DEF 14A 1 def14a12312021.htm DEF 14A Document

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ý
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))
ýDefinitive Proxy Statement
Definitive Additional Materials
Soliciting Material Pursuant to §240.14a-12
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EVERTEC, Inc.
(Name of Registrant as Specified In Its Charter)
Not Applicable
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
 
ýNo fee required
Fee paid previously with preliminary materials
Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11





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2022 Proxy Statement and
Notice of Annual Meeting of Stockholders






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Friday, May 20, 2022
9:00 a.m. Atlantic Standard Time




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Dear Stockholder:

On behalf of the Board of Directors and officers of Evertec, Inc. (“
we,” “us,” “Evertec” or the “Company”) we are pleased to invite you to attend our 2022 Annual Meeting of Stockholders (the “Annual Meeting”) to be held virtually on Friday, May 20, 2022 at 9:00 a.m. Atlantic Standard Time. We believe hosting a virtual meeting will help us safeguard public health during the ongoing COVID-19 pandemic.
At our virtual Annual Meeting stockholders will be able to attend, vote their shares, and submit questions by visiting www.virtualshareholdermeeting.com/EVTC2022. During the Annual Meeting, you will be asked to vote on four proposals described in detail in the accompanying notice of the Annual Meeting and Proxy Statement. The Proxy Statement also contains other information that you should read and consider before voting.
Your vote is very important to us. Whether or not you expect to attend the Annual Meeting, please submit your proxy or voting instructions over the Internet, telephone, or by mail as soon as possible to ensure that your shares are represented at the Annual Meeting and your vote is properly recorded. If you decide to attend the Annual Meeting remotely, you will be able to vote, even if you previously submitted your proxy.
If you have any questions concerning the Annual Meeting, and you are the stockholder of record of your shares, please contact our Investor Relations department at IR@evertecinc.com or (787) 773-5442. If your shares are held by a bank, broker or other nominee, please contact your bank, broker or other nominee for questions concerning the Annual Meeting.
Sincerely,
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Frank G. D’Angelo
Chairman of the Board of Directors
Morgan M. Schuessler, Jr.
President and Chief Executive Officer

    





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Notice of the 2022 Annual Meeting of Stockholders


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Date and TimeVirtual Meeting AccessRecord Date
Friday, May 20, 2022 at 9:00 a.m.
Atlantic Standard Time

To access the Annual Meeting, please visit:
www.virtualshareholdermeeting.com/EVTC2022
Close of business on March 22, 2022
(the “Record Date”).
Items of Business
Company proposals to be voted on at the Annual Meeting:Board Voting Recommendation
1. Election of Directors;
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FOR each director nominee
2. Advisory Vote on Executive Compensation;
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FOR
3. Ratification of the Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm; and
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FOR
4. Approval of the Evertec, Inc. 2022 Equity Incentive Plan.
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FOR

Stockholders may also transact any other business that may be properly brought before the Annual Meeting or any adjournments or postponements thereof.


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING

The Company’s Proxy Statement and Annual Report are available at www.proxyvote.com. Your vote is important to us. Please exercise your stockholder right to vote.

By Order of the Board of Directors,
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Luis A. Rodríguez
Executive Vice President, Chief Legal and Corporate Development Officer, and Secretary of the Board of Directors





Table of Contents






Proxy Statement Summary
Introduction
Please read this Proxy Statement, and our Form 10-K and Annual Report for the fiscal year ended on December 31, 2021 for complete information regarding the Annual Meeting, the proposals to be voted on at the Annual Meeting and our performance for the year ended on December 31, 2021. Except as otherwise indicated or unless the context requires otherwise, the terms “Evertec,” “we,” “us,” “our Company,” and “the Company” refer to Evertec, Inc. and its subsidiaries on a consolidated basis. The enclosed Proxy Statement and notice of the Annual Meeting were first mailed to stockholders on or about April 4, 2022.
Annual Meeting Information
Date and Time:
Friday, May 20, 2022
9:00 a.m. (AST)
Virtual Meeting Access:
www.virtualshareholdermeeting.com/EVTC2022
Record Date:
March 22, 2022
Voting Proposals 
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Cast Your Vote
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At the Annual MeetingInternetQR CodePhoneMail
Visit www.virtualshareholdermeeting.com/EVTC2022. You will need the 16-digit number included in your proxy card or notice.
Visit www.proxyvote.com. You will need the 16-digit number included in your proxy card or notice.
Scan this QR code with your phone to vote. You will need the 16-digit number included in your proxy card or notice.Call 1-800-690-6903.  You will need the 16-digit number included in your proxy card or notice.Send your completed and signed proxy card to the address on your proxy card.


IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING:
The Company’s Proxy Statement and Annual Report are available at www.proxyvote.com. Your vote is important to us. Please exercise your stockholder right to vote.
Evertec, Inc. - 2022 Proxy Statement     1



Executive Summary
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All amounts are rounded. For more information, please refer to our Annual Report on Form 10-K for the fiscal year ended on December 31, 2021. For purposes of this Proxy Statement, “Adjusted EBITDA” is not presented in accordance with accounting principles generally accepted in the United States of America (commonly known as “GAAP”). See Appendix A for a reconciliation of GAAP and non-GAAP financial measures to our results, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2021.
2   Evertec, Inc. 2022 Proxy Statement    


SUMMARYDIRECTOR NOMINEES


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Audit CommitteeCompensation CommitteeNominating and Corporate Governance CommitteeInformation Technology Committee

Evertec, Inc. 2022 Proxy Statement     3



RECENT ESG HIGHLIGHTS
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RESULTS OF THE 2021 ADVISORY VOTE ON EXECUTIVE COMPENSATION

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2021 EXECUTIVE TARGET COMPENSATION MIX
The charts below set forth the target compensation mix for our Chief Executive Officer (the “CEO”) and the average target compensation mix for the rest of our Named Executive Officers (“NEOs”) during 2021. For purposes of these charts, “base salary” includes base salary and applicable statutory Christmas bonus, as such amounts are disclosed for each of our NEOs in the “Compensation Discussion and Analysis” section of this Proxy Statement.

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Evertec® and ATH® are trademarks of Evertec, Inc. or its subsidiaries in the United States of America and/or other countries. Links to websites included in this Proxy Statement are provided solely for convenience purposes. Content on the websites, including content on our Company website, is not, and shall not be deemed to be, part of this Proxy Statement or incorporated herein or into any of our other filings with the Securities and Exchange Commission (SEC).
4   Evertec, Inc. 2022 Proxy Statement    


PROPOSAL 1
Election of Directors
Information About Director Nominees
The individuals identified below have been nominated to stand for election for a term that expires at the Company’s 2023 annual meeting of stockholders. Each of these individuals has consented to be named as a nominee in this Proxy Statement and to serve as a director until the expiration of his or her respective term and until such nominee’s successor has been duly elected or qualified or until the earlier resignation or removal of such nominee.
Pursuant to the terms of our Stockholder Agreement by and among the Company, Popular, Inc. (“Popular”) and the other stockholder parties thereto, as amended (the “Stockholder Agreement”), and as described in more detail in the “Certain Relationships and Related Transactions” section of this Proxy Statement, Popular has re-nominated Messrs. Pagán and Polak as members of our Board of Directors (the “Board”).
All of our director nominees currently serve as members of the Board. There are no family relationships between any current director, executive officer or director nominee.Should any one or more of the nominees named in this Proxy Statement become unable to serve for any reason, the Board may designate substitute nominees, unless the Board by resolution provides for a lesser number of directors. In this event, the proxy holders will vote for the election of such substitute nominee or nominees. The following is a summary of each director nominee’s principal occupation, experience and qualifications:

Frank G. D’Angelo
Age: 76
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Mr. D’Angelo has been Chairman of the Board since February 2014 and a director since September 2013. He currently serves as Operating Partner in Hill Path, a private equity partnership and as a partner in Bridgeport Partners, a private investment firm. Until 2020, he served as Executive Vice President and President of NCR Banking. Mr. D’Angelo has over 40 years of experience in the financial services, digital banking and payments industries. He is a former chairman of the Electronic Funds Transfer Association, served on the Payments Advisory Council of the Federal Reserve Bank of Philadelphia, and served as a director for Walsh University (Ohio). Mr. D’Angelo’s experience in the financial services industry, as well as in operations and management, provides great value to our Board.
Morgan M. Schuessler, Jr.
Age: 51
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Mr. Schuessler has been a director and the Company’s President and CEO since April 2015. Previously, he served as President of International for Global Payments, Inc., overseeing the company’s business outside of the Americas, spanning 23 countries throughout Europe and Asia. Mr. Schuessler currently serves on the Board of Directors of Endeavor Puerto Rico, and the Dean’s Advisory Board of Emory University’s Goizueta Business School. Mr. Schuessler has over 20 years of experience in the payments industry; accordingly, he is well-versed in the intricacies of the Company’s core business and has developed management and oversight skills required to make significant contributions to the Board.
Kelly Barrett
Age: 57
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From 2016 until her retirement in 2020, Ms. Barrett was the Senior Vice President of Home Services at The Home Depot. Ms. Barrett joined The Home Depot in 2003, where she held various senior management positions, including as Vice President of Internal Audit and Corporate Compliance, and Controller. Ms. Barrett currently serves as board member of NACD-Atlanta Chapter, Piedmont Office Realty Trust, The Aaron’s Company, Inc., and Americold Realty Trust. Her leadership roles in the community include currently serving as Chair of the Board of the Metro Atlanta YMCA, the Georgia Tech Foundation Board of Trustees and a member of the Advisory Board of Scheller College of Business at Georgia Tech. She is also a Certified Public Accountant in the state of Georgia. Ms. Barrett’s substantial experience in leadership roles, strategy and enterprise risk management, coupled with service on several boards, will be of great service to the Company.
Evertec, Inc. 2022 Proxy Statement     5


Olga Botero
Age: 58
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Ms. Botero has been a director since September 2014. She is the founder and Managing Director of C&S Customer and Strategy, and has been a Senior Advisor to the Boston Consulting Group since 2011. She is the Co-Chair of the Women Corporate Directors Foundation Colombia Chapter, a fellow at the National Association of Corporate Directors’ (NACD) Board Leadership Fellow program, and an advisor to the Information Technology Committee of Grupo Pichincha and Banco Pichincha in Ecuador. She also serves as an independent director and member of the Audit and Risk Committee, and Human Resources Committee of each of ESVAL S.A. and ESSBIO S.A., which are both publicly traded water utilities companies in Chile. She is a member of the Altipal S.A.S. Board of Directors since April 2022. She served as independent director, chair of the Audit Committee and member of the Transactions Committee of Farmalatam Holding Inc. (Farmalisto), a health tech and e-pharmacy company in Latin America. Ms. Botero has over 25 years of experience in leadership roles in financial services, telecommunications and technology. Her experience, expertise in cybersecurity and technology, and knowledge of Latin American markets are an asset to the Company.
Jorge A. Junquera
Age:73
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Mr. Junquera has been a director since April 2012. He currently serves as Managing Partner at Kohly Capital, LLC, a private investment company. He has over 40 years of experience in the banking and financial services industries. Until his retirement in 2015, Mr. Junquera was Vice Chairman of the Board of Directors of Popular. Prior to becoming Vice Chairman, he was the Chief Financial Officer of Popular and Supervisor of Popular’s Financial Management Group. He currently serves as a director for Sacred Heart University (PR) and Bluestone Community Development Fund. Mr. Junquera’s substantial experience managing financial institutions and serving on various boards of directors provides him with unique expertise and valuable perspective to assist the Board.
Iván Pagán
Age: 63
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Mr. Pagán has been a director since May 2019. For twenty-two years until his retirement in February 2019, Mr. Pagán was the Head of Corporate Development at Popular, where he managed mergers and acquisitions, divestitures, corporate reorganization and strategic alliances for Popular, completing significant transactions in the United States, Latin American, Puerto Rico and the Caribbean. Mr. Pagán currently serves as a member of the Board of Directors of Banco BHD León, S.A. in the Dominican Republic. Mr. Pagán’s substantial expertise in financial and M&A matters, experience in the Caribbean and Latin American markets, and knowledge of the Company’s operations are an asset to the Company.
Aldo J. Polak
Age: 47
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Mr. Polak has been a director since May 2019. He has been a Managing Director of Mizuho since November 2021. From April 2021 until October 2021, he was the Managing Member of Ionos Capital Partners LLC. From April 2019 until April 2021, Mr. Polak served as Chief Investment & Development Officer at Cisneros Group of Companies. Prior to Cisneros, he spent over 15 years as an investment banker in Wall Street, most recently heading the Latin America efforts at LionTree, a global investment and merchant banking firm, from 2013 until March 2019. He currently serves as a director for LatinoU and Reaching U, and is also involved with Endeavor as a panelist and mentor to entrepreneurs. Mr. Polak’s significant experience in M&A and corporate development, and his knowledge and contacts in Latin America provide great value to the Board.
Alan H. Schumacher
Age: 75
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Mr. Schumacher has been a director since April 2013. For 23 years he worked at American National Can Corporation as well as at American National Can Group, where he served as Vice President, Controller and Chief Accounting Officer until 1997 and as Executive Vice President and Chief Financial Officer from 1997 until his retirement in 2000. He is a former member of the Federal Accounting Standards Advisory Board, and currently serves as a director of Blue Bird Corporation, Warrior Met Coal, Albertsons Companies, Inc., and Pendrick Capital Partners LLC. Mr. Schumacher has substantial expertise in accounting, reporting, audit and financial matters and, as such, is able to provide valuable contributions to our Board in its oversight functions.
6   Evertec, Inc. 2022 Proxy Statement    


Brian J. Smith
Age: 66
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Mr. Smith has been a director since February 2016. Mr. Smith has served as President and Chief Operating Officer of The Coca-Cola Company since January 2019. From 2016 until December 2018, he served as President of its Europe, Middle East and Africa (EMEA) Group and, prior to that, he also held other strategic and management roles since joining The Coca-Cola Company in 1997. Mr. Smith serves as a director for the Coca-Cola Europacific Partners Board and is a member of its Corporate Social Responsibility Committee. Like other members of the Board, Mr. Smith has substantial managerial experience in Latin America. His extensive expertise in management and corporate strategy makes him a valuable asset to the Company.


THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE ELECTION OF EACH OF
THE COMPANY’S DIRECTOR NOMINEES LISTED ABOVE.
Evertec, Inc. 2022 Proxy Statement     7


Corporate Governance
Overview
The Company’s business affairs are conducted under the direction of the Company’s Board in accordance with the Puerto Rico General Corporation Act of 2009, as amended, the Company’s Amended and Restated Certificate of Incorporation (the “Charter”), and Amended and Restated Bylaws (the “Bylaws”). Members of the Board are informed of the Company’s business through discussions with management, by reviewing materials provided to them and by participating in meetings of the Board and its committees.
Board Composition
Under the Company’s Charter, Bylaws and the Stockholder Agreement, the size of the Board is currently fixed at nine, with each director serving until the Company’s next annual meeting of stockholders and until their successors are duly elected and qualified. Below please find the current Board composition:

Frank G. D'AngeloChairman of the Board, Independent
  8 of 9
     directors are independent
     in compliance with NYSE rules
Morgan M. Schuessler, Jr.President and CEO,Non-Independent
Kelly BarrettDirector, Independent
Olga BoteroDirector, Independent
Jorge A. JunqueraDirector, Independent
Iván PagánDirector, Independent
Aldo J. PolakDirector, Independent
Alan H. SchumacherDirector, Independent
Brian J. SmithDirector, Independent

Mr. Schuessler has been the management director since April 1, 2015.
For 2022 Popular has designated Messrs. Pagán and Polak to be nominated by the Board for election as directors until the Company’s 2023 annual meeting of stockholders and until their successors are duly elected and qualified.
On February 24, 2022 Evertec and Evertec Group, LLC (“Evertec Group”) entered into an asset purchase agreement with Popular and Banco Popular de Puerto Rico (“BPPR”) (the “Asset Purchase Agreement”) to sell to BPPR certain technology services assets (the “Asset Sale”) and, Popular or BPPR will pay consideration of $196,600,000 in exchange for the Asset Sale, which will be paid in the form of Evertec common stock currently held by Popular valued at $42.84 per share, and will be subject to certain adjustments. Upon closing of the Asset Sale, the Stockholder Agreement will terminate and, thus, Popular will no longer have a right to (i) designate nominees for election to the Board or (ii) representation to each committee of the Board.
Pursuant to the terms of the Stockholder Agreement, the Employment Agreement and the A&R Employment Agreement (as these terms are defined herein), Mr. Schuessler shall continue to be the management director for so long as he holds the office of CEO of Evertec.
A majority of the directors of the Board must meet the criteria for independence established by the Board in accordance with the New York Stock Exchange (“NYSE”) general independence standards. The Board has determined that eight of the nine directors serving as of the Record Date (Mses. Barrett and Botero, and Messrs. D’Angelo, Junquera, Pagán, Polak, Schumacher and Smith) are independent in accordance with NYSE rules.
Our current Board profile is as follows:



8   Evertec, Inc. 2022 Proxy Statement    


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Board Committees
The Board has four standing committees:
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Pursuant to our Bylaws, the Board may establish additional committees. As of the Record Date, the Board has not established additional committees besides those described in this Proxy Statement.
Popular has the right to representation on each committee of the Board in the same proportion as the number of directors, if any, nominated by Popular out of the total number of directors—for so long as Popular owns, together with its affiliates, at least 5% of our outstanding common stock. As previously discussed, pursuant to the Asset Purchase Agreement, the Stockholder Agreement will terminate upon closing and, thus, Popular will no longer have a right to representation on each committee of the Board.
Each of our Board committees acts pursuant to a written charter (as amended and restated) adopted by the Board. You may find copies of each charter on the Company’s website at https://ir.evertecinc.com/govdocs.
Below please find a description of each of the Board’s four standing committees:
Evertec, Inc. 2022 Proxy Statement     9


Audit Committee
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Responsibilities and Risk Oversight:
overseeing: (i) our financial reporting process with respect to the integrity of our financial statements and our internal controls over financial reporting, (iii) the performance of our internal audit function, (iii) our management policies regarding risk assessment and management, and (iv) our compliance with laws and regulations

discussing with management and the Company’s independent registered public accounting firm the Company’s major financial and control-related risk exposures, and steps that management has taken to monitor and control such exposures

reviewing the overall implementation of the Company’s Enterprise Risk Management (“ERM”) framework and program, which includes (i) ensuring the placement of controls needed to establish a strong internal control environment, and receiving periodic status reports on management’s ERM progress, and (ii) overseeing the Company’s risk exposure, and validating management’s active role in assessing, managing and mitigating risks

establishing procedures for handling complaints regarding accounting or auditing matters
Alan Schumacher, Chairperson
Olga Botero
Jorge A. Junquera
Iván Pagán
Met 15 times during 2021

Must consist of at least 3 board members (including a chairperson) who must meet at least 4 times a year, including once every fiscal quarter

All members qualify as “independent” under SEC and NYSE rules

All members are “financially literate” under NYSE rules

Each of Messrs. Schumacher, Junquera and Pagán is considered a “financial expert” under SEC rules

Compensation Committee
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Responsibilities and Risk Oversight:
reviewing and recommending policy relating to the compensation and benefits of our officers, directors and employees, including reviewing and approving corporate goals and objectives relevant to the compensation of the CEO and other senior officers

evaluating the performance of senior officers in light of the Company’s goals and objectives, and reviewing and approving the compensation of senior officers based on such evaluations

producing a report on executive officer compensation as required by the SEC, which is included in this Proxy Statement

overseeing risks related to the Company’s cash and equity-based compensation programs and practices

overseeing succession planning for the CEO and senior management

Frank G. D’Angelo, Chairperson
Kelly Barrett
Aldo J. Polak
Brian J. Smith
Met 2 times during 2021

Must consist of at least 3 board members (including a chairperson) who must meet at least once a year

Each member is qualifies as “independent” under NYSE rules and as a “non-employee independent director,” as defined in Section 16b-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)
10   Evertec, Inc. 2022 Proxy Statement    


Nominating and Corporate Governance Committee
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Responsibilities and Risk Oversight:
evaluating the composition of the Board, its committees and planning for Board member succession

assisting the Board in identifying individuals qualified to serve as members of the Board and recommending to the Board the director nominees for the next annual meeting of stockholders

leading the Board in its performance review and that of its committees

overseeing management initiatives related to ESG matters

reviewing and recommending to the Board a set of corporate governance guidelines

overseeing risks related to the composition and structure of the Board and its committees and the Company's corporate governance practices
Brian J. Smith, Chairperson
Jorge A. Junquera
Aldo J. Polak
Alan H. Schumacher
Met 2 times during 2021

Must consist of at least 3 board members (including a chairperson) who must meet at least once a year

Each member qualifies as “independent” under applicable NYSE rules
Information Technology Committee
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Responsibilities and Risk Oversight:
assisting the Board in overseeing the integrity of the Company’s information and technology (“IT”) system, IT-related risks, IT security and cybersecurity, and IT infrastructure and strategy

advising and making recommendations to the Board regarding the state of the Company’s cybersecurity preparedness, and reviewing the threat landscape facing the Company

reviewing and reassessing the adequacy of the Company’s IT program, policies and procedures and recommending proposed changes to the Board for approval, if required

overseeing the Company’s internal IT Governance Committee

monitoring and evaluating the effectiveness of the Company’s IT security and cybersecurity protocols, including IT disaster recover capabilities
Olga Botero, Chairperson
Kelly Barrett
Frank G. D’Angelo
Iván Pagán
Met 3 times during 2021

Must consist of at least 3 board members (including a chairperson) who must meet at least twice a year
Director Qualifications
Size of our Board
Under the Company’s Charter, Bylaws and the Stockholder Agreement, the size of the Board is currently fixed at nine. The Stockholder Agreement grants Popular director nominee rights and it provides that, unless otherwise prohibited by applicable law, regulation or the NYSE rules (including the independence requirements described above), Popular has the right to representation on each committee of the Board in the same proportion as the number of directors, if any, nominated by Popular out of the total number of directors—for so long as Popular owns, together with its affiliates, at least 5% of our outstanding common stock. As previously discussed, upon the closing of the Asset Sale, the Stockholder Agreement will terminate and Popular will no longer have a right to designate nominees for election to the Board.



Evertec, Inc. 2022 Proxy Statement     11


Candidates for Board Membership
In making its recommendations of nominees to the Board, the Nominating and Corporate Governance Committee identifies candidates who meet the current challenges and needs of the Board. The Nominating and Corporate Governance Committee considers the following factors, among others, when determining whether a person is a suitable candidate for nomination for election to the Board: (i) diversity, (ii) background, (iii) expertise, and (iv) independence.
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The Board believes that diversity is key to our success. As discussed above, the Nominating and Corporate Governance Committee considers diversity, among other factors such as expertise, professional background, independence and other appropriate qualities, in determining whether a person is a suitable candidate for nomination for election to our Board. Pursuant to our Corporate Governance Guidelines, the Nominating and Corporate Governance Committee not only considers traditional demographic diversity concepts (such as race, ethnicity, gender, age and nationality) but also diversity of work experiences, academic backgrounds, skills and viewpoints.
Our Board currently has two female directors, and four of its directors identify as Hispanic. For further discussion of our diversity efforts, please refer to the “Environmental, Social and Governance (ESG) Matters” section under the “Compensation Discussion and Analysis” of this Proxy Statement, and our ESG summary available at our website https://www.evertecinc.com/en/our-purpose/; the ESG summary is not incorporated by reference to this Proxy Statement.
The Nominating and Corporate Governance Committee and the Board will evaluate recommendations for director nominees submitted by directors, management, professional search firms or stockholders in the same manner, using the criteria stated above.
Directors’ and Officers’ Questionnaire
All director nominees must complete a form of directors’ and officers’ questionnaire to determine their independence, financial literacy, risk management experience, beneficial ownership interest of the Company’s outstanding common stock, and any possible conflict of interest in relation to the Company or its business, as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Nominating and Corporate Governance Committee or the Board.
Board Vacancies
In accordance with the Stockholder Agreement, if there are any vacancies on our Board, then our entire Board (other than any directors who are to be replaced because Popular has lost the right to nominate them) has the right to nominate the individuals to fill such vacancies, which nominees must be reasonably acceptable to Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding common stock. To maintain flexibility to nominate, appoint or retain qualified Board members, regardless of age, Evertec does not have an age limit for directors nor a mandatory retirement policy.
12   Evertec, Inc. 2022 Proxy Statement    


For more information on our directors’ qualifications, please see our Corporate Governance Guidelines available on our website at https://ir.evertecinc.com/govdocs.
Board Leadership Structure
The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board believes that, given the dynamic and competitive environment in which we operate, the optimal board leadership structure may vary as circumstances warrant. In consideration of the above, the Board has determined that it is in the best interests of the Company and its stockholders to maintain a separate independent Board Chairman and CEO. Our Board believes that our current structure, with an independent Chairman who is well-versed in the needs of a complex business and has strong, well-defined governance duties, gives our Board a strong independent leadership and corporate governance structure that best serves the needs of Evertec and its stockholders.
We believe this corporate structure also permits the Board to have a healthy dynamic that enables its members to function to the best of their abilities, individually and as a unit. The Board has the ability to change its structure, subject to any limitations under the Stockholder Agreement, should it deem a restructuring of the Board to be appropriate and in the best interests of the Company and its stockholders. The Board expects to continue to evaluate its leadership structure on an ongoing basis and may make changes as appropriate to Evertec and its future needs.
Board and committee processes and procedures, including regular executive sessions of non-management directors and a regular review of the Company’s and our executive officers’ performance, provide substantial independent oversight of our management’s performance. Our Board believes its current leadership structure is appropriate because it effectively allocates authority, responsibility, and oversight between management and the independent members of our Board.
In the event a non-independent director serves as Chairperson of the Board, as per the Company’s Corporate Governance Guidelines, the Board will appoint a lead independent director to serve as the liaison between the Chairperson and the independent and non-employee directors. For more information about our Corporate Governance Guidelines, please visit our website at https://ir.evertecinc.com/govdocs.
Chairman Duties
As an independent Chairman of the Board, Mr. D’Angelo leads the activities of the Board. As part of his duties and responsibilities, Mr. D’Angelo is charged with, among other matters: (i) convening and presiding over all Board meetings, (ii) setting the agenda for the Board, in conjunction with the CEO and the Secretary of the Board, (iii) advising the CEO on Company strategy, and (iv) acting as liaison between non-management directors and management of the Company.
Director Compensation
The Board’s Independent Director Compensation Policy (the “Director Compensation Policy”) has been designed to ensure that the Company attracts, retains and compensates skilled and experienced directors to serve on the Board. It is our Board’s policy that only non-employee directors who qualify as independent directors are eligible to receive compensation for their services. In July 2021 the Director Compensation Policy was amended to increase the Board equity retainer to $132,500. Pursuant to the Director Compensation Policy, our independent directors are compensated as follows:
Annual RetainersChairMember
Board Retainer: Cash + Equity Compensation
$305,000 
(1)
$215,000 
(2)
Committee Retainers (in addition to Board compensation):(3)
Audit Committee $25,000 $12,500 
Compensation Committee $20,000 $10,000 
Nominating and Corporate Governance Committee $10,000 $5,000 
Information Technology Committee $10,000 $5,000 
(1)Includes $127,500 paid in cash and $177,500 paid in equity, which represents approximately 42% and 58% of the total Board chair retainer, respectively.
(2)Includes $82,500 paid in cash and $132,500 paid in equity, which represents approximately 38% and 62% of the total member Board retainer, respectively.
(3)All committee retainers are paid in cash.

Evertec, Inc. 2022 Proxy Statement     13


Pursuant to the Director Compensation Policy, each independent director may elect to receive all or a portion of his or her Board cash retainer as equity compensation. Furthermore, independent directors shall be paid a per-meeting cash fee of $1,500 if the number of meetings in a service year (i.e., as measured from one annual meeting of stockholders to the next) exceeds the established threshold number of meetings. During 2021 the Company did not pay any per-meeting fees. The threshold number of meetings after which the $1,500 per-meeting cash fee would apply are set forth in the table below; in each case (i) per service year and (ii) regardless of whether the meetings are in person or via teleconference.
Board and CommitteeThreshold Number of Meetings
Board14
Audit Committee14
Compensation Committee10
Nominating and Corporate Governance Committee8
Information Technology Committee8
In accordance with the above compensation structure, in 2021 the Company granted restricted stock units (“RSUs”) to the non-management independent directors, with vesting of the RSUs occurring on May 31, 2022. If a non-management independent director is appointed to the Board other than as a result of election or reelection at the Company’s annual meeting of stockholders, his or her award of RSUs will be made as soon as practicable following such appointment. Other restrictions may apply; for more details, please refer to the “Stock Ownership Guidelines” section under the “Compensation Discussion and Analysis” of this Proxy Statement.
The following table shows the compensation earned by our non-employee directors for their services in 2021:
Name
Fees Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)
Total 
($)
Frank G. D’Angelo152,500170,000322,500
Kelly Barrett58,125125,000183,125
Olga Botero105,000125,000230,000
Jorge A. Junquera102,019125,000227,019
Iván Pagán100,000125,000225,000
Aldo J. Polak97,500125,000222,500
Alan H. Schumacher112,500125,000237,500
Brian J. Smith20,000207,500227,500
Thomas W. Swidarski(3)
37,35637,356
(1)Represents the annual retainer amounts earned during 2021 pursuant to the Director Compensation Policy.
(2)Represents a grant date fair value of $43.57 per share in connection to the RSU awards granted to each director in 2021 pursuant to the Director Compensation Policy. For further discussion about share-based compensation, refer to Note 17 of the Audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2021. The number of outstanding RSUs held by our non-employee directors as of December 31, 2021 was as follows:

NameGrant Date: June 1, 2021
 RSUs
(#)
Frank G. D’Angelo3,901
Kelly Barrett2,868
Olga Botero2,868
Jorge A. Junquera2,868
Iván Pagán2,868
Aldo J. Polak2,868
Alan H. Schumacher2,868
Brian J. Smith*4,762
*Mr. Smith elected to receive all of his Board cash retainer as equity compensation.

(3)Mr. Swidarski's directorship ended on the Company's 2021 Annual Meeting of Stockholders held on May 27, 2021.



14   Evertec, Inc. 2022 Proxy Statement    


Director Attendance Matters
The Board’s operation and responsibilities are governed by the Charter, the Bylaws, the charters of the Board’s standing committees, Puerto Rico law and the Stockholder Agreement. The Company does not have a formal policy with regards to Board member attendance at the Company’s annual meetings of stockholders. All directors are encouraged to attend each annual meeting of stockholders to provide our stockholders with an opportunity to communicate with directors about issues affecting the Company; however, attendance is not mandatory. As required by the Company’s Bylaws, the Board meets immediately after the Company’s annual meeting of stockholders.
Last year, all of our directors standing for election at the Company’s 2021 annual meeting of stockholders attended the meeting.
The Board met 9 times during 2021. None of our current directors attended less than 96% of their Board and respective committee meetings. Each director’s attendance percentage for meetings of the Board and the committees on which he or she served during 2021 is listed below:
DirectorAttendance Percentage
Frank G. D’Angelo100%
Morgan M. Schuessler, Jr.100%
Kelly Barrett*100%
Olga Botero100%
Jorge A. Junquera96%
Iván Pagán100%
Aldo J. Polak100%
Alan H. Schumacher100%
Brian J. Smith100%
Thomas W. Swidarski*80%
*Attendance percentages for Ms. Barrett and Mr. Swidarski are based on meetings they attended during their directorship, which began and ended, respectively, on the Company's 2021 Annual Meeting of Stockholders held on May 27, 2021.
Board and Committee Evaluations
All of our directors must annually complete a form of directors’ and officers’ questionnaire, which ultimately enables the Board enhance its overall effectiveness. Through the questionnaire, each director provides information that helps the Board verify and determine their independence, financial literacy, risk management experience, beneficial ownership interest of the Company’s outstanding common stock, and any possible conflict of interest in relation to the Company or its business.
Each director is also required to annually submit an anonymous completed individual self-assessment which helps determine the Board’s and each of its committees continuous improvement and effectiveness. The self-assessments contain a series of statements that are designed to obtain the director’s opinions and comments regarding his or her individual performance and the performance of the Board and the committee(s) on which he or she serves. To ensure absolute confidentiality during this process, the self-assessments are submitted on an anonymous basis. The results of the directors’ and officers’ questionnaires and self-assessments are discussed in the Nominating and Corporate Governance Committee and presented to the Board.
Indemnification of Directors and Officers
The Charter and Bylaws generally eliminate the personal liability of each of our directors for breaches of fiduciary duty as a director and indemnify directors and officers as described herein. Our Charter and Bylaws limit the liability of our directors to the maximum extent permitted by Puerto Rico law. However, if Puerto Rico law is amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Puerto Rico law, as so amended.
Our Charter and Bylaws provide that we will, from time to time, to the fullest extent permitted by law, indemnify our directors and officers against all liabilities and expenses in any suit or proceeding, arising out of their status as an officer or director or their activities in these capacities. We will also indemnify any person who, at our request, is or
Evertec, Inc. 2022 Proxy Statement     15


was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and is involved in a suit or proceeding arising out of such position.
We may, by action of our Board, provide indemnification to our employees and agents within the same scope and effect as the foregoing indemnification of directors and officers. The right to be indemnified includes the right of an officer or a director to be paid expenses, including, without limitation, attorneys’ fees, in advance of the final disposition of any proceeding, provided that, if required by law, we receive an undertaking (from the relevant officer or director) to repay such expenses if it is determined that such officer or director is not entitled to be indemnified.
Our Board may take certain action it deems necessary to carry out these indemnification provisions, including purchasing insurance policies. Neither the amendment nor the repeal of these indemnification provisions, nor the adoption of any provision of our Charter and Bylaws inconsistent with these indemnification provisions, will eliminate, reduce or adversely affect any rights to indemnification relating to such person’s status or any activities prior to such amendment, repeal or adoption.
Our Bylaws provide that we may maintain insurance covering certain liabilities of our officers, directors, employees and agents, whether or not we would have the power or would be required under Puerto Rico law to indemnify them against such liabilities. We maintain a directors’ and officers’ liability insurance policy (the “D&O Liability Insurance”) for the protection of our directors and certain of our officers.
 We have entered into separate indemnification agreements with each of our directors in connection with his or her appointment to the Board. These indemnification agreements will require us to, among other things, indemnify our directors against liabilities that may arise by reason of their status or service as directors. We believe these provisions will assist in attracting and retaining qualified individuals to serve as directors and officers. These indemnification agreements also require us to advance any expenses incurred by the directors as a result of any proceeding against them as to which they could be indemnified and to use reasonable efforts to cause our directors to be covered by our D&O Liability Insurance policy. A director is not entitled to indemnification by us under such agreements if (i) the director did not act in good faith and in a manner he or she deemed to be reasonable and consistent with, and not opposed to, our best interests or (ii) with respect to any criminal action or proceeding, the director had reasonable cause to believe his or her conduct was unlawful.
To the best of our knowledge, currently there is no pending litigation or proceeding involving any of our directors or officers in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in such a claim for indemnification.
Risk Oversight
Enterprise Risk Management Policy
The Company has in place an Enterprise Risk Management Policy (the “ERM Policy”), the overall purpose and scope of which is the execution of risk management processes that provide for risk and exposure monitoring, the embedding or integration of risk management into all activities as an integral part of the Company’s business activities, and the development of comprehensive internal controls and assurance processes linked to key risks. As a result, the Company continuously implements risk management processes to facilitate the Company’s compliance with existing regulatory and industry standards, thereby protecting the value of the Evertec brand and reputation by applying a disciplined approach to risk management, governance and internal controls.
Board Oversight
Our Board is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees. Among other areas, the Board, including its committees, is directly involved in overseeing risks related to the Company’s overall strategy, including product, go-to-market and sales strategy, executive officer succession, business continuity, crisis preparedness, cybersecurity, and corporate reputational risks. In addition, the Company, under the supervision of the Audit Committee, has established procedures available to all employees for the anonymous and confidential submission of complaints or concerns relating to any matter to encourage employees to report questionable activities directly to the Company’s senior management and the Audit Committee.
Management Operating Committee
A Management Operating Committee (the “MOC”) that is comprised of members of senior management (including our CEO, Chief Operating Officer (“COO”), Chief Financial Officer (“CFO”), Chief Legal and Corporate Development Officer, Chief Administrative Officer (“CAO”), heads of our business segments and such other officers of the
Company as the CEO deems necessary or advisable for the proper conduct of the business of the Company) was created to assist the Audit Committee with risk oversight responsibilities. The MOC delegates risk responsibilities throughout the Company through the Company’s Risk Officer, risk owners and risk working groups in order to define the Company’s risk appetite through a combination of limits and tolerances, and ensure that processes are implemented to identify, measure and assess risks.
The ERM Policy requires regular reporting to ensure proper documentation of the Company’s ERM activities. The Risk Officer has been delegated the primary responsibility of reporting risk summaries to the Audit Committee and compiling an annual ERM report. Members of senior management also report information regarding the Company’s risk profile directly to the Board from time to time.
The Company believes that the work undertaken by the Board, the Board’s committees, the MOC and the Company’s senior management team enables the Board to effectively oversee the Company’s risk management processes.
Cybersecurity
The Board has delegated to the Information Technology Committee the responsibility of exercising oversight with respect to the Company’s cybersecurity risk management and controls. Our CAO and her staff regularly update the Information Technology Committee on the state of the Company’s cybersecurity program particularly with regards to key risk indicators, security incidents, security assessment results, and remediation and improvement plans. The Audit Committee also receives regular updates from our CAO and Director of Internal Audit on cybersecurity audits.
The Information Technology Committee and Board review the Company’s Information Security Policy and Information Security Program on an annual basis to ensure that our policies, controls, activities, and priorities promote the resilience of the Company’s infrastructure and maintain a risk profile at a level commensurate with its risk appetite and compliant with current applicable regulatory requirements and leading industry standards and best practices. Our President and CEO has appointed a Chief Information Security Officer (“CISO”), who is responsible for establishing and maintaining the enterprise vision, strategy and programs to ensure information assets as adequately protected. The CISO reports directly to our CAO.
Procedures for Communications with the Board
Stockholders and any interested party may communicate directly with the Board. All communications should be directed to our Secretary of the Board at the address below and should prominently indicate on the outside of the envelope that it is intended for the Board or for non-management directors. If no director is specified, the communication will be forwarded to the entire Board. Communications to the Board should be sent to: Evertec, Inc., Board of Directors, care of the Secretary of the Board, Road 176, Kilometer 1.3, San Juan, Puerto Rico 00926. This process is also described in our website at https://ir.evertecinc.com/BoardofDirectors.
Section 16(a) Report Compliance
Section 16(a) of the Exchange Act requires that our directors, executive officers, and holders who own more than 10% percent of any registered class of the Company’s equity securities file with the SEC initial reports of beneficial ownership and report changes in beneficial ownership of common stock and other equity securities. Such reports are filed on Form 3, Form 4 and Form 5 under the Exchange Act, as appropriate. Reporting persons holding the Company’s stock are required by the Exchange Act to furnish the Company with copies of all Section 16(a) reports they file.
To the Company’s knowledge, based solely on the Company’s review of copies of these reports, and written representations from such reporting persons that no other reports were required, the Company believes that all filings required to be made by reporting persons holding the Company’s stock were correctly and timely filed for the fiscal year ended December 31, 2021 in accordance with Section 16(a).
Management Succession Planning
The Company has in place a management succession plan applicable to our NEOs, the rest of our senior management team and other key positions within the Company, including certain manager positions. Pursuant to its charter, the Compensation Committee is responsible for developing and reviewing a succession plan for both our CEO and senior management and recommending the approval of such succession plan to the Board. This succession plan is revised annually and includes both a long-term succession plan and an emergency succession plan.
Evertec, Inc. 2022 Proxy Statement     16


Shareholder Engagement
Evertec engages with various stakeholder groups in a variety of ways. We review recent business trends, regulatory changes and stakeholder expectations. We also consider ESG rating agencies, corporate peers and Evertec’s leadership input. Our investor relations team, CEO and/or CFO regularly engage with investors, prospective investors and analysts through earnings calls, direct engagement and/or investor conferences. Other senior management members may also participate in such meetings to provide insight on the Company’s services, performance, strategy, and growth. Further, Board members may be included in areas of shareholder concerns regarding significant governance matters.
Code of Ethics
For Directors, Officers and Employees
Evertec’s ethical principles of integrity, honesty and good faith provide the foundation for our ethical business practices and standards. We have adopted a Code of Ethics that applies to all our directors, officers and employees, including our CEO and CFO. The purpose of this Code of Ethics is to promote honest and ethical conduct and compliance with the law, while serving as a guide on our vision, mission and values. Evertec is committed to the prevention of corruption and bribery, and to the upholding human rights as part of its Human Rights Policy, which is included within the Code of Ethics.
Each year our directors, officers and employees receive the Code of Ethics and agree to comply with its provisions, including compliance with our Anti-Corruption Policy and related procedures. Officers and Employees are also required to participate in annual trainings regarding anti-corruption and anti-bribery. Our Code of Ethics is published on our website at https://ir.evertecinc.com/codeofethics. We intend to include on our website any amendments to, or waivers from, a provision of the Code of Ethics that applies to our CEO, CFO, principal accounting officer, or controller that relates to any element of the “code of ethics,” as defined by the SEC. We granted no waivers to our Code of Ethics in fiscal year 2021.
For Vendors and Service Providers
We also have in place a Code of Ethics for Vendors and Service Providers which defines and reaffirms these high standards and helps our vendors and service providers fully understand their duty to comply with ethical principles and all laws, rules and regulations applicable to the engaged service. When service providers make a commitment to work with Evertec, they also commit to the terms of our Code of Ethics for Vendors and Service Providers and to maintaining high standards, ethical business practices and compliance requirements materially similar to those stated in our Code of Ethics for directors, officers and employees. Our Code of Ethics for Vendors and Service Providers is published on our website at https://ir.evertecinc.com/vendorcode.
Environmental, Social and Governance (ESG) Matters
ESG is woven into our culture and values. We believe it is our responsibility to deliver business success while at the same time doing what is best for our employees, customers, communities and the world around us. The Nominating and Corporate Governance Committee is responsible for monitoring, reviewing and making recommendations on ESG matters. Our Board, senior management and the ESG working group are committed to developing strong ESG practices that are essential for generating long-term value for all of our stakeholders.
We are focused on making continuous progress on our ESG priorities, making a difference and increasing transparency with all of our stakeholders. As such, some of our recent accomplishments under our ESG program include: (i) being named to the Bloomberg Gender Equality Index for four consecutive years, (ii) investing over $500,000 in our corporate responsibility program during 2021, and (iii) increasing our Board gender diversity to over 20%.
graphic28.jpg
17   Evertec, Inc. 2022 Proxy Statement    


We promote diversity and inclusion as part of our formula for innovation. We value diversity of ideas, thoughts and opinions. We embrace inclusion of our people, products and services, and integrating diversity in our strategies and business decisions. Over 99% of both our employees and managers are Hispanic.
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Our vision, mission and values are embedded in our corporate culture and in the way we manage our relationships with employees, clients, vendors and service providers. Thus, they are an integral part of our ethical business practices and standards. Below please find our Company’s core values.
graphic90.jpg
We Care
We care about our colleagues and our communities.
graphic91.jpg
Collaboration
Be inclusive, valuing diversity.
graphic92.jpg
Responsibility
Own my execution and act ethically.
graphic93.jpg
Innovation
Continuously improve what we do.
graphic94.jpg
Agility
Know and anticipate our customer needs.
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For additional information related to the Company’s ESG program, including, but not limited to, governance practices, environmental footprint and resource reduction efforts, employee development initiatives, community involvement details and data security, please refer to our ESG tear sheet available on our ESG website at https://www.evertecinc.com/en/our-purpose/. The ESG website is not incorporated by reference in to this Proxy Statement.
Evertec, Inc. 2022 Proxy Statement     18


Biographical Information of Our Executive Officers
Executive Officers
graphic51a.jpg
Morgan M. Schuessler, Jr.
Age: 51



Mr. Schuessler joined the Company in April 2015 as our President and CEO. Please refer to the “Information About Director Nominees” section under Proposal 1 for Mr. Schuessler’s biographical information.
graphic52a.jpg
Joaquín A. Castrillo
Age: 39


Mr. Castrillo has served as our Executive Vice President, CFO and Treasurer since October 2018. From August 2018 until such appointment, he served as Interim CFO and Treasurer. He has worked at the Company since 2012 serving in roles of increasing responsibility, including as Vice President and Finance Manager from 2015 to 2018, and as Vice President and Finance Director in 2018 until his appointment as Executive Vice President, CFO and Treasurer. Prior to joining the Company, Mr. Castrillo was an Audit Manager in the Banking and Capital Markets group of PwC. Mr. Castrillo holds a B.B.A. with a double concentration in Finance and Accounting from Villanova University. He is also a Certified Public Accountant and a member of the Villanova University Finance Department Advisory Committee.
graphic53a.jpg
Rodrigo Del Castillo
Age: 60


Mr. Del Castillo has served as our Executive Vice President since 2020 and as Chief Commercial Officer for Latin America since February 2021. In 2017 he was named Senior Vice President of LATAM Payment Services upon joining the Company as a result of the acquisition of the business formerly known as PayGroup where he previously served as Chief Executive Officer. Mr. Del Castillo has more than 30 years of experience in the development and commercialization of products, IT services and transactional financial solutions. He holds a Bachelor of Science degree in Industrial Engineering from the Universidad de Santiago in Chile and a Master of Business Management from the Universidad Adolfo Ibáñez, also in Chile.
graphic54a.jpg
Alexandra López-Soler
Age: 50


Ms. López-Soler was named Executive Vice President and Chief Marketing and Communications Officer in February 2022. She joined the Company in 2018 as our Senior Vice President of Marketing and Communications. Before joining Evertec in 2018, she served as Chief Marketing and Audience Officer at GFR Media. She also held various executive level positions at GFR Media, Oriental Bank and Doral Bank. Ms. López-Soler has over twenty years of experience in the marketing industry, with emphasis on digital media, financial technology, and banking. Ms. López-Soler earned a Bachelor of Arts in political science and Italian from Tufts University, and a master’s degree (MBA) from the University of Michigan Ross School of Business.
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Paola Pérez
Age: 38


Ms. Pérez has served as our Executive Vice President since February 2018 and CAO since March 2020. Prior to that she was our Senior Vice President of People and Culture from August 2017 until her appointment as Executive Vice President. She joined the Company in 2011 as Director of Internal Audit. Before joining Evertec, Ms. Pérez worked at Chartis as an External Reporting Manager for the Latin America Region, and PwC where she worked as a senior auditor. She obtained her Bachelor of Science in Accounting from Fairfield University, is a Certified Public Accountant and a board member of Multisensory Reading Centers of Puerto Rico, a non-profit organization.
19   Evertec, Inc. 2022 Proxy Statement    


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Luis A. Rodríguez
Age: 44


Mr. Rodríguez has served as our Executive Vice President since February 2017 and as Chief Legal and Corporate Development Officer since February 2021. He joined the Company in 2015 as Senior Vice President for Corporate Development, and was appointed General Counsel and Secretary of the Board in September 2016. Prior to joining the Company, Mr. Rodríguez served as Executive Director at J.P. Morgan in New York. Mr. Rodríguez possesses a bachelor’s degree from the Woodrow Wilson School of Public and International Affairs at Princeton University and holds a Juris Doctor from Stanford Law School.
graphic57a.jpg
Guillermo Rospigliosi
Age: 48


Mr. Rospigliosi has served as our Executive Vice President since 2016 and as Chief Product and Innovation Officer since February 2020. Before joining the Company in 2016, he served as Chief Risk Officer for Visa in Latin America and before that he was the Managing Director for Latin America at CyberSource, a Visa subsidiary. He graduated from the Universidad de Lima with a Bachelor of Science in Business Administration and holds an MBA from the University of Texas in Austin.
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Diego Viglianco
Age: 52


Mr. Viglianco has served as our Executive Vice President and COO since June 2021, and was a consultant to the Company from March 2021 until his appointment as COO. Before joining the Company, Mr. Viglianco served as the CEO of Interbanking, S.A., a digital financial ACH/real time payments company headquarters in Argentina, from July 2019 to February 2021. Prior to that, he was the CEO of the Processing Division of Prisma Medios de Pago S.A. in Argentina from March 2017 to June 2019. Previously, he held senior management positions with MasterCard in Argentina and Miami, USA, and Promoción y Operación S.A. de C.V. (PROSA) in Mexico. Mr. Viglianco holds an MBA in Economy and Business Administration from ESEADE University, Argentina, and a Bachelor of Science in Engineering from the University of Salvador, Argentina.
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Miguel Vizcarrondo
Age: 48


Mr. Vizcarrondo has served as our Executive Vice President since 2012, and as Chief Commercial Officer for Puerto Rico and the Caribbean since 2021. He manages all of the Company’s commercial segments in Puerto Rico and the Caribbean including, but not limited to, merchant acquiring, payment services and the ATH Network. Prior to joining the Company in 2010, Mr. Vizcarrondo worked in Banco Popular de Puerto Rico for 14 years in a variety of roles, lastly as Senior Vice President of the Merchant Acquiring Solutions group from 2006 until he joined the Company in 2010. Mr. Vizcarrondo serves as a member of the Banco Popular Foundation, and as director for the Puerto Rico American Football Alliance, a youth sports league. Mr. Vizcarrondo holds a Bachelor of Science in Management, with a concentration in Finance, from Tulane University.
All ages are as of the Record Date.

Evertec, Inc. 2022 Proxy Statement     20


PROPOSAL 2
Advisory Vote on Executive Compensation
Overview
In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2019 (the “Dodd-Frank Act”), stockholders are being asked to approve, on an advisory basis (Say-on-Pay vote), the compensation of the NEOs, as set forth and discussed in the “Compensation Discussion & Analysis” section of this Proxy Statement, which includes compensation tables and related narrative discussion and analysis.
For the reasons outlined elsewhere in this Proxy Statement, we believe that our executive compensation program is well designed, appropriately aligns executive pay with Company performance, and incentivizes desirable behavior. Specifically, our executive compensation program is designed to attract, motivate and retain talented executive officers and align their interests with the long-term interests of the Company’s stockholders. Our compensation program:
compensates executive officers fairly and competitively, which promotes management stability and supports the short- and long-term well-being of the Company
rewards performance that meets or exceeds established goals
develops incentives to achieve a high level of performance while discouraging excessive risk-taking in the business
For more details of our compensation program, please refer to the “Compensation Philosophy and Objectives” section under the “Compensation Discussion & Analysis” of this Proxy Statement.
The Board unanimously recommends that stockholders vote FOR the following resolution on an advisory basis:
“RESOLVED, that the stockholders approve, on an advisory basis, the compensation of the Company’s Named Executive Officers, as disclosed in this proxy statement, including the Compensation Discussion and Analysis, the accompanying compensation tables and the related narrative.
Because your vote is advisory, it will be non-binding on the Board and the Company. However, the Board values stockholder’s opinions and your vote will provide information to our Compensation Committee regarding investor sentiment about our executive compensation philosophy, policies and practices, which the Compensation Committee will be able to consider when determining future executive compensation arrangements.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
THAT YOU VOTE “FOR” THE APPROVAL OF OUR
EXECUTIVE COMPENSATION ON AN ADVISORY BASIS.






21   Evertec, Inc. 2022 Proxy Statement    


Compensation Discussion and Analysis
2021 Performance Highlights
We displayed strong commitments to our communities, clients, employees, and stockholders during 2021. Some of the financial highlights for the fiscal year ended December 31, 2021 include:
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All amounts are approximates. For more information on the Company’s financial performance in 2021, please refer to our Annual Report
on Form 10-K for the fiscal year ended on December 31, 2021.
In addition to GAAP measures, management uses non-GAAP measures to focus on the factors the Company believes are pertinent to the daily management of the Company’s operations as it is frequently used by securities analysts, investors and other interested parties to evaluate companies in this industry. We define “EBITDA” as earnings before interest, taxes, depreciation and amortization and “Adjusted EBITDA” as EBITDA further adjusted to exclude unusual items and other adjustments.
For purposes of this discussion, “Adjusted Earnings per common share” is a supplemental measure of the Company’s performance; it is not required by, or presented in accordance with, GAAP. It is not a measurement of the Company’s financial performance under GAAP, and should not be considered as an alternative to total revenue, net income or any other performance measure derived in accordance with GAAP, or as an alternative to cash flows from operating activities, as an indicator of cash flow or as a measure of the Company’s liquidity.
We define “Adjusted Net Income” as net income adjusted to exclude unusual items and other adjustments. We define “Adjusted Earnings per common share” as Adjusted Net Income divided by diluted shares outstanding. EBITDA, Adjusted EBITDA, and Adjusted Earnings per common share are not measurements of liquidity or financial performance under GAAP. For additional details, refer to our reconciliation of GAAP to non-GAAP in Appendix A to this Proxy Statement.
Return to Stockholders
The following graph shows a comparison of the cumulative total return for our common stock, the S&P 500 Index and the S&P Technology Index for the five years ended December 31, 2021. The graph assumes that $100 was invested on December 31, 2016 in our common stock, and in each index, and that all dividends were reinvested.
Evertec, Inc. 2022 Proxy Statement     22


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Historical stock price performance is not necessarily indicative of future stock price performance.
Outside Advisors
The Compensation Committee uses Frederic W. Cook & Co. (“F.W. Cook”) to assist it in its review of our entire executive and director compensation program. The Compensation Committee assessed the independence of F.W. Cook and whether its work raised any conflict of interest, taking into consideration the independence factors set forth in applicable SEC and NYSE rules, and determined that F.W. Cook was independent and its work raised no conflict of interest. Aside from its work for the Compensation Committee, F.W. Cook does no other work for the Company.
Executive Compensation Highlights
Our compensation program for our NEOs consists of the following core elements:
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23   Evertec, Inc. 2022 Proxy Statement    


The charts below set forth the target compensation mix for the CEO and the average target compensation mix for the rest of our NEOs during 2021:
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For purposes of these charts, “base salary” includes base salary and applicable statutory Christmas bonus, as such amounts are disclosed for each of our NEOs in this “Compensation Discussion and Analysis” section.
Named Executive Officers (NEOs)
The table below sets forth a list of our NEOs for 2021. All of our NEOs are employed by Evertec Group and also serve in similar functions for the Company.
NameTitle
Morgan M. Schuessler, Jr.President and Chief Executive Officer
Joaquín A. Castrillo Executive Vice President, Chief Financial Officer and Treasurer
Guillermo RospigliosiExecutive Vice President and Chief Product and Innovation Officer
Diego VigliancoExecutive Vice President and Chief Operating Officer
Miguel VizcarrondoExecutive Vice President and Chief Commercial Officer for Puerto Rico and the Caribbean
Compensation Philosophy and Objectives
The Compensation Committee is responsible for establishing, implementing and continually monitoring adherence with our general compensation philosophy and objectives. As part of its duties and responsibilities, the Compensation Committee determines our CEO’s compensation, approves the compensation of our other executive officers and directors, and administers our equity-based compensation plans, in which our NEOs may participate. The Compensation Committee is also charged with (i) overseeing the risk assessment of the compensation arrangements applicable to our executive officers and other employees and (ii) reviewing and considering the relationship between risk management policies and practices, and compensation.
The Compensation Committee meets as often as necessary, but at least once annually. While ultimate responsibility for compensation recommendations rests with the Compensation Committee, it has the authority to hire a
Evertec, Inc. 2022 Proxy Statement     24


compensation consultant to assist it in fulfilling its duties. As previously noted, the Compensation Committee has engaged F.W. Cook to advise it in the fulfillment of its duties.
The Compensation Committee’s intent is to ensure that the total compensation paid to our executive officers is fair, reasonable and competitive. In December 2021 the Compensation Committee decided to revise the Company’s compensation philosophy and modify it to target the 25th percentile to median (the previous compensation philosophy was to target the 25th percentile) of our approved compensation peer group in recognition of the size differentials that exist between Evertec and the compensation peer group companies, as well as the challenges in identifying good business matches within desired size parameters. Compensation for our NEOs has been designed to provide rewards commensurate with each NEO’s contribution.
The philosophy embedded in our compensation program is to: (i) support an environment that rewards performance against established goals; (ii) provide fair base compensation, benefits and incentive compensation in order to foster stability at the management level and support our short- and long-term success; (iii) align the interests of executives with the long-term interests of stockholders through equity-based awards; and (iv) develop incentives to achieve high levels of performance without encouraging excessive risk-taking.
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Our executive compensation strategy is designed to: (i) attract and retain highly qualified executives; (ii) provide executives with compensation that is competitive within the industry in which we operate; (iii) establish compensation packages that take into consideration the executive's role, qualifications, experience, responsibilities, leadership potential, creativity, individual goals and performance; and (iv) align executive compensation with the achievement of our business objectives.
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This Compensation Discussion and Analysis (“CD&A”) reflects a discussion of our compensation objectives and philosophy, as well as the elements of our total NEO compensation packages including, but not limited to, information regarding certain compensation changes implemented for 2021.
25   Evertec, Inc. 2022 Proxy Statement    


The Compensation Committee may conduct further review of the executive compensation philosophy and objectives from time to time and reserves the right to make changes to the executive compensation practices as it considers appropriate.
Say on Pay
The Board carefully considers the results of our stockholders’ advisory say-on-pay vote. Our stockholders continue to express support for the Company’s executive compensation program with the Company receiving approximately 99% advisory approval in 2021. In consideration of this continued support, the Board maintained the principal features and performance-based elements of the executive compensation program in 2021. At the Annual Meeting, the Company’s stockholders will again have the opportunity to approve Evertec’s executive compensation program through the advisory say-on-pay vote included as Proposal 2 in this Proxy Statement.

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Role of Executive Officers in Compensation Decisions
Our CEO defines and recommends to the Compensation Committee the corporate and individual objectives for each of our other NEOs annually. The Compensation Committee has the authority to modify these objectives as it deems necessary and approve the final incentive opportunity which will be communicated by the CEO to such NEOs.
Our CEO reviews the performance of each of our other NEOs annually and formulates recommendations based on these reviews, including recommendations with respect to salary adjustments, annual incentive award targets and actual payout amounts. These recommendations are presented to the Compensation Committee, which has the discretion to modify any recommended adjustments or awards to executives, including our NEOs.
The Compensation Committee has final approval over all compensation decisions for our NEOs and approves recommendations regarding cash and equity awards for all of our NEOs. Although the CEO is present to discuss recommendations pertaining to each of our other NEOs, our CEO is not permitted to attend those portions of meetings of the Compensation Committee during which the CEO’s performance and/or compensation is discussed, unless specifically invited by the Compensation Committee.
Competitive Compensation Practices
As part of the Company’s comprehensive review of its compensation programs and practices, the Compensation Committee, with the assistance of F.W. Cook, established an executive compensation peer group to assist in evaluating the competitiveness of NEO compensation in terms of both dollar opportunity and compensation structure and design. In narrowing its focus of comparable companies for consideration, the Compensation Committee considered:
the extent to which the peer companies compete with Evertec in one or more lines of business for executive talent and for investors;
statistical reliability in terms of the total number of companies in the peer set;
comparability of revenues, market capitalization, total assets and number of employees; and
“peer of peer” analysis.
F.W. Cook last conducted a review of our peer group of companies in December 2021. In February 2022 the Compensation Committee determined that Repay Holdings Corporation be included in the peer group, replacing Cardtronics. This is the current compensation peer group of companies that the Compensation Committee uses to make its NEO compensation decisions:
Peer Group
ACI WorldwideEuronet WorldwideJack Henry & AssociatesRepay Holdings Corporation
Bottomline TechnologiesEveri HoldingsMoneyGram InternationalWEX
Black KnightEVO PaymentsQ2 Holdings
Evertec, Inc. 2022 Proxy Statement     26


Evertec’s compensation philosophy is to target the 25th percentile to median of the above peer group in recognition of the size differentials that exist between Evertec and the peer companies, as well as the challenges in identifying good business matches within the desired size parameters. Given the Company’s location in Puerto Rico, the Compensation Committee must balance the challenges of attracting and retaining experienced local executive talent with talent from the mainland United States and elsewhere.
The Compensation Committee’s access to competitive benchmarking is a critical element to understanding the current environment for executive talent. Along with other factors, this information enables the Compensation Committee to make well-informed decisions on recruitment and retention of key executives. F.W. Cook last prepared a benchmark compensation study on behalf of the Compensation Committee for NEOs in February 2022 and for directors in July 2021.
Elements of Compensation
The Compensation Committee believes the compensation packages provided to our executives, including our NEOs, should include both cash and equity-based incentives that reward performance against established business goals and that discourage management from taking unnecessary and/or excessive risks that may harm the Company. Our compensation program for our NEOs consists of the following core elements:
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Base Salary
We provide our NEOs and other employees with a base salary to compensate them for services rendered during the year. This fixed element of our compensation program is determined for each executive based on position and scope of responsibility. Annual base salary for our NEOs is subject to review and approval by the Compensation Committee. In reviewing base salaries, the Compensation Committee may consider, among other factors:
changes in the executive’s individual responsibility;
analysis of the executive’s compensation, both internally (i.e., relative to other Company officers) and externally (i.e., relative to similarly situated executives at peer companies); and
the executive’s individual performance.
Having considered these factors, and to ensure that our total compensation packages are competitive with those provided by our peer companies and our competitors for top executive talent, and after consultation with F.W. Cook, the Compensation Committee approved the following base salaries for our NEOs for 2021, including base salary increases effective as of June 2021 for Messrs. Schuessler, Castrillo, Rospigliosi and Vizcarrondo to $762,200, $386,250, $370,800, and $370,800 respectively. Below please find base salaries for our NEOs:
Name
2021 Base Salary 
($)(1)
2020 Base Salary 
($)(2)
Percent Change
(%)
Morgan M. Schuessler, Jr.762,200740,0003%
Joaquín A. Castrillo386,250375,0003%
Guillermo Rospigliosi370,800360,0003%
Diego Viglianco330,000n/a
Miguel Vizcarrondo370,800360,0003%
(1)Base salaries as of December 31, 2021.
(2)Base salaries as of December 31, 2020.




27   Evertec, Inc. 2022 Proxy Statement    


Annual Cash Incentive
Our Compensation Committee, with F.W. Cook’s recommendations, places considerable weight on the achievement of certain quantitative factors as reflected in the corporate component of the cash incentive under the Company’s annual cash incentive program, thus strengthening our commitment to a pay-for-performance compensation philosophy.
The target annual cash incentive as a percentage of salary is a mix between corporate performance, business metric (as applicable) and individual performance elements.
For our CEO and CFO, the corporate and individual objective components were established at 90% and 10% of the overall cash incentive targets, respectively.
For NEOs in charge of business segments, a business metric was established at 60%, and the corporate and individual objective components were established at 20% and 20% of the overall incentive targets, respectively.
For NEOs with support functions (to which the business metric was not applicable), the corporate and individual objective components were established at 75% and 25% of the overall cash incentive targets, respectively.
Under the annual cash incentive program, the Compensation Committee establishes specific performance objectives for the Company, as well as threshold, target and maximum levels based on actual achievement. The corporate component of the potential cash incentive is triggered if the Company achieves at least 95% of each of the (i) revenue target (weighted at 40%) and (ii) Adjusted Net Income (weighted at 60%) target for the fiscal year, with our NEOs receiving 50% of the corporate component at the 95% performance level, and up to 150% of the corporate component at 110% of our target level corporate metrics, with linear interpolation between the 95% and 110% performance levels.
For 2021 the corporate performance metric was measured against the following goals:
MetricWeightThreshold (95%) (000's)Target (100%) (000's)Maximum (110%) (000's)
Revenues40%$516,782$543,981$598,379
Adjusted Net Income60%$153,793$161,887$178,076
The Company’s performance in those two metrics during 2021 was as follows:
MetricPerformance (000's)% Difference (Target)Payment ScoreWeighted Score
Revenues$590,0998.48%142.39%56.96%
Adjusted Net Income$199,80923.42%150.00%90.00%
CORPORATE PERFORMANCE METRIC PAYOUT SCORE:147%
Furthermore, our NEOs were eligible to earn a cash incentive of 0% up to 150% of the individual component based on each executive’s individual performance, which is assessed and given a performance rating. If the NEO’s individual performance rating is “Below Minimum Acceptable Performance,” such NEO will not receive any portion of the annual cash incentive, regardless of the corporate component or business metric results. Other ratings for NEOs will result in the individual performance component being modified by factors ranging from 50% for a rating of “Needs Development” up to 150% for a rating of “Exceptional Performance.”
The executive’s successful implementation and completion of audit observations, enterprise risk management action items and achievement of the financial budget are also considered as part of the actual cash incentive payout calculation. For 2021 all of our NEOs were deemed to have met their individual objective goals.
The actual incentive payout for each of our NEOs for 2021 was as follows:
Evertec, Inc. 2022 Proxy Statement     28


NEOsTarget Cash
 Incentive
Percentage
Corporate
Performance
Percentage(1)
Business
Metric
Percentage(1)
Individual
Performance
Percentage(1)
Target Cash
 Incentive
Actual Cash
Incentive
Payout(2)
Morgan M. Schuessler, Jr.125%90%—%10%$952,750$1,355,384
Joaquín A. Castrillo75%90%—%10%$289,688$412,110
Guillermo Rospigliosi
75%75%—%25%$278,100$376,038
Diego Viglianco75%75%—%25%$247,500$334,662
Miguel Vizcarrondo75%20%60%20%$278,100$375,871
(1)     Actual cash incentive payout breakdown is as follows:
NEOsCorporate ($)Business ($)Individual ($)
Morgan M. Schuessler, Jr.1,260,10995,275
Joaquín A. Castrillo383,14128,969
Guillermo Rospigliosi306,51369,525
Diego Viglianco272,78761,875
Miguel Vizcarrondo81,737238,51455,620
(2)     In the case of Mr. Viglianco, due to his significant contributions and added responsibilities upon joining the Company as COO in June 2021, the Board approved a cash incentive payout as if he had served as COO the full fiscal year, without a pro-rata payout of the incentive to reflect his actual time served as COO during 2021.
Long-Term Equity Incentives
In connection with our initial public offering, we adopted the Evertec, Inc. 2013 Equity Incentive Plan (the “2013 Plan”), under which stock options, restricted stock and other equity awards have been granted. The Compensation Committee has been delegated the responsibility to administer the 2013 Plan.
Our Compensation Committee believes that a long-term incentive design linked to strong pay-for-performance principles is appropriate to ensure executive ownership and linkage to the long-term interests of Evertec’s stockholders. As a result, since 2014 our executive officers have been awarded grants of RSUs under the 2013 Plan. RSU awards provide for the grant of both performance-based and time-based RSUs designed for the dual purpose of serving as an incentive vehicle to help ensure that key employees’ compensation is linked to the Company’s overall performance in future years and as a retention mechanism.
Following a comprehensive review of the Company’s long-term incentive plan, in 2016 the Compensation Committee established Adjusted EBITDA as the primary performance measure while maintaining focus on total stockholder return (“TSR”) through the use of a performance modifier. As part of this revamped process, RSUs earned based on the Adjusted EBITDA performance (“EBITDA RSUs”) are adjusted upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to companies in the Russell 2000 Index (for more information, see “Relative TSR Multiplier” in table under “Performance-Based RSU Award Granted in 2021” below). The Compensation Committee’s decision was influenced by the macroeconomic conditions then-present in Puerto Rico and a focus on placing more emphasis on operational performance that is within management’s control. The Compensation Committee has reviewed and discussed these metrics with F.W. Cook each year since its adoption and has determined that they continue to be appropriate for the Company under our compensation philosophy. For details on the reconciliation of our GAAP to non-GAAP results, please refer to the results provided in the Company’s Form 10-K for fiscal year ended December 31, 2021.
All unvested RSUs granted to NEOs have dividend equivalent rights, which entitle the RSU holders to the same value per share as our stockholders for dividends declared between the date of the grant and the settlement date of the RSUs. Dividend equivalents are subject to the same terms and conditions as the corresponding unvested RSUs and are accumulated and paid only upon the vesting and settlement of the underlying RSUs.
RSU Distribution Mix
For 2021 the Compensation Committee approved grants of time-based RSUs and performance-based RSUs to its CEO and other NEOs, with the following distribution mix:
29   Evertec, Inc. 2022 Proxy Statement    


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NameLong-Term Equity Incentive Total Award Value
($)
RSUs Granted
Time-Based
(#)(1)
Performance-Based
(#)(2)
Total
(#)
Morgan M. Schuessler, Jr.5,250,000 50,999 84,467 135,466 
Joaquín A. Castrillo1,424,000 15,809 21,148 36,957 
Guillermo Rospigliosi1,214,000 13,477 18,029 31,506 
Diego Viglianco606,039 5,861 7,841 13,702 
Miguel Vizcarrondo1,214,000 13,477 18,029 31,506 
(1)As of the grant date, March 2, 2021, the closing common stock price was $36.03, with the exception of Mr. Viglianco’s award which was granted on June 7, 2021 with a closing common stock price of $44.23.
(2)As of the grant date, the Monte Carlo simulation value was $40.40; provided, however, that Mr. Viglianco’s performance-based award was granted on June 7, 2021, with a closing common stock price of $44.23.

Time-Based RSU Award Granted in 2021
The time-based RSUs granted to NEOs vest in three substantially equal installments on March 2, 2022, 2023 and 2024, provided that the NEO remains continuously employed with the Company through the vesting date, except as otherwise set forth in the applicable award agreement. The actual number of time-based RSUs granted was determined by dividing the award dollar value by the price of our common stock on the close of business of the date of grant.
In addition to the time-based RSUs discussed in the table above, as part of Mr. Viglianco’s recruitment, he received an RSU grant valued at $250,000 (5,652 RSUs granted based on the closing common stock price of $44.23 as of the grant date), shall vest on the third anniversary of the grant date on June 7, 2021.
Performance-Based RSU Award Granted in 2021
The Adjusted EBITDA performance measure was calculated for the one-year period commencing on January 1, 2021 and ending on December 31, 2021 (the “2021 Adjusted EBITDA”), relative to the goals set by the Compensation Committee for this same period. The EBITDA RSUs are earned according to the table below, and are subject to a three-year service period before vesting measured from the date of the grant:
Performance Level*Evertec 1-Year Adj. EBITDA for 2021 (amounts in millions)($)Payout Percentage
Maximum279.7 or above200%
Target254.3100%
Threshold246.660%
Less Than Thresholdbelow 246.60%
*Performance between levels is linearly interpolated.
The Company’s 2021 Adjusted EBITDA was $294.8 million which, pursuant to the table above, yielded a payout of 200% of the target number of performance-based shares. The earned number of EBITDA RSUs shall be then modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period from the grant date. The following table summarizes the relationship
Evertec, Inc. 2022 Proxy Statement     30


between the Company’s actual TSR performance when compared with the TSR performance of the members of the Russell 2000 Index and the associated modifier for the performance achieved:
Performance Level*Company Percentile Rank vs. Russell 2000 IndexRelative TSR Multiplier
Maximum75th Percentile or Above1.25
Target50th Percentile1.00
Threshold35th Percentile or Below0.75
*Performance between levels is linearly interpolated.
The actual number of performance-based RSUs granted was determined by dividing the award dollar value by a Monte Carlo simulation value that factors future stock prices for the Company and companies in the Russell 2000 Index.
Performance-Based RSU Awards that Vested in 2021
In 2018 the Compensation Committee approved grants of performance-based awards to certain NEOs (the “2018 EBITDA RSU Awards”). Pursuant to the 2018 EBITDA RSU Awards, the participating NEOs were eligible to earn the awarded RSUs vesting on February 22, 2022, only to the extent that performance was achieved against certain pre-established goals. The 2018 EBITDA RSU Awards were set to be earned according to the table below, and were subject to a three-year service period before vesting measured from the date of the grant:
Performance Level(1)
Evertec 1-Year Adj. EBITDA for 2018 (amounts in millions)($)Payout Percentage
Maximum196.4 or above200%
Target178.5100%
Threshold173.160%
Less Than Thresholdbelow 173.10%
(1)     Performance between levels is linearly interpolated.
The Company’s Adjusted EBITDA for the one-year period that commenced on January 1, 2018 and ended on December 31, 2018 was $212.5 million; therefore, the performance-based maximum performance level was met with a payout percentage of 200%. The TSR of the 2018 EBITDA RSU Awards was 141.18%, which ranked in the 88th percentile of the Russell 2000 Index and, thus, vested with a TSR multiplier of 1.25.
2022 Awards
In February 2022 the Compensation Committee approved a grant of time-based RSUs to the NEOs, vesting in three substantially equal installments on February 25, 2023, 2024 and 2025, provided that the NEO remains continuously employed with the Company during such time period except as otherwise set forth in the applicable award agreement.
For the 2022 performance-based RSUs, the Compensation Committee continued to use an Adjusted EBITDA target with the TSR Modifier as the metrics for such awards. The Adjusted EBITDA performance metric for 2022 shall be calculated for the one-year period commencing on January 1, 2022 and ending on December 31, 2022, relative to the goals set by the Compensation Committee for this same period.
Similar to 2021, the EBITDA RSUs are earned according to performance level targets and are also subject to a three-year service period, measured from the date of the grant, before vesting. As in 2021, the earned number of EBITDA RSUs will then be modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period.
For 2022 the Compensation Committee approved grants of time-based RSUs and performance-based RSUs to its CEO and other NEOs, with the following distribution mixes:
31   Evertec, Inc. 2022 Proxy Statement    


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NameTotal Award Value
($)
RSUs Granted
Time-based
(#)(1)
Performance-based
(#)(2)
Total
(#)
Morgan M. Schuessler, Jr.5,750,000 48,540 79,369 127,909 
Joaquín A. Castrillo1,550,000 14,954 19,749 34,703 
Guillermo Rospigliosi1,300,000 12,542 16,564 29,106 
Diego Viglianco1,300,000 12,542 16,564 29,106 
Miguel Vizcarrondo1,300,000 12,542 16,564 29,106 
(1)As of the grant date, the closing common stock price was $41.46.
(2)As of the grant date, the Monte Carlo simulation value for all executives was $47.09.
Other Compensation
Christmas Bonus
In 2021 each of our NEOs received a Christmas bonus, except for Mr. Viglianco who, due to his employment start date (June 2021) was not eligible to receive it. As a general rule, Puerto Rico law requires companies to pay employees who worked more than 700 hours during a 12-month period, from October 1st of the prior year to September 30th of the year in which the Christmas bonus will be paid, an amount not less than $600 as a Christmas bonus, which must be paid on or before the 15th day of December of the applicable year. In 2021 our practice was to pay a Christmas bonus to employees in Puerto Rico in an amount equivalent to approximately 4.17% of the employee’s base salary for employees hired before October 29, 2012 and 3.00% of the employee’s base salary for employees hired after this date.
Benefits and Perquisites
Our NEOs participate in the same benefit programs as the rest of our general employee population. These benefits may include health insurance coverage, short- and long-term disability insurance, and life insurance, among others. In addition, in order to better enable us to attract, retain and motivate employees in key positions, we provide limited perquisites to our NEOs to assist them in carrying out their duties and increasing productivity. We believe these perquisites, which do not constitute a significant portion of our NEOs’ total compensation package, are reasonable, customary with local practice and consistent with our overall compensation philosophy. These perquisites may include: (i) the use of Company-owned automobiles, (ii) club membership fees for certain of our NEOs, (iii) entertainment tickets and tickets to Company-sponsored events for NEOs and a guest, (iv) corporate gifts under $200, (v) executive concierge services as part of the NEOs’ health insurance coverage, (vi) Company matched donations made by NEOs to approved organizations under the Evertec Executive Fund Matching Program, (vii) executive leadership training programs, and (x) executive assistance for personal matters which may represent no more than 15% of the NEO’s executive assistant’s time, if applicable, for which there is no incremental cost to the Company. Since October 2021, there has been an incremental cost for the Company of $2,400 annually, per NEO, in relation to the executive concierge services as part of the NEOs’ health insurance coverage.
Our NEOs, as well as all other Evertec Group employees, were eligible to participate in the Evertec Group Savings and Investment Plan in 2021. This plan is a tax-qualified retirement savings plan (similar to a 401(k) plan) to which all of our Puerto Rico employees were able to contribute up to $15,000 in 2021 on a pre-tax basis and up to 10% after-tax of their total annual compensation. We match 50% of the employee
Evertec, Inc. 2022 Proxy Statement     32


contributions up to 3% of base salary. All matching contributions to the Evertec Group Savings and Investment Plan vest 20% each year over a five-year period.
Tax Deductibility of Executive Compensation
All of our NEOs are residents of Puerto Rico. The Compensation Committee intends that all applicable compensation payable to NEOs be deductible for income tax purposes. The Puerto Rico Internal Revenue Code of 2011, as amended, does not provide a limitation for compensation; as a result, the compensation paid to Puerto Rico residents is deductible for Puerto Rico income tax purposes only.
Stock Ownership Guidelines
The Stock Ownership Guidelines for directors, NEOs and certain other key employees of the Company, as adopted by our Compensation Committee, were established to align the financial interest of the directors and certain officers of the Company with those of the Company’s stockholders. The guidelines provide for ownership levels to be based on the fair market value of the Company’s common stock. Furthermore, the Compensation Committee believes that the investment community values stock ownership by the Company’s directors and NEOs and that share ownership demonstrates a commitment to and belief in the long-term profitability of the Company. Our NEOs, other key officers and directors are generally subject to the following ownership guidelines:
Designated OwnerOwnership Level*
Non-Employee Independent Directors5 times annual cash retainer
Chief Executive Officer5 times annual base salary
Executive Vice Presidents3 times annual base salary
Senior Vice Presidents1 times annual base salary
*The designated owner has 5 years to achieve his or her applicable ownership level. If the designated owner becomes subject to a greater ownership amount due to promotion or an increase in base salary or cash retainer in the case of non-employee independent directors, the designated owner is expected to meet the new ownership level required within the later of the remaining term of the original 5-year period or 3 years from the effective date of such promotion or salary or cash retainer increase.
Anti-Pledging and Anti-Hedging Policies
Pursuant to our Insider Trading Policy and related procedures, none of our directors, executives or employees may engage in speculative transactions in Evertec securities and other transactions that may otherwise give the appearance of impropriety, including pledging Evertec securities as margin call or as collateral for a loan. Speculative transactions include engaging in any transaction in which they profit from short-term movements (i.e., the sale of a stock that an investor does not own or a sale which is consummated by the delivery of a stock borrowed by, or for the account of, the investor), either increases or decreases, in the price of Evertec securities. Furthermore, all directors, executives and employees are prohibited from purchasing financial instruments, including variable forward contracts, puts, calls, equity swaps, collars and exchange funds, designed to hedge or offset any decrease in market value of Evertec securities held by such director, executive or employee. Any exception only with respect to the prohibition of pledging Evertec securities as collateral for a loan (not including margin debt) must be pre-cleared by the Company prior to the execution of documents evidencing the proposed pledge, subject to the director, executive or employee clearly demonstrating the financial capacity to repay the loan without resort to the pledged securities.
Clawback Policy
We have in place a Clawback Policy that intends to encourage sound financial reporting and increase individual accountability. The policy is administered by the Compensation Committee and it applies to all short or long-term cash incentives and bonuses, stock options, equity or equity-based awards, whether performance-based or service based, including without limitation RSUs, and other incentive compensation.
All (i) officers (as defined by Section 16 of the Exchange Act), (ii) executive vice-presidents, and (iii) any other designated employee of the Company that the Compensation Committee designates are considered “covered officers” under the Clawback Policy (as defined therein). If a Triggering Event (as defined in the Clawback Policy) occurs with respect to a covered officer, the Compensation Committee may seek to require the forfeiture or repayment of the full or partial award, vesting or amount of any Incentive Compensation (as defined in the Clawback Policy), whether vested or unvested and including gains on equity. The clawback will apply where such award was granted, vesting occurred or amount was paid, as applicable, within the three years prior to the occurrence of the Triggering Event. The forfeiture or recoupment from the covered officer may come from, or take the form of, any of
33   Evertec, Inc. 2022 Proxy Statement    


the following, as determined by the Compensation Committee in its sole discretion: (i) prior Incentive Compensation payments, (ii) future Incentive Compensation payments, (iii) cancellation of outstanding equity awards, (iv) future equity awards, and/or (v) direct repayment. Triggering Events under the policy include:
material noncompliance with financial reporting requirements, resulting in the necessity to produce an accounting restatement, excluding such situations occurring as a result of a change in accounting principles;
violations of any of the Company’s material policies resulting in demonstrable material injury, damage, or loss to the Company; and
acts that constitute fraud resulting in demonstrable material injury, damage, or loss to the Company.
Compensation Risk Assessment
We believe our approach to establishing goals and objectives and setting targets with payouts at multiple levels of performance, combined with the evaluation of performance results, assists in mitigating excessive risk-taking that could harm the Company’s value or reward poor judgment by our executives. Several features of our programs reflect sound risk management practices.
Furthermore, F.W. Cook, our independent compensation consultant, is aware of the potential risks in compensation programs and assisted with the implementation of the following plan design features of the Company’s cash and equity incentive programs for our executives that reduce the likelihood of excessive risk-taking:
balanced mix of incentives:
ücash and equity
üannual and long-term
ütime-based and performance-based (revenue, earnings, and TSR) metrics
maximum payout levels for annual cash incentive for 2021 were capped at 150% of our executives’ base salary
maximum payout levels for performance-based RSUs granted in 2021 were capped at 250% of target
equity awards are subject to multi-year vesting
compliance and ethical behaviors are integral factors considered in all performance assessments
executive and senior officers are subject to the Company’s Stock Ownership Guidelines and Clawback Policy, which is a significant risk mitigator
We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.

















Evertec, Inc. 2022 Proxy Statement     34


Summary Compensation
The following table summarizes the total compensation of each of our NEOs for services rendered during 2021, 2020 and 2019, as applicable.
Name and Principal PositionYearSalary
($)
Bonus
($)(1)
Stock
Awards
($)(2)
Non-Equity
Incentive Plan
Compensation
($)
All Other
Compensation
($)(3)
Total
($)
Morgan M. Schuessler, Jr.
President and CEO
2021751,10022,8665,250,0001,355,384118,8297,498,179
2020712,92322,2003,600,000945,63837,4855,318,246
2019700,00021,0003,000,000798,09032,9534,552,043
Joaquín A. Castrillo
Executive Vice President, CFO and Treasurer
2021380,62516,0941,424,000412,11049,9792,282,808
2020341,15415,6251,000,000287,52527,6241,671,928
2019305,00013,542600,000277,90628,6321,225,080
Guillermo Rospigliosi
Executive Vice President and Chief Product and Innovation Officer
2021365,40011,1241,214,000376,03828,6641,995,226
2020339,69210,800750,000268,1444,5591,373,195
2019330,0009,900525,000276,1917,8811,148,972
Diego Viglianco*
Executive Vice President and COO
2021184,039856,039(4)334,662127,9821,502,722
Miguel Vizcarrondo
Executive Vice President and Chief Commercial Officer for Puerto Rico and the Caribbean
2021365,40015,4501,214,000376,03815,1971,986,085
2020339,69215,000750,000286,32513,7541,404,771
2019319,50013,750525,000278,40623,9671,160,623
*We have excluded compensation for Mr. Viglianco for 2020 and 2019, as he was first employed by the Company on 2021.
(1)Consists of the Christmas bonuses paid in 2019, 2020 and 2021. As previously discussed, pursuant to Puerto Rico law, Mr. Viglianco was not eligible to receive a Christmas bonus in 2021. For more information, please refer to the “Elements of CompensationOther Compensation” section of this CD&A.
(2)Aggregate grant date fair value computed in accordance with FASB ASC Topic 718. For a discussion of assumptions made in the valuation of awards, refer to Note 16 of the Audited Consolidated Financial Statements included in the Company’s Annual Report. The value of the awards for each NEO assuming the highest level of performance achieved was as follows, as of the grant date:
NameHighest Level of Performance Achieved per Year by Each NEO
Year 2021 ($)Year 2020 ($)Year 2019 ($)
Morgan M. Schuessler, Jr.10,368,750 7,110,000 5,925,000 
Joaquín A. Castrillo2,705,600 1,900,000 1,140,000 
Guillermo Rospigliosi2,306,600 1,425,000 997,500 
Diego Viglianco1,401,474 — — 
Miguel Vizcarrondo2,306,600 1,425,000 997,500 
(3)Amounts reported in this column reflect for each NEO (i) the sum of the incremental cost to the Company of all perquisites and other personal benefits and (ii) the matching contribution amounts made as part of the Evertec Group Savings and Investment Plan. All other compensation for 2021 is detailed below:
Name
Car
($)(a)
Club
Membership
($)
Matching Contributions in Savings and Investment Plan
($)
Other
Payments
($)(b)
Total
($)
Morgan M. Schuessler, Jr.20,962 9,259 4,350 84,258 118,829 
Joaquín A. Castrillo14,000 9,259 4,350 22,370 49,979 
Guillermo Rospigliosi— — 4,350 24,314 28,664 
Diego Viglianco— — 1,142 126,840 127,982 
Miguel Vizcarrondo— 4,800 4,350 6,047 15,197 
(a)Annual car-value straight-line depreciation as recognized in the Company’s financial statements.
(b)We determined the incremental cost to us for these benefits based on the actual costs or charges incurred. Includes (i) for all NEOs, items such as entertainment tickets and tickets to Company-sponsored events for NEOs and a guest, and corporate gifts; (ii) for Messrs. Schuessler, Castrillo and Rospigliosi, matching donations made by each NEO to approved organizations under the Evertec Executive Fund Matching Program, and executive leadership training program expenses in the amounts of $69,000, $18,000 and $18,000, respectively; and (iii) for Mr. Viglianco: (x) $81,250 paid under a professional services agreement executed between Mr. Viglianco and the Company in March 2021, prior to his appointment as Executive Vice President and COO; (y) a reimbursement of $30,000 for relocation expenses from Argentina to Puerto Rico (the “Relocation Expense”); and (z) $15,090 to cover expenses related to the process of obtaining his U.S. employment-based immigrant visa. To calculate Mr. Viglianco’s fees paid under his professional services agreement we considered the then average market fees applicable to the services provided; and to calculate the Relocation Expense, we calculated the cost of air travel from Argentina to Puerto Rico for Mr. Viglianco and his family, one month of house rent, and private auto rental expenses for use upon arrival in Puerto Rico.

(4)Includes a recruitment grant valued at $250,000 in connection with Mr. Viglianco’s appointment as Executive Vice President and COO.
35   Evertec, Inc. 2022 Proxy Statement    


Grants of Plan-Based Awards
The following table sets forth certain information for plan-based awards granted to each of our NEOs for the fiscal year ended December 31, 2021.
NameGrant TypeBoard Approval DateGrant
Date
Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards
($)
(1)
Estimated Future Payouts
Under Equity Incentive Plan
Awards
(#)
(3)
Grant date
fair value of
stock awards
($)
(dates in 2021)
Threshold(2)
TargetMaximumThresholdTargetMaximum
Morgan M. Schuessler, Jr.
Cash Incentive428,738 952,750 1,429,125 
Time-based RSUsFebruary 18March 250,9991,837,500 
Performance-based RSUs38,01084,467211,1673,412,500 
Joaquín A. Castrillo
Cash Incentive130,359 289,688 434,531 
Time-based RSUsFebruary 18March 215,809569,600 
Performance-based RSUs9,51721,14852,870854,400 
Guillermo Rospigliosi
Cash Incentive104,288 278,100 417,150 
Time-based RSUsFebruary 18March 213,477485,600 
Performance-based RSUs8,11318,02945,072728,400 
Diego Viglianco
Cash Incentive92,813 247,500 371,250 
Time-based RSUs (Recruitment)April 22June 75,652250,000 
Time-based RSUs5,861242,416 
Performance-based RSUs3,5287,84119,602363,623 
Miguel Vizcarrondo
Cash Incentive27,810 278,100 417,150 
Time-based RSUsFebruary 18March 213,477485,600 
Performance-based RSUs8,11318,02945,072728,400 
(1)Reflects cash incentive opportunities under the Company’s annual cash incentive plan. The cash incentive opportunities are based on a corporate component, individual component and a business metric, as applicable. The actual cash incentive payouts for 2021 are discussed in the “Elements of Compensation—Annual Cash Incentive” section of this CD&A.
(2)This column reflects the amount payable if (a) the threshold targets for the corporate component are met and (b) the NEO achieves the threshold individual performance rating required to receive the corporate component, as discussed in the “Elements of Compensation—Annual Cash Incentive” section of this CD&A.
(3)Reflects (a) for all NEOs, time-based RSUs granted under the 2021 awards, which vest in three equal installments on March 2, 2022, 2023 and 2024 (in each case subject to continued employment through the vesting date), and the performance-based RSUs granted under the 2021 awards which will vest on March 2, 2024; and (b) for Mr. Viglianco, time-based RSUs granted on June 7, 2021 for recruitment purposes in connection with his appointment as Executive Vice President and COO.
Evertec, Inc. 2022 Proxy Statement     36


Outstanding Equity Awards at Fiscal Year End
The table below sets forth the outstanding equity awards for our NEOs as of December 31, 2021. None of our NEOs had any outstanding options awards.
NameStock Awards
Number of
shares or
units of stock
that have not
vested 
(#)
(1)
Market value
of shares or
units of stock
that have
not vested 
($)(2)
Equity incentive
plan awards:
number of
unearned shares,
units or other
rights that have not
vested 
(#)
(3)
Equity incentive
plan awards:
market or payout
value of
unearned shares,
units or other rights that have not vested
($)(2)
Morgan M. Schuessler, Jr.90,304 4,513,394 238,932 11,941,821 
Joaquín A. Castrillo27,228 1,360,855 56,549 2,826,319 
Guillermo Rospigliosi22,381 1,118,602 46,933 2,345,711 
Diego Viglianco11,513 575,420 11,762 587,865 
Miguel Vizcarrondo22,381 1,118,602 46,933 2,345,711 
(1)Includes time-based RSUs still subject to a time-based service period, as follows:
NameTime-based RSUs
Grant Date:
February 22, 2019(a)
(#)
Grant Date:
February 27, 2020(b)
(#)
Grant Date:
March 2, 2021(c)
(#)
Grant Date:
June 7, 2021
(#)(d)
Total
(#)
Morgan M. Schuessler, Jr.11,925 27,380 50,999 — 90,304 
Joaquín A. Castrillo2,727 8,692 15,809 — 27,228 
Guillermo Rospigliosi2,385 6,519 13,477 — 22,381 
Diego Viglianco— — — 11,513 11,513 
Miguel Vizcarrondo2,385 6,519 13,477 — 22,381 
(a)As of December 31, 2021, this award had one pending vesting scheduled for February 22, 2022.
(b)As of December 31, 2021, this award was scheduled to vest in two substantially equal installments on February 27, 2022, and February 27, 2023, respectively.
(c)As of December 31, 2021, this award was scheduled to vest in three substantially equal installments on March 2, 2022, March 2, 2023, and March 2, 2024.
(d)Mr. Viglianco's time-based awards consists of (i) 5,861 RSUs scheduled to vest in substantially equal installments on March 2, 2022, March 2, 2023 and March 2, 2024, respectively, and (ii) 5,652 RSUs that vest on June 7, 2024.
(2)Based on the closing price of the common stock on December 31, 2021 of $49.98.
(3)Includes performance-based RSUs, for which the measurement of performance metric targets was still pending as of December 31, 2021, as follows:
NamePerformance-based RSUs
Grant Date:
February 22, 2019(d)
(#)
Grant Date:
February 27, 2020(e)
(#)
Grant Date:
March 2, 2021(f)
(#)
Total
(#)
Morgan M. Schuessler, Jr.55,008 57,223 126,701 238,932 
Joaquín A. Castrillo10,154 14,672 31,722 56,548 
Guillermo Rospigliosi8,885 11,004 27,044 46,933 
Diego Viglianco— — 11,762 11,762 
Miguel Vizcarrondo8,885 11,004 27,044 46,933 
(e)Represents performance-based RSUs vesting on February 22, 2022 for which the one-year Adjusted EBITDA performance metric has been met as modified by the relative TSR modifier at the Threshold Level (pending completion of the TSR performance period).
(f)Represents performance-based RSUs vesting on February 27, 2023 for which the one-year Adjusted EBITDA performance metric has been met as modified by the relative TSR modifier at the Threshold Level (pending completion of the TSR performance period).
(g)Represents performance-based RSUs vesting on March 2, 2024 for which the one-year Adjusted EBITDA performance metric has been met as modified by the relative TSR modifier at the Threshold Level (pending completion of the TSR performance period).

37   Evertec, Inc. 2022 Proxy Statement    


Stock Vested
Stock awards vested during fiscal year ended December 31, 2021 are as follows:
Name(1)
Stock Awards
Number of Shares Acquired on Vesting 
(#)
Value Realized on Vesting 
($)(2)
Morgan M. Schuessler, Jr.299,473 11,071,517 
Joaquín A. Castrillo8,716 322,231 
Guillermo Rospigliosi5,644 208,659 
Diego Viglianco— — 
Miguel Vizcarrondo47,380 1,751,639 
(1)None of our NEOs held or exercised stock options during 2021.
(2)Value represents the number of shares that vested during 2021 multiplied by the closing market value of our common stock on the applicable vesting dates.

Employment Agreements
CEO Employment Agreement as of December 31, 2021
As of December 31, 2021, the only NEO who had an employment agreement with the Company was Mr. Schuessler. Mr. Schuessler’s Employment Agreement, executed on November 8, 2018 (the “Employment Agreement”), among other things, extended his employment period, increased his base salary, and addressed matters related to acceleration of long-term incentive awards as described below, superseding any section in his RSU award agreements regarding the treatment of RSUs upon termination in the event of any inconsistency.
The term of the Employment Agreement automatically renews for successive one-year periods on each January 1 thereafter unless either party gives notice of non-renewal at least 180 calendar days in advance of the renewal date. Mr. Schuessler’s Employment Agreement also contains certain non-competition and non-solicitation covenants for the benefit of Evertec Group during Mr. Schuessler’s employment and for one-year period following the termination of his employment, certain covenants relating to the protection of Evertec Group’s confidential information and intellectual property, and a mutual non-disparagement covenant.
Mr. Schuessler’s compensation under his Employment Agreement includes: (i) an annual base salary of no less than $700,000, subject to annual review by the Board or committee thereof; (ii) eligibility for annual cash incentive awards of up to 100% of his base salary, pursuant to the terms and conditions set forth in the Company’s Annual Performance Incentive Guidelines; (iii) a Christmas bonus in an amount equal to 3% of his base salary; (iv) participation in employee benefit plans, policies and practices; (v) life insurance, short term disability insurance and long-term disability insurance benefits; (vi) car and car insurance benefits; (vii) reimbursement of up to $10,000 in club membership fees annually; and (viii) four weeks of paid vacation annually. For more details about the Employment Agreement, please refer to the Company’s current report on Form 8-K filed on November 9, 2018.
CEO Amended and Restated Employment Agreement
On February 24, 2022, Mr. Schuessler and the Company entered into an Amended and Restated Employment Agreement (the “A&R Employment Agreement”). Under the A&R Employment Agreement, Mr. Schuessler’s employment term was extended thru December 31, 2024, and shall automatically renew for successive one-year period on each January 1 thereafter unless either party gives notice of non-renewal at least 90 calendar days in advance of the renewal date. Mr. Schuessler’s annual base salary was increased to no less than $762,200, and he is now eligible to receive annual cash incentive awards of up to 125% of his base salary, pursuant to the terms and conditions set forth in the Company’s Annual Performance Incentive Guidelines. Pursuant to the A&R Employment Agreement, Mr. Schuessler will also receive reimbursement of up to $15,000 in club membership fees annually. Except as described herein, Mr. Schuessler’s other employment benefits remain the same under the A&R Employment Agreement. For more details about Mr. Schuessler’s A&R Employment Agreement, please refer to the Company’s current report on Form 8-K filed on February 24, 2022.
Other NEOs
None of our other NEOs currently have employment agreements.

Evertec, Inc. 2022 Proxy Statement     38


Severance Policy
Each of our NEOs, except for Mr. Schuessler, is a party to the Evertec Group, LLC Severance Policy (the “Severance Policy”) pursuant to which, among other things, each such NEO is entitled to certain severance benefits upon termination of employment. The Severance Policy restricts the participating NEOs from: (i) competing with Evertec Group, its successors, assigns, subsidiaries or affiliates within a 10-mile perimeter of where they are engaged in or have conducted business in Puerto Rico or any other country with respect to which the Company has conducted business during the twelve consecutive month period ending on the termination of employment; (ii) for twelve months following termination soliciting employees, customers or other business relations of Evertec Group, its successors, assigns, subsidiaries or affiliates; (iii) disparaging Evertec Group, its successors, assigns, subsidiaries or affiliates, at any time following termination; and (iv) disclosing confidential information at any time during his employment or after termination.

graphic70.jpg

The Severance Policy defines:
Cause”—as the executive’s (i) commission of a felony or a crime of moral turpitude; (ii) engaging in conduct that constitutes fraud, bribery or embezzlement; (iii) engaging in conduct that constitutes gross negligence or willful misconduct that results or could reasonably be expected to result in harm to Evertec Group’s business or reputation; (iv) breach of any material terms of any agreement between Evertec Group and Executive which results or could reasonably be expected to result in harm to Evertec Group’s business or reputation; (v) continued willful failure to substantially perform his or her reasonable and proper duties; (vi) failure to live in the location approved by the Compensation Committee as the executive’s primary residency, provided that the Compensation Committee may not unilaterally change the primary residence location after the initial residence determination; or (vii) violation of Evertec Group’s “Code of Ethics” or other written Evertec Group’s policy which is materially injurious to Evertec Group.
Good Reason”—as the occurrence of any one or more of the following without the executive’s express written consent: (i) a material reduction in executive’s base salary; provided that any such material reduction shall not constitute Good Reason if the material reduction is part of a collective reduction applied consistently by Evertec Group to all executives and that does not reduce such executive’s base salary by more than 10%; (ii) a material adverse change to, or a material reduction of, executive’s duties and responsibilities to Evertec Group; or (iii) any other action or inaction by Evertec Group (or any successor) that constitutes a material breach by Evertec Group of the terms and conditions of the Severance Policy. The affected NEO must provide Evertec Group written notice of the occurrence of any of these “Good Reason” events within 30 days of his or her knowledge of the event, and 30 days to cure the event.
The Severance Policy definitions of “Cause” and “Good Reason” will be used in the “Potential Payments Upon Termination of Employment,” “Potential Payments Upon Change in Control,” and “Payments Upon Termination or a
39   Evertec, Inc. 2022 Proxy Statement    


Change in Control” sections below, as applicable to each of our NEOs, except for Mr. Schuessler who, as previously mentioned, is not a party to the Severance Policy.
All severance benefits under the Severance Policy are subject to the applicable NEO executing and not revoking a release of claims agreement. For more details of the Severance Policy, please refer to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021.
Potential Payments upon Termination of Employment
For our President and CEO
The potential severance payments upon termination of employment for Mr. Schuessler are established in his Employment Agreement. If Evertec does not renew the term of his Employment Agreement and Mr. Schuessler remains employed by the Company through the last day of the employment period that expires, Mr. Schuessler shall be entitled to a lump sum payment equal to the greater of one time his base salary and the amounts otherwise due to him under applicable law. If the Employment Agreement is terminated by Evertec without “cause” or by Mr. Schuessler for “good reason” (each as defined in the Employment Agreement), he shall be entitled to (i) the unpaid cash incentive for any fiscal year ended prior to the year in which the date of termination occurs, provided Mr. Schuessler was employed on the last day of such fiscal year, and (ii) in cash, severance in an amount equal to twice the sum of Mr. Schuessler’s annual base salary plus his target cash incentive for the year in which he is terminated. The severance payments described herein shall be collectively known as the “CEO Severance Payment”.
Mr. Schuessler’s Employment Agreement also provides that if there is a termination due to Evertec Group’s non-renewal of the term of the Employment Agreement, or by Evertec without “cause” (as defined below) or by Mr. Schuessler for “good reason” (as defined below), and the date of termination occurs prior to a Change in Control (as the term is defined below) or more than two years after a Change in Control, then:
(i) any then-unvested time-based long-term incentive award(s) shall be prorated as of the date of termination (unless the applicable award agreement provides for full vesting as of the date of termination in which case the award agreement provision shall apply) and such prorated award(s) shall become fully vested as of the date of termination (and the remaining non-prorated portion of the unvested time-based long-term incentive award(s) shall be forfeited as of the date of termination); and
(ii) any then-unvested performance-based long-term incentive award(s) shall be prorated as of the date of termination and such prorated portion of the award(s) shall remain outstanding and eligible to vest based on the actual level of performance achieved for the applicable performance period (and the remaining non-prorated portion of the unvested performance-based long-term incentive award(s) shall be forfeited as of the date of termination).
Mr. Schuessler would be required to sign a separation agreement and general release of claims against Evertec Group and its affiliates as a condition to his entitlement to receive these benefits.
Mr. Schuessler’s Employment Agreement defines:
Cause”—as the executive’s (i) commission of a felony or a crime of moral turpitude; (ii) engaging in conduct that constitutes fraud, bribery or embezzlement; (iii) engaging in conduct that constitutes gross negligence or willful misconduct that results or could reasonably be expected to result in material harm to the Company’s business or reputation; (iv) breach of any material terms of the executive’s employment, or Employment Agreement, which results or could reasonably be expected to result in material harm to the Company’s business or reputation; (v) continued willful failure to substantially perform reasonable and proper duties as President and CEO; (vi) failure to live and work in Puerto Rico except as specifically permitted under the Employment Agreement; or (vii) violation of the Company’s Code of Ethics or other written Company policy which is materially injurious to the Company. The Employment Agreement requires prior written notice by the Board stating the basis for such termination and provides Mr. Schuessler with a period of 30 calendar days to cure the event, to the extent curable.
Good Reason”—as (i) any material failure of the Company to fulfill its obligations under his Employment Agreement; (ii) executive no longer reports directly and exclusively to the board of directors of a publicly traded company, where the common stock of such company is registered for sale pursuant to the Exchange Act; and where all of the officers and employees of such company report directly or indirectly to the executive; or (iii) the failure of any successor (whether by sale, reorganization, consolidation, merger or other corporate transaction which constitutes a Change in Control to assume his Employment Agreement, whether in writing or by operation of law. Mr. Schuessler must provide Evertec Group written notice of the occurrence of any of these “good
Evertec, Inc. 2022 Proxy Statement     40


reason” events within 30 days of his knowledge of the event and provide Evertec Group with 30 days to cure the event.
Pursuant to Mr. Schuessler’s A&R Employment Agreement, which became effective on February 24, 2022, the potential severance payments upon termination of employment were amended and restated. For more information on the potential severance payment provisions under the A&R Employment Agreement, please refer to the Company’s current report on Form 8-K filed on February 24, 2022.
For our Other NEOs
Regarding our other NEOs employed by the Company as of December 31, 2021 their potential payments upon termination of employment are established in the Severance Policy. The Severance Policy establishes that in the event a covered NEO’s employment with the Company is terminated by us without Cause or by the NEO for Good Reason other than within twenty-four months immediately following a Change in Control, that the NEO will be eligible for:
graphic78.jpg
a lump sum severance payment equal to the NEO’s then-current annual base salary;
graphic78.jpg
a pro rata annual bonus calculated based on actual performance for the year in which the employment termination occurs;
graphic78.jpg
any earned but unpaid annual bonus relating to any fiscal year ending prior to the date on which the employment termination occurs; and
graphic78.jpg
subject to such NEO’s timely election of COBRA coverage and continued copayment of applicable premiums, continued payment by Evertec Group of health insurance coverage for such coverage immediately prior to termination.
Since 2019 the RSU award agreements for our NEOs establish that, subject to the execution of a separation agreement and general release of all claims against the Company and its affiliates, upon termination of employment without Cause or by them for Good Reason (as defined in the Severance Policy):
unvested RSUs that are time-based shall vest on a pro-rata basis as of the termination date and the termination date shall be deemed to be the vesting date under the RSU agreement; and
unvested RSUs that are performance-based shall vest and be settled following the end of the performance period based on actual performance determined at the end of the performance period on a pro-rata basis.
The above-mentioned provisions for RSU award agreements since 2019 are not applicable to Mr. Schuessler; the treatment of incentive awards for Mr. Schuessler upon termination are governed by his Employment Agreement.
Potential Payments upon Change in Control
For our President and CEO
Pursuant to both the Employment Agreement and the Severance Policy, the term “Change in Control” shall have the meaning set forth in the 2013 Plan. If Mr. Schuessler is terminated due to Evertec Group’s non-renewal of the term of the Employment Agreement, or by Evertec Group without Cause or by Mr. Schuessler for Good Reason, and the date of termination occurs within two years following a Change in Control, then Mr. Schuessler would be entitled the applicable CEO Severance Payment and the following:
(i) any then unvested time-based long-term incentive award(s) shall become fully vested as of the date of termination; and
(ii) any then unvested performance-based long-term incentive award(s) shall become fully vested as of the date of termination (a) based on actual level of performance achieved as of the Change in Control (to the extent the performance period with respect to the relevant goal was completed as of the Change in Control date) and (b) at the target level of performance (to the extent the performance period with respect to the relevant goal was not complete as of the Change in Control date).
Mr. Schuessler would be required to sign and not revoke a separation agreement and general release of claims against Evertec Group and its affiliates as a condition to his entitlement to receive these payments. Pursuant to Mr. Schuessler’s A&R Employment Agreement, which became effective on February 24, 2022, the potential payments upon change in control were amended and restated. For more information on the potential severance payment
41   Evertec, Inc. 2022 Proxy Statement    


provisions under the A&R Employment Agreement, please refer to the Company’s report on Form 8-K filed on February 24, 2022.
For our Other NEOs
The Severance Policy establishes that in the event a covered NEO’s employment with the Company is terminated by us without Cause or by the NEO for Good Reason within twenty-four months immediately following a Change in Control a NEO will be eligible to receive: (i) a lump sum severance payment in an aggregate amount equal to two times the sum of the NEO’s then-current annual base salary (or annual base salary in effect immediately prior to the “change in control,” if higher) and then-current annual target bonus opportunity (or annual target bonus opportunity in effect for the year immediately prior to the year in which the employment termination occurs, if higher), (ii) a pro rata annual bonus calculated at target for the year in which the employment termination occurs, (iii) any earned but unpaid annual bonus relating to the fiscal year immediately preceding the year in which the employment termination occurs, and (iv) subject to such NEO’s timely election of COBRA coverage and continued copayment of applicable premiums, continued payment by Evertec Group of health insurance coverage for eighteen months following termination to the same extent Evertec Group paid for such coverage immediately prior to termination.
graphic78.jpg
a lump sum severance payment in an aggregate amount equal to two times the sum of the NEO’s then-current annual base salary (or annual base salary in effect immediately prior to the “change in control,” if higher) and then-current annual target bonus opportunity (or annual target bonus opportunity in effect for the year immediately prior to the year in which the employment termination occurs, if higher);
graphic78.jpg
a pro rata annual bonus calculated at target for the year in which the employment termination occurs;
graphic78.jpg
any earned but unpaid annual bonus relating to the fiscal year immediately preceding the year in which the employment termination occurs; and
graphic78.jpg
subject to such NEO’s timely election of COBRA coverage and continued copayment of applicable premiums, continued payment by Evertec Group of health insurance coverage for eighteen months following termination to the same extent Evertec Group paid for such coverage immediately prior to termination.

In the event that the NEO’s employment is terminated pursuant to a Qualifying Termination (as defined below) within twenty-four months following a Change in Control, the RSU agreements since 2019 indicate that:
unvested RSUs that are time-based shall become fully vested and the termination date shall be deemed to be the vesting date under the RSU agreement; and
unvested RSUs that are performance-based shall become fully vested upon the Qualifying Termination (as the term is defined below) (x) based on the actual level of performance achieved as of the change in control (to the extent the performance period with respect to the relevant goal was completed as of the change in control date) and (y) at the target level of performance (to the extent the performance period with respect to the relevant goal was not complete as of the Change in Control date) and the termination date shall be deemed to be the vesting date under the RSU agreements. The RSU agreements provide that the Company, in its sole discretion, will determine when a component of an unearned performance award is valued based on actual performance and when a separate component is valued based on target performance.
Per the Severance Policy, a “Qualifying Termination” means a termination of employment under the following circumstances: (i) an involuntary termination of the executive’s employment by the Company for reasons other than cause, death, or disability pursuant to a notice of termination delivered to the executive by the Company, or (ii) a voluntary termination by the executive for Good Reason pursuant to a notice of termination delivered to the Board or the Company, as applicable, by the executive.






Evertec, Inc. 2022 Proxy Statement     42


Payments Upon Termination or a Change in Control
The following table sets forth the potential post-employment payments described above for each NEO as of December 31, 2021. The potential payments to our NEOs are hypothetical situations only and assume that termination of employment and/or a change in control occurred on December 31, 2021.
Name Triggering Event
Severance
Payment 
($)(1)
Accelerated Vesting of RSUs
($)(2)(3)
Performance-Based RSUs Capable of Vesting
($)(2)(4)
Payment of Health Insurance
($)(5)
Total 
($)
Morgan M. Schuessler, Jr.
Resignation with “Good Reason” / Termination without “Cause”3,429,900 2,107,212 6,103,376 — 11,640,488 
Change in Control and “Good Reason” / Termination without “Cause”3,429,900 20,435,800 — — 23,865,700 
Joaquín A. Castrillo
Resignation with “Good Reason” / Termination without “Cause”798,360 613,688 1,367,891 23,220 2,803,159 
Change in Control and “Good Reason” / Termination without “Cause”1,641,564 5,129,289 — 23,220 6,794,073 
Guillermo Rospigliosi
Resignation with “Good Reason” / Termination without “Cause”746,838 498,798 1,130,959 23,220 2,399,815 
Change in Control and “Good Reason” / Termination without “Cause”1,575,900 4,246,216 — 23,220 5,845,336 
Diego Viglianco
Resignation with “Good Reason” / Termination without “Cause”664,662 114,773 94,817 23,220 897,472 
Change in Control and “Good Reason” / Termination without “Cause”1,402,500 1,483,456 — 23,220 2,909,176 
Miguel Vizcarrondo
Resignation with “Good Reason” / Termination without “Cause”746,838 498,798 1,130,959 23,220 2,399,815 
Change in control and “Good Reason” / Termination without “Cause”1,575,900 4,246,216 — 23,220 5,845,336 
(1)Severance payment amounts for Mr. Schuessler are calculated pursuant to his Employment Agreement. Severance payment amounts for the other NEOs are calculated pursuant to the Severance Policy.
(2)Based on the closing price of the common stock on December 31, 2021 of $49.98.
(3)Time-based RSUs and performance-based RSUs with accelerated vesting upon Change in Control.
(4)Performance-based RSUs capable of vesting at the end of the performance period, calculated using the relative TSR modifier at the Threshold Level.
(5)Pursuant to the Severance Policy, participating NEOs are entitled to, subject to timely election of COBRA coverage and continued co-payment of applicable premiums, continued payment of health insurance coverage for 18 months following termination to the same extent the Company paid for such coverage immediately prior to termination. Mr. Schuessler is our only NEO who is not a party to the Severance Policy.

Compensation Committee Interlocks and Insider Participation
Other than Mr. Schuessler, who currently serves as our President and CEO, none of our directors acted as officers or employees of the Company during 2021. Furthermore, none of our directors had any relationships that required disclosure by us under SEC rules related to certain relationships and related party transactions.
During 2021 none of our executive officers served as a member of the compensation committee of another entity, any of whose executive officers served on our Compensation Committee or Board, and none of our executive officers served as a director of another entity, any of whose executive officers served on our Compensation Committee.
Pension Benefits and Non-Qualified Deferred Compensation
We do not provide defined benefit pension benefits or non-qualified deferred compensation to our NEOs.
43   Evertec, Inc. 2022 Proxy Statement    


Compensation Committee Report
Our Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K. Based on such review and discussions, the Compensation Committee recommended to the Board that this CD&A be included in this Proxy Statement.
THE COMPENSATION COMMITTEE

Frank G. D’Angelo, Chairman
Kelly Barrett
Aldo J. Polak
Brian J. Smith
 
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CEO Pay Ratio
Overview
The SEC requires that U.S. publicly-traded companies disclose the ratio of their chief executive officer’s compensation to that of their median employee. The table below sets forth the following:
(i) the 2021 total annual compensation of Mr. Schuessler, as shown in the Summary Compensation Table (the “2021 CEO Compensation”),
(ii) the total annual compensation of our median employee in 2021 (the “2021 Median Employee Compensation”), and
(iii) the ratio comparing the 2021 CEO Compensation to the 2021 Median Employee Compensation (the “CEO Pay Ratio”):
CEO Pay Ratio
2021 CEO Compensation$7,498,179 
2021 Median Employee Compensation$29,179 
CEO Pay Ratio257:1
The 2021 CEO Compensation and the 2021 Median Employee Compensation were determined using the same methodology that we used to determine our NEO’s annual total compensation for the Summary Compensation Table. To identify the median employee as of December 31, 2021, we used a consistently applied compensation measure which considered: base salary, applicable statutory bonuses, stock awards, annual cash incentive, and other compensation elements, such as the Company matching employee contributions toward the savings and retirement plans.
Our Compensation practices and programs ensure compensation programs are fair and equitable and are aligned with our business objectives. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, exclusions and assumptions that reflect their compensation practices. As such, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, even those in a related industry or of a similar size and scope. Other companies may have different employment practices, regional demographics or may utilize different methodologies and assumptions in calculating their pay ratios.


45   Evertec, Inc. 2022 Proxy Statement    


PROPOSAL 3
Ratification of the Appointment of Deloitte & Touche LLP as the Company’s Independent Registered Public Accounting Firm
Overview
The Audit Committee intends to appoint Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.
Neither the Charter nor our Bylaws require that our stockholders ratify the appointment of Deloitte as the Company’s independent auditors. However, the Board is submitting the selection of Deloitte to the Company’s stockholders for ratification as a matter of good corporate governance and practice. Even if the appointment is ratified, the Audit Committee, in its discretion, may change the appointment at any time during the year if they determine that such change would be in the best interests of the Company and its stockholders.
The audit reports of Deloitte on the Company’s consolidated financial statements for the fiscal year ended December 31, 2021 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
Deloitte audited the consolidated financial statements as of and for the year ended December 31, 2021, included in the Company’s Annual Report on Form 10-K and, as part of the audit, has issued a report, included as part of Item 8 therein, on the effectiveness of our internal control over financial reporting as of December 31, 2021.
It is expected that representatives of Deloitte will attend our Annual Meeting, during which they will have the opportunity to make a statement, if they so desire, and be available to respond to any appropriate questions brought to their attention by stockholders.
Principal Accounting Fees and Services
The following table presents the aggregated fees billed for professional services provided by Deloitte, as the Company’s independent registered public accounting firm, for the fiscal year ending 2021 and 2020, as indicated below.
 
Year ended December 31st of
20212020
Audit Fees$2,193,304 $2,033,362 
Audit-Related Fees$1,817,297 $1,649,596 
All Other Fees$— $— 
 Total$4,010,601 $3,682,958 
Audit Fees
This category includes fees and expenses related to the audit of our annual financial statements and the effectiveness of our internal controls over financial reporting. This category also includes the review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent auditors in connection with regulatory filings or engagements, consultations provided on audit and accounting matters that arose during, or as a result of, the audits or the reviews of interim financial statements, reviews of offering documents and registration statements for debt and issuance of related comfort letters, reviews of acquisition and integration accounting in connection with reviews of business combinations, review of required regulatory filings of financial statements of businesses acquired, additional audit work necessary for acquired businesses, and the preparation of any written communications on internal control matters.
Audit-Related Fees
This category consists of assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”
All Other Fees
This category consists of fees for services other than fees for the services listed in the other categories.
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Pre-Approval Policies
Pursuant to the rules and regulations of the SEC, before the Company’s independent public accountant is engaged to render audit or non-audit services, the engagement must be approved by the Company’s Audit Committee or entered into pursuant to the committee’s pre-approval policies and procedures. The policy authorizing pre-approval to certain specific audit and audit-related services and specifying the procedures for pre-approving other services is set forth in the Amended and Restated Charter of the Audit Committee.

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”
THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP
AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL YEAR 2022.


























47   Evertec, Inc. 2022 Proxy Statement    



Audit Committee Report
In the performance of its oversight function, the Audit Committee has considered and discussed our audited consolidated financial statements for the fiscal year ended December 31, 2021—including critical accounting policies, reasonableness of significant estimates and judgment and financial statements disclosures—with management and Deloitte, our independent registered public accounting firm for the 2021 fiscal year.

The Audit Committee has also discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). In addition, the Audit Committee has received the written disclosures and the letter from Deloitte required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with Deloitte its independence. The Audit Committee has also considered whether the provision of non-audit services by the independent registered public accounting firm to us is compatible with maintaining the auditors’ independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its Management.

The members of the Audit Committee are not engaged professionally in the practice of auditing or accounting and are not employees of the Company. The Company’s management is responsible for its accounting, financial management and internal controls. As such, it is not the duty or responsibility of the Audit Committee or its members to conduct auditing or accounting reviews or establish procedures to set auditor independence standards.

Based on the Audit Committee’s consideration of the audited consolidated financial statements and the discussions referred to above with management and the independent registered public accounting firm, and subject to the limitations of the role and responsibilities of the Audit Committee set forth in the charter and those discussed above, the Audit Committee recommended to the Board that our audited consolidated financial statements be included in our Annual Report on Form 10-K for filing with the SEC.
 
THE AUDIT COMMITTEE

Alan H. Schumacher, Chairman
Olga Botero
Jorge A. Junquera
Iván Pagán


The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not to be incorporated by reference in any filing of Evertec under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

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Certain Relationships and Related Party Transactions
Policies for Approval of Related Party Transactions
We have a written policy relating to the approval of transactions involving related persons (the “Related Party Transactions”), pursuant to which our Audit Committee will review and, subject to certain exceptions, approve or recommend to our Board for approval, all Related Party Transactions, which include any transactions that we would be required to disclose pursuant to SEC rules.
As set forth in our Related Transactions Policy and the Audit Committee Charter, in the course of its review and approval or ratification of a Related Party Transaction, our Audit Committee will:
consider the determination of the Company’s Legal and Compliance Division as to whether the Related Party Transaction in a pre-approved Related Party Transaction and complies with applicable legal requirements;
consider whether the Related Party Transaction would impair the independence of any director;
satisfy itself that it has been fully informed as to the material facts of (i) the relationship and interest the related person has in the transaction and (ii) the proposed Related Party Transaction; and
ultimately make its determination taking into consideration factors including whether the Related Party Transaction (i) was made in accordance with applicable rules and regulations, (ii) complies with the restrictions set forth in applicable contractual relationships, such as our debt agreements and the Stockholder Agreement, (iii) is on terms and conditions no less favorable to us than may reasonably be expected in arm’s-length transactions with unrelated parties, and (iv) is in, or not inconsistent with, the best interests of the Company and its stockholders.
Related Party Transactions
Other than compensation arrangements for our directors and NEOs described elsewhere in this Proxy Statement, below in this section you will find Related Party Transactions during our last fiscal year, to which we were a party or will be a party, in which:
the amounts involved exceeded or will exceed $120,000, and
any of our directors, executive officers or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons or entities, had or will have a direct or indirect material interest.
The agreements described below were entered into in connection with the Agreement and Plan of Merger, as amended (the “Merger Agreement”), dated as of September 30, 2010, pursuant to which Evertec Group became a wholly-owned subsidiary of Evertec Intermediate Holdings, LLC (formerly Carib Holdings, LLC and Carib Holdings, Inc., hereinafter “Holdings”) and Apollo Management, LLP (“Apollo”) became the owner of approximately 51% of the outstanding voting capital stock of Holdings, with Popular retaining a 49% ownership interest (the “Merger”). Each of the agreements described below were entered into at the closing of the Merger and were the product of extensive arm’s-length negotiations between Apollo and Popular (two unrelated third parties) prior to the consummation of the Merger in which Apollo became the 51%-controlling stockholder of Evertec. Each of these agreements, including the Master Services Agreement, is comparable to those that the Company could have obtained in a transaction with an unrelated third party and is on terms that are no more or less favorable in the aggregate to the Company than terms that exist, where applicable, between the Company and unrelated third party customers of similar size and scale as Popular.
In 2021 we received the following recorded revenues as part of our Related Party Transactions:
graphic79.jpg
All amounts are approximates in millions of USD.
49   Evertec, Inc. 2022 Proxy Statement    


As previously disclosed by the Company in its filings with the SEC, on February 24, 2022 Evertec, Evertec Group and Popular entered into the Asset Purchase Agreement. Upon closing of the Asset Purchase Agreement (a) the Stockholder Agreement will terminate; (b) the (i) Master Services Agreement, (ii) ATH Network Participation Agreement, and (iii) Independent Sales Organization Sponsorship and Services Agreement will be extended, amended and restated; (c) the ATH Support Agreement shall be replaced by a schedule to the amended and restated ATH Network Participation Agreement; and (d) the parties will enter into other Ancillary Agreements, as the term is defined in the Asset Purchase Agreement. As discussed above, Popular or BPPR will pay consideration of $196,600,000 in exchange for the Asset Sale, which will be paid in the form of Evertec common stock currently held by Popular valued at $42.84 per share, and will be subject to certain adjustments. For more information on the Asset Purchase Agreement, the Asset Sale and the Ancillary Agreements, please refer to the Company’s report on Form 8-K filed on February 24, 2022.
Master Services Agreement
We historically provided various processing and IT services to Popular and its subsidiaries pursuant to a master services agreement among us, Popular and certain of Popular’s subsidiaries, as amended (the “Master Services Agreement”).
At the closing of the Merger, we amended and restated the previous form of the Master Services Agreement. As noted above, upon closing of the transactions contemplated by the Asset Purchase Agreement, the Master Services Agreement will be further amended and restated. Under the current Master Services Agreement. Under the Master Services Agreement, Popular and BPPR agreed to, and caused their respective subsidiaries to, receive the services covered by the Master Services Agreement, including certain changes, modifications, enhancements or upgrades to such covered services, on an exclusive basis from us. In exchange for the services, Popular, BPPR and their respective subsidiaries initially pay amounts that are set forth in a price list incorporated into the Master Services Agreement, which is generally based on the historical pricing practices among the parties. The majority of such service fees are adjusted annually to reflect changes in the consumer price index, provided that any such fee adjustment may not exceed 5% per year. The Master Services Agreement provides that it is the intent of the parties to such agreement that the fees we charge to any “banking affiliate” under the Master Services Agreement will be in compliance with applicable laws, and, in order to ensure such compliance, the parties agreed to periodically review such fees to ensure that they represent and remain at levels consistent with the market terms that such banking affiliate would pay to an independent third party for providing similar services. The Master Services Agreement provides that when performing such review, the parties will pay particular attention to any available information on comparable market terms for similar services, and will evaluate and take into consideration the contracting terms and our performance of the services under the Master Services Agreement. The Master Services Agreement defines “banking affiliate” as any banking institution (including its subsidiaries) that is our affiliate for purposes of Section 23A and Section 23B of the Federal Reserve Act and Regulation W of the Federal Reserve Board.
In addition, Popular, BPPR and their respective subsidiaries agreed to grant us a right of first refusal to (i) provide our services to support Popular, BPPR and their respective subsidiaries’ implementation of any development, maintenance, enhancement or modification of any services provided by us under the Master Services Agreement, (ii) create or offer certain new services or products that Popular, BPPR or one of their respective subsidiaries determine to offer to their customers or (iii) provide certain core bank processing and credit card processing services that are currently provided by third parties to certain subsidiaries of Popular, if Popular and BPPR and their respective subsidiaries determine to extend or renew these services, which are currently provided by third parties. We agreed to grant Popular, BPPR and their respective subsidiaries a right of first refusal to purchase any new service or product created or developed by us internally or by a third party, unless the service or product was created or developed by, or at the specific request of, a client other than Popular, BPPR and their respective subsidiaries.
We agreed under the Master Services Agreement that we will not compete with Popular, BPPR and their respective subsidiaries in offering, providing or marketing certain payment processing services that are currently offered by Popular, BPPR and their respective subsidiaries to certain identified customers of Popular, BPPR and their respective subsidiaries. Popular, BPPR and their subsidiaries agreed not to hire or solicit any of our employees, subject to customary carve-outs. The Master Services Agreement also contained a non-circumvention covenant, which is intended to prohibit us on the one hand, and Popular, BPPR and their subsidiaries on the other hand, from engaging in certain actions designed or intended to divert customers from the other.
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Except for cases of our gross negligence or willful misconduct, our liability for breach under the Master Services Agreement is limited to the amount paid for such services under the Master Services Agreement, subject to an aggregate annual liability limit of twelve months of payments for the service the liability relates to, provided, however, that such aggregate liability limit does not apply to losses related to breaches of confidentiality nor intellectual property indemnification provisions. Under certain circumstances, breaches with respect to certain services result only in service credits accruing to Popular, BPPR and their respective subsidiaries in lieu of the payment of monetary damages.
The Master Services Agreement provides for a 15-year term which commenced upon the closing of the Merger (subject to our option to extend such term by an additional three years upon a “Popular parties change of control” —as defined in the Master Services Agreement—of Popular or BPPR). After the initial term, the Master Services Agreement will renew automatically for successive three-year periods, unless a party gives written notice of non-renewal to the other parties not less than 1 year prior to the relevant renewal date.
The Master Services Agreement provides for termination by a party (i) for the other party’s breach of the agreement that results in a material adverse effect on the terminating party that continues for more than 90 days, (ii) for a failure by the other party to pay any properly submitted invoice for a material amount in the aggregate that is undisputed for a period of more than 60 days or (iii) for a prohibited assignment of the Master Services Agreement by the other party. In addition, Popular and BPPR are permitted to terminate the Master Services Agreement up to 30 days following the occurrence of a change of control of Evertec Group (an “Evertec change of control” as defined in the Master Services Agreement), unless (A) the acquirer is identified to Popular and BPPR at least 30 business days prior to the proposed Evertec change of control, (B) neither the acquirer nor any of its affiliates is engaged, directly or indirectly, in the banking, securities, insurance or lending business, from which they derive aggregate annual revenues from Puerto Rico in excess of $50.0 million unless none of them has a physical presence in Puerto Rico that is used to conduct any such business, (C) we (or our successor, as applicable) will be solvent (as defined in the Master Services Agreement) after the proposed Evertec change of control, and (D) following the Evertec change of control, we (or our successor, as applicable) will be capable of providing the services under the Master Services Agreement at the level of service that is required under the Master Services Agreement (the “Popular Termination Condition”).
We agreed to provide certain transition assistance to Popular, BPPR and their respective subsidiaries in connection with (i) the termination of the Master Services Agreement, (ii) the termination of a particular service provided by us under the Master Services Agreement or (iii) a release event under the Technology Agreement (as described below).
For 2021 we recorded revenue of approximately $204.7 million from Popular, BPPR and their respective subsidiaries under the Master Services Agreement. The revenues attributable under the Master Services Agreement are primarily (i) transaction-based fees, which depend on factors such as number of accounts or transactions processed and typically consist of a fee per transaction or item processed, a percentage of dollar volume processed or a fee per account on file, or some combination thereof and (ii) fixed fees per month or based on time and expenses incurred. Individual pricing terms charged to Popular and our other banking clients may vary based on volume and/or to the extent the service provided is customized to fit the particular customer need. As discussed above, the Master Services Agreement was negotiated on an arm’s-length basis by Apollo and Popular in connection with the Merger, is on terms that are comparable to those that the Company could have obtained in a transaction with an unrelated third party, and such terms are no more or less favorable in the aggregate to the Company than terms that exist, where applicable, between the Company and unrelated third party customers of similar size and scale as Popular.
Technology Agreement
At the closing of the Merger, Popular and Evertec entered into a Technology Agreement, pursuant to which we deposited certain proprietary software, technology and other assets into escrow. According to the Technology Agreement we must continue to make deposits on a semi-annual basis during the term of the Master Services Agreement and the term of any transition period under the Master Services Agreement. As specified in the Technology Agreement, Popular has the right and option, upon the occurrence of certain release events, to obtain the release of part, and upon the occurrence of other release events, of all of the materials deposited into escrow. Upon the occurrence of any release event, Popular will also have the option to elect to exercise its rights under a license granted by us to Popular to use and otherwise exploit all or any part of the released materials for the term
51   Evertec, Inc. 2022 Proxy Statement    


(perpetual or term-limited) specified by Popular. We will also negotiate with Popular the fair market value of the rights elected by Popular upon the release of the escrow. Popular is permitted to terminate the Technology Agreement upon the occurrence of a Popular Termination Condition (as applicable to the Technology Agreement). We do not receive an annual revenue under the Technology Agreement.
ATH Network Participation Agreement
We historically provided BPPR access to the ATH network (the “ATH Network”) pursuant to an ATH Network participation agreement between BPPR and us. At the closing of the Merger, we amended and restated the current ATH Network participation agreement (as amended and restated, the “ATH Network Participation Agreement”). Under the ATH Network Participation Agreement, we (i) provide BPPR access to the ATH Network by providing various services, including connecting BPPR’s ATMs to the ATH Network, monitoring BPPR’s ATMs, agreeing to forward transactions from connected terminals to the participant of the ATH Network and settling transactions among ATH Network participants from all POS and ATM terminals on a daily basis (collectively, the “ATH Network Services”) and (ii) grant to BPPR a non-exclusive, non-transferable, limited, royalty free license to use the ATH logo and the ATH word mark and any other trademarks or service marks used by us in connection with the ATH Network (collectively, the “ATH Mark”) within the U.S. territories, Puerto Rico, and any other country where the ATH Mark is registered or subject to registration.
The ATH Network Participation Agreement provides for a 15-year term, which commenced upon the closing of the Merger (subject to our option to extend such term by an additional three years upon a change of control—as defined in the ATH Network Participation Agreement—of BPPR). After the initial term, the ATH Network Participation Agreement will renew automatically for successive three-year periods, unless a party gives written notice to the other party not less than 1 year prior to the relevant renewal date. The ATH Network Participation Agreement provides for termination (i) by us if BPPR commits a material breach, which includes, but is not limited to (A) any activities or actions of BPPR which reflect adversely on our business reputation, any participant in the ATH Network or the ATH Network or (B) any breach of the license described above; (ii) by BPPR, if we commit a breach or series of breaches that results in a material adverse effect on BPPR; or (iii) by either party (A) for a failure by the other party to pay any properly submitted invoice for a material amount in the aggregate that is undisputed for a period of more than 60 days or (B) for a prohibited assignment of the ATH Network Participation Agreement by the other party. In addition, BPPR is permitted to terminate the ATH Network Participation Agreement upon the occurrence of a Popular Termination Condition (as applicable to the ATH Network Participation Agreement).
BPPR also agreed to grant us a right of first refusal with respect to any development, maintenance or other technology project related to the ATH Network Services and will agree to exclusively use us to provide the ATH Network Services throughout the term of the ATH Network Participation Agreement. For 2021 we recorded revenue of approximately $40.5 million from BPPR under the ATH Network Participation Agreement.
ATH Support Agreement
We and BPPR entered into the ATH Support Agreement at the closing of the Merger pursuant to which BPPR agreed to support the ATH Mark by (i) supporting, promoting and marketing the ATH Network and brand and debit cards bearing the symbol of the ATH Network, either exclusively or with the symbol of another credit card association and (ii) issuing in each successive twelve month period at least a set minimum number of debit cards exclusively bearing the symbol of the ATH Network (“ATH Debit Cards”). BPPR shall not be deemed to be in breach of the requirement to issue at least a minimum number of ATH Debit Cards under the ATH Support Agreement during any twelve month period if, as a result of factors outside of BPPR’s control, there is a change in demand for debit cards (including a reduction in the demand for ATH Debit Cards ), an increase in demand for debit cards bearing the symbol of the ATH Network and the symbol of another credit card association (“Dual Branded Debit Cards”) or the development of new payment technologies in the market that result in a decrease in demand for debit cards (including a reduction in demand for ATH Debit Cards).
BPPR also agreed not to, and will not create incentives for its or its affiliates’ personnel to, promote, support or market (i) debit cards other than ATH Debit Cards or Dual Branded Debit Cards or (ii) credit cards in a manner targeted to negatively impact the issuance of ATH Debit Cards and Dual Branded Debit Cards. The ATH Support Agreement terminates upon the earlier of 15 years after the date of the closing of the Merger or the termination of the Master Services Agreement.
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BPPR agreed that, during the term of the ATH Support Agreement, it may not directly or indirectly enter into any agreement with another card association to issue Dual Branded Debit Cards without our prior written consent. Under the ATH Support Agreement, if BPPR desires to enter into such an agreement, it will consult with us and provide documentation and other support requested by us to demonstrate that BPPR’s entry into the agreement will have a direct economic benefit to us. We will then be required to make a good faith determination based on such documentation and support whether to consent to BPPR’s entry into the agreement. BPPR is permitted to terminate the ATH Support Agreement upon the occurrence of a Popular Termination Condition (as applicable to the ATH Support Agreement). We do not receive an annual revenue under the ATH Support Agreement.
Independent Sales Organization Sponsorship and Services Agreement
At the closing of the Merger, we amended and restated an interim Independent Sales Organization Sponsorship and Services Agreement previously entered into with BPPR (as amended and restated, the “ISO Agreement”). As noted above, upon closing of the transactions contemplated by the Asset Purchase Agreement, the ISO Agreement will be further amended and restated. Under the current ISO Agreement, BPPR sponsors us as an independent sales organization with respect to certain credit card associations and we provide various services including, among other things, the payment processing services to merchants (the “Merchant Services”), the signing up and underwriting of merchants to accept such Merchant Services and the sale of various products related to the Merchant Services. This agreement also provides that the parties will establish the fees to be paid by Evertec Group to BPPR for the fraud monitoring services provided by BPPR. The term of the ISO Agreement will continue until December 31, 2025 and thereafter will be automatically renewed for successive three-year periods unless written notice of non-renewal is given at least one year in advance by either party.
Pursuant to the ISO Agreement, BPPR is the acquiring member with respect to the credit card associations covered by the ISO Agreement for anyone in Puerto Rico, the U.S. Virgin Islands and the British Virgin Islands. However, if BPPR is unable (for any reason other than a merchant’s refusal to enter into a merchant agreement with BPPR through no fault of BPPR) or unwilling to act as the acquiring member for any merchant, we may enter into an agreement with another financial institution to serve as the sponsoring bank with respect to such person. However, in order to use another financial institution as the sponsoring bank with respect to any merchant, we must make a good faith determination that the provision of Merchant Services to the merchant does not pose an unreasonable financial, regulatory or reputational risk to BPPR or us.
Additionally, pursuant to the ISO Agreement, BPPR agreed to exclusively refer to us any merchant that inquires about, requests or otherwise evidences interest in the Merchant Services. BPPR will receive a referral fee for each merchant referred that subsequently agrees to receive Merchant Services from us. We also agreed under the ISO Agreement to refer to BPPR any merchant doing business in Puerto Rico, the U.S. Virgin Islands and the British Virgin Islands that inquires about, requests or otherwise evidences interest in banking services or products. BPPR also agreed to make monthly payments to Evertec Group as a means of subsidizing certain Merchant Services provided by Evertec Group on less than favorable terms in connection with two existing customer relationships that are favorable to Popular and its affiliates as a whole. These subsidies were historically reflected in an agreement between the Merchant Acquiring business and BPPR.
During the term of the ISO Agreement and for one year following the termination of the ISO Agreement for any reason, BPPR may not and may not cause any independent sales organization sponsored by BPPR to solicit any merchant receiving Merchant Services from us to receive such services instead from another independent sales organization. This non-solicitation restriction does not apply, however, to (i) any banking customer of BPPR to which we are unable or unwilling to provide Merchant Services and (ii) to any merchant with respect to the solicitation by BPPR to provide banking services and products. BPPR is permitted to terminate the ISO Agreement upon the satisfaction of the Popular Termination Condition (as applicable to the ISO Agreement). For 2021 we recorded revenue of approximately $112.3 million in connection to the Merchant Services related to the ISO Agreement.
Cash Depot Subcontract
As a subcontractor of BPPR, we provide certain cash depot services (the “Cash Depot Services”) to depository institutions doing business in Puerto Rico and the U.S. Virgin Islands pursuant to a subcontract
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between us and BPPR (the “Subcontract”). However, we do not make any payments to, or receive any payments from, BPPR under the Subcontract (although we are required under the Subcontract to reimburse BPPR for any costs they may incur under the Cash Depot Agreement). Instead, we bill the Puerto Rico Bankers Association (“PRBA”), who pays us directly and the PRBA then invoices separately those depository institutions that use the Cash Depot Services.
In order to use the Cash Depot Services, depository institutions must apply through, and be approved by, the quasi-government organization who holds the prime contract with BPPR and the PRBA (the “Cash Depot Agreement”) and who ultimately decides who can provide the Cash Depot Services and who has the right to terminate the services as further described below. BPPR is one of the depository institutions that receive services from us under the Subcontract, on the same terms and conditions as the other participants, and BPPR pays the PRBA for those services.
The Subcontract is effective for so long as the Cash Depot Agreement is in effect. Under the terms of the Subcontract, either party may terminate the subcontract prior to the expiration of the Subcontract by giving the other party advance notice. However, under the Merger Agreement, Popular agreed that until the termination of the ISO Agreement, the Master Services Agreement or the assignment of the Cash Depot Agreement, Popular will cause BPPR to not terminate the Cash Depot Agreement or take any action that would deprive us of the economic benefit that we derive from the Cash Depot Agreement. In addition, the quasi-government organization that is a party to the Cash Depot Agreement may terminate the Cash Depot Agreement and thereby cause the termination of the Subcontract upon advance notice or upon the occurrence of certain triggering events, one of which is a material change in the ownership, management and/or operations of BPPR and/or Evertec. For 2021 we recorded revenue of approximately $1.3 million under the Subcontract.
Master Lease Agreement
We and BPPR are parties to the Master Lease Agreement, as amended, that governs the premises leased by us at the Cupey Center for use as our headquarters. On March 31, 2020, the Company notified BPPR that it was exercising its option to renew the Master Lease Agreement for an additional five-year term. The Master Lease Agreement can be renewed at our option for up to two additional five-year terms. We have a right of first refusal over substantially all of the leased premises in the event that BPPR desires to sell the property. We paid approximately $7.1 million (including estimated operating expenses) to BPPR in annual rent under the Master Lease Agreement during 2021.
Virgin Islands Services Agreement
We and BPPR are party to a Virgin Islands Services Agreement whereby BPPR provides our Merchant Acquiring business with the services that are provided by the Virgin Islands employees that BPPR did not transfer to us in connection with the Merger. The initial term of the Virgin Islands Services Agreement continued until three years following the closing of the Merger and thereafter automatically renews for successive one-year periods unless written notice of non-renewal is given at least 30 days in advance by either party. The Virgin Islands Services Agreement provides for termination by (i) us at any time upon giving at least 30 days advance written notice and (ii) BPPR in the event we fail to pay a material undisputed invoiced amount. In addition, BPPR is permitted to terminate the Virgin Islands Services Agreement upon the satisfaction of the Popular Termination Condition (as applicable to the Virgin Islands Services Agreement). For 2021 we paid approximately $564.4 to BPPR under the Virgin Island Services Agreement.
Stockholder Agreement
In connection with the Merger, Holdings entered into a Stockholder Agreement with Popular, Apollo and the other stockholders of Holdings, which was amended and restated in connection with a reorganization of the Company and is now an agreement among the Company, Popular, Apollo and certain of our other stockholders. Prior to the completion of our initial public offering, we entered into an amendment to the Stockholder Agreement. As noted above, upon closing of the transactions contemplated by the Asset Purchase Agreement, the Stockholder Agreement will be further amended and restated. The current Stockholder Agreement, as amended, among other things, sets forth certain rights and restrictions with respect to our common stock. On June 30, 2013, we entered into a Second Amendment to the Stockholder Agreement to, among other things, allow our Board to fill vacancies on the Board, provided that any person chosen to fill such vacancy shall be selected in accordance with the provisions of the Stockholder
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Agreement. On November 13, 2013, we entered into a Third Amendment to the Stockholder Agreement to, among other things, facilitate the use of 10b5-1 plans by the management holders. The description below is a summary of the terms of the Stockholder Agreement, as amended.
For purposes of the following summary, as of December 31, 2021, Popular owned approximately 16.2% of our common stock outstanding. Apollo no longer owns any of our common stock and therefore its rights and obligations under the Stockholder Agreement terminated in accordance with the terms of the Stockholder Agreement.
Director Nomination Rights
Our Board is currently comprised of nine directors. Messrs. Pagán and Polak were nominated to the Board by Popular under its director nominee rights granted by the Stockholder Agreement to be elected to serve as directors until the Company’s 2022 annual meeting of stockholders and until their successors are duly elected and qualified. For so long as Popular owns, together with its affiliates, more than 10% but less than 25% of our then outstanding common stock, it will have the right to nominate two members of our Board (the “10% board right”). Similarly, for so long as Popular owns, together with its affiliates, more than 5% but less than 10% of our then outstanding common stock, it will have the right to nominate one member of our Board (the “5% board right”). In addition, if there are any vacancies on our Board as a result of the aggregate number of our directors that Popular has the right to nominate pursuant to the Stockholder Agreement being less than eight, then a committee consisting of our entire Board (other than any directors who are to be replaced because Popular has lost the right to nominate them) has the right to nominate the individuals to fill such vacancies, which nominees must be reasonably acceptable to Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding common stock. Our Stockholder Agreement further clarifies that it does not eliminate the right of stockholders holding a majority of our outstanding common stock to remove any such director with or without cause or the right of any of our stockholders to nominate a person for election as a director (whether to fill a vacancy or otherwise) at any meeting of the stockholders in accordance with applicable law, our Charter and our Bylaws.
Pursuant to the Stockholder Agreement, the individual holding the office of CEO of Evertec Group will become the management director. Mr. Schuessler has been the management director since April 1, 2015 and shall continue to be the management director for so long as he holds the office of CEO of Evertec Group.
Popular has agreed to vote all of its shares of our common stock and to take all other actions within its control to cause the election of directors nominated in accordance with the Stockholder Agreement. Similarly, we have agreed to take all actions within our control necessary and desirable to cause the election of directors nominated in accordance with the Stockholder Agreement.
Except for certain exceptions described in the Stockholder Agreement, and subject to applicable law, Popular’s director nominees may only by removed and replaced by Popular. The Stockholder Agreement also provides that we will, at all times, cause the Evertec Group Board and the board of directors of Holdings to be comprised of the same individuals as our Board.
Quorum Rights
The Stockholder Agreement provides that a quorum for the transaction of business at any meeting of the stockholders consist of (i) stockholders holding a majority of our outstanding common stock and entitled to vote at such meeting and (ii) Popular, for so long as it owns, together with its affiliates, 20% or more of our outstanding common stock. If a stockholder meeting is adjourned for lack of a quorum due to Popular failing to attend the meeting, a quorum at a reconvened meeting of the stockholders (with the same agenda as the adjourned meeting) shall not require the presence of Popular, as long as stockholders holding a majority of our outstanding common stock and entitled to vote at such meeting are in attendance at such reconvened meeting.
The Stockholder Agreement provides that a quorum for the transaction of business at any meeting of the Board consist of (i) a majority of the total number of directors then serving on the Board and (ii) at least one director nominated by Popular, for so long as it owns, together with its affiliates, 5% or more of our outstanding common stock. If a Board meeting is adjourned for lack of a quorum due to Popular’s director nominees failing to attend such meeting, a quorum at a reconvened meeting of the Board (with the same agenda as the adjourned meeting) shall not require the presence of Popular director nominees, in each
55   Evertec, Inc. 2022 Proxy Statement    


case, as long as a majority of the directors then in office are in attendance at such reconvened meeting. As of the Record Date, Popular and its affiliates did not own 20% or more of our outstanding common stock and, therefore, a quorum is not required to consist of Popular for the transaction of business at the Annual Meeting.
Additional Stockholder Rights
Popular has the right, for so long as it owns, together with its affiliates, 10% or more of our outstanding common stock and has the right to nominate at least one director, the approval of at least one director nominated by Popular shall be necessary, to approve (i) any issuance of preferred stock of us or any of our subsidiaries (other than the issuance of preferred stock by one of our wholly owned subsidiaries to us or another of our wholly owned subsidiaries) and (ii) any transfer of equity in Holdings or Evertec Group, in each case subject to certain exceptions.
Popular and certain of its transferees are also entitled to information rights and inspection rights, in each case for so long as it satisfies certain ownership thresholds set forth in the Stockholder Agreement.
In addition, the Stockholder Agreement grants certain demand registration rights to Popular and certain of its transferees and piggyback registration rights to each stockholder, subject to customary cutbacks. Under the Stockholder Agreement, Evertec, Inc. has agreed to assume certain fees and expenses associated with registration. The Stockholder Agreement contains customary provisions with respect to registration proceedings, underwritten offerings, and indemnity and contribution rights.
Registration Rights
The Stockholder Agreement grants Popular the right to request up to four registrations under the Securities Act on Form S-1 (or any successor form) or similar long-form registration statement (each, a “Long-Form Registration”) of all or any portion of the shares of our common stock beneficially owned by the requesting holder if the shares to be sold in any such registration (including piggyback shares and before deduction of any underwriting discounts) are reasonably expected to exceed $75.0 million, subject to cutbacks. Popular may request that any such Long-Form Registration be an underwritten offering, and no registration shall count as one of Popular’s four permitted Long-Form Registrations, unless such registration (i) has become effective and (ii) includes at least 75% of the shares of our common stock sought by Popular to be included in such Long-Form Registration.
The Stockholder Agreement also grants Popular the right, at any time after we are eligible to file a registration statement on Form S-3, to request an unlimited number of registrations under the Securities Act on Form S-3 (or any successor form) or any similar short-form registration statement (each, a “Short-Form Registration”) of all or any portion of the shares of our common stock beneficially owned by Popular, if the shares to be sold in any such Short-Form Registration (including piggyback shares and before deduction of any underwriting discounts) are reasonably expected to exceed $50.0 million, subject to cutbacks. Popular may request that any such Short-Form Registration be an underwritten offering.
Pursuant to the Stockholder Agreement, we are required to use commercially reasonable efforts to file, no later than 45 days following any written request from Popular, a registration statement on Form S-3 (or any successor form) or any similar short-form registration statement (the “Form S-3 Shelf”) for an offering to be made on a delayed or continuous basis covering the resale of shares of our common stock. Following the effectiveness of the Form S-3 Shelf, Popular may request unlimited shelf-takedowns if the total offering price of the shares to be sold in such offering (including piggyback shares and before deduction of underwriting discounts) is reasonably expected to exceed $25.0 million.
Whenever we propose to register any shares of our common stock, whether in a primary or secondary offering, Popular has the right to request that shares beneficially owned by such holder be included in such registration, subject to cutbacks. Under the Stockholder Agreement, we have agreed to pay the fees and expenses associated with such registrations (excluding discounts and commissions and other selling expenses payable by the selling holders). The Stockholder Agreement contains customary provisions with respect to registration proceedings, underwritten offerings, and indemnity and contribution rights.
Transfer Restrictions
Subject to certain exceptions set forth in the Stockholder Agreement, without the prior written consent of Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding common stock,
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none of the parties to the Stockholder Agreement may sell shares of our common stock representing 20% or more of the total number of outstanding shares of our common stock at the time of such sale directly to certain transferees previously identified by Popular to the other parties to the Stockholder Agreement.
Additional Restrictions
The Stockholder Agreement contains a covenant restricting us and our subsidiaries from engaging in any business (including commencing operations in any country in which they do not currently operate), subject to certain exceptions, if such activity would reasonably require Popular or an affiliate of Popular to seek regulatory approval from, or provide notice to, any bank regulatory authority. This covenant will apply to the extent that the activities and investments of us and our subsidiaries are subject to restrictions under the Bank Holding Company Act of 1956, as amended, because of Popular’s and/or its affiliates’ ownership of our common stock.
The Stockholder Agreement also provides that the adoption of any stockholder rights plan, rights agreement or other form of “poison pill” which is designed to or has the effect of making an acquisition of large holdings of the common stock more difficult or expensive must be approved by a majority of our Board and approved by at least one director nominated by Popular (or certain of its transferees) in each case for so long as Popular (or certain of its transferees) owns, together with its affiliates, 5% or more of our outstanding common stock.
Certain Provisions Particular to Management Holders
We have the right to purchase all of our common stock (and options and warrants exercisable for our common stock) beneficially owned by any of our stockholders who is employed by or who serves as a consultant or director for us or any of our subsidiaries upon such stockholder (1) ceasing to be employed by us or any of our subsidiaries for any reason or (2) experiencing a bankruptcy event. Subject to tolling under certain circumstances set forth in the Stockholder Agreement, we must exercise this repurchase right within twelve months following the date on which such stockholder ceases to provide services to us or our subsidiaries. We may designate this repurchase right to Popular or any complete rights transferee. The Stockholder Agreement also provides that each such stockholder party to such agreement is subject to certain non-solicitation and non-competition restrictions which remain in effect until the stockholder ceases to be employed by us or any of our subsidiaries.
Under the Stockholder Agreement, the restrictions described in the paragraph above do not apply to Popular or any of its affiliates.
Assignment of Rights
Subject to certain limitations set forth in the Stockholder Agreement, Popular may assign the stockholders meeting quorum, 10% board right, 5% board right and up to two long-form demand registration rights to any person to whom Popular transfers 20% of more of the shares of our common stock held by Popular as of the date of the Stockholder Agreement. Such transferee can in turn assign such rights to any person to whom it transfers 100% of the shares of common stock acquired by it in connection with the assignment pursuant to which it became a partial rights transferee. Such transferees are also entitled to certain other rights set forth in the Stockholder Agreement (including the registration rights, information rights and inspection rights described above) upon becoming a party thereto.


57   Evertec, Inc. 2022 Proxy Statement    


Security Ownership
Security Ownership of Certain Beneficial Owners and Management
The following table provides certain information regarding the beneficial ownership of our common stock as of the Record Date, by (i) each person or group who beneficially owns more than 5% of our common stock and (ii) each of our directors and nominees, each of our NEOs, and all of our current executive officers and directors as a group. Except as otherwise indicated by footnote: (a) the persons or groups named in the table below have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, (b) applicable percentage of beneficial ownership is based on 71,789,298 shares of common stock outstanding on the Record Date, and (c) the address of each beneficial owner listed in the following table is c/o Evertec, Inc., Road 176, Kilometer 1.3, San Juan, Puerto Rico 00926.
Name and Address of Principal Stockholders
Amount and Nature of Beneficial Ownership(1)
Percent of Class
Popular, Inc.(2)
209 Muñoz Rivera Ave.
Popular Center Building
Hato Rey, PR 00918
11,654,80316.23%
BlackRock, Inc.(3)
55 East 52nd Street
New York, NY 10055
9,203,57212.82%
The Vanguard Group(4)
100 Vanguard Blvd.
Malvern, PA 19355
7,500,44110.45%
Kayne Anderson Rudnick Investment Management, LLC(5)
1800 Avenue of the Stars, 2nd Floor
Los Angeles, CA 90067
4,753,5686.62%
Capital International Investors(6)
333 South Hope Street, 55th Fl
Los Angeles, CA 90071
4,419,3336.16%
Boston Partners(7)
One Beacon Street 30th FL
Boston, MA 02108
3,831,7615.34%
Directors
Amount and Nature of Beneficial Ownership(1)(8)
Percent of Class
Frank G. D’Angelo7,548*
Kelly Barrett*
Olga Botero24,973*
Jorge A. Junquera24,265*
Iván Pagán6,852*
Aldo J. Polak7,932*
Alan H. Schumacher28,891*
Brian J. Smith32,402*
NEOs
Amount and Nature of Beneficial Ownership(1)(8)
Percent of Class
Morgan M. Schuessler, Jr.9,522*
Joaquín A. Castrillo19,075*
Guillermo Rospigliosi*
Diego Viglianco1,168*
Miguel Vizcarrondo89,397*
Directors, NEOs and the Executive Officers of the Company,
as a group (16 persons)
316,572*
*    Indicates ownership of less than 1% of the outstanding shares of common stock as of the Record Date.
(1)     For purposes of this table, “beneficial ownership” is determined in accordance with Rule 13d-3 under the Exchange Act and includes: (i) shares over which the beneficial owner has sole or shared voting power or investment power, and (ii) any shares that the beneficial owner has the right to acquire within 60 days of the Record Date.
(2)     Based on information reported on Schedule 13G filed by Popular, Inc. on February 13, 2014. Popular, Inc. reports that it has sole voting power and sole dispositive power with respect to all shares reported.
(3)     Based solely on Schedule 13G/A filed by BlackRock, Inc. on January 26, 2022. BlackRock Inc. reports that it has sole voting power with respect to 9,016,006 shares and sole dispositive power with respect to 9,085,394 shares.
(4)     Based solely on Schedule 13G/A filed by The Vanguard Group on February 10, 2022. The Vanguard Group reports that it has shared voting power with respect to 115,901 shares, sole dispositive power with respect to 7,331,175 shares, and shared dispositive power with respect to 169,266 shares.
(5)     Based solely on information contained in Schedule 13G filed by Kayne Anderson Rudnick Investment Management, LLC on February 11, 2022. Kayne Anderson Rudnick Investment Management, LLC reports that it has sole voting power with respect to 2,580,738 shares, shared voting power with respect to 1,414,642 shares, sole dispositive power with respect to 3,158,926 shares, and shared dispositive power with respect to 1,414,642 shares.
(6)    Based solely on information contained in Schedule 13G filed by Capital International Investors on February 11, 2022. Capital International Investors reports that it has sole voting power with respect to 4,411,860 shares and sole dispositive power with respect to 4,419,333 shares.
(7)    Based solely on information contained in Schedule 13G/A filed by Boston Partners on February 11, 2022. Boston Partners reports that is has sole voting power with respect to 3,492,365 shares, shared voting power with respect to 6,031 shares, and sole dispositive power with respect to 3,831,761 shares.
(8)     None of the shares are pledge as security.
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PROPOSAL 4
Approval of the Evertec, Inc. 2022 Equity Incentive Plan
Overview
On March 29, 2022, our Board approved the Evertec, Inc. 2022 Incentive Award Plan (the “2022 Plan”), subject to stockholder approval. Our stockholders are being asked to approve the 2022 Plan. The 2022 Plan will become effective immediately upon stockholder approval at the Annual Meeting.
The Board is seeking approval of the 2022 Plan as the successor to the 2013 Equity Incentive Plan (the “Prior Plan”), which we previously adopted at the time of our initial public offering and which will expire by its terms on April 12, 2023. If the stockholders do not approve the 2022 Plan, the 2022 Plan will not become effective and we will continue to be able to grant awards under the Prior Plan in accordance with its terms and subject to the existing share reserve.
Under the 2022 Plan, the number of shares reserved for issuance will be equal to the sum of (i) 5,250,000 shares of our common stock, plus (ii) the number of shares remaining available for grant under the Prior Plan as of the effective date of the 2022 Plan, plus (iii) any shares covered by awards under the Prior Plan as of the effective date of the 2022 Plan that again become available for grant pursuant to the terms of the 2022 Plan as of the effective date of the 2022 Plan, as described below. The principal features of the 2022 Plan are summarized below, but the summary is qualified in its entirety by reference to the 2022 Plan itself, which is attached to this Proxy Statement as Appendix B.
Description of the 2022 Plan
We believe that the adoption of the 2022 Plan is essential to our success. Equity awards are intended to motivate high levels of performance, align the interests of our employees, directors and consultants with those of our stockholders and provide a means of recognizing their contributions to our success. We believe that equity awards are necessary to remain competitive in the industry and are essential to recruiting and retaining the highly qualified individuals who help us meet our goals.
In determining the size of the share reserve under the 2022 Plan, our board of directors considered the following factors:
Reasonable Share Reserve: If approved, the 5,250,000 shares to be initially reserved for issuance under the 2022 Plan will represent an increase of 4,492,643 shares from the aggregate number of shares available for future grant under the Prior Plan as of March 22, 2022. If the 2022 Plan is approved, it will represent the only equity plan under which we will be able to grant future equity awards.
Responsible Equity Plan Usage: In fiscal years 2019, 2020 and 2021, equity awards representing a total of approximately 517,153 shares, 413,733 shares and 705,970 shares, respectively, were granted under the Prior Plan (excluding long-term incentive plan awards issued during such periods), for an annual equity burn rate of 0.72%, 0.58% and 0.98%, respectively. This level of equity awards represents a 3-year average burn rate of 0.76% of common shares outstanding. Equity burn rate is calculated by dividing the number of shares subject to equity awards granted during the fiscal year by the weighted average number of common shares outstanding.
Sufficiency for Projected Future Grants: We expect the proposed aggregate share reserve under the 2022 Plan to provide us with enough shares for awards for approximately 5-8 years, assuming we continue to grant awards consistent with our current practices and historical usage, as reflected in our historical burn rate, and further dependent on the price of our shares and hiring activity during the next few years, forfeitures of outstanding awards, and noting that future circumstances may require us to change our current equity grant practices. We cannot predict our future equity grant practices, the future price of our shares or future hiring activity with any degree of certainty at this time, and the share reserve under the 2022 Plan could last for a shorter or longer time.
Reasonable Dilution: If the 2022 Plan is approved, we expect our overhang at the end of fiscal year 2022 will be approximately 9.3%. Overhang is calculated by dividing (i) the sum of the number of shares subject to equity awards outstanding at the end of the fiscal year plus shares remaining available for issuance for
59   Evertec, Inc. 2022 Proxy Statement    


future awards at the end of the fiscal year by (ii) the number of shares outstanding at the end of the fiscal year.
In light of the factors described above, and the fact that the ability to continue to grant equity compensation is vital to our ability to continue to attract and retain employees in the extremely competitive labor markets in which we compete, our board of directors has determined that the size of thFe share reserve under the 2022 Plan is reasonable and appropriate at this time. Our Board does not believe that the creation of a subcommittee to evaluate the risk and benefits for issuing shares under the 2022 Plan is necessary and will not create such a subcommittee.
Summary of Key Stock Plan Data
Share Usage
The following table sets forth information regarding stock-settled equity awards granted over each of the last three fiscal years:
2021202020193-Year Average
Stock Options/Stock Appreciation Rights (SARs) Granted0000.76%
Restricted Stock and RSUs Granted*705,970413,733517,153
Weighted-Average Basic Common Shares Outstanding72,053,79571,943,96572,099,755
Share Usage Rate0.98%0.58%0.72%
*As reported in Note 17 Share-Based Compensation to the financial statements included within the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021, filed with with the SEC on February 25, 2022.

Overhang as of March 22, 2022
The following table sets forth certain information as of March 22, 2022, unless otherwise noted, with respect to the Company’s equity compensation plans:
Stock Options/SARs Outstanding0
Weighted-Average Exercise Price of Outstanding Stock Options/SARs$0
Weighted-Average Remaining Term of Outstanding Stock Options/SARs0 years
Total Restricted Stock and RSU Awards Outstanding1,345,700
Remaining Shares Available for Grant Under the Prior Plan*757,357
Additional Shares Being Requested Under the 2022 Plan5,250,000
Basic Common Shares Outstanding as of the Record Date (March 22, 2022)71,789,298
*For references purposes, the remaining shares available for grant under the Prior Plan is denoted as of March 22, 2022. The number of shares to be rolled over into the 2022 Plan will be equal to the actual number of shares which remain available for grant under the Prior Plan as of the effective date of the 2022 Plan. Upon stockholder approval of the 2022 Plan, no further awards will be made under the Prior Plan.

As of April 1, 2022, the per-share closing price of our common stock as reported on the NYSE was $41.53.
Equity Compensation Best Practices Reflected in the 2022 Plan
The 2022 Plan contains a number of provisions that we believe are consistent with best practices in equity compensation and protect its stockholders’ interests.
Continued Broad-Based Eligibility for Equity Awards: We grant equity awards to a significant number of our service providers. By doing so, we link their interests with stockholder interests and motivate these individuals to act as owners of the business. As of December 31, 2021, 361 of our 2,568 employees, 1 of our consultants, and all of our 8 non-employee directors held outstanding equity awards.
Stockholder Approval is Required for Additional Shares: The 2022 Plan does not contain an annual “evergreen” provision. The 2022 Plan authorizes a limited number of shares, so that stockholder approval will be required for any future increase to the maximum number of shares of common stock which may be issued under the 2022 Plan.
No Liberal Share Recycling: Shares tendered by a participant to satisfy the exercise price or withholding taxes associated with a stock option or stock appreciation right will not be added back to the number of shares of common stock which may be issued under the 2022 Plan.
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No Discount Stock Options or Stock Appreciation Rights: All stock options and stock appreciation rights will have an exercise price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted; provided, that discount stock options may be granted in the event stock options are assumed or substituted in connection with certain corporate transactions.
No Automatic Single-Trigger Vesting of Awards: The 2022 Plan does not provide for automatic “single-trigger” accelerated vesting upon a change in control.
Limitations on Dividend Payments on Awards: Dividends and dividend equivalents may be paid on awards subject to vesting conditions only to the extent such conditions are met.
Non-Employee Director Compensation Limit: An annual limit applies to the sum of all cash and other compensation and the value of all equity, cash-based and other awards granted to a non-employee director for services as a member of our board of directors.
No Repricing of Awards Without Stockholder Approval: Awards may not be repriced, replaced or regranted through cancellation or modification without stockholder approval if the effect would be to reduce the exercise price for the shares under the award.
No Tax Gross-Ups: The 2022 Plan does not provide for any tax gross-ups.
Stockholder Approval Requirement
In general, stockholder approval of the 2022 Plan is necessary in order for us to meet the stockholder approval requirements of the principal securities market on which our shares are traded, and grant stock options that qualify as incentive stock options (“ISOs”) as defined under Section 422 of the Code.
Summary of the 2022 Plan
Limitation on Awards and Shares Available
Under the 2022 Plan, the number of shares reserved for issuance (including, without limitation, ISOs) will be equal to the sum of (i) 5,250,000 shares of our common stock, plus (ii) the shares remaining available for grant under the Prior Plan, plus (iii) any shares covered by awards under the Prior Plan as of the effective date of the 2022 Plan that again become available for grant pursuant to the terms of the 2022 Plan.
Awards granted under the 2022 Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by an entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or shares will not reduce the number of shares authorized for grant under the 2022 Plan. Shares tendered by a holder or withheld to satisfy any tax withholding obligation with respect to a full-value award, or otherwise not issued in settlement of an award, will be eligible for grant pursuant to future awards. However, shares tendered by a holder or withheld to satisfy any exercise price or tax withholding obligation with respect to a stock option or stock appreciation right will not be eligible for grant pursuant to future awards.
The maximum grant date fair value (determined as of the grant date in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) of equity-based awards granted to a non-employee director as compensation for services as a non-employee director pursuant to the 2022 Plan in the aggregate during any calendar year is $700,000, subject to exception in extraordinary circumstances determined by the Board (excluding any effected directors).
Eligibility and Administration
Our employees, consultants and directors, and employees and consultants of its subsidiaries will be eligible to receive awards under the 2022 Plan. As of December 31, 2021, we had 2,568 employees, 8 non-employee directors, and approximately 48 consultants, all of whom would have been eligible to participate in the 2022 Plan if it had been in effect on such date. The 2022 Plan is expected to be administered by our board of directors with respect to awards to non-employee directors and by the compensation committee with respect to other participants, each of which may delegate its duties and responsibilities to committees of directors and/or officers (referred to collectively as the “plan administrator” below), subject to certain limitations that may be imposed under Section 16 of the Exchange Act and/or stock exchange rules, as applicable. The plan administrator will have the authority to make all determinations and interpretations under, prescribe all forms for use with, and adopt rules for the administration of, the 2022 Plan, subject to its express terms and conditions. The plan administrator will also set the terms and conditions of all awards under the 2022 Plan, including any vesting and vesting acceleration conditions.
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Awards
The 2022 Plan provides for the grant of stock options, including ISOs and non-qualified stock options (“NSOs”), restricted shares, dividend equivalents, share payments, RSUs, other incentive awards, share appreciation rights (“SARs”), and cash awards. No determination has been made as to the types or amounts of awards that will be granted to certain individuals pursuant to the 2022 Plan.
Certain awards under the 2022 Plan may constitute or provide for a deferral of compensation, subject to Section 409A of the Code, which may impose additional requirements on the terms and conditions of such awards. All awards under the 2022 Plan will be set forth in award agreements, which will detail all terms and conditions of the awards, including any applicable vesting and payment terms and post-termination exercise limitations. Awards, other than cash awards, generally will be settled in common shares, but the plan administrator may provide for cash settlement of any award. A brief description of each award type follows.
Stock Options: Stock options provide for the purchase of common shares in the future at an exercise price set on the grant date. ISOs, by contrast to NSOs, may provide tax deferral beyond exercise and favorable capital gains tax treatment to their holders if certain holding period and other requirements of the Code are satisfied. The exercise price of a stock option for any such stock option may not be less than 100% of the fair market value of the underlying common share on the date of grant (or 110% in the case of ISOs granted to certain significant stockholders), except with respect to certain substitute options granted in connection with a corporate transaction. The term of a stock option may not be longer than ten years (or five years in the case of ISOs granted to certain significant shareholders), and vested in-the-money awards will be automatically exercised on the last day of the applicable term.
SARs: SARs entitle their holder, upon exercise, to receive an amount equal to the appreciation of the common shares subject to the award between the grant date and the exercise date. The exercise price of a SAR may not be less than 100% of the fair market value of the underlying common share on the date of grant (except with respect to certain substitute SARs granted in connection with a corporate transaction) and the term of a SAR may not be longer than ten years, and vested in-the-money awards will be automatically exercised on the last day of the applicable term.
Restricted Shares and RSUs: Restricted shares are an award of nontransferable common shares that remain forfeitable unless and until specified conditions are met, and which may be subject to a purchase price. RSUs are contractual promises to deliver common shares in the future, which may also remain forfeitable unless and until specified conditions are met. Delivery of the common shares underlying RSUs may be deferred under the terms of the award or at the election of the participant, if the plan administrator permits such a deferral.
Share Payments and Other Incentive Awards: Share payments are awards of fully vested common shares that may, but need not, be made in lieu of base salary, bonus, fees or other cash compensation otherwise payable to any individual who is eligible to receive awards. Other incentive awards are awards other than those enumerated in this summary that are denominated in, linked to or derived from common shares or value metrics related to common shares, and may remain forfeitable unless and until specified conditions are met.
Dividend Equivalents: Dividend equivalents represent the right to receive the equivalent value of dividends paid on common shares and may be granted alone or in tandem with awards. Dividend equivalents are credited as of dividend record dates during the period between the date an award is granted and the date such award vests, is exercised, is distributed or expires, as determined by the plan administrator. Dividend equivalents may not be paid in respect of unvested awards, and if the share underlying such award does not vest, any credited dividend equivalents are forfeited.
Vesting
Vesting conditions determined by the plan administrator may apply to each award and may include continued service, performance and/or other conditions.
Certain Transactions
The plan administrator has broad discretion to take action under the 2022 Plan, as well as make adjustments to the terms and conditions of existing and future awards, including vesting terms, to prevent the dilution or enlargement of intended benefits and facilitate necessary or desirable changes in the event of certain transactions and events
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affecting common shares, such as share dividends, share splits, mergers, acquisitions, consolidations and other corporate transactions. In addition, in the event of certain non-reciprocal transactions with our shareholders known as “equity restructurings,” the plan administrator will make equitable adjustments to the 2022 Plan and outstanding awards.
In the event of our “change in control” (as defined in the 2022 Plan), to the extent that the surviving entity declines to continue, convert, assume or replace outstanding awards, then the plan administrator may provide that all such awards will terminate in exchange for cash or other consideration, or become fully vested and exercisable in connection with the transaction. Upon or in anticipation of a change in control, the plan administrator may cause any outstanding awards to terminate at a specified time in the future and give the participant the right to exercise such awards during a period of time determined by the plan administrator in its sole discretion. Individual award agreements may provide for additional accelerated vesting and payment provisions.
Foreign Participants, Claw-Back Provisions, Transferability, and Participant Payments
The plan administrator may modify award terms, establish subplans and/or adjust other terms and conditions of awards, subject to the share limits described above, in order to facilitate grants of awards subject to the laws and/or stock exchange rules of countries outside of the United States. All awards will be subject to the provisions of any claw-back policy implemented by us to the extent set forth in such claw-back policy and/or in the applicable award agreement. With limited exceptions for estate planning, domestic relations orders, certain beneficiary designations and the laws of descent and distribution, awards under the 2022 Plan are generally non-transferable, and are exercisable only by the participant. With regard to tax withholding, exercise price and purchase price obligations arising in connection with awards under the 2022 Plan, the plan administrator may, in its discretion, accept cash or check, provide for net withholding of common shares, allow common shares that meet specified conditions to be repurchased, allow a “market sell order” or such other consideration as it deems suitable.
Prohibition of Repricing
Except in connection with a corporate transaction involving the company (including, without limitation, any stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, or exchange of shares), neither the board of directors nor the Compensation Committee will, without the approval of the stockholders of the company, authorize the amendment of any outstanding award to reduce its price per share, including any amendment to reduce the exercise price per share of outstanding options or SARs. Furthermore, no award will be canceled and replaced with the grant of an award having a lesser price per share without the further approval of stockholders of the company, which includes the cancellation of outstanding options or SARs in exchange for cash, other awards or options or SARs with an exercise price per share that is less than the exercise price per share of the original options or SARs.
Amendment and Termination of the 2022 Plan
The board of directors may amend or terminate the 2022 Plan at any time, including any amendments required in order to conform such terms with the requirements of local law. However, except in connection with certain changes in our capital structure, shareholder approval will be required for any amendment that increases the number of common shares available under the 2022 Plan. No award may be granted pursuant to the 2022 Plan after the tenth anniversary of the adoption of the 2022 Plan.
Federal Income Tax Consequences Associated with the 2022 Plan
The following is a general summary under current law of the material federal income tax consequences to participants in the 2022 Plan. This summary deals with the general tax principles that apply and is provided only for general information. Some kinds of taxes, such as state and local income taxes, are not discussed. Tax laws are complex and subject to change and may vary depending on individual circumstances and from locality to locality. This summary does not discuss all aspects of income taxation that may be relevant in light of a holder's personal investment circumstances. This summarized tax information is not tax advice.
Non-qualified Stock Options
For federal income tax purposes, if an optionee is granted NQSOs under the 2022 Plan, the optionee will not have taxable income on the grant of the option, nor will we be entitled to any deduction. Generally, on exercise of an NQSO the optionee will recognize ordinary income, and we will be entitled to a deduction, in an amount equal to the difference between the option exercise price and the fair market value of a share of common stock on the date each such option is exercised. The optionee’s basis for the stock for purposes of determining gain or loss on subsequent
63   Evertec, Inc. 2022 Proxy Statement    


disposition of such shares generally will be the fair market value of the common stock on the date the optionee exercises such option. Any subsequent gain or loss will be generally taxable as capital gains or losses.
Incentive Stock Options
There is no taxable income to an optionee when an optionee is granted an ISO or when that option is exercised. However, the amount by which the fair market value of the shares at the time of exercise exceeds the option price will be an “item of adjustment” for the optionee for purposes of the alternative minimum tax. Gain realized by the optionee on the sale of common stock received upon exercise of an ISO is taxable at capital gains rates, and no tax deduction is available to us, in each case unless the optionee disposes of the shares within (i) two years after the date of grant of the option or (ii) within one year of the date the shares were transferred to the optionee.
If the common shares are sold or otherwise disposed of before the end of the two-year and nine-year periods specified above, the difference between the option exercise price and the fair market value of the shares on the date of the option’s exercise will be taxed at ordinary income rates, and we will be entitled to a deduction to the extent the optionee must recognize ordinary income. If such a sale or disposition takes place in the year in which the optionee exercises the option, the income the optionee recognizes upon sale or disposition of the shares will not be considered income for alternative minimum tax purposes. Otherwise, if the optionee sells or otherwise disposes of the shares before the end of the two-year and one-year periods specified above, the maximum amount that will be included as alternative minimum tax income is the gain, if any, the optionee recognizes on the disposition of the shares. An ISO exercised more than three months after an optionee terminates employment, other than by reason of death or disability, will be taxed as a NQSO, and the optionee will have been deemed to have received income on the exercise taxable at ordinary income rates. We will be entitled to a tax deduction equal to the ordinary income, if any, realized by the optionee.
Restricted Stock, Restricted Stock Units, and Deferred Stock
A participant to whom restricted stock, RSUs or deferred stock is issued generally will not recognize taxable income upon such issuance and we generally will not then be entitled to a deduction unless, with respect to restricted stock, an election is made by the participant under Section 83(b) of the Code. However, when restrictions on shares of restricted stock lapse, such that the shares are no longer subject to a substantial risk of forfeiture, the employee generally will recognize ordinary income and we generally will be entitled to a deduction for an amount equal to the excess of the fair market value of the shares at the date such restrictions lapse over the purchase price.
If a timely election is made under Section 83(b) with respect to restricted stock, the participant generally will recognize ordinary income on the date of the issuance equal to the excess, if any, of the fair market value of the shares at that date over the purchase price therefore, and we will be entitled to a deduction for the same amount. Similarly, when RSUs or deferred stock vest and the underlying common stock is issued to the participant, the participant generally will recognize ordinary income and we generally will be entitled to a deduction for the amount equal to the fair market value of the shares at the date of issuance. A Section 83(b) election is not permitted with regard to the grant of RSUs or deferred stock.
Stock Appreciation Rights
In the case of SARs granted with an exercise price equal to the fair market value of our common stock on the date of grant, no taxable income is realized upon the receipt of the SAR, but upon exercise of the SAR, the fair market value of the shares received, determined on the date of exercise of the SAR, or the amount of cash received in lieu of shares, must be treated as compensation taxable as ordinary income to the recipient in the year of such exercise. We will be entitled to a deduction for compensation paid in the same amount that the recipient realized as ordinary income.
Dividend Equivalents
A recipient of a dividend equivalent award generally will not recognize taxable income at the time of grant, and we will not be entitled to a deduction at that time. When a dividend equivalent is paid, the participant generally will recognize ordinary income, and we will be entitled to a corresponding deduction.
Stock Payments
A participant who receives a stock payment in lieu of a cash payment that would otherwise have been made will generally be taxed as if the cash payment has been received, and we generally will be entitled to a deduction for the same amount.
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Section 409A of the Code
Certain types of awards under the 2022 Plan may constitute, or provide for, a deferral of compensation under Section 409A of the Code. Unless certain requirements set forth in Section 409A are complied with, holders of such awards may be taxed earlier than would otherwise be the case (e.g., at the time of vesting instead of the time of payment) and may be subject to an additional 20% federal penalty tax (and, potentially, certain interest penalties). To the extent applicable, the 2022 Plan and awards granted under the 2022 Plan will be structured and interpreted to comply with Section 409A of the Code and the Treasury Regulations and other interpretive guidance that may be issued pursuant to Section 409A of the Code. If a plan award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize the compensation deferred under the award as ordinary income when such amounts are vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply, Section 409A imposes an additional 20% federal income tax on the deferred compensation recognized as ordinary income, as well as interest on such deferred compensation.
Plan Benefits
As of December 31, 2021, 361 of our 2,568 employees, 1 of our consultants, and all of our 8 non-employee directors held outstanding equity awards. No awards have been issued under the 2022 Plan as it is not yet effective. All future grants under the 2022 Plan are within the discretion of the plan administrator and the benefits of such grants are, therefore, not determinable. No estimate of awards in subsequent years can be provided. However, it is expected that awards made in future years will be very similar to the awards made in 2021 and described in the tables in the Compensation Discussion and Analysis section of this Proxy Statement.
Accordingly, in lieu of providing information regarding benefits that will be received under the 2022 Plan over its potential life, the following table provides information concerning the benefits that were received by the following persons and groups in 2021: all current directors who are not executive officers, as a group; each named executive officer; all current executive officers, as a group; and all current employees who are not executive officers, as a group. With respect to the executive officers, these amounts illustrate the number of RSUs each executive officer would receive assuming target performance was achieved with respect to the awards granted or allocated during 2021.
Name of Directors and Executive Officers
Dollar Value
($)
Number of RSUs
(#)
Frank G. D’Angelo170,000*
Kelly Barrett125,000*
Olga Botero125,000*
Jorge A. Junquera125,000*
Iván Pagán125,000*
Aldo J. Polak125,000*
Alan H. Schumacher125,000*
Brian J. Smith207,500*
All current directors who are not executive officers (as a group)1,127,500*
Morgan M. Schuessler, Jr.*135,466
Joaquín A. Castrillo*36,957
Guillermo Rospigliosi*31,506
Diego Viglianco*19,354
Miguel Vizcarrondo*31,506
Other executive officers*50,606
All executive officers (as a group)
*305,395
All current employees who are not executive officers (as a group)
*140,286


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