Executive Compensation Highlights

Executive Compensation Philosophy

Our executive compensation program is based on a philosophy that aligns the interests of our executives and stockholders. The following are key objectives of our compensation philosophy:

 

•

Attract, motivate and retain highly experienced executives who are vital to our short- and long-term success, profitability and growth;

•

Align the focus of our executives with the interest of our stockholders by rewarding executives for the achievement of strategic goals that successfully drive our strategy, operations and business performance and, thereby, enhance stockholder value;

•

Differentiate rewards based on actual individual performance while also rewarding executives for our overall results; and

•

Discourage unnecessary and excessive risk-taking.

Strong Stockholder Support

Our most recent Say-on-Pay vote was held at our 2019 Annual Meeting of Stockholders, and received 98.3% support. We believe this strong Say-on-Pay vote outcome shows the support for our executive compensation program.

2019 Executive Compensation Reflected our NEOs’ and the Company’s Overall Strong Performance

 

•

Our Named Executive Officer’s 2019 annual incentive payout ranged between 125% and 166% of target.

•

Our 2017-2019 Performance Share Unit total weighted payout was the maximum level of 200% resulting from maximum performance achievement on all three performance measures: Cumulative Adjusted EBITDA (45% weighting), Cumulative Revenue (20% weighting) and Relative TSR (35% weighting).

 

6

Target Compensation Mix is Linked to Company Performance and Aligned with Stockholders

 

•

87% of our CEO’s target compensation and 81% of our other NEOs’ target compensation is “at-risk” based on Company and share price performance.

•

73% of our CEO’s target compensation and 62% of our other NEOs’ target compensation is based on long-term incentives aligned with stockholders.

 

 

 

 

See “Compensation Discussion and Analysis” on page 56 and “Executive Compensation” on page 78 for additional details on our executive compensation programs.

 

7

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

 

 

8

 

9

 

10

 

11

 

12

 

13

CORPORATE GOVERNANCE AND RELATED MATTERS

General

Our Board of Directors directs the management of our business and affairs, as well as managing our business on behalf of our stockholders. The Board and management recognize that the interests of TransUnion are advanced by responsibly addressing the concerns of multiple constituencies, including employees, consumers, customers and the communities in which we operate. Our Corporate Governance Guidelines support the Board in its oversight role and in fulfilling its obligation to stockholders.

Our Corporate Governance Guidelines address, among other things:

•

the composition and responsibilities of the Board,

•

director independence and qualification standards,

•

Board meeting requirements,

•

management succession planning,

•

compensation of non-management directors, and

•

communications with Board members.

The Nominating and Corporate Governance Committee regularly reviews our Corporate Governance Guidelines and recommends modifications of these guidelines to the Board when appropriate, including when New York Stock Exchange (NYSE) and SEC regulations require changes.

You can find our Corporate Governance Guidelines on our Investor Relations website, www.transunion.com/tru, on the “Leadership and Governance” page.

Company Structure; Board Composition

TransUnion was formed by affiliates of Goldman, Sachs & Co. LLC (“GS”) and Advent International Corporation (“Advent,” and together with GS, the “Sponsors”) on February 15, 2012. On April 30, 2012, TransUnion Intermediate Holdings, Inc. was acquired by TransUnion and became our wholly-owned subsidiary. On June 30, 2015, we completed the initial public offering of our common stock (the “IPO”) at a public offering price of $22.50 per share. Our stock trades on the New York Stock Exchange under the ticker “TRU.”

Our Second Amended and Restated Certificate of Incorporation currently provides for a classified board of directors. We currently have four directors in Class I (Messrs. George Awad, Christopher Cartwright, Siddharth (Bobby) Mehta and Andrew Prozes), four directors in Class II (Messrs. Kermit Crawford, Thomas Monahan and Leo Mullin and Ms. Suzanne Clark) and two directors in Class III (Mr. Russell Fradin and Ms. Pamela Joseph). Subject to approval by our stockholders of Proposal 1 at the Annual Meeting, the Board will be declassified over the next three years such that all directors will stand for election on an annual basis beginning with the 2022 Annual Meeting of Stockholders.

Board Leadership Structure and Role of Board in Risk Oversight

Our Board of Directors is currently led by Mr. Leo Mullin, our Non-Executive Chairperson. In accordance with our mandatory retirement guidelines, Mr. Mullin will not seek reelection at the Annual Meeting and will retire from the Board at the Annual Meeting. The Board has elected Ms. Pamela Joseph to succeed Mr. Mullin as Chairperson at that time. Whenever the Chairperson of the Board is also the CEO or is a director who does not otherwise qualify as an “independent director,” the independent directors will elect from among themselves a Lead Director of the Board. Following nomination by the Nominating and Corporate Governance Committee, each independent director will be given the opportunity, by secret ballot, to vote in favor of a Lead Director nominee or to write in a candidate of his or her own. The Lead Director will be elected by a plurality and will serve until the Board meeting immediately following the next annual meeting of stockholders, unless otherwise determined by the Board. Since the CEO position is currently separate from our Chairperson position, we do not have a Lead Director at this time.

 

14

We believe that the separation of the Chairperson and the CEO roles is appropriate for us at this time. The Board believes that this leadership structure is appropriate because it strikes an effective balance between management and independent director participation in the Board process. The Non-Executive Chairperson role allows our President and CEO to focus on his management responsibilities in leading the business, setting our strategic direction and optimizing our performance and operations. At the same time, the Non-Executive Chairperson can focus on Board leadership, provide guidance to the CEO, and focus on corporate governance and our overall business strategy. The Board believes that the separation of functions between the CEO and the Non-Executive Chairperson of the Board provides independent leadership of the Board in the exercise of its oversight responsibilities, increases the accountability of the CEO and creates transparency into the relationship among executive management, the Board and our stockholders.

The Board of Directors has extensive involvement in the oversight of risk management related to us and our business and accomplishes this oversight through the regular reporting by the Audit and Compliance Committee. The Audit and Compliance Committee represents the Board by periodically reviewing our accounting, reporting and financial practices, including the integrity of our financial statements, the oversight of administrative and financial and disclosure controls, and our compliance with legal and regulatory requirements. Through its regular meetings with management, including the finance, legal, compliance and internal audit functions, the Audit and Compliance Committee reviews and discusses all significant areas of our business and summarizes for the Board of Directors areas of compliance risk and appropriate mitigating factors. In addition, our Board receives periodic detailed operating performance reviews from management.

In May 2019, our Board established the TPC Committee in response to the growing number of complexities that affect information security infrastructure and our industry, including cybersecurity and cyber fraud risks, third party risk management and privacy. Our Board and our TPC Committee regularly meet with our Chief Information Security Officer to assess cybersecurity risks and to evaluate the status of our cybersecurity strategy and program, which includes an overview of how people, process and technology are deployed at TransUnion to protect consumers, customers, data and systems that are part of our business.

Director Independence

Our Board of Directors has affirmatively determined that each of Mses. Clark and Joseph and Messrs. Awad, Crawford, Fradin, Mehta, Monahan, Mullin and Prozes has no material relationship with the Company and qualifies as an independent director under the standards established by the New York Stock Exchange (“NYSE”), as currently in effect.

In making that determination, the Board considered all relevant facts and circumstances, including the director’s commercial, industrial, banking, consulting, legal, accounting, charitable and familial relationships, and applied the following standards under NYSE rules, which provide that a director will not be considered independent if he or she:

 

•

is currently an employee of the Company or has an immediate family member who is one of our executive officers;

•

has been a Company employee within the past three years or has an immediate family member who has been an executive officer within the past three years;

•

has, or has an immediate family member who has, received within the past three years more than $120,000 during any twelve-month period in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service), and other than a family member’s compensation for service as a non-executive employee;

•

is a current partner or employee of a firm that is our internal or external auditor; has an immediate family member who is a current partner of such a firm; has an immediate family member who is a

 

15

current employee of such firm and personally works on our audit; or was, or has an immediate family member who was within the last three years, a partner or employee of such a firm and personally worked on our audit within that time;

•

has, or has an immediate family member who has, been employed as an executive officer of another company where any of our present executives have served on the other company’s compensation committee during the past three years; or

•

is currently employed as an executive officer or employee, or has an immediate family member who is currently employed as an executive officer, of another company that makes payments to, or receives payments from, the Company for property or services in an amount which, in any single fiscal year, exceeds the greater of (a) $1 million or (b) 2% of such other company’s consolidated gross revenues.

Mr. Robert Beauchamp, who served as a director until his resignation on April 2, 2019, was deemed to be independent under the NYSE rules. Mr. James Peck, who served as a director until his resignation on February 29, 2020, was not deemed to be independent under the NYSE rules as Mr. Peck served as our President and CEO until May 8, 2019. The purpose of the independence review by our Board is to determine whether any such relationships or transactions were material and, therefore, inconsistent with a determination that the director or director nominee is independent. As a result of its review of our nominees for director, the Board determined that Ms. Clark and Messrs. Crawford, and Monahan are independent under NYSE rules. There are no family relationships between any of the nominees for director or between any nominee and any executive officer of our Company.

Mandatory Retirement

Any director who reaches age 75 while in office must resign when he or she reaches the age of 75. A director elected to the Board before his or her 75th birthday may continue to serve until the later of (1) the expiration of the director’s then-current term and (2) the annual stockholders’ meeting coincident with or next following his or her 75th birthday. On the recommendation of the Nominating and Corporate Governance Committee, the Board may waive this requirement as to any director if it deems such waiver to be in the best interests of the Company.

No Term Limits

The Board believes we benefit from the service of directors who have developed, through valuable experience over time, an increasing insight into the Company and its operations. The Nominating and Corporate Governance Committee will review periodically the appropriateness of each director’s continued service.

Stockholder Engagement

We employ a broad stockholder engagement program that provides management and our Board with valuable insight and feedback from investors throughout the year. During 2019, senior management engaged with stockholders representing more than 65% of our outstanding common stock and with more than 80% of actively managed shares across ten major investment markets in the United States, Canada and Europe. In 2019, we also hosted our first ever Investor Day, which included presentations from 13 senior executives and seven product demonstrations across a broad range of topics, including key strategic growth initiatives across each of our business segments and largest verticals, new product innovation and technology.

Communications with Directors

We have established a process for communications with directors. All interested parties (including our stockholders) who would like to communicate with, or otherwise make his or her concerns known directly to the chairperson of any of the Audit and Compliance, Nominating and Corporate Governance or Compensation Committees, or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the Chief Legal Officer (Heather Russell, heather.russell@transunion.com),

 

16

555 West Adams Street, Chicago, Illinois 60661, who will forward such communications to the appropriate party. Such communications may be made confidentially or anonymously.

Meetings and Meeting Attendance

During 2019, each of our directors attended at least 75% of the Board and Board committee meetings on which he or she served (held during the period that such director served), except that Mr. Mehta attended less than 75% of the Board meetings during the fiscal year ended December 31, 2019. During 2019, our Board of Directors met seven times. Directors are expected to attend our annual stockholders’ meeting. For our 2019 Annual Meeting of Stockholders, all members of our Board who were then-serving attended the meeting.

Sustainability Overview

In 2019, we established a Sustainability Office under the purview of a Chief Sustainability Officer. In keeping with our mission of leveraging Information for Good^®, the Sustainability Office embodies our commitment to integrating sustainability into every aspect of our business. The goals and programs at TransUnion are consistent with the greatest areas of sustainability risk and topics most important to our stakeholders.

Social Good: Human Capital Management and Diversity & Inclusion

We invest in associate development and diversity training to enable associates to bring their authentic selves to work. Beyond our inclusion training, we are committed to providing associates with competitive salaries and benefits. We provide our associates with flexible time off, pet insurance, gender confirmation procedures, and other cutting-edge benefits. Our commitment to creating a great work culture helps us attract and retain the best talent, so that we are able to continue to innovate creative solutions and build products that better reflect our customers’ needs and are inclusive of consumers’ perspectives.

Economic Good: Economic Inclusion and Financial Literacy

As a supplier of unbiased, highly predictive information within the financial system, we help create a more even playing field for all consumers. On a local level, in more than 30 global markets, we do this by working with non-profits and community groups to increase access to financial literacy and information. Across our global markets, we facilitate information exchanges in early credit markets so that national economies can flourish, as well as leveraging trended and alternative data in established markets to capture a wider range of positive payment behaviors. This empowers lenders to make more informed decisions while increasing financial inclusion to a larger population of consumers creating a more inclusive world.

Environmental Good: Environmental Efficiency and Climate Change

We recognize that individuals and businesses have a role to play in protecting the environment. We are currently evaluating numerous energy efficiency and waste management initiatives to reduce operating costs and improve our resilience to ensure continuous access to energy necessary for running our offices and data centers. By protecting the environment, we not only fulfill our responsibility to the world, but also improve our operational efficiency.

Good Governance: Ethics, Privacy and Information Security

We take the responsibility entrusted to us by consumers, data furnishers, and business partners to protect sensitive information and have developed a culture of privacy and security, working hard and taking action to reduce the impact and likelihood of malicious activity. Our information security team operates globally across all our business units and locations, ensuring coverage and visibility 24 hours a day, 7 days a week. Our legal department actively partners with business units across the globe to proactively manage and address compliance, security and related issues when the need arises. Protecting consumers and their data empowers people in markets where we operate and supports our growth plans for the future.

 

17

For more information on our sustainability practices and an overview of the steps we have already taken to make progress on a number of these goals, please review our CSR report available at https://www.transunion.com/csr.

Considerations for Board Nominees

When considering whether directors and nominees have the experience, qualifications, attributes and skills to enable our Board of Directors to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on each person’s background and experience as reflected in the information discussed below under Director Experience and Skills and each of the directors’ individual biographies. We believe that our directors provide an appropriate mix of experience and skills relevant to the size and nature of our business.

While the Board has not established mandatory minimum qualifications that a potential director nominee must possess, our Nominating and Corporate Governance Committee identifies candidates for the Board of Directors by taking into account all factors it considers appropriate, which includes monitoring the mix of specific experience, qualifications, skills and diversity of the directors to assure that the Board, as a whole, has the necessary tools to perform its oversight function effectively. Our guidelines regarding director candidates do not prescribe specific standards for diversity, but the Nominating and Corporate Governance Committee considers diversity broadly to include differences of professional experience, viewpoint, individual characteristics, qualities and skills, resulting in naturally varying perspectives among the directors. Important individual qualifications for our directors include strength of character, mature judgment, familiarity with our business and industry, independence of thought and an ability to work collegially. The Nominating and Corporate Governance Committee considers candidates with demonstrated skills or experience in the following areas, among others: business or regulatory acumen, industry knowledge and experience, relevant technical skills, relevant career experience, financial experience, and local or community ties.

In identifying qualified candidates for our Board, our Nominating and Corporate Governance Committee reviews candidates’ existing commitments to other businesses and potential conflicts of interest with other pursuits. The Nominating and Corporate Governance Committee evaluates legal considerations, such as antitrust issues, corporate governance background, financial and accounting background, executive compensation background and the size, composition and combined expertise of the existing Board. Our Nominating and Corporate Governance Committee will consider director candidates from many sources, including stockholders. Stockholder recommendations must follow certain procedures under SEC rules and regulations and our bylaws. Any such recommendations must be in writing and delivered to the Nominating and Corporate Governance Committee at the following address: Corporate Secretary, 555 West Adams Street, Chicago, Illinois 60661. The Nominating and Corporate Governance Committee will evaluate all candidates for the Board in the same manner, including those candidates proposed by stockholders.

Background and Experience of Directors

Our director nominees and continuing directors reflect a wide range of diverse backgrounds, skills and experiences, ranging from senior governmental experience to several current and former CEOs from varying industries. We believe that identifying the primary skills of our directors provides a meaningful representation of the balance of skills of our Board as a whole. Our directors’ diverse viewpoints and unique experiences enhance the quality of our Board’s discussions and the ability to execute on our business strategy.

 

18

The table below highlights summary information about our directors’ experience and skills.

 

 

Director Biographies

The specific experience and qualifications of each our director nominees and continuing directors is described below. If a skill is not listed for an individual director that does not necessarily signify a director’s lack of qualification or experience in a particular area. The age indicated for each of our director nominees and continuing directors is as of March 13, 2020. The immediately following three directors will be seeking election at our Annual Meeting. See “Proposal 5: Election of Directors” for more information.

 

Suzanne P. Clark, 52		Director since June 2017
		President, U.S. Chamber of Commerce

Qualification Highlights

•

Senior Leadership / CEO

•

Corporate Governance

•

Cybersecurity and Technology

•

Organizational Transformation

Suzanne P. Clark has served as President of the U.S. Chamber of Commerce since June 2019, where she focuses on strategy, government relations and market innovation in support of the Chamber’s more than 3 million member companies internationally. Ms. Clark served as Senior Executive Vice President from January 2017 until June 2019 and as Executive Vice President of the U.S. Chamber of Commerce from September 2014 until January 2017. She was previously the Chief Executive Officer of Potomac Research Group from 2010 through September 2014. Prior to that, she held senior leadership roles with Atlantic Media Company (President of National Journal Group) and American Trucking Associations (Chief of Staff). She has served on the board of AGCO Corporation (NYSE:AGCO) and their Compensation and Succession Committees since April 2017 and

 

19

Ms. Clark serves on the boards of So Others Might Eat and St. Patrick’s Episcopal Day School. She is the former President of International Women’s Forum (Washington chapter) and has been honored by Washingtonian Magazine as one of the “100 Most Powerful Women in Washington.”

Ms. Clark holds a B.A. and an M.B.A. from Georgetown University.

 

Kermit R. Crawford, 60		Director since June 2019
		Former President and COO, Rite Aid Pharmacy

Qualification Highlights

•

Senior Leadership / CEO

•

Corporate Governance

•

Finance and Accounting

•

Risk Management

Kermit R. Crawford served as President and Chief Operating Officer of Rite Aid Pharmacy, which operates one of the leading retail drugstore chains in the United States, from October 2017 until March 2019. Prior to Rite Aid, he was an operating partner and advisor with the private equity firm Sycamore Partners from 2015 to 2017. He served as Executive Vice President and President of Pharmacy, Health and Wellness for Walgreen Company, which operates the largest drugstore chain in the United States, from April 2011 to December 2014, and prior to that, as Executive Vice President and Senior Vice President of Pharmacy Services from 2007 to 2011.

He has served on the board of directors for The Allstate Corporation since 2013 and is currently Chair of the Audit Committee, as well as a member of the Risk and Return Committee. Mr. Crawford served on the board of directors for LifePoint Health from March 2016 to November 2018. His service extends to several non-profit organizations including, the Board of Directors for Northwestern Lake Forest Hospital and the Board of Trustees for The Field Museum.

Mr. Crawford has received many notable honors for his expertise and contributions. Chain Drug Review honored him with the “Lifetime Achievement Award” in 2014. Drug Store News presented Crawford with its 2014 “Pharmacy Innovator Award.” Savoy Magazine named Crawford one of the “Top 100 Most Influential Blacks in Corporate America” in 2018, and Black Enterprise Magazine named Crawford to its prestigious list of “America’s Most Powerful Black Directors” in 2018.

Mr. Crawford holds a B.S. in Pharmacy from Texas Southern University.

 

Thomas L. Monahan, III, 53		Director since June 2017
		Managing Partner, Norton Street Capital

Qualification Highlights

•

Senior Leadership / CEO

•

Corporate Governance

•

Cybersecurity and Technology

•

Global

Thomas L. Monahan, III served as Chairman and Chief Executive Officer of CEB, Inc. (formerly NYSE: CEB) from 2008 until April 2017, and served as CEO beginning in 2005. CEB is a research and analytics firm which provides data and insights to help people work more effectively. In his 21 years at CEB, Mr. Monahan led significant global growth and digitization of product delivery. Mr. Monahan has served as a Managing Partner at Norton Street Capital since April 2017. Previously, he worked at Deloitte and Andersen Consulting. He is a former member of the CEB board and served as a member of the board of Convergys Corporation (NYSE:CVG) from 2008 through 2018. Mr. Monahan is also currently a member of the boards of ProKarma, Inc. (Chair), Workforce Logiq, Winsight, the Peace Tech Lab and the Maret School.

Mr. Monahan holds a B.A. from Harvard University and an M.B.A. from New York University.

 

20

The following directors are continuing directors who will not stand for election at the 2020 Annual Meeting:

 

George M. Awad, 59		Director since November 2013
		Founder and Principal, Gibraltar Capital Corporation

Qualification Highlights

•

Senior Leadership / CEO

•

Finance and Accounting

•

Global

•

Risk Management

George M. Awad is the founder and principal of Gibraltar Capital Corporation, which he founded in 2011. Gibraltar Capital Corporation is a wealth management and advisory firm providing investment and business advice to wealthy, internationally-based families. He is a highly accomplished executive with exceptional operating experience in running large, global businesses across the full suite of consumer financial services products, including senior leadership roles with GE Capital from 1988 to 2006 and Citigroup, Inc. from 2006 to 2011, with focus on domestic and global markets. Most recently, Mr. Awad served as CEO, Consumer Finance for Citigroup, with prior positions as CEO, North America Cards and CEO, Global Consumer Group EMEA. Mr. Awad acted as the interim CEO and President of Walter Investment Management Corp. (now known as Ditech Holding Corporation) from June to September 2016. He has served on its board of directors since June 2016 and as the Chairman of the Board from June 2016 through February 2018. Mr. Awad leads Ditech Holding Corporation’s Compliance Committee and serves on its Nominating and Corporate Governance and Finance committees.

Mr. Awad holds a B.S. from the American University of Beirut and an M.B.A. from the University of Pittsburgh - Katz Graduate School of Business.

 

Christopher A. Cartwright, 54		Director since May 2019
		President and CEO, TransUnion

Qualification Highlights

•

Senior Leadership / CEO

•

Cybersecurity & Technology

•

Industry

•

Organizational Transformation

Christopher A. Cartwright has served as President and CEO of the Company since May 8, 2019. Mr. Cartwright joined the Company in August 2013 as Executive Vice President-U.S. Information Services. From December 2010 through March 2013, he was the Chief Executive Officer of Decision Insight Information Group, a portfolio of independent businesses providing real property information, software and services to insurance, finance, legal and real estate professionals in the United States, Canada and Europe. From June 1997 through October 2010, he held a variety of positions at Wolters Kluwer, a global information services and workflow solutions company, where he was CEO of Corporate Legal and Financial Services Division of North America and CEO of Shared Technology Services. Prior to Wolters Kluwer, he was Senior Vice President, Strategic Planning & Operations for Christie’s Inc. and Strategy Consultant for Coopers and Lybrand.

Mr. Cartwright holds a bachelor’s degree in business administration and a master’s in public accountancy from The University of Texas at Austin.

 

21

Russell P. Fradin, 64		Director since July 2018
		Operating Partner, Clayton, Dubilier & Rice, Inc.

Qualification Highlights

•

Senior Leadership / CEO

•

Corporate Governance

•

Cybersecurity and Technology

•

Organizational Transformation

Russell P. Fradin became an operating partner with private investment firm Clayton, Dubilier & Rice, Inc. (CD&R) in 2016, and in that capacity serves as Chairman of two portfolio companies: Capco, a business, digital and technology consulting services company for the financial services industry; and TRANZACT, which provides end-to-end customer acquisition solutions to the insurance sector. Prior to joining CD&R, Mr. Fradin served as President and CEO at SunGard Data Systems, from 2011 until the company’s acquisition by FIS in 2015. He previously served as the Chairman and CEO of Aon Hewitt, a global leader in human resource solutions. During his tenure, Mr. Fradin oversaw the successful 2010 merger between Aon Consulting and Hewitt Associates, having been CEO of Hewitt since 2006. Additional former roles include CEO of the BISYS Group, and senior executive positions at Automatic Data Processing and McKinsey & Company. He has served on the board of Best Buy Co., Inc. since April 2013 and is currently lead independent director. Mr. Fradin also serves on the board of Hamilton Insurance Group, Ltd.

Mr. Fradin holds a B.S. in economics from the Wharton School at the University of Pennsylvania and an M.B.A. from Harvard Business School.

 

Pamela A. Joseph, 61		Director since September 2015; Chairperson Elect of the Board
		CEO, Clearent, LLC

Qualification Highlights

•

Senior Leadership / CEO

•

Cybersecurity and Technology

•

Finance and Accounting

•

Global

Pamela A. Joseph has served as Chief Executive Officer of Clearent, LLC, a payments processing company, since September 2019, and acts as Operating Partner for Clearent’s majority owner, Advent International. Ms. Joseph served as the President and Chief Operating Officer of TSYS from May 2016 until September 2017. Ms. Joseph was previously the Vice Chairman of U.S. Bancorp Payment Services and Chairman of Elavon (formerly NOVA Information Systems, Inc.), a wholly-owned subsidiary of U.S. Bancorp, a position she held from 2004 until June 2015. Ms. Joseph serves on the board of directors of Paychex, Inc., a payroll provider, and also serves on its Governance and Compensation Committee. Ms. Joseph also serves on the board of directors of Adyen, N.V., a Netherlands-based payment processor, and the board of directors of Clearent. Ms. Joseph served on the board of directors of TSYS from May 2016 to September 2017. Ms. Joseph served as a director of Centene Corporation from September 2007 to April 2016.

Ms. Joseph holds a B.S. from the University of Illinois at Urbana-Champaign.

 

22

Siddharth N. (Bobby) Mehta, 61		Director since April 2012
		Former President and CEO, TransUnion

Qualification Highlights

•

Senior Leadership / CEO

•

Cybersecurity and Technology

•

Industry

•

Risk Management

Siddharth N. (Bobby) Mehta is the former President and CEO of TransUnion. He joined the Company in August 2007 and served as the President and CEO until December 31, 2012. From May 2007 through July 2007, he was a consultant to our Board of Directors. From 1998 through February 2007, he held a variety of positions with HSBC Finance Corporation and HSBC North America Holdings, Inc., including Chairman and Chief Executive Officer of HSBC Finance Corporation. He has served on the board of directors of Jones Lang LaSalle Incorporated since July 2019, the board of directors of Northern Trust Corporation since January 2019 and the board of directors of The Allstate Corporation since 2014. Mr. Mehta also serves on the boards of DataCard Group, The Chicago Public Education Fund, The Field Museum, the Myelin Repair Foundation and Amount LLC.

Mr. Mehta holds a B.S. from London School of Economics and an M.B.A. from the University of Chicago.

 

Andrew Prozes, 74		Director since January 2014
		Former CEO, LexisNexis

Qualification Highlights

•

Senior Leadership / CEO

•

Corporate Governance

•

Industry

•

Organizational Transformation

Andrew Prozes served as a director of Cott Corporation from 2005 until May 2018 and chaired its Human Resources and Compensation Committee. He currently serves on the board of directors of Scribestar Limited, Fiizy, Payfone, Neoway, nanopay and Synaptive Limited, and a number of other private for-profit and not-for-profit boards. Mr. Prozes served as the Chief Executive Officer of LexisNexis and on the board of directors of Reed Elsevier PLC from 2000 until December 2010. Prior to joining Reed Elsevier, Mr. Prozes served as Executive Vice President and Chief Operating Officer of West Group, part of the Thomson Reuters Corporation, from 1997 to 2000. From 1988 to 1996, he served as President of Southam’s City Newspapers and was responsible for thirteen daily newspapers and Southam’s business information. Mr. Prozes is a past Chairman of The U.S. Information Industry Association and has served on the boards of the Information Technology Association of Canada and the Canadian Newspaper Association. He is a board trustee of Freedom House in Washington, D.C.

Mr. Prozes holds a B.A. from the University of Waterloo and an M.B.A. from York University.

 

23

Board Committees

The standing committees of our Board of Directors consist of an Audit and Compliance Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, a Technology, Privacy and Cybersecurity Committee and an Executive Committee. The Board has adopted written charters for each of its committees, which can be found on our Investor Relations website, www.transunion.com/tru, on the “Leadership and Governance” page. Listed below are the members of each of the five standing committees as of March 13, 2020.

 

AUDIT AND COMPLIANCE COMMITTEE              2019 Meetings: 4    Pamela A. Joseph, Chairperson (I)  George M. Awad (I)  Suzanne P. Clark (I)		•   Assist our Board in overseeing and advising on: ¡   the quality and integrity of our financial statements and our financial reporting and disclosure practices; ¡   the soundness of our system of internal controls regarding finance and accounting; ¡   our compliance with applicable legal and regulatory requirements; ¡  our independent registered public accounting firm’s qualifications, performance and independence; ¡  the performance of our internal audit function; ¡   compliance with our Code of Business Conduct; and ¡  compliance with our related person transaction policy.   •   Retain our independent registered public accounting firm.   •   Pre-approve audit and non-audit services to be provided by our independent registered public accounting firm.   •   Consult with our independent and internal auditors regarding audits of our consolidated financial statements and the adequacy of our internal controls.   •   Prepare the audit committee report for our proxy statement.   •   Our Board has determined that each member of the Audit and Compliance Committee qualifies as an independent director under the NYSE corporate governance standards and the independence requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).   •   Our Board has determined that each of Ms. Joseph and Mr. Awad qualifies as an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K.

 

I = Independent

 

24

COMPENSATION COMMITTEE    2019 Meetings: 7    Andrew Prozes, Chairperson (I)  Thomas L. Monahan, III (I)  Leo F. Mullin (I)1		•   Assist our Board of Directors in discharging its responsibilities relating to: ¡  setting our compensation program and compensation of our executive officers and directors; ¡   monitoring our incentive and equity-based compensation plans; ¡  overseeing our management succession and continuity planning process; and ¡   preparing the compensation committee report in our proxy statement.   •   Review and approve annual compensation decisions for our CEO and executive officers, including adjustments to base salary, bonus, equity and equity-based incentives, and other benefits.   •   Review and make recommendations to the Board regarding compensation for non-management directors for their Board and committee service.   •   Review and discuss with management, at least annually, management’s assessment of whether risks arising from our compensation policies and practices for all employees, including non-executive officers, are reasonably likely to have a material adverse effect on the Company.   •   Review and evaluate the succession plans relating to the CEO and other executive officers and make recommendations to the Board accordingly.   •   Consult directly with our independent compensation consultant, Frederic W. Cook & Co., Inc. (“FW Cook”), as needed, and with management to review and evaluate our compensation practices, which include both our executive and director compensation programs.

 

I = Independent

 

(1)	Mr. Mullin will resign from the Board effective as of the Annual Meeting.

 

25

NOMINATING AND CORPORATE  GOVERNANCE COMMITTEE    2019 Meetings: 2    Leo F. Mullin, Chairperson (I)1  Russell P. Fradin (I)  Andrew Prozes (I)		•   Assist our Board of Directors in discharging its responsibilities relating to:   ¡  identifying qualified individuals to become new Board members and selecting the director nominees for the annual meetings of stockholders or filling vacancies that may occur between meetings;   ¡   reviewing the qualifications of incumbent directors to determine whether to recommend them for reelection, or recommending that the Board select the director nominees for our annual meeting of stockholders;   ¡  recommending Board members to serve on Board committees and evaluating the operations and performance of such committees;   ¡  developing and recommending to the Board applicable corporate governance principles and taking a leadership role in shaping the corporate governance of the Company;   ¡  overseeing the annual self-evaluation of the Board and each Board committee, as well as overseeing individual director and management evaluations; and   ¡   maintaining an informed status on Company issues related to corporate social responsibility, philanthropy, public policy, and the Company’s visibility as a global corporate citizen.

 

I = Independent

 

(1)	Mr. Mullin will resign from the Board effective as of the Annual Meeting.

 

26

TECHNOLOGY, PRIVACY AND  CYBERSECURITY COMMITTEE    2019 Meetings: 2    Russell P. Fradin, Chairperson (I)  Suzanne P. Clark (I)  Siddharth (Bobby) N. Mehta (I)		•   Assist our Board of Directors in discharging its responsibilities related to:   ¡  reviewing our technology and innovation strategy and approach, including the impact on our performance, growth and competitive position, and monitoring performance against its technology functionality and availability goals;   ¡   monitoring the quality and effectiveness of our information security framework, including capabilities, policies and controls, and methods for identifying, assessing and mitigating information and cybersecurity risks;   ¡  assessing the effectiveness of our management of information security-related risks, including reviewing the results of audits regarding information technology and information security issues and management’s responses thereto, and consulting with internal and external advisors as appropriate;   ¡   monitoring our compliance with global data privacy and security regulations and requirements applicable to the data we receive, collect, create, use, process and maintain, including personal information and information regarding consumers; and   ¡  assessing the effectiveness of systems, controls and procedures we use to ensure compliance with applicable global data privacy and security regulations and requirements.

 

EXECUTIVE COMMITTEE    2019 Meetings: None    Leo F. Mullin, Chairperson (I)1  Christopher A. Cartwright  Russell P. Fradin (I)  Pamela A. Joseph (I)  Andrew Prozes (I)		•   Exercise the powers and authority of the Board during the intervals between meetings of the full Board of Directors.

 

I = Independent

 

(1)	Mr. Mullin will resign from the Board effective as of the Annual Meeting.

 

27

Code of Business Conduct

We have adopted a Code of Business Conduct that applies to all directors, officers and employees. You can find our Code of Business Conduct on our Investor Relations website, www.transunion.com/tru, on the “Leadership and Governance” page, and a copy of the Code of Business Conduct may also be obtained free of charge upon a request directed to TransUnion, 555 West Adams Street, Chicago, Illinois 60661, Attn: Corporate Secretary.

Related Person Transactions

Our Board of Directors has adopted a written Related Person Transaction Policy, which provides that any “Related Person Transaction” must be reviewed and approved or ratified in accordance with specified procedures. The term “Related Person Transaction” includes any transaction, arrangement or relationship, or series of similar transactions, arrangements or relationships, in which (1) the aggregate dollar amount involved exceeds $120,000 in any fiscal year, (2) the Company is, or is proposed to be, a participant, and (3) any person who is or was (since the beginning of the last fiscal year) a director, a nominee for director, an executive officer or a beneficial owner of more than five percent of any class of our voting securities, or a member of the immediate family of any such person, had, has or will have a direct or indirect interest (other than solely as a result of being a director or being less than a 10 percent beneficial owner of another entity).

Our policy requires each director, nominee and executive officer to notify the Chief Legal Officer in writing of any Related Person Transaction in which the director, nominee, executive officer or an immediate family member has or will have an interest and to provide specified details of the transaction. The Chief Legal Officer will deliver a copy of the notice to the Audit and Compliance Committee, who will then review the material facts of each proposed Related Person Transaction and approve, ratify or disapprove the transaction.

The vote of a majority of disinterested members of the Audit and Compliance Committee is required for the approval or ratification of any Related Person Transaction. The Audit and Compliance Committee may approve or ratify a Related Person Transaction if the Audit and Compliance Committee determines, in its business judgment, based on the review of all available information, that the transaction is fair and reasonable to the Company, that there is a business or corporate interest supporting the Related Person Transaction, and that the Related Person Transaction is in the best interests of the Company.

In making this determination, the Audit and Compliance Committee will consider, among other things:

 

•

the business or corporate purpose of the transaction;

 

•

whether the transaction is entered into on an arms-length basis and on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances;

 

•

whether the interest of the director, nominee, executive officer, beneficial owner or family member in the transaction is material;

 

•

whether the transaction would impair the independence of the director or executive officer;

 

•

whether the transaction would otherwise present an improper conflict of interest; and

 

•

whether the transaction would violate any law or regulation applicable to us or any provision of our Code of Business Conduct.

The policy also contains categories of pre-approved transactions that the Board has identified as not having a significant potential for an actual or potential conflict of interest or improper benefit.

In any case where the Audit and Compliance Committee determines not to approve or ratify a Related Person Transaction, the matter will be referred to the Chief Legal Officer for review and consultation regarding the appropriate disposition of such transaction, arrangement or relationship including, but not limited to, termination of the transaction or rescission or modification of the transaction in a manner that would permit it to be ratified and approved.

 

28

Associated Organizations of Directors and Executive Officers

During 2018, we entered into a three-year contract with BMC Software Inc. (“BMC”) to provide us with ITSM SAAS (IT service management, software as a service) after a competitive bidding process. Mr. Robert Beauchamp, who served as a director from June 20, 2018 until his resignation on April 2, 2019, served as the chairman of BMC’s board until October 12, 2018 (and his since been reappointed to such position). During 2018, we paid $2.8 million for services provided by BMC. Given that the services provided by BMC are easily obtainable/replaceable from a number of third parties and the services are for our internal use and not used to generate revenue, the services are not considered to be qualitatively significant or material to TransUnion.

Compensation Committee Interlocks and Insider Participation

Messrs. Prozes (Chairperson), Monahan and Mullin were members of the Compensation Committee during 2019. None of these individuals is or has been an officer or employee of the Company or is serving or has served as a member of the compensation committee of another entity that has an executive officer serving on our Compensation Committee. None of our executive officers serves on the board of directors or as a member of the compensation committee of another entity at which a member of our Compensation Committee or Board of Directors serves as an executive officer.

 

29

PROPOSAL 5: ELECTION OF DIRECTORS

Upon the recommendation of the Nominating and Corporate Governance Committee, our Board has nominated the three people named below for election as Class II directors at our Annual Meeting. Each of the nominees for director has agreed to be named in this proxy statement and to serve as a director if elected.

Nominees:

Suzanne P. Clark

Kermit R. Crawford

Thomas L. Monahan, III

If Proposal 1 is approved by our stockholders, upon the filing of the Declassification Amendment set forth on Appendix A attached hereto, the classification of the Board will be phased out over the next three annual meetings of stockholders as described in Proposal 1, such that at the (a) Annual Meeting, each of the directors in Class II will be elected to hold office for a term of one year, (b) 2021 Annual Meeting of Stockholders, each of the directors in Class II and Class III will be elected to hold office for a term of one year, and (c) 2022 Annual Meeting of Stockholders, each of the directors in Class I, Class II and Class III will be elected to hold office for a term of one year, and thereafter the classification of the Board will terminate in its entirety, and if elected, each of the Class II director nominees will serve a term of one year on our Board, until our 2021 annual meeting of stockholders or until their successors are duly elected and qualified in accordance with our bylaws.

If Proposal 1 is not approved by our stockholders, and if elected, each of the Class II director nominees will serve a term of three years on our Board, until our 2023 Annual Meeting of Stockholders or until their successors are duly elected and qualified in accordance with our bylaws.

The affirmative vote of a majority of votes (meaning the number of shares voted “for” a nominee must exceed the number of shares voted “against” such nominee) cast virtually or represented by proxy and entitled to vote at the Annual Meeting will elect each of the three nominees as Class II directors. If any nominee for director receives a greater number of votes “against” his or her election than votes “for” such election, our Corporate Governance Guidelines provide that such person shall tender to the Board his or her resignation as a director. Unless instructions to the contrary are given, all properly delivered proxies will be voted “FOR” the election of these three nominees as directors.

In the event that any nominee for any reason is unable to serve, or for good cause will not serve, the proxies will be voted for such substitute nominee as our Board may determine. We are not aware of any nominee who will be unable to serve, or for good cause will not serve, as a director.

The relevant experiences, qualifications, attributes or skills of each nominee that led our Board to recommend the above persons as a nominee for director are described in the section entitled “Background and Experience of Directors.”

The Board of Directors recommends a vote “FOR” each of the foregoing nominees to serve as a Class II director.

Director Compensation

The following table discusses the compensation earned by our independent, non-employee directors in 2019. All of our current non-employee directors are independent. Mr. Cartwright, our President and CEO, and Mr. Peck, our former President and CEO, are not included in the table below because they did not receive any additional compensation for their service on the Board of Directors. Mr. Peck served on the Board until his resignation on February 29, 2020. Messrs. Cartwright’s and Peck’s 2019 compensation is presented in the Summary Compensation Table found on page 78.

 

40

The Compensation Committee annually reviews non-employee director compensation with its independent compensation consultant, FW Cook, to confirm that pay is aligned with the market and that of our comparator companies used for executive compensation benchmarking, but is not excessive.

After its annual compensation review in May 2019, the Compensation Committee recommended and the Board of Directors approved the following: a $10,000 increase in the Board of Directors annual retainer (from $85,000 to $95,000); a $15,000 increase in the annual Board Chairperson fee (from $100,000 to $115,000); and a $20,000 increase in the annual target restricted stock grant value (from $150,000 to $170,000). The Compensation Committee recommended and the Board of Directors also approved the compensation for the newly formed Technology, Privacy and Cybersecurity Committee with an annual Committee Chair fee of $20,000 and an annual Committee Member fee of $10,000. The retainer and fee increases were effective on July 1, 2019 and the restricted stock grant increase was effective beginning with the May 2019 grant.

Overall, in 2019, our independent, non-employee directors were eligible for the annualized compensation amounts described below, which are inclusive of the increases described above. The independent directors are paid on a quarterly basis for their service on our Board of Directors and Committees:

 

Board of Directors’ Annual Retainer		$	95,000
Board Chair Fee		$	115,000
Audit and Compliance Committee Chair Fee		$	30,000
Compensation Committee Chair Fee		$	25,000
Nominating and Corporate Governance Committee Chair Fee		$	20,000
Technology, Privacy and Cybersecurity Committee Chair Fee		$	20,000
Committee Member Fees		$	10,000

In addition, in 2019, our independent directors received restricted stock grants with a target grant value of $170,000 under our 2015 Omnibus Incentive Plan, which vest on the one-year anniversary of the grant date. The restricted stock grants provide the directors with the same rights as stockholders generally, including the right to receive dividends paid on our common stock.

The total compensation paid to our independent directors in 2019 is shown in the table below and reflects the increases described above. The annual retainer and applicable fees are prorated for Mr. Crawford, who was appointed on June 14, 2019, and Mr. Beauchamp, who resigned effective April 2, 2019.

Non-Employee Director Compensation Table – 2019

 

Name		Fees Earned or Paid in Cash ($)				Stock Awards(1) ($)				Total ($)
George M. Awad(2)			100,000				169,943				269,943
Robert E. Beauchamp			23,750				—				23,750
Suzanne P. Clark			105,000				169,943				274,943
Kermit R. Crawford			47,500				169,995				217,495
Russell P. Fradin			115,000				169,943				284,943
Pamela A. Joseph			130,000				169,943				299,943
Siddharth N. (Bobby) Mehta(2)			95,000				169,943				264,943
Thomas L. Monahan			100,000				169,943				269,943
Leo F. Mullin(2)			227,500				169,943				397,443
Andrew Prozes			135,000				169,943				304,943

 

(1)

The amounts shown in this column represent the full grant date fair value of the restricted stock grant in 2019 as computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Assumptions used in the calculation of these amounts are included in Note 17, “Stock-Based Compensation,” of the consolidated financial statements contained in

 

41

our 2019 Annual Report on Form 10-K. Messrs. Awad, Fradin, Mehta, Monahan, Mullin and Prozes and Mses. Clark and Joseph each received a grant of 2,571 shares of restricted stock under our 2015 Omnibus Incentive Plan on May 8, 2019. Mr. Crawford received a grant of 2,397 shares of restricted stock under our 2015 Omnibus Incentive Plan on June 14, 2019 in connection with his appointment to the Board. These are the only outstanding restricted stock grants for each director.

(2)

Mr. Awad has 43,189 vested and exercisable stock options with an exercise price of $8.57. Mr. Mehta has 42,658 vested and exercisable stock options with an exercise price of $4.99. Mr. Mullin has 31,405 vested and exercisable stock options and 1,653 unvested stock options with an exercise price of $13.06 that fully vest on March 31, 2020.

Stock Ownership Requirements

We maintain a formal stock ownership policy requiring all independent, non-employee directors to hold TransUnion common stock, which includes unvested restricted stock, in an amount equal to five times the Board of Directors’ annual retainer. To attain the desired multiple, each director must retain 75% of the after-tax value of his or her shares received pursuant to any equity grant after January 1, 2016, until such multiple is achieved. All applicable directors have met their stock ownership requirements, except for Messrs. Fradin and Crawford who were recently appointed to the Board of Directors in 2018 and 2019, respectively.

Business Expenses

The independent directors are reimbursed for their business expenses related to their attendance at our meetings, including room, meals and transportation to and from Board and committee meetings. On rare occasions, a director’s spouse may accompany a director when traveling on TransUnion business.

Director and Officer Liability (or D&O) Insurance

D&O insurance insures our individual directors and officers against certain losses that they are legally required to bear as a result of their actions while performing duties on our behalf. Our D&O insurance policy does not break out the premium for directors versus officers and, therefore, a dollar amount cannot be assigned to the coverage provided for individual directors.

 

42

PROPOSAL 6: APPROVAL OF TRANSUNION AMENDED AND RESTATED 2015 OMNIBUS INCENTIVE PLAN

On June 18, 2015, our stockholders approved our existing 2015 Omnibus Incentive Plan, which we refer to as our 2015 Plan. The Board of Directors believes that it is advisable to amend our 2015 Plan in order to increase the shares of our common stock available for issuance by an additional 7 million shares, to extend the term of the 2015 Plan to the tenth anniversary of the adoption of the Amended 2015 Plan (as defined below) and to make certain additional clarifying and administrative updates to the 2015 Plan, including technical amendments to reflect recent changes to Section 162(m) of the Internal Revenue Code (the “Code”), which we refer to as Section 162(m). These changes will be incorporated in the Amended and Restated 2015 Omnibus Incentive Plan (the “Amended 2015 Plan”). The Board approved, subject to stockholder approval, the Amended 2015 Plan on February 27, 2020 following the recommendation of the Compensation Committee and recommends that stockholders approve the Amended 2015 Plan. If our stockholders do not approve the Amended 2015 Plan, the 2015 Plan will remain in effect in its current form.

In accordance with SEC disclosure requirements, the following is a description of the material features of the Amended 2015 Plan. The Amended 2015 Plan is set forth in its entirety as Appendix F to this proxy statement. The following description and summary are qualified in their entirety by reference to Appendix F.

Material Changes to the 2015 Plan

In connection with this approval, the Board has recommended that the 2015 Plan be amended in the following respects, and to reflect such amendments in the new Amended 2015 Plan document:

 

•

Increase the number of shares of common stock reserved for issuance under the 2015 Plan by 7,000,000 shares (from 5,400,000 shares to 12,400,000 shares);

•

Extend the term of the 2015 Plan through the tenth anniversary of the date of adoption of the Amended 2015 Plan; and

•

To make certain additional clarifying and administrative updates to the 2015 Plan, including technical amendments to reflect recent changes to Section 162(m).

As of February 28, 2020, 1,228,551 shares of common stock remained available for issuance of future awards under the 2015 Plan. As of February 28, 2020, 2,364,763 full value awards remain outstanding under the 2015 Plan and 1,291,200 stock options remain outstanding under the frozen TransUnion Holding Company, Inc. 2012 Management Equity Plan. As of February 28, 2020, the average weighted per share exercise price of all outstanding stock options was $7.79 and the weighted average remaining contractual term was 3.35 years. As discussed under the “Compensation Discussion and Analysis” section of this proxy statement below, beginning in the first quarter of 2016, we began issuing equity awards for shares of our common stock as equity compensation. Based on past trends and current expectations for possible future awards, we are recommending that an additional 7 million shares of common stock be made available for issuance under the Amended 2015 Plan, sufficient to cover equity awards for the next several years. On February 28, 2020, the closing price of a share of our common stock was $88.92.

Common measures for the use of stock incentive plans include the run rate and the overhang rate. The run rate measures the annual dilution from equity awards granted during a particular year. We calculate this based on all target awards granted under the 2015 Plan in a given year as a percent of the number of shares of our common stock outstanding in that year. Our run rates for 2017, 2018 and 2019 were approximately 0.52%, 0.50% and 0.52%, respectively. In February 2020, the Compensation Committee approved time-based and performance-based equity compensation awards in the form of RSUs and PSUs for approximately 580,814 shares of common stock. After discussing with FW Cook and reviewing the grant practices of our comparator companies, we believe these are reasonable levels. The run rate may increase in future years as the number of our associates who

 

43

are eligible to receive equity awards grows, and if we continue to have equity awards as an important component of compensation for our executives and other key employees to better align their interests with the interests of our stockholders.

The overhang rate is a measure of potential dilution to stockholders. We calculate this based on all unissued shares under the 2015 Plan plus outstanding PSUs and RSUs as a percentage of the total number of shares of common stock outstanding. At the end of 2019 (not including grants made in February 2020), our overhang rate was approximately 2.24%. With the increase in the number of shares reserved for issuance under the Amended 2015 Plan, our overhang rate at the end of 2019 would have been 5.97%. After discussing with FW Cook and reviewing the grant practices of our comparator companies, we believe these are reasonable levels and provide us with the appropriate flexibility to ensure meaningful equity awards in future years to our executives and other key employees to better align their interests with the interests of our stockholders.

The 2015 Plan is also being amended to reflect certain technical amendments designed to address changes to the Code due to the enactment of the 2017 Tax Cuts and Jobs Act (the “Tax Act”) and its elimination of the tax deduction for certain qualified performance-based compensation under Section 162(m). These proposed amendments will not eliminate performance criteria for equity awards under the Amended 2015 Plan or materially impact the performance criteria that the Compensation Committee may consider when establishing performance awards under the Amended 2015 Plan.

Summary of the Amended 2015 Plan

Purpose

The purpose of the Amended 2015 Plan is to provide a means through which to attract and retain key personnel and to provide a means whereby current directors, officers, employees, consultants and advisors can acquire and maintain an equity interest in us, or be paid incentive compensation, including incentive compensation measured by reference to the value of our common stock, thereby strengthening their commitment to our welfare and aligning their interests with those of our stockholders.

Administration

The Amended 2015 Plan will be administered by the Compensation Committee. The Compensation Committee has the sole and plenary authority to establish the terms and conditions of any award consistent with the provisions of the Amended 2015 Plan. The Compensation Committee is authorized to interpret, administer, reconcile any inconsistency in, correct any defect in and/or supply any omission in the Amended 2015 Plan and any instrument or agreement relating to, or any award granted under, the Amended 2015 Plan; establish, amend, suspend, or waive any rules and regulations and appoint such agents as the Compensation Committee deems appropriate for the proper administration of the Amended 2015 Plan; and to make any other determination and take any other action that the Compensation Committee deems necessary or desirable for the administration of the Amended 2015 Plan.

Except to the extent prohibited by applicable law or the applicable rules and regulations of any securities exchange or inter-dealer quotation system on which our securities are listed or traded, the Compensation Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it in accordance with the terms of the Amended 2015 Plan. Any such allocation or delegation may be revoked by the Compensation Committee at any time. Unless otherwise expressly provided in the Amended 2015 Plan, all designations, determinations, interpretations, and other decisions under or with respect to the Amended 2015 Plan or any award or any documents evidencing awards granted pursuant to the Amended 2015 Plan are within the sole discretion of the Compensation Committee, may be made at any time and are final, conclusive and binding upon all persons or entities, including, without limitation, us, any holder or beneficiary of any award, and any of our stockholders.

 

44

Term

The Amended 2015 Plan shall become effective on the date on which it is approved by our stockholders (the “Restatement Effective Date”). Without giving effect to the amendment and restatement of the 2015 Plan, the 2015 Plan provides that the expiration date of the 2015 Plan is the tenth anniversary of the original effective date of the 2015 Plan (June 18, 2015). If the Amended 2015 Plan is approved by our stockholders, the expiration date of the Amended 2015 Plan, on and after which date no awards may be granted, shall be the tenth anniversary of the Restatement Effective Date.

Eligibility

Any employee, director, officer, consultant or advisor to the Company or an affiliate thereof who is selected by the Compensation Committee to participate in the Amended 2015 Plan is eligible to receive an award thereunder. As of February 28, 2020, approximately 8,113 employees and 9 directors would be eligible to receive awards under the Amended 2015 Plan. Consultants do not receive awards pursuant to our current equity compensation program and we have not granted any awards to consultants in the past under the 2015 Plan.

Shares Subject to the Amended 2015 Plan

Without giving effect to the amendment and restatement of the 2015 Plan, the Amended 2015 Plan provides that no more than 5,400,000 shares of common stock shall be available for awards under the 2015 Plan. The Amended 2015 Plan would increase this amount by 7,000,000 shares and provide that no more than 12,400,000 shares of common stock shall be available for awards under the Amended 2015 Plan. Of this amount, the maximum number of shares for which incentive stock options may be granted is 12,400,000; the maximum number of shares for which options or SARs may be granted to any individual participant during any single fiscal year is 1,333,000; the maximum number of shares for which performance compensation awards denominated in shares may be granted to any individual participant in respect of a single fiscal year is 1,333,000 (or if any such awards are settled in cash, the maximum amount may not exceed the fair market value of such shares on the last day of the performance period to which such award relates); the maximum number of shares of common stock granted during a single fiscal year to any non-employee director, taken together with any cash fees paid to such non-employee director during the fiscal year in respect of such non-employee director’s service on the Board, shall not exceed $1,500,000 in total value; and the maximum amount that may be paid to any individual for a single fiscal year under a performance compensation award denominated in cash is $25,000,000. Except for substitute awards (as described below), in the event any award terminates, lapses, or is settled without the payment of the full number of shares subject to such award, including as a result of net exercise or settlement of the award or as a result of the award being settled in cash, the undelivered shares may be granted again under the Amended 2015 Plan, unless the shares are surrendered after the termination of the Amended 2015 Plan, and only if stockholder approval is not required under the then-applicable rules of the exchange on which the shares of common stock are listed. Awards may, in the sole discretion of the Compensation Committee, be granted in assumption of, or in substitution for, outstanding awards previously granted by an entity directly or indirectly acquired by us or with which we combine (referred to as “substitute awards”), and such substitute awards shall not be counted against the total number of shares that may be issued under the Amended 2015 Plan, except that substitute awards intended to qualify as “incentive stock options” shall count against the limit on incentive stock options described above. No award may be granted under the Amended 2015 Plan after the tenth anniversary of the effective date of the Amended 2015 Plan, but awards theretofore granted may extend beyond that date. Without giving effect to the amendment and restatement of the 2015 Plan, the 2015 Plan provides that no award may be granted under the 2015 Plan after the tenth anniversary of the original effective date of the 2015 Plan.

Options

The Compensation Committee may grant non-qualified stock options and incentive stock options under the Amended 2015 Plan, with terms and conditions determined by the Compensation Committee that are not

 

45

inconsistent with the Amended 2015 Plan; provided that all stock options granted under the Amended 2015 Plan are required to have a per share exercise price that is not less than 100% of the fair market value of our common stock underlying such stock options on the date an option is granted (other than in the case of options that are substitute awards). All stock options that are intended to qualify as incentive stock options must be granted pursuant to an award agreement expressly stating that the option is intended to qualify as an incentive stock option, and will be subject to the terms and conditions that comply with the rules as may be prescribed by Section 422 of the Code. The maximum term for stock options granted under the Amended 2015 Plan will be ten years from the initial date of grant, or with respect to any stock options intended to qualify as incentive stock options, such shorter period as prescribed by Section 422 of the Code. However, if a non-qualified stock option would expire at a time when trading of shares of common stock is prohibited by our insider trading policy (or Company-imposed “blackout period”), the term will automatically be extended to the 30th day following the end of such period. The purchase price for the shares as to which a stock option is exercised may be paid to us, to the extent permitted by law (1) in cash or its equivalent at the time the stock option is exercised, (2) in shares having a fair market value equal to the aggregate exercise price for the shares being purchased and satisfying any requirements that may be imposed by the Compensation Committee, or (3) by such other method as the Compensation Committee may permit in its sole discretion, including without limitation (A) in other property having a fair market value on the date of exercise equal to the purchase price, (B) if there is a public market for the shares at such time, through the delivery of irrevocable instructions to a broker to sell the shares being acquired upon the exercise of the stock option and to deliver to us the amount of the proceeds of such sale equal to the aggregate exercise price for the shares being purchased, or (C) through a “net exercise” procedure effected by withholding the minimum number of shares needed to pay the exercise price. Any fractional shares of common stock will be settled in cash.

Stock Appreciation Rights

The Compensation Committee may grant stock appreciation rights (“SARs”), with terms and conditions determined by the committee that are not inconsistent with the Amended 2015 Plan. Generally, each SAR will entitle the participant upon exercise to an amount (in cash, shares or a combination of cash and shares, as determined by the committee) equal to the product of (1) the excess of (A) the fair market value on the exercise date of one share of common stock, over (B) the strike price per share, times (2) the numbers of shares of common stock covered by the SAR, less an amount equal to any statutory withholding amounts or taxes required to be withheld. The strike price per share of a SAR will be determined by the Compensation Committee at the time of grant but in no event may such amount be less than the fair market value of a share of common stock on the date the SAR is granted (other than in the case of SARS granted in tandem with or in substitution of previously granted awards).

Restricted Shares and Restricted Stock Units

The Compensation Committee may grant restricted shares of our common stock or restricted stock units (“RSUs”), representing the right to receive, upon the expiration of the applicable restricted period (or applicable deferral period), one share of common stock for each RSU, or, in the Compensation Committee’s sole discretion, the cash value thereof (or any combination thereof). As to restricted shares of our common stock, subject to the other provisions of the Amended 2015 Plan, the holder will generally have the rights and privileges of a stockholder as to such restricted shares of common stock, including without limitation the right to vote such restricted shares of common stock (except, that if the lapsing of restrictions with respect to such restricted shares of common stock is contingent on satisfaction of performance conditions other than or in addition to the passage of time, any dividends payable on such restricted shares of common stock will be retained and delivered without interest to the holder of such shares when the restrictions on such shares lapse). To the extent provided in the applicable award agreement, the holder of outstanding RSUs will be entitled to be credited with dividend equivalent payments (upon the payment by us of dividends on shares of common stock) either in cash or, at the Compensation Committee’s sole discretion, in shares of common stock having a value equal to the amount of such dividends (and interest may, at the Compensation Committee’s sole discretion, be credited on the amount of

 

46

cash dividend equivalents at a rate and subject to such terms as determined by the committee), which will be payable at the same time as the underlying RSUs are settled following the release of restrictions on such RSUs.

Other Stock-Based Awards and Other Cash-Based Awards

The Compensation Committee may issue unrestricted common stock, rights to receive grants of awards at a future date, or other awards denominated in shares of common stock (including, without limitation, performance shares or performance units), and other awards denominated in cash, including, without limitation, cash bonuses, under the Amended 2015 Plan, including performance-based awards.

Performance Compensation Awards

The Compensation Committee may also make performance goals applicable to an award recipient with respect to any award granted in its discretion, including, but not limited to, one or more of the performance goals set forth in the Amended 2015 Plan.

The Compensation Committee has the sole discretion to select the length of any applicable performance periods, the types of performance compensation awards to be issued, the applicable performance criteria and performance goals, and the kinds and/or levels of performance goals that are to apply. The performance criteria that will be used to establish the performance goals may be based on the attainment of specific levels of performance of the Company (and/or one or more affiliates, divisions or operational and/or business units, product lines, brands, business segments, administrative departments, or any combination of the foregoing) and will be described in the Amended 2015 Plan. Unless otherwise determined by the Compensation Committee at the time a performance compensation award is granted, the Compensation Committee shall specify adjustments or modifications to be made to the calculation of a performance goal for such performance period, based on and to appropriately reflect the following events: (1) asset write-downs; (2) litigation or claim judgments or settlements; (3) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (4) any reorganization and restructuring programs; (5) extraordinary nonrecurring items as described in Accounting Standards Codification Topic 225-20 (or any successor pronouncement thereto) and/or in management’s discussion and analysis of financial condition and results of operations appearing in our annual report to stockholders for the applicable year; (6) acquisitions or divestitures; (7) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (8) foreign exchange gains and losses; (9) discontinued operations and nonrecurring charges; (10) a change in our fiscal year; and (11) any other adjustments specified by the Compensation Committee. If the Compensation Committee determines that a change in the business, operations, corporate structure or capital structure of the Company, or any other events or circumstances, renders any performance goals to be unsuitable, the Compensation Committee may modify such goals as it deems appropriate.

Following the completion of a performance period, the Compensation Committee will review and certify in writing whether, and to what extent, the performance goals for the performance period have been achieved and, if so, calculate and certify in writing that amount of the performance compensation awards earned for the period based upon the performance formula. In determining the actual amount of an individual participant’s performance compensation award for a performance period, the Compensation Committee may make such adjustments to the amount of the performance compensation award earned as it determines in its sole discretion.

The Amended 2015 Plan deleted certain provisions under the 2015 Plan that were previously applicable to performance compensation awards under Section 162(m) that, following the effectiveness of the Tax Act and its elimination of the exception for qualified “performance-based compensation” from the deductibility limits under Section 162(m), are no longer applicable to awards under the Amended 2015 Plan.

Effect of Certain Events on the Amended 2015 Plan and Awards

In the event of (a) any dividend (other than regular cash dividends) or other distribution (whether in the form of cash, shares of common stock, other securities or other property), recapitalization, stock split, reverse stock split,

 

47

reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of our shares of common stock or other securities, issuance of warrants or other rights to acquire our shares of common stock or other securities, or other similar corporate transaction or event that affects the shares of common stock (including a change in control, as defined in the Amended 2015 Plan), or (b) unusual or nonrecurring events affecting us, including changes in applicable rules, rulings, regulations or other requirements that the Compensation Committee determines, in its sole discretion, could result in substantial dilution or enlargement of the rights intended to be granted to, or available for, participants (an “adjustment event”) the Compensation Committee shall, in respect of any such adjustment event, make such proportionate substitution or adjustment, if any, as it deems equitable, to any or all of: (i) the share limits applicable under the Amended 2015 Plan with respect to the number of awards which may be granted thereunder, (ii) the number of our shares of common stock or other securities which may be delivered in respect of awards or with respect to which awards may be granted under the Amended 2015 Plan and (iii) the terms of any outstanding award, including, without limitation, (A) the number of shares of common stock subject to outstanding awards or to which outstanding awards relate (with any increase requiring the approval of our board of directors), (B) the exercise price or strike price with respect to any award or (C) any applicable performance measures.

In connection with any adjustment event, the Compensation Committee may, in its discretion, provide for any one or more of the following: (i) providing for (A) a substitution or assumption of awards (which we refer to as “successor awards”), (B) accelerating the exercisability of, lapse of restrictions on, or termination of, awards or (C) providing for a period of time for participants to exercise outstanding awards prior to the occurrence of such event; and (ii) cancelling any one or more outstanding awards and causing to be paid to the holders holding vested awards (including any awards that would vest as a result of the occurrence of such event but for such cancellation) the value of such awards, if any, as determined by the Compensation Committee (which if applicable may be based upon the price per share of common stock received or to be received by other Company stockholders in such event), including without limitation, in the case of options and SARs, a cash payment equal to the excess, if any, of the fair market value of the shares of common stock subject to the option or SAR over the aggregate exercise price thereof. For the avoidance of doubt, the Compensation Committee may cancel any stock option or SAR for no consideration if the fair market value of the shares subject to such option or SAR is less than or equal to the aggregate exercise price or strike price of such stock option or SAR.

In the event of (a) any sale, transfer, disposition, or other transaction which results in an award holder ceasing to provide services to us or any of our affiliates, or (b) a change in control, unless otherwise provided for under the terms of an award granted under the Amended 2015 Plan: (i) any successor awards issued in connection with such transaction will become fully vested and exercisable (to the extent applicable) upon specified qualifying terminations of the award holder’s employment following such transaction; (ii) with respect to any unvested performance-vesting awards, satisfaction of performance criteria will be measured based on actual performance through such event (or if performance levels cannot be measured, such criteria will be deemed to have been satisfied at target levels), and a successor award may be granted in respect of the vested portion of such awards.

Nontransferability of Awards

An award will not be transferable or assignable by a participant (including, without limitation, except as may be prohibited by applicable law, pursuant to a domestic relations order) other than by will or by the laws of descent and distribution and any such purported assignment, alienation, pledge, attachment, sale, transfer or encumbrance will be void and unenforceable against us or any affiliate. However, the Compensation Committee may, in its sole discretion, permit awards (other than incentive stock options) to be transferred, including transfers to a participant’s family members, any trust established solely for the benefit of participant or such participant’s family members, any partnership or limited liability company of which participant, or participant and participant’s family members, are the sole member(s), and a beneficiary to whom donations are eligible to be treated as “charitable contributions” for tax purposes.

 

48

Amendment and Termination

The Board may amend, alter, suspend, discontinue, or terminate the Amended 2015 Plan or any portion thereof at any time; provided, that no such amendment, alteration, suspension, discontinuation or termination may be made without stockholder approval if (1) such approval is necessary to comply with any regulatory requirement applicable to the Amended 2015 Plan or for changes in GAAP to new accounting standards, (2) it would materially increase the number of securities which may be issued under the Amended 2015 Plan (except for adjustments in connection with certain corporate events), or (3) it would materially modify the requirements for participation in the Amended 2015 Plan; provided, further, that any such amendment, alteration, suspension, discontinuance or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any award shall not to that extent be effective without such individual’s consent.

The Compensation Committee may also, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award granted or the associated award agreement, prospectively or retroactively, subject to the consent of the affected participant if any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination would materially and adversely affect the rights of any participant with respect to such award; provided, further, that without stockholder approval, except as otherwise permitted in the “adjustments” provisions of the Amended 2015 Plan, (1) no amendment or modification may reduce the exercise price of any option or the strike price of any SAR, (2) the Compensation Committee may not cancel any outstanding option or SAR and replace it with a new option or SAR (with a lower exercise price or strike price, as the case may be) or other award or cash payment that is greater than the value of the cancelled option or SAR, and (3) the Compensation Committee may not take any other action which is considered a “repricing” for purposes of the stockholder approval rules of any securities exchange or inter-dealer quotation system on which our securities are listed or quoted.

Dividends and Dividend Equivalents

The Compensation Committee, in its sole discretion, may provide part of an award with dividends, dividend equivalents, or similar payments in respect of awards, on such terms and conditions as may be determined by the Compensation Committee in its sole discretion; provided, that no dividend equivalents shall be payable in respect of outstanding (1) options or SARs or (2) unearned performance compensation awards or other unearned awards subject to performance conditions (other than or in addition to the passage of time) (although dividend equivalents may be accumulated in respect of unearned awards and paid within 15 days after such awards are earned and become earned, payable or distributable).

Clawback/Forfeiture, Other Detrimental Activity

All awards shall be subject to reduction, cancellation, forfeiture or recoupment to the extent necessary to comply with any clawback, forfeiture, or other similar policy adopted by the board or committee, and applicable law (including, without limitation, the applicable rules and regulations of the SEC and the New York Stock Exchange or any other securities exchange or inter-dealer quotation system on which the Company’s common stock is listed or quoted). In addition, to the extent a participant receives any amount in excess of what the participant should have received under the terms of an award (including by reason of a financial restatement, mistake in calculations, or other administrative error) the committee may require the participant to repay any such excess amount.

If the participant, while employed by or providing services to us or any affiliate or after termination of such employment or service, violates a non-competition, non-solicitation or non-disclosure covenant or agreement or otherwise has engaged in or engages in other detrimental activity that is in conflict with or adverse to our interests or the interests of any affiliate, as determined by the Compensation Committee in its sole discretion, the committee may cancel any or all of such participant’s outstanding awards, or require the participant to forfeit any amount or gain realized due to the vesting or exercise of such award, and must repay any such amount or gain to us.

 

49

Federal Income Tax Consequences

The following is a summary of the general federal income tax consequences to our company and to United States taxpayers of awards granted under the Amended 2015 Plan. Tax consequences for any particular individual or under state or non-U.S. tax laws may be different.

Non-Qualified Stock Options and SARs—Tax Effects

No taxable income is reportable when a non-qualified stock option or SAR is granted to a person. Upon exercise, generally, the person will have ordinary income equal to the fair market value of our common stock, on the exercise date minus the exercise price. Any gain or loss upon the disposition of the stock received upon exercise will be a capital gain or loss to the person.

Incentive Stock Options—Tax Effects

No taxable income is reportable when an incentive stock option is granted or exercised (except for persons who are subject to the alternative minimum tax, who may be required to recognize income in the year in which the incentive stock option is exercised). If the person exercises the incentive stock option and then sells the underlying shares of our common stock more than two years after the grant date and more than one year after the exercise date, the sale price minus the exercise price will be taxed as capital gain or loss. If the person exercises the incentive stock option and sells the shares before the end of the two- or one-year holding periods, then the person generally will have ordinary income at the time of the sale equal to the fair market value of the shares of our common stock on the exercise date (or the sale price, if less) minus the exercise price of the incentive stock option, and any additional gain on the sale will be treated as capital gain.

Restricted Stock and RSUs—Tax Effects

A person receiving restricted stock or RSUs will not have taxable income upon the grant unless, in the case of restricted stock, the person timely elects under Code Section 83(b) to be taxed at that time. Instead, the person will have ordinary income at the time of vesting equal to the fair market value on the vesting date of the shares of our common stock (or cash) received.

Performance Compensation Awards—Tax Effects

A person receiving a performance compensation award that is subject to a substantial risk of forfeiture will generally not recognize income at the time of receipt and the Company will not be entitled to a deduction at that time. A person will generally recognize ordinary income in an amount equal to any cash received or the value of any shares received on the date of payment or delivery of such cash or shares in settlement of such person’s performance compensation award. Depending on the length of time the shares acquired upon the achievement of the performance goals are held, such person will recognize either long-term or short-term capital gain or loss upon the sale of such shares.

Tax Effect for Our Company

We generally will receive a tax deduction for any ordinary income recognized by a person with respect to an award under the Amended 2015 Plan (for example, upon the exercise of a non-qualified stock option). In the case of incentive stock options that meet the holding period requirements described above, the person will not recognize ordinary income; therefore, we will not receive a deduction. Our deduction may also be limited by Code Section 280G or Section 162(m).

 

50

Section 162(m) generally provides that a publicly traded corporation may not deduct compensation in excess of $1.0 million per year paid to the company’s “covered employees.” “Covered employee” includes (a) any individual who at any time during the taxable year is either our principal executive officer or principal financial officer, or an employee whose total compensation for the tax year is required to be reported to our stockholders because he or she is among the three highest compensated officers for the tax year (other than the principal executive officer or principal financial officer), and (b) any person who was a covered employee at any time after December 31, 2016. However, certain awards that qualified as “performance-based compensation” under Section 162(m) were not subject to such $1.0 million limitation. The performance-based compensation exception was eliminated by the Tax Act with respect to tax years beginning January 1, 2018; however, under a transition rule, compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and which is not materially modified after such date may still qualify for the performance-based compensation exception.

To the extent applicable to our existing contracts and awards, the Compensation Committee may avail itself of this transition rule. However, because of uncertainties as to the application and interpretation of the transition rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition rule. While the Compensation Committee is mindful of the benefit to our performance of full deductibility of compensation, the Compensation Committee believes that it should not be constrained by the requirements of Section 162(m) where those requirements would impair flexibility in compensating our executive officers in a manner that can best promote our corporate objectives and support our compensation philosophy. The Compensation Committee intends to continue to compensate our executive officers in a manner consistent with the best interests of the Company and our stockholders.

New Plan Benefits

Because grants under the Amended 2015 Plan are generally within the discretion of the Compensation Committee, it is not possible to determine the future grants that will be made, other than to non-employee directors, under the Amended 2015 Plan.

The Amended 2015 Plan authorizes the grant of equity-based awards to non-employee directors in accordance with our director compensation program, as described above under “Director Compensation.” Historically, our non-employee directors have received annual equity grants under the 2015 Plan in May of each year. The table below sets forth the aggregate target grant value that all non-employee directors as a group are expected to receive in 2020 pursuant to our current director compensation program. If our stockholders do not approve this Proposal 6, we expect that sufficient shares will remain available for grant to our non-employee directors in May 2020 under the 2015 Plan.

 

Name		Dollar Value				Number of Units/ Awards(1)
Current NEOs and Position			—			—
Christopher A. Cartwright, President and CEO			—			—
James M. Peck, Former President and CEO			—			—
Todd M. Cello, Executive Vice President, Chief Financial Officer			—			—
John T. Danaher, President, Consumer Interactive			—			—
Abhi Dhar, Executive Vice President, Chief Information & Technology Officer			—			—
David M. Neenan, President, International			—			—
All Current Executive Officers as a Group			—			—
All Current Non-Executive Directors as a Group(2)		$	1,360,000			—
All Current Non-Executive Officer Employees as a Group			—			—

 

51

(1)	The number of restricted shares granted to non-executive directors in May 2020 cannot be determined at this time since the $170,000 target grant value will be converted to the number of restricted shares using TransUnion’s closing stock price on the date of grant.

(2)	Excludes Mr. Mullin, who will retire from the Board at the Annual Meeting.

History of Grants Under the 2015 Plan

The following table shows the number of shares of our common stock subject to equity awards granted under the 2015 Plan since its inception through February 28, 2020 for certain individuals:

 

Name		RSUs/ Restricted Stock					PSUs(1)
Current NEOs and Position
Christopher A. Cartwright, President and CEO				173,875					130,426
James M. Peck, Former President and CEO				255,127					255,124
Todd M. Cello, Executive Vice President, Chief Financial Officer				43,552					43,547
John T. Danaher, President, Consumer Interactive				93,429					58,235
Abhi Dhar, Executive Vice President, Chief Information & Technology Officer				34,501					16,703
David M. Neenan, President, International				93,029					95,035
All Current Executive Officers as a Group				215,121					215,104
All Current Non-Executive Directors as a Group				80,089					—
Nominees for Election as a Director
Suzanne P. Clark				8,302					—
Kermit R. Crawford				2,397					—
Thomas L. Monahan, III				8,302					—
Associates of any such Directors, Executive Officers or Nominees				—					—
Other Persons who received or are to receive 5% of such options or rights				—					—
All Current Non-Executive Officer Employees as a Group				1,650,832					1,285,523

 

(1)	Reflects target PSUs granted.

Registration

We intend to file a registration statement on Form S-8 with the SEC with respect to the Amended 2015 Plan to cover shares issuable under the Amended 2015 Plan.

Vote Required

Approval of Proposal 6 requires the affirmative “FOR” vote of the holders of a majority of the votes cast on the proposal. Abstentions will have the same effect as a vote against Proposal 6 and broker non-votes will have no effect on Proposal 6.

The Board of Directors recommends a vote “FOR” the approval of the Amended 2015 Plan.

 

52

PROPOSAL 7: RATIFICATION OF APPOINTMENT OF

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit and Compliance Committee of our Board has appointed the independent registered public accounting firm of PricewaterhouseCoopers LLP to audit our consolidated financial statements for the year ending December 31, 2020. This is the first year that PricewaterhouseCoopers has been engaged as our independent registered public accounting firm. We are not required under SEC regulations to submit this proposal. However, the Board believes it is appropriate and a good corporate governance practice to do so.

Ratification of Appointment of PricewaterhouseCoopers LLP

The ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the year ending December 31, 2020 will be determined by the vote of a majority of the voting power of the shares present or represented at the 2020 Annual Meeting of Stockholders and voting affirmatively or negatively on the proposal. Unless instructions to the contrary are given, all properly delivered proxies will be voted “FOR” ratification.

If the appointment is not ratified by the stockholders, the Audit and Compliance Committee will consider the appointment of a different independent registered public accounting firm.

A representative of PricewaterhouseCoopers LLP and a representative of Ernst & Young LLP, our former independent registered public accounting firm, are expected to be present at the virtual Annual Meeting, will be offered the opportunity to make a statement if such representative desire to do so and will be available to respond to appropriate questions.

The Board of Directors recommends a vote “FOR” the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for fiscal year 2020.

Change in Independent Registered Public Accounting Firm in 2020

As reported on our Current Report on Form 8-K filed on February 24, 2020 (the “Auditor 8-K”), on February 18, 2020, the Audit and Compliance Committee (i) dismissed Ernst & Young LLP (“EY”) and (ii) engaged PricewaterhouseCoopers LLP (or “PwC”) as our independent registered public accounting firm for the fiscal year ending December 31, 2020, subject to completion of PwC’s standard client acceptance procedures and execution of an engagement letter. The reports of EY on the Company’s consolidated financial statements for the years ended December 31, 2019 and 2018 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope or accounting principles.

During the years ended December 31, 2019 and 2018, and the subsequent interim period through February 18, 2020, there were no disagreements with EY on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of EY, would have caused them to make a reference thereto in their reports.

During the years ended December 31, 2019 and 2018, and the subsequent interim period through February 18, 2020, there were no “reportable events” requiring disclosure pursuant to paragraph (a)(1)(v) of Item 304 of Regulation S-K, except as described below.

During the quarterly period ended June 30, 2019, a material weakness in internal control over financial reporting was identified relating to the operating effectiveness of internal controls designed to prevent or timely detect unauthorized wire transfers by TransUnion Limited, a Hong Kong entity in which we hold a 56.25% interest, so as to safeguard the Company’s cash assets in TransUnion Limited from unauthorized wire transfers and prevent

 

53

or detect a material misstatement of our financial statements. This material weakness was disclosed in Item 4 of our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2019 and September 30, 2019, and disclosed as remediated in Item 9A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019.

We provided EY with a copy of the Auditor 8-K and requested that EY provide a letter addressed to the SEC stating whether EY agrees with the statements contained in the Auditor 8-K as they relate to EY. A copy of such letter dated February 24, 2020 was attached as Exhibit 16.1 to the Auditor 8-K.

During the years ended December 31, 2019 and 2018, and the subsequent interim period through February 18, 2020, neither the Company nor anyone on its behalf consulted PwC regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, and no written report or oral advice was provided to the Company that PwC concluded was an important factor considered by us in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” or “reportable event” (within the meaning of paragraph (a)(1)(iv) of Item 304 of Regulation S-K and paragraph (a)(1)(v) of Item 304 of Regulation S-K, respectively).

Audit and Related Fees

The following table sets forth the aggregate fees paid to Ernst & Young LLP, our principal accountant, for the years ended December 31, 2019 and 2018:

 

Category (in millions)		2019				2018
Audit fees		$	5.3			$	4.6
Audit-related fees			—				0.1
Tax fees			—				0.1
All other fees			—				—
Total		$	5.3			$	4.8

All audit and non-audit services provided by our principal accountant must be approved by the Audit and Compliance Committee of our Board of Directors. For engagements expected to generate fees of $50,000 or less, audit and non-audit services by our principal accountant can be approved by the Chairperson of the Audit and Compliance Committee. Audit-related fees include fees paid for the review of controls and security of our information systems and agreed upon procedures. Tax fees include fees related to the analysis of various domestic and international tax restructuring matters. All of the fees paid to our principal accountant in 2019 and 2018 were pre-approved by our Audit and Compliance Committee.

Audit and Compliance Committee Report

The Audit and Compliance Committee of our Board of Directors currently consists of the three directors whose names appear below. Each member of the Audit and Compliance Committee is “independent” and meets the financial literacy requirements of NYSE’s listing standards. The primary purposes of the Audit and Compliance Committee are to assist the Board in monitoring:

 

•

the integrity of TransUnion’s financial statements and financial reporting processes and systems of internal control;

 

•

the qualifications and independence of TransUnion’s independent registered public accounting firm;

 

•

the performance of TransUnion’s internal audit function and independent registered public accounting firm; and

 

•

TransUnion’s compliance with legal and regulatory requirements.

 

54

The Audit and Compliance Committee is responsible for appointing, retaining and terminating our independent registered public accounting firm and also performs the specific functions set forth in its charter, which is available on our website.

The Audit and Compliance Committee has reviewed and discussed with TransUnion’s management and Ernst & Young LLP, TransUnion’s independent registered public accounting firm, the audited financial statements of TransUnion included in its Annual Report on Form 10-K for the year ended December 31, 2019.

The Audit and Compliance Committee has discussed with TransUnion’s independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) and the SEC. The Audit and Compliance Committee also has received and reviewed the written disclosures and the letter from Ernst & Young LLP required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit and Compliance Committee concerning independence, and has discussed with Ernst & Young LLP such independent registered public accounting firm’s independence.

Based on the review and discussions referred to above, the Audit and Compliance Committee recommended to our Board of Directors that the audited financial statements be included in TransUnion’s Annual Report on Form 10-K for the year ended December 31, 2019 for filing with the SEC.

This report is submitted on behalf of the Audit and Compliance Committee.

Pamela A. Joseph, Chairperson

George M. Awad, Committee Member

Suzanne P. Clark, Committee Member

The foregoing Audit and Compliance Committee Report is not soliciting material, is not deemed filed with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

 

55

COMPENSATION DISCUSSION AND ANALYSIS

The information contained in this “Compensation Discussion and Analysis” (“CD&A”) describes the material elements of compensation paid or awarded to our principal executive officer, former principal executive officer, principal financial officer, and the other three most highly compensated executive officers (collectively, our “named executive officers” or “NEOs”) for the twelve months ended December 31, 2019.

For 2019, our NEOs were:

 

•

Mr. Christopher A. Cartwright—President and Chief Executive Officer (the “CEO”);

 

•

Mr. James M. Peck—Former President and Chief Executive Officer (the “Former CEO”);

 

•

Mr. Todd M. Cello—Executive Vice President (“EVP”), Chief Financial Officer (the “CFO”);

 

•

Mr. David M. Neenan—President, International;

 

•

Mr. John T. Danaher—President, Consumer Interactive; and

 

•

Mr. Abhi Dhar—EVP, Chief Information and Technology Officer.

In the Executive Summary section of this CD&A, we highlight our:

 

•

2019 Business Results;

 

•

2019 Annual Incentive Plan Performance;

 

•

2017-2019 Performance Share Unit Performance;

 

•

2019 Executive Compensation Program Actions, Results and Changes; and

 

•

CEO Transition.

In the remainder of this CD&A, we describe:

 

•

How our executive compensation philosophy and governance practices align with stockholders and reflect best practices, particularly by discouraging and mitigating against excessive risk taking (see page 61);

 

•

The role of the Compensation Committee, management and compensation consultant in compensation decisions (see page 63);

 

•

An overview of our NEOs’ 2019 target compensation mix (see page 63);

 

•

Key executive compensation components (see page 65);

 

•

Our market analysis and benchmarking (see page 65); and

 

•

Our 2019 executive compensation program (see page 67).

Executive Summary

2019 Business Results

As a global information and insights company, we find innovative ways to leverage data and information to help businesses and consumers transact with confidence and achieve great things. We link online and offline data to securely provide the best foundation for identifying and building a comprehensive picture of each consumer. This unique data identity allows us to help make trust possible between businesses and consumers, by reliably and safely representing consumers in the marketplace. We call this Information for Good^® — it is our purpose and what drives us every day.

 

56

For 2019, we delivered another year of excellent financial performance with double-digit revenue and Adjusted EBITDA growth as well as continued margin expansion, as compared to 2018, which is summarized as follows:

 

•   Consolidated revenue of $2.656 billion, an increase of 15% (16% on a constant currency basis)   •   Consolidated Adjusted Revenue of $2.662 billion, an increase of 14% (14% on a constant currency basis)   •   Consolidated Adjusted EBITDA of $1.059 billion, an increase of 15% (17% on a constant currency basis)   •   Adjusted EBITDA margin expansion of approximately 70 basis points

This strong performance was broad-based and the result of executing on our growth strategy, which is driven by our core business, new solutions, and faster growing verticals and geographies. Additionally, we are enabling further investment in strategic growth initiatives that should continue to drive diversified top-line growth and strengthen our competitive position globally.

Adjusted Revenue and Adjusted EBITDA are non-GAAP financial measures that we use as supplemental measures of our operating performance. For a more detailed explanation of how we calculate these non-GAAP measures, please refer to our Annual Report on Form 10-K, filed with the SEC on February 18, 2020, under the heading “Results of Operations—Twelve Months Ended December 31, 2019, 2018 and 2017,” and Exhibit 99.1 of our Current Report on Form 8-K, filed with the SEC on February 18, 2020, under the heading “Non-GAAP Financial Measures.” Further, the year over year constant currency percentage changes above assume that foreign currency exchange rates are consistent between years. This allows financial results to be evaluated without the impact of fluctuations in foreign currency exchange rates.

 

57

2019 Annual Incentive Plan Performance

The following highlights the corporate financial performance results for our 2019 annual incentive plan. Overall, our Defined Corporate Adjusted EBITDA was $1,058.5 million resulting in a payout of 144% of target and our Defined Corporate Revenue was $2,662.1 million resulting in a payout of 124% of target. For the portion of the year that Mr. Cartwright served as our CEO and for the 2019 annual incentives for Mr. Peck, Mr. Cello and Mr. Dhar, Defined Corporate Adjusted EBITDA has a 50% weighting and Defined Corporate Revenue has a 20% weighting. For our other NEOs and for the portion of the year that Mr. Cartwright served as our President, U.S. Markets, Defined Corporate Adjusted EBITDA has a 20% weighting. Our 2019 annual incentive, including the business unit level financial objectives, individual objectives, applicable weightings and achievement is discussed in greater detail beginning on page 67 in the section titled “2019 Executive Compensation Program—Annual Incentive Plan.”

 

 

 

58

2017-2019 Performance Share Unit Performance

The following highlights the performance results for our 2017-2019 Performance Share Units (“PSUs”) granted in February 2017 with a performance period of January 1, 2017 to December 31, 2019. Overall, our cumulative Adjusted EBITDA was $2,532.6 million resulting in a payout of 200%, our cumulative Revenue was $6,271.2 million resulting in a payout of 200% and our Relative Total Shareholder Return (“TSR”) was in the 97^th percentile resulting in a payout of 200%. For our 2017 PSUs, cumulative Adjusted EBITDA has a 45% weighting, cumulative Revenue has a 20% weighting, and Relative TSR has a 35% weighting resulting in an overall weighted payout of 200% (maximum performance). Our PSU performance is discussed in greater detail beginning on page 73 in the section titled “2019 Executive Compensation Program—Long-Term Incentive Plan—2017-2019 Performance Share Unit Performance.”

 

 

2019 Executive Compensation Program Actions, Results and Changes

We took the following actions with respect to our NEOs and executive compensation program in 2019:

 

•   Mr. Cartwright received a base salary increase in connection with his promotion to CEO. Mr. Cello received a base salary increase in recognition of strong performance and to better align his pay with peers (see page 67).   •   Mr. Cartwright received an increase in his target annual incentive in connection with his promotion to CEO. Mr. Cello received an increase in his target annual incentive to better align his pay with peers (see page 68).   •   Actual 2019 annual incentive payouts for the NEOs ranged from 125% to 166% of target based on corporate, business unit and individual performance (see page 70).   •   Mr. Dhar received a one-time restricted stock unit grant upon hire and Mr. Danaher received a one-time restricted stock unit retention grant (see page 74).

 

59

CEO Transition

On May 8, 2019 (the “Succession Date”), Mr. Cartwright succeeded Mr. Peck as our President and CEO. To assist with an orderly transition, from the Succession Date through February 29, 2020, Mr. Peck continued as a non-executive employee and member of the Board until his resignation on February 29, 2020. The Compensation Committee approved the following compensation for Mr. Cartwright effective as of the Succession Date:

 

•

An annual base salary of $950,000;

 

•

A target annual incentive equal to 115% of his base salary, prorated for the remainder of 2019; and

 

•

A long-term incentive award with a target grant value of $5,500,000.

The Compensation Committee also approved an annual base salary for Mr. Peck of $500,000 as of the Succession Date through February 29, 2020. Mr. Peck was eligible for a target annual incentive equal to 130% of his base salary for 2019, but is not eligible for any annual incentive or long-term incentive awards in 2020. Additionally, Mr. Peck did not receive a long-term incentive award in 2019.

 

60

Executive Compensation Philosophy and Governance Practices Align with Stockholders and Reflect Best Practices, Discouraging and Mitigating Excessive Risk Taking

 

What We Do		What We Don’t Do
☑  Emphasize Company performance. 87% of our CEO’s target compensation and 81% of our other NEOs’ target compensation is “at-risk” based on Company and share price performance.   ☑  Align with stockholders. 73% of our CEO’s target compensation and 62% of our other NEOs’ target compensation is based on long-term incentives aligned with our stockholders.   ☑  Incent both short- and long-term performance. Our long-term incentives have a three-year vesting or performance period complementing the one-year performance period for our annual incentive.   ☑  Require significant stock ownership for our executives. Our executives are subject to certain stock ownership requirements.   ☑  Compensation Committee advised by an independent compensation consultant. The independent consultant does not provide services to the Company other than advising the Compensation Committee.   ☑  Anti-hedging and pledging stock policies for our officers and directors.   ☑  Annual incentive plan and long-term incentive grants contain a clawback provision. We can recoup annual incentive payments and long-term incentive compensation, including upon a financial restatement.   ☑  Pay severance or vest PSUs and RSUs upon a “double trigger” in the event of a change in control. Our “double trigger” requires both a change in control and termination of employment either involuntarily without cause or voluntarily for good reason.		☒  Provide NEOs with tax gross-ups in the event of a change in control. Taxes are our NEOs’ responsibility.   ☒  No re-pricing of underwater stock options. We do not re-price outstanding stock options, whether vested or unvested.   ☒  Pay dividend equivalents on unvested performance share units. Dividend equivalents on PSUs are paid only upon the vesting of such PSUs based on the number of shares earned as a result of actual Company performance.   ☒  Provide enhanced benefit plans for our NEOs. Our NEOs generally participate in the same retirement, health and welfare plans broadly available to all U.S. salaried employees. Additionally, there are no lifetime benefits for former or retired executives.   ☒  Offer excessive perquisites. We only offer a limited number of perquisites to NEOs to support personal financial planning and well-being.

Executive Compensation Philosophy & Practices

Our executive compensation program is based on a philosophy that aligns the interests of our executives and stockholders. The following are key objectives of our compensation philosophy, which are used to guide the Compensation Committee in making compensation decisions. These objectives are evaluated to confirm the appropriateness of each objective in light of the overall corporate strategy and market practices.

 

•

Attract, motivate and retain highly experienced executives who are vital to our short- and long-term success, profitability and growth;

 

61

•

Align the focus of our executives with the interest of our stockholders by rewarding executives for the achievement of strategic goals that successfully drive our strategy, operations and business performance and, thereby, enhance stockholder value;

 

•

Differentiate rewards based on actual individual performance while also rewarding executives for our overall results; and

 

•

Discourage unnecessary and excessive risk-taking.

In support of this philosophy, the Compensation Committee:

 

•

Reviews and approves corporate goals and objectives for our CEO;

 

•

Evaluates the performance of our CEO in light of such goals and objectives and approves the annual base salary, annual incentive, long-term incentives and other benefits provided to the CEO and other executive officers;

 

•

Reviews and recommends to the full Board of Directors new executive compensation programs, including long-term incentive compensation programs;

 

•

Periodically reviews the operation of our executive compensation programs as well as the administration of such programs to determine whether they are achieving their intended purpose(s);

 

•

Requires our executives to establish and maintain significant stock ownership in the Company;

 

•

Engages an independent compensation consultant to solely advise the Compensation Committee as to the competitiveness of our program and incentives being provided to our CEO and the other executives; and

 

•

Places a significant portion of each executive’s compensation at risk, contingent upon meeting measurable and meaningful performance goals.

Most Recent Say-on-Pay Voting Results

At our 2016 Annual Meeting of Stockholders, the stockholders approved, on a non-binding advisory basis, holding a non-binding advisory vote to approve the executive compensation of the NEOs every three years (the “Say-on-Pay vote”). Our most recent Say-on-Pay vote was held at our 2019 Annual Meeting of Stockholders, and received 98.3% support. We believe this strong Say-on-Pay vote outcome shows support for the program and no changes have been made to the current program design as a result of the most recent Say-on-Pay vote. We presently expect that our next Say-on-Pay advisory vote will be conducted at our 2022 Annual Meeting of Stockholders.

 

62

Role of Compensation Committee, Management and Compensation Consultant in Compensation Decisions

Pursuant to its charter, the Compensation Committee is responsible for overseeing our executive compensation program, developing and reviewing our executive compensation philosophy, and approving decisions regarding executive compensation.

The Compensation Committee is ultimately responsible for making the compensation decisions with respect to our CEO and creating appropriate programs for the CEO and the other NEOs. The Compensation Committee seeks and considers input from senior management and an independent compensation consultant in connection with its duties. In 2019, the Compensation Committee engaged FW Cook as a consultant on executive compensation matters.

FW Cook’s engagement includes reviewing and advising on executive compensation matters principally related to the CEO, the executive officers, our senior executives and outside directors. For 2019, FW Cook assisted the Compensation Committee by (a) recommending a comparator group for benchmarking purposes and (b) providing comparator group data on compensation levels and design, including an analysis of target total compensation (base salary, annual incentives and long-term incentives). FW Cook also assisted the Compensation Committee in reviewing general market practices and management compensation proposals.

FW Cook performs services solely on behalf of the Compensation Committee and does not provide any other services to us. The Compensation Committee assessed the independence of FW Cook and concluded no conflicts of interest exist that would prevent FW Cook from independently representing the Compensation Committee.

Executive management regularly participates in the compensation decision-making process in the following specific respects:

 

•

The CEO reports to the Compensation Committee his performance evaluation of our senior executives, including the NEOs (other than himself). Together with the EVP, Chief Human Resources Officer, the CEO recommends compensation decisions for these individuals, including base salary levels, the mix of incentive awards and performance objectives;

 

•

The CEO develops recommended performance objectives and targets for our incentive compensation programs; and

 

•

The CEO and the EVP, Chief Human Resources Officer recommend long-term incentive grants for executive officers, other than the CEO, for approval by the Compensation Committee.

Overview of 2019 Target Compensation Mix

The Compensation Committee annually reviews the CEO’s and other NEOs’ compensation. In performing this exercise, the Compensation Committee evaluates all elements of target total compensation against a pre-determined group of companies (as described below in the section titled “Market Analysis and Benchmarking”). As noted in the following section, there is a significant emphasis on performance-based components of compensation. For additional detail on each compensation component, please see the sections below titled “Base Salary,” “Annual Incentive Plan” and “Long-Term Incentive Plan” under “2019 Executive Compensation Program.”

 

63

Target Compensation Mix

There is a significant emphasis on the elements that comprise performance-based pay (annual and long-term incentive awards). As illustrated in the following charts, a significant percentage of our CEO’s and all other NEOs’ target total compensation (i.e., target annual incentive, restricted stock units (“RSUs”) and PSUs) is linked to Company performance and aligned with the interests of our stockholders and considered “at-risk”: 87% for the CEO and 81% for our other NEOs.

 

 

 

 

 

(1)

Percentages calculated using Mr. Cartwright’s 2019 annual base salary, target annual incentive and target annual long-term incentive grant value for RSUs and PSUs as if Mr. Cartwright were the CEO for the full 2019 calendar year. Due to the CEO transition, our Former CEO, Mr. Peck, is excluded from the CEO illustration.

(2)	Percentages are calculated using 2019 annual base salary, target annual incentive and target grant value for RSUs and PSUs. Includes the one-time 2019 PSU grant made to Mr. Neenan in May 2019 and excludes Mr. Cartwright and the one-time RSU grants for Mr. Danaher and Mr. Dhar.

 

64

Key Executive Compensation Components

The key components of our executive compensation program for NEOs are base salary, annual incentive, employee benefits (health, welfare, retirement and perquisites) and long-term incentive (“LTI”) awards, which consist of time-vested RSUs and PSUs subject to a three-year performance period.

These elements are illustrated in greater detail below:

 

Component				Description		Purpose
Fixed		Base Salary		•  Ongoing cash compensation based on the NEO’s role, responsibilities, market data and individual performance		•  Designed to attract and retain experienced executives •  Recognizes individual experiences, skills, and sustained performance
		Benefits (health, welfare and retirement)		•  Medical, dental, qualified and nonqualified retirement plan		•  Same benefits generally available to U.S. employees
		Perquisites		•  Reimbursement for financial and tax planning services and annual physical program		•  Supports personal financial planning needs •  Ensures personal well-being
At-Risk		Annual Incentive		•  Actual pay varies between 0% and 200% of target •  Uses predominantly financial objectives, including financial goals linked to a business unit where relevant, as well as individual objectives		•  Incentivizes and drives the accomplishment of financial and individual strategic goals
		Restricted Stock Units		•  Represents 50% of target annual LTI grant value •  Vest 100% on the third anniversary of the grant date provided NEO remains continuously employed		•  Aligns NEOs to long-term financial and share price performance
		Performance Share Units		•  Represents 50% of target annual LTI grant value •  Actual awarded shares varies between 0% and 200% of target •  Performance components include 3-year cumulative Adjusted EBITDA, Revenue and Relative TSR •  Vest 100% following three-year performance period based on actual Company performance		•  Aligns NEOs to long-term financial and share price performance •  Aligns pay and performance by linking number of shares to financial and market performance

Market Analysis and Benchmarking

As described below, we use various tools and methods, including benchmarking, to evaluate whether each NEO’s level of pay is appropriate. For 2019, the benchmarking process for all of our NEOs is described below.

 

65

Benchmarking

The Compensation Committee benchmarks against the median for each pay component (i.e., base salary, target annual incentive and target LTI grants) to guide our compensation objectives. We utilize the median as a point of reference and not necessarily the definitive compensation level. Consequently, our NEOs’ compensation may be positioned at a level less than or greater than the median based on time in position, experience and competitive pay objectives, as well as other factors.

Comparator Group

The Compensation Committee, with input from FW Cook and management, annually approves a company comparator group (the “Custom Comparator Group”) to be used in reviewing and benchmarking various pay components in addition to the use of general industry data.

Selection of the Custom Comparator Group begins with an initial list of potential organizations and is then filtered using various selection criteria to determine our final list of comparator companies. The following outlines the process the Compensation Committee used in selecting the Custom Comparator Group for benchmarking executive compensation in 2019.

 

 

 

(1)	On October 5, 2018, Convergys Corporation was acquired by SYNNEX Corporation and is now part of Concentrix Corporation. All benchmark information was completed based on available fiscal year 2018 results for Convergys Corporation.

(2)	On February 8, 2019, The Dun & Bradstreet Corporation became a privately held company. All benchmark information was completed based on fiscal year 2018 results.

Based on the above methodology, the evaluation resulted in the following year-over-year changes to our Custom Comparator Group:

 

•

Additions: Alliance Data Systems Corporation; Euronet Worldwide, Inc.; and Nielsen Holdings plc

 

•

Removals: Cardtronics, Inc.; DST Systems, Inc.; Total Systems Services, Inc.; and Worldpay, Inc.

Weighing each of the quantitative criteria described above equally for our Custom Comparator Group, our composite percentile ranking was 45%—near the median of the group. While not receiving a greater weight than any other factor, the median annual net revenue of the Custom Comparator Group at the time of benchmarking was approximately $2.5 billion, compared with our approximate 2018 revenue of $2.3 billion and 2019 revenue of $2.7 billion.

 

66

2019 Executive Compensation Program

Base Salary

Each NEO receives an annual base salary to compensate for services rendered in the NEO’s position during the year. The Compensation Committee annually evaluates the performance of the CEO and determines his base salary in light of his goals and objectives, individual performance and competitive market data. The Compensation Committee also, at least annually, reviews each other NEO’s base salary based on a recommendation from the CEO, with input from our EVP, Chief Human Resources Officer, and adjusts the NEO’s base salary when appropriate. In general, the CEO recommends a base salary increase for the other NEOs when supported by additional responsibilities, strong individual performance or changes in competitive market data.

In January 2019, as part of the annual compensation review process, Mr. Cartwright received a $100,000 base salary increase in recognition of beginning the CEO transition. Following the increase, Mr. Cartwright’s annualized base salary was $800,000. On the Succession Date, as part of the CEO transition, Mr. Cartwright received an additional $150,000 base salary increase. Following the increase, Mr. Cartwright’s annualized base salary is $950,000.

Effective on the Succession Date, as part of his employment agreement, Mr. Peck’s annualized base salary is $500,000.

In February 2019, as part of the annual compensation review process, Mr. Cello received a $100,000 base salary increase to reflect strong performance and to better align his pay with peers. Following the increase, Mr. Cello’s annualized base salary is $550,000.

Messrs. Neenan and Danaher did not receive a base salary increase in 2019. Mr. Dhar was hired on January 14, 2019.

The following table illustrates the NEO’s 2019 annualized base salary incorporating the increases described above.

 

Named Executive Officer		2019 Annualized Base Salary				2018 Annualized Base Salary
Christopher A. Cartwright		$	950,000			$	700,000
James M. Peck		$	500,000			$	1,000,000
Todd M. Cello		$	550,000			$	450,000
David M. Neenan		$	650,000			$	650,000
John T. Danaher		$	450,000			$	450,000
Abhi Dhar		$	500,000				n/a

Annual Incentive Plan

The annual incentive plan is designed to motivate and reward our NEOs based on financial and individual performance. Financial targets are approved by the Compensation Committee at the beginning of the performance period with individual and other qualitative goals set to successfully drive our operations and business results to achieve our overall corporate strategy. Each NEO’s annual incentive is determined by multiplying the target annual incentive percentage by the NEO’s eligible base salary and then multiplying this result by the percentage achievement with respect to the applicable financial and individual goals, provided the threshold level of performance is achieved.

Target Levels

Each NEO has a target annual incentive expressed as a percentage of his eligible base salary. The target is determined by the Compensation Committee after consideration of several factors, including the NEO’s duties

 

67

and responsibilities and competitive market data. In connection with his appointment as CEO, Mr. Cartwright received an increase in his target annual incentive in 2019 from 100% of base salary to 115% of base salary effective as of the Succession Date. Mr. Cello also received an increase in his target annual incentive in 2019 from 90% of base salary to 100% of base salary to better align his pay with peers.

 

Named Executive Officer		2019 Target Annual Incentive as a Percentage of Base Salary					2019 Target Annual Incentive
Christopher A. Cartwright(1)				110	%			$	990,726
James M. Peck				130	%			$	877,945
Todd M. Cello				100	%			$	550,000
David M. Neenan				100	%			$	650,000
John T. Danaher				100	%			$	450,000
Abhi Dhar(2)				100	%			$	500,000

 

(1)

Mr. Cartwright’s 2019 target annual incentive from January 1, 2019—May 7, 2019 was 100% when he was our President, U.S. Markets. His target annual incentive from May 8, 2019—December 31, 2019 was 115% after his appointment as CEO. The percentage and amount disclosed above reflects the combined target annual incentive.

(2)	Mr. Dhar’s 2019 target annual incentive was retroactive to January 1, 2019.

 

68

Financial and Individual Objectives, Targets, and Potential Payouts

The following table defines the various financial and individual objectives applicable for the 2019 annual incentive. The actual payout ranges between 0% and 200% of target for each objective depending on actual performance. The objectives of Defined Corporate Adjusted EBITDA and Defined Corporate Revenue are to incent our NEOs based on the achievement of overall Company financial performance. Similarly, at the business unit level, Defined Adjusted EBITDA and Defined Revenue are designed to incent specific business unit financial performance. The Growth Strategy Initiative is a quantitative measure aligned to our overall growth strategy, while the Strategic Individual Objectives are quantitative and qualitative measures aligned to specific strategic objectives. Both of these objectives are set individually for each NEO in a manner that would significantly advance our growth and strategic objectives, if delivered. Additionally, these goals are designed to provide NEOs with the opportunity to achieve above target payouts only upon robust performance.

 

Objective		Definition
Defined Corporate Adjusted EBITDA		Earnings before interest, taxes, depreciation and amortization, and other adjustments deemed by management and the Compensation Committee for annual incentive plan purposes.
Defined Corporate Revenue		The overall corporate revenue, including applicable adjustments used in the calculation of Adjusted Revenue as disclosed in our Annual Report on Form 10-K, and further adjusted by management and the Compensation Committee for annual incentive plan purposes.
Defined U.S. Markets Adjusted EBITDA		Earnings before interest, taxes, depreciation and amortization, and other adjustments for annual incentive plan purposes for the U.S. Markets operating segment.
Defined U.S. Markets Revenue		The U.S. Markets operating segment revenue, including applicable adjustments used in the calculation of Adjusted Revenue as disclosed in our Annual Report on Form 10-K, and further adjusted by management and the Compensation Committee for annual incentive plan purposes.
Defined International Adjusted EBITDA		Earnings before interest, taxes, depreciation and amortization, and other adjustments for annual incentive plan purposes for the International operating segment.
Defined International Revenue		The International operating segment revenue, including applicable adjustments used in the calculation of Adjusted Revenue as disclosed in our Annual Report on Form 10-K, and further adjusted by management and the Compensation Committee for annual incentive plan purposes.
Defined Consumer Interactive Adjusted EBITDA		Earnings before interest, taxes, depreciation and amortization, and other adjustments for annual incentive plan purposes for the Consumer Interactive operating segment.
Defined Consumer Interactive Revenue		The Consumer Interactive operating segment revenue, including applicable adjustments used in the calculation of Adjusted Revenue as disclosed in our Annual Report on Form 10-K, and further adjusted by management and the Compensation Committee for annual incentive plan purposes.
Growth Strategy Initiative		Robust planning process that supports the development of growth strategy initiatives, including business cases, action plans and specific, budgeted Adjusted EBITDA growth targets that are accretive to fuel growth in future years.
Strategic Individual Objectives		Specific individual quantitative and qualitative goals aligned with our strategic objectives.

 

69