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 Registrant x☒ Filed by a Partyparty other than the Registrant ¨☐
Check the appropriate box:
Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to §240.14a-12 |
FISERV, INC.
(Name of Registrant as Specified inIn Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Thanother than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required. | ||||
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
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(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):
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(4) | Proposed maximum aggregate value of transaction:
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(5) | Total fee paid:
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Fee paid previously with preliminary materials. | ||||
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. | ||||
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255 Fiserv Drive
Brookfield, Wisconsin 53045
April 16, 201411, 2017
You are cordially invited to attend the annual meeting of shareholders of Fiserv, Inc. to be held at our corporate officesoffice in Brookfield, Wisconsin on Wednesday, May 28, 201424, 2017 at 10:00 a.m. This is an important day on the Fiserv calendar, as it is an opportunity to review our financial results and strategic progress in providing our clients, and their customers, innovative technology products and services.
(CT). Information about the meeting and the matters on which shareholders will act is set forth in the accompanying Notice of 2017 Annual Meeting of Shareholders and Proxy Statement. Following action on these matters, we will present a report onYou can find financial and other information about Fiserv in our business activities.Form 10-K for the fiscal year ended December 31, 2016. We welcome your comments or inquiries about our business that would be of general interest to shareholders during the meeting.
We urge you to be represented at the annual meeting, regardless of the number of shares you own or whether you are able to attend the annual meeting in person, by voting as soon as possible. Shareholders can vote their shares via the Internet, by telephone or telephone using the instructions set forth on the enclosedby mailing a completed and signed proxy card. You also may votecard (or voting instruction form if you hold your shares by marking your votes on the enclosed proxy card, signing and dating it, and mailing it in the enclosed envelope.through a broker).
Sincerely,
Jeffery W. Yabuki
President and Chief Executive Officer
2017 Proxy Statement |
Notice of 2017 Annual Meeting of Shareholders
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Time and Date:
TO BE HELD MAY 28, 2014Wednesday, May 24, 2017 at 10:00 a.m. (CT)
To the Shareholders of Fiserv, Inc.:Place:
The annual meeting of shareholders of Fiserv, Inc. will be held at our corporate offices at 255 Fiserv Drive, Brookfield, Wisconsin 53045 on Wednesday, May 28, 2014, at 10:00 a.m. local time for the following purposes, which are set forth more completely in the accompanying proxy statement:
Matters To Be Voted On:
1. |
2. |
3. |
4. | Ratification of appointment of Deloitte & Touche LLP as our independent registered public accounting firm for |
5. |
Any other business as may properly come before the annual meeting or any adjournments or postponements thereof. |
The boardWho Can Vote:
Holders of directors has fixedFiserv stock at the close of business on March 27, 2017.
Date of Mailing:
On April 1, 2014 as11, 2017, we will commence mailing the record date for determining shareholders entitled to notice of Internet availability of proxy materials, or a proxy statement, proxy card and annual report, to vote at, the annual meeting and at any adjournments or postponements thereof.shareholders.
By orderOrder of the boardBoard of directors,Directors,
Lynn S. McCreary
Secretary
April 16, 201411, 2017
Important notice regarding the availability of proxy materials for the shareholder meeting to be held on May 28, 2014:24, 2017: The proxy statement, 2016 Annual Report on Form 10-K and annual reportthe means to security holdersvote by Internet are available at
http://www.proxyvote.com.
2017 Proxy Statement |
Proxy Statement Table of Contents
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Proposal 3. Advisory Vote on Frequency of Shareholder Advisory Vote on Executive Compensation | 61 | |||
Proposal 4. Ratification of the Appointment of Independent Registered Public Accounting Firm | 62 | |||
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2017 Proxy Statement |
Your vote is important. Our Proxy Statement Summary
This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement is included with this notice. To vote your shares, please mark, sign, date and return your proxy card or vote by Internet or telephone as soon as possible.
PROXY STATEMENT
Annual Meeting
Time and Date: | Wednesday, May 24, 2017 at 10:00 a.m. (CT) | |
Place: | Fiserv 255 Fiserv Drive Brookfield, Wisconsin 53045 | |
Record Date: | March 27, 2017 | |
Voting: | Shareholders as of the record date are entitled to vote by Internet at www.proxyvote.com; telephone at1-800-690-6903; completing and returning their proxy card or voter instruction card; or in person at the annual meeting (shareholders who hold shares through a bank, broker or other nominee must obtain a legal proxy from their bank, broker or other nominee granting the right to vote). |
Proxy Statement
This proxy statement is furnished in connection with the solicitation on behalf of the board of directors of Fiserv, Inc., a Wisconsin corporation, of proxies for use at our 2017 annual meeting of shareholders. This proxy statement is being made available to our shareholders entitled to vote at the annual meeting on or about April 11, 2017.
Purposes of Annual Meeting
Agenda Item
| Board Vote
| Page Reference for More Detail
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1. | Election of Directors The board of directors has nominated nine individuals for election as directors. All nominees are currently serving as directors and all, except Mr. Yabuki, our president and chief executive officer, are independent. We believe that each nominee for director has the requisite experience, integrity and sound business judgment to serve as a director.
| FOR each Director Nominee | 11 | |||
2. |
Advisory Vote on Named Executive Officer Compensation The board of directors is asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Our compensation program for named executive officers is designed to create long-term shareholder value by rewarding performance as described in the Compensation Discussion and Analysis section of this proxy statement.
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FOR |
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01 | 2017 Proxy Statement |
Agenda Item
| Board Vote
| Page Reference for More Detail
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3. |
Advisory Vote on Frequency of Shareholder Advisory Vote on Named Executive Officer Compensation The board of directors is asking shareholders to approve, on an advisory basis, the frequency of holding a shareholder advisory vote on the compensation of our named executive officers in accordance with Section 14A of the Exchange Act. Shareholders may vote on whether they prefer to hold the advisory vote on the compensation of our named executive officers every one, two or three years.
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1 YEAR |
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4. |
Ratification of Appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm As a matter of good corporate governance, the audit committee of the board of directors is seeking ratification of its appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017.
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FOR |
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5. |
Shareholder Proposal Seeking an Amendment to our Proxy AccessBy-law(if properly presented) In 2016, we implemented proxy access for director nominations by our shareholders on terms consistent with market practices. Under our proxy accessby-law, any shareholder or group of up to 20 shareholders that beneficially owns at least 3% of our outstanding common stock continuously for 3 years may nominate up to the greater of two individuals or 20% of the board for election to the board and requires us to include such nominees in our proxy materials. Accordingly, we believe no further action is needed and that the change to proxy access that the shareholder proposal seeks is not in the best interests of our company or shareholders.
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AGAINST |
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Executing on Our Strategy
We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 as well as GAAP earnings per share of $4.15 and adjusted earnings per share of $4.43. This represents a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. We also had net cash provided by operating activities of $1.43 billion and free cash flow of $1.08 billion in 2016, a 6% and 8% increase, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. As discussed further in the Compensation Discussion and Analysis section of this proxy statement, our named executive officer compensation for 2016 was paid or awarded in the context of these results.
Internal revenue growth, adjusted earnings per share and free cash flow arenon-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures.
02 | 2017 Proxy Statement |
2016 Governance Highlights
On February 19, 2016, our board of directors amended ourby-laws to implement proxy access in the form that it believes is most appropriate for our company and our shareholders and is consistent with current market practices. Specifically, theby-laws provide that any shareholder or group of up to 20 shareholders that beneficially owns at least 3% of our outstanding common stock continuously for three years and that complies with the procedures set forth in ourby-laws may nominate up to the greater of two individuals or 20% of the board of directors for election to the board and require us to include such nominees in our proxy materials. Our board adopted proxy access after considering various potential formulations of proxy access and engaging with a number of our shareholders who provided valuable feedback on the subject of proxy access.
In addition, in 2016, we added a new independent director to the board, making it the third consecutive year that we have done so.
2016 Compensation Highlights
In 2016, our compensation committee began granting performance share units to certain executive officers. These performance share units have a three-year performance period, and the number of shares issued at vesting will be based on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over such three-year period.
We also amended the employment agreement with Mr. Yabuki in 2016 to provide that he will continue to serve as our president and chief executive officer for at least another three-year term and eliminated his excise taxgross-up benefit. In connection with this amendment, Mr. Yabuki received a grant of performance share units.
We continued to add executive talent to further strengthen the company, including by retaining a new chief financial officer and group president during the year.
We encourage you to review the entire “Compensation Discussion and Analysis” section of this proxy statement as well as the tabular and narrative disclosure under “Executive Compensation.”
03 | 2017 Proxy Statement |
Compensation Practices
What We Do | ||
Our compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives. | ||
We provide cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and strategic performance by delivering incremental value to executive officers to the extent our stock price increases over time. | ||
In 2016, we began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the achievement ofpre-determined performance goals over a three-year period. | ||
We have a stock ownership policy that requires our executive officers to acquire and maintain a significant amount of Fiserv equity to further align their interests with those of our long-term shareholders. | ||
We have a policy that prohibits our executive officers from hedging or pledging Fiserv stock. | ||
We have a compensation recoupment, or “clawback,” policy. |
What We Don’t Do | ||
In 2016, we amended the employment agreements with our chief executive officer to eliminate the excise taxgross-up provisions in those agreements. We do not have excise taxgross-up arrangements with any of our other executive officers, and we have a policy not to enter into such arrangements in the future. | ||
We don’t provide separate pension programs or a supplemental executive retirement plan to our named executive officers. | ||
We generally don’t provide personal-benefit perquisites to our named executive officers. |
04 | 2017 Proxy Statement |
Board Nominees
The board met eight times during 2016 and each of our directors attended 75% or more of the aggregate number of meetings of the board and the committees on which he or she served, in each case while the director was serving on our board of directors during 2016. The following table provides summary information on each director nominee. All candidates were nominated in accordance with the company’s governance guidelines. The terms of Daniel P. Kearney and Thomas C. Wertheimer as directors will end at the 2017 annual meeting of shareholders. For more information about each director nominee, please see their full biographies beginning on page 12.
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Alison Davis | 55 | 2014 | Advisor, Fifth Era | Audit | ||||||||||||||||||||||||||||||||
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John Y. Kim | 56 | 2016 | President, New York Life Insurance Company | Audit | ||||||||||||||||||||||||||||||||
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Dennis F. Lynch | 68 | 2012 | Chairman, Cardtronics plc |
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Denis J. O’Leary | 60 | 2008 | Investor |
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Glenn M. Renwick + | 61 | 2001 | Executive Chairman, The Progressive Corporation | Compensation | ||||||||||||||||||||||||||||||||
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Kim M. Robak + | 61 | 2003 | Partner, Mueller Robak, LLC | | Nominating | | ||||||||||||||||||||||||||||||
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JD Sherman | 51 | 2015 | President and Chief Operating Officer, HubSpot, Inc. | Audit | ||||||||||||||||||||||||||||||||
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Doyle R. Simons | 53 | 2007 | President and Chief Executive Officer, Weyerhaeuser Company | Compensation | ||||||||||||||||||||||||||||||||
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Jeffery W. Yabuki | 57 | 2005 | President and Chief Executive Officer, Fiserv, Inc. | |||||||||||||||||||||||||||||||||
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05 | 2017 Proxy Statement |
The board of directors of Fiserv, Inc., a Wisconsin corporation, is soliciting proxies in connection with our annual meeting of shareholders to be held on Wednesday, May 28, 201424, 2017 at 10:00 a.m. local time,(CT), or at any adjournment or postponement of the meeting. At the meeting,On April 11, 2017, we will vote oncommence mailing the matters described in thisnotice of Internet availability of proxy materials, or a proxy statement, and in the accompanying notice. The annual meeting will be held at our principal executive offices located at 255 Fiserv Drive, Brookfield, Wisconsin 53045. We intend to mail this proxy statement and accompanying proxy card on or about April 16, 2014and annual report, to all shareholders entitled to vote at the annual meeting.
Purposes of Annual Meeting
The annual meeting has been called for the purposes of: electing seven directors to serve for a one-year term; approving, on an advisory basis, the compensation of our named executive officers; ratifying the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2014; voting on a shareholder proposal relating to confidential voting, if properly presented at the annual meeting; and transacting such other business as may properly come before the annual meeting or any adjournments or postponements thereof.
Solicitation of Proxies
We will pay the cost of soliciting proxies on behalf of the board of directors. In addition to the use of mail, our directors, officers and other employees may solicit proxies by personal interview, telephone or electronic communication. None of them will receive any special compensation for these efforts. We have retained the services of Georgeson Inc. (“Georgeson”) to assist us in soliciting proxies. Georgeson may solicit proxies by personal interview, mail, telephone or electronic communications. We expect to pay Georgeson its customary fee, approximately $10,000, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. We also have made arrangements with brokerage firms, banks, nominees and other fiduciaries to forward proxy materials to beneficial owners of shares. We will reimburse such record holders for the reasonable out-of-pocket expenses incurred by them in connection with forwarding proxy materials.
Proxies
You should complete and return the accompanying form of proxy regardless of whether you attend the annual meeting in person. You may revoke your proxy at any time before it is exercised by: giving our corporate Secretary written notice of revocation; giving our corporate Secretary a properly executed proxy of a later date; or attending the annual meeting and voting in person; provided that, if your shares are held of record by a broker, bank or other nominee, you must obtain a proxy issued in your name from the record holder. Written notices of revocation and other communications with respect to the revocation of proxies should be addressed to Lynn S. McCreary, Executive Vice President, General Counsel and Secretary, Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045.
The persons named as proxies in the accompanying proxy card have been selected by the board of directors and will vote shares represented by valid proxies. All shares represented by valid proxies received and not revoked before they are exercised will be voted in the manner specified in the proxies. If nothing is specified, the proxies will be voted: to elect each of the board’s nominees for director; to approve the compensation of our named executive officers as disclosed in this proxy statement; to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm; and against the shareholder proposal relating to confidential voting, if properly presented at the annual meeting. Our board of directors is unaware of any other matters that may be presented for action at our annual meeting. If other matters do properly come before the annual meeting or any adjournments or postponements thereof, it is intended that shares represented by proxies will be voted in
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Notice of Internet Availability of Proxy Materials In accordance with rules and regulations adopted by the Securities and Exchange Commission, we may furnish our proxy statement and annual report to shareholders of record by providing access to those documents via the Internet instead of mailing printed copies. The notice you received regarding the Internet availability of our proxy materials (the “Notice”) provides instructions on how to access our proxy materials and cast your vote over the Internet, by telephone or by mail. Shareholders’ access to our proxy materials via the Internet allows us to reduce printing and delivery costs and lessen adverse environmental impacts. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the Notice for requesting those materials. Solicitation of Proxies We will pay the cost of soliciting proxies on behalf of the board of directors. Our directors, officers and other employees may solicit proxies by mail, personal interview, telephone or electronic communication. None of them will receive any special compensation for these efforts. We have retained the services of Georgeson LLC (“Georgeson”) to assist us in soliciting proxies. Georgeson may solicit proxies by personal interview, mail, telephone or electronic communications. We expect to pay Georgeson its customary fee, approximately $10,000, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. We also have made arrangements with brokerage firms, banks, nominees and other fiduciaries to forward proxy materials to beneficial owners of shares. We will reimburse such record holders for the reasonable out-of-pocket expenses incurred by them in connection with forwarding proxy materials. Proxies solicited hereby will be | tabulated by an inspector of election, who will be designated by the board of directors and will not be an employee or director of Fiserv, Inc. Holders Entitled to Vote The board of directors has fixed the close of business on March 27, 2017 as the record date for determining the shareholders entitled to notice of, and to vote at, the annual meeting. On the record date, there were 213,076,941 shares of common stock outstanding and entitled to vote, and we had no other classes of securities outstanding. All of these shares are to be voted as a single class, and you are entitled to cast one vote for each share you held as of the record date on all matters submitted to a vote of shareholders. Voting Your Shares You may vote: By Internet Visit www.proxyvote.com By telephone Dial toll-free 1-800-690-6903 By mailing your proxy card If you requested a printed copy of the proxy materials, mark your vote on the proxy card, sign and date it, and return it in the enclosed envelope. In person If you are a shareholder of record you may join us in person at the annual meeting to be held at our Brookfield, Wisconsin headquarters. |
06 | 2017 Proxy Statement |
the discretion of the proxy holders. Proxies solicited hereby will be returned to the board of directors and will be tabulated by an inspector of election, who will not be an employee or director of Fiserv, Inc., designated by the board of directors.
Voting through the Internet or by telephone. You may direct your vote by proxy without attending the annual meeting. You can vote by proxy over the Internet or by telephone until 11:59 p.m. (ET) on May 23, 2017 by following the instructions provided in the Notice. Shareholders voting via the Internet or by telephone will bear any costs associated with electronic or telephone access, such as usage charges from Internet access providers and telephone companies. Voting by proxy card. If you requested a printed copy of the proxy materials, you may vote by returning a proxy card that is properly signed and completed. The shares represented by that card will be voted as you have specified. Banks, brokers or other nominees.Shareholders who hold shares through a bank, broker or other nominee may vote by the methods that their bank or broker makes available, in which case the bank or broker will include instructions with the Notice or this proxy statement. If you wish to vote in person at the annual meeting, you must obtain a legal proxy from your bank, broker or other nominee giving you the right to vote the shares at the annual meeting. 401(k) savings plan.An individual who has a beneficial interest in shares of our common stock allocated to his or her account under the Fiserv, Inc. 401(k) savings plan may vote the shares of common stock allocated to his or her account. We will provide instructions to participants regarding how to vote. If no direction is provided by the participant about how to vote his or her shares by 11:59 p.m. (ET) on May 21, 2017, the trustee of the Fiserv, Inc. 401(k) savings plan will vote the shares in the same manner and in the same proportion as the shares for which voting instructions are received from other participants, except that the trustee, in the exercise of its fiduciary duties, may determine that it must vote the shares in some other manner. Proxies Jeffery W. Yabuki, President and Chief Executive Officer, and Lynn S. McCreary, Chief Legal Officer and Secretary, have been selected by the board of directors as proxy holders and will vote shares represented by valid proxies. All shares represented | by valid proxies received and not revoked before they are exercised will be voted in the manner specified in the proxies. If nothing is specified, the proxies will be voted: “FOR” each of the board’s nominees for director; “FOR” proposals two and four; “1 YEAR” for proposal three; and “AGAINST” proposal five, if properly presented at the annual meeting. Our board of directors is unaware of any other matters that may be presented for action at our annual meeting. If other matters do properly come before the annual meeting or any adjournments or postponements thereof, it is intended that shares represented by proxies will be voted in the discretion of the proxy holders. You may revoke your proxy at any time before it is exercised by doing any of the following: • entering a new vote using the Internet or by telephone • giving written notice of revocation to Lynn S. McCreary, Chief Legal Officer and Secretary, Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045 • submitting a subsequently dated and properly completed proxy card • attending the annual meeting and voting in person However, if your shares are held of record by a bank, broker or other nominee, you must obtain a proxy issued in your name from the record holder. Quorum The presence, in person or by proxy, of at least a majority of the outstanding shares of common stock entitled to vote at the annual meeting will constitute a quorum for the transaction of business. Holders of shares that abstain from voting or that are subject to a broker non-vote will be counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business. In the event there are not sufficient votes for a quorum or to approve a proposal at the time of the annual meeting, the annual meeting may be adjourned or postponed, in our sole discretion, in order to permit the further solicitation of proxies. |
Record Date and
07 | 2017 Proxy Statement |
Required Vote
The board of directors has fixed the close of business on April 1, 2014 as the record date for determining shareholders entitled to notice of, and to vote at, the annual meeting. On the record date, there were 251,438,243 shares of common stock outstanding and entitled to vote, and we had no other classes of securities outstanding. All of these shares are to be voted as a single class, and each holder is entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. The presence, in person or by proxy, of at least a majority of the outstanding shares of common stock entitled to vote at the annual meeting will constitute a quorum for the transaction of business. Holders of shares that abstain from voting or that are subject to a broker non-vote will be counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business. In the event there are not sufficient votes for a quorum or to approve a proposal at the time of the annual meeting, the annual meeting may be adjourned or postponed, in our sole discretion, in order to permit the further solicitation of proxies.
Directors will be elected by a majority of votes cast at the annual meeting. A description of the majority voting provisions in our by-laws appears below under the heading “Election of Directors – Majority Voting.” For each of Proposals 2, 3 and 4 to be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal.
Proposal | Voting Standard | |||||
1. | Election of directors | A director will be elected if the number of shares voted “for” that director’s election exceeds the number of votes cast “withheld” with respect to that director’s election. | ||||
2. | To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement | To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. | ||||
3. | To approve, on an advisory basis, the frequency of holding a shareholder advisory vote on the compensation of our named executive officers in accordance with Section 14A of the Exchange Act | The alternative receiving the greatest number of votes – every one, two or three years – will be the frequency that shareholders approve on an advisory basis. | ||||
4. | To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017 | To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. | ||||
5. | To vote on a shareholder proposal seeking an amendment to our proxy access by-law, if properly presented at the annual meeting | To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. |
For each of these proposals, abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.
Voting
Shareholders can appoint a proxy by: marking their vote on their proxy card, signing and dating it, and returning it promptly in the enclosed envelope, which requires no postage if mailed in the United States; calling a toll-free number in accordance with the instructions on their proxy card; or voting on-line in accordance with the instructions on their proxy card.
Shareholders who hold shares through a bank, broker or other record holder may vote by the methods that their bank or broker makes available, in which case the bank or broker will include instructions with this proxy statement. Shareholders voting via the Internet or by telephone will bear any costs associated with electronic or telephone access, such as usage charges from Internet access providers and telephone companies.
An individual who has a beneficial interest in shares of our common stock allocated to his or her account under the Fiserv, Inc. 401(k) savings plan may vote the shares of common stock allocated to his or her account. We will provide instructions to participants regarding how to vote. If no direction is provided by the participant about how to vote his or her shares, the trustee of the Fiserv, Inc. 401(k) savings plan will vote the shares in the same manner and in the same proportion as the shares for which voting instructions are received from other participants, except that the trustee, in the exercise of its fiduciary duties, may determine that it must vote the shares in some other manner.
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08 | 2017 Proxy Statement |
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information with respect to the beneficial ownership of our common stock as of March 21, 201414, 2017 by: each current director and director nominee; each executive officer appearing in the Summary Compensation Table; all directors and executive officers as a group; and any person who is known by us to beneficially own more than 5% of the outstanding shares of our common stock based on our review of the reports regarding ownership filed with the Securities and Exchange Commission in accordance with Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (the “Exchange Act”). In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis.
Name and Address of Beneficial Owner(1) | Number of Shares of Common Stock Beneficially Owned(2) | Percent of Class(3) | ||||||
T. Rowe Price Associates, Inc.(4) 100 E. Pratt Street Baltimore, Maryland 21202 | 34,976,775 | 13.9 | % | |||||
The Vanguard Group, Inc.(5) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 17,751,429 | 7.1 | % | |||||
BlackRock, Inc.(6) 40 East 52nd Street New York, New York 10022 | 13,751,564 | 5.5 | % | |||||
FMR LLC Edward C. Johnson 3d(7) 245 Summer Street Boston, Massachusetts 02210 | 13,222,906 | 5.3 | % | |||||
Jeffery W. Yabuki | 2,963,907 | 1.2 | % | |||||
Thomas J. Hirsch | 493,506 | * | ||||||
Mark A. Ernst | 188,531 | * | ||||||
Rahul Gupta | 259,032 | * | ||||||
Byron C. Vielehr | — | * | ||||||
Donald F. Dillon | 3,815,174 | 1.5 | % | |||||
Christopher M. Flink | 3,086 | * | ||||||
Daniel P. Kearney | 75,074 | * | ||||||
Dennis F. Lynch | 5,846 | * | ||||||
Denis J. O’Leary | 67,430 | * | ||||||
Glenn M. Renwick | 123,645 | * | ||||||
Kim M. Robak | 74,399 | * | ||||||
Doyle R. Simons | 63,155 | * | ||||||
Thomas C. Wertheimer | 50,819 | * | ||||||
All directors and executive officers as a group (17 people) | 8,365,389 | 3.3 | % |
Name and Address of Beneficial Owner(1)
| Number of Shares of
| Percent of Class(3)
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T. Rowe Price Associates, Inc.(4) 100 E. Pratt Street Baltimore, Maryland 21202 | 30,526,773 | 14.3% | ||||||||||
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The Vanguard Group, Inc.(5) 100 Vanguard Blvd. Malvern, Pennsylvania 19355 | 20,527,961 | 9.6% | ||||||||||
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BlackRock, Inc.(6) 55 East 52nd Street New York, New York 10055 | 15,357,733 | 7.2% | ||||||||||
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Jeffery W. Yabuki | 2,602,437 | 1.2% | ||||||||||
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Robert W. Hau | — | * | ||||||||||
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Thomas J. Hirsch(7) | 44,033 | * | ||||||||||
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Mark A. Ernst | 468,785 | * | ||||||||||
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Devin B. McGranahan | 15,000 | * | ||||||||||
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Byron C. Vielehr | 128,134 | * | ||||||||||
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Alison Davis | 6,412 | * | ||||||||||
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Daniel P. Kearney | 65,735 | * | ||||||||||
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John Y. Kim | 359 | * | ||||||||||
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Dennis F. Lynch | 21,521 | * | ||||||||||
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Denis J. O’Leary | 74,315 | * | ||||||||||
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Glenn M. Renwick | 142,608 | * | ||||||||||
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Kim M. Robak | 70,602 | * | ||||||||||
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JD Sherman | 3,841 | * | ||||||||||
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Doyle R. Simons | 81,799 | * | ||||||||||
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Thomas C. Wertheimer | 61,316 | * | ||||||||||
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All directors and executive officers as a group (19 people) | 4,015,220 | 1.8% | ||||||||||
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* Less than 1%.
(1) | Unless otherwise indicated, the address for each beneficial owner is care of Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045. |
(2) | All information with respect to beneficial ownership is based upon filings made by the respective beneficial owners with the Securities and Exchange Commission or information provided to us by such beneficial owners. Except as indicated in the footnotes to | ` | this table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws. Includes stock options, which, as of March 14, 2017, were exercisable currently or within 60 days: Mr. Yabuki – 2,255,734; Mr. Hirsch – 29,606; Mr. Ernst – 411,246; Mr. Vielehr – 118,405; |
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09 | 2017 Proxy Statement |
Includes stock options, which, as of March 21, 2014, were exercisable currently or within 60 days: Mr. Yabuki – 2,770,624; Mr. Hirsch – 452,176; Mr. Ernst – 153,054; Mr. Gupta – 214,764; Mr. Dillon – 42,524; Mr. Flink – 2,320; Mr. Kearney – 42,524; Mr. Lynch – 4,394; Mr. O’Leary – 33,822; Mr. Renwick – 49,368; Ms. Robak – 36,388; Mr. Simons – 35,508; Mr. Wertheimer – 36,388; and all directors and executive officers as a group – 4,024,696. Includes restricted stock units, which, as of March 21, 2014, were due to vest within 60 days: Mr. Gupta – 1,594 and all directors and executive officers as a group – 3,566.
Includes shares deferred under vested restricted stock units: Mr. Hirsch – 16,944; Mr. Kearney – 9,758; Mr. Lynch – 1,452; Mr. O’Leary – 8,068; Mr. Renwick – 11,558; Ms. Robak – 5,504; Mr. Simons – 11,558; and all directors and executive officers as a group – 64,842. Also includes shares eligible for issuance pursuant to the non-employee director deferred compensation plan: Mr. Kearney – 13,448; Mr. O’Leary – 13,038; Mr. Renwick – 16,425; Ms. Robak – 5,833; Mr. Simons – 14,839; and all directors as a group – 63,583.
Mr. Dillon is a trustee of the Dillon Foundation which holds 267,500 shares of our common stock. Mr. Kearney is a trustee of the Daniel and Gloria Kearney Foundation which holds 3,400 shares of our common stock. Mr. Yabuki is a trustee of the Yabuki Family Foundation which holds 23,600 shares of our common stock. As a trustee, Mr. Dillon, Mr. Kearney or Mr. Yabuki, as applicable, has voting and investment power over the shares held by the foundation. These shares are, accordingly, included in their respective reported beneficial ownership.
Ms. Davis – 4,842; Mr. Kearney – 29,387; Mr. Lynch – 16,271; Mr. O’Leary – 37,045; Mr. Renwick – 48,265; Ms. Robak – 28,647; Mr. Sherman – 1,393; Mr. Simons – 47,385; Mr. Wertheimer – 43,169; and all directors and executive officers as a group – 3,244,734. |
Includes shares deferred under vested restricted stock units: Mr. Hirsch – 6,992; Ms. Davis – 1,486; Mr. Kearney – 13,556; Mr. Lynch – 5,250; Mr. O’Leary – 11,866; Mr. Renwick – 15,356; Ms. Robak –7,404; Mr. Simons – 15,356; and all directors and executive officers as a group – 70,274. |
Also includes shares eligible for issuance pursuant to thenon-employee director deferred compensation plan: Mr. Kearney – 13,448; Mr. Kim – 359; Mr. O’Leary – 16,502; Mr. Renwick – 19,713; Ms. Robak – 7,479; Mr. Simons – 17,808; and all directors as a group – 75,309. |
Mr. Kearney is a trustee of the Daniel and Gloria Kearney Foundation which holds 3,400 shares of our common stock. Mr. Yabuki is a trustee of the Yabuki Family Foundation which holds 60,214 shares of our common stock. As a trustee, Mr. Kearney or Mr. Yabuki, as applicable, has voting and investment power over the shares held by the foundation. These shares are, accordingly, included in their respective reported beneficial ownership. |
(3) | On March |
(4) | Based on a Schedule 13G filed by T. Rowe Price Associates, Inc. (“Price Associates”) on February |
Exchange Commission, which indicates that these securities are owned by various individual and institutional investors for which Price Associates serves as investment adviser and with power to direct investments and/or sole power to vote the securities. According to the Schedule 13G, Price Associates exercises sole voting power over |
(5) | Based on a Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard Group”) on February |
(6) | Based on a Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on January |
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(7) | Mr. Hirsch served as our chief financial officer and treasurer until March 14, 2016 and is not included in the amounts shown above for all directors and executive officers as a group. |
10 | 2017 Proxy Statement |
MATTERS TO BE VOTED ON AT THE ANNUAL MEETING Proposal 1. Election of Directors
PROPOSAL 1
ELECTION OF DIRECTORS
Historically, the terms of service of directors were staggered in three groups, and directors elected at each annual meeting (or such directors’ successors) were elected to hold office for a term expiring at the annual meeting held in the third year following the year of their election and until their successors had been elected and qualified. At our 2012 annual meeting of shareholders, our shareholders approved an amendment to our articles of incorporation that will result in the declassification of our board of directors. At this annual meeting of shareholders, shareholders will vote upon seven director nominees to hold office for a term expiring at the 2015 annual meeting of shareholders and until their successors have been elected and qualified. At the 2015 annual meeting of shareholders and each annual meeting of shareholders thereafter, allAll directors will be elected to hold office for a term expiring at the next annual meeting of shareholders and until their successors have been elected and qualified.
All of the nominees for election as director at the annual meeting are incumbent directors. No nominee for director has been nominated pursuant to any agreement or understanding between us and any person, and there are no family relationships among any of our directors or executive officers. These nominees have consented to serve as a director if elected, and management has no reason to believe that any nominee will be unable to serve. Unless otherwise specified, the shares of common stock represented by the proxies solicited hereby will be voted in favor of the nominees proposed by the board of directors. In the event that any director nominee becomes unavailable for re-election as a result of an unexpected occurrence, shares will be voted for the election of such substitute nominee, if any, as the board of directors may propose. The affirmative vote of a majority of votes cast is required for the election of directors. A description of the majority voting provisions in our by-laws appears below under the heading “– Majority Voting.”
Nominees for Election
Each person listed below is nominated for election to serve as a director until the next annual meeting of shareholders and until his or her successor is elected and qualified.The board of directors recommends that you vote in favor of its nominees for director.
Christopher M. Flink (age 42) has been a director since 2012. Mr. Flink is a partner at the innovation and design firm IDEO where he leads key client relationships, guiding portfolios of innovation projects in retail, education and consumer products. In his 15 years at IDEO, Mr. Flink has held a variety of roles, from heading the firm’s Consumer Experience Design practice to co-founding its New York office. Mr. Flink also teaches at Stanford University where he is a lecturer at the Graduate School of Business, a consulting associate professor at the Hasso Plattner Institute of Design (d.school), and a member of the d.school’s leadership team. In the past five years, in addition to Fiserv, Mr. Flink has served on the board of E*TRADE Financial Corporation (current), a publicly traded financial services company. The board concluded that Mr. Flink should be a director of the company because of his strong understanding of innovative technologies and his nearly 20 years of experience helping companies of all kinds innovate and grow.Principal Occupation: Partner, IDEO.
Dennis F. Lynch(age 65) has been a director since 2012. Mr. Lynch is Chairman of Cardtronics, Inc., a publicly traded company and the largest owner and operator of retail ATMs worldwide. He was appointed Chairman in 2010 and has served as a director of Cardtronics since 2008. Mr. Lynch is also a director, and former Chairman, of the Secure Remote Payments Council, a cross-industry organization dedicated to accelerating the growth, development and market adoption of more secure ecommerce and mobile payments. He previously served as: Chairman and Chief Executive Officer of RightPath Payments, Inc. from 2005 to 2008; a director of Open Solutions, Inc. from 2005 to 2007; President and Chief Executive Officer of NYCE Corporation from 1996 to
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2004; and Chairman of Yankee 24 ATM Network from 1988 to 1990. In the past five years, in addition to Fiserv, Mr. Lynch has served as a director of Cardtronics, Inc. (current). The board concluded that Mr. Lynch should be a director of the company because he has over 30 years of experience in the payments industry and is a leader in the introduction and growth of payment solutions.Principal Occupation: Chairman, Cardtronics, Inc.
Denis J. O’Leary(age 57) has been a director since 2008. In 2009, Mr. O’Leary became Managing Partner of Encore Financial Partners, Inc., a company focused on the acquisition and management of banking organizations in the United States. From 2006 to 2009, he was a senior advisor to The Boston Consulting Group with respect to the enterprise technology, financial services and consumer payments industries. Through early 2003, he spent 25 years at J.P. Morgan Chase & Company and its predecessors in various capacities, including Director of Finance, Chief Information Officer, Head of Retail Branch Banking, Managing Executive of Lab Morgan, and, from 1994 to 2003, Executive Vice President. In the past five years, in addition to Fiserv, Mr. O’Leary has served on the board of directors of Crowdstrike, Inc. (current), a privately held computer security software company, Hamilton State Bancshares, Inc. (current), a privately held bank holding company, and McAfee, Inc. (former), a formerly publicly traded supplier of computer security solutions. The board concluded that Mr. O’Leary should be a director of the company because of his extensive knowledge of and experience in both the banking and information technology industries.Principal Occupation: Managing Partner, Encore Financial Partners, Inc.
Glenn M. Renwick(age 58) has been a director since 2001. Mr. Renwick is President and Chief Executive Officer of The Progressive Corporation, a publicly traded property and casualty insurance company. Before being named Chief Executive Officer in 2001, Mr. Renwick served as Chief Executive Officer – Insurance Operations and Business Technology Process Leader from 1998 through 2000. Prior to that, he led Progressive’s consumer marketing group and served as president of various divisions within Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida. In the past five years, in addition to Fiserv, Mr. Renwick has served on the board of directors of The Progressive Corporation (current) and UnitedHealth Group Incorporated (current), a publicly traded provider of health insurance. The board concluded that Mr. Renwick should be a director of the company because he is an accomplished business leader with significant information technology experience.Principal Occupation: President and Chief Executive Officer of The Progressive Corporation.
Kim M. Robak (age 58) has been a director since 2003. Since 2004, Ms. Robak has been a partner at Mueller Robak, LLC, a government relations firm. Prior to that, Ms. Robak was Vice President for External Affairs and Corporation Secretary at the University of Nebraska from 1999 to 2004. Ms. Robak served as the Lieutenant Governor of the State of Nebraska from 1993 to 1999, as Chief of Staff from 1992 to 1993, and as Legal Counsel from 1991 to 1992. Prior to 1991, Ms. Robak was a partner at the law firm Rembolt Ludtke Milligan and Berger. During her tenure in state government, she chaired the Governor’s Information Resources Cabinet and led the Information Technology Commission of Nebraska. In the past five years, in addition to Fiserv, Ms. Robak has served on the board of directors of Ameritas Mutual Holding Company (current), a provider of life insurance, annuities, and mutual funds; Union Bank & Trust Company (current), a financial institution; FBL Financial Group, Inc. (former), a publicly traded life insurance holding company; and First Ameritas Life Insurance Corporation of New York (former), a life insurance company. The board concluded that Ms. Robak should be a director of the company because she is an accomplished business person and community leader who brings a variety of experiences to the board through her work in the fields of law, government and technology.Principal Occupation: Partner at Mueller Robak, LLC.
Doyle R. Simons(age 50) has been a director since 2007. Mr. Simons is President and Chief Executive Officer of Weyerhaeuser Company, a publicly traded company focused on timberlands, forest products and homebuilding. Prior to joining Weyerhaeuser in 2013, Mr. Simons served in a variety of roles for Temple-Inland, Inc., a formerly publicly traded manufacturing company focused on corrugated packaging and building products which was acquired in 2012. From 2007 to early 2012, he served as the Chairman and Chief Executive Officer; from 2005 to 2007, he was Executive Vice President; from 2003 to 2005, he served as its Chief Administrative Officer; from 2000 to 2003, he was Vice President – Administration; and from 1994 to 2000, he served as
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Director of Investor Relations. In the past five years, in addition to Fiserv, Mr. Simons has served on the board of directors of Weyerhaeuser Company (current) and Temple-Inland, Inc. (former). The board concluded that Mr. Simons should be a director of the company because he is an accomplished business person with diverse experiences in senior management and financial and legal matters.Principal Occupation: President and Chief Executive Officer of Weyerhaeuser Company.
Thomas C. Wertheimer(age 73) has been a director since 2003. Mr. Wertheimer is a Certified Public Accountant and a retired Senior Audit Partner of PricewaterhouseCoopers (“PwC”). He served as lead audit partner for a number of key multinational and national clients of PwC, including publicly held automotive manufacturing, financial services and retail companies. He also held technical accounting and audit quality positions including Director of Accounting, Auditing and SEC for the Midwest Region of Coopers & Lybrand. Mr. Wertheimer served on the Board of Partners at Coopers & Lybrand from 1995 until its merger with Price Waterhouse in 1998. From 2003 to 2007, he was a consultant to the Public Company Accounting Oversight Board, assisting in designing and executing its program of inspection of registered accounting firms. In the past five years, in addition to Fiserv, Mr. Wertheimer has served on the board of directors of Vishay Intertechnology, Inc. (current), a publicly traded electronic component manufacturer, and Xinyuan Real Estate Co., Ltd. (current), a residential real estate developer in China. The board concluded that Mr. Wertheimer should be a director of the company because of his extensive knowledge of and experience in accounting, auditing and financial reporting matters.Principal Occupation: Financial Consultant.
Continuing Directors
Continuing terms expiring in 2015
Daniel P. Kearney(age 74) has been a director since 1999. Mr. Kearney is a financial consultant and served as Chief Investment Officer of Aetna, Inc. from 1991 to 1998. In 1995, he assumed the additional responsibility of President of Aetna’s annuity, pension and life insurance division, retiring in 1998. Prior to joining Aetna, Mr. Kearney was President and Chief Executive Officer of the Resolution Trust Corporation Oversight Board. Before that, he was a principal at Aldrich, Eastman and Waltch, Inc., a Boston-based pension fund advisor. From 1977 to 1988, Mr. Kearney was with Salomon Brothers, Inc. as Managing Director of its Real Estate Financing Department and a founder of its Mortgage Securities Department, and from 1976 to 1977 he was Associate Director of the United States Office of Management and Budget. He served as President of the Government National Mortgage Association (Ginnie Mae) from 1974 to 1976, Deputy Assistant Secretary of the Department of Housing and Urban Development from 1973 to 1974, and as Executive Director of the Illinois Housing Development Authority from 1969 to 1973. Previously, he was in private law practice in Chicago, Illinois. In the past five years, in addition to Fiserv, Mr. Kearney has served as a director of MGIC Investment Corporation (current), a publicly traded mortgage insurance company, and non-executive Chairman of MBIA, Inc. (current), a publicly traded financial guarantor. The board concluded that Mr. Kearney should be a director of the company because of his over 40 years of experience in the banking, insurance and legal industries.Principal Occupation: Financial Consultant.
Jeffery W. Yabuki (age 54) has been a director and our President and Chief Executive Officer since 2005. Before joining Fiserv, Mr. Yabuki served as Executive Vice President and Chief Operating Officer for H&R Block, Inc., a financial services firm, from 2002 to 2005. From 2001 to 2002, he served as Executive Vice President of H&R Block and from 1999 to 2001, he served as the President of H&R Block International. From 1987 to 1999, Mr. Yabuki held various executive positions with American Express Company, a financial services firm, including President and Chief Executive Officer of American Express Tax and Business Services, Inc. In the past five years, in addition to Fiserv, Mr. Yabuki has served on the board of directors of Ixonia Bancshares, Inc. (current), a privately held banking holding company, and MBIA, Inc. (former), a publicly traded financial guarantor. The board concluded that Mr. Yabuki should be a director of the company because he has extensive senior management experience at a number of large corporations and serves as the chief executive officer of the company.Principal Occupation: President and Chief Executive Officer of Fiserv, Inc.
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Our by-laws provide that each director will be elected by the majority of the votes cast with respect to that director’s election at any meeting of shareholders for the election of directors, other than a contested election. A majority of the votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “withheld” with respect to that director’s election. In a contested election, each director will be elected by a plurality of the votes cast with respect to that director’s election. Once our chairman of the board determines that a contested election exists in accordance with our by-laws, the plurality vote standard will apply at a meeting at which a quorum is present regardless of whether a contested election continues to exist as of the date of such meeting.
Our by-laws further provide that, in an uncontested election of directors, any nominee for director who is already serving as a director and receives a greater number of votes “withheld” from his or her election than votes “for” his or her election will promptly tender his or her resignation. The nominating and corporate governance committee of the board of directors will then promptly consider the tendered resignation, and the committee will recommend to the board whether to accept or reject it. Following the board’s decision, we will promptly file a Current Report on Form 8-K with the Securities and Exchange Commission that sets forth the board’s decision whether to accept the resignation as tendered, including a full explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation. Any director who tenders a resignation pursuant to this provision will not participate in the committee recommendation or the board consideration regarding whether to accept the tendered resignation.
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11 | 2017 Proxy Statement |
PROPOSAL 2
ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Background
We are conducting a non-binding, advisory vote to approve the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, in accordance with Section 14A of the Exchange Act (commonly referred to as “Say-on-Pay”).
Proposed Resolution
We encourage shareholders to review the Compensation Discussion and Analysis beginning on page 21 of this proxy statement as well as the tabular and narrative disclosure under “Compensation of Executive Officers” beginning on page 33. Our compensation program for named executive officers is designed to create shareholder value by rewarding performance and includes the following key factors for 2013:
We grew adjusted earnings per share by 18% and made strategic progress in areas that we believe will enhance our future financial results, including with respectNominees for Election
Each person listed below is nominated for election to the integration of our Open Solutions acquisition and key products and services such as electronic bill payment, mobile banking and person-to-person payments.
The base salaries of our named executive officers were below the 50th percentile of our peers. The total compensation of our chief executive officer was between the 50th and 75th percentile of our peers, and the total compensation of our other named executive officers who served for the full year was generally at or below the 50th percentile of our peers.
We provided compensation in the form of cash incentive awards based on achievement of annual performance goals and long-term equity compensation that promotes sustained financial and operating performance by delivering value to executive officers to the extent our stock price increases over time. Specifically:
More than 80% of the compensation that we paid to our named executive officers was in the form of incentive awards and equity incentive awards comprised more than 70% of the compensation paid to the named executive officers.
More than half of the equity awards that we granted to the named executive officers were in the form of options, which are inherently performance-based and have value to the extent that the price of our stock increases.
We generally did not provide perquisites to our named executive officers in 2013.
We have stock ownership guidelines, which require our executive officers to maintain a substantial investment in Fiserv stock; stock disposition requirements that restrict how much Fiserv stock an executive officer can sell in a specified period; and a compensation recoupment, or “clawback,” policy, all of which we believe align the interests of our named executive officers with those of our shareholders.
The board endorses the compensation of our named executive officers and recommends that you vote in favor of the following resolution:
RESOLVED, that the shareholders hereby approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including under “Compensation Discussion and Analysis” and in the tabular and narrative disclosures under “Compensation of Executive Officers.”
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Vote Required, Effect of Vote and Recommendation of the Board of Directors
To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted in favor of this proposal.
Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any actionserve as a resultdirector until the next annual meeting of the outcome of the vote on this proposal. Although the outcome of this voteshareholders and until his or her successor is advisory, the compensation committee will carefully consider the outcome of the vote when considering future executive compensation decisions to the extent it can determine the cause or causes of any significant negative voting results.
elected and qualified.The board of directors recommends that you vote in favor“FOR” each of Proposal 2.its nominees for director.
Alison Davis, 55 • Director since 2014 • Audit Committee member • Principal occupation: Advisor, Fifth Era • Experience in global financial services, corporate strategy and financial management | Ms. Davis is an advisor to Fifth Era, a firm that invests in and incubates early stage technology companies, and previously served as its Managing Partner from 2011 to 2015. Prior to Fifth Era, she was the Managing Partner of Belvedere Capital Partners, Inc., a private equity firm serving the financial services sector, from 2004 to 2010. Prior to joining Belvedere, she served as Chief Financial Officer for Barclays Global Investors, an institutional asset manager that is now part of BlackRock, Inc., from 2000 to 2003, a senior partner at A.T. Kearney, Inc., a leading global management consulting firm, from 1993 to 2000, and a consultant at McKinsey & Company, another leading global management consulting firm, from 1984 to 1993. In the past five years, in addition to Fiserv, Ms. Davis has served as a director at the following publicly traded companies: Royal Bank of Scotland Group plc (current), a British bank holding company, Unisys Corporation (current), a global information technology company, Ooma, Inc. (current), a consumer telecommunications company, Diamond Foods, Inc. (former), a packaged food company, and Xoom Corporation (former), a digital money transfer provider. The board concluded that Ms. Davis should be a director of the company because of her extensive experience in global financial services, corporate strategy and financial management. | |||||
John Y. Kim, 56 • Director since 2016 • Audit Committee member • Principal occupation: President, New York Life Insurance Company • Experience in the financial services industry | Mr. Kim has served as President of New York Life Insurance Company, a mutual life insurance company, since 2015. Since 2008, Mr. Kim served in various other positions at New York Life, including as its Chief Investment Officer from 2011 to 2015; President of the Investments Group from 2012 to 2015; and Chief Executive Officer and President of New York Life Investments from 2008 to 2012. Prior to joining New York Life in 2008, Mr. Kim was President of Prudential Retirement, a provider of retirement plan solutions, and its predecessor organization, CIGNA Retirement and Investment Services, from 2002 to 2007. Mr. Kim also served as Chief Executive Officer of Bondbook, an electronic bond trading company, from 2001 to 2002; President and CEO of Aeltus Investment Management Inc., now known as ING Investment Management Company, from 1994 to 2000; and Managing Director of Mitchell Hutchins Asset Management, Inc., now part of UBS Global Asset Management, from 1993 to 1994. Mr. Kim also currently serves as a director of New York Life Insurance and Annuity Corporation, a wholly owned life insurance subsidiary of New York Life and registered investment company. Mr. Kim was recommended to the nominating and corporate governance committee by one of the company’s independent directors. The board concluded that Mr. Kim should be a director of the company because of his extensive experience in the financial services industry. |
12 | 2017 Proxy Statement |
Dennis F. Lynch, 68 • Director since 2012 • Compensation Committee and Nominating and Corporate Governance Committee member • Principal occupation: Chairman, Cardtronics plc • Experience in the payments industry | Mr. Lynch is Chairman of Cardtronics plc, a publicly traded company and the largest owner and operator of retail ATMs worldwide. He was appointed Chairman in 2010 and has served as a director of Cardtronics since 2008. Mr. Lynch was also the founding Chairman and, from 2009 to 2015, a board member of the Secure Remote Payments Council, a cross-industry organization dedicated to accelerating the growth, development and market adoption of more secure e-commerce and mobile payments. He previously served as: Chairman and Chief Executive Officer of RightPath Payments, Inc. from 2005 to 2008; a director of Open Solutions, Inc. from 2005 to 2007; President and Chief Executive Officer of NYCE Corporation from 1996 to 2004; and Chairman of Yankee 24 ATM Network from 1988 to 1990. In the past five years, in addition to Fiserv, Mr. Lynch has served as a director of Cardtronics plc (current). The board concluded that Mr. Lynch should be a director of the company because he has over 30 years of experience in the payments industry and is a leader in the introduction and growth of payment solutions. | |||||
Denis J. O’Leary, 60 • Director since 2008 • Audit Committee and Nominating and Corporate Governance Committee member • Principal occupation: Investor • Experience in the banking, technology and information services industries | Mr. O’Leary is a private investor, and from 2009 to 2015, he served as Managing Partner of Encore Financial Partners, Inc., a company focused on the acquisition and management of banking organizations in the United States. From 2006 to 2009, he was a senior advisor to The Boston Consulting Group with respect to the enterprise technology, financial services and consumer payments industries. Through early 2003, he spent 25 years at J.P. Morgan Chase & Company and its predecessors in various capacities, including Director of Finance, Chief Information Officer, Head of Retail Branch Banking, Managing Executive of Lab Morgan, and, from 1994 to 2003, Executive Vice President. Mr. O’Leary also currently serves as a director at CrowdStrike, Inc., a privately held computer security software company, Hamilton State Bancshares, Inc., a privately held bank holding company, and The Warranty Group, Inc., a privately held provider of extended warranty programs and related benefits. The board concluded that Mr. O’Leary should be a director of the company because of his extensive knowledge and experience in the banking, technology and information services industries. |
13 | 2017 Proxy Statement |
Glenn M. Renwick, 61 • Director since 2001 • Compensation Committee chair • Principal occupation: Executive Chairman, The Progressive Corporation • Experience in business leadership and information technology | Mr. Renwick is Executive Chairman of The Progressive Corporation, a publicly traded property and casualty insurance company, and also served as its President and Chief Executive Officer from 2001 to 2016. Before being named Chief Executive Officer in 2001, Mr. Renwick served as Chief Executive Officer – Insurance Operations and Business Technology Process Leader from 1998 through 2000. Prior to that, he led Progressive’s consumer marketing group and served as president of various divisions within Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida. In the past five years, in addition to Fiserv, Mr. Renwick has served as a director at the following publicly traded companies: The Progressive Corporation (current) and UnitedHealth Group Incorporated (current), a provider of health insurance. The board concluded that Mr. Renwick should be a director of the company because he is an accomplished business leader with information technology experience. | |||||
Kim M. Robak, 61 • Director since 2003 • Nominating and Corporate Governance Committee chair • Principal occupation: Partner at Mueller Robak, LLC • Experience in law, government and technology | Ms. Robak has been a partner at Mueller Robak, LLC, a government relations firm, since 2004. Prior to that, Ms. Robak was Vice President for External Affairs and Corporation Secretary at the University of Nebraska from 1999 to 2004. Ms. Robak served as the Lieutenant Governor of the State of Nebraska from 1993 to 1999, as Chief of Staff from 1992 to 1993, and as Legal Counsel from 1991 to 1992. Prior to 1991, Ms. Robak was a partner at the law firm Rembolt Ludtke Milligan and Berger. During her tenure in state government, she chaired the Governor’s Information Resources Cabinet and led the Information Technology Commission of Nebraska. Ms. Robak also currently serves as a director at Ameritas Mutual Holding Company, a privately held provider of life insurance, annuities, and mutual funds, Ameritas Life Insurance Corporation, a privately held life insurance company, and Union Bank & Trust Company, a privately held financial institution. The board concluded that Ms. Robak should be a director of the company because she is an accomplished businessperson who brings a variety of experiences to the board through her work in law, government and technology. |
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JD Sherman, 51 • Director since 2015 • Audit Committee member • Principal occupation: President and Chief Operating Officer, HubSpot, Inc. • Experience in financial management and the information technology industry | Mr. Sherman has served as Chief Operating Officer of HubSpot, Inc., a publicly traded provider of marketing software, since 2012 and as its President since 2014. Prior to joining HubSpot, Mr. Sherman was Chief Financial Officer of Akamai Technologies, Inc., a provider of content delivery network services, from 2005 to 2012. From 1990 to 2005, Mr. Sherman served in various positions at International Business Machines Corporation, an information technology company. In the past five years, in addition to Fiserv, Mr. Sherman has served as a director of Cypress Semiconductor Corporation (former), a publicly traded provider of programmable technology solutions. He also previously served as a director of 3Com Corporation, a former global enterprise networking solutions provider, and AMIS Holdings, Inc., a former designer and manufacturer of mixed-signal and digital products for the automotive, medical, industrial, military and aerospace sectors. The board concluded that Mr. Sherman should be a director of the company because of his strong financial management experience in the information technology industry. | |||||
Doyle R. Simons, 53 • Director since 2007 • Compensation Committee member • Principal occupation: President and Chief Executive Officer, Weyerhaeuser Company • Experience in senior management, financial and legal matters | Mr. Simons is President and Chief Executive Officer of Weyerhaeuser Company, a publicly traded company focused on timberlands and forest products. Prior to joining Weyerhaeuser in 2013, Mr. Simons served in a variety of roles for Temple-Inland, Inc., a formerly publicly traded manufacturing company focused on corrugated packaging and building products which was acquired in 2012. From 2007 to early 2012, he served as the Chairman and Chief Executive Officer; from 2005 to 2007, he was Executive Vice President; from 2003 to 2005, he served as its Chief Administrative Officer; from 2000 to 2003, he was Vice President – Administration; and from 1994 to 2000, he served as Director of Investor Relations. In the past five years, in addition to Fiserv, Mr. Simons has served as a director at the following publicly traded companies: Weyerhaeuser Company (current) and Temple-Inland, Inc. (former). The board concluded that Mr. Simons should be a director of the company because he is an accomplished businessperson with diverse experiences in senior management, financial and legal matters. |
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Jeffery W. Yabuki, 57 • Director since 2005 • Principal occupation: President and Chief Executive Officer, Fiserv, Inc. • Experience in senior management positions including as chief executive officer of the company | Mr. Yabuki has served as our President and Chief Executive Officer since 2005. Before joining Fiserv, Mr. Yabuki served as Executive Vice President and Chief Operating Officer for H&R Block, Inc., a financial services firm, from 2002 to 2005. From 2001 to 2002, he served as Executive Vice President of H&R Block and from 1999 to 2001, he served as the President of H&R Block International. From 1987 to 1999, Mr. Yabuki held various executive positions with American Express Company, a financial services firm, including President and Chief Executive Officer of American Express Tax and Business Services, Inc. Mr. Yabuki also currently serves as a director at Ixonia Bancshares, Inc., a privately held bank holding company. The board concluded that Mr. Yabuki should be a director of the company because he has extensive senior management experience and serves as the chief executive officer of the company. |
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At a Glance
Name | Independent | Audit Committee | Compensation | Nominating and | ||||||||||||||
Daniel P. Kearney Chairman of the Board | ||||||||||||||||||
Alison Davis | ||||||||||||||||||
John Y. Kim | ||||||||||||||||||
Dennis F. Lynch | ||||||||||||||||||
Denis J. O’Leary | ||||||||||||||||||
Glenn M. Renwick | C | |||||||||||||||||
Kim M. Robak | C | |||||||||||||||||
JD Sherman | ||||||||||||||||||
Doyle R. Simons | ||||||||||||||||||
Thomas C. Wertheimer | C | |||||||||||||||||
Jeffery W. Yabuki | ||||||||||||||||||
C = Committee Chair
Director Independence Our board of directors has determined that Alison Davis, Daniel P. Kearney, John Y. Kim, Dennis F. Lynch, Denis J. O’Leary, Glenn M. Renwick, Kim M. Robak, JD Sherman, Doyle R. Simons and Thomas C. Wertheimer are “independent” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). Prior to his resignation on June 21, 2016, our board of directors also determined that Christopher M. Flink was independent within the meaning of that rule. Mr. Yabuki is not independent because he is a current employee of Fiserv. | Board Meetings and Attendance During our fiscal year ended December 31, 2016, our board of directors held eight meetings. Each director attended at least 75% of the aggregate of the number of meetings of the board of directors and the number of meetings held by all committees of the board on which she or he served, in each case while the director was serving on our board of directors. Our directors meet in executive session without management present at each regular meeting of the board of directors. Directors are expected to attend each annual meeting of shareholders. All of the directors serving on the board at the time of our 2016 annual meeting of shareholders attended the meeting. The board of directors considers the performance of the board and of individual directors, and each committee of the board reviews its performance, on an annual basis. |
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Board Leadership We separate the roles of chief executive officer and Chairman of the board to allow our leaders to focus on their respective responsibilities. Our chief executive officer is responsible for setting our strategic direction and providing day-to-day leadership. Our Chairman provides guidance to our chief executive officer, sets the agenda for board meetings and presides over meetings of the full board. Our board recognizes the time, effort and energy that our chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. Our board believes that having separate positions provides a clear delineation of responsibilities for each position and enhances the ability of each leader to discharge his duties effectively which, in turn, enhances our prospects for success. |
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PROPOSAL 3
RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP
Background
The audit committee of the board of directors is directly responsible for the appointment, compensation, retention and oversight of our independent registered public accounting firm. The audit committee has appointed Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2014. Deloitte has served as our independent public accounting firm since 1986. The audit committee, from time to time, evaluates the performance and independence of Deloitte to determine whether we should continue to retain Deloitte. To this end, at least annually, Deloitte makes a presentation to the committee regarding the services it provides, and our chief financial officer provides the committee with his assessment of the firm’s performance. The audit committee is responsible for the audit fee negotiations associated with the retention of Deloitte. In addition, in conjunction with the mandated rotation of Deloitte’s lead engagement partner, the audit committee and its chairman actively participate in the selection of a successor lead engagement partner. The members of the audit committee and the board believe that the continued retention of Deloitte to serve as our independent registered public accounting firm is in the best interests of the company and its shareholders.
A representative of Deloitte is expected to be present at the annual meeting, will have an opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions.
Reasons for the Proposal
Selection of our independent registered public accounting firm is not required to be submitted for shareholder approval, but the audit committee of our board of directors is seeking ratification of its selection of Deloitte as a matter of good corporate practice. If our shareholders do not ratify this selection, the audit committee of the board of directors will consider it a direction to seek to retain another independent public accounting firm. Even if the selection is ratified, the audit committee may, in its discretion, appoint a different independent registered public accounting firm at any time if it determines that such a change would be in our shareholders’ best interests.
Vote Required and Recommendation of the Board of Directors
To ratify the selection of Deloitte as our independent registered public accounting firm, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted to ratify the selection of Deloitte as our independent registered public accounting firm for 2014.
The board of directors recommends that you vote in favor of Proposal 3.
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PROPOSAL 4
SHAREHOLDER PROPOSAL RELATING TO CONFIDENTIAL VOTING
The following proposal was submitted by an individual shareholder and will be voted on at the annual meeting if it is properly presented.The board of directors recommends you vote AGAINST the proposal and asks you to read Fiserv’s Statement in Opposition which follows the proposal.The shareholder’s name, address, and number of shares of common stock held may be obtained upon written request therefor made to our corporate Secretary. The proposal has been included exactly as we received it in accordance with the rules of the Securities and Exchange Commission.
“4 – Confidential Voting
Shareholders request our Board of Directors to take the steps necessary to adopt a bylaw that prior to the Annual Meeting, the outcome of votes cast by proxy on uncontested matters, including a running tally of votes for and against, shall not be available to management or the Board and shall not be used to solicit votes. This enhanced confidential voting requirement should apply to 1) management-sponsored or Board-sponsored resolutions seeking approval of executive pay or for other purposes, including votes mandated under NASD rules; 2) proposals required by law, or the Company’s Bylaws, to be put before shareholders for a vote (e.g., say-on-pay votes); and 3) Rule14a-8 shareholder resolutions included in the proxy.
This enhanced confidential voting requirement shall not apply to elections of directors, or to contested proxy solicitations, except at the Board’s discretion. Nor shall this proposal impede our Company’s ability to monitor the number of votes cast to achieve a quorum, or to conduct solicitations for other proper purposes.
Management is able to monitor voting results and take steps to influence the outcome on matters where they have a direct personal stake such as such as ratification of stock options. As a result, a Yale Law School study concluded: “Management-sponsored proposals (the vast majority of which concern stock options or other bonus plans) are overwhelmingly more likely to win a vote by a very small amount than lose by a very small amount to a degree that cannot occur by chance.”
This proposal should also be more favorably evaluated due to our Company’s clearly improvable corporate governance performance as reported in 2013:
GMI Ratings, an independent investment research firm, rated our company D for accounting. GMI said there were forensic accounting ratios related to asset-liability valuation and expense recognition that had extreme values either relative to industry peers or to our company’s own history.
GMI said the following flagged KeyMetrics raised concerns regarding our board’s ability to maintain effective incentive pay for our company’s top executives:
Did our CEO’s potential cash severance pay exceed 5-times his annual pay?
Did unvested equity pay lapse upon CEO termination?
Did our company disclose specific performance target objectives for our CEO?
Did our company only give long-term incentive pay to our CEO for above-median performance?
In regard to our board our Chairman Donald Dillon, had 18-years long-tenure which usually detracts from director independence. Plus there were two CEOs on our executive pay committee which is like the fox and the hen house: Doyle Simons and Glenn Renwick (committee chairman). GMI said Fiserv had a higher accounting and governance risk than 95% of companies and a higher shareholder class action litigation risk than 97% of all rated companies.
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Returning to the core topic of this proposal from the context of our clearly improvable corporate performance, please vote to protect shareholder value:
Confidential Voting – Proposal 4”
FISERV’S STATEMENT IN OPPOSITION
Our shareholder communications and proxy solicitation methods are designed to foster an open dialogue with our shareholders, while allowing for confidentiality as desired. We believe that the proponent’s proposal would be detrimental to this dialogue and, therefore, is not in our or our shareholders’ best interests. Accordingly, you should vote “against” this proposal.
We communicate with our shareholders and monitor the voting tally for a variety of lawful purposes that we believe are customary and beneficial to shareholders. For example, we may contact shareholders to urge them to submit their proxies to assure a quorum at a shareholder meeting, to ask if they have any questions about the upcoming shareholder meeting or our proxy statement disclosures, or to learn more about their decision-making processes. Preventing our board of directors and management from monitoring our shareholders’ participation in the voting process would hinder our ability to engage in beneficial communications with our shareholders at a time when greater, rather than less, shareholder engagement is important.
In addition, we believe the proposal is unnecessary because a significant majority of our shareholders already vote confidentially or have the means to do so. The significant majority of our shares are held in street name through a broker, bank or other nominee and, as such, these shareholders already have the means to vote confidentially. For shares registered with our transfer agent, a shareholder may attain confidential voting by re-registering their shares in street name.
Finally, we have an obligation to act in the best interests of our company and all of our shareholders. Our board of directors, elected by the shareholders, is charged with supporting management or shareholder proposals which it believes to be in the best interest of our shareholders. Likewise, our board of directors opposes proposals it believes to not be in the best interests of our shareholders. We can most efficiently advocate for or against proposals when we are aware of the voting tally results and are permitted to discuss them with our shareholders.
Vote Required and Recommendation of the Board of Directors
The number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal in order for it to be approved. Unless otherwise specified, the proxies solicited hereby will be voted against the shareholder proposal.
The board of directors recommends that you vote AGAINST Proposal 4.
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CORPORATE GOVERNANCE
Director Independence
Our board of directors has determined that Donald F. Dillon, Christopher M. Flink, Daniel P. Kearney, Dennis F. Lynch, Denis J. O’Leary, Glenn M. Renwick, Kim M. Robak, Doyle R. Simons and Thomas C. Wertheimer are “independent” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). Mr. Yabuki is not independent because he is a current employee of Fiserv.
Meetings and Attendance
During our fiscal year ended December 31, 2013, our board of directors held four meetings. Each director attended at least 75% of the aggregate of the number of meetings of the board of directors and the number of meetings held by all committees of the board on which she or he served, in each case while the director was serving on our board of directors. Directors are expected to attend each annual meeting of shareholders. All of the directors serving on the board at the time of our 2013 annual meeting of shareholders attended the meeting. Our directors meet in executive session without management present at each regular meeting of the board of directors.
Board Leadership
On March 8, 2014, our board of directors appointed Mr. Kearney as the new Chairman of the board of directors effective when the term of our current Chairman, Mr. Dillon, as director ends at the 2014 annual meeting of shareholders.
We separate the roles of chief executive officer and Chairman of the board to allow our leaders to focus on their respective responsibilities. Our chief executive officer is responsible for setting our strategic direction and providing day-to-day leadership. Our Chairman provides guidance to our chief executive officer, sets the agenda for board meetings and presides over meetings of the full board. Our board recognizes the time, effort and energy that our chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. Our board believes that having separate positions provides a clear delineation of responsibilities for each position and enhances the ability of each leader to discharge his duties effectively which, in turn, enhances our prospects for success.
Committees of the Board of Directors
Our board of directors has three standing committees: an audit committee; a compensation committee; and a nominating and corporate governance committee; an audit committee; and a compensation committee. The directors currently serving on these committees satisfy the independence requirements contained inof the NASDAQ Marketplace Rules applicable to such committees, including the enhanced independence requirements for members of the audit committee and compensation committee. Each of these committees has the responsibilities set forth in written charters adopted by the board of directors. We make copies of each of these charters available free of charge on our website at
http://investors.fiserv.com/documents.cfm.corporate-governance.cfm. Other than the text of the charters, we are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this proxy statement.
Nominating and Corporate Governance Committee
Membership and Responsibilities
The nominating and corporate governance committee assists the board of directors to identify and evaluate potential director nominees, and recommends qualified nominees to the board of directors for consideration by
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Audit Committee | ||||
Mr. Wertheimer(Chair) Ms. Davis Mr. Kim(as of February 22, 2017) Mr. O’Leary Mr. Sherman Number of Meetings held in 2016: 7 | Duties: The audit committee’s primary role is to provide independent review and oversight of our financial reporting processes and financial statements, system of internal controls, audit process and results of operations and financial condition. The audit committee is directly and solely responsible for the appointment, compensation, retention, termination and oversight of our independent registered public accounting firm. Each of the members of the audit committee is independent, as defined by applicable NASDAQ and Securities and Exchange Commission rules. The board of directors has determined that Ms. Davis and Messrs. Kim, O’Leary, Sherman and Wertheimer are “audit committee financial experts,” as that term is used in Item 407(d)(5) of Regulation S-K. | |||
Compensation Committee | ||||
Mr. Renwick(Chair) Mr. Lynch Mr. Simons Number of Meetings held in 2016: 5 | Duties: The compensation committee of the board of directors is responsible for overseeing executive officer compensation. The compensation committee’s responsibilities include: approval of executive officer compensation and benefits; administration of our equity incentive plans including compliance with executive stock ownership requirements; and approval of severance or similar termination payments to executive officers. Each of the members of the compensation committee is a non-employee director and “independent” as defined by applicable NASDAQ rules. Additional information regarding the compensation committee and our policies and procedures regarding executive compensation, including, among other matters, our use of compensation consultants and their role, and management’s role, in determining compensation, is provided below under the heading “Compensation Discussion and Analysis – Determining and Structuring Compensation – Determining Compensation.” | |||
Nominating and Corporate Governance Committee | ||||
Ms. Robak(Chair) Mr. Lynch Mr. O’Leary Number of Meetings held in 2016: 4 | Duties: The nominating and corporate governance committee assists the board of directors to identify and evaluate potential director nominees, and recommends qualified nominees to the board of directors for consideration by the shareholders. The nominating and corporate governance committee also oversees our corporate governance policies and practices. Each of the members of the nominating and corporate governance committee is independent as defined by applicable NASDAQ rules. |
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the shareholders. The nominating and corporate governance committee also oversees our corporate governance procedures and manages the board’s annual evaluation of the chief executive officer. The members of the nominating and corporate governance committee are currently Ms. Robak (Chairperson), Mr. Flink, Mr. Kearney and Mr. O’Leary, each of whom is independent. Mr. Kearney will no longer serve on the nominating and corporate governance committee when he becomes Chairman at the 2014 annual meeting of shareholders. The nominating and corporate governance committee held three meetings during 2013.
Nominations of Directors
The nominating and corporate governance committee recommends to the full board of directors the nominees to stand for election at our annual meeting of shareholders and to fill vacancies occurring on the board. In this regard, the nominating and corporate governance committee regularly assesses the appropriate size of the board of directors and whether any vacancies on the board of directors are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the committee utilizes a variety of methods to identify and evaluate director candidates. Candidates may come to the attention of the committee through current directors, professional search firms, shareholders or other persons.
The committee evaluates prospective nominees in the context of the then current constitution of the board of directors and considers all factors it considersbelieves appropriate, which include those set forth in our governance guidelines. Our governance guidelines provide that the membersa majority of our board of directors should have diverse backgrounds with outstanding business experience, proven ability and skills. The diversity that the committee seeks includes diversity of education, professional experience as well as diversity of gender, race and national origin, in order thatsignificant accomplishments through other enterprises to enable the board representsof directors to represent a broad set of skillscapabilities and viewpoints. Other than as set forth in our governance guidelines, the committee does not have a formal policy with respect to diversity. The board of directors and the nominating and corporate governance committee believe the following minimum qualifications must be met by a director nominee to be recommended by the committee:
Each director must display the highest personal and professional ethics, integrity and values.
Each director must have the ability to exercise sound business judgment.
Each director must be highly accomplished in his or her respective field, with strong credentials and broad experience.
Each director must have relevant expertise and experience and be able to offer advice and guidance to our chief executive officer based on that expertise and experience.
Each director must be independent of any particular constituency, be able to represent all of our shareholders, and be committed to enhancing long-term shareholder value.
shareholders, and be committed to enhancing long-term shareholder value. |
In addition, the nominating and corporate governance committee seeks to have at least one director who is an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K under the Exchange Act, and we must have at least one director (who may also be an “audit committee financial expert”) who, in accordance with the NASDAQ Marketplace Rules, has past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.
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In making recommendations to the board of directors, the nominating and corporate governance committee examines each director nomineecandidate on a case-by-case basis regardless of who recommended the nominee.candidate. The committee will consider persons recommended by shareholders to become nominees for election as directorsshareholder-recommended director candidates in accordance with the foregoing and other criteria set forth in our governance guidelines and the Nominating and Corporate Governance Committee Charter. Recommendations for consideration by the committee must be submitted in writing to the chairman of the board and/or president and the chairman of the nominating and corporate governance committee together with appropriate biographical information concerning each proposed candidate. The committee does not evaluate shareholder nomineesshareholder-recommended director candidates differently than any other nominee.director candidate.
PursuantIn 2016, we amended our by-laws to include a provision pursuant to which a shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of our stock representing an aggregate of at least 3% of our outstanding shares may nominate and include in our proxy material director nominees constituting up to 20% of our board of directors – so called
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“proxy access.” Alternatively, a shareholder may nominate director nominees under our by-laws that the shareholder does not intend to have included in our proxy materials. In either case, such shareholders must comply with the procedures set forth in our by-laws, including that the shareholders and nominees satisfy the requirements in our nominatingby-laws and corporate governance committee will consider shareholder nominations for directors if our corporate Secretary receives timely written notice, in proper form, of the intent to make a nomination at aan annual meeting of shareholders. To be in proper form, the notice must, among other matters: list the name and residence address of the person or persons to be nominated; include each nominee’s written consent to be named in our proxy statement and to serve as a director if elected; describe all arrangements or understandings between the nominating shareholder and each nominee, including any understanding with any person as to how such nominee, if elected, will act or vote on any issue or question and all direct and indirect compensation and any other material monetary arrangements during the past three years between the nominating shareholder and its affiliates and each nominee and his or her affiliates; describe information about the nominating shareholder and each nominee; and contain such other information regarding each nominee proposed by such shareholder and any such beneficial owner as would be required to be disclosed in solicitations of proxies for a contested election of directors, or would be otherwise required to be disclosed, in each case pursuant to Section 14 of the Exchange Act. To be timely, the notice must be received by the applicable deadline set forth in our by-laws. The detailed requirements for nominations are set forth in our by-laws, which were attached as an exhibit to our CurrentAnnual Report on Form 8-K10-K filed with the Securities and Exchange Commission on May 24, 2012.February 19, 2016. A copy of our by-laws will be provided upon written request to our corporate Secretary. Additional requirements regarding shareholder proposals includingand director nominations, including the dates by which notices must be received, are described below under the heading ““Other Matters – Shareholder Proposals for the 20152018 Annual Meeting.Meeting.”
Audit Committee
Membership and Responsibilities
The audit committee’s primary role is to provide independent review and oversight of our financial reporting processes and financial statements, system of internal controls, audit process and results of operations and financial condition. In doing so, it is the responsibility of the audit committee to provide an open avenue of communication between the board of directors, management, our internal audit function and our independent auditor. The audit committee is directly and solely responsible for the appointment, compensation, retention, termination and oversight of our independent auditor. The members of the audit committee are Mr. Wertheimer (Chairman), Mr. Kearney and Mr. O’Leary, each of whom is independent as defined by applicable NASDAQ and Securities and Exchange Commission rules. The board of directors has determined that all three of the members of the audit committee are “audit committee financial experts,” as that term is used in Item 407(d)(5) of Regulation S-K. Mr. Kearney will no longer serve on the audit committee when he becomes Chairman at the 2014 annual meeting of shareholders. The board of directors has appointed Mr. Flink to serve on the audit committee effective at the 2014 annual meeting of shareholders. The audit committee held seven meetings during 2013.
Audit Committee Report
In accordance with its written charter, the audit committee provides independent review and oversight of the accounting and financial reporting processes and financial statements of Fiserv, Inc., the system of internal controls that management and the board of directors have established, the audit process and the results of operations of Fiserv, Inc. and its financial condition. Management has the responsibility for preparing the company’s financial statements, and Deloitte & Touche LLP (“Deloitte”), the company’s independent registered public accounting firm, has the responsibility for examining those statements.
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The audit committee has reviewed and discussed with management and Deloitte the audited financial statements of Fiserv, Inc. for the fiscal year ended December 31, 2013. The audit committee has also discussed with Deloitte the matters required to be discussed under Public Company Accounting Oversight Board standards. The audit committee has received the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and has discussed with Deloitte its independence.
The audit committee also discussed with management, the internal auditors and Deloitte the quality and adequacy of the internal controls and internal audit organization, responsibilities, budget and staffing of Fiserv, Inc. The audit committee reviewed with both Deloitte and the internal auditors their respective audit plans, audit scope and identification of audit risks. Based on the above-mentioned reviews and discussions, the audit committee recommended to the board of directors that the audited financial statements of Fiserv, Inc. be included in its Annual Report on Form 10-K for 2013, for filing with the Securities and Exchange Commission.
Thomas C. Wertheimer, Chairman
Daniel P. Kearney
Denis J. O’Leary
Compensation Committee
The compensation committee of the board of directors is responsible for overseeing executive officer compensation. The members of the compensation committee are currently Mr. Renwick (Chairman), Mr. Lynch and Mr. Simons, each of whom is a non-employee director and “independent” as defined by applicable NASDAQ Marketplace Rules. The compensation committee operates under a written charter that identifies its responsibilities which include: approval of executive officer compensation; approval of compensation programs and benefit plans in which our executive officers participate; review of compensation-related risk; administration of our equity incentive plans including compliance with executive share ownership requirements; approval of severance or similar termination payments to executive officers; and oversight of regulatory compliance with respect to compensation matters. The compensation committee held five meetings during 2013. Additional information regarding the compensation committee and our policies and procedures regarding executive compensation, including, among other matters, our use of compensation consultants and management’s role in determining compensation, is provided below under the heading “Compensation Discussion and Analysis – Determining Compensation.”
Risk Oversight
Our management is responsible for managing risks,risk, and our board of directors is responsible for overseeing management. To discharge this responsibility, the board seeks to be informed about the risks facing the company so that it may evaluate actual and potential risks and understand how management is managingaddressing such risks. To this end, the board, as a whole and at the committee level, regularly receives reports from management about risks faced by the company. For example, the board of directors regularly receives reports directly from our chief executive officer about, among other matters, developments in our industry so that the board may evaluate the competitive and other risks faced by the company. In addition, our chief financial officer, at each meeting of the board, presents information regarding our financial performance and condition in an effort to understand financial risks faced by the company. Furthermore, at each meeting, the board receives a cybersecurity update from our chief executive officer, chief risk officer, chief information officer or chief legal officer, or a combination of the foregoing, in each case depending on the focus of the matters under review.
As discussed above, the positions of chief executive officer and Chairman are held by different
individuals. We believe a separate Chairman position enhances the effectiveness of our board’s risk oversight function by providing leadership to the board that is independent from those tasked with managing the risk profile of our company.
The committees of the board also play a critical role in the board’s ability to collect and assess information. The audit committee’s charter charges it with a variety of risk-related oversight duties, including: (i)
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At each of its quarterly meetings, the audit committee receives reports from our chief audit executive regarding significant audit findings during the quarter and management’s responses thereto. In addition, the committee regularly receives reports from our chief compliance officer and chief risk officer. Our chief risk officer leads our enterprise risk and resilience group which is responsible foroperates Fiserv’s enterprise risk management program. The program that encompasses our business continuity planning, incident management, risk assessment, operational regulatory compliance, insurance and information security across all Fiserv businesses and support functions.
In addition, ourOur compensation committee regularly receives reports from our human resources department and our senior management about our compensation programs and policies to enable it to oversee management’s administration of compensation-related risks.
The nominating and corporate governance committee also works closely with our general counselchief legal officer and the members of the board to seek to manage risks associated with director and executive officer succession, the independence of the directors, conflicts of interest and other corporate governance related matters.
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Communications with the Board of Directors
Shareholders may communicate with our board of directors or individual directors by submitting communications in writing to us at 255 Fiserv Drive, Brookfield, Wisconsin 53045, Attention: Lynn S. McCreary, Executive Vice President, General CounselChief Legal Officer and Secretary. Communications will be delivered directly to our board of directors or individual directors, as applicable.
Review, Approval or Ratification of Transactions with Related Persons
A related person transaction is a transaction in which we are proposed to be a participant and in which a related person, such as an executive officer or director, mayWe have a direct or indirect material interest. Our board of directors has adopted a written policy requiring that requires allany related person transactionstransaction that would require disclosure under Item 404(a) of Regulation S-K under the Exchange Act be reviewed and approved by: theby our audit committee of the board of directors; or, if the audit committee is not able to review the transaction for any reason, (e.g., if a majority of its membersour disinterested directors. Compensation matters regarding our executive officers or directors are interested in a transaction), a majority of the disinterested members of the board; or, if the transaction involves thereviewed and approved by
our compensation of an executive officer or director, the compensation committee of the board of directors.committee. The policy also provides that, at least annually, eachany such ongoing, previously approved related person transaction is to be reviewed by the body that originally approved the transaction: to ensure that it is being pursued in accordance with all of the understandings and commitments made at the time that it was previously approved; to ensure that the commitments being made with respect to such transaction are appropriately reviewed and documented; and to affirm the continuing desirability of and need for the related person arrangement. The audit committee (or, as applicable, the board of directors or the compensation committee) will consider all
All relevant factors with respect to a proposed related person transaction and will only approvebe considered, and such a transaction will only be approved if the audit committee determines that the transactionit is in our and our shareholders’ best interests or, if an alternate standard of review is imposed by applicable laws, statutes, governing documents or listing standards, if such alternate standard of review is satisfied.
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Section 16(a) Beneficial Ownership Reporting ComplianceDirector Compensation
Section 16Objectives for Director Compensation
Quality non-employee directors are critical to our success. We believe that the two primary duties of non-employee directors are to effectively represent the long-term interests of our shareholders and to provide guidance to management. As such, our compensation program for non-employee directors is designed to meet several key objectives:
Elements of Director Compensation
The compensation committee of the Exchange Act requiresboard of directors reviews non-employee director compensation every other year and considers our directorsfinancial performance, general market conditions and executive officersnon-employee director compensation at the peer group companies set forth below under “Compensation Discussion and persons who own more than ten percent of a registered classAnalysis – Structuring Compensation – Peer Group.”
We believe that the following components of our director compensation program support the objectives above:
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Non-Employee Director Deferred
Compensation Plan
Under our non-employee director deferred compensation plan, each non-employee director may defer up to 100% of his or her cash fees. Based on his or her deferral election, the director is credited with a number of share units at the time he or she would have otherwise received the portion of the fees being deferred. Share units are equivalent to shares of our common stock except that share units have no voting rights.
Upon cessation of service on the board, the director receives a share of our common stock for each share unit. Shares are received in a lump sum distribution, and any fractional share units are paid in cash. Share units credited to a director’s account are considered awards granted under the Amended and Restated Fiserv, Inc. 2007 Omnibus Incentive Plan (the “Incentive Plan”) and count against that plan’s share reserve.
Stock Ownership Requirements
Under our stock ownership policy, non-employee directors are required by Securitiesto accumulate and Exchange Commission regulationshold our common stock having a market value equal to furnish us with copies of all Section 16 forms they file. To our knowledge, based solely on a reviewat least six times the amount of the copies of such reports furnishedannual board retainer.
Non-employee directors have five years after they become subject to us and written representations from Section 16 reporting persons, we believethe policy to meet the ownership requirements provided that interim ownership milestones are achieved during the five-year period. All non-employee directors are in compliance with our fiscal year ended December 31, 2013, all Section 16 reporting persons complied with all applicable filing requirements.stock ownership policy.
Director Compensation Program
Our 2016 non-employee director compensation program is summarized below on an annualized basis:
Element of Compensation | 2016 | |||||||
Board Retainer | $ | 78,000 | ||||||
Chairman’s Retainer(1) | 145,000 | |||||||
Committee Retainer | ||||||||
Audit | 15,000 | |||||||
Compensation | 15,000 | |||||||
Nominating and Corporate Governance | 15,000 | |||||||
Committee Chair Retainer(1) | ||||||||
Audit | 10,000 | |||||||
Compensation | 10,000 | |||||||
Nominating and Corporate Governance | 10,000 | |||||||
Equity Awards ($)(2) | ||||||||
Stock Options | 86,000 | |||||||
Restricted Stock Units | 86,000 | |||||||
(1) | The Chairman’s retainer is in addition to the standard board retainer, and the committee chair retainer is in addition to the standard committee retainer. |
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AUDIT FEES
Independent Registered Public Accounting Firm and Fees
The following table presents the aggregate fees billed by Deloitte & Touche LLP and related entities (“Deloitte”) for services provided during 2012 and 2013. The 2013 fees were impacted by our acquisition of Open Solutions in early 2013. The audit committee has concluded that Deloitte’s provision of the audit and permitted non-audit services described below is compatible with Deloitte maintaining its independence.
(2) | Upon being elected as a director at our annual meeting of shareholders in 2016, each non-employee director received stock options and restricted stock units each having approximately $86,000 in value. |
2012 | 2013 | |||||||
Audit Fees | $ | 2,035,000 | $ | 2,830,000 | ||||
Audit-Related Fees | 2,906,000 | 3,439,000 | ||||||
Tax Fees | 566,000 | 669,000 | ||||||
All Other Fees | — | 312,000 | ||||||
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Total | $ | 5,507,000 | $ | 7,250,000 | ||||
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Audit Fees. Audit fees are for professional services rendered by Deloitte in connection with the integrated audit of our annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, and other statutory audits.
Audit-Related Fees. Audit-related fees are for professional services rendered by Deloitte for service auditor reports.
Tax Fees. Tax fees are for tax consultations and tax return preparation.
All Other Fees. All other fees are for consulting services.
Pre-Approval Policy
The audit committee has established pre-approval policies and procedures that require audit committee approval of all audit and permitted non-audit services to be provided by its independent registered public accounting firm. In some cases, the audit committee pre-approves particular services, subject to certain monetary limits, after the audit committee is presented with a schedule describing the services to be approved. The audit committee’s pre-approval policies do not permit the delegation of the audit committee’s responsibilities to management. In 2013, the audit committee pre-approved all services provided by our independent registered public accounting firm.
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24 | 2017 Proxy Statement |
2016 Director Compensation
Name
| Fees Earned or Paid in Cash ($)(1)
| Stock Awards ($)(2)
| Option Awards ($)(2)
| Total ($)
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Alison Davis(3) | 93,000 | 86,066 | 86,007 | 265,073 | ||||||||||||||||||||||||||||
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Christopher M. Flink(4) | 51,330 | 86,066 | 86,007 | 223,403 | ||||||||||||||||||||||||||||
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Daniel P. Kearney(5) | 223,000 | 86,066 | 86,007 | 395,073 | ||||||||||||||||||||||||||||
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John Y. Kim(6) | 36,880 | 73,350 | 73,308 | 183,538 | ||||||||||||||||||||||||||||
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Dennis F. Lynch(7) | 94,875 | 86,066 | 86,007 | 266,948 | ||||||||||||||||||||||||||||
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Denis J. O’Leary(8) | 108,000 | 86,066 | 86,007 | 280,073 | ||||||||||||||||||||||||||||
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Glenn M. Renwick(9) | 103,000 | 86,066 | 86,007 | 275,073 | ||||||||||||||||||||||||||||
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Kim M. Robak(10) | 103,000 | 86,066 | 86,007 | 275,073 | ||||||||||||||||||||||||||||
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JD Sherman(11) | 93,000 | 86,066 | 86,007 | 265,073 | ||||||||||||||||||||||||||||
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Doyle R. Simons(12) | 93,000 | 86,066 | 86,007 | 265,073 | ||||||||||||||||||||||||||||
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Thomas C. Wertheimer(13) | 103,000 | 86,066 | 86,007 | 275,073 | ||||||||||||||||||||||||||||
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(1) This column includes the following amounts deferred under our non-employee director deferred compensation plan, a non-qualified defined contribution plan: Mr. Kim ($36,880); Mr. O’Leary ($108,000); Mr. Renwick ($103,000); Ms. Robak ($51,500); and Mr. Simons ($93,000). (2) We granted each non-employee director, other than Mr. Kim, a number of restricted stock units determined by dividing $86,000 by $102.46, the closing price of our common stock on May 18, 2016, the date of the grant, rounded up to the next whole restricted stock unit. Mr. Kim joined the board on July 11, 2016 and we granted him a pro rata number of restricted stock units based on the number of days between his date of election and the date of our next annual meeting of shareholders and using the closing price of our common stock on July 11, 2016 of $110.30. Accordingly, each non-employee director, other than Mr. Kim, received 840 restricted stock units, and Mr. Kim received 665 restricted stock units. The restricted stock units vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. We granted each non-employee director, other than Mr. Kim, a number of stock options determined by dividing $86,000 by a binomial valuation of an option of one share of our common stock on May 18, 2016, the grant date, rounded up to the next whole option. We | granted Mr. Kim a pro rata number of stock options based on the number of days between the date of his election and the date of our next annual meeting of shareholders and using the binomial valuation of an option of one share of our common stock on July 11, 2016, the grant date. Accordingly, we granted an option to purchase 2,589 shares of our common stock at an exercise price of $102.46 to each non-employee director, other than Mr. Kim, and an option to purchase 2,050 shares of our common stock at an exercise price of $110.30 to Mr. Kim. The options vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2016. (3) As of December 31, 2016, Ms. Davis held 7,431 options to purchase shares of our common stock, 4,842 of which were vested, and 840 unvested restricted stock units. (4) On May 18, 2016, Mr. Flink received a grant of restricted stock units and stock options in the manner described in footnote (2) above. Upon Mr. Flink’s resignation from our board of directors on June 21, 2016, these awards |
25 | 2017 Proxy Statement |
terminated without vesting. As of December 31, 2016, Mr. Flink did not hold any options to purchase shares of our common stock or restricted stock units. (5) As of December 31, 2016, Mr. Kearney held 39,634 options to purchase shares of our common stock, 37,045 of which were vested, and 840 unvested restricted stock units. (6) Mr. Kim’s cash compensation includes pro rata compensation for service on the board beginning in the third quarter of 2016. As of December 31, 2016, Mr. Kim held 2,050 options to purchase shares of our common stock, none of which were vested, and 665 unvested restricted stock units. (7) Mr. Lynch’s cash compensation includes pro rata compensation for service on the nominating and corporate governance committee beginning in the fourth quarter of 2016. As of December 31, 2016, Mr. Lynch held 18,860 options to purchase shares of our common stock, 16,271 of which were vested, and 840 unvested restricted stock units. | (8) As of December 31, 2016, Mr. O’Leary held 48,288 options to purchase shares of our common stock, 45,699 of which were vested, and 840 unvested restricted stock units. (9) As of December 31, 2016, Mr. Renwick held 50,854 options to purchase shares of our common stock, 48,265 of which were vested, and 840 unvested restricted stock units. (10) As of December 31, 2016, Ms. Robak held 31,236 options to purchase shares of our common stock, 28,647 of which were vested, and 840 unvested restricted stock units. (11) As of December 31, 2016, Mr. Sherman held 3,982 options to purchase shares of our common stock, 1,393 of which were vested, and 840 unvested restricted stock units. (12) As of December 31, 2016, Mr. Simons held 49,974 options to purchase shares of our common stock, 47,385 of which were vested, and 840 unvested restricted stock units. (13) As of December 31, 2016, Mr. Wertheimer held 50,854 options to purchase shares of our common stock, 48,265 of which were vested, and 840 unvested restricted stock units. |
26 | 2017 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS Proposal 2. Advisory Vote to Approve Executive Compensation
Overview
Background
The Compensation Discussion and Analysis portion of this proxy statement is designedWe are conducting anon-binding, advisory vote to provide you with information regarding our executive compensation philosophy, how we determine and structure executive compensation, including the factors we consider in making compensation decisions, and our executive compensation policies. The Compensation Discussion and Analysis focuses onapprove the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, in accordance with Section 14A of the Exchange Act (commonly referred to as“Say-on-Pay”). Our shareholders previously expressed a preference that we holdSay-on-Pay votes on an annual basis, and our board of directors accordingly determined to holdSay-on-Pay votes every year until the next required advisory vote on the frequency of futureSay-on-Pay votes.
Proposed Resolution
We encourage shareholders to review the Compensation Discussion and Analysis section of this proxy statement as well as the tabular and narrative disclosure under the heading “Executive Compensation.” Our compensation program for 2013, who were:named executive officers is designed to create long-term shareholder value by rewarding performance and includes the following key factors for 2016:
• We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 and a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. Net cash provided by operating activities and free cash flow also increased 6% and 8%, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. Internal revenue growth, adjusted earnings per share and free cash flow arenon-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures. • Our compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives. • We have: (i) a stock ownership policy that requires our executive officers to maintain a substantial investment in Fiserv; (ii) a policy that prohibits executive officers from hedging or pledging our stock; and (iii) a compensation recoupment, or “clawback,” policy, all of which we believe align the interests of our named executive officers with those of our shareholders. • In 2016, we amended the employment agreements with our chief executive officer to eliminate the excise taxgross-up provisions in those agreements. We do not have excise taxgross-up arrangements with any of our other executive officers, and we have a policy not to enter into such arrangements in the future. | • We provided compensation in the form of cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and strategic performance by delivering incremental value to executive officers to the extent our stock price increases over time. Specifically: • Our compensation committee began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the company’s achievement ofpre-determined performance goals over a three-year period. • Not including the grant of performance share units to our chief executive officer in 2016 in connection with the amendment to his employment agreement: • Approximately three-quarters of the compensation that we paid to our named executive officers was in the form of equity, and • Almosttwo-thirds of the aggregate equity awards granted to our named executive officers were in the form of stock options, which deliver value only to the extent that the price of our stock increases, and performance share units. • We generally did not provide perquisites to our named executive officers in 2016. |
27 | 2017 Proxy Statement |
The board endorses the compensation of our named executive officers and recommends that you vote in favor of the following resolution:
“RESOLVED, that the shareholders hereby approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including under the heading ’Compensation Discussion and Analysis’ and in the tabular and narrative disclosures under the heading ’Executive Compensation.’”
Vote Required, Effect of Vote and Recommendation of the Board of Directors
To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, the number of votes cast “for”
the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted in favor of this proposal.
Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any action as a result of the outcome of the vote on this proposal. Although the outcome of this vote is advisory, the compensation committee will carefully consider the outcome of the vote when considering future executive compensation decisions to the extent it can determine the cause or causes of any significant negative voting results.
The board of directors recommends that you vote ”FOR” Proposal 2.
28 | 2017 Proxy Statement |
Compensation Discussion and Analysis
Executive Summary
Named Executive Officer | Title | |||
Jeffery W. Yabuki | President and Chief Executive Officer | |||
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Robert W. Hau | Chief Financial Officer | |||
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Thomas J. Hirsch | Former Chief Financial Officer and Treasurer | |||
Mark A. Ernst | Chief Operating Officer | |||
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Devin B. McGranahan | Group President, | |||
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Byron C. Vielehr | Group President, Depository Institution Services Group | |||
Executive Summary
Overview The Compensation Discussion and Analysis portion of this proxy statement is designed to provide you with information regarding our executive compensation philosophy, how we determine and structure executive compensation, including the factors we consider in making compensation decisions, and our executive compensation policies. The Compensation Discussion and Analysis focuses on the compensation of the executive officers identified above (our “named executive officers”). Several important changes occurred in 2016, including that Mr. Hau began serving as our chief financial officer and treasurer on March 14, 2016, following Mr. Hirsch’s retirement from that position. Mr. Hirsch remained at the company to assist our chief executive officer with special projects and the transition to his successor until his departure on March 31, 2017. In addition, Mr. McGranahan joined Fiserv on October 31, 2016 as a group president. Our Business Our mission is to provide integrated technology and services solutions that enablebest-in-class results for our clients. We pursue this goal with strategies focused on innovative product development, service quality, improved cost effectiveness, aggressive solicitation of new clients and disciplined capital deployment, including strategic acquisitions and divestitures. We face significant competition from domestic and international companies that are aggressive and well financed. Our industry is characterized by rapidly changing technology, evolving industry standards and | frequent new product introductions. In order to implement our strategic plan, we need to assemble and maintain a leadership team with the integrity, skills and dedication to execute our initiatives. We believe that executive officer compensation can be used to help us achieve our objectives by “paying for performance,” thereby aligning the interests of our executive officers with those of our shareholders 2016 Business Highlights We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 as well as GAAP earnings per share of $4.15 and adjusted earnings per share of $4.43. This represents a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. We also had net cash provided by operating activities of $1.43 billion and free cash flow of $1.08 billion in 2016, a 6% and 8% increase, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. Executive officer compensation for 2016 was paid or awarded in the context of these results. Internal revenue growth, adjusted earnings per share and free cash flow arenon-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures. |
Our Business
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Our mission is to provide integrated technology and services solutions to enable best-in-class results for our clients. We pursue this goal with a strategy focused on innovative product and service development, improved cost effectiveness of services, aggressive solicitation of new clients and disciplined capital deployment, including strategic acquisitions and divestitures. We face intense competition from domestic and international companies that are aggressive and well financed. Our industry is characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. In order to implement our strategic plan, we need to assemble and maintain a leadership team with the integrity, skills and dedication to execute our initiatives. We believe that executive officer compensation can be used to help us meet these challenges by “paying for performance,” thereby aligning the interests of our executive officers with those of our shareholders.
Executive Compensation Practices
Our compensation program is designed to create long-term value for our shareholders by rewarding performance and sustainable growth. The tables on the following page summarizetable below summarizes our current compensation practices as well as those practices we have not implemented because we do not believe they advance the goals of our compensation program.
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What We Do | What We Don’t Do | |||||||||
| Our compensation committee | In | ||||||||
| We provide cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and | We don’t provide separate pension programs or a supplemental executive retirement plan to our named executive | ||||||||
| We generally don’t provide personal-benefit perquisites to our named executive officers. | |||||||||
In 2016, we began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the achievement ofpre-determined performance goals over a three-year period. | ||||||||||
We have a stock ownership policy that requires our executive officers to acquire and maintain a significant amount of Fiserv | ||||||||||
| We have a policy that | |||||||||
| We have a compensation recoupment, or |
30 | 2017 Proxy Statement |
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How Pay is Tied to Performance
2013 Business Highlights
In 2013, we grew adjusted earnings per share by 18% and made strategic progress in areas that we believe will enhance our future financial results, including with respect to the integration of our Open Solutions acquisition and key products and services such as electronic bill payment, mobile banking and person-to-person payments. We also continued to enhance our level of competitive differentiation through innovation and integration. As discussed further in this Compensation Discussion and Analysis, executive officer compensation for 2013 was paid or awarded in the context of those results.
20132016 Compensation Matters
We did not increase the base salary of our chief executive officer. He received aFor 2016, we paid cash incentive award equalawards to 108% of hisnamed executive officers below target award because hisalthough we exceeded our target adjusted earnings per share and, if applicable, target consolidated net operating profit performance goal was exceeded. In 2013, the value of equity compensation granted togoals, our chief executive officer as a percentage of his total compensation remained comparable with 2012 and was nearly two and a half times the cash compensation paid to him.
We paid cash incentive awards to other named executive officers at or near target levels because we exceeded the target adjusted earnings per share performance goal, although adjusted internal revenue growth in 2013 wasresults were below target.
Messrs. Hau and McGranahan received equity incentive awards in 2016 as an inducement to join our company and to immediately and strongly align their interests with those of our shareholders. The other named executive officers received annual equity incentive awards in 2013 generally2016 at or above target levels, reflectingwhich included performance share units in the committee’s belief that theircase of Messrs. Ernst and Vielehr. In addition, Mr. Yabuki received a grant of performance will continueshare units in 2016 in connection with the amendment of his employment agreement which extended his employment term for at least three more years and eliminated his excise taxgross-up benefit.
Not including the grant of performance share units to positively impact our future operating results at or above expected levels. Mr. Vielehr joined Fiservchief executive officer in December 2013 and did not
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receive a cash incentive award for 2013 or an annual equity incentive award in 2013. Overall, equity incentive awards comprised more than 70%2016, approximately three-quarters of the compensation paid to the named executive officers in 2013.
As a group, more than 80% of the compensation that we paid to our named executive officers was in the form of incentive awards. In addition, more than halfequity and almosttwo-thirds of the aggregate equity awards that we granted to our named executive officers were in the form of stock options, which are inherently performance-based and havedeliver value only to the extent that the price of our stock increases.increases, and performance share units. In addition, more thanone-quarter of the aggregate annual equity awards granted to Messrs. Ernst and Vielehr were in the form of performance share units which vest only upon the achievement of performance goals over a three-year performance period.
Recent Developments
In 2016, our compensation committee began granting performance share units to certain executive officers. For certain executive officers, the performance share units represent additional compensation; for others they change the overall mix of equity incentive awards granted. The performance share units granted in 2016 have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award. In addition, in 2016, we entered into amendments to the employment agreement and key executive employment and
severance agreement with our chief executive officer. Under the amendments, he will continue to serve as our president and chief executive officer for at least another three-year term, and we eliminated the excise taxgross-up provisions in his agreements.
Determining and Structuring Compensation
Compensation Philosophy and Objectives
The goal of our executive compensation program is the same as our goal for operating our company: to create value for our clients and shareholders. To this end, we design our compensation program to reward our executive officers for sustained financial and operating performance and leadership excellence and to align their interests with those of our shareholders. This design is balanced by below median market compensation when company performance does not meet our goals.
Our executive officers are critical to our long-term success; therefore, we need to be competitive not only in the productswith companies that require talent aligned to our product, technology and services that we offer but also in the quality of our executive officers. Accordingly, weservice roadmaps. We seek to pay our executive officers at levels that are competitive with other employers, who compete with us for talent, both within and outside of our industry, to encouragesecure the best talent possible for all our executive officers to remainstakeholders. Consistent with Fiserv’s “pay for performance” philosophy, the company for long and productive careers. We compensate our executive officers in a manner thatcompensation committee seeks to achieve one or morestructure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance alignment or retention objectives. We also seek to structure our compensation plans in a manner that is understandable to our shareholders and that is consistent with good corporate governance practices.
The goal of our executive compensation program is the same as our goal for operating our company: to create long-term value for our shareholders and clients. To this end, we design our compensation program to reward our executive officers for sustained financial, operating and strategic performance, to align their interests with those of our shareholders, and to encourage them to remain with the company for long and productive careers.
Determining Compensation
The Compensation Committee’s Role
The compensation committee of the board of directors is responsible for overseeingfor:
31 | 2017 Proxy Statement |
With respect to executive officers, at the beginning of each year, the compensation committee sets base salaries, approves cash incentive awards for the cash andprior year’s performance, approves equity incentive awards, and establishes the objective performance targets to be achieved for the year.targets.
Consultants’ Role
The committee did not engage or meet with a compensation consultant in 2013. Management obtained data regarding comparable executive officer compensation pursuant to a standard data subscription with Towers Watson in 2013. As further described herein, management used this data, among other things, to make recommendations to the committee regarding compensation matters.
Management’s Role
Our chief executive officer makes recommendations to our compensation committee concerning the compensation of ourexecutive officers other named executive officers. Our chief executive officer’s recommendations relate only to the compensation of our other named executive officers,than himself, although performance measures included in his recommendations may apply generally to all of our named executive officers. Our chief executive officer does not attend the portion of any compensation committee meeting during which the committee deliberates or votes on matters related specifically to his compensation. WhenFor example, when formulating recommendations to the compensation committee regarding the compensation of a group president, for example, our chief executive officer considers, among other matters,factors, the group’s internal revenue growth, and net operating profit, as well asstrategic progress, talent development, operational excellence and market and other available data. Our chief executive officer annually completes a self-appraisal of his performance. For 2013,2016, his self-
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appraisalself-appraisal focused on strategy,strategic impact, growth, leadershiptalent development, organizational objectivesrisk management and risk.financial results. The appraisal, and the recommendations of the nominating and corporate governance committee, which administers the annual evaluation of the chief executive officer by the board, is considered by the committee in its annual review of our chief executive officer’s performance and compensation. Our chief executive officer does not attend the portion of any compensation committee meeting during which the committee deliberates on matters related specifically to his compensation.
Consultant’s Role
During 2016, the compensation committee engaged Meridian Compensation Partners, LLC (“Meridian”) to advise the committee regarding the design elements of a performance-based equity compensation program. In addition, Meridian provided management with market compensation data and assistance with tally sheet calculations. Management also obtained market compensation data from Willis Towers Watson in 2016 pursuant to a standard data subscription. As further described herein, management used this market data to make recommendations to the committee regarding compensation matters. The committee concluded that management’s work with Meridian
did not impair Meridian’s ability to provide independent advice regarding executive compensation matters because of the de minimis revenue associated with the services that Meridian provided and Meridian’s policies and procedures ensuring independence.
Tally Sheets
The compensation committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of each named executive officer’s compensation, including base salary, annual target cash incentive compensation, annual target equity incentive compensation, value of unvested equity, potential severance, and employer contributions to 401(k) savings plans, allowing the committee to see what an executive officer’s total compensation is and how a potential change to an element of our compensation program would affect an executive officer’s overall compensation.
Shareholder Advisory Vote on Named Executive Officer Compensation
At our 20132016 annual meeting, our shareholders approved, by approximately 95%96% of the votes cast, the compensation of our named executive officers as disclosed in our 20132016 proxy statement. The compensation committee considered the results of the 20132016 advisory vote at its meeting in February 2014 as one factor in evaluating our executive compensation program.2017. Because a substantial majority of our shareholders approved the compensation program described in the proxy statement for the 20132016 annual meeting, the compensation committee did not implement changes to our executive compensation program as a result of the shareholder advisory vote. The compensation committee will continue to consider the results of shareholder advisory votes about our named executive officer compensation.
32 | 2017 Proxy Statement |
Structuring Compensation
Components of Compensation
The elements of compensation that we provided to our named executive officers for 20132016 were base salary, annual cash incentive awards and equity incentive awards:awards.
Type | Elements | Description | ||||||||
Short-Term Compensation | Base Salary | • • • | Fixed annual amount
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Annual Cash Incentive | • |
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Long-Term Compensation | Stock Options and Restricted Stock Units | • |
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Performance Share Units | • | Equity grants where the number of shares issued at vesting is determined by the achievement ofpre-determined financial performance goals |
Base Salary
Base Salary We provide base salary to compensate an executive officer for his or her regular work. When determining base salaries, the compensation committee considers market data, an executive officer’s scope of responsibilities, the market value of their experience, overall effectiveness, and, except in the case of the base salary of our chief executive officer, the recommendations of our chief executive officer. Cash Incentive Award We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our achievement of long-term objectives. We seek to offer cash awards in large enough proportion to base salary to ensure that a significant portion of each executive officer’s cash compensation is “at risk” and payable only upon the achievement of defined objectives. Our compensation committee annually determines the performance goals for and potential amounts of our cash incentive awards. Equity Incentive Award In 2016, we provided compensation to our named executive officers in the form of time-vesting stock options and restricted stock units and, in some cases, performance share units. Stock options deliver compensation to an executive officer only to the extent our stock price increases over the term of the award. Restricted stock units are settled in | shares of common stock upon vesting. We believe restricted stock units serve as a strong reward and retention device, encouraging our executive officers to stay with the company until the restricted stock units vest. The number of shares issued pursuant to performance share units is determined by the achievement ofpre-determined performance goals. We believe that the grants of stock options and restricted stock units in 2016 effectively balanced our objective of focusing our executive officers on delivering long-term value to our shareholders with our objective of providing value to executive officers. Furthermore, we believe the introduction of performance share units in 2016 reinforces ourpay-for-performance philosophy by emphasizing the relationship between compensation and the achievement of long-term performance objectives. Equity awards support our objective of aligning our executive officers’ interests with those of our shareholders by tying the value of this component of compensation to changes in shareholder value. When making equity award decisions, we do not consider existing equity ownership because we do not want to discourage executive officers from holding significant amounts of our common stock. We also do not review realized compensation from prior equity awards when making current compensation decisions. If the value of equity awards granted in prior years increases significantly in future years, we do not believe that this positive development should impact current compensation decisions. |
We provide base salary to compensate an executive officer for his or her regular work. When determining base salaries, the compensation committee considers: market data; company, business unit and individual performance; experience; internal pay equity; promotions; and, except in the case of the base salary of our chief executive officer, the recommendations of our chief executive officer. The committee may vary the amount of base salary for a number of reasons, including an executive officer’s position and responsibilities, our business needs, the tenure of an executive officer, individual performance, and an executive officer’s future potential.
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33 | 2017 Proxy Statement |
Cash Incentive Award
We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our achievement of long-term objectives. We seek to offer cash awards in large enough proportion to base salary to ensure that a significant portion of each executive officer’s cash compensation is “at risk” and payable only upon the achievement of defined objectives. Our compensation committee annually determines the performance goals for and potential amounts of our cash incentive awards.
Equity Incentive Award
We provide compensation to our named executive officers in the form of time-vesting stock options and restricted stock units. Stock options are inherently performance-based because they deliver compensation to an executive officer to the extent our stock price increases over the term of the award. Restricted stock units are units that are settled in shares of common stock upon vesting. We believe restricted stock units serve as a strong reward and retention device, encouraging our executive officers to stay with the company until the restricted stock units vest.
We believe that providing combined grants of stock options and restricted stock units effectively balances our objective of focusing our executive officers on delivering long-term value to our shareholders with our objective of providing value to executive officers. In addition, equity awards support our objective of aligning our executive officers’ interest with those of our shareholders by tying the value of this component of compensation to changes in shareholder value. When making equity award decisions, we do not consider existing stock ownership levels because we do not want to discourage executive officers from holding significant amounts of our common stock. We also do not review “wealth accumulation” analyses from prior equity awards when making current compensation decisions. If the value of equity awards granted in prior years increases significantly in future years, we do not believe that this positive development should impact current compensation decisions.
Mix of Compensation Components
We believe that the mix of compensation that we pay helps us to achieve our compensation objectives.
Components | Objectives | |||
Fixed and variable compensation | We seek to increase the percentage of total pay that is “at risk” as executive officers move to greater levels of responsibility, with direct impact on company results. | |||
Short-term and long-term focus | We seek to create incentives to achieve near-term goals by providing annual cash incentives, which are based on annual performance measures. We seek to create incentives to achieve long-term goals by granting equity awards with multi-year vesting periods, the ultimate value of which depends on our share price. These awards promote retention and | |||
Cash and equity compensation | We believe that executive officers in positions that more directly affect corporate performance should have as their main priority profitably growing the company. Accordingly, we generally structure the target compensation of these executive officers so that they receive a significant portion of their compensation in the form of equity. Using equity in this manner further aligns executive officers’ interests with those of our shareholders, encourages retention and rewards our executive officers if we succeed. |
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Peer Group
Consistent with Fiserv’s “pay for performance” philosophy, the compensation committee strives to set executive officer base salaries at a level that is comparable to the 50th percentile of our peers and provides for total compensation at a level comparable to the 50th percentile of our peers for median performance with an opportunity for 75th percentile compensation for superior performance. To determine peer group compensation for an executive officer, the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee may also considers,consider, among other matters, market trends in executive compensation, and the percentage that each component of compensation comprises of an executive officer’s total compensation.compensation and the executive officer’s tenure in position. The peer group that we used for 20132016 and that the committee approved is set forth below:
Alliance Data Systems Corporation | Equifax Inc. | Paychex, Inc. | ||
Automatic Data Processing, Inc. | Fidelity National Information Services, Inc. | Total System Services, Inc. | ||
Convergys Corporation | Intuit Inc. | Unisys Corporation | ||
Discover Financial Services | Jack Henry & Associates, Inc. | Visa Inc. | ||
DST Systems, Inc. | MasterCard Incorporated | The Western Union Company | ||
The Dun & Bradstreet Corporation | NCR Corporation |
34 | 2017 Proxy Statement |
We believe our peer group is comprised of companies comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that compete with us for managerial talent; companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; and other publicly tradedbusiness-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization; and companies that compete with us for managerial talent. Based on our analysis, for 2013,capitalization.
2016 Named Executive Officer Compensation
Base Salaries
We did not increase the base salaries of all of our named executive officers were below the 50th percentile of our peers, the total compensation of our chief executive officer was between the 50th and 75th percentile of our peers, and total compensation of our other named executive officers who served for the full year was generally at or below the 50th percentile of our peers.
2013 Named Executive Officer Compensation
Base Salaries
in 2016. We have not increased the base salary of our chief executive officer in the last eight years, and we did not increaseeleven years. Mr. Hirsch’s base salary was reduced when he retired as our chief financial officer on March 14, 2016 to reflect the base salariesreduced scope of our other named executive officers in 2013.his responsibilities while remaining with the company.
Cash Incentive Awards
Certain Terminology
In this section of the proxy statement, we use a number of financial terms. Set forth below is a description of these terms:
Adjusted earnings per share, is calculated as earnings per share from continuing operations in accordance with generally accepted accounting principles, excluding merger and integration-related costs, severance costs, amortization of acquisition-related intangible assets, and certain other non-operating gains and losses or unusual items.
Adjusted internal revenue growth is measured as the increase in adjusted revenue, excluding the impact of acquisitions and dispositions, for the current year divided by adjusted revenue from the prior year. Adjusted revenue is calculated as total revenue in accordance with generally accepted accounting principles, excluding output solutions postage reimbursements and including deferred revenue purchase
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Adjusted consolidated net operating profit is calculated as total revenue minus total operating expenses, excluding share-based compensation and the capitalization and amortizationarenon-GAAP financial measures. See Appendix A to this proxy statement for a definition of internally developed software, and is adjusted for the items described in the calculation of adjusted earnings per share. Adjusted business unit or group net operating profit is calculated in the same manner using business unit or group revenue, expenses and adjustments as applicable.
Stock Splitthese measures.
In December 2013, we completed a two-for-one split of our common stock. Accordingly, all per share amounts are presented on a split-adjusted basis.
Messrs. Yabuki and HirschHau
The cash incentive payments to Messrs. Yabuki and HirschHau for 20132016 were based on adjusted earnings per share and adjusted internal revenue growth. We use adjusted earnings per share as a performance measure because we believe that there is a direct correlation between the increase in adjusted earnings per share and shareholder value. For 2013, we set the target adjusted earnings per share performance goal at $2.93, which represented a 15% increase over our 2012 adjusted earnings per share. We use adjusted internal revenue growth because we believe that the long-term value of our enterprise depends on our ability to grow revenue without regard forto acquisitions. For 2013,2016, we set the target adjusted earnings per share performance goal at $4.34, which represented a 12% increase over our 2015 adjusted earnings per share. For 2016, we set the target internal revenue growth performance goal at 3.4%4.9% compared to adjusted internal revenue growth of 2%4.3% in 2012.2015. For 2013,2016, the threshold, target, maximum and actual amounts for Messrs. Yabuki and HirschHau were as follows:
Performance Measure (weighting) | Threshold | Target | Maximum | Actual | ||||
Adjusted Earnings Per Share (60%) | $2.81 | $2.93 | $3.23 or more | $2.99 | ||||
Adjusted Internal Revenue Growth (40%) | 1.0% | 3.4% | 6.5% or more | 2.7% | ||||
Award as a Percentage of Base Salary | ||||||||
J. Yabuki | 75% | 150% | 300% | 162% | ||||
T. Hirsch | 45% | 90% | 180% | 97% |
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Adjusted Earnings Per Share (60%) | $4.18 | $4.34 | $4.57 or more | $4.43 | ||||||||||||||||||||||||||||
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Internal Revenue Growth (40%) | 3.0% | 4.9% | 7.0% or more | 3.7% | ||||||||||||||||||||||||||||
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J. Yabuki | 88% | 175% | 350% | �� | 165% | |||||||||||||||||||||||||||
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R. Hau | 55% | 110% | 220% | 104% | ||||||||||||||||||||||||||||
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Mr. Hirsch
Mr. Hirsch did not receive a cash incentive payment for 2016 given the reduced scope of his responsibilities once he retired as our chief financial officer on March 14, 2016.
35 | 2017 Proxy Statement |
Mr. Ernst
The cash incentive payment to Mr. Ernst for 20132016 was based on achievement of adjusted earnings per share, adjusted internal revenue growth and adjusted consolidated net operating profit. Similar to other named executive officers, these company-wide performance measures are designed to drive internal revenue growth and profitability. In addition, we considered adjusteduse consolidated net operating profit because we believe it is a key metric that Mr. Ernst can influence in his capacity ashas the ability to drive high quality revenue growth and effectively manage our Chief Operating Officer.costs through operational effectiveness programs. For 2013,2016, the threshold, target, maximum and actual amounts for Mr. Ernst were as follows:
Performance Measure (weighting) | Threshold | Target | Maximum | Actual | ||||
Adjusted Earnings Per Share (30%) | $2.81 | $2.93 | $3.23 or more | $2.99 | ||||
Adjusted Internal Revenue Growth (40%) | 1.0% | 3.4% | 6.5% or more | 2.7% | ||||
Adjusted Consolidated Net Operating Profit (in millions) (30%) | $1,335 | $1,385 | $1,490 | $1,380 | ||||
Award as a Percentage of Base Salary | 63% | 125% | 250% | 124% |
Performance Measure(weighting)
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Adjusted Earnings Per Share (30%) | $4.18 | $4.34 | $4.57 or more | $4.43 | ||||||||||||||||||||||||||||
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Internal Revenue Growth (40%) | 3.0% | 4.9% | 7.0% or more | 3.7% | ||||||||||||||||||||||||||||
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Consolidated Net Operating Profit (in millions) (30%) | $1,669 | $1,719 | $1,815 | $1,734 | ||||||||||||||||||||||||||||
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Award as a Percentage of Base Salary | 68% | 135% | 270% | 116% | ||||||||||||||||||||||||||||
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Mr. GuptaMessrs. McGranahan and Vielehr
The cash incentive payment to Mr. Guptaeach of Messrs. McGranahan and Vielehr for 20132016 was based on the achievement of adjusted earnings per share, adjusted internal revenue growth, adjusted consolidated net operating profit and group-level results (group net
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operating profit (20%) and group adjusted revenue, (20%))equally weighted). The committee consideredSimilar to other named executive officers, adjusted earnings per share, adjusted internal revenue growth and adjusted consolidated net operating profit because we are focused on profitably growing companydesigned to drive internal revenue growth and profitability, and Mr. Gupta hadMcGranahan and Mr. Vielehr have the ability to significantly impact those results as the president of our Digital Solutions group. The committee consideredBilling and Payments Group and Depository Institution Services Group, respectively. We use the group-level results because it believedwe believe they wereare most relevant to, and couldcan be most directly influenced by, Mr. Gupta.Messrs. McGranahan and Vielehr. The adjusted earnings per share, adjusted internal revenue growth and adjusted consolidated net operating profit threshold, target and maximum goals for Mr. GuptaMessrs. McGranahan and Vielehr were set at the same levels set forth above for our other named executive officers. With respect to group net operating profit and group adjusted revenue, we set the performance goal levels for each of Mr. GuptaMcGranahan and Mr. Vielehr such that we believed that it would be unlikely that the top end of the range would be achieved, but it would be reasonably likely that the target could be achieved. For 2013,2016, the threshold, target, maximum and actual results were as follows:
Performance Measure (weighting) | Threshold | Target | Maximum | Actual | ||||
Adjusted Earnings Per Share (10%) | $2.81 | $2.93 | $3.23 or more | $2.99 | ||||
Adjusted Internal Revenue Growth (35%) | 1.0% | 3.4% | 6.5% or more | 2.7% | ||||
Adjusted Consolidated Net Operating Profit (in millions) (15%) | $1,335 | $1,385 | $1,490 | $1,380 | ||||
Group–Level Results (40%) | ||||||||
Award as a Percentage of Base Salary | 55% | 110% | 220% | 105% |
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Adjusted Earnings Per Share (10%) | $4.18 | $4.34 | $4.57 or more | $4.43 | ||||||||||||||||||||||||||||
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Internal Revenue Growth (35%) | 3.0% | 4.9% | 7.0% or more | 3.7% | ||||||||||||||||||||||||||||
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Consolidated Net Operating Profit (in millions) (15%) | $1,669 | $1,719 | $1,815 | $1,734 | ||||||||||||||||||||||||||||
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D. McGranahan(1) | 58% | 115% | 230% | 35% | ||||||||||||||||||||||||||||
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B. Vielehr | 55% | 110% | 220% | 84% | ||||||||||||||||||||||||||||
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(1) | Mr. McGranahan’s cash incentive payment for 2016 waspro-rated to reflect his period of service from October 31 to December 31, 2016. |
Mr. Vielehr
Mr. Vielehr joined our companyThe 2016 award as a percentage of base salary shown in December 2013 and was not eligiblethe tables above for all named executive officers includes a reduction of the annual cash incentive awardpayment by the committee, upon the recommendation of management, based on the company’s progress against certain corporate initiatives for 2013.2016.
36 | 2017 Proxy Statement |
Equity Incentive Awards
Overview
The committee established threshold, target and maximum values of total equity awards, comprised of stock options and restricted stock units, expressed as a percentage of base salary, which Messrs. Yabuki, Hirsch, Ernst and Gupta could receive. The targetfor the named executive officers who were eligible for annual equity incentive awards in 2016. On February 19, 2016, we granted equity awards generally reflectto the committee’s assessment ofnamed executive officers other than Messrs. Hau and McGranahan based on the level of an executive officer’s responsibilities within the company. On February 20, 2013, we granted equity awards to Messrs. Yabuki, Hirsch, Ernstcompany and Gupta based on the committee’s judgment of each executive’s prospective performance including with respect to leadership, overallstrategic impact, building of organizational capacity, talent development, risk management, financial results, including adjusted earnings per share and internal revenue growth, and, other than with respect to his own awards, the recommendation of our chief executive officer. As discussed below, Messrs. Hau and McGranahan receivedsign-on equity awards rather than annual equity awards in 2016, and Mr. Yabuki also received a grant of performance share units in connection with the amendment of his employment agreement.
Performance Share Units
Our compensation committee began granting performance share units in 2016 to further align the long-term interests of our named executive officers with those of our shareholders. The performance share units have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award. The committee chose adjusted income from continuing operations as the threshold performance measure because we believe there should be a minimum level of income generated before long-term, performance-based awards pay out. We also use internal revenue growth as the performance measure to determine the level of vesting because we believe that the long-term value of our enterprise is linked to our ability to grow revenue without regard to acquisitions. The committee did not grant performance share units to Mr. Hirsch due to his expected retirement as our chief financial officer in March 2016, nor did the committee grant performance share units as part of Mr. Yabuki’s annual award in anticipation of the award granted in connection with an amendment to his employment agreement as further described below.
Equity Mix
The equity mix awarded by the committee is consistent with our objective of emphasizing performance-based compensation and aligning our executive officers’ economic interests with those of our shareholders. For those who received performance share units as part of their annual award, the committee determined the number of performance share units that would vest at target based on anticipatedperformance and ability to drive high quality revenue growth over the three-year performance period. Performance share units, at target, represent more thanone-quarter of the aggregate grant date fair value of all equity granted to Messrs. Ernst and Vielehr in 2016. The mix of options and restricted stock units granted is determined by the committee based in part on the recommendation of the chief executive officer and an understanding of individual preference.
Annual Equity Awards
For 2016, the compensation committee increased the target and maximum equity awards available to Mr. Ernst to provide him with an equity opportunity that is better aligned with the equity compensation available to individuals holding a similar position at our peer companies considering his level of skill, experience and performance. Mr. Vielehr’s award for 2016 reflects his performance and strategic alignmentexpanded scope of responsibilities and is designed to further enhance his long-term retention. The threshold, target and maximum equity grantsawards for our other named executive officers were set at levels commensurate with their experience and responsibilities and comparable to executives serving in comparablethe equity compensation available to individuals holding
37 | 2017 Proxy Statement |
similar positions at our peer companies. The grant date fair value of the annual equity incentive awards, performance share units at target, restricted stock units and options combined, as a percentage of base salary were as follows:
Percent of Base Salary (%) | Percent of Base Salary (%) | |||||||||||||||||||||||||||||||||||||||||||||||
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J. Yabuki | 238 | % | 476 | % | 952 | % | 633 | % | 238% | 476% | 952% | 833% | ||||||||||||||||||||||||||||||||||||
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T. Hirsch | 100 | % | 200 | % | 300 | % | 274 | % | 100% | 275% | 400% | 275% | ||||||||||||||||||||||||||||||||||||
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M. Ernst | 100 | % | 200 | % | 300 | % | 243 | % | 100% | 333% | 500% | 367% | ||||||||||||||||||||||||||||||||||||
R. Gupta | 75 | % | 125 | % | 200 | % | 167 | % | ||||||||||||||||||||||||||||||||||||||||
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B. Vielehr | 100% | 200% | 300% | 383% | ||||||||||||||||||||||||||||||||||||||||||||
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(1) | Mr. Yabuki’s annual award does not include the performance share units granted to him in March 2016 in connection with the amendment to his employment agreement as further described below. The actual award expressed as a percentage of base salary for Mr. Hirsch is based on his annualized base salary of $500,000 at the time of grant when Mr. Hirsch still served as our chief financial officer. The actual awards expressed as a percentage of base salary for Messrs. Ernst and Vielehr include the grant date fair value of the performance share units granted in 2016 at the target award level. The value realized by each of them at the end of the three-year performance period will depend on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations, over the three-year period and will range from 0% to 200% of the target award. |
In addition, in February 2013,Messrs. Hau and McGranahan
To induce each of them to join the company, on March 14, 2016, Mr. Gupta received a special award of 19,830 restricted stock units in recognition of his accomplishments to date in our payment businesses and his continuing leadership in driving growth in our strategically important digital solutions. In December 2013, Mr. VielehrHau received stock options and restricted stock units having an aggregate grant date fair value of approximately $4$5.5 million, to induce him to join the company. Theand on October 31, 2016, Mr. McGranahan received stock options and restricted stock units having an aggregate grant wasdate fair value of approximately $3.2 million. These grants were intended to immediately and strongly align Mr. Vielehr’sHau’s and Mr. McGranahan’s interests with those of our shareholdersshareholders. Messrs. Hau and in part, recognize that he was forfeiting significant benefits upon leaving his prior employer. Mr. Vielehr will not beMcGranahan first became eligible forto receive an annual equity incentive award until 2015.in February 2017.
Mr. Yabuki
In March 2016, Mr. Yabuki’s employment agreement was amended as discussed further below under “–Employment and Other Agreements with Executive Officers – Yabuki Employment Agreement.” Among other things, pursuant to this amendment, Mr. Yabuki agreed to an extension of his term as our chief executive officer for at least three years and the elimination of his excise taxgross-up benefit. As required by this amendment, in 2016, our compensation committee made a grant of performance share units to Mr. Yabuki with a grant date fair value, at target, of approximately $12 million. The committee made this award to Mr. Yabuki in connection with this amendment to further incentivize his continuing and valuable contributions to our success through the development and execution of our strategic objectives and the creation of value for our shareholders, clients and associates.
His performance share units vest at the end of a three-year performance period based upon the company’s internal revenue growth over the three-year period (80% weighting) and, as determined by the committee in its discretion, talent development goals (20% weighting), subject to attaining a threshold level of adjusted income from continuing operations which, if not met, will result in no vesting of the performance share units. The portion of the award subject to internal revenue growth will vest at 0% to 200% of target depending on the company’s achievement of internal revenue growth goals over the three-year period. The portion of the award subject to achievement of talent development goals will vest at 0% to 200% depending on the committee’s assessment of Mr. Yabuki’s performance at the end of three years with respect to senior executive talent development.
In addition, we amended Mr. Yabuki’s employment agreement to provide that, beginning in 2017, he will receive annual grants of options, restricted stock units and/or other awards under our long-term incentive compensation program commensurate with his position and with an aggregate grant date fair value of not less than $8 million. The compensation committee retains discretion to increase the value of his award.
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38 | 2017 Proxy Statement |
Other Elements of Compensation
Employee Stock Purchase Plan
We maintain atax-qualified employee stock purchase plan that is generally available to all employees, including executive officers, which allows employees to acquire our common stock at a discounted price on anafter-tax basis. This plan allows employees to buy our common stock at a 15% discount to the market price with up to 10% of their salary and incentives (up to a maximum of $25,000 in any calendar year), with the objective of allowing employees to benefit when the value of our stock increases over time.
Post-Employment Benefits
We provide severance andchange-in-control protections to our named executive officers through agreements which are discussed below under the heading “– Employment and Other Agreements with Executive Officers.”
Perquisites
In 2013,2016, we did not provide any personal-benefit perquisites to our named executive officers other than relocation-related expenses disclosed in footnote 34 to the Summary Compensation Table below and participation in wellness programs.an executive physical program.
Retirement Savings Plan and Health and Welfare Benefits
We provide subsidized health and welfare benefits which include medical, dental, life insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health, welfare and 401(k) savings plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. We subsidize supplemental long-term disability coverage for executive officers and other employees with cash compensation of $240,000 or more.officers. We do not provide a separate pension program or a supplemental executive retirement plan or other post-retirement payments to executive officers. Fiserv associates,plan. Our employees, including executive officers, are immediately eligible for matching contributions under our 401(k) savings plan. Our matching contributions are
capped at 3% of annual cash compensation and vest after the first two calendar years in which the employee is credited with 1,000 hours of service.years.
Employee Stock PurchaseNonqualified Deferred Compensation Plan
We maintain a tax-qualified employee stock purchase plan that is generally available to all employees, including executive officers, which allows employees to acquire our common stock at a discounted price on an after-tax basis. This plan allows employees to buy our common stock at a 15% discount to the market price with up to 10% of their salary and incentives (up to a maximum of $25,000 in any calendar year), with the objective of allowing employees to benefit when the value of our stock increases over time.
Post-Employment Benefits
We provide severance and change-in-control protections to ourOur named executive officers, through key executive employmentalong with other highly compensated employees, are eligible to participate in anon-qualified deferred compensation plan pursuant to which they can defer cash compensation and severance agreements, or “KEESAs,” and,have their accounts credited with earnings based on the participant’s selection of investment choices similar to our 401(k) savings plan. We do not make any contributions to this plan. Please see “ExecutiveCompensation –Non-Qualified Deferred Compensation Plan in the case of Messrs. Yabuki, Ernst, Gupta and Vielehr, employment agreements. We discuss the purposes and terms of the KEESAs and other arrangements with our named executive officers2016” below under the heading “Employment and Other Agreements with Executive Officers.”for additional information.
Additional Compensation Policies
Securities Trading Policy
We prohibit our executive officers from trading in our common stock during certain periods at the end of each quarter until after we disclose our financial and operating results.results unless such trading occurs under an approved Rule10b5-1 plan. We may impose additional restricted trading periods at any time if we believe trading by executive officers would not be appropriate because of developments that are, or could be, material. In addition, we requirepre-clearance by our general counselchief legal officer and our chief executive officer of all stock transactions by designated senior members of management and our board of directors, including the establishment of a Rule10b5-1 trading plan.
We also prohibit our employees, officers and directors from hedging or engaging in short sales of our stock. Furthermore, directors and executive officers are prohibited from pledging our stock and from entering into transactions in derivative instruments in connection with our stock.
Stock Ownership
We believe that stock ownership by our executive officers is essential for aligning management’s long-term interests with those of our shareholders. To emphasize this principle, we maintain a stock ownership policy that requires our chief executive officersofficer to own directly or indirectly, equity having a value of at least six times his base salary in the caseand our other executive
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officers to own equity having a value of our chief executive officer andat least four times their respective base salary in the case of our other named executive officers.salaries. We believe that these levels are sufficiently high to demonstrate a commitment to value
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creation, while satisfying our executive officers’ needs for portfolio diversification. All executive officers are expected to satisfy the stock ownership requirements within five years after they become subject to them with minimum attainment levels beginning at the end of the second year. All named executive officers are currently in compliance with the requirements.
Disposition Requirements
We have also adopted restrictions regarding the number of shares that any director or executive officer may sell in a given year. The restrictions generally provide that an executive officer or director may not, in any particular year, dispose of more than 10% of the shares he or she beneficially owns at the beginning of such year. Shares of our stock that are sold or withheld to pay the applicable option exercise prices or taxes associated with such exercises are not included when determining whether the relevant limitations are satisfied.
Compensation Recoupment Policy
In the event that we restate our financial results, we may recover all or a portion of the incentive awards that we paid or granted, or that vested, on the basis of such results. Recovery may be sought, in the discretion of the board, from any person who was serving as an executive officer of the company at the time the original results were published. Both cash and equity incentive awards are subject to recoupment; there is no time limit on our ability to recover such amounts, other than limits imposed by law; and recoupment is available to us regardless of whether the individuals subject to recoupment are still employed by us when repayment is required. To the extent recoupment is sought, the board of directors may, in its discretion, seek to recover interest on amounts recovered and/or costs of collection and we have the right to offset the repayment amount from any compensation owed by us to any executive officer. The independent members of our board of directors, or a committee thereof comprised solely of independent directors, are responsible for determining whether recoupment is appropriate and the specific amount, if any, to be recouped by us.
Equity Award Grant Practices
The compensation committee generally approves annual equity awards during its regularly-scheduled February meeting, after we issue our financial results for the prior year. In addition, in order to accommodate the need for periodic awards, such as in connection with newly hired employees, promotions or retention awards, the compensation committee delegates its authority to our chief executive officer and chief operating officer to enable such individuals to grant equity awards
within certain parameters; provided that all grants to directors and executive officers are specifically made by the compensation committee. Our equity grant policy prescribes the timing of awards or specific grant dates.
Unless Under the compensation committee determines otherwise,Incentive Plan, the exercise price of all options to purchase shares of our common stock is equal tomay not be less than the closing price of our common stock on the NASDAQ stock market on the grant date.
Deductibility of Compensation
Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct from our taxable income for federal income tax purposes in any one year with respect to our named executive officers (other than our chief executive officer and each of the next four highest compensated executive officers.financial officer). Certain performance-based compensation is not subject to the deduction limit. We seekIt is generally our intention to make cash and equity-based awards under our plans in a manner that is not subject to the limit imposed by Section 162(m). For example, our incentivequalify compensation is paid pursuant to the Amended and Restated Fiserv, Inc. 2007 Omnibus Incentive Plan (the “Incentive Plan”), which has been approved by our shareholders, one of the requirementspayments for tax deductibility under Section 162(m). In addition,Notwithstanding our employment agreements with named executive officers are designedintentions, because of ambiguities and uncertainties as to comply withthe application and interpretation of Section 162(m). and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will so qualify. Our compensation committee reserves the right to provide compensation that does not qualify as performance-based compensation under Section 162(m) to the extent it believes that we should use our best effortssuch compensation is necessary to cause any compensation paidcontinue to executiveprovide competitive arrangements intended to attract and retain, and provide appropriate incentives to, qualified officers to be deductible. However, in order to maintain flexibility in
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compensating our executive officers, it is not a policy of the committee that all executive compensation must be tax deductible.
Employment and Other Agreements with Executive Officers
Yabuki Employment Agreement
In 2005,2016, we entered into anamended the employment agreement with Mr. Yabuki to provide that provides that, during the term of his employment, Mr. Yabuki will continue to serve as our president and chief executive officer for at least another three-year term and, subject to election by our shareholders, as a director. After the current three-year term ends in 2018, the agreement automatically renews forone-year terms unless either party gives the other 90 days prior written notice of his or its desire to terminate the agreement.
40 | 2017 Proxy Statement |
Under his employment agreement, as amended in 2016, Mr. Yabuki is entitled: (i) to receive an annual salary of at least $840,000; (ii) to participate in our executive incentive compensation plan with a target and maximum cash incentive award of not less than 125%175% and 350% of his base salary;salary, respectively; (iii) to receive grants of options, restricted stock and/or other awards under our long-term incentive compensation program commensurate with his position;position, provided that, beginning in 2017, the grant date fair value of each year’s award shall not be less than $8 million; and (iv) to receive up to four weeks of vacation; and (v) to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. In addition, the 2016 amendment provides for the elimination of the excise taxgross-up provision in his existing employment agreement and for aone-time grant of performance share units. The agreement automatically renews for one year terms unless either party givesperformance share units have a grant date fair value of approximately $12 million and vest at the other 90 days prior written noticeend of his or its desirea three-year performance period only upon the achievement of specified internal revenue growth and talent development goals, subject to terminate the agreement.attaining a threshold level of adjusted income from continuing operations over such three-year period. In the event of a conflict between his employment agreement and the terms of an equity award agreement, his employment agreement will control unless the equity award agreement provides a more favorable benefit. The terms of Mr. Yabuki’s employment agreement and KEESAkey executive employment and severance agreement, or “KEESA,” resulted from anarm’s-length negotiation, and, as a result, we believe the terms reflect the market terms for the leader of a company of our size in our industry.
Hau and McGranahan Agreements
We entered into an agreement with each of Messrs. Hau and McGranahan in 2016 in connection with the start of their employment with us. Under Mr. Hau’s agreement, he is entitled to: (i) receive an annual salary of at least $625,000; (ii) participate in our annual cash incentive plan with a target and maximum award of 110% and 220% of base salary, respectively; (iii) participate in our annual equity incentive plan beginning in February 2017 with an annual target of $2,000,000; (iv) asign-on equity grant of $2,500,000 of restricted stock units and $3,000,000 of stock options, each
of which will vestone-half on each of the third and fourth anniversaries of grant; (v) aone-time cash award of $500,000 which was paid on April 15, 2016 and must be repaid if he leaves Fiserv within 24 months; and (vi) reimbursement of relocation expenses.
Under his agreement, Mr. McGranahan is entitled to: (i) receive an annual salary of at least $510,000; (ii) participate in our annual cash incentive plan with a target and maximum award of 115% and 230% of base salary, respectively; (iii) participate in our annual equity incentive plan beginning in February 2017 with an annual target of $1,000,000; (iv) asign-on equity grant of $1,000,000 of restricted stock units and $2,200,000 of stock options, each of which will vestone-half on each of the third and fourth anniversaries of grant; (v) aone-time cash award of $500,000 to be paid in two equal installments 90 days and 12 months after his start date and which must be repaid if he leaves Fiserv within 24 months; (vi) an additional equity award of $3,000,000 in February 2020, subject to his continued full-time employment in good standing, which will vest in equal installments on the third and fourth anniversaries of grant; and (vii) reimbursement of relocation expenses.
In addition, Messrs. Hau and McGranahan are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. The terms of Mr. Hau’s and Mr. McGranahan’s agreements and KEESAs resulted fromarm’s-length negotiations, and, as a result, we believe the terms reflect the market terms for a leader of a company of our size in our industry.
Ernst Gupta and Vielehr Employment Agreements
We entered into an employment agreement with each of Messrs. Ernst Gupta and Vielehr pursuant to which we agreed to employ each of them until one party provides the other with a notice of termination. Under their employment agreements, Messrs. Ernst and Vielehr are entitled:entitled to: (i) to receive an annual salary of at least $525,000 and $470,000, respectively; (ii) to participate in our executive cash incentive compensation plan; and (iii) to participate in our executive long-term equity incentive compensation program with an annual target of at
41 | 2017 Proxy Statement |
least 200% of base salary; and (iv) in the case of Mr. Vielehr, a one-time cash payment of $200,000 which was paid on March 15, 2014. Under his employment agreement, Mr. Gupta is entitled: (i) to receive an annual salary of at least $400,000; (ii) to participate in our executive incentive compensation plan; (iii) to participate in our executive long-term compensation program; and (iv) to receive a minimum of four weeks paid vacation.salary. In addition, Messrs. Ernst Gupta and Vielehr are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. Each of Messrs. Ernst, Gupta and Vielehr also received equity awards upon joining Fiserv pursuant to his employment agreement, and these awards are reflected in the Outstanding Equity Awards table below. The terms of Mr. Ernst’s Mr. Gupta’s and Mr. Vielehr’s employment agreements and KEESAs resulted fromarm’s-length negotiations, and, as a result, we believe the terms reflect the market terms for a leader of a company of our size in our industry.
Key Executive Employment and Severance Agreements
We have entered into Key Executive Employment and Severance Agreements, or “KEESAs,”KEESAs, with our executive officers that provide for potential benefits in connection with a change in control. A complete discussion of the terms of the KEESAs, together with an estimate of the amounts potentially payable under each KEESA, appears below under the heading “Potential“Potential Payments Upon Termination or Change in Control.Control.”
Compensation Committee Interlocks and Insider Participation
There are no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.
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The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” contained in this proxy statement with management. Based on our review and the discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form10-K for the year ended December 31, 2013.2016.
Glenn M. Renwick, Chairman
Dennis F. Lynch
Doyle R. Simons
Compensation Committee Interlocks and Insider Participation
During the last fiscal year, there were no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.
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COMPENSATION OF EXECUTIVE OFFICERSExecutive Compensation
The following table sets forth in summary form the compensation of our chief executive officer, our current and former chief financial officer and our next three highest paid executive officers (collectively, our “named executive officers”) for the year ended December 31, 2013.
SUMMARY COMPENSATION TABLE2016.
Name and Principal Position | Year | Salary | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation(2) | All Other Compensation(3) | Total | |||||||||||||||||||||
Jeffery W. Yabuki | 2013 | $ | 840,000 | $ | 916,074 | $ | 4,400,022 | $ | 1,359,036 | $ | 11,965 | $ | 7,527,097 | |||||||||||||||
Chief Executive Officer | 2012 | 840,000 | 2,458,003 | 2,600,546 | 1,154,160 | 12,155 | 7,064,864 | |||||||||||||||||||||
and President | 2011 | 840,000 | 850,672 | 3,749,474 | 1,262,100 | 13,980 | 6,716,226 | |||||||||||||||||||||
Thomas J. Hirsch | 2013 | 475,000 | 650,039 | 650,008 | 461,102 | 12,109 | 2,248,258 | |||||||||||||||||||||
Chief Financial Officer | 2012 | 475,000 | 600,027 | 600,124 | 391,590 | 11,867 | 2,078,608 | |||||||||||||||||||||
and Treasurer | 2011 | 400,000 | 281,274 | 843,635 | 432,720 | 14,123 | 1,971,752 | |||||||||||||||||||||
Mark A. Ernst | 2013 | 575,000 | 350,033 | 1,050,003 | 715,515 | 11,985 | 2,702,536 | |||||||||||||||||||||
Chief Operating Officer | 2012 | 575,000 | 325,045 | 975,202 | 589,807 | 14,275 | 2,479,329 | |||||||||||||||||||||
2011 | 525,000 | — | 1,000,141 | 432,768 | 98,068 | 2,055,977 | ||||||||||||||||||||||
Rahul Gupta | 2013 | 420,000 | 1,150,075 | 350,018 | 441,902 | 12,644 | 2,374,639 | |||||||||||||||||||||
Group President, Digital | 2012 | 420,000 | 275,048 | 275,064 | 368,076 | 12,834 | 1,351,022 | |||||||||||||||||||||
Solutions | 2011 | 403,333 | 475,088 | 174,996 | 325,160 | 14,658 | 1,393,235 | |||||||||||||||||||||
Byron C. Vielehr(4) | 2013 | 39,167 | 2,000,290 | 2,000,186 | — | 13,245 | 4,052,888 | |||||||||||||||||||||
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Name and Principal Position
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Jeffery W. Yabuki | 2016 | $ | 840,000 | — | $ | 14,680,135 | $ | 4,320,031 | $ | 1,389,679 | $ | 11,937 | $ | 21,241,782 | ||||||||||||||||||||||||||||||||||||||||||||||||||
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President and Chief | 2015 | 840,000 | — | 1,288,041 | 6,535,501 | 1,328,040 | 9,737 | 10,001,319 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Executive Officer | 2014 | 840,000 | — | 1,078,613 | 4,722,371 | 1,622,880 | 12,053 | 8,275,917 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Robert W. Hau(5) | 2016 | 499,599 | $ | 500,000 | 2,500,008 | 3,000,004 | 649,935 | 151,244 | 7,300,790 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Thomas J. Hirsch(6) | 2016 | 340,256 | — | 687,568 | 687,506 | — | 13,548 | 1,728,878 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Former Chief Financial | 2015 | 500,000 | — | 850,025 | 1,001,972 | 579,700 | 11,348 | 2,943,045 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Officer and Treasurer | 2014 | 500,000 | — | 650,028 | 650,004 | 644,000 | 12,427 | 2,456,459 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mark A. Ernst | 2016 | 600,000 | — | 500,067 | 1,700,028 | 695,936 | 12,517 | 3,508,548 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Chief Operating Officer | 2015 | 600,000 | — | — | 1,972,804 | 824,823 | 11,267 | 3,408,894 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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2014 | 575,000 | — | — | 1,400,005 | 886,291 | 11,923 | 2,873,219 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Devin B. McGranahan(5) | 2016 | 86,961 | — | 1,000,064 | 2,200,009 | 179,339 | 11,508 | 3,477,881 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Byron C. Vielehr(7) | 2016 | 470,000 | — | 1,200,006 | 600,001 | 396,482 | 11,664 | 2,678,153 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Group President, | 2015 | 470,000 | — | — | 1,309,042 | 515,924 | 24,914 | 2,319,880 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Depository Institution | 2014 | 470,000 | 200,000 | — | — | 645,900 | 313,257 | 1,629,157 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) Reflects the grant date fair value of the awards granted in the respective years under the Incentive Plan. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note |
(2) The amounts shown in this column include the grant date fair value of performance share units granted to Messrs. Yabuki ($12,000,030), Ernst ($500,067) and Vielehr ($600,003) in 2016 at the target award level, which reflects, as of the grant date, the probable outcome of the performance conditions. The value realized by each of them at the end of the three-year performance period will depend on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing | operations, over the three-year period and will range from 0% to 200% of the target award. If the highest level of performance conditions are met, the grant date fair value of these awards would be as follows: Mr. Yabuki - $24,000,060; Mr. Ernst - $1,000,134; and Mr. Vielehr - $1,200,006. (3) These cash incentive payments were made pursuant to the Incentive Plan. These awards were earned in the year listed and paid in the following year. |
(4) The amounts shown in this column include company matching |
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expenses pursuant to the terms of his |
(5) Messrs. Hau and McGranahan joined Fiserv on (6) Mr. Hirsch served as our chief financial officer and treasurer until March 14, 2016 and remained with the company until March 31, 2017 with a reduced scope of responsibilities. The amount shown in the (7) Mr. Vielehr joined Fiserv on December 1, | The material terms of the company’s agreements with Messrs. Yabuki, Hau, Ernst, McGranahan and Vielehr are set forth above under the heading “Compensation Discussion and Analysis – Employment and Other Agreements with Executive Officers.” Mr. Hirsch did not have an employment agreement with the company. |
The material terms of the company’s agreements with Messrs. Yabuki, Ernst, Gupta and Vielehr are set forth above under the heading “Compensation Discussion and Analysis – Employment and Other Agreements with Executive Officers.” Mr. Hirsch does not have an employment agreement, other than the KEESA, which, together with the estimated possible benefits payable thereunder, is discussed below.
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GRANTS OF PLAN-BASED AWARDS IN 2013
Name | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | All Other Option Awards: Number of Securities Underlying Options (#)(1) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(2) | ||||||||||||||||||||||||||
Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||
J. Yabuki | 630,000 | 1,260,000 | 2,520,000 | |||||||||||||||||||||||||||||
02/20/2013 | 22,706 | 916,074 | ||||||||||||||||||||||||||||||
02/20/2013 | 350,224 | 40.35 | 4,400,022 | |||||||||||||||||||||||||||||
T. Hirsch | 213,750 | 427,500 | 855,000 | |||||||||||||||||||||||||||||
02/20/2013 | 16,112 | 650,039 | ||||||||||||||||||||||||||||||
02/20/2013 | 51,738 | 40.35 | 650,008 | |||||||||||||||||||||||||||||
M. Ernst | 362,250 | 718,750 | 1,437,500 | |||||||||||||||||||||||||||||
02/20/2013 | 8,676 | 350,033 | ||||||||||||||||||||||||||||||
02/20/2013 | 83,576 | 40.35 | 1,050,003 | |||||||||||||||||||||||||||||
R. Gupta | 231,000 | 462,000 | 924,000 | |||||||||||||||||||||||||||||
02/20/2013 | 8,676 | 350,033 | ||||||||||||||||||||||||||||||
02/20/2013 | 19,830 | (3) | 800,042 | |||||||||||||||||||||||||||||
02/20/2013 | 27,860 | 40.35 | 350,018 | |||||||||||||||||||||||||||||
B. Vielehr(4) | 12/01/2013 | 36,402 | 2,000,290 | |||||||||||||||||||||||||||||
12/01/2013 | 116,892 | 54.95 | 2,000,186 |
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Grants of Plan-Based Awards in 2016
Name
| Grant Date
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)
| Estimated Future Payouts Under Equity Incentive Plan Awards(2)
| All Other Stock Awards: Number of Shares of Stock or Units (#)(3)
| All Other Option Awards: Number of Securities Underlying Options (#)(3)
| Exercise or Base Price of Option Awards ($/Sh)
| Grant Date Fair Value of Stock and Option Awards ($)(4)
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Threshold ($)
| Target ($)
| Maximum ($)
| Threshold (#)
| Target (#)
| Maximum (#)
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J. Yabuki | 739,200 | 1,470,000 | 2,940,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 27,730 | 2,680,105 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 137,888 | 96.65 | 4,320,031 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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03/29/2016 | 29,502 | 118,006 | 236,012 | 12,000,030 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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R. Hau | 343,750 | 687,500 | 1,375,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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03/14/2016 | 25,404 | 2,500,008 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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03/14/2016 | 94,044 | 98.41 | 3,000,004 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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T. Hirsch | 02/19/2016 | 7,114 | 687,568 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 21,944 | 96.65 | 687,506 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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M. Ernst | 408,000 | 810,000 | 1,620,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 54,262 | 96.65 | 1,700,028 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 1,294 | 5,174 | 10,348 | 500,067 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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D. McGranahan | 295,800 | 587,000 | 1,174,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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10/31/2016 | 10,155 | 1,000,064 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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10/31/2016 | 68,901 | 98.48 | 2,200,009 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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B. Vielehr | 258,500 | 517,000 | 1,034,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 6,208 | 600,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 19,151 | 96.65 | 600,001 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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02/19/2016 | 1,552 | 6,208 | 12,416 | 600,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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(1) Mr. McGranahan joined Fiserv on October 31, 2016, and the threshold, target and maximum non-equity incentive plan awards for him are provided on an annualized basis. Mr. McGranahan’s actual non-equity incentive plan award for 2016 was pro-rated based on his period of service during the year. Mr. Hirsch was not eligible for a non-equity incentive plan award for 2016 due to his retirement as our chief financial officer on March 14, 2016. (2) We granted all of the (3) We granted all of the restricted stock units and stock options reported above pursuant to the Incentive Plan. Except in the case of Messrs. Hau and McGranahan, one-third of the restricted stock units vest on each of the second, third and fourth anniversaries of the grant date, and one-third of the stock options vest on each anniversary of the grant date. For Messrs. | Hau and McGranahan, one-half of the restricted stock units and one-half of the stock options vest on each of the third and fourth anniversaries of the grant date. The options have an exercise price equal to the closing price of our common stock on the grant date and expire on the 10 year anniversary of the grant date. |
(4) The amounts in the table represent the grant date fair value of the |
46 | 2017 Proxy Statement |
34
OUTSTANDING EQUITY AWARDS AT DECEMBEROutstanding Equity Awards at December 31, 20132016
Option Awards(1) | Stock Awards(1) | Option Awards(1)
| Stock Awards(1)
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) | Number of Securities Underlying Unexercised Options Exercisable (#)
| Number of Securities Underlying Unexercised Options Unexercisable (#)
| Option Exercise Price ($)
| Option Expiration Date
| Number of Shares or Units of Stock that Have Not Vested (#)
| Market Value of Shares or Units of Stock that Have Not Vested ($)(2)
| Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2)
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J. Yabuki | 126,104 | (3) | 7,446,441 | 64,216(3) | 6,824,876 | 118,006(4) | 12,541,678 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 350,224 | (4) | 40.35 | 02/20/2023 |
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80,450 | 160,900 | (5) | 32.64 | 02/22/2022 | — | 137,888(5) | 96.65 | 02/19/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
219,460 | 109,730 | (6) | 30.86 | 02/23/2021 |
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388,826 | — | 23.85 | 02/24/2020 | 68,832 | 137,664(6) | 79.05 | 02/18/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
543,984 | — | 16.37 | 02/26/2019 |
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51,652 | — | 27.11 | 02/27/2018 | 167,713 | 83,857(7) | 56.97 | 02/19/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
190,548 | — | 27.11 | 02/27/2018 |
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248,784 | — | 27.35 | 02/23/2017 | 317,188 | — | 40.35 | 02/20/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
450,000 | — | 23.05 | 12/01/2015 |
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290,000 | — | 23.05 | 12/01/2015 | 241,350 | — | 32.64 | 02/22/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
T. Hirsch | 44,072 | (7) | 2,602,452 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 51,738 | (4) | 40.35 | 02/20/2023 |
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18,564 | 37,132 | (5) | 32.64 | 02/22/2022 | 329,190 | — | 30.86 | 02/23/2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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388,826 | — | 23.85 | 02/24/2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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543,984 | — | 16.37 | 02/26/2019 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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51,652 | — | 27.11 | 02/27/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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190,548 | — | 27.11 | 02/27/2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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R. Hau | 25,404(8) | 2,699,937 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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— | 94,044(9) | 98.41 | 03/14/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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T. Hirsch | 30,846(10) | 3,278,313 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
49,378 | 24,690 | (6) | 30.86 | 02/23/2021 |
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83,320 | — | 23.85 | 02/24/2020 | — | 21,944(5) | 96.65 | 02/19/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
88,248 | — | 16.37 | 02/26/2019 |
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38,740 | — | 27.11 | 02/27/2018 | 11,146 | 22,292(6) | 79.05 | 02/18/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
48,424 | — | 27.11 | 02/27/2018 |
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50,000 | — | 27.35 | 02/23/2017 | 23,084 | 11,543(7) | 56.97 | 02/19/2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
15,000 | — | 22.16 | 05/01/2016 |
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M. Ernst | 18,636 | (8) | 1,100,456 | 2,892(11) | 307,362 | 5,174(4) | 549,893 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 83,576 | (4) | 40.35 | 02/20/2023 |
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30,168 | 60,338 | (5) | 32.64 | 02/22/2022 | — | 54,262(5) | 96.65 | 02/19/2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
32,430 | 64,860 | (9) | 29.75 | 01/03/2021 |
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R. Gupta | 52,520 | (10) | 3,101,306 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 27,860 | (4) | 40.35 | 02/20/2023 | 23,603 | 47,207(6) | 79.05 | 02/18/2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8,508 | 17,020 | (5) | 32.64 | 02/22/2022 |
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10,242 | 5,122 | (6) | 30.86 | 02/23/2021 | 49,720 | 24,861(7) | 56.97 | 02/19/2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
14,444 | — | 23.85 | 02/24/2020 |
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33,848 | — | 16.37 | 02/26/2019 | 83,576 | — | 40.35 | 02/20/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
32,282 | — | 27.11 | 02/27/2018 |
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27,672 | — | 27.11 | 02/27/2018 | 90,506 | — | 32.64 | 02/22/2022 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
34,850 | — | 26.53 | 03/30/2017 |
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30,000 | — | 26.25 | 12/18/2016 | 97,290 | — | 29.75 | 01/03/2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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D. McGranahan | 10,155(12) | 1,079,273 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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— | 68,901(13) | 98.48 | 10/31/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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B. Vielehr | 36,402 | (11) | 2,149,538 | 24,410(14) | 2,594,295 | 6,208(4) | 659,786 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
— | 116,892 | (12) | 54.95 | 12/01/2023 |
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— | 19,151(5) | 96.65 | 02/19/2026 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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17,047 | 34,094(6) | 79.05 | 02/18/2025 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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77,928 | 38,964(15) | 54.95 | 12/01/2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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47 | 2017 Proxy Statement |
(1) | In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis. |
(2) | The amounts in this column were calculated by multiplying the closing market price of our common stock on December |
(3) | Includes |
(4) | The performance share units are reported at the target award level and have a three-year performance period. |
(5) | One-third of the options vest on each anniversary of the grant date, February |
One-third of the options vest on each anniversary of the grant date, February |
One-third of the options vest on each anniversary of the grant date, February |
One-half of the restricted stock units will vest on each of March 14, 2019 and 2020. |
(9) | One-half of the options vest on the third and fourth anniversaries of the grant date, March 14, 2016. |
(10) | Includes |
(11) | All of the restricted stock units vested on February 20, 2017. |
One-third of the options vest on the second, third and fourth anniversaries of the grant date, December 1, 2013. |
All of the agreements that govern equity awards contain provisions that provide for automatic vesting in the event that certain age and/or term of service requirements are achieved at the time of an executive officer’s retirement. If these requirements are met, the options and restricted stock units may vest earlier than indicated in the table above.
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48 | 2017 Proxy Statement |
OPTION EXERCISES AND STOCK VESTED DURING 2013Option Exercises and Stock Vested During 2016
During our fiscal year ended December 31, 2013,2016, the named executive officers exercised options to purchase shares of our common stock and/or had restricted stock units vest as set forth below. In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | ||||||||||||
J. Yabuki | — | — | 35,230 | 1,411,538 | ||||||||||||
T. Hirsch | 39,316 | 1,118,983 | 10,252 | (3) | 410,153 | |||||||||||
M. Ernst | — | — | — | — | ||||||||||||
R. Gupta | — | — | 5,134 | 205,142 | ||||||||||||
B. Vielehr | — | — | — | — |
Option Awards
| Stock Awards
| |||||||||||||||||||||||||||||||
Name
| Number of Shares Acquired on Exercise (#)
| Value Realized on Exercise ($)(1)
| Number of Shares Acquired on Vesting (#)
| Value Realized on Vesting ($)(2)
| ||||||||||||||||||||||||||||
J. Yabuki | 248,784 | 16,680,967 | 38,985 | 3,799,785 | ||||||||||||||||||||||||||||
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R. Hau | — | — | — | — | ||||||||||||||||||||||||||||
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T. Hirsch | 181,502 | 11,896,807 | 15,303 | 1,486,820 | ||||||||||||||||||||||||||||
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M. Ernst | — | — | 6,212 | 604,606 | ||||||||||||||||||||||||||||
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D. McGranahan | — | — | — | — | ||||||||||||||||||||||||||||
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B. Vielehr | — | — | 18,200 | 1,880,424 | ||||||||||||||||||||||||||||
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(1) The “Value Realized on Exercise” was calculated in accordance with SEC rules by multiplying the gross number of shares acquired on exercise times the difference between the |
(2) The “Value Realized on Vesting” was calculated in accordance with SEC rules by multiplying the gross number of shares acquired on vesting times the |
49 | 2017 Proxy Statement |
Non-Qualified Deferred Compensation in 2016
The following table sets forth certain information for each of our named executive officers regarding non-qualified deferred compensation for the year ended December 31, 2016.
Name
| Executive Contributions in Last Fiscal Year ($)(1)
| Registrant Contributions in Last Fiscal Year ($)
| Aggregate Earnings in Last Fiscal Year ($)
| Aggregate Withdrawals/ Distributions ($)
| Aggregate Balance at Last Fiscal Year End ($)(2)
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J. Yabuki | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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R. Hau | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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T. Hirsch | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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M. Ernst | 120,000 | — | 61,333 | — | 721,764 | |||||||||||||||||||||||||||||||||||
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D. McGranahan | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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B. Vielehr | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
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(1) The amounts shown in this column are also reported in the Summary Compensation Table for 2016. | (2) In addition to the contributions made in 2016, $558,146 of the |
Our non-qualified deferred compensation plan permits deferral of up to 100% of base salary, commissions and/or any cash payment earned by a participant pursuant to one of our written incentive plans. Accounts are credited with earnings based on each participant’s selection among investment choices that are similar to those available under our 401(k) plan. Investment allocations may be changed monthly by the participant.
Participants wishing to participate in the plan must make a deferral election each year. At the time of election, the participant must also choose the time and form of distribution. The participant may elect to have distributions begin on a specified date or following retirement. Distributions will also occur in connection with any other separation from service, or upon death or a change in control.
37
50 | 2017 Proxy Statement |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLPotential Payments Upon Termination or Change in Control
In the discussion below, we describe potential payments to the named executive officers upon termination of employment or a change in control. The following descriptions of arrangements under which our named executive officers may become entitled to potential payments upon termination or change in control are qualified in their entirety by reference to the relevant agreements. The complete definitions of cause, good reason, disability and change in control are set forth in: Mr. Yabuki’s employment agreement and KEESA which we filedin the named executive officers’ agreements with our Current Report on Form 8-K on December 23, 2008; the KEESAs for Messrs. Hirsch, Ernst, Gupta and Vielehr, a form of which we filed with our Current Report on Form 8-K on December 23, 2008; Mr. Ernst’s employment agreement, which we filed with our Current Report on Form 8-K on May 27, 2011; Mr. Gupta’s employment agreement, which we filed with our Annual Report on Form 10-K on February 24, 2012; Mr. Vielehr’s employment agreement, which we filed with our Annual Report on Form 10-K on February 20, 2014; and the relevant stock option, restricted stock and restricted stock unit award agreements, formscompany, all of which we have filed with the Securities and Exchange Commission.
Terminology
“Cause” under the agreements generally refers to specified types of serious misconduct that may harm our company. In some cases, executive officers have “good reason” to terminate their employment if we change in a negative manner their working conditions or position within our organization if we modify their travel requirements, or if we breach the terms of the agreements. “Disability” under the agreements generally means physical or mental illness that causes the executive officer to become disabled to a degree as to be unable to perform substantially all of his duties for a continuous period of six months. The complete definitions may vary from agreement to agreement. Accordingly, the preceding summary description of the definitions is qualified by reference to the agreements themselves.
Employment Agreements
General.
Our employment agreements with Messrs. Yabuki, Ernst Gupta and Vielehr provide for potential payments on certain terminations of employment. As described above under “Compensation“Compensation Discussion and Analysis – Deductibility of Compensation,,” these agreements are designed to comply with Section 162(m) of the Internal Revenue Code. In addition, these agreements and our KEESAs all provide that post-termination payments and benefits are subject to asix-month delay in the event that the executive officer is considered a “specified employee” within the meaning of Section 409A of the Internal Revenue Code at the time of a qualifying termination. The employment
agreements also contain provisions that require each of the named executive officers to maintain the confidentiality of our confidential information and proprietary data during and following his employment. In addition, each of Messrs. Yabuki, Ernst Gupta and Vielehr agrees that during his employment and for 12 months after termination of employment, he will not compete with us or solicit our clients or our employees. Under the employment agreements, we have the ability to recover certain compensation previously paid to the named executive officer if he breaches these obligations.
Terms of Employment Agreement with Mr. Yabuki.Yabuki
We have the right to terminate Mr. Yabuki’s employment at any time. Under his employment agreement, as amended in 2016, if we terminate Mr. Yabuki’s employment or fail to renew the term of his employment other than for death, disability or cause, or Mr. Yabuki terminates his employment for good reason, he is entitled to receivereceive: (i) a lump sum payment equal to fourfive andone-half times his current annual base salary, (ii) full vesting of all equity awards, as well as the right to exercise the stock options granted to him upon hire for two years, and all other stock options for not less than one year, following the date of termination of his employment, but in no event longer than ten years from the date of grant, or if earlier, the latest date the option could have been exercised had Mr. Yabuki remained employed, (iii) a lump sum payment equal to any cash incentive compensation that has been allocated or awarded, but not paid, to him for any period ending prior to his termination and (iv) reimbursement for COBRA or other health insurance premiums for up to two years following the date of his termination, or until Mr. Yabuki obtains health care coverage through subsequent employment, whichever is earlier.
If Mr. Yabuki’s employment is terminated for death or disability, he or his
38
estate, as applicable, is entitled to receive full vesting of all equity and long-term awards and a lump sum payment equal to any cash incentive compensation that has been allocated or awarded, but not paid, to him for any period ending prior to his termination.
Under hisIn 2016, we amended Mr. Yabuki’s employment agreement Mr. Yabuki will also be entitledand KEESA to receive aneliminate the excise taxgross-up payment so that the net amount retained by Mr. Yabuki, after deduction of all applicable taxes and any interest, penalties or additions with respect thereto, equals the total present value of the payments to which Mr. Yabuki is entitled under provisions in his employment agreement or KEESA at the time such payments are to be made. agreements.
51 | 2017 Proxy Statement |
If the benefits to Mr. Yabuki under his employment agreement are duplicative of or inconsistent with the benefits provided under his equity award agreements or KEESA, his employment agreement provides that he will receive the most favorable benefits (determined on abenefit-by-benefit basis) under his equity award agreements or KEESA, on the one hand, or his employment agreement.agreement on the other hand.
Terms of Employment AgreementAgreements with Mr.Messrs. Ernst Mr. Gupta and Mr. Vielehr.
We have the right to terminate their employment at any time. If we terminate Mr. Ernst’s employment other than for death, disability or cause, or if he terminates his employment for good reason, he is entitled to receive a lump sum payment equal to 1.8 times his then-current base salary. If we terminate Mr. Gupta’s employment other than for death, disability or cause, or if he terminates his employment because we breach his employment agreement, he is entitled to receive: (i) a lump sum payment equal to 12 months of salary; (ii) the benefit of accelerated vesting for all unvested equity awards as if he had remained employed for an additional 12-month period; and (iii) reimbursement of COBRA premiums for up to 12 months following the date of his termination. With respect to Mr. Vielehr, if we terminate hisVielehr’s employment other than for death, disability or cause, he is entitled to receive: (i) a lump sum payment equal to 12 months of salary and (ii) accelerated vesting of certain equity awards granted to him pursuant to his employment agreement determined by dividing each of the total number of stock options and restricted stock units granted upon employment by two and then subtracting the number of stock options or restricted stock units, as applicable, that have vested prior to termination.
Other Agreements
We have entered into agreements with each of Messrs. Hau and McGranahan in connection with the start of their employment with us. Upon a termination without cause, each of them will receive 12 months of salary and accelerated vesting of all remaining unvested equity awards granted upon the commencement of his employment.
Mr. Hirsch
Mr. Hirsch served as our chief financial officer until March 14, 2016 and retired from our company on March 31, 2017. Mr. Hirsch did not have an employment agreement with the company, and pursuant to his equity award agreements, subject to compliance with ongoingnon-competition, confidentiality and other obligations, all of Mr. Hirsch’s unvested stock options and restricted
stock unit awards will continue to vest on their original vesting schedule as if he had not retired, and vested stock options will remain exercisable until the earlier of five years following his retirement or the original expiration date of the stock option. As of December 31, 2016, Mr. Hirsch’s unvested stock options and restricted stock units had a value of $4,665,830.
Key Executive Employment and Severance Agreements
General
Our Key Executive Employment and Severance Agreements (“KEESAs”) set forth the amounts and types of benefits that we believe will enable us to keep our executive officers’ interests aligned with those of our shareholders in the event of a change in control by allowing them to concentrate on taking actions that are in the best interests of our shareholders without consideration of whether their actions may ultimately have an effect on the security of their employment. We also intend for the benefits to recognize past contributions by the executive officers if they are asked to leave, and to help to prevent the departure of key managers in connection with an anticipated or actual change in control. The KEESAs fulfill these purposes by generally providing for severance in the event of a qualifying termination following a change in control and vesting of outstanding equity awards upon a change in control.
We believe these agreements provide for an equitable financial transition for an executive officer when an adverse change in his or her employment status is required as a result of certain unexpected corporate events. The committee selected the triggering events for benefits under the KEESAs based on its judgment that the change in control events described in the KEESAs are likely to result in the concerns described above. New executive officers have generally entered into KEESAs with the same economic terms as those provided since 2001, which is when we began to enter into KEESAs. Thus, benefits for new executive officers are generally consistent with those for executive officers with existing agreements. We believe that this helps us achieve compensation that is equitable among executive officers. Because these agreements have been entered into for the specific purposes described above, these arrangements do not affect the decisions we make with respect to annual or long-term compensation.
Benefits
Pursuant to the terms of the KEESAs, upon a change in control, all stock options and restricted stock units granted prior to the change in control will become fully and immediately vested. In addition, if we terminate
39
them other than for death, disability or
52 | 2017 Proxy Statement |
cause, or they resign for good reason, within three years following a change in control, then our named executive officers will be entitled to receive:
a cash termination payment equal to two times the sum of (i) their annual salary plus (ii)
their highest annual cash incentive award during the three completed fiscal years before the change in control; or
in the case of Mr. Vielehr,Messrs. Hau and McGranahan, because heeach of them has not been employed by us for three or more years, the greater of 60% of his annual salary at the time of the change in control or the highest annual cash incentive award during the two completed fiscal years before the change in control;
with respect to each incentive compensation award made to the named executive officer for all uncompleted periods as of the termination date, a cash payment equal to the value of such award prorated through the termination date as if the goals with respect to such award had been achieved (at the target level, if applicable), which we refer to as the “prorated bonus;” and
continuation for up to three years of life, disability, hospitalization, medical and dental insurance coverage at our expense as in effect at the termination, in addition to certain other benefits related to securing other employment.
In the event their employment is terminated for death or disability within three years following a change in control, our named executive officers will be entitled to receive the prorated bonus under their KEESAs. If, within three years following a change in control, we terminate the employment of our named executive officers for any reason, or they resign or retire, our named executive officers (or their heirs or estate, as applicable) will also be entitled to receive: any unpaid base salary through the termination date; reimbursement of business expenses incurred through the termination date; any compensation previously deferred by the named executive officer; and the sum of any bonus or incentive compensation allocated or awarded but not yet paid.
To comply with Section 409A of the Internal Revenue Code, the KEESAs require a six-month delay of post-termination payments and benefits (other than payments to cover employment taxes due on such amounts) in the event that the named executive officer is a “specified employee” within the meaning of Section 409A at the time of a qualifying termination in connection with a change in control of our company.
The KEESAs other than Mr. Yabuki’s, also provide that if any portion of the benefits under the KEESAs or any other agreement to which they are a party would constitute an “excess parachute payment” for purposes of the Internal Revenue Code, then they will have the
option to receive the total payments and pay the 20% excise tax imposed by the Internal Revenue Code, or have the total payments reduced such that they would not be required to pay the excise tax. Mr. Yabuki’s employment agreement provides for an excise tax gross-up payment so that the net amount retained by Mr. Yabuki, after deduction of all applicable taxes and any interest, penalties or additions with respect thereto, equals the total present value of the payments to which Mr. Yabuki is entitled under his employment agreement or his KEESA at the time such payments are to be made.
Change in Control Defined
A “change in control” under the KEESAs generally will occur if: any person becomes the beneficial owner of securities representing 20% or more of our outstanding shares of common stock or combined voting power; specified changes occur to our incumbent board of directors; our shareholders approve a merger, consolidation or share exchange with any other corporation, or approve the issuance of voting securities in connection with a merger, consolidation or share exchange; or our shareholders approve a plan of complete liquidation or dissolution or an agreement for the sale or disposition of all or substantially all of our assets.
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Non-Compete
Each named executive officer with a KEESA agrees that he will not, for a period of six months after the termination date, participate in the management of, be employed by or own any business enterprise at a location within the United States that substantially competes with us or our subsidiaries. In addition, during and following his employment, he will hold in confidence, and not directly or indirectly disclose, use or copy, our confidential information and proprietary data. Finally, he agrees that for a period of two years after the termination date, he will not hire or solicit for employment any person who is or was employed by us during the twelve months preceding his termination.
Equity Awards
Equity award agreements under the Incentive Plan provide that, on a recipient’s death disability or retirement,disability, 100% of any then unexercisable stock options will become exercisable by the recipient until the earlier of one year following the triggering event or the stock option expiration date. In addition, the restricted stock unit and performance share unit agreements generally provide for pro rata vesting in the event of death disability or retirement. disability; provided that, with respect to performance share units, shares will not be issued until the end of the performance period based on the number of months of service during the performance period.
53 | 2017 Proxy Statement |
Except in the case of the award agreements for performance share units granted in 2016, the equity award agreements also provide that, following a qualified retirement and subject to compliance with ongoingnon-competition, confidentiality and other obligations, all unvested stock option and restricted stock unit awards held by an executive officer will continue to vest on their original vesting schedule as if the executive officer had not ceased to be an employee, and vested stock options will remain exercisable until the earlier of five years following retirement or the original expiration date of the stock option.
The equity award agreements require our named executive officers to maintain the confidentiality of our confidential information and not to compete with us or solicit our employees or clients while employed by us or during the 12 months following the termination of their employment. In the event the named executive officer breaches these obligations, we are entitled to recover the value of any amounts previously paid or payable or any shares or the value of any shares delivered pursuant to any of our programs, plans or arrangements.
Upon a change in control, the Incentive Plan provides that if a named executive officer has an employment, retention, change in control or similar agreement that addresses the effect of a change in control on his or her awards, then such agreement will control. Otherwise, the Incentive Plan provides that the successor or purchaser may assume the equitystock option and restricted stock unit awards or provide substitute awards with similar terms and conditions; provided, that, if within 12 months following the change in control the named executive officer is terminated without cause or terminates his employment for good reason, the assumed equity award or such substitute award will become fully vested and exercisable and/or all restrictions on the award will lapse as of the time immediately prior to such termination of employment. In that case, the named executive officer will have 90 days after the termination to exercise an option award unless a longer exercise period is applicable under the agreement, and the confidentiality,non-compete andnon-solicit covenants in the equity award agreement will cease to apply. If the successor or purchaser does
not assume the equity awardstock option and restricted stock unit awards or issue a replacement award,awards, then immediately prior to the change in control, each equitystock option and restricted stock unit award subject to the agreements will become fully vested and exercisable and/or all restrictions on the award will lapse.
The award agreements for performance share units provide that, upon a change in control prior to the end of the performance period, the named executive officer will be paid cash in an amount equal to the fair market value (as of the date of the change in control) of such number of shares eligible for issuance at 150% of the target award level. Thereafter, the award will terminate.
Cash Incentive Awards
Our Incentive Plan provides that, upon a change in control, the successor or purchaser may assume the cash incentive awards to our named executive officers or provide substitute awards with similar terms and conditions. If the successor or purchaser in the change in control does not assume the cash incentive award or issue a replacement award, then any award earned but not yet paid will be paid to the named executive officer. If the cash incentive award is not yet earned, then the award will be canceled in exchange for a cash payment equal to the product of the amount that would have been due under the canceled award as if the performance goals measured at the time of the change in control were achieved at the same rate through the end of the performance period and a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to the date of the change in control and the denominator of which is the number of whole months in the performance period.
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Estimated Potential Payments
In the tables below, we estimate the maximum amount of compensation payable to each of our named executive officers based on their agreements in effect at, and assuming that the triggering event or events indicated occurred on, December 31, 2013. In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis.2016. The amounts shown in the tables below rely on the following assumptions:
54 | 2017 Proxy Statement |
The amount shown in the table with respect to restricted stock units and performance share units is equal to the closing price of our common stock on the last trading day of the calendar year times the number of unvested restricted stock units or performance share units which would experience accelerated vesting.
In accordance with the terms of the KEESAs, the amount shown for outplacement services is 10% of the executive officers’ respective base salaries for 2013.
The executive officers’ KEESAs provide that the named executive officers are entitled to receive reimbursement for certain fees and expenses, up to $15,000, paid to consultants and legal or accounting advisors in connection with the computation of benefits under the KEESAs. Accordingly, $15,000 is shown for advisor fees for each named executive officer.
In certain circumstances, our named executive officers could elect to have payments reduced to eliminate potential excise taxes; however, for purposes of the tables below, we have assumed that no such election has been made.
55 | 2017 Proxy Statement |
Potential PaymentsPayment on a Change in Control without Termination of Employment; Acceleration of Vesting
Name | Number of Option Shares Vested on Accelerated Basis (#) | Number of Restricted Units Vested on Accelerated Basis (#) | Value Realized | Number of Option Shares Vested on Accelerated Basis (#)
| Number of Restricted Stock Units Vested on Accelerated Basis (#)
| Number of Performance Share Units Vested on Accelerated Basis at 150% of Target Level (#)
| Value Realized ($)
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J. Yabuki | 620,854 | 126,104 | $ | 21,338,288 | 359,409 | 64,216 | 177,009 | 34,848,834 | ||||||||||||||||||||||||||||||||||||
T. Hirsch | 113,560 | 44,072 | $ | 5,246,620 | ||||||||||||||||||||||||||||||||||||||||
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R. Hau | 94,044 | 25,404 | — | 3,440,063 | ||||||||||||||||||||||||||||||||||||||||
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M. Ernst | 208,774 | 18,636 | $ | 6,157,252 | 126,330 | 2,892 | 7,761 | 4,166,087 | ||||||||||||||||||||||||||||||||||||
R. Gupta | 50,002 | 52,520 | $ | 4,216,175 | ||||||||||||||||||||||||||||||||||||||||
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D. McGranahan | 68,901 | 10,155 | — | 1,616,701 | ||||||||||||||||||||||||||||||||||||||||
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B. Vielehr | 116,892 | 36,402 | $ | 2,628,795 | 92,209 | 24,410 | 9,312 | 6,696,800 | ||||||||||||||||||||||||||||||||||||
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56 | 2017 Proxy Statement |
Potential Payment on a Termination of Employment
Mr. Yabuki
Benefits and Payments
| Death or Disability Prior to Change in Control (Employment Agreement)
| Retirement (Equity Award Agreements)
| Resignation For Good Reason or Termination Without Cause (Employment Agreement)
| Death or Disability Following Change in Control (KEESA/ Equity Award Agreement)
| Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA/Equity Award Agreement)
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Compensation: | ||||||||||||||||||||||||||||||||||||||||
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Base Salary | — | — | $ | 4,620,000 | — | $ | 1,680,000 | |||||||||||||||||||||||||||||||||
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Cash Incentive Award | — | — | — | — | 3,325,760 | |||||||||||||||||||||||||||||||||||
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| ||||||||||||||||||||||||||||||
Prorated Bonus | $ | 1,470,000 | — | 1,470,000 | $ | 1,470,000 | 1,470,000 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | 9,211,441 | $ | 9,211,441 | 9,211,441 | 9,211,441 | 9,211,441 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Restricted Stock Units: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | 6,824,876 | 6,824,876 | 6,824,876 | 6,824,876 | 6,824,876 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Performance Share Units: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | 12,541,678 | — | 12,541,678 | 18,812,517 | 18,812,517 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Benefits: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
COBRA Reimbursement | — | — | 12,703 | — | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Post-Employment Benefits | — | — | — | — | 102,724 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Outplacement Services | — | — | — | — | 84,000 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Advisor Fees | — | — | — | — | 15,000 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total | $ | 30,047,995 | $ | 16,036,317 | $ | 34,680,698 | $ | 36,318,834 | $ | 41,526,318 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Mr. Hau
Benefits and Payments
| Death or Disability Prior to Change in Control (Equity Award Agreements) | Termination Without Cause (Employment Agreement) | Death or Disability Following Change in Control (KEESA) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | ||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Base Salary | — | $ | 625,000 | — | $ | 1,250,000 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Cash Incentive Award | — | — | — | 750,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Prorated Bonus | — | — | $ | 687,500 | 687,500 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | $ | 740,126 | 740,126 | 740,126 | 740,126 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Restricted Stock Units: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | — | 2,699,937 | 2,699,937 | 2,699,937 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Benefits: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Post-Employment Benefits | — | — | — | 118,983 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Outplacement Services | — | 3,950 | — | 62,500 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | $ | 740,126 | $ | 4,069,013 | $ | 4,127,563 | $ | 6,324,046 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
57 | 2017 Proxy Statement |
Potential Payment on a Termination of Employment
Mr. Ernst
Benefits and Payments
| Death or Disability Prior to Change in Control (Equity Award Agreements) | Retirement (Equity Award Agreements)
| Resignation For Good Reason or Termination Without Cause (Employment Agreement) | Death or Disability Following Change in Control (KEESA/ Equity Award Agreement) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA/Equity Award Agreement) | |||||||||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Base Salary | — | — | $ | 1,080,000 | — | $ | 1,200,000 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Cash Incentive Award | — | — | — | — | 1,772,582 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Prorated Bonus | — | — | — | $ | 810,000 | 810,000 | ||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | $ | 3,033,886 | $ | 3,033,886 | — | 3,033,886 | 3,033,886 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Restricted Stock Units: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | 76,840 | 307,362 | — | 307,362 | 307,362 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Performance Share Units: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Unvested | 183,333 | — | — | 824,839 | 824,839 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Benefits: | ||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Post-Employment Benefits | — | — | — | — | 150,340 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Outplacement Services | — | — | — | — | 60,000 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Advisor Fees | — | — | — | — | 15,000 | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||||||||
Total | $ | 3,294,059 | $ | 3,341,248 | $ | 1,080,000 | $ | 4,976,087 | $ | 8,174,009 | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
Mr. McGranahan
Benefits and Payments
| Death or Disability Prior to Change in Control (Equity Award Agreements) | Termination Without Cause (Employment Agreement) | Death or Disability Following Change in Control (KEESA) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | ||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Base Salary | — | $ | 510,000 | — | $ | 1,020,000 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Cash Incentive Award | — | — | — | 612,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Prorated Bonus | — | — | $ | 97,833 | 97,833 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Sign-On Bonus | $ | 500,000 | 500,000 | 500,000 | 500,000 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | 537,428 | 537,428 | 537,428 | 537,428 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Restricted Stock Units: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | — | 1,079,273 | 1,079,273 | 1,079,273 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Benefits: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Post-Employment Benefits | — | — | — | 100,866 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Outplacement Services | — | 3,950 | — | 51,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | $ | 1,037,428 | $ | 2,630,651 | $ | 2,214,534 | $ | 4,013,400 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
58 | 2017 Proxy Statement |
Potential Payment on a Termination of Employment
Mr. Vielehr
Benefits and Payments
| Death or Disability Prior to Change in Control (Equity Award Agreements) | Termination Without Cause (Employment Agreement) | Death or Disability Following Change in Control (KEESA/Equity Award Agreement) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA/Equity Award Agreement) | ||||||||||||||||||||||||||||
Compensation: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Base Salary | — | $ | 470,000 | — | $ | 940,000 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Cash Incentive Award | — | — | — | 1,291,800 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Prorated Bonus | — | — | $ | 517,000 | 517,000 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Stock Options: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | $ | 3,112,826 | — | 3,112,826 | 3,112,826 | |||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Restricted Stock Units: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | 967,361 | — | 2,594,295 | 2,594,295 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Performance Share Units: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Unvested | 220,000 | — | 989,679 | 989,679 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Benefits: | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Post-Employment Benefits | — | — | — | 147,434 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Outplacement Services | — | — | — | 47,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
Total | $ | 4,300,187 | $ | 470,000 | $ | 7,213,800 | $ | 9,655,034 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
59 | 2017 Proxy Statement |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16 of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. These Section 16 reporting persons are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16 forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from Section 16 reporting persons, we believe that, during our fiscal year ended December 31, 2016, all Section 16 reporting persons complied with all applicable filing requirements.
60 | 2017 Proxy Statement |
Mr. YabukiProposal 3. Advisory Vote on Frequency of Shareholder Advisory Vote on Executive Compensation
Background
We are conducting a non-binding, advisory vote on the frequency of holding a shareholder advisory vote on the compensation of our named executive officers in accordance with Section 14A of the Exchange Act. We are providing shareholders the option of selecting a frequency of every one, two or three years. You may vote for any of these options, or abstain on the matter. We are required by Section 14A of the Exchange Act to seek this advisory vote every six years. We last submitted a vote on this matter to our shareholders in 2011, when, in keeping with the recommendation of our board, our shareholders expressed a preference that an advisory vote be held on an annual basis.
Proposed Resolution
You may cast your vote on your preferred frequency of holding an advisory vote when you vote in response to the resolution set forth below.
“RESOLVED, that the shareholders hereby approve, on an advisory basis, that the company hold a shareholder advisory vote to approve the compensation of the named executive officers as disclosed pursuant to Item 402 of Regulation S-K every one year, two years or three years, as determined by the alternative that receives the highest number of votes cast for it.”
After careful consideration of this proposal, our board of directors has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for Fiserv. Therefore, our board of directors recommends that you vote for holding an advisory vote on the compensation of our named executive officers every year. Shareholders should understand that they are not voting “for” or “against” the recommendation of the board, but instead have the choice to vote for holding future advisory votes on compensation every one, two or three years, or to abstain from voting.
Our board of directors continues to believe that an executive compensation program should drive creation of shareholder value over the long-term. Although not all compensation programs can be adequately evaluated on an annual basis, the board currently believes that receiving advisory input from our shareholders each year will be most effective to enable it to receive timely, direct input on our compensation philosophy, policies and practices.
Vote Required and Recommendation of the Board of Directors
The alternative receiving the greatest number of votes – every one, two or three years – will be the frequency that shareholders approve on an advisory basis for holding an advisory vote on the compensation of our named executive officers. Unless otherwise specified, the proxies solicited hereby will be voted in favor of holding an advisory vote on the compensation of our named executive officers every year.
Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any action as a result of the outcome of the vote on this proposal. Although the outcome of this vote is advisory, the compensation committee and board will carefully consider the outcome of the vote when determining how often shareholders will have an opportunity to vote on the compensation of our named executive officers.
The board of directors recommends that you vote “1 YEAR” on Proposal 3.
61 | 2017 Proxy Statement |
Proposal 4. Ratification of the Appointment of Independent Registered Public Accounting Firm
Benefits and Payments | Death or Disability (Employment Agreement) | Resignation For Good Reason or Termination Without Cause (Employment Agreement) | Resignation For Good Reason or | |||||||||
Compensation: | ||||||||||||
Base Salary | — | $ | 3,780,000 | $ | 1,680,000 | |||||||
Cash Incentive Award | — | — | 2,524,200 | |||||||||
Prorated Bonus | $ | 1,260,000 | 1,260,000 | 1,260,000 | ||||||||
Stock Options: | ||||||||||||
Unvested and Accelerated | 13,891,847 | 13,891,847 | 13,891,847 | |||||||||
Restricted Stock Units: | ||||||||||||
Unvested and Accelerated | 7,446,441 | 7,446,441 | 7,446,441 | |||||||||
Benefits: | ||||||||||||
COBRA Reimbursement | — | 10,629 | — | |||||||||
Post-Employment Benefits | — | — | 90,633 | |||||||||
Excise Tax Gross-Up | — | — | — | |||||||||
Outplacement Services | — | — | 84,000 | |||||||||
Advisor Fees | — | — | 15,000 | |||||||||
Total | $ | 22,598,288 | $ | 26,388,917 | $ | 26,992,121 |
Mr. HirschBackground
Benefits and Payments | Death or Disability Prior (Equity Award Agreements) | Death or Disability Following Change in Control (KEESA) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | |||||||||
Compensation: | ||||||||||||
Base Salary | — | — | $ | 950,000 | ||||||||
Cash Incentive Award | — | — | 865,440 | |||||||||
Prorated Bonus | — | $ | 427,500 | 427,500 | ||||||||
Stock Options: | ||||||||||||
Unvested and Accelerated | $ | 2,644,168 | 2,644,168 | 2,644,168 | ||||||||
Restricted Stock Units: | ||||||||||||
Unvested and Accelerated | 412,878 | 2,602,452 | 2,602,452 | |||||||||
Benefits: | ||||||||||||
Post-Employment Benefits | — | — | 111,680 | |||||||||
Outplacement Services | — | — | 47,500 | |||||||||
Advisor Fees | — | — | 15,000 | |||||||||
Total | $ | 3,057,046 | $ | 5,674,120 | $ | 7,663,740 |
43
Mr. Ernst
Benefits and Payments | Death or Disability Prior to Change in Control (Equity Award Agreements) | Resignation For Good (Employment Agreement) | Death or Disability Change in Control | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | ||||||||||||
Compensation: | ||||||||||||||||
Base Salary | — | $ | 1,035,000 | — | $ | 1,150,000 | ||||||||||
Cash Incentive Award | — | — | — | 1,179,614 | ||||||||||||
Prorated Bonus | — | — | $ | 718,750 | 718,750 | |||||||||||
Stock Options: | ||||||||||||||||
Unvested and Accelerated | $ | 5,056,796 | — | 5,056,796 | 5,056,796 | |||||||||||
Restricted Stock Units: | ||||||||||||||||
Unvested and Accelerated | 147,035 | — | 1,100,456 | 1,100,456 | ||||||||||||
Benefits: | ||||||||||||||||
Post-Employment Benefits | — | — | — | 113,312 | ||||||||||||
Outplacement Services | — | — | — | 57,500 | ||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||
Total | $ | 5,203,831 | $ | 1,035,000 | $ | 6,876,002 | $ | 9,391,428 |
Mr. Gupta
Benefits and Payments | Death or Disability Prior to Change in Control (Equity Award Agreements) | Breach of Employment Without Cause | Death or Disability Following Change in Control (KEESA) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | ||||||||||||
Compensation: | ||||||||||||||||
Base Salary | — | $ | 420,000 | — | $ | 840,000 | ||||||||||
Cash Incentive Award | — | — | — | 736,152 | ||||||||||||
Prorated Bonus | — | — | $ | 462,000 | 462,000 | |||||||||||
Stock Options: | ||||||||||||||||
Unvested and Accelerated | $ | 1,114,869 | 542,787 | 1,114,869 | 1,114,869 | |||||||||||
Restricted Stock Units: | ||||||||||||||||
Unvested and Accelerated | 501,984 | 679,547 | 3,101,306 | 3,101,306 | ||||||||||||
Benefits: | ||||||||||||||||
COBRA Reimbursement | — | 15,943 | — | — | ||||||||||||
Post-Employment Benefits | — | — | — | 128,160 | ||||||||||||
Outplacement Services | — | — | — | 42,000 | ||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||
Total | $ | 1,616,853 | $ | 1,658,277 | $ | 4,678,175 | $ | 6,439,487 |
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Mr. Vielehr
Benefits and Payments | Death or Disability Prior to Change in Control (Equity Award Agreements) | Termination Without Cause | Death or Disability Following Change in Control (KEESA) | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | ||||||||||||
Compensation: | ||||||||||||||||
Base Salary | — | $ | 470,000 | — | $ | 940,000 | ||||||||||
Cash Incentive Award | — | — | — | 564,000 | ||||||||||||
Prorated Bonus | — | — | $ | 517,000 | 517,000 | |||||||||||
Stock Options: | ||||||||||||||||
Unvested and Accelerated | $ | 479,257 | 239,629 | 479,257 | 479,257 | |||||||||||
Restricted Stock Units: | ||||||||||||||||
Unvested and Accelerated | — | 1,074,769 | 2,149,538 | 2,149,538 | ||||||||||||
Benefits: | ||||||||||||||||
Post-Employment Benefits | — | — | — | 121,654 | ||||||||||||
Outplacement Services | — | — | — | 47,000 | ||||||||||||
Advisor Fees | — | — | — | 15,000 | ||||||||||||
Total | $ | 479,257 | $ | 1,784,398 | $ | 3,145,795 | $ | 4,833,449 |
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COMPENSATION OF DIRECTORS
Objectives for Director Compensation
Quality non-employee directors are critical to our success. We believe that the two primary duties of non-employee directors are to effectively represent the long-term interests of our shareholders and to provide guidance to management. As such, our compensation program for non-employee directors is designed to meet several key objectives:
Adequately compensate directors for their responsibilities and time commitments and for the personal liabilities and risks that they face as directors of a public company;
Attract the highest caliber non-employee directors by offering a compensation program consistent with those at companies of similar size, complexity and business character;
Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and requiring directors to own our stock;
Provide compensation that is simple and transparent to shareholders and reflects corporate governance best practices; and
Where possible, provide flexibility in form and timing of payments.
Elements of Director Compensation
The compensationaudit committee of the board of directors reviews non-employee directoris directly responsible for the appointment, compensation, every otherretention and oversight of our independent registered public accounting firm. The audit committee has appointed Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017. Deloitte has served as our independent public accounting firm since 1986. The audit committee periodically evaluates the performance and considersindependence of Deloitte to determine whether we should continue to retain the firm. To this end, at least annually, Deloitte makes a presentation to the committee regarding the services it provides, and our chief financial performance, general market conditionsofficer provides the committee with his assessment of the firm’s performance. The audit committee is responsible for the audit fee negotiations associated with the retention of Deloitte. In addition, in conjunction with the mandated rotation of Deloitte’s lead engagement partner, the audit committee and non-employee director compensation atits chairman actively participate in the peer group companies set forth above under “Compensation Discussionselection of a successor lead engagement partner. The members of the audit committee and Analysis – Structuring Compensation – Peer Group.” Wethe board believe that the following componentscontinued retention of Deloitte to serve as our independent registered public accounting firm is in the best interests of the company and its shareholders.
A representative of Deloitte is expected to be present at the annual meeting, will have an opportunity to make a statement if he or she so desires, and will be available to respond to appropriate questions.
Reason for the Proposal
Appointment of our director compensation program supportindependent registered public accounting firm is not required to be submitted for shareholder approval, but the objectives above:audit committee of our board of directors is seeking ratification of its appointment of Deloitte as a matter of good corporate practice. If our shareholders do not ratify this appointment, the audit committee of the board of directors will consider it a direction to seek to retain another independent public accounting firm. Even if the appointment is ratified, the audit committee may, in its discretion, appoint a different independent registered public accounting firm at any time if it determines that such a change would be in our shareholders’ best interests.
Vote Required and Recommendation of the Board of Directors
To ratify the appointment of Deloitte as our independent registered public accounting firm, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted to ratify the appointment of Deloitte as our independent registered public accounting firm for 2017.
The board of directors recommends that you vote “FOR” Proposal 4.
62 | 2017 Proxy Statement |
Independent Registered Public Accounting Firm and Fees
The following table presents the aggregate fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (the “Deloitte Entities”) for services provided during 2016 and 2015.
2016 | 2015 | |||||||||||||||
Audit Fees | $ | 2,827,000 | $ | 2,818,000 | ||||||||||||
Audit-Related Fees | 3,472,000 | 3,413,000 | ||||||||||||||
Tax Fees | 848,000 | 699,000 | ||||||||||||||
All Other Fees | 87,000 | 247,000 | ||||||||||||||
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Total | $ | 7,234,000 | $ | 7,177,000 | ||||||||||||
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Audit Fees. Audit fees are for professional services rendered by the Deloitte Entities in connection with the integrated audit of our annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, other statutory audits and other regulatory filings.
Audit-Related Fees. Audit-related fees are for professional services rendered by the Deloitte Entities for service auditor reports.
Tax Fees. Tax fees are for tax consultations and tax return preparation and compliance.
All Other Fees. All other fees are for consulting and training services.
Audit Committee Pre-Approval Policy
The audit committee has established pre-approval policies and procedures that require audit committee approval of all audit and permitted non-audit services to be provided by its independent registered public accounting firm. For certain types of services, the audit committee pre-approves the particular services, subject to certain monetary limits, after the audit committee is presented with a schedule describing the services to be approved. The audit committee’s pre-approval policies do not permit the delegation of the audit committee’s responsibilities to management. In 2016, the audit committee pre-approved all services provided by our independent registered public accounting firm.
In accordance with its written charter, the audit committee provides independent review and oversight of the accounting and financial reporting processes and financial statements of Fiserv, Inc., the system of internal controls that management and the board of directors have established, the audit process and the results of operations of Fiserv, Inc. and its financial condition. Management has the responsibility for preparing the company’s financial statements and Deloitte & Touche LLP (“Deloitte”), the company’s independent registered public accounting firm, has the responsibility for examining those statements.
The audit committee has reviewed and discussed with management and Deloitte the audited financial statements of Fiserv, Inc. for the fiscal year ended December 31, 2016. The audit committee has also discussed with Deloitte the matters required to be discussed by the standards of the Public Company Accounting Oversight Board. The audit committee has received the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence and has discussed with Deloitte its independence. The audit committee has pre-approved all services provided and fees charged by the independent registered public accounting firm to Fiserv, Inc. and has concluded that such services are compatible with Deloitte’s independence.
The audit committee also discussed with management, the internal auditors and Deloitte the quality and adequacy of the internal controls and internal audit organization, responsibilities, budget and staffing of Fiserv, Inc. The audit committee reviewed with both Deloitte and the internal auditors their respective audit plans, audit scope and identification of audit risks. Based on the above-mentioned reviews and discussions, the audit committee recommended to the board of directors that the audited financial statements of Fiserv, Inc. be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the Securities and Exchange Commission.
Thomas C. Wertheimer, Chairman
Alison Davis
John Y. Kim
Denis J. O’Leary
JD Sherman
63 | 2017 Proxy Statement |
Proposal 5. Shareholder Proposal
We provide cash compensation through retainers for boardThe following proposal was submitted by an individual shareholder and committee service, as well as separate retainers towill be voted on at the chairpersons of our board committees. We do not provide board and committee meeting fees. Compensation in this manner simplifies the administration of our program and creates greater equality in rewarding service on committees of the board. The committee and committee chair retainers compensate directors for the additional responsibilities and time commitments involved with those positions.
To compensate the Chairman for his involvement in board and committee matters, he receives an annual cash retainer of $100,000. The Chairman also receives equity grants in the same manner as the other non-employee directors.
Non-employee directors receive grants of stock options and restricted stock units which vest 100% on the earlier of (i) the first anniversary of the grant date or (ii) immediately prior to the first annual meeting if it is properly presented.The board of shareholders followingdirectors recommends you vote AGAINST the grant date. In 2013, we increasedproposal because Fiserv has already implemented a proxy access by-law consistent with market practices and asks you to read its Statement in Opposition which follows the valueproposal.The shareholder’s name, address and number of stock options and restricted stock units received by non-employee directors upon being elected or continuing as a director at our annual meeting of shareholders from $60,000 each to $70,000 each to better align their compensation with non-employee director compensation at peer companies.
Our stock ownership guidelines require non-employee directors to own shares of our common stock having a total value equal to six times the annual retainer amount.
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In order to provide greater flexibility in managing their compensation, we maintain a non-employee director deferred compensation plan. This plan allows directors to defer all or a part of their cash retainers until their service on the board ends. Funds in deferred accounts are invested in hypothetical shares of our common stock. We denominate these deferred payments in shares of our common stock to promote alignment between director compensation and the interest of our shareholders.
Non-employee directors may also defer receipt of the restricted stock units granted to them annually. Restricted stock units are hypothetical shares of our common stock that are settled in shares of common stock onheld may be obtained upon written request to our corporate Secretary.
The following proposal has been included exactly as we received it in accordance with the rules of the Securities and Exchange Commission:
Proposal 5 - Shareholder Proxy Access Reform
Shareholders request that our board of directors take the steps necessary to enable at least 50 shareholders to aggregate their shares to equal 3% of our stock owned continuously for 3-years in order to make use of shareholder proxy access.
Even if the 20 largest public pension funds were able to aggregate their shares, they would not meet the 3% criteria for a one-for-one basis upon vesting, subjectcontinuous 3-years at most companies examined by the Council of Institutional Investors. Additionally many of the largest investors of major companies are routinely passive investors who would be unlikely to any deferral elections. Directors may defer receiptbe part of shares issuable pursuantthe proxy access shareholder aggregation process.
Under this proposal it is unlikely that the number of shareholders who participate in the aggregation process would reach an unwieldy number due to the restricted stock units until their service onrigorous rules our management adopted for a shareholder to qualify as one of the board ends.aggregation participants. Plus it is easy for our management to screen aggregating shareholders because management simply needs to find one item lacking from a list of typical proxy access requirements.
This proposal is more important to our company than most other companies because we do not have the right to confidential voting. Our non-employee director compensation program is summarized below:management can see how we are voting and try to twist our arm to vote the opposite. On the other hand if our management adopts this proxy access reform proposal it will be a sign that our management values shareholder input.
Please vote to enhance shareholder value:
Shareholder Proxy Access Reform - Proposal 5
Element of Compensation | ||||
Board Retainer | $ | 60,000 | ||
Chairman’s Retainer(1) | 100,000 | |||
Committee Retainer | ||||
Audit | 12,000 | |||
Compensation | 10,000 | |||
Nominating and Corporate Governance | 10,000 | |||
Committee Chair Retainer | ||||
Audit | 7,500 | |||
Compensation | 7,500 | |||
Nominating and Corporate Governance | 7,500 | |||
Equity Awards(2) | ||||
Stock Options | 70,000 | |||
Restricted Stock Units | 70,000 |
64 | 2017 Proxy Statement |
2013 Director CompensationFiserv’s Statement in Opposition
Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Total ($) | ||||||||||||
Donald F. Dillon(3) | 100,000 | 70,050 | 70,004 | 240,054 | ||||||||||||
Christopher M. Flink(4) | 70,000 | 70,050 | 70,004 | 210,054 | ||||||||||||
Daniel P. Kearney(5) | 82,000 | 70,050 | 70,004 | 222,054 | ||||||||||||
Dennis F. Lynch(6) | 70,000 | 70,050 | 70,004 | 210,054 | ||||||||||||
Denis J. O’Leary(7) | 82,000 | 70,050 | 70,004 | 222,054 | ||||||||||||
Glenn M. Renwick(8) | 77,500 | 70,050 | 70,004 | 217,554 | ||||||||||||
Kim M. Robak(9) | 85,000 | 70,050 | 70,004 | 225,054 | ||||||||||||
Doyle R. Simons(10) | 70,000 | 70,050 | 70,004 | 210,054 | ||||||||||||
Thomas C. Wertheimer(11) | 79,500 | 70,050 | 70,004 | 219,554 |
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We granted each non-employeeThe board of directors has carefully considered this proposal and recommends that you vote AGAINST it. As we discuss below, in 2016, we implemented proxy access for director a number of stock options determinednominations by dividing $70,000 by a binomial valuation of an option of one shareour shareholders on terms consistent with market practices. Accordingly, our board believes no further action is needed and that the change to proxy access that the shareholder proposal seeks is not in the best interests of our company or our shareholders.
On February 19, 2016, our board of directors amended our by-laws to implement proxy access in the form that it believes is most appropriate for our company and our shareholders and is consistent with current market practices.
Under our proxy access by-law, any shareholder or group of up to 20 shareholders that beneficially owns at least 3% of our outstanding common stock on May 22, 2013,continuously for 3 years may nominate up to the grant date. Accordingly, we granted an option to purchase 5,032 sharesgreater of our common stock at an exercise price of $44.68 to each non-employee director. The options vest 100% on the earliertwo individuals or 20% of the first anniversaryboard of directors for election to the board and require us to include such nominees in our proxy materials. A copy of the grant date or immediately priorby-laws, as amended, was attached as an exhibit to the first annual meeting of shareholders following the grant date.
The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2016.
The shareholder proposal seeks to increase the number of shareholders who may aggregate their holdings to reach the 3% minimum ownership requirement (an “aggregation limit”). An aggregation limit is designed to ensure that all shareholders have a fair and reasonable opportunity to nominate director candidates by forming groups with other shareholders who own fewer than the minimum required shares while also minimizing the burden on the company in Note 8reviewing and verifying the information and representations that each member of a shareholder group must provide to establish the group’s eligibility. Our aggregation limit achieves these dual objectives by assuring that any shareholder may form a group owning more than 3% of the common stock by combining with other shareholders, while not imposing the cost of processing nominations from a large group of shareholders on us and our Consolidated Financial Statements for the year ended December 31, 2013.other shareholders.
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Non-Employee Director Deferred Compensation Plan
UnderBefore the board of directors adopted our non-employee director deferred compensation plan, each non-employee director may defer up to 100% of his or her cash fees. Based on his or her deferral election, the director is creditedproxy access by-law, we engaged with a number of share units atour shareholders on the time hesubject of proxy access and they provided valuable feedback, including regarding what terms they view as appropriate for our company. In no case did any shareholder object to or she would have otherwise received the portionsuggest a revision of the fees20-shareholder aggregation limit. A 20-shareholder aggregation limit has been included by the substantial majority of companies adopting proxy access and is not inconsistent with institutional shareholders’ voting policies. In light of this, the board of directors concluded that the 20-shareholder aggregation limit appropriately balanced our interests in providing a workable proxy access by-law that is accessible by all shareholders, promoting efficiency and keeping costs low.
Our board has a strong record of being deferred. Share units are equivalentresponsive to sharesshareholder concerns. We regularly engage with and solicit the views of our common stock exceptshareholders on governance matters and will continue to do so. For these reasons, our board of directors believes that share units have no voting rights. Upon cessation of service onour company’s current shareholder proxy access right is in the board, the director receives a sharebest interests of our common stockshareholders and that the approach in the shareholder proposal is not appropriate for each share unit. Shares are received in a lump sum distribution,our company.
Vote Required and any fractional share units are paid in cash. Share units credited to a director’s account are considered awards granted under the Incentive Plan and count against that plan’s share reserve.
Share Ownership Requirements
Under our share ownership policy, non-employee directors are required to accumulate and hold our common stock having a market value equal to at least six times the amountRecommendation of the annualBoard of Directors
The number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal for it to gain approval. Unless otherwise specified, the proxies solicited hereby will be voted against the shareholder proposal.
The board retainer. Non-employeeof directors have five years after they become subject to the guidelines to meet the ownership requirements providedrecommends that interim ownership milestones are achieved during the five year period.you vote “AGAINST” Proposal 5.
65 | 2017 Proxy Statement |
Shareholder Proposals for the 2015
2018 Annual Meeting
Any proposal that a shareholder desires to include in our proxy materials for our 20152018 annual meeting of shareholders pursuant to Rule 14a-8 under the Exchange Act (“Rule 14a-8”) must be delivered to the following address no later than December 17, 2014:12, 2017 to the following address: 255 Fiserv Drive, Brookfield, Wisconsin 53045, Attention: Lynn S. McCreary, Executive Vice President, General CounselChief Legal Officer and Secretary.
In 2016, we amended our by-laws to include a proxy access provision. Under our by-laws, shareholders who meet the requirements set forth in our by-laws may under certain circumstances include a specified number of director nominees in our proxy materials. Among other matters, a shareholder must give written notice to our corporate Secretary not less than 120 days and not more than 150 days prior to the first anniversary of the date on which we first made available our proxy materials for the 2017 annual meeting. Because we will commence mailing our proxy statement for the 2017 annual meeting on April 11, 2017, we must receive notice of a shareholder’s director nomination for the 2018 annual meeting pursuant to the proxy access by-law provision no sooner than November 12, 2017 and no later than December 12, 2017. If the notice is received outside of that time frame, then we are not required to include the nominees in our proxy materials for the 2018 annual meeting.
A shareholder who intends to present business, other than a shareholder’sshareholder proposal pursuant to Rule 14a-8, or to nominate a director, other than pursuant to our proxy access by-law provision, at the 20152018 annual meeting must comply with the requirements set forth in our by-laws. Among other matters, a shareholder must give written notice to our corporate Secretary not less than 45 days and not more than 70 days prior to the first anniversary of the date on which we first mailed our proxy materials for the 20142017 annual meeting. Because we anticipatewill commence mailing our proxy statement for the 20142017 annual meeting on April 16, 2014,11, 2017, we must receive notice of a shareholder’s intent to present business, other than pursuant to Rule 14a-8, or to nominate a director, other than pursuant to our proxy access by-law provision, at the 20152018 annual meeting no sooner than February 5, 2015,January 31, 2018, and no
later than March 2, 2015.
February 25, 2018. If the notice is received after March 2, 2015,outside of that time frame, then we are not required to permit the business or the nomination to be presented at the 20152018 annual meeting of shareholders because the notice will be considered untimely.meeting. Nevertheless, if our board of directors permits a matter of business submitted after March 2, 2015February 25, 2018 to be presented at the 20152018 annual meeting, then the persons named in proxies solicited by the board of directors for the 20152018 annual meeting may exercise discretionary voting power with respect to such proposal.
Proxy Statement and Annual Report Delivery
Our Annual Report on Form 10-K for 20132016 will be made available or mailed to each shareholder on or about April 16, 2014. Our Annual Report on Form 10-K for 2013, which we filed with the Securities and Exchange Commission,11, 2017. We will be furnishedfurnish such report, without charge, to any person requesting a copy thereof in writing and stating such person is a beneficial holder of shares of our common stock on the record date for the 20142017 annual meeting. Requests and inquiries should be sent to our corporate Secretary, Lynn S. McCreary, at the address below.
Proxy Materials
As permitted by rules of the Securities and Exchange Commission, services that deliver our communications to shareholders who hold their stock through a bank, broker or other holder of record may deliver a single copy of our Annual Report to shareholdersNotice, annual report and proxy statement to multiple shareholders sharing the same address. Upon
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written or oral request, we will promptly deliver a separate copy of our Notice, annual report and/or proxy statement to any shareholder at a shared address to which a single copy of each document was delivered. Shareholders sharing an address who are currently receiving multiple copies of the Notice, annual report to shareholders and/or proxy statement may also request delivery of a single copy. Shareholders may make a request by writing to Lynn S. McCreary, Executive Vice President, General CounselChief Legal Officer and Secretary, Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045.
By Order of the Board of Directors
Lynn S. McCreary, Secretary
Brookfield, Wisconsin
April 16, 2014
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66 | 2017 Proxy Statement |
Non-GAAP Financial Measures
The company reports its financial results in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The company supplements its reporting of information determined in accordance with GAAP, such as revenue, earnings per share and net cash provided by operating activities, with “adjusted revenue,” “internal revenue growth,” “adjusted earnings per share” and “free cash flow.” Management believes that adjustments for certainnon-cash or other items and the exclusion of certain pass-through revenue and expenses enhance shareholders’ ability to evaluate the company’s performance as such measures provide additional insights into the factors and trends affecting its business. The company excludes these items from GAAP revenue, earnings per share and net cash provided by operating activities to more clearly focus on the factors management believes are pertinent to its operations and the information used to make operating decisions, including the allocation of resources to the company’s various businesses. In this proxy statement, we also disclose performance goals related to cash incentive awards based on adjusted earnings per share, internal revenue growth and consolidated net operating profit, which is anothernon-GAAP financial measure. Set forth below is a description of these terms:
Thesenon-GAAP measures may not be comparable to similarly titled measures reported by other companies and should be considered in addition to, and not as a substitute for, revenue, earnings per share, net cash provided by operating activities or any other amount determined in accordance with GAAP.
67 | 2017 Proxy Statement |
Below are reconciliations of adjusted earnings per share, internal revenue growth and free cash flow to the most directly comparable measures determined in accordance with GAAP:
| 2016
| 2015
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GAAP earnings per share | $ | 4.15 | $ | 2.99 | ||||||||||||
Adjustments – net of income taxes: | ||||||||||||||||
Merger, integration and other costs(1) | 0.17 | 0.10 | ||||||||||||||
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Severance costs | 0.04 | 0.06 | ||||||||||||||
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Amortization of acquisition-related intangible assets | 0.46 | 0.53 | ||||||||||||||
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Debt extinguishment and refinancing costs | — | 0.25 | ||||||||||||||
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StoneRiver and other investment activity(2) | (0.39) | (0.07) | ||||||||||||||
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Adjusted earnings per share | $ | 4.43 | $ | 3.87 | ||||||||||||
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Earnings per share is calculated using actual, unrounded amounts.
(1) Merger, integration and other costs include acquisition and related integration costs in 2016; certain costs associated with the achievement of the company’s operational effectiveness objectives, including expenses related to data center and real estate consolidation activities; and anon-cash expense in 2015 related to the modification of certain employee equity award agreements. | (2) Represents the company’s share of net gains on the sales of a business interest and a subsidiary business at StoneRiver, as well as anon-cashwrite-off of a $7 million investment in 2016. |
(in millions) | 2016
| 2015
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Revenue | $ | 5,505 | $ | 5,254 | ||||||||||||
Output Solutions postage reimbursements | (300) | (313) | ||||||||||||||
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Deferred revenue purchase accounting adjustments | 6 | 4 | ||||||||||||||
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Adjusted revenue | $ | 5,211 | $ | 4,945 | ||||||||||||
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Internal revenue growth is measured as the increase in adjusted revenue for the current year excluding acquired revenue and revenue attributable to dispositions, divided by adjusted revenue from the prior year excluding revenue attributable to dispositions. 2016 acquired revenue was $89 million, and revenue in the comparable prior year attributable to dispositions was $8 million.
68 | 2017 Proxy Statement |
(in millions) | 2016
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Net cash provided by operating activities | $ | 1,431 | $ | 1,346 | ||||||||||||
Capital expenditures(1) | (290) | (359) | ||||||||||||||
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Other adjustments(1)(2) | (57) | 19 | ||||||||||||||
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Free cash flow | $ | 1,084 | $ | 1,006 | ||||||||||||
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(1) 2015 includes $70 million of capital expenditures, primarily leasehold improvements and furniture and equipment related to the company’s Atlanta facility consolidation, of which $25 million is offset by landlord reimbursements reported in net cash provided by operating activities, and $45 million of non-reimbursable building expenditures is included in “other adjustments.” |
(2) Free cash flow excludes tax-effected severance, merger and integration payments; certain cash distributions from StoneRiver; cash tax benefits on early debt extinguishment; and other items which management believes may not be indicative of the future free cash flow of the company. “Other adjustments” removes cash distributions, net of related tax payments, from StoneRiver of $99 million and $20 million in 2016 and 2015, respectively.
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69 | 2017 Proxy Statement |
FISERV, INC. 255 FISERV DRIVE BROOKFIELD, WI 53045 | VOTE BY INTERNET -www.proxyvote.com | |||||||||
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the | ||||||||||
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS | ||||||||||
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | ||||||||||
VOTE BY PHONE -1-800-690-6903 | ||||||||||
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the | ||||||||||
VOTE BY MAIL | ||||||||||
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
E21221-P89650 | KEEP THIS PORTION FOR YOUR RECORDS |
KEEP THIS PORTION FOR YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
Nominees: 01) Alison Davis 06) Kim M. Robak The Board of Directors recommends you vote FOR the following proposal: For Against Abstain The Board of Directors recommends you vote FOR the following proposal: For Against Abstain V.1.1
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice &of Annual Meeting and Proxy Statement and Annual Report is/for the Year Ended December 31, 2016
are available atwww.proxyvote.com.
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —— —
E21222-P89650
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FISERV, INC. Annual Meeting of Shareholders May 24, 2017 This proxy is solicited by the Board of Directors | ||||||||
The undersigned hereby appoints JEFFERY W. YABUKI and LYNN S. MCCREARY as Proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote as set forth herein, all the shares of common stock of Fiserv, Inc. held of record by the undersigned on
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder.If no directionis made, this proxy will be voted
This proxy covers all the shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the 401(k) Savings Plan of Fiserv, Inc. and its Participating Subsidiaries (the “Plan”). This proxy, when properly executed, will be voted as directed. If voting instructions are not received by the proxy tabulator by 11:59 pm ET on May
Continued and
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