UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Lexmark International
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LEXMARK INTERNATIONAL, INC.

One Lexmark Centre Drive

Lexington, Kentucky 40550

April 8, 2016

Dear Shareholder:

You are cordially invited to attend the Annual Meeting of Shareholders of Lexmark International, Inc., which will be held on Friday, May 20, 2016, at 7:30 a.m. Eastern Daylight Time, at the Embassy Suites Hotel, 1801 Newtown Pike, Lexington, Kentucky 40511.

Consistent with prior years, we are taking advantage of the U.S. Securities and Exchange Commission rules that allow us to furnish proxy materials to you via the Internet. Unless you have already requested to receive a printed set of proxy materials, you will receive a Notice Regarding the Availability of Proxy Materials (“Notice”). The Notice contains instructions on how to access proxy materials and vote your shares via the Internet or, if you prefer, to request a printed set of proxy materials, including this Proxy Statement, our 2015 Annual Report and a form of proxy card, at no additional cost to you. We believe that this approach provides a convenient way for you to access your proxy materials and vote your shares, while lowering our printing and delivery costs and reducing the environmental impact associated with our Annual Meeting.

The attached Notice of Meeting and Proxy Statement describe the matters to be acted upon at the meeting. At the Annual Meeting we will also report on our operations and respond to questions from shareholders. It is important that your shares be represented and voted at the meeting whether or not you plan to attend. Therefore, we urge you to vote your shares.

I look forward to seeing you on May 20^th.

Sincerely,

Paul A. Rooke

Chairman and

Chief Executive Officer

PROXY SUMMARY
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
PROXY STATEMENT	1
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING AND VOTING	1
PROPOSAL 1 ELECTION OF DIRECTORS	6
COMPENSATION DISCUSSION & ANALYSIS	19
COMPENSATION COMMITTEE REPORT	41
EXECUTIVE COMPENSATION	42
SUMMARY COMPENSATION TABLE	42
GRANTS OF PLAN-BASED AWARDS	45
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END	48
OPTION EXERCISES AND STOCK VESTED	50
PENSION BENEFITS	51
NONQUALIFIED DEFERRED COMPENSATION	54
TERMINATION AND CHANGE IN CONTROL PAYMENTS	56
DIRECTOR COMPENSATION	62
2015 DIRECTOR COMPENSATION	64
SECURITY OWNERSHIP BY MANAGEMENT AND PRINCIPAL SHAREHOLDERS	66
EQUITY COMPENSATION PLAN INFORMATION	69
REPORT OF THE FINANCE AND AUDIT COMMITTEE	70
PROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS	71
PROPOSAL 3 SHAREHOLDER ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION	73
SUBMISSION OF SHAREHOLDER PROPOSALS	74
OTHER MATTERS	74
ANNEX A — RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

LEXMARK INTERNATIONAL, INC.

PROXY SUMMARY

This Proxy Summary contains highlights about Lexmark International, Inc. (the “Company”) and the Company’s 2016 Annual Meeting of Shareholders. This summary does not contain all of the information that you should consider in advance of the 2016 Annual Meeting, and we strongly encourage you to read the entire Proxy Statement and the Company’s 2015 Annual Report on Form 10-K carefully before voting.

  2015 Financial Performance

Transforming to a Higher Value Portfolio

• In 2015, the Company took a key step in our transition from a hardware-centric company to a higher-value end-to-end solutions company with the acquisition of Kofax Limited, nearly doubling the size of our Enterprise Software segment Non-GAAP revenue to an approximately $700 million run-rate business.

• Despite the significant currency headwinds from the strong U.S. dollar, the Company delivered solid financial performance. The key financial results utilized by the Company in its Pay for Performance analysis are summarized in the table below (shown in millions except share price):

	2015			2014		2013
Non-GAAP Revenue(1)	$	3,596		$	3,728	$	3,684
Non-GAAP Operating Income(1)	$	354		$	397	$	403
Free Cash Flow(2)	$	(5	)	$	282	$	313
Stock Price (12/31)	$	32.45		$	41.27	$	35.52

(1) Please refer to Annex A for a reconciliation of GAAP to Non-GAAP Revenue and Operating Income.

(2) Free Cash Flow is defined as net cash flows provided by operating activities minus purchases of property, plant & equipment plus proceeds from the sale of fixed assets. Refer to the Company’s Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013 on Page 61 of the Company’s Form 10-K for the fiscal year ended December 31, 2015 for the amounts underlying the Free Cash Flow calculations.

• We generated more than $1.4 billion in Non-GAAP revenue in our strategic focus areas of managed print services (“MPS”) and Enterprise Software, up 24% (32% in constant currency) year to year, and now comprising nearly 40% of total Non-GAAP revenue.

• 2015 marked the 16^th consecutive year of growth in MPS.

• Our Enterprise Software segment Non-GAAP revenue significantly exceeded our $500 million goal for 2015. Further, our Non-GAAP operating income margin of 24% exiting 2015 nearly met, a year early, our profit goal of 25% Non-GAAP operating income margin exiting 2016.

Working to Increase Profitability

• We announced restructuring actions in July 2015, which delivered $2 million in cash savings in 2015 and is expected to deliver approximately $55 million in cash savings in 2016, and approximately $65 million in annual savings beginning in 2017.

Creating Shareholder Value

• We continued to aggressively grow our software business by acquiring Claron Technology and Kofax Limited, immediately enhancing our enterprise content management and business process management offerings.

i

• We continued to execute on our capital allocation plan of returning greater than 50% of free cash flow to shareholders in 2015 by returning $30 million to shareholders through share repurchases and an additional $89 million through dividends.

• In October 2015, the Board of Directors announced that the Company would explore strategic alternatives to enhance shareholder value.

  Governance Highlights

Recent Updates

• Shareholder approved Board Declassification phase-in is now complete — Directors elected in 2016 to serve one-year terms.

• Transaction Committee comprised of independent directors established in connection with the Company’s process to explore strategic alternatives to stay apprised of significant developments and to provide guidance, advice and assistance to senior management during the process.

• The Company, with the oversight of the Finance & Audit Committee, made significant progress in its efforts to remediate the material weakness in internal control over accounting for income taxes, as reported in the Company’s Annual Report on Form 10-K, during fiscal year 2015.

Board of Directors

• 12 Directors; 11 are independent.

• Committee members are independent (except Executive Committee, which has one management Director).

• Executive sessions of Independent Directors, led by the Presiding Director, at each regularly-scheduled meeting.

• Limited membership on other public company boards.

• All Directors attended more than 75% of all Board and Committee meetings in 2015.

• All Finance & Audit Committee members are “financial experts.”

• Annual Board and Committee self-assessments.

• No former employees serve as Directors.

Shareholders

• Majority voting standard for uncontested Director elections.

• No super-majority voting requirements.

• No shareholder rights plan.

• Annual vote to ratify Independent Auditors.

• Best practices in our executive compensation program discussed below, including annual advisory vote to approve executive compensation (commonly referred to as “Say on Pay”).

  Executive Compensation Program Highlights

We pay for performance.

• We emphasize at-risk, performance-based compensation whereby more than 85% of our Chief Executive Officer’s pay is performance-based and more than 75%, on average, of our other Named Executive Officers’ pay is performance-based.

ii

• We establish performance objectives designed to promote the long-term success of the Company and maximize shareholder returns. The performance measures established for our annual incentive program (strategic revenue, operating income, cash cycle and free cash flow) and long-term incentive program (total shareholder return and return on invested capital, each relative to the S&P MidCap Technology Index, and combined services and software revenue growth) represent key drivers of our success in enhancing shareholder value.

• Target attainment goals are set at a moderate to difficult level and maximum attainment goals are set at a difficult level. Over the past five years, the Company has achieved performance in excess of the target level for annual incentive compensation two times (the 2013 and 2014 performance periods). The Company has achieved greater than the target level for long-term incentive compensation two times during the past five years (the performance-based restricted stock units for the 2015 performance period and the cash-based long-term incentive plan and performance-based restricted stock units for the 2013-2015 performance period).

• Based on our 2015 financial performance, no payouts were made to Named Executive Officers under the corporate objectives for our annual incentive plan, demonstrating the strong alignment between pay and performance.

• To assess the correlation of a Named Executive Officer’s compensation with the performance of the Company, the Compensation and Pension Committee believes that a Named Executive Officer’s compensation should be analyzed by looking at the amount realized versus the total compensation opportunity and the correlation of such amounts to Company performance. The following table reflects the CEO’s compensation opportunity from 2011 to 2015 versus the amount he has realized as of February 29, 2016:

CEO Compensation Opportunity	2011			2012			2013			2014			2015
Base Salary	$	800,000		$	800,000		$	850,000		$	850,000		$	850,000
Performance-Based Annual Bonus		800,000			960,000			1,020,000			1,020,000			1,020,000
Performance-Based Cash LTIP (3-Year Performance Period)		N/A			2,300,000			1,880,000			1,920,000			2,120,000
Performance-Based RSUs (3-Year Performance Period)		N/A			2,320,060			1,892,800			1,904,822			2,147,792
Performance-Based RSUs (1-Year Performance Period)		3,956,121			N/A			946,400			952,411			1,073,896
Time-Based RSUs		N/A			N/A			N/A			994,001			N/A
Total Compensation Opportunity	$	5,556,121		$	6,380,060		$	6,589,200		$	7,641,234		$	7,211,688
% at Risk		86	%		87	%		87	%		76	%		88	%
Amount Realized
Base Salary	$	800,000		$	800,000		$	850,000		$	850,000		$	850,000
Performance-Based Annual Bonus(1)		88,340			163,200			1,104,359			1,344,037			0
Performance-Based Cash LTIP (3-Year Performance Period)		N/A			650,900			2,162,000			TBD			TBD
Performance-Based RSUs (3-Year Performance Period)		N/A			1,273,124			3,008,000			TBD			TBD
Performance-Based RSUs (1-Year Performance Period)(2)		0			N/A			1,558,590			699,909			492,951
Time-Based RSUs(3)		N/A			N/A			N/A			448,188			N/A
Total Received as of 2/27/2015	$	888,340		$	2,887,224		$	8,682,949		$	3,342,134		$	1,342,951
Percentage of Total Opportunity Received as of 2/29/2016(4)		16	%		45	%		132	%		44	%		19	%
Unrealized Amount
Value of Unvested Earned Performance-Based RSUs and Unvested Time-Based RSUs as of 2/29/2016(5)	$	0		$	0		$	0		$	694,041		$	986,808

iii

(1) Mr. Rooke elected to defer 100% of his 2014 incentive compensation in excess of $500,000 to receive an award of deferred stock units (“DSUs”). Mr. Rooke deferred 100% of his 2013 incentive compensation award to receive an award of DSUs.

(2) For the 2015 performance period, Mr. Rooke earned 48,200 performance-based restricted stock units (“PRSUs”) of which 16,388 PRSUs became vested on February 24, 2016. For the 2014 performance period, Mr. Rooke earned 27,719 PRSUs of which 9,424 PRSUs became vested on February 24, 2015 and 9,527 PRSUs, including associated dividend equivalent units (“DEUs”), became vested on February 24, 2016. For the 2013 performance period, Mr. Rooke earned 38,968 PRSUs of which 13,249 PRSUs became vested on February 24, 2014, 13,271 PRSUs, including associated DEUs, became vested on February 24, 2015, and 13,824 PRSUs, including associated DEUs, became vested on February 24, 2016. The Company failed to achieve the minimum level of performance required to earn the PRSUs granted in 2011, and Mr. Rooke forfeited those PRSUs.

(3) Of the 23,900 time-based restricted stock units (“RSUs”) awarded to Mr. Rooke in 2014, 4,933 RSUs, including associated DEUs, vested on February 24, 2015, and 7,707 RSUs, including associated DEUs, vested on February 24, 2016.

(4) The percentage of total opportunity received as of February 29, 2016 was calculated by taking the total amount earned and paid to Mr. Rooke as of February 29, 2016, divided by his total compensation opportunity for the applicable year, including the compensation opportunity for any uncompleted performance periods.

(5) Based on the closing price of the Common Stock on February 29, 2016 ($31.02). For 2015, includes 31,812 unvested earned 2015 PRSUs. For 2014, includes 12,846 unvested RSUs, including associated DEUs and 9,528 unvested earned 2014 PRSUs, including associated DEUs.

• The amount realized for the performance-based compensation elements for the other Named Executive Officers reflects a similar correlation to Company performance.

Our pay practices are shareholder-friendly.

• We require our executive officers to own stock in the Company (five (5) times annual base salary for the CEO and three (3) times annual base salary for other executive officers).

• Stock ownership guidelines exclude unexercised stock options, unvested restricted stock units and unvested deferred stock units and require that until the ownership guideline is met that the CEO retain 100% (50% for other executive officers) of the net after-tax shares received by the executive from the exercise of any stock options or the vesting and settlement of any restricted stock units.

• Incentive compensation and equity compensation are subject to forfeiture and recoupment under the Company’s Executive Compensation Recovery Policy.

• We provide minimal perquisites and we do not generally provide tax gross-ups on such perquisites, except in the case of certain relocation expenses, consistent with our relocation policy.

• The Company and executive officers agreed to eliminate excise tax gross-ups on change in control agreements in 2010.

• The Company terminated its only non-shareholder approved incentive plan in 2011.

• The Company has implemented shareholders’ preference for an annual Say on Pay vote.

• The Company’s 2013 Equity Compensation Plan (the “2013 Plan”), which was approved by shareholders in April 2013 includes the following shareholder-friendly features:

• The 2013 Plan is administered by the Compensation and Pension Committee, all members of which are independent directors.

• The 2013 Plan includes a flexible share pool that reduces the share reserve approximately twice as rapidly when full value awards, such as restricted stock, restricted stock units and performance-based restricted stock units, are granted.

• The 2013 Plan does not include an “evergreen” feature.

• Any material changes to the 2013 Plan (including any increase to the 2013 Plan’s share reserve, other than in connection with stock splits or other similar recapitalization events) require approval of the Company’s shareholders.

iv

• Stock options and stock appreciation rights may not be “repriced” without shareholder approval.

• “Reload” stock options are prohibited under the 2013 Plan.

• Restricted stock and restricted stock units awarded under the 2013 Plan require a minimum three-year vesting period for service-based awards or a minimum one-year vesting period for performance-based awards.

• The 2013 Plan generally provides for “double-trigger” vesting for awards upon a change in control (i.e, awards generally vest only if a participant’s employment is involuntarily terminated in connection with a change in control), except in the case where the Company does not survive and the acquirer does not agree to assume or substitute for outstanding awards.

• Dividend equivalents may not be paid on any performance awards under the 2013 Plan unless and until the performance conditions are satisfied.

• Shares that are used to satisfy the exercise price of options, or applicable withholding taxes, may not be recycled and reused under the 2013 Plan.

  Voting Matters

Management Proposals	Board vote Recommendation	Page reference (for more detail)
Proposal 1: Election of twelve Directors, each for a one-year term expiring in 2017	FOR EACH DIRECTOR NOMINEE	6
Proposal 2: Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s Independent Auditors for 2016	FOR	71
Proposal 3: Approve an advisory vote on Executive Compensation	FOR	73

v

  Proposal 1—Election of Directors

The following table provides summary information about our nominees for election to the Board of Directors for a one-year term expiring in 2017. Additional information for each nominee and for continuing Directors may be found beginning on page 6.

Name	Director since	Primary occupation	Independent	# of other public company boards
Ralph E. Gomory	1991	President Emeritus of the Alfred P. Sloan Foundation	X	0
Michael J. Maples	1996	Retired Executive Vice President of Microsoft Corporation	X	1
Stephen R. Hardis	1996	Retired Chairman and CEO of Eaton Corporation	X	1
William R. Fields	1996	Chairman of Four Corners Sourcing International	X	1
Robert Holland, Jr.	1998	Managing Director of Essex Lake Group, LLC	X	1
Kathi P. Seifert	2006	Retired Executive Vice President of Kimberly-Clark Corporation	X	2
Jean-Paul L. Montupet	2006	Retired Executive Vice President of Emerson Electric Co.	X	3
Jared L. Cohon	2010	President Emeritus of Carnegie Mellon University	X	2
J. Edward Coleman	2010	Former Chairman and CEO of Unisys, Inc.	X	1
Paul A. Rooke	2010	Chairman and CEO of Lexmark International, Inc.		0
Sandra L. Helton	2011	Former Executive Vice President & CFO of Telephone & Data Systems, Inc.	X	1
W. Roy Dunbar	2011	Former Chairman and CEO of Network Solutions, Inc.	X	1

  Proposal 2—Ratify the Appointment of Independent Auditors

We are asking shareholders to ratify the appointment of PricewaterhouseCoopers LLP (“PwC”) as the Company’s independent registered public accounting firm for 2016. Information concerning PwC’s fees in 2015 and 2014 is set forth in the table below. Additional information for such fees may be found on page 71.

Type of Fees	2015		2014
Audit Fees	$	7,886,723	$	5,273,500
Audit-Related Fees		198,465		96,955
Tax Fees		1,168,250		32,310
All Other Fees		320,000		249,000
Total	$	9,573,438	$	5,651,765

vi

  Proposal 3—Advisory Vote on Executive Compensation

We are asking shareholders to approve an advisory, non-binding vote on the compensation paid to the Company’s Named Executive Officers as disclosed in this Proxy.

The Compensation and Pension Committee’s goal in setting executive compensation is to provide total compensation opportunities that are market competitive and supportive of the Company’s strategy to attract, develop, motivate and retain outstanding executive talent. The Company’s executive compensation programs are centered on a pay-for-performance culture that are designed to reward executive officers for superior Company and individual performance while encouraging behavior that is in the long-term best interests of the Company and its shareholders.

  Meeting Information

Date and Time:	May 20, 2016 at 7:30 a.m. Eastern Daylight Time
Place:	Embassy Suites Hotel 1801 Newtown Pike Lexington, KY 40511
Record Date:	March 28, 2016
Voting:	Shareholders at the close of business on the record date may vote at the 2016 Annual Meeting. Each share is entitled to one vote on each matter to be voted upon at the 2016 Annual Meeting.
Attendance:	Shareholders do not require a ticket to attend the 2016 Annual Meeting. However, shareholders wishing to attend the 2016 Annual Meeting should be prepared to present (i) valid photo identification and (ii) if your shares are held in a stock brokerage account or by a bank, trustee or nominee, proof of beneficial ownership as of the Record Date.

vii

LEXMARK INTERNATIONAL, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

ON FRIDAY, MAY 20, 2016

April 8, 2016

To the Shareholders:

The Annual Meeting of Shareholders of Lexmark International, Inc. (the “Company”) will be held on Friday, May 20, 2016, at 7:30 a.m. Eastern Daylight Time, at the Embassy Suites Hotel, 1801 Newtown Pike, Lexington, Kentucky 40511. The registration desk will open at 7:00 a.m. At the Annual Meeting, shareholders will be asked to:

1. Elect 12 Directors, each for a one-year term expiring in 2017;

2. Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm (the “Independent Auditors”) for the Company’s fiscal year ending December 31, 2016;

3. Approve an advisory vote on executive compensation; and

4. Transact such other business as may properly come before the meeting or any adjournment or postponement thereof.

Only shareholders of record at the close of business on March 28, 2016 will be entitled to notice of, and to vote at, the Annual Meeting or any adjournment or postponement thereof. A list of shareholders entitled to vote will be kept at the Company’s offices at One Lexmark Centre Drive, Lexington, Kentucky 40550 for a period of ten days prior to the Annual Meeting. Please vote before the Annual Meeting in one of the following ways:

1. By Internet — You can vote over the Internet at www.proxyvote.com by entering the control number found on your Notice or proxy card;

2. By Telephone — You can vote by telephone by calling 1-800-690-6903 and entering the control number found on your Notice or proxy card; or

3. By Mail — If you received your proxy materials by mail, you can vote by signing, dating and mailing the proxy card in the pre-paid enclosed envelope.

By Order of the Board of Directors,

Robert J. Patton

Secretary

PLEASE VOTE YOUR SHARES WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON. YOUR VOTE IS IMPORTANT.

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of Shareholders to be held on May 20, 2016:

The Proxy Statement and 2015 Annual Report are

available at http://investor.lexmark.com.

LEXMARK INTERNATIONAL, INC.

One Lexmark Centre Drive

Lexington, Kentucky 40550

PROXY STATEMENT

Questions and Answers about the 2016 Annual Meeting and Voting

Why did I receive these Proxy Materials?

We are providing these proxy materials in connection with the solicitation by the Board of Directors of Lexmark International, Inc., a Delaware corporation (the “Company”), of proxies to be voted at our 2016 Annual Meeting of Shareholders (the “Annual Meeting”) and at any adjournment or postponement of such Meeting. The Annual Meeting will take place on Friday, May 20, 2016, beginning at 7:30 a.m. Eastern Daylight Time, at the Embassy Suites Hotel, 1801 Newtown Pike, Lexington, Kentucky 40511.

Do I need a ticket to attend the Annual Meeting?

No, an admission ticket is not required to attend the Annual Meeting. However, the Annual Meeting is limited to shareholders of the Company or their designated representatives. If you are a shareholder wishing to attend the Annual Meeting, please be prepared to present: (1) your valid photo identification, such as a driver’s license or passport; and (2) if your shares are held in a stock brokerage account or by a bank, trustee or nominee, you will need to bring proof of beneficial ownership as of the record date, such as your most recent account statement reflecting your stock ownership as of March 28, 2016 or a copy of the voting instruction card provided by your broker, bank, trustee or nominee or similar evidence of ownership.

Who is entitled to vote at the Annual Meeting?

Only shareholders of record at the close of business on March 28, 2016 are entitled to receive the Notice of Annual Meeting and to vote their shares at the Annual Meeting. As of such date, there were 62,634,593 shares (excluding shares held in treasury) of the Company’s Class A Common Stock, par value $0.01 per share (the “Common Stock”), issued and outstanding and entitled to vote. Each share of Common Stock entitles the holder to one vote on each matter properly brought before the Annual Meeting.

What is the difference between holding shares as a Shareholder of Record and as a Beneficial Owner?

Most of our shareholders hold their shares through a broker, bank, trustee or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.

If your shares are registered directly in your name with the Company’s registrar and transfer agent, Computershare Trust Company, N.A., you are considered the “shareholder of record” with respect to those shares. This Notice of Annual Meeting and Proxy Statement have been provided directly to you by the Company.

If your shares are held in a stock brokerage account, or by a bank, trustee or other nominee, you are considered the “beneficial owner” of those shares, and this Notice of Annual Meeting and Proxy Statement has been forwarded to you by your broker, bank, trustee or nominee who is considered the shareholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank, trustee or nominee how to vote your shares by using the voting instruction card or by following their instructions for voting by telephone or on the Internet.

1

What does it mean to give a Proxy and how do I vote if I am a Shareholder of Record?

Giving a proxy means that you authorize the persons named on the proxy card to vote your shares at the Annual Meeting in the manner directed. To vote by proxy, you may use one of the following methods if you are a shareholder of record (that is, you hold our stock in your own name):

• By Internet — You can vote over the Internet at www.proxyvote.com by entering the control number found on your Notice or proxy card. If you vote by Internet, you do not have to return your proxy or voting instruction card.

• By Telephone — You can vote by telephone by calling 1-800-690-6903 and entering the control number found on your Notice or proxy card. If you vote by telephone, you do not have to return your proxy or voting instruction card.

• By Mail — If you received your proxy materials by mail, you can vote by signing, dating and mailing the proxy card in the pre-paid enclosed envelope. If you are a shareholder of record and you return your signed proxy card but do not indicate your voting preferences, the persons named in the proxy card will vote the shares represented by your proxy card as recommended by the Board of Directors.

Shareholders of record who attend the Annual Meeting may vote in person at the meeting. You may also be represented by another person at the meeting by executing a proper proxy designating that person.

We request that shareholders vote as soon as possible. When the proxy is properly returned, the shares of stock represented by the proxy will be voted at the Annual Meeting in accordance with the instructions contained in the proxy.

How do I vote if I am a Beneficial Owner?

If you are the beneficial owner of shares, we recommend that you follow the voting instructions in the materials you receive from your broker, bank, trustee or other nominee.

What can I do if I change my mind after I vote my shares?

If you are a shareholder of record, you have the power to revoke your proxy or change your vote at any time before the proxy is voted at the Annual Meeting. You can revoke your proxy or change your vote in one of four ways:

• by sending a signed notice of revocation to the Secretary of the Company to revoke your proxy;

• by sending to the Secretary of the Company a completed proxy card bearing a later date than your original proxy indicating the change in your vote;

• by logging on to www.proxyvote.com in the same manner you would to submit your proxy electronically or calling 1-800-690-6903, and in each case following the instructions to revoke or change your vote; or

• by attending the Annual Meeting and voting in person, which will automatically cancel any proxy previously given, or by revoking your proxy in person, but attendance alone will not revoke any proxy that you have given previously.

If you choose any of the first three methods, you must take the described action no later than the beginning of the Annual Meeting. Once voting on a particular matter is completed at the Annual Meeting, you will not be able to revoke your proxy or change your vote as to that matter.

If you are a beneficial owner of shares, you must contact your broker, bank, trustee or other nominee to change your vote.

What shares are included on the Proxy Card?

If you are a shareholder of record, you will receive one proxy card for all the shares you hold of record in certificate form and in book-entry form. If you are an employee or former employee of the Company and hold shares in the Lexmark Savings Plan, your proxy card also includes those shares.

2

How do I vote shares held in the Lexmark Savings Plan

If you are an employee or former employee of Lexmark or its subsidiaries who has a right to vote shares acquired through your participation in the Lexmark Savings Plan, a tax-qualified 401(k) plan, you are entitled to instruct the trustee, Fidelity Management Trust Company, how to vote the shares allocated to your account. The trustee will vote those shares as you instruct. Your proxy card covers any shares held in your Lexmark Savings Plan account, as well as any other shares registered in your name as of the record date. To allow sufficient time for the trustee to vote, your voting instructions must be received by no later than 11:59 p.m. Eastern Daylight Time on May 17, 2016. If you do not provide instructions by that time, your shares held in the Lexmark Savings Plan will be voted by the trustee in accordance with the rules of the Lexmark Savings Plan.

What is “householding” and how does it affect me?

We have adopted a procedure approved by the U.S. Securities and Exchange Commission (“SEC”), referred to as “householding.” This procedure allows us to deliver multiple Notices in a single envelope or a single copy of an Annual Report and Proxy Statement to any household where two or more shareholders reside if we believe the shareholders are members of the same family. This rule benefits shareholders by reducing the volume of duplicate information they receive at their households. It also benefits us by reducing our printing and mailing costs.

We are mailing Notices in a single envelope, or a single set of proxy materials, as applicable, to each household this year unless the shareholders in these households provided instructions to the contrary in response to a notice previously mailed to them. However, for shareholders who previously requested a printed set of the proxy materials, we are mailing each shareholder in a single household a separate proxy card or voting instruction form. If you prefer to receive your own copy of the proxy materials for this or future Annual Meetings and you are a registered holder, you may request a duplicate set at no cost to you by writing to Lexmark International, Inc., Attention: Investor Relations, One Lexmark Centre Drive, Lexington, Kentucky 40550 or by calling (859) 232-5568, and we will promptly furnish such materials. If a broker, bank, trustee or other nominee holds your shares, you may instruct such institution to send duplicate mailings by following the instructions on your voting instruction form or by contacting your broker, bank, trustee or other nominee.

If you hold some shares as a registered holder or through the Lexmark Savings Plan, and other shares in the name of a broker, bank, trustee or other nominee, we must send you proxy materials for each account. To avoid receiving duplicate sets of proxy materials, you may consolidate accounts or consent to electronic delivery as described in the following section.

Why did I receive a “Notice of Availability of Proxy Materials” but no Proxy Materials?

As in previous years, we are able to distribute the Annual Report and Proxy Statement to certain shareholders in a fast and efficient manner via the Internet pursuant to the SEC’s “notice and access” rules. This reduces the amount of paper delivered to a shareholder’s address and eliminates the cost of sending these documents by mail. On April 8, 2016, we mailed a “Notice of Availability of Proxy Materials” to participating shareholders, which includes instructions on how to access the Company’s Annual Report and Proxy Statement on the Internet.

You may elect to receive all future Annual Reports and Proxy Statements by mail instead of viewing them via the Internet. To make an election, please log on to www.proxyvote.com and enter your control number.

Can I access the Proxy Statement and Annual Report on the Internet?

Even if you do not participate in “notice and access,” the Proxy Statement and 2015 Annual Report are available on our investor relations website at http://investor.lexmark.com. You may elect to view all future Annual Reports and Proxy Statements on the Internet instead of receiving them by mail. To make an election, please log on to www.proxyvote.com and enter your control number.

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Is there a list of Shareholders entitled to vote at the Annual Meeting?

A list of shareholders of record entitled to vote at the Annual Meeting will be available at the meeting and for ten days prior to the meeting at the Company’s offices at One Lexmark Centre Drive, Lexington, Kentucky 40550.

What is a Broker Non-Vote?

If you are a beneficial owner whose shares are held of record by a broker, you must instruct the broker how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal for which the broker does not have discretionary authority to vote. This is referred to as a “broker non-vote.” Broker non-votes are counted as present for purposes of determining the existence of a quorum, but will not be able to vote on those matters for which specific authorization is required under the rules of the New York Stock Exchange.

Under the New York Stock Exchange rules, your broker has discretionary authority to vote your shares on the ratification of PricewaterhouseCoopers LLP as the Company’s Independent Auditors, even if your broker does not receive voting instructions from you. However, your broker does not have discretionary authority to vote on the election of Directors or the advisory vote on executive compensation, without instructions from you. If you do not instruct your broker on these non-discretionary matters, a broker non-vote will occur and your shares will not be voted on these matters.

What is a quorum for the Annual Meeting?

The presence of shareholders representing a majority of all shares of Common Stock issued and outstanding and entitled to vote at the Annual Meeting, in person or represented by proxy, is necessary to constitute a quorum. Abstentions and broker non-votes are counted as present and entitled to vote for purposes of determining a quorum.

What are the voting requirements to elect the Directors and to approve each of the other Proposals in this Proxy Statement?

Votes may be cast “for” or “against” each respective nominee for Director or you may abstain from voting for one or more nominees for Director. The Directors to be elected at the meeting will be elected by a majority of the votes cast by the shareholders present in person or by proxy and entitled to vote. The affirmative vote of a majority of the shares of Common Stock present in person or by proxy and entitled to vote is required to approve the Company’s proposals other than the election of directors.

Abstentions may be specified on all proposals submitted to a shareholder vote, including the election of Directors. Abstentions will have no effect on the election of Directors because abstentions are not considered a vote cast. Abstentions on proposals other than the election of Directors will have the effect of a vote against such proposals.

How will my shares be voted at the Annual Meeting?

At the Annual Meeting, the proxies will vote your shares as you instruct. If you sign your proxy card and return it without indicating how you would like to vote your shares, your shares will be voted as the Board of Directors recommends, which is:

• FOR the election of each of the Director nominees named in Proposal 1 of this Proxy Statement;

• FOR the ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the 2016 fiscal year; and

• FOR the approval of the advisory vote on Executive Compensation.

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Could other matters be decided at the Annual Meeting?

As of the date of this Proxy Statement, we were not aware of any matters to be raised at the Annual Meeting other than the Proposals set forth in this Proxy Statement.

If you return your signed and completed proxy card or vote by telephone or on the Internet and any other matters are properly presented at the Annual Meeting for consideration, the proxies named on your proxy card will have the discretion to vote for you.

Who will pay for the cost of this Proxy Solicitation?

The Company is making this proxy solicitation and will bear the cost of soliciting proxies. In addition to the solicitation of proxies by use of the mail, proxies may be solicited by Directors, officers and regularly engaged employees or agents of the Company. The Company has also retained Georgeson LLC, 480 Washington Blvd., 26th Floor, Jersey City, NJ 07310, to assist in the solicitation for estimated fees of approximately $9,000 plus reasonable expenses. Brokers, nominees and other similar record holders will be requested to forward solicitation material and will be reimbursed by the Company upon request for their out-of-pocket expenses.

Who will count the votes?

Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of elections appointed for the meeting and the inspector will determine whether a quorum is present.

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PROPOSAL 1

ELECTION OF DIRECTORS

Action will be taken at the 2016 Annual Meeting of Shareholders to elect 12 Directors to serve until the 2017 Annual Meeting of Shareholders. The nominees for election at the 2016 Annual Meeting of Shareholders are Mr. Ralph E. Gomory, a Director since 1991; Mr. Michael J. Maples, a Director since 1996; Mr. Stephen R. Hardis, a Director since 1996; Mr. William R. Fields, a Director since 1996; Mr. Robert Holland, Jr., a Director since 1998; Ms. Kathi P. Seifert, a Director since 2006; Mr. Jean-Paul L. Montupet, a Director since 2006; Dr. Jared L. Cohon, a Director since 2010; Mr. J. Edward Coleman, a Director since 2010; Mr. Paul A. Rooke, a Director since 2010; Ms. Sandra L. Helton, a Director since 2011; and Mr. W. Roy Dunbar, a Director since 2011. The nominees are listed below with certain information about each of them.

Directors are elected by a majority of the votes cast by the shares entitled to vote if a quorum is present at the Annual Meeting. Abstentions and broker non-votes are counted for the purpose of determining whether a quorum exists at the Annual Meeting, but are not counted and have no effect on the determination of whether a majority exists with respect to a given nominee.

Nominees for One-Year Terms that will Expire in 2017

  Ralph E. Gomory     Age 86 Mr. Gomory has been a Director of the Company since March 1991. Since 2007, Mr. Gomory has served as a Research Professor at the Stern School of Business at New York University and President Emeritus of the Alfred P. Sloan Foundation. Mr. Gomory served as President of the Alfred P. Sloan Foundation from 1989 through his retirement in 2007. Prior to such time, Mr. Gomory was Senior Vice President for Science and Technology at International Business Machines Corporation (“IBM”).   In nominating Mr. Gomory to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Gomory to serve as a Director of the Company: significant executive management experience as a senior vice president of a Fortune 500 company publicly-traded on the New York Stock Exchange and 18 years as president of a billion dollar not-for-profit organization; significant research and technical background that led to significant developments in the computer industry; strong educational background with a doctorate in Mathematics from Princeton University; valuable understanding of the global economy, as co-author of Global Trade and Conflicting National Interests; financial expertise acquired serving on three audit committees of publicly-traded companies; and broad experience gained as a director of multiple publicly-held companies.

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Michael J. Maples     Age 73

Mr. Maples has been a Director of the Company since February 1996. Until July 1995, Mr. Maples was Executive Vice President of the Worldwide Products Group and a member of the Office of the President of Microsoft Corporation. Mr. Maples, who joined Microsoft in 1988, has over 40 years of experience in the computer industry. Before joining Microsoft, he was Director of Software Strategy for IBM. Mr. Maples has also served as a director of the following companies during the past five years: Multimedia Games Holding Company, Inc., from 2004 to 2014, Q2 Holdings, Inc. since 2012, and Sonic Corp. from 2005 to 2015. In nominating Mr. Maples to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Maples to serve as a Director of the Company: more than 30 years of executive management experience at two Fortune 500 companies publicly-traded on the New York Stock Exchange; significant experience in the computer industry, including software strategy; strong educational background with an MBA from Oklahoma City University; financial expertise acquired as an executive officer and serving on the audit committees of four publicly-traded companies; and significant experience gained as a director of more than ten publicly-traded companies.

Stephen R. Hardis     Age 80

Mr. Hardis has been a Director of the Company since November 1996. In July 2000, Mr. Hardis retired as Chairman and Chief Executive Officer of Eaton Corporation, which he joined in 1979 as Executive Vice President — Finance and Administration. He was elected Vice Chairman and designated Chief Financial and Administrative Officer in 1986. He became Chief Executive Officer of Eaton Corporation in August 1995 and Chairman in January 1996. Mr. Hardis has also served as a director of the following companies during the past five years: Axcelis Technologies, Inc. from 2000 to 2015, Marsh & McLennan Companies, Inc. from 1998 to 2011, and The Progressive Corporation since 1988. In nominating Mr. Hardis to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Hardis to serve as a Director of the Company: more than 20 years of executive management experience, including more than five years as chief executive officer and nearly ten years as chief financial officer of a Fortune 500 company that is publicly-traded on the New York Stock Exchange; significant international experience gained as an executive officer of Eaton Corporation, a diversified power management company with more than 70,000 employees that sells its products to customers in more than 150 countries; strong educational background with a bachelor’s degree from Cornell University and a master’s degree in Public and International Affairs from Princeton University; financial expertise gained as a chief executive officer and chief financial officer and serving on the audit committees of six publicly-traded companies; and significant experience gained as a director of multiple publicly-traded companies.

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William R. Fields     Age 66

Mr. Fields has been a Director of the Company since December 1996. Mr. Fields is Chairman of Fields Texas Limited LLC and Four Corners Sourcing International, General Partner of Origentics Rejuvenation Centers, and Managing Partner of Strategic Brands LLC. Previously, Mr. Fields served as Chairman and Chief Executive Officer of Factory 2-U Stores, Inc. from 2002 to 2003, President and Chief Executive Officer of Hudson’s Bay Company from 1997 to 1999 and as Chairman and Chief Executive Officer of Blockbuster Entertainment Group, a division of Viacom, Inc., from 1996 to 1997. Mr. Fields has also held numerous positions with Wal-Mart Stores, Inc., which he joined in 1971. He left Wal-Mart in March 1996 as President and Chief Executive Officer of Wal-Mart Stores Division, and Executive Vice President of Wal-Mart Stores, Inc. Mr. Fields has also served as a director of the following companies during the past five years: Car Charging Group, Inc. from 2013 to 2014; Electronic Cigarettes International Group, Ltd. from 2013 to 2015; and The Joint Corp. since 2014. In nominating Mr. Fields to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Fields to serve as a Director of the Company: significant executive management experience gained as a chief executive officer of four companies, including three publicly-traded companies; valuable experience in retail, supply chain, and consumer goods marketing; strong international experience gained as an executive officer at Wal-Mart Stores, Inc., one of the largest retail chains in the world, Blockbuster Entertainment Group, and Hudson’s Bay Company, Canada’s largest diversified general merchandise retailer; strong educational background with a bachelor’s degree in Economics and Business from the University of Arkansas; financial expertise acquired as a chief executive officer; and significant experience gained as a director of multiple publicly-held companies.

Robert Holland, Jr.     Age 75

Mr. Holland has been a Director of the Company since December 1998. Mr. Holland is a Managing Director of Essex Lake Group LLC, a profit enhancement advisory firm, a General Partner of The West Africa Fund and also maintains a consulting practice for strategic development assistance to senior management of Fortune 500 companies. Prior to October 2007, Mr. Holland was a General Partner and Industry Specialist with Cordova, Smart and Williams, a private equity firm. Previously, Mr. Holland served as Chief Executive Officer of WorkPlace Integrators, a company he acquired in June 1997 and sold in April 2001. Prior to that, Mr. Holland was President and Chief Executive Officer of Ben & Jerry’s Homemade, Inc. from February 1995 to December 1996, Chairman and Chief Executive Officer of Rokher-J Inc. from 1991 to 1995 and from 1981 to 1984, Chairman of Gilreath Manufacturing, Inc. from 1987 to 1991 and Chairman and Chief Executive Officer of City Marketing from 1984 to 1987. Mr. Holland is a former partner with McKinsey & Company, Inc. and held various positions at Mobil Oil Corporation from 1962 to 1968. He has also served as a director of the following companies during the past five years: Carver Bancorp, Inc. since 2000, and YUM! Brands, Inc. from 1997 to 2012. In nominating Mr. Holland to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Holland to serve as a Director of the Company: more than 20 years of executive management experience, including significant experience gained as a chief executive officer of five companies; significant experience in mergers and acquisitions; strong educational background with a bachelor’s degree in Mechanical Engineering from Union College and an MBA from the Zicklin School of Business at Baruch College (CUNY); financial expertise acquired as a chief executive officer and serving on the audit committees of six publicly-traded companies; and significant experience gained as a director of multiple publicly-traded companies.

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Kathi P. Seifert     Age 66

Ms. Seifert has been a Director of the Company since April 2006. In June 2004, Ms. Seifert retired as Executive Vice President of Kimberly-Clark Corporation, leading the company’s personal care businesses and sales organization. Previously, Ms. Seifert worked in various marketing positions at The Procter & Gamble Company, Beatrice Foods and Fort Howard Paper Company. Ms. Seifert has also served as a director of the following companies during the past five years: Appvion, Inc. (formerly Appleton Papers, Inc.) since 2004, Eli Lilly & Company since 1995, Revlon, Inc. from 2006 to 2015, and Supervalu Inc. from 2006 to 2013. In nominating Ms. Seifert to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Ms. Seifert to serve as a Director of the Company: significant executive management experience gained as an executive vice president of a Fortune 500 company publicly traded on the New York Stock Exchange; strong international experience acquired while in charge of Kimberly-Clark Corporation’s global personal care business; more than 30 years of sales and marketing experience; strong educational background with a bachelor’s degree in Business Administration from Valparaiso University; financial expertise acquired as an executive vice president and serving on the audit committees of three publicly-traded companies; and significant experience gained as a director of multiple publicly-traded companies.

JeanPaul L. Montupet     Age 67

Mr. Montupet has been a Director of the Company since October 2006, and has served as the Presiding Director since 2010. In December 2012, Mr. Montupet retired as Executive Vice President of Emerson Electric Co., where he had been in charge of the company’s industrial automation business since 2000, and as President of Emerson Europe, a position he had held since 2002. Mr. Montupet joined Emerson Electric Co. and was named Executive Vice President of its industrial motors and drives business with its acquisition in 1990 of Moteurs Leroy Somer SA, where he had been Chairman and Director of North American Operations. Mr. Montupet has also served as a director of the following companies during the past five years: Assurant, Inc. since 2012, IHS, Inc. since 2012, PartnerRe Ltd. from 2002 to March 2016, and as Chairman from 2010 to March 2016, and WABCO Holdings, Inc. since 2012. In nominating Mr. Montupet to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Montupet to serve as a Director of the Company: more than 20 years of executive management experience, including his recent position as an executive vice president and president of a $4 billion business division of a Fortune 500 company; strong international experience gained as the president of the European division of Emerson Electric Co., a diversified global manufacturing and technology company with more than 250 manufacturing locations worldwide and approximately 129,000 employees, and additional international experience acquired working in Europe, North America and Asia; financial expertise acquired as a president and as a chief financial officer and serving on the audit committees of two publicly-traded companies; strong educational background with an advanced business degree from HEC Paris, and additional experience gained as a director of multiple publicly-traded companies.

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Jared L. Cohon     Age 68

Dr. Cohon has been a Director of the Company since July 2010. Since July 2013, Dr. Cohon has served as President Emeritus and as a University Professor at Carnegie Mellon University. From 1997 to June 2013, Dr. Cohon served as President of Carnegie Mellon University. Prior to such time, Dr. Cohon served as the Dean of the School of Forestry & Environmental Studies and Professor of Environmental Systems Analysis at Yale University from 1992 to 1997; and in various educational and leadership roles, including Associate Dean of Engineering and Vice Provost for Research, at Johns Hopkins University from 1973 to 1992. Dr. Cohon also was appointed by President George W. Bush to serve on the Homeland Security Advisory Council in 2002 and reappointed by President Barack Obama in 2010. Dr. Cohon was elected to the National Academy of Engineering and the American Academy of Arts and Sciences in 2012. Dr. Cohon has also served as a director of the following companies during the past five years: Ingersoll-Rand plc since 2008; and Unisys, Inc. since 2013. In nominating Dr. Cohon to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Dr. Cohon to serve as a Director of the Company: significant executive management and financial experience gained as President of a major university; unique perspective on technological advancements gained as president of a global research university known for its leadership in technology programs; strong educational background with a bachelor’s degree in Civil Engineering from the University of Pennsylvania and a master’s degree and doctorate in Civil Engineering from the Massachusetts Institute of Technology (“MIT”); and significant experience gained as a director of multiple publicly-traded companies.

J. Edward Coleman     Age 64

Mr. Coleman has been a Director of the Company since July 2010. Mr. Coleman served as Chairman and Chief Executive Officer of Unisys Corporation from 2008 through December 1, 2014. Prior to such time, Mr. Coleman served as Chief Executive Officer of Gateway, Inc. from 2006 to 2008; as Senior Vice President and President of Enterprise Computing Solutions at Arrow Electronics from 2005 to 2006; and as Chairman and Chief Executive Officer of CompuCom Systems, Inc. from 2001 to 2004 and as Chief Executive Officer from 1999 to 2001. Prior to that, Mr. Coleman held various leadership and executive positions at Computer Sciences Corporation and IBM. Mr. Coleman has also served as a director of the following companies during the past five years: Ameren Corporation since February 2015 and Unisys Corporation from 2008 to 2014. In nominating Mr. Coleman to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Coleman to serve as a Director of the Company: significant executive management and financial experience gained as the Chief Executive Officer of three publicly-traded companies; more than 30 years of experience in the information technology business; extensive merger and acquisition experience, including the sale of Gateway, Inc. to Acer, Inc., while serving as the Chief Executive Officer of Gateway, Inc.; strong educational background with a bachelor’s degree in Economics from the College of William and Mary and an MBA from Indiana University; and significant experience gained as a director of multiple publicly-traded companies.

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Paul A. Rooke     Age 57

Mr. Rooke has been a Director of the Company since October 2010. Since April 2011, Mr. Rooke has been Chairman and Chief Executive Officer of the Company. From October 2010 to April 2011, Mr. Rooke served as President and Chief Executive Officer of the Company. Prior to such time, Mr. Rooke served as Executive Vice President of the Company and President of the Company’s former Imaging Solutions Division from July 2007 to October 2010, as Executive Vice President of the Company and President of the Company’s former Printing Solutions and Services Division from November 2002 to July 2007, and in various senior management roles with the Company since its inception in 1991. In nominating Mr. Rooke to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Rooke to serve as a Director of the Company: significant executive management experience and financial expertise acquired as Chairman and Chief Executive Officer and as a division president; more than 20 years experience as an engineer in the computer peripherals industry; and strong educational background with a bachelor’s degree in Mechanical Engineering from the University of Michigan and an MBA from the University of Kentucky.

Sandra L. Helton     Age 66

Ms. Helton has been a Director of the Company since February 2011. Ms. Helton served as Executive Vice President and Chief Financial Officer of Telephone & Data Systems, Inc., a telecommunications service company (“TDS”), from 2000 through 2006. She joined TDS as Executive Vice President — Finance and Chief Financial Officer in 1998. Prior to joining TDS, Ms. Helton was the Vice President and Corporate Controller of Compaq Computer Corporation between 1997 and 1998. Prior to that time, Ms. Helton was employed by Corning Incorporated. At Corning, Ms. Helton was Senior Vice President and Treasurer between 1994 and 1997 and was Vice President and Treasurer between 1991 and 1994. Ms. Helton has also served as a director of the following companies during the past five years: Covance, Inc. from 2003 to February 2015; and The Principal Financial Group since 2001. In nominating Ms. Helton to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Ms. Helton to serve as a Director of the Company: Ms. Helton’s financial expertise acquired as a Chief Financial Officer and serving on the audit committees of two publicly-traded companies; international experience gained from more than 20 years of service as an executive at Corning and Compaq; significant executive management experience in corporate strategy, finance, accounting and control, treasury, information technology and other corporate administrative functions; as well as extensive corporate governance experience; strong educational background with a bachelor’s degree in mathematics from the University of Kentucky and a master’s degree in Finance and Planning & Control from the MIT Sloan School of Management; and significant experience gained as a director of multiple publicly-traded companies.

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  W. Roy Dunbar     Age 54 Mr. Dunbar has been a Director of the Company since April 2011. Mr. Dunbar currently serves as the Chairman of private companies engaged in renewable energy and green construction. Prior to such time, Mr. Dunbar served as the Chief Executive Officer of Network Solutions, Inc. from 2008 to 2009 and as Chairman from 2008 to 2010; as President of Global Technology and Operations of Mastercard International, Inc. from 2004 to 2008; and in various senior leadership roles at Eli Lilly & Company from 1990 to 2004, including President of Eli Lilly’s Intercontinental Region, and Vice President and Chief Information Officer. Mr. Dunbar has also served as a director of the following companies during the past five years: Humana, Inc. since 2005; and iGATE Corporation from 2010 to 2015.   In nominating Mr. Dunbar to continue to serve as a Director of the Company, the Board of Directors concluded that the following experience, qualifications and skills qualify Mr. Dunbar to serve as a Director: significant experience gained as a director of multiple publicly-traded companies; significant executive management experience gained as a Chief Executive Officer and as a division President; operational and information technology expertise, acquired as an executive officer of two Fortune 500 companies; and a strong educational background with a degree in Pharmacy from Manchester University and an MBA from Manchester Business School.

• THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE FOREGOING NOMINEES TO THE BOARD OF DIRECTORS.

Composition of Board and Committees

In 2013, the Board of Directors and the shareholders of the Company approved an amendment to the Restated Certificate of Incorporation to declassify the Board of Directors. Pursuant to such amendment, each Director nominee is now elected for a one-year term rather than a three-year term. Directors may be removed from the Board with or without cause.

The Board of Directors held eight meetings during 2015. All incumbent members of the Board attended at least 75% of the aggregate of the meetings of the Board and committees of the Board on which they served. While the Company does not have a formal policy regarding the attendance of Directors at the Annual Meeting of Shareholders, all Directors are strongly urged to attend. All members of the Board of Directors who were serving as Directors at the time of last year’s Annual Meeting of Shareholders, with the exception of Mr. Fields, attended the Annual Meeting. Mr. Fields was unable to attend due to medical reasons.

The Board of Directors has adopted the stated requirements for independence under Section 10A of the Securities Exchange Act of 1934, the rules of the Securities and Exchange Commission thereunder and the listing standards of the New York Stock Exchange as categorical standards for determining the independence of individual directors in accordance with guidance received from the New York Stock Exchange, and the Board has determined that all of the Board members, with the exception of Mr. Rooke, are independent on the basis of these requirements. In making its independence determinations, the Board of Directors has considered transactions occurring in each of the preceding three years between the Company and entities associated with the independent directors or their immediate family members. In all instances, the total amount of the transactions represented significantly less than 2% of the Company’s and the other entity’s revenues for the preceding three fiscal years. Additionally, the Company has not made any charitable contributions within any of the preceding three years that would exceed the greater of $1 million or 2% of a charitable organization’s consolidated gross revenues to any charitable organization for which a member of the Board of Directors served as an executive officer of the charitable organization.

The Board has four standing committees: an Executive Committee, a Finance and Audit Committee, a Compensation and Pension Committee and a Corporate Governance and Public Policy Committee. Each committee has adopted a written charter, which are available on the Corporate Governance section of the

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Company’s Investor Relations website at http://investor.lexmark.com. The following chart reflects current committee memberships and the number of meetings held by each committee during 2015.

Name of Director	Executive Committee		Finance & Audit Committee		Compensation & Pension Committee		Corporate Governance & Public Policy Committee
Non-Employee Directors
Jared L. Cohon						Member
J. Edward Coleman				Member
W. Roy Dunbar						Member
William R. Fields						Member
Ralph E. Gomory								Member
Stephen R. Hardis		Member		Chair
Sandra L. Helton				Member
Robert Holland, Jr.								Member
Michael J. Maples				Member
Jean-Paul L. Montupet		Member						Chair
Kathi P. Seifert		Member				Chair
Employee Directors
Paul A. Rooke		Chair
Number of Meetings held in 2015		0		13		6		2

The Executive Committee is responsible for exercising all of the powers and authority of the Board of Directors during intervals between Board meetings, except for those powers delegated to the other committees of the Board and the powers which pursuant to Delaware law may not be delegated to a committee of the Board.

The Board of Directors has established the Finance and Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The Finance and Audit Committee is responsible for, among other things, assisting the Board of Directors in fulfilling its oversight responsibilities with respect to the systems of internal controls established by management, the integrity and transparency of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements with respect to audit, financial and accounting matters, the Company’s policies related to risk assessment and risk management, the Independent Auditors’ qualifications and independence, the performance of the Independent Auditors’ and the Company’s internal audit functions, and the Company’s financial strategy and policies, capital structure, share repurchase and dividend policy and capital expenditures. The Board of Directors has determined that each member of the Finance and Audit Committee is “independent” and “financially literate” as such terms are defined under the listing standards of the New York Stock Exchange. The Board of Directors has also determined that each member of the Finance and Audit Committee is an “audit committee financial expert” as that term is defined by the applicable rules established by the Securities and Exchange Commission. The Board of Directors does not limit the number of other public company audit committees on which members of its Finance and Audit Committee may serve. However, no member of the Finance and Audit Committee is currently serving on more than one other public company audit committee.

The Compensation and Pension Committee is responsible for assuring that the Company has a competitive executive compensation program in order to attract and retain qualified executives and to provide incentives to management of the Company for the attainment of the Company’s goals and objectives. The Compensation and Pension Committee is also responsible for periodically reviewing and approving the Company’s retirement and stock incentive plans. Each member of the Committee is “independent” as defined under the listing standards of the New York Stock Exchange.

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The Corporate Governance and Public Policy Committee is responsible for providing counsel to the Board with respect to corporate governance issues, including Board and committee organization, membership and function, and acting in an advisory capacity to the Board and the Company’s management on public policy issues. The Corporate Governance and Public Policy Committee is also responsible for the nomination of persons for election to the Board. Each member of the Committee is “independent” as defined under the listing standards of the New York Stock Exchange.

In addition to the four standing committees, a special project committee, comprised of Ms. Helton and Messrs. Dunbar, Holland and Montupet, met once in 2015 to review risks associated with the Company’s information technology. Additionally, a transaction committee, comprised of Ms. Seifert and Messrs. Hardis and Montupet, was formed in connection with the Company’s announcement of a process to explore strategic alternatives, and met three times in 2015.

Nomination of Directors

The Corporate Governance and Public Policy Committee does not set specific, minimum qualifications (including specific requirements for diversity) that nominees must meet in order for the Corporate Governance and Public Policy Committee to recommend them to the Board of Directors for election, but rather believes that each nominee should be evaluated based on his or her individual merits, taking into account the needs and composition of the Board at the time. The Corporate Governance and Public Policy Committee considers candidates for election who would bring a wide range of attributes to the Board. The general criteria that the Corporate Governance and Public Policy Committee looks for in candidates is a person of high integrity with: (i) broad general management experience in a significant organization; (ii) experience with major management, technical, operational, marketing or financial issues; (iii) diversity of background and thought, or experience in areas of special interest to the Company, such as brand development or technology; (iv) strong track record of success; (v) strong international experience; (vi) board experience at other international companies; (vii) ample time to devote to Board duties; and (viii) ability and desire to serve multiple terms as a Board member. With respect to diversity, the Corporate Governance and Public Policy Committee believes that a Director nominee with a diverse background, professional experience, education, skill, and differences of viewpoint fulfills that specific attribute and contributes to a heterogeneous Board. In the past, the Committee has identified director nominees from various sources, including officers, directors and professional search consultants, but the Committee will also consider nominees recommended by shareholders. The Corporate Governance and Public Policy Committee applies the same evaluation for nominees for director whether the nominee is recommended by a shareholder or other source.

The Corporate Governance and Public Policy Committee has from time to time retained SpencerStuart, a third party search firm, to assist the Committee in identifying and evaluating candidates for Board membership who best match the director recruitment criteria described above. SpencerStuart has played an important role in identifying many of the Company’s most recent independent directors for Board membership.

Shareholders wishing to recommend a director candidate for consideration by the Corporate Governance and Public Policy Committee may do so by complying with the procedures and providing the information required by the Company’s By-Laws.

Corporate Governance Matters

Code of Business Conduct & Committee Charters

The Company has adopted a code of business conduct and ethics for directors, officers (including the Company’s principal executive officer and principal financial and accounting officer) and employees, known as the Code of Business Conduct. The Code of Business Conduct, as well as the Company’s Corporate Governance Principles, Related Person Transaction Policy and the charters of each of the committees of the Board of Directors are available on the Corporate Governance section of the Company’s Investor Relations website at http://investor.lexmark.com. The Company also intends to disclose on the Corporate Governance section of the Investor Relations website any amendments to the Code of Business Conduct and any waivers from the provisions of the Code of Business Conduct that apply to the principal executive officer and principal financial

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and accounting officer and that relate to any elements of the code of ethics enumerated by the applicable regulation of the Securities and Exchange Commission (Item 406(b) of Regulation S-K).

Remediation of Material Weakness

The Company took significant steps in 2015 with the oversight of the Finance and Audit Committee to remediate the material weakness in its internal controls. The scope of the material weakness, initially disclosed in the Company’s 2014 Annual Report, is limited to accounting for income taxes. The Company, and the Finance and Audit Committee, are focused on finalizing the remediation efforts in 2016 and confirming that the new processes and controls put in place are fully operational and consistently applied for a sufficient period of time to provide the Company with adequate assurance of a sustainable and reliable control environment related to income tax accounting.

The following outlines the timeline of the remediation efforts:

Affirmative Steps taken to enhance internal controls.

In 2015, the Company made substantial progress to remediate the material weakness and further enhance its internal controls. These activities and improvements include:

• Tax leadership and personnel changes including the deployment of additional internal resources;

• Assistance with remediation efforts from hired outside tax advisors;

• Defining and clearly communicating roles and responsibilities for income tax personnel;

• Revising and formalizing numerous income tax review processes;

• Redesigning and implementing a new and more robust set of internal controls related to income tax accounting; and

• Implementing new technology utilized in the accounting for income taxes.

The impact on previously issued financial statements was not material.

The Company concluded that despite the material weakness, its consolidated financial statements included in both the 2014 and the 2015 Annual Reports on Form 10-K fairly presented, in all material respects, its financial position, results of operations and cash flows in conformity with accounting principles generally accepted (“GAAP”) in the United States. The Company revised certain prior period financial statements to correct for the errors resulting from the material weakness.

The external auditor’s opinion on the financial statements was unaffected.

Both the Company’s 2014 and 2015 Annual Reports on Form 10-K included the following statement by PricewaterhouseCoopers LLC (“PwC”): “We considered this material weakness in determining the nature, timing, and extent of audit tests applied in our audit of the [2014] [2015] consolidated financial statements, and

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our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.”

While significant progress and improvements were made, the Company expects to make further improvements in the first half of 2016 and evaluate the effectiveness of these new controls.

The Finance and Audit Committee discussed in depth the status of the remediation efforts in 2015 with management as well as with PwC, including the time and efforts necessary to ensure the sustainability, robustness and reliability of the new processes and controls. In its 2015 Annual Report, the Company communicated its decision to continue and further improve its controls and confirm the sustainability and reliability of the newly implemented processes and controls, which can only be proven through observed effectiveness over a prolonged period of time: “The Company believes it is important to finalize remediation efforts in 2016 and confirm that the new processes and controls that were put in place as part of the remediation are fully operational and consistently applied for a sufficient period of time to provide the Company with adequate assurance of a sustainable and reliable control environment related to income tax accounting.”

The Finance and Audit Committee members are highly qualified and committed to overseeing the remediation and redesign process.

The Finance and Audit Committee members are Ms. Helton and Messrs. Coleman, Hardis and Maples. The Board of Directors has determined that each member of the Finance and Audit Committee is “financially literate” in accordance with the NYSE listing standards and that each is an “audit committee financial expert” as that term is defined by applicable SEC rules. This proxy statement contains detailed information about the qualifications of each nominee for Director. As described in detail in their biographies in the “Election of Directors” section set forth above, each of the members brings deep business acumen and a wealth of financial experience to the Board and to the Finance and Audit Committee.

The Finance and Audit Committee has been vigilant in its oversight of the Company’s financial reporting process generally and during the remediation process specifically.

The Company, its Board of Directors and the Finance and Audit Committee are committed to maintaining a strong, effective, and sustainable internal control environment. During 2015, the Finance and Audit Committee devoted considerable time to oversight of the Company’s ongoing financial reporting process and tax accounting remediation efforts including meeting 13 times during the year and covering in depth, among other topics, the tax accounting function’s structure, processes, information management systems, staffing, external resources, and skills.

Related Person Transactions

On the recommendation of the Corporate Governance and Public Policy Committee, the Board of Directors has adopted a written Related Person Transaction Policy (the “Policy”) for the purpose of identifying potential conflicts of interest arising out of a related person transaction between the Company and any related person. Under the Policy, a related person is a Director, nominee for election as a Director, executive officer, beneficial owner of more than 5% of the Company’s common stock or any immediate family member of the foregoing persons. A related person transaction under the Policy is any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in excess of $120,000 in which the Company or any of its subsidiaries is a party and in which the related person has or will have a direct or indirect material interest.

The Company reviews all transactions, arrangements or relationships between the Company and related persons in excess of $120,000 to determine whether such transactions are permissible under the Policy and, if permissible, whether such persons have a direct or indirect material interest in a transaction that is required to be disclosed by the Company in the Company’s proxy statement. Under the Policy, certain transactions have been pre-approved, as not constituting related person transactions, including, among other transactions, compensation paid to Directors and executive officers in the ordinary course of performing their duties; transactions in the ordinary course of business with another company where a Director is an employee or serves as a director, the

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Director is not involved in the negotiations of the terms of the transaction and the aggregate amount involved does not exceed the greater of $1 million or 2% of the other company’s gross revenues; and charitable contributions to a charitable organization, foundation or university at which a related person’s only relationship is an employee (other than an executive officer), or a director or trustee and the aggregate amount involved does not exceed the lesser of $1 million or 2% of the charitable organization’s total annual receipts.

Each Director and executive officer is required to complete a questionnaire on an annual basis that requires them to disclose any potential related person transactions with the Company. In addition, under the Policy, each Director and executive officer has a continuing obligation to notify the Corporate Secretary of any potential related person transactions with the Company. With respect to any potential related person transaction reported to the Corporate Secretary, the Corporate Secretary will determine whether the transaction is pre-approved under the Policy, and if it is not pre-approved, will present the transaction for approval to the Corporate Governance and Public Policy Committee at its next meeting, or to the Chair of the Corporate Governance and Public Policy Committee, when it is not practicable to wait until the next meeting. The Corporate Governance and Public Policy, or the Chair of the Corporate Governance and Public Policy Committee, as applicable, will review the material facts and circumstances of each related person transaction and determine whether to approve, ratify or reject the entry into such transaction. Related person transactions may only be approved if, based on the information presented, the Corporate Governance and Public Policy Committee determines that the transaction is in the best interests of the Company and its shareholders.

As part of its annual independence assessment and review of related person transactions, the Corporate Governance and Public Policy Committee reviewed the transactions between the Company and certain entities in which some of our Directors serve as executive officers or directors, and determined that there were no transactions between the Company and any related person in 2015 that were required to be reported under Item 404(a) of Regulation S-K, nor are there any currently proposed.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation and Pension Committee has served as an officer or employee of the Company at any time. No executive officer of the Company serves as a member of the compensation committee or on the board of directors of any company at which a member of the Compensation and Pension Committee or Board of Directors serves as an executive officer.

Leadership Structure

As part of its review of the Company’s overall corporate governance practices, the Board of Directors periodically reviews its leadership structure. Currently, the Board believes that the most effective leadership structure for the Company is for the Company’s Chief Executive Officer to serve as Chairman of the Board of Directors. The Board combined the Chairman and Chief Executive Officer role in 1999 to provide strong leadership and a unified voice for the Company’s management and the Board. The Board has been satisfied with the combined Chairman and Chief Executive Officer and believes it has served the Company’s shareholders well. This leadership structure allows the Chief Executive Officer to establish a Board agenda, with Board input, which focuses on the Company’s strategic challenges, ensures the Board is presented with the necessary information required to fulfill its responsibilities, and allows for productive and effective Board meetings.

Except for Mr. Rooke, the Board is completely comprised of independent Directors who bring a broad range of leadership experience to the Board and regularly contribute to the thoughtful discussion involved in effectively overseeing the business and affairs of the Company. Collegial, yet rigorous, debate at Board meetings is common. Also, the Finance and Audit Committee, the Corporate Governance and Public Policy Committee and the Compensation and Pension Committee are comprised solely of independent Directors and each with a separate independent chair. These Committees perform important roles for the Company as explained in the “Composition of Board and Committees” section. The independent Directors also meet in executive session at each regularly scheduled meeting to voice their observations and to shape future Board agendas. Immediately following each session, the Presiding Director notifies the Chairman of the Board of the independent Directors’ assessment of the meeting and any desired agenda items for future meetings. Thus, the Board has the opportunity to take up issues it believes are important.

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When the Chairman of the Board is not an independent Director, the Board also elects a single Presiding Director from the current independent Directors with such duties and for such term as the Board may determine from time to time. At each regularly-scheduled meeting of the Board of Directors, the independent Directors meet in executive session, at which only independent Directors are present. The Presiding Director serves as chairman of those meetings and presides over any meeting of the Board when the Chairman of the Board is not present. In addition, the Presiding Director consults with the Chairman of the Board to plan and set the agenda for meetings of the Board of Directors and serves as the point of contact for members of the Board of Directors to raise issues not readily addressable directly to the Chairman. The Presiding Director also performs such other functions and responsibilities as required by the Board of Directors from time to time. Based on the recommendation of the Corporate Governance and Public Policy Committee, Mr. Montupet has served as the Presiding Director since April 2010. Mr. Montupet was reelected as Presiding Director at the February 2014 meeting and will continue to serve in that role until the 2016 Annual Meeting.

The Board believes that the leadership structure in which the Company’s Chief Executive Officer serves as Chairman of the Board, the vast majority of the Board is comprised of independent Directors, the Board Committees described above are led by independent Directors, the Company has a Presiding Director with known responsibilities, and the independent Directors hold regular meetings in executive session, remains the optimal leadership structure for the Company and the Company’s shareholders.

Shareholders and other interested parties may communicate directly with the Presiding Director, non-management Directors as a group or any member of the Board of Directors through the Corporate Secretary by writing to him at Lexmark International, Inc., 740 West New Circle Road, Lexington, Kentucky 40550. The Corporate Secretary will review all communications and forward appropriate correspondence to the proper Board member or members.

Board’s Role in Risk Oversight

The Company’s Board of Directors administers its risk oversight function directly and through the Finance and Audit Committee, the Compensation and Pension Committee, and through special project committees that review key areas of risk management. The Finance and Audit Committee has oversight responsibility with respect to the Company’s financial risk assessment and financial risk management. The Finance and Audit Committee meets regularly with management to review the Company’s risk exposures, the potential financial impact those risks may have on the Company, the steps management takes to address those risks, and how management monitors emerging risks. With respect to the Company’s compensation plans and programs, the Compensation and Pension Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking by the Company’s officers and employees, as discussed in the “Risk Assessment” section of the “Compensation Discussion & Analysis.” The full Board of Directors has oversight responsibility of enterprise risk management and periodically has management review the Company’s major enterprise risk exposures, the potential financial or other impact on the Company, and the process for managing such risks. In 2015, a special project committee of the Board of Directors met to review the Company’s risk management in the area of information technology.

Political Contribution Policy

In order to provide greater transparency to our shareholders regarding the Company’s involvement in political contributions and to ensure Board-level oversight, the Board of Directors has adopted a political contribution policy. Under this policy, the Company will not make contributions of any kind (money, employee time, goods or services) to political parties or candidates, political committees, including political committees organized under Section 527 of the Internal Revenue Code, or in support of or against ballot measures. This policy applies equally in all countries and all levels of government, even where such contributions are permitted by law. The Company’s political contribution policy is available on the Corporate Governance section of the Company’s Investor Relations website at http://investor.lexmark.com.

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COMPENSATION DISCUSSION & ANALYSIS

Compensation Governance

The Compensation and Pension Committee (the “Compensation Committee”) is responsible for setting and administering the policies governing all compensation components, including base salary, incentive compensation, equity-based compensation and other long-term incentive compensation for the Company’s executive officers, including the CEO and other key members of management. The Compensation Committee determines the type, structure and amount of each compensation component awarded under the Company’s compensation plans. The Committee is responsible for approving payments under the compensation plans and making a recommendation to the Board of Directors to approve base salary increases for Section 16 Officers. The process by which the Compensation Committee fulfills these responsibilities is detailed in the discussion that follows.

Named Executive Officers

The Company’s principal executive officer, principal financial officer and the Company’s three most highly compensated executive officers other than the principal executive officer and principal financial officer for 2015 (the “Named Executive Officers”) whose compensation is set forth in the tables and following discussion in accordance with Securities and Exchange Commission rules are as follows:

• Paul A. Rooke, Chairman and Chief Executive Officer

• David W. Reeder, Vice President and Chief Financial Officer (Effective as of January 9, 2015)

• Gary D. Stromquist, Vice President, Corporate Finance*

• Reynolds C. Bish, Vice President and President, Enterprise Software (Effective as of May 22, 2015)

• Martin S. Canning, Lexmark Executive Vice President and President, Imaging Solutions and Services (“ISS”)

• Robert J. Patton, Vice President, General Counsel and Secretary

• Scott T.R. Coons, Former Lexmark Vice President and President, Enterprise Software**

* Mr. Stromquist served as Vice President and Interim Chief Financial Officer from May 20, 2014 through January 8, 2015.

** Mr. Coons retired from the Company, effective July 31, 2015. Prior to the acquisition of Kofax Limited, Mr. Coons served as Lexmark Vice President and President of Enterprise Software. Following the acquisition of Kofax Limited, Mr. Coons continued to serve as a Lexmark Vice President through the date of his retirement to help ensure a smooth transition to the new Enterprise Software leadership team.

Executive Compensation Philosophy

The Compensation Committee has developed a set of principles to guide the design of the compensation plans and programs applicable to the Company’s executive officers, including the Named Executive Officers who were serving as executive officers at the end of 2015.

• Pay for performance where performance criteria are aligned with shareholder interests.

The performance of the Company and individual levels of performance determine the amount of compensation realized by the executive officers. The objectives of the Company’s compensation plans are intended to focus each executive officer on the achievement of key performance goals and the execution of the strategic plan that will promote the long-term success of the Company and maximize shareholder returns.

• Put pay significantly “at risk” and subject to the achievement of strategic business objectives.

The executive officers have roles and responsibilities that directly influence the achievement of the Company’s performance objectives. Therefore, the Compensation Committee believes that they should have a significant portion of their compensation dependent on whether those objectives are achieved. Base salary is the only component of an executive officer’s direct compensation that is fixed. Other components, including annual incentive compensation and long-term incentive compensation, are principally subject to the achievement of strategic business objectives.

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• Balance short-term and long-term objectives.

The Company’s compensation programs are balanced between short-term and long-term objectives to ensure that executive officers focus on short-term performance that supports and ensures long-term success and profitability without encouraging excessive risk. The Company’s compensation programs also include personal objectives relating to key focus areas and strategic performance objectives.

• Provide total compensation opportunities that are market competitive and supportive of the Company’s strategy to attract, develop, motivate and retain outstanding talent.

The Company benchmarks the components of executive compensation to ensure that they are competitive in or with the marketplace. In evaluating the competitiveness of each executive officer’s target compensation, the Compensation Committee utilizes survey and peer group data to ensure that each executive officer’s target compensation is comparable to targeted pay levels established by the Compensation Committee. However, the Compensation Committee may use discretion to vary executive officer pay from the targeted levels based on factors such as an executive officer’s performance, responsibilities, experience, or length of time in the position.

Components of the Company’s Executive Compensation Program

Total compensation for each of the Named Executive Officers may consist of the following components which are based on the principles guiding the design of that component:

Compensation Component	Form of Compensation	Key Compensation Objectives to be Achieved
Base Salary	•  Cash	•  Provide a steady source of income that is market competitive and supportive of the Company’s strategy to attract, develop, motivate and retain outstanding talent.
Annual Incentive Compensation	•  Cash	•  To motivate and reward executive officers for the Company’s attainment of performance metrics required for the Company to be successful.
		•  Put pay significantly “at risk” and subject to the achievement of strategic business objectives.
		•  Balance short-term and long-term objectives.
Long-Term Incentive Compensation	•  Time-Based Restricted Stock Units •  Performance-Based Restricted Stock Units •  Stock Options •  Cash	•  To retain and motivate executive officers where performance criteria are aligned with shareholder interests. •  Put pay significantly “at risk“ and subject to the achievement of strategic business objectives. •  Balance short-term and long-term objectives.
Retirement Plans and Other Benefits	•  401(k) Plan •  Supplemental Savings & Deferred Compensation Plan •  Health and Other Welfare Benefits	•  Provide competitive benefits that are designed to provide sufficient retirement income and promote the welfare of our executive officers and their families.
Perquisites	•  Reimbursement for Financial Planning	•  Provide financial stability and minimize distractions from an executive officer’s attention to important Company initiatives.

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Determining Executive Compensation

Annually, the Compensation Committee considers whether to recommend to the Board of Directors adjustments to each Named Executive Officer’s base salary and approves the form and amount of equity-based awards. The Compensation Committee also establishes the target compensation opportunity for each of the Named Executive Officers under the annual incentive compensation plan and for any long-term incentive award (either cash and/or equity). To determine the amount of the compensation opportunity to award, the Compensation Committee considers comparative market data and other factors described in more detail in the discussion that follows. The Compensation Committee does not have a pre-established target allocation for each compensation element nor does it have a pre-established target mix of cash versus equity, short-term incentive compensation versus long-term incentive compensation, or fixed pay versus variable pay. Annually, the Compensation Committee determines the target total direct compensation for each Named Executive Officer by assessing the role of the Named Executive Officer and the comparative market data. The Compensation Committee then determines the appropriate mix of cash and equity for each Named Executive Officer as detailed in the “Compensation Components” section.

The Compensation Committee utilizes the services of Pearl Meyer & Partners, a well-established executive compensation consulting firm, to assess the competitiveness of the Company’s executive compensation plans and programs and to provide other executive compensation consulting services. Pearl Meyer & Partners is retained solely by the Compensation Committee and does not advise management on matters involving executive compensation or on any other matter. Pearl Meyer & Partners’ role in assisting the Compensation Committee is described in more detail in the discussion that follows.

To evaluate the competitiveness of each Named Executive Officer’s total compensation for 2015, the Compensation Committee utilized survey and peer group data, drawn from annual proxy statement disclosures, provided by Pearl Meyer & Partners. Survey data for all the Named Executive Officers, other than Messrs. Bish and Coons, reflected a broad group of technology firms with generally similar revenues as the Company. Annually, the Compensation Committee reviews and updates the group of peer companies to ensure that each company continues to be appropriate for benchmarking executive compensation. The Compensation Committee utilizes the services of Pearl Meyer & Partners on an annual basis to prepare a peer group analysis and make recommendations to the Compensation Committee on determining the appropriate peer group of companies. Revenue and product similarity are the primary factors for peer group inclusion and market capitalization is a secondary factor. Companies with revenue and/or market capitalization of one-fourth to four times the revenue and/or market capitalization of the Company are targeted. Based on the annual review and analysis prepared by Pearl Meyer & Partners for 2015, the Company maintained the same peer group as 2014, except for the removal of Imation Corporation and the addition of Pitney Bowes and Zebra Technologies. These changes were aligned with the Company’s strategy of pursuing growth through software and solutions. The following peer group was approved for 2015 executive compensation benchmarking purposes for all Named Executive Officers, other than Messrs. Bish and Coons:

2015 Peer Group			Revenue ($M)*
Advanced Micro Devices, Inc.	Logitech International	Peer Group 75th %	$	5,991
Brocade Communications	NCR
Diebold, Inc.	Net App, Inc.	Peer Group Median	$	4,256
Insight Enterprises, Inc.	Pitney Bowes Inc.
JDS Uniphase Corporation	Polycom, Inc.	Peer Group 25th %	$	2,186
Juniper Networks Inc.	SanDisk Corporation
KLA-Tencor Corporation	Xerox Corporation
LAM Research Corporation	Zebra Technologies Corp.
		Lexmark International, Inc.	$	3,666

* Reflects trailing 4 quarters revenue as of August 2014, in most cases.

Although the Company makes reference to many competitors in its annual report, Xerox Corporation was the only referenced company included in the Company’s peer group of companies used for executive

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compensation benchmarking purposes. The Company’s other competitors were excluded because their revenue and market capitalization did not meet the criteria set forth above or their headquarters are located outside of the United States. Companies headquartered outside of the United States are generally excluded for benchmarking purposes because (i) executive compensation data is not as readily available or disclosed as fully as is required in the United States, (ii) Lexmark’s labor market for its executive officers is generally based in the United States, and (iii) compensation practices in other countries can vary dramatically due to local regulations, customs and state-required compensation programs.

To evaluate the competitiveness of Mr. Coons’ compensation, survey data was provided by Pearl Meyer & Partners, reflecting a group of 33 software companies with generally similar revenues as Enterprise Software. The software peer group had median revenue of $411 million for the previous fiscal year. The Compensation Committee utilized the benchmarking information provided by Pearl Meyer & Partners to evaluate Mr. Coon’s compensation as head of our Enterprise Software segment for 2015. In connection with the acquisition of Kofax Limited and the appointment of Mr. Bish as President of the Company’s Enterprise Software segment, Pearl Meyer & Partners provided survey data to assist the Compensation Committee’s evaluation of the competitiveness of Mr. Bish’s compensation, reflecting a group of 21 software companies with revenue of one-half to two times the revenue of the Enterprise Software segment, taking into account the Company’s acquisition of Kofax Limited. The Compensation Committee used the benchmarking information to determine Mr. Bish’s compensation as president of the Company’s Enterprise Software segment for 2015.

Role of the Compensation Consultant

Pearl Meyer & Partners has been retained by the Compensation Committee to assist the Committee in assessing the competitiveness of executive compensation, and provides other consulting services as requested by the Committee. In 2015, Pearl Meyer & Partners provided composite data from survey sources and proxy statement disclosure data from the peer group of companies to assist the Compensation Committee in establishing the proper compensation level for executive officers, including the Named Executive Officers. Pearl Meyer & Partners also prepared a report measuring the Company’s total shareholder return and return on invested capital against the S&P MidCap Technology Index to guide the Compensation Committee in calculating cash-based and equity-based awards under the Company’s long-term incentive plan. In addition, Pearl Meyer & Partners conducted a competitive assessment review of executive compensation in the first quarter of 2015, which was utilized by the Compensation Committee in determining executive compensation for 2015. Pearl Meyer & Partners also provided benchmarking data in the second quarter of 2015, which was utilized by the Compensation Committee to determine executive compensation, including Mr. Bish, in connection with the acquisition of Kofax Limited. Pearl Meyer & Partners also advised the Compensation Committee on a broad spectrum of matters, including, but not limited to:

• Composition of the Company’s peer group for benchmarking executive compensation.

• Review of the Company’s proxy disclosures, including this Compensation Discussion and Analysis.

• Review of management proposals to advise the Compensation Committee.

• Overview of regulatory updates.

Pearl Meyer & Partners does not advise management on matters involving executive compensation or on any other matter. The Compensation Committee has the sole authority to retain or terminate Pearl Meyer & Partners as the Compensation Committee’s executive compensation consultant and to approve its fees and other terms of engagement. The Compensation Committee annually assesses the independence of Pearl Meyer & Partners and determines whether any related conflicts of interest require disclosure. Based on the assessment of Pearl Meyer & Partners’ independence, the Compensation Committee determined that no conflict of interest was required to be reported under Item 407(e)(3)(iv) of Regulation S-K for 2015.

Role of the Shareholders

The Company’s Board of Directors and Compensation Committee welcome and value the input of shareholders and other interested parties. There are numerous ways for shareholders and other interested parties to communicate their views to the Board of Directors and the Compensation Committee. Shareholders and other

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interested parties may communicate directly with the Presiding Director, non-management Directors as a group or any member of the Board of Directors through the Corporate Secretary by writing to him at Lexmark International, Inc., 740 West New Circle Road, Lexington, Kentucky 40550. In addition, the Company has added an e-mail link on the Corporate Governance section of its webpage seeking the input of all of its shareholders and other interested parties on executive compensation and other corporate governance matters.

Consideration of Say on Pay Vote

In 2015 and 2014, 96% and 92%, respectively, of the Company’s shareholders who voted on the Company’s advisory, non-binding, vote on executive compensation (commonly referred to as “Say on Pay”) approved the compensation of the Company’s Named Executive Officers. The Compensation Committee believes that the vote of shareholders is an endorsement of the Company’s pay for performance philosophy, which is designed to promote the long-term success of the Company and maximize shareholder returns. The Compensation Committee considered the vote results and due to the significant level of support did not make any material changes to the Company’s executive compensation decisions and policies in 2015.

Setting Performance Objectives

The Compensation Committee believes that the Company’s annual business plan and strategic plan appropriately reflect the level of performance required for the Company to be successful in a highly competitive market. Generally, the targeted range for performance objectives is aligned with the corresponding measure in the Company’s plans for the corresponding performance period. The Compensation Committee believes that minimum attainment goals should be achievable most of the time, while target attainment goals are set at a moderate to difficult level and maximum attainment goals are set at a difficult level. Over the past five years, the Company has achieved performance in excess of the target level for annual incentive compensation two times (the 2013 and 2014 performance periods) and for long-term incentive compensation twice (the cash-based long-term incentive plan and performance-based restricted stock units for the 2013-2015 performance period and the performance-based restricted stock units for the 2015 performance period).

COMPENSATION COMPONENTS

Total Direct Compensation

The Compensation Committee determines the form and level of compensation opportunity to award by applying the same principles, policies, and methodologies to each of the Named Executive Officers. The principles, policies and methodologies relating to the decision to utilize each component of compensation, the level of each component, and how one component may influence the Compensation Committee’s decisions with respect to other components is described in further detail in the discussion that follows or was provided in the table in the “Components of the Company’s Executive Compensation Program” section.

Annually, the Compensation Committee reviews the total direct compensation opportunity for each of the Named Executive Officers, as well as the Company’s other Section 16 executive officers. Total direct compensation includes base salary, annual incentive compensation opportunity, and long-term incentive compensation opportunity. The long-term incentive opportunity may be an equity-based award (such as restricted stock units or stock options) or a cash-denominated award. First, the Compensation Committee determines the form and level of each compensation component to award by performing a separate and distinct analysis of base salary, annual incentive compensation and total long-term incentive compensation for each Named Executive Officer. Next, the Compensation Committee reviews the total direct compensation opportunity of each of the Named Executive Officers by a comparison to the total direct compensation of named executive officers of peer companies obtained through their proxy statement disclosures, as described above.

The Compensation Committee has determined that each Named Executive Officer’s total direct compensation opportunity should be nominally targeted at the 50th percentile of the Company’s peer group. The Compensation Committee believes that the 50th percentile aligns a Named Executive Officer’s compensation with that of the Company’s peer group and the interests of the Company’s shareholders, and likewise ensures that the Company remains competitive in attracting and retaining executive officers. However, it should be noted that

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total direct compensation opportunity for each individual may range above or below the 50th percentile based on a variety of factors, including the executive officer’s skills and experience, the importance of the position to the Company, past and expected future performance, the difficulty of replacement, and the length of time in the position.

The following graphs illustrate the allocation of the 2015 total direct compensation for the Chief Executive Officer and the average total direct compensation of the other Named Executive Officers as a group:

Base Salary

The Compensation Committee reviews the base salary of each Named Executive Officer on an annual basis. The base salary for each of the Named Executive Officers is determined by the responsibilities of the position held, the experience of the individual, the individual’s length of time in the position, and by reference to the information compiled from compensation surveys and peer group data regarding the competitive marketplace for executive talent, including a comparison to base salaries for comparable marketplace positions discussed above in the section entitled “Determining Executive Compensation.”

Salary adjustments for each of the Named Executive Officers are based on an evaluation of the performance of the Company and of each of the Named Executive Officers. New responsibilities, as well as changes in the competitive marketplace, are also taken into account when considering an adjustment to base salary. The Compensation Committee determines the amount of any change in base salary to recommend to the Board of Directors for approval. The Board of Directors is ultimately responsible for approving any change in base salary for each of the Named Executive Officers, as well as the Company’s other Section 16 executive officers.

At its meeting on February 18, 2015, the Compensation Committee reviewed management’s recommendations and the competitive assessment review report prepared by Pearl Meyer & Partners, and based on that information as well as current economic conditions, the Compensation Committee recommended that the Board of Directors not increase base salaries for 2015.

On December 18, 2014 the Board of Directors appointed Mr. David Reeder as the Vice President and Chief Financial Officer of the Company, effective January 9, 2015. The Board of Directors, on the recommendation of the Compensation Committee, approved an annual base salary of $485,000 for Mr. Reeder. On May 22, 2015, in conjunction with the acquisition of Kofax Limited, the Board of Directors appointed Mr. Reynolds Bish as Lexmark Vice President and President, Enterprise Software, and approved a base salary of $600,000 for Mr. Bish based upon the recommendation of the Compensation Committee.

Annual Incentive Compensation

The annual incentive compensation opportunity for each of the Named Executive Officers is set within the context of the Lexmark International, Inc. Senior Executive Incentive Compensation Plan, which was approved by the Company’s shareholders in 2004. The Senior Executive Incentive Compensation Plan has been designed to ensure that the annual incentive compensation awards are paid in a manner to ensure maximum deductibility of the payment of such awards by the Company under Section 162(m) of the Internal Revenue Code. Under the terms of the Senior Executive Incentive Compensation Plan, the maximum award for each Named Executive Officer is six-tenths of one percent of Operating Income, as defined in the plan. The Compensation Committee administers the plan and has negative discretion to reduce, but not increase, the award made to a Named Executive Officer based on any factors it may deem appropriate.

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The factors considered by the Compensation Committee for reducing a Named Executive Officer’s annual incentive compensation award under the Senior Executive Incentive Compensation Plan are based on the strategic performance objectives for each of the Named Executive Officers set forth in the 2015 Incentive Compensation Plan.

For 2015, the strategic performance objectives under the 2015 Incentive Compensation Plan included the following:

• Corporate Objectives — measured with reference to annual strategic revenue, operating income and cash cycle, each excluding all acquisition activity.

• Worldwide Business/Geographic Unit Objectives — measured with reference to the applicable worldwide business or geographic unit annual strategic revenue, operating income and cash cycle, each excluding all acquisition activity, or with respect to Enterprise Software measured with reference to Enterprise Software’s revenue and operating income, excluding all acquisition activity.

• Personal Objectives — established based on key focus areas and strategic performance objectives specific to each individual. The CEO’s personal objective is based on an assessment of his general management of the Company.

• Threshold Objectives — measured with reference to free cash flow, excluding all acquisition activity and any settlement payments related to ongoing, multi-year EU copyright litigation.

The Compensation Committee selected strategic revenue, operating income and cash cycle, each excluding all acquisition activity, as the performance objectives for 2015, because it believed the achievement of the targets established for these performance measures would drive the long-term success of the Company. The targets established by the Compensation Committee for strategic revenue are designed to motivate employees to grow existing business and focus on customers’ needs to drive increased hardware, supplies, software and services and solutions sales in selected, strategic businesses. The Compensation Committee’s selection of operating income as a performance measure is intended to motivate employees of the Company to focus on generating additional earnings by focusing on cost reduction, improved product quality, pricing, expense management and innovation. The Compensation Committee selected cash cycle as a performance measure to motivate employees to reduce the amount of time it takes the Company to convert its cash into product, sell the product to the customer, and collect the account receivable from the customer. Free cash flow, excluding all acquisition activity and any settlement payments related to ongoing, multi-year EU copyright litigation, was selected by the Compensation Committee as the threshold performance measure to emphasize the importance of cash generation.

The weighting for each objective for the fiscal year ending December 31, 2015 for each of the Named Executive Officers is shown in the table below.

Name	Corporate Objectives			Worldwide Business or Geographic Unit Objectives			Personal Objectives
Paul Rooke		80	%		0	%		20	%
David Reeder		80			0			20
Gary Stromquist		20			60			20
Reynolds Bish		20			60			20
Martin Canning		20			60			20
Robert Patton		80			0			20
Scott Coons		20			60			20

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The following table shows the corporate performance objectives for the fiscal year ending December 31, 2015, which were approved by the Compensation Committee at its February 18, 2015 meeting as well as the actual attainment that was certified by the Compensation Committee at its February 17, 2016 meeting. All dollar amounts are in millions and include restructuring charges and exclude acquisition related costs and expenses.

	Min		Target		Max		2015 Actual Attainment
Corporate
Strategic Revenue (40%)	$	3,307	$	3,483	$	3,628	$	3,257
Operating Income (40%)	$	286	$	339	$	387	$	230
Cash Cycle (days) (20%)		6		4		2		0.4
Threshold
Free Cash Flow	$	220		N/A		N/A	$	(5	)

An annual incentive compensation opportunity for each of the Named Executive Officers, other than the CEO, is recommended by the CEO, for approval by the Compensation Committee. The award opportunity may be increased or decreased based on the judgment of the Compensation Committee of the individual’s overall contribution to Lexmark’s business results. The Compensation Committee determines and approves the annual incentive compensation opportunity for the CEO. The annual incentive opportunities for each of the Named Executive Officers are based on the peer group company data and the survey data for annual incentive awards and each Named Executive Officer’s total compensation target discussed above in the section entitled “Determining Executive Compensation.”

The Compensation Committee establishes annual incentive compensation targets that it believes put annual incentive compensation significantly “at risk” because payments are entirely dependent upon the achievement of strategic performance objectives. At its meeting on February 18, 2015, the Compensation Committee reviewed the information from the peer group company data and the compensation surveys, and also gave consideration to the qualitative factors listed above. Based on this review, the Compensation Committee approved the annual incentive award opportunity for each of the Named Executive Officers for the fiscal year ending December 31, 2015, shown in the table below. The Compensation Committee must review and certify the business results and the incentive compensation plan attainments before any payments can be made. This review is generally performed in the first quarter of each year and the payout typically occurs shortly thereafter.

At its meeting on February 17, 2016, the Compensation Committee reviewed and certified the business results for the fiscal year ending December 31, 2015, and determined that, based on the Company’s financial performance for 2015, that no payouts would be made for the full-year corporate, ISS or Enterprise Software performance objectives. Based on the second-half performance of the Enterprise Software segment, the Compensation Committee approved a payment to Mr. Bish under the Kofax Incentive Compensation Plan, as set forth in the table below:

	2015 Annual Incentive Compensation Award Opportunity						2015 Annual Incentive Compensation Award
Name	Threshold		Target		Maximum
Paul Rooke	$	153,000	$	1,020,000	$	2,040,000	$	0
David Reeder		54,563		363,750		727,500		0
Gary Stromquist		31,500		210,000		332,500		0
Reynolds Bish		76,500		510,000		1,020,000		125,070
Martin Canning		66,938		446,250		892,500		0
Robert Patton		45,000		300,000		600,000		0
Scott Coons*		60,563		403,750		807,500		0

* Mr. Coons retired from the Company, effective July 31, 2015, but did not meet the retirement-eligibility requirements to receive an annual incentive compensation award for 2015.

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Total Long-Term Incentive Compensation

In consultation with Pearl Meyer & Partners, the Compensation Committee redesigned the Company’s long-term incentive plan in 2012 to strengthen the link between financial goals, shareholder interests and executive compensation by increasing the performance period to three years and adding relative total shareholder return (“TSR”) and relative return on invested capital (“ROIC”) measured against the S&P 500 Technology Index (the comparator group was changed to the S&P MidCap Technology Index beginning in 2013) as the performance measures. In 2013, the Compensation Committee wanted to maintain continuity with the shareholder-friendly metrics that were established in the prior year, and therefore determined that approximately 80% of the long-term incentive plan metrics should be based on the Company’s performance relative to the market. The Compensation Committee also wanted to focus management on an additional key goal that was consistent with the Company’s long-term strategy for the remaining 20% of the long-term incentive plan metrics, but did not want to duplicate metrics already utilized under the short-term incentive plans. The Compensation Committee added services and software revenue as the metric for performance-based restricted stock units with a one-year performance period, but subject to a three-year vesting period. The Compensation Committee continued to utilize these metrics for the 2015 incentive compensation award opportunity.

Under the 2015 long-term incentive plan approved by the Compensation Committee, 100% of Mr. Rooke’s long-term incentive compensation opportunity is performance-based, comprised as follows: (i) a cash-based award based on relative TSR for a three-year performance period, representing 40% of the total award opportunity; (ii) performance-based restricted stock units based on relative ROIC for a three-year performance period, representing 40% of the total award opportunity; and (iii) performance-based restricted stock units based on the Company’s services and software revenue for a one-year performance period, representing 20% of the total award. The other Named Executive Officers, except for Mr. Stromquist, have a long-term incentive compensation opportunity for 2015 that is 70% performance-based (a cash-based award based on relative TSR for a three-year performance period, representing 28% of the total award opportunity; performance-based restricted stock units based on relative ROIC for a three-year performance period, representing 28% of the total award opportunity; and performance-based restricted stock units based on the Company’s services and software revenue for a one-year performance period, representing 14% of the total award opportunity) and 30% comprised of time-based restricted stock units. The Compensation Committee believes that a long-term incentive opportunity comprised of a combination of performance-based and time-based restricted stock units will motivate the Named Executive Officers on the achievement of key performance goals, while maintaining a retention focus. The Compensation Committee believes that a greater portion of the Chief Executive Officer’s long-term incentive compensation opportunity should be focused on the achievement of key performance goals and therefore has generally not awarded Mr. Rooke time-based restricted stock units, except for a recognition award in 2014, as discussed below. Mr. Stromquist received only a time-based restricted stock unit award on February 18, 2015.

To determine long-term incentive award levels, the Company utilizes peer group data and market survey data, reviews the value of prior equity awards made to each Named Executive Officer, and evaluates each Named Executive Officer’s expected future contribution to business results. The CEO then makes a long-term incentive award recommendation for each of the Named Executive Officers, other than himself, to the Compensation Committee based on this analysis. The Vice President of Human Resources makes a recommendation to the Compensation Committee for the CEO based on the competitive market data. The Compensation Committee reviews management’s analysis and recommendations and the peer group data and is ultimately responsible for determining the size of the long-term incentive awards and approving the equity grants.

For each of the Named Executive Officers, the Compensation Committee has awarded long-term incentive award opportunities comprised of cash-based and equity-based awards, as set forth in the discussion below. The Company utilizes a combination of cash-based and equity-based compensation to foster and promote the long-term financial success of the Company and to materially increase shareholder value by motivating superior performance by executive officers. By providing executive officers with an ownership interest, their interests are more closely aligned with those of the Company’s shareholders.

• 2015 Cash-based Long-Term Incentive Awards.    On February 18, 2015, the Compensation Committee awarded each of the Named Executive Officers, except Messrs. Bish and Stromquist, a cash-based

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long-term incentive award opportunity pursuant to the 2015-2017 Long-Term Incentive Plan (the “2015-2017 LTIP”). On May 22, 2015, the Compensation Committee awarded Mr. Bish a cash-based long-term incentive award opportunity pursuant to the 2015-2017 LTIP. The performance metric under the 2015-2017 LTIP is the Company’s TSR measured against the TSR of companies in the S&P MidCap Technology Index for the period commencing January 1, 2015 and ending December 31, 2017. At the end of the three-year performance period, the Compensation Committee will measure the Company’s TSR against the companies in the S&P MidCap Technology Index. Payouts under the 2015-2017 LTIP range from 0% if the Company’s TSR rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile. If amounts are earned under the 2015-2017 LTIP, the cash payout will occur prior to March 15, 2018.

The minimum, target and maximum award opportunities established under the 2015-2017 LTIP for each of the Named Executive Officers are set forth in the following table:

Name	Minimum		Target		Maximum
Paul Rooke	$	530,000	$	2,120,000	$	4,240,000
David Reeder.		98,000		392,000		784,000
Reynolds Bish		126,000		504,000		1,008,000
Martin Canning		126,000		504,000		1,008,000
Robert Patton		63,000		252,000		504,000
Scott Coons *		126,000		504,000		1,008,000

* Mr. Coons forfeited his 2015-2017 LTIP award opportunity upon his retirement.

• 2015 Equity-based Long-Term Incentive Awards.    On February 18, 2015, the Compensation Committee awarded each of the Named Executive Officers, except Messrs. Bish and Stromquist, an equity-based award comprised of two performance-based restricted stock unit grants, one of which is relative to the market and has a three-year performance period and one of which is based on an internal company metric with a one-year performance period. On May 22, 2015, the Compensation Committee awarded Mr. Bish two similar performance-based restricted stock unit awards. The performance measure for the relative performance-based restricted stock units is the Company’s ROIC measured against the ROIC of the companies in the S&P MidCap Technology Index for the period commencing January 1, 2015 and ending December 31, 2017. The performance-based restricted stock units to be awarded based on the Company’s achievement of its objective, if any, will be determined by the Compensation Committee in 2018, and if earned will be fully settled on February 24, 2018. The performance-based restricted stock units that may be earned range from 0% if the Company’s ROIC rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile.

The minimum, target and maximum award levels for the three-year performance-based restricted stock unit awards are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($44.56 for all except Mr. Bish and $45.85 for Mr. Bish).

	2015-2017 Performance-Based RSU Awards (ROIC)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)
Paul Rooke		12,050		48,200		96,400	$	2,147,792
David Reeder.		2,250		9,000		18,000		401,040
Reynolds Bish		2,875		11,500		23,000		527,275
Martin Canning		2,875		11,500		23,000		512,440
Robert Patton		1,450		5,800		11,600		258,448
Scott Coons *		2,875		11,500		23,000		512,440

* Mr. Coons forfeited his 2015-2017 Performance-Based RSU award opportunity upon his retirement.

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The performance measure for the performance-based restricted stock units with a one-year performance period (January 1, 2015 through December 31, 2015) was the Company’s services and software revenue. The revenue performance objective was $1,276 million at minimum attainment, $1,383 million at target attainment and $1,504 million at maximum attainment. At its meeting on February 17, 2016, the Compensation Committee reviewed and certified the business results for the 2015 performance-based restricted stock unit awards and determined that the Company’s services and software revenue, including pre-acquisition revenue of acquired companies in 2015, for the one-year performance period was $1,514.3 million (200% attainment) and awarded the Named Executive Officers a corresponding number of restricted stock units, as set forth in the table below.

The earned performance-based restricted stock units vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2016, February 24, 2017 and February 24, 2018, based on the Named Executive Officer’s continued employment on each vesting date.

The minimum, target and maximum award levels for the one-year performance-based restricted stock unit awards, and the number of restricted stock units earned by each of the Named Executive Officers, are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($44.56 for all except Mr. Bish and $45.85 for Mr. Bish).

	2015 Performance-Based RSU Awards  (Services/Software Revenue)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)		Earned RSUs (#)
Paul Rooke		12,050		24,100		48,200	$	1,073,896		48,200
David Reeder		2,250		4,500		9,000		200,520		9,000
Reynolds Bish		2,900		5,800		11,600		265,930		11,600
Martin Canning		2,900		5,800		11,600		258,448		11,600
Robert Patton		1,450		2,900		5,800		129,224		5,800
Scott Coons *		2,900		5,800		11,600		258,448		N/A

* Mr. Coons forfeited his 2015 Performance-Based RSU award opportunity upon his retirement.

On February 18, 2015, the Compensation Committee awarded each of the Named Executive Officers, except for Mr. Rooke and Mr. Bish, time-based restricted stock units as a component of their long-term incentive award opportunity (the sole component for Mr. Stromquist). On May 22, 2015, the Compensation Committee awarded Mr. Bish a similar time-based restricted stock unit award. The time-based restricted stock unit awards for each of the Named Executive Officers, except Mr. Bish, vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2016, February 24, 2017 and February 24, 2018, based on the continued employment of the Named Executive Officer on each vesting date. The time-based restricted stock units granted to Mr. Stromquist on February 18, 2015 included vesting provisions consistent with time-based restricted stock units awarded to other senior level executives, which will vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2017, February 24, 2018 and February 24, 2109. The time-based restricted stock units granted to Mr. Bish on May 22, 2015 will vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on May 22, 2016, May 22, 2017 and May 22, 2018, based on his continued employment on each vesting date.

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The time-based restricted stock units awarded to each of the Named Executive Officers are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($44.56 for all except Mr. Bish and $45.85 for Mr. Bish).

	2015 Time-Based RSU Awards
Name	RSUs(#)		FMV at Grant
Paul Rooke		0	$	0
David Reeder		9,600		427,776
Gary Stromquist		4,600		204,976
Reynolds Bish		12,300		563,955
Martin Canning		12,300		548,088
Robert Patton		6,200		276,272
Scott Coons *		12,300		548,088

* Mr. Coons forfeited the unvested portion of his 2015 time-based RSU award upon his retirement

• 2015 New Hire Award — Mr. Reeder.    On December 18, 2014, the Board of Directors, on the recommendation of the Compensation Committee, approved a time-based restricted stock unit award with a grant date fair market value of $4.5 million for Mr. Reeder, to be granted on his hire date. On January 9, 2015, Mr. Reeder was awarded 110,700 restricted stock units with a fair market value of $4,499,955 on the date of grant. The time-based restricted stock units vest and settle as follows: 17% on June 30, 2015, 17% on December 31, 2015, 33% on December 31, 2016 and 33% on December 31, 2017. The vesting of such time-based restricted stock units will be accelerated in the event of Mr. Reeder’s death or disability.

• 2015 Kofax Acquisition Incentive Awards — Mr. Bish.    On May 22, 2015 in connection with the Company’s acquisition of Kofax Limited, the Compensation Committee approved Kofax Acquisition Incentive Awards comprised of performance-based restricted stock units and time-based restricted stock units as an incentive to retain and motivate the performance of certain key employees of Lexmark’s Enterprise Software Segment, including Mr. Bish. The Compensation Committee approved an award opportunity of $5 million at target for Mr. Bish comprised as follows: (i) a performance-based restricted stock unit with a grant date value of $3.5 million at target (76,370 performance RSUs) and (ii) a time-based restricted stock unit with a grant date value of $1.5 million (32,730 RSUs). Of the 76,370 performance-based RSUs, 40% of such units may be earned during the performance period commencing July 1, 2015 and ending December 31, 2016 (the “2016 Performance Period”), 30% of such units may be earned during the performance period commencing January 1, 2017 and ending December 31, 2017 (the “2017 Performance Period”), and 30% of such units may be earned during the performance period commencing January 1, 2018 and ending December 31, 2018 (the “2018 Performance Period”). The performance measures for the performance-based RSUs granted as an acquisition incentive award include Enterprise Software Revenue and Enterprise Software Operating Income Margin. For the 2016 Performance Period, Mr. Bish may earn 40% of the total number of performance-based RSUs (30,548 units, at target, with a maximum award opportunity of 61,096 units). For the 2017 Performance Period, Mr. Bish may earn 30% of the total number of performance-based RSUs (22,911 units, at target, with a maximum award opportunity of 45,822 units). For the 2018 Performance Period, Mr. Bish may earn the remaining 30% of the total number of performance-based RSUs (22,911 units, at target, with a maximum award opportunity of 45,822 units). The performance-based RSUs to be awarded based on the Company’s Enterprise Software segment’s achievement of its objectives, if any, will be determined by the Compensation Committee as soon as practicable after the end of each performance period, and if performance-based RSUs are earned, they will vest and settle on February 24, 2017, February 24, 2018 and February 24, 2019. Termination of employment prior to a vesting date for any reason other than death, disability, or involuntary termination without cause, will result in forfeiture of the award. In the event of Mr. Bish’s death, disability or involuntary termination without cause during a performance period, a prorated portion of the performance-based RSUs may be earned based on the actual attainment of the performance objectives as of the end of the of the performance period in which the death, disability

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or involuntary termination without cause occurred, based on the number of complete months of service performed during such performance period prior to the termination of employment divided by the number of months in the performance period. The performance-based RSUs for the performance periods commencing after Mr. Bish’s termination of employment for death, disability or involuntary termination without cause shall be forfeited. The time-based RSUs awarded as part of the acquisition incentive award shall vest and settle, subject to Mr. Bish’s continuous employment with the Company, in three approximately equal installments on each of February 24, 2017, 2018 and 2019.

• 2014 Cash-based Long-Term Incentive Awards.    On February 19, 2014, the Compensation Committee awarded each of the Named Executive Officers, except Mr. Stromquist, a cash-based long-term incentive award opportunity pursuant to the 2014-2016 Long-Term Incentive Plan (the “2014-2016 LTIP”). On May 16, 2014, the Compensation Committee awarded Mr. Stromquist a cash-based long-term incentive award opportunity pursuant to the 2014-2016 LTIP, effective May 20, 2014, in connection with his appointment as the Company’s interim chief financial officer. The performance metric under the 2014-2016 LTIP is the Company’s TSR measured against the TSR of companies in the S&P MidCap Technology Index for the period commencing January 1, 2014 and ending December 31, 2016. At the end of the three-year performance period, the Compensation Committee will measure the Company’s TSR against the companies in the S&P MidCap Technology Index. Payouts under the 2014-2016 LTIP range from 0% if the Company’s TSR rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile. If amounts are earned under the 2014-2016 LTIP, the cash payout will occur prior to March 15, 2017.

The minimum, target and maximum award opportunities established under the 2014-2016 LTIP for each of the Named Executive Officers are set forth in the following table:

Name	Minimum		Target		Maximum
Paul Rooke	$	480,000	$	1,920,000	$	3,840,000
Gary Stromquist.		50,000		200,000		400,000
Martin Canning		126,000		504,000		1,008,000
Robert Patton		59,500		238,000		476,000
Scott Coons*		119,000		476,000		952,000

* Mr. Coons forfeited his 2014-2016 LTIP award opportunity upon his retirement.

• 2014 Equity-based Long-Term Incentive Awards.    On February 19, 2014, the Compensation Committee awarded each of the Named Executive Officers, except Mr. Stromquist, an equity-based award comprised of two performance-based restricted stock unit grants, one of which is relative to the market and has a three-year performance period and one of which is based on an internal company metric with a one-year performance period. On May 16, 2014, the Compensation Committee awarded Mr. Stromquist two similar performance-based restricted stock unit awards, effective May 20, 2014, in connection with his appointment as the Company’s interim chief financial officer. The performance measure for the relative performance-based restricted stock units is the Company’s relative ROIC measured against the ROIC of the companies in the S&P MidCap Technology Index for the period commencing January 1, 2014 and ending December 31, 2016. The performance-based restricted stock units to be awarded based on the Company’s achievement of its objective, if any, will be determined by the Compensation Committee in 2017, and if earned will be fully settled on February 24, 2017. The performance-based restricted stock units that may be earned range from 0% if the Company’s ROIC rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile.

The minimum, target and maximum award levels for the three-year performance-based restricted stock unit awards are set forth in the following table. The fair market values are computed using the closing

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price of the Common Stock on the date of grant ($41.59 for all except Mr. Stromquist and $42.60 for Mr. Stromquist).

	2014-2016 Performance-Based RSU Awards (ROIC)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)
Paul Rooke		11,450		45,800		91,600	$	1,904,822
Gary Stromquist.		1,150		4,600		9,200		195,960
Martin Canning		3,000		12,000		24,000		499,080
Robert Patton		1,425		5,700		11,400		237,063
Scott Coons*		2,850		11,400		22,800		474,126

* Mr. Coons forfeited his 2014-2016 Performance-Based RSU award opportunity upon his retirement.

The performance measure for the performance-based restricted stock units with a one-year performance period (January 1, 2014 through December 31, 2014) was the Company’s services and software revenue. The revenue performance objective was $1,075 million at minimum attainment, $1,185 million at target attainment and $1,300 million at maximum attainment. At its meeting on February 18, 2015, the Compensation Committee reviewed and certified the business results for the 2014 performance-based restricted stock unit awards and determined that the Company’s services and software revenue, including pre-acquisition revenue of acquired companies in 2014, for the one-year performance period was $1,209.2 million (121% attainment) and awarded the Named Executive Officers a corresponding number of restricted stock units, as set forth in the table below.

The earned performance-based restricted stock units vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2015, February 24, 2016 and February 24, 2017, based on the Named Executive Officer’s continued employment on each vesting date.

The minimum, target and maximum award levels for the one-year performance-based restricted stock unit awards, and the number of restricted stock units earned by each of the Named Executive Officers, are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($41.59 for all except Mr. Stromquist and $42.60 for Mr. Stromquist).

	2014 Performance-Based RSU Awards  (Services/Software Revenue)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)		Earned RSUs (#)
Paul Rooke		11,450		22,900		45,800	$	952,411		27,719
Gary Stromquist		1,150		2,300		4,600		97,980		2,784
Martin Canning		3,000		6,000		12,000		249,540		7,263
Robert Patton		1,450		2,900		5,800		120,611		3,510
Scott Coons*		2,850		5,700		11,400		237,063		6,899

* Mr. Coons forfeited the unvested portion of his earned 2014 Performance-Based RSU award upon his retirement.

On February 19, 2014, the Compensation Committee awarded each of the Named Executive Officers, except for Mr. Rooke, time-based restricted stock units as a component of their long-term incentive award opportunity. The time-based restricted stock unit awards for each of the Named Executive Officers, except Mr. Stromquist, vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2015, February 24, 2016 and February 24, 2017, based on the continued employment of the Named Executive Officer on each vesting date. The time-based restricted stock units granted to Mr. Stromquist on February 19, 2014 included vesting provisions consistent with time-based restricted stock units awarded to other senior level executives, which will vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2016, February 24, 2017 and February 24, 2018, based on his continued employment on each vesting date.

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The time-based restricted stock units awarded to each of the Named Executive Officers are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($41.59).

	2014 Time-Based RSU Awards
Name	RSUs(#)		FMV at Grant
Paul Rooke		0	$	0
Gary Stromquist		3,600		149,724
Martin Canning		12,900		536,511
Robert Patton		6,100		253,699
Scott Coons*		12,200		507,398

* Mr. Coons forfeited the unvested portion of his 2014 Time-Based RSU award upon his retirement.

• 2014 Recognition Award — Mr. Rooke.    On February 19, 2014, in recognition of Mr. Rooke’s services to the Company, the Compensation Committee made a one-time grant of time-based restricted stock units to Mr. Rooke. The Compensation Committee awarded Mr. Rooke 23,900 restricted stock units with a fair market value of $994,001 on the date of grant. The time-based restricted stock units vest and settle as follows: 20% on February 24, 2015; 30% on February 24, 2016; and 50% on February 24, 2017. The vesting of such time-based restricted stock units will be accelerated in the event of Mr. Rooke’s death or disability. In the event of Mr. Rooke’s retirement, the time-based restricted stock units will continue to vest and settle on the dates set forth in the Award Agreement.

• 2013 Cash-based Long-Term Incentive Awards.    On March 8, 2013, the Compensation Committee awarded each of the Named Executive Officers a cash-based long-term incentive award opportunity pursuant to the 2013-2015 Long-Term Incentive Plan (the “2013-2015 LTIP”). The performance metric under the 2013-2015 LTIP is the Company’s TSR measured against the TSR of companies in the S&P MidCap Technology Index for the period commencing January 1, 2013 and ending December 31, 2015. At the end of the three-year performance period, the Compensation Committee will measure the Company’s TSR against the companies in the S&P MidCap Technology Index. Payouts under the 2013-2015 LTIP range from 0% if the Company’s TSR rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile. At its meeting on February 17, 2016, the Compensation Committee determined, based upon a report prepared by Pearl Meyer & Partners, that the Company’s TSR for the performance period (17%) was at the 56^th percentile measured against the TSR of companies in the S&P MidCap Technology Index (8% at the 25^th percentile; 16% at the 50^th percentile; and 27% at the 75^th percentile), resulting in payouts to the Named Executive Officers of approximately 115% of the Target opportunity. The cash payouts will occur prior to March 15, 2016.

The minimum, target and maximum award opportunities established under the 2013-2015 LTIP for each of the Named Executive Officers, as well as the amounts earned by each of the Named Executive Officers, are set forth in the following table:

	2013-2015 Cash-Based LTIP Award Opportunity (TSR)						2013-2015 LTIP Award
Name	Threshold		Target		Maximum
Paul Rooke	$	470,000	$	1,880,000	$	3,760,000	$	2,162,000
Martin Canning		98,000		392,000		784,000		450,800
Robert Patton		56,000		224,000		448,000		257,600
Scott Coons*		63,000		252,000		504,000		0

* Mr. Coons forfeited his 2013-2015 LTIP award opportunity upon his retirement.

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• 2013 Equity-based Long-Term Incentive Awards.    On March 8, 2013, the Compensation Committee awarded each of the Named Executive Officers an equity-based award comprised of two performance-based restricted stock unit grants, one of which is relative to the market and has a three-year performance period and one of which is based on an internal company metric with a one-year performance period.

The performance measure for the relative performance-based restricted stock units is the Company’s relative ROIC measured against the ROIC of the companies in the S&P MidCap Technology Index for the period commencing January 1, 2013 and ending December 31, 2015. The performance-based restricted stock units to be awarded based on the Company’s achievement of its objective, if any, will be determined by the Compensation Committee in 2016, and if earned will be settled on February 24, 2016. The performance-based restricted stock units that may be earned range from 0% if the Company’s ROIC rank is at less than the 25^th percentile; 25% at the 25^th percentile, 50% at the 40^th percentile; 100% at the 50^th percentile; 150% at the 70^th percentile; and 200% at the 90^th percentile. At its meeting on February 17, 2016, the Compensation Committee determined, based upon a report prepared by Pearl Meyer & Partners, that the Company’s ROIC for the performance period (11%) was at the 60^th percentile measured against the ROIC of the companies in the S&P MidCap Technology Index (5.5% at the 25^th percentile; 9.7% at the 50^th percentile; and 12.7% at the 75^th percentile), resulting in the Named Executive Officers earning approximately 125% of the performance-based restricted stock units. The earned performance-based RSUs, as forth in the table below, settled on February 24, 2016.

The minimum, target and maximum award levels for the three-year performance-based restricted stock unit awards are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($23.66).

	2013-2015 Performance-Based RSU Awards (ROIC)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)		Earned RSUs (#)
Paul Rooke		20,000		80,000		160,000	$	1,892,800		100,000
Martin Canning		4,175		16,700		33,400		395,122		20,875
Robert Patton		2,400		9,600		19,200		227,136		12,000
Scott Coons*		2,700		10,800		21,600		255,528		0

* Mr. Coons forfeited his 2013-2015 Performance-Based RSU award opportunity upon his retirement.

The performance measure for the performance-based restricted stock units with a one-year performance period (January 1, 2013 through December 31, 2013) was the Company’s services and software revenue. The revenue performance objective was $870 million at minimum attainment, $995 million at target attainment and $1,120 million at maximum attainment. At its meeting on February 19, 2014, the Compensation Committee reviewed and certified the business results for the 2013 performance-based restricted stock unit awards and determined that the Company’s services and software revenue for the one-year performance period was $988.6 million (97% of target performance) and awarded the Named Executive Officers a corresponding number of restricted stock units, as set forth in the table below.

The earned performance-based restricted stock units vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2014, February 24, 2015 and February 24, 2016, based on the Named Executive Officer’s continued employment on each vesting date.

The minimum, target and maximum award levels for the one-year performance-based restricted stock unit awards, and the number of restricted stock units earned by each of the Named Executive Officers, are set

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forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($23.66).

	2013 Performance-Based RSU Awards (Services/Software Revenue)
Name	RSUs(#) Min		RSUs(#) Target		RSUs(#) Max		FMV at Grant (Target)		Earned RSUs (#)
Paul Rooke		20,000		40,000		80,000	$	946,400		38,968
Martin Canning		4,200		8,400		16,800		198,744		8,183
Robert Patton		2,400		4,800		9,600		113,568		4,676
Scott Coons		2,700		5,400		10,800		127,764		5,261

* Mr. Coons forfeited the unvested portion of his earned 2013 Performance-Based RSU award upon his retirement.

On February 20, 2013, the Compensation Committee awarded each of the Named Executive Officers, except for Mr. Rooke, time-based restricted stock units. The time-based restricted stock unit awards vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2014, February 24, 2015 and February 24, 2016, based on the continued employment of the Named Executive Officer on each vesting date.

The time-based restricted stock units awarded to each of the Named Executive Officers are set forth in the following table. The fair market values are computed using the closing price of the Common Stock on the date of grant ($22.13).

	2013 Time-Based RSU Awards
Name	RSUs(#)		FMV at Grant
Paul Rooke		0	$	0
Martin Canning		19,100		422,683
Robert Patton		11,000		243,430
Scott Coons*		12,300		272,199

* Mr. Coons forfeited the unvested portion of his 2013 Time-Based RSU award upon his retirement.

• Standard Terms of LTIP Awards.    To earn a payout under an LTIP award, the Named Executive Officer must be employed on the last day of the relevant performance period. Termination of employment prior to such time for any reason, other than death, disability or retirement, will result in forfeiture of the award. In the event of a Named Executive Officer’s death, disability or retirement during the performance period, a pro-rated portion of the award may be earned based on the actual attainment as of the end of the performance period and will be paid to the executive or his estate at such times as specified in the LTIP Award Agreement.

In determining whether the Named Executive Officers have earned a payout under the cash-based LTIP Award Agreements or performance-based restricted stock units under the equity-based LTIP Award Agreements, the Compensation Committee may exercise negative discretion applying any factors that it deems appropriate in its sole discretion under the circumstances.

• Grant Practice of Equity-Based Awards.    Equity-based awards are granted under the Lexmark International, Inc. 2013 Equity Compensation Plan (the Stock Incentive Plan for awards made prior to April 25, 2013) and must be approved by the Compensation Committee. Grants of equity-based awards are generally effective on the date that the Compensation Committee approves the award. The Compensation Committee delegated authority to approve awards to each of the CEO and the Vice President of Human Resources, excluding grants made to Section 16 executive officers, on April 26, 2006. The terms of this delegation limit the type and size of each award and all awards in the aggregate

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made between meetings of the Compensation Committee and the CEO or Vice President of Human Resources is required to present a report of the equity-based awards that have been granted between each Compensation Committee meeting at the next regularly scheduled Compensation Committee meeting. No more than 60,000 shares may be granted between regularly-scheduled Compensation Committee meetings and no more than 15,000 shares may be granted to an individual pursuant to an equity-based award during such period. Restricted stock grants are limited to a maximum value of $350,000 per individual and must include a vesting schedule of not less than three years. Stock option awards must vest over a period of not less than three years, must not have a term that exceeds ten years, and must not have an exercise price lower than the closing price of the Company’s stock on the grant date. Awards are granted on the first business day of the month following approval by the CEO or the Vice President of Human Resources.

Retirement Plans and Other Benefits

The Company provides retirement and other benefit plans in which qualified employees, including each of the Named Executive Officers, are eligible to participate. Each plan is designed to offer competitive benefits in order to attract and retain talent and is described in detail as follows:

• Defined Benefit Retirement Plans.    All employees in the United States, including each of the Named Executive Officers other than Messrs. Reeder, Bish and Coons, were eligible to participate in the Lexmark Retirement Growth Account Plan prior to April 3, 2006. The plan is a cash balance defined benefit plan under which benefit accruals were frozen effective April 3, 2006. To the extent that a participant’s eligible compensation was not considered under the Lexmark Retirement Growth Account Plan due to the Internal Revenue Code Section 401(a)(17) limit, the Company maintains a non-qualified, unfunded, noncontributory plan known as the Lexmark Nonqualified Supplemental Retirement Plan. This plan provides for the same benefits that would have been provided under the cash balance defined benefit plan without such limitation. Benefit accruals under the Lexmark Nonqualified Supplemental Retirement Plan were frozen as a result of the Company’s actions to freeze benefits under the Lexmark Retirement Growth Account Plan. A description of the Lexmark Retirement Growth Account Plan and the Lexmark Nonqualified Supplemental Retirement Plan follows the “Pension Benefits” table.

• Defined Contribution Plans.    The Lexmark Savings Plan is a tax-favored 401(k) plan that allows eligible employees, including each of the Named Executive Officers, other than Mr. Bish, to contribute on a pre-tax basis up to 50% of eligible compensation, as defined in the plan, subject to Internal Revenue Code limitations ($18,000 for pre-tax contributions and $6,000 for catch-up contributions in 2015). The Company makes an automatic Company contribution of 1% of each employee’s eligible compensation and a Company matching contribution of up to 5% of the employee’s eligible compensation. Mr. Bish participates in the Kofax, Inc. 401(k) Salary Savings Plan. Kofax makes a matching contribution equal to 50% of an employee’s contributions up to $2,000 per year.

• Supplemental Deferred Compensation Plan.    The Lexmark Supplemental Savings and Deferred Compensation Plan allows eligible employees, including each of the Named Executive Officers, other than Mr. Bish, to defer up to 100% of eligible compensation in excess of the Internal Revenue Code Section 401(a)(17) limit ($265,000 in 2015) and to receive a Company matching contribution of up to 6% of the participant’s eligible excess compensation. A description of the Lexmark Supplemental Savings and Deferred Compensation Plan follows the “Non-Qualified Deferred Compensation” table.

• Deferred Stock Units.    The Lexmark International, Inc. 2013 Equity Compensation Plan (the Lexmark Stock Incentive Plan for deferrals prior to April 25, 2013) entitles a participant, including each of the Named Executive Officers, to elect to defer receipt of all or a portion of his annual incentive compensation, and receive an award of deferred stock units. These deferred stock units are fully vested at all times and settle on the earlier of the fifth anniversary of the grant date or the termination date due to retirement (subject to a six-month delay as required under Internal Revenue Code Section 409A), death or disability. The participant also receives an additional award of supplemental deferred stock units upon deferral with a value equal to 20% of the compensation deferred. These supplemental deferred stock units

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vest and settle on the fifth anniversary of the date that the compensation deferred would otherwise have been paid, subject to continued employment from the date of deferral through the settlement date. Supplemental deferred stock units will vest and settle in full upon termination of employment due to death or disability.

• Health and Welfare Benefits.    Each of the Named Executive Officers are eligible to participate in the same health and welfare benefit plans that are available to all eligible employees of the Company or Enterprise Software, as applicable.

Termination and Change in Control Agreements

Each of the Named Executive Officers has entered into a change in control agreement with the Company. The Compensation Committee believes that these agreements are in the best interest of the Company and its shareholders to ensure the continued focus and dedication of each Named Executive Officer to the business of the Company without the distraction or personal financial concern if the Company were to be acquired by another company. These agreements ensure that the Named Executive Officers will continue to perform services on behalf of the Company when a change in control is pending, and protects the Named Executive Officers against the potential loss of their positions following a change in control. The agreements provide certain severance benefits only upon a double trigger, meaning severance benefits will only be paid to a Named Executive Officer if the following two events occur: (i) a change in control of the Company, and (ii) within 12 months prior to a change in control, the Named Executive Officer’s employment is terminated by the Company in connection with or in anticipation of the Change in Control, or within 24 months following the change in control of the Company, the Named Executive Officer’s employment is terminated by the Company without “cause” or by the Named Executive Officer with “good reason.” A description of the material terms and potential payments provided under the change in control agreements for each of the Named Executive Officers is included in the narrative of the “Termination and Change in Control Payments” section.

In addition, each of the Named Executive Officers has entered into an executive severance agreement with the Company. The agreements for each of the Named Executive Officers provide severance benefits upon an involuntary termination of employment without “cause” or a voluntary termination by a Named Executive Officer with “good reason.” The Compensation Committee believes that the severance benefits offered under the executive severance agreements represent a significant component of each Named Executive Officer’s total compensation package, are market competitive and not excessive, and are essential to the Company’s ability to attract and retain key executive officers. The benefits offered under the executive severance agreements allow the executives to continue to focus their efforts and attention on the Company’s business operations and execution of the Company’s strategic plan. A description of the material terms and the payments provided under the executive severance agreements for each of the Named Executive Officers is included in the narrative of the “Termination and Change in Control Payments” section.

Perquisites

The Company provides each of the Named Executive Officers with perquisites that the Company and the Compensation Committee believe are reasonable, not excessive, and consistent with its overall compensation philosophy. Each of the Named Executive Officers is entitled to reimbursement for qualified payments towards financial planning and may receive up to $6,000 ($12,000 for the Chief Executive Officer) annually.

Stock Ownership

The Compensation Committee believes in aligning the interests of executive officers with the long-term interests of shareholders. Consistent with this philosophy, the Compensation Committee recommended, and the Board approved, stock ownership guidelines for certain executive officers, including each of the Named Executive Officers. These guidelines require that until the ownership goal is reached, each of the Named Executive Officers must retain a percentage of after tax net shares on the exercise of any stock options and the vesting and settlement of any restricted stock units. That percentage is 100% for the Chief Executive Officer and 50% for each of the other Named Executive Officers. The guidelines exclude unexercised stock options, unvested

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restricted stock units and unvested deferred stock units and require the Chief Executive Officer to hold a minimum of five times base salary and each of the other Named Executive Officers to hold a minimum of three times base salary (one times base salary for Mr. Stromquist) in value of the Common Stock. The Compensation Committee annually reviews the actual stock ownership of each Named Executive Officer compared to his stock ownership guideline. Information on the number of stock options, unvested restricted stock units and unvested deferred stock units, which are not counted for ownership guidelines, is also presented to the Compensation Committee during the review of stock ownership.

Risk Assessment

In designing compensation plans and programs for executive officers of the Company, including the Named Executive Officers, the Compensation Committee structures such plans and programs to balance risk and reward, while mitigating the incentive for excessive risk taking. The following characteristics of the Company’s executive compensation plans and programs limit the possibility for excessive risk taking:

• The base salary is a fixed amount, and therefore does not encourage risk taking.

• The annual incentive compensation opportunity for each Named Executive Officer is limited to six-tenths of one percent of Operating Income, in accordance with the Lexmark International, Inc. Senior Executive Incentive Compensation Plan.

• The Company’s annual incentive compensation program and long term incentive compensation program have used metrics such as revenue growth (including license and subscription revenue growth for Enterprise Software employees), operating income, cash cycle, days sales outstanding and free cash flow for many years and the Company has seen no evidence that it encourages unnecessary or excessive risk taking.

• The long-term incentive opportunity is comprised of time-based restricted stock units and one-year performance-based restricted stock units that vest over multiple years and/or performance-based restricted stock units and a cash-based long-term incentive opportunity with three-year relative performance metrics tied to return on invested capital and total shareholder return measured against the companies in the S&P MidCap Technology Index, respectively, which aligns the Named Executive Officer’s interests to long-term shareholder interests.

• Members of the Compensation Committee approve the final incentive compensation awards after reviewing the executive officer’s and the Company’s performance, and may utilize negative discretion to reduce incentive compensation awards based on a variety of performance objectives, thereby diversifying the risk.

• Incentive compensation and equity awards are subject to forfeiture and recoupment as described in the “Executive Compensation Recovery Policy” section.

• The Named Executive Officers are subject to stock ownership guidelines as described in the “Stock Ownership” section.

Tax Deductibility of Pay

Section 162(m) of the Internal Revenue Code generally disallows the deductibility of compensation paid to each of the Named Executive Officers in amounts in excess of $1 million unless the compensation is paid pursuant to pre-determined performance objectives that meet the requirements of Section 162(m), including shareholder approval. To ensure deductibility of non-discretionary annual incentive awards, the Lexmark International, Inc. Senior Executive Incentive Compensation Plan, which was presented to and approved by the Company’s shareholders at the 2004 Annual Meeting of Shareholders, sets forth a maximum annual incentive award to each participant equal to six-tenths of one percent of Operating Income, as defined in the plan. To ensure the deductibility of long-term incentive awards and equity awards, the Lexmark International, Inc. 2013 Equity Compensation Plan, which was presented to and approved by the Company’s shareholders, sets forth a maximum number of shares that may be awarded to a participant as stock options or stock appreciation rights

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over a five-year period equal to 3,000,000 shares, and further sets forth a maximum long-term incentive award to each participant awarded during a calendar year to $10,000,000, if the award is denominated in cash, or 400,000 shares for stock-based awards. The Compensation Committee and the Board of Directors believe that it is essential to retain the ability to reward and motivate executives based on the assessment of an individual’s performance, even though some or all of any such discretionary payments may not be deductible due to the requirements of Section 162(m). Accordingly, the Compensation Committee reserves the right to award discretionary incentive awards to executive officers and adopt other compensation plans and arrangements which may not be deductible under Section 162(m). Any such incentive payments would be based on the Compensation Committee’s qualitative assessment of the applicable executive’s individual performance and contribution.

Tally Sheets

The Compensation Committee annually reviews tally sheets that set forth the total annual compensation for each of the Named Executive Officers and certain other executive officers. The Compensation Committee believes that tally sheets are important to maintain visibility to amounts realized by each of the Named Executive Officers annually under various termination and change in control scenarios. The tally sheets include the dollar amount that would be realized by the executive officer under four termination and change in control scenarios. These scenarios include voluntary termination (including retirement), involuntary termination without cause or voluntary termination by the employee for good reason, change in control without a termination of employment, and termination following a change in control.

Executive Compensation Recovery Policy

In February 2009, the Compensation Committee and the Corporate Governance and Public Policy Committee recommended to the Board of Directors the adoption of an Executive Compensation Recovery Policy that is applicable to certain employees, including each of the Named Executive Officers. The Board of Directors adopted the policy on February 19, 2009, and it applies to all incentive compensation and equity awards granted after such date. Under the Executive Compensation Recovery Policy, if a Covered Employee’s fraud, gross negligence or intentional misconduct causes the Company to restate all or a portion of its financial information that has been filed with the Securities and Exchange Commission, the Company, to the extent permitted by applicable law, shall be able to recoup certain payments from the Covered Employee, who engaged in the prohibited conduct, and from certain other executive officers, including each of the Named Executive Officers, who benefited from such misconduct. With respect to a Covered Employee who engages in the prohibited conduct requiring a restatement of financial information, the Company shall recoup (i) 100% of the incentive compensation (annual bonuses, long-term incentive compensation, and performance-based equity awards) paid to the Covered Employee during the period beginning at the time of the initial public disclosure of the misstated financial information and ending 12 months following the date of the initial filing of any financial statement that must be restated (the “Recovery Period”), and (ii) 100% of the gains realized by the Covered Employee from the vesting and settlement of any restricted stock unit or other equity award or the vesting or exercise of any stock option, the sale of any stock acquired pursuant to the vesting and settlement of any restricted stock unit or any other equity award or the vesting and exercise of any stock option, and all cash awards granted under the Company’s equity incentive plans. In addition, the Policy requires the Covered Employee to forfeit any vested and unvested stock options, restricted stock units and any other equity awards. With respect to certain other Covered Employees, including each Named Executive Officer, who benefits from the misconduct, the Policy provides that the Company may recoup from such Covered Employees the excess incentive compensation paid during the Recovery Period over the amount that would have been paid if the financial information had been correctly reported.

In addition, each stock option agreement and restricted stock unit agreement awarded to employees of the Company, including each Named Executive Officer, provides that if the employee violates the non-compete, non-interference, non-disparagement, or non-disclosure restrictions set forth in the agreement or otherwise acts against the best interests of the Company, the employee shall (i) forfeit any unexercised portion of the stock option or unvested portion of the restricted stock unit; and (ii) repay to the Company an amount equal to the

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stock option gains or the income realized upon vesting of the restricted stock units within 18 months preceding the earlier of the violation of one of the restrictions or the termination of the employee’s employment through the later of 18 months following the violation of one of the restrictions or such period of time it takes the Company to discover the violation. Due to restrictions on non-compete and non-solicitation clauses in California, Mr. Bish’s restricted stock unit agreements do not include a non-compete provision and the non-interference provision is limited to the non-solicitation of employees and certain former employees.

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COMPENSATION COMMITTEE REPORT

The Compensation and Pension Committee has reviewed and discussed the foregoing Compensation Discussion and Analysis with management. Based on the review and discussions with management, the Compensation and Pension Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015.

Kathi P. Seifert, Chair

Jared L. Cohon

W. Roy Dunbar

William R. Fields

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EXECUTIVE COMPENSATION

The information set forth below describes the components of the total compensation of each of the Named Executive Officers. The Named Executive Officers are determined based on 2015 total compensation excluding the change in pension value and nonqualified deferred compensation earnings, as disclosed in the Summary Compensation Table. Also described below are the contracts, plans, and arrangements providing for payments to each of the Named Executive Officers in connection with a termination of the Named Executive Officer, a change in control of the Company or certain changes in the Named Executive Officer’s responsibilities.

The following table sets forth the total compensation for each of the Named Executive Officers during the year ended December 31, 2015.

SUMMARY COMPENSATION TABLE

Name and Principal Position	Year		Salary ($)		Bonus(1) ($)		Stock Awards(2) ($)		Option Awards ($)		Non-Equity Incentive Plan Compensation(3) ($)		Change in Pension Value and Nonqualified Deferred Compensation Earnings(4) ($)		All Other Compensation(5) ($)		Total ($)
Paul Rooke		2015	$	853,269	$	0	$	3,382,750	$	0	$	2,162,000	$	0	$	82,975	$	6,480,994
Chairman and Chief Executive Officer		2014		853,269		0		4,061,941		0		1,994,937		89,675		54,819		7,054,641
		2013		828,462		0		2,839,200		0		1,104,359		0		60,982		4,833,003
David Reeder		2015		475,673		225,000		5,529,291		0		0		0		138,164		6,368,128
Vice President and Chief Financial Officer
Gary Stromquist		2015		351,346		0		204,976		0		0		0		36,281		592,603
Vice President, ISS Finance (Former Interim CFO)		2014		341,827		0		443,664		0		254,680		97,155		34,300		1,171,626
Reynolds Bish		2015		364,583		0		6,890,011		0		150,413		0		4,555,027		11,960,034
Vice President and President of Enterprise Software
Martin Canning		2015		527,019		0		1,318,976		0		450,800		0		79,596		2,376,391
Executive Vice President and President of Imaging Solutions and Services		2014 2013		527,019 514,615		0 0		1,285,131 1,016,549		0 0		887,959 550,115		8,528 0		67,218 35,654		2,775,855 2,116,933
Robert Patton		2015		401,539		0		663,944		0		257,600		0		47,588		1,370,671
Vice President, General Counsel and Secretary		2014		401,539		0		611,373		0		462,459		3,459		44,892		1,523,722
		2013		389,135		0		584,134		0		332,810		0		25,454		1,331,533
Scott Coons		2015		275,865		0		1,318,976		0		0		0		15,042		1,609,883
Former Vice President and President of Enterprise Software		2014 2013		464,519 439,327		0 0		1,218,587 655,491		0 0		239,145 502,190		0 0		44,004 15,300		1,966,255 1,612,308

(1) In 2015, Mr. Reeder received a signing bonus in the amount of $225,000 when he joined the Company. No other discretionary bonuses have been awarded to any of the Named Executive Officers during the past three fiscal years. Refer to the Non-Equity Incentive Compensation Plan column for payments awarded based on the achievement of pre-established performance objectives.

(2) Consists of the grant date fair value dollar amount computed in accordance with the provisions of the FASB guidance on share-based payments and related interpretations for all restricted stock units and supplemental deferred stock units granted during the years presented above. The grant date fair value for restricted stock units and supplemental deferred stock units with time-based vesting is computed by multiplying the number of units by the closing price of a share of Common Stock on the grant date. For the performance-based restricted stock units, the grant date fair value is computed by multiplying the target number of units by the closing price of a share of Common Stock on the grant date, based on the Company’s determination that performance at target would be the probable outcome of the performance condition as of the grant date.

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The grant date fair value for the 2015 performance-based restricted stock units for the Named Executive Officers receiving such awards would be as follows if the maximum performance were achieved for the 2015-2017 performance period: Mr. Rooke — $4,295,584; Mr. Reeder — $802,080; Mr. Stromquist — N/A; Mr. Bish — $1,054,550; Mr. Canning — $1,024,880; and Mr. Patton — $516,896. The grant date fair value for the 2015 performance-based restricted stock units for the Named Executive Officers receiving such awards would be as follows if the maximum performance were achieved for the 2015 performance period: Mr. Rooke — $2,147,792; Mr. Reeder — $401,010; Mr. Stromquist — N/A; Mr. Bish — $531,860; Mr. Canning — $516,896; and Mr. Patton — $258,448. Refer to the Compensation Discussion and Analysis “2015 Long-Term Incentive Awards” section for further detail. In connection with the Kofax acquisition, the Company agreed to the full vesting of Mr. Bish’s unvested long- term incentive plan awards for 400,000 shares of Kofax common stock at target, resulting in a payment of $4.4 million to Mr. Bish after closing of the Kofax acquisition. Of such amount, $2,631,555 has been included in the “Stock Award” column representing the compensation expense incurred by the Company under the FASB guidance on share-based payments. The remaining amount is reported under “All Other Compensation.” Mr. Coons retired effective July 31, 2015 and therefore forfeited all of his 2015 stock awards and any unvested prior year stock awards.

At its meeting on February 17, 2016, the Compensation Committee reviewed and certified the business results for the performance-based restricted stock unit awards with the 2015 performance period, and determined that 200% attainment had been achieved for the performance period. They also certified the business results for the performance-based restricted stock unit awards and cash-based long-term incentive plan awards for the 2013-2015 performance period, and determined that 125% of Target performance had been attained for the performance-based restricted stock units and 115% of Target performance had been attained for the cash-based plan.

At its meeting on February 18, 2015, the Compensation Committee reviewed and certified the business results for the performance-based restricted stock unit awards with the 2014 performance period, and determined that 121% attainment had been achieved for the performance period. They also certified the business results for the performance-based restricted stock unit awards and cash-based long-term incentive plan awards for the 2012-2014 performance period, and determined that 47% of Target performance had been attained for the performance-based restricted stock units and 28% of Target performance had been attained for the cash-based plan.

At its meeting on February 19, 2014, the Compensation Committee reviewed and certified the business results for the performance-based restricted stock unit awards with the 2013 performance period, and determined that 97% of Target performance had been attained for the performance period.

(3) For 2015, consists of the payment under the cash-based 2013-2015 Long-Term Incentive Plan for Messrs. Rooke, Canning and Patton. There was no annual incentive compensation payment under the Senior Executive Incentive Compensation Plan for the fiscal year ending December 31, 2015. Mr. Bish received payment in the amount of $125,070 under the Kofax Incentive Compensation Plan for the six-month period ended December 31, 2015. Mr. Bish also received a bonus payment under the Kofax Executive Management Team Incentive Plan for the quarter ended June 30, 2015 in the amount of $57,656, of which $25,343 has been included in the table above, reflecting payment for service after the date of the Kofax acquisition.

For 2014, consists of annual incentive compensation under the Senior Executive Incentive Compensation Plan for the fiscal year ending December 31, 2014 and the payment under the cash-based 2012-2014 Long-Term Incentive Plan as detailed in the table that follows.

Name	2014 Annual Incentive Compensation		2012-2014 Long-Term Incentive Plan		Total Non-Equity Incentive Plan Compensation
Paul Rooke(a)	$	1,344,037	$	650,900	$	1,994,937
Gary Stromquist		254,680		N/A		254,680
Martin Canning		769,099		118,860		887,959
Scott Coons		174,762		64,383		239,145
Robert Patton		393,124		69,335		462,459

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(a) Mr. Rooke deferred 100% of his 2014 annual incentive compensation in excess of $500,000 and received an award of elective deferred stock units. Mr. Rooke also received a supplemental award of deferred stock units with a value equal to 20% of his elective deferred stock units. Refer to the Nonqualified Deferred Compensation section entitled “Deferred Stock Units” for further information concerning deferred stock unit awards.

For 2013, consists of annual incentive compensation under the Senior Executive Incentive Compensation Plan for the fiscal year ending December 31, 2013. Pursuant to his deferral election, Mr. Rooke elected to defer 100% of his 2013 incentive compensation to receive an award of elective deferred stock units. Mr. Rooke also received a supplemental award of deferred stock units with a value equal to 20% of his elective deferred stock units. Refer to the Nonqualified Deferred Compensation section entitled “Deferred Stock Units” for further information concerning deferred stock unit awards. The amount for Mr. Coons for 2013 also includes $248,596 paid out under the Perceptive Software FY12-FY13 Incentive Compensation Plan. There was no cash-based long-term incentive plan for 2011-2013.

(4) Consists of the change in pension value during the years presented above under the Lexmark Retirement Growth Account Plan and the Lexmark Nonqualified Supplemental Retirement Plan. See the section entitled “Pension Benefits” for a description of these plans. Lexmark does not pay above-market or preferential earnings on nonqualified deferred compensation.

For 2015, the amounts were negative, and therefore, zero was reported in the Summary Compensation Table. The actual change in pension value for the Named Executive Officers for 2015 was as follows: Mr. Rooke ($38,748); Mr. Reeder — N/A; Mr. Stromquist ($55,245); Mr. Bish — N/A; Mr. Canning ($5,169); Mr. Patton ($1,117); and Mr. Coons- N/A.

For 2013, the amounts were negative, and therefore, zero was reported in the Summary Compensation Table. The actual change in pension value for the Named Executive Officers for 2013 was as follows: Mr. Rooke ($94,580); Mr. Canning ($24,166); Mr. Patton ($7,656); and Mr. Coons — N/A.

(5) For 2015, the following table contains a breakdown of the value of compensation and benefits included in the column entitled “All Other Compensation.”

Name	Financial Planning Reimbursement		Matching Contribution under 401(k) Plan		Matching Contribution under the Supplemental Deferred Compensation Plan		Other			Total
Paul Rooke	$	1,975	$	15,900	$	65,100	$	0		$	82,975
David Reeder		3,102		15,900		0		119,162	(a)		138,164
Gary Stromquist		0		15,900		20,381		0			36,281
Reynolds Bish		0		2,000		0		4,553,027	(b)		4,555,027
Martin Canning		1,950		15,900		61,746		0			79,596
Robert Patton		0		15,900		31,688		0			47,588
Scott Coons		0		15,042		0		0			15,042

(a) This amount represents relocation expenses provided to Mr. Reeder in connection with his relocation to Lexington, Kentucky. Relocation expenses included travel, temporary housing, rental car, spousal assistance, home sale/purchase assistance, a miscellaneous expense allowance and a tax gross-up on certain relocation expenses, consistent with the Company’s relocation policy.

(b) This amount represents (i) payments made on behalf of Mr. Bish, in connection with the Kofax acquisition, in the amount of $2,680,461 for excise taxes on “excess parachute payments” and a gross-up of federal and state taxes on the payment of such taxes, which Mr. Bish was entitled to under the terms of his employment agreement with Kofax Limited; (ii) a one-time payment in the amount of $104,121 to adjust for currency fluctuations in cashing-out fully vested stock options with exercise prices denominated in pounds sterling in connection with the Company’s acquisition of Kofax Limited; and (iii) $1,768,445, representing a portion of the $4.4 million cash payment made to Mr. Bish after closing of the Kofax acquisition in settlement of Mr. Bish’s long-term incentive plan awards for which the Company agreed to full vesting and payment. The remaining portion of the $4.4 million cash payment represented a compensation expense incurred by the Company under the FASB guidance on share-based payments and is reported under the “Stock Award” column.

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GRANTS OF PLAN-BASED AWARDS

						Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards(2)						All Other Stock Awards: Number of Shares of Stock or Units(3) (#)		Grant Date Fair Value of Stock and Option Awards(4) ($)
Name	Award Type			Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)
Paul Rooke		Annual IC			—	$	153,000	$	1,020,000	$	2,040,000
		3-Yr LTIP			—		530,000		2,120,000		4,240,000
		3-Yr PRSUs			02/18/2015								12,050		48,200		96,400			$	2,147,792
		1-Yr PRSUs			02/18/2015								12,050		24,100		48,200				1,073,896
		DSUs	(5)		03/05/2015														3,969		161,062
David Reeder		Annual IC			—		54,563		363,750		727,500
		3-Yr LTIP			—		98,000		392,000		784,000
		RSUs			01/09/2015														110,700		4,499,955
		3-Yr PRSUs			02/18/2015								2,250		9,000		18,000				401,040
		1-Yr PRSUs			02/18/2015								2,250		4,500		9,000				200,520
		RSUs			02/18/2015														9,600		427,776
Gary Stromquist		Annual IC			—		31,500		210,000		332,500
		RSUs			02/18/2015														4,600		204,976
Reynolds Bish		Annual IC			—		76,500		510,000		1,020,000
		3-Yr LTIP			—		126,000		504,000		1,008,000
		3-Yr PRSUs			05/22/2015								2,875		11,500		23,000				527,275
		1-Yr PRSUs			05/22/2015								2,900		5,800		11,600				265,930
		RSUs			05/22/2015														12,300		563,955
		Acq PRSUs	(6)		05/22/2015								15,274		30,548		61,096				1,400,626
		Acq RSUs	(7)		05/22/2015														32,730		1,500,671
Martin Canning		Annual IC			—		66,938		446,250		892,500
		3-Yr LTIP			—		126,000		504,000		1,008,000
		3-Yr PRSUs			02/18/2015								2,875		11,500		23,000				512,440
		1-Yr PRSUs			02/18/2015								2,900		5,800		11,600				258,448
		RSUs			02/18/2015														12,300		548,088
Robert Patton		Annual IC			—		45,000		300,000		600,000
		3-Yr LTIP			—		63,000		252,000		504,000
		3-Yr PRSUs			02/18/2015								1,450		5,800		11,600				258,448
		1-Yr PRSUs			02/18/2015								1,450		2,900		5,800				129,224
		RSUs			02/18/2015														6,200		276,272
Scott Coons(8)		Annual IC			—		60,563		403,750		807,500
		3-Yr LTIP			—		126,000		504,000		1,008,000
		3-Yr PRSUs			02/18/2015								2,875		11,500		23,000				512,440
		1-Yr PRSUs			02/18/2015								2,900		5,800		11,600				258,448
		RSUs			02/18/2015														12,300		548,088

(1) The award opportunity for the 2015 performance period for each Named Executive Officer under the Lexmark International, Inc. Senior Executive Incentive Compensation Plan (“SEICP”) is 0.6% of the Company’s Operating Income, which may be reduced by the Compensation Committee, in its sole discretion, based on any factors it deems reasonable. For 2015, the Compensation Committee has determined that annual incentive awards under the SEICP may be subject to reduction based on the factors set forth in the Company’s 2015 Incentive Compensation Plan. Based on those possible reduction factors, the first row for each Named Executive Officer in this column, entitled “Estimated Future Payouts Under Non-Equity Incentive Plan Awards,” consists of potential future payments of annual incentive compensation with respect to fiscal year 2015 under the SEICP.

The second row consists of potential future payments under the 2015-2017 Long-Term Incentive Plan (“LTIP”). The performance measure for the 2015-2017 LTIP is the Company’s relative total shareholder return (“TSR”) measured against the TSR of companies in the S&P MidCap Technology Index for the performance period commencing January 1, 2015 and ending December 31, 2017. The Named Executive Officer must be employed on the last day of the performance period to earn an LTIP payout. Termination of employment prior to such time for any reason, other than death, disability or retirement, will result in forfeiture of the award. In the event of a Named Executive Officer’s death, disability or retirement (as defined in the LTIP Award Agreement) during the performance period, a prorated portion of the award may

45

be earned based on the actual attainment as of the end of the performance period. If earned, the cash payout will occur prior to March 15, 2018.

(2) Performance-based restricted stock unit awards in 2015 are granted under the Company’s 2013 Equity Compensation Plan. The performance measure for the first row of awards (the “2015-2017 Performance-Based RSUs”) for each Named Executive Officer in this column, entitled “Estimated Future Payouts Under Equity Incentive Plan Awards, is the Company’s relative Return on Invested Capital (“ROIC”) measured against the ROIC of companies in the S&P MidCap Technology Index for the performance period commencing January 1, 2015 and ending December 31, 2017. Settlement of any earned 2015-2017 Performance-Based RSUs will occur on February 24, 2018. Target levels are set based on 100% achievement of the goal. Threshold represents goal achievement at the minimum performance level (25%) and maximum represents goal achievement at the maximum performance level (200%). If threshold performance is not achieved during the performance period, then no 2015-2017 Performance-Based RSUs will be earned. The Named Executive Officer must be employed on the last day of the performance period to earn the 2015-2017 Performance-Based RSUs. Termination of employment prior to such time for any reason, other than death, disability or retirement, will result in forfeiture of the award. In the event of a Named Executive Officer’s death, disability or retirement (as defined in the RSU Award Agreement) during the performance period, a prorated portion of the 2015-2017 Performance-Based RSUs may be earned based on the actual attainment as of the end of the performance period.

The performance measure for the second row of awards (the “2015 Performance-Based RSUs”) is the Company’s services and software revenue for the performance period commencing January 1, 2015 and ending December 31, 2015. Settlement of any earned 2015 Performance-Based RSUs will occur in three approximately equal installments (34%, 33% and 33%, respectively) on February 24, 2016, February 24, 2017 and February 24, 2018. Target levels are set based on 100% achievement of the goal. Threshold represents goal achievement at the minimum performance level (50%) and maximum represents goal achievement at the maximum performance level (200%). If threshold performance is not achieved during the performance period, then no 2015 Performance-Based RSUs will be earned. The Named Executive Officer must be employed on the last day of the performance period to earn the 2015 Performance-Based RSUs. Termination of employment prior to such time for any reason will result in forfeiture of the award.

(3) Restricted stock unit awards in 2015 are granted under the 2013 Equity Compensation Plan. The restricted stock unit award granted on January 9, 2015 to Mr. Reeder vests and settles as follows: 17% on June 30, 2015, 17% on December 31, 2015, 33% on December 31, 2016 and 33% on December 31, 2017. The restricted stock unit awards granted on February 18, 2015 to all Named Executive Officers, except Messrs. Bish and Stromquist, vest and settle in three approximately equal installments (34%, 33%, and 33%, respectively) on February 24, 2016, February 24, 2017 and February 24, 2018. The restricted stock unit award granted on February 18, 2015 to Mr. Stromquist vests and settles in three approximately equal installments (34%, 33%, and 33%, respectively) on February 24, 2017, February 24, 2018 and February 24, 2019. The restricted stock unit award granted on May 22, 2015 to Mr. Bish vests and settles in three approximately equal installments (34%, 33% and 33%, respectively) on the first, second and third anniversaries of the grant date.

(4) The grant date fair value for time-based restricted stock units was determined by multiplying the number of restricted stock units granted by the closing price of a share of Common Stock on the grant date. The grant date fair value for performance-based restricted stock units was determined by multiplying the number of performance-based restricted stock units at target, which was determined to be the probable outcome of the performance condition as of the grant date, by the closing price of a share of Common Stock on the grant date.

(5) Award consists of supplemental deferred stock units granted under the 2013 Equity Compensation Plan. Mr. Rooke elected to defer 100% of his 2014 incentive compensation in excess of $500,000 into deferred stock units, and therefore was granted an additional 20% in supplemental units. The supplemental deferred stock units will become 100% vested on the fifth anniversary of the grant date.

(6) Award consists of performance-based restricted stock units at Target for the performance period commencing July 1, 2015 and ending December 31, 2016 (the “2016 Performance Period”) granted in connection with the Company’s acquisition of Kofax Limited. If the performance metric is achieved, settlement of any earned

46

acquisition performance-based restricted stock units will occur on February 24, 2017. Target levels are set based on 100% achievement of the goal. Threshold represents goal achievement at the minimum performance level (50%) and maximum represents goal achievement at the maximum performance level (200%). If threshold performance is not achieved during the performance period, then no acquisition performance-based RSUs will be earned. Mr. Bish must be employed on the last day of the performance period to earn the acquisition performance-based RSUs. Termination of employment prior to a vesting date for any reason, other than death, disability or involuntary termination without cause, will result in forfeiture of the award. In the event of Mr. Bish’s death, disability or involuntary termination without cause during the performance period, a prorated portion of the performance-based RSUs may be earned based on the actual attainment of the performance objectives as of the end of the performance period in which the death, disability or involuntary termination without cause occurred, based on the number of complete months of service performed during such performance period prior to the termination of employment divided by the number of months in the performance period. The award also includes an opportunity to earn 22,911 performance-based restricted stock units at target for a performance period to commence January 1, 2017 and end December 31, 2017 (the “2017 Performance Period”) and an additional opportunity to earn 22,911 performance-based restricted stock units at target for a performance period to commence January 1, 2018 and end December 31, 2018 (the “2018 Performance Period”). During the first quarter of each of the 2017 and 2018 Performance Periods, the Compensation Committee will establish the minimum, target and maximum performance objectives for such performance periods. Because performance objectives have not been established for the 2017 and 2018 Performance Periods, the awards for such Performance Periods were not capable of valuation and therefore are not included in the table above.

(7) Award consists of time-based restricted stock units granted in connection with the Company’s acquisition of Kofax, which vest and settle in three approximately equal installments (34%, 33% and 33%, respectively) on each of February 24, 2017, 2018 and 2019.

(8) Mr. Coons retired from the Company, effective July 31, 2015, and therefore forfeited all of the plan-based awards reflected in the table above.

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OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

	Option Awards											Stock Awards
Name	Grant Date			Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable		Option Exercise Price ($)		Option Expiration Date		Grant Date			Number of Shares or Units of Stock That Have Not Vested(1) (#)		Market Value of Shares or Units of Stock That Have Not Vested(2) ($)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) ($)
Paul Rooke		02/22/2006	(3)		60,000		—	$	48.05		02/22/2016		03/08/2013	(4)		13,824	$	448,589
		02/21/2007			45,000		—		63.11		02/21/2017		03/08/2013	(5)		100,000		3,245,000
		07/26/2007			25,000		—		42.21		07/26/2017		02/19/2014	(6)		20,553		666,945
		02/20/2008			46,000		—		33.26		02/20/2018		02/19/2014	(4)		19,055		618,335
		05/15/2009			172,000		—		17.12		05/15/2019		02/19/2014	(7)						45,800	$	1,486,210
		10/26/2010			60,000		—		37.71		10/26/2020		03/06/2014	(8)		5,400		175,230
													02/18/2015	(4)		48,200		1,564,090
													02/18/2015	(9)						48,200		1,564,090
													03/05/2015	(8)		4,095		132,883
David Reeder													01/09/2015	(10)		76,099		2,469,413
													02/18/2015	(11)		9,999		324,468
													02/18/2015	(4)		9,000		292,050
													02/18/2015	(9)						9,000		292,050
Gary Stromquist		02/22/2006	(3)		19,000		—		48.05		02/22/2016		02/22/2012	(12)		1,583		51,368
		02/21/2007			14,000		—		63.11		02/21/2017		02/20/2013	(12)		5,097		165,398
													02/19/2014	(12)		3,870		125,582
													05/20/2014	(4)		1,914		62,109
													05/20/2014	(7)						4,600		149,270
													02/18/2015	(12)		4,791		155,468
Reynolds Bish													05/22/2015	(13)		33,768		1,095,772
													05/22/2015	(14)						30,548		991,283
													05/22/2015	(15)		12,690		411,791
													05/22/2015	(4)		11,600		376,420
													05/22/2015	(9)						11,500		373,175
Martin Canning													02/20/2013	(11)		7,052		228,837
													03/08/2013	(4)		2,904		94,235
													03/08/2013	(5)		20,875		677,394
													02/19/2014	(11)		9,156		297,112
													02/19/2014	(4)		4,993		162,023
													02/19/2014	(7)						12,000		389,400
													02/18/2015	(11)		12,811		415,717
													02/18/2015	(4)		11,600		376,420
													02/18/2015	(9)						11,500		373,175
Robert Patton													02/20/2013	(11)		4,061		131,779
													03/08/2013	(4)		1,660		53,867
													03/08/2013	(5)		12,000		389,400
													02/19/2014	(11)		4,329		140,476
													02/19/2014	(4)		2,413		78,302
													02/19/2014	(7)						5,700		184,965
													02/18/2015	(11)		6,458		209,562
													02/18/2015	(4)		5,800		188,210
													02/18/2015	(9)						5,800		188,210

(1) Number of shares or units of stock that have not vested include associated dividend equivalent units.

(2) Based on the closing price of the Common Stock on December 31, 2015 ($32.45).

(3) The stock options expired unexercised on February 22, 2016.

(4) Award consists of earned performance-based restricted stock units scheduled to vest and settle in three approximately equal installments (34%, 33% and 33% per year) on the February 24^th immediately following the first, second and third anniversaries of the grant date, respectively.

(5) Award consists of earned performance-based restricted stock units, which are scheduled to vest and settle on February 24, 2016.

48

(6) Award consists of restricted stock units scheduled to vest and settle in three installments (20%, 30%, and 50% per year) on the February 24^th immediately following the first, second, and third anniversaries of the grant date, respectively.

(7) Award consists of unearned performance-based restricted stock units at target attainment, which are scheduled to vest and settle on February 24, 2017 if the performance measure is achieved. The performance measure for the performance-based restricted stock units is the Company’s ROIC measured against the ROIC of companies in the S&P MidCap Technology Index for the performance period commencing January 1, 2014 and ending December 31, 2016.

(8) Award consists of supplemental deferred stock units, which cliff vest five years from the grant date.

(9) Award consists of unearned performance-based restricted stock units at target attainment, which are scheduled to vest and settle on February 24, 2018 if the performance measure is achieved. The performance measure for the performance-based restricted stock units is the Company’s ROIC measured against the ROIC of companies in the S&P MidCap Technology Index for the performance period commencing January 1, 2015 and ending December 31, 2017.

(10) Award consists of restricted stock units scheduled to vest and settle in four installments (17%, 17%, 33% and 33%) on June 30, 2015, December 31, 2015, December 31, 2016 and December 31, 2017, respectively.

(11) Award consists of restricted stock units scheduled to vest and settle in three approximately equal annual installments (34%, 33%, and 33% per year) on February 24^th immediately following the first, second and third anniversaries of the grant date, respectively.

(12) Award consists of restricted stock units scheduled to vest and settle in three approximately equal installments (34%, 33%, and 33% per year) on February 24^th immediately following the second, third and fourth anniversaries of the grant date, respectively.

(13) Award consists of restricted stock units granted in connection with the acquisition of Kofax Limited, which are scheduled to vest and settle in three approximately equal installments (34%, 33%, and 33% per year) on February 24, 2017, February 24, 2018 and February 24, 2019, respectively.

(14) Award consists of unearned performance-based restricted stock units at target attainment granted in connection with the acquisition of Kofax Limited. If the performance measure is achieved, these units are scheduled to vest and settle on February 24, 2017. In addition to the unearned performance-based restricted stock units reported in the table, above, Mr. Bish has an opportunity to earn 22,911 performance-based restricted stock units at target for the performance period commencing January 1, 2017 and ending December 31, 2017 (the “2017 Performance Period”) and 22,911 performance-based restricted stock units at target for the performance period commencing January 1, 2018 and ending December 31, 2018 (the “2018 Performance Period”). During the first quarter of each of the 2017 and 2018 Performance Periods, the Compensation Committee will establish the minimum, target and maximum performance objectives for such performance periods. Because performance objectives have not been established, the awards for the 2017 and 2018 Performance Periods were not capable of valuation and therefore are not included in the table above.

(15) Award consists of restricted stock units scheduled to vest and settle in three approximately equal installments (34%, 33%, and 33% per year) on the first, second and third anniversaries of the grant date, respectively.

49

OPTION EXERCISES AND STOCK VESTED

	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)		Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)
Paul Rooke		0	$	0		56,655	$	2,484,888
David Reeder		0		0		38,751		1,504,010
Gary Stromquist		0		0		6,623		290,485
Reynolds Bish		0		0		0		0
Martin Canning		243,000		5,544,340		29,038		1,273,607
Robert Patton		0		0		16,134		707,637
Scott Coons		0		0		18,527		812,594

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PENSION BENEFITS

Name	Plan Name(1)		Number of Years Credited Service(2) (#)		Present Value of Accumulated Benefit(3) ($)		Payments During Last Fiscal Year ($)
Paul Rooke		Tax-qualified plan		25.9	$	503,873	$	0
		Non-qualified plan		25.9		372,806		0
David Reeder		Tax-qualified plan		0.0		0		0
		Non-qualified plan		0.0		0		0
Gary Stromquist		Tax-qualified plan		32.6		906,113		0
		Non-qualified plan		32.6		18,511		0
Reynolds Bish		Tax-qualified plan		0.0		0		0
		Non-qualified plan		0.0		0		0
Martin Canning		Tax-qualified plan		7.2		143,517		0
		Non-qualified plan		7.2		101,419		0
Robert Patton		Tax-qualified plan		5.2		95,330		0
		Non-qualified plan		5.2		0		0
Scott Coons		Tax-qualified plan		0.0		0		0
		Non-qualified plan		0.0		0		0

(1) The tax-qualified plan refers to the Lexmark Retirement Growth Account Plan (RGA). The non-qualified plan refers to the Lexmark Nonqualified Supplemental Retirement Plan (SERP). Messrs. Reeder, Bish and Coons are not participants in either the RGA Plan or SERP.

(2) Reflects credited service frozen as of April 3, 2006 for benefit accrual purposes for RGA and SERP Plans. Actual years of service through December 31, 2015 are 35.6 for Mr. Rooke, 42.3 for Mr. Stromquist, 16.9 for Mr. Canning, and 14.9 for Mr. Patton.

(3) The values are based on benefits accrued as of December 31, 2015. Key assumptions used in valuing the benefits are as follows:

• Discount rates were 4.45% for the RGA and 4.25% for the SERP.

• Post-retirement mortality rates were based on the MRP-2007 employee and retiree tables, no collar, with generational projection based on scale MSS-2007 as of December 31, 2015. The MRP-2007 tables are based on the Society of Actuaries RP-2014 tables with mortality improvements after 2007 backed out. Projection scale MSS-2007 reflects actual improvement rates for 2008-2010 based on Social Security data, implied rates from 2011-2014 based on Social Security data, and beginning in 2015 the rates in the intermediate projection in the Social Security 2014 Trustees report. No pre-retirement mortality rates were assumed.

• The interest crediting rate on a participant’s cash balance account was assumed to be 4.0% for plan years 2015 through 2019 and 4.25% for plan years after 2019.

• Retirement is assumed to occur at the age the participant is first eligible for unreduced benefits.

• Benefits were assumed to be paid as a lump sum to participants eligible only for cash balance benefits. Other participants are assumed to elect the payment form (lump sum or annuity) which produces the higher value.

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Lexmark Retirement Growth Account Plan

The Lexmark Retirement Plan was amended and restated as the Lexmark Retirement Growth Account Plan effective January 1, 1998. The plan is a defined benefit pension plan that provides all vested eligible employees with retirement income. An initial Retirement Growth Account balance was established for each Lexmark Retirement Plan participant as of January 1, 1998. The cash balance benefit is based on the opening account balance and annual contribution credits of 6% of eligible earnings for up to 35 years of service. Cash balance benefits also include an interest component that is based on the 1-year Constant Treasury Maturity rates plus 1%, subject to a minimum of 4%. Eligible earnings include salary, commission payments and recurring payments under any form of variable compensation plan, short-term incentive pay and exclude compensation deferred under any other nonqualified deferred compensation plan, special awards, long-term incentive compensation, and gains on stock option exercises. Includable earnings are limited by the amount under Internal Revenue Code Section 401(a)(17).

Effective April 3, 2006, annual contribution credits were discontinued and the Retirement Growth Account Plan was frozen. Interest will continue to accrue on individual Retirement Growth Account balances until the participant begins receiving a benefit under the plan. Upon leaving the Company after the participant has become vested, the participant may elect an annuity funded by the Retirement Growth Account balance or a lump sum of the Retirement Growth Account balance. Vesting occurs after 3 years of continuous service. The full annuity benefit is payable in the form of a life annuity. Alternative annuity payment forms, such as joint and survivor annuities and Social Security leveling options, are available on an actuarially equivalent basis. Lump sum amounts are equal to the better of the value of the cash balance account under the Retirement Growth Account Plan or the present value of annuity benefits accrued as of December 31, 1999 under the Lexmark Retirement Plan, with such present value determined using a discount rate based on 30-year Treasury rates, an IRS-prescribed mortality table and an assumed retirement age of 65.

The Lexmark Retirement Plan was designed to provide a monthly retirement income based on service and earnings. Benefits under this plan were frozen on December 31, 1999. The retirement benefit under the Lexmark Retirement Plan is calculated as the sum of a Core Retirement Benefit (for employees hired before January 1, 1993), a career average formula based upon an employee’s credited service and earnings (frozen on December 31, 1999), and a Personal Retirement Provision, which provided annual allocations based upon an employee’s earnings and guaranteed interest credits. Upon retirement, benefits for employees hired before January 1, 1993 are calculated under the prior plan provisions and under the provisions effective January 1, 1998. Participants receive benefits equal to the greater of the two calculations. The prior plan formula generally provided an annuity benefit equal to 1.35% of 5-year average earnings through 1996 times service through 1996 plus 1.35% of pay earned in years 1997 through 1999. In addition, the prior plan provided a cash balance benefit based on contribution credits of 5% of pay in 1991 up to $7,500, 1% of pay in 1992, 2% of pay in 1993 and 3% of pay in 1994 through 1999 plus interest credits based on 1-year Treasury Bill rates plus 1.5%, subject to a minimum of 4%. Participants hired between January 1, 1993 and January 1, 1998 only received the cash balance benefit under the prior plan.

Normal retirement age is the later of age 65 or the completion of 3 years of continuous service, as defined in the plan. Under the prior plan provisions applicable to employees hired before January 1, 1993, early retirement eligibility occurs at the earliest of 30 years of continuous service, age 55 with 15 years of continuous service or age 62 with 5 years of continuous service. There is no early retirement reduction after 30 years of continuous service or attainment of age 60. Prior to 30 years of continuous service or attainment of age 60, the early retirement reduction is 2% per year of early commencement. The only Named Executive Officers who are currently eligible for early retirement benefits under the prior plan provisions are Messrs. Rooke and Stromquist.

Lexmark Nonqualified Supplemental Retirement Plan

The Company has adopted a Supplemental Retirement Plan to pay retirement benefits which would have been paid under the Lexmark Retirement Growth Account Plan if not for the eligible compensation limits as defined in Internal Revenue Code Section 401(a)(17). These benefits are paid out of the general funds of the Company. Annual contribution credits were discontinued as of April 3, 2006 when the Retirement Growth Account Plan was frozen.

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To comply with the requirements of Internal Revenue Code Section 409A and the final regulations issued thereunder, the Company amended and restated the Nonqualified Supplemental Retirement Plan, effective January 1, 2009. In accordance with Internal Revenue Code Section 409A, the Company grandfathered any benefits that were accrued and vested as of December 31, 2004. The distribution of grandfathered benefits shall be made at the same time and in the same form of benefit as the participant’s benefit under the Retirement Growth Account Plan. For administrative purposes, the Company determined that the non-grandfathered benefits (benefits which were accrued but not vested as of January 1, 2005, and benefits that were accrued between January 1, 2005 and the date benefits under the Nonqualified Supplemental Retirement Plan were frozen on April 3, 2006) would be distributed in a single lump sum payment in January 2009 for any Participant who did not have a Core Retirement Benefit under the Lexmark Retirement Plan. Any other non-grandfathered benefits will be distributed in a lump sum distribution on the first day of the seventh month after a participant’s separation from service.

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NONQUALIFIED DEFERRED COMPENSATION

Name	Executive Contributions in Last FY ($)		Registrant Contributions in Last FY ($)		Aggregate Earnings in Last FY ($)			Aggregate Withdrawals/ Distributions ($)		Aggregate Balance at Last FYE ($)
Paul Rooke — SDCP	$	325,500	$	65,100	$	97,628		$	0	$	3,062,106
— Deferred  Stock Units		805,188		161,062		(401,463	)		0		1,848,449
David Reeder		0		0		0			0		0
Gary Stromquist — SDCP		20,381		20,381		7,357			0		239,551
Reynolds Bish		0		0		0			0		0
Martin Canning — SDCP		61,746		61,746		21,832			0		689,233
Robert Patton — SDCP		79,219		31,688		12,437			0		417,079
Scott Coons — SDCP		0		0		2,028			0		59,903

Lexmark Supplemental Savings and Deferred Compensation Plan

The Company maintains the Lexmark Supplemental Savings and Deferred Compensation Plan (“SDCP”), a non-qualified deferred compensation plan, which permits eligible employees of the Company and Perceptive Software to voluntarily defer up to 100% of their eligible compensation, including base salary, commission payments and annual incentive compensation, in excess of the Internal Revenue Code Section 401(a)(17) limit ($265,000 in 2015). Each of the Named Executive Officers, except for Messrs. Reeder and Bish, is eligible to participate in the plan. Mr. Reeder and Mr. Bish will become eligible to participate in the plan in 2016 and 2017, respectively. Mr. Coons did not elect to participate in the plan during 2015. Participants who elect to defer their eligible compensation receive a Company matching contribution equal to 100% of such deferrals up to 6% of their eligible compensation in excess of the Internal Revenue Code Section 401(a)(17) limit.

Amounts deferred by participants under the plan, and the related Company matching contributions, are fully vested. Any Company matching contributions made for any plan year commencing on or after January 1, 2009, shall be forfeited by a participant for violating the terms of any restrictive covenants set forth in the participant’s employment agreement or change in control agreement or, if the participant is not subject to an employment agreement or change in control agreement, for violating the Company’s Code of Business Conduct.

Each participant’s account maintained under the plan is credited with an annual rate of return that is calculated using the Merrill Lynch 7-10 year A-rated corporate bond index (“Merrill-Lynch Rate”), determined as of the last business day of the month of November of the prior year. However, the annual rate of return shall not exceed 120% of the long-term applicable federal rate (“AFR”) as determined under Internal Revenue Code Section 1274(d) or any other rate above which such earnings would be considered “above-market” or “preferential” pursuant to the rules and regulations of the Securities and Exchange Commission. Because the Merrill-Lynch Rate exceeded the 120% long-term AFR, the rate for crediting interest to participants’ accounts for 2015 was limited to the 120% long-term AFR (3.45 %).

On their annual deferral agreement, participants may elect to receive a distribution of amounts deferred under the plan for the year, and related Company matching contributions, in either a lump sum or in annual installments. The distribution for a participant’s elective deferrals shall be made or, with respect to annual installments, commence on any date specified by the participant (subject to a three-year minimum deferral period) or on the first day of the seventh month following the participant’s separation from service, as elected by the participant on his annual deferral agreement. The distribution of a participant’s matching contribution shall be made or, with respect to annual installments, commence on the first day of the seventh month following the participant’s separation from service, or such later date as specified by the participant. In the event of an unforeseeable emergency, as defined in the plan, participants may request a hardship distribution up to an amount necessary to satisfy the emergency need and to pay applicable taxes on the distribution. Participants (or their beneficiaries, as applicable) shall receive a lump sum distribution of their account balance as soon as

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administratively practicable after the occurrence of their death or disability, or after the effective date of a change in control of the Company.

Deferred Stock Units

The Company permits eligible employees, including each of the Named Executive Officers, to elect to defer up to 100% of their annual incentive compensation under the Company’s 2013 Equity Compensation Plan, and receive an award of deferred stock units. The number of elective deferred stock units credited to a participant’s account shall be determined by dividing the amount of incentive compensation deferred by the participant by the fair market value of one share of Common Stock on the grant date, rounded to the nearest whole share. A participant who makes a deferred stock unit election shall also receive a supplemental award of deferred stock units upon deferral with a value equal to 20% of the incentive compensation deferred. The elective deferred stock units are fully vested at all times. The supplemental deferred stock units awarded to a participant shall become vested on the fifth anniversary of the grant date, subject to the participant’s continued employment. The supplemental deferred stock units shall also become vested upon termination of employment due to the participant’s death, disability or involuntary or constructive termination without cause on or after a change in control of the Company. Both the elective and vested supplemental deferred stock units shall settle (i.e., one share of Common Stock shall be issued) on the earlier of the fifth anniversary of the grant date or the date of the participant’s termination of employment due to death, disability, or retirement (or six months and one day after termination of employment due to retirement, if the participant is a “specified employee” within the meaning of Internal Revenue Code Section 409A). Mr. Rooke was the only Named Executive Officer to make an election to defer his incentive compensation and receive deferred stock units with respect to his 2014 incentive compensation. As of December 31, 2015, Mr. Rooke has 56,963 deferred stock units and associated dividend equivalent units outstanding.

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TERMINATION AND CHANGE IN CONTROL PAYMENTS

The Company has entered into certain arrangements and maintains certain plans that will require the Company to provide compensation to Named Executive Officers in the event of a termination of employment or a change in control of the Company. The Compensation Committee considers the termination and change in control arrangements to be in the best interest of shareholders to ensure that the Company is able to attract outstanding talent to serve in key management positions and to ensure the retention and focus of key management in the event of a change in control of the Company. The table below reflects the estimated amount of compensation payable to each Named Executive Officer in the event of termination of employment under various scenarios. The amount of compensation payable assumes that termination was effective as of December 31, 2015 and includes amounts earned through such time.

	Potential Payments Upon Termination and Change in  Control(1)
	Retirement		Termination by Employer Without Cause or Termination by Employee for Good Reason		Change in Control		Termination upon a Change in Control by Employer Without Cause or by Employee for Good Reason
Paul Rooke
Cash Severance Payment	$	0	$	2,570,532	$	0	$	6,630,000
Long-Term Incentive Compensation		4,148,667		4,148,667		1,717,208		4,148,667
Equity-Based Incentive Compensation		6,624,083		6,624,083		5,338,804		7,007,837
Benefits and Perquisites		0		0		0		28,219
TOTAL	$	10,772,750	$	13,343,282	$	7,056,012	$	17,814,723
David Reeder
Cash Severance Payment	$	0	$	848,750	$	0	$	2,061,250
Long-Term Incentive Compensation		0		0		130,667		130,667
Equity-Based Incentive Compensation		0		0		243,375		3,037,248
Benefits and Perquisites		0		0		0		27,679
TOTAL	$	0	$	848,750	$	374,042	$	5,256,844
Gary Stromquist
Cash Severance Payment	$	0	$	518,323	$	0	$	1,330,000
Long-Term Incentive Compensation		0		0		133,333		133,333
Equity-Based Incentive Compensation		0		0		316,280		659,438
Benefits and Perquisites		0		0		0		17,438
TOTAL	$	0	$	518,323	$	449,613	$	2,140,209
Reynolds Bish
Cash Severance Payment	$	1,068,895	$	2,303,965	$	0	$	2,711,264
Long-Term Incentive Compensation		0		0		168,000		168,000
Equity-Based Incentive Compensation		0		0		643,029		2,150,596
Benefits and Perquisites		0		0		0		37,790
TOTAL	$	1,068,895	$	2,303,965	$	811,029	$	5,067,650
Martin Canning
Cash Severance Payment	$	0	$	987,460	$	0	$	3,036,678
Long-Term Incentive Compensation		0		450,800		954,800		954,800
Equity-Based Incentive Compensation		0		0		1,437,189		2,312,041
Benefits and Perquisites		0		0		0		37,120
TOTAL	$	0	$	1,438,260	$	2,391,989	$	6,340,639
Robert Patton
Cash Severance Payment	$	0	$	656,895	$	0	$	1,628,475
Long-Term Incentive Compensation		0		257,600		500,267		500,267
Equity-Based Incentive Compensation		0		0		777,318		1,205,657
Benefits and Perquisites		0		0		0		27,245
TOTAL	$	0	$	914,495	$	1,277,585	$	3,361,644

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(1) Amounts reflected in the table assume payments were triggered on December 31, 2015 and are based on the closing stock price of the Common Stock on that day ($32.45). Mr. Coons is not included in the table, above, due to his retirement from the Company, effective July 31, 2015. He did not receive any incremental benefits as a result of his retirement.

Accrued Payments and Retirement Benefits

Potential payments in the table above do not include payments and benefits payable to each Named Executive Officer upon termination or a change in control that are provided on a non-discriminatory basis to employees, including the following:

• Accrued salary,

• Regular pension benefits (see the section entitled “Pension Benefits” for details on these plans),

• Distributions of balances under the Lexmark Savings Plan, a tax-qualified 401(k) plan, and

• Distributions of balances under the Lexmark Supplemental Savings and Deferred Compensation Plan (see the section entitled “Nonqualified Deferred Compensation” for details on this plan).

Retirement

In the event of termination due to retirement (30 years of continuous service, on or after age 55 years with 10 years of continuous service, or on or after age 65), the executive will be entitled to a pro rata portion of annual incentive compensation for the year of termination. The amount of the annual incentive compensation payment shall be based on the actual attainment of the performance objectives for the performance period and the executive’s earnings through the date of retirement.

If the executive retires at any time during the performance period under a cash-based Long-Term Incentive Plan (“LTIP”), the executive will be entitled to a pro rata portion of the cash-based long-term incentive compensation for each of the long-term incentive plans in which the executive participates. An executive is retirement-eligible on or after age 65 or on or after age 55 with 15 years of continuous service (on or after age 65 only for Mr. Stromquist’s 2014-2016 LTIP Agreement). Payments will be based on actual attainment of the performance objectives for the performance period. See the section entitled “Total Long-Term Incentive Compensation” in the Compensation Discussion and Analysis for details of the long-term incentive plans outstanding for each Named Executive Officer on December 31, 2015. As of December 31, 2015, Mr. Rooke was the only Named Executive Officer to have satisfied the retirement eligibility provisions for the cash-based long-term incentive plans.

Time-based restricted stock units granted to each Named Executive Officer, other than Mr. Stromquist, provide that the units will continue to vest and settle on the dates set forth in the retirement-eligible executive’s award agreement. With respect to the unearned performance-based restricted stock units with three-year performance periods, a retirement eligible executive shall be entitled to a pro rata portion of the units based on the actual attainment of the performance measure as of the end of the performance period, based on the number of complete months of service performed during the performance period, and such units shall be paid on the original settlement date specified in the award agreement. With respect to any earned performance-based restricted stock units with a one-year performance period, the earned units shall continue to vest and settle on the dates set forth in the retirement-eligible executive’s award agreement. An executive is retirement-eligible at age 65 or at age 55 with 15 years of continuous service (at age 65 only for Mr. Stromquist’s 2014 performance-based restricted stock units). As of December 31, 2015, no Named Executive Officer had met the age and/or service requirements for retirement vesting of outstanding time-based and performance-based restricted stock units, except for Mr. Rooke.

The amount payable to each executive at retirement in the table above reflects the actual annual incentive compensation payment for the 2015 performance period and the actual long-term incentive compensation pay for the 2013-2015 performance period. The amount payable also assumes the Company achieves target attainment for the 2014-2016 LTIP and 2015-2017 LTIP. The amount in the table above for equity-based long-term

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incentive compensation reflects the 2013, 2014 and 2015 performance-based restricted stock units that a retirement-eligible executive would be entitled to receive, each calculated using the closing price of the Common Stock on December 31, 2015 ($32.45).

Termination by Employer Without Cause or Termination by Employee for Good Reason

Each of the Named Executive Officers has entered into an executive severance agreement with the Company, which provides that in the event of an involuntary termination by the Company without Cause or a termination by the Named Executive Officer for Good Reason, as such terms are defined in the executive severance agreement, the Named Executive Officer shall be entitled to severance payments. The executive severance agreements provide that the executive will be entitled to receive a lump sum payment, six months and one day following the executive’s involuntary termination by the Company without Cause or termination by the executive for Good Reason, in an amount equal to the sum of the following: (a) one times the executive’s annual base salary (two times in the case of Mr. Rooke); (b) an amount equal to the average annual bonus paid to the executive over the three-year period immediately prior to the executive’s date of termination; and (c) the executive’s unpaid annual incentive compensation with respect to a completed fiscal year. The obligation of the Company to make any payments to the Named Executive Officers under the executive severance agreements is conditioned upon the receipt of an approved general release and covenant not to sue. In addition to the payments described in this paragraph, Mr. Bish, is also entitled to a payment in the amount of $1,050,000 plus an amount equal to 12 months of COBRA premiums in the event of his termination for any reason, except for a fraudulent for felonious act related to his employment with the Company or its subsidiaries, which represents the amount he would have received under his Kofax employment agreement had he elected to terminate his employment for Good Reason at the time of the Company’s acquisition of Kofax Limited.

Change in Control

Each of the Named Executive Officers has entered into a Change in Control Agreement with the Company. The Change in Control Agreement for each Named Executive Officer determines the potential payments due to each Named Executive Officer if, within 12 months prior to a Change in Control, the executive’s employment is terminated by the Company in connection with or in anticipation of a Change in Control, or within 24 months after a Change in Control (the “CIC Protection Period”), the executive’s employment is terminated by the Company or the executive under certain circumstances. The Lexmark International, Inc. 2013 Equity Compensation Plan (Stock Incentive Plan for awards made prior to April 25, 2013) determines the potential payments due to each Named Executive Officer upon a Change in Control with respect to Incentive Awards made under such plan.

Generally, a Change in Control is deemed to occur under each of the Change in Control Agreements and the Lexmark International, Inc. 2013 Equity Compensation Plan in any of the following events:

(1) A majority of members of the Board at any time cease for any reason other than due to death or disability to be persons who were members of the Board twenty-four months prior to such time;

(2) Any “person,” including a “group” is or becomes the “beneficial owner,” directly or indirectly, including without limitation, by means of a tender or exchange offer, of securities of the Company representing 30% or more of the combined voting power of the Company’s then outstanding securities;

(3) The consummation of a definitive agreement (i) that results in the merger or other business combination of the Company with or into another corporation immediately following which merger or combination (A) the stock of the surviving entity is not readily tradable on an established securities market, (B) a majority of the directors of the surviving entity are persons who (x) were not directors of the Company immediately prior to the merger and (y) are not nominees or representatives of the Company or (C) any “person,” including a “group” is or becomes the “beneficial owner,” directly or indirectly, of 30% or more of the securities of the surviving entity or (ii) for the direct or indirect sale or other disposition of all or substantially all of the assets of the Company; or

58

(4) Approval of the shareholders of the Company of a complete liquidation or dissolution of the Company.

A Change in Control will not be deemed to occur in the event the Company files for bankruptcy, liquidation or reorganization under the United States Bankruptcy Code, or if any executive, or any entity in which the executive is a partner, officer or more than 50% owner, initiates any transaction or series of transactions that would otherwise constitute a Change in Control and directly or indirectly owns more than 10% of the then outstanding shares of Common Stock resulting from such action, or of the combined voting power of then outstanding voting securities of the Company or such resulting corporation.

With respect to the payment upon a Change in Control of any Section 409A Incentive Award under the Lexmark International, Inc. 2013 Equity Compensation Plan, such amount shall become payable only if the event constituting a Change in Control would also constitute a “change in the ownership” of the Company, a “change in the effective control” of the Company, or a “change in the ownership of a substantial portion of the assets” of the Company within the meaning of Internal Revenue Code Section 409A and the regulations issued thereunder.

Cash Severance Payments.    Under the terms of the Change in Control Agreement for each of the Named Executive Officers, the executive will be entitled to receive a lump sum payment, six months and one day following the executive’s involuntary termination by the Company for any reason other than Cause or termination by the executive for Good Reason during the CIC Protection Period, in an amount equal to the sum of the following: (a)(1) the executive’s accrued but unpaid annual base salary as of the date of termination, (2) the executive’s unpaid annual incentive compensation with respect to a completed fiscal year, and (3) a pro rata portion of the annual incentive compensation for the year of termination, calculated assuming the greater of (x) 100% of the Company’s financial objectives are achieved in such fiscal year or (y) the actual attainment of the Company’s financial objectives as of the date of termination are achieved in such fiscal year, in each case without regard to personal attainment, and (b) three times (two times in the case of Messrs. Reeder, Bish, Patton and Stromquist) the sum of the executive’s annual base salary and 100% of the executive’s annual incentive compensation target, calculated assuming the Company attained its financial targets and disregarding personal attainment goals. The amount reflected in the table is calculated in the same manner as a payment for involuntary termination.

Cash-Denominated Long-Term Incentive Compensation.    Under the terms of the Lexmark International, Inc. 2013 Equity Compensation Plan (Stock Incentive Plan for awards made prior to April 25, 2013), the amount of the Performance Awards payable to the executive will be calculated using the greater of the target performance level or actual attainment of the performance period from the beginning of the performance period through the effective date of the Change in Control. The Performance Award will be prorated based on the number of complete months of service performed during the performance period prior to the Change in Control divided by 36. The table above assumes that the Company achieved target attainment for each performance period. See the section entitled “Total Long-Term Incentive Compensation” in the Compensation Discussion and Analysis for the details of the cash-denominated long-term incentive plans outstanding for each Named Executive Officer on December 31, 2015.

Equity-Based Long-Term Incentive Compensation.    Under the terms of the Lexmark International, Inc. 2013 Equity Compensation Plan (for awards made on or after April 25, 2013) any outstanding restricted stock units, including earned performance-based restricted stock units will become 100% vested and settle immediately in shares of Common Stock if the Named Executive Officer experiences an involuntary or constructive termination of employment following a Change in Control. For any unearned performance-based restricted stock unit awards, a pro rata portion of the performance-based RSUs will be deemed earned based on the greater of target or actual achievement of the performance measure as of the date of the Change in Control, and the earned performance-based RSUs will become 100% vested and settle immediately in shares of Common Stock.

Under the terms of the Stock Incentive Plan (for awards made prior to April 25, 2013), any vested or unvested stock options will be cancelled promptly and a payment in cash for the difference in the

59

exercise price and the Change in Control price will be made to the executive. Any outstanding restricted stock units, including earned performance-based restricted stock units, will become 100% vested and settle immediately in shares of Common Stock. The Compensation Committee may, with the consent of the executive, substitute an Alternative Award, as defined in the plan, instead of making a cash payment for stock options or instead of accelerating vesting for restricted stock units. For unearned performance-based RSUs, the amount of performance-based RSUs that will be deemed earned by the executive will be calculated using the greater of the target performance level or actual attainment of the performance period from the beginning of the performance period through the effective date of the Change in Control. The number of earned performance-based RSUs will be prorated based on the number of complete months of service performed during the performance period prior to the Change in Control divided by 36.

The table above assumes that the Company achieved target attainment for each performance period for unearned performance-based RSUs. See the section entitled “Total Long-Term Incentive Compensation” in the Compensation Discussion and Analysis for the details of the performance-based RSU awards outstanding for each Named Executive Officer on December 31, 2015.

Benefits and Perquisites.    Under the terms of the Change in Control Agreement for each of the Named Executive Officers, for a period of three years (two years in the case of Messrs. Reeder, Bish, Patton and Stromquist) following the executive’s termination, the Company will be obligated to continue to provide at least the same level of benefits (including medical, dental, disability, and insurance plans and programs) that were provided during the executive’s employment, or if more favorable to the executive, as in effect thereafter.

Each Change in Control Agreement provides that to the extent that any payments and benefits to the executive under the Change in Control Agreement would trigger an excise tax to the executive, such payments and benefits shall (i) be paid to the executive in full (the executive pays the excise tax) or (ii) reduced to an amount that would result in no portion of the payments and benefits being subject to the excise tax, whichever amount results in the best net after-tax benefit to the executive.

Death or Disability

In the event of termination due to death or disability during the performance period, the Named Executive Officer (or the executive’s estate) may be entitled to payment of a pro rata portion of the annual incentive compensation for the year of termination, calculated based on the actual attainment of the performance objectives for the performance period. In the event of termination due to death or disability during the performance period under a cash-based long-term incentive plan, the executive (or the executive’s estate) will also be entitled to a pro rata portion of the LTIP payout based on the actual attainment as of the end of the performance period. The vested portion of any stock options outstanding at the time of an executive’s termination due to death or disability will be exercisable for 12 months following termination by the executive (or the executive’s estate) and the unvested portion will be forfeited. With respect to any earned but unvested performance-based restricted stock units and any unvested time-based restricted stock units, the units will become vested and settle upon the executive’s termination due to death or disability. In the event of termination due to death or disability during the performance period for unearned performance-based restricted stock units, a pro rata portion of such performance-based restricted stock units may be earned based on the actual attainment of performance objectives as of the end of the performance period.

Material Terms Affecting Payments

Each Named Executive Officer is subject to forfeiture of realized and unrealized gains on stock incentive awards for violating certain provisions of the executive severance agreement, including:

(1) Unauthorized disclosure of any confidential or proprietary non-public information obtained by the executive while employed by the Company;

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(2) Becoming employed by, serving as an agent for, or consulting with an entity that competes with the Company within the greater of (a) a period equal to the number of months providing the basis for calculating any severance payments, if such payments are required or (b) a 12 month period following termination; and

(3) Within 36 months from termination, soliciting any person or entity who or which is employed by the Company or intentionally interfering with the Company’s relationship with any person or entity who or which has been a customer, client or supplier of the Company within the previous 36 months.

Due to restrictions on non-compete and non-solicitation clauses in California, Mr. Bish’s executive severance agreement and stock incentive awards do not include a non-compete and the non-solicitation provision is limited to employees and certain former employees and the duration of such restriction is 18 months rather than 36 months. If the executive violates any of these restrictions then all stock incentive awards held by the executive terminate upon the date of the violation, all gains realized on the vesting of restricted stock units, deferred stock units and stock option gains within 18 months preceding the earlier of the violation or the date of termination through the later of 18 months following the violation and such time of the discovery of the violation, shall be paid to the Company. Similar provisions are included in each executive’s stock incentive award agreements, LTIP agreements, and Change in Control Agreement.

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DIRECTOR COMPENSATION

The Company’s policy is to pay compensation only to those Directors who are not also employees of the Company or any of its subsidiaries or affiliated with any principal shareholder of the Company (each, an “Eligible Director”). All Directors are, however, reimbursed for expenses incurred in attending Board and committee meetings.

Annually, the Corporate Governance and Public Policy Committee reviews the Company’s Director Compensation Policy and peer group data to determine whether to recommend to the Board of Directors any adjustments to the compensation for Eligible Directors. The Board of Directors has determined that each Eligible Director’s total compensation should be nominally targeted at the 50^th percentile of the peer group compensation. Based upon its review of peer group data, the Corporate Governance and Public Policy Committee recommended that the Board not amend the compensation for Eligible Directors for 2015.

The Director Compensation Policy provides that the compensation each Eligible Director of the Company shall receive includes an annual retainer of $60,000. In addition an Eligible Director shall receive an annual committee retainer of $15,000 for membership on the Finance and Audit Committee; $10,000 for membership on the Compensation Committee; and $8,000 for membership on the Corporate Governance and Public Policy Committee. Any such Eligible Director who served as the chair of a committee also received an annual retainer of $25,000 for the Finance and Audit Committee Chair, $15,000 for the Compensation Committee Chair, and $10,000 for the Corporate Governance and Public Policy Committee Chair. The Presiding Director received an annual retainer of $25,000. Cash payments are made to each Eligible Director on a quarterly basis, as calculated on the last day of each calendar quarter.

In addition, each Eligible Director has the opportunity to participate in the Company’s 2005 Nonemployee Director Stock Plan (the “Director Plan”). Upon election to the Board, each Eligible Director of the Company receives a one-time grant of restricted stock units as the initial equity award under the Director Plan. The number of restricted stock units granted as the initial equity award for an Eligible Director elected in any calendar year is reviewed annually by the Board of Directors. The Director Compensation Policy currently provides that the number of restricted stock units to be granted pursuant to the initial equity award is determined by dividing $150,000 by the closing price of the Common Stock on the date of grant, rounded up to the nearest whole unit. The restricted stock units granted pursuant to the initial equity award vest in whole on the sixth anniversary of the Eligible Director joining the Board and settle upon termination of the Eligible Director’s status as a Board member.

Under the Director Plan, each Eligible Director is also eligible to receive an annual equity award on the date of the Annual Meeting of Shareholders for service as a Board member through the next Annual Meeting of Shareholders. The Director Compensation Policy provides that the annual equity award shall be granted in the form of restricted stock units (the “Annual Award”). The number of restricted stock units to be granted to each Eligible Director pursuant to the Annual Award shall be determined by dividing $150,000 by the closing price of the Common Stock on the date of grant, rounded up to the nearest whole unit. For Eligible Directors appointed to the Board at any time after the Annual Meeting of Shareholders, the Annual Award will be prorated for the remaining months of service until the next scheduled Annual Meeting of Shareholders based on the dollar value of the Annual Award granted to Directors at the time of the preceding Annual Meeting of Shareholders. The restricted stock units become fully vested on the date immediately prior to the next Annual Meeting of Shareholders, based on continued Board service through such date, and 100% of the restricted stock units will settle on the earlier of termination of status as member of the Board or the fifth anniversary of the date of grant, unless an Eligible Director elects to further defer settlement.

In addition, each Eligible Director may elect to defer payment of all or a portion of the annual retainer, committee retainer and chair retainer (the “Annual Fees”) and to receive in lieu thereof a grant of deferred stock units equal to the amount of Annual Fees so deferred, divided by the fair market value of a share of Common Stock on the date of grant of the deferred stock units, rounded up to the nearest whole unit. Deferred stock units are granted to each Eligible Director electing annually to defer retainer and/or attendance fees, with such deferred stock units being granted at the end of each calendar quarter when cash payments would otherwise be made and at the price of the Common Stock at such time.

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The Board has implemented stock ownership guidelines encouraging Directors to own at least that number of shares of Common Stock having a value of five times the annual retainer payable to a nonemployee Board member. Each Eligible Director is encouraged to reach this guideline ownership level within two to four years of becoming a member of the Board. All Eligible Directors have satisfied the Company’s stock ownership guidelines.

The Company has entered into an indemnification agreement with each of its Directors, which requires the Company to indemnify them against certain liabilities that may arise as a result of their status or service as Directors of the Company. The Company also pays the premiums on the directors’ and officers’ liability insurance policies.

Directors are also eligible to participate in the Lexmark Employee Purchase Program, which provides certain discounts for the purchase of Lexmark printers and printer supplies, on the same basis as employees of the Company.

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2015 DIRECTOR COMPENSATION

	Fees Earned or Paid in Cash
Name	Annual  Board Retainer ($)		Annual Committee Retainer ($)		Presiding Director &  Committee Chair Retainers ($)		Stock Awards (Granted in  RSUs)(1) ($)		All Other Compensation ($)		Total ($)
Jared Cohon(2)	$	60,000	$	10,000	$	0	$	150,013	$	0	$	220,013
J. Edward Coleman(2)		60,000		15,000		0		150,013		0		225,013
W. Roy Dunbar		60,000		10,000		0		150,013		0		220,513
William Fields		60,000		10,000		0		150,013		0		220,013
Ralph Gomory		60,000		8,000		0		150,013		0		218,013
Stephen Hardis(3)		60,000		15,000		25,000		150,013		0		250,013
Sandra Helton		60,000		15,000		0		150,013		0		225,013
Robert Holland, Jr.(3)		60,000		8,000		0		150,013		0		218,013
Michael Maples		60,000		15,000		0		150,013		0		225,013
Jean-Paul Montupet		60,000		8,000		35,000		150,013		0		253,013
Kathi Seifert		60,000		10,000		15,000		150,013		0		235,013

(1) Reflects the grant date fair value dollar amount computed in accordance with the provisions of the FASB guidance on share-based payments and related interpretations for the 3,483 restricted stock units granted as the 2015 annual equity award on April 21, 2015. Listed below are the outstanding equity awards for each director as of December 31, 2015:

Name	Restricted Stock Units*		Stock Options
Jared Cohon		27,531		0
J. Edward Coleman		29,356		0
W. Roy Dunbar		24,694		0
William Fields		15,673		20,500
Ralph Gomory		12,648		20,500
Stephen Hardis		19,194		20,500
Sandra Helton		17,720		0
Robert Holland, Jr.		22,219		20,500
Michael Maples		12,648		10,400
Jean-Paul Montupet		26,501		14,900
Kathi Seifert		33,047		14,900
* Includes associated dividend equivalent units

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(2) The entire amount of Board and Committee retainers earned by Dr. Cohon and Mr. Coleman were deferred into deferred stock units during 2015 pursuant to the 2005 Nonemployee Director Stock Plan, resulting in the following deferred stock units being held by each director at December 31, 2015 based on each director’s service during 2015: Dr. Cohon, 1,954 units and Mr. Coleman, 2,093 units. Listed below are the outstanding deferred stock units and associated dividend equivalent units for each director as of December 31, 2015:

Name	Deferred Stock Units*
Jared Cohon		12,106
J. Edward Coleman		12,816
W. Roy Dunbar		0
William Fields		1,808
Ralph Gomory		0
Stephen Hardis		2,048
Sandra Helton		0
Robert Holland, Jr.		11,796
Michael Maples		0
Jean-Paul Montupet		7,884
Kathi Seifert		4,479
* Includes associated dividend equivalent units

(3) The entire amount of Board and Committee retainers earned by Messrs. Hardis and Holland were used to purchase shares of the Common Stock on the open market pursuant to each director’s irrevocable election to receive shares in lieu of cash payment.

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SECURITY OWNERSHIP BY MANAGEMENT

AND PRINCIPAL SHAREHOLDERS

The following table furnishes certain information, to the best knowledge of the Company, as of December 31, 2015, as to the shares of Common Stock beneficially owned by each entity owning beneficially more than 5% of the outstanding shares of Common Stock.

Beneficial Owner	Amount and Nature of Beneficial Ownership		Percentage of Class(1)
Iridian Asset Management LLC(2)		9,363,301		15.12	%
276 Post Road West Westport, CT 06880-4704
The Vanguard Group, Inc.(3)		6,164,540		9.96
100 Vanguard Blvd. Malvern, PA 19355
BlackRock, Inc.(4)		4,444,044		7.18
55 East 52nd Street New York, NY 10055
FMR LLC(5)		4,150,260		6.70
245 Summer Street Boston, MA 02210
First Eagle Investment Management, LLC(6)		3,382,217		5.46
1345 Avenue of the Americas New York, NY 10105
LSV Asset Management(7)		3,111,755		5.03
155 N. Wacker Drive Suite 4600 Chicago, IL 60606

(1) Based on 61,914,791 shares of Common Stock outstanding as of December 31, 2015.

(2) Based on a Schedule 13G/A jointly filed as a group with the Securities and Exchange Commission (“SEC”) on February 11, 2016, by Iridian Asset Management LLC (“Iridian”), David L. Cohen (“Cohen”) and Harold J. Levy (“Levy”), the Reporting Persons are the beneficial owners of 9,363,301 shares, which includes options to acquire beneficial ownership of 568,300 shares within 60 days of December 31, 2015 (which options have since expired unexercised). Iridian has the direct power to vote or direct the vote, and the direct power to dispose or direct the disposition, of 8,794,701 shares of Common Stock, which does not include the options to acquire 568,300 shares within 60 days of December 31, 2015 (which options have since expired unexercised). Cohen and Levy may be deemed to share with Iridian the power to vote or direct the vote and to dispose or direct the disposition of such shares. Iridian is majority owned by Arovid Associates LLC, a Delaware limited liability company owned and controlled by the following: 12.5% by Cohen, 12.5% by Levy, 37.5% by LLMD LLC, a Delaware limited liability company, and 37.5% by ALHERO LLC, a Delaware limited liability company. LLMD LLC is owned 1% by Cohen, and 99% by a family trust controlled by Cohen. ALHERO LLC is owned 1% by Levy and 99% by a family trust controlled by Levy. Iridian has direct beneficial ownership of the shares of Common Stock in the accounts for which it serves as the investment adviser under its investment management agreements. Messrs. Cohen and Levy may be deemed to possess beneficial ownership of the shares of Common Stock beneficially owned by Iridian by virtue of their indirect controlling ownership of Iridian, and having the power to vote and direct the disposition of shares of Common Stock as joint Chief Investment Officers of Iridian. Messrs. Cohen and Levy disclaim beneficial ownership of such shares.

(3) Based on a Schedule 13G/A filed with the SEC on February 10, 2016. The Vanguard Group, Inc. (“Vanguard”), an investment adviser, is the beneficial owner of 6,164,540 shares. Of such shares, Vanguard

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has sole dispositive power over 6,120,979 shares and shared dispositive power over 43,561 shares. Vanguard has sole voting power over 44,261 shares and shared voting power over 3,000 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of Vanguard, is the beneficial owner of 40,561 shares as a result of its serving as an investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of Vanguard, is the beneficial owner of 6,700 shares as a result of its serving as an investment manager of Australian investment offerings.

(4) Based on a Schedule 13G/A filed with the SEC on January 26, 2016. BlackRock, Inc. (“BlackRock”), as parent holding company of investment advisory subsidiaries, BlackRock Advisors (UK) Limited; BlackRock Advisors, LLC; BlackRock Asset Management Canada Limited; BlackRock Asset Management Ireland Limited; BlackRock Asset Management Schweiz AG; BlackRock Financial Management, Inc.; BlackRock Fund Advisors; BlackRock Institutional Trust Company, N.A.; BlackRock International Limited; BlackRock Investment Management (Australia) Limited; BlackRock Investment Management (UK) Ltd; BlackRock Investment Management, LLC; and BlackRock Life Limited, is the beneficial owner of 4,444,044 shares. Of such shares, BlackRock has sole voting power over 4,202,577 shares and sole dispositive power over 4,444,044 shares.

(5) Based on a Schedule 13G jointly filed with the SEC on February 12, 2016 by FMR LLC (“FMR”) and Abigail P. Johnson (Director, Vice Chairman and Chief Executive Officer and President of FMR). FMR, as parent holding company of certain of its subsidiaries and affiliates, and other companies, and Abigail P. Johnson are the beneficial owners of 4,150,260 shares over which they have sole dispositive power. Of such shares, FMR has sole voting power over 217,037 shares. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR. Neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company, a wholly-owned subsidiary of FMR, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.

(6) Based on a Schedule 13G filed with the SEC on February 5, 2016. First Eagle Investment Management, LLC (“First Eagle”), an investment adviser, is the beneficial owner of 3,382,217 shares over which it has shared dispositive and voting power. First Eagle Fund of America (“FEA”), a registered investment company, may be deemed to beneficially own 3,382,217 shares, including common stock underlying call options referencing an aggregate of 550,000 shares. FEA is managed by First Eagle and sub-advised by Iridian. Each of First Eagle and Iridian are deemed to be the beneficial owner of the 3,382,217 shares. Clients of First Eagle have the right to receive and the ultimate power to direct the receipt of dividends from, or the proceeds of the sale of, such shares.

(7) Based on a Schedule 13G filed with the SEC on February 12, 2016. LSV Asset Management (“LSV”), an investment adviser, is the beneficial owner of 3,111,755 shares over which it has sole dispositive power. Of such shares, LSV has sole voting power over 2,063,348 shares.

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The following table furnishes certain information, to the best knowledge of the Company, as of March 28, 2016, as to the shares of Common Stock beneficially owned by (i) each Director of the Company, (ii) each Named Executive Officer of the Company as set forth in the Summary Compensation Table, and (iii) all Directors and executive officers of the Company as a group. The address of each person listed below is the address of the Company.

Beneficial Owner	Amount and Nature of Beneficial Ownership(1)		Percentage of Class
Jared L. Cohon		34,960		*
J. Edward Coleman		35,755		*
W. Roy Dunbar		22,559		*
William R. Fields		60,399		*
Ralph E. Gomory		66,640		*
Stephen R. Hardis		143,702		*
Sandra L. Helton		22,182		*
Robert Holland, Jr.		82,763		*
Michael J. Maples		37,803		*
Jean-Paul L. Montupet		65,020		*
Kathi P. Seifert(2)		61,455		*
Paul A. Rooke(3)		663,708		1.06
David Reeder		25,607		*
Gary D. Stromquist		28,000		*
Reynolds C. Bish		2,404		*
Martin S. Canning		100,707		*
Robert J. Patton		57,490		*
All directors and executive officers as a group (19 persons)		1,768,827		2.82

* Less than 1% of class (62,634,593 shares outstanding as of March 28, 2016).

(1) Shares beneficially owned include shares that may be acquired pursuant to the exercise of options that are exercisable within 60 days following March 28, 2016 by the following persons and groups in the following amounts: William R. Fields, 20,500 shares; Ralph E. Gomory, 20,500 shares; Stephen R. Hardis, 20,500 shares; Robert Holland, Jr., 20,500 shares; Michael J. Maples, 10,400 shares; Jean-Paul L. Montupet, 14,900 shares; Kathi P. Seifert, 14,900 shares; Paul A. Rooke 348,000 shares; Gary D. Stromquist 14,000 shares; and all Directors and executive officers as a group (19 persons), 594,200 shares. Included in these shares are (i) deferred stock units and associated dividend equivalent units granted to Directors as a result of their election to defer all or a portion of their Board fees under the 2005 Nonemployee Director Stock Plan, (ii) restricted stock units and associated dividend equivalent units granted to Directors which have become fully vested and for which settlement has been deferred or will become fully vested within 60 days following March 28, 2016, and (iii) elective deferred stock units and associated dividend equivalent units granted to executive officers as a result of their election to defer all or a portion of their annual incentive compensation under the Stock Incentive Plan. These shares also include shares allocated to executive officers through participation in the Lexmark Savings Plan. The shares held in the Lexmark Savings Plan can be voted by each executive officer, and each executive officer has investment authority over the shares held in his or her account in the plan. In the case of a tender offer, the trustee shall tender or not tender shares as directed by each participant in the plan.

(2) Ms. Seifert’s shares include 4,660 shares owned by an investment agency account established by Ms. Seifert for her own benefit.

(3) Mr. Rooke’s shares include 267,070 shares owned by a revocable trust established by Mr. Rooke for his own benefit.

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides information about the Company’s equity compensation plans as of December 31, 2015.

Plan Category	Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights			Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(1)		Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans
	(Number of securities in millions)
Equity compensation plans approved by shareholders		4.0	(2)	$	36.29		7.9	(3)
Equity compensation plans not approved by shareholders:
Broad-Based Employee Stock Plan(4)		0.0			44.65		0.0
Kofax Plans(5)		0.7			26.17		0.0
Total		4.7		$	34.48		7.9

(1) The numbers in this column represent the weighted average exercise price of stock options only.

(2) Of the approximately 4.0 million shares outstanding under the equity compensation plans approved by shareholders, there were approximately 0.8 million stock options (of which 643,000 are employee stock options and 122,000 are nonemployee director stock options) and approximately 3.2 million restricted stock units (“RSUs”) and deferred stock units (“DSUs”), including associated dividend equivalent units (of which 2,951,000 are employee RSUs and DSUs and 293,000 are nonemployee director RSUs and DSUs). Performance-based RSUs granted in 2013, 2014 and 2015 were included at the target level of achievement.

(3) Of the approximately 7.9 million shares available, 7.7 million relate to employee plans (of which 3.8 million may be granted as full-value awards) and 0.2 million relate to the nonemployee director plan.

(4) As of December 31, 2015, approximately 46,000 shares remained outstanding (all of which are in the form of stock options) pursuant to awards made under the Lexmark International, Inc. Broad-Based Employee Stock Incentive Plan (the “Broad-Based Plan”), an equity compensation plan which had not been approved by the Company’s shareholders. On February 24, 2011, the Company’s Board of Directors terminated the Broad-Based Plan and cancelled the remaining available shares that had been authorized for issuance under the Broad-Based Plan.

(5) As of December 31, 2015, approximately 693,000 shares remained outstanding (222,000 stock options and 471,000 restricted stock units) pursuant to awards granted under Kofax equity compensation plans that were converted into Lexmark options and restricted stock units in connection with the acquisition of Kofax in May 2015. No additional awards may be granted under the Kofax plans.

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REPORT OF THE FINANCE AND AUDIT COMMITTEE

During 2015, the Finance and Audit Committee (the “Committee”) was comprised of four nonemployee directors, Ms. Helton and Messrs. Coleman, Hardis and Maples.

The Committee operates pursuant to a written charter which can be found on the Company’s Investor Relations website at http://investor.lexmark.com. After reviewing the qualifications of the Committee members, and any relationships that they may have with the Company that might affect their independence from the Company, the Board of Directors has determined that (i) all Committee members are “independent” as that term is defined by Section 10A of the Securities Exchange Act of 1934, the rules of the Securities and Exchange Commission thereunder and the listing standards of the New York Stock Exchange, (ii) all Committee members are “financially literate” as that term is defined by the listing standards of the New York Stock Exchange and (iii) each of Ms. Helton and Messrs. Coleman, Hardis, and Maples is an “audit committee financial expert” as that term is defined by the applicable rules established by the Securities and Exchange Commission.

Company management has primary responsibility for preparing the Company’s financial statements and the financial reporting process, including establishing and maintaining adequate internal control over financial reporting and evaluating the effectiveness of internal control over financial reporting. PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm (the “Independent Auditors”), is responsible for performing an audit and expressing an opinion on the conformity of the Company’s audited financial statements to generally accepted accounting principles in the United States of America and performing an audit and expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. The Committee’s responsibility is to monitor and review these processes, acting in an oversight capacity. In this context, during 2015 the Committee met 13 times and held separate discussions with management, the Company’s internal auditors and the Independent Auditors. The Committee discussed with the Company’s internal auditors and the Independent Auditors the overall scope and plans for their respective audits. The Committee met regularly with the internal auditors and the Independent Auditors, with and without management present, to discuss the results of their respective examinations, their evaluation of the Company’s internal controls, and the overall quality of the Company’s financial reporting. The Committee discussed with the Independent Auditors the matters required to be communicated by the Public Company Accounting Oversight Board (“PCAOB”) Auditing Standard 16, Communications with Audit Committees. The Committee received and reviewed a report prepared by the Independent Auditors describing the firm’s internal quality control procedures and any material issues raised by the firm’s most recent internal quality-control review and peer review of the firm. The Committee received and reviewed the written disclosures and the letter from the Independent Auditors required by the applicable requirements of the PCAOB regarding the Independent Auditors’ communications with the Committee concerning independence, and has discussed with the Independent Auditors the Independent Auditors’ independence. The Committee also considered whether the provision of the non-audit services provided by the Independent Auditors is compatible with the Independent Auditors’ independence.

In discharging its duties, the Committee met with management of the Company and PwC and reviewed and discussed the Company’s audited financial statements for the fiscal year ended December 31, 2015. The Committee also discussed with PwC the critical accounting policies and practices used in the preparation of the Company’s audited financial statements. Management and PwC have represented to the Committee that the audited financial statements for the year ended December 31, 2015 were prepared in accordance with generally accepted accounting principles.

Based on the review and discussions with management, the internal auditors and the Independent Auditors referred to above, and subject to the limitations on the role and responsibilities of the Committee referred to above and in the Committee Charter, the Committee has recommended to the Board of Directors, and the Board has approved, the inclusion of the audited financial statements of the Company in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

The Finance and Audit Committee

of the Board of Directors

Stephen R. Hardis, Chair

J. Edward Coleman

Sandra L. Helton

Michael J. Maples

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PROPOSAL 2

RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS

Vote Required

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s Independent Auditors for the fiscal year ending December 31, 2016 will require the affirmative vote of the holders of a majority of the shares of Common Stock represented and entitled to vote on this proposal at the Annual Meeting.

The Board of Directors recommends a vote “FOR” this proposal. Signed proxies will be voted “FOR” this Proposal, unless shareholders specify a different choice in their proxies.

Summary

The Finance and Audit Committee of the Board of Directors has appointed PricewaterhouseCoopers LLP as the Company’s Independent Auditors to audit its consolidated financial statements and the effectiveness of the Company’s internal control over financial reporting and express an opinion thereon for the 2016 fiscal year. During the 2015 fiscal year, PricewaterhouseCoopers LLP served as the Company’s Independent Auditors and also provided certain tax services. The aggregate fees billed or to be billed to the Company by PricewaterhouseCoopers LLP for services performed during the fiscal years ended December 31, 2015 and 2014 are as follows:

	2015		2014
Audit Fees(1)	$	7,886,723	$	5,273,500
Audit-Related Fees(2)		198,465		96,955
Tax Fees(3)		1,168,250		32,310
All Other Fees(4)		320,000		249,000

(1) Audit Fees consist of fees for professional services rendered for the audit of the Company’s consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements.

(2) Audit-Related Fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s consolidated financial statements and are not reported under “Audit Fees.” These services include certain attest audits and accounting consultations concerning financial accounting and reporting standards.

(3) Tax Fees consist of fees for federal, state, local and international tax compliance, tax consulting and expatriate tax services.

(4) For 2015, All Other Fees consists of accounting and tax due diligence services provided in connection with the Company’s acquisition of Kofax Limited and information security services. For 2014, All Other Fees consists of accounting and tax due diligence services provided in connection with the Company’s acquisition of ReadSoft AB.

All fees for services incurred in 2015 were approved by the Finance and Audit Committee. The Finance and Audit Committee has considered whether the provision of non-audit services is compatible with maintaining the Independent Auditors’ independence. A representative of PricewaterhouseCoopers LLP is expected to be present at the Annual Meeting of Shareholders and will have an opportunity to make a statement and to respond to appropriate questions. Although the Company is not required to seek shareholder approval of this appointment, the Board believes it to be sound corporate governance to do so. If the appointment is not ratified, the Finance and Audit Committee will reconsider the appointment.

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Policy Regarding Finance and Audit Committee Preapproval of Audit and Permissible Non-Audit Services

In April 2003, the Finance and Audit Committee adopted a policy regarding the preapproval of all audit and permissible non-audit services to be provided to the Company by the Independent Auditors. The Finance and Audit Committee amended such policy in February 2006. On an annual basis, the Finance and Audit Committee is required to review and consider for approval the annual audit engagement terms and fees for the coming year, which includes the audit of the Company’s annual financial statements (including required quarterly reviews) and required subsidiary audits. At the same time, the Committee also reviews and considers for approval annually recurring and planned audit-related and tax services to be provided to the Company in the coming year. All of the services reviewed and approved on an annual basis are approved at an estimated fee and require additional preapproval by the Committee during the year if the estimated fee is expected to be exceeded. The authority to preapprove any services exceeding previously approved budgeted amounts by $50,000 or less is delegated to the Chair of the Finance and Audit Committee, provided that such preapprovals are reported to the full Committee at its next regularly scheduled meeting. All other permissible services to be provided by the Independent Auditors at a fee not to exceed $50,000 may be specifically preapproved by the Chair of the Finance and Audit Committee, and reported to the full Committee at its next regularly scheduled meeting.

In considering the preapproval of services to be provided by the Independent Auditors, the Finance and Audit Committee is mindful of the relationship between fees for audit and non-audit services, and may determine for each fiscal year the appropriate ratio between the total amount of fees for audit, audit-related and tax services and the total amount of fees for certain permissible non-audit services classified as all other services.

72

PROPOSAL 3

SHAREHOLDER ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

In 2009, the Board of Directors adopted a Corporate Governance Principle, commonly known as a “Say-on-Pay” proposal, to annually provide shareholders with the opportunity to approve the compensation of the Company’s Named Executive Officers through consideration of the following non-binding advisory resolution:

RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.

As discussed in the Compensation Discussion and Analysis section of this Proxy Statement, the Compensation Committee’s goal in setting executive compensation is to provide total compensation opportunities that are market competitive and supportive of the Company’s strategy to attract, develop, motivate and retain outstanding executive talent. The Company’s executive compensation programs are centered on a pay-for-performance culture that are designed to reward executive officers for superior Company and individual performance while encouraging behavior that is in the long-term best interests of the Company and its shareholders. Consistent with this philosophy, a significant portion of each executive officer’s total compensation opportunity is performance-based and dependent upon the Company’s achievement of specified financial goals and the performance of the Common Stock on a long-term basis.

Shareholders are encouraged to read the Compensation Discussion and Analysis section of this Proxy Statement, which discusses the Company’s compensation plans and programs that have been designed to implement the Company’s executive compensation philosophy, as well as the Summary Compensation Table and other related compensation tables and narrative disclosure, which describe the compensation of each of the Named Executive Officers. The Compensation Committee and the Board of Directors believe that the compensation plans and programs articulated in the Compensation Discussion and Analysis section of this Proxy Statement are effective in implementing the Company’s executive compensation philosophy and that the compensation of the Named Executive Officers in 2015 reflects and supports such philosophy.

Because your vote is advisory, it will not be binding on the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements.

• THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ADVISORY VOTE ON EXECUTIVE COMPENSATION SET FORTH IN THIS PROPOSAL THREE.

73

SUBMISSION OF SHAREHOLDER PROPOSALS

If a holder of the Common Stock wishes to present a proposal for consideration at next year’s Annual Meeting, any such proposal must be received at the Company’s offices at One Lexmark Centre Drive, Lexington, Kentucky 40550, Attention: Corporate Secretary, on or before December 9, 2016. In addition, the Company’s By-Laws provide that in order for any shareholder to nominate a Director or propose to transact any corporate business at an Annual Meeting of Shareholders, the shareholder must have given written notice, by certified mail, to the Secretary of the Company, which must be received by the Secretary of the Company not less than 60 nor more than 120 days prior to the first anniversary of the date on which the Company first mailed its proxy materials for the preceding year’s Annual Meeting of Shareholders. If the date of the Annual Meeting is advanced more than 30 days prior to or delayed by more than 30 days after the first anniversary of the preceding year’s Annual Meeting, the notice must be received by the Secretary not later than the close of business on the later of the 90th day prior to the Annual Meeting or the 10th day following the day on which public announcement of the date of such meeting is first made.

OTHER MATTERS

The management knows of no other matters which are likely to be brought before the meeting, but if any such matters properly come before the meeting, the persons named in the enclosed proxy, or their substitutes, will vote the proxy in accordance with their best judgment.

The Company will furnish to each person whose proxy is being solicited, upon written request, copies of any exhibits to its Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission. Requests in writing for copies of any such materials should be directed to Investor Relations, Lexmark International, Inc., One Lexmark Centre Drive, Lexington, Kentucky 40550.

Robert J. Patton

Secretary

April 8, 2016

74

ANNEX A

Reconciliation of Non-GAAP Financial Measures

Revenue (in millions)	2015		2014		2013
GAAP	$	3,551	$	3,710	$	3,668
Acquisition and Divestiture-Related Adjustments		45		17		16
Non-GAAP	$	3,596	$	3,728	$	3,684

Higher Value Solutions (MPS & Enterprise Software) Revenue (in millions)	2015		2014		2013
GAAP	$	1,362	$	1,117	$	945
Acquisition Related Adjustments		45		17		16
Non-GAAP	$	1,407	$	1,134	$	961

Operating Income (in millions)	2015			2014		2013
GAAP	$	(25	)	$	149	$	409
Actuarial Gain/loss on Pension Plan		9			81		(82	)
Remediation-Related Adjustments		8			—		—
Restructuring Charges & Project Costs		88			46		55
Acquisition and Divestiture-Related Adjustments		274			121		21
Non-GAAP	$	354		$	397	$	403

A-1

*** Exercise Your Right to Vote ***

Important Notice Regarding the Availability of Proxy Materials for the

Stockholder Meeting to Be Held on May 20, 2016

LEXMARK INTERNATIONAL, INC.		Meeting Information
		Meeting Type:           Annual Meeting
		For holders as of:     March 28, 2016
		Date:   May 20, 2016	Time:   7:30 AM EDT
		Location:  Embassy Suites Hotel      1801 Newtown Pike      Lexington, KY 40511
	Lexmark International, Inc. 740 West New Circle Road Lexington, KY 40550	You are receiving this communication because you hold shares in the above named company.
		This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side).
		We encourage you to access and review all of the important information contained in the proxy materials before voting.
		See the reverse side of this notice to obtain proxy materials and voting instructions.

	—   Before You Vote   — How to Access the Proxy Materials
	Proxy Materials Available to VIEW or RECEIVE:
	1. Annual Report        2. Notice & Proxy Statement
	How to View Online:
	Have the information that is printed in the box marked by the arrow   (located on the following page) and visit: www.proxyvote.com.
	How to Request and Receive a PAPER or E-MAIL Copy:
	If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request:
	1) BY INTERNET:        www.proxyvote.com
	2) BY TELEPHONE:    1-800-579-1639
	3) BY E-MAIL*:            sendmaterial@proxyvote.com
	*   If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked by the arrow   (located on the following page) in the subject line. Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 08, 2016 to facilitate timely delivery.
	—  How To Vote  — Please Choose One of the Following Voting Methods
	Vote In Person:  Many stockholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares. Vote By Internet:  To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box marked by the arrow    available and follow the instructions.
	Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card.

		Voting  Items
	The Board of Directors recommends you vote FOR all of the Nominees for Director in Proposal 1.
	1.      Election of Directors - 1 year term expiring in 2017         Nominees
	1a    Ralph E. Gomory 1b    Michael J. Maples 1c    Stephen R. Hardis 1d    William R. Fields 1e    Robert Holland, Jr. 1f    Kathi P. Seifert 1g    Jean-Paul L. Montupet 1h    Jared L. Cohon 1i    J. Edward Coleman 1j    Paul A. Rooke 1k    Sandra L. Helton 1l    W. Roy Dunbar

The Board of Directors recommends you vote FOR proposals 2 and 3.
2	Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016
3	Approval, by non-binding advisory vote, of the Company’s executive compensation
NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

Lexmark International, Inc. 740 West New Circle Road Lexington, KY 40550	VOTE BY INTERNET - www.proxyvote.com
	Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
	ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
	VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
	VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

KEEP THIS PORTION FOR YOUR RECORDS

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY

The Board of Directors recommends you vote FOR all of the Nominees for Director in Proposal 1.

1.

Election of Directors - 1 year term expiring in 2017

Nominees

1a    Ralph E. Gomory 1b    Michael J. Maples 1c    Stephen R. Hardis 1d    William R. Fields 1e    Robert Holland, Jr. 1f    Kathi P. Seifert 1g    Jean-Paul L. Montupet 1h    Jared L. Cohon For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting

For ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ Yes ¨

Against ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ No ¨

Abstain ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨ ¨

1i 1j 1k 1l

J. Edward Coleman Paul A. Rooke Sandra L. Helton W. Roy Dunbar

For ¨ ¨ ¨ ¨

Against ¨ ¨ ¨ ¨

Abstain ¨ ¨ ¨ ¨

The Board of Directors recommends you vote FOR proposals 2 and 3.

For

Against

Abstain

2

Ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016

¨

¨

¨

3

Approval, by non-binding advisory vote, of the Company’s executive compensation

¨

¨

¨

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.

Signature [PLEASE SIGN WITHIN BOX]

Date

Signature (Joint Owners)

Date

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:

The Annual Report and Notice & Proxy Statement are available at www.proxyvote.com

		LEXMARK INTERNATIONAL, INC. Annual Meeting of Stockholders May 20, 2016 7:30 AM This proxy is solicited by the Board of Directors
		The stockholder(s) hereby appoint(s) Paul A. Rooke, David Reeder and Robert J. Patton, or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Class A Common Stock of LEXMARK INTERNATIONAL, INC. that the stockholder(s) is/are entitled to vote at the Annual Meeting of Stockholder(s) to be held at 7:30 AM, EDT on May 20, 2016, at the Embassy Suites Hotel, 1801 Newtown Pike, Lexington, Kentucky 40511, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. ATTENTION Participants in the Lexmark Savings Plan (the “Plan”): If the stockholder holds shares in the Plan, this proxy covers all shares for which the stockholder has the right to give voting instructions to Fidelity Management Trust Company (“Fidelity”), the Plan trustee. The stockholder’s voting instructions with respect to shares held in the Plan must be provided by 11:59 PM, EDT on May 17, 2016. The shares attributable to the stockholder’s Plan account will be voted by Fidelity as directed. If no direction is made, if the card is not signed, or if the card is not received by May 17, 2016, the shares attributable to the stockholder’s account will not be voted by Fidelity. Address change / comments:
	(If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.)
		Continued and to be signed on reverse side