DEF 14A 1 d901834ddef14a.htm DEF 14A DEF 14A
Table of Contents

 

 

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                               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))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under §240.14a-12

XEROX HOLDINGS CORPORATION

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
  (1)  

Title of each class of securities to which transaction applies:

     

  (2)  

Aggregate number of securities to which transaction applies:

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

     

  (4)  

Proposed maximum aggregate value of transaction:

     

  (5)  

Total fee paid:

     

  Fee paid previously with preliminary materials.
  Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
  (1)  

Amount Previously Paid:

     

  (2)  

Form, Schedule or Registration Statement No.:

     

  (3)  

Filing Party:

     

  (4)  

Date Filed:

     

 

 

 


Table of Contents

LOGO

Xerox Holdings Corporation

YOUR VOTE IS VERY IMPORTANT

Dear Shareholders:

You are cordially invited to attend the 2020 Annual Meeting of Shareholders of Xerox Holdings Corporation (Xerox), to be held at 9:00 a.m., local time, on Thursday, May 21, 2020, at 301 Merritt 7 in Norwalk, Connecticut. We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local government and health authorities may impose. In the event that it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting by press release as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor the www.news.xerox.com/investors website for updated information. As always, we encourage you to vote your shares prior to the Annual Meeting.

 

At the Annual Meeting, you will be asked to consider and vote upon proposals to: (i) elect seven directors to our board of directors; (ii) ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020; (iii) approve, on an advisory basis, the 2019 compensation of our named executive officers; (iv) approve the Company’s Performance Incentive Plan; and (v) consider such other business as may properly come before the Annual Meeting.

 

Our Board unanimously recommends that you vote “FOR” all nominees for director, “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020, “FOR” the non-binding executive compensation proposal, and “FOR” approval of the Company’s Performance Incentive Plan.

 

Your vote is important — no matter how many or how few shares you may own. Whether or not you plan to attend the Annual Meeting, please submit your proxy as soon as possible. You may submit a proxy via the Internet, by telephone or by signing, dating and mailing the enclosed proxy card. Specific instructions for shareholders of record who wish to use Internet or telephone proxy procedures are included in the enclosed Proxy Statement. Any shareholder attending the Annual Meeting may vote in person even if a proxy has been returned.

 

The accompanying notice of meeting and the enclosed Proxy Statement provide specific information about the Annual Meeting and explain the various proposals. Please read these materials carefully.

 

Thank you for your continued support of Xerox.

For the Board of Directors,

 

LOGO

 

LOGO

Keith Cozza   Giovanni (“John”) Visentin
Chairman of the Board   Vice Chairman and Chief Executive Officer

 

The accompanying Proxy Statement is dated April 8, 2020 and is first being distributed to shareholders on or about April 8, 2020.


Table of Contents

LOGO

Notice of 2020 Annual Meeting of Shareholders

You are cordially invited to attend the 2020 Annual Meeting of Shareholders of Xerox Holdings Corporation to be held at 9:00 a.m., local time, on Thursday, May 21, 2020, at 301 Merritt 7 in Norwalk, Connecticut. Your Board of Directors and management look forward to greeting those shareholders who are able to attend.

We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local government and health authorities may impose. In the event that it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting by press release as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor the www.news.xerox.com/investors website for updated information. As always, we encourage you to vote your shares prior to the Annual Meeting.

Shareholders will be asked to:

 

  1.

Elect each of the seven directors named in the enclosed Proxy Statement;

 

  2.

Ratify the appointment/election of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020;

 

  3.

Approve, on an advisory basis, the 2019 compensation of our named executive officers; and

 

  4.

Approve the Company’s Performance Incentive Plan.

Shareholders will also be asked to consider such other business as may properly come before the Annual Meeting.

Voting:

You are eligible to vote if you were a shareholder of record at the close of business on March 27, 2020.

Ensure that your shares are represented at the meeting by voting in one of several ways:

 

 

 

LOGO

   VIA THE INTERNET.

 

LOGO

   BY TELEPHONE.

 

LOGO

  

BY MAIL.

 

 

 

LOGO

  

 

AT THE ANNUAL MEETING

Please review the Notice of Internet Availability of Proxy Materials or accompanying proxy card for voting instructions, and submit your proxy as soon as possible to ensure that your shares are represented, even if you plan to attend the Annual Meeting. Voting now will not limit your right to change your vote or to attend the Annual Meeting.

Important Notice Regarding the Availability of Proxy Materials for the

Annual Meeting of Shareholders to be Held on May 21, 2020.

The 2020 Proxy Statement and 2019 Annual Report are available at

www.edocumentview.com/XRX or www.xerox.com/investor.

If you have any questions or require assistance in voting your shares, you should call Harkins Kovler, LLC, Xerox’s proxy solicitor for the Annual Meeting, toll-free at (844) 218-8384 (from the U.S. and Canada) or at (212) 468-5380) (from other locations) (Banks and Brokerage firms may call collect at (212) 468-5380).

By order of the Board of Directors,

 

LOGO

Douglas H. Marshall

Corporate Secretary

Norwalk, Connecticut

April 8, 2020


Table of Contents

TABLE OF CONTENTS

 

NOTICE OF 2020 ANNUAL MEETING OF SHAREHOLDERS

       1  

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

       1  

THE ANNUAL MEETING

       1  

WHAT IS THE PURPOSE OF THE ANNUAL MEETING?

       1  

HOW DO I VOTE?

       1  

HOW DOES THE BOARD RECOMMEND THAT I VOTE?

       2  

HOW CAN I ATTEND THE ANNUAL MEETING?

       2  

PROPOSAL 1 — ELECTION OF DIRECTORS

       4  

BIOGRAPHIES

       4  

CORPORATE SOCIAL RESPONSIBILITY

       11  

ENVIRONMENTAL GOALS

       11  

SOCIAL GOALS

       12  

DIVERSITY AND INCLUSION

       12  

CORPORATE GOVERNANCE

       13  

DIRECTOR NOMINATION PROCESS

       13  

BOARD DIVERSITY

       14  

SHAREHOLDER PROXY ACCESS

       14  

BOARD LEADERSHIP STRUCTURE

       14  

RISK OVERSIGHT

       15  

DIRECTOR INDEPENDENCE

       15  

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

       16  

BOARD OF DIRECTORS AND BOARD COMMITTEES

       16  

COMMITTEE FUNCTIONS, MEMBERSHIP AND MEETINGS

       16  

AUDIT COMMITTEE

       17  

COMPENSATION COMMITTEE

       17  

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

       18  

CORPORATE GOVERNANCE COMMITTEE

       18  

FINANCE COMMITTEE

       19  

ATTENDANCE AND COMPENSATION OF DIRECTORS

       19  

SUMMARY OF ANNUAL DIRECTOR COMPENSATION

       19  

OWNERSHIP OF COMPANY SECURITIES

       22  

DELINQUENT SECTION 16(A) REPORTS

       24  

EXECUTIVE COMPENSATION

       25  

COMPENSATION DISCUSSION AND ANALYSIS

       25  

LETTER FROM THE COMMITTEE CHAIR

       25  

EXECUTIVE SUMMARY

       27  

SAY-ON-PAY VOTES AND SHAREHOLDER ENGAGEMENT

       31  

OUR EXECUTIVE COMPENSATION PRINCIPLES

       33  

 

i


Table of Contents

SUMMARY OF 2019 COMPENSATION ACTIONS

       34  

GOVERNANCE OF THE EXECUTIVE COMPENSATION PROGRAM

       37  

PROCESS FOR SETTING COMPENSATION

       38  

2019 COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS

       40  

NAMED EXECUTIVE OFFICERS WITH UNIQUE COMPENSATION ARRANGEMENTS

       48  

PENSION AND SAVINGS PLANS

       50  

PERQUISITES AND PERSONAL BENEFITS

       51  

CHANGE IN CONTROL BENEFITS

       52  

EMPLOYMENT AND SEPARATION

       53  

OTHER FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

       54  

CERTAIN TAX IMPLICATIONS OF EXECUTIVE COMPENSATION

       55  

COMPENSATION COMMITTEE REPORT

       56  

SUMMARY COMPENSATION TABLE

       57  

GRANTS OF PLAN-BASED AWARDS IN 2019

       61  

OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END

       63  

OPTION EXERCISES AND STOCK VESTED IN 2019

       65  

PENSION BENEFITS FOR THE 2019 FISCAL YEAR

       66  

NON-QUALIFIED DEFERRED COMPENSATION FOR THE 2019 FISCAL YEAR

       67  

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

       68  

EQUITY COMPENSATION PLAN INFORMATION

       73  

CEO PAY RATIO

       74  

PROPOSAL 2 — RATIFICATION OF APPOINTMENT/ELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

       76  

AUDIT COMMITTEE REPORT

       76  

PROPOSAL 3 — PROPOSAL TO APPROVE, ON AN ADVISORY BASIS, THE 2019 COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

       78  

PROPOSAL 4 — PROPOSAL TO APPROVE THE COMPANY’S PERFORMANCE INCENTIVE PLAN, 2020 AMENDMENT AND RESTATEMENT

       82  

OTHER MATTERS

       89  

QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING

       90  

WHO IS ENTITLED TO VOTE?

       90  

WHAT IS THE DIFFERENCE BETWEEN HOLDING SHARES AS A SHAREHOLDER OF RECORD AND AS A BENEFICIAL OWNER?

       90  

WHAT IS A PROXY?

       90  

MAY I CHANGE OR REVOKE MY VOTE AFTER I RETURN MY PROXY CARD?

       90  

HOW WILL MY PROXY BE VOTED?

       90  

HOW MANY SHARES ARE REQUIRED TO BE PRESENT TO HOLD THE ANNUAL MEETING?

       90  

HOW MANY SHARES ARE REQUIRED TO APPROVE EACH PROPOSAL?

       91  

WHAT IS A BROKER NON-VOTE AND HOW WILL IF AFFECT THE VOTING?

       92  

WHO WILL COUNT THE VOTE? IS MY VOTE CONFIDENTIAL?

       92  

 

ii


Table of Contents

WHEN WILL THE VOTING RESULTS BE DISCLOSED?

       92  

HOW ARE PROXIES SOLICITED?

       92  

WHY DID I RECEIVE A NOTICE IN THE MAIL REGARDING INTERNET AVAILABILITY OF PROXY MATERIALS INSTEAD OF A FULL SET OF PRINTED PROXY MATERIAL?

       92  

HOW CAN I ELECTRONICALLY ACCESS THE PROXY MATERIALS?

       92  

WHAT IS THE DEADLINE TO PROPOSE ACTIONS (OTHER THAN DIRECTOR NOMINATIONS) FOR CONSIDERATION AT THE 2021 ANNUAL MEETING OF SHAREHOLDERS?

       93  

HOW MAY I RECOMMEND INDIVIDUALS TO SERVE AS DIRECTORS AND WHAT IS THE DEADLINE FOR A DIRECTOR RECOMMENDATION?

       93  

HOW MAY I NOMINATE INDIVIDUALS TO SERVE AS DIRECTORS AND WHAT ARE THE DEADLINES FOR A DIRECTOR NOMINATION?

       93  

HOW CAN I CONTACT THE BOARD?

       94  

WHAT IF MULTIPLE SHAREHOLDERS HAVE THE SAME ADDRESS?

       94  

HOW MAY I OBTAIN ADDITIONAL COPIES OF THE PROXY MATERIALS?

       94  

IS THERE A LIST OF SHAREHOLDERS ENTITLED TO VOTE AT THE ANNUAL MEETING?

       94  

ANNEX A. XEROX HOLDINGS CORPORATION PERFORMANCE INCENTIVE PLAN

       A-1  

 

iii


Table of Contents

PROXY STATEMENT

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

The following are some of the questions that you may have about this proxy statement (Proxy Statement) and the answers to those questions. The information in this section does not provide all of the information that may be important to you with respect to this Proxy Statement. Therefore, we encourage you to read the entire Proxy Statement, which was first distributed on or about April 8, 2020, for more information about these topics.

 

 

The Annual Meeting

The 2020 Annual Meeting of Shareholders (Annual Meeting) of Xerox Holdings Corporation (Xerox or the Company), will be held beginning at 9:00 a.m., local time, at 301 Merritt 7 in Norwalk, Connecticut, on Thursday, May 21, 2020.

 

 

What is the purpose of the Annual Meeting?

At the Annual Meeting, shareholders will consider and vote on the following matters:

 

  1.

Election of the seven nominees named in this Proxy Statement to our Board of Directors (Board), each for a term of one year;

 

  2.

Ratification of the appointment of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31, 2020;

 

  3.

Approval, on an advisory basis, the 2019 compensation of our named executive officers; and

 

  4.

Approval of the Company’s Performance Incentive Plan.

Shareholders will also be asked to consider any other business that may properly come before the Annual Meeting. In addition, our management will report on Xerox’s performance during fiscal 2019 and respond to questions from shareholders.

 

 

How do I vote?

Beneficial owners will receive a separate Notice of Internet Availability of Proxy Materials (Notice) with voting instructions from the bank, broker or other holder of record where the shares are held that must be followed in order for their shares to be voted. Beneficial owners should follow the instructions from their bank, broker or other holder of record in order for their shares to be voted. If you hold your shares through a broker, bank or nominee, you must obtain a “legal proxy” from your broker, bank or nominee to vote in person at the Annual Meeting.

 

1


Table of Contents

Registered shareholders can vote in any one of four ways:

 

 

BY INTERNET

 

 

 

BY TELEPHONE

 

If you have Internet access, you may vote your shares by following the “Vote by Internet” instructions included in the Notice or on the enclosed proxy card. If you vote via the Internet, do not return your proxy card.   If you received written materials, you may vote your shares by following the “Vote by Telephone” instructions on the enclosed proxy card. If you vote by telephone, do not return your proxy card.

 

BY MAIL

 

 

 

AT THE ANNUAL MEETING

 

If you received written materials, you may vote by completing and signing the proxy card enclosed with this Proxy Statement and promptly mailing it in the enclosed postage-prepaid envelope. The shares you own will be voted according to your instructions on the proxy card you mail. If you sign and return your proxy card but do not indicate your voting instructions on one or more of the matters listed, the shares you own will be voted by the named proxies in accordance with the recommendations of our Board.   If you vote by Internet or by telephone, or if you complete and mail your proxy card, you do not need to vote at the Annual Meeting. At the Annual Meeting, we will distribute written ballots to any shareholder of record or authorized representative of a shareholder of record who wants to vote in person at the Annual Meeting instead of by proxy. Voting in person will revoke any proxy previously given. If you hold your shares through a broker, bank or nominee, you must obtain a proxy from your broker, bank or nominee to vote in person.

If you vote by Internet, telephone or mail, you authorize each of the three directors, whose names are listed on the proxy card accompanying this Proxy Statement, to act as your proxies to represent you and vote your shares as you direct.

 

 

How does the Board recommend that I vote?

The Board recommends that you vote:

 

   

“FOR” the election of each of the seven directors named in this Proxy Statement;

 

   

“FOR” the ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2020;

 

   

“FOR” the approval, on an advisory basis, of the 2019 compensation of our named executive officers; and

 

   

“FOR” the approval of the Company’s Performance Incentive Plan.

 

 

How can I attend the Annual Meeting?

You are entitled to attend the Annual Meeting only if you were a Xerox shareholder of record as of the close of business on March 27, 2020 or if you hold a valid proxy for the Annual Meeting.

Registered shareholders will be admitted to the Annual Meeting upon providing a valid form of government-issued photo identification, such as a driver’s license or passport, and an admission ticket. Your name will be verified against the list of shareholders of record on the record date prior to your admission to the Annual Meeting.

Beneficial owners will be admitted to the Annual Meeting upon providing your most recent brokerage statement, along with a valid form of government-issued photo identification, such as a driver’s license or passport, and an admission ticket. We will use your brokerage statement to verify your ownership of common stock or Series A Preferred Stock as of the record date and admit you to the Annual Meeting. If you own shares in street name and wish to vote those shares at the Annual Meeting, you must obtain a “legal proxy” from your broker, bank or nominee.

 

2


Table of Contents

To obtain an admission ticket:

If you are a registered shareholder:

 

   

If you submit your proxy via the Internet or by telephone, you will be asked if you would like to receive an admission ticket.

 

   

If you return a proxy card by mail, please mark the appropriate box on the proxy card and an admission ticket will be sent to you.

If you are a beneficial owner:

 

   

Please request an admission ticket in advance by calling Shareholder Services at (203) 849-2315 or by mailing a written request, along with proof of your ownership of Xerox common stock as of the Record Date, to Xerox Holdings Corporation, Shareholder Services, 201 Merritt 7, Norwalk, CT 06851-1056. All calls and written requests for admission tickets must be received no later than the close of business on May 11, 2020.

No cameras, laptops, recording equipment, other similar electronic devices, signs, placards, briefcases, backpacks, large bags, or packages will be permitted in the Annual Meeting. We reserve the right to deny admittance to any shareholder who attempts to bring any such item into the Annual Meeting. Small purses are permissible, but they and any bags or packages permitted in the meeting room will be subject to inspection.

We intend to hold our Annual Meeting in person. However, we are actively monitoring the coronavirus (COVID-19) situation and we are sensitive to the public health and travel concerns our shareholders may have and the protocols that federal, state and local government and health authorities may impose. We are also mindful of the health and safety of our directors, management, employees, shareholders and others attending the Annual Meeting. In the event that it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting by press release as promptly as practicable, which may include holding the meeting solely by means of remote communication. As a New York corporation, we are currently not legally permitted to hold solely a virtual meeting on May 21, 2020. Please monitor the www.news.xerox.com/investors website for updated information. If you are planning to attend our Annual Meeting, please check the www.news.xerox.com/investors website one week prior to the Annual Meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.

You can find directions to the meeting online at www.edocumentview.com/XRX. If you have any further questions regarding admission or directions to the Annual Meeting, please call Shareholder Services at (203) 849-2315.

 

3


Table of Contents

PROPOSAL 1 — ELECTION OF DIRECTORS

Shareholders annually elect directors to serve for one year and until their successors have been elected and have been qualified. Based on the director nomination process described below, the seven persons whose biographies appear below have been nominated by the Board to serve as directors based on the recommendation of the Corporate Governance Committee.

Each of the director nominees currently serves on the Board. Each nominee brings to us valuable experience from a variety of fields. The biographical information presented regarding each nominee’s specific experience, qualifications, attributes and skills led our Board to the conclusion that he or she should serve as a director. Each of the nominees has demonstrated business acumen and an ability to exercise independent and sound judgment, as well as an understanding of the Company’s business environment and a commitment to serve the Company and our Board. We also value their significant experience on other public company boards of directors and board committees.

The Board has determined that each of the nominees (other than John Visentin, Vice Chairman and Chief Executive Officer of the Company) is independent under the NYSE corporate governance rules and the Company’s more stringent independence standards.

It is expected that all nominees proposed by our Board will be able to serve on the Board if elected. Although not anticipated, if for any reason, a nominee is unable to serve, the proxies may use their discretion to vote for a substitute nominated by the Board.

Biographies

The Board is continuously seeking highly-qualified, diverse candidates to add to the range of skills and experiences represented on our Board. The seven individuals nominated for election at our 2020 Annual Meeting bring valuable diversity to the Board. One of these seven director nominees is a woman. One of our nominees is Hispanic. These seven director nominees range in age from 41 to 64. In addition, each director nominee contributes to the Board’s overall diversity by providing a variety of perspectives, personal and professional experiences and backgrounds. The tenure of the current directors averages approximately two and a half years. We believe our director nominees bring a well-rounded variety of skills, qualifications, experience and diversity as well as fresh perspectives.

 

LOGO    LOGO


Board Diversity 2 of 7 Directors are diverse basedon gender & ethnicity Board Age Distribution Average Ag ~54

The table below summarizes the key qualifications, skills and attributes that each of our directors possesses that were most relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill or that other qualities were not also considered; rather, a mark indicates a specific area of focus or expertise on which the Board relied most heavily. Each director’s biography below describes his or her qualifications and relevant experience in more detail.

 

4


Table of Contents

Skills and Qualifications of our Board of Directors

 

 

Experience,

expertise or

attribute

 

 

  Christodoro     Cozza     Echevarria     Graziano     Krongard     Letier     Visentin  

 

Technology

 

 

 

 

 

 

 

 

 

 

 

 

         

 

 

 

 

 

         

 

 

 

 

 

 

 

 

 

 

 

 

Leadership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Global Business

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Business Operations

         

 

 

 

 

 

 

 

 

 

 

 

         

 

 

 

 

 

         

 

 

 

 

 

 

Diversity

                 

 

 

 

 

 

         

 

 

 

 

 

               

In addition to the qualifications and skills referenced above, we have provided below the principal occupation and other information about the relevant experience, qualifications, attributes or skills that the Board has concluded qualify each of the nominees to serve as a director of the Company. Each director nominee has consented to being named in this Proxy Statement and has agreed to serve if elected.

Certain terms used in the biographies may be unfamiliar to you, so we are defining them here.

Xerox securities owned means the Company’s common stock, including vested Deferred Stock Units (DSUs) issued under the 2019 Amendment and Restatement of the 2004 Equity Compensation Plan for Non-Employee Directors, as amended (2004 Directors Plan).

Options/Rights means unvested DSUs and restricted stock units (RSUs) issued under the 2004 Directors Plan and RSUs, performance share units (PSUs) and stock options awarded under the 2019 Amendment and Restatement of the Xerox Corporation 2004 Performance Incentive Plan, as amended (2004 Performance Incentive Plan), as applicable.

Immediate family means the spouse, the minor children and any relatives sharing the same home as the nominee.

Unless otherwise noted, all Xerox securities held are owned beneficially by the nominee. Beneficial ownership means he or she has or shares voting power and/or investment power with respect to the securities, even though another name (that of a broker, for example) may appear in the Company’s records. All ownership figures are as of February 29, 2020.

 

LOGO     

Jonathan Christodoro

Age: 44       Director since: 2018

Xerox securities owned: 16,816 DSUs

Options/Rights: 6,254 DSUs

Occupation: Partner, Patriot Global Management LP

Education: BS, Cornell University; M.B.A., University of Pennsylvania Wharton School of Business

Board Committees: Audit, Compensation, Finance

Key Skills:

• Technology

• Leadership

• Global Business

• Financial

• Public and Private Company Boards & Governance

Other Directorships (past 5 years): Enzon Pharmaceuticals, Inc. (since 2013); Herbalife Ltd. (since 2013); PayPal Holdings, Inc. (since 2015); Sandridge Energy, Inc. (since 2018); Lyft, Inc. (2015- 2019); Xerox Corporation (2016-2017); American Railcar Industries, Inc. (2015-2017); Cheniere Energy, Inc. (2015-2017); eBay, Inc. (March 2015-July 2015); Hologic Inc. (2013-2016); Talisman Energy Inc. (2013-2015).

 

5


Table of Contents

Other Background: Mr. Christodoro has been a Partner at Patriot Global Management LP, an investment manager, since March 2017. From July 2012 — February 2017, Mr. Christodoro served as a Managing Director of Icahn Capital LP, the entity through which Mr. Icahn manages investment funds. Mr. Christodoro was responsible for identifying, analyzing and monitoring investment opportunities and portfolio companies for Icahn Capital. Prior to joining Icahn Capital, Mr. Christodoro held various investment and research roles at P2 Capital Partners, Prentice Capital Management, LP and S.A.C. Capital Advisors, LP. Mr. Christodoro began his career as an investment banking analyst at Morgan Stanley. Mr. Christodoro has been a director of Sandridge Energy, Inc., an oil and natural gas exploration and production company, since June 2018; PayPal Holdings, Inc., a technology platform company that enables digital and mobile payments worldwide, since July 2015; and Enzon Pharmaceuticals, Inc., a biotechnology company, since October 2013 and has been Chairman of the Board since November 2013. Mr. Christodoro was previously a director of: Lyft, Inc., or Lyft, a mobile ridesharing application, from May 2015 until March 2019; Cheniere Energy, Inc., or Cheniere, a developer of natural gas liquefaction and export facilities and related pipelines, from August 2015 until August 2017; Hologic, Inc., or Hologic, a supplier of diagnostic, medical imaging and surgical products, from December 2013 to March 2016; eBay Inc., or eBay, a global commerce and payments company, from March 2015 to July 2015; Talisman Energy Inc., or Talisman, an independent oil and gas exploration and production company, from December 2013 to May 2015; and American Railcar Industries, Inc., a railcar manufacturing company, from June 2015 to February 2017. American Railcar Industries, Inc. was previously indirectly controlled by Carl C. Icahn. Mr. Icahn has or previously had non-controlling interests in each of Sandridge Energy, Inc., Xerox Corporation, Cheniere Energy, Inc., PayPal Holdings, Inc., eBay, Inc., Lyft, Inc., Hologic Inc., Talisman Energy Inc., Enzon Pharmaceuticals, Inc. and Herbalife Ltd. through the ownership of securities. Mr. Christodoro received an M.P.H. in Epidemiology from the Harvard T.H. Chan School of Public Health. Mr. Christodoro received an M.B.A. from the University of Pennsylvania’s Wharton School of Business with Distinction, majoring in Finance and Entrepreneurial Management. Mr. Christodoro received a B.S. in Applied Economics and Management Magna Cum Laude with Honors Distinction in Research from Cornell University. Mr. Christodoro also served in the United States Marine Corps.

From his broad investment background and service on other public company boards and committees, Mr. Christodoro brings to the Board expertise relevant to Xerox, including the experience of identifying investment and portfolio opportunities, strategic planning, company transformation, and financial expertise.

 

 

LOGO

    

Keith Cozza

Age: 41       Director since: 2018

Xerox securities owned: 50,000 shares of Common Stock, 7,434 DSUs

Options/Rights: 6,116 RSUs

Occupation: President and Chief Executive Officer, Icahn Enterprises L.P.

Education: B.S., University of Dayton

Board Committees: Chairman of the Board; Corporate Governance (Chair)

Key Skills:

• Technology

• Leadership

• Global Business

• Financial

• Public and Private Company Boards & Governance

Other Directorships (past 5 years): Caesars Entertainment Corporation (since 2019); Tenneco Inc. (2018-2019) Tropicana Entertainment Inc. (2014-2018); Icahn Enterprises L.P. (since 2012); Herbalife Ltd. (2013-2018).

Other Background: Mr. Cozza has been the President and Chief Executive Officer of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment, automotive, energy, food packaging, metals, real estate and home fashion, since February 2014. In addition, Mr. Cozza has served as Chief Operating Officer of Icahn Capital LP, the subsidiary of Icahn Enterprises through which Carl C. Icahn manages investment funds, since February 2013. From February 2013 to February 2014, Mr. Cozza served as Executive Vice President of Icahn Enterprises. Mr. Cozza is also the Chief Financial Officer of Icahn Associates Holding LLC, a position he has held since 2006. Mr. Cozza has been: a director at Caesars Entertainment Corporation, a casino-entertainment and hospitality services provider, since March 2019; and a director of

 

6


Table of Contents

Icahn Enterprises L.P., since September 2012. In addition, Mr. Cozza serves as a director of certain wholly-owned subsidiaries of Icahn Enterprises L.P., including: Icahn Automotive Group LLC, an automotive parts installer, retailer and distributor; and PSC Metals LLC, a metal recycling company. Mr. Cozza was previously: a director of Tenneco Inc., manufacturers of Ride Performance, Clean Air products and technology solutions for automotive and commercial vehicles, from October 2018 to March 2019; a director of Federal-Mogul Holdings LLC (formerly known as Federal-Mogul Holdings Corporation), a supplier of automotive powertrain and safety components from January 2017 to October 2018; a director of Tropicana Entertainment Inc., a company that is primarily engaged in the business of owning and operating casinos and resorts, from February 2014 until October 2018; a director of Herbalife Ltd., a nutrition company, from April 2013 to April 2018; a member of the Executive Committee of American Railcar Leasing LLC, a lessor and seller of specialized railroad tank and covered hopper railcars, from June 2014 to June 2017; a director of CVR Refining, LP, an independent downstream energy limited partnership, from January 2013 to February 2014; and a director of MGM Holdings Inc., an entertainment company focused on the production and distribution of film and television content, from April 2012 to August 2012. Federal-Mogul, Icahn Automotive, CVR Refining, Icahn Enterprises, PSC Metals and Tropicana are each indirectly controlled by Carl C. Icahn, and American Railcar Leasing was previously indirectly controlled by Mr. Icahn. Mr. Icahn also has or previously had non-controlling interests in Caesars Entertainment, Tenneco, Xerox, Herbalife and MGM Holdings through the ownership of securities. Mr. Cozza holds a B.S. in Accounting from the University of Dayton.

From his extensive finance and investment background and significant Board service, Mr. Cozza brings to the Board expertise relevant to being Chairman of the Board at Xerox, including his service on several other boards and committees as well as his significant corporate, finance, accounting and investment experience.

 

LOGO

    

Joseph J. Echevarria

Age: 63       Director since: 2017

Xerox securities owned: 16,078 DSUs

Options/Rights: 6,254 DSUs

Occupation: Former Chief Executive Officer of Deloitte LLP

Education: B.B.A., University of Miami

Board Committees: Audit (Chair), Finance

Key Skills:

• Leadership

• Global Business

• Financial

• Public Company Boards & Governance

• Business Operations

• Diversity

Other Directorships (past 5 years): The Bank of New York Mellon Corporation (since 2015); Pfizer Inc. (since 2015); Unum Group (since 2016).

Other Background: Mr. Echevarria served as Chief Executive Officer of Deloitte LLP, a global provider of professional services, from 2011 until his retirement in August 2014. He joined the Deloitte U.S. Firms in 1978. During his tenure with Deloitte he held increasingly senior leadership positions prior to being named CEO, including U.S. Managing Partner and Chief Operating Officer, Deputy Managing Partner, and Southeast Region Audit Managing Partner. His leadership responsibilities extended to approximately 70,000 professionals in nearly 90 U.S. cities and India. In addition, he oversaw the U.S. owned consulting businesses in Germany, Mexico, China, and Brazil. He also served on key boards and committees within Deloitte and its member firm network, including chair of the U.S. Executive and Americas Executive committees and memberships on the U.S. and global boards. In addition to the public company board service noted above, Mr. Echevarria currently serves as a Trustee and Senior Advisor to the President of the University of Miami; and he has been appointed by the President to be a member of the President’s Private Export Council and the President’s Commission on Election Administration; he was formerly a member of President Obama’s Export Council, the principal national advisory committee on international trade. He also serves as the Chair Emeritus of former President Obama’s My Brother’s Keeper Alliance and as an advisor to the Obama Foundation.

 

7


Table of Contents

Mr. Echevarria brings to the Board significant experience in finance, accounting, international business, leadership and risk management skills relevant to Xerox acquired through his leadership at Deloitte. Mr. Echevarria’s financial acumen, including his significant previous audit experience, expertise in accounting issues and service on the audit committee on the boards of other publicly traded companies is an asset to the Board and the Audit Committee. He also brings public policy perspectives from his government service, which includes his public service on the President’s Private Export Council.

 

 

LOGO

    

Nicholas Graziano

Age: 48       Director since: 2018

Xerox securities owned: 4,780 shares of Common Stock, 7,434 DSUs

Options/Rights: 6,254 DSUs

Occupation: Portfolio Manager of Icahn Capital

Education: B.A./M.B.A. program at Duke University; BA in Economics; MBA from Fuqua School of Business

Board Committees: Finance (Chair), Audit

Key Skills:

• Technology

• Leadership

• Global Business

• Financial

• Public and Private Company Boards & Governance

Other Directorships (past 5 years): Cloudera, Inc. (since 2019, Chairman since 2020); Conduent Incorporated (2018-2020); Herc Holdings, Inc. (since 2018); Herbalife Ltd. (since 2018); Occidental Petroleum Corporation (since 2020).

Other Background: Mr. Graziano has served as Portfolio Manager of Icahn Capital, the entity through which Carl C. Icahn manages investment funds, since February 2018. Mr. Graziano was previously the Founding Partner and Chief Investment Officer of the hedge fund Venetus Partners LP, where he was responsible for portfolio and risk management, along with day-to-day firm management, from June 2015 to August 2017. Prior to founding Venetus, Mr. Graziano was a Partner and Senior Managing Director at the hedge fund Corvex Management LP from December 2010 to March 2015. At Corvex, Mr. Graziano played a key role in investment management and analysis, hiring and training of analysts and risk management. Prior to Corvex, Mr. Graziano was a Portfolio Manager at the hedge fund Omega Advisors, Inc., where he managed a proprietary equity portfolio and made investment recommendations, from September 2009 until December 2010. Before Omega, Mr. Graziano served as a Managing Director and Head of Special Situations Equity at the hedge fund Sandell Asset Management, where he helped build and lead the special situations team responsible for managing a portfolio of concentrated equity and activist investments, from July 2006 to July 2009. Mr. Graziano has been a director of: Cloudera, Inc., a company that provides a software platform for data engineering, data warehousing, machine learning and analytics, since August 2019; Herc Holdings Inc., an international provider of equipment rental and services, since May 2018; Herbalife Ltd., a nutrition company, since April 2018; and Occidental Petroleum Corporation, an international oil and gas exploration and production company, since March 2020. Mr. Icahn has non-controlling interests in each of Cloudera, Conduent, Herc, Xerox, Herbalife, and Occidental through the ownership of securities. Mr. Graziano previously served on the Board of Directors of each of: Conduent Incorporated from May 2018 to March 2020, Fair Isaac Corporation (FICO) from February 2008 to May 2013; WCI Communities Inc. from August 2007 to August 2009; and InfoSpace Inc. from May 2007 to October 2008. Sandell Asset Management had non-controlling interests in FICO and InfoSpace through the ownership of securities. Mr. Graziano completed a five-year undergraduate/M.B.A. program at Duke University earning a B.A. in Economics and an M.B.A. from The Fuqua School of Business.

From his broad investment background and service on other public company boards and committees, Mr. Graziano brings to the Board expertise relevant to Xerox, including his significant risk management and investment experience and financial expertise.

 

8


Table of Contents
LOGO     

Cheryl Gordon Krongard

Age: 64       Director since: 2017

Xerox securities owned: 16,078 DSUs

Options/Rights: 6,254 DSUs

Occupation: Private investor; Former CEO Rothschild Asset Management

Education: B.S., Iowa State University

Board Committees: Compensation (Chair), Corporate Governance

Key Skills:

• Leadership

• Global Business

• Financial

• Public Company Boards & Governance

• Business Operations

• Diversity

Other Directorships (past 5 years): Air Lease Corporation (since 2013); Federal-Mogul Holdings LLC (formerly known as Federal-Mogul Holdings Corporation) (private company) (2016-2018); Legg Mason, Inc. (2006-2017); US Airways Group Inc. (2003-2013).

Other Background: Ms. Krongard was a senior partner of Apollo Management, L.P., a private investment company, from January 2002 to December 2004. From 1994 to 2000, she served as the Chief Executive Officer of Rothschild Asset Management and as Senior Managing Director for Rothschild North America. Additionally, she served as a director of Rothschild North America, Rothschild Asset Management, Rothschild Asset Management BV, and Rothschild Realty Inc. and as Managing Member of Rothschild Recovery Fund. Ms. Krongard was also elected a lifetime governor of the Iowa State University Foundation in 1997 and has served as Chairperson of its Investment Committee.

Ms. Krongard brings to the Board expertise relevant to Xerox, including her substantial asset management expertise and her operational and leadership experience serving as a senior executive at large, complex asset management organizations. Ms. Krongard brings extensive investment, strategic planning and financial expertise gained as a director of other public companies. Ms. Krongard also has significant compensation, finance, audit and corporate governance experience acquired through her service on the boards and committees of other publicly traded companies.

 

LOGO     

Scott Letier

Age: 59       Director since: 2018

Xerox securities owned: 7,434 DSUs

Options/Rights: 6,254 DSUs

Occupation: Managing Director of Deason Capital Services, LLC

Education: B.B.A. with a concentration in accounting, Southern Methodist University — Cox School of Business

Board Committees: Compensation, Corporate Governance

Key Skills:

• Technology

• Leadership

• Global Business

• Financial

• Public and Private Company Boards & Governance

Other Directorships (past 5 years): Conduent Incorporated (since 2018); serves on various private company boards, including MV Transportation; Colvin Resources Group; Grow 52, LLC (dba Gardenuity); fund advisory board of Griffis Residential.

Other Background: Scott Letier has been Managing Director of Deason Capital Services, LLC (DCS), the family office for Darwin Deason, since July 2014. Prior to joining DCS, Mr. Letier was the Managing Director of JFO Group, LLC, the family office for the Jensen family, from September 2006 to July 2014. Mr. Letier has over 20 years of prior leadership roles serving as a private equity investment professional and chief financial officer,

 

9


Table of Contents

and began his career in the audit group at Ernst & Whinney (now Ernst & Young). Mr. Letier has served on numerous boards in the past, and currently serves on the Board of Directors of Conduent Incorporated and several private companies, including MV Transportation, Inc., the leading provider of para-transit services and the largest privately owned passenger transportation contracting firm in the United States, Colvin Resources Group, a Dallas based search and staffing firm, and Grow 52, LLC (dba Gardenuity), a tech enabled retailer, and serves on the fund advisory board of Griffis Residential, a Denver based multi-family real estate management and investment firm. Mr. Letier also serves as Treasurer, board member, executive committee member, and Chairman of the audit and finance committees of the Dallas County Community College District Foundation. Mr. Letier is a Certified Public Accountant and has a B.B.A. with a concentration in accounting from the Southern Methodist University — Cox School of Business.

With his over 20 years of prior leadership roles and service on other company boards and committees, Mr. Letier brings to the Board expertise relevant to Xerox, including his significant audit experience and investment and financial expertise serving as a private equity investment professional and chief financial officer.

 

LOGO     

Giovanni (“John”) Visentin

Age: 57       Director since: 2018

Xerox securities owned: 295,263 shares of Common Stock

Options/Rights: 201,986 stock options; 308,289 RSUs; 632,718 PSUs

Occupation: Vice Chairman and Chief Executive Officer of Xerox Corporation

Education: Bachelor of Commerce, Concordia University (Montreal, Canada)

Board Committees: None — Chief Executive Officer

Key Skills:

• Technology

• Leadership

• Global Business

• Financial

• Business Operations

• Public Company Boards & Governance

Other Directorships (past 5 years): Presidio, Chairman of the Board of Directors (February 2015 to November 2017).

Other Background: Mr. Visentin joined Xerox as Vice Chairman and CEO in May 2018. Prior to joining Xerox, Mr. Visentin served as a senior advisor to the chairman of Exela Technologies from August 2017 to May 2018, an operating partner for Advent International from September 2017 to May 2018 and a consultant to Icahn Capital in connection with a proxy contest at Xerox from March 2018 to May 2018. From 2013 to 2017, he served as the executive chairman and chief executive officer of Novitex Enterprise Solutions and as an advisor with Apollo Global Management. Mr. Visentin was also a director and chairman of the board of Presidio, Inc. from 2015 to 2017. From 2011 to 2012, he served as executive vice president and general manager of Hewlett Packard Company’s enterprise services business. From 2007 to 2011, Mr. Visentin served as general manager of integrated technology services for IBM. Mr. Visentin graduated from Concordia University in Montreal, Canada, with a Bachelor of Commerce.

With his significant experience in leading and transforming multibillion-dollar business units in the IT services industry during his time at both Hewlett-Packard and IBM, Mr. Visentin brings to the Board expertise relevant to Xerox. Mr. Visentin also brings to the Board significant strategic planning, company transformation, and financial expertise gained through his experience serving as chairman and chief executive officer at other companies.

The Board recommends a vote

FOR

the election of each of the seven directors nominated by the Board

 

10


Table of Contents

CORPORATE SOCIAL RESPONSIBILITY

For generations, Xerox has stood for innovation, quality and an excellent customer experience. Led by the core values our founder established a half century ago, we strive to conduct business ethically and in an environmentally and socially conscious manner. We are the company that revolutionized the office, created printing-on-demand, and repeatedly reinvented and transformed to keep pace with the demands of our customers and the market. We set goals, track our progress, communicate and share best practices to improve the quality of work and life, keeping to the core value of corporate citizenship.

Today, we honor this heritage by turning investments in innovation into products and services that help our customers be more productive, profitable and sustainable. We are helping define the future of work and enabling printing beyond paper with new technologies designed to disrupt the market and change the way we think about workflows and information processes. This is our contribution to a more sustainable world.

Alignment with the United Nations Sustainable Development Goals (SDGs)

The 2030 Agenda of the United Nations for Sustainable Development provides a global blueprint for dignity, peace and prosperity for people and the planet, now and in the future. Achieving the SDGs requires immediate and accelerated actions by countries along with collaborative partnerships among governments and stakeholders at all levels.

Technology companies, like Xerox, are important stakeholders that can lead by example in their own operations and provide the solutions and countermeasures globally to achieve the goals.

Established over a half century ago by founder Joseph C. Wilson, our corporate values have stood the test of time and align with the SDGs. We will continue our efforts to bring our Operations and those of our customers closer to goal.

Our Corporate Social Responsibility Goals

Below is a summary of our environmental and social goals and a status of our progress towards achieving those goals. More detailed information can be found in our 2020 Corporate Social Responsibility Goals and Progress Report which is available on our website at https://www.xerox.com/en-us/about/corporate-social-responsibility, as well as in our 2020 Corporate Social Responsibility Report which is available on our website at https://www.xerox.com/en-us/about/corporate-social-responsibility. Information about Environment, Health, Safety, and Sustainability at Xerox, including details of our initiatives with respect to carbon footprint, paper, clean air & water, waste, chemical management, and health & safety, is available on our website at https://www.xerox.com/en-us/about/ehs. Information on the Xerox website is not incorporated by reference into this proxy statement.

ENVIRONMENTAL GOALS

Operations LOGO LOGO LOGO

 

Goal

 

 

2019
  Progress  

 

 

100% landfill avoidance by 2020

 

   

 

 

 

 

92

 

 

%

 

 

20% renewable energy use by 2020

 

   

 

 

 

 

15

 

 

%

 

 

35% reduction in water use by 2020, from 2010 baseline

 

   

 

 

 

 

45

 

 

%

 

 

24% reduction in GHG emissions by 2025, from 2016 baseline

 

   

 

 

 

 

18

 

 

%*

 

 

25% reduction in energy use by 2025, from 2016 baseline

 

   

 

 

 

 

18.5

 

 

%*

 

 

*

preliminary and conservative estimate pending third-party validation expected in May 2020.

 

11


Table of Contents

Products LOGO LOGO LOGO

 

Goal

 

 

2019
  Progress  

 

 

100% newly launched and eligible products achieve Energy Star®

 

   

 

 

 

 

100

 

 

%

 

 

100% newly launched and eligible products achieve EPEAT®

 

   

 

 

 

 

100

 

 

%

 

SOCIAL GOALS

Labor: Workplace Safety LOGO

 

Goal

 

 

2019
  Progress  

 

 

5% reduction in Total Recordable Injury Rate (TRI) from 2018

 

   

 

 

 

 

2.4

 

 

% (U.S.)

 

 

5% reduction in Days Away from Work (DAFW) from 2018

 

   

 

 

 

 

1.8

 

 

% (U.S.)

 

Labor: Balanced Workforce/Diversity LOGO LOGO LOGO

 

Goal

 

 

2019
  Progress  

 

 

36% woman managers — Europe, Middle East and Africa

 

   

 

 

 

 

26

 

 

%

 

 

38% woman managers — the Americas

 

   

 

 

 

 

27

 

 

%

 

 

32% woman managers — Asia Pacific

 

   

 

 

 

 

18.2

 

 

%

 

 

7% veterans — U.S.

 

   

 

 

 

 

4

 

 

%

 

 

7% employees with disabilities

 

   

 

 

 

 

3

 

 

%

 

DIVERSITY AND INCLUSION

Diversity and inclusion are an essential part of Xerox’s culture. Our long history of promoting diversity in our ranks began over a half-century ago, with the leadership of one man: Joseph C. Wilson, the first CEO of modern-day Xerox. Thanks to his vision, diversity became a part of our value system.

First introduced at the White House by President Obama, our Wilson Rule marks enhanced efforts to increase the representation of minorities and women in management and senior-level professional positions. The Wilson Rule requires that women and minorities be among the final pool of qualified candidates for open management and senior-level professional positions in the U.S. Outside the U.S., women must be considered among the final pool of qualified candidates for the same management and senior-level professional positions.

 

12


Table of Contents

Today, we have one of the most diverse workforces in the world. Through diversity of backgrounds and perspectives, we gain the benefit of different ways of looking at our business, leading to innovative breakthroughs for our customers and more engaging work for our people. Globally, we create policies that support our business goals and reflect the culture of the countries in which we do business. Xerox does not discriminate on the basis of race, color, religious belief, sex, age, national origin, citizenship status, marital status, union status, sexual orientation or gender identity.

And we continue to learn and adapt every day. We build and sustain a global workforce and supply base that represent and connect with the different people and communities we serve. In today’s changing, connected world, our shared commitments to respect each other and listen to each other remain critical to our success.

We recognize that diversity and inclusion gains will not be sustained unless our workplace promotes and encourages new ways of problem-solving and diversity of thought. To that end, we promote understanding and inclusion through a comprehensive set of diversity initiatives and strategies including:

 

   

Our balanced workforce strategy drives equitable people representation in all areas of our company, all around the world.

 

   

Our work-life programs assist our people in the many aspects of their personal lives.

 

   

We educate all of our people on diversity programs, policies and achievements. And, we ensure diversity and inclusion principles are communicated to all of our people.

 

   

We continually develop and evolve strategies that leverage diversity to gain a competitive global advantage and to drive market excellence.

 

   

Our supplier diversity program ensures we are actively committed to purchasing supplies and products from small and diverse enterprises.

 

   

We address diversity disparities by identifying shortfalls and closing those gaps.

More about these initiatives and strategies can be found on the “Careers” page of our website, which is available at: www.xerox.com/en-us/jobs/diversity. Information on the Xerox website is not incorporated by reference into this proxy statement.

CORPORATE GOVERNANCE

Xerox is committed to the highest standards of business integrity and corporate governance. All of our directors, executives and employees must act ethically. In addition, our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer, principal financial officer and principal accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct. Each of these codes of conduct can be accessed through our website at xerox.com/en-us/about/corporate-social-responsibility/finance-code-of-conduct and xerox.com/en-us/about/corporate-social-responsibility/code-of-business-conduct, respectively. Our Corporate Governance Guidelines and the charters of our Audit, Compensation, Corporate Governance and Finance Committees can be accessed through our website at www.xerox.com/governance. They are also available to any shareholder who requests them in writing addressed to Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851-1056, Attention: Corporate Secretary. We will disclose any future amendments to, or waivers from, provisions of our Code of Business Conduct and Ethics for members of the Board and our Code of Business Conduct and our Finance Code of Conduct for our officers on our website as promptly as practicable, as may be required under applicable SEC and NYSE rules. The Corporate Governance Committee of the Board periodically reviews and reassesses the adequacy of our overall corporate governance, Corporate Governance Guidelines and committee charters.

Director Nomination Process

The Corporate Governance Committee considers candidates for Board membership recommended by Board members, management, shareholders and others (see below). The Corporate Governance Guidelines require that a substantial majority of the Board consist of independent directors and that management representation on the Board should be limited to Company senior management. There are no specific minimum qualifications that the Corporate Governance Committee believes must be met by prospective candidates; however, the Corporate Governance Committee applies the criteria set forth in our Corporate Governance Guidelines. These criteria include, among other things, the candidate’s broad perspective, integrity, independence of judgment, experience, expertise, diversity, ability to make independent analytical inquiries, understanding of the

 

13


Table of Contents

Company’s business environment and willingness to devote adequate time and effort to Board responsibilities. The Corporate Governance Committee does not assign specific weight to particular criteria and no particular criterion is necessarily applicable to all prospective nominees.

Board Diversity

Our Corporate Governance Guidelines dictate that diversity should be considered by the Corporate Governance Committee in the director identification and nomination process. Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the director nomination process. This means that the Corporate Governance Committee seeks nominees who bring a variety of business backgrounds, experiences and perspectives to the Board. In February 2020, the Board amended our Corporate Governance Guidelines to require that the initial list of candidates from which new, management-supported director nominees are chosen by the Corporate Governance Committee should include, but not be limited to, qualified women and minority candidates. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a broad diversity of experience, professions, skills, geographic representations, knowledge and abilities that will allow the Board to fulfill its responsibilities.

Shareholders who wish to recommend individuals for consideration by the Corporate Governance Committee may do so by submitting a written recommendation to the Secretary of the Company at Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851-1056. Submissions must include sufficient biographical information concerning the recommended individual, including age, employment and current board memberships (if any), for the Corporate Governance Committee to consider. The submission must be accompanied by the written consent of the nominee to stand for election if nominated by the Board and to serve if elected by the shareholders. Recommendations received no earlier than November 9, 2020 and no later than December 9, 2020 will be considered for nomination at the 2021 Annual Meeting of Shareholders

Shareholder Proxy Access

In March 2020, the Board amended the Company’s By-Laws, adding Section 13 to Article I of the By-Laws, to permit a shareholder, or a group of up to twenty (20) shareholders, owning three percent (3%) or more of the Company’s outstanding common stock continuously for at least three (3) years, to nominate and include in the Company’s proxy materials director candidates constituting up to the greater of two (2) directors or twenty percent (20%) of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the By-Laws. The Company’s By-Laws are available on our website at: www.xerox.com/governance.

Board Leadership Structure

The Board’s goal is to achieve the best board leadership structure for effective oversight and management of the Company’s affairs. The Board believes that there is no single, generally accepted approach to providing board leadership, and that each possible leadership structure must be considered in the context of the individuals involved and the specific circumstances facing a company. Accordingly, what the Board believes is the right board leadership structure may vary as circumstances warrant.

The Company’s governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. Our policies do not preclude the Chief Executive Officer (CEO) from also serving as Chairman of the Board. This flexibility has allowed the Board to utilize its experience and knowledge to appoint the most qualified director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when desirable.

During the Board’s evaluation of its leadership structure, the Board took into account many factors, including the specific needs of the Board and the business, our Corporate Governance Guidelines and the best interests of our shareholders. Upon recommendation of the Corporate Governance Committee, the non-employee directors of the Board concluded that the current leadership structure continues to be the right leadership structure for the Company at this time and that it is in the best interests of the shareholders to maintain the separate Chairman and CEO role currently in place. This structure allows our CEO, who also serves as our Vice Chairman, to focus on the operations of our business while the independent Chairman focuses on leading the Board in its responsibilities. The Board deems this overall board governance structure appropriate as it benefits from the CEO’s knowledge of the Company operations and substantial board experience, while maintaining Board independence in the Chairman role. Our independent Chairman leads the Board in its

 

14


Table of Contents

responsibilities by performing the following duties: presiding at executive sessions of the independent directors; calling special meetings of the independent directors, as needed; addressing individual Board member performance matters, as needed; and serving as liaison on Board-wide issues between the independent directors and the CEO.

Under our Corporate Governance Guidelines, each regularly scheduled Board meeting must include an executive session of all directors and the CEO and a separate executive session attended only by the independent directors.

Our Board is 86 percent comprised of directors who qualify as independent directors. We have an independent Chairman and each of our standing Board committees is comprised solely of independent directors, including our Corporate Governance Committee, which establishes our corporate governance policy and monitors the effectiveness of this policy at the Board level.

Risk Oversight

Our Board has ultimate oversight responsibility for our Enterprise Risk Management (ERM) process. The Board oversees our ERM process through the Audit Committee of the Board, which previews the ERM assessment and process for subsequent review by the Board. Our ERM process is designed to strengthen our risk-management capability and to assess, monitor, and manage all categories of business risk, including strategic, operational, compliance and financial reporting. The Company’s Chief Financial Officer is responsible for the Company’s ERM function through the Enterprise Risk Steering Committee, which includes the majority of the direct reports to the CEO, as well as our Chief Information Officer, our Controller, and our Chief Audit Executive. The Enterprise Risk Steering Committee inspects risk mitigation plans and progress, identifies and addresses emerging risks, and shares mitigation best practices across the Company. Additionally, to ensure that ERM is integrated with our business management, the Company’s Management Committee, the Business Ethics and Compliance Office, and various internal control committees monitor risk exposure and the effectiveness of how we manage these risks.

While the Board has ultimate oversight responsibility for the risk management process, various committees of the Board have been delegated responsibility for certain aspects of risk management. In addition to its responsibility to oversee the overall ERM process, the Audit Committee focuses on financial risk, including risks associated with internal control, audit, financial reporting and disclosure matters, and also on our Ethics, Litigation, Information and Cyber Security risk mitigation plans and progress. In addition, the Compensation Committee seeks to incent executive employees in a manner that discourages unnecessary or inappropriate risk-taking, while encouraging a level of risk-taking behavior consistent with the Company’s business strategy. In parallel, the Board’s Finance Committee oversees aspects of our Global Economy risk, and on an as needed basis, special sub-Committees are established to focus on specific business risks.

We believe that our leadership structure supports the risk oversight function of the Board. Our CEO serves on the Board and is able to promote open communication between management and directors relating to risk. Additionally, each Board committee is comprised solely of independent directors, and all directors are actively involved in the risk oversight function.

Director Independence

A director is not considered independent unless the Board determines that he or she has no material relationship with the Company. The Board has adopted categorical standards to assist in both its determination and the Corporate Governance Committee’s recommendation as to each director’s independence. Under these categorical standards, a director will be presumed not to have a material relationship with the Company if:

 

  (1)

he or she satisfies the bright-line independence and other applicable requirements under the listing standards of the NYSE and all other applicable laws, rules and regulations regarding director independence, in each case from time to time in effect;

 

  (2)

he or she is not a current employee (and none of his or her “immediate family members” is employed as an “executive officer,” each as defined by the NYSE corporate governance rules) of a company that has made payments to, or received payments from, the Company or any of its consolidated subsidiaries for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or one percent of such other company’s consolidated gross revenues; and

 

15


Table of Contents
  (3)

in the event that he or she serves as an executive officer or director of a charitable organization, the Company and its consolidated subsidiaries donated less than five percent of that organization’s charitable receipts (provided that if within the preceding three years the Company and its consolidated subsidiaries donated annual aggregate contributions in excess of $1 million or two percent of the annual consolidated gross revenue of the charitable organization, such contributions must be disclosed in the Company’s Proxy Statement).

Our Board has determined that all of the nominees for election as directors are independent under the NYSE corporate governance rules and our Corporate Governance Guidelines, with the exception of John Visentin, our Chief Executive Officer.

In addition, the Corporate Governance Committee reviews relationships involving members of the Board, their immediate family members and affiliates, and transactions in which members of the Board, their immediate family members and their affiliates have a direct or indirect interest in which the Company is a participant, to determine whether such relationship or transaction is material and could impair a director’s independence. In making independence determinations, the Board considers all relevant facts and circumstances from the point of view of both the director and the persons or organizations with which the director has relationships. See Certain Relationships and Related Person Transactions.

Based on the results of the aforementioned review, 86% of our nominees for election as directors are deemed to be independent.

Certain Relationships and Related Person Transactions

Related Person Transactions Policy

The Board has adopted a policy addressing the Company’s procedures with respect to the review, approval and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K of the U.S. Securities Act of 1933, as amended (Regulation S-K). The policy provides that any transaction, arrangement or relationship, or series of similar transactions, in which the Company will participate or has participated and a “related person” (as defined in Item 404(a) of Regulation S-K) has or will have a direct or indirect material interest, and which exceeds $120,000 in the aggregate, is subject to review (each such transaction, a Related Person Transaction). In its review of Related Person Transactions, the Corporate Governance Committee reviews the material facts and circumstances of the transaction and takes into account certain factors, where appropriate, based on the particular facts and circumstances, including: (i) the nature of the “related person’s” interest in the transaction; (ii) the significance of the transaction to the Company and to the “related person”; and (iii) whether the transaction is likely to impair the judgment of the “related person” to act in the best interest of the Company.

No member of the Corporate Governance Committee may participate in the review, approval or ratification of a transaction with respect to which he or she is a “related person.”

Certain Employment Arrangements

We actively recruit qualified candidates for our employment needs. Relatives of our executive officers and other employees are eligible for hire. In 2019, we had one non-executive employee who is a family member of a current executive officer, is employed by Xerox and received more than $120,000 in annual compensation (salary, incentive cash awards, equity awards and commissions). This is a routine employment arrangement entered into in the ordinary course of business with compensation commensurate with that of the employee’s peers, and the terms of employment are consistent with the Company’s human resources policies. For 2019, the compensation of Kimberly Finley, spouse of Joseph H. Mancini, Jr., our Chief Accounting Officer, was $467,021. Ms. Finley is Director, Tax Accounting at Xerox and has been with Xerox for over 25 years.

BOARD OF DIRECTORS AND BOARD COMMITTEES

Committee Functions, Membership and Meetings

Our Board has four standing committees: Audit, Compensation, Corporate Governance and Finance. Set forth below is a summary of the responsibilities of each committee, the number of committee meetings held during 2019 for each committee and a list of the members of each committee.

 

16


Table of Contents

Audit Committee (12 meetings)

A copy of the charter of the Audit Committee is posted on the Company’s website at www.xerox.com/governance.

The responsibilities of the Audit Committee include:

 

   

oversee the integrity of the Company’s financial statements;

 

   

oversee the Company’s compliance with legal and regulatory requirements;

 

   

oversee the Company’s risk assessment policies and practices, including the ERM process, and preview the ERM assessment and process for subsequent review by the Board;

 

   

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

 

   

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

 

   

review the Company’s audited financial statements, including the Company’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and recommend to the Board their inclusion in the Company’s Annual Report on Form 10-K;

 

   

review changes in working capital policies and procedures with management; and

 

   

review and approve the Company’s Code of Business Conduct.

The Audit Committee is also responsible for the preparation of the Audit Committee Report that is included below in this Proxy Statement beginning on page 77.

Members: Jonathan Christodoro, Joseph J. Echevarria, and Nicholas Graziano.

Chairman: Mr. Echevarria

The Board has determined that all of the members of the Audit Committee are (1) independent under the Company’s Corporate Governance Guidelines and under the applicable SEC and NYSE corporate governance rules and (2) “audit committee financial experts,” as defined in the applicable SEC rules, and (3) financially literate. Sara Martinez Tucker, who served on the Audit Committee until May 21, 2019, satisfied the foregoing standards during her time as a member of the Audit Committee. Designation or identification of a person as an audit committee financial expert does not impose any duties, obligations or liabilities that are greater than the duties, obligations and liabilities imposed on such person as a member of the Audit Committee and the Board in the absence of such designation or identification.

Compensation Committee (5 meetings)

A copy of the charter of the Compensation Committee is posted on the Company’s website at www.xerox.com/governance.

The responsibilities of the Compensation Committee include:

 

   

oversee development and administration of the Company’s executive compensation plans;

 

   

set the compensation of the CEO and other executive officers;

 

   

review and approve the performance goals and objectives with respect to the compensation of the CEO and other executive officers;

 

   

oversee the evaluation of the CEO and other executive officers;

 

   

have sole authority to retain and terminate the consulting firms engaged to assist the Compensation Committee in the evaluation of the compensation of the CEO and other executive officers;

 

   

be directly responsible for oversight of the work of the compensation consultants, including determination of compensation to be paid to any such consultant by the Company;

 

   

conduct an independence assessment of any compensation consultants to the Compensation Committee, including consideration of the six independence factors required under SEC rules and NYSE listing standards; and

 

   

review and approve employment, severance, change-in-control, termination and retirement arrangements for executive officers.

 

17


Table of Contents

The Compensation Committee is also responsible for reviewing and discussing the Compensation Discussion and Analysis (CD&A) with management, and has recommended to the Board that the CD&A be included in the Company’s Proxy Statement (beginning on page 25) and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The CD&A discusses the material aspects of the Company’s compensation objectives, policies and practices. The Compensation Committee’s report appears on page 56 of this Proxy Statement.

The Compensation Committee has not delegated its authority for compensation for executive officers. The Compensation Committee has, however, delegated to the CEO authority under the Company’s equity plan to grant equity awards to employees who are not executive officers or officers directly reporting to the CEO. The CEO is also responsible for setting the compensation of, reviewing performance goals and objectives for, and evaluating officers who are not executive officers.

Executive officer compensation decisions are made by the Compensation Committee after discussing recommendations with the CEO and the Chief Human Resources Officer. The Chief Financial Officer confirms the Company’s financial results used by the Compensation Committee to make compensation decisions. The Chief Financial Officer attends Compensation Committee meetings to discuss financial targets and results for the Annual Performance Incentive Plan and the Executive Long-Term Incentive Program as described in the CD&A. The Compensation Committee meets in executive session to review and approve compensation actions for the CEO.

The Compensation Committee has retained Frederic W. Cook & Co., Inc. (FW Cook) as an independent consultant to the Compensation Committee. FW Cook provides no services to management and provides an annual letter to the Compensation Committee regarding its independence, which the Compensation Committee reviews and determines whether there is any conflict of interest. Based on its review for 2019, the Compensation Committee determined that FW Cook’s work has not raised any conflict of interest and that such firm is independent. The consultant’s responsibilities are discussed beginning on page 37 of this Proxy Statement.

Members: Jonathan Christodoro, Cheryl Gordon Krongard, and Scott Letier.

Chair: Mrs. Krongard

The Board has determined that all of the members of the Compensation Committee are independent under the Company’s Corporate Governance Guidelines and NYSE corporate governance rules. Gregory Q. Brown, who served on the Compensation Committee until May 21, 2019, satisfied the foregoing independence standards during his time as a member of the Compensation Committee. In addition, each Committee member is a “non-employee director” as defined in Rule 16b-3 under the Exchange Act.

Compensation Committee Interlocks and Insider Participation

No member of the Compensation Committee was or is an officer or employee of the Company or any of its subsidiaries. In addition, during the last fiscal year, none of our executive officers served on the compensation committee (or its equivalent) or board of directors of another entity whose executive officer served on our Board or Compensation Committee.

Corporate Governance Committee (4 meetings)

A copy of the charter of the Corporate Governance Committee is posted on the Company’s website at www.xerox.com/governance.

The responsibilities of the Corporate Governance Committee include:

 

   

identify and recommend to the Board individuals to serve as directors of the Company and on Board committees;

 

   

advise the Board regarding Board composition, procedures and committees;

 

   

develop, recommend to the Board and annually review the Corporate Governance Guidelines applicable to the Company;

 

   

review significant environmental and corporate social responsibility matters;

 

   

administer the Company’s Related Person Transactions Policy;

 

18


Table of Contents
   

evaluate and recommend director compensation to the Board; and

 

   

oversee the annual Board and committee evaluation processes.

The Corporate Governance Committee recommends to the Board nominees for election as directors of the Company and considers the performance of incumbent directors in determining whether to recommend their nomination.

Members: Keith Cozza, Cheryl Gordon Krongard, and Scott Letier.

Chairman: Mr. Cozza

The Board has determined that all of the members of the Corporate Governance Committee are independent under the Company’s Corporate Governance Guidelines and the NYSE corporate governance rules. Sara Martinez Tucker, who served on the Corporate Governance Committee until May 21, 2019, satisfied the foregoing independence standards during her time as a member of the Corporate Governance Committee.

Finance Committee (4 meetings)

A copy of the charter of the Finance Committee is posted on the Company’s website at www.xerox.com/governance.

The responsibilities of the Finance Committee include:

 

   

review the Company’s cash position, capital structure and strategies, financing strategies, insurance coverage and dividend policy;

 

   

review the adequacy of funding of the Company’s funded retirement plans and welfare benefit plans in terms of the Company’s purposes; and

 

   

review the Company’s policy on derivatives and annually determine whether the Company and its subsidiaries shall enter into swap and security-based swap transactions that are not cleared with a Commodity Exchange Act registered clearing organization.

Members: Jonathan Christodoro, Joseph J. Echevarria, and Nicholas Graziano.

Chairman: Mr. Graziano

The Board has determined that all of the members of the Finance Committee are independent under the Company’s Corporate Governance Guidelines and the NYSE corporate governance rules. Gregory Q. Brown, who served on the Finance Committee until May 21, 2019, satisfied the foregoing independence standards during his time as a member of the Finance Committee.

Attendance and Compensation of Directors

Attendance: 16 meetings of the Board and 25 meetings of the Board committees were held in 2019. All incumbent directors attended at least 75 percent of the total number of meetings of the Board, and Board committees on which they served, during the period in which they served as a Xerox director, unless the director recused him or herself from the meeting. The Company’s policy generally is for all members of the Board to attend the Annual Meeting of Shareholders. All nominees who were serving as directors at the time attended the 2019 Annual Meeting of Shareholders, except for Mr. Graziano and Mr. Letier, who did not attend due to conflict with another shareholder meeting for a company on whose board they serve as directors. We believe that attendance at meetings is only one means by which directors may contribute to the effective management of the Company and that the contributions of all directors have been substantial and are highly valued.

Summary of Annual Director Compensation

Compensation for our directors is determined by the Corporate Governance Committee and approved by the full Board. Directors who are our employees receive no additional compensation for serving as a director. Accordingly, Mr. Visentin did not receive any additional compensation for his service on the Board during 2019.

During 2019, the annual cash retainer for directors was $85,000 (for the fiscal year January 1 to December 31); the value of the annual equity retainer for directors was $200,000 (for the period from one annual meeting to the next annual meeting); the chairman of the Audit Committee received an additional $30,000; Audit Committee members each received an additional $15,000; the chairman of the Compensation Committee received an additional $25,000; Compensation Committee members each received an additional $12,500; the

 

19


Table of Contents

chairman of the Corporate Governance Committee received an additional $20,000; the chairman of the Finance Committee received an additional $15,000; and the Corporate Governance and Finance Committee members each received an additional $10,000. The additional annual fee for the independent (non-executive) Chairman of the Board was $100,000. In addition, there is an annual total compensation cap of $750,000 for each non-employee director. Because we have an independent Chairman of the Board, we do not have a Lead Independent Director. Directors do not have an option to receive additional equity in lieu of cash. Directors also receive reimbursement for out-of-pocket expenses incurred in connection with their service on the Board.

Directors receive their annual equity retainer in the form of RSUs, unless they elect to receive DSUs (new DSUs) (described below) instead of RSUs, with such election to be made prior to the year in which the new DSUs are awarded. RSUs vest one year following the date of grant and are paid out in shares of our common stock as on the vesting date. New DSUs vest one year following the date of grant but are not paid out until 30 days following a director’s termination of Board service.

All non-employee Directors are expected to establish a meaningful equity ownership requirement in the Company, which shall be equal in value to five times the annual Board cash retainer. This requirement shall be achieved within five years of the later of (i) December 12, 2018 and (ii) the initial date of election as Director and may be achieved by a director holding RSUs, DSUs (including old DSUs as described below) or a combination of both.

Prior to 2019, the director’s annual equity retainer was paid by Xerox Corporation in DSUs (old DSUs). By serving on the Board for a period of approximately one and a half years, a director would hold old DSUs equivalent in value (as of date of grant) to at least three times a director’s current annual cash retainer. The longer a director served on the Board and was paid an equity retainer in the form of old DSUs, the larger his or her equity ownership interest in the Company would become because, by their terms, all old DSUs are required to be held by directors until the earlier of one year after the termination date of Board service or the date of death. If there is a change in control of the Company, the terms of the 2004 Directors Plan provide that DSUs (old and new) be paid out in cash as soon as practicable.

Each director is also prohibited from engaging in short-swing trading and trading in puts and calls with respect to Xerox stock and is prohibited from using any strategies or products to hedge against potential changes in the value of Xerox stock (collectively, hedging). “Short sales” are also prohibited. Under the Company’s insider trading policy, directors are permitted to buy or sell Xerox securities only during a “window period,” which is the period commencing on the day that is one full trading day following announcement of quarterly earnings and ending on (and including) the fifteenth day of the last month of the quarter during which the earnings announcement is made. The only exception to this restriction is for directors who have entered into trading plans pursuant to SEC Rule 10b5-1. In addition, under the Company’s insider trading policy, directors are prohibited from pledging Xerox stock, including depositing Xerox securities in margin accounts at brokerage firms, or using Xerox stock as collateral.

DSUs are a bookkeeping entry that represent the right to receive one share of common stock at a future date. Vested DSUs include the right to receive dividend equivalents, which are credited in the form of additional DSUs, at the same time and in approximately the same amounts that the holder of an equivalent number of shares of common stock would be entitled to receive in dividends. Vested RSUs (which are issued in the form of common stock following vesting) receive regular cash dividends at the same time and in the same amount as other shareholders. Dividend equivalents are not credited with respect to DSUs or RSUs that have not vested, however, when DSUs or RSUs initially vest, they are credited with dividend equivalents equal to the dividends that would have been paid during the vesting period. DSU dividend equivalents are paid in the form of additional DSUs, and RSU dividend equivalents are paid in the form of cash. The DSUs and RSUs are issued under the 2004 Directors Plan, which was approved by Xerox Corporation shareholders at the 2004 Annual Meeting of Shareholders, amended and restated, with shareholder approval, in 2013 and in 2019 and adopted by Xerox Holdings Corporation upon consummation of the merger of Xerox Corporation into a subsidiary of Xerox (Reorganization). Awards that were outstanding prior to the Reorganization are to be paid in shares of Xerox common stock.

 

20


Table of Contents

Individually, the compensation for each non-employee director during fiscal year 2019 was as follows:

 

Name of Director (1)

 

 

Fees

earned

or paid in

cash

(2)

 

   

Stock

Awards
(3)

 

   

Option       

Awards       

$

 

 

Non-Equity       

Incentive Plan       

Compensation       

$

 

 

 

Change in       

Pension       

Value and       

Non-Qualified       

Deferred       

$

 

 

All Other       

Compensation       
$
(4)       

 

  

Total

$

 

 
               

Gregory Q. Brown

    $41,641          $77,328     -        -        -        -           $118,969  
               

Jonathan Christodoro

    $122,500       $277,328     -        -        -        -           $399,828  
               

Keith Cozza

    $205,000       $277,328     -        -        -        -           $482,328  
               

Joseph J. Echevarria

    $125,000       $277,328     -        -        -        -           $402,328  
               

Nicolas Graziano

    $115,000       $277,328     -        -        -        -           $392,328  
               

Cheryl Gordon Krongard

    $120,000       $277,328     -        -        -        -           $397,328  
               

Scott Letier

    $107,500       $277,328     -        -        -        -           $384,828  
               

Sara Martinez Tucker

    $42,610       $77,328     -        -        -        -           $119,938  

 

(1) 

Mr. Brown and Ms. Tucker did not stand for re-election at the 2019 Annual Meeting

 

(2) 

Cash fees are paid on a quarterly basis using a fiscal year of January 1 to December 31. Effective January 1, 2019, we changed from paying cash fees quarterly in advance to paying cash fees quarterly in arrears on April 15, July 15, October 15 and January 15. For this reason, the fees for the last quarter of 2019 are included in the table because they were earned in 2019, although not paid until January 15, 2020. The cash fees paid to Mr. Brown and Ms. Tucker are prorated, because they served on the Board only until May 21, 2019.

 

(3) 

The cash portion of compensation awarded in the form of DSUs or RSUs is reflected in this column. The amount presented in this column reflects the aggregate grant date fair value of the DSUs and RSUs awarded during 2019 computed in accordance with Financial Accounting Standards Board Accounting Standards Codification (FASB ASC) Topic 718, Compensation — Stock Compensation, and excludes dividend equivalents accrued during the period.

Effective January 1, 2019, we changed from awarding DSUs quarterly in advance to awarding DSUs and/or RSUs annually on the date of the annual meeting of shareholders. The DSUs and/or RSUs awarded annually are for the period from annual meeting to annual meeting, rather than the fiscal year in which they were awarded, and do not vest unless the director completes the year of service from one annual meeting to the next annual meeting. For this reason, the table reflects both: (1) the annual award of $200,000 worth of DSUs and/or RSUs made to each director (other than Mr. Brown and Ms. Tucker) on May 21, 2019, the date of last year’s annual meeting of shareholders; and (2) a separate award of DSUs made to cover the stub period January 1, 2019 to May 21, 2019, when the first annual grant of DSUs and/or RSUs was made. The DSUs awarded for the stub period were vested as of the date of grant.

The total number and value of all DSUs and RSUs (including DSU dividend equivalents) as of the end of 2019 (based on the December 31, 2019 closing market price of our common stock of $36.87) held by each director is as follows: Mr. Brown, 15,864 ($584,906); Mr. Christodoro, 23,070 ($850,591); Mr. Cozza, 13,550 ($499,589); Mr. Echevarria, 22,332 ($823,381); Mr. Graziano, 13,688 ($504,677); Ms. Krongard, 22,332 ($823,381); Mr. Letier, 13,688 ($504,677); and Ms. Tucker 44,812 ($1,652,218).

 

(4) 

In accordance with applicable SEC rules, dividend equivalents accrued in 2019 on DSUs and RSUs are not included in “All Other Compensation” because those amounts were factored into the grant date fair values of the DSUs and RSUs.

For information on compensation for Mr. Visentin, a director and the Vice Chairman and Chief Executive Officer of Xerox, see the executive compensation table beginning on page 57.

 

21


Table of Contents

SECURITIES OWNERSHIP

Ownership of Company Securities

We are not aware of any person who, or group that, owns beneficially more than 5% of any class of the Company’s voting securities as of December 31, 2019, except as otherwise set forth below.(1)

 

Name and Address of

Beneficial Owner

Common Stock Series A Preferred Stock

Percent of

Total Current

Voting Power

(3)

Amount and

Nature of

Beneficial

Ownership

Percent

of Class

Amount and

Nature of

Beneficial

Ownership

Percent

of Class

(2)

           

Mr. Carl C. Icahn

c/o Icahn Capital LP

767 Fifth Ave, Suite 4700

New York, NY 10153

23,456,087 (4) 11.03% - - 10.99%
           

The Vanguard Group, Inc.

100 Vanguard Blvd.

Malvern, PA 19355

22,014,821 (5) 10.35% - - 10.32%
           

BlackRock, Inc.

55 East 52nd Street

New York, NY 10055

16,169,030 (6) 7.60% - -   7.58%
           

Darwin Deason

5956 Sherry Ln., Suite 800

Dallas, TX 75225

15,283,657 (7) 7.18% 180,000 100%   4.32%

 

 

(1) 

The words “group” and “beneficial” are as defined in regulations issued by the SEC. Beneficial ownership under such definition means possession of sole voting power, shared voting power, sole dispositive power or shared dispositive power. The information provided in this table is based solely upon the information contained in the most recent Schedule 13G or 13G/A (or in the case of Mr. Icahn and Mr. Deason, the most recent Schedule 13D/A) filed by the named entity with the SEC. BlackRock, Inc. is a registered investment adviser under the Investment Advisers Act of 1940, as amended, and has subsidiaries that are also investment advisers under the Investment Advisers Act with beneficial ownership of the reported shares. Percentage ownership of our common stock in the table is based on 212,590,152 shares of common stock outstanding as of December 31, 2019.

 

(2) 

Percentage ownership of our Series A Preferred Stock in the table is based on 180,000 shares of Series A Preferred Stock outstanding as of December 31, 2019.

 

(3) 

As of December 31, 2019, there were 212,590,152 shares of our common stock and 180,000 shares of our Series A Preferred Stock outstanding and entitled to vote at the Annual Meeting. Each share of common stock is entitled to one vote on each matter voted upon. Holders of shares of Series A Preferred Stock are entitled to vote with the holders of shares of common stock, as a single class. The shares of Series A Preferred Stock were convertible into 6,741,572 shares of common stock as of December 31, 2019, and are entitled to one vote for each ten shares of common stock into which they are convertible. As a result, the shares of Series A Preferred Stock are entitled to an aggregate of 674,157 votes. This column is intended to show total current voting power and does not take into account shares of our common stock that may be acquired within 60 days of December 31, 2019 pursuant to the conversion of Series A Preferred Stock.

 

(4) 

Based solely on the Schedule 13D/A filed on August 6, 2019, represents shares of common stock held by the following group of entities associated with Carl C. Icahn: High River Limited Partnership (High River), Hopper Investments LLC (Hopper), Barberry Corp. (Barberry), Icahn Partners Master Fund LP (Icahn Master), Icahn Offshore LP (Icahn Offshore), Icahn Partners LP (Icahn Partners), Icahn Onshore LP (Icahn Onshore), Icahn Capital LP (Icahn Capital), IPH GP LLC (IPH), Icahn Enterprises Holdings L.P.

 

22


Table of Contents
  (Icahn Enterprises Holdings), Icahn Enterprises G.P. Inc. (Icahn Enterprises GP) and Beckton Corp. (Beckton) (collectively, the Reporting Persons). The principal business address of (i) each of High River, Hopper, Barberry, Icahn Offshore, Icahn Partners, Icahn Master, Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP and Beckton is White Plains Plaza, 445 Hamilton Avenue — Suite 1210, White Plains, NY 10601, and (ii) Mr. Icahn, Barberry and Hopper is c/o Icahn Capital LP, 767 Fifth Avenue, 47th Floor, New York, NY 10153. Icahn Partners, Icahn Master and High River (collectively, the Icahn Parties) are entities controlled by Carl C. Icahn. Barberry is the sole member of Hopper, which is the general partner of High River. Icahn Offshore is the general partner of Icahn Master. Icahn Onshore is the general partner of Icahn Partners. Icahn Capital is the general partner of each of Icahn Offshore and Icahn Onshore. Icahn Enterprises Holdings is the sole member of IPH, which is the general partner of Icahn Capital. Beckton is the sole stockholder of Icahn Enterprises GP, which is the general partner of Icahn Enterprises Holdings. Carl C. Icahn is the sole stockholder of each of Barberry and Beckton. As such, Mr. Icahn is in a position indirectly to determine the investment and voting decisions made by each of the Icahn Parties. In addition, Mr. Icahn is the indirect holder of approximately 91.0% of the outstanding depositary units representing limited partnership interests in Icahn Enterprises L.P. (Icahn Enterprises). Icahn Enterprises GP is the general partner of Icahn Enterprises, which is the sole limited partner of Icahn Enterprises Holdings.

The Reporting Persons may be deemed to beneficially own, in the aggregate, 23,456,087 shares of common stock.

High River has sole voting power and sole dispositive power with regard to 4,691,218 shares of common stock. Each of Hopper, Barberry and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares. Icahn Partners has sole voting power and sole dispositive power with regard to 11,130,555 shares of common stock. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of common stock. Icahn Master has sole voting power and sole dispositive power with regard to 7,634,314 shares of common stock. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn has shared voting power and shared dispositive power with regard to such shares of common stock.

Each of Hopper, Barberry and Mr. Icahn, by virtue of their relationships to High River, may be deemed to indirectly beneficially own the shares of common stock that High River directly beneficially owns. Each of Hopper, Barberry and Mr. Icahn disclaims beneficial ownership of such shares of common stock for all other purposes. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Master, may be deemed to indirectly beneficially own the shares of common stock which Icahn Master directly beneficially owns. Each of Icahn Offshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn disclaims beneficial ownership of such shares of common stock for all other purposes. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn, by virtue of their relationships to Icahn Partners, may be deemed to indirectly beneficially own the shares of common stock which Icahn Partners directly beneficially owns. Each of Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton and Mr. Icahn disclaims beneficial ownership of such shares of common stock for all other purposes.

 

(5) 

Based solely on the Schedule 13G/A filed on February 12, 2020, the Vanguard Group, Inc. and its subsidiary companies have sole voting power for 281,826 shares of common stock, sole dispositive power for 21,692,601 shares of common stock, shared voting power for 60,321 shares of common stock and shared dispositive power for 322,220 shares of common stock.

 

(6) 

Based solely on the Schedule 13G filed on February 6, 2020, BlackRock, Inc. and its subsidiary companies have sole voting power for 13,519,150 shares of common stock and sole dispositive power for 16,169,030 shares of common stock, and have no shared voting power or shared dispositive power for any of the shares.

 

(7) 

Based solely on the Schedule 13D/A filed on August 1, 2019, Darwin Deason has sole voting power and sole dispositive power for 15,283,657 shares of common stock (including 6,741,572 shares issuable on the conversion of 180,000 shares of Series A Preferred Stock), and has no shared dispositive or shared voting power for any of the shares.

 

23


Table of Contents

Shares of common stock of the Company owned beneficially by the directors and nominees for director, each of the executive officers named in the Summary Compensation Table and all directors and current executive officers as a group, as of February 29, 2020, were as follows.

 

Name of Beneficial Owner  

Amount

Beneficially

Owned

   

Total

Stock

Interest

 
     

Steven J. Bandrowczak

    20,357       378,990  
     

Jonathan Christodoro

    0       23,070  
     

Keith Cozza

    50,000       63,550  
     

Joseph J. Echevarria

    0       22,332  
     

Michael D. Feldman

    81,621       390,338  
     

Nicholas Graziano

    4,780       18,468  
     

Cheryl Gordon Krongard

    0       22,237  
     

A. Scott Letier

    0       13,688  
     

William F. Osbourn, Jr.

    70,550       387,435  
     

Hervé N. Tessler

    74,197       290,363  
     

Giovanni (John) Visentin

    295,263       1,438,256  
     

All directors and executive officers as a group (16)1

    702,998       3,420,110  

 

1 

Excludes Mr. Tessler, who retired from his role as Executive Vice President effective February 28, 2020 and is no longer an executive officer of the Company.

Percent Owned by Directors and Executive Officers: Each director and executive officer beneficially owns less than 1% of the aggregate number of shares of common stock outstanding at February 29, 2020. The amount beneficially owned by all directors and executive officers as a group also amounted to less than 1%.

Amount Beneficially Owned: The numbers shown are the shares of common stock considered beneficially owned by the directors and executive officers identified as “Named Executive Officers” in accordance with SEC rules. Shares of common stock which directors and executive officers had a right, within 60 days of February 29, 2020, to acquire upon the exercise of options or rights or upon vesting of performance share units, deferred stock units or restricted stock units are included on a gross basis. Shares held in a grantor retained annuity trust or by family members and vested shares, the receipt of which have been deferred under one or more equity compensation programs, are also included. All of these are counted as outstanding for purposes of computing the percentage of common stock outstanding and beneficially owned by such person (but are not deemed to be outstanding for computing the percentage ownership of any other person shown in the table).

Total Stock Interest: The numbers shown include the amount shown in the Amount Beneficially Owned column, plus stock options, performance shares, restricted stock units and deferred stock units, as applicable, held by directors and executive officers that are not exercisable within 60 days of February 29, 2020.

Address: Unless otherwise noted, the address of each person named in the table is c/o Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851.

Delinquent Section 16(a) Reports

Section 16(a) of the Exchange Act requires the Company’s directors, executive officers and 10% or greater stockholders to file with the SEC reports of ownership and changes in ownership of common stock of the Company. Based solely on our review of these reports and written representations that no other reports were required to be filed, the Company believes that all Section 16 reports for its directors and executive officers were timely filed during 2019, except as follows: Michael Feldman, Suzan Morno-Wade, Joseph Mancini, Jr. and Hervé Tessler each filed late, due to administrative error, one Form 4 Report reporting vesting of RSU and PSU awards and the related withholding of shares to satisfy tax obligations.

 

24


Table of Contents

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

LETTER FROM THE COMMITTEE CHAIR

Dear Fellow Shareholders,

Building on our achievements in 2019, Xerox is poised to make fundamental changes in our business that will guide the future trajectory of the Company. Execution on our strategy is critical to our success. We need our workforce to be focused and motivated. Xerox’s Compensation Committee remains committed to working with our shareholders to ensure the Company’s compensation plans support our business objectives, align with shareholders’ interests, and continue to motivate and retain talented executives.

A year ago, Xerox embarked on a three-year strategic plan and I am happy to report that we are ahead of schedule, having exceeded almost all financial targets for 2019.

 

   

In 2019, we made significant progress on our strategic initiatives to transform Xerox: we expanded operating margin, grew cash flows from continuing operations, made investments in our business that are beginning to impact revenue; and increased strategic flexibility by restructuring our relationship with FUJIFILM.

 

   

Through Project Own It, we are optimizing operations and making it easier to do business with Xerox. In the 18 months ending December 31, 2019, we generated approximately $1 billion in gross savings, including approximately $640 million in gross savings during 2019. Due to our disciplined approach to restructuring, we spent approximately $0.35 for every dollar saved.

 

   

During 2020, we expect to deliver approximately $450 million in gross savings that can be reinvested in our business. We are investing in innovation in our core business, software, services and adjacencies, such as Artificial Intelligence, Internet of Things and 3D printing.

 

   

We generated $1.24 billion of cash from continuing operations in 2019. We are committed to returning at least 50% of free cash flow to shareholders.

The year 2018 included a tumultuous period with the termination of a merger agreement with Fuji Xerox and the appointment of a new leadership team. The leadership team in place since mid-2018 has generated results and demonstrated success in navigating strategic initiatives that will continue to drive shareholder value in the future. As we review Xerox’s executive compensation program and make decisions regarding executive pay, we continue to take into account our industry climate, our performance and the competitiveness of the executive talent market.

The Compensation Committee has engaged in an extensive dialogue with our shareholders regarding our executive compensation and carefully considered the feedback we received with the aim of taking actionable steps to more closely align our compensation strategy with the long-term interests of our shareholders. The results of the 2019 say-on-pay vote drove home the importance of revitalizing our shareholder outreach program, which we had deliberately limited in 2018 so we could focus on stabilizing our operations and formulating our new business strategy, which we publicly announced at an Investor Day in February 2019. We understand many of our shareholders were concerned about this, and about the alignment between CEO pay and performance. We recognize that there were concerns raised on executive compensation, including the terms of the new CEO’s compensation. As a result, this year, we conducted a robust shareholder outreach program, contacting shareholders representing more than 86% of our outstanding shares, including owners of a majority of the shares voted against the say-on-pay proposal at last year’s annual meeting.

Based on the feedback we received, we reviewed our executive compensation programs and considered what was working well and what should change. The Compensation Committee and the Board, assisted by members of management, took steps to reflect shareholder feedback and to advance the core principles of our executive compensation philosophy, as follows:

 

   

We renegotiated the CEO’s agreement to sunset the “modified single-trigger” feature of the change-in-control provisions in his original offer letter for any equity compensation grants made after May 15, 2020.

 

25


Table of Contents
   

The one-time compensation items provided to our CEO in connection with his hire in 2018 (designed to replace compensation he forfeited to join Xerox and to reflect the risk of joining the Company during a period of great uncertainty) were not repeated during 2019.

 

   

We did not apply positive discretion to increase any compensation awards for 2019.

 

   

We increased our emphasis on performance-based pay, such that performance share units (“PSUs”) constitute 60% of the long-term incentive program mix for 2019 awards.

We believe that our executive compensation program promotes consistent leadership, sound decision-making and results that are aligned with shareholders’ interests, without taking inappropriate or unnecessary risks. The Company’s business performance during 2019, as demonstrated by our 87% improvement in stock price from December 31, 2018 to December 31, 2019, speaks for itself. Our “say-on-pay” proposal is found on page 78 of this Proxy Statement, and the Board recommends that you vote ‘FOR’ this proposal. We also invite you to consider additional information about our compensation philosophy and decisions in the Compensation Discussion and Analysis (“CD&A”) on the following pages.

I am confident that our executive compensation programs support our strategy, secure our talent, and drive shareholder value creation. We value the opinions of our shareholders, and the Compensation Committee will take into account the outcome of this vote when considering future compensation decisions.

Sincerely,

Cheryl Gordon Krongard

Chair, Compensation Committee

 

26


Table of Contents

EXECUTIVE SUMMARY

Delivering on 2019 Commitments

Xerox developed the following strategic initiatives to position the Company for long-term success.

Xerox Strategic Initiatives

 

LOGO

Strategic InitiativeExamplesOptimize Operations for Simplicity-Simplify operating model for greater accountability and efficiency-Optimize the supply chain and supplier competitiveness-Make it easier to do business with XeroxDrive Revenue-More effectively support customers-Sell higher-value services and integrated solutions-Expand software and services offeringsRe-energize the Innovation Engine-Focus investments in growing market segments such as AI (Artificial Intelligence) and IoT (Internet of Things)-Leverage expertise to develop differentiated technology-Monetize new innovationsFocus on Cash Flow and Increasing Capital Returns-Maximize cash flow generation-Return at least 50% of free cash flow(1) to shareholders-Focus on Return on Investment (ROI) and Internal Rate of Return (IRR) to make capital allocation decisions

Our emphasis continues to be on creating a simpler, more agile and effective organization by enhancing Xerox’s focus on customers and partners and instilling a culture of continuous improvement. We are driving end-to-end transformation of our systems and processes to create greater focus, speed, accountability and effectiveness. This will enable Xerox to be more competitive, invest in growth and maximize shareholder returns.

We ended 2019 stronger, delivering full-year results that are ahead of schedule on almost all financial metrics.

For the full year, we increased EPS from continuing operations, cash flow from operating activities of continuing operations and adjusted(1)operating margins year-over-year.

 

   

Operating cash flow from continuing operations for the full year was $1.24 billion, an increase of $162 million from a year ago. Full-year free cash flow(1) totaled $1.18 billion, up $187 million year-over-year. We accomplished this while returning more than 70% of free cash flow(1) to shareholders, paying down $950 million of debt and increasing investments in growth areas.

 

   

Full-year, revenue declined 4.7% at constant currency(1) year-over-year, in line with our guidance. Our second half progress reversed the first half’s top-line trajectory, but we have more work to do, and this continues to be an area of intense focus for us.

 

   

Adjusted(1) operating margin for the full year was 13.1%, up 180 basis points year-over-year. We also returned $843 million to our shareholders in the form of dividends ($243 million) and share repurchases ($600 million). This was more than 70% of our free cash flow(1) from continuing operations — exceeding our commitment to return at least 50% of free cash flow(1) to shareholders.

In 2019, we made significant progress as a result of Project Own It, our enterprise-wide initiative launched in mid-2018 to simplify and streamline our operations and instill a culture of continuous improvement while driving sustainable, lower costs.

 

   

At the heart of Project Own It is simplification — redesigning seven key areas across the organization so that we can better serve clients, generate savings to be reinvested in the business, and position Xerox for a return to growth.

 

27


Table of Contents
   

These seven areas of focus are shared services, procurement, IT, delivery, supply chain, real estate and organizational change. We have made significant progress in each of these areas. For example, changes to our supply chain in 2019 improved our responsiveness and increased our sourcing flexibility. As a result of Project Own It, we delivered gross savings of $1 billion on a $9 billion cost base in just 18 months.

 

   

In 2019, we achieved our target annual growth savings of $640 million. Due to our disciplined approach to restructuring, we spent approximately $0.35 for every dollar saved.

In November, we restructured our relationship with FUJIFILM and Fuji Xerox, both to monetize an otherwise illiquid asset at an attractive valuation and to establish a more traditional supply relationship, so that we have the ability to source from the partner that can offer the best value proposition. We also redesigned our logistics networks and inventory utilization model. By maximizing competitive tension among our sourcing partners and improving the speed and responsiveness of our supply chain, we are better positioned to serve our clients at a lower cost, thereby improving our revenue trajectory and margins. Our investment initiatives under Project Own It are beginning to take hold as well. For example, we now have nearly 200 bots working across the organization in areas such as order-to-cash, delivery, human resources and finance. We expect to double that number in 2020.

In the second half of 2019, the benefits of revenue-generating initiatives began to flow through to our operating results. We are focused on capturing growth in core markets, broadening services and software, delivering new technology solutions, and further penetrating the small and mid-size business (SMB) market.

Based on 2019 financial performance, results under our Management Incentive Program (MIP), formerly the Annual Performance Incentive Program (APIP), on the 2019 goals previously approved by the Compensation Committee were as follows: Free Cash Flow (1) metric was achieved at maximum, Operating Margin(1) results were at the high end of the range between threshold and target, and we did not meet our Absolute Revenue(1) metric.

 

(1)

The Company’s 2019 Annual Report on Form 10-K reports the Company’s financial results in accordance with generally accepted accounting principles (GAAP). In this CD&A, we also discuss certain aspects of our financial results using non-GAAP measures with respect to metrics and related adjustment items previously approved by the Compensation Committee. The Compensation Committee believes the exclusion of these items better reflects the trends in our business. Non-GAAP financial measures should be viewed in addition to, and not as a substitute for, the Company’s reported results. A reconciliation of each such non-GAAP financial measure to the most directly comparable financial measure calculated and presented in accordance with GAAP is discussed below.

 

 

   

Absolute Revenue is GAAP revenue from continuing operations unadjusted for currency. See Revenue Growth at Constant Currency below.

 

   

Free cash flow is GAAP net cash provided by operating activities of continuing operations less capital expenditures ($1,244 million — $65 million, respectively), or $1,179 million for fiscal year 2019 and for fiscal year 2018 ($1,082 million — $90 million, respectively) or $992 million for fiscal year 2018. Management believes this measure gives investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment; it provides a measure of the Company’s ability to fund acquisitions, dividends and share repurchase.

 

   

Operating Profit is GAAP total revenue from continuing operations less related operating costs ($9,066 million — $7,874 million, respectively) or $1,192 million for fiscal year 2019. Operating Margin is Operating Profit as a percent of revenue.

 

   

Revenue Growth at Constant Currency excludes the impact of changes in the translation of foreign currency revenues into U.S. dollars. This impact is calculated by translating current period activity in local currency using the comparable prior year period’s currency translation rate. Management believes this measure provides investors an additional perspective on revenue trends.

 

   

Pre-Tax Income is GAAP pre-tax income from continuing operations, as reported in the Company’s Annual Report on Form 10-K.

 

   

Earnings per Share (EPS) is GAAP diluted EPS from continuing operations.

 

   

Operating Cash Flow is GAAP net cash provided by operating activities from continuing operations.

 

28


Table of Contents
   

Absolute Share Price is calculated based on the 20-trading day average price at the end of the performance period, plus the value of accumulated dividends during the 3-year performance period.

 

   

Relative Total Shareholder Return (rTSR) was measured as stock appreciation plus reinvested dividends paid from April 3, 2018 through April 2, 2019 relative to that of the 2018 Xerox peer group companies.

The above metrics, as referenced within this document, are adjusted to exclude some or all of the following items previously approved by the Compensation Committee: amortization of intangible assets, non-service retirement-related costs, restructuring-related costs, acquisitions, separations or divestitures, non-cash write-offs or impairments, effects of changes in accounting principles, certain items identified in other expenses, net, gains/(losses) from the settlement of tax audits or changes in tax laws, gains/(losses) from acts of war, terrorism or natural disasters, cash payments for restructuring, pension contributions, and other types of unusual or infrequent items.

 

Named Executive Officers

Our executive compensation strategy plays an important role in attracting, retaining and rewarding individuals with the ability, drive and vision to lead our business, support our long-term success and deliver shareholder value. Our named executive officers (“NEOs”) for fiscal year 2019 were:

 

Name

 

 

Title

 

 

Giovanni (John) Visentin

 

 

 

Vice Chairman and Chief Executive Officer

 

 

Steven J. Bandrowczak

 

 

 

President and Chief Operations Officer

 

 

William F. Osbourn, Jr.

 

 

 

Executive Vice President and Chief Financial Officer

 

 

Michael D. Feldman

 

 

 

Executive Vice President

 

 

Hervé N. Tessler

 

 

 

Executive Vice President

 

Sunset of Vice Chairman & CEO’s Modified “Single-Trigger” Change-in-Control Feature

During 2019, Mr. Visentin agreed to an amendment of his negotiated offer letter that eliminates the modified single-trigger feature of his equity compensation for grants made after May 15, 2020.

See Named Executive Officers with Unique Compensation Arrangements for further information.

Retirement of Hervé Tessler

Effective February 28, 2020, Hervé N. Tessler retired from his role as Executive Vice President. Xavier Heiss was promoted into this role starting February 29, 2020.

See Potential Payments Upon Termination or Change in Control for information about compensation payable in connection with Mr. Tessler’s retirement.

Linking Pay to Performance

We structure our compensation practices to attract and retain first-class executive talent, reward past performance and motivate future performance. Our executive compensation program is designed to pay for performance, create long-term shareholder value, and align executive compensation with our business strategy. By making performance a substantial element of compensation, we link our executives’ interests to the interests of our shareholders. Accordingly, we reward NEOs when the Company achieves short- and long-term performance objectives and we reduce or eliminate performance-based components of compensation when the Company does not achieve those objectives.

Our actual 2019 payouts under the short-term and long-term incentive programs demonstrate our alignment of pay with performance.

 

   

In February 2020, the Compensation Committee reviewed the Company’s performance against metrics previously approved by the Committee and approved a calculated payout factor under our

 

29


Table of Contents
 

2019 annual short-term incentive program of 97.8% of target. The Committee applied no positive discretion and paid out officer awards at the 97.8% achievement level or lower.

 

   

In July 2019, our 2016 performance share unit awards (PSUs) (2016-2018 performance cycle) vested at 96.1% of target. The 96.1% payout was based on actual performance results for 2016 only, as the established performance goals for 2017 and 2018 were no longer applicable after the separation of Xerox and Conduent.

Shareholder Outreach and Engagement

We understand the message shareholders sent in our 2019 say-on-pay vote, and we have revamped our shareholder outreach plan in response. Our new shareholder outreach plan and findings from our conversations with investors are detailed in the next section, Say-on-Pay Votes and Shareholder Engagement.

 

30


Table of Contents

SAY-ON-PAY VOTES AND SHAREHOLDER ENGAGEMENT

Changes in leadership and business strategy during 2018 unfortunately necessitated that Xerox step back from our preferred level of shareholder outreach until the Company’s new strategic direction could be thoughtfully developed and communicated. For that and other reasons, including certain one-time features of the new CEO’s compensation package, at our annual meeting of shareholders held on May 21, 2019, only 40.22% of the votes cast on our say-on-pay proposal were voted in favor of the NEO compensation disclosed in our 2019 Proxy Statement. We understand the message shareholders sent in our 2019 say-on-pay vote results, and we have revamped our shareholder outreach plan in response. Our new shareholder outreach plan and findings from our conversations with investors are detailed below. In response to the 2019 say-on-pay vote, management and our Board increased engagement efforts with our shareholders to better understand the concerns they had, to provide clear information on the Company’s strategic direction and its alignment with our compensation programs and decisions, and to more closely tailor our compensation programs with shareholder interests and concerns.

We developed a new continuous program for more robust shareholder engagement as illustrated in the chart below. This year-round program creates transparency between the Board and our shareholders and generates ongoing discussion and informed relationships. It is designed to gather first-hand information from our shareholders and, in turn, to provide our shareholders with an opportunity to engage directly with the Chair of our Compensation Committee and key members of the Xerox leadership team.

Xerox’s Continuous Shareholder Outreach Cycle

 

 

LOGO

 

31


Table of Contents

After our new three-year strategic plan was announced at an Investor Day in February 2019, we significantly expanded shareholder outreach activities to share this new strategy with current and potential shareholders, so we could gather their feedback and ensure any concerns regarding compensation were addressed. We contacted our 100 largest shareholders (representing more than 86% of our shares outstanding including owners of a majority of the shares voted against the say-on-pay proposal at last year’s annual meeting) to invite them to discuss governance related topics and spoke, in some cases on multiple occasions, with shareholders representing more than 52% of the outstanding shares, including owners of a majority of the shares voted against the say-on-pay proposal at the 2019 annual meeting.

Key concerns identified by shareholders during these conversations are highlighted in the table below.

Key Topics Raised by Shareholders and Xerox Response

 

 

LOGO

TopicOutcomeApplication of discretionAs a result of comments made by shareholders as well as thoughtful discussion at the Board level, we are limiting the application of positive discretion in determining compensation. None of the NEOs received positive discretion on their 2019 MIP awards.Limited shareholder engagementThe discussion above highlights our revised, more robust approach to shareholder engagement.Overlapping annual and long-term incentive metricsWe have analyzed the metrics in our incentive plans and believe they are appropriate for Xerox's turnaround strategy at this time. While there remains some overlap between our annual and multi-year incentive plan metrics, we continue to believe that having similar metrics for a portion of our long-term plan and our annual plan supports achievement of goals for both plans. We will continue to review the appropriateness of similar metrics on an ongoing basis."Single trigger" change-in-control feature and one-time Compensation for Vice Chairman & CEOWhen we negotiated the terms of Mr. Visentins offer in the second quarter of 2018, it was uncertain whether Xerox would continue to be an independent company due to the potential transaction with FUJIFILM Holdings Corporation. As a result, a modified single-trigger change-in-control feature was necessary to successfully recruit Mr. Visentin and align his incentives with those of shareholders. As part of his 2018 hire package, Mr. Visentin received one-time awards that will not be repeated in the future. These awards resulted in higher first year compensation than provided in 2019. In an acknowledgment that this earlier period of uncertainty was not permanent, Mr. Visentin's negotiated offer letter was amended during 2019 to sunset the single-trigger change-in-control feature. See Named Executive Officer With Unique Compensation Arrangement for further information.

We will continue to reach out to investors and to consider how our actions align with their interests when making future compensation decisions for our NEOs.

 

32


Table of Contents

OUR EXECUTIVE COMPENSATION PRINCIPLES

The following core principles reflect our philosophy with respect to compensation of the NEOs. These principles, established and refined from time to time by the Compensation Committee, are intended to:

 

   

promote improved financial performance;

 

   

hold our senior executives personally accountable for the performance of the business units, divisions or functions for which they are responsible; and

 

   

motivate our senior executives to collectively make decisions about the Company that will deliver enhanced value to our shareholders over the long term.

 

LOGO

Core PrinciplesXerox PracticeCompensation should reinforce our business objectives and values-Reward contributions and leadership that increase profit, revenue, operating cash flow and shareholder value-Enhance confidence in our financial leadership-Create and maintain the commitment of our customers and employeesCompensation should be linked to performance and should not motivate unnecessary risk-Generally, at least two-thirds of our NEOs' pay is performance based, which means it is at risk and varies from year to year based on performance -A significant portion of total compensation is tied to Xerox's financial performance -The Compensation Committee monitors how our compensation programs could affect management's behavior to ensure that performance objectives do not motivate executives to take unnecessary risk that could jeopardize the health and future of the CompanyThere should be flexibility in allocating the various compensation elements-The Compensation Committee uses a variety of compensation elements to establish compensation packages-The Compensation Committee does not impose a specific targeted mix of compensation elements in cash versus equity, fixed pay versus variable pay, or long-term versus short-term incentives. It instead retains flexibility to award compensation that best reflects the Company's then-current needs and circumstancesCompensation opportunities should be competitive-The Compensation Committee reviews peer group compensation data as well as other third-party compensation surveys annually to ensure that our executive compensation program is competitive-Our compensation program ensures pay levels are aligned with performance, tenure, individual contributions, and other factorsIncentive compensation should balance short-term and long-term performance-Incentive opportunities based on both short-term and long-term objectives are designed to promote strong annual results and the Company's long-term viability and successNEOs should have financial risk and reward tied to their business decisions-Over 80% of our NEO compensation on average is designed to be at risk -The portion of total compensation represented by short-term and long-term incentive programs increases with positions at higher levels of responsibility, as these executives have the greatest ability to influence the Company's strategic direction and results -We require our NEOs to own shares of Company stock in order to align their financial risks and rewards with those of our shareholdersThe pay practices for our NEOs should align with the pay practices of our other senior level employees-The practices we use to set base pay, retirement and savings, and health and welfare benefits for the NEOs are generally consistent with the practices used to set compensation for our other senior level employees

 

33


Table of Contents

SUMMARY OF 2019 COMPENSATION ACTIONS

The primary elements of our executive compensation program for the NEOs are:

 

   

base salary

 

   

short-term incentives

 

   

long-term incentives

 

   

pension and savings plans

 

   

perquisites

 

   

change in control benefits

The Compensation Committee made several decisions regarding the compensation of NEOs in 2019, as summarized below.

Base Salaries

Executive salaries reflect peer group data and the complexity of the NEOs’ roles. During 2019, the base salaries for our NEOs did not change from 2018 levels.

 

Executive  

Annual

Base Salary ($)

 
   

Giovanni (John) Visentin

    1,200,000  
   

Steven J. Bandrowczak

    525,000  
   

William F. Osbourn, Jr.

    625,000  
   

Michael D. Feldman

    575,000  
   

Hervé N. Tessler (*)

    561,272  

 

 

(*)

Mr. Tessler’s base salary of 501,270 (unchanged from 2018) was denominated and paid in euros (EUR). The salary shown in this table and throughout the Proxy Statement is Mr. Tessler’s annual base salary converted to U.S. dollars (USD) at an exchange rate of 1.1197 USD per EUR, consistent with the exchange rate used in the Company’s 2019 Annual Report on Form 10-K.

For further information on base salaries, see 2019 Compensation for the Named Executive Officers — Base Salary.

Short-Term Incentives

The 2019 performance measures and weightings for our Management Incentive Program (MIP), formerly the Annual Performance Incentive Program (APIP), were: Absolute Revenue,(1) Free Cash Flow,(1) and Operating Margin(1) (weighted equally). These metrics reflect changes from 2018, as follows:

 

   

Absolute Revenue(1) replaced Revenue Growth at constant currency(1) to provide greater focus on this important top-line metric

 

   

Operating Margin(1) replaced Adjusted Pre-Tax Income(1) to provide greater clarity on profitability accomplishments in running the business, before the impact of other financial considerations

 

   

Free Cash Flow(1) was retained from 2018 and we continue to use this metric as it reflects the broad performance of the business in generating cash

Based on the following results, the Compensation Committee approved the short-term incentive calculated payout factor of 97.8% of target. A summary of performance results relative to predetermined performance levels is below.

 

34


Table of Contents

2019 MIP Results ($ in million unless a %)

 

Performance
Measure

 

 

 

Weight 

 

 

 

Threshold

(50%

payout)

 

   

 

Target

(100%

payout)

 

   

 

Maximum

(200%

payout)

 

   

 

Actual 2019

Performance

Results

 

   

 

Performance Results
(Payout Factor)

 

 

 

Weighted
Payout
Factor

 

 

Absolute Revenue (1)

 

 

 

 

one-third 

 

 

 

 

$9,300

 

 

 

 

 

 

$9,400

 

 

 

 

 

 

$9,600

 

 

 

 

 

 

$9,161

 

 

  Below Threshold

 

(0.00)

 

 

 

 

0.0

 

Free Cash Flow (1)

 

 

 

 

one-third 

 

 

 

 

$1,000

 

 

 

 

 

 

$1,100

 

 

 

 

 

 

$1,200

 

 

 

 

 

 

$1,272

 

 

  Maximum

 

(2.00)

 

 

 

 

66.7

 

Operating Margin (1)

 

 

 

 

one-third 

 

 

 

 

12.5%

 

 

 

 

 

 

13.5%

 

 

 

 

 

 

14.5%

 

 

 

 

 

 

13.4%

 

 

  Between Threshold

& Target

 

(.93)

 

 

 

 

31.1

 

 

2019 MIP Factor

 

 

 

 

97.8

 

The target award opportunities for 2019 remained the same as in 2018 for all of our NEOs. Following a review of overall Company results, business unit results and individual contributions, the Compensation Committee approved NEO payouts within a range of 39.1% to 97.8% of target, as shown below.

2019 MIP Payout

 

Executive

 

Annual

Base Salary ($)

 

Target

Short-Term

Incentive

(% of Salary)

 

Target

Short-Term

Incentive

($)

 

Payout
Factor

 

  Actual 2019 MIP  
Payout

($)

 

           

Giovanni (John) Visentin

1,200,000 150% $1,800,000 97.8% 1,760,400
           

Steven J. Bandrowczak

   525,000 100% $   525,000 97.8%    513,450
           

William F. Osbourn, Jr.

   625,000 100% $   625,000 97.8%    611,250
           

Michael D. Feldman

   575,000 100% $   575,000 97.8%    562,350
           

Hervé N. Tessler (*)

   561,272 100% $   561,272 39.1%    219,570

 

 

(*)

Mr. Tessler’s base salary 501,270 and target-short term incentive 501,270 are both denominated and paid in euros (EUR) and converted to U.S. dollars (USD) at an exchange rate of 1.1197USD per EUR. Actual short-term incentive paid reflects the application of negative discretion in light of EMEA results.

For more information on short-term incentives, refer to 2019 Compensation for the Named Executive Officers — Short-Term Incentives.

 

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

Long-Term Incentives

Our 2019 Executive Long-Term Incentive Program (E-LTIP) included awards granted in the form of performance share units (PSUs) (60%) and restricted stock units (RSUs) (40%). Stock options were not included in our 2019 E-LTIP awards. Instead, the objective of stock option grants (to provide greater alignment with shareholders and increased focus on improving stock price performance) was achieved in our 2019 E-LTIP grants through PSUs with an Absolute Share Price(1) metric, weighted at 50%.

The grant date for these awards was January 14, 2019 for the named executive officers. In 2019, the timing of our E-LTIP grant was changed from April to January to more closely align the grant date with the underlying performance period for the PSUs. Earned PSUs cliff-vest three years from the grant date following the Compensation Committee’s certification of performance results. RSUs vest 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date and 50% on the third anniversary of the grant date.

 

35


Table of Contents

PSUs are earned based on achieving pre-established performance goals. The 2019 performance measures and weightings for the portion of the award granted as PSUs were as follows:

 

   

50% Absolute Share Price(1) (inclusive of accumulated dividends over the three-year performance period) — focuses on stock price appreciation and achieving goals to maximize shareholder returns

 

   

25% Absolute Revenue(1) pursuant to the Company’s business plan — focuses on improving the top line and is aligned with management strategy

 

   

25% Free Cash Flow(1) — focuses on reducing costs, improving productivity and profitable revenue

 

Executive

 

 

2019 E-LTIP ($)

 

   

PSUs (60%) ($)

 

   

RSUs (40%) ($)

 

 

Giovanni (John) Visentin

    10,000,000       6,000,000       4,000,000  

Steven J. Bandrowczak

    2,500,000       1,500,000       1,000,000  

William F. Osbourn, Jr.

    2,250,000       1,350,000       900,000  

Michael D. Feldman

    2,200,000       1,320,000       880,000  

Hervé N. Tessler

    1,700,000       1,020,000       680,000  

For more information on long-term incentives, see 2019 Compensation for the NEOs — Long-Term Incentives.

Total Target Compensation

Complete compensation information for our NEOs appears in the Summary Compensation Table on page 57. The following table, approved by the Compensation Committee, shows annualized base salary, target and actual short-term incentive (MIP), and annual long-term incentive (E-LTIP) and is used to manage executive pay:

 

Executive

 

 

Annual

Base Salary ($)

 

 

Target

Short-Term

Incentive

(% of Salary)

 

 

Target

Short-Term

Incentive

($)

 

 

Long-Term

Incentive

($)

 

 

 

Total Target

Compensation

(Base + Target
Short-Term +
Long-Term
Incentive) ($)

 

           

Giovanni (John) Visentin

  1,200,000   150%   $1,800,000   10,000,000   13,000,000
           

Steven J. Bandrowczak

     525,000   100%   $   525,000     2,500,000     3,550,000
           

William F. Osbourn, Jr.

     625,000   100%   $   625,000     2,250,000     3,500,000
           

Michael D. Feldman

     575,000   100%   $   575,000     2,200,000     3,350,000
           

Hervé N. Tessler (*)

     561,272   100%   $   561,272     1,700,000     2,822,544

 

 

(*)

Mr. Tessler’s base salary 501,270 and target-short term incentive 501,270 are both denominated and paid in euros (EUR) and converted to U.S. dollars (USD) at an exchange rate of 1.1197 USD per EUR.

Looking Ahead to 2020

The Compensation Committee took the following actions for 2020:

 

   

Maintained the short-term incentive program’s focus on financial performance by retaining the three corporate financial metrics established for 2019 — Absolute Revenue(1) (unadjusted for currency), Operating Margin(1), and Free Cash Flow(1) (weighted equally).

 

   

Maintained the long-term incentive program established for 2019, structured as follows: 60% PSUs and 40% RSUs. The PSU metrics continue to be Absolute Share Price(1) (50%), Absolute Revenue(1) (unadjusted for currency) (25%), and Free Cash Flow(1) (25%).

These metrics were chosen and continued for the 2020 cycle because of their close alignment to shareholder interests and business success.

 

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

36


Table of Contents

GOVERNANCE OF THE EXECUTIVE COMPENSATION PROGRAM

Oversight

The Compensation Committee administers the executive compensation program on behalf of the Board and our shareholders. The members of the Compensation Committee are Cheryl Gordon Krongard, who became the Committee Chair on May 14, 2018, Jonathan Christodoro and Scott Letier, who were each appointed to the Compensation Committee on May 14, 2018. (Gregory Q. Brown stepped down from the Compensation Committee as of the date of the 2019 Annual Meeting and did not stand for re-election as a director.)

All directors who serve on the Compensation Committee are independent directors in accordance with applicable NYSE standards, including heightened independence requirements for Compensation Committee members. Their biographies appear beginning on page 4 of this Proxy Statement.

The Compensation Committee’s responsibilities are discussed beginning on page 17 of this Proxy Statement. A complete description of the Compensation Committee’s responsibilities and functions appears in its charter, which can be found on our website at www.xerox.com/governance.

Independent Consultant

The Compensation Committee has retained the services of an independent compensation consulting firm, FW Cook, to assist with its responsibilities. FW Cook reports only to the Compensation Committee and has not performed any other work for the Company since being retained as an independent consultant to the Compensation Committee. As provided in its charter, the Compensation Committee has the authority to determine the scope of FW Cook’s services and may terminate their engagement at any time. The Compensation Committee reviewed FW Cook’s independence under SEC and NYSE rules and determined there was no conflict of interest.

During fiscal 2019, FW Cook provided the following services:

 

   

regularly updated the Compensation Committee on trends in executive compensation and proactively advised on emerging trends and best practices;

 

   

reviewed officer compensation levels and the Company’s overall performance compared to a peer group made up of organizations with which the Company is likely to compete for executive expertise and/or share with the Company a similar business model in one or more areas;

 

   

reviewed incentive compensation designs for short-term and long-term programs;

 

   

advised the Compensation Committee on peer group companies for pay and performance comparisons;

 

   

reviewed the Compensation Discussion and Analysis and related compensation tables for this Proxy Statement;

 

   

reviewed Compensation Committee meeting materials with management and the Committee Chair before distribution;

 

   

attended Compensation Committee meetings and, as requested, meetings in executive session;

 

   

offered independent analysis and input on CEO compensation; and

 

   

advised on other compensation matters as requested.

Best Practices

The Compensation Committee regularly reviews executive compensation best practices and makes changes to the Company’s programs as appropriate.

 

37


Table of Contents
    

 

Our program reflects best practices as follows:

 

What We Do:

 

 

Emphasize pay for performance to align executive compensation with our business strategy and promote creation of long-term shareholder value.

 

 

 

Use multiple sources of data including peer group pay as a reference point to determine total target compensation.

 

 

  Maintain equity plans with double trigger vesting upon a change in control, except that Mr. Visentin’s original negotiated offer letter, provided for vesting upon a change in control (regardless of whether employment terminates.) Mr. Visentin’s negotiated offer letter, as amended in 2019, clarifies that this provision no longer applies with respect to equity awards granted on or after Mr. Visentin’s second anniversary of employment which is May 15, 2020; as described in the Named Executive Officer With Unique Compensation Arrangement section of the CD&A.

 

 

 

Have clawback provisions to recover short- and long-term incentive compensation, non-qualified pension benefits and severance payments under the Officer Severance Program.

 

 

 

Maintain stock ownership and post-retirement stock holding requirements for executive officers.

 

 

 

Have non-compete and non-solicitation agreements that apply during employment and after leaving the Company, as permissible under local law.

 

 

 

Provide minimal executive perquisites.

 

 

 

Design compensation programs with controls to mitigate risk.

 

 

 

Engage an independent compensation consultant for the Compensation Committee that performs no other services for Xerox.

 

What We Don’t Do:

 

 

 

NO payment of dividends or dividend equivalents before RSUs are vested or PSUs are earned. No payment of dividends or dividend equivalents on stock options or on PSUs earned in excess of target performance.

 

 

 

NO accrual of additional benefits under our non-qualified pension plans, which were frozen in 2012, and no Company contributions under our non-qualified deferred compensation plan, which was closed to new contributions after 2018.

 

 

 

NO payment of tax gross-ups on perquisites.

 

 

 

NO excise tax gross-ups in change-in-control arrangements.

 

 

 

NO hedging or pledging of Xerox stock by executive officers.

 

 

 

NO employment agreements (unless customary under local law or in connection with new hire arrangements).

 

Risk Assessment

The Compensation Committee believes that our programs encourage positive behavior while balancing risk and reward, consistent with the interests of our shareholders. Management conducts risk assessments each year and presents the findings to the Compensation Committee. Based on the assessment of programs covering our employees and executives for 2019, the Compensation Committee determined that our compensation plans, programs and practices do not motivate behavior that is reasonably likely to have a material adverse impact on the Company. Our assessment included reviews of our internal controls, clawback provisions (including those for engaging in detrimental activity), ownership requirements, overlapping performance periods and vesting schedules, the balance of short- and long-term incentives, and performance goals that are tied to multiple financial metrics.

PROCESS FOR SETTING COMPENSATION

Competitive Market Information

Each year, the Compensation Committee receives and reviews a report comparing the compensation of our NEOs with the compensation of the NEOs of the companies in our peer group. This comparison includes peer group compensation data from the most recent proxy statements for these elements of pay:

 

   

base salary

 

38


Table of Contents
   

short-term incentives

 

   

total cash compensation (base salary plus short-term incentives)

 

   

long-term incentives

 

   

total compensation (total cash compensation plus long-term incentives)

The Compensation Committee reviews the peer group total target compensation (including the individual elements noted above) for each NEO. The competitive peer group market data is prepared, analyzed and presented to the Compensation Committee by FW Cook, the Committee’s independent compensation consultant. FW Cook also presents a broader set of survey data.

When setting compensation, the Compensation Committee also reviews the Company’s performance in relation to the peer group.

Peer Group

To establish the 2019 peer group, several companies were removed from the 2018 peer group as follows: Arrow Electronics, Inc., Avnet, Inc., CDW Corporation, Micron Technology, Inc. and SYNNEX Corporation. These companies were replaced because they no longer met one or more of the selection criteria listed below or they had been acquired and information was no longer available.

The 2019 peer group consisted of the following 19 companies:

 

 

2019 Peer Group

 

 

Applied Materials, Inc.

 

 

 

HP, Inc.*

 

 

 

Pitney Bowes Inc.

 

 

CA Technologies

 

 

 

Jabil Inc.

 

 

 

Seagate Technology plc

 

 

CGI Group Inc.

 

 

 

Juniper Networks, Inc.*

 

 

 

TE Connectivity Ltd.*

 

 

DXC Technology Company

 

 

 

Keysight Technologies*

 

 

 

Western Digital Corporation

 

 

First Data Corporation

 

 

 

Motorola Solutions, Inc.

 

 

 

Zebra Technologies*

 

 

Flex Ltd.

 

 

 

NCR Corporation

 

   

 

Hewlett Packard Enterprise Company*

 

 

 

NetApp, Inc.

 

   

 

 

*

New peer group company for 2019.

The Compensation Committee regularly reviews the composition of the peer group and makes modifications as appropriate. This peer group was reviewed and confirmed by the Compensation Committee for 2019 and we believe these peer group companies on the whole are:

 

   

appropriate in size (considering revenue, market capitalization, EBIT, enterprise value and assets);

 

   

companies with which we are likely to compete for executive talent; and/or

 

   

companies that share a similar business model or similar business content in one or more areas.

When the Compensation Committee reviewed the peer group data for the last four consecutive quarters, available as of July 15, 2019, the median annual revenue of the peer group was approximately $10.9 billion compared to Xerox revenue of $9.3 billion. The 25th percentile for the peer group revenue data was $6.6 billion and the 75th percentile was $20.8 billion.

Performance Objectives

Following a thorough review of the external market, business outlook, business plan and budgets, the Compensation Committee sets performance objectives for the Vice Chairman & CEO. The Vice Chairman & CEO in turn sets performance objectives, aligned with his objectives, for the other NEOs. For 2019, Mr. Visentin’s performance objectives were focused primarily on the company’s financial goals related to Absolute Revenue(1), Operating Margin(1), and Free Cash Flow(1).

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

39


Table of Contents

2019 COMPENSATION FOR THE NAMED EXECUTIVE OFFICERS

Overview

As shown in the chart below, the Compensation Committee follows a thorough and multi-faceted process to establish compensation for our NEOs.

 

Compensation
Committee Assessment
       Compensation Committee
Considerations
       Final Steps

•  Overall Company performance

 

•  Past contributions

 

•  Expected future contributions

 

•  Succession planning objectives

 

•  Retention objectives

 

•  Internal pay equity

 

•  Peer group data

 

  

 

•  Evaluation of Vice Chairman & CEO’s performance relative to specified performance objectives

 

•  Vice Chairman & CEO’s evaluation of the management team, their contributions and performance

 

•  Vice Chairman & CEO’s recommendations for compensation actions for other NEOs

 

•  Competitive executive pay practices

 

•  Financial feasibility

 

•  Vice Chairman & CEO’s self-assessment

      

•  Input from the Compensation Committee’s consultant

 

•  Review of evolving market practices, regulatory developments, the market for executive talent and compensation philosophy

After receiving input from the Vice Chairman & CEO, the Compensation Committee makes its own assessments and formulates compensation amounts. Once all components of compensation are established, the Compensation Committee verifies that the total compensation for each NEO is appropriate and competitive.

The Compensation Committee expects a high level of individual and collaborative performance and contributions, consistent with our NEOs’ level of responsibility, and, when setting compensation, seeks to appropriately motivate our NEOs to achieve a high level of performance.

NEOs generally earn short- and long-term incentive payments based on achievement of pre-established objective performance goals of the Company. Base salary increases and short-term and long-term incentive target award opportunities are determined by taking into consideration the individual’s performance, market data and internal comparisons to ensure that pay is competitive and consistent with Company succession planning objectives and that differences in pay among the officers are appropriate.

Mr. Visentin’s compensation was determined under the same compensation programs and policies pursuant to which the compensation of other Xerox NEOs were determined, except as otherwise provided under the terms of his negotiated offer letter. Mr. Visentin was not present when the Compensation Committee discussed and established his compensation.

2019 Total Target Compensation

Total target compensation includes base salary, target annual short-term cash incentive and target annual long-term equity incentive awards, which includes the 2019 annual E-LTIP grants. For purposes of market comparisons, total target compensation within the range of plus or minus 15% of the peer group median typically is considered as a competitive reference point.

Overall, the aggregate total target compensation of our NEOs is within the competitive range of peer group and survey medians. In addition, the mix of pay elements as a percent of total target compensation is similar to that of our peers.

 

40


Table of Contents

We show the 2019 total target compensation, including annual base salary, target and actual short-term incentive compensation, and long-term incentive compensation as described above under Executive Summary — Summary of 2019 Compensation Actions. More complete compensation information appears in the Summary Compensation Table on page 57.

Fixed Versus Variable Pay

The charts below show the 2019 pay mix for our NEOs as well as the portion of their total target compensation that is in the form of variable pay. The target pay presented in the charts represents base salary, target short-term incentive MIP awards and annual long-term incentive E-LTIP awards.

 

 

LOGO

Base Salary

Base salary is the fixed pay element of our compensation program. The Compensation Committee reviews and approves base salaries annually, typically in February. The Compensation Committee also reviews NEO salaries when there is a specific event, such as a new hire, promotion or achievement of an extraordinary level of performance. There were no base salary increases during 2019 for any of our NEOs.

Short-Term Incentives

The Company’s MIP provides for short-term incentive awards paid in the form of cash for our NEOs and other eligible employees. Each year, the Compensation Committee determines the target short-term incentive award opportunity under the MIP, stated as a percentage of base salary, for each NEO.

 

41


Table of Contents

The following chart shows our process for setting short-term incentive awards. This process typically takes place in the first quarter of the year.

 

LOGO

StepProcessBoard of Directors-Reviews Company results for previous year-Considers annual operating plan for the current yearVice Chairman & CEO-With the Chief Financial Officer (CFO), assesses prior year performance-Recommends to the Compensation Committee performance measures for the coming year -Recommends actions related to payment of awards based on prior year performance and establishment of short-term incentive target awards for the coming year for the other NEOsCompensation Committee-With the input of the Vice Chairman & CEO and CFO, assesses prior year performance against goals-With the input of the Vice Chairman & CEO, determines awards earned for the prior year-Sets performance measures and weightings for the current year, including the threshold, target and maximum goals for each measure; payout ranges; potential adjustment categories; and overall design

 

Short-term incentives, if earned based on the previous fiscal year’s performance, are generally paid in the March / April time frame.

Short-Term Incentive Target Award Opportunity for the Individual Named Executive Officers

The short-term incentive target award opportunity for each NEO takes into account many factors, including scope of responsibility and comparable targets for NEOs in the peer group. If an executive’s responsibilities change after February, when the terms of the short-term incentive awards are generally approved, the Compensation Committee may adjust the short-term incentive target award opportunity for that executive. No changes were made to target award opportunities for any NEOs from their 2018 levels.

 

Executive

 

 

  2019 Target Bonus  
  (% of Base)  

 

 

Giovanni (John) Visentin

 

 

 

150%

 

 

Steven J. Bandrowczak

 

 

 

100%

 

 

William F. Osbourn, Jr.

 

 

 

100%

 

 

Michael D. Feldman

 

 

 

100%

 

 

Hervé N. Tessler

 

 

 

100%

 

Determining Short-Term Incentive Award Payouts

After the end of each fiscal year, the CFO confirms the financial results and communicates the results to the Compensation Committee. Subject to the Compensation Committee’s review and approval, any material unusual or infrequent charges or gains/(losses) may be excluded from the MIP short-term incentive calculations in order to obtain normalized operational results of the business.

Each performance measure is assessed and calculated independently. The weighted results of each measure are added together to determine overall performance results. Even if pre-established performance measures are achieved, the Compensation Committee retains the discretion to adjust the calculated incentive payout, as it deems appropriate, based on overall Xerox performance. The Compensation Committee also may use its discretion to adjust a MIP award based on individual performance provided that an individual executive’s award never exceeds two times the executive’s target award opportunity.

 

42


Table of Contents

Under extraordinary circumstances, if the Compensation Committee believes an additional incentive is appropriate to reward and motivate executives, it has authority to pay discretionary cash awards outside of the MIP that are separate and independent of any calculated MIP incentive payout.

2019 Short-Term Incentive Award Performance Measures and Payouts

The performance measures set by the Compensation Committee for 2019 were Absolute Revenue(1), Operating Margin(1) and Free Cash Flow(1). Although we consider historical performance when setting future performance goals, these goals were aligned with our 2019 operating plan at the time they were established and designed to be challenging, yet achievable. The payout for achieving target performance goals is 100% of target and the payout for achieving maximum performance goals is 200% of target, with payout at 200% representing attainment of outstanding performance results. The payout for achieving threshold performance goals is 50% of target. There is no payout for results below the threshold levels established by the Compensation Committee. Payouts are made proportionately for achievement at levels between threshold and maximum goals.

The weightings, threshold, target and maximum goals, payout ranges and performance results against the established 2019 performance measures are as follows ($ in millions):

2019 MIP Results ($ in millions unless a %)

 

 

Performance
Measure

 

 

 

Weight

 

 

 

 Threshold 

(50%

payout)

 

 

 

Target

(100%

 payout) 

 

 

 

Maximum

(200%

payout)

 

 

 

Actual 2019

 Performance 

Results

 

 

Performance
Results
 (Payout Factor) 

 

 

 

Weighted
Payout
Factor

 

               

Absolute Revenue (1)

 

  one-third 

 

  $9,300

 

  $9,400

 

  $9,600

 

  $9,161

 

 

Below Threshold

(0.00)

 

  0.0%

 

               

Free Cash Flow (1)

 

  one-third 

 

  $1,000

 

  $1,100

 

  $1,200

 

  $1,272

 

 

Maximum

(2.00)

 

  66.7%

 

Operating Margin (1)

 

  one-third 

 

  12.5%

 

  13.5%

 

  14.5%

 

  13.4%

 

 

Between Threshold

& Target

(.93)

 

  31.1%

 

2019 MIP Factor  

 

  97.8%

 

2019 MIP — Calculation of Performance Results ($ in millions unless a %)

 

 

($ in millions)

 

 

 

Absolute
Revenue 
(1)

 

   

 

Free Cash
Flow 
(1)

 

    

 

Operating
Margin 
(1)

 

 

Reported (2)

 

   

 

$9,066

 

 

 

   

 

$1,179

 

 

 

    

 

$1,192

 

 

 

Discontinued Operations — as reported (3)

 

   

 

79

 

 

 

   

 

89

 

 

 

    

 

28

 

 

 

Xerox International Partners (XIP) — Nov./Dec. Estimate (3)

 

   

 

16

 

 

 

   

 

4

 

 

 

    

 

5

 

 

 

Adjusted Absolute Revenue (1), Free Cash Flow (1) and Operating Profit (1)

 

   

 

$9,161

 

 

 

   

 

$1,272

 

 

 

    

 

$1,225

 

 

 

Adjusted Operating Margin(4)

 

                    

 

13.4%

 

 

 

Actual 2019 Performance Results

 

   

 

Below
Threshold

 

 
 

 

   

 

Maximum

 

 

 

    


 

  Between

  Threshold and
  Target

 

 

 
 

 

 

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

(2) 

Absolute Revenue(1), Free Cash Flow(1) and adjusted(1) Operating Profit all from continuing operations, as reported in our 2019 Annual Report on Form 10-K.

 

43


Table of Contents
(3) 

In November 2019, Xerox Holdings completed a series of transactions to restructure its relationship with FUJIFILM Holdings Corporation (FH), including the sale of its indirect 25% equity interest in Fuji Xerox (FX) and its indirect 51% partnership interest in Xerox International Partners (XIP). As a result, the historical financial results of the Company’s equity investment in FX and XIP business (which was consolidated) for the periods prior to these transactions are reflected as a discontinued operation. Refer to the Company’s 2019 Annual Report on Form 10-K for additional information.

 

(4) 

Adjusted Operating Margin of 13.4% is adjusted(1) Operating Profit of $1,225 million divided by Adjusted(1) Absolute Revenue of $9,161 million.

The short-term plan contains specific metrics, but also permits the Compensation Committee some limited discretion as described above under Determining Short-Term Incentive Award Payouts.

The Compensation Committee approved the calculated payout factor of 97.8% of target, reflecting performance results for all three measures, determined in accordance with the process and applicable goals and weightings described above. The Compensation Committee approved NEO payouts at 97.8% achievement with no discretion applied, other than for Mr. Tessler, whose reduced payout reflects EMEA performance. For more information on short-term incentive payouts, see the Total Target Compensation section on page 36.

 

 

LOGO

2019 Earned Base Salary ($) X Target MIP Opportunity Overall Xerox Performance (Payout Range: 0%-200% of Target) ($) = Actual Cash Incentive Award ($)*

 

 

*

Actual short-term incentive paid to Mr. Tessler reflects the application of negative discretion in light of EMEA results.

The Compensation Committee believes that the fiscal 2019 short-term incentive payments are consistent with our strategy of compensating NEOs for achieving important business goals. In view of the Company’s 2019 results, the Compensation Committee believes that the annual short-term incentive payments resulted in reasonable and appropriate performance-related incentive payments to the NEOs.

The annual incentives paid to the NEOs in April 2020 for fiscal year 2019 are shown in the Summary Compensation Table. Additional information about the short-term incentive opportunities is shown in the Grants of Plan-Based Awards table.

Long-Term Incentives

We provide long-term incentives to reward NEOs for sustained performance, as a retention incentive and to align executives’ interests with the interests of our shareholders.

Executive Long-Term Incentive Program

Our Executive Long-Term Incentive Program (E-LTIP) awards are made annually and off-cycle for special purposes (such as new hire, promotion and recognition), pursuant to the 2004 Performance Incentive Plan. The 2019 awards were issued 60% as PSUs and 40% as RSUs.

PSUs are typically based on achievement of goals over a performance period covering three fiscal years. The service period for these PSUs is three years from the date of grant. Earned PSUs vest after the Compensation Committee certifies the results for the performance period. RSUs are subject to time-based vesting requirements and currently are scheduled to vest 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date and 50% on the third anniversary of the grant date.

Upon vesting of PSUs and RSUs, dividend equivalents are paid in cash on vested shares in an amount equal to the dividends the executive would have earned from having owned the same amount of Xerox Common Stock (up to the target number of shares) throughout the vesting period. Dividend equivalents are not paid with respect to stock options.

 

44


Table of Contents

Compensation Committee Actions Relating to E-LTIP Awards

E-LTIP awards are based on a review of both peer group and market data, operating results, each executive’s past and expected future contributions and retention of key personnel.

 

 

LOGO

Actions the Compensation Committee Takes every year with respect to E-LTIP awards -For completed performance periods, determines the number of PSUs, if any, earned by each NEO based on the results for the performance period -For the new PSU cycle, establishes overall design, performance measures and weightings; the threshold, target, and maximum goals for each measure; and payout ranges -Approves new E-LTIP grants for NEOs Specific actions taken for 2019 E-LTIP Grants -Approved 2019 long-term incentive target grant values for NEOs -Approved design, performance measures and weightings. Set threshold, target, and maximum goals for each measure and payout ranges

The 2019 E-LTIP awards were granted in the form of 60% PSUs and 40% RSUs as shown below. Delivering two different forms of equity provides a means of balancing financial and strategic performance and promotes retention.

 

Executive

 

 

 

  2019 LTI ($)  

 

 

 

  PSUs (60%) ($)  

 

 

 

  RSUs (40%) ($)  

 

 

 

Giovanni (John) Visentin

 

   

 

 

 

 

10,000,000

 

 

 

 

   

 

 

 

 

6,000,000

 

 

 

 

   

 

 

 

 

4,000,000

 

 

 

 

 

Steven J. Bandrowczak

 

   

 

 

 

 

2,500,000

 

 

 

 

   

 

 

 

 

1,500,000

 

 

 

 

   

 

 

 

 

1,000,000

 

 

 

 

 

William F. Osbourn, Jr.

 

   

 

 

 

 

2,250,000

 

 

 

 

   

 

 

 

 

1,350,000

 

 

 

 

   

 

 

 

 

900,000

 

 

 

 

 

Michael D. Feldman

 

   

 

 

 

 

2,200,000

 

 

 

 

   

 

 

 

 

1,320,000

 

 

 

 

   

 

 

 

 

880,000

 

 

 

 

 

Hervé N. Tessler

 

   

 

 

 

 

1,700,000

 

 

 

 

   

 

 

 

 

1,020,000

 

 

 

 

   

 

 

 

 

680,000

 

 

 

 

The payout for achieving threshold performance goals is 50% of the target award opportunity, the payout for achieving target performance goals is 100% of the target award opportunity, and the payout for achieving maximum performance goals is 200% of target award opportunity, with payout at 200% representing attainment of outstanding performance results. Payouts are made proportionately for achievement at levels between these goals. There is no payout if performance falls below each of the threshold goals established by the Compensation Committee. Payout of PSUs is conditioned on actual achievement of the pre-established performance measures, and any earned shares will be paid on the vesting date.

The target numbers of PSUs and RSUs granted to our NEOs were determined by dividing the approved E-LTIP target awards (dollar value) by the fair value of Xerox Common Stock on the respective grant dates (or last trading day prior to the grant date if the market was closed on the grant date). The fair value used to determine the number of RSUs granted was the closing price of Xerox Common Stock on the date of grant. The fair value used to determine the number of PSUs granted was determined as follows: one-half based on the closing price of Xerox Common Stock on the grant date (for the Absolute Revenue(1) and Free Cash Flow(1) metric) and one-half based on a Monte Carlo valuation (for the Absolute Share Price(1) metric).

 

Vesting of earned PSUs is on the third anniversary of the grant date following the Compensation Committee’s certification of performance results. RSUs vest annually in increments of 25%, 25% and 50%, respectively, over a three year period.

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

45


Table of Contents

Metrics for the 2019 Performance Cycle (2019 E-LTIP)

The 2019 E-LTIP performance measures (all based on continuing operations) and weightings for the PSU are as follows:

 

   

Free Cash Flow(1) (25%)

 

   

Rationale: provides shareholders and investors an additional perspective on cash flow from operating activities in excess of amounts required for reinvestment; it provides a measure of our ability to fund acquisitions, dividends and share repurchases

 

   

Performance period: Based on cumulative performance from January 2019 through December 2021

 

   

Absolute Revenue(1) (25%)

 

   

Rationale: Replaced Revenue Growth at constant currency(1) to provide greater focus on top-line results

 

   

Performance period: Based on cumulative performance from January 2019 through December 2021

 

   

Absolute Share Price(1) (50%)

 

   

Rationale: Replaced relative Total Shareholder Return(1) metric used in 2018, to create an intense focus on share price and support strong alignment with our shareholders. Inclusion of Absolute Share Price(1) supported the elimination of new stock option grants, since this metric is focused on stock price

 

   

Performance period: Measured based on 20-trading day average price at the end of the performance period, plus the value of accumulated dividends during the 3-year performance period

Performance measures for our long-term incentive awards are typically set at the beginning of the first year and reflect a three-year performance period. Earned long-term incentive awards vest three years from the date of grant and the actual value realized by our NEOs with respect to these awards is based on achievement of performance goals and stock price at the time of vesting.

Target performance goals are reasonably achievable with a level of performance that is in line with the Company’s Board-approved operating plan, whereas maximum performance levels represent stretch goals which can only be achieved with outstanding performance.

Under the 2019 E-LTIP, actual Company results for the performance measures will be adjusted for the impacts of certain pre-established items, subject to thresholds, such as: acquisitions, separations or divestitures, effects of changes in accounting principles, certain items identified in other expenses, net, gains/(losses) from the settlement of tax audits or changes in tax laws, gains/(losses) from acts of war, terrorism or natural disasters, cash payments for restructuring, pension contributions, changes in receivables factoring programs, and other types of unusual or infrequent items.

Because we believe Absolute Revenue(1) and Free Cash Flow(1) to be two of the fundamental financial metrics that drive shareholder value, we used those financial metrics for both our short- and long-term incentive programs.

Additional information on the 2019 E-LTIP awards can be found in the Summary Compensation Table and the Grants of Plan-Based Awards table.

Performance and Payouts under Prior E-LTIP Awards

2016 PSUs

The 2016 E-LTIP was based on one year of performance (2016 only) with all financial measures based on total Company results. The Compensation Committee determined that the performance measures were inapplicable for 2017 and 2018 because they applied to the combined company prior to the separation of Conduent

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

46


Table of Contents

Incorporated. For additional information on the 2016 E-LTIP performance measures and definitions, refer to Exhibit 10(e)(20) of the Annual Report on Form 10-K for the fiscal year ended December 31, 2015, filed on February 19, 2016. Performance results against the pre-established performance measures and definitions for this award are as follows:

2016 PSU Results

 

Performance
Measure
   Weight   

 Threshold 

(50%

payout)

 

Target

(100%

 payout) 

 

 Maximum 

(200%

payout)

 

Actual 2016

 Performance 

Results

   Performance 
Results
(Payout
Factor)
   Weighted 
Payout
Factor

Revenue Growth at Constant Currency (1)

  30%   (5%)   (3%)   (1%)   (3.4%)  

Between Threshold

& Target

(0.90)

  27.00%

Adjusted Earnings Per Share (1)

  50%   $1.07   $1.14   $1.21   $1.12  

Between Threshold

& Target

(0.86)

  42.86%

Adjusted Operating Cash Flow (1)

  20%   $1.2B   $1.3B   $1.55B   $1.378B  

Between Target

& Max

(1.31)

  26.24%

Actual 2016 Performance Results  

  96.10%

2016 PSU — Calculation of Performance Results

 

    

 

Performance Measures (Weightings)

 

 

 

Adjusted
Revenue
Growth at
constant
currency 
(1)
(30%)

 

 

 

Adjusted
Earnings
Per Share 
(1)
(50%)

 

 

 

Adjusted
Operating
Cash Flow 
(1)
(20%)

 

 

Unadjusted Measures (2)

 

 

 

(3.4)%

 

 

 

$0.41

 

 

 

$1,095

 

 

 

Restructuring and related costs

 

 

 

-

 

 

 

0.25

 

 

 

141

 

 

 

Amortization of intangible assets

 

 

 

-

 

 

 

0.21

 

 

 

-

 

 

 

Non-service retirement-related costs

 

 

 

-

 

 

 

0.08

 

 

 

-

 

 

 

Separation related costs

 

 

 

-

 

 

 

0.15

 

 

 

118

 

 

 

Other, net

 

 

 

-

 

 

 

0.02

 

 

 

24

 

 

 

Adjusted Measures

 

 

 

(3.4)%

 

 

 

$1.12

 

 

 

$1,378

 

 

 

Actual 2016 Performance Results

 

 

 

Between
Threshold and
Target

 

 

 

Between
Threshold and
Target

 

 

 

Between
Target and
Maximum

 

 

 

(1) 

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

(2) 

Revenue growth at constant currency excludes the impact of changes in the translation of foreign currency revenues into U.S. dollars. Revenue growth, Earnings per Share and Operating Cash Flow are on a total company basis — including continuing and discontinued operations.

Based on the above, the Compensation Committee determined a payout level for the 2016 PSUs of 96.1% of target. The actual payout value of the 2016 E-LTIP as a percent of grant date value on July 1, 2016, was 141.4% due to percentage earned of shares granted and the difference in the fair market value per share on the July 1, 2016 grant date as compared to the July 1, 2019 stock price at vesting.

 

47


Table of Contents

NAMED EXECUTIVE OFFICER WITH UNIQUE COMPENSATION ARRANGEMENT

Giovanni (John) Visentin

Mr. Visentin was hired on May 15, 2018 under unique circumstances and at a time of significant uncertainty concerning the Company’s future:

 

   

Several directors had recently resigned, and new directors had joined the Board

 

   

The New York State Supreme Court had enjoined a pending change of control transaction with FUJIFILM

 

   

The Company’s former CEO had resigned

The Company’s independent directors determined that Mr. Visentin was particularly well-suited to lead the Company’s turn-around strategy, and several of the Company’s largest shareholders had communicated similar views publicly. Further, the independent directors also recognized that recruiting any CEO candidate, particularly someone of Mr. Visentin’s caliber, into an organization facing so many challenges would be difficult. When the independent directors concluded that the Company needed to hire Mr. Visentin, they realized that some exceptions to the Compensation Committee’s standard pay practices would be both necessary and appropriate under the circumstances.

Mr. Visentin’s negotiated offer letter provided for:

 

   

Ongoing compensation:

 

   

$1,200,000 base salary

 

   

150% short-term incentive target

 

   

$10,000,000 long-term incentive target

 

   

Participation in the Company’s retirement, health and welfare, vacation and other benefit programs

 

   

2018 one-time compensation items (not repeated in 2019):

 

   

$1,500,000 cash sign-on bonus payment

 

   

Award of restricted shares with a value of $10,000,000 (based on the closing price of Xerox Common Stock on May 15, 2018, his first day of employment with Xerox) that cliff vested one year from the grant date

The negotiated 2018 one-time compensation items described above were designed to replace compensation that Mr. Visentin forfeited to join the Company and to provide Mr. Visentin with significant incentives to lead the turn-around that Xerox needed. These one-time items were not expected to be repeated and Mr. Visentin’s 2019 compensation has decreased accordingly, as seen in the table below.

 

 

Year

 

  

 

Base Salary
($)

 

  

 

Bonus and
Non-Equity
Incentive
Awards ($)

 

  

 

Stock and
Option
Awards ($)

 

  

 

Other
Compensation
($)

 

  

 

Total ($)

 

           

2018

 

      756,522*

 

   3,300,000

 

   19,072,839

 

   329,642

 

   23,459,003

 

           

2019

 

   1,200,000

 

   1,760,400

 

   10,000,029

 

   177,005

 

   13,137,434

 

 

 

*

Actual Base Salary for partial year of employment. Mr. Visentin became an employee on May 15, 2018

The original negotiated offer letter also included special change-in-control and severance provisions. In the event of a Change in Control (as defined in the offer letter), any outstanding equity awards would become vested. In addition, in the event of Mr. Visentin’s (i) voluntary termination for Good Reason, (ii) involuntary termination without Cause prior to a Change in Control (all as defined in the negotiated offer letter), or (iii) as originally negotiated, his voluntary termination without Good Reason within 90 days following a Change in Control, Mr. Visentin would be entitled to, among other things:

 

   

Cash payments in the aggregate equal to 2 times the sum of his base salary and his target short-term incentive;

 

   

Prorated annual short-term incentive for the year of termination based on actual results; and

 

48


Table of Contents
   

Accelerated vesting of all outstanding long-term incentive awards that would have otherwise become vested during the two-year severance period.

The negotiated offer letter was amended in 2019 to eliminate the modified single-trigger (or “walk-away”) change-in-control feature for equity compensation awards made after May 15, 2020. Under the amended letter agreement, following a Change in Control, in the event of Mr. Visentin’s involuntary termination without Cause or voluntary termination for Good Reason, he would be entitled to:

 

   

Cash payments equal to 2.99 times the sum of his base salary and his target short-term incentive; and

 

   

Annual short-term incentive for the year of termination based on actual results

The amended negotiated offer letter also modified the change-in-control vesting provision applicable to Mr. Visentin’s long-term incentive awards. Under the amendment, awards granted on or after May 15, 2020 become fully vested due to a Change in Control only if followed by an involuntary termination of employment (other than for Cause) or a voluntary termination for Good Reason (i.e., “double-trigger” vesting). (Awards granted prior to May 15, 2020 continue to be governed by the pre-amendment change-in-control provision described above.)

The 2019 amendment to Mr. Visentin’s negotiated offer letter were made to address concerns raised in connection with our failed say-on-pay vote last year and concerns discussed with shareholders in the months following that vote. The amended negotiated offer letter also reflects a CEO compensation approach more consistent with the compensation practices of our peers and our own past practices.

For additional information, please see Change in Control Benefits section.

 

49


Table of Contents

PENSION AND SAVINGS PLANS

Pension and Savings Plans

The only NEO who participated in a pension plan in 2019 is Mr. Tessler, as described below. The other NEOs were eligible to participate in the Company’s tax-qualified 401(k) plan, as described below.

Xerox Corporation Savings Plan (401(k) Savings Plan)

Messrs. Visentin, Bandrowczak, Osbourn and Feldman were eligible to participate in the Company’s 401(k) Savings Plan in the same manner as all other U.S. employees covered by the plan. Each of these NEOs participated in the 401(k) Savings Plan in 2019. These NEOs were eligible for a 50% Company match on 6% of eligible pay saved on a before-tax basis, subject to IRS qualified plan compensation limits and highly compensated threshold limits. NEOs may not receive 401(k) Savings Plan benefits in excess of those limits. The match is applied after year-end and is forfeited in full should the participant leave Xerox prior to year-end.

The Xerox Corporation Supplemental Savings Plan, a non-tax-qualified deferred compensation plan, was closed to new contributions after 2018, but the existing account balances of Messrs. Visentin, Osbourn and Feldman continue to generate earnings. See Non-Qualified Deferred Compensation for the 2019 Fiscal Year for further information.

French Pension Plans

Mr. Tessler, as a French citizen, was eligible to participate in the following pension plans in 2019:

 

   

Defined Contribution Pension Plan for Directors of Xerox SAS, France

 

   

Contributions to the plan are based on earnings up to a cap of 205,680

 

   

Payments are managed by AXA and are payable upon retirement (earliest being 62 years of age)

 

   

Earnings are credited to a participant’s account based on market investments selected by the participant

 

   

Retirement Indemnities Plan

 

   

French pension plan required under the Collective Bargaining Agreement (forfeited if an employee leaves before they are 62; since Mr. Tessler is not yet age 62, he would not be eligible for any benefits under this plan)

Mr. Tessler was not covered by U.S. tax-qualified or non-qualified plans (nor any retirement plans in the U.K., where he was on assignment). More details on Mr. Tessler’s pension benefits can be found in the Pension Benefits for 2019 Fiscal Year and Non-Qualified Deferred Compensation for the 2019 Fiscal Year sections.

 

50


Table of Contents

PERQUISITES AND PERSONAL BENEFITS

General Benefits

The Company generally maintains medical and dental coverage, life insurance, accidental death insurance and disability benefit programs or plans for all of its employees, as well as customary vacation, leave of absence and other similar policies. NEOs are eligible to participate in these programs and plans on the same basis as all other salaried employees, except as otherwise disclosed.

Perquisites

We periodically review the perquisites received by NEOs. The Compensation Committee believes its policies regarding perquisites are conservative compared to other companies. The Company does not pay tax gross-ups in connection with perquisites (other than in connection with tax equalization for the international assignment allowances noted below).

 

   

Financial Planning: All NEOs are eligible to receive Company-paid financial planning assistance (up to $10,000 every two years). Solid financial planning by experts reduces the amount of time and attention that NEOs devote to their finances and maximizes the value of their compensation.

 

   

Chartered Aircraft: For purposes of security, productivity and efficiency, the Board of Directors requires Mr. Visentin to use chartered aircraft for business travel. Employees are permitted to accompany Mr. Visentin on the Company chartered aircraft solely for business purposes with prior authorization by Mr. Visentin.

 

   

Mr. Visentin also may use the Company chartered aircraft for personal travel and he may be accompanied by family members and guests. Mr. Visentin is wholly responsible for the tax consequences related to his personal use of Company chartered aircraft. The Company does not provide gross-ups or other tax protection related to his personal use of chartered aircraft.

 

   

Home Security: Mr. Visentin receives home security to address safety concerns resulting from his position as our Vice Chairman & CEO.

 

   

International Assignment Allowances: Mr. Tessler, a citizen of France, was on international assignment and received an international assignment allowance in 2019, which is customary for Xerox employees on international assignment.

For additional information and the total costs to the Company for providing perquisites and personal benefits to the NEOs during fiscal 2019, see the “All Other Compensation” column of the Summary Compensation Table.

 

51


Table of Contents

CHANGE IN CONTROL BENEFITS

All NEOs have change in control severance agreements. These agreements are in the best interests of both the Company and our shareholders because they foster the continuous employment and dedication of key management without potential distraction or personal concern if Xerox were the potential subject of an acquisition by another company or other change in control. The Compensation Committee periodically reviews our change in control severance agreements against benchmark data to ensure that our plans are consistent with market practice.

Under the change in control agreements with Messrs. Bandrowczak, Osbourn, Feldman and Tessler, if employment terminates involuntarily (other than for cause, death or disability) or voluntarily for Good Reason within two years following a change in control, the NEO would be entitled to:

 

   

Two times the sum of their annual base salary and target short-term incentive award;

 

   

Continuation of specified welfare benefits at active employee rates for a period of 24 months; and

 

   

Accelerated vesting of outstanding equity awards.

The CIC severance agreements for Messrs. Bandrowczak, Osbourn, Feldman and Tessler require that the executive agrees to remain an employee of the Company for nine months following a “potential change in control” (as defined therein) or until the date upon which the NEO is first entitled to receive the benefits described above, if earlier. Severance payments to these NEOs following a change in control are generally not conditioned on non-competition or non-solicitation obligations. Good Reason is defined in the change in control severance agreements.

The change in control provisions of Mr. Visentin’s 2018 negotiated offer letter, and the 2019 amendment thereto, are detailed in the Named Executive Officers With Unique Compensation Arrangements section. Under Mr. Visentin’s offer letter as originally negotiated, in the event of a Change in Control (as defined therein), any outstanding equity awards become vested. As amended during 2019, awards granted on or after May 15, 2020 become fully vested due to a Change in Control only if followed by an involuntary termination of employment (other than for cause) or a voluntary termination for Good Reason (i.e., “double-trigger” vesting).

In addition, if Mr. Visentin’s employment terminates involuntarily (other than for cause, death or disability) or voluntarily for Good Reason following a Change in Control, he would be entitled to:

 

   

A lump sum cash payment equal to 2.99 times the sum of his annual base salary and target short-term incentive award;

 

   

Annual short-term incentive for the year of termination, based on actual results; and

 

   

Continuation of specified welfare benefits at active employee rates for a period of 24 months.

Under Mr. Visentin’s 2018 offer letter as originally negotiated, if Mr. Visentin voluntarily terminated his employment without Good Reason within 90 days following a Change in Control, he would be entitled to the above benefits but with a multiplier of 2.0 rather than 2.99; the 2019 amendment eliminated this feature effective May 15, 2020.

Mr. Visentin’s change-in-control payments and benefits are subject to his execution of a release of claims against the Company and a two-year non-compete/non-solicitation agreement. Good Reason is defined in Mr. Visentin’s negotiated offer letter.

Xerox does not provide any of the NEOs with excise tax reimbursement on severance payments.

Additional information and the amount of the estimated payments and benefits payable to the NEOs assuming a change in control of Xerox and a qualifying termination of employment is presented under the Potential Payments Upon Termination or Change in Control table.

 

52


Table of Contents

EMPLOYMENT AND SEPARATION

NEOs serve at the will of the Board. This enables the Board to remove a NEO, consistent with applicable laws, whenever it is in the best interests of the Company, with discretion of the Compensation Committee to decide on an appropriate severance package (except for benefits that have vested or in the case of a change in control). When a NEO is removed from his or her position, the Compensation Committee exercises its business judgment in determining whether any special severance arrangement is appropriate in light of all relevant circumstances, including how long the officer was with the Company, past accomplishments, the reasons for separation and requirements under local law.

The Compensation Committee approved an Officer Severance Program in 2017 and revised the program in 2018. With the intention of continuously reviewing the use and terms of the program, the approval in 2018 was for a period of eighteen months, with a scheduled expiration in January 2020. The Compensation Committee renewed the officer severance program in January 2020 for an additional eighteen months.

Under the Officer Severance Program, an officer who is eligible to participate in the program will be entitled to receive:

 

   

One year of salary continuance and benefits

 

   

Pro-rata vesting of equity grants, and

 

   

Pro-rata annual short-term incentive award for the year of termination.

 

   

The Officer Severance Program includes a covenant not to engage in activity that is detrimental to the Company, and payments and benefits under the program are conditioned upon the NEO’s execution of a release of claims against the Company and a non-competition/non-solicitation agreement.

The NEOs are generally eligible for the Officer Severance Program, except that the Officer Severance Program excludes from eligibility an officer with a written agreement providing for severance benefits upon separation, and it contains a non-duplication of benefits provision, pursuant to which payments and benefits under the Officer Severance Program are reduced by amounts required to be paid to the officer as severance under another arrangement or by operation of law. Thus, the treatment of Messrs. Visentin and Tessler under the Officer Severance Program would be as follows:

 

   

Mr. Visentin’s negotiated offer letter (as amended) provides for severance benefits and, in the event of severance, his benefits would be governed by that arrangement and he would not be eligible for the Officer Severance Program. See Named Executive Officers with Unique Compensation Arrangements for further information.

 

   

Mr. Tessler would not receive a benefit under the Officer Severance Plan to the extent he receives benefits under the Convention Collective d’Enterprise Xerox S.A.S. du 10 December 2015, a collective bargaining agreement between the Company’s French subsidiary and certain French trade unions (XF-CBA). See Potential Payments Upon Termination or Change in Control for further information. Effective February 28, 2020, Mr. Tessler retired from his role as Executive Vice President. See Potential Payments Upon Termination or Change in Control for information about compensation payable in connection with Mr. Tessler’s retirement.

Except as described above, if the Compensation Committee does not approve a severance arrangement under the Officer Severance Program for a named executive officer whose employment is terminated, that officer would be covered under the Company’s regular U.S. severance policy, as applicable at the time of the separation.

 

53


Table of Contents

OTHER FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM

Stock Ownership Requirements

We require each NEO to build and maintain a meaningful level of stock ownership.

 

 

Role

 

 

 

Ownership Requirement

 

   

CEO

 

  5 times base salary

 

   

Other NEOs

 

  3 times base salary

 

To that end, the annual E-LTIP PSU and RSU awards are subject to a mandatory holding requirement. NEOs must retain at least 50% of the shares acquired through the vesting of these E-LTIP awards, net of taxes, until they achieve their required level of ownership. Once achieved, NEOs must continue to hold that amount of stock as long as they remain with the Company. They also remain subject to a holding requirement following separation from employment (including retirement) for six months for the CEO and three months for other NEOs. The holding requirement essentially restricts the CEO from selling these shares prior to two earnings announcements following separation from employment (prior to one earnings announcement for other NEOs). For six months following separation, NEOs may only sell shares during a “window period” (as defined below under Trading, Hedging and Pledging). The CEO has the authority to permit discretionary hardship exceptions (other than for himself) from the ownership and holding requirements to enable participants with financial need to access their vested shares, but no such exceptions have ever been requested.

Shares that count toward ownership requirements include (i) shares owned outright (whether or not held in street name), (ii) outstanding unvested restricted stock and RSUs and (iii) outstanding earned but unvested PSUs. Outstanding unearned PSUs and stock options do not count toward ownership requirements.

Trading, Hedging and Pledging

Executive officers are prohibited from engaging in short-swing trading and trading in options (including puts, calls and straddles) and from otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset any decrease in the market value of Xerox securities. “Short sales” are also prohibited. Our anti-hedging policies and practices also apply to directors. Under the Company’s insider trading policy, executive officers are permitted to buy or sell Xerox securities only during a “window period,” which is the period commencing on the day that is one full trading day following announcement of quarterly earnings and ending on (and including) the fifteenth day of the last month of the quarter during which the earnings announcement is made. The only exception to this restriction is for executive officers who have entered into trading plans pursuant to SEC Rule 10b5-1.

Executive officers are expected to obtain approval from the CEO prior to selling Xerox securities. In addition, executive officers are prohibited from pledging Xerox securities, including depositing Xerox securities in margin accounts at brokerage firms, and from using Xerox securities as collateral.

Compensation Recovery Policy (Clawbacks)

Typically, separation arrangements with our NEOs include a provision that rescinds severance payments if an executive engages in activity that is detrimental to the Company. Clawback arrangements may also be included in letter agreements with executives. In addition, the following plans provide for compensation recovery.

Under the 2004 Performance Incentive Plan, if the Compensation Committee determines that a NEO has engaged in activity that is detrimental to the Company, it may cancel any awards granted to that individual. In addition, if such a determination is made before any change in control of Xerox, the Compensation Committee may rescind any payment or delivery of an equity or annual cash incentive award that occurred from six months before the detrimental activity. For this purpose, detrimental activity may include a violation of a non-compete agreement with the Company, disclosing confidential information (except for reporting and other communications protected by “whistle blower” provisions of Dodd Frank), soliciting an employee to terminate employment with the Company, or soliciting a customer to reduce its level of business with the Company. If a payment or award is rescinded, the NEO will be expected to pay the Company the amount of any gain realized or payment received in a manner the Compensation Committee or its delegate requires.

 

54


Table of Contents

Our E-LTIP equity award agreements, under the 2004 Performance Incentive Plan, include a clawback provision that applies if an accounting restatement is required to correct any material non-compliance with financial reporting requirements as required under Dodd Frank. Under this provision, the Company can recover, for the three prior years, any excess incentive-based compensation (the excess over what would have been paid under the accounting restatement) from executive officers or former executive officers. Short-term incentive awards are also subject to clawback provisions.

Under the Xerox Corporation Supplemental Savings Plan, if a participant, including a NEO, is found to have engaged in detrimental activity, the Plan Administrator may reduce or delete the matching contribution account balance and not pay such amounts to that individual.

CERTAIN TAX IMPLICATIONS OF EXECUTIVE COMPENSATION

Section 162(m) of the Internal Revenue Code of 1986, as amended (Section 162(m)), limits to $1 million per year the federal income tax deduction available to public corporations for compensation paid for any fiscal year to the corporation’s CEO and certain other NEOs included in the Summary Compensation Table in the Company’s proxy statement. Prior to 2018, this limitation on deductibility did not apply to qualifying “performance-based compensation” and did not apply to our CFO. In December 2017, the Tax Cuts and Jobs Act (Tax Act) was signed into law. Under the Tax Act, the exemption from Section 162(m)’s deduction limit for “performance-based compensation” was repealed, effective for taxable years beginning after December 31, 2017, and extended the limitation to compensation paid to CFOs and certain former NEOs. As a result, all compensation in excess of $1 million paid to each of our NEOs will not be deductible unless the compensation qualifies for certain transition relief applicable to certain arrangements in place as of November 2, 2017. Because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing Section 162(m)’s exception to the deduction limit for performance-based compensation, no assurance can be given that compensation which had been intended to satisfy the requirements for exception from the Section 162(m) deduction limit will, in fact, satisfy the exception.

 

55


Table of Contents

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Xerox management. Based upon its review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 and be included in the Proxy Statement for the 2020 Annual Meeting of Shareholders.

Cheryl Gordon Krongard, Chair

Jonathan Christodoro

A. Scott Letier

 

56


Table of Contents

SUMMARY COMPENSATION TABLE

The Summary Compensation Table below provides compensation information for the CEO, the CFO and the next three most highly compensated executive officers who served during the fiscal year ended December 31, 2019 (collectively referred to as NEOs). The table includes the dollar value of base salary earned, bonus, stock and option awards, non-equity incentive plan compensation earned, change in pension value, if any, and all other compensation, whether paid or deferred.

For a summary of the Compensation Committee’s decisions on the compensation awarded to our NEOs for fiscal 2019, please refer to the CD&A beginning on page 25.

Summary Compensation Table

 

                   

Name &

Principal

Position

  Year    

Salary

($) (A)

   

Bonus

($) (B)

   

Stock
Awards

($) (C)

   

Option
Awards

($) (D)

    Non-Equity
Incentive Plan
Compensation
($) (E)
    Change in
Pension
Value and
NQDC
Earnings
($) (F)
  All Other
Compensation
($) (G)
   

Total

($)

 
                   

Giovanni (John) Visentin

 

   

 

2019

 

 

 

   

 

1,200,000

 

 

 

   

 

-

 

 

 

   

 

10,000,029

 

 

 

   

 

-

 

 

 

   

 

1,760,400

 

 

 

  -

 

   

 

177,005

 

 

 

   

 

13,137,434

 

 

 

Vice Chairman and Chief Executive Officer

 

   

 

2018

 

 

 

   

 

756,522

 

 

 

   

 

1,500,000

 

 

 

   

 

17,500,045

 

 

 

   

 

1,572,794

 

 

 

   

 

1,800,000

 

 

 

  -

 

   

 

329,642

 

 

 

   

 

23,459,003

 

 

 

                   

Steven J. Bandrowczak

 

   

 

2019

 

 

 

   

 

525,000

 

 

 

   

 

-

 

 

 

   

 

2,500,038

 

 

 

   

 

-

 

 

 

   

 

513,450

 

 

 

  -

 

   

 

8,139

 

 

 

   

 

3,546,627

 

 

 

President and Chief Operations Officer

 

   

 

2018

 

 

 

   

 

272,917

 

 

 

   

 

300,000

 

 

 

   

 

3,184,407

 

 

 

   

 

206,591

 

 

 

   

 

273,000

 

 

 

  -

 

   

 

2,981

 

 

 

   

 

4,239,896

 

 

 

                   

William F. Osbourn, Jr.

 

   

 

2019

 

 

 

   

 

625,000

 

 

 

   

 

-

 

 

 

   

 

2,250,020

 

 

 

   

 

-

 

 

 

   

 

611,250

 

 

 

  -

 

   

 

11,035

 

 

 

   

 

3,497,305

 

 

 

Executive Vice President and Chief Financial Officer

 

   

 

2018

 

 

 

   

 

625,000

 

 

 

   

 

-

 

 

 

   

 

1,687,531

 

 

 

   

 

353,793

 

 

 

   

 

531,250

 

 

 

  -

 

   

 

168,280

 

 

 

   

 

3,365,854

 

 

 

   

 

2017

 

 

 

   

 

625,000

 

 

 

   

 

-

 

 

 

   

 

3,375,018

 

 

 

   

 

-

 

 

 

   

 

825,000

 

 

 

  -

 

   

 

200,945

 

 

 

   

 

5,025,963

 

 

 

                   

Michael D. Feldman

 

   

 

2019

 

 

 

   

 

575,000

 

 

 

   

 

-

 

 

 

   

 

2,200,012

 

 

 

   

 

-

 

 

 

   

 

562,350

 

 

 

  -

 

   

 

8,559

 

 

 

   

 

3,345,921

 

 

 

Executive Vice President

 

   

 

2018

 

 

 

   

 

575,000

 

 

 

   

 

300,000

 

 

 

   

 

1,875,030

 

 

 

   

 

393,101

 

 

 

   

 

385,250

 

 

 

  -

 

   

 

42,876

 

 

 

   

 

3,571,257

 

 

 

   

 

2017

 

 

 

   

 

575,000

 

 

 

   

 

-

 

 

 

   

 

2,500,027

 

 

 

   

 

-

 

 

 

   

 

725,000

 

 

 

  -

 

   

 

30,371

 

 

 

   

 

3,830,398

 

 

 

                   

Hervé N. Tessler

 

   

 

2019

 

 

 

   

 

561,272

 

 

 

   

 

-

 

 

 

   

 

1,700,018

 

 

 

   

 

-

 

 

 

   

 

219,570

 

 

 

  -

 

   

 

155,957

 

 

 

   

 

2,636,817

 

 

 

Executive Vice President

 

   

 

2018

 

 

 

   

 

573,273

 

 

 

   

 

238,488

 

 

 

   

 

1,500,031

 

 

 

   

 

314,485

 

 

 

   

 

286,637

 

 

 

  210,661

 

   

 

553,797

 

 

 

   

 

3,677,372

 

 

 

   

 

2017

 

 

 

   

 

598,567

 

 

 

   

 

-

 

 

 

   

 

2,000,039

 

 

 

   

 

-

 

 

 

   

 

796,094

 

 

 

  285,861

 

   

 

854,214

 

 

 

   

 

4,534,775

 

 

 

Compensation reported in this table is in U.S. dollars and rounded to the nearest dollar. For Mr. Tessler, the exchange rates used in the Company’s Annual Reports on Form 10-K have been used to be consistent:

 

   

1.1197USD per EUR for 2019

 

   

1.1436USD per EUR for 2018

 

   

1.1941USD per EUR for 2017

 

(A)

The 2018 amounts shown in column (A) for Messrs. Visentin and Bandrowczak represent base salary earned from their hire dates (May 15, 2018 and June 25, 2018 respectively). Mr. Tessler’s base salary of 501,270 (unchanged from 2017) converted to U.S. dollars using the exchange rates listed above.

 

(B)

The 2018 amounts shown in column (B) for Mr. Visentin and Mr. Bandrowczak reflect their lump-sum cash sign-on award approved as part of their negotiated offer letters. Also included are cash incentive awards for Mr. Feldman and Mr. Tessler. These awards were approved by the Compensation Committee in 2016, payable on the one-year anniversary of the Separation to recognize the work required to accomplish the Separation and to retain these executives beyond the Separation.

The Annual MIP awards appear as “Non-Equity Incentive Plan Compensation” in column (E).

 

(C)

The amounts shown in this column represent the aggregate grant date fair values of equity awards in the form of PSUs and RSUs granted to our NEOs for each respective year, computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation.

PSU awards under 2019 E-LTIP were granted on January 14, 2019 for Messrs. Visentin, Bandrowczak, Osbourn, Feldman and Tessler. The grant date fair value of these awards at maximum performance is as follows: Mr. Visentin — $12,000,023; Mr. Bandrowczak — $3,000,034; Mr. Osbourn — $2,700,027; Mr. Feldman — $2,640,018; and Mr. Tessler — $2,040,004.

 

57


Table of Contents

This column also includes the grant date fair value of the new hire restricted stock award granted to Mr. Visentin on May 15, 2018 ($10,000,025) and the new hire RSU award granted to Mr. Bandrowczak on July 1, 2018 ($2,200,008) as described in last year’s proxy.

 

(D)

Stock options were not granted in 2019.

 

(E)

The Non-Equity Incentive Plan payments under the 2019 MIP, based on 2019 performance, were approved by the Compensation Committee in February 2020. Actual 2019 full year payments as a percentage of target were as follows: Mr. Visentin, 97.8%; Mr. Bandrowczak, 97.8%; Mr. Osbourn, 97.8%; Mr. Feldman, 97.8%; and Mr. Tessler, 39.1%. Mr. Tessler’s payout reflects the application of negative discretion in light of EMEA results. For more information, see the 2019 Performance for Short-Term Incentive Award Performance Measures and Payouts section in the CD&A.

 

(F)

Effective February 28, 2020, Hervé N. Tessler retired from his role as Executive Vice President. Mr. Tessler participates in the Retirement Indemnities Plan, our French pension plan which we are required to maintain under a certain collective agreement with our employees in France. However, the Retirement Indemnities Plan does not pay any benefits to a participant who terminates employment before age 62. Mr. Tessler had not attained age 62 when he retired in 2020, and therefore is not eligible for any benefits under this plan.

The change in pension value shown in this column is calculated by determining the change in the present value of the benefits from December 31, 2018 to December 31, 2019 (if the change in the present value of the benefit is negative then it is not shown). The change in the present value of the accrued pension benefits is impacted by an additional year of age and by changes in the discount rate used in the present value calculation. The present value is computed using the FASB ASC Topic 715 assumptions in effect at the corresponding fiscal year end and assuming the benefit commences at the earliest retirement date at which unreduced benefits are payable (age 62).

 

  a.

For 2019 - these assumptions include a discount rate of 0.70% for the Retirement Indemnities Plan and an exchange rate of 1.1197USD per EUR, consistent with the rates used in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The primary driver of the decrease in pension value is due the decrease in pay between 2018 and 2019.

 

  b.

For 2018, the assumptions used for Mr. Tessler’s pension value included a discount rate of 1.45% and a December 31, 2018 exchange rate of 1 euro to 1.1436 U.S. dollars.

 

  c.

For 2017, the assumptions used for Mr. Tessler’s pension value included a discount rate of 1.25% and a December 31, 2017 exchange rate of 1 euro to 1.1941 U.S. dollars.

 

(G)

The table below provides additional data on the amounts included under the “All Other Compensation” column.

 

58


Table of Contents

All Other Compensation Table

 

                   

Name

 

 

Year

 

   

Personal
Use of
Aircraft
($) (A)

 

   

International
Assignment
Allowances
($) (B)

 

   

Life
Insurance
Paid by
Registrant
($) (C)

 

   

Relocation
Expenses
($) (D)

 

   

Tax Related
Reimbursements
($) (E)

 

   

401(k), SSP,
& DC
Employer
Contribution
($) (F)

 

   

Miscellaneous
($) (G)

 

   

Total All Other
Compensation

($) (H)

 

 
Giovanni (John) Visentin     2019       166,466       -       -       -       -       8,400       2,139       177,005  
   

 

2018

 

 

 

   

 

275,715

 

 

 

   

 

-

 

 

 

   

 

3,194

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

13,696

 

 

 

   

 

37,037

 

 

 

   

 

329,642

 

 

 

Steven J. Bandrowczak     2019         -       -       -       -       7,980       159       8,139  
     

 

2018

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

1,509

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

1,313

 

 

 

   

 

159

 

 

 

   

 

2,981

 

 

 

William F. Osbourn, Jr.     2019         -       -       -       -       8,400       2,635       11,035  
      2018       -       -       4,354       63,835       55,119       38,813       6,159       168,280  
     

 

2017

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

4,035

 

 

 

   

 

133,542

 

 

 

   

 

55,109

 

 

 

   

 

8,100

 

 

 

   

 

159

 

 

 

   

 

200,945

 

 

 

Michael D. Feldman

    2019         -       -       -       -       8,400       159       8,559  
      2018       -       -       3,389       -       -       39,000       487       42,876  
     

 

2017

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

3,166

 

 

 

   

 

-

 

 

 

   

 

-

 

 

 

   

 

27,046

 

 

 

   

 

159

 

 

 

   

 

30,371

 

 

 

Hervé N. Tessler

    2019         140,192       -       -       -       6,807       8,958       155,957  
      2018       -       173,367       -       135,354       238,260       6,816       -       553,797  
     

 

2017

 

 

 

   

 

-

 

 

 

   

 

319,412

 

 

 

   

 

-

 

 

 

   

 

55,178

 

 

 

   

 

472,598

 

 

 

   

 

7,026

 

 

 

   

 

-

 

 

 

   

 

854,214

 

 

 

 

A.

For reasons of productivity, security and efficiency, the Company requires Mr. Visentin to use Company chartered aircraft for business travel. Mr. Visentin may also use the Company chartered aircraft for personal travel. The compensation value of personal usage of Company chartered aircraft is calculated based on the aggregate incremental cost to the Company, using the incremental aircraft operating rate based on the number of flight hours used, and primarily includes the cost of fuel, maintenance and other variable costs (such as the cost of landing fees, crew on the road expenses, trip related service and maintenance, airport taxes and fees). Mr. Visentin is also allowed to bring guests, such as family members, on the Company chartered aircraft. The Company does not provide gross-ups or other tax protection related to his personal use of Company chartered aircraft.

 

B.

Mr. Tessler, a citizen of France, received certain benefits in connection with his international assignment in the U.S. and U.K.

 

C.

Amounts in this column include the imputed income for Company-paid life insurance, similar to other US employees. The Xerox Universal Life Plan was frozen and no employer contributions were made to the plan after December 31, 2018.

 

D.

For 2017 and 2018, the amounts shown for Mr. Osbourn reflect home sale related reimbursements (see prior proxy for more details). For 2017 and 2018, the amounts shown for Mr. Tessler reflect his relocation to the U.K. for an international assignment (see prior proxy for more details).

 

E.

For Mr. Osbourn, the 2017 and 2018 amounts, represents gross-up payments related to reimbursement of expenses in connection with relocation. Mr. Tessler’s 2017 and 2018 tax related reimbursements are covered under the Xerox international assignment policy and relate to relocation expenses, expatriate tax assistance and equalization in the U.S. and U.K.

 

F.

For U.S. employees, this column includes the employer contribution under the 401(k) savings plan and Xerox Corporation Supplemental Savings Plan. Xerox’s Supplemental Savings Plan was frozen in 2018. For Mr. Tessler, this column includes the employer contribution under the DC plan for French Directors (values have been converted to U.S. dollars using currency conversions listed in the summary compensation table footnotes).

 

G.

Amounts in this column for 2019 include identity theft protection, financial planning assistance and other incidental benefits of de minimis value.

 

59


Table of Contents
H.

In accordance with applicable SEC rules, dividend equivalents paid in 2019 on PSUs and RSUs are not included in “All Other Compensation” because those amounts were factored into the grant date fair values of the PSUs and RSUs.

 

60


Table of Contents

GRANTS OF PLAN-BASED AWARDS IN 2019

The following table provides additional detail regarding RSUs and PSUs granted to each of the NEOs under the 2019 E-LTIP, as well as potential amounts payable under the 2019 MIP. Threshold, target and maximum award opportunities are provided for PSUs and the MIP, as applicable.

 

               

Name

 

                 

Estimated Future Payout Under
Non-Equity Incentive Awards

(B)

 

Estimated Future Payout

Under Equity Incentive

Awards (C)

 

All Other

Stock

Awards:

Number

of

Shares

or

 

Grant

Date

Fair

Value

 
 

Award

 

 

Grant

Date

(A)

 

   

Date of

Action

(A)

 

   

Thresh.

($)

 

 

Target

($)

 

 

Max

($)

 

 

Thresh.

(#)

 

 

Target

(#)

 

 

Max

(#)

 

 

Stock

Units
(#) (D)

 

 

of Stock

Awards

($)

 

 
                       
G. Visentin   2019
MIP

 

   

 

-

 

 

 

   

 

-

 

 

 

  299,700

 

  1,800,000

 

  3,600,000

 

  -

 

  -

 

  -

 

  -

 

   

 

-

 

 

 

                       
    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  52,140

 

  313,153

 

  626,306

 

  -

 

   

 

6,000,011

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  179,373

 

   

 

4,000,018

 

 

 

                       
S. J. Bandrowczak   2019
MIP

 

   

 

-

 

 

 

   

 

-

 

 

 

  87,413

 

  525,000

 

  1,050,000

 

  -

 

  -

 

  -

 

  -

 

   

 

-

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  13,035

 

  78,289

 

  156,578

 

  -

 

   

 

1,500,017

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  44,844

 

   

 

1,000,021

 

 

 

                       
W. F. Osbourn, Jr.   2019
MIP

 

   

 

-

 

 

 

   

 

-

 

 

 

  104,063

 

  625,000

 

  1,250,000

 

  -

 

  -

 

  -

 

  -

 

   

 

-

 

 

 

                       
    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  11,732

 

  70,460

 

  140,920

 

  -

 

   

 

1,350,014

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  40,359

 

   

 

900,006

 

 

 

                       
M. D. Feldman   2019
MIP

 

   

 

-

 

 

 

   

 

-

 

 

 

  95,738

 

  575,000

 

  1,150,000

 

  -

 

  -

 

  -

 

  -

 

   

 

-

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  11,471

 

  68,894

 

  137,788

 

  -

 

   

 

1,320,009

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  39,462

 

   

 

880,003

 

 

 

                       
H. N. Tessler   2019
MIP

 

   

 

-

 

 

 

   

 

-

 

 

 

  93,452

 

  561,272

 

  1,122,544

 

  -

 

  -

 

  -

 

  -

 

   

 

-

 

 

 

                       
    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  8,864

 

  53,236

 

  106,472

 

  -

 

   

 

1,020,002

 

 

 

    2019
E-LTIP

 

   

 

01/14/19

 

 

 

   

 

01/13/19

 

 

 

  -

 

  -

 

  -

 

  -

 

  -

 

  -

 

  30,494

 

   

 

680,016

 

 

 

 

 

(A)

The “Grant Date” is the effective date of the equity awards. The “Date of Action” is the date on which the values of the awards were approved by the Compensation Committee and the Board of Directors for Mr. Visentin.

 

(B)

These columns reflect the threshold, target and maximum payout opportunities under the 2019 MIP set by the Compensation Committee on December 11, 2018. The actual MIP payout, which was based on 2019 performance and paid on April 3, 2020, is presented in the Summary Compensation Table in column (E).

 

61


Table of Contents
  The MIP measures and weightings for 2019 were Absolute Revenue(1) (one-third), Operating Margin(1)  (one-third) and Free Cash Flow(1) (one-third). Threshold payout was determined based on achieving the minimum performance level for only one of the three performance measures. If threshold performance was not achieved on any of the performance measures, there would be no MIP payout.

 

(C)

The threshold, target and maximum payout opportunities for the 2019 E-LTIP PSU awards, as well as the design and methodology for determining the 2019 E-LTIP PSU awards were approved by the Compensation Committee on January 13, 2019. The target number of PSUs granted to our NEOs was determined as follows: one-half of the approved E-LTIP target award value divided by the closing market price of Xerox Common Stock on the grant date (or last trading day prior to the grant date if the market was closed on the grant date) for the Absolute Revenue(1) and Free Cash Flow(1) measures, and one-half of the approved E-LTIP target award value divided by a per-share Monte Carlo valuation for the Absolute Share Price(1) measure, rounded up to the nearest whole share.

The performance measures and weightings for the portion of the 2019 E-LTIP award granted as PSUs are: Absolute Revenue(1) (unadjusted for currency) (25%), Free Cash Flow(1) (25%) and Absolute Share Price(1) (50%).

PSUs under the 2019 E-LTIP can be earned by achieving three-year performance goals between threshold and maximum. The performance period for the Absolute Revenue(1) and Free Cash Flow(1) measures is January 1, 2019 through December 31, 2021. Absolute Share Price(1) is measured based on the 20-trading day average price at the end of the three-year performance period, plus the value of accumulated dividends during the three-year performance period. The service period and vesting date for the PSUs is three years from the grant date; earned PSUs will be determined and paid after the 2021 performance results have been certified by the Committee.

The threshold column reflects the lowest number of PSUs that can be earned if performance is achieved at the minimum level for only one performance measure. If threshold performance is not achieved on any of the performance measures, no PSUs are earned. See Compensation Committee Actions Relating to E-LTIP Awards in the CD&A for additional information. The target column reflects the number of PSUs that could be earned if target performance was achieved on all performance measures. The maximum column reflects the greatest number of PSUs that could be earned if maximum or higher performance was achieved on all performance measures. The number of PSUs earned is interpolated in the event that the Company’s performance varies between threshold and maximum, as determined by the Compensation Committee.

 

(D)

This column includes the E-LTIP RSU grants made to our NEOs in 2019. RSUs vest 25% on the first anniversary of the grant date, 25% on the second anniversary of the grant date and 50% on the third anniversary of the grant date. The number of RSUs granted was determined by dividing the approved award value by the closing market price on the grant date (or the last trading day before the grant date if the stock market was closed on the grant date) and rounding up to the nearest whole share.

 

 

(1)

Refer to the Executive Summary section, footnote (1) for a discussion of Non-GAAP financial measures and definitions.

 

62


Table of Contents

OUTSTANDING EQUITY AWARDS AT 2019 FISCAL YEAR-END

The following table displays unvested stock awards held by each of the NEOs at the end of fiscal year 2019.

 

     
  Option Awards Stock Awards

Name

 

Number of

Securities

Underlying

Unexercised

Options

Exercisable

(#) (A)

 

Number of

Securities

Underlying

Unexercised

Options

Unexercisable

(#) (B)

 

Option

Exercise

Price ($)

 

Option

Expiration

Date

 

Number

of

Shares

or Units

of

Stock

That

Have

Not

Vested