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EXECUTIVE COMPENSATION

The following table contains compensation information for our NEOs for the fiscal year ended December 31, 2019 and, to the extent required under the SEC executive compensation disclosure rules, the fiscal years ended December 31, 2018 and December 31, 2017.

2019 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

2019 1,000.0 5,600.0 1,400.0 1,700.0 399.5 10,099.5
2018 1,000.0 5,148.5 1,400.0 1,390.6 236.2 9,175.3
2017 1,000.0 5,181.9 1,400.0 1,731.0 413.5 9,726.4

Raj Agrawal

Chief Financial
Officer

2019 630.0 2,400.0 718.2 56.5 3,804.7
2018 630.0 2,193.6 534.2 73.7 3,431.5
2017 590.0 1,839.3 769.4 53.8 3,252.5

Jean Claude Farah(6)

President, Global
Network

2019 500.0 1,050.0 486.0 179.4 2,215.4
2018 500.0 959.7 354.6 176.3 1,990.6
2017 500.0 965.6 519.3 179.8 2,164.7

Khalid Fellahi

President, Consumer Money Transfer

2019 451.7 27.8 1,200.0 427.9 128.1 2,235.5
2018 N/A N/A N/A N/A N/A N/A N/A N/A
2017 N/A N/A N/A N/A N/A N/A N/A N/A

Caroline Tsai

Chief Legal Officer and Corporate
Secretary

2019 450.0 1,100.0 449.6 34.4 2,034.0
2018 450.0 1,057.6 309.8 129.3 1,946.7
2017 N/A N/A N/A N/A N/A N/A N/A N/A

Odilon Almeida(7)

Former EVP, President — Global Money Transfer

2019 487.5 2,000.0 486.2 2,093.9 5,067.6
2018 650.0 1,828.0 531.7 57.3 3,067.0
2017 650.0 1,655.3 704.3 51.9 3,061.5

Footnotes:

(1)

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

(2)

The amounts reported in these columns for 2019 represent 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 2019 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 2019 Financial PSUs, the maximum value of the 2019 Financial PSUs would be as follows: Mr. Ersek - $7,000.0; Mr. Agrawal - $2,400.0; Mr. Farah - $1,050.0; Mr. Fellahi - $700.0; Ms. Tsai - $1,100.0; and Mr. Almeida - $2,000.0. 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. For 2019, the amounts also include the incremental fair value associated with modifications to the 2019 Financial PSUs and February 2019 RSUs in connection with the retroactive implementation of dividend equivalents on such awards, as follows: Mr. Ersek - $533.6; Mr. Agrawal - $242.1; Mr. Farah - $105.9; Mr. Fellahi - $77.2; Ms. Tsai - $111.0; and Mr. Almeida - $201.8. During 2019, the Committee amended the 2019 Financial PSUs and February 2019 RSUs to institute dividend equivalent rights. Because the retroactive implementation of dividend equivalent rights resulted in a modification under applicable accounting rules, the Company is required to report additional compensation in the 2019 Summary Compensation Table associated with such modification. Dividend equivalents with respect to the 2019 Financial PSUs and 2019 RSUs will be paid to the extent the underlying PSUs and RSUs are earned. For purposes of this table, the number of Financial PSUs modified is assumed to be the target amount. See Note 17 to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the years ended December 31, 2019 and 2018, respectively, and Note 16 to the Consolidated Financial Statements included in our Annual Reports on Form 10-K for the year ended December 31, 2017 for a discussion on the relevant assumptions used in calculating the amounts reported for the applicable year.

(3)

For 2019, the amounts reflect the actual cash bonus received under the Annual Incentive Plan.

(4)

Amounts included in this column for 2019 are set forth by category in the 2019 All Other Compensation Table below.

(5)

For 2019, Mr. Ersek’s salary is denominated in U.S. 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 U.S. dollars for disclosure in the proxy. The conversion rates of .884956, .883236, .892777, and .903506 were applied for quarters one, two, three, and four, respectively.

(6)

For 2019, Mr. Farah’s salary is denominated in U.S. dollars but is paid to or on behalf of Mr. Farah in Emirati dirham, based on a conversion rate that was determined for 2019 and each calendar quarter. The conversion rates of .272251, .272252, .272252, and .272251 were applied for quarters one, two, three, and four, respectively. Contributions made to the CFE retirement fund on behalf of Mr. Farah and Mr. Fellahi are denominated in euros and converted to U.S. dollars for disclosure in the proxy. The conversion rates of .884956, .883236, .892777, and .903506 were applied for quarters one, two, three, and four, respectively.

(7)

Mr. Almeida stepped down as an executive officer, effective June 30, 2019, after which he served in a senior advisory capacity until he departed from the Company on September 30, 2019.

2019 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)
POST-
TERMINATION
PAYMENTS
($000)(3)
TOTAL
($000)
Hikmet Ersek 300.0 0.2 74.4 24.9 399.5
Raj Agrawal 6.5 1.8 46.6 1.6 56.5
Jean Claude Farah 152.9 8.1 18.4 179.4
Khalid Fellahi 48.0 78.2 1.9 128.1
Caroline Tsai 2.9 30.4 1.1 34.4
Odilon Almeida 0.1 42.0 2.3 2,049.5 2,093.9

Footnotes:

(1)

Amounts shown in this column for Mr. Ersek include the incremental cost or valuation of personal jet usage ($285,471), car service/allowances, and executive security costs. Following a comprehensive security assessment conducted by an independent security firm in 2018, 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 Mr. Agrawal, the amounts in this column include sporting and entertainment event tickets. For Ms. Tsai, the amounts in this column include sporting and entertainment event tickets and costs related to health and wellness. For Mr. Farah, the amounts in this column include housing ($108,901), education, health and wellness and transportation allowances, service anniversary award, and annual plane tickets to Mr. Farah’s home country for Mr. Farah and his dependents. For Mr. Almeida, the amounts in this column include costs related to reward and recognition point cards.

(2)

Amounts shown in this column represent (i) 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, (ii) 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 (iii) contributions made by the Company on behalf of Mr. Farah and Mr. Fellahi to the CFE retirement fund.

(3)

The amount shown in this column represents payments made to Mr. Almeida pursuant to his separation agreement. Please see the “—Potential Payments Upon Termination or Change-in-Control” section of this Proxy Statement for further information regarding the amount of compensation received or to be received by Mr. Almeida in connection with his separation.

The following table summarizes awards made to our NEOs in 2019.

2019 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
(#)
ALL OTHER OPTION AWARDS: NUMBER OF SECURITIES UNDERLYING OPTIONS
(#)(2)
EXERCISE OR BASE PRICE OF OPTION AWARDS
($/Sh)
GRANT DATE FAIR VALUE OF STOCK AND OPTION AWARDS ($000)(3)
TARGET ($000) MAXIMUM ($000) THRESHOLD (#) TARGET (#) MAXIMUM (#)

Hikmet
Ersek

    1,700.0 2,975.0                
2/21/19 2/21/19       99,263(4) 198,526(4) 397,052(4)       3,055.3
2/21/19 2/21/19       52,672(5) 105,343(5) 210,686(5)       1,400.0
2/21/19 2/21/19             39,706(6)     611.1
2/21/19 2/21/19               549,020 $17.63 1,400.0
N/A N/A             238,232(7)     533.6

Raj
Agrawal

    630.0 1,260.0                
2/20/19 2/20/19       33,633(4) 67,265(4) 134,530(4)       1,048.7
2/20/19 2/20/19       17,392(5) 34,783(5) 69,566(5)       480.0
2/20/19 2/20/19             40,359(6)     629.2
N/A N/A             107,624(7)     242.1

Jean Claude Farah

    450.0 900.0                
2/20/19 2/20/19       14,715(4) 29,429(4) 58,858(4)       458.8
2/20/19 2/20/19       7,609(5) 15,218(5) 30,436(5)       210.0
2/20/19 2/20/19             17,657(6)     275.3
N/A N/A             47,086(7)     105.9

Khalid
Fellahi

    407.6 815.2                
2/20/19 2/20/19       9,810(4) 19,619(4) 39,238(4)       305.9
2/20/19 2/20/19       5,073(5) 10,145(5) 20,290(5)       140.0
2/20/19 2/20/19             11,772(6)     183.5
3/07/19 3/07/19             5,647(6)     93.4
11/07/19 9/25/19             14,358(6)     400.0
N/A N/A             37,038 (7)     77.2

Caroline
Tsai

    405.0 810.0                
2/20/19 2/20/19       15,415(4) 30,830(4) 61,660(4)       480.6
2/20/19 2/20/19       7,972(5) 15,943(5) 31,886(5)       220.0
2/20/19 2/20/19             18,498(6)     288.4
N/A N/A             49,328(7)     111.0

Odilon Almeida

    650.0 1,300.0                
2/20/19 2/20/19       28,027(4) 56,054(4) 112,108(4)       873.9
2/20/19 2/20/19       14,493(5) 28,986(5) 57,972(5)       400.0
2/20/19 2/20/19             33,633(6)     524.3
N/A N/A             89,687(7)     201.8

Footnotes:

(1)

These amounts consist of the target and maximum cash award levels set in 2019 under the Annual Incentive Plan. In the case of Mr. Fellahi, his target and maximum cash award levels are pro-rated to reflect the mid-year increase in his target opportunity in connection with his 2019 promotion. The amount actually paid to each NEO is included in the Non-Equity Incentive Plan Compensation column in the 2019 Summary Compensation Table. Please see “Compensation Discussion and Analysis” for further information regarding the Annual Incentive Plan.

(2)

This amount represents 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.

(3)

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. In addition, the amounts associated with footnote 7 represent the incremental fair value associated with modifications to the 2019 Financial PSUs and February 2019 RSUs in connection with the retroactive implementation of dividend equivalents on such awards and do not represent new grants. See Note [17] to the Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2019 for a discussion of the relevant assumptions used in calculating the amounts.

(4)

These amounts represent the threshold, target and maximum Financial PSUs granted under the Long-Term Incentive Plan. These Financial PSUs are scheduled to vest on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022), subject to the achievement of threshold revenue and EBIT performance goals over a three-year performance period. Please see “Compensation Discussion and Analysis” for further information regarding this award. The Financial PSU award includes cash dividend equivalent rights entitling the recipient to cash dividend equivalents for dividends paid with respect to Company common stock subject to the award during the PSU vesting period. The cash dividend equivalents are subject to the same vesting conditions as the underlying Financial PSUs. In connection with his separation from the Company, Mr. Almeida is scheduled to receive a prorated portion of this award.

(5)

These amounts represent the threshold, target and maximum TSR PSUs granted under the Long-Term Incentive Plan. These TSR PSUs are scheduled to vest on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022) based on the Company’s relative TSR performance versus the S&P 500 Index over a three-year performance period. Please see “Compensation Discussion and Analysis” for further information regarding this award. In connection with his separation from the Company, Mr. Almeida is scheduled to receive a prorated portion of this award.

(6)

These amounts represent RSUs granted under the Long-Term Incentive Plan to the NEOs. Mr. Fellahi’s RSUs granted on March 7, 2019 and November 7, 2019 each vest 50% on each of the first and second anniversaries of the respective date of grant, and the remaining RSUs reported in this column vest 100% on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022), in each case 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 award agreements under the Long-Term Incentive Plan. Please see “Compensation Discussion and Analysis” for further information regarding these RSU grants. Each RSU award includes cash dividend equivalent rights entitling the recipient to cash dividend equivalents for dividends paid with respect to the Company common stock subject to the award during the RSU vesting period. The cash dividend equivalents are subject to the same vesting conditions as the underlying RSUs.

(7)

These amounts represent the February 2019 Financial PSUs (at target) and February 2019 RSUs that were modified by the retroactive implementation of dividend equivalents and do not reflect new equity awards. Because the retroactive implementation of dividend equivalent rights resulted in a modification under applicable accounting rules, the Company is required to report additional compensation in the 2019 Summary Compensation Table associated with such modification. Dividend equivalents with respect to the 2019 Financial PSUs and 2019 RSUs will be paid to the extent the underlying PSUs and RSUs are earned.

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 2019, Messrs. Ersek and Farah were each party to an employment agreement, which reflects competitive practices in the employment locations of Messrs. Ersek and Farah at the time the respective agreement 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 2019, the Compensation Committee granted long-term incentive awards under the Long-Term Incentive Plan consisting of (i) 50% Financial PSUs (vesting based on both revenue and EBIT growth goals), 20% TSR PSUs, 20% stock options, and 10% service-based RSUs for Mr. Ersek, and (ii) 50% Financial PSUs (vesting based on both revenue and EBIT growth goals), 20% TSR PSUs, and 30% service-based RSUs for the other NEOs. Please see the “Compensation Discussion and Analysis” section of this Proxy Statement for further information regarding the 2019 long-term incentive awards, including the performance metrics applicable to the 2019 PSUs.

At its February 2019 meeting, the Compensation Committee established performance objectives to be considered under the Annual Incentive Plan for the 2019 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 175% 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 key performance indicators relating to the Company’s 2019 Restructuring Initiative, leadership and compliance. 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 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, 2019.

2019 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

    OPTION AWARDS     STOCK AWARDS
NAME   NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
EXERCISABLE
  NUMBER OF
SECURITIES
UNDERLYING
UNEXERCISED
OPTIONS (#)
UNEXERCISABLE
  OPTION
EXERCISE
PRICE ($)
  OPTION
EXPIRATION
DATE
    NUMBER OF
SHARES OR
UNITS OF
STOCK THAT
HAVE NOT
VESTED (#)
  MARKET
VALUE OF
SHARES
OR UNITS
OF STOCK
THAT HAVE
NOT VESTED
($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     549,020(2)   17.63   2/21/2029     39,706(6)   1,063.3   397,052(16)   10,633.1
  95,890   287,672(3)   20.09   2/22/2028     34,844(7)   933.1   210,686(17)   5,642.2
  207,101   207,101(4)   19.99   2/22/2027     210,106(8)   5,626.6   348,434(18)   9,331.1
  317,220   105,741(5)   18.19   2/19/2026     82,796(9)   2,217.3   132,326(19)   3,543.7
  336,135       19.27   2/19/2025                  
  303,798       15.99   2/20/2024                  
  400,810       17.86   2/23/2022                  
  233,859       21.00   2/24/2021                  

Raj Agrawal

  84,034       19.27   2/19/2025     40,359(6)   1,080.8   134,530(16)   3,602.7
  65,823       15.99   2/20/2024     35,839(7)   959.8   69,566(17)   1,863.0
  134,063       14.00   2/20/2023     60,576(8)   1,622.2   119,464(18)   3,199.2
  86,843       17.86   2/23/2022     24,543(9)   657.3   45,326(19)   1,213.8
  24,796       16.49   9/15/2021     20,192(10)   540.7        
  16,895       21.00   2/24/2021                  
  24,553       16.00   2/24/2020                  

Jean Claude Farah

  44,818       19.27   2/19/2025     17,657(6)   472.9   58,858(16)   1,576.2
  10,127       15.99   2/20/2024     15,680(7)   419.9   30,436(17)   815.1
  33,401       17.86   2/23/2022     31,803(8)   851.7   52,266(18)   1,399.7
  28,157       21.00   2/24/2021     12,886(9)   345.1   19,832(19)   531.1
                    10,601(10)   283.9        

Khalid Fellahi

  28,012       19.27   2/19/2025     11,772(6)   315.3   39,238(16)   1,050.8
  16,895       21.00   2/24/2021     10,453(7)   279.9   20,290(17)   543.4
                    21,202(8)   567.8   34,844(18)   933.1
                    8,591(9)   230.1   13,222(19)   354.1
                    7,068(10)   189.3        
                    14,358(11)   384.5        
                    5,647(12)   151.2        

Caroline Tsai

                    18,498(6)   495.4   61,660(16)   1,651.3
                    13,440(7)   359.9   31,886(17)   853.9
                    6,809(13)   182.3   44,800(18)   1,199.7
                    6,873(14)   184.1   16,998(19)   455.2

Odilon Almeida

                    49,710(8)   1,331.2   22,710(16)   608.2
                    20,141(9)   539.4   11,744(17)   314.5
                    38,566(15)   1,032.8   53,230(18)   1,425.5
                            20,196(19)   540.8

Footnotes:

(1)

The market value of shares or units of stock that have not vested reflects the closing stock price of $26.78 per share on December 31, 2019.

(2)

These options were awarded on February 21, 2019, 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 22, 2018, 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 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.

(5)

These options vested on February 19, 2020.

(6)

Represents RSUs that are scheduled to vest on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022); 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 21, 2021 (or, in the case of Mr. Ersek, February 22, 2021); 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 PSUs that vested 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. In connection with his separation from the Company, Mr. Almeida’s PSUs vested on a prorated basis.

(9)

Represents PSUs that vested 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. In connection with his separation from the Company, Mr. Almeida’s PSUs vested on a prorated basis.

(10)

Represents RSUs that vested on February 21, 2020.

(11)

Represents RSUs that were awarded on November 7, 2019, which vest in 50% increments on each of the first and second 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.

(12)

Represents RSUs that were awarded on March 7, 2019, which vest in 50% increments on each of the first and second 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.

(13)

Represents RSUs that were awarded on December 5, 2018, which vest in 50% increments on each of the first and second 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.

(14)

Represents RSUs that were awarded on December 6, 2017, which vest in one-third increments on each of the first through third 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.

(15)

Represents RSUs that vested on a prorated basis upon Mr. Almeida’s retirement on September 30, 2019. Because Mr. Almeida is a “specified employee” for purposes of Section 409A of the Internal Revenue Code, Mr. Almeida’s RSUs may not be settled prior to the six-month anniversary of his separation from service.

(16)

Represents PSUs that are scheduled to vest on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022) based on the Company’s revenue and EBIT performance over the 2019–2021 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 maximum performance goals. In connection with his separation from the Company, Mr. Almeida’s PSUs are scheduled to vest on a prorated basis.

(17)

Represents PSUs that are scheduled to vest on February 20, 2022 (or, in the case of Mr. Ersek, February 21, 2022) based on the Company’s TSR performance relative to the S&P 500 Index over the 2019–2021 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 maximum performance goals. In connection with his separation from the Company, Mr. Almeida’s PSUs are scheduled to vest on a prorated basis.

(18)

Represents PSUs that are scheduled to vest on February 21, 2021 (or, in the case of Mr. Ersek, February 22, 2021) based on the Company’s revenue and EBIT performance over the 2018–2020 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 maximum performance goals. In connection with his separation from the Company, Mr. Almeida’s PSUs are scheduled to vest on a prorated basis.

(19)

Represents PSUs that are scheduled to vest on February 21, 2021 (or, in the case of Mr. Ersek, February 22, 2021) based on the Company’s TSR performance relative to the S&P 500 Index over the 2018–2020 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 maximum performance goals. In connection with his separation from the Company, Mr. Almeida’s PSUs are scheduled to vest on a prorated basis.

The following table provides information concerning the exercise of stock options and vesting of stock awards during 2019 for each of the NEOs.

2019 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   1,068,136   5,211,631   180,100   3,212,984
Raj Agrawal   21,950   142,528   60,528   1,079,095
Jean Claude Farah       30,264   539,547
Khalid Fellahi   49,948   212,793   18,600   331,571
Caroline Tsai       13,681   367,336
Odilon Almeida   170,248   881,722   49,524   882,915

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

2019 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
Raj Agrawal 58.2 35.4 315.8 1,382.1
Jean Claude Farah
Khalid Fellahi
Caroline Tsai 38.0 19.2 17.8 132.3
Odilon Almeida 52.5 30.8 137.4 850.5

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 2019 Summary Compensation Table.

(2)

These amounts are included in the “All Other Compensation” column in the 2019 Summary Compensation Table.

(3)

Amounts in this column include the following amounts that were previously reported in the Summary Compensation Table as compensation for 2018 and 2017 (in $000s): Mr. Agrawal–$206.1, Ms. Tsai–$28.8 and Mr. Almeida–$209.0.

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 Messrs. Ersek and 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 2019, each participating NEO was eligible to receive a Company contribution equal to 4% of his or her eligible compensation. During 2019, Mr. Ersek participated in the qualified retirement savings plan made available to eligible employees in Austria. During 2019, Mr. Farah and Mr. Fellahi 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 U.S. 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 or 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 or disability or for cause, or he or she terminates employment voluntarily for “good reason” (which may arise from 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:

  • The 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, 2019:

  • 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 would be 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 (i) the senior executive’s prorated target bonus under the Annual Incentive Plan for the year in which the termination occurs and (ii) 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 employment for good reason, in either case, 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 the applicable expiration date for the stock options).
  • 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 applicable expiration date for the stock options.
  • 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 (only 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 end of service gratuity/severance amounts in accordance with local law. Any amounts due to Mr. Farah under the Executive Severance Policy will be reduced by any end of service gratuity/severance paid under the terms of his employment agreement or as required by local law.
  • As noted in the “Compensation Discussion and Analysis” section of this Proxy Statement, effective June 30, 2019, Mr. Almeida stepped down as an executive officer of the Company, and served the Company in a senior advisor capacity until September 30, 2019. While serving as a senior advisor, Mr. Almeida continued to receive his regular base salary and participated in the Company’s benefit programs. In connection with Mr. Almeida’s departure, he became eligible to receive separation benefits pursuant to the Executive Severance Policy. Pursuant to the policy and in exchange for Mr. Almeida signing a general release of claims in favor of the Company, Mr. Almeida will receive separation pay in an aggregate amount equal to approximately $1.95M, payable over an 18-month period following his separation. In addition, Mr. Almeida became eligible to receive (i) his prorated 2019 target bonus under the Annual Incentive Plan ($486,164), (ii) a lump sum payment equal to the difference between active employee healthcare premiums and healthcare continuation coverage premiums ($23,601), (iii) prorated vesting of PSUs representing 129,806 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 Mr. Almeida’s termination date (estimated value of $3,007,605, based on the Company’s closing stock price as of September 30, 2019), (iv) prorated vesting of RSUs representing 38,566 RSUs, prorated for the period from the respective grant dates to Mr. Almeida’s termination date (estimated value of $893,574, based on the Company’s closing stock price as of September 30, 2019), (v) cash dividend equivalents with respect to the 2019 RSUs and 2019 Financial PSUs (accrued until such RSUs and PSUs are settled and valued at $10,901 for dividend equivalents accrued through September 30, 2019), and (vi) outplacement assistance through December 31, 2021 or such shorter period as determined by the Company (estimated to be $40,000).

For the NEOs serving as of December 31, 2019, 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, 2019.

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) DEU ACCRUAL
($000)
GROSS-UP
($000)(4)
TOTAL
($000)
STOCK
OPTIONS($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 7,100.0 38.6 9,262.6 23,081.2 1,996.4 190.6 14,197.7 55,867.1
Raj Agrawal 3,150.0 24.6 7,415.2 2,581.3 86.1 13,257.2
Jean Claude Farah 2,350.0 3,460.9 1,176.7 37.7 7,025.3
Khalid Fellahi 2,500.0 23.0 2,307.2 1,320.2 32.5 6,182.9
Caroline Tsai 2,115.0 23.6 2,080.1 1,221.7 39.5 5,479.9

INVOLUNTARY TERMINATION OTHER THAN FOR DEATH, DISABILITY, OR CAUSE

NAME SEVERANCE
($000)(2)
WELFARE
BENEFITS
($000)(3)
LONG-TERM INCENTIVES(5) DEU ACCRUAL
($000)
TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 7,100.0 38.6 3,007.4 12,070.9 576.4 22,793.3
Raj Agrawal 2,520.0 24.6 3,723.3 1,108.8 7,376.7
Jean Claude Farah 1,875.0 1,835.4 530.2 4,240.6
Khalid Fellahi 2,000.0 23.0 1,223.6 353.5 3,600.1
Caroline Tsai 1,687.5 23.6 511.9 247.7 2,470.7

DEATH OR DISABILITY

NAME SEVERANCE
($000)
WELFARE
BENEFITS($000)
LONG-TERM INCENTIVES(5) DEU ACCRUAL
($000)
TOTAL
($000)
STOCK
OPTIONS
($000)
PSUs
($000)
RSUs
($000)
Hikmet Ersek 9,262.6 23,081.2 1,996.4 190.6 34,530.8
Raj Agrawal 7,415.2 2,581.3 86.1 10,082.6
Jean Claude Farah 3,460.9 1,176.7 37.7 4,675.3
Khalid Fellahi 2,307.2 1,320.2 32.5 3,659.9
Caroline Tsai 2,080.1 1,221.7 39.5 3,341.3

RETIREMENT(6)

Hikmet Ersek       3,007.4   14,394.9   880.1   54.4   18,336.8
Khalid Fellahi         1,452.0   534.1   9.3   1,995.4
NAME   SEVERANCE
($000)
  WELFARE
BENEFITS
($000)
  LONG-TERM INCENTIVES(5)   DEU ACCRUAL
($000)
  TOTAL
($000)
STOCK
OPTIONS
($000)
  PSUs
($000)
  RSUs
($000)

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 or disability or for cause, or he or she terminates 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 (i) the lesser of the NEO’s (x) 2019 target bonus and (y) 2019 bonus based on actual performance, plus (ii) 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, 2019, 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 44% 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 $26.78 per share on December 31, 2019. 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 $26.78 per share on December 31, 2019 by the number of unvested RSUs or, in the case of PSUs, by the number of shares to be awarded based on target achievement. 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 $26.78 per share on December 31, 2019 and (ii) the number of unvested option shares that would vest following a qualifying termination or termination due to 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 qualifying termination within subsequent 24-month period   Accelerate   Accelerate   Accelerated vesting and award is payable to the extent earned based on actual performance results
Change-in-control (without termination of employment)   Vesting continues under normal terms   Vesting continues under normal terms   Vesting continues under normal terms
Involuntary termination without cause (outside 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 Fellahi are the only NEOs eligible for retirement as of December 31, 2019, as defined under the Long-Term Incentive Plan.

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