dance with the rules and regulations of the Securities and Exchange
Commission, and reviews and approves allocations of shares in the companys
employee stock plans in connection with the granting of stock options and other
stock awards. In addition, it oversees management of one or more specific risks
as described on page 8 under the heading Role of the Board in Risk Oversight.
The committees charter, which was last amended in September 2009, is available
on the companys website at
www.pb.com
under the heading Our
Company-Leadership & Governance.
The
F
inance
Committee,
which met five times in 2009, reviews the companys
financial condition and evaluates significant financial policies and
activities, oversees the companys major retirement programs, advises
management and recommends financial action to the board. The committees duties
include monitoring the companys current and projected financial condition,
reviewing and approving major investment decisions, and overseeing the
financial operations of the companys retirement, savings, and post-retirement
benefit plans and retirement funds to confirm that plan liabilities are
adequately funded and plan assets are prudently managed. The committee
recommends for approval by the board the establishment of new plans and any
amendments that materially affect cost, benefit coverages, or liabilities of
the plans. In addition, it oversees management of one or more specific risks as
described on page 8 under the heading Role of the Board in Risk Oversight.
The
G
overnance
Committee,
which met four times in 2009, recommends nominees for
election to the board of directors, determines the duties of and recommends
membership in the board committees, reviews executives potential for growth,
reviews and recommends to the board the amount and form of compensation to
non-employee members of the board, and, with the chief executive officer, is
responsible for succession planning and ensuring management continuity. The
Governance Principles of the Board of Directors, which are posted on the
companys website at
www.pb.com
under the caption Our
Company-Leadership & Governance, include additional information about
succession planning. The committee reviews and evaluates the effectiveness of
board administration and its governing documents, and reviews and monitors
company programs and policies relating to directors. The committee reviews
related-person transactions in accordance with company policy. In addition, it
oversees management of one or more specific risks as described on page 8 under
the heading Role of the Board in Risk Oversight.
The Governance
Committee generally identifies qualified candidates for nomination
for election to the board of directors from a variety of sources, including
other board members, management, and stockholders. The committee also may
retain a third-party search firm to assist the committee members in identifying
and evaluating potential nominees to the board.
Stockholders wishing to recommend a
candidate for consideration by the Governance Committee may do so by writing
to the Corporate Secretary, Pitney Bowes Inc., 1 Elmcroft Road, MSC 65-19,
Stamford, CT 06926-0700. Recommendations submitted for consideration by the
committee in preparation for the 2011 annual meeting of stockholders must
be received by January 3, 2011, and must contain the following information:
(i) the name and address of the stockholder; (ii) the name and address of
the person to be nominated; (iii) a representation that the stockholder is
a holder of the companys stock entitled
to vote at the meeting; (iv) a statement in support of the stockholders
recommendation, including a description of the candidates qualifications; (v)
information regarding the candidate as would be required to be included in a
proxy statement filed in accordance with the rules of the Securities and
Exchange Commission; and (vi) the candidates written, signed consent to serve
if elected.
The Governance Committee evaluates candidates recommended by
stockholders based on the same criteria it uses to evaluate candidates from
other sources. The Governance Principles of the Board of Directors, which are
posted on the companys Corporate Governance website at
www.pb.com
under
the caption Our Company-Leadership & Governance, include a description of
director qualifications. A discussion of the specific experience and
qualifications identified by the committee for directors and nominees may be
found on page 16 under the heading Director Qualifications.
If the Governance Committee believes that a potential candidate may be
appropriate for recommendation to the board, there is generally a mutual
exploration process, during which the committee seeks to learn more about the
candidates qualifications, background and interest in serving on the board,
and the candidate has the opportunity to learn more about the company, the
board, and its governance practices. The final selection of the boards
nominees is within the sole discretion of the board.
Alternatively, as referenced on page 7 of this proxy statement,
stockholders intending to appear at a stockholders meeting in order to
nominate a candidate for election by the stockholders at the meeting (in cases
where the board of directors does not intend to nominate the candidate or where
the Governance Committee was not requested to consider his or her candidacy)
must comply with the procedures in Article II, Section 6 of the companys
By-laws. The By-laws are posted on the companys Corporate Governance website
at
www.pb.com
under the caption Our Company-Leadership &
Governance.
The
T
echnology
Committee,
which met two times in 2009, monitors the companys
information technology strategy, significant product development activities
(including software initiatives), and new technology investments. In addition,
it oversees management of one or more specific risks as described on page 8
under the heading Role of the Board in Risk Oversight.
11
D
irectors
Compensation
Role of Governance Committee in Determining
Director Compensation.
In accordance with the Governance Principles of the
Board, the Governance Committee reviews and recommends to the board of
directors the amount and form of compensation to non-employee members of the
board. The Governance Committee reviews the director compensation policy
periodically and consults from time to time with an independent compensation
consultant, selected and retained by the committee, as to the competitiveness
of the program. In 2006, the Governance Committee reviewed peer group and
market data provided by Steven Hall & Partners in considering and
determining non-employee director compensation effective January 1, 2007. The
Governance Committee believes that the compensation for Pitney Bowes
non-employee directors is appropriate and consistent with the philosophy, or
objectives, of the director compensation program as further described in the
Governance Principles of the Board. The following is a summary of the director
compensation program.
D
irectors Fees.
During
2009, each director who was not an employee of the company received an annual
fee of $65,000 and a meeting fee of $1,500 for each board and committee meeting
attended. Committee chairs (except for the Audit Committee chair) receive an
additional $1,500 for each committee meeting that they chair, and the Audit
Committee chair receives an additional $2,000 for each Audit Committee meeting
chaired. The Lead Director receives an additional annual retainer of $10,000.
All directors are reimbursed for their out-of-pocket expenses incurred
in attending board and committee meetings. It is also our practice that when a
non-employee directors spouse or guest is invited by the company to attend a
company-hosted event, the incremental costs of such spousal or guest travel are
treated as income to the director and are grossed up by the company such that
the director is made whole for the added income taxes payable by him or her as
a result of such spousal or guest travel.
The board of directors maintains directors stock ownership guidelines,
requiring, among other things, that each director accumulate and retain a
minimum of 7,500 shares of company common stock within five years of becoming a
director of Pitney Bowes. The directors stock ownership guidelines are
available on the companys Corporate Governance website at
www.pb.com
under the
caption Our Company-Leadership & Governance.
D
irectors Stock Plan.
Under the
Directors Stock Plan, in 2009 each director who was not an employee of the
company received an award of 2,200 shares of restricted stock which are fully
vested upon grant. The shares carry full voting and dividend rights but, unless
certain conditions are met, may not be transferred or alienated until the later
of (i) termination of service as a director, or, if earlier, the date of a
change of control (as defined in the Directors Stock Plan), and (ii) the
expiration of the six-month period following the grant of such shares. The
Directors Stock Plan permits certain dispositions of stock granted under the
restricted stock program provided that the director effecting the disposition
had accumulated and will retain 7,500 shares of common stock. Permitted
dispositions are limited to: (i) transfer to a family member or family trust or
partnership; and (ii) donations to charity after the expiration of six months
from date of grant. The original restrictions would continue to apply to the
donee except that a charitable donee would not be bound by the restriction
relating to termination of service from the board.
Since the approval of the Directors Stock Plan by stockholders in 1991,
the common stock of the company has twice undergone a two-for-one split, in
1992 and 1997, respectively. In addition, the annual grant was increased in
1997 in connection with the discontinuation of the Directors Retirement Plan,
as described below. Ownership of shares granted under the Directors Stock Plan
is reflected in the table on page 15 showing security ownership of directors
and executive officers.
D
irectors Deferred Incentive
Savings Plan.
The company maintains a Directors Deferred
Incentive Savings Plan under which directors may defer all or part of the cash
portion of their compensation. Deferred amounts will be notionally invested
in any combination of several institutional investment funds. The investment
choices available to directors under this plan are the same as those offered to
employees under the companys 401(k) plan. Deferral elections made with respect
to plan years prior to 2004 also included as an investment choice the ability
to invest in options to purchase common stock of the company.
Stock options selected by directors as an investment vehicle for
deferred compensation were granted through the Directors Stock Plan. The
Directors Stock Plan permits the exercise of stock options granted after
October 11, 1999 during the full remaining term of the stock option by
directors who have terminated service on the board, provided that service on
the board is terminated: (i) after ten years of service on the board; (ii) due
to directors death or disability; or (iii) due to the director having attained
mandatory directors retirement age. The stock options may be exercised for
three months following termination for any other reason. The Directors Stock
Plan also permits the donation of vested stock options, regardless of the date
of grant, to family members and family trusts or partnerships. All outstanding
stock options are fully vested.
D
irectors Retirement Plan.
The
companys Directors Retirement Plan was discontinued, and the benefits
previously earned by directors were frozen as of May 12, 1997. Under this plan,
there is no benefit paid to a director who served for less than five years as
of May 12, 1997. A director who had met the five-year minimum vesting
requirement as of May 12, 1997 will receive an annual
12
retirement benefit calculated as 50% of the directors retainer in
effect as of May 12, 1997, and a director with more than five years of service
at retirement will receive an additional ten percent of such retainer for each
year of service over five, to a maximum of 100% of such retainer for ten or
more years of service. The annual retainer fee in effect as of May 12, 1997,
was $30,000. The annual retirement benefit is paid for life. Linda G. Alvarado
is the only current director who is eligible to receive a retirement benefit
under the plan after termination of service on the board. She had completed
five years of service as a director as of the date the plan was frozen, and
will therefore receive an annual benefit of $15,000.
D
IRECTOR COMPENSATION
FOR 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Fees Earned or
Paid in Cash
($)
(1)
|
|
Stock
Awards
($)
(2)
|
|
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($)
(3)
|
|
All Other
Compensation
($)
(4)
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Adkins
|
|
84,500
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
133,164
|
|
Ms. Alvarado
|
|
92,000
|
|
|
48,664
|
|
8,038
|
|
|
0
|
|
|
148,702
|
|
Ms. Busquet
|
|
89,000
|
|
|
48,664
|
|
0
|
|
|
5,000
|
|
|
142,664
|
|
Ms. Fuchs
|
|
90,500
|
|
|
48,664
|
|
0
|
|
|
5,000
|
|
|
144,164
|
|
Mr. Green
|
|
86,000
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
134,664
|
|
Mr. Keyes
|
|
118,500
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
167,164
|
|
Mr. McFarlane
|
|
87,500
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
136,164
|
|
Mr. Menascé
|
|
87,500
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
136,164
|
|
Mr. Roth
|
|
104,000
|
|
|
48,664
|
|
0
|
|
|
5,000
|
|
|
157,664
|
|
Mr. Shedlarz
|
|
108,500
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
157,164
|
|
Mr. Snow
|
|
89,000
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
137,664
|
|
Mr. Weissman
|
|
104,000
|
|
|
48,664
|
|
0
|
|
|
0
|
|
|
152,664
|
|
|
|
|
|
(1)
|
Each non-employee director receives
an annual retainer of $65,000 ($16,250 per quarter) and a meeting fee of
$1,500 for each board and committee meeting attended. Committee chairs
(except for the Audit Committee chair) receive an additional $1,500 for each
committee meeting that they chair, and the Audit Committee chair receives an additional
$2,000 for each Audit Committee meeting chaired. The Lead Director receives
an additional annual retainer of $10,000.
|
|
|
(2)
|
On May 11, 2009, each non-employee
director then serving received an award of 2,200 shares of restricted stock.
The fair market value of the restricted share awards was calculated using the
average of the high and low stock price, $22.35 and $21.89, respectively, as
reported on the New York Stock Exchange on May 11, 2009, the date of grant.
The closing price on May 11, 2009 on the New York Stock Exchange was $22.12.
The grant date fair market value of the restricted stock awards was computed
in accordance with the share-based payment accounting guidance under ASC 718.
The aggregate number of shares of restricted stock held by each director as
of December 31, 2009 is as follows: Mr. Adkins 5,943 shares; Ms. Alvarado
24,600 shares; Ms. Busquet 5,522 shares; Ms. Fuchs 8,963 shares; Mr.
Green 15,500 shares; Mr. Keyes 19,600 shares; Mr. McFarlane 15,875
shares; Mr. Menascé 14,592 shares; Mr. Roth 21,400 shares; Mr. Shedlarz 14,592 shares; Mr. Snow
8,000 shares; and Mr. Weissman 14,592 shares. Stock options were not
awarded to non-employee directors during 2009. Stock options formerly were
available to non-employee directors as an investment choice under the
Directors Deferred Incentive Savings Plan. Cash fees deferred with respect
to plan years prior to 2004 could be invested in options to purchase common
stock of the company. The aggregate number of stock options held by each
director as of December 31, 2009 is as follows: Mr. McFarlane 9,194 and Mr.
Weissman 1,789.
|
|
|
(3)
|
Ms. Alvarado is the only
non-employee director who served on the board during 2009 eligible to receive
payments from the now-suspended Directors Retirement Plan. Ms. Alvarado is
eligible to receive payments upon her retirement from the board.
|
|
|
(4)
|
Ms. Busquet, Ms. Fuchs and Mr. Roth
utilized the Pitney Bowes Non-Employee Director Matching Gift Program during
2009. The company matches individual contributions by current and retired
non-employee directors, dollar for dollar, from a minimum of $25 to a maximum
of $5,000 per board member per calendar year.
|
13
C
ertain
Relationships and Related-Person Transactions
The board of directors has a written Policy on Approval and
Ratification of Related-Person Transactions which states that the Governance
Committee of the board of directors of Pitney Bowes Inc. is responsible for
reviewing and approving any related-person transactions between Pitney Bowes
and its directors, nominees for director, executive officers, beneficial owners
of more than five percent of any class of Pitney Bowes voting stock and their
immediate family members as defined by the rules and regulations of the
Securities and Exchange Commission (related persons). It is the expectation
and policy of the board of directors that all related-person transactions will
be at arms length and on terms that are fair to the company.
Under the related-person transaction approval policy, any newly proposed
transaction between Pitney Bowes and a related person must be submitted to the
Governance Committee for approval if the amount involved in the transaction is
greater than $120,000. Any related-person transactions that have not been
pre-approved by the Governance Committee must be submitted for ratification as
soon as they are identified. Ongoing related-person transactions are reviewed
on an annual basis. The material facts of the transaction and the related
persons interest in the transaction must be disclosed to the Governance
Committee.
If the proposed transaction involves a related person who is a Pitney
Bowes director or an immediate family member of a director, that director may
not participate in the deliberations or vote regarding approval or ratification
of the transaction but may be counted for the purposes of determining a quorum.
The following related-person transactions do not require approval by the
Governance Committee:
|
|
|
|
1.
|
Any
transaction with another company with which a related persons only
relationship is as an employee or beneficial owner of less than ten percent
of that companys shares, if the aggregate amount invested does not exceed
the greater of $1 million or two percent of that companys consolidated gross
revenues;
|
|
|
|
|
2.
|
A
relationship with a firm, corporation or other entity that engages in a
transaction with Pitney Bowes where the related persons interest in the
transaction arises only from his or her position as a director or limited
partner of the other entity that is party to the transaction;
|
|
|
|
|
3.
|
Any
charitable contribution by Pitney Bowes to a charitable organization where a
related person is an officer, director or trustee, if the aggregate amount
involved does not exceed the greater of $1 million or two percent of the
charitable organizations consolidated gross revenues;
|
|
|
|
|
4.
|
Any
transaction involving a related person where the rates or charges involved
are determined by competitive bids; and
|
|
|
|
|
5.
|
Any
transaction with a related person involving services as a bank depositary of
funds, transfer agent, registrar, trustee under a trust indenture, or similar
services.
|
The Governance Committee may delegate authority to approve
related-person transactions to one or more of its members. The member to whom
such authority is delegated must report, for informational purposes only, any
approval or ratification decisions to the Governance Committee at its next
scheduled meeting.
C
ompensation Committee Interlocks and Insider Participation
During 2009, there were no compensation committee interlocks and no
insider participation in Executive Compensation Committee decisions that were
required to be reported under the rules and regulations of the Securities
Exchange Act of 1934, as amended.
14
S
ECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
|
|
|
|
|
|
|
|
|
|
|
|
|
Title of
Class of Stock
|
|
Name of Beneficial Owner
|
|
Shares
Deemed to
be Beneficially
Owned
(1)(2)(3)
|
|
Options
Exercisable
Within
60 Days
(4)
|
|
% of Class
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
Rodney C. Adkins
|
|
|
6,168
|
|
|
0
|
|
*
|
|
|
Common
|
|
Linda G. Alvarado
|
|
|
28,628
|
|
|
0
|
|
*
|
|
|
Common
|
|
Anne M. Busquet
|
|
|
7,082
|
|
|
0
|
|
*
|
|
|
Common
|
|
Anne Sutherland Fuchs
|
|
|
9,963
|
|
|
0
|
|
*
|
|
|
Common
|
|
Ernie Green
|
|
|
26,649
|
|
|
0
|
|
*
|
|
|
Common
|
|
James H. Keyes
|
|
|
21,702
|
|
|
0
|
|
*
|
|
|
Common
|
|
John S. McFarlane
|
|
|
29,871
|
|
|
9,194
|
|
*
|
|
|
Common
|
|
Eduardo R. Menascé
|
|
|
15,292
|
|
|
0
|
|
*
|
|
|
Common
|
|
Michael I. Roth
|
|
|
29,543
|
|
|
0
|
|
*
|
|
|
Common
|
|
David L. Shedlarz
|
|
|
17,092
|
|
|
0
|
|
*
|
|
|
Common
|
|
David B. Snow, Jr.
|
|
|
9,000
|
|
|
0
|
|
*
|
|
|
Common
|
|
Robert E. Weissman
|
|
|
21,078
|
|
|
1,789
|
|
*
|
|
|
Common
|
|
Murray D. Martin
|
|
|
2,014,259
|
|
|
1,901,346
|
|
*
|
|
|
Common
|
|
Michael Monahan
|
|
|
265,834
|
|
|
245,359
|
|
*
|
|
|
Common
|
|
Leslie Abi-Karam
|
|
|
225,561
|
|
|
213,356
|
|
*
|
|
|
Common
|
|
David Dobson
|
|
|
51,540
|
|
|
44,189
|
|
*
|
|
|
Common
|
|
Vicki OMeara
|
|
|
37,161
|
|
|
30,318
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
|
|
All executive officers and directors as a
group (22)
|
|
|
2,816,423
|
|
|
2,445,550
|
|
1.18
|
%
|
|
|
|
*
|
Less
than 1% of Pitney Bowes Inc. common stock.
|
(1)
|
These
shares represent common stock beneficially owned as of March 10, 2010 and
shares for which such person has the right to acquire beneficial ownership
within 60 days thereafter. To our knowledge, none of these shares are pledged
as security.
|
(2)
|
Other
than with respect to ownership by family members, the reporting persons have
sole voting and investment power with respect to the shares listed.
|
(3)
|
Includes
shares that are held indirectly through the Pitney Bowes 401(k) Plan and its
related excess plan.
|
(4)
|
The
director or executive officer has the right to acquire beneficial ownership
of this number of shares within 60 days of March 10, 2010 by exercising
outstanding stock options. Amounts in this column are also included in the
column titled Shares Deemed to be Beneficially Owned.
|
15
B
eneficial
Ownership
The only persons or groups known to the company to be the beneficial
owners of more than five percent of any class of the companys voting
securities are reflected in the chart below. The following information is based
solely upon Schedules 13G and amendments thereto filed by the entities shown
with the Securities and Exchange Commission as of the date appearing below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
Amount and Nature of
Beneficial Ownership
of Common
|
|
Percent of
Common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NWQ
Investment Management Company, LLC
|
|
|
|
|
|
|
|
2049
Century Park East, 16th Floor
|
|
21,700,223
|
(1)
|
|
10.48%
|
|
Los
Angeles, CA 90067
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dodge
& Cox
|
|
|
|
|
|
|
|
555
California Street, 40th Floor
|
|
18,767,666
|
(2)
|
|
9.1%
|
|
San Francisco,
CA 94104
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BlackRock
Inc.
|
|
|
|
|
|
|
|
40 East
East 52nd Street
|
|
13,733,356
|
(3)
|
|
6.63%
|
|
New
York, NY 10022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
Vanguard Group, Inc.
|
|
|
|
|
|
|
|
100
Vanguard Blvd.
|
|
11,078,904
|
(4)
|
|
5.34%
|
|
Malvern,
PA 19355
|
|
|
|
|
|
|
|
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Capital
Research Global Investors
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333
South Hope Street
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10,607,678
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(5)
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5.1%
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Los Angeles, CA 90071
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(1)
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As of
December 31, 2009, NWQ Investment Management Company, LLC, an investment
adviser registered under Section 203 of the Investment Advisers Act of 1940,
had sole investment power with respect to 21,700,233 shares and sole voting
power with respect to 18,241,603 shares.
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(2)
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As of
December 31, 2009, Dodge & Cox, an investment adviser registered under
Section 203 of the Investment Advisers Act of 1940, had sole investment power
with respect to 18,767,666 shares, sole voting power with respect to
17,824,066 shares and shared voting power with respect to 38,500 shares.
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(3)
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As of
December 31, 2009, BlackRock, Inc., a parent holding company, had sole
investment power and sole voting power with respect to 13,733,356 shares.
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(4)
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As of
December 31, 2009, The Vanguard Group, Inc., an investment advisor, had sole
investment power with respect to 10,783,112 shares, shared investment power
with respect to 295,792 shares and sole voting power with respect to 330,792
shares.
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(5)
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As of
December 31, 2009, Capital Research Global Investors, an investment advisor,
had sole investment power with respect to 10,607,678 shares and sole voting
power with respect to 6,257,127 shares.
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S
ection
16(a) Beneficial Ownership Reporting Compliance
Directors and persons who are considered officers of the company for
purposes of Section 16(a) of the Securities Exchange Act of 1934 and greater
than ten percent stockholders (Reporting Persons) are required to file
reports with the Securities and Exchange Commission showing their holdings of
and transactions in the companys securities. It is generally the practice of
the company to file the forms on behalf of its Reporting Persons who are
directors or officers. The company believes that all such forms have been
timely filed for 2009.
P
roposal 1: Election of Directors
D
irector
Qualifications
The board of directors believes that, as a whole, the board should
include individuals with a diverse range of experience to give the board depth
and breadth in the mix of skills represented for the board to oversee
management on behalf of the companys stockholders. In addition, the board
believes that there are certain attributes that each director should possess,
as described below. Therefore, the board and the Governance Committee consider
the qualifications of directors and nominees both individually and in the
context of the overall composition of the board.
The board, with the assistance of the Governance Committee, is
responsible for assembling appropriate experience and
16
capabilities within its membership as a whole, including financial
literacy and expertise needed for the Audit Committee as required by applicable
law and New York Stock Exchange listing standards. Among the other criteria
applicable to all directors, which are set forth in the Governance Principles
of the Board of Directors, are integrity and ethics, business acumen, sound judgment,
and the ability to commit sufficient time and attention to the activities of
the board, as well as the absence of any conflicts with the companys
interests. The Governance Committee is responsible for reviewing and revising,
as needed, criteria for the selection of directors. It also reviews and
updates, from time to time, the board candidate profile used in the context of
a director search, in light of the current and anticipated needs of the company
and the experience and talent then represented on the board. The Governance
Committee reviews the qualifications of director candidates in light of the
criteria approved by the board and recommends candidates to the board for
election by the stockholders at the Annual Stockholders Meeting.
The Governance Committee seeks to include individuals with a variety of
occupational and personal backgrounds on the board in order to obtain a range
of viewpoints and perspectives and to enhance the diversity of the board in
such areas as experience and geography, as well as race, gender, ethnicity and
age.
Among other things, the board has determined that it is important that
the board should include members with the following skills and experiences:
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Financial
acumen
for evaluation of the companys financial statements
and capital structure.
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Significant
international experience and experience with emerging markets
to help
oversee the companys global operations.
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Technology
acumen
, coupled with in-depth understanding of the
companys business and markets, to provide counsel and oversight with regard
to the companys strategy.
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Significant
operating experience
, providing the company
with specific insight into developing, implementing and assessing the
companys operating plan and business strategy.
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Human
resources experience, including executive compensation experience
to help
the company attract, motivate and retain world-class talent.
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Corporate
governance experience
at publicly traded
companies to support the goals of greater transparency, accountability for
management and the board, and protection of stockholder interests.
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Understanding
of customer communications and marketing channels
to
support the companys customer focus and customer communications and
marketing strategy.
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The Governance Committee assesses the effectiveness of its criteria when
evaluating and recommending new candidates.
Each director brings experience and skills that complement those of the
other directors. The board believes that all the directors nominated for
election or continuing to serve are highly qualified, and have the attributes,
skills and experience required for service on the board of directors.
Additional information about each director is included with biographical
information for each appearing below.
Nominees for
Election
The board of directors is divided into three classes whose terms of
office end in successive years.
Ms. Busquet, Ms. Fuchs, Messrs. Keyes, Shedlarz and Snow were elected
last year to three-year terms expiring at the 2012 annual meeting.
Messrs. Adkins, Martin, Roth and Weissman were elected in 2008 to
three-year terms expiring at the 2011 annual meeting.
The Governance Committee recommended to the board of directors, and the
board approved, the nomination of Ms. Alvarado, Messrs. Green, McFarlane and
Menascé to three-year terms expiring at the 2013 annual meeting.
Information about each nominee for director and each incumbent director,
including the nominees or incumbents age, as of March 10, 2010, is set forth
beginning on page 18. Unless otherwise indicated, each nominee or incumbent has
held his or her present position for at least five years.
Should you choose not to vote for a nominee, you may list on the proxy
the name of the nominee for whom you choose not to vote and mark your proxy
under proposal 1 for all other nominees, or grant your proxy by telephone or
the Internet as described on the proxy voting instruction card. Should any
nominee become unable to accept nomination or election as a director (which is
not now anticipated), the persons named in the enclosed proxy will vote for
such substitute nominee as may be selected by the board of directors, unless
the size of the board is reduced. At the annual meeting, proxies cannot be
voted for more than the four director nominees.
Vote
Required
In accordance with the companys By-laws, in an uncontested election, a
majority of the votes cast is required for the election of directors. This
means that any nominee for director in this election who fails to receive a majority
of votes cast in the affirmative must tender his or her resignation for
consideration by the Governance Committee. The Governance Committee will
recommend to the board of directors the action to be taken with respect to such
offer of resignation. The board will act on the Governance Committees
recommendation and publicly disclose its decision within 90 days from the date
of the certification of the election results.
The board of directors recommends that stockholders vote FOR the
election of the following nominees:
17
N
OMINEES
FOR ELECTION TO TERMS EXPIRING AT THE 2013 ANNUAL MEETING
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Linda G. Alvarado,
58, president
and chief executive officer of
Alvarado Construction, Inc., a Denver-based commercial general contractor,
construction management and development firm. Alvarado Construction has
successfully developed and constructed numerous multi-million dollar
commercial, government, transportation, office, communications, energy,
retail, heavy engineering, utility, and technology projects throughout the
United States and Latin America. Ms. Alvarado is also co-owner of the
Colorado Rockies Major League Baseball Club and President of Palo Alto, Inc.
which owns and operates YUM! Brands restaurants in multiple states. Director
since 1992. (Also a director of 3M Company and The Pepsi Bottling Group, Inc.
Formerly a director of Lennox International Inc. and Qwest Communications
International Inc.)
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As a principal of several diverse
businesses, Ms. Alvarado has significant operating experience, as well as an
understanding of marketing, finance and human resources issues. Her
experience as a member of other public company boards of directors
contributes to her understanding of global public company issues, including
those relating to international markets and government affairs.
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Ernie Green,
71,
president and chief executive officer of Ernie Green Industries, Inc., a
manufacturer of automotive components, serving, among others, General Motors,
Honda and Toyota. Director since 1997. (Also a director of Eaton Corporation.
Formerly a director of Dayton Power & Light, Inc.)
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As chief executive officer and
founder of a privately held company, Mr. Green has a wide range of
experience, including business operations, product development, human
resources, finance, and global manufacturing and outsourcing. His experience
as a member of other public company boards of directors contributes to his
knowledge of public company matters, including corporate governance and
public affairs.
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John S. McFarlane,
61,
managing partner of Highland Partners LLC, a
technology consulting and management company. Founder and, until February
2009, chief executive officer, Vidder, Inc. (formerly Piano Networks Inc.),
an Internet protocol software company. Interim chief executive officer and
president, Exar Corporation, a developer of high-performance analog and
mixed-signal silicon solutions for communications, December 2007-April 2008.
Chief executive officer of Ascendent Telecommunications Inc., a
communications software company, 2004-2005. Director since 2000. (Formerly a
director of Creo Inc., Exar Corporation and Fair Isaac Corporation.) Nexsi
Systems, Inc., a private corporation of which Mr. McFarlane previously served
as president and chief executive officer, filed for protection under Chapter
7 of the U.S. Bankruptcy Laws in 2002.
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Mr. McFarlane has significant
experience as a senior public company executive and as a technologist and
founder of new business ventures. His diverse experience both in public
companies and in start-up operations focusing on new technologies contributes
to his understanding of emerging technologies and services, as well as
business operations, strategy and international markets.
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Eduardo R. Menascé,
64,
retired president, Enterprise Solutions Group,
Verizon Communications Inc., a leading provider of wireline and wireless
communications. Director since 2001. (Also a director of John Wiley &
Sons, Inc., KeyCorp, Hill-Rom Holdings, Inc. and Hillenbrand, Inc.)
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Mr. Menascé has broad experience
as a former senior executive responsible for a significant international
operation of a public company, including business operations, finance and
capital markets, international and emerging markets, technology, customer
communications and marketing channels, and executive compensation. His
experience on other public company boards and as a director of the New York
chapter of the National Association of Corporate Directors contributes to his
knowledge of public company matters.
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18
I
NCUMBENT DIRECTORS
WHOSE TERMS EXPIRE AT THE 2012 ANNUAL MEETING
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Anne M. Busquet,
60,
principal of AMB Advisors, LLC, an independent consulting firm; former chief
executive officer, IAC Local & Media Services, a division of
IAC/Interactive Corp., an Internet commerce conglomerate, 2004-2006. Director
since 2007. (Also a director of Blyth, Inc.)
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Ms. Busquet has experience as a
senior public company executive, including as American Express Company
Division President, leading global interactive services initiatives. As
former chief executive officer of the Local and Media Services unit of
InterActiveCorp, she has experience in electronic media, communications and
marketing. Ms. Busquet possesses substantial operating experience, including
in international markets, marketing channels, emerging technologies and
services, and product development.
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Anne Sutherland Fuchs,
62,
consultant to private equity firms. Chair of
the Commission on Womens Issues for New York City, since 2002. Director
since 2005. (Also a director of Gartner, Inc.)
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Ms. Fuchs has experience as a senior
executive with operational responsibility within the media and marketing
industries, as well as experience as global chief executive officer of a
business unit within a public company. She possesses experience in product
development, marketing and branding, as well as in human resources and
executive compensation. Her experience in managing a number of well-known
magazines contributes to her knowledge and understanding of businesses
closely tied to the mailing industry.
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James H. Keyes,
69,
retired chairman, Johnson Controls, Inc., a supplier of automotive systems
and facility management and control. Director since 1998. (Also a director of
Navistar International Corporation and a trustee of Fidelity Funds. Formerly
a director of LSI Logic Corporation.)
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Mr. Keyes has broad experience as
former chief executive officer of a public company, experience as a certified
public accountant, and experience as a member of other public company boards
of directors. He possesses strong operating experience, financial expertise,
experience in capital markets, international markets, corporate governance,
and human resources and executive compensation.
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David L. Shedlarz,
61,
retired vice chairman of Pfizer Inc., a
pharmaceutical, consumer and animal products health company. Formerly vice
chairman, 2005-2007; executive vice president and chief financial officer,
1999-2005, Pfizer Inc. Director since 2001. (Also a director of Teachers
Insurance and Annuity Association and The Hershey Company.)
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Mr. Shedlarz has broad experience
as a former senior executive of a public company, experience as a former
chief financial officer and as a member of other public company boards of
directors. He possesses financial expertise, knowledge of business operations
and capital markets, international markets, emerging technologies and
services, customer communications and marketing channels, human resources and
executive compensation, regulatory and government affairs, product
development, and corporate governance.
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David B. Snow,
Jr.,
55, chairman and chief executive officer of Medco Health
Solutions, Inc., a leading pharmacy benefit manager. Director since 2006.
(Also a director of Medco Health Solutions, Inc.)
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As the chief executive officer of
a public company, Mr. Snow has a broad range of experience, including
business operations, finance and capital markets, emerging technologies,
customer communications and marketing channels, human resources and executive
compensation, regulatory and government affairs, corporate governance, and
product development.
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19
I
NCUMBENT DIRECTORS
WHOSE TERMS EXPIRE AT THE 2011 ANNUAL MEETING
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Rodney C. Adkins, 51,
senior vice president, Systems and Technology
Group, International Business Machines Corporation, a leading manufacturer of
information technologies, since October, 2009. The Systems and Technology
Group encompasses all aspects of IBMs semiconductor, server, storage, system
software and retail store solutions businesses. Formerly senior vice
president, development & manufacturing, May 2007 October 2009, and vice
president of development, December 2003 May 2007, IBM Systems and
Technology Group. Director since 2007.
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As a senior executive of a public
technology company, Mr. Adkins has a broad range of experience, including
emerging technologies and services, global business operations, international
and emerging markets, and product development.
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Murray D. Martin,
62,
chairman, president and chief executive officer
of Pitney Bowes Inc. since January 2009; president and chief executive
officer, May 2007 December 2008; president and chief operating officer,
October 2004 May 2007. Director since 2007. (Also a director of The Brinks
Company.)
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Mr. Martin has strong experience
in business operations, finance, international and emerging markets, emerging
technologies and services, customer communications and marketing channels,
human resources and executive compensation, regulatory and government
affairs, and product development. With more than twenty years of management
experience with Pitney Bowes, Mr. Martin possesses in-depth knowledge and
understanding of the companys business operations, technologies and
customers.
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Michael I. Roth,
64,
chairman and chief executive officer, The Interpublic Group of Companies,
Inc., a global marketing communications and marketing services company.
Formerly chairman of the board, The Interpublic Group of Companies, Inc.,
2004-2005. Director since 1995. (Also a director of Gaylord Entertainment
Company and The Interpublic Group of Companies, Inc.)
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Mr. Roth has broad experience as
the chief executive officer of a public company and as a member of other
public company boards of directors, as well as previous experience as a
certified public accountant and attorney. He possesses financial expertise,
and experience in business operations, capital markets, international
markets, emerging technologies and services, marketing channels, corporate
governance, and executive compensation.
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Robert E. Weissman,
69,
retired chairman, IMS Health Incorporated, a
leading provider of information solutions to the pharmaceutical and
healthcare industries. Director since 2001. (Also a director of Cognizant
Technology Solutions Corporation, Information Services Group, Inc. and State
Street Corporation.)
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Mr. Weissman has broad experience
as the former chief executive officer of several public companies, as well as
experience as a member of other public company boards of directors. He
possesses financial expertise, understanding of business operations,
including international operations, capital markets, emerging technologies
and services, corporate governance, and executive compensation.
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20
R
eport of the Audit Committee
The Audit Committee functions pursuant to a charter that is reviewed
annually and was last amended in February 2010. The committee represents and
assists the board of directors in overseeing the financial reporting process
and the integrity of the companys financial statements. The committee is
responsible for retaining the independent accountants and pre-approving the
services they will perform, and for reviewing the performance of the
independent accountants and the companys internal audit function. The board of
directors, in its business judgment, has determined that all five of the
members of the committee are independent, as required by applicable listing
standards of the New York Stock Exchange.
In the performance of its responsibilities, the committee has reviewed
and discussed the audited financial statements with management and the
independent accountants. The committee has also discussed with the independent
accountants the matters required to be discussed by Statement on Auditing
Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU section
380), as adopted by the Public Company Accounting Oversight Board in Rule
3200T. Finally, the committee has received the written disclosures and the
letter from the independent accountants required by applicable requirements of
the Public Company Accounting Oversight Board regarding the independent
accountants communications with the audit committee concerning independence,
and has discussed with the independent accountants their independence.
Based upon the review of information received and discussions as
described in this report, the committee recommended to the board that the
audited financial statements be included in the companys Annual Report on Form
10-K for the year ended December 31, 2009 filed with the Securities and
Exchange Commission on February 26, 2010.
By the Audit Committee of the board of directors,
David L.
Shedlarz, Chair
Anne M. Busquet
James H. Keyes
Michael I. Roth
Robert E. Weissman
P
roposal
2: Ratification of Independent Accountants for 2010
The Audit Committee has appointed PricewaterhouseCoopers LLP
(PricewaterhouseCoopers) as the independent accountants for Pitney Bowes for
2010. Although not required by law, as a matter of good corporate governance
this matter is being submitted to the stockholders for ratification. If this
proposal is not ratified at the annual meeting by the affirmative vote of a
majority of the votes cast, the Audit Committee intends to reconsider its appointment
of PricewaterhouseCoopers as its independent accountants.
PricewaterhouseCoopers has no direct or indirect financial interest in Pitney
Bowes or any of its subsidiaries. A representative from PricewaterhouseCoopers
will attend the annual meeting and will be available to respond to appropriate
questions and will have the opportunity to make a statement if he or she
desires to do so.
P
rincipal Accountant Fees and Services
Aggregate fees billed for professional services rendered for the company
by PricewaterhouseCoopers for the years ended December 31, 2009 and 2008, were
(in millions):
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2009
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2008
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Audit
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$
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7.5
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$
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8.3
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Audit-Related
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1.4
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1.1
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Tax
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.8
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1.2
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All Other
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Total
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$
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9.7
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$
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10.6
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The Audit fees for the years ended December 31, 2009 and 2008 were for
services rendered for the audits of the consolidated financial statements and
internal control over financial reporting of the company, financial statements
of certain selected subsidiaries and internal control over financial reporting,
statutory audits, issuance of comfort letters, consents, income tax provision
procedures, and assistance with review of documents filed with the Securities
and Exchange Commission.
The Audit-Related fees for the years ended December 31, 2009 and 2008
were for assurance and related services related to employee benefit plan
audits, due diligence related to mergers and acquisitions, and consultations
concerning financial accounting and reporting standards.
The Tax fees for the years ended December 31, 2009 and 2008 were for
services related to tax compliance, including the preparation and/or review of
tax returns and claims for refund, and tax compliance services for expatriate
employees.
The Audit Committee has adopted policies and procedures to pre-approve
all services to be performed by PricewaterhouseCoopers. Specifically the
committees policy is to pre-approve the use of PricewaterhouseCoopers for
audit services as well as detailed, specific types of services within the
following categories of audit-related and non-audit services: merger and
acquisition due diligence and audit services; employee benefit plan audits; tax
services; and procedures required to meet certain regulatory requirements. The
committee will not approve any service prohibited by regulation and does not
anticipate approving any service in addition to the categories described above.
In each case, the committees policy is to pre-approve a specific annual budget
by category for such audit, audit-related
21
and tax services which the company anticipates obtaining from
PricewaterhouseCoopers, and has required management to report the actual fees
(versus budgeted fees) to the committee on a periodic basis throughout the
year. In addition, any new, unbudgeted engagement for audit services or within
one of the other pre-approved categories described above must be pre-approved
by the committee or its chair. In 2009, all services provided by
PricewaterhouseCoopers were pre-approved and no accountant services were
approved through a waiver of the pre-approval requirements.
Vote
Required
Ratification of the appointment of Pitney Bowes independent accountants
requires the affirmative vote of a majority of votes cast by the holders of
common stock and $2.12 convertible preference stock of the company.
The board of directors recommends that stockholders vote FOR the
ratification of PricewaterhouseCoopers LLP as the companys independent
accountants for 2010.
P
roposal 3: Amendment of the Certificate of Incorporation and
By-Laws to provide for the Annual Election of Directors
On February 8, 2010, the board of directors voted to approve, and to
recommend to our stockholders that they approve, phasing out the classification
of the board of directors and providing instead for the annual election of
directors by approving amendments to the companys Amended and Restated
Certificate of Incorporation (the Certificate) and the Companys Amended and
Restated By-laws (the By-laws). The proposed amendments would implement
annual elections and include such other conforming and technical changes to the
Certificate and By-laws as may be necessary or appropriate. If approved by the
Companys stockholders, the Certificate and Bylaws would provide for the annual
election of directors beginning at the 2011 Annual Meeting of Stockholders,
provided however, that prior to the 2011 Annual Meeting of Stockholders, any
director elected by the stockholders of the Company to a three-year term may
complete the term to which he or she has been elected.
Under Article Seventh of the Certificate, and Article II, Section 2 of
the By-laws, the board of directors is divided into three classes, as nearly
equal in number as possible, composed of directors each serving terms of office
of three years. If the proposed measure is approved by our stockholders, those
directors previously elected for three-year terms of office by our stockholders
will complete their three-year terms, and would be eligible for re-election
thereafter for one-year terms at each Annual Meeting of Stockholders. New
directors elected to fill newly created directorships resulting from an
increase in the number of directors or any vacancies on the board of directors
will serve until the next annual meeting. Beginning with the Annual Meeting of
Stockholders in 2013, the declassification of the board of directors would be
complete and all directors would be subject to annual election to one-year
terms.
Classified boards provide effective protection against unwanted
takeovers and proxy contests because they make it difficult for a substantial
stockholder to gain control of the board of directors without the cooperation
or approval of incumbent directors. Classified boards also foster continuity
and stability, not only on the board but also in the overall business of a
company, since a majority of directors will always have prior experience as
directors of the company.
However, classified boards may be perceived as also reducing the
accountability of directors to stockholders as they may limit the ability of
stockholders to evaluate and elect each director each year. Many institutional
investors believe that the election of directors is the primary means for
stockholders to influence corporate governance policies and to hold management
accountable for implementing those policies.
The board of directors considered the arguments in favor of and against
continuation of the classified board of directors and determined that it is in
the companys best interests to propose to declassify its board of directors.
Stockholders are requested in this Proposal 3 to approve the proposed
amendments to the Certificate and Bylaws. If the proposed amendments are
approved by the stockholders, the Company will restate its Certificate and
By-laws to reflect the amendments.
The description set forth above is a summary of the proposed changes to
the Certificate and By-laws. Annex A to these proxy materials shows the
proposed changes to the relevant sections of these documents.
Vote
Required
The proposed amendments to the Certificate and Bylaws to phase out the
classification of the board of directors and provide for the annual election of
directors will be approved if 80% of the voting power of the shares entitled to
vote generally in the election of directors, voting together as a single class,
are voted in favor of the proposal.
22
The board of directors recommends that
stockholders vote FOR the proposal to amend and restate the certificate of
incorporation and by-laws to provide for the annual election of directors.
Proposal 4: Consideration of a Stockholder Proposal
The California Public Employees Retirement System, whose address is
P.O. Box 942707, Sacramento, CA 94229-2707, the beneficial owner, as of
December 9, 2009, of approximately 609,656 shares of common stock has notified
the company in writing that it will introduce the resolution that appears below
at the annual meeting. The resolution and related statement are followed by the
directors statement that it recommends a vote FOR this proposal, and the
explanation for its position:
SHAREOWNER PROPOSAL
RESOLVED, that the shareowners of Pitney Bowes Inc. (Company) urge
the Company to take all steps necessary, in compliance with applicable law, to
remove the supermajority vote requirements in its certificate of incorporation
and by-laws, including but not limited to the 80% supermajority vote
requirements necessary to amend specific sections within the Companys
certificate of incorporation as well as its by-laws.
SUPPORTING STATEMENT
Is accountability by the Board of Directors important to you as a
shareowner of the Company? As a trust fund with more than 1.6 million
participants, and as the owner of approximately 609,656 shares of the Companys
common stock, the California Public Employees Retirement System (CalPERS)
thinks accountability is of paramount importance. This is why we are sponsoring
this proposal which, if passed and implemented, would make the Company more
accountable to shareowners by removing supermajority requirements that, among
other things, make it very difficult to approve certain transactions and to amend
certain sections of the Companys certificate of incorporation and by-laws.
Currently, the affirmative vote of 80% of the outstanding shares of the
Company is required for these actions. When you consider abstentions and broker
non-votes, such a supermajority vote can be almost impossible to obtain. For
example, a proposal to declassify the board of directors filed at Goodyear Tire
& Rubber Company failed to receive 50% of a majority of outstanding shares
even though approximately 90% of votes cast were in favor of the proposal. More
recently, a proposal to remove supermajority provisions failed to pass at
Brocade Communications Systems, Inc. even though 91% of votes cast were in
favor of the proposal. While it is often stated by corporations that the purpose
of supermajority requirements is to provide corporations the ability to protect
minority shareowners, supermajority requirements are most often used, in
CalPERS opinion, to block initiatives opposed by management and the board of
directors but supported by most shareowners.
CalPERS believes that corporate governance procedures and practices,
and the level of accountability they impose, are closely related to financial
performance. CalPERS also believes that shareowners are willing to pay a
premium for shares of corporations that have excellent corporate governance.
Supermajority voting requirements have been found to be one of six entrenching
mechanisms that are negatively correlated with company performance. See What
Matters in Corporate Governance? Lucien Bebchuk, Alma Cohen & Allen
Ferrell, Harvard Law School, Discussion Paper No. 491 (09/2004, revised
03/2005). If the Company were to remove its supermajority requirements, it
would be a strong statement that this Company is committed to good corporate
governance and its long-term financial performance. We urge your support FOR
this proposal.
Directors Statement regarding the Stockholder Proposal
The board of directors has determined to recommend that stockholders
vote in favor of the proposal to eliminate the supermajority provisions in the
Restated Certificate of Incorporation and By-laws (Supermajority Provisions)
after weighing the competing considerations.
If stockholders approve this proposal, the board of directors will
abide by the vote of stockholders and will present for a vote of stockholders
at the 2011 Annual Meeting amendments to the Restated Certificate of
Incorporation and By-laws that, if approved, would eliminate the Supermajority
Provisions.
In 1984, the board recommended, and the stockholders approved, adoption
of the Supermajority Provisions (together with other amendments to the Restated
Certificate of Incorporation), at the Annual Meeting of Stockholders. However,
the board is aware that during the period since 1984, some institutional
investors and commentators have become increasingly vocal in their opposition
to supermajority voting requirements.
Considerations for and against the Supermajority Provisions are
summarized below.
Considerations Against Supermajority Provisions
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Violate the
principle that a simple majority of voting shares should be all that is
necessary to
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effect change
regarding a company and its corporate governance provisions.
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Allow the holder
of a minority of the companys shares to block amendments that could be in
the best interests of stockholders.
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May be viewed as
stockholder-unfriendly and this perception may lead to negative publicity and
discourage some institutional investment.
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May be perceived
as making management and the board less accountable to stockholders.
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Considerations Favoring Supermajority Provisions
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Protect against
short-term, self-interested actions by one or a few large stockholders who
would seek to make fundamental changes to the company without the involvement
of the board, which has a fiduciary duty to act in a manner it believes to be
in the best interests of the company and its stockholders.
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Give the board
valuable time to consider alternative proposals that might provide greater
value for all stockholders.
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Provisions are
limited to a few rare, major corporate actions that should only be taken if
there is a true mandate of the stockholders.
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Under any
circumstances and especially during a period of depressed stock prices it
is important that the board be able to respond to opportunistic takeover bids
from a position of strength, ensuring that the outcome is in the best
interests of the company and all stockholders.
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Vote Required
Approval of the stockholder proposal requires the affirmative vote of a
majority of the votes cast.
The board of directors recommends a vote FOR
this proposal.
Report of the Executive Compensation
Committee
The Committee 1) has reviewed and discussed with management the section
included below in this proxy statement entitled Compensation Discussion and
Analysis (the CD&A) and 2) based on the review and discussions referred
to in item 1) above, the Committee has recommended to the board of directors
that the CD&A be included in the companys Annual Report on Form 10-K for
the year ended December 31, 2009 and this proxy statement.
By the Executive Compensation Committee of the board of directors,
James H. Keyes, Chair
Anne Sutherland Fuchs
Eduardo R. Menascé
David B. Snow, Jr.
Robert E. Weissman
Compensation Discussion and Analysis
The following discussion and analysis
contains statements regarding company performance targets and goals. These
targets and goals are disclosed in the limited context of our compensation
programs and should not be understood to be statements of managements
expectations or estimates of results or other guidance. Pitney Bowes
specifically cautions investors not to apply these statements to other
contexts.
Named Executive Officers
In this Compensation Discussion and Analysis, we describe the material
components of our executive compensation program for our named executive
officers. The named executive officers for 2009 are: Mr. Murray D. Martin,
chairman, president and chief executive officer; Mr. Michael Monahan, executive
vice president and chief financial officer; Ms. Leslie Abi-Karam, executive
vice president and president, Mailing Solutions Management; Mr. David Dobson,
executive vice president and president Pitney Bowes Management Services; and
Ms. Vicki OMeara, executive vice president and chief legal and compliance
officer.
Objectives
Our key compensation goals are to attract, retain and motivate high
performing executives with a commitment to the long-term success of our
business.
We seek to establish a compensation program based on the following five
main principles:
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(1)
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Compensation
should be tied to performance and long-term stockholder return;
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(2)
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Compensation
should reflect leadership position and responsibility, and performance-based
compensation should be a greater part of total compensation for more senior
positions;
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(3)
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Incentive
compensation should reward both short-term and long-term performance;
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(4)
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Compensation
levels should be sufficiently competitive to attract and retain talent; and
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(5)
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Executives should
own Pitney Bowes stock to align their interests with Pitney Bowes
stockholders.
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Compensation should be tied to performance
and long-term stockholder return
We link compensation, including executive compensation, to the
performance of the company as a whole as well as to individual performance. In
particular, the short-term, or annual, incentive compensation element for each
of the named executive officers is tied predominantly to enterprise performance
during the current fiscal year, and the long-term incentive compensation
element is tied to long-term enterprise performance. We evaluate enterprise
performance using a number of criteria, including;
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income from
continuing operations;
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organic growth;
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adjusted earnings
per share;
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adjusted earnings
before interest and taxes;
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adjusted free cash
flow; and
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development and
implementation of long-term strategy.
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For information on GAAP / non-GAAP adjustments, please see page 28.
In addition, we use the companys total stockholder return relative to
the total stockholder return for the Standard & Poors 500 (S&P 500)
as a modifier in the calculation of long-term incentive payments.
Compensation should reflect leadership
position and responsibility, and performance-based compensation should be a
greater part of total compensation for more senior positions
It is our belief that employees with higher levels of responsibility
and a greater ability to influence enterprise results should have a greater
percentage of variable total compensation. This ensures that the interests of
senior executives are aligned with stockholders.
Our consideration of individual pay levels, which consist of base
salary and annual and long-term incentive targets, typically include factors
such as:
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experience in the
position;
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individual
performance measured against objectives;
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demonstrated
leadership;
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potential to
enhance long-term stockholder value;
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recruiting and
retention needs;
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internal pay
equity;
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external
marketplace;
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current salary;
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salary history;
and
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prior incentive
awards.
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Incentive compensation should reward both
short-term and long-term performance
Pitney Bowes short-term executive compensation program includes salary
and annual performance-based cash incentives designed to reward performance
without encouraging executives to take unnecessary and excessive risk. Pitney
Bowes long-term executive compensation program includes stock options,
performance-based restricted stock units, which we refer to as
performance-based RSUs, and cash incentive units, which we refer to as CIUs.
These components represent the compensation opportunity for named executive
officers (excluding benefits).
The chart below illustrates the 2009 target
compensation mix for the CEO and the average of the 2009 target compensation
mix for the other named executive officers.
25
Compensation levels should be sufficiently
competitive to attract and retain talent
To provide that Pitney Bowes current and long-term executive
compensation is competitive in the marketplace, the Executive Compensation
Committee of the board of directors (the Committee) establishes our target
compensation structure based on companies with comparable revenues in the $6 to
$10 billion range. We developed our data on compensation levels for our named
executive officers using Towers Watsons published executive compensation
reports. Annually, the Committee reviews our actual compensation payouts
against a peer group of publicly traded companies listed on page 29 with
comparable revenue, market capitalization and total stockholder return.
The Committee strives to set target compensation which includes base
salary, and annual and long-term target incentives, for our named executive
officers at the market median, although individual levels can vary for a
variety of reasons as discussed above. Actual compensation may be above or
below the median based on actual performance.
Executives should own Pitney Bowes stock to
align their interests with Pitney Bowes stockholders
Stock ownership and equity-related compensation arrangements are
considered key elements to focus executives on increasing stockholder value.
Therefore, we aim to develop and maintain stock programs that encourage each
executive to act like a business owner. A substantial portion of an executives
long-term incentive compensation is awarded in the form of stock compensation,
which along with the CIUs, serves as the primary vehicle for aligning the
interests of executives with long-term stockholders. Named executive officers
have access to various vehicles to assist in building their ownership over
time, including:
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1)
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the ability to
elect investment of company matching contributions in the 401(k) Plan and the
401(k) Restoration Plan in company stock;
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2)
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the ability to
elect company stock as an investment option in the companys Deferred
Incentive Savings Plan;
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3)
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retention of
shares acquired upon exercise of stock options or vesting of restricted
stock; and
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4)
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participation in
the Dividend Reinvestment Plan (which is available to all of our
stockholders).
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We believe it is important that the company maintain a stock ownership
policy that encourages executives to own substantial amounts of company stock.
As a result, the company maintains the Executive Stock Ownership Policy that is
described on page 35.
Compensation Design Decisions
Actions Taken by the Executive Compensation
Committee in 2009
The Committee believes that the companys compensation program
effectively achieves the objective of aligning compensation with performance
measures that are directly related to the companys financial goals without
encouraging executives to take unnecessary and excessive risks. The Committee
strives to maintain a compensation program that is balanced to help us
effectively motivate and retain our executives.
During 2009, the Committee and management evaluated and reviewed the
executive compensation mix, in particular the long-term incentive program, in
the context of the companys performance and the economy. Following this
review, the long-term incentive program, which in 2008 utilized two types of
incentives for named executive officers, 50% stock options and 50% CIUs, was
modified in 2009 to include performance-based RSUs. In 2009 the Committee
determined the long-term incentive mix for the named executive officers would
be 50% CIUs, 25% stock options and 25% performance-based RSUs. The Committee
believes that the addition of these performance-based RSUs would achieve a
better balance in the long-term incentive program while continuing to reflect
the importance of the role of stock performance in executive compensation.
The Committee also determined that stock option awards granted on and
after 2009 will vest in equal installments over three years after the date of
grant. The change, from a four to three year vesting schedule, was made to more
closely align the stock options with competitive practices.
The Committee reviewed a compensation risk assessment of the 2007 Stock
Plan and the Key Employees Incentive Plan which we refer to as the KEIP. The
analysis was based on a risk assessment tool suggested by Frederic W. Cook
& Co., Inc. (FWC), the Committees independent consultant, which is used
to assist companies in determining the level of risk in compensation plans. It
was determined that the plans do not create risks that are reasonably likely to
have a material adverse effect on the company.
The Committee approved a recoupment or clawback policy which gives
the board of directors the discretion to adjust, recoup or require the
forfeiture of any awards made or paid to named executive officers under the
2007 Stock Plan or the KEIP. This policy applies to payments made during the
prior 36 month period in the event of any financial restatement due to a
misrepresentation of the financial state of the company.
26
The Committee also approved a recoupment policy which gives the board
of directors the discretion to adjust, recoup or require the forfeiture of any
awards made or paid under the KEIP to any employee, including executive
officers, whom the board of directors reasonably believes engaged in misconduct
or breached any provisions in their Proprietary Interest Protection Agreement,
which generally provides for confidentiality, and non-competition and
non-solicitation of employees and customers for one year following termination
of employment. This policy previously applied only to the 2007 Stock Plan.
The Committee determined and approved, and in the case of the CEO
endorsed for approval by the board of directors, that 50% of the cash
performance awards that were vested and paid in August 2009 would be settled in
company stock and that withholding taxes on the full value of the vested award
would be withheld from the remaining portion of the award that was paid in
cash. The stock acquired by the executives in connection with the settlement
was applied towards the executive stock ownership requirements.
Role of the Executive Compensation Committee
in Determining Executive Compensation
At the beginning of each year, the Committee reviews the financial and
strategic objectives for the company for that calendar year based on the
metrics that have been recommended by the senior management and approved by the
board of directors. In addition, senior management recommends to the Committee
base salary and the target levels of annual and long-term incentive
compensation for the named executive officers other than the CEO. The Committee
then reviews and determines whether to approve or modify the financial and
strategic objectives, base salary and the target levels of annual and long-term
incentive compensation as submitted.
The Committee recommends for approval by the independent board of
directors the CEOs base salary and target levels. In making its decisions, the
Committee consults with FWC, its outside independent consultant.
Representatives from FWC attended all the Committee meetings in 2009. In
addition, the companys human resources department and the Committee have
discussed with FWC the design of programs that affect executive officer
compensation. The Committee has the sole authority to hire and terminate its
independent consultant.
At the end of each year, the Committee reviews the financial and
strategic accomplishments for the company for that calendar year and the
recommended actual payout levels for incentive compensation. The Committee then
determines the annual and long-term incentive compensation for the named executive
officers and recommends for approval by the independent board of directors the
CEOs compensation. The Committee also reviews tally sheets provided by the
company to evaluate the individual components and the total mix of
compensation.
Role of Management in Determining Executive
Compensation
In the beginning of the year our CEO, on behalf of senior management,
recommends to the Committee financial and strategic objectives for the
incentive plans based on the companys financial and strategic objectives set
by the board of directors. In addition, the CEO and the executive vice
president and chief human resources officer recommend target levels of annual
and long-term incentive compensation for the named executive officers other
than the CEO.
At the end of each year, each named executive officer completes a
written self assessment of his or her performance against his or her
objectives. The CEO recommends individual ratings for each named executive
officer other than himself and these ratings are considered by the Committee in
determining annual merit salary increases. The Committee recommends to the
independent directors of the board an individual rating for the CEO. In making
recommendations for annual merit salary increases, the CEO or the Committee, as
applicable, uses market data, to the extent available, and the Committee or the
independent directors, as applicable, reviews the recommendations and
determines the actual merit increases, if any, that will be awarded.
The CEO evaluates the performance of his direct reports and recommends
incentive compensation actions to the Committee. The executive vice president
and chief human resources officer is also consulted in developing
recommendations regarding executive compensation. The actual payout levels for
annual incentive compensation are based upon the companys performance against
the pre-established objectives and strategic qualitative criteria such as total
shareholder return and customer value. For long-term incentive compensation,
the recommendation to the Committee for payout levels is based on
pre-established objectives and a total shareholder return calculation.
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Accounting Items
and Reconciliation of GAAP to Non-GAAP Measures
For 2009,
the Committee determined that to avoid unduly rewarding or penalizing
executives for conditions over which they had little or no control, adjusted
earnings per share and adjusted free cash flow results may exclude the impact
of special items (both positive and negative) such as restructuring charges,
legal settlements and write downs of assets which materially impact the
comparability of the companys results of operations. Organic growth excludes
certain items such as acquisitions and the impact of foreign currency
translation.
The
following are non-GAAP measures: adjusted earnings per share, adjusted free
cash flow, and adjusted earnings before interest and taxes (EBIT).
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Adjusted earnings per share
exclude special items including unbudgeted stock repurchase programs and the
impact of any accounting changes.
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Adjusted free cash flow is
adjusted net income plus depreciation and amortization, stock option expense
and deferred taxes; changes in working capital excluding increases in finance
receivables, net of reserve account deposits; less capital expenditures, net
of disposals.
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Adjusted EBIT is earnings before
interest and taxes and is calculated by taking the adjusted net income result
and adding back minority interest; interest expense net of interest income
and taxes.
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This
adjusted financial information should not be construed as an alternative to our
reported results determined in accordance with GAAP. Further, our definition of
this adjusted financial information may differ from similarly titled measures
used by other companies.
Reconciliation
of GAAP measures to non-GAAP measures may be found at the companys website
www.pb.com/investorrelations
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Treatment of Special Items
In
determining performance goals and evaluating enterprise performance results,
the Committee may use its discretion and judgment to ensure that managements
rewards for business performance are commensurate with their contributions to
that performance while still holding management accountable for the overall
results of the business. The Committee believes that the metrics for incentive
compensation plans should be specific and objective. However, in exercising its
negative discretion, the Committee recognizes that interpretation of the
application of pre-established metrics to results may be necessary from time to
time for certain special items, such as changes in company strategy or new
accounting pronouncements. The Committee has adopted a philosophy for
evaluating previously established metrics in light of special items.
Specifically, the Committee may consider whether or not to include the impact
of the special item on incentive plan targets based on typical competitive
practices and the specific circumstances for each special item. In 2009,
special items included charges taken for restructuring activities. For the
2007-2009 CIU cycle, special items also included restructuring and asset
impairment charges and tax adjustments.
Tally Sheets
Management
provides the Committee and FWC, its independent consultant, with tally sheets
which demonstrate the total mix of compensation for executive officers. The
tally sheets show the dollar amount of the elements of each executive officers
compensation, including:
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total cash compensation (base
salary and annual incentive);
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long-term incentive grants
(stock options, performance-based RSUs, restricted stock and CIUs awarded at
grant);
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financial counseling;
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long-term incentive payouts;
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balances in the companys
qualified and nonqualified pension, defined contribution and other deferred
compensation plans;
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equity and long-term cash plan
balances; and
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amounts that would be payable
under various termination scenarios, including involuntary termination, and
termination following a change of control, or due to death or disability.
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The
purpose of these tally sheets is to bring together all of the elements of
compensation so that the Committee may analyze both the individual elements of
compensation as well as the aggregate total amount of actual and projected
compensation. In addition tally sheets are reviewed to determine whether any
single component of compensation is out of the ordinary or out of the appropriate
range of total compensation as a whole.
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Benchmarking
To ensure
that Pitney Bowes executive compensation is competitive in the marketplace,
the Committee annually reviews the competitiveness of each executives
compensation with a view towards determining the optimal mix of compensation.
The Committee establishes our target compensation structure based on companies
with revenues in the $6 to $10 billion range using Towers Watsons published
executive compensation reports.
This
market data includes reference points for the Committees evaluation of
compensation decisions, but is not the sole basis for determining appropriate
compensation design, compensation targets, or individual pay levels. At any
point in time, compensation targets and individual pay levels may be above or
below the median for a variety of reasons. For example, target levels may be
affected by:
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the value of the total rewards
package;
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program design and strategic
considerations;
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affordability;
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changing competitive conditions;
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program transition
considerations;
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the definition and scope of the
executives role;
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an executives individual
contributions to the company; or
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succession or retention.
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When
determining compensation for 2009, the Committee noted that the compensation
for Mr. Martin was in line with the median of the market data for chief
executive officers of similar size companies.
While
Pitney Bowes does not have a competitor that is in a majority of our
businesses, the Committee annually reviews our relative performance and actual
compensation payouts against the relative performance and compensation payouts
of the peer group described below. This peer group, which in 2008 was modified
by FWC at the direction of the Committee, consists of companies that have
revenue, market capitalization and number of employees similar to those of the
company. The peer group was designed to enable the Committee to analyze the
competitive market for the talent and skill required to lead a business of
complexity and size similar to that of Pitney Bowes. Based on this review, the
Committee determined that the Pitney Bowes compensation data was in line with
the data reviewed.
The peer
group of companies that was determined by FWC and the Committee consist of the
companies listed below. There were no changes made to the peer group in 2009.
Affiliated Computer Services, Inc.
Agilent Technologies, Inc.
Alliance Data Systems Corporation
Automatic Data Processing, Inc.
Cognizant Technology Solutions
Computer Sciences Corporation
DST Systems, Inc.
Fiserv, Inc.
Harris Corporation
Ingersoll-Rand Company Limited
ITT Corporation
Lexmark International, Inc.
NCR Corporation
Rockwell Automation, Inc.
R.R. Donnelley & Sons Company
Seagate Technology LLC
Xerox Corporation
In
addition, to supplement the information regarding peer companies, the Committee
has engaged FWC to provide, under the oversight of the Committee, an analysis
on compensation trends relative to the peer group along with their views on
specific compensation programs designed by company management.
Components of
Compensation
Base Salary
We pay
base salary to compensate named executive officers for performing the daily
duties of their defined jobs in amounts that are competitive in the markets in
which we operate. In general, the company aligns base salary for executives
with reference to the competitive market median data for base salary using
Towers Watsons published executive compensation reports.
Base
salaries for the named executive officers are all within plus or minus 10% of
the median of competitive data.
Among the
factors considered in determining the actual base salary for executives are:
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the potential impact the
individual may make on the company now and in the future;
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internal pay equity;
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level of experience and skill;
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individual performance compared
with annually established financial, strategic, unit or individual
objectives; and
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competitive market salary rates
for similar positions.
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Salaries
are reviewed annually on a common review date. The Committee determined that
there would be no merit increases for executives, including the named executive
officers, in 2009 and 2010 due to the current global economic environment and
our company performance.
Annual Incentives
Our target
annual incentive compensation is competitive in the markets in which we
operate. We pay annual performance-based incentive compensation, or short-term
incentives, to reward named executive officers for achieving certain goals over
the course of the year.
The
factors considered in determining the annual incentive target award levels for
each member of this group are:
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potential impact the individual
may make on the company now and in the future;
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level of experience;
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internal pay equity; and
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competitive market data for
similar positions.
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Named
executive officers are eligible for annual incentives for achieving challenging
financial and strategic objectives that are established at the beginning of
each year. The Committee determined that the annual incentive target would be
160% of base salary for our CEO. This increase to 160% from 150% of base salary
in 2008 reflects his additional duties and responsibilities in connection with
becoming chairman of the company, effective January 1, 2009. The annual
incentive targets for the other named executive officers range from 60-80% of
base salary. This range is unchanged from 2008. For each named executive
officer, the Committee targets annual incentive payouts at levels which strive
to ensure that total compensation is at the median of competitive market data
for each position, however individual levels can vary for a variety of reasons
as discussed above.
The
combined base salary and target annual incentive for the named executive
officers in 2009 was, on average, equal to the median of competitive market
data.
Annual
incentive payments for 2009 were subject to the company first achieving a
threshold income from continuing operations objective of $408,263,000 excluding
all one-time items. Actual 2009 income from continuing operations was
$473,399,000. The maximum annual incentive a named executive officer could
receive under the KEIP, is $4,000,000 and the Committee applies negative
discretion to reduce annual awards such that individual payouts are in line
with financial and strategic enterprise, business unit and individual
performance.
2009 Annual Incentive Payout
In
applying negative discretion in determining the awards for 2009 performance,
the Committee measured the companys financial and strategic performance
against objectives that were set by the Committee in the first quarter of 2009.
The payouts for named executive officers are predominantly tied to these
objectives, with some discretion for individual performance.
The 2009
financial objectives, which were each weighted at 17.5% at target, were as
follows:
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Financial Objectives
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Target
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Organic
Growth
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0%
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Adjusted
Earnings Per Share
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$2.67
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Adjusted
EBIT
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$1.093 billion
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Adjusted
Free Cash Flow
|
|
$745 million
|
The 2009 strategic performance objective was weighted at 30% at target and consisted of
creating new business opportunities, sustaining profit growth in mail-related businesses,
expanding beyond the core business, and creating efficiency and scale through innovation and transformation.
In
applying negative discretion the Committee also considers factors such as
customer loyalty, talent and leadership development, and other significant
accomplishments.
In
February 2010, the Committee determined 2009 performance. The company exceeded
its performance target for adjusted free cash flow and the strategic performance objective. The Committee compared actual
performance to the predetermined targets to determine the resulting performance
factor. The resulting performance factor of each metric may be between 0-150%
of the applicable target. Given the challenging environment in 2009, organic
growth, adjusted earnings per share and adjusted earnings before interest and
taxes did not meet target expectations and there was no payout for those
objectives.
The
performance factor for free cash flow, which was weighted at 17.5% at target,
was 150% resulting in a payout factor of 26%. The Committee determined that the
company exceeded target with respect to the strategic performance objective
resulting in a performance factor of 35%. Based on these results, the Committee
approved annual incentive awards in 2009, for the named executive officers
other than Mr. Monahan, at approximately 61% of amounts they would have received
had all the factors been achieved at target. The Committee determined that
Mr. Monahans annual
incentive award would include an additional amount of $50,000 in connection
with his leadership role in the strategic transformation initiatives. The
performance factor of 61% of target represents a decrease of 36% from the
performance factor in 2008.
30
Long-term
Incentives
We pay
long-term incentives to improve the companys overall performance by linking
the named executive officers long-term rewards to our long-term results. We
also pay long-term incentives in order to be competitive in the markets in
which we operate.
The
long-term incentive program, which previously utilized stock options and CIUs,
was modified in 2009 to include performance-based RSUs. In the past stock options
made up 100% of the equity portion of our long-term incentive program. The
modification in 2009 resulted in performance-based RSUs and stock options each
making up 50% of the equity portion of our long-term incentive program. The
Committee decided that the change in the mix of the equity portion to include
performance-based RSUs would achieve a better balance in the long-term
incentive program while continuing to reflect the importance of the role of
stock performance in executive compensation.
The annual
long-term incentive value is based on a total target dollar value, rather than
a fixed number of shares, stock options or performance-based RSUs.
The
factors considered in determining the long-term incentive target dollar value
for each member of this group are:
|
|
|
|
|
potential impact the individual
may make on the company now and in the future;
|
|
|
|
|
|
level of experience;
|
|
|
|
|
|
internal pay equity; and
|
|
|
|
|
|
competitive market data for
similar positions.
|
For each
named executive officer, the Committee strives to grant long-term incentives at
levels designed to ensure that total compensation is at the median of
competitive market data for each position. However, target compensation can
vary for a variety of reasons as discussed above. The Committee may also award
shares of restricted stock in unique circumstances where needed for attracting,
retaining or motivating executive talent.
The base
salary, target annual incentive and target long-term incentive for the named
executive officers in 2009 was, on average, 106% of the median of competitive
market data. The Committee uses these performance-driven components to link
executive compensation to long-term company performance and to external market
performance of the companys stock price.
Cash Incentive Units
CIUs are
long-term incentive awards granted under the KEIP that are paid in cash with a
unit value that is based on the achievement of pre-established financial
objectives over a three-year performance period. For the named executive
officers, payments are subject to the company first achieving a threshold
income from continuing operations objective. Once this threshold has been
achieved the range of the CIU value may be between $0 and $1.80 based upon the
achievement of the pre-established goals described below. The maximum long-term
incentive payout a named executive officer could receive under the KEIP is
$8,000,000 and the Committee applies negative discretion to reduce awards such
that individual payouts are in line with financial and strategic enterprise
performance. With respect to CIUs awarded before 2008, in applying negative
discretion the Committee considers achievement of financial metrics over the
cumulative three year cycle. With respect to CIUs awarded beginning in 2008, in
applying negative discretion the Committee considers achievement of financial
metrics for each individual year in the three-year cycle.
CIUs are
granted annually to named executive officers. The pre-established goals used to
determine the value of each unit are:
|
|
|
|
|
adjusted earnings per share; and
|
|
|
|
|
|
adjusted free cash flow.
|
Adjusted
earnings per share and adjusted free cash flow are each weighted at 50% in
calculating CIU values. The Committee also uses a Total Stockholder Return
(TSR) modifier in the calculation of the CIU value. The unit value based on
financial performance may be modified by up to 25%, upwards or downwards, based
on Pitney Bowes three-year TSR performance compared to the three-year TSR
performance of the S&P 500. The purpose of the TSR modifier is to balance
the measurement of performance using the internal financial goals with the
measurement of the relative stockholder value created by meeting these goals.
For the
2009-2011 CIU cycle, the unit value at target is $1.00. The two performance
goals for the CIUs are set in the first quarter of each year during the
three-year CIU cycle. If the threshold level of performance is not met for a
calendar year for both of these goals, one-third of the award value will be
forfeited. If the income from continuing operations threshold is not met over
the three year cycle, the entire award will be forfeited.
The
performance objectives for the 2009 portion of the 2009-2011 CIU cycle are as
follows:
|
|
|
|
2009 LTI
Performance Objectives
|
|
|
Target
|
|
|
|
|
Adjusted Earnings Per Share (EPS)
|
|
$2.67
|
Adjusted Free Cash Flow (AFCF)
|
|
$745 million
|
Targets
for each additional year in the cycle will be determined in the first quarter
of each year.
31
2009 Long-Term Incentive Payout (CIU 2007-2009 Performance Period)
For the
named executive officers, CIU payments for 2009 were subject to the company
first achieving a threshold three-year (2007-2009) average of income from
continuing operations objective of $485,412,000 excluding all one-time items.
Actual income from continuing operations for the 2007-2009 CIU cycle was
$552,582,000.
The
targets for the 2007-2009 CIU cycles were adjusted three-year earnings per
share of $9.59 and adjusted three-year free cash flow of $2.239 billion and
actual performance was adjusted three-year earnings per share of $7.78 and
adjusted three-year free cash flow of $2.675 billion. The TSR modifier
decreased the CIU payout level by 11.7% resulting in a final payout of $0.79
per unit, which represents a below-target level of performance. This payout
level represents a decrease of 8% from the CIU payout in 2008.
Stock Options
The
independent members of the board of directors are responsible for stock option
grants to the CEO. The Committee is responsible for grants to all of the other
executive officers of the company, including the named executive officers. An
annual grant of stock options is made to named executive officers at the
Committees or, in the case of the CEO, the boards meeting during the first
quarter of the year. This is typically after our fourth quarter earnings
release has been widely disseminated. The Committee may, from time to time,
grant stock options to new executive hires; these grants are typically made at
the Committees next regularly scheduled meeting.
In special
circumstances, the Committee may determine that it is appropriate to make
additional grants to executives (other than the CEO) during the course of the
year; these grants are made at a Committee meeting.
The
companys stock price must increase in order for stock option grantees to
realize any benefit. When the stock price increases, both stockholders and
stock option grantees will benefit.
On
February 9, 2009, the named executive officers were awarded an annual grant of
stock options to purchase common stock of the company under the 2007 Stock Plan
at an exercise price of $24.75 per share, the closing price of the companys
common stock on February 9, 2009. The stock options have a ten-year exercise
period and will vest and become exercisable in equal installments over three
years after the date of grant.
The
maximum amount of shares, including stock options, that may be awarded to any
individual in any plan year under the 2007 Stock Plan is 600,000.
Restricted Stock Units
The
independent members of the board of directors are responsible for the grant of
performance-based RSU awards to the CEO. The Committee is responsible for
grants to all of the other executive officers of the company, including the
named executive officers. The 2009 grant of performance-based RSUs was made to
named executive officers at the Committees or, in the case of the CEO, the
boards meeting during the first quarter of the year. The performance-based
RSUs have a four-year vesting schedule with the restrictions lapsing in equal installments
over four years after the date of grant. No dividends are issued until the
restrictions on the performance-based RSUs have lapsed. In the case of the
executive officers, including the named executive officers, commencement of the
vesting of the performance-based RSUs is subject to the company achieving an
initial financial threshold, which, for the 2009 award, was 2009 income from
continuing operations equaling or exceeding $408,263,000. Since actual 2009
income from continuing operations was $473,399,000 the 2009 award will vest as
described above. If the initial threshold had not been achieved, the
performance-based RSUs granted in 2009 would have been forfeited.
In
November 2009, the Committee approved a grant of performance-based RSUs to Mr.
Dobson and Ms. OMeara, with the cash value of $150,000 and $140,000
respectively, to recognize their assumption of newly expanded responsibilities
and to create incentive and motivation to perform successfully in certain
important strategic initiatives assigned to them. The vesting of the
performance-based RSUs is subject to the company achieving pre-determined
income from continuing operations for 2010. If this performance hurdle is
achieved the performance-based RSUs will vest in full on the fourth anniversary
of the date of grant.
32
The
supplemental table below is designed to provide additional details on the
payments received by our CEO in 2009.
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|
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|
|
|
|
|
|
|
|
SUPPLEMENTAL TABLE OF CEO PAY RECEIVED IN
2009
|
|
|
|
|
|
|
|
|
|
Form of
Compensation
|
|
Period
Covered
|
|
Target
Compensation
($)
|
|
Total
Received
($)
|
|
Performance Results Over Performance Period
That Produced the Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salary
|
|
2009
|
|
|
950,000
|
|
|
950,000
|
|
Due to the economic climate and
company performance, there were no merit increases in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
2009
|
|
|
1,520,000
|
|
|
937,200
|
|
The company achieved 2009 income
from continuing operations objective of $408,263,000. The company exceeded
its performance targets for adjusted free cash flow and the strategic performance
objective. The Committee determined that the achievement of organic growth,
adjusted earnings per share and adjusted EBIT fell short of expectations
and thus resulted in no payout for those objectives. The Committee compared
actual performance to the predetermined targets to determine the resulting
performance factor of approximately 61%. This represents a decrease of approximately
36% from the performance factor in 2008.
|
|
|
|
|
|
|
|
|
|
|
|
Performance Award
Payout
|
|
2008
|
|
|
475,000
|
|
|
337,250
|
|
Based on actual 2008 adjusted
earnings per share of $2.78, the performance award payout was 71% of the
target award level. Awards vested 50% in August 2009 and another 50% will
vest in February 2011. The Committee decided to pay 50% of the August 2009
award in the form of stock and the remaining 50% was paid in cash and all
taxes were withheld from this payment. Mr. Martin received 7,799 shares based
on the closing stock price of $21.62 on August 14, 2009.
|
|
|
|
|
|
|
|
|
|
|
Long-Term Incentive Payout
|
|
2007-2009
|
|
|
2,000,000
|
|
|
1,580,000
|
|
The Long Term Incentive award was
earned over the three-year performance period, 2007-2009, and produced a
total payout of $1,580,000. The company achieved its income from continuing
operations objective for 2007-2009 of $485,412,000. Adjusted EPS was not
achieved and adjusted free cash flow exceeded the target level. Total
shareholder return modifier (TSR) adjusted the payment downwards. Based on
the 2009 results, the total long-term incentive payout was $0.79 per unit.
|
|
|
|
|
|
|
|
|
|
|
|
Stock Option Exercises
|
|
2009
|
|
|
not applicable
|
|
|
0
|
|
There were no stock option
exercises in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
Vesting
|
|
2009
|
|
|
not applicable
|
|
|
0
|
|
There were no restricted stock
vestings in 2009.
|
|
|
|
|
|
|
|
|
|
|
|
All Other Compensation
|
|
2009
|
|
|
not applicable
|
|
|
103,272
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total 2009
Target
|
|
|
|
|
4,945,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Payments
|
|
|
|
|
|
|
|
|
|
|
Received in
2009*
|
|
|
|
|
|
|
|
3,907,722
|
|
|
|
|
Note:
|
This table differs substantially from the Summary
Compensation
Table required by the U.S. Securities and Exchange Commission and is not
meant to be a substitute for that table.
|
|
|
*
|
This amount does not include the
value of other benefits, such as pension plan value attributed to 2009, since
they are not payments Mr. Martin received in 2009.
|
33
Tax and Accounting
The companys compensation programs generally satisfy the requirements
for full deductibility under Section 162(m) of the Internal Revenue Code of
1986, as amended (the Code). Section 162(m) denies the company a tax
deduction for certain compensation in excess of $1 million paid to covered
employees unless the compensation is qualified performance-based compensation.
At the beginning of 2009, the Committee established threshold performance-based
income from continuing operations goals for the 2009 annual incentive, RSUs,
restricted stock grants and long-term 2009-2011 CIU cycle.
The maximum annual and long-term cash incentives a named executive
officer could receive under the KEIP are $4,000,000 and $8,000,000,
respectively, and the Committee applies negative discretion to reduce annual
cash and long-term cash incentive unit awards such that individual payouts are
tied to the achievement of pre-determined financial and strategic enterprise,
business unit and individual performance objectives. The Committee does,
however, weigh the benefits of compliance with Section 162(m) against the
potential limitations of such compliance, and reserves the right to pay
compensation that may not be fully deductible if it determines that it is in
the companys best interest to do so.
In determining the number of stock options in the mix of long-term
incentives, the company currently values stock options based upon the
Black-Scholes valuation methodology, consistent with the provisions of FASB
Accounting Standards Codification Topic 718 (ASC 718). Key assumptions used
to estimate the fair value of stock options include:
|
|
|
|
|
the volatility of
the companys stock;
|
|
|
|
|
|
the risk-free
interest rate; and
|
|
|
|
|
|
the companys
dividend yield.
|
In determining the number of RSUs in the mix of long-term incentives,
the company values RSUs based upon the closing price of the companys stock on
the grant date.
For additional information on the accounting treatment for stock-based
awards, please refer to note 12 to the financial statements included in the
companys Annual Report on Form 10-K for the year ended December 31, 2009. The
company believes that the valuation technique and the approach utilized to
develop the underlying assumptions are appropriate in estimating the fair value
of its stock option grants. Estimates of fair value are not intended to predict
actual future events or the value ultimately realized by employees who receive
equity awards, and subsequent events are not indicative of the reasonableness
of the original estimates of fair value made by the company under ASC 718.
Retirement Benefits and Deferred Compensation
For United States executives hired prior to January 1, 2005, the
company sponsors both qualified and nonqualified pension and 401(k) plans. The
nonqualified plans provide eligible executives with the benefits that would
have otherwise been provided under the qualified benefit plans, but for the
limitations set forth under the Code. On December 31, 2014 the qualified and
nonqualified pension benefits will be frozen with no further accruals under
those plans after that date. Effective May 1, 2009 the maximum 401(k) qualified
company match was reduced from 4% to 1½% of
eligible compensation and the
company match for the nonqualified 401(k) plan was suspended.
Executives based in the United States, including the named executive
officers also have the opportunity to voluntarily defer annual incentives and
payouts of CIUs into a nonqualified deferred compensation plan. These deferred
amounts are subject to claims by creditors of the company and do not receive
any above-market earnings.
We use these pension and deferred compensation benefits as retention
vehicles. For more detailed information, see the narrative accompanying the
Pension Benefits as of December 31, 2009 table beginning on page 44 and the
narrative accompanying the Nonqualified Deferred Compensation for 2009 table
beginning on page 45.
Executive Benefits
We provide a financial counseling benefit to executives to enable them
to ensure compliance with increasingly complex rules and regulations of pay and
to provide assistance to executives in managing complex investment, tax, legal
and estate matters. The company believes that maintaining a financial
counseling program enables the executives to remain focused on business
priorities as opposed to personal financial concerns. Pitney Bowes provided a
maximum annual financial counseling benefit of $21,000 for the named executive
officers, which effective 2010 was reduced to $7,500. See the All Other
Compensation column of the Summary Compensation Table on page 37.
34
Employment
Agreements
The company has not entered into fixed term employment agreements with
its named executive officers and therefore such officers are at will
employees of the company. Participation by the named executive officers in the
companys severance program eliminates the need for individual employment
agreements while providing protection to the executives upon termination.
Executive Stock
Ownership Policy
Pitney Bowes maintains an executive stock ownership policy to more
closely align our key executives interests with the long-term interests of our
stockholders.
The
multiple of salary required to be held is as follows:
|
|
|
Title
|
|
Multiple of
Salary
|
|
|
|
Chief Executive Officer
|
5X
|
Other Section 16 Officers
|
2X
|
We calculate the number of shares targeted for retention by multiplying
an executives annual base salary times the multiple of salary required and
dividing by the average closing price of Pitney Bowes common stock on the last
trading day of each of the prior two years.
In 2007, the Committee approved guidelines providing that executives
have five years from the time they become covered by this policy to achieve the
required ownership levels. If an executive covered by this policy is promoted
into a position with a higher ownership requirement, the executive will have
five years from the time of promotion to satisfy the new ownership requirement.
The value of 60% of the performance-based RSUs, restricted stock and
unexercised vested stock options and 100% of the shares owned outright or held
in trust are counted toward the ownership requirement. The value is calculated
using the closing price of Pitney Bowes common stock on the last trading day of
the previous calendar year.
Until the required ownership levels are met, executives are required to
hold 100% of their net profit shares. Net profit shares are, with respect
to stock options, the shares remaining after payment of the option exercise
price and taxes owed upon exercise and, with respect to performance-based RSUs
and restricted stock, the shares that remain after the payment of applicable
taxes. Although none of the named executive officers have achieved the required
ownership levels, all are in compliance with the guidelines.
As long as the multiple of salary requirement is met, an executive may
sell shares acquired previously in the market as well as shares acquired
through the exercise of stock options or the vesting of restricted stock
awards. Executives cannot pledge Pitney Bowes securities, engage in short-term
speculative (in and out) trading in Pitney Bowes securities, or participate in hedging and other derivative
transactions, including short sales, put or call options, swaps or collars,
with respect to Pitney Bowes securities (other than transactions in employee stock
options).
Change of Control
In reviewing its change of control program, the company looks to market
practices and the Committee seeks advice from its independent consultant, FWC.
We believe that the companys payment and benefit levels triggered by change of
control transactions are consistent with current market practice for companies
of our size. The companys change of control arrangements are intended to
encourage those executives most closely connected to a potential change of
control to act more objectively, and therefore, in the best interests of the
companys stockholders, despite the fact that such a transaction could result
in the executives termination. The companys change of control protections
also encourage executives to remain with the company prior to the completion of
the transaction and work towards a successful transition. Except for equity
awards made under our now superseded 2002 Stock Plan, accelerated vesting of
equity awards and change of control severance payments are made only when an
employee is terminated without cause or when an employee voluntarily terminates
his or her employment for good reason (such as a reduction in position, pay or
other constructive termination event) within two years following a change of
control (a double trigger payment mechanism). The change of control, by
itself, does not cause severance payments to be made or accelerated vesting of
equity awards except for those under the 2002 Stock Plan.
As part of the change of control severance benefits our named executive
officers would be reimbursed for any excise taxes imposed on their severance
and any other payments under Section 4999 of the Code that exceed 110% of the
safe-harbor amount. The excise tax gross-up is intended to preserve the level
of change of control severance protections that we have determined to be
competitive in the marketplace.
Our change of control arrangements fit into our overall compensation
objectives because they are aligned with the companys goal that compensation
should be tied to stockholder return and should be sufficiently competitive to
attract and retain talent.
Executive Compensation Tables and Related Narrative
The following Summary Compensation Table shows all compensation earned
or paid for Messrs. Martin, Monahan and Ms. Abi-Karam during or with respect to
2009, 2008 and 2007 for services rendered to the company and its sub-
35
sidiaries. With respect to Mr. Dobson and Ms. OMeara, the Summary
Compensation Table shows all compensation earned or paid in 2009, which is the
first year that they became named executive officers. The Summary Compensation
Table includes amounts earned and deferred during the periods covered under
the Deferred Incentive Savings Plan.
The Grants of Plan-Based Awards in 2009 table on page 39 provides
additional information regarding grants made during 2009 to the named executive
officers.
36
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
Salary
($)
(1)
|
|
Bonus
($)
(2)
|
|
Stock
Awards
($)
(3)
|
|
Option
Awards
($)
(4)
|
|
Non-Equity
Incentive
Plan
Compen-
sation
($)
(5)
|
|
Change in
Pension
Value
and Non-
qualified
Deferred
Compen-
sation
Earnings
($)
(6)
|
|
All Other
Compen-
sation
($)
(7)
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chairman,
President and
|
|
2009
|
|
950,000
|
|
0
|
|
1,187,500
|
|
1,187,500
|
|
2,854,450
|
|
1,360,339
|
|
103,272
|
|
7,643,061
|
|
Chief Executive Officer
|
|
2008
|
|
941,667
|
|
0
|
|
|
|
1,950,000
|
|
2,109,000
|
|
896,908
|
|
108,853
|
|
6,006,428
|
|
|
|
2007
|
|
837,500
|
|
0
|
|
|
|
2,000,000
|
|
1,336,000
|
|
436,122
|
|
107,558
|
|
4,717,180
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
2009
|
|
540,000
|
|
0
|
|
275,000
|
|
275,000
|
|
578,000
|
|
222,692
|
|
32,261
|
|
1,922,953
|
|
and Chief Financial Officer
|
|
2008
|
|
525,000
|
|
0
|
|
|
|
500,000
|
|
560,800
|
|
178,919
|
|
93,728
|
|
1,858,447
|
|
|
|
2007
|
|
424,517
|
|
0
|
|
|
|
200,000
|
|
325,923
|
|
50,313
|
|
44,699
|
|
1,045,452
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
2009
|
|
525,000
|
|
0
|
|
275,000
|
|
275,000
|
|
520,700
|
|
296,835
|
|
47,041
|
|
1,939,576
|
|
and President, Mailing
|
|
2008
|
|
508,333
|
|
0
|
|
|
|
500,000
|
|
575,200
|
|
229,399
|
|
106,196
|
|
1,919,128
|
|
Solutions Management
|
|
2007
|
|
409,934
|
|
0
|
|
|
|
200,000
|
|
315,545
|
|
67,026
|
|
44,495
|
|
1,037,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Dobson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President
and President PBMS
|
|
2009
|
|
455,000
|
|
0
|
|
325,000
|
|
175,000
|
|
233,650
|
|
|
|
31,178
|
|
1,219,828
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki OMeara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
Vice President
and Chief Legal and
Compliance Officer
|
|
2009
|
|
500,000
|
|
0
|
|
302,500
|
|
162,500
|
|
218,500
|
|
|
|
13,744
|
|
1,197,244
|
|
|
|
(1)
|
Mr.
Martins base salary was increased in June 2007 to $900,000 in connection
with his appointment to President and CEO, and was increased 6% to $950,000
in March 2008 due to his compensation relative to the market and to reflect
his experience as CEO. Mr. Monahans and Ms. Abi-Karams base salaries
increased in March 2008 by 20% and 24% respectively due to the change in
their roles and responsibilities in the company.
|
|
|
(2)
|
Values in
this column reflect the fact that no discretionary bonuses were paid to named
executive officers for the reporting periods listed above.
|
|
|
(3)
|
This
column includes the value of stock awarded to named executive officers during
2009 based upon its grant date fair market value, as determined in accordance
with the share - based payment accounting guidance under ASC 718. Only
performance-based restricted stock units were granted to the named executive
officers in 2009. In addition to the annual stock award grant to all named
executive officers, Mr. Dobson and Ms. OMeara also received
performance-based RSUs with the cash value of $150,000 and $140,000,
respectively. Details regarding the grants of performance-based RSUs can be
found in the Grants of Plan-Based Awards in 2009 table.
|
|
|
(4)
|
This
column includes the value of options awarded to named executive officers
during 2009, 2008 and 2007 based upon their grant date fair value, as
determined in accordance with the share - based payment accounting guidance
under ASC 718. The value of options reported for 2008 and 2007 have been
revised from prior year proxy disclosures to reflect their grant date fair
value in accordance with the revised SEC disclosure requirements relating to
such awards. Details regarding 2009 option award grants can be found in the
Grants of Plan-Based Awards in 2009 table and details regarding outstanding
stock and option awards can be found in the Outstanding Equity Awards at 2009
Fiscal Year-End table.
|
|
|
(5)
|
The
majority of compensation for the named executive officers is
performance-based and is earned based on company and executive performance
against pre-established strategic and financial objectives. Non-equity
incentive includes annual incentive compensation, CIU payouts that vested at
the end of 2009, 2008 and 2007 for multi-year performance and, the value of
the cash performance award that vested in August 2009. The 2009 annual
incentive and CIU payout amounts in this column are as follows: for Mr.
Martin, annual incentive of $937,200 and CIU of $1,580,000; Mr. Monahan,
annual incentive of $313,500 and CIU of $158,000; Ms. Abi-Karam, annual
incentive of $256,200 and CIU of $158,000; Mr. Dobson, annual incentive of
$180,400; and Ms. OMeara, annual incentive of $183,000. The cash performance
awards vested and paid in August 2009 are as follows: Mr. Martin, $337,250;
Mr. Monahan, $106,500; Ms. Abi-Karam, $106,500; Mr. Dobson, $53,250; and Ms.
OMeara, $35,500. At the Committees discretion, half of the performance
award for each of the named executive officers was settled in stock and the
remaining half was settled in cash. The total value of the performance award,
including the cash portion that was settled in stock, is in this column. The
2009 amounts in this column include amounts that were deferred at the
election of a named executive officer under the terms of the Pitney Bowes
Deferred Incentive Savings Plan, as follows: annual incentive deferral by Mr.
Martin of $125,000; annual incentive deferral by Mr. Monahan of $45,000; and
annual incentive deferral by Mr. Dobson of $100,000.
|
|
|
(6)
|
This
column shows the change in the actuarial present value of the accumulated
pension benefit during 2009, 2008 and 2007 for Messrs. Martin, Monahan, and
Ms. Abi-Karam. Mr. Dobson and Ms. OMeara do not participate in the qualified
Pension Plan or the Pension Restoration Plan.
|
(footnotes continued on next page)
37
SUMMARY COMPENSATION TABLE (CONTINUED)
|
|
(7)
|
Amounts
shown for 2009 include all other compensation received by the named executive
officers that is not reported elsewhere. For 2009, this includes the
following: for Mr. Martin, companys actual cost for spousal travel,
financial counseling, automobile lease payments by the company, life
insurance premium paid by the company, company match to Pitney Bowes 401(k)
Plan and $46,067 company match to Pitney Bowes 401(k) Restoration Plan; for
Mr. Monahan, financial counseling, life insurance premium paid by the
company, company match to Pitney Bowes 401(k) Plan and $16,624 company match
to Pitney Bowes 401(k) Restoration Plan; for Ms. Abi-Karam, companys actual
cost for spousal travel, financial counseling, life insurance premium paid by
the company, anniversary benefits payment (a defined payment due to changes
in vacation plans), company match to Pitney Bowes 401(k) Plan and $12,969
company match to Pitney Bowes 401(k) Restoration Plan; for Mr. Dobson,
financial counseling, life insurance premium paid by the company, and
relocation payments; and for Ms. OMeara, life insurance premium paid by the
company and relocation payment.
Amounts shown for 2008 have been slightly
reduced to reflect a change in how the company paid life insurance premium is
calculated.
|
38
GRANTS OF PLAN-BASED AWARDS IN 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future Payouts
Under Equity
Incentive
Plan
Awards
|
|
All
Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)
|
|
All
Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
Exercise
or
Base Price
of Option
Awards
($/Sh)
|
|
Grant
Date
Fair Value of
Stock and
Option
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
Future Payouts Under Non-Equity
Incentive Plan Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
Target
(#)
|
|
|
|
|
|
Name
|
|
|
Grant
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(annual incentive)
(1)
|
|
|
|
133,000
|
|
1,520,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(2)
|
|
|
|
58,781
|
|
2,375,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(stock options)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
390,625
|
|
24.75
|
(3)
|
1,187,500
|
(4)
|
(RSUs)
(5)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
47,980
|
|
|
|
|
|
1,187,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(annual incentive)
(1)
|
|
|
|
37,800
|
|
432,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(2)
|
|
|
|
13,613
|
|
550,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(stock options)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
90,461
|
|
24.75
|
(3)
|
275,000
|
(4)
|
(RSUs)
(5)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
11,111
|
|
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(annual incentive)
(1)
|
|
|
|
36,750
|
|
420,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(2)
|
|
|
|
13,613
|
|
550,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(stock options)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
90,461
|
|
24.75
|
(3)
|
275,000
|
(4)
|
(RSUs)
(5)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
11,111
|
|
|
|
|
|
275,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David Dobson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(annual incentive)
(1)
|
|
|
|
25,878
|
|
295,750
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(2)
|
|
|
|
8,663
|
|
350,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(stock options)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
57,566
|
|
24.75
|
(3)
|
175,000
|
(4)
|
(RSUs)
(5)(6)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
7,071
|
|
|
|
|
|
175,000
|
|
|
|
11/9/2009
|
|
|
|
|
|
|
|
6,015
|
|
0
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki OMeara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(annual incentive)
(1)
|
|
|
|
26,250
|
|
300,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(2)
|
|
|
|
8,044
|
|
325,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
(stock options)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
53,454
|
|
24.75
|
(3)
|
162,500
|
(4)
|
(RSUs)
(5)(6)
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
6,566
|
|
|
|
|
|
162,500
|
|
|
|
11/9/2009
|
|
|
|
|
|
|
|
5,614
|
|
0
|
|
|
|
|
|
140,000
|
|
|
|
(1)
|
Values in this row represent
estimated future payouts for the 2009 annual incentive award. The maximum
annual incentive a named executive officer could receive under the KEIP is
$4,000,000 and the Committee applies negative discretion to reduce the annual
awards such that individual payments are in line with financial and strategic
enterprise, business unit and/or individual performance.
|
|
|
(2)
|
Values in this row represent
estimated future payouts for the 2009 - 2011 CIU cycle. The maximum long-term
incentive a named executive officer could receive under the KEIP is
$8,000,000 and the Committee applies negative discretion to reduce long-term awards
such that payments are in line with financial enterprise performance.
|
|
|
(3)
|
The exercise price for each
option equals the closing price for a share of the companys common stock on
the date of grant.
|
|
|
(4)
|
The Black-Scholes value for each
option granted on February 9, 2009 grant date was $3.04, based on assumptions
detailed in note 12 to the Companys financial statements included in our
Annual Report and Form 10-K for the year ended December 31, 2009.
|
|
|
(5)
|
The number of performance-based
RSUs was based on the actual closing price on the February 9, 2009 grant date
of $24.75. A performance metric tied to income from continuing operations was
met as of December 31, 2009, however, the awards remain subject to forfeiture
over the remaining service period.
|
|
|
(6)
|
The number of performance-based
RSUs was based on the actual closing price on the November 9, 2009 grant date
of $24.94. These awards are subject to the performance metric tied to 2010
income from continuing operations being met and remain subject to forfeiture
over the remaining service period.
|
39
Stock Awards
|
|
|
|
|
The Stock Awards
column in the Summary Compensation Table represents the value of
performance-based RSUs awarded during 2009, 2008 and 2007 based upon its
grant date fair value, as determined in accordance with the share-based payment
accounting guidance; the All Other Stock Awards column in the Grants of
Plan-Based Awards in 2009 table represents the number of shares subject to
performance-based RSUs granted to each named executive officer during 2009.
|
|
|
|
|
|
The Estimated Future
Payouts Under Equity Incentive Plan Awards column in the Grants of
Plan-Based Awards in 2009 table represents the number of performance-based
RSUs granted in 2009 that remain subject to the 2010 performance metric.
|
|
|
|
|
|
It is the
companys policy that the number of stock awards is based on the market price
of the stock on the date of grant. The 2007 Stock Plan, approved by
stockholders on May 14, 2007, defines market price as the closing price for
Pitney Bowes stock on the New York Stock Exchange on the date of grant.
|
|
|
|
|
|
In 2009, the
long-term incentive program was modified to include performance-based RSUs.
The performance-based RSUs have a four-year vesting schedule with the
restrictions lapsing, subject to the company achieving an initial financial
threshold for named executive officers, in equal 25% increments over four
years after the date of grant.
|
|
|
|
|
|
There were no
restricted stock awards granted to the named executive officers in 2009.
|
|
|
|
Option
Awards
|
|
|
|
|
|
The Option
Awards column in the Summary Compensation Table represents the value of
options awarded during 2009, 2008 and 2007 based upon their grant date fair
value, as determined in accordance with the share-based payment accounting
guidance; the All Other Option Awards column in the Grants of Plan-Based
Awards in 2009 table represents the number of stock options awarded to each
of our named executive officers during 2009.
|
|
|
|
|
|
It is the
companys policy that stock options are granted only at an exercise price equal
to the market price of the stock on the date of grant. The 2007 Stock Plan,
approved by stockholders on May 14, 2007, defines market price as the closing
price for Pitney Bowes stock on the New York Stock Exchange on the date of
grant.
|
|
|
|
|
|
Stock options
typically have a ten-year exercise period. Nonqualified stock options granted
in 2009 vest and become exercisable in equal increments over three years
after the date of grant. Incentive stock options granted in 2009 vest and
become exercisable three years after the date of grant. Nonqualified stock
options granted prior to 2009 vest and become exercisable ratably in equal
increments over the first four years following the date of grant and
incentive stock options vest and become exercisable four years after the date
of grant.
|
|
|
|
|
|
The aggregate
number of shares subject to stock options granted to each named executive
officer during 2009 is shown in the Grants of Plan-Based Awards in 2009
table. The awards are nonqualified stock options and vest in equal
installments over a three-year period beginning on the first anniversary of
the date of grant.
|
|
|
|
Non-Equity
Incentive Plan Compensation
|
|
|
|
|
|
The values shown
in the Non-Equity Incentive Plan Compensation column in the Summary
Compensation Table include the annual incentive payments earned for 2009,
2008 and 2007, as well as the CIUs that were earned over the three-year
periods ending December 31, 2009, December 31, 2008 and December 31, 2007.
The 2009 amount includes the full value of a performance award which vested
in August 2009. At the time of payment, the Committee exercised its
discretion to settle half of this amount in stock and the remaining half was
settled in cash.
|
|
|
|
|
|
The non-equity
incentive compensation column in the Grants of Plan-Based Awards in 2009
table show the range of estimated possible future payouts for the 2009 annual
incentive payment at varying levels of performance. They also show the range
of estimated possible future payouts of the CIUs granted for the 2009-2011
cycle at varying levels of performance. The maximum annual incentive and
long-term incentive a named executive officer could receive under the KEIP is
$4,000,000 and $8,000,000, respectively and the Committee applies negative
discretion to reduce awards such that individual payouts are in line with
financial and strategic enterprise, business unit and individual performance.
|
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation Earnings
|
|
|
|
|
|
The Change in
Pension Value and Nonqualified Deferred Compensation Earnings column in the
Summary Compensation Table reflects the change in pension value for each of
the years shown. On December 31, 2014 the qualified and nonqualified pension
benefits will be frozen with no further accruals under those plans after that
date.
|
40
|
|
|
|
|
The change in
pension value reflects the aggregate change for both the Pension Plan and the
Pitney Bowes Pension Restoration Plan.
|
|
|
|
|
|
Since the deferred
compensation plans are tied to the returns of the investments in the 401(k)
Plan, there were no above-market deferred compensation earnings.
|
|
|
|
All
Other Compensation
|
|
|
|
The All Other
Compensation column in the Summary Compensation Table consists of other
amounts earned or paid to each named executive officer. Many of the benefits
described in this column are available to employees other than the named
executive officers.
|
|
|
|
Equity Awards
|
|
The next table is
provided to present an overview of Pitney Bowes equity awards held as of
December 31, 2009 by each named executive officer. It discloses compensation
in the form of equity that has previously been awarded, remains outstanding,
and is unexercised or unvested.
|
41
OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR-END
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Unrealized
Appreciation ($)
(2)
|
|
Number of
Shares or Units
of Stock That
Have Not
Vested (#)
|
|
Market Value of
Shares or Units of
Stock That Have
Not Vested ($)
(3)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares
Units, or Other
Rights That Have
Not Vested (#)
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares Units, or
Other Rights That
Have Not Vested
($)
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
2/14/2000
|
|
36,889
|
|
|
0
|
|
|
46.3841
|
|
2/13/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/2000
|
|
73,778
|
|
|
0
|
|
|
26.9932
|
|
10/19/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2001
|
|
107,594
|
|
|
0
|
|
|
34.1074
|
|
2/11/2011
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2003
|
|
75,000
|
|
|
0
|
|
|
32.1000
|
|
2/9/2013
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2004
|
|
75,000
|
|
|
0
|
|
|
40.0800
|
|
2/8/2014
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
95,738
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
4,262
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
89,411
|
|
|
27,458
|
(4)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
0
|
|
|
2,346
|
(5)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/16/2007
|
|
162,074
|
|
|
159,873
|
(6)
|
|
45.4000
|
|
3/15/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/16/2007
|
|
0
|
|
|
2,202
|
(7)
|
|
45.4000
|
|
3/15/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
150,000
|
|
|
447,295
|
(8)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
0
|
|
|
2,705
|
(9)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
0
|
|
|
390,625
|
(10)
|
|
24.7500
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
47,980
|
(11)
|
|
1,092,025
|
|
|
0
|
|
|
0
|
|
|
Michael Monahan
|
|
2/14/2000
|
|
9,223
|
|
|
0
|
|
|
46.3841
|
|
2/13/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/11/2000
|
|
205
|
|
|
0
|
|
|
36.4496
|
|
9/10/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10/20/2000
|
|
12,297
|
|
|
0
|
|
|
26.9932
|
|
10/19/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/10/2001
|
|
6,148
|
|
|
0
|
|
|
41.8755
|
|
9/9/2011
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2002
|
|
6,000
|
|
|
0
|
|
|
40.6800
|
|
2/10/2012
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2003
|
|
15,000
|
|
|
0
|
|
|
32.1000
|
|
2/9/2013
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2004
|
|
23,000
|
|
|
0
|
|
|
40.0800
|
|
2/8/2014
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
21,738
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
4,262
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
21,037
|
|
|
4,667
|
(4)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
0
|
|
|
2,346
|
(5)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
14,388
|
|
|
12,307
|
(12)
|
|
48.0300
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
0
|
|
|
2,082
|
(13)
|
|
48.0300
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
38,461
|
|
|
112,680
|
(8)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
0
|
|
|
2,705
|
(9)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
0
|
|
|
90,461
|
(10)
|
|
24.7500
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,111
|
(11)
|
|
252,886
|
|
|
0
|
|
|
0
|
|
|
Leslie Abi-Karam
|
|
2/14/2000
|
|
6,149
|
|
|
0
|
|
|
46.3841
|
|
2/13/2010
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9/10/2001
|
|
2,562
|
|
|
0
|
|
|
41.8755
|
|
9/9/2011
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2002
|
|
5,000
|
|
|
0
|
|
|
40.6800
|
|
2/10/2012
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/9/2002
|
|
1,667
|
|
|
0
|
|
|
33.7900
|
|
12/8/2012
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/10/2003
|
|
4,418
|
|
|
0
|
|
|
32.1000
|
|
2/9/2013
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2004
|
|
18,000
|
|
|
0
|
|
|
40.0800
|
|
2/8/2014
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
20,738
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2005
|
|
4,262
|
|
|
0
|
|
|
46.9300
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
21,037
|
|
|
4,667
|
(4)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
0
|
|
|
2,346
|
(5)
|
|
42.6200
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
42
OUTSTANDING EQUITY AWARDS AT 2009 FISCAL YEAR-END (continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Unrealized
Appreciation ($)
(2)
|
|
Number of
Shares or Units
of Stock That
Have Not
Vested (#)
|
|
Market Value of
Shares or Units of
Stock That Have
Not Vested ($)
(3)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned Shares
Units, or Other
Rights That Have
Not Vested (#)
|
|
Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares Units, or
Other Rights That
Have Not Vested
($)
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
(continued)
|
|
2/12/2007
|
|
14,388
|
|
|
12,307
|
(12)
|
|
48.0300
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
0
|
|
|
2,082
|
(13)
|
|
48.0300
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
38,461
|
|
|
112,680
|
(8)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
0
|
|
|
2,705
|
(9)
|
|
36.9600
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
0
|
|
|
90,461
|
(10)
|
|
24.7500
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,111
|
(11)
|
|
252,886
|
|
|
0
|
|
|
0
|
|
David Dobson
|
|
8/27/2008
|
|
22,052
|
|
|
66,156
|
(14)
|
|
33.9100
|
|
8/27/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/2008
|
|
2,948
|
|
|
8,844
|
(15)
|
|
33.9100
|
|
8/27/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
5,000
|
(16)
|
|
113,800
|
|
|
0
|
|
|
0
|
|
|
|
2/9/2009
|
|
0
|
|
|
57,566
|
(10)
|
|
24.7500
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7,071
|
(11)
|
|
160,936
|
|
|
0
|
|
|
0
|
|
|
|
11/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
0
|
|
|
6,015
|
(17)
|
|
136,901
|
|
Vicki OMeara
|
|
8/27/2008
|
|
9,552
|
|
|
28,656
|
(14)
|
|
33.9100
|
|
8/27/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/2008
|
|
2,948
|
|
|
8,844
|
(15)
|
|
33.9100
|
|
8/27/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/27/2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
(16)
|
|
113,800
|
|
|
0
|
|
|
0
|
|
|
|
2/9/2009
|
|
0
|
|
|
53,454
|
(10)
|
|
24.7500
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,566
|
(11)
|
|
149,442
|
|
|
0
|
|
|
0
|
|
|
|
11/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
0
|
|
|
5,614
|
(17)
|
|
127,775
|
|
|
|
(1)
|
These columns represent the total
number of securities underlying unexercised options, both exercisable and
unexercisable, that were outstanding at the end of 2009. The number of shares
subject to the options has been adjusted to reflect the spin-off of
Imagistics International Inc. in 2001.
|
|
|
(2)
|
This column represents the amount
of appreciation on the unexercisable and the exercisable options which have
not yet been realized. None of the options currently outstanding are
in-the-money.
|
|
|
(3)
|
These amounts were calculated
based on the closing price of the companys common stock of $22.76 per share
on December 31, 2009.
|
|
|
(4)
|
These awards represent
nonqualified stock options that vest at the rate of 25% per year, with a
remaining vesting date of February 13, 2010.
|
|
|
(5)
|
These awards represent ISOs that
vest 100% after four years, with a vesting date of February 13, 2010.
|
|
|
(6)
|
These awards represent
nonqualified stock options that vest at the rate of 25% per year, with
vesting dates of March 16, 2010 and March 16, 2011.
|
|
|
(7)
|
These awards represent ISOs that
vest 100% after four years, with a vesting date of March 16, 2011.
|
|
|
(8)
|
These awards represent
nonqualified stock options that vest at the rate of 25% per year, with
vesting dates of February 11, 2010, February 11, 2011, and February 11, 2012.
|
|
|
(9)
|
These awards represent ISOs that
vest 100% after four years, with a vesting date of February 11, 2012.
|
|
|
(10)
|
These awards represent
nonqualified stock options that vest equal amounts on February 9, 2010,
February 9, 2011, and February 9, 2012.
|
|
|
(11)
|
These awards represent
performance-based RSUs that vest at the rate of 25% per year, with vesting
dates of February 2, 2010, February 1, 2011, February 7, 2012 and February 5,
2013. A performance metric tied to income from continuing operations has been
met, however, the awards remain subject to forfeiture over the remaining service
period.
|
|
|
(12)
|
These awards represent
nonqualified stock options that vest at the rate of 25% per year, with
remaining vesting dates of February 12, 2010 and February 12, 2011.
|
|
|
(13)
|
These awards represent ISOs that
vest 100% after four years, with a vesting date of February 12, 2011.
|
|
|
(14)
|
These awards represent
nonqualified stock options that vest at the rate of 25% per year, with
remaining vesting dates of August 27, 2010, August 27, 2011, and August 27,
2012.
|
|
|
(15)
|
These awards represent ISOs that
vest at the rate of 25% per year, with remaining vesting dates of August 27,
2010, August 27, 2011, and August 27, 2012.
|
|
|
(16)
|
These awards represent
performance-based restricted stock shares that vest 100% after three years,
with a vesting date of August 27, 2011. A performance metric tied to income
from continuing operations has been met, however, the awards remain subject
to forfeiture over the remaining service period.
|
|
|
(17)
|
These awards represent
performance-based RSUs that will vest 100% on February 5, 2013, provided the
performance metric tied to 2010 income from continuing operations has been
met. These awards remain subject to forfeiture over the remaining service
period.
|
43
OPTION EXERCISES AND STOCK VESTED DURING 2009 FISCAL YEAR
None of our named executive officers exercised stock options during
2009. None of the shares of unvested company stock held by our named executive
officers vested during 2009.
Pension Benefits
The following table provides information regarding pension payments to
the named executive officers. It includes data regarding the Pitney Bowes
Pension Plan and Pension Restoration Plan. The Pitney Bowes Pension Plan is a
qualified defined benefit pension plan for U.S. employees. U.S. named executive
officers hired prior to January 1, 2005 are eligible to participate in the
Pitney Bowes Pension Plan which is a broad-based tax-qualified plan under which
employees generally are eligible to retire with unreduced benefits at age 65.
U.S. named executive officers who participate in the Pitney Bowes Pension Plan
are also eligible to participate in the Pension Restoration Plan, a
nonqualified deferred compensation plan, which provides eligible employees with
compensation greater than the $245,000 limit for 2009 and those employees who
defer portions of their compensation with benefits based on the same formula
used under the qualified plan. The Pension Restoration Plan is offered to
approximately 300 of our current active employees to provide for retirement
benefits above amounts available under the tax-qualified Pension Plan. Pitney
Bowes does not grant extra years of credited service under its pension plans.
Payments under the nonqualified Pension Restoration Plan are paid from our
general assets. These payments are substantially equal to the difference
between the amount that would have been payable under our Pension Plan in the
absence of IRS limits on compensation and benefits as applied to qualified
plans, and the amount actually paid under our Pension Plan. The Pitney Bowes
Pension Restoration Plan, which is a nonqualified deferred compensation plan,
does not include special provisions, such as above-market interest rates.
All of the eligible named executive officers are fully vested in their
pension benefit.
On December 31, 2014 the qualified and nonqualified pension benefits
will be frozen with no further accruals under those plans after that date.
The amounts reported in the table below equal the present value of the
accumulated benefit on December 31, 2009, for the named executive officers
under the various Pitney Bowes pension plans based on years of service and
covered earnings (as described below) considered by the plans for the period
through December 31, 2009. The present value has been calculated based on
benefits payable that would commence when the executive reaches age 65, and
that benefit is payable consistent with the assumptions as described in note 19
to the financial statements included in the Annual Report on Form 10-K for the
year ended December 31, 2009.
44
|
|
|
|
|
|
|
|
|
|
PENSION
BENEFITS AS OF DECEMBER 31, 2009
(1)
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Plan Name
|
|
Number of Years
Credited Service
(#)
|
|
Present Value of
Accumulated
Benefit ($)
(2)
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
(3)
|
|
Pitney Bowes Pension Plan
|
|
22.4
|
|
529,900
|
|
|
Murray D. Martin
|
|
Pitney Bowes Pension Restoration
Plan
|
|
22.4
|
|
4,451,009
|
|
|
Michael Monahan
|
|
Pitney Bowes Pension Plan
|
|
21.6
|
|
202,383
|
|
|
Michael Monahan
|
|
Pitney Bowes Pension Restoration
Plan
|
|
21.6
|
|
558,409
|
|
|
Leslie Abi-Karam
|
|
Pitney Bowes Pension Plan
|
|
25.9
|
|
289,174
|
|
|
Leslie Abi-Karam
|
|
Pitney Bowes Pension Restoration
Plan
|
|
25.9
|
|
786,261
|
|
|
|
|
(1)
|
Mr. Dobson
and Ms. OMeara are omitted from this table since they are not pension plan
participants.
|
|
|
(2)
|
Material
assumptions used to calculate the present value of accumulated benefits under
the Pitney Bowes Pension Plan for each named officer are detailed in note 19
to the financial statements included in the Annual Report on Form 10-K for
the year ended December 31, 2009. In addition, the mortality table used was
UP94G.
|
|
|
(3)
|
Mr. Martin
is currently eligible for early retirement. If Mr. Martin were to have
retired on December 31, 2009, the present value of the pension benefit
payable would have been $5,485,479.
|
The
material terms of the U.S. Pension and Pension Restoration plans are summarized
below:
|
|
|
|
|
Employees
hired prior to January 1, 2005 are eligible to participate.
|
|
|
|
|
|
Normal
retirement age is 65 with at least five years of service, while early
retirement is allowed at age 55 with at least ten years of service.
|
|
|
|
|
|
The
vesting period is three years.
|
|
|
|
|
|
For
purposes of determining pension benefits, earnings are defined as the
average of the five highest consecutive calendar year pay amounts. Earnings
include base salary, vacation, severance, before-tax plan contributions,
annual incentives (paid and deferred), and certain bonuses. Earnings do not
include long-term cash incentive unit payments, stock options, restricted stock,
RSUs, hiring bonuses, company contributions to benefits, and expense
reimbursements.
|
|
|
|
|
|
The
formula to determine benefits is based on age, years of service, and final
average of the highest consecutive five-year earnings. Employees receive
annual percentages of earnings based on their age plus service. The annual
percentages range from 2% to 10% of final average earnings, plus 2% to 6% of
such earnings in excess of the Social Security Wage Base. In addition,
Pension Plan participants whose age plus service totaled more than 50 as of
September 1, 1997 receive transition credits to make up for some of the
differences between old and new retirement plan formulas. Two of our named
executive officers, Mr. Martin, and Ms. Abi-Karam, are among those Pension
Plan participants who are eligible to receive transition credits.
|
|
|
|
|
|
The
maximum benefit accrual under the Pension Restoration Plan is an amount equal
to 16.5% multiplied by the participants final average earnings and further
multiplied by the participants credited service.
|
|
|
|
|
|
Upon
retirement, benefits are payable in a lump-sum or various annuity forms,
including life annuity and 50% joint and survivor annuity.
|
|
|
|
|
|
The
distribution options under the Pension Restoration Plan are designed to
comply with the requirements of Internal Revenue Code Section 409A.
|
|
|
|
|
|
In the
event of a named executive officers involuntary termination without cause
the calculation of benefits also includes target bonus.
|
|
|
|
|
|
The
company has not provided extra years of credited services to any of the named
executive officers.
|
Deferred Compensation
Information included in the table below includes contributions,
earnings, withdrawals, and balances with respect to the Pitney Bowes 401(k)
Restoration Plan (a nonqualified deferred compensation plan) and the Pitney
Bowes Deferred Incentive Savings Plan (a nonqualified deferred compensation
plan where certain employees may defer their incentives and salary).
Eligibility for both of these plans is limited to U.S. employees. The Pitney
Bowes 401(k) Restoration Plan and Deferred Incentive Savings Plan, which we
refer to as the DISP, are unfunded plans established for a select group of
management or highly compensated employees under ERISA. All payments pursuant
to the plans are made from the general assets of the company and no special or
separate fund is established or segregation of assets made to assure payment.
Participants do not own any interest in the assets of the company as a result
of participating in the plans. There is a grantor trust to assist in
accumulating funds to pay the companys obligations under the plans. Any assets
of the grantor trusts are subject to the claims of the companys creditors.
45
NONQUALIFIED DEFERRED COMPENSATION FOR 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Executive
Contributions in
Last FY ($)
(1)
|
|
Registrant
Contributions in
Last FY ($)
(2)
|
|
Aggregate
Earnings/(Loss)
in Last FY ($)
(3)
|
|
Aggregate
Withdrawals/
Distributions ($)
|
|
Aggregate
Balance at Last
FYE ($)
(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
46,067
|
|
|
20,119
|
|
|
0
|
|
|
372,097
|
|
Deferred Incentive Savings Plan
|
|
125,000
|
|
|
|
|
|
104,246
|
|
|
0
|
|
|
863,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
16,624
|
|
|
(2,801
|
)
|
|
0
|
|
|
82,472
|
|
Deferred Incentive Savings Plan
|
|
25,000
|
|
|
|
|
|
156,530
|
|
|
0
|
|
|
664,472
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
12,969
|
|
|
(7,665
|
)
|
|
0
|
|
|
74,078
|
|
Deferred Incentive Savings Plan
|
|
35,000
|
|
|
|
|
|
1,155
|
|
|
0
|
|
|
68,426
|
|
|
|
(1)
|
Amounts
in this column represent a portion of the 2008 annual incentives paid in 2009
deferred under the DISP.
|
|
|
(2)
|
Amounts
shown are company contributions to the Pitney Bowes 401(k) Restoration Plan
earned in 2008 and credited under the 401(k) Restoration Plan in 2009. These
amounts are also included in the All Other Compensation column of the Summary
Compensation Table for each of the named officers.
|
|
|
(3)
|
Amounts
shown are the respective earnings in the Pitney Bowes 401(k) Restoration Plan
and the DISP. These earnings are not included in the Summary Compensation
Table.
|
|
|
(4)
|
Amounts
shown are the respective balances in the Pitney Bowes 401(k) Restoration Plan
and the DISP. The aggregate balance for the 401(k) Restoration Plan includes
amounts previously reported as compensation in the Summary Compensation Table
as follows: $167,727 for Mr. Martin, $35,495 for Mr. Monahan, and $33,972 for
Ms. Abi-Karam. The aggregate balance for the DISP includes amounts previously
reported as non-equity incentive plan compensation in the Summary
Compensation Table as follows: $265,000 for Mr. Martin, $149,800 for Mr.
Monahan and $27,000 for Ms. Abi-Karam.
|
The
material terms of the Pitney Bowes 401(k) Restoration Plan are summarized
below:
|
|
|
|
|
The goal of this plan is
generally to restore benefits that would have been provided under the
qualified 401(k) Plan but for certain Internal Revenue Service limitations
placed on tax-qualified 401(k) plans.
|
|
|
|
|
|
For purposes of determining
benefits under the 401(k) Restoration Plan, earnings are defined as base
salary, vacation, annual incentives (paid and deferred), and certain bonuses.
Earnings do not include long-term cash incentive unit payments, stock
options, restricted stock, performance-based RSUs, severance, hiring bonuses,
company contributions to benefits, and expense reimbursements. Participants
need to contribute the allowable maximum to the 401(k) Plan to be eligible
for the company match in the 401(k) Restoration Plan.
|
|
|
|
|
|
Employees must have one year of
service to participate, and the vesting is the same as under the qualified
401(k) Plan. Messrs. Martin, and Monahan and Ms. Abi-Karam are fully vested
in their accounts. Since they had not satisfied the service requirements Mr.
Dobson and Ms. OMeara were not eligible to receive a company match for 2008
earnings.
|
|
|
|
|
|
Distributions payable in a
lump-sum or installments may occur upon termination of employment and will
follow guidelines under Section 409A of the Code.
|
|
|
|
|
|
Effective May 1, 2009 the
company match under the 401(k) Restoration Plan was suspended.
|
The
material terms of the Deferred Incentive Savings Plan (DISP) are summarized
below:
|
|
|
|
|
|
Mr. Dobson and Ms. OMeara were
not participants in the DISP in 2009.
|
|
|
|
|
|
|
The DISP
allows deferral of up to 100% of annual incentives and cash long-term
incentives. Base salary deferral is permissible only for certain key
employees.
|
|
|
|
|
|
|
Employees
must be highly-compensated employees as defined in the DISP in order to
participate in this plan.
|
|
|
|
|
|
|
Distributions
from the DISP can occur for various reasons and will be in compliance with
guidelines established under Section 409A of the Code:
|
|
|
|
|
|
|
|
Termination/Death/Disability
a lump sum payment is made one month after termination including
termination for disability and within 90 days after death.
|
46
|
|
|
|
|
|
|
Retirement
payment is made in accordance with the payment election in effect for the
account beginning after termination.
|
|
|
|
|
|
|
|
Change
of Control payment is made in a lump sum.
|
|
|
|
|
|
|
|
Unforeseeable
Emergency plan permits withdrawals with appropriate verification.
|
|
|
|
|
|
|
|
In-Service
Payments payments are made immediately after the deferral dates selected.
|
Investment options for both the Pitney Bowes 401(k) Restoration Plan and
the DISP are identical to those in the Pitney Bowes 401(k) Plan. These
investment options provide participants with an opportunity to invest in Pitney
Bowes stock and a variety of bond funds, money market funds and blended funds.
Each employee notionally selects his or her investment options and can change
these at any time by accessing his or her account on the Internet. These
investments are tracked in phantom accounts. All investment gains and losses
in a participants account under the Pitney Bowes 401(k) Restoration Plan and
the DISP are entirely based upon the investment selections made by the
participant. Effective May 1, 2009 the maximum company match in the 401(k) Plan
was reduced from 4% to 1½% of
eligible compensation and the company match in the 401(k) Restoration Plan was
suspended.
Other Post-Termination Payments
The tables below reflect the amount of compensation that would become
payable to each of the named executive officers under existing arrangements if
the hypothetical termination of employment events described had occurred on
December 31, 2009, given the named executive officers compensation and service
levels as of such date and, if applicable, based on the companys closing stock
price on that date. For purposes of valuing stock options in the
Post-Termination Payments tables, we assume that upon a change of control,
all vested outstanding stock options will be cashed out using the difference
between the stock option exercise price and $22.76, the closing price of the
companys common stock on December 31, 2009. All payments are payable by the
company in a lump-sum unless otherwise noted. The terms of these benefits are
described in the notes and narrative following the tables.
These benefits are in addition to benefits available regardless of the
occurrence of such an event, such as currently exercisable stock options, and
benefits generally available to salaried employees, such as distributions under
the companys 401(k) plan, subsidized retiree medical benefits, disability
benefits, and accrued vacation pay. In addition, in connection with any actual
termination of employment, the company may determine to enter into an agreement
or to establish an arrangement providing additional benefits or amounts, or
altering the terms of benefits described below, as the Committee determines
appropriate.
The actual amounts that would be paid upon a named executive officers
termination of employment can be determined only at the time of such
executives separation from the company. Due to the number of factors that
affect the nature and amount of any benefits provided upon the events discussed
below, any actual amounts paid or distributed may be higher or lower than
reported in the tables below. Factors that could affect these amounts include
the timing during the year of any such event, the companys stock price and the
executives age.
As discussed above under the section entitled Deferred Compensation
some of the named executive officers participate in the companys nonqualified
deferred compensation plans. The last column of the Nonqualified Deferred
Compensation for 2009 table on page 46 reports each named executive officers
aggregate balance at the companys fiscal year-end. In the event of termination
of employment, the named executive officers are entitled to receive the vested
portion of their deferred compensation account. The account balances continue
to be credited with increases or decreases reflecting changes in the value of
the investment funds that are tracked until the valuation date as provided
under the plan, and therefore amounts received by the named executive officers
will differ from those shown in the Nonqualified Deferred Compensation for
2009 table on page 46. See the narrative accompanying that table for
information on available types of distributions under the plans.
47
POST-TERMINATION PAYMENTS
MURRAY D. MARTIN
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Early
Retirement ($)
|
|
Involuntary
Not for Cause
Termination
($)
(2)
|
|
|
Change
of
Control with
Termination
(CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
|
|
|
|
411,058 - 4,940,000
|
(3)
|
|
|
5,538,000
|
(4)
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
937,200
|
(5)
|
|
|
937,200
|
(5)
|
|
|
1,520,000
|
(6)
|
|
|
937,200
|
(5)
|
|
|
937,200
|
(5)
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-2009 cycle
|
|
|
1,580,000
|
(7)
|
|
|
1,580,000
|
(7)
|
|
|
1,580,000
|
(8)
|
|
|
1,580,000
|
(7)
|
|
|
1,580,000
|
(7)
|
2008-2010 cycle
|
|
|
1,700,000
|
(9)
|
|
|
1,700,000
|
(9)
|
|
|
2,550,000
|
(8)
|
|
|
1,700,000
|
(9)
|
|
|
1,700,000
|
(9)
|
2009-2011 cycle
|
|
|
791,667
|
(9)
|
|
|
791,667
|
(9)
|
|
|
2,375,000
|
(8)
|
|
|
791,667
|
(9)
|
|
|
791,667
|
(9)
|
Stock Options Accelerated
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
Restricted Stock Units
Accelerated
(11)
|
|
|
0
|
|
|
|
0
|
|
|
|
1,092,025
|
|
|
|
1,092,025
|
|
|
|
1,092,025
|
|
Performance Award Accelerated
|
|
|
84,313
|
(12)
|
|
|
84,313
|
(12)
|
|
|
337,250
|
(13)
|
|
|
84,313
|
(12)
|
|
|
84,313
|
(12)
|
Incremental Pension Benefit
|
|
|
|
|
|
|
0 - 2,958,890
|
(14)
|
|
|
1,055,012
|
(15)
|
|
|
|
|
|
|
|
|
Medical & other benefits
(16)
|
|
|
|
|
|
|
|
|
|
|
90,975
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
|
|
|
|
|
0 - 15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance (1x base salary)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
950,000
|
|
|
|
|
|
Tax-gross up
(17)
|
|
|
|
|
|
|
|
|
|
|
4,601,151
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,093,180
|
|
|
|
5,504,238 - 13,007,070
|
|
|
|
20,739,413
|
|
|
|
7,135,205
|
|
|
|
6,185,205
|
|
|
|
(1)
|
All data
is shown assuming termination on December 31, 2009.
|
(2)
|
Ranges
represent variance between Mr. Martins basic severance plan and enhanced
severance payment as explained in the section entitled Explanation of
Benefits Payable Upon Various Termination Events on page 53.
|
(3)
|
Under the
terms of the Pitney Bowes Severance Pay Plan, Mr. Martin would receive a
minimum of 22.5 weeks of base salary if he were terminated involuntarily and
not for cause. Under our enhanced severance policy, Mr. Martin could receive
up to two years of base salary and target bonus.
|
(4)
|
Includes
three years of salary and three years of annual incentive. Salary used is the
base rate as of December 31, 2009. Annual incentive award used is the average incentive
earned for service in 2006, 2007 and 2008.
|
(5)
|
Annual
incentive is prorated for time worked during the year of termination and is
shown with actual amount earned for 2009. This amount was paid in February
2010 under the normal distribution of annual incentives. Since Mr. Martin is
eligible for early retirement this payment is not subject to reduction.
|
(6)
|
Annual
incentive is valued at the targeted amount and is paid upon termination
following a change of control.
|
(7)
|
CIUs for
2007-2009 cycles are valued at $0.79 per unit based upon actual achievement
of performance metrics for the 2007-2009 cycle. This amount was paid in
February 2010 under the normal distribution of CIUs.
|
(8)
|
CIUs for
2007-2009 cycle are valued at $0.79 per unit based upon actual achievement of
performance metrics for the 2007-2009 cycle. This amount was paid in February
2010 under the normal distribution of CIUs. CIUs for 2008-2010 and 2009-2011
cycles are valued at the targeted amount which is $1.00 per unit. Payment is
made upon termination following a change of control.
|
(9)
|
CIUs for
2008-2010 and 2009-2011 cycles are valued at the targeted amount which is
$1.00 per unit. Payment is prorated based upon time worked through the end of
each cycle period, however, payment is not made until the end of the
performance period. Since Mr. Martin is eligible for early retirement,
payments for the CIUs for the 2009 - 2011 cycle are prorated.
|
(10)
|
Upon
certain termination events vesting of options is accelerated and the options
remain exercisable for the remainder of the term. There were no in-the-money
unvested options as of December 31, 2009.
|
(11)
|
All
restrictions on performance-based RSUs lapse immediately upon death,
disability, or change in control with termination.
|
(12)
|
Outstanding
2008 performance award is prorated based upon time worked during remaining
vesting period.
|
(13)
|
Outstanding
2008 performance award shown at targeted amount which is 100% of the
remaining value of the performance award.
|
(14)
|
Amount
shown is the increase in lump-sum actuarial equivalent of the pension age,
service and earnings credit for the associated severance period.
|
(15)
|
Amount
shown is the increase in lump-sum actuarial equivalent of the pension age and
service credits for the associated severance period.
|
(16)
|
Amount
shown is the present value of the companys cost to continue medical and
other health & welfare plans for three years plus the companys cost for
outplacement services.
|
(17)
|
Amount
shown is the gross-up value for excise tax due on parachute payments and
their gross-up payments. Gross-up payments are subject to a safe harbor
amount described on page 54.
|
48
POST-TERMINATION PAYMENTS
MICHAEL MONAHAN
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
Not
for Cause
Termination ($)
(2)
|
|
Change
of
Control with
Termination (CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
228,462 - 1,944,000
|
(3)
|
|
|
2,441,391
|
(4)
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
0 - 313,500
|
(5)
|
|
|
432,000
|
(6)
|
|
|
313,500
|
(5)
|
|
313,500
|
(5)
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-2009 cycle
|
|
|
0 - 158,000
|
(7)
|
|
|
158,000
|
(8)
|
|
|
158,000
|
(7)
|
|
158,000
|
(7)
|
|
2008-2010 cycle
|
|
|
0 - 333,333
|
(9)
|
|
|
500,000
|
(8)
|
|
|
333,333
|
(9)
|
|
333,333
|
(9)
|
|
2009-2011 cycle
|
|
|
0
|
(9)
|
|
|
550,000
|
(8)
|
|
|
183,333
|
(9)
|
|
183,333
|
(9)
|
|
Stock Options Accelerated
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|
Restricted Stock Units
Accelerated
(11)
|
|
|
0
|
|
|
|
252,886
|
|
|
|
252,886
|
|
|
252,886
|
|
|
Performance Award Accelerated
|
|
|
26,625
|
(12)
|
|
|
106,500
|
(13)
|
|
|
26,625
|
(12)
|
|
26,625
|
(12)
|
|
Incremental Pension Benefit
|
|
|
0 - 392,666
|
(14)
|
|
|
134,863
|
(15)
|
|
|
|
|
|
|
|
|
Medical & other benefits
(16)
|
|
|
|
|
|
|
91,730
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
|
0 - 15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance (1x base salary)
|
|
|
|
|
|
|
|
|
|
|
540,000
|
|
|
|
|
|
Tax-gross up
(17)
|
|
|
|
|
|
|
1,671,173
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
255,087 - 3,183,124
|
|
|
|
6,338,543
|
|
|
|
1,807,677
|
|
|
1,267,677
|
|
|
|
|
(1)
|
All data
is shown assuming termination on December 31, 2009.
|
(2)
|
Ranges
represent variance between Mr. Monahans basic severance plan and enhanced
severance payment as explained in the section entitled Explanation of
Benefits Payable Upon Various Termination Events on page 53.
|
(3)
|
Under the
terms of the Pitney Bowes Severance Pay Plan, Mr. Monahan would receive a
minimum of 22 weeks of base salary if he were terminated involuntarily and
not for cause. Under our enhanced severance policy, Mr. Monahan could receive
up to two years of base salary and target bonus.
|
(4)
|
Includes
three years of salary and three years of annual incentive. Salary used is the
base rate as of December 31, 2009. Annual incentive award used is the average incentive
earned for service in 2006, 2007 and 2008.
|
(5)
|
Annual
incentive is prorated for time worked during the year of termination and is
shown with actual amount earned for 2009. This amount was paid in February
2010 under the normal distribution of annual incentives.
|
(6)
|
Annual
incentive is valued at the targeted amount and is paid upon termination
following a change of control.
|
(7)
|
CIUs for
2007-2009 cycles are valued at $0.79 per unit based upon actual achievement
of performance metrics for the 2007-2009 cycle. This amount was paid in
February 2010 under the normal distribution of CIUs.
|
(8)
|
CIUs for
2007-2009 cycle are valued at $0.79 per unit based upon actual achievement of
performance metrics for the 2007-2009 cycle. This amount was paid in February
2010 under the normal distribution of CIUs. CIUs for 2008-2010 and 2009-2011
cycles are valued at the targeted amount which is $1.00 per unit. Payment is
made upon termination following a change of control.
|
(9)
|
CIUs for
2008-2010 and 2009-2011 cycles are valued at the targeted amount which is
$1.00 per unit. Payment is prorated based upon time worked through the end of
each cycle period, however, payment is not made until the end of the
performance period. In the case of involuntary not for cause termination no
payments are made for CIUs for the 2009-2011 cycle since the award has been
outstanding for less than one year.
|
(10)
|
Upon
certain termination events vesting of options is accelerated and the options
remain exercisable for the remainder of the term. There were no in-the-money
unvested options as of December 31, 2009.
|
(11)
|
All
restrictions on performance-based RSUs lapse immediately upon death,
disability, or change in control with termination.
|
(12)
|
Outstanding
2008 performance award is prorated based upon time worked during remaining
performance period.
|
(13)
|
Outstanding
2008 performance award shown at targeted amount which is 100% of the
remaining value of the performance award.
|
(14)
|
Amount
shown is the increase in lump-sum actuarial equivalent of the pension age,
service and earnings credit for the associated severance period.
|
(15)
|
Amount
shown is the increase in lump-sum actuarial equivalent of the pension age and
service credits for the associated severance period.
|
(16)
|
Amount
shown is the present value of the companys cost to continue medical and
other health & welfare plans for three years plus the companys cost for
outplacement services.
|
(17)
|
Amount
shown is the gross-up value for excise tax due on parachute payments and
their gross-up payments. Gross-up payments are subject to a safe harbor
amount described on page 54.
|
49
POST-TERMINATION PAYMENTS
LESLIE ABI-KARAM
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
Not
for Cause
Termination ($)
(2)
|
|
Change
of
Control with
Termination (CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
262,500 - 1,890,000
|
(3)
|
|
|
2,370,413
|
(4)
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
0 - 256,200
|
(5)
|
|
|
420,000
|
(6)
|
|
|
256,200
|
(5)
|
|
256,200
|
(5)
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-2009 cycle
|
|
|
0 - 158,000
|
(7)
|
|
|
158,000
|
(8)
|
|
|
158,000
|
(7)
|
|
158,000
|
(7)
|
|
2008-2010 cycle
|
|
|
0 - 333,333
|
(9)
|
|
|
500,000
|
(8)
|
|
|
333,333
|
(9)
|
|
333,333
|
(9)
|
|
2009-2011 cycle
|
|
|
0
|
(9)
|
|
|
550,000
|
(8)
|
|
|
183,333
|
(9)
|
|
183,333
|
(9)
|
|
Stock Options Accelerated
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|
Restricted Stock Units
Accelerated
(11)
|
|
|
0
|
|
|
|
252,886
|
|
|
|
252,886
|
|
|
252,886
|
|
|
Performance Award Accelerated
|
|
|
26,625
|
(12)
|
|
|
106,500
|
(13)
|
|
|
26,625
|
(12)
|
|
26,625
|
(12)
|
|
Incremental Pension Benefit
|
|
|
0 - 470,251
|
(14)
|
|
|
192,535
|
(15)
|
|
|
|
|
|
|
|
|
Medical & other benefits
(16)
|
|
|
|
|
|
|
91,103
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
|
0 - 15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance (1x base salary)
|
|
|
|
|
|
|
|
|
|
|
525,000
|
|
|
|
|
|
Tax-gross up
(17)
|
|
|
|
|
|
|
1,636,731
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
289,125 - 3,149,409
|
|
|
|
6,278,168
|
|
|
|
1,735,377
|
|
|
1,210,377
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All data is shown assuming
termination on December 31, 2009.
|
(2)
|
Ranges represent variance between
Ms. Abi-Karams basic severance plan and enhanced severance payment as
explained in the section entitled Explanation of Benefits Payable Upon
Various Termination Events on page 53.
|
(3)
|
Under the terms of the Pitney
Bowes Severance Pay Plan, Ms. Abi-Karam would receive a minimum of 26 weeks
of base salary if she were terminated involuntarily and not for cause. Under
our enhanced severance policy, Ms. Abi-Karam could receive up to two years of
base salary and target bonus.
|
(4)
|
Includes three years of salary
and three years of annual incentive. Salary used is the base rate as of
December 31, 2009. Annual incentive award used is the average incentive
earned for service in 2006, 2007 and 2008.
|
(5)
|
Annual incentive is prorated for
time worked during the year of termination and is shown with actual amount
earned for 2009. This amount was paid in February 2010 under the normal
distribution of annual incentives.
|
(6)
|
Annual incentive is valued at the
targeted amount and is paid upon termination following a change of control.
|
(7)
|
CIUs for 2007-2009 cycles are
valued at $0.79 per unit based upon actual achievement of performance metrics
for the 2007-2009 cycle. This amount was paid in February 2010 under the
normal distribution of CIUs.
|
(8)
|
CIUs for 2007-2009 cycle are
valued at $0.79 per unit based upon actual achievement of performance metrics
for the 2007-2009 cycle. This amount was paid in February 2010 under the
normal distribution of CIUs. CIUs for 2008-2010 and 2009-2011 cycles are valued
at the targeted amount which is $1.00 per unit. Payment is made upon
termination following a change of control.
|
(9)
|
CIUs for 2008-2010 and 2009-2011
cycles are valued at the targeted amount which is $1.00 per unit. Payment is
prorated based upon time worked through the end of each cycle period,
however, payment is not made until the end of the performance period. In the
case of involuntary not for cause termination no payments are made for CIUs
for the 2009-2011 cycle since the award has been outstanding for less than
one year.
|
(10)
|
Upon certain termination events
vesting of options is accelerated and the options remain exercisable for the
remainder of the term. There were no in-the-money unvested options as of
December 31, 2009.
|
(11)
|
All restrictions on
performance-based RSUs lapse immediately upon death, disability, or change in
control with termination.
|
(12)
|
Outstanding 2008 performance
award is prorated based upon time worked during remaining performance period.
|
(13)
|
Outstanding 2008 performance
award shown at targeted amount which is 100% of the remaining value of the
performance award.
|
(14)
|
Amount shown is the increase in
lump-sum actuarial equivalent of the pension age, service and earnings credit
for the associated severance period.
|
(15)
|
Amount shown is the increase in
lump-sum actuarial equivalent of the pension age and service credits for the
associated severance period.
|
(16)
|
Amount shown is the present value
of the companys cost to continue medical and other health & welfare
plans for three years plus the companys cost for outplacement services.
|
(17)
|
Amount shown is the gross-up
value for excise tax due on parachute payments and their gross-up payments.
Gross-up payments are subject to a safe harbor amount described on page 54.
|
50
POST-TERMINATION PAYMENTS
DAVID DOBSON
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
Not
for Cause
Termination ($)
(2)
|
|
Change
of
Control with
Termination (CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
17,500 - 1,501,500
|
(3)
|
|
|
2,565,000
|
(4)
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
0 - 180,400
|
(5)
|
|
|
295,750
|
(6)
|
|
|
180,400
|
(5)
|
|
180,400
|
(5)
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-2009 cycle
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008-2010 cycle
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009-2011 cycle
|
|
|
0
|
(9)
|
|
|
350,000
|
(8)
|
|
|
116,667
|
(9)
|
|
116,667
|
(9)
|
|
Stock Options Accelerated
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|
Restricted Stock Accelerated
(11)
|
|
|
0
|
|
|
|
113,800
|
|
|
|
113,800
|
|
|
113,800
|
|
|
Restricted Stock Units
Accelerated
(12)
|
|
|
0
|
|
|
|
297,837
|
|
|
|
297,837
|
|
|
297,837
|
|
|
Performance Award Accelerated
|
|
|
13,313
|
(13)
|
|
|
53,250
|
(14)
|
|
|
13,313
|
(13)
|
|
13,313
|
(13)
|
|
Incremental Pension Benefit
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical & other benefits
(16)
|
|
|
|
|
|
|
86,371
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
|
0 - 15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance (1x base salary)
|
|
|
|
|
|
|
|
|
|
|
455,000
|
|
|
|
|
|
Tax-gross up
(17)
|
|
|
|
|
|
|
1,329,442
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
30,813 - 1,710,213
|
|
|
|
5,091,450
|
|
|
|
1,177,017
|
|
|
722,017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All data is shown assuming
termination on December 31, 2009.
|
(2)
|
Ranges represent variance between
Mr. Dobsons basic severance plan and enhanced severance payment as explained
in the section entitled Explanation of Benefits Payable Upon Various
Termination Events on page 53.
|
(3)
|
Under the terms of the Pitney
Bowes Severance Pay Plan, Mr. Dobson would receive a minimum of 2 weeks of
base salary if he were terminated involuntarily and not for cause. Under our
enhanced severance policy, Mr. Dobson could receive up to two years of base
salary and target bonus.
|
(4)
|
Includes three years of salary
and three years of annual incentive. Salary used is the base rate as of
December 31, 2009. Annual incentive award used is the annualized 2008
incentive award paid in 2009 since his employment commenced mid-year 2008.
|
(5)
|
Annual incentive is prorated for
time worked during the year of termination and is shown with actual amount
earned for 2009. This amount was paid in February 2010 under the normal
distribution of annual incentives.
|
(6)
|
Annual incentive is valued at the
targeted amount and is paid upon termination following a change of control.
|
(7)
|
Mr. Dobson was not eligible for
the 2007-2009 and 2008 - 2010 CIU cycles.
|
(8)
|
CIUs for the 2009-2011 cycle are
valued at the targeted amount which is $1.00 per unit. Payment is paid upon
termination following a change of control.
|
(9)
|
Units for the 2009-2011 cycles
are valued at the targeted amount which is $1.00 per unit. Payment is
prorated based upon time worked through the end of the cycle period, however,
payment is not made until the end of the performance period. In the case of
involuntary not for cause termination no payments are made for CIUs for the
2009-2011 cycle since the award has been outstanding for less than one year.
|
(10)
|
Upon certain termination events
vesting of options is accelerated and the options remain exercisable for the
remainder of the term. There were no in-the-money unvested options as of
December 31, 2009.
|
(11)
|
All restrictions on
performance-based restricted stock lapse immediately upon death, disability,
or change in control with termination.
|
(12)
|
All restrictions on
performance-based RSUs lapse immediately upon termination due to death,
disability, or change in control.
|
(13)
|
Outstanding 2008 performance
award is prorated based upon time worked during remaining vesting period.
|
(14)
|
Outstanding 2008 performance
award shown at targeted amount which is 100% of the remaining value of the
performance award.
|
(15)
|
Mr. Dobson is not a pension plan
participant.
|
(16)
|
Amount shown is the present value
of the companys cost to continue medical and other health & welfare
plans for three years plus the companys cost for outplacement services.
|
(17)
|
Amount shown is the gross-up
value for excise tax due on parachute payments and their gross-up payments.
Gross-up payments are subject to a safe harbor amount described on page 54.
|
51
POST-TERMINATION PAYMENTS
VICKI OMEARA
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Involuntary
Not
for Cause
Termination ($)
(2)
|
|
Change
of
Control with
Termination (CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance
|
|
|
19,231 - 1,600,000
|
(3)
|
|
|
2,323,515
|
(4)
|
|
|
|
|
|
|
|
|
Annual Incentive
|
|
|
0 - 183,000
|
(5)
|
|
|
300,000
|
(6)
|
|
|
183,000
|
(5)
|
|
183,000
|
(5)
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007-2009 cycle
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008-2010 cycle
(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2009-2011 cycle
|
|
|
0
|
(9)
|
|
|
325,000
|
(8)
|
|
|
108,333
|
(9)
|
|
108,333
|
(9)
|
|
Stock Options Accelerated
(10)
|
|
|
0
|
|
|
|
0
|
|
|
|
0
|
|
|
0
|
|
|
Restricted Stock Accelerated
(11)
|
|
|
0
|
|
|
|
113,800
|
|
|
|
113,800
|
|
|
113,800
|
|
|
Restricted Stock Units
Accelerated
(12)
|
|
|
0
|
|
|
|
277,217
|
|
|
|
277,217
|
|
|
277,217
|
|
|
Performance Award Accelerated
|
|
|
8,875
|
(13)
|
|
|
35,500
|
(14)
|
|
|
8,875
|
(13)
|
|
8,875
|
(13)
|
|
Incremental Pension Benefit
(15)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical & other benefits
(16)
|
|
|
|
|
|
|
86,698
|
|
|
|
|
|
|
|
|
|
Financial Counseling
|
|
|
0 - 15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Life insurance (1x base salary)
|
|
|
|
|
|
|
|
|
|
|
500,000
|
|
|
|
|
|
Tax-gross up
(17)
|
|
|
|
|
|
|
1,106,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
28,106 - 1,806,875
|
|
|
|
4,568,320
|
|
|
|
1,191,225
|
|
|
691,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
All data is shown assuming
termination on December 31, 2009.
|
(2)
|
Ranges represent variance between
Ms. OMearas basic severance plan and enhanced severance payment as
explained in the section entitled Explanation of Benefits Payable Upon
Various Termination Events on page 53.
|
(3)
|
Under the terms of the Pitney
Bowes Severance Pay Plan, Ms. OMeara would receive a minimum of 2 weeks of
base salary if she were terminated involuntarily and not for cause. Under our
enhanced severance policy, Ms. OMeara could receive up to two years of base
salary and target bonus.
|
(4)
|
Includes three years of salary
and three years of annual incentive. Salary used is the base rate as of
December 31, 2009. Annual incentive award used is the annualized 2008
incentive award paid in 2009 since her employment commenced mid-year 2008.
|
(5)
|
Annual incentive is prorated for
time worked during the year of termination and is shown with actual amount
earned for 2009. This amount was paid in February 2010 under the normal
distribution of annual incentives.
|
(6)
|
Annual incentive is valued at the
targeted amount and is paid upon termination following a change of control.
|
(7)
|
Ms. OMeara was not eligible for
the 2007-2009 and 2008 - 2010 CIU cycles.
|
(8)
|
CIUs for the 2009-2011 cycle are
valued at the targeted amount which is $1.00 per unit. Payment is paid upon
termination following a change of control.
|
(9)
|
Units for the 2009-2011 cycles
are valued at the targeted amount which is $1.00 per unit. Payment is
prorated based upon time worked through the end of the cycle period, however,
payment is not made until the end of the performance period. In the case of
involuntary not for cause termination no payments are made for CIUs for the
2009-2011 cycle since the award has been outstanding for less than one year.
|
(10)
|
Upon certain termination events
vesting of options is accelerated and the options remain exercisable for the
remainder of the term. There were no in-the-money unvested options as of
December 31, 2009.
|
(11)
|
All restrictions on
performance-based restricted stock lapse immediately upon death, disability,
or change in control with termination.
|
(12)
|
All restrictions on
performance-based RSUs lapse immediately upon termination due to death,
disability, or change in control.
|
(13)
|
Outstanding performance award is
prorated based upon time worked during remaining vesting period.
|
(14)
|
Outstanding 2008 performance
award shown at targeted amount which is 100% of the remaining value of the
performance award.
|
(15)
|
Ms. OMeara is not a pension plan
participant.
|
(16)
|
Amount shown is the present value
of the companys cost to continue medical and other health & welfare
plans for three years plus the companys cost for outplacement services.
|
(17)
|
Amount shown is the gross-up
value for excise tax due on parachute payments and their gross-up payments.
Gross-up payments are subject to a safe harbor amount described on page 54.
|
52
Explanation of
Benefits Payable Upon Various Termination Events
Change in Responsibilities
In the event that a diminution in the responsibilities of Messrs.
Martin, Monahan, Dobson, or Mmes. Abi-Karam and OMeara were determined to be a
constructive termination, or the equivalent of materially changing the
executives position, these named executive officers would receive the
separation benefits set forth under the column entitled Involuntary Not for
Cause Termination in each executives Post-Termination Payments table.
Resignation
A voluntary termination would not provide any compensation, benefits or
special treatment under equity plans for any of the named executive officers.
Early Retirement
The U.S. Pitney Bowes Pension Plan allows for early retirement at age 55
with at least ten years of service. As of the date of this proxy, Mr. Martin is
currently eligible for early retirement. Early retirement entitles named
executive officers to the following upon termination:
|
|
|
|
|
A
prorated annual incentive award.
|
|
|
|
|
|
Prorated
CIU payments at the end of each three-year cycle.
|
|
|
|
|
|
Stock
option awards and RSUs that have been outstanding for at least one year will
fully vest and stock options will remain exercisable for the duration of the
term.
|
|
|
|
|
|
The
board of directors has the discretion to accelerate vesting of restricted
stock that would otherwise be forfeited.
|
|
|
|
|
|
2008
cash performance awards prorated based on full months worked during vesting
period.
|
Normal Retirement
None of
the named executive officers are eligible for normal retirement at this time.
Involuntary/Not for Cause Termination
The company maintains a severance pay plan that provides for the payment
of severance to full-time employees based in the United States whose employment
is terminated under certain business circumstances (other than a change of
control). The Pitney Bowes Severance Pay Plan provides a continuation of
compensation upon involuntary termination by the company without cause (defined
as willful failure to perform duties or engaging in illegal conduct or gross
misconduct harmful to the company) as summarized below. In addition, in order
to obtain an appropriate waiver and release from the employee, the company may
offer enhanced severance payments. Where an employee is involuntarily
terminated after becoming eligible for early retirement, the employee is
eligible for benefits afforded early retirees or involuntarily terminated
employees, whichever is greater.
Basic Severance
|
|
|
|
|
The
basic severance benefit is one week of salary per year of service.
|
Enhanced
Severance
The company may offer enhanced severance to executives upon termination,
conditioned upon signing a waiver and release, which could include the
following payments:
|
|
|
|
|
Severance
pay based on an employees years of service and level within the company up
to a maximum of two years of pay, less any basic severance. All named
executive officers would be eligible for two years of pay, which includes
current base salary plus current target annual incentive.
|
|
|
|
|
|
A
prorated annual incentive award.
|
|
|
|
|
|
CIUs
outstanding for one year from the date of grant are prorated and payments are
calculated and paid at the end of each three-year cycle.
|
|
|
|
|
|
Any
stock options and RSUs outstanding for one year at the date of termination
will continue to vest up to 24 months following termination and will expire
at the end of this period.
|
|
|
|
|
|
The
board of directors has the discretion to accelerate vesting of restricted
stock and RSUs that would otherwise be forfeited.
|
|
|
|
|
|
2008
cash performance awards prorated based on full months worked during vesting
period.
|
|
|
|
|
|
Pension
benefit calculation includes service credit and earnings during the severance
period.
|
|
|
|
|
|
Financial
counseling will continue through the severance period.
|
|
|
|
|
|
Outplacement
services.
|
Termination for Cause or Gross Misconduct
|
|
|
|
|
Termination
for cause would not provide any additional compensation, severance, benefits
or special treatment under equity plans to any of the named executive
officers.
|
Death
The named executive officers beneficiary would be entitled to the
following upon the executives death:
|
|
|
|
|
A
prorated annual incentive award.
|
53
|
|
|
|
|
Prorated
CIU payments calculated through the date of death at the end of each
three-year cycle.
|
|
|
|
|
|
All
stock options will vest upon death. The named executive officers beneficiary
can exercise stock options during the remaining term of the grant.
|
|
|
|
|
|
Restrictions
on outstanding shares of restricted stock and RSUs will be removed.
|
|
|
|
|
|
2008
cash performance awards prorated based on full months worked during vesting
period.
|
|
|
|
|
|
Life
insurance of one times base salary for U.S. executives.
|
Disability
The named executive officers would be entitled to the following upon
termination for disability:
|
|
|
|
|
A
prorated annual incentive award.
|
|
|
|
|
|
Prorated
CIU payments at the end of each three-year cycle.
|
|
|
|
|
|
All
stock options and RSUs will vest upon disability. Stock options can be
exercised during the remaining term of the grant.
|
|
|
|
|
|
Restrictions
on outstanding shares of restricted stock and RSUs will be removed.
|
|
|
|
|
|
2008
cash performance awards prorated based on full months worked during vesting
period.
|
Change of Control Arrangements
Set forth below is a summary of certain change of control arrangements
maintained by the company. Under the companys change of control arrangements,
a change of control is defined as:
|
|
|
|
|
the
acquisition of 20% or more of the companys common stock or 20% or more of
the combined voting power of the companys voting securities by an
individual, entity or group;
|
|
|
|
|
|
the
replacement of a majority of the board other than by approval of the
incumbent board;
|
|
|
|
|
|
the
consummation of a reorganization, merger, or consolidation where greater than
50% of the companys common stock and voting power changes hands; or
|
|
|
|
|
|
the
approval by stockholders of the liquidation or dissolution of the company.
|
Upon a
termination from employment without cause or for good reason (defined as a
diminution in position, authority, duties, responsibilities, earnings or
benefits, or relocation) within two years of a change of control each of the
named executive officers is entitled to the following:
|
|
|
|
|
A
payment equal to three times the sum of the participants current annual
salary and the participants average annual incentive award in the preceding
three years.
|
|
|
|
|
|
A
prorated annual incentive award based on the participants current annual
incentive target.
|
|
|
|
|
|
CIU payments
based on the total of the outstanding grants for each of the open cycles paid
at target value at the end of the cycle, or upon termination if earlier.
|
|
|
|
|
|
The
Pitney Bowes Inc. 2007 Stock Plan provides that all stock options, restricted
stock and RSUs will vest upon the employees termination and stock options
can be exercised during their remaining term.
|
|
|
|
|
|
2008
cash performance awards paid at target value upon termination prior to
vesting date.
|
|
|
|
|
|
Only age
and service credits, not earnings, are included in the pension calculation
for the associated severance period.
|
|
|
|
|
|
Health
and welfare benefits for the executive and his or her dependents for a
three-year period.
|
|
|
|
|
|
Outplacement
services.
|
|
|
|
|
|
A tax
gross-up covering all additional taxes due (e.g., excise, income, employment
taxes) to U.S. employees if an excise tax is due on the parachute payments.
However, there is a provision that allows the severance payments to be
reduced if the parachute value is within 110% of the safe-harbor amount, and
therefore no tax gross-up would then be payable.
|
A change of control without termination entitles named executive
officers to have their stock options and shares of restricted stock granted to
them under the 2002 Stock Plan to vest immediately. These stock options are
exercisable during the remainder of their term. As of December 31, 2009, none
of the named executive officers held in-the-money unvested stock options or
restricted stock under the 2002 Stock Plan.
Internal Revenue Code Section 409A
The Companys benefits arrangements are intended to comply with Code
Section 409A. In that regard, Key Employees as defined in Code Sections 409A
and 416 may have certain payments delayed until six months after the employee
terminates employment.
54
A
dditional
Information
S
olicitation
of Proxies
In addition to the use of the mail, proxies may be solicited by the
directors, officers, and employees of the company without additional
compensation by personal interview, by telephone, or by electronic
transmission. Arrangements may also be made with brokerage firms and other
custodians, nominees, and fiduciaries for the forwarding of solicitation
material to the beneficial owners of Pitney Bowes common stock and $2.12
convertible preference stock held of record, and the company will reimburse
such brokers, custodians, nominees, and fiduciaries for reasonable
out-of-pocket expenses incurred. The company has retained Georgeson Inc. to aid
in the solicitation of proxies.
The anticipated fee of such firm is $8,500 plus out-of-pocket costs and
expenses. The cost of solicitation will be borne entirely by Pitney Bowes.
O
ther
Matters
Management knows of no other matters which may be presented for
consideration at the meeting. However, if any other matters properly come
before the meeting, it is the intention of the individuals named in the
enclosed proxy to vote in accordance with their judgment.
By order
of the board of directors.
|
Amy C. Corn
|
Corporate
Secretary
|
55
A
nnex A
Proposed Changes to Relevant Sections of Restated Certificate of
Incorporation
Seventh:-
PROVISIONS RELATING TO THE BOARD OF DIRECTORS
|
|
(a)
|
Number, election and terms.
Except
as otherwise fixed by or pursuant to the provisions of Article Fourth hereof
relating to the rights of the holders of any class or series of stock having
a preference over the Common Stock as to dividends or upon liquidation to
elect additional directors under specified circumstances, the number of the
Directors of the Corporation shall be fixed from time to time by or pursuant
to the By-Laws of the Corporation. Commencing with the annual meeting of
stockholders in 2011,
The
the Directors, other than those who may be elected
by the holders of any class or series of stock having a preference over the
Common Stock as to dividends or upon liquidation, shall be elected annually
for terms expiring at the next succeeding annual meeting; provided, however,
that Directors elected at the 2008 annual meeting of stockholders shall hold
office until the 2011 annual meeting of stockholders, Directors elected at
the 2009 annual meeting of stockholders shall hold office until the 2012
annual meeting of stockholders, and Directors elected at the 2010 annual
meeting of stockholders shall hold office until the 2013 annual meeting of
stockholders.
classified, with respect to the time for which they severally
hold office, into three classes, as nearly equal in number as possible, as
shall be provided in the manner specified in the By-Laws of the Corporation,
one class to be originally elected for a term expiring at the annual meeting
of stockholders to be held in 1987, with each class to hold office until its
successor is elected and qualified. At each annual meeting of the
stockholders of the Corporation, the successors of the class of Directors
whose term expires at that meeting shall be elected to hold office for a term
expiring at the annual meeting of stockholders held in the third year
following the year of their election.
|
|
|
(b)
|
Stockholder nomination of director candidates.
Advance
notice of stockholder nominations for the election of Directors shall be
given in the manner provided in the By-Laws of the Corporation.
|
|
|
(c)
|
Newly created directorship and vacancies.
Except
as otherwise provided for or fixed by or pursuant to the provisions of
Article Fourth hereof relating to the rights of the holders of any class or
series of stock having a preference over the Common Stock as to dividends or
upon liquidation to elect directors under specified circumstances, newly
created directorships resulting from any increase in the number of Directors
and any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other cause shall be filled by the
affirmative vote of a majority of the remaining Directors then in office,
even though less than a quorum of the Board of Directors. Any Director
elected in accordance with the preceding sentence shall hold office
for the
remainder of the full term of the class of Directors in which the new
directorship was created or the vacancy occurred and
until such Directors
successor shall have been elected and qualified, subject, however, to prior
death, resignation, retirement, disqualification or removal from office. No
decrease in the number of Directors constituting the Board of Directors shall
shorten the term of any incumbent Director.
|
|
|
(d)
|
Removal.
Subject to the rights of
any class of series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect Directors under specified
circumstances, any Director may be removed from office, with or without cause
and only by the affirmative vote of the holders of 80% of the combined voting
power of the then outstanding shares of stock entitled to vote generally in
the election of Directors, voting together as a single class.
|
|
|
(e)
|
Amendment, repeal, etc.
Notwithstanding
anything contained in this Amended and Restated Certificate of Incorporation
to the contrary, the affirmative vote of the holders of at least 80% of the
voting power of all shares of the Corporation entitled to vote generally in
the election of directors, voting together as a single class, shall be
required to alter, amend, adopt any provision inconsistent with or repeal
this Article SEVENTH.
|
A-1
Proposed Changes to Relevant Sections of Amended and Restated By-laws
ARTICLE II
BOARD OF DIRECTORS
Section 1. Powers of Board.
The
business of the Corporation shall be managed by or under the direction of the
Board of Directors.
Section 2. Number, Election and Terms.
Except as
otherwise fixed by or pursuant to the provisions of Article Fourth of the
Amended and Restated Certificate of Incorporation relating to the rights of the
holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation to elect additional directors under
specified circumstances, the number of the Directors of the Corporation shall
be fixed from time to time by the Board of Directors but shall not be less than
three. Commencing with the 2011 annual meeting of stockholders, t
T
he Directors,
other than those who may be elected by the holders of any class or series of
stock having a preference over the Common Stock as to dividends or upon
liquidation, shall be elected annually for terms expiring at the next
succeeding annual meeting; provided, however, that Directors elected at the
2008 annual meeting of stockholders shall hold office until the 2011 annual
meeting of stockholders, Directors elected at the 2009 annual meeting of
stockholders shall hold office until the 2012 annual meeting of stockholders,
and Directors elected at the 2010 annual meeting of stockholders shall hold
office until the 2013 annual meeting of stockholders.
classified, with respect
to the time for which they severally hold office, into three classes, as nearly
equal in number as possible, as determined by the Board of Directors of the
Corporation, one class to be originally elected for a term expiring at the
annual meeting of stockholders to be held in 1985, another class to be
originally elected for a term expiring at the annual meeting of stockholders to
be held in 1986, and another class to be originally elected for a term expiring
at the annual meeting of stockholders to be held in 1987, with each class to
hold office until its successor is elected and qualified at each annual meeting
of the stockholders of the Corporation, the successors of the class of
Directors whose term expires at that meeting shall be elected to hold office
for a term expiring at the annual meeting of stockholders held in the third
year following the year of their election.
Section 3. Stockholder Nomination of Director
Candidates.
Advance notice of stockholder nominations for the
election of Directors shall be given in the manner provided in Article II,
Section 6 of these By-laws.
Section 4. Newly Created Directorships and Vacancies.
Except as
otherwise provided for or fixed by or pursuant to the provisions of Article
Fourth of the Amended and Restated Certificate of Incorporation relating to the
rights of the holders of any class or series of stock having a preference over
the Common Stock as to dividends or upon liquidation to elect directors under
specified circumstances, newly created directorships resulting from any increase
in the number of Directors and any vacancies on the Board of Directors
resulting from death, resignation, disqualification, removal or other cause
shall be filled by the affirmative vote of a majority of the remaining
Directors then in office, even though less than a quorum of the Board of
Directors. Any Director elected in accordance with the preceding sentence shall
hold office
for the remainder of the full term of the class of Directors in
which the new directorship was created or the vacancy occurred and
until such
Directors successor shall have been elected and qualified, subject, however,
to prior death, resignation, retirement, disqualification or removal from
office. No decrease in the number of Directors constituting the Board of
Directors shall shorten the term of any incumbent Director.
Section 5. Removal.
Subject to the rights of
any class or series of stock having a preference over the Common Stock as to
dividends or upon liquidation to elect Directors under specified circumstances,
any Director may be removed from office, with or without cause and only by the
affirmative vote of the holders of 80% of the combined voting power of the then
outstanding shares of stock entitled to vote generally in the election of
Directors, voting together as a single class.
A-2
|
|
|
|
|
D
IRECTIONS:
|
|
Northbound on
I-95
|
Please
take Exit 7 (Greenwich Avenue) and proceed through the first intersection to
next traffic light, where you should turn right onto Washington Boulevard.
Continue through two traffic lights and two stop signs. (Washington Boulevard
becomes Dyke Lane.) At the end of Dyke Lane, turn left onto Elmcroft Road.
Please park where indicated.
|
|
Southbound on I-95
|
Please
take Exit 7 (Atlantic Street) and stay in the middle lane. At the fifth
traffic light, turn left onto Washington Boulevard. Continue through three
traffic lights and two stop signs. (Washington Boulevard becomes Dyke Lane.)
At the end of Dyke Lane, turn left onto Elmcroft Road. Please park where
indicated.
|
|
From the Merritt Parkway
|
Please take
Exit 34 (Long Ridge Road). Turn south onto Long Ridge Road. Follow Long Ridge
Road for approximately 2 miles to Cold Spring Road and turn right onto Cold
Spring Road. Bear left onto Washington Boulevard and follow to the end
(approximately 2 miles under railroad and I-95). (Washington Boulevard
becomes Dyke Lane.) At the end of Dyke Lane, turn left onto Elmcroft Road.
Please park where indicated.
|
This Proxy Statement is printed entirely on recycled and recyclable
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