terms so provide, as further adjusted to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items, and other unusual ornon-recurring items, and the cumulative effect of tax or accounting changes, each as defined by generally accepted accounting principles or identified in the Company’s financial statements, notes to the financial statements or management’s discussion and analysis.
NPOI is a non-GAAP measure. Income from operations is the most directly comparable GAAP measure.
Determination of Performance Period. As was the case under the Prior Plan, the Amended MIP provides that performance goals will be established for each performance period established by the Committee, which may be no longer than five years and no less than six months.
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This table shows the revised maximum amount payable under the Amended MIP:
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Reasons for Revision. The Board revised the maximum to reflect the new business criteria of NGOI, but otherwise retained the maximum percentages that applied under the Prior Plan.
Prior Plan Maximum Amount No Longer Applicable. With stockholder approval of the revised material terms of the Amended MIP, the maximum amount payable under the Prior Plan relative to NPOI will no longer apply to new awards granted under the Amended MIP on or after January 1, 2017.
Committee Authority To Decrease Amount Payable. As under the Prior Plan, the Committee may not increase the amount payable with respect to an award granted under the Amended MIP, but it retains the discretionary authority to reduce the amount payable with respect to any award based on certain factors, which may include corporate or business unit performance against budgeted financial goals (for example, operating income or revenue), achievement ofnon-financial goals, economic and relative performance considerations and assessments of individual performance, and other factors determined appropriate by the Committee.
Section 162m. It is currently intended that compensation attributable to awards payable under the Amended MIP will qualify as performance-based compensation under Section 162(m). However, as more fully described in theTax Considerations in Setting Compensation section of theCompensation Discussion & Analysis, the Committee has not adopted a policy requiring all pay to be deductible, so as to preserve the ability to awardnon-deductible compensation if determined to be in the best interests of the Company’s stockholders.
The following summarizes certain additional principal features of the Amended MIP, which are substantially the same as the principal features of the Prior Plan.
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The Amended MIP is administered by the Committee, which has broad authority to administer and interpret its provisions as determined appropriate. The Committee is comprised solely of two or more “outside directors” within the meaning of Section 162(m). The Board reserves the right to amend or terminate the Amended MIP at any time with respect to future awards to participants. Amendments to the Amended MIP will require stockholder approval to the extent required to comply with applicable law.
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Under the Prior Plan, each participant was eligible to receive a maximum performance award equal to a percentage of our NPOI, as described above, for a performance period established by the Committee. The Board has, subject to approval by our stockholders pursuant to this Proposal 4, determined that awards payable under the Amended MIP will funded by our NGOI as described above, effective for new awards and performance periods granted on or after January 1, 2017.
The actual performance award granted to a participant is determined by the Committee, which retains the discretionary authority to reduce or eliminate (but not increase) a performance award based on its consideration of, among other things, corporate or business unit performance against budgeted financial goals, achievement ofnon-financial goals, economic and relative performance considerations and assessments of individual performance. The time period during which the achievement of the performance goals is to be measured will be determined by the Committee, subject to a maximum of five years and a minimum of six months. Within the earlier of 90 days after the beginning of each fiscal year or the expiration of 25% of a performance period, the Committee will designate one or more performance periods, determine the participants for such performance periods and affirm the applicability of the formula for determining each participant’s award.
Each award under the Amended MIP will be paid in cash, provided that the Committee may in its discretion determine that all or a portion of an award will be paid in stock, restricted stock, stock options or other stock-based or stock denominated units that are issued pursuant to our then effective equity compensation plan(s), including our NCR Corporation 2017 Stock Incentive Plan. An award shall be paid only after the Committee certifies in writing the attainment of the performance goals and the amount of the award. Participants may defer receipt of awards under certain circumstances in accordance with a deferred compensation plan approved by the Committee.
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A participant who terminates employment with the Company during a performance period due to disability or death will be eligible to receive an award under the Amended MIP prorated for the portion of the performance period before termination of employment. Subject to the discretion of the Committee to determine otherwise, if a participant terminates employment for a reason other than disability or death, no award will be payable with respect to the performance period in which such termination occurs.
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Subject to the above restrictions, the Committee has full authority to cancel or suspend awards, and the participant may be required to repay any or all amounts previously paid pursuant to any award, such as in the case of awards to participants who render services to, or owns any material interest in, any business that competes with the Company as determined by the Committee or its delegate.
Unless otherwise determined by the Committee, any award will be cancelled, and the Participant may be required to repay any or all amounts previously paid pursuant to any award, if the participant, without the consent of the Company, violates any policy adopted by the Company or applicable affiliate relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to such participant by the Company or affiliate, as such policy is in effect on the date the award is made or paid, or, to the extent necessary to address applicable legal requirements, as may be amended from time to time. The Company may, to the extent permitted or required by law or regulation (including the Dodd-Frank Act), enforce any repayment obligation pursuant to any such policy by reducing any amounts that may be owing from time to time to a participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason, or enforce any other recoupment as prescribed by applicable law or regulation.
If our stockholders approve this Proposal 4, the Amended MIP will be implemented and award amounts for fiscal year 2017 or subsequent years will be determined based upon our NGOI and, in addition, will be subject to the Committee’s right to reduce any participant’s award by any amount in its sole discretion. As a result, it is not possible to determine the amounts of Amended MIP awards for fiscal year 2017 or subsequent years at this time. For fiscal year 2016, the maximum award payable under the Prior Plan’s current formula is 1.5% of NPOI for our Chief Executive Officer and 0.75% of NPOI for all other Executive Officer participants. See theSummary Compensation Table in these proxy materials for the MIP awards that the Committee determined to be payable to our named executives for the 2016 fiscal year.
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In February 2017, upon recommendation by the Compensation and Human Resource Committee (the “Committee”) and its independent compensation consultant, the Board approved the NCR Corporation 2017 Stock Incentive Plan (the “2017 Stock Plan”), subject to stockholder approval. The 2017 Stock Plan allows NCR to grant stock-based incentive awards that are critical to our compensation program and the future growth of NCR. With stockholder approval, the 2017 Stock Plan will replace the current plan (the NCR Corporation 2013 Stock Incentive Plan (the “2013 Plan”), under which no new awards would be granted).
The Board unanimously recommends that stockholders approve the 2017 Stock Plan.
Stockholder approval of the 2017 Stock Plan will also serve as an approval of the material terms of its performance goals for Internal Revenue Code Section 162(m) purposes. This Section 162(m) approval will permit the Committee to continue to grant awards that qualify as tax deductible “performance-based compensation” (to the extent determined appropriate in its discretion).
Our ability to grant stock-based incentives to our employees and ournon-employee directors is critical to the future of NCR and directly serves the interests of our stockholders. As a result of the limited number of shares remaining available for issuance under the 2013 Stock Plan, our projections show that that the share reserve will not likely be sufficient to cover anticipated new equity grants needed beyond 2017.
In order to have an appropriate supply of shares available for future equity awards to attract, retain and motivate top talent, the Board unanimously recommends that our stockholders approve the 2017 Stock Plan, including a reserve of 12 million new shares for future stock-based incentives. We expect that this reserve will be sufficient for approximately four years, covering grants currently anticipated over the period from 2018 through 2021. As described in theKey Data section below, NCR has a proven track record of prudent equity grant practices, and we believe that approval of this additional share reserve will not likely increase our share usage beyond a responsible level compared to peers.
The 2017 Stock Plan’s material terms and certain additional features are summarized below. This summary is qualified in its entirety by reference to the full text of the 2017 Stock Plan, which is included asAppendix B to these proxy materials. The 2017 Stock Plan will not become effective until approved by NCR stockholders. Appendix B also includes important tax information relating to this proposal, which should be reviewed together with this proposal.
The Company’s ability to grant stock-based incentives is critical to:
align employee and stockholder interests in the creation of stockholder value,
motivate employee behavior that leads to increased stockholder return, and
drive employees to achieve short-term and long-term financial and operational goals to realize our Vision 2020 strategy.
Stockholder interests and the future of NCR would be seriously jeopardized if the Company were unable to use equity grants to achieve these outcomes. Stock-based incentives are fundamental components of the Committee’spay-for-performance philosophy, as reflected in these proxy materials.
The Company’s ability to make equity grants:
is essential to attract, incentivize and retain highly qualified and experienced employees andnon-employee directors,
is required for NCR to compete for top talent with our competitors, especially in the software space where equity grants are a key and universally recognized component of pay, and
aligns our employees with our message that NCR is on a growth path that is focused on improving stockholder value and that has our stockholders’ support.
The Company would be at a distinct disadvantage, to the detriment of our stockholders, if we could not use equity grants to compete successfully in the market for top employee talent. Our ability to attract, maintain and incentivize highly motivated top performers would also be undermined, which disserves our stockholders’ best interests.
Our proven track record shows that NCR share usage levels are responsible compared to our peers. When approving the 2017 Stock Plan, the Board considered the potential dilutive impact on our stockholders of our share usage measured by our “shareholder value transfer” and “overhang”:
Shareholder Value Transfer: A measure of annual value shared through equity compensation awards. It is calculated as the total value of equity grants during the year, expressed as a percent of our market capitalization and our annual revenue.
Overhang: Dilution analysis quantifying the cumulative impact of equity grant practices, by calculating shares subject to outstanding grants plus the shares remaining in the share reserve for new grants, divided by the diluted common stock outstanding atyear-end, plus the shares subject to outstanding grants plus the shares remaining in the share reserve.
NCR Historic Equity Grant Shareholder Value Transfer and Overhang. This Chart shows our shareholder value transfer under the 2013 Stock Plan for the past three fiscal years:
NCR Historic Shareholder Value Transfer (SVT) | ||||||||||||||||
2016 | 2015 | 2014 | 3-Year Average (2014-2016) | |||||||||||||
Total Value of Shares Granted | $ | 98.4M | $ | 72.7M | $ | 74.5M | $ | 81.9M | ||||||||
Weighted Average Market Capitalization at Grant | $ | 3,675M | $ | 4,986M | $ | 5,348M | $ | 4,670M | ||||||||
Annual Revenue | $ | 6,543M | $ | 6,373M | $ | 6,591M | $ | 6,502M | ||||||||
SVT % of Market Capitalization | 2.68 | % | 1.46 | % | 1.39 | % | 1.84 | % | ||||||||
SVT % of Revenue | 1.50 | % | 1.14 | % | 1.13 | % | 1.26 | % |
For purposes of the Chart above,
We calculate Shareholder Value Transfer as defined above, and we include our Series A Convertible Preferred Stock on an “as converted basis” in our 2015 and 2016 calculations.
NCR Historic Overhang. This chart shows our overhang under the 2013 Stock Plan:
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For purposes of the Chart above,
We calculate Overhang as defined above, and we include our Series A Convertible Preferred Stock on an “as converted basis” in our calculation.
NCR Historic Share Usage and Dilution Rates Compared to Peers. This Chart shows that our three-year average SVT under the 2013 Stock Plan from 2014 through 2016 and our overhang as of February 28, 2017 are competitively aligned with our compensation peer group.
NCR3-Year Average*SVT is competitively aligned with | SVT % of: | |||||||||||
Market Capitalization | Revenue | |||||||||||
NCR | 1.84 | % | 1.26 | % | ||||||||
Peer Median | 1.34 | % | 3.66 | % | ||||||||
Peer 75th Percentile | 2.22 | % | 7.36 | % | ||||||||
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* Based on NCR’s shareholder value transfer over the 2014-2016 period.
** See page 45 of these proxy materials for details on our compensation peer group. Peer group data is based on peer group SVT and overhang results over the 2013-2015 period.
For more details, seeKey Data below.
Other Total LTI Equity Spend is less than our peer group.
Our regular annual equity spend is conservative. The fair value of equity granted to employees is near the lowest among our peers, as shown in the Chart below:
We use equity wisely, focusing on attracting and retaining global talent that has generated a Total Shareholder Return of 65.8% in 2016, which far exceeds our Peer Group, the S&P 500 and the RussellMid-Cap Medians.
Treatment of Series A Convertible Preferred Stock in Calculating Share Usage and Overhang. Importantly, in calculating our shareholder value transfer and dilution, we treat the outstanding shares of our Series A Convertible Preferred Stock (the “Series A Shares”) as equivalent to our common stock, and so included these shares in the Company’s common shares outstanding on an “as converted basis.” The Series A Shares were issued at the end of 2015 when affiliates of The Blackstone Group L.P. (“Blackstone”) invested $820 million in NCR. SeeRelated Person Transactions (starting on page 111) for a description of recent transactions involving the Company and Blackstone.
In Our View, Series A Shares Are Equivalent to Common Shares. We treat the Series A Shares as equivalent to NCR common stock, and so include them as common shares outstanding on an “as converted” basis in determining our SVT and overhang, because:
The Series A Shares vote on all matters on anas-converted basis with common stock.
The Series A Shares are“in-the-money” and convertible at any time, with enough common shares reserved now for full conversion.
The Series A Shares are included on anas-converted basis in our diluted share count metrics – for example,non-GAAP diluted Earnings Per Share:
The Company’s stock analysts and our investors focus on ournon-GAAP diluted EPS as a key performance measure.
The Company uses our diluted share count for itsnon-GAAP diluted EPS guidance.
The Company’s stock analysts’ research uses diluted share count for diluted EPS and price targets.
Proxy Advisory Firm Technical Formulae. In reviewing our 2017 Stock Plan proposal, proxy advisory firms such as Institutional Shareholder Services (“ISS”) and Glass-Lewis may apply technical formulae that disregard the “convertible” nature of the Series A Shares, and so may exclude them when determining our share usage and dilution rate. We believe this would be misdirected, because it ignores a material component of our equity capital structure and overstates our SVT and overhang. We recommend including the Series A shares on an“as-converted basis” to evaluate the economic impact of our 2017 Stock Plan proposal.
Even when excluding the Series A Shares from our outstanding common stock, our three-year average shareholder value transfer from 2014 through 2016 and overhang as of February 28, 2017 would be:
Average SVT excluding Series A Shares: 2.05%, which we believe is competitively aligned with our peer group.
Average Overhang excluding Series A Shares: 16.92%, which we believe is competitively aligned with our peer group.
Other Indicators used by Proxy Advisory Firms show that our 2017 Stock Plan Cost is Reasonable.
Our Long-Term Incentive program is primarily performance-based. Our Long-Term Incentive program is primarily performance-based for our management team. We generally stopped granting new options after 2012, and now grant primarily performance-based stock awards to our executives and senior managers. In 2016, approximately 66% of all equity awards granted to all recipients were performance-based and vest only to the extent that specified performance goals are achieved.
Equity grants are broadly distributed among our employees. Our equity grants are not limited to top management. In 2016, approximately 48% of grants went to employees below the Senior Vice President level. We grant equity to high performing Software Engineers and employees down through director level. Ournon-employee directors also receive equity grants. These equity grant practices strongly incentivize a large portion of our work force to drive shareholder value in furtherance of our Vision 2020 strategy and in direct alignment with stockholder interests.
We follow prudent equity award practices. NCR’s prudent equity practices include:
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The 2017 Stock Plan adds enhanced governance rules protecting stockholders, plus continues prior governance protections:
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The table below shows certain key data supporting our 2017 Stock Plan proposal, including certain awards outstanding under the 2013 Stock Plan, the NCR Corporation Amended and Restated 2011 Stock Incentive Plan, the NCR Corporation 2006 Stock Incentive Plan and the NCR Management Stock Plan (collectively, the “Prior Plans”). Our common stock outstanding is shown with the Series A Shares included on an “as converted” basis as noted above.
Key Data | ||||
Prior Plan Share Details: | As of 2/28/17 | |||
• Number of outstanding Options | 562,075 | |||
• Weighted average exercise price | $ | 17.34 | ||
• Weighted average remaining contractual term | 3.2 | |||
• Number of outstanding Time-based Restricted Stock Units | 2,960,158 | |||
• Number of outstanding Performance-Based Restricted Stock Units* | 6,410,752 | |||
Total shares remaining available for grant under the 2013 Stock Plan | 3,121,761 | |||
Additional shares requested for the 2017 Stock Plan under this Proposal | 12,000,000 | |||
Total number of shares available for issuance under the 2017 Stock Plan** | 15,121,761 | |||
The closing price of our common stock on the New York Stock Exchange as of February 28, 2017 | $ | 48.07 | ||
Total shares of NCR common stock outstanding as of February 28, 2017*** | 152,276,619 |
* Represents the number of unearned Performance-Based Restricted Stock Units assuming maximum performance and any earned Performance-Based Restricted Stock Units (which remain subject to a holding period) based on actual performance.
** May be increased as a result of share withholding and forfeited awards granted under the 2013 Stock Plan before the effective date of the 2017 Stock Plan.
*** Includes Series A Shares as described in this proposal.
The chart below summarizes the principal features of the 2017 Stock Plan. Certain additional terms are described in more detail below. The chart and descriptions do not purport to be a complete description of the 2017 Stock Plan, and each is qualified in its entirety by the complete text of the 2017 Stock Plan included in these proxy materials asAppendix B.
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* Subject to adjustment as permitted by the 2017 Stock Plan.
** Subject to certain limited exceptions in the 2017 Stock Plan and described inAppendix B.
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The Committee will administer the Plan. The Committee will determine eligible recipients and establish Award terms and conditions for inclusion in an Award agreement (“Award Agreement”). The Committee is authorized to, among other things, interpret the 2017 Stock Plan and Award Agreements, and amend Awards and Award Agreements as permitted by the Plan.
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Code Section 162(m) currently provides that if, in any year, the compensation paid to our Chief Executive Officer or to any of our three other most highly compensated executive officers (excluding our Chief Financial Officer) exceeds $1 million per person, any amounts that exceed the $1 million threshold will not be deductible by us for U.S. Federal income tax purposes, unless the compensation qualifies in relevant part as “performance-based compensation” under Section 162(m) if stockholders approve the material terms of the performance goals under the 2017 Stock Plan.
For purposes of Section 162(m), the material terms of the performance goals under which compensation may be paid include: (1) the employees eligible to receive compensation; (2) a description of the business criteria on which performance goals may be based; and (3) the maximum amount of compensation that can be paid to an employee under the performance goal. Each of these is discussed below. As noted above, stockholder approval of the 2017 Stock Plan will be deemed to constitute approval of each of these material terms.
Certain Awards under the 2017 Stock Plan may be intended to be eligible for deduction as performance-based compensation, as determined in the discretion of the Committee. As more fully described in theTax Considerations in Setting Compensation section of theCompensation Discussion & Analysis, the Committee has not adopted a policy requiring all compensation to be deductible, so as to preserve the ability to award non-deductible compensation is determined to be in the best interests of the Company’s stockholders.
Eligible Employees. Current and prospective Company employees and consultants, as well as officers andnon-employee directors, are eligible to receive awards under the 2017 Stock Plan. However, ISOs may only be granted to employees.
Award Limits and Maximums. The 2017 Stock Plan contains the below limits that apply to individual and aggregate Awards. In addition, the maximum number of shares of NCR common stock that may be granted pursuant to Options intended to be ISOs is 12,000,000.
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Permissible Performance Goals. “Performance Goals” means any performance goals established by the Committee in connection with the grant of Restricted Stock, RSUs, Performance Units or Other Stock-Based Awards. Under the 2017 Stock Plan: (i) such Performance Goals will be based on attaining specified levels of one or more of the following measures and will be limited to one or more of the following measures: revenues; revenue growth; earnings or losses or net earnings or losses (including earnings or losses before taxes, before interest and taxes or before interest, taxes, depreciation and amortization); earnings or loss per share; operating income and adjusted operating income (before or after taxes) (includingnon-pension operating income andnon-pension operating income less capital charge); net income or loss (before or after taxes); net operating profit (before or after taxes);pre- orafter-tax income or loss (before or after allocation of corporate overhead and bonus); cash flow (before or after dividends) (including operating cash flow and free cash flow); cash flow return on capital; cash flow per share (before or after dividends); gross or net margin; operating margin; bookings; net sales; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; return on assets or net assets or operating assets; economic value added (or an equivalent metric); stock price appreciation; total stockholder return (measured in terms of stock price appreciation and dividend growth); cost control; gross profit; operating profit; enterprise value; net annual contract value; cash generation; unit volume; appreciation in and/or maintenance of stock price; market share; sales; asset quality; cost saving levels; marketing-spending efficiency; core noninterest income; cash margin; debt reduction; stockholders equity; operating efficiencies; customer satisfaction; customer growth; employee satisfaction; productivity or productivity ratios; financial ratios, including those measuring liquidity, activity, profitability or leverage; financing and other capital raising transactions (including sales of the Company’s equity or debt securities); debt levelyear-end cash position; book value; competitive market metrics; implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, products or projects, acquisitions and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; improvement in or attainment of expense levels; or change in working capital with respect to the Company or any one or more affiliates, subsidiaries, divisions, business units or business segments of the Company either in absolute terms or relative to the performance of one or more other companies or an index covering multiple companies, and (ii) such Performance Goals shall be set by the Committee within the time period prescribed by Code Section 162(m).
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Fair Market Value. Unless otherwise determined by the Committee, the closing price of a share of NCR common stock on the Applicable Exchange (as defined in the 2017 Stock Plan) on the trading date, or if shares were not traded on the Applicable Exchange on the trading date, then on the immediately preceding date on which shares were traded, all as reported by such source as the Committee may select. If NCR Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
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Options. Options entitle the participant to buy NCR common stock at a specified exercise price. Options are granted in the form of either ISOs that are intended to qualify for special tax treatment under Code Section 422, or NQSOs that are nottax-qualified.
Options must be granted with an exercise price at least equal to the Fair Market Value of one share of common stock on the grant date, and generally may not be exercisable for more than 10 years after granted. Options generally become exercisable in specified increments on the anniversaries of the grant date as determined by the Committee, except that vesting may not occur earlier than the first such anniversary except in limited cases involving participant death or disability.
Except for certain limited permissible adjustments (described below), the Company may not, without stockholder approval, reprice any Option or buyout any underwater Option by: (i) lowering its exercise price after the grant date; (ii) cancelling it (at a time when the applicable exercise price per share exceeds the Fair Market Value of the underlying shares) in exchange for cash, property or another Award; (iii) taking any action
that would be treated as a repricing under generally accepted accounting principles; or (iv) taking any other action that has the same effect as clause (i), (ii) or (iii).
SARs.A SAR is a contractual right granted to the participant to receive, either in cash, common stock or both, an amount equal to the appreciation of one share of common stock from the grant date to the exercise date. SARs may be granted free-standing or in tandem with other types of Awards. A free-standing SAR generally will be subject to the same terms and conditions that apply to options under the 2017 Stock Plan. A Tandem SAR will have the same terms and conditions as the Award to which it relates. The Committee will set the exercise price for SARs, which will not be less than the fair market value of one share of our common stock on the grant date.
Except for certain limited permissible adjustments (described below), the Company may not, without stockholder approval, reprice any SAR by: (i) lowering its exercise price after the grant date; (ii) cancelling it (at a time when the applicable exercise price per share exceeds the Fair Market Value of the underlying shares) in exchange for cash, property or another Award; (iii) taking any action that would be treated as a repricing under generally accepted accounting principles; or (iv) taking any other action that has the same effect as clause (i), (ii) or (iii).
Restricted Stock, Restricted Stock Units and Other Stock-Based Awards. Shares of Restricted Stock are actual shares of NCR common stock issued to a participant subject to certain transfer and forfeiture restrictions for a specified period of time. RSUs are unfunded, unsecured rights to receive cash, common stock or both (as determined by the Committee) at the end of a specified period of time, which are also subject to certain transfer and forfeiture restrictions. Other Stock-Based Awards may be granted under the Plan, provided that any Other Stock-Based Awards that are unrestricted Awards of common stock will only be granted in lieu of other compensation due and payable to a participant.
The Committee may, before or at the time of grant, designate Restricted Stock or RSUs as “performance-based compensation” (defined above), in which event the grant or vesting will be conditioned upon satisfying the Performance Goals established by the Committee. The Committee may also generally condition the grant or vesting of Restricted Stock Awards or RSUs upon satisfying Performance Goals and/or upon the continued service with the Company, which need not be the same for each recipient. Subject to the 2017 Stock Plan and applicable Award Agreement terms, during the period that an Award is subject to continued service and/or Performance Goal requirements, participants may not sell, assign, transfer, pledge or otherwise encumber Restricted Stock or RSUs subject to the Award.
Generally, Restricted Stock, RSUs and Other Stock-Based Awards (excluding Options, SARs and dividend equivalent rights), collectively “Full-Value Awards,” will have vesting periods of at least one year after the grant date. A 2017 Stock Plan exception permits the grant of five percent (5%) of shares available for grant as any type of Award with a vesting period of at least one year following the grant date. Full-Value Awards may also vest in part on a pro rata before their applicable vesting dates in circumstances permitted by the Committee.
Generally, a participant granted Restricted Stock will have all of the rights of a holder of Company common stock, including the right to vote and receive dividends. A participant with RSUs or Other Stock-Based Awards will not have rights as a stockholder.
Unless otherwise determined by the Committee in the applicable Award Agreement, and subject to the provisions of the Plan: (i) cash dividends on common shares subject to an Award of Restricted Stock will be automatically deferred and reinvested in additional Restricted Stock, held subject to the vesting of the underlying Restricted Stock, (ii) subject to any adjustment, dividends payable in common stock will be paid in the form of Restricted Stock, held subject to the vesting of the underlying Restricted Stock and (iii) in the case of an Award of Restricted Stock subject to Performance Goals, the participant will not be entitled to receive payment for dividends with respect to such Restricted Stock unless, until and except to the extent that the applicable Performance Goals are achieved or are otherwise deemed satisfied.
Performance Units. Performance Units may be issued for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The Performance Goals to be achieved during any period established by the Committee at the time any Performance Unit is granted (or at any time thereafter) (each, a “Performance Period”) and the length of the Performance Period will be determined by the Committee upon the grant of each Performance Unit, provided that the Performance Period will be no less than one year following the date of grant (subject to the 5% exception noted above). The conditions for grant or vesting and the other provisions of Performance Units (including any applicable Performance Goals) need not be the same with respect to each recipient.
Performance Units may be paid in cash, common stock, other property or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance levels to be achieved for each Performance Period, the amount of the Award to be distributed and whether or not the Award will be designated as a Qualified Performance-Based Award will be determined by the Committee. Performance Units may be paid in a lump sum or in installments following the close of the Performance Period.
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The Committee may grant Awards to eligible participants who are foreign nationals and/or persons who are otherwise subject to foreign legal or regulatory provisions on such terms and conditions different from those specified in the Plan as may be necessary or desirable. The Committee is authorized to make such modifications, amendments, procedures, or sub-plans as may be necessary or advisable to comply with such legal or regulatory provisions.
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Except as provided under the Plan, no Award holder has any rights as a stockholder with respect to common stock subject to an Award (including rights to vote common stock and receive dividends thereon) until such common stock is distributed to such holder.
Options and SARs will not be transferable by a participant other than: (i) by will or by the laws of descent and distribution; or (ii) in the case of an NQSO or a SAR if expressly permitted by the Committee, pursuant to a transfer to the participant’s family members.
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If certain corporate events occur, such as a change in capitalization, merger, liquidation,spin-off, stock split, extraordinary dividend or similar event affecting the Company or the common stock (each a “Corporate Transaction”), the Committee is authorized to make appropriate and equitable adjustments to: (a) the number and kind of common shares or other securities reserved for issuance and delivery under the 2017 Stock Plan; (b) the Plan’s maximum share limits; (c) the number and kind of common shares or other securities subject to outstanding Awards; and (d) outstanding Option and SAR exercise prices.
Awards may, in the discretion of the Committee, be granted under the 2017 Stock Plan in assumption of, or in substitution for, outstanding awards previously granted by the Company or any of its subsidiaries or affiliates or an entity acquired by the Company or any of its subsidiaries or affiliates or with which the Company or any of its subsidiaries or affiliates combines (“Substitute Awards”); provided, however, that in no event may any Substitute Award be granted in a manner that would violate the prohibitions on repricing of Options and SARs (as described below). The number of common shares underlying any Substitute Awards will generally be counted against the maximum share limits of the Plan; provided, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by or combined with the Company or any of its subsidiaries or affiliates, will not be counted against the maximum share limits of the Plan (with the exception that Substitute Awards that are ISOs will count against the maximum ISO limit of the Plan).
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Unless otherwise provided in the applicable Award Agreement, in the event of a Change in Control (as defined below) unless Awards are assumed, converted or replaced, Awards will vest immediately prior to such Change in Control. Further, unless otherwise provided in the applicable Award Agreement, upon a participant’s Termination of Employment (as defined below), during the24-month period following a Change in Control, (x) by the Company other than for Cause (as defined below) or disability, or (y) to the extent applicable, by the participant for Good Reason (as defined below):
any Options and SARs outstanding as of such Termination of Employment that were outstanding as of the date of such Change in Control will become fully exercisable and vested;
the restrictions and deferral limitations applicable to any Restricted Stock will lapse, and such Restricted Stock outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control will become free of all restrictions and become fully vested and transferable; and
all RSUs outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control will be considered to be earned and payable in full, and any deferral or other restriction will lapse.
“Cause” means, unless otherwise provided in an Award Agreement, Cause as defined in any employment, consulting or similar agreement between the Plan participant and the Company or one of its subsidiaries or affiliates, or, if no such agreement exists or if it does not define Cause, Cause will generally mean, with regard
to the applicable participant: (A) a felony conviction under Federal, state or foreign law; (B) dishonesty in the course of his or her duties; (C) his or her failure to perform substantially his or her employment duties in any material respect; (D) a material violation of the Company’s ethics and compliance program; or (E) before a Change in Control, such other events as will be determined by the Committee and set forth in the applicable participant’s Award Agreement.
Unless otherwise provided pursuant to an Award Agreement,“Change in Control” is defined to mean any of the following events, generally:
the acquisition by any individual, entity or group of beneficial ownership of 30% or more of either the then outstanding common shares or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; except any acquisition directly from or by the Company or any acquisition by any Company employee benefit plan (or related trust), or anyNon-Qualifying Transaction (as defined below) will generally not be deemed a Change in Control; or
a change in the composition of a majority of the Board of Directors which is not supported by the incumbent board of directors; or
the consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the Company’s assets or the acquisition of assets of another entity, unless, immediately following such transaction (i) more than 50% of the total voting power of the surviving entity or the ultimate parent entity is represented by voting shares that were outstanding immediately before the transaction and are held substantially in the same proportion, (ii) no individual, entity or group (excluding any Company employee benefit plan or related trust) is or becomes the beneficial owner of 30% or more of the outstanding voting shares (except as provided above) and (iii) there has not been a change in the composition of a majority of the Board of Directors, as provided above (each, a“Non-Qualifying Transaction”); or
the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.
“Good Reason” generally means, if the applicable Plan participant is also a participant in the Company’s Change in Control Severance Plan or is subject to a Company severance plan, policy or guideline that provides the applicable participant with the opportunity to resign for good reason, the definition of Good Reason as set forth in such Company arrangement, as applicable. If the participant is not a participant in any such Company arrangement, the definition of Good Reason as set forth in any Award Agreement to which the applicable participant is a party or any employment, consulting or similar agreement between the applicable participant and the Company or one of its subsidiaries or affiliates.
“Termination of Employment” generally means, unless otherwise provided in the applicable Award Agreement, the complete termination of the applicable Plan participant’s employment with, and performance of services for, the Company and any of its subsidiaries or affiliates (including in connection with a complete disaffiliation of a subsidiary or an affiliate or a division of the Company).
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The Board or its delegate may amend or terminate the 2017 Stock Plan, so long as such amendment or termination will not materially impair rights under outstanding Awards without participant consent (except if required to comply with applicable law or stock exchange or accounting rules). No amendment will be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or by New York Stock Exchange listing standards.
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Subject to the above restrictions, the Committee has full authority to cancel or suspend Awards, and the participant may be required to repay any or all amounts previously paid pursuant to any Award, such as in the case of Awards to participants who render services to, or owns any material interest in, any business that competes with the Company as determined by the Committee or its delegate.
Unless otherwise provided in the applicable Award Agreement, any Award will be cancelled, and the Participant may be required to repay any or all amounts previously paid pursuant to any Award, if the participant, without the consent of the Company, violates any policy adopted by the Company or applicable affiliate relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to such participant by the Company or applicable affiliate, as such policy is in effect on the Award’s grant date, or, to the extent necessary to address applicable legal requirements, as may be amended from time to time. The Company may, to the extent permitted or required by law or regulation (including the Dodd-Frank Act), enforce any repayment obligation pursuant to any such policy by reducing any amounts that may be owing from time to time to a participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason, or enforce any other recoupment as prescribed by applicable law or regulation.
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Subject to the adjustment provisions of the 2017 Stock Plan in the event of Corporate Transactions, the maximum number of shares that may be granted under the 2017 Stock Plan is limited to: (i) 12,000,000 shares of NCR common stock; plus (ii) any shares remaining available for grant under the Company’s 2013 Stock Plan on the Effective Date (as defined below); plus (iii) any shares with respect to awards granted under the Company’s Management, 2006, 2011, and 2013 Stock Plans that are forfeited, cancelled or expire following the Effective Date. We had 3,121,761 shares remaining available for future issuance under the 2013 Plan as of February 28, 2017. No shares remained available for future issuance under either the 2011 Plan, the 2006 Plan or the Management Stock Plan as of February 28, 2017. Shares subject to any type of Award will be counted against this plan limit as one share for every one share granted.
Provided our stockholders approve the 2017 Stock Plan, the 2013 Stock Plan automatically will be frozen, replaced and superseded on the first day of the month following the date of such approval (the “Effective Date”). The 2013 Plan previously replaced and superseded our 2011 Stock Incentive Plan and 2006 Stock Incentive Plan, each as amended from time to time (together with the 2013 Plan and our Management Stock Plan, the “Prior Plans”). Although the Prior Plans will be frozen, replaced and superseded, awards granted under the Prior Plans will remain in effect according to their terms. If stockholders do not approve the 2017 Stock Plan, the 2013 Stock Plan will not be frozen, replaced and superseded. Instead, the 2013 Stock Plan will remain in place according to its current terms.
Because benefits under the 2017 Stock Plan will depend on the Committee’s actions and the fair market value of our common stock at various future dates, it is not possible to determine at this time the benefits that might be received by officers, employees andnon-employee directors if the 2017 Stock Plan is approved by stockholders.
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The Board recommends that you vote FOR the Directors’ proposal to approve the 2017 Stock Plan.
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Under applicable New York Stock Exchange listing standards, Maryland law and the Company’s charter and bylaws, a majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual meeting or by proxy) is required to approve the 2017 Stock Plan. Under Section 162(m), the materials terms of a performance goal are approved by stockholders if, in a separate vote, a majority of the votes cast on the issue by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the virtual meeting or by proxy), are cast in favor of approval. Broker“non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal. Under the rules of the NYSE, abstentions will be counted as votes cast and thus will have the same effect as a vote “against” this proposal. Proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
Related Person Transactions |
Under its charter, the Committee on Directors and GovernanceCODG is responsible for the review of all related person transactions. In January 2007 the Board formalized in writing a Related Person Transactions Policy that provides that each related person transaction must be considered for approval or ratification (i) by the Company’s Committee on Directors and Governance,CODG, or (ii) by all of the disinterested members of the Board, if the Committee on Directors and GovernanceCODG so determines.
The policy requires each director and executive officer of the Company to use reasonable efforts to report to the Company’s General Counsel any transaction that could constitute a related person transaction prior to undertaking the transaction. The General Counsel must advise the Chairman of the Committee on Directors and GovernanceCODG of any related person transaction of which the General Counsel becomes aware, whether as a result of reporting or otherwise. The Committee on Directors and GovernanceCODG then considers each such related person transaction, unless the Committee determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board, in which case such disinterested members of the Board will consider the transaction. Except as set forth below, the Company will not enter into a related person transaction that is not approved in advance unless the effectiveness of the transaction is expressly subject to ratification by the Committee on Directors and GovernanceCODG or the disinterested members of the Board, as applicable.
If the Company enters into a transaction that it subsequently determines is a related person transaction or a transaction that was not a related person transaction at the time it was entered into but thereafter became a related person transaction, then, in either case, the related person transaction shall be presented to the Committee on Directors and GovernanceCODG or the disinterested members of the Board, as applicable, for ratification. If such related person transaction is not ratified, then the Company shall take all reasonable actions to attempt to terminate the Company’s participation in that transaction.
Under the policy, a related person transaction generally means any transaction involving or potentially involving an amount in excess of $120,000 in which the Company or any of its subsidiaries is a participant and in which any of its directors or director nominees, executive officers or 5% stockholders, or any immediate family members of any of the foregoing, or any entity controlled by any of the foregoing or in which any of the foregoing has a 10% or greater ownership interest, has or will have a direct or indirect material interest.
In considering whether to approve or ratify a related person transaction or relationship, the Committee on Directors and GovernanceCODG or the disinterested members of the Board, as applicable, considers all relevant factors, including:
the size of the transaction and the amount payable to a related person or any other benefit received by a related person;
· | the size of the transaction and the amount payable to a related person or any other benefit received by a related person; |
the nature of the interest of the related person in the transaction;
· | the nature of the interest of the related person in the transaction; |
whether the transaction may involve a conflict of interest; and
· | whether the transaction may involve a conflict of interest; and |
· | whether the transaction involves the provision of goods or services to the Company 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 the Company as would be available in comparable transactions with or involving unaffiliated third parties. |
whether the transaction involves the provision of goods or services to the Company 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 the Company as would be available in comparable transactions with or involving unaffiliated third parties.
Transactions and relationships that are required to be disclosed under applicable securities laws and regulations are disclosed in the Company’s proxy statement. Since the beginning of the Company’s 20162018 fiscal year, the Committee on Directors and GovernanceCODG has identified the following related person transactions requiring such disclosure:
In December 2015, the Company issued 820,000 shares of Series A Convertible Preferred Stock to entities affiliated with The Blackstone Group L.P. (collectively, “Blackstone”) for an aggregate purchase price of $820 million, or $1,000 per share, pursuant to the Investment Agreement.
Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 5.5% per annum, payable quarterly in arrears. If the Company does not declare and pay that dividend, the dividend rate will increase by 2.5% to 8.0% per annum until all accrued but unpaid dividends have been paid in full. Dividends are paidin-kind, through the issuance of additional shares of Series A Convertible Preferred Stock, for the first sixteen dividend payment dates, after which dividends are payable in cash orin-kind (or a combination of both) at the option of the Company.
Through the Record Date, the Company paid dividendsin-kind to Blackstone of 46,934 shares of Series A Convertible Preferred Stock, and as of the Record Date, Blackstone held 866,934 shares of Series A Preferred Stock, which shares represented approximately 19% of the Company’s common stock on anas-converted basis.
Blackstone was granted certain customary registration rights with respect to the Series A Convertible Preferred Stock and the common stock issuable upon conversion thereof under the terms of a registration rights agreement between Blackstone and the Company. Pursuant to these rights, on March 29, 2016, the Company filed a Registration Statement on FormS-3 with the Securities and Exchange Commission to register for resale an aggregate of (i) 1,021,314 shares of Series A Convertible Preferred Stock, consisting of the 820,000 shares of Series A Convertible Preferred Stock issued to Blackstone in December 2015, and 201,214201,314 shares of Series A Convertible Preferred Stock to be issued as dividends paidin-kind on such shares over a four-year period frombeginning in December 2015; and (ii) 34,043,460 shares of the Company’s common stock, which represents the total number of shares of common stock issuable upon conversion of all such shares of Series A Convertible Preferred Stock. Under the registration statement, Blackstone may offer and sell shares of Series A Convertible Preferred Stock or shares of common stock in public or private transactions, or both. These sales may occur at fixed prices, at market prices prevailing at the time of sale, at prices related to prevailing market prices, or at negotiated prices.
Under the original terms of the Investment Agreement, Blackstone agreed not to sell or otherwise transfer its shares of Series A Convertible Preferred Stock (or any shares of common stock issued upon conversion thereof) without the Company’s consent until June 4, 2017. As a result of recent discussions with Blackstone, inIn March 2017, the Company agreed to provide Blackstone with an early partial release from thislock-up, allowing Blackstone to sell approximately 49% of its shares of Series A Convertible Preferred Stock, which in the aggregate represented approximately 14,400,000 shares of common stock on anas-converted basis. In return, Blackstone agreed to amend the Investment Agreement to extend thelock-up on the remaining 51% of its shares of Series A Convertible Preferred Stock for six months until December 1, 2017.
In connection with the early release of thelock-up, Blackstone offered for sale 342,000 shares of Series A Convertible Preferred Stock in an underwritten offering conducted pursuant to the registration rights described above. In addition, the Company entered into a stock repurchase agreement whereby Blackstone agreed to convert 90,000 shares of Series A Convertible Preferred Stock into approximately 3,000,000 shares of the Company’s common stock and to sell such shares to the Company for $48.47 per share. The underwritten offering and the stock repurchase are expected to bewere consummated on or about March 17, 2017. In accordance with the registration rights agreement, the Company paid certain expenses incurred by Blackstone in connection with the underwritten offering.
Following the sales described above, Blackstone retained its right to designate two seatsnominees for election as a director on the Company’s board of directors.
As of the Record Date, taking into account dividends paidin-kind and the transactions described above, Blackstone held 491,666 shares of Series A Preferred Stock, which shares represented approximately 11.1% of the Company’s common stock on anas-converted basis.
Except as set forth above, since the beginning of the Company’s 20162018 fiscal year, the Committee on Directors and GovernanceCODG has not identified any related person transactions requiring disclosure.
Fees Paid to Independent Registered Public Accounting Firm |
The following table presents the approximate fees for professional audit services rendered by the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP, for the audit of the Company’s financial statements for the fiscal years ended December 31, 20162018 and December 31, 2015,2017, as well as the approximate worldwide fees billed for other services rendered by PricewaterhouseCoopers in such years:
Service | 2016 | 2015 |
2018
|
2017
| ||||||||||||
Audit Fees(1) | $ | 6,051,100 | $ | 6,582,800 |
$
|
5,570,300
|
|
$
|
6,162,400
|
| ||||||
Audit-Related Fees(2) | $ | 367,000 | $ | 570,000 |
$
|
962,300
|
|
$
|
$503,000
|
| ||||||
Subtotal | $ | 6,418,100 | $ | 7,152,800 | $
| 6,532,600
|
|
$
|
6,665,400
|
| ||||||
Tax Fees(3) | $ | 360,000 | $ | 842,300 |
$
|
1,029,000
|
|
$
|
233,000
|
| ||||||
All Other Fees(4) | $ | 3,068,800 | $ | 8,600 |
$
|
8,800
|
|
$
|
482,800
|
| ||||||
Subtotal | $ | 3,428,800 | $ | 850,900 |
$
|
1,037,800
|
|
$
|
715,800
|
| ||||||
Total Fees | $ | 9,846,900 | $ | 8,003,700 |
$
|
7,570,400
|
|
$
|
7,381,200
|
|
(1) Includes fees required for the review and examination of NCR’s consolidated financial statements, the audit of internal controls over financial reporting, quarterly reviews of interim financial statements, statutory audit and consultations by 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. AlsoThis also includes attestation services and review services associated with the Company’s filings with the SEC.
(2) Includes fees related to financial audits of employee benefit plans and services related to due diligence and technical accounting assistance.
(3) Generally includes tax compliance, tax advice, tax planning and expatriate services. In 20162018 and 2015,2017, respectively, fees for tax services include:
(a) $96,000$384,000 and $195,000$167,000 for tax compliance including the preparation, review and filing of tax returns; and
(b) $264,000$645,000 and $647,300$66,000 for tax audit consultation and assistance.
(4) Includes fees for all other work performed by PricewaterhouseCoopers that does not meet the above category descriptions. In 2016,2018, of these fees 83% related to licenses to research and benchmarking applications and 17% related to inventory certification assistance. In 2017, of these fees, approximately 67% related to advisory services associated with organizational design related to integrated solutions and product lifecycle management, approximately 31%92% related to advisory services associated with integrated business planning related to assessment of the Company’s supply chain operations, and approximately 2%8% related to security advisory services. In 2015, of these fees, approximately 46% relatedlicenses to an attestation engagement in Spain related to compliance with electronic waste legislation, approximately 42% related to licensing and proprietary software for accounting research and approximately 12% related to an agreed-upon procedure engagement.benchmarking applications. These items were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the independent registered public accounting firm.
The charter of the Audit Committee requires that all auditing andnon-auditing services to be provided to the Company by its independent accountants bepre-approved by the Audit Committee. The Audit Committee has adopted policies and procedures regarding itspre-approval of these services (the“Pre-Approval Policy”). ThePre-Approval Policy is designed to assure that the provision of such services does not impair the independence of the Company’s independent registered public accounting firm and includes the following principles and restrictions, among others:
In no case should NCR or its consolidated subsidiaries retain the Company’s 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.
· | In no case should NCR or its consolidated subsidiaries retain the Company’s 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. |