Preliminary Proxy Statement | ||||||
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||||
Definitive Proxy Statement | ||||||
Definitive Additional Materials | ||||||
Soliciting Material Pursuant to §240.14a-12 |
No fee required. | ||||||||
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
3, 2024
1.A proposal to elect eight directors;
2.A proposal to ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2022;2024; and
3.A proposal to approve, on an advisory basis, the 20212023 compensation of our named executive officers.
proposals 1, 2 and 3.
Date and Time: | ||||||||
Location: | The Annual Meeting will be conducted virtually, via a live audio webcast; there will be no physical meeting location. You will not be able to attend the Annual Meeting in person. | |||||||
Virtual Meeting Access: | You will be able to participate online and submit your questions during the meeting by visiting www.meetnow.global/ | |||||||
Purpose: | Our shareholders will be asked to consider and vote on the following matters: 2024;
| |||||||
Record Date: | March | |||||||
Proxy Voting: | (1) Telephone;
| |||||||
Importance of Vote: | Your vote is very important. Whether or not you plan to attend the Annual Meeting, we encourage you to read this proxy statement and submit your proxy as soon as possible. You may submit your proxy for the Annual Meeting by using the Internet or telephone voting systems or by completing, signing, dating and returning your proxy card in the pre-addressed envelope provided. For specific instructions on how to vote your shares, please refer to the section entitled “How do I vote?” beginning on page 1 of this proxy statement and the instructions on the proxy card. |
17, 2024.
|
i
ii
|
|
|
BY INTERNET | BY TELEPHONE | |||||||
|
| |||||||
If you have Internet access, you may vote your shares by following the “Vote by Internet” instructions included in the Notice or on the enclosed proxy card. If you vote via the Internet, do not return your proxy card. | You may vote your shares by following the “Vote by Telephone” instructions on the enclosed proxy card. If you vote by telephone, do not return your proxy card. |
BY MAIL | ELECTRONICALLY DURING VIRTUAL ANNUAL MEETING | |||||
If you received a printed copy of the proxy materials, you may vote by completing and signing the proxy card enclosed with this Proxy Statement and promptly mailing it in the enclosed postage-prepaid envelope. The shares you own will be voted according to your instructions on the proxy card you mail. If you sign and return your proxy card but do not indicate your voting instructions on one or more of the matters listed, the shares you own will be voted by the named proxies in favor of each of the proposals in accordance with the recommendations of our Board. | If you are a registered shareholder with a control number or a beneficial shareholder thathas submitted a legal proxy and has received a control number from Computershare, you will also be able to vote your shares electronically during the Annual Meeting by clicking on the “Vote” link on the Meeting site. |
|
|
|
our Common Stock outstanding on the Record Date will constitute a quorum. As of the Record Date, there were 215,604,418
Securities and Exchange Commission (“
SEC”).•Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2022;2024; and
•Approval, on an advisory basis, of the 20212023 compensation of our named executive officers.
4, 2024.
the Company no earlier than November 13, 20224, 2024 and no later than December 13, 2022.4, 2024. Any such notice must comply with requirements set forth in our amended and restated by-laws. Nominations for director must be
Hunter Gary, Kathy Higgins Victor, Scott Letier, Jesse A. Lynn, Steven Miller, Michael Montelongo, Margarita Paláu-Hernández and Clifford Skelton
|
| |||||||
Skelton | Gary | Higgins Victor | Letier | Lynn | Miller | Montelongo | Paláu- Hernández | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Experience, expertise or attribute | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Industry Expertise (1) | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Global Business | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Public Company | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Boards & Corporate Governance | X | X | X | X | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Operations | X | X | X | X | X | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ESG Oversight | X | X | X | X | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Identity | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Male | Female | Male | Male | Male | Male | Female | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LGBTQ+ | No | No | No | No | No | No | No | No | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| White | White | White | White | White | Not Disclosed | Hispanic | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Veteran | Yes | No | No | No | No | No | Yes | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| No | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
Mr. Skelton received a Bachelor of Arts degree from the University of Southern California and a Master in Public Administration degree from Harvard University’s John F. Kennedy School of Government.
|
|
|
|
|
|
|
Board Size: | ||||||||||||||||
Total Number of Directors | 8 | |||||||||||||||
Gender: | ||||||||||||||||
Male | Female | Non-Binary | Did Not Disclose | |||||||||||||
Number of directors based on gender identity | 6 | 2 | 0 | 0 | ||||||||||||
Number of Directors who identify in Any of the Categories Below: |
| |||||||||||||||
African American or Black | 0 | 0 | 0 | 1 | ||||||||||||
Alaskan Native or American Indian | 0 | 0 | 0 | 1 | ||||||||||||
Asian | 0 | 0 | 0 | 1 | ||||||||||||
Hispanic or Latinx | 1 | 1 | 0 | 1 | ||||||||||||
Native Hawaiian or Pacific Islander | 0 | 0 | 0 | 1 | ||||||||||||
White | 4 | 1 | 0 | 1 | ||||||||||||
Two or More Races or Ethnicities | 0 | 0 | 0 | 1 | ||||||||||||
LGBTQ+ | 0 | |||||||||||||||
Persons with Disabilities | 0 | |||||||||||||||
Directors who are Military Veterans: 2
|
|
2023 and April 3, 2024
Board Size: | |||||
Total Number of Directors | 8 | ||||
Number of Directors based on Gender Identity: | |||||
Male | 6 | ||||
Female | 2 | ||||
Non-Binary | 0 | ||||
Did Not Disclose | 0 | ||||
Number of Directors who identify in Any of the Categories Below: | |||||
African American or Black | 0 | ||||
Alaskan Native or American Indian | 0 | ||||
Asian | 0 | ||||
Hispanic or Latinx | 2 | ||||
Native Hawaiian or Pacific Islander | 0 | ||||
White | 5 | ||||
Two or More Races or Ethnicities | 0 | ||||
LGBTQ+ | 0 | ||||
Persons with Disabilities | 0 | ||||
Did Not Disclose | 1 | ||||
Directors who are Military Veterans | 2 |
In addition, the Board recognizes the tremendous value of having a diverse collection of directors, and as such, also places value on candidates who are women, from an underrepresented racial or ethnic group, who are LGBTQ, with disabilities, who are military veterans, or with other diverse or underrepresented characteristics.
CEO and a
solutions and services.
Energy/Greenhouse Gas Management & Reductions
Opportunities in Clean Technology
Electronic Waste & Other Recycling
Privacy & Data Security
Conduent Associate Experience
Diversity & Inclusion
Giving Back in Our Local Communities Inclusion
Business Continuity
Business Ethics & Professional Integrity
Supplier Practices
Our key ESGsustainability initiatives support the following three overarching ESG outcomes on which Conduent is focused:
|
|
|
UN Sustainable Development Goals:
to enhance our CSR reporting and disclosures in 2024. In 2024, we also plan to develop and submit our near-term greenhouse gas target, as part of Conduent’s recent Science Based Target initiative commitment. We are honored to be recognized for the progress we have made in our sustainability efforts, including the following:
As a result of this review, our Board has determined that all of the nominees for election as directors at the Annual Meeting are, and were during 2021,2023, independent under the Nasdaq rules and our Corporate Governance Guidelines, with the exception of Clifford Skelton, our CEO. Additionally, our Board determined that Courtney Mather, who previously served on our Board during 2021, was independent under the Nasdaq rules and our Corporate Governance Guidelines.
2023.
Audit Committee (8 meetings)
A copy of the charter of the Audit Committeeeach committee is posted on the Company’s website at
•appoint, retain, compensate, evaluate and replace our independent auditors;
•review and pre-approve audit services to be performed by our independent auditors;
•examine and make recommendations with respect to the audit scope, plans for and results of the annual audit;
•assess independent auditor’s qualifications and independence;
•oversee the activities, qualifications, adequacy of resources, performance and effectiveness of the internal audit organization and review and approve the internal audit scope and internal audit plan;
•review with management, the independent auditors and the internal auditors the quality and adequacy of internal controls;
•review and make recommendations to the Board regarding the Company’s policies and disclosures with regard to affiliate transactions;
oversee the Company’s risk assessment policies and practices, including the ERM process, and preview the ERM assessment and process for subsequent review by the Board;
•oversee the integrity of the Company’s financial statements;
•review the Company’s audited financial statements, including the Company’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and recommend to the Board their inclusion in the Company’s Annual Report on Form 10-K;
review the effectiveness of the Company’s compliance and ethics program, including reviewing and approving the Company’s Code of Business Conduct and Ethics and Finance Code of Conduct;
•oversee the Company’s compliance with legal and regulatory requirements;
•assess performance of the Company’s independent auditors and the internal audit function;
meet quarterly strategies, financing strategies and insurance coverage and report to the full Board with respect thereto as appropriate;
60.
Montelongo.
A copy of the charter of the Compensation Committee is posted on the Company’s website at www.conduent.com/corporate-governance.
•review and approve the goals, objectives and philosophies with respect to the compensation of the CEO and other key executive officers;
•review and approve the compensation of the CEO and other key executive officers;
•oversee the evaluation of the CEO;
•review, and approve key executive officer compensation and retirement plans, and administer and interpret such compensation plans;
•review and approve employment, severance, change-in-control, termination and retirement arrangements for key executive officers;
•review and recommend to the Board the Company’s stock ownership guidelines and all material compensation-related policies;
•oversee succession planning for executive officers;
•oversee and review the assessment and mitigation of risks associated with the Company’s compensation policies and practices;
•oversee shareholder communications on executive compensation; and
•have sole authority to retain, terminate and assess the independence of the consulting firms engaged to assist the Compensation Committee in the evaluation of the compensation of the CEO and other executive officers, and oversee the work of the compensation consultants, including determination of compensation to be paid to any such consultant by the Company.
ndez.
A copy of the charter of the Corporate Governance Committee is posted on the Company’s website at www.conduent.com/corporate-governance.
The responsibilities of the Corporate Governance Committee are set forth in the Corporate Governance Committee charter and include the following:
•identify, screen and recommend candidates for membership on the Board, consistent with criteria recommended by the Corporate Governance Committee and approved by the Board;
•review and make recommendations to the Board concerning the size, structure, membership qualifications, composition and procedures of the Board and Board committees;
•review and make recommendations to the Board concerning length of Board services and retirement age for Board members;
•review and assess the independence of each director and make recommendationrecommendations to the Board regarding the independence of each director;
•review director compensation and recommend to the Board any changes;
•consider matters of corporate governance, including developments, trends and best practices, and review the Company’s corporate governance policies, including the Corporate Governance Guidelines;
•monitor compliance with the Company’s Code of Business Conduct and Ethics for membersMembers of the Board;
•administer the Company’s Related Person Transactions Policy;
•review and recommend director orientation and continuing director education;
•provide oversight and make recommendations to the Board regarding the Company’s response to shareholder proposals;
•review and discuss with management disclosure of the Company’s corporate governance practices to be included in the Company’s proxy statement and Form 10-K; and
•oversee the annual evaluation processes of the Board and Board committees.
ndez.
Finance
A copy of the charter of the Finance Committee is posted on the Company’s website at www.conduent.com/corporate-governance.
•oversee the Company’s risk assessment policies and practices, including the ERM process, and, at least annually, preview the ERM assessment and process for subsequent review by the Board;
reviewBoard’s oversight of the role of technology in executing the Company’s strategy and make recommendations tosupporting the Company’s business and operational requirements;
•receive and review periodic reports from the adequacy ofCompany’s Chief Information Officer concerning the fundingCompany’s technology infrastructure and the quality and effectiveness of the Company’s funded retirement plansinformation technology systems and welfare benefits plans (other thanprocesses;
reviewinternal controls over the Company’s policy on derivatives;
|
reviewcompliance and approvemanagement risks, with the three-year strategic planassistance of the General Counsel and the annual capital budget;Chief Compliance Officer, and
•review and approve (1) acquisitions in excess of $75 million or involving the issuance of Company stock and (2) dispositions of assets or stock of a subsidiary in excess of $50 million.
Montelongo.
A copy of the Corporate Social Responsibility and Public Policy Committee charter is posted on the Company’s website at www.conduent.com/corporate-governance.
•review the Company’s policies, programs and practices regarding ESGsocial responsibility and public policy focus areas, including the impact of climate change and other environmental matters, energy and natural resource conservation, supply chain sustainability, employee health, safety and well-being, diversity, equity and inclusion, workforce human rights, public policy engagement, political contribution, and corporate charitable and philanthropic activities (“Social Responsibility Focus Areas”Areas”);
•review and monitor the development and implementation of the goals the Company may establish from time to time for its performance with respect to its Social Responsibility Focus Areas, the development of metrics and procedures to gauge progress toward achievement of those goals, and the Company’s progress against those goals;
•review in advance the Company’s global ESG communication plans and any public reports issued from time to time by the Company in connection with reporting results of the Company’s initiatives related to the Social Responsibility Focus Areas, including the Company’s Sustainability Accounting
•review a summary report of the Company’s charitable giving;
•review and monitor the Company’s strategies and efforts to address the Company’s short-improve Conduent’s reputation as it relates to ESG and long-term brand trust opportunities and brand leadership priorities that are significantreview process for assurance of ESG metrics to the Company, its customers and other stakeholders;
•review and make recommendations with respect to shareholder proposals relating to any of the Social Responsibility Focus Areas or other related matters, if and as requested by the Company’s Corporate Governance Committee; and
•review, identify, evaluate, and monitor environmental, social and related public policy trends, issues, risks and concerns, domestic and foreign, which affect or could affect the Company’s business activities and performance, and make recommendations to the Board regarding such efforts.
Montelongo.
Annual Meeting Attendance Policy:Policy: The Company’s policy generally is for all members of the Board to attend the Annual Meeting of Shareholders. All nominees attended the 20212023 Annual Meeting of Shareholders.
The Non-Executive Chairman receives $125,000 per year;
The Chair of the Audit Committee receives $25,000 per yearChair and $15,000 for each other member of the Audit Committee receives $15,000 per year;
The Chair of•$27,000 for the Compensation Committee receives $20,000 per yearChair and $12,000 for each other member of the Compensation Committee receives $12,000 per year;
The Chair of•$20,000 for the Corporate Governance Committee receives $15,000 per yearChair and $10,000 for each other member of the Corporate Governance Committee;
The Chair of the Finance Committee receives $15,000 per year andfor each other member of the FinanceRisk Oversight Committee; and
|
|
20212023 Director Compensation Table
Name | Fees Earned or Paid in Cash ($) (1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | ||||||||||
Hunter Gary | 107,000 | 190,000 | — | 297,000 | ||||||||||
Kathy Higgins Victor | 112,500 | 190,000 | — | 302,500 | ||||||||||
Scott Letier | 217,501 | (3) | 190,000 | — | 407,501 | |||||||||
Jesse Lynn | 98,333 | 190,000 | — | 288,333 | ||||||||||
Courtney Mather | 80,835 | (3) | 31,667 | — | 112,500 | |||||||||
Steven Miller | 99,583 | 174,170 | — | 273,753 | ||||||||||
Michael Montelongo | 123,333 | 190,000 | — | 313,333 | ||||||||||
Margarita Paláu-Hernández | 107,000 | 190,000 | — | 297,000 |
|
|
|
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | |||||||||||||
Hunter Gary | 117,000 | 190,000 | — | 307,000 | |||||||||||||
Kathy Higgins Victor | 115,000 | 190,000 | — | 305,000 | |||||||||||||
Scott Letier | 227,000 | (2) | 190,000 | — | 417,000 | ||||||||||||
Jesse Lynn | 100,000 | 190,000 | — | 290,000 | |||||||||||||
Steven Miller | 115,000 | 190,000 | — | 305,000 | |||||||||||||
Michael Montelongo | 135,000 | 190,000 | — | 325,000 | |||||||||||||
Margarita Paláu-Hernández | 112,000 | (2) | 190,000 | — | 302,000 |
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||
Common Stock | Mr. Carl C. Icahn (2) c/o Icahn Capital LP 767 Fifth Avenue, 47th Floor New York, NY 10153 | 38,149,336 | 17.69 | % | ||||||
Common Stock | The Vanguard Group (3) 100 Vanguard Blvd. Malvern, PA 19355 | 16,235,669 | 7.53 | % | ||||||
Common Stock | BlackRock, Inc. (4) 55 East 52nd Street New York, NY 10055 | 15,866,595 | 7.36 | % | ||||||
Common Stock | Neuberger Berman Group LLC/Neuberger Berman Investment Advisers LLC (5) 1290 Avenue of the Americas New York, NY 10104 | 13,361,651 | 6.20 | % | ||||||
Common Stock | Mr. Darwin A. Deason (6) 3953 Maple Avenue, Suite 150 Dallas, TX 75219 | 12,320,307 | 5.71 | % |
|
|
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||||||||||||||||||||
Common Stock | Mr. Carl C. Icahn (2) c/o Icahn Capital LP 767 Fifth Avenue, 47th Floor New York, NY 10153 | 38,149,336 | 18.28 | % | ||||||||||||||||||||||
Common Stock | The Vanguard Group (3) 100 Vanguard Blvd. Malvern, PA 19355 | 17,354,385 | 8.32 | % | ||||||||||||||||||||||
Common Stock | Neuberger Berman Group LLC/Neuberger Berman Investment Advisers LLC (4) 1290 Avenue of the Americas New York, NY 10104 | 14,693,141 | 7.04 | % | ||||||||||||||||||||||
Common Stock | BlackRock, Inc. (5) 50 Hudson Yards New York, NY 10001 | 14,650,070 | 7.02 | % | ||||||||||||||||||||||
Common Stock | Mr. Darwin A. Deason (6) 3953 Maple Avenue, Suite 150 Dallas, TX 75219 | 12,320,307 | 5.90 | % | ||||||||||||||||||||||
Common Stock | T. Rowe Price Investment Management, Inc. (7) 101 E. Pratt Street Baltimore, MD 21201 | 10,906,621 | 5.23 | % |
Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of Common Stock.
|
|
|
|
(3)Based on a Schedule 13G/A filed with the SEC on February 13, 2024 by The Vanguard Group (“Vanguard”), Vanguard has no sole voting power for any shares of Common Stock, sole dispositive power for 17,020,002 shares of Common Stock, shared voting power for 192,116 shares of Common Stock and shared dispositive power for 334,383 shares of Common Stock.
Name of
| Amount
| ||||||||
Clifford Skelton, President and Chief Executive Officer | 1,788,087 | ||||||||
292,931 | |||||||||
Randall King, Executive Vice President, Commercial Solutions | 144,216 | ||||||||
Michael Krawitz, Executive Vice President, General Counsel and Secretary | 562,121 | ||||||||
Mark Prout, Executive Vice President, Chief Information Officer | 297,038 | ||||||||
Stephen Wood, Executive Vice President, Chief Financial Officer | 271,436 | ||||||||
Mark King, former Executive Vice President, Government Solutions | 53,190 | ||||||||
Hunter Gary, Director | 94,407 | ||||||||
Kathy Higgins Victor, Director | 12,708 | ||||||||
Scott Letier, Director | 132,251 | ||||||||
Jesse A. Lynn, Director | 83,633 | ||||||||
Steven Miller, Director | 34,151 | ||||||||
90,431 | |||||||||
Margarita Paláu-Hernández, Director | 45,524 | ||||||||
All current directors and executive officers as a group | 3,848,934 |
For purposes of this CD&A and the disclosure that follows, the following are our named executive officers for 2021:
•Clifford Skelton, President and Chief Executive Officer
|
•Stephen Wood, Executive Vice President and Chief Financial Officer;
•Mark Prout, Executive Vice President, Chief Information Officer
Louis Keyes,•Randall King, Executive Vice President, Chief Revenue Officer
•Mark King(1), Former |
1Mr. Wood initially joined Conduent on August 10, 2020 as Vice President and Corporate Controller, and on June 11, 2021, in connection with the departure of Brian Webb-Walsh, was appointed Executive Vice President, Government Solutions.
on January 2,Mr. Webb-Walsh ceased 2024, Mark King voluntarily terminated his employment with the Company on June 11, 2021.
EXECUTIVE SUMMARY
Conduent, and thus is no longer an active associate.
We create value for our clients through efficient global service delivery combined with technology-enabled solutions and a personalizedservices spanning the commercial, government and seamless experience for the end-user. We apply our expertise, technology and innovation to continually modernize our offerings for improved client/end-user satisfaction and loyalty, increased process efficiency, reduced costs and rapid response to changing market dynamics.
Headquartered in Florham Park, New Jersey, we have a team of approximately 60,000 associates as of December 31, 2021, servicing customers from service centers in 24 countries. In 2021, 10% of our revenue was generated outside the U.S.
2021 Strategic Focus
Our vision is to become the leading business services partner of choice for businesses and governments. Through our dedicated associates, we deliver mission-critical services and solutions on behalf of businesses and governments,transportation spectrum – creating valuable outcomes for our clients and the millions of people who count on us.them. The Company leverages cloud computing, artificial intelligence ("
We have identified specific execution strategies across Growth, Efficiency and Quality, and our compensation plans include specific measures to reward our successful execution of these strategies.
Growth: Our opportunity for growth comes from understanding our clients’ businesses, strengthening our relationships, and driving valuable outcomes for our clients that enable them to reduce costs, improve efficiencies and customer experience and grow their businesses. To capitalize on the growth opportunities, we are focused on the following strategies:
Sales Performance Optimization: The significant progress and investments in sales training and process improvements during the last couple of years, together with the foundational improvements in operational performance, have resulted in more selling opportunities for us to support the strategies of our existing clients with our portfolio of market-leading services and solutions. In 2021 our add-on sales grew by 44% compared to 2020. We continue to improve client responsiveness and increase
|
Offering Development: We augmented our portfolio of services and solutions with innovative technology capabilities, including data analytics and machine learning capabilities, to create differentiated, high-value services for our clients and penetrate attractive market segments.
As we continued to improve our quality and efficiency in 2021, our existing clients renewed contracts with us and gave us more business in adjacent service lines, and we gained new clients. Our annual compensation bonus plan rewards achievement for success in Growth by including revenue retention and new business signings, among other metrics. Our long-term incentive plans also reward Growth, as our performance restricted stock awards have metrics tied to increase in stock value and revenue hurdles.
Efficiency: We continued to find ways to reduce costs and deliver more effectively via increased efficiencies. We simplified and standardized our operating model by removing redundant management layers and implementing more robust processes to enable faster decision-making and greater transparency. In addition, we aim to unlock further efficiencies through the following strategies:
Automation: We will continue to invest in embedding intelligent process automation capabilities into operations, including document processing and intelligent virtual assistant customer care tools. Artificial intelligence and machine learning algorithms will continue to add value to the enterprise.
Technology Consolidation: We have identified and are rationalizing duplicative technology systems across our lines of business. Centralizing technology systems will drive economies of scale, amplify the impact of investments, and will continue to strengthen consistent, resilient service delivery.
Delivery Optimization: We are continuing to drive efficiencies by delivering common processes with a shared services model that enables economies of scale. We are driving progress in every process through process improvement methodologies and exploiting new staffing models including work from home.
We continue to respond with agility to clients’ shifting needs and have received positive client feedback for our services and proactivity throughout the COVID-19 pandemic. Our compensation plans reward success in Efficiency by measuring associate retention and improvement in adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”) margin, among other metrics.
Quality: Our clients count on consistent, high-quality service delivery. We continue to drive progress in increasing uptime, improving operational stability, and significantly boosting client confidence and satisfaction by focusing on the following strategies:
Proactive, Real time Monitoring of Applications and Service Performance: We are investing in artificial intelligence and machine learning technologies to proactively monitor and prevent incidents. We have a state-of-the-art global IT command center in Sandy, UT to deliver more seamless and reliable service to our global clients and continued to increase uptime in 2021.
Data Center Optimization: We continue to standardize our technology footprint to improve performance and lower costs. As part of this, we have made significant progress in our data center optimization program to consolidate our multiple data centers into a select few. For example, in 2021 we closed two of our largest facilities in the US, completing these high complexity closures that in turn drove a significant increase in service availability for our clients.
Improve End User Experience: We are improving user interface/user experience across our offerings by expanding self-service tools, launching mobile apps and leveraging analytics to create deeper insights.
Our focus on quality is leading to improved client confidence and satisfaction. Our compensation plans are designed to measure success in Quality by including metrics in our incentive plans related to service level agreement performance, system availability, and client satisfaction.
Our strategic focus on Growth, Efficiency and Quality and Efficiency serves as the foundation for our compensation programs. Key aspects of theour compensation program design are directly aligned to our growth journey and our strategic focus, including incentivizing revenue growth and operational efficiency, and creating sustainable shareholder value. To this end, our compensation program positively influenced 2021links pay to performance, aligns to our shareholder interests, and is reflective of our 2023 operational and financial results.
2021 Operational Results
The Conduent team continued
Disposition – In December 2021, we entered into an agreement with Symplr Software, Inc. to sell our Midas suite of patient safety, quality and advanced analytics solutions for an aggregate cash purchase price of $340 million, less certain indebtedness and adjusted for the difference between estimated working capital at closing and a negotiated working capital target. On February 8, 2022, we successfully completed the sale and received $321 million in cash, which is subject to customary post-closing adjustments; such settlement is likely to occur in the second quarter of 2022 and is not expected to be material. The Midas solution represented approximately $70 million and $72 million of revenue in 2021 and 2020, respectively.
Global Labor Market Dynamics – To address the significant change in the labor market environment, we responded by strengthening our talent acquisition organization and processes and, maintaining an appropriate mix of work-from-home and work-from-office roles, whichstability. Our focus on Quality has resulted in increasing hire ratesclient confidence and improved ratings on Comparablysatisfaction.
2021 Financial Results
Revenue of $4,140 million for the year ended December 31, 2021 was a decline of 0.55% from 2020, a significantly improved trend compared with the (6.0%) decline in 2020 from 2019. 2021 Revenue was impacted by lost business from prior years, partially offset by (1) increases attributable to lesser impacts of the COVID-19 pandemic across our Transportation and Commercial Industries segments, (2) increased volumes in our Government Services segment, primarily a result of increased payments activity because of Federal stimulus and (3) the ramp of new business.
|
Net loss of $(28) million; pre-tax loss of $(25) million, significant improvements from 2020.
Adjusted EBITDA margins and thus is an important additional factor when determining annual incentive plan payouts.
$243 million of cash flow from operations, an increase from $161 million in 2020.
The 2021 operational and financial achievements resulted in above target results for our Annual Performance Incentive Plan (“APIP”), mainly due to:
The performance measures and weightings in the 2023 APIP were Adjusted Revenue and(weighted 40%), Adjusted EBITDA margin above targets, driven by stimulus payments volume in the Government Services business,Margin(1) (weighted 40%) and
Improvement in Client Retention
The 20212023 Adjusted Revenue, Adjusted EBITDA Margin and Net ARR Activity metric performance goals were established in March 2021 and the2023. The Compensation Committee did not reset these goals or use positive discretionmake upward adjustments in determining overall APIP Funding.
(1)Please see “Non-GAAP Financial Measures” beginning on page 51 of this Proxy Statement for information on our non-GAAP financial measures.
2021
In defining our 2021 PRSU metrics to reward increase in share price and growth in revenue, we set forth clear, measurable, and transparent goals to motivate our associates.
The first tranche2022 PRSU—Share Hurdle awards have not been earned as none of the PRSUs with share price hurdles did not vest on December 31, 2021 because our share price did not increase by at least 20% between the date of grant and December 31, 2021.have been met. These awards, however, remain outstanding and may be earned for active associates if the share price appreciation metric ismetrics are met by December 31, 2023.2024. Conduent’s relative total shareholder return from January 1, 2023 through December 31, 2023 resulted in an rTSR modifier of -5% for tranche two. As a result, if the share hurdle for the second tranche of the 2022 PRSU—Share Hurdle award is achieved, the granted shares will be adjusted to 95.00% of the original shares granted. The rTSR modifier for the first tranche of the award is -4.29%. As a result, if the share hurdle for the first tranche of the 2022 PRSU—Share Hurdle award is achieved, the granted shares will be adjusted to 95.71% of the original shares granted.
Looking forward, to continue to focus on increasing shareholder value, our 2022 share price hurdle PRSUs, will include a relative total shareholder return modifier based on the Company’s performance versus our compensation peer group.
(1)Please see “Non-GAAP Financial Measures”2021 PRSU—Share Hurdle awards had been earned and “Non-GAAP Reconciliations” on page 55 in this Proxy Statement for information on our non-GAAP financial measures.
2020 LTIP
All of the share price hurdles for the 2020 PRSU annual grant have been achieved. As a result, the first and secondthus, all tranches of the 2020 LTIP award were settled on December 31, 2020 and December 31, 2021, respectively. Vesting forforfeited.
2019 LTIP
The three-year performance period of our 2019 LTIP grant ended2021 PRSU—Revenue Hurdle awards did not vest on December 31, 2021. Cumulative performance over this three-year period fell short2023, as neither our revenue growth target for 2023 nor our Adjusted EBITDA margin threshold were met.
forfeited.
OUR EXECUTIVE COMPENSATION PROGRAM
•provide competitive compensation to attract and retain executives critical to our long-term success;
•align executive and shareholder interests using both short-term and long-term financial and strategic objectives that build a sustainable Company;
•recognize and reward collective accountability and individual contribution to drive enterprise results;
•instill high standards of corporate governance and best practices; and
•mitigate excess risk taking and/or behavior that is inconsistent with the Company’s strategic plans and high ethical standards.
What We Do | What We Don’t Do | |||||||||||||
✓ | Deliver a significant portion of compensation through long-term incentives tied directly to shareholder value creation. | X | Permit re-pricing of underwater stock options or springloading of equity grants. | |||||||||||
✓ | Balance short- and long-term incentives with multiple performance metrics. | X | Provide a defined-benefit pension plan or SERPs to executives (only all-employee 401(k) plan). | |||||||||||
✓ | Impose caps on our annual incentive and PRSU awards for our named executive officers. | X | Provide special executive perquisites or excessive termination payments. | |||||||||||
✓ | Maintain a recoupment policy that allows clawback of cash and equity compensation earned because of fraudulent or illegal conduct or in the event of an accounting restatement. | X | Allow directors, named executive officers and other senior leaders to hedge or pledge Company stock. | |||||||||||
✓ | Maintain stock ownership requirements for all of our named executive officers. | X | Permit tax gross-ups on change in control or other severance payments. | |||||||||||
✓ | Conduct an annual review of programs to ensure they do not encourage risks that have a material adverse effect on the Company. | X | Maintain written employment contracts with our executive officers. | |||||||||||
✓ | Maintain non-competition and non-solicitation agreements with our named executive officers that prohibit competing against Conduent and soliciting our customers or current | X | Allow single-trigger | |||||||||||
✓ | Engage an Independent Consultant under the direction of the Compensation Committee. | X | Provide guaranteed incentive payouts for named executive officers. |
2021
Executive
|
Title
|
Annual Base Salary
|
Target Short- Term Incentive (% of Base
| Target Long-
| Target Total | |||||||||||||||||
Clifford Skelton | Chief Executive Officer | $ | 775,000 | 135 | % | $ | 4,000,000 | $ | 5,821,250 | |||||||||||||
Stephen Wood | Executive Vice President, Chief Financial Officer (“CFO”) | $ | 450,000 | 75 | % | $ | 620,000 | $ | 1,407,500 | |||||||||||||
Michael Krawitz | Executive Vice President, General Counsel & Secretary | $ | 450,000 | 75 | % | $ | 735,000 | $ | 1,522,500 | |||||||||||||
Louis Keyes | Executive Vice President, Chief Revenue Officer | $ | 450,000 | 75 | % | $ | 500,000 | $ | 1,287,500 | |||||||||||||
Mark Prout | Executive Vice President, Chief Information Officer | $ | 450,000 | 75 | % | $ | 450,000 | $ | 1,237,500 | |||||||||||||
Brian Webb-Walsh | Former Executive Vice President, Chief Financial Officer | $ | 510,000 | 75 | % | $ | 975,000 | $ | 1,867,500 |
The2023.
Executive | Title | Annual Base Salary | Target Short- Term Incentive (% of Base Salary) | Target Long- Term Incentive | Target Total Direct Compensation | ||||||||||||
Clifford Skelton | President and Chief Executive Officer | $835,000 | 150 | % | $5,000,000 | $7,087,500 | |||||||||||
Stephen Wood | Executive Vice President and Chief Financial Officer | $525,000 | 80 | % | $1,150,000 | $2,095,000 | |||||||||||
Michael Krawitz | Executive Vice President, General Counsel & Secretary | $500,000 | 75 | % | $1,000,000 | $1,875,000 | |||||||||||
Mark Prout | Executive Vice President, Chief Information Officer | $450,000 | 75 | % | $750,000 | $1,537,500 | |||||||||||
Randall King | Executive Vice President, Commercial Solutions | $450,000 | 75 | % | $600,000 | $1,387,500 | |||||||||||
Mark King | Executive Vice President, Government Solutions (Former) | $450,000 | 75 | % | $800,000 | $1,587,500 |
The chart below reflects the 20212023 annual target total direct compensation pay mix for our CEO and other named executive officers who were serving as executives onof December 31, 2021,2023, and the portion of their targeted total direct compensation that is variable pay. Basing this variable compensation upon performance results, including revenue growth and share price,Conduent’s rTSR performance as compared to our proxy peers, directly aligns our executives’ interests with shareholder value creation. To reinforce the Company’s pay for performance philosophy, 87%88% of our CEO’s targeted total direct compensation, and on average 67%70% for our other named executive officers, is variable and “at risk.” Additionally, 52% of targeted total direct compensation
Linking Pay with Performance
Short-Term Incentives
In early 2021, theDetermining Compensation Committee approved an Annual Performance Incentive Program that aligned with the interests of shareholders and the Company. Each of our named executive officers participated in the APIP which focused on our business priorities for 2021. The 2021 performance measures and weightings were: Revenue (adjusted for currency) (25%); Adjusted EBITDA Margin (25%); New Business Signings (15%); and Strategic Goals (improvement in: client retention, employee attrition, system availability and service level agreements (“SLA”) (35%).
Additional information regarding short-term incentives can be found under “2021 Compensation for the Named Executive Officers—Short-Term Incentives.”
Long-Term Incentives
In early 2021, the Compensation Committee approved a Long-Term Incentive Program that aligned with the interests of management and long-term shareholders. The 2021 annual LTIP award for our named executive officers includes a mix of 50% performance-based awards, comprised of one-half, or 25% of the total LTIP, tied to share price hurdles (“Performance Restricted Stock Units—Share Hurdle” or “PRSU—Share Hurdle”), and the second half, or 25% of the total LTIP, tied to annual revenue growth hurdles (“Performance Restricted Stock Units—Revenue Hurdle” or “PRSU—Revenue Hurdle”), with the remaining 50% of the LTIP granted as time-based awards (“Restricted Stock Units” or “RSU”). This approach balances the need to drive healthy revenue growth and shareholder value, while also fostering retention and stock ownership. The Performance Restricted Stock Units – Share Hurdle awards vest based on the achievement of certain share price hurdles on or prior to December 31, 2023. Vesting for each tranche of the Performance Restricted Stock Units – Share Hurdle occurs on the later of the date the applicable share price is achieved or December 31 of each year during the annual performance period. The Performance Restricted Stock Units – Revenue Hurdle
vest based on the achievement of revenue hurdles for the years ending December 31, 2021, December 31, 2022 and December 31, 2023. Restricted Stock Units vest 1/3 on each December 31 of 2021, 2022, and 2023.
Additional information regarding long-term incentives can be found under “2021 Compensation for the Named Executive Officers—Long-Term Incentives.”
PROCESS FOR DETERMINING COMPENSATION
Role of the Compensation Committee
•Periodically discussing the performance of the Company and each executive officer with the Compensation Committee; and
•Making recommendations on the components of compensation for the other executive officers.
•regularly updated the Compensation Committee on trends in executive compensation, including providing proactive advice on emerging trends and best practices;
•reviewed officer compensation levels and overall performance compared to general industry survey data and a peer group made up of organizations with which Conduent is likely to compete for business, investor capital and/or executive talent;
•reviewed incentive compensation designs for short-term and long-term programs;
•advised the Compensation Committee on executive compensation peer group companies for pay and performance comparisons;
•reviewed the Compensation Discussion and Analysis and related compensation tables for inclusion in this Proxy Statement;
reviewed Compensation Committee meeting materials with management before distribution;
•attended Compensation Committee meetings, including meetings in executive session, as requested by the Compensation Committee chair; and
•offered independent analysis and input on CEO compensation.
| ||||||||
ICF Intl (ICFI) | ||||||||
CACI International Inc (CACI) | Leidos Holdings, Inc (LDOS) | |||||||
CGI Group (GIB) | ManTech Intl* | |||||||
Concentrix (CNXC) | Maximus, Inc (MMS) | |||||||
CSG Systems Intl (CSGS) | TELUS Intl (TIXT) | |||||||
TriNet Group (TNET) | ||||||||
Genpact LTD (G) | Veradigm (MDRX) |
*ManTech Intl was acquired in |
| ||
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
|
|
•base salary;
•target short-term incentives;
•total target cash compensation (base salary plus target short-term incentives);
•target long-term incentives; and
•total target direct compensation (total target cash compensation plus target long-term incentives).
2021 COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS
2021
Targets
43.
Executive | Annual Base Salary at 12/31/20 | Annual Base Salary at 12/31/21 | ||
Clifford Skelton | $750,000 | $775,000 | ||
Stephen Wood | $345,000 | $450,000 | ||
Michael Krawitz | $450,000 | $450,000 | ||
Louis Keyes | $450,000 | $450,000 | ||
Mark Prout | $425,000 | $450,000 |
These2023.
Executive | Annual Base Salary at 12/31/22 | Annual Base Salary at 12/31/23 | ||||||
Clifford Skelton | $835,000 | $835,000 | ||||||
Stephen Wood | $525,000 | $525,000 | ||||||
Michael Krawitz | $500,000 | $500,000 | ||||||
Mark Prout | $450,000 | $450,000 | ||||||
Randall King | $450,000 | $450,000 | ||||||
Mark King | $425,000 | $450,000 |
received a base salary increase from 2022 to 2023.
The following chart reflects Conduent’s process for setting short-term incentive awards. This process typically takes place in the first quarter of the year.
The target award opportunities for all our named executive officers for the 2021 APIP are disclosed above under “2021 Total Direct Compensation Targets for Named Executive Officers.”
Executive | Target Short- at 12/31/20 (% of Base | Target Short- Term Incentive at 12/31/21 (% of Base Salary) | ||
Clifford Skelton | 125% | 135% | ||
Stephen Wood | 60% | 75% | ||
Michael Krawitz | 70% | 75% | ||
Louis Keyes | 75% | 75% | ||
Mark Prout | 75% | 75% |
Increases No increases were made to the APIP targets for Messrs. Skelton and Krawitz to more closely alignshort-term incentive target percentages from 2022 to those of our peers and the market. The increase to Mr. Wood’s APIP target percentage is a result of his promotion to Chief Financial Officer.
2023.
Executive | Target Short-Term Incentive (% of Base Salary) | ||||
Clifford Skelton | 150 | % | |||
Stephen Wood | 80 | % | |||
Michael Krawitz | 75 | % | |||
Mark Prout | 75 | % | |||
Randall King | 75 | % | |||
Mark King | 75 | % |
goals. In 2021,2023, the performance goals for the APIP were designed to align with Conduent’s overall strategies, goals and objectives. Our 20212023 performance measures were based on RevenueRevenue (adjusted for currency), Adjusted Earnings Before Interest, Taxes, DepreciationEBITDAMargin and AmortizationMargin, New Business Signings,Net Annual Recurring Revenue (“Net ARR”) Activity. The target for Revenue was lower than our 2022 target and Strategic Goalsactual results, due to business runoff from prior years and the anticipated reduced impact of improvementgovernment stimulus payments in client retention, employee attrition, system availability2023. The defined APIP measures were designed to give a clear line of sight to key business results and SLA.
to encourage growth in revenue without eroding margin.
business strategy. Our defined APIP metrics were measured as follows:
(40% weight)
New Business Signings/Total Contract Value is measured by estimated future revenues from contracts signed during the year related to new logo, new service line, or expansion with existing customers.
New Business Signings/ACV represents the sum of Annual Recurring Revenue plus Non-Recurring Revenue signing metrics on all new business signed during the year.
Strategic Goals consist of goals relating to improvement in: client retention, employee attrition, system availability and service level agreements.
In no event may an APIP payout exceed the maximum payout (200% of target). The APIP funding level for achieving threshold performance for each performance goal is 25% of target, thetarget. The APIP funding level for achieving target performance is 100% of target, and the APIP funding level for achieving maximum performance is 200%150% of target.target, while the over-achievement funding for Adjusted Revenue and Adjusted EBITDA Margin is 200%. Performance below threshold results in zero APIP funding. Performance results and APIP funding levels are interpolated between these points. The following table notes the 20212023 Threshold, Target, Maximum and MaximumOver-achievement APIP targets for our Non-StrategicAPIP Goals:
Performance Measure | Threshold 25% Funding | Target 100% Funding | Maximum 200% Funding | |||||||||
Revenue | $ | 3,936M | $ | 4,100M | $ | 4,182M | ||||||
Adjusted EBITDA Margin | 10.78 | % | 11.46% | 11.69% | ||||||||
New Business—Total Contract Value | $ | 1,680M | $ | 2,100M | $ | 2,310M | ||||||
New Business Signing—Annual Contract Value | $ | 560M | $ | 700M | $ | 770M |
Adjusted EBITDA must also be greater than 85% of planned budget in order for the APIP to be funded.
2021 Revenue and Adjusted EBITDA Margin targets were set below 2020 actual results due to business runoff from prior years, and the anticipated reduced impact of government stimulus payments in 2021.
Performance Measure(1) | Threshold 25% Funding | Target 100% Funding | Maximum 150% Funding | Over-Achievement 200% Funding | ||||||||||
Adjusted Revenue(2) | $ | 3,662 | M | $ | 3,775 | M | $ | 3,888 | M | $4,153M | ||||
Adjusted EBITDA Margin | 9.90 | % | 10.40 | % | 10.90 | % | 11.40 | % | ||||||
Net ARR Activity | $ | 141 | M | $ | 166 | M | $ | 191 | M | NA |
Performance Measure(1) | Weighting (A) | Actual Results | Performance Achievement (B) | Funding % (A) x (B) | ||||||||||
Revenue ($M)(2) | 25% | $4,132M | 139 | % | 35 | % | ||||||||
Adjusted EBITDA Margin | 25% | 11.76% | 200 | % | 50 | % | ||||||||
New Business Total Contract Value | 10% | $1,785M | 44 | % | 4 | % | ||||||||
New Business Signing Annual Contract Value | 5 | % | $817M | 200 | % | 10 | % | |||||||
Strategic Goals: | ||||||||||||||
Improvement in Client Retention | 10% | Above Maximum | 200 | % | 20 | % | ||||||||
Reduction in Employee Attrition | 15% | Below Threshold | 0 | % | 0 | % | ||||||||
Improvement in Technology | 5% | Above Maximum | 200 | % | 10 | % | ||||||||
Improvement in SLA | 5% | Below Threshold | 0 | % | 0 | % | ||||||||
Total | 129 | % | ||||||||||||
Actual Funding | 125 | % | ||||||||||||
Adjusted EBITDA: > 85% of Budget |
Performance Measure(1) | Weighting (A) | Actual Results | Performance Achievement (B) | Funding % (A) x (B) | ||||||||||
Adjusted Revenue(2) | 40% | $ | 3,722 | M | 65 | % | 26 | % | ||||||
Adjusted EBITDA Margin | 40% | 10.20 | % | 63 | % | 25 | % | |||||||
Net ARR Activity ($M) | 20% | $ | 62 | M | Below Threshold | 0 | % | |||||||
Total | 51 | % | ||||||||||||
Actual Funding | 51 | % |
|
|
Determining Short-Term Incentive Award Payouts
Each
2021
Executive | 2021 Bonus Target Amount | 2021 Actual Bonus Amount | 2021 Actual Bonus as a % of Target | ||||||||||||
Clifford Skelton | $ | 1,046,250 | $ | 1,307,813 | 125 | % | |||||||||
Stephen Wood | $ | 278,864 | $ | 450,000 | 161 | % | |||||||||
Michael Krawitz | $ | 335,342 | $ | 450,000 | 134 | % | |||||||||
Mark Prout | $ | 335,702 | $ | 450,000 | 134 | % | |||||||||
Louis Keyes | $ | 337,500 | $ | 365,000 | 108 | % |
Executive | 2023 | 2023 | 2023 | ||||||||
Bonus Target Amount | Actual Bonus Amount | Actual Bonus as a % of Target | |||||||||
Clifford Skelton | $ | 1,252,500 | $ | 638,775 | 51 | % | |||||
Stephen Wood | $ | 420,000 | $ | 224,910 | 54 | % | |||||
Michael Krawitz | $ | 375,000 | $ | 200,813 | 54 | % | |||||
Mark Prout | $ | 337,500 | $ | 180,731 | 54 | % | |||||
Randall King | $ | 337,500 | $ | 137,700 | 41 | % | |||||
Mark King | $ | 335,856 | $ | — | — | % |
emphasis is placedGrowth and rTSR were selected as our long-term metrics to emphasize our continued focus on the strong correlation between revenue growthgrowing revenues and increases inincreasing shareholder value.
Revenue Growth from Previous Year | 2023 | 2024 | 2025 | Payout % | ||||||||||
Maximum | 0.0% | 5.7% | 6.2% | 200% | ||||||||||
Target | (2.0)% | 3.2% | 3.2% | 100% | ||||||||||
Threshold | (4.0)% | 0.7% | 0.2% | 50% |
Conduent rTSR | Payout % | ||||
>=75th Percentile | 150% | ||||
Median | 100% | ||||
25th Percentile | 50% |
Although equity awards generally are granted on a regular annual cycle, the Compensation Committee may grant off-cycle equity awards for special purposes, such as new hire, promotion, retention and recognition. An off-cycle equity award was granted to Mr. Wood to recognize his promotion to CFO in June 2021. No additional off-cycle equity awards were granted to our named executive officers in 2021.
Additionally,indexes
Grant Date Common Stock Price: $5.19 | ||||||||||||||
Tranche | Share Hurdle Description | Share Hurdles | Share Hurdle Achieved as of 12/31/2023 | Service Condition | ||||||||||
1 | +15% stock price appreciation | $5.968 | No | December 31, 2022 | ||||||||||
2 | +30% stock price appreciation | $6.747 | No | December 31, 2023 | ||||||||||
3 | +50% stock price appreciation | $7.785 | No | December 31, 2024 |
rTSR Percentile | Modifier | ||||
75th percentile or above | 105% | ||||
Median | 100% | ||||
25th Percentile | 95% |
Tranche | Performance Period | Percentile Achievement | rTSR Modifier Results | ||||||||
1 | April 1, 2022 - December 31, 2022 | 28.57 percentile | 95.71 | % | |||||||
2 | January 1, 2023 - December 31, 2023 | 21.43 percentile | 95.00 | % | |||||||
3 | January 1, 2024 - December 31, 2024 | To be determined | To be determined |
Grant Date Common Stock Price: $6.92 | |||||||||||||||||
Tranche | Share Hurdle Description | Share Hurdles | Share Hurdle Achieved as of 12/31/2023 | Service Condition | Vesting | ||||||||||||
1 | +20% stock price appreciation | $ | 8.304 | No | December 31, 2021 | Service condition met; Unvested | |||||||||||
2 | +40% stock price appreciation | $ | 9.688 | No | December 31, 2022 | Service condition met; Unvested | |||||||||||
3 | +60% stock price appreciation | $ | 11.072 | No | December 31, 2023 | Service condition met; Unvested |
Detailshurdles for the April 1, 2021 PRSU—Share Hurdle grant are as follows:
Grant Date Common Stock Price: $6.92 | ||||||||
Tranche | Share Hurdle Description | Price Hurdles | Price Hurdle Achieved as of 12/31/21 | Service Condition | ||||
1 | +20% stock price appreciation | $8.304 | No | December 31, 2021 | ||||
2 | +40% stock price appreciation | $9.688 | No | December 31, 2022 | ||||
3 | +60% stock price appreciation | $11.072 | No | December 31, 2023 |
The PRSU – Revenue Hurdle was added to further emphasize revenue growth without eroding margin. The
($ in millions) | 2021 LTIP Revenue Targets for year ending 12/31/2023 | 2023 | ||||||||||||
Threshold | Target | Maximum | Actual | |||||||||||
Revenue | 3,870 | 3,928 | 3,986 | 3,722 | ||||||||||
Revenue Growth/(Decrease) | 0.5 | % | 2.0 | % | 3.5 | % | (3.4 | %) | ||||||
Minimum Adjusted EBITDA Qualifier: 11.00% | 10.15 | % | ||||||||||||
Revenue Hurdle Achievement | 0 | % |
Change in Revenue Targets:
2020 Actual | 2021 | 2022 | 2023 | |||||||||||||
Threshold | (3.0 | %) | (1.0 | %) | 0.5 | % | ||||||||||
Target | (6.1 | %) | (1.5 | %) | 0.5 | % | 2.0 | % | ||||||||
Max | 0.0 | % | 2.0 | % | 3.5 | % |
The 2021 target Revenue was setrevenue achievement were below 2020 actual results due to business runoff from prior years,threshold level and the anticipated reduced impact of government stimulus payments in 2021, but a significantly improved trend compared with the (6.0%) decline from 2019.
The 2022 revenue target is set at 0.5% growth over 2021 actual revenue, and the 2023 target will be set at 2.0% growth over 2021 revenue. The threshold for payout is 1.5% points from the target and the maximum payout is 1.5% points above the target. A qualifier ofminimum required Adjusted EBITDA Margin at or aboveof 11% is necessary for any payout to be achieved. Each year, 1/3 of the award is eligible to vest. The design of these PRSU—Revenue Hurdle awards aligns with our improvement journey and will reward growth in revenue over the measurement periods.
Conduent surpassed the target levels for 2021 revenue growth, and achieved the minimum Adjusted EBITDA Margin requirement. As a result, on February 4, 2021,. Thus, the Compensation Committee ofcertified 0% payout for the Board of Directors approved the 20212023 tranche of the 2021 PRSU—Revenue Hurdle grant settlement at 126% of targeted shares. The details ofAwards, and the results are as follows:
($ in millions) | 2021 LTIP Revenue Targets | 2021 | ||||||||||||||||||
Threshold | Target | Maximum | Actual | |||||||||||||||||
|
|
| ||||||||||||||||||
Revenue | 4,038 | 4,100 | 4,163 | 4,140 | ||||||||||||||||
FX (Benefit) / Drag |
| (8) | ||||||||||||||||||
|
|
| ||||||||||||||||||
Adjusted Revenue - Constant Currency | 4,038 | 4,100 | 4,163 | 4,132 | ||||||||||||||||
|
|
| ||||||||||||||||||
Revenue Growth | (3.0%) | (1.5%) | 0.0% | (0.7%) | ||||||||||||||||
|
|
| ||||||||||||||||||
Revenue Hurdle Achievement | 126% |
PERFORMANCE RESULTS AND PAYOUTS UNDER PRIOR EQUITY AWARDS
2019 – 2021 Performance Share Grant
The three-year measurement period for the 2019 Conduent Long-Term Incentive Plan Performance Shares (“PSU”) ended on December 31, 2021. Conduent did not meet threshold achievement levels for Free Cash Flow (50% weighting) or Adjusted Profit Before Tax (50% weighting). As a result, there was no payout for these 2019 PSU awards.
2020 Performance — Restricted Stock Units
All stock price hurdles related to the April 1, 2020 annual PRSU grantcorresponding shares were achieved prior to December 31, 2021. As a result, the second tranche vested on December 31, 2021. The vesting of the third and final tranche is now solely dependent upon the completion of the final service requirement.
Grant Date Common Stock Price: $2.06 | ||||||||||
Tranche | Share Hurdle Description | Price Hurdles | Price Hurdle Achieved | Service Condition | Vesting | |||||
1 | +50% stock price appreciation | $3.09 | Yes | December 31, 2020 | Vested and settled | |||||
2 | +100% stock price appreciation | $4.12 | Yes | December 31, 2021 | Vested and settled | |||||
3 | +150% stock price appreciation | $5.15 | Yes | December 31, 2022 | Performance condition met. Final vesting upon completion of service condition. |
SAVINGS PLANS
forfeited.
BENEFITS AND PERQUISITES
EMPLOYMENT AND SEPARATION
For separations
change in control (primarily the Company’s executive officers), as per the Executive Change in Control Severance Plan (“CIC Plan”), which became effective October 1, 2017. In 2021, the Committee updated the levelevent of CIC benefits for executive officers to better reflect market practice, including changing the benefits ofa qualifying termination in connection with a change in control, the CEO fromwould be eligible to receive two and a half times his base salary and target annual incentive, to two and a half times base salary and target annual incentive, as well as making all named executive officers that report directly to the CEO would be eligible forto
GOVERNANCE OF THE EXECUTIVE COMPENSATION PROGRAMS
•Balanced mix of cash and equity, with incentives tied to both short- and long-term performance
•Balanced mix of performance measures (financial, operational and stock price) approved by the Compensation Committee in advance
•Executive incentive plan payouts are capped
•Overlapping performance periods for long-term incentives
•Independent Compensation Committee oversight
•Officer stock ownership guidelines
•Compensation recoupment policy
•Anti-hedging and anti-pledging policies
•Ownership requirements of 6x, 3x and 1x base salary, for the CEO, CEO’s officer direct reports and all other officers, respectively.
•Officers are required to retain 50 percent of all shares received upon the vesting of equity awards (net of taxes) until the requirement is achieved.
•CEO (or, with respect to the CEO, the Board) has the authority to permit discretionary hardship exceptions from the ownership and holding requirements.
Trading, Hedging and Pledging
As of December 31, 2023, none of our named executive officers have entered into a 10b5-1 trading plan.
Under
Conduent’s Compensation Recoupment Policy includes a claw back provision that applies if an accounting restatement is required to correct any material non-compliance with financial reporting requirements. Under this provision, Conduent can recover, for the three prior years, any excess incentive-based compensation (the excess over what would have been paid under the accounting restatement) from executive officers or former executive officers.
CERTAIN TAX IMPLICATIONS OF EXECUTIVE COMPENSATION
Name & Principal Position | Year | Salary ($) (A) | Bonus ($) (B) | Stock ($) (C) | Non-Equity Incentive Plan Compensation ($) (D) | All Other Compensation ($) (E) | Total ($) | |||||||||||||||||||
Clifford Skelton | 2021 | 770,255 | - | 3,999,993 | 1,307,813 | - | 6,078,061 | |||||||||||||||||||
Chief Executive Officer | 2020 | 697,693 | - | 2,999,999 | 1,260,957 | 15,000 | 4,973,649 | |||||||||||||||||||
2019 | 325,000 | - | 3,999,990 | - | 16,929 | 4,341,919 | ||||||||||||||||||||
Stephen Wood | 2021 | 398,241 | - | 499,977 | 450,000 | - | 1,348,218 | |||||||||||||||||||
Executive Vice President and | ||||||||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||
Michael Krawitz | 2021 | 450,000 | - | 734,987 | 450,000 | 8,700 | 1,643,687 | |||||||||||||||||||
Executive Vice President, | 2020 | 430,385 | - | 734,999 | 465,000 | 18,466 | 1,648,850 | |||||||||||||||||||
General Counsel & Secretary | 2019 | 34,615 | - | 199,994 | - | 130 | 234,739 | |||||||||||||||||||
Mark Prout | 2021 | 446,506 | - | 449,993 | 450,000 | 8,700 | 1,355,199 | |||||||||||||||||||
Executive Vice President, | ||||||||||||||||||||||||||
Chief Information Officer | 2020 | 406,475 | - | 499,996 | 500,000 | 1,312 | 1,407,783 | |||||||||||||||||||
Louis Keyes | 2021 | 450,000 | - | 499,993 | 365,000 | 8,025 | 1,323,018 | |||||||||||||||||||
Executive Vice President, | ||||||||||||||||||||||||||
Chief Revenue Officer | 2020 | 430,385 | - | 499,998 | 525,000 | - | 1,455,383 | |||||||||||||||||||
Brian Webb-Walsh, | 2021 | 251,403 | - | 974,986 | - | - | 1,226,389 | |||||||||||||||||||
Former, Executive Vice President & | 2020 | 487,770 | - | 974,998 | 540,000 | 13,317 | 2,016,085 | |||||||||||||||||||
Chief Financial Officer | 2019 | 492,692 | - | 974,994 | - | 18,466 | 1,486,152 |
2023, as well as an additional former associate (Mark King) not serving as an executive officer on December 31, 2023 and who resigned on January 2, 2024.
Name & Principal Position | Year | Salary ($) | Stock Awards ($) (A) | Non-Equity Incentive Plan Compensation ($) (B) | All Other Compensation ($) (C) | Total ($) | ||||||||||||||
Clifford Skelton | 2023 | 835,000 | 4,999,996 | 638,775 | — | 6,473,771 | ||||||||||||||
President and | 2022 | 826,808 | 4,249,995 | 789,075 | — | 5,865,878 | ||||||||||||||
Chief Executive Officer | 2021 | 770,255 | 3,999,993 | 1,307,813 | — | 6,078,061 | ||||||||||||||
Stephen Wood | 2023 | 525,000 | 1,149,992 | 224,910 | — | 1,899,902 | ||||||||||||||
Executive Vice President & | 2022 | 514,760 | 1,149,992 | 260,000 | — | 1,924,752 | ||||||||||||||
Chief Financial Officer | 2021 | 398,241 | 499,977 | 450,000 | — | 1,348,218 | ||||||||||||||
Michael Krawitz | 2023 | 500,000 | 999,993 | 200,813 | 3,630 | 1,704,436 | ||||||||||||||
Executive Vice President, | 2022 | 493,173 | 999,998 | 242,000 | 3,050 | 1,738,221 | ||||||||||||||
General Counsel & Secretary | 2021 | 450,000 | 734,987 | 450,000 | 8,700 | 1,643,687 | ||||||||||||||
Mark Prout | 2023 | 450,000 | 749,995 | 180,731 | 3,630 | 1,384,356 | ||||||||||||||
Executive Vice President, | 2022 | 450,000 | 749,995 | 236,000 | 3,050 | 1,439,045 | ||||||||||||||
Chief Information Officer | 2021 | 446,506 | 449,993 | 450,000 | 8,700 | 1,355,199 | ||||||||||||||
Randall King | 2023 | 450,000 | 599,996 | 137,700 | 3,630 | 1,191,326 | ||||||||||||||
Executive Vice President | ||||||||||||||||||||
Commercial Solutions | ||||||||||||||||||||
Mark King | 2023 | 446,779 | 799,998 | — | 3,630 | 1,250,407 | ||||||||||||||
Executive Vice President, | ||||||||||||||||||||
Government Solutions (Former) |
|
|
|
|
Name | Grant Date | Performance Restricted Stock Units (PRSU) | Restricted Stock Units (RSU) | |||||||||||||||||
PRSU—Revenue Hurdle | PRSU—Share Hurdle | |||||||||||||||||||
Fair Market Value on Grant Date | Fair Value Based on Monte Carlo Method | Fair Market Value on Grant Date | Fair Market Value on Grant Date | |||||||||||||||||
Clifford Skelton | 4/1/2021 | 999,995 | 1,000,000 | 1,114,300 | 1,999,998 | |||||||||||||||
Stephen Wood | 4/1/2021 | 56,246 | 56,246 | 62,674 | 112,498 | |||||||||||||||
6/30/2021 | 68,745 | 68,745 | 77,070 | 137,498 | ||||||||||||||||
Michael Krawitz | 4/1/2021 | 183,747 | 183,747 | 204,749 | 367,494 | |||||||||||||||
Mark Prout | 4/1/2021 | 112,498 | 112,497 | 125,356 | 224,997 | |||||||||||||||
Louis Keyes | 4/1/2021 | 124,996 | 124,998 | 139,286 | 249,999 | |||||||||||||||
Brian Webb-Walsh | 4/1/2021 | 243,743 | 243,749 | 271,610 | 487,493 |
|
|
The grant date fair value of the 2023 PRSU—rTSR awards is based upon the Monte Carlo method, and both the target fair market value and the maximum fair market value at 150% of target, on the date of grant are shown below. The grant date fair value of the 2023 PRSU—Revenue Growth awards is based on the probable outcome of the performance conditions as of the grant date, or target, and the maximum value of these awards are shown below in the table.
Name | Grant Date | 2023 PRSU—rTSR | 2023 PRSU—Revenue Growth | RSU | |||||||||||||||||||
Fair Value Based on Monte Carlo Valuation Method ($) | Value on Grant Date ($) Based on Stock Price | Maximum Market Value on Grant Date ($) | Fair Value on Grant Date ($) Based on Stock Price | Maximum Fair Market Value on Grant Date ($) | Fair Market Value on Grant Date ($) | ||||||||||||||||||
Clifford Skelton | 4/1/2023 | 750,000 | 871,800 | 915,390 | 1,750,000 | 3,500,000 | 2,499,996 | ||||||||||||||||
Stephen Wood | 4/1/2023 | 172,497 | 200,511 | 210,537 | 402,497 | 804,994 | 574,998 | ||||||||||||||||
Michael Krawitz | 4/1/2023 | 149,998 | 174,357 | 183,075 | 349,997 | 699,994 | 499,998 | ||||||||||||||||
Mark Prout | 4/1/2023 | 112,499 | 130,769 | 137,307 | 262,498 | 524,996 | 374,998 | ||||||||||||||||
Randall King | 4/1/2023 | 89,999 | 104,615 | 156,923 | 209,999 | 419,998 | 299,998 | ||||||||||||||||
Mark King | 4/1/2023 | 120,000 | 139,488 | 261,536 | 279,998 | 699,994 | 400,000 |
Name | Award (A) | Grant (A) | Approval (A) | Estimated Future Payout Under Non-Equity Incentive Awards (B) | Estimated Future Payout Under Equity Incentive Awards (C) |
All Other Number | Grant Date Fair Value of Stock Awards ($)(E) | |||||||||||||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||||
Clifford Skelton |
|
261,563 |
|
|
1,046,250 |
|
|
2,092,500 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 289,017 | 1,999,998 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 4/1/2021 | 2/5/2021 | 72,254 | 144,508 | 216,762 | 999,995 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 53,675 | 161,026 | 161,026 | 1,000,000 | ||||||||||||||||||||||||||||||||||||||
Stephen Wood |
|
69,716 |
|
|
278,864 |
|
|
557,728 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 6/30/2021 | 5/5/2021 | 18,333 | 137,498 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 6/30/2021 | 5/5/2021 | 4,583 | 9,166 | 13,749 | 68,745 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 6/30/2021 | 5/5/2021 | 3,425 | 10,276 | 10,276 | 68,745 | ||||||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 16,257 | 112,498 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 4/1/2021 | 2/5/2021 | 4,064 | 8,128 | 12,192 | 56,246 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 3,019 | 9,057 | 9,057 | 56,246 | ||||||||||||||||||||||||||||||||||||||
Michael Krawitz |
|
83,836 |
|
|
335,342 |
|
|
670,684 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 53,106 | 367,494 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Metric | 4/1/2021 | 2/5/2021 | 13,277 | 26,553 | 39,830 | 183,747 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 9,862 | 29,588 | 29,588 | 183,747 | ||||||||||||||||||||||||||||||||||||||
Mark Prout |
|
83,926 |
|
|
335,702 |
|
|
671,404 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 32,514 | 224,997 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 4/1/2021 | 2/5/2021 | 8,129 | 16,257 | 24,386 | 112,498 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 6,038 | 18,115 | 18,115 | 112,497 | ||||||||||||||||||||||||||||||||||||||
Louis Keyes |
|
84,375 |
|
|
337,500 |
|
|
675,000 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 36,127 | 249,999 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 4/1/2021 | 2/5/2021 | 9,032 | 18,063 | 27,095 | 124,996 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 6,709 | 20,128 | 20,128 | 124,998 | ||||||||||||||||||||||||||||||||||||||
Brian Webb-Walsh |
|
95,625 |
|
|
382,500 |
|
|
765,000 |
| |||||||||||||||||||||||||||||||||||
LTIP RSU | 4/1/2021 | 2/5/2021 | 70,447 | 487,493 | ||||||||||||||||||||||||||||||||||||||||
LTIP PRSU —Revenue Hurdle | 4/1/2021 | 2/5/2021 | 17,612 | 35,223 | 52,835 | 243,743 | ||||||||||||||||||||||||||||||||||||||
LTIP PRSU—Share Hurdle | 4/1/2021 | 2/5/2021 | 13,083 | 39,250 | 39,250 | 243,749 |
|
|
|
Name Award
(A)Grant
DateApproval
DateEstimated Future Payout Under
Non-Equity Incentive Awards
(A)Estimated Future Payout Under
Equity Incentive Awards
(B)All Other
Stock
Awards:
Number
of Shares
or Units
(#)(C)Grant
Date Fair
Value of
Stock
Awards
($)(D)Threshold
($)Target
($)Maximum
($)Threshold
(#)Target
(#)Maximum
(#)Clifford
SkeltonAPIP 313,125 1,252,500 2,505,000 LTIP RSU 4/1/2023 2/2/2023 728,862 2,499,997 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 255,102 510,204 1,020,408 1,750,000 LTIP PRSU—rTSR 4/1/2023 2/2/2023 127,085 254,169 381,254 750,000 Stephen
WoodAPIP 105,000 420,000 840,000 LTIP RSU 4/1/2023 2/2/2023 167,638 574,998 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 58,673 117,346 234,692 402,497 LTIP PRSU—rTSR 4/1/2022 2/2/2023 29,229 58,458 87,687 172,497 Michael
KrawitzAPIP 93,750 375,000 750,000 LTIP RSU 4/1/2023 2/2/2023 145,772 499,998 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 51,020 102,040 204,080 349,997 LTIP PRSU—rTSR 4/1/2023 2/2/2023 25,417 50,833 76,250 149,998 Mark
ProutAPIP 84,375 337,500 675,000 LTIP RSU 4/1/2023 2/2/2023 109,329 374,998 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 38,265 76,530 153,060 262,498 LTIP PRSU—rTSR 4/1/2022 2/2/2023 19,063 38,125 57,188 112,499 Randall
KingAPIP 84,375 337,500 675,000 LTIP RSU 4/1/2023 2/2/2023 87,463 299,998 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 30,612 61,224 122,448 209,999 LTIP PRSU—rTSR 4/1/2023 2/2/2023 15,250 30,500 45,750 89,999 APIP 83,964 335,856 671,712 LTIP RSU 4/1/2023 2/2/2023 116,618 400,000 LTIP PRSU—Revenue Growth 4/1/2023 2/2/2023 40,816 81,632 163,264 279,998 LTIP PRSU—rTSR 4/1/2023 2/2/2023 20,334 40,667 61,001 120,000
|
|
($3.43) and rounding the number of shares down to the nearest share.
Name
| Grant
| Grant Type
| Number of Shares or Units of Stock That Have Not Vested (#) (1)
| Market Value of Shares or Units of Stock That Have Not Vested ($) (2)
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3)
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2)
| ||||||||||||||||||
Clifford Skelton |
|
6/28/2019 |
|
|
RSU |
|
|
26,073 |
|
|
139,230 |
| ||||||||||||
6/28/2019 | RSU | 86,913 | 464,115 | |||||||||||||||||||||
4/1/2020 | | PRSU—Share Hurdle | | 386,314 | 2,062,917 | |||||||||||||||||||
4/1/2020 | RSU | 242,766 | 1,296,370 | |||||||||||||||||||||
4/1/2021 | | PRSU—Revenue Hurdle | | 96,339 | 514,450 | |||||||||||||||||||
4/1/2021 | | PRSU—Share Hurdle | | 161,026 | 859,879 | |||||||||||||||||||
4/1/2021 | RSU | 192,678 | 1,028,901 | |||||||||||||||||||||
Stephen Wood |
|
9/30/2020 |
|
|
PRSU—Share |
|
|
47,539 |
|
|
253,858 |
| ||||||||||||
9/30/2020 | RSU | 36,688 | 195,914 | |||||||||||||||||||||
4/1/2021 | | PRSU—Revenue Hurdle | | 5,419 | 28,937 | |||||||||||||||||||
4/1/2021 | | PRSU—Share Hurdle | | 9,057 | 48,364 | |||||||||||||||||||
4/1/2021 | RSU | 10,838 | 57,875 | |||||||||||||||||||||
6/30/2021 | | PRSU—Revenue Hurdle | | 4,584 | 24,479 | 6,110 | 32,627 | |||||||||||||||||
6/30/2021 | | PRSU—Share Hurdle | | 10,276 | 54,874 | |||||||||||||||||||
6/30/2021 | RSU | 18,333 | 97,898 | |||||||||||||||||||||
Michael Krawitz |
|
11/18/2019 |
|
|
RSU |
|
|
10,353 |
|
|
55,285 |
| ||||||||||||
4/1/2020 | | PRSU—Share Hurdle | | 94,646 | 505,410 | |||||||||||||||||||
4/1/2020 | RSU | 59,477 | 317,607 | |||||||||||||||||||||
4/1/2021 | | PRSU—Revenue Hurdle | | 17,702 | 94,529 | |||||||||||||||||||
4/1/2021 | | PRSU—Share Hurdle | | 29,588 | 158,000 | |||||||||||||||||||
4/1/2021 | RSU | 35,404 | 189,057 | |||||||||||||||||||||
Mark Prout |
|
6/28/2019 |
|
|
RSU |
|
|
1,738 |
|
|
9,281 |
| ||||||||||||
4/1/2020 | | PRSU—Share Hurdle | | 64,384 | 343,811 | |||||||||||||||||||
4/1/2020 | RSU | 40,459 | 216,051 | |||||||||||||||||||||
4/1/2021 | | PRSU—Revenue Hurdle | | 10,838 | 57,875 | |||||||||||||||||||
4/1/2021 | | PRSU—Share Hurdle | | 18,115 | 96,734 | |||||||||||||||||||
4/1/2021 | RSU | 21,676 | 115,750 | |||||||||||||||||||||
Louis Keyes |
|
9/30/2019 |
|
|
RSU |
|
|
5,360 |
|
|
28,622 |
| ||||||||||||
4/1/2020 | | PRSU—Share Hurdle | | 64,385 | 343,816 | |||||||||||||||||||
4/1/2020 | RSU | 40,461 | 216,062 | |||||||||||||||||||||
4/1/2021 | | PRSU—Revenue Hurdle | | 12,042 | 64,304 | |||||||||||||||||||
4/1/2021 | | PRSU—Share Hurdle | | 21,873 | 116,802 | |||||||||||||||||||
4/1/2021 | RSU | 24,085 | 128,614 |
____________________ (1)The awards presented in this column include unvested RSUs and are scheduled to vest provided the service requirements are fulfilled, the |
|
|
The June 30, 2021 RSUs vest their remaining shares on June 30, 2023. (There are no earned unvested PRSU—Share Hurdle awards that have met the share price hurdle, as of December 31, 2023.)
OPTION EXERCISES AND STOCK VESTED IN 2021
PRSU—Revenue Hurdle award is valued at zero in this column, as threshold Revenue performance for 2023 was not achieved.
Name
|
Number of (#) (A)
|
Value Realized ($) (B)
| ||||||
Clifford Skelton |
|
898,878 |
|
|
4,994,118 |
| ||
Stephen Wood |
|
50,945 |
|
|
322,262 |
| ||
Michael Krawitz |
|
193,285 |
|
|
1,025,983 |
| ||
Mark Prout |
|
124,219 |
|
|
662,129 |
| ||
Louis Keyes |
|
129,802 |
|
|
694,453 |
| ||
Brian Webb-Walsh |
|
14,646 |
|
|
75,573 |
|
|
|
Name Number of
Shares
(#) (A)Value Realized
on Vesting
($) (B)Clifford Skelton 475,773 1,736,571 Stephen Wood 122,682 443,143 Michael Krawitz 98,405 359,178 Mark Prout 71,366 260,486 Randall King 94,748 334,299 Mark King 54,527 199,024
Named Executive Officer | Involuntary (A) | Involuntary Termination Not for Cause or Termination for Good Reason after Change in Control (B) | Death & Disability (C) | |||||||||
Clifford Skelton | ||||||||||||
• Cash Severance ($) | 387,500 | 4,553,125 | - | |||||||||
• Non-Equity Incentive Awards ($) | 1,307,813 | 1,307,813 | 1,307,813 | |||||||||
• Equity Incentive Awards ($) | 533,730 | 6,783,482 | 6,365,862 | |||||||||
• Healthcare Benefits ($) | - | - | - | |||||||||
Clifford Skelton Total Termination Benefits ($) | 2,229,043 | 12,644,420 | 7,673,675 | |||||||||
Stephen Wood | ||||||||||||
• Cash Severance ($) | 225,000 | 1,575,000 | - | |||||||||
• Non-Equity Incentive Awards ($) | 450,000 | 450,000 | 450,000 | |||||||||
• Equity Incentive Awards ($) | 56,224 | 790,906 | 790,906 | |||||||||
• Healthcare Benefits ($) | 7,595 | 15,191 | - | |||||||||
Stephen Wood Total Termination Benefits ($) | 738,819 | 2,831,097 | 1,240,906 | |||||||||
Michael Krawitz | ||||||||||||
• Cash Severance ($) | 225,000 | 1,575,000 | - | |||||||||
• Non-Equity Incentive Awards ($) | 450,000 | 450,000 | 450,000 | |||||||||
• Equity Incentive Awards ($) | 4,607 | 1,319,888 | 1,319,888 | |||||||||
• Healthcare Benefits ($) | 2,825 | 5,649 | - | |||||||||
Michael Kraw itz Total Termination Benefits ($) | 682,432 | 3,350,537 | 1,769,888 | |||||||||
Mark Prout | ||||||||||||
• Cash Severance ($) | 225,000 | 1,575,000 | - | |||||||||
• Non-Equity Incentive Awards ($) | 450,000 | 450,000 | 450,000 | |||||||||
• Equity Incentive Awards ($) | 4,640 | 867,339 | 839,501 | |||||||||
• Healthcare Benefits ($) | 7,324 | 14,647 | - | |||||||||
Mark Prout Total Termination Benefits ($) | 686,964 | 2,906,986 | 1,289,501 | |||||||||
Louis Keyes | ||||||||||||
• Cash Severance ($) | 225,000 | 1,575,000 | - | |||||||||
• Non-Equity Incentive Awards ($) | 365,000 | 365,000 | 365,000 | |||||||||
• Equity Incentive Awards ($) | 7,155 | 984,071 | 898,220 | |||||||||
• Healthcare Benefits $) | 8,103 | 16,206 | - | |||||||||
Louis Keyes Total Termination Benefits ($) | 605,258 | 2,940,277 | 1,263,220 |
|
Named Executive Officer Involuntary
Termination Not
for Cause
(A)Involuntary Termination Not for Cause or Termination for Good Reason, after Change in Control (B) Death &
Disability
(C)Clifford Skelton • Cash Severance ($) 835,000 5,218,750 - • Non-Equity Incentive Awards ($) 638,775 638,775 638,775 • Equity Incentive Awards ($) 4,826,324 6,693,629 6,643,094 • Healthcare Benefits ($) - - - Clifford Skelton Total Termination Benefits ($) 6,300,099 12,551,154 7,281,869 Stephen Wood • Cash Severance ($) 525,000 1,890,000 - • Non-Equity Incentive Awards ($) 224,910 224,910 224,910 • Equity Incentive Awards ($) 1,254,265 1,696,951 1,672,122 • Healthcare Benefits ($) 32,438 32,438 - Stephen Wood Total Termination Benefits ($) 2,036,613 3,844,299 1,897,032 Michael Krawitz • Cash Severance ($) 500,000 1,750,000 - • Non-Equity Incentive Awards ($) 200,813 200,813 200,813 • Equity Incentive Awards ($) 1,038,657 1,413,901 1,402,009 • Healthcare Benefits ($) 12,021 12,021 - Michael Krawitz Total Termination Benefits ($) 1,751,491 3,376,735 1,602,822 Mark Prout • Cash Severance ($) 450,000 1,575,000 - • Non-Equity Incentive Awards ($) 180,731 180,731 180,731 • Equity Incentive Awards ($) 778,992 1,060,424 1,051,506 • Healthcare Benefits ($) 31,522 31,522 - Mark Prout Total Termination Benefits ($) 1,441,245 2,847,677 1,232,237 Randall King • Cash Severance ($) 450,000 1,575,000 - • Non-Equity Incentive Awards ($) 137,700 137,700 137,700 • Equity Incentive Awards ($) 525,327 748,097 743,341 • Healthcare Benefits $) 33,434 33,434 - Randall King Total Termination Benefits ($) 1,146,461 2,494,231 881,041
|
Change-in-Control Plan (“
CIC Plan”) with severance period multiples as described below, which provides them specified severance benefits if, within 90 days prior to, or within 12 months (or, for our CEO, 24 months) following a change in control of Conduent, their employment was terminated either involuntarily other than for cause, death or disability, or voluntarily for good reason. This arrangement whereby change in control severance benefits are provided only upon a qualifying termination event following a change in control is commonly described as “double-trigger.”•A lump sum cash payment equal to two and one-half times the then-current annual base salary and short-term incentive award target for Mr. Skelton
•A lump sum cash payment equal to two times the then-current annual base salary and short-term incentive award target for Messrs. Wood, Krawitz, Prout, and Keyes.
•Continuation of specified welfare benefits at active employee rates for a period of 24 months for Messrs. Skelton, Wood, Krawitz, Prout and Keyes.
Payment of reasonable legal fees and expenses incurred when the named executive officer, in good faith, is involved in a dispute while seeking to enforce the benefits and rights provided by the severance agreement.
•Pursuant to the terms of the applicable agreements, accelerated vesting of stock awards, including performance restricted stock units at target and performance restricted stock units and restricted stock units at fair market value as of December 31, 2021, and a short-term incentive (Non-Equity(Non-Equity Incentive Award) payment for the 20212023 performance, reflected above at actual achievement against performance goals.
|
Executive Compensation Programs—Compensation RecoveryRecoupment Policy (Clawbacks)” section of the CD&A for additional information.
•Any person becomes a beneficial owner representing 50 percent or more of the combined voting power of the outstanding securities of Conduent.
•A majority of the Conduent Board is replaced under specific circumstances.
•All or substantially all of Conduent’s assets are sold, or Conduent’s shareholders approve a plan of complete liquidation or dissolution.
•The material diminution of authority, duties or responsibilities, including being an executive officer of Conduent before a change in control and ceasing to be an executive officer of the surviving company. The change-in-control benefits for this provision will only be triggered if the executive officer has not voluntarily terminated his/her employment and the “material diminution of authority, duties, or responsibilities” has occurred and not been remedied.
•A material reduction in annual base salary, annual target short-term incentive or employee benefits in the aggregate, except to the extent such reduction is consistent with an across-the-board reduction for employees.
•A material change in the geographic location where the executive is required to be based.
•Failure of Conduent to obtain a satisfactory agreement from any successor to assume and agree to perform in a manner consistent with the change in control agreement.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category
| (A) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)
| (B) Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(1)
| (C) Number of Securities Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (A))(2)
| |||
Equity compensation plans approved by security holders
|
8,210,280 |
- |
23,729,576 | |||
Equity compensation plans not approved by security holders
|
-
|
-
|
-
| |||
Total | 8,210,280 | - | 23,729,576 |
|
|
Plan Category (A)
Number of Securities
to be Issued Upon
Exercise of
Outstanding
Options, Warrants
and Rights(1)(B)
Weighted Average
Exercise Price of
Outstanding
Options, Warrants
and Rights(1)(C)
Number of Securities
Available for Future
Issuance Under Equity
Compensation Plans
(Excluding Securities
Reflected in Column (A))(2)Equity compensation plans approved by security holders 12,673,184 - 14,284,266 Equity compensation plans not approved by security holders - - - Total 12,673,184 - 14,284,266
For 2021, our median employee originally selected in 2019 is no longer employed with Conduent. Thus, we have elected to use a median employee whose compensation is substantially similar to the original median employee selected in 2019 based on the compensation measure used to select the original median employee. Our new median employee has the same job title, job code, compensation tier and work state, as our median employee selected 2019. Otherwise, we have had no material change in our employee compensation arrangements that we believe would significantly impact the pay ratio disclosure.
associate population.
The Company’s by-laws provide
Directors and Officers Liability Insurance and Indemnity
On June 1, 2021, the Company renewed its policies for directors’ and officers’ liability insurance. The policies are issued by Chubb insurance Company of New Jersey, XL Specialty Insurance Company, Associated Industries Insurance Co, Travelers Casualty and Surety Company of America, Twin City Fire Insurance Company, Continental Insurance Company of New Jersey, Ascot Insurance Company, Capitol Indemnity Corporation, Zurich American Insurance Company, Arch Insurance Company, Berkley Professional Liability, Ironshore Indemnity Inc., Argonaut Insurance Company, Hudson Insurance Company, RSUI Indemnity Company, Marsh Alpha (Lloyd’s of London), National Union Fire Insurance Company of Pittsburgh, AXIS Insurance Company, U.S. Specialty Insurance Company, Beazley Insurance Company, Inc., Old Republic Professional Liability, Inc. and Endurance American Insurance Company. The policies expire June 1, 2022, and the total annual premium is approximately $6,100,000.
NON-GAAP FINANCIAL MEASURES
•Divestitures. Revenue from divestitures, of which there were none in the first quarter of 2019.
•Effect of currency changes. To better understand trends in our business, we believe that it is helpful to adjust revenue to exclude the impact of changes in the translation of foreign currencies into U.S. Dollars.
We provide adjusted revenues as supplemental information to our presentation of reported GAAP revenue in order to facilitate additional information to our investors concerning period-to-period comparisons reflecting the impact of our divestitures.
•Restructuring and related costs. Restructuring and related costs include restructuring and asset impairment charges as well as costs associated with our strategic transformation program.
•Goodwill impairment. This represents goodwill impairment charges related to entering into the agreement to transfer the BenefitWallet portfolio.
•Litigation costs,settlements (recoveries), net. Litigation costs, net represents provisionsRepresents settlements or recoveries for various matters subject to litigation.
•Other charges (credits). This comprises otherincludes Other (income) expenses, net associated with providing transition services on the California Medicaid contract lossConsolidated Statements of Income (Loss) and other insignificant (income) expenses and other adjustments.
Abandonment of internal project. This includes charges in connection with the abandonment of an internal project. The costs include writing off previously capitalized costs and terminating hosting fees that would have continued to be incurred without any economic benefit.
Divestitures.
Adjusted EBITDA is not intended to represent cash flows from operations, operating income (loss) or net income (loss) as defined by U.S. GAAP as indicators of operating performances. Management cautions that amounts presented in accordance with Conduent’s definition of Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similar measures disclosed by other companies because not all companies calculate Adjusted EBITDA and Adjusted EBITDA margin in the same manner.
Free Cash Flow
Free Cash Flow is defined as cash flows from operating activities as reported on the consolidated statement
Non-GAAP Reconciliations
(in millions) | Year Ended December 31, 2021 | |||
Reconciliation to Adjusted Revenue | ||||
Revenue | $ | 4,140 | ||
Divestitures | (0 | ) | ||
|
| |||
Adjusted Revenue | $ | 4,140 | ||
Effect of currency changes(1) | (17 | ) | ||
|
| |||
Adjusted Revenue at Constant Currency | $ | 4,123 | ||
|
| |||
Reconciliation to Adjusted EBITDA | ||||
Net Income (Loss) from Continuing Operations | $ | (28 | ) | |
Interest Expense | 55 | |||
Income tax expense (benefit) | 3 | |||
Depreciation and amortization | 352 | |||
Contract inducement amortization | 1 | |||
|
| |||
EBITDA | $ | 383 | ||
|
| |||
EBITDA Margin | 9.3 | % | ||
EBITDA | $ | 383 | ||
Adjustments: | ||||
Restructuring | 45 | |||
Loss on divestitures and transaction costs | 3 | |||
Litigation costs, net | 3 | |||
Loss on extinguishment of debt | 15 | |||
Abandonment of internal project | 32 | |||
Other charges (credits) | 6 | |||
|
| |||
Adjusted EBITDA | $ | 487 | ||
|
| |||
(in millions) |
| ||||
Reconciliation to Adjusted Revenue | |||||
Revenue | $ | 3,722 | |||
Divestitures | 0 | ||||
Adjusted Revenue | $ | 3,722 | |||
Effect of currency | (11) | ||||
Adjusted Revenue at Constant Currency | $ | 3,711 | |||
Reconciliation to Adjusted EBITDA | |||||
Net Income (Loss) from Continuing Operations | $ | (296) | |||
Interest Expense | 111 | ||||
Income tax expense (benefit) | (36) | ||||
Depreciation and amortization | 264 | ||||
Contract inducement amortization | 3 | ||||
EBITDA - Before Adjustment for Divestitures | 46 | ||||
Divestitures | — | ||||
EBITDA | $ | 46 | |||
EBITDA Margin | 1.2 | % | |||
EBITDA | $ | 46 | |||
Adjustments: | |||||
Restructuring | 62 | ||||
Goodwill impairment | 287 | ||||
(Gain) loss on divestitures and transaction costs | 10 | ||||
Litigation settlements (recoveries), net | (30) | ||||
Other charges (credits) | 3 | ||||
Adjusted EBITDA | $ | 378 | |||
Adjusted EBITDA Margin | 10.2 | % |
Free Cash Flow /
(in millions) | Year Ended December 31, 2021 | |||
Operating Cash Flow | $ | 243 | ||
Cost of additions to land, buildings and equipment | (80 | ) | ||
Cost of additions to internal use software | (67 | ) | ||
|
| |||
Free Cash Flow | $ | 96 | ||
|
| |||
Free Cash Flow | $ | 96 | ||
Transaction costs | 2 | |||
Vendor financed lease payments | (9 | ) | ||
Texas litigation payments | 0 | |||
|
| |||
Adjusted Free Cash Flow | $ | 89 | ||
|
|
Performance Measures Linking Pay versus Performance Adjusted EBITDA Margin Relative TSR Net ARR Activity Revenue
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||||||||||||
Year | SCT Total Compensation for PEO ($) | Compensation Actually Paid to PEO ($) | Average SCT Total Compensation for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | Value of Initial Fixed $100 Investment Based On: | GAAP Net Income (in Millions) | CSM: Revenue (in Millions) | |||||||||||||||||||
Total Shareholder Return ($) | Peer Group Total Shareholder Return(1)($) | |||||||||||||||||||||||||
2023 | 6,473,771 | 5,550,137 | 1,486,085 | 1,345,749 | 59 | 155 | (296) | 3,722 | ||||||||||||||||||
2022 | 5,865,878 | 2,009,495 | 1,560,266 | 871,985 | 65 | 100 | (182) | 3,858 | ||||||||||||||||||
2021 | 6,078,061 | 6,206,311 | 1,379,302 | 795,496 | 86 | 120 | (28) | 4,140 | ||||||||||||||||||
2020 | 4,973,649 | 10,153,839 | 1,632,025 | 2,934,397 | 77 | 125 | (118) | 4,163 |
Year | SCT Total Compensation | Less SCT Equity | Plus (minus) Year End Fair Value of Equity Awards Granted During Fiscal Year that are Outstanding and Unvested at End of the Year | Plus (minus) Year over Year Change in Fair Value of Outstanding Unvested Equity Awards Granted in Prior Years | Plus (minus) Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Plus (minus) Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Fiscal Years that Vested in the Fiscal Year | Plus (minus) Fair Value at the End of the Prior Year of Equity Awards that were Forfeited in the Year | Compensation Actually Paid (CAP) | ||||||||||||||||||
PEO | ||||||||||||||||||||||||||
2023 | 6,473,771 | (4,999,996) | 3,956,560 | (446,558) | 886,782 | (93,128) | (227,294) | 5,550,137 | ||||||||||||||||||
2022 | 5,865,878 | (4,249,995) | 1,896,875 | (750,008) | 552,744 | (1,305,999) | — | 2,009,495 | ||||||||||||||||||
2021 | 6,078,061 | (3,999,993) | 2,139,147 | 512,747 | 838,551 | 637,798 | — | 6,206,311 | ||||||||||||||||||
2020 | 4,973,649 | (2,999,999) | 5,926,239 | (316,315) | 3,018,696 | (448,431) | — | 10,153,839 | ||||||||||||||||||
Average for non-PEO NEOs | ||||||||||||||||||||||||||
2023 | 1,486,085 | (859,995) | 698,403 | (84,548) | 152,525 | (21,859) | (24,863) | 1,345,749 | ||||||||||||||||||
2022 | 1,560,266 | (849,995) | 379,375 | (135,079) | 110,547 | (193,129) | — | 871,985 | ||||||||||||||||||
2021 | 1,379,302 | (631,987) | 242,190 | 63,611 | 80,082 | 58,662 | (396,364) | 795,496 | ||||||||||||||||||
2020 | 1,632,025 | (677,498) | 1,338,334 | (16,283) | 681,725 | (23,906) | — | 2,934,397 |
2021
|
2020
| |||
Audit Fees(1)
| $5.4
| $5.5
| ||
Audit Related Fees(2)
| $0.5
| $0.5
| ||
Tax Fees(3)
| $0.1
| $0.0
| ||
Total Fees
| $6.0
| $6.0
|
|
|
|
2023 | 2022 | |||||||
Audit Fees(1) | $5.0 | $5.3 | ||||||
Audit Related Fees(2) | $— | $0.1 | ||||||
Tax Fees(3) | $— | $— | ||||||
All Other Fees | $— | $— | ||||||
Total Fees | $5.0 | $5.4 |
•The professional qualifications of PwC, the lead audit partner and other key engagement partners on the engagement;
•The appropriateness of PwC’s fees relative to both efficiency and audit quality;
•PwC’s independence policies and processes for maintaining its independence;
•PwC’s capability, expertise and efficiency in handling the breadth and complexity of the Company’s operations across the globe; and
•PwC’s demonstrated professional integrity and objectivity.
•Reviewed and discussed with the management of the Company and PwC the audited consolidated financial statements of the Company for the year ended December 31, 2021;
•Discussed with PwC the matters required to be discussed by the applicable requirements of the PCAOB and the SEC; and
•Received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence, and has discussed with PwC its independence.
registered public accounting firm for the year 2022
Unless the Board modifies its policies on the frequency of future say-on-pay advisory votes, the next say-on-pay advisory vote will be held at the 2025 Annual Meeting of Shareholders.
C123456789 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000000000.000000 ext 000004 Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. Your vote matters – here’s how to vote! You may vote online or by phone instead
The 2022 Annual Meeting of Shareholders of Conduent Incorporated will be held on Wednesday, May 25, 2022 at 11:00 A.M. EDT, virtually via the internet at www.meetnow.global/M9Z2TCK. To access the virtual meeting, you must have the 15-digit number on the proxy card, notice or email you received. Small steps make an impact. Help the environment by consenting to receive electronic delivery, sign up at www.envisionreports.com/CNDT IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. Proxy — Conduent Incorporated Notice of 2022 Annual Meeting of Shareholders Proxy Solicited by Board of Directors for Annual Meeting — May 25, 2022 Clifford Skelton and Scott Letier (the “Proxies”), or either of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Shareholders of Conduent Incorporated to be held virtually on May 25, 2022 at 11:00 a.m. (EDT) or at any postponement or adjournment thereof. Shares represented by this proxy will be voted by the shareholder. If no such directions are indicated, the Proxies will have authority to vote FOR all Nominees and FOR Proposals 2 and 3. In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting. (Items to be voted appear on reverse side) C Non-Voting Items Change of Address — Please print new address below. Comments — Please print your comments below. Meeting Attendance Mark box to the right if you plan to attend the Annual Meeting.