601 E. Third Street
P.O. Box 8190
ACXIOM CORPORATION
601 E. Third Street
P.O. Box 8190
Little Rock, Arkansas 72203-8190
501.252.1000
www.acxiom.com
This proxy statement (the "Proxy Statement") is being furnished in connection with the solicitation of proxies by the Board of Directors of Acxiom Corporation, a Delaware corporation (the "Company" or "Acxiom"), to be used at its 2016 Annual Meeting of Stockholders (the "2016 Annual Meeting") to be held on August 9, 2016 at 10:30 a.m. CDT via the Internet at www.virtualshareholdermeeting.com/ACXM16, and at any postponement or adjournment thereof. The Proxy Statement is being furnished to stockholders beginning on June 24, 2016. As a stockholder, you are invited to attend the 2016 Annual Meeting virtually via the Internet and are entitled and requested to vote on the proposals described in the Proxy Statement. Please read the Proxy Statement carefully, then vote your shares promptly by telephone, by Internet, or by signing, dating and returning your proxy card.
Shares represented by properly executed proxies will be voted during the meeting. If a choice is specified by a stockholder, the proxy will be voted in accordance with that choice. If no choice is specified by a stockholder but the proxy is otherwise properly executed, the proxy will be voted in accordance with the recommendations of Acxiom's Board of Directors.
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Questions And Answers About The Proxy
Materials And The 2016 Annual Meeting
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Q:
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Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?
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A:
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Under rules adopted by the Securities and Exchange Commission (the "SEC"), the Company has elected to provide access to its proxy materials over the Internet. Accordingly, on or about June 24, 2016, the Company sent a notice of Internet availability of proxy materials to the Company's stockholders of record and beneficial owners, except for stockholders who have requested otherwise. All stockholders will have the ability to access the proxy materials on the website referred to in the notice. Instructions on how to access the proxy materials over the Internet or to request a printed copy may be found in the notice. In addition, stockholders may request to receive proxy materials electronically by email on an ongoing basis. The Company encourages you to take advantage of the electronic availability of the proxy materials in order to help reduce costs and to reduce the impact on the environment.
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Who can vote at the 2016 Annual Meeting?
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A:
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Holders of record of Acxiom common stock at the close of business on June 13, 2016 (the record date for the 2016 Annual Meeting) are entitled to vote their shares of common stock owned as of that date at the 2016 Annual Meeting or any postponement or adjournment thereof. On the record date for the 2016 Annual Meeting, there were 77,796,259 shares of the Company's common stock outstanding and entitled to vote. A list of our stockholders will be available for review at our principal offices, 601 E. Third Street, P.O. Box 8190, Little Rock, Arkansas 72203-8190, for at least 10 days prior to the 2016 Annual Meeting.
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Q:
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How many shares may I vote?
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You may vote all of the shares of Acxiom common stock you held as of the record date, June 13, 2016, including (1) shares held directly in your name as the stockholder of record, (2) shares held for you as the beneficial owner in street name through a stockbroker or bank, and (3) shares purchased through Acxiom's 401(k) Retirement Savings Plan and/or employee stock purchase plan.
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Q:
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How can I attend the 2016 Annual Meeting?
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A:
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Stockholders may attend the 2016 Annual Meeting virtually via the Internet at www.virtualshareholdermeeting.com/ACXM16. While all Acxiom stockholders will be permitted to listen to the 2016 Annual Meeting, only stockholders of record and beneficial owners as of the close of business on the record date, June 13, 2016, may vote and ask questions during the meeting. In order to vote or submit a question during the meeting, you will need to follow the instructions posted at www.proxyvote.com and www.virtualshareholdermeeting.com/ACXM16 and will need the control number included on your notice of Internet availability of the proxy materials or proxy card. Broadridge Financial Solutions, Inc. is hosting the 2016 Annual Meeting and, on the date of the meeting, will be available via telephone at 1-855-449-0991 toll free (1-720-378-5962 international), to answer your questions regarding how to attend and participate in the 2016 Annual Meeting virtually via the Internet.
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Q:
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What is the difference between a stockholder of record and a beneficial owner of shares held in street name?
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A:
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Beneficial owners
. Most Acxiom stockholders hold their shares through a broker, bank or other nominee (that is, in "street name") rather than directly in their own name. If you hold your shares in street name, you are a "beneficial owner," and a notice of Internet availability of proxy materials or a full set of the proxy materials, together with a voting instruction form, will be forwarded to you by your broker, bank or other nominee.
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Stockholders of record
. If your shares are registered directly in your name with our transfer agent, Computershare Investor Services, you are considered the "stockholder of record" with respect to those shares, and a notice of Internet availability of proxy materials or a full set of the proxy materials together with a proxy card has been sent directly to you by Acxiom.
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Q:
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How can I vote my shares?
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A:
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There are four ways to vote:
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By Internet.
You can submit a proxy over the Internet to vote your shares by following the instructions provided either in the notice of Internet availability of proxy materials or on the proxy card or voting instruction form you received if you requested and received a full set of the proxy materials by mail or email.
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By telephone.
If you requested and received a full set of the proxy materials by mail or email, you can submit a proxy over the telephone following the instructions provided on the proxy card or voting instruction form accompanying the proxy materials you received. If you received a notice of Internet availability of proxy materials only, you can submit a proxy over the telephone to vote your shares by following the instructions at the Internet website address referred to in the notice.
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By mail.
If you requested and received a full set of the proxy materials by mail or email, you can submit a proxy by mail to vote your shares by completing, signing and returning the proxy card or voting instruction form accompanying the proxy materials you received.
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During the meeting
. You may vote virtually via the Internet during the 2016 Annual Meeting. If you desire to vote during the meeting, please follow the instructions for attending and voting during the 2016 Annual Meeting posted at www.virtualshareholdermeeting.com/ACXM16. Beneficial owners must obtain a legal proxy from their broker, bank or other nominee to vote during the meeting. Follow the instructions from your broker, bank or other nominee included with the notice of internet availability or proxy materials, or contact your broker, bank or other nominee, to request a legal proxy. All votes must be received by the independent inspector before the polls close during the meeting.
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How do I vote if I hold my shares as a participant in Acxiom's 401(k) Retirement Savings Plan?
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If you hold shares as a participant in Acxiom's 401(k) Retirement Savings Plan, you must submit your vote to the Plan's trustee no later than 11:59 p.m. CDT on August 3, 2016 in order to allow sufficient time for your vote to be tabulated by the trustee. You also may revoke or change your voting instruction at any time prior to the cut-off time. Due to the tabulation requirements of the plan administrator, participants in Acxiom's 401(k) Retirement Savings Plan may not vote their shares during the meeting.
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Any stockholder, other than a participant in Acxiom's 401(k) Retirement Savings Plan, executing a proxy retains the right to revoke it at any time prior to the final vote at the 2016 Annual Meeting. You may revoke your proxy and vote again by (i) delivering a notice of revocation or delivering a later-dated proxy to Acxiom's Corporate Secretary at Acxiom Corporation, 601 E. Third Street, P.O. Box 8190, Little Rock, Arkansas 72203-8190; (ii) submitting another vote over the Internet or by telephone; or (iii) by attending and voting, virtually via the Internet, during the 2016 Annual Meeting. However, your attendance during the 2016 Annual Meeting will not automatically revoke your proxy unless you specifically so request. A stockholder's last vote is the vote that will be counted.
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Who will count the votes?
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A representative of Broadridge Financial Solutions, Inc. will count the votes and will serve as the inspector of the election.
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What does it mean if I receive more than one proxy card or voting instruction form?
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If your shares are registered differently, or if they are held in more than one account, you will receive more than one proxy card or voting instruction form. Please follow the instructions on each proxy card or voting instruction form to ensure that all of your shares are voted. Please sign each proxy card exactly as your name appears on the card. For joint accounts, each owner should sign the proxy card. When signing as executor, administrator, attorney, trustee, guardian, etc., please print your full title on the proxy card.
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What is the quorum requirement for the 2016 Annual Meeting?
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The presence, virtually via the Internet or by proxy, of the holders of a majority of the shares of common stock issued and outstanding as of the record date is required to establish a quorum at the 2016 Annual Meeting. If a quorum is established, each holder of common stock shall be entitled to one vote on the matters presented at the 2016 Annual Meeting for each share of common stock outstanding in his or her name.
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Q:
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What items of business will be presented at the 2016 Annual Meeting?
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A:
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The following matters will be presented for stockholder consideration and voting at the 2016 Annual Meeting:
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1.
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The election of three director nominees named in this Proxy Statement for a three-year term expiring in 2019;
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2.
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An advisory vote approving the compensation of our named executive officers; and
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3.
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The ratification of the selection of KPMG LLP as the Company's independent registered public accounting firm for fiscal year 2017.
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What vote is required to pass each item of business?
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A
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The stockholder vote required to approve each proposal is set forth below:
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Proposal
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Votes Required
for Approval
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1.
Election of directors
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Majority of votes cast
for each nominee*
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2.
Advisory vote to approve executive compensation
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Majority of votes
cast*
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3.
Ratification of auditors
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Majority of votes
cast*
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*
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A majority of votes cast means that the number of votes cast "for" a director nominee's election or a proposal must exceed the number of votes cast "against" it.
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Director Resignation Policy
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In an uncontested election, a nominee who does not receive a majority of the votes cast will not be elected, and the Board of Directors has established procedures under which any incumbent director who fails to receive a majority of the votes cast in his or her election will tender his or her resignation to the Board. The Board will act upon a tendered resignation within 90 days of the date on which the election results were certified and will promptly make public disclosure of the results of its actions.
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How are proxies voted?
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All shares represented by valid proxies received prior to the 2016 Annual Meeting will be voted, and where a stockholder specifies by means of the proxy a choice with respect to any matter to be acted upon, the shares will be voted in accordance with the stockholder's instructions.
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What happens if I do not give specific voting instructions?
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Stockholders of record.
If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions or you indicate when voting on the Internet or by telephone that you wish to vote as recommended by the Board, then the proxy holders will vote your shares in the manner recommended by the Board on all matters presented in this Proxy Statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a vote at the 2016 Annual Meeting.
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Beneficial owners.
If you are a beneficial owner of shares held in street name and do not join and vote at the 2016 Annual Meeting or provide the broker, bank or other nominee that holds your shares with specific voting instructions, under the rules of various national and regional securities exchanges, the broker, bank or other nominee that holds your shares may generally vote on routine matters but cannot vote on non-routine matters. If the broker, bank or other nominee that holds your shares does not receive instructions from you on how to vote your shares on a non-routine matter, the broker, bank or other nominee that holds your shares will inform the inspector of election that it does not have the authority to vote on this matter with respect to your shares. This is generally referred to as a "broker non-vote."
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Which items of business are considered "routine" and "non-routine"?
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The election of directors (Proposal No. 1) and the advisory vote regarding the Company's executive compensation (Proposal No. 2) are considered to be non-routine matters under applicable rules and, therefore, a broker or other nominee may not vote on these matters without instructions from the beneficial owner. Consequently, there may be broker non-votes with respect to these proposals. On the other hand, the ratification of KPMG LLP (Proposal No. 3) is considered a routine matter, and a broker or other nominee may vote without instructions and broker non-votes are not expected to occur with respect to this proposal.
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How are broker non-votes and abstentions treated?
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Broker non-votes and abstentions (which occur when a stockholder chooses to abstain from voting on any or all proposals) are counted for purposes of determining whether a quorum is present. However, broker non-votes and abstentions will have no effect on any proposals to be presented at the 2016 Annual Meeting because they are not considered "votes cast" under the majority-of-votes-cast voting standard applicable to each proposal.
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Who can help answer my questions?
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If you have any questions about the 2016 Annual Meeting or how to vote your shares, please contact The Proxy Advisory Group, LLC, which has been retained to assist us in the distribution and solicitation of proxies, by mail or by telephone at:
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The Proxy Advisory Group, LLC
18 East 41st Street, Suite 2000
New York, New York 10017
212-616-2180
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(Proposal No. 1 of the Proxy Card)
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The number of members of the Acxiom Board of Directors is currently set at nine and may be fixed from time to time by the Board in the manner provided in the Company's bylaws. Our certificate of incorporation and bylaws provide for three classes of directors serving staggered three-year terms, with each class to be as nearly equal in number as possible.
The terms of the following current directors expire at the 2016 Annual Meeting: Richard P. Fox, Jerry D. Gramaglia and Clark M. Kokich. The Board, upon the recommendation of the Governance/Nominating Committee, has nominated Messrs. Fox, Gramaglia and Kokich to stand for election as directors at the 2016 Annual Meeting.
Unless otherwise directed, the individuals named in the accompanying form of proxy will vote that proxy for the election of the nominees, with each to hold office for a term of three years until the 2019 annual meeting or until their respective successors are duly elected and qualified, or until their earlier resignation, removal or death. The Board of Directors expects that each of the nominees will be available for election but, in the event that any of them are not available, proxies received will be voted for substitute nominees to be designated by the Board or, in the event no such designation is made, proxies will be voted for a lesser number of nominees.
Set forth below is biographical information for each nominee standing for election at the 2016 Annual Meeting, as well as for each director who will continue to serve as a director of the Company after the 2016 Annual Meeting. The following descriptions also outline each person's background and qualifications that qualify him or her to serve on the Company's Board of Directors.
Nominees for Director with Terms Expiring in 2019
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Skills and Qualifications
Mr. Fox's financial, accounting and management expertise qualifies him to serve on our Board and to serve as chair of the Audit/Finance Committee. As a result of his extensive accounting and financial management experience, Mr. Fox has a deep understanding of financial reporting processes, internal accounting and financial controls, independent auditor engagements, and other audit committee and board functions. As a certified public accountant, and based on his extensive financial and accounting expertise and management experience, Mr. Fox is deemed to be an "audit committee financial expert," as defined by the rules of the SEC. Additionally, his management experience across a diverse array of industries, including several technology and software companies, enables him to offer the Board a broad perspective on the challenges and opportunities facing the Company.
Since 2001, Mr. Fox has been an independent consultant. From 2000–2001, he was president and chief operating officer of CyberSafe Corporation, a global security software provider, where he was responsible for the overall financial services and operations of the company. From 1998–2000, Mr. Fox was chief financial officer and a member of the board of directors of Wall Data, a developer of enterprise software products and associated application tools, where he was responsible for the company's finances, operations, and human resources activities. Previously Mr. Fox spent 28 years at EY, a global accounting firm, last serving as managing partner of EY's Seattle office from 1995–1997. He currently serves on the board of directors of Pinnacle West Capital Corporation (NYSE: PNW), an energy holding company; ServiceMaster Global Holdings, Inc. (NYSE: SERV), a leading provider of residential and commercial services; and Univar Inc. (NYSE: UNVR), an international chemical distributor. He is also a member of the board of directors of HonorHealth and Premera Blue Cross and serves on the Board of Visitors of the Fuqua School of Business at Duke University. Previously, he served on the boards of Pendrell Corporation (NASDAQ: PCO), an intellectual property investment and advisory firm; Flow International (NASDAQ: FLOW), a machine tool manufacturer; Shurgard Self Storage until its merger with Public Storage in 2006; aQuantive, Inc. until it was acquired by Microsoft in 2007; Orbitz Worldwide until 2011; and PopCap until it was acquired by Electronic Arts in 2011. Mr. Fox holds a bachelor's degree in business administration from Ohio University and an MBA from the Fuqua School of Business at Duke University, where he was a Fuqua Scholar. He is a certified public accountant in the State of Washington.
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Richard P. Fox
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Age 68
Director since 2012
Committees:
Audit/Finance (Chair), Compensation, Executive
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Skills and Qualifications
Mr. Gramaglia's experience as president, chief operating officer and chief marketing officer of a public company, his service on the boards of other public companies, and his marketing, financial, technology and management expertise qualify him to serve on our Board. Through his experience, Mr. Gramaglia brings an extensive, multi-disciplined perspective to the Board. As an advisor to early-stage companies, Mr. Gramaglia's knowledge of cutting-edge technological developments is particularly valuable as new and emerging technologies are important factors that contribute to the success of the Company. His previous executive and board experience provide him with key skills in working with the other directors, understanding board processes and functions, responding to the financial, strategic and operational challenges and opportunities of our business, and overseeing management, all of which qualify him to chair the Board.
Mr. Gramaglia, the Non-Executive Chairman of the Board, is a private investor and advisor to technology start-ups, previously served as partner for Arrowpath Venture Partners, and as president and chief operating officer of E*TRADE Group Inc. (NASDAQ: ETFC). He served in 2011 for a four-month period as Acxiom's interim chief executive officer and president while a search was conducted for a new CEO. Mr. Gramaglia began his career at Procter & Gamble and later held senior marketing and general management positions at Nestle, PepsiCo, Imasco and Sprint. He currently serves on the board of WageWorks (NYSE: WAGE), a leading provider of tax-advantaged employee benefits, and is a former director of Coldwater Creek, a national retailer of women's apparel. He holds a bachelor's degree in economics from Denison University.
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Jerry D. Gramaglia
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Age 60
Director since 2009
Committees:
Executive, Governance/Nominating
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Skills and Qualifications
Mr. Kokich's qualifications to serve on our Board include his background in the field of digital marketing and technology, his experience in traditional marketing, and his years of management experience. This combination of experience in both management and marketing allow him to understand the Company's challenges in a global marketplace. Mr. Kokich also brings technological expertise to the Board gained through his service with Marchex, Rocket Fuel, Razorfish and other technology companies.
Mr. Kokich is the executive chairman of the board of directors of Marchex, Inc. (NASDAQ: MCHX), a mobile and online advertising company based in Seattle, where he previously served as chief strategy officer from 2013 to 2015. For the prior 14 years Mr. Kokich was an executive at Razorfish, a leading Seattle-based global consultancy in digital marketing and technology, serving most recently as chairman of the board. Prior to joining Razorfish, he was CEO of Calla Bay, Inc.; prior to that he was director of sales and marketing for a division of McCaw Cellular Communications. In his early career he spent 12 years in traditional advertising, including the position of executive vice president/managing director for Cole & Weber, a division of Ogilvy & Mather. He is a director of Rocket Fuel, Inc. (NASDAQ: FUEL), an advertising technology company. Mr. Kokich also serves on the boards of EMP (Experience Music Project), a museum in Seattle; Childhaven, a Seattle children's charity; and Wonderwork, a not-for-profit organization based in New York City which funds free surgeries for underprivileged children around the world. Mr. Kokich holds a bachelor's degree in finance from the University of Oregon.
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Clark M. Kokich
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Age 64
Director since 2009
Committees:
Audit/Finance, Governance/Nominating (Chair)
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Directors Whose Terms Expire in 2017
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Skills and Qualifications
Mr. Cadogan's qualifications to serve on the Board include his extensive experience in the fields of digital advertising and technology as well as his years of management experience. As the chief executive officer of a digital advertising business, Mr. Cadogan has extensive insight into managing complex business operations and overseeing business risk.
Mr. Cadogan is the chief executive officer of OpenX Technologies, Inc., one of the world's leading providers of digital advertising technology, enabling businesses to manage and maximize their advertising revenue. From 2003–2008 Mr. Cadogan served as senior vice president of Global Advertising Marketplaces at Yahoo! (NASDAQ: YHOO) where he oversaw the primary advertising product lines including display, search and video. Previously at Yahoo!, he was vice president of search where he was responsible for both the consumer search and the paid search businesses. Prior to joining Yahoo!, Mr. Cadogan was vice president of search at Overture (formerly GoTo.com), a consultant at The Boston Consulting Group, and a consultant at McKinsey & Company. He holds a BSc degree from The London School of Economics, an MPhil degree in international relations from Oxford University, and an MBA from Stanford University.
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Timothy R. Cadogan
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Age 45
Director since 2012
Committees:
Audit/Finance, Compensation
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Election of Directors
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Skills and Qualifications
Mr. Dillard's qualifications to serve on our Board include his experience as the chairman and CEO of a public company, his financial acumen, and his service on the boards of other public companies. Mr. Dillard's understanding of corporate planning, risk management, executive compensation, and capital markets are an invaluable asset to our Board. Based upon his service as a chief executive officer and his financial sophistication, Mr. Dillard is deemed to be an "audit committee financial expert," as defined by the rules of the SEC.
Mr. Dillard has served as a member of the Dillard's, Inc. (NYSE: DDS) board of directors since 1968 and currently serves as the chairman of the board and chief executive officer of Dillard's, Inc., a chain of traditional department stores based in Little Rock, Arkansas, with one internet store, 272 store locations and 24 clearance centers in 29 states. Mr. Dillard is also a director of Barnes & Noble, Inc. (NYSE: BKS). He served as the Company's lead independent director from 2006–2007. He holds a bachelor's degree in business administration from the University of Arkansas and an MBA from Harvard University.
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William T. Dillard II
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Age 71
Director since 1988
Committees:
Audit/Finance, Compensation
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Skills and Qualifications
The Board of Directors believes it is important for Acxiom's chief executive officer to serve as a member of the Board, as the CEO is in a unique position to understand the challenges and issues facing the Company. Among Mr. Howe's qualifications are his demonstrated leadership skills and his prior work experience, including over a decade of corporate leadership in the digital advertising industry, which qualify him to serve both as CEO and as a director.
Mr. Howe joined the Company in 2011 as its Chief Executive Officer and President. Prior to joining Acxiom, he served as corporate vice president of Microsoft Advertising Business Group from 2007–2010. In this role, he managed a multi-billion dollar business encompassing all emerging businesses related to online advertising, including search, display, ad networks, in-game, mobile, digital cable and a variety of enterprise software applications. Mr. Howe was employed from 1999–2007 as an executive and later as a corporate officer at aQuantive, Inc. where he managed three lines of business, including Avenue A|Razorfish (a leading Seattle-based global consultancy in digital marketing and technology), DRIVE Performance Media (now Microsoft Media Network), and Atlas International (an adserving technology now owned by Facebook). Earlier in his career, he was with The Boston Consulting Group and Kidder, Peabody & Company, Inc. He serves as a director of Blue Nile, Inc. (NASDAQ: NILE), a leading online retailer of diamonds and fine jewelry, and the Center for Medical Weight Loss. He previously served on the board of the Internet Advertising Bureau (IAB). He is a
magna cum laude
graduate of Princeton University, where he earned a degree in economics, and he holds an MBA from Harvard University.
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Scott E. Howe
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Age 48
Director since 2011
Committee:
Executive (Chair)
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Directors Whose Terms Expire in 2018
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Skills and Qualifications
As an entrepreneur with an extensive background in digital publishing and digital advertising, Mr. Battelle provides the Board with a unique blend of media—related and digital experience that assists the Company in executing its growth strategy. In addition, his operational and advisory roles with various media businesses qualify him to serve on the Board.
Mr. Battelle is an entrepreneur, journalist, professor and author who has founded or co-founded various online, conference, magazine and other media businesses. He serves as executive chair of the board of directors of sovrn Holdings, a programmatic advertising and publisher platform that connects publishers with monetization solutions. He is also the founder/executive chair and CEO of NewCo Platform, Inc., a disruptive conference model and media platform which provides executives, entrepreneurs and investors with personal experiences inside some of the most important companies worldwide. In 2005, Mr. Battelle founded the Internet media company Federated Media Publishing, where he served as chairman and CEO until its sale to LIN Media in early 2014. He currently serves as a director for Chute, a venture-backed company that provides the tools to capture, manage and display media. He founded and served as executive producer of the Web 2 Summit and maintains Searchblog, an ongoing daily site which covers the intersection of media, technology and culture at www.battellemedia.com. From 2001–2004 he occupied the Bloomberg chair in Business Journalism for the Graduate School of Journalism at the University of California, Berkeley. He was the founder and served from 1997–2001 as chairman and CEO of Standard Media International (SMI) and as publisher of
The Industry Standard
and
TheStandard.com
. Prior to that, he was a co-founding editor of
Wired
magazine and Wired Ventures. Mr. Battelle previously served on the board of directors of the Internet Advertising Bureau and was a founding board member of the Online Publishers Association. In 2005, he authored
The Search: How Google and Its Rivals Rewrote the Rules of Business and Transformed Our Culture
(Penguin/Portfolio), an international bestseller published in more than 25 languages. His next book,
If/Then
, is due for publication in 2016. He is considered to be an expert in the field of media and technology, and has appeared on national and international news channels such as CBS, BBC, CNN, PBS, Discovery and CNBC. Honors and awards include: "Global Leader for Tomorrow" and "Young Global Leader" by the World Economic Forum in Davos, Switzerland; a finalist in the 2000 "Entrepreneur of the Year" competition by Ernst & Young; "Innovator – One of Ten Best Marketers in the Business" by
Advertising Age
; and one of the "Most Important People on The Web" by
PCWorld
. Mr. Battelle holds a bachelor's degree in anthropology and a master's degree in journalism from the University of California, Berkeley.
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John L. Battelle
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Age 50
Director since 2012
Committee:
Governance/Nominating
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Skills and Qualifications
Mr. Henderson's knowledge of the direct marketing industry and his experience as Postmaster General, and more recently as an officer of and advisor to high-tech companies, qualify him to serve on our Board. His management background and his experience chairing the compensation committee of another public company particularly qualify him to serve as Acxiom's Compensation Committee chair, and his service on the board of another high-tech public company in the marketing arena allows him to provide additional value to the Acxiom Board of Directors.
Mr. Henderson is the founder and principal of Hold The Eye Images, Inc., a video, photographic and applications business. Mr. Henderson also serves as lead independent director and chairs the compensation committee of comScore, Inc. (NASDAQ: SCOR). In the past eight years, he has served as chief executive officer of Bestline Research and as chief operations officer of Netflix Inc. (NASDAQ: NFLX), as well as working as a consultant. From 1998 until his retirement from the United States Postal Service (USPS) in 2001, Mr. Henderson was the 71st Postmaster General and the fifth career employee to lead the world's largest postal system. From 1994 until his appointment as Postmaster General and chief executive officer of the USPS, he served as its chief operating officer. From 1992–1994, he served the USPS as vice president of employee relations, then became chief marketing officer and senior vice president. In 1997, Mr. Henderson received the USPS' John Wanamaker Award, and in 1998 he received American University's Roger W. Jones Award for Executive Leadership. In 1998, Mr. Henderson also received an honorary Mailing Excellence Award from the National Postal Forum for his work with the nation's professional mailing industry. He also served on the advisory boards of the Committee for Economic Development and
Nature's Best
magazine. He is a fellow with the National Academy of Public Administration. Mr. Henderson holds a bachelor's degree in industrial relations from the University of North Carolina at Chapel Hill and was awarded an honorary Doctor of Philosophy in Quality Systems Management degree by the National Graduate School of Quality Management, Falmouth, Massachusetts. He served in the U.S. Army.
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|
William J. Henderson
|
|
Age 69
Director since 2001
Committees:
Compensation (Chair), Governance/Nominating
|
|
|
Election of Directors
|
|
|
|
|
Skills and Qualifications
As the chief marketing officer of one of the country's top insurance companies, Ms. Tomlin's extensive marketing background qualifies her to serve on our Board. In addition, her in-depth knowledge of two of the Company's primary client industries, insurance and banking, offer opportunities for the Board to obtain insights into the Company's strategies from a customer perspective.
Ms. Tomlin joined the Acxiom Board in March 2016. Since 2013, she has served as chief marketing and distribution officer for CSAA Insurance Group, a major provider of AAA-branded insurance, and served as chief marketing officer of CSAA Insurance Group from 2012-2013. Ms. Tomlin leads marketing and distribution, including brand; marketing analytics and market research; customer experience management; AAA club and agency operations and relationships; and direct marketing and sales. Previously, from 2007
–
2012 Ms. Tomlin held several senior leadership positions, including vice president of marketing, with Capital One Financial Corp. (NYSE: COF), where she headed commercial banking, retail marketing and sponsorships. She led Capital One's regional marketing effort, leveraging the footprint and deep community roots of the bank's local markets. Prior to that role, she led the marketing strategy for Capital One's national small business credit cards. Before joining Capital One, Ms. Tomlin held the roles of senior marketing officer and head of corporate brand for USAA Insurance Company, where she designed and delivered industry-recognized programs in marketing and customer management. Prior to USAA, she held numerous marketing positions, including chief marketing officer, at LOMA, an Atlanta-based international organization that provides consulting services for distribution, operational management, and education training for global financial services companies. Ms. Tomlin serves on the board of directors of the YMCA of San Francisco. She is a former member of the board of the Amyotrophic Lateral Sclerosis (ALS) Society of Georgia. She is also active in numerous marketing organizations and has been repeatedly honored by the
San Francisco Business Times
as one of the Bay Area's Most Influential Women in Business. Ms. Tomlin holds a bachelor's degree in English from Siena College and a master's degree in political science from North Carolina State University.
|
|
Debora B. Tomlin
|
|
Age 47
Director since 2016
Committee(s):
(To be assigned in August 2016)
|
|
|
Board of Directors' Recommendation
The Board of Directors recommends that the stockholders vote
FOR
the election of Messrs. Fox, Gramaglia and Kokich at the 2016 Annual Meeting.
Our Board of Directors believes that good corporate governance is important to ensure that Acxiom is managed for the long-term benefit of our stockholders. This section describes key corporate governance practices that we have adopted. Complete copies of our corporate governance principles, Board committee charters, codes of conduct and stock ownership guidelines are available on the Company's website at www.acxiom.com, or you may request a printed copy of them by sending a written request to the Corporate Secretary at Acxiom Corporation, 601 E. Third Street, P.O. Box 8190, Little Rock, Arkansas 72203-8190.
Acxiom's management and the Board of Directors closely monitor corporate governance developments and will continue to evaluate their duties and responsibilities with the intention of complying with all applicable laws, rules and regulations.
Director Independence
All of the Company's current non-employee directors have been determined by the Board to be independent. In making these determinations, the Board reviewed the directors' relationships, if any, with Acxiom and affirmatively determined that there are no relationships or other factors which would impair any director's ability to exercise independent judgment in carrying out his or her responsibilities as a director. There are no family relationships among any of our directors or executive officers.
The relationships considered by the Board in assessing each director's independence included consideration of the transactions described below that occurred during the past fiscal year. With respect to each, the amount of the charges has been deemed by the Board to be immaterial to Acxiom as well as to the other company. None of these relationships are required to be disclosed in the Proxy Statement as a "related-party transaction" under the rules and regulations of the SEC:
|
|
•
|
Acxiom purchased data from sovrn Holdings, LLC ("sovrn"), for which director John L. Battelle serves as executive chair of sovrn's board of directors. The charges to Acxiom, which were based on sovrn's standard rates, totaled approximately $259,000 in the last fiscal year. This amount represents approximately 0.03% of Acxiom's total annual revenue and approximately 0.23% of sovrn's total annual revenue.
|
|
|
•
|
Acxiom provided marketing services to Dillard's, Inc. ("Dillard's"), of which director William T. Dillard II is the chairman and CEO. The charges for the services, which were based on Acxiom's standard rates, totaled approximately $197,500 in the last fiscal year. This amount represents approximately 0.02% of Acxiom's total annual revenue and approximately 0.003% of Dillard's total annual revenue.
|
|
|
•
|
Acxiom provided data and marketing services to comScore, Inc. ("comScore"), of which director William J. Henderson is a non-employee director. The charges for the data and services, which were based on Acxiom's standard rates, totaled approximately $268,650 in the last fiscal year. This amount represents approximately 0.03% of Acxiom's total annual revenue and approximately 0.07% of comScore's total annual revenue. Acxiom purchased a digital media subscription from comScore. The charges to Acxiom, which were based on comScore's standard rates, totaled approximately $81,000 in the last fiscal year. This amount represents approximately 0.009% of Acxiom's total annual revenue and approximately 0.002% of comScore's total annual revenue.
|
Board Leadership Structure
Our corporate governance principles give the Board of Directors the discretion to either separate or combine the positions of chief executive officer and chairman. Since 2007, these positions have been separated. The Board of Directors believes that separating the positions improves the ability of the Board to exercise its oversight role over management by having a director who is not an officer or member of management serve in the role of chairman. Appointing an independent chairman also simplifies our corporate governance structure by allowing the chairman to convene executive sessions with the independent directors and dispensing with the need for another director to discharge the role of lead director. Separation of the two roles also enhances our corporate governance profile. As noted above, Mr. Gramaglia is currently serving as the non-executive chairman of the Board.
Corporate Governance
Board and Stockholder Meetings
Quarterly meetings of the Board are held to review the Company's strategy, financial performance, enterprise risks and significant developments, and to act on matters requiring Board approval. If issues arise that require the full Board's attention between regularly scheduled meetings, special meetings are called or action is taken by written consent. Time is allotted at the end of each Board and committee meeting for the independent directors to meet in executive session outside the presence of management.
During the last fiscal year, the Board of Directors met nine times. All of the directors attended 75% or more of the meetings of the Board and of the committees on which they served during the past fiscal year.
Directors are expected to attend Board and stockholder meetings whenever possible. At the 2015 annual meeting of stockholders, five directors (Messrs. Fox, Gramaglia, Henderson, Howe and Kokich) were in attendance.
Committees of the Board of Directors
The Board currently has four standing committees: Audit/Finance, Compensation, Executive and Governance/Nominating. A description of each committee is set forth below. For a portion of the past fiscal year, the Board also had a standing Technology & Innovation (T&I) Committee, which held one meeting during fiscal 2016. That committee was dissolved by the Board in August 2015, after which time the Board has included the topics typically discussed in the T&I Committee meetings on the agenda for each quarterly Board meeting.
Current members of each standing committee and the number of meetings held (or actions taken by unanimous written consent in lieu of a meeting) by each committee during fiscal 2016 are as follows:
|
|
|
|
|
|
|
|
Committee Memberships
|
|
Board Member
|
Audit/
Finance
|
Compensation
|
Executive
|
Governance/
Nominating
|
|
|
|
|
|
|
|
Jerry D. Gramaglia,
Chairman
|
-
|
-
|
|
|
|
|
|
|
|
|
|
John L. Battelle
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
Timothy R. Cadogan
|
|
|
-
|
-
|
|
|
|
|
|
|
|
William T. Dillard II
|
|
|
-
|
-
|
|
|
|
|
|
|
|
Richard P. Fox
|
|
|
|
-
|
|
|
|
|
|
|
|
Clark M. Kokich
|
|
-
|
-
|
|
|
|
|
|
|
|
|
William J. Henderson
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Scott E. Howe
|
-
|
-
|
|
-
|
|
|
|
|
|
|
|
Debora B. Tomlin
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
Meetings held in fiscal 2016
|
7
|
5
|
-
|
3
|
|
|
|
|
|
|
|
Written consents in fiscal 2016
|
-
|
3
|
1
|
1
|
Member
Chairperson
Audit/Finance Committee.
The members of the Audit/Finance Committee currently are Messrs. Fox (Chair), Cadogan, Dillard and Kokich, each of whom is deemed independent under the NASDAQ listing standards and SEC rules.
The Audit/Finance Committee assists the Board in overseeing Acxiom's financial statements and financial reporting process; systems of internal accounting and financial controls; independent auditors' engagement, performance, independence and qualifications; internal audit function; disclosure controls and procedures; and legal, regulatory compliance and ethics programs as established by management
and the Board. In addition, the committee monitors all major financial matters pertaining to the Company, assists the Board in long-range financial planning, and makes recommendations regarding the Company's capital and debt structure. It oversees the management of certain of Acxiom's risks, including the Company's exposures in the areas of finance and accounting, legal, compliance, internal controls, IT security, insurance coverages, business continuity plans, and the implications, if any, on the civil rights of protected classes of individuals and the potential impact of such issues on the Company's business, operations and reputation. It recommends and prioritizes capital and financial commitments, monitors related performance measurements and reviews annual operating and capital budgets. The committee also reviews large capital and unbudgeted expenditures. Proposed acquisitions and divestitures are reviewed by the committee, and it makes recommendations regarding the Company's hedging, dividend and tax policies. The Board has determined that Messrs. Fox and Dillard each qualify as "audit committee financial experts" as defined by SEC rules.
Compensation Committee.
The members of the Compensation Committee currently are Messrs. Henderson (Chair), Cadogan, Dillard and Fox, each of whom is deemed independent under the NASDAQ listing standards.
The Compensation Committee assists the Board in fulfilling its oversight responsibility related to compensation programs, plans and awards for Acxiom's executive officers, and it administers the Company's equity-based compensation plans. The committee annually reviews and makes recommendations to the full Board regarding the annual goals and objectives for the CEO and makes a recommendation to the full Board regarding his compensation (except for that portion of the CEO's compensation intended to qualify under Section 162(m), which is determined by the committee after consultation with the full Board). The committee annually sets the compensation of the Company's executive officers, and it reviews all of the Company's compensation plans periodically and considers any risks associated with the plans and whether they are philosophically aligned with the executive officers' compensation programs. The committee has the authority to retain advisers to assist with the work of the committee as it deems necessary and appropriate.
Executive Committee.
The members of the Executive Committee currently are Messrs. Howe (Chair), Fox and Gramaglia. The Executive Committee implements the policy decisions of the full Board of Directors and handles routine matters that arise during the interim periods between Board meetings consistent with the authority which has been delegated to the committee by the Board.
Governance/Nominating Committee.
The members of the Governance/Nominating Committee ("GNC") currently are Messrs. Kokich (Chair), Battelle, Gramaglia and Henderson, each of whom is deemed independent under NASDAQ listing standards.
This committee is responsible for reviewing and making recommendations to the Board with regard to corporate governance principles, management succession planning, structure of Board committees, compensation of directors, self-evaluation process for the Board, ethics compliance programs, director orientation and director education programs. In addition, the committee is charged with reviewing and approving any transaction required to be disclosed as a related-party transaction under SEC rules and regulations. The GNC's charter specifies that no related-party transaction will be approved unless it is deemed by the GNC to be commercially reasonable and in the best interests of, or not inconsistent with the best interests of, the Company.
The GNC is also responsible for screening and recommending qualified candidates to the Board for membership and for annually recommending to the Board the nominees for director to be submitted for election at each annual meeting of the Company's stockholders. All nominations or appointments to the Board are approved by the full Board of Directors. Potential Board candidates are identified through various methods, including recommendations from directors, management and stockholders. The committee has the authority to retain search firms to identify director candidates and to approve the search firm's fees and other retention terms. The committee periodically reviews the appropriate skills and characteristics required of Board members. In reviewing potential candidates, the GNC considers applicable board and committee independence requirements imposed by the various committee charters, the NASDAQ listing standards and applicable law. The committee also considers the number of other boards and committees on which a director candidate serves.
The GNC and Board seek directors who possess the highest personal and professional integrity, ethics and values, are committed to representing the long-term interests of the stockholders and have an objective perspective and mature judgment. Among the various criteria for selection as a Board member are the level of a potential candidate's experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, and willingness to devote adequate time to Board duties, and a commitment to serve on the Board for an extended period of time in order to develop an in-depth knowledge of the Company, its strategy and its principal operations. The GNC and Board seek candidates who demonstrate a willingness to evaluate management's performance objectively and who have no activities or interests that could conflict with their responsibilities to Acxiom.
Corporate Governance
The GNC is responsible for assessing the appropriate balance of skills and characteristics required of Board members. Nominees for director must meet the qualifications set forth in our corporate governance principles and the GNC charter, pursuant to which the Board and committee are mandated to use reasonable efforts to attract a diversified membership and to endeavor to have a Board representing diverse experience at policy-making levels in business, government, education and technology. While the GNC continually seeks to identify potential candidates who would further enhance the diversity of the Board, it does not have a formal policy with respect to diversity. Nominees must also comply with the Board of Directors' code of business conduct and ethics, a copy of which is posted in the "about – Codes of Ethics" section of our website at www.acxiom.com.
In accordance with the terms of the Company's corporate governance principles, any nominees proposed by stockholders will be evaluated by the GNC in the same manner as nominees proposed by other sources. To be considered by the GNC, a stockholder nominee must be submitted to the corporate secretary at the address and within the time frame specified under the section of this Proxy Statement below entitled "Stockholder Proposals." It is the policy of the Board that representatives of institutional investors may be considered for Board membership so long as the institution (a) does not own or control significant holdings (i.e., more than 5% of the total outstanding shares or other equity units) in businesses that are competitive with the Company; (b) fully discloses, on an ongoing basis, any currently existing and/or reasonably foreseeable conflicts of interest with the Company and/or its other stockholders; and (c) agrees to comply with the Company's stock trading guidelines applicable to directors and senior members of management, as currently in force or as may be in force in the future.
Other Committees.
In addition to the standing committees described above, the Board may establish other committees, including additional standing committees or
ad hoc
committees to deal with a particular event or process.
Responsibility for Risk Management
Management has primary responsibility for identifying and managing risks facing Acxiom, subject to the oversight of the Board of Directors. The CEO brings key business risks to the attention of the Board, generally in the context of the Company's strategic and operating plans. The Company's director of risk management and the internal audit team, together with outside expert consultants, prepare reports used by the Audit/Finance Committee to analyze the most serious enterprise risks facing the Company and to prioritize the items to be addressed in the annual internal audit plan. The Company's director of risk management and the internal audit team prepare risk assessments by conducting interviews and surveys with members of management across the Company and with the Audit/Finance Committee members to identify individual process and enterprise risks.
The committees of the Board assist in discharging the Board's risk oversight role by performing certain subject matter responsibilities. Risks regarding financial, accounting and legal issues, compliance and internal controls, IT security, insurance coverages and business continuity are overseen by the Audit/Finance Committee. Risks related to the Company's compensation programs are overseen by the Compensation Committee. Risks associated with governance and executive succession planning are overseen by the Governance/Nominating Committee. The Board of Directors, however, retains full oversight responsibility for all subject matters, regardless of whether any particular subject matter is assigned to a committee. At each quarterly meeting, the Board receives a verbal summary of risk-related matters discussed in each of the committee meetings. All directors have access to the minutes of all committee meetings. The full Board is responsible for the overall risk assessment and management process and also directly oversees risks associated with the Company's strategic plan, operating plan, products, human resources and organizational issues.
The Board's administration of its risk oversight role has not specifically affected the Board's leadership structure. In establishing the Board's current leadership structure, risk oversight was one factor among many factors considered, and the Board believes that the current leadership structure is conducive to and appropriate for its risk oversight role. The Board regularly reviews its leadership structure and evaluates whether such structure, as well as the Board as a whole, is functioning effectively. If in the future the Board believes that a change in its leadership structure is required to, or potentially could, improve the Board's risk oversight role, it may make any changes it deems appropriate.
Communication with Directors
Stockholders and other interested parties may contact the Board of Directors, a Board committee, a particular group of directors (e.g., our independent directors), or individual members of the Board, including the Chairman of the Board, via the Company's website, www.acxiom.com, by visiting the Board of Directors page under the "about" section of the site, or by visiting https://secure.ethicspoint.com/domain/media/en/gui/40223/index.html. Communications relating to concerns about Acxiom's accounting, internal accounting controls, or auditing matters will be referred to members of the Audit/Finance Committee. Incoming messages are monitored by Navex Global, an international ethics and compliance software and solution provider.
|
|
|
|
|
Advisory Vote to Approve Named Executive Officer Compensation
(Proposal No. 2 of the Proxy Card)
|
In accordance with the Dodd-Frank Act and Rule 14a-21 under the Securities Exchange Act of 1934, the Company requests that our stockholders cast a non-binding, advisory vote to approve the compensation of the Company's "Named Executive Officers" identified in the section titled "Compensation Discussion and Analysis" set forth below in this Proxy Statement.
In accordance with the Company's compensation philosophy, our compensation programs are designed to attract, retain and motivate the management team to achieve the Company's business goals on an annual and a long-term basis. Key objectives of our compensation programs are to:
|
|
•
|
align leadership compensation with the business strategy, values and management initiatives
|
|
|
•
|
align Company executives' interests with stockholders' interests
|
|
|
•
|
motivate executives to achieve the highest level of performance
|
|
|
•
|
provide a strong link between pay and performance
|
|
|
•
|
attract and retain the best executives through competitive, market-based plans
|
Details concerning how we implement our compensation philosophy, and how we structure our compensation programs to meet the objectives listed above, are provided in the "Compensation Discussion and Analysis" section below. In particular, we discuss how we design performance-based compensation programs and set compensation targets and other objectives to maintain a close correlation between executive pay and Company performance.
In light of the foregoing, we ask that stockholders vote
FOR
the following resolution:
"RESOLVED, that the Company's stockholders approve, on an advisory basis, the compensation of the Company's Named Executive Officers, as disclosed in the Company's Proxy Statement for the 2016 Annual Meeting pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the Summary Compensation Table and the other related tables and disclosures."
At the 2011 Annual Meeting of Stockholders, stockholders were provided an advisory (non-binding) vote on the frequency at which stockholder advisory votes on executive compensation (like this Proposal No. 2) should be held. Consistent with the recommendation of the Board of Directors, approximately 90% of votes cast at the 2011 Annual Meeting were cast in favor of holding stockholders' advisory votes on executive compensation on an annual basis. Accordingly, the Company has determined to hold such votes on an annual basis, and the next advisory vote to approve the Company's compensation of its Named Executive Officers will be held at the 2017 Annual Meeting of Acxiom Stockholders (the "2017 Annual Meeting").
While this vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board of Directors, we value the opinions of our stockholders. Accordingly, the Board of Directors will take the results of this vote under advisement and will consider our stockholders' concerns when making future decisions regarding the Company's executive compensation programs.
Board of Directors' Recommendation
The Board of Directors unanimously recommends a vote
FOR
the resolution to approve, on an advisory basis, the compensation of the Company's Named Executive Officers as disclosed in this Proxy Statement.
|
|
|
|
|
Ratification Of Independent Registered Public Accountant
(Proposal No. 3 of the Proxy Card)
|
The Audit/Finance Committee has selected KPMG to serve as independent auditor for fiscal year 2017, and the stockholders are being asked to ratify this action. We anticipate that a representative of KPMG will be present at the 2016 Annual Meeting and will have the opportunity to make a statement at the meeting if he or she desires to do so and to respond to appropriate questions.
Fees Billed for Services Rendered by Independent Auditor
The following table presents fees for professional audit services rendered by KPMG for the audits of the Company's annual financial statements for the fiscal years ended March 31, 2016 and March 31, 2015, and fees billed for other services rendered by KPMG.
|
Audit Fees (including quarterly reviews)
1
|
|
$
|
2,326,000
|
|
|
$
|
2,252,000
|
|
|
Audit-Related Fees
2
|
|
|
687,000
|
|
|
|
992,000
|
|
|
Tax Fees
3
|
|
|
64,000
|
|
|
|
175,000
|
|
|
All Other Fees
4
|
|
|
29,000
|
|
|
|
134,000
|
|
|
Total
|
|
$
|
3,106,000
|
|
|
$
|
3,553,000
|
|
|
1
|
Audit fees relate to professional services rendered in connection with the audit of our annual financial statements, the audit of our internal control over financial reporting, quarterly reviews of financial statements included in our Forms 10-Q and 10-K, and audit services provided in connection with other statutory and regulatory filings.
|
|
2
|
Audit-related fees include professional services related to our SSAE16 (service organization) audits, audit services provided to one of our divisions and to the audit of our 401(k) retirement plan.
|
|
3
|
Tax fees include professional services rendered in connection with tax compliance and preparation relating to our tax audits, international tax compliance and tax consulting. We do not engage KPMG to perform personal tax services for our executive officers.
|
|
4
|
Other fees include other permitted professional advisory services.
|
Audit/Finance Committee Pre-Approval Policy
The Audit/Finance Committee has adopted a policy for the pre-approval of engagements for audit, audit-related and non-audit services by the independent auditor. The policy requires that the committee pre-approve all audit services and audit-related services to be performed by the independent auditor. Such pre-approval may be made by the chairman of the Audit/Finance Committee so long as a report of the engagement is made to the full committee at its next quarterly meeting following the engagement. In connection with any proposed engagement for non-audit services, the scope, nature and anticipated fees for such services must be agreed upon by management and the external auditor, who then must obtain the consent of the chairman of the Audit/Finance Committee to proceed with the proposed engagement. Upon the chairman's consent, the independent auditor is authorized to enter into an engagement letter with the Company to conduct the non-audit services in accordance with the terms and conditions approved by the chairman. All audit and non-audit services reflected in the table above were pre-approved by the Audit/Finance Committee in accordance with the policy, and none were approved pursuant to the
de minimis
exception provided in Rule 2-01(c)(7)(i)(C) of Regulation S-X promulgated by the SEC.
Board of Directors' Recommendation
The Board of Directors recommends that the stockholders vote
FOR
the ratification of KPMG as the Company's independent registered accountant for fiscal year 2017. If the stockholders fail to ratify this appointment, the Audit/Finance Committee will reconsider whether to retain KPMG or another firm without resubmitting the matter to our stockholders. Even if the appointment is ratified, the Audit/Finance Committee may, in its discretion, direct the appointment of a different independent auditor at any time during the year if it determines that such change would be in the Company's best interests and in the best interests of our stockholders.
The following table sets forth information as of June 1, 2016, with respect to the beneficial ownership of our common stock by:
|
|
•
|
each of our directors, nominees and named executive officers individually;
|
|
|
•
|
all of our directors, nominees and executive officers as a group; and
|
|
|
•
|
each person who is known to us to beneficially own more than 5% of our common stock.
|
Unless otherwise indicated, the address of each person named in the table below is c/o Acxiom Corporation, 601 E. Third Street, P.O. Box 8190, Little Rock, AR 72203-8190, and each beneficial owner named in the table has sole voting and sole investment power with respect to all shares beneficially owned. The percentage listed in the column entitled "Percentage of Class" is calculated based on 77,794,097 shares of our common stock issued and outstanding as of June 1, 2016. This number excludes 53,032,459 shares held in treasury.
The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial owner" of a security if that person has or shares "voting power," which includes the power to vote or to direct the voting of the security, or "investment power," which includes the power to dispose of or to direct the disposition of the security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which that person has no economic interest.
|
Beneficial Owner
|
Shares
Beneficially
Owned
|
Percentage
of Class
|
|
John L. Battelle
|
|
|
24,727
|
|
|
|
*
|
|
|
Timothy R. Cadogan
|
|
|
26,010
|
|
|
|
*
|
|
|
William T. Dillard II
|
|
|
134,362
|
1
|
|
|
*
|
|
|
Richard E. Erwin
|
|
|
58,373
|
2
|
|
|
*
|
|
|
Richard P. Fox
|
|
|
26,692
|
|
|
|
*
|
|
|
Jerry D. Gramaglia
|
|
|
85,265
|
|
|
|
*
|
|
|
William J. Henderson
|
|
|
58,975
|
1
|
|
|
*
|
|
|
Scott E. Howe
|
|
|
1,033,862
|
3
|
|
|
*
|
|
|
Warren C. Jenson
|
|
|
424,141
|
4
|
|
|
*
|
|
|
Jerry C. Jones
|
|
|
338,471
|
5
|
|
|
*
|
|
|
Clark M. Kokich
|
|
|
79,143
|
|
|
|
*
|
|
|
S. Travis May
|
|
|
148,061
|
6
|
|
|
*
|
|
|
Debora B. Tomlin
|
|
|
1,134
|
|
|
|
*
|
|
|
All directors, nominees and executive officers as a group (15 people)
|
|
|
2,465,428
|
7
|
|
|
3.11%
|
|
|
BlackRock, Inc.
55 East 52
nd
Street
New York, NY 10022
|
|
|
7,154,775
|
8
|
|
|
9.2%
|
|
|
The Vanguard Group
100 Vanguard Blvd.
Malvern, PA 19355
|
|
|
5,131,918
|
9
|
|
|
6.6%
|
|
|
Waddell & Reed Financial, Inc.
6300 Lamar Avenue
Overland Park, KS 66202
|
|
|
11,419,530
|
10
|
|
|
14.7%
|
|
|
1
|
Includes 2,900 shares subject to options which are currently exercisable, of which all are in the money.
|
|
2
|
Includes 31,785 shares subject to options which are currently exercisable or exercisable within 60 days, of which all are in the money.
|
|
3
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Includes 732,285 shares subject to options which are currently exercisable or exercisable within 60 days, of which all are in the money.
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4
|
Includes 328,802 shares subject to options which are currently exercisable or exercisable within 60 days, of which all are in the money.
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5
|
Includes 257,904 shares subject to options which are currently exercisable or exercisable within 60 days, of which 237,711 are in the money.
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6
|
Includes 66,149 shares subject to options which are currently exercisable or exercisable within 60 days, of which all are in the money.
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7
|
Includes 1,439,188 shares subject to options which are currently exercisable or exercisable within 60 days, of which 1,412,565 are in the money
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8
|
This information is based solely upon information contained in a Schedule 13G/A filed on January 25, 2016. According to the Schedule 13G/A, BlackRock, Inc. has sole voting power over 6,978,131 of the reported shares, no shared voting power with respect to any reported shares and sole dispositive power over all reported shares through its control of certain direct and indirect subsidiaries listed on Exhibit A attached to the Schedule 13G/A.
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9
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This information is based solely upon information contained in a Schedule 13G/A filed on February 10, 2016. According to the Schedule 13G/A, The Vanguard Group has sole voting power over 98,131 of the reported shares, shared voting power over 5,900 of the reported shares, sole dispositive power over 5,032,087 of the reported shares, and shared dispositive power over 99,831 of the reported shares.
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10
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This information is based solely upon information contained in a Schedule 13G/A filed on February 12, 2016. According to the Schedule 13G/A, Waddell & Reed Financial, Inc. has sole voting and dispositive power over all reported shares through its control of certain direct and indirect subsidiaries that are additional reporting persons listed in the Schedule 13G/A.
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Compensation Discussion And Analysis
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Our Compensation Discussion and Analysis describes the compensation program for our Principal Executive Officer, our Principal Financial Officer, and the next three most highly-compensated Executive Officers of the Company during fiscal 2016 (the "Named Executive Officers").
Our Named Executive Officers for fiscal 2016 were:
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Named Executive Officer
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Position as of March 31, 2016
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Scott E. Howe
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Chief Executive Officer & President
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Warren C. Jenson
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Chief Financial Officer & Executive Vice President / President, International
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Richard E. Erwin
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President & General Manager, Audience Solutions
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Jerry C. Jones
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Chief Ethics and Legal Officer & Executive Vice President
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S. Travis May
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President & General Manager, Connectivity
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This Compensation Discussion and Analysis describes the material elements of our executive compensation program during fiscal 2016. It also provides an overview of our executive compensation philosophy and objectives. Finally, it analyzes how and why the Compensation Committee of our Board of Directors (the "Compensation Committee") arrived at the specific compensation decisions for our executive officers, including the Named Executive Officers, for fiscal 2016, including the key factors that the Compensation Committee considered in determining their compensation.
This Compensation Discussion and Analysis is organized in six sections:
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Section 1: Executive Summary
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Section 2: Executive Compensation Philosophy and Program Design
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Section 3: Governance of Executive Compensation Program
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•
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Section 4: Individual Compensation Elements
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Section 5: Other Compensation Policies and Practices
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Section 6: Tax and Accounting Considerations
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Section 1: Executive Summary
We are a global technology and services company that provides the data foundation for the world's best marketers. To support our ongoing transformation and growth, we have designed our executive compensation program to ensure a strong connection between our financial and operational performance and the incentives we use to motivate and reward our executive officers. As we have reshaped our business in recent years to meet the challenges of evolving technologies, as well as customer needs and expectations, we have been proactive in designing our executive officers' compensation packages to support our key business objectives:
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Three-quarters of their target total direct compensation opportunities are "at risk" and linked to the achievement of pre-established business outcomes.
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The majority of their target total direct compensation opportunities consist of performance-based incentives that reward them only if their efforts create sustainable long-term value for our stockholders.
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Through our ongoing constructive dialogue with our major stockholders, we continue to refine our executive compensation program to emphasize long-term performance, as evidenced by our significant re-design of our incentive compensation opportunities in our fiscal 2017 executive compensation program, which includes a shift in our compensation peer group as well as a heavier weighting towards performance stock units (PSUs) and the use of a Total Shareholder Return (TSR) measure in our PSU plan (as described in Section 2 below).
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Business Highlights
Since our founding in 1969, our mission has focused on ease and safety of people based information. While our mission has remained, over the past two years, we have been strategically driving our business to
focus and organize around solutions that provide the critical data foundation marketers need to engage consumers in a digital world. This transformation has led to improving trends, thought leadership, innovation and strong financial performance. Key business highlights for fiscal 2016 include:
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Successfully reorganizing our business into three clear and distinct divisions: Connectivity, Audience Solutions, and Marketing Services. Our divisional structure provides clear "line of sight" and increased accountability across the enterprise, and at the same time, allows each division to move faster and innovate against its unique opportunity set.
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Transforming our financial reporting and disclosures to provide our stockholders with increased transparency and visibility into the performance of each of our divisions.
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Establishing and scaling our leadership in data connectivity, growing direct customers by over 30%, and more than doubling our partner ecosystem.
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Stabilizing and improving top-line performance in our Audience Solutions and Marketing Services divisions.
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Innovating across our portfolio and delivering new products and capabilities to our customers, including
Customer Link
and the
Marketing Analytics Environment
. Returning value to our stockholders, repurchasing more than $50 million of our common stock during the year.
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Financial Highlights
With a focus on execution and growth, our fiscal 2016 performance delivered strong financial results for our stockholders, including:
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Fiscal year Total Shareholder Return ("TSR") of 16%, compared to -3.6% for the S&P Midcap 400 Index
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Revenue of $850 million, up 6% year-over-year
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Overall Non-GAAP earnings-per-share ("EPS")
1
of $0.59, up from $0.49 in fiscal 2015, with GAAP EPS of $0.09, up from negative $0.14 in fiscal 2015
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Explosive growth in our Connectivity division, with revenue up 85% year-over-year to approximately $102 million and segment income improving significantly
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Executive Compensation Highlights
Consistent with our "pay-for-performance" philosophy and objective of rewarding our executive officers only where they deliver sustained value for our stockholders, our key compensation decisions and outcomes for fiscal 2016 were as follows:
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Annual cash incentives
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Design
– Based annual cash incentive opportunities on our adjusted revenue and adjusted EPS
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Outcome
– Made annual cash incentive payments at above-target levels as a result of exceeding our annual adjusted revenue and adjusted EPS targets for the year, including a payment in the amount of $854,750 to our CEO
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Long-term equity incentives
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Fiscal 2016 award mix
– Granted long-term incentive opportunities in the form of equity awards, consisting of options to purchase shares of our common stock, restricted stock unit ("RSU") awards, and performance stock unit ("PSU") awards, which vest or are earned over multi-year periods, including an equity award with a grant date fair value of $3,828,601 to our CEO
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Fiscal 2016 PSU award design
–
The PSU awards are payable in shares of our common stock at the end of a three-year performance period based on our adjusted EPS and relative TSR performance compared to the S&P Midcap 400 Index over this period.
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1
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See Schedule 1 on page 41-42 of this proxy statement for a reconciliation of our GAAP revenue to adjusted revenue and our GAAP earnings-per-share to overall Non-GAAP earnings-per-share and adjusted earnings-per-share.
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Executive Compensation
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Fiscal 2014–2016 PSU award outcome
– All of the shares of our common stock subject to the PSU awards granted in fiscal 2014 for the fiscal 2014-2016 performance period were forfeited. This resulted in a lower realized pay for our CEO and other Named Executive Officers.
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Fiscal 2014 "transformational" awards
– As of the end of fiscal 2016, the per share market price of our common stock was $21.44 and none of these awards had been earned. The one-time transformational incentive awards (in the form of performance-based stock appreciation rights and performance-based restricted stock unit awards) granted to our CEO and CFO in fiscal 2014 are intended to reward these executives only after our stockholders have realized significant share price appreciation by the end of fiscal 2018. Specifically, these awards will be earned only if we achieve levels of appreciation ranging from 75% to 227% of the market price of our common stock on the date of grant ($22.92 per share) over this period.
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Section 2: Executive Compensation Philosophy and Program Design
We believe in paying for performance. Our objective is to attract, motivate, reward, and retain our executive officers in a manner that is transparent, market competitive, and aligned with the interests of our stockholders by putting compensation at risk, providing rewards only when our performance warrants, and helping us to deliver for our customers.
Our compensation philosophy and objectives support our strategic priorities. They are:
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align our executive compensation program with diverse business divisions and ongoing business transformation and incentivize execution of key management initiatives;
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•
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align our executive officers' interests with those of our stockholders and consider stockholder feedback when making compensation decisions;
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maintain simple, transparent compensation arrangements that provide a strong link between pay and performance and motivate our executive officers to achieve the highest level of performance
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attract and retain the best executive officers through competitive, market-based compensation programs
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We believe these objectives enable us to reward the overall performance and contributions of our executive officers while maintaining an appropriate correlation between executive compensation levels and our performance, including the execution of our business strategy. The following discussion explains how our executive compensation program achieves these objectives.
Compensation Program Framework
We structure our executive compensation program to align compensation outcomes with the interests of our stockholders, reward our executive officers for producing sustainable growth in stockholder value, and attract, motivate, reward, and retain individuals who have the vision, expertise, leadership capability, and experience to develop and successfully execute our strategic plan. The Compensation Committee believes that the annual target total direct compensation opportunities (the sum of base salary, cash incentives and long-term incentives) of our executive officers should be tied to our performance in both the short-term and long-term.
The Compensation Committee carefully selected the framework reflected in the following chart to achieve these objectives in our fiscal 2016 executive compensation program:
These compensation elements are allocated so that the majority of each executive officer's target total direct compensation opportunity is "at risk" and/or subject to performance-based vesting requirements. While the pay mix may vary from year to year, the ultimate goal is to achieve our compensation objectives as described above.
Executive Compensation Program Enhancements
At our 2015 Annual Meeting of Stockholders, approximately 80.5%
of the votes cast
on the non-binding stockholder advisory vote on the fiscal 2015 compensation of the named executive officers (commonly known as a "Say-on-Pay" vote) were voted in favor of the proposal. While this represented majority support of our executive compensation program, our Board of Directors recognized that this result deviated significantly from the support for our executive compensation program in fiscal 2014 (approximately 94%), and from what it considered to be satisfactory.
Stockholder Engagement
This year, we expanded our engagement effort to better understand our stockholders' concerns with our executive compensation program. We engaged in a concerted and sustained dialogue with our stockholders, including over half of our 15 largest stockholders. These discussions addressed potential changes to our executive compensation program as well as our current compensation policies and practices.
Changes for Fiscal 2017
As part of our annual review of our executive compensation programs, the feedback that we received from our stockholder outreach efforts, and in response to the results of the fiscal 2015 Say-on-Pay vote, we have taken the following actions:
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Compensation Area
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Stockholder
Feedback
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Our Response
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When Change
Became Effective
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Compensation peer group
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Peer companies not representative of our size based on revenue and market capitalization
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Reconstituted compensation peer group to remove nine companies and add 12 new companies with more comparable financial characteristics
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February 2016, for use in fiscal 2017 compensation deliberations
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Long-term incentive award mix
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Strengthen alignment between corporate performance and compensation outcomes
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Revised long-term incentive compensation award mix for CEO and other NEOs to:
•
Eliminate use of stock options
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Beginning with long-term incentive compensation awards to be granted in fiscal 2017
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Executive Compensation
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Compensation Area
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Stockholder
Feedback
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Our Response
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When Change
Became Effective
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•
Weight equity award mix 60% PSU awards and 40% RSU awards for CEO
•
Weight equity award mix 50% PSU awards and 50% RSU awards for other NEOs
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Long-term incentive award design
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Duplicative earning-per share ("EPS") performance measure with annual cash incentive plan
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Replace duplicative EPS performance measure with relative total stockholder return ("TSR") measure, using S&P Mid-Cap 400 Index
Set target level payment to be earned only for above-median (60
th
percentile) performance
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Beginning with long-term incentive compensation awards to be granted in fiscal 2017
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The impact of these enhancements is not reflected in the fiscal 2016 Summary Compensation Table in this proxy statement. Since these enhancements were made in response to our fiscal 2015 Say-on-Pay vote, which occurred after the Compensation Committee had made its fiscal 2016 executive compensation decisions, they will not be reflected in our executive compensation disclosure until our fiscal 2017 proxy statement.
Pay-for-Performance Discussion
Our compensation practices are designed to support our goals, our values and standards of conduct, and our pay for performance philosophy. They are a means to reward our executive officers, including the Named Executive Officers, for their achievements. We believe our executive compensation program is reasonable, competitive, and appropriately balances the goals of attracting, motivating, rewarding, and retaining our executive officers, and that it therefore promotes stability in our leadership.
To ensure our executive officers' interests are aligned with those of our stockholders and to motivate and reward individual initiative and effort, a substantial portion of their target annual total direct compensation opportunity is "at-risk" and will vary above or below target levels commensurate with our performance. We emphasize performance-based compensation that appropriately rewards our executive officers for delivering financial, operational, and strategic results that meet or exceed pre-established goals through our annual cash incentive opportunities, as well as options to purchase shares of our common stock (prior to fiscal 2017) and PSU awards that make up a significant portion of our long-term incentive compensation opportunities. In addition, we further align the interests of our executive officers with those of our stockholders through our stock ownership guidelines and grants of RSU awards as part of our long-term incentive compensation opportunities.
The target total direct compensation opportunities for our CEO and, on average, the other Named Executive Officers during fiscal 2016 reflect this philosophy:
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Fiscal 2016 CEO
Target Total Direct Compensation
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Fiscal 2016 Average Other NEO
Target Total Direct Compensation
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The percentages in the above charts are based on target total direct compensation opportunities, which consist of salary, annual cash incentive and long-term equity awards, which are valued at grant date fair market value. Amounts shown are at target and actual payouts may differ. Other forms of compensation shown in the Summary Compensation Table are not included.
As reflected in the foregoing graphics, we believe that equity awards are a key incentive for our executive officers to drive long-term growth. To ensure that we continue to align to our compensation philosophy, the Compensation Committee regularly evaluates the relationship between the reported values of the equity awards granted to our executive officers, the amount of compensation realizable (and, ultimately, realized) from such awards in subsequent years, and our total stockholder return over this period.
While we disclose the estimated values of these equity awards in our Summary Compensation Table at the time of grant for each covered fiscal year, the value of these awards that may be realizable by our executive officers will vary depending on the performance of our common stock and often differs significantly from the amounts reported in the Summary Compensation Table.
Executive Compensation Policies and Practices
We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. During fiscal 2016, we maintained the following executive compensation policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behaviors that we do not believe serve our stockholders' long-term interests:
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What We Do
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What We Don't Do
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✓
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Use a pay-for-performance philosophy that links our executive officers' compensation to corporate and individual performance
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×
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Provide Special Health, Welfare or Qualified Retirement Plan Benefits not available to all employees
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✓
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Annual Executive Compensation Review
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×
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Provide Tax Payments on Perquisites other than relocation benefits
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✓
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Significant portion of compensation at-risk
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×
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Permit Hedging
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✓
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Retain an Independent Compensation Advisor
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×
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Permit Pledging
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✓
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Maintain an Independent Compensation Committee
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×
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Provide Excise Tax Payments on Future Post-Employment Compensation Arrangements
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Executive Compensation
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What We Do
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What We Don't Do
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✓
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Annual Compensation-Related Risk Assessment
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×
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Pay Dividends or Dividend Equivalents on Unvested Equity Awards
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✓
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Performance-Based Equity Awards
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×
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Permit Stock Option Repricing
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✓
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Compensation Recovery ("Clawback") Policy
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×
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Provide Guaranteed Bonuses
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✓
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"Double-Trigger" Change-in-Control Arrangements
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×
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"Single trigger" Change-in-Control Arrangements
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✓
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Stock Ownership Guidelines
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✓
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Conduct an Annual Stockholder Advisory Vote on Named Executive Officer Compensation as well as engaging in regular dialogue with stockholders on corporate governance matters
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✓
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Succession Planning
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Stockholder Engagement and Advisory Votes on Executive Compensation
Our stockholders' opinions on how we operate our business are important to us. While we received majority support for our Say-on-Pay proposal at our 2015 Annual Meeting of Stockholders, the Compensation Committee continued to work to enhance our executive compensation program to address stockholder concerns. Over the course of fiscal 2016, members of our management and our Board of Directors met with many of our stockholders to obtain direct feedback on our executive compensation program. When making future compensation decisions for our executive officers, the Compensation Committee will continue to consider the outcome of our Say-on-Pay votes and feedback from our stockholders.
With regard to the separate non-binding stockholder advisory vote on the frequency of future Say-on-Pay votes (commonly known as a "Say-When-on-Pay" vote) conducted at our 2011 Annual Meeting of Stockholders, our stockholders cast the highest number of votes for annual basis voting, compared to every two- or three-year voting. In light of this result and other factors considered, our Board of Directors determined that we will hold annual Say-on-Pay votes until the next required Say-When-on-Pay vote.
Therefore, following the Annual Meeting of Stockholders to which this proxy statement relates, the next Say-on-Pay vote will occur at our 2017 Annual Meeting of Stockholders. Further, following the Annual Meeting of Stockholders to which this proxy statement relates, the next Say-When-on-Pay vote also will occur at our 2017 Annual Meeting of Stockholders
Section 3: Governance of Executive Compensation Program
Role of the Compensation Committee
The Compensation Committee discharges the responsibilities of our Board of Directors relating to the compensation of our executive officers.
The Compensation Committee has overall responsibility for overseeing the design, development, and implementation of our executive compensation program and all related policies and practices.
Specifically, the Compensation Committee:
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reviews and approves the compensation of our executive officers, other than our CEO;
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reviews and approves the compensation of our CEO that is intended to comply with Section 162(m) of the Internal Revenue Code (the "Code"), in consultation with our Board of Directors; and
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makes a recommendation to our Board of Directors for approval of our CEO's other compensation.
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In carrying out its responsibilities, the Compensation Committee establishes the amounts and allocates the mix of compensation between base salary, annual cash incentives, and long-term incentive compensation. The Compensation Committee also oversees our incentive and equity-based executive compensation plans and establishes performance targets for performance-based awards. Periodically, the
Compensation Committee reviews our post-employment compensation arrangements, retirement benefits and nonqualified deferred compensation program, senior leadership benefits, and perquisites. The Compensation Committee also reviews and considers risks associated with our compensation philosophy and executive compensation program as discussed under "Compensation Risk Assessment" elsewhere in this proxy statement.
The Compensation Committee does not establish a specific target for setting the annual target total direct compensation opportunity of our executive officers, including the Named Executive Officers. When evaluating and setting the amount of each compensation element, the Compensation Committee considers the following factors:
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our performance against the financial and operational objectives established by the Compensation Committee and our Board of Directors;
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each individual executive officer's responsibilities, qualifications, and length of service;
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the scope of each executive officer's role compared to other similarly-situated executives at companies in our compensation peer group;
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the performance of each individual executive officer, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team, all of which reflect our core values;
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compensation parity among our executive officers; and
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the compensation practices of our compensation peer group and the positioning of each executive officer's compensation in a ranking of peer company compensation levels.
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These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each executive officer. No single factor is determinative in setting pay levels, nor was the impact of any factor on the determination of pay levels quantifiable. As an executive officer's responsibilities and ability to affect our financial results increase, base salary becomes a smaller element of his or her target total direct compensation opportunity and long-term incentive compensation becomes a larger element, further aligning his or her interests with those of the stockholders.
Role of Management
In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, competitive market data, and management's perspective and recommendations on compensation matters. The Compensation Committee solicits and reviews our CEO's recommendations and proposals with respect to adjustments to target total annual cash compensation, long-term incentive compensation opportunities, program structures, and other compensation-related matters for our executive officers (other than with respect to his own compensation). The Compensation Committee reviews and discusses these recommendations and proposals with our CEO and uses them as one factor in determining and approving the compensation for our executive officers. In setting the compensation of our CEO, he recuses himself from all discussions and recommendations regarding his own compensation.
Role of Compensation Advisors
As permitted in its charter, the Compensation Committee engages an external compensation consultant to assist it by providing information, analysis, and other advice relating to our executive compensation program and the decisions resulting from its annual executive compensation review. It directly engages the compensation consultant under an engagement letter that the Compensation Committee reviews at least annually.
Until October 2015, the Compensation Committee retained Pay Governance, a national compensation consulting firm as it compensation consultant. In October 2015, the Compensation Committee ended its engagement with Pay Governance and retained Compensia, a national compensation consulting firm, to serve as its compensation consultant. Its compensation consultant reports directly, and is directly accountable, to the Compensation Committee, and the Compensation Committee has the sole authority to retain, terminate, and obtain the advice of its compensation consultant at our expense.
Executive Compensation
The Compensation Committee selected each of Pay Governance and Compensia as its compensation consultant at various times because of each firm's expertise and reputation and the fact that each firm provides no services to us other than its services to the Compensation Committee, has no other ties to management that could jeopardize its independent status, and has strong internal governance policies that help ensure that it maintains its independence.
During fiscal 2016, the compensation consultant regularly attended the meetings of the Compensation Committee (both with and without management present) and provided the following services:
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consulting with the Compensation Committee chair and other members between Compensation Committee meetings;
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providing competitive market data based on the compensation peer group for our executive officer positions and evaluating how the compensation we pay our executive officers compares both to our performance and to how the companies in our compensation peer group compensate their executives;
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review and analysis of the base salary levels, annual cash incentive opportunities, and long-term incentive compensation opportunities of our executive officers;
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•
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assessment of executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments;
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•
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review of market equity compensation practices, including burn rate and overhang;
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•
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review of the Compensation Discussion & Analysis; and
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•
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assessment of compensation risk to determine whether our compensation policies and practices are reasonably likely to have a material adverse impact on the Company.
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The Committee also engaged Bryan Cave, LLP as independent legal counsel to assist with the Committee's review and analysis of our senior executive compensation program in light of current market, economic, regulatory and our business conditions.
In fiscal 2016, neither Pay Governance, Compensia nor Bryan Cave provided any other services to us other than the consulting services to the Compensation Committee. The Compensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation advisors. In fiscal 2016, the Compensation Committee considered the six specific independence factors adopted by the SEC and The NASDAQ Stock Market and determined that Pay Governance, Compensia and Bryan Cave were independent and that their work did not raise any conflicts of interest.
Process for Determining CEO Compensation
Each year, our Board of Directors evaluates our CEO's performance in light of our strategic plan, operating goals, and key performance indicators relating to executive compensation. Our executive compensation objectives include maintaining competitive pay, linking pay to performance, promoting the creation of stockholder value, and encouraging retention. The Compensation Committee considers the results of this evaluation. In consultation with its compensation consultant, the Compensation Committee also considers general market conditions and specific industry trends. The Compensation Committee reviews each element of our CEO's compensation, his employment agreement, a tally sheet to evaluate his target total direct compensation opportunity, and assists our Board of Directors in assessing our CEO's total compensation. The Compensation Committee also considers our business results, the tax deductibility of our CEO's compensation, and the other factors described above. Any recommendations from the Compensation Committee are submitted to our Board of Directors for approval, other than elements of compensation intended to comply with Section 162(m) which are determined exclusively by the Compensation Committee. Our CEO does not participate in discussions or decisions regarding his own compensation.
Process for Determining Compensation of Other Executive Officers
Each year, our CEO evaluates the performance of each of our other executive officers, including the other Named Executive Officers. Our CEO makes a recommendation for the compensation of each executive officer to the Compensation Committee based upon his evaluation and information supplied by the Compensation Committee's compensation consultant. The Compensation Committee considers our CEO's recommendation in light of our strategic plan, operating goals, and compensation philosophy. In consultation with its compensation consultant, the Compensation Committee also considers general market conditions and specific industry trends. The Compensation Committee also reviews tally sheets with respect to each executive officer, our business results, and tax deductibility considerations.
Competitive Positioning
For purposes of comparing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a group of comparable technology companies. They were selected on the basis of their similarity to us in terms of revenue, market capitalization, and industry, were as follows:
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Akamai Technologies, Inc.
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Harte-Hanks, Inc.
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Alliance Data Systems Corp.
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Heartland Payment Systems, Inc.
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AOL, Inc.
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IHS, Inc.
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comScore, Inc.
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Informatica Corporation
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CoreLogic, Inc.
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The Dun & Bradstreet Corporation
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Equifax, Inc.
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Total System Services, Inc.
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Fair Isaac Corporation
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United Online, Inc.
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Global Payments, Inc.
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In February 2016, with the assistance of Compensia, the Compensation Committee re-examined the compensation peer group to reflect the changes in our revenue and market capitalization, recognize our evolving business focus and divisional structure, and account for changes in the competitive market. Based on this effort, the Compensation Committee approved a revised compensation peer group consisting of the following companies:
The companies in this revised compensation peer group were selected on the basis of their similarity to us in size, as determined using the following criteria:
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similar revenue size – ~0.5x to ~2.0x our last four fiscal quarter revenue (~$415 million to ~$1.7 billion);
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similar market capitalization – ~0.3x to ~3.0x our market capitalization (~$517 million to ~$5.2 billion);
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•
|
industry affiliation – application software, internet software and services, advertising, data processing and outsourced services, research and consulting services, and IT consulting and other services; and
|
|
|
•
|
similar business focus – SaaS, marketing service provider, or data services.
|
To analyze the compensation practices of the companies in our compensation peer group, the compensation consultant gathered data from public filings (primarily proxy statements) and from the Radford executive compensation surveys. This market data was then used as a reference point for the Compensation Committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts.
Executive Compensation
While the Compensation Committee reviews each compensation element and target total direct compensation for each of our executive officers compared to similarly-situated executives of the companies in the compensation peer group, it does not target compensation to a specific percentile of the competitive market data. In determining actual pay levels, the Compensation Committee considers data from the compensation peer group, as well as the other factors described above, in its collective judgment.
The Compensation Committee reviews our compensation peer group at least annually and makes adjustments to its composition, taking into account changes in both our business and the businesses of the companies in the peer group.
Section 4: Individual Compensation Elements
The specific elements of our fiscal 2016 executive compensation program for our executive officers, including the Named Executive Officers, were as follows:
In addition, we provide our executive officers with welfare and health benefits programs, a non-qualified deferred compensation program, post-employment compensation arrangements, and limited perquisites and other personal benefits.
Base Salary
Base salary represents the fixed portion of the compensation of our executive officers, including the Named Executive Officers, and is an important element of compensation intended to attract and retain highly-talented individuals.
Generally, we establish the initial base salaries of our executive officers through arm's-length negotiation at the time we hire the individual executive officer, taking into account his or her position, qualifications, experience, prior salary level, and the base salaries of our other executive officers. Thereafter, the Compensation Committee reviews the base salaries of our executive officers as part of its annual compensation review and makes adjustments to base salaries as it determines to be necessary or appropriate.
In May 2015, the Compensation Committee reviewed the base salaries of our executive officers, including the Named Executive Officers, taking into consideration a competitive market analysis prepared by its compensation consultant, the recommendations of our CEO (except with respect to his own base salary), and the other factors described above. Following this review, the Compensation Committee decided that no changes would be made to base salaries, with the exception of Mr. May, who received a base salary increase that recognized his promotion to his current role. The base salaries of the Named Executive Officers for fiscal 2016 were as follows:
|
Named Executive Officer
|
Fiscal 2015
Base Salary
|
Fiscal 2016
Base Salary
|
Percentage
Adjustment
|
|
Named Executive Officer
|
|
Fiscal 2015Salary
|
|
|
Fiscal 2016
Base
|
|
|
Percentage
Adjustment
|
|
|
Mr. Howe
|
|
$
|
650,000
|
|
|
$
|
650,000
|
|
|
|
-
|
|
|
Mr. Jenson
|
|
$
|
515,000
|
|
|
$
|
515,000
|
|
|
|
-
|
|
|
Mr. Erwin
(1)
|
|
|
-
|
|
|
$
|
400,000
|
|
|
|
-
|
|
|
Mr. Jones
|
|
$
|
405,000
|
|
|
$
|
405,000
|
|
|
|
-
|
|
|
Mr. May
(2)
|
|
$
|
310,000
|
|
|
$
|
350,000
|
|
|
|
12.9
|
%
|
|
(1)
|
On April 13, 2015, Mr. Erwin was hired into the position of President & General Manager, Audience Solutions.
|
|
(2)
|
On June 1, 2015, Mr. May was promoted to his current position of President & General Manager, Connectivity. He received a base pay increase on July 1, 2015 to recognize his promotion.
|
Annual Cash Incentives
For fiscal 2016, our executive officers, including the Named Executive Officers, and other key employees were eligible to earn annual cash incentive payments pursuant to the Acxiom Corporation 2016 Cash Incentive Plan (the "Fiscal 2016 CIP"), which is subject to the terms and conditions of the Amended and Restated 2010 Executive Cash Incentive Plan of Acxiom Corporation. The Fiscal 2016 CIP provided our executive officers with the opportunity to earn these payments based on our actual corporate performance as assessed against multiple financial measures and their individual contributions to this performance.
The Compensation Committee established each executive officer's target and maximum annual cash incentive opportunity and set the formula for incentive payments at the beginning of fiscal 2016. The Fiscal 2016 CIP also provides our CEO with discretion to modify individual executive officer payments by up to 10% and the Compensation Committee with the ability to adjust payments by up to 30% based on individual performance as determined by the Compensation Committee for our CEO and as recommended by our CEO for our other executive officers. All individual performance adjustments were to be approved by the Compensation Committee in its sole discretion.
Target Annual Cash Incentive Opportunities
Each participant in the Fiscal 2016 CIP was assigned a target annual cash incentive opportunity, the amount of which was calculated as a percentage of his or her annual base salary. The maximum annual cash incentive payment under the Fiscal 2016 CIP for each executive officer was 200% of his or her target annual cash incentive opportunity.
Executive Compensation
In May 2015, the Compensation Committee reviewed the target annual cash incentive opportunities of our executive officers, taking into consideration a competitive market analysis prepared by its compensation consultant, the recommendations of our CEO (except with respect to his own target annual cash incentive opportunity), and the other factors described above. Following this review, the Compensation Committee decided that no changes would be made to incentive targets, with the exception of Mr. May, who received a cash incentive target increase from 60% to 65% associated with his promotion to his current role. The target annual cash incentive opportunities of the Named Executive Officers for fiscal 2016 were as follows:
|
Named Executive Officer
|
Fiscal 2016 Target
Annual Cash
Incentive
Opportunity
(as a percentage of
base salary)
|
Fiscal 2016 Target
Annual Cash
Incentive
Opportunity
($)
|
|
Mr. Howe
|
|
|
100
|
%
|
|
$
|
650,000
|
|
|
Mr. Jenson
|
|
|
100
|
%
|
|
$
|
515,000
|
|
|
Mr. Erwin
|
|
|
65
|
%
|
|
$
|
260,000
|
|
|
Mr. Jones
|
|
|
65
|
%
|
|
$
|
263,250
|
|
|
Mr. May
|
|
|
65
|
%
|
|
$
|
227,500
|
|
Corporate Performance Measures
In fiscal 2016, the Compensation Committee selected adjusted revenue and a non-GAAP earnings-per-share measure ("Adjusted EPS") as the corporate performance measures for purposes of the Fiscal 2016 CIP. These performance measures were weighted 50% for selected Adjusted Revenue and 50% for Adjusted EPS. The Compensation Committee selected these performance measures because it believed that achieving our Adjusted Revenue and Adjusted EPS target levels for fiscal 2016 would effectively align the interest of our executive officers with the interests of our stockholders and reflect success in key financial areas critical to our long-term success.
|
|
|
|
|
Fiscal 2016 Cash Incentive Plan
Performance Measure
|
Definition
|
Rationale
|
|
Adjusted revenue
1
|
Revenue adjusted to reflect the impact of acquisitions and divestitures during the year.
|
Revenue growth is important to the creation of long-term stockholder value because it is a reflection of management's ability to grow our top line through execution of our digital marketing ecosystem strategy.
|
|
Adjusted EPS
1
|
Earnings per share ("EPS") on a Non-GAAP basis before incentive compensation expense. Adjusted EPS also excludes stock-based compensation expenses, amortization of acquired intangibles, one-time business separation and transformation expenses, restructuring and impairment charges, and the impact of acquisitions and divestitures during the year.
|
EPS is important because it reflects our ability to grow our top line while running an efficient business and effectively managing capital.
|
|
1
|
See Schedule 1 on page 41-42 for a reconciliation of our GAAP revenue to Adjusted Revenue and our GAAP earnings-per-share to overall Non-GAAP earnings-per-share and Adjusted EPS.
|
In May 2015, the Compensation Committee set the target levels and the payment percentages for each of the corporate performance measures for the Fiscal 2016 Cash Incentive Plan: The threshold, target, and maximum performance levels of the corporate performance measures were as follows:
|
Corporate Performance Measure
|
Threshold
Performance Level
|
Target Performance
Level
|
Maximum
Performance Level
|
|
Adjusted Revenue*
|
|
$
|
948,000
|
|
|
$
|
1,053,900
|
|
|
$
|
1,159,000
|
|
|
Adjusted EPS
|
|
$
|
0.83
|
|
|
$
|
0.93
|
|
|
$
|
1.02
|
|
|
Funding
|
|
Up to 50%
|
|
|
Up to 100%
|
|
|
Up to 162%
|
|
Payments under threshold levels are capped at 25% and can be reduced to zero at the discretion of the Compensation Committee.
Maximum individual payments are capped at 200% subject to overall corporate funding.
As provided in the Fiscal 2016 CIP, the corporate performance measures were subject to adjustment by the Compensation Committee in recognition of unusual or nonrecurring events affecting us, any subsidiary or affiliate, our executive officers, or the financial statements of the Company or of any subsidiary or affiliate; in the event of changes in applicable laws, regulations or accounting principles; or in the event the Compensation Committee determined that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the plan, subject to certain exceptions for awards intended to comply with Section 162(m).
Fiscal 2016 Annual Cash Incentive Payments
In May 2016, the Compensation Committee determined the amounts to be paid under the Fiscal 2016 Plan based on our actual performance for the year with respect to each corporate performance measure. The actual results for fiscal 2016 were adjusted
revenue of $1,055.6 million and Adjusted EPS of $1.17. Adjusted Revenue and Adjusted EPS were calculated in accordance with the terms of the Fiscal 2016 Plan as determined by the Compensation Committee. See Schedule 1 on page 41-42 for a reconciliation of our GAAP revenue to Adjusted Revenue and our GAAP earnings-per-share to Adjusted EPS.
Because we exceeded the threshold Adjusted EPS amount of $0.83 during fiscal 2016, and we attained slightly above 100% of the adjusted revenue target payment, and 126% of the Adjusted EPS target payment, the Named Executive Officers were eligible to receive up to 131.5% of their target cash incentive opportunities under the Fiscal 2016 CIP.
|
Measure
|
Weighting
|
Threshold
|
Target
|
Maximum
|
Actual
|
Actual as a
Percentage
of Target
|
Payment as
a Percentage
of Target
|
|
Adjusted Revenue*
|
|
|
50
|
%
|
|
$
|
948,000
|
|
|
$
|
1,053,900
|
|
|
$
|
1,159,000
|
|
|
$
|
1,055,600
|
|
|
|
100
|
%
|
|
|
101
|
%
|
|
Adjusted EPS
|
|
|
50
|
%
|
|
$
|
0.83
|
|
|
$
|
0.93
|
|
|
$
|
1.02
|
|
|
$
|
1.17
|
|
|
|
126
|
%
|
|
|
162
|
%
|
|
Weighted Payment as a Percentage of Target
|
|
|
|
131.5
|
%
|
After reviewing the individual performance of each of the Named Executive Officers after the end of the fiscal year, our CEO determined that each individual had effectively performed the responsibilities associated with each of his individual performance goals and that, in the context of pursuing the objectives under our annual operating plan, had expended significant efforts to meet these goals in a dynamic and increasingly challenging environment. Consequently, our CEO decided not to exercise his discretion to modify individual executive officer payments and, instead, simply to work with the Compensation Committee to determine whether to adjust the payments to which they would otherwise be entitled to receive based on the achievement of our corporate performance objectives for the year. Based on these discussions, the Compensation Committee decided to increase the actual cash incentive payment for Mr. May in recognition of the successful performance of our Connectivity division and to slightly reduce the actual annual cash incentive payments to Messrs., Jenson, Erwin, and Jones. The Compensation Committee also decided to not make any adjustment for individual performance for our CEO.
Executive Compensation
The target annual cash incentive opportunities and the actual cash incentive payments made to the Named Executive Officers for fiscal 2016 were as follows:
|
Named Executive
Officer
|
Fiscal 2016
Target Annual
Cash
Incentive
Opportunity
($)
|
Financial
Performance
Factor
|
Target
Multiplied by
Financial
Performance
Factor
|
Actual
Annual
Cash
Incentive
Payment
|
Actual
Annual Cash
Incentive
Payment (as
a percentage
of target)
|
|
Mr. Howe
|
|
$
|
650,000
|
|
|
|
131.5
|
%
|
|
$
|
854,750
|
|
|
$
|
854,750
|
|
|
|
131.5
|
%
|
|
Mr. Jenson
|
|
$
|
515,000
|
|
|
|
131.5
|
%
|
|
$
|
677,225
|
|
|
$
|
673,000
|
|
|
|
130.9
|
%
|
|
Mr. Erwin
|
|
$
|
260,000
|
|
|
|
131.5
|
%
|
|
$
|
341,900
|
|
|
$
|
340,000
|
|
|
|
130.9
|
%
|
|
Mr. Jones
|
|
$
|
263,250
|
|
|
|
131.5
|
%
|
|
$
|
346,174
|
|
|
$
|
344,000
|
|
|
|
130.9
|
%
|
|
Mr. May
|
|
$
|
227,500
|
|
|
|
131.5
|
%
|
|
$
|
299,163
|
|
|
$
|
310,000
|
|
|
|
135.0
|
%
|
Long-Term Incentive Compensation
The Compensation Committee believes long-term incentive compensation is an effective tool for focusing our executive officers, including the Named Executive Officers, on driving increased stockholder value over a multi-year period, provides a meaningful reward for appreciation in our stock price and long-term value creation, and motivates them to remain employed with us. Long-term incentive compensation can also serve to discourage inappropriate short-term risk-taking behaviors.
As with their other elements of compensation, the Compensation Committee determines the amount of long-term incentive compensation for our executive officers as part of its annual compensation review and after taking into consideration a competitive market analysis prepared by its compensation consultant, the recommendations of our CEO (except with respect to his own long-term incentive compensation), the outstanding equity holdings of each executive officer, the projected impact of the proposed awards on our earnings, the proportion of our total shares outstanding used for annual employee long-term incentive compensation awards (our "burn rate") in relation to the median proportions of the companies in our compensation peer group, the potential voting power dilution to our stockholders (our "overhang") in relation to the median practice of the companies in our compensation peer group, and the other factors described above.
For fiscal 2016, the Compensation Committee provided long-term incentive compensation opportunities to our executive officers, including the Named Executive Officers, in the form of options to purchase shares of our common stock (30%), RSU awards (30%), and PSU awards (40%). The mix of equity awards among stock options, RSU awards, and PSU awards reflected the Compensation Committee's objective of providing equity awards which align the compensation of our executive officers with the interests of our stockholders, reward our executive officers for our performance, and encourage their retention. The Committee sets long-term incentive target amounts based on the executives' responsibilities, length of service, demonstrated personal performance, Company performance, internal pay equity, tax considerations, and market and peer group data.
The equity awards granted to the Named Executive Officers for fiscal 2016 were as follows:
|
Named Executive
Officer
|
Stock Options
Granted
(number of shares)
|
Restricted Stock
Units Granted
(number of shares)
|
Performance Stock
Units Granted
(number of shares)
|
Total
Grant
Date Fair
Value ($)
|
|
Mr. Howe
|
|
|
174,847
|
|
|
|
65,180
|
|
|
|
86,907
|
|
|
$
|
3,828,601
|
|
|
Mr. Jenson
|
|
|
71,759
|
|
|
|
26,786
|
|
|
|
35,714
|
|
|
$
|
1,572,753
|
|
|
Mr. Erwin
|
|
|
63,571
|
|
|
|
15,723
|
|
|
|
41,929
|
|
|
$
|
1,506,068
|
|
|
Mr. Jones
|
|
|
20,833
|
|
|
|
7,776
|
|
|
|
10,369
|
|
|
$
|
456,601
|
|
|
Mr. May
|
|
|
27,778
|
|
|
|
10,369
|
|
|
|
106,133
|
|
|
$
|
880,203
|
|
Stock Options and RSU Awards
The stock options and RSU awards granted to our executive officers in fiscal 2016 vest annually in equal increments over a period of four years beginning on the first anniversary of the date of grant. The four-year vesting period for stock options and RSU awards is intended to encourage retention while rewarding increases in the price of our common stock.
The following graph explains the design of the fiscal 2016 stock options and RSU awards:
Fiscal 2016 PSU Awards
The PSU awards granted to our executive officers in fiscal 2016 may be earned based on our financial performance as measured over a three-year performance period. Each PSU award entitles the holder to a number of shares of our common stock ranging from zero to 200% of the target number of units awarded. As described below, the three-year performance period for the PSU awards is intended to promote long-term earnings-per-share growth and stock price appreciation equal to or greater than the S&P Midcap 400 Index, as well as encourage retention.
The following graph and accompanying tables explain the design of the fiscal 2016 PSU awards:
The fiscal 2016 PSU awards will be earned based on our adjusted diluted EPS growth measured over a three-year performance period beginning April 1, 2015 and ending March 31, 2018 as set forth in the following table:
Fiscal 2016 PSU Awards — Performance Measure
|
Three-Year Earnings-Per-Share
Growth
|
Resulting Fiscal 2018
Adjusted EPS
|
Percentage of Performance
Units Earned
(1)
|
|
Below 10%
|
|
|
Below $0.90
|
|
|
|
0
|
|
|
|
11%
|
|
|
|
$0.90
|
|
|
|
50%
|
|
|
|
11%
|
|
|
|
$1.00
|
|
|
|
100%
|
|
|
|
11%
|
|
|
|
$1.10
|
|
|
|
200%
|
|
|
(1)
|
The performance units earned are to be linear between the specified target levels.
|
Executive Compensation
Further, the number of units earned is subject to adjustment by as much as +/-20% based on our total stockholder return ("TSR") compared to the S&P Midcap 400 Index over the performance period as set forth below, subject to an overall cap of 1.2:
Fiscal 2016 PSU Awards — Modifier
|
Total Stockholder Return Percentile
|
Total Stockholder Return Modifier
1
|
|
Below 25
th
|
0.8
|
|
50
th
|
1.0
|
|
75
th
and Above
|
1.2
|
|
(1)
|
The modifier between the specified target levels will be calculated using straight-line interpolation.
|
For purposes of the fiscal 2016 PSU awards, "total stockholder return" for us and the S&P Midcap 400 Index is to be calculated by dividing the difference between the starting and ending share price for the performance period (taking into account any dividends) by the starting share price. For purposes of calculating both our TSR and the TSR for the companies in the Index, the share prices will be calculated using the average of the opening and closing prices of the common stock for the 20 trading days preceding the starting and ending dates.
PSU Award for Mr. May
In June 2015, the Compensation Committee granted to Mr. May an additional PSU award covering 92,308 shares of our common stock. This PSU award may be earned based on our financial performance as measured over a two-year performance period ending June 30, 2017. This PSU award entitles Mr. May to a number of shares of our common stock ranging from zero to 100% of the target number of shares covered by the award.
The Compensation Committee granted this award to Mr. May as part of a broad-based equity grant to certain Connectivity key employees to ensure their retention during a critical time in the Company's growth. To provide effective motivation to these employees, the shares of our common stock subject to these awards will be earned only if we achieve or exceed certain specified stock price targets as established by the Compensation Committee at the time of grant.
Pursuant to the terms of his PSU award, provided Mr. May is continuously employed by us through the first regularly-scheduled meeting of the Compensation Committee following the last day of the performance period, he will vest in that number of shares of our common stock equal to 92,308 shares multiplied by the "share price factor" for the performance period. The "share price factor" will be determined based on the market price of a share of our common stock (which is to be calculated using the average of the opening and closing market prices of our common stock for the 20 trading days ending June 30, 2017) and is to be calculated as a percentage of that value (ranging from 0% to 100%) based on such value, with a threshold value of $25.00 or less resulting in a share price factor of 0% and a maximum value of $55.00 or more resulting in a share price factor of 100%.
Fiscal 2014 PSU Awards
The three-year performance period for fiscal year 2014 performance units ("2014 PSUs") was completed on March 31, 2016. The 2014 PSU award agreements required attainment of adjusted earnings per share for fiscal year 2016 ("FY2016 EPS") equal to at least $1.00 as a precondition to any payout under the 2014 PSUs. In calculating FY2016 EPS, certain adjustments to overall Non-GAAP EPS were required under the terms of the award agreements. Specifically, targeted FY2016 EPS associated with discontinued operations (the IT Infrastructure Management and 2Touch businesses) were added back, and required adjustments for non-cash compensation (adjusted for acquisitions), purchased intangible amortization (adjusted for acquisitions) and acquisitions were made, resulting in adjusted FY2016 EPS of $0.98, which is below the payout threshold. The Compensation Committee determined that the awards were forfeited.
Welfare and Health Benefits
Our executive officers, including the Named Executive Officers, are eligible to participate in the same tax-qualified retirement and welfare plans as our other full-time employees. We sponsor a Section 401(k) plan that provides for employer matching contributions paid in shares of our common stock, subject to specified vesting requirements. Our executive officers are also eligible to receive supplemental retirement benefits through our non-qualified retirement plan. We believe these benefits are important for attracting, motivating, rewarding, and retaining our executive officers, and are comparable to those retirement benefits being provided by companies in our compensation peer group.
Defined Benefit Pension Plan
None of our executive officers, including none of the Named Executive Officers, participate in or have an account balance in a tax-qualified defined benefit pension plan maintained by us.
Supplemental Executive Retirement Plan
While we do not maintain a defined benefit pension plan, our executive officers, including the Named Executive Officers, are eligible to participate in our non-qualified supplemental executive retirement plan (the "SERP") which enables them to contribute their pre-tax income into the plan through payroll deductions. We match contributions at a rate of 50% for each dollar contributed by a participant (up to 6% of his or her compensation) but only to the extent that the maximum matching contribution has not already been made under the Section 401(k) plan. These employer matching contributions are subject to a vesting requirement.
Health Benefit Plans
We maintain several broad-based employee benefit plans in which our executive officers, including the Named Executive Officers, are permitted to participate on the same terms as other employees who meet applicable eligibility criteria, subject to legal limitations on the amounts that may be contributed or the benefits that may be payable under the plans. These include health benefits, life insurance, disability benefits, and an employee stock purchase plan. We believe these benefits encourage the overall health, stability and well-being of our executive officers and are comparable to those plans being provided by the companies in our compensation peer group.
Perquisites and Other Personal Benefits
We do not view perquisites or other personal benefits as a significant component of our executive compensation program. We describe the perquisites and other personal benefits provided to the Named Executive Officers in footnote 4 to the Summary Compensation Table elsewhere in this proxy statement.
In the future, we may provide perquisites or other personal benefits in limited situations, such as where we believe it is appropriate to assist an individual in the performance of his or her duties, to make our executive officers more efficient and effective, and for recruitment and retention purposes. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee.
Employment Agreements
In fiscal 2015, we renewed the employment agreements with our CEO and CFO. Each of these employment agreements has an initial three-year term and automatically renews thereafter for successive one-year terms unless we or the applicable executive officer elects not to extend the term upon 180 days' notice. As renewed, these employment agreements provide for the compensation arrangements for each executive officer, including an annual base salary and a target annual cash incentive opportunity.
These agreements also set forth the rights and responsibilities of each party and protect both parties' interests in the event of a termination of employment by providing our CEO and CFO with the opportunity to receive certain specified post-employment payments and benefits in the event of certain terminations of employment, including following a change in control of the Company. Finally, these employment agreements prohibit our CEO and CFO from engaging directly or indirectly in competition with us, recruiting or soliciting any of our customers for a one-year period following termination of employment. These post-employment compensation arrangements are described in more detail in "Post-Employment Compensation" below and "Fiscal 2016 Potential Payments Upon Termination or Change in Control" elsewhere in this Proxy Statement.
For a description of the specific terms and conditions of the employment agreements with our CEO and CFO, see the discussion of "Employment Agreements" elsewhere in this Proxy Statement.
Executive Compensation
Post-Employment Compensation
We believe that having in place reasonable and competitive post-employment compensation arrangements are essential to attracting and retaining highly-qualified executive officers. Accordingly, our CEO and CFO are eligible to receive certain specified payments and benefits in the event of a termination of employment in connection with a change in control of the Company as provided in their employment agreements. In addition, the other Named Executive Officers are eligible to participate in our 2010 Executive Officer Severance Plan, as amended in May 2015.
Our post-employment compensation arrangements have been designed to provide reasonable compensation to executive officers who leave the Company under certain circumstances to facilitate their transition to new employment. Further, we seek to mitigate any potential employer liability and avoid future disputes or litigation by requiring a departing executive officer to sign and not revoke a general release and waiver of any and all claims against us as a condition to receiving post-employment compensation payments or benefits.
We do not consider specific amounts payable under these post-employment compensation arrangements when establishing annual compensation. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive.
In determining payment and benefit levels under the various circumstances triggering the post-employment compensation arrangements for the Named Executive Officers, the Compensation Committee has drawn a distinction between voluntary terminations of employment, terminations of employment for cause and terminations of employment without cause or as a result of a change in control of the Company. Payment in the latter circumstances has been deemed appropriate in light of the benefits to us described above, as well as the likelihood that the executive officer's departure is due, at least in part, to circumstances not within his or her control. In contrast, we believe that payments are not appropriate in the event of a termination of employment for cause or a voluntary resignation because such events often reflect either inadequate performance or an affirmative decision by the executive officer to end his or her relationship with us.
In the case of the post-employment compensation arrangements in the event of a termination of employment in connection with a change in control of the Company, we believe that these arrangements are designed to align the interests of management and stockholders when considering our long-term future. The primary purpose of these arrangements is to keep our most senior executive officers focused on pursuing all corporate transaction activity that is in the best interests of stockholders regardless of whether those transactions may result in their own job loss. Reasonable post-acquisition payments and benefits should serve the interests of both the executive officer and our stockholders.
All payments and benefits in the event of a change in control of the Company are payable only if there is a subsequent loss of employment by an executive officer (a so-called "double-trigger" arrangement). In the case of the acceleration of vesting of outstanding equity awards, we use this double-trigger arrangement to protect against the loss of retention power following a change in control of the Company and to avoid windfalls, both of which could occur if vesting accelerated automatically as a result of the transaction.
We have not provided excise tax payments (or "gross-ups") relating to a change in control of the Company and have no such obligations in place with respect to any of our executive officers, including any of the Named Executive Officers. Consistent with our historical practice, in the future we intend to refrain from providing excise tax payments (or "gross-ups") relating to a change in control of the Company.
For information on the post-employment compensation arrangements for the Named Executive Officers, as well as an estimate of the potential payments and benefits payable under these arrangements as of the end of fiscal 2016, see "Fiscal 2016 Potential Payments Upon Termination or Change in Control" elsewhere in this Proxy Statement.
Compensation-Related Risks
As described above, the Compensation Committee considers many factors in making compensation decisions for our executive officers. One such factor is the risk associated with our executive compensation program. During the first quarter of fiscal 2016, the Compensation Committee conducted its annual risk assessment of our compensation policies and practices covering all employees. After a review and assessment of potential risks, the Compensation Committee concluded that this program does not create risks that are reasonably likely to have a material adverse effect on the Company. Material risk in the design of our executive compensation program is mitigated in several ways:
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The weighting of our annual and long-term incentives appropriately balances the importance of our short-term and long-term financial and strategic objectives;
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Our long-term incentive compensation awards to our executive officers are allocated between options to purchase shares of our common stock, restricted stock unit awards that may be settled for shares of our common stock, and performance restricted stock unit awards pursuant to which shares of our common stock may be earned, which provides a balance of incentives;
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Our cash incentive plan contains caps on maximum payouts and the Compensation Committee retains authority to reduce incentive plan payouts in its discretion;
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Our performance-based plans are not overly reliant on a single performance measure and include the use of multi-year performance measures to mitigate the risk of our executive officers focusing exclusively on short-term growth at the expense of sustained profitability and increase in stockholder value; and
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Our stock ownership guidelines require our executive officers to hold significant amounts of our common stock, which commits an appropriate portion of their compensation to our long-term performance.
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Section 5: Other Compensation Policies and Practices
Stock Ownership Guidelines
We believe that linking a significant portion of our executive officers' current and potential future net worth to our success, as reflected in the value of our common stock, helps to ensure that they have a stake similar to that of our stockholders. Our executive officers are subject to stock ownership guidelines designed to ensure that they have a meaningful stake in the Company. These guidelines are intended to balance an executive officer's need for portfolio diversification while ensuring that his or her interests are closely aligned with the interests of our stockholders. These stock ownership guidelines are as follows:
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Executive Officer
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Stock Ownership Requirement
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Chief Executive Officer
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Three times annual base salary
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Other Executive Officers
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One times annual base salary
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Generally, each executive officer has five years from the date of appointment to attain the required ownership level. Under the guidelines, stock ownership includes shares of our common stock: purchased on the open market; owned jointly with, or separately by, immediate family members (spouse and dependent children); held in trust for the Named Executive Officer or an immediate family member; held through any Company-sponsored plan, such as an employee stock purchase plan, a qualified retirement plan, or a supplemental executive retirement plan; obtained through the exercise of stock options; and 50% of restricted stock unit awards (after deduction of applicable federal and state taxes).
Until his or her required ownership level is met, an executive officer is expected to retain 50% of the net shares of our common stock acquired upon option exercises, and 50% of the shares of our common stock issued upon the vesting of a restricted stock unit award or performance stock unit award (after deduction of applicable federal and state taxes). Failure to meet or, in unique circumstances, to show sustained progress toward meeting the above guidelines may result in a reduction in future equity awards or cash incentive payouts in the form of shares of our common stock.
As of March 31, 2016 each of the Named Executive Officers had satisfied his or her stock ownership requirement.
Please see the section entitled "Stock Ownership" elsewhere in this proxy statement for a presentation of the equity holdings of our executive officers, including the Named Executive Officers.
Compensation Recovery ("Clawback") Policy
We maintain a compensation recovery ("clawback") policy which provides that if we are required to prepare an accounting restatement due to material noncompliance with any financial reporting requirement under the federal securities laws as a result of the intentional misconduct by an executive officer with a title of Senior Vice President or higher, our Board of Directors may require reimbursement for any bonus or other incentives (including equity awards) earned above what would have been earned under the restated financials, including any profits realized from the sale of our equity securities, that was paid to any executive officer during the 12-month period preceding the first public issuance or filing with the SEC of the financial document in which the material noncompliance was contained. The independent members of our Board of Directors will determine whether material noncompliance with a financial reporting requirement is the result of intentional misconduct of the executive officer.
Executive Compensation
Notwithstanding the foregoing, we intend to evaluate this policy and take further action with respect to the recovery of excess incentive-based compensation that our Board of Directors determines to be necessary or advisable to comply with the requirements of applicable law (including, without limitation, Section 304 of the Sarbanes Oxley Act of 2002 and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act).
Policy Prohibiting Hedging or Pledging of Our Equity Securities
Our Insider Trading Policy prohibits our executive officers, including the Named Executive Officers, and the members of our Board of Directors from engaging in short sales, as well as hedging or monetization transactions (such as zero-cost collars and forward sales contracts) that involve the establishment of a short position in our common stock. In addition, our executive officers, including the Named Executive Officers, are prohibited from holding shares of our common stock in a margin account or otherwise pledging shares of our common stock as collateral for a loan.
Section 6: Tax and Accounting Considerations
The Compensation Committee periodically reviews the potential impact of the applicable tax and accounting rules on the material elements of our executive compensation program. These factors are considered by the Compensation Committee along with the other factors described above when making decisions about the annual and long-term incentive compensation awards for our executive officers.
Deductibility of Executive Compensation
Generally, Section 162(m) of the Code disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to their chief executive officer and each of the three other most highly-compensated executive officers (other than the chief executive officer and chief financial officer) whose compensation is required to be disclosed to our stockholders under the Exchange Act in any taxable year. Remuneration in excess of $1 million may only be deducted if it is "performance-based compensation" within the meaning of Section 162(m) or qualifies for one of the other exemptions from the deductibility limit. In making compensation decisions, the Compensation Committee considers the potential effects of Section 162(m) on the compensation paid to the Named Executive Officers.
Where reasonably practicable, the Compensation Committee seeks to qualify the performance-based incentive compensation paid or awarded to the Named Executive Officers for the "performance-based compensation" exemption from the deductibility limit of Section 162(m). As such, in approving the amount and form of compensation for the Named Executive Officers, the Compensation Committee considers all elements of our cost of providing such compensation, including the potential impact of Section 162(m). To maintain flexibility in compensating the Named Executive Officers in a manner designed to promote varying corporate goals, however, the Compensation Committee has not adopted a policy that all compensation payable to the Named Executive Officers that is subject to Section 162(m) must be deductible for federal income tax purposes. From time to time, the Compensation Committee may, in its judgment, approve compensation for the Named Executive Officers that does not comply with an exemption from the deductibility limit when it believes that such compensation is in the best interests of the Company and our stockholders. The Compensation Committee will continue to monitor the issue of deductibility of executive compensation, and make adjustments to our executive compensation program to maximize the deductibility of our executive compensation to the extent that it believes such result is consistent with the objectives of individual compensation elements and the best interests of the Company and our stockholders.
Taxation of "Parachute" Payments
Sections 280G and 4999 of the Code provide that executive officers and members of our Board of Directors who hold significant equity interests and certain other service providers may be subject to significant additional taxes if they receive payments or benefits in connection with a change-in-control of the Company that exceeds certain prescribed limits, and that we (or our successor) may forfeit a deduction on the amounts subject to this additional tax. We did not provide any executive officer, including any Named Executive Officer, with a "gross-up" or other reimbursement payment for any tax liability that the executive officer may owe as a result of the application of Sections 280G or 4999 during fiscal 2016, and we have not agreed and are not otherwise obligated to provide any executive officer with such a "gross-up" or other reimbursement.
Accounting for Stock-Based Compensation
We follow the Financial Accounting Standard Board's Accounting Standards Codification Topic 718 ("FASB ASC Topic 718") for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and members of our Board of Directors, including options to purchase shares of our common stock and other stock awards, based on the grant date "fair value" of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.