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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material under §240.14a-12 |
DEX MEDIA, INC. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
(2) | Form, Schedule or Registration Statement No.: | |||
(3) | Filing Party: | |||
(4) | Date Filed: |
April 17, 2015
Dear Stockholders:
I am pleased to invite you to attend the 2015 Annual Meeting of Stockholders ("Annual Meeting") of Dex Media, Inc. (the "Company" or "Dex Media"), which will be held at our D/FW headquarters, located at 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261, on Thursday, May 28, 2015, at 9 a.m. local time. The attached Notice of Annual Meeting of Stockholders and proxy statement will guide you through the items of business to be conducted at the Annual Meeting and provide details regarding the Annual Meeting.
During 2014, we made progress on many fronts—integrating corporate functions from our legacy companies, continuing to pay down our debt, expanding our telephone sales channel and adding more bundled, multi-platform marketing solutions to our product suite.
When I joined the Company in the fourth quarter as CEO, my mandate from the Board of Directors was clear—to accelerate the Company's transformation from a legacy print directory business into a full service digital media company. To achieve that mandate, I appointed a new executive team that is a mix of proven talent from the Company and from the industry.
Last December, we announced a number of transformative initiatives designed to reorganize the Company, achieve significant cost reductions and improve operational productivity. We also announced a number of revenue enhancement measures that will improve and upgrade our existing products, enhance the sales call and provide a more satisfying client experience. All of those efforts are now underway.
We are excited to see the many planned changes and enhancements come to life. With fiscal year 2014 behind us, we are now fully focused on reshaping the business and creating a sustainable future.
As we evolve our business, our processes and our product mix, our Board, executives and employees remain committed to strong corporate governance as the foundation for financial integrity and shareholder confidence. We value the ongoing input we receive from investors and other stakeholders.
Whether or not you plan to attend the Annual Meeting in person, we encourage you to vote promptly using the directions outlined in this proxy statement.
On behalf of the Board of Directors and the executive team, I would like to express our appreciation for your interest in Dex Media.
Sincerely,
Joseph A. Walsh
Chief Executive Officer
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be held on May 14, 201428, 2015
Dear Stockholders:
We are pleased to invite you to attend the 20142015 Annual Meeting (the "Annual Meeting") of Stockholders of Dex Media, Inc. (the "Company," "Dex Media," "we," "us" or "our") to be held on Wednesday,Thursday, May 14, 2014,28, 2015, at 10:309:00 a.m., local time, at our headquarters at 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261. The meeting will be held for the following purposes:
4.
5.
Information concerning the matters to be voted upon at the Annual Meeting is set forth in the accompanying proxy statement. Holders of record of the Company's common stock as of the close of business on March 17, 2014April 6, 2015 are entitled to notice of, and to vote at, the Annual Meeting. A list of such stockholders will be available at the Annual Meeting, and during the ten days prior to the Annual Meeting, at our headquarters located at the address above.
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 28, 2015. We are pleased to take advantage of the Securities and Exchange Commission's "notice and access" rules, which allow companies to furnishfurnishing proxy materials to theirour stockholders primarily over the Internet. We believe these rules allow usInternet, instead of mailing printed copies of those materials to each stockholder. By doing so we provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of our annual meeting.Annual Meeting. On or about April 3, 2014,17, 2015, we mailed a Notice of Internet Availability of Proxy Materials to our stockholders containing instructions on how to access the proxy statement and vote online, and made proxy materials available to our stockholders over the Internet. Instructions for requesting paper or e-mail copies of the proxy materials are contained in the Notice of Internet Availability of Proxy Materials.
Your vote is important. You are cordially invited to attend the Annual Meeting in person. Whether or not you plan to attend the Annual Meeting, we hope you will vote as promptly as possible.
By Order of the Board of Directors, | ||
Raymond R. Ferrell Executive Vice President, General Counsel and Corporate Secretary |
D/FW Airport, Texas
April 3, 201417, 2015
Your vote is important. Whether or not you plan to attend the meetingAnnual Meeting in person, pleasewe encourage you to read this proxy statement and vote promptly over the Internet, at www.proxyvote.com promptlyby telephone or, if you requested to receive printed proxy materials, by completing and mailing a proxy card or voting instruction form, so that your shares maywill be votedrepresented at the Annual Meeting. Please review the instructions on each of your voting options described in accordance with your wishes. Ifthis proxy statement, as well as in the Notice of Internet Availability of Proxy Materials you request paper or e-mail copies ofreceived in the proxy materials (which include a proxy card), you may also vote by completing, signing and returning the proxy card by mail.
General Information about the Annual Meeting and Voting | 1 | |||
Proxy Summary | 2 | |||
Questions and Answers about the Annual Meeting and Voting | ||||
Corporate Governance | ||||
11
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Board Composition, Responsibilities and Leadership Structure | ||||
Director Independence | 11 | |||
Board Committees | ||||
Corporate Governance Principles | ||||
Risk Oversight | ||||
Communications with the Board | ||||
14
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Code of Conduct | ||||
Related Person Transactions | ||||
Election of Directors (Item No. 1) | ||||
Executive and Director Compensation | ||||
Compensation Discussion and Analysis | ||||
Section 1—Business Summary and Highlights | 20 | |||
Section 2—Chief Executive Officer Pay and Transition | 21 | |||
Section 3—Our Compensation Decision Making Process | 22 | |||
Section 4—Compensation Philosophy, Objectives and Programs | 24 | |||
Section 5—Executive Employment and Consulting Agreements | 33 | |||
Section 6—Other Compensation Related Items | 35 | |||
Compensation and Benefits Committee Report | ||||
Executive Compensation Tables | ||||
Summary Compensation Table | ||||
Grants of Plan-Based Awards Table— | ||||
Additional Information Relating to Summary Compensation Table and Grants of Plan-Based Awards | ||||
Outstanding Equity Awards at | ||||
Option Exercises and Stock Vested— | ||||
Pension | ||||
Potential Payments Upon Termination or Change in Control | ||||
Compensation and Benefits Committee Interlocks and Insider Participation | ||||
Director Compensation | ||||
Advisory Vote Approving the Company's Executive Compensation (Item No. 2) | ||||
54
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Stock Ownership Information | ||||
Stock Ownership of Certain Beneficial Owners and Management | ||||
Section 16(a) Beneficial Ownership Reporting Compliance | ||||
Audit and Finance Committee | ||||
Audit and Finance Committee Report | ||||
Principal Accountant Fees and Services | ||||
Ratification of Appointment of Independent Registered Public Accounting Firm | ||||
Householding of Materials | ||||
Other Information | ||||
How to Raise a Matter at a Meeting or Nominate Members of the Board of Directors |
DEX MEDIA, INC.
P.O. Box 619810
2200 West Airfield Drive
D/FW Airport, Texas 75261
PROXY STATEMENT
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
This proxy statement provides information in connection with the solicitation of proxies by the boardBoard of directorsDirectors (the "Board") of Dex Media, Inc. (the "Company," "Dex Media," "we," "us" or "our") for use at the Company's 20142015 Annual Meeting of Stockholders or any postponement or adjournment thereof (the "Annual Meeting").
Holders of record of the Company's common stock as of the close of business on March 17, 2014,April 6, 2015, are entitled to vote at the Annual Meeting. Each holder of record as of March 17, 2014,April 6, 2015, is entitled to one vote for each share of common stock held. On March 17, 2014,April 6, 2015, there were 17,637,46117,621,932 shares of common stock outstanding.
Pursuant to "notice and access" rules adopted by the Securities and Exchange Commission ("SEC"), the Company has elected to provide access to its proxy materials over the Internet. Accordingly, on or about April 3,17, 2015, materials for the Annual Meeting, including this proxy statement and the Company's 2014 weAnnual Report, are being made available to all stockholders entitled to vote at the Annual Meeting. We also mailed a Notice of Internet Availability of Proxy Materials (the "Notice") on or about April 17, 2015, to all stockholders of record as ofentitled to vote at the close of business on March 17, 2014.Annual Meeting. This Notice includes:includes (i) instructions on how to access our proxy materials electronically;electronically, (ii) the date, time and location of the Annual Meeting;Meeting, (iii) a description of the matters intended to be acted upon at the Annual Meeting;Meeting, (iv) a list of the materials being made available electronically;electronically, (v) instructions on how a stockholder can request to receive paper or e-mail copies of the proxy materials;materials, (vi) any control/identification numbers that a stockholder needs to access the proxy;proxy, and (vii) information about attending the Annual Meeting and voting in person. We encourage our stockholders to take advantage of the availability of the proxy materials over the Internet to help lower the costs of delivery and reduce the environmental impact of our Annual Meeting.
No business can be conducted at the Annual Meeting unless a majority of all shares entitled to vote are either present in person or represented by proxy at the Annual Meeting. As far as we know, the only matters to be brought before the Annual Meeting are those referred to in this proxy statement. If any additional matters are presented at the Annual Meeting, the persons named as proxies may vote your shares in their discretion.
Your vote is important. Whether or not you plan to attend the Annual Meeting, we hope you will vote as soon as possible. You may vote over the Internet, as well as by telephone, or, if you requested to receive printed proxy materials, by completing and mailing a proxy card or voting instruction form, so that your shares will be represented at the Annual Meeting. Please review the instructions on each of your voting options described in this proxy statement, as well as in the Notice you received in the mail.
Also, please let us know if you plan to attend the Annual Meeting by marking the appropriate box on the enclosed proxy card, if you requested to receive printed proxy materials, or, if you vote by telephone or over the Internet, by indicating your plans when prompted.
This summary includes highlights of our proxy materials for your reference. This summary does not include all of the information that you should consider, so please read our entire proxy statement before you vote.
2015 ANNUAL MEETING OF STOCKHOLDERS
Date: May 28, 2015
Time: 9:00 a.m., local time
Place: 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261
Record Date: Stockholders of record as of the close of business on April 6, 2015 are entitled to attend, and to vote at, the Annual Meeting.
Admission Requirements: You must provide proof of your ownership of our common stock and a form of personal identification for admission to the Annual Meeting. For more information about attendance and voting please see the "Questions and Answers About the Annual Meeting and Voting" beginning on page 7.
VOTING MATTERS AND BOARD RECOMMENDATIONS
The following table summarizes the proposals that will be considered at our Annual Meeting and also provides our Board of Directors' recommendations with respect to each proposal.
Proposals | Board Vote Recommendation | Page Reference (for full details) | ||||||
---|---|---|---|---|---|---|---|---|
Item 1 | Election of eight directors | FOR each nominee | 16 | |||||
Item 2 | Advisory vote to approve the Company's executive compensation | FOR | 54 | |||||
Item 3 | Ratification of the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm | FOR | 59 |
Your vote is important. Whether or not you plan to attend the Annual Meeting in person, please promptly vote over the Internet, by telephone, or, if you requested to receive printed proxy materials, by completing and mailing a proxy card or voting instruction form, so that your shares will be represented at the Annual Meeting.
We believe that adherence to sound corporate governance principles and practices makes Dex Media a better business partner for our clients and also serves the best interests of our stockholders. Through its independent Corporate Governance Committee, our Board members play an active role in establishing our Corporate Governance Guidelines. The Board of Directors monitors developments in governance best practices to assure that it continues to meet its commitment to thoughtful and
independent representation of stockholder interests. The following table summarizes certain of our corporate governance practices and facts:
ü | Seven out of eight director nominees are independent | ü | Executive sessions of independent directors held at each regularly scheduled Board meeting | |||
ü | Annual election of all directors | ü | Stock ownership guidelines for directors and executive officers | |||
ü | Independent Chairman of the Board | ü | Annual advisory vote on executive compensation | |||
ü | Separate positions for Chairman and CEO | ü | Annual CEO performance review conducted by non-management directors | |||
ü | Annual board and committee self-evaluations | ü | Engagement of independent advisors (reporting to the Board) to evaluate executive compensation practices |
The following table provides summary information about our directors who have been nominated to serve on our Board until the 2016 Annual Meeting of Stockholders. Please see "Election of Directors" beginning on page 16 for more information about the nominees.
Name | Dex Media Director Since: | Board Service with a Dex Media Predecessor:(1) | Position or Committee Memberships | Independent? | ||||||
---|---|---|---|---|---|---|---|---|---|---|
Jonathan B. Bulkeley | 2013 | 2010 | • Compensation and Benefits | Yes | ||||||
• Corporate Governance | ||||||||||
Thomas D. Gardner | 2013 | 2009 | • Audit and Finance | Yes | ||||||
• Compensation and Benefits (Chair) | ||||||||||
W. Kirk Liddell | 2013 | 2010 | • Audit and Finance (Chair) | Yes | ||||||
Thomas S. Rogers | 2013 | 2006 | • Compensation and Benefits | Yes | ||||||
Alan F. Schultz | 2013 | 2005 | • Chairman of the Board | Yes | ||||||
John Slater | 2013 | 2010 | • Audit and Finance | Yes | ||||||
• Corporate Governance | ||||||||||
Joseph A. Walsh | 2014 | N/A | • President and CEO | No | ||||||
Douglas D. Wheat | 2013 | 2010 | • Corporate Governance (Chair) | Yes |
Our mission is to be the trusted marketing partner for small and medium-sized businesses. 2014 was the first full year of operation for our combined company following the merger of Dex One Corporation and SuperMedia Inc. in April 2013, and we made progress on many fronts. Our accomplishments in 2014 included:
CHANGES TO OUR EXECUTIVE MANAGEMENT TEAM
We appointed new executive leadership in 2014 and early 2015, beginning with our President and Chief Executive Officer ("CEO"), Joseph A. Walsh. As you will see in the table below, our leadership team brings a wealth of experience to Dex Media, from within our company as well as our industry. That experience will be critical to transforming the traditional print-based directory business to a digital and multi-product marketing service business.
The following table sets forth our current executive leadership team, along with some highlights of their past employment for your reference. For more narrative and a complete look at their biographies and work history, please see Item 1. "Business—Executive Officers of the Registrant" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014, filed with the SEC on March 16, 2015.
Name | Position | Joined Dex Media | Highlights: Prior Business Experience | ||||
---|---|---|---|---|---|---|---|
Joseph A. Walsh | President and CEO | 2014 | • President and CEO, Board Member of Yellowbook Inc. • Co-founded IYP Publishing • Chairman of the Local Search Association | ||||
Del Humenik | EVP—Chief Revenue Officer | 2010 | • Chief Operating Officer, Dex Media • EVP, Sales and Marketing, Dex Media • EVP, Sales, SuperMedia Inc. • SVP, Sales and Marketing, Paychex Inc. • SVP and GM, RHDC | ||||
Paul D. Rouse | EVP—Chief Financial Officer and Treasurer | 2014 | • CFO, Apple and Eve, LLC • VP of Finance and Treasurer, Yellowbook Inc. • Public accounting, Ernst and Young LLP • Internal audit, JPMorgan | ||||
Gordon Henry | EVP—Chief Marketing Officer | 2014 | • Vice President and General Manager, Deluxe Corp. • Chief Marketing Officer, Yellowbook Inc. | ||||
Carleton G. Shaw | EVP—Chief Information Officer | 2014 | • Principal, Houstonian Partners, LLC • Global Chief Information Officer, Hibu plc • Chief Information Officer, Yellowbook • EVP Operations, Yellowbook | ||||
John F. Wholey | EVP—Operations and Client Services | 2015 | • Head of United States Operations, Hibu plc • Vice President, Operations, Hibu plc | ||||
Raymond R. Ferrell | EVP—General Counsel and Corporate Secretary | 2009 | • Vice President and Associate General Counsel, Commercial Operations, SuperMedia • Senior Counsel and Vice President, General Counsel's Office, American Express | ||||
Debra M. Ryan | EVP—Chief Human Resources Officer | 2012 | • EVP, Human Resources and Employee Administration, SuperMedia Inc. • VP, Franchise Development, Dex One • VP, Human Resources, RHDC | ||||
Michael N. Dunn | EVP—Chief Technology Officer | 2010 | • Vice President and CIO, SuperMedia • SVP, Information Technology and Business Process Management, Level 3 Communications | ||||
Mark Cairns | EVP—Integration and Client Experience | 2014 | • Principal, Treales, LLC • Head of Operations for the United States and United Kingdom, Hibu plc • Chief Publishing Officer, Yellow Book Inc. • Yell Group |
EXECUTIVE COMPENSATION AND PAY-FOR-PERFORMANCE
Our push for business transformation creates an opportunity to align our compensation programs with longer-term goals for the Company. Starting with the hire of our current President and CEO, Joseph A. Walsh, in October 2014, the Compensation and Benefits Committee began working with management to craft a new executive compensation philosophy and a new approach to pay. The new philosophy allocates more of an executive's pay opportunity to performance-based annual and long-term incentives, and focuses less on base salary and perquisites; we explain more about this shift in the "Compensation Discussion and Analysis" beginning on page 20.
VALUE CREATION PROGRAM ("VCP")
One very important change that we made to long-term incentives in 2014 was the discontinuation of our 2013 - 2015 Cash Long-term Incentive Plan ("2013-2015 Cash LTIP") and the introduction of the Value Creation Program ("VCP"). The VCP rewards participants for the increase in value in the
total invested capital of the Company—total invested capital is the sum of the market value of the Company's equity and debt. We implemented the VCP in the fourth quarter of 2014. We did not grant any awards under the 2013-2015 Cash LTIP for the 2015 performance year, i.e., the performance periods for these plans do not overlap.
The VCP is a three-year plan that began on October 14, 2014 and ends on December 31, 2017; awards may be paid out in 2018 if value has been created per the plan terms. The VCP rewards participants for net value creation in the Company measured as the net change over the performance period in the fair market value of the Company's total invested capital, including equity securities, debt securities, and bank debt; plus cash dividends and cash payments (interest and principal) to debt, but reduced by any net value contributed from external sources, in each case as determined in the manner provided by the VCP. The formula for the value creation under the VCP is summarized below:
We describe the VCP in more detail in the "Compensation Discussion and Analysis" beginning on page 20.
DISCONTINUATION OF PERQUISITES
To further align our overall program with a stronger pay-for-performance mindset, management and the Compensation and Benefits Committee decided to discontinue two programs that fall into the category of perquisites:
We ended the Flexible Allowance program in December 2014. The Financial Planning program will end in May 2015 so that participants can work with their current advisors to complete their 2014 financial planning and tax preparation.
The Compensation and Benefits Committee and management agreed that it is in the best interests of both stockholders and our senior management team to keep the Physical Examination program, which provides eligible executives with a comprehensive medical examination once per year. The cost of this program to the Company is approximately $2,000 per year per participant; a valuable benefit with a relatively low cost.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What am I voting on at the Annual Meeting?
What does the Board of Directors recommend with respect to the matters to be presented at the Annual Meeting?
The Board of Directors recommends a vote:
4.
You are entitled to vote at the Annual Meeting if you owned the Company shares (directly in your name or in "street name," as defined below) as of the close of business on March 17, 2014,April 6, 2015, the record date for the Annual Meeting. On that date, 17,637,46117,621,932 shares of our common stock were outstanding and entitled to vote at the Annual Meeting and no shares of our preferred stock were outstanding. Each share of common stock is entitled to one vote on each proposal to properly come before the Annual Meeting.
What is the difference between holding shares directly as a stockholder of record and holding shares in "street name"?
Most of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are differences between shares held of record and those held beneficially or in "street name."
Registered Stockholders. If your shares are registered directly in your name with our transfer agent, you are considered the stockholder of record with respect to those shares, and a notice containing instructions on how to access our proxy statement and annual report online was sent directly to you. As the stockholder of record, you have the right to vote your shares as described herein.
Beneficial Stockholders. If your shares are held by a bank, broker or other agent as your nominee, you are considered the beneficial owner of shares held in "street name," and the notice containing instructions on how to access our proxy statement and annual report online was forwarded to you by your bank, broker or agent who is considered the stockholder of record with respect to those shares.
Registered Stockholders. If you hold shares in your own name you may vote by proxy beforein the Annual Meeting by signing and returning a completed proxy card orfollowing ways:
Beneficial Stockholders. If you holdare a beneficial owner of shares held in street name, you may vote in the following ways:
Even if you plan to attend the Annual Meeting, we recommend that you vote your shares in street name,advance over the Internet, by telephone or, if you requested to receive printed proxy materials, by completing and mailing a proxy card or voting instruction form, so that your bank, broker or other agentshares will sendbe represented at the annual meeting, so that your vote will be counted if you aslater decide not to attend the beneficial owner, a separate package describing the procedure for voting your shares. You should follow the instructions provided by your bank, broker or agent to vote your shares.Annual Meeting.
Can I change my vote or revoke my proxy?
Registered Stockholders. You may change your vote or revoke your proxy at any time prior to the taking of thefinal vote at the Annual Meeting by: (i)by voting again over the Internet or by telephone, by completing, signing, dating and returning a new proxy card or voting instruction form with a later date, or by attending the Annual Meeting and voting in person. Only your latest dated proxy we receive at or prior to the Annual Meeting will be counted. However, your attendance at the Annual Meeting will not automatically revoke your proxy unless you vote again at the Annual Meeting and specifically request that your prior proxy be revoked by sending a written notice of revocation to the Corporate Secretary (at the address of the Company set forth on the first page of this Proxy Statement)
2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261) prior to your shares being voted; (ii) delivering another duly executed proxy bearing a later date (which automatically revokes the earlier proxy); or (iii) voting in person at the Annual Meeting.
Beneficial Stockholders. You may change your vote by submitting new voting instructions to your bank, broker or other agent following the instructions they provided, or, if you have obtained a legal proxy from your bank, broker or other agent giving you the right to vote your shares, by attending the Annual Meeting and voting in person.
Who will count the vote at the Annual Meeting?
Representatives of Broadridge Financial Solutions will tabulate the vote and serve as inspector of election at the Annual Meeting.
What vote is required to approve each proposal?
Item No. 1—Election of Directors. Each director will be elected by the vote of the majority of the votes cast when a quorum is present. A "majority of the votes cast" means that the number of votes cast "for" a director exceeds the number of votes cast "against" that director. "Votes cast" excludes abstentions and any votes withheld by banks and brokers in the absence of instructions from street name holders ("broker non-votes"). Your broker or nominee will not be permitted to vote on the election of directors without specific instructions as to how to vote from the beneficial owner. As a result, if you hold your shares through a broker or nominee, they will not be voted in the election of directors, unless you affirmatively vote your shares in accordance with the voting instructions provided by that institution.
Item No. 2—Advisory Vote on the Company's Executive Compensation and Item No. 4—3—Ratification of Appointment of Ernst & Young LLP. The affirmative vote of a majority of the shares present at the Annual Meeting in person or by proxy is required toto: approve, on an advisory basis, the Company's executive compensation (Item No. 2); and ratify the appointment of our independent registered public accounting firm (Item No. 4)3). Abstentions have the same effect as votes cast against Item Nos. 2 and 4.3. Broker non-votes will be voted in and for Item No. 4,3, and will have no effect on the outcome of the vote on Item No. 2.
Item No. 3—Advisory Vote on the Frequency of Advisory Votes to Approve the Company's Executive Compensation. The frequency of Although the advisory vote on the Company's executive compensation (ItemItem No. 3) receiving a majority of votes cast (every one, two or three years) will be considered the frequency recommended by stockholders. Abstentions and broker non-votes have no effect on such vote.
Although the advisory votes on Items Nos. 2 and 3 areis non-binding as provided by law, our Board will review the results of the votesvote and, consistent with our record of stockholder engagement, will take them into account in making a determination concerning executive compensation and the frequency of advisory votes on executive compensation.
Any other matter. Any other matter that properly comes before the Annual Meeting will require the approval of the majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.
What constitutes a quorum for the Annual Meeting?
The presence of the holders of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting, present in person or represented by proxy, is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.
What happens if I sign, date and return my proxy but do not specify how I want my shares voted on one or more of the proposals?
Regardless of your form of ownership, your proxy will be counted as a vote "FOR" all of the director nominees; and "FOR" Item Nos. 2 and 4; and "1 Year" for Item No. 3.
What happens if I do not vote my shares?
Registered Stockholders. Your shares will not be voted at the Annual Meeting.
Beneficial Stockholders. Your broker or nominee may vote your shares only on those proposals on which it has discretion to vote. Your broker or nominee does not have discretion to vote your shares on non-routine matters such as the election of directors (Item No. 1) or Items Nos. 2 and 3.advisory vote on the Company's executive compensation (Item No. 2). However, your broker or nominee does have discretion to vote your shares on routine matters such as Itemratification of appointment of Ernst & Young LLP (Item No. 4.3). To be sure your shares are voted in the manner you desire, you should instruct your broker or nominee how to vote your shares.
How is my proxy voted on matters not identified on the proxy form or in this Proxy Statement?
Other than the fourthree items of business described in this Proxy Statement, our Board presently knows of no other matters to be presented for action at the Annual Meeting. Neither did we receive timely notice of any nomination for a director, nor did we receive timely notice of any other matter intended to be raised by any stockholder at the Annual Meeting. Accordingly, the proxy form confers upon the persons named on the proxy form authority to vote your shares in their discretion upon any other matter that may properly come before the Annual Meeting.
What do I need to do if I plan to attend the Annual Meeting in person?
If you plan to attend the Annual Meeting in person, you must provide proof of your ownership of our common stock and a form of personal identification for admission to the Annual Meeting. If you hold shares in street name and you also wish to be able to vote at the Annual Meeting, you must obtain a proxy, executed in your favor, from your bank or broker. All stockholders as of the record date are invited to attend, although seating may be limited.
Who is bearing the cost of this proxy solicitation and how is the solicitation effected?
The Company is soliciting your proxy and is paying the cost of such solicitation, including preparing this proxy statement and the proxy card and the costs of any mailing. The Company may request banks, brokers and other custodians, nominees and fiduciaries to forward copies of these proxy materials to their principals and to request authority for the execution of proxies. The Company may reimburse such persons for their expenses in so doing.
Under what circumstances can the Annual Meeting be adjourned?
Adjournments may be made for the purpose of, among other things, soliciting additional proxies. Any adjournment may be made from time to time by approval of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting (whether or not a quorum exists) without further notice other than by an announcement made at the Annual Meeting. We do not currently intend to seek an adjournment of the Annual Meeting.
Where can I find the voting results of the Annual Meeting?
We will disclose voting results on a Form 8-K filed with the SEC within four business days after the Annual Meeting.
When are stockholder proposals due for inclusion in the Company's proxy statement for the 20152016 Annual Meeting of Stockholders?
In order to be considered for inclusion in the Company's proxy materials for the 20152016 Annual Meeting of Stockholders, a stockholder proposal must be received in writing by our Company at Dex
Media, Inc., 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, TX 75261, Attention: Corporate Secretary, no later than the close of business on December 4, 2014,21, 2015, and otherwise comply with Rule 14a-8 under the Securities Exchange Act of 1934.
Our Bylaws provide that stockholders may propose business to be conducted at an annual meeting of stockholders and/or nominate individuals to be elected to the Board of Directors at an annual meeting of stockholders if such proposal or nomination is made pursuant to timely notice in writing to the Secretary of the Company at the address set forth on the cover page of this Proxy Statement.(at 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, Texas 75261). To be timely, a stockholder's notice shall be delivered to or mailed and received at the our principal executive offices not less than 90 days nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was first mailed or public disclosure of the date of the annual meeting was first made, whichever first occurs. Such stockholder's notice shall set forth all of the information described in Section 11 of our Bylaws. A copy of our Bylaws is available upon request by any of our stockholders from the Secretary of the Company.
Introductory Note—Merger of Dex One Corporation and SuperMedia Inc.
On December 5, 2012, Dex One Corporation ("Dex One") entered into an Amended and Restated Agreement and Plan of Merger (the "Merger Agreement") with SuperMedia Inc. ("SuperMedia"), Newdex Inc. ("Newdex"), and Spruce Acquisition Sub, Inc., a direct wholly owned subsidiary of Newdex ("Merger Sub"). The Merger Agreement provided that, upon the terms and subject to the conditions set forth therein, (i) Dex One would merge with and into Newdex, with Newdex as the surviving entity and (ii) immediately thereafter, Merger Sub would merge with and into SuperMedia, with SuperMedia as the surviving entity, and become a direct wholly owned subsidiary of Newdex (the "Merger"). As a result of the Merger, Newdex, as successor to Dex One, would be renamed Dex Media, Inc. and become a newly listed company. The Merger Agreement further provided that if either Dex One or SuperMedia were unable to obtain the requisite consents to the Merger from their respective stockholders to consummate the transactions on an out-of-court basis, the Merger could be effected through voluntary pre-packaged plans of reorganization under Chapter 11 of Title 11 of the United States Code ("Chapter 11" or the "Bankruptcy Code"). Because neither Dex One nor SuperMedia were able to obtain the requisite consents to complete the Merger out of court, each of Dex One and SuperMedia and all of their domestic subsidiaries voluntarily filed pre-packaged bankruptcy petitions under Chapter 11 on March 18, 2013, in the United States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court") and requested confirmation of their respective joint pre-packaged Chapter 11 plans (the "Prepackaged Plans"), seeking to effect the Merger and related transactions contemplated by the Merger Agreement.
On April 29, 2013, the Bankruptcy Court held a hearing and entered separate orders confirming each of the Prepackaged Plans. On April 30, 2013, Dex One and SuperMedia consummated the Merger and other transactions contemplated by the Merger Agreement and emerged from Chapter 11 protection. Effective with the emergence from bankruptcy and the consummation of the Merger, each share of Dex One common stock was converted into 0.2 shares of common stock of Dex Media and each share of SuperMedia common stock was converted into 0.4386 shares of common stock of Dex Media. The common stock of Dex Media was listed on the NASDAQ Stock Market. As the Merger was completed on April 30, 2013, we did not hold an annual meeting of stockholders in 2013.
Board Composition, Responsibilities and Leadership StructureBOARD COMPOSITION, RESPONSIBILITIES AND LEADERSHIP STRUCTURE
Our Board of Directors was substantially constituted as part of the Merger. Pursuant to the terms of the Merger Agreement, following the consummation of the Merger, the Board of Directors of Dex Media consisted of ten members comprising: (i) five then-current Dex One non-employee directors, including Jonathan B. Bulkeley, Richard L. Kuersteiner, W. Kirk Liddell, Mark A. McEachen, and Alan F. Schultz, as chairman of the Board of Dex Media; (ii) four then-current SuperMedia non-employee directors designated by SuperMedia, including Thomas D. Gardner, Thomas S. Rogers, John Slater, and Douglas D. Wheat; and (iii) Peter J. McDonald then-current director and Chief Executive Officer of SuperMedia, as the President and Chief Executive Officer ("Chief Executive Officer" or "CEO") of Dex Media.
The Board of Directors is responsible for overseeing the affairs of the Company. The Board held nine meetings since the formation of our Company on April 30, 2013 to December 31, 2013. Each director attended at least 90% of the meetings of the Board and of the standing committees on which he served since April 30, 2013. The Board currently consists of teneight directors. Our Bylaws provide, however, that the Board may increase or decrease the size of the Board and fill any vacancies. The Board held 11 meetings during 2014. Each director attended at least 90% of the meetings of the Board and of the standing committees on which they served during 2014. Our Board of Directors appointed Mr. Walsh as President and Chief Executive Officer of the Company and elected him to the Company's Board of Directors, effective upon resignation of Mr. McDonald on October 14, 2014. Mr. Walsh attended both meetings of the Board held between October 14, 2014 and December 31, 2014.
As reflected in our Corporate Governance Guidelines, while the Board does not presently require all its members to attend annual meetings of stockholders, it does encourage its members to do so and the non-executive Chairman is expected to attend all meetings of stockholders. The Board is sensitive
to stockholder access concerns and will periodically monitor and reassess this policy to ensure it remains open and available for stockholder communications. Seven of our directors attended the May 2014 annual stockholders meeting.
The Board has determined that the appropriate leadership structure for the Board at this time is for a non-management director to serve as non-executive Chairman of the Board. The Board reserves the right to review this policy from time to time to assess whether a non-executive Chairman continues to serve the best interests of the Company and our stockholders.
The non-executive Chairman is responsible for ensuring that the quality, quantity and timeliness of the flow of information between our management and the Board enables the Board to fulfill its functions and fiduciary duties in an efficient and effective manner. Our non-executive Chairman is elected annually by a majority of the independent directors upon a recommendation from the Corporate Governance Committee. Our non-executive Chairman presides over executive sessions of the non-employee directors following every regularly scheduled Board meeting (which sessions are not attended by management) and advises the Board, in consultation with the CEO and other independent directors, as to Board schedules and agendas. The Board has also determined that our non-executive Chairman shall be available to consult with stockholders and call meetings of the independent directors when appropriate. See our Corporate Governance Guidelines in the corporate governance section of our website at http://www.dexmedia.com/company/about/corporate/corporate-governance/ for additional information on the leadership structure of the Board.
Our Corporate Governance Guidelines state that the Board's objective is that at least two-thirds of the members of the Board be independent under applicable listing standards of The NASDAQ Stock Market LLC ("NASDAQ") and applicable law. To be considered "independent," the Board of Directors must make an affirmative determination, by a resolution of the Board as a whole, that the director being reviewed has no material relationship with the Company that interferes with the exercise of independent judgment in carrying out the duties of a director. In each case, the Board broadly considers all relevant facts and circumstances.
The Board has determined that seven of eight directors standing for re-election, Jonathan B. Bulkeley, Thomas D. Gardner, W. Kirk Liddell, Thomas S. Rogers, Alan F. Schultz, John Slater, and Douglas D. Wheat, are independent under applicable NASDAQ listing standards for membership on the Board. The Board has also determined, as further described below, that each of these directors is independent under applicable SEC rules and the NASDAQ listing standards for service on the
Committees of the Board on which they serve. Mr. Walsh is not an independent director because he is our President and Chief Executive Officer.
The Board maintains three standing committees—an Audit and Finance Committee, a Compensation and Benefits Committee and a Corporate Governance Committee. Each Committee operates under a charter that has been approved by the Board. A copy of each committeeCommittee charter is posted in the corporate governance section of our website at http://www.dexmedia.com/company/about/corporate/corporate-governance/. Each Committee may delegate the authority granted to it under its charter to a subcommittee, in order to ensure compliance with legal and regulatory obligations, timely decision making or for other purposes.
The following table below sets forth the composition of our Board committees in 2013.2014.
| Audit and Finance Committee | Compensation and Benefits Committee | Corporate Governance Committee | |||
---|---|---|---|---|---|---|
Jonathan B. Bulkeley | ||||||
| ||||||
| ü | ü | ||||
Thomas D. Gardner | ü | ü(Chair) | ||||
W. Kirk Liddell | ü(Chair) | |||||
| ||||||
Thomas S. Rogers | ü | |||||
John Slater | ü | ü | ||||
Douglas D. Wheat | ü(Chair) | |||||
Alan F. Schultz (Board Chair) |
The Audit and Finance Committee has overall responsibility for the integrity of our financial reporting process, including oversight of the preparation of financial statements and related financial information and the annual independent audit of such statements, as well as responsibility for our
system of internal controls, internal audit process, risk assessment and management processes and compliance function. In addition, the Audit and Finance Committee has responsibility for reviewing proposed and existing financing arrangements (and compliance with governing documents) and for making recommendations to the Board regarding financing requirements for the Company and sources for such financing.
The Audit and Finance Committee also prepares the Audit and Finance Committee Report that the SEC rules require be included in our annual proxy statement. This report is on page 4957 of this proxy statement.
The Board of Directors has unanimously determined that Jonathan B. Bulkeley and W. Kirk Liddell, each a present memberChair of the Audit and Finance Committee, qualifyqualifies as "audit committee financial experts" and possess "accounting or related financial management expertise"expert" within the meaning of all applicable lawsthe SEC rules and regulations.satisfies financial sophistication requirements under the NASDAQ listing standards. In addition, the Board has unanimously determined that all present members of the Audit and Finance Committee are financially literate and as stated below, independent as that term is used in Item 407(a)within the meaning of regulation S-K.applicable SEC rules and the NASDAQ listing standards.
The Audit and Finance Committee met sixeight times between April 30, 2013 and December 31, 2013.in 2014.
The Compensation and Benefits Committee is responsible for the oversight of our executive and non-management director compensation practices and programs and the administration of our compensation and benefit plans for employees (including senior management) and non-management directors.
The Compensation and Benefits Committee is responsible for reviewing and approving all aspects of the compensation paid to our Chief Executive Officer, our Chief Financial Officer and the three other most highly paid executive officersCEO and our other executive officers identified as Section 16(a) reporting persons.defined in Rule 16a-1(f) under the Securities Exchange Act of 1934. The Compensation and Benefits Committee also approves all executive employment contracts and other compensatory arrangements providing for the payment of benefits following a change of control of the Company or severance following a termination of employment. See "Compensation Discussion and Analysis—Section 3—Our Compensation Decision-Making Process—Role of the Compensation and Benefits Committee" on page 22 for further details.
The Compensation and Benefits Committee also prepares the Compensation and Benefits Committee Report that SEC rules require be included in our annual proxy statement. This report is on page 2638 of this proxy statement.
The Board has determined that each member of the Compensation and Benefits Committee is comprised entirelyan independent director within the meaning of directors who satisfythe NASDAQ listing standards, an "outside director" under Section 162(m) of the U.S. Internal Revenue Code ("Section 162(m)") and the standards of independence established by our Board of Directors.a "nonemployee director" under Exchange Act Rule 16b-3.
The Compensation and Benefits Committee met 2715 times between April 30, 2013 and December 31, 2013.in 2014.
The Corporate Governance Committee oversees the Board candidate selection, assessment and nomination process, makes recommendations to the Board regarding corporate governance policies, guidelines and procedures and in coordination with the Audit and Finance Committee, establishes and administers policies with respect to corporate responsibility and ethical business practices.
The Board has determined that each member of the Corporate Governance Committee is composed entirelyan independent director within the meaning of directors who satisfyapplicable NASDAQ listing standards and the standards of independence established by our Board of Directors.standards.
The Corporate Governance Committee met sixnine times between April 30, 2013 and December 31, 2013.
Special Committee
In October 2013, our Board established a special committee of the Board of Directors, comprising Messrs. Mark A. McEachen, Thomas D. Gardner and John Slater, to assist the management in its preparation of the 2014 annual operating budget of the Company. The special committee held three meetings in 2013.2014.
Corporate Governance PrinciplesCORPORATE GOVERNANCE PRINCIPLES
The Board of Directors has adopted policies and procedures to ensure effective governance of the Company. Our corporate governance materials, including our Corporate Governance Guidelines, the charters of each of the standing committeesCommittees of the Board and our Code of Conduct for directors, finance employees and all employees, may be viewed in the corporate governance section of our website at http://www.dexmedia.com/company/about/corporate/corporate-governance/. We will also provide without charge copies of any of the foregoing information in print upon written request of our stockholders to the Office of the Corporate Secretary, Dex Media, Inc., P.O. Box 619810, 2200 West Airfield Drive, D/FW Airport, Texas 75261.
The Corporate Governance Committee reviews our Corporate Governance Guidelines on a regular basis and proposes modifications to the principles and other key governance practices as warranted for adoption by the Board.
Senior management is responsible for identifying and prioritizing enterprise risks facing the Company. The Board of Directors, in turn, is responsible for ensuring that material risks are managed appropriately. The Board of Directors as a whole has responsibility for risk oversight, with reviews of certain areas being conducted by the relevant Board committees. The Board and its committees regularly review material strategic, operational, financial and reporting, succession and compensation, and compliance risks with senior management. The Audit and Finance Committee is responsible for
discussing our overall risk assessment and risk management practices, as set forth in the Audit and Finance Committee's charter. The Audit and Finance Committee also performs a central oversight role with respect to financial and compliance risks, and periodically reports on its findings to the full Board. In addition, the Audit and Finance Committee is responsible for assessing riskrisks related to our capital structure, significant financial exposures and our risk management and major insurance programs, and regularly evaluates financial risks associated with such programs. The Compensation and Benefits Committee considers risk in connection with its design of compensation programs for our executives.
Communications with the BoardCOMMUNICATIONS WITH THE BOARD
Our Board welcomes communications from stockholders and other interested parties. Stockholders and other interested parties may contact the Board by writing to Peter J. McDonald,Joseph A. Walsh, President and Chief Executive Officer, and President, c/o Dex Media, Inc., 2200 West Airfield Drive, P.O. Box 619810, DFWD/FW Airport, Texas 75261. Stockholders and other interested parties may contact the independent members of our Board with any governance questions or other concerns by writing to Alan F. Schultz, Chairman of the Board, Dex Media, Inc., 2200 West Airfield Drive, P.O. Box 619810, DFWD/FW Airport, Texas 75261. In addition, any questions or concerns regarding financial reporting, internal controls, accounting or other financial matters may be forwarded to W. Kirk Liddell, Chair of the Audit and Finance Committee, c/o Dex Media, Inc., 2200 West Airfield Drive, P.O. Box 619810, DFWD/FW Airport, Texas 75261. All appropriate inquiries will be forwarded directly to the addressee. Persons wishing to submit anonymous, confidential inquiries or comments regarding the Company may do so through www.dexmedia.ethicspoint.com, our web-based reporting system, by simply following the instructions on
that site. These procedures for communications between independent members of our Board and interested parties were approved by the independent and non-management members of our Board.
Our Corporate Governance Guidelines state the Board's objective that at least two-thirds of the members of the Board be independent under NASDAQ listing standards and applicable law. To be considered "independent", the Board of Directors must make an affirmative determination, by a resolution of the Board as a whole, that the director being reviewed has no material relationship with the Company that interferes with the exercise of independent judgment in carrying out the duties of a director. In each case, the Board broadly considers all relevant facts and circumstances.
The Board has determined that seven of eight directors who are standing for re-election, Jonathan B. Bulkeley, Thomas D. Gardner, W. Kirk Liddell, Thomas S. Rogers, Alan F. Schultz, John Slater, and Douglas D. Wheat, are independent under applicable NASDAQ and SEC rules. Peter J. McDonald is not an independent director because he is our President and Chief Executive Officer.
Code of ConductCODE OF CONDUCT
Our Board has adopted a Code of Conduct applicable to our directors, senior management including the principal executive officer, principal financial officer and principal accounting officer, and all other employees. The Code of Conduct is available on our website at http://www.dexmedia.com/company/about/corporate/corporate-governance/. Any waiver of any provision of the Code of Conduct made with respect to any director or executive officer of the Company will be promptly posted on our website at the same link as the Code of Conduct itself and will be disclosed in the next periodic report required to be filed with the SEC.
Related Person TransactionsRELATED PERSON TRANSACTIONS
The Corporate Governance Committee, in consultation with the Audit and Finance Committee, is charged with the responsibility of reviewing, approving and overseeing all transactions with related persons (as defined in the SEC regulations). The Corporate Governance Committee and the Audit and Finance Committee periodically reassessesreassess any related-person transactions entered into by the Company to ensure their continued appropriateness. This responsibility is set forth in the Corporate Governance Committee's Charter.
The Corporate Governance Committee considersand the Audit and Finance Committee consider all relevant factors when determining whether to approve a related person transaction including, without limitation, the following:
under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unrelated third parties.
On November 15, 2013,October 14, 2014, we announced the appointment of Mr. Walsh, as President and Chief Executive Officer of the Company and his election to the Company's Board of Directors. During the period from March 7, 2014 to October 7, 2014 Mr. Walsh, through his wholly-owned consulting firm, Walsh Partners, was retained by the Company as a consultant to the Board of Directors. Mr. Walsh provided consulting services with respect to, among other things, the Company's current business and strategies, and was paid $490,000 for such consulting services. The consulting arrangement was approved by the Company's Board of Directors.
On September 9, 2014, certain subsidiaries of the Company commenced offers to repurchase bank debt below par. The offers expired on November 25, 2013September 16, 2014 and the Company successfully repurchased bank debt at eachtwo of its four operating subsidiaries and retired approximately $137.1$35 million in principal amount of bank debt for approximately $101$29 million in cash consideration. Franklin Resources, Inc. ("FRI"), and Paulson & Co. ("Paulson") and Restructuring Capital Associates, L.P. ("RCA"), entities known by the Company to beneficially own 5% or more of the Company's outstanding common stock, participated in the offers. RCA, FranklinFRI and Paulson tendered
and the Company repurchased $17.7 million, $16.3 $15.0 million, and $10.3$18.1 million in bank debt, respectively. RCA, Franklin and Paulson received the proceedsMr. Slater, one of approximately $13.3 million, $12.4 million and $6.4 million, respectively.our directors, is an officer of Paulson. The bank debt repurchases were carried out in the ordinary course of business, pursuant to the terms of the Company's amended and restated credit facilities, approved by the Board of Directors, and were offered to debt holders on the same terms and conditions. The Corporate Governance Committee, in consultation with the Audit and Finance Committee, reviewed and approved these transactions.
ELECTION OF DIRECTORS (ITEM NO. 1)
The Company's by-laws provide that the number of directors will be determined by our Board of directorsDirectors from time to time, provided that the number of directors may not be less than three. The Board of Directors set the number of directors to serve on the Board after the Annual Meeting at eight directors.
Each of our current directors is serving a term that expires at the Annual Meeting. Each of the director nominees listed below will be elected if he receives the vote of the majority of the votes cast, meaning he will be elected if he receives more "For" votes than "Against" votes. Each nominee elected as a director will continue in office until the 20152016 Annual Meeting of Stockholders and until his successor has been duly elected and qualified or until his earlier death, resignation or removal. If any nominee becomes unable to serve, proxies will be voted for the election of such other person as the Board of Directors may designate, unless the Board chooses to reduce the number of directors.
The Corporate Governance Committee of the Board of Directors is responsible for making recommendations to the Board concerning nominees for election as directors and nominees for Board vacancies. When assessing a director candidate's qualifications, the Corporate Governance Committee considers the candidate's expertise (including industry background), independence, and integrity, as well as skills relating to operations, finance, marketing and technology. In addition, the Committee looks at the overall composition of the Board and how a candidate would contribute to the overall synergy and collaborative process of the Board. The Committee has not established specific minimum eligibility requirements for candidates other than integrity, the commitment to act in the best interests of all stockholders and ensuring that a substantial majority of the Board remains independent. Our Corporate Governance Guidelines provide that the Corporate Governance Committee will consider director candidates recommended by stockholders provided such recommendations comply with our Bylaws and the process set forth in this proxy statement. In assessing such candidates, the Corporate Governance Committee will consider the same criteria described above. See our Corporate Governance Guidelines, which may be viewed in the corporate governance section of our website at http://www.dexmedia.com/company/about/corporate/corporate-governance/, for additional information on the selection of director candidates.
Each of the director nominees listed below is an incumbent director whose nomination to serve on the Board was recommended by the Corporate Governance Committee and approved by the Board. Each of the director nominees has indicated a willingness to serve as a director if elected.
Mr. Bulkeley, 53,54, has served on the Dex Media Board of Directors since April 2013; he previously served as a Director of Dex One Corporation ("Dex One") from January 2010 to April 2013, and was non-executive Chairman of the Dex One Board of Directors from September 2010 to August 2011. He currently serves as a member of the Compensation and Benefits Committee and the Corporate Governance Committee of Dex Media. Mr. Bulkeley also serves as the Chief Executive Officer at RealMatch Inc., a leader in the online recruitment industry selling through hundreds of local media partners. Mr. Bulkeley founded Blue Square Capital Management LLC, which operates the Blue Square Small Cap Value Fund, a hedge fund investing in global small and microcapmicro cap equities, in March 2009 and has served as its Chief Investment Officer since inception.until November 2014. Mr. Bulkeley also served as Chief Executive Officer of Scanbuy Inc., a global leader in visual navigation for the wireless industry, from March 2006 to August 2010. Mr. Bulkeley also previously has served as Chief Executive Officer of barnesandnoble.com, and Chairman and Chief Executive Officer of Lifeminders, an online direct marketing company. Mr. Bulkeley currently serves on the boardBoard of Spark Networks, Inc. During the past five years, Mr. Bulkeley has also been a directorJones, Lang, LaSalle Income Property Trust.
Table of The Reader's Digest Association, Inc. and Excelsior LaSalle Property Fund, Inc.Contents
Mr. Bulkeley brings to the Board managementinvesting, board and operational experience with companies in all phases of business developmentgrowth. In particular, he has deep experience in overseeing and experience with our Company's businessmanaging digital media and industry.local digital media businesses.
THOMAS D. GARDNER
Mr. Gardner, 56,57, has served on the Dex Media Board of Directors since April 2013; he previously served as a Director of SuperMedia Inc. ("SuperMedia") from December 2009 to April 2013. He currently serves as the Chairman of the Compensation and Benefits Committee and as a member of the Audit and Finance Committee. He is a trustee for Guideposts, and previously served as a trustee for Northern Westchester Hospital and Reader's Digest Foundation. He served as executive vice president of Reader's Digest Association, Inc. from 2006 to 2007, and was president of Reader's Digest International from 2003 to 2007. Prior to holding those positions, he held numerous other positions with Reader's Digest Association, Inc. from 1992 to 2007, including president, North American Books and Home Entertainment; president, global marketing; senior vice president, corporate strategy and U.S. new business development; vice president, marketing, Reader's Digest USA; and director, corporate planning. From 1989 to 1992, Mr. Gardner was a management consultant for McKinsey & Co. Other experience includes time with General Foods Corporation in product management, desserts division, and with Yankelovich, Skelly and White, Inc., industrial and corporate communications division, in project management.
Mr. Gardner's experience in the publishing industries, including his several senior positions at Reader's Digest, gives him an understanding of the opportunities and challenges associated with our business. In addition, Mr. Gardner brings an understanding of financial issues to the Board and the Audit and Finance Committee.
Mr. Liddell, 64,65, has served on the Dex Media Board of Directors since April 2013; he previously served as a Director of Dex One from January 2010 to April 2013. Mr. Liddell previously served as interim Principal Executive Officer of Dex One, from May 2010 to September 2010. He currently serves as the Chairman of the Audit and Finance Committee. Mr. Liddell has served as President, Chief Executive Officer and Director of Irex Corporation, the parent corporation of a specialty contracting network serving commercial, industrial, marine and residential customers, since 1984. Prior to joining Irex Corporation, Mr. Liddell was an associate at Covington & Burling in Washington, D.C., where he practiced corporate law with a focus on bank regulation, securities and antitrust.
Mr. Liddell brings to the Board operational experience as the chief executive of a company directly interfacing with local businesses and consumers. In addition, Mr. Liddell brings an understanding of financial issues to the Board and the Audit and Finance Committee.
PETER J. MCDONALD
Mr. McDonald, 63, has been Dex Media's president and chief executive officer and has served on the Dex Media Board of Directors since April 2013; he previously was president and chief executive officer and served as a director of SuperMedia since December 2010. From October 4, 2010 until December 9, 2010, Mr. McDonald served as SuperMedia Inc.'s interim chief executive officer. Prior to joining SuperMedia, Mr. McDonald held various positions at R.H. Donnelley Corporation (predecessor to Dex One), including as president and chief operating officer from 2004 through 2008. From 2002 to 2008, Mr. McDonald served as senior vice president and president of Donnelley Media. Mr. McDonald served as a director of R.H. Donnelley between 2001 and 2002. Previously, Mr. McDonald served as president and chief executive officer of SBC Directory Operations, a publisher of yellow pages directories, from 1999 to 2000. He was president and chief executive officer of Ameritech Publishing's yellow pages business from 1994 to 1999, when Ameritech was acquired by SBC. Prior to that, Mr. McDonald was president and chief executive officer of DonTech and served in a variety of sales positions at R.H. Donnelley, after beginning his career at National Telephone Directory Corporation. He is also a member of the board of the Local Search Association, where he previously served as Chairman.
Mr. McDonald's over 35 years of experience in the yellow pages directory advertising and publication industry gives him unique knowledge of the opportunities and challenges associated with our business. Mr. McDonald's familiarity with our business and industry and the various market participants provides invaluable insight and advice to our Board.
THOMAS S. ROGERS
Mr. Rogers, 59,60, has served on the Dex Media Board of Directors since April 2013; he previously served as a Director of SuperMedia from 2006 to April 2013. Mr. RogersHe currently serves as presidenta member of the Compensation and chief executiveBenefits Committee. Mr. Rogers serves as President and Chief Executive officer of TiVo Inc., a provider of television-based interactive and entertainment services, a position he has held since July 2005. He also currently serves on the board of directors of TiVo Inc. Mr. Rogers previously served as chairmanChairman of the board of Teleglobe International Holdings, Ltd., a provider of international voice, data, internet and mobile roaming services, from November 2004 to February 2006. He also has served as chairmanChairman of TRget Media LLC, a media industry investment and operations advisory firm, since July 2003. Mr. Rogers served as the senior operating executive for media and entertainment for Cerberus Capital Management, a large private equity firm, from 2004 to July 2005. Prior to holding
that position, he served as chairmanChairman and chief executive officerChief Executive Officer of Primedia, Inc., a print, video and online media company, from October 1999 to April 2003. From January 1987 until October 1999, Mr. Rogers held positions with the National Broadcast Company, Inc., including president of NBC Cable and executive vice president.
As a long-term member of the board of SuperMedia Mr. Rogers has a familiarity with our business that makes him uniquely qualified to serve as a director of Dex Media. As president and chief executive officer of a public company, Mr. Rogers has significant exposure to, and we benefit from his experiences related to, the opportunities and challenges associated with our business. Additionally, his service on other public company boards allows the Company to leverage his experiences with, among other things, appropriate oversight and corporate governance matters.
Mr. Schultz, 55,56, has served on the Dex Media Board of Directors since April 2013 and currently serves as the non-executive Chairman of the Board; he previously served as a Director of Dex One from 2005 to April 2013, and was non-executive Chairman of the Dex One Board of Directors from August 2011 to April 2013 and from June 2010 to September 2010. Mr. Schultz served as non-executive Chairman of the Board of Valassis Communications, Inc., a respected leader within the marketing services and promotional media industries, from January 1, 2012 to February 4, 2014, following his retirement as President and Chief Executive Officer effective December 31, 2011. From 1997 through December 2011, Mr. Schultz served as Chairman, President and Chief Executive Officer of Valassis. Prior to that, Mr. Schultz held numerous executive positions in sales, marketing, operations and finance with Valassis. He has served on the Board of Directors of the Ad Council and the American Advertising Federation. Mr. Schultz joined Valassis from Deloitte and Touche in 1984.
Mr. Schultz brings to the Board experience as the former chief executive officer of a publicly-held marketing services company servicing both national and local businesses. Mr. Schultz also has significant experience with the Company's business and industry.
Mr. Slater, 40,42, has served on the Dex Media Board of Directors since April 2013; he previously served as a directorDirector of SuperMedia from January 2010 to April 2013. He currently serves as a member of the Audit and Finance Committee and the Corporate Governance Committee. Mr. Slater currently serves as a Senior Vice President at Paulson where he focuses on investments in the media, telecom and technology sectors. Mr. Slater joined Paulson in January 2009. Previously, he was a vice president at Lehman Brothers and Barclays Capital where he worked from 2004 to 2008 in the global trading
strategies group, focusing on investments in the media and other sectors. Prior to Lehman Brothers and Barclays Capital, Mr. Slater was senior director, finance and strategy, at NextSet Software Inc., a financial trading systems software vendor. He started his career as an associate consultant at Burlington Consultants, a strategy consultancy based in London.
Mr. Slater brings leadership, financial experience and a background in the media, telecom and technology industries to the Board. Mr. Slater's exposure to companies in the media, telecom and technology industries provides valuable insight to the Board regarding industry trends that affect our Company. Mr. Slater also brings to the Board the perspective of large institutional investors.
Mr. Walsh, 51, has joined the Company as its President and Chief Executive Officer and a member of the Board of Directors in October 2014. Prior to joining the Company, Mr. Walsh was the Chairman and Chief Executive Officer of Walsh Partners, a private company founded in 2012 that has been focused on investments and advisory services. Mr. Walsh has also served as the Executive Chairman of
Cambium Learning Group, Inc., a leading educational solutions and services company, since March 2013. Mr. Walsh was previously employed by Yellowbook Inc., a digital and print marketing solutions company, from 1987 until 2011, and served as President and Chief Executive Officer and a member of its board of directors from 1993 until 2011. In 1982, Mr. Walsh co-founded IYP Publishing, a company sold in 1985 to DataNational Corporation, a leading provider for enterprise software and services. He served as Vice President of Sales at DataNational until joining Yellowbook in 1987. Mr. Walsh served as Chairman of the Local Search Association (LSA) and on the board of LSA's predecessor, the Yellow Pages Association. He was also Chairman and a long-term board member of the Association of Directory Publishers and served on the board of the Association of Directory Marketing.
Mr. Walsh possesses substantial executive, business and operational experience relating to yellow pages directory advertising and publication industry which gives him unique knowledge of the opportunities and challenges associated with our business. Mr. Walsh's familiarity with our business and industry and the various market participants provides invaluable insight and advice to our board.
Mr. Wheat, 63,64, has served on the Dex Media Board of Directors since April 2013; he previously served as the Chairman of the Board of Directors of SuperMedia from July 2010 to April 2013, including Executive Chairman from August 2010 to December 2010. He currently serves as the Chairman of the Corporate Governance Committee. Mr. Wheat serves as Chairman of AMN Healthcare Services, Inc., one of the leading temporary healthcare staffing companies in the world.world, and as the Chairman of the Board of Overseas Shipholding Group, Inc., a market leader in global energy transportation services. Mr. Wheat previously served as a director of Playtex Products, Inc. from 1995 to 2007 (including serving as its chairman from 2004 to 2006). Mr. Wheat has served as a member of the boards of directors of Dr. Pepper/Seven-Up Companies, Inc., Thermadyne Industries, Inc., Sybron International Corporation, Smarte Carte Corporation, Nebraska Book Corporation, and ALC Communications Corporation. Since 2008, he has served as Managing Partner of Southlake Equity Group (formerly Challenger Equity Group), a private investment firm. Prior to Southlake Equity Group, he served as president of Haas Wheat & Partners, a private investment firm specializing in strategic equity investments and leveraged buyouts of middle market companies from 1992 to 2006. Mr. Wheat also held various leadership and senior management positions at Grauer & Wheat and Donaldson Lufkin & Jenrette Securities Corporation earlier in his career.
Mr. Wheat's extensive experience serving on public company boards, including as chairman of three public boards, and his expertise in a variety of financial matters make him uniquely qualified to serve on our Board. Additionally, Mr. Wheat's experiences have provided him with critical knowledge with respect to, among other things, appropriate oversight and related actions utilized in the Board environment, including concerning corporate governance matters.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR"
THE ELECTION OF ALL OF THE DIRECTOR NOMINEES NAMED ABOVE
EXECUTIVE AND DIRECTOR COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis
provides a description of our compensation philosophy, the objectives of our compensation programs for executive officers, and the process that the Compensation and Benefits Committee of the Board of Directors, referred to below as the "Committee," follows to make decisions regarding executive compensation arrangements.
This discussion and analysis of our compensation program for named executive officers should be read in conjunction with the accompanying tables and text disclosing the compensation awarded to, earned by, orand paid to, theour named executive officers.
Compensation of the named executive officers, is determined under the Company's compensation program for senior executives. This program is governed by the Compensation and Benefits Committee of the Board of Directors, referred to below as the "Committee." While the Committee determines the compensation of all of the Company's executive officers, this discussion and analysis focuses on the executive officers listed in the Summary Compensation Table and other compensation tables that follow, referred to herein as the "Named Executive Officers" or "NEOs." The "NEOs" for 2014 include: Joseph A. Walsh, President and Chief Executive Officer; Paul D. Rouse, Executive Vice President—Chief Financial Officer and Treasurer; Del Humenik, Executive Vice President—Chief Revenue Officer; Raymond R. Ferrell, Executive Vice President—General Counsel and Corporate Secretary; Debra M. Ryan, Executive Vice President—Chief Human Resources Officer; Peter J. McDonald, former President and Chief Executive Officer (resigned effective October 14, 2014); Samuel D. Jones, former Executive Vice President—Chief Financial Officer and Treasurer (resigned effective November 14, 2014); and Frank P. Gatto, former Executive Vice President—Operations (resigned effective October 31, 2014).
We have organized the discussion into the following sections:
Executive SummarySECTION 1—BUSINESS SUMMARY AND HIGHLIGHTS
SECTION 2—CHIEF EXECUTIVE OFFICER PAY AND TRANSITION
SECTION 3—OUR COMPENSATION DECISION-MAKING PROCESS
SECTION 4—COMPENSATION PHILOSOPHY, OBJECTIVES AND PROGRAMS
SECTION 5—EXECUTIVE EMPLOYMENT AND CONSULTING AGREEMENTS
SECTION 6—OTHER COMPENSATION RELATED ITEMS
Background.SECTION 1—BUSINESS SUMMARY AND HIGHLIGHTS
Dex Media was formed on April 30, 2013 through the Merger which brought togethermerger of Dex One and SuperMedia, two major providers of local, social, and mobile marketing solutions to businesses in communities across the United States. Dex Media's consumer services include onlineOur mission is to be the trusted marketing partner for local businesses. 2014 was the first full year of operation for our combined company following the merger, and mobile search portalswe made progress on many fronts. Our accomplishments in 2014 included:
In additionDecember 2014, we started implementing an organizational restructuring program designed to bringingreorganize and strategically refocus the two companies together in 2013, we experienced a challenging business environment throughout the year. Challenges included an industry trend of decreased demand for print based advertisingCompany and broader uneven economic trends impacting the Company's core retail customer segment. These trends in particular resulted in Dex Media's experiencing a decline in revenue. In addition,to transform Dex Media is highly leveraged, with long-term debt greater than revenue. Repayinginto a large portion of that debt was a key focus of our Company following the Merger.
Dex Media's 2013 executive compensation program is best understood in the context of the Mergerleaner, nimbler and these business trends. 2013 was both a transitional and transformational year for the Company. We focused on both top-line and bottom-line performance, all while continuing our post-Merger integration activities. We redefined our strategy and worked to transform our business from a principally print-based advertising and media company to a multi-platform marketing solutions provider, introducing digital solutions that are relevant and valuable to our customers. Throughout the year, we focused on integrating two organizations, we right-sized themore competitive organization (people, facilities and resources), re-negotiated multiple key contracts and moved to single IT and financial platforms.
Compensation Philosophy and Objectives. Dex Media's compensation program is designed to reward executives for Company and individual performance through awards of annual and long-term incentives. Annual and long-term incentives encourage our executive officers to achieve the Company's financial, operational and strategic goals and reward individual and Company performance. Our compensation program is also intendedpositioned to be competitive with our peer companies so that we can attractthe leading multi-product marketing provider for small and retain highly qualified personnel and recognize their knowledge, skills and attributes. To increasemedium-sized businesses. The program includes the retentive powerlaunch of the compensation program, annual and long-term goals are established at challenging but achievable levels. Finally, we strive to design our compensation program to be transparent to our executive officers and to shareholders, and to evidence positive governance principles.
2013 Compensation Design. Following the Merger, the Committee approved an annual incentive design for the remainder of 2013 that largely replicated the annual incentive approach that had been in place previously at Dex One and SuperMedia. This annual incentive design included metrics tied to the financial plan that had been approved as part of the Merger plan. The Committee also approved long-term incentives covering 2013 through 2015 that include a strong cash component, a restrictedvirtual sales offices, enabling
stock componentthe Company to eliminate field sales offices, the automation of the sales process, integration to eliminate duplicative systems, product simplifications, introduction of new sales tools and workforce reductions.
SECTION 2—CHIEF EXECUTIVE OFFICER PAY AND TRANSITION
On October 14, 2014, we announced the retirement of Mr. McDonald, our then President and Chief Executive Officer, and the appointment of Mr. Walsh as our President and Chief Executive Officer and a Board member.
To ensure a smooth transition, our Board worked closely with Mr. McDonald in identifying and recruiting his successor. Further to this goal, the Board retained Mr. McDonald via a consulting agreement for a 12-month period beginning in October 2014 (see "Compensation Discussion and Analysis—Section 5—Executive Employment and Consulting Agreements" for further details). Before joining Dex Media as our President and Chief Executive Officer, Mr. Walsh provided consulting services to our Board with respect to the Company's business operations and strategy from March 2014 to October 2014, through his wholly-owned consulting firm, Walsh Partners.
Mr. Walsh's top priority is to accelerate the Company's transformation to the leading marketing services provider for small and medium-sized businesses. To help accomplish this goal, he assembled an experienced executive team combining talent from within our Company as well as some long-time colleagues from the industry. That experience will be critical to transforming the traditional print-based directory business to a digital and multi-product marketing service business (see "Proxy Summary—Changes to Our Executive Management Team" for further details). Some of the compensation strategy changes we made in 2014 are reflected in Mr. Walsh's own compensation package, which evidences heavy emphasis on performance-based compensation.
The compensation package for our current President and Chief Executive Officer, Mr. Walsh, comprises an annual base salary of $150,000 and long-term incentives valued as of their award date at $7,183,180. The long-term incentives have two components: (i) 271,000 stock options with an exercise price equal to their fair market value of the Company's common stock on the grant date of $7.54, having a total award value of $1,130,070 (using the Black-Scholes option pricing model), and (ii) 350,000 units in the Company's Value Creation Program (the "VCP") valued at $6,053,110, or $17.29 per unit, on the grant date (using a Monte Carlo simulation, a type of option pricing model). See Note 11 to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2014, for a description of the assumptions used in the Monte Carlo simulation. The actual value to the CEO of the stock options and VCP will depend on actual results and could be higher or lower than the award value.
These long-term incentive awards are intended to cover performance from October 14, 2014, Mr. Walsh's hire date, through the time the awards vest. The stock options will vest on December 31, 2017, subject to the terms of the applicable award agreement. The performance period for the VCP units ends on December 31, 2017, and the value of those units, if any, will be paid out in equal one-third installments on each of March 31, 2018, June 30, 2018 and December 31, 2018. The Committee currently has no plans to award Mr. Walsh additional long-term incentives prior to December 31, 2017. The annualized award value for the stock options and VCP units awarded to Mr. Walsh for the period from October 14, 2014 to December 31, 2017 is $2,186,696.
Mr. Walsh's total compensation package is weighted heavily towards performance-based incentive awards, or pay "at risk." Below is an illustration of the fixed and variable proportions of Mr. Walsh's compensation package. For this illustration, we have annualized the expected value, based on the
estimated value at the time the awards were made, of both the stock options and VCP units that Mr. Walsh received on his hire date:
Proportion of Fixed vs. Variable
Compensation
See "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" and "Executive Compensation Tables—Grants of Plan-Based Awards" for further description of the stock option component. These programs are describedand VCP unit awards that comprise Mr. Walsh's performance-based incentives.
SECTION 3—OUR COMPENSATION DECISION-MAKING PROCESS
Stockholders Advisory Vote: "Say on Pay"
At the Company's annual meeting of stockholders held in more detail laterMay 2014, a substantial majority (90.86%) of the votes cast on the proposal to approve executive compensation, on an advisory basis, were voted in this section.favor of the proposal. The Committee also updatedbelieves this affirms stockholders' support of the peer group usedCompany's approach to benchmark compensation for executive officers, adopted stock ownership guidelines for executive officers and non-management directors and negotiated a three year extension to the CEO's employment agreement. All of these items are described in more detail in this Compensation Discussion and Analysis.compensation.
The Committee is responsible for reviewing and making individual compensation determinations including, but not limited to, salary, annual cash incentives, long-term incentive awards of cash or stock and any other awards made to the CEO and senior management (which includes all executive officers as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934). The Committee annually reviews and approves the corporate goals, objectives, and other key measures relevant to compensation of the Company's executive officers. All key decisions are presented to the full Board for review and, in the case of the CEO, for ratification.
The Committee receives assistance from two sources—itsreviews and approves the Company's incentive compensation and equity-based compensation plans, including the performance measures to be applied in determining incentive awards. The Committee oversees the administration of the incentive compensation and equity-based compensation plans to ensure consistency with the Committee's compensation policies, objectives, and programs with respect to plan participation, including, but not limited to, approving general size of overall awards, designating eligible participants, approving awards, appointing and reviewing the performance of plan administrators, and imposing any limitations, restrictions and conditions upon awards. The Committee also reviews performance-based awards, such as those payable under our annual and long-term incentive plans, prior to any payout to ensure that performance under the plan is sufficient to merit an award, and payments are made in accordance with the plan terms.
The Committee works with management and the Committee's independent compensation consulting firm, Semler Brossy Consulting Group LLC ("Semler Brossy"), to make pay determinations and to ensure that our programs are competitive and meet our compensation objectives (see "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" for further details).
Role of the Company's internal executive compensation staff.Committee's Compensation Adviser
As mentioned above, the Committee has selected Semler Brossy has been retained by, andas its independent compensation adviser. Semler Brossy reports directly to the Committee and does not have any other consulting engagements with management or the Company. Specifically,The Committee has assessed the independence of Semler Brossy and concluded that its engagement of Semler Brossy did not raise any conflict of interest with the Company or any of its directors or executive officers in 2014. In making this assessment, the Committee considered the independence factors enumerated in new Rule 10C-1(b) under the Securities Exchange Act of 1934, including the fact that Semler Brossy does not provide any other services to the Company, the level of fees received from the Company as a percentage of Semler Brossy's total revenue, policies and procedures employed by Semler Brossy to prevent conflicts of interest, and whether the individual Semler Brossy advisers to the Committee own any of the Company's stock or have any business or personal relationships with members of the Committee or our executive officers.
The Committee regularly seeks independent advice from Semler Brossy on current trends in compensation design, including overall levels of compensation, the appropriateness of peer group companies, the relative weightings of compensation elements and the value of particular performance measures on which to base compensation. Within this framework, Semler Brossy has been directed to work collaboratively with management to ensure sufficient understanding of the Company's business and compensation programs.
With respect to compensation for Dex Media's CEO, Semler Brossy provides competitive market CEO compensation data for the Committee's consideration. In accumulating these relevant data, Semler Brossy relies on its understanding of Dex Media's business and compensation programs and its independent research and analysis. Semler Brossy does not meet with the CEO with respect to his compensation.
For executive officers other executive officers' compensation,than the chief human resources officerCEO, our Chief Human Resources Officer works with the CEO to develop the CEO's compensation recommendations to the Committee. In developing these recommendations, the CEO considers the Company's overall performance, each individual's scope of responsibility, competitive market compensation data, individual performance, and the CEO's assessment of the individual's current and future potential contributions.
Executive Compensation Peer Group
Semler Brossy providesassists the Committee with its independent view of the CEO'sin determining an appropriate compensation recommendations.
Compensation Positioning
Peer Group Companies. The Committee intends that the compensation opportunity available tobenchmarking group for our executive officers be competitive with the compensation offered by similar companies. Following the Merger in 2013,officers. In 2014, the Committee reexamined the peer group and made changes that are reflected in consultation with its independent compensation consulting firm, Semler Brossy.the table below. The Committee-approvedcurrent peer group includes companies in the Advertising (GICS Industry 25401010) and Publishing (GICS Industry 25401040) subcategories of Media companies with trailing four quarter revenues between $1.0 billion and $2.5 billion that are similarcomparable to our Company.Dex
Media. The peer group is used to provide market references in establishing the total compensation opportunity for our executive officers. For 2013,2014, this group comprised:
IAC/InterActiveCorp | John Wiley & Sons Inc. | |
Meredith Corporation | ||
Scholastic Corporation | The McClatchy Company | |
The New York Times Company |
Target Marketplace Positioning. The Committee's stated objective is to position an executive'sexecutive officer's target total direct remunerationcompensation opportunity assuming(base salary plus target performance,annual incentive plus target long-term incentive) within a 10% to 15% range above or belowof the median of the competitive market for the executive'sexecutive officer's position. Actual total direct remunerationOf course, actual pay will vary from year to year and may be below or above target, depending on both the Company's performance relative to our annual and long-term incentive plan metrics and the executive's performance relative to pre-established objectives.executive officer's individual performance.
Although the Committee reviews peer group data to provide a frame of reference for decision-making, theThe Committee did not rely exclusively on peer group data in setting the terms of the 20132014 compensation programs. Similarly, the Committee did not set total direct remuneration or its component parts at levels designed to achieve a mathematically precise market position, nor is there a commitment or understanding to provide executives with compensation at any specific level, or within any specific range with respect to the peer group.
SECTION 4—COMPENSATION PHILOSOPHY, OBJECTIVES AND PROGRAMS
Our goal for the executive compensation program is to attract, motivate, and retain a talented, entrepreneurial, and creative team of executives who will provide leadership for the Company's success in dynamic and competitive markets. Our compensation philosophy is to provide a balanced compensation program that rewards employees for the achievement of the Company's financial, operational and strategic goals. We believe that the most effective program will provide a competitive base salary with annual and long-term incentives based on performance.
For 2014 our executive compensation programs focused on both top-line and bottom-line performance, all while working on transforming our business and positioning the Company to be the leading multi-product marketing provider for small and medium-sized businesses.
Following the merger of Dex One and SuperMedia in April 2013, the Committee developed our 2014 compensation design and target compensation opportunities, comprising a mix of fixed and variable compensation, including base salaries and annual and long-term incentives that created a balance between annual and long-term focus. Our annual incentive design included metrics tied to the Company's financial growth plan. Long-term incentives awarded for 2014 included stock options, promotional grants of restricted stock, and performance-based cash awards, scheduled to pay out one year after the performance period ended (such performance period ended on December 31, 2014). A new long-term incentive plan, the VCP, was introduced in 2014. These programs are described in more detail below.
Total direct remuneration for Dex Media'sOur executive officerscompensation program is comprised of base salary, annual incentive compensationdesigned to be competitive with companies both within and long-term incentive compensation.
Base Salary. Dex Media provides its executive officers an annual base salary to compensate them for services rendered during the year; base salary is a fundamental component of compensation and is necessary tooutside our industry so that we can attract and retain talented management employees. We design our compensation plans to be transparent to our executive officers.officers and to stockholders, and to evidence and support positive governance principles.
The following table sets forth elements of our 2014 executive compensation program. Additional details regarding these compensation elements follow immediately after the table:
What it Does—How it Works | 2014 Plan Metrics—Weighting | |||
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Base Salary | • Basic element of competitive pay • Influences annual incentive value (base salary × target annual incentive %) | Not applicable. | ||
Annual Incentive | • Short-term incentive plan • Performance-based compensation element with a variable payout potential based on corporate and individual performance. • Performance metrics are established at the beginning of the performance period. • This plan is intended to motivate and reward executive officers for the achievement of annual (short-term) business objectives. | • EBITDA—30% • Free Cash Flow—10% • Print Ad Sales—25% • Digital Ad Sales—35% | ||
Long-term Incentive: | • This plan was effective in 2014 and will not be continued in 2015; awards for the 2013 performance period paid out in December 2014, and awards for the 2014 performance period are scheduled to be paid out in December 2015. • This plan provided significant focus on improving our Free Cash Flow for 2014 and on growing the digital marketing side of our business. • This plan was intended to motivate and reward executive officers for achievement of the plan goals, and also to provide Dex Media with a measure of retention value to maintain a stable executive leadership team. | • Free Cash Flow—50% • Digital Ad Sales—50% | ||
Long-term Incentive: | • This plan was introduced in October 2014 to provide executive officers an opportunity to receive long-term compensation based on the net value creation in the Company. • The VCP is a long-term plan; it measures the value creation over a roughly three-year performance period (October 2014 through December 2017). | Net change in fair market value of the Company's total invested capital, including: • Equity securities • Debt securities • Bank debt; • Plus cash dividends and cash debt payments (interest and principal); • Reduced by any net value contributed from external sources | ||
What it Does—How it Works | 2014 Plan Metrics—Weighting | |||
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Long-term Incentive: | • Options to acquire shares of stock that vest either over a four-year period or on December 31, 2017. • Designed to retain executives and align their interests with those of the company's stockholders. | Not applicable. | ||
Long-term Incentive: | • Shares of stock that vest as a result of continued employment with the company. • Designed to retain executives and align their interests with those of the company's stockholders. | Not applicable. | ||
Cash Allowance | • This plan provided a monthly stipend to eligible executive officers; the Cash Allowance wasdiscontinued effective December 31, 2014. | Not applicable. | ||
Financial Counseling | • This plan provided for financial counseling and tax preparation services through a financial or tax adviser, up to a fixed annual maximum amount. • The financial counseling program wasdiscontinued in December 2014. Eligible executive officers may receive benefits under the plan through April 2015, so that they may complete their 2014 financial and tax planning. | |||
Executive Physical | • Eligible executive officers receive $2,000 per year for a comprehensive medical examination | |||
Retirement Benefits | • A 401(k) retirement savings plan enables all employees, including executive officers, to contribute a portion of their compensation with a company matching contribution. • Predecessor companies' pension plans for certain employees and executive officers. | Not applicable. | ||
Employment and Severance Benefits | • CEO Employment Agreement provides for salary, incentive opportunities and severance benefits. • Dex Media, Inc. Severance Plan—Executive Vice Presidents and Above ("Severance Plan") provides for severance benefits equal to a multiple of salary and target short-term incentive award in the event of certain terminations of employment. | Not applicable. |
Details: 2014 Base Salaries and Annual Incentives
Base Salaries
As mentioned above, the Committee is responsible for reviewing and making individual executive officers' base salaries are reviewed annually bycompensation determinations. In consultation with management, the Committee evaluates the performance of executive officers in light of agreed upon measures and determines and approves, or recommends to the Board for approval, executive officers' compensation, including annual base salary levels, but dodoes not automatically increase these levels each year. We believe that base salary increases at the executive officer level are generally warranted when (i) the employee has had a significant increase in job responsibilities, (ii) the employee's base salary is not viewed as externally competitive or internally equitable, based on the analysis performed by the Committee's independent adviser, or (iii) individual performance and career growth support an increase to base salary.
In August of 2013,December 2014, the Committee adjustedreviewed base salaries for our executive officers to reflect increased or changed responsibilities following the Merger. Theseand approved an increase of Mr. Ferrell's base salary levels werefrom $312,500 to $340,000, effective MayJanuary 1, 2013,2015, to coincidebring Mr. Ferrell's salary in line with his peers and within the completionmedian range of the Merger. Annualizedcompetitive market for his position. Messrs. Walsh's and Rouse's base salaries were determined in connection with their respective hiring in October and November, 2014. Based on the input received from Semler Brossy and considering that recently-hired officers' pay was reviewed and approved at the time of hire, the Committee determined that no other base salary rates for each of the NEOs beginning May 1, 2013 were:increases were warranted in 2014.
Name | Salary | |||
---|---|---|---|---|
Peter J. McDonald | $ | 977,000 | ||
Samuel D. Jones | $ | 514,000 | ||
Del Humenik | $ | 500,000 | ||
Frank P. Gatto | $ | 430,000 | ||
Matthew J. Stover(1) | $ | 385,000 | ||
Cody Wilbanks(1) | $ | 437,800 |
Annual Incentive Compensation (Short-term Incentive).Incentives Dex Media provides its
We provide our executive officers with the opportunity to earn variableannual, performance-based cash compensation under the Company'sour Short-term Incentive program (STI). The purpose of the STI is to reward executive officers for performance during a singlePlan ("STI"), which covers our fiscal year and to provide incentives for them to achieve Dex Media's annual financial and operational goals, as measured against specific performance criteria relative to Dex Media's overall business results.(the calendar year). Payouts under the STI are determined annually by the Committee based on the executive officer's target incentive and performance against pre-determined performance measures.
Annual incentive opportunities for executive officers are expressed as a percentage of base salary. The Committee follows the same benchmarking and decision-making process with respect to annual incentives as it does with base salary; reviewing publicly available data of the Company's peer group to assess the competitiveness of the executives' compensation components, as the Committee deems appropriate. The Committee may reassess the target annual incentive for each executive officer from time to time. Annualized incentive opportunitiesThe annualized base salary levels and target annual incentives for theeach of our NEOs effectivein 2014 (which comprise both current and former executive officers, as of May 1, 2013 were:indicated) were as follows:
| Name | Annualized Base Salary | Target Annual Incentive (STI) | ||||||
---|---|---|---|---|---|---|---|---|---|
Current Executive Officers | Joseph A. Walsh | $ | 150,000 | 0 | % | ||||
Paul D. Rouse | $ | 450,000 | 70 | % | |||||
Del Humenik(1) | $ | 600,000 | 85 | % | |||||
Debra M. Ryan | $ | 332,000 | 60 | % | |||||
Raymond R. Ferrell | $ | 312,500 | 60 | % | |||||
Former Executive Officers(2) | Peter J. McDonald | $ | 1,050,000 | 100 | % | ||||
Samuel D. Jones | $ | 514,000 | 85 | % | |||||
Frank P. Gatto | $ | 430,000 | 70 | % |
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For 2013,
EachChief Operating Officer of the Company, effective May 28, 2014. As part of his promotion, Mr. Humenik's annual base salary was increased from $500,000 to $600,000 and his annual STI award opportunity increased from 70% to 85% of his base salary. Effective November 4, 2014, Mr. Humenik became the Executive Vice President—Chief
Revenue Officer, with responsibility for managing sales for our Company. Under our new management structure, the position of Chief Operating Officer was eliminated.
2014 Annual Incentive Plan Metrics and Performance
There were four performance metrics was assignedin our 2014 STI. Below is a description of those metrics and our threshold, target and maximum performance value. Belowlevels and respective payouts under the threshold performance level, which for all metrics was 85% of the target performance level, no incentive would be earned. Similarly, the maximum payout for any metric was 200% for performance at or above 120% of target.
To support the plan design and facilitate the payout calculations, several breakpoints were established between threshold and target, and between target and maximum performance levels. The performance breakpoints are shown in the table below:
| Threshold | | | Target | | Maximum | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Performance as a Percent of Target: | 85 | % | 90 | % | 95 | % | 100 | % | 110 | % | 120 | % | |||||||
Calculated STI Payout Value: | 30 | % | 50 | % | 90 | % | 100 | % | 150 | % | 200 | % |
Performance levels that fall in between the specified breakpoints above would result in a calculated payout based on straight-line interpolation between the two breakpoints.
Corporate Performance Metricsplan.
The Committee developed the performance and payout parameters for the 2014 STI in the first quarter of 2014. We set threshold, target and maximum performance levels for each metric and the targets were tied to our annual operating plan.
As illustrated in the tables below, the Committee established a minimum performance threshold of 90% of target for each metric. This means that performance below 90% of target for any metric would result in no incentive award being earned for that metric. As an example, if performance on EBITDA, which was weighted 30%, came in below 90% of target, then 30% of the STI payout opportunity would not be funded. The Committee established a maximum performance level at 120% of target performance for each metric, and capped the maximum payout at 200% of target.
For performance between any of the breakpoints listed in the table below, we would interpolate the value of the payout using the percentages immediately above and below the values in the table. Our actual 2014 performance and payout results follow these tables.
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EBITDA 30% | FREE CASH FLOW 10% | PRINT AD SALES 25% | DIGITAL AD SALES 35% | ||||||||||||||||||||
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Performance | Payout | Performance | Payout | Performance | Payout | Performance | Payout | ||||||||||||||||
90 | % | 65 | % | 90 | % | 65 | % | 90 | % | 65 | % | 90 | % | 65 | % | ||||||||
95 | % | 83 | % | 95 | % | 83 | % | 95 | % | 83 | % | 95 | % | 83 | % | ||||||||
100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | 100 | % | ||||||||
110 | % | 135 | % | 110 | % | 135 | % | 110 | % | 135 | % | 110 | % | 135 | % | ||||||||
120 | % | 200 | % | 120 | % | 200 | % | 120 | % | 200 | % | 120 | % | 200 | % |
On March 10, 20145, 2015 the Committee reviewed the Company's performance against the pre-established metrics for 2013.fiscal year 2014. The Committee determined that: EBITDA results were at 93.4%98.6% of target,
resulting in a 19.3%95.2% payout for this measure; Free Cash Flow results were at 102.3%109% of target, resulting in a 27.9%131.5% payout for this measure; Print Ad Sales were at 95.1%100.5% of target, resulting in a 22.6%101.6% payout for this measure; and Digital Ad Sales results were below the threshold for anyat 94.6% of target, resulting in a 81.2% payout for this measure, i.e., 0% payout.measure. Given the performance described above, the total payout percent for the 20132014 STI Plan was 69.8%95.6% overall. The resulting incentive payments to Named Executive Officers are detailed in the table below:
Name | 2013 STI Paid in March 2014 | |||
---|---|---|---|---|
Peter J. McDonald | $ | 457,745 | ||
Samuel D. Jones | $ | 204,697 | ||
Del Humenik | $ | 163,982 | ||
Frank P. Gatto | $ | 141,025 | ||
Matthew J. Stover | $ | 126,266 |
| Name | 2014 STI Paid in March 2015 | ||||
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Current Executive Officers | Joseph A. Walsh | N/A | ||||
Paul D. Rouse | N/A | |||||
Del Humenik | $ | 459,273 | ||||
Debra M. Ryan | $ | 190,435 | ||||
Raymond R. Ferrell | $ | 179,250 | ||||
Former Executive Officers | Peter J. McDonald | $ | 963,000 | |||
Samuel D. Jones | $ | 380,642 | ||||
Frank P. Gatto | $ | 250,696 |
2014 Special Awards
On March 10, 2014 the Committee also approved awe granted one-time, special awardcash awards to theour Named Executive Officers in the amounts set forth below.Officers. The special awardawards for the NEOs excepting the CEO were recommended by the CEO and approved by the Committee. The special award for the CEO was recommended by the Committee and approved by the full Board. The basis forCommittee determined that these awards were warranted based on the special award was two-fold: 1)executive officers' performance in leading the integration performance (leadership in merger integration; significant results achieved in integrating each function, team, processesof Dex One and platforms) and 2) team selection and retention (has chosenSuperMedia following the right members for his/her team and has retained them post-merger; and continues to build an effective team aligned with the Company's plan for growth).merger. In approving these awards, the Committee and the Board desired to rewardrecognize the integration related performance notingsignificant achievements made in integrating the two companies, and noted that the STI, designwhile focused on four areas of operational performance.performance, did not include an effective way to recognize integration results.
Name | Special Awards Paid in March 2014 | |||
---|---|---|---|---|
Peter J. McDonald | $ | 30,000 | ||
Samuel D. Jones | $ | 15,000 | ||
Del Humenik | $ | 13,000 | ||
Frank P. Gatto | $ | 11,000 | ||
Matthew J. Stover | $ | 0 |
| Name | March 2014 Special Awards | ||||
---|---|---|---|---|---|---|
Current Executive Officers | Del Humenik | $ | 13,000 | |||
Debra M. Ryan | $ | 8,000 | ||||
Raymond R. Ferrell | $ | 5,500 | ||||
Former Executive Officers | Peter J. McDonald | $ | 30,000 | |||
Samuel D. Jones | $ | 15,000 | ||||
Frank P. Gatto | $ | 11,000 |
Details: Long-term Incentives.Incentive Plans and Awards in 2014 As
Dex Media provides its executive officers with the opportunity to earn variable long-term equity and/or cash compensation under its long-term incentive plans. The purpose of the effective date of the Merger, the Company assumed all of the obligations of SuperMedia under the SuperMedia 2009 Long-Term Incentive Plan. Also as of the effective date of the Merger, the Company, as successor-in-interestthese long-term awards is to reward executive officers for performance over a longer time period and to provide incentives for them to achieve Dex One, assumed all of the obligations of Dex One under the Dex One Corporation Equity Incentive Plan, which is now known as theMedia's long-term financial and operational goals. The Dex Media, Inc. Equity Incentive Plan (the "EIP").
On September 5, 2013, the Company amended and restated the SuperMedia 2009 Long-Term Incentive Plan and adopted it in the form of the Dex Media, Inc. Amended and Restated Long-Term Incentive Plan (the "LTIP"). The LTIP and EIP are intended to advance the best interests of the Company, its affiliates, and its stockholders by providing those persons who have substantial responsibility for the management and growth of the Company and its affiliates with additional performance incentives and an opportunity to obtain or increase their proprietary interest in the Company, thereby encouraging them to continue in their employment or affiliation with the Company or its affiliates.Company. The LTIP and EIP are administered by the Committee and will terminate no later than ten years after their respective adoption.
On September 5, 2013, the Board of Directors andIn March 2014, the Committee approved a newgoals and weightings, under the Company's long-term incentive program comprised of awards of restricted stock, non-qualified stock options and long-term cash under the LTIP and EIP. Under the approved structure restricted stock and non-qualifiedNon-qualified stock options will only beare granted in 2013 for the three year period and the cash component will beis provided each year. While the Committee reserves the ability to grant equity to NEOs in 2014 and 2015, the intent of the 2013-2015 design is that no additional equity awards will be made to NEOs except in the case of a promotion or new hire.
20132014 Restricted Stock Program.Awards to Executive Officers
In connection with his promotion to the position of the Chief Operating Officer of the Company, effective May 28, 2014, Mr. Humenik received an additional restricted stock award of 10,000 shares. The restricted stock awards made under the LTIP and EIP vestaward vests on December 31, 2015.2016, subject to the terms of the applicable award agreement. The grant date fair value of this award was $99,900.
In connection with his appointment as the Corporation's Executive Vice President—General Counsel and Corporate Secretary, on January 2, 2014, Mr. Ferrell received an additional restricted stock award of 8,401 shares. The restricted stock award vests on December 31, 2015, subject to the terms of the applicable award agreement. The grant date fair value of this award was $54,859.
No other restricted stock awards were granted to our NEOs in 2014.
2014 Non-Qualified Stock Option Awards
The following NEOs were awarded shares of restricted stock on September 5, 2013, in the following amounts on the terms and conditions set forth in their respective restricted stock award agreements:
Executive Officer | Restricted Stock Awards | Restricted Stock Award Grant Date Value | |||||
---|---|---|---|---|---|---|---|
Peter J. McDonald | 50,000 | $ | 512,500 | ||||
Samuel D. Jones | 33,300 | $ | 341,325 | ||||
Del Humenik | 24,400 | $ | 250,100 | ||||
Frank P. Gatto | 22,200 | $ | 227,550 | ||||
Matthew J. Stover | 20,000 | $ | 205,000 |
2013 Non-Qualified Stock Option Program. The non-qualified stock option awards madeoptions under the LTIP and EIP, vest over four years in equal installmentswith exception of one-fourth on March 31, 2014, March 31, 2015, March 31, 2016 and March 31, 2017. The following NEOs were awardedMr. Walsh, who received a grant of non-qualified stock options on September 5, 2013, at an exercise price of $10.25,a stand-alone basis, outside the EIP, in the following amounts on the terms and conditions set forth in their respective stock option award agreements:
Executive Officer | Stock Options | Stock Options Grant Date Value(1) | |||||
---|---|---|---|---|---|---|---|
Peter J. McDonald | 125,000 | $ | 696,250 | ||||
Samuel D. Jones | 83,300 | $ | 463,981 | ||||
Del Humenik | 61,100 | $ | 340,327 | ||||
Frank P. Gatto | 55,600 | $ | 309,692 | ||||
Matthew J. Stover | 50,000 | $ | 278,500 |
Executive Officer | Stock Options(1) | Stock Options Grant Date Value(2) | |||||
---|---|---|---|---|---|---|---|
Joseph A. Walsh | 271,000 | $ | 1,130,070 | ||||
Paul D. Rouse | 30,972 | $ | 155,789 | ||||
Del Humenik | 40,486 | $ | 215,895 | ||||
Raymond R. Ferrell | 47,158 | $ | 196,895 | ||||
Debra M. Ryan | 19,358 | $ | 97,371 |
2013-2015 Cash Long-term Incentive Plan.Plan
On September 5, 2013,March 10, 2014, the Committee established the performance objectives and other terms for the 2014 measurement period under the Company's 2013-2015 Cash Long-term Incentive Plan (the "2013-2015 Cash LTIP"), which provides for a payment of incentive compensation to the
Company's executive officers and to other eligible employees. These incentive compensation payments are determined by the Company's achievement of specified performance metrics determined at the start of each performance year.
The 2013-2015 Cash LTIP comprises three performance periods. Each of fiscal years 2013, (post-Merger), and fiscal 2014 and 2015 represents one performance period, with 2013 measured on a pro rata basis from the effective date of the Merger through December 2013.period. If, at the end of a measurement period, the Company's performance against the specified performance metrics results in an award being payable to any participating executive officer, the payment of such award shall be made in December of the following year. Performance objectives for each of the 2014 and 2015 performance periods are determined by the Committee during the fourth calendar quarter of 2013 and 2014, respectively.
The total target incentive opportunity for each of 2013 (pro rata), 2014 and 2015 performance periodsperiod under the 2013-2015 Cash LTIP for the following s executive officersNamed Executive Officers is set forth below:
Executive Officer | 2014 Target Award | |||
---|---|---|---|---|
Del Humenik(1) | $ | 900,000 | ||
Debra M. Ryan | $ | 250,000 | ||
Raymond R. Ferrell | $ | 200,000 |
Executive Officer | 2013 Target Award | 2014 Target Award | 2015 Target Award | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Peter J. McDonald | $ | 750,000 | $ | 1,125,000 | $ | 1,125,000 | ||||
Samuel D. Jones | $ | 500,000 | $ | 750,000 | $ | 750,000 | ||||
Del Humenik | $ | 367,000 | $ | 750,000 | $ | 750,000 | ||||
Frank P. Gatto | $ | 334,000 | $ | 500,000 | $ | 500,000 | ||||
Matthew J. Stover | $ | 300,000 | $ | 450,000 | $ | 450,000 |
Under the terms of his employment agreement, our former CEO, Mr. McDonald, is entitled to receive a pro rata payout of the 2014 performance period award under the 2013-2015 Cash LTIP equal to $984,375, payable in December 2015. Pursuant to the terms of the 2013-2015 Cash LTIP and the Severance Plan, Mr. Jones' and Mr. Gatto's (our former executive officers) 2014 performance period awards were forfeited.
For 2013,2014, performance under the 2013-2015 Cash LTIP is based on: (i) 2013 pro-forma adjusted2014 Free Cash Flow (defined as cash from operations, less additions to fixed assets and capitalized software adjusted for the impacts of certain unique items, including the historical results of SuperMedia prior to the Merger and excluding merger transaction costs)software), which comprises 50% of the total award opportunity; and (ii) 2013 fourth quarter2014 Digital Ad Sales, which comprises 50% of the total award opportunity.
Each of these metrics was assigned a threshold, target and maximum performance and payout level. For both Free Cash Flow and 2013 fourth quarter Digital Ad Sales, the threshold performance level was set at 85% of target performance. Similarly, the maximum performance level was set at 115% of target. The payout for Free Cash Flow at or above the maximum level of performance was 125%. The maximum payout for 2013 fourth quarter Digital Ad Sales at the maximum performance level was 125%. To facilitate payout calculations, performance in between these breakpoints would be calculated
using straight line interpolation (i.e., between threshold and target or between target and maximum). The table below provides the thresholds and maximums for each metric.
| Threshold | Target | Maximum | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Performance as a Percent of Target: | 85 | % | 100 | % | 115 | % | ||||
Calculated Cash LTIP Payout—Free Cash Flow: | 75 | % | 100 | % | 125 | % | ||||
Calculated Cash LTIP Payout—2013Fourth Quarter Digital Ad Sales: | 75 | % | 100 | % | 125 | % |
FREE CASH FLOW 50% | DIGITAL AD SALES 50% | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Target % | Payout % | Target % | Payout % | ||||||||
90 | % | 75 | % | 90 | % | 50 | % | ||||
95 | % | 88 | % | 95 | % | 75 | % | ||||
100 | % | 100 | % | 100 | % | 100 | % | ||||
110 | % | 125 | % | 110 | % | 150 | % | ||||
120 | % | 150 | % | 120 | % | 200 | % |
On March 11, 2014,5, 2015, the Committee reviewed the Company's performance against the pre-established metrics for 2013.fiscal year 2014. The Committee determined that: 2013 fourth quarterthat 2014 Digital Ad Sales results were at 95.8%94.6% of target, resulting in a 46.5%73.2% payout, and adjusted Free Cash Flow results were at 107%109% of target, resulting in a 55.8%122.5% payout. Given the performance and relative weights described above, the total payout for the 20132014 performance period under the 2013-2015 Cash LTIP was 102.4%is 97.9% of target. The 2014 award is scheduled to pay out in December 2015.
Value Creation Program
On October 14, 2014, our Board of Directors approved the VCP, which is designed to enable the Company to retain and award participating employees and other service providers by giving them an opportunity to receive additional compensation based on the net value creation in the Company over the course of certain performance periods. The bonus pool under the VCP represents 7% of the total value creation under the program and is comprised of 700,000 award units. To the extent not all of the units are awarded by the end of the performance period, the unallocated units will be allocated to the participating executives in proportion to the number of units awarded each executive. As of December 31, 2014, participating executives had been granted 645,000 units. Value Creation is measured as the net change over the performance period commencing October 14, 2014 and ending December 31, 2017 in the fair market value of the Company's total invested capital, including equity securities, debt securities, and bank debt; plus cash dividends and cash payments (interest and principal) to debt, but reduced by any net value contributed from external sources, in each case as determined in the manner provided by the VCP. The VCP specifies that the fair market value of total invested capital at the beginning of the performance period (October 14, 2014) and the end of the performance period (December 31, 2017) is to be determined based on the average trading prices of equity securities, debt securities, and bank debt for the 20 days preceding each date.
The structure of the VCP bonus pool is comparable to a dividend protected employee stock option in which the exercise price of the option is reduced by the amount of any cash dividends distributed prior to the option being exercised.
Under the terms of the VCP award notices, the awards vest in equal one-third portions on each of March 31, 2018, June 30, 2018, and December 31, 2018, subject to the employee's continuous employment with the Company through each such date, and relevant portions of the award are payable in cash within 60 days of each applicable vesting date.
The following NEOs were awarded units under the VCP in the following amounts on the terms and conditions set forth in their respective VCP award notices:
Executive Officer | Units in VCP | Percent of VCP Pool | |||||
---|---|---|---|---|---|---|---|
Joseph A. Walsh | 350,000 | 50 | % | ||||
Paul D. Rouse | 40,000 | 5.7 | % | ||||
Del Humenik | 20,000 | 2.9 | % | ||||
Debra M. Ryan | 25,000 | 3.6 | % | ||||
Raymond R. Ferrell | 25,000 | 3.6 | % |
In connection with the adoption of the VCP, the Committee will not grant 2013-2015 Cash LTIP awards for the 2015 performance period.
SECTION 5—EXECUTIVE EMPLOYMENT AND CONSULTING AGREEMENTS
Joseph A. Walsh Employment Agreement
In connection with Mr. Walsh's appointment as our President and CEO Employment AgreementChief Executive Officer, Mr. Walsh and Severance Payments
In December 2010 SuperMediathe Company entered into an Employment Agreement, withdated as of October 14, 2014 (the "Walsh Employment Agreement"). The Walsh Employment Agreement provides for an initial term of three years, during which Mr. Walsh is entitled to an annual base salary of $150,000. Mr. Walsh is also entitled to a grant of options to purchase 271,000 shares of the Company's common stock, which vest on December 31, 2017, as well as an award of 350,000 VCP units, representing 50% of the total incentive pool under the VCP. Under the Walsh Employment Agreement, the Company also pays Mr. Walsh $2,500 per month to maintain a remote office. For a description of the material terms of the Walsh Employment Agreement, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control—President and CEO Employment Agreement."
Peter J. McDonald in connection with his appointment as SuperMedia PresidentEmployment Agreement; Consulting Agreement and Chief Executive Officer.Severance
On December 19, 2013, the Company entered into an Amended and Restated Employment Agreement
with Mr. McDonald in connection with his service as our President and Chief Executive Officer (the "Employment"McDonald Employment Agreement"). The McDonald Employment Agreement expires on December 31, 2016.was terminated upon Mr. McDonald's retirement effective October 14, 2014. The agreement will renew automatically for one-year periods until either party gives the other party a notice of non-renewal. The agreement providesMcDonald Employment Agreement provided for an annual base salary of $1,050,000 beginning on January 1, 2014 (and a pro-rated annual base salary of $977,000 until December 31, 2013), and Mr. McDonald is eligible to earn a target annual short-term incentive award of 100% of his base salary.
In connection with Mr. McDonald's retirement and to ensure a smooth transition of his responsibilities, the Company and Mr. McDonald entered into a Consulting Services Agreement, dated October 14, 2014 (the "McDonald Consulting Agreement"), pursuant to which the Company will retain Mr. McDonald as a consultant for a term of twelve months, beginning on October 14, 2014. While he serves as a consultant, Mr. McDonald is not due any additional compensation beyond the severance benefits provided in the McDonald Employment Agreement. In connection with entering into the McDonald Consulting Agreement, the Company and Mr. McDonald agreed to change the payment schedule for a portion of the cash severance benefits payable to Mr. McDonald from a single lump sum, as contemplated by the McDonald Employment Agreement, to a monthly installment schedule over the 12-month consulting period. Mr. McDonald and the Company entered into the General Release Agreement, in connection with the termination his employment effective as of October 14, 2014. For a description of the material terms of Mr. McDonald's Employment Agreement,severance benefits payouts, see "Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change in Control—PresidentControl."
Samuel D. Jones and CEO EmploymentFrank P. Gatto Consulting Agreements
Mr. Jones resigned as the Company's Executive Vice President—Chief Financial Officer and Treasurer effective November 14, 2014. To ensure a smooth transition of his responsibilities, the Company and Mr. Jones entered into a Consulting Services Agreement, dated November 4, 2014 (the "Jones Consulting Agreement"), pursuant to which the Company will retain Mr. Jones as a consultant for a term of twelve months, beginning on November 14, 2014. While he serves as a consultant, Mr. Jones will receive a monthly fee of $25,000, payable on a monthly basis in arrears. The Jones Consulting Agreement provides that Mr. Jones or the Company may terminate the Jones Consulting Agreement at any time and for any reason with at least 30 days' advance written notice to the other party; provided that the foregoing notice period is not required for a termination by the Company for cause, and that if the Company terminates the consulting arrangement other than for Cause and other than as a result of Mr. Jones securing full-time employment with another employer in an executive level capacity, prior to the six-month anniversary of the date of Mr. Jones' termination of employment with the Company, the Company shall pay to Mr. Jones the remaining unpaid consulting fees that would have been paid to him through the six-month anniversary of the date of his termination of employment with the Company in cash in a single lump sum within 30 days following the termination of the Jones Consulting Agreement."
Mr. Gatto, the Company's former Executive Vice President—Operations, resigned as an executive officer of the Company effective October 31, 2014. To ensure a smooth transition of his responsibilities, the Company and Mr. Gatto have entered into a Consulting Services Agreement, dated October 31, 2014 (the "Gatto Consulting Agreement"), pursuant to which the Company will retain Mr. Gatto as a consultant for a term of twelve months, beginning on October 31, 2014. While he serves as a consultant, Mr. Gatto will receive a monthly fee of $16,650, payable on a monthly basis in arrears. The Gatto Consulting Agreement provides that Mr. Gatto or the Company may terminate the Gatto Consulting Agreement at any time and for any reason with at least 30 days' advance written notice to the other party; provided that the foregoing notice period is not required for a termination by the Company for cause.
The Company does not have employment agreements with any executive officersNEOs except for Mr. McDonald. Messrs. Jones, Humenik, and GattoWalsh. Other NEOs are eligible to receive severance benefits and are subject to certain restrictive covenants under the SuperMedia'sDex Media Severance Plan. The Severance Plan replaces and supersedes the SuperMedia Inc. Executive Transition Plan dated asand the Dex One Corporation Severance Plan—Senior Vice President, the severance plans of May 26, 2010 (the "Executive Transition Plan"). Effective asour predecessor companies. The Severance Plan provides benefits to certain of our executives, serving in a position of Executive Vice President or a more senior position in the consummationevent of termination of their employment under the Merger,circumstances described in the Company assumed all obligations of SuperMedia under this plan.Severance Plan. The Executive TransitionSeverance Plan was designed primarily to encourage executives to remain employed bywith the Company by providing certain severance protection against involuntary termination of employment with additional severance protection applicable to a termination of employment in connection with a change in control.
For additional information about this plan,the Severance Plan, see "Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change in Control—Executive TransitionSeverance Plan." Mr. McDonaldWalsh does not participate in, and is not entitled to receive any payments or other benefits under, the Executive TransitionSeverance Plan. Under histhe Walsh Employment Agreement, Mr. McDonaldWalsh is entitled to receive payments upon the termination of his employment under certain circumstances. These payments are described under "Potential Payments Upon Termination or Change in Control—President and CEO Employment Agreement."
Mr. Gatto and Mr. Jones received severance benefits pursuant to the Severance Plan, in the manner as provided in the Severance Plan. Mr. Gatto and the Company entered into the Separation Agreement and Release, in connection with the termination his employment effective as of October 31, 2014. For a description of payouts to Mr. Gatto pursuant to the Severance Plan, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control." Mr. Jones and the Company entered into the Separation Agreement and Release, in connection with the termination his employment effective as of November 14, 2014. For a description of payouts to Mr. Jones pursuant to the Severance Plan, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control."
Effective November 4, 2014, Mr. Humenik was appointed the Company's Executive Vice President—Chief Revenue Officer with responsibility for managing sales for the Company. Under the Company's new management structure, the position of chief operating officer previously held by Mr. Humenik has been eliminated. In connection with Mr. Humenik's appointment as Executive Vice President—Chief Revenue Officer, Mr. Humenik and the Company entered into a Confirmation of Severance Protection Letter, effective as of November 4, 2014 (the "Confirmation Letter"). The Confirmation Letter provides for an extended severance protection period under the Severance Plan if the Company terminates Mr. Humenik's employment for reasons other than cause or Mr. Humenik resigns for good reason.
2013SECTION 6—OTHER COMPENSATION RELATED ITEMS
Certain of our NEOs participate in the Company sponsored pension plans, the SuperMedia Pension Plan for Management Employees, the SuperMedia Excess Pension Plan, the Dex One Retirement Account and Pension Benefit Equalization Plan. These plans provide benefits to the Named Executive Officers. These plans are frozen and neither accept new participants nor accrue additional benefits. Brief descriptions of the plans are provided below.
The SuperMedia Pension Plan for Management Employees (the "Management Plan"). The Management Plan is a noncontributory, tax-qualified pension plan for salaried employees who previously participated in Verizon pension plans prior to SuperMedia's spin-off from Verizon in 2006. Benefits payable to NEOs are equal to 1.35% of eligible pay for each year of pension accrual service, based on the highest average annual salary during any five consecutive years of employment, up to the applicable IRS limit. Each of the Named Executive Officers who participate in the Management Plan has his or her benefits under the plan calculated under the highest average pay formula.
Benefits under the Management Plan are payable in a lump sum or an annuity, at the participant's election. Lump sum benefits are generally equal to the greater of the participant's cash balance account or the actuarial value of the highest average pay formula, if applicable. Annuity benefits are generally equal to the greater of the actuarial value of a participant's cash balance account or the highest average pay formula, if applicable.
Under the Management Plan, a participant must have 75 points (age plus years of service) with at least 15 years of service to be retirement eligible. For retirement-eligible participants who retire before reaching age 55, the pension benefit is reduced 3% for each year up to a maximum of 18%. Of our current Named Executive Officers, only Mr. Jones and Mr. Gatto arewere retirement eligible under this plan. Messrs. Gatto and Jones resigned as executive officers of the Company effective October 31, 2014 and November 14, 2014, respectively. Following their separation from service, in January 2015, Mr. Jones and Mr. Gatto received pension payments from the Management Plan of $1,232,364 and $1,404,414, respectively.
The SuperMedia Excess Pension Plan ("Excess Plan"). The Excess Plan is an unfunded non-qualified plan that provides supplemental retirement benefits to the participating Named Executive Officers and other eligible employees. The Excess Plan provides benefits under the same formulas as the Management Plan, but only with respect to compensation that cannot be taken into account under the Management Plan because it exceeds the applicable IRS limit. Benefits under the Excess Plan are payable in a lump sum and are paid following a participant's termination of employment. Benefits under the Excess Plan may not be paid to the participating Named Executive Officers or other key employees until at least six months following termination of their employment with the Company. Of our current Named Executive Officers, only Mr. Jones and Mr. Gatto arewere retirement eligible under this plan. Messrs. Gatto and Jones resigned as executive officers of the Company effective October 31, 2014 and November 14, 2014, respectively. Six months after their separation from service, Mr. Jones and Mr. Gatto will receive pension payments from the Excess Plan of $237,275 and $57,064, respectively.
Dex One Retirement Account. The Dex One Retirement Account is a non-contributory, tax-qualified defined benefit pension plan that provides benefits under a "cash balance" formula. Under this formula, pension benefits were based on the participant's notional account balance. Of our current Named Executive Officers, only Mr. Humenik has a balance in this plan.
Dex One PBEP. The Pension Benefit Equalization Plan of Dex One ("Dex One PBEP"), is an unfunded, non-qualified plan that covers participants in the Dex One Retirement Account whose benefits under the Dex One Retirement Account were limited by the qualified plan rules. Dex One PBEP benefits were based on the participant's notional account balance. The participant's notional account balance under the Dex One PBEP is equal to the excess of (1)(i) the participant's "uncapped" notional account balance determined in accordance with the Dex One Retirement Account disregarding the Internal Revenue Code Section 415 limit on benefits and Section 401(a)(17) limit on compensation, over (2)(ii) the participant's notional account balance under the Dex One Retirement Account. We will pay the benefits from our general assets in the form of a lump sum that is equivalent to the Dex One PBEP notional account balance. Of our current Named Executive Officers, only Mr. Humenik has a balance in this plan.
FollowingOur NEOs participated in the Merger, our NEOs were eligible to participate informer SuperMedia Savings Plan during 2014. On December 31, 2014 we merged the Dex One 401(k) Savings Plan and the SuperMedia Savings Plan to form Dex Media Inc., Savings Plan. Participants couldcan elect to contribute to this plan on a pre-tax, and/post-tax or post-taxRoth basis and receive a Company matching contribution of up toat 100% on the first 3% of eligible compensation, which includesemployee contributions (includes base salary and annual short-term incentives, subject to applicable Internal Revenue Service limitations.limitations) and 50% on the next 3% of eligible employee contributions for an effective maximum match rate of 4.5%. Management employees are eligible for an additional Company matching contribution under the plan of up to 3% of eligible compensation if Company performance criteria, established bycompensation. Although the Committee, are met. Since 2011, based on the Company's relative achievement against these measures, the Committee determined that no supplemental contributions would be made, although the plan still allows for the discretionary match. Effective January 1, 2014, the Company will provide a Company match, at 100% on the first 3% of eligible employeeno supplemental contributions and 50% on next 3% of eligible employee contributions for an effective maximum match rate of 4.5%.have been made since 2011.
Benefits are part of the overall competitive compensation program designed to attract and retain employees, including executives. The NEOs participate in the same benefit programs as the general employee population, with certain additional benefits made available to them, including annual physical examinations, financial planning resources and services and flexible allowances, as described in footnote (i) to the Summary Compensation Table below. The perquisites and otherIn December 2014, the Committee reviewed the levels of personal benefits provided by the Company to the NEOs are consistent with the Company's philosophy of attracting and retaining exemplary executive talent and include annual physical examinations, financial planning resources and services and flexible allowances. The Company provides perquisites and other personal benefits becausedetermined that it is in the best interestsinterest of the Company and its stockholders.stockholders to discontinue the financial counseling program effective May 1, 2015, and cash allowance effective December 31, 2014. The Committee periodically reviews the levels of perquisites and other personal benefits providedagreed to the NEOs.maintain annual physical
examinations' benefit, which provides eligible executives with a comprehensive medical examination once per year. The cost of this program to the Company is $2,000 per participant. The Committee will continue to periodically review and evaluate personal benefits provided to the NEOs.
The named executivesNamed Executive Officers are subject to significant contractual restrictions intended to prevent them from taking actions that could potentially harm the business, particularly after termination of employment. These business protections include obligations not to compete, not to hire away employees, not to interfere with relationships with suppliers and customers, not to disparage Dex Media, not to reveal confidential information, and to cooperate with the Company in litigation. Business protection provisions are included in the Company's Code of Conduct, Mr. McDonald'sthe Walsh Employment Agreement and standard form releases that are required to be executed before the Company makes severance payments to any employee, including executive officers.
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation the Company may deduct for federal income tax purposes in any one year with respect to the chief executive officer and the next four most highly compensated officers (excluding the principal financial officer) who were serving as executive officers as of the last day of the applicable year. Performance basedPerformance-based compensation that meets certain requirements is excluded from this limitation.
The Committee considers the anticipated tax treatment to the Company and to our executive officers of various payments and benefits. However, the deductibility of certain compensation payments depends upon the timing of an executive's vesting or exercise of previously granted awards, as well as interpretations and changes in the tax laws and other factors beyond the committee's control. For these and other reasons, including the need to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the Committee will not necessarily, or in all circumstances, limit executive compensation to that which is deductible under Section 162(m) and has not adopted a policy requiring that all compensation be deductible.
The Committee will also consider various practicable alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with its other compensation objectives. The Committee may establish performance criteria in an effort to ensure the deductibility of short-term cash incentives and also the deductibility of compensation resulting from equity awards made under the long-term incentive plan. Base salary does not qualify as performance basedperformance-based compensation under Section 162(m).
Our Board of Directors has implemented stock ownership guidelines applicable to both the Company's executive officers and directors. The Executive Stock Ownership Guidelines (the "Executive Guidelines") apply to the President and CEO and Executive Vice Presidents of the Company who are also subject to Section 16 ofour other executive officers as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934.1934 (the "Covered Executives"). Under thesethe Executive Guidelines, the covered executivesCovered Executives are required to hold 60% of the net shares (after tax) they receive upon the vesting of any incentive award granted after August 1, 2013, that is denominated in, and ultimately settled in, shares or units of common stock of the Company. The Director Stock Ownership Guidelines (the "Director Guidelines") apply to all of our non-management directors. TheseThe Director Guidelines provide that the non-management directors are required to hold a minimum of 10,000 shares or units of common stock of the Company granted after August 1, 2013, as equity awards to non-management directors, and until the minimum 10,000-share threshold has been achieved and the
non-management directors are prohibited from selling shares or units of common stock of the Company, except to the extent required to pay taxes on applicable equity grants.
As part of the Company's Code of Conduct, we have a policy prohibiting employees from engaging in transactions involving risks associated with the fluctuations in the Company's share price.
Risk Considerations
The Committee conducted an assessment of the Company's compensation policies and practices to identify any potential risk arising from such policies and practices that could be reasonably likely to have a material adverse effect on the Company. The assessment covered all compensation elements and included an analysis of overall compensation costs (total costs, variable incentive costs vs. fixed compensation costs), compensation plan participation by employee group, metrics and performance goals. No potential risks that could be reasonably likely to have a material adverse effect were identified.
Compensation and Benefits Committee ReportCOMPENSATION AND BENEFITS COMMITTEE REPORT
The Compensation and Benefits Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this proxy statement and, based on such review and discussions, has recommended to the Board (and the Board has accepted such recommendation) that the Compensation Discussion and Analysis be included in this proxy statement.
This Compensation and Benefits Committee Report shall not be deemed to be "filed" with the SECSecurities and Exchange Commission or subject to Section 18 of the Securities Exchange Act of 1934.
Compensation and Benefits Committee
Thomas D. Gardner, ChairmanMark A. McEachen Jonathan B. BulkeleyRichard L. Kuersteiner
Thomas S. Rogers
Executive CompensationEXECUTIVE COMPENSATION TABLES
The following tables and accompanying narrative should be read in conjunction with "Compensation Discussion and Analysis" above.summarize the 2014 compensation of our Named Executive Officers.
Summary Compensation TableSUMMARY COMPENSATION TABLE
The following table summarizes the 2013 post-Merger compensation of our NEOs including: Peter J. McDonald, President and Chief Executive Officer; Samuel D. Jones, Executive Vice President—Chief Financial Officer and Treasurer; Del Humenik, Executive Vice President—Sales and Marketing; Frank P. Gatto, Executive Vice President—Operations; Matthew J. Stover, former Executive Vice President—Marketing, and Cody Wilbanks, former Executive Vice President—General Counsel and Corporate Secretary. Mr. Wilbanks resigned as the Company's Executive Vice President—General Counsel and Corporate Secretary, effective as of August 1, 2013. Mr. Stover resigned as the Company's Executive Vice President—Marketing, effective January 3, 2014.
Name and Principal Position(a) | Year(b) | Salary $(c) | Bonus $(d) | Stock Awards $(e) | Option/ SAR Awards $(f) | Non-Equity Incentive Plan Compensation $(g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings $(h) | All Other Compensation $(i) | Total $(j) | Year(b) | Salary $(c) | Bonus $(d) | Stock Awards $(e) | Option/ SAR Awards $(f) | Non-Equity Incentive Plan Compensation $(g) | Change in Pension Value and Nonqualified Deferred Compensation Earnings $(h) | All Other Compensation $(i) | Total $(j) | ||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter J. McDonald | 2013 | 638,423 | 30,000 | 512,500 | 696,250 | 2,457,745 | 0 | 25,250 | 4,360,168 | |||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Walsh | 2014 | 25,385 | 0 | 0 | 2,043,340 | 0 | 0 | 497,029 | 2,565,753 | |||||||||||||||||||||||||||||||||||||||||||||||
President and CEO | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Samuel D. Jones | 2013 | 335,688 | 15,000 | 341,325 | 463,981 | 1,404,697 | 0 | 34,793 | 2,595,484 | |||||||||||||||||||||||||||||||||||||||||||||||
Paul D. Rouse | 2014 | 51,923 | 0 | 0 | 284,323 | 0 | 0 | 779 | 337,025 | |||||||||||||||||||||||||||||||||||||||||||||||
EVP—Chief Financial Officer and Treasurer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Del Humenik | 2013 | 326,642 | 13,000 | 250,100 | 340,327 | 963,982 | 457 | 31,585 | 1,926,093 | 2014 | 562,308 | 0 | 99,900 | 391,911 | 835,081 | 4,386 | 43,259 | 1,936,845 | ||||||||||||||||||||||||||||||||||||||
EVP—Sales and Marketing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EVP—Chief Revenue Officer | 2013 | 326,642 | 13,000 | 250,100 | 340,327 | 963,982 | 457 | 31,585 | 1,926,093 | |||||||||||||||||||||||||||||||||||||||||||||||
Raymond R. Ferrell | 2014 | 310,212 | 0 | 54,859 | 462,656 | 241,427 | 0 | 28,318 | 1,097,472 | |||||||||||||||||||||||||||||||||||||||||||||||
EVP—General Counsel and Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debra M. Ryan | 2014 | 332,000 | 0 | 0 | 177,706 | 361,443 | 30,627 | 44,494 | 946,271 | |||||||||||||||||||||||||||||||||||||||||||||||
EVP—Chief Human Resources Officer | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Peter J. McDonald | 2014 | 873,539 | 0 | 0 | 0 | 1,734,000 | 0 | 7,487,735 | 10,095,273 | |||||||||||||||||||||||||||||||||||||||||||||||
Former President and CEO | 2013 | 638,423 | 30,000 | 512,500 | 696,250 | 2,457,745 | 0 | 25,250 | 4,360,168 | |||||||||||||||||||||||||||||||||||||||||||||||
Samuel D. Jones | 2014 | 474,462 | 0 | 0 | 0 | 380,642 | 0 | 4,022,501 | 4,877,604 | |||||||||||||||||||||||||||||||||||||||||||||||
Former EVP—Chief Financial Officer and Treasurer | 2013 | 335,688 | 15,000 | 341,325 | 463,981 | 1,404,697 | 0 | 34,793 | 2,595,484 | |||||||||||||||||||||||||||||||||||||||||||||||
Frank P. Gatto | 2013 | 281,015 | 11,000 | 227,550 | 309,692 | 941,025 | 0 | 86,005 | 1,856,287 | 2014 | 380,385 | 0 | 0 | 0 | 250,696 | 46,442 | 3,419,958 | 4,097,480 | ||||||||||||||||||||||||||||||||||||||
EVP—Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Stover | 2013 | 251,622 | 0 | 205,000 | 278,500 | 926,266 | 0 | 40,064 | 1,701,452 | |||||||||||||||||||||||||||||||||||||||||||||||
Former EVP—Marketing | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cody Wilbanks | 2013 | 116,185 | 0 | 0 | 0 | 600,000 | 0 | 2,922,230 | 3,638,416 | |||||||||||||||||||||||||||||||||||||||||||||||
Former EVP—General Counsel and Corporate Secretary | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Former EVP—Operations | 2013 | 281,015 | 11,000 | 227,550 | 309,692 | 941,025 | 0 | 86,005 | 1,856,287 |
Additional plan based amounts reported in this column represent earnings under the 2012-2013 SuperMedia2013-2015 Cash Long-term Incentive Program ("2012-2013 Cash LTIP").LTIP. The 2012-20132013-2015 Cash LTIP comprisedcomprises a two-year performance
three year measurement period, with each of the fiscal years 20122013, 2014, and 20132015 representing one measurement period. The executive's incentive opportunityamounts for each of the 2012 and 2013 was equal to 50% of the total target incentive opportunity. Following a change in control of SuperMedia, awards under 2012-2013 Cash LTIPperformance period were paid out at the maximum award level six months after the change in control, contingent on the participants' continued employment with the Company (subject to certain exceptions).
Amounts exclude payments made immediately following the change in controlDecember 2014. See "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" above for further explanation of SuperMedia after the completion of the Merger under the SuperMedia's 2013 annual Short Term Incentive Plan for the period from January 1 through April 30, 2013, for the following NEOs: Mr. McDonald, $320,005; Mr. Jones, $120,002; Mr. Humenik, $112,002; Mr. Gatto, $99,557; Mr. Stover, $89,602, and Mr. Wilbanks, $105,792.
our long-term incentive awards.
Amounts also exclude payments made immediately following the change in control of SuperMedia after the completion of the Merger under the 2013-2014 SuperMedia Cash Long-term Incentive Program ("2013-2014 Cash LTIP") for the period from January 1 through April 30, 2013. Under the 2013-2014 Cash LTIP, following the change in control of SuperMedia, long term cash awards were paid out on a pro rata basis and adjusted for performance. The performance through April 30, 2013 was approved at 100% of target and paid on a pro rata basis to the following NEOs: Mr. McDonald, $164,384; Mr. Jones, $108,493; Mr. Humenik, $72,329; Mr. Gatto, $72,329; Mr. Stover, $72,329, and Mr. Wilbanks, $54,247.
Table of $148,443 between both plans.
Contents
| Financial Planning ($)(1) | Company Contributions to Savings Plan ($)(2) | Flexible Allowance ($)(3) | Physical Examination ($)(4) | Other ($)(5) | Total ($)(6) | Financial Planning ($)(1) | Company Contributions to Savings Plan ($)(2) | Flexible Allowance ($)(3) | Physical Examination ($)(4) | Other ($)(5) | Total ($)(6) | ||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Joseph A. Walsh | $ | 0 | $ | 779 | $ | 6,250 | $ | 0 | $ | 490,000 | $ | 497,029 | ||||||||||||||||||||||||||
Paul D. Rouse | 0 | 779 | 0 | 0 | 0 | 779 | ||||||||||||||||||||||||||||||||
Del Humenik | 13,870 | 11,700 | 15,600 | 2,089 | 0 | 43,259 | ||||||||||||||||||||||||||||||||
Raymond R. Ferrell | 5,434 | 7,284 | 15,600 | 0 | 0 | 28,318 | ||||||||||||||||||||||||||||||||
Debra M. Ryan | 13,870 | 10,731 | 15,600 | 1,608 | 2,686 | 44,494 | ||||||||||||||||||||||||||||||||
Peter J. McDonald | 0 | 7,650 | 17,600 | 0 | 0 | 25,250 | 0 | 11,700 | 22,000 | 0 | 7,454,035 | 7,487,735 | ||||||||||||||||||||||||||
Samuel D. Jones | 13,535 | 7,650 | 10,400 | 3,208 | 0 | 34,793 | 12,084 | 11,700 | 14,300 | 1,984 | 3,982,433 | 4,022,501 | ||||||||||||||||||||||||||
Del Humenik | 13,535 | 7,650 | 10,400 | 0 | 0 | 31,585 | ||||||||||||||||||||||||||||||||
Frank P. Gatto | 13,535 | 7,650 | 10,400 | 2,134 | 52,286 | 86,005 | 11,552 | 11,700 | 13,000 | 1,871 | 3,381,835 | 3,419,958 | ||||||||||||||||||||||||||
Matthew J. Stover | 0 | 6,700 | 10,400 | 0 | 22,964 | 40,064 | ||||||||||||||||||||||||||||||||
Cody Wilbanks | 0 | 7,650 | 5,200 | 0 | 2,909,380 | 2,922,230 |
Ms. Ryan received a distribution of her pension account balance under the Dex One Retirement Account. The payment was due as a result of a corrective action required by the Internal Revenue Service under the Employee Plans Compliance Resolution System statement.
For Mr. McDonald, the aggregate amount includes a $90,444 payment received in 2014, as final distribution of his pension account balance under the Dex One Retirement Account. The payment was due as a result of a corrective action required by the Internal Revenue Service under the Employee Plans Compliance Resolution System statement. Mr. McDonald's additional amounts include severance compensation payments and values comprised of (a) $2,312,000 severance payment paid in 2014, (b) $3,988,000 in deferred 2015 payments, (c) $79,216 in lieu of vacation, and (d) $984,375 in estimated 2015 deferred payments related to the 2014 2013-2015 Cash LTIP performance period.
For Mr. Jones, the aggregate amount includes (a) 2015 deferred pension payments of $1,232,364 and $237,275, under the Management Plan and the Excess Plan, respectively, (b) 2015 deferred severance payment of $1,901,800, (c) a $512,000 deferred payment in 2015 on 2013 Cash LTIP performance, (d) $15,054 in lieu of vacation, (e) 58,940 in severance related to executive perquisites covered under the Severance Plan, and (f) $25,000 in 2014 post-termination consulting services.
For Mr. Gatto, the aggregate amount includes $32,757 paid in premiums for whole life insurance(a) 2015 deferred pension payments of $1,404,414 and $19,529 in reimbursement for taxes associated with the portion of the life insurance premiums that the Company pays on behalf of Mr. Gatto. This benefit is a carry-over benefit that was provided to Mr. Gatto by Verizon prior to and after SuperMedia spun off from Verizon in 2006. For Mr. Stover, the aggregate amount includes $14,387 paid in premiums for whole life insurance and $8,577 in reimbursement for taxes associated with the portion of the life insurance premiums that the Company pays on behalf of Mr. Stover. This benefit is a carry-over benefit that was provided to Mr. Stover by Verizon prior to and after SuperMedia spun off from Verizon in 2006.
For Mr. Wilbanks, this includes severance compensation pursuant to the Company's Executive Transition Plan in conjunction with the change in control of SuperMedia following the completion of the Merger. These payments and values are comprised of: (a) a $1,488,520 cash payment representing two times his base salary plus his 2013 target annual incentive component short-term incentive opportunity; (b) a $77,245 cash payment representing a pro-rata portion of his 2013 target annual incentive component short-term incentive opportunity (May 1, 2013 - July 31, 2013); and (c) $1,343,616 representing the value of certain other severance payments, perquisites, and continuing benefits pursuant to the Executive Transition Plan. Of the $1,343,616 amount, $1,047,558 was a pension payment$57,064, under the Management Plan and $137,999 was pensionthe Excess Plan, respectively, (b) severance payment of $1,462,000, (c) a $342,016 deferred payment in 2015 on 2013 2013-2015 Cash LTIP performance, (d) $20,101 in lieu of vacation, (e) 58,940 in severance related to executive perquisites covered under the Excess Plan. For additional information, see "Potential Payment Upon Termination or ChangeSeverance Plan, and (f) $33,300 in Control—Executive Transition Plan."2014 post-termination consulting services.
Grants of Plan-Based Awards Table—2013GRANTS OF PLAN-BASED AWARDS
The following table provides information regarding equity and non-equity incentive plan-based awards granted to each individual included in the Summary Compensation Table (other than Mr. Wilbanks,Messrs. McDonald, Jones, and Gatto, who resigned effective August 1, 2013,separated prior to the awards' grant date) for the year ended December 31, 2013.2014.
GRANTS OF PLAN-BASED AWARDS TABLE—FISCAL 2014
| | | | | | All Other Stock Awards: Number of Shares of Restricted Stock (#) (f) | | | | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | All Other Option/SAR Awards: Number of Securities Underlying Options/SARs (#) (g) | | | | | | | | All Other Stock Awards: Number of Shares of Restricted Stock (#) (f) | All Other Option/SAR Awards: Number of Securities Underlying Options/SARs (#) (g) | | | |||||||||||||||||||||||||||||||||||||
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Exercise or Base Price of Option/SAR Awards ($/Sh) (h) | Grant Date Fair Value of Stock and Option/SAR Awards ($) (i)(2) | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Exercise or Base Price of Option/SAR Awards ($/Sh) (h) | Grant Date Fair Value of Stock and Option/SAR Awards (i)(2) | ||||||||||||||||||||||||||||||||||||||||||||
Name (a) | | Grant Date (b) | Threshold ($) (c)(1) | Target ($) (d)(1) | Maximum ($) (e)(1) | | Grant Date (b) | Threshold ($) (c)(1) | Target ($) (d)(1) | Maximum ($) (e)(1) | ||||||||||||||||||||||||||||||||||||||||||||
Peter J. McDonald | STI | 05/01/13 | 196,738 | 655,795 | 1,311,589 | |||||||||||||||||||||||||||||||||||||||||||||||||
Joseph A. Walsh | NQSO | 10/14/14 | 271,000 | 7.54 | ||||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 09/05/13 | 562,500 | 750,000 | 937,500 | VCP | 10/14/14 | 6,053,110 | 2,043,340 | ||||||||||||||||||||||||||||||||||||||||||||||
NQSO | 09/05/13 | 125,000 | 10.25 | 696,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||
RSA | 09/05/13 | 50,000 | 512,500 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Samuel D. Jones | STI | 05/01/13 | 87,978 | 293,262 | 586,523 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 09/05/13 | 375,000 | 500,000 | 625,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
NQSO | 09/05/13 | 83,300 | 10.25 | 463,981 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Paul D. Rouse | NQSO | 12/15/14 | 30,972 | 9.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||
RSA | 09/05/13 | 33,300 | 341,325 | VCP | 12/15/14 | 691,784 | 284,323 | |||||||||||||||||||||||||||||||||||||||||||||||
Del Humenik | STI | 05/01/13 | 70,479 | 234,932 | 469,863 | STI | 01/01/14 | 331,500 | 510,000 | 1,020,000 | ||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 09/05/13 | 275,250 | 367,000 | 458,750 | LTI Cash | 01/01/14 | 562,500 | 900,000 | 1,575,000 | |||||||||||||||||||||||||||||||||||||||||||||
NQSO | 09/05/13 | 61,100 | 10.25 | 340,327 | NQSO | 05/28/14 | 25,000 | 9.99 | 249,750 | |||||||||||||||||||||||||||||||||||||||||||||
RSA | 09/05/13 | 24,400 | 250,100 | NQSO | 12/15/14 | 15,486 | 9.18 | 142,161 | ||||||||||||||||||||||||||||||||||||||||||||||
Frank P. Gatto | STI | 05/01/13 | 60,612 | 202,041 | 404,082 | |||||||||||||||||||||||||||||||||||||||||||||||||
RSA | 05/28/14 | 10,000 | 99,900 | |||||||||||||||||||||||||||||||||||||||||||||||||||
VCP | 12/15/14 | 345,892 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Raymond R. Ferrell | STI | 01/01/14 | 121,875 | 187,500 | 375,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 09/05/13 | 250,500 | 334,000 | 417,500 | LTI Cash | 01/01/14 | 125,000 | 200,000 | 350,000 | |||||||||||||||||||||||||||||||||||||||||||||
NQSO | 09/05/13 | 55,600 | 10.25 | 309,692 | NQSO | 01/02/14 | 27,800 | 10.25 | 284,950 | |||||||||||||||||||||||||||||||||||||||||||||
RSA | 09/05/13 | 22,200 | 227,550 | NQSO | 12/15/14 | 19,358 | 9.18 | 177,706 | ||||||||||||||||||||||||||||||||||||||||||||||
Matthew J. Stover | STI | 05/01/13 | 54,269 | 180,897 | 361,795 | |||||||||||||||||||||||||||||||||||||||||||||||||
RSA | 01/02/14 | 8,401 | 54,859 | |||||||||||||||||||||||||||||||||||||||||||||||||||
VCP | 12/15/14 | 432,365 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Debra M. Ryan | STI | 01/01/14 | 129,480 | 199,200 | 398,400 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 09/05/13 | 225,000 | 300,000 | 375,000 | LTI Cash | 01/01/14 | 156,250 | 250,000 | 437,500 | |||||||||||||||||||||||||||||||||||||||||||||
NQSO | 09/05/13 | 50,000 | 10.25 | 278,500 | NQSO | 12/15/14 | 19,358 | 9.18 | 177,706 | |||||||||||||||||||||||||||||||||||||||||||||
RSA | 09/05/13 | 20,000 | 205,000 | VCP | 12/15/14 | 432,365 | ||||||||||||||||||||||||||||||||||||||||||||||||
Peter J. McDonald | STI | 01/01/14 | 682,500 | 1,050,000 | 2,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 01/01/14 | 703,125 | 1,125,000 | 1,968,750 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Samuel D. Jones | STI | 01/01/14 | 283,985 | 436,900 | 873,800 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 01/01/14 | 468,650 | 750,000 | 1,312,500 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Frank P. Gatto | STI | 01/01/14 | 195,650 | 301,000 | 602,000 | |||||||||||||||||||||||||||||||||||||||||||||||||
LTI Cash | 01/01/14 | 312,500 | 500,000 | 875,000 |
Additional Information Relating to Summary Compensation Tableand Grants of Plan-Based Awards Table—2013ADDITIONAL INFORMATION RELATING TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
The following narrative regarding the Employment Agreementemployment agreements and other compensation arrangements includes certain background information to provide the reader with a better understanding of the compensation amounts shown in the Summary Compensation Table and Grants of Plan-Based Awards Table—2013Table above. It should be read in conjunction with the footnotes to those tables and "Compensation Discussion and Analysis" above.
Employment Agreement and Other Compensation Arrangements. On December 19, 2013, the Company entered into the Employment Agreement with Peter J. McDonald in connection with his service as our President and Chief Executive Officer. The Employment Agreement expires on December 31, 2016. The agreement will renew automatically for one-year periods until either party
gives Employment Agreement and Other Compensation Arrangements. In connection with Mr. Walsh's appointment as our President and Chief Executive Officer, Mr. Walsh and the other party a noticeCompany entered into the Walsh Employment Agreement, which provides for an initial term of non-renewal. The agreement provides forthree years, during which Mr. Walsh is entitled to an annual base salary of $1,050,000 beginning$150,000. Mr. Walsh is also entitled to a grant of options to purchase 271,000 shares of the Company's common stock, which vest on January 1, 2014 (and a pro-rated annual base salary of $977,000 until December 31, 2013), and Mr. McDonald is eligible to earn a target annual short-term incentive2017, as well as an award of 100%350,000 VCP units, representing 50% of his base salary.
the total incentive pool under the VCP. Under the Walsh Employment Agreement, the Company also pays Mr. Walsh $2,500 per month to maintain a remote office. For a description of the material terms of the Walsh Employment Agreement, see "Potential Payments Upon Termination or Change in Control—President and CEO Employment Agreement." The Company does not have employment agreements with any executive officers except for Mr. McDonald. Messrs. Jones, Humenik,Walsh.
On December 19, 2013, the Company entered into the McDonald Employment Agreement with Mr. McDonald, our former President and Gatto are eligibleChief Executive Officer, which was terminated upon Mr. McDonald's retirement effective October 14, 2014. The McDonald Employment Agreement provided for an annual base salary of $1,050,000 beginning on January 1, 2014 and a target annual short-term incentive award of 100% of his base salary.
In connection with Mr. McDonald's retirement and to receiveensure a smooth transition of his responsibilities, the Company and Mr. McDonald entered into the McDonald Consulting Agreement, pursuant to which the Company will retain Mr. McDonald as a consultant for a term of twelve months, beginning on October 14, 2014. While he serves as a consultant, Mr. McDonald is not due any additional compensation beyond the severance benefits provided in the McDonald Employment Agreement. See "Compensation Discussion and are subject to certain restrictive covenants under the Analysis—Section 5—Executive Transition Plan. The Executive Transition Plan was designed primarily to encourage executives to remain employed by the Company by providing certainEmployment and Consulting Agreements" for further details. For a description of Mr. McDonald's severance protection against involuntary termination of employment with additional severance protection applicable to a termination of employment in connection with a change in control. For additional information about this plan,benefits payouts, see "Executive Compensation—Compensation Tables—Potential Payments Upon Termination or Change in Control—Control."
Mr. Jones resigned as the Company's Executive Transition Plan." Mr. McDonald does not participate in,Vice President—Chief Financial Officer and is not entitled to receive any payments or other benefits under, the Executive Transition Plan. Under his Employment Agreement, Mr. McDonald is entitled to receive payments upon the terminationTreasurer effective November 14, 2014. To ensure a smooth transition of his employment under certain circumstances. These payments are described under "Potentialresponsibilities, the Company and Mr. Jones entered into the Jones Consulting Agreement, pursuant to which the Company will retain Mr. Jones as a consultant for a term of twelve months, beginning on November 14, 2014. While he serves as a consultant, Mr. Jones will receive a monthly fee of $25,000, payable on a monthly basis in arrears. See "Compensation Discussion and Analysis—Section 5—Executive Employment and Consulting Agreements" for further details. For a description of Mr. Jones' severance benefits payouts, see "Executive Compensation Tables—Potential Payments uponUpon Termination or Change in Control—President and CEO Employment Agreement.Control."
TheMr. Gatto, the Company's former Executive Vice President—Operations, resigned as an executive officer of the Company effective October 31, 2014. To ensure a smooth transition of his responsibilities, the Company and Mr. Gatto have entered into the Gatto Consulting Agreement, pursuant to which the Company will retain Mr. Gatto as a consultant for a term of twelve months, beginning on October 31, 2014. While he serves as a consultant, Mr. Gatto will receive a monthly fee of $16,650, payable on a monthly basis in arrears. See "Compensation Discussion and Analysis—Section 5—Executive Employment Agreement and the Executive Transition Plan are incorporated by reference as exhibits to our Annual Report on Form 10-KConsulting Agreements" for the year ended December 31, 2013.further details. For a description of Mr. Gatto's severance benefits payouts, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control."
Outstanding Equity Awards at 2013 Fiscal Year-End TableOUTSTANDING EQUITY AWARDS
The following table provides information regarding all outstanding stock options and restricted stock sharesunits held by each individual included in the Summary Compensation Table as of December 31, 2013.
| | Options Awards | Stock Awards | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name (a) | Grant Date (b) | Number of Securities Underlying Unexercised Options (#) Exercisable (c)(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable (d)(1) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g)(2) | Value of Shares or Units of Stock That Have Not Vested ($) (h)(3) | |||||||||||||||
Peter J. McDonald | 09/05/2013 | — | 125,000 | $ | 10.25 | 09/05/2023 | 50,000 | $ | 338,600 | |||||||||||||
Samuel D. Jones | 09/05/2013 | — | 83,300 | $ | 10.25 | 09/05/2023 | 33,300 | $ | 225,508 | |||||||||||||
Del Humenik | 09/05/2013 | — | 61,100 | $ | 10.25 | 09/05/2023 | 24,400 | $ | 165,237 | |||||||||||||
Frank P. Gatto | 09/05/2013 | — | 55,600 | $ | 10.25 | 09/05/2023 | 22,200 | $ | 150,338 | |||||||||||||
Matthew J. Stover | 09/05/2013 | — | 50,000 | $ | 10.25 | 09/05/2023 | 20,000 | $ | 135,440 |
Option Exercises and Stock Vested—2013
There were no shares that vested in period beginning May 1, 2013, for individuals named in the Summary Compensation Table. There were no option exercises in period beginning May 1, 2013, by any of the individuals named in the Summary Compensation Table.2014.
Pension Benefits Table—OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END—FISCAL 2014
| | Options Awards | Stock Awards | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name (a) | Grant Date (b) | Number of Securities Underlying Unexercised Options (#) Exercisable (c)(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable (d)(1) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Number of Shares or Units of Stock That Have Not Vested (#) (g)(2) | Value of Shares or Units of Stock That Have Not Vested ($) (h)(3) | |||||||||||||
Joseph A. Walsh | 10/14/2014 | 271,000 | $ | 7.54 | 10/14/2024 | |||||||||||||||
Paul D. Rouse | 12/15/2014 | 30,972 | $ | 9.18 | 12/15/2024 | |||||||||||||||
Del Humenik | 12/15/2014 | 15,486 | $ | 9.18 | 12/15/2024 | |||||||||||||||
05/28/2014 | 25,000 | $ | 9.99 | 05/28/2024 | 10,000 | $ | 89,700 | |||||||||||||
09/05/2013 | 15,275 | 45,825 | $ | 10.25 | 09/05/2023 | 24,400 | $ | 218,868 | ||||||||||||
Raymond R. Ferrell | 12/15/2014 | 19,358 | $ | 9.18 | 12/15/2024 | |||||||||||||||
01/02/2014 | 6,950 | 20,850 | $ | 10.25 | 01/02/2024 | 8,401 | $ | 75,357 | ||||||||||||
09/05/2013 | 09/05/2023 | 2,699 | $ | 24,210 | ||||||||||||||||
Debra M. Ryan | 12/15/2014 | 19,358 | $ | 9.18 | 12/15/2024 | |||||||||||||||
09/05/2013 | 6,950 | 20,850 | $ | 10.25 | 09/05/2023 | 11,100 | $ | 99,567 | ||||||||||||
Peter J. McDonald | 09/05/2013 | 125,000 | $ | 10.25 | 01/12/2015 | |||||||||||||||
Samuel D. Jones | 09/05/2013 | 83,300 | $ | 10.25 | 02/12/2015 | |||||||||||||||
Frank P. Gatto | 09/05/2013 | 55,600 | $ | 10.25 | 10/31/2015 |
OPTION EXERCISES AND STOCK VESTED
The following table sets forth information about the vesting of restricted shares held by our named executive officers during 2014. There were no option exercises during 2014 by any of the individuals named in the Summary Compensation Table.
OPTION EXERCISES AND STOCK VESTED—FISCAL 2014
| Stock Awards | ||||||
---|---|---|---|---|---|---|---|
Name | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | |||||
Peter J. McDonald | 50,000 | $ | 377,000 | (2) | |||
Samuel D. Jones | 33,300 | 282,384 | (3) | ||||
Frank P. Gatto | 22,200 | 172,938 | (4) |
The table below shows the actuarial present value of accumulated benefits and the number of years of service credited under the plans as of December 31, 2013,2014, as well as payments made to our Named Executive Officers during 2013.2014.
Name | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments During Last Fiscal Year | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Peter J. McDonald(3) | — | — | — | — | ||||||||
Samuel D. Jones | Management Plan | 25.00 | $ | 869,496 | — | |||||||
Excess Plan | 25.00 | $ | 153,842 | — | ||||||||
Frank P. Gatto | Management Plan | 29.50 | $ | 1,140,482 | — | |||||||
Excess Plan | 29.50 | $ | 56,225 | — | ||||||||
Del Humenik(4) | Retirement Account | 3.58 | $ | 41,349 | — | |||||||
PBEP | 3.58 | $ | 29,634 | — | ||||||||
Cody Wilbanks | Management Plan | 21.00 | $ | 1,047,558 | — | |||||||
Excess Plan | 21.00 | $ | 137,999 | — | ||||||||
Matt Stover | — | — | — | — |
Name | Plan Name | Number of Years Credited Service(1) | Present Value of Accumulated Benefit(2) | Payments During Last Fiscal Year | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Del Humenik(3) | Dex One | 3.58 | $ | 52,472 | ||||||||
PBEP | 3.58 | 31,263 | ||||||||||
Debra M. Ryan(4) | Dex One | 34 | 694,012 | |||||||||
PBEP | 34 | 2,686 | ||||||||||
Peter J. McDonald(5) | Dex One | 12.84 | 90,444 | |||||||||
Samuel D. Jones(6) | Management Plan | 25.00 | 1,232,364 | |||||||||
Excess Plan | 25.00 | 237,275 | ||||||||||
Frank P. Gatto(7) | Management Plan | 29.50 | 1,404,414 | |||||||||
Excess Plan | 29.50 | 57,064 |
See "Executive"Compensation Discussion and Director Compensation—Analysis—Section 6—Other Compensation Discussion Analysis—2013 Pension Benefits"Related Items" above for a further explanation of our pensions.
Potential Payments Upon Termination or Change in ControlPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
President and CEO Employment Agreement
The Employment AgreementOn October 14, 2014, we announced the appointment of Joseph A. Walsh, as President and Chief Executive Officer of the Company and his election to the Company's Board of Directors. In connection with Mr. Walsh's appointment as our President and Chief Executive Officer, Mr. Walsh and the Company entered into the Walsh Employment Agreement, which provides for payments and benefitsan initial term of three years, during which Mr. Walsh is entitled to an annual base salary of $150,000. Mr. McDonald inWalsh is also entitled to a grant of options to purchase 271,000 shares of the event his employment is terminatedCompany's common stock, which vest on December 31, 2017, as well as an award of 350,000 units, representing 50% of the total bonus pool under the circumstances described below.VCP.
Under the terms of hisWalsh Employment Agreement, Mr. McDonald does not participate inWalsh's employment continues until the Executive Transition Plan described under "Executive Transition Plan" below.
Termination Without Causeearlier of his resignation (with or for Good Reason Unrelated to a Change in Control.without good reason), death or disability or termination by the Company (with or without cause). If the Company terminates Mr. McDonald'sWalsh's employment without cause, Mr. Walsh resigns without good reason or Mr. McDonald terminates hisWalsh's employment term expires, Mr. Walsh is entitled to receive severance equal to (i) any unpaid base salary through the date of termination, (ii) reimbursement for good reason,any unreimbursed business expenses incurred through the date of termination, (iii) any accrued but unused vacation time in accordance with Company policy and (iv) all other than termination in connection with a change in control, then, subjectpayments, benefits or fringe benefits that Mr. Walsh is entitled to hisreceive under the terms of any applicable compensation arrangement or benefit, equity or fringe benefit plan, program, grant or the Walsh Employment Agreement, including Mr. Walsh's award under the VCP and the grant of stock options.
satisfaction of certain conditions, Mr. McDonald is entitled to receive the following payments and benefits:
Under the Employment Agreement, Mr. McDonald is deemed to have been terminated without cause if he is terminated for any reason other than:
Mr. McDonald is deemed to have terminated his employment for good reason if the termination follows:
Termination in Connection with a Change in Control. If the Company terminates Mr. McDonald'sWalsh's employment withoutother than for cause, or Mr. McDonald terminates his employmentWalsh resigns for good reason duringor due to death or disability, the period beginning three months prior to the date of a change in control and ending on the second anniversary of the change in control, then, subject toCompany will pay Mr. McDonald's satisfaction of certain conditions, heWalsh (or his estate, as applicable), all payments, benefits or fringe benefits that Mr. Walsh is entitled to receive the payments and benefits described above, except that the multiplier for the severance payment will be changed from 2.0 to 3.0, a pro-rata portion of the bonus that would have been earned under the Company's annual incentiveterms of any applicable compensation arrangement or benefit, equity or fringe benefit plan, program, will be based ongrant or the greater of target bonus and actual bonus earned, and all unvested equity awards will fully and immediately vest.
Under theWalsh Employment Agreement, a change in control is defined inincluding Mr. Walsh's award under the same manner as in the Company's LTIP, as:
Termination Due to Death or Disability. If Mr. McDonald's employment terminates due to death or if he is terminated by the Company due to disability, he (or his beneficiary) is entitled to receive:
Termination Due to Expiration of Employment Term. If Mr. McDonald's employment terminates due to the expiration of the employment term under the agreement, he is entitled to receive:
Voluntary Resignation. Upon termination of employment due to voluntary resignation, Mr. McDonaldWalsh or, if Mr. Walsh is not entitled to receive such an award, at such time that he would have received his award if he were so entitled.
Mr. Walsh has also agreed to customary restrictions with respect to the use of the Company's confidential information and has agreed that all Accrued Benefits.
Termination for Causeintellectual property developed or conceived by Mr. Walsh while he is employed by the Company that relates to the Company's business shall belong exclusively to the Company. If During the term of Mr. Walsh's employment with the Company and during the six-month period immediately thereafter, Mr. Walsh has agreed not to directly or indirectly, own manage, operate, control, be employed by or render services to any person, firm, corporation or other entity that is engaged in competition with the Company, provided, however, that if Mr. Walsh's employment terminates Mr. McDonald's employmentfor any reason, other than for cause, following the eighteen-month anniversary of the start of his employment, the noncompete period will continue only if the Company pays an additional $1,000,000. Mr. McDonald is entitled to receive Accrued Benefits (other than any unpaid bonus).
ObligationsWalsh has also agreed that during the term of Mr. McDonald. Payment and benefits under the Employment Agreement are subject to compliance by Mr. McDonaldhis employment with the restrictive covenants inCompany and during the agreement, including non-disclosure, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants expire eighteen months after the termination ofone year period immediately thereafter, Mr. McDonald's employment. The non-disclosure covenant doesWalsh will not expire. If Mr. McDonald violatessolicit or hire any of these covenants, he will not be entitled to further payments and benefits under the Employment Agreement. All paymentsCompany's employees or benefits underinterfere with the Employment Agreement are conditioned on the execution of a general release of claims by Mr. McDonald in favor ofrelationship between the Company and any of its affiliates, and their officers, directors and employees.vendors, joint venturers or licensors.
Executive Transition Severance Plan
Messrs. Jones, Humenik,All of our current NEOs, other than Mr. Walsh, our President and GattoChief Executive Officer, are eligible to receive severance benefits and are subject to certain restrictive covenants under the Executive TransitionSeverance Plan. Effective as ofThe Severance Plan replaces and supersedes the consummation of the Merger, the Company assumed all obligations of SuperMedia under this plan. TheInc. Executive Transition Plan provides specified payments and otherthe Dex One Corporation Severance Plan—Senior Vice President, the severance plans of our predecessor companies. The Severance Plan is effective as of July 30, 2014, and will continue in effect (as it may be further amended from time to time in accordance with its terms) until terminated as provided therein. The Severance Plan provides benefits to certain of our NEOs, other than our Chiefexecutives, serving in a position of Executive Officer,Vice President, or a more senior position, in the event the officer'sof termination of their employment is terminated under the circumstances described below. During 2010,in the Compensation CommitteeSeverance Plan. The Severance Plan provides for Regular Severance Benefits and Change in Control Severance Benefits (each as defined in the Severance Plan), subject to the terms and conditions of SuperMedia amended the Executive TransitionSeverance Plan.
An employee that is a participant in the Severance Plan to eliminate tax gross-up payments for new participants and bring it into compliance with Section 409A requirements. The Company is not required to provide any payment or benefit under the Executive Transition Plan that duplicates any payment or benefit that an executive officer is entitled to receive under any other Company compensation or benefit plan, award agreement, or other arrangement. Payments and other benefits payable to our Chief Executive OfficerRegular Service Benefits in the event hisof the termination of their employment for reasons other than "cause" and by employee for "good reason," unless such employee is terminated within two years following a change in control, which include: a lump sum payment equal to 78 weeks of pay plus 1.5 times such employee's target bonus; reimbursement for the difference, if any, between (i) the total cost paid by employee for continuing health benefits under COBRA and (ii) the active employee rate for the same health benefits elected by employee under COBRA, for up to 18 months ("COBRA Supplement"); payment of premiums to continue basic life insurance for up to 18 months ("Life Insurance Continuation"); prorated bonus payable based upon actual Company performance for the entire performance period at such time as bonuses are covered byotherwise paid (if employee has worked at least 90 days of the termscurrent calendar year at the date of his Employment Agreement. Fortermination; and outplacement services for one year ("Pro-rated Bonus").
In the event of a descriptiontermination of these payments and other benefits, see "President and CEO Employment Agreement" above.employment within two years following a change in control, such employee is entitled to Change in Control Severance Benefits, which include: a lump sum payment
Termination Without Cause. Ifequal to 104 weeks of pay plus two times such employee's target bonus; COBRA Supplement; Life Insurance Continuation; and Pro-rated Bonus.
Payments and benefits under the Severance Plan are subject to the employee's timely execution of a general release in such form and containing such terms and conditions as may be required by the Company, terminates the employmentwithin sixty (60) days of an executive officer without cause, unrelated to a change in control, then the officer is entitled to receive the following payments and benefits:
Under the terms of the Severance Plan, any payments or benefits payable to the officer or the officer's spouse or other dependents under any other Company employee plan or program;
These additional provisions do not apply with respect to any such former Transition Plan participants who incur a numbertermination of months equal to 12 times the Severance Multiplier; and
In addition the Committee, in its sole discretion, may accelerate vesting of any outstanding long-term incentive awards held by the executive officer.
Under the Executive Transition Plan, an executive officer is deemed to have been terminated without cause if the executive officer is terminated for any reason other than:
Termination in Connection with a Change in Control. If the Company terminates the employment of an executive officer without cause during the period beginning six months prior to the date of a
change in control (or, if earlier, the date a definitive agreement is signed that would result in a change in control) and ending on the first anniversary of the change in control, or if an executive officer terminates employment for good reason within one year after a change in control, then the officer is entitled to receive the payments andadditional benefits described above, except that the Severance Multiplier is 2.0.
Inexecutives who were participants in the event a change in control occurs, all outstanding long-term incentive awards held by an executive officer will become fully vested if the officer is employed by the Company immediately before the change in control occurs. The payout under any performance-based award will equal the target amount. Under the Executive Transition Plan a change in control is defined in the same manner as in the LTIP, as described above.
An executive officer is deemedprior to have terminated his or her employment for good reason if the termination follows:
Termination Due to Death or Disability. If an executive officer's employment terminates due to death or is terminated by the Company due to disability, the officer (or the officer's beneficiary) is entitled to receive a cash payment equal to six months' base salary plus a prorated portion of the officer's target short-term incentive award for the year in which the termination occurs. Vesting of the officer's outstanding long-term incentive awards is subject to the discretion of the Committee. An executive officer whose employment is terminated by the Company due to disability is also entitled to receive two years of continuing group health2010 and welfare benefits (including continued participation in the Company's executive life insurance program and conversion of any life or disability policies) at the Company's expense.
Obligations of the Officer. Payment and benefits under the Executive Transition Plan are subject to compliance by the former officer with the restrictive covenants in the Executive Transition Plan, including non-disclosure, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants expire on the first anniversary of the termination of the officer's employment. The non-disclosure covenant does not expire. If the former officer violates any of these covenants, the officer will notwho would be entitled to further payments and benefits under the Executive Transition Plan and must repay the Company for the payments and the value of benefits previously received under the Executive Transition Plan. All payments or benefits under the Executive Transition Plan are conditioned on the execution of a general release of claims by the former officer in favor of the Company, its affiliates, and their officers, directors and employees.
Tax Gross-Up Payments. In the event an executive officer is subject to federal excise taxes foron benefits he or she isthey are entitled to under the Executive Transition Plan or otherwisereceive from the Company, the officer isare entitled to receive an amountamounts necessary to offset the excise taxes and any related income taxes, penalties and interest. This benefitOnly Mr. Jones and Mr. Gatto were the participants in the Transition Plan prior to 2010. Mr. Jones' resignation was grandfathered in 2010;effective as of November 14, 2014 and Mr. Gatto's, as of October 31, 2014. They were not subject to federal excise taxes; therefore, all new officers that jointhey did not receive any tax gross-up payments. Mr. Jones and Mr. Gatto received other additional benefits provided for the former Transition Plan participants.
The VCP is designed to enable the Company after January 1, 2010 do notto retain and award participating employees and other service providers by giving them an opportunity to receive tax gross-up payments.additional compensation based on the net value creation in the Company over the course of certain performance periods. Generally, the total bonus pool under the VCP represents 7% of the total "value creation" under the VCP. Value Creation is measured as the net change over the performance period commencing on October 14, 2014 and ending December 31, 2017 in the fair market value of the Company's total invested capital, including equity securities, debt securities, and bank debt; plus cash dividends and cash payments (interest and principal) to debt, but reduced by any net value contributed from external sources, in each case as determined in the manner provided by the VCP.
The VCP awards vest in equal one-third portions on each of March 31, 2018, June 30, 2018, and December 31, 2018, subject to the employee's continuous employment with the Company through each such date, and relevant portions of the award are payable in cash within 60 days of each applicable vesting date.
In the event of the employee's termination of employment with the Company by employee for good reason, by the Company other than for cause, or due to employee's death or disability, the performance period with respect to the employee's award will end immediately upon the date of
termination and employee will become immediately vested in the amount of award. The award amount will be payable in cash within 60 days following the date of termination.
In the event that the employee's service with the Company continues through a change in control that occurs prior to December 31, 2017, the performance period with respect to the employee's award will end immediately upon the date of the change in control, and employee will become immediately vested in the amount of award in equal one-third portions on each of the 3-month, 6-month, and 1-year anniversaries of such change in control, in each case subject to continuous employment with the Company through each such vesting date. Relevant portions of the award amount will be payable in cash within 60 days of each applicable vesting date.
2013-2015 Cash Long-Term Incentive Plan
The Company's 2013-2015 Cash LTIP comprises three performance periods. Each of fiscal years 2013, 2014 and 2015 represents one performance period, with 2013 measured on a pro rata basis from the effective date of the merger through December 2013. If, at the end of a measurement period, the Company's performance against the specified performance metrics results in an award being payable to any participating executive officer, the payment of such award shall be made in December of the following year. Following the introduction of the VCP in the fourth quarter of 2014, we discontinued our 2013-2015 Cash LTIP and did not grant any awards under the 2013-2015 Cash LTIP for the 2015 performance year.
Following a change in control of the Company, under the 2013-2015 Cash LTIP, awards for the performance period in progress would be deemed to be earned at the target amount and for any performance period that has not been started as of the change in control, potential future awards will be forfeited.
Restricted Stock Awards and Stock Option Awards
On September 5, 2013 the Board and the Committee approved restricted stock and stock option awards to our Named Executive Officers under the LTIP and EIP, as applicable. In connection with his appointment as the Corporation's Executive Vice President—General Counsel and Corporate Secretary, on January 2, 2014, Mr. Ferrell received an additional restricted stock award of 8,401 shares under the EIP. In connection with his promotion to the position of the Chief Operating Officer of the Company, effective May 28, 2014, Mr. Humenik received an additional restricted stock award of 10,000 shares under the EIP. The restricted stock awards granted on September 5, 2013 and January 2, 2014, vest on December 31, 2015, subject to the terms of the applicable award agreement.agreements. All unvested shares of restricted stock will be forfeited upon the employee's termination of employment with the Company for any reason on or before December 31, 2015, except that the Committee, in its sole discretion, may provide for the accelerated vesting of the restricted stock. If the employee terminates employment without cause or for good reason within six months prior to or two years following a change in control, all unvested shares of restricted stock will immediately vest as of the date of such termination. All restricted stock granted on May 28, 2014 to Mr. Humenik vest 100% on December 31, 2016, subject to the terms of the applicable award agreement. All unvested shares of restricted stock will be forfeited upon Mr. Humenik's termination of employment with the Company for any reason on or before December 31, 2016, except that the Committee, in its sole discretion, may provide for the accelerated vesting of the restricted stock. If the employee terminates employment without cause or for good reason within six months prior to or two years following a change in control, all unvested shares of restricted stock will immediately vest as of the date of such termination.
On September 5, 2013 the Board and the Committee approved awards of stock options to our Named Executive Officers under the LTIP and EIP, as applicable. In connection with his appointment as the Corporation's Executive Vice President—General Counsel and Corporate Secretary, on
January 2, 2014, Mr. Ferrell received an additional award of stock options to acquire 27,800 shares of the Company's common stock under the EIP. In connection with his promotion to the position of the Chief Operating Officer of the Company, effective May 28, 2014, Mr. Humenik received an additional award of stock options to acquire 25,000 shares of the Company's common stock under the EIP. As a material inducement to accept the position of our Chief Executive Officer, on October 14, 2014, Mr. Walsh received an award of stock options to acquire 271,000 shares of the Company's common stock on a stand-alone basis, outside the EIP. On December 15, 2014, the Board and the Committee approved restricted stock awards to our Named Executive Officers under the EIP.
The stock option awards granted on September 5, 2013 and January 2, 2014, vest over four years in equal installments of one-fourth on March 31, of each of 2014, 2015, 2016 and 2017. Mr. Humenik's May 28, 2014 stock option award vests over four years in equal installments of one-fourth, on March 31, of each of 2015, March 31, 2016, 2017, and March2018. All stock option awards granted on October 14 and December 15, 2014, vest 100% on December 31, 2017. Any unvested portion of the stock option award will be forfeited upon the employee's termination of employment with the Company for any reason before the date the option vests, except that the Committee, at its sole discretion, may provide for the accelerated vesting of the stock option award. If the employee terminates employment without cause or for good reason within six months prior to or two years following a change in control, any unvested portion of the stock option award will immediately vest on the date of such termination.
Under the award agreements the change in control is defined as set forth in the Transition Plan, as described above.
2013-2015 Cash Long-Term Incentive Plan
The Company's 2013-2015 Cash LTIP comprises three performance periods. Each of 2013 (post-Merger), and fiscal years 2014 and 2015 represents one performance period, with 2013 measured on a pro rata basis from the effective date of the Merger through December 2013. If, at the end of a measurement period, the Company's performance against the specified performance metrics results in an award being payable to any participating executive officer, the payment of such award shall be made in December of the following year.
Following a change in control of the Company, under the 2013-2015 Cash LTIP, awards for the performance period in progress would be deemed to be earned at the target amount and for any performance period that has not been started as of the change in control, potential future awards will be forfeited. Under 2013-2015 Cash LTIP the change in control is defined as set forth in the Transition Plan, as described above.
Pension and Retirement Benefits
Upon retirement or other termination of employment, certain of the Named Executive Officers are entitled to pension benefits under the Management Plan, the Excess Plan, Dex One Retirement Account and Dex One PBEP. See "Executive"Compensation Discussion and Director Compensation—Executive Compensation—2013 Pension Benefits"Analysis—Section 6—Other Compensation Related Items" for further information regarding the pension benefits payable to the eligible Named Executive Officers under these plans.
Incremental Value of Payments and Benefits Upon Change in Control ("CIC") and Various Types of Terminations
| Mr. McDonald | Mr. Jones | Mr. Humenik | Mr. Gatto | Mr. Stover(1) | Mr. Walsh | Mr. Rouse | Mr. Humenik | Mr. Ferrell | Ms. Ryan | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination Scenario (12/31/14)($) | ||||||||||||||||||||||||||||||||
Termination Without Cause | Termination Without Cause | |||||||||||||||||||||||||||||||
Compensation | ||||||||||||||||||||||||||||||||
Separation Benefits | $ | 3,908,000 | $ | 950,900 | $ | 850,000 | $ | 731,000 | $ | — | $ | — | $ | 1,147,500 | $ | 1,665,000 | $ | 750,000 | $ | 796,800 | ||||||||||||
Short-Term Incentive Cash | $ | 977,000 | $ | 436,900 | $ | 350,000 | $ | 301,000 | $ | — | — | — | 487,560 | 179,250 | 190,435 | |||||||||||||||||
Long Term Incentive Cash | $ | 750,000 | $ | 500,000 | $ | 367,000 | $ | 334,000 | $ | — | — | — | 900,000 | 200,000 | 250,000 | |||||||||||||||||
Value Creation Program | 5,988,500 | 684,400 | 342,200 | 427,750 | 427,750 | |||||||||||||||||||||||||||
Restricted Stock | $ | 84,650 | $ | 225,508 | $ | 165,237 | $ | 150,338 | $ | — | — | — | 308,568 | 99,567 | 99,567 | |||||||||||||||||
Stock Options | $ | 65,213 | $ | 289,717 | $ | 212,506 | $ | 193,377 | $ | — | 387,530 | 6,504 | 85,332 | 35,369 | 35,369 | |||||||||||||||||
Benefits | ||||||||||||||||||||||||||||||||
Health & Welfare Benefits | $ | 30,243 | $ | 18,125 | $ | 18,449 | $ | 12,966 | $ | — | 21,986 | 21,986 | 22,038 | 13,811 | 23 | |||||||||||||||||
Executive Life Insurance Program | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Life Insurance | 344 | 1,029 | 2,492 | 933 | 1,227 | |||||||||||||||||||||||||||
Flexible Allowance | $ | — | $ | 15,600 | $ | 15,600 | $ | 15,600 | $ | — | — | — | 15,600 | 15,600 | 15,600 | |||||||||||||||||
Financial Planning | $ | — | $ | 13,535 | $ | 13,535 | $ | 13,535 | $ | — | ||||||||||||||||||||||
Flexible Allowance | — | — | 14,245 | 14,245 | 14,245 | |||||||||||||||||||||||||||
Physical Examination | $ | — | $ | 2,000 | $ | 2,000 | $ | 2,000 | $ | — | — | 2,000 | 2,000 | 2,000 | 2,000 | |||||||||||||||||
Outplacement Services | $ | — | $ | 9,500 | $ | 9,500 | $ | 9,500 | $ | — | — | 7,250 | 7,250 | 7,250 | 7,250 | |||||||||||||||||
Excise Tax Gross-Up | $ | — | $ | — | $ | — | $ | — | $ | — | — | — | — | — | — | |||||||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
Total | $ | 5,815,105 | $ | 2,461,785 | $ | 2,003,826 | $ | 1,763,316 | $ | — | $ | 6,398,359 | $ | 1,870,669 | $ | 3,852,285 | $ | 1,745,774 | $ | 1,840,265 | ||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
Termination Without Cause or for Good Reason in Conjunction with a Change in Control | ||||||||||||||||||||||||||||||||
Compensation | ||||||||||||||||||||||||||||||||
Separation Benefits | $ | 5,862,000 | $ | 1,901,800 | $ | 1,700,000 | $ | 1,462,000 | $ | 1,309,000 | ||||||||||||||||||||||
Short-Term Incentive Cash | $ | 977,000 | $ | 436,900 | $ | 350,000 | $ | 301,000 | $ | 269,500 | ||||||||||||||||||||||
Long Term Incentive Cash | $ | 750,000 | $ | 500,000 | $ | 367,000 | $ | 334,000 | $ | 300,000 | ||||||||||||||||||||||
Restricted Stock | $ | 338,600 | $ | 225,508 | $ | 165,237 | $ | 150,338 | $ | 135,440 | ||||||||||||||||||||||
Stock Options | $ | 434,750 | $ | 289,717 | $ | 212,506 | $ | 193,377 | $ | 173,900 | ||||||||||||||||||||||
Benefits | ||||||||||||||||||||||||||||||||
Health & Welfare Benefits | $ | 30,243 | $ | 36,251 | $ | 36,897 | $ | 25,932 | $ | 31,335 | ||||||||||||||||||||||
Executive Life Insurance Program | $ | — | $ | — | $ | — | $ | — | $ | 375,396 | ||||||||||||||||||||||
Flexible Allowance | $ | — | $ | 31,200 | $ | 31,200 | $ | 31,200 | $ | 31,200 | ||||||||||||||||||||||
Financial Planning | $ | — | $ | 27,070 | $ | 27,070 | $ | 27,070 | $ | 27,070 | ||||||||||||||||||||||
Physical Examination | $ | — | $ | 4,000 | $ | 4,000 | $ | 4,000 | $ | 4,000 | ||||||||||||||||||||||
Outplacement Services | $ | — | $ | 9,500 | $ | 9,500 | $ | 9,500 | $ | 9,500 | ||||||||||||||||||||||
Excise Tax Gross-Up | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
Total | $ | 8,392,593 | $ | 3,461,946 | $ | 2,903,410 | $ | 2,538,417 | $ | 2,666,341 | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
| | | | | | | | | | | ||||||||||||||||||||||
Death | ||||||||||||||||||||||||||||||||
Compensation | ||||||||||||||||||||||||||||||||
Separation Benefits | $ | — | $ | 693,900 | $ | 600,000 | $ | 516,000 | $ | — | ||||||||||||||||||||||
Short-Term Incentive Cash | $ | 977,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Long Term Incentive Cash | $ | 750,000 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Restricted Stock | $ | 84,650 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Stock Options | $ | 65,213 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Benefits | ||||||||||||||||||||||||||||||||
Health & Welfare Benefits | $ | 30,243 | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||||||||
Executive Life Insurance Program | $ | — | $ | — | $ | — | $ | 3,660,000 | $ | — |
| Mr. McDonald | Mr. Jones | Mr. Humenik | Mr. Gatto | Mr. Stover(1) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Flexible Allowance | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Financial Planning | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Physical Examination | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Excise Tax Gross-Up | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | | | |
Total | $ | 1,907,105 | $ | 693,900 | $ | 600,000 | $ | 4,176,000 | $ | — | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Disability | ||||||||||||||||
Compensation | ||||||||||||||||
Separation Benefits | $ | — | $ | 693,900 | $ | 600,000 | $ | 516,000 | $ | — | ||||||
Short-Term Incentive Cash | $ | 977,000 | $ | — | $ | — | $ | — | $ | — | ||||||
Long Term Incentive Cash | $ | 750,000 | $ | 500,000 | $ | 367,000 | $ | 334,000 | $ | — | ||||||
Restricted Stock | $ | 84,650 | $ | 225,508 | $ | 165,237 | $ | 150,338 | $ | — | ||||||
Stock Options | $ | 65,213 | $ | 289,717 | $ | 212,506 | $ | 193,377 | $ | — | ||||||
Benefits | ||||||||||||||||
Health & Welfare Benefits | $ | 30,243 | $ | 36,251 | $ | 36,897 | $ | 25,932 | $ | — | ||||||
Executive Life Insurance Program | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Flexible Allowance | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Financial Planning | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Physical Examination | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Excise Tax Gross-Up | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
| | | | | | | | | | | | | | | | |
Total | $ | 1,907,105 | $ | 1,745,376 | $ | 1,381,640 | $ | 1,219,647 | $ | — | ||||||
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Mr. Walsh | Mr. Rouse | Mr. Humenik | Mr. Ferrell | Ms. Ryan | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Termination Without Cause or for Good Reason in Conjunction with a CIC | ||||||||||||||||
Compensation | ||||||||||||||||
Separation Benefits | $ | — | $ | 1,530,000 | $ | 2,220,000 | $ | 1,000,000 | $ | 1,062,400 | ||||||
Short-Term Incentive Cash | — | — | 510,000 | 187,500 | 199,200 | |||||||||||
Long Term Incentive Cash | — | — | 900,000 | 200,000 | 250,000 | |||||||||||
Value Creation Program | 5,988,500 | 684,400 | 342,200 | 427,750 | 427,750 | |||||||||||
Restricted Stock | — | — | 308,568 | 99,567 | 99,567 | |||||||||||
Stock Options | 387,530 | 6,504 | 85,332 | 35,369 | 35,369 | |||||||||||
Benefits | ||||||||||||||||
Health & Welfare Benefits | 21,986 | 21,986 | 22,038 | 13,811 | 23 | |||||||||||
Life Insurance | 344 | 1,029 | 2,492 | 933 | 1,227 | |||||||||||
Flexible Allowance | — | — | 31,200 | 31,200 | 31,200 | |||||||||||
Flexible Allowance | — | — | 28,490 | 28,490 | 28,490 | |||||||||||
Physical Examination | — | 4,000 | 4,000 | 4,000 | 4,000 | |||||||||||
Outplacement Services | — | 7,250 | 7,250 | 7,250 | 7,250 | |||||||||||
Excise Tax Gross-Up | — | — | — | — | — | |||||||||||
Total | $ | 6,398,359 | $ | 2,255,169 | $ | 4,461,570 | $ | 2,035,869 | $ | 2,146,475 | ||||||
Death | ||||||||||||||||
Compensation | ||||||||||||||||
Separation Benefits | $ | 3,988,500 | $ | 1,147,500 | $ | 1,665,000 | $ | 750,000 | $ | 796,800 | ||||||
Short-Term Incentive Cash | — | — | 487,560 | 179,250 | 190,435 | |||||||||||
Long Term Incentive Cash | — | — | — | — | — | |||||||||||
Value Creation Program | 5,988,500 | 684,400 | 342,200 | 427,750 | 427,750 | |||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||
Stock Options | 387,530 | 6,504 | 85,332 | 35,369 | 35,369 | |||||||||||
Benefits | ||||||||||||||||
Health & Welfare Benefits | 10,911 | 10,911 | 10,911 | 4,371 | 15 | |||||||||||
Life Insurance | — | — | — | — | — | |||||||||||
Flexible Allowance | — | — | — | — | — | |||||||||||
Financial Planning | — | — | — | — | — | |||||||||||
Physical Examination | — | — | — | — | — | |||||||||||
Excise Tax Gross-Up | — | — | — | — | — | |||||||||||
Total | $ | 10,375,441 | $ | 1,849,315 | $ | 2,591,003 | $ | 1,396,740 | $ | 1,450,369 | ||||||
Disability | ||||||||||||||||
Compensation | ||||||||||||||||
Separation Benefits | $ | 3,988,500 | $ | 1,147,500 | $ | 1,665,000 | $ | 750,000 | $ | 796,800 | ||||||
Short-Term Incentive Cash | — | — | 487,560 | 179,250 | 190,435 | |||||||||||
Long Term Incentive Cash | — | — | — | — | — | |||||||||||
Value Creation Program | 5,988,500 | 684,400 | 342,200 | 427,750 | 427,750 | |||||||||||
Restricted Stock | — | — | — | — | — | |||||||||||
Stock Options | 387,530 | 6,504 | 85,332 | 35,369 | 35,369 | |||||||||||
Benefits | — | — | — | — | — | |||||||||||
Health & Welfare Benefits | 21,986 | 21,986 | 22,038 | 13,811 | 23 | |||||||||||
Life Insurance | — | 1,029 | 2,492 | 933 | 1,227 | |||||||||||
Flexible Allowance | — | — | — | — | — | |||||||||||
Financial Planning | — | — | — | — | — | |||||||||||
Physical Examination | — | — | — | — | — | |||||||||||
Excise Tax Gross-Up | — | — | — | — | — | |||||||||||
Total | $ | 10,386,516 | $ | 1,861,419 | $ | 2,604,622 | $ | 1,407,112 | $ | 1,451,603 |
| Mr. McDonald | Mr. Jones | Mr. Gatto | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Termination Scenario(1) | ||||||||||
Termination Without Cause or for Good Reason in Conjunction with a CIC | ||||||||||
Compensation | ||||||||||
Separation Benefits | $ | 6,300,000 | $ | 1,901,800 | $ | 1,462,000 | ||||
Short-Term Incentive Cash | 963,000 | 380,642 | 250,696 | |||||||
Long Term Incentive Cash | 1,755,375 | 512,000 | 342,000 | |||||||
Restricted Stock | 377,000 | 282,384 | 172,938 | |||||||
Stock Options | 1,281,250 | 853,825 | 569,900 | |||||||
Benefits | ||||||||||
Health & Welfare Benefits | 22,300 | 30,300 | 23,000 | |||||||
Executive Life Insurance Program | — | 2,099 | 1,803 | |||||||
Flexible Allowance | — | 31,200 | 31,200 | |||||||
Financial Planning | — | 27,740 | 27,740 | |||||||
Physical Examination | — | 4,000 | 4,000 | |||||||
Outplacement Services | — | 7,250 | 7,250 | |||||||
Excise Tax Gross-Up | — | — | — | |||||||
Total | $ | 10,698,925 | $ | 4,033,239 | $ | 2,892,527 |
Compensation and Benefits Committee Interlocks and Insider ParticipationCOMPENSATION AND BENEFITS COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Thomas D. Gardner, Richard L. Kuersteiner, Mark A. McEachenJonathan B. Bulkeley and Thomas S. Rogers served as members of the Compensation and Benefits Committee since April 30, 2013 through December 31, 2013.during 2014. Mark A. McEachen and Richard L. Kuersteiner served as members of the Compensation and Benefits Committee from January 1, 2014 to May 14, 2014. Mr. Kuersteiner and Mr. McEachen did not stand for re-election at the Company's 2014 meeting of stockholders. Their service on our Board of Directors ceased on May 14, 2014. No such member of thatthe Committee is or has been an officer or employee of the Company and none had interlocking relationships with any other entities of the type that would be required to be disclosed in this proxy statement.
Director CompensationDIRECTOR COMPENSATION
The Committee periodically reviews the level and balance of our non-employee director compensation with the input and assistance of its independent compensation consultant. Following the Merger, theThe Committee and the new Board reviewed the director compensation program in April 2014, and implementedapproved an increase of annual cash retainer for the following revised non-employee director compensation program which took effectBoard Chairman service from $145,000 to $160,000 (effective as of April 30, 2013, the first daythird quarter of 2014) and an increase of the termannual award of restricted stock for which the Board was appointedChairman service from $30,000 to serve as$40,000 divided by the Boardclosing price of our common stock on the Company:date of grant (effective for awards payable in 2015).
Cash Compensation.CASH COMPENSATION
The table below shows cash compensation payable to the non-management directors of the Company, except Mr. Slater,1, for Board and Board committee services, effective asservices. At his request, Mr. Slater, an executive officer of April 30, 2013.Paulson, one of our largest stockholders, has waived all director compensation.
Service | Fee Amount | Fee Amount | ||||||
---|---|---|---|---|---|---|---|---|
Annual Retainer for Board Service | $ | 75,000 | $ | 120,000 | ||||
Annual Retainer for Board Chairman Service | $ | 100,000 | 160,000 | |||||
Annual Audit and Finance Committee Membership Retainer | $ | 7,500 | 7,500 | |||||
Annual Audit and Finance Committee Chairman Retainer | $ | 25,000 | 25,000 | |||||
Annual Compensation and Benefits Committee Membership Retainer | $ | 7,500 | 7,500 | |||||
Annual Compensation and Benefits Committee Chairman Retainer | $ | 25,000 | 25,000 | |||||
Annual Corporate Governance Committee Membership Retainer | $ | 5,000 | 5,000 | |||||
Annual Corporate Governance Committee Chairman Retainer | $ | 15,000 | 15,000 | |||||
Board and Committee Meeting Fee | $ | 2,000 | 2,000 |
Annual cash director retainers are paid quarterly at the beginning of each quarter and include Board and committee retainers. Board and committee meeting fees are paid on a quarterly basis in arrears based on attendance.
Annual Equity Based Compensation. Non-managementANNUAL EQUITY BASED COMPENSATION
In 2014, non-management directors, except Mr. Slater, received an annual award of restricted stock equal to $75,000$30,000 divided by the closing price of our common stock on the grant date.
Effective asdate of the first quarter of 2014, upon the recommendation of the Committee, the Board approved a decrease in the amount of annual awards of restricted stock to $30,000 and corresponding increases in annual cash retainers for the Board service to $120,000 and annual cash retainer for the Board Chairman service to $145,000.grant.
The following table sets forth certain information regarding the compensation earned by each non-employee director who served on our Board of Directors in 2013, following the consummation of the Merger on April 30, 2013.2014.
Director Compensation—2013DIRECTOR COMPENSATION—FISCAL 2014
Name(1) | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Total | Fees Earned or Paid in Cash(2) | Stock Awards(3) | Total | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jonathan B. Bulkeley(2) | $ | 185,542 | — | $ | 185,542 | $ | 180,625 | $ | 30,000 | $ | 210,625 | |||||||||
Thomas D. Gardner | $ | 248,250 | — | $ | 248,250 | 223,903 | 30,000 | 253,903 | ||||||||||||
Richard L. Kuersteiner | $ | 244,125 | — | $ | 244,125 | 248,563 | 30,000 | 278,563 | ||||||||||||
W. Kirk Liddell | $ | 201,584 | $ | 10,000 | $ | 211,584 | 183,000 | 30,000 | 213,000 | |||||||||||
Mark A. McEachen(2)(4) | $ | 266,167 | — | $ | 266,167 | 48,563 | 30,000 | 78,563 | ||||||||||||
Thomas S. Rogers(2) | $ | 223,375 | — | $ | 223,375 | 177,500 | 30,000 | 207,500 | ||||||||||||
Alan F. Schultz | $ | 195,917 | $ | 60,000 | $ | 255,917 | 178,250 | 30,000 | 208,250 | |||||||||||
John Slater | — | — | — | — | — | — | ||||||||||||||
Douglas D. Wheat | $ | 186,250 | $ | 60,000 | $ | 246,250 | 200,000 | 30,000 | 230,000 |
Compensation— Compensation Tables—Summary Compensation Table" for a discussion of the compensation earned by Mr. Walsh and Mr. McDonald during 2013.
In addition to the cash compensation disclosed above, each of Messrs. Jonathan B. Bulkeley, Richard L. Kuersteiner, W. Kirk Liddell, Mark A. McEachen and Alan F. Schultz, the former Dex One directors, received the following cash compensation for their service on the Dex One board of directors prior to the Merger, from January 1, 2013 through April 30, 2013: $36,500; $54,500; $53,333; $56,000 and $66,500, respectively (not included in the amounts shown in the table).
In recognition of their services to the Company, in connection with evaluation of potential strategic transactions, in October 2013, the Board granted each of Mr. Liddell, Mr. Wheat and Mr. Schultz, an award of fully vested restricted Stock pursuant to the terms of the EIP, each equal to $10,000 divided by the closing price of the Corporation's common stock on the grant date.
date). The amounts in the table represent the aggregate grant date fair value of restricted stock granted to our non-management directors in 2013.2014. Pursuant to the SEC rules, the dollar amounts were computed in accordance with Financial Accounting Standards Board Accounting Standards CodificationFASB ASC Topic 718, Compensation-Stock Compensation ("ASC Topic 718"), and exclude the impact of estimated forfeitures related to service-based vesting conditions. See Note 11 to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2013,2014, for a description of the assumptions used in determining the accounting expense associated with these awards.
The following table sets forth the number of shares held by each of the non-management directors that are standing for re-election at the 2014 Annual Meeting as of March 17, 2014.
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In recognition of their services to the Company, in connection with evaluation of potential strategic transactions, the Board granted each of Mr. Liddell, Mr. Wheat and Mr. Schultz, an award of fully vested 1,460 shares of restricted stock pursuant to the terms of the EIP.
ADVISORY VOTE APPROVING THE COMPANY'S EXECUTIVE COMPENSATION
(ITEM NO. 2)
Recently enacted rules enableWe provide our stockholders with the opportunity to cast an annual advisory vote to approve on an advisory basis, the compensation of our NEOsNamed Executive Officers as disclosed in this proxy statement.
Background. Dex Media was formedpursuant to the SEC's compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables, and the narrative disclosures that accompany the compensation tables). We believe it is appropriate to seek and take into account the views of stockholders on April 30, 2013 through the Merger which brought together Dex Onedesign and SuperMedia, two major providerseffectiveness of local, social, and mobile marketing solutions to businesses in communities across the United States. Dex Media's consumer services include online and mobile search portals and applications, as well as local printed yellow pages directories, white page directories, community, and companion directories in various markets across the U.S.
In addition to bringing the two companies together in 2013, we experienced a challenging business environment throughout the year. Challenges included an industry trend of decreased demand for print based advertising and broader uneven economic trends impacting the Company's core retail customer segment. These trends in particular resulted in Dex Media's experiencing a decline in revenue. In addition, Dex Media is highly leveraged, with long-term debt greater than revenue. Repaying a large portion of that debt was a key focus of our Company following the Merger.executive compensation program.
Dex Media's 2013Our goal for the executive compensation program is best understoodto attract, motivate, and retain a talented, entrepreneurial, and creative team of executives who will provide leadership for the Company's success in dynamic and competitive markets. Our compensation philosophy is to provide a balanced compensation program that rewards employees for the contextachievement of the MergerCompany's financial, operational and these business trends. 2013 was both a transitional and transformational year for the Company. Westrategic goals.
For 2014 our executive compensation program focused on both top-line and bottom-line performance, all while continuing our post-Merger integration activities. We redefined our strategy and worked to transformworking on transforming our business fromand positioning the Company to be the leading multi-product marketing provider for small and medium-sized businesses. Following the merger of Dex One and SuperMedia in April 2013, the Committee developed our 2014 compensation design and target compensation opportunities, comprising a principally print-based advertisingmix of fixed and media company to a multi-platform marketing solutions provider, introducing digital solutions that are relevantvariable compensation, including base salaries and valuable to our customers. Throughout the year, we focused on integrating two organizations, we right-sized the organization (people, facilities and resources), re-negotiated multiple key contracts and moved to single IT and financial platforms.
Compensation Philosophy and Objectives. Dex Media's compensation program is designed to reward executives for Company and individual performance through awards of annual and long-term incentives. Annual and long-term incentives encourage our executive officers to achieve the Company's financial, operational and strategic goals and reward individual and Company performance. Our compensation program is also intended to be competitive with our peer companies so that we can attract and retain highly qualified personnel and recognize their knowledge, skills and attributes. To increase the retentive power of the compensation program,created a balance between annual and long-term goals are established at challenging but achievable levels. Finally, we strive to design our compensation program to be transparent to our executive officers and to shareholders, and to evidence positive governance principles.
2013 Compensation Design. Following the Merger, the Committee approved an annual incentive design for the remainder of 2013 that largely replicated the annual incentive approach that had been in place previously at Dex One and SuperMedia. Thisfocus. Our annual incentive design included metrics tied to the Company's financial growth plan. Long-term incentives awarded for 2014 included stock options, promotional grants of restricted stock, and performance-based cash awards. A new long-term incentive plan, that had been approved as partthe VCP, providing an opportunity to executives to receive additional compensation based on the net value creation in the Company over the course of certain performance periods, was introduced in 2014.
At the Company's annual meeting of stockholders held in May 2014, a substantial majority (90.86%) of the Merger plan.votes cast on the proposal to approve executive compensation, on an advisory basis, were voted in favor of the proposal. The Committee also approved long-term incentives covering 2013 through 2015 that include a strong cash component, a restricted stock component and a stock option component. The Committee also updatedbelieves this affirms stockholders' support of the peer group usedCompany's approach to benchmark compensation for executive officers, adopted stock ownership guidelines for executive officers and non-management directors and negotiated a three year extension to the CEO's employment agreement.compensation. All of these items are described in more detail in "Compensation Discussion and Analysis" above.
For the reasons discussed above, we are asking our stockholders to indicate their support for our executive compensation as described in this proxy statement by voting "FOR" the following resolution. This vote is not intended to address any specific item of compensation, but rather the overall
compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement.
"RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company's Proxy Statementproxy statement for the 20142015 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement.the narrative disclosures that accompany the compensation tables."
This vote is advisory, and therefore not binding on the Company, the Board or the Compensation and Benefits Committee. However, the Board and the Compensation and Benefits Committee valuevalues the opinions of our stockholders and, to the extent there is any significant vote against the NEO compensation as disclosed in this proxy statement, we will consider such stockholders' concerns and the Compensation and Benefits Committee will evaluate whether any actions are necessary to address those concerns.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR"
THE APPROVAL, ON AN ADVISORY BASIS, OF THE COMPANY'S EXECUTIVE COMPENSATION
ADVISORY VOTE DETERMINING THE FREQUENCYOF ADVISORY VOTES TO APPROVE THE COMPANY'S EXECUTIVE COMPENSATION(ITEM NO. 3)
Recently enacted rules also enable our stockholders to indicate how frequently we should seek an advisory vote on the compensation of our NEOs, such as Item No. 2 above. By voting on this Item No. 3, stockholders may indicate whether they would prefer an advisory vote on NEO compensation once every one, two or three years (or you may abstain).
After careful consideration of this Item, the Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company at this time, and therefore the Board recommends that you vote for a one-year interval for the advisory vote on executive compensation.
In formulating its recommendation, the Board considered that an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. Additionally, an annual advisory vote on executive compensation is consistent with RiskMetric's policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. We understand that our stockholders may have different views as to what is the best approach for the Company, and we look forward to hearing from such stockholders on this Item.
You may cast your vote on your preferred voting frequency by choosing the option of one year, two years, three years or abstain from voting when you vote in response to the resolution set forth below.
"RESOLVED, that the option of once every one year, two years, or three years that receives a majority of votes cast for this resolution will be determined to be the frequency preferred by the stockholders with which the Company is to hold a stockholder vote to approve the compensation of the named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission."
The option of one year, two years or three years that receives a majority of votes cast by stockholders will be the frequency for the advisory vote on executive compensation that has been recommended by stockholders. However, because this vote is advisory and not binding on the Board or the Compensation and Benefits Committee in any way, the Board may decide that it is in the best interests of our stockholders to hold an advisory vote on executive compensation more or less frequently than the option recommended by the stockholders.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDSSTOCKHOLDERS SELECT "ONE YEAR" ON THE PROPOSALRECOMMENDING THE FREQUENCY OF ADVISORYVOTES TO APPROVR THE COMPANY'S EXECUTIVE COMPENSATION
Stock Ownership of Certain Beneficial Owners and ManagementSTOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The tables below provide information regarding the beneficial ownership of our common stock as of March 17, 2014,April 6, 2015, by:
Beneficial ownership is determined in accordance with the rules and regulations of the SEC. Unless otherwise indicated and subject to community property laws, where applicable, the Company believes that each of the stockholders named in the table below has sole voting and investment power with respect to the shares indicated as beneficially owned. Each of our directors and executive officers beneficially owned less than 1.0%, and all of our directors and executive officers as a group, beneficially owned less than 3.5%2% of our common stock outstanding as of March 17, 2014.April 6, 2015.
Directors and Executive OfficersDIRECTORS AND EXECUTIVE OFFICERS
Name of Beneficial Owner(1) | Amount and Nature of Beneficial | |||
---|---|---|---|---|
Jonathan B. Bulkeley | ||||
Thomas D. Gardner | ||||
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W. Kirk Liddell | ||||
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Alan F. Schultz | ||||
John Slater | — | |||
Thomas S. Rogers | ||||
Douglas D. Wheat | ||||
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Del | ||||
Raymond R. Ferrell(2)(3) | 27,036 | |||
Debra M. Ryan(2)(3) | 27,443 | |||
All directors and executive officers as a group (16 persons) |
Five Percent HoldersFIVE PERCENT HOLDERS
The following table sets forth information regarding the number and percentage of shares of common stock held by all persons and entities known by the Company to beneficially own 5% or more of the Company's outstanding common stock. The information regarding beneficial ownership of common stock by the entity identified below is included in reliance on reports filed by the entities with the SEC, except that the percentage is based upon the Company's calculations made in reliance upon the number of shares reported to be beneficially owned by the entity in such report and the Company's number of shares of common stock outstanding on March 17, 2014.April 6, 2015. We know of no other stockholder holding 5% or more of the Company's common stock.
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | Amount and Nature of Beneficial Ownership | Percent of Class | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Franklin Resources, Inc.(1) | 2,688,898 | 15.3 | % | 2,688,898 | 15.2 | % | ||||||||
One Franklin Parkway | ||||||||||||||
San Mateo, CA 94403-1906 | ||||||||||||||
Paulson & Co. Inc.(2) | 2,231,132 | 12.7 | % | 2,231,132 | 12.6 | % | ||||||||
1251 Avenue of the Americas, 50th Floor | ||||||||||||||
New York, New York 10020 | ||||||||||||||
Restructuring Capital Associates, L.P(3) | 1,255,840 | 7.1 | % | |||||||||||
2 Stamford Plaza, Suite 1501 | ||||||||||||||
281 Tresser Boulevard | ||||||||||||||
Stamford, Connecticut 06901 | ||||||||||||||
Hayman Capital Management, L.P(4). | 1,264,221 | 7.2 | % | |||||||||||
2101 Cedar Springs Road, Suite 1400 | ||||||||||||||
Dallas, TX 75201 |
Section 16(a) Beneficial Ownership Reporting ComplianceSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires our directors, certain of our officers and beneficial owners of more than ten percent of our common stock to file with the SEC reports of their initial ownership and changes in their ownership of our common stock. We are required to disclose in this proxy statement any late filings of such reports. Based solely on a review of copies of reports filed by the reporting persons furnished to us, or written representations from reporting persons, we believe that the reporting persons complied with all Section 16(a) filing requirements on a timely basis during 2013.2014.
Audit and Finance Committee ReportAUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board of Directors serves as the representative of the Board for general oversight of our financial accounting and reporting, systems of internal control, audit process and monitoring compliance with laws and regulations and standards of business conduct. The Board has adopted a written Charter for the Audit and Finance Committee. Management has responsibility for preparing our financial statements as well as for our financial reporting process. Ernst & Young LLP ("EY"), acting as independent accountant, is responsible for expressing an opinion on the conformity of our audited financial statements with generally accepted accounting principles in the United States.
In this context, the Audit and Finance Committee hereby reports as follows:
1) The Audit and Finance Committee has reviewed and discussed the audited financial statements for fiscal 20132014 with management.
2) The Audit and Finance Committee has also discussed with EY the matters required to be discussed by Auditing Standard No. 61,16, "Communications with Audit Committees" issued by the Public Company Accounting Oversight Board.
3) The Audit and Finance Committee has received the written disclosures and the letter from EY required by applicable requirements of the Public Company Accounting Oversight Board regarding EY communications with the Audit and Finance Committee concerning independence and has discussed with EY its independence from the Company and management.
4) Based on the review and discussion referred to in paragraphs (1) through (3) above, the Audit and Finance Committee recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in the Annual Report on Form 10-K for the year ended December 31, 2013,2014, for filing with the Securities and Exchange Commission.
This Audit and Finance Committee Report shall not be deemed to be "filed" with the SECSecurities and Exchange Commission or subject to Section 18 of the Securities Exchange Act of 1934.
Audit and Finance Committee
W. Kirk Liddell, ChairmanJonathan B. Bulkeley
Thomas D. Gardner
John Slater
Principal Accountant Fees and Services
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Following the completion of the Merger,merger of Dex One and SuperMedia, the Audit and Finance Committee of the Board conducted a competitive process to review the appointment of the Company's independent registered public accounting firm for the year ending December 31, 2013. As a result of this process, on May 15, 2013, the Audit and Finance Committee engaged Ernst & Young LLP ("EY") as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2013, and dismissed KPMG LLP ("KPMG") from that role. KPMG had previously served as the independent registered public accounting firm for Dex One Corporation, the predecessor to the Company.
EY served as the Company's independent registered public accounting firm for 2014 and has been selected by the Audit and Finance Committee to serve as the Company's independent registered public accounting firm for 2014.2015.
Aggregate fees for professional services rendered to the Company by EY for the year ended December 31, 2014 and for the period from May 15, 2013 to December 31, 2013, and by KPMG to Dex One and the Company for the yearsyear ended December 31, 2012 and December 31, 2013 were as follows:
| 2013 EY | 2013 KPMG | 2012 KPMG | 2014 EY | 2013 EY | 2013 KPMG | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit Fees | $ | 2,022,218 | $ | 314,548 | $ | 1,306,766 | $ | 1,727,395 | $ | 2,137,218 | $ | 314,548 | ||||||||
Audit-Related Fees | $ | 203,450 | — | — | 196,400 | 196,400 | — | |||||||||||||
Tax Fees | — | $ | 941,650 | $ | 282,450 | 5,850 | 7,050 | 941,650 | ||||||||||||
All Other Fees | — | $ | 34,500 | $ | 180,959 | 6,300 | — | 34,500 | ||||||||||||
| | | | | | | | | | | | | | | | | | |||
Total | $ | 2,225,668 | $ | 1,290,698 | $ | 1,770,175 | $ | 1,935,945 | $ | 2,340,668 | $ | 1,290,698 | ||||||||
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Audit Fees.AUDIT FEES. Audit fees consist principally of fees for the audit of the Company's consolidated financial statements, review of the company'sCompany's interim consolidated financial statements, the audit of internal control over financial reporting and reorganization matters.
Audit-Related Fees.AUDIT-RELATED FEES. Audit-related fees consist principally of fees for audits of the Company's employee benefit plans.
Tax Fees.TAX FEES. Tax fees consist principally of fees for services performed in connection with consultations on tax, tax compliance and reorganization tax matters.
All Other Fees.ALL OTHER FEES. All otherIn 2014, the Company paid EY $6,300 for their testimony in a litigation proceeding. In 2013, the Company paid KPMG $34,500 for fees principally consist of costs related to the Merger.merger associated with the transition of audit firms.
The Audit and Finance Committee's policy is to require the pre-approval of all audit and non-audit services provided to the Company by its independent registered public accounting firm (except for items exempt from pre-approval requirements under applicable laws and rules). All audit and non-audit services for 20132014 were pre-approved by the Audit and Finance Committee.
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM(ITEM (ITEM NO. 4)
3)
Our Audit and Finance Committee, pursuant to its charter, has appointed Ernst & Young LLP ("EY") as our independent registered public accounting firm for the fiscal year 2014.2015.
While the Audit and Finance Committee is responsible for the appointment, compensation, retention, termination and oversight of the independent registered public accounting firm, the Audit and Finance Committee and our Board are requesting, as a matter of policy, that the stockholders ratify the appointment of EY as our independent registered public accounting firm. The Audit and Finance Committee is not required to take any action as a result of the outcome of the vote on this proposal. However, if the stockholders do not ratify the appointment, the Audit and Finance Committee may investigate the reasons for stockholder rejection and may consider whether to retain EY or to appoint another independent registered public accounting firm. Furthermore, even if the appointment is ratified, the Audit and Finance Committee in its discretion may direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of our stockholders or the Company.
A formal statement by representatives of EY is not planned for the Annual Meeting. However, EY representatives are expected to be present at the meeting and available to respond to appropriate questions.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE "FOR"
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 20142015
We participate, and some brokerage firms, banks and other nominee record holders may be participating in the practice of "householding" of proxy materials. This means that we are delivering only one copy of the notice and, if applicable, this proxy statement and the annual report to multiple stockholders in the same household. This procedure reduces our printing costs, mailing costs and fees. We will promptly deliver a separate copy of the notice and, if applicable, this proxy statement and the annual report to any stockholder at a shared address to whom we delivered a single copy of any of these documents, upon request by writing or calling us at the following address or phone number: Dex Media, Inc., P.O. Box 619810, 2200 West Airfield Drive, D/FW Airport, Texas 75261, Attention: Investor Relations; (972) 453-7000. Any stockholder who wants to receive separate copies in the future, or who is currently receiving multiple copies and would like to receive only one copy for his or her household, should contact us at the above address and phone number. Stockholders who hold shares in "street name" may contact their brokerage firm, bank or other nominee record holder to request information about householding.
How to Raise a Matter at a Meeting or Nominate Members of the Board of DirectorsHOW TO RAISE A MATTER AT A MEETING OR NOMINATE MEMBERS OF THE BOARD OF DIRECTORS
In order to be included in the Company's proxy materials for the 2015 Annual Meeting2016 annual meeting of Stockholders,stockholders, a stockholder proposal must be received in writing by our Company at Dex Media Inc., 2200 West Airfield Drive, P.O. Box 619810, D/FW Airport, TX 75261, Attention: Corporate Secretary, no later than the close of business on December 4, 2014,21, 2015, and otherwise comply with Rule 14a-8 under the Securities Exchange Act of 1934.
Our Bylaws provide that stockholders may propose business to be conducted at an annual meeting of stockholders and/or nominate individuals to be elected to the Board of Directors at an annual meeting of stockholders if such proposal or nomination is made pursuant to timely notice in writing to the Secretary of the Company at the address set forth on the cover page of this Proxy Statement. To be timely, a stockholder's notice shall be delivered to or mailed and received at the our principal executive offices not less than 90 days nor more than 120 days in advance of the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the 10th day following the day on which notice of the date of the annual meeting was first mailed or public disclosure of the date of the annual meeting was first made, whichever first occurs. Such stockholder's notice shall set forth all of the information described in Section 11 of our Bylaws. A copy of our Bylaws is available upon request by any of our stockholders from the Secretary of the Company.
Your vote is important. Whether or not you plan to attend the Annual Meeting it is importantin person, we encourage you to vote promptly over the Internet, by telephone or, if you requested to receive printed proxy materials, by completing and mailing a proxy card or voting instruction form, so that your shares arewill be represented at the Annual Meeting. Accordingly, we urge you to vote your shares by one of the prescribed methods as soon as possible. Thank you for your prompt attention to this important stockholder responsibility.
By Order of the Board of Directors | ||
Raymond R. Ferrell Executive Vice President, General Counsel and Corporate Secretary |
D/FW Airport, Texas
April 3, 201417, 2015
INFORMATION CONCERNING DEX MEDIA'S 20142015 ANNUAL MEETING OF STOCKHOLDERS
Time and Location. The 20142015 Annual Meeting of Stockholders will begin at 10:309:00 a.m. local time on Wednesday,Thursday, May 14, 2014,28, 2015, at our headquarters at 2200 West Airfield Drive, P.O. Box 619810 D/FW Airport, Texas 7526175261.
Directions.Directions.
Directions from D/FW International Airport | Directions from D/FW International Airport | Directions from Dallas | Directions from D/FW International Airport | Directions from Dallas | ||||||||
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1. | From terminals, take North Exit from Airport (State Hwy -97 Spur North/International Parkway N) | 1. | Take I-35E North toward Denton | From terminals, take North Exit from Airport (State Hwy -97 Spur North/International Parkway N). | 1. | Take I-35E North toward Denton | ||||||
2. | Take ramp right for TX State Hwy -114 West/John W. Carpenter Freeway toward Ft. Worth/ Grapevine | 2. | Keep left to continue on TX-183 W, follow signs for Texas 183/Texas 114/Irving/DFW Airport | Take ramp right for TX State Hwy -114 West/John W. Carpenter Freeway toward Ft. Worth/ Grapevine | 2. | Keep left to continue on TX-183 W, follow signs for Texas 183/Texas 114/Irving/DFW Airport | ||||||
3. | Keep Straight onto TX State Hwy -114 South/TX-114 West/John W. Carpenter Freeway; bear right onto TX-114 West | 3. | Keep right to continue on W State Hwy 114 W/TX-114 W, follow signs for Grapevine/Airport North Entry | Keep Straight onto TX State Hwy -114 South/TX-114 West/John W. Carpenter Freeway; bear right onto TX-114 West | 3. | Keep right to continue on W State Hwy 114 W/TX-114 W, follow signs for Grapevine/Airport North Entry | ||||||
4. | Take exit right on Texan Trail | 4. | Take exit right on Texan Trail | Take exit right on Texan Trail | 4. | Take exit right on Texan Trail | ||||||
5. | Follow the exit ramp to the stop light and turn left | 5. | Follow the exit ramp to the stop light and turn left | Follow the exit ramp to the stop light and turn left | 5. | Follow the exit ramp to the stop light and turn left | ||||||
6. | Proceed until the road ends (approximately a1/2 mile) and turn right onto Airfield Drive | 6. | Proceed until the road ends (approximately a1/2 mile) and turn right onto Airfield Drive | Proceed until the road ends (approximately a1/2 mile) and turn right onto Airfield Drive | 6. | Proceed until the road ends (approximately a1/2 mile) and turn right onto Airfield Drive | ||||||
7. | At the next stop light, turn left onto West Airfield Dr. | 7. | At the next stop light, turn left onto West Airfield Dr. | At the next stop light, turn left onto West Airfield Dr. | 7. | At the next stop light, turn left onto West Airfield Dr. | ||||||
8. | Upon passing three stop lights you will see Dex Media headquarters on your right (across the street from American Airlines hangar) | 8. | Upon passing three stop lights you will see Dex Media headquarters on your right (across the street from American Airlines hangar) | Upon passing three stop lights you will see Dex Media headquarters on your right (across the street from American Airlines hangar) | 8. | Upon passing three stop lights you will see Dex Media headquarters on your right (across the street from American Airlines hangar) | ||||||
9. | Turn into the guard gate and Dex Media headquarters is straight ahead | 9. | Turn into the guard gate and Dex Media headquarters is straight ahead | Turn into the guard gate take an immediate left then take the second right to arrive at the Dex Media headquarters | 9. | Turn into the guard gate take an immediate left then take the second right to arrive at the Dex Media headquarters |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The notice of annual meeting and proxy statement for the |