|
COMPENSATION DISCUSSION AND ANALYSIS
|
more detailed input. The committee chairman is committed to continuing
his dialogue with our stockholders on executive compensation on a regular
basis.
The following discussion highlights the actions taken by the committee
and the independent board members in 2012 and 2013 to address the various
concerns raised by our stockholders.
We aligned the CEO annual incentive target with
market competitive data and enhanced the rigor of our annual incentive
objectives
Taking into consideration stockholder feedback, the results of market
research, the implementation of a new peer group, the outcome of the 2012
Say-on-Pay vote and advice from Pay Governance, the committee and the
independent board members reviewed our annual incentive compensation plan and
made several changes, including:
|
|
|
|
●
|
Reduced
the former CEOs 2012 annual incentive target from 165% of base salary to
130% of base salary with the former CEOs agreement;
|
|
●
|
Maintained
the annual incentive target at 130% of base salary for the new CEO;
|
|
●
|
Increased
the weighting of the financial objectives to at least 80% and reduced the
weighting of the strategic objectives to no more than 20% for 2013;
|
|
●
|
Reduced
duplicative metrics across award types for 2013 by replacing the Adjusted EPS
financial objective with an Adjusted earnings before interest and taxes
(EBIT) objective; and
|
|
●
|
Reduced
the 2012 annual incentive award to reflect our disappointing TSR performance.
|
Based on our review of market practices and data, we believe that the
reduction in the CEO annual incentive target better aligns to current market
competitive data while still providing a competitive total cash compensation
package. Mr. Lautenbachs total target cash compensation, including base salary
and annual incentive, was 82% of the median of the Towers Watson Regressed
Compensation Report.
In our discussions with stockholders, we learned that the weighting and
duplication of certain objectives raised concerns regarding the rigor of our
incentive targets. We believe that decreasing the weighting of strategic
objectives to no more than 20% provides more focus on financial objectives
where the rigor can be more easily assessed by stockholders, while maintaining
an appropriate weight for strategic objectives aimed at providing management
with the right incentives to focus on long term growth.
In addition to reducing duplication of financial metrics across award
types by replacing the Adjusted EPS financial objective with Adjusted EBIT, the
committee believes that an Adjusted EBIT metric will better link incentive
compensation with short-term corporate performance. The committee believes that
EBIT is a more appropriate measurement for annual incentive compensation
because it measures current profitability and performance. The committee
maintained the Adjusted Free Cash Flow objective due to the critical importance
of this metric to our short and long-term financial position.
Additionally, because our one year TSR for 2012 was 36%, the committee
and the independent board members took further action to reduce the annual
incentive enterprise pool by an additional 11%, impacting the NEOs as well as
all eligible employees.
We changed the type and mix of our long-term
incentives and increased the performance-based component
We
received feedback from stockholders that they wanted to see a greater
performance-based component as part of the total long-term mix and conducted a
review of our long-term incentive program. As a result, the committee
established the following new structure for the long-term incentive awards for
our senior executives:
|
|
|
|
●
|
60% Cash Incentive Units
|
|
●
|
40% Restricted Stock Units
|
By increasing the CIU component from 50% to 60%, a majority of the
long-term incentive is now based on financial performance metrics, in addition
to the IRC 162(m) threshold target. The goal of this change is to ensure that a
substantial portion of our executive officers long-term incentive compensation
is more closely linked to the achievement of financial performance objectives
than the structure we used in 2012. In 2012, the committee had replaced stock
options with market stock units (MSUs) in order to introduce an award that
was directly tied to TSR and therefore company performance. The introduction of
the MSUs met with mixed stockholder acceptance, therefore, the committee
eliminated MSUs from the long term incentive mix for 2013. Instead, RSUs will
be 40% of the long-term incentive award. Management believes the RSUs are
important for retaining the talent necessary to support our activities and
strategic realignment.
Before 2012, the committee applied the TSR modifier to adjust the payout
in each of the three years of a CIU cycle. Because the MSU award that we
introduced in 2012 included an intrinsic TSR feature, we eliminated the TSR
feature for the 2012 2014 CIU cycle. However, in light of stockholder
feedback and the internal review of executive compensation practices, the
committee re-introduced a cumulative three-year TSR modifier of +/ 25% into
the CIU awards and retroactively reinstituted the cumulative three-year TSR
modifier for the 2012 2014 CIU cycle. The TSR modifier adjusts the CIU payout
by +/ 25% based on relative performance compared with the newly constituted
peer group
50
|
COMPENSATION DISCUSSION AND ANALYSIS
|
over the cumulative three-year period. However, if our TSR is negative
for the cumulative three-year period, there can be no positive application of
the TSR modifier even if our TSR is less negative as compared to our new peer
group. Finally, the committee also approved a maximum CIU payout that is two
times target, including any impact from the TSR modifier.
We cancelled Mr. Martins $2 million special KEIP award
Due to poor TSR performance compared to our peer group and taking into
account the results of the 2012 Say-on-Pay vote, the independent board members
cancelled Mr. Martins $2 million KEIP award granted in February 2011, with Mr.
Martins agreement. This award would have otherwise vested in December 2013
subject to Pitney Bowes and Mr. Martin each achieving certain financial and
succession planning objectives.
We revised our peer group
Previously our peer group was weighted towards companies with higher
revenues and larger market capitalization, which caused concerns among our
stockholders that our executive pay may have been benchmarked to an
inappropriately high level. In the previous peer group, we were in the 30
th
percentile for revenue and 13
th
percentile for market
capitalization in 2012. After reviewing the peer group, the committee
eliminated six of the original sixteen companies in the previous peer group and
added another four companies. In the new peer group, we are at the 50
th
percentile
for revenue and 25
th
percentile for market capitalization as of
December 31, 2012, better balancing company size and complexity of the
business. The new peer group also eliminates our previous focus on industrial
machinery comparators while increasing the weight of commercial printing and
computer hardware peers. For a further discussion of the specific changes to
our peer group, see Assessing Competitive Practice Benchmarking, beginning
on page 59 of this proxy statement.
We enhanced disclosure on our Performance
Targets
In this proxy statement, we are disclosing more detailed information
about threshold and maximum targets for 2012 and have provided more detailed
disclosure about the rationale for our pay decisions.
We eliminated the excise tax gross-ups
Effective October 8, 2012, the independent board members eliminated the
excise tax gross-up following a change of control that was included in our
executive severance plans.
We reaffirmed our strong corporate governance
practices
In addition to the changes summarized above, we are maintaining our
commitment toward compensation practices that represent strong corporate
governance, as evidenced by the following:
|
|
|
|
●
|
An independent compensation
consultant who reports directly to the committee and performs no other
services to the company;
|
|
●
|
A direct line of communication
between our stockholders and the board of directors;
|
|
●
|
No employment agreements with
our executive officers;
|
|
●
|
No special arrangements whereby
extra years of prior service are credited under our pension plans;
|
|
●
|
No perquisites other than
limited financial counseling and an executive physical benefit;
|
|
●
|
A double-trigger vesting
clause in the case of change-of-control arrangements;
|
|
●
|
A clawback policy that permits
the company to recover bonuses from senior executives whose fraud or
misconduct resulted in a significant restatement of financial results;
|
|
●
|
Prohibitions against pledging
and hedging our stock;
|
|
●
|
An annual risk assessment of our
pay practices;
|
|
●
|
Significant stock ownership
guidelines that align executives interests with those of stockholders; and
|
|
●
|
An annual stockholder advisory
vote on executive compensation.
|
|
Other
2012 and 2013 Compensation Decisions
|
In addition to the structural changes we made to our executive
compensation program after the 2012 Advisory Vote on Executive Compensation, we
took the following compensation actions:
|
General Compensation Decisions
|
In February 2012, prior to the results of our 2012 Say-on-Pay vote and
consistent with our usual time frame for making compensation decisions, the
committee approved the executive compensation structure for 2012 and took the
following actions:
51
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
|
|
|
●
|
Conducted
an in-depth review of the LTI design, considering several alternatives, and
approved the following changes:
|
|
|
○
|
Eliminated
stock options because the committee believed they no longer appropriately
incentivized performance;
|
|
|
○
|
Introduced
MSUs in an effort to increase the performance characteristics of its
long-term incentive compensation, because they have an intrinsic TSR value;
|
|
|
○
|
Eliminated
the TSR component of the 2010 2012 CIU award since it was included in the
MSUs; and
|
|
|
○
|
Increased
Mr. Martins target LTI award by $500,000 to more closely align his total
direct compensation with our then peer group.
|
|
●
|
Approved
the financial and strategic objectives for the 2012 annual incentive and CIU
grants;
|
|
●
|
Performed
its annual review of the design and implementation of the KEIP and our 2007
Stock Plan and determined that the plans do not create risks that are
reasonably likely to have a material adverse effect on the company.
|
Compensation for the
New CEO
Effective December 3, 2012, the board elected Mr. Lautenbach as the new
President and CEO. Before joining Pitney Bowes, Mr. Lautenbach had a highly
successful career at International Business Machines Corporation leading
businesses and customer segments. The compensation package of our new President
and CEO reflects the enhanced performance-linked pay philosophy adopted by the
board in 2012.
Mr. Lautenbachs total direct compensation package is 95% of the market
median of total direct compensation when compared to our new peer group and
101% of the median of the Towers Watson Regressed Compensation Report:
|
|
|
|
|
Average of CEOs in
|
Pitney Bowes CEO
|
Average of CEOs
|
Towers Watson Regressed
|
|
in Peer Group
|
Compensation Report
|
|
|
|
Annual Base Salary: $850,000
|
|
Annual incentive award target:
|
Long-Term Incentives:
|
130% of base salary and a maximum
|
Composed of 60% CIUs and 40% RSUs
|
of 225% of base salary for 2013
|
with a target value of $4,000,000
|
|
|
52
|
COMPENSATION DISCUSSION
AND ANALYSIS
|
|
|
|
|
|
|
|
Mr.
Lautenbach also received:
|
|
●
|
Sign-on
performance equity grant in December 2012: A grant of premium-priced stock
options upon the commencement of employment as follows:
|
|
|
|
○
|
100,000
options with an exercise price equal to 115% of the closing price of our
common stock on December 3, 2012, Mr. Lautenbachs first day of employment
(Start Date).
|
|
|
|
○
|
200,000
options with an exercise price equal to 130% of the closing price on the
Start Date.
|
|
|
|
○
|
300,000
options with an exercise price equal to 145% of the closing price on the
Start Date.
|
|
●
|
An
additional sign-on grant of 400,000 premium-priced stock options in February
2013 with an exercise price equal to 160% of the closing price on February
11, 2013.
|
The option awards will vest in four equal annual installments
beginning on the first anniversary of the Start Date and ending on the fourth
anniversary of the Start Date.
|
Compensation Payout Overview
|
As discussed under Discussion of Compensation Actions beginning on
page 49 of this proxy statement, the committee and the independent board
members approved extensive changes to our executive compensation program. We
could not reflect all these changes in the 2012 compensation payouts discussed
below, because the 2012 compensation program was approved in February 2012,
prior to the results of our 2012 Say-on-Pay vote and our subsequent adjustments
to the compensation program. Where possible, however, the committee made
retroactive adjustments and also exercised negative discretion on the final
payment of the annual incentive and cash incentive units to better align with
our performance and TSR.
We link executive compensation to the performance of the company as a
whole. We believe executives with higher levels of responsibility and a greater
ability to influence enterprise results should have a greater percentage of
variable total compensation. Compensation for our NEOs varies from year to year
based on company stock performance as well as an assessment of the success of
the NEO in achieving enterprise-wide objectives. This means that our executives
may be paid below or above market rates depending on enterprise-wide
performance. We emphasize enterprise-wide performance to break down any internal
barriers that can arise in organizations that emphasize individual performance.
At the same time, the executive compensation committee does factor in
individual performance in determining the executives overall compensation.
In February 2012, we approved merit increases to base salaries for the
broad-based employee population. Similarly, the committee and the independent
directors approved merit increases for the NEOs and the CEO, respectively, and
set 2012 target compensation. The committee and the board approved increases
effective March 2012 between 1.75% and 3% for NEOs, except for Mr. OHara who
received a 22% increase in his base salary to more closely align it to market
competitive com-
pensation following his promotion to President, Pitney Bowes Software.
In February 2013, we determined that due to the 2012 business results no
merit increases will be applied to base salaries for the broad-based employee
population. Similarly, the committee and the independent directors froze base
salaries for the NEOs and the CEO, respectively.
NEOs are eligible for annual incentives under the KEIP for achieving
challenging enterprise-wide financial and strategic objectives established at
the beginning of each
year. Individual performance ratings can, in certain circumstances,
modify the final payout for the annual incentive.
|
2012 Annual Incentive Objectives and
Metrics
|
The 2012 financial objectives, which were weighted at 70% at target, are
shown in the chart below. The chart also shows the threshold, target, and
maximum ranges.
|
|
|
|
|
Financial Objectives
|
Weighting
|
Threshold
|
Target
|
Maximum
|
Adjusted Earnings Per Share
(1)
|
28%
|
$1.72
|
$2.15
|
$2.58
|
Revenue Growth
(1)
|
21%
|
3.5%
|
0%
|
2.0%
|
Adjusted Free Cash Flow
(1)
|
21%
|
$684 million
|
$760 million
|
$836 million
|
|
|
(1)
|
Adjusted EPS, Revenue Growth and Adjusted Free Cash Flow
are non-GAAP measures. For a reconciliation and additional information,
please see Accounting Items and Reconciliation of GAAP to Non-GAAP Measures
on page 65 of this proxy statement.
|
53
|
COMPENSATION DISCUSSION AND ANALYSIS
|
We believe that each of the financial objective metrics is an important
measurement of our performance and thus particularly appropriate metrics upon
which to base annual incentive awards. Adjusted EPS is an appropriate measure of
our profitability because it excludes the impact of certain special items, both
positive and negative. While these special items are actual income or expenses,
they could mask the underlying trend or performance within a business. Revenue
growth is an appropriate measure because it indicates whether our business is
expanding. Adjusted Free Cash Flow is an appropriate measure of the companys ability
to pursue discretionary opportunities that enhance stockholder value.
While we believe the 2012 metrics are important measures of our
financial health, our stockholders expressed concern regarding our use of the
EPS metric in multiple awards. In response to those concerns, we replaced the
EPS metric with an EBIT metric for the 2013 annual incentive program. We
believe that EBIT is a stronger measure for annual incentive compensation
because it more directly reflects current profitability and performance.
We set the targets for the financial objectives at the midpoint of our
guidance provided to stockholders and the financial community at the beginning
of 2012. Any subsequent revisions to guidance during the year did not affect
the targets set. The threshold and maximum ranges are approximately 10% to 20%
above and below the target based on market best practices. We believe the 2012
financial objectives were set at aggressive yet achievable levels in light of
the prolonged global economic uncertainty, the continued decline in postal
volumes, and the impact both have on our business and the markets in which we
operate.
The 2012 strategic objectives were weighted at 30% of target and were:
|
|
|
|
|
●
|
Demonstrate
progress on meaningful growth in the enterprise group, consisting of two
equally weighted elements:
|
|
|
|
|
|
|
○
|
achieving
targeted revenue growth of 1.5% for the enterprise group; and
|
|
|
○
|
achieving
specific foundational milestones relating to certain enterprise-wide clients,
Volly and re-branding in order to implement our strategic direction for the
future.
|
|
|
|
|
●
|
Improve
the core business by focusing on improving the meter population net loss rate
over the prior year.
|
The committee designed the 2012 strategic performance objectives to encourage
management to focus on the future development and growth of the enterprise
group while sustaining the core mail business. As we reposition for future
growth, it is important to maintain the strength of those parts of our business
which contribute significantly to our strong cash flow.
The committee reviewed these strategic objectives to ensure that they
had a high degree of difficulty for achievement. The specific targets within
these objectives are highly confidential and not reported publicly because such
disclosure would provide competitors insight into our internal planning
processes and would result in meaningful competitive harm.
Funding of the 2012 Annual Incentive Pool and
Actual Payout
The annual incentive is only paid if the company achieves its IRC 162(m)
threshold target of an income from continuing operations of $383,665,000,
excluding certain special events (See Treatment of Special Events beginning
page 65 of this proxy statement.) This target is used specifically to meet the
IRC 162(m) requirements, and is intended to ensure tax deductibility of
compensation paid. Actual 2012 income from continuing operations, excluding all
special events, was $435,277,000.
The chart below shows actual results as compared to target.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Objectives
|
|
Target
Weighting
|
|
Actual
Result
|
|
Actual
Payout as a % of Target
|
|
Financial
Objectives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings Per Share
(1)
|
|
|
|
28
|
%
|
|
|
$2.16
|
|
|
|
|
30
|
%
|
|
Revenue Growth
(1)
|
|
|
|
21
|
%
|
|
|
(3.4%
|
)
|
|
|
|
11
|
%
|
|
Adjusted Free Cash Flow
(1)
|
|
|
|
21
|
%
|
|
|
$767
|
|
|
|
|
23
|
%
|
|
Strategic
Objectives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demonstrate progress on growth in the
enterprise segment
|
|
|
|
15
|
%
|
|
|
Did not meet threshold
|
|
|
|
0
|
%
|
|
Improve
the core business
|
|
|
|
15
|
%
|
|
|
Exceeded threshold
|
|
|
|
11
|
%
|
|
Subtotal
|
|
|
|
100
|
%
|
|
|
n/a
|
|
|
|
|
75
|
%
|
|
Negative
Discretion
|
|
|
|
n/a
|
|
|
|
n/a
|
|
|
|
|
(11%
|
)
|
|
Total
|
|
|
|
100
|
%
|
|
|
n/a
|
|
|
|
|
64
|
%
|
|
|
|
(1)
|
Adjusted EPS, Revenue Growth and Adjusted Free Cash Flow
are non-GAAP measures. For a reconciliation and additional information on the
adjustments, please see Accounting Items and Reconciliation of GAAP to
Non-GAAP Measures beginning on page 65 of this proxy statement.
|
54
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
The committee and independent board members may modify the resulting
payout factor by between 0 and 15% based on the achievement of pre-determined
customer and employee objectives, TSR and the quality of our earnings. The
committee compared the 2012 actual performance to the pre-determined targets
and did not apply any modifier.
Even though the performance against the financial and strategic
objectives would have supported a payout of 75% of target for the incentive
pool, the committee approved a 2012 incentive pool of 64%, after utilizing
negative discretion due to our overall performance in 2012. The
resulting payout factor was 35% less than the payment factor for 2011
performance.
Based on the above analysis, and taking into account Mr. Martins
recommendations as CEO for most of 2012, Mr. Lautenbach made specific
recommendations to the committee for Mr. Lautenbachs direct reports. The
committee considered those recommendations and the actual performance against
objectives as shown and applied negative discretion, resulting in the annual
incentive awards to our NEOs as follows:
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
Target
Award
|
|
Payout
|
|
Payout
Percent to Target
|
|
Michael Monahan
|
|
$
|
462,720
|
|
|
|
$296,141
|
|
64%
|
|
Leslie Abi-Karam
|
|
$
|
444,320
|
|
|
|
$284,365
|
|
64%
|
|
Vicki A. OMeara
|
|
$
|
419,200
|
|
|
|
$268,288
|
|
64%
|
|
John E. OHara
|
|
$
|
270,000
|
|
|
|
$172,800
|
|
64%
|
|
Murray D. Martin
|
|
$
|
1,300,000
|
|
|
|
$832,000
|
|
64%
|
|
Mr.
Lautenbach did not receive an annual incentive payout for 2012.
Long-term incentives link the NEOs long-term rewards to our long-term
financial performance and our stock price performance. We also pay long-term
incentives in order to be competitive in the markets in which we operate and in
order to attract and retain high-performing executives. The vesting of
long-term incentive awards are generally subject to achieving an initial
financial threshold target under IRC 162(m).
Cash Incentive Units (CIUs)
CIUs are long term cash awards granted annually with three year
performance and vesting cycles. At any given
time there are three cycles outstanding. NEOs are awarded CIUs with
payouts based on achieving challenging enterprise-wide financial objectives
established at the beginning of each individual year of the three-year 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.
CIU Objective and Metrics
The 2010
2012 financial objectives, each weighted at 50%, were as follows:
|
|
|
|
|
|
|
|
2010 2012 LTI Adjusted Earnings Per
Share
(1)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
2010
|
|
$1.92
|
|
$2.40
|
|
$2.45
|
|
2011
|
|
$1.78
|
|
$2.23
|
|
$2.27
|
|
2012
|
|
$1.72
|
|
$2.15
|
|
$2.19
|
|
|
|
|
|
|
|
|
|
2010 2012 LTI Adjusted Free Cash Flow
(1)
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
2010
|
|
$536
|
|
$670
|
|
$683
|
|
2011
|
|
$729
|
|
$819
|
|
$850
|
|
2012
|
|
$684
|
|
$760
|
|
$790
|
|
|
|
(1)
|
Adjusted EPS and Adjusted Free Cash
Flow are non-GAAP measures. For a reconciliation and additional information
on the adjustments, please see Accounting Items and Reconciliation of GAAP
to Non-GAAP Measures beginning on page 65 of this proxy statement.
|
The Committee believes that adjusted EPS and Adjusted FCF are important
indicators of our long-term viability and performance and thus appropriate
metrics upon which to base long-term incentive awards. Adjusted EPS is a good
measure of long-term profitability; and a strong
Adjusted FCF provides us with the resources we need to reposition and
pursue new growth opportunities.
The committee generally sets the financial targets at the midpoint of
the guidance we provide to stockholders and
55
|
COMPENSATION DISCUSSION AND ANALYSIS
|
the financial community at the beginning of each year. Subsequent
revisions of guidance during the course of the year do not affect the targets
set at the beginning of a year. The committee believes it set the 2012
objectives at aggressive yet achievable levels in light of the prolonged global
economic uncertainty, the continued decline in postal volumes, and the impact
both have on our business and the markets in which we operate.
2012 Funding of the Cash Incentive Unit Pool and Actual
Payout
For the 2010 2012 CIU cycle, the unit value at target is $1.00. The
CIU value range is between $0 and $1.80 based upon the achievement of the
pre-determined financial objectives described above, each weighted at
50%. The committee modifies the resulting unit value by up to +/ 25%
based on our TSR as compared to the TSR of companies within the S&P 500
(TSR modifier), therefore linking payout to our relative TSR.
For the 2010 2012 CIU Cycle, the IRC 162 (m) threshold was achieving
an average annual income from continuing operations over the cycle of
$331,379,000, excluding certain special events (see Treatment of Special
Events beginning on page 65). Adjusted average annual income from continuing
operations for the 2010 2012 CIU Cycle exceeded the threshold and was
$481,418,000.
The chart below shows actual results as compared to target before and
after applying the TSR modifier for the 2010 2012 cycle.
|
|
|
|
|
|
|
Objectives
|
|
|
Actual Result
|
Metric
Payout Value
|
TSR Modifier
|
Final
Payout Value
|
2010 2012 LTI Adjusted
|
|
|
|
|
|
|
Earnings Per Share
(1)
|
|
|
|
|
|
|
2010
|
|
|
$2.23
|
$0.12
|
(10%)
|
$0.11
|
2011
|
|
|
$2.70
|
$0.30
|
(25%)
|
$0.23
|
2012
|
|
|
$2.16
|
$0.20
|
(25%)
|
$0.15
|
2010 2012 LTI Adjusted
|
|
|
|
|
|
|
Free Cash Flow
(1)
|
|
|
|
|
|
|
2010
|
|
|
$951
|
$0.30
|
(10%)
|
$0.27
|
2011
|
|
|
$994
|
$0.30
|
(25%)
|
$0.23
|
2012
|
|
|
$767
|
$0.20
|
(25%)
|
$0.15
|
Subtotal
|
|
|
|
$1.42
|
|
$1.14
|
Negative
Discretion
|
|
|
|
|
|
($0.40)
|
Total
|
|
|
|
|
|
$0.74
|
|
|
(1)
|
Adjusted EPS and Adjusted Free Cash
Flow are non-GAAP measures. For a reconciliation and additional information
on the adjustments, please see Accounting Items and Reconciliation of GAAP
to Non-GAAP Measures beginning on page 65 of this proxy statement.
|
The TSR modifier in aggregate decreased the CIU pay-out level for the
2010 2012 cycle by 20%.
Even though the pre-determined financial objectives would have supported
a payout of $1.14 per unit after applying the TSR modifier for the 2010 2012
CIU award cycle, the committee approved a final payout of $0.74 per unit, after
applying negative discretion based on our overall 2012 performance. This
resulted in decreasing the CIU payout for the 2010 2012 award cycle by 35%.
The CIU payout in February 2013 was 31% less than the payout in February 2012.
|
Performance-Based
Restricted Stock Units
|
An annual grant of performance-based RSUs is made during the first
quarter of the year, typically after our fourth quarter earnings release has
been widely disseminated.
For the 2012 awards, the IRC 162(m) threshold was 2012 income from
continuing operations equaling or exceeding $383,665,000, excluding certain
special
events (see Treatment of Special Events beginning on page 65). The
actual 2012 income from continuing operations exceeded the target and was
$435,277,000. Therefore, the 2012 award will vest in four equal installments
commencing on the first anniversary of the grant date if the executive is still
employed on the vesting date. If the initial threshold had not been achieved,
the performance-based RSUs granted in 2012 would have been forfeited.
|
Performance-Based
Market Stock Units
|
Performance-based MSUs were granted to executive officers, including
NEOs in February 2012 for the first time and, given changes made later in 2012,
the only time. The number of MSUs that can vest is capped at 200% of the number
of MSUs granted. A minimum number of shares, 50% of the award, will vest at the
end of the three-year performance period.
Because the 162 (m) threshold target was achieved, the 2012 award will
vest on the third anniversary of the grant
56
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
date. The number of performance-based MSUs that will vest at that time
is contingent on our TSR over the vesting period and the executives continued
employment until the vesting date. The vesting percentage is determined by
multiplying the number of units by a fraction, the numerator of which is the
Pitney Bowes ending stock price
1
plus cumulative dividends paid on
outstanding company stock during the vesting period, and the denominator of
which is the Pitney Bowes beginning stock price.
2
|
Periodic
Off-Cycle Long-Term Awards
|
In special circumstances, the committee, or in the case of the CEO, the
independent board members, may determine that it is appropriate to make
additional long-term award grants to executives during the course of the year.
Effective December 3, 2012, the independent board
members awarded a one-time grant of premium-priced stock options in
connection with the commencement of Mr. Lautenbachs employment. Please see
Compensation for the New CEO beginning on page 52 of this proxy statement.
In April 2012, the committee granted a performance RSU award with a
three year cliff vesting feature under the 2007 Stock Plan to Mr. OHara valued
at $450,000 designed to situate Mr. OHaras compensation more competitively
against those with similar responsibilities in other companies.
|
|
|
1
|
Pitney Bowes ending stock price is
the average of the closing price of company stock for the 20 trading days
ending on the last day of the month prior to the vesting date.
|
|
|
2
|
Pitney Bowes beginning stock price
is the average of the closing prices of company stock for the 20 trading days
ending with the grant day.
|
|
Other
Indirect Compensation
|
Retirement Benefits include:
|
|
|
|
●
|
Qualified
and nonqualified restoration pension plans for employees hired prior to
January 1, 2005.
|
|
●
|
Qualified
and nonqualified restoration 401(k) plans with company matching contributions
up to 4% of eligible compensation and 2% company core contribution for those
not eligible for the pension plan.
|
Nonqualified restoration plans (pension and 401(k)) are based on the
same formulas as are used under the qualified plans and make up for benefits
that otherwise would be unavailable due to limitations set forth under the
Internal Revenue Code of 1986, as amended (the Code). Restoration plans are
available to employees including the NEOs.
Nonqualified plans are unfunded obligations of the company subject to
claims by our creditors. The 401(k) restoration plan is:
|
|
|
|
●
|
adjusted
on the basis of notional investment returns of publicly-available mutual fund
investments; and
|
|
●
|
do not
receive any above-market earnings.
|
The pension restoration plan applies the same standard actuarial rules
as are applied under the qualified pension plan.
In January 2013, the board of directors approved, effective April 1,
2013, the freezing of all future pension plan benefit accruals for employees
with fewer than 16 years of benefit accrual service as of March 31, 2013.
Employees with 16 or more years of benefit accrual service on March 31, 2013
will continue to accrue pension benefits through December 31, 2014, after which
date no further benefits will accrue under the pension plan. Similar
actions were adopted with respect to the Pension Restoration Plan. At
the same time, the board of directors approved, effective April 1, 2013, the
eligibility of those employees who will no longer accrue benefits under the
pension plan to participate in the 2% employer core contribution to the 401(k)
plan. The 2% employer core contribution has been in effect since 2005 when the
pension plan was closed to employees hired after December 31, 2004.
For additional information, please see the narrative accompanying the
Pension Benefits as of December 31, 2012 table on page 77 and the narrative
accompanying the Nonqualified Deferred Compensation for 2012 table on pages
78 and 79 of this proxy statement.
Other benefits include:
|
|
|
|
|
●
|
Nonqualified
Deferred Incentive Savings Plan:
|
|
|
○
|
Provides
a savings vehicle in a tax efficient manner
|
|
|
○
|
Provides
the ability to voluntarily defer payouts of annual cash incentives, CIUs and
base pay into a nonqualified deferred compensation plan
|
|
●
|
Limited
additional benefits, including, financial counseling to assist with
compliance of regulations and to provide guidance in managing complex
investment, tax, legal and estate matters; up to a maximum of $7,500 per year
|
|
●
|
Relocation
assistance for executives asked to move to a new work location; facilitates
the placement of the right person in the job and aids in developing talent
|
|
●
|
Executive
physical
|
|
●
|
Spousal
travel
|
57
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
Process
for Determining Named Executive Officer Compensation
|
|
Committee
|
The committee is responsible for reviewing the performance of and
approving compensation awarded to our executives, other than the CEO. The
independent board members, with the input of the committee, annually set the
CEOs individual target compensation, review his performance and determine his
compensation payout in the context of the established objectives, the actual
performance against those objectives and the TSR. In addition, the
committee may exercise negative discretion in its sole determination. The
committee works closely with its independent consultant, Pay Governance, and
management to examine various pay and performance matters throughout the year.
|
Independent
Compensation Consultant
|
From January through May 2012 Frederic W. Cook & Co. (FWC) served
as the committees compensation consultant. In June 2012 the committee
terminated the services of FWC and engaged Pay Governance as its independent
compensation consultant. The committee decided to retain a new consultant after
the 2012 Say-on-Pay vote and after listening to stockholders feedback on our
compensation programs because it believed it needed a fresh look at the entire
program. The committee selected Pay Governance after a search process that
included interviewing several firms. The committee found Pay Governances
analysis and presentation during the interview process to be the most
forthright and compelling. Additionally Pay Governance had a proven track
record of aiding companies to revamp their executive compensation program after
a failed Say-on-Pay vote.
The committee considers advice and information from its independent
compensation consultant in determining the compensation for the CEO and the
other NEOs. The consultant advises on a range of matters, including peer
group composition and plan design. The consultant regularly attends the
committee meetings. Neither consultant performed other services for us or the
board of directors. We incurred $109,378 in fees from FWC and $134,411 from Pay
Governance for services performed for the committee during 2012. The committee
considered the following six factors and determined there was no conflict in
the engagement of Pay Governance: i) the provision of other services to us by
Pay Governance; (ii) the amount of fees received from us by Pay Governance, as
a percentage of the total revenue of Pay Governance; (iii) the policies and
procedures of Pay Governance that are designed to prevent conflicts of
interest; (iv) any business or personal relationship of the Pay Governance
consultant with a member of the committee; (v) any of our stock owned by the
Pay Governance consultants; and (vi) any business or personal relationship of
the Pay Governance consultant or Pay Governance with any of our executive
officers. The committee has the sole authority to hire and terminate its
consultant.
|
Determining
CompensationThe Decision Process
|
58
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
At the beginning of each year our CEO, on behalf of senior management,
recommends to the committee financial and strategic objectives for the
incentive plans based on our financial and strategic objectives set by the
board of directors. The committee and the independent directors review the recommendations
of management particularly with respect to the appropriateness and rigor of the
objectives and approve the final annual and long term objectives.
Our CEO and Executive Vice President and Chief Human Resources Officer
recommend compensation target levels for total direct compensation as well as
the annual and long-term incentive compensation for executive officers,
including the NEOs, other than the CEO. The committee reviews managements
recommendations and determines the appropriate financial and strategic
objectives, base salary and the target levels of annual and long-term incentive
compensation. The committee also recommends for approval by the independent
board members the CEOs base salary and annual and long-term incentive target
levels. Generally at this time the committee also approves any changes to the
compensation program for the coming year.
At the end of each year, each NEO completes a written self-assessment of
his or her performance against his or her objectives. The CEO evaluates the
performance of his executive officer direct reports and recommends individual
ratings for each NEO other than himself. These ratings are considered by the
committee in determining annual merit base salary increases. Based on these
ratings, the CEO also recommends incentive compensation actions other than for
himself to the committee. The committee recommends to the independent board
members an individual rating for the CEO. The committee reviews the financial
and strategic accomplishments of the company for the preceding year as well as
the individual ratings and determines actual base salary increases as well as
the annual and long-term incentive compensation for the NEOs and recommends for
approval by the independent board members the CEOs compensation. The actual
payout levels for annual incentive compensation are based upon the
companys performance against the predetermined financial and strategic
objectives and other criteria, as discussed in further detail under Annual
Incentives beginning on page 53. For long-term incentive compensation, the
recommendation to the committee for payout levels is based on pre-determined
financial objectives and a TSR modifier, as discussed in further detail under
Long-term Incentives beginning on page 55 of this proxy statement.
To assist in this process, the committee also reviews tally sheets the
Human Resources department prepares to evaluate the individual components and
the total mix of compensation. The tally sheets show the dollar amount of each
of the components of each executive officers compensation, summarizing the
total compensation opportunity, including the executives fixed and variable
compensation, perquisites and potential payments upon termination or change of
control. In addition, the tally sheets include a summary of historical
compensation. These tally sheets aid the committee in analyzing the individual
compensation components as well as the compensation mix and weighting of the
components within the total compensation package.
To ensure that each NEOs compensation package is competitive with the
marketplace, the committee, and with respect to the CEO, the independent board
members, also reviews each executives total direct compensation against market
data during the benchmarking process as more fully described in Assessing
Competitive Practice Benchmarking below. Based on the structure of our
current management team, the committee and the board strive to ensure that the
relationship between the compensation paid to the CEO and the second highest
paid NEO are within acceptable market norms, subject to considerations such as
performance, the market median compensation of the respective positions,
contributions to the company and experience that may lead to deviations from
market relationships. However, since we have no Chief Operating Officer, or
COO, the difference between the CEOs compensation and that of our next most
highly paid officer, currently our CFO, will likely be a bit larger than for
companies that do have a COO.
|
Assessing
Competitive PracticeBenchmarking
|
To ensure that Pitney Bowes executive compensation is competitive in
the marketplace, the committee annually compares each executives total direct
compensation (base salary, annual incentive and long-term incentives) against
two independent reports, with a view towards determining the optimal mix and
level of compensation. To achieve this, we use two sources of compensation
information. We use the Towers Watson Regressed Compensation Report to determine
the compensation targets annually and then we review the targets and actual
payouts against publically available data from our peer group to evaluate
ongoing compensation opportunity and competitiveness.
The committee establishes the target total direct compensation structure
based on the Towers Watson
Regressed Compensation Report. Compensation targets are set based on the
assumption that specific incentive award performance objectives are achieved at
their target level. Beginning this year, the committee regressed the data from
this report for corporate revenue of approximately $5.3 billion (instead of
following our previous practice of comparing compensation against a group with
revenues of $6 $10 billion) for corporate leaders and actual regressed
revenue for business unit leaders. The committee believes that this new
regressed revenue scope more accurately reflects market competitiveness against
outside companies that are within the companys revenue range. The report is
comprised of companies in all industry areas other than those in the financial
and energy sector. However, the
59
|
COMPENSATION DISCUSSION AND ANALYSIS
|
exact number of companies included in the data for each executive
position may vary depending on the structure of the applicable company and
whether the company submitted the relevant data. The report is a sub-section of
the 2012 US CDB General Industry Executive Database report from Towers Watson.
The complete report can be purchased from Towers Watson.
This market data provides important reference points for the committee
but is not the sole basis for determining appropriate compensation design,
compensation targets, or individual pay levels. Use of comparative industry
data and outside surveys only serve to indicate to the committee whether those
decisions are in-line with industry in general and our peer group in
particular. The committee believes that the comparative industry data used from
Towers Watson and the new peer group are consistent with our compensation
philosophy. In addition, compensation targets and individual pay levels may
vary from the median for various reasons, including:
|
|
|
|
●
|
the value of the total rewards
package;
|
|
●
|
program design and strategic
considerations;
|
|
●
|
affordability;
|
|
●
|
changing competitive conditions;
|
|
●
|
program transition
considerations;
|
|
●
|
the definition and scope of the
executives role;
|
|
●
|
the executives individual
contributions to the company; or
|
|
●
|
succession or retention
considerations.
|
For each NEO, the committee targets total direct compensation levels
that strive to ensure that generally the base salary, target total cash
compensation and target total direct compensation is at +/ 20% of the median
of the data presented by the Towers Watson Regressed Compensation Report for
each executives position. The committee believes that by comparing our
compensation data against the mid-point or median, we are measuring against the
most stable central tendency of the companies included in the survey. Based on
this review, the committee determined that the Pitney Bowes total direct
compensation package approximates the median of the data from the Towers Watson
Regressed Compensation Report. In addition, to supplement the Towers Watson
information, the committee asked Pay Governance to provide an analysis on
compensation trends along with its views on specific compensation program
design. The committee and the board also consider the burn rate with respect to
the equity awards when deciding how much of the total direct compensation
package should be composed on equity-based awards. The burn rate is the total
equity awards we granted in a fiscal year divided by the total common stock
outstanding at the beginning of the year. Our three-year average burn rate of
1.09% for the time period from 2010 to 2012 is below the median run-rate of
1.55% for S&P 1500 companies in FY2011 (source: Equilar 2012 Equity Trends
Report).
We do not have a single completely overlapping competitor due to the
unique mix of our business. Nevertheless, the committee annually reviews our
relative performance, compensation targets and actual payouts
against the relative performance and compensation of the peer group
listed below. In 2012, the committee changed the composition of the peer group.
Pay Governance and the committee designed our peer group so the committee could
analyze compensation packages, including compensation mix and other benefits,
within the competitive market to attract and retain the talent and skill
required to lead a business of complexity and size similar to ours. This peer
group consists of services, industrial and technology companies. When evaluating
the appropriateness of the peer group, the committee considered factors such as
revenue, net income, market capitalization, number of employees, and complexity
of the business to ensure a reasonable balance in terms of company size and an
adequate number of peers. The new peer group consists of companies with
revenues between $2 billion and $22 billion, and market capitalization between
$1 billion and $14 billion.
Previously our peer group was weighted towards companies with higher
revenues and larger market capitalization than ours. Stockholders told us that
they were concerned that our executive pay may have been compared with the
wrong benchmark. In the previous peer group, we were at the 30
th
percentile
for revenue and 13
th
percentile for market capitalization in 2012.
After reevaluating the previous peer group, the committee eliminated six of the
sixteen companies from our previous peer group and added another four
companies. With these changes our company is at the 50
th
percentile
for revenue and 25
th
percentile for market capitalization within the
new peer group as of December 31, 2012. The new peer group also eliminates our
previous focus on industrial machinery comparators while increasing the weight
of commercial printing and computer hardware peers. The committee decided to
continue to include Xerox in our peer group despite the revenue size difference
because the committee considers them our closest direct peer given its business
portfolio compared to ours and it also is undergoing a similar transformation
in its core business. The committee eliminated the following companies from the
peer group:
|
|
|
|
●
|
Cognizant Technology Solutions
|
|
●
|
ITT
|
|
●
|
ADP
|
|
●
|
Computer Sciences
|
|
●
|
Ingersoll Rand
|
|
●
|
Seagate
|
Cognizant Technology Solutions and ITT have been eliminated because, due
to changes to their businesses and ours, their business operations are no
longer a strong fit compared to ours from an industry perspective. ADP,
Computer Sciences, Ingersoll Rand and Seagate were all eliminated because their
revenue is twice that of ours.
The committee added the following companies:
|
|
|
|
●
|
Avery Dennison
|
|
●
|
Iron Mountain
|
|
●
|
Unisys
|
|
●
|
Diebold
|
60
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
We added
Avery Dennison, Diebold, Iron Mountain, and Unisys Corp. to provide greater
industry focus and relevant size characteristics to the group. Additionally
Avery Dennison represents a close industry match for us with a similar revenue
size. Iron Mountain is a good fit from a
business
content perspective. The inclusion of Unisys including their trailing twelve
month revenues and market capitalization compared to ours recognizes our
anticipated growth in the software solutions segment.
New Peer Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2012
Revenue
($ millions)
|
|
12/31/2012
Market Capitalization
($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholder Return
|
|
Company Name
|
|
|
|
|
1-Year
|
|
3-Year
|
|
5-Year
|
|
Agilent Technologies Inc.
|
|
|
6,858
|
|
|
14,244
|
|
|
18
|
%
|
|
10
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliance Data Systems Corporation
|
|
|
3,641
|
|
|
7,217
|
|
|
39
|
%
|
|
31
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Avery Dennison Corporation
|
|
|
6,036
|
|
|
3,478
|
|
|
26
|
%
|
|
2
|
%
|
|
-5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diebold, Incorporated
|
|
|
2,992
|
|
|
1,935
|
|
|
5
|
%
|
|
6
|
%
|
|
5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST Systems Inc.
|
|
|
2,577
|
|
|
2,733
|
|
|
35
|
%
|
|
13
|
%
|
|
-5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiserv, Inc.
|
|
|
4,482
|
|
|
10,548
|
|
|
35
|
%
|
|
18
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harris Corporation
|
|
|
5,451
|
|
|
5,560
|
|
|
40
|
%
|
|
4
|
%
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Iron Mountain Inc.
|
|
|
3,005
|
|
|
5,886
|
|
|
17
|
%
|
|
18
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lexmark International Inc.
|
|
|
3,798
|
|
|
1,498
|
|
|
-27
|
%
|
|
-2
|
%
|
|
-7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCR Corp.
|
|
|
5,730
|
|
|
4,074
|
|
|
55
|
%
|
|
32
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Donnelley & Sons Company
|
|
|
10,222
|
|
|
1,621
|
|
|
-32
|
%
|
|
-21
|
%
|
|
-20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockwell Automation Inc.
|
|
|
6,259
|
|
|
11,731
|
|
|
17
|
%
|
|
24
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unisys Corporation
|
|
|
3,706
|
|
|
761
|
|
|
-12
|
%
|
|
-23
|
%
|
|
-18
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xerox Corporation
|
|
|
22,390
|
|
|
8,618
|
|
|
-12
|
%
|
|
-5
|
%
|
|
-14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25th Percentile
|
|
|
3,658
|
|
|
2,135
|
|
|
-8
|
%
|
|
-1
|
%
|
|
-6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
4,967
|
|
|
4,817
|
|
|
18
|
%
|
|
8
|
%
|
|
-1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75th Percentile
|
|
|
6,203
|
|
|
8,268
|
|
|
35
|
%
|
|
18
|
%
|
|
4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pitney Bowes Inc.
|
|
|
$ 4,904
|
|
|
$ 2,136
|
|
|
-36
|
%
|
|
-16
|
%
|
|
-17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBI Percent Rank
|
|
|
50%
|
|
|
25%
|
|
|
Lowest
|
|
10
|
%
|
|
10
|
%
|
|
Source:
Capital I.Q.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61
|
COMPENSATION DISCUSSION AND ANALYSIS
|
Previous Peer Group
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal
2012
Revenue
($ millions)
|
|
12/31/2012
Market Capitalization
($ millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
Stockholder Return
|
|
Company Name
|
|
|
|
|
1-Year
|
|
3-Year
|
|
5-Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Agilent Technologies Inc.
|
|
|
6,858
|
|
|
14,244
|
|
|
18
|
%
|
|
10
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alliance Data Systems Corporation
|
|
|
3,641
|
|
|
7,217
|
|
|
39
|
%
|
|
31
|
%
|
|
14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Automatic Data Processing, Inc.
|
|
|
10,172
|
|
|
27,638
|
|
|
9
|
%
|
|
13
|
%
|
|
8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cognizant Technology Solutions
Corporation
|
|
|
7,346
|
|
|
22,179
|
|
|
15
|
%
|
|
18
|
%
|
|
17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer Sciences Corporation
|
|
|
15,877
|
|
|
6,223
|
|
|
73
|
%
|
|
-10
|
%
|
|
-3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DST Systems Inc.
|
|
|
2,577
|
|
|
2,733
|
|
|
35
|
%
|
|
13
|
%
|
|
-5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiserv, Inc.
|
|
|
4,482
|
|
|
10,548
|
|
|
35
|
%
|
|
18
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harris Corporation
|
|
|
5,451
|
|
|
5,560
|
|
|
40
|
%
|
|
4
|
%
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ingersoll-Rand Plc
|
|
|
14,035
|
|
|
14,436
|
|
|
60
|
%
|
|
12
|
%
|
|
2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ITT Corporation
|
|
|
2,228
|
|
|
2,175
|
|
|
23
|
%
|
|
6
|
%
|
|
-2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lexmark International Inc.
|
|
|
3,798
|
|
|
1,498
|
|
|
-27
|
%
|
|
-2
|
%
|
|
-7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NCR Corp.
|
|
|
5,730
|
|
|
4,074
|
|
|
55
|
%
|
|
32
|
%
|
|
0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R.R. Donnelley & Sons Company
|
|
|
10,222
|
|
|
1,621
|
|
|
-32
|
%
|
|
-21
|
%
|
|
-20
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rockwell Automation Inc.
|
|
|
6,259
|
|
|
11,731
|
|
|
17
|
%
|
|
24
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Seagate Technology Public Limited
Company
|
|
|
14,939
|
|
|
11,483
|
|
|
95
|
%
|
|
22
|
%
|
|
6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Xerox Corporation
|
|
|
22,390
|
|
|
8,618
|
|
|
-12
|
%
|
|
-5
|
%
|
|
-14
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25th Percentile
|
|
|
4,311
|
|
|
3,739
|
|
|
13
|
%
|
|
2
|
%
|
|
-4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Median
|
|
|
6,559
|
|
|
7,918
|
|
|
29
|
%
|
|
12
|
%
|
|
1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
75th Percentile
|
|
|
11,175
|
|
|
12,359
|
|
|
44
|
%
|
|
19
|
%
|
|
7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pitney Bowes Inc.
|
|
|
$ 4,904
|
|
|
$ 2,136
|
|
|
-36
|
%
|
|
-16
|
%
|
|
-17
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PBI Percent Rank
|
|
|
30%
|
|
|
13%
|
|
|
Lowest
|
|
3
|
%
|
|
3
|
%
|
|
Source:
Capital I.Q.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
Policies and Guidelines
|
|
Clawback
Policy
|
The board of directors adopted a clawback policy in 2009. Under this
policy, the board of directors may adjust, recoup or require the forfeiture of
any awards made or paid under any stock plan or the KEIP:
|
|
●
|
to any
executive officer, including NEOs, in the event of any financial restatement
due to a misrepresentation of the financial statements of the company. This
applies to vesting or to payments made or paid during the 36-month period
prior to the financial restatement; or
|
●
|
to any
employee, including NEOs, whom the board of directors reasonably believes
engaged in gross 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.
|
62
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
No
Agreements with Executives
|
We have not entered into fixed term employment agreements with any of
our NEOs and therefore such officers are at will employees.
|
No
Pledging, Hedging and Other Short-term Speculative Trading
|
We have policies prohibiting both the pledging and hedging of our stock.
Neither the board of directors nor management-level employees may pledge or
transfer for value 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, collars or similar derivative transactions, with respect to
Pitney Bowes securities (other than transactions in employee stock options).
Among the boards responsibilities is to oversee succession planning and
leadership development. As part of this process, the Governance Committee
oversees long-term and short-term plans for CEO succession. The board of
directors is responsible for evaluating the performance of the CEO and for
selection of successors to that position. The criteria used when assessing the
qualifications of potential CEO successors include, among others, strategic
vision and leadership, operational excellence, financial management, executive
officer leadership development, ability to motivate employees, and an ability
to develop an effective working relationship with the Board. 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.
In 2012, the board used the succession planning process described above
to plan for the succession of
Mr. Martin, our former CEO. The Governance Committee interviewed
internal and external candidates with the assistance of a nationally recognized
executive search firm. After the Governance Committee conducted an in-depth
review of all the internal and external candidates, it referred finalist
candidates for board interviews. Effective December 3, 2012, the board elected
Mr. Lautenbach as our new President and CEO and Michael I. Roth, a director
since 1995 and the boards Lead Director since February 2012, as the new
Non-Executive Chairman of the board.
Periodically, but not less than annually, the board of directors
considers managements recommendations concerning succession planning for
senior management roles other than the role of CEO. As part of this process,
the board reviews development plans to strengthen and supplement the skills and
qualifications of internal succession candidates.
|
Executive
Stock Ownership Policy
|
We maintain an executive stock ownership policy that encourages
executives to think as owners and to own substantial amounts of company stock
to more closely align our key executives interests with the long-term
interests of our stockholders. In setting the ownership guidelines the
committee considered best market practices in determining the methodology and
ownership level requirement. All of our NEOs are in compliance with the
guidelines.
The
multiple of base salary required to be held is as follows:
|
|
Title
|
Multiple of Base Salary
|
Chief Executive Officer
|
5X
|
Other Executive 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 our 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 to achieve the required ownership levels from the time they
become covered by this policy, or receive a promotion, whichever is later. In
Feb-
ruary 2012, the committee revised the guidelines to provide that
executives are expected to reach their multiple of salary requirement within
the later of five years after (i) the ownership multiple is established or (ii)
the first grant following the election of becoming executive officer. 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 our common stock on the last trading day of the previous
calendar year.
Until an executive meets the required ownership levels, that executive
is 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 vested
performance-based RSUs and restricted stock, the shares that remain after the
payment of applicable taxes. 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.
63
|
COMPENSATION DISCUSSION AND ANALYSIS
|
We believe that the cash payments and benefit levels provided to our
executives following a change of control transaction are consistent with
current market practice for companies of our size. Our 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 our stockholders, despite the fact that such a transaction
could result in the executives termination. Our change of control protections
also encourage executives to remain with the company until the completion of
the transaction to enable 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 occur only when an employee is
terminated without cause or when an employee voluntarily terminates 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 or accelerated vesting of equity awards except for those under the
2002 Stock Plan.
In 2012, the board eliminated the excise tax gross-up provision of the
policy which previously allowed the reimbursement of any excise taxes imposed
by Section 4999 of the Code in the event that 110% of the safe-harbor amount
was exceeded. Although many companies still have gross-up policies, the board
eliminated this policy in October 2012 with immediate effect.
In February 2013, the board amended the change of control benefit
payable to the executive officers, including NEOs, under the Senior Executive
Severance Policy (SESP) to two times the sum of the participants current
annual salary and the participants average annual incentive award in the
preceding two years.
During Mr. Lautenbachs first 18 months of employment, if a change of
control were to occur, he would receive severance benefits under the SESP equal
to (a) 1.5 times his then current base salary and 1.5 times his then current target
bonus, payable in a lump sum. All other severance benefits under the SESP are
the same as other senior executives covered by the policy.
The board of directors also approved a change in the definition of
Change of Control dealing with the acquisition of company shares. Under the new
definition, a Change of Control would occur if there is an acquisition of 30%
(previously 20%) or more of our common stock or 30% (previously 20%) or more of
the combined voting power of our voting securities by an individual, entity or
group.
Our change of control arrangements fit into our overall compensation
objectives because they are aligned with our goal of providing a compensation
package sufficiently competitive to attract and retain talent and aligned with
stockholder interests. With the prior adoption of the double trigger payment
mechanism applicable to both equity vesting and cash payouts and the more
recent elimination of the gross-up provision, the change of control
arrangements may be considered as market leading from a corporate governance
perspective.
Our compensation programs generally satisfy the requirements for full
deductibility under Section 162(m) of 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. We structure our incentive compensation programs to be 162(m)
compliant; however, the committee weighs the benefits of compliance with
Section 162(m) against the potential limitations of such compliance, and may
award compensation that may not be fully deductible if it determines that it is
in the companys best interest to do so. The rules and regulations promulgated
under Section 162(m) are complicated and subject to change from time to time,
sometimes with retroactive effect. In addition, a number of requirements must
be met in order for particular compensation to so qualify. As such, there can
be no assurance that any compensation awarded or paid by the company will be
fully deductible under all circumstances.
In determining the number of stock options in the mix of long-term
incentives, we value stock options based upon the Black-Scholes valuation
method, 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 our stock;
|
●
|
the
risk-free interest rate;
|
●
|
expected
term; and
|
●
|
our
dividend yield.
|
In determining the number of MSUs in the mix of long-term incentives, we
value MSUs based upon a Monte-Carlo Simulation which is a generally accepted
statistical technique used, in this instance, to simulate a range of possible
future stock prices for the company. Key assumptions used to estimate the value
of market stock units include:
|
|
●
|
the
volatility of our stock;
|
●
|
the
risk-free interest rate;
|
●
|
expected
term; and
|
●
|
our
dividend yield.
|
We believe that the valuation techniques and the approaches utilized to
develop the underlying assumptions are appropriate in estimating the fair value
of our stock option and market stock unit 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
64
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
indicative
of the reasonableness of the original estimates of fair value made by the
company under ASC 718.
In determining
the number of RSUs in the mix of long-term incentives, we value RSUs based upon
the closing price of our common stock on the grant date.
For
additional information on the accounting treatment for stock-based awards, see
note 11 to the financial statements included in our Annual Report on Form 10-K
for the year ended December 31, 2012.
|
Treatment
of Special Events
|
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-determined metrics to results may be necessary from time to
time to better reflect the operating performance of the company business
segments and take into account certain one-time events. In adopting its
philosophy in establishing metrics and compensating the management team for its
actual performance, the committee believes it to be a fairer measure to remove
the impact of certain events that may mask, either positively or negatively,
the actual performance of management. The following chart explains the types of
events that the committee has taken into consideration in this regard.
|
|
|
|
|
|
ACCOUNTING ITEMS AND
RECONCILIATION OF GAAP TO NON-GAAP MEASURES
|
|
|
|
|
|
For
2012, the committee determined that adjusted earnings per share, adjusted
free cash flow and adjusted income from continuing operations results may
exclude the impact of certain special events (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.
|
|
|
|
|
|
The
following are non-GAAP measures: adjusted earnings per share, adjusted free
cash flow, adjusted income from continuing operations and revenue growth.
|
|
|
|
|
|
●
|
Adjusted
earnings per share exclude special items (as discussed above under Treatment
of Special Events) including the impact of any accounting changes.
|
|
|
●
|
Adjusted
free cash flow is adjusted earnings 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 and significant pension contributions.
|
|
|
●
|
Adjusted
income from continuing operations excludes special events (as described under
Treatment of Special Events) including the impact of any accounting changes.
|
|
|
●
|
Revenue
growth is computed as the year over year change in revenue excluding the
impact of foreign currency translation.
|
|
|
|
|
|
This
adjusted financial information should not be construed as an alternative to
our reported results determined in accordance with Generally Accepted
Accounting Principles, or GAAP. Further, our definition of this adjusted
financial information may differ from similarly titled measures used by other
companies. We use measures such as adjusted earnings per share, adjusted
income from continuing operations and adjusted free cash flow to exclude the
impact of special items like restructuring charges, tax adjustments, and
asset write-downs, because, while these are actual income or expenses of
ours, they can mask underlying trends associated with our business. Such
items are often inconsistent in amount and frequency and as such, the
adjustments allow a stockholder greater insight into the current underlying
operating trends of the business. The use of adjusted free cash flow provides
investors insight into the amount of cash that management could have
available for other discretionary uses. It adjusts GAAP cash from operations
for capital expenditures, as well as special items like cash used for
restructuring charges, unusual tax payments and contributions to its pension
funds.
|
|
65
|
COMPENSATION DISCUSSION
AND ANALYSIS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pitney
Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Benefits
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31,
|
|
|
|
|
|
|
|
(Dollars
in thousands, except per share data)
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP
diluted earnings per share from continuing operations, as reported
|
|
$
|
2.16
|
|
$
|
1.98
|
|
$
|
1.57
|
|
|
|
Restructuring
charges and asset impairments
|
|
|
0.08
|
|
|
0.48
|
|
|
0.59
|
|
|
|
Goodwill
impairment
|
|
|
|
|
|
0.41
|
|
|
|
|
|
|
Sale
of leveraged lease
|
|
|
(0.06
|
)
|
|
(0.13
|
)
|
|
|
|
|
|
Tax
adjustments
|
|
|
|
|
|
0.02
|
|
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share from continuing operations, as adjusted
(1)
|
|
|
2.18
|
|
|
2.75
|
|
|
2.29
|
|
|
|
Adjustment
for IMS (reported as a discontinued operation for GAAP)
|
|
|
(0.02
|
)
|
|
(0.05
|
)
|
|
(0.06
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings per share
from continuing operations, as adjusted
(before discontinued operation)
|
|
$
|
2.16
|
|
$
|
2.70
|
|
$
|
2.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP net cash provided by
operating activities, as reported
|
|
$
|
660,188
|
|
$
|
948,987
|
|
$
|
952,111
|
|
|
|
Capital expenditures
|
|
|
(176,586
|
)
|
|
(155,980
|
)
|
|
(119,768
|
)
|
|
|
Restructuring payments and
discontinued operations
|
|
|
74,718
|
|
|
107,002
|
|
|
119,565
|
|
|
|
Pension contribution
|
|
|
95,000
|
|
|
123,000
|
|
|
|
|
|
|
Tax payments on sale of
leveraged lease assets
|
|
|
114,128
|
|
|
|
|
|
|
|
|
|
Reserve account deposits
|
|
|
1,636
|
|
|
35,354
|
|
|
10,399
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow, as adjusted
(2)
|
|
|
769,084
|
|
|
1,058,363
|
|
|
962,307
|
|
|
|
Reserve account deposits
|
|
|
(1,636
|
)
|
|
(35,354
|
)
|
|
(10,399
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted free cash flow
|
|
$
|
767,448
|
|
$
|
1,023,009
|
|
$
|
951,908
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP income from continuing
operations
|
|
$
|
435,932
|
|
$
|
400,556
|
|
|
324,267
|
|
|
|
Restructuring charges and
asset impairments, after tax
|
|
|
15,407
|
|
|
97,661
|
|
|
122,666
|
|
|
|
Goodwill impairments, after
tax.
|
|
|
|
|
|
82,890
|
|
|
|
|
|
|
Sales of leveraged lease,
after tax
|
|
|
(12,886
|
)
|
|
(26,689
|
)
|
|
|
|
|
|
Tax adjustments
|
|
|
|
|
|
3,539
|
|
|
27,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing
operations, as adjusted
|
|
|
438,453
|
|
|
557,957
|
|
|
474,442
|
|
|
|
Adjustment for IMS
(reported as a discontinued operation for GAAP)
|
|
|
(3,176
|
)
|
|
(9,863
|
)
|
|
(13,558
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from
continuing operations
|
|
$
|
435,277
|
|
$
|
548,094
|
|
$
|
460,884
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reported revenue growth
|
|
|
(4.3%
|
)
|
|
(2.6%
|
)
|
|
(2.1%
|
)
|
|
|
Impacts of foreign currency
|
|
|
1.1%
|
|
|
(1.5%
|
)
|
|
(0.3%
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth on a
constant currency basis
|
|
|
(3.2%
|
)
|
|
(4.1%
|
)
|
|
(2.4%
|
)
|
|
|
Adjustment for IMS (reported
as a discontinued operation for GAAP)
|
|
|
(0.2%
|
)
|
|
(0.1%
|
)
|
|
(0.5%
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue growth on a
constant currency basis (before discontinued operation)
|
|
|
(3.4%
|
)
|
|
(4.2%
|
)
|
|
(2.9%
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The
sum of the earnings per share amounts may not equal the totals above due to
rounding.
|
|
|
(2)
|
The
above table includes an adjustment to GAAP net cash provided by operating
activities due to a reclassification between net cash provided by operating
activities and net cash used in investing activities. As a result, GAAP net
cash provided by operating activities increased by $28.8 million for the year
ended December 31, 2011.
|
|
|
|
|
|
The table below shows the vested compensation in 2012 and 2011 by
the NEOs and supplements the Summary Compensation Table that appears on page 69
of this proxy statement. This supplemental table also illustrates the impact
that the companys below-target financial performance in 2012 and 2011 had on
vested compensation in each of those years. Compensation information for Mr.
Lautenbach is not included in this table because he did not join the company
until December 3, 2012.
The primary difference between this supplemental table and the
standard Summary Compensation Table is the method used to value stock options
and stock awards. SEC rules require that the grant date fair value of all stock
options and restricted stock units be reported in the Summary Compensation
Table for the year that they were granted. As a result, a significant portion of
the total compensation amounts reported in the Summary Com-
pensation Table relate to stock options and restricted stock units
that have not vested and which are subject to substantial uncertainty based on
future changes in stock price and financial performance. In contrast, the
supplemental table below includes only stock options and restricted stock units
that vested during the applicable year and shows the value of those awards as
of the applicable vesting date. There is no assurance that the NEOs will
actually realize the value attributed to these awards even in this supplemental
table, since the ultimate value of the stock options will depend on when the
stock options are exercised and the underlying shares are sold and the ultimate
value of the restricted stock units will depend on when the released shares are
sold. That means that the value of even some of the compensation currently
realized depends upon future company performance.
66
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
|
Vested Compensation Compared to Target
Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Year
|
|
Salary
($)
|
|
Stock
Awards
Vested in
Fiscal
Year
($)
(1)
|
|
Option
Awards
Vested in
Fiscal
Year
($)
(2)
|
|
Annual
Incentive
Compen-
sation
($)
|
|
Cash
Incentive
Unit
Compen-
sation
($)
|
|
Other
Bonuses
($)
(3)
|
|
All Other
Compen-
sation
($)
(4)
|
|
Total
Vested
Compen-
sation
($)
|
|
Total
Target
(5)
($)
|
|
%
Difference
in
Vested
Pay vs. Target
|
|
Michael
Monahan
|
|
2012
|
|
575,600
|
|
180,060
|
|
0
|
|
296,141
|
|
444,000
|
|
1,100,000
|
|
53,310
|
|
2,649,111
|
|
3,388,356
|
|
-22%
|
|
|
2011
|
|
558,000
|
|
150,313
|
|
0
|
|
440,294
|
|
588,500
|
|
106,500
|
|
28,788
|
|
1,872,395
|
|
2,217,700
|
|
-16%
|
|
Leslie
Abi-Karam
|
|
2012
|
|
553,800
|
|
180,060
|
|
0
|
|
284,365
|
|
444,000
|
|
|
|
21,798
|
|
1,484,023
|
|
2,248,156
|
|
-34%
|
|
|
2011
|
|
544,016
|
|
150,313
|
|
0
|
|
427,907
|
|
588,500
|
|
106,500
|
|
27,360
|
|
1,844,596
|
|
2,191,076
|
|
-16%
|
|
Vicki
A. OMeara
|
|
2012
|
|
522,500
|
|
109,264
|
|
0
|
|
268,288
|
|
240,500
|
|
|
|
42,727
|
|
1,183,279
|
|
1,622,530
|
|
-27%
|
|
|
2011
|
|
512,500
|
|
179,712
|
|
0
|
|
403,760
|
|
347,750
|
|
35,500
|
|
34,587
|
|
1,513,809
|
|
1,693,646
|
|
-11%
|
|
John
E. OHara
|
|
2012
|
|
450,000
|
|
30,310
|
|
0
|
|
172,800
|
|
44,733
|
|
|
|
70,680
|
|
768,523
|
|
873,921
|
|
-12%
|
|
Murray
D. Martin
|
|
2012
|
|
996,667
|
|
713,630
|
|
0
|
|
832,000
|
|
1,757,500
|
|
|
|
144,284
|
|
4,444,081
|
|
7,237,317
|
|
-39%
|
|
|
2011
|
|
975,000
|
|
619,318
|
|
0
|
|
1,584,660
|
|
2,541,250
|
|
337,250
|
|
62,758
|
|
6,120,236
|
|
7,814,916
|
|
-22%
|
|
|
|
(1)
|
Amounts
shown represent the aggregate value of all RSUs that vested during 2012 and
2011. The value of vested RSUs is calculated by multiplying the number of
shares vested by the average of the high and low trading price of the
companys common stock on the date that the shares were released to the award
recipients.
|
(2)
|
Amounts
shown represent the aggregate value of all stock options that vested during
2012 and 2011. The value of vested stock options is calculated by multiplying
the number of shares vested by the difference between the exercise price and
the closing price of the companys common stock on the vesting date without
regard to actual option exercise activity. Currently all stock options are underwater.
|
(3)
|
This
column shows payouts on the 2008 and 2010 performance awards. For Mr.
Monahan, both the final installment of his 2008 performance award and the
payout of his 2010 performance award is shown. For Mmes. Abi-Karam and
OMeara and Mr. Martin, the column shows the payout of the final installment
of the 2008 performance awards.
|
(4)
|
Amounts
shown equal the amounts reported in the All Other Compensation column of
the Summary Compensation Table.
|
(5)
|
Target
amounts shown represent base salary, target annual incentive, target CIU
value and the aggregate target value of all stock options and stock awards
that vested during 2012 and 2011. The target value for vested RSU awards is
calculated by multiplying the number of RSUs by the closing price of the
companys common stock on the grant date. The target value for vested stock
options is calculated by multiplying the number of stock options by the
Black-Scholes value on the grant date. For Mr. Monahan, the target value of
his 2008 performance award is included in 2011 and the target value of his
2010 performance award is included in 2012. For Mmes. Abi-Karam and OMeara
and Mr. Martin, this column includes the target value of the final
installment of their 2008 performance awards.
|
67
|
COMPENSATION DISCUSSION
AND ANALYSIS
|
|
The information in the table below provides additional context to
2012 and 2011 NEO compensation, because it demonstrates that our below-target
financial performance in 2012 and 2011 had a negative impact on the actual
compensation received as compared to the value accorded these items when
initially awarded. The table below also supplements the Summary Compensation
Table that appears on page 69 of the proxy statement and compares the following
for the NEOs in 2012 and 2011:
|
|
|
|
●
|
The
hypothetical aggregate value of all stock
options and stock awards that vested during
2012
and 2011 had all of
the awards vested at target.
|
The target value for vested RSU awards is calculated by multiplying the
number of RSUs by the closing
price of the companys common stock on the grant date. The target value for vested stock options is calculated by
multiplying the number of stock
options by the Black-Scholes value on the grant date; and
|
|
|
|
●
|
The
actual aggregate value of all stock options and
stock awards that vested
during 2012 and 2011 as
shown in the Vested Compensation Compared to
Target Compensation table
above.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Target Value of Options
and Stock Awards Vested
(1)
|
|
Value of Options
and Stock Awards Vested
(2)
|
Name
|
|
Year
|
|
Stock
Options ($)
|
|
RSUs ($)
|
|
Total ($)
|
|
Stock
Options ($)
|
|
RSUs ($)
|
|
Total ($)
|
|
Difference in
Vested vs.
Target Award
|
Michael Monahan
|
|
2012
|
|
425,003
|
|
225,033
|
|
650,036
|
|
|
|
$180,060
|
|
$180,060
|
|
-72
%
|
|
2011
|
|
366,669
|
|
143,751
|
|
510,420
|
|
|
|
$150,313
|
|
$150,313
|
|
-71
%
|
Leslie Abi-Karam
|
|
2012
|
|
425,003
|
|
225,033
|
|
650,036
|
|
|
|
$180,060
|
|
$180,060
|
|
-72
%
|
|
2011
|
|
366,669
|
|
143,751
|
|
510,420
|
|
|
|
$150,313
|
|
$150,313
|
|
-71
%
|
Vicki A. OMeara
|
|
2012
|
|
218,333
|
|
137,497
|
|
355,830
|
|
|
|
$109,264
|
|
$109,264
|
|
-69
%
|
|
2011
|
|
143,333
|
|
250,813
|
|
394,146
|
|
|
|
$179,712
|
|
$179,712
|
|
-54
%
|
John E. OHara
|
|
2012
|
|
52,470
|
|
41,001
|
|
93,471
|
|
|
|
$ 30,310
|
|
$ 30,310
|
|
-68
%
|
Murray D. Martin
|
|
2012
|
|
1,675,000
|
|
890,651
|
|
2,565,651
|
|
|
|
$713,630
|
|
$713,630
|
|
-72
%
|
|
2011
|
|
1,779,172
|
|
593,744
|
|
2,372,916
|
|
|
|
$619,318
|
|
$619,318
|
|
-74
%
|
|
|
(1)
|
Amounts
shown represent the aggregate target value of all stock option and stock
awards that vested during 2012 and 2011. The target value for vested stock
options and vested stock awards equals the grant date fair value of those
awards. The target value for vested RSU awards is calculated by multiplying
the number of RSUs by the closing price of the companys common stock on the
grant date.
|
(2)
|
Amounts
shown equal the 2012 and 2011 amounts reported in the Stock Awards Vested in
Fiscal Year column of the Vested Compensation Compared to Target
Compensation table on page 67.
|
68
|
E
xecutive
Compensation Tables and Related Narrative
|
The following Summary Compensation Table shows all compensation earned
or paid for Messrs. Lautenbach, Monahan, OHara and Martin, and Mmes. Abi-Karam
and OMeara during or with respect to 2012, 2011 and 2010 for services rendered
to the company. The Summary Compensation Table includes amounts earned and
deferred during the periods covered under the Deferred Incentive Savings Plan.
The Grants of Plan-Based Awards in 2012 table on page 71 provides additional
information regarding grants made during 2012 to the NEOs.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY
COMPENSATION TABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and
Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
(1)
|
|
Stock
Awards
($)
(2)
|
|
Option
Awards
($)
(3)
|
|
Non-Equity
Incentive
Plan
Compensation
($)
(4)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(5)
|
|
All Other
Compensation
($)
(6), (7)
|
|
Total ($)
|
Marc B. Lautenbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and Chief
|
|
2012
|
|
70,833
|
|
0
|
|
0
|
|
289,300
|
|
|
|
|
|
|
|
360,133
|
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
2012
|
|
575,600
|
|
0
|
|
650,000
|
|
0
|
|
1,840,141
|
|
161,052
|
|
53,310
|
|
3,280,103
|
Executive Vice President
|
|
2011
|
|
558,000
|
|
0
|
|
325,000
|
|
325,000
|
|
1,135,294
|
|
264,368
|
|
28,788
|
|
2,636,450
|
and Chief Financial Officer
|
|
2010
|
|
540,000
|
|
0
|
|
300,000
|
|
300,000
|
|
1,018,160
|
|
252,487
|
|
24,295
|
|
2,434,942
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
2012
|
|
553,800
|
|
0
|
|
650,000
|
|
0
|
|
728,365
|
|
136,738
|
|
21,798
|
|
2,090,701
|
and President, Pitney
|
|
2011
|
|
544,016
|
|
0
|
|
325,000
|
|
325,000
|
|
1,122,907
|
|
328,795
|
|
27,360
|
|
2,673,078
|
Bowes Communications
|
|
2010
|
|
535,096
|
|
0
|
|
300,000
|
|
300,000
|
|
963,727
|
|
271,468
|
|
29,603
|
|
2,399,894
|
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive Vice President
|
|
2012
|
|
522,500
|
|
0
|
|
450,000
|
|
0
|
|
508,788
|
|
|
|
42,727
|
|
1,524,015
|
and President, Pitney
|
|
2011
|
(8)
|
512,500
|
|
0
|
|
225,000
|
|
225,000
|
|
787,010
|
|
|
|
34,587
|
|
1,784,097
|
Bowes Services
|
|
2010
|
|
500,000
|
|
50,000
|
|
262,500
|
|
162,500
|
|
395,500
|
|
|
|
14,775
|
|
1,385,275
|
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John E. OHara
Executive Vice President
and President, Pitney
Bowes Software Solutions
|
|
2012
|
|
450,000
|
|
0
|
|
750,000
|
|
0
|
|
217,533
|
|
|
|
70,680
|
|
1,488,213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
2012
|
|
996,667
|
|
0
|
|
2,625,000
|
|
0
|
|
2,589,500
|
|
1,430,430
|
|
144,284
|
|
7,785,881
|
Former Chairman, President
|
|
2011
|
(9)
|
975,000
|
|
0
|
|
1,187,500
|
|
1,187,500
|
|
4,463,160
|
|
1,354,880
|
|
62,758
|
|
9,230,798
|
and Chief Executive Officer
|
|
2010
|
|
950,000
|
|
0
|
|
1,187,500
|
|
1,187,500
|
|
4,420,600
|
|
508,288
|
|
80,446
|
|
8,334,334
|
|
|
(1)
|
On June 21, 2010, Ms. OMeara was
awarded a $50,000 promotional sign-on cash award in connection with her
appointment as President of Pitney Bowes Management Services.
|
(2)
|
This column includes the value of
stock awarded to NEOs during 2012, 2011 and 2010 based upon its grant date
fair value, as determined in accordance with the share-based payment
accounting guidance under ASC 718. Performance-based RSUs and MSUs were
granted to the NEOs in 2012. Mr. OHaras stock award includes a $450,000
performance-based restricted stock unit award granted on April 9, 2012. This
award has a three-year cliff vesting feature and vests in full on April 9,
2015 and remains subject to forfeiture during the vesting period. Details
regarding the grants of performance-based RSUs and MSUs can be found in the
Grants of Plan-Based Awards in 2012 table and details regarding outstanding
stock awards can be found in the Outstanding Equity Awards at 2012 Fiscal
Year-End table. If performance conditions allow for MSUs granted to reach
the 200% maximum number of shares at vesting, based on the grant date value,
the total value of stock awarded in 2012 would be $975,000 for Mr. Monahan;
$975,000 for Ms. Abi-Karam; $675,000 for Ms. OMeara; $900,000 for Mr.
OHara; and $3,937,500 for Mr. Martin.
|
(3)
|
This column includes the value of
stock options awarded to named executive officers during 2012, 2011 and 2010
based upon its grant date fair value, as determined in accordance with the
share-based payment accounting guidance under ASC 718. Details regarding
outstanding stock option awards can be found in the Outstanding Equity
Awards at 2012 Fiscal Year-End table.
|
(4)
|
When considering all elements of
the table above, the majority of compensation for the named executive
officers is at-risk and is earned based on company and executive performance
against pre-determined financial and strategic objectives. This column
includes annual incentive compensation, CIU payouts that vested at the end of
2012, 2011 and 2010 for multi-year performance and for Mr. Monahan, payout of
his 2010 performance award. Mr. Lautenbach did not receive an annual
incentive award for 2012. The 2012 annual incentive and CIU award payout
amounts in this column are as follows: for Mr. Monahan, annual incentive of
$296,141, CIU of $444,000, and 2010 performance award of $1,100,000 in
connection with achievement of annualized benefits from Strategic
Transformation and a 2011 IRC 162(m) objective of $322,619,000; for Ms.
Abi-Karam, annual incentive of $284,365, CIU of $444,000; for Ms. OMeara,
annual incentive of $268,288, CIU of $240,500; for Mr. OHara,
|
69
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
|
|
|
|
annual incentive of $172,800, CIU
of $44,733; for Mr. Martin, annual incentive of $832,000 and CIU of
$1,757,500. The 2012 amounts in this column include payments that were
deferred at the election of the named executive officers under the terms of
the Pitney Bowes Deferred Incentive Savings Plan, as follows: annual
incentive deferral by Mr. Monahan of $25,000 and annual incentive deferral by
Ms. Abi-Karam of $20,000.
|
(5)
|
This column shows the change in the
actuarial present value of the accumulated pension benefit applicable to all
eligible employees during 2012, 2011 and 2010. Mr. Lautenbach, Ms. OMeara
and Mr. OHara do not participate in the qualified Pension Plan or the
Pension Restoration Plan.
|
(6)
|
Amounts shown for 2012 include all
other compensation received by the NEOs that is not reported elsewhere. For
2012, this includes the following: for Mr. Monahan, financial counseling,
group term life insurance provided by the company, company match to Pitney
Bowes 401(k) Plan made in 2012 and 2011 company contribution of $36,306 to
Pitney Bowes 401(k) Restoration Plan credited in 2012; for Ms. Abi-Karam,
companys actual cost for spousal travel, financial counseling, group term
life insurance provided by the company and company match to Pitney Bowes
401(k) Plan made in 2012; for Ms. OMeara, companys actual cost for spousal
travel, financial counseling, group term life insurance provided by the
company, company match to Pitney Bowes 401(k) Plan made in 2012, 2011 2% core
contribution to Pitney Bowes 401(k) Plan credited in 2012 and 2011 company
match and 2% core contribution to Pitney Bowes 401(k) Restoration Plan
credited in 2012; for Mr. OHara, companys actual cost for spousal travel,
relocation cost of $44,000, group term life insurance provided by the
company, company match to Pitney Bowes 401(k) Plan made in 2012, 2011 2% core
contribution to Pitney Bowes 401(k) Plan credited in 2012 and 2011 company
contribution to Pitney Bowes 401(k) Restoration Plan credited in 2012; and
for Mr. Martin, companys actual cost for spousal travel, financial
counseling, group term life insurance provided by the company, executive
physical, company match to Pitney Bowes 401(k) Plan made in 2012 and 2011
company contribution of $111,394 to Pitney Bowes 401(k) Restoration Plan
credited in 2012. Mr. Lautenbach did not have other compensation in 2012.
|
(7)
|
For Ms. OMeara, 2010 amount is
amended to include a previously unreported $6,543 2% core contribution to
Pitney Bowes 401(k) Restoration Plan.
|
(8)
|
The increase in total compensation
for Ms. OMeara from 2010 to 2011 was primarily due to this being her first
CIU payout with Pitney Bowes.
|
(9)
|
94% of the increase in total
compensation for Mr. Martin from 2010 to 2011 was primarily due to the change
in pension value under the terms of the Pitney Bowes Pension Plans.
|
70
|
EXECUTIVE COMPENSATION
TABLES AND RELATED NARRATIVE
|
GRANTS OF PLAN-BASED AWARDS IN 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
|
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
|
Grant
Date Fair
Value of
Stock and
Option
Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
|
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
(1)
($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
|
|
|
|
|
Marc B. Lautenbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Premium-priced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options)
(2)
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
13.386
|
|
63,300
|
|
(Premium-priced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options)
(3)
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
15.132
|
|
101,800
|
|
(Premium-priced
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock Options)
(4)
|
|
12/3/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
|
16.878
|
|
124,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(5)
|
|
|
|
|
34,704
|
|
462,720
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(6)
|
|
|
|
|
16,088
|
|
650,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based MSUs)
(7)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
9,073
|
|
18,146
|
|
36,292
|
|
|
|
|
|
|
|
|
325,000
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(8)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
17,587
|
|
|
|
|
|
|
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(5)
|
|
|
|
|
33,324
|
|
444,320
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(6)
|
|
|
|
|
16,088
|
|
650,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based MSUs)
(7)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
9,073
|
|
18,146
|
|
36,292
|
|
|
|
|
|
|
|
|
325,000
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(8)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
17,587
|
|
|
|
|
|
|
|
|
|
|
325,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. OMeara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(5)
|
|
|
|
|
31,440
|
|
419,200
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(6)
|
|
|
|
|
11,138
|
|
450,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based MSUs)
(7)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
6,282
|
|
12,563
|
|
25,126
|
|
|
|
|
|
|
|
|
225,000
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(8)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
12,175
|
|
|
|
|
|
|
|
|
|
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John E. OHara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(5)
|
|
|
|
|
20,250
|
|
270,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(6)
|
|
|
|
|
7,425
|
|
300,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based MSUs)
(7)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
4,188
|
|
8,375
|
|
16,750
|
|
|
|
|
|
|
|
|
150,000
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(8)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
8,117
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(9)
|
|
4/9/2012
|
|
|
|
|
|
|
|
|
|
|
|
26,148
|
|
|
|
|
|
|
|
|
|
|
450,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(5)
|
|
|
|
|
97,500
|
|
1,300,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(CIU)
(6)
|
|
|
|
|
64,969
|
|
2,625,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based MSUs)
(7)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
36,642
|
|
73,283
|
|
146,566
|
|
|
|
|
|
|
1,312,500
|
|
(Performance-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
based RSUs)
(8)
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
71,023
|
|
|
|
|
|
|
|
|
1,312,500
|
|
|
|
(1)
|
The values shown in this column represent the maximum
annual incentive and CIU payout for IRC 162(m) purposes. The committee sets a
maximum payout at well below 162(m) maximums and more in line with threshold
and target values for both the annual incentive and CIU awards.
|
(2)
|
These options have an exercise price equal to 115% of the
closing price of the companys common stock on the commencement of employment
on December 3, 2012. Based on these terms the exercise price is $13.386. The
Black-Scholes value for each option granted on December 3, 2012 grant date
was $0.633, based on assumptions detailed in note 11 to our financial
statements included in our Annual Report on Form 10-K for the year ended
December 31, 2012, as filed with the SEC on February 25, 2013.
|
(3)
|
These options have an exercise price equal to 130% of the
closing price of the companys common stock on the first trading day on or
following the commencement of employment on December 3, 2012. Based on these
terms the exercise price is $15.132. The Black-Scholes value for each option
granted on December 3, 2012 grant date was $0.509, based on assumptions
detailed in note 11 to our financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2012, as filed with the SEC on
February 25, 2013.
|
(4)
|
These options have an exercise price equal to 145% of the
closing price of the companys common stock on the first trading day on or
following the commencement of employment on December 3, 2012. Based on these
terms the exercise price is $16.878. The Black-Scholes value for each option
granted on December 3, 2012 grant date was $0.414, based on assumptions
detailed in note 11 to our financial statements included in our Annual Report
on Form 10-K for the year ended December 31, 2012, as filed with the SEC on
February 25, 2013.
|
(5)
|
Values in this row represent estimated future payouts for
the 2012 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.
|
71
|
|
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
(6)
|
Values in this row represent
estimated future payouts for the 2012 2014 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.
The target value of each CIU is $1.00.
|
(7)
|
Performance-based MSUs were granted
based on the Monte-Carlo Simulation methodology value of $17.91. MSUs
represent a right to Pitney Bowes stock, with the number of shares determined
after a specified restriction period on the vesting date. The performance
metric tied to income from continuing operations was met as of December 31,
2012, however, the awards remain subject to forfeiture over the remaining
vesting period. See pages 56 and 57 in Compensation Discussion and Analysis
for additional information on this performance award.
|
(8)
|
Performance-based RSUs were granted
based on the actual closing price on the February 13, 2012 grant date of
$18.48. A performance metric tied to income from continuing operations was
met as of December 31, 2012, however, the awards remain subject to forfeiture
over the remaining vesting period.
|
(9)
|
Performance-based RSUs granted to
Mr. OHara were based on the actual closing price on the April 9, 2012 grant
date of $17.21. This award is subject to achievement of the pre-determined
performance metric tied to a 2013 income from continuing operations
objective. This award has a three-year cliff vesting feature and vests in
full on April 9, 2015 and remains subject to forfeiture during the vesting
period.
|
|
|
Stock
Awards
|
|
●
|
The
Stock Awards column in the Summary Compensation Table represents the value
of performance-based RSUs, MSUs and restricted stock awarded during 2012,
2011 and 2010 based upon its grant date fair value, as determined in
accordance with the share-based payment accounting guidance.
|
|
●
|
It is
our policy that the number of stock awards to be granted is determined 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.
|
|
●
|
The
Estimated Future Payouts Under Equity Incentive Plan Awards column in the
Grants of Plan-Based Awards in 2012 table show the range of estimated
number of MSUs that can vest upon varying levels of performance during the
three-year performance period and the estimated number of performance based
RSUs that could have vested based on performance. For the performance based
RSUs, a performance metric tied to income from continuing operations was met
as of December 31, 2012, however the rewards remain subject to forfeiture
over the remaining vesting period. See page 56 in Compensation Discussion
and Analysis for additional information on this performance award.
|
|
|
|
Option Awards
|
|
●
|
The
Option Awards column in the Summary Compensation Table represents the
value of options awarded during 2012, 2011 and 2010 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 2012 table represents the number of stock options awarded to Mr.
Lautenbach during 2012.
|
|
●
|
It is
our policy that stock options are granted only at an exercise price equal to
or greater than the market price of the stock on the date of grant with a
ten-year exercise period. 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 November 2012,
the board approved, effective December 3, 2012, a onetime grant of
premium-priced stock options, to be granted in connection with the
commencement of employment for Mr. Lautenbach. See Grants of Plan-Based
Awards in 2012 table for details of Mr. Lautenbachs stock option awards.
|
|
|
|
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
2012, 2011 and 2010, as well as the CIUs that were earned over the three-year
periods ending December 31, 2012, December 31, 2011 and December 31, 2010.
The 2011 amounts include 50% of the full values of the 2008 performance award
which vested in February 2011.
|
|
●
|
The
Estimated Future Payouts Under Non-Equity Incentive Plan Awards column in
the Grants of Plan-Based Awards in 2012 table show the range of estimated
possible future payouts for the 2012 annual incentive payment at varying
levels of performance. They also show the range of estimated possible future
payouts of the CIUs granted for the 2012-2014 cycle at varying levels of
performance.
|
|
|
|
Change
in Pension Value and Non-qualified 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.
|
|
●
|
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.
|
72
|
|
|
EXECUTIVE COMPENSATION
TABLES AND RELATED NARRATIVE
|
|
|
|
All
Other Compensation
|
|
●
|
The All
Other Compensation column in the Summary Compensation Table consists of
other amounts earned or paid to each NEO. Many of the benefits described in
this column are available to employees other than the NEOs.
|
|
|
|
Equity
Awards
|
The next
table is provided to present an overview of Pitney Bowes equity awards held
as of December 31, 2012 by each NEO. It discloses compensation in the form of
equity that has previously been awarded, remains outstanding, and is
unexercised or unvested.
|
73
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
OUTSTANDING
EQUITY AWARDS AT 2012 FISCAL YEAR-END
|
The
following table provides information on the current holdings of stock option
and stock awards by the NEOs. This table includes unexercised or unvested
option awards, unvested RSUs and unvested MSUs. Each equity grant is shown
separately for each NEO. The vesting schedule for each outstanding award is
shown following this table
(1)
. For additional information about the
stock option and stock awards, see the description of equity incentive
compensation in Compensation Discussion and Analysis beginning on page 55.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Stock Awards
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
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)
|
Marc B. Lautenbach
|
|
12/3/2012
|
|
|
0
|
|
|
100,000
|
|
|
13.3860
|
|
|
12/3/2022
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/3/2012
|
|
|
0
|
|
|
200,000
|
|
|
15.1320
|
|
|
12/3/2022
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12/3/2012
|
|
|
0
|
|
|
300,000
|
|
|
16.8780
|
|
|
12/3/2022
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
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
|
|
|
26,000
|
|
|
0
|
|
|
46.9300
|
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
|
28,050
|
|
|
0
|
|
|
42.6200
|
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
28,777
|
|
|
0
|
|
|
48.0300
|
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
|
153,846
|
|
|
0
|
|
|
36.9600
|
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
90,461
|
|
|
0
|
|
|
24.7500
|
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,778
|
|
|
29,558
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
70,922
|
|
|
30,935
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
0
|
|
|
4,526
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,790
|
|
|
72,246
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
31,401
|
|
|
58,967
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,349
|
|
|
99,473
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,587
|
|
|
187,126
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,146
|
|
|
193,073
|
|
Leslie Abi-Karam
|
|
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
|
|
|
25,000
|
|
|
0
|
|
|
46.9300
|
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
|
28,050
|
|
|
0
|
|
|
42.6200
|
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/12/2007
|
|
|
28,777
|
|
|
0
|
|
|
48.0300
|
|
|
2/11/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
|
153,846
|
|
|
0
|
|
|
36.9600
|
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
90,461
|
|
|
0
|
|
|
24.7500
|
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,778
|
|
|
29,558
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
70,922
|
|
|
30,935
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
0
|
|
|
4,526
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,790
|
|
|
72,246
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
31,401
|
|
|
58,967
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,349
|
|
|
99,473
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
17,587
|
|
|
187,126
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,146
|
|
|
193,073
|
|
Vicki A. OMeara
|
|
8/27/2008
|
|
|
50,000
|
|
|
0
|
|
|
33.9100
|
|
|
8/27/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
53,454
|
|
|
0
|
|
|
24.7500
|
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,642
|
|
|
17,471
|
|
|
|
|
|
|
|
|
|
11/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,614
|
|
|
59,733
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
38,416
|
|
|
14,682
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
0
|
|
|
4,526
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,678
|
|
|
39,134
|
|
|
|
|
|
|
|
|
|
11/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,248
|
|
|
45,199
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
21,739
|
|
|
39,643
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,473
|
|
|
68,873
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,175
|
|
|
129,542
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,563
|
|
|
133,670
|
|
74
|
EXECUTIVE COMPENSATION
TABLES AND RELATED NARRATIVE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
Stock Awards
|
Name
|
|
Grant Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
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)
|
John E. OHara
|
|
2/11/2008
|
|
|
8,077
|
|
|
0
|
|
|
36.9600
|
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
8,635
|
|
|
0
|
|
|
24.7500
|
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
266
|
|
|
2,830
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
7,145
|
|
|
3,573
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
684
|
|
|
7,278
|
|
|
|
|
|
|
|
|
|
6/23/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
15,645
|
|
|
166,463
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
3,835
|
|
|
7,670
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
4,015
|
|
|
8,031
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,338
|
|
|
24,876
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,117
|
|
|
86,365
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,375
|
|
|
89,110
|
|
|
|
4/9/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,148
|
|
|
278,215
|
|
|
|
|
|
|
|
Murray D. Martin
|
|
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
|
|
|
100,000
|
|
|
0
|
|
|
46.9300
|
|
|
2/13/2015
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/13/2006
|
|
|
119,215
|
|
|
0
|
|
|
42.6200
|
|
|
2/12/2016
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/16/2007
|
|
|
324,149
|
|
|
0
|
|
|
45.4000
|
|
|
3/15/2017
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/11/2008
|
|
|
600,000
|
|
|
0
|
|
|
36.9600
|
|
|
2/10/2018
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
390,625
|
|
|
0
|
|
|
24.7500
|
|
|
2/8/2019
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/9/2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,995
|
|
|
127,627
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
280,733
|
|
|
135,840
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
0
|
|
|
4,526
|
|
|
22.0900
|
|
|
2/7/2020
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/8/2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
26,878
|
|
|
285,982
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
114,734
|
|
|
225,634
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
|
2/13/2021
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/14/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,162
|
|
|
363,484
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
71,023
|
|
|
755,685
|
|
|
|
|
|
|
|
|
|
2/13/2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
73,283
|
|
|
779,731
|
|
|
|
(
1)
|
Option and Stock Awards Vesting Schedule
|
|
|
|
|
|
|
|
|
|
Grant Date
|
|
Award Type
|
|
Name of
Executive
|
|
Vesting Schedule
|
|
2/9/2009
|
|
RSU
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
remaining 25% vests on February 5,
2013
|
|
11/9/2009
|
|
RSU
|
|
OMeara
|
|
100% vests on February 5, 2013
|
|
2/8/2010
|
|
NQSO
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
remaining 33% vests on February 5,
2013
|
|
2/8/2010
|
|
ISO
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
100% vests on February 5, 2013
|
|
2/8/2010
|
|
RSU
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
Four year vesting; 50% remains
unvested; 25% vests on February 5, 2013 and February 4, 2014
|
|
6/23/2010
|
|
RSU
|
|
OHara
|
|
100% vests on June 23, 2013
|
|
11/8/2010
|
|
RSU
|
|
OMeara
|
|
100% vests on February 4, 2014
|
|
2/14/2011
|
|
NQSO
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
Three year vesting; 66% remains
unvested; 33% vests on February 14, 2013 and February 14, 2014
|
|
2/14/2011
|
|
ISO
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
100% vests on February 14, 2014
|
|
2/14/2011
|
|
RSU
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
Four year vesting; 75% remains
unvested; 25% vests on February 5, 2013, February 4, 2014 and February 3,
2015
|
|
2/13/2012
|
|
RSU
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
Four year vesting; 100% remains
unvested; 25% vests on February 5, 2013, February 4, 2014, February 3, 2015
and February 2, 2016
|
|
2/13/2012
|
|
MSU
|
|
Monahan, Abi-Karam, OMeara, OHara, Martin
|
|
100% vests on February 3, 2015
|
|
4/9/2012
|
|
RSU
|
|
OHara
|
|
100% vests on April 9, 2015
|
|
12/3/2012
|
|
NQSO
|
|
Lautenbach
|
|
Four year vesting; 100% remains
unvested; 25% vests on December 3, 2013, December 3, 2014, December 3, 2015
and December 3, 2016
|
|
|
(2)
|
This column represents the difference between the exercise
price on the date of grant and the closing price of the company stock on
December 31, 2012 for outstanding exercisable and unexercisable options which
have not yet been realized.
|
(3)
|
These amounts were calculated based on the closing price
of the companys common stock of $10.64 per share on December 31, 2012. For
MSUs, values were calculated using the target number of shares granted. The
total number of MSUs that can vest is capped at 200% of the number of MSUs
granted. A minimum number of shares, 50% of the award, will vest at the end
of the three year performance period.
|
75
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
|
|
|
|
|
|
OPTION EXERCISES AND STOCK VESTED DURING 2012 FISCAL YEAR
(1)
|
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of
Shares Acquired
on Exercise (#)
|
Value
Realized
on Exercise ($)
|
Number
of
Shares Acquired
on Vesting (#)
(2)
|
Value
Realized
on Vesting ($)
(3)
|
Michael Monahan
|
0
|
0
|
9,291
|
|
180,060
|
|
Leslie Abi-Karam
|
0
|
0
|
9,291
|
|
180,060
|
|
Vicki A. OMeara
|
0
|
0
|
5,638
|
|
109,264
|
|
John E. OHara
|
0
|
0
|
1,564
|
|
30,310
|
|
Murray D. Martin
|
0
|
0
|
36,823
|
|
713,630
|
|
|
|
(1)
|
Mr. Lautenbach did not have any stock option exercises or
stock vest during 2012.
|
(2)
|
Performance-based RSUs granted on February 11, 2008,
February 9, 2009, February 8, 2010 and February 14, 2011 vested on February
7, 2012.
|
(3)
|
These values were determined based on the average of the
high and low trading price on the February 7, 2012 vesting date of $19.38.
|
|
|
Pension Benefits
|
The following table provides information regarding pension payments to
the NEOs. It includes data regarding the Pitney Bowes Pension Plan and the
Pension Restoration Plan. The Pitney Bowes Pension Plan is a qualified defined
benefit pension plan for U.S. employees. U.S. NEOs 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. NEOs 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 $250,000 limit for 2012
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 230 of our
current active employees to provide for retirement benefits above amounts
available under the tax-qualified Pension Plan. Pitney Bowes does not as a
hiring practice 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 NEOs are fully vested in their pension benefit.
On January 29, 2013 the board of directors approved, effective April 1,
2013, the freezing of all future pension plan benefit accruals for employees
with fewer than sixteen years of benefit accrual service as of March 31, 2013.
(See discussion under Other Indirect Compensation Retirement Compensation
on page 57 of this proxy statement).
The amounts reported in the table below equal the present value of the
accumulated benefit on December 31, 2012, for the NEOs under the various Pitney
Bowes pension plans determined based on years of service and covered earnings
(as described below). The present value has been calculated based on benefits payable
that would commence when the executive reaches age 65, and in an amount
consistent with the assumptions as described in note 17 to the financial
statements included in the Annual Report on Form 10-K for the year ended
December 31, 2012, as filed with the SEC on February 25, 2013.
76
|
EXECUTIVE COMPENSATION
TABLES AND RELATED NARRATIVE
|
|
PENSION BENEFITS AS OF DECEMBER 31, 2012
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number
of Years
Credited Service (#)
|
|
Present
Value of
Accumulated Benefit ($)
(2)
|
|
|
Michael Monahan
|
|
Pitney Bowes
Pension Plan
|
|
24.6
|
|
314,399
|
|
|
|
Michael Monahan
|
|
Pitney Bowes
Pension Restoration Plan
|
|
24.6
|
|
1,124,297
|
|
|
|
Leslie Abi-Karam
|
|
Pitney Bowes
Pension Plan
|
|
28.9
|
|
408,802
|
|
|
|
Leslie Abi-Karam
|
|
Pitney Bowes
Pension Restoration Plan
|
|
28.9
|
|
1,403,636
|
|
|
|
Murray D. Martin
(3)
|
|
Pitney Bowes
Pension Plan
|
|
25.4
|
|
733,093
|
|
|
|
Murray D. Martin
|
|
Pitney Bowes
Pension Restoration Plan
|
|
25.4
|
|
7,541,414
|
|
|
|
|
(1)
|
Mr. Lautenbach, Ms. OMeara and Mr.
OHara are omitted from this table since they are not pension plan
participants. However, they are eligible for a 2% core contribution. See
Deferred Compensation below.
|
(
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 17 to the financial
statements included in the Annual Report on Form 10-K for the year ended
December 31, 2012. These lump sum values are expressed as the greater of the
Pension Equity Account and the Present Value of the Age 65 Accrued benefit
using the 417(e)(3) mortality table. For Mr. Monahan and Ms. Abi-Karam, this
assumes accruals to date and early retirement at age 55. Neither Mr. Monahan
or Ms. Abi-Karam are currently eligible for early retirement.
|
(3)
|
Mr. Martin retired on February 6,
2013. If Mr. Martin were to have retired on December 31, 2012, the present
value of the combined pension benefit payable would have been $8,274,507.
|
The material terms of the Pitney Bowes Pension Plan and Pension
Restoration Plan are as follows:
|
|
|
|
●
|
Only
U.S. employees hired prior to January 1, 2005 are eligible to participate.
|
|
●
|
Normal
retirement age is 65 with at least three 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 CIU payments, stock options, restricted stock, RSUs, MSUs, 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, Pitney
Bowes 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
NEOs, Ms. Abi-Karam and Mr. Martin, are among those Pitney Bowes Pension Plan
participants who are eligible to receive transition credits.
|
|
●
|
The
maximum benefit accrual under the Pitney Bowes 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 Pitney Bowes Pension Restoration Plan are
designed to comply with the requirements of Section 409A of the Code.
|
|
●
|
The
company has not provided extra years of credited services to any of the NEOs.
|
|
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 base 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. The company reserves the right to fund 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.
|
77
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
NONQUALIFIED DEFERRED COMPENSATION FOR
2012
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
|
Executive
Contributions
in Last FY ($)
(2)
|
|
Registrant
Contributions
in Last FY ($)
(3)
|
|
Aggregate
Earnings/(Loss)
in Last FY ($)
(4)
|
|
Aggregate
Withdrawals/
Distributions ($)
|
|
Aggregate
Balance at
Last FYE ($)
(5)
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
|
36,306
|
|
|
(26,434
|
)
|
|
0
|
|
115,248
|
|
|
Deferred Incentive Savings Plan
|
|
|
0
|
|
|
|
|
|
114,541
|
|
|
0
|
|
960,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
|
0
|
|
|
5,071
|
|
|
0
|
|
99,622
|
|
|
Deferred Incentive Savings Plan
|
|
|
15,000
|
|
|
|
|
|
4,519
|
|
|
0
|
|
108,416
|
|
|
Vicki A. OMeara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
|
20,670
|
|
|
992
|
|
|
0
|
|
45,854
|
|
|
Deferred Incentive Savings Plan
|
|
|
0
|
|
|
|
|
|
0
|
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John E. OHara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
|
5,194
|
|
|
381
|
|
|
0
|
|
5,575
|
|
|
Deferred Incentive Savings Plan
|
|
|
0
|
|
|
|
|
|
0
|
|
|
0
|
|
0
|
|
|
Murray D. Martin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
|
|
|
111,394
|
|
|
48,295
|
|
|
0
|
|
662,307
|
|
|
Deferred Incentive Savings Plan
|
|
|
125,000
|
|
|
|
|
|
138,334
|
|
|
0
|
|
1,510,501
|
|
|
|
|
(
1)
|
Mr. Lautenbach is omitted from this
table since he did not participate in the nonqualified deferred compensation
plans in 2012.
|
(2)
|
Amounts in this column represent
the portion of the 2011 annual incentives paid in 2012 deferred under the
Deferred Incentive Savings Plan.
|
(3)
|
Amounts shown are company
contributions to the Pitney Bowes 401(k) Restoration Plan earned in 2011 and
credited under the 401(k) Restoration Plan in 2012. These amounts are also
included in the All Other Compensation column of the Summary Compensation
Table for each of the named executive officers listed above.
|
(
4)
|
Amounts shown are the respective
earnings in the Pitney Bowes 401(k) Restoration Plan and the Deferred
Incentive Savings Plan. These earnings are not included in the Summary
Compensation Table.
|
(5)
|
Amounts shown are the respective
balances in the Pitney Bowes 401(k) Restoration Plan and the Deferred
Incentive Savings Plan. The aggregate balance for the 401(k) Restoration Plan
includes amounts previously reported as compensation in the Summary
Compensation Table as follows: $79,471 for Mr. Monahan, $60,269 for Ms.
Abi-Karam, $31,108 for Ms. OMeara and $297,114 for Mr. Martin. The aggregate
balance for the Deferred Incentive Savings Plan includes amounts previously
reported as compensation in the Summary Compensation Table as follows:
$264,800 for Mr. Monahan, $102,000 for Ms. Abi-Karam and $765,000 for Mr. Martin.
|
The
material terms of the Pitney Bowes 401(k) Restoration Plan are as follows:
|
|
|
|
|
●
|
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 CIU 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 of up to 4% in the 401(k) Restoration Plan. In addition, employees
hired after December 31, 2004 and not participating in the Pension Plan are
eligible to receive a 2% company core contribution into the qualified 401(k)
plan. To the extent of earnings in excess of the IRS limitation, the 2% core
contribution is made into the 401(k) Restoration Plan.
|
|
●
|
On
January 29, 2013, the board of directors approved, effective April 1, 2013
the eligibility of those employees who will no longer accrue benefits under
the pension plan to participate in the 2% employer core contribution to the
401(k) plan. See discussion under Other Indirect CompensationRetirement
Compensation on page 57 of this proxy statement.
|
|
●
|
Employees
must have one year of service to participate, and the vesting is the same as
under the qualified 401(k) Plan. Except for Mr. Lautenbach, all NEOs are
fully vested in their accounts.
|
|
●
|
Distributions
payable in a lump-sum or installments may occur upon termination of
employment and will follow guidelines under Section 409A of the Code.
|
|
|
The
material terms of the Deferred Incentive Savings Plan (DISP) are as follows:
|
|
|
|
●
|
The DISP
allows deferral of up to 100% of annual incentives and long-term cash
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
|
78
|
EXECUTIVE COMPENSATION
TABLES AND RELATED NARRATIVE
|
|
|
|
|
●
|
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 in the event of a termination
within two years following a change of control
|
|
●
|
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 comparable to those in the Pitney Bowes 401(k) Plan. These
investment options provide participants with an opportunity to invest in a
variety of publicly available bond funds, money market funds, equity funds and
blended funds. Prior to January 1, 2011, participants also had the opportunity
to invest in Pitney Bowes stock. 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 notional
investment selections made by the participant.
|
Potential
Payments upon Termination or Change of Control
|
|
Other
Post-Termination Payments
|
|
The
tables below reflect the amount of compensation that would become payable to
each of the NEOs under existing arrangements if the hypothetical termination
of employment events described had occurred on December 31, 2012, given the
NEOs 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 $10.64, the closing price of our common stock on December 31, 2012.
|
|
All payments
are payable by the company in a lump-sum unless otherwise noted. The actual
amounts that would be paid upon a NEOs 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, our companys stock price and the executives age.
|
|
In the
event of termination of employment, the NEOs 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 NEOs will
differ from those shown in the Nonqualified Deferred Compensation for 2012
table on page 78. See the narrative accompanying that table for information
on available types of distributions under the plans.
|
|
The
benefits described in the tables below 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
in the tables below, as the committee determines appropriate or in the case
of Messrs. Lautenbach and Martin, the independent board members.
|
79
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
Estimated Post-Termination Payments and
Benefits
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of Payment
or Benefit
|
|
Retirement
Eligible ($)
|
|
|
Involuntary Not for
Cause Termination ($)
(2)
|
|
|
Change of
Control with
Termination
(CIC) ($)
|
|
Death ($)
|
|
|
Disability ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marc B.
Lautenbach
|
|
|
Severance
|
|
|
|
|
32,692 - 2,932,500
|
(3)
|
|
2,461,000
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
|
|
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
Stock
Options Accelerated
(5)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
|
|
|
89,000
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
|
32,692 - 2,943,750
|
|
|
2,550,000
|
|
|
|
|
|
|
|
Michael
Monahan
|
|
|
Severance
|
|
|
|
|
22,246 - 1,561,680
|
(3)
|
|
1,590,689
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
|
|
0 - 462,720
|
(8)
|
|
462,720
|
(9)
|
|
296,141
|
(10)
|
|
296,141
|
(10)
|
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 2012
cycle
|
|
|
|
|
0 - 444,000
|
(11)
|
|
444,000
|
(12)
|
|
444,000
|
(11)
|
|
444,000
|
(11)
|
|
|
|
2011 2013
cycle
|
|
|
|
|
0 - 433,333
|
(13)
|
|
650,000
|
(12)
|
|
433,333
|
(13)
|
|
433,333
|
(13)
|
|
|
|
2012 2014
cycle
|
|
|
|
|
0
|
(13)
|
|
650,000
|
(12)
|
|
216,667
|
(13)
|
|
216,667
|
(13)
|
|
|
|
Stock
Options Accelerated
(5)
|
|
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Performance-based
RSUs Accelerated
(14)
|
|
|
|
|
0- 168,123
|
|
|
388,403
|
|
|
388,403
|
|
|
388,403
|
|
|
|
|
Performance-based
MSUs Accelerated
(14)
|
|
|
|
|
0
|
|
|
193,073
|
|
|
193,073
|
|
|
193,073
|
|
|
|
|
Incremental
Pension Benefit
|
|
|
|
|
0 - 390,958
(15)
|
|
|
219,009
|
(16)
|
|
|
|
|
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
0
|
|
|
101,501
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
|
22,246 - 3,472,064
|
|
|
4,699,395
|
|
|
1,971,617
|
|
|
1,971,617
|
|
Leslie
Abi-Karam
|
|
|
Severance
|
|
|
|
|
21,362 - 1,499,580
|
(3)
|
|
1,260,237
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
|
|
0 - 444,320
|
(8)
|
|
444,320
|
(9)
|
|
284,365
|
(10)
|
|
284,365
|
(10)
|
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 2012
cycle
|
|
|
|
|
0 - 444,000
|
(11)
|
|
444,000
|
(12)
|
|
444,000
|
(11)
|
|
444,000
|
(11)
|
|
|
|
2011 2013
cycle
|
|
|
|
|
0 - 433,333
|
(13)
|
|
650,000
|
(12)
|
|
433,333
|
(13)
|
|
433,333
|
(13)
|
|
|
|
2012 2014
cycle
|
|
|
|
|
0
|
(13)
|
|
650,000
|
(12)
|
|
216,667
|
(13)
|
|
216,667
|
(13)
|
|
|
|
Stock
Options Accelerated
(5)
|
|
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Performance-based
RSUs Accelerated
(14)
|
|
|
|
|
0 - 168,123
|
|
|
388,403
|
|
|
388,403
|
|
|
388,403
|
|
|
|
|
Performance-based
MSUs Accelerated
(14)
|
|
|
|
|
0
|
|
|
193,073
|
|
|
193,073
|
|
|
193,073
|
|
|
|
|
Performance
Award Accelerated
|
|
|
|
|
0
|
(17)
|
|
1,100,000
|
(18)
|
|
870,833
|
(19)
|
|
870,833
|
(19)
|
|
|
|
Incremental
Pension Benefit
|
|
|
|
|
0 - 805,094
|
(15)
|
|
570,485
|
(16)
|
|
|
|
|
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
0
|
|
|
100,913
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
|
21,362 - 3,805,700
|
|
|
5,801,431
|
|
|
2,830,674
|
|
|
2,830,674
|
|
Vicki A.
OMeara
|
|
|
Severance
|
|
|
|
|
20,154 - 1,414,800
|
(3)
|
|
2,554,260
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
|
|
0 - 419,200
|
(8)
|
|
419,200
|
(9)
|
|
268,288
|
(10)
|
|
268,288
|
(10)
|
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 2012
cycle
|
|
|
|
|
0 - 240,500
|
(11)
|
|
240,500
|
(12)
|
|
240,500
|
(11)
|
|
240,500
|
(11)
|
|
|
|
2011 2013
cycle
|
|
|
|
|
0 - 300,000
|
(13)
|
|
450,000
|
(12)
|
|
300,000
|
(13)
|
|
300,000
|
(13)
|
|
|
|
2012 2014
cycle
|
|
|
|
|
0
|
(13)
|
|
450,000
|
(12)
|
|
150,000
|
(13)
|
|
150,000
|
(13)
|
|
|
|
Stock
Options Accelerated
(5)
|
|
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Performance-based
RSUs Accelerated
(14)
|
|
|
|
|
0 - 207,448
|
|
|
359,951
|
|
|
359,951
|
|
|
359,951
|
|
|
|
|
Performance-based
MSUs Accelerated
(14)
|
|
|
|
|
0
|
|
|
133,670
|
|
|
133,670
|
|
|
133,670
|
|
|
|
|
Performance
Award Accelerated
|
|
|
|
|
0
|
(17)
|
|
1,000,000
|
(18)
|
|
791,667
|
(19)
|
|
791,667
|
(19)
|
|
|
|
Incremental
Pension Benefit
|
|
|
|
|
|
(15)
|
|
|
(16)
|
|
|
|
|
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
0
|
|
|
98,468
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
|
20,154 - 2,593,198
|
|
|
5,706,049
|
|
|
2,244,076
|
|
|
2,244,076
|
|
John E.
OHara
|
|
|
Severance
|
|
|
|
|
17,308 - 1,080,000
|
(3)
|
|
1,463,594
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
|
|
|
0 - 270,000
|
(8)
|
|
270,000
|
(9)
|
|
172,800
|
(10)
|
|
172,800
|
(10)
|
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 2012
cycle
|
|
|
|
|
44,733
|
(11)
|
|
44,733
|
(12)
|
|
44,733
|
(11)
|
|
44,733
|
(11)
|
|
|
|
2011 2013
cycle
|
|
|
|
|
0 - 108,333
|
(13)
|
|
162,500
|
(12)
|
|
108,333
|
(13)
|
|
108,333
|
(13)
|
|
|
|
2012 2014
cycle
|
|
|
|
|
0
|
(13)
|
|
300,000
|
(12)
|
|
100,000
|
(13)
|
|
100,000
|
(13)
|
|
|
|
Stock
Options Accelerated
(5)
|
|
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Performance-based
RSUs Accelerated
(14)
|
|
|
|
|
0 - 193,159
|
|
|
566,027
|
|
|
566,027
|
|
|
566,027
|
|
|
|
|
Performance-based
MSUs Accelerated
(14)
|
|
|
|
|
0
|
|
|
89,110
|
|
|
89,110
|
|
|
89,110
|
|
|
|
|
Incremental
Pension Benefit
|
|
|
|
|
|
(15)
|
|
|
(16)
|
|
|
|
|
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
0
|
|
|
94,367
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
|
17,308 - 1,707,475
|
|
|
2,990,331
|
|
|
1,081,003
|
|
|
1,081,003
|
|
80
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of Payment
or Benefit
|
|
Retirement
Eligible ($)
|
|
|
Involuntary Not for
Cause Termination ($)
(2)
|
|
|
Change of
Control with
Termination
(CIC) ($)
|
|
Death ($)
|
|
|
Disability ($)
|
Murray D.
Martin
|
|
|
Severance
|
|
|
|
|
38,462 - 3,450,000
|
(3)
|
|
5,850,718
|
(4)
|
|
|
|
|
|
|
|
|
|
Annual
Incentive
|
|
832,000
|
(10)
|
|
832,000
|
(20)
|
|
1,300,000
|
(9)
|
|
832,000
|
(10)
|
|
832,000
|
(10)
|
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2010 2012
cycle
|
|
1,757,500
|
(11)
|
|
1,757,500
|
(11)
|
|
1,757,500
|
(12)
|
|
1,757,500
|
(11)
|
|
1,757,500
|
(11)
|
|
|
|
2011 2013
cycle
|
|
1,583,333
|
(13)
|
|
1,583,333
|
(13)
|
|
2,375,000
|
(12)
|
|
1,583,333
|
(13)
|
|
1,583,333
|
(13)
|
|
|
|
2012 2014
cycle
|
|
875,000
|
(13)
|
|
875,000
|
(13)
|
|
2,625,000
|
(12)
|
|
875,000
|
(13)
|
|
875,000
|
(13)
|
|
|
|
Stock
Options Accelerated
(5)
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
|
|
Performance-based
RSUs Accelerated
(14)
|
|
777,092
|
|
|
777,092
|
|
|
1,532,777
|
|
|
1,532,777
|
|
|
1,532,777
|
|
|
|
|
Performance-based
MSUs Accelerated
(14)
|
|
|
|
|
0
|
|
|
779,731
|
|
|
779,731
|
|
|
779,731
|
|
|
|
|
Incremental
Pension Benefit
|
|
|
|
|
0 - 1,450,105
|
(15)
|
|
720,770
|
(16)
|
|
|
|
|
|
|
|
|
|
Financial
Counseling
(6)
|
|
|
|
|
0 - 11,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Medical
& other benefits
(7)
|
|
|
|
|
|
|
|
99,689
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
5,824,925
|
|
|
5,863,387 -
10,736,280
|
|
|
17,041,185
|
|
|
7,360,341
|
|
|
7,360,341
|
|
|
|
(1)
|
All data is shown assuming
termination on December 31, 2012.
|
(2)
|
Ranges represent variance between
the named executive officers basic severance plan and enhanced severance
payment as explained in the section entitled Explanation of Benefits Payable
Upon Various Termination Events on page 82 of this Proxy Statement.
|
(3)
|
If termination of employment falls
within the terms of the Pitney Bowes Severance Pay Plan, Mr. Lautenbach, Mr.
Monahan, Ms. Abi-Karam, Ms. OMeara, Mr. OHara and Mr. Martin would receive
a minimum of 2 weeks of base salary if they were terminated involuntarily and
not for cause. Under our enhanced severance policy, the named executive
officers could receive up to 78 weeks of base salary plus target bonus
contingent upon signing a waiver and release.
|
(4)
|
In October 2012, Pitney Bowes
Senior Executive Severance Plan was amended to eliminate excise tax gross-ups.
Executives now receive a best-net approach. For Mr. Monahan, Ms. Abi-Karam,
Ms. OMeara, Mr. OHara and Mr. Martin this amount represents either the full
value of the 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, or the value of the payment that is capped at the
280G limit, depending on which provides the higher after-tax benefit. For Mr.
Lautenbach, if during his first 18 months of employment, there is a change of
control and he resigns for good reason within the subsequent two years, he
will receive either the full value of the payment equal to 1.5 times the sum
of his current annual salary and current target bonus, or the value of the
payment that is capped at the 280G limit, depending on which provides the
higher after-tax benefit.
|
(5)
|
In cases of retirement, options
outstanding for at least one year will immediately vest and remain
exercisable for the balance of the option term. In cases of involuntary not
for cause termination, options outstanding for at least one year will
continue to vest and remain exercisable for 24 months following termination
of employment contingent upon signing a waiver and release. In cases of
change of control, death and disability, all outstanding options will
immediately vest and remain exercisable for the balance of the option term.
All unvested stock options are currently underwater.
|
(6)
|
Amount shown is the value of the
companys cost to provide financial counseling through the severance period,
which executive officers may receive for up to a maximum of 78 weeks.
|
(7)
|
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.
|
(8)
|
A prorated annual incentive is paid
at the lower of target or current bonus accrual as additional severance at
termination contingent upon signing a waiver and release. If a waiver and
release is not signed, no additional severance is paid.
|
(9)
|
Annual incentive is valued at the
targeted amount and is paid upon termination following a change of control.
|
(10)
|
A prorated annual incentive is paid
at the actual amount earned for 2012 at the time of the normal distribution
of annual incentives.
|
(11)
|
CIUs for 2010 2012 cycles are
valued at $0.74 per unit based upon actual achievement of performance metrics
for the 2010 2012 cycle. In the case of involuntary not for cause
termination for Mr. Monahan, Ms. Abi-Karam, Ms. OMeara, and Mr. OHara the
payment of this amount is subject to signing a waiver and release. This
amount was paid in February 2013 under the normal distribution of CIUs.
|
(12)
|
CIUs for 2010 2012 cycles are
valued at $0.74 per unit and paid in February 2013 under the normal
distribution of CIUs. CIUs for 2011 2013 and 2012 2014 cycles are valued
at the targeted amount which is $1.00 per unit.
|
(13)
|
CIUs for 2011 2013 and 2012
2014 cycles are estimated at the targeted amount which is $1.00 per unit.
Payment is prorated based upon time worked through the end of each cycle.
However, payment is not made until the end of the performance period and will
be paid based on actual results. For Mr. Monahan, Ms. Abi-Karam, Ms. OMeara
and Mr. OHara in the case of involuntary not for cause termination, no
payments are made for the 2012 2014 CIU cycle since the award has been
outstanding for less than one year and the 2011 2013 cycle payment is
subject to signing a waiver and release.
|
(14)
|
In the case of involuntary not for
cause termination for Mr. Monahan, Ms. Abi-Karam, Ms. OMeara and Mr. OHara
all performance-based RSUs outstanding for one year at the date of
termination will continue to vest up to 24 months following termination contingent
upon signing a waiver and release. Since Mr. Martin is eligible for
retirement, all performance-based RSUs outstanding for at least one year at
the date of termination will vest immediately. In the case of change of
control with termination all performance-based MSUs vest immediately with
shares for each outstanding cycle issued immediately at target. All
restrictions on performance-based RSUs lapse immediately upon death,
disability, or change of control with termination.
|
(15)
|
Amount shown is the increase in
lump-sum actuarial equivalent of the pension age, service and earnings
credits for the associated severance period. Mr. Lautenbach, Ms. OMeara and
Mr. OHara are not pension plan participants.
|
(16)
|
Amount shown is the increase in
lump-sum actuarial equivalent of the pension age and service credits for the
associated severance period. Mr. Lautenbach, Ms. OMeara and Mr. OHara are
not pension plan participants.
|
(17)
|
Outstanding 2011 performance award
is forfeited upon involuntary not for cause termination.
|
(18)
|
Outstanding 2011 performance award
is paid in full.
|
(19)
|
Outstanding 2011 performance award
is prorated based on the date of death or disability.
|
(20)
|
Since Mr. Martin is retirement
eligible, a prorated annual incentive is paid at the actual amount earned for
2012 at the time of the normal distribution of annual incentives. Upon
signing a waiver and release, in lieu of a prorated annual incentive being
paid at actual amount earned for 2012, a prorated annual incentive is paid to
Mr. Martin at targeted amount of $1,300,000 as additional severance at
termination.
|
81
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
|
Explanation
of Benefits Payable upon Various Termination Events
|
|
|
The benefits described below
apply to the NEOs.
|
Resignation
A voluntary termination would not provide any compensation, benefits or
special treatment under equity plans for any of the NEOs.
Early Retirement
The U.S. Pitney Bowes Pension Plan allows for early retirement at age 55
with at least ten years of service. Early retirement entitles NEOs 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;
|
|
●
|
MSUs
that have been outstanding for at least one year will fully vest with units
converted into stock at the end of the three-year vesting period based on
TSR.
|
The board of directors has the discretion to accelerate vesting of
restricted stock that would otherwise be forfeited.
Normal Retirement
The U.S. Pitney Bowes Pension Plan provides that normal retirement is
age 65 with at least 5 years of service. Mr. Martin is eligible for normal
retirement at this time. Normal retirement entitles NEOs to the following:
|
|
|
|
●
|
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;
|
|
●
|
MSUs
that have been outstanding for at least one year will fully vest with units
converted into stock at the end of the three-year vesting period based on
TSR.
|
Involuntary/Not for Cause Termination
We maintain 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, we 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.
Severance Pay Plan
The Severance Pay Plan provides for one week of salary continuation
benefits per year of service. Salary continuation benefits in excess of two
weeks of salary require a signed agreement containing a waiver and release.
There is a two week minimum benefit under the severance pay plan.
Conditional Severance
We may offer additional severance to employees, including NEOs, upon
termination of employment, conditioned upon signing a waiver and release.
Additional severance could include the following payments:
|
|
|
|
●
|
Severance pay is based on years
of service and level within the company. All NEOs are eligible for 78 weeks
of pay including current base salary plus current target annual incentive.
|
|
●
|
A prorated annual incentive
award to the date of termination of employment;
|
|
●
|
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;
|
|
●
|
For NEOs, stock options, RSUs
and MSUs 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;
|
82
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
|
|
|
|
●
|
The
board of directors has the discretion to accelerate vesting of restricted
stock and RSUs that would otherwise be forfeited;
|
|
●
|
Pension
benefit calculation includes service credit and earnings during the severance
period;
|
|
●
|
Financial
counseling through the severance period; and
|
|
●
|
Outplacement
services.
|
Termination for Cause
Termination for cause would not provide any additional compensation,
severance, benefits or special treatment under equity plans to any of the NEOs.
Death
The NEOs beneficiary would be entitled to the following upon the
executives death:
|
|
|
|
●
|
A
prorated annual incentive award;
|
|
●
|
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 NEOs beneficiary can exercise stock
options during the remaining term of the grant;
|
|
●
|
Restrictions
on outstanding shares of restricted stock and RSUs will be removed;
|
|
●
|
MSUs
will fully vest with units converted into stock at the end of the three-year
vesting period based on TSR; and
|
|
●
|
For Ms.
Abi-Karam and Ms. OMeara, a prorated 2010 Cash Performance Award.
|
Disability
Disability vesting occurs after the completion of two years of long-term
disability or on the date of termination of employment due to disability,
whichever is earlier. The NEOs 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 vesting date. Stock options can be exercised during the
remaining term of the grant;
|
|
●
|
Restrictions on outstanding
shares of restricted stock and RSUs will be removed;
|
|
●
|
MSUs will fully vest with units
converted into stock at the end of the three-year vesting period based on
TSR; and
|
|
●
|
For Ms. Abi-Karam and Ms.
OMeara, a prorated 2010 Cash Performance Award.
|
Change of Control Arrangements
Set forth below is a summary of our change of control arrangements.
Under our change of control arrangements, a Change of Control is defined as:
|
|
|
|
●
|
The board of directors approved
a change in the definition of Change of Control dealing with the acquisition
of company shares. Under the new definition, a Change of Control would occur
if there is an acquisition of 30% (previously 20%) or more of our common
stock or 30% (previously 20%) or more of the combined voting power of our
voting securities by an individual, entity or group;
|
|
●
|
the replacement of a majority of
the board of directors other than by approval of the incumbent board;
|
|
●
|
the consummation of a
reorganization, merger, or consolidation where greater than 50% of our common
stock and voting power changes hands; or
|
|
●
|
the approval by stockholders of
the liquidation or dissolution of the company.
|
In October 2012, the board of directors amended the Pitney Bowes Senior
Executive Severance Plan to eliminate excise tax gross-ups. 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 NEOs receive a
best net approach as it relates to the following:
|
|
|
|
|
●
|
Either (i) the full value of the
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, or (ii) the value of the payment that is capped at the 280G
limit, depending on which provides the higher after-tax benefit.
|
|
|
●
|
During the first 18 months of
employment, Mr. Lautenbach is entitled to one and one-half times current base
salary and target bonus. Bonus will be payable in a lump sum. After 18 months
of employment, upon a
|
83
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
|
|
|
|
|
|
|
|
|
Change
of Control or resignation for Good Reason within two years subsequent to a
Change in Control Mr. Lautenbach would receive two times current base
salary and current target bonus. Bonus will be payable in a lump sum.
|
|
|
●
|
Effective
February 11, 2013, the severance benefits payable to all NEOs (other than Mr.
Lautenbach whose benefit is described above) upon a change of control were
reduced to two 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;
|
|
●
|
All
stock options, restricted stock, RSUs and MSUs granted under the 2007 Plan
will vest upon the employees termination and stock options can be exercised
during their remaining term;
|
|
●
|
For Ms.
Abi-Karam and Ms. OMeara, the 2010 Cash Performance Award would be paid in
full upon termination prior to the vesting date;
|
|
●
|
Only age
and service credits 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. Effective February 11, 2013, health and welfare benefits
for the executive and his or her dependents will be provided for a two-year
period; and
|
|
●
|
Outplacement
services.
|
Internal Revenue Code Section 409A
Our benefits arrangements are intended to comply with Section 409A of
the Code. In that regard, Key Employees as defined in Sections 409A and 416
of the Code may have certain payments delayed until six months after
termination of employment.
|
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 Morrow & Co., LLC
to aid in the solicitation of proxies.
The anticipated fee of such firm is $10,000 plus out-of-pocket costs and
expenses. The cost of solicitation will be borne entirely by Pitney Bowes.