DEF 14A 1 def14aapr2016.htm DEF 14A DEF 14A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.     )

 þ Filed by the Registrant                  ¨ Filed by a Party other than the Registrant
Check the appropriate box:
¨
Preliminary Proxy Statement
¨
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
þ
Definitive Proxy Statement
¨
Definitive Additional Materials
¨
Soliciting Material Pursuant to §240.14a-12

 Blackbaud, Inc.

(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ
No fee required.
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1) Title of each class of securities to which transaction applies:
 
(2) Aggregate number of securities to which transaction applies:
 
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
 
(4) Proposed maximum aggregate value of transaction:
 
(5) Total fee paid:
¨
Fee paid previously with preliminary materials.
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1) Amount Previously Paid:
 
(2) Form, Schedule or Registration Statement No.:
 
(3) Filing Party:
 
(4) Date Filed:









TABLE OF CONTENTS
 
LETTER TO STOCKHOLDERS FROM OUR BOARD OF DIRECTORS
 
 
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
 
 
PROXY SUMMARY
 
 
PROXY STATEMENT
 
 
GOVERNANCE
Proposal 1—Election of Directors
Board of Directors and Committees
Director Compensation
Transactions with Related Persons
 
 
STOCK OWNERSHIP
Ownership of Equity Securities of the Company
Section 16(a) Beneficial Ownership Reporting Compliance
 
 
EXECUTIVE COMPENSATION
Proposal 2—Advisory Vote to Approve Named Executive Officer Compensation
Compensation Discussion and Analysis
Compensation Committee Report
Compensation Committee Interlocks and Insider Participation
Compensation Tables
Potential Payments Upon Termination or Change in Control
Proposal 3—Approval of the Blackbaud, Inc. 2016 Equity and Incentive Compensation Plan
Equity Compensation Plan Information
 
 
AUDIT MATTERS
Proposal 4—Ratification of Appointment of Independent Registered Public Accounting Firm
Audit Committee Report
 
 
ADDITIONAL INFORMATION
Questions and Answers about the 2015 Annual Meeting of Stockholders
Stockholder Proposals
Delivery of Documents to Stockholders Sharing an Address
Annual Report on Form 10-K
Other Matters
Directions to the 2015 Annual Meeting of Stockholders
 
 
Appendices
 
 
 

2016 Proxy Statement
1



 
LETTER TO STOCKHOLDERS
FROM OUR BOARD OF DIRECTORS

Fellow Blackbaud Stockholders:
Blackbaud is a leading provider of software and services for the worldwide philanthropic community. As a market leader in a large and growing market, our Company offers its customers a comprehensive solution set combined with domain expertise. As stewards of this Company, we are committed to achieving long-term performance and delivering stockholder value through a strong business model and five point strategy for growth, which is: building integrated and open solutions in the cloud; driving sales effectiveness; expanding the Company’s total addressable market into near adjacent markets through acquisitions; streamlining operations; and executing on margin improvement plans. With that strategy in mind, the Board of Directors is pleased with the Company’s progress over the past year.
In 2015, the Company:

Increased total revenue by 13.0% to $637.9 million;
Increased total non-GAAP organic revenue* by 6.1%, 7.7% in constant currency;
Grew recurring revenue to approximately 76.1% of total revenue;
Increased income from operations by 0.8% to $46.7 million;
Increased non-GAAP income from operations* by 19.9% to $122.0 million
Increased cash flow from operations by 11.8% to $114.3 million;
Provided returns to stockholders by paying $22.5 million in dividends;
Expanded its subscription-based cloud delivery model, including the announcement of the general availability of Raiser's Edge NXT® and Financial Edge NXT®, and introduction of Blackbaud SKYTM, our new, innovative cloud technology architecture for the global philanthropic community;
Launched a formal Sales Effectiveness Program to streamline processes and expand our direct sales and customer success teams, and announced a value added reseller ("VAR") program, launching in 2016;
Completed the acquisition of Smart, LLC, which expanded our addressable market into K-12 tuition and financial aid management, a new and near adjacency within the education market, which added an estimated $700 million to our total addressable market;
Substantially completed the implementation of an enterprise quality enhancement program and extended our relentless focus on quality to process optimization across the entire organization; and
Generated financial results that keep us on track to deliver against our long-term aspirational goals related to revenue growth and margin expansion, and announced an updated long-term aspirational goal for aggregate operating cash flow over the four-year period from 2014 to 2017 from an initial estimated range of $400 million to $450 million to an updated estimated range of $500 million to $550 million.

We remain committed to continuing stockholder communication and engagement to better understand your views on the Company and, in particular, our executive compensation program. In 2015, as we do every year, we reviewed our executive compensation program with our Compensation Committee’s independent compensation consultant, Compensia, Inc., and benchmarked our programs against our industry peers.
Our compensation decisions, including the continued practice of making annual grants to our executive officers of performance-based restricted stock units, reinforce our strong pay-for-performance compensation philosophy. We are committed to providing competitive, performance-based compensation opportunities to our executive officers, who collectively are responsible for making our Company successful, and are confident that our compensation programs achieve this aim.
We appreciate your investment in Blackbaud and value your input and continued support.
 
The Board of Directors of Blackbaud, Inc.
 
 
April 26, 2016
* See Appendix A for a reconciliation of non-GAAP financial measures to results reported in accordance with generally accepted accounting principles.

2
2016 Proxy Statement


 

 
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS

Wednesday, June 15, 2016
4:00 p.m., Eastern Time

Blackbaud Corporate Headquarters
2000 Daniel Island Drive, Charleston, South Carolina 29492

Fellow Blackbaud Stockholders:
The 2016 Annual Meeting of Stockholders of Blackbaud, Inc. will be held on Wednesday, June 15, 2016 at 4:00 p.m., Eastern Time, at our corporate headquarters located at 2000 Daniel Island Drive, Charleston, South Carolina 29492, to take action on the following business:
1.
To elect the two Class C directors named in the Proxy Statement, each for a three-year term expiring in 2019;
2.
To approve, on an advisory basis, the 2015 compensation of our named executive officers;
3.
To approve the Blackbaud, Inc. 2016 Equity and Incentive Compensation Plan;
4.
To ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016; and
5.
To transact such other business as may properly come before the meeting or any adjournment thereof.
These matters are more fully described in the Proxy Statement accompanying this Notice.
If you were a stockholder of record of Blackbaud common stock as of the close of business on April 18, 2016, you are entitled to receive this Notice and vote at the Annual Meeting of Stockholders and any adjournments or postponements thereof.
You are cordially invited to attend the meeting in person; however, to assure your representation at the meeting, you are urged to vote by proxy by following the instructions contained in the accompanying Proxy Statement. You may revoke your proxy in the manner described in the Proxy Statement at any time before it has been voted at the meeting. Any stockholder attending the meeting may vote in person even if he or she has returned a proxy.
Your vote is important. Whether or not you plan to attend the meeting, we hope that you will vote as soon as possible.
 
 
 
 
By order of the Board of Directors
 
 
Jon W. Olson
 
Senior Vice President, General Counsel and Secretary
 
Dated:
April 26, 2016

2016 Proxy Statement
3



 
PROXY SUMMARY

This proxy summary is intended to provide a broad overview of the items that you will find elsewhere in this proxy statement. Because this is only a summary, it does not contain all of the information that you should consider, and you should read the entire proxy statement carefully prior to voting.
 
ANNUAL MEETING OF STOCKHOLDERS
TIME AND DATE:
June 15, 2016, 4:00 p.m., Eastern Time
 
 
 
 
PLACE:
Blackbaud Corporate Headquarters, 2000 Daniel Island Drive, Charleston, South Carolina 29492. See "Directions to the 2015 Annual Meeting of Stockholders" on page 64 of this Proxy Statement.
 
 
 
 
RECORD DATE:
April 18, 2016
 
 
 
 
VOTING:
Stockholders as of the record date are entitled to vote. Each share of Blackbaud common stock is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on.
 
Even if you plan to attend the 2016 Annual Meeting of Stockholders in person, please vote right away using one of the following advance voting methods (see page 61 for additional details). Make sure you have your proxy card or voting instruction form in hand and follow the instructions.
 
Use the Internet
Call Toll-Free
Mail Your Proxy Card
 
 
 
 
 
8
'
*
 
www.proxyvote.com
1-800-690-6903
Follow the instructions on
your proxy materials
ADMISSION:
Proof of share ownership and a form of personal photo identification will be required to enter the Blackbaud Annual Meeting.
 
MEETING AGENDA AND VOTING MATTERS
Proposal
Board's Voting
Recommendation
Voting
Standard
Page
Number
(for more
details)
No. 1
Election of two Class C directors, each for a three-year term expiring in 2019.
ü FOR (each nominee)
Majority of votes present and entitled to vote
No. 2
Advisory vote to approve the 2015 compensation of our named executive officers.
ü FOR
Majority of votes present and entitled to vote
No. 3
Approve the Blackbaud, Inc. 2016 Equity and Incentive Compensation Plan.
ü FOR
Majority of votes present and entitled to vote
No. 4
Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
ü FOR
Majority of votes present and entitled to vote

4
2016 Proxy Statement


 
 
PROXY SUMMARY


 
MEMBERS OF OUR BOARD OF DIRECTORS (pages 10-16)
 
Age        
Director
Since
Class
Current Term Expires
Expiration of Term For Which Nominated
Independent
Other Public Company Boards
Committee Memberships
Name, Primary Occupation
AC
CC
NCGC
ROC
Timothy Chou, Ph.D.
President of Oracle On Demand, a division of Oracle Corporation (Retired)
61
2007
A
2017
-
Yes
None
 
l
l
 
George H. Ellis
Chief Financial Officer of The Studer Group L.L.C.
67
2006
B
2018
-
Yes
1
l
 
 
 
Michael P. Gianoni
President and CEO of Blackbaud, Inc.
55
2014
C
2016
2019
No
1
 
 
 
 
David G. Golden
Managing Partner of Revolution Ventures
57
2010
B
2018
-
Yes
2
l
 
 
 
Peter J. Kight
Private Investor
60
2014
A
2017
-
Yes
1
l
 
 
l
Andrew M. Leitch
Chairman of the Board of Blackbaud, Inc., Regional Partner - Asia of Deloitte & Touche LLP (Retired)
72
2004
B
2018
-
Yes
2
l
 
l
l
Sarah E. Nash
Vice Chairman of JPMorgan
Chase & Co. (Retired)
62
2010
C
2016
2019
Yes
1
 
l
l
 
Joyce M. Nelson
President and Chief Executive Officer of National Multiple Sclerosis Society (Retired)
65
2012
A
2017
-
Yes
None
 
l
l
 
l - Committee Chair
AC - Audit Committee
CC - Compensation Committee
NCGC - Nominating and Corporate Governance Committee
ROC - Risk Oversight Committee
 
INFORMATION ABOUT OUR BOARD AND COMMITTEES (pages 16-18)
 
Number of Members
Independence
Number of Meetings During Fiscal Year 2015
Full Board
8
88%
7
Audit Committee
4
100%
12
Compensation Committee
3
100%
6
Nominating and Corporate Governance Committee
4
100%
4
Risk Oversight Committee(1)
2
100%
1
(1)
Formed in the third quarter of 2015.
 
2015 PERFORMANCE HIGHLIGHTS (page 25)
Total Revenue
Non-GAAP Organic Revenue Growth in Constant Currency(1)
Non-GAAP Income from Operations(1)
Cash Flow From Operations
Recurring Revenue
$637.9M
7.7%
$122.0M
$114.3M
76.1%
(increased 13.0%)
 
(increased 19.9%)
(increased 11.8%)
(vs. 72.8% in 2014)
(1)
See Appendix A for a reconciliation of non-GAAP financial measures to results reported in accordance with generally accepted accounting principles.

2016 Proxy Statement
5


PROXY SUMMARY
 
 

 
GOVERNANCE HIGHLIGHTS
Governance Matter
Summary Highlights
Page
Number
(for more
 details)
Board Independence
ü
Independent Board, except CEO
 
ü
Independent Board Chairman
 
ü
100% Independent Committee Members
 
ü
Regular Executive Sessions of Independent Directors
16
 
ü
Committee Authority to Retain Independent Advisors
15
Director Elections
ü
Majority Voting
61
Meeting Attendance
ü
All Directors Attended At Least 75% of the Total Number of Meetings of our Board and Committees on which the Director Served in 2015
16
Evaluating and Improving Board Performance
ü
Annual Board Evaluations
17
ü
Annual Committee Evaluations
17
Aligning Director and Stockholder Interests
ü
Director Stock Ownership Guidelines
21
ü
Annual Director Equity Grants
Aligning Executive Officer and Stockholder Interests
ü
Executive Officer Stock Ownership Guidelines
39
ü
Executive Compensation Driven by Pay-For-Performance Philosophy
26
Other
ü
Annual Non-binding, Advisory ("Say-on-Pay") Vote
ü
Risk Oversight Committee of the Board
18
ü
Prohibition on Pledging and Hedging of Company Securities
27
ü
Equity Plan Prohibits Stock Option Exchanges or Repricing Without Stockholder Approval
27
 
COMPONENTS OF EXECUTIVE COMPENSATION PROGRAM (page 26)
Component
Description
Base Salary
Fixed compensation component payable in cash
Annual Cash Bonus
Variable compensation component payable based on performance against pre-established short-term performance objectives
Annual Equity Grants
Variable and long-term compensation component consisting of 50% restricted stock awards (“RSAs”) and 50% performance-based restricted stock units (“PRSUs”)
“Double-Trigger”
Change in Control
Severance Arrangements
Provide change in control payments and benefits to executive officers only upon a qualifying termination of employment within 12 months of a change in control of our Company
Other Benefits
Generally provide the same health and welfare benefits as offered to all of our employees

6
2016 Proxy Statement


 
 
PROXY SUMMARY


 
2015 EXECUTIVE COMPENSATION ACTIONS (page 27)
 
Base Salaries
Increased base salaries of our named executive officers (other than our newly hired Executive Vice President and President, Enterprise Customer Business Unit) by 3.0% from their 2014 levels.
Annual Cash Bonuses
Increased the target annual cash bonus opportunity for certain of our named executive officers (other than our President and CEO and Executive Vice President of Corporate and Product Strategy) to 65% of their earned base salaries.
Due to excellent financial performance in 2015, awarded cash bonuses that were, on average, 115% of each named executive officer's target annual cash bonus opportunity.
Long-term Incentive Compensation
Approved grants of annual equity awards consisting of RSAs and PRSUs for our named executive officers that met competitive market concerns, supported our retention objectives, and rewarded overall company performance.
Amended and Restated CEO Employment Agreement
Entered into an amended and restated employment and noncompetition agreement (the "Amended Agreement") with our CEO. Pursuant to the Amended Agreement, our CEO received a grant of RSAs valued at $5.0 million (the “Retention Grant”). The Retention Grant consisted of 80,555 RSAs, which were granted on December 14, 2015. The Retention Grant will vest in full on December 31, 2019 and is contingent upon our CEO's continued employment as of the vesting date. The vesting period aligns with the term of the Amended Agreement and is intended to facilitate the retention of our CEO for this extended period in consideration of our achievements and progress towards our long-term goals under his leadership.
 
2015 NEO COMPENSATION SUMMARY (page 41)
 
Set forth below is the 2015 compensation for each of our named executive officers as determined under SEC rules. See the notes accompanying the 2015 Summary Compensation Table beginning on page 41 for more information.
Name and Principal Position
Salary

Bonus

Stock
Awards

Option
Awards

Non-Equity
Incentive Plan
Compensation

All Other
Compensation

Total

Michael P. Gianoni
President and CEO
$
613,506

$

$
10,111,855

$

$
709,820

$
50,165

$
11,485,346

Anthony W. Boor
Executive Vice President and CFO
434,567


2,028,298


326,813

30,723

2,820,401

Kevin W. Mooney
Executive Vice President and President, General Markets Business Unit
412,274


1,521,212


325,031

24,617

2,283,134

Charles T. Cumbaa
Executive Vice President of Corporate and Product Strategy
393,666


1,521,212


227,734

24,693

2,167,305

Brian E. Boruff
Executive Vice President and President, Enterprise Customer Business Unit
272,023

50,000

1,104,539


195,220

20,090

1,641,872


2016 Proxy Statement
7



 
 
 
2000 DANIEL ISLAND DRIVE
 
CHARLESTON, SC 29492
 
 
 
 
 
April 26, 2016



 
PROXY STATEMENT

The Board of Directors of Blackbaud, Inc. (the "Board" or "Board of Directors") is furnishing you this Proxy Statement to solicit proxies on its behalf to be voted at the 2016 Annual Meeting of Stockholders of Blackbaud, Inc. The meeting will be held on Wednesday, June 15, 2016 at 4:00 p.m. Eastern Time, at Blackbaud's corporate headquarters located at 2000 Daniel Island Drive, Charleston, South Carolina 29492. The proxies also may be voted at any adjournments or postponements of the meeting.
We are first furnishing the proxy materials including the Notice of Annual Meeting of Stockholders, this Proxy Statement, our 2015 Annual Report to Stockholders, including financial statements, and a proxy card for the meeting, by providing access to them via the Internet on April 26, 2016. All properly completed proxies submitted by Internet or telephone and properly executed written proxies that are delivered pursuant to this solicitation will be voted at the meeting in accordance with the directions given in the proxy, unless the proxy is revoked prior to completion of voting at the meeting.
Only owners of record and beneficial owners of common stock of the Company as of the close of business on the record date, April 18, 2016, are entitled to notice of, and to vote at, the meeting or at any adjournments or postponements of the meeting. Each owner of record and beneficial owner on the record date is entitled to one vote for each share of common stock held. Stockholders’ votes will be tabulated by persons appointed by the Board to act as inspectors of election for the meeting.

 
 
 
 
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 15, 2016.
 
 
The Notice of Annual Meeting of Stockholders, Proxy Statement and 2015 Annual Report on Form 10-K are available at www.proxyvote.com
 
 
 
 

8
2016 Proxy Statement


 
GOVERNANCE
PROPOSAL 1 — ELECTION OF DIRECTORS
The Board of Directors consists of eight members and is divided into three classes, the members of which each serve for a staggered three-year term. The term of office of one class of directors expires each year in rotation so that one class is elected at each annual meeting for a full three-year term. Each of our existing Class C directors, Sarah E. Nash and Michael P. Gianoni, have been nominated to fill a three-year term expiring in 2019. The two other classes of directors, who were elected or appointed for terms expiring at the annual meetings in 2017 and 2018, respectively, will remain in office.
If you are a stockholder of record, unless you mark your Proxy Card otherwise, the proxy holders will vote the proxies received by them for the two Class C nominees named below, each of whom is currently a director and each of whom has consented to be named in this Proxy Statement and to serve if elected. In the event that any nominee is unable or declines to serve as a director at the time of the meeting, your proxy will be voted for any nominee designated by the Board of Directors to fill the vacancy. We do not expect that any nominee will be unable or will decline to serve as a director.
If you are a beneficial owner of shares held in street name and you do not provide your broker with voting instructions, your broker may not vote your shares on the election of directors. Therefore, it is important that you vote.
 
 
 
 
 
ü
The Board of Directors unanimously recommends that stockholders vote FOR the two Class C director nominees.
 
 
 
 
 
The voting requirements for this Proposal 1 are described above and under "Additional Information" on page 61 of this Proxy Statement.
Director Qualifications
The Board has identified particular qualifications, attributes, skills and experience that are important to be represented on the Board as a whole in light of the Company's current business. The Board believes the areas of director expertise that contribute to a well-functioning Board to effectively oversee the Company's strategy and management include:

2016 Proxy Statement
9


GOVERNANCE
 
 

Biographies of Our Director Nominees
The biographies of our directors as of April 18, 2016 are set forth below. There are no family relationships among our directors, director nominees or executive officers. The business address for each of our directors, director nominees and executive officers for matters regarding Blackbaud is 2000 Daniel Island Drive, Charleston, South Carolina 29492.
MICHAEL P. GIANONI
Age 55
 
Director since January 2014
 
 
 
 
President and Chief Executive Officer of Blackbaud, Inc.
 
 
 
 
NON-INDEPENDENT DIRECTOR Class C
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2016
 
ü
Leadership - Current CEO
Blackbaud Board Committees None
 
ü
Business Operations
Other Public Boards Teradata Corporation
 
ü
Technology and Software Industries
 
 
 
ü
Nonprofit Industry
 
 
 
ü
Public Company Board Service
Biography
Mr. Gianoni joined us as President, Chief Executive Officer and a member of the Board of Directors in January 2014. Prior to joining us, he served as Executive Vice President and Group President, Financial Institutions at Fiserv, Inc., a global technology provider serving the financial services industry, from January 2010 to December 2013. He joined Fiserv as President of its Investment Services division in December 2007. Mr. Gianoni was Executive Vice President and General Manager of CheckFree Investment Services, which provided investment management solutions to financial services organizations, from June 2006 until December 2007 when Fiserv acquired CheckFree. From May 1994 to November 2005, he served as Senior Vice President of DST Systems Inc., a global provider of technology-based service solutions. Mr. Gianoni is a member of the board of directors of Teradata Corporation, a publicly traded global big data analytics and marketing applications company, as well as the University of New Haven. He holds an AS in electrical engineering from Waterbury State Technical College, a BS with a business concentration from Charter Oak State College and an MBA and honorary Doctorate from the University of New Haven.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Mr. Gianoni's unique knowledge and experience in the technology industry and his experience with nonprofit organizations, as well as his leadership as our President and CEO since January 2014, led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.
SARAH E. NASH
Age 62
 
Director since July 2010
 
 
 
 
Vice Chairman of JPMorgan Chase & Co. (Retired)
 
 
 
 
INDEPENDENT DIRECTOR Class C
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2016
 
ü
Business Development and Corporate Transactions
Blackbaud Board Committees Compensation (Chair), Nominating and Corporate Governance
 
ü
Finance
 
ü
Corporate Governance
Other Public Boards Knoll, Inc.
 
ü
Nonprofit Industry
 
 
 
ü
Public Company Board Service
Biography
Ms. Nash joined the Board of Directors in July 2010. Ms. Nash currently serves on the boards of directors of Knoll, Inc. as well as private companies HBD Industries, Inc. and Irving Oil Ltd. She also served on the board of directors of Merrimack Pharmaceuticals, Inc. from May 2006 until December 2014. Ms. Nash is trustee of the New York-Presbyterian Hospital. She is also a member of the Business Leadership Council of City University of New York and the National Board of the Smithsonian

10
2016 Proxy Statement

 
 
GOVERNANCE

Institution. Ms. Nash spent nearly 30 years in investment banking at JPMorgan Chase & Co. (and predecessor companies), a financial services firm, retiring as Vice Chairman in July 2005. Ms. Nash holds a BA in political science from Vassar College.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Ms. Nash’s knowledge and experience in capital markets, strategic transactions, corporate governance and nonprofit organizations led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that she is well qualified to serve as a director of our Company.
Biographies of Our Directors Not Up For Re-election At This Meeting
 
TIMOTHY CHOU, Ph.D.
Age 61
 
Director since June 2007
 
 
 
 
President of Oracle On Demand, a division of Oracle Corporation (Retired)
 
 
 
 
INDEPENDENT DIRECTOR Class A
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2017
 
ü
Business Operations
Blackbaud Board Committees Compensation, Nominating and Corporate Governance
 
ü
Technology and Software Industries
 
ü
Business Development and Corporate Transactions
Other Public Boards None
 
ü
Corporate Governance
Biography
Dr. Chou joined the Board of Directors in June 2007. From November 1999 until his retirement from full-time employment in January 2005, Dr. Chou served as President of Oracle On Demand, a division of Oracle Corporation, a provider of enterprise software and computer hardware products and services. Prior to that, Dr. Chou served as Chief Operating Officer of Reasoning, Inc., an information technology services firm, and as Vice President, Server Products, of Oracle Corporation. Dr. Chou is the author of “The End of Software” and is a lecturer at Stanford University. Dr. Chou holds a BS in Electrical Engineering from North Carolina State University and MS and PhD degrees in Electrical Engineering from the University of Illinois Urbana-Champaign.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Dr. Chou’s knowledge and experience in the software-as-a-service and cloud computing industry, corporate governance as well as his senior leadership roles and operational experience in large organizations in the information technology industry led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.
GEORGE H. ELLIS
Age 67
 
Director since March 2006
 
 
 
 
Chief Financial Officer of The Studer Group L.L.C.
 
 
 
 
INDEPENDENT DIRECTOR Class B
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2018
 
ü
Leadership - Former CEO
Blackbaud Board Committees Audit (Chair)
 
ü
Accounting and Finance
Other Public Boards Liquidity Services, Inc.
 
ü
Nonprofit Industry
 
 
ü
Technology and Software Industries
 
 
 
ü
Public Company Board Service
Biography
Mr. Ellis joined the Board of Directors in March 2006. Mr. Ellis has been Chief Financial Officer of The Studer Group L.L.C., a private company in the health care industry (now an operating unit of Huron Consulting Group Inc.), since September 2011. Prior to that, from July 2006 to August 2011, Mr. Ellis was Chief Financial Officer of Global 360, Inc., now OpenText Corporation, a private company offering business process management services. Since April 2010, Mr. Ellis has served on the board of Liquidity Services, Inc., currently as Chairman of its audit committee. He has also served in several capacities at

2016 Proxy Statement
11


GOVERNANCE
 
 

Softbrands, Inc., as a member of its board of directors from October 2001 to August 2009, serving as Chairman from October 2001 to June 2006, and Chief Executive Officer from October 2001 to January 2006. Mr. Ellis was the Chairman and Chief Executive Officer of AremisSoft Corporation from October 2001 to confirmation of its plan of reorganization under Chapter 11 of the Federal Bankruptcy Code in August 2002. Mr. Ellis, who served as a director of AremisSoft from April 1999 until February 2001, accepted the position at AremisSoft to assist in the reorganization. Mr. Ellis served on the board of directors of PeopleSupport, Inc. from October 2004 to October 2008. Mr. Ellis served as the Chief Operating Officer of the Community Foundation of Texas from August 1999 to July 2001. Mr. Ellis has served on the board of directors and advisory boards of several nonprofit companies in the Dallas area. Mr. Ellis is a licensed CPA and an attorney in the State of Texas. Mr. Ellis is a National Association of Corporate Directors (“NACD”) Board Leadership Fellow. He has demonstrated his commitment to boardroom excellence by completing NACD's comprehensive program of study for corporate directors and supplements his skill set through ongoing engagement with the director community and access to leading practices. Mr. Ellis holds a BS in accounting from Texas Tech University and a JD from Southern Methodist University.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Mr. Ellis’ knowledge and experience in leading large organizations in the information technology industry and his experience with financial, auditing and legal matters, as well as with nonprofit companies, led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.
DAVID G. GOLDEN
Age 57
 
Director since July 2010
 
 
 
 
Managing Partner of Revolution Ventures
 
 
 
 
INDEPENDENT DIRECTOR Class B
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2018
 
ü
Accounting and Finance
Blackbaud Board Committees Audit
 
ü
Business Development and Corporate Transactions
Other Public Boards Barnes & Noble Education, Inc., Everyday Health, Inc.
 
ü
Legal and Compliance
 
 
 
ü
Corporate Governance
 
 
 
ü
Public Company Board Service
Biography
Mr. Golden joined the Board of Directors in July 2010. Mr. Golden has been a Managing Partner at Revolution Ventures, an early-stage venture affiliate of Revolution LLC, since January 2013. Mr. Golden was a Partner, Executive Vice President and Strategic Advisor at Revolution LLC, a private investment company, from March 2006 until December 2011. Prior to that Mr. Golden spent 18 years, including five years as Vice Chairman, with JPMorgan Chase & Co. (and predecessor companies), a financial services firm. Mr. Golden also served as Executive Chairman at Code Advisors, a private merchant bank, from its founding in 2010 through 2012. Mr. Golden currently serves on the board of directors of Barnes & Noble Education, Inc., Everyday Health, Inc. and several private companies. Mr. Golden serves on the advisory boards of several private investment companies. Mr. Golden holds an AB in Government from Harvard College and a JD from Harvard Law School, where he was an editor of The Harvard Law Review.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Mr. Golden’s knowledge and experience in capital markets, strategic transactions, corporate governance, as well as financial and legal matters, led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.

12
2016 Proxy Statement

 
 
GOVERNANCE

PETER J. KIGHT
Age 60
 
Director since December 2014
 
 
 
 
Private Investor
 
 
 
 
INDEPENDENT DIRECTOR Class A
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2017
 
ü
Leadership - Former CEO
Blackbaud Board Committees Risk Oversight (Chair), Audit
 
ü
Business Development and Corporate Transactions
Other Public Boards Huntington Bancshares Incorporated
 
ü
Business Operations
 
 
 
ü
Corporate Governance
 
 
 
ü
Public Company Board Service
Biography
Mr. Kight joined the Board of Directors in December 2014. He has been self-employed as a private investor since April 2015. Mr. Kight served as a senior advisor at Comvest Partners, a private investment firm providing equity and debt capital to middle market companies across the United States, from January 2010 to April 2015. He served as Co-Chairman and Managing Partner of Comvest Advisors, LLC, from January 2010 to April 2013. From December 2007 to March 2010, Mr. Kight served as Vice Chairman of Fiserv and as director from December 2007 to May 2012 following Fiserv's acquisition of CheckFree Corporation, a leading provider of electronic commerce services and products. Mr. Kight founded CheckFree Corporation in 1981 and served as its Chairman and Chief Executive Officer until December 2007. Mr. Kight has served on the board of directors of Huntington Bancshares Incorporated, a multi-state diversified regional bank holding company, since June 2012. Mr. Kight served on the boards of directors of Akamai Technologies, Inc., a publicly traded company that distributes computing solutions and services, from March 2004 to July 2012, and Manhattan Associates, Inc., a publicly traded company that provides supply chain planning and execution solutions, from October 2007 to July 2011.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Mr. Kight’s leadership experience at various other public companies, including strategic planning and operational experience, as well as valuable insight on public company governance practices, and his knowledge of the payment services industry, led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.
ANDREW M. LEITCH
Age 72
 
Director since February 2004
 
 
 
 
Chairman of the Board of Blackbaud, Inc., Regional Partner - Asia of Deloitte & Touche LLP (Retired)
 
 
 
 
INDEPENDENT DIRECTOR Class B
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2018
 
ü
Leadership - Current Chairman
Blackbaud Board Committees Nominating and Corporate Governance (Chair), Audit, Risk Oversight
 
ü
Accounting and Finance
 
ü
Corporate Governance
Other Public Boards STR Holdings, Inc, Taxus Cardium Pharmaceuticals Group Inc.
 
ü
Public Company Board Service

Biography
Mr. Leitch joined the Board of Directors in February 2004 and has served as our Chairman since July 2009. Mr. Leitch was with Deloitte & Touche LLP, an accounting firm, for over 27 years, last serving as the Vice Chairman of the Management Committee, Hong Kong from September 1997 to March 2000. Mr. Leitch has served on the boards of directors of the following public companies: STR Holdings, Inc. since November 2009; Taxus Cardium Pharmaceuticals Group Inc. since August 2007; and L & L Energy, Inc. from February 2011 to August 2011. Mr. Leitch also serves as director of other private companies. He is a CPA in the State of New York and a Chartered Accountant in Ontario, Canada.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Mr. Leitch’s experience in auditing and accounting, corporate governance, board service on various other public companies as well as his leadership as our Board Chairman since July 2009, led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that he is well qualified to serve as a director of our Company.

2016 Proxy Statement
13


GOVERNANCE
 
 

JOYCE M. NELSON
Age 65
 
Director since September 2012
 
 
 
 
President and Chief Executive Officer of National Multiple Sclerosis Society (Retired)
 
 
 
 
INDEPENDENT DIRECTOR Class A
 
DIRECTOR QUALIFICATION HIGHLIGHTS
 
 
 
 
 
Current Term Expires 2017
 
ü
Leadership - Former CEO
Blackbaud Board Committees Compensation, Nominating and Corporate Governance
 
ü
Nonprofit Industry
 
ü
Business Operations
Other Public Boards None
 
ü
Corporate Governance
Biography
Ms. Nelson joined the Board of Directors in September 2012. From October 2011 to her retirement from full-time employment in September 2012, Ms. Nelson served as a special consultant to the in-coming President and Chief Executive Officer of the National Multiple Sclerosis Society (“NMSS”), a nonprofit organization focused on multiple sclerosis. From November 2004 to October 2011, Ms. Nelson served as President and Chief Executive Officer of NMSS. From December 1991 to November 2004, she led NMSS's national field services and fundraising departments. From June 1985 to December 1991, she led the Mid America (Greater Kansas City) chapter of NMSS. From September 1983 to June 1985, she oversaw fundraising activities for the Northern California Chapter of NMSS. Ms. Nelson was on the board of directors of NMSS from November 2004 to November 2011 and the Multiple Sclerosis International Federation from November 2004 to November 2011, as well as the advisory board to the North Park University School of Nonprofit Management from September 2006 to June 2010. Ms. Nelson holds a BA in English from North Park University, where she was named Distinguished Alum and awarded an honorary doctorate in 2012.
Experience, Skills and Qualifications of Particular Relevance to Blackbaud
Among other experience, qualifications, attributes and skills, Ms. Nelson’s leadership experience at a large nonprofit organization, including her knowledge and extensive operational experience in the nonprofit industry as well has her experience in corporate governance led to the conclusion of our Nominating and Corporate Governance Committee, and of our full Board, that she is well qualified to serve as a director of our Company.

BOARD OF DIRECTORS AND COMMITTEES
The Board of Directors currently comprises eight members, namely Chairman Andrew M. Leitch, Timothy Chou, Ph.D., George H. Ellis, David G. Golden, Michael P. Gianoni, Peter J. Kight, Sarah E. Nash and Joyce M. Nelson.
We have historically separated the position of Chairman, currently independent director Andrew M. Leitch, and that of Chief Executive Officer (“CEO”), currently Michael P. Gianoni. While the Board of Directors believes the separation of these positions has served our Company well, and intends to maintain this separation where appropriate and practicable, the Board does not believe that it is appropriate to prohibit one person from serving as both Chairman and CEO. We believe our leadership structure is appropriate given the size of our Company in terms of number of employees, Mr. Leitch’s experience on boards of directors and management skills, and Mr. Gianoni’s experience and understanding of our Company and industry.
Independence of Directors
The Board of Directors has adopted categorical standards or guidelines to assist it in making independence determinations with respect to each director. These standards are published in Section 1 of our Corporate Governance Guidelines and are available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com. The Board has determined that the following seven directors are independent within the meaning of Rule 5605(a)(2) of the NASDAQ Marketplace Rules: Dr. Chou; Mr. Ellis; Mr. Golden; Mr. Kight; Mr. Leitch; Ms. Nash; and Ms. Nelson. As part of such determination of independence, the Board has affirmatively determined that none of these directors has a relationship with us that would interfere with the exercise of independent judgment in carrying out their responsibilities as directors. Mr. Gianoni, our President and CEO, is the only member of management serving as a director.

14
2016 Proxy Statement

 
 
GOVERNANCE

Each Board committee is composed entirely of independent directors in accordance with Rule 5605(a)(2) of the NASDAQ Marketplace Rules, the Sarbanes-Oxley Act and Rule 10A-3(b)(1) under the Securities Exchange Act of 1934 (the “Exchange Act”), as applicable. The Board and each committee have the authority to obtain, at our expense, the advice and assistance from independent advisors, experts and others as they may deem necessary, and to the extent they engage any such advisors they consider the independence of such advisors and any conflict of interest that may exist.
Furthermore, our Compensation Committee consists entirely of independent directors in accordance with NASDAQ Marketplace Rule 5605(d)(2)(A). The Board has also determined that each member of the Compensation Committee qualifies as an "outside director" under Section 162(m) of the Internal Revenue Code, and each member qualifies as a "non-employee director" under Rule 16b-3 of the Exchange Act.
Corporate Governance Guidelines
We believe in sound corporate governance practices and have adopted formal Corporate Governance Guidelines to enhance our effectiveness. The Board of Directors adopted these Corporate Governance Guidelines in order to ensure that it has the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The Corporate Governance Guidelines are also intended to align the interests of directors and management with those of our stockholders. The Corporate Governance Guidelines set forth the practices the Board follows, including, but not limited to, Board and Committee composition and selection, director responsibilities, director access to executive officers and employees, and CEO performance evaluation and succession planning. A copy of our Corporate Governance Guidelines is available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com.
Code of Business Conduct and Ethics and Code of Ethics
The Board of Directors has adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees. The Board has also adopted a separate Code of Ethics for our CEO and all senior financial officers, including our Chief Financial Officer (“CFO”), who is our principal accounting officer, our Corporate Controller, or persons performing similar functions. We will provide copies of our Code of Business Conduct and Ethics and Code of Ethics without charge upon request. To obtain a copy of our Code of Business Conduct and Ethics or Code of Ethics, please send your written request to Blackbaud, Inc., 2000 Daniel Island Drive, Charleston, South Carolina 29492, Attn: General Counsel. Our Code of Business Conduct and Ethics and Code of Ethics are also available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com.
Communication with the Board of Directors
Stockholders who wish to communicate with members of the Board of Directors, including the independent directors individually or as a group, may send correspondence to them in care of our Corporate Secretary at our principal executive offices. Such communication will be forwarded to the intended recipient(s). We currently do not intend to have our Corporate Secretary screen this correspondence, but we may change this policy if directed by the Board due to the nature or volume of correspondence.

2016 Proxy Statement
15


GOVERNANCE
 
 

Information Regarding Meetings of the Board and Committees
During 2015, the Board of Directors held seven meetings. Each of our current directors attended at least 75% of the aggregate of all meetings of the Board and the committees on which he or she served during 2015.
The Board has established four standing committees. The following table provides membership and meeting information for each of the committees during 2015.
Name
Audit
Committee
Compensation
Committee
Nominating and
Corporate Governance
Committee
Risk Oversight
Committee(3)
Timothy Chou, Ph.D.
 
 
 
 
l
 
l
 
George H. Ellis
 
l
 
 
 
 
 
Michael P. Gianoni
 
 
 
 
 
 
 
 
David G. Golden
 
l
 
 
 
 
 
 
Peter J. Kight
 
l
 
 
 
 
 
l
Andrew M. Leitch
 
l
 
l
(1) 
l
l
Sarah E. Nash
 
 
 
 
l
 
l
 
Joyce M. Nelson
 
 
 
 
l
(2) 
l
 
2015 Meetings
 
12
 
 
6
 
4
1
l - Committee Chair
- Audit Committee Financial Expert
(1)
Mr. Leitch served on the Compensation Committee through September 2015.
(2)
Ms. Nelson joined the Compensation Committee in September 2015.
(3)
Formed in the third quarter of 2015.

Although we do not have a formal written policy with respect to directors’ attendance at our annual meetings of stockholders, we strongly encourage all directors to attend. All directors attended our 2015 Annual Meeting of Stockholders.
In addition to the meetings held by the above-referenced committees, the independent non-employee members of the Board of Directors regularly meet in executive session without our CEO or any executive officers present. One purpose of these executive sessions is to evaluate the performance of management.
Each of the above-referenced committees operates pursuant to a formal written charter. The charters for each committee, which have been adopted by the Board of Directors, contain a detailed description of the respective committee’s duties and responsibilities and are available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com.
AUDIT COMMITTEE
Committee Members
Primary Responsibilities
(all independent)
Pursuant to its charter, the Committee assists the Board in its oversight of:
 
Ÿ
the integrity of our financial statements;
George H. Ellis (Chair)
Andrew M. Leitch
David G. Golden
Peter J. Kight
Ÿ
the performance of our internal audit function;
Ÿ
the qualifications, independence and performance of our independent registered public accounting firm, for whose appointment the Committee bears primary responsibility;
Ÿ
the review of our annual audited financial statements and quarterly financial statements;
2015 Meetings: 12
Ÿ
the review of our capital management;
  Audit Committee
    Financial Expert
Ÿ
the review of our public disclosures related to earnings, guidance and other matters as appropriate; and
Ÿ
the review of our compliance with certain financial, regulatory and legal requirements.
See “Audit Committee Report” on page 58 of this Proxy Statement.

16
2016 Proxy Statement

 
 
GOVERNANCE

COMPENSATION COMMITTEE
Committee Members
Primary Responsibilities
(all independent)
Pursuant to its charter, the Committee:
 
Ÿ
reviews and approves all compensation decisions relating to our executive officers, including approving the compensation decisions for the CEO;
Sarah E. Nash (Chair)
Timothy Chou, Ph.D.
Joyce M. Nelson
Ÿ
annually reviews and approves the compensation of our non-employee members of the Board of Directors;
Ÿ
periodically reviews and makes recommendations to the Board of Directors with respect to incentive compensation plans and equity-based plans;
2015 Meetings: 6

Ÿ
periodically reviews and makes recommendations to the Board of Directors with respect to stock ownership guidelines for the Company's executive officers and non-employee directors;
 
Ÿ
administering and amending the Company's various incentive compensation and other similar plans; and
 
Ÿ
reviews and assesses on a periodic basis the Company's compliance with laws and regulations relating to compensation and employee benefits, and other human resource matters.

Compensation Decisions
In evaluating incentive and other compensation and equity-based plans, the Compensation Committee considers the results of the most recent non-binding, advisory Say-on-Pay vote. As part of its review, the Compensation Committee also considers compensation data with respect to the executive officers' counterparts at the companies in our compensation peer group and the recommendations of the CEO regarding compensation for those executive officers reporting directly to him as well as other officers. See “Compensation Discussion and Analysis” beginning on page 25 of this Proxy Statement.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
Committee Members
Primary Responsibilities
(all independent)
Pursuant to its charter, the Committee has responsibility for:
 
Ÿ
identifying individuals qualified to become Board members;
Andrew M. Leitch (Chair)
Timothy Chou, Ph.D.
Sarah E. Nash
Joyce M. Nelson

2015 Meetings: 4
Ÿ
recommending to the Board director nominees for the next annual meeting of stockholders;
Ÿ
reviewing the qualifications and independence of the members of the Board and its various committees;
Ÿ
recommending to the Board the Corporate Governance Guidelines and reviewing such Guidelines on a regular basis to ensure compliance with sound corporate governance practices and legal, regulatory and NASDAQ requirements;
 
Ÿ
leading the Board and its committees in their annual self-evaluation process; and
 
Ÿ
reviewing our Company’s governance scores and ratings from third parties.
Selection of Nominees for the Board of Directors
The Nominating and Corporate Governance Committee is responsible for establishing the criteria for recommending which directors should stand for re-election to the Board and the selection of new directors to serve on the Board. In addition, the Committee is responsible for establishing the procedures for our stockholders to nominate candidates to the Board. The Committee has not formulated any specific minimum qualifications for director candidates, but has determined certain desirable characteristics, including strength of character, mature judgment, career specialization, relevant technical skills and independence. While it does not have a specific written policy with regard to the consideration of diversity in identifying director nominees, the Committee does consider diversity to be an additional desirable characteristic in potential nominees. This commitment to diversity is part of our Corporate Governance Guidelines, which are available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com.

2016 Proxy Statement
17


GOVERNANCE
 
 

Our Bylaws permit any stockholder of record to nominate directors. Stockholders wishing to nominate a director, whether by inclusion of such business in our proxy materials or otherwise, must deliver written notice of the nomination by registered mail, return receipt requested, to the Corporate Secretary at our principal executive offices not more than 75 and not less than 45 days before the meeting at which directors are to be elected. Any such notice must set forth the following: (a) the name, age, business address, residence and ownership of our stock of any director nominee and all information relating to the director nominee that is required to be disclosed in solicitations of proxies for elections of directors; (b) any material interest in the director nomination of such stockholder or any Stockholder Associated Person (as defined below), individually or in the aggregate; (c) as to the stockholder or any Stockholder Associated Person, their holdings of our stock and whether the stockholder has entered into transactions to manage risk with respect to such stock; (d) as to the stockholder giving notice and Stockholder Associated Person, the name and address of such stockholder, as they appear on our stock ledger, and current name and address, if different, and of such Stockholder Associated Person; and (e) to the extent known by the stockholder giving the notice, the name and address of any other stockholder supporting the nominee for election as a director. Our Bylaws define “Stockholder Associated Person” as (a) any person controlling, directly or indirectly, or acting in concert with, such stockholder, (b) any beneficial owner of our shares of stock owned of record or beneficially by such stockholder; and (c) any person controlling, controlled by or under common control with such Stockholder Associated Person. The Nominating and Corporate Governance Committee will evaluate a nominee recommended by a stockholder in the same manner in which the Committee evaluates nominees recommended by other persons as well as its own nominee recommendations.

RISK OVERSIGHT COMMITTEE(1)
Committee Members
Primary Responsibilities
(all independent)
Pursuant to its charter, the Committee assists the Board in its oversight of:
 
Ÿ
the Company's risk management, compliance and control activities;
Peter J. Kight (Chair)
Andrew M. Leitch

2015 Meetings: 1
Ÿ
the Company's cybersecurity risks, including the Company's cyber risk management practices, adequacy of insurance, adequacy of an incident response plan and the Company's ability to respond to a cyber breach;
Ÿ
the Company's systems of operational controls regarding certain legal and regulatory compliance; and
 
Ÿ
the compliance with certain legal and regulatory requirements applicable to the Company.
(1)
Formed in the third quarter of 2015.

While our Company’s senior management is responsible for management of risk, the Board and its committees play a significant role in overseeing this function. Each of the committees oversees risks associated with its respective area of responsibility. In particular, the Audit Committee oversees risk related to our accounting, tax, financial and public disclosure processes. It also assesses risks associated with our financial assets. The Compensation Committee oversees risks related to our compensation and benefit plans and policies to ensure sound pay practices that do not cause risks to arise that are reasonably likely to have a material adverse effect on our Company. The Nominating and Corporate Governance Committee seeks to minimize risks related to governance structure by implementing sound corporate governance principles and practices. The Risk Oversight Committee oversees risks related to information technology security, in addition to the risk oversight described above. Each of the committees regularly reports to the full Board as appropriate on its efforts at risk oversight and on any matter that rises to the level of a material or enterprise level of risk.

18
2016 Proxy Statement

 
 
GOVERNANCE

DIRECTOR COMPENSATION
The general policy of the Board of Directors is that the compensation for our non-employee directors should be a mix of cash and equity-based compensation. The Board periodically reviews our director compensation program and practices, generally once every other year, and makes changes as it deems appropriate. The current director compensation program and practices were adopted in June 2013.
For 2015, annual compensation for our non-employee directors consisted of the following components:
Component
Amount and Description
Maximum
Number of
Meetings
(if applicable)
Annual Cash Retainer(1)
$50,000 (unless the non-employee directors elect to receive RSAs in lieu of a portion or all of their annual cash retainers)
8
Annual Equity Grants(2)
Approximately $165,000 in RSAs that vest in full on the first anniversary of the date of grant or, if earlier, immediately prior to the following annual election of directors of our Company, provided that the director is still serving as a member of the Board of Directors at that time. Recipients of RSAs have the right to vote such shares and receive dividends
 
Board Chair Fee(1)
$50,000
 
Committee Chair Fees(1)
$30,000 for the Audit Committee
$20,000 for the Compensation Committee
$15,000 for the Nominating and Corporate Governance Committee
$20,000 for the Risk Oversight Committee
12
8
4
4
Committee Member Fees(1)
$15,000 for the Audit Committee
$10,000 for the Compensation Committee
$10,000 for the Nominating and Corporate Governance Committee
$10,000 for the Risk Oversight Committee
12
8
4
4
Meeting Fees
All non-employee chairs and members of the Board and committees receive $1,000 for each meeting they attend in person or by telephone above the specified maximum number of meetings for the Board and committees on which they serve
 
(1)
This cash retainer is paid on a quarterly basis.
(2)
Based on a review of the competitive market in 2015, the Compensation Committee increased the annual equity grant value of our non-employee directors to approximately $235,000 beginning in 2016.
2015 Director Compensation Table
The following table sets forth the total compensation paid to each of our non-employee directors in 2015. 
Name
Fees Earned or Paid in Cash
($)

Stock
Awards(1)
($)

All Other
Compensation(2)
($)

Total
($)

Timothy Chou, Ph.D.
$
70,000

$
172,609

$
1,794

$
244,403

George H. Ellis
80,000

172,609

1,794

254,403

David G. Golden
65,000

172,609

1,794

239,403

Peter J. Kight
15,000

225,027

672

240,699

Andrew M. Leitch
90,000

225,027

1,794

316,821

Sarah E. Nash
55,000

198,825

1,794

255,619

Joyce M. Nelson
60,000

172,609

1,794

234,403

(1)
On August 12, 2015, we granted each of our non-employee directors then serving 2,798 shares of RSAs with an aggregate grant date fair value of $172,609, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”). Messrs. Leitch and Kight elected to receive shares of RSAs in lieu of their entire annual cash retainer. Accordingly, on January 8, 2015, April 6, 2015, July 1, 2015, and October 15, 2015, Messrs. Leitch Kight each received 289, 274, 231 and 218 RSAs, respectively, with an aggregate grant date fair value of $52,418. Ms. Nash elected to receive RSAs in lieu of one-half of her annual cash retainer. Accordingly, on January 8, 2015, April 6, 2015, July 1, 2015, and October 15, 2015, Ms. Nash received 144, 137, 116 and 109 RSAs, respectively, with an aggregate grant date fair value of $26,216. No options to purchase shares of our common stock or SAR awards for shares of our common stock were granted to our non-employee directors in 2015.
(2)
The amounts reported consist of dividends paid in 2015 on shares of unvested RSAs granted as equity compensation.

2016 Proxy Statement
19


GOVERNANCE
 
 

The following table shows the aggregate number of RSAs held by our non-employee directors as of December 31, 2015 that were received as compensation.
Name
Number of RSAs(1)

 
Dr. Chou
24,912

(2) 
Mr. Ellis
11,960

(3) 
Mr. Golden
27,197

(4) 
Mr. Kight
3,810

(5) 
Mr. Leitch
26,263

(6) 
Ms. Nash
19,414

(7) 
Ms. Nelson
12,405

(8) 
(1)
Pursuant to our director compensation plan, we make annual grants of RSAs to our non-employee directors that vest in full on the first anniversary of the date of grant or, if earlier, immediately prior to the following annual election of directors of our Company, provided that the director is still serving as a member of the Board at that time.
(2)
Includes 2,717 RSAs that vested July 1, 2008, 4,144 RSAs that vested August 8, 2009, 4,144 RSAs that vested August 4, 2010, 3,531 RSAs that vested August 2, 2011, 4,432 RSAs that vested August 9, 2012, 4,544 RSAs that vested August 10, 2013 and 4,931 RSAs that vested August 6, 2014, 4,676 RSAs that vested August 4, 2015, 11,005 shares of which Dr. Chou has sold. Also includes 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Dr. Chou is then serving as a director of our Company.
(3)
Includes 2,643 RSAs that vested July 1, 2007, 2,717 RSAs that vested July 1, 2008, 4,144 RSAs that vested August 8, 2009, 4,144 RSAs that vested August 4, 2010, 3,531 RSAs vested August 2, 2011, 4,432 RSAs that vested August 9, 2012, 4,544 RSAs that vested August 10, 2013 and 4,931 RSAs that vested August 6, 2014, 4,676 RSAs that vested August 4, 2015, 3,500 shares of which Mr. Ellis has gifted and 23,100 shares of which Mr. Ellis has sold. Also includes 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Mr. Ellis is then serving as a director of our Company.
(4)
Includes 5,816 RSAs that vested August 2, 2011, 4,432 RSAs that vested August 9, 2012, 4,544 RSAs that vested August 10, 2013, 4,931 RSAs that vested August 6, 2014, 4,676 RSAs that vested August 4, 2015 and 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Mr. Golden is then serving as a director of our Company.
(5)
This amount Includes 289 RSAs that vested January 8, 2015, 274 RSAs that vested April 6, 2015, 231 RSAs that vested July 1, 2015 and 218 RSAs that vested October 15, 2015. This amount also includes 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Mr. Kight is then serving as a director of our Company.
(6)
Includes 3,200 RSAs that vested June 21, 2006, 2,643 RSAs that vested July 1, 2007, 2,717 RSAs that vested July 1, 2008, 4,144 RSAs that vested August 8, 2009, 4,144 RSAs that vested August 4, 2010, 3,531 RSAs that vested August 2, 2011, 4,432 RSAs that vested August 9, 2012, 4,544 RSAs that vested August 10, 2013, 4,931 RSAs that vested August 6, 2014, 322 RSAs that vested October 6, 2014, 289 RSAs that vested January 8, 2015, 274 RSAs that vested April 6, 2015, 231 RSAs that vested July 1, 2015, 4,676 RSAs that vested August 4, 2015, 218 RSAs that vested October 15, 2015, 16,831 shares of which Mr. Leitch has sold. Also includes 2,798 and RSAs that will vest August 12, 2016, or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Mr. Leitch is then serving as a director of our Company.
(7)
Includes 5,816 RSAs that vested August 2, 2011, 4,432 RSAs that vested on August 9, 2012, 4,544 RSAs that vested on August 10, 2013, 4,931 RSAs that vested August 6, 2014 and 161 RSAs that vested October 6, 2014, 144 RSAs that vested January 8, 2015, 137 RSAs that vested April 6, 2015, 116 RSAs that vested July 1, 2015, 4,676 RSAs that vested August 4, 2015, 109 RSAs that vested October 15, 2015, 3,184 shares of which Ms. Nash has gifted and 5,266 shares of which Ms. Nash has sold. Also includes 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Ms. Nash is then serving as a director of our Company.
(8)
Includes 8,197 RSAs that vested November 6, 2013, 4,931 RSAs that vested August 6, 2014 and 4,676 RSAs that vested August 4, 2015, 8,197 shares of which Ms. Nelson has sold. This amount also includes 2,798 RSAs that will vest August 12, 2016 or, if earlier, immediately prior to the 2016 annual election of directors of our Company, provided that Ms. Nelson is then serving as a director of our Company.

20
2016 Proxy Statement

 
 
GOVERNANCE

Director Stock Ownership Guidelines
Under our Non-Employee Directors’ Stock Ownership Guidelines, it is expected that our non-employee directors will accumulate, through their receipt of equity compensation, not later than three years after first receiving his or her first annual RSA, $100,000 of our common stock. Once a non-employee director has been a director for five consecutive years, he or she is expected to accumulate, through his or her receipt of equity compensation, $200,000 of our common stock. Additionally, non-employee directors should not dispose of any vested RSAs granted to such director until reaching the ownership targets, unless the disposition is to satisfy tax obligations resulting from the lapse of restrictions.
The table set forth below shows the ownership levels of our non-employee directors as of December 31, 2015:
Name
Stock Ownership Requirement

Number of Shares or RSAs Owned(1)

Value of Shares or RSAs Owned(2)

Ownership as a Percent of Requirement(2)

Dr. Chou
$
200,000

24,912

$
1,640,704

820
%
Mr. Ellis
200,000

11,960

787,686

394
%
Mr. Golden
200,000

27,197

1,791,194

896
%
Mr. Kight(3)

13,310

876,597

%
Mr. Leitch
200,000

27,763

1,828,471

914
%
Ms. Nash
200,000

19,414

1,278,606

639
%
Ms. Nelson(4)
100,000

12,405

816,993

817
%
(1)
Includes vested and unvested shares of common stock subject to RSAs beneficially owned.
(2)
Based on $65.86 per share, which was the closing price of our common stock on the NASDAQ Global Select Market on December 31, 2015, the last trading day of that fiscal year.
(3)
Since Mr. Kight had been a director of the Company for less than three years as of December 31, 2015, he was not required to meet an ownership target. However, as of December 31, 2015, Mr. achieved 877% of the three year requirement.
(4)
Ms. Nelson joined our Board of Directors on September 18, 2012.
Continuing Director Education
Our non-employee directors are encouraged to attend director education seminars that are designed to develop skills and strategies for effective service on the Board. As such, it is our policy to reimburse our non-employee directors for the reasonable and direct costs, including transportation and lodging, of attending such educational seminars. These reimbursement costs are not included in the “2015 Director Compensation Table” above.
TRANSACTIONS WITH RELATED PERSONS
The written charter of our Audit Committee authorizes and the NASDAQ Marketplace Rules require our Audit Committee to review and approve related party transactions. In reviewing related party transactions, our Audit Committee applies the basic standard that transactions with affiliates should be made on terms no less favorable to us than could have been obtained from unaffiliated parties. Therefore, the Audit Committee reviews the benefits of the transactions, terms of the transactions and the terms available from unrelated third parties, as applicable. All transactions other than compensatory arrangements between us and our executive officers, directors, principal stockholders and their affiliates must be approved by our Audit Committee or a majority of the disinterested directors, and must continue to be on terms no less favorable to us than could be obtained from unaffiliated third parties. For the year ended December 31, 2015, we had no transactions in which we were a participant where the amount involved exceeded $120,000 and one or more of our executive officers, directors, principal stockholders or their affiliates had a direct or indirect material interest.


2016 Proxy Statement
21



 
STOCK OWNERSHIP
OWNERSHIP OF EQUITY SECURITIES OF THE COMPANY
Five Percent Beneficial Owners of Company Stock

Set forth in the table below is information about the number of shares held by holders we know to be the beneficial owners of more than 5% of our issued and outstanding common stock as of December 31, 2015.
Name and Address
Total Shares
Beneficially
Owned

Percentage
Beneficially
Owned(1)

Brown Capital Management, LLC(2)
4,575,903

9.63
%
1201 North Calvert Street
 
 
Baltimore, Maryland 21202
 
 
Eaton Vance Management(3)
4,510,368

9.50
%
2 International Place
 
 
Boston, Massachusetts 02110
 
 
BlackRock, Inc.(4)
4,448,906

9.37
%
55 East 52nd Street
 
 
New York, New York 10055
 
 
Janus Capital Management LLC(5)
4,166,307

8.77
%
151 Detroit Street
 
 
Denver, Colorado 80206
 
 
The Vanguard Group, Inc.(6)
3,596,098

7.57
%
100 Vanguard Boulevard
 
 
Malvern, Pennsylvania 19355
 
 
Jackson Square Partners, LLC(7)
2,906,841

6.12
%
101 California Street, Suite 3750
 
 
San Francisco, CA 94111
 
 
(1)
The ownership percentages set forth in this column are based on the assumption that each of the stockholders continued to own the number of shares reflected in the table above on April 18, 2016.
(2)
Based on information contained in Schedule 13G/A filed with the SEC on February 16, 2016, by Brown Capital Management, LLC. Brown reported that it had sole voting power over 2,576,896 shares and sole dispositive power over 4,575,903 shares.
(3)
Based on information contained in Schedule 13G/A filed with the SEC on February 12, 2016, by Eaton Vance Management. Eaton reported that it had sole voting and dispositive power over 4,510,368 shares.
(4)
Based on information contained in Schedule 13G/A filed with the SEC on January 25, 2016, by BlackRock, Inc. BlackRock reported that it had sole voting power over 4,349,644 shares and sole dispositive power over 4,448,906 shares.
(5)
Based on information contained in Schedule 13G/A filed with the SEC on February 16, 2016, by Janus Capital Management, LLC. Janus reported that it had sole voting and dispositive power over 4,166,307 shares due to its ownership of INTECH Investment Management and Perkins Investment Management LLC. Janus provides investment advice to Janus Triton Fund, which had sole voting and dispositive power over 2,804,334 shares.
(6)
Based on information contained in Schedule 13G/A filed with the SEC on February 10, 2016, by The Vanguard Group, Inc. Vanguard reported that it had sole voting power over 102,692 shares, shared voting power over 2,700 shares, sole dispositive power over 3,493,606 shares and shared dispositive power over 102,492 shares.
(7)
Based on information contained in Schedule 13G filed with the SEC on February 16, 2016, by Jackson Square Partners, LLC. Jackson reported that it had sole voting power over 760,225 shares, shared voting power over 1,889,084 shares and sole dispositive power over 2,906,841 shares.

22
2016 Proxy Statement

 
 
STOCK OWNERSHIP

Executive Officers and Directors

The following table sets forth information regarding beneficial ownership of our common stock by each individual named in the 2015 Summary Compensation Table on page 41, each Director, and our current executive officers and Directors as a group, all as of April 18, 2016. Unless otherwise noted, voting power and investment power in common stock are exercisable solely by the named person. The address for each executive officer and director is c/o Blackbaud, Inc., 2000 Daniel Island Drive, Charleston, South Carolina 29492.
Name
Shares
Owned

Shares
Under
Exercisable
SARs(1)

Total
Shares
Beneficially
Owned

Percentage
Beneficially
Owned

Michael P. Gianoni
265,929


265,929

*

Anthony W. Boor
104,152

69,293

173,445

*

Kevin W. Mooney
74,177

68,196

142,373

*

Charles T. Cumbaa
71,507

105,458

176,965

*

Brian E. Boruff
22,706


22,706

*

Timothy Chou, Ph.D.
24,912


24,912

*

George H. Ellis
11,960


11,960

*

David G. Golden
27,197


27,197

*

Peter J. Kight
74,361


74,361

*

Andrew M. Leitch
28,170


28,170

*

Sarah E. Nash
19,617


19,617

*

Joyce M. Nelson
12,405


12,405

*

All current executive officers and directors as a group (15 persons)
842,454

473,990

1,316,444

2.74
%
(1)
Includes only SARs exercisable within 60 days of April 18, 2016.
*
Less than one percent.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our executive officers and directors and any person or entity who owns more than 10% of a registered class of our common stock to file with the SEC certain reports of ownership and changes in ownership of our securities. Executive officers, directors and stockholders who hold more than 10% of our outstanding common stock are required by the SEC to furnish us with copies of all required forms filed under Section 16(a). We prepare Section 16(a) reports on behalf of our executive officers and directors based on the information provided by them. Based solely on a review of this information and written representations from these persons that no other reports were required, we believe that, during fiscal year 2015, all our executive officers, directors and, to our knowledge, 10% stockholders complied with all applicable Section 16(a) filing requirements, with the exception of Messrs. Kight and Leitch and Ms. Nash filed Forms 4 on January 13 and April 24, 2015 and January 21, 2016 reporting the grants of vested RSAs on January 8, April 6 and July 1, 2015, respectively.

2016 Proxy Statement
23



 
EXECUTIVE COMPENSATION
PROPOSAL 2 — ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
In deciding how to vote on Proposal 2, the Board urges you to specifically consider our executive compensation philosophy, policies and practices, all of which are summarized below and more fully described under “Compensation Discussion and Analysis” beginning on page 25 of this Proxy Statement.
Background

The Board recognizes the interest our stockholders have expressed in how we compensate our named executive officers. At the 2011 Meeting of Stockholders, in accordance with the Board’s recommendation, our stockholders endorsed holding an annual, non-binding stockholder advisory (“Say-on-Pay”) vote on the compensation of the named executive officers. As part of its commitment to our stockholders, the Board is submitting a Say-on-Pay proposal for stockholder consideration again this year and has decided to hold an annual advisory stockholder vote on executive compensation at least until the next Say-on-Pay frequency vote in 2017. Each Say-on-Pay vote is being provided as required pursuant to Section 14A of the Securities Exchange Act. The Say-on-Pay vote is not intended to address any specific item of compensation, but rather our overall compensation philosophy, policies and practices as they relate to the named executive officers. While your vote is advisory and will not be binding on the Board, the Compensation Committee, or us, we strive to align our executive compensation program with the interests of our long-term stockholders. As they do every year, the Board and the Compensation Committee will take into account the outcome of this year’s Say-on-Pay vote when considering future compensation actions and decisions.
Say-on-Pay Proposal

The Board believes that our executive compensation is a competitive advantage in attracting and retaining the high caliber of executive talent necessary to drive our business forward and build sustainable value for our stockholders. Accordingly, we are asking our stockholders to vote FOR the following resolution:

RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the named executive officers as disclosed in this Proxy Statement for the 2016 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Compensation Discussion and Analysis, the 2015 Summary Compensation Table and the other related tables and disclosures).”
Effect of Say-on-Pay Vote

As indicated above, the vote on Proposal 2 is advisory and will not be binding on the Board, the Compensation Committee, or us. However, because the Board values your opinions as expressed through votes and other communications with us, it and our Compensation Committee will carefully review the 2016 Say-on-Pay voting results in an effort to better understand any issues or concerns you may have with our executive compensation. Stockholders who want to communicate with the Board on executive compensation or other matters should refer to “Communication with the Board of Directors” on page 15 of this Proxy Statement for additional information.
 
 
 
 
 
ü
The Board of Directors unanimously recommends that stockholders vote, on an advisory basis, FOR the 2015 compensation of our named executive officers.
 
 
 
 
 
The voting requirements for this Proposal 2 are described under "Additional Information" on page 61 of this Proxy Statement.

24
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis describes our executive compensation program, as well as the philosophy underlying this program and our related policies and practices. It focuses on the compensation of our named executive officers ("NEO" or "NEOs") for 2015, who were:
Name
Title
Michael P. Gianoni
President and Chief Executive Officer
Anthony W. Boor
Executive Vice President and Chief Financial Officer
Kevin W. Mooney
Executive Vice President and President, General Markets Business Unit (“GMBU”)
Charles T. Cumbaa
Executive Vice President of Corporate and Product Strategy
Brian E. Boruff
Executive Vice President and President, Enterprise Customer Business Unit (“ECBU”)
Executive Summary

Our executive compensation program is designed to reward our executive management for effectively building stockholder value.
2015 Business Highlights
We are a leading provider of software and services for the global philanthropic community. Our customers use our cloud-based and on-premises software solutions and related services to help increase donations, reduce fundraising costs, improve communications with constituents, manage their finances and optimize operations. We believe that through the strength of our business model and executive leadership team, we delivered on our strategic priorities in 2015. In particular, we:

Continued to transition our business to predominantly serve customers through a subscription-based cloud delivery model, including our announcement of the general availability of Raiser's Edge NXT and Financial Edge NXT, and introduction of Blackbaud SKY, our new, innovative cloud technology architecture for the global philanthropic community;
Launched a formal Sales Effectiveness Program to streamline processes and expand our direct sales and customer success teams, and introduced indirect sales with the announcement of a VAR program, launching in 2016;
Completed the acquisition of Smart Tuition, which expanded our addressable market into K-12 tuition and financial aid management, a new and near adjacency within the education market, which added an estimated $700 million to our total addressable market;
Substantially completed the implementation of an enterprise quality enhancement program announced last year and shifted our focus towards process optimization across the entire organization; and
Continued to execute against our three-year operating margin improvement plan designed to increase our operating effectiveness and efficiency.

These accomplishments contributed to a year of positive financial performance for us, inclusive of foreign currency headwinds and our mid-market cloud-transition for the NXT solutions, as we:

Increased total revenue by 13.0% to $637.9 million;
Increased total non-GAAP organic revenue* by 6.1%, 7.7% in constant currency;
Grew recurring revenue to approximately 76.1% of total revenue in 2015;
Increased income from operations by 0.8% to $46.7 million;
Increased non-GAAP income from operations* by 19.9% to $122.0 million
Increased cash flow from operations by 11.8% to $114.3 million;
Provided returns to stockholders by paying $22.5 million in dividends; and
Generated financial results that keep us on track to deliver against our long-term aspirational goals related to revenue growth and margin expansion. In addition, we announced that we are updating our long-term aspirational goal for aggregate operating cash flow over the four year period from 2014 to 2017 from an initial estimated range of $400 million to $450 million to an updated estimated range of $500 million to $550 million.
* See Appendix A for a reconciliation of non-GAAP financial measures to results reported in accordance with generally accepted accounting principles.

2016 Proxy Statement
25


EXECUTIVE COMPENSATION
 
 

In 2015, we were included on the ZDNet CRM Watchlist for a fourth consecutive year, ranked #139 on Software 500, the world's largest ranking of software and service providers, ranked #1 on Capterra's Top 20 Most Popular Nonprofit Software, and Blackbaud Merchant Services received an overall A-Rating Review by Card Payment Options. Additionally, we were named one of the best places to work in South Carolina for a sixth consecutive year, and recognized as one of the Top 50 Tech Employers in Austin, Texas by the Austin Business Journal and one of the Top 100 Tech Companies in Austin by Built in Austin.
2015 Stockholder Advisory Vote on NEO Compensation
We conducted a non-binding stockholder advisory vote on the compensation of our NEOs at our 2015 Annual Meeting of Stockholders. At that time, the holders of 98.5% of the shares present and entitled to vote on the matter voted in favor of the compensation of our NEOs as disclosed in the proxy statement for such annual meeting. The Board of Directors has considered the results of this vote and believes they represent an affirmation of our executive compensation program and practices and our continued commitment to stockholder communication and engagement and responsiveness to stockholder concerns. Accordingly, the Compensation Committee did not make any changes to our executive compensation program.
While this vote is advisory, and therefore not binding on us or the Board, the Compensation Committee carefully considers the results of the vote in the context of our executive compensation program, policies, and practices. The Board and the Compensation Committee value our stockholders' opinions and, to the extent there is any significant vote against the compensation of the NEOs, we will consider their concerns and the Compensation Committee will evaluate whether any actions are necessary to address those concerns, as it has done in the past.
Overview of Compensation Philosophy and Executive Compensation Program
We are committed to a philosophy of pay-for-performance as it relates to executive compensation. Our executive compensation program is designed to achieve three primary objectives:
1.
Market Competitiveness. Provide market competitive compensation opportunities to attract and retain executive officers and motivate them to perform at their highest level.
2.
Stockholder Value Creation. Structure compensation through base salary, cash bonus opportunities and a combination of performance-based and time-based equity awards, which should ultimately promote increased value for stockholders.
3.
Pay-for-Performance. Ensure actual compensation realized by our executive officers is linked to the attainment and furtherance of our short-term and long-term business strategies thereby enhancing operational performance and stockholder return.
The following table describes the components of our executive compensation program and how they support these objectives:
Component
Description
Compensation 
Objective(s) 
Supported
Base Salary
Provide competitive fixed compensation payable in cash based on individual experience and contributions, corporate performance, historical compensation practices for our executive officers, and an analysis of competitive market practices
1 and 2
Annual Cash Bonus
Offer variable compensation in the form of annual cash bonus opportunities based on performance against pre-established short-term performance objectives
12 and 3
Annual Equity Grants
Provide variable and long-term incentives aligned with stockholder interests consisting of 50% RSAs and 50% PRSUs. Recipients of RSAs have the right to vote such shares and receive dividends
12 and 3
“Double-Trigger”
Change in Control Severance Arrangements
Provide change in control payments and benefits to our executive officers only upon a qualifying termination of employment within 12 months of a change in control of our Company
1 and 2
Other Benefits
Generally provide the same health and welfare benefits as offered to all of our employees
1

26
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

2015 Executive Compensation Actions
For 2015, the Compensation Committee continued to use our executive compensation program to focus on creating incentives for our executive officers to achieve our financial and operational objectives and foster sustainable stockholder value creation. The key compensation decisions of the Compensation Committee for 2015 for the NEOs were as follows:

Base Salaries
Increased base salaries of our NEOs (other than our new Executive Vice President and President ECBU) by 3.0% from their 2014 levels;
Annual Cash Bonuses
Increased the target annual cash bonus opportunity for certain of our NEOs (other than our President and CEO and Executive Vice President of Corporate and Product Strategy) to 65% of their earned base salaries;
Due to excellent financial performance in 2015, awarded cash bonuses that were, on average, 115% of each NEO's target annual cash bonus opportunity;
Long-term Incentive Compensation
Approved grants of annual equity awards consisting of RSAs and PRSUs for our NEOs that met competitive market concerns, supported our retention objectives, and rewarded overall company performance; and
Amended and Restated CEO Employment Agreement
Entered into an Amended Agreement with our CEO. Pursuant to the Amended Agreement, our CEO received a Retention Grant of RSAs valued at $5.0 million. The Retention Grant consisted of 80,555 RSAs and were granted on December 14, 2015. The Retention Grant will vest in full on December 31, 2019 and is contingent upon our CEO's continued employment as of the vesting date. The vesting period aligns with the term of the Amended Agreement and is intended to facilitate the retention of our CEO for this extended period in consideration of our achievements and progress towards our long-term goals under his leadership.
2015 Corporate Governance Policies and Practices
During 2015, we maintained robust compensation-related corporate governance policies and practices including:

The Compensation Committee is composed solely of independent directors;
The Compensation Committee retains its own independent compensation consultant that performs no other consulting or other services for us;
The Compensation Committee conducts an annual review of our executive compensation program, including a review of our compensation-related risk profile, to ensure that any compensation-related risks are not reasonably likely to have a material adverse effect on our Company;
Our arrangements for paying post-employment compensation provide for “double-trigger” change in control payments and benefits;
We do not provide material non-cash benefits or perquisites (such as guaranteed retirement or pension plan benefits) for our executive officers that are not available to our employees generally;
The 2008 Equity Incentive Plan does not permit stock option exchanges or repricing without stockholder approval;
Company employees are not permitted to hedge their economic exposure to our common stock and Company directors and Section 16(a) reporting executive officers may not pledge their ownership interests in our common stock to secure a loan; and
We emphasized performance-based compensation by continuing the practice of granting PRSUs to our NEOs that are earned through the attainment of pre-established performance objectives, and, when earned, are subject to additional time-based vesting requirements.
Executive Compensation-Setting Process

The Compensation Committee works closely with its compensation consultant and senior management to address executive compensation matters throughout the year. The Compensation Committee met six times in 2015. During these meetings, the Compensation Committee reviewed our executive compensation program and formulated its compensation actions for the year, and made decisions regarding the compensation for our CEO and the other NEOs. The Compensation Committee may create a subcommittee consisting of one or more of its members and may delegate any of its duties and responsibilities to such subcommittee, unless otherwise prohibited by applicable laws or listing standards. In addition, the Compensation Committee may delegate any of its duties and responsibilities, including the administration of equity incentive or employee benefit plans, to the Compensation Committee Chair, unless otherwise prohibited by applicable laws or listing standards.

2016 Proxy Statement
27


EXECUTIVE COMPENSATION
 
 

The Compensation Committee does not seek to deliver a specified percentage of pay to our executive officers through each component of the executive compensation program; rather, it adheres to the overall principle of delivering the majority of executive compensation in variable, performance-based forms. For base salary, annual cash bonuses and equity awards, generally our strategy has been to evaluate individual experience and contribution, corporate performance, historical compensation practices for our executive officers, and competitive market analyses. With respect to base salary and annual cash bonuses, we generally target pay to be competitive to the market. At times, the Compensation Committee has approved compensation levels for individual executive officers above and below target pay positions, based on experience, individual contribution, and the Company's performance relative to the compensation peer group, to ensure an appropriate pay-for-performance alignment.
Role of the Compensation Committee
The Compensation Committee has overall responsibility for our executive compensation program and approves our executive compensation decisions. Its principal duties and responsibilities include:

Establishing our compensation philosophy, policies, and practices for our executive officers, including the compensation objectives and target pay levels, and approving the compensation peer group used for assessing the competitiveness of our executive compensation;
Establishing and approving corporate goals and objectives relevant to the compensation of our CEO and, in light of those goals and objectives, evaluating and determining his compensation level;
Reviewing and overseeing the corporate goals and objectives relevant to the compensation of our other executive officers, including the other NEOs, taking into account the practices of the compensation peer group and other appropriate factors, such as corporate and individual performance and historical compensation practices for such executive officers and the recommendations of our CEO;
Establishing appropriate compensation, retention, incentive, severance, and benefit policies and programs for our executive officers;
Reviewing and recommending, with input from the Board of Directors, incentive compensation plans for our executive officers and employees;
Administering and amending as necessary the Company's various incentive compensation, and other similar plans; and
Conducting periodic competitive evaluations of our executive compensation program.
Our Compensation Committee operates pursuant to a charter that further outlines its specific authority, duties and responsibilities. The charter is periodically reviewed and revised by the Compensation Committee and the Board and is available under Corporate Governance in the Company – Investor Relations section of our website at www.blackbaud.com.
Role of our CEO
Our CEO evaluates and makes recommendations regarding the compensation of our executive officers, including the other NEOs. At the end of each fiscal year, our CEO reviews with the Compensation Committee the performance of each executive officer and makes recommendations with respect to his or her base salary, target annual cash bonus opportunity, and equity awards for the ensuing year. In formulating his recommendations, our CEO considers both internal and external compensation data from our Human Resources Department and the Compensation Committee's compensation consultant. While the Compensation Committee considers the recommendations of our CEO, it considers these recommendations as just one factor in its deliberations when making executive compensation decisions. The Compensation Committee consults with the full Board of Directors (excluding our CEO) in making decisions regarding the CEO's compensation.
Role of Compensation Consultant
Pursuant to its written charter, the Compensation Committee has the authority to engage the services of outside advisers, experts and others to assist it in the performance of its duties and responsibilities. Currently, the Compensation Committee engages Compensia, Inc. ("Compensia"), a national compensation consulting firm, to provide advice and information relating to executive and director compensation. Compensia reports to the Compensation Committee and does not provide any services to management. From time to time, the Compensation Committee may direct its advisors to work with our Human Resources Department to support it in matters relating to the fulfillment of its charter.

28
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

During 2015, at the request and on behalf of our Compensation Committee, Compensia:

Assessed our executive compensation program and practices, particularly with respect to our pay-for-performance alignment;
Advised on the size and structure of the cash components of our executive compensation program (i.e., base salary and target annual cash bonus opportunities, and performance measures and weighting of bonuses);
Advised on the composition, structure, and competitiveness of the equity component of our executive compensation program;
Advised on the composition of our compensation peer group;
Advised on the design and amount of the compensation package for our CEO; and
Advised on the compensation for the non-employee members of the Board.
The Compensation Committee has evaluated Compensia's engagement, and based on the six factors for assessing independence and identifying potential conflicts of interest that are set forth in Exchange Act Rule 10C-1(b)(4), Rule 5605(d)(3)(D) of the NASDAQ Marketplace Rules, and such other factors as were deemed relevant under the circumstances, has determined that its relationship with Compensia and the work of Compensia on behalf of the committee did not raise any conflict of interest, and that Compensia is independent as defined in Rule 5605(a)(2) of the NASDAQ Marketplace Rules.
Competitive Positioning
In selecting the compensation peer group, the Compensation Committee considers other software or technology companies with comparable annual revenue and market capitalization. Periodically, the Compensation Committee reviews the current compensation peer group, with the assistance of its compensation consultant, to determine whether it is still appropriate. It updates the compensation peer group for changes resulting from mergers, acquisitions, bankruptcies, going private transactions, and other changes in strategic focus or circumstances, removing from the group any companies that no longer fit the relevant criteria and adding ones that do. The following compensation peer group was approved by the Compensation Committee in 2014 and used as a reference when making executive compensation decisions for 2015:
Company Name
Company Ticker
12/31/2015
Market Cap
($ millions)
FY2015
Revenue
($ millions)
Software-Focus
  Business
Blackbaud, Inc.
BLKB
$3,089
$638
ü
ACI Worldwide, Inc.
ACIW
2,531
1,046
ü
Advent Software, Inc.(1)
ADVS
 
 
ü
Athenahealth, Inc.
ATHN
6,250
925
ü
CommVault Systems, Inc.
CVLT
1,783
608
ü
Conversant, Inc.(1)
CNVR
 
 
ü
Dealertrack Technologies, Inc.(1)
TRAK
 
 
ü
FactSet Research Systems Inc.
FDS
6,696
1,007
ü
Fair Isaac Corporation
FICO
2,954
839
ü
HomeAway, Inc.(1)
AWAY
 
 
ü
MedAssets, Inc.(1)
MDAS
 
 
ü
Medidata Solutions, Inc.
MDSO
2,729
393
ü
MicroStrategy Inc.
MSTR
2,038
530
ü
Rovi Corporation
ROVI
1,377
526
ü
Solera Holdings, Inc.(1)
SLH
 
 
ü
SS&C Technologies Holdings, Inc.
SSNC
6,639
1,000
ü
Synchronoss Technologies, Inc.
SNCR
1,555
579
ü
Tyler Technologies, Inc.
TYL
5,916
591
ü
Veeva Systems Inc.
VEEV
3,837
313
ü
(1)
This company was subsequently removed from the peer group due to its acquisition by another entity.

2016 Proxy Statement
29


EXECUTIVE COMPENSATION
 
 

In addition to the practices of the compensation peer group, the Compensation Committee reviews the executive pay practices of other similarly sized software or technology companies with which we compete for talent as reported in the Radford Global Technology Survey. This information is considered when making determinations for each component of compensation as well as total compensation.
Analysis of 2015 Executive Compensation
The charts below show the significant percentage of performance-based compensation reported for fiscal 2015 in the Summary Compensation Table for Mr. Gianoni, our CEO, and for our other NEOs as a group.
2015 Total Direct Compensation* Mix
 


 
 
Fixed
 
 
 
Performance-based
 
 
 
Time-based
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Base Salary
 
Annual Cash Bonus
 
 
Annual PRSU Grants
 
 
Annual RSA Grants
 
CEO
Retention Grant
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash
 
 
 
Equity
 

*Base salary, actual annual cash bonus and the grant date fair value of all equity grants for 2015.

Base Salary
Base salary is the principal fixed component in our executive compensation program. The Compensation Committee reviews the base salaries of our executive officers each year and makes adjustments as it deems necessary and appropriate based on its consideration of individual experience and contributions, corporate performance, historical compensation practices for our executive officers and its assessment of the competitive market.

30
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

In 2015, the Compensation Committee increased base salaries of our NEOs, other than Mr. Boruff (who joined us May 4, 2015), effective April 1, 2015, as set forth in the following table. The Compensation Committee made these adjustments after taking into consideration the individual achievements of each NEO, in recognition of our success in delivering on our 2014 strategic priorities, the recommendations of our CEO (except with respect to his own base salary), and the factors described above.
Name
2015
Base Salary
2014
Base Salary
Salary
Adjustment
Change

% Change

Mr. Gianoni
$
618,000

$
600,000

$
18,000

3.0
%
Mr. Boor(1)
437,750

425,000

12,750

3.0
%
Mr. Mooney
424,360

412,000

12,360

3.0
%
Mr. Cumbaa
396,550

385,000

11,550

3.0
%
Mr. Boruff(2)
410,000



%
(1)
Mr. Boor served as interim President and CEO in addition to his responsibilities as Executive Vice President and CFO from August 31, 2013 to January 13, 2014. Mr. Boor's base salary as reflected in this table is for his services in his capacity as Executive Vice President and CFO only.
(2)
Mr. Boruff joined us on May 4, 2015.
Annual Cash Bonus
Annual cash bonuses represent one of the principal variable pay components of our executive compensation program, and are reported in the “Non-Equity Incentive Plan Compensation” columns of the 2015 Summary Compensation Table and the 2015 NEO Compensation Summary on pages 41 and 5, respectively. During 2015, we provided our executive officers with the opportunity to earn cash bonuses based on one or more pre-established corporate performance objectives and, where applicable, the financial performance of the executive officer's business unit.
Target Annual Cash Bonus Opportunities
After considering competitive market data, the recommendations of our CEO (except with respect to his own target annual cash bonus opportunity) and the factors described above, the Compensation Committee increased the target annual cash bonus opportunity for Messrs. Boor and Mooney at an amount equal to 65% of their earned base salaries, which represented an increase from their 2014 target annual cash bonus opportunity of 50% of their earned base salaries.
The following table sets forth each NEO's target annual cash bonus opportunity for 2015 and how the opportunity was weighted between corporate performance and business unit performance:
 
Target Annual Cash Bonus Opportunity as a Percentage
 of Base Salary
Weighting of Target Annual Cash Bonus Opportunity
Name
Portion Attributable to Corporate Performance Metrics
Portion Attributable to Business Unit Performance Metrics
Mr. Gianoni
100%
100%
—%
Mr. Boor
65%
100%
—%
Mr. Mooney
65%
70%
30%
Mr. Cumbaa
50%
100%
—%
Mr. Boruff
65%
70%
30%
The Compensation Committee established the target annual cash bonus opportunity for Mr. Boruff at 65% of his earned base salary when he joined us on May 4, 2015.

2016 Proxy Statement
31


EXECUTIVE COMPENSATION
 
 

Corporate Performance Metrics
Consistent with 2014 and 2013, the Compensation Committee selected Adjusted Revenue (as defined below) and Adjusted Earnings (as defined below) as the corporate performance metrics to be used in 2015 for purposes of the corporate performance factor used to determine our executive officers annual cash bonuses.
For purposes of determining annual cash bonuses:
“Adjusted Revenue” means the Company's 2015 non-GAAP revenue, which excludes the impact of acquisition-related deferred revenue write-downs, as presented in the Company's periodic reports filed with the SEC within the section "Management's discussion and analysis of financial condition and results of operations" of those reports.
“Adjusted Earnings” means the Company's 2015 non-GAAP income from operations, which excludes the impact of acquisition-related deferred revenue write-downs, stock-based compensation charges, costs associated with amortization of intangibles arising from business combinations, impairment of capitalized software development costs due to business combinations, acquisition-related integration costs, acquisition-related expenses, CEO transition costs and restructuring costs. Non-GAAP income from operations is also presented in the Company's periodic reports filed with the SEC within the section "Management's discussion and analysis of financial condition and results of operations" of those reports. Adjusted Earnings is calculated before bonus expense.
The Compensation Committee selected "Adjusted Earnings" as one of the performance metrics for 2015 because it focuses on results of operations, without considering the cost of financing those operations (interest in debt or gains and losses on debt extinguishment and termination of derivative instruments), our tax provision, and non-operating items like interest income and foreign exchange transaction gains and losses.
Achievement against the corporate performance metrics is calculated on a constant currency basis, using foreign exchange rates in effect during the 2014 base year. The Compensation Committee weighted the corporate performance metrics at 60% for Adjusted Revenue and 40% for Adjusted Earnings. The Compensation Committee also determined the threshold levels for each performance metric that would have to be achieved for any amount to be paid with respect that metric, as set forth in the following table.
The determination of each NEO’s potential payout under the corporate performance metrics was based on the following matrix:
Corporate Performance Metric
 
Performance
2015 Target (in millions)

Below  Threshold

Threshold    

Target    

Maximum    

Adjusted Revenue
$
638.1

<90.0%

90.0
%
100.0
%
115.0
%
Adjusted Earnings
$
146.0

<90.0%

90.0
%
100.0
%
115.0
%
 
 
Payout
Maximum individual potential bonus as % of target
 
%
62.5
%
100.0
%
200.0
%
For each of the our performance metrics, the Compensation Committee set the performance target at a level it believes is reasonably achievable while requiring what it believes would be outstanding performance to achieve the maximum payout level.
For 2015, our achievement against the corporate performance metrics was 100.6% with respect to Adjusted Revenue and 105.0% with respect to Adjusted Earnings, for a corporate performance factor of 102.4%. The corporate performance factor increased payments by 6.67% for every 1% of achievement over the target performance level. Therefore, the Compensation Committee determined that, with respect to the corporate performance metrics, the application of the corporate factor resulted in a payout of approximately 116% of the target payout.

32
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

NEO Performance Metrics and Bonus Determinations

Mr. Gianoni

The Compensation Committee determined Mr. Gianoni’s 2015 bonus entirely based on the achievement of the corporate performance metrics as described above. Accordingly, Mr. Gianoni received $709,820 (approximately 116% of his total target annual cash bonus opportunity).

 


Mr. Boor

The Compensation Committee determined Mr. Boor’s 2015 bonus entirely based on the achievement of the corporate performance metrics as described above. Accordingly, Mr. Boor received $326,813 (approximately 116% of his total target annual cash bonus opportunity).
 


Mr. Mooney
 
The Compensation Committee determined Mr. Mooney’s 2015 bonus 70% based on the achievement of the corporate performance metrics described above and 30% based on the achievement of overall GMBU performance. For the corporate performance component of his 2015 bonus, Mr. Mooney received $221,771 (approximately 116% of the 70% of his target annual cash bonus opportunity attributable to corporate performance).
 


2016 Proxy Statement
33


EXECUTIVE COMPENSATION
 
 

For the overall GMBU performance component of his 2015 bonus, Mr. Mooney received $103,260 (approximately 126% of the 30% of his target cash bonus opportunity attributable to GMBU performance). The Compensation Committee evaluated overall GMBU performance against Adjusted Revenue and Adjusted Earnings as follows:

 
 
Performance
GMBU Performance Metric
2015 Target
(in millions)
Below
Threshold

Threshold

Target

Maximum

Adjusted Revenue
$281.9
<90.0%

90.0
%
100.0
%
115.0
%
Adjusted Earnings
$152.6
<90.0%

90.0
%
100.0
%
115.0
%
 
 
Payout
Maximum potential bonus as % of target
%
62.5
%
100.0
%
200.0
%

The Adjusted Revenue and Adjusted Earnings threshold levels both had to be achieved for any GMBU performance bonus to be paid. The Adjusted Revenue and Adjusted Earnings metrics were each measured quarterly and annually. The Adjusted Revenue metric was weighted 60% while Adjusted Earnings was weighted 40%. For 2015, GMBU achieved an overall GMBU performance bonus factor of 103.9%. The GMBU performance factor increased payments by 6.67% for every 1% of achievement above the target performance level.
Mr. Cumbaa
 
The Compensation Committee determined Mr. Cumbaa’s 2015 bonus entirely based on the achievement of the corporate performance metrics as described above. Accordingly, Mr. Cumbaa received $227,734 (approximately 116% of his total target annual cash bonus opportunity).
 



Mr. Boruff

The Compensation Committee determined Mr. Boruff’s 2015 bonus 70% based on the achievement of the corporate performance metrics described above and 30% based on the achievement of overall ECBU performance. For the corporate performance component of his 2015 bonus, Mr. Boruff received $143,892 (approximately 116% of the 70% of his target annual cash bonus opportunity attributable to corporate performance). Mr. Boruff's target annual cash bonus opportunity was reduced because he joined us on May 4, 2015.
 


34
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

For the overall ECBU performance component of his 2015 bonus, Mr. Boruff received $51,328 (approximately 96% of the 30% of his target annual cash bonus opportunity attributable to ECBU performance). The Compensation Committee evaluated overall ECBU performance against Adjusted Revenue and Adjusted Earnings metrics as follows:
 
 
Performance
ECBU Performance Metric
2015 Target
(in millions)

Below
Threshold

Threshold

Target

Maximum

Adjusted Revenue
$
312.4

<90.0%

90.0
%
100.0
%
115.0
%
Adjusted Earnings
$
163.2

<90.0%

90.0
%
100.0
%
115.0
%
 
 
Payout
Maximum potential bonus as % of target
%
62.5
%
100.0
%
200.0
%

The Adjusted Revenue and Adjusted Earnings threshold levels both had to be achieved for any ECBU performance bonus to be paid. The Adjusted Revenue and Adjusted Earnings metrics were each measured quarterly and annually. The Adjusted Revenue metric was weighted 60% while Adjusted Earnings was weighted 40%. For 2015, ECBU achieved an overall performance bonus factor of 98.5%. The ECBU performance factor decreased payments by 2.5% for every 1% of achievement below the target performance level.

Summary of Bonus Payments
The following illustrates the 2015 annual cash bonus opportunities for our NEOs and their respective payout amounts.

2016 Proxy Statement
35


EXECUTIVE COMPENSATION
 
 

Long-Term Incentive Compensation

Our Long-Term Incentive Plan ("LTIP") is designed to align the interest of our executive officers with the interests of our stockholders and serve as an important means for executive retention. Based on feedback from our stockholders and our assessment of the competitive market, we have increased the emphasis on performance-based equity for our executive officers in recent years. Each of the NEOs receives equity awards that are 50% performance-based and 50% time-based. In 2015, the Compensation Committee granted our executive officers their annual LTIP awards in the first fiscal quarter.
The following table sets forth the number of shares of our common stock subject to RSAs and PRSUs granted to each NEO on February 13, 2015 under our LTIP (except for Mr. Boruff who was granted his LTIP award on May 14, 2015 after joining us), which are reflected in the 2015 Summary Compensation Table below. The Compensation Committee determined LTIP award levels for our NEOs after considering peer group equity award practices, individual performance, criticality of role, expected future contributions of and the long-term retention objectives for each NEO and our performance compared to our peer group.
Name
Number of RSAs

Number of PRSUs

Mr. Gianoni
57,038

57,039

Mr. Boor
22,816

22,815

Mr. Mooney
17,111

17,112

Mr. Cumbaa
17,111

17,112

Mr. Boruff
10,346

10,346

 
2015 CEO Retention Grant
On December 9, 2015, we entered into the Amended Agreement with our CEO. Pursuant to the Amended Agreement, our CEO received the Retention Grant of RSAs valued at $5.0 million. The Retention Grant consisted of 80,555 RSAs, which were granted on December 14, 2015. The Retention Grant will vest in full on December 31, 2019 and is contingent upon our CEO's continued employment as of the vesting date. The vesting period aligns with the term of the Amended Agreement and is intended to facilitate the retention of our CEO for this extended period in consideration of our achievements and progress towards our long-term goals under his leadership. Further discussion of the Amended Agreement can be found in our Current Report on Form 8-K filed with the SEC on December 9, 2015, and the Amended Agreement can be found at Exhibit 10.81 to our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 24, 2016.
In entering into the Amended Agreement, the Compensation Committee determined that the Retention Grant represented both an appropriate means for recognizing Mr. Gianoni’s performance during his first two years as CEO and as an incentive and retention tool to motivate continued performance in creating sustainable long-term stockholder value.
In particular, the Compensation Committee took into account Mr. Gianoni’s effective leadership and ongoing success in transitioning our business to a subscription-based cloud delivery model, as well as the immense stockholder value created over the previous year compared to industry and index peer groups. As seen in the chart at right, our total shareholder return in 2015 significantly outperformed both the GICS 4510 Peer Group and the S&P600.

 
*Cumulative stock price appreciation plus dividends, with dividends reinvested.


36
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION



In choosing a four-year cliff vesting Retention Grant, the Compensation Committee linked Mr. Gianoni’s ability to earn the Retention Grant to his continued employment through the full initial term of the Amended Agreement and believes that this approach is consistent with a performance-based compensation philosophy, because the Retention Grant will be earned only at the end of the four-year term, which carefully and significantly aligns Mr. Gianoni’s financial interest with long term stockholder interests.
In designing Mr. Gianoni’s compensation package and Retention Grant, the Committee also considered the costs to the Company associated with hiring a replacement for Mr. Gianoni should he have accepted other employment following the initial term of his original employment agreement, which would have ended at the end of 2016. The Compensation Committee believed that, at this point in the transition of our Company’s business model, the replacement costs would be significant, both financially and more significantly, in terms of lost momentum and productivity. The Committee determined that such a disruption would be harmful to stockholders’ interests.
The Committee also considered the highly-competitive market for proven and experienced senior executive talent and determined that the Amended Agreement and Retention Grant fairly and appropriately met market standards for the level of executive talent exhibited by Mr. Gianoni during his tenure at Blackbaud.
As a result, the Compensation Committee determined that it is in the best interests of the Company and our stockholders to provide Mr. Gianoni with a Retention Grant that recognized his effective leadership and past contributions while, at the same time, conditioning the award on his continued employment through the term of the Amended Agreement.
2015 PRSU Awards to NEOs
In February 2015, the Compensation Committee granted PRSUs to our NEOs (the "2015 PRSUs"). The shares of our common stock subject to the 2015 PRSUs may be earned and become eligible for vesting if the following performance criteria are met (together, the “2015 PRSU Performance Metrics”):
i.
At any time during the three-year period from January 1, 2015 to December 31, 2017, the Company achieves during a rolling four consecutive quarter period: (a) an increase of 6.5% in its total non-GAAP revenue, adjusted to exclude incremental acquisition-related revenue associated with companies acquired during this current period ("Adjusted Revenue") above the total non-GAAP revenue for the immediately preceding four consecutive quarter period, adjusted to exclude the effects of any fair value adjustments to acquired deferred revenue associated with companies acquired during this prior period ("Base Revenue") and (b) in no circumstances does Base Revenue fall below the Company's 2014 non-GAAP revenue, as adjusted for the full year effect of the MicroEdge and WhippleHill acquisitions, which is $601.9 million (“Initial Base Revenue”); and
ii.
Adjusted Non-GAAP Operating Margin (defined as non-GAAP operating margin as presented in the Company's periodic reports filed with the SEC within the section "Management's discussion and analysis of financial condition and results of operations" of those reports) does not fall below a four consecutive quarter average of 17.8% of Adjusted Revenue during the same four consecutive quarter period that meets the performance requirements set forth in criterion (i) above.
Based on our stated strategy of simultaneous growth and improving operating margins, the Compensation Committee believes that, for achieving performance-based compensation metrics, revenue and operating margin targets align management's strategic goals closely with the interests of our stockholders.
To the extent earned, the 2015 PRSUs are eligible for vesting in three annual installments starting in February 2016. Achievement against the 2015 PRSU Performance Metrics is calculated on a constant currency basis, using foreign exchange rates in effect during the 2014 base year. As of December 31, 2015, the 2015 PRSU Performance Metrics had been met because in the four consecutive quarter period ended December 31, 2015, the Company achieved:
i.
Adjusted Revenue of $646.7 million, which represented an increase of 7.5% compared to the Initial Base Revenue; and
ii.
Adjusted Non-GAAP Operating Margin of 18.7% of Adjusted Revenue.
As a result, the shares of our common stock subject to the 2015 PRSUs will vest according to the time-based vesting schedule noted above subject to each NEO's continued employment.

2016 Proxy Statement
37


EXECUTIVE COMPENSATION
 
 

Post-Employment Compensation

We have entered into arrangements with our NEOs which provide for payments and benefits upon a termination of employment in connection with a change in control of the Company. These arrangements provide for a "double-trigger," that is, they generally only provide payments and benefits if a NEO's employment is terminated within 12 months following a change in control of the Company either by us without cause or by the NEO for good reason. Based on our assessment of the competitive market, we believe these arrangements are appropriate as they serve as a means for executive retention.
For a detailed discussion of these arrangements and an estimate of the payments and benefits that our NEOs would be eligible to receive in certain circumstances pursuant to their agreements, see “Potential Payments Upon Termination or Change in Control - Employment Arrangements” beginning on page 44 of this Proxy Statement.
Other Benefits
Health and Welfare Benefits
Generally, the Compensation Committee seeks to provide our executive officers with health and welfare benefits on the same basis as all of our full-time employees. These benefits include health, dental, and vision benefits, health and dependent care flexible spending accounts, short-term and long-term disability insurance, accidental death and dismemberment insurance and basic life insurance coverage.
We have established a tax-qualified Section 401(k) retirement plan for all employees who satisfy certain eligibility requirements, including requirements relating to age and length of service. Currently, we make matching contributions to each NEO's account under our Section 401(k) plan on the same terms and using the same formulas as other participating employees. We intend for the plan to qualify under Section 401(a) of the Internal Revenue Code (the “Code”) so that contributions by employees to the plan and income earned on plan contributions are not taxable to employees until withdrawn from the plan.
Perquisites and Other Personal Benefits
Historically, we have not provided any material perquisites or other personal benefits to our executive officers. While we do not view perquisites or other personal benefits as a significant component of our executive compensation program, from time to time, the Compensation Committee may provide certain of the NEOs with perquisites or other personal benefits in amounts deemed to be reasonable where it believes that these benefits may be useful in attracting, motivating, and retaining the executive talent for which we compete, to assist our executive officers in performing their duties and to provide certain time efficiencies in appropriate circumstances.
Other Compensation Policies
Equity Grant Policy
We do not have an established formal policy with respect to the timing of equity awards in coordination with the release of material nonpublic information. As a matter of practice and informal policy, however, the Compensation Committee generally grants equity awards during periods considered to be our “open trading windows” (that is, the periods beginning two business days following our earnings release and ending one month prior to the end of the fiscal quarter). In addition, any options to purchase shares of our common stock are required to be granted with an exercise price at least equal to the fair market value of our common stock on the date of grant.
Compensation Recovery
Mr. Gianoni's employment agreement includes a compensation recovery, or clawback, provision requiring that he return to us all incentive-based compensation he receives from us to the extent required by any Company clawback or recoupment policy, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and/or Section 304 of the Sarbanes-Oxley Act of 2002.

38
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

Executive Officer Stock Ownership Guidelines

Under our Executive Officer Stock Ownership Guidelines, our CEO and the CEO’s officer-level direct reports are expected to own shares of our common stock, in the following amounts:

For the CEO, the lesser of (i) equity in an amount equal to four times base salary or (ii) 70,000 shares; and
For the CEO’s officer-level direct reports, the lesser of (i) equity in an amount equal to two times base salary, or (ii) 20,000 shares.
For purposes of these guidelines, vested, unexercised options and/or SARs will also count at 100% of their intrinsic value. We expect our CEO and the CEO’s officer-level direct reports to meet these guidelines within five years of receiving their first annual equity award after the later of their hire date or the adoption of these guidelines.
Progress towards meeting the guidelines is summarized below as of December 31, 2015:
 
Stock Ownership Guideline
 (Lesser of):
 
 
Name
Multiple of
Base Salary
(in shares)(2)

OR
Minimum
Number
 of Shares

Number
 of Shares
Owned(3)

Percent of Guideline Achieved

Mr. Gianoni
37,534

 
70,000

183,930

490
%
Mr. Boor
13,293

 
20,000

95,844

721
%
Mr. Mooney
12,887

 
20,000

81,972

636
%
Mr. Cumbaa
12,042

 
20,000

108,628

902
%
Mr. Boruff(1)
12,451

 
20,000

10,346

83
%
(1)
Mr. Boruff joined us on May 4, 2015.
(2)
Number of shares required under the guideline for multiple of base salary calculated using $65.86 per share which was the closing price of our common stock on the NASDAQ Global Select Market on December 31, 2015.
(3)
Includes the number of shares owned as well as the number of shares issuable under exercisable SARs. The number of shares issuable under exercisable SARs was also calculated using $65.86 per share (the closing price of our common stock on the NASDAQ Global Select Market on December 31, 2015).
Other Considerations
Tax Deductibility of Executive Compensation
The Compensation Committee considers the potential impact of Section 162(m) of the Code in designing and administering our executive compensation program. Section 162(m) disallows a tax deduction for any publicly-held corporation for compensation exceeding $1 million paid in any taxable year to our CEO and our three other most highly compensated executive officers (other than our CFO). Compensation in excess of $1 million may be deducted if it qualifies as “performance-based compensation” for purposes of Section 162(m) or satisfies the conditions for another exemption from the deduction limit. In this regard, the compensation income realized upon the exercise of stock options or SARs granted under a stockholder-approved employee stock plan generally will be deductible so long as the options are granted by a committee whose members are non-employee directors and certain other conditions are satisfied.
It is the Compensation Committee's policy to periodically review and consider whether particular compensation, including incentive compensation, paid or awarded to our executive officers will be deductible for federal income tax purposes. Based on our current compensation plans and policies, and proposed regulations interpreting Section 162(m), we believe that, for the near future, we will not lose material tax deductions for executive compensation (other than for a portion of our CEO's RSAs). In addition, to maintain flexibility in the administration of our executive compensation program, the Compensation Committee reserves the discretion to compensate our executive officers in a manner that it believes to be in the best interests of the Company and our stockholders, even if these arrangements do not qualify for deductibility under the federal income tax laws.

2016 Proxy Statement
39


EXECUTIVE COMPENSATION
 
 

Accounting for Stock-based Compensation
We account for stock-based compensation awards in accordance with the requirements of FASB ASC Topic 718. Under FASB ASC Topic 718, stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is the vesting period. The assumptions used to determine the fair value of the awards are included in Note 13 of the financial statements included in our Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed with the SEC on February 24, 2016.
We estimate the number of awards that will be forfeited and recognize expense only for those awards that we expect will ultimately vest. Significant judgment is required in determining the adjustment to compensation expense for estimated forfeitures. Compensation expense in a period could be impacted, favorably or unfavorably, by differences between estimated and actual forfeitures.
Risk Assessment of Compensation
The Compensation Committee has assessed our compensation programs and has concluded that they do not create risks that are reasonably likely to have a material adverse effect on the Company. We believe that the combination of different types and amounts of compensation, together with our internal controls and oversight of our Board of Directors, mitigates potential compensation-related risks.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (“CD&A”) with our Company’s management. Based on this review and discussion, the Compensation Committee recommended to the Board of Directors that the CD&A be included in this Proxy Statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, which was filed with the SEC on February 24, 2016.
THE COMPENSATION COMMITTEE OF
THE BOARD OF DIRECTORS
Sarah E. Nash, Chair
Timothy Chou, Ph.D.
Joyce M. Nelson

COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
The members of the Board of Directors who served on the Compensation Committee in 2015 were Chair Sarah E. Nash, Timothy Chou, Ph.D., Andrew M. Leitch (through September) and Joyce M. Nelson (starting in September). None of the members of the Compensation Committee serves or in the past has served as one of our executive officers or has been employed by us and none of our executive officers have served on the compensation committee or board of any company that employed any member of our Compensation Committee or Board. Mr. Gianoni participated in discussions regarding salary, bonus and equity compensation for our executive officers, except for discussions regarding his own salary, bonus and equity compensation.

40
2016 Proxy Statement

 
 
EXECUTIVE COMPENSATION

COMPENSATION TABLES
2015 SUMMARY COMPENSATION TABLE

The following table sets forth information concerning the compensation paid to and earned by our NEOs for services rendered to us in all capacities in 2015, 2014 and 2013.
Name and Principal 
Position
Year
Salary
($)

Bonus(3)
($)

Stock
Awards(4)
($)

Option
Awards
($)

Non-Equity
Incentive Plan
Compensation
($)

All Other
Compensation(5)
($)

Total
($)

Michael P. Gianoni(1)  President and CEO
2015
$
613,506

$

$
10,111,855

$

$
709,820

$
50,165

$
11,485,346

2014
581,923

863,277

2,630,468


682,660

31,146

4,789,474

Anthony W. Boor(2)
Executive Vice
President and CFO
2015
434,567


2,028,298


326,813

30,723

2,820,401

2014
532,500


534,324


242,756

23,786

1,333,366

2013
609,575