280 Park Avenue, 38th FloorUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
New York, New York 10017SCHEDULE 14A
(212) 277-7100(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Annual Meeting of Stockholders
June 17, 2016
Dear Stockholder:
On behalf of the board of directors of ExlService Holdings, Inc., I am pleased to invite you to the 2016 Annual Meeting of Stockholders, which will be held on June 17, 2016 in New York, New York.
The Annual Meeting will begin with discussion and voting on the matters set forth on the accompanying Notice of the Annual Meeting and Proxy Statement followed by discussion of other business matters properly brought before the Annual Meeting.
Pursuant to rules promulgated by Section 14(a) of
the Securities and Exchange Commission, we are providing access to our proxy materials over the Internet. On or about April 29, 2016, we will mail a NoticeAct of Internet Availability of Proxy Materials (the “Internet Notice”1934 (Amendment No. ) to each of our stockholders of record and beneficial owners at the close of business on April 21, 2016, the record date for the Annual Meeting. On the date of mailing of the Internet Notice, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to in the Internet Notice. These proxy materials will be available free of charge.
Even if you choose to attend the Annual Meeting in person, you are encouraged to review the proxy materials and vote your shares in advance of the meeting by Internet or phone. The Internet Notice will contain instructions to allow you to request copies of the proxy materials to be sent to you by mail. Any proxy materials sent to you will include a proxy card that you may use to cast your vote by completing, signing and returning the proxy card by mail (or voting instruction form, if you hold shares through a broker). Your vote is extremely important, and we appreciate you taking the time to vote promptly. If you attend the Annual Meeting, you may withdraw your proxy should you wish to vote in person.
The board of directors and management look forward to seeing you at the Annual Meeting.
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| April 23, 2021 Dear Stockholder, As we look back at 2020, we are proud of our performance and perseverance despite the uncertainties that marked this unprecedented year. The efforts EXL put in place early, such as shifting our 30,000+ global workforce to a work from home model, ensuring the health and safety of our employees and safeguarding the business continuity of our clients, helped establish the momentum that we would carry throughout the year. Ultimately, through a combination of ingenuity, hard work and collaboration, we demonstrated agility and resilience in the face of crisis. We ended the year with stronger client relationships, expanded capabilities and a reaffirmation of our mission to work as one team to help our clients transform. 2020 provided a unique opportunity for us to implement our philosophy of looking deeper, finding a better way, and making it happen. Our character and culture stood out more than ever as we exemplified our core values of collaboration, innovation, excellence, integrity and respect. For the year, we generated revenues of $958.4 million, representing a 3.3% decline from 2019. Like most of the market, the second quarter resulted in the most severe impact on our revenues resulting from COVID-19, representing an 8.6% decline in revenue during that quarter. Owing to the resiliency of our business model and new demand for our services in the second half of the year, we were able to close the year with strong revenue momentum. We also focused on our expense base as a means to mitigate the impacts of COVID-19. EXL achieved record profitability with diluted EPS of $2.59, up from $1.95 in 2019. There are two key trends that drove our strong performance in 2020 and we believe that these trends will provide momentum for future revenue growth: (1) accelerated demand for our full suite of data and analytics capabilities and (2) leveraging cloud-based solutions to embed intelligence in operations. First, the massive migration of consumers onto digital channels amid the uneven economic recovery has spurred demand for data-driven insights and powerful analytics. As a result, we are seeing surging interest in our data-led value creation framework, which is being used by clients in every industry we serve to deliver more personalized customer experiences, optimize costs and support resilient operating models. We are well positioned to capitalize on this accelerated market demand. The second key trend is our cloud solutions offerings through which we are able to embed Artificial Intelligence (AI) in operations, fueling the growth in our operations management business. The Cloud has become central to our clients' resilience strategies and it is the lynchpin to powering advanced data and analytics functions. We are currently investing in a cloud center of excellence and our partnership ecosystem to develop and go-to-market with these cloud-native AI solutions. With several solution pilots underway, we are co-innovating with our clients and partners to solve strategic business problems. |
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| We have entered 2021, our 15th year as a public company, with strong momentum in our large deals pipeline and new logos of leading companies to our client portfolio. Most importantly, though, the success we have enjoyed in such a difficult year is a testament to the amazing contributions of so many hard-working individuals. We greatly appreciate the contribution of all our colleagues around the world and the support of our stockholders, clients and partners, and we look forward to seeing what we can all accomplish together in 2021. Our efforts to be good stewards of your capital and to provide industry-leading services to our clients are not our only pledge to our stockholders and other stakeholders. We view our sustainability efforts as integral to our long-term success, durability and resiliency as an organization. In last year's letter to stockholders, we pledged to improve our disclosure on our sustainability efforts. We have delivered on that pledge. In November 2020, we published our first Sustainability Report according to the UN Sustainability Development Goals and the Global Reporting Initiative standards, which outlines our efforts and goals for improving the environment, human capital management, and corporate social responsibility, among others. More recently, we applied and will soon become a participant in the UN Global Compact. You can read more about our recent accomplishments in sustainability in the "Sustainability" section of this Proxy Statement. We also continue to improve upon our strong corporate governance practices. At the end of 2020, we launched our formal stockholder engagement program, through which we hold meetings with our stockholders on topics relating to strategy, performance and governance, including board refreshment. These conversations inform our governance practices. Please refer to the "Corporate Governance" section of this Proxy Statement to learn more about governance practices and philosophy. The success we have enjoyed in such a difficult year is a testament to the amazing contributions of many hard-working individuals. We look forward to seeing what EXL will accomplish in 2021. Finally, we wish to thank David Kelso and Deborah Kerr, who will be departing from our board of directors following our 2021 Annual Meeting of Stockholders, for their service to EXL. On behalf of the board of directors of ExlService Holdings, Inc., we are pleased to invite you to the 2021 Annual Meeting of Stockholders, which will be held on June 16, 2021. We look forward to sharing more about our Company at the Annual Meeting. Due to concerns regarding the current public health crisis related to the COVID-19 pandemic and the health and wellbeing of our stockholders, employees and directors, we will hold our Annual Meeting in virtual format only via live audio webcast instead of holding the meeting in New York or at any physical location. We encourage you to read carefully the attached 2021 Annual Meeting of Stockholders and Proxy Statement, which contain important information about the matters to be voted upon and instructions on how you can vote your shares. | |
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| Your vote is important to us. Please vote as soon as possible whether or not you plan to participate in the Annual Meeting. The board of directors and management look forward to seeing you at the Annual Meeting. Sincerely, | |
Garen K. Staglin Chairman | Rohit Kapoor Vice Chairman and CEO |
280 Park Avenue, 38th Floor
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NOTICE OF 2016 ANNUAL MEETING OF STOCKHOLDERS
Dear Stockholder:
You are cordially invited to the 2016 Annual Meeting of Stockholders of ExlService Holdings, Inc., a Delaware corporation (the “Company”). The Annual Meeting will be held at the New York offices of the Company, 280 Park Avenue, 38th Floor, New York, New York 10017 on June 17, 2016 at 8:30 AM, Eastern Time, for the purposes of voting on the following matters:
NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS | ||||
Dear Stockholder: | ||||
You are cordially invited to the 2021 Annual Meeting of Stockholders of ExlService Holdings, Inc., a Delaware corporation (the "Company"), for the purposes of voting on the following matters: | ||||
1. | the election of |
2. | the ratification of the |
3. | the approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company; and |
4. | the transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. | |||
Due to the current state of the public health crisis related to COVID-19, and the health and wellbeing of our stockholders, employees and directors, we will hold our Annual Meeting in virtual format only, via live audio webcast (rather than at any physical location) on June 16, 2021 at 9:30 AM, Eastern Time, instead of holding the meeting in New York or at any physical location. You or your proxyholder may participate, vote, and examine our stockholder list at the Annual Meeting by visiting www.virtualshareholdermeeting.com/EXLS2021 and using your 16-digit control number. | ||||
If you are a stockholder of record at the close of business on April 19, 2021, the record date for the Annual Meeting, you are entitled to vote at the Annual Meeting. A list of stockholders as of the record date will be available for examination for any purpose germane to the Annual Meeting, during ordinary business hours, at the Company's executive offices at 320 Park Avenue, 29th Floor, New York, New York 10022, for a period of 10 days prior to the date of the Annual Meeting and at the Annual Meeting itself. If our corporate headquarters are closed during the 10 days prior to the Annual Meeting, you may send a written request to the Corporate Secretary at our corporate headquarters, and we will arrange a method for you to inspect the list. The list of stockholders will also be available during the Annual Meeting at www.virtualshareholdermeeting.com/EXLS2021. |
If you are a stockholder of record at the close of business on April 21, 2016, you are entitled to vote at the Annual Meeting. A list of stockholders as of the record date will be available for examination for any purpose germane to the Annual Meeting, during ordinary business hours, at the Company’s executive offices at 280 Park Avenue, 38th Floor, New York, New York 10017, for a period of 10 days prior to the date of the Annual Meeting and at the Annual Meeting itself.
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Whether or not you expect to attend the Annual Meeting in person, the Company encourages you to promptly vote and submit your proxy by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Voting by proxy will not deprive you
Please note the technical requirements for virtual attendance at the Annual Meeting, as described in the enclosed Proxy Statement beginning on Page 117 under the heading "Annual Meeting Q&A." | ||
Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials over the Internet. On or about April 23, 2021, we will mail a Notice of Internet Availability of Proxy Materials (the "Internet Notice") to each of our stockholders of record and beneficial owners at the close of business on the record date. On the date of mailing of the Internet Notice, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to in the Internet Notice. These proxy materials will be available free of charge. Whether or not you expect to attend the Annual Meeting, the Company encourages you to promptly vote and submit your proxy by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Voting by proxy will not deprive you of the right to attend the Annual Meeting or to vote your shares. You can revoke a proxy at any time before it is exercised by voting at the Annual Meeting, by delivering a subsequent proxy or by notifying the inspector of elections in writing of such revocation prior to the Annual Meeting. YOUR SHARES CANNOT BE VOTED UNLESS YOU EITHER (I) VOTE BY USING THE INTERNET, (II) VOTE BY PHONE, (III) REQUEST PROXY MATERIALS BE SENT TO YOU BY MAIL AND THEN USE THE PROXY CARD PROVIDED BY MAIL TO CAST YOUR VOTE BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD BY MAIL OR (IV) ATTEND THE ANNUAL MEETING AND VOTE. By Order of the Board of Directors | ||
Ajay Ayyappan Senior Vice President, | ||
General Counsel and Corporate Secretary New York, New York April 23, 2021 |
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2021 PROXY STATEMENT |
New York, New York
TABLE OF CONTENTS |
TABLE OF CONTENTS
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8 | ||
OUR BOARD OF DIRECTORS | 18 | |
CORPORATE GOVERNANCE | ||
30 | ||
SUSTAINABILITY | 47 | |
59 | ||
EXECUTIVE COMPENSATION | ||
61 | ||
Compensation Discussion and Analysis | ||
61 | ||
Compensation Committee Report | 85 | |
Summary Compensation Table for Fiscal Year 2020 | 86 | |
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS | 106 | |
108 | ||
AUDIT COMMITTEE REPORT | ||
109 | ||
110 | ||
PROPOSAL | 112 | |
PROPOSAL | 114 | |
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE | 115 | |
MISCELLANEOUS | ||
116 | ||
ANNUAL MEETING Q&A | 117 | |
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2021 PROXY STATEMENT SUMMARY
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Voting Proposal Item | ||
Board Vote Recommendation
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1. Election of directors | |||
FORthe election of | |||
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2. | |||
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3. Advisory (non-binding) vote on executive compensation | FOR (pg. 114) | ||||
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2021 PROXY STATEMENT SUMMARY
OUR BUSINESS |
Our Business
EXL isWe are a leading operations management and analytics company that helps businesses enhance growthour clients build and profitability in the face of relentless competitiongrow sustainable businesses. By orchestrating our domain expertise, data, analytics and continuous disruption. Using our proprietary award-winning Business EXLerator Framework™, which integrate analytics, automation, benchmarking, BPO, consulting, industry best practices anddigital technology, platforms EXL lookswe look deeper to help companiesdesign and manage agile, client-centric operating models to improve global operations, drive profitability, enhance client satisfaction, increase data-driven insights, increase customer satisfaction, and manage risk and compliance. EXL servesHeadquartered in New York, as of March 31, 2021 we had approximately 31,600 professionals in locations throughout the United States, the United Kingdom, Europe, India, the Philippines, Colombia, Canada, Australia and South Africa. We serve clients in multiple industries, including insurance, healthcare, banking and financial services, utilities, and travel, transportation and logistics, industries. Headquartered in New York, New York, EXL has more than 24,000 professionals in locations throughout the United States, Europe, Asia (primarily Indiamedia and Philippines), Latin America, Australia and South Africa.retail, among others.
Company 3 Year Performance | Revenue (Year-over-year growth %) | ||||||||||||||||||||||||
Revenue and Segment Information ($ in millions) | 2018 YOY% | 2019 YOY% | 2020 YOY% | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Insurance Segment | $ | 311.2 | 15.8% | $ | 346.4 | 11.3% | $ | 341.8 | –1.3% | ||||||||||||||||
Healthcare Segment | 89.8 | 5.4% | 97.5 | 8.5% | 101.2 | 4.0% | |||||||||||||||||||
Emerging Business Segment | 196.8 | –0.8% | 190.1 | –3.4% | 152.7 | –19.7% | |||||||||||||||||||
Analytics Segment | 285.3 | 35.90% | 357.3 | 25.3% | 362.7 | 1.5% | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Consolidated | $ | 883.1 | 15.8% | $ | 991.3 | 12.3% | $ | 958.4 | –3.3% |
Performance Highlights for 2015
Company 3 Year Performance Select Revenue and Segment Information (in millions) | |||
Financial Metric | 2013 | 2014 | 2015 |
Consolidated Revenue (Year-over-year growth %) | $478.5 | $499.3 (4.4%) | $628.5 (25.9%) |
Consolidated Revenue Excluding Disentanglement* (Year-over-year growth %) | $478.8 | $525.6 (9.8%) | $628.5 (19.6%) |
Operations Management Revenue (Year-over-Year Growth %) | $433.0 | $433.7 (0.2%) | $506.3 (16.7%) |
Analytics Revenue (Year-over-Year Growth %) | $45.5 | $65.6 (44.2%) | $122.2 (86.3%) |
* Excludes the reimbursement of disentanglement costs of $0.3 million and $26.3 million in 2013 and 2014, respectively, for a disclosed client issue. Please refer to our SEC filings, including our most recent Annual Report on Form 10-K, for additional information regarding this reimbursement.
We improvedWhile our annual revenues decreased from $499.3 million ($525.6 million excluding the reimbursement of one-time disentanglement costs of $26.3 million) in fiscal year 2014 to $628.5$991.3 million in fiscal year 2015,2019 to $958.4 million in fiscal year 2020, we improved our net income attributable to stockholders by 32% to $89.5 million. During the first fiscal quarter ended March 31, 2020, COVID-19 did not have a significant impact on our business, however, in subsequent quarters, COVID-19 materially impacted us. Among other actions in 2020, we adapted delivery for our clients to a work from home model; took actions in response to the pandemic that focused on helping our employees; and also achieved the following:
implemented a series of cost reduction measures. For more information regarding these and other business highlights, please see page 23Pages 63 to 65 below and ourthe 2020 Form 10-K.
As shown in the following table,The graphs below compare our 1-year, 3-year and 5-year cumulative total stockholder return outperformed market benchmarks.
("TSR") as of December 31, 2020 with the median TSR for companies comprising Nasdaq, S&P 600 and our peer group.
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2021 PROXY STATEMENT SUMMARY
OUR PURPOSE AND CORE VALUES |
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2021 PROXY STATEMENT SUMMARY
CORPORATE GOVERNANCE HIGHLIGHTS Based on current board profile and practices (including our nine director nominees, and our two directors who currently serve on our board, but will not be standing for reelection) Board of • 11 directors, all of whom are independent, except for our Vice Chairman and CEO • Independent board chairman • Seasoned board of directors, with diverse experience, including in human capital management, corporate sustainability, insurance, healthcare, utilities, consulting, banking and financial services, finance/accounting, global business and technology • Diversity in age, ethnicity, gender and other important characteristics • Declassified board Board Accountability • Majority voting standard for uncontested elections • Annual board- and committee-level evaluations • Regularly-held executive session of non-management directors • Robust executive and director equity ownership guidelines • Independent board of directors evaluation of CEO performance and compensation Governance Practices • Regular executive sessions • Standing board committees composed solely of independent chairs and members • Equity ownership guidelines • Independent compensation consultant • Board risk oversight and assessment • Board committee oversight over sustainability efforts • Director training and education • Simultaneous service restrictions • Active stockholder engagement program addressing strategy, performance and governance |
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2021 PROXY STATEMENT SUMMARY
2015 Compensation Highlights
Director Qualifications Our board of directors reflects an effective and diverse mix of skills, background and experience appropriate for our Company and industry. Our directors have the following attributes: • Executive Leadership Experience • Board Experience • Finance and Accounting Expertise • Client and Industry Expertise • Global Experience • Risk Oversight/Management Expertise • Human Capital Management Expertise • Diverse Backgrounds • Experience in Environmental, Social and Governance Matters • Strategic Insight • Commitment to Accountability, Excellence and Continuous Improvement • Commitment to Driving our Growth and Success |
Skills Matrix
Finance and Accounting | Executive Leadership | Public Company Governance | Technology | Analytics | Human Capital Management | Operations Management | Marketing and Branding | International Companies | Risk Oversight and Management | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | |
Garen Staglin | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Rohit Kapoor | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
David Kelso | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Deborah Kerr | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Anne Minto | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Som Mittal | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Clyde Ostler | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Vikram Pandit | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Kristy Pipes | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
Nitin Sahney | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Jaynie Studenmund | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
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2021 PROXY STATEMENT SUMMARY
NOMINEES FOR ELECTION AS DIRECTORS |
Name | Director Since | Experience* | Committee Membership | |||||||||
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Garen Staglin Chairman | June 2005 | Former Chief Executive Officer of eONE Global LP and Safelite Auto Glass; Chairman of the Company since 2014 | Compensation Committee; Nominating and Governance Committee | |||||||||
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Rohit Kapoor Vice Chairman | November 2002 | Co-founded the Company in 1999; Vice Chairman and CEO of the Company since 2012 | None | |||||||||
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Anne Minto | March 2013 | Former Global Human Reources Durector for Centrica plc, former CHRO for Smiths Group plc | Compensation Committee (former Chair through December 2020); Nominating and Governance Committee | |||||||||
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Som Mittal | December 2013 | Former Chairman and President of NASSCOM | Compensation Committee; Nominating and Governance Committee | |||||||||
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Clyde Ostler | December 2007 | Former executive for Wells Fargo, whose roles included Group Executive Vice President, Chief Financial Officer and Chief Auditor | Audit Committee (Chair); Compensation Committee | |||||||||
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Vikram Pandit | October 2018 | Chairman and Chief Executive Officer of Orogen Group; former Chairman of TGG Group and former Chief Executive Officer of Citigroup Inc. | Audit Committee; Nominating and Governance Committee | |||||||||
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Kristy Pipes | January 2021 | Former Chief Financial Officer of Deloitte Consulting | Audit Committee; Compensation Committee | |||||||||
| | | | | | | | | | | | |
Nitin Sahney | January 2016 | Founder and Chief Executive Officer of Pharmacord, LLC; former President and CEO of Omnicare Inc. | Nominating and Governance Committee (Chair); Audit Committee | |||||||||
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Jaynie Studenmund | September 2018 | Former Chief Operating Officer of Overture Services, Inc.; former President & Chief Operating Officer, PayMyBills; former Executive Vice President and Head of Consumer and Business Banking for First Interstate of California | Compensation Committee (Chair); Audit Committee | |||||||||
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*A complete list of each nominee's business experience and directorships is listed below beginning on page 21.
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2021 PROXY STATEMENT SUMMARY
SUSTAINABILITY |
Our corporate culture is rooted in our five core values. In line with our culture, we are committed to sustainability initiatives that are key to our long-term strategy and benefit our stockholders, clients, employees and communities. See "Sustainability" beginning on page 47 below for more details on our recent accomplishments in sustainability.
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2021 PROXY STATEMENT SUMMARY
2020 COMPENSATION HIGHLIGHTS |
Named Executive Officers
Name | Title | |||
---|---|---|---|---|
| | | | |
Rohit Kapoor | Vice Chairman and CEO | |||
| | | | |
Maurizio Nicolelli | Executive Vice President and CFO | |||
| | | | |
Pavan Bagai | President and Chief Operating Officer and Former Interim CFO | |||
| | | | |
Nalin Miglani | Executive Vice President and Chief Human Resources Officer | |||
| | | ||
Vikas Bhalla | Executive Vice President | |||
| | | | |
Samuel Meckey | Executive Vice President and | |||
| | | | |
2015 Standard Annual Compensation | |||||
Compensation Component | Rohit Kapoor | Vishal Chhibbar | Pavan Bagai | Nalin Miglani | Henry Schweppe |
Salary | $600,000 | $251,341 | $242,590 | $400,000 | $450,000 |
Cash Bonus Award | $621,129 | $157,049 | $246,239 | $274,840 | $349,385 |
Annual Equity Awards | $2,979,000 | $595,800 | $993,000 | $476,640 | $595,800 |
Other Compensation(1) | $35,014 | $43,115 | $85,550 | $81,520 | $8,340 |
Total | $4,235,143(2) | $1,047,305 | $1,567,379 | $1,233,000 | $1,403,525 |
2020 Standard Annual Compensation |
Compensation Component | | Rohit Kapoor | | Maurizio Nicolelli | | Pavan Bagai(4) | | Nalin Miglani | | Vikas Bhalla(4) | | Samuel Meckey | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | |
Salary (1) | $599,016 | $384,283 | $300,977 | $404,631 | $229,016 | $382,152 | |||||||||||||||||||
Non-Equity Incentive Plan Compensation | 810,000 | 243,097 | 200,164 | 253,125 | 169,370 | 239,063 | |||||||||||||||||||
Equity Awards (2) | 5,701,209 | 1,166,955 | 1,693,173 | 1,179,065 | 1,399,048 | 1,106,585 | |||||||||||||||||||
Other Compensation (3) | 31,041 | 133,970 | 20,132 | 9,054 | 43,029 | 9,054 | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Total | $7,141,267 | $1,928,305 | $2,214,447 | $1,845,875 | $1,840,463 | $1,736,853 |
(1) As described in greater detail in the Compensation Discussion and Analysis below beginning on page 61, our named executive officers agreed to a reduction in base salary for four months during fiscal year 2020 in light negative effects of the COVID-19 pandemic.
(2) Equity award values reflect equity grants in 2020 with time-based and revenue linked performance-based restricted stock units valued based on grant date fair market value and TSR linked performance-based restricted stock units valued using a Monte Carlo fair market valuation.
(3) For each named executive officer, this category includes, if applicable, his perquisites and personal benefits, hiring bonus, changes in pension value, Company-paid life insurance premiums and Company contributions to our 401(k) plan. A detailed discussion of the compensation components for each named executive officer for fiscal year 2020 is provided in the "Summary Compensation Table for Fiscal Year 2020" beginning on page 86.
(4) Messrs. Bagai and Bhalla are each based in Delhi, India. Certain of their compensation components, as described herein, are paid in Indian rupees (INR), and are converted for comparison purposes at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
On an annual basis, we submit to our stockholders an advisorya vote to approve, our executive compensation. At this year’s Annual Meeting, we are seeking your approval, on a non-binding advisory basis, of the compensation of our named executive officers as described in this proxy statement. We refer to this vote as "say-on-pay". Please refer to our Compensation Discussion and Analysis, startingbeginning on page 2361 for a complete description of our 20152020 compensation program.
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Auditor Matters
As a matter of good corporate practice, we are seeking your ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2016. For more information on our auditors, including 2015 audit fees, see page 78.
2015 (in thousands) | ||
Audit Fees | $ | 1,453 |
Audit-Related Fees | 179 | |
Tax Fees | 45 | |
All Other Fees | 31 | |
Total | $ | 1,708 |
PROXY STATEMENT
2021 PROXY STATEMENT SUMMARY
Below are a few highlights of our executive compensation:
In accordance with rules and regulations adopted by the Securities and Exchange Commission (the “SEC”), instead of mailing a printed copy of our proxy materials to each stockholder of record, the Company furnishes proxy materials via the Internet. If you received a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) by mail, you will not receive a printed copy of our proxy materials other than as described herein. Instead, the Internet Notice will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Internet Notice also instructs you as to how you may submit your proxy over the Internet or by phone. If you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting proxy materials included in the Internet Notice.
It is anticipated that the Internet Notice will be sent to stockholders on or about April 29, 2016. This proxy statement and the form of proxy relating to the Annual Meeting will be made available via the Internet to stockholders on the date that the Internet Notice is first sent.
Who Can Vote
Only stockholders who own shares of our common stock at the close of business on April 21, 2016, the record date for the Annual Meeting, can vote at the Annual Meeting. As of the close of business on April 21, 2016, the record date, we had 33,592,996 shares of common stock outstanding and entitled to vote. Each holder of common stock is entitled to one vote for each share held as of the record date for the Annual Meeting. There is no cumulative voting in the election of directors.
How You Can Vote
If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent (which means you are a “stockholder of record”), you can vote your proxy by (i) Internet, (ii) by phone or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Please refer to the specific instructions set forth in the Internet Notice. You will not be able to vote your shares unless you use one of the methods above to designate a proxy or by attending the Annual Meeting.
If you are the beneficial owner of shares held in the name of a brokerage, bank, trust or other nominee as a custodian (also referred to as shares held in “street name”), your broker, bank, trustee or nominee will provide you with materials and instructions for voting your shares. In addition to voting by mail, a number of banks and brokerage firms participate in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that offers telephone and Internet voting options. Votes submitted by telephone or by using the Internet through Broadridge’s program must be received by 11:59 p.m. Eastern Time, on June 16, 2016.
Voting at the Annual Meeting. Voting by Internet, phone or mail will not limit your right to vote at the Annual Meeting if you decide to attend in person. Our board of directors recommends that you vote by Internet, phone or mail as it is not practical for most stockholders to attend the Annual Meeting. If you are a “stockholder of record,” you may vote your shares in person at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy from your broker, bank, trustee or nominee giving you the right to vote the shares at the Annual Meeting or your vote at the Annual Meeting will not be counted.
Revocation of Proxies
You can revoke your proxy at any time before it is exercised in any of the following ways:
Required Vote; Effect of Abstentions and Broker Non-Votes
Quorum
A quorum, which is a majority of the issued and outstanding shares of our common stock as of April 21, 2016, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented by the stockholders attending the Annual Meeting in person and by their proxy holders. If you indicate an abstention as your voting preference for all matters to be acted upon at the Annual Meeting, your shares will be counted toward a quorum but they will not be voted on any matter.
Proposal 1: Election of Directors
Under our by-laws, directors are elected by the affirmative vote of a plurality of votes cast in person or represented by proxy and entitled to vote at the Annual Meeting. You may cast your vote in favor of electing the nominees as directors, withhold your vote on one or more nominees or abstain from voting your shares. For purposes of the vote on Proposal 1, abstentions and broker non-votes (as described below) will have no effect on the results of the vote.
Other Proposals
The ratification of the appointment of our independent registered public accounting firm, the approval ofnon-binding advisory basis, the compensation ofpaid to our named executive officers and each other item to be acted upon atfor fiscal year 2019. Approximately 98% of the Annual Meeting will require the affirmative vote of a majority of sharesvotes present in person or represented by proxy and entitled to vote at the Annual Meeting. You may cast your vote(excluding broker non-votes) voted in favor of or against these proposals or you may abstain from voting your shares. For purposes offiscal year 2019 compensation.
If you submit your proxy, but do not mark your voting preference, the proxy holders will vote your shares (i) FOR the election of the nominees for director, (ii) FOR the ratification of the appointmentrevenue performance target, and 95.26% of our independent registered public accounting firm, (iii) FOR the approval of the compensation ofAOPM target resulting in annual incentive payout calculations for our named executive officers, and (iv) as described below,ranging from 50.36% of target performance to 94.69% of target performance. As discussed in greater detail in the judgmentCompensation Discussion and Analysis below, our Compensation Committee did not make adjustments to the performance targets that had previously been set, but rather reviewed Company, business unit, and individual performance and adjusted the payouts to 75% of target performance for all named executive officers after taking into account the unanticipated impact of the proxy holder on any other matters presentedCOVID-19 pandemic and the teamwork and extraordinary efforts of the named executive officers.
Shares Held46.51 percentile amongst its peer group, resulting in “Street Name” by a Broker
If you are the beneficial ownerexecutives earning 88.37% of the target funding of those grants. In the aggregate the 2018 performance-based restricted stock units resulted in the vesting of shares held in “street name” by a broker, then your broker, asat 94.13% of target performance. No adjustments were made to the record holder2018 performance-based restricted stock units or the associated performance targets — or the outstanding 2019 and 2020
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2021 PROXY STATEMENT SUMMARY
performance-based restricted stock units or associated performance targets — to account for the impact of the shares, must vote those sharesCOVID-19 pandemic in accordance with your instructions. If you failthe 2020 fiscal year.
Other Matters to Be Acted Upon at the Meeting
Our board of directors presently is not aware of any matters, other than those specifically stated in the Notice of Annual Meeting, which areofficers' base salaries to be presentedeffective April 1, 2020, the named executive officers agreed to defer these increases due to the uncertainly caused by the COVID-19 pandemic. The increases, therefore, did not come into effect during the 2020 fiscal year. In addition, from May 1, 2020 to August 31, 2020, also due to the uncertainty caused by the COVID-19 pandemic and in order to retain flexibility, the Company's executive management team recommended to the Compensation Committee and the Compensation Committee accepted, salary reductions for action at the Annual Meeting. If any matternamed executive officers. Accordingly, the base salary for the Company's Vice Chairman and Chief Executive Officer, Mr. Rohit Kapoor, was temporarily reduced by 50% and the base salary for the other than those describednamed executive officers was temporarily reduced by 30%. Finally, as an extension of these cost saving actions, our non-employee directors also agreed to a reduction of 30% in this proxy statement is presented at the Annual Meeting ontheir cash retainers, which a vote may properly be taken, the shares represented by proxies will be votedwas in accordance with the judgment of the person or persons voting those shares.
Adjournments and PostponementsCompensation Mix
Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.
Solicitation of Proxies
We will pay the cost of printing and mailing proxy materials and posting them on the Internet. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of our common stock.
Internet Availability of Proxy Materials
Our Notice of Annual Meeting, proxy statement and form of proxy card are each available atwww.proxyvote.com. You may access these materials and provide your proxy by following the instructions provided in the Internet Notice.
Important
Please promptly vote and submit your proxy by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided.
This will not limit your right to attend or vote at the Annual Meeting.
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If you have any further questions about voting your shares or attending the Annual Meeting, please call our Investor Relations Department at (212) 277-7109.
OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS |
Our board of directors currently consists of eight11 directors divided into three classes,(including our nine director nominees, and our two directors who are currently serving on the board, but will not stand for reelection) with each director servingdiverse experience, including in human capital management, corporate sustainability, insurance, healthcare, utilities, consulting, banking and financial services, finance/accounting, global business and technology. The following tables include a three-year termsummary of our board composition by age, gender, tenure and one class being elected at each year’s annual meeting of stockholders. The current composition ofindependence.
Historically, our board of directors is as follows:
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Audit committee financial experts under applicable SEC rules and regulations.
The election of our Class I directors will take place atwas divided into three classes. Beginning with the Annual Meeting. If elected, each of the Class IMeeting, however, all director nominees elected by our stockholders will serve on our boardbe elected to hold office for a term of directors until our 2019 Annual Meeting of Stockholdersone year, or until their successors are duly elected and qualified in accordance with our by-laws.
by-laws, and the classification of the Board of Directors will terminate in its entirety.
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OUR BOARD OF DIRECTORS
Upon the recommendation of our Nominating and Governance Committee, we are pleased to propose nine of our existing directors as nominees for election as directors at the Annual Meeting. As previously disclosed, two of our current directors, Ms. Kerr and Mr. Kelso, will not be standing for re-election at the Annual Meeting; the remaining nine directors are our director nominees at the Annual Meeting. Our nominees for re-election as directors at the Annual Meeting are as follows:
DIRECTOR NOMINEES |
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Rohit Kapoor Vice Chairman and CEO and Director | Vikram Pandit* Independent Director | |||||
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Anne Minto Independent Director and Former Chair of the Compensation Committee | Kristy Pipes Independent Director | |||||
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Som Mittal Independent Director | Nitin Sahney Independent Director and Chair of the Nominating and Governance Committee | |||||
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Jaynie Studenmund Independent Director and Chair of the Compensation Committee | Garen Staglin Independent Director and Chair of the Board | |||||
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Clyde Ostler Independent Director and Chair of the Audit Committee | ||||||
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* Mr. Pandit was appointed to the board as a director under the terms of an Investment Agreement as described on pages 19 to 20 below.
We believe that our director nominees and continuing directors, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to maintain an effective board to serve the best interests of the Company and its stockholders described below under Director Qualifications (see page 12).
In addition to satisfying these general qualifications considered by the Nominating and Governance Committee in connection with a director nomination, Vikram S. Pandit was appointed to the Board on October 4, 2018 as a director pursuant to the terms of an Investment Agreement, dated as of October 1, 2018 (the "Investment Agreement"), between the Company and Orogen Echo LLC (the "Purchaser"), an affiliate of The Orogen Group LLC ("The Orogen Group"). The Investment Agreement was entered into in connection with our issuance to the Purchaser of
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OUR BOARD OF DIRECTORS
$150,000,000 in aggregate principal amount of 3.50% Convertible Senior Notes due October 1, 2024 (the "notes"). For so long as the Purchaser has the right to nominate a director to the Board under the Investment Agreement, we have, subject to the terms of the Investment Agreement, agreed to include such person in our list of nominees for election to our board of directors at each of our annual meetings of stockholders at which directors are to be elected, and to use our reasonable best efforts to cause the election of such person to our board of directors. The Purchaser's right to nominate a director will terminate if Purchaser and its affiliates beneficially own less than 50% of the number of shares of our common stock deemed beneficially owned by the Purchaser and its affiliates immediately following the issuance of the notes (which, for purposes of the Investment Agreement, includes shares of our common stock issuable upon conversion of the notes).
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OUR BOARD OF DIRECTORS
BOARD OF DIRECTORS |
The names, ages and principal occupations (which have continued for at least the past five years unless otherwise indicated) and certain other information, including the specific experience, qualifications, attributes or skills that led to the conclusion that such person should serve as a director of the Company, with respect to each of the nominees and continuing directors are set forth below.
Directors with Terms Expiring in 2016
Rohit Kapoor—Age: 51—co-founded EXL Inc. in April 1999 and has served as our Vice Chairman and CEO since April 2012 and as a director since November 2002. Mr. Kapoor served as our President and CEO from May 2008 to March 2012, as our Chief Financial Officer (“CFO”) from November 2002 until June 2005 and from September 2006 to March 2007, as our Chief Operating Officer from June 2007 until April 2008 and as President and CFO of EXL Inc. since August 2000. Prior to founding EXL Inc., Mr. Kapoor served as a business head of Deutsche Bank from July 1999 to July 2000. From 1991 to 2000, Mr. Kapoor served in various capacities at Bank of America in the United States and Asia, including India. Mr. Kapoor was appointed as a member of the board of directors of CA Technologies, Inc. (NASDAQ: CA) on April 7, 2011 and is an active member of the National Association of Software and
Services Companies (“NASSCOM”) BPM Forum. The Company has concluded that in connection with Mr. Kapoor’s experience as a founder and current role as CEO of the Company, he should serve as a director.
Anne E. Minto—Age: 62—has served as a member of our board of directors since March 2013. Ms. Minto is a qualified lawyer and member of the Law Society of Scotland. She is a Fellow of the Chartered Institute of Personnel & Development, the Chartered Institute of Management and the City and Guilds of London Institute. She was Group Director Human Resources and a member of the executive committee at Centrica plc from 2002 until her retirement in 2011. Ms. Minto previously held senior management roles at Shell UK and Smiths Group plc and was Deputy Director-General of the Engineering Employers’ Federation. Based in the UK, Ms. Minto is a non-executive director of Shire plc (NASDAQ: SHPG; LSE: SHP) and a non-executive director of Tate & Lyle plc (LSE: TATE) where she serves as Chairman of the Remuneration Committees of both companies. She is also a non-executive director of the Court of the University of Aberdeen and Vice Chairman of the University of Aberdeen Development Trust. She was awarded an OBE in 2000 for services to the engineering industry in the UK. The Company has concluded, based in part on Ms. Minto’s extensive experience as a member of international company boards and of management in the human resources field, together with her knowledge and experience of the European business and regulatory environment that she should serve as a director.
Directors with Terms Expiring in 2017
David B. Kelso—Age: 63—has served as a member of our board of directors since July 2006. Mr. Kelso is a financial advisor for Kelso Advisory Services, a company he started in 2003. Mr. Kelso served as a senior advisor to Inductis, Inc. from June 2004 through June 2006 at which time the firm was acquired by the Company. From September 2001 through September 2003, Mr. Kelso served as Chairman of the Aetna Life Insurance Co. as well as the Executive Vice President, Strategy and Finance and a member of the Office of the Chairman for Aetna, Inc. From 1996 to 2001, Mr. Kelso was Executive Vice President, Chief Financial Officer and Managing Director of the Chubb Corporation. Mr. Kelso currently serves on the Board of Directors of the Sound Shore Fund where he is the lead independent director and Chair of the Audit, Nominating, and Valuation Committees. From 2005 to 2010, Mr. Kelso was a member of the Board of Directors of Aspen Holdings Limited. From 2007 to 2015, Mr. Kelso served on the Board of Assurant, Inc. and was a member of its Audit Committee and Finance & Investment Committee. In November 2015, Mr. Kelso was appointed to the Board of Trustees of the Darden School Foundation of the University of Virginia Darden School of Business. Mr. Kelso’s business experience with Inductis, his management and operating experience at major public companies, his expertise in finance, strategy and investments, and his board and committee service at other global companies led to the conclusion that he should serve as a director.
Som Mittal—Age: 64—has served as a member of our board of directors since December 2013. Mr. Mittal served as President of NASSCOM, a trade body for the IT and business process management industries in India from 2008 through January 2014. Mr. Mittal has held various corporate leadership roles in the IT industry since 1989, including at companies such as Wipro, Digital India, Compaq and HP. He also has extensive experience in the engineering, manufacturing and automotive industries, having held executive roles with Larsen & Toubro, Escorts and Denso. Mr. Mittal became an Independent Director of Axis Bank (NSE: Axis) in October 2011, Cyient Ltd. (NSE: CYIENT) in April 2014 and Tata SIA Airlines in July 2015. He is a member of the Board of Governors of the Indian Institute of Corporate Affairs. Mr. Mittal has been a committee member with the Indian Prime Minister’s National
e-Governance Program and is part of several committees of the Government of India. Besides being an Advisor to several companies he is also deeply associated with education as he is on the Board of Governors of several of them. The Company has concluded, based in part on Mr. Mittal’s business experience as President of NASSCOM and his knowledge of the outsourcing industry, that Mr. Mittal should serve as a director.
Clyde W. Ostler—Age: 69—has served as a member of our board of directors since December 2007. At the time of his retirement in 2011 from Wells Fargo & Co., Mr. Ostler was a Group Executive Vice President of Wells Fargo & Co., Vice Chairman of Wells Fargo Bank California NA, and President of Wells Fargo Family Wealth. Mr. Ostler served in a number of capacities during his forty year tenure with Wells Fargo, including Vice Chairman in the Office of the President, Chief Financial Officer, Chief Auditor, Head of Retail Branch Banking, Head of Information Technology, Head of Institutional and Personal Investments and Head of Internet Services. Mr. Ostler also served on the Senior Management Committee of Wells Fargo for over twenty-five years. Mr. Ostler has also served on a number of for-profit and non-profit boards of directors. Mr. Ostler was appointed to the board of The McClatchy Company (NYSE: MNI) in March 2013. The Company has concluded, based in part on Mr. Ostler’s business experience through his positions at Wells Fargo & Company that Mr. Ostler should serve as a director.
Nominees for Terms Expiring in 2018
Deborah Kerr—Age: 44—has served as a member of our board of directors since January 2015. Ms. Kerr is a proven technology leader in the software industry with more than 25 years of diverse management experience. Ms. Kerr has served as the Executive Vice President and Chief Product and Technology Officer at Sabre Corporation (NASDAQ: SABR) since 2013 and is responsible for leading the global product and technology organization. Prior to her appointment at Sabre Corporation, Ms. Kerr served as Executive Vice President, Chief Product and Technology Officer at Fair Isaac Corporation (FICO) from 2009 until 2012. Ms. Kerr previously held senior leadership roles with Hewlett-Packard, Peregrine Systems and NASA’s Jet Propulsion Laboratory. From 2013 to present Ms. Kerr serves as an Independent Director of D+H Corporation (TSX: DH), which provides technology solutions and products to the financial services industry. She was previously a member of the board of directors of Mitchell International Inc. and was Chair of the Technology Committee. The Company has concluded, based in part on Ms. Kerr’s experience driving business through innovative technology solutions and more than 25 years of diverse management experience that Ms. Kerr should serve as a director.
Nitin Sahney—Age: 53—has served as a member of our board of directors since January 2016. He is a leader in the healthcare industry with over 25 years of experience across all areas of healthcare. He is the former President and CEO of Omnicare Inc., a former New York Stock Exchange-listed Fortune 500 company in the long-term care and specialty care industries. Prior to Omnicare, Mr. Sahney managed a healthcare investment fund, and was the founder and CEO of RxCrossroads, a specialty pharmaceutical company. He also held a series of leadership positions with Cardinal Healthcare, a global healthcare services and products company. The Company has concluded, based in part on Mr. Sahney’s experience as CEO of Omnicare, Inc. and his expertise in the healthcare industry garnered from more than two decades of experience that he should serve as a director.
Garen K. Staglin—Age: 71—has served as our Chairman since February 2014 and as a member of our board of directors since June 2005. Mr. Staglin has over 40 years of experience in the financial services and technology industries. From 2001 to 2004 he was Chief Executive Officer of eONE Global LP, an emerging payments company, and from 1993 – 1999 he was CEO of Safelite Auto Glass, a provider of glass claim solutions. Mr. Staglin serves on the boards of directors of several public and private companies and non-profit corporations. In the past five years, Mr. Staglin has served on the public company board of directors of Bottomline Technologies, Inc. and of Solera Holdings, Inc. and is presently serving on the board of SVB Financial Group (NASDAQ: SIVB). Additional prior public board experience includes First Data Corporation, CyberCash, Inc., and Quick Response Services. Private board experience includes Specialized Bicycle, NVoice Payments, Profit Velocity Solutions, and Winecountry.com. Non-profit board experience includes One Mind, IMHRO, and BringChange2Mind. The Company has concluded, based in part on Mr. Staglin’s experience in the financial services and technology industries and his past experience as a member of public company boards of directors that Mr. Staglin should serve as a director.
There are no family relationships among any of our directors or executive officers.
Nominees for Election at the Annual Meeting
Rohit Kapoor Director since November 2002 | Vice Chairman and CEO since April 2012 | | Non-Independent | ||
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| | Age: 56 — co-founded EXL in April 1999 and has served as our Vice Chairman and CEO since April 2012 and as a director since November 2002. He previously served as our President and CEO from May 2008 to March 2012. Mr. Kapoor's business experience and directorships are detailed below. The Company has concluded that, in connection with Mr. Kapoor's experience as a founder and current role as CEO of the Company, Mr. Kapoor should serve as a director. Committees: N/A Business Experience at the Company • Vice Chairman and CEO (2012 - present) • President and CEO (2008 - 2012) • Various senior leadership roles, including CFO and COO (2000 - 2008) Other Business Experience • Business head, Deutsche Bank, a financial services provider (1999 - 2000) • Various capacities at Bank of America in the United States and Asia, including India (1991 - 1999) Public Directorships During Past Five Years • Director and member of the audit committee and former lead independent director,CA Technologies, Inc., a software services company (NASDAQ: CA) (2012 - 2018) Other Relevant Experience • Member, Board of Directors, American India Foundation (AIF) • Member, Board of Directors, Pratham (Tristate Chapter) | ||
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OUR BOARD OF DIRECTORS
Anne E. Minto Director since March 2013 | | Independent | ||
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| | Age: 67 — is a qualified lawyer and member of the Law Society of Scotland. Ms. Minto's business experience and directorships are detailed below. The Company has concluded, based in part on Ms. Minto's extensive experience as a member of international company boards and management in the human resources field and her expertise in human capital management, together with her knowledge and experience of the European business and regulatory environment, that Ms. Minto should serve as a director. Committees: • Compensation, Nominating and Governance Business Experience • Qualified lawyer and member of Law Society of Scotland • Group director, human resources and member of the executive committee, Centrica plc, an energy and services company (2002 - 2011) • Prior senior management roles at Shell UK and Smiths Group plc Public Directorships During Past Five Years • Non-executive director, chairman of the remuneration committee, Tate & Lyle plc, a global provider of specialty food products (LSE: TATE) (2012 - present) • Non-executive director, chairman of the remuneration committee and member of the nomination and governance committee, Shire plc, a global biopharmaceutical company (NASDAQ: SHPG, LSE: SHP) (2010 - 2019) Other Relevant Experience • Non-executive director, Court of the University of Aberdeen • Chairman, University of Aberdeen Development Trust • Fellow, Chartered Institute of Personnel & Development and the City and Guilds of London Institute • Fellow, Chartered Institute of Management • Recipient, Order of the British Empire for services to the U.K. engineering industry (2000) | ||
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OUR BOARD OF DIRECTORS
Som Mittal Director since December 2013 | | Independent | ||
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| | Age: 69 — has held various corporate leadership roles in the IT industry since 1989 and has extensive experience in the engineering and automotive sectors. His business experience and directorships are detailed below. The Company has concluded, based in part on Mr. Mittal's business experience as President of NASSCOM, his knowledge of the global outsourcing industry and his expertise in corporate sustainability and responsibility, that Mr. Mittal should serve as a director. Committees: • Compensation, Nominating and Governance Business Experience • Chairman and President, NASSCOM, a trade body for the IT and business process management industries in India (2008 - 2014) • Prior leadership roles at Wipro, Digital, Compaq and HP • Prior executive roles at Larsen and Tourbo, Escorts and Denso Public Directorships During Past Five Years • Director and member of audit and risk management committee, Cyient Ltd., an engineering design services company (NSE:CYIENT) (2014 - present) • Director and chairman of nomination and remuneration committee, Sheela Foam Ltd., a manufacturing company (NSE: SFL) (2016 - present) • Director and chairman of customer service committee and IT strategy committee, member of nomination and remuneration committee and other committees, Axis Bank, Ltd., a financial services company (NSE:Axis) (2011 - 2019) Other Directorships • Director, Tata SIA Airlines, Ltd., an Indian airline joint venture between TATA and Singapore Airlines with Indian and international operations (2015 - present) • Non executive Independent Director and Chairman, Vodafone India Services India Pvt Ltd., an Indian shared services company that is wholly owned, operated and controlled by Vodafone Group Plc ("Vodafone") and provides information technology and networks services, among others, to Vodafone (2020 - present) Other Relevant Experience • Former member, Board of Governors, Indian Institute of Corporate Affairs • Former Committee Member, Indian Prime Minister's National e-Governance Program • Member of the governing body of Axis Bank Foundation, a non-profit organization, and member of board of governors of academic institutions | ||
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OUR BOARD OF DIRECTORS
Clyde W. Ostler Director since December 2007 | | Independent | ||
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| | Age: 74 — is a retired executive of Wells Fargo and during his 40-year tenure held numerous senior leadership positions within that organization. The Company has concluded, based in part on Mr. Ostler should serve as a director. Committees: • Audit (Chair)*, Compensation Business Experience • Leadership positions within Wells Fargo, including: Group Executive Vice President, Wells Fargo & Co., Vice Chairman, Wells Fargo Bank California NA, President, Wells Fargo Family Wealth, Vice Chairman in the Office of the President, Chief Financial Officer, Chief Auditor, Head of Retail Branch Banking, Head of Information Technology, Head of Institutional and Personal Investments and Head of Internet Services • Served on the Senior Management Committee of Wells Fargo for over 25 years Public Directorships During Past Five Years • Director, McClatchy Company, a media company (NYSE: MNI) (2013 - 2020) Other Directorships • Advisory Director Emeritus, FTV Capital, a private global investment company Other Relevant Experience • Director's Advisory Council, Scripps Institution of Oceanography | ||
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* Audit committee financial expert under applicable SEC rules and regulations.
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OUR BOARD OF DIRECTORS
Vikram S. Pandit Director since October 2018 | | Independent | ||
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| | Age: 64 — is Chairman and Chief Executive Officer of The Orogen Group, which makes significant long-term strategic investments in financial services companies and related businesses. Mr. Pandit's business experience and directorships are detailed below. Mr. Pandit was appointed to the Board pursuant to the terms of the Investment Agreement. The Company has concluded, based in part on Mr. Pandit's more than 30 years of experience in the financial services industry, including his experience as Chief Executive Officer and a member of the board of directors of Citigroup Inc. (NYSE: C), that Mr. Pandit should serve as a director. Committees: • Audit; Nominating and Governance Business Experience • Chairman and Chief Executive Officer, The Orogen Group LLC (July 2016 - present) • Chairman, TGG Group (February 2014 - June 2016) • Chief Executive Officer, Citigroup Inc. (December 2007 - October 2012) Public Directorships During Past Five Years • Director and member of the nominating and governance and finance committees, Virtusa Corporation (NASDAQ: VRTU) (2017 - 2021) • Lead Independent Director, chair of the human resources and compensation committee and member of the corporate governance and nominating committee, former member of the audit committee, Bombardier Inc. (TSX: BBD) (2014 - present) Other Relevant Experience • Director, Citigroup Inc. (December 2007 - October 2012) • Chairman, Fair Square Financial Holdings (2017 - present) • Director, Westcor Land Title Insurance Company (2020 - present) • Chairman, JM Financial Credit Solutions Ltd. (2014 - present) • Member of the Board of Overseers of Columbia Business School • Member of the Board of Visitors of Columbia School of Engineering • Member of the Board of Trustees of Columbia Business School until 2016 | ||
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OUR BOARD OF DIRECTORS
Kristy Pipes Director since January 2021 | | Independent | ||
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| | Age: 61 — is a leader in the consulting and financial services industry. Ms. Pipes's business experience and directorships are detailed below. The Company has concluded, based in part on Ms. Pipes's experience as the Chief Financial Officer and as a member of the Management Committee of Deloitte Consulting, LLP and her expertise in the consulting and financial services industry that Ms. Pipes should serve as a director. Committees: • Audit; Compensation Business Experience • Chief Financial Officer, member of the Management Committee and various leadership positions, Deloitte Consulting LLP, a management consulting firm (1999 - 2019) • Vice President and Manager, Finance Division, Transamerica Life Companies (1997 - 1999) • Senior Vice President and Chief of Staff for the President and CEO, among other senior management positions, First Interstate Bank of California (1985 - 1996) Public Directorships During Past Five Years • Director and chair of the audit committee, and member of the nominating/corporate governance committee, PS Business Parks, Inc. (NYSE: PSB), a commercial property real estate investment trust (2019 - present) • Director and chair of the audit committee, and member of the nominating/corporate governance committee, Public Storage (NYSE: PSA) an international self storage company (2020 - present) | ||
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* Audit committee financial expert under applicable SEC rules and regulations.
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OUR BOARD OF DIRECTORS
Nitin Sahney Director since January 2016 | | Independent | ||
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| | Age: 58 — Is a leader in the healthcare industry with over 25 years of experience across all areas of healthcare. Mr. Sahney's business experience and directorships are detailed below. The Company has concluded, based in part on Mr. Sahney's experience as CEO of Pharmacord and Omnicare, Inc. and his expertise in the healthcare industry garnered from more than two decades of experience, that Mr. Sahney should serve as a director. Committees: • Nominating and Governance (Chair), Audit Business Experience • Founder, Member-Manager and Chief Executive Officer, Pharmacord, LLC, a company that helps biopharma manufacturers address product access hurdles (2016 - present) • Operating Advisor, Clayton Dubilier & Rice Funds, a private equity firm (2016 - 2017) • President and CEO (2014 - 2015) and President and COO (2012 - 2014) of Omnicare Inc., a former New York Stock Exchange-listed Fortune 500 company in the long-term care and specialty care industries • Manager of a healthcare investment fund (2008 - 2010) • Founder and CEO of RxCrossroads, a specialty pharmaceutical company (2001 - 2007) • Prior leadership positions with Cardinal Healthcare, a global healthcare services and products company Public Directorships During Past Five Years • Director, Option Care Enterprises, Inc. (NASDAQ: OPCH) (2019 - present) Other Relevant Experience • Member of the Board of Trustees, University of Louisville (2017 - 2019) | ||
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OUR BOARD OF DIRECTORS
Garen K. Staglin Director since June 2005 | Chairman of the Board since February 2014 | | Independent | ||
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| | Age: 76 — has over 45 years of experience in the financial services and technology industries. Mr. Staglin's business experience and directorships are detailed below. The Company has concluded, based in part on Mr. Staglin's experience in the financial services and technology industries and his past experience as a member of public company boards of directors, that Mr. Staglin should serve as a director. Committees: • Compensation, Nominating and Governance Business Experience • Chief Executive Officer of eONE Global LP, an emerging payments company (2001 - 2004) • Chief Executive Officer of Safelite Auto Glass, a provider of glass claim solutions (1993 - 1999) Public Directorships During Past Five Years • Director, chairman of the compensation and member of the governance and risk committees, SVB Financial Group (NASDAQ:SIVB), a financial services provider (2011 - present) Other Directorships • Senior Advisor and Advisory Director, FTV Capital, a private global investment company (2004 - present) • Vice Chairman, Profit Velocity Solutions, a manufacturing analytics firm (2007 - present) • Chairman, Nvoicepay, Inc. an electronic payment service provider (2010 - 2019) • Advisory Director, Specialized Bicycle, a manufacturer of cycling equipment (1995 - 2014) • Other directorships completed prior to 2015 include: Bottomline Technologies, a provider of payment and invoice automation software and services (2007 - 2012); Solera Holdings, a public automotive insurance software service provider (2005 - 2011); First Data Corporation, a payments solutions provider (1992 - 2003); and Global Document Solutions, a private document processing outsourcing company (2005 - 2010). Other Relevant Experience • Co-Founder and Co-Chairman, One Mind (1995 - present) • Founder and Co-Chairman, Healthy Brains Financing Initiative (2019 - present) • Member of the Stewardship Board, World Economic Forum (2019 - present) • Co-Chairman, UCLA Centennial Capital Campaign (2014 - 2019) | ||
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OUR BOARD OF DIRECTORS
Jaynie M. Studenmund Director since September 2018 | | Independent | ||
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| | Age: 66 — is a seasoned executive with significant experience as a top line executive leading financial services and digital companies. She also has extensive experience as a public company director. Ms. Studenmund's business experience and directorships are detailed below. The Company has concluded, based in part on Ms. Studenmund's extensive public company board experience, together with her knowledge and experience in the digital, financial services, health care and consumer business sectors, and her expertise in compensation and corporate governance, that Ms. Studenmund should serve as a director. Committees: • Compensation (Chair), Audit* Business Experience • Chief Operating Officer, Overture Services, a pioneer in paid search and search engine marketing (2001- 2004) • President & Chief Operating Officer, PayMyBills, the leading consumer bill payment and presentment company (1999 - 2001) • Previously for over two decades served as Executive Vice President and Head of Consumer and Business Banking for three of the nation's largest banks at the time and primarily for First Interstate of California. Today, these three banks form the backbone of Chase's and Wells Fargo's consumer business in California following the era of bank consolidation. Other Relevant Experience • Director and chair of the compensation committee and member of the risk management committee, Pacific Premier Bancorp (Nasdaq: PPBI) (2019 - present) • Director and chair of the compensation committee and member of the nomination and governance committee, CoreLogic, Inc. (NYSE: CLGX) (2012 - present) • Director and member of the contracts committee, audit committee and nomination and governance committee, Western Asset Management funds (2004 - present), a major global fixed income fund, and director of affiliated funds for Western Asset Management • Director, compensation committee chair and member of the compliance committee, Pinnacle Entertainment (Nasdaq: PNK) until its acquisition in 2018 (2012 - 2018) • Director, compensation committee chair and member of the audit committee, Lifelock (Nasdaq: LOCK) until its acquisition in 2017 (2015 - 2017) Other Relevant Experience • Board Leadership Fellow, National Association of Corporate Directors • Life trustee and board chair, Huntington Hospital • Founder and board member, Enduring Heroes Foundation | ||
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* Audit committee financial expert under applicable SEC rules and regulations.
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE |
Our
DIRECTOR INDEPENDENCE |
In determining director independence, the board of directors considered the transactions and relationships set forth below under "Certain Relationships and Related Person Transactions — Related Party Transactions" and routine service arrangements between the Company and each of Fair Square Financial ("FSF") and Virtusa Corporation ("Virtusa"). During fiscal year 2020, one of our directors, Mr. Pandit, served as a non-executive director and, through his ownership in The Orogen Group (see below for information on Mr. Pandit's relationship with The Orogen Group), owned an immaterial indirect equity interest, in each of FSF and Virtusa; Mr. Pandit is not a partner, controlling shareholder or executive officer of either FSF or Virtusa. Based on its review of all applicable relationships, our board of directors has determined that all of the members on our board of directors, other than Mr. Kapoor, meet the independence requirements of the Nasdaq Stock Market and federal securities laws.
MEETING ATTENDANCE |
Meeting Attendance
OurWe expect our directors are expected to attend all board of directors meetings and meetings of committees on which they serve. Directors areWe also expectedexpect our directors to spend sufficient time and meet as frequently as necessary to discharge their responsibilities properly. Overall, during 2015, our boardEach director attended at least 75% of directors met 7 times. Each memberthe aggregate meetings of our board of directors attended more than 75% of our board of directors meetingsand the committees on which they served during the period in 2015 in which he or she served on our board of directors.2020. It is our policy that all of our directors should attend our Annual Meetings of Stockholders absent exceptional cause. All of the persons who were members of the board of directors at the timecause, and all of our 2015then-incumbent directors attended the 2020 Annual Meeting of Stockholders attended such meeting.
Stockholders.
Board Leadership Structureand Committee Meetings in 2020
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CORPORATE GOVERNANCE
CORPORATE GOVERNANCE FRAMEWORK |
The board is responsible for providing governance and oversight over the effectiveness of policy and decision-making with respect to the strategy, operations and management of EXL, in order to enhance our financial performance and stockholder value over the long term.
Our board's commitment to strong corporate governance is informed by the five core values of our corporate culture: innovation, respect, integrity, excellence and collaboration. Our board seeks to maintain best practices in corporate governance by reviewing and updating our governance policies, as appropriate, at least annually, and provides oversight over our risk management and strategic planning, as relates to our growth, human capital management, and environmental, social and governance matters, each as discussed further below.
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CORPORATE GOVERNANCE
BEYOND THE BOARD ROOM |
32
CORPORATE GOVERNANCE
BOARD LEADERSHIP STRUCTURE |
Our board of directors is currently led by Garen K. Staglin, our Chairman, and Rohit Kapoor, our Vice Chairman and CEO.
Our by-laws provide that our Chairman or, in the absence of our Chairman, our Lead Director (if there is a Lead Director serving at such time), or in the absence of both our Chairman and Lead Director, our CEO, shall callcalls meetings of our board of directors to order and shall actacts as the chairman thereof.for those board meetings. In the absence of our Chairman, our Lead Director (if there is a Lead Director serving at such time), and our CEO, and a majority of our directors present may elect as chairman of the meeting any director present. Independent directors meet at least quarterly in executive session without any management directors or members of the Company’sCompany's management present. TheOur Corporate Governance Guidlines provide that in the absence of our Chairman, our Lead Director (if there is a Lead Director serving at such time) or, in the absence of the Lead Director, a director chosen by the directors meeting in executive session, presides at all executive sessions.
Consolidating the Vice Chairman and CEO positions allows our CEO to contribute his experience and perspective regarding management and leadership of the Company towards the goals of improved corporate governance and greater management accountability. In addition, the presence of our Chairman ensures that the board can retain sufficient delineation of responsibilities, such that our Chairman and our Vice Chairman and CEO may each successfully and effectively perform and discharge their respective duties and, as a corollary, enhance our prospects for success. TheAs a result, the Company will thus benefit from the ability to integrate the collective leadership and corporate governance experience of our Chairman and our Vice Chairman and CEO, while retaining the ability to facilitate the functioning of the board of directors independently of our management and to focus on our commitment to corporate governance.
For the foregoing reasons, our board of directors has determined that its leadership structure is appropriate and in the best interests of our stockholders at this time.
Committees
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CORPORATE GOVERNANCE
DIRECTOR QUALIFICATIONS, REFRESHMENT AND EVALUATIONS |
Director Qualifications
The board of directors considers it paramount to achieving excellence in corporate governance to assemble a board of directors that, taken together, has the breadth of skills, qualifications, experience and attributes appropriate for functioning as the board of directors of our Company and working productively with management. The Nominating and Governance Committee of the board is responsible for recommending nominees who are qualified and bring a diverse set of skills and qualifications to oversee the Company effectively.
The Nominating and Governance Committee has not formally established any minimum qualifications for director candidates, but pursuant to our Corporate Governance Guidelines, our board of directors seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The Nominating and Governance Committee assesses each director candidate's independence, diversity (including age, ethnicity, race and gender, among others), skills and experience in the context of the needs of the board of directors. The Nominating and Governance Committee considers a number of factors in selecting director candidates, including, among others: ethical standards and integrity; independence; diversity of professional and personal backgrounds; skills and experience; other public company directorships; and financial literacy and expertise; communication skills; and ability and willingness to comply with Company policies and procedures.
34
CORPORATE GOVERNANCE
In light of our business, the primary areas of experience, qualifications and attributes typically sought and put forward by the Nominating and Governance Committee in director candidates include, but are not limited to, the following:
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CORPORATE GOVERNANCE
REFRESHMENT |
Our Nominating and Governance Committee regularly considers the size and composition of our board on a continual basis with an aim toward creating a balanced board with extensive experience and institutional knowledge, and fresh perspective and insight. Considerations include whether the composition of the board of directors includes sufficient diversity and independent skill sets and background as appropriate for our immediate and long-term strategic needs. These considerations are also informed by discussions with our investors through stockholder engagement. In terms of diversity, our board is 57% diverse in terms of gender and 57% diverse in terms of ethnic/racial diversity. |
In considering board composition, our Nominating and Governance Committee also considers the length of tenure of the directors as a whole. Over the past four years, we have added three new directors, and following the Annual Meeting, will have the following balance of tenures:
While the Company does not maintain term limits, our Corporate Governance Guidelines provide that the expectations for new directors is a maximum term of ten years. The board actively manages board refreshment and succession planning. The board expects that over the next few years, three to four longer tenured directors may retire. The Nominating and Governance Committee will identify successors based on the goal of maintaining the board's overall balance of experience and perspective. A recommendation regarding board composition is shared with the full board of directors on an annual basis.
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CORPORATE GOVERNANCE
Board Refreshment Process:
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CORPORATE GOVERNANCE
Board Evaluations
We consider the continued effectiveness of the board and its committees as critical to our long-term success and stockholder value. The board evaluates its performance and the performance of it committees and each director on an annual basis through the following process:
COMMITTEES |
Our board of directors currently has three standing committees: the Audit Committee, the Nominating and Governance Committee and the Compensation Committee.
As discussed above, our board of directors has determined that each member of the Audit, Nominating and Governance and Compensation Committees meets the independence and experience requirements of the Nasdaq Stock Market and federal securities laws. Copies of our committee financial expert under applicable SEC rules and regulations.charters can be found on the Investor Relations page of our website at: https://ir.exlservice.com/corporate-governance. Information on our website referred to in this proxy statement does not constitute a part of this proxy statement.
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CORPORATE GOVERNANCE
Audit Committee.Committee
Our Audit Committee oversees and assists our board of directors in fulfilling its oversight responsibilities with respect to:to our accounting and financial reporting processes, including the integrity of the financial statements and other financial information provided by us to our stockholders, the public, stock exchanges and others; our compliance with legal and regulatory requirements; our independent registered public accounting firm's qualifications and independence; the audit of our financial statements; the performance of our internal audit function and independent registered public accounting firm; and the Company's cyber security program and cyber strategy-related risks. Our Audit Committee's risk oversight is discussed below beginning on page 43. Our Audit Committee charter permits the committee to form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of directors who satisfy the applicable requirement of federal securities laws as well as independence requirements of the Nasdaq Stock Market.
Our Audit Committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent registered public accounting firm, and our independent registered public accounting firm reports directly to our Audit Committee. Our Audit Committee also reviews and approves certainspecified related-party transactions as required by the rules of the Nasdaq Stock Market.Market, and oversees the Company's cyber security program and cyber strategy-related risks. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”"Exchange Act"). Our Audit Committee annually reviews and assesses the adequacy of the Audit Committee charter and its own performance. In December 2015, the Audit Committee approved an amendment to its charter to include responsibility for overseeing the Company’s cyber security program and cyber strategy related risks. A copy of our Audit
Committee charter can be found on our website at www.exlservice.com. Information on our website referred to in this proxy statement does not constitute a part of this proxy statement.
The members of our Audit Committee are appointed by our board of directors. All members of our Audit Committee must also be recommended by our Nominating and Governance Committee. Our board
40
Table of directors has determined that all of the members of the Audit Committee meet the independence and experience requirements of the Nasdaq Stock Market and the federal securities laws for audit committee membership. During 2015, our Audit Committee met seven times. Each member of our Audit Committee attended at least 75% of our Audit Committee’s meetings in 2015 during the period in which he or she served on our Audit Committee.Contents
CORPORATE GOVERNANCE
Nominating and Governance Committee.Committee
Our Nominating and Governance Committee identifies individuals qualified to become members of our board of directors (consistent with criteria approved by our board of directors), selects, or recommends that our board of directors select,is responsible for: (i) identifying and recommending candidates for election to our board of directors developsusing selection criteria approved by our board of directors and recommendsoverseeing board refreshment, and committee membership, (ii) developing and recommending to our board of directors Corporate Governance Guidelines and other board procedures that are applicable to us, and oversees(iii) overseeing our board of director and management evaluations. A copy ofevaluations and our Nominatingdirector education program, and Governance Committee charter can be found on(iv) overseeing our website at www.exlservice.com.
ESG goals, policies and practices. Our Nominating and Governance Committee has a policy, reflected in such committee’s charter,Charter permits the committee to form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of considering director candidates recommended by our stockholders. Candidate recommendations should be sent to ourdirectors who satisfy the applicable independence requirements of the Nasdaq Stock Market. Until December 31, 2020, Mr. Kelso was the chair of the Nominating and Governance Committee. Mr. Sahney became the chair of the Nominating and Governance Committee c/o ExlService Holdings, Inc., 280 Park Avenue, 38th Floor, New York, New York 10017, Attention: Corporate Secretary. Our Nominating and Governance Committee evaluates all candidates in the same manner regardless of the source of the recommendation. Our Nominating and Governance Committee, in making its selection of director candidates, considers the appropriate skills and personal characteristics required in the light of the then-current makeup of our board of directors and in the context of our perceived needs at the time. The Nominating and Governance Committee considers a number of factors in selecting director candidates, including, among others:on January 1, 2021.
Our Nominating and Governance Committee reviews written and oral information provided by and about candidates and considers any additional criteria it feels is appropriate to ensure that all director nominees possess appropriate skills and experience to serve as a member of our board of directors.
AlthoughAside from its role in assessing the board, its committees and individual director effectiveness described above, our Nominating and Governance Committee, does not have a formal policytogether with regard to diversitythe Compensation Committee, provides annual reports on our CEO's performance in respect of board members, pursuant to our Corporate Governance Guidelines, our board of directors seeks members from diverse professionalcertain goals and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. This assessment includes an individual’s independence, as well as consideration of diversity, age, skills and experience inobjectives set by the context of the needs of the board of directors. Our Nominating and Governance Committee reviews and makesthe board. Pursuant to its charter, the Nominating and Governance Committee is responsible for developing, annually reassessing and making recommendations to the board with respect to succession plans for our CEO and other key executive officers of the Company, and preparing contingency plans for interim CEO succession in the event of an unexpected occurrence for board review.
The Nominating and Governance Committee also oversees our director onboarding and training program, which provides new directors with training regarding the composition of our board of directors in order to ensureCompany's policies and procedures and specific requirements that may be needed based on the board has an appropriate breadth of expertisedirector's committee memberships.
In addition, the Nominating and its membership consists of persons with sufficiently diverseGovernance Committee oversees and independent skill setsreviews the Company's ESG goals, policies and backgrounds.programs and the Company's corporate governance policies and practices regularly. Our Nominating and Governance Committee annually reviews and assesses the adequacy of the Nominating and Governance Committee charter and its own performance.
The members of our Nominating and Governance Committee are appointed by our board of directors. During 2015, our Nominating and Governance Committee met five times. Each appointed member of our Nominating and Governance Committee attended at least 75% of our Nominating and Governance Committee’s meetings in 2015 during the period in which he or she served on our Nominating and Governance Committee. Our board of directors has determined that all of the members of the Nominating and Governance Committee meet the independence requirements of the Nasdaq Stock Market and federal securities laws.
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CORPORATE GOVERNANCE
Compensation Committee.Committee
Our Compensation Committee reviews and recommends policies relating to compensation and benefits of our directors, officers and employees and is responsible for approving the compensation of our Vice Chairman and CEO and other executive officers. Our Compensation Committee also reviews, evaluates and makes recommendations to our board of directors with respect to our incentive compensation plans and equity-based plans and administers the issuance of awards under our equity incentive plans. Our Compensation Committee charter permits the committee to form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of directors who satisfy the applicable independence requirements of the Nasdaq Stock Market. Any such subcommittee must have a published committee charter. Until December 31, 2020, Ms. Minto was the chair of the Compensation Committee. Ms. Studenmund became the chair of the Compensation Committee on January 1, 2021.
Our Compensation Committee charter also permits the committee to retain advisors, consultants or other professionals to assist the Compensation Committee to evaluate director, Vice Chairman and CEO or other senior executive compensation and to carry out its duties. For 2015,2020, our Compensation Committee retained the services of Frederick W. Cook & Co., Inc. (“Cook & Co.("FW Cook"), a qualified and independent compensation consultant, to aid the Compensation Committee in performing its review of executive compensation.compensation including executive compensation benchmarking and peer group analysis. Our Compensation Committee also provides oversight with respect to diversity and equity matters as relate to compensation, including pay equity. Our Compensation Committee annually reviews and assesses the adequacy of the Compensation Committee charter and its own performance. Additional information regarding our Compensation Committee’s processes and procedures for considering executive compensation are addressed in the Compensation Discussion and Analysis below. A copy of our Compensation Committee charter can be found on our website at www.exlservice.com.
The members of our Compensation Committee are appointed by our board of directors. All new members of our Compensation Committee must be recommended by our Nominating and Governance Committee. Our board of directors has determined that all members of the Compensation Committee meet the independence requirements of the Nasdaq Stock Market and federal securities laws for compensation committee membership. During 2015, our Compensation Committee met eight times. Each member of our Compensation Committee attended at least 75% of our Compensation Committee’s meetings in 2015 during the period in which he or she served on our Compensation Committee.
Risk Oversight
Our board of directors provides risk oversight. Our management assists the board in identifying strategic and operating risks that could affect the achievement of our business goals and objectives, assessing the likelihood and potential impact of these risks and proposing courses of action to mitigate and/or respond to these risks. These risks are reviewed and discussed periodically with the full board of directors as part of the business and operating review.
Our management is responsible for management of our day-to-day risks, and, because we are exposed to financial risks in multiple areas of our business, day-to-day risk management activities and processes are performed by multiple members of our senior and
other management. Our board of directors primarily relies on the Audit Committee for oversight of our risk management and cyber security risk. The Audit Committee regularly reviews and discusses with management our major financial risk and cyber security exposures and the steps management has taken to monitor, control and manage such exposures, including our risk assessment and risk management guidelines and policies. In addition, our management maintains, as part of our disclosure controls and procedures, a separate disclosure committee that, as part of its review of our quarterly and annual reports, helps facilitate understanding by the Audit Committee and our full board of directors of new or changing risks affecting us. Once a year, the full board receives a report from management on the Company’s readiness and capability to prevent, detect and respond to a cyber-attack.
Compensation Committee Interlocks and Insider Participation
Ms. Kerr, Ms. Minto, Mr. Mittal, Mr. Ostler and Mr. Staglin are the members of our Compensation Committee.
During 2015,2020, none of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our board of directors or Compensation Committee.
Other Directorships
42
The Board maintains
CORPORATE GOVERNANCE
BOARD AND COMMITTEE OVERSIGHT OF RISK MANAGEMENT |
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CORPORATE GOVERNANCE
Cybersecurity Risk Management
We maintain a practice wherebycomprehensive program that focuses on information security, cybersecurity, data privacy and the protection of our directors discloseclients' and their customers' confidential personal and sensitive information. Our Audit Committee has primary oversight and receives presentations throughout the year on cybersecurity-related risks and vulnerabilities and strategic policies and practices from management. At least once a year, the full board receives a report from management on the Company's readiness and capability to prevent, detect and respond to a cyber-attack.
We have invested in our information security and cyber security posture and protocols to support compliance with our contractual obligations and the Board any offerslaws and regulations governing our activities. These investments include people, processes and technology intended to be a directorprotect information throughout its life cycle. Each of any other organization, which is then evaluatedour employees receives and must pass annual, mandatory knowledge and awareness training and testing on risk mitigation and management and controls and procedures relating to information security, cybersecurity and data privacy.
EXL focuses on implementing and maintaining cybersecurity capabilities to identify, protect, detect, respond and recover from cyber threats, incidents and attacks; reduce vulnerabilities and minimize the impact of cyber incidents. We emphasize compliance and institutional governance built upon and supported by the Board for potential businesspolicies and other conflicts.
processes, tools and technologies, and knowledge and awareness training. EXL takes into account guidance from relevant regulatory and governance bodies. For more details on our cybersecurity program, see "Sustainability — Cybersecurity at EXL" on page 56.
Code of ConductEnvironmental, Social and Ethics; Corporate Governance Guidelines("ESG") Risk Management
Our board of directors has adopted a Code of Conductreviews and Ethics thatreceives regular reports on ESG and sustainability risks, including those relating to employee safety, environmental-related efforts, human capital management matters, and corporate governance trends and best practices.
While the Nominating and Governance Committee is applicableresponsible for overseeing our risk management related to our directors, officersESG matters generally, the other board Committees share in the responsibility with respect to certain matters within their purview. The Compensation Committee deals with certain human capital management matters relating to employee compensation and employeesbenefits, and which outlines the high ethical standards that we support and details how our directors, officers and employees should conduct themselves when dealing with fellow employees, clients, suppliers, competitors and the general public. Our Code of Conduct and Ethics is reviewed annually by the Audit Committee. In December 2015, the Audit Committee approvedis involved in regulatory risks touching on ESG matters.
In 2021, we established a new management-level ESG steering committee, which is responsible for setting our revisedsustainability/ESG strategy and enhanced Coderisk management, keeping our management and board up-to-date on ESG-related developments, overseeing our internal and external disclosure on ESG matters, and providing implementation support across our Company. The ESG steering committee works in close coordination with the board, and provides the board with advice and assistance in its oversight of ConductESG risks and Ethics which can be foundother matters. For more details on our ESG and sustainability-related efforts, see "Sustainability" on page 47.
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CORPORATE GOVERNANCE
Stockholder Engagement
Our formal governance-focused stockholder outreach program commenced in late 2020, which we plan to take forward and expand in future years. As of the date hereof, we offered to meet with stockholders representing approximately 55% of shares outstanding for discussions focusing on governance topics, and engaged with all stockholders that accepted our invitation, representing nearly 22% of shares outstanding. EXL was represented by our management, members of our legal and investor relationships teams, and board members at these meetings. One of our independent directors, Mr. Pandit, attended meetings with stockholders representing nearly 19% of shares outstanding. |
Topics discussed included:
EXL also regularly interacts and shares information with our stockholders through our quarterly earnings calls, investor meetings, SEC filings and publications on our website, at www.exlservice.com.among others.
Our board of directors has also adopted a set of Corporate Governance Guidelines to assistThe feedback received from our stockholders is shared with and reviewed by our board, of directors in the exercise of its responsibilities. The Corporate Governance Guidelines reflect the commitment ofwhich is used to inform and focus our board of directorsdecisions relating to monitor the effectiveness of policyour governance and decision-making, both at the board and senior management levels,sustainability practices and to enhance stockholder value over the long term. A copy ofimprove our Corporate Governance Guidelines can be found on our website at www.exlservice.com.disclosure.
Communications with the Board
Stockholders interested in contacting our board of directors, our Chairman or any individual director are invited to do so by writing to:
Board of Directors of ExlService Holdings, Inc.
c/o Corporate Secretary
ExlService Holdings, Inc.
280
320 Park Avenue, 3829th Floor
New York, New York 1001710022
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CORPORATE GOVERNANCE
All other stockholder communications addressed to our board of directors will be referred to our Chairman and tracked by our Corporate Secretary. Stockholder communications specifically addressed to a particular director will be referred to that director.
Complaints and concerns relating to our accounting, internal accounting controls or auditing matters should be communicated to our Audit Committee, which consists solely of non-employee directors. Any such communication may be anonymous and may be reported to our Audit Committee through our General Counsel by writing to:
Audit Committee of the Board of Directors
ExlService Holdings, Inc.
280
320 Park Avenue, 3829th Floor
New York, New York 10017
10022
Attn: General Counsel
All such concerns will be reviewed under Audit Committee direction and oversight by our General Counsel, our Head of Internal Audit or such other persons as our Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of our Audit Committee. We prepare periodic summary reports of all such communications for our Audit Committee.
Section 16(a) Beneficial Ownership Reporting Compliance
46
Section 16(a)
SUSTAINABILITY
SUSTAINABILITY |
In line with our mission of digging deeper to find a better way for our clients, at EXL we are committed to doing our part as a global citizen to build a better future for us all by operating in a responsible and sustainable manner. We believe that by integrating sustainable practices into our business model, working toward positive social change, and providing transparent reporting on those practices and our progress, we will best able to deliver long-term value to our stockholders while promoting and developing our business, people, communities and the world around us.
Recent Activities
In 2020 and continuing into 2021, we have taken a number of steps to continue improving and formalizing our sustainability program. These recent activities include:
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SUSTAINABILITY
We support our employees' charitable efforts by enabling payroll giving, recognizing social impact through individual, geography and business unit awards, organizing social responsibility events in each region in which we operate and creating "volunteer weeks" that our employees can use for volunteer efforts.
We partner with non-profits and our clients to support corporate social responsibility initiatives, in education and skills, global health and disaster relief.
In 2020, we additionally focused on COVID-19 relief-related contributions through a global network of partners across seven of the Exchange Act requirescountries in which we operate, reaching approximately 78,000 beneficifiaries.
48
SUSTAINABILITY
Protecting our executive officers and directors, and persons who own more than 10% of a registered classPlanet
At EXL, we endeavor to keep the environmental impact of our equity securities,operations to file reports of ownershipa minimum. We strive to continuously improve in our environmental stewardship, with a focus on Forms 3, 4energy conservation, minimizing waste, and 5 with the SEC. Officersdeveloping green infrastructure and directors are requiredoperations, all in order to furnish us with copies of all Forms 3, 4 and 5 they file.reduce our carbon footprint across our global operations.
Based solely on a review of the reports furnishedWe have committed ourselves to us, or written representations from reporting persons that all reportable transaction were reported, the Company’s officers, directors and greater than ten percent owners timely filed all reports they were required to file under Section 16(a)year-on-year targets for reducing our environmental footprint our baseline numbers. We began this process in 2017, with respect to transactions during fiscal year 2015, except forour India and Philipplines operations only, and began recording data and applying our year-on-year targets to our global operations using 2019 as a baseline. The targets, and our progress through 2019 with respect to our India and Philippines operations are as stated in the following Form 4s that were filed subsequenttable. We expect to report our global progress in our 2020 Annual Sustainability Report to be published during 2021.
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SUSTAINABILITY
These goals are assessed by our Environment, Health and Safety team periodically, as well as third-party experts, and our progress is reported to our ESG steering committee, management and board for review. We report our progress toward these goals annually in our Annual Sustainability Report.
Sustainable Supply Chain
We conduct background investigations of all of our new suppliers to collect information on their policies and performance relating to economic and environmental matters, as well as human rights, data privacy, product safety and working conditions. Through our Supplier Standards of Conduct, we maintain the right to review our suppliers' practices in the future.
We seek to procure our materials from local suppliers, to the due date on accountextent feasible.
Our supplier diversity programs ensure that suppliers of administrative and/or broker error: three reports (eight transactions) for each of Messrs. Bagai, Bhalla, Chhibbardiverse backgrounds can participate in our procurement sourcing process and de Villa; three reports (six transactions) for Mr. Kapoor; two reports (four transactions) for Mr. Miglani; one report (five transactions) for Mr. Mohanbir Sawhney, a former director; one report (two transactions) for Ms. Saltzmanencourages engagement with suppliers owned by people belonging to minority groups, women, the gay, lesbian, bisexual and one report (one transaction) for Mr. Mittal.transgender community, and veterans, specially-abled people, and small business enterprises.
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SUSTAINABILITY
Supporting and Developing our People
Our people are our primary assets. The world we work and live in is full of diversity and powered by innovation. We believe success in such a world will come through an environment that embraces diversity of thought. In line with our core values, one of our principal priorities is promoting the talent of our employees while creating an inclusive work environment to permit us to leverage our employees' diversity and to deliver exceptional results for our clients. We have an active employee relations function to ensure that we regularly communicate with and understand our employees, and are able to swiftly respond to specific needs and concerns as they arise. We periodically conduct employee surveys to monitor our employee satisfaction and engagement, and take actions to address the results of such surveys.
EXL is made up of approximately 31,600 professionals (as of March 31, 2021) in locations throughout the United States, the United Kingdom, Europe, India, the Philippines, Colombia, Canada, Australia and South Africa.
EXL Locations |
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SUSTAINABILITY
Diversity, Equity and Inclusion
Our Diversity and Inclusion Council consists of a global, diverse mix of leaders, provides inputs to the design of our diversity and inclusion program to bring in diverse perspectives, collaborates with external partners for customization inputs, conducts periodic reviews of the progress of our program and provides execution leadership for specific diversity initiatives.
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SUSTAINABILITY
We have institutionalized a comprehensive set of practices, processes and programs to create an active learning culture and to build market-relevant talent within our Company in four stages:
Our capability development framework is focused on developing our employees' digital and domain expertise and leadership as a means to develop our talent internally. We do this through our learning academies, and through partnerships with industry organizations, institutes, business schools and consulting firms. In 2020, in light of COVID-19, we introduced a new capability ecosystem to deliver learning virtually from any location, at any time.
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SUSTAINABILITY
Academies
2020 Training
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SUSTAINABILITY
Benefits
Enhanced leave for employees impacted by COVID-19 and for employees receiving COVID-19 vaccines | ||
Paid leave for U.S. new parents | ||
Excused days of absence | ||
Generous vacation policy | ||
Paid holidays | ||
Employee Assistance Program providing confidential counseling services |
Our employees also participate in our success:
Annual bonuses or incentives: 100% of our employees are eligible to receive | ||
401K plans with Company match: 100% of our U.S. employees are eligible to enroll within three months of their employment at EXL |
Employee Health and Safety
In 2020, given COVID-19, approximately 92% of our employees worked from home. We took actions that focused on helping our employees, including:
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SUSTAINABILITY
Cybersecurity at EXL
We are committed to protecting the confidentiality, integrity, availability and privacy of the information assets of our clients and their customers, as well as our employees, vendors and any other third parties, that are provided to us and for which we are responsible and have developed robust information security and cybersecurity and data privacy controls, safeguards and enabling measures in accordance with applicable laws and regulations and information security standards.
We have implemented and maintain, and regularly improve upon, tools and capabilities to identify, protect, detect, respond and recover from cyber threats, incidents and attacks; reduce vulnerabilities; and minimize the impact from cyber incidents. We have an established culture of compliance around cybersecurity matters, and have a strong governance program built upon and supported by policies and processes, tools and technologies, and periodic knowledge and awareness training. Each of our employees receives and must pass annual, mandatory periodic knowledge and awareness training and testing on risk mitigation and management and controls and procedures relating to information security, cybersecurity and data privacy.
We comply with and/or are certified in the following standards:
SO 27001:2013 Global Information Security Standard — Company-wide | Credit Card and Payment Industry Certification — India, Philippines and South Africa operations | SOC 1 and SOC 2 — Company-wide | Hitrust Certification — healthcare operations | ISO22301 Business Resiliency Certification — India, Philippines and South Africa operations |
For more information on our cybersecurity risk management, please see "Cybersecurity Risk Management" on page 44. For more information on our information security and data privacy procedures, please refer to our Sustainability Report, which is available on our website at www.exlservice.com/corporate-sustainability.
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SUSTAINABILITY
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SUSTAINABILITY
Environmental, Social and Governance Matters and Pay-for-Performance at EXL
A portion of our CEO's total compensation is tied to the achievement of specific performance goals relating to ESG matters. For more information, see "Detailed Review of Compensation Components — Incentive Bonus — Determination of Individual Performance Measure Achievement" on page 78.
Sustainability Oversight
For more information on our oversight of sustainability and ESG-related matters and risks, see "Environmental, Social and Governance Risk Management" on page 44.
Learn More about Sustainability and Environmental, Social and Governance Matters at EXL
Please visit www.exlservice.com/corporate-sustainability to learn more about our efforts toward sustainability and the impacts we are making on our communities and the environment. Information on our website referred to in this proxy statement does not constitute a part of this proxy statement.
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OUR EXECUTIVE OFFICERS
OUR EXECUTIVE OFFICERS |
| Rohit Kapoor | |Vice Chairman and CEO | See section entitled | |||
| Ajay Ayyappan (age 43) |Senior Vice President, General Counsel and Corporate Secretary Mr. Ayyappan has served as our Senior Vice President, General Counsel and Corporate Secretary since December 2018 and our Vice President, Acting General Counsel and Corporate Secretary since August 2018. He previously served as Vice President, Deputy General Counsel and Assistant Secretary from April 2014 to August 2018 and Vice President and Assistant General Counsel from March 2007 to March 2014. Prior to joining us, Mr. Ayyappan was a corporate associate at the law firm of Morgan, Lewis & Bockius LLP. | |||||
| Pavan Bagai | |President and Chief Operating Officer | Mr. Bagai has served as our President and Chief Operating Officer since April 2012, as our Chief Operating Officer from May 2008 to March 2012 and as Vice President, Head of Outsourcing Services of EXL India from June 2006 until April 2008. In addition, he served as our interim Chief Financial Officer from December 2019 through February 2020. He previously served as Vice President, Research and Analytics of EXL India from December 2004 to May 2006, as Vice President, Operations of EXL India from November 2003 to November 2004 and as Vice President, Strategic Businesses of EXL India from July 2002 to November 2003. Prior to joining us, Mr. Bagai served in various capacities in several business areas across markets in Europe and Asia, including India, at Bank of America beginning in 1985. Mr. Bagai is based in Delhi, India. On April 16, 2021, Mr. Bagai notified the Company that he will be retiring effective October 1, 2021. | |||
| Vikas Bhalla | |Executive Vice President and Business Head, | Mr. Bhalla has served as our Executive Vice President and Business Head, |
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OUR EXECUTIVE OFFICERS
| Vivek Jetley (age 46) |Executive Vice President and | Business Head, Analytics Mr. |
| Anita Mahon (age 52) |Executive Vice President | Ms. Mahon has served as our Executive Vice President | ||||
| Samuel Meckey (age 50) |Executive Vice President and Business Head, Healthcare Mr. Meckey has served as | |||||
| Nalin Miglani | |Executive Vice President and Chief Human Resource Officer | Mr. Miglani has served as our Executive Vice President, Chief Human Resource Officer since December 2014. Mr. Miglani is responsible for the global human resources function at | |||
| Maurizio Nicolelli (age 52) |Executive Vice President | Mr. Nicolelli has served as our Executive Vice President and |
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EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION |
COMPENSATION DISCUSSION AND ANALYSIS |
Table of Contents
NAMED EXECUTIVE OFFICERS | 63 | |
EXECUTIVE SUMMARY | 63 | |
Select 2020 Financial and | 63 | |
Total Stockholder Return | 64 | |
Awards and Industry Recognition | 64 | |
Clients and Operations | 64 | |
Summary of | 65 | |
Pay-for-Performance | 66 | |
EXECUTIVE COMPENSATION PROGRAM, PRACTICES AND POLICIES | 67 | |
OVERVIEW OF COMPENSATION POLICIES AND PHILOSOPHIES | 69 | |
COMPENSATION PROCESS: ROLES AND RESPONSIBILITIES | 70 | |
COMPONENTS OF EXECUTIVE COMPENSATION FOR 2020 | 72 | |
DETAILED REVIEW OF COMPENSATION COMPONENTS | 73 | |
Base Salary | 73 | |
Incentive Bonus | 75 | |
Long-Term Equity Incentives | 80 | |
FISCAL YEAR 2020 AWARDS | 81 | |
PAYOUT OF AWARDS GRANTED IN PRIOR FISCAL YEARS | 82 | |
NEW HIRE AWARDS FOR MR. NICOLELLI | 83 | |
BENEFITS AND PERQUISITES | 83 | |
RISK AND COMPENSATION POLICIES | 83 | |
SEVERANCE AND CHANGE-IN-CONTROL BENEFITS | 83 | |
REVISED EMPLOYMENT AGREEMENT FOR MR. KAPOOR | 84 | |
2021 COMPENSATION | 84 | |
DEDUCTIBILITY CAP ON EXECUTIVE COMPENSATION | 84 | |
GRANTS OF PLAN-BASED AWARDS TABLE FOR FISCAL YEAR 2020 | 88 | |
EMPLOYMENT AGREEMENTS | 89 | |
OUTSTANDING EQUITY AWARDS AT FISCAL 2020 YEAR-END | 92 | |
OPTION EXERCISES AND STOCK VESTED DURING FISCAL YEAR 2020 | 93 | |
PENSION BENEFITS FOR FISCAL YEAR 2020 | 93 | |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AT FISCAL 2020 YEAR-END | 93 | |
INDICATIVE PAYOUTS FOR ROHIT KAPOOR | 96 |
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
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EXECUTIVE COMPENSATION
Named Executive Officers
As determined in accordance with SEC rules, our “namednamed executive officers” in 2015 were:officers ("NEOs") for 2020 are:
Rohit Kapoor, our Vice Chairman and |
Maurizio Nicolelli, our Executive Vice President and |
Pavan Bagai, our President, |
Nalin Miglani, our Executive Vice President and Chief Human Resources Officer | ||
Vikas Bhalla, our Executive Vice President and Business Head, Insurance | ||
Samuel Meckey, our Executive Vice President and Business Head, Healthcare |
Executive Summary –Business Highlights
Select 2020 Financial and Key Compensation Decisions for 2015
The Company had a successful 2015 from the perspective of achieving various financial performance goals that drive the creation of stockholder value, but also with respect to making a strategic acquisition, attaining industry recognition for our outstanding client-service, winning new clients and expanding our operations and geographic footprint. Our compensation program offers our executives the opportunity to earn annual cash bonuses based on achievement of revenue and Adjusted EPS targets (as described below). We also granted our executives a mix of time-vested restricted stock units that vest over four years and performance-vested restricted stock units, half of which vest based on revenue achievement over three years and half of which vest based on relative total stockholder return over three years.
As a result of our performance, our Compensation Committee granted increases in base salary or fixed compensation payable to certain of our named executive officers and funded our bonus pool based on an achievement of approximately 102.2% for the revenue component and 100% for the Adjusted EPS component. Moreover, our performance resulted in our executives banking one-third of their 2014 and 2015 revenue-based performance restricted stock units, subject to continued employment through the end of the performance period. This banking feature is described under “Compensation and Discussion Analysis – Long-Term Equity Incentives” on page 36.For the revenue-based performance restricted stock units granted in fiscal year 2016, we have removed this banking feature and the revenue-based performance restricted stock units cliff vest on December 31, 2018 if the revenue target is achieved.
2015 Business Highlights
We improved our
63
Table of Excellence in Gurgaon, India.Contents
EXECUTIVE COMPENSATION
Total Stockholder Return
As shown in theThe following table,graphs compare our 1-year, 3-year and 5-year cumulative total stockholder return ("TSR") as of December 31, 2020 with the median TSR of companies comprising Nasdaq, S&P 600 and our peer group. As shown in the table, our 1-Year, 3-Year and 5-Year TSR outperformed all of our market benchmarks.
Acquisitions, Finance and Equity Transactions
Awards and Industry Recognition
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EXECUTIVE COMPENSATION
Summary of Key Compensation Considerations & Decisions in 2015
2020
The following highlights the Compensation Committee’sCommittee's key considerations and compensation decisions in 20152020 and with respect to performance for 2015.2020 for our NEOs.
Items | Considerations and Decisions | |||
---|---|---|---|---|
| | | | |
Say on Pay Approval | Approximately 98% of our stockholders approved, | |||
| | | | |
Base Salaries | Although the Compensation Committee approved modest increases to our named executive officers' base salaries to be effective April 1, 2020, the named executive officers | |||
In |
| | | ||
Annual Bonuses | We based our annual |
As discussed in greater detail under Incentive Bonus on page 75, our Compensation Committee did not make adjustments to the | ||||
| | | | |
Equity Incentives | This was the third and final performance year for the 2018 performance-based restricted stock |
| | | | |
Key Corporate Governance Features
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EXECUTIVE COMPENSATION
Pay-for-Performance
Our executive compensation philosophy is focused on pay-for-performance. In this regard, we link a significant portion of each NEO's total compensation to the achievement of specified performance goals. This variable compensation is "at-risk" and rewards performance and contributions to both short- and long-term financial performance
As illustrated by the following charts, the majority of compensation that may be earned by our named executive officers is tied to the achievement of financial performance metrics (annual performance bonuses and PRSUs) or fluctuates with the underlying value of our common stock (RSUs).
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EXECUTIVE COMPENSATION
Executive Compensation Program, Practices and Policies
Our compensation programs, practices and policies are reviewed and re-evaluated periodicallyregularly and are subject to change from time to time.time in line with market best practices, including alignment of pay with performance. Our executive compensation philosophy is aligned with our core values, focused on pay for performancepay-for-performance and is designed to reflect appropriate governance practices aligned with the needs of our business. Listed below are some of the Company’sCompany's more significant practices and policies that were in effect during fiscal 2015,year 2020, which were adopted to drive performance and to align our executives’executives' interests with those of our stockholders.
What We Do | What We Don't Do | |||||||||||
| | | | | | | | | | | | |
Align our Executive Pay | No Option Repricing: We prohibit option repricing without stockholder approval. | |||||||||||
Variable compensation is |
| | | | | | | | | | | | |
Use Appropriate | No Option Backdating or Discounting: We prohibit option backdating and discounting. | |||||||||||
We set |
| | | | | | | | | | | | |
Ensure Equity | No Excessive Overhang or Dilution: We do not have excessive overhang or dilution from equity grants |
We hold dividends accrued under our equity awards, if any, until the recipient vests in the underlying shares or units. | ||||||||||||
| | | | | | | | | | | | |
Maintain an Independent Compensation Committee: Compensation decisions for our NEOs are approved by a Compensation Committee composed of non-employee independent directors. alignment. | Limited |
Our Compensation Committee is advised by an independent consultant who reports directly to the Compensation Committee and provides no other services to the Company or management. | We consider the perquisites and personal benefits that we offer to our executives in India to be customary benefits which allow us to remain competitive for top talent. | |||||||||||
| | | | | | | | | | | | |
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EXECUTIVE COMPENSATION
| | | | | | | | | | | | |
Mitigate Risks: The mix and design of our compensation programs |
No |
| | | | | | | | | | | | |
Maintain a Clawback | No Hedging: We maintain a policy in which the following persons are prohibited from engaging in hedging transactions involving our shares and other securities: our directors and their secretaries and other assistants; our executive officers and their secretaries and other assistants; our employees in the accounting, finance and legal departments; the members and permanent invitees of our operating and executive committees; and all of our vice president level 2 and 3 officers (whom we refer to collectively as "Reporting Persons"). For this purpose, "hedging" refers to any strategy to offset or reduce the risk of price fluctuations in our shares or other securities or to protect, in whole or in part, against declines in the value of our shares or other securities. This prohibition thus applies to all transactions in derivative securities based on our stock such as other securities, including puts, calls, swaps and collar arrangements. |
| | | | | | | | | | | | |
Maintain a Robust Stock Ownership | No Pledging: Under our policy mentioned above, Reporting Persons (as defined above) are only permitted to pledge shares of our stock that exceed those required to be owned under our Stock Ownership Policy described above. | |||||||||||
We maintain a similar stock ownership policy for our non-employee directors that requires directors to maintain stock ownership of at least five times their respective annual retainers. Directors have five years from their appointment date to attain the required stock ownership levels. |
As of December 31, 2020, all covered executives and directors | ||||||||||||
| | | | | | | | | | | | |
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EXECUTIVE COMPENSATION
Overview of compensation policiesCompensation Policies and philosophies
Philosophies
We believe that theour long-term success of companies that provide outsourcing, transformation and analytics services globally is linked to theirour ability to recruit, train, motivate and retain employees at every level. There is significant competitive pressure in our industry for qualified managers with a track record of achievement. It is critical that we recruit, train, motivate and retain highly talented individuals at all levels of the organization who are committed to our core values of innovation, collaboration, excellence, integrity and mutual respect. We believe that our executive compensation programs are integral to achieving this end.
Our Compensation Committee bases its executive compensation programs on the following objectives, which guide us in establishing all of our compensation programs:
Our
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EXECUTIVE COMPENSATION
Compensation Committee’s Processes
Process: Roles and Responsibilities
Our Compensation Committee has established a number of processes to assist it in ensuring that our executive compensation programs are achieving their objectives. Among thoseOur Compensation Committee, our management and our independent compensation consultant are the following:each engaged in these processes, as described in greater detail below.
| | | | |
Company Performance Compensation Committee | Establishment of Performance Measures At the beginning of each year, or the end of the prior year, our Compensation Committee Assessment of At the end of the |
We generally pay bonuses at target when we achieve the established financial measures that are set forth in our annual operating plan and personal performance goals, as described below. These measures reflect targets that are intended to encourage stretch performance.
| | | ||
Individual Performance Board of Compensation and Nominating and Governance Committees, and Vice Chairman and CEO | The evaluation of an |
For Messrs. Chhibbarsalary for each of our named executive officers.
Assessment of Vice Chairman and CEO Performance
For Mr. Kapoor, our board of directors reviews and provides feedback on a self-evaluation prepared by Mr. Kapoor. Our Chairman then discusses the consolidated feedback from the board of directors with our Compensation and Nominating and Governance Committees. Once all directors have given feedback on Mr. Kapoor's performance, we conduct a comprehensive discussion of the full board of directors on Mr. Kapoor's performance, leadership accomplishments and overall competence to evaluate the achievement of established objectives.
Assessment of Performance for All Other NEOs and Executive Officers
For all other NEOs and Miglani, our Compensation Committee receives a performance assessment and compensation recommendation from our Vice Chairman and CEO. The performance assessments are based on each of our named executive officer’s respective self-evaluations and subsequent performance appraisals conducted by our Vice Chairman and CEO. Our Compensation Committee reviews the performance assessments of these executive officers with our Vice Chairman and CEO, and evaluates the achievement of established objectives by each executive officer and his or her business line (if applicable), as well as the executive officer’s contribution to our
performance, leadership accomplishments and overall competence. In determining the numerical performance rating that translates into specific payouts under our incentive bonus program and also influences any changes in base salary, our Compensation Committee may exercise its judgment based on our board of directors’ interactions with such executive officers.
Our Compensation and Nominating and Governance Committees reviews the performance assessments with Mr. Kapoor, and evaluates the achievement of established objectives by each named executive officer and his business line, if applicable, and |
directors.
| | | ||
The compensation data for our peer group is compiled directly by Cook & Co., the independent consultant to the Compensation Committee. The peer group compensation data was supplemented by global general industry and technology industry survey data. The data from the surveys was scaled to our size by Cook & Co. based on revenues or corresponding revenue ranges as provided by the surveys. While the Compensation Committee reviewed and considered the data provided by these surveys, it did not consider or review the compensation paid to executives at the component companies included within such surveys and did not use this information or any other data as a benchmark to set executive compensation for fiscal year 2015.
Our Compensation Committee uses the compensation data to obtain a general understanding of current market practices, so it can design our executive compensation program to be competitive. Market data is not used exclusively, but rather as a point of reference to draw comparisons and distinctions. The Compensation Committee also takes into account an executive officer’s job responsibilities, performance, qualifications and skills in determining individual compensation levels.
Compensation Compensation Committee | Our Compensation Committee periodically reviews related matters such as succession planning and management, evaluation of management performance, changes in the scope of managerial responsibilities, and consideration of the business environment, and considers such matters in making compensation decisions. The Compensation Committee also takes into account an executive officer's job responsibilities, performance, qualifications and skills in determining individual compensation levels. | |||||
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EXECUTIVE COMPENSATION
| | | | |
Independent Compensation Consultant | For • collecting and evaluating external market data regarding executive compensation and performance, • selecting peer group companies, • reviewing the proxy statement, and • advising the Compensation Committee on developing trends and best practices in executive Other than performing these consulting services, FW Cook | |||
| | | | |
Peer Market Data Compensation Committee and | We review peer compensation data at the beginning of the year (or the end of the prior year) in order to set compensation for each year. At the time compensation decisions were made for our U.S.-based and other senior executive officers in 2020, our Compensation Committee reviewed publicly available compensation data for companies that are engaged in business and technology services like us taking into account whether the companies had market capitalizations, geographic locations, or annual revenues similar to ours. The companies that comprised our peer group for 2020 were as follows: Blackbaud, CoreLogic, CSG Systems International, EPAM Systems, Genpact, Guidewire, Sykes Enterprises, Virtusa, and WNS Holdings. Management also separately engaged Aon Consulting in 2019 for the purpose of providing a survey of compensation data (the parameters of which were not prepared by Aon Consulting) for individuals in our global industry holding analogous positions to our executive officers. While the Compensation Committee reviewed and considered the data provided by these surveys, it did not consider or review the compensation paid to executives at the component companies included within such surveys and did not use this information or any other data as a definitive benchmark to set executive compensation for fiscal year 2020. Our Compensation Committee reviews compensation information provided by FW Cook and other third party data in order to evaluate each executive's base pay, incentive bonus and equity incentives when changes in compensation are considered. Compensation decisions are designed to promote our fundamental business objectives and strategy. Our Compensation Committee uses the compensation data to obtain a general understanding of current market practices, so it can design our executive compensation program to be competitive. Market data is not used exclusively, but rather as a point of reference to draw comparisons and distinctions. | |||
| | | | |
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EXECUTIVE COMPENSATION
Components of Executive Compensation for 2015
2020
For 2015,2020, the compensation of executive officers consisted of the following five primary components:
Compensation Component | Description | Objectives | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | ||
Base Salary |
| Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skill set and market value. |
| |||||||
| | | | | | | | | ||
Annual Incentives |
| "At-risk" compensation earned based on performance measured against pre-established annual goals.
|
| Incentivize executives to achieve annual goals that ultimately contribute to long-term company growth and stockholder return. | ||||||
| | | | | | | | | ||
Long-Term Incentives |
|
|
| | | | | | |||
Other Benefits |
| Broad-based benefits provided to company employees (e.g., health and group insurance), a retirement savings plan and other personal benefits where appropriate. |
| Provide a total compensation package that is competitive with the marketplace and addresses unique needs, especially for overseas executives. | ||||
| | | | | | | | |
Severance and Change in Control Protections |
|
| ||||||
| | | | | | | | |
Compensation Mix
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Consistent with our compensation philosophy, our compensation program balances base salary, short-term incentive and long-term incentive opportunities provided to our executive officers. The following charts illustrate the mix
EXECUTIVE COMPENSATION
As illustrated by the charts below, the majority of compensation that may be earned by our named executive officers is tied to the achievement of financial performance metrics (annual performance bonuses and PRSUs) or fluctuates with the underlying value of our common stock (RSUs).
|
|
Detailed Review of Compensation Components
Base Salary
As discussed above, we provide our executive officers fixed compensation commensurate with their performance, experience, responsibilities, skill set and market value. This attracts and retains an appropriate caliber of talent for the position and provides a base wage that is not subject to our performance risk. In setting base salaries for 2015,2020, our Compensation Committee considered:
| | | | |
Individual Performance | The degree to which the executive met and exceeded expectations. | |||
| | | | |
Market Data | ||||
Geographical and market data to test reasonableness of compensation. | ||||
| | | | |
Overall Compensation Mix | ||||
Senior employees should have a greater portion of their compensation tied to increasing stockholder value. | ||||
| | | | |
Upon completing its review and as shown in the table below,Although the Compensation Committee determined that it was appropriateapproved modest increases to change Mr. Kapoor’s base salary in recognition of his many individual accomplishments and the Company’s performance. In addition, the Compensation Committee determined to increase theour named executive officers' base salaries to be effective April 1, 2020, the named executive officers agreed to defer these increases due to the uncertainly caused by the COVID-19 pandemic. The increases, therefore, did not come into effect during the 2020 fiscal year. Further, the fixed compensation amounts for each of Messrs. ChhibbarBagai and Bagai due to their individual contributions and the Company’s performance. Mr. Schweppe’s and Mr. Miglani’s salaries remained the same as their 2014 salary, which were set late that year. The fixed compensation paid to Messrs. Chhibbar and Bagai is paid in Indian Rupees and we have included the percentage increase with respect to their fixed compensation in their home currency (INR). Further, these amountsBhalla cover not only base salary, for Messrs. Chhibbar and Bagai, but also amounts available as a travel allowance, an automobile allowance, a housing allowance, a medical allowance and a cash supplementary allowance, consistent with compensation practices in India.
In May 2020, the Company announced that, due to the uncertainty caused by the COVID-19 pandemic and in order to retain flexibility, the Company's executive management team recommended to the Compensation Committee and the Compensation Committee accepted, salary reductions of 30% or 50% for each of the Company's named executive officers. As a result, the base salary for Mr. Kapoor, was temporarily reduced by 50% and the base salary for the Company's other named executive officers was temporarily reduced by 30% from May 1, 2020 through August 31, 2020.
Name | 2014 Base Salary / Annual Fixed Compensation | 2015 Base Salary / Annual Fixed Compensation (Effective April 1, 2015) | % Increase / Decrease | |||||
Rohit Kapoor | $ | 565,000 | $ | 600,000 | (1) | 6.2% | ||
Vishal Chhibbar | $ | 298,387 | $ | 309,376 | 3.7% (5.4% INR) | |||
Pavan Bagai | $ | 322,581 | $ | 337,934 | 4.8% (6.5% INR) | |||
Nalin Miglani | $ | 400,000 | $ | 400,000 | 0.0% | |||
Henry Schweppe | $ | 450,000 | $ | 450,000 | 0.0% |
Each named executive officer agreed that their base salary reduction would not constitute a termination for "good reason" within the meaning of such named executive officer's employment agreement.
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EXECUTIVE COMPENSATION
The following table shows the 2019 and 2020 fixed compensation, the approved fixed compensation of our named executive officers for 2020, including the increases that would have taken effect on April 1, 2020 and without adjusting for the salary reductions mentioned above, the actual earned fixed compensation of our named executive officers in 2020, and the overall difference between our named executive officers' actual earned fixed compensation and what they would have earned in 2020 but for the base salary increase deferrals and temporary base salary reductions.
Name | | 2019 Base Salary / Annual Fixed Compensation ($) | | 2020 Base Salary / Annual Fixed Compensation ($)(7) | | 2020 Approved Base Salary / Fixed Compensation ($)(8) | | 2020 Actual Earned Base Salary / Fixed Compensation ($)(9) | | 2020 Overall Base Salary / Fixed Compensation Reduction ($) | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Rohit Kapoor | 720,000 | 720,000 | 742,541 | 599,016 | 143,525 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Maurizio Nicolelli(1) | — | 450,000 | 432,172 | 384,283 | 47,889 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Pavan Bagai(6) | INR26,000,000 | (2) | INR26,000,000 | (3) | INR27,502,732 | (10) | INR23,400,000 | (11) | INR4,102,732 | (12) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Nalin Miglani | 450,000 | 450,000 | 463,525 | 404,631 | 58,893 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Vikas Bhalla(6) | INR22,000,000 | (4) | INR22,000,000 | (5) | INR23,878,415 | (13) | INR19,800,002 | (14) | INR4,078,413 | (15) | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Samuel Meckey | 425,000 | 425,000 | 437,773 | 382,152 | 55,622 | |||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Mr. Kapoor’sNicolelli joined us on February 3, 2020. As such, he was not eligible for a base salary along withincrease in 2020 and this table shows his employment agreement, becameapproved and actual earned base salary prorated from his start date.
(2) Equivalent to $364,248, converted at 71.38 INR to 1 USD, which was the exchange rate on December 31, 2019.
(3) Equivalent to $355,848, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(4) Equivalent to $308,210, converted at 71.38 INR to 1 USD, which was the exchange rate on December 31, 2019.
(5) Equivalent to $301,102, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(6) The annual fixed compensation paid to Messrs. Bagai and Bhalla is in Indian rupees (INR).
(7) The Compensation Committee approved base salary increases in February 2020; however, as noted above these increases were deferred and did not come into effect during the 2020 fiscal year. The following base salary or annual fixed compensation amounts were approved, but not implemented: $750,000 for Mr. Kapoor; INR 28,000,000 for Mr. Bagai; $468,000 for Mr. Miglani; INR 24,500,000 for Mr. Bhalla; and $442,000 for Mr. Meckey.
(8) Base salary increases were to be effective Januaryon April 1, 2015.2020.
(9) Includes the deferral of the approved 2020 base salaries, as well as the reduction of Mr. Kapoor's base salary by 50%, and our other named executive officers' base salaries by 30% from May 1, 2020 through August 31, 2020.
(10) Equivalent to $376,415, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(11) Equivalent to $320,263, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(12) Equivalent to $56,152 converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(13) Equivalent to $326,811, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(14) Equivalent to $270,992, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(15) Equivalent to $55,819, converted at 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
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EXECUTIVE COMPENSATION
Incentive Bonus
We have established an annual incentive bonus program in order to align our executive officers’officers' goals with our performance targets for the current year and to encourage meaningful contributions to our future financial performance. Our Compensation Committee approved the framework of our incentive bonus program in December 2014late 2019 for the year 20152020 for bonuses payable in respect of 20152020 performance. Under the program, bonus target amounts, expressed as a percentage of base salary or
annual fixed compensation, are established for participants at the beginning of each year unless their employment agreements contain different terms. Funding of potential bonus payouts for the year are determined by our financial results for the year relative to predetermined performance measures and may be increased or decreased depending upon the executive’sour assessment of each named executive officer's performance relative to his predetermined individual performance against his performance goals. If our performance falls short of target, our aggregate funding of the annual cash bonus incentive pool declines. If we do not achieve a minimum threshold for the established financial performance objectives, then the bonus pool is not funded for that particular objective. AtAlthough the end of the performance period, our Compensation Committee has not historically done so, it has the discretion under the 2018 Plan to adjust an award payout from the amount yielded by the formula.
formula at the end of the performance period for reasons such as the effect of changes in laws or regulatory rules, acquisitions or divestitures, extraordinary accounting items, foreign exchange gains or losses, and/or any specific unusual or non-recurring events. As discussed in greater detail below, the Compensation Committee utilized this discretion for the year 2020 in light of the unanticipated impact of the COVID-19 global pandemic.
Our Compensation Committee considered the following when establishing the awards for 2015:2020:
Bonus Targets. Bonus targets were established based on job responsibilities and comparable market data. Our objective was to set bonus targets such that total annual cash compensation was within the broad middle range of market data and a substantial portion of that compensation was linked to our performance. Consistent with our executive compensation policy, individuals with greater job responsibilities had a greater proportion of their total compensation tied to our performance. During 2020, our Compensation Committee established the following bonus targets (expressed as a percentage of base salary or annual fixed compensation) as well as maximum bonus targets for each named executive officer.
Name | Bonus | Bonus | ||||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
310% of base salary | ||||||||
| | | | | | | | |
Maurizio Nicolelli | 155% of base salary | |||||||
| | | | | | | | |
Pavan Bagai | 75% of annual fixed compensation | 155% of annual fixed compensation | ||||||
| | | | | | | | |
Nalin Miglani | ||||||||
75% of base salary | 155% of base salary |
| | | | | | |
Vikas Bhalla |
Name | Company-Wide Performance(1) | Individual Performance | Business Line or Other Company Performance | |||
Rohit Kapoor | 80% | — | 20% | |||
Vishal Chhibbar | 60% | 20% | 20% | |||
Pavan Bagai | 80% | — | 20% | |||
Nalin Miglani | 60% | 20% | 20% | |||
Henry Schweppe | 80% | — | 20% |
75% of annual fixed compensation | 154% of annual fixed compensation | |||||||
| | | | | | | ||
Samuel Meckey | 75% of base salary | 154% of base salary | ||||||
| | | | | | | | |
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Performance Measures. Our executives were eligible to earn annual bonuses based on their achievement of company-wide performance metrics, business line or other company performance metrics and individual performance, as described in the tables below
Name | | Company-Wide Performance(1) | | Individual Performance | | Business Line or Other Company Performance(2) | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |
Rohit Kapoor | 65% | 15% | 20% | |||||||||
| | | | | | | | | | | | |
Maurizio Nicolelli | 60% | 20% | 20% | |||||||||
| | | | | | | | | | | | |
Pavan Bagai | 65% | 15% | 20% | |||||||||
| | | | | | | | | | | | |
Nalin Miglani | 60% | 20% | 20% | |||||||||
| | | | | | | | | | | | |
Vikas Bhalla | 50% | 20% | 30% | |||||||||
| | | | | | | | | | | | |
Samuel Meckey | 50% | 20% | 30% | |||||||||
| | | | | | | | | | | | |
(1) Based 30% on the Company's Adjusted EPS goal, 40% on the Company's revenue goal, and 30% on the Company's adjusted operating profit margin (AOPM) for all employees whose incentive bonus is linked to Company-wide financial performance, including our named executive officers.
(2) For 2015,Messrs. Kapoor, Bagai, Nicolelli and Miglani, based on aggregate Revenue, Adjusted EPS, and AOPM for specific business units. For Messrs. Bhalla and Meckey, based on aggregate revenue and business operating income for specific business units. Business operating income is a component for measuring business unit performance that is computed as the business unit's gross margin less direct operating expenses.
In 2020, the Compensation Committee believed Messrs. Kapoor’s, Bagai’s and Schweppe’s annual bonus should be 80% based on the Company’s Adjusted EPS and revenues goals and 20% based on the aggregated performance of all Business Units Revenue and Adjusted EPS due to the nature of their positions as Vice Chairman and CEO, President and Chief Operating Officer, and President, Global Business and Marketing respectively. The Committee believed it was importantcontinued to set the business line and other Company performance goals as well as the individual performance goals described above for Messrs. Chhibbar and Miglaniall named executive officers to ensure the executives were properly focused on both the Company’sCompany's Adjusted EPS, revenue, and revenueAOPM goals, aggregate of business unitsunits' performance on revenue and Adjusted EPS goals and other areas of performance that are unique to their positions within the organization. The Compensation Committee believes achievement of these performance metrics will drive our business and, in turn, lead to increased stockholder value.
Adjusted EPS Goals | Revenue Goals | |||
% of Adjusted EPS Achieved Compared to Target Goal | % of Target Portion Funded | % of Revenues Achieved Compared to Target Goal | % of Target Portion Funded | |
Less than 90% | 0% | Less than 90% | 0% | |
At 90% | 25% | At 90% | 25% | |
From 90% to 100% | Linear interpolation from 25% to 100% | From 90% to 100% | Linear interpolation from 25% to 100% | |
At 100% | 100% | At 100% | 100% | |
From 100% to 110% | Linear interpolation from 100% to 200% | From 100% to 110% | Linear interpolation from 100% to 200% | |
Above 110% | 200% | Above 110% | 200% |
In 2015,
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EXECUTIVE COMPENSATION
Determination of Financial Performance Achievement:
For 2020, our Compensation Committee established an Adjusted EPS target of $1.96$3.65 (18.12% higher than our actual Adjusted EPS for the prior year and 14.96% higher than the prior year's target performance), a revenue target of $592 million. $1.075 billion (8.44% higher than our actual revenue for the prior year and 8.70% higher than the prior year's target performance), and an AOPM target of $165.40 million or 15.4%. 2020 was the first year that the AOPM metric was used. As shown below, the portion of incentive bonus payments that were subject to these financial performance measures could have ranged from zero to 210% of target depending on the achievement of the performance goals:
Performance Targets: Adjusted EPS ($3.65); Revenue ($1.075 billion); and AOPM ($165.40 million)
| | | | |
% of Performance Achieved Compared to Target Goal | % of Target Portion Funded | |||
| | | | |
Less than 90% | 0% | |||
| | | | |
At 90% | 10% | |||
| | | | |
90% to 100% | Linear interpolation from 10% to 100% | |||
| | | | |
At 100% | 100% | |||
| | | | |
100% to 105% | Linear interpolation from 100% to 160% | |||
| | | | |
105% to 110% | Linear interpolation from 160% to 210% | |||
| | | | |
Above 110% | 210% | |||
| | | | |
Based on our performance during the 20152020 fiscal year, we achieved 100%99.20% of our Adjusted EPS target and 102.2%(resulting in funding of 92.80%), 89.32% of our revenue target.
target (resulting in funding of 0%), and 95.26% of our AOPM target (resulting in funding of 57.37%) for a weighted funding of 45.1%. Notwithstanding these funding percentages, as described below, the Compensation Committee awarded incentive bonus payments in light of our executives' individual and collective extraordinary contributions during the unique circumstances of 2020.
The bonus pool funding for employees whose bonuses are tied to the performance of specific business lines is determined by targets established for such businesses by our Compensation Committee.
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EXECUTIVE COMPENSATION
Determination of Individual Performance Measure Achievement:
Our named executive officers earn a portion of their respective annual incentive bonuses based on the achievement of individual performance measures that are designed to balance the attention of the officer between the achievement of near-term objectives that improve specific processes or performance metrics and long-term objectives for us. For more information on the process, roles and responsibilities for determining individual performance measure achievement, please see "Compensation Process: Roles and Responsibilities" on page 70. Below is a summary of each named executive officer's individual performance measures, and a summary of the achievements and accomplishments toward meeting those performance measures:
Named Executive Officer | Individual Performance | Individual Performance Achievement | ||||||
---|---|---|---|---|---|---|---|---|
| | | | | | | | |
agenda
Build digital strategy and organization
Improve return on invested capital • Strengthen succession planning • Enhance ESG focus | ||||||||
• Acceleration of digital efforts • Excellent focus on ROIC and active pursuit of investment opportunities • Strong progress on development of executive team • Substantial improvement in ESG focus and reporting | ||||||||
| | | | | | | | |
Maurizio Nicolelli | • Improve reporting processes • Improve return on capital • Develop long-term M&A stratgey • Drive profitable growth agenda | • Led finance team through tumultuous year with frequent changes to operating plan due to the COVID-19 pandemic • Significantly enhanced our stock buy back program to effectively deploy capital • Drove the focus on clearly articulating strategic priorities for M&A assets | ||||||
| | | | | | | | |
Pavan Bagai | • Drive revenue growth and increase profitability • Build digital strategy and organization • Continue focus on risk and compliance culture | • Drove cost reductions in technology, facilities, and logistics and improved productivity • Led business recovery and stabilization during COVID-19 pandemic • Developed digital strategy • Effectively managed information security and related processes | ||||||
| | | | | | | | |
Nalin Miglani | • Focus on company culture • Expand and drive digitial HR transformation • Drive effective recruitment of key employees | • Strong pivot and leadership to address COVID-19 challenges, including remote working and employee safety • Increased self-learning by employees through digital tools • Enabled digital hiring, onboarding and training and increased social media visibility • Significantly increased communication with employees on digital platforms | ||||||
| | | | | | | | |
Vikas Bhalla | • Raise insurance business profitability • Create and implement innovative data and analytics solutions
| • Strong momentum and • Led the design and formulation of a provide greater resiliency and flexibility in the face of the COVID-19 pandemic and beyond
Improved profitability and return on invested capital for insurance business | ||||||
| | | | | | | | |
Samuel Meckey | • Develop strong sales pipeline and grow strategic accounts • Improve return on invested capital for healthcare business • Drive tighter integration of | • Notwithstanding the material affects of the COVID-19 pandemic, grew healthcare significantly over a one-year period with impressive pipeline growth • Improved margin profile of healthcare business
Successfully developed and launched the EXL Health Brand | ||||||
| | | | | | | | |
Mr. Kapoor made performance assessments
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EXECUTIVE COMPENSATION
Actual Bonus Payments:
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EXECUTIVE COMPENSATION
Name | | Actual Incentive Bonus Awarded ($)(1) | | Incentive Bonus Without Adjustment ($)(1) | | Alternative Scenario Incentive Bonus Without COVID-19 Effects ($)(1)(2) | |||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | |
Rohit Kapoor | 810,000 | 610,318 | 927,456 | ||||||||||
| | | | | | | | | | | | | |
Maurizio Nicolelli | 243,097 | 187,212 | 276,678 | ||||||||||
| | | | | | | | | | | | | |
Pavan Bagai | 200,164 | 162,830 | 241,200 | ||||||||||
| | | | | | | | | | | | | |
Nalin Miglani | 253,125 | 205,059 | 298,216 | ||||||||||
| | | | | | | | | | | | | |
Vikas Bhalla | 169,370 | 138,203 | 179,814 | ||||||||||
| | | | | | | | | | | | | |
Samuel Meckey | 239,063 | 322,414 | 401,042 | ||||||||||
| | | | | | | | | | | | | |
(1) The exchange rate used for the bonus conversion from Indian rupees to U.S. dollars for Messrs. Bagai and Bhalla was 73.065 INR to 1 USD, which was the exchange rate on December 31, 2020.
(2) Uses the midpoint of the individual performance funding range.
Under our equity compensation program, our executive officers received restricted stock units under the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (the “2015 Plan”). We awarded restricted stock units to all of our named executive officers in the portions shown below.
The percentage of Relative TSR-Linked PRSUs earned will be determined based on straight-line interpolation to the extent the Company’s TSR falls in between the 20th and 80th percentiles, as per the chart below:
TSR Peer Group Percentile | Percentage of Relative TSR-Linked PRSUs Earned | |
80.0 | 200% | |
50.0 | 100% | |
20.0 | 0% |
The table below shows the amount of Time-Vested and Performance-Vested RSUs our Compensation Committee awarded our named executive officers in 2015. In general, the Compensation Committee believes that the size of the award granted to an executive officer should increase based on the executive officer’s level of responsibility within the Company.
Name | Time Vested RSUs | Revenue-Linked | Relative TSR- Linked PRSUs | Stock Price Performance Award(1) | ||||
Rohit Kapoor | 37,500 | 18,750 | 18,750 | 100,000 | ||||
Vishal Chhibbar | 7,500 | 3,750 | 3,750 | — | ||||
Pavan Bagai | 12,500 | 6,250 | 6,250 | — | ||||
Nalin Miglani | 6,000 | 3,000 | 3,000 | — | ||||
Henry Schweppe | 7,500 | 3,750 | 3,750 | — |
The Committee continues to believe that long-term equity awards provide employees with the incentive to stay with us for longer periods of time, which in turn, provides us with greater stability as we grow. These incentives foster the long-term perspective necessary for continued success in our business because the value of the awards is directly linked to long-term stock price performance, and they ensure that our executive officers are properly focused on stockholder value.
Moreover, the Committee favors restricted stock unit awards as these awards offer executives the opportunity to receive shares of our common stock on or shortly following the date that the restrictions lapse. Such awards serve both to reward and retain executives because value is linked to the price of our stock on the date that the restriction lapses, and the executive must generally remain in employment through the date that the restrictions lapse. Restricted stock unit awards provide a significant degree of alignment of interests between our executives and stockholders.
The Committee also believes that the mix between Time-Vested RSUs and Performance-Vested RSUs provides an appropriate balance between incentivizing our executives to continue their employment with the Company and to ensure they are focused on long-term financial performance and generating stockholder value, which will enable them to realize additional compensation.
Finally, restricted stock units are potentially less dilutive to stockholders’stockholders' equity than stock options because restricted stock awards are full value awards, and our Compensation Committee can award fewer shares than an equivalent value of stock options.
Mr. Kapoor’s Stock Price Performance Award80
EXECUTIVE COMPENSATION
Fiscal Year 2020 Awards
Under our equity compensation program, our executive officers received restricted stock units under the 2018 Omnibus Incentive Plan approved by the Company's stockholders at the annual meeting of stockholders held in June 2018 (the "2018 Plan"). We awarded restricted stock units to nearly all of our named executive officers in the proportions shown above,below.
50% | | + | | 25% | | + | | 25% | | = | | TOTAL |
Time-Vested RSUs | | | Revenue-Linked RSUs | | | Relative TSR-Linked PRSUs | | | LTI Award |
The table below shows the amount of Time-Vested and Performance-Vested RSUs our Compensation Committee awarded our named executive officers in 2020. In general, the Compensation Committee believes that the size of the award granted to an executive officer should increase based on the executive officer's level of responsibility within the Company.
Name | | | | Time-Vested RSUs | | | | Revenue-Linked PRSUs | | | | Relative TSR-Linked PRSUs | | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | |||||||||
Rohit Kapoor(1) | | | | 23,520 | | | | | 21,330 | | | | | 21,330 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Maurizio Nicolelli | | | | 10,263 | (2) | | | | 2,183 | | | | | 2,182 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Pavan Bagai | | | | 10,045 | | | | | 5,023 | | | | | 5,022 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Nalin Miglani | | | | 6,995 | | | | | 3,498 | | | | | 3,497 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Vikas Bhalla | | | | 8,300 | | | | | 4,150 | | | | | 4,150 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Samuel Meckey | | | | 6,565 | | | | | 3,283 | | | | | 3,282 | | | ||||||
| | | | | | | | | | | | | |
(1) In 2020, Mr. Kapoor received a one-time Stock Price Performance Award of 100,000was awarded restricted stock units of which approximately 65% were Performance-Vested RSUs, and the remainder were Time-Vested RSUs.
(2) This amount includes 5,898 Time-Vested RSUs that were granted to Mr. Nicolelli in connection with his new employment agreement. Provided thatFebruary 2020 hire. Accordingly, Mr. Kapoor remains continuously employed byNicolelli's Time-Vested RSUs accounted for more than 50% of this total LTI award in 2020.
Average Stock Price as of December 31, 2017(1) | Vested or Earned Percentage | |
$50.00 or more | 200% | |
$37.50 | 100% | |
Less than $37.50 | 0% |
The threshold/target stock priceachievement of $37.50 reflects a 10% annual growth ratethreshold Company revenues against an aggregate revenue target over the grant's three-year performance period from December 31, 2014 ($28.10)of January 1, 2020 to December 31, 2017.2022 and continuous employment through December 31, 2022 — we call these awards "Revenue-Linked PRSUs." The maximum stock priceultimate amount of $50.00 reflectsRevenue-Linked PRSUs that a 21% annual growth rate. Ifrecipient earns may be up to 200% of the Company’s average stock pricetarget award of Revenue-Linked RSUs. To the extent the Company's revenue falls in between $37.50 and $50.00,the outlined target achievements, the percentage of Revenue-Based RSUs earned
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EXECUTIVE COMPENSATION
will be determined based on straight line interpolation. The chart below sets forth the revenue target achievement thresholds and corresponding funding percentage:
Revenue Target Achievement | Funding Percentage | |||
---|---|---|---|---|
| | | | |
110% or more | 200% | |||
| | | | |
98% to 102% | 100% | |||
| | | | |
90% or less | 0% | |||
| | | | |
The percentage of Relative TSR-Linked PRSUs earned will be determined based on straight-line interpolation.interpolation to the extent the Company's TSR falls in between the 20th and 80th percentiles, as per the chart below:
We believe this Stock Price Performance Award further aligns Mr. Kapoor’s interests with those
TSR Peer Group Percentile | | Percentage of Relative TSR-Linked PRSUs Earned | ||
---|---|---|---|---|
| | | | |
80.0 or more | 200% | |||
| | | | |
65.0 | 150% | |||
| | | | |
50.0 | 100% | |||
| | | | |
35.0 | 50% | |||
| | | | |
20.0 or less | 0% | |||
| | | | |
Payout of Awards Granted in Prior Fiscal Years
This was the award based on specific increasesthird and final performance year for the 2018 performance-based restricted stock units. We achieved 99.89% of the revenue target for the revenue-linked restricted stock units resulting in 100% of target funding of those grants. The Company's TSR performance was at the 46.51 percentile amongst its peer group, resulting in the Company’sexecutives earning 88.37% of the 2018 relative TSR-linked restricted stock price.units pursuant to the terms of the original
82
EXECUTIVE COMPENSATION
grant. No adjustments were made to the 2018 performance-based restricted stock units — or the outstanding 2019 and 2020 performance-based restricted stock units — to account for the impact of the COVID-19 pandemic in the 2020 fiscal year.
New Hire Awards for Mr. Nicolelli
In connection with his appointment, Mr. Nicolelli and the Company entered into an employment agreement, under which Mr. Nicolelli received a joining bonus of $225,000, payable in two installments, and an initial grant of restricted stock units of the Company's common stock with a fair market value of $425,000, which will vest in four equal, annual installments beginning on the first anniversary of the grant date. The bonuses and grants were in part to address lost compensation Mr. Nicolelli would realize as a result of leaving his prior employment.
We offer employee benefits coverage in order to:
The benefits available for all U.S. employees include customary medical and dental coverage, disability insurance and life insurance. In addition, our 401(k) plan provides a reasonable level of retirement income reflecting employees’employees' careers with us. A number of our U.S. employees, including our U.S.-based named executive officers, participate in these plans. The cost of employee benefits is partially borne by our employees, including our named executive officers. Our named executive officers in India, Mr.Messrs. Bagai (and prior to his 2016 relocation to the United States, Mr. Chhibbar), isand Bhalla, are eligible to participate in the Company’sCompany's pension benefit, health and welfare and fringe benefit plans otherwise available to executive employees stationed in India.
We generally do not provide significant perquisites or personal benefits to executive officers other than our Vice Chairman and CEO and our executive officers stationed in India. Our Vice Chairman and CEO is provided a limited number of perquisites whose primary purpose is to minimize distractions from his attention to our important initiativeswhich we believe are reasonable and consistent with market trends, which are intended to be competitive.part of a competitive overall compensation program. A discussion of the benefits provided to our Vice Chairman and CEO is provided under “Employment Agreements”"Employment Agreements" beginning on page 46.89.
Risk and Compensation Policies
Our Compensation Committee has taken into account its discussions with management and FW Cook regarding our compensation practices and has concluded that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company. This conclusion was based on the features of our compensation programs, practices and policies set forth under "Executive Compensation Program, Practices and Policies" on page 67.
Severance and Change-in-Control Benefits
Each named executive officer is (or was, in the case of Mr. Schweppe) party to an employment agreement or letter that sets forth the terms of his or her employment, including compensation, which was negotiated through arms’arms'-length contract negotiations. Under these employment agreements or letters, we are obligated to pay severance or other enhanced benefits upon termination of their employment. A discussion of the severance and other enhanced benefits provided to our named executive officers is provided under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.
93.
We have provided change-in-control severance protection for certainsome of our executive officers, including our named executive officers. Our Compensation Committee believes that such protection is intended to preserve employee
83
EXECUTIVE COMPENSATION
morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control. In addition, for executive officers, the program is intended to align executive officers’officers' and stockholders’stockholders' interests by enabling executive officers to consider corporate transactions that are in the best interests of our stockholders and other constituents without undue concern over whether the transactions may jeopardize the executive officers’officers' own employment.
Senior executive officers, including our named executive officers, have enhanced levels of benefits based on their job level, seniority and probable loss of employment after a change in control. We also consider it likely that it will take more time for senior executive officers to find new employment.
Revised Employment Agreement for Mr. Kapoor
Looking Forward to 2016
Following our redesignIn August 2020, we revised the terms of our Vice Chairman and CEO's employment with our Company by entering into a second amended and restated employment agreement that became effective August 3, 2020. Except as stated herein, these terms are substantially similar to those in effect during the beginning of our 2020 fiscal year and are discussed in greater detail on page 89. The agreement provides for (1) an employment term that extends until Mr. Kapoor's termination or resignation (previously a three year term subject to renewal, unless terminated earlier), (2) updates, to reflect levels currently in effect, to Mr. Kapoor's base salary ($750,000, subject to his 50% base salary reduction and deferment of 2020 increments due to the COVID-19 pandemic), bonus (target of 150% and maximum payout of 310% of base salary) and equity ($4,925,000 baseline), and (3) associated changes to reflect the removal of the employment term and the addition of certain retirement benefits upon Mr. Kapoor's termination of his employment after the age of 60, including 27 months of continued equity vesting for outstanding awards.
For fiscal year 2021, we amended the annual bonus program by removing the business unit component to further encourage a focus on enterprise initiatives and performance. For each named executive officer, the 2021 annual bonus program will be weighted 75% on Company performance and 25% on individual performance. Going forward, any relevant business unit performance may still be considered as a part of a named executive officer's individual component assessment.
In response to the continuing COVID-19 pandemic, for fiscal year 2020, we also revised our long-term equity incentives in 2014,incentive program to remove the revenue performance metric because the current uncertainty and market volatility makes it difficult to predict a three-year revenue target. As a result, the PRSUs are based solely on TSR performance as compared to a pre-determined set of peer companies. Our Compensation Committee determinedbelieves TSR continues to continue these programsprovide an effective metric as described above in fiscal 2016, subject of course, to new performance goals. Effective April 1, 2016,all companies are impacted by the Compensation Committee approved a modest increase in base salary for certain of our current executive officers.
For the Relative TSR-Linked PRSUs granted in 2016, the Company included a negative TSR cap identicalunprecedented environment. This decision was only made with respect to the cap first implemented in 2015. Under2021 grants and is not, at this time, intended to reflect a permanent change to the negative TSR cap, if the total stockholder return is negative over the course of the three year performance period, no named executive officer may receive greater than 100% funding of the TSR-Linked PRSUs.long-term equity incentive program.
Subsequent to fiscal year 2015, we entered into a new employment agreement with Mr. Chhibbar, effective as of January 1, 2016. Under the new agreement, Mr. Chhibbar’s annual base salary will be increased to $400,000, subject to adjustments by the Board as permitted in the agreement, and his target annual cash bonus opportunity will be 60% of his base salary with a maximum of 120% of his base salary. Mr. Chhibbar will continue to remain eligible to receive equity awards at the discretion of the Compensation Committee. In addition, Mr. Chhibbar is entitled to receive up to $100,000 in connection with his relocation from India to New York.
Deductibility Cap on Executive Compensation
OurAs in the past, our Compensation Committee’s general policy isCommittee expects to continue to take into consideration the tax deductibility of compensation, but reserves the right to authorize payments that compensation should qualify as taxmay not be deductible toif it believes that the Company for federal income tax purposes whenever possible, to the extentpayments are appropriate and consistent with our overall compensation goals. Underphilosophy.
Despite the limited availability of Code Section 162(m) performance-based compensation exceptions following the Tax Cuts and Jobs Act of the Code,2017, our Compensation Committee does not anticipate a shift away from variable or performance-based compensation paidpayable to certain of our named executive officers (other than our chief financial officer) in excess of $1 million per year isofficers. Similarly, we do not deductible unless the compensation is
“performance-based” as describedexpect to apply less rigor in the regulations under Section 162(m). Compensation is generally “performance-based” if it is determined usingprocess by which we establish performance goals or evaluate performance against pre-established objective formulas and criteria approved by stockholders within the past five years. Compensation awards under our 2015 Plan generally are designedgoals with respect to maximize tax deductibility by satisfying the performance-based compensation exception to Section 162(m). Changes in applicable tax laws and regulations as well as factors beyond the control of the Compensation Committee can adversely impact the deductibility of compensation paid to our named executive officers who are covered by Section 162(m). Our Compensation Committee believes that mathematical formulas cannot always anticipate and fairly address every situation that might arise. The Compensation Committee therefore retains the authority to adjust compensation in the case of unexpected, unusual or non-recurring events or to attract and retain key executive talent, even if this results in the payment of non-deductible compensation or to otherwise award or pay non-deductible compensation if the Committee deems it in the best interests of the Company and its stockholders to do so.officers.
Our Compensation Committee may make payments that are not fully deductible if, in its judgment, such payments are necessary to achieve our compensation objectives and to protect stockholder interests.
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Compensation Committee ReportTable of Contents
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT |
The Compensation Committee of the board of directors of ExlService Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis with our management and, based on such review and discussion, has recommended to the board of directors of ExlService Holdings, Inc. that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and our proxy statement relating to the Annual Meeting.
Compensation Committee
Ms. Jaynie M. Studenmund (Chair)
Ms. Deborah Kerr
Ms. Anne Minto (Chair until December 31, 2020)
Mr. Som Mittal
Mr. Clyde W. Ostler
Mr. Garen K. Staglin
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION | ||
Summary Compensation Table for Fiscal Year 2015
The following table sets forth information for compensation earned in fiscal years 2013, 20142018, 2019 and 20152020 by our named executive officers:
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Name and Principal Position | Year | Salary ($) | Bonus ($)(13) | Stock Awards ($)(4) | Non-Equity Incentive Plan Compensation ($)(5) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6) | All Other Compensation ($) | Total ($) | |||||||||||||||||
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Rohit Kapoor | 2020 | 599,016 | — | 5,701,209 | 810,000 | — | 31,041 | (7) | 7,141,267 | ||||||||||||||||
Vice Chairman & CEO | 2019 | 720,000 | — | 4,121,410 | 1,304,453 | — | 49,354 | 6,195,217 | |||||||||||||||||
2018 | 720,000 | — | 3,791,277 | 532,748 | — | 61,484 | 5,105,509 | ||||||||||||||||||
Maurizio Nicolelli | | 2020 | | 384,283 | | 125,000 | | 1,166,955 | | 243,097 | | — | | 8,970 | (8) | | 1,928,305 | ||||||||
Executive Vice President and CFO | | 2019 | | — | | — | | — | | — | | — | | — | | — | |||||||||
| | 2018 | | — | | — | | — | | — | | — | | — | | — | |||||||||
Pavan Bagai | 2020 | 300,977 | (2) | — | 1,693,173 | 200,164 | 5,988 | 14,145 | (9) | 2,214,447 | |||||||||||||||
President & Chief Operating Officer and | 2019 | 311,554 | — | 1,557,454 | 323,814 | 6,129 | 47,893 | 2,246,845 | |||||||||||||||||
Interim CFO(1) | 2018 | 301,448 | — | 1,339,363 | 133,946 | 17,124 | 57,284 | 1,849,164 | |||||||||||||||||
Nalin Miglani | | 2020 | | 404,631 | | — | | 1,179,065 | | 253,125 | | — | | 9,054 | (10) | | 1,845,875 | ||||||||
Executive Vice President and Chief Human | | 2019 | | 450,000 | | — | | 880,294 | | 411,735 | | — | | 9,444 | | 1,751,473 | |||||||||
Resources Officer | | 2018 | | 440,137 | | — | | 809,936 | | 164,579 | | — | | 8,640 | | 1,423,292 | |||||||||
Vikas Bhalla | 2020 | 229,016 | (3) | — | 1,399,048 | 169,370 | 5,067 | 37,962 | (11) | 1,840,463 | |||||||||||||||
Executive Vice President and Business Head, | 2019 | 263,809 | — | 973,685 | 285,636 | 5,186 | 40,367 | 1,568,683 | |||||||||||||||||
Insurance | 2018 | — | — | — | — | — | — | — | |||||||||||||||||
Samuel Meckey | | 2020 | | 382,152 | | — | | 1,106,585 | | 239,063 | | — | | 9,054 | (12) | | 1,736,853 | ||||||||
Executive Vice President and Business Head, | | 2019 | | 425,000 | | — | | 765,547 | | 364,320 | | — | | 9,444 | | 1,564,311 | |||||||||
Healthcare | | 2018 | | — | | — | | — | | — | | — | | — | | — | |||||||||
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Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(3) | Non- Equity Incentive Plan Compen- sation ($)(4) | Change in Pension Value and Nonqualified Deferred Compen- sation Earnings ($)(5) | All Other Compen- sation ($) | Total ($) | |||||||||||
Rohit Kapoor | 2015 | 600,000 | — | 6,119,000 | 621,129 | — | 35,014 | (6) | 7,375,143 | ||||||||||
Vice Chairman | 2014 | 565,000 | — | 2,164,263 | 535,760 | — | 44,198 | 3,309,221 | |||||||||||
& CEO | 2013 | 553,904 | — | 2,276,711 | 169,070 | — | 38,433 | 3,038,118 | |||||||||||
Vishal Chhibbar | 2015 | 251,341 | (1) | — | 595,800 | 157,049 | 8,340 | 34,775 | (7) | 1,047,305 | |||||||||
Executive Vice | 2014 | 250,272 | — | 415,549 | 130,457 | 8,066 | 35,879 | 840,222 | |||||||||||
President and | 2013 | 250,119 | 6,129 | 381,028 | 109,880 | 7,529 | 24,205 | 778,890 | |||||||||||
CFO | |||||||||||||||||||
Pavan Bagai | 2015 | 242,590 | (2) | — | 993,000 | 246,239 | 9,386 | 76,164 | (8) | 1,567,379 | |||||||||
President & | 2014 | 235,363 | — | 681,554 | 222,188 | 9,010 | 84,938 | 1,233,053 | |||||||||||
Chief Operating | 2013 | 225,475 | 28,381 | 720,673 | 126,568 | 8,511 | 68,747 | 1,178,356 | |||||||||||
Officer | |||||||||||||||||||
Nalin Miglani | 2015 | 400,000 | — | 476,640 | 274,840 | — | 81,520 | (9) | 1,233,000 | ||||||||||
Executive Vice | 2014 | — | — | — | — | — | — | — | |||||||||||
President, | 2013 | — | — | — | — | — | — | — | |||||||||||
Global Head of | |||||||||||||||||||
Human | |||||||||||||||||||
Resources | |||||||||||||||||||
Henry | 2015 | 450,000 | — | 595,800 | 349,385 | — | 8,340 | (11) | 1,403,525 | ||||||||||
Schweppe(10) | 2014 | — | — | — | — | — | — | — | |||||||||||
Former | 2013 | — | — | — | — | — | — | — | |||||||||||
President, | |||||||||||||||||||
Global Business | |||||||||||||||||||
and Marketing |
(1) In addition to his other roles, Mr. Bagai served as our interim Chief Financial Officer in January 2020.
(2) The amount set forth in the "Salary" column for Mr. Bagai includes $112,092 of base salary, $113,237 of a cash supplementary allowance, $56,046 of housing allowance (which Mr. Bagai elected to receive instead in cash), $9,337 of travel allowance (which Mr. Bagai elected to receive instead in cash), and $10,265 of a special car allowance (which Mr. Bagai elected to receive instead in cash).
(3) The amount set forth in the "Salary" column for Mr. Bhalla includes $94,847 of base salary, $78,845 of a cash supplementary allowance, $47,423 of housing allowance (which Mr. Bhalla elected to receive instead in cash), $7,901 of travel allowance (which Mr. Bhalla elected to receive instead in cash).
(4) Amounts reflect the total grant date fair value of awards (RSUs and revenue based PRSUs) and Monte Carlo value of awards (TSR based PRSUs) (recognized for financial statement reporting purposes for the fiscal years ended December 31, 2018, 2019 and 2020, in accordance with FASB ASC Topic 718 (disregarding any forfeiture assumptions). Assumptions used in the calculation of these amounts are included (i) for 2020, in footnotes 2 and 23 to the audited financial statements for the fiscal year ended December 31, 2020, included in the 2020 Form 10-K; (ii) for 2019, in footnotes 2 and 23 to the audited financial statements for the fiscal year ended December 31, 2019, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2020; and (iii) for 2018, in footnotes 2 and 24 to the audited financial statements for the fiscal year ended December 31, 2018, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2019. With respect to stock awards granted in 2015, which includes Mr. Kapoor’s one-time Stock Price Performance Award,2020, the table below sets forth the value attributable to performance restricted stock
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EXECUTIVE COMPENSATION
units valued at target achievement:
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achievement. Performance restricted stock units granted in 20152020 may pay out up to 200% of the target award, which would have amounted to the following grant date fair values listed as the maximum total grant date fair value for each named executive officer:officer in the table below.
Name | Total Grant Date Fair Value ($) | Maximum Total Grant Date Fair Value ($) | ||||||
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Rohit Kapoor | 3,853,478 | 7,706,956 | ||||||
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Maurizio Nicolelli | 393,798 | 787,596 | ||||||
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Pavan Bagai | 906,248 | 1,812,496 | ||||||
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Nalin Miglani | 631,077 | 1,262,154 | ||||||
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Vikas Bhalla | 748,826 | 1,497,652 | ||||||
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Samuel Meckey | 592,282 | 1,184,564 | ||||||
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(5) Reflects the cash incentive bonuses earned in respect of 2020 and paid in 2021. For details on our annual incentive bonus program, see "Compensation Discussion and Analysis — Incentive Bonus" beginning on page 75.
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(6) Reflects the present value of accruals under the Gratuity Plan for Indian employees. Information regarding our Gratuity Plan (including the assumptions used to calculate these amounts) may be found under "Pension Benefits for Fiscal Year 2020" beginning on page 93.
(7) Amount for Mr. Kapoor includes the travel allowance ($13,927) provided for under his employment agreement, to be used for once-a-year business class airfare for himself and his family between the United States and India, costs associated with use of an automobile and driver ($2,688), car lease rental ($5,372), contribution to our 401(k) plan ($8,550), and Company-paid Life Insurance ($504).
(8) Amount for Mr. Nicolelli includes contribution to our 401(k) plan ($8,550), Company-paid Life Insurance ($420).
(9) Amount for Mr. Bagai includes contributions to the Employees' Provident Fund Scheme (a statutorily required defined contribution program for Indian employees) ($13,451), costs associated with use of an automobile and driver in India ($443.40), home internet and telephone charges ($250.20).
(10) Amount for Mr. Miglani includes contributions to 401(k) plan ($8,550) and Company paid Life Insurance premiums ($504).
(11) Amount for Mr. Bhalla includes car allowance ($20,530), contributions to the Employees' Provident Fund Scheme (a statutorily required defined contribution program for Indian employees) ($11,381), costs associated with use of an automobile and driver in India ($5,502), home internet and telephone charges ($549).
(12) Amount for Mr. Samuel Meckey includes contributions to 401(k) plan ($8,550) and Company paid Life Insurance premiums ($504).
(13) Mr. Nicolelli received $125,000 as his joining bonus.
Unless otherwise specified, below, certain U.S. dollar figures in this proxy statement have been converted from Indian rupees at a rate of 66.1573.065 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect as of December 31, 2015. The amounts disclosed in2020. Some of the “Compensation Discussion and Analysis” section have been converted from Indian rupees at a rate of 63.03 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect as of January 31, 2015. This represents the exchange rate in effect at or around the time the relevant compensation was set, which more accurately reflects the relative value that the Company placed on those elements at the time. Certain information in the Summary Compensation Tables for fiscal years 20132019 and 20142018 was converted using the exchange rates in effect as set forth below:
Fiscal Year | Rate | Exchange Rate of INR per US$1 | ||||||
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2019 | December 31, 2019 | 71.38 | ||||||
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2018 | December 31, 2018 | 69.77 | ||||||
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Fiscal Year | Rate | Exchange Rate of INR per US$1 | ||
2014 | December 31, 2014 | 63.03 | ||
2013 | December 31, 2013 | 61.78 |
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EXECUTIVE COMPENSATION
Grants of Plan-Based Awards Table for Fiscal Year 2015
2020
The following table sets forth information concerning grants of stock and option awards and non-equity incentive plan awards granted to our named executive officers during fiscal year 2015:2020:
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| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards(6) ($) | |||||||||||||||||||||||
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Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||
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Rohit Kapoor | 1,080,000 | 2,234,520 | ||||||||||||||||||||||||||
2/20/20 | 23,520 | (4) | 1,847,731 | |||||||||||||||||||||||||
2/20/20 | 21,330 | (2) | 42,660 | 1,675,685 | ||||||||||||||||||||||||
2/20/20 | 21,330 | (3) | 42,660 | 2,177,793 | ||||||||||||||||||||||||
Maurizio Nicolelli | | | | | | 324,129 | | 735,300 | | | | | | | | | | | ||||||||||
| | 2/3/20 | | | | | | | | | | | | | | 5,898 | (5) | | 431,203 | |||||||||
| | 2/19/20 | | | | | | | | | | | | | | 4,365 | (4) | | 341,954 | |||||||||
| | 2/19/20 | | | | | | | | | | 2,183 | (2) | | 4,366 | | | | 171,016 | |||||||||
| | 2/19/20 | | | | | | | | | | 2,182 | (3) | | 4,364 | | | | 222,782 | |||||||||
Pavan Bagai | 266,886 | 552,186 | ||||||||||||||||||||||||||
2/19/20 | 10,045 | (4) | 786,925 | |||||||||||||||||||||||||
2/19/20 | 5,023 | (2) | 10,046 | 393,502 | ||||||||||||||||||||||||
2/19/20 | 5,022 | (3) | 10,044 | 512,746 | ||||||||||||||||||||||||
Nalin Miglani | | | | | | 337,500 | | 696,600 | | | | | | | | | | | ||||||||||
| | 2/19/20 | | | | | | | | | | | | | | 6,995 | (4) | | 547,988 | |||||||||
| | 2/19/20 | | | | | | | | | | 3,498 | (2) | | 6,996 | | | | 274,033 | |||||||||
| | 2/19/20 | | | | | | | | | | 3,497 | (3) | | 6,994 | | | | 357,044 | |||||||||
Vikas Bhalla | 225,826 | 464,299 | ||||||||||||||||||||||||||
2/19/20 | 8,300 | (4) | 650,222 | |||||||||||||||||||||||||
2/19/20 | 4,150 | (2) | 8,300 | 325,111 | ||||||||||||||||||||||||
2/19/20 | 4,150 | (3) | 8,300 | 423,715 | ||||||||||||||||||||||||
Samuel Meckey | | | | | | 318,750 | | 655,350 | | | | | | | | | | | ||||||||||
| | 2/19/20 | | | | | | | | | | | | | | 6,565 | (4) | | 514,302 | |||||||||
| | 2/19/20 | | | | | | | | | | 3,283 | (2) | | 6,566 | | | | 257,190 | |||||||||
| | 2/19/20 | | | | | | | | | | 3,282 | (3) | | 6,564 | | | | 335,092 | |||||||||
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(1) These amounts reflect the target and maximum cash incentive bonuses set for 2020. For details of our annual incentive bonus program, see "Compensation Discussion and Analysis — Incentive Bonus" beginning on page 75.
Estimated Future Payouts | Estimated Future Payouts | All Other | Grant Date | ||||||||||
Name | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | ||||||
Rohit Kapoor | 600,000 | 1,200,000 | |||||||||||
2/26/2015 | 18,750 | (2) | 37,500 | 651,563 | |||||||||
2/26/2015 | 18,750 | (3) | 37,500 | 1,024,313 | |||||||||
4/29/2015 | 100,000 | (4) | 200,000 | 3,140,000 | |||||||||
2/26/2015 | 37,500 | (5) | 1,303,125 | ||||||||||
Vishal Chhibbar | 145,529 | 291,057 | |||||||||||
2/26/2015 | 3,750 | (2) | 7,500 | 130,313 | |||||||||
2/26/2015 | 3,750 | (3) | 7,500 | 204,863 | |||||||||
2/26/2015 | 7,500 | (5) | 260,625 | ||||||||||
Pavan Bagai | 237,862 | 475,725 | |||||||||||
2/26/2015 | 6,250 | (2) | 12,500 | 217,188 | |||||||||
2/26/2015 | 6,250 | (3) | 12,500 | 341,438 | |||||||||
2/26/2015 | 12,500 | (5) | 434,375 | ||||||||||
Nalin Miglani | 240,000 | 480,000 | |||||||||||
2/26/2015 | 3,000 | (2) | 6,000 | 104,250 | |||||||||
2/26/2015 | 3,000 | (3) | 6,000 | 163,890 | |||||||||
2/26/2015 | 6,000 | (5) | 208,500 | ||||||||||
Henry Schweppe | 337,500 | 675,000 | |||||||||||
2/26/2015 | 3,750 | (2) | 7,500 | 130,313 | |||||||||
2/26/2015 | 3,750 | (3) | 7,500 | 204,863 | |||||||||
2/26/2015 | 7,500 | (5) | 260,625 | ||||||||||
(2) Represents annual awards of Revenue-Linked PRSUs granted under the 2018 Plan, subject to the vesting set forth in footnote 7.
(3) Represents annual awards of Relative TSR-Linked PRSUs granted under the 2018 Plan, subject to the vesting set forth in footnote 7.
(4) Represents annual awards of restricted stock units granted under the 2018 Plan, subject to the vesting set forth in footnote 7.
(5) Represents one time joining award of restricted stock units granted under the 2018 Plan, subject to the vesting set forth in footnote 7.
(6) The grant date fair value of the estimated future payouts for the Relative TSR-Linked PRSUs are based on the Monte Carlo value.
(7) The vesting schedules of the stock grants mentioned in the table are as follows for each named executive officer (subject to continued employment through each applicable vesting date).
| Grant Date | Vesting Start Date | Vesting Schedule | |||||||||
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2/19/2020 | 2/ | Revenue Linked PRSUs: 100% vesting on 12/31/2022 | ||||||||||
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2/19/2020 | 2/ | Relative TSR-Linked PRSUs: 100% vesting on 12/31/2022 | ||||||||||
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2/19/2020(1)(2) | 2/19/2020 | Restricted Stock Vesting over 4 years | ||||||||||
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(1) The grant date and vesting start date for Mr. Kapoor's annual equity award was February 20, 2020.
(2) The grant date and vesting start date for Mr. Nicolelli's one-time joining awards was February 3, 2020.
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Employment Agreements
In addition to the terms described below, the employment and severance agreements for each of our named executive officers include severance, termination and/or noncompetition provisions, which are described below under "Potential Payments upon Termination or Change in Control at Fiscal 2020 Year-End" beginning on page 93.
Rohit Kapoor
Mr. Kapoor serves as our Vice Chairman and CEO, and is based at our executive offices in New York, New York. WeOur engagement of Mr. Kapoor has been under the terms of employment agreements for over 15 years. On September 19, 2017, we entered into an amended and restated employment agreement with him, dated April 29, 2015. Mr. Kapoor’s employment agreement providesKapoor that became effective on January 1, 2018 (the "Prior Kapoor Agreement"). The Prior Kapoor Agreement provided for an initial term that commencesfrom January 1, 2015 and extends2018 until December 31, 20172020, and automatically renewsrenewed for successive one-year periods unless terminated with 120 daysdays' prior notice. In light of the impending expiration of the initial term of the Prior Kapoor Agreement, the Company entered into a second amended and restated employment agreement with Mr. Kapoor dated and effective as of August 3, 2020 (the "Amended Kapoor Agreement"). The Amended Kapoor Agreement provides for an employment term that extends until Mr. Kapoor's termination or resignation. Unless otherwise noted, the summary below describes the terms of both the Prior Kapoor Agreement and the Amended Kapoor Agreement.
Equity.Equity:
In 2020, Mr. Kapoor’sKapoor's base salary was increased from $720,000 to $600,000, effective January 1, 2015. $750,000, subject to his 50% base salary reduction and deferment of 2020 increments due to the COVID-19 pandemic, as documented in the Amended Kapoor Agreement.
Mr. Kapoor’sKapoor's base salary can be increased at our sole discretion and cannot be decreased unless a Company-wide decrease in pay is implemented. Mr. Kapoor can earn an annual cash bonus, with a target of 100%150% of base salary and a maximum payout of 200%310% of base salary (326% under the Prior Kapoor Agreement), based upon the attainment of performance criteria determined by our Compensation Committee. Mr. Kapoor remains eligible to receive equity-based awards annually during the term, in amounts and forms determined by the Compensation Committee but with terms no less favorable than his direct reports. Under the Prior Kapoor Agreement, Mr. Kapoor was entitled to vesting terms no less favorable than ratable vesting over four years from the date of grant.
Pursuant to the terms of our 2006 Omnibus Award Plan (the “2006 Plan”), Mr. Kapoor received a Stock Price Performance Award in the second quarter of 2015 that he may earn based on the Company’s average stock price exceeding certain targets during the 60 day period prior to December 31, 2017 and contingent upon his continuous service through that date. The amount of PRUSs Mr. Kapoor ultimately receives may be between 0% and 200% of his Target Award, based on actual performance.
Mr. Kapoor’sKapoor's employment agreement also includes severance, termination and noncompetition provisions which are described below under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.93.
Vishal Chhibbar
Maurizio Nicolelli
Mr. ChhibbarNicolelli serves as our Executive Vice President and CFO and wasis based at our executive offices in India until December 31, 2015.New York, New York. We entered into an employment agreement with him, effective May 1, 2009,February 3, 2020, which waswill continue throughout
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Mr. Nicolelli's employment with the Company. In connection with his appointment, Mr. Nicolelli received a joining bonus of $225,000, payable in effect until December 31, 2015.two installments, and an initial grant of restricted stock units of the Company's common stock with a fair market value of $425,000, which will vest in four equal, annual installments beginning on the first anniversary of the grant date.
Equity. Equity:
Mr. Chhibbar’s annual fixed compensation, measured in his home currency of Indian rupees, was increased by 5.4% effective April 1, 2015. Mr. Chhibbar’s annual fixed compensation includesNicolelli's base salary as well as amounts available as a leave travel allowance, a housing allowance, an automobile allowance, a medical allowance and a cash supplementary allowance.was set at $475,000 upon his hire in 2020. In addition, under his agreement, Mr. ChhibbarNicolelli can earn an annual cash bonus, with a target of 50%75% of annual fixed
compensation and a maximum of 100% of annual fixed compensation,base salary, based upon the attainment of performance criteria determined by our Compensation Committee. Mr. ChhibbarNicolelli is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee.
Mr. Chhibbar’s employment agreementNicolelli's agreements also includes severance, termination and noncompetition provisions which are described below under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.93.
Please refer to page 40 of the Compensation Discussion and Analysis for a summary of the material terms of Mr. Chhibbar’s revised employment agreement effective January 1, 2016.
Pavan Bagai
Mr. Bagai serves as our President and Chief Operating Officer, and is based in Delhi, India. During January 2020, he also served as our interim CFO. We entered into antwo employment agreementagreements with him, effective July 31, 2002 and August 1, 2002, respectively and a severance agreement,letter, effective March 15, 2011, each of which will continue throughout Mr. Bagai’sBagai's employment with the Company.
Equity. Equity:
Mr. Bagai’sBagai's annual fixed compensation, measured in U.S. dollars rather than his home currency of Indian rupees (using an exchange rate of 71.38 INR to 1 USD, which was increased by 6.5%the exchange rate on December 31, 2020), was decreased to $364,248 effective April 1, 2015.2019. Mr. Bagai’sBagai's annual fixed compensation includes base salary, as well as amounts available as a leave travel allowance, a housing allowance, an automobile allowance, a medical allowance and a cash supplementary allowance. In addition, Mr. Bagai can earn an annual cash bonus, with a target of 75% of annual fixed compensation and a maximum of 150%163% of annual fixed compensation, in 2015, based upon the attainment of performance criteria determined by our Compensation Committee. Mr. Bagai is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee.
Mr. Bagai’s employment and severanceBagai's agreements also includeincludes severance, termination and noncompetition provisions which are described below under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.93.
Nalin Miglani
Mr. Miglani serves as our Executive Vice President Global Head ofand Chief Human Resources Officer, and is based at our executive offices in New York, New York. We entered into an employment agreement with him, effective December 1, 2014, which will continue throughout Mr. Miglani’sMiglani's employment with the Company.
Equity. Equity:
Mr. Miglani’sMiglani's base salary is $400,000, whichwas held constant at $450,000 in 2020 but may be increased from time to time by our Board.board of directors. While employed, Mr. Miglani can earn an annual cash bonus, with a target of 60%75% of base salary and a maximum of 120%162% of base salary, based upon attainment of performance criteria determined by our Compensation Committee. Mr. Miglani is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee. Mr. Miglani’sMiglani's employment agreement provided for: (i) an initial equity award of 20,000 restricted stock units that will vest according to the schedule described below under “Outstanding"Outstanding Equity Awards at Fiscal 2015 Year-End”2020 Year-End" beginning on page 49and92 and (ii) a one-time joining bonus of $200,000 half of which was paid on the commencement of his employment
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and the other half paid in March 2015, based on his continued service with the Company. Mr. Miglani is entitled to receivereceived $100,000 in connection with his relocation from Amsterdam to New York.York in 2014.
Mr. Miglani’sMiglani's employment agreement also includes severance, termination and noncompetition provisions which are described below under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.93.
Henry Schweppe
Vikas Bhalla
Mr. SchweppeBhalla serves as our Executive Vice President and Business Head, Insurance, and is based in Delhi, India. We entered into an employment agreement with him, effective April 28, 2001 and a severance letter, effective March 15, 2011, each of which will continue throughout Mr. Bhalla's employment with the Company.
Mr. Bhalla's agreements also includes severance, termination and noncompetition provisions which are described below under "Potential Payments upon Termination or Change in Control at Fiscal 2020 Year-End" beginning on page 93.
Samuel Meckey
Mr. Meckey serves as our Executive Vice President Globaland Business Head, Healthcare, and Marketing of Holdings, and wasis based at our executive offices in New York, New York. We entered into an employment agreement with him, effective October 6, 2014. HisNovember 5, 2018, which will continue throughout Mr. Meckey's employment with the Company terminated as of March 18, 2016.Company.
Equity. Equity:
Mr. Schweppe’s base salaryMeckey's annual fixed compensation was $450,000. While employed,held constant at $425,000 in 2019. In addition, Mr. Schweppe was eligible toMeckey can earn an annual cash bonus, with a target of 75% of base salaryannual fixed compensation and a maximum of 150%162% of base salary,annual fixed compensation, based upon the attainment of performance criteria determined by our Compensation Committee. Mr. Schweppe wasMeckey is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee. Mr. Schweppe’s employment agreement provided for: (i) an initial equity award of restricted stock units valued at $500,000 as of the date of grant that vest according to the schedule described below under “Outstanding Equity Awards at Fiscal 2015 Year-End” beginning on page 49and (ii) a one-time joining bonus of $350,000 half of which was paid on the commencement of his employment and the other half of which was paid in March 2015. We agreed to pay up to $200,000 in legal fees on behalf of Mr. Schweppe in connection with his resignation from his prior employer should he have to resolve any matters concerning his noncompetition agreement with his prior employer.
Mr. Schweppe’s employment agreementMeckey's agreements also includedincludes severance, termination and noncompetition provisions which are described below under “Potential"Potential Payments upon Termination or Change in Control at Fiscal 2015 Year-End”2020 Year-End" beginning on page 56.
93.
91
EXECUTIVE COMPENSATION
Outstanding Equity Awards at Fiscal 20152020 Year-End
Name | | Stock Award Grant Date | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(2) | | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | |||||||||||||||
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| | | | | | | | | | | | |||||||||||||||
Rohit Kapoor | | | 2/22/2017 | | | | 7,973 | | | | 678,741 | | | | | | | | | |||||||
| | 2/20/2018 | | | | 15,003 | | | | 1,277,205 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | 21,683 | | | | 1,845,874 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 28,910 | (a) | | | 2,461,108 | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 28,910 | (b) | | | 2,461,108 | | | ||||||||
| | 2/20/2020 | | | | 23,520 | | | | 2,002,258 | | | | | | | | | ||||||||
| | 2/20/2020 | | | | | | | | | | 21,330 | (c) | | | 1,815,823 | | | ||||||||
| | 2/20/2020 | | | | | | | | | | 21,330 | (d) | | | 1,815,823 | | | ||||||||
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Maurizio Nicolelli | | | 2/3/2020 | | | | 5,898 | | | | 502,097 | | | | | | | | | |||||||
| | 2/19/2020 | | | | 4,365 | | | | 371,592 | | | | | | | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 2,183 | (c) | | | 185,839 | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 2,182 | (d) | | | 185,754 | | | ||||||||
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Pavan Bagai | | | 2/23/2017 | | | | 2,875 | | | | 244,749 | | | | | | | | | |||||||
| | 2/22/2018 | | | | 5,300 | | | | 451,189 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | 8,194 | | | | 697,555 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 10,926 | (a) | | | 930,130 | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 10,924 | (b) | | | 929,960 | | | ||||||||
| | 2/19/2020 | | | | 10,045 | | | | 855,131 | | | | | | | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 5,023 | (c) | | | 427,608 | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 5,022 | (d) | | | 427,523 | | | ||||||||
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Nalin Miglani | | | 2/23/2017 | | | | 1,788 | | | | 152,212 | | | | | | | | | |||||||
| | 2/22/2018 | | | | 3,205 | | | | 272,842 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | 4,632 | | | | 394,322 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 6,176 | (a) | | | 525,763 | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 6,174 | (b) | | | 525,593 | | | ||||||||
| | 2/19/2020 | | | | 6,995 | | | | 595,484 | | | | | | | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 3.498 | (c) | | | 297,785 | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 3,497 | (d) | | | 297,700 | | | ||||||||
| | | | | | | | | | | | |||||||||||||||
Vikas Bhalla | | | 2/23/2017 | | | | 1,362 | | | | 115,947 | | | | | | | | | |||||||
| | 2/22/2018 | | | | 3,328 | | | | 283,313 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | 5,123 | | | | 436,121 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 6,830 | (a) | | | 581,438 | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 6.830 | (b) | | | 581,438 | | | ||||||||
| | 2/19/2020 | | | | 8,300 | | | | 706,579 | | | | | | | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 4.150 | (c) | | | 353,290 | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 4,150 | (d) | | | 353,290 | | | ||||||||
| | | | | | | | | | | | |||||||||||||||
Samuel Meckey | | | 11/8/2018 | | | | 4,253 | | | | 362,058 | | | | | | | | | |||||||
| | 2/20/2019 | | | | 4,028 | | | | 342,904 | | | | | | | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 5,370 | (a) | | | 457,148 | | | ||||||||
| | 2/20/2019 | | | | | | | | | | 5370 | (b) | | | 457,148 | | | ||||||||
| | 2/19/2020 | | | | 6,565 | | | | 558,878 | | | | | | | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 3,283 | (c) | | | 279,482 | | | ||||||||
| | 2/19/2020 | | | | | | | | | | 3,282 | (d) | | | 279,397 | | | ||||||||
| | | | | | | | | | | |
(1) The restricted stock unit awards in this table vest and convert to shares in accordance with the following schedule (generally subject to continued employment through each applicable vesting date): 25% of the restricted stock units vest on each of the first, second, third and fourth anniversaries of the grant date.
(2) The performance restricted stock unit awards in this table vest and convert to shares in accordance with the following table sets forthschedules (generally subject to continued employment through the equity awards we have made to our named executive officers that were outstanding asapplicable vesting date and achievement of applicable performance goals):
(a) 100% of the restricted stock units vest on December 31, 2015:2021. This amount represents the 2019 Revenue-Linked PRSUs and reflects maximum performance.
(b) 100% of the restricted stock units vest on December 31, 2021. This amount represents the 2019 Relative TSR-Linked PRSUs and reflects maximum performance.
(c) 100% of the restricted stock units vest on December 31, 2022. This amount represents 2020 Revenue-Linked PRSUs and reflects target performance.
(d) 100% of the restricted stock units vest on December 31, 2022. This amount represents 2020 Relative TSR-Linked PRSUs and reflects target performance.
(3) The price used in determining the market values set forth in this table is $85.13, which was the closing price of our stock on December 31, 2020.
Option Awards | Stock Awards | |||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of | Option Exercise | Option | Number of Shares or Units | Market | Equity | Equity |
Rohit Kapoor | 150,000 | — | 11.88 | 7/26/2016 | ||||
150,000 | — | 16.96 | 1/23/2018 | |||||
196,400 | — | 8.75 | 2/10/2019 | |||||
97,500 | — | 19.76 | 2/3/2021 | |||||
73,125 | 24,375 | 24.77 | 2/7/2022 | |||||
9,375 | 421,219 | |||||||
37,500 | 1,684,875 | |||||||
674 | 30,283 | |||||||
2,409 | 108,236 | |||||||
28,125 | 1,263,656 | |||||||
37,500 | 1,684,875 | |||||||
12,499 | 561,580 | 12,502 | 561,715 | |||||
6,249 | 280,768 | 12,501 | 561,670 | |||||
37,500 | 1,684,875 | |||||||
18,750 | 842,438 | |||||||
100,000 | 4,493,000 | |||||||
Vishal Chhibbar | 50,209 | — | 9.59 | 6/1/2019 | ||||
6,350 | — | 19.76 | 2/3/2021 | |||||
4,830 | 4,420 | 24.77 | 2/7/2022 | |||||
1,700 | 76,381 | |||||||
8,400 | 377,412 | |||||||
297 | 13,344 | |||||||
6,300 | 283,059 | |||||||
751 | 33,742 | |||||||
7,500 | 336,975 | |||||||
2,333 | 104,822 | 2,334 | 104,867 | |||||
1,249 | 56,118 | 2,501 | 112,370 | |||||
7,000 | 314,510 | |||||||
3,750 | 168,488 |
Option Awards | Stock Awards | |||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of | Option Exercise | Option | Number of Shares or Units | Market | Equity | Equity |
Pavan Bagai | 13,000 | — | 19.76 | 2/3/2021 | ||||
19,500 | 13,000 | 24.77 | 2/7/2022 | |||||
5,000 | 224,650 | |||||||
461 | 20,713 | |||||||
16,100 | 723,373 | |||||||
10,350 | 465,026 | |||||||
1,203 | 54,051 | |||||||
12,500 | 561,625 | |||||||
3,833 | 172,217 | 3,834 | 172,262 | |||||
2,083 | 93,589 | 4,167 | 187,223 | |||||
11,500 | 516,695 | |||||||
6,250 | 280,813 | |||||||
Nalin Miglani | 18,000 | 808,740 | ||||||
6,000 | 269,580 | |||||||
999 | 44,885 | 2,001 | 89,905 | |||||
3,000 | 134,790 | |||||||
Henry Schweppe | 18,153 | 815,614 | ||||||
7,500 | 336,975 | |||||||
1,249 | 56,118 | 2,501 | 112,370 | |||||
3,750 | 168,488 |
92
EXECUTIVE COMPENSATION
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Option Exercises and Stock Vested During Fiscal Year 2015
The following table provides additional information about the value realized by our named executive officers on option award exercises and stock award vesting during fiscal year 2015:2020:
| | Option Awards | | | Stock Awards | |||||||||||
Name | | | Number of Shares Acquired on Exercise | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting | | | Value Realized on Vesting ($) | ||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | |
Rohit Kapoor | | | 29,259 | | | 1,390,750 | | | 60,335 | | | 4,654,983 | ||||
| | | | | | | | | | | | | | | | |
Maurizio Nicolelli | | | — | | | — | | | — | | | — | ||||
| | | | | | | | | | | | | | | | |
Pavan Bagai | | | — | | | — | | | 21,365 | | | 1,648,592 | ||||
| | | | | | | | | | | | | | | | |
Nalin Miglani | | | — | | | — | | | 12,470 | | | 962,034 | ||||
| | | | | | | | | | | | | | | | |
Vikas Bhalla | | | — | | | — | | | 12,625 | | | 974,084 | ||||
| | | | | | | | | | | | | | | | |
Samuel Meckey | | | — | | | — | | | 3,469 | | | 276,247 | ||||
| | | | | | | | | | | | | | | | |
Option Awards | Stock Awards | |||||||
Name | Number of Shares | Value Realized ($) | Number of Shares (#) | Value Realized ($) | ||||
Rohit Kapoor | — | — | 9,375 9,375 1,244 673 18,750 9,375 1,203 | 277,008 293,438 38,937 21,065 586,875 294,094 37,738 | ||||
Vishal Chhibbar | 1,800 3,600 6,300 900 900 900 900 | 26,694 74,664 160,083 23,769 24,669 25,389 26,199 | 1,700 1,275 554 297 2,400 700 374 | 50,231 39,908 17,340 9,296 75,120 21,959 11,732 | ||||
Pavan Bagai | — | — | 5,000 3,750 817 460 4,600 1,150 601 | 147,738 117,375 25,572 14,398 143,980 36,076 18,853 | ||||
Nalin Miglani | — | — | 2,000 | 91,100 | ||||
Henry Schweppe | — | — | 2,016 | 77,576 |
Pension Benefits For Fiscal Year 2015
Pension Benefits for Fiscal Year 2020 |
The following table discloses the present value of accumulated benefits payable to each of the named executive officers and the years of
Name | | | | Plan Name | | | | Number of Years Credited Service (#)(1) | | | | Present Value of Accumulated Benefit ($) | | | | Payments During Last Fiscal Year ($) |
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | |
Pavan Bagai | | | Gratuity Plan for Indian Employees(2) | | | 18 | | | 107,781 | | | — | ||||
| | | | | | | | | | | | | | | | |
Vikas Bhalla | | | Gratuity Plan for Indian Employees(2) | | | 20 | | | 101,332 | | | — | ||||
| | | | | | | | | | | | | | | | |
1) Consists of the number of years of service credited to each named executive under the Gratuity Plan for Indian Employees as of December 31, 2015:2020 for the purpose of determining benefit service under the Gratuity Plan. Credited service is determined based on the completed years of continuous employment (rounded to the nearest whole number of years) with the Company since the executive's date of hire.
(2) Liabilities with regard to the Gratuity Plans are determined by actuarial valuation using the projected unit credit method. Under this method, we determine our liability based upon the discounted value of salary increases until the date of separation arising from retirement, death, resignation or other termination of services. Critical assumptions used in measuring the plan expense and projected liability under the projected unit credit method include the discount rate, expected return on assets and the expected increase in the compensation rates. Details regarding the assumptions used in the calculation of these amounts are included in footnote 20 to the audited financial statements for the fiscal year ended December 31, 2020 included in the 2020 Form 10-K.
Name | Plan Name | Number of Years Credited Service (#)(1) | Present Value of Accumulated Benefit | Payments During Last Fiscal Year | ||||
Vishal Chhibbar | Gratuity Plan for Indian Employees | 7 | 44,643 | — | ||||
Pavan Bagai | Gratuity Plan for Indian Employees | 13 | 70,437 | — |
We are required to provide all Indian employees with benefits under the Gratuity Plan, a defined benefit pension plan in India. Distributions from the Gratuity Plan are made in a single lump sum following retirement from the Company. An executive’sexecutive's benefit under the Gratuity Plan is determined at any time as the executive’sexecutive's annual base salary (determined based on the executive’sexecutive's most recent monthly base salary) divided by 26, multiplied by 15, and the product multiplied by the executive’sexecutive's completed years of continuous service with the Company. An executive has a vested and nonforfeitable right to payment of his accrued Gratuity Plan benefit only after five years of service. The present value of Mr. Chhibbar’sMessrs. Bagai and Mr. Bagai’sBhalla's accumulated benefits has been determined based on their monthly basic salary rates in effect on December 31, 2015,2020, which wereare approximately $11,054$10,379 and $9,392,$8,782, respectively.
The following tables summarize the amounts payable to each named executive officer upon Terminationa change in control or Changetermination of his employment with us on December 31, 2020. In calculating potential payments for purposes of this disclosure, we have quantified our equity-based payments using the closing stock price on December 31, 2020, which was $85.13. Some of the capitalized terms used in Control at Fiscal 2015 Year-Endthe employment agreements for our named executive officers are defined in the section entitled "Certain Defined Terms" on page 101.
Rohit Kapoor
93
EXECUTIVE COMPENSATION
Rohit Kapoor |
Unless otherwise noted, the below summary describes the terms of the Amended Kapoor Agreement in place as of December 31, 2020 in order to align with the quantitative disclosures provided in the accompanying tables.
Cash Severance.Severance: If Mr. Kapoor’sKapoor's employment were terminated by us without “cause”"cause" or by the executive for “good reason”"good reason" or by "retirement" (in each case, as described below) on December 31, 2015,2020, he would have been entitled to cash severance consisting of:
·
expenses;
“Cause” will occur when:
· there is a final nonappealable conviction of, or pleading of no contest to, (1) a felony, or (2) a crime of moral turpitude that causes serious economic injury or serious injury to our reputation;
·Under the executive engages in fraud, embezzlement, self-dealing, gross negligence, dishonesty or other gross and willful misconduct that causes serious and demonstrable injury to us;
· the executive materially violates any of our material policies;
· the executive willfully and continually fails to substantially perform his duties (other than for reason of physical or mental incapacity) which continues beyond 15 days after we notify him in writing of his need to substantially improve his performance; provided that a failure to achieve performance objectives will not by itself constitute cause and no act or failure to act shall be considered “willful” unless done or failed to be done by the executive in bad faith and without a reasonable belief that his actions or omissionPrior Kapoor Agreement, Mr. Kapoor was in our best interest;
· the executive fails to reasonably cooperate in a governmental investigation involving us;
· the executive materially, knowingly and intentionally fails to comply with applicable laws with respectalso entitled to the executionabove severance amount in the event of the Company’s business operations (subject to a presumption of good faith if the executive is following advice of counsel);
· the executive fails to follow our board of directors’ lawful instructions and does not remedy the failure for 15 days after we give him written notice;
· the executive’s use of alcohol or drugs materially interferes with the performance of his duties;
· the executive fails to take reasonable steps to end certain affiliations specified in his employment agreement within six months after a request by our board of directors; or
· the executive materially breaches any material termCompany's non-renewal of his employment agreement which isbut not remedied within 15 days of receipt of notice from the Company specifying the breach in reasonable detail.
“Good reason” means:
· the executive’s duties or responsibilities are substantially reduced, he is required to report to anyone other than our board of directors, or his title as our officer is adversely changed; however, if following a change in control, his new title and authority are similar to his old title and authority, then any change in the executive’s title will not constitute a significant reduction in his duties and authorities;
· the executive’s base salary is reduced (other than in connection with a Company-wide decrease in pay), or his target annual bonus opportunity is reduced below 100%event of his base salary;
"retirement."
· the office or location where the executive is based in the metropolitan New York City area is moved more than 30 miles, and the new location is more than 30 miles from his primary residence in the metropolitan New York City area; or
· we breach any material term of the executive’s employment agreement.
If the executive plans to terminate his employment for good reason, he must notify us within 45 days following the date the executive first becomes aware of the circumstances giving rise to good reason and must allow us 30 days to remedy the problem.
Change-in-Control Cash Severance.Severance: If Mr. Kapoor’sKapoor's employment is terminated by us without “cause”"cause" or by the executive for “good reason”"good reason" (in each case, as described above) within 12 months following a “change of control”"change in control" or in specific contemplation of a change in control, the executive will receive, in lieu of the cash severance described above, (1) a lump sum payment equal to 24 months of base salary and (2) his actual bonus, if any, earned for the year of termination, determined as if he had been employed for the full year of termination, paid ratably over the remaining period of base salary payments.
A “change in control” (as generally defined in Mr. Kapoor’s employment agreement, the 2006 Plan and the 2015 Plan, as applicable) generally means any of the following events:
· any person or group becomes a beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% (50% or more in the 2006 Plan) of either (1) the combined voting power of our then-outstanding voting securities entitled to vote in the election of directors or (2) our outstanding shares of common stock, assuming all rights to acquire common stock through options, warrants, conversion of convertible stock or debt, and the like are exercised;
· a majority of the members of our board of directors changes from those in office as of the date of Mr. Kapoor’s employment agreement or the effective date of the 2006 or 2015 Plan (as applicable), except that the election of any new director whose election or nomination was approved by at least two-thirds of our incumbent directors will not be regarded towards a change in the majority for these purposes;
· our dissolution or liquidation;
· the sale, transfer or other disposition of all or substantially all of our business or our assets; or
· consummation of a reorganization, recapitalization, merger, consolidation or similar transaction with another entity which requires the approval of our stockholders; however, any such transaction will not be a change in control if after the transaction:
Death or Disability.Disability: If Mr. Kapoor’sKapoor's employment terminates due to his death or is terminated by either the executive or us due to his disability, he (or his estate) will be entitled to a prorated portion of his projected bonus amount for the year of termination.
Noncompetition and Nonsolicitation Provisions.Non-solicitation Provisions: Mr. Kapoor is subject to confidentiality and nondisparagementnon-disparagement restrictions at all times, as well as noncompetition and nonsolicitationnon-solicitation restrictions during his employment and for one year thereafter.
Annual Equity Awards.Awards: If Mr. Kapoor’sKapoor's employment is terminated withby us without cause or by Mr. Kapoor for good reason, or without cause, Mr. Kapoor shallwill be treated as if he werewas still employed by the Company for a period of twotwenty-seven months (two years under the Prior Kapoor Agreement) following the termination date. On a “change"change in control”control" (as defined in the 2006 Plan, 2015 Plan, or 20152018 Plan, as applicable), retirement (as defined below), or on death, Mr. Kapoor’sKapoor's outstanding annual equity awards will vest as described below:
Stock Price Performance Award. Mr. Kapoor will vest in a portion of his Stock Price Performance Award representing his service from January 1, 2015 through his termination date plus an additional year (the “Enhanced Pro-Rata Portion”) if his employment terminates prior to a change in control due to his death or disability. If, prior to a change in control, Mr. Kapoor is terminated by the Company without cause or he voluntarily terminates his employment withfor good reason within 12 months following a portionchange in control. If Mr. Kapoor dies before the end of the PRSUsfour-year vesting period, all of Mr. Kapoor's outstanding Time-Vested RSUs will be considered earned based onbecome fully vested. For awards granted in 2020, if Mr. Kapoor retires and the Company’s average stock price duringapplicable award has been outstanding for at least 6 months, Mr. Kapoor will become fully vested in any unvested RSUs that would have vested within the 60 days prior to Mr. Kapoor’s termination date (the “Earned PRSUs”). An Enhanced Pro-Rata Portion of any such Earned PRSUs will vest immediately upon Mr. Kapoor’s termination date.next 12 months absent his retirement.
Revenue-Linked PRSUs:If a change in control occurs prior to the end of the performance period, 100% of target of Mr. Kapoor's Revenue-Linked PRSUs will be deemed earned, will be subject to a three-year installment vesting schedule and will be advanced by one year under such schedule. In addition, all of Mr. Kapoor's outstanding Revenue-Linked PRSUs will become fully vested if, (i) he is terminated without cause in specific contemplation of or within 12 months following a change in control; (ii) he voluntarily terminates his employment for good reason within 12 months following a change in control; or (iii) he dies following a change in control. If Mr. Kapoor dies prior to the end of the performance period and no change in control has occurred, Mr. Kapoor will become vested in a portion of the outstanding Revenue-Linked PRSUs outstanding asequal to (x) the number of completed full months during the three-year performance period up to the date of Mr. Kapoor's death divided by (y) 36 multiplied by (z) 100% of Mr. Kapoor's Revenue-Linked PRSUs. For awards granted in 2020, if Mr. Kapoor retires and the award has been outstanding for at least 6 months, Mr. Kapoor will become vested in a portion of the outstanding Revenue-Linked PRSUs equal to (x) the number of years of service completed by Mr. Kapoor from the grant date (rounding up to the closest whole number) divided by (y) 3 multiplied by (z) the number of Revenue-Linked PRSUs earned based on actual performance.
Relative TSR-Linked PRSUs: If a change in control occurs on or prior to the first anniversary of controlthe grant date, 100% of target of Mr. Kapoor's Relative TSR-Linked PRSUs will be deemed earned and convertearned. If a change in control occurs after the first anniversary of the grant date, the performance period will be deemed to Time-Vested RSUs (“CIC PRSUs”), based on the Company’s average stock price
end on the date of the change in control and the Compensation Committee will determine the number of earned Relative TSR-Linked PRSUs based on the TSR of the Company and the peer group as of such date. In either scenario, the Relative TSR-Linked PRSUs that cliff-vest on December 31, 2017, contingent uponare deemed earned will be subject to a three year installment vesting schedule and will be advanced by one year under such schedule. In addition, all of Mr. Kapoor’s continued employment through that date. One hundred percent of allKapoor's outstanding Relative TSR-Linked PRSUs granted to Mr. Kapoor pursuant to the Stock Price Performance Award will become fully vested if, (i) within 12 months following or in specific contemplation of a change in control, he is terminated without cause; (ii) within 12 monthscause or, following a change in control, he (i) voluntarily terminates his employment for good reason or (iii) there is a failure(ii) dies. If Mr. Kapoor dies prior to substitute, assume, exchange or otherwise continue the PRSUs by an acquirer. In addition, followingend of the 12-monthperformance period described above, an Enhanced Pro-Rata Portion of any earned CIC PRSUs will vest immediately upon Mr. Kapoor’s termination of employment at any time after aand no change in control duehas occurred, Mr. Kapoor will become vested in a portion of the outstanding Relative TSR-Linked PRSUs equal to his termination without cause,(x) the number of completed full months during the 3 year performance period up to the date of Mr. Kapoor's death or disability, or resignationdivided by (y) 36 multiplied by (z) 100% of Mr. Kapoor's Relative TSR-Linked PRSUs. For awards granted in 2020, if Mr. Kapoor retires and the award has been outstanding for good reason.at least 6 months, Mr. Kapoor will become vested in a portion of the outstanding Revenue-Linked PRSUs equal to (x) the number of years of service completed by Mr. Kapoor from the grant date (rounding up to the closest whole number) divided by (y) 3 multiplied by (z) the number of Revenue-Linked PRSUs earned based on actual performance.
Release of Claims.Claims: Mr. Kapoor’sKapoor's severance payments and termination-related equity acceleration are subject to his execution of a release of claims against us, his not having committed a material breach of the restrictive covenants that has remained uncured for 15 days after we have given him notice of such breach and his resignation from the board of directors and all committees thereof, if requested by the Company.
Code Section 280G.280G: Mr. Kapoor’sKapoor's employment agreement also contains a “modified cut-back”"modified cut-back" provision such that any payments that constitute “excess"excess parachute payments”payments" under Section 280G of the Code will be reduced to an amount that does not trigger the applicable excise taxes, to the extent such reduced amount is larger than the amount Mr. Kapoor would have received on a present-value net-after-tax basis (including excise taxes) absent such a reduction.
In quantifying potential payments for purposes
95
Table of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2015, which was $44.93.Contents
EXECUTIVE COMPENSATION
Indicative Payouts for Rohit Kapoor
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Disability ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | — | | | | | 1,440,000 | | | | | — | | | | | 1,440,000 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Bonus payout | | | | 810,000 | | | | | 810,000 | | | | | 810,000 | | | | | 810,000 | | | | | — | | | | | 810,000 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Life insurance | | | | — | | | | | — | | | | | — | | | | | 4,239 | | | | | — | | | | | 4,239 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Health insurance | | | | — | | | | | — | | | | | — | | | | | 35,229 | | | | | — | | | | | 35,229 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Restricted stock units | | | | 5,804,078 | | | | | 5,804,078 | | | | | — | | | | | 5,303,429 | | | | | 2,433,164 | | | | | 5,804,078 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Performance restricted stock units | | | | 2,851,248 | | | | | 6,843,392 | | | | | — | | | | | 6,092,754 | (1) | | | | 5,632,965 | | | | | 6,843,392 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
The following table summarizes the amounts payable to(1) As described above, upon his termination for good reason or without cause, Mr. Kapoor is treated as having continued his employment for two additional years for purposes of his annual equity awards. The information in this table was calculated assuming target performance over the additional two year-period, however, the actual payment would depend upon the Company's actual performance following Mr. Kapoor's termination.
Maurizio Nicolelli
Either Mr. Nicolelli or we may terminate Mr. Nicolelli's employment at any time with 30 days' notice (or 90 days' notice if termination is by Mr. Nicolelli). If Mr. Nicolelli is terminated by us without "cause" (other than due to death or disability), or if Mr. Nicolelli resigns for "good reason", Mr. Nicolelli will receive a cash severance payment equal to twelve months' of his then-current base salary, with 25% payable on the first payroll date at least 10 days following termination and the remainder payable in nine equal monthly installments.
On a "change in control" (as defined in the 2018 Plan) or death, Mr. Nicolelli's outstanding equity awards will vest as described below:
Time-Vested RSUs: If a change in control occurs prior to the end of the four-year vesting period, Mr. Nicolelli's Time-Vested RSUs will be advanced by one year. In addition, all of Mr. Nicolelli's outstanding Time-Vested RSUs will become fully vested if, following or in specific contemplation of a change in control, he is terminated without cause or, following a change in control, he terminates his employment for good reason. If Mr. Nicolelli dies before the end of the four-year vesting period, all of Mr. Nicolelli's outstanding Time-Vested RSUs will become fully vested. For awards granted in 2020, if Mr. Nicolelli retires with at least 10 years of service and the applicable award has been outstanding for at least 6 months, Mr. Nicolelli will become vested in all unvested RSUs that would have vested within the next 12 months absent his retirement. If Mr. Nicolelli retires with at least 5 years of service but less than 10, the number of vested Time-Vested PRSUs will be calculated as described in the preceding sentence and then reduced by 50%.
Revenue-Linked PRSUs: If a change in control occurs prior to the end of the performance period, 100% of Mr. Nicolelli's Revenue-Linked PRSUs will be deemed earned, will be subject to a new three year installment vesting schedule and will be advanced by one year under such schedule. In addition, all of Mr. Nicolelli's outstanding Revenue-Linked PRSUs will become fully vested if, following or in specific contemplation of a change in control, he is
96
EXECUTIVE COMPENSATION
terminated without cause or, following a change in control, he (i) terminates his employment for good reason or, (ii) dies. If Mr. Nicolelli dies prior to the end of the performance period and no change in control has occurred, Mr. Nicolelli will become vested in a portion of the outstanding Revenue-Linked PRSUs equal to (x) the number of completed full months during the 3 year performance period up to the date of Mr. Nicolelli's death divided by (y) 36 multiplied by (z) 100% of Mr. Nicolelli's Revenue-Linked PRSUs. For awards granted in 2020, if Mr. Nicolelli retires with at least 10 years of service and the award has been outstanding for at least 6 months, Mr. Nicolelli will become vested in a portion of the outstanding Revenue-Linked PRSUs equal to (x) the number of years of service completed by Mr. Nicolelli from the grant date (rounding up to the closest whole number) divided by (y) 3 multiplied by (z) the number of Revenue-Linked PRSUs earned based on actual performance. If Mr. Nicolelli retires with at least 5 years of service but less than 10, the number of vested Revenue-Linked PRSUs will be calculated as described in the preceding sentence and then reduced by 50%.
Relative TSR-Linked PRSUs: If a change in control occurs on or prior to the first anniversary of the grant date, 100% of Mr. Nicolelli's Relative TSR-Linked PRSUs will be deemed earned. If a change in control occurs after the first anniversary of the grant date, the performance period will be deemed to end on the date of the change in control and the Compensation Committee will determine the number of earned Relative TSR-Linked PRSUs based on the TSR of the Company and the peer group as of such date. In either scenario, the Relative TSR-Linked PRSUs that are deemed earned will be subject to a new three year installment vesting schedule and will be advanced by one year under such schedule. In addition, all of Mr. Nicolelli's outstanding, earned TSR-Linked PRSUs will become fully vested if, following or in specific contemplation of a change in control, he is terminated without cause or, following a change in control, he (i) voluntarily terminates his employment for good reason or, (ii) dies. If Mr. Nicolelli dies prior to the end of the performance period and no change in control has occurred, Mr. Nicolelli will become vested in a portion of the outstanding Relative TSR-Linked PRSUs equal to (x) the number of completed full months during the 3 year performance period up to the date of Mr. Nicolelli's death divided by (y) 36 multiplied by (z) 100% of Mr. Nicolelli's Relative TSR-Linked PRSUs. For awards granted in 2020, if Mr. Nicolelli retires with at least 10 years of service and the award has been outstanding for at least 6 months, Mr. Nicolelli will become vested in a portion of the outstanding Relative TSR-Linked PRSUs equal to (x) the number of years of service completed by Mr. Nicolelli from the grant date (rounding up to the closest whole number) divided by (y) 3 multiplied by (z) the number of Relative TSR-Linked PRSUs earned based on actual performance. If Mr. Nicolelli retires with at least 5 years of service but less than 10, the number of vested Relative TSR-Linked PRSUs will be calculated as described in the preceding sentence and then reduced by 50%.
Mr. Nicolelli's severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. Nicolelli is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for two years following termination of his employment.
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EXECUTIVE COMPENSATION
Indicative Payouts for Maurizio Nicolelli
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | 475,000 | | | | | — | | | | | 475,000 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Restricted stock units | | | | 873,689 | | | | | 873,689 | | | | | — | | | | | 218,422 | | | | | 873,689 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Performance restricted stock units | | | | 123,852 | | | | | 371,592 | | | | | — | | | | | 247,741 | | | | | 371,592 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Pavan Bagai
Either Mr. Bagai or we may terminate Mr. Bagai's employment at any time with three months' notice (or pay three months' salary in lieu of notice). If Mr. Bagai is terminated by us without "cause" (other than due to disability) at any time following a change in control or in specific contemplation of a change in control, or if Mr. Bagai resigns for "good reason" following a "change in control" (as defined in the 2015 Plan), Mr. Bagai will receive a cash severance payment equal to twelve months' of his then-current annual fixed compensation, payable in twelve equal monthly installments.
On a "change in control" (as defined in the 2018 Plan) or death, Mr. Bagai's outstanding equity awards will vest in the same manner as described for Mr. Nicolelli's outstanding equity awards beginning on Page 96.
Mr. Bagai's severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. Bagai is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for two years following termination of his employment with us on December 31, 2015:employment.
Indicative Payouts for Pavan Bagai
Payments upon Termination | Death | Disability | Expiration of the Employment Terms | Termination for Good Reason or Without Cause | Change in Control | Termination Without Cause or for Good Following Change in Control | Termination Due to Death Following Change in Control | Termination Without Cause | ||||||||
Base salary payout | — | — | — | 1,200,000 | — | 1,200,000 | — | 1,200,000 | ||||||||
Bonus payout | 621,129 | 621,129 | — | 621,129 | — | — | — | — | ||||||||
Life insurance | — | — | 5,414 | 5,414 | 5,414 | 5,414 | — | 5,414 | ||||||||
Health insurance | 19,569 | 19,569 | 19,569 | 19,569 | — | 19,569 | — | 19,569 | ||||||||
Stock options (unvested and accelerated) | — | — | — | 491,400 | 491,400 | 491,400 | — | 491,400 | ||||||||
Restricted stock units (unvested and accelerated) | — | — | — | 3,929,488 | 2,190,472 | 5,193,144 | — | 5,193,144 | ||||||||
Performance restricted stock units (unvested and accelerated) | — | — | — | 3,369,750(1) | 3,650,652 | 4,212,188 | — | 4,212,188 | ||||||||
Performance restricted stock units (unvested and accelerated Stock Price Performance Award) | 2,992,608 | 2,992,608 | — | 4,515,240 | —(2) | 4,898,269 | 4,898,269 | 4,898,269 |
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Disability ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | — | | | | | 355,848 | | | | | — | | | | | 355,848 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Restricted stock units | | | | 2,248,624 | | | | | 2,248,624 | | | | | — | | | | | — | | | | | 916,637 | | | | | 2,248,624 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Performance restricted stock units | | | | 905,076 | | | | | 2,068,814 | | | | | — | | | | | — | | | | | 1,783,799 | | | | | 2,068,814 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Government-required payouts(1) | | | | 107,781 | | | | | 107,781 | | | | | — | | | | | 107,781 | | | | | — | | | | | 107,781 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
(1) Represents distributions under the Gratuity Plan, which is due to Mr. Bagai because he has earned over five years of credited service.
98
Vishal Chhibbar
EXECUTIVE COMPENSATION
Nalin Miglani
Either Mr. ChhibbarMiglani or we may terminate Mr. Chhibbar’sMiglani's employment at any time (though we must give Mr. ChhibbarMiglani 30 days' notice if the termination is without "cause" and Mr. Miglani must give us three months’90 days' advance notice upon a termination without good reason)any resignation). If Mr. Chhibbar’sMiglani's employment with the Company is terminated by the Company without “cause”"cause" (other than due to death or disability) or by Mr. ChhibbarMiglani for “good reason,”"good reason" (both "cause" and "good reason" as summarized below,defined above), Mr. ChhibbarMiglani will receive a cash severance payment equal to one times his total annual fixed compensation then12 months base salary, with 25% payable as a lump sum payment and the remaining 75% payable in effect, paid in installments over a 12-month period.
accordance with the Company's regular payroll practices.
On a “change"change in control”control" (as defined in the 2006 Plan2018 Plan) or 2015 Plan, as applicable),death, Mr. Chhibbar’sMiglani's outstanding equity awards will vest in the same manner as described below:for Mr. Nicolelli's outstanding equity awards beginning on Page 96.
Mr. Chhibbar’sMiglani's severance payments and termination-related equity acceleration are subject to his execution of a release of claims against us. Mr. ChhibbarMiglani is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement and nonsolicitation restrictions during his employment and for one year thereafter.
Indicative Payouts for Nalin Miglani
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Retirement ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | 450,000 | | | | | — | | | | | | | | | 450,000 | | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Restricted stock units | | | | 1,414,861 | | | | | 1,414,861 | | | | | — | | | | | 568,924 | | | | | 74,436 | | | | | 1,414,861 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | ||||||||||||||||||
Performance restricted stock units | | | | 548,944 | | | | | 1,281,468 | | | | | — | | | | | 1,082,993 | | | | | 99,247 | | | | | 1,281,468 | | | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | |
Vikas Bhalla
Either Mr. Bhalla or we may terminate Mr. Bhalla's employment at any time with three months' notice (or pay three months' salary in lieu of notice). If Mr. Bhalla is terminated by us without "cause" (other than due to disability) at any time following a change in control or in specific contemplation of a change in control, or if Mr. Bhalla resigns for "good reason" after at least six months following a "change in control" (as defined in the 2015 Plan), Mr. Bhalla will receive a cash severance payment equal to twelve months' of his then-current annual fixed compensation, payable in twelve equal monthly installments.
On a "change in control" (as defined in the 2018 Plan) or death, Mr. Bhalla's outstanding equity awards will vest in the same manner as described for Mr. Nicolelli's outstanding equity awards beginning on Page 96.
Mr. Bhalla's severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. Bhalla is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for two years following termination of his employment.
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EXECUTIVE COMPENSATION
Indicative Payouts for Vikas Bhalla
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | 301,102 | | | | | — | | | | | 301,102 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Restricted stock units | | | | 1,541,960 | | | | | 1,541,960 | | | | | — | | | | | 579,586 | | | | | 1,541,960 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Performance restricted stock units | | | | 623,147 | | | | | 1,465,355 | | | | | — | | | | | 1,229,853 | | | | | 1,465,355 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Government-required payouts(1) | | | | 101,332 | | | | | 101,332 | | | | | 101,332 | | | | | — | | | | | 101,332 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
(1) Represents distributions under the Gratuity Plan, which is due to Mr. Bhalla because he has earned over five years of credited service.
Samuel Meckey
Either Mr. Meckey or we may terminate Mr. Meckey's employment at any time (though we must give Mr. Meckey 30 days' notice if the termination is without "cause" and Mr. Meckey must give us 60 days' advance notice upon any resignation). If Mr. Meckey's employment with the Company is terminated by the Company without "cause" (other than due to death or disability) or by Mr. Meckey for "good reason" (both "cause" and "good reason" as defined above), Mr. Meckey will receive a cash severance payment equal to 12 months base salary, with 25% payable as a lump sum payment and the remaining 75% payable in accordance with the Company's regular payroll practices.
On a "change in control" (as defined in the 2018 Plan) or death, Mr. Meckey's outstanding equity awards will vest in the same manner as described for Mr. Nicolelli's outstanding equity awards on Page 96.
Mr. Meckey's severance payments and termination-related equity acceleration are subject to his execution of a release of claims against us. Mr. Meckey is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement and nonsolicitation restrictions during his employment and for one year thereafter.
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EXECUTIVE COMPENSATION
Indicative Payouts for Samuel Meckey
Payments upon Termination | | | | Death Prior to a Change in Control ($) | | | | Death After a Change in Control ($) | | | | Termination for Good Reason or Without Cause ($) | | | | Change in Control ($) | | | | Termination Without Cause or for Good Reason Following Change in Control or Termination Without Cause in Specific Contemplation of Change in Control ($) | | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Base salary payout | | | | — | | | | | — | | | | | 425,000 | | | | | — | | | | | 425,000 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Restricted stock units | | | | 1,263,840 | | | | | 1,263,840 | | | | | — | | | | | 435,036 | | | | | 1,263,840 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | |||||||||||||||
Performance restricted stock units | | | | 491,055 | | | | | 1,155,457 | | | | | — | | | | | 969,183 | | | | | 1,155,457 | | | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
Certain Defined Terms
Definition of Cause
The definitionsfollowing definition of “cause” and “good reason” described below apply"cause" applies to Messrs. Chhibbar,Kapoor, Nicolelli, Bagai, Miglani, Bhalla and SchweppeMeckey unless stated otherwise.
“Cause” "Cause" will occur when:
·if: (i) there is a final nonappealable conviction of, or pleading of no contest to, (1) a crime of moral turpitude which causes serious economic injury or serious injury to our reputation or (2) a felony;
· (ii) the executive engages in fraud, embezzlement, gross negligence, self-dealing, dishonesty or other gross and willful misconduct which causes serious and demonstrable injury to us;
· (iii) the executive materially violates any of our material policies;
·policies (for Mr. Kapoor, which is not remedied within 15 days of receipt of notice from the Company specifying the breach in reasonable detail); (iv) the executive willfully and continually fails to substantially perform his duties (other than for reason of physical or mental incapacity) which continues beyond 15 days after we notify him in writing of his need to substantially improve his performance; provided that a failure to achieve performance objectives will not by itself constitute cause and no act or failure to act shall be considered “willful”"willful" unless done or failed to be done by the executive in bad faith and without a reasonable belief that his actions or omission was in our best interest;
· (v) the executive fails to reasonably cooperate in a governmental investigation involving us;
· (vi) the executive materially, knowingly and intentionally fails to comply with applicable laws with respect to the execution of the Company’sCompany's business operations (subject to a presumption of good faith if the executive is following advice of counsel);
· (vii) the executive fails to follow his supervisor’ssupervisor's (or, for Messrs. ChhibbarKapoor and Bagai our board of directors’directors') lawful instructions and does not remedy the failure for 15 days after we give him written notice; or
·(viii) the executive’sexecutive's use of alcohol or drugs materially interferes with the performance of his duties.duties; (ix) for Mr. Kapoor only, he fails to take reasonable steps to end certain affiliations specified in his employment agreement within six months after a request by our board of directors; or (x) for Mr. Kapoor only, he materially breaches any material term of his employment agreement which is not remedied within 15 days of receipt of notice from the Company specifying the breach in reasonable detail.
Definition of Good Reason
For Mr. Kapoor, "good reason" generally means: (i) his duties or responsibilities are substantially reduced, he is required to report to anyone other than our board of directors, or his title as our officer is adversely changed; however, if following a change in control, his new title and authority are similar to his old title and authority, then any change in the executive's title will not constitute a significant reduction in his duties and authorities, it being understood that "good reason" shall be deemed to exist if Mr. Kapoor is no longer the chief executive officer of the Company or any entity
“Good reason”
101
EXECUTIVE COMPENSATION
that acquires the Company; (ii) his base salary is reduced, or his target annual bonus opportunity is reduced below 100% of his base salary; (iii) the office or location where he is based in the metropolitan New York City area is moved more than 30 miles, and the new location is more than 30 miles from his primary residence in the metropolitan New York City area; or (iv) we breach any material term of his employment agreement. If Mr. Kapoor plans to terminate his employment for good reason, he must notify us within 45 days following the date the executive first becomes aware of the circumstances giving rise to good reason and must allow us 30 days to remedy the problem.
The following definition of "good reason" applies to Messrs. Nicolelli, Bagai, Miglani, Bhalla and Meckey unless stated otherwise. "Good reason" means, without the executive’sexecutive's prior written consent:
· (i) the executive’sexecutive's duties or responsibilities are substantially reduced, or he is required to report to anyone other than our board of directors, or our CEO;
· (ii) the executive’sexecutive's title as our officer is adversely changed; however, if following a change in control (as defined in the 20152018 Plan), his new title and authority are similar to his old title and authority, then any change in the executive’sexecutive's title will not constitute a significant reduction in his duties and authorities;
· (iii) for Messrs. Chhibbar andMr. Bagai only, the executive’sexecutive's base salary or annual cash bonus opportunity is reduced, other than in connection with a proportionate reduction impacting all members of our executive committee;
· (iv) for Messrs. Nicolelli, Miglani and SchweppeMeckey only, there is a change in the office or location where the executive is based of more than 50 miles and such new office or location is more than 50 miles from the executive’sexecutive's primary residence; or
· (v) we breach any material term of the executive’sexecutive's employment agreement or severance agreement.
If the executive plans to terminate his employment for good reason, he must notify us within 30 days following the date the executive first becomes aware of the circumstances giving rise to good reason and must allow us 30 days to remedy the problem (15 days forproblem.
Definition of Change in Control
A "change in control" (as generally defined in Mr. Chhibbar).
In quantifying potential payments for purposesKapoor's employment agreement and the 2018 Plan, as applicable) generally means any of this disclosure, we have quantified our equity-based payments by using the closing pricefollowing events: (i) any person or group becomes a beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% of either (1) the combined voting power of our then-outstanding voting securities entitled to vote in the election of directors or (2) our outstanding shares of common stock, on December 31, 2015,assuming all rights to acquire common stock through options, warrants, conversion of convertible stock or debt, and the like are exercised; (ii) a majority of the members of our board of directors changes from those in office as of the date of Mr. Kapoor's employment agreement or the effective date of the 2018 Plan (as applicable), except that the election of any new director whose election or nomination was approved by at least two-thirds of our incumbent directors will not be regarded towards a change in the majority for these purposes; (iii) our dissolution or liquidation; (iv) the sale, transfer or other disposition of all or substantially all of our business or our assets; or (v) consummation of a reorganization, recapitalization, merger, consolidation or similar transaction with another entity which was $44.93.
Indicative Payoutsrequires the approval of Vishal Chhibbar
The following table summarizes the amounts payable to Mr. Chhibbar uponour stockholders; however, any such transaction will not be a change in control if after the transaction (1) more than 50% of the total voting power of the resulting entity or its ultimate parent is represented by what were our outstanding voting securities before the transaction in substantially the same proportion among holders; (2) no person or group is or becomes the beneficial owner of more than 50% of the total voting power of the outstanding voting securities eligible to elect members of our board of directors of the parent or surviving company; and (3) at least a majority of the members of our board of directors of the parent or surviving company following the transaction were our board members when our board first approved the transaction.
Definition of Retirement
A "retirement" generally means a named executive officer's voluntary termination of his employment with us on December 31, 2015:that is effective after he reaches age 60.
Payments upon | Death | Disability | Expiration | Termination | Change in | Termination | Termination | Termination | ||||||||
Base salary payout | — | — | — | 294,785 | — | 294,785 | 294,785 | 294,785 | ||||||||
Bonus payout | — | — | — | — | — | — | — | — | ||||||||
Life insurance | — | — | — | — | — | — | — | — | ||||||||
Health insurance | — | — | — | — | — | — | — | — | ||||||||
Stock options (unvested and accelerated) | — | — | — | — | 89,107 | 89,107 | 89,107 | 89,107 | ||||||||
Restricted stock units (unvested and accelerated) | — | — | — | — | 364,921 | 1,120,914 | 1,120,914 | 1,120,914 | ||||||||
Performance restricted stock units (unvested and accelerated) | — | — | — | — | 696,415 | 808,740 | 808,740 | 808,740 | ||||||||
Government-required payouts(1) | 44,643 | 44,643 | — | 44,643 | — | 44,643 | 44,643 | 44,643 |
Please refer to page 40
102
EXECUTIVE COMPENSATION
In accordance with SEC rules and the Dodd-Frank Wall Street Reform and Consumer Protection Act, presented below is an estimate of the Compensation Discussion and Analysis for a summary of the material terms of Mr. Chhibbar’s revised employment agreement effective January 1, 2016.
Pavan Bagai
Either Mr. Bagai or we may terminate Mr. Bagai’s employment at any time with one month’s notice (or pay one month’s salary in lieu of notice). If Mr. Bagai is terminated by us without “cause” (other than due to disability) at any time following a change in control or in specific contemplation of a change in control, or if Mr. Bagai resigns for “good reason” following a “change in control” (as defined in the 2015 Plan), Mr. Bagai will receive a cash severance payment equal to twelve months’ of his then-current annual fixed compensation, payable in twelve equal monthly installments.
On a “change in control” (as defined in the 2006 Plan or 2015 Plan, as applicable), Mr. Bagai’s outstanding equity awards will vest as described below:
Mr. Bagai’s severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. Bagai is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for two years following termination of his employment.
In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing priceratio of our stock on December 31, 2015, which was $44.93.
Indicative Payouts for Pavan Bagai
The following table summarizesCEO's annual total compensation to our median employee's annual total compensation (our "Pay Ratio"). Due to the amounts payable to Mr. Bagai upon a change in control or termination of his employment with us on December 31, 2015:
Payments upon Termination | Death | Disability | Expiration | Termination | Change | Termination | Termination | Termination Without Cause | |||||||||
Base salary payout | — | — | — | 321,995 | — | 321,995 | 321,995 | 321,995 | |||||||||
Bonus payout | — | — | — | — | — | — | — | — | |||||||||
Life insurance coverage | — | — | — | — | — | — | — | — | |||||||||
Health insurance | — | — | — | — | — | — | — | — | |||||||||
Stock options (unvested and accelerated) | — | — | — | — | 262,080 | 262,080 | 262,080 | 262,080 | |||||||||
Restricted stock units (unvested and accelerated) | — | — | — | — | 741,884 | 2,049,437 | 2,049,437 | 2,049,437 | |||||||||
Performance restricted stock units (unvested and accelerated) | — | — | — | — | 1,149,444 | 1,336,668 | 1,336,668 | 1,336,668 | |||||||||
Government-required payouts(1) | 70,437 | 70,437 | — | 70,437 | — | 70,437 | 70,437 | 70,437 |
Nalin Miglani
Either Mr. Miglani or we may terminate Mr. Miglani’s employment at any time (though we must give Mr. Miglani 30 days’ notice if the termination is without “cause”size and Mr. Miglani must give us 90 days’ advance notice upon any resignation). If Mr. Miglani’s employment with the Company is terminated by the Company without “cause” (other than due to death or disability) or by Mr. Miglani for “good reason” (both “cause” and “good reason” as defined above), Mr. Miglani will receive a cash severance payment equal to 12 months base salary, with 25% payable as a lump sum payment and the remaining 75% payable in accordance with the Company’s regular payroll practices.
On a “change in control” (as defined in the 2006 Plan or 2015 Plan, as applicable), Mr. Miglani’s outstanding equity awards will vest as described below:
Mr. Miglani’s severance payments and termination-related equity acceleration are subject to his execution of a release of claims against us. Mr. Miglani is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement and nonsolicitation restrictions during his employment and for one year thereafter.
In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing pricecomplexity of our stock on December 31, 2015,organization, which was $44.93.
Indicative Payouts for Nalin Miglani
The following table summarizes the amounts payable to Mr. Miglani upon a change in control or termination of her employment with us on December 31, 2015:
Payments upon | Death | Disability | Expiration | Termination | Change | Termination | Termination | Termination Without Cause | |||||||||
Base salary payout | — | — | — | 400,000 | — | 400,000 | 400,000 | — | |||||||||
Bonus payout | — | — | — | — | — | — | — | — | |||||||||
Life insurance coverage | — | — | — | — | — | — | — | — | |||||||||
Health insurance | — | — | — | — | — | — | — | — | |||||||||
Stock options (unvested and accelerated) | — | — | — | — | — | — | — | — |
Payments upon | Death | Disability | Expiration | Termination | Change | Termination | Termination | Termination Without Cause | |||||||||
Restricted stock units (unvested and accelerated) | — | — | — | — | 206,678 | 1,078,320 | 1,078,320 | 1,078,320 | |||||||||
Performance restricted stock units (unvested and accelerated) | — | — | — | — | 179,720 | 269,580 | 269,580 | 269,580 |
Henry Schweppe
The following section describes Mr. Schweppe’s employment agreement in effect while he was employed.If Mr. Schweppe’s employment with the Company was terminated by the Company without “cause” (other than due to death or disability) or by Mr. Schweppe for “good reason” (both “cause” and “good reason” as defined above), Mr. Schweppe will receive a cash severance payment equal to 12 months base salary, payable in accordance with the Company’s regular payroll practices.
On a “change in control” (as defined in the 2006 Plan or 2015 Plan, as applicable), Mr. Schweppe’s outstanding equity awards would have vested as described below:
Mr. Schweppe’s severance payments and termination-related equity acceleration were subject to his execution of a release of claims against us. Mr. Schweppe is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement and nonsolicitation restrictions during his employment and for one year thereafter.
In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2015, which was $44.93.
Indicative Payouts for Henry Schweppe
Mr. Schweppe’s employment with the Company terminated as of March 18, 2016. However, pursuant to SEC rules we are disclosing certain additional information related to a hypothetical termination31, 2021 was made up of approximately 31,600 professionals throughout the world, with delivery centers in over 10 countries, our Pay Ratio is based on reasonable assumptions and estimates described below.
We calculated our Pay Ratio by looking at our entire employee population (excluding our CEO) as of December 31, 2015. Accordingly,2020, but excluding leased employees and independent contractors. We then calculated each employee's "total pay" using the following table summarizes the amounts payable to Mr. Schweppe upon a change in control or terminationsum of his employmentor her fixed pay / base salary and variable pay (including any performance bonus, sales commission, and retention or signing bonus). We also annualized total pay for all full-time and part-time employees that were employed for less than the full fiscal year 2020.
For all employees located in jurisdictions other than the United States, a cost-of-living adjustment was made to align their compensation with usthe cost-of-living standards in the United States, the jurisdiction in which our CEO resides. Finally, we identified the median employee and calculated his or her annual total compensation and the CEO's annual total compensation in the manner required by Item 402(u) of Regulation S-K, to determine the pay ratio shown in the table below.
Pay Ratio — All Employees (with COLA)(1) | ||||
---|---|---|---|---|
| | | | |
Chief Executive Officer's Annual Total Compensation | $7,141,267 | |||
| | | | |
Median Employee's Annual Total Compensation | $10,682 | |||
| | | | |
Ratio of Chief Executive Officer's Annual Total Compensation to Median Employee's Annual Total Compensation | 669:1 | |||
| | | | |
(1) 2020 Mercer Combined Index. Our median employee, identified without performing a cost-of-living adjustment, is based in India and had an annual total compensation of $6,870, resulting in a pay ratio of 1,039:1.
Approximately 93% of our employees are located outside of the United States, primarily in India and the Philippines. As is common with many global companies, our compensation programs are market based, and as such they may differ for employees based on December 31, 2015:the country where an employee works. Accordingly, we believe that it is important to show our pay-ratio calculated in a similar manner as described above using the median U.S.-based employee to provide a commensurable view of our pay practices.
Pay Ratio — United States Employees | ||||
---|---|---|---|---|
| | | | |
Chief Executive Officer's Annual Total Compensation | $7,141,267 | |||
| | | | |
Median Employee's Annual Total Compensation | $114,037 | |||
| | | | |
Ratio of Chief Executive Officer's Annual Total Compensation to Median Employee's Annual Total Compensation | 63:1 | |||
| | | | |
Payments upon | Death | Disability | Expiration | Termination | Change | Termination | Termination | Termination Without Cause | |||||||||
Base salary payout | — | — | — | 450,000 | — | 450,000 | 450,000 | — | |||||||||
Bonus payout | — | — | — | — | — | — | — | — | |||||||||
Life insurance coverage | — | — | — | — | — | — | — | — | |||||||||
Health insurance | — | — | — | — | — | — | — | — | |||||||||
Stock options (unvested and accelerated) | — | — | — | — | — | — | — | — | |||||||||
Restricted stock units (unvested and accelerated) | — | — | — | — | 214,945 | 1,152,589 | 1,152,589 | 1,152,589 | |||||||||
Performance restricted stock units (unvested and accelerated) | — | — | — | — | 224,650 | 336,975 | 336,975 | 336,975 |
103
EXECUTIVE COMPENSATION
Director Compensation for Fiscal Year 2015
2020
The following table sets forth information for compensation earned in fiscal year 20152020 by our non-executive directors who served during fiscal year 2015:2020:
Name(1) | | Fees Earned or Paid in Cash ($)(4) | | Stock Awards ($)(5)(6) | | All Other Compensation ($)(2) | | Total ($) | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | |
David Kelso | 83,250 | 140,000 | — | 193,250 | ||||||||||||
| | | | | | | | | | | | | | | | |
Deborah Kerr | 72,000 | 140,000 | — | 182,000 | ||||||||||||
| | | | | | | | | | | | | | | | |
Anne Minto | 81,000 | 140,000 | 12,123 | 203,123 | ||||||||||||
| | | | | | | | | | | | | | | | |
Som Mittal | 72,000 | 140,000 | 7,501 | 189,501 | ||||||||||||
| | | | | | | | | | | | | | | | |
Clyde Ostler | 85,500 | 140,000 | — | 195,500 | ||||||||||||
| | | | | | | | | | | | | | | | |
Vikram Pandit(3) | 65,250 | 140,000 | — | 175,250 | ||||||||||||
| | | | | | | | | | | | | | | | |
Nitin Sahney | 74,250 | 140,000 | — | 184,250 | ||||||||||||
| | | | | | | | | | | | | | | | |
Garen Staglin | 162,000 | 240,000 | 52,345 | 424,345 | ||||||||||||
| | | | | | | | | | | | | | | | |
Jaynie Studenmund | 74,250 | 140,000 | — | 184,250 | ||||||||||||
| | | | | | | | | | | | | | | | |
(1) Mr. Kapoor's compensation during 2020 was based solely on his role as CEO, as disclosed in the "Summary Compensation Table for Fiscal Year 2020" beginning on page 86 and discussed in "Compensation Discussion and Analysis" beginning on page 61. He does not receive any additional compensation for his services as a director. Mr. Pipes, a current non-executive director, was not a director during fiscal year 2020.
(2) For Ms. Minto and Mr. Mittal, amount reflects our reimbursement to the director for fees associated with tax preparer services. For Mr. Staglin, amount reflects our reimbursement for costs associated with secretarial services.
(3) Pursuant to the Investment Agreement, Mr. Pandit's 2020 compensation was paid to The Orogen Group.
(4) Fees earned or paid in cash were temporarily reduced due to COVID-19, as described on page 105.
(5) Amounts reflect the aggregate grant date fair value of stock awards and option awards recognized for financial statement reporting purposes for the fiscal year ended December 31, 2020, in accordance with FASB ASC Topic 718 (disregarding any forfeiture assumptions). Assumptions used in the calculation of these amounts are included in footnotes 2 and 23 to our audited financial statements for the fiscal year ended December 31, 2020 included in the 2020 Form 10-K.
Name(1) | Fees Earned or | Stock | Option | All Other | Total | ||||||
David Kelso | 80,000 | 99,998 | — | — | 179,998 | ||||||
Deborah Kerr | 72,500 | 146,309 | — | — | 218,809 | ||||||
Clyde Ostler | 82,500 | 99,998 | — | — | 182,498 | ||||||
Anne Minto | 77,500 | 127,108 | — | 25,077(6) | 229,685 | ||||||
Som Mittal | 70,000 | 99,998 | — | — | 169,998 | ||||||
Mohanbir Sawhney(4) | 72,500 | 99,998 | — | — | 172,498 | ||||||
Garen Staglin | 120,000 | 206,771 | — | 39,500(5) | 366,271 |
104
Name | No. of Securities | No. of Securities | No. of Shares or Units of | ||||
David Kelso | 38,253 | — | 2,853 | ||||
Deborah Kerr | — | — | 4,470 | ||||
Anne Minto | 3,093 | — | 3,621 | ||||
Som Mittal | — | — | 2,853 | ||||
Clyde Ostler | 62,723 | — | 2,853 | ||||
Mohanbir Sawhney | — | — | 2,853 | ||||
Garen Staglin | 32,723 | — | 6,270 |
EXECUTIVE COMPENSATION
(6) The outstanding equity awards held by our non-employee directors on December 31, 2020 is set forth on the table below:
Name(1) | | | | No. of Securities Underlying Unexercised Options (#) Exercisable | | | | No. of Securities Underlying Unexercised Options (#) Unexercisable | | | | No. of Shares or Units of Stock That Have Not Vested | | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | |||||||||
David Kelso | | | | 21,156 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Deborah Kerr | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Anne Minto | | | | 3,093 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Som Mittal | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Clyde Ostler | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Vikram Pandit | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Nitin Sahney | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Garen Staglin | | | | 0 | | | | | 0 | | | | | 3,711 | | | ||||||
| | | | | | | | | | | | | | |||||||||
Jaynie Studenmund | | | | 0 | | | | | 0 | | | | | 2,363 | | | ||||||
| | | | | | | | | | | | | |
For 2015,2020, non-employee directors (other than the non-executive Chairman) were eligible to receive an annual retainer fee in the amount of $55,000.$60,000 in cash and $140,000 in equity valued at the time of grant. The non-executive Chairman of our board of directors was eligible to receive an additionalannual retainer fee in the amount of $150,000 which is paid $50,000$160,000 in cash and $100,000$240,000 in equity. The Lead Directorequity valued at the time of our board of directors (if there is a Lead Director serving at such time) was eligible to receive an additional annual fee of $25,000.grant. New non-employee directors who join our board of directors during a calendar quarter are eligible to receive the full cash fee for such calendar quarter.quarter and a pro-rated equity grant. The chairperson of our Audit Committee was eligible to receive an additional annual fee of $20,000,$25,000 in cash, and other members of our Audit Committee were eligible to receive an additional annual fee of $10,000.$12,500 in cash. The Chairpersons of committees other than our Audit Committee were eligible to receive an additional annual fee of $15,000,$20,000 in cash, and members of committees other than our Audit Committee were eligible to receive an additional annual fee of $7,500. $10,000.
2020 COVID-19 Related Temporary Salary Deferrals and Reductions
From May 1, 2020 to August 31, 2020, due to the uncertainty caused by the COVID-19 pandemic and in order to retain flexibility, as an extension of the cost savings actions taken by the Company as described above (including related to salary increment deferrals and salary reductions), the Company's non-employee directors agreed to a reduction of 30% in their respective cash retainers.
There are no additional fees payable for attendance at our board or committee meetings (whether in person, telephonic or otherwise). We make quarterly cash payments in respect of the director fees to our directors who elect to receive a portion of their director fees in the form of cash.
Prior to July 1, 2014, new non-employee directors who join our board of directors were eligible to receive restricted stock units representing 4,000 shares of our common stock and each non-employee director received a grant on the anniversary of his board service date of restricted stock units representing 4,000 shares of our common stock. Effective July 1, 2014, the Company decided to transition to making an annual grant to all directors with an approximate value of $100,000 commencing on the date of the 2015 Annual Stockholders’ meeting. In order to transition to this new program, any director with an anniversary hire date between July 1, 2014 and June 19, 2015, the date of the 2015 Annual Stockholders’ meeting, received a pro rata grant based upon the number of days between the anniversary date and the date of the Annual Stockholders’ meeting. On June 19, 2015, each non-employee director received a grant or restricted stock units valued at $100,000 with the exact number of units being determined by dividing $100,000 by the closing stock price on June 18, 2015. The grants provide that the restricted stock units will vest on the earliest of:
directors.
Holders of restricted stock units do not receive the underlying shares of common stock until the units have vested and are settled. The restricted stock units issued to each of our non-employee directors will settle on the earliest of:
Risk and Compensation Policies
105
Our Compensation Committee has taken into account its discussions with management regarding our compensation practices and has concluded that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us.
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND
CERTAIN BENEFICIAL OWNERS
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS |
Unless otherwise indicated, the table below sets forth as of March 31, 2016, information with respect to the beneficial ownership of our common stock by:
The amounts and percentages of common stock beneficially owned below are as of March 31, 20162021 (the "Determination Date") and are reported on the basis of the regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days of March 31, 2016.the Determination Date. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities. Except as otherwise indicated below, each of the persons named in the table has sole voting and investment power with respect to the securities beneficially owned by such person as set forth opposite such person’sperson's name.
Beneficial Ownership
Vested but Unsettled Restricted Stock Units(3) | ||||||||||
Beneficial Ownership | ||||||||||
Name and Address of Beneficial Owner(1) | Shares | Percentage (%)(2) | Total | |||||||
Wellington Management Group LLP(4) | 3,168,468 | 9.82 | — | 3,168,468 | ||||||
Blackrock, Inc.(5) | 3,092,116 | 9.58 | — | 3,092,116 | ||||||
Vanguard Group, Inc.(6) | 2,406,845 | 7.46 | — | 2,406,845 | ||||||
TimesSquare Capital Management, LLC(7) | 1,816,231 | 5.63 | — | 1,816,231 | ||||||
Rohit Kapoor(8) | 1,556,123 | 4.57 | — | 1,556,123 | ||||||
Pavan Bagai(9) | 147,770 | * | — | 147,770 | ||||||
Vishal Chhibbar(10) | 73,915 | * | — | 73,915 | ||||||
Nalin Miglani | — | * | — | — | ||||||
Henry Schweppe(11) | — | * | — | — | ||||||
David B. Kelso(12) | 43,253 | * | 35,208 | 78,461 | ||||||
Deborah Kerr | — | * | 1,617 | 1,617 | ||||||
Anne E. Minto(13) | 3,093 | * | 8,768 | 11,861 | ||||||
Som Mittal | — | * | 6,021 | 6,021 | ||||||
Clyde W. Ostler(14) | 62,723 | * | 25,935 | 88,658 | ||||||
Nitin Sahney | — | * | — | 34,184 | ||||||
Garen K. Staglin(15) | 52,723 | * | 43,240 | 95,693 | ||||||
All current directors and current executive officers as a group (14 persons)(16) | 2,045,822 | 5.94 | 154,973 | 2,200,795 |
Name and Address(1) | | Shares | | %(2) | | Vested but Unsettled RSUs(3) | | Total | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | ||||||
5% Beneficial Owners | | | | | | | | ||||||||
| | | | | | | | | | ||||||
Blackrock Inc.(4) | | 5,022,856 | | 14.98 | | | — | | | | |||||
Vanguard Group, Inc.(5) | | 3,490,051 | | 10.41 | | | — | | | | |||||
FMR LLC(6) | | 2,736,294 | | 8.16 | | | — | | | | |||||
Wellington Management Group LLP(7) | | 1,873,175 | | 5.59 | | | — | | | | |||||
Named Executive Officers | | | | | | | | ||||||||
| | | | | | | | | | ||||||
Rohit Kapoor | | 729,618 | (8) | 2.18 | | | — | | | 729,618 | | ||||
Maurizio Nicolelli | | 3,210 | | * | | | — | | | 3,210 | | ||||
Pavan Bagai | | 55,938 | | * | | | — | | | 55,938 | | ||||
Nalin Miglani | | 3,879 | | * | | | — | | | 3,879 | | ||||
Vikas Bhalla | | 13,630 | | * | | | — | | | 13,630 | | ||||
Samuel Meckey | | 4,366 | | * | | | — | | | 4,366 | | ||||
| | | | | | | | | |
106
STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
Name and Address(1) | | Shares | | %(2) | | Vested but Unsettled RSUs(3) | | Total | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | ||||||
Directors | | | | | | | | ||||||||
| | | | | | | | | | ||||||
David Kelso | | 26,663 | (9) | * | | | 38,061 | | | 64,724 | | ||||
Deborah Kerr | | — | | * | | | 11,923 | | | 11,923 | | ||||
Anne E. Minto | | 3,093 | (10) | * | | | 19,074 | | | 22,167 | | ||||
Som Mittal | | 5,657 | | * | | | 10,670 | | | 16,327 | | ||||
Clyde W. Ostler | | 22,261 | | * | | | 36,241 | | | 58,502 | | ||||
Vikram S. Pandit | | — | | * | | | 2,995 | | | 2,995 | | ||||
Kristy Pipes | | — | | * | | | 0 | | | 0 | | ||||
Nitin Sahney | | — | | * | | | 8,499 | | | 8,499 | | ||||
Garen K. Staglin | | 23,753 | (11) | * | | | 51,139 | | | 74,892 | | ||||
Jaynie M. Studenmund | | 2,220 | | * | | | 3,036 | | | 5,256 | | ||||
| | | | | | | | | | ||||||
All current directors and executive officers as a group (18 people)(12) | | 942,020 | (13) | 2.81 | | | | | | ||||||
| | | | | | | | | |
* Less than 1%.
(1) Unless otherwise noted, the business address of each beneficial owner is c/o ExlService Holdings, Inc., 320 Park Avenue, 29th Floor, New York, New York 10022.
(2) Based on 33,526,889 shares outstanding as of the Determination Date.
(3) For non-management directors, this column includes restricted stock units (previously granted for service on the Board) that have vested but are unsettled. Because vested restricted stock units generally settle 180 days following the director's term of service (see "Director Compensation for Fiscal Year 2020" for additional details on settlement), the units are not treated as beneficially owned under SEC rules because the holder does not have the right to acquire the underlying stock within 60 days of the Determination Date. However, restricted stock units that are vested but unsettled provide a meaningful alignment with the Company's stockholders, and they count towards our stock ownership policy for non-employee directors, which requires directors to maintain stock ownership of at least five times their respective annual retainers.
(4) Based on the Schedule 13G/A filed on February 26, 2021, BlackRock, Inc. had sole voting power with respect to 4,981,727 shares and sole dispositive power with respect to 5,022,856 shares. The business address of Blackrock, Inc. is 55 East 52nd Street, New York, New York 10022.
(5) Based on the Schedule 13G/A filed on February 10, 2021, Vanguard Group, Inc. had shared voting power with respect to 76,177 shares, sole dispositive power with respect to 3,386,871 shares and shared dispositive power with respect to 103,180 shares. The business address of Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, PA 19355.
(6) Based on the Schedule 13G/A filed on February 8, 2021, FMR LLC had sole voting power with respect to 551,810 shares and sole dispositive power with respect to 2,736,294 shares. The business address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.
(7) Based on the Schedule 13G/A filed on February 4, 2021, Wellington Management Group LLP had shared voting power with respect to 1,590,523 shares and shared dispositive power with respect to 1,873,175 shares. The business address of Wellington Management Group LLP is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
(8) The amount includes: (a) 177,134 shares of our common stock owned indirectly by Mr. Kapoor through a family trust created in 2016 under a 2005 grantor-retained annuity trust, for which Mr. Kapoor's spouse and Mr. Kapoor's brother are the co-trustees and share dispositive and voting control over the shares in the trust, (b) 40,219 shares of our common stock owned indirectly by Mr. Kapoor through a family trust created in 2016 under a 2013 grantor retained annuity trust, for which Mr. Kapoor's spouse and Mr. Kapoor's brother are the co-trustees and share dispositive and voting control over the shares in the trust, (c) 84,000 shares of our common stock owned indirectly by Mr. Kapoor through a spousal lifetime access trust, for which Mr. Kapoor's spouse and Mr. Kapoor's brother are the co-trustees and share dispositive and voting control over the shares in the trust, (d) 84,000 shares of our common stock owned indirectly by Mr. Kapoor through a spousal lifetime access trust for Mr. Kapoor's spouse, for which Mr. Kapoor and Mr. Kapoor's brother are the co-trustees and share dispositive and voting control over the shares in the trust, and (e) 158,185 shares of our common stock owned indirectly by Mr. Kapoor through a family trust created in 2016 for which Mr. Kapoor is the investment advisor to Commonwealth Trust Company, the trustee.
(9) This amount consists of 21,156 shares of our common stock of which Mr. Kelso has the right to acquire beneficial ownership within 60 days of the Determination Date pursuant to currently vested and exercisable stock options.
(10) This amount consists of 3,093 shares of our common stock of which Ms. Minto has the right to acquire beneficial ownership within 60 days of the Determination Date pursuant to currently vested and exercisable stock options.
(11) This amount includes 1,854 shares of our common stock owned indirectly by Mr. Staglin through an irrevocable family trust created in 2018, for which Mr. Staglin's spouse is the sole beneficiary and trustee with sole dispositive and voting control over the shares in the trust.
(12) Includes all 10 current non-employee directors and our eight current executive officers.
(13) This amount includes an aggregate of 28,249 shares of our common stock of which our current directors and current executive officers have the right to acquire beneficial ownership within 60 days of the Determination Date pursuant to currently vested and exercisable stock options.
107
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS |
Review and Approval of Related Party Transactions
We review all relationships and transactions in which we, our directors and executive officers or their immediate family members and our 5% stockholders are participants to determine whether such persons have a direct or indirect material interest in such transactions. Our Code of Conduct and Ethics instructs our directors, officers and employees to report the facts and circumstances of any such transaction or potential transaction to our General Counsel or our Audit Committee. Our board of directors has adopted a policy regarding the review of potential related party transactions. Under this policy, our General Counsel will review the facts and circumstances of any covered transaction. If our General Counsel determines that the transaction involves a related party transaction and thatif the amount involved does not equal or exceed $120,000, our General Counsel will approve or disapprove the transaction. If our General Counsel determines that the transaction involves a related party transaction and thatif the amount involved equals or exceeds $120,000, our General Counsel will refer the transaction to our Audit Committee for approval. For eachconsideration. In the course of reviewing, approving or ratifying a disclosable related party transaction, our General Counsel and Audit Committee as applicable, will reviewconsiders all factors it considers appropriate, including but not limited to the nature of the related party transaction, the related party’s interestfactors in the transaction and the material terms of the transaction, the importance of the transaction to us andbox to the related party and whether the transaction would impair the judgment of a director or executive officer to act in our best interest. right.
Related Party Transactions
As required under SEC rules, transactions that are determined to be directly or indirectly material to us or a related person and which involve amounts exceeding $120,000 in the previous fiscal year are disclosed in our proxy statement.
On October 1, 2018, the Company entered into the Investment Agreement with the Purchaser, an affiliate of The Orogen Group. One of the Company's directors, Vikram Pandit, is the Chairman and Chief Executive Officer of The Orogen Group. Under the terms of the Investment Agreement, the Company issued to the Purchaser $150,000,000 in aggregate principal amount of 3.50% Convertible Senior Notes due October 1, 2024. In addition, we appointed Mr. Pandit, a nominee of the Purchaser, to our board of directors pursuant to the Investment Agreement. After considering the facts and circumstances regarding the relationship, our board of directors has determined that the Investment Agreement does not impair Mr. Pandit's independence under applicable Nasdaq standards and federal securities laws.
Related Party Transactions
None.
108
REPORT OF THE Table of Contents
AUDIT COMMITTEE REPORT
AUDIT COMMITTEE REPORT |
The Audit Committee of the board of directors of ExlService Holdings, Inc. assists our board of directors in fulfilling its oversight responsibilities with respect to the following:
In connection with these responsibilities, the Audit Committee met with management and ErnstDeloitte & YoungTouche LLP to review and discuss the December 31, 20152020 audited consolidated financial statements. The Audit Committee also discussed with ErnstDeloitte & YoungTouche LLP the matters required to be discussed by the Statement on Auditing Standards No. 61 (Communication with Audit Committees), as amended, as adopted byapplicable requirements of the Public Company Accounting Oversight Board in Rule 3200T.and the SEC. The Audit Committee also received written disclosures and the letter from ErnstDeloitte & YoungTouche LLP required by Rule 3526 of the Public Company Accounting Oversight Board (Communications with Audit Committees Concerning Independence), and the Audit Committee discussed with ErnstDeloitte & YoungTouche LLP the firm’sfirm's independence.
Based on the review and discussions referred to above, the Audit Committee approved the inclusion of the audited financial statements in the Company’sCompany's Annual Report on Form 10-K for 2015.the fiscal year ended December 31, 2020.
Audit Committee
Mr. Clyde W. Ostler (Chairman)
Mr. David B. Kelso
Mr. Vikram Pandit
Ms. Kristy Pipes
Mr. Nitin Sahney
Ms. Jaynie Studenmund
109
PROPOSAL 1
— ELECTION OF DIRECTORS
PROPOSAL 1 — ELECTION OF DIRECTORS |
The Nominees
Our Nominating and Governance Committee has nominated, and our board of directors has designated, Ms.Mses. Minto, Pipes and Mr.Studenmund and Messrs. Kapoor, Mittal, Ostler, Pandit, Sahney and Staglin to stand for election as Class I directors at the Annual Meeting. Two of our current directors, Ms. MintoKerr and Mr. Kapoor areKelso, will not be standing for re-election. re-election at the Annual Meeting.
Term of Office
If elected, each of the director nominees will serve a term of one year on our board of directors, until our 2022 Annual Meeting of Stockholders or until their successors are duly elected and qualified in accordance with our by-laws.
Voting Instructions and Substitutes
The proxies given to the proxy holders will be voted or not voted as directed and, if no direction is given, will be voted FOR these threesix nominees. Our board of directors knows of no reason why any of these nominees should be unable or unwilling to serve. However, if for any reason any nominee should be unable or unwilling to stand for election, the shares represented by proxies will be voted for the election of any substitute nominee designated by our board of directors to fill the vacancy.
General Information Aboutabout Nominees
The age, tenure on our board of directors and committee membership, if any, of each nominee appears below. Information regarding the business experience during at least the last five years and directorships of other publicly owned corporations of each nominee can be found above under “Our"Our Board of Directors.”" Other information required
110
PROPOSAL 1 — ELECTION OF DIRECTORS
with respect to any solicitation of proxies in connection with the election of directors is found elsewhere in this proxy statement.
Name | | | Age | | | Director Since | | | Independent | | | Committee Membership | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | | | |||||||||||
Garen Staglin Chairman | | | 76 | | | June 2005 | | Yes | | ||||||||||||||||||
Compensation; Nominating and Governance | |||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Rohit Kapoor | Vice Chairman and CEO | | | | 56 | | | | November 2002 | | | No | | | None | ||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Anne Minto | | | | 67 | | | | March 2013 | | | Yes | | | Compensation; Nominating and Governance | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Som Mittal | | | | 69 | | | | December 2013 | | | Yes | | | Compensation; Nominating and Governance | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Clyde Ostler | | | | 74 | | | | December 2007 | | | Yes | | | Audit (Chair); Compensation | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Vikram Pandit | | | | 64 | | | | October 2018 | | | Yes | | | Audit; Nominating and Governance | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Kristy Pipes | | | | 61 | | | | January 2021 | | | Yes | | | Audit; Compensation | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Nitin Sahney | | | | 58 | | | | January 2016 | | | Yes | | | Nominating and Governance (Chair); Audit | |||||||||||||
| | | | | | | | | | | | | | | | | |||||||||||
Jaynie Studenmund | | | | 66 | | | | September 2018 | | | Yes | | | Compensation (Chair); Audit | |||||||||||||
| | | | | | | | | | | | | | | | |
Required Vote
The affirmative vote of the pluralitya majority of votes (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee) cast in person or represented by proxy and entitled to vote at the Annual Meeting will elect the threenine nominees as Class III directors for a term of one year. If any nominee for director receives a greater number of votes "against" his or her election than votes "for" such election, our by-laws provide that such person will tender to the specified three-year term.board of directors his or her resignation as a director. Unless marked to the contrary, proxies received will be voted “FOR”"FOR" the nominees.
Our board
111
Table of directors recommends a vote FOR the election of Ms. Minto and Mr. Kapoor as Class I directors of the Company.Contents
PROPOSAL 2
— RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
Our Audit Committee has selected Ernstappointed Deloitte & YoungTouche LLP ("Deloitte") as the independent registered public accounting firm to audit the Company’sCompany's and its subsidiaries’subsidiaries' books, records and accounts for the fiscal year 2016.2021. Our board of directors has endorsed this appointment. Ratification of the selectionappointment of Ernst & Young LLPDeloitte by our stockholders is not required by law. However, as a matter of good corporate practice, such selectionappointment is being submitted to our stockholders for ratification at the Annual Meeting. If our stockholders do not ratify the selection,appointment, our board of directors and our Audit Committee will reconsider whether or not to retain Ernst & Young LLP,Deloitte, but may nonetheless retain Ernst & Young LLP.Deloitte. Even if the selectionappointment is ratified, the Audit Committee in its discretion may change such appointment at any time during the year if it determines that such change would be in the best interests of the Company and our stockholders. Ernst & Young LLP audited our consolidated financial statements for fiscal years 2015
In retaining Deloitte as the Company's independent registered public accounting firm, the Audit Committee considered whether the provision of non-audit services by Deloitte was compatible with maintaining Deloitte's independence and 2014.concluded that it was. Representatives of Ernst & Young LLPDeloitte are expected to be present at the Annual Meeting. They will have an opportunity to make a statement, if they desire to do so, and will be available to respond to appropriate questions. Deloitte has served as our independent registered public accounting firm since February 28, 2018.
Audit and Non-Audit Fees
The following is a summary of the fees billed or expected to be billed to us by Ernst & Young LLPthe Company's independent registered public accounting firm for professional services rendered forin each of the last two fiscal years 2015 and 2014:years:
Fee Category | | Fiscal 2020 | | Fiscal 2019 | | ||
---|---|---|---|---|---|---|---|
| | (in thousands) | | ||||
| | | | | | ||
Audit Fees | | $ | 1,451 | | $ | 1,391 | |
Audit-Related Fees | | — | | 114 | | ||
Tax Fees | | 758 | | 696 | | ||
All Other Fees | | — | | — | | ||
| | | | | | ||
Total Fees | | $ | 2,209 | | $ | 2,201 | |
Fee Category | Fiscal | Fiscal | ||||
(in thousands) | ||||||
Audit Fees | $ | 1,453 | $ | 1,302 | ||
Audit-Related Fees | 179 | 211 | ||||
Tax Fees | 45 | 10 | ||||
All Other Fees | 31 | 3 | ||||
Total Fees | $ | 1,708 | $ | 1,526 |
112
PROPOSAL 2 — RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Audit Fees.Fees: Consist of fees billed or expected to be billed for professional services rendered for the audit of our consolidated financial statements, including (i) the audit of effectiveness of internal control over financial reporting, (ii) review of our consolidated financial statements included in our quarterly reports, orand (iii) services that are normally provided by our registered independent public accountants including services in connection with statutory or regulatory filings or engagements for those fiscal years.
Audit-Related Fees.Fees: Consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under “Audit"Audit Fees.”" These services include SSAE 1618 service organization audits and Federal Reserve and tax certification for Indian legal entities.due diligence in connection with acquisition activity.
Tax Fees.Fees: Consist primarily of fees billed or expected to be billed for other tax filing orand advisory projects.
All Other Fees.Fees: Consist of fees billed or expected to be billed for products and services other than as reported above.
permissible work performed by the Company's independent public registered accounting firm that does not meet the above category descriptions.
Our Audit Committee pre-approves and is responsible for the engagement of all auditing services provided by our independent registered public accountants and all non-auditing services to be provided by such accountants to the extent permitted under
Section 10A of the Exchange Act, including all fees and other terms of engagement. Our Audit Committee may delegate the authority to pre-approve audit and permitted non-audit services between meetings of our Audit Committee to a designated member of our Audit Committee, provided that the decisions made by such member are presented to our full Audit Committee for ratification at its next scheduled meeting.
All of the fees paid to Ernst & Young LLPDeloitte in 2015 and 2014fiscal year 2020 were pre-approved by the Audit Committee.
Required Vote
The ratification of the appointment of Ernst & Young LLPDeloitte as our independent registered public accounting firm requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Unless marked to the contrary, proxies received will be voted “FOR”"FOR" ratification of the appointment.
Our board of directors recommends a vote FOR the ratification of Ernst & Young LLP as our independent registered public accounting firm.
113
PROPOSAL 3
— ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
PROPOSAL 3 — ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION |
Proposal 3 is ana vote, on a non-binding advisory (non-binding) vote onbasis, to approve the compensation of our executive officers as described in this proxy statement. Although the vote is advisory and is not binding on the board of directors, our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. We refer to this non-binding advisory vote as the “say-on-pay”"say-on-pay" vote.
At the 20112018 Annual Meeting of Stockholders, our stockholders voted on a proposal relating to the frequency of the “say-on-pay”"say-on-pay" vote. We recommended, and our stockholders approved on ana non-binding advisory non-binding basis, an annual say-on-pay vote. Accordingly, we include the say-on-pay vote each year as a regular part of each Annual Meeting of Stockholders, and the next such say-on-pay vote will occur at next year’syear's Annual Meeting of Stockholders. The next vote on the frequency of the “say-on-pay”"say-on-pay" vote will also be held at next year’sthe Annual Meeting of Stockholders.to be held in 2023.
In addition, our philosophy places more emphasis on variable elements of compensation (such as incentive bonuses and equity-based compensation) than fixed remuneration.
Our stockholders have the opportunity to vote for, against or abstain from voting on the following resolution:
“"Resolved, that the stockholders approve on an advisory basis the compensation of our named executive officers, as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure shall include the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement).”"
The above-referenced disclosures related to the compensation of our named executive officers appear beginning at page 2361 of this proxy statement.
Required Vote
The approval, on an advisory (non-binding) basis, of the compensation of our named executive officers requires the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. Unless marked to the contrary, proxies received will be voted “FOR”"FOR" the approval of the compensation of our named executive officers.
Our board of directors recommends a vote FOR the approval on an advisory basis of the compensation of our named executive officers as disclosed pursuant to the compensation disclosure rules of the SEC (which disclosure shall include the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement).
114
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS
FOR THE 20172022 ANNUAL MEETING
STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2022 ANNUAL MEETING |
Stockholder proposals intended to be included in our proxy materials for the 20172022 Annual Meeting of Stockholders (“2017("2022 Annual Meeting”Meeting") must be received by the deadline calculated in accordance with SEC Rule 14a-8, which is 120 days before the anniversary of the date of this year’syear's proxy statement. This year’syear's deadline is Friday, December 30, 2016.24, 2021. Such proposals must include the information required by SEC rules, and should be sent in writing by courier or certified mail to the Corporate Secretary of the Company at 280320 Park Avenue, 38th29th Floor, New York, New York 10017.10022. Stockholder proposals that are sent to any other person or location or by any other means may not be received in a timely manner and thus may be ineligible for inclusion.
Stockholders who intend to submit proposals at the 20172022 Annual Meeting but whose proposals are not included in the proxy materials for the meeting, and stockholders who intend to submit nominations for directors at the 20172022 Annual Meeting, are required to notify the Corporate Secretary of the Company (at the address above) of their proposal or nominations not less than 90 days, nor more than 120 days, before the anniversary of this year’syear's Annual Meeting of Stockholders, in accordance with our by-laws. This year such noticeSuch notices of proposals for the 2022 Annual Meeting must be delivered between February 17, 201716, 2022 and March 19, 2017.18, 2022. Special notice provisions apply under the by-laws if the date of the 20172022 Annual Meeting is more than 30 days before or 70 days after the anniversary date of this year’syear's Annual Meeting of Stockholders.
Any notice of proposed business or nomination, whether or not included in our proxy statement, must include the information required under our by-laws, including Section 2.11.4, in order for the matter to be eligible for consideration at the 20172022 Annual Meeting. The presiding officer of the 20172022 Annual Meeting may refuse to acknowledge any matter or nomination not made in compliance with the procedures in our by-laws. Our by-laws can be found on our website and the current SEC rules for submitting stockholder proposals can be obtained from the SEC at: Division of Corporation Finance, 100 F. Street, N.E., Washington, DC 20549, or through the SEC’sSEC's Internet website at www.sec.gov.
115
MISCELLANEOUS
MISCELLANEOUS |
Delivery of Documents to Stockholders Sharing an Address
If you are the beneficial owner, but not the record holder, of shares of our common stock, your broker, bank, trust or other nominee may only deliver one copy of this proxy statement and the 2020 Form 10-K, which serves as our 2015 Annual Report to Stockholders under Regulation 14A (the "2020 Annual Report"), to multiple stockholders who share an address unless that nominee has received contrary instructions from one or more of the stockholders. We will deliver promptly, upon written or oral request, a separate copy of this proxy statement and our 2015the 2020 Annual Report to a stockholder at a shared address to which a single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the proxy statement and annual report, now or in the future, should submit this request to our investor relations department through the Investor Relations page of our website at www.exlservice.com.https://ir.exlservice.com/. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and annual reports and who wish to receive a single copy of such materials in the future will need to contact their broker, bank, trust or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.
Electronic Access to Proxy Statement and Annual Report
This proxy statement and our 20152020 Annual Report on Form 10-K may be viewed on our website atwww.exlservice.com and atwww.proxyvote.com by following the instructions provided in the Internet Notice. If you are a stockholder of record, you can elect to access future annual reports and proxy statements electronically by marking the appropriate box on your proxy form. If you choose this option, you will receive a proxy form in mid-May listing the website locations and your choice will remain in effect until you notify us by mail that you wish to resume mail delivery of these documents. If you hold your common stock through a bank, broker or another holder of record, refer to the information provided by that entity for instructions on how to elect this option.
116
ANNUAL MEETING Q&A
ANNUAL MEETING Q&A |
WHO IS PROVIDING THIS PROXY STATEMENT? |
This Proxy Statement is being furnished to you in connection with the solicitation by the board of directors of ExlService Holdings, Inc., a Delaware corporation ("us," "we," "our" or the "Company"), of proxies to be used at our 2021 Annual Meeting of Stockholders (the "Annual Meeting") to be held in virtual format only via live audio webcast at the website www.virtualshareholdermeeting.com/EXLS2021 on June 16, 2021 at 9:30 AM, Eastern Time, and any adjournments or postponements thereof.
HOW ARE THE PROXY MATERIALS BEING MADE AVAILABLE? |
In accordance with rules and regulations adopted by the Securities and Exchange Commission (the "SEC"), instead of mailing a printed copy of our proxy materials to each stockholder of record, the Company furnishes proxy materials via the Internet. If you received a Notice of Internet Availability of Proxy Materials (the "Internet Notice") by mail, you will not receive a printed copy of our proxy materials other than as described herein. Instead, the Internet Notice will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Internet Notice also instructs you as to how you may submit your proxy over the Internet or by phone. If you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting proxy materials included in the Internet Notice.
Our Notice of Annual Meeting, proxy statement and form of proxy card are each available at www.proxyvote.com. You may access these materials and provide your proxy by following the instructions provided in the Internet Notice.
WHEN WILL THE INTERNET NOTICE BE SENT? |
We anticipate the Internet Notice will be sent to stockholders on or about April 23, 2021. This proxy statement and the form of proxy relating to the Annual Meeting will be made available via the Internet to stockholders on or prior to the date that the Internet Notice is first sent.
WHO CAN VOTE? |
Only stockholders who own shares of our common stock at the close of business on April 19, 2021, the record date for the Annual Meeting, can vote at the Annual Meeting. As of the close of business on April 19, 2021, the record date, we had 33,479,956 shares of common stock outstanding and entitled to vote. Each holder of common stock is entitled to one vote for each share held as of the record date for the Annual Meeting.
IS CUMULATIVE VOTING APPLICABLE IN THE ELECTION OF DIRECTORS? |
There is no cumulative voting in the election of directors.
HOW DO I VOTE MY SHARES? |
If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent (which means you are a "stockholder of record"), you can vote your proxy by (i) Internet, (ii) by phone or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Please refer to the specific instructions set forth in the Internet Notice.
If you are the beneficial owner of shares held in the name of a brokerage, bank, trust or other nominee as a custodian (also referred to as shares held in "street name"), your broker, bank, trustee or nominee will provide you with materials
117
ANNUAL MEETING Q&A
and instructions for voting your shares. In addition to voting by mail, a number of banks and brokerage firms participate in a program provided through Broadridge Financial Solutions, Inc. ("Broadridge") that offers telephone and Internet voting options. Votes submitted by telephone or by using the Internet through Broadridge's program must be received by 11:59 p.m. Eastern Time, on June 15, 2021.
You also have the right to vote electronically at the Annual Meeting if you decide to attend. Our board of directors recommends that you vote by Internet, phone or mail even if you choose to attend the Annual Meeting. If you are a "stockholder of record," you may vote your shares electronically at the Annual Meeting. If you hold your shares in "street name," you must obtain a proxy from your broker, bank, trustee or nominee giving you the right to vote the shares electronically at the Annual Meeting or your vote at the Annual Meeting will not be counted.
You will not be able to vote your shares unless you use one of the methods described above to designate a proxy or you vote electronically at the Annual Meeting.
CAN I REVOKE MY PROXY? |
You can revoke your proxy at any time before it is exercised in any of the following ways:
HOW IS A QUORUM ESTABLISHED AT THE ANNUAL MEETING? |
A quorum, which is a majority of the issued and outstanding shares of our common stock as of the record date of April 19, 2021, must be present, in person or by proxy, to conduct business at the Annual Meeting. A quorum is calculated based on the number of shares represented by the stockholders attending the Annual Meeting in person and by their proxy holders.
If you indicate an abstention as your voting preference for all matters to be acted upon at the Annual Meeting, your shares will be counted toward a quorum but they will not be voted on any matter. Virtual attendance at our Annual Meeting constitutes presence in person for purposes of quorum at the Annual Meeting.
WHAT IS A "BROKER NON-VOTE" |
If you are the beneficial owner of shares held in "street name" by a broker, then your broker, as the record holder of the shares, must vote those shares in accordance with your instructions. If you fail to provide instructions to your broker, under the New York Stock Exchange rules (which apply to brokers even though our shares are listed on the NASDAQ Stock Market), your broker will not be authorized to vote your shares on "non-routine" proposals, which include, at the Annual Meeting, the election of directors and approval on an advisory (non-binding) basis of the compensation of our named executive officers. As a result, a "broker non-vote" occurs. However, without your instructions, your broker has discretionary authority to vote your shares with respect to "routine" proposals only, which include, at the Annual Meeting, the ratification of the appointment of our independent registered public accounting firm.
HOW MANY VOTES ARE NEEDED TO APPROVE EACH PROPOSAL AND WHAT IS THE EFFECT OF ABSTENTIONS AND/OR BROKER NON-VOTES? |
Proposal 1: Election of Directors
Under our Fifth Amended and Restated By-Laws (our "by-laws"), directors who are standing for election at the Annual Meeting will be elected by the affirmative vote of a majority of votes cast (meaning the number of shares voted "for" a
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nominee must exceed the number of shares voted "against" such nominee) by stockholders in person or represented by proxy and entitled to vote at the Annual Meeting. If any incumbent nominee for director receives a greater number of votes "against" his or her election than votes "for" such election, our by-laws provide that such person will tender to the board of directors his or her resignation as a director. You may cast your vote in favor of electing all of the nominees as directors, against one or more nominees, or abstain from voting your shares. For purposes of the vote on Proposal 1, abstentions and broker non-votes will have no effect on the results of the vote. Virtual attendance at our Annual Meeting will constitute presence in person for purposes of voting at the Annual Meeting.
Other Proposals
The ratification of the appointment of our independent registered public accounting firm, the advisory (non-binding) approval of the compensation of our named executive officers and each other item to be acted upon at the Annual Meeting will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. You may cast your vote in favor of or against these proposals or you may abstain from voting your shares. For purposes of the vote on Proposal 2 (ratification of the appointment of our independent registered public accounting firm), Proposal 3 (advisory (non-binding) vote on executive compensation), and such other items properly presented and to be acted upon at the Annual Meeting, abstentions will have the effect of a vote against these proposals. Broker non-votes will have the effect of a vote against Proposal 3, but because Proposal 2 is a "routine" proposal where brokers have discretionary authority to vote in the absence of instruction, there will be no broker non-votes.
If you submit your proxy, but do not mark your voting preference, the proxy holders will vote your shares (i) FOR the election of all six nominees for director, (ii) FOR the ratification of the appointment of our independent registered public accounting firm, (iii) FOR the approval on an advisory (non-binding) basis of the compensation of our named executive officers, and (iv) as described below, in the judgment of the proxy holder on any other matters properly presented at the Annual Meeting.
ARE THERE OTHER MATTERS TO BE ACTED UPON AT THE MEETING? |
Our board of directors presently is not aware of any matters, other than those specifically stated in the Notice of Annual Meeting, which are to be presented for action at the Annual Meeting. If any matter other than those described in this proxy statement is presented at the Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.
WHAT ABOUT ADJOURNMENTS AND POSTPONEMENTS? |
Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting is properly adjourned or postponed.
WHO PAYS FOR SOLICITATION OF PROXIES? |
We will pay the cost of printing and mailing proxy materials and posting them on the Internet. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of our common stock.
HOW CAN I ATTEND THE ANNUAL MEETING AND WHY IS THE COMPANY HOLDING THE ANNUAL MEETING IN A VIRTUAL ONLY FORMAT? |
We have monitored the pandemic closely and have determined that holding an in-person annual meeting could pose a risk to the health and safety of our stockholders, employees, and directors, and therefore we will instead hold a virtual Annual Meeting rather than a meeting in New York or at any physical location.
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To attend and participate in the Virtual Annual Meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders of record will need to visit www.virtualshareholdermeeting.com/EXLS2021 and use their 16-digit Control Number provided in the Internet Notice to log in to this website, and beneficial owners of shares held in street name will need to follow the instructions provided by the broker, bank or other nominee that holds their shares. We encourage stockholders to log in to this website and access the webcast before the Annual Meeting's start time. Further instructions on how to attend, participate in and vote at the Annual Meeting, including how to demonstrate your ownership of our stock as of the record date, are available at www.virtualshareholdermeeting.com/EXLS2021. Please note you will only be able to attend, participate and vote in the meeting using this website. All references to attending the Annual Meeting "in person" in this Proxy Statement shall mean attending the live webcast at the Annual Meeting.
HOW DO I SUBMIT QUESTIONS AT THE ANNUAL MEETING? |
We are committed to ensuring that our stockholders will be afforded the same rights and opportunities to participate in a virtual Annual Meeting as they would at a meeting held at a physical location. You will be able to submit questions during our Annual Meeting by visiting www.virtualshareholdermeeting.com/EXLS2021. We will try to answer as many stockholder-submitted questions as time permits that comply with the meeting rules of conduct as determined by the chairman of the meeting. However, we reserve the right to edit profanity or other inappropriate language, or to exclude questions that are not pertinent to meeting matters or that are otherwise inappropriate. If we receive substantially similar questions, we will group such questions together and provide a single response to avoid repetition.
WILL THE ANNUAL MEETING BE RECORDED? |
A recording of the Annual Meeting will be available online at http://ir.exlservice.com for approximately 12 months following the meeting date.
WHAT IF I HAVE TECHNICAL DIFFICULTIES OR TROUBLE ACCESSING THE VIRTUAL ANNUAL MEETING? |
We will have technicians ready to assist you with any technical difficulties you may have accessing the live webcast of the Annual Meeting. A technical support phone number will be posted on www.virtualshareholdermeeting.com/EXLS2021 that you may call if you experience technical difficulties during the check-in process or during the Annual Meeting.
WHAT IF I HAVE FURTHER QUESTIONS? |
If you have any further questions about voting your shares or attending the Annual Meeting, please call our Investor Relations Department at (212) 624-5913.
IMPORTANT |
Please promptly vote and submit your proxy before the Annual Meeting by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. This will not limit your right to attend or vote at the Annual Meeting.
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OTHER MATTERS
OTHER MATTERS |
Our board of directors does not know of any other business that will be presented at the Annual Meeting. If any other business is properly brought before the Annual Meeting, your proxy holders will vote on it as they think best unless you direct them otherwise in your proxy instructions.
Whether or not you intend to be present at the Annual Meeting, we urge you to submit your signed proxy promptly.
By Order of the Board of Directors,
Ajay Ayyappan
Senior Vice President, General Counsel and Corporate Secretary
New York, New York
April 23, 2021
April 29, 2016
We will furnish without charge to each person whose proxy is being solicited, upon the written request of any such person, a copy of the Company’s Annual Report on2020 Form 10-K, for the fiscal year ended December 31, 2015, as filed with the SEC, as well as copies of exhibits to the Annual Report on2020 Form 10-K, but for copies of exhibits will charge a reasonable fee per page to any requesting stockholder. Stockholders may make such request in writing to ExlService Holdings, Inc., 280320 Park Avenue, 38th29th Floor, New York, New York 10017,10022, Attention: Investor Relations. The request must include a representation by the stockholder that as of April 21, 2016,19, 2021, the stockholder was entitled to vote at the Annual Meeting.
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VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 p.m. Eastern Time on June 15, 2021. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. EXLSERVICE HOLDINGS, INC. 320 PARK AVENUE, 29th FLOOR NEW YORK, NEW YORK 10022 During The Meeting - Go to www.virtualshareholdermeeting.com/EXLS2021 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 p.m. Eastern Time on June 15, 2021. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D42591-P53778 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. EXLSERVICE HOLDINGS, INC. The Board of Directors recommends you vote FOR the following: 1. Election of Directors Nominees: For Against Abstain ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! ! 1a. Garen Staglin The Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain ! ! ! 1b. Rohit Kapoor 2. The ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for fiscal year 2021. 1c. Anne Minto ! ! ! 1d. Som Mittal 3. The approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company. 1e. Clyde Ostler 1f. Vikram Pandit NOTE: The proxies are authorized to act upon such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof. 1g. Kristy Pipes 1h. Nitin Sahney 1i. Jaynie Studenmund Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D42592-P53778 EXLSERVICE HOLDINGS, INC. Annual Meeting of Shareholders June 16, 2021 9:30 AM EDT This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Maurizio Nicolelli and Ajay Ayyappan, or either of them, as proxies, each with the power to appoint his substitute, and hereby authorize(s) them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common/Preferred stock of EXLSERVICE HOLDINGS, INC. that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholders to be held virtually via live audio webcast at www.virtualshareholdermeeting.com/EXLS2021, at 9:30 A.M., Eastern Daylight Time on June 16, 2021, and any adjournment or postponement thereof. The undersigned hereby also authorize(s) the proxy, in his or her discretion, to vote on any other business that may properly be brought before the meeting or any adjournment or postponement thereof to the extent authorized by Rule 14a-4(c) promulgated by the Securities and Exchange Commission. The undersigned herby acknowledges receipt of the notice of Annual Meeting of Shareholders, dated on or about April 23, 2021, and the Proxy Statement furnished therewith. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations, and accordingly, will be voted FOR each of the Board of Directors' nominees for director specified in Proposal 1 and FOR Proposals 2 and 3, unless a contrary choice is specified, in which case the proxy will be voted as specified. Continued and to be signed on reverse side