Executive Compensation

The following table contains compensation information for our NEOs for the fiscal year ended December 31, 2017 and, to the extent required under the SEC executive compensation disclosure rules, the fiscal years ended December 31, 2016 and December 31, 2015.

2017 SUMMARY COMPENSATION TABLE

NAME AND PRINCIPAL
POSITION
YEAR SALARY
($000)(1)
BONUS
($000)
STOCK
AWARDS
($000)(2)
OPTION
AWARDS
($000)(2)
NON-EQUITY
INCENTIVE
PLAN
COMPENSATION
($000)(3)
CHANGE IN
PENSION VALUE
AND NON-
QUALIFIED
DEFERRED
COMPENSATION
EARNINGS
($000)
ALL OTHER
COMPENSATION
($000)(4)
TOTAL
($000)

Hikmet Ersek(5)

President and Chief Executive Officer

2017 1,000.0 5,181.9 1,400.0 1,731.0 413.5 9,726.4
 2016 1,000.0 5,179.8 1,400.0 1,392.0 313.7 9,285.5
 2015 1,000.0 4,480.6 1,200.0 1,767.0 122.2 8,569.8

Rajesh K. Agrawal

EVP and Chief Financial Officer

2017 590.0 1,839.3 769.4 53.8 3,252.5
 2016 566.5 1,518.1 554.0 524.7 3,163.3
 2015 563.8 1,120.1 300.0 603.7 46.9 2,634.5

Odilon Almeida

EVP, President — Global Money Transfer

2017 650.0 1,655.3 704.3 51.9 3,061.5
 2016 612.0 1,242.1 566.2 53.8 2,474.1
 2015 610.0 896.1 240.0 652.1 52.1 2,450.3

Elizabeth G. Chambers

Former EVP, Chief Strategy, Product and Marketing Officer

2017 535.0 1,103.6 555.7 72.9 2,267.2
 2016 535.0 1,104.1 446.8 258.1 2,344.0
 2015 N/A N/A N/A N/A N/A N/A N/A N/A

Jean Claude Farah(6)

EVP, President – Global Payments

2017 500.0 965.6 519.3 179.8 2,164.7
 2016 N/A N/A N/A N/A N/A N/A N/A N/A
 2015 N/A N/A N/A N/A N/A N/A N/A N/A

Footnotes:

  1. Except with respect to salary adjustments in connection with promotions, salary adjustments are effective as of March of each reporting year.

  2. The amounts reported in these columns for 2017 represent the annual equity grants to the NEOs under the Long-Term Incentive Plan. The amounts reported in these columns are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The amounts included in the Stock Awards column for the PSUs granted during 2017 are calculated based on the probable satisfaction of the performance conditions for such awards as of the date of grant. Assuming the highest level of performance is achieved for the Financial PSUs, the maximum value of the 2017 Financial PSUs would be as follows: Mr. Ersek—$5,672.9; Mr. Agrawal—$1,619.2; Mr. Almeida—$1,457.3; Ms. Chambers—$971.5; and Mr. Farah—$850.1. Under FASB ASC Topic 718, the vesting condition related to the TSR PSUs is considered a market condition and not a performance condition. Accordingly, there is no grant date fair value below or in excess of the amount reflected in the table above for the NEOs that could be calculated and disclosed based on achievement of the underlying market condition. In connection with her separation from the Company, Ms. Chambers will forfeit her 2017 equity awards under the Long-Term Incentive Plan. See Note 16 to the Consolidated Financial Statements included in our Annual Reports on Form 10-K for the years ended December 31, 2017, 2016, and 2015, respectively, for a discussion of the relevant assumptions used in calculating the amounts reported for the applicable year.

  3. For 2017, the amounts reflect the actual cash bonus received under the Annual Incentive Plan.

  4. Amounts included in this column for 2017 are set forth by category in the 2017 All Other Compensation Table below.

  5. For 2017, Mr. Ersek’s salary is denominated in United States dollars but is paid to or on behalf of Mr. Ersek in euros, based on a conversion rate determined prior to payment each quarter. Contributions made to the Austrian retirement plan on behalf of Mr. Ersek are denominated in euros and converted to United States dollars for disclosure in the proxy. The conversion rates .956572, .93362, .895095, and .837942 were applied for quarters one, two, three and four, respectively.

  6. For 2017, Mr. Farah’s salary is denominated in United States dollars but is paid to or on behalf of Mr. Farah in Emirati dirham, based on a conversion rate that was determined for 2017 and each calendar quarter. The conversion rates 0.2722698, 0.272261949, 0.272257987 and 0.27226387 were applied for quarters one, two, three, and four respectively. Contributions made to the CFE retirement fund on behalf of Mr. Farah are denominated in euros and converted to United States dollars for disclosure in the proxy. The conversion rates .956572, .93362, .895095, and .837942 were applied for quarters one, two, three and four, respectively.

2017 ALL OTHER COMPENSATION TABLE

NAME PERQUISITES
& OTHER
PERSONAL
BENEFITS
($000)(1)
TAX
REIMBURSEMENTS
($000)
COMPANY
CONTRIBUTIONS
TO DEFINED
CONTRIBUTION
PLANS
($000)(2)
INSURANCE
PREMIUMS
($000)
TOTAL
($000)
Hikmet Ersek 317.9 75.4 20.2 413.5
Rajesh K. Agrawal 5.8 1.0(3) 45.6 1.4 53.8
Odilon Almeida 0.4 0.2 48.4 2.9 51.9
Elizabeth G. Chambers 30.6 0.5(4) 39.3 2.5 72.9
Jean Claude Farah 155.5 7.7 16.6 179.8

Footnotes:

  1. Amounts shown in this column for Mr. Ersek include the incremental cost or valuation of personal jet usage ($274,888), car service/allowances, sporting event tickets and executive security costs. Following a comprehensive security assessment conducted by an independent security firm, the Board of Directors advised Mr. Ersek to utilize the Company’s leased aircraft for personal travel at the Company’s expense. Those personal travel expenses reported in this column were valued on the basis of the aggregate incremental cost to the Company and represent the amount accrued for payment or paid directly to the third-party vendor from which the Company leases corporate aircraft. For Ms. Chambers, the amounts in this column include relocation expenses of $29,763. These relocation expenses were valued on the basis of the aggregate incremental cost to the Company and represent the amount accrued for payment or paid to the service provider or the NEO, as applicable. For Mr. Farah, the amounts in this column include housing ($108,904), education, health and wellness, and transportation allowances, home internet services, and annual plane tickets to Mr. Farah’s home country for Mr. Farah and his dependents.

  2. Amounts shown in this column represent contributions made by the Company on behalf of each of the NEOs, except for Messrs. Ersek and Farah, to the Company’s Incentive Savings Plan and/or the Supplemental Incentive Savings Plan, contributions made by the Company on behalf of Mr. Ersek to the Company’s defined contribution plan in Austria, the Victoria Volksbanken Pensionskassen AG, and contributions made by the Company on behalf of Mr. Farah to the Company’s retirement plan for employees located in Dubai, the CFE retirement fund.

  3. This amount includes $1,000 paid to or on behalf of Mr. Agrawal in connection with his relocation from the United Kingdom to Colorado, which represents trailing tax liability with respect to equity awards granted to Mr. Agrawal when he lived in the United Kingdom.

  4. This amount includes a tax gross-up for Ms. Chambers for relocation expenses. This benefit is generally available to employees asked to relocate as part of the Company’s relocation and immigration programs.

The following table summarizes awards made to our NEOs in 2017.

2017 GRANTS OF PLAN-BASED AWARDS TABLE

NAME GRANT
DATE
APPROVAL
DATE
  ESTIMATED
POSSIBLE
PAYOUTS UNDER
NON-EQUITY
INCENTIVE PLAN
AWARDS(1)
  ESTIMATED FUTURE
PAYOUTS UNDER EQUITY
INCENTIVE PLAN AWARDS
  ALL OTHER
STOCK
AWARDS:
NUMBER
OF SHARES
OF STOCK
OR UNITS
(#)(2)
  ALL OTHER
OPTION
AWARDS:
NUMBER OF
SECURITIES
UNDERLYING
OPTIONS
(#)(3)
  EXERCISE
OR BASE
PRICE OF
OPTION
AWARDS
($/Sh)
  GRANT
DATE
FAIR
VALUE
OF
STOCK
AND
OPTION
AWARDS
($000)(4)
TARGET
($000)
MAXIMUM
($000)
THRESHOLD
(#)
TARGET
(#)
MAXIMUM
(#)
Hikmet Ersek       1,500.0 2,250.0                        
  2/22/17 2/21/17         105,053(5) 210,106(5) 315,159(5)               3,781.9
  2/22/17 2/21/17         53,764(6) 107,527(6) 161,291(6)               1,400.0
  2/22/17 2/21/17                     414,202   $19.99   1,400.0
Rajesh K. Agrawal       590.0 1,032.5                        
  2/21/17 2/21/17         30,288(5) 60,576(5) 90,864(5)               1,079.5
  2/21/17 2/21/17         15,937(6) 31,873(6) 47,810(6)               400.0
  2/21/17 2/21/17                 20,192           359.8
Odilon Almeida       585.0 1,023.8                        
  2/21/17 2/21/17         27,259(5) 54,518(5) 81,777(5)               971.5
  2/21/17 2/21/17         14,343(6) 28,686(6) 43,029(6)               360.0
  2/21/17 2/21/17                 18,173           323.8
Elizabeth G. Chambers       481.5 842.6                        
  2/21/17 2/21/17(7)         18,173(5) 36,346(5) 54,519(5)               647.7
  2/21/17 2/21/17(7)         9,562(6) 19,124(6) 28,686(6)               240.0
  2/21/17 2/21/17(7)                 12,116           215.9
Jean Claude Farah       450.0 787.5                        
  2/21/17 2/21/17         15,902(5) 31,803(5) 47,705(5)               566.7
  2/21/17 2/21/17         8,367(6) 16,734(6) 25,101(6)               210.0
  2/21/17 2/21/17                 10,601           188.9

Footnotes:

  1. These amounts consist of the target and maximum cash award levels set in 2017 under the Annual Incentive Plan. The amount actually paid to each NEO is included in the Non-Equity Incentive Plan Compensation column in the 2017 Summary Compensation Table. Please see “Compensation Discussion and Analysis” for further information regarding the Annual Incentive Plan.

  2. This amount represents RSUs granted under the Long-Term Incentive Plan to the NEOs other than Mr. Ersek. The RSUs vest 100% on February 21, 2020, provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy. Please see “Compensation Discussion and Analysis” for further information regarding these restricted stock unit grants.

  3. These amounts represent stock options granted under the Long-Term Incentive Plan to Mr. Ersek. These options vest in 25% increments on each of the first through fourth year anniversaries of the date of grant; provided that Mr. Ersek is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or award agreements under the Long-Term Incentive Plan. Please see “Compensation Discussion and Analysis” for further information regarding this award.

  4. The amounts shown in this column are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 and, in the case of the PSUs, are based upon the probable outcome of the applicable performance conditions. See Note 16 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2017 for a discussion of the relevant assumptions used in calculating the amounts.

  5. These amounts represent the threshold, target and maximum Financial PSUs granted under the Long-Term Incentive Plan. For actively employed executives, these Financial PSUs are scheduled to vest on February 21, 2020 (or, in the case of Mr. Ersek, February 22, 2020), subject to the achievement of threshold revenue and operating income performance goals. Please see “Compensation Discussion and Analysis” for further information regarding this award.

  6. These amounts represent the threshold, target and maximum TSR PSUs granted under the Long-Term Incentive Plan. For actively employed executives, these TSR PSUs are scheduled to vest on February 21, 2020 (or, in the case of Mr. Ersek, February 22, 2020) based on the Company’s relative TSR performance versus the S&P 500 Index over a three-year performance period. See “Compensation Discussion and Analysis” for further information regarding this award.

  7. In connection with her separation from the Company on January 1, 2018, Ms. Chambers forfeited her 2017 equity awards.

NARRATIVE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE

EMPLOYMENT ARRANGEMENTS

As noted in the Compensation Discussion and Analysis, the Company generally executes an offer of employment prior to the time an executive joins the Company which describes the basic terms of the executive’s employment, including his or her start date, starting salary, bonus target, and long-term incentive award target. The terms of the executive’s employment are based thereafter on sustained good performance rather than contractual terms, and the Company’s policies, such as the Executive Severance Policy, will determine the benefits to be received by senior executives, including our NEOs, upon termination of employment from the Company. Please see the “—Potential Payments Upon Termination or Change-in-Control” section for a description of the policy.

As noted in the Compensation Discussion and Analysis, under certain circumstances, the Compensation Committee recognizes that special arrangements with respect to an executive’s employment may be necessary or desirable. Accordingly, during 2017, Messrs. Ersek and Farah were party to employment agreements, which reflects competitive practices in the employment locations of Messrs. Ersek and Farah at the time the agreements became effective. The terms of Messrs. Ersek and Farah’s employment agreements provide for (i) eligibility to participate in an annual incentive program and Long-Term Incentive Plan and (ii) eligibility to participate in retirement, health, and welfare benefit programs on the same basis as similarly situated employees in Austria and Dubai, respectively. Messrs. Ersek and Farah’s employment agreements also include non-competition, non-solicitation, and confidentiality provisions.

AWARDS

In 2017, the Compensation Committee granted the CEO and the Executive Vice Presidents long-term incentive awards under the Long-Term Incentive Plan consisting of 60% Financial PSUs (incorporating both revenue and operating income growth), 20% TSR PSUs, for Mr. Ersek, 20% stock option awards and, for NEOs other than Mr. Ersek, 20% service-based RSUs. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for further information regarding the 2017 long-term incentive awards, including the performance metrics applicable to the 2017 PSUs.

At its February 2017 meeting, the Compensation Committee established performance objectives to be considered under the Annual Incentive Plan for the 2017 plan year. As discussed in the “Compensation Discussion and Analysis” section of this Proxy Statement, participants are eligible to receive a cash payout ranging from 0% to 150% of target based on the achievement of pre-established corporate financial and strategic goals. The total payout under the Annual Incentive Plan for the NEOs other than Mr. Ersek is subject to a +/- 25% modifier based on the committee’s assessment of individual performance with respect to personalized objectives, including business unit goals. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for more information regarding the annual incentive awards, including the performance metrics applicable to such awards.

SALARY AND BONUS IN PROPORTION TO TOTAL COMPENSATION

As noted in the “Compensation Discussion and Analysis” section of this Proxy Statement, the Compensation Committee heavily weighted total direct compensation toward the performance-based elements, which include annual incentive compensation and PSUs and stock options, in order to hold executives accountable and reward them for the results of the Company. Our Compensation Committee structured the compensation program to give our NEOs substantial alignment with stockholders, while also permitting the committee to incentivize the NEOs to pursue performance that it believes increases stockholder value. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for a description of the objectives of our compensation program and overall compensation philosophy.

The following table provides information regarding outstanding option awards and unvested stock awards held by each of the NEOs on December 31, 2017.

2017 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

NAME  OPTION AWARDS STOCK AWARDS
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE
NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE
OPTION
EXERCISE
PRICE ($)
OPTION
EXPIRATION
DATE
NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED (#)
MARKET
VALUE OF
SHARES
OR UNITS
OF STOCK
THAT HAVE
NOT VESTED
($000)(1)
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
($000)(1)
Hikmet Ersek 414,202(2) 19.99 2/22/2027 172,565(15) 3,280.5 315,159(11) 5,991.2
105,740 317,221(3) 18.19 2/19/2026 39,977(16) 760.0 53,764(12) 1,022.0
168,067 168,068(4) 19.27 2/19/2025     230,897(13) 4,389.4
227,848 75,950(5) 15.99 2/20/2024     42,297(14) 804.1
625,000   14.00 2/20/2023        
400,810   17.86 2/23/2022        
233,859   21.00 2/24/2021        
230,628   17.45 9/1/2020        
212,508   16.00 2/24/2020        
Rajesh K. Agrawal 42,017 42,017(4)
19.27 2/19/2025 43,141(15) 820.1 90,864(11) 1,727.3
49,367 16,456(5) 15.99 2/20/2024 9,994(16) 190.0 15,937(12) 303.0
134,063   14.00 2/20/2023 20,192(6) 383.8 54,366(13) 1,033.5
86,843   17.86 2/23/2022 18,122(7) 344.5 9,946(14) 189.1
24,796   16.49 9/15/2021 7,234(8) 137.5    
16,895   21.00 2/24/2021        
24,553   16.00 2/24/2020        
21,950   11.86 2/17/2019        
32,925   20.99 2/21/2018        
Odilon Almeida 33,613 33,614(4) 19.27 2/19/2025 34,513(15) 656.1 81,777(11) 1,554.6
45,570 15,190(5) 15.99 2/20/2024 7,995(16) 152.0 14,343(12) 272.7
58,008   14.00 2/20/2023 18,173(6) 345.5 44,482(13) 845.6
16,701   17.86 2/23/2022 14,828(7) 281.9 8,138(14) 154.7
10,560   21.00 2/24/2021 6,941(9) 131.9    
15,000   16.00 2/24/2020        
31,500   20.99 2/21/2018        
Elizabeth G. Chambers(17)         12,116(6) 230.3 54,519(11) 1,036.4
        13,180(7) 250.6 9,562(12) 181.8
        5,667(10) 107.7 39,539(13) 751.6
            7,234(14) 137.5
Jean Claude Farah 22,409 22,409(4) 19.27 2/19/2025 23,009(15) 437.4 47,705(11) 906.9
30,380 10,127(5) 15.99 2/20/2024 5,331(16) 101.3 8,367(12) 159.1
12,891   14.00 2/20/2023 10,601(6) 201.5 27,183(13) 516.7
33,401   17.86 2/23/2022 9,061(7) 172.2 4,973(14) 94.5
28,157   21.00 2/24/2021 4,627(9) 88.0    
10,650   20.99 2/21/2018        

Footnotes:

  1. The market value of shares or units of stock that have not vested reflects the closing stock price of $19.01 per share, on December 29, 2017.

  2. These options were awarded on February 22, 2017, and vest in 25% increments on each of the first through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  3. These options were awarded on February 19, 2016, and vest in 25% increments on each of the first through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  4. These options were awarded on February 19, 2015, and vest in 25% increments on each of the first through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  5. These options vested on February 20, 2018.

  6. Represents RSUs that are scheduled to vest on February 21, 2020; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  7. Represents RSUs that are scheduled to vest on February 18, 2019; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  8. Represents RSUs that were awarded on July 15, 2014, and vest in 25% increments on each of the first through fourth year anniversaries of the date of grant; provided that the executive is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan.

  9. Represents RSUs that vested on March 28, 2018.

  10. Represents RSUs that were awarded on November 10, 2015 under the Long-Term Incentive Plan. This award vests in three equal installments. The first two installments of these RSUs vested on November 10, 2016 and 2017, and the remaining installment was scheduled to vest on November 10, 2018; provided that the executive is still employed by the Company on the applicable vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan. In connection with her separation from the Company, Ms. Chambers’ vested on a prorata basis with respect to the RSUs that were unvested as of her separation date other than Ms. Chambers’ 2017 RSU award, which she forfeited in its entirety.

  11. Represents PSUs that are scheduled to vest on February 21, 2020 (or, in the case of Mr. Ersek, February 22, 2020) based on the Company’s revenue and operating income performance during 2017, 2018 and 2019; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving the maximum performance goals.

  12. Represents PSUs that are scheduled to vest on February 21, 2020 (or, in the case of Mr. Ersek, February 22, 2020) based on the Company’s TSR performance relative to the S&P 500 Index over the 2017-2019 performance period; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving the threshold performance goals.

  13. Represents PSUs that are scheduled to vest on February 18, 2019 (or, in the case of Mr. Ersek, February 19, 2019) based on the Company҆s revenue and operating income performance during 2016, 2017 and 2018; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan. In accordance with the SEC executive compensation disclosure rules, the amounts reported are based on achieving the target performance goals.

  14. Represents PSUs that are scheduled to vest on February 18, 2019 (or, in the case of Mr. Ersek, February 19, 2019) based on the Company҆s TSR performance relative to the S&P 500 Index over the 2016-2018 performance period; provided that the executive is still employed by the Company on the vesting date or as otherwise provided for pursuant to the Executive Severance Policy or Long-term Incentive Plan. In accordance with the SEC executive compensation disclosure rules, the amounts reported in this column are based on achieving threshold vesting levels.

  15. Represents PSUs that vested on February 19, 2018 based on the Company’s revenue and operating income performance during 2015, 2016 and 2017.

  16. Represents PSUs that vested on February 19, 2018 based on the Company’s TSR performance relative to the S&P 500 Index over the 2015-2017 performance period.

  17. In connection with her separation from the Company on January 1, 2018, Ms. Chambers forfeited the 2017 Financial PSU, the 2017 TSR PSU and the 2017 RSU awards. Ms. Chambers vested on a pro-rata basis with respect to the 2016 PSUs and RSUs that were unvested as of her separation date.

The following table provides information concerning the exercise of stock options and vesting of stock during 2017 for each of the NEOs.

2017 OPTION EXERCISES AND STOCK VESTED TABLE

NAME OPTION AWARDS   STOCK AWARDS
NUMBER OF
SHARES
ACQUIRED ON
EXERCISE
(#)
VALUE
REALIZED
ON EXERCISE
($)
NUMBER OF
SHARES
ACQUIRED ON
VESTING
(#)
VALUE
REALIZED
ON VESTING
($)
Hikmet Ersek   283,311 5,615,224
Rajesh K. Agrawal   68,619 1,354,241
Odilon Almeida   63,604 1,262,921
Elizabeth G. Chambers   5,667 114,133
Jean Claude Farah 12,891 83,792   42,404 841,974

The following table provides information regarding compensation that has been deferred by our NEOs pursuant to the terms of our Supplemental Incentive Savings Plan.

2017 NONQUALIFIED DEFERRED COMPENSATION TABLE

NAME EXECUTIVE
CONTRIBUTIONS
IN LAST FY
($000)(1)
REGISTRANT
CONTRIBUTIONS
IN LAST FY
($000)(2)
AGGREGATE
EARNINGS
IN LAST FY
($000)
AGGREGATE
WITHDRAWALS/
DISTRIBUTIONS
($000)
AGGREGATE
BALANCE
AT LAST
FYE
($000)(3)
Hikmet Ersek
Rajesh K. Agrawal 57.0 34.8 155.1 907.5
Odilon Almeida 60.5 37.6 69.4 553.3
Elizabeth G. Chambers 49.1 28.5 25.8 187.4
Jean Claude Farah

Footnotes:

  1. These amounts represent deferrals of the NEO’s salary and compensation received under the Annual Incentive Plan and are included in the “Salary” and “Non-Equity Incentive Plan Compensation” columns in the 2017 Summary Compensation Table.

  2. These amounts are included in the “All Other Compensation” column in the 2017 Summary Compensation Table.

  3. Amounts in this column include the following amounts that were previously reported in the Summary Compensation Table as compensation for 2016 and 2015 (in $000s): Mr. Agrawal–$175.9, Mr. Almeida–$197.1 and Ms. Chambers–$37.5.

INCENTIVE SAVINGS PLAN

We maintain a defined contribution retirement plan (the “Incentive Savings Plan” or “ISP”) for our employees on United States payroll, including each of our NEOs other than Mr. Ersek and Mr. Farah. The ISP is structured with the intention of qualifying under Section 401(a) of the Internal Revenue Code. Under the ISP, participants are permitted to make contributions up to the maximum allowable amount under the Internal Revenue Code. In addition, we make matching contributions equal to 100% of the first 3% of eligible compensation contributed by participants and 50% of the next 2% of eligible compensation contributed by participants. For 2017, each participating NEO was eligible to receive a Company contribution equal to 4% of his eligible compensation. During 2017, Mr. Ersek participated in the qualified retirement savings plan made available to eligible employees in Austria. During 2017, Mr. Farah participated in the Caisse des Français de l’Etranger (the “CFE Retirement Fund”), which provides for continued coverage under the French State Social Security System for French citizens who work outside of France. On behalf of the employee, the CFE Retirement Fund contributes to the National Retirement Insurance Fund (“CNAV”) allowing the employee to receive pension benefits from the CNAV upon retirement.

SUPPLEMENTAL INCENTIVE SAVINGS PLAN

We maintain a nonqualified supplemental incentive savings plan (the “SISP”) for certain of our employees on United States payroll, including each of our NEOs other than Messrs. Ersek and Farah. Under the SISP, participants may defer up to 80% of their salaries, including commissions and incentive compensation (other than annual bonuses), and may make a separate election to defer up to 80% of any annual bonuses and up to 100% of any performance-based cash awards they may earn. The SISP also provides participants the opportunity to receive credits for matching contributions equal to the difference between the matching contributions that a participant could receive under the ISP but for the contribution and compensation limitations imposed by the Internal Revenue Code, and the matching contributions allowable to the participant under the ISP. Participants are generally permitted to choose from among the mutual funds available for investment under the ISP for purposes of determining the imputed earnings, gains, and losses applicable to their SISP accounts. The SISP is unfunded. Participants may specify the timing of the payment of their accounts by choosing either a specified payment date or electing payment upon separation from service (or a date up to five years following separation from service), and in either case may elect to receive their accounts in a lump sum or in annual or quarterly installments over a period of up to ten years. With respect to each year’s contributions and imputed earnings, the participant may make a separate distribution election. Subject to the requirements of Section 409A of the Internal Revenue Code, applicable Internal Revenue Service guidance, and the terms of the SISP, participants may receive an early payment in the event of a severe financial hardship and may make an election to delay the timing of their scheduled payment by a minimum of five years.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL

EXECUTIVE SEVERANCE POLICY

We maintain the Executive Severance Policy for the payment of certain benefits to senior executives, including our NEOs, upon termination of employment from the Company and upon a change-in-control of the Company. Under the Executive Severance Policy, an eligible executive will become eligible for benefits if (i) prior to a change-in-control, he or she is involuntarily terminated by the Company other than on account of death, disability or for cause, or (ii) after a change-in-control, he or she is involuntarily terminated by the Company other than on account of death, disability or for cause or terminates his or her own employment voluntarily for “good reason” (including a material reduction in title or position, reduction in base salary or bonus opportunity or an increase in the executive’s commute to his or her current principal working location of more than 50 miles without consent) within 24 months after the date of the change-in-control. Under the Executive Severance Policy, a change-in-control is generally defined to include:

  • Acquisition by a person or entity of 35% or more of either the outstanding shares of the Company or the combined voting power of such shares, with certain exceptions;

  • An unapproved change in a majority of the Board members within a 24-month period; and

  • Certain corporate restructurings, including certain mergers, dissolution and liquidation.

The Executive Severance Policy provided for the following severance and change-in-control benefits as of December 31, 2017:

  • Effective for senior executives hired before February 24, 2011, a severance payment equal to the senior executive’s base pay plus target bonus for the year in which the termination occurs (the “base severance pay”), multiplied by 1.5 (multiplied by two in the case of the CEO and in the case of all senior executives who terminate for an eligible reason within 24 months following a change-in-control). Effective for senior executives hired on and after February 24, 2011, a senior executive employed by the Company for 12 months or less was entitled to receive a severance payment equal to the base severance pay and, for every month employed in excess of 12 months, an additional severance payment equal to a pro rata portion of the base severance pay, up to a maximum severance payment equal to the senior executive’s base severance pay, multiplied by 1.5 (multiplied by two in the case of all senior executives who terminate for an eligible reason within 24 months following a change-in-control).

  • A cash payment equal to the lesser of the senior executive’s prorated target bonus under the Annual Incentive Plan for the year in which the termination occurs or the maximum bonus which could have been paid to the senior executive under the Annual Incentive Plan for the year in which the termination occurs, based on actual Company performance during such year. No bonus will be payable unless the Compensation Committee certifies that the performance goals under the Annual Incentive Plan have been achieved for the year in which the termination occurs (except for eligible terminations following a change-in-control).

  • A lump sum payment equal to the difference between active employee health care premiums and continuation coverage premiums for 18 months of coverage.

  • At the discretion of the Compensation Committee, outplacement benefits may be provided to the executive.

  • All awards made pursuant to our Long-Term Incentive Plan, including those that are performance-based, generally will become fully vested and exercisable if a senior executive is involuntarily terminated without cause or terminates for good reason, within 24 months following a change-in-control. In such event, the right to exercise stock options will continue for 24 months (36 months in the case of the CEO) after the senior executive’s termination (but not beyond their original terms).

  • If a senior executive is involuntarily terminated without cause and no change-in-control has occurred, awards granted pursuant to our Long-Term Incentive Plan generally will vest on a prorated basis based on the period served during the vesting period and stock options will remain exercisable until the end of severance period under the Executive Severance Policy, but not beyond the stock options’ original terms.

  • With respect to all executives other than the CEO, any benefits triggered by a change-in-control are subject to an automatic reduction to avoid the imposition of excise taxes under Section 4999 of the Internal Revenue Code in the event such reduction would result in a better after-tax result for the executive.

  • For individuals who were senior executives on or before April 30, 2009 (including our CEO), if benefits payable after a change-in-control exceed 110% of the maximum amount of such benefits that would not be subject to the excise tax imposed by Section 4999 of the Internal Revenue Code, an additional cash payment in an amount that, after payment of all taxes on such benefits (and on such amount), provides the senior executive with the amount necessary to pay such tax. (If the benefits so payable do not exceed such 110%threshold, the amount thereof will be reduced to the maximum amount not subject to such excise tax.) Mr. Ersek is the only Company employee who remains eligible for excise tax gross-up payments.

The provision of severance benefits under the Executive Severance Policy is conditioned upon the executive executing an agreement and release which includes, among other things, non-competition and non-solicitation restrictive covenants, as well as a release of claims against the Company. These restrictive covenants vary in duration, but generally do not exceed two years.

As noted earlier, Mr. Farah is subject to an employment agreement, which is a customary practice for executives located in Dubai. Under the terms of Mr. Farah’s employment agreement, he is required to receive three months’ notice of termination of employment or, in lieu of such notice, three months of pay. In addition, Mr. Farah is also eligible for statutory severance amounts in accordance with local law. Any amounts due to Mr. Farah under the Executive Severance Policy will be reduced by any severance paid under the terms of his employment agreement or as required by local law.

Ms. Chambers separated from the Company on January 1, 2018. In connection with Ms. Chambers’ departure, she became eligible to receive separation benefits pursuant to the Executive Severance Policy. Pursuant to the policy and in exchange for Ms. Chambers signing a general release of claims in favor of the Company, Ms. Chambers will receive separation pay in an aggregate amount equal to approximately $1.525M, to be paid out over an 18-month period. In addition, Ms. Chambers was eligible to receive (i) a lump sum payment equal to the difference between active employee healthcare premiums and healthcare continuation coverage premiums ($16,010), (ii) prorated vesting of PSUs representing 33,705 PSUs at target, with actual payout determined based upon Company performance during the performance period and prorated for the period from the respective grant dates to Ms. Chambers’ termination date (estimated value of $643,091, based on the Company’s closing stock price as of January 2, 2018), (iii) prorated vesting of RSUs representing 12,280 RSUs, prorated for the period from the respective grant dates to Ms. Chambers’ termination date (estimated value of $234,302, based on the Company’s closing stock price as of January 2, 2018), and (iv) outplacement assistance for a maximum of 12 months (estimated to be $40,000).

For the NEOs other than Ms. Chambers, we have quantified the potential payments upon termination under various termination circumstances in the tables set forth below. These tables assume that the covered termination took place on December 31, 2017.

PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL TABLES

TERMINATION FOLLOWING A CHANGE-IN-CONTROL(1)
NAME SEVERANCE
($000)(2)
WELFARE
BENEFITS
($000)(3)
LONG-TERM INCENTIVES(5) GROSS-UP
($000)(4)
TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 6,500.0 31.0 489.5 15,525.7 10,225.1 32,771.3
Rajesh K. Agrawal 2,950.0 24.5 49.7 4,062.3 865.9 7,952.4
Odilon Almeida 3,055.0 24.5 45.9 3,454.8 759.3 7,339.5
Jean Claude Farah 2,350.0 30.6 2,110.6 461.7 4,952.9
INVOLUNTARY TERMINATION OTHER THAN FOR DEATH, DISABILITY, OR CAUSE
NAME SEVERANCE
($000)(2)
WELFARE
BENEFITS
($000)(3)
LONG-TERM INCENTIVES(5) TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 6,500.0 31.0 342.6 7,091.8 13,965.4
Rajesh K. Agrawal 2,360.0 24.5 48.0 1,725.9 333.4 4,491.8
Odilon Almeida 2,437.5 24.5 44.3 1,394.6 299.5 4,200.4
Jean Claude Farah 1,875.0 29.5 895.1 189.9 2,989.5
DEATH OR DISABILITY
NAME SEVERANCE
($000)
WELFARE
BENEFITS
($000)
LONG-TERM INCENTIVES(5) TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 489.5 15,525.7 16,015.2
Rajesh K. Agrawal 49.7 4,062.3 865.9 4,977.9
Odilon Almeida 45.9 3,454.8 759.3 4,260.0
Jean Claude Farah 30.6 2,110.6 461.7 2,602.9
RETIREMENT(6)
NAME SEVERANCE
($000)
WELFARE
BENEFITS
($000)
LONG-TERM INCENTIVES(5) TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 342.6 8,886.3 9,228.9
Odilon Almeida 44.3 1,864.5 398.3 2,307.1

Footnotes:

  1. Under the Executive Severance Policy, following a change-in-control, an eligible executive will become entitled to severance benefits if he or she is involuntarily terminated by the Company other than on account of death, disability or for cause or terminates his or her own employment voluntarily for good reason within 24 months after the date of the change-in-control.

  2. In accordance with the Executive Severance Policy, amounts in this column represent severance payments equal to the NEO’s target bonus for 2017 plus 1.5 times (two times in the case of the CEO and in the case of all senior executives who terminate for an eligible reason within 24 months following a change-in-control) the sum of the NEO’s base salary and target bonus.

  3. Amounts in this column represent a lump sum cash payment equal to the product of (i) the difference in cost between the NEO’s actual health premiums and COBRA health premiums (if applicable) as of December 31, 2017 and (ii) 18, the number of months of continuing COBRA coverage.

  4. Amounts in this column reflect tax gross-up calculations assuming a blended effective tax rate of approximately 47% and a 20% excise tax incurred on excess parachute payments, as calculated in accordance with Internal Revenue Code Sections 280G and 4999. The equity is valued using a closing stock price of $19.01 per share on December 29, 2017. As noted above, the Executive Severance Policy prohibits the Company from providing change-in-control tax gross-ups to individuals promoted or hired after April 2009. Accordingly, Mr. Ersek is the only Company employee who remains eligible for excise tax gross-up payments.

  5. Amounts in these columns reflect the long-term incentive awards to be received upon a termination or a change-in-control calculated in accordance with the Executive Severance Policy and the Long-Term Incentive Plan. In the case of stock grants, the equity value represents the value of the shares (determined by multiplying the closing stock price of $19.01 per share on December 29, 2017 by the number of unvested RSUs or, in the case of PSUs, by the number of shares to be awarded based on the projected achievement of the applicable performance objectives as of December 31, 2017, that would vest upon a qualifying termination, death or disability). In the case of option awards, the equity value was determined by multiplying (i) the spread between the exercise price and the closing stock price of $19.01 per share on December 29, 2017 and (ii) the number of unvested option shares that would vest following a qualifying termination, death or disability. The calculation with respect to unvested long-term incentive awards reflects the following additional assumptions under the Executive Severance Policy and the Long-Term Incentive Plan:

    EVENT   STOCK OPTIONS   RSUs   PSUs
    Change-in-Control and Termination for Eligible Reason within 24-month Period   Accelerate   Accelerate   Accelerated vesting and award is payable to the extent earned based on actual performance results.
    Change-in-Control (No Termination)   Vesting continues under normal terms.   Vesting continues under normal terms.   Vesting continues under normal terms.
    Involuntary Termination (Not for Cause prior to a Change-in-Control or after the 24-month Period following a Change-in-Control)   Prorated vesting by grant based on period served during vesting period.   Prorated vesting by grant based on period served during vesting period; if termination occurs prior to the one year anniversary of the grant date, the awards are forfeited.   Prorated vesting by grant based on actual performance results and period served during vesting period; if termination occurs prior to the one year anniversary of the grant date, the awards are forfeited.
    Death or Disability   Accelerate   Accelerate   Accelerated vesting and award is payable to the extent earned based on actual performance results.
    Retirement  

    Effective for grants on January 31, 2011 and later, prorated vesting by grant based on period served during vesting period, with an exercise period equal to the earlier of (i) two years post-termination (three years, in the case of the CEO if termination is a severance-eligible event) and (ii) the expiration date.

    Grants made prior to January 31, 2011 may be exercised until four years after the termination date or, if earlier until the expiration date.

      Prorated vesting by grant based on period served during vesting period.   Prorated vesting by grant based on actual performance results and period served during vesting period.
  6. Messrs. Ersek and Almeida are the only NEOs eligible for retirement as of December 31, 2017, as defined under the Long-Term Incentive Plan.

RISK MANAGEMENT AND COMPENSATION

Appropriately incentivizing behaviors which foster the best interests of the Company and its stockholders is an essential part of the compensation-setting process. The Company believes that risk-taking is necessary for continued innovation and growth, but that risks should be encouraged within parameters that are appropriate for the long-term health and sustainability of the business. As part of its compensation setting process, the Company evaluates the merits of its compensation programs through a comprehensive review of its compensation policies and programs to determine whether they encourage unnecessary or inappropriate risk-taking by the Company’s executives and employees below the executive level. Based on this review, the Company has concluded that the risks arising from its compensation programs are not reasonably likely to have a material adverse effect on the Company.

Management and the Compensation Consultant review the Company’s compensation programs, including the broad-based employee programs and the programs tied to the performance of individual business units. The team maps the level of “enterprise” risk for each business area, as established through the Company’s enterprise risk management oversight process, with the level of compensation risk for the associated incentive programs. In developing the risk assessment, the team reviews the compensation programs within each business area for:

  • The mix of fixed versus variable pay;

  • The performance metrics to which pay is tied;

  • Whether the pay opportunity is capped;

  • The timing of payout;

  • Whether “clawback” adjustments are permitted;

  • The use of equity awards; and

  • Whether stock ownership guidelines apply.

Annual incentive awards and long-term incentive awards granted to executives are tied primarily to corporate performance goals, including revenue and operating income growth, and strategic performance objectives. The Compensation Committee believes that these metrics encourage performance that supports the business as a whole. The executive annual incentive awards include a maximum payout opportunity equal to 150% of target, subject to a +/-25% individual performance-based modifier for NEOs other than Mr. Ersek. Our executives are also expected to meet share ownership guidelines in order to align the executives’ interests with those of our stockholders. Further, the Company’s clawback policy permits the Company to recover incentive compensation paid to an executive officer if the compensation resulted from any financial result or metric impacted by the executive officer’s misconduct or fraud. This policy helps to discourage inappropriate risks, as executives will be held accountable for misconduct which is harmful to the Company’s financial and reputational health. In addition, in 2017 as part of the Joint Settlement Agreements, the Company adopted a compliance clawback policy and added specific clawback provisions to its annual and long-term incentive award agreements allowing the Company to “claw back” executive bonuses if the executive engaged in conduct that is later determined to have contributed to future compliance failures, subject to applicable law.