Broad-Based Benefits Programs and Perquisites
All full-time employees, including our NEOs, may participate in our health and is not entitledwelfare benefit programs, including medical, dental and vision care coverage, disability insurance and life insurance. Our NEOs are also eligible to receive any payments or otherparticipate in our employee stock purchase plan, beginning in fiscal year 2021, on the same terms as our eligible employees. In fiscal year 2020, our NEOs also received certain perquisites and personal benefits under,set forth in the Severance Plan. Under“Summary Compensation Table” below. We provide these benefits to retain and attract talented executives with the Walshskills and experience to further our long-term strategic plan.
NEO Employment Agreement,Agreements and Arrangements
From time to time, we entered into employment agreements and arrangements in order to attract and retain key executives. Mr. Walsh is entitledthe only NEO party to receive payments upon the termination of hisan employment under certain circumstances. These payments are described under "Potential Payments Upon Termination or Change in Control—President and CEOagreement with us.
Joseph A. Walsh Employment Agreement."Agreement
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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.
SECTION 6—OTHER COMPENSATION RELATED ITEMS
2014 Pension Benefits
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 were 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.
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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 were 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 (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 (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.
401(k) plans
Our NEOs participated in the former 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 can elect to contribute to this plan on a pre-tax, post-tax or Roth basis and receive a Company matching contribution at 100% on the first 3% of eligible employee contributions (includes base salary and annual short-term incentives, subject to applicable Internal Revenue Service 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. Although the plan allows for the discretionary match, no supplemental contributions have been made since 2011.
Benefit Programs and Perquisites
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. In December 2014, the Committee reviewed the levels of personal benefits provided to the NEOs and determined that it is in the best interest of the Company and its stockholders to discontinue the financial counseling program effective May 1, 2015, and cash allowance effective December 31, 2014. The Committee agreed to maintain annual physical
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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.
Business Protection Terms
The Named 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, the 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.
Tax Deductibility
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-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-based compensation under Section 162(m).
Stock Ownership Guidelines
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 our other executive officers as defined in Rule 16a-1(f) under the Securities Exchange Act of 1934 (the "Covered Executives"). Under the Executive Guidelines, the Covered 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. The 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
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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.
Hedging Transactions
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 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 Securities and Exchange Commission or subject to Section 18 of the Securities Exchange Act of 1934.
Compensation and Benefits Committee
Thomas D. Gardner, Chairman
Jonathan B. Bulkeley
Thomas S. Rogers
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EXECUTIVE COMPENSATION TABLES
The following tables summarize the 2014 compensation of our Named Executive Officers.
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
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) | |
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Joseph A. Walsh | | | 2014 | | | 25,385 | | | 0 | | | 0 | | | 2,043,340 | | | 0 | | | 0 | | | 497,029 | | | 2,565,753 | |
President and CEO | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Paul D. Rouse | | | 2014 | | | 51,923 | | | 0 | | | 0 | | | 284,323 | | | 0 | | | 0 | | | 779 | | | 337,025 | |
EVP—Chief Financial Officer and Treasurer | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Del Humenik | | | 2014 | | | 562,308 | | | 0 | | | 99,900 | | | 391,911 | | | 835,081 | | | 4,386 | | | 43,259 | | | 1,936,845 | |
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 | | | 2014 | | | 380,385 | | | 0 | | | 0 | | | 0 | | | 250,696 | | | 46,442 | | | 3,419,958 | | | 4,097,480 | |
Former EVP—Operations | | | 2013 | | | 281,015 | | | 11,000 | | | 227,550 | | | 309,692 | | | 941,025 | | | 0 | | | 86,005 | | | 1,856,287 | |
(d)2013 amounts represent the special award to the Named Executive Officers paid in March 2014, based on post-merger integration performance and team selection and retention.
(e)(f) The compensation amounts reported in the "Stock Awards" and "Option/SAR Awards" columns reflect the grant date value of awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("FASB ASC Topic 718") without regard to estimated forfeitures related to service-based vesting conditions. The fair value of a stock award is equal to the closing price of our stock on the grant date. Our Black-Scholes assumptions for financial statement purposes are described in Note 11 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. See "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" above for a further explanation of our long-term incentive awards.
(g)Amounts reported in this column represent the Company's short-term incentive award paid for performance under our STI. The amounts for 2014 performance were paid in March 2015. The amounts for Mr. Jones and Mr. Gatto represent paid amounts at pro-rata target under the Severance Plan. See "Grants of Plan-Based Awards" below and "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" above for further explanation of our annual incentive awards.
Additional plan based amounts reported in this column represent earnings under the 2013-2015 Cash LTIP. The 2013-2015 Cash LTIP comprises a three year measurement period, with each of the fiscal years 2013, 2014, and 2015 representing one measurement period. The amounts for the 2013 performance period were paid in December 2014. See "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" above for further explanation of our long-term incentive awards.
(h)Amounts listed as "Change in Pension Value and Nonqualified Deferred Compensation Earnings" reflect the change during the year in the actual present value of each NEO's pension benefit, if any. For Mr. Jones, the change in the pension plans represents an aggregate decrease of $32,709.
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(i)The "All Other Compensation" column for 2014 includes the following (all amounts in dollars):
| | | | | | | | | | | | | | | | | | | |
| | Financial Planning ($)(1) | | Company Contributions to Savings Plan ($)(2) | | Flexible Allowance ($)(3) | | Physical Examination ($)(4) | | Other ($)(5) | | Total ($)(6) | |
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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 | | | 11,700 | | | 22,000 | | | 0 | | | 7,454,035 | | | 7,487,735 | |
Samuel D. Jones | | | 12,084 | | | 11,700 | | | 14,300 | | | 1,984 | | | 3,982,433 | | | 4,022,501 | |
Frank P. Gatto | | | 11,552 | | | 11,700 | | | 13,000 | | | 1,871 | | | 3,381,835 | | | 3,419,958 | |
(1)Financial planning and tax counseling services, generally provided by The Ayco Company, L.P., to assist executive officers with tax and regulatory compliance. These executive programs will no longer continue as of April 30, 2015.
(2)"Company Contributions to Savings Plan" represent the Company's contributions under our 401(k) Plan, as reported by our plan record keepers prior to audit and any adjustments. The 401(k) plan is a tax-qualified defined contribution plan.
(3)Flexible allowance benefits are paid in cash on a monthly basis and are for use at executive's discretion in lieu of a car allowance or otherwise; this executive program has been discontinued effective December 31, 2014. Under the Walsh Employment agreement, the Company pays Mr. Walsh $2,500 per month to maintain a remote office.
(4)Executive physical benefits are comprised of a thorough annual executive physical exam whereby the Company reimburses $2,000 of the executive's out of pocket expenses above insurance coverage.
(5)Prior to his appointment as our CEO, 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.
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 (a) 2015 deferred pension payments of $1,404,414 and $57,064, under the Management Plan and the 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 Severance Plan, and (f) $33,300 in 2014 post-termination consulting services.
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GRANTS OF PLAN-BASED AWARDS
The following table provides information regarding equity and non-equity incentive plan-based awards granted to each individual included in the Summary Compensation Table (other than Messrs. McDonald, Jones, and Gatto, who separated prior to the awards' grant date) for the year ended December 31, 2014.
GRANTS OF PLAN-BASED AWARDS TABLE—FISCAL 2014
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| |
| |
| |
| |
| | All Other Stock Awards: Number of Shares of Restricted Stock (#) (f) | | All Other Option/SAR Awards: Number of Securities Underlying Options/SARs (#) (g) | |
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| |
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| |
| | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Exercise or Base Price of Option/SAR Awards ($/Sh) (h) | | Grant Date Fair Value of Stock and Option/SAR Awards (i)(2) | |
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Name (a) | |
| | Grant Date (b) | | Threshold ($) (c)(1) | | Target ($) (d)(1) | | Maximum ($) (e)(1) | |
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Joseph A. Walsh | | NQSO | | | 10/14/14 | | | | | | | | | | | | | | | 271,000 | | | 7.54 | | | | |
| | VCP | | | 10/14/14 | | | | | | 6,053,110 | | | | | | | | | | | | | | | 2,043,340 | |
Paul D. Rouse | | NQSO | | | 12/15/14 | | | | | | | | | | | | | | | 30,972 | | | 9.18 | | | | |
| | VCP | | | 12/15/14 | | | | | | 691,784 | | | | | | | | | | | | | | | 284,323 | |
Del Humenik | | STI | | | 01/01/14 | | | 331,500 | | | 510,000 | | | 1,020,000 | | | | | | | | | | | | | |
| | LTI Cash | | | 01/01/14 | | | 562,500 | | | 900,000 | | | 1,575,000 | | | | | | | | | | | | | |
| | NQSO | | | 05/28/14 | | | | | | | | | | | | | | | 25,000 | | | 9.99 | | | 249,750 | |
| | NQSO | | | 12/15/14 | | | | | | | | | | | | | | | 15,486 | | | 9.18 | | | 142,161 | |
| | 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 | | | 01/01/14 | | | 125,000 | | | 200,000 | | | 350,000 | | | | | | | | | | | | | |
| | NQSO | | | 01/02/14 | | | | | | | | | | | | | | | 27,800 | | | 10.25 | | | 284,950 | |
| | NQSO | | | 12/15/14 | | | | | | | | | | | | | | | 19,358 | | | 9.18 | | | 177,706 | |
| | 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 | | | 01/01/14 | | | 156,250 | | | 250,000 | | | 437,500 | | | | | | | | | | | | | |
| | NQSO | | | 12/15/14 | | | | | | | | | | | | | | | 19,358 | | | 9.18 | | | 177,706 | |
| | 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 | | | | | | | | | | | | | |
(1)Amounts shown represent threshold, target and maximum payouts under (a) the STI, (b) 2013-2015 Cash LTIP, and (c) the VCP at grant date value. See "Compensation Discussion and Analysis—Section 4—Compensation Philosophy, Objectives and Programs" above for an explanation of the performance measures, performance objectives and relative weightings used by the Committee to determine actual 2014 payout amounts.
(2)Grant date fair value calculated in accordance with FASB ASC Topic 718.
ADDITIONAL INFORMATION RELATING TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
The following narrative regarding employment 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 above. It should be read in conjunction with the footnotes to those tables and "Compensation Discussion and Analysis" above.
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Employment Agreement and Other Compensation Arrangements. In connection with Mr. Walsh'sWalsh’s appointment as our President and Chief Executive Officer, Mr. Walsh and the Company entered into thean Amended and Restated Employment Agreement, dated as of September 26, 2016 (the “Walsh Employment Agreement”). The Walsh Employment Agreement which provides for an initial term of three years,until December 31, 2019, during which Mr. Walsh is entitled to a base salary at a fixed annual rate and an annual award of one hundred percent of his base salary subject to annual performance objectives. The term of $150,000.employment is automatically extended, upon the same terms and conditions, for successive periods of one year, unless either party gives notice of intention to not renew the employment term. The agreement also provides for a notice and 30-day cure period prior to termination with cause, though the Company may terminate without cause immediately upon written notice. 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 perCompany’s stock option plan and a stipend each 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. Walsh.
On December 19, 2013, the Company entered into the McDonald Employment Agreement with Mr. McDonald, our former President and Chief 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 ensure 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 Analysis—Section 5—Executive Employment and Consulting Agreements" for further details. For a description of Mr. McDonald's severance benefits payouts, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control."
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 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 Upon Termination or Change in Control."
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 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 $16,650, payable on a monthly basis in arrears. See "Compensation Discussion and Analysis—Section 5—Executive Employment and Consulting Agreements" for further details. For a description of Mr. Gatto's severance benefits payouts, see "Executive Compensation Tables—Potential Payments Upon Termination or Change in Control."
OUTSTANDING EQUITY AWARDS
The following table provides information regarding all outstanding stock options and restricted stock units held by each individual included in the Summary Compensation Table as of December 31, 2014.
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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END—FISCAL 2014
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| | Options Awards | | Stock Awards | |
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Name (a) | | Grant Date (b) | | Number of Securities Underlying Unexercised Options (#) Exercisable (c)(1) | | Number of Securities Underlying Unexercised Options (#) Unexercisable (d)(1) | | Option Exercise Price ($) (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) | |
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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 | | | | | | | |
(1)All time-vested stock option grants awarded on September 5, 2013 and January 2, 2014 vest in equal, annual installments over four years, on March 31, of each of 2014, 2015, 2016, and 2017. Mr. Humenik's May 28, 2014, time-vested stock option award vests in equal, annual installments over four years, on March 31, of each of 2015, 2016, 2017, and 2018. All time-vested stock option grants awarded on October 14 and December 15, 2014, vest 100% on December 31, 2017.
(2)All restricted stock grants awarded on September 5, 2013, and January 2, 2014, vest 100% on December 31, 2015. Mr. Humenik's restricted stock grant awarded on May 28, 2014, vests 100% on December 31, 2016.
(3)Value of stock awards is calculated using market closing price of $8.97 as of December 31, 2014, which was the last trading day in the fiscal year 2014.
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.
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OPTION EXERCISES AND STOCK VESTED—FISCAL 2014
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| | Stock Awards | |
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Name | | Number of Shares Acquired on Vesting | | Value Realized on Vesting(1) | |
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Peter J. McDonald | | | 50,000 | | $ | 377,000 | (2) |
Samuel D. Jones | | | 33,300 | | | 282,384 | (3) |
Frank P. Gatto | | | 22,200 | | | 172,938 | (4) |
(1)Represents the number of shares of restricted stock that vested multiplied by the per-share closing price of the Company's common stock on the date each award vested.
(2)This restricted stock award was granted on September 5, 2013, and vested on October 14, 2014, in connection with Mr. McDonald's separation from the Company.
(3)This restricted stock award was granted on September 5, 2013 and vested on November 14, 2014, in connection with Mr. Jones' separation from the Company.
(4)This restricted stock award was granted on September 5, 2013, and vested on October 31, 2014, in connection with Mr. Gatto's separation from the Company.
PENSION BENEFITS
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, 2014, as well as payments made to our Named Executive Officers during 2014.
PENSION BENEFITS—FISCAL 2014
| | | | | | | | | | | | |
Name | | Plan Name | | Number of Years Credited Service(1) | | Present Value of Accumulated Benefit(2) | | Payments During Last Fiscal Year | |
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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 | | | | |
(1)Equal to the number of years credited service under the applicable legacy plan. Participants in the plans do not receive credit for additional years of service other than for determining retirement eligibility.
(2)The present value for pension benefits has been calculated based on the age at which the Named Executive Officer may retire without any reduction in benefits and consistent with the assumptions described in Note 11 to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2013.
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(3)Mr. Humenik had prior service and pension with Dex One; therefore, following the merger of Dex One and SuperMedia, we account for his pension data for this prior service. On October 21, 2008, the Compensation and Benefits Committee of the Board of Directors of Dex One Corporation authorized the freeze of the R.H. Donnelley Retirement Account and the Company's Pension Benefit Equalization Plan effective as of December 31, 2008. In connection with the freeze, all benefit accruals under these plans ceased as of December 31, 2008; however, all plan balances will remain intact and interest credits on participant account balances, as well as service credits for vesting and retirement eligibility, will continue in accordance with the terms of the plans.
(4)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.
(5)Mr. McDonald received the 2014 payment as final distribution of his pension account balance 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.
(6)Following his separation from service, Mr. Jones received a pension payment of $1,232,364 in January 2015 from the Management Plan. Six months after his separation from service, Mr. Jones will receive a pension payment of $237,275 from the Excess Plan.
(7)Following his separation from service, Mr. Gatto received a pension payment of $1,404,414 in January 2015 from the Management Plan. Six months after his separation from service, Mr. Gatto will receive a pension payment of $57,064 from the Excess Plan.
See "Compensation Discussion and Analysis—Section 6—Other Compensation Related Items" above for a further explanation of our pensions.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
President and CEO Employment Agreement
On 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 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 units, representing 50% of the total bonus pool under the VCP.
Under the Walsh Employment Agreement, Mr. Walsh'sWalsh’s employment continues until the earlier of his resignation (with or without good reason), death or disability or termination by the Company (with or without cause). If the Company terminates Mr. Walsh'sWalsh’s employment withoutwith cause, Mr. Walsh resigns without good reason, or Mr. Walsh'sWalsh’s employment terminates because he does not renew his employment term, expires, Mr. Walsh is entitled to receive severance equal tothe following: (i) any unpaid base salary through the date of termination, (ii) reimbursement for any unreimbursed business expenses incurred through the date of termination, (iii) any accrued but unused vacation time in accordance with Companyour policy, (iv) except in the case of termination for cause, any accrued but unpaid bonus for the most recently completed year (or most recently completed period in the case of bonus plans covering periods shorter than a year) under our short term cash incentive plans and (iv)(v) all other payments, benefits or fringe benefits that Mr. Walsh is entitled to receive 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(collectively, (i) through (v) the VCP and the grant of stock options.
“accrued benefits”).