Fiserv, Inc.
FISERV INC (Form: DEF 14A, Received: 04/11/2017 16:46:34)
Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.   )

 

 

Filed by the Registrant  ☒                             Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material Pursuant to §240.14a-12

FISERV, INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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Table of Contents

 

 
 

255 Fiserv Drive

Brookfield, Wisconsin 53045

April 11, 2017

You are cordially invited to attend the annual meeting of shareholders of Fiserv, Inc. to be held at our office in Brookfield, Wisconsin on Wednesday, May 24, 2017 at 10:00 a.m. (CT). Information about the meeting and the matters on which shareholders will act is set forth in the accompanying Notice of 2017 Annual Meeting of Shareholders and Proxy Statement. You can find financial and other information about Fiserv in our Form 10-K for the fiscal year ended December 31, 2016. We welcome your comments or inquiries about our business that would be of general interest to shareholders during the meeting.

We urge you to be represented at the annual meeting, regardless of the number of shares you own or whether you are able to attend the annual meeting in person, by voting as soon as possible. Shareholders can vote their shares via the Internet, by telephone or by mailing a completed and signed proxy card (or voting instruction form if you hold your shares through a broker).

Sincerely,

 

      LOGO

Jeffery W. Yabuki

President and Chief Executive Officer

 

 

 

 

LOGO

 

 
 
 

 

  2017 Proxy Statement


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     Notice of 2017 Annual Meeting of Shareholders

 

 
 

Time and Date:

Wednesday, May 24, 2017 at 10:00 a.m. (CT)

Place:

Fiserv, 255 Fiserv Drive, Brookfield, Wisconsin 53045

Matters To Be Voted On:

1. Election of nine directors to serve for a one-year term and until their successors are elected and qualified.

 

2. Approval, on an advisory basis, of the compensation of our named executive officers.

 

3. Approval, on an advisory basis, of the frequency of the shareholder advisory vote on the compensation of our named executive officers.

 

4. Ratification of appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017.

 

5. Shareholder proposal seeking an amendment to our proxy access by-law, if properly presented.

 

     Any other business as may properly come before the annual meeting or any adjournments or postponements thereof.

Who Can Vote:

Holders of Fiserv stock at the close of business on March 27, 2017.

Date of Mailing:

On April 11, 2017, we will commence mailing the notice of Internet availability of proxy materials, or a proxy statement, proxy card and annual report, to shareholders.

By Order of the Board of Directors,

 

LOGO

 

Lynn S. McCreary

Secretary

April 11, 2017

Important notice regarding the availability of proxy materials for the shareholder meeting to be held on May 24, 2017: The proxy statement, 2016 Annual Report on Form 10-K and the means to vote by Internet are available at http://www.proxyvote.com.

 

LOGO

 

 
 
 

 

  2017 Proxy Statement


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      Proxy Statement Table of Contents

 

 
 

Proxy Statement Summary

    01  

Proxy and Voting Information

    06  

Security Ownership of Certain Beneficial Owners and Management

    09  

Proposal 1. Election of Directors

    11  

Our Board of Directors

    11  

Majority Voting

    11  

Nominees for Election

    12  

Corporate Governance

    17  

Director Compensation

    23  

Proposal 2. Advisory Vote to Approve Executive Compensation

    27  

Compensation Discussion and Analysis

    29  

Compensation Committee Report

    43  

Compensation Committee Interlocks and Insider Participation

    43  

Executive Compensation

    44  

Summary Compensation Table

    44  

Grants of Plan-Based Awards in 2016

    46  

Outstanding Equity Awards at December 31, 2016

    47  

Option Exercises and Stock Vested During 2016

    49  

Non-Qualified Deferred Compensation in 2016

    50  

Potential Payments Upon Termination or Change in Control

    51  

Section 16(a) Beneficial Ownership Reporting Compliance

    60  

Proposal 3. Advisory Vote on Frequency of Shareholder Advisory Vote on Executive Compensation

    61  

Proposal 4. Ratification of the Appointment of Independent Registered Public Accounting Firm

    62  

Independent Registered Public Accounting Firm and Fees

    63  

Audit Committee Pre-Approval Policy

    63  

Audit Committee Report

    63  

Proposal 5. Shareholder Proposal

    64  

Fiserv’s Statement in Opposition

    65  

Other Matters

    66  

Shareholder Proposals for the 2018 Annual Meeting

    66  

Proxy Statement and Annual Report Delivery

    66  

Appendix A – Non-GAAP Financial Measures

    67  

 

 
 
 

 

  2017 Proxy Statement


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      Proxy Statement Summary

 

 
 

This summary highlights information contained elsewhere in this proxy statement. This summary does not contain all of the information you should consider, and you should read the entire proxy statement carefully before voting.

 

 

Annual Meeting

 

Time and Date:    Wednesday, May 24, 2017 at 10:00 a.m. (CT)
Place:   

Fiserv

255 Fiserv Drive

Brookfield, Wisconsin 53045

Record Date:    March 27, 2017
Voting:    Shareholders as of the record date are entitled to vote by Internet at www.proxyvote.com; telephone at 1-800-690-6903; completing and returning their proxy card or voter instruction card; or in person at the annual meeting (shareholders who hold shares through a bank, broker or other nominee must obtain a legal proxy from their bank, broker or other nominee granting the right to vote).

Proxy Statement

This proxy statement is furnished in connection with the solicitation on behalf of the board of directors of Fiserv, Inc., a Wisconsin corporation, of proxies for use at our 2017 annual meeting of shareholders. This proxy statement is being made available to our shareholders entitled to vote at the annual meeting on or about April 11, 2017.

Purposes of Annual Meeting

 

Agenda Item

 

  

Board Vote
Recommendation

 

  

Page Reference

for More Detail

 

        
1.
  

Election of Directors

The board of directors has nominated nine individuals for election as directors. All nominees are currently serving as directors and all, except Mr. Yabuki, our president and chief executive officer, are independent. We believe that each nominee for director has the requisite experience, integrity and sound business judgment to serve as a director.

 

  

FOR each

Director Nominee

   11
                

 

2.

  

 

Advisory Vote on Named Executive Officer Compensation

The board of directors is asking shareholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. Our compensation program for named executive officers is designed to create long-term shareholder value by rewarding performance as described in the Compensation Discussion and Analysis section of this proxy statement.

 

  

 

FOR

  

 

27

 

 
 
 

 

01   2017 Proxy Statement


Table of Contents

 

 
 

Agenda Item

 

  

Board Vote
Recommendation

 

  

Page Reference

for More Detail

 

 

3.

  

 

Advisory Vote on Frequency of Shareholder Advisory Vote on Named Executive Officer Compensation

The board of directors is asking shareholders to approve, on an advisory basis, the frequency of holding a shareholder advisory vote on the compensation of our named executive officers in accordance with Section 14A of the Exchange Act. Shareholders may vote on whether they prefer to hold the advisory vote on the compensation of our named executive officers every one, two or three years.

 

  

 

1 YEAR

  

 

61

                

 

4.

  

 

Ratification of Appointment of Deloitte & Touche LLP as our Independent Registered Public Accounting Firm

As a matter of good corporate governance, the audit committee of the board of directors is seeking ratification of its appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017.

 

  

 

FOR

  

 

62

                

 

5.

  

 

Shareholder Proposal Seeking an Amendment to our Proxy Access By-law (if properly presented)

In 2016, we implemented proxy access for director nominations by our shareholders on terms consistent with market practices. Under our proxy access by-law, any shareholder or group of up to 20 shareholders that beneficially owns at least 3% of our outstanding common stock continuously for 3 years may nominate up to the greater of two individuals or 20% of the board for election to the board and requires us to include such nominees in our proxy materials. Accordingly, we believe no further action is needed and that the change to proxy access that the shareholder proposal seeks is not in the best interests of our company or shareholders.

 

  

 

AGAINST

  

 

64

                

Executing on Our Strategy

We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 as well as GAAP earnings per share of $4.15 and adjusted earnings per share of $4.43. This represents a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. We also had net cash provided by operating activities of $1.43 billion and free cash flow of $1.08 billion in 2016, a 6% and 8% increase, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. As discussed further in the Compensation Discussion and Analysis section of this proxy statement, our named executive officer compensation for 2016 was paid or awarded in the context of these results.

Internal revenue growth, adjusted earnings per share and free cash flow are non-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures.

 

 
 
 

 

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2016 Governance Highlights

On February 19, 2016, our board of directors amended our by-laws to implement proxy access in the form that it believes is most appropriate for our company and our shareholders and is consistent with current market practices. Specifically, the by-laws provide that any shareholder or group of up to 20 shareholders that beneficially owns at least 3% of our outstanding common stock continuously for three years and that complies with the procedures set forth in our by-laws may nominate up to the greater of two individuals or 20% of the board of directors for election to the board and require us to include such nominees in our proxy materials. Our board adopted proxy access after considering various potential formulations of proxy access and engaging with a number of our shareholders who provided valuable feedback on the subject of proxy access.

In addition, in 2016, we added a new independent director to the board, making it the third consecutive year that we have done so.

2016 Compensation Highlights

In 2016, our compensation committee began granting performance share units to certain executive officers. These performance share units have a three-year performance period, and the number of shares issued at vesting will be based on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over such three-year period.

We also amended the employment agreement with Mr. Yabuki in 2016 to provide that he will continue to serve as our president and chief executive officer for at least another three-year term and eliminated his excise tax gross-up benefit. In connection with this amendment, Mr. Yabuki received a grant of performance share units.

We continued to add executive talent to further strengthen the company, including by retaining a new chief financial officer and group president during the year.

We encourage you to review the entire “Compensation Discussion and Analysis” section of this proxy statement as well as the tabular and narrative disclosure under “Executive Compensation.”

 

 
 
 

 

03   2017 Proxy Statement


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Compensation Practices

 

What We Do

 

LOGO

   Our compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives.

 

LOGO

   We provide cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and strategic performance by delivering incremental value to executive officers to the extent our stock price increases over time.

 

LOGO

   In 2016, we began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the achievement of pre-determined performance goals over a three-year period.

 

LOGO

   We have a stock ownership policy that requires our executive officers to acquire and maintain a significant amount of Fiserv equity to further align their interests with those of our long-term shareholders.

 

LOGO

   We have a policy that prohibits our executive officers from hedging or pledging Fiserv stock.

 

LOGO

   We have a compensation recoupment, or “clawback,” policy.

 

 
 
   

 

 

What We Don’t Do

 

LOGO

   In 2016, we amended the employment agreements with our chief executive officer to eliminate the excise tax gross-up provisions in those agreements. We do not have excise tax gross-up arrangements with any of our other executive officers, and we have a policy not to enter into such arrangements in the future.

 

LOGO

   We don’t provide separate pension programs or a supplemental executive retirement plan to our named executive officers.

 

LOGO

   We generally don’t provide personal-benefit perquisites to our named executive officers.

 

 
 
 

 

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Board Nominees

The board met eight times during 2016 and each of our directors attended 75% or more of the aggregate number of meetings of the board and the committees on which he or she served, in each case while the director was serving on our board of directors during 2016. The following table provides summary information on each director nominee. All candidates were nominated in accordance with the company’s governance guidelines. The terms of Daniel P. Kearney and Thomas C. Wertheimer as directors will end at the 2017 annual meeting of shareholders. For more information about each director nominee, please see their full biographies beginning on page 12.

 

 

 

Name

 

         Age    

 

           Director
Since

 

          

Principal Occupation

 

         Independent

 

         Current Committee    
Memberships

 

 

Alison Davis

       55          2014        Advisor, Fifth Era      LOGO        Audit  

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

John Y. Kim

       56          2016       

President, New York Life Insurance Company

     LOGO        Audit  

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Dennis F. Lynch

       68          2012        Chairman, Cardtronics plc      LOGO       

 



Compensation

 

Nominating
and Corp.
Governance

 

 

 
 
 

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Denis J. O’Leary

       60          2008        Investor      LOGO       

 



Audit

 

Nominating
and Corp.
Governance

 

 

 
 
 

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Glenn M. Renwick +

       61          2001       

Executive Chairman, The Progressive Corporation

     LOGO        Compensation  

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Kim M. Robak +

       61          2003        Partner, Mueller Robak, LLC      LOGO     

 

Nominating
and Corp.
Governance

 
 
 

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

JD Sherman

       51          2015       

President and Chief Operating Officer, HubSpot, Inc.

     LOGO        Audit  

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Doyle R. Simons

       53          2007       

President and Chief Executive Officer, Weyerhaeuser Company

     LOGO        Compensation  

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

Jeffery W. Yabuki

       57          2005       

President and Chief Executive Officer, Fiserv, Inc.

         

 

    

 

 

      

 

 

      

 

    

 

    

 

 

 

+ Committee Chair

 

 
 
 

 

05   2017 Proxy Statement


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      Proxy and Voting Information

 

 
 

The board of directors of Fiserv, Inc., a Wisconsin corporation, is soliciting proxies in connection with our annual meeting of shareholders to be held on Wednesday, May 24, 2017 at 10:00 a.m. (CT), or at any adjournment or postponement of the meeting. On April 11, 2017, we will commence mailing the notice of Internet availability of proxy materials, or a proxy statement, proxy card and annual report, to shareholders entitled to vote at the annual meeting.

 

 

 

Notice of Internet Availability of Proxy Materials

 

In accordance with rules and regulations adopted by the Securities and Exchange Commission, we may furnish our proxy statement and annual report to shareholders of record by providing access to those documents via the Internet instead of mailing printed copies. The notice you received regarding the Internet availability of our proxy materials (the “Notice”) provides instructions on how to access our proxy materials and cast your vote over the Internet, by telephone or by mail.

 

Shareholders’ access to our proxy materials via the Internet allows us to reduce printing and delivery costs and lessen adverse environmental impacts. If you would like to receive a paper or email copy of our proxy materials, you should follow the instructions in the Notice for requesting those materials.

 

Solicitation of Proxies

 

We will pay the cost of soliciting proxies on behalf of the board of directors. Our directors, officers and other employees may solicit proxies by mail, personal interview, telephone or electronic communication. None of them will receive any special compensation for these efforts.

 

We have retained the services of Georgeson LLC (“Georgeson”) to assist us in soliciting proxies. Georgeson may solicit proxies by personal interview, mail, telephone or electronic communications. We expect to pay Georgeson its customary fee, approximately $10,000, plus reasonable out-of-pocket expenses incurred in the process of soliciting proxies. We also have made arrangements with brokerage firms, banks, nominees and other fiduciaries to forward proxy materials to beneficial owners of shares. We will reimburse such record holders for the reasonable out-of-pocket expenses incurred by them in connection with forwarding proxy materials. Proxies solicited hereby will be

             

tabulated by an inspector of election, who will be designated by the board of directors and will not be an employee or director of Fiserv, Inc.

 

Holders Entitled to Vote

 

The board of directors has fixed the close of business on March 27, 2017 as the record date for determining the shareholders entitled to notice of, and to vote at, the annual meeting. On the record date, there were 213,076,941 shares of common stock outstanding and entitled to vote, and we had no other classes of securities outstanding.

 

All of these shares are to be voted as a single class, and you are entitled to cast one vote for each share you held as of the record date on all matters submitted to a vote of shareholders.

 

Voting Your Shares

 

You may vote:

 

By Internet

Visit www.proxyvote.com

 

By telephone

Dial toll-free 1-800-690-6903

 

By mailing your proxy card

If you requested a printed copy of the proxy materials, mark your vote on the proxy card, sign and date it, and return it in the enclosed envelope.

 

In person

If you are a shareholder of record you may join us in person at the annual meeting to be held at our Brookfield, Wisconsin headquarters.

 

 
 
 

 

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Voting through the Internet or by telephone. You may direct your vote by proxy without attending the annual meeting. You can vote by proxy over the Internet or by telephone until 11:59 p.m. (ET) on May 23, 2017 by following the instructions provided in the Notice. Shareholders voting via the Internet or by telephone will bear any costs associated with electronic or telephone access, such as usage charges from Internet access providers and telephone companies.

 

Voting by proxy card. If you requested a printed copy of the proxy materials, you may vote by returning a proxy card that is properly signed and completed. The shares represented by that card will be voted as you have specified.

 

Banks, brokers or other nominees. Shareholders who hold shares through a bank, broker or other nominee may vote by the methods that their bank or broker makes available, in which case the bank or broker will include instructions with the Notice or this proxy statement. If you wish to vote in person at the annual meeting, you must obtain a legal proxy from your bank, broker or other nominee giving you the right to vote the shares at the annual meeting.

 

401(k) savings plan. An individual who has a beneficial interest in shares of our common stock allocated to his or her account under the Fiserv, Inc. 401(k) savings plan may vote the shares of common stock allocated to his or her account. We will provide instructions to participants regarding how to vote. If no direction is provided by the participant about how to vote his or her shares by 11:59 p.m. (ET) on May 21, 2017, the trustee of the Fiserv, Inc. 401(k) savings plan will vote the shares in the same manner and in the same proportion as the shares for which voting instructions are received from other participants, except that the trustee, in the exercise of its fiduciary duties, may determine that it must vote the shares in some other manner.

 

Proxies

 

Jeffery W. Yabuki, President and Chief Executive Officer, and Lynn S. McCreary, Chief Legal Officer and Secretary, have been selected by the board of directors as proxy holders and will vote shares represented by valid proxies. All shares represented

         

by valid proxies received and not revoked before they are exercised will be voted in the manner specified in the proxies.

 

If nothing is specified, the proxies will be voted: “FOR” each of the board’s nominees for director; “FOR” proposals two and four; “1 YEAR” for proposal three; and “AGAINST” proposal five, if properly presented at the annual meeting.

 

Our board of directors is unaware of any other matters that may be presented for action at our annual meeting. If other matters do properly come before the annual meeting or any adjournments or postponements thereof, it is intended that shares represented by proxies will be voted in the discretion of the proxy holders.

 

You may revoke your proxy at any time before it is exercised by doing any of the following:

 

• entering a new vote using the Internet or by telephone

 

• giving written notice of revocation to Lynn S. McCreary, Chief Legal Officer and Secretary, Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045

 

• submitting a subsequently dated and properly completed proxy card

 

• attending the annual meeting and voting in person

 

However, if your shares are held of record by a bank, broker or other nominee, you must obtain a proxy issued in your name from the record holder.

 

Quorum

 

The presence, in person or by proxy, of at least a majority of the outstanding shares of common stock entitled to vote at the annual meeting will constitute a quorum for the transaction of business. Holders of shares that abstain from voting or that are subject to a broker non-vote will be counted as present for the purpose of determining the presence or absence of a quorum for the transaction of business. In the event there are not sufficient votes for a quorum or to approve a proposal at the time of the annual meeting, the annual meeting may be adjourned or postponed, in our sole discretion, in order to permit the further solicitation of proxies.

 

 

 
 
 

 

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Required Vote

 

 

Proposal

 

        

Voting Standard

 

1.    Election of directors         

A director will be elected if the number of shares voted “for” that director’s election exceeds the number of votes cast “withheld” with respect to that director’s election.

 

2.   

To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement

 

         To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal.
3.   

To approve, on an advisory basis, the frequency of holding a shareholder advisory vote on the compensation of our named executive officers in accordance with Section 14A of the Exchange Act

 

         The alternative receiving the greatest number of votes – every one, two or three years – will be the frequency that shareholders approve on an advisory basis.
4.   

To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2017

 

         To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal.
5.   

To vote on a shareholder proposal seeking an amendment to our proxy access by-law, if properly presented at the annual meeting

 

         To be approved, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal.

For each of these proposals, abstentions and broker non-votes will be entirely excluded from the vote and will have no effect on its outcome.

 

 
 
 

 

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      Security Ownership of Certain Beneficial Owners and Management

 

 
 

The following table sets forth information with respect to the beneficial ownership of our common stock as of March 14, 2017 by: each current director and director nominee; each executive officer appearing in the Summary Compensation Table; all directors and executive officers as a group; and any person who is known by us to beneficially own more than 5% of the outstanding shares of our common stock based on our review of the reports regarding ownership filed with the Securities and Exchange Commission in accordance with Sections 13(d) and 13(g) of the Securities Exchange Act of 1934 (the “Exchange Act”).

 

 

 

Name and Address of Beneficial Owner (1)

 

       

Number of Shares of
Common Stock
Beneficially Owned (2)

 

        

Percent of Class (3)

 

 

   

 

    

 

T. Rowe Price Associates, Inc. (4)

100 E. Pratt Street

Baltimore, Maryland 21202

    30,526,773      14.3%

 

   

 

    

 

The Vanguard Group, Inc. (5)

100 Vanguard Blvd.

Malvern, Pennsylvania 19355

    20,527,961      9.6%

 

   

 

    

 

BlackRock, Inc. (6)

55 East 52nd Street

New York, New York 10055

    15,357,733      7.2%

 

   

 

    

 

Jeffery W. Yabuki

    2,602,437      1.2%

 

   

 

    

 

Robert W. Hau

         *    

 

   

 

    

 

Thomas J. Hirsch (7)

    44,033      *    

 

   

 

    

 

Mark A. Ernst

    468,785      *    

 

   

 

    

 

Devin B. McGranahan

    15,000      *    

 

   

 

    

 

Byron C. Vielehr

    128,134      *    

 

   

 

    

 

Alison Davis

    6,412      *    

 

   

 

    

 

Daniel P. Kearney

    65,735      *    

 

   

 

    

 

John Y. Kim

    359      *    

 

   

 

    

 

Dennis F. Lynch

    21,521      *    

 

   

 

    

 

Denis J. O’Leary

    74,315      *    

 

   

 

    

 

Glenn M. Renwick

    142,608      *    

 

   

 

    

 

Kim M. Robak

    70,602      *    

 

   

 

    

 

JD Sherman

    3,841      *    

 

   

 

    

 

Doyle R. Simons

    81,799      *    

 

   

 

    

 

Thomas C. Wertheimer

    61,316      *    

 

   

 

    

 

All directors and executive officers as a group (19 people)

    4,015,220      1.8%

 

   

 

    

 

* Less than 1%.

 

(1)   Unless otherwise indicated, the address for each beneficial owner is care of Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045.

 

(2)   All information with respect to beneficial ownership is based upon filings made by the respective beneficial owners with the Securities and Exchange Commission or information provided to us by such beneficial owners. Except as indicated in the footnotes to

   `             

       this table, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws.

 

       Includes stock options, which, as of March 14, 2017, were exercisable currently or within 60 days: Mr. Yabuki – 2,255,734; Mr. Hirsch – 29,606; Mr. Ernst – 411,246; Mr. Vielehr – 118,405;

 

 
 
 

 

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     Ms. Davis – 4,842; Mr. Kearney – 29,387; Mr. Lynch – 16,271; Mr. O’Leary – 37,045; Mr. Renwick – 48,265; Ms. Robak – 28,647; Mr. Sherman – 1,393; Mr. Simons – 47,385; Mr. Wertheimer – 43,169; and all directors and executive officers as a group – 3,244,734.

 

     Includes shares deferred under vested restricted stock units: Mr. Hirsch – 6,992; Ms. Davis – 1,486; Mr. Kearney – 13,556; Mr. Lynch – 5,250; Mr. O’Leary – 11,866; Mr. Renwick – 15,356; Ms. Robak –7,404; Mr. Simons – 15,356; and all directors and executive officers as a group – 70,274.

 

     Also includes shares eligible for issuance pursuant to the non-employee director deferred compensation plan: Mr. Kearney – 13,448; Mr. Kim – 359; Mr. O’Leary – 16,502; Mr. Renwick – 19,713; Ms. Robak – 7,479; Mr. Simons – 17,808; and all directors as a group – 75,309.

 

     Mr. Kearney is a trustee of the Daniel and Gloria Kearney Foundation which holds 3,400 shares of our common stock. Mr. Yabuki is a trustee of the Yabuki Family Foundation which holds 60,214 shares of our common stock. As a trustee, Mr. Kearney or Mr. Yabuki, as applicable, has voting and investment power over the shares held by the foundation. These shares are, accordingly, included in their respective reported beneficial ownership.

 

 

 

(3) On March 14, 2017, there were 213,687,143 shares of common stock outstanding. Percentages are calculated pursuant to Rule 13d-3(d) under the Exchange Act. Shares not outstanding that are subject to options exercisable by the holder thereof within 60 days, shares due upon vesting of restricted stock units within 60 days, shares deferred pursuant to vested restricted stock units and shares eligible for issuance pursuant to the non-employee director deferred compensation plan are deemed outstanding for the purposes of calculating the number and percentage owned by such shareholder but not deemed outstanding for the purpose of calculating the percentage of any other person.

 

 

 

(4) Based on a Schedule 13G filed by T. Rowe Price Associates, Inc. (“Price Associates”) on February 7, 2017 with the Securities and

 

 
 
   
  Exchange Commission, which indicates that these securities are owned by various individual and institutional investors for which Price Associates serves as investment adviser and with power to direct investments and/or sole power to vote the securities. According to the Schedule 13G, Price Associates exercises sole voting power over 8,675,688 of the securities and sole dispositive power over 30,526,773 of the securities. For purposes of the reporting requirements of the Exchange Act, Price Associates is deemed to be a beneficial owner of such securities; however, Price Associates expressly disclaims that it is, in fact, the beneficial owner of such securities.

 

 

 

(5) Based on a Schedule 13G filed by The Vanguard Group, Inc. (“Vanguard Group”) on February 13, 2017 with the Securities and Exchange Commission, which indicates that the Vanguard Group exercises sole voting power over 340,382 of the securities, shared voting power over 53,513 of the securities, sole dispositive power over 20,135,762 of the securities and shared dispositive power over 392,199 of the securities. According to the Schedule 13G, Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned subsidiary of Vanguard Group, is the beneficial owner of 278,986 of the securities as a result of VFTC serving as investment manager of collective trust accounts, and Vanguard Investments Australia, Ltd. (“VIA”), a wholly-owned subsidiary of Vanguard Group, is the beneficial owner of 174,609 of the securities as a result of VIA serving as investment manager of Australian investment offerings.

 

 

 

(6) Based on a Schedule 13G filed by BlackRock, Inc. (“BlackRock”) on January 24, 2017 with the Securities and Exchange Commission, which indicates that various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, these securities. According to the Schedule 13G, BlackRock exercises sole voting power over 13,250,362 of the securities and sole dispositive power over 15,357,733 of the securities.

 

 

 

(7) Mr. Hirsch served as our chief financial officer and treasurer until March 14, 2016 and is not included in the amounts shown above for all directors and executive officers as a group.

 

 
 
 

 

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      Proposal 1. Election of Directors

 

 
 

Our Board of Directors

All directors will be elected to hold office for a term expiring at the next annual meeting of shareholders and until their successors have been elected and qualified.

All of the nominees for election as director at the annual meeting are incumbent directors. No nominee for director has been nominated pursuant to any agreement or understanding between us and any person, and there are no family relationships among any of our directors or executive officers. These nominees have consented to serve as a director if elected, and management has no reason to believe that any nominee will be unable to serve. Unless otherwise specified, the shares of common stock represented by the proxies solicited hereby will be voted in favor of the nominees proposed by the board of directors. In the event that any director nominee becomes unavailable for re-election as a result of an unexpected occurrence, shares will be voted for the election of such substitute nominee, if any, as the board of directors may propose. The affirmative vote of a majority of votes cast is required for the election of directors.

 

 
 
   

Majority Voting

Our by-laws provide that each director will be elected by the majority of the votes cast with respect to that director’s election at any meeting of shareholders for the election of directors, other than a contested election. A majority of the votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “withheld” with respect to that director’s election. In a contested election, each director will be elected by a plurality of the votes cast with respect to that director’s election. Once our chairman of the board determines that a contested election exists in accordance with our by-laws, the plurality vote standard will apply at a meeting at which a quorum is present regardless of whether a contested election continues to exist as of the date of such meeting.

Our by-laws further provide that, in an uncontested election of directors, any nominee for director who is already serving as a director and receives a greater number of votes “withheld” from his or her election than votes “for” his or her election will promptly tender his or her resignation. The nominating and corporate governance committee of the board of directors will then promptly consider the tendered resignation, and the committee will recommend to the board whether to accept or reject it. Following the board’s decision, we will promptly file a Current Report on Form 8-K with the Securities and Exchange Commission that sets forth the board’s decision whether to accept the resignation as tendered, including a full explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting the tendered resignation. Any director who tenders a resignation pursuant to this provision will not participate in the committee recommendation or the board consideration regarding whether to accept the tendered resignation.

 

 
 
 

 

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Nominees for Election

Each person listed below is nominated for election to serve as a director until the next annual meeting of shareholders and until his or her successor is elected and qualified. The board of directors recommends that you vote “FOR” each of its nominees for director.

 

        

Alison Davis, 55

 

•  Director since 2014

 

•  Audit Committee member

 

•  Principal occupation:

   Advisor, Fifth Era

 

•  Experience in global financial

   services, corporate strategy and

   financial management

    

Ms. Davis is an advisor to Fifth Era, a firm that invests in and incubates early stage technology companies, and previously served as its Managing Partner from 2011 to 2015. Prior to Fifth Era, she was the Managing Partner of Belvedere Capital Partners, Inc., a private equity firm serving the financial services sector, from 2004 to 2010. Prior to joining Belvedere, she served as Chief Financial Officer for Barclays Global Investors, an institutional asset manager that is now part of BlackRock, Inc., from 2000 to 2003, a senior partner at A.T. Kearney, Inc., a leading global management consulting firm, from 1993 to 2000, and a consultant at McKinsey & Company, another leading global management consulting firm, from 1984 to 1993.

 

In the past five years, in addition to Fiserv, Ms. Davis has served as a director at the following publicly traded companies: Royal Bank of Scotland Group plc (current), a British bank holding company, Unisys Corporation (current), a global information technology company, Ooma, Inc. (current), a consumer telecommunications company, Diamond Foods, Inc. (former), a packaged food company, and Xoom Corporation (former), a digital money transfer provider.

 

The board concluded that Ms. Davis should be a director of the company because of her extensive experience in global financial services, corporate strategy and financial management.

 

        

John Y. Kim, 56

 

•  Director since 2016

 

•  Audit Committee member

 

•  Principal occupation:

   President, New York Life Insurance

   Company

 

•  Experience in the financial services

   industry

    

Mr. Kim has served as President of New York Life Insurance Company, a mutual life insurance company, since 2015. Since 2008, Mr. Kim served in various other positions at New York Life, including as its Chief Investment Officer from 2011 to 2015; President of the Investments Group from 2012 to 2015; and Chief Executive Officer and President of New York Life Investments from 2008 to 2012. Prior to joining New York Life in 2008, Mr. Kim was President of Prudential Retirement, a provider of retirement plan solutions, and its predecessor organization, CIGNA Retirement and Investment Services, from 2002 to 2007. Mr. Kim also served as Chief Executive Officer of Bondbook, an electronic bond trading company, from 2001 to 2002; President and CEO of Aeltus Investment Management Inc., now known as ING Investment Management Company, from 1994 to 2000; and Managing Director of Mitchell Hutchins Asset Management, Inc., now part of UBS Global Asset Management, from 1993 to 1994.

 

Mr. Kim also currently serves as a director of New York Life Insurance and Annuity Corporation, a wholly owned life insurance subsidiary of New York Life and registered investment company.

 

Mr. Kim was recommended to the nominating and corporate governance committee by one of the company’s independent directors. The board concluded that Mr. Kim should be a director of the company because of his extensive experience in the financial services industry.

 

 

 
 
 

 

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Dennis F. Lynch, 68

 

•  Director since 2012

 

•  Compensation Committee and

   Nominating and Corporate

   Governance Committee

   member

 

•  Principal occupation:

   Chairman, Cardtronics plc

 

•  Experience in the payments industry

    

Mr. Lynch is Chairman of Cardtronics plc, a publicly traded company and the largest owner and operator of retail ATMs worldwide. He was appointed Chairman in 2010 and has served as a director of Cardtronics since 2008. Mr. Lynch was also the founding Chairman and, from 2009 to 2015, a board member of the Secure Remote Payments Council, a cross-industry organization dedicated to accelerating the growth, development and market adoption of more secure e-commerce and mobile payments. He previously served as: Chairman and Chief Executive Officer of RightPath Payments, Inc. from 2005 to 2008; a director of Open Solutions, Inc. from 2005 to 2007; President and Chief Executive Officer of NYCE Corporation from 1996 to 2004; and Chairman of Yankee 24 ATM Network from 1988 to 1990.

 

In the past five years, in addition to Fiserv, Mr. Lynch has served as a director of Cardtronics plc (current).

 

The board concluded that Mr. Lynch should be a director of the company because he has over 30 years of experience in the payments industry and is a leader in the introduction and growth of payment solutions.

 

        

Denis J. O’Leary, 60

 

•  Director since 2008

 

•  Audit Committee and

   Nominating and Corporate

   Governance Committee member

 

•  Principal occupation:

   Investor

 

•  Experience in the banking,

   technology and information services

   industries

    

Mr. O’Leary is a private investor, and from 2009 to 2015, he served as Managing Partner of Encore Financial Partners, Inc., a company focused on the acquisition and management of banking organizations in the United States. From 2006 to 2009, he was a senior advisor to The Boston Consulting Group with respect to the enterprise technology, financial services and consumer payments industries. Through early 2003, he spent 25 years at J.P. Morgan Chase & Company and its predecessors in various capacities, including Director of Finance, Chief Information Officer, Head of Retail Branch Banking, Managing Executive of Lab Morgan, and, from 1994 to 2003, Executive Vice President.

 

Mr. O’Leary also currently serves as a director at CrowdStrike, Inc., a privately held computer security software company, Hamilton State Bancshares, Inc., a privately held bank holding company, and The Warranty Group, Inc., a privately held provider of extended warranty programs and related benefits.

 

The board concluded that Mr. O’Leary should be a director of the company because of his extensive knowledge and experience in the banking, technology and information services industries.

 

 

 
 
 

 

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Glenn M. Renwick, 61

 

•  Director since 2001

 

•  Compensation Committee chair

 

•  Principal occupation:

   Executive Chairman, The

   Progressive Corporation

 

•  Experience in business leadership

   and information technology

    

Mr. Renwick is Executive Chairman of The Progressive Corporation, a publicly traded property and casualty insurance company, and also served as its President and Chief Executive Officer from 2001 to 2016. Before being named Chief Executive Officer in 2001, Mr. Renwick served as Chief Executive Officer – Insurance Operations and Business Technology Process Leader from 1998 through 2000. Prior to that, he led Progressive’s consumer marketing group and served as president of various divisions within Progressive. Mr. Renwick joined Progressive in 1986 as Auto Product Manager for Florida.

 

In the past five years, in addition to Fiserv, Mr. Renwick has served as a director at the following publicly traded companies: The Progressive Corporation (current) and UnitedHealth Group Incorporated (current), a provider of health insurance.

 

The board concluded that Mr. Renwick should be a director of the company because he is an accomplished business leader with information technology experience.

 

        

Kim M. Robak, 61

 

•  Director since 2003

 

•  Nominating and Corporate

   Governance Committee chair

 

•  Principal occupation:

   Partner at Mueller Robak, LLC

 

•  Experience in law, government

   and technology

    

Ms. Robak has been a partner at Mueller Robak, LLC, a government relations firm, since 2004. Prior to that, Ms. Robak was Vice President for External Affairs and Corporation Secretary at the University of Nebraska from 1999 to 2004. Ms. Robak served as the Lieutenant Governor of the State of Nebraska from 1993 to 1999, as Chief of Staff from 1992 to 1993, and as Legal Counsel from 1991 to 1992. Prior to 1991, Ms. Robak was a partner at the law firm Rembolt Ludtke Milligan and Berger. During her tenure in state government, she chaired the Governor’s Information Resources Cabinet and led the Information Technology Commission of Nebraska.

 

Ms. Robak also currently serves as a director at Ameritas Mutual Holding Company, a privately held provider of life insurance, annuities, and mutual funds, Ameritas Life Insurance Corporation, a privately held life insurance company, and Union Bank & Trust Company, a privately held financial institution.

 

The board concluded that Ms. Robak should be a director of the company because she is an accomplished businessperson who brings a variety of experiences to the board through her work in law, government and technology.

 

 

 
 
 

 

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JD Sherman, 51

 

•  Director since 2015

 

•  Audit Committee member

 

•  Principal occupation:

   President and Chief Operating

   Officer, HubSpot, Inc.

 

•  Experience in financial management

   and the information technology

   industry

    

Mr. Sherman has served as Chief Operating Officer of HubSpot, Inc., a publicly traded provider of marketing software, since 2012 and as its President since 2014. Prior to joining HubSpot, Mr. Sherman was Chief Financial Officer of Akamai Technologies, Inc., a provider of content delivery network services, from 2005 to 2012. From 1990 to 2005, Mr. Sherman served in various positions at International Business Machines Corporation, an information technology company.

 

In the past five years, in addition to Fiserv, Mr. Sherman has served as a director of Cypress Semiconductor Corporation (former), a publicly traded provider of programmable technology solutions. He also previously served as a director of 3Com Corporation, a former global enterprise networking solutions provider, and AMIS Holdings, Inc., a former designer and manufacturer of mixed-signal and digital products for the automotive, medical, industrial, military and aerospace sectors.

 

The board concluded that Mr. Sherman should be a director of the company because of his strong financial management experience in the information technology industry.

 

        

Doyle R. Simons, 53

 

•  Director since 2007

 

•  Compensation Committee

   member

 

•  Principal occupation:

   President and Chief Executive

   Officer, Weyerhaeuser Company

 

•  Experience in senior management,

   financial and legal matters

    

Mr. Simons is President and Chief Executive Officer of Weyerhaeuser Company, a publicly traded company focused on timberlands and forest products. Prior to joining Weyerhaeuser in 2013, Mr. Simons served in a variety of roles for Temple-Inland, Inc., a formerly publicly traded manufacturing company focused on corrugated packaging and building products which was acquired in 2012. From 2007 to early 2012, he served as the Chairman and Chief Executive Officer; from 2005 to 2007, he was Executive Vice President; from 2003 to 2005, he served as its Chief Administrative Officer; from 2000 to 2003, he was Vice President – Administration; and from 1994 to 2000, he served as Director of Investor Relations.

 

In the past five years, in addition to Fiserv, Mr. Simons has served as a director at the following publicly traded companies: Weyerhaeuser Company (current) and Temple-Inland, Inc. (former).

 

The board concluded that Mr. Simons should be a director of the company because he is an accomplished businessperson with diverse experiences in senior management, financial and legal matters.

 

 

 
 
 

 

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Jeffery W. Yabuki, 57

 

•  Director since 2005

 

•  Principal occupation:

   President and Chief Executive

   Officer, Fiserv, Inc.

 

•  Experience in senior management

   positions including as chief

   executive officer of the company

    

Mr. Yabuki has served as our President and Chief Executive Officer since 2005. Before joining Fiserv, Mr. Yabuki served as Executive Vice President and Chief Operating Officer for H&R Block, Inc., a financial services firm, from 2002 to 2005. From 2001 to 2002, he served as Executive Vice President of H&R Block and from 1999 to 2001, he served as the President of H&R Block International. From 1987 to 1999, Mr. Yabuki held various executive positions with American Express Company, a financial services firm, including President and Chief Executive Officer of American Express Tax and Business Services, Inc.

 

Mr. Yabuki also currently serves as a director at Ixonia Bancshares, Inc., a privately held bank holding company.

 

The board concluded that Mr. Yabuki should be a director of the company because he has extensive senior management experience and serves as the chief executive officer of the company.

 

 

 
 
 

 

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Corporate Governance

At a Glance

 

Name

 

        

Independent                    

 

      

Audit Committee          

 

      

Compensation
Committee                      

 

      

Nominating and
Corporate Governance
Committee

 

 

    

 

    

 

    

 

    

 

Daniel P. Kearney

Chairman of the Board

     LOGO               

 

    

 

    

 

    

 

    

 

Alison Davis

     LOGO      LOGO          

 

    

 

    

 

    

 

    

 

John Y. Kim

     LOGO      LOGO          

 

    

 

    

 

    

 

    

 

Dennis F. Lynch

     LOGO           LOGO      LOGO

 

    

 

    

 

    

 

    

 

Denis J. O’Leary

     LOGO      LOGO           LOGO

 

    

 

    

 

    

 

    

 

Glenn M. Renwick

     LOGO           C     

 

    

 

    

 

    

 

    

 

Kim M. Robak

     LOGO                C

 

    

 

    

 

    

 

    

 

JD Sherman

     LOGO      LOGO          

 

    

 

    

 

    

 

    

 

Doyle R. Simons

     LOGO           LOGO     

 

    

 

    

 

    

 

    

 

Thomas C. Wertheimer

     LOGO      C          

 

    

 

    

 

    

 

    

 

Jeffery W. Yabuki

                   

 

    

 

    

 

    

 

    

 

C  = Committee Chair

 

Director Independence

 

Our board of directors has determined that Alison Davis, Daniel P. Kearney, John Y. Kim, Dennis F. Lynch, Denis J. O’Leary, Glenn M. Renwick, Kim M. Robak, JD Sherman, Doyle R. Simons and Thomas C. Wertheimer are “independent” within the meaning of NASDAQ Marketplace Rule 5605(a)(2). Prior to his resignation on June 21, 2016, our board of directors also determined that Christopher M. Flink was independent within the meaning of that rule. Mr. Yabuki is not independent because he is a current employee of Fiserv.

               

Board Meetings and Attendance

 

During our fiscal year ended December 31, 2016, our board of directors held eight meetings. Each director attended at least 75% of the aggregate of the number of meetings of the board of directors and the number of meetings held by all committees of the board on which she or he served, in each case while the director was serving on our board of directors. Our directors meet in executive session without management present at each regular meeting of the board of directors.

 

Directors are expected to attend each annual meeting of shareholders. All of the directors serving on the board at the time of our 2016 annual meeting of shareholders attended the meeting.

 

The board of directors considers the performance of the board and of individual directors, and each committee of the board reviews its performance, on an annual basis.

 

 
 
 

 

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Board Leadership

 

We separate the roles of chief executive officer and Chairman of the board to allow our leaders to focus on their respective responsibilities. Our chief executive officer is responsible for setting our strategic direction and providing day-to-day leadership. Our Chairman provides guidance to our chief executive officer, sets the agenda for board meetings and presides over meetings of the full board.

 

Our board recognizes the time, effort and energy that our chief executive officer is required to devote to his position in the current business environment, as well as the commitment required to serve as our Chairman. Our board believes that having separate positions provides a clear delineation of responsibilities for each position and enhances the ability of each leader to discharge his duties effectively which, in turn, enhances our prospects for success.

 

 

 
 
   

 

 

 

 
 
 

 

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Committees of the Board of Directors

Our board of directors has three standing committees: an audit committee; a compensation committee; and a nominating and corporate governance committee. The directors currently serving on these committees satisfy the independence requirements of the NASDAQ Marketplace Rules applicable to such committees, including the enhanced independence requirements for members of the audit committee and compensation committee. Each of these committees has the responsibilities set forth in written charters adopted by the board of directors. We make copies of each of these charters available free of charge on our website at http://investors.fiserv.com/corporate-governance.cfm. Other than the text of the charters, we are not including the information contained on or available through our website as a part of, or incorporating such information by reference into, this proxy statement.

 

 

 

Audit Committee

 

    

 

    

 

 

Mr. Wertheimer (Chair)

Ms. Davis

Mr. Kim (as of February 22, 2017)

Mr. O’Leary

Mr. Sherman

Number of Meetings held in 2016:

7

    

Duties:

 

The audit committee’s primary role is to provide independent review and oversight of our financial reporting processes and financial statements, system of internal controls, audit process and results of operations and financial condition. The audit committee is directly and solely responsible for the appointment, compensation, retention, termination and oversight of our independent registered public accounting firm. Each of the members of the audit committee is independent, as defined by applicable NASDAQ and Securities and Exchange Commission rules. The board of directors has determined that Ms. Davis and Messrs. Kim, O’Leary, Sherman and Wertheimer are “audit committee financial experts,” as that term is used in Item 407(d)(5) of Regulation S-K.

 

Compensation Committee

 

 

    

 

 

Mr. Renwick (Chair)

Mr. Lynch

Mr. Simons

Number of Meetings held in 2016:

5

    

Duties:

 

The compensation committee of the board of directors is responsible for overseeing executive officer compensation. The compensation committee’s responsibilities include: approval of executive officer compensation and benefits; administration of our equity incentive plans including compliance with executive stock ownership requirements; and approval of severance or similar termination payments to executive officers. Each of the members of the compensation committee is a non-employee director and “independent” as defined by applicable NASDAQ rules. Additional information regarding the compensation committee and our policies and procedures regarding executive compensation, including, among other matters, our use of compensation consultants and their role, and management’s role, in determining compensation, is provided below under the heading “Compensation Discussion and Analysis – Determining and Structuring Compensation – Determining Compensation.”

 

Nominating and Corporate Governance Committee

 

 

    

 

 

Ms. Robak (Chair)

Mr. Lynch

Mr. O’Leary

Number of Meetings held in 2016:

4

    

Duties:

 

The nominating and corporate governance committee assists the board of directors to identify and evaluate potential director nominees, and recommends qualified nominees to the board of directors for consideration by the shareholders. The nominating and corporate governance committee also oversees our corporate governance policies and practices. Each of the members of the nominating and corporate governance committee is independent as defined by applicable NASDAQ rules.

 

 
 
 

 

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Nominations of Directors

The nominating and corporate governance committee recommends to the full board of directors the nominees to stand for election at our annual meeting of shareholders and to fill vacancies occurring on the board. In this regard, the nominating and corporate governance committee regularly assesses the appropriate size of the board of directors and whether any vacancies on the board of directors are expected due to retirement or otherwise. In the event that vacancies are anticipated or otherwise arise, the committee utilizes a variety of methods to identify and evaluate director candidates. Candidates may come to the attention of the committee through current directors, professional search firms, shareholders or other persons.

The committee evaluates prospective nominees in the context of the then current constitution of the board of directors and considers all factors it believes appropriate, which include those set forth in our governance guidelines. Our governance guidelines provide that a majority of our board of directors should have diverse backgrounds with outstanding business experience, proven ability and significant accomplishments through other enterprises to enable the board of directors to represent a broad set of capabilities and viewpoints. Other than as set forth in our governance guidelines, the committee does not have a formal policy with respect to diversity. The board of directors and the nominating and corporate governance committee believe the following minimum qualifications must be met by a director nominee to be recommended by the committee:

 

  Each director must display the highest personal and professional ethics, integrity and values.

 

  Each director must have the ability to exercise sound business judgment.

 

  Each director must be highly accomplished in his or her respective field.

 

  Each director must have relevant expertise and experience and be able to offer advice and guidance to our chief executive officer based on that expertise and experience.

 

  Each director must be independent of any particular constituency, be able to represent all of our

 

 
 
   
   

shareholders, and be committed to enhancing long-term shareholder value.

 

  Each director must have sufficient time available to devote to activities of the board of directors and to enhance his or her knowledge of our business.

In addition, the nominating and corporate governance committee seeks to have at least one director who is an “audit committee financial expert” under Item 407(d)(5) of Regulation S-K under the Exchange Act, and we must have at least one director (who may also be an “audit committee financial expert”) who, in accordance with the NASDAQ Marketplace Rules, has past employment experience in finance or accounting, requisite professional certification in accounting or any other comparable experience or background which results in the individual’s financial sophistication, including being or having been a chief executive officer, chief financial officer or other senior officer with financial oversight responsibilities.

In making recommendations to the board of directors, the nominating and corporate governance committee examines each director candidate on a case-by-case basis regardless of who recommended the candidate. The committee will consider shareholder-recommended director candidates in accordance with the foregoing and other criteria set forth in our governance guidelines and the Nominating and Corporate Governance Committee Charter. Recommendations for consideration by the committee must be submitted in writing to the chairman of the board and/or president and the chairman of the nominating and corporate governance committee together with appropriate biographical information concerning each proposed candidate. The committee does not evaluate shareholder-recommended director candidates differently than any other director candidate.

In 2016, we amended our by-laws to include a provision pursuant to which a shareholder, or group of up to 20 shareholders, owning continuously for at least three years shares of our stock representing an aggregate of at least 3% of our outstanding shares may nominate and include in our proxy material director nominees constituting up to 20% of our board of directors – so called

 

 
 
 

 

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“proxy access.” Alternatively, a shareholder may nominate director nominees under our by-laws that the shareholder does not intend to have included in our proxy materials. In either case, such shareholders must comply with the procedures set forth in our by-laws, including that the shareholders and nominees satisfy the requirements in our by-laws and our corporate Secretary receives timely written notice, in proper form, of the intent to make a nomination at an annual meeting of shareholders. The detailed requirements for nominations are set forth in our by-laws, which were attached as an exhibit to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 19, 2016. A copy of our by-laws will be provided upon written request to our corporate Secretary. Additional requirements regarding shareholder proposals and director nominations, including the dates by which notices must be received, are described below under the heading “Other Matters – Shareholder Proposals for the 2018 Annual Meeting.”

Risk Oversight

Our management is responsible for managing risk, and our board of directors is responsible for overseeing management. To discharge this responsibility, the board seeks to be informed about the risks facing the company so that it may evaluate actual and potential risks and understand how management is addressing such risks. To this end, the board, as a whole and at the committee level, regularly receives reports from management about risks faced by the company. For example, the board of directors regularly receives reports directly from our chief executive officer about, among other matters, developments in our industry so that the board may evaluate the competitive and other risks faced by the company. In addition, our chief financial officer, at each meeting of the board, presents information regarding our financial performance and condition in an effort to understand financial risks faced by the company. Furthermore, at each meeting, the board receives a cybersecurity update from our chief executive officer, chief risk officer, chief information officer or chief legal officer, or a combination of the foregoing, in each case depending on the focus of the matters under review.

As discussed above, the positions of chief executive officer and Chairman are held by different

 

 
 
   

individuals. We believe a separate Chairman position enhances the effectiveness of our board’s risk oversight function by providing leadership to the board that is independent from those tasked with managing the risk profile of our company.

The committees of the board also play a critical role in the board’s ability to collect and assess information. The audit committee’s charter charges it with a variety of risk-related oversight duties, including:

 

  coordinating the board’s oversight of our significant internal controls and disclosure controls and procedures;

 

  administering our code of business conduct and ethics;

 

  reviewing legal and regulatory matters that could have a material impact on the financial statements;

 

  considering and approving related party transactions as required by our related party transactions policy; and

 

  establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters.

At each of its quarterly meetings, the audit committee receives reports from our chief audit executive regarding significant audit findings during the quarter and management’s responses thereto. In addition, the committee regularly receives reports from our chief compliance officer and chief risk officer. Our chief risk officer leads our enterprise risk and resilience group which operates Fiserv’s enterprise risk management program. The program encompasses our business continuity planning, incident management, risk assessment, operational regulatory compliance, insurance and information security across all Fiserv businesses and support functions.

Our compensation committee regularly receives reports about our compensation programs and policies to enable it to oversee management’s administration of compensation-related risks.

The nominating and corporate governance committee also works closely with our chief legal officer and the members of the board to seek to manage risks associated with director and executive officer succession, the independence of the directors, conflicts of interest and other corporate governance related matters.

 

 
 
 

 

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Communications with the Board of Directors

Shareholders may communicate with our board of directors or individual directors by submitting communications in writing to us at 255 Fiserv Drive, Brookfield, Wisconsin 53045, Attention: Lynn S. McCreary, Chief Legal Officer and Secretary. Communications will be delivered directly to our board of directors or individual directors, as applicable.

Review, Approval or Ratification of Transactions with Related Persons

We have adopted a written policy requiring that any related person transaction that would require disclosure under Item 404(a) of Regulation S-K under the Exchange Act be reviewed and approved by our audit committee or, if the audit committee is not able to review the transaction for any reason, a majority of our disinterested directors. Compensation matters regarding our executive officers or directors are reviewed and approved by

 

 
 
   

our compensation committee. The policy also provides that, at least annually, any such ongoing, previously approved related person transaction is to be reviewed by the body that originally approved the transaction: to ensure that it is being pursued in accordance with all of the understandings and commitments made at the time that it was previously approved; to ensure that the commitments being made with respect to such transaction are appropriately reviewed and documented; and to affirm the continuing desirability of and need for the related person arrangement.

All relevant factors with respect to a proposed related person transaction will be considered, and such a transaction will only be approved if it is in our and our shareholders’ best interests or, if an alternate standard of review is imposed by applicable laws, statutes, governing documents or listing standards, if such alternate standard of review is satisfied.

 

 
 
 

 

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Director Compensation

Objectives for Director Compensation

Quality non-employee directors are critical to our success. We believe that the two primary duties of non-employee directors are to effectively represent the long-term interests of our shareholders and to provide guidance to management. As such, our compensation program for non-employee directors is designed to meet several key objectives:

 

  Adequately compensate directors for their responsibilities and time commitments and for the personal liabilities and risks that they face as directors of a public company

 

  Attract the highest caliber non-employee directors by offering a compensation program consistent with those at peer companies

 

  Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and requiring directors to own our stock

 

  Provide compensation that is simple and transparent to shareholders and reflects corporate governance best practices

 

  Where possible, provide flexibility in form and timing of payments

 

 
 
   

Elements of Director Compensation

The compensation committee of the board of directors reviews non-employee director compensation every other year and considers our financial performance, general market conditions and non-employee director compensation at the peer group companies set forth below under “Compensation Discussion and Analysis – Structuring Compensation – Peer Group.”

We believe that the following components of our director compensation program support the objectives above:

 

  We provide cash compensation through retainers for board and committee service, as well as separate retainers to the chairpersons of our board committees. Compensation in this manner simplifies the administration of our program and creates greater equality in rewarding service on committees of the board. The committee and committee chair retainers compensate directors for the additional responsibilities and time commitments involved with those positions.

 

  To compensate the Chairman for his involvement in board and committee matters, he receives an annual cash retainer of $145,000 in addition to the standard board retainer. The Chairman receives equity grants in the same manner as the other non-employee directors.

 

  Non-employee directors receive grants of stock options and restricted stock units which vest 100% on the earlier of (i) the first anniversary of the grant date or (ii) immediately prior to the first annual meeting of shareholders following the grant date.

 

  Our stock ownership policy requires non-employee directors to own shares of our common stock having a total value equal to six times the annual board retainer amount.

 

  We maintain a non-employee director deferred compensation plan that provides directors with flexibility in managing their compensation and promotes alignment with the interests of our shareholders. This plan allows directors to defer all or a part of their cash retainers in hypothetical shares of our common stock until their service on the board ends.

 

  Non-employee directors may also defer receipt of the restricted stock units granted to them annually. Restricted stock units are hypothetical shares of our common stock that are settled in shares of common stock on a one-for-one basis upon vesting, subject to any deferral elections. Directors may defer receipt of shares issuable pursuant to the restricted stock units until their service on the board ends.

 

 
 
 

 

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Non-Employee Director Deferred

Compensation Plan

Under our non-employee director deferred compensation plan, each non-employee director may defer up to 100% of his or her cash fees. Based on his or her deferral election, the director is credited with a number of share units at the time he or she would have otherwise received the portion of the fees being deferred. Share units are equivalent to shares of our common stock except that share units have no voting rights.

Upon cessation of service on the board, the director receives a share of our common stock for each share unit. Shares are received in a lump sum distribution, and any fractional share units are paid in cash. Share units credited to a director’s account are considered awards granted under the Amended and Restated Fiserv, Inc. 2007 Omnibus Incentive Plan (the “Incentive Plan”) and count against that plan’s share reserve.

Stock Ownership Requirements

Under our stock ownership policy, non-employee directors are required to accumulate and hold our common stock having a market value equal to at least six times the amount of the annual board retainer.

Non-employee directors have five years after they become subject to the policy to meet the ownership requirements provided that interim ownership milestones are achieved during the five-year period. All non-employee directors are in compliance with our stock ownership policy.

 

 
 
   

Director Compensation Program

Our 2016 non-employee director compensation program is summarized below on an annualized basis:

 

Element of Compensation

 

        

2016

 

 

 

    

 

 

 

Board Retainer

     $     78,000  

 

    

 

 

 

Chairman’s Retainer (1)

       145,000  

 

    

 

 

 

Committee Retainer

    

 

    

 

 

 

Audit

       15,000  

 

    

 

 

 

Compensation

       15,000  

 

    

 

 

 

Nominating and Corporate Governance

       15,000  

 

    

 

 

 

Committee Chair Retainer (1)

    

 

    

 

 

 

Audit

       10,000  

 

    

 

 

 

Compensation

       10,000  

 

    

 

 

 

Nominating and Corporate Governance

       10,000  

 

    

 

 

 

Equity Awards ($) (2)

    

 

    

 

 

 

Stock Options

       86,000  

 

    

 

 

 

Restricted Stock Units

       86,000  

 

    

 

 

 

 

(1)    The Chairman’s retainer is in addition to the standard board retainer, and the committee chair retainer is in addition to the standard committee retainer.

 

 

 

(2)    Upon being elected as a director at our annual meeting of shareholders in 2016, each non-employee director received stock options and restricted stock units each having approximately $86,000 in value.

 

 

 

 

 
 
 

 

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2016 Director Compensation

 

Name

 

         Fees Earned or
Paid in Cash ($) (1)         

 

           Stock Awards ($) (2)     

 

           Option Awards ($) (2)     

 

           Total ($)                    

 

 

Alison Davis (3)

       93,000          86,066          86,007          265,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Christopher M. Flink (4)

       51,330          86,066          86,007          223,403  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Daniel P. Kearney (5)

       223,000          86,066          86,007          395,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

John Y. Kim (6)

       36,880          73,350          73,308          183,538  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Dennis F. Lynch (7)

       94,875          86,066          86,007          266,948  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Denis J. O’Leary (8)

       108,000          86,066          86,007          280,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Glenn M. Renwick (9)

       103,000          86,066          86,007          275,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Kim M. Robak (10)

       103,000          86,066          86,007          275,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

JD Sherman (11)

       93,000          86,066          86,007          265,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Doyle R. Simons (12)

       93,000          86,066          86,007          265,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Thomas C. Wertheimer (13)

       103,000          86,066          86,007          275,073  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

 

(1)   This column includes the following amounts deferred under our non-employee director deferred compensation plan, a non-qualified defined contribution plan: Mr. Kim ($36,880); Mr. O’Leary ($108,000); Mr. Renwick ($103,000); Ms. Robak ($51,500); and Mr. Simons ($93,000).

 

 

(2)   We granted each non-employee director, other than Mr. Kim, a number of restricted stock units determined by dividing $86,000 by $102.46, the closing price of our common stock on May 18, 2016, the date of the grant, rounded up to the next whole restricted stock unit. Mr. Kim joined the board on July 11, 2016 and we granted him a pro rata number of restricted stock units based on the number of days between his date of election and the date of our next annual meeting of shareholders and using the closing price of our common stock on July 11, 2016 of $110.30. Accordingly, each non-employee director, other than Mr. Kim, received 840 restricted stock units, and Mr. Kim received 665 restricted stock units. The restricted stock units vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date.

 

We granted each non-employee director, other than Mr. Kim, a number of stock options determined by dividing $86,000 by a binomial valuation of an option of one share of our common stock on May 18, 2016, the grant date, rounded up to the next whole option. We

               

granted Mr. Kim a pro rata number of stock options based on the number of days between the date of his election and the date of our next annual meeting of shareholders and using the binomial valuation of an option of one share of our common stock on July 11, 2016, the grant date. Accordingly, we granted an option to purchase 2,589 shares of our common stock at an exercise price of $102.46 to each non-employee director, other than Mr. Kim, and an option to purchase 2,050 shares of our common stock at an exercise price of $110.30 to Mr. Kim. The options vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date.

 

The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2016.

 

 

(3)   As of December 31, 2016, Ms. Davis held 7,431 options to purchase shares of our common stock, 4,842 of which were vested, and 840 unvested restricted stock units.

 

 

(4)   On May 18, 2016, Mr. Flink received a grant of restricted stock units and stock options in the manner described in footnote (2) above. Upon Mr. Flink’s resignation from our board of directors on June 21, 2016, these awards

 

 
 
 

 

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terminated without vesting. As of December 31, 2016, Mr. Flink did not hold any options to purchase shares of our common stock or restricted stock units.

 

 

(5)   As of December 31, 2016, Mr. Kearney held 39,634 options to purchase shares of our common stock, 37,045 of which were vested, and 840 unvested restricted stock units.

 

 

(6)   Mr. Kim’s cash compensation includes pro rata compensation for service on the board beginning in the third quarter of 2016. As of December 31, 2016, Mr. Kim held 2,050 options to purchase shares of our common stock, none of which were vested, and 665 unvested restricted stock units.

 

 

(7)   Mr. Lynch’s cash compensation includes pro rata compensation for service on the nominating and corporate governance committee beginning in the fourth quarter of 2016. As of December 31, 2016, Mr. Lynch held 18,860 options to purchase shares of our common stock, 16,271 of which were vested, and 840 unvested restricted stock units.

 

 

               

(8)   As of December 31, 2016, Mr. O’Leary held 48,288 options to purchase shares of our common stock, 45,699 of which were vested, and 840 unvested restricted stock units.

 

 

(9)   As of December 31, 2016, Mr. Renwick held 50,854 options to purchase shares of our common stock, 48,265 of which were vested, and 840 unvested restricted stock units.

 

 

(10) As of December 31, 2016, Ms. Robak held 31,236 options to purchase shares of our common stock, 28,647 of which were vested, and 840 unvested restricted stock units.

 

 

(11) As of December 31, 2016, Mr. Sherman held 3,982 options to purchase shares of our common stock, 1,393 of which were vested, and 840 unvested restricted stock units.

 

 

(12) As of December 31, 2016, Mr. Simons held 49,974 options to purchase shares of our common stock, 47,385 of which were vested, and 840 unvested restricted stock units.

 

 

(13) As of December 31, 2016, Mr. Wertheimer held 50,854 options to purchase shares of our common stock, 48,265 of which were vested, and 840 unvested restricted stock units.

 

 

 

 

 
 
   
 

 

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      Proposal 2. Advisory Vote to Approve Executive Compensation

 

 
 

Background

We are conducting a non-binding, advisory vote to approve the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, in accordance with Section 14A of the Exchange Act (commonly referred to as “Say-on-Pay”). Our shareholders previously expressed a preference that we hold Say-on-Pay votes on an annual basis, and our board of directors accordingly determined to hold Say-on-Pay votes every year until the next required advisory vote on the frequency of future Say-on-Pay votes.

Proposed Resolution

We encourage shareholders to review the Compensation Discussion and Analysis section of this proxy statement as well as the tabular and narrative disclosure under the heading “Executive Compensation.” Our compensation program for named executive officers is designed to create long-term shareholder value by rewarding performance and includes the following key factors for 2016:

 

•  We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 and a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. Net cash provided by operating activities and free cash flow also increased 6% and 8%, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. Internal revenue growth, adjusted earnings per share and free cash flow are non-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures.

 

•  Our compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives.

 

•  We have: (i) a stock ownership policy that requires our executive officers to maintain a substantial investment in Fiserv; (ii) a policy that prohibits executive officers from hedging or pledging our stock; and (iii) a compensation recoupment, or “clawback,” policy, all of which we believe align the interests of our named executive officers with those of our shareholders.

 

•  In 2016, we amended the employment agreements with our chief executive officer to eliminate the excise tax gross-up provisions in those agreements. We do not have excise tax gross-up arrangements with any of our other executive officers, and we have a policy not to enter into such arrangements in the future.

 

               

•  We provided compensation in the form of cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and strategic performance by delivering incremental value to executive officers to the extent our stock price increases over time. Specifically:

 

•  Our compensation committee began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the company’s achievement of pre-determined performance goals over a three-year period.

 

•  Not including the grant of performance share units to our chief executive officer in 2016 in connection with the amendment to his employment agreement:

 

•  Approximately three-quarters of the compensation that we paid to our named executive officers was in the form of equity, and

 

•  Almost two-thirds of the aggregate equity awards granted to our named executive officers were in the form of stock options, which deliver value only to the extent that the price of our stock increases, and performance share units.

 

•  We generally did not provide perquisites to our named executive officers in 2016.

 

 
 
 

 

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The board endorses the compensation of our named executive officers and recommends that you vote in favor of the following resolution:

“RESOLVED, that the shareholders hereby approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including under the heading ’Compensation Discussion and Analysis’ and in the tabular and narrative disclosures under the heading ’Executive Compensation.’”

Vote Required, Effect of Vote and Recommendation of the Board of Directors

To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, the number of votes cast “for”

 

 
 
   

the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted in favor of this proposal.

Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any action as a result of the outcome of the vote on this proposal. Although the outcome of this vote is advisory, the compensation committee will carefully consider the outcome of the vote when considering future executive compensation decisions to the extent it can determine the cause or causes of any significant negative voting results.

The board of directors recommends that you vote ”FOR” Proposal 2.

 

 
 
 

 

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Compensation Discussion and Analysis

Executive Summary

 

Named Executive Officer

 

      

Title

 

Jeffery W. Yabuki      President and Chief Executive Officer

 

    

 

Robert W. Hau      Chief Financial Officer and Treasurer

 

    

 

Thomas J. Hirsch      Former Chief Financial Officer and Treasurer

 

    

 

Mark A. Ernst      Chief Operating Officer

 

    

 

Devin B. McGranahan      Group President, Billing and Payments Group

 

    

 

Byron C. Vielehr      Group President, Depository Institution Services Group

 

    

 

 

Overview

 

The Compensation Discussion and Analysis portion of this proxy statement is designed to provide you with information regarding our executive compensation philosophy, how we determine and structure executive compensation, including the factors we consider in making compensation decisions, and our executive compensation policies. The Compensation Discussion and Analysis focuses on the compensation of the executive officers identified above (our “named executive officers”).

 

Several important changes occurred in 2016, including that Mr. Hau began serving as our chief financial officer and treasurer on March 14, 2016, following Mr. Hirsch’s retirement from that position. Mr. Hirsch remained at the company to assist our chief executive officer with special projects and the transition to his successor until his departure on March 31, 2017. In addition, Mr. McGranahan joined Fiserv on October 31, 2016 as a group president.

 

Our Business

 

Our mission is to provide integrated technology and services solutions that enable best-in-class results for our clients. We pursue this goal with strategies focused on innovative product development, service quality, improved cost effectiveness, aggressive solicitation of new clients and disciplined capital deployment, including strategic acquisitions and divestitures. We face significant competition from domestic and international companies that are aggressive and well financed. Our industry is characterized by rapidly changing technology, evolving industry standards and

               

frequent new product introductions. In order to implement our strategic plan, we need to assemble and maintain a leadership team with the integrity, skills and dedication to execute our initiatives. We believe that executive officer compensation can be used to help us achieve our objectives by “paying for performance,” thereby aligning the interests of our executive officers with those of our shareholders

 

2016 Business Highlights

 

We delivered solid results in 2016 highlighted by GAAP revenue growth of 5% and internal revenue growth of 4% compared to 2015 as well as GAAP earnings per share of $4.15 and adjusted earnings per share of $4.43. This represents a 39% and 14% increase in GAAP earnings per share and adjusted earnings per share, respectively, over 2015. We also had net cash provided by operating activities of $1.43 billion and free cash flow of $1.08 billion in 2016, a 6% and 8% increase, respectively, compared to the prior year. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation which we believe is essential to sustaining future growth. Executive officer compensation for 2016 was paid or awarded in the context of these results.

 

Internal revenue growth, adjusted earnings per share and free cash flow are non-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and reconciliations to the most directly comparable GAAP measures.

 

 
 
 

 

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Executive Compensation Practices

Our compensation program is designed to create long-term value for our shareholders by rewarding performance and sustainable growth. The table below summarizes our current compensation practices as well as those practices we have not implemented because we do not believe they advance the goals of our compensation program:

 

What We Do         What We Don’t Do
   

 

LOGO

  Our compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives.        

 

LOGO

  In 2016, we amended the employment agreements with our chief executive officer to eliminate the excise tax gross-up provisions in those agreements. We do not have excise tax gross-up arrangements with any of our other executive officers, and we have a policy not to enter into such arrangements in the future.
   

 

LOGO

  We provide cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial, operating and strategic performance by delivering incremental value to executive officers to the extent our stock price increases over time.        

 

LOGO

  We don’t provide separate pension programs or a supplemental executive retirement plan to our named executive officers.
         

 

LOGO

  We generally don’t provide personal-benefit perquisites to our named executive officers.
   

 

LOGO

  In 2016, we began granting performance share units to certain executive officers. The number of shares issued at vesting is determined by the achievement of pre-determined performance goals over a three-year period.            
   

 

LOGO

  We have a stock ownership policy that requires our executive officers to acquire and maintain a significant amount of Fiserv equity to further align their interests with those of our long-term shareholders.            
   

 

LOGO

  We have a policy that prohibits our executive officers from hedging or pledging Fiserv stock.            
   

 

LOGO

 

We have a compensation recoupment, or “clawback,” policy.

 

           

 

 
 
 

 

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2016 Compensation Matters

For 2016, we paid cash incentive awards to named executive officers below target because although we exceeded our target adjusted earnings per share and, if applicable, target consolidated net operating profit performance goals, our internal revenue growth results were below target.

Messrs. Hau and McGranahan received equity incentive awards in 2016 as an inducement to join our company and to immediately and strongly align their interests with those of our shareholders. The other named executive officers received annual equity incentive awards in 2016 at or above target levels, which included performance share units in the case of Messrs. Ernst and Vielehr. In addition, Mr. Yabuki received a grant of performance share units in 2016 in connection with the amendment of his employment agreement which extended his employment term for at least three more years and eliminated his excise tax gross-up benefit.

Not including the grant of performance share units to our chief executive officer in 2016, approximately three-quarters of the compensation we paid to our named executive officers was in the form of equity and almost two-thirds of the aggregate equity awards granted to our named executive officers were in the form of stock options, which deliver value only to the extent that the price of our stock increases, and performance share units. In addition, more than one-quarter of the aggregate annual equity awards granted to Messrs. Ernst and Vielehr were in the form of performance share units which vest only upon the achievement of performance goals over a three-year performance period.

Recent Developments

In 2016, our compensation committee began granting performance share units to certain executive officers. For certain executive officers, the performance share units represent additional compensation; for others they change the overall mix of equity incentive awards granted. The performance share units granted in 2016 have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award. In addition, in 2016, we entered into amendments to the employment agreement and key executive employment and

 

 
 
   

severance agreement with our chief executive officer. Under the amendments, he will continue to serve as our president and chief executive officer for at least another three-year term, and we eliminated the excise tax gross-up provisions in his agreements.

Determining and Structuring Compensation

Compensation Philosophy and Objectives

Our executive officers are critical to our long-term success; therefore, we need to be competitive with companies that require talent aligned to our product, technology and service roadmaps. We seek to pay our executive officers at levels that are competitive with other employers, both within and outside of our industry, to secure the best talent possible for all our stakeholders. Consistent with Fiserv’s “pay for performance” philosophy, the compensation committee seeks to structure compensation that incentivizes our leaders to strive for market-leading performance, which we expect will transfer into long-term value for our shareholders, and is balanced by the risk of lower performance-based compensation when we do not meet our performance objectives. We also seek to structure our compensation plans in a manner that is understandable to our shareholders and that is consistent with good corporate governance practices.

The goal of our executive compensation program is the same as our goal for operating our company: to create long-term value for our shareholders and clients. To this end, we design our compensation program to reward our executive officers for sustained financial, operating and strategic performance, to align their interests with those of our shareholders, and to encourage them to remain with the company for long and productive careers.

Determining Compensation

The Compensation Committee’s Role

The compensation committee of the board of directors is responsible for:

 

  approving executive officer compensation

 

  approving compensation programs and plans in which our executive officers participate

 

  reviewing compensation-related risk

 

  administering our equity incentive plans including compliance with executive stock ownership requirements

 

 
 
 

 

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  approving severance or similar termination payments to executive officers

 

  overseeing regulatory compliance with respect to compensation matters

With respect to executive officers, at the beginning of each year, the compensation committee sets base salaries, approves cash incentive awards for the prior year’s performance, approves equity incentive awards, and establishes objective performance targets.

Management’s Role

Our chief executive officer makes recommendations to our compensation committee concerning the compensation of executive officers other than himself, although performance measures included in his recommendations may apply generally to all executive officers. For example, when formulating recommendations to the compensation committee regarding the compensation of a group president, our chief executive officer considers, among other factors, the group’s internal revenue growth, net operating profit, strategic progress, talent development, operational excellence and market data. Our chief executive officer annually completes a self-appraisal of his performance. For 2016, his self-appraisal focused on strategic impact, growth, talent development, risk management and financial results. The appraisal, and the recommendations of the nominating and corporate governance committee, which administers the annual evaluation of the chief executive officer by the board, is considered by the committee in its annual review of our chief executive officer’s performance and compensation. Our chief executive officer does not attend the portion of any compensation committee meeting during which the committee deliberates on matters related specifically to his compensation.

Consultant’s Role

During 2016, the compensation committee engaged Meridian Compensation Partners, LLC (“Meridian”) to advise the committee regarding the design elements of a performance-based equity compensation program. In addition, Meridian provided management with market compensation data and assistance with tally sheet calculations. Management also obtained market compensation data from Willis Towers Watson in 2016 pursuant to a standard data subscription. As further described herein, management used this market data to make recommendations to the committee regarding compensation matters. The committee concluded that management’s work with Meridian

 

 
 
   

did not impair Meridian’s ability to provide independent advice regarding executive compensation matters because of the de minimis revenue associated with the services that Meridian provided and Meridian’s policies and procedures ensuring independence.

Tally Sheets

The compensation committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of each named executive officer’s compensation, including base salary, annual target cash incentive compensation, annual target equity incentive compensation, value of unvested equity, potential severance, and employer contributions to 401(k) savings plans, allowing the committee to see what an executive officer’s total compensation is and how a potential change to an element of our compensation program would affect an executive officer’s overall compensation.

Shareholder Advisory Vote on Named Executive Officer Compensation

At our 2016 annual meeting, our shareholders approved, by approximately 96% of the votes cast, the compensation of our named executive officers as disclosed in our 2016 proxy statement. The compensation committee considered the results of the 2016 advisory vote at its meeting in February 2017. Because a substantial majority of our shareholders approved the compensation program described in the proxy statement for the 2016 annual meeting, the compensation committee did not implement changes to our executive compensation program as a result of the shareholder advisory vote. The compensation committee will continue to consider the results of shareholder advisory votes about our named executive officer compensation.

 

 
 
 

 

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Structuring Compensation

Components of Compensation

The elements of compensation that we provided to our named executive officers for 2016 were base salary, annual cash incentive awards and equity incentive awards.

 

Type

 

       

Elements

 

       

Description

 

Short-Term Compensation      Base Salary     

 

Fixed annual amount

Provides a level of income security

Used to determine pay-based incentives

    

 

         Annual Cash Incentive         

Annual cash award based on achievement of defined performance metrics

 

Long-Term Compensation      Stock Options and

Restricted Stock Units

      

Equity grants that vest over a period of several years

    

 

         Performance Share Units         

Equity grants where the number of shares issued at vesting is determined by the achievement of pre-determined financial performance goals

 

 

Base Salary

 

We provide base salary to compensate an executive officer for his or her regular work. When determining base salaries, the compensation committee considers market data, an executive officer’s scope of responsibilities, the market value of their experience, overall effectiveness, and, except in the case of the base salary of our chief executive officer, the recommendations of our chief executive officer.

 

Cash Incentive Award

 

We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our achievement of long-term objectives. We seek to offer cash awards in large enough proportion to base salary to ensure that a significant portion of each executive officer’s cash compensation is “at risk” and payable only upon the achievement of defined objectives. Our compensation committee annually determines the performance goals for and potential amounts of our cash incentive awards.

 

Equity Incentive Award

 

In 2016, we provided compensation to our named executive officers in the form of time-vesting stock options and restricted stock units and, in some cases, performance share units. Stock options deliver compensation to an executive officer only to the extent our stock price increases over the term of the award. Restricted stock units are settled in

         

shares of common stock upon vesting. We believe restricted stock units serve as a strong reward and retention device, encouraging our executive officers to stay with the company until the restricted stock units vest. The number of shares issued pursuant to performance share units is determined by the achievement of pre-determined performance goals.

 

We believe that the grants of stock options and restricted stock units in 2016 effectively balanced our objective of focusing our executive officers on delivering long-term value to our shareholders with our objective of providing value to executive officers. Furthermore, we believe the introduction of performance share units in 2016 reinforces our pay-for-performance philosophy by emphasizing the relationship between compensation and the achievement of long-term performance objectives. Equity awards support our objective of aligning our executive officers’ interests with those of our shareholders by tying the value of this component of compensation to changes in shareholder value.

 

When making equity award decisions, we do not consider existing equity ownership because we do not want to discourage executive officers from holding significant amounts of our common stock. We also do not review realized compensation from prior equity awards when making current compensation decisions. If the value of equity awards granted in prior years increases significantly in future years, we do not believe that this positive development should impact current compensation decisions.

  

 

 
 
 

 

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Mix of Compensation Components

We believe that the mix of compensation that we pay helps us to achieve our compensation objectives.

 

Components

 

       

Objectives

 

Fixed and variable compensation        We seek to increase the percentage of total pay that is “at risk” as executive officers move to greater levels of responsibility, with direct impact on company results.
Short-term and long-term focus        We seek to create incentives to achieve near-term goals by providing annual cash incentives, which are based on annual performance measures. We seek to create incentives to achieve long-term goals by granting equity awards with multi-year vesting periods, the ultimate value of which depends on our share price. These awards promote retention and align the interests of our executive officers and shareholders. In 2016, we also began granting equity awards with multi-year performance periods to further promote the achievement of long-term performance objectives linked to our enterprise strategic goals.
Cash and equity compensation        We believe that executive officers in positions that more directly affect corporate performance should have as their main priority profitably growing the company. Accordingly, we generally structure the target compensation of these executive officers so that they receive a significant portion of their compensation in the form of equity. Using equity in this manner further aligns executive officers’ interests with those of our shareholders, encourages retention and rewards our executive officers if we succeed.

Peer Group

To determine peer group compensation for an executive officer, the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee may also consider, among other matters, market trends in executive compensation, the percentage that each component of compensation comprises of an executive officer’s total compensation and the executive officer’s tenure in position. The peer group that we used for 2016 and that the committee approved is set forth below:

 

Alliance Data Systems Corporation

 

 

Equifax Inc.

 

    

Paychex, Inc.

 

Automatic Data Processing, Inc.

 

 

Fidelity National Information Services, Inc.

 

    

Total System Services, Inc.

 

Convergys Corporation

 

 

Intuit Inc.

 

    

Unisys Corporation

 

Discover Financial Services

 

 

Jack Henry & Associates, Inc.

 

    

Visa Inc.

 

DST Systems, Inc.

 

 

MasterCard Incorporated

 

    

The Western Union Company

 

The Dun & Bradstreet Corporation

 

 

NCR Corporation

 

    

 

 
 
 

 

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We believe our peer group is comprised of companies comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that compete with us for managerial talent; companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; and other publicly traded business-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization.

2016 Named Executive Officer Compensation

Base Salaries

We did not increase the base salaries of our named executive officers in 2016. We have not increased the base salary of our chief executive officer in the last eleven years. Mr. Hirsch’s base salary was reduced when he retired as our chief financial officer on March 14, 2016 to reflect the reduced scope of his responsibilities while remaining with the company.

Cash Incentive Awards

Certain Terminology

In this section of the proxy statement, we use a number of financial terms. Adjusted earnings per share, internal revenue growth and consolidated net operating profit are non-GAAP financial measures. See Appendix A to this proxy statement for a definition of these measures.

Messrs. Yabuki and Hau

The cash incentive payments to Messrs. Yabuki and Hau for 2016 were based on adjusted earnings per share and internal revenue growth. We use adjusted earnings per share as a performance measure because we believe that there is a direct correlation between the increase in adjusted earnings per share and shareholder value. We use internal revenue growth because we believe that the long-term value of our enterprise depends on our ability to grow revenue without regard to acquisitions. For 2016, we set the target adjusted earnings per share performance goal at $4.34, which represented a 12% increase over our 2015 adjusted earnings per share. For 2016, we set the target internal revenue growth performance goal at 4.9% compared to internal revenue growth of 4.3% in 2015. For 2016, the threshold, target, maximum and actual amounts for Messrs. Yabuki and Hau were as follows:

 

Performance Measure (weighting)

 

        

Threshold          

 

          

Target                 

 

          

Maximum          

 

          

Actual                

 

 

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Adjusted Earnings Per Share (60%)

       $4.18          $4.34          $4.57 or more          $4.43  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Internal Revenue Growth (40%)

       3.0%          4.9%          7.0% or more          3.7%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

    Award as a Percentage of Base Salary (on an annualized basis, as applicable)

                   

 

    

 

 

      

 

 

      

 

 

      

 

 

 

J. Yabuki

       88%          175%          350%          165%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

R. Hau

       55%          110%          220%          104%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Mr. Hirsch

Mr. Hirsch did not receive a cash incentive payment for 2016 given the reduced scope of his responsibilities once he retired as our chief financial officer on March 14, 2016.

 

 
 
 

 

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Mr. Ernst

The cash incentive payment to Mr. Ernst for 2016 was based on achievement of adjusted earnings per share, internal revenue growth and consolidated net operating profit. Similar to other named executive officers, these company-wide performance measures are designed to drive internal revenue growth and profitability. In addition, we use consolidated net operating profit because we believe Mr. Ernst has the ability to drive high quality revenue growth and effectively manage our costs through operational effectiveness programs. For 2016, the threshold, target, maximum and actual amounts for Mr. Ernst were as follows:

 

Performance Measure (weighting)

 

        

Threshold         

 

          

Target                

 

          

Maximum         

 

          

Actual                

 

 

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Adjusted Earnings Per Share (30%)

       $4.18          $4.34          $4.57 or more          $4.43  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Internal Revenue Growth (40%)

       3.0%          4.9%          7.0% or more          3.7%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Consolidated Net Operating Profit

(in millions) (30%)

       $1,669          $1,719          $1,815          $1,734  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

    Award as a Percentage of Base Salary

       68%          135%          270%          116%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Messrs. McGranahan and Vielehr

The cash incentive payment to each of Messrs. McGranahan and Vielehr for 2016 was based on the achievement of adjusted earnings per share, internal revenue growth, consolidated net operating profit and group-level results (group net operating profit and group adjusted revenue, equally weighted). Similar to other named executive officers, adjusted earnings per share, internal revenue growth and consolidated net operating profit are designed to drive internal revenue growth and profitability, and Mr. McGranahan and Mr. Vielehr have the ability to significantly impact those results as the president of our Billing and Payments Group and Depository Institution Services Group, respectively. We use the group-level results because we believe they are most relevant to, and can be most directly influenced by, Messrs. McGranahan and Vielehr. The adjusted earnings per share, internal revenue growth and consolidated net operating profit threshold, target and maximum goals for Messrs. McGranahan and Vielehr were set at the same levels set forth above for our other named executive officers. With respect to group net operating profit and group adjusted revenue, we set the performance goal levels for each of Mr. McGranahan and Mr. Vielehr such that we believed that it would be unlikely that the top end of the range would be achieved, but it would be reasonably likely that the target could be achieved. For 2016, the threshold, target, maximum and actual results were as follows:

 

Performance Measure (weighting)

 

        

Threshold         

 

          

Target                

 

          

Maximum

 

          

Actual                

 

 

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Adjusted Earnings Per Share (10%)

       $4.18          $4.34          $4.57 or more          $4.43  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Internal Revenue Growth (35%)

       3.0%          4.9%          7.0% or more          3.7%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Consolidated Net Operating Profit

(in millions) (15%)

       $1,669          $1,719          $1,815          $1,734  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

Group-Level Results (40%)

                   

 

    

 

 

      

 

 

      

 

 

      

 

 

 

    Award as a Percentage of Base Salary (on an annualized basis, as applicable)

                   

 

    

 

 

      

 

 

      

 

 

      

 

 

 

D. McGranahan (1)

       58%          115%          230%          35%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

B. Vielehr

       55%          110%          220%          84%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 
(1) Mr. McGranahan’s cash incentive payment for 2016 was pro-rated to reflect his period of service from October 31 to December 31, 2016.

The 2016 award as a percentage of base salary shown in the tables above for all named executive officers includes a reduction of the annual cash incentive payment by the committee, upon the recommendation of management, based on the company’s progress against certain corporate initiatives for 2016.

 

 
 
 

 

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Equity Incentive Awards

Overview

The committee established threshold, target and maximum values of total equity awards, expressed as a percentage of base salary, for the named executive officers who were eligible for annual equity incentive awards in 2016. On February 19, 2016, we granted equity awards to the named executive officers other than Messrs. Hau and McGranahan based on the level of an executive officer’s responsibilities within the company and the committee’s judgment of each executive’s performance with respect to strategic impact, building of organizational capacity, talent development, risk management, financial results, including adjusted earnings per share and internal revenue growth, and, other than with respect to his own awards, the recommendation of our chief executive officer. As discussed below, Messrs. Hau and McGranahan received sign-on equity awards rather than annual equity awards in 2016, and Mr. Yabuki also received a grant of performance share units in connection with the amendment of his employment agreement.

Performance Share Units

Our compensation committee began granting performance share units in 2016 to further align the long-term interests of our named executive officers with those of our shareholders. The performance share units have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award. The committee chose adjusted income from continuing operations as the threshold performance measure because we believe there should be a minimum level of income generated before long-term, performance-based awards pay out. We also use internal revenue growth as the performance measure to determine the level of vesting because we believe that the long-term value of our enterprise is linked to our ability to grow revenue without regard to acquisitions. The committee did not grant performance share units to Mr. Hirsch due to his expected retirement as our chief financial officer in March 2016, nor did the committee grant performance share units as part of Mr. Yabuki’s annual award in anticipation of the award granted in connection with an amendment to his employment agreement as further described below.

Equity Mix

The equity mix awarded by the committee is consistent with our objective of emphasizing performance-based compensation and aligning our executive officers’ economic interests with those of our shareholders. For those who received performance share units as part of their annual award, the committee determined the number of performance share units that would vest at target based on anticipated performance and ability to drive high quality revenue growth over the three-year performance period. Performance share units, at target, represent more than one-quarter of the aggregate grant date fair value of all equity granted to Messrs. Ernst and Vielehr in 2016. The mix of options and restricted stock units granted is determined by the committee based in part on the recommendation of the chief executive officer and an understanding of individual preference.

Annual Equity Awards

For 2016, the compensation committee increased the target and maximum equity awards available to Mr. Ernst to provide him with an equity opportunity that is better aligned with the equity compensation available to individuals holding a similar position at our peer companies considering his level of skill, experience and performance. Mr. Vielehr’s award for 2016 reflects his performance and expanded scope of responsibilities and is designed to further enhance his long-term retention. The threshold, target and maximum equity awards for our other named executive officers were set at levels commensurate with their experience and responsibilities and comparable to the equity compensation available to individuals holding

 

 
 
 

 

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similar positions at our peer companies. The grant date fair value of the annual equity incentive awards, performance share units at target, restricted stock units and options combined, as a percentage of base salary were as follows:

 

           Percent of Base Salary (%)  
    

 

 

 
          

Threshold            

 

          

Target                  

 

          

Maximum            

 

          

Actual Award (1)      

 

 

 

    

 

 

      

 

 

      

 

 

      

 

 

 

J. Yabuki

       238%          476%          952%          833%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

T. Hirsch

       100%          275%          400%          275%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

M. Ernst

       100%          333%          500%          367%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 

B. Vielehr

       100%          200%          300%          383%  

 

    

 

 

      

 

 

      

 

 

      

 

 

 
(1) Mr. Yabuki’s annual award does not include the performance share units granted to him in March 2016 in connection with the amendment to his employment agreement as further described below. The actual award expressed as a percentage of base salary for Mr. Hirsch is based on his annualized base salary of $500,000 at the time of grant when Mr. Hirsch still served as our chief financial officer. The actual awards expressed as a percentage of base salary for Messrs. Ernst and Vielehr include the grant date fair value of the performance share units granted in 2016 at the target award level. The value realized by each of them at the end of the three-year performance period will depend on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations, over the three-year period and will range from 0% to 200% of the target award.

Messrs. Hau and McGranahan

To induce each of them to join the company, on March 14, 2016, Mr. Hau received stock options and restricted stock units having an aggregate grant date fair value of approximately $5.5 million, and on October 31, 2016, Mr. McGranahan received stock options and restricted stock units having an aggregate grant date fair value of approximately $3.2 million. These grants were intended to immediately and strongly align Mr. Hau’s and Mr. McGranahan’s interests with those of our shareholders. Messrs. Hau and McGranahan first became eligible to receive an annual equity incentive award in February 2017.

Mr. Yabuki

In March 2016, Mr. Yabuki’s employment agreement was amended as discussed further below under “–Employment and Other Agreements with Executive Officers – Yabuki Employment Agreement.” Among other things, pursuant to this amendment, Mr. Yabuki agreed to an extension of his term as our chief executive officer for at least three years and the elimination of his excise tax gross-up benefit. As required by this amendment, in 2016, our compensation committee made a grant of performance share units to Mr. Yabuki with a grant date fair value, at target, of approximately $12 million. The committee made this award to Mr. Yabuki in connection with this amendment to further incentivize his continuing and valuable contributions to our success through the development and execution of our strategic objectives and the creation of value for our shareholders, clients and associates.

His performance share units vest at the end of a three-year performance period based upon the company’s internal revenue growth over the three-year period (80% weighting) and, as determined by the committee in its discretion, talent development goals (20% weighting), subject to attaining a threshold level of adjusted income from continuing operations which, if not met, will result in no vesting of the performance share units. The portion of the award subject to internal revenue growth will vest at 0% to 200% of target depending on the company’s achievement of internal revenue growth goals over the three-year period. The portion of the award subject to achievement of talent development goals will vest at 0% to 200% depending on the committee’s assessment of Mr. Yabuki’s performance at the end of three years with respect to senior executive talent development.

In addition, we amended Mr. Yabuki’s employment agreement to provide that, beginning in 2017, he will receive annual grants of options, restricted stock units and/or other awards under our long-term incentive compensation program commensurate with his position and with an aggregate grant date fair value of not less than $8 million. The compensation committee retains discretion to increase the value of his award.

 

 
 
 

 

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Other Elements of Compensation

Employee Stock Purchase Plan

We maintain a tax-qualified employee stock purchase plan that is generally available to all employees, including executive officers, which allows employees to acquire our common stock at a discounted price on an after-tax basis. This plan allows employees to buy our common stock at a 15% discount to the market price with up to 10% of their salary and incentives (up to a maximum of $25,000 in any calendar year), with the objective of allowing employees to benefit when the value of our stock increases over time.

Post-Employment Benefits

We provide severance and change-in-control protections to our named executive officers through agreements which are discussed below under the heading “– Employment and Other Agreements with Executive Officers.”

Perquisites

In 2016, we did not provide any personal-benefit perquisites to our named executive officers other than relocation-related expenses disclosed in footnote 4 to the Summary Compensation Table below and participation in an executive physical program.

Retirement Savings Plan and Health and Welfare Benefits

We provide subsidized health and welfare benefits which include medical, dental, life insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health, welfare and 401(k) savings plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. We subsidize supplemental long-term disability coverage for executive officers. We do not provide a separate pension program or a supplemental executive retirement plan. Our employees, including executive officers, are immediately eligible for matching contributions under our 401(k) savings plan. Our matching contributions are

 

 
 
   

capped at 3% of annual cash compensation and vest after two years.

Nonqualified Deferred Compensation Plan

Our named executive officers, along with other highly compensated employees, are eligible to participate in a non-qualified deferred compensation plan pursuant to which they can defer cash compensation and have their accounts credited with earnings based on the participant’s selection of investment choices similar to our 401(k) savings plan. We do not make any contributions to this plan. Please see “Executive Compensation –Non-Qualified Deferred Compensation Plan in 2016” below for additional information.

Additional Compensation Policies

Securities Trading Policy

We prohibit our executive officers from trading in our common stock during certain periods at the end of each quarter until after we disclose our financial and operating results unless such trading occurs under an approved Rule 10b5-1 plan. We may impose additional restricted trading periods at any time if we believe trading by executive officers would not be appropriate because of developments that are, or could be, material. In addition, we require pre-clearance by our chief legal officer and our chief executive officer of all stock transactions by designated senior members of management and our board of directors, including the establishment of a Rule 10b5-1 trading plan.

We also prohibit our employees, officers and directors from hedging or engaging in short sales of our stock. Furthermore, directors and executive officers are prohibited from pledging our stock and from entering into transactions in derivative instruments in connection with our stock.

Stock Ownership

We believe that stock ownership by our executive officers is essential for aligning management’s long-term interests with those of our shareholders. To emphasize this principle, we maintain a stock ownership policy that requires our chief executive officer to own equity having a value of at least six times his base salary and our other executive

 

 
 
 

 

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officers to own equity having a value of at least four times their respective base salaries. We believe that these levels are sufficiently high to demonstrate a commitment to value creation, while satisfying our executive officers’ needs for portfolio diversification. All executive officers are expected to satisfy the stock ownership requirements within five years after they become subject to them with minimum attainment levels beginning at the end of the second year. All named executive officers are in compliance with the requirements.

Compensation Recoupment Policy

In the event that we restate our financial results, we may recover all or a portion of the incentive awards that we paid or granted, or that vested, on the basis of such results. Recovery may be sought, in the discretion of the board, from any person who was serving as an executive officer of the company at the time the original results were published. Both cash and equity incentive awards are subject to recoupment; there is no time limit on our ability to recover such amounts, other than limits imposed by law; and recoupment is available to us regardless of whether the individuals subject to recoupment are still employed by us when repayment is required. To the extent recoupment is sought, the board of directors may, in its discretion, seek to recover interest on amounts recovered and/or costs of collection and we have the right to offset the repayment amount from any compensation owed by us to any executive officer. The independent members of our board of directors, or a committee thereof comprised solely of independent directors, are responsible for determining whether recoupment is appropriate and the specific amount, if any, to be recouped by us.

Equity Award Grant Practices

The compensation committee generally approves annual equity awards during its regularly-scheduled February meeting, after we issue our financial results for the prior year. In addition, in order to accommodate the need for periodic awards, such as in connection with newly hired employees, promotions or retention awards, the compensation committee delegates its authority to our chief executive officer and chief operating officer to enable such individuals to grant equity awards

 

 
 
   

within certain parameters; provided that all grants to directors and executive officers are specifically made by the compensation committee. Our equity grant policy prescribes the timing of awards or specific grant dates. Under the Incentive Plan, the exercise price of all options to purchase shares of our common stock may not be less than the closing price of our common stock on the NASDAQ stock market on the grant date.

Deductibility of Compensation

Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct from our taxable income for federal income tax purposes in any one year with respect to our named executive officers (other than our chief financial officer). Certain performance-based compensation is not subject to the deduction limit. It is generally our intention to qualify compensation payments for tax deductibility under Section 162(m). Notwithstanding our intentions, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will so qualify. Our compensation committee reserves the right to provide compensation that does not qualify as performance-based compensation under Section 162(m) to the extent it believes such compensation is necessary to continue to provide competitive arrangements intended to attract and retain, and provide appropriate incentives to, qualified officers and other key employees.

Employment and Other Agreements with Executive Officers

Yabuki Employment Agreement

In 2016, we amended the employment agreement with Mr. Yabuki to provide that Mr. Yabuki will continue to serve as our president and chief executive officer for at least another three-year term and, subject to election by our shareholders, as a director. After the current three-year term ends in 2018, the agreement automatically renews for one-year terms unless either party gives the other 90 days prior written notice of his or its desire to terminate the agreement.

 

 
 
 

 

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Under his employment agreement, as amended in 2016, Mr. Yabuki is entitled: (i) to receive an annual salary of at least $840,000; (ii) to participate in our executive incentive compensation plan with a target and maximum cash incentive award of not less than 175% and 350% of his base salary, respectively; (iii) to receive grants of options, restricted stock and/or other awards under our long-term incentive compensation program commensurate with his position, provided that, beginning in 2017, the grant date fair value of each year’s award shall not be less than $8 million; and (iv) to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. In addition, the 2016 amendment provides for the elimination of the excise tax gross-up provision in his existing employment agreement and for a one-time grant of performance share units. The performance share units have a grant date fair value of approximately $12 million and vest at the end of a three-year performance period only upon the achievement of specified internal revenue growth and talent development goals, subject to attaining a threshold level of adjusted income from continuing operations over such three-year period. In the event of a conflict between his employment agreement and the terms of an equity award agreement, his employment agreement will control unless the equity award agreement provides a more favorable benefit. The terms of Mr. Yabuki’s employment agreement and key executive employment and severance agreement, or “KEESA,” resulted from an arm’s-length negotiation, and, as a result, we believe the terms reflect the market terms for the leader of a company of our size in our industry.

Hau and McGranahan Agreements

We entered into an agreement with each of Messrs. Hau and McGranahan in 2016 in connection with the start of their employment with us. Under Mr. Hau’s agreement, he is entitled to: (i) receive an annual salary of at least $625,000; (ii) participate in our annual cash incentive plan with a target and maximum award of 110% and 220% of base salary, respectively; (iii) participate in our annual equity incentive plan beginning in February 2017 with an annual target of $2,000,000; (iv) a sign-on equity grant of $2,500,000 of restricted stock units and $3,000,000 of stock options, each

 

 
 
   

of which will vest one-half on each of the third and fourth anniversaries of grant; (v) a one-time cash award of $500,000 which was paid on April 15, 2016 and must be repaid if he leaves Fiserv within 24 months; and (vi) reimbursement of relocation expenses.

Under his agreement, Mr. McGranahan is entitled to: (i) receive an annual salary of at least $510,000; (ii) participate in our annual cash incentive plan with a target and maximum award of 115% and 230% of base salary, respectively; (iii) participate in our annual equity incentive plan beginning in February 2017 with an annual target of $1,000,000; (iv) a sign-on equity grant of $1,000,000 of restricted stock units and $2,200,000 of stock options, each of which will vest one-half on each of the third and fourth anniversaries of grant; (v) a one-time cash award of $500,000 to be paid in two equal installments 90 days and 12 months after his start date and which must be repaid if he leaves Fiserv within 24 months; (vi) an additional equity award of $3,000,000 in February 2020, subject to his continued full-time employment in good standing, which will vest in equal installments on the third and fourth anniversaries of grant; and (vii) reimbursement of relocation expenses.

In addition, Messrs. Hau and McGranahan are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. The terms of Mr. Hau’s and Mr. McGranahan’s agreements and KEESAs resulted from arm’s-length negotiations, and, as a result, we believe the terms reflect the market terms for a leader of a company of our size in our industry.

Ernst and Vielehr Employment Agreements

We entered into an employment agreement with each of Messrs. Ernst and Vielehr pursuant to which we agreed to employ them until one party provides the other with a notice of termination. Under their employment agreements, Messrs. Ernst and Vielehr are entitled to: (i) receive an annual salary of at least $525,000 and $470,000, respectively; (ii) participate in our executive cash incentive compensation plan; and (iii) participate in our executive long-term equity incentive compensation program with an annual target of at

 

 
 
 

 

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least 200% of base salary. In addition, Messrs. Ernst and Vielehr are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. The terms of Mr. Ernst’s and Mr. Vielehr’s employment agreements and KEESAs resulted from arm’s-length negotiations, and, as a result, we believe the terms reflect the market terms for a leader of a company of our size in our industry.

 

 
 
   

Key Executive Employment and Severance Agreements

We have entered into KEESAs, with our executive officers that provide for potential benefits in connection with a change in control. A complete discussion of the terms of the KEESAs, together with an estimate of the amounts potentially payable under each KEESA, appears below under the heading “Potential Payments Upon Termination or Change in Control.”

 

 
 
 

 

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Compensation Committee Report

The compensation committee has reviewed and discussed the “ Compensation Discussion and Analysis ” contained in this proxy statement with management. Based on our review and the discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2016.

Glenn M. Renwick, Chairman

Dennis F. Lynch

Doyle R. Simons

 

 
 
   

Compensation Committee Interlocks and Insider Participation

During the last fiscal year, there were no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.

 

 
 
 

 

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Executive Compensation

Summary Compensation Table

The following table sets forth in summary form the compensation of our chief executive officer, our current and former chief financial officer and our next three highest paid executive officers (collectively, our “named executive officers”) for the year ended December 31, 2016.

 

 

 

Name and

Principal Position

 

        Year

 

          Salary      

 

          Bonus      

 

          Stock
Awards (1)(2)   

 

          Option
Awards (1)   

 

          Non-Equity
Incentive Plan
Compensation (3)

 

          All Other
Compensation (4)

 

          Total

 

 
Jeffery W. Yabuki       2016       $ 840,000               $ 14,680,135       $ 4,320,031       $ 1,389,679       $   11,937       $ 21,241,782  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
President and Chief       2015         840,000                 1,288,041         6,535,501         1,328,040         9,737         10,001,319  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Executive Officer       2014         840,000                 1,078,613         4,722,371         1,622,880         12,053         8,275,917  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Robert W. Hau (5)       2016         499,599       $ 500,000         2,500,008         3,000,004         649,935         151,244         7,300,790  
Chief Financial Officer                                
and Treasurer                                

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Thomas J. Hirsch (6)       2016         340,256                 687,568         687,506                 13,548         1,728,878  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Former Chief Financial       2015         500,000                 850,025         1,001,972         579,700         11,348         2,943,045  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Officer and Treasurer       2014         500,000                 650,028         650,004         644,000         12,427         2,456,459  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Mark A. Ernst       2016         600,000                 500,067         1,700,028         695,936         12,517         3,508,548  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Chief Operating Officer       2015         600,000                         1,972,804         824,823         11,267         3,408,894  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      2014         575,000                         1,400,005         886,291         11,923         2,873,219  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Devin B. McGranahan (5)       2016         86,961                 1,000,064         2,200,009         179,339         11,508         3,477,881  
Group President,                                
Billing and Payments                                
Group                                

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Byron C. Vielehr (7)       2016         470,000                 1,200,006         600,001         396,482         11,664         2,678,153  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Group President,       2015         470,000                         1,309,042         515,924         24,914         2,319,880  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
Depository Institution       2014         470,000         200,000                         645,900         313,257         1,629,157  
Services Group                                

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1)   Reflects the grant date fair value of the awards granted in the respective years under the Incentive Plan. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2016.

 

 

(2)   The amounts shown in this column include the grant date fair value of performance share units granted to Messrs. Yabuki ($12,000,030), Ernst ($500,067) and Vielehr ($600,003) in 2016 at the target award level, which reflects, as of the grant date, the probable outcome of the performance conditions. The value realized by each of them at the end of the three-year performance period will depend on the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing

                  

operations, over the three-year period and will range from 0% to 200% of the target award. If the highest level of performance conditions are met, the grant date fair value of these awards would be as follows: Mr. Yabuki - $24,000,060; Mr. Ernst - $1,000,134; and Mr. Vielehr - $1,200,006.

 

 

(3)   These cash incentive payments were made pursuant to the Incentive Plan. These awards were earned in the year listed and paid in the following year.

 

 

(4)   The amounts shown in this column include company matching under our 401(k) savings plan; company-paid premiums for insurance; participation in our executive physical program; and if applicable, company contributions to a health savings account. For 2016, the amount shown for Messrs. Hau and McGranahan also includes reimbursement for relocation-related

 

 
 
 

 

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expenses pursuant to the terms of his respective agreement. The amount of Mr. Hau’s reimbursed relocation-related expenses in 2016 was $138,177.

 

 

(5)   Messrs. Hau and McGranahan joined Fiserv on March 14, 2016 and October 31, 2016, respectively. For 2016, Mr. Hau’s and Mr. McGranahan’s base salaries were paid at an annualized rate of $625,000 and $510,000, respectively. The amount shown for each of them reflects the actual amount of base salary paid to him during 2016. We granted restricted stock units and options to Mr. Hau on March 14, 2016 and to Mr. McGranahan on October 31, 2016 pursuant to their respective agreements. The grants were intended to immediately and strongly align Messrs. Hau’s and McGranahan’s interests with those of our shareholders and, in part, recognize that each of them was forfeiting significant benefits upon leaving his prior employer. On April 15, 2016, Mr. Hau also received a $500,000 cash payment pursuant to the terms of his agreement to compensate him for benefits he forfeited upon leaving his prior employer. In addition, Mr. McGranahan’s non-equity incentive plan award for 2016 was pro-rated based on his period of service during the year.

 

 

(6)   Mr. Hirsch served as our chief financial officer and treasurer until March 14, 2016 and remained with the company until March 31, 2017 with a reduced scope of responsibilities. The amount shown in the salary column reflects the actual amount of base salary paid to him during 2016.

 

 

(7)   Mr. Vielehr joined Fiserv on December 1, 2013. On March 15, 2014, Mr. Vielehr received a $200,000 cash payment pursuant to the terms of his employment agreement to compensate him for the benefits which he forfeited upon leaving his prior employer.

 

 

 

                The material terms of the company’s agreements with Messrs. Yabuki, Hau, Ernst, McGranahan and Vielehr are set forth above under the heading “Compensation Discussion and Analysis – Employment and Other Agreements with Executive Officers.” Mr. Hirsch did not have an employment agreement with the company.

 

 
 
 

 

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Grants of Plan-Based Awards in 2016

 

Name

 

        Grant Date

 

          Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards (1)

 

          Estimated Future Payouts Under
Equity Incentive Plan Awards (2)

 

          All Other
Stock
Awards:
Number of
Shares of
Stock  or
Units

(#) (3)

 

          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
($) (4)

 

 
        Threshold  
($)

 

          Target      
($)

 

          Maximum  
($)  

 

          Threshold  
(#)

 

          Target      
(#)

 

          Maximum  
(#)  

 

                 

J. Yabuki

          739,200         1,470,000         2,940,000                              
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                 27,730                 2,680,105  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                     137,888         96.65         4,320,031  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      03/29/2016                     29,502         118,006         236,012                     12,000,030  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

R. Hau

          343,750         687,500         1,375,000                              
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      03/14/2016                                 25,404                 2,500,008  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      03/14/2016                                     94,044         98.41         3,000,004  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

T. Hirsch

      02/19/2016                                 7,114                 687,568  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                     21,944         96.65         687,506  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

M. Ernst

          408,000         810,000         1,620,000                              
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                     54,262         96.65         1,700,028  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                     1,294         5,174         10,348                     500,067  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

D. McGranahan

          295,800         587,000         1,174,000                              
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      10/31/2016                                 10,155                 1,000,064  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      10/31/2016                                     68,901         98.48         2,200,009  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

B. Vielehr

          258,500         517,000         1,034,000                              
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                 6,208                 600,003  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                                     19,151         96.65         600,001  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      02/19/2016                     1,552         6,208         12,416                     600,003  

 

   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 

 

(1)   Mr. McGranahan joined Fiserv on October 31, 2016, and the threshold, target and maximum non-equity incentive plan awards for him are provided on an annualized basis. Mr. McGranahan’s actual non-equity incentive plan award for 2016 was pro-rated based on his period of service during the year. Mr. Hirsch was not eligible for a non-equity incentive plan award for 2016 due to his retirement as our chief financial officer on March 14, 2016.

 

 

(2)   We granted all of the performance share units reported above pursuant to the Incentive Plan. The performance share units have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award.

 

 

(3)   We granted all of the restricted stock units and stock options reported above pursuant to the Incentive Plan. Except in the case of Messrs. Hau and McGranahan, one-third of the restricted stock units vest on each of the second, third and fourth anniversaries of the grant date, and one-third of the stock options vest on each anniversary of the grant date. For Messrs.

                      

Hau and McGranahan, one-half of the restricted stock units and one-half of the stock options vest on each of the third and fourth anniversaries of the grant date. The options have an exercise price equal to the closing price of our common stock on the grant date and expire on the 10 year anniversary of the grant date. As discussed under “Compensation Discussion and Analysis – 2016 Named Executive Officer Compensation – Equity Incentive Awards,” the mix of stock options and restricted stock units granted is determined by the compensation committee based in part on the recommendation of the chief executive officer and an understanding of individual preference.

 

 

(4)   The amounts in the table represent the grant date fair value of the restricted stock unit and stock option awards and, in the case of performance share units, the grant date fair value at the target award level. Information about the assumptions that we used to determine the grant date fair value of the awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2016.

 

 

 
 
 

 

46   2017 Proxy Statement


Table of Contents

 

 
 

Outstanding Equity Awards at December 31, 2016

 

         

Option Awards (1)

 

         

Stock Awards (1)

 

 

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

($) (2)

 

          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 ($) (2)

 

 

J. Yabuki

                      64,216 (3)         6,824,876         118,006 (4)         12,541,678  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
              137,888 (5)         96.65         02/19/2026                  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      68,832         137,664 (6)         79.05         02/18/2025                  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      167,713         83,857 (7)         56.97         02/19/2024                  
   

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

     

 

 

 
      317,188                 40.35