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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

 

 

 

Filed by the Registrant  x		Filed by a Party other than the Registrant  ¨

Check the appropriate box:

 

x	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 Pursuant to §240.14a-12

NCR 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):

 

x	No fee required.

 

¨	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

¨	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.

 

 

 

 

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NOTICE OF 2016 ANNUAL MEETING

AND PROXY STATEMENT

March 10, 2016

Dear Fellow NCR Stockholder:

I am pleased to invite you to attend the 2016 Annual Meeting of Stockholders (the “Annual Meeting”) for NCR Corporation, a Maryland corporation (“NCR” or the “Company”), that will be held on April 20, 2016, at 9:00 a.m. Eastern Time. This year’s Annual Meeting will again be a virtual meeting of stockholders. You will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by visiting www.virtualshareholdermeeting.com/NCR. As in the past, prior to the Annual Meeting you will be able to authorize a proxy to vote your shares at www.proxyvote.com on the matters submitted for stockholder approval at the Annual Meeting and we encourage you to do so.

The accompanying notice of the Annual Meeting and proxy statement tell you more about the agenda and procedures for the meeting. They also describe how the Board of Directors of the Company operates and provide information about our director candidates, director and executive officer compensation and certain corporate governance matters. I look forward to sharing more information with you about NCR at the Annual Meeting.

As in prior years, we are offering to our stockholders the option to receive NCR’s proxy materials on the Internet. We believe this option allows NCR to provide our stockholders the information they need in an environmentally conscious form and at a reduced cost.

Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, I urge you to authorize a proxy to vote your shares as soon as possible. You may authorize a proxy to vote your shares on the Internet or by telephone, or, if you received the proxy materials by mail, you may also authorize a proxy to vote your shares by mail. Your vote will ensure your representation at the Annual Meeting regardless of whether you attend via webcast on April 20, 2016.

Sincerely,

 

 

William R. Nuti

Chairman of the Board

Chief Executive Officer and President

 

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NCR CORPORATION

 

Time:

9:00 a.m. Eastern Time

Date:

Wednesday, April 20, 2016

Place:

Virtual Meeting via webcast at www.virtualshareholdermeeting.com/NCR

Purpose:

The holders of shares of common stock, par value $0.01 per share (the “common stock”), and shares of Series A Convertible Preferred Stock, liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), of NCR Corporation, a Maryland corporation (“NCR” or the “Company”) will, voting together as a single class, be asked to:

 

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Consider and vote upon the election of two Class B directors identified in this proxy statement to hold office until the third annual meeting of stockholders following their election and until their respective successors are duly elected and qualify;

 

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Consider and vote to approve, on an advisory basis, executive compensation (“Say On Pay”) as described in these proxy materials;

 

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Consider and vote upon a directors’ proposal to approve the amendment and restatement of the NCR Employee Stock Purchase Plan;

 

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Consider and vote upon the ratification of the appointment of PricewaterhouseCoopers LLC (“PricewaterhouseCoopers”) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016;

 

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Consider and vote upon a directors’ proposal to amend and restate the charter of the Company to eliminate the classification of the Board of Directors of the Company and provide for the annual election of all directors elected at or after the Company’s 2017 Annual Meeting of Stockholders;

 

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Consider and vote upon a stockholder proposal described in these proxy materials; and

 

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

The holders of the Series A Convertible Preferred Stock will, voting as a separate class, be asked to:

 

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Consider and vote upon the election of one Class B director identified in this proxy statement to hold office until the third annual meeting of stockholders following his election and one Class C Director to hold office until the next annual meeting of stockholders, and until their respective successors are duly elected and qualify.

Other Important Information:

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Record holders of NCR’s common stock and Series A Convertible Preferred Stock at the close of business on February 17, 2016 may vote at the meeting.

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Your shares cannot be voted unless they are represented by proxy or in person by the record holder attending the meeting via webcast. Even if you plan to attend the meeting via webcast, please authorize your proxy.

 

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If you wish to watch the webcast at a location provided by the Company, the Company’s Maryland counsel, Venable LLP, will air the webcast at its offices located at 750 E. Pratt Street, Suite 900, Baltimore, MD 21202. Please note that no members of management or the Board of Directors will be in attendance at this location. If you wish to view the meeting via webcast at Venable LLP’s office, please follow the directions for doing so set forth on the “2016 Annual Meeting of Stockholders Reservation Request Form” in this proxy statement.

By order of the Board of Directors,

 

 

Edward Gallagher

Senior Vice President, General Counsel and Secretary

March 10, 2016

Important Notice Regarding the Availability of Proxy Materials for the

Stockholder Meeting to Be Held on April 20, 2016

This proxy statement and NCR’s 2015 Annual Report on Form 10-K are available at www.proxyvote.com.

NCR Corporation

3097 Satellite Boulevard

Duluth, Georgia 30096

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NCR  CORPORATION

2016 ANNUAL MEETING PROXY STATEMENT

 

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Proxy Statement – General Information

 

 

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NCR Stock Ownership

 

Officers and Directors

The following table reflects the NCR common stock beneficially owned, as determined under applicable SEC rules, as of the close of business on February 17, 2016 (the “Table Date”) by: (i) each executive officer named in the Summary Compensation Table below on page 62 (the “named executives”), (ii) each non-employee director and nominee, and (iii) all current directors and executive officers as a group. Except to the extent indicated in the footnotes below, to NCR’s knowledge each person named in the table below has sole voting and investment power over the shares reported. As of the Table Date, 133,108,758 shares of the Company’s common stock were issued and outstanding.

 

NCR Stock Ownership By Officers and Directors
Beneficial Owners		Total Shares Beneficially Owned(1)(2)				Percent				Number of Shares Subject to Options Exercisable Within 60 Days of February 17, 2016				Number of RSUs That Vest Within 60 Days of February 17, 2016(3)
Non-Employee Directors
Gregory R. Blank, Director(4)			—				—				—				—
Edward “Pete” Boykin, Director			202,345				*				68,143				—
Chinh E. Chu, Independent Lead Director(5)			678				*				—				678
Richard L. Clemmer, Director			141,899				*				61,167				—
Gary J. Daichendt, Director			139,000				*				68,143				—
Robert P. DeRodes, Director			129,835				*				61,167				—
Kurt P. Kuehn, Director			33,639				*				10,039				—
Linda Fayne Levinson, Director			182,659				*				68,143				—
Deanna W. Oppenheimer, Director			28,611				*				6,849				—
Named Executive Officers
William R. Nuti, Director and Officer			464,093				*				63,552				68,938
Robert P. Fishman, Officer			29,835				*				—				9,128
Andrew S. Heyman, Officer			19,833				*				—				11,176
Frederick J. Marquardt, Officer			87,562				*				20,312				9,310
Michael B. Bayer, Officer			5,169				*				—				4,180
Current Directors, Named Executive Officers and remaining Executive Officers as a Group (16 persons)			1,643,990				1.2	%			518,797				113,049

* Less than 1%.

(1) The number of shares beneficially owned by each person as of the Table Date includes shares of NCR common stock that such person had the right to acquire on or within 60 days after that date, including, but not limited to, upon the exercise of options and vesting and payment of restricted stock units. This does not include restricted stock units that vest more than 60 days after the Table Date which, in the case of our named executives, is as follows: Mr. Nuti 535,918; Mr. Fishman 74,503; Mr. Heyman 97,066; Mr. Marquardt 89,148; and Mr. Bayer 79,023.

(2) Some of NCR’s executive officers and directors own fractional shares of NCR common stock. For purposes of this Table, all fractional shares have been rounded up to the nearest whole number. This column also includes 105,912 shares granted to Mr. Boykin; 75,732 shares granted to Mr. Clemmer; 31,891 shares granted to Mr. DeRodes; 21,720 shares granted to Mr. Kuehn; 8,077 shares granted to Ms. Levinson; and 16,077 shares granted to Ms. Oppenheimer.

 

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(3) This column reflects those shares the officers and directors have the right to acquire through restricted stock vesting on or within 60 days after the Table Date, ignoring the withholding of shares of NCR common stock to cover applicable taxes. These shares are also included in the Total Shares Beneficially Owned column.

(4) Because Mr. Blank did not become a member of the NCR Board until December 4, 2015, he did not receive any restricted stock units in 2015 under the NCR Director Compensation Program. Mr. Blank will not receive any units or shares under the Program in 2016 or later because he disclaimed all interest in NCR director compensation payable in 2016 and future years. While Mr. Blank is an officer of an affiliate of Blackstone, he disclaims beneficial ownership of, and the shares reported in the Table exclude, NCR securities beneficially owned by the Blackstone Entities.

(5) Because Mr. Chu did not become a member of the NCR Board until December 4, 2015, he did not receive any restricted stock units in 2015 under the NCR Director Compensation Program. On January 1, 2016, Mr. Chu received a mid-year prorated equity grant under the Program of 2,712 restricted stock units valued at $33,643. This grant vests in four equal quarterly installments beginning three months after the grant date. While Mr. Chu is a senior advisor to an affiliate of Blackstone, he disclaims beneficial ownership of, and the shares reported in the table exclude, NCR securities beneficially owned by the Blackstone Entities.

 

Other Beneficial Owners

To the Company’s knowledge, and as reported as of the close of business on February 16, 2016 (except as otherwise specified), the following stockholders beneficially own more than 5% of the Company’s outstanding stock.

 

Other Beneficial Owners of NCR Stock
		Common Stock								Series A Convertible Preferred Stock
Name and Address of Beneficial Owner		Total Number of Shares				Percent of Class				Total Number of Shares				Percent of Class
Entities affiliated with The Blackstone Group(1)			—				—				820,000				100	%
345 Park Avenue
New York, NY 10154
The Vanguard Group(2)			10,516,048				7.93	%			—				—
100 Vanguard Boulevard
Malvern, PA 19355
BlackRock Inc.(3)			10,210,582				6.0	%			—				—
55 East 52nd Street
New York, NY 10022

(1) Information is based on a Schedule 13D filed with the SEC on December 11, 2015 by Blackstone BCP VI SBS ESC Holdco L.P. (“BCP VI ESC”), Blackstone NCR Holdco L.P. (“BCP VI NCR”), BTO NCR Holdings—ESC L.P. (“BTO NCR ESC”), BTO NCR Holdings L.P. (“BTO NCR Holdings,” and together with BCP VI ESC, BCP VI NCR and BTO NCR ESC, the “Blackstone Purchasers”), Blackstone NCR Holdco GP L.L.C. (“Blackstone NCR Holdco”), BCP VI Side-By-Side GP L.L.C. (“BCP VI Side-By-Side”), Blackstone Management Associates VI L.L.C. (“Blackstone Management Associates”), BMA VI L.L.C. (“BMA VI”), BTO Holdings Manager L.L.C. (“BTO Holdings Manager”), Blackstone Tactical Opportunities Associates L.L.C. (“Blackstone Tactical Opportunities”), BTOA L.L.C. (“BTOA”), Blackstone Holdings III L.P. (“Blackstone Holdings III”), Blackstone Holdings III GP L.P. (“Blackstone Holdings III GP”), Blackstone Holdings III GP Management L.L.C. (“Blackstone Holdings III GP Management”), The Blackstone Group L.P. (“The Blackstone Group”), and Blackstone Group Management L.L.C. (“Blackstone Group Management”) (collectively, the “Blackstone Entities”), and Steven A. Schwarzman, reporting beneficial ownership of 820,000 shares of the Company’s Series A Convertible Preferred Stock.

In this filing, BVP VI NCR reported ownership of 610,866 shares of Series A Convertible Preferred Stock, BCP VI ESC reported ownership of 1,213 shares of Series A Convertible Preferred Stock, BTO NCR ESC reported ownership of 726 shares of Series A Convertible Preferred Stock, and BTO NCR Holdings reported ownership of 207,195 shares of Series A Convertible Preferred Stock.

Blackstone NCR Holdco is the general partner of BCP VI NCR. Blackstone Management Associates is the managing member of Blackstone NCR Holdco. BMA VI is the sole member of Blackstone Management Associates. Blackstone Holdings III is the managing member of BMA VI. BCP VI Side-by-Side is the general partner of BCP VI ESC. Blackstone Holdings III is the sole member of BCP VI Side-by-Side. BTO Holdings Manager is the general partner of BTO NCR ESC and BTO NCR Holdings. Blackstone Tactical Opportunities is the managing member of BTO Holdings Manager. BTOA is the sole member of Blackstone Tactical Opportunities. Blackstone Holdings III is the managing member of BTOA. Blackstone Holdings III GP is the general partner of Blackstone Holdings III. Blackstone Holdings III GP Management is the general partner of Blackstone Holdings III GP. The Blackstone Group is the sole member of Blackstone Holdings III GP Management. Blackstone Group Management is the general partner of The Blackstone Group. Blackstone Group Management is wholly-owned by Blackstone’s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of the foregoing (other than the Blackstone Purchasers to the extent of their respective direct holdings) may be deemed to beneficially own the shares beneficially owned by the Blackstone Purchasers directly or indirectly controlled by it or him, but each disclaims beneficial ownership of such shares.

 

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As of December 31, 2015, the shares of Series A Convertible Preferred Stock held by the Blackstone Purchasers were convertible into 27,330,600 shares of common stock.

(2) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on February 10, 2016 by The Vanguard Group (“Vanguard Group”), reporting beneficial ownership of 10,516,048 shares of the Company’s stock as of December 31, 2015. In this filing, Vanguard Group reported sole dispositive power with respect to 10,413,412 of such shares, sole voting power with respect to 103,703 of such shares, shared dispositive power with respect to 102,636 of such shares and shared voting power with respect to 8,900 of such shares. Vanguard Group also reported that Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc. may be deemed to have beneficial ownership of 93,736 of such shares as investment manager of certain collective trust accounts, and that Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., may be deemed to have beneficial ownership of 18,867 of such shares as a result of serving as investment manager of certain Australian investment offerings.

(3) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on January 27, 2016 by BlackRock, Inc. (“BlackRock”), reporting beneficial ownership of 10,210,582 shares of the Company’s stock as of December 31, 2015, as a parent holding company or control person for its subsidiaries, BlackRock (Luxembourg) S.A., BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management North Asia Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Fund Managers Ltd., BlackRock Institutional Trust Company, N.A., BlackRock International Limited, BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd., BlackRock Investment Management, LLC, BlackRock Life Limited and Xulu, Inc. In this filing, BlackRock reported sole voting power with respect to 9,446,054 of such shares, and sole dispositive power with respect to all 10,210,582 of such shares.

 

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PROXY STATEMENT		Proposal 1 – Election of Directors

 

Election of Two Class B Directors

FOR		The Board of Directors recommends that you vote FOR Edward “Pete” Boykin and Linda Fayne Levinson as Class B Directors.

 

Proposal Details

The NCR Board is currently divided into three classes. Directors hold office for staggered terms ending at the third annual meeting of stockholders following their election (or sooner if they are filling a vacancy) and until their successors are duly elected and qualify. One of the three classes is elected at each annual meeting to succeed the directors whose terms are expiring. The current terms for the directors in Classes A, B and C of the Board expire at the annual meetings of stockholders in 2018, 2016, and 2017, respectively.

Subject to approval of Proposal 5, commencing with NCR’s 2017 Annual Meeting of Stockholders, the Board will be declassified and all directors will be elected annually to serve until the next annual meeting of stockholders following their election, except that directors elected prior to NCR’s 2017 Annual Meeting of Stockholders (including those directors elected under this Proposal 1) will continue to serve the balance of their existing terms. If Proposal 5 is not approved, the Board will remain classified and directors will continue to be elected for staggered terms ending at the third annual meeting of stockholders following their election.

Proxies solicited by the Board will be exercised for the election of each of the nominees, unless you elect to withhold your vote on your proxy. The Board has no reason to believe that any of these nominees will be unable to serve. However, if one of them should become unavailable prior to the Annual Meeting, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute, shares represented by proxies will be voted for the substitute nominee.

In connection with the Annual Meeting, the holders of Series A Convertible Preferred Stock will vote on one additional Class B director nominee to hold office until the third annual meeting of stockholders following his election, and one Class C director nominee to hold office until the next annual meeting of stockholders following his election. The nominees, Chinh E. Chu (Class B) and Gregory R. Blank (Class C), are current Board members who are designated by Blackstone under the terms of the Investment Agreement. The holders of Series A Convertible Preferred Stock will vote separately, as a class, on the election of these directors. Only the holders of Series A Convertible Preferred Stock have the right to vote on the election of Mr. Chu and Mr. Blank.

The name, age, principal occupation, other business affiliations and certain other information regarding each nominee for election as a director, and each director whose term of office continues, is set forth below. The age reported for each director is as of the filing date of this proxy statement.

Directors to Be Elected by Holders of Common Stock and Series A Convertible Preferred Stock, Voting Together as a Single Class

 

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Class B—Current Term Expiring in 2016 and New Term Expiring in 2019

Edward “Pete” Boykin, 77, was Chair of the Board of Directors of Capital TEN Acquisition Corp., a special purpose acquisition company, from October 2007 to May 2008. He served as President and Chief Operating Officer of Computer Sciences Corporation (“CSC”), an information technology services company he joined in 1966, from July 2001 to June 2003. Mr. Boykin is also a director of Teradata Corporation. Mr. Boykin became a director of NCR on June 5, 2002 and was appointed independent Lead Director effective July 25, 2013 and continued to serve in that role through February 22, 2016. In recommending Mr. Boykin as a nominee for election as a director of the Company, the Committee on Directors and Governance considered Mr. Boykin’s independence and his previous experience at CSC, a multi-billion dollar international company with complex accounting issues, including among other things, his extensive experience evaluating financial statements in his former position as CSC’s President and Chief Operating Officer, his past experience managing major acquisitions at CSC and his former role on CSC’s disclosure committee. In addition to these attributes, the Committee on Directors and Governance considered Mr. Boykin’s financial literacy in concluding that his abilities would meet the needs of the Board.

Linda Fayne Levinson, 74, is Chair of the Board of Hertz Global Holdings, Inc. and a Director of IngramMicro Inc., Jacobs Engineering and The Western Union Company. Ms. Levinson became a director of NCR on January 1, 1997 and was appointed the independent Lead Director of the Board on October 1, 2007 and continued to serve in that role through July 24, 2013. Ms. Levinson is also on the U.S. advisory board of CVC Capital Partners. She was Chair of the Board of Directors of Connexus Corporation (formerly VendareNetblue), an online marketing company, from July 2006 until May 2010 when it was merged into Epic Advertising. Ms. Levinson was a Partner at GRP Partners, a private equity investment fund investing in start-up and early-stage retail, technology and e-commerce companies, from 1997 to December 2004. Prior to that, she was a Partner in Wings Partners, a private equity firm, an executive at American Express running its leisure travel and tour business, and a Partner at McKinsey & Company. Ms. Levinson was a director of DemandTec, Inc. from June 2005 until February 2012 when it was acquired by International Business Machines Corporation. In recommending Ms. Levinson as a nominee for election as a director of the Company, the Committee on Directors and Governance considered her long experience as a public company director and a committee chair, starting in 1991, as well as her general management experience at American Express, her strategic experience at McKinsey & Company and her investment experience at GRP Partners and Wings Partners. Ms. Levinson’s extensive management and leadership experience, her broad industry knowledge, independence, in-depth knowledge of corporate governance issues and diversity of perspective were also skills and attributes that led the Committee on Directors and Governance to conclude that her abilities would meet the needs of the Board.

Directors to Be Elected Separately by Holders of Series A Convertible Preferred Stock

Class B—Current Term Expiring in 2016 and New Term Expiring in 2019

Chinh E. Chu, 49, was a Senior Managing Director of Blackstone in the Corporate Private Equity Group from January 2000 to November 2015, and currently acts as a senior advisor to Blackstone. Before joining Blackstone in 1990, Mr. Chu worked at Salomon Brothers in the Mergers & Acquisitions Department. Mr. Chu led Blackstone’s investments in AlliedBarton, Celanese, Graham Packaging, Interstate Hotels, Kronos, LIFFE, Nalco, Nycomed, and Stiefel Laboratories. Mr. Chu graduated with a bachelor’s degree in finance from the University of Buffalo. He currently serves as a director of Biomet, Inc., Freescale Semiconductor, Inc., HealthMarkets Inc., and Kronos Incorporated. Mr. Chu became a director of NCR on December 4, 2015 and was appointed independent Lead Director effective February 22, 2016. Pursuant to the Investment Agreement, the Company agreed to nominate Mr. Chu for election as a Class B director

 

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at the Annual Meeting. Additionally, only the holders of the Series A Convertible Preferred Stock may vote on the election of Mr. Chu as a Class B director at the Annual Meeting. In making its nomination the Committee on Directors and Governance considered Mr. Chu’s independence, his experience as a director of other public and private companies and his extensive experience evaluating and managing acquisitions and investments in multiple industries in concluding that his abilities would meet the needs of the Board.

Class C—Current Term Expiring in 2016 and New Term Expiring in 2017

Gregory R. Blank, 35, is a Managing Director of Blackstone in the Private Equity Group based in New York where he focuses on investments in the technology, media and telecommunications sectors. Since joining Blackstone in 2009, Mr. Blank has been involved in the execution of many of Blackstone’s investments, including most recently in Kronos, Ipreo and Optiv. Prior to joining Blackstone, Mr. Blank was an associate at Texas Pacific Group (TPG) in San Francisco where he was involved in the evaluation and execution of private equity transactions. Before joining TPG, Mr. Blank worked in investment banking at Goldman, Sachs & Co. focused on technology, media and telecommunications clients. Mr. Blank graduated with a bachelor’s degree in economics from Harvard College and received an MBA from the Harvard Business School. He currently serves as a director of Ipreo, Kronos, Optiv, Travelport Worldwide Limited and The Weather Company. Mr. Blank became a director of NCR on December 4, 2015. Pursuant to the Investment Agreement, the Company agreed to nominate Mr. Blank for election as a Class C director at its 2016 annual meeting of stockholders. Additionally, only the holders of the Series A Convertible Preferred Stock may vote on the election of Mr. Blank as a Class C director at the Annual Meeting. In making its nomination the Committee on Directors and Governance considered Mr. Blank’s independence, his experience as a director of other public and private companies, his experience evaluating and managing acquisitions and investments in the technology and telecommunications industries, his service on Travelport’s Audit committee, and his financial literacy, in concluding that his abilities would meet the needs of the Board.

Directors Whose Terms of Office Continue

The following directors will hold office as disclosed below.

Class A—Current Term Expiring in 2018

William R. Nuti, 52, is NCR’s Chairman of the Board, Chief Executive Officer and President. Mr. Nuti became Chairman of the Board on October 1, 2007. Before joining NCR in August 2005 Mr. Nuti served as President and Chief Executive Officer of Symbol Technologies, Inc., an information technology company. Prior to that, he was Chief Operating Officer of Symbol Technologies. Mr. Nuti joined Symbol Technologies in 2002 following a 10 plus year career at Cisco Systems, Inc., where he advanced to the dual role of Senior Vice President of the company’s Worldwide Service Provider Operations and U.S. Theater Operations. Prior to his Cisco experience Mr. Nuti held sales and management positions at International Business Machines Corporation, Netrix Corporation and Network Equipment Technologies. Mr. Nuti is also a director of Coach, Inc., where he is a member of its Audit, Human Resources and Governance & Nominating committees, and of United Continental Holdings, Inc., where he is a member of its Finance committee. Mr. Nuti previously served as a director of Sprint Nextel Corporation. Mr. Nuti is also a member of the Georgia Institute of Technology advisory board and a trustee of Long Island University. Mr. Nuti became a director of NCR on August 7, 2005. In determining if Mr. Nuti should continue serving as a director of the Company, the Committee on Directors and Governance considered his current role as Chief Executive Officer and President of the Company, his experience as a director of other public companies, his previous experience as President and Chief Executive Officer of Symbol Technologies, his

 

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previous experience as Senior Vice President at Cisco Systems, and the responsibilities associated with these positions. Mr. Nuti’s demonstrated management and leadership experience and global sales and operations experience were also skills and attributes that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.

Gary J. Daichendt, 64, has been principally occupied as a private investor since June 2005 and has been a managing member of Theory R Properties LLC, a commercial real estate firm, since October 2002. He served as President and Chief Operating Officer of Nortel Networks Corporation, a global supplier of communication equipment, from March 2005 to June 2005. Prior to that and until his retirement in December 2000, Mr. Daichendt served as Executive Vice President, Worldwide Operations for Cisco Systems, Inc. Mr. Daichendt became a director of NCR on April 26, 2006 and also serves on the boards of directors of Polycom Inc., where he serves on the Governance committee and Juniper Networks, Inc., where he is a member of its Compensation committee. In determining if Mr. Daichendt should continue serving as a director of the Company, the Committee on Directors and Governance considered his previous experience as President and Chief Operating Officer of Nortel Networks Corporation, his previous experience as Executive Vice President, Worldwide Operations for Cisco Systems, and the responsibilities associated with these positions. Mr. Daichendt’s demonstrated management experience, financial literacy and independence were also attributes and skills that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.

Robert P. DeRodes, 65, leads DeRodes Enterprises, LLC, an information technology, business operations and management advisory firm. Most recently, Mr. DeRodes served from April 2014 to April 2015 as the Executive Vice President and Chief Information Officer for Target, Inc., a general merchandising retailer, leading their post-breach information security efforts and developing a long-term technology transformation roadmap. Previously, Mr. DeRodes served as Executive Vice President, Global Operations & Technology of First Data Corporation, an electronic commerce and payments company, from October 2008 to July 2010. Prior to First Data Corporation, Mr. DeRodes served as Executive Vice President and Chief Information Officer of The Home Depot, Inc., a home improvement retailer, from February 2002 to October 2008 and as President and Chief Executive Officer of Delta Technology, Inc. and Chief Information Officer of Delta Air Lines, Inc., from September 1999 until February 2002. Prior to Delta, Mr. DeRodes held various executive positions in the financial services industry with Citibank (1995-99) and with USAA (1983-93). During the 10 years prior to 1983, Mr. DeRodes held technology positions working for regional Midwestern banks. Mr. DeRodes became a director of NCR on April 23, 2008. In determining if Mr. DeRodes should continue serving as a director of the Company, the Committee on Directors and Governance considered the scope of his previous experience and the responsibilities associated with the aforementioned positions. Mr. DeRodes’s demonstrated management experience, information technology experience, cyber-security expertise, understanding of the financial services, retail and transportation industries, financial literacy and independence led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.

Class C—Current Term Expiring in 2017

Richard L. Clemmer, 64, is President and Chief Executive Officer of NXP Semiconductors N.V., a semiconductor company, a position he has held since January 1, 2009. Prior to that, he was a senior advisor to Kohlberg Kravis Roberts & Co., a private equity firm, a position he held from May 2007 to December 2008. He previously served as President and Chief Executive Officer of Agere Systems Inc., an integrated circuits components company that was acquired in 2007 by LSI Logic Corporation, from October 2005 to April 2007. Mr. Clemmer became a director of NCR on April 23, 2008. During the past 5 years, Mr. Clemmer was a director of i2 Technologies, Inc. and Trident Microsystems Inc. In determining if

 

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Mr. Clemmer should continue serving as a director of the Company, the Committee on Directors and Governance considered his experience in his position at NXP and his former positions with Kohlberg Kravis Roberts & Co. and Agere Systems Inc. Mr. Clemmer’s demonstrated management experience, independence and financial literacy were also attributes that led the Committee on Directors and Governance to conclude that his skills would meet the needs of the Board.

Kurt P. Kuehn, 61, was Chief Financial Officer at United Parcel Service, Inc. (“UPS”), a global leader in logistics, from 2008 until July 2015. Prior to his appointment as CFO, Mr. Kuehn was Senior Vice President, Worldwide Sales and Marketing, leading the transformation of the sales organization to improve the global customer experience. Mr. Kuehn was UPS’s first Vice President of Investor Relations, taking the company public in 1999 in one of the largest IPOs in U.S. history. Since he joined UPS as a driver in 1977, Mr. Kuehn’s UPS career has included leadership roles in sales and marketing, engineering, operations and strategic cost planning. Mr. Kuehn became a director of NCR on May 23, 2012. In recommending Mr. Kuehn as a nominee for election as a director of the Company, the Committee on Directors and Governance considered his role as CFO at UPS, his previous experience at UPS as Senior Vice President, Worldwide Sales and Marketing, and Vice President of Investor Relations, and the responsibilities associated with these positions. Mr. Kuehn’s demonstrated management experience, independence, and financial literacy were also attributes and skills that led the Committee on Directors and Governance to conclude that his abilities would meet the needs of the Board.

On February 24, 2016, Deanna W. Oppenheimer, a Class B director, resigned from her positions as a member of the Board and as a member of the Audit Committee of the Board, effective as of the completion of the Annual Meeting. As a result, Ms. Oppenheimer has not been included as a Class B director nominee in these proxy materials.

 

How does the Board Recommend that I Vote on this Proposal?

 

Board Recommendation

The Board of Directors recommends that you vote FOR Edward “Pete” Boykin and Linda Fayne Levinson as Class B directors to hold office until the third annual meeting of stockholders following their election and until their respective successors are duly elected and qualify. Proxies received by the Board will be voted FOR all nominees for which the stockholder may vote unless they specify otherwise.

 

Vote Required for Approval

A majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the Annual Meeting or by proxy), is required to elect Edward “Pete” Boykin and Linda Fayne Levinson (two of the three Class B director nominees). Abstentions and broker “non-votes” will be counted as votes cast and will have no effect on the vote required to elect either Mr. Boykin or Ms. Levinson.

The vote of the holders of a majority of the outstanding shares of our Series A Convertible Preferred Stock, voting separately as a class, is required to elect Mr. Chinh E. Chu, a Class B director nominee, and Mr. Gregory R. Blank, the Class C director nominee. Only the holders of Series A Convertible Preferred Stock have the right to vote on the election of Mr. Chu and Mr. Blank. Pursuant to the Company’s charter and bylaws, as given effect under Maryland law, abstentions by holders of Series A Convertible Preferred Stock will have the effect of votes against these two directors.

 

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More Information About Our Board of Directors

The Board oversees the overall performance of the Company on behalf of the stockholders of the Company. Members of the Board stay informed of the Company’s business by participating in Board and committee meetings (including regular executive sessions of the Board), by reviewing materials provided to them prior to meetings and otherwise, and through discussions with the Chief Executive Officer and other members of management and staff.

 

Corporate Governance

The Board is elected by the stockholders of the Company (with certain members of the Board being elected solely by the holders of the Series A Convertible Preferred Stock) to direct the management of the Company. The Board selects the senior management team, which is charged with managing the Company’s business and affairs. Having selected the senior management team, the Board acts as an advisor to senior management and monitors its performance. The Board reviews the Company’s strategies, financial objectives and operating plans. It also plans for management succession of the Chief Executive Officer, as well as other senior management positions, and oversees the Company’s compliance efforts.

To help discharge its responsibilities, the Board has adopted Corporate Governance Guidelines on significant corporate governance issues, including, among other things: the size and composition of the Board; director independence; Board leadership; roles and responsibilities of the Board; director compensation and stock ownership; committee membership and structure, meetings and executive sessions; and director selection, training and retirement. The Corporate Governance Guidelines, as well as the Board’s committee charters, are found under “Corporate Governance” on the “Company” page of NCR’s website at http://www.ncr.com/company/corporate-governance. You also may obtain a written copy of the Corporate Governance Guidelines, or any of the Board’s committee charters, by writing to NCR’s Corporate Secretary at the address listed on page 4 of this proxy statement.

In keeping with the requirements of our Corporate Governance Guidelines and the NYSE listing standards, a majority of our Board must be independent. Under the standards of independence set forth in the Corporate Governance Guidelines, and consistent with independence standards provided in the NYSE listing standards, a Board member may not be independent unless the Board affirmatively determines that the Board member has no material relationship with the Company (whether directly or indirectly), taking into account, in addition to those other factors it may deem relevant, whether the director:

 

•

has not been an employee of the Company or any of its affiliates, or affiliated with the Company, within the past five years;

 

•

has not been affiliated with or an employee of the Company’s present or former independent auditors or its affiliates for at least five years after the end of such affiliation or auditing relationship;

 

•

has not for the past five years been a paid advisor, service provider or consultant to the Company or any of its affiliates or to an executive officer of the Company, or an employee or owner of a firm that is such a paid advisor, service provider or consultant;

 

•

does not, directly or indirectly, have a material relationship (such as being an executive officer, director, partner, employee or significant stockholder) with a company that has made payments to or received payments from the Company that exceed, in any of the previous three fiscal years, the greater of $1 million or 2% of the other company’s consolidated gross revenues;

 

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•

is not an executive officer or director of a foundation, university or other non-profit entity receiving significant contributions from the Company, including contributions in the previous three years that, in any single fiscal year, exceeded the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues;

 

•

has not been employed by another corporation that has (or had) an executive officer of the Company on its board of directors during the past five years;

 

•

has not received compensation, consulting, advisory or other fees from the Company, other than Director compensation and expense reimbursement or compensation for prior service that is not contingent on continued service for the past five years; and

 

•

is not and has not been for the past five years a member of the immediate family of: (i) an officer of the Company; (ii) an individual who receives or has received during any twelve-month period more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service that is not contingent on continued service; (iii) an individual who, with respect to the Company’s independent auditors or their affiliates, is a current partner or a current employee personally working on the Company’s audit or was a partner or employee and personally worked on the Company’s audit; (iv) an individual who is an executive officer of another corporation that has (or had) an executive officer of the Company on its board of directors; (v) an executive officer of a company that has made payments to, or received payments from, the Company in a fiscal year that exceeded the greater of $1 million or 2% of the other company’s consolidated gross revenues; or (vi) any director who is not considered an independent director.

Consistent with the Corporate Governance Guidelines and the NYSE listing standards, on an annual basis the Board, with input from the Committee on Directors and Governance, determines whether each non-employee Board member is considered independent. In doing so, the Board takes into account the factors listed above and such other factors as it may deem relevant.

The Board has determined that all of the Company’s non-employee directors and nominees, namely Gregory R. Blank, Edward “Pete” Boykin, Chinh E. Chu, Richard L. Clemmer, Gary J. Daichendt, Robert P. DeRodes, Kurt P. Kuehn, Linda Fayne Levinson and Deanna W. Oppenheimer are independent in accordance with the NYSE listing standards and the Company’s Corporate Governance Guidelines.

 

Board Leadership Structure and Risk Oversight

As set out in the Corporate Governance Guidelines, the Board does not have a guideline on whether the role of Chairman should be held by a non-employee director. Instead, our Board has the flexibility to select a Chairman as it deems best for the Company from time to time. Under the Corporate Governance Guidelines, if the positions of Chairman and Chief Executive Officer are held by the same person, the independent directors of the Board will select a Lead Director from the independent directors. Additionally, if the positions of Chairman and Chief Executive Officer are held by the same person, the Board has set out the roles of both Chairman and Chief Executive Officer and the independent Lead Director in Exhibit C to the Corporate Governance Guidelines.

Currently the Board has an integrated leadership structure in which William R. Nuti serves in the combined roles of Chairman and Chief Executive Officer, and Chinh E. Chu serves as the Board’s independent Lead Director. The Board believes that this structure promotes greater efficiency through more direct

 

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communication of critical information between the Company and the Board. In addition, the Chief Executive Officer’s extensive knowledge of the Company uniquely qualifies him, in close consultation with the independent Lead Director, to lead the Board in discussing strategic matters and assessing risks, and focuses the Board on the issues that are most material to the Company. Combining the roles of Chairman and Chief Executive Officer also has allowed the Company to more effectively develop and communicate a unified vision and strategy to the Company’s stockholders, employees and customers.

Consistent with the Corporate Governance Guidelines, the independent Lead Director has broad authority, as follows. The independent Lead Director, among other things: presides at the executive sessions of the non-employee directors and at all Board meetings at which the Chairman is not present; serves as liaison between the Chairman and the independent directors; frequently communicates with the Chief Executive Officer; is authorized to call meetings of the independent directors; obtains Board member and management input and, with the Chief Executive Officer, sets the agenda for the Board; approves meeting schedules to assure that there is sufficient time for discussion of all agenda items; works with the Chief Executive Officer to ensure that Board members receive the right information on a timely basis; stays current on major risks and focuses the Board members on such risks; molds a cohesive Board to support the success of the Chief Executive Officer; works with the Committee on Directors and Governance to evaluate Board and committee performance; facilitates communications among directors; assists in the recruiting and retention of new Board members (with the Committee on Directors and Governance and the Chief Executive Officer); in conjunction with the Chairman and Committee on Directors and Governance, ensures that committee structure and committee assignments are appropriate and effective; works with the Committee on Directors and Governance to ensure outstanding governance processes; leads discussions regarding Chief Executive Officer performance, personal development and compensation; and, if requested by major stockholders of the Company, is available for consultation and direct communication with such stockholders. Additionally, the leadership and oversight of the Board’s other independent directors continues to be strong, and further structural balance is provided by the Company’s well-established corporate governance policies and practices, including its Corporate Governance Guidelines. Independent directors currently account for nine out of ten of the Board’s members, and make up all of the members of the Board’s Compensation and Human Resource Committee (the “CHRC Committee”), Audit Committee and Committee on Directors and Governance. Additionally, among other things, the Board’s non-employee directors meet regularly in executive session with only the non-employee directors present.

The Board has had over eight years of successful experience with this leadership structure – in which the roles of Chairman and Chief Executive Officer are combined and an independent Lead Director is selected – and, taking into account these factors, has determined that this leadership structure is the most appropriate and effective for the Company at this time.

The Board’s involvement in risk oversight includes receiving regular reports from members of senior management and evaluating areas of material risk to the Company, including operational, financial, legal, regulatory, strategic and reputational risks. The Audit Committee of the Board is responsible for overseeing the assessment of financial risk as well as general risk management programs. In carrying out this responsibility, the Audit Committee regularly evaluates the Company’s risk identification, risk management and risk mitigation strategies and practices. The Audit Committee and the full Board receive and review reports prepared by members of the Company’s Enterprise Risk Management team on an annual basis. In general, the reports identify, analyze, prioritize and provide the status of major risks to the Company. In addition, the CHRC Committee regularly considers potential risks related to the Company’s compensation programs as discussed below, and the Committee on Directors and Governance also considers risks within the context of its responsibilities (as such responsibilities are defined in its committee charter), including legal and

 

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regulatory compliance risks. After each committee meeting, the Audit Committee, CHRC Committee and Committee on Directors and Governance each reports at the next meeting of the Board all significant items discussed at each committee meeting, which includes a discussion of items relating to risk oversight. We believe the leadership structure of the Board effectively facilitates risk oversight by the Board as a result of: (i) the role of the Board committees in risk identification and mitigation, (ii) the direct link between management and the Board achieved by having one leader serve as Chairman and Chief Executive Officer, and (iii) the role of our active independent Lead Director whose duties include ensuring the Board reviews and evaluates major risks to the Company, as well as measures proposed by management to mitigate such risks. These elements work together to ensure an appropriate focus on risk oversight.

 

Compensation Risk Assessment

The Company has historically maintained a prudent and appropriately risk-balanced approach to its incentive compensation programs to ensure that these programs promote the long-term interests of our stockholders and do not contribute to unnecessary risk-taking, and will continue to do so. The CHRC Committee evaluates whether the Company’s executive and broad-based compensation programs contribute to unnecessary risk-taking to achieve above-target results and has concluded that the risks arising from these programs are not likely to be significant. The CHRC Committee directly engages its independent compensation consultant, Frederic W. Cook & Co., Inc. (“FWC”), to assist the CHRC Committee in its evaluation. In accordance with the CHRC Committee’s direction, FWC performs a compensation risk assessment of the Company’s executive and broad-based compensation programs and makes an independent report to the CHRC Committee. The last risk assessment from FWC was completed in 2011. At that time, FWC concluded that the Company’s executive and broad-based compensation programs do not present any area of significant risk, noting that the plans are well-aligned with the CHRC Committee’s compensation design principles. In 2015 and early 2016, the Company conducted its own compensation risk assessment of the incentive compensation programs and concluded that the Company’s executive and broad-based compensation programs do not present any area of significant risk. The only significant changes to our compensation programs since FWC’s 2011 risk assessment were the adoption of the NCR Corporation 2011 Economic Profit Plan (which was amended in 2015 with stockholder approval) and the NCR Executive Severance Plan (including amendments), which the Company and FWC determined did not present an area of significant risk, and the 2016 modifications to our long-term incentive program, which the Company and FWC determined did not present an area of significant risk.

 

Committees of the Board

The Board has four standing committees: the Audit Committee, the Compensation and Human Resource Committee, the Committee on Directors and Governance and the Executive Committee. The Board has adopted a written charter for each such committee that sets forth the committee’s mission, composition and responsibilities. Each charter can be found under “Corporate Governance” on the “Company” page of NCR’s website at http://www.ncr.com/company/corporate-governance.

The Board met 21 times last year. During 2015, each incumbent member of the Board attended 75% or more of the aggregate of: (i) the total number of meetings of the Board (held during the period for which such person has been a director) and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served). The Company has no formal policy regarding director attendance at its annual meeting of stockholders. The directors then in office, except Mr. Nuti, were not in attendance at the Company’s 2015 Annual Meeting of Stockholders, which was a virtual, and not an in-person, meeting.

 

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The members of each committee as of the end of fiscal 2015 and the number of meetings held in fiscal 2015 are shown below:

 

Name

Audit Committee

Compensation and Human Resource Committee

Committee on Directors and Governance

Executive Committee

Gregory R. Blank

X

(1)

X

(1)

Edward “Pete” Boykin

X

X

X

Chinh E. Chu

X

(2)

X

(2)

Richard L. Clemmer

X

Gary J. Daichendt

X

X

*

X

Robert P. DeRodes

X

Kurt P. Kuehn

X

*

Linda Fayne Levinson

X

*

X

X

William R. Nuti

X

*

Deanna W. Oppenheimer(3)

X

Number of meetings in 2015

8

7

5

0

* Chair

(1) Mr. Blank was elected to serve on the Audit and Executive Committee effective December 4, 2015.

(2) Mr. Chu was elected to serve on the Compensation and Human Resource Committee and Committee on Directors and Governance effective December 4, 2015.

(3) On February 24, 2016, Ms. Oppenheimer resigned as a member of the Board and Audit Committee effective as of the completion of the 2016 Annual Meeting.

Audit Committee

The Audit Committee is the principal agent of the Board in overseeing: (i) the quality and integrity of the Company’s financial statements; (ii) the assessment of financial risk and risk management programs; (iii) the independence, qualifications, engagement and performance of the Company’s independent registered public accounting firm; (iv) the performance of the Company’s internal auditors; (v) the integrity and adequacy of internal controls; and (vi) the quality and adequacy of disclosures to stockholders. The Audit Committee also:

 

•

selects, evaluates, sets compensation for and, where appropriate, replaces the Company’s independent registered public accounting firm;

 

•

pre-approves all audit and non-audit services to be performed by the Company’s independent registered public accounting firm;

 

•

reviews and discusses with the Company’s independent registered public accounting firm its services and quality control procedures and the Company’s critical accounting policies and practices;

 

•

regularly reviews the scope and results of audits performed by the Company’s independent registered public accounting firm and internal auditors;

 

•

prepares the report required by the SEC to be included in the Company’s annual proxy statement;

 

•

meets with management to review the adequacy of the Company’s internal control framework and its financial, accounting, reporting and disclosure control processes;

 

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•

reviews the Company’s periodic SEC filings and quarterly earnings releases;

 

•

reviews and discusses with the Company’s Chief Executive Officer and Chief Financial Officer the procedures they follow to complete their certifications in connection with NCR’s periodic filings with the SEC;

 

•

discusses management’s plans with respect to the Company’s major financial risk exposures;

 

•

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

 

•

reviews the effectiveness of the Internal Audit function, including compliance with the Institute of Internal Auditors’ International Professional Practices Framework for Internal Auditing consisting of the Definition of Internal Auditing, Code of Ethics and the Standards.

Each member of the Audit Committee is independent and financially literate as determined by the Board under applicable SEC rules and NYSE listing standards. In addition, the Board has determined that Messrs. Blank, Clemmer and Kuehn and Ms. Oppenheimer are each an “audit committee financial expert,” as defined under SEC regulations. The Board has also determined that each member of the Audit Committee is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines, which meet, and in some cases exceed, the listing standards of the NYSE and the applicable rules of the SEC. No member of the Audit Committee may receive any compensation, consulting, advisory or other fees from the Company, other than the Board compensation described below under the caption “Director Compensation,” as determined in accordance with applicable SEC rules and NYSE listing standards. Members serving on the Audit Committee are limited to serving on no more than two other audit committees of boards of directors of public companies, unless the Board evaluates and determines that these other commitments would not impair the member’s effective service to the Company.

Compensation and Human Resource Committee

The CHRC Committee provides general oversight of the Company’s management compensation philosophy and practices, benefit programs and strategic workforce initiatives and oversees the Company’s leadership development plans. In doing so, the CHRC Committee reviews and approves the Company’s total compensation goals, objectives and programs covering executive officers and key management employees as well as the competitiveness of NCR’s total executive officer compensation practices. The CHRC Committee also:

 

•

evaluates and reviews the performance levels of the Company’s executive officers and determines base salaries, equity awards, incentive awards and other compensation for such officers;

 

•

discusses its evaluation of, and determination of compensation for, the Chief Executive Officer at executive sessions of the Board;

 

•

reviews and recommends to the Board for its approval, the Company’s executive compensation plans;

 

•

oversees the Company’s compliance with compensation-related requirements of the SEC and NYSE rules;

 

•

reviews and approves employment, severance, change in control and similar agreements and arrangements for the Company’s executive officers;

 

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•

reviews management’s proposals to make significant organizational changes or significant changes to existing executive officer compensation plans;

 

•

periodically assesses the risks associated with the Company’s compensation programs; and

 

•

oversees the Company’s plans for management succession and development.

The CHRC Committee may delegate its authority to the Company’s Chief Executive Officer to make equity awards to individuals (other than executive officers) in limited instances.

The CHRC Committee retains and is advised by an independent compensation consultant, Frederic W. Cook & Co., Inc. The CHRC Committee has directly engaged FWC to review the Company’s long-term incentive program, the Stock Incentive Plan (which we refer to as the Stock Plan), the Annual Incentive Plan (which includes the Management Incentive Plan and Customer Success Bonus), the Economic Profit Plan and other key programs related to the compensation of executive officers. As directed by the CHRC Committee, FWC provides a competitive assessment of the Company’s executive compensation programs relative to our compensation philosophy; reviews our compensation peer group companies; provides expert advice regarding compensation matters for our executive officers, including the Chief Executive Officer; provides information about competitive market rates; assists in the design of the variable incentive plans and the establishment of performance goals; assists in the design of other compensation programs and perquisites; assists with Section 162(m) and Section 409A compliance, disclosure matters and other technical matters; conducts a risk assessment of the Company’s compensation programs; and is readily available for consultation with the CHRC Committee and its members regarding such matters. FWC did not perform any additional work for the Company or its management in 2015. In keeping with NYSE listing standards, the CHRC Committee retained FWC after taking into consideration all factors relevant to FWC’s independence from management. The CHRC Committee has reviewed the independence of FWC in light of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that FWC’s work for the CHRC Committee is independent and does not raise any conflict of interest.

The Board has determined that each member of the CHRC Committee is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines which meet, and in some cases exceed, the listing standards of the NYSE and satisfy the additional provisions specific to compensation committee membership set forth in the listing standards of the NYSE.

Committee on Directors and Governance

The Committee on Directors and Governance is responsible for reviewing the Board’s corporate governance practices and procedures, including the review and approval of each related party transaction under the Company’s Related Person Transaction Policy (unless the Committee on Directors and Governance determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board), and the Company’s ethics and compliance program, and:

 

•

establishes procedures for evaluating the performance of the Board and oversees such evaluation;

 

•

reviews and makes recommendations to the Board concerning director compensation;

 

•

reviews the composition of the Board and the qualifications of persons identified as prospective directors, recommends the candidates to be nominated for election as directors, and, in the event of a vacancy on the Board, recommends any successors;

 

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•

reviews the Company’s charter and bylaws and makes any recommendations for changes, as appropriate; and

 

•

reviews any stockholder proposals the Company receives for submission to its annual meeting of stockholders.

The Committee on Directors and Governance is authorized to engage consultants to review the Company’s director compensation program.

The Board has determined that each member of the Committee on Directors and Governance is independent based on independence standards set forth in the Board’s Corporate Governance Guidelines, which meet, and in some cases exceed, the listing standards of the NYSE.

Executive Committee

The Executive Committee has the authority to exercise all powers of the full Board, except those reserved to the full Board by applicable law, such as amending the Company’s bylaws or approving a merger that requires stockholder approval. The Executive Committee meets between regular Board meetings if urgent action is required.

 

Selection of Nominees for Directors

The Committee on Directors and Governance and our other directors are responsible for recommending nominees for membership to the Board. The director selection process is described in detail in the Board’s Corporate Governance Guidelines. In determining candidates for nomination, the Committee on Directors and Governance will seek the input of the Chairman of the Board and the Chief Executive Officer, and, in the event the positions of Chairman of the Board and Chief Executive Officer are held by the same person, the independent Lead Director, and will consider individuals recommended for Board membership by the Company’s stockholders in accordance with applicable law. It is a qualification of each of the directors to be elected by the holders of shares of Series A Convertible Preferred Stock that they have been designated by Blackstone pursuant to the Investment Agreement.

The Board’s Corporate Governance Guidelines include qualification guidelines for directors standing for re-election and new candidates for membership on the Board. All candidates are evaluated by the Committee on Directors and Governance using these qualification guidelines. In accordance with the guidelines, as part of the selection process, the Committee on Directors and Governance examines candidates’ business skills and experience (including financial literacy), independence, demonstrated leadership, personal integrity, judgment and ability to devote the appropriate amount of time and energy to serving the best interests of stockholders. The Committee on Directors and Governance also considers those other factors it may deem relevant, including the needs of the Board and other attributes of the candidate. In addition, although there is no specific policy on considering diversity, the Board and the Committee on Directors and Governance believe that Board membership should reflect diversity in its broadest sense, including persons diverse in geography, gender, ethnicity, experience, functional background and professional experience. The Board and the Committee on Directors and Governance are committed to finding proven leaders who are qualified to serve as NCR directors and may from time to time engage outside search firms to assist in identifying and contacting qualified candidates.

 

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Stockholders wishing to recommend individuals for consideration as directors should contact the Committee on Directors and Governance by writing to the Company’s Corporate Secretary at NCR Corporation, 250 Greenwich Street, 35^th Floor, New York, NY 10007. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates. Stockholders who wish to nominate directors for election at NCR’s next annual meeting of stockholders must follow the procedures described in the Company’s bylaws, which are available under “Corporate Governance” on the “Company” page of NCR’s website at http://www.ncr.com/company/corporate-governance. See “Procedures for Stockholder Proposals and Nominations Outside of SEC Rule 14a-8” and “Stockholder Proposals for 2017 Annual Meeting pursuant to SEC Rule 14a-8” on page 96 of this proxy statement for further details regarding how to nominate directors.

The directors nominated by the Board for election at the Annual Meeting were recommended by the Committee on Directors and Governance. All of the candidates for election are currently serving as directors of the Company and have been determined by the Board to be independent.

 

Communications with Directors

Stockholders or interested parties wishing to communicate directly with the Board, the independent Lead Director or any other individual director, the Chairman of the Board, or NCR’s independent directors as a group are welcome to do so by writing to the Company’s Corporate Secretary at NCR Corporation, 250 Greenwich Street, 35^th Floor, New York, NY 10007. The Corporate Secretary will forward appropriate communications. Any matters reported by stockholders relating to NCR’s accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee as appropriate. Anonymous and/or confidential communications with the Board may also be made by writing to this address. For more information on how to contact the Board, please see the Company’s Corporate Governance website at http://www.ncr.com/company/corporate-governance.

 

Code of Conduct

The Company has a Code of Conduct that sets the standard for ethics and compliance for all of its directors and employees. The Code of Conduct is available on the Company’s Corporate Governance website at http://www.ncr.com/company/company/code-of-conduct. To receive a copy of the Code of Conduct, please send a written request to the Corporate Secretary at the address provided above.

 

Section 16(a) Beneficial Ownership Reporting Compliance

Pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended, the Company is required to report in this proxy statement any failure to file or late filing occurring during the fiscal year ended December 31, 2015. Based solely on a review of filings furnished to the Company from reporting persons, the Company believes that all of these filing requirements were satisfied by its directors, officers and 10% beneficial owners.

 

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Director Compensation

 

Director Compensation Program

Pursuant to authority granted by our Board, the Committee on Directors and Governance adopted the NCR Director Compensation Program (the “Program”), effective as of April 23, 2013. The Program provides for the payment of annual retainers and annual equity grants to non-employee members of the Board. Mr. Nuti does not receive remuneration for his service as Chairman of the Board.

 

 

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Director Compensation Tables

This Table shows 2015 compensation for our non-employee directors:

 

Director Compensation for 2015
Director Name		Fees Earned or Paid in Cash ($)(1)				Stock Awards ($)(2)				Total ($)
Gregory R. Blank(3)			—				—				—
Edward “Pete” Boykin			—				309,053				309,053
Chinh E. Chu(3)			—				—				—
Richard L. Clemmer			—				265,064				265,064
Gary J. Daichendt			52,000				227,050				279,050
Robert P. DeRodes			—				265,064				265,064
Kurt P. Kuehn			109,000				175,007				284,007
Linda Fayne Levinson			55,000				270,043				325,043
Richard T. “Mick” McGuire III(4)			69,462				87,504				156,966
Deanna W. Oppenheimer			90,000				175,007				265,007

(1) This column shows annual retainers earned or paid in cash in 2015. Messrs. Boykin and Clemmer elected to receive their retainers in deferred shares in lieu of cash. Mr. DeRodes elected to receive his entire retainer in current shares in lieu of cash. Ms. Levinson and Mr. Daichendt elected to receive one-half of their retainers in current shares. These deferred and current shares are reported in the “Stock Awards” column. Mr. Kuehn, Mr. McGuire and Ms. Oppenheimer elected to receive their retainers in cash.

(2) This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of RSU awards, as well as deferred shares (also referred to as “phantom stock units”) and current shares paid in lieu of annual cash retainers. See Note 9 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 for an explanation of the assumptions we make in the valuation of our equity awards.

(3) Because they did not become Board members until December 4, 2015, Messrs. Blank and Chu did not receive NCR director compensation under the Program in 2015.

(4) Mr. McGuire resigned from Board service effective November 12, 2015. Upon resignation, Mr. McGuire forfeited the unvested portion of his 2015 annual equity grant and received no further compensation under the Program.

 

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This Table shows the grant date fair values of shares received for retainer payments and RSU awards:

 

Value of Director 2015 Retainer and Equity Grant Shares
Director Name		Annual Equity RSU Grant ($)				Current Stock in lieu of cash ($)				Deferred Stock in lieu of cash ($)
Gregory R. Blank(1)			—				—				—
Edward “Pete” Boykin			175,007				—				134,046
Chinh E. Chu(1)			—				—				—
Richard L. Clemmer			175,007				—				90,057
Gary J. Daichendt			175,007				52,043				—
Robert P. DeRodes			175,007				90,057				—
Kurt P. Kuehn			175,007				—				—
Linda Fayne Levinson			215,001				55,042				—
Richard T. “Mick” McGuire III(2)			87,504				—				—
Deanna W. Oppenheimer			175,007				—				—

(1) Because they did not become Board members until December 4, 2015, Messrs. Blank and Chu did not receive NCR director compensation under the Program in 2015.

(2) Mr. McGuire resigned from Board service effective November 12, 2015. Upon resignation, Mr. McGuire forfeited the unvested portion of his 2015 annual equity grant and received no further compensation under the Program.

This Table shows the number of shares underlying non-employee director options, RSUs and deferred shares outstanding as of December 31, 2015:

 

Shares Underlying Director Equity Awards – as of December 31, 2015
Director Name		Options Outstanding as of 12/31/15 #				RSUs Outstanding as of 12/31/15 #				Deferred Shares Outstanding as of 12/31/15 #
Gregory R. Blank(1)			—				—				—
Edward “Pete” Boykin			68,143				—				107,367
Chinh E. Chu(1)			—				—				—
Richard L. Clemmer			61,167				—				77,187
Gary J. Daichendt			68,143				2,910				—
Robert P. DeRodes			61,167				—				33,346
Kurt P. Kuehn			10,039				—				23,175
Linda Fayne Levinson			68,143				3,575				8,077
Deanna W. Oppenheimer			6,849				—				17,532

(1) Because they did not become Board members until December 4, 2015, Messrs. Blank and Chu did not receive NCR director compensation under the Program in 2015.

 

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PROXY STATEMENT		Proposal 2 – Say On Pay

 

Say On Pay: Advisory Vote on the Executive Compensation of the Named Executives

FOR		The Board of Directors recommends that		ü		Robust oversight by the Compensation Committee.
		you vote FOR the resolution to approve		ü		Excellent pay for performance alignment.
		the compensation of the named executives.		ü		Strong link between management and stockholder interests.

 

Proposal Details

We currently conduct a Say On Pay vote every year at the annual meeting. This vote is required by Section 14A of the Securities Exchange Act of 1934. While this vote is non-binding, the Board and the Compensation and Human Resource Committee (the “Committee” as referenced throughout the various sections of this Proposal 2, including the Executive Compensation – Compensation Discussion & Analysis section) value the opinions of our stockholders. The Committee will consider the outcome of the Say On Pay vote as part of its annual evaluation of our executive compensation program.

Please read the following Executive Compensation – Compensation Discussion & Analysis section and our Executive Compensation Tables for information necessary to inform your vote on this proposal.

 

How does the Board Recommend that I Vote on This Proposal?

 

Board Recommendation

The Board of Directors recommends that you vote to approve, on a non-binding and advisory basis, executive compensation as disclosed in these proxy materials.

 

Vote Required for Approval

A majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual meeting or by proxy) is required to approve the non-binding advisory vote on executive compensation. Pursuant to the Company’s charter and bylaws, as given effect under Maryland law, abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal.

Signed proxies that do not have instructions on how to vote will be voted FOR this proposal.

 

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Executive Compensation – Compensation Discussion & Analysis

 

Executive Summary

 

 

Company 2015 Financial Performance

Delivered Results, Despite Headwinds More Difficult Than Expected.

 

2015 Financial Highlights*
ü		Our Free Cash Flow increased 31% to $409 million, which exceeded our target
		performance objective of $375 million for our Annual Incentive Plan;
ü		Our Non-Pension Operating Income grew by 1% to $830 million; which exceeded our
		threshold performance objective of $812 million for our Annual Incentive Plan on a
		constant currency basis;
ü		Our revenue was down 3%, but grew 3% on a constant currency basis;
ü		Our software-related revenue was flat, but grew 4% on a constant currency basis; and
ü		While our one-year total shareholder return of -16.1% and our annualized three-year
		total shareholder return of -1.4% are disappointing, our annualized five-year total
		shareholder return of 9.7% exceeds our Peer Group total shareholder return over the
		same period.

* See “Supplementary Non-GAAP Information” for a description of non-GAAP measures and reconciliations of those non-GAAP measures to their most directly comparable GAAP measures.

 

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Our 2015 and 2014 Performance

These charts compare our 2015 performance with our 2014 performance:*

 

 

* See “Supplementary Non-GAAP Information” for a description of non-GAAP measures and reconciliations of those non-GAAP measures to their most directly comparable GAAP measures.

 

Our Total Stockholder Return

This chart compares our one-year, three-year and five-year total stockholder return with the performance of our 2015 compensation peer group and other relevant major indices:

 

 

 

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Summary of 2015 Compensation Program Actions by our Committee

The Company’s 2015 compensation program was consistent with its philosophy and objectives of paying for performance, aligning the interests of executives with the interests of stockholders, attracting and retaining executive talent, and adopting competitive, best-practice compensation programs that are appropriate for our Company. Specific examples of actions taken by the Company in 2015 and early 2016 to carry out this philosophy include:

 

•

2015 Annual Incentive Plan Core Financial Objectives. For our 2015 Annual Incentive Plan, we continued to use Non-Pension Operating Income (NPOI) and Adjusted Free Cash Flow as the Core Financial Objectives under our Management Incentive Plan. Aggressive NPOI and Adjusted Free Cash Flow goals were selected to align management compensation with our key internal strategic measures, and to differentiate the Management Incentive Plan (“MIP”) financial metrics from the performance metrics under our Long-Term Incentive Program (“LTI Program”).

 

•

2015 Performance-Based Equity Awards. The Committee established aggressive performance goals for the annual 2015 performance-based restricted stock unit (“RSU”) awards under our Stock Plan. We continued to use Return on Capital (ROC) and Non-Pension Operating Income Minus Capital Charge (NPOICC) as the performance measures for these awards.

 

•

2015 Economic Value Added Definition for Economic Profit Plan. In 2015, stockholders approved our request to redefine “Economic Profit” under our the NCR Corporation Economic Profit Plan (the “EPP”) using a more traditional economic value added (EVA) approach calculated as Net Operating Profit After Tax (NOPAT), less the product of Total Invested Capital and our Weighted Average Cost of Capital (WACC). The Committee, in consultation with its independent compensation consultant, made this change to better capture the EVA created by the decisions of our named executives.

 

•

2015 Equity Award Program Modifications. To better align with market practices and help us attract and retain top talent, we modified the vesting schedule for time-based restricted stock units granted in 2015 to a ratable vesting schedule, with one-third of units vesting on each anniversary of the grant date. Time-based awards granted in 2014 and earlier will continue to vest 100% on the third anniversary of the grant date. Also, to keep our executive team fully focused and rewarded for significant overachievement of our 2015 financial goals and to better align with market practices, we increased the maximum award payable under our 2015 performance-based restricted stock unit awards to 150% of target (up from 125% in prior years).

 

•

2015 Executive Severance Plan Amendment. In 2015, the Committee amended our NCR Executive Severance Plan (the “Severance Plan”) in order to align with competitive market practices and better position the Company to attract and retain executive talent. Under the amended plan, participants are eligible in the event of a qualifying termination to receive a cash lump sum equal to 1x annual base salary plus target annual cash bonus (as defined in the plan).

 

•

2016 Annual Incentive Plan – Revised Financial Metrics. We evaluated the financial metrics used under our Annual Incentive Plan and revised the 2016 financial metrics to include Non-GAAP Operating Income (including ongoing pension expense) as our Core Financial Objective, and retained Free Cash Flow as a modifier to the payout calculations. This better aligns management’s compensation with key strategic measures, and continues to differentiate our Annual Incentive Plan financial metrics from the performance goals used for our LTI Program.

 

•

2016 Long-Term Incentive Plan – Vision 2020 Awards and Revised Financial Metrics for Traditional Equity Awards. We evaluated our 2016 LTI Program and modified our equity award mix and terms to grant a portion of long-term value as partially front-loaded “Vision 2020 Awards” with

 

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vesting terms tied to achievement of aggressive stock price targets. These awards strongly align management and stockholder interests. They signal a new direction for the Company in pursuit of its recently announced Vision 2020 strategy, and are designed to generate excitement and reinforce a sense of urgency among our key executives for achieving future performance expectations. We granted the remaining portion of 2016 long-term value in a mix of traditional performance-based and time-based restricted stock units. For performance-based units, the Committee approved revised financial metrics including Non-GAAP Diluted Earnings Per Share and Software-Related Margin Dollars as the two performance metrics that will determine the payout. This better aligns management’s compensation with key strategic measures, and continues to differentiate our LTI Program financial metrics from our Annual Incentive Plan metrics. Because the Committee granted all long-term incentive awards in 2016 in the form of equity awards under our Stock Plan, the Committee determined that no new awards would be made under our EPP in 2016.

 

Our Named Executive Officers

 

 

William Nuti – Chairman of the Board, Chief Executive Officer and President (CEO)   Robert Fishman – Senior Vice President and Chief Financial Officer   Andrew Heyman – Senior Vice President and President, Financial Services Division   Frederick Marquardt – Executive Vice President, Services, Enterprise Quality and Telecom & Technology   Michael Bayer – Senior Vice President and President, Retail Solutions Division

 

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Our Executive Compensation Philosophy

 

 

Executive Compensation Program Design – Factors We Consider

When designing our executive compensation program, the Committee considers actions that:

 

 

Impact of Most Recent Say On Pay Vote

 

 

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Independent Compensation Consultant

The Committee retains and is advised by Frederic W. Cook & Co., Inc., a national executive compensation consulting firm, to assist in review and oversight of our executive compensation programs. The Committee considers FWC’s advice and recommendations when making executive compensation decisions. FWC is independent of the Company’s management, and reports directly to the Committee. FWC representatives attended substantially all meetings of the Committee in 2015. Our CEO is not present during Committee and FWC discussions about CEO compensation. Also, FWC reports on CEO compensation are not shared with our CEO. For more about FWC’s role as advisor to the Committee, see the Compensation and Human Resource Committee section (starting on page 19).

 

Management Recommendations

 

 

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Best Practices in NCR Executive Compensation

Our executive compensation program features many best practices:

 

		WHAT WE DO				WHAT WE DON’T DO
ü		Pay for Performance. A significant portion of our named executives’ compensation is “at-risk” and delivered only if rigorous performance goals established by the Committee are achieved.				X		No Guaranteed Annual Salary Increase or Bonus. Salary increases are based on individual performance evaluations, while annual cash incentives are tied to corporate and individual performance, as well as customer satisfaction.
ü		Strong Link between Performance Goals and Strategic Objectives. We link performance goals for incentive pay to operating priorities designed to create long-term stockholder value.				X		No Plans that Encourage Excessive Risk Taking. Based on the Committee’s annual review, none of our pay practices incentivize employees to engage in unnecessary or excessive risk-taking.
ü		Independent Compensation Consultant. The Committee retains an independent compensation consultant to evaluate and advise on our executive compensation programs and practices, as well as named executive pay mix and levels.				X		No Hedging or Pledging of NCR Securities. Our policies prohibit hedging and pledging of the Company’s equity securities.
ü		Benchmark Peers with Similar Business Attributes and Business Complexity. The Committee benchmarks our executive compensation program and annually reviews peer group membership with its independent compensation consultant.				X		No Repricing Stock Options. Our Stock Plan prohibits repricing of stock options without prior stockholder approval.
ü		Strong Compensation Clawback Policy. Executive awards are subject to clawback in specified circumstances.				X		No Excessive Perquisites. We offer only limited perks to be competitive, to attract and retain highly talented executives and ensure their safety and focus on critical business activities.
ü		Robust Stock Ownership Guidelines. We require named executives to meet our aggressive guidelines, and to maintain the guideline ownership level after any transaction.				X		No Dividends or Dividend Equivalents Paid on Unvested Equity Awards. Equity awards must vest before dividends are payable.
ü		Double Trigger Benefits in the Event of a Change in Control. Equity awards do not automatically vest in a change in control of NCR unless employment also ends in a qualifying termination.				X		No Excise Tax Gross-ups for new Change in Control Severance Plan participants (since 2010), and no tax gross-ups on any perquisites other than standard relocation benefits.
ü		Reasonable Change in Control Severance. Change in control severance benefits are three times target cash pay for the CEO and two times target cash pay for other eligible senior executives.				X		No Special Executive Pension Benefits for any executives, and no broad-based pension benefits except for limited benefits under closed and/or frozen pension plans covering only one of our named executives.

 

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Key Elements of 2015 Executive Compensation

The key elements of our 2015 executive compensation program are shown in the chart below. Each element of the program has a specific purpose in furthering our compensation objectives.

 

Fixed

Variable

Base Salary

Annual Incentives

Long-Term Incentives: Equity Awards

Long-Term Incentives: Economic Profit Plan

Key Features

–   –

Competitive fixed level of cash income Reviewed annually and adjusted when appropriate

–

Variable compensation payable annually in cash if performance goals achieved

–     –         –

Restricted stock units payable based on achieving performance goals and continued service Performance-based RSUs units vest 44 months after grant based on actual performance Time-based RSUs vest 1/3 on each anniversary of the grant date

–

A percentage interest in our Economic Profit as defined in our EPP

Why We Pay This Element

–   –

Provides a base level of competitive cash pay for executive talent Promotes appropriate risk taking

–   –

Motivates and rewards executives for performance on key Company-wide financial metrics and customer satisfaction Executive-specific objectives motivate our team to achieve goals in areas they can influence

–   –

Aligns executive pay and stockholder interests and serves to retain executive talent Motivates executive performance on key long-term measures to build multi-year stockholder value

–   –

Links incentive compensation to sustainable long-term performance, which drives sustainable stockholder value creation Retention of key executives

How We Determine Amount

–

Committee approves based on role, position against external market, and internal comparable salary levels

–   –   –

NPOI performance threshold must be achieved for any payout Maximum award as % of NPOI is 1.5% for CEO and 0.75% for other named executives Award payout ranges: - Financial Metrics: 0%  –  200% -Individual Goals: 0%  –  150% -Customer Success: 0% or 10%

–   –   –

RSU grant mix: -75% Performance-based RSUs -25% Time-based RSUs Performance threshold of 20% ROC must be achieved for any payout Performance–based RSU payout ranges from 0% to 150%

–   –

A predetermined percentage of Economic Profit may be deposited in a bookkeeping account for each executive 33% of the account balance is eligible for annual vesting / payout

 

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2015 Executive Compensation Program Highlights

 

 

2015 Pay for Performance Highlights

 

 

2015 Target Total Direct Compensation Pay Mix

 

NCR CEO: Target Pay Mix		Peer Group CEO: Target Pay Mix
[Graphic Appears Here]		[Graphic Appears Here]
NCR Other Named Executives: Target Pay Mix		Peer Group Other Named Executive Officers Target Pay Mix
[Graphic Appears Here]		[Graphic Appears Here]

 

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2015 “At Risk” Pay vs. Fixed Pay Mix at  Target

For our CEO and our other named executives, the 2015 ratio between performance-based pay (including performance-based equity and annual cash incentives) and fixed pay (base salary and time-based equity) is consistent with the pay mix of other CEOs and named executive officers in our peer group.

 

NCR CEO: At-Risk vs. Fixed Pay		Peer Group CEO: At-Risk vs. Fixed Pay
[Graphic Appears Here]		[Graphic Appears Here]
NCR Named Executives: At-Risk vs. Fixed Pay		Peer Group Named Executive Officers: At-Risk vs. Fixed Pay
[Graphic Appears Here]		[Graphic Appears Here]

 

Understanding Our CEO’s Target Pay vs. Realizable Pay

Because such a significant portion of the compensation of our named executives is performance-based and therefore “at risk,” we review the “target” versus the “realizable” compensation levels of our CEO and our other named executives to track the alignment and effectiveness of our pay-for-performance executive compensation design. To complete this analysis, we compare the value of the targeted compensation levels at the time of grant to the value of the realizable compensation levels each calendar year as a result of the performance of the organization in achieving its short-term and long-term goals and the year-end price of the Company’s stock. This Table shows the “target” versus “realizable” compensation for the CEO for the previous three fiscal years:

 

		Our CEO’s Target Pay vs. Actual “Realizable” Pay
		Target Pay(1) ($M)																				“Realizable” Pay(2) ($M)																				“Realizable” vs. Target Pay
Year		Base				Target Bonus				RSUs				EPP				Total				Base				Actual Bonus				RSUs				EPP				Total
2015		$	1.0			$	1.5			$	8.0			$	1.5			$	12.0			$	1.0			$	0.0			$	7.3			$	2.0			$	10.3			86%
2014		$	1.0			$	1.5			$	5.0			$	7.1			$	14.6			$	1.0			$	0.0			$	2.5			$	0.0			$	3.5			24%
2013		$	1.0			$	1.5			$	5.0			$	6.8			$	14.3			$	1.0			$	0.6			$	5.5			$	6.8			$	13.9			97%

 

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(1) Target pay includes: base salary, target annual incentive, grant date fair market value of all equity awards, plus the projected EPP Bonus Credit award based on the financial plan established each year.

(2) Compensation “realizable” for each year includes: base salary, actual bonus received, the fair market value of outstanding awards granted each year as of December 31, 2015, and the actual EPP Bonus Credit award based on the actual economic profit for each year . The 2013 annual performance-based LTI award granted on February 25, 2013 is reflected at 100.8% of target (payout earned). The 2014 annual performance-based LTI award granted on February 24, 2014 is reflected at 43.6% of target (payout earned). The 2015 annual performance-based LTI award granted on February 23, 2015 is reflected at 114.5% of target, and is subject to the Company achieving a two-year average ROC threshold of 20% during the performance period.

The above Table shows that our executive compensation program is designed so that the amount of compensation that our CEO actually receives may be higher or lower than the Target amount approved by the Committee, depending on our stock price performance, level of achievement of financial goals, Committee discretionary reductions and other relevant factors. Because it highlights how clearly our CEO’s actual realizable pay is tied to Company performance, this Table demonstrates the very strong alignment of the interests of our executives with those of our stockholders. This Table is supplementary to, and is not intended to be a substitute for, the Summary Compensation Table included in these proxy materials.

 

Comparing our CEO’s Realizable Pay with Company Performance

This chart compares our CEO’s realizable compensation to Company performance over the last three years:

 

		CEO Realizable Pay vs. Company Performance
		CEO Realizable Pay												Company Performance
Year		“Realizable” vs. Target Pay				Bonus Payout Earned				Performance LTI Award Earned(1)				NPOICC Results ($M)				NCR 1-Year Total Shareholder Return (TSR)(2)				NCR 1-Year TSR Percentile Rank for Peer Group(2)
2015			86	%			0	%			114.5	%		$	721				-16	%			33	%
2014			24	%			0	%			43.6	%		$	695				-14	%			0	%
2013			97	%			42	%			100.8	%		$	592				34	%			25	%

(1) The 2013 annual performance-based LTI award granted on February 25, 2013 is reflected at 100.8% of target (payout earned). The 2014 annual performance-based LTI award granted on February 24, 2014 is reflected at 43.6% of target (payout earned). The 2015 annual performance-based LTI award granted on February 23, 2015 is reflected at 114.5% of target, and is subject to the Company achieving a two-year average ROC threshold of 20% during the performance period.

(2) The TSR Percentile Rank measurement is from calendar year-end to calendar year-end.

The strong correlation between the compensation realizable by our CEO over the past three years, and our performance as measured by total shareholder return, demonstrates the strong alignment between our CEO’s realizable pay and Company performance. The above chart is supplementary to, and is not intended to be a substitute for, the Summary Compensation Table included in these proxy materials.

 

Our Process for Establishing 2015 Compensation

Our Committee has the sole authority to establish compensation levels for our named executives. When making compensation decisions, the Committee carefully examines:

 

 

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External Market Analysis – Peer Group and Survey Data

We use several methods to examine the various elements of our executive compensation program to determine the competitive market and understand current compensation practices. In general, the Committee considers the median of the peer group data described below when establishing base salary, annual incentive and long-term incentive opportunities. The Committee retains the flexibility to make adjustments in order to respond to market conditions, promotions, individual performance and internal equity. The Committee also reviews broad-based survey data prepared by its independent compensation consultant, and considers key business decisions that can impact compensation.

 

 

Final 2015 Peer Group. The Committee carefully reviewed our prior peer group and determined, with the advice of its independent compensation consultant, that no modifications were needed for 2015. As such, we continued to use our 2014 peer group for purposes of benchmarking our 2015 executive compensation program.

Our 2015 peer group therefore consisted of the following companies:

 

Our Peer Companies – 2015 Compensation
Adobe Systems		Fidelity Info Services		Juniper		SanDisk
Agilent		Fiserv		NetApp		Seagate
CA Technologies		Harris		Pitney Bowes		Symantec
Diebold		Intuit		Salesforce		Western Digital

 

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External Market Surveys. The Committee reviewed a comprehensive analysis and assessment prepared by its independent compensation consultant, which showed the competitive position of our named executive pay mix and levels compared to the marketplace using a combination of proxy data from our peer group, as well as general market data provided by the Company. Market survey data includes surveys concentrated on companies in both general and high-tech industries, which encompass the Company’s competitors and non-competitors. The broad-based surveys give us access to market data for numerous companies under a consistent methodology to assist our understanding of market trends and practices. The market surveys used were:

 

 

The Committee considers market median levels when setting compensation levels, but retains flexibility to set compensation above or below the median based on individual considerations. When setting 2015 compensation levels, the Committee considered our peer group’s proxy data for chief executive officers and chief financial officers with a 100% weighting for Mr. Nuti and Mr. Fishman, respectively. For Mr. Heyman, Mr. Marquardt and Mr. Bayer, the Committee considered our peer group’s proxy data for Unit Heads with a 75% weighting, and general market survey data for similar Sector Heads with a 25% weighting.

 

Internal Compensation Analysis – Tally Sheets and Internal  Equity

 

 

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Recommendations

The Committee also considers recommendations from our CEO and our Senior Vice President, Corporate Services & Chief Human Resources Officer when establishing compensation levels for named executives other than the CEO. The CEO and management do not participate in any Committee discussions about CEO compensation.

 

2015 Executive Compensation Program Details

 

Base Salaries for 2015

We attempt to set base salaries at a level competitive with our peer group. This helps us attract and retain top quality executive talent, while keeping our overall fixed costs at a reasonable level.

For 2015, the Committee approved these base salaries for our named executives:

 

Summary of 2015 Base Salary Actions
Named Executive		Effective Date of Most Recent Base Salary Action				Base Salary on December 31, 2015				Rationale for Base Salary Actions
William Nuti			August 8, 2005			$	1,000,000			No Change – Competitive
Robert Fishman			September 15, 2014			$	575,000			No Change – Competitive
Andrew Heyman			September 15, 2014			$	575,000			No Change – Competitive
Frederick Marquardt			September 15, 2014			$	575,000			No Change – Competitive
Michael Bayer			March 1, 2015			$	540,000			Transfer to our U.S. Company at a market competitive adjustment

 

Annual Incentives for 2015

 

Total Annual Incentive Plan Opportunity for 2015

The total 2015 Annual Incentive Plan opportunity for our named executives was comprised of our:

 

Management Incentive Plan Bonus		+		Customer Success Bonus

 

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Setting Annual Incentive Targets

At the beginning of the performance year, the Committee establishes a total target bonus for each named executive as a percentage of their base salary for purposes of both the MIP and the Customer Success Bonus. This total target bonus percentage has three components:

 

•

MIP—Core Financial Objectives Target Bonus, which is a target bonus percentage that is then multiplied by a Company-wide performance factor generated by achieving core financial goals (the “Core Financial Objectives”);

 

•

MIP—Individual Performance Modifier, which is a MIP percentage modifier based on the particular named executive’s achievement of individual performance goals (“MBOs”); and

 

•

Customer Success Target Bonus, which is a target bonus percentage linked to the Company’s overall customer success survey results.

 

 

Calculating Annual Incentive Awards

The calculation of Annual Incentive Plan awards includes our MIP and Customer Success Bonus components as follows:

Total Annual Bonus Opportunity – 2015

 

Management Incentive Plan  (MIP)

Customer Success Bonus

MIP Target Bonus %

x

Core Financial Objectives

x

Individual Performance Modifier

+

Payout Linked to Our Customer Success Survey Results

=

Actual Bonus %

(Range: 0% - 200%)

(Range: 0% - 150%)

(Range: 0% or 10%)

 

MIP Core Financial Objectives for 2015

The Committee established the MIP Core Financial Objectives for 2015 based on:

 

Non-Pension Operating Income (NPOI)		and		Adjusted Free Cash Flow

 

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NPOI Objective

The Committee established NPOI as 60% of the Core Financial Objectives. We use NPOI because it:

 

 

Adjusted Free Cash Flow Objective

The Committee established Adjusted Free Cash Flow as 40% of the Core Financial Objectives. We use Adjusted Free Cash Flow because it:

 

 

MIP Core Financial Objectives – Definitions and  Impacts

The 2015 MIP core financial objectives, including the definitions and impact of each, are shown in this chart:

 

MIP – Core Financial Objectives for 2015
Financial Objective		Definition		Impact on Our Financials		Impact on Our Behavior
NPOI(1)		Our income (loss) from operations as reported under generally accepted accounting principles, excluding the impact of our pension expense and certain specified special items.		Profit (Loss) on our Income Statement (non-GAAP).		Forces decision-making to produce results aligned to achieving our long-term strategic objectives. Management can only be rewarded financially each year when they drive both profitable growth and use capital efficiently.
Adjusted Free Cash Flow(1)		Our net cash provided by operating activities and discontinued operations, less capital expenditures for property, plant and equipment, less additions to capitalized software, and discretionary pension contributions.		Income Statement and Statement of Cash Flow (non-GAAP).		Forces decision-making to provide available cash for investment in our existing businesses, strategic acquisitions and investments, repurchase of NCR stock, and repayment of debt obligations.

 

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(1) NPOI and Adjusted Free Cash Flow are non-GAAP measures. Income from operations and net cash provided by operating activities, respectively, are the most directly comparable GAAP measures.

We exclude the impact of our pension expense and certain specified special items from our NPOI Core Financial Objective because they do not directly relate to a named executive’s performance or the Company’s operational success.

 

MIP Core Financial Objectives – 2015 Targets, Thresholds and  Caps

The Committee approves threshold, target and maximum levels for NPOI and Adjusted Free Cash Flow, which, if achieved, would result in a preliminary determination of the MIP bonus at 50%, 100%, or 200% of the MIP target, respectively. Awards are interpolated between these levels. The threshold for an objective must be reached before any MIP payment will be made for that objective. On February 23, 2015, the Committee decided when establishing our 2015 MIP that performance results for the NPOI objective would be determined on a constant currency basis to eliminate the impact of foreign currency during the performance period, based on the same foreign exchange rates used to establish the Company’s 2015 financial plan.

 

 

The Committee’s establishment of challenging MIP performance thresholds requires our named executives to achieve significant annualized NPOI and Adjusted Free Cash Flow growth in order to receive any payout for the MIP portion of their annual bonus.

Absolute Limit on MIP Payouts and Committee Discretion. The annual bonus otherwise payable under the MIP is also subject to an absolute limit based on the Company’s performance. The maximum annual bonus payout opportunity is 1.5% of NPOI for our CEO, and 0.75% of NPOI for our other named executives. Consistent with Section 162(m) of the Internal Revenue Code (the “Code”), the Committee retains the discretion to decrease, but not increase, the final Annual Incentive Plan payout earned.

 

MIP – Individual Performance Modifiers

In addition to the Core Financial Objectives, we establish multiple individual objectives, called MBOs, for each of our named executives. These individual objectives are assigned to our named executives based on their areas of influence, and on objectives that are critical for the Company’s achievement of its overall financial goals and stretch internal objectives. Based on the extent to which a named executive satisfies his MBOs, the Committee determines an “individual performance modifier” that increases or decreases the preliminary MIP bonus determined by the Core Financial Objectives. The individual performance modifier can range from 0% for poor performance to 150% for exceptional performance.

 

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The Committee established multiple MBOs for our CEO, and in conjunction with the CEO, for each named executive. The MBOs selected directly complement our corporate strategic goals of:

 

 

Customer Success Bonus for 2015

Because of the critical importance of customer retention, customer referrals and customer relationships, we retain our Customer Success Bonus as a separate component of our Annual Incentive Plan, with its own separate reward structure. We link our Customer Success objective to a semi-annual survey of customers conducted by an independent third party. The actual payout for this component is determined at the discretion of the Committee for our CEO, and at the discretion of the CEO for our other named executives.

 

Annual Incentive Plan – Total Bonus Opportunity for 2015

For 2015, the Committee established MIP annual incentive targets for our named executives based on peer group data and positioning within the senior leadership team. The 2015 target MIP and Customer Success annual incentive opportunities for our named executives were:

 

2015 Annual Incentive Plan – Targets and Total Bonus Opportunity (% of Base Salary)
Named Executive		MIP Target				Customer Success Target				Total Annual Bonus Target (MIP Target + Customer Success Target)				Total Annual Bonus Opportunity
William Nuti			140	%			10	%			150	%			0% to 430%
Robert Fishman			100	%			10	%			110	%			0% to 310%
Andrew Heyman			100	%			10	%			110	%			0% to 310%
Frederick Marquardt			100	%			10	%			110	%			0% to 310%
Michael Bayer			100	%			10	%			110	%			0% to 310%

 

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By way of illustration, in the case of our CEO, if the Core Financial Objectives had been met at the maximum level, this could generate a preliminary MIP bonus of 280% (200% of his 140% target bonus). If he had achieved the maximum individual performance modifier of 150%, his bonus could have become 420% (150% of his preliminary MIP bonus of 280%). If the Customer Success objective (10%) was also met, his total Annual Incentive Plan bonus could have been 430% of his base salary.

 

Annual Incentive Plan – Objectives, Results and Payouts for 2015

 

MIP Core Financial and Customer Success Results and Payout Funding

 

 

The 2015 Annual Incentive Plan objectives, results, earned payout and funded payout are shown in this chart:

 

2015 Annual Incentive Plan – Objectives, Results and Funding
		Performance Objectives ($M)
Discretionary Objectives		Threshold (25% Funded)		Target (100% Funded)		Maximum (200% Funded)		Performance Results		Earned and Funded Payouts
Non-Pension Operating Income(1) (60%)		$812		$844		$876		$830		Calculated at 114.1% of Target
Adjusted Free Cash Flow (40%)		$350		$375		$425		$409		(Funded at 0% of Target)
Customer Success Objective		Payout Linked to Overall Satisfaction Of Company Customers						Below Expectations		0%

(1) NPOI threshold, target and cap are shown on a constant currency basis as determined appropriate by the Committee.

 

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Individual Performance Modifier Assessment

Although Mr. Nuti and other NEOs did achieve and exceed many of their 2015 individual objectives, collectively the Company’s performance on several key strategic goals fell short of expectations. Therefore it was determined that no Annual Incentive Plan awards would be paid to the CEO or certain other named executives for 2015 in keeping with our pay-for-performance philosophy.

 

Annual Incentive Plan – Final 2015  Payouts

The total annual bonus payments approved for each named executive for the 2015 performance year were:

 

2015 Annual Incentive Plan – Final Payout Calculation
Named Executive		MIP Target				MIP Payout Earned (% of Target)				Funded MIP Payout (Before IPM)				Individual Performance Modifier				MIP Payout (After IPM)				Customer Success Payout (0% of Target)				Total Bonus Payout
William Nuti		$	1,000,000				114.1	%		$	0				0	%		$	0			$	0	%		$	0
Robert Fishman		$	575,000				114.1	%		$	0				0	%		$	0			$	0	%		$	0
Andrew Heyman		$	575,000				114.1	%		$	0				0	%		$	0			$	0	%		$	0
Frederick Marquardt		$	575,000				114.1	%		$	0				0	%		$	0			$	0	%		$	0
Michael Bayer		$	511,205				114.1	%		$	0				0	%		$	0			$	0	%		$	0

Messrs. Fishman and Marquardt each received discretionary bonuses for 2015 that were recommended by the CEO and approved by the Committee. Mr. Fishman was awarded $100,000 for his leadership on the Company’s evaluation of certain strategic alternatives and over-achievement on other core initiatives. Mr. Marquardt was awarded $136,500 for exceeding the full year 2015 controllable operating income goal for the Services division and for another year of continued improvement of Services delivery execution.

 

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2015 Long-Term Incentives

Our Long-Term Incentive Program directly aligns a large portion of the total compensation of our named executives with Company performance and changes in stockholder value. Long-term incentives for our named executives include:

 

 

2015 Equity Award Mix

The use of equity for our LTI program links our executives and stockholders to a common goal: sustainable stockholder value creation. On February 23, 2015, the Committee approved 2015 annual equity awards under our Stock Plan in the form of performance-based and time-based restricted stock units. We use these awards to create commonality of interests with stockholders and help manage our ability to retain our key executives. These awards also provide a good balance to our executives and protection to our stockholders, because wealth creation can be “realizable” by an executive only when both long-term performance goals and service-based milestones are achieved.

The 2015 equity award mix for our named executives is 75% performance-based restricted stock units, and 25% time-based restricted stock units.

 

 

For our 2015 equity awards, the number of shares subject to restricted stock units was determined by converting the dollar value approved by the Committee into a specific number of shares, based on the grant date closing price of our common stock as provided under our Stock Plan.

 

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Performance-Based Equity – Performance Metrics

 

ROC – Primary Performance Metric

 

 

NPOICC – Secondary Performance Metric

 

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We calculate NPOICC as follows:

 

NPOICC—Non-Pension Operating Income Minus Capital Charge
Formula		Definition		Impact on Our Financials		Impact on Our Behavior
NPOI(1)		Non-Pension Operating Income is our income (loss) from operations as reported under generally accepted accounting principles, excluding the impact of our pension expense and certain specified special items		Profit (Loss) on our Income Statement (non-GAAP)		Drive Revenue Growth and Expand Gross Margin
—		—
Capital Charge		Capital Charge is our “controllable capital” multiplied by our annual “Weighted Average Cost of Capital” which was 9.0% for 2014   Controllable Capital is our working capital (accounts receivable plus inventory, minus the sum of accounts payable, deferred revenue and customer deposits), plus the sum of property, plant and equipment, other current assets excluding taxes, and capitalized software, minus the sum of accrued payroll and employee benefits liabilities and other current liabilities, excluding taxes and severance   Weighted Average Cost of Capital is the sum of:   a) the product of (i) the cost of equity, and (ii) the weighted market value of the Company’s common shares outstanding		Changes in Assets, Liabilities & Stockholders’ Equity on our Balance Sheet (non-GAAP)		Efficient use of Capital (Assets, Debt and Stock)
		+   b) the product of (i) the cost of debt, and (ii) the weighted market value of the Company’s long-term and short- term debt   divided by:   c) the sum of the weighted market value of common shares outstanding and the weighted market value of long-term debt and short-term debt
=		=
NPOICC		Non-Pension Operating Income minus Capital Charge		Changes in our Stock Price, Market Capitalization, and Enterprise Value		Create Sustainable Enterprise Value for Stockholders

 

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(1) NPOI and NPOICC are non-GAAP measures. Income from operations is the most directly comparable GAAP measure.

 

2015 NPOICC Results and Impact on 2015 Equity Awards

 

2015 NPOICC Results

 

•

2015 NPOICC Achieved: NPOICC achieved for 2015 was $721 million.

 

Impact of 2015 NPOICC Results on 2015 Awards

 

•

Impact on 2015 Performance-Based Equity Awards: The 2015 NPOICC of $721 million achieved exceeded the target NPOICC of $709 million, both determined on a constant currency basis, resulting in a preliminary award of 114.5% of the target number of units granted on February 23, 2015. This restricted stock unit payout of 114.5% is now subject to NCR achieving at least $709 million of NPOICC for the 2016 performance year (and if not, the payout will be reduced to 100%), a two year average ROC requirement of at least 20%, along with the vesting requirement of continued employment with the Company through October 23, 2018.

 

History of Annual LTI Equity Awards

This Chart shows our three-year payout history for annual performance-based equity awards, with 2015 goals and results shown on a constant currency basis:

 

Annual LTI Equity Awards: Historical Goals, Results and Payouts
Award Year		Performance Period		NPOICC Performance Range ($M)												Return on Capital Results				NPOICC Results ($M)				Final Payout
				Threshold				Target				Maximum
2015		2015 – 2016		$	631			$	709			$	750				73.1	%		$	721				114.5	%
2014		2014 – 2015		$	665			$	785			$	865				67.9	%		$	695				43.6	%
2013		2013 – 2014		$	530			$	590			$	650				57.5	%		$	592				100.8	%

 

2015 Total Annual LTI Equity Award Values

This Chart shows the 2015 total annual LTI equity award values for our named executives:

 

2015 Total Annual LTI Equity Award Value(1)
Named Executive		Performance-Based RSUs (75% of Value)				Time-Based RSUs (25% of Value)				Total Award Value
William Nuti		$	6,000,003			$	2,000,011			$	8,000,014
Robert Fishman		$	825,001			$	274,990			$	1,099,991
Andrew Heyman		$	1,124,988			$	375,006			$	1,499,994
Frederick Marquardt		$	1,124,988			$	375,006			$	1,499,994
Michael Bayer		$	1,124,988			$	375,006			$	1,499,994

(1) Represents the “grant date fair value” of RSUs, as shown in the Grants of Plan-Based Awards—2015 Table on page 66.

 

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2015 Ad Hoc LTI Awards

 

•

2015 Ad Hoc Awards: In past years, the Committee has approved Ad Hoc LTI awards with single-metric performance based conditions in appropriate circumstances. No named executives received Ad Hoc awards in 2015.

 

Update on 2013 and 2014 Performance-Based Equity Awards

 

 

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2015 LTI Awards: Economic Profit Plan

With stockholder approval of our amended EPP in 2015, awards under the EPP continued to be a portion of the overall 2015 LTI award value granted to our named executives that otherwise would have been granted as RSUs under our Stock Plan. The EPP links our named executives’ incentive compensation to long-term, sustainable creation of stockholder value, and strikes a balance with the dilution that can occur with equity-based awards.

The financial metric used for the EPP is the Company’s 2015 “Economic Profit.” As amended, the EPP uses this “Economic Value Added” (EVA) definition of Economic Profit to capture the EVA created by the decisions of our named executives:

 

 

 

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2015 Economic Profit Plan Results

We achieved Economic Profit of $304 million for the 2015 performance year. We also exceeded the EPP cash flow test requirement, as our Cash Flow from Operations of $681 million was greater than 1% of our total revenues for 2015 (or $64 million). The results of our 2015 Economic Profit calculation and our 2015 Cash Flow test are shown in this chart:

 

Economic Profit Plan – 2015 Results
Economic Profit Calculation ($M)						Cash Flow Test Results ($M)
NOPAT(1)		$	775			Cash Flow from Operations		$	681
Less the Product of:						Pension Adjustment		$	0
Total Invested Capital		$	5,238			Adjusted Cash Flow from Operations(1)(2)		$	681
Multiplied by:						Total Revenues		$	6,373
WACC			9	%		Cash Flow Hurdle Rate (% of Total Revenues)			1	%
Less: Capital Charge		($	471	)		Cash Flow Hurdle Amount – 1% of Total Revenues		$	64
*Economic Profit		$	304			*Cash Flow Test Passed			ü

(1) NOPAT and Cash Flow from Operations, as defined for purposes of the EPP, are non-GAAP measures. Income from operations and net cash provided by operating activities, respectively, are the most directly comparable GAAP measures.

(2) Cash Flow from Operations, as defined for purposes of the EPP, is net cash provided by (used in) operating activities (in 2015, $681 million), adjusted to exclude any extraordinary cash payments made to or under the Company’s global defined benefit pension and retirement plans in connection with the Company’s strategy to reduce pension liability or increase pension funding (including but not limited to, cash payments made in connection with any annuity purchase, plan termination or settlement).

The participation level for our named executives and the amounts earned under the EPP for the 2015 performance year are:

 

Economic Profit Plan – 2015 Awards and Payouts
Named Executive		2015 Carried Interest %				2014 Ending Bank Balance (after 2014 Payout)				2015 Bonus Credit Award				Bank Balance (Before 2015 Payout)(1)				2015 EPP Cash Payout(2)				2015 Ending Bank Balance (After 2015 Payout)
William Nuti			0.65	%		$	5,863,829				1,973,400				7,837,229				2,586,285				5,250,944
Robert Fishman			0.48	%		$	716,125				1,457,280				2,173,405				717,224				1,456,181
Andrew Heyman			0.65	%		$	332,186				1,973,400				2,305,586				760,843				1,544,743
Frederick Marquardt			0.65	%		$	265,749				1,973,400				2,239,149				738,919				1,500,230
Michael Bayer			0.65	%		$	0	(3)			1,973,400				1,973,400				651,222				1,322,178

(1) 33% of the Bank Balance (before 2015 payout) is the 2015 EPP Cash Payout.

(2) The 2015 EPP Cash Payout is payable in August 2016 in accordance with the terms and conditions of the EPP.

(3) Mr. Bayer joined the Company in August 2014, and did not participate in the EPP until 2015 and therefore had no 2014 ending bank balance.

 

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2016 Multi-Year LTI Program with Vision 2020 Awards

 

 

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Vision 2020 Awards in 2016

Price-Contingent Restricted Stock Units: All named executives were awarded price-contingent restricted stock units with these terms:

 

•

50% are earned if NCR’s stock price closes at or above $35 per share for any twenty consecutive trading days at any time during the five-year period after the grant date.

 

•

50% are earned if NCR’s stock price closes at or above $40 per share for any twenty consecutive trading days at any time during the five-year period after the grant date.

 

•

Vesting is also conditioned on continued service with the Company, where no more than 50% of the award “earned” will vest on the three-year anniversary of the grant date, and up to 100% of the award “earned” can vest on the four-year anniversary of the grant date, and finally, if not previously vested up to 100% of the award “earned” can vest on the five-year anniversary of the grant date conditioned entirely on NCR achieving the $35 and $40 stock price hurdles prior to these potential vesting dates.

The five year performance period for the Vision 2020 Awards provides a longer-term focus on sustained share price growth. Unless earned based on the stock price hurdles outlined above, all unvested Vision 2020 Awards are forfeited in the event of employment termination, except in the event of death, disability or other limited circumstances as described in the award agreements.

 

Traditional Restricted Stock Unit Awards in 2016

 

 

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No New Economic Profit Plan Awards for 2016

Because the Committee granted all long-term incentive awards in 2016 in the form of equity awards under our Stock Plan, the Committee determined that no new awards would be made under our Economic Profit Plan in 2016. Our named executives will continue to hold their existing Bonus Banks earned in 2015 and earlier years based on performance in those years. In 2016, these previously earned Bonus Banks may or may not become payable to our named executives according to the terms of the EPP described in the 2015 LTI Awards: Economic Profit Plan section (starting on page 52).

The long-term incentive awards granted to each of our named executives for 2016 are shown in this chart:

 

2016 Long-Term Incentive Awards and Value
Named Executive		Vision 2020  Awards: Price-Contingent RSUs(1)				Traditional Performance- Based RSUs				Traditional Time-Based RSUs				Total Award Value(2)
William Nuti		$	10,000,000			$	3,750,000			$	1,250,000			$	15,000,000
Robert Fishman		$	3,000,000			$	1,125,000			$	375,000			$	4,500,000
Andrew Heyman		$	1,600,000			$	600,000			$	200,000			$	2,400,000
Frederick Marquardt		$	2,200,000			$	825,000			$	275,000			$	3,300,000
Michael Bayer		$	1,600,000			$	600,000			$	200,000			$	2,400,000

(1) Includes half of the total target long-term incentive program value approved by the Committee for our named executives in 2016, plus the “front-loaded” half of the total target long-term incentive program value that the Committee anticipated it would grant to our named executives in 2017.

(2) Represents the 2016 total target long-term incentive program value approved by the Committee for our named executives, plus the font-loaded half of the total target long-term incentive program value that the Committee anticipated it would grant to our named executives in 2017.

 

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Other Employee Benefits

 

 

Change in Control and Post-Termination Benefits

 

 

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Stock Ownership Requirements

 

 

 

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Tax Considerations in Setting Compensation

Under Federal tax rules, compensation over $1 million annually for certain named executives cannot be deducted unless paid under a performance-based plan satisfying Internal Revenue Service standards (or otherwise meeting certain IRS requirements). While we generally pay compensation intended to be deductible, the Committee has not adopted a policy requiring all pay to be deductible, so as to preserve the ability to award non-deductible compensation if determined to be in the best interests of our stockholders. In addition, these tax rules are complex and may change (including with retroactive effect), thus even compensation that is intended to be deductible may not qualify.

 

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Board and Compensation and Human Resource Committee Report on Executive Compensation

The Compensation and Human Resource Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion & Analysis with management. Based on that review and those discussions, the Committee recommended to our Board of Directors that the Compensation Discussion & Analysis be included in these proxy materials.

The Compensation and Human Resource Committee:

Linda Fayne Levinson (Chair)

Edward “Pete” Boykin

Chinh E. Chu

Gary J. Daichendt

 

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Executive Compensation Tables

 

Summary Compensation Table

Our Summary Compensation Table below shows the total compensation paid to or earned by each of our named executive officers with respect to the fiscal years ending December 31, 2015, 2014, and 2013.

 

Summary Compensation Table ($)
Name and Principal Position (a)		Year (b)				Salary (c)				Bonus (d)				Stock Awards (e)(1)				Non-Equity Incentive Plan Compensation (f)(2)				Change in Pension Value (g)(3)				All Other Compensation (h)(4)				Total (i)
William Nuti Chairman of the Board, Chief Executive Officer and President			2015				1,000,000				—				8,000,014				2,586,286				—				314,206				11,900,506
			2014				1,000,000				—				4,999,999				2,888,154				—				396,744				9,284,897
			2013				1,000,000				—				4,999,996				4,940,678				—				210,004				11,150,678
Robert Fishman Senior Vice President and Chief Financial Officer			2015				575,000				100,000				1,099,991				717,224				(13,008	)			23,593				2,502,800
			2014				538,502				—				750,011				352,719				42,507				24,242				1,707,981
			2013				518,269				—				650,007				762,446				—				23,180				1,953,902
Andrew Heyman Senior Vice President, and President, Financial Services Division			2015				575,000				—				1,499,993				760,843				—				17,593				2,853,429
			2014				504,039				100,000				999,994				163,614				—				18,242				1,785,889
Frederick Marquardt Executive Vice President, Services, Enterprise Quality and Telecom & Technology			2015				575,000				136,500				1,499,993				738,919				—				23,490				2,973,902
			2014				499,038				100,000				899,994				130,891				—				23,425				1,653,348
Michael Bayer(5) Senior Vice President, and President, Retail Solutions Division			2015				497,358				—				1,499,993				651,222				—				140,558				2,789,131
			2014				214,662				213,325				999,999				—				181				28,976				1,457,143

(1) This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the stock awards granted to each named executive in the applicable year. See Note 9 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 (our “2015 Annual Report”) for an explanation of the assumptions we make in the valuation of our equity awards. Assuming achievement of the highest level of performance, the aggregate grant date fair values of the performance-based restricted stock units granted in 2015 are as follows: Nuti: $9,000,005; Fishman: $1,237,502; Heyman: $1,687,482; Marquardt: $1,687,482; and Bayer; $1,687,482. For additional information about awards made in 2015, see the Grants of Plan-Based Awards—2015 table on page 66 of this proxy statement.

(2) The amounts reported for 2015 are comprised of amounts earned under our 2015 Annual Incentive Plan: Nuti: $0; Fishman: $0; Heyman: $0; Marquardt: $0; and Bayer $0, plus amounts for performance under the 2015 EPP to be paid in August 2016: Nuti: $2,586,286; Fishman: $717,224; Heyman: $760,843; Marquardt: $738,919; and Bayer $651,222. The entire amounts reported in 2014 are for EPP. Because he joined the Company in August, 2014, Mr. Bayer did not participate in the 2014 EPP. The amounts reported in 2013 are comprised of 2013 Annual Incentive Plan: Nuti: $630,000; and Fishman: $236,000, plus EPP: Nuti: $4,310,678; and Fishman: $526,446.

(3) The aggregate change in actuarial values of the accumulated pension benefit under the Company’s qualified pension benefit plans is applicable only to Messrs. Fishman and was $(13,008). For more information regarding pension benefits, see the 2015 Pension Benefits Table on page 68 of this proxy statement.

(4) The amounts in this column consist of the aggregate incremental cost to the Company of the perquisites provided to the named executives, any insurance premiums paid by the Company with respect to life insurance for the benefit of the named executives and contributions made by the Company to the Savings Plan on behalf of the named executives. Additional details regarding the amounts are included in the All Other Compensation Table and Perquisites Table, both of which can be found below.

(5) Until his relocation to our U.S. Company effective March 1, 2015, Mr. Bayer was paid in Euros, which were converted to U.S. dollars for reporting purposes using the 2015 year-end exchange rate of 0.918070 USD/EUR. In 2014, Mr. Bayer was paid in Euros, which were converted to U.S. dollars for reporting purposes using the 2014 year-end exchange rate of 1.219 USD/EUR.

 

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All Other Compensation Table

This table shows the value of Company-paid perquisites and life insurance premiums, and Company matching contributions to the NCR Savings Plan, our 401(k) plan, on behalf of our named executives in 2015:

 

All Other Compensation – 2015
Named Executive		Perquisites and Other Personal Benefits(1)				Insurance Premiums(2)				Company Contributions to Retirement / 401(k) Plans(3)				Total
William Nuti		$	307,174				1,032				6,000			$	314,206
Robert Fishman			17,000				593				6,000				23,593
Andrew Heyman			17,000				593				—				17,593
Frederick Marquardt			17,000				490				6,000				23,490
Michael Bayer			135,640				557				4,361				140,558

(1) This column shows the Company’s aggregate incremental cost for the perquisites and other personal benefits described in the Perquisites Table below.

(2) This column shows the value of Company-paid premiums for life insurance for the benefit of our named executives.

(3) The column shows Company matching contributions to our 401(k) plan, which the Company also makes for our non-executive employee participants in that plan.

 

Perquisites Table

This table shows the aggregate incremental cost to the Company for perquisites for our named executives.

 

Perquisites – 2015
Named Executive		Corporate Aircraft Usage(1)				Lodging(2)				Vehicle and Security(3)				Relocation(4)				Executive Medical Program(5)				Financial Planning Allowance(6)				Total
William Nuti		$	206,395				9,498				74,281				—				5,000				12,000			$	307,174
Robert Fishman		$	—				—				—				—				5,000				12,000				17,000
Andrew Heyman		$	—				—				—				—				5,000				12,000				17,000
Frederick Marquardt			—				—				—				—				5,000				12,000				17,000
Michael Bayer			—				—				—				118,640				5,000				12,000				135,640

(1) This column shows the Company’s incremental cost for personal usage of the corporate aircraft. We calculated this incremental cost by determining the variable operating cost to the Company, including items such as fuel, landing and terminal fees, crew travel expenses and operational maintenance. Expenses determined to be less variable in nature, such as general administration, depreciation, and pilot compensation, were not included in this incremental cost. On occasion, other individuals traveled with our CEO on corporate aircraft; however, the Company incurred de minimis incremental costs as a result of such travel and no amounts for such travel are included in the Table.

(2) This column shows the Company’s cost of providing Mr. Nuti occasional overnight hotel accommodations near our New York City office not in connection with Board meetings or monthly executive team meetings.

(3) This column shows Company payments for the Company-provided car and driver that the Company requires Mr. Nuti to use for security purposes.

(4) This column shows expenses paid on Mr. Bayer’s behalf in connection with his relocation to our U.S. Company effective March 1, 2015.

(5) This column shows the Company-paid maximum amount available to named executives for medical diagnostic services under our Executive Medical Exam Program. Though some executives may not use the maximum, for privacy reasons we choose to disclose the maximum benefit (rather than the amount actually used).

(6) This column shows the Company-paid amounts for financial planning assistance under our Executive Financial Planning Allowance Program, which were earned by named executives in 2015 and paid in 2016.

 

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Agreements with Our Named Executives

Our named executives have agreements with the Company that describe, among other things, their initial base salaries, bonus opportunities and equity awards, as well as benefit plan participation. Changes to named executive compensation may be made from time to time, as noted in the Compensation Discussion & Analysis. The agreements generally are not updated to reflect these changes.

 

 

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Grants of Plan-Based Awards Table

The table below shows the Committee’s equity and non-equity incentive plan awards to our named executives in 2015. Equity awards were made under our Stock Plan. Non-equity awards were made under our Annual Incentive Plan (MIP and Customer Success Bonus) and EPP. These plans and related awards are described in the Compensation Discussion & Analysis.

 

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		Grants of Plan-Based Awards – 2015 ($)
								Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1)												Estimated Future Payouts Under Equity Incentive Plan Awards(2)
Named Executive		Award Type		Grant Date				Threshold				Target				Max				Threshold				Target				Max				All Other Stock Awards: Number of Units(3)				Grant Date Fair Value of Stock Awards(4)
William Nuti		Management Incentive Plan							350,000				1,400,000				4,200,000				—				—				—				—				—
		Customer Success							—				100,000				100,000				—				—				—				—				—
		Economic Profit Plan							—				2,586,286				—				—				—				—				—				—
		Performance-Based RSU			02/23/15				—				—				—				50,167				200,669				301,004				—				6,000,003
		Time-Based RSU			02/23/15				—				—				—				—				—				—				66,890				2,000,011
Robert Fishman		Management Incentive Plan							143,750				575,000				1,725,000				—				—				—				—				—
		Customer Success							—				57,500				57,500				—				—				—				—				—
		Economic Profit Plan							—				717,224				—				—				—				—				—				—
		Performance-Based RSU			02/23/15				—				—				—				6,898				27,592				41,388				—				825,001
		Time-Based RSU			02/23/15				—				—				—				—				—				—				9,197				274,990
Andrew Heyman		Management Incentive Plan							143,750				575,000				1,725,000				—				—				—				—				—
		Customer Success							—				57,500				57,500				—				—				—				—				—
		Economic Profit Plan							—				760,843				—				—				—				—				—				—
		Performance-Based RSU			02/23/15				—				—				—				9,406				37,625				56,438				—				1,124,988
		Time-Based RSU			02/23/15				—				—				—				—				—				—				12,542				375,006
Frederick Marquardt		Management Incentive Plan							143,750				575,000				1,725,000				—				—				—				—				—
		Customer Success							—				57,500				57,500				—				—				—				—				—
		Economic Profit Plan							—				738,919				—				—				—				—				—				—
		Performance-Based RSU			02/23/15				—				—				—				9,406				37,625				56,438				—				1,124,988
		Time-Based RSU			02/23/15				—				—				—				—				—				—				12,542				375,006
Michael Bayer		Management Incentive Plan							124,340				497,358				1,492,075				—				—				—				—				—
		Customer Success							—				54,000				54,000				—				—				—				—				—
		Economic Profit Plan							—				651,222				—				—				—				—				—				—
		Performance-Based RSU			02/23/15				—				—				—				9,406				37,625				56,438				—				1,124,988
		Time-Based RSU			02/23/15				—				—				—				—				—				—				12,542				375,006

(1) This column shows potential award levels based on performance under our 2015 Annual Incentive Plan, which includes our Management Incentive Plan and our Customer Success bonus, plus our EPP. The Customer Success metric is “make or miss.” The EPP uses a formula to credit or debit participant accounts (Bonus Banks) with a percentage (not to exceed 5.0%) of our “Economic Profit” or loss each year, and pays out a portion of these Bonus Banks each year to the extent required by the EPP. Because awards are determined under a formula and the Committee does not set a target amount under the EPP, in accordance with SEC guidelines the target amounts shown in the Table are the amounts expected to be paid in August 2016. We have not included a maximum amount because the maximum percentage of Economic Profit creditable to any participant as a Bonus Credit for any performance period is 5% of Economic Profit.

(2) This column shows the threshold, target, and maximum shares that could be received for performance-based RSUs awarded in 2015.

(3) This column shows time-based RSUs granted to our named executives in 2015 under our Stock Plan.

(4) This column shows the grant date fair value of equity awards, as determined in accordance with FASB ASC Topic 718. The grant date fair values of performance-based RSU awards are based on the probable outcome of applicable performance conditions as of the grant date. These awards are subject to a two-year performance period and an additional time-based vesting condition.

 

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Outstanding Equity Awards at Fiscal Year End 2015 Table

 

Outstanding Equity Awards at Fiscal Year-End – 2015 (for footnotes to this Table, see page 68)
				Option Awards(1)										Restricted Stock Unit Awards
Named Executive		Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)				Option Exercise Price ($)				Option Expiration Date		Number of Stock Units That Have Not Vested (#)				Market Value of Stock Units That Have Not Vested ($)				Equity Incentive Plan Awards: Number of Unearned Stock Units That Have Not Vested (#)				Equity Incentive Plan Awards: Market or Payout Value of Unearned Stock Units That Have Not Vested ($)(2)
William Nuti		02/23/2015(3)													66,890				1,636,129
		2/23/2015(4)																					301,004				7,362,558
		02/24/2014(3)													37,403				914,877
		02/24/2014(5)													48,923				1,196,649
		02/25/2013(3)													46,642				1,140,863
		02/25/2013(6)													141,044				3,449,946
		02/23/2010			63,552				12.81			02/22/2020
Robert Fishman		02/23/2015(3)													9,197				224,959
		02/23/2015(4)																					41,388				1,012,350
		02/24/2014(3)													5,610				137,221
		02/24/2014(5)													7,339				179,506
		02/25/2013(3)													6,063				148,301
		02/25/2013(6)													18,337				448,511
Andrew Heyman		02/23/2015(3)													12,542				306,777
		02/23/2015(5)																					56,438				1,380,461
		02/24/2014(3)													7,480				182,961
		02/24/2014(5)													9,785				239,334
		02/25/2013(3)													6,996				171,122
		02/25/2013(6)													21,157				517,498
Frederick Marquardt		02/23/2015(3)													12,542				306,777
		02/23/2015(4)																					56,438				1,380,461
		05/01/2014(7)													8,197				200,499
		02/24/2014(3)													4,862				118,925
		02/24/2014(5)													6,360				155,564
		02/25/2013(3)													5,130				125,480
		02/25/2013(6)													15,515				379,500
		02/23/2010			2,311				12.81			2/22/2020
		03/01/2008			14,096				22.16			2/28/2018
		10/01/2007			3,905				23.93			9/30/2017
Michael Bayer		02/23/2015(3)													12,542				306,777
		02/23/2015(4)																					56,438				1,380,461
		12/01/2014(7)													13,836				338,429
		08/01/14(3)													19,200				469,632

 

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(1) These awards, having vested 25% on each anniversary of the grant date, are all now fully vested.

(2) The market value was calculated by multiplying the number of shares shown in the table by $24.46, which was the closing market price of NCR common stock on December 31, 2015, the last trading day of our fiscal year.

(3) Cliff vesting on third anniversary of the grant date.

(4) Performance-based award with one year of a two-year performance period satisfied. Shown at maximum, or 150% of target. If performance goal achieved, vests on October 24, 2017.

(5) Performance-based award where the performance period is satisfied. Award vests on October 24, 2017.

(6) Performance-based award where the performance period is satisfied. Award vests 50% on October 25, 2016.

(7) Performance-based award with a one-year performance period. If performance goal achieved, vests 100% on third anniversary of grant date.

 

2015 Option Exercises and Stock Vested Table

This table shows 2015 vesting for performance-based and time-based restricted stock unit awards made to our named executives. No named executives exercised stock options in 2015.

 

Option Exercises and Stock Vested – 2015
		Option Awards				Stock Awards
Named Executive		Number of Shares Acquired on Exercise		Value Realized on Exercise		Number of Shares Acquired on Vesting				Value Realized on Vesting
William Nuti		—		—			251,654			$	7,091,817
Robert Fishman		—		—			33,554				945,580
Andrew Heyman		—		—			41,942				1,181,959
Frederick Marquardt		—		—			34,036				965,473
Michael Bayer		—		—			—				—

 

2015 Pension Benefits Table

 

 

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Pension Benefits – 2015
Named Executive		Plan Name		Number of Years Credited Service		Present Value of Accumulated Benefit(1)
Robert Fishman		U.S. Pension Plan		13.6		$248,937

(1) For more on the assumptions used to quantify benefits under our U.S. Pension Plan, see Note 10 to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2015.

 

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