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 primarily based on
achievement of enterprise-wide objectives and individual performance. We emphasize enterprise-wide performance to break down any
internal barriers that can arise in organizations that emphasize individual performance.
Our executive compensation program is designed to recognize
and reward outstanding achievement and to attract, retain and motivate our leaders. In addition, we directly engaged with many
of our stockholders in 2013 to solicit feedback on our executive compensation programs to ensure they are appropriately aligned
with stockholder interests.
The chart below shows the 2013
targeted compensation mix for the CEO and other NEOs compared with the targeted average compensation of our peer group as
reported in their 2013 proxy statements. As illustrated in the chart, our compensation is (i) well aligned to the
compensation mix of our peer group and (ii) predominantly variable. The specific proportion of each compensation element
below may change with changes in market practice or performance considerations.
We design the mix of short and long-term incentives to reward
and motivate short-term performance, while at the same time providing significant incentives to keep our executives focused on
longer-term corporate goals that drive stockholder value. In addition, we believe this balance of short-term and long-term incentive
compensation and mix of performance criteria helps mitigate the incentive for executives to take excessive risk that may have
the potential to harm the company in the long-term. We monitor the structure annually to make sure that it does not incentivize
excessive risk and report our findings to the Committee.
In determining our executive’s grant levels, we take into
consideration the following:
Due to the qualitative nature of these considerations, we do
not assign specific weightings or numerical goals to them.
The Committee is responsible for
determining the compensation for all NEOs, other than the CEO, and for recommending to the board of directors each specific
element of compensation for the CEO. The Committee considers recommendations from the CEO regarding the compensation of the
other NEOs. The independent board members are responsible for determining the CEO’s compensation. No member of the
management team, including the CEO, has a role in determining his or her own compensation. For each NEO, the Committee sets,
as a guideline, target total direct compensation levels so the base salary, total cash compensation, and total direct
compensation is at +/– 20% of the median of the competitive data based on the Towers Watson Regressed Compensation
Report, as regressed for companies approximately our size, and the Radford High-Tech Industry Survey focusing on companies
with revenue scopes similar to ours for each position. We describe these two reports in more detail under “Assessing
Competitive Practice” beginning on page 51 of this proxy statement. In order to attract specific talent, the general
+/– 20% of the median guideline may be exceeded. For 2013, the total target cash compensation (base salary plus annual
incentive) and total target direct compensation (base salary plus annual incentive plus long-term incentive) for Mr.
Lautenbach were 88% and 92%, respectively, of the average of the Survey Reports for chief executive officers. For the NEOs,
as a group, the average total target cash compensation and total direct compensation were 107% and 108%, respectively, of the
average of the Survey Reports.
COMPENSATION DISCUSSION AND ANALYSIS
The following table outlines the components of direct compensation
for our NEOs and how they align with our compensation principles.
|
|
|
How
it Aligns
|
|
Fixed
or
|
|
Cash
or
|
|
What
it Rewards
|
|
With
Our Principles
|
|
Performance-Based
|
|
Equity
|
Base Salary
|
•
•
|
Performance
of daily job duties
Highly developed
skills and abilities critical
to the success of the company
|
•
|
Competitive
in the markets in which we operate
enabling us to attract and
retain executive talent
|
•
•
|
Fixed compensation
Increases influenced
by executive’s
individual performance rating
|
•
|
Cash
|
Annual Incentive
|
•
|
Achievement
of pre-determined short-term objectives established
in the first quarter
of each year
|
•
•
•
|
Competitive
incentive targets enable us to attract
and retain executive talent
Payout dependent
on achievement of objectives aligning pay to performance
Subject to a
“clawback” (See “Clawback Policy”
on page 53 of this proxy statement)
|
•
•
•
|
Performance-based
compensation primarily measured on achievement of enterprise-wide
metrics
Individual performance
may be considered in establishing executives’
annual incentive opportunity
Up to a maximum
of $4,000,000 per NEO granted under
the Key Employees
Incentive Plan (KEIP)
|
•
|
Cash
|
Long-term
Incentives
|
|
Cash Incentive
Units (CIUs) (60% in 2013; eliminated in 2014)
|
•
•
|
Achievement
of pre-determined long-term objectives and annual objectives established
in the first quarter
of the first year and the first
quarter of each year, respectively, of the three year
cycle
Change
in company’s stock price versus
S&P 500 companies for
the 2011-2013 CIU award and versus the company’s peer group for the 2012-2014 CIU award payout
|
•
•
•
|
Payout dependent
on achievement of long-term objectives aligning
pay to long-term performance
The resulting
unit value is modified by up
to +/–25% based on TSR. For
the CIU award cycle 2011-2013,
the company’s TSR
was compared to the TSR of companies
within the S&P 500. For
subsequent CIU award cycles, the
comparison is to the company’s
peer group. The application
of the TSR Modifier links
the CIU payout to stockholder return
versus the comparator group of
companies. TSR Modifier cannot
be positive if there
is a negative TSR over the three-year
cycle
3-year performance
period cycle thereby promoting
retention
|
•
•
|
Performance-based compensation measured
on enterprise-wide metrics
Up to a maximum
in any one year of $8,000,000
per NEO granted under
the KEIP
|
•
|
Cash
|
Performance
Stock Units (PSUs) (0% in 2013; 70% in 2014)
|
•
•
|
Achievement
of pre-determined long-term objectives and annual objectives established
in the first quarter
of the first year and the first
quarter of each year, respectively, of the three year
cycle
Change
in company’s stock price compared
to peer group starting
in 2014
|
•
•
|
Shares vested
dependent on achievement of long-term objectives aligning
pay to performance
The resulting
number of shares vested is modified
by up to +/-25% based on 3-year cumulative
TSR as compared to 3-year
cumulative TSR of our peer group,
further linking compensation
to stockholder return. TSR Modifier
cannot be positive if there
is a negative TSR over the three-year
cycle
|
•
•
|
Performance-based compensation measured
on enterprise-wide metrics
Up to a maximum
of 1,200,000 shares including RSUs
per NEO in any plan year granted
under the 2013 Stock Plan
|
•
|
Equity
|
|
|
•
|
3-year performance
period cycle thereby promoting
retention
|
|
|
|
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
|
How it Aligns
|
|
Fixed or
|
|
Cash or
|
|
What it Rewards
|
|
With Our Principles
|
|
Performance-Based
|
|
Equity
|
Performance-Based Restricted Stock Units (RSUs) (40% in 2013; 30% in 2014)
|
•
•
|
Achievement of a pre-determined performance objective established at the time of grant
Company stock value
|
•
•
•
|
Vesting
dependent on achievement of a pre-determined performance objective aligning pay to performance
3-year pro-rata vesting
beginning 2014 thereby promoting retention for executives; 4-year pro-rata vesting in 2013
Award value linked to company’s stock price
|
•
•
|
Performance-based compensation measured on a threshold financial target for IRC 162(m) purposes
Up to a maximum of 1,200,000 shares including performance stock units per NEO, in any plan year granted under the 2013 Stock Plan
|
•
|
Equity
|
Long-term Incentives
|
|
Market Stock Units (granted only in 2012)
|
•
•
|
Achievement of a pre-determined performance objective established at the time of grant
Company stock value
|
•
•
•
|
Vesting dependent on achievement of a pre-determined performance objective aligning pay to performance and on formula based on TSR over the three-year cycle
3-year cliff vesting thereby promoting retention
Award value linked to company’s stock price
|
•
•
|
Performance-based compensation measured on a threshold financial metric for IRC 162(m) purposes
Up to a maximum number of shares per NEO (600,000 in 2012), including grants of RSUs, in any plan year granted under the 2007 Stock Plan
|
•
|
Equity
|
Periodic Off-cycle Long-term Awards
|
•
|
The Committee may also grant other long-term incentive awards in unique circumstances where needed for attracting, retaining or motivating executive talent
|
•
|
All long-term incentives are subject to a “clawback” (See “Clawback Policy” on page 53 of this proxy statement)
|
•
|
Depends on award granted
|
•
|
Cash or Equity
|
We also provide certain other benefits for our NEOs, including
retirement benefits and deferred compensation plans. For additional information, please see “Other Indirect Compensation”
on page 48 of this proxy statement.
2013 Compensation
Overview
In February 2013, the Committee
implemented changes to the compensation program in response to feedback received from the company’s stockholders. These
changes ensured a stronger link between company financial performance and executive compensation and will be reflected
beginning with the February 2014 payouts.
Base Salary
In February 2013, based on the business results for 2012, the
Committee and the independent directors froze the base salaries for the CEO and the NEOs. The
company also imposed a freeze on the base salaries of the broad-based
employee population.
COMPENSATION DISCUSSION AND ANALYSIS
Annual Incentives
NEOs are eligible for annual incentives under the KEIP primarily
for achieving challenging enterprise-wide financial objectives established at the beginning of
each year. Individual performance and its impact on financial,
strategic, unit or individual objectives may be considered.
2013 Annual Incentive Objectives and Metrics
In 2013, 100% of the annual incentive was based on financial
objectives which are shown in the chart below. The chart also shows the threshold, target, and maximum ranges.
Financial Objectives
|
Weighting
|
Threshold
|
Target
|
Maximum
|
Adjusted Earnings Before
Interest and Taxes
(1)
|
35%
|
$673 million
|
$727 million
|
$779 million
|
|
|
|
|
|
Revenue Growth
(1)
|
25%
|
–1.2%
|
0.6%
|
2.8%
|
|
|
|
|
|
Adjusted Free Cash Flow
(1)
|
40%
|
$573 million
|
$623 million
|
$673 million
|
(1)
|
Adjusted earnings before interest and taxes, 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 55 of this proxy statement. Threshold, target and maximum amounts have been restated to
exclude PBMS, IMS, and Nordic furniture.
|
We believe that together these financial objectives effectively
measure how well our business is performing on a short-term basis and thus represent appropriate metrics upon which to base annual
incentive awards. In 2012 our stockholders expressed concern regarding duplicative financial metrics in our short and long-term
compensation programs. In response to that concern, we replaced the earnings per share metric with an Adjusted earnings before
interest and taxes metric for the 2013 annual incentive program.
|
•
|
Adjusted EBIT is a stronger measure for annual incentive
compensation because it more directly reflects current profitability and performance.
|
|
•
|
Revenue growth is an appropriate measure because it indicates
whether our business is expanding.
|
|
•
|
Adjusted free cash flow is an appropriate measure of the
company’s ability to pursue discretionary opportunities that enhance stockholder value.
|
Each of these metrics exclude the impact of certain special
items, both positive and negative, which could mask the underlying trend or performance within a business.
We set the targets for the Adjusted
earnings before interest and taxes and Adjusted free cash flow financial objectives at approximately the midpoint of our
guidance provided to stockholders and the financial community at the beginning of 2013. We set the target for 2013 revenue at
the lower end of guidance because we believed achieving that goal would be challenging in light of continuing uncertainties
in the core business environment and the transformational changes being made inside the company. The only revision to targets
during the course of the year reflected the revision to guidance announced as a result of the sale of PBMS, IMS and our
Nordic furniture business. We believe that the 2013 financial objectives at each level (threshold, target and maximum)
accurately balance difficulty of attainment of the level with the related payout. In 2013, we increased the weighting of the
financial metrics to be 100%, from 70%, of the annual incentive design. This demonstrates our commit-
ment to place more rigor in
the payouts and reflects stockholder feedback. While strategic metrics did not play a primary role in the annual incentive
design, we included these important goals as a zero to 10% modifier to the ultimate payout. Strategic goals are targets that
are important to the successful operation of the enterprise above and beyond financial goals. The strategic goals for
2013 included improving client satisfaction and implementing a culture change throughout the organization. These
important strategic goals are the foundation for our future business success. Depending on the achievement of the strategic
goals, the annual incentive multiplier may be increased by 0% to 10%.
Funding of the Annual Incentive Pool and 2013 Actual Payout
Funding of the annual incentive pool begins with the sum of
the annual incentive targets of eligible Pitney Bowes Incentive Plan (PBIP) participants. For more information on setting the
target see “Assessing Competitive Practice” on page 51. After the close of the calendar year, the Committee determines
the company’s achievement of the overall financial results against each metric (see above) and approves a multiplier to
be applied to the sum of the annual incentive targets. For NEOs, executive officers, unit presidents and staff vice presidents
the annual incentive is only paid if the company achieves its IRC 162(m) threshold target of $276,086,000 in income from continuing
operations, excluding certain special events. (See “Treatment of Special Events” beginning on page 55 of this proxy
statement.) This IRC 162(m) target is an additional target intended to ensure tax deductibility of compensation paid. Actual 2013
Adjusted income from continuing operations, excluding all special events, was $380,668,000. The IRC 162(m) threshold target income
from continuing operations was restated to exclude the PBMS, IMS and Nordic furniture businesses sold.
The chart below shows actual financial results and the payout
as compared to target.
COMPENSATION DISCUSSION AND ANALYSIS
Objectives
|
Target Weighting
|
Actual Result
|
Actual Payout as a % of Target
|
Financial Objectives:
|
|
|
|
Adjusted Earnings Before
|
35%
|
$714 million
|
32.4%
|
Interest and Taxes
(1)
|
|
|
|
Revenue Growth
(1)
|
25%
|
(-0.8%)
|
19.0%
|
Adjusted Free Cash Flow
(1)
|
40%
|
$655 million
|
49.0%
|
Total
|
100%
|
n/a
|
100.5%
|
(1)
|
Adjusted EBIT, 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 55 of this proxy statement.
|
The Committee compared the 2013 performance
against the financial targets and approved a 2013 annual incentive multiplier of 100.5%. Next the Committee assessed the predetermined
strategic goals for 2013 which included improving client satisfaction and implementing a culture change throughout the organization.
|
•
|
With respect to the client satisfaction goal, the Committee
noted that the company successfully implemented the Net Promoter Score (NPS) universal metric across four key business units,
established a baseline metric and a monthly management process. The Committee also noted that the company showed improvement among
four core relationship drivers - sales support, products and services, customer support and customer communications - within those
business units. The client satisfaction threshold, target, and maximum objectives were to achieve a 3%, 5% or 10% improvement
in these four core relationship drivers in reducing the gap to goal. The company ultimately achieved a 9% improvement in closing
the gap to goal among these relationship drivers, which was slightly below the maximum achievement of 10%.
|
|
•
|
In considering the culture metric, the Committee noted
that the company far exceeded the maximum objective of achieving 2% improvement in each of the company’s core principles
of Client Centricity, Accountability, One Team, Sense of Urgency, and Shared Vision, plus almost achieved the maximum 6% improvement
in employee engagement by ending with a 5% improvement in that metric.
|
Noting the significant progress made in addressing
client satisfaction across the four key business units and achieving outstanding results in implementing a culture change throughout
the organization, the Committee, and independent board members with respect to the CEO, added a 9% strategic modifier resulting
in a final annual incentive multiplier of 109.5%.
Based on the above analysis, Mr. Lautenbach
made recommendations to the Committee for his direct reports. The Committee considered those recommendations and the actual performance
against objectives as shown, resulting in the annual incentive awards to our NEOs as follows:
Executive
|
|
Target Award
|
|
Payout
|
|
Payout Percent to Target
|
Marc B. Lautenbach
|
|
$
|
1,105,000
|
|
|
$
|
1,209,975
|
|
|
|
109.5
|
%
|
Michael Monahan
|
|
$
|
462,720
|
|
|
$
|
506,678
|
|
|
|
109.5
|
%
|
Abby F. Kohnstamm
(1)
|
|
$
|
241,797
|
|
|
$
|
264,768
|
|
|
|
109.5
|
%
|
Daniel J. Goldstein
|
|
$
|
286,440
|
|
|
$
|
313,652
|
|
|
|
109.5
|
%
|
Mark F. Wright
|
|
$
|
300,000
|
|
|
$
|
328,500
|
|
|
|
109.5
|
%
|
Leslie Abi-Karam
|
|
$
|
444,320
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Vicki A. O’Meara
|
|
$
|
419,200
|
|
|
|
N/A
|
|
|
|
N/A
|
|
(1)
|
Ms. Kohnstamm’s annual incentive is prorated based on her June 17, 2013 start date.
|
COMPENSATION DISCUSSION AND ANALYSIS
Long-term Incentives
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. In 2013, the long-term incentive
mix consisted of 60% CIUs and 40% RSUs.
Cash Incentive Units (CIUs)
CIUs are long-term cash awards granted
annually with three year performance and vesting cycles. The vesting of long-term incentive awards are generally subject to
achieving an initial financial threshold target established for purposes of IRC 162(m). 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. Beginning with the 2014
– 2016 cycle, we have eliminated this component of LTI compensation and replaced it with Performance Stock Units,
discussed below.
The Committee believes that Adjusted earnings per share
and Adjusted free cash flow are important indicators of
our long-term viability and performance and thus appropriate metrics
upon which to base long-term incentive awards. Adjusted earnings per share is an appropriate measure of long-term
profitability, and a strong Adjusted free cash flow 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 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. Before finalizing payouts, the
Committee compares the company’s cumulative three-year TSR to a cumulative three-year TSR of the company’s peer group.
The Committee believes it sets the 2013 objectives with the appropriate level of difficulty and stretch for each target.
CIU Objectives and Metrics
The 2011 – 2013 financial objectives, each weighted at
50%, are stated below:
2011 – 2013 LTI Adjusted Earnings Per Share
(1)
|
Threshold
|
Target
|
Maximum
|
2011
|
$1.78
|
$2.23
|
$2.27
|
2012
|
$1.72
|
$2.15
|
$2.19
|
2013
|
$1.53
|
$1.71
|
$1.88
|
|
|
|
|
2011 – 2013 LTI Adjusted Free Cash Flow
(1)
|
Threshold
|
Target
|
Maximum
|
2011
|
$729
|
$819
|
$850
|
2012
|
$684
|
$760
|
$790
|
2013
|
$573
|
$623
|
$673
|
(1)
|
Adjusted earnings per share and Adjusted free cash flow
(in millions) 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 55 of this proxy statement.
|
2013 Funding of the Cash Incentive Unit Pool and Actual Payout
For the 2011 – 2013 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, therefore linking payout to our relative TSR.
For NEOs, executive officers, unit
presidents and staff vice presidents the 2011 – 2013 CIU cycle is only paid if the company achieves an IRC 162(m)
threshold target of average income from continuing operations over the cycle of $298,086,000, excluding certain special
events. (See “Treatment of Special Events” beginning on page 55 of this proxy statement.) Adjusted average annual
income from continuing operations for the 2011 – 2013 CIU cycle exceeded the threshold and was $426,332,000. The IRC
162(m) threshold target for income from continuing operations on the 2011 – 2013 period was restated to exclude PBMS,
IMS and Nordic furniture.
COMPENSATION DISCUSSION AND ANALYSIS
The chart below shows actual results as compared to target before
and after applying the TSR Modifier for the 2011 – 2013 cycle.
|
|
Metric
|
|
Final
|
Objectives
|
Actual Result
|
Payout Value
|
TSR Modifier
|
Payout Value
|
2011 – 2013 LTI Adjusted
|
|
|
|
|
Earnings Per Share
(1)
|
|
|
|
|
2011
|
$2.70
|
$0.30
|
(25%)
|
$0.23
|
2012
|
$2.16
|
$0.20
|
(25%)
|
$0.15
|
2013
|
$1.88
|
$0.33
|
25%
|
$0.41
|
2011 – 2013 LTI Adjusted
|
|
|
|
|
Free Cash Flow
(1)
|
|
|
|
|
2011
|
$994 million
|
$0.30
|
(25%)
|
$0.23
|
2012
|
$767 million
|
$0.20
|
(25%)
|
$0.15
|
2013
|
$655 million
|
$0.27
|
25%
|
$0.34
|
Total
|
|
$1.60
|
|
$1.50
|
1)
|
Adjusted earnings per share 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 55 of this proxy statement. The sum of the Adjusted earnings
per share and Adjusted free cash flow may not equal the totals due to rounding.
|
The TSR Modifier in aggregate decreased the CIU pay-out level
for the 2011 – 2013 cycle by 6%.
The CIU payout in February 2014, for 2011-2013 cycle, was $1.50.
This compares to the 2010-2012 cycle pay-out which was $0.74, after the Committee applied negative discretion.
Performance-Based Restricted Stock Units
An annual grant of performance-based restricted stock units
(RSUs) is made during the first quarter of the year.
For NEOs, executive officers, unit presidents and staff vice
presidents, no performance-based restricted stock units (RSUs) will vest unless the company achieves its IRC 162(m) threshold
target of $276,086,000 income from continuing operations, excluding certain special events. (See “Treatment of Special Events”
beginning page 55 of this proxy statement.) Actual 2013 Adjusted income from continuing operations, excluding all special events,
was $380,668,000, which exceeded the target. The IRC 162(m) threshold targets for income from continuing operations and actual
2013 income from continuing operations were restated to exclude PBMS, IMS and Nordic furniture.
The 2013 award vests 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 2013 would have been forfeited.
Performance-Based Market Stock Units
Performance-based market stock units
(MSUs) were granted to executive officers, including NEOs, in February 2012 for the first and only time. The number of MSUs
that can vest is capped at 200% of the number of MSUs originally granted. A minimum number of shares, comprising 50% of the
award, will vest at the end of the three-year performance period.
Because the IRC 162 (m) threshold
target was achieved, the 2012 award will vest on the third anniversary of the grant 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
In 2013, the Committee determined that MSUs would no longer
be a part of the company’s executive compensation structure.
(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 price of company stock for the 20 trading days ending with the grant date.
|
COMPENSATION DISCUSSION AND ANALYSIS
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. In February 2013, the independent board members awarded the second and final tranche of premium-priced
stock options promised to Mr. Lautenbach upon commencement of his employment in December 2012. These options were awarded at a
160% premium to the award date stock price. In July 2013, the Committee awarded a one-time grant of 400,000 premium-priced stock
options, with a premium ranging from 115% to 160% of the award date stock price, to Mr. Monahan for retention purposes.
See details of the grants for Mr. Lautenbach and Mr. Monahan
in the “Grants of Plan-Based Awards in 2013” table on page 59 of this proxy statement.
2014 LTI Design Mix
In November 2013, reflecting the tenor of comments made by stockholders,
the Committee changed the design mix for the 2014 LTI awards to 100% equity to further align long-term incentives with long-term
stockholder interests. The 2014 LTI design mix will be 70%
performance stock units (PSUs) and 30%
performance-based RSUs, both paid in stock. The long-term executive compensation structure will be entirely impacted by
changes in company stock price.
PSUs, which the Committee decided will be granted in place of
CIUs beginning in 2014, have many of the same features as the previously granted CIUs, except that the PSUs are based on and settled
in stock instead of cash. The new LTI mix of 100% equity further aligns the LTI program with market best practices. In addition,
the vesting period for the RSUs was changed from four years to three years.
Because PSUs are equity-based and
CIUs are cash-based, beginning in 2014, the Summary Compensation Table will reflect for reporting purposes only
a “bunching” of award values. The outstanding and previously granted cash-based CIU awards will continue to
be reflected as required under SEC rules when paid, but the equity denominated PSUs are required to be reported when granted.
The result will look like the total value of LTI has increased when in fact it only reflects the different timing of when
cash versus equity is reported. Since outstanding and previously awarded CIU awards will continue to vest through 2016,
this “bunching” effect will continue through 2016.
Other Indirect Compensation
Retirement Compensation
In the United States, retirement benefits include:
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Qualified and nonqualified restoration pension plans for
employees hired prior to January 1, 2005.
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•
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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.
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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 (IRC). 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:
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is adjusted on the basis of notional investment returns
of publicly-available mutual fund investments; and
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•
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does not receive any above-market earnings.
|
The Pension Restoration Plan applies the same standard actuarial
rules as are applied under the qualified Pension Plan.
Effective April 1, 2013, the board of directors approved the
freezing of all future Pension Plan benefit accruals for employees with fewer than 16 years of service as of
March 31, 2013. Employees with 16 or more years of 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 amendments were adopted with respect to the Pension Restoration Plan. At the same time, the board
of directors amended the 401(k) Plan, effective April 1, 2013, to provide eligibility to participate in the 2% employer core contribution
to those employees who will no longer accrue benefits under the Pension 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, 2013” table on page 65 and the narrative accompanying the “Nonqualified
Deferred Compensation for 2013” table on pages 66 and 67 of this proxy statement.
Other Benefits
Other benefits include:
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Nonqualified Deferred Incentive Savings Plan:
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º
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Provides a savings vehicle in a tax efficient manner
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º
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Provides certain executives the ability to voluntarily
defer payouts of annual cash incentives, CIUs and base pay into a nonqualified deferred compensation plan
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•
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Limited additional benefits, including, financial counseling
to assist with tax law compliance and
|
COMPENSATION DISCUSSION AND ANALYSIS
to provide guidance in managing complex investment, tax, legal
and estate matters; up to a maximum of $7,500 per year
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•
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Relocation assistance for executives asked to move to a
new work location facilitates the place-
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ment of the right person in the job and aids in developing talent
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Executive physical
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Spousal travel
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Process for Determining Named Executive Officer Compensation
Committee
The Committee is responsible for
reviewing the performance of and approving compensation awarded to our executive officers, other than the CEO. The
independent board members, with the input of the Committee, annually set the CEO’s 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 LLC, and management to examine various pay and performance matters throughout the year.
Independent Compensation Consultant
The Committee hired Pay Governance as
its independent compensation consultant in June, 2012. 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. The
consultant does not perform other services for the company. We incurred $145,396 in fees for Pay Governance for services
performed for the Committee during 2013. The Committee considered the following six factors and determined there was no
conflict in the engagement of Pay Governance and that Pay Governance is independent: i) the provision
of other services to the company by Pay Governance; (ii) the
amount of fees received from the company 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 company 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 the company’s
executive officers. The Committee has the sole authority to hire and terminate its consultant.
COMPENSATION DISCUSSION AND ANALYSIS
Determining Compensation—The Decision Process
At the beginning of each year our CEO, on behalf of senior management,
recommends to the Committee financial objectives for the incentive plans based on the financial 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.
After reviewing benchmarking data presented by external consultants,
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 management’s recommendations and determines the appropriate financial 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 CEO’s 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 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 accomplishments of the company, taking into account predetermined objectives for the preceding year,
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 CEO’s compensation. The actual payout levels for annual
incentive compensation are based upon the com-
pany’s performance against the predetermined financial
objectives and other criteria, as discussed in further detail under “Annual Incentives” beginning on page 44. 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 46 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 officer’s compensation, summarizing the total
compensation opportunity, including the executive’s 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 evaluate whether each NEO’s compensation package is
competitive with the marketplace, the Committee, and with respect to the CEO, the independent board members, also reviews each
executive’s total direct compensation against market data during the benchmarking process as more fully described in “Assessing
Competitive Practice” 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.
COMPENSATION DISCUSSION AND ANALYSIS
Assessing Competitive Practice
To evaluate whether Pitney
Bowes’ executive compensation is competitive in the marketplace, the Committee annually compares each executive’s
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, the Towers Watson Regressed Compensation Report (Towers
Watson Report), and the Radford High-Tech Industry Survey Report (Radford Report). We then review the targets and actual
payouts against publicly available data from our peer group to evaluate ongoing compensation opportunity and competitiveness.
Finally, the Committee’s independent compensation consultant reviews the data presented to the Committee, before the
Committee establishes the target total direct compensation structure. The Committee sets compensation targets on the
assumption that specific incentive award performance objectives are achieved at their target level. The Towers Watson data is
regressed for corporate revenue of approximately $4.0 billion for corporate leaders and actual regressed revenue for business
unit leaders. The Radford Report bases its analysis on applicable revenue ranges as they pertain to various roles. The
Committee believes using the Towers Watson Report regressed revenue scope and the revenue ranges in the Radford Report more
accurately reflect market competitiveness against outside companies. However, the 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 Towers Watson Report is a sub-section of the 2013 US CDB General Industry Executive
Database. The Radford Report is derived from a database of survey results from high-tech companies.
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 serves 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
the Towers Watson Report, the Radford Report and the 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:
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the value of the total rewards package;
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•
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program design and strategic considerations;
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affordability;
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•
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changing competitive conditions;
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•
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program transition considerations;
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•
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the definition and scope of the executive’s role;
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•
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the executive’s individual contributions to the company; or
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•
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succession or retention considerations.
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In making its determination that the Pitney Bowes compensation
package is appropriate and competitive, the
Committee takes the following actions. The Committee first references
for each NEO the median of the data presented in the Towers Watson and Radford Reports in determining target base salary, target
total cash compensation and target total direct compensation. However, in making its final determination on any one position,
the Committee will also take into account unique skill sets presented by the employee in high-growth areas targeted by the company.
In addition, as a supplement to the Towers Watson and Radford information, the Committee asks Pay Governance to perform its analysis
and provide its opinion on the 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 of equity-based
awards. Burn rate is the total equity awarded in a fiscal year divided by the total common stock outstanding at the beginning
of the year. Our three-year average burn rate of 1.00% for the time period from 2011 to 2013 is below the median burn rate of
1.72% for S&P 1500 companies in fiscal year 2012 (source: Equilar 2013 Equity Trends Report).
Next, the Committee annually reviews our relative performance,
compensation targets and actual payouts against the relative performance and compensation of the peer group listed below.
Based on this rigorous review, the Committee has determined
that the Pitney Bowes total compensation package for 2013 is appropriate and competitive considering all the factors outlined
above.
PEER GROUP
Although we do not have a single
completely overlapping competitor due to the unique mix of our business, we use a peer group of companies similar in size and
complexity to benchmark our executive compensation against. In 2013, the Committee changed the composition of the peer group
to reflect the sale of Pitney Bowes Management Services (PBMS) and the company’s enhanced focus on software and
technology. 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 our business. 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 Committee also considered feedback received from stockholders. The new peer group consists of companies
with revenues between $2.7 billion and $22.3 billion, and market capitalization between $1.5 billion and $16.4 billion.
COMPENSATION DISCUSSION AND ANALYSIS
Based upon these considerations, the Committee eliminated the
following companies from the prior peer group:
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•
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Agilent Technologies
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|
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|
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•
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Avery Dennison
|
The Committee eliminated Agilent
Technologies because of its primary focus on bioanalytical solutions, a business that does not closely reflect our portfolio.
The Committee removed Avery Dennison to reflect our emphasized focus on technology and software following the sale of
PBMS.
The Committee added the following companies to the peer group:
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EchoStar Corp.
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•
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Fidelity National Information Services, Inc.
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•
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The Western Union Co.
|
The Committee added EchoStar Corp.
since it is an appropriately-sized equipment manufacturing business, Fidelity National Information Services, Inc. because of
its focus on data processing solutions and services, similar to the geocoding and address processing services we provide to
our clients and the Western Union Co. because of its focus on financial transactions as well as data processing and
outsourcing services, which are similar to our leasing, banking and processing services functions. The Committee decided to
continue to include Xerox in our peer group despite the revenue size difference because the Committee considers it our
closest direct peer in the office equipment space and it also is undergoing a similar transformation in its core
business.
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Peer Group
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Fiscal 2013
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12/31/2013
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Revenue
|
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Market Capitalization
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Total Stockholder Return
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Company Name
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($ millions)
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($ millions)
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1-Year
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3-Year
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5-Year
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Alliance Data Systems Corporation
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4,150
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12,808
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82
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%
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55
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%
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41
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%
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Diebold, Incorporated
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2,886
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2,107
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12
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%
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5
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%
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7
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%
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DST Systems Inc.
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2,650
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3,827
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52
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%
|
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29
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%
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20
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%
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EchoStar Corp.
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3,261
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|
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4,494
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|
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45
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%
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26
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%
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27
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%
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Fidelity National Information Services, Inc.
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5,992
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15,628
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57
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%
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27
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%
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29
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%
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Fiserv, Inc.
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4,742
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15,231
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|
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49
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%
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26
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%
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27
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%
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Harris Corporation
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5,042
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7,461
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47
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%
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19
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%
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17
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%
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Iron Mountain Inc.
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3,016
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|
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5,803
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|
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1
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%
|
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15
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%
|
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|
9
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%
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Lexmark International Inc.
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3,629
|
|
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|
2,206
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|
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59
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%
|
|
|
4
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%
|
|
|
8
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%
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NCR Corp.
|
|
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6,095
|
|
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|
5,668
|
|
|
|
34
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%
|
|
|
30
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%
|
|
|
19
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%
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R.R. Donnelley & Sons Company
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10,385
|
|
|
|
3,686
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|
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|
144
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%
|
|
|
13
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%
|
|
|
16
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%
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Rockwell Automation Inc.
|
|
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6,352
|
|
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|
16,401
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|
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|
44
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%
|
|
|
21
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%
|
|
|
33
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%
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Unisys Corporation
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3,440
|
|
|
|
1,474
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|
|
|
94
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%
|
|
|
9
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%
|
|
|
32
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%
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The Western Union Company
|
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5,545
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|
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|
9,526
|
|
|
|
31
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%
|
|
|
0
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%
|
|
|
6
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%
|
Xerox Corporation
|
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22,282
|
|
|
|
14,895
|
|
|
|
83
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%
|
|
|
4
|
%
|
|
|
11
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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25th Percentile
|
|
|
3,350
|
|
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|
3,756
|
|
|
|
39
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%
|
|
|
7
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%
|
|
|
10
|
%
|
Median
|
|
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4,742
|
|
|
|
5,803
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|
|
|
49
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%
|
|
|
19
|
%
|
|
|
19
|
%
|
75th Percentile
|
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6,044
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|
13,852
|
|
|
|
71
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%
|
|
|
27
|
%
|
|
|
28
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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Pitney Bowes Inc.
|
|
|
4,843
|
|
|
|
4,706
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|
|
|
132
|
%
|
|
|
7
|
%
|
|
|
6
|
%
|
PBI Percent Rank
|
|
|
52
|
%
|
|
|
37
|
%
|
|
|
98
|
%
|
|
|
25
|
%
|
|
Lowest
|
|
Source: Capital I.Q.
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|
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|
COMPENSATION DISCUSSION AND ANALYSIS
Other Policies and Guidelines
Clawback Policy
The company’s executive compensation programs include
a “clawback” feature, allowing the board of directors to adjust, recoup or require the forfeiture of any awards made
or paid under any stock plan or the KEIP under the following circumstances:
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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
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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.
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No Agreements with Executives
We have not entered into fixed term employment agreements with
any of our NEOs, including the CEO. 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).
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 2013, the Committee once again reviewed the executive stock
ownership policy using external benchmarks. Although the benchmarks indicated that the prior stock ownership policy was predominantly
in line with market best practices, the Committee made changes to the company’s executive stock ownership policy. The Committee
adopted the changes to further emphasize its expectation that its executives think like owners, own substantial amounts of company
stock and more closely align their interests with long-term stockholders.
Although the multiple of base salary ownership requirement for
the CEO and other executive officers will remain at 5X and 2X, respectively, unvested RSU and option awards will no longer count
toward the ownership requirement. Instead, only shares owned outright, shares held in a trust and shares owned in a deferred compensation
plan will be counted toward the requirement. In addition, the Committee approved expanding the policy to include unit presidents
and staff vice presidents at a 1X multiple of base salary.
Title
|
Multiple of Base Salary
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Chief Executive Officer
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5X
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Other Executive Officers
|
2X
|
Unit Presidents and Staff Vice
|
|
Presidents
|
1X
|
We calculate the number of shares targeted for retention by
multiplying an executive’s 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.
The guidelines provide that the CEO and other executive officers
have five years to achieve the required ownership levels from the date of the first award following the time they become covered
by this policy.
Until the CEO and other executive officers meet the required
ownership levels, that executive is required to hold at least 75% of their “net profit shares” in the first five years,
and 100% of the “net profit shares” thereafter. Unit Presidents and Staff Vice Presidents must hold at least 50% of
their “net profit shares” until the multiple is met. 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, PSUs 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 equity awards.
COMPENSATION DISCUSSION AND ANALYSIS
Change of Control
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 IRC in the event that
110% of the safe-harbor amount was exceeded.
In February 2013, based on competitive data and stockholder
feedback and continuing our practice of exercising good pay governance, the board amended the Change of Control benefit payable
to the executive offi-
cers, including NEOs, under the Senior Executive Severance Policy
(SESP) to two times the sum of the participant’s current annual salary and the participant’s average annual incentive
award in the preceding three years from the prior three times of annual salary and incentive award.
During Mr. Lautenbach’s 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 (b) 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, we believe the Change of Control arrangements are market leading from a corporate governance
perspective.
Tax and Accounting
Our compensation programs generally
satisfy the requirements for full deductibility under IRC Section 162(m) of the Code. IRC 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 generally structure our incentive compensation programs to be
IRC 162(m) compliant. However, the Committee weighs the benefits of compliance with IRC 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 company’s best interest to do so. The rules and regulations promulgated under IRC 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 qualify. As such, there can be no assurance that any compensation awarded or paid by the
company will be fully deductible under all circumstances.
Stock options are not currently granted as part of the mix of
long-term incentives, however, special awards of stock options may be granted. In those cases 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 price;
|
|
|
|
|
•
|
the risk-free interest rate;
|
|
|
|
|
•
|
expected term; and
|
|
|
|
|
•
|
our dividend yield.
|
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 MSUs units include:
|
•
|
the volatility of our stock price;
|
|
|
|
|
•
|
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
COMPENSATION DISCUSSION AND ANALYSIS
are appropriate in estimating the fair value of our stock option
and MSU grants. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees
who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value
made by the company under ASC 718.
In determining the number of RSUs to be awarded in the mix of
long-term incentives, we value RSUs based
upon the closing price of our common stock on the grant date.
In reporting the value of RSUs in the Summary Compensation Table, we discount the value of the RSUs for non-payment of dividends
during the vesting period as required by accounting guidance under ASC 718.
For additional information on the accounting treatment for stock-based
awards, see note 12 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013.
Treatment of Special Events
In determining performance goals and
evaluating enterprise performance results, the Committee may use its discretion and judgment to ensure that
management’s 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’s 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 distort, either positively or
negatively, the actual performance of management. The chart below 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 2013, the Committee determined that Adjusted earnings per
share, Adjusted free cash flow, Adjusted income from continuing operations, and Adjusted earnings before interest and taxes may
exclude the impact of certain special events (both positive and negative) such as restructuring charges, legal settlements and
asset impairments, which materially impact the comparability of the company’s results.
The following are non-GAAP measures: Adjusted earnings per share,
Adjusted free cash flow, Adjusted income from continuing operations, Adjusted earnings before interest and taxes and revenue growth.
|
•
|
Adjusted earnings per share excludes special items (as discussed above under “Treatment of Special
Events”) including the impact of any accounting changes.
|
|
|
|
|
•
|
Adjusted free cash flow is cash from operations less capital expenditures, adjusted for the cash impact of special events
(as discussed above under “Treatment of Special Events”).
|
|
|
|
|
•
|
Adjusted income from continuing operations excludes special events (as described under “Treatment of Special Events”)
including the impact of any accounting changes.
|
|
|
|
|
•
|
Adjusted earnings before interest and taxes excludes the impact of one-time adjustments, including restructuring charges,
strategic actions, capital-related initiatives, and 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 free cash flow, Adjusted income from
continuing operations and Adjusted earnings before interest and taxes to exclude the impact of special items like
restructuring charges, tax adjustments, and asset impairments, 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.
COMPENSATION DISCUSSION AND ANALYSIS
Pitney Bowes Inc.
Reconciliation of Reported Consolidated
Results to Adjusted Measures
(Unaudited)
(Dollars in thousands, except per share data)
|
|
|
2013
|
|
|
|
2012
(1)
|
|
|
|
2011
(1)
|
|
GAAP diluted earnings per share from continuing operations,
as reported
|
|
$
|
1.49
|
|
|
$
|
1.96
|
|
|
$
|
2.16
|
|
Restructuring charges and asset impairments
|
|
|
0.29
|
|
|
|
0.06
|
|
|
|
0.44
|
|
Extinguishment of debt
|
|
|
0.10
|
|
|
|
—
|
|
|
|
—
|
|
Sale of leveraged lease assets
|
|
|
—
|
|
|
|
(0.06
|
)
|
|
|
(0.13
|
)
|
Tax adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
0.02
|
|
Diluted earnings per share from continuing operations,
as adjusted
(2)
|
|
$
|
1.88
|
|
|
$
|
1.96
|
|
|
$
|
2.49
|
|
Adjustment for discontinued operations
(3)
|
|
|
—
|
|
|
|
0.20
|
|
|
|
0.21
|
|
Adjusted diluted earnings per share
(2)
|
|
|
1.88
|
|
|
|
2.16
|
|
|
|
2.70
|
|
GAAP net cash provided by operating activities, as reported
|
|
$
|
624,824
|
|
|
$
|
660,188
|
|
|
$
|
948,987
|
|
Capital expenditures
|
|
|
(137,512
|
)
|
|
|
(176,586
|
)
|
|
|
(155,980
|
)
|
Restructuring payments
|
|
|
59,520
|
|
|
|
74,718
|
|
|
|
107,002
|
|
Pension contribution
|
|
|
—
|
|
|
|
95,000
|
|
|
|
123,000
|
|
Tax and other payments on sale of businesses and leveraged
lease assets
|
|
|
75,545
|
|
|
|
114,128
|
|
|
|
—
|
|
Reserve account deposits
|
|
|
(20,104
|
)
|
|
|
1,636
|
|
|
|
35,354
|
|
Extinguishment of debt
|
|
|
32,639
|
|
|
|
—
|
|
|
|
—
|
|
Free cash flow, as adjusted
|
|
|
634,912
|
|
|
|
769,084
|
|
|
|
1,058,363
|
|
Reserve account deposits
|
|
|
20,104
|
|
|
|
(1,636
|
)
|
|
|
(35,354
|
)
|
Reclassification
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
(28,794
|
)
|
Adjusted free cash flow
|
|
$
|
655,016
|
|
|
$
|
767,448
|
|
|
$
|
994,215
|
|
GAAP income from continuing operations after income taxes,
as reported
|
|
$
|
301,733
|
|
|
$
|
395,684
|
|
|
$
|
437,593
|
|
Restructuring charges and asset impairments, after tax
|
|
|
59,024
|
|
|
|
11,610
|
|
|
|
89,477
|
|
Extinguishment of debt, after tax
|
|
|
19,911
|
|
|
|
—
|
|
|
|
—
|
|
Sale of leveraged lease assets, after tax
|
|
|
—
|
|
|
|
(12,886
|
)
|
|
|
(26,689
|
)
|
Tax adjustments
|
|
|
—
|
|
|
|
—
|
|
|
|
3,539
|
|
Adjusted income from continuing operations
|
|
$
|
380,668
|
|
|
$
|
394,408
|
|
|
$
|
503,920
|
|
GAAP income from continuing operations before income
taxes, as reported
|
|
$
|
403,177
|
|
|
$
|
534,312
|
|
|
$
|
491,486
|
|
Interest expense, net, before tax
|
|
|
190,364
|
|
|
|
188,386
|
|
|
|
197,266
|
|
Restructuring charges and asset impairments, before tax
|
|
|
84,344
|
|
|
|
17,176
|
|
|
|
118,630
|
|
Extinguishment of debt, before tax
|
|
|
32,639
|
|
|
|
—
|
|
|
|
—
|
|
Sale of leveraged lease, before tax
|
|
|
—
|
|
|
|
3,817
|
|
|
|
7,283
|
|
Earnings before interest and taxes, as adjusted
|
|
$
|
710,524
|
|
|
$
|
743,691
|
|
|
$
|
814,665
|
|
Impacts of foreign currency compared to budget
(5)
|
|
|
3,210
|
|
|
|
—
|
|
|
|
—
|
|
Adjusted earnings before interest and taxes
|
|
$
|
713,734
|
|
|
$
|
743,691
|
|
|
$
|
814,665
|
|
Reported revenue growth
|
|
|
(1.2%
|
)
|
|
|
(5.1%
|
)
|
|
|
(3.2%
|
)
|
Impacts of foreign currency
|
|
|
0.4%
|
|
|
|
1.1%
|
|
|
|
(1.6%
|
)
|
Revenue growth on a constant currency basis
|
|
|
(0.8%
|
)
|
|
|
(4.0%
|
)
|
|
|
(4.8%
|
)
|
(1)
|
During 2013, we sold our PBMS operations, our Nordic furniture business and our International Mail Services operations. The historical results for 2012 and 2011 have been restated to reflect the divested businesses as discontinued operations.
|
|
|
(2)
|
The sum of the earnings per share amounts may not equal the totals above due to rounding.
|
|
|
(3)
|
Represents amounts reclassified to discontinued operations related to transactions that occurred in 2013 and 2012.
|
|
|
(4)
|
GAAP net cash provided by operating activities, as reported increased by $28.8 million for the year ended December 31, 2011 due to a reclassification between net cash provided by operating activities and net cash used in investing activities.
|
|
|
(5)
|
For 2013, Adjusted earnings before taxes is translated at 2013 budget rates.
|
Executive Compensation Tables and Related Narrative
The following “Summary
Compensation Table” shows all compensation earned by or paid to for Messrs. Lautenbach, Monahan, Wright, Goldstein, and
Ms. Kohnstamm. Mmes. Abi-Karam and O’Meara terminated employment in 2013 but are included in the table below because
they were executive officers during the course of the year with total compensation that would have placed them in the top
five highest paid notwithstanding their termination of employment. The compensation shown below was paid for services
performed during or with respect to 2013, 2012 and 2011. The “Summary Compensation Table” includes amounts earned
and deferred during the periods covered under the Deferred Incentive Savings Plan.
The “Grants of Plan-Based Awards in 2013” table on
page 59 provides additional information regarding grants made during 2013 to the NEOs.
SUMMARY COMPENSATION TABLE
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
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
Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
850,000
|
|
—
|
|
1,172,558
|
|
148,800
|
|
1,209,975
|
|
—
|
|
14,704
|
|
3,396,037
|
|
2012
|
|
70,833
|
|
—
|
|
—
|
|
289,300
|
|
—
|
|
—
|
|
—
|
|
360,133
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
Executive Vice President
and Chief Financial Officer
|
|
2013
|
|
578,400
|
|
—
|
|
381,082
|
|
554,560
|
|
1,481,678
|
|
199,451
|
|
42,940
|
|
3,238,111
|
|
2012
|
|
575,600
|
|
—
|
|
582,644
|
|
—
|
|
1,840,141
|
|
161,052
|
|
26,164
|
|
3,185,601
|
|
2011
|
|
558,000
|
|
—
|
|
279,737
|
|
325,000
|
|
1,135,294
|
|
264,368
|
|
53,534
|
|
2,615,933
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abby F. Kohnstamm
Executive Vice President
and Chief Marketing Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
303,333
|
|
400,000
|
|
379,947
|
|
—
|
|
264,768
|
|
—
|
|
200,240
|
|
1,548,288
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark F. Wright
Executive Vice President
and President, Pitney Bowes
Digital Commerce Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
356,061
|
|
350,000
|
|
450,421
|
|
—
|
|
328,500
|
|
—
|
|
4,961
|
|
1,489,943
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Goldstein
Executive Vice President
and Chief Legal &
Compliance Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
477,400
|
|
—
|
|
190,546
|
|
—
|
|
726,152
|
|
—
|
|
55,282
|
|
1,449,380
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
(8)
former Executive Vice
President and President,
Pitney Bowes
Communications Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
407,285
|
|
—
|
|
381,082
|
|
—
|
|
1,966,667
|
|
789,701
|
|
610,184
|
|
4,154,919
|
|
2012
|
|
553,800
|
|
—
|
|
582,644
|
|
—
|
|
728,365
|
|
136,738
|
|
44,707
|
|
2,046,254
|
|
2011
|
|
544,016
|
|
—
|
|
279,737
|
|
325,000
|
|
1,122,907
|
|
328,795
|
|
27,360
|
|
2,627,815
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. O’Meara
(9)
former Executive Vice
President and President,
Pitney Bowes Services
Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013
|
|
393,000
|
|
—
|
|
263,829
|
|
—
|
|
1,618,750
|
|
—
|
|
33,597
|
|
2,309,176
|
|
2012
|
|
522,500
|
|
—
|
|
403,367
|
|
—
|
|
508,788
|
|
—
|
|
47,782
|
|
1,482,437
|
|
2011
|
|
512,500
|
|
—
|
|
193,680
|
|
225,000
|
|
787,010
|
|
—
|
|
38,444
|
|
1,756,634
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
On July 15, 2013, Ms. Kohnstamm was awarded a $400,000 cash sign-on award upon her hire. On May 15, 2013, Mr. Wright was awarded a $350,000 cash sign-on award upon his hire. In both cases, the sign on bonuses will be forfeited if employment does not continue beyond the first year anniversary of the date of hire.
|
|
|
(2)
|
This column
includes the value of stock awarded to NEOs during 2013, 2012 and 2011 based upon its grant date fair value, as determined
in accordance with the share-based payment accounting guidance under ASC 718. Performance-based RSUs were granted to the
NEOs in 2013. Details regarding the grants of performance-based RSUs can be found in the “Grants of Plan-Based
Awards in 2013” table and details regarding outstanding stock awards can be found in the “Outstanding Equity
Awards at 2013 Fiscal Year-End” table. For Mr. Monahan and Mmes. Abi-Karam and O’Meara, stock awarded in 2012 and
2011 was previously disclosed based upon its grant date market value and is restated to reflect the grant date fair value.
Grant date fair value is the appropriate valuation of an RSU that does not pay dividends to the executive during the vesting
period. If performance conditions allow for MSUs granted in 2012 to reach the 200% maximum number of shares, based on the
grant date fair value, the total value of stock awarded in 2012 would be $907,640 for Mr. Monahan; $907,640 for Ms.
Abi-Karam; and $628,370 for Ms. O’Meara.
|
EXECUTIVE COMPENSATION TABLES AND RELATED
NARRATIVE
(3)
|
This column includes the value of stock options awarded to NEOs during 2013, 2012 and 2011 based upon its grant date fair value, as determined in accordance with the share-based payment accounting guidance under ASC 718. Stock options awarded to Mr. Lautenbach in 2013 and 2012, and Mr. Monahan in 2013, are premium-priced options. Details regarding outstanding stock option awards can be found in the “Outstanding Equity Awards at 2013 Fiscal Year-End” table.
|
|
|
(4)
|
When
considering all elements of the table above, the majority of compensation for the NEOs is at-risk and is earned based on
company and executive performance against pre-determined financial objectives. This column includes annual incentive
compensation earned in 2013, 2012 and 2011, and CIU payouts earned over the following award cycles: 2009–2011,
2010–2012 and 2011–2013. For Mr. Monahan, this also includes a payout in 2012 of his performance retention
award made in 2010 in connection with achievement of annualized benefits from Strategic Transformation and a 2011 IRC
162(m) objective of $322,619,000. Mr. Lautenbach did not receive an annual incentive award for 2012. The 2013 annual
incentive and CIU award payout amounts in this column are as follows: for Mr. Lautenbach, annual incentive of $1,209,975;
for Mr. Monahan, annual incentive of $506,678, CIU of $975,000; for Ms. Kohnstamm, a prorated annual incentive of
$264,768; for Mr. Wright annual incentive of $328,500; for Mr. Goldstein, annual incentive of $313,652, CIU of $412,500;
for Ms. Abi-Karam, a prorated CIU of $866,667; for Ms. O’Meara, a prorated CIU of $618,750. For Mmes. Abi-Karam and
O’Meara, this includes a payout in 2013 of their 2010 performance retention awards in the amounts of $1,100,000 and
$1,000,000, respectively. The 2010 performance retention awards to Mr. Monahan (paid in 2012) and Abi-Karam (paid in
2013) and O’Meara (paid in 2013) were made as part of the board’s succession planning process at a time the
board was assessing who would succeed our prior CEO. These awards were based on the achievement of financial objectives
and continued employment through August 31, 2013. The 2013 amounts in this column include payments that were deferred at
the election of the NEOs under the terms of the Pitney Bowes Deferred Incentive Savings Plan, as follows: Mr. Lautenbach
deferred 5% of his annual incentive equal to $60,499.
|
|
|
(5)
|
This column shows the change in the actuarial present value of the accumulated pension benefit applicable to all eligible employees during 2013, 2012 and 2011. Mr. Lautenbach, Ms. Kohnstamm, Mr. Wright, and Ms. O’Meara do not participate in the qualified Pension Plan or the Pension Restoration Plan. Mr. Goldstein’s pension benefit decreased compared to year-end 2012 as a result of the impact of rising interest rates on the frozen pension benefit when he terminated employment in August 2008 resulting in a negative value of ($28,201), which is excluded from the sum total in accordance with SEC standards. Mr. Goldstein was not eligible to rejoin the pension plan when he was rehired in October 2010. The Pension Plan is a broad-based plan in which all employees hired prior to 2005 with certain exceptions participate.
|
|
|
(6)
|
Amounts shown
for 2013 include all other compensation received by the NEOs that is not reported elsewhere. For 2013, this includes the
following: for Mr. Lautenbach, the company’s actual cost for spousal travel, financial counseling, group term life
insurance provided by the company in excess of $50,000, company match of $2,289 and 2% core contribution of $1,417 to Pitney
Bowes 401(k) Restoration Plan credited in 2014; for Mr. Monahan, financial counseling, group term life insurance provided by
the company in excess of $50,000, company match to Pitney Bowes 401(k) Plan and company match of $24,782 to Pitney Bowes
401(k) Restoration Plan credited in 2014; for Ms. Kohnstamm, group term life insurance provided by the company in excess of
$50,000 and $200,000 in consulting fees; for Ms. Abi-Karam, $574,725 in severance and other related payments, financial
counseling, group term life insurance provided by the company in excess of $50,000, company match to Pitney Bowes 401(k) Plan
and company match of $17,466 to the Pitney Bowes 401(k) Restoration Plan credited in 2014; for Mr. Wright, financial
counseling and group term life insurance provided by the company in excess of $50,000; for Mr. Goldstein, company’s
actual cost for spousal travel, financial counseling, group term life insurance provided by the company in excess of $50,000,
company match to Pitney Bowes 401(k) Plan, 2% core contribution to Pitney Bowes 401(k) Plan credited in 2014, company match
of $16,229 and 2% core contribution to Pitney Bowes 401(k) Restoration Plan credited in 2014; for Ms. O’Meara,
company’s actual cost for spousal travel, financial counseling, group term life insurance provided by the company in
excess of $50,000, company match to Pitney Bowes 401(k) Plan, 2% core contribution of $5,100 to Pitney Bowes 401(k) Plan
credited in 2014, company match of $7,300 and 2% core contribution of $8,126 to Pitney Bowes 401(k) Restoration Plan credited
in 2014. Mr. Lautenbach did not have any other compensation reportable in this column for 2012.
|
|
|
(7)
|
For Mr. Monahan, 2012 and 2011 amounts are amended to reflect company match to the 401(k) Restoration Plan during the years earned rather than the year credited. For Ms. Abi-Karam, the 2012 amount is amended to reflect company match to the 401(k) Restoration Plan during the year earned rather than the year credited. For Ms. O’Meara 2012 and 2011 amounts are amended to reflect company match and 2% core contributions to the 401(k) Restoration Plan during the year earned rather than the year credited.
|
|
|
(8)
|
Ms. Abi-Karam terminated employment on September 1, 2013.
|
|
|
(9)
|
Ms. O’Meara terminated employment on September 30, 2013.
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
GRANTS OF PLAN-BASED AWARDS IN 2013
|
|
|
|
Estimated Future Payouts Under
Non-Equity Incentive Plan Awards
|
Estimated Future Payouts Under
Equity Incentive Plan Awards
|
All Other
Stock
Awards:
Number of
Shares of
Stock or
Units (#)
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options (#)
|
Exercise
or Base
Price of
Option
Awards
($/Sh)
|
Grant
Date Fair Value of
Stock and
Option
Awards
(2)
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
(1)
($)
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
Marc B. Lautenbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
193,375
|
|
1,105,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
59,400
|
|
2,400,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(5)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
115,523
|
|
|
|
|
|
1,172,558
|
(Premium-priced Stock Options)
(6)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
400,000
|
22.16
|
148,800
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
80,976
|
|
462,720
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
19,305
|
|
780,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(5)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
37,545
|
|
|
|
|
|
381,082
|
(Premium-priced Stock Options)
(7)
|
|
7/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
40,000
|
17.20
|
77,160
|
(Premium-priced Stock Options)
(8)
|
|
7/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
80,000
|
19.45
|
129,120
|
(Premium-priced Stock Options)
(9)
|
|
7/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
21.69
|
163,320
|
(Premium-priced
Stock Options)
(10)
|
|
7/1/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
160,000
|
23.94
|
184,960
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Abby F. Kohnstamm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
42,315
|
|
241,797
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(11)
|
|
7/1/2013
|
|
|
|
|
|
|
|
|
26,738
|
|
|
|
|
|
379,947
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark F. Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
52,500
|
|
300,000
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
11,138
|
|
450,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(12)
|
|
5/1/2013
|
|
|
|
|
|
|
|
|
21,008
|
|
|
|
|
|
260,919
|
(Performance-based RSUs)
(13)
|
|
5/1/2013
|
|
|
|
|
|
|
|
|
14,006
|
|
|
|
|
|
189,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel J. Goldstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
50,127
|
|
286,440
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
9,653
|
|
390,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(5)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
18,773
|
|
|
|
|
|
190,546
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
77,756
|
|
444,320
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
19,305
|
|
780,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(5)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
37,545
|
|
|
|
|
|
381,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vicki A. O’Meara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Annual Incentive)
(3)
|
|
|
|
73,360
|
|
419,200
|
|
4,000,000
|
|
|
|
|
|
|
|
|
|
(CIU)
(4)
|
|
|
|
13,365
|
|
540,000
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
(Performance-based RSUs)
(5)
|
|
2/11/2013
|
|
|
|
|
|
|
|
|
25,993
|
|
|
|
|
|
263,829
|
The Grants of Plan-Based awards table captures the potential
threshold, target and maximum award payouts for annual incentive, CIUs, performance-based RSUs, and premium-priced stock options.
(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 IRC 162(m) maximums
and more in line with threshold and target values for both the annual incentive and CIU awards.
|
|
|
(2)
|
The amounts in this column represent the grant date fair values of
RSU and stock option awards calculated in accordance with accounting guidance under ASC 718 and RSUs reflect an adjustment
for the exclusion of dividend equivalents during the vesting period.
|
|
|
(3)
|
Values in this row represent the range in payout for the 2013 annual
incentive award. The IRC requires that we state the maximum payouts an NEO could receive for annual incentive awards under
the KEIP, which is $4,000,000. The Committee may apply negative discretion to reduce the annual awards such that individual
payments are in line with financial enterprise, business unit and/or individual performance. Ms. Kohnstamm’s 2013
annual incentive is prorated based on her June 17, 2013 date of hire. As a result of Mmes. Abi-Karam’s and
O’Meara’s termination from employment, the Company is not obligated to make the 2013 annual incentive payment
listed on the schedule above.
|
|
|
(4)
|
Values in this row represent the range in payout for the 2013-2015
CIU cycle. The IRC requires that we state the maximum payouts a NEO could receive for long-term incentive awards under the
KEIP, which is $8,000,000. The Committee may apply 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. Because Mmes. Abi-
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
|
Karam and O’Meara terminated employment with the company in 2013, they will receive a pro-rated payout of their 2011-2013, 2012-2014 and 2013-2015 CIU awards at the end of each respective cycle.
|
|
|
(5)
|
Performance-based RSUs were granted based on the actual closing price on the February 11, 2013 grant date of $13.85. A performance metric tied to income from continuing operations was met as of December 31, 2013, however, the awards remain subject to forfeiture over the remaining vesting period. This award will vest on a pro-rata basis over a four year period ending February 7, 2017.
|
|
|
(6)
|
These options
have an exercise price equal to 160% of the closing price of the company’s common stock on the February 11, 2013 grant
date of $13.85. Based on these terms the exercise price is $22.16. The Black-Scholes value for each option granted on
February 11, 2013 grant date was $0.372, based on assumptions detailed in note 12 to our financial statements included in our
Annual Report on Form 10-K for the year ended December 31, 2013 as filed with the SEC on February 21, 2014.
|
|
|
(7)
|
These options have an exercise price equal to 115% of the closing price of the company’s common stock on the July 1, 2013 grant date of $14.96. Based on these terms the exercise price is $17.20. The Black-Scholes value for each option granted on July 1, 2013 grant date was $1.929, based on assumptions detailed in note 12 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on February 21, 2014.
|
|
|
(8)
|
These options have an exercise price equal to 130% of the closing price of the company’s common stock on the July 1, 2013 grant date of $14.96. Based on these terms the exercise price is $19.45. The Black-Scholes value for each option granted on July 1, 2013 grant date was $1.614, based on assumptions detailed in note 12 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on February 21, 2014.
|
|
|
(9)
|
These options have an exercise price equal to 145% of the closing price of the company’s common stock on the July 1, 2013 grant date of $14.96. Based on these terms the exercise price is $21.69. The Black-Scholes value for each option granted on July 1, 2013 grant date was $1.361, based on assumptions detailed in note 12 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on February 21, 2014.
|
|
|
(10)
|
These options have an exercise price equal to 160% of the closing price of the company’s common stock on the July 1, 2013 grant date of $14.96. Based on these terms the exercise price is $23.94. The Black-Scholes value for each option granted on July 1, 2013 grant date was $1.156, based on assumptions detailed in note 12 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013, as filed with the SEC on February 21, 2014.
|
|
|
(11)
|
Performance-based RSUs granted to Ms. Kohnstamm were based on the actual closing price on the July 1, 2013 grant date of $14.96. A performance metric tied to income from continuing operations must be met as of March 31, 2014, however, the awards remain subject to forfeiture over the remaining vesting period. This award has a one-year cliff vesting feature which vests in full on July 1, 2014.
|
|
|
(12)
|
Performance-based
RSUs granted to Mr. Wright were based on the actual closing price on the May 1, 2013 grant date of $14.28. A performance
metric tied to income from continuing operations was met as of December 31, 2013, however, the awards remain subject to
forfeiture over the remaining vesting period. This award will vest on a pro-rata basis over a four year period ending
February 7, 2017.
|
|
|
(13)
|
Performance-based
RSUs granted to Mr. Wright were based on the actual closing price on the May 1, 2013 grant date of $14.28. A performance
metric tied to income from continuing operations was met as of December 31, 2013, however, the awards remain subject to
forfeiture over the remaining vesting period. This award has a one-year cliff vesting feature which vests in full on May 1,
2014.
|
Stock Awards
|
•
|
The “Stock Awards” column in the “Summary Compensation Table” represents the value of performance-based RSUs and MSUs awarded during 2013, 2012 and 2011 based upon the fair value for RSU awards and Monte Carlo simulation for MSU awards.
|
|
|
|
|
•
|
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 2013 Stock Plan, approved by stockholders on May 13, 2013, 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 2013” table shows the estimated number of performance based RSUs that may vest based on performance. For the performance based RSUs granted to all NEOs except Ms. Kohnstamm, a performance metric tied to income from continuing operations was met as of December 31, 2013, however the awards remain subject to forfeiture over the remaining vesting period. Ms. Kohnstamm’s RSU grant is subject to an IFCO performance metric that ends on March 31, 2014. See page 59 (“Grants of Plan-Based Awards in 2013”).
|
Option Awards
|
•
|
The “Option Awards” column in the “Summary Compensation Table” represents the value of options awarded during 2013, 2012 and 2011 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 2013” table represents the number of stock options awarded to Mr. Lautenbach and Mr. Monahan during 2013.
|
|
|
|
|
•
|
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 2013 Stock Plan, approved by stockholders on May 13, 2013, defines
market price as the closing price for Pitney Bowes stock on the New York Stock Exchange on the date of grant. In connection
with Mr. Lautenbach’s employment, premium-priced stock options were awarded in December 2012 and February 2013. A
special one-time premium-priced stock option award was made to Mr. Monahan on July 1, 2013 as a retention vehicle. See page
59 “Grants of Plan-Based Awards in 2013” table for details of Mr. Lautenbach and Mr. Monahan’s stock option
awards.
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
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 2013, 2012 and 2011, as well as the CIUs that were earned over
the three-year periods ending December 31, 2013, December 31, 2012 and December 31, 2011. The 2011 amounts include the final
February 2011 vesting of the 2008 performance award. The 2013 amounts for Mmes. Abi-Karam and O’Meara include the
payment of performance-based cash awards granted in 2010. For additional details of the 2010 award to Mmes. Abi-Karam and
O’Meara see page 68.
|
|
|
|
|
•
|
The “Estimated Future Payouts Under Non-Equity Incentive Plan Awards” column in the “Grants of Plan-Based Awards in 2013” table show the range of estimated possible future payouts for the 2013 annual incentive payment at varying levels of performance. They also show the range of estimated possible future payouts of the CIUs granted for the 2013–2015 cycle at varying levels of performance.
|
Change in Pension Value and Nonqualified Deferred Compensation
Earnings
|
•
|
The “Change in Pension Value and Nonqualified Deferred Compensation Earnings” column in the “Summary Compensation Table” reflects the change in pension value for each of the years shown.
|
|
|
|
|
•
|
The change in pension value reflects the aggregate change for both the Pension Plan and the Pitney Bowes Pension Restoration Plan.
|
|
|
|
|
•
|
There were no above-market deferred compensation earnings credited to the Pension Restoration Plan.
|
|
|
|
|
•
|
The Pitney Bowes Pension Restoration Plan provides benefits that would otherwise be provided in the qualified Pension Plan but for IRS limitations applicable to the qualified Pension Plan.
|
All Other Compensation
|
•
|
The “All Other Compensation” column in the “Summary Compensation Table” consists of other amounts earned or paid to each NEO, including the qualified 401(k) Plan and the non-qualified 401(k) Restoration Plan. There were no above-market deferred compensation earnings credited to the 401(k) Restoration Plan. 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, 2013 by each NEO. It discloses compensation in the form of equity that has previously been
awarded, remains outstanding, and is unexercised or unvested.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
OUTSTANDING EQUITY AWARDS AT 2013 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 47.
|
|
|
|
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
|
|
25,000
|
|
|
75,000
|
|
|
13.3860
|
|
12/3/2022
|
|
|
991,400
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
12/3/2012
|
|
50,000
|
|
|
150,000
|
|
|
15.1320
|
|
12/3/2022
|
|
|
1,633,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
12/3/2012
|
|
75,000
|
|
|
225,000
|
|
|
16.8780
|
|
12/3/2022
|
|
|
1,926,600
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/11/2013
|
|
100,000
|
|
|
300,000
|
|
|
22.1600
|
|
12/2/2022
|
|
|
456,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/11/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
0
|
|
|
115,523
|
|
|
2,691,686
|
|
|
—
|
|
|
—
|
|
Michael Monahan
|
|
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
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/8/2010
|
|
106,383
|
|
|
0
|
|
|
22.0900
|
|
2/7/2020
|
|
|
128,723
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/8/2010
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
3,395
|
|
|
79,104
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
62,802
|
|
|
27,566
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
6,233
|
|
|
145,229
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
13,190
|
|
|
307,327
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,146
|
|
|
422,802
|
|
|
|
2/11/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
37,545
|
|
|
874,799
|
|
|
—
|
|
|
—
|
|
|
|
7/1/2013
|
|
—
|
|
|
40,000
|
|
|
17.2000
|
|
6/30/2023
|
|
|
244,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7/1/2013
|
|
—
|
|
|
80,000
|
|
|
19.4500
|
|
6/30/2023
|
|
|
308,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7/1/2013
|
|
—
|
|
|
120,000
|
|
|
21.6900
|
|
6/30/2023
|
|
|
193,200
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
7/1/2013
|
|
—
|
|
|
160,000
|
|
|
23.9400
|
|
6/30/2023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Abby F. Kohnstamm
|
|
7/1/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
26,738
|
|
|
622,995
|
|
Mark F. Wright
|
|
5/1/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
21,008
|
|
|
489,486
|
|
|
—
|
|
|
—
|
|
|
|
5/1/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
14,006
|
|
|
326,340
|
|
|
—
|
|
|
—
|
|
Daniel J. Goldstein
|
|
10/18/2010
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
4,638
|
|
|
108,065
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
18,900
|
|
|
9,450
|
|
|
26.0700
|
|
2/13/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
7,670
|
|
|
3,835
|
|
|
26.0700
|
|
2/13/2021
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
2,637
|
|
|
61,442
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
6,595
|
|
|
153,664
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9,073
|
|
|
211,401
|
|
|
|
2/11/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
18,773
|
|
|
437,411
|
|
|
—
|
|
|
—
|
|
Leslie Abi-Karam
|
|
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
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/8/2010
|
|
106,383
|
|
|
0
|
|
|
22.0900
|
|
2/7/2020
|
|
|
128,723
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
62,802
|
|
|
27,566
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,146
|
|
|
422,802
|
|
(Table continued on next page)
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)
|
Vicki A. O’Meara
|
|
8/27/2008
|
|
50,000
|
|
|
0
|
|
|
33.9100
|
|
8/27/2018
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/9/2009
|
|
53,454
|
|
|
0
|
|
|
24.7500
|
|
2/8/2019
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/8/2010
|
|
57,624
|
|
|
0
|
|
|
22.0900
|
|
2/7/2020
|
|
|
69,725
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
43,478
|
|
|
17,904
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/14/2011
|
|
0
|
|
|
3,835
|
|
|
26.0700
|
|
2/13/2021
|
|
|
0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
2/13/2012
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12,563
|
|
|
292,718
|
|
|
|
2/11/2013
|
|
—
|
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
|
25,993
|
|
|
605,637
|
|
|
—
|
|
|
—
|
|
(1)
|
Option and Stock Awards Vesting Schedule
|
Grant Date
|
|
Award Type
|
|
Name of Executive
|
|
Vesting Schedule (as of December 31, 2013)
|
2/8/2010
|
|
RSU
|
|
Monahan
|
|
remaining 25% vests on February 4, 2014
|
10/18/2010
|
|
RSU
|
|
Goldstein
|
|
remaining 33% vests on February 4, 2014
|
2/14/2011
|
|
NQSO
|
|
Monahan, Abi-Karam, O’Meara, Goldstein
|
|
remaining 33% vests on February 14, 2014
|
2/14/2011
|
|
ISO
|
|
Monahan, Abi-Karam, O’Meara, Goldstein
|
|
100% vests on February 14, 2014
|
2/14/2011
|
|
RSU
|
|
Monahan, Goldstein
|
|
Four year vesting; 50% remains unvested; 25% vests on February 4, 2014 and February 3, 2015
|
2/13/2012
|
|
RSU
|
|
Monahan, Goldstein
|
|
Four year vesting; 75% remains unvested; 25% vests on February 4, 2014, February 3, 2015 and February 2, 2016
|
2/13/2012
|
|
MSU
|
|
Monahan, Abi-Karam, O’Meara, Goldstein
|
|
100% vests on February 3, 2015
|
12/3/2012
|
|
NQSO
|
|
Lautenbach
|
|
Four year vesting; 75% remains unvested; 25% vests on December 3, 2014, December 3, 2015 and December 3, 2016
|
2/11/2013
|
|
NQSO
|
|
Lautenbach
|
|
Four year vesting; 75% remains unvested; 25% vests on December 3, 2014, December 3, 2015 and December 3, 2016
|
2/11/2013
|
|
RSU
|
|
Lautenbach, Monahan, O’Meara, Goldstein
|
|
Four year vesting; 100% remains unvested; 25% vests on February 4, 2014, February 3, 2015,
February 2, 2016 and February 7, 2017
|
5/1/2013
|
|
RSU
|
|
Wright
|
|
Four year vesting for 21,008 units; 100% remains unvested;
25% vests on February 4, 2014, February 3, 2015, February 2, 2016 and February 7, 2017
|
5/1/2013
|
|
RSU
|
|
Wright
|
|
100% of 14,006 units vests on May 1, 2014
|
7/1/2013
|
|
NQSO
|
|
Monahan
|
|
Three year vesting; 100% remains unvested; 33% vests on
February 3, 2015, 33% vests on February 2, 2016 and 33% vests on February 7, 2017
|
7/1/2013
|
|
RSU
|
|
Kohnstamm
|
|
100 % vests on July 1, 2014
|
(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, 2013 for outstanding exercisable and unexercisable
options which have not yet been realized.
|
|
|
(3)
|
These amounts were calculated based on the closing price of the company’s
common stock of $23.30 per share on December 31, 2013. For MSUs, values were calculated using the target number of shares
granted. The total number of MSUs that can vest is capped at 200% of the number of MSUs granted. A minimum number of shares,
50% of the award, will vest at the end of the three year performance period.
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
OPTION EXERCISES AND STOCK VESTED DURING 2013
FISCAL YEAR
(1)
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of
Shares Acquired
on Exercise (#)
|
|
Value Realized
on Exercise ($)
|
|
Number of
Shares Acquired
on Vesting (#)
(2)
|
|
Value Realized
on Vesting ($)
|
Marc B. Lautenbach
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Michael Monahan
|
|
0
|
|
|
0
|
|
|
13,686
|
|
|
181,955
|
(3)
|
Abby F. Kohnstamm
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Mark F. Wright
|
|
0
|
|
|
0
|
|
|
0
|
|
|
0
|
|
Daniel J. Goldstein
|
|
0
|
|
|
0
|
|
|
8,155
|
|
|
108,421
|
(3)
|
Leslie Abi-Karam
|
|
0
|
|
|
0
|
|
|
36,504
|
|
|
696,958
|
(4)
|
Vicki A. O’Meara
|
|
0
|
|
|
0
|
|
|
33,830
|
|
|
544,700
|
(5)
|
(1)
|
Mr. Lautenbach, Ms. Kohnstamm and Mr. Wright did not have any
stock option exercises or stock vest during 2013.
|
|
|
(2)
|
Performance-based RSUs granted on February 9, 2009, February 8, 2010, February
14, 2011 and February 13, 2012 had a pro-rata vesting on February 5, 2013.
|
|
|
(3)
|
These values were determined based on the average of the high and low trading
price on the February 5, 2013 vesting date of $13.30.
|
|
|
(4)
|
For Ms. Abi-Karam, values for 13,686 RSUs were determined based on the average
of the high and low trading price on the February 5, 2013 vesting date of $13.30; values for 22,818 RSUs were determined based
on the average of the high and low trading price on the November 14, 2013 vesting date of $22.57, the date she became eligible
for early retirement.
|
|
|
(5)
|
For Ms. O’Meara, values for 14,297 RSUs were determined based on the
average of the high and low trading price on the February 5, 2013 vesting date of $13.30; values for 19,533 RSUs were determined
based on the average of the high and low trading price on the September 30, 2013 vesting date of $18.16.
|
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. 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 benefits based on the same formula used under the qualified plan to eligible employees with compensation greater
than the $255,000 IRC compensation limit for 2013 and to those employees who defer portions of their compensation under the Deferred
Incentive Savings Plan.
The Pension Restoration Plan is offered to
approximately 225 of our current active employees. Benefits under the Pension Restoration Plan are substantially equal to the
difference between the amount that would have been payable under our qualified Pension Plan, absent IRS limits on
compensation and benefits, and the amount actually paid under our qualified Pension Plan. Payments under the nonqualified
Pension Restoration Plan are made out of the company’s general assets. The Pension Restoration Plan does not provide
above-market interest rates on deferred compensation.
All of the eligible NEOs are fully vested in
their pension benefit.
In 2009, the board of directors approved freezing
the qualified and nonqualified Pension Plan for all participants, effective December 31, 2014. Mr. Monahan is the only active NEO
accruing benefits under the pension plans. (See discussion under “Other Indirect Compensation” on page 48 of this proxy
statement.)
The amounts reported in the table below
equal the present value of the accumulated benefit on December 31, 2013, for the NEOs under the Pitney Bowes pension plans
determined based on years of service and covered earnings (as described below). The present value has been calculated based
on benefits payable commencing upon the executive attaining age 65, and in an amount consistent with the assumptions as
described in note 18 to the financial statements included in the Annual Report on Form 10-K for the year ended December 31,
2013, as filed with the SEC on February 21, 2014.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
PENSION BENEFITS AS OF DECEMBER 31, 2013
(1)
Name
|
|
Plan Name
|
|
Number of Years
Credited Service (#)
|
|
Present Value of
Accumulated Benefit ($)
(2)
|
Michael Monahan
|
|
Pitney Bowes Pension Plan
|
|
25.6
|
|
|
336,869
|
|
Michael Monahan
|
|
Pitney Bowes Pension Restoration Plan
|
|
25.6
|
|
|
1,301,278
|
|
Daniel J. Goldstein
|
|
Pitney Bowes Pension Plan
|
|
8.9
|
|
|
95,000
|
|
Daniel J. Goldstein
|
|
Pitney Bowes Pension Restoration Plan
|
|
8.9
|
|
|
56,497
|
|
Leslie Abi-Karam
|
|
Pitney Bowes Pension Plan
|
|
29.9
|
|
|
515,844
|
|
Leslie Abi-Karam
|
|
Pitney Bowes Pension Restoration Plan
|
|
29.9
|
|
|
2,086,295
|
|
(1)
|
Mr. Lautenbach, Ms.
Kohnstamm, Mr. Wright and Ms. O’Meara are omitted from this table since they are not Pension Plan participants. Mr.
Goldstein is not currently participating in the Pension Plan, but has a prior accumulated benefit under the plans. Active
employees who do not participate in the Pension Plan are eligible for a 2% core contribution in the 401(k) Plan. See
“Deferred Compensation” section below. Ms. Abi-Karam continues to accrue a pension benefit during the severance
period.
|
|
|
(2)
|
Material assumptions used to calculate
the present value of accumulated benefits under the Pitney Bowes Pension Plan for each NEO are detailed in note 18 to the
financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2013. 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 IRC
417(e)(3) mortality table.
|
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. Mr. Monahan and Ms. Abi-Karam are among those Pitney Bowes Pension Plan participants who earned “transition credits.”
|
|
|
|
|
•
|
The maximum benefit accrual under the Pitney Bowes Pension Restoration Plan is an amount equal to 16.5% multiplied by the participant’s final average earnings and further multiplied by the participant’s 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 IRC 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 restoring benefits that would have otherwise been made in the qualified 401(k) Plan
but for IRC limitations) and the Pitney Bowes Deferred Incentive Savings Plan (a nonqualified deferred compensation plan
where certain employees may defer their incentives and base salary). 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 are subject to the company’s creditors. 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 company’s obligations under the plans. Any assets of the grantor trusts are subject to the claims of the
company’s creditors.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
NONQUALIFIED DEFERRED COMPENSATION FOR 2013
(1)
|
|
|
Executive
|
|
Registrant
|
|
Aggregate
|
|
Aggregate
|
|
Aggregate
|
|
|
|
|
Contributions
|
|
Contributions
|
|
Earnings/(Loss)
|
|
Withdrawals/
|
|
Balance at
|
|
Name
|
|
|
in
Last FY ($)
(2)
|
|
in
Last FY ($)
(3)
|
|
in
Last FY ($)
(4)
|
|
Distributions
($)
|
|
Last
FYE ($)
(5)
|
|
Marc B. Lautenbach
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Deferred Incentive Savings Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Michael Monahan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
12,000
|
|
|
66,387
|
|
|
0
|
|
|
193,635
|
|
|
Deferred Incentive Savings Plan
|
|
|
25,000
|
|
|
—
|
|
|
177,142
|
|
|
0
|
|
|
1,164,647
|
|
|
Abby F. Kohnstamm
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Deferred Incentive Savings Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Mark F. Wright
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Deferred Incentive Savings Plan
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0
|
|
|
—
|
|
|
Daniel J. Goldstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
29,857
|
|
|
7,245
|
|
|
0
|
|
|
51,972
|
|
|
Deferred Incentive Savings Plan
|
|
|
50,000
|
|
|
—
|
|
|
19,118
|
|
|
0
|
|
|
122,005
|
|
|
Leslie Abi-Karam
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
22,000
|
|
|
23,142
|
|
|
0
|
|
|
144,764
|
|
|
Deferred Incentive Savings Plan
|
|
|
20,000
|
|
|
—
|
|
|
1,404
|
|
|
0
|
|
|
129,820
|
|
|
Vicki A. O’Meara
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
401(k) Restoration Plan
|
|
|
—
|
|
|
20,525
|
|
|
1,380
|
|
|
0
|
|
|
67,759
|
|
|
Deferred Incentive Savings Plan
|
|
|
0
|
|
|
—
|
|
|
0
|
|
|
0
|
|
|
0
|
|
|
(1)
|
Mr. Lautenbach, Ms. Kohnstamm, and Mr. Wright did not incur activity in the nonqualified deferred compensation plans in 2013.
|
|
|
(2)
|
Amounts in this column represent the portion of the annual incentives earned in 2012 and paid in 2013 deferred under the Deferred Incentive Savings Plan.
|
|
|
(3)
|
Amounts shown are company contributions to the Pitney Bowes 401(k) Restoration Plan earned in 2012 and credited under the 401(k) Restoration Plan in 2013. For Mr. Monahan, Ms. Abi-Karam, and Ms. O’Meara, these amounts are also included in the amended 2012 All Other Compensation column of the Summary Compensation Table.
|
|
|
(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. For Mr. Monahan, the Deferred
Incentive Savings Plan amount reflects an additional $2,297 in dividends relating to 2012 investment activity that were
applied to the beginning balance in 2013. The aggregate balance for the 401(k) Restoration Plan includes amounts previously
reported as compensation in the Summary Compensation Table, including the amended 2012 and 2011 amounts, as follows: $127,777
for Mr. Monahan, $82,269 for Ms. Abi-Karam, and $72,303 for Ms. O’Meara. The aggregate balance for the Deferred
Incentive Savings Plan includes amounts previously reported as compensation in the Summary Compensation Table as follows:
$289,800 for Mr. Monahan, and $122,000 for Ms. Abi-Karam.
|
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 IRC 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 pre-tax contributions to the 401(k) Plan to be eligible for any company match in the 401(k) Restoration Plan. Once the pre-tax maximum is contributed by the participant into the qualified 401(k) Plan, the company will match the same percentage of eligible compensation that the Participant defers under the 401(k) Plan and the DISP up to a maximum 4% of eligible compensation.
|
|
|
|
|
•
|
In addition, employees
not participating in the Pension Plan are eligible to receive a 2% company core contribution into the qualified 401(k) Plan.
To the extent the participant has eligible earnings in excess of the IRC compensation 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 because of the Pension Plan freeze
to participate in the 2% employer core contribution to the 401(k) Plan. See discussion under “Other Indirect
Compensation” on page 48 of this proxy statement.
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
|
•
|
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, Ms. Kohnstamm and Mr. Wright, 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 IRC 409A.
|
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 IRC 409A:
|
|
•
|
Termination/Death/Disability – a lump sum payment is made one month after termination including termination for disability and within 90 days after death
|
|
|
|
|
•
|
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, including 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 web site of the third party administrator. These investments
are tracked in “phantom” accounts. All investment gains and losses in a participant’s 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, 2013, given the NEO’s compensation and service levels as of such date and, if applicable, based on the company’s
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 $23.30, the closing price of our common stock on December 31, 2013.
All payments are payable by the company in a lump-sum unless otherwise
noted. The actual amounts that would be paid upon a NEO’s termination of employment can be determined only at the time of
such executive’s 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 company’s stock
price and the executive’s 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 2013” table on page 66. 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 company’s 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 Mr. Lautenbach, the independent board
members.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
After continuing employment with the company through an appropriate
transition period, Ms. Abi-Karam separated from the company on September 1, 2013 and was eligible for separation benefits under
the Pitney Bowes Separation Pay Plan (Separation Plan). In exchange for Ms. Abi-Karam signing a waiver and release, Ms. Abi-Karam
will receive separation pay in an aggregate amount of $1,741,605. In addition, Ms. Abi-Karam was eligible to receive (i) a lump
sum payment from the qualified Pension Plan valued at $562,555, (ii) a lump sum payment from the nonqualified Pension Plan valued
at $2,408,692 payable in 2014, (iii) accelerated vesting of Ms. Abi-Karam’s outstanding stock options, (iv) accelerated vesting
of RSUs, representing 43,634 units, (v) continued vesting of MSUs representing 18,146 units payable in 2015 after the end of the
three year award cycle, (vi) pro-rated payment of her CIU awards payable at the end of each respective three-year award cycle,
(vii) payment of her nonqualified 401(k) Restoration Plan balance in 2014, (viii) payment of her deferrals under the Deferred Incentive
Savings Plan in 2014, (ix) COBRA coverage with the first six months at the active employee rate, (x) outplacement services valued
at $25,000, (xi) financial counseling valued at $11,250, (xii) continued company-provided life insurance for one year following
separation from employment. Ms. Abi-Karam’s severance period and separation payments ($1,741,605) will count as pensionable
earnings through December 31, 2014 under the terms of the qualified Pension Plan and the nonqualified Pension Restoration Plan.
Ms. Abi-Karam forfeited her 2013 RSU award upon her separation of employment.
Ms. O’Meara’s employment with the company terminated
as a result of the sale of PBMS on September 30, 2013. Ms. O’Meara was not entitled to any severance pay under the company’s
plans. As a consequence of the sale, Ms. O’Meara’s RSU and MSU awards vested, with the MSU award payable at the end
of the three-year award cycle. Ms. O’Meara’s outstanding CIUs will be pro-rated on the basis of active employment during
the award cycle and payable at the end of the award cycle. The buyer assumed the liability for Ms. O’Meara’s 2013 annual
incentive.
As noted in footnote 4 to the Summary Compensation Table, Mmes. Abi-Karam
and O’Meara were granted performance retention awards which were paid on August 31, 2013 in the amounts of $1,100,000 for
Ms. Abi-Karam and $1,000,000 for Ms. O’Meara. These awards were based on the achievement of financial objectives and continued
employment through August 31, 2013. The 2010 performance retention awards to Mr. Monahan (paid in 2012) and Mmes. Abi-Karam (paid
in 2013) and O’Meara (paid in 2013) were made as part of the board’s succession planning process at a time the board
was assessing who would succeed our former CEO.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
Estimated Post-Termination Payments and Benefits
(1)
Name
|
|
Type of Payment or Benefit
|
|
Retirement
Eligible ($)
|
|
Involuntary Not for
Cause Termination
($)
(2)
|
|
Change of
Control with
Termination
(CIC) ($)
|
|
Death
($)
|
|
Disability
($)
|
|
Marc B. Lautenbach
|
|
Severance
|
|
—
|
|
32,692 - 2,932,500
|
(3)
|
2,932,500
|
(4)
|
—
|
|
—
|
|
|
|
Annual Incentive
|
|
—
|
|
0 - 1,105,000
|
(5)
|
1,105,000
|
(6)
|
1,209,975
|
(7)
|
1,209,975
|
(7)
|
|
|
CIUs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2013 – 2015 cycle
|
|
—
|
|
0
|
(8)
|
2,400,000
|
(9)
|
800,000
|
(8)
|
800,000
|
(8)
|
|
|
Stock Options Accelerated
(10)
|
|
—
|
|
2,275,800
|
|
3,755,700
|
|
3,755,700
|
|
3,755,700
|
|
|
|
Performance-based RSUs Accelerated
(11)
|
|
—
|
|
0
|
|
2,691,686
|
|
2,691,686
|
|
2,691,686
|
|
|
|
Financial Counseling
(12)
|
|
—
|
|
0 - 11,250
|
|
—
|
|
—
|
|
—
|
|
|
|
Medical & other benefits
(13)
|
|
—
|
|
—
|
|
85,935
|
|
|
|
|
|
|
|
Total
|
|
0
|
|
2,308,492 - 6,324,550
|
|
12,970,821
|
|
8,457,361
|
|
8,457,361
|
|
Michael Monahan
|
|
Severance
|
|
—
|
|
22,246 - 1,561,680
|
(3)
|
1,973,197
|
(4)
|
—
|
|
—
|
|
|
|
Annual Incentive
|
|
—
|
|
0 - 462,720
|
(5)
|
462,720
|
(6)
|
506,678
|
(7)
|
506,678
|
(7)
|
|
|
CIUs
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
2011 – 2013 cycle
|
|
—
|
|
0 - 975,000
|
(14)
|
975,000
|
(9)
|
975,000
|
(14)
|
975,000
|
(14)
|
|
|
2012 – 2014 cycle
|
|
—
|
|
0 - 433,333
|
(8)
|
650,000
|
(9)
|
433,333
|
(8)
|
433,333
|
(8)
|
|
|
2013 – 2015 cycle
|
|
—
|
|
260,000
|
(8)
|
780,000
|
(9)
|
260,000
|
(8)
|
260,000
|
(8)
|
|
|
Stock Options Accelerated
(10)
|
|
—
|
|
0
|
|
745,200
|
|
745,200
|
|
745,200
|
|
|
|
Performance-based RSUs Accelerated
(11)
|
|
—
|
|
0 - 1,406,458
|
|
1,406,458
|
|
1,406,458
|
|
1,406,458
|
|
|
|
Performance-based MSUs Accelerated
(11)
|
|
—
|
|
0 - 422,802
|
|
422,802
|
|
422,802
|
|
422,802
|
|
|
|
Incremental Pension Benefit
|
|
—
|
|
0 - 200,348
|
(15)
|
118,837
|
(15)
|
—
|
|
—
|
|
|
|
Financial Counseling
(12)
|
|
—
|
|
0 - 11,250
|
|
—
|
|
—
|
|
—
|
|
|
|
Medical & other benefits
(13)
|
|
—
|
|
—
|
|
88,606
|
|
—
|
|
—
|
|
|
|
Total
|
|
0
|
|
282,246 - 5,733,591
|
|
7,622,820
|
|
4,749,471
|
|
4,749,471
|
|
Abby F. Kohnstamm
|
|
Severance
|
|
—
|
|
21,538 - 1,512,000
|
(3)
|
2,016,000
|
(4)
|
—
|
|
—
|
|
|
|
Annual Incentive
|
|
—
|
|
0 - 264,768
|
(5)
|
448,000
|
(6)
|
264,768
|
(7)
|
264,768
|
(7)
|
|
|
Performance-based RSUs Accelerated
(11)
|
|
—
|
|
0 - 0
|
|
622,995
|
|
622,995
|
|
622,995
|
|
|
|
Financial Counseling
(12)
|
|
—
|
|
0 - 11,250
|
|
—
|
|
—
|
|
—
|
|
|
|
Medical & other benefits
(13)
|
|
—
|
|
—
|
|
56,524
|
|
—
|
|
—
|
|
|
|
Total
|
|
0
|
|
21,538 - 1,788,018
|
|
3,143,519
|
|
887,763
|
|
887,763
|
|
Mark F. Wright
|
|
Severance
|
|
—
|
|
19,231 - 1,200,000
|
(3)
|
1,600,000
|
(4)
|
—
|
|
—
|
|
|
|
Annual Incentive
|
|
—
|
|
0 - 300,000
|
(5)
|
300,000
|
(6)
|
328,500
|
(7)
|
328,500
|
(7)
|
|
|
CIUs
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
2013 – 2015 cycle
|
|
—
|
|
0
|
(8)
|
450,000
|
(9)
|
150,000
|
(8)
|
150,000
|
(8)
|
|
|
Performance-based RSUs Accelerated
(11)
|
|
—
|
|
0
|
|
815,826
|
|
815,826
|
|
815,826
|
|
|
|
Financial Counseling
(12)
|
|
—
|
|
0 - 11,250
|
|
—
|
|
—
|
|
—
|
|
|
|
Medical & other benefits
(13)
|
|
—
|
|
—
|
|
73,432
|
|
—
|
|
—
|
|
|
|
Total
|
|
0
|
|
19,231 - 1,511,250
|
|
3,239,258
|
|
1,294,326
|
|
1,294,326
|
|
Daniel J. Goldstein
|
|
Severance
|
|
—
|
|
18,362 - 1,145,760
|
(3)
|
1,156,655
|
(4)
|
—
|
|
—
|
|
|
|
Annual Incentive
|
|
—
|
|
0 - 286,440
|
(5)
|
286,440
|
(6)
|
313,652
|
(7)
|
313,652
|
(7)
|
|
|
CIUs
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
2011 – 2013 cycle
|
|
—
|
|
0 - 412,500
|
(14)
|
412,500
|
(9)
|
412,500
|
(14)
|
412,500
|
(14)
|
|
|
2012 – 2014 cycle
|
|
—
|
|
0 - 216,667
|
(8)
|
325,000
|
(9)
|
216,667
|
(8)
|
216,667
|
(8)
|
|
|
2013 – 2015 cycle
|
|
—
|
|
0
|
(8)
|
390,000
|
(9)
|
130,000
|
(8)
|
130,000
|
(8)
|
|
|
Stock Options Accelerated
(10)
|
|
—
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
|
Performance-based RSUs Accelerated
(11)
|
|
—
|
|
0 - 271,958
|
|
760,582
|
|
760,582
|
|
760,582
|
|
|
|
Performance-based MSUs Accelerated
(11)
|
|
—
|
|
0 - 211,401
|
|
211,401
|
|
211,401
|
|
211,401
|
|
|
|
Incremental Pension Benefit
|
|
—
|
|
—
|
(15)
|
—
|
(15)
|
—
|
|
—
|
|
|
|
Financial Counseling
(12)
|
|
—
|
|
0 - 11,250
|
|
—
|
|
—
|
|
—
|
|
|
|
Medical & other benefits
(13)
|
|
—
|
|
—
|
|
56,506
|
|
—
|
|
—
|
|
|
|
Total
|
|
0
|
|
18,362 - 2,555,976
|
|
3,599,084
|
|
2,044,802
|
|
2,044,802
|
|
(1)
|
All data is shown assuming termination on December 31, 2013.
|
|
|
(2)
|
Ranges represent variance between the NEO’s basic severance plan and enhanced severance payment as explained in the section entitled “Explanation of Benefits Payable Upon Various Termination Events” on page 71 of this Proxy Statement.
|
|
|
(3)
|
If termination of employment falls within the terms of the Pitney Bowes Severance Pay Plan, the NEOs 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 NEOs 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’ SESP was amended to eliminate excise tax gross-ups. Executives now receive payments calculated based on a “best-net” approach. For Mr. Monahan, Mr. Wright, Mr. Goldstein, and Ms. Kohnstamm, this amount represents either the full value of the payment equal to two times the sum of the participant’s current annual salary and the participant’s average annual incentive award for 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. Goldstein, the 2010 annual incentive paid in 2011 is annualized to account for a break in service prior to his being rehired in October 2010. Since Ms. Kohnstamm and Mr. Wright were hired in 2013, their average annual incentive used in calculating their Change of Control benefit is based on target instead of actual incentive payouts. 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.
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
(5)
|
A pro-rated 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 severance
is paid in excess of two weeks. For Ms. Kohnstamm, annual incentive is pro-rated based on her start date of June 17, 2013.
|
|
|
(6)
|
Annual incentive is valued at the targeted amount and is paid upon termination following a Change of Control.
|
|
|
(7)
|
A pro-rated annual incentive is paid at the actual amount earned for 2013 at the time of the normal distribution of annual
incentives. For Ms. Kohnstamm, annual incentive is pro-rated based on her start date of June 17, 2013.
|
|
|
(8)
|
CIUs for 2012 – 2014 and 2013 – 2015 cycles are estimated at the targeted amount which is $1.00 per unit.
Payment is pro-rated 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. In the case of involuntary not for cause termination, no payments
are made for the 2013 – 2015 CIU cycle since the award has been outstanding for less than one year, except if the executive
has attained early retirement eligibility or is bridgeable to early retirement, then payment is pro-rated based upon time
worked through the end of the cycle. The 2012 – 2014 cycle payment is subject to signing a waiver and release.
|
|
|
(9)
|
CIUs for 2011 – 2013 cycles are valued at $1.50 per unit and paid in February 2014 under the normal distribution
of CIUs. CIUs for 2012 – 2014 and 2013 – 2015 cycles are valued at the targeted amount which is $1.00 per unit.
|
|
|
(10)
|
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 retirement or involuntary not for cause termination, options outstanding for less than one year forfeit.
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.
|
|
|
(11)
|
In the case of involuntary not for cause termination accompanied by a separation agreement including a waiver and release,
all performance-based RSUs and MSUs outstanding for one year or more at the date of termination will continue to vest up to
24 months following termination, except if the executive has attained retirement eligibility or is bridgeable to early retirement,
then all performance-based RSUs will eventually vest. For Mr. Monahan and Mr. Goldstein, in the case of Change of Control
followed by termination of employment, all performance-based MSUs vest immediately with shares issued immediately at target.
All restrictions on performance-based RSUs and MSUs lapse immediately upon death, disability, or Change of Control followed
by termination of employment.
|
|
|
(12)
|
Amount shown is the value of the company’s cost to provide financial counseling through the severance period, which
NEOs may receive for up to a maximum of 78 weeks.
|
|
|
(13)
|
Amount shown is the present value of the company’s cost to continue medical and other health and welfare plans for
three years plus the company’s cost for outplacement services.
|
|
|
(14)
|
CIUs for 2011 – 2013 cycles are valued at $1.50 per unit based upon actual achievement of performance metrics for
the 2011 – 2013 cycle. In the case of involuntary not for cause termination, payment of this amount is subject to signing
a waiver and release. This amount was paid in February 2014 under the normal distribution of CIUs.
|
|
|
(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, Mr. Wright, and Ms. Kohnstamm are not Pension Plan participants. Mr. Goldstein
is not currently participating in the Pension Plan, but has a prior accumulated benefit under the plans. In the case of a
Change in Control with termination, amount shown is the increase in lump-sum actuarial equivalent of the pension age and service
credits for the associated severance period.
|
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 and Normal Retirement
The U.S. Pitney Bowes Pension Plan allows for early retirement at
age 55 with at least ten years of service, and normal retirement at age 65 with at least three years of service. Early and normal
retirement entitles NEOs to the following upon termination:
|
•
|
A prorated annual incentive award;
|
|
|
|
|
•
|
Prorated CIU payments paid 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.
|
Ms. Abi-Karam terminated employment September 1, 2013 and was bridged
to her early retirement date, November 14, 2013.
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 as summarized below. In addition, in order to obtain an appropriate waiver and release
from the employee, we may offer conditional 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;
|
|
|
|
|
•
|
The board of directors has the discretion to accelerate vesting of restricted stock, RSUs, and MSUs 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. “Cause” is defined as willful failure
to perform duties or engaging in illegal conduct or gross misconduct harmful to the company.
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
Death
The NEO’s beneficiary would be entitled to the following upon
the executive’s death:
|
•
|
A prorated annual incentive award;
|
|
|
|
|
•
|
CIU payments prorated through the date of death and paid at the end of each three-year cycle;
|
|
|
|
|
•
|
All stock options will vest upon death. The NEO’s 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
|
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 made 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
|
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:
|
•
|
In December 2012, 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
SESP 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 payments calculated based on a “best-net” approach as it relates to the benefits described
below.
|
•
|
Either (i) the full value of the payment equal to two times the sum of the participant’s current annual salary and the participant’s 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. (Effective February 11, 2013, the board of directors reduced the severance benefit payable to NEOs upon a termination from employment on account of a Change of Control from three years base and bonus to two years base and bonus);
|
|
|
|
|
•
|
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 “Change of Control” or resignation for “Good Reason” within two years subsequent to a “Change of Control” Mr. Lautenbach would receive two times current base salary and current target bonus. Bonus will be payable in a lump sum;
|
|
|
|
|
•
|
A prorated annual incentive award based on the participant’s 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 and 2013 Plan will vest upon the employee’s termination and stock options can be exercised during their remaining term;
|
|
|
|
|
•
|
Only age and service credits are included in the pension calculation for the associated severance period;
|
EXECUTIVE COMPENSATION TABLES AND RELATED NARRATIVE
|
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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
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Outplacement services.
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Internal Revenue Code Section 409A
Our benefits arrangements are intended to comply with IRC 409A. In
that regard, “Key Employees” as defined in IRC 409A and IRC 416 may have certain payments delayed until six months
after termination of employment.
Additional Information
Solicitation 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.