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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)

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

Filed by the Registrant ☒

Filed by a Party other than the Registrant o

Check the appropriate box:

oPreliminary Proxy Statement
oConfidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
Definitive Proxy Statement
oDefinitive Additional Materials
oSoliciting Material Pursuant to §240.14a-12
Pitney Bowes Inc.
(Name of Registrant as Specified In Its Charter)
 
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.
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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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3001 Summer Street
Stamford, Connecticut 06926

Notice of the 2019

Annual Meeting and

Proxy Statement

To the Stockholders:

We will hold our 2019 annual meeting of stockholders at 9:00 a.m. on Monday, May 6, 2019 at the Hyatt Regency Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870. The Notice of Meeting and Proxy Statement and accompanying proxy card describe in detail the matters to be acted upon at the meeting.

It is important that your shares be represented at the meeting. Whether or not you plan to attend, please submit a proxy through one of the three convenient methods described in this proxy statement in order for your shares to be voted at the meeting. Your vote is important so please act at your first opportunity.

We have elected to furnish proxy materials and the Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2018, to many of our stockholders via the Internet pursuant to Securities and Exchange Commission rules. We urge you to review those materials as well as our proxy statement for information on our financial results and business operations over the past year. The Internet availability of our proxy materials affords us an opportunity to reduce costs while providing stockholders the information they need. On or about March 22, 2019, we started mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and annual report and how to submit a proxy online along with instructions on how to receive a printed copy of the proxy statement and annual report. We provided a copy of the annual meeting materials to all other stockholders by mail or through electronic delivery.

If you receive your annual meeting materials by mail, the Notice of Meeting and Proxy Statement, Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2018 and proxy card are enclosed. Whether or not you plan to attend the annual meeting in person, please mark, sign, date and return your proxy card in the enclosed prepaid envelope, or submit your proxy via telephone or the Internet, as soon as possible in order for your shares to be voted at the meeting. If you received your annual meeting materials via e-mail, the e-mail contains voting instructions and links to the proxy statement and annual report on the Internet, which are also available at www.proxyvote.com. If you decide to attend the annual meeting and wish to change your vote, you may do so by submitting a later dated proxy or by voting in person at the annual meeting.

We look forward to seeing you at the meeting.

Michael I. Roth
Non-Executive Chairman of the Board

Stamford, Connecticut
March 15, 2019

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Notice of Meeting:

   

Annual Meeting Information
Time and Date:
Monday, May 6, 2019 at 9:00 a.m.
Place:
Hyatt Regency Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870
Requirements for Attending the Meeting:
Admission ticket, which is attached to your proxy card, or Notice of Internet Availability of Proxy Materials, together with a form of valid, government-issued photo identification, such as a driver’s license. If your shares are held in the name of a bank, broker or nominee, you must present proof of your ownership as of the record date (such as bank or brokerage account statement).
Record Date:
March 8, 2019
Voting:
Registered stockholders as of the record date (March 8, 2019) are entitled to submit proxies by Internet at www.proxyvote.com; telephone at 1-800-690-6903; or completing your proxy card; or you may vote in person at the annual meeting. If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on voting methods.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 6, 2019:

Pitney Bowes’ 2019 Proxy Statement and Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2018, are available at www.proxyvote.com.

The items of business at the annual meeting are:

1.Election of 10 directors named in the proxy statement.
2.Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2019.
3.Non-binding Advisory Vote to Approve Executive Compensation.
4.Approval of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan.

Stockholders also will act on such other matters as may properly come before the meeting, including any adjournment or postponement of the meeting.

March 8, 2019 is the record date for the meeting.

This proxy statement and accompanying proxy card are first being distributed or made available via the Internet beginning on or about March 22, 2019.

Daniel J. Goldstein
Executive Vice President, Chief Legal Officer & Corporate Secretary

   

NOTICE: Your vote is important. Brokers are not permitted to vote on any proposals to be considered at the meeting except on proposal 2, ratification of the Audit Committee’s appointment of the Independent Accountants for 2019, without instructions from the beneficial owner. Therefore, if your shares are held through a broker, please instruct your broker, bank or other nominee on how to vote your shares. For your vote to be counted with respect to each of the proposals, you will need to communicate your voting decisions to your broker, bank, financial institution or other nominee.

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PROXY SUMMARY

Proxy Summary - Meeting Agenda Items
Proposal 1: Election of Directors

You are being asked to elect 10 directors, which constitute the entire board. Each of the director nominees is standing for election for a one-year term ending at the next annual meeting of stockholders in 2020 and until his or her successor has been duly elected and qualified.

All current directors attended at least 75% of the meetings of the board and board committees on which they served in 2018.

The board of directors recommends that stockholders vote FOR the election of all the director nominees.

Proposal 2: Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2019

The board is asking stockholders to ratify the selection of PricewaterhouseCoopers LLP as our independent accountants for 2019.

The board of directors recommends that stockholders vote FOR the ratification of PricewaterhouseCoopers LLP as our independent accountants for 2019.

Proposal 3: Non-binding Advisory Vote to Approve Executive Compensation

The board is asking stockholders to approve, on a non-binding advisory basis, the compensation of the named executive officers as disclosed in this proxy statement. The board has determined to hold this advisory vote on an annual basis. The next advisory vote is expected to take place at the 2020 annual meeting of stockholders.

The board of directors recommends that stockholders vote FOR the approval of executive compensation on an advisory basis.

Proposal 4: Approval of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan

The board is asking stockholders to approve the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan (the “Plan”). The Plan will govern grants of stock-based awards to employees and authorize a maximum of 15,919,041 shares, including the 8,500,000 additional shares sought in this amendment, (subject to the adjustment as described in Proposal 4) in addition to any shares associated with outstanding awards under this Plan or prior plans that cease to be subject to such awards. The amendments are as follows: (i) increase the number of shares issuable under the Plan, (ii) incorporate a fungible share design (to replace the current full value share limit), (iii) apply a minimum vesting period of one year for all future awards, and (iv) update the limit on maximum allowable shares per person per year upon approval of the Plan.

The board of directors recommends that stockholders vote FOR the proposal to approve the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan.

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Annual Meeting Information

 

   

The Annual Meeting and Voting

Our board of directors is soliciting proxies to be used at the annual meeting of stockholders to be held on May 6, 2019, at 9:00 a.m. at the Hyatt Regency Hotel, 1800 East Putnam Avenue, Old Greenwich, Connecticut 06870, and at any adjournment or postponement of the meeting. This proxy statement contains information about the items being voted on at the annual meeting.

Annual Meeting Admission

An admission ticket, which is required for entry into the annual meeting, is attached to your proxy card if you hold shares directly in your name as a registered stockholder. If you plan to attend the annual meeting, please submit your proxy but keep the admission ticket and bring it to the annual meeting.

If your shares are held in the name of a bank, broker or nominee and you plan to attend the meeting, you must present proof of your ownership of Pitney Bowes stock as of the record date (such as a bank or brokerage account statement) to be admitted to the meeting.

If you have received a Notice of Internet Availability of Proxy Materials (a “Notice”), your Notice is your admission ticket. If you plan to attend the annual meeting, please submit your proxy, but keep the Notice and bring it to the annual meeting.

Stockholders also must present a form of photo identification, such as a driver’s license, in order to be admitted to the annual meeting. No cameras, recording equipment, large bags, or packages will be permitted in the annual meeting. Many cellular phones have built-in cameras, and, while these phones may be brought into the annual meeting, neither the camera nor the recording functions may be used at any time.

For directions to the meeting, you may contact our Investor Relations group at, Pitney Bowes Inc., 3001 Summer Street, Stamford, Connecticut 06926.

Outstanding Shares and Vote Entitlement

Each share of Pitney Bowes common stock has one vote. In addition, we have two classes of preferred stock issued and outstanding: the 4% Preferred Stock and the $2.12 Preference Stock. The 4% Preferred Stock can be converted into 24.24 shares of common stock in certain events but does not carry any voting rights. As of March 8, 2019 (the record date), there were twelve shares of the 4% Preference Stock outstanding. The $2.12 Preference Stock can be converted into 16.53 shares of common stock in certain events and each share of the $2.12 Preference Stock carries with it 16.53

votes. Record holders of the common stock and the Preference Stock at the close of business on the record date of March 8, 2019 can vote at the meeting. As of the record date, 185,108,729 shares of common stock, and 14,319 shares of the $2.12 Preference Stock were issued and outstanding. If converted into common stock, the twelve shares of 4% preferred stock would be converted into 290 shares of common stock. The 14,319 shares of $2.12 Preference Stock can be converted into 236,693 shares of common stock.

How do I vote?

If you are a registered stockholder, which means you hold shares in your name, you may choose one of three methods to submit your proxy to have your shares voted:

you may submit your proxy on-line via the Internet by accessing the following website and following the instructions provided: www.proxyvote.com;
you may submit your proxy by telephone by calling 1-800-690-6903; or
if you received your annual meeting material by mail, you also may choose to grant your proxy by completing and mailing the proxy card.

Alternatively, you may attend the meeting and vote your shares in person.

If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on voting methods. Please note that if you are a beneficial owner and you wish to vote in person at the meeting, you must first obtain a legal proxy issued in your name from the broker, bank, trustee or other nominee that holds your shares.

May I revoke my proxy or change my vote?

If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your proxy is voted at the annual meeting by any of the following methods:

you may send in a revised proxy dated later than the first proxy;
you may vote in person at the meeting; or
you may notify the Corporate Secretary in writing prior to the meeting that you have revoked your proxy.

Attendance at the meeting alone will not revoke your proxy.

If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on how to revoke your proxy or change your vote.

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GENERAL INFORMATION

What constitutes a quorum?

The holders of shares representing a majority of the votes entitled to be cast at the annual meeting constitutes a quorum. If you submit your proxy by Internet, telephone or proxy card, you will be considered part of the quorum. Abstentions and broker non-votes are included in the count to determine a quorum.

What vote is required for a proposal to pass?

If a quorum is present, director candidates receiving the affirmative vote of a majority of votes cast will be elected. Proposals 2, 3 and 4 will be approved if a quorum is present and a majority of the votes cast by the stockholders are voted for the proposal.

How are votes counted?

You may vote “for”, “against” or “abstain” with respect to each of the proposals presented. A vote “for” will be counted in favor of the proposal or respective director nominee and a vote “against” will be counted against each proposal or respective nominee.

Your broker is not permitted to vote on your behalf on any proposals to be considered at the meeting except on proposal 2, the ratification of the selection of PricewaterhouseCoopers LLP as independent accountants for 2019, unless you provide specific instructions by completing and returning the voting instruction form or following the instructions provided to you to vote your stock via telephone or the Internet. If you do not own your shares of record, for your vote to be counted with respect to proposals 1, 3 or 4, you will need to communicate your voting decisions to your broker, bank, financial institution or other nominee.

Under New York Stock Exchange rules, if your broker holds your shares in its “street” name, the broker may vote your shares in its discretion on proposal 2 if it does not receive instructions from you.

If your broker does not have discretionary voting authority and you do not provide voting instructions, or if you abstain on one or more agenda items, the effect would be as follows:

Proposal 1: Election of Directors

Broker non-votes and abstentions would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes and abstentions will have no effect in the election of directors.

Proposal 2: Ratification of Audit Committee’s Appointment of the Independent Accountants for 2018

If you choose to abstain in the ratification of the Audit Committee’s selection of the independent accountants for 2019, the abstention will have no effect on the ratification of the Audit Committee’s selection of the independent accountants for 2019.

Proposal 3: Non-binding Advisory Vote to Approve Executive Compensation

The vote to approve executive compensation is an advisory vote and the results will not be binding on the board of directors or the Company. The board of directors will review the results and take them into consideration when making future decisions regarding executive compensation. Broker non-votes and abstentions are not considered votes cast and therefore will not be counted either for or against. As a result, broker non-votes and abstentions will have no effect on the advisory vote to approve executive compensation.

Proposal 4: Approval of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan

Broker non-votes are not considered votes cast and therefore will not be counted either for or against this proposal. With respect to abstentions, for purposes of approval under our By-laws, abstentions are not considered votes cast and therefore will not be counted either for or against; however, for purposes of approval under New York Stock Exchange rules, abstentions are treated as votes cast, and, therefore, will have the same effect as an “against” vote.

How do Dividend Reinvestment Plan participants or employees with shares in the 401(k) plans vote by proxy?

If you are a registered stockholder and participate in our Dividend Reinvestment Plan, or our employee 401(k) plans, your proxy includes the number of shares acquired through the Dividend Reinvestment Plan and/or credited to your 401(k) plan account.

Shares held in our 401(k) plans are voted by the plan trustee in accordance with voting instructions received from plan participants. The plans direct the trustee to vote shares for which no instructions are received in the same proportion (for, against or abstain) indicated by the voting instructions given by participants in the plans.

Who will count the votes?

Broadridge Financial Solutions, Inc. (Broadridge) will tabulate the votes and act as Inspector of Election.

Want more copies of the proxy statement? Getting too many copies?

Only one Notice or, if paper copies are requested, only one proxy statement and annual report to stockholders including the report on Form 10-K are delivered to multiple stockholders sharing an address unless one or more of the stockholders provide contrary instructions to us or, if applicable, to your bank or broker. This process is commonly referred to as “householding”.

You may request to receive a separate copy of these materials, and we will promptly deliver the requested materials.

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GENERAL INFORMATION

Similarly, you may request to receive a separate copy of these materials in the future, or if you are receiving multiple copies, you may request delivery of a single copy in the future.

Requests can be made to:

Broadridge Householding Department by phone at 1-866-540-7095 or by mail to:

Broadridge Householding Department
51 Mercedes Way
Edgewood, New York 11717.

If you own shares of stock through a bank, broker or other nominee, please notify that entity if you no longer wish to participate in householding and would prefer to receive a separate copy of these materials, or if you are receiving duplicate copies of these materials and wish to have householding apply.

Additional copies of our annual report to stockholders, including the report on Form 10-K or the proxy statement will be sent to stockholders free of charge upon written request to:

Investor Relations, Pitney Bowes Inc.
3001 Summer Street
Stamford, CT 06926-0700.

Want Electronic Delivery of the Annual Report and Proxy Statement?

We want to communicate with you in the way you prefer. You may receive:

GENERAL INFORMATION

a Notice of Internet Availability of Proxy Materials or a full set of printed materials, including the proxy statement, annual report and proxy card; or
an email with instructions for how to view the annual meeting materials and vote online.

If you received the Notice of Internet Availability of Proxy Materials or a full set of annual meeting materials by mail, you may choose to receive future annual meeting materials electronically by following the instructions when you vote online or by telephone. With electronic delivery, you will receive an e-mail for future meetings listing the website locations of these documents and your choice to receive annual meeting materials electronically

will remain in effect until you notify us that you wish to resume mail delivery of these documents. If you hold your Pitney Bowes stock through a bank, broker, trustee or other nominee, you should refer to the information provided by that entity for instructions on how to elect this option. This proxy statement and our 2018 annual report may be viewed online at www.pitneybowes.com.

Stockholder Proposals and Other Business for the 2020 Annual Meeting

If a stockholder wants to submit a proposal for inclusion in our proxy material for the 2020 annual meeting, which is scheduled to be held on Monday, May 4, 2020, it must be received by the Corporate Secretary by the close of business on November 16, 2019. Also, under our By-laws, a stockholder can present other business at an annual meeting, including the nomination of candidates for director, only if written notice of the business or candidates is received by the Corporate Secretary no earlier than the close of business on January 7, 2020 and no later than the close of business on February 6, 2020. However, in the event that the date of the 2020 annual meeting is more than 30 days before or more than 60 days after the anniversary of our 2019 annual meeting, then the stockholder’s notice must be delivered no earlier than the close of business on the 120th day prior to the meeting and no later than the close of business on the later of the 90th day prior to the meeting or, if the first public announcement of the date of the annual meeting is less than 100 days prior to the date of such meeting, the 10th day after the first public announcement of the meeting date. There are other procedural requirements in the By-laws pertaining to stockholder proposals and director nominations. The By-laws are posted on our Corporate Governance website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance.” If notice of a matter is not received within the applicable deadlines or does not comply with the By-laws, the chairman of the meeting may refuse to introduce such matter. If a stockholder does not meet these deadlines, or does not satisfy the requirements of Rule 14a-4 of the Securities Exchange Act of 1934, the persons named as proxies will be allowed to use their discretionary voting authority when and if the matter is raised at the annual meeting.

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GENERAL INFORMATION

Corporate Governance

 

   

We encourage stockholders to visit our Corporate Governance website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance” for information concerning governance practices, including the Governance Principles of the board of directors, charters of the committees of the board, and the directors’ Code of Business Conduct and Ethics. Our Business Practices Guidelines, which is the Code of Ethics for employees, including our Chief Executive Officer (CEO) and our named executive officers (NEOs), is also available at “Our Company—Corporate Responsibility—Values & Ethics.” We intend to disclose any future amendments or waivers to certain provisions of the directors’ Code of Business Conduct and Ethics or the Business Practices Guidelines on our website within four business days following the date of such amendment or waiver.

Investor Outreach. It is our practice to contact many of our stockholders over the course of the year to seek their views on various governance topics and executive compensation matters. The key elements of our stockholder outreach program are (i) Investor Day Meeting, (ii) the corporate governance outreach program, and (iii) the Annual Stockholders Meeting. Our comprehensive stockholder engagement program is supplemented by

our year-round investor relations outreach program that includes post-earnings communications, roadshows, one-on-one conferences, group meetings and general availability to respond to investor inquiries. The multifaceted nature of this program allows us to maintain meaningful engagement with a broad audience including large institutional investors, smaller to mid-size institutions, pension funds, advisory firms, and individual investors. In the spring of 2018, we reached out to stockholders representing approximately 50% of outstanding company shares, and in the fall 2018, we reached out to stockholders representing approximately 50% of outstanding company shares. We value the feedback we receive concerning the board’s leadership structure, governance practices, the company’s proxy statement, and emerging governance and executive compensation. With those stockholders who responded to our invitation in 2018, we discussed corporate governance practices, executive compensation policies and our approach to the board’s role in risk mitigation oversight, including its oversight of our cybersecurity efforts and board composition. Our investors generally have provided positive feedback on these topics. Refer to section Stockholder Engagement—Executive Compensation on page 45 for further details regarding Investor Outreach.

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GENERAL INFORMATION

Key Corporate Governance Practices Enhancing the Board’s Independent
Leadership, Accountability and Oversight
   
 
Separate Chairman and CEO. Our Governance Principles include well-defined responsibilities, qualifications and selection criteria with respect to the Chairman role. The board has appointed Michael I. Roth, an independent director, as Non-Executive Chairman. In addition to chairing the Executive and Finance Committees, Mr. Roth is a member of the Audit Committee and attends most of the other board committee meetings as well.
   
 
Independent Committees. The board of directors has determined that all board committees, other than the Executive Committee, should consist entirely of independent directors.
   
 
Executive Sessions. Our independent directors meet without the CEO or other members of management to discuss issues, including matters concerning management. The Non-Executive Chairman presides at these executive sessions.
   
 
Majority Voting in Director Elections. Our By-laws provide that in uncontested elections, director nominees must be elected by a majority of the votes cast.
   
 
Annual Election of Directors. Our By-laws provide that our stockholders elect all directors annually.
   
 
Stock Holding Requirements. Within five years of becoming a director, each board member is expected to accumulate and hold company common stock having a minimum aggregate market value of five times the annual base cash retainer.
   
 
No Hedging or Pledging. Directors may not pledge or transfer for value Pitney Bowes securities, engage in short-term speculative (“in and out”) trading in Pitney Bowes securities, or participate in hedging and other derivative transactions, including short sales, “put” or “call” options, swaps, collars or similar derivative transactions, with respect to Pitney Bowes securities.
   
 
Annual Assessments. Every year, the full board, as well as each board committee, conducts a self-assessment to evaluate all aspects of the board or board committee, including the members of the board and the board’s leadership. Each committee as well as the full board reviews and discusses the self-assessments and implements any appropriate action. In some years, the board engages a third party advisor for assistance in the self-assessment, as it did in 2016. The third-party advisor provides feedback in separate discussions with the full board and the Governance Committee as well as in individual discussions with the Chairman and with the Chair of the Governance Committee.

   

Board of Directors

   

Leadership Structure

 

   

The board of directors has separated the roles of Chairman and CEO. Michael I. Roth, an independent director, is our Non-Executive Chairman of the board of directors. The board of directors believes it should have the flexibility to establish a leadership structure that works best for the company at a particular time, and it reviews that structure from time to time, including in the context of a change in leadership. The board believes that its current leadership structure best serves the objective of effective board oversight of management at this time and allows our CEO to focus primarily on the operations and management of the company, while leveraging the experience of the Non-Executive Chairman to lead the board.

In addition to his responsibilities in chairing the meetings of the board and of the Finance and Executive Committees, Mr. Roth is a member of the Audit Committee and

attends most of the meetings of the two committees on which he is not a member. Mr. Roth is also actively involved as an advisor to the Chief Executive Officer through frequent conversations, bringing to bear his experiences as a CEO and his experiences from his service on other boards.

The board of directors has established well-defined responsibilities, qualifications and selection criteria with respect to the Chairman role. This information is set forth in detail in the Governance Principles of the Board of Directors, which can be found on our website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance.”

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CORPORATE GOVERNANCE

Management Succession Planning

 

   

Among the board’s most important responsibilities is to oversee short and long-term succession planning and leadership development. As part of this process, the Governance Committee oversees long-term and short-term plans for CEO succession. The board of directors is responsible for evaluating the performance of the CEO and for selection of successors to that position. The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, operational excellence, financial management, ability to motivate employees, and an ability to develop an effective working relationship with the board. The Governance Principles of the Board of Directors, which are posted on the company’s website at www.pitneybowes.com under the caption “Our

Company—Our Leadership & Governance—Corporate Governance,” include additional information about succession planning.

Periodically, but not less than annually, the board of directors considers management’s recommendations concerning succession planning for senior management roles other than the role of CEO. As part of this process, the board reviews development plans to strengthen and supplement the skills and qualifications of internal succession candidates.

As a result of these processes, the company announced several senior management changes in 2018. These are discussed in the Compensation Discussion & Analysis (CD&A) section beginning on page 39.

Board Composition, Skills and Experience Review, and Board Succession Planning

 

   

The Governance Committee periodically updates and reviews the skills and types of experience that should be represented on the board of directors in light of the company’s current business needs and future strategy. The committee then compares these desired skills and experiences to those which current board members possess to determine whether all the identified skills and experience are sufficiently represented on the board. Based upon its review, and on its discussion with the CEO, the committee may recommend to the board that additional expertise is advisable. The committee would then develop for the board’s consideration a skills and experience profile to be used in identifying additional board candidates as appropriate.

The board believes that, in planning for board succession, it is advisable to maintain a board that includes both experienced directors with extensive knowledge of the company’s businesses, as well as newer directors who can refresh the board’s collective experience and expertise as business needs require. The board, as well as each of its committees, circulates to its members on an annual basis a performance assessment questionnaire. The results of the assessment are reviewed by the respective committees, with a view toward taking action to address issues presented. The Governance Committee assesses the contributions of each director annually, and determines the skill set required for new members joining the board.

The board of directors and the Governance Committee , after reviewing evolving views on board composition and turnover and hearing input from shareholders, has decided to change the section of its Governance Principles relating to board succession. Instead of relying on a mandatory retirement age, the board has decided to use a different approach to maintaining an orderly turnover of members of the board over time, with the goal of having a mix of years of tenure on the board between those who have served shorter term, medium term and

longer term. To achieve this goal, the Governance Committee will focus on the range, median, and mean tenures of the board to go along with other factors it considers in its board turnover. The Governance Committee will also consider factors such as board size and the advisability of overlapping terms for board members leaving or joining the board. These will be in addition to the Governance Committee’s consideration of each director’s skills and the skills of the collective board, each director’s contribution to the board, diversity and the company’s long-term strategy and business needs. The Governance Committee will conduct this review on an annual basis.

Consistent with this approach and their own individual circumstances, three current directors have decided not to stand for re-election this year: Linda Alvarado, Eduardo Menascé and David Snow. The board appreciates the leadership and strategic vision they have provided the company over the course of their respective tenures on the board. In addition, the board added two directors last year, Mary J. Steele Guilfoile, who has expertise in the area of financial services and retail banking as well as experience as a member of other public company audit committees, and Robert M. Dutkowsky, who has experience in the areas of technology as a recent CEO and Board Chairman, and expertise in running and operating a business. Ms. Guilfoile and Mr. Dutkowsky were brought to the attention of the Governance Committee by a non-management Director or the CEO. After being interviewed by various members of the board and Governance Committee, Ms. Guilfoile and Mr. Dutkowsky were appointed to the board in July 2018. As of the 2018 Annual Meeting, our average board tenure was 13 years. Upon the election of the proposed slate of directors, and in light of the additions of Ms. Guilfoile and Mr. Dutkowsky to the board and the fact that Ms. Alvarado, Mr. Menascé and Mr. Snow are not standing for re-election, the average board tenure will be 9 years.

The board reviewed its size and determined that a board of 10 members is appropriate at this time. That change will become effective at the time of the Annual Meeting.

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CORPORATE GOVERNANCE

Role of the Board of Directors in Risk Oversight

 

   

The board of directors is responsible for oversight of the risk assessment and risk management process. Management is responsible for risk management, including identification and mitigation planning. The company has an enterprise risk management process to identify, assess, monitor and address risks across the entire company and its business operations. The description, assessments, mitigation plan and status for each enterprise risk are developed and monitored by management, including management “risk owners” and an oversight management risk committee.

Both the Audit Committee and the entire board review on an ongoing basis the structure of the company’s enterprise risk management program, including the overall process by which management identifies and manages risks. As part of this review, the board regularly provides feedback to management on its view of ways to continually improve the program. Upon the recommendation of the Governance Committee, the board of directors assigns oversight responsibility for each of the enterprise-wide risks to either a specific committee of the board, or to the full board. The board and each committee, with the exception of the Executive Committee, are responsible for oversight of one or more risks. The assignments are generally made based upon the type of enterprise risk and the linkage of the subject matter to the responsibilities of the committee as described in its charter or the nature of the enterprise risk warranting review by the full board. For example, the Finance Committee oversees risks relating to liquidity, the Audit Committee oversees risks relating to internal controls and the

Executive Compensation Committee reviews risk analyses relating to the company’s compensation programs. With respect to cybersecurity, management, (comprised of members from multiple disciplines in the company, including Information Technology, Research and Development, Legal, Privacy, and Internal Audit) provides a detailed overview first to the Audit Committee and then again to the full board of the company’s cybersecurity efforts and management of that risk. Under its Charter, the Audit Committee has oversight of the enterprise risks relating to Information Technology function generally, and cybersecurity in particular.

Each enterprise risk and its related mitigation plan is reviewed by either the board of directors or the designated board committee on an annual basis. On an annual basis, the board of directors receives a report on the status of all enterprise risks and their related mitigation plans.

Management monitors the risks and determines, from time to time, whether new risks should be considered either due to changes in the external environment, changes in the company’s business, or for other reasons. Management also determines whether previously identified risks should be combined with new or emerging risks.

In addition to the formal components of the enterprise risk management program, management explicitly discusses risks with the board within the context of other topics, such as the company’s and individual unit strategies and specific aspects of the company’s current transformation efforts.

Director Independence

 

   

The board of directors conducts an annual review of the independence of each director under the New York Stock Exchange listing standards and our standards of independence, which are set forth in the Governance Principles of the Board of Directors available on our website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance.” In making these determinations, the board of directors considers, among other things, whether any director or the director’s immediate family members have had any direct or indirect material relationship with Pitney Bowes or its management, including

current or past employment with Pitney Bowes or its independent accountants.

Based upon its review, the board of directors has concluded in its business judgment that the following directors are independent: Linda G. Alvarado, Anne M. Busquet, Robert M. Dutkowsky, Roger Fradin, Anne Sutherland Fuchs, Mary J. Steele Guilfoile, S. Douglas Hutcheson, Eduardo R. Menascé, Michael I. Roth, Linda S. Sanford, David L. Shedlarz, and David B. Snow, Jr.

Marc B. Lautenbach is not independent because he is a Pitney Bowes executive officer.

Communications with the Board of Directors

 

   

Stockholders and other interested parties may communicate with the Non-Executive Chairman of the board via e-mail at boardchairman@pb.com, the Audit Committee chair via e-mail at audit.chair@pb.com or they may write to one or more directors, care of the Corporate Secretary, Pitney Bowes Inc., 3001 Summer Street, Stamford, CT 06926-0700.

The board of directors has instructed the Corporate Secretary to assist the Non-Executive Chairman, Audit Committee chair and the board in reviewing all electronic and written communications, as described above, as follows:

(i)Customer, vendor or employee complaints or concerns are investigated by management and copies are forwarded to the Chairman;

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(ii)If any complaints or similar communications regarding accounting, internal accounting controls or auditing matters are received, they will be forwarded by the Corporate Secretary to the General Auditor and to the Audit Committee chair for review and copies will be forwarded to the Chairman. Any such matter will be investigated in accordance with the procedures established by the Audit Committee; and
(iii)Other communications raising matters that require investigation will be shared with appropriate members of management in order to permit the gathering of information relevant to the directors’ review, and will be forwarded to the director or directors to whom the communication was addressed.

Except as provided above, the Corporate Secretary will forward appropriate written communications, as applicable to the full board of directors, or to individual directors. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.

   

Board Committees and Meeting Attendance

   

During 2018, each director attended at least 75% of the total number of board meetings and meetings held by the board committees on which he or she served. The board of directors met eight times in 2018, and the independent directors met in executive session, without any member of management in attendance at the six in person board meetings. Each member of the board of directors serves on one or more of the five standing committees described below. As the need arises, the board may establish ad hoc committees of the board to consider specific issues. Mr. Lautenbach is a member of the Executive Committee.

The members of all other board committees are independent directors pursuant to New York Stock Exchange independence standards. Each committee of the board operates in accordance with a charter. The members of each of the board committees, and the number of meetings for each committee in 2018, are set forth in the chart below.

It is the longstanding practice and the policy of the board of directors that the directors attend the annual meeting of stockholders. All directors then serving on the board other than Mr. Menascé, attended the May 2018 annual meeting.

Name
Audit
Executive
Executive
Compensation
Finance
Governance
Linda G. Alvarado
 
 
 
X
X
Anne M. Busquet
 
 
X
 
X
Robert M. Dutkowsky
 
 
X
 
X
Roger Fradin
X
 
 
X
 
Anne Sutherland Fuchs
 
 
X
 
X
Mary J. Steele Guilfoile
X
 
 
X
 
S. Douglas Hutcheson
X
 
 
X
 
Marc B. Lautenbach
 
X
 
 
 
Eduardo R. Menascé
 
X
Chair
 
X
Michael I. Roth
X
Chair
 
Chair
 
Linda S. Sanford
X
 
X
 
 
David L. Shedlarz
Chair
X
 
X
 
David B. Snow, Jr.
 
X
X
 
Chair
Number of meetings in 2018
6
1
7
4
5

Audit Committee

 

   

The Audit Committee monitors our financial reporting standards and practices and our internal financial controls to confirm compliance with the policies and objectives established by the board of directors and oversees our ethics and compliance programs. The committee appoints independent accountants to conduct the annual audits, and discusses with our independent accountants the scope of their examinations, with particular attention to areas where either the committee or the independent accountants believe special emphasis should be directed. The committee reviews the annual financial statements and independent accountant’s report, invites the independent accountant’s recommendations on

internal controls and on other matters, and reviews the evaluation given and corrective action taken by management. It reviews the independence of the independent accountants and approves their fees. It also reviews our internal accounting controls and the scope and results of our internal auditing activities, and submits reports and proposals on these matters to the board. The committee is also responsible for overseeing the process by which management identifies and manages the company’s risks. The committee meets in executive session with the independent accountants and internal auditor at each committee meeting.

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The Audit Committee also has oversight over the information technology function, cybersecurity risks as well as compliance generally. The Audit Committee regularly discusses cybersecurity with leaders of the technology, information security, privacy and audit functions.

The board of directors has determined that the following members of the Audit Committee are “audit committee

financial experts,” as that term is defined by the SEC: Mary J. Steele Guilfoile, S. Douglas Hutcheson, Michael I. Roth and David L. Shedlarz. All Audit Committee members are independent as defined under the New York Stock Exchange and SEC standards for Audit Committee independence.

Executive Committee

 

   

The Executive Committee can act, to the extent permitted by applicable law and the company’s Restated Certificate of Incorporation and its By-laws, on matters concerning management of the business which may arise between scheduled board of directors meetings and as described in the committee’s charter. The committee meets on an ad hoc basis when circumstances necessitate.

Executive Compensation Committee

 

   

The Executive Compensation Committee (“Committee”) is responsible for our executive compensation policies and programs. The Committee chair frequently consults with, and the Committee meets in executive session with, Pay Governance LLC, its independent compensation consultant. The Committee recommends to all of the independent directors for final approval policies, programs and specific actions regarding the compensation of the CEO, and approves the same for all of our other

executive officers. The Committee also recommends the “Compensation Discussion and Analysis” for inclusion in our proxy statement, in accordance with the rules and regulations of the SEC, and reviews and approves stock grants and other stock-based compensation awards. All Executive Compensation Committee members are independent as independence for compensation committee members is defined under New York Stock Exchange and SEC standards.

Finance Committee

 

   

The Finance Committee reviews our financial condition and capital structure, and evaluates significant financial policies and activities, oversees our major retirement programs, advises management and recommends financial action to the board of directors. The committee’s duties include monitoring our current and projected financial condition, reviewing and recommending for board approval quarterly dividends, share repurchases,

and other major investment decisions including financing, mergers and acquisitions, divestitures and overseeing the financial operations of our retirement plans. The committee recommends for approval by the board of directors the establishment of new retirement and post-retirement benefit plans and any amendments that materially affect cost, benefit coverages, or liabilities of the plans.

Governance Committee

 

   

The Governance Committee recommends nominees for election to the board of directors, recommends membership in, and functions of, the board committees, reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board, and oversees CEO and senior management succession planning. The Governance Principles of the Board of Directors, which are posted on our website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance,” include additional information about succession planning. The committee reviews and evaluates the effectiveness of board administration and its governing documents, and reviews and monitors company programs and policies relating to directors. The committee reviews related-person transactions in accordance with company policy.

The Governance Committee generally identifies qualified candidates for nomination for election to the board of directors from a variety of sources, including other board

members, management and stockholders. The committee also may retain a third-party search firm to assist the committee members in identifying and evaluating potential nominees to the board of directors.

Stockholders wishing to recommend a candidate for consideration by the Governance Committee may do so by writing to: c/o Corporate Secretary, Pitney Bowes Inc., 3001 Summer Street, Stamford, CT 06926-0700. Recommendations submitted for consideration by the committee must contain the following information: (i) the name and address of the stockholder; (ii) the name and address of the person to be nominated; (iii) a representation that the stockholder is a holder of our stock entitled to vote at the meeting; (iv) a statement in support of the stockholder’s recommendation, including a description of the candidate’s qualifications; (v) information regarding the candidate as would be required to be included in a proxy statement filed in accordance with the rules of the SEC; and (vi) the candidate’s written, signed consent to serve if elected.

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The Governance Committee evaluates candidates stockholders recommend based on the same criteria it uses to evaluate candidates from other sources. The Governance Principles of the Board of Directors, which are posted on our Corporate Governance website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance,” include a description of director qualifications. A discussion of the specific experience and qualifications the committee identified for directors and nominees may be found under “Director Qualifications” on page 21 of this proxy statement.

If the Governance Committee believes that a potential candidate may be appropriate for recommendation to the board of directors, there is generally a mutual exploration process, during which the committee seeks to learn more about the candidate’s qualifications, background and interest in serving on the board of directors, and the candidate has the opportunity to learn more about the company, the board, and its governance practices. The final selection of the board’s nominees is within the sole discretion of the board of directors.

Alternatively, as referenced on page 8 of this proxy statement, stockholders intending to nominate a candidate for election by the stockholders at the meeting must comply with the procedures in Article I, Section 5 of the company’s By-laws. The By-laws are posted on our Corporate Governance website at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance.”

The Governance Committee assesses the contributions of each director annually, and determines the skill set for any new board members. Each committee also conducts an annual self-assessment of its performance.

The board also periodically hires an outside advisor to conduct an independent review of board effectiveness.

In addition, the board of directors and the Governance Committee has revised its Governance Principles, to be effective as of the annual meeting. As discussed on page 11, to reflect evolving views of board composition and turnover and reflecting input from shareholders, the board will no longer have a mandatory retirement age, but instead will conduct an annual review of board composition.

   

Directors’ Compensation

   

Role of Governance Committee in Determining Director Compensation

 

   

In accordance with the Governance Principles of the board, the Governance Committee reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board of directors. The Governance Committee reviews the director compensation policy periodically and may consult from time to time with a compensation consultant, to be selected and retained by the committee, as to the competitiveness of the program.

The non-employee directors’ compensation program, including the amended and restated Directors’ Stock

Plan, was last revised and approved by the stockholders effective in May 2014. At that time, the Governance Committee retained an independent compensation consultant with no other company business, Farient Advisors, to assist in its review of the director compensation program.

The Governance Committee targets director compensation to be at approximately the 50th percentile of the total compensation in the peer and broader benchmark groups and used that benchmark in establishing the 2014 compensation levels.

Highlights of the Directors’ Compensation Program:

 

   

Cash component paid as an annual retainer
Leadership premiums paid to Committee Chairmen
Leadership premium paid to Chairman of the board
Annual equity grant in the form of restricted stock units, the number of which is calculated by dividing $100,000 by the fair market value of a share of the company’s common stock as of the award date
Each non-employee director is subject to a stock ownership requirement equal to five times the annual cash retainer, $375,000, to be attained over a five-year period

Directors’ Fees

 

   

Each non-employee director receives an annual retainer of $75,000 for board service and an additional retainer for service on the committees to which he or she is assigned. The Non-Executive Chairman of the Board receives an additional retainer of $100,000 commensurate with the additional responsibilities required of the chairman role.

Annual retainers for committee service are: $12,000 for service on the Audit Committee (with the Committee Chairman receiving an additional annual retainer of $12,000); $10,500 for service on the Executive Compensation Committee (with the Committee Chairman receiving an additional annual retainer of $10,500); $9,000 for

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service on the Governance Committee (with the Committee Chairman receiving an additional annual retainer of $9,000); and $9,000 for service on the Finance Committee (with the Committee Chairman receiving an additional annual retainer of $9,000).

A meeting attendance fee of $2,000 is paid with respect to meetings of the Executive Committee. The Executive Committee met once in 2018.

All directors are reimbursed for their out-of-pocket expenses incurred in attending board and committee meetings.

Stock under the Director’s Compensation Program

 

   

Under the amended and restated Directors’ Stock Plan, each non-employee director received an award of restricted stock units with a fair market value of $100,000 on the date of grant, which are fully vested one year after the date of grant. (Directors appointed by the board to fill a vacancy during the year receive a prorated grant of restricted stock units as described in the Directors’ Stock Plan.) The units have no voting rights until they are converted to shares of common stock. Each non-employee director receives a quarterly cash payment equal to the amount that would have been paid as a dividend with

respect to shares represented by the restricted stock units held as of the record date for the payment of the common stock dividend. Non-employee directors may elect to defer the conversion of restricted stock units to shares until the date of termination of service as a director.

Shares shown in the table on page 19 of this proxy statement disclosing security ownership of directors and executive officers include shares granted to the directors under the Directors’ Stock Plan.

Director Stock Ownership Requirement

 

   

The board of directors maintains directors’ stock ownership guidelines, requiring, among other things, that each director accumulate and retain a minimum of company common stock with a market value of five times the base retainer, or $375,000, within five years of becoming a director of Pitney Bowes. The directors’ stock ownership

guidelines are available within the Governance Principles on our Corporate Governance web-site at www.pitneybowes.com under the caption “Our Company—Our Leadership & Governance—Corporate Governance.”

Directors’ Deferred Incentive Savings Plan

 

   

We maintain a Directors’ Deferred Incentive Savings Plan under which directors may defer all or part of the cash portion of their compensation. Deferred amounts will be notionally “invested” in any combination of several

institutional investment funds. The investment choices available to directors under this plan are the same as those offered to employees under the company’s 401(k) plan.

Directors’ Equity Deferral Plan

 

   

Directors may elect to defer all of their equity portion of their compensation on an annual basis. Deferral of restricted stock units (RSU) defers settlement of the RSUs into company common stock until termination from board service. RSU awards, whether deferred or not, vest on the first anniversary of the award. Deferred

RSUs continue to receive dividend equivalents. Deferred RSUs do not have any voting rights until converted into common stock. Deferred RSUs are converted into company common stock upon the expiration of 90 days following termination of board service.

Directors’ Retirement Plan

 

   

The board discontinued the Directors’ Retirement Plan, with all benefits previously earned by directors frozen as of May 12, 1997.

Linda G. Alvarado is the only current director who is eligible to receive a retirement benefit under the plan after termination of service on the board of directors. As of the

date the plan was frozen, she had completed five years of service as a director, the minimum years of service required to receive an annual retirement benefit of 50% of her retainer as of May 12, 1997. Therefore, she will receive an annual benefit of $15,000 after termination from board service.

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DIRECTOR COMPENSATION FOR 2018
 
Name
Fees Earned or
Paid in Cash
($)(1)
Stock
Awards
($)(2)
Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($)(3)
All Other
Compensation
($)(4)
Total ($)
 
Linda G. Alvarado
 
93,000
 
 
100,000
 
 
0
 
 
18,533
 
 
211,533
 
 
 
 
 
Anne M. Busquet
 
94,500
 
 
100,000
 
 
0
 
 
14,984
 
 
209,484
 
 
 
 
 
Robert M. Dutkowsky
 
47,250
 
 
83,013.70
 
 
0
 
 
3,358
 
 
133,622
 
 
 
 
 
Roger Fradin
 
96,000
 
 
100,000
 
 
0
 
 
12,568
 
 
208,568
 
 
 
 
 
Anne Sutherland Fuchs
 
94,500
 
 
100,000
 
 
0
 
 
7,568
 
 
202,068
 
 
 
 
 
Mary J. Steele Guilfoile
 
48,000
 
 
83,013.70
 
 
0
 
 
3,358
 
 
134,372
 
 
 
 
 
S. Douglas Hutcheson
 
96,000
 
 
100,000
 
 
0
 
 
21,395
 
 
217,395
 
 
 
 
 
Eduardo R. Menascé
 
107,000
 
 
100,000
 
 
0
 
 
17,846
 
 
224,846
 
 
 
 
 
Michael I. Roth
 
207,000
 
 
100,000
 
 
0
 
 
12,568
 
 
319,568
 
 
 
 
 
Linda S. Sanford
 
97,500
 
 
100,000
 
 
0
 
 
7,568
 
 
205,068
 
 
 
 
 
David L. Shedlarz
 
110,000
 
 
100,000
 
 
0
 
 
10,870
 
 
220,870
 
 
 
 
 
David B. Snow, Jr.
 
105,500
 
 
100,000
 
 
0
 
 
18,092
 
 
223,592
 
 
 
 
(1)
Each non-employee director receives an annual retainer of $75,000 ($18,750 per quarter). The non-executive chairman receives an additional annual retainer of $100,000 ($25,000 per quarter). Each committee member receives the following annual retainer: $12,000 for Audit, $10,500 for Executive Compensation and $9,000 each for Finance and Governance. The committee chairmen receive an additional retainer of equal amounts for their respective committees.
 
 
 
(2)
Represents the grant date fair value of 11,351 restricted stock units granted on May 7, 2018. The number of restricted stock units was derived by dividing $100,000 by $8.81, the closing price on May 7, 2018 on the New York Stock Exchange. Neither restricted stock nor stock options were awarded to non-employee directors during 2018. See Note 21 “Stock-Based Compensation” in the Notes to our Consolidated Financial Statements included in our Annual Report on Form 10-K for the year ended December 31, 2018 for the valuation assumptions used in determining the fair value of equity grants. Since the Company does not issue fractional shares, total shares issued to non-employee directors are determined by dividing $100,000 by the closing share price on May 7, 2018 and rounding to the nearest whole number.
 
 
 
(3)
Ms. Alvarado is the only non-employee director who served on the board of directors during 2018 eligible to receive payments from the discontinued Directors’ Retirement Plan. Ms. Alvarado is eligible to receive payments upon her retirement from the board of directors. In 2018, Ms. Alvarado experienced a decrease of $5,545 in her pension value. The decrease in present value in 2018 is primarily driven by the increase in discount rate (from 3.70% at December 31, 2017 to 4.35% at December 31, 2018).
 
 
 
(4)
During 2018, dividend equivalents were paid quarterly in cash to non-employee directors with respect to (a) the first quarter on the award of 6,309 restricted stock units granted in May 2017 and (b) the second, third and fourth quarter on the 11,351 restricted stock units granted in May 2018. In addition, with respect to Mmes. Alvarado and Busquet and Messrs. Hutcheson, Menascé, Shedlarz, and Snow, dividend equivalents were paid with respect to the vested restricted stock units previously deferred. Messrs. Fradin and Roth utilized the Pitney Bowes Non-Employee Director Matching Gift Program during 2018. The company matches individual contributions by non-employee directors, dollar for dollar up to a maximum of $5,000 per board member per calendar year. For Messrs. Fradin and Roth, the amount shown in this column includes a company match of $5,000 each made in 2018.
 
 
 

   

Relationships and Related-Person Transactions

   

The board of directors has a written “Policy on Approval and Ratification of Related-Person Transactions” which states that the Governance Committee is responsible for reviewing and approving any related person transactions between Pitney Bowes and its directors, nominees for director, executive officers, beneficial owners of more than five percent of any class of Pitney Bowes voting stock and their “immediate family members” as defined by the rules and regulations of the SEC (related persons).

Under the related-person transaction approval policy, any newly proposed transaction between Pitney Bowes and a related person must be submitted to the Governance Committee for approval if the amount involved in the transaction or series of transactions is greater than $120,000. Any related-person transactions that have not been pre-approved by the Governance Committee must be submitted for ratification as soon as they are identified. Ongoing related-person transactions are reviewed on an annual basis. The material facts of the transaction

and the related person’s interest in the transaction must be disclosed to the Governance Committee. It is the expectation and policy of the board of directors that any related-person transactions will be at arms’ length and on terms that are fair to the company.

If the proposed transaction involves a related person who is a Pitney Bowes director or an immediate family member of a director, that director may not participate in the deliberations or vote regarding approval or ratification of the transaction but may be counted for the purposes of determining a quorum.

The following related-person transactions do not require approval by the Governance Committee:

1.Any transaction with another company with which a related person’s only relationship is as an employee or beneficial owner of less than ten percent of that company’s shares, if the aggregate amount invested does

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not exceed the greater of $1 million or two percent of that company’s consolidated gross revenues;

2.A relationship with a firm, corporation or other entity that engages in a transaction with Pitney Bowes where the related person’s interest in the transaction arises only from his or her position as a director or limited partner of the other entity that is party to the transaction;
3.Any charitable contribution by Pitney Bowes to a charitable organization where a related person is an officer, director or trustee, if the aggregate amount involved does not exceed the greater of $1 million or two percent of the charitable organization’s consolidated gross revenues;
4.Any transaction involving a related person where the rates or charges involved are determined by competitive bids; and
5.Any transaction with a related person involving services as a bank depositary of funds, transfer agent,

registrar, trustee under a trust indenture, or similar services.

The Governance Committee may delegate authority to approve related-person transactions to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any approval or ratification decisions to the Governance Committee at its next scheduled meeting.

Stanley J. Sutula, III, Executive Vice President and Chief Financial Officer, is an executive officer of the company. His brother, Troy Sutula, holds the position of Vice President, Parcel Operations Commerce Services. The value of Troy Sutula’s annual compensation is approximately $321,462 which includes equity awarded in 2018 with an approximate fair value of $49,249.

   

Compensation Committee Interlocks and Insider Participation

   

During 2018, there were no Executive Compensation Committee interlocks and no insider participation in Executive Compensation Committee decisions that were required to be reported under the rules and regulations of the Securities Exchange Act of 1934, as amended.

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SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS

   

Title of
Class of
Stock
Name of Beneficial Owner
Shares
Deemed to
be Beneficially
Owned(1)(2)(3)(4)
Options
Exercisable
Within
60 days(4)
% of Class
Common
Linda G. Alvarado
 
58,314
 
 
16,197
 
 
 
*
Common
Anne M. Busquet
 
37,230
 
 
9,888
 
 
 
*
Common
Robert M. Dutkowsky
 
0
 
 
0
 
 
 
*
Common
Roger Fradin
 
32,947
 
 
0
 
 
 
*
Common
Anne Sutherland Fuchs
 
41,713
 
 
0
 
 
 
*
Common
Mary J. Steele Guilfoile
 
0
 
 
0
 
 
 
*
Common
S. Douglas Hutcheson
 
34,269
 
 
20,013
 
 
 
*
Common
Eduardo R. Menascé
 
44,567
 
 
13,704
 
 
 
*
Common
Michael I. Roth
 
62,884
 
 
0
 
 
 
*
Common
Linda S. Sanford
 
26,658
 
 
0
 
 
 
*
Common
David L. Shedlarz
 
47,996
 
 
4,403
 
 
 
*
Common
David B. Snow, Jr.
 
38,659
 
 
15,610
 
 
 
*
Common
Marc B. Lautenbach(5)
 
2,438,109
 
 
2,185,736
 
 
 
*
Common
Michael Monahan
 
1,165,406
 
 
941,929
 
 
 
*
Common
Stanley J. Sutula III(6)
 
441,322
 
 
431,322
 
 
 
*
Common
Jason Dies
 
99,197
 
 
83,646
 
 
 
*
Common
Robert Guidotti
 
165,926
 
 
162,521
 
 
 
*
Common
Lila Snyder
 
348,866
 
 
323,585
 
 
 
*
Common
All executive officers and directors as a group (23)
 
6,151,169
 
 
5,028,189
 
 
3.2
%

   

*
Less than 1% of Pitney Bowes Inc. common stock.
(1)
These shares represent common stock beneficially owned as of March 1, 2019 and shares for which such person has the right to acquire beneficial ownership within 60 days thereafter. To our knowledge, none of these shares are pledged as security. There were 185,905,225 shares of our common stock outstanding as of March 1, 2019. No director or executive officer owns shares of $2.12 convertible preference stock.
(2)
Other than with respect to ownership by family members, the reporting persons have sole voting and investment power with respect to the shares listed.
(3)
Includes shares that are held indirectly through the Pitney Bowes 401(k) Plan.
(4)
The director or executive officer has the right to acquire beneficial ownership of this number of shares within 60 days of March 1, 2019 by exercising outstanding stock options or through the conversion of restricted stock units into securities. Amounts in this column are also included in the column “Shares Deemed to be Beneficially Owned.”
(5)
Mr. Lautenbach’s total includes four open market purchases of company stock using his personal funds: (i) 11,100 shares (approximately $100,122) made in May 2018 (ii) 4,739 shares (approximately $70,015) made in November 2016 (iii) 12,007 shares (approximately $250,000) made in October 2015 and (iv) 66,000 shares (approximately $1,000,000) made in May 2013.
(6)
Mr. Sutula’s total includes one open market purchase of company stock using his personal funds: 10,000 shares (approximately $88,200) made in May 2018.

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Beneficial Ownership

   

The only persons or groups known to the company to be the beneficial owners of more than five percent of any class of the company’s voting securities are reflected in the chart below. The following information is based solely upon Schedules 13G and amendments thereto filed by the entities shown with the SEC as of the date appearing below.

Name and Address of Beneficial Owner
Amount and Nature of
Beneficial Ownership
of Common Stock
Percent of
Common Stock(1)

   

   
 
 
 
 
 
 
BlackRock, Inc.
55 East 52nd Street
New York, NY 10055
 
25,222,983
(2) 
 
13.4
%
   
 
 
 
 
 
 
   
 
 
 
 
 
 
The Vanguard Group, Inc.
100 Vanguard Blvd Malvern, PA 19355
 
17,898,521
(3) 
 
9.5
%
   
 
 
 
 
 
 
   
 
 
 
 
 
 
(1)There were 185,905,225 shares of our common stock outstanding as of March 1, 2019.
(2)As of December 31, 2018 BlackRock, Inc. disclosed sole voting power with respect to 24,725,162 shares and sole dispositive power with respect to 25,222,983 shares. The Aggregate amount beneficially owned by each reporting person was 25,222,983 shares. The foregoing information is based on a Schedule 13G/A filed with the SEC on January 31, 2019.
(3)As of December 31, 2018, The Vanguard Group, Inc. disclosed sole voting power of 286,527 shares, shared voting power of 22,429 shares, sole dispositive power of 17,608,490 shares and shared dispositive power of 290,031 shares. The aggregate amount beneficially owned by each reporting person was 17,898,521 shares. The foregoing information is based on a Schedule 13G/A filed with the SEC on February 12, 2019.

   

Section 16(a) Beneficial Ownership Reporting Compliance

   

Directors and persons who are considered “officers” of the company for purposes of Section 16(a) of the Securities Exchange Act of 1934 and greater than ten percent stockholders (“Reporting Persons”) are required to file reports with the SEC showing their holdings of and transactions in the company’s securities. It is generally the practice of the company to file the forms on behalf of its Reporting Persons who are directors or officers. Based solely on a review of such forms and amendments furnished to us and written representations that no other reports were required, we believe that all such forms have been timely filed for 2018.

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Proposal 1: Election of Directors

 

   

Director Qualifications

   

The board of directors believes that, as a whole, the board should include individuals with a diverse range of experience to give the board depth and breadth in the mix of skills represented for the board to oversee management on behalf of our stockholders. In addition, the board of directors believes that there are certain attributes that each director should possess, as described below. Therefore, the board of directors and the Governance Committee consider the qualifications of directors and nominees both individually and in the context of the overall composition of the board of directors.

The board of directors, with the assistance of the Governance Committee, is responsible for assembling appropriate experience and capabilities within its membership as a whole, including financial literacy and expertise needed for the Audit Committee as required by applicable law and New York Stock Exchange listing standards. The Governance Committee is responsible for reviewing and revising, as needed, criteria for the selection of directors. It also reviews and updates, from time to time, the board candidate profile used in the context of a director search, in light of the current and anticipated needs of the company and the experience and talent then represented on the board of directors. The Governance Committee reviews the qualifications of director candidates in light of the criteria approved by the board of directors and recommends candidates to the board for election by the stockholders at the annual stockholders meeting.

The Governance Committee seeks to include individuals with a variety of occupational and personal backgrounds on the board of directors in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the board of directors in such areas as experience and geography, as well as race, gender, ethnicity and age.

The board believes all directors should demonstrate integrity and ethics, business acumen, sound judgment, and the ability to commit sufficient time and attention to the activities of the board of directors, as well as the absence of any conflicts with our interests.

In 2018, the Governance Committee identified additional skills relating to retail and client experience, experience

in emerging technologies and logistics and shipping or financial services experience as skills that it is important for members of the board to possess. The Governance Committee identified these additional skills as part of its periodic examination of the skills of the members of the board to align with the evolving Company strategy :

Financial and capital markets experience for evaluation of financial statements and capital structure.
International experience and experience with emerging markets to evaluate our global operations.
Experience in emerging technology, coupled with an in-depth understanding of our business and markets, to provide counsel and oversight with regard to our strategy.
Experience as a current or recent public company CEO to provide specific insight into developing, implementing and assessing our operating plan and business strategy and to bring expertise in operating a public company.
Other board experience at a publicly traded company to support the goals of transparency, accountability for management and the board, and protection of stockholder interests.
Experience in logistic/shipping to support our growth businesses.
Experience in commercial banking to support our growth businesses.
Retail, client and “small and medium business” experience to bring client experience to bear on our decisions.
Transformation experience to help us assess opportunities to reposition certain of our businesses.
Diversity to bring different perspectives and experience to the board.
Product management/development experience to provide perspective on innovation.The Governance Committee has evaluated which of these skills each independent director brings to the board.

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Proposal 1: Election of Directors

The graph below depicts the number of directors standing for election providing each of these skills to the board.


When evaluating and recommending new candidates, the Governance Committee assesses the effectiveness of its criteria and considers whether there are any skill gaps that should be addressed and whether the candidates offer a range of skills to the board rather than a single one, as the board believes that a well-rounded individual would provide the most effective contributions to the board.

The board conducts a self-assessment of its effectiveness as well as each of its members annually. Each committee also conducts a self-assessment of its performance annually. The board also periodically hires an

outside advisor to conduct an independent review of how the board functions and to provide feedback based on that review.

Each director brings experience and skills that complement those of the other directors. The board of directors believes that all the directors nominated for election are highly qualified, and have the attributes, skills and experience required for service on the board of directors. Additional information about each director, including biographical information, appears on the following pages.

   

Nominees for Election

   

Directors are elected to terms of one year. The board of directors currently has thirteen members. Effective as of the date of the annual meeting, the board size will be reduced to ten directors. Upon determining to fill an open board position, the board considers candidates submitted by outside independent recruiters, directors, members of management and others. Each of the nominees for election at the 2019 annual meeting of stockholders is a current board member and was selected by the board of directors as a nominee in accordance with the recommendation of the Governance Committee. If elected at the 2019 annual meeting of stockholders, each of the nominees would serve until the 2020 annual meeting of

stockholders and until his or her successor is elected and has qualified, or until such director’s death, resignation or removal.

Information about each nominee for director as of March 1, 2019, is set forth below.

Should any nominee become unable to accept nomination or election as a director (which is not now anticipated), the persons named in the enclosed proxy will vote for such substitute nominee as may be selected by the board of directors, unless the size of the board is reduced. At the annual meeting, proxies cannot be voted for more than the director nominees.

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Proposal 1: Election of Directors

Vote Required; Recommendation of the Board of Directors

   

In accordance with our By-laws, in an uncontested election, a majority of the votes cast is required for the election of directors. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote. The Board of Directors Governance Principles provide that any nominee for director in this election who fails to receive a majority of votes cast in the affirmative must tender his or her resignation for consideration by the Governance Committee. The Governance Committee will recommend to the board of directors the action to be taken with respect to such offer of resignation. The board of directors will act on the Governance Committee’s recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results.

The board of directors recommends that stockholders vote FOR the election of all the director nominees.

   

   

Nominees

   



Director since: 2007
   
Committees:
Executive Compensation; Governance
Anne M. Busquet
   
Principal, AMB Advisors, LLC, an independent consulting firm, since 2006; former chief executive officer, IAC Local & Media Services, a division of IAC/Interactive Corp., an Internet commerce conglomerate, 2004 – 2006. (Also a director of Medical Transcription Billing Corp. and InterContinental Hotels Group PLC and Elior Group. Formerly a director of Meetic S.A. and Blyth, Inc.)
   
Ms. Busquet, age 69, has experience as a senior public company executive, including as American Express Company Division President, leading global interactive services initiatives. As former chief executive officer of the Local and Media Services unit of InterActiveCorp, she has experience in electronic media, communications and marketing. In addition, Ms. Busquet brings to the board of directors her substantial operational experience, including in international markets, marketing channels, emerging technologies and services, and product development.

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Proposal 1: Election of Directors



Director since: 2018
   
Committees:
Executive Compensation; Governance
Robert M. (“Bob”) Dutkowsky
   
Executive Chairman and Advisor to CEO, Tech Data, an American multinational distribution company specializing in IT products and services since 2018. Mr. Dutkowsky previously served as CEO of Tech Data for over a decade. Mr. Dutkowsky serves on the Board of United Way Suncoast and the Moffitt Research Committee, as well as the advisory board of the University of South Florida Business School. (Also a director of US Foods and Raymond James Financial).
   
Mr. Dutkowsky, age 64, has broad global business, industry and operational experiences, as Mr. Dutkowsky is skilled at viewing the technology industry from a variety of perspectives. The experiences and skills Mr. Dutkowsky developed as a senior executive at one of the leading technology companies in the world and as the Chair and CEO of other technology and software businesses allow Mr. Dutkowsky to provide value related to finance, management, operations and risk.
   
 


Director since: 2012
   
Committees: Audit; Finance
Roger Fradin
   
Retired, Vice Chairman, Honeywell International Inc., a diversified technology and manufacturing company, since February, 2017. Formerly president and chief executive officer of Honeywell Automation and Control Solutions, a division of Honeywell. Currently, Operating Executive with The Carlyle Group, one of the largest global Private Equity firms. Mr. Fradin is the Chairman of the Board of Resideo, a NYSE listed company, and a member of the board of Goldman Sachs Asset Management. (Also a director of Harris Corporation and MSC Industrial Direct Co., Inc.)
   
Mr. Fradin, age 65, as a retired senior executive of a major diversified technology and manufacturing company, with substantial experience as the chief executive officer of its $17 billion Automation and Control Solutions division, brings to the board significant operational experience, financial expertise, and experience in capital markets, product development, and marketing, including in international markets. He possesses a strong entrepreneurial background, with experience in driving robust growth for businesses under his leadership, and has deep experience in entering new markets, both organically and through acquisition.
   
 


Director since: 2005
   
Committees:
Executive Compensation; Governance
Anne Sutherland Fuchs
   
Consultant to private equity firms. Formerly group president, Growth Brands Division, Digital Ventures, a division of J. C. Penney Company, Inc., a retailer, November 2010 – April 2012; former Chair of the Commission on Women’s Issues for New York City, 2002 – 2013. (Also a director of Gartner, Inc.)
   
Ms. Fuchs, age 71, has experience as a senior executive with operational responsibility within the media and marketing industries, as well as experience as global chief executive officer of a unit of LMVH Moet Hennessy Louis Vuitton. Her experience in the publishing industry includes senior level operational roles at Hearst, Conde Nast, Hachette and CBS. She possesses experience in product development, marketing and branding, international operations, as well as in human resources and executive compensation. Her experience in managing a number of well-known magazines contributes to her knowledge and understanding of businesses closely tied to the mailing industry. Her work for the City of New York has further informed her understanding of government operations and government partnerships with the private sector.

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Proposal 1: Election of Directors



Director since: 2018
   
Committees: Audit;
Finance
Mary J. Steele Guilfoile
   
Chairman, MG Advisors, Inc., a privately owned financial services merger and acquisitions advisory and consulting firm. From 2000 to 2002, Ms. Guilfoile was Executive Vice President and Corporate Treasurer at JPMorgan Chase & Co. and also served as Chief Administrative Officer of its investment bank. Ms. Guilfoile is a former Partner, CFO and COO of The Beacon Group, LLC, a private equity, strategic advisory and wealth management partnership, from 1996 through 2000. Ms. Guilfoile, a licensed CPA, continues as a Partner of The Beacon Group, LP, a private investment group. (Also a director of The Interpublic Group of Companies, Inc., C.H. Robinson Worldwide and Hudson Ltd. Formerly a director of Valley National Bancorp.)
   
Ms. Guilfoile, age 64, brings knowledge and expertise as a financial industry executive and her training as a certified public accountant. Ms. Guilfoile brings to the Board valuable experience and expertise in corporate governance, accounting, risk management and auditing.
   
 


Director since: 2012
   
Committees: Audit; Finance
S. Douglas Hutcheson
   
Senior Advisor of Technology, Media and Telecom for Searchlight Capital, a global private investment firm. Formerly Chief Executive Officer of Laser, Inc., a private held technology company (March 2014 – May 2017) and also former Chief Executive Officer of Leap Wireless International, Inc., a provider of wireless services and devices through its subsidiary, Cricket Communications, Inc. (February 2005 – March 2014). (Also a director of InterDigital, Inc. Formerly a director of Leap Wireless International, Inc.)
   
Mr. Hutcheson, age 62, brings to the board of directors significant operational and financial expertise as an experienced former chief executive officer of a wireless communications company. His broad business background includes strategic planning and product and business development and marketing. His expertise in developing and executing successful wireless strategies is an asset to Pitney Bowes as more products and services are transitioned to the cloud. In addition, his experience as a public company chief executive contributes to his knowledge of corporate governance and public company matters.
   
 


Director since: 2012
   
Committees:
Executive
Marc B. Lautenbach
   
President and Chief Executive Officer of Pitney Bowes Inc. since December 3, 2012. Formerly, Managing Partner, North America, Global Business Services, International Business Machines Corporation (IBM), a global technology services company, 2010 – 2012, and General Manager, IBM North America, 2005 – 2010. (Also a director of Campbell Soup Company.)
   
Mr. Lautenbach, age 57, as a former senior operating executive at a global technology services company, possesses substantial operational experience, including in technology services, software solutions, application development, and infrastructure management, as well as marketing, sales and product development. Mr. Lautenbach has extensive experience working with a breadth of client segments, including in the small and medium sized business segment and public and enterprise markets. He also has significant international experience.

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Proposal 1: Election of Directors



Director since: 1995
   
Committees: Chair, Executive; Chair, Finance; Audit
Michael I. Roth
   
Chairman and Chief Executive Officer, The Interpublic Group of Companies, Inc., a global marketing communications and marketing services company, since 2005. (Also a director of Ryman Hospitality Properties, Inc. and The Interpublic Group of Companies, Inc.)
   
Mr. Roth, age 73, has broad experience as the chief executive officer of a public company and as a member of other public company boards of directors, as well as previous experience as a certified public accountant and attorney. In addition to his experience as chief executive officer of The Interpublic Group of Companies, his experience includes service as the chief executive officer of The MONY Group Inc. prior to its acquisition by AXA Financial, Inc. He brings to the board of directors his deep financial expertise, and experience in business operations, capital markets, international markets, emerging technologies and services, marketing channels, corporate governance, and executive compensation.
   
 


Director since: 2015
   
Committees:
Audit; Executive Compensation
Linda S. Sanford
   
Retired Senior Vice President, Enterprise Transformation, International Business Machines Corporation (IBM), a global technology and services company, since December 31, 2014. Prior to her leadership role as senior vice president, enterprise transformation, which she held from January 2003 to December 31, 2014, Ms. Sanford was senior vice president & group executive, IBM Storage Systems Group. Ms. Sanford joined IBM in 1975. (Also a director of RELX Group and Consolidated Edison, Inc.)
   
Ms. Sanford, age 66, with extensive experience as a senior executive in a public global technology company, possesses a broad range of experience, including in technology, innovation and global operations. Ms. Sanford has significant expertise in business transformation, information technology infrastructure, and global process integration.
   
 


Director since: 2001
   
Committees: Chair, Audit; Executive; Finance
David L. Shedlarz
   
Retired Vice Chairman of Pfizer Inc., a pharmaceutical company. Formerly vice chairman of Pfizer Inc., 2005 – 2007; executive vice president and chief financial officer, 1999 – 2005, Pfizer Inc. (Also a director of Teachers Insurance and Annuity Association, Teladoc, Inc., and The Hershey Company.)
   
Mr. Shedlarz, age 70, has broad experience as a former senior executive of a public company, experience as a former chief financial officer and as a member of other public company boards of directors. He possesses financial expertise, knowledge of business operations and capital markets, international markets, emerging technologies and services, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, product development, and corporate governance.

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Report of the Audit Committee
   
The Audit Committee functions pursuant to a charter that is reviewed annually and was last amended in November 2016. The committee represents and assists the board of directors in overseeing the financial reporting process and the integrity of the company’s financial statements. The Committee is responsible for the appointment, compensation and retention of the independent accountants, pre-approving the services they will perform, selecting the lead engagement partner, and for reviewing the performance of the independent accountants and the company’s internal audit function. The board of directors, in its business judgment, has determined that all six of the members of the committee are “independent,” as required by applicable listing standards of the New York Stock Exchange. Four of the six members of the Committee have the requisite experience to be designated as an Audit Committee financial expert as defined by the rules of the Securities and Exchange Commission.
   
In the performance of its responsibilities, the committee has reviewed and discussed the audited financial statements with management and the independent accountants. The Committee has also discussed with the independent accountants the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight Board (“PCAOB”). Finally, the committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Audit Committee concerning independence, and has discussed with the independent accountants their independence.
   
In determining whether to recommend that the stockholders ratify the selection of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as Pitney Bowes’ independent accountants for 2019, management and the committee, as they have done in prior years, engaged in a review of PricewaterhouseCoopers. In that review, the committee considers the continued independence of PricewaterhouseCoopers, its geographic presence compared to that of Pitney Bowes, its industry knowledge, the quality of the audit and its services, the audit approach and supporting technology, any Securities and Exchange Commission actions and other legal issues as well as PCAOB inspection reports. Pitney Bowes management prepares an annual assessment that includes an analysis of (1) the above criteria for PricewaterhouseCoopers and the other “Big Four” accounting firms; (2) an assessment of whether firms outside of the “Big Four” should be considered; and (3) a detailed analysis of the PricewaterhouseCoopers’ fees. In addition, PricewaterhouseCoopers reviews with the Committee its analysis of its independence. Based on the results of this review this year, the Committee concluded that PricewaterhouseCoopers is independent and that it is in the best interests of Pitney Bowes and its investors to appoint PricewaterhouseCoopers, who have been independent accountants of the company since 1934, to serve as Pitney Bowes’ independent registered accounting firm for 2019.
   
Based upon the review of information received and discussions as described in this report, the committee recommended to the board of directors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2018 as filed with the Securities and Exchange Commission on February 20, 2019.
   
By the Audit Committee of the board of directors,
   
David L. Shedlarz, Chair
Roger Fradin
Mary J. Steele Guilfoile
S. Douglas Hutcheson
Michael I. Roth
Linda S. Sanford

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Proposal 2: Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2019

 

   

The Audit Committee has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent accountants for Pitney Bowes for 2019. Although not required by law, this matter is being submitted to the stockholders for ratification, as a matter of good corporate governance. If this proposal is not ratified at the annual meeting by the affirmative vote of a majority of the votes cast, the Audit Committee intends to reconsider

its appointment of PricewaterhouseCoopers as its independent accountants. PricewaterhouseCoopers has no direct or indirect financial interest in Pitney Bowes or any of its subsidiaries. A representative from PricewaterhouseCoopers is expected to attend the annual meeting and to be available to respond to appropriate questions and will have the opportunity to make a statement if he or she desires to do so.

   

Principal Accountant Fees and Services

   

Aggregate fees billed for professional services rendered for the company by PricewaterhouseCoopers for the years ended December 31, 2018 and 2017, were (in millions):

 
2018
2017
Audit
$
6.4
 
$
5.6
 
Audit-Related
 
3.6
 
 
4.6
 
Tax
 
.5
 
 
.5
 
Total
$
10.5
 
$
10.7
 

Audit fees: The Audit fees for the years ended December 31, 2018 and 2017 were for services rendered for the audits of the consolidated financial statements and internal control over financial reporting of the company and selected subsidiaries, statutory audits, issuance of comfort letters, consents, income tax provision procedures, and assistance with review of documents filed with the SEC.

Audit-Related fees: The Audit-Related fees for the years ended December 31, 2018 and 2017 were for audits of selected subsidiaries not included in “audit” above, the Newgistics acquisition, assurance and related services related to employee benefit plan audits, procedures performed for SSAE 18 reports, consultations concerning financial accounting and reporting standards and for assessing and advising in the pre-implementation of the new ERP system.

Tax fees: The Tax fees for the years ended December 31, 2018 and 2017 were for services related to tax compliance, including the preparation and/or review of tax returns and claims for refunds.

The Audit Committee has adopted policies and procedures to pre-approve all services to be performed by PricewaterhouseCoopers. Specifically the Committee’s policy requires pre-approval of the use of PricewaterhouseCoopers for audit services as well as detailed, specific types of services within the following categories of audit-related and non-audit services: merger and acquisition due diligence and audit services; employee benefit plan audits; tax services; procedures required to meet certain regulatory requirements; assessment of and making recommendations for improvement in internal accounting controls and selected related advisory services. The Audit Committee delegates to its Chairman the authority to address requests for pre-approval services between Audit Committee meetings, if it is deemed necessary to commence the service before the next scheduled meeting of the Audit Committee. Such pre-approval decisions are discussed at the next scheduled meeting. The Committee will not approve any service prohibited by regulation or for services which, in their opinion, may impair PricewaterhouseCoopers’ independence. In each case, the Committee’s policy is to pre-approve a specific annual budget by category for such audit, audit-related and tax services which the company anticipates obtaining from PricewaterhouseCoopers, and has required management to report the actual fees (versus budgeted fees) to the Committee on a periodic basis throughout the year. In addition, any new, unbudgeted engagement for audit services or within one of the other pre-approved categories described above must be pre-approved by the Committee or its chair.

   

Vote Required; Recommendation of the Board of Directors

   

Ratification of the appointment of Pitney owes’ independent accountants requires the affirmative vote of a majority of votes cast. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote.

The board of directors recommends that stockholders vote FOR the ratification of PricewaterhouseCoopers LLP as our independent accountants for 2019.

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Proposal 3: Non-binding Advisory Vote to Approve Executive Compensation

 

   

In accordance with SEC rules, stockholders are being asked to approve, on an advisory or non-binding basis, the compensation of our named executive officers (NEOs) as disclosed in this proxy statement.

This proposal, commonly known as a “Say-On-Pay” proposal, provides our stockholders with the opportunity to express their views, on an advisory (non-binding) basis, on our executive compensation for our NEOs for fiscal year 2018 as described in the “Compensation Discussion and Analysis” or (CD&A) beginning on page 39 of this proxy statement, as well as the “Summary Compensation Table” and other related compensation tables and narratives, on pages 59 through 70 of this proxy statement.

At the company’s annual meeting of stockholders in 2018, stockholders voted in favor of the company’s executive compensation by 94.4% of the votes cast.

The Executive Compensation Committee (Committee) and the board of directors believe that the compensation program described in the CD&A establishes effective incentives for the sustainable achievement of positive results without encouraging unnecessary or excessive risk-taking. Our compensation program appropriately aligns pay and performance incentives with stockholder interests and enables the company to attract and retain

talented executives. The company and the Committee have reached out to stockholders to solicit their views on the company’s executive compensation structure.

As discussed in the CD&A, the Committee has structured our executive compensation program based on the following central principles:

(1)Compensation should be tied to performance and long-term stockholder return and performance-based compensation should be a greater part of total compensation for more senior positions;
(2)Compensation should reflect leadership position and responsibility;
(3)Incentive compensation should reward both short-term and long-term performance;
(4)Compensation levels should be sufficiently competitive to attract and retain talent; and
(5)Executives should own meaningful amounts of Pitney Bowes stock to align their interests with Pitney Bowes stockholders.

We believe our executive compensation program demonstrates a strong link between pay and performance in its design and exhibits strong pay governance practices.

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Proposal 3: Non-binding Advisory Vote to Approve Executive Compensation

Strong Pay for Performance and Governance Practices
   
 
89% of our CEO’s target total direct compensation, and 73% of target total direct compensation for the other NEOs, is variable, and is subject to financial performance metrics.
More than two-thirds of the total compensation paid to our CEO, and half of the total compensation paid to the NEOs, is equity-based and aligned with shareholder interests;
100% of the 2018 long-term incentive mix is equity-based;
100% of the annual incentive and long-term stock units grants are based on financial objectives;
No employment agreements with our executive officers;
No tax gross-ups on Change-of-Control payments;
No special arrangements whereby extra years of prior service are credited under our pension plans;
No perquisites other than limited financial counseling and an executive physical examination benefit;
“Double-trigger” vesting provisions in our Change-of-Control arrangements;
A “clawback” policy that permits the company to recover incentives from senior executives whose misrepresentation or misconduct resulted in a significant restatement of financial results;
Prohibitions against pledging and hedging of our stock;
Executive stock ownership policy that aligns executives’ and directors’ interests with those of stockholders;
Separate roles of CEO and Chairman of the board of directors;
An annual risk assessment of our pay practices;
An annual stockholder advisory vote on executive compensation;
A direct line of communication between our stockholders and the board of directors;
Use of tally sheets to review each component of executive officer compensation;
Use of two independent third-party compensation surveys (Radford Global Technology Survey and Willis Towers Watson Regressed Compensation Report) in determining the competitiveness of executive compensation;
Use of an independent compensation consultant that advises the Committee directly on the company’s compensation structure and actions and performs no other services for the company;
Enhanced disclosure of performance targets; and
Investor outreach regarding governance and executive compensation in spring and fall of each year.

   

We have for the past several years regularly contacted many of our stockholders to give them an opportunity to share their views about our executive compensation program. In the spring of 2018, we reached out to stockholders representing approximately 49% of outstanding company shares, and in the fall of 2018, we reached out to stockholders representing approximately 51% of outstanding company shares to answer questions concerning the 2018 proxy statement, including the executive compensation program. Over the past few years, the Committee has implemented features in the executive compensation program that directly related to comments received from the stockholders. We also invite our largest stockholders to provide input on executive compensation matters during the month prior to our annual meeting.

The CD&A beginning on page 39 of this proxy statement describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the “Summary Compensation Table” and other related compensation tables and narratives on pages 59 through 70, which provide detailed information on the compensation of our NEOs.

We also invite stockholders to read our Annual Report on Form 10-K for the year ended December 31, 2018, as filed with the Securities and Exchange Commission on

February 20, 2019, which describes our business and 2018 financial results in more detail.

In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to indicate their support for our NEO compensation by voting FOR this advisory resolution at the 2019 Annual Meeting:

RESOLVED, that the stockholders of Pitney Bowes Inc. approve on a non-binding advisory basis the compensation of the company’s NEOs disclosed in the CD&A, the Summary Compensation Table and the related compensation tables, notes and narratives in this proxy statement for the company’s 2019 Annual Meeting of Stockholders.

This advisory resolution, commonly referred to as a “Say-On-Pay” resolution, is non-binding on the board of directors. Although non-binding, our board of directors and the Committee will carefully review and consider the voting results when making future decisions regarding our executive compensation program. The next “Say-on-Pay” advisory vote will occur at the 2020 annual meeting based on the recommended advisory vote on the frequency of future advisory votes on executive compensation.

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Proposal 3: Non-binding Advisory Vote to Approve Executive Compensation

Vote Required; Recommendation of the Board of Directors

   

The affirmative vote of the majority of the votes cast will constitute the stockholders’ non-binding approval with respect to our executive compensation programs. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote.

The board of directors recommends that stockholders vote FOR the approval of our executive compensation on an advisory basis.

Equity Compensation Plan Information
   
The following table provides information as of December 31, 2018 regarding the number of shares of common stock that may be issued under our equity compensation plans.
Plan Category
(a)
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(b)
Weighted-average exercise
price of outstanding options,
warrants and rights
(c)
Number of securities
remaining available for
future issuance under equity
compensation plans
excluding securities
reflected in column (a)
Equity compensation plans approved by security holders
 
13,593,156
 
$
15.30
 
 
11,326,742
 
Equity compensation plans not approved by security holders
 
 
 
 
 
 
Total
 
13,593,156
 
$
15.30
 
 
11,326,742
(1)
   
(1) These shares are available for stock awards made under the Stock Plan of 2018. As of December 31, 2018, of the total 11,326,742 shares
   remaining and available for future issuance, 7,104,765 are available for full value share awards.

   

Report of the Executive Compensation Committee
The Executive Compensation Committee (“Committee”) of the board of directors (1) has reviewed and discussed with management the section beginning on page 39 entitled “Compensation Discussion and Analysis” (CD&A) and (2) based on that review and discussion, the Committee has recommended to the board of directors that the CD&A be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2018 and this proxy statement.
   
By the Executive Compensation Committee of the board of directors,
   
Mr. Eduardo R. Menascé, Chair
Ms. Anne M. Busquet
Ms. Anne S. Fuchs
Ms. Linda S. Sanford
Mr. David B. Snow, Jr.
Mr. Robert M. Dutkowsky

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Proposal 4: Approval of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan

 

   

In March 2019, the board of directors unanimously adopted and approved amendments to the 2018 Stock Plan effective May 6, 2019 subject to shareholder approval at our annual meeting. The complete text of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan approved by the board of directors is attached as Annex A to this proxy statement (the “Plan”). The amendments are as follows: (i) increase the number of shares issuable under the 2018 Stock Plan by 8,500,000 (ii) incorporate a fungible share design (to replace the current full value share limit) with a 2.0:1 ratio pursuant to

which “full value” awards such as restricted stock units and performance stock units count against the Plan’s share reserve as 2.0 shares for every one share issued in connection with such award with appreciation awards (such as SARs and stock options) continuing to count against the reserve on a one-for-one basis, (iii) apply a minimum vesting period for all future awards, and (iv) update the limit on maximum allowable shares per person per year to 2,000,000. The following discussion is qualified in all respects by reference to Annex A.

   

Why we believe you should approve the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan

   

The board recommends that our stockholders approve the Plan because it believes appropriate equity incentives are important to attract and retain the highest caliber individuals, to link incentive reward to company performance, to encourage employee and director ownership in our company and to align the interests of participants to those of our stockholders.

The approval of the Plan will enable us to continue to provide such incentives.

If the Plan is not approved, the 2018 Stock Plan previously approved will remain in effect, but we may not be able to provide persons eligible for awards with compensation packages that are necessary to attract, retain and motivate these individuals.

Plan Highlights

 

   

While the Plan is an “omnibus” stock plan that provides for a variety of equity award vehicles to maintain flexibility, currently awards largely consist of Performance Stock Units (PSUs), Restricted Stock Units (RSUs) and Nonqualified Stock Options (NSOs).

Provisions Designed to Protect Stockholder Interests

The Plan has several provisions designed to protect stockholder interests and promote effective corporate governance including:

Limit on grants of full-value awards;
Prohibition on share recycling or “Liberal Share Counting” practices;
No re-pricing of stock options or SARs without prior stockholder approval;
Stock options and SARs cannot be granted below 100% of fair market value;
Maximum term for stock options and SARs is 10 years;
One-year minimum vesting period for all future awards (no portion of awards should vest within one year from the date of grant and prorata vesting will not occur prior to the first year anniversary from the grant date);
Minimum one-year performance period for performance-based awards;
Change-in-Control definition that requires either a 30% acquisition or a consummation of a transaction;
“Double-trigger” requirement under a Change-in- Control;
No “evergreen” provision to automatically increase the number of shares issuable under the Plan; and
Clawback policy applicable to awards under the Plan.

Determination of the Shares Available and Award Limits under the Plan

In order to decide upon a number of the features of the Plan, the Committee consulted Pay Governance LLC, its independent compensation advisor. Pay Governance examined a number of factors, including stockholder dilution, burn rate and overhang. The Committee considered Pay Governance’s analysis and advice in reaching its decision on the total number of shares to authorize under the Plan.

A maximum of 15,919,041 shares, including the 8,500,000 additional shares sought in this amendment, (subject to adjustment as described below) will be available for issuance under the Plan for PSUs, RSUs, stock options, SARs, restricted stock and any other type of stock-based awards issued under the Plan. In addition to the number of shares described in the preceding sentence, any shares associated with outstanding awards under the Plan, or the Prior Plans as of May 6, 2019 (“Prior Plan Awards”) that on or after such date cease for

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any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and non-forfeitable shares) will also be available for issuance under the amended and restated Plan (collectively, the “Plan Maximum”). “Prior Plans” means the Pitney Bowes Inc. 2007 Stock Plan and the Pitney Bowes Inc. 2013 Stock Plan. Any shares issued under stock options or SARs will be counted against the Plan Maximum on a one-for-one (1:1) basis and any shares issued pursuant to awards other than stock options or SARs will be counted against the Plan Maximum as 2.0 shares for every one (1) share subject to such award. Prior Plan Awards that are added to the Plan Maximum will be added as one (1) share if such shares were subject to options or SARs, and as 2.0 shares if such shares were subject to awards other than options or SARs. An employee may receive multiple awards under the Plan.

A maximum of 2,000,000 shares that are the subject of awards (other than tandem SARs) may be granted under the Plan to any individual during any calendar year.

Shares delivered under the Plan will be authorized but unissued shares of Pitney Bowes common stock, treasury shares or shares purchased in the open market or otherwise. To the extent that any award under the Plan or the Prior Plans payable in shares is forfeited, cancelled, returned to the company for failure to satisfy vesting requirements or upon the occurrence of other forfeiture events, or otherwise terminates without payment being made in shares, the shares covered thereby will no longer be charged against the maximum share limitation and may again be made subject to awards under the Plan. Any awards settled in cash will not be counted against the maximum share reserve under the Plan. However, any shares exchanged by an employee or withheld from an employee as full or partial payment to the company of the exercise price or the tax withholding upon exercise or settlement of an award, unissued shares resulting from the settlement of SARs in stock or net settlement of a stock option, and shares repurchased on the open market with the proceeds of an option exercise will not be returned to the number of shares available for issuance under the Plan.

The board believes that 15,919,041 shares and the 2.0:1 fungible plan design, represents a reasonable amount of potential equity dilution (7.8% of our common shares outstanding as of December 31, 2018) and provides a meaningful incentive for employees to increase the value of the company for all stockholders. Based on our past experience, we believe the 15,919,041 shares will provide us an opportunity to grant equity awards for approximately one to two years, due to the fungible plan design and expected LTI award mix, before we would need to seek stockholder approval of more shares. In order to determine the number of shares to be authorized under the Plan, the Committee and the board considered the need for the shares and the potential dilution that awarding the requested shares may have on current stockholders.

Equity Overhang

After the February 2019 grant, which utilized approximately 5,142,567 shares, as of February 19, 2019 there is a balance of 7,419,041 available for issuance under the Plan. If the additional shares requested are approved, the 15,919,041 shares available under the Plan would represent approximately 8.5% of the 187,675,082 common shares outstanding as of December 31, 2018. Assuming the approval of the Plan, the potential equity overhang from all stock incentives granted and available to employees and directors would be approximately 16.8%. The equity overhang as of December 31, 2018 was 13.7%.

In considering the cumulative dilutive impact of the equity program, the Committee considered the overhang impact of previously issued awards. Included in the equity overhang calculation are options with exercise prices greater than the current share price. “Overhang” is defined as:

outstanding stock options, plus
outstanding full value awards, such as RSUs, plus
the number of shares available for future grants under our 2014 Directors Plan and the proposed amended and restated Plan
collectively divided by:
186,491,283 (the estimated total outstanding shares of common stock as of February 19, 2019) plus
all shares in the numerator.

As of December 31, 2018, there were 18,474,499 shares outstanding under the company's stock incentive plans (of which 4,881,343 are subject to awards of stock units and shares of restricted stock, and 13,593,156 are subject to awards of stock options). As of December 31, 2018, the weighted average exercise price of outstanding stock options was $15.30 and the weighted average remaining term of outstanding stock options was 6.48 years.

As of February 19, 2019 and inclusive of the February 2019 grant, there is a balance of 7,419,041 shares available for issuance under the Plan, and there are approximately 21,760,776 shares outstanding under the company's stock incentive plans (of which 8,399,574 are full value shares and 13,361,202 are stock options). The estimated total common shares outstanding as of February 19, 2019 is 186,491,283. As of February 19, 2019 the weighted average exercise price of outstanding stock options and the weighted average remaining term of outstanding stock options are estimated at approximately $14.01 and 6.86 years.

Burn Rate

The Committee also considered the burn rate with respect to the equity awards. Burn rate is the total equity awarded in a fiscal year divided by the total weighted average common shares outstanding for the year. Our three-year average burn rate for the time period from 2016 to 2018 is approximately 2.94%. We will continue to

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monitor our equity use in future years to ensure our burn rate is maintained within competitive market norms.

20162018 Equity Grants

 

   

Fiscal Year
Stock
Options
granted
RSUs granted
PSUs (Earned)
Wtd. Avg. CSO
(Common Shares
Outstanding)
2016
 
1,758,760
 
 
826,546
 
 
 
 
187,945,000
 
2017
 
2,553,510
 
 
1,995,473
 
 
258,685
 
 
186,332,010
 
2018
 
4,932,467
 
 
1,754,098
 
 
91,493
 
 
187,276,674
 

   

Plan Terms and Conditions

   

Plan Administration

 

   

The Plan is administered by the Executive Compensation Committee or any other committee designated by the board of directors to administer the Plan. The board of directors and the Committee have the authority to delegate their duties under the Plan to the fullest extent permitted by Delaware law. The Committee may delegate certain administrative tasks to an internal administrative employee benefits committee. Any power of the Committee may also be exercised by the board of directors. In the event that an action taken by the board of directors conflicts with action taken by the Committee, the board of directors' action will control. The Committee is authorized to designate employees under the Plan, determine the

number of shares and type(s) of awards granted to employees, determine the terms and conditions of awards, interpret and administer the Plan, establish, amend, suspend, rescind or reconcile rules and regulations under the Plan, and generally make any other determination and take any other action the Committee deems necessary or desirable for the administration of the Plan. The board determines all awards made to the CEO. The Committee has delegated certain of its responsibilities under the Plan, including the authority to make awards to employees below the executive officer level, to the chief executive officer as consistent with Delaware law.

Eligibility and Participation

 

   

Approximately 13,300 employees of the company and its affiliates are eligible to participate in the Plan and approximately 615 employees (including the executive officers of the company) currently receive long-term incentive awards in a given year. These numbers may

vary from year to year. From time to time, the Committee will determine who will be granted awards, the number of shares subject to such grants and all other terms of awards.

Types of Plan Awards

 

   

The Plan, like our prior equity plans, provides for a variety of equity instruments to preserve flexibility. The types of awards that may be issued under the Plan are described below. Since 2015, the company has utilized PSUs, RSUs and NSOs in making awards under its long-term incentive program.

The Plan includes a one-year minimum vesting period for all future awards.

Performance Stock Units

PSUs provide the employee the right to receive Pitney Bowes common stock at the conclusion of a specified performance period (generally three years) based upon certain pre-established performance criteria. Based on how the company performs against the pre-established financial criteria, the award can pay out in common stock anywhere between zero to two times the PSUs awarded. Target payout is one common share per PSU awarded. Dividend equivalent rights are payments equivalent to

dividends declared on the company’s common stock before a stock unit vests and is converted into common stock. Although it has not been the company’s past practice to grant dividend equivalents, PSUs may be granted together with related dividend equivalent rights. If granted, dividend equivalents are prohibited from being paid until the underlying award has vested.

Restricted Stock and Stock Units

A restricted stock award represents shares of Pitney Bowes common stock that are issued subject to restrictions on transfer and vesting requirements as determined by the Committee. A RSU provides the employee the right to receive a payment in common stock or cash based on the value of a share of Pitney Bowes common stock. Both restricted stock and RSUs may be subject to such vesting requirements, restrictions and conditions to payment as the Committee determines are appropriate. Generally, we issue performance-based, time-vested restricted stock and RSU awards which vest pro-rata

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over a period of approximately three years (pro-rata vesting will not occur prior to the first year anniversary from the grant date). Vesting requirements may be based on the continued service of the employee for specified time periods and/or on the attainment of specified business performance goals established by the Committee. Restricted stock will pay dividends earned only after the restricted stock vests. Although it has not been the company’s past practice to grant dividend equivalents, RSUs may be granted together with related dividend equivalent rights. If granted, dividend equivalents are prohibited from being paid until the underlying award has been vested.

Stock Options

Stock options granted under the Plan may be either nonqualified stock options (NSOs) or incentive stock options (ISOs) under Section 422 of the Internal Revenue Code of 1986, as amended (Code). Stock options entitle the employee to purchase a share of Pitney Bowes common stock at an exercise price specified in the Award Agreement (including through net settlement or a cashless exercise through a broker facility, to the extent permitted by the Committee). The exercise price of any stock option granted, other than substitute awards or tandem SARs, may not be less than 100% of the fair market value of a share of Pitney Bowes common stock on the date of grant. The Plan defines the fair market value as the closing price of Pitney Bowes common stock on the date of grant as reported by the New York Stock Exchange. The option exercise price is payable in cash, shares of Pitney Bowes common stock, through a broker-assisted cashless exercise through share withholding or as otherwise permitted by the Committee.

The Committee determines the terms of each stock option grant at the time of the grant. Generally, all options have a ten-year term from the date of the grant. The Committee specifies, at the time each option is granted, the time or times at which, and in what proportions, an option becomes vested and exercisable. Vesting may be based on the continued service of the employees for specified time periods or on the attainment of specified

business performance goals established by the Committee or both. Generally vesting of stock options occurs pro-rata over a three-year period (pro-rata vesting will not occur prior to the first year anniversary from the grant date). Under certain circumstances, the Committee may accelerate the vesting of options.

With certain exceptions, a vested stock option expires three months after termination of employment.

Stock Appreciation Rights

SARs entitle the employee, upon settlement, to receive a payment based on the excess of the fair market value of a share of Pitney Bowes common stock on the date of settlement over the base price of the right, multiplied by the applicable number of SARs of Pitney Bowes common stock. SARs may be granted on a stand-alone basis or in tandem with a related stock option. The base price may not be less than the fair market value of a share of Pitney Bowes common stock on the date of grant. The Committee will determine the vesting requirements, form of payment and other terms of a SAR, including the effect of termination of service of an employee. Vesting may be based on the continued service of the employee for specified time periods or on the attainment of specified business performance goals established by the Committee or both. Under certain circumstances, the Committee may accelerate the vesting of SARs. Generally, all SARs have a ten-year term from the date of the grant. SARs may be payable in cash or in shares of Pitney Bowes common stock or in a combination of both.

The company does not currently have any SARs outstanding.

Other Stock Based Awards

The Committee may grant employees such other awards denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Pitney Bowes common stock (including without limitation securities convertible into such shares), as are deemed by the Committee to be consistent with the purposes of the Plan.

Performance-Based Awards

 

   

Subject to the other terms of the Plan, the Committee may condition the grant, retention, issuance, payment, release, vesting or exercisability of any award, in whole or in part, upon the achievement of performance criteria during one or more specified performance periods. The performance criteria may be measured either annually or cumulatively over a period of years, on an absolute basis or relative to a pre-established target, to previous year’s results or to a designated comparison group, in each case established by the Committee.

Performance criteria may include any one or more of the following either individually, alternatively or in any combination, applied to either the company as a whole or to a business unit, subsidiary, division or department:

(i) achievement of cost control, (ii) earnings before interest and taxes (EBIT), (iii) earnings before interest, taxes, depreciation and amortization (EBITDA), (iv) earnings per share, (v) economic value added, (vi) free cash flow, (vii) gross profit, (viii) growth of book or market value of capital stock, (ix) income from continuing operations, (x) net income, (xi) operating income, (xii) operating profit, (xiii) organic revenue growth, (xiv) return on investment (including return on invested capital), (xv) return on operating assets, (xvi) return on stockholder equity, (xvii) revenue, (xviii) revenue growth (xix) stock price, (xx) total earnings, (xxi) total stockholder return, or (xxii) any other performance criteria established by the Committee.

The Committee will appropriately adjust any evaluation of performance under a performance goal to eliminate

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the effects of charges for restructurings, discontinued operations, extraordinary items and all items of gain, loss or expense determined to be extraordinary or unusual in nature or related to the disposal of a segment or a business or related to a change in accounting principle all as determined in accordance with standards established by the Accounting Principles Board if any or other applicable accounting provisions, as well as the cumulative effect of accounting changes, in each case as determined in accordance with generally accepted accounting principles or identified in the company’s financial statements, including the notes thereto. In addition there may

be appropriate adjustments made to any evaluation of performance under a performance goal to exclude any of the following events that occurs during a performance period: asset write-downs, litigation, claims, judgments or settlements, the effect of changes in tax law or other such laws or provisions affecting reported results, accruals for reorganization and restructuring programs and accruals of any amounts for payment under the Plan or any other compensation arrangement maintained by the company.

Forfeiture of Awards (Clawback)

 

   

The Plan provides that the Committee may forfeit awards in the event that 1) an employee engages in gross misconduct (as defined in the Plan), 2) an employee violates the terms of the Proprietary Interest Protection Agreement (a non-compete, non-solicitation and confidentiality agreement) or similar agreement, or 3) in the case of

executive officers, it is necessary to restate the company’s financial results which consists of a misrepresentation of the financial state of the company for purposes of the Securities Exchange Act of 1934. Award payments may be recouped in the event that any of the above apply.

Effect of Change of Control

 

   

Upon termination of employment which is on account of and within two years of a Change of Control (as defined in the Plan): (1) all unvested RSUs vest and are immediately converted into company common stock, (2) unvested PSUs vest at the target performance level and are immediately converted into common stock and (3) unvested NSOs vest and become fully exercisable for the remainder of the option term. If there is no termination of employment following a Change of Control: (1) all unvested RSUs vest but are not converted into common stock until the earlier of Termination of Employment (as defined in the Plan) or the normal vesting dates of the award, (2) all unvested PSUs will vest at target but will not be converted into common stock until the earlier of Termination of Employment or the conclusion of the three-year performance period, and (3) NSOs shall vest on the

Change of Control and become fully exercisable on the earlier of Termination of Employment or the normal award vesting date and remain exercisable for the balance of the option term. If the acquiring company does not assume the company’s Stock Plan or any of its outstanding equity awards, RSUs and NSOs will vest upon the Change of Control, and in the case of PSUs will vest as if target performance for the entire performance period has been achieved, be valued at the common stock price as of the Change of Control and converted into cash payable upon the earlier of termination from employment or the normal award vesting date. Holders of vested RSUs and PSUs will be entitled to dividends payable upon the earlier of termination from employment or the normal award vesting date.

Limited Transferability

 

   

All RSUs, PSUs, NSOs and other stock-based awards granted under the Plan are non-transferable except upon death, either by the employee’s will or the laws of descent

and distribution or through a beneficiary designation, or as otherwise provided by the Committee.

Adjustments for Corporate Changes

 

   

In the event of recapitalizations, reclassifications or other specified events affecting the company or the outstanding shares of Pitney Bowes common stock, equitable adjustments will be made to the number and kind of shares of Pitney Bowes common stock available for

grant, as well as to other maximum limitations under the Plan, and the number and kind of shares of Pitney Bowes common stock or other rights and prices of outstanding awards.

Plan Term, Amendment and Termination

 

   

The Plan will continue to have a term expiring on May 6, 2028, unless terminated earlier by the board of directors. Unless prohibited by applicable law or otherwise expressly provided in an award agreement or in the Plan, the board may at any time and from time to time and in

any respect amend, alter, suspend, discontinue or terminate the Plan. The board may seek the approval of any amendment or modification by the company’s stockholders to the extent it deems necessary or advisable in its sole discretion for compliance purposes, including the

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listing requirements of the New York Stock Exchange or another exchange or securities market or for any other purpose. No amendment or modification of the Plan will adversely affect any outstanding award without the consent of the employee or the permitted transferee of the award. Any amendment to the Plan that would (a) increase the total number of shares available for awards; (b) reduce the price at which NSOs/SARs may

be granted below the exercise price; (c) reduce the exercise price of outstanding NSOs/SARs; (d) extend the term of the Plan; (e) change the class of persons eligible to be employees; (f) otherwise amend the Plan in any manner requiring stockholder approval by law or under the New York Stock Exchange listing requirements; or (g) increase the individual maximum limits, would require stockholder approval.

Plan Benefits

 

   

Because benefits under the Plan will depend on the Committee’s actions (including a determination of who will receive future awards and the terms of those awards) and the fair market value of common shares at various future dates, it is not possible to determine the benefits that will be received by executive officers and other employees if the Plan is approved by the stockholders.

On February 5, 2019, the date of the 2019 award grants, the closing price of our common stock traded on the New York Stock Exchange was $6.60 per share and as of March 8, 2019 (the record date) the closing price of our common stock was $6.56 per share.

U.S. Federal Income Tax Consequences

 

   

The following discussion summarizes the material U.S. federal income tax consequences to the company and the participating employees in connection with the Plan under applicable provisions of the Internal Revenue Code (Code) and the accompanying regulations. The discussion is general in nature and does not address issues relating to the income tax circumstances of any individual employee. The discussion is based on federal income tax laws in effect on the date of this proxy statement and is, therefore, subject to possible future changes in the law. The discussion does not address the consequences of state, local or foreign tax laws.

Federal Income Tax Consequences to the Company

Generally, to the extent that a recipient recognizes ordinary income, the company will be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Code Section 280G and, together with other compensation paid certain “covered employees,” is below the $1,000,000 deduction limitation imposed by IRC Section 162(m). Generally a “covered employee” is an executive who is or was a NEO beginning with the NEOs listed in the 2018 proxy statement and thereafter. Compensation paid to a covered employee whether performance-based or not, will not be deductible to the extent such amounts exceed $1 million in any one year, unless grandfathered under the Tax Cut and Jobs Act of 2017 (the Tax Act).

Section 409A

Code Section 409A may apply to awards under the Plan that are deemed to be deferred compensation. If the requirements of Section 409A are not met, the recipient may be required to include deferred compensation in taxable income and additional taxes and interest may be assessed on such amounts. To the extent Section 409A is applicable to an award made under the Plan, it is the

company’s intent to have such award comply with the rules promulgated under Section 409A.

Tax Withholding

To the extent required by applicable federal, state, local or foreign law, an employee will be required to satisfy, in a manner satisfactory to the company, any withholding tax obligations that arise by reason of the award.

Taxation of the Various Plan Awards

Performance Stock Units and Restricted Stock Units. Employees granted RSUs and PSUs do not recognize income at the time of the grant. Rather they recognize ordinary income, and subject to IRC 162(m), the company receives a corresponding tax deduction, in an amount equal to the fair market value of the units when the award vests and is converted into common stock or paid in cash. Certain employees who receive PSUs or RSUs may defer the conversion of the PSUs or RSUs beyond the award vesting date.

Nonqualified Stock Options. An employee will not recognize income and the company will not be entitled to a deduction upon receipt of a NSO award. Ordinary income will be realized by the employee, and subject to IRC 162(m), a tax deduction will be recognized by the company at the time the non-qualified stock option is exercised and the shares are transferred to the employee. The amount of such taxable income and deduction upon the exercise of an Option, is the difference between the exercise or option price and the fair market value of the shares on the date of exercise.

Incentive Stock Options. ISOs will not result in taxable income to the employee, nor a taxable deduction for the company. However, the difference between the fair market value of the stock on the date of grant and the option exercise price is a tax preference item that may subject the employee to the alternative minimum tax. If the employee holds the ISO shares for two years from the date the option was granted and for one year after the

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shares were transferred to him upon the exercise of the option, the employee will recognize long-term capital gain on the portion of the gain on the sale of the shares equal to the difference between the sales price and the option exercise price and the company will not be entitled to a deduction either at the time the employee exercises the ISO or subsequently sells the ISO shares. If the employee sells the ISO shares within two years after the date the ISO is granted or within one year after the date the ISO is exercised, then the sale is considered a disqualifying sale, and the difference between the grant price and the exercise price will be taxed as ordinary income. The balance of the gain will be treated as long-or short-term capital gain depending on the length of time the employee held the stock. If the shares decline in value after the date of exercise, the compensation income will be limited to the difference between the sale price and the amount paid for the shares. The tax will be imposed in the year the disqualifying sale is made. Subject to 162(m), the company will be entitled to a deduction equal to the ordinary income recognized by the employee.

With respect to both NSOs and ISOs, special rules apply if an employee uses shares already held by the employee to pay the exercise price or if the shares received upon exercise of the option are subject to a substantial risk of forfeiture by the employee.

Stock Appreciation Rights. An employee will recognize taxable income upon the exercise of a SAR in the amount of the aggregate cash received. In either case, subject to 162(m) the company will be entitled to an income tax deduction in the amount of such income recognized by the employee.

Restricted Stock. Employees receiving restricted stock will not recognize any income upon receipt of the restricted stock. Ordinary income will be realized by the holder at the time that the restrictions on transfer are

removed or have expired and the stock vests. The amount of ordinary income will be equal to the fair market value of the shares on the date that the restrictions on transfer are removed or have expired. Subject to 162(m), the company will be entitled to a deduction at the same time and in the same amount as the ordinary income the employee realizes. An employee may elect to recognize taxable ordinary income in an amount equal to the fair market value of the shares at the time the award is received if the employee makes an election no later than 30 days after an employee receives the restricted stock. If a timely election is made, the employee will not recognize any additional income when the restrictions on the shares lapse. If the employee forfeits the shares to the company, the employee may not claim a deduction with respect to the income recognized as a result of the election.

Generally, when an employee disposes of shares acquired under the Plan, the difference between the sales price and his or her basis in such shares will be treated as long- or short-term capital gain or loss depending upon the holding period for the shares.

Registration with the SEC

If the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan is approved by shareholders, the company will file a Registration Statement on Form S-8 with the SEC with respect to the additional shares of Pitney Bowes common stock to be registered pursuant to the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan, as soon as reasonably practicable following shareholder approval.

Tax Treatment of Awards to Employees Outside the United States

The grant and exercise of options and awards under the Plan to employees outside the United States may be taxed on a different basis.

   

Vote Required; Recommendation of the Board of Directors

   

Approval of the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan requires the affirmative vote of a majority of votes cast. Broker non-votes are not considered votes cast and therefore will not be counted either for or against this proposal. With respect to abstentions, for purposes of approval under our By-laws, abstentions are not considered votes cast and therefore will not be counted either for or against; however, for purposes of approval under New York Stock Exchange rules, abstentions are treated as votes cast, and, therefore, will have the same effect as an “against” vote.

The board of directors recommends that stockholders vote FOR the proposal to approve the Amended and Restated Pitney Bowes Inc. 2018 Stock Plan.

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Compensation Discussion and Analysis

 

   

The following discussion and analysis contains statements regarding company performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. Investors should not apply these statements to other contexts.

   

Executive Summary

   

Overview

 

   

This Compensation Discussion and Analysis (CD&A) section explains our compensation philosophy, summarizes the material components of our compensation programs and reviews compensation decisions made by the Executive Compensation Committee (Committee) and the independent board members. The Committee, comprised of only independent directors, makes all compensation decisions regarding executive officers including those identified as named executive officers (NEOs) below, other than the Chief Executive Officer (CEO) and the Chief Operating Officer (COO). The independent board members, based on recommendations by the Committee, determine compensation actions impacting the CEO and the COO.

2018 Named Executive Officers
Marc B. Lautenbach, President and Chief Executive Officer
Stanley J. Sutula III, Executive Vice President and Chief Financial Officer
Lila Snyder, Executive Vice President & President, Commerce Services
Jason Dies, Executive Vice President & President, SMB Solutions
Robert Guidotti, Executive Vice President and President, Software Solutions
Michael Monahan, retired Executive Vice President, Chief Operating Officer

Pitney Bowes has bifurcated the roles of President and CEO and Chairman of the board of directors. Marc B. Lautenbach is President and CEO and Michael I. Roth is non-executive Chairman of the board of directors.

Pitney Bowes announced the retirement of Michael Monahan effective July 9, 2018, and at the same time eliminated the position of COO. As a result, after Mr. Monahan’s retirement, the independent board members made determinations relating to the compensation of the CEO only.

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2018 Summary of Business Performance

 

   

Pitney Bowes continued to make progress on creating long-term value, repositioning our portfolio of businesses to growth markets, making investments for the long-term future of the company, while also decreasing debt and expense, and returning cash to shareholders. Revenue grew in 2018, marking the second consecutive year of growth and the best revenue growth performance in a decade.

We saw continued growth in our Commerce Services group in 2018. For 2018 overall, Commerce Services represented 44 percent of overall company revenue, with shipping revenues comprising 32 percent of the company’s overall revenue total. On a pro forma basis, 2018 shipping volumes in Commerce Services grew 14 percent over 2017 bringing the total label and parcel volumes to nearly 550 million for the year. Our API-enabled shipping solutions business more than doubled on a year-to-year basis. In addition, Presort Services processed over 16.5 billion pieces of mail, an increase of 5 percent versus 2017.

In our Small and Medium Business (SMB) group, we have placed more than 70,000 units of our innovative SendPro C-Series since its launch in 2017, and have nearly 300,000 internet-connected devices in the marketplace. The SendPro C-Series is a digital, multi-carrier platform that enables our SMB clients to use a single device for both their shipping and mailing needs. The SendPro C-Series uses cloud technology to provide greater value and convenience to our clients by offering multiple applications, analytics and services. The company has deployed several new applications to our clients, which are largely oriented towards shipping and provide more value to our clients. Our SMB group represented 47 percent of overall company revenue in 2018.

Our Software Solutions business posted its second consecutive year of growth. Our data and location intelligence products continued to deliver solid growth and meet the requirements of our clients globally.

Our commitment to operational excellence efforts continued in 2018, reducing gross spend for the year by over $150 million against a target of $120 million. We have decreased our SG&A expense by over $400 million over the past six years and reduced our inventory by nearly 80 percent.

From a financial perspective, in 2018, the company:

Generated revenue of $3.5 billion, an increase of 13% versus 2017
Delivered free cash flow of $318 million
Returned $140 million in dividends to our stockholders
Made capital expenditures totaling $191 million
Held at year-end over $867 million in cash on the Balance Sheet
Reported adjusted earnings per diluted share (Adjusted EPS) of $1.16
Reduced debt by $565 million versus 2017

In summary, the company made solid progress against our strategic objectives in 2018 to unlock value for the company’s shareholders and move our portfolio to sustained, long-term growth.

Some of the amounts in the CD&A portion of this proxy statement are shown on a non-GAAP basis. For a reconciliation and additional detail on the calculation of the financial results reported in this proxy statement, including those described above, please refer to page 57 “Non-GAAP Measures.” Our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the SEC on February 20, 2019 describes our business and 2018 financial results in more detail.

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Compensation Discussion and Analysis

Snapshot of 2018 Pay for Performance Actions

 

   

Both our annual and long-term incentive compensation programs are strongly aligned with company performance. Our 2018 annual incentive plan paid 64.4% of target reflecting the company’s performance against 2018 goals. The Performance Stock Units (PSUs) portion of our long-term plan paid 0% of target for the 2016-2018 performance period.

The company divides our performance-based compensation into an annual performance component and a three-year performance component. It does so to incent management to strike an appropriate balance between the short and long- term growth of the company. The 2018 compensation annual and long-term incentive plans reflect this balance and, in 2018, worked as designed to reflect the company’s performance.

Annual Incentive Plan. The company made progress toward important strategic initiatives. In 2018, the company achieved above target for the Revenue Growth financial objective, above threshold for Adjusted Free Cash Flow (Adjusted FCF), and did not achieve threshold for the Adjusted Earnings Before Interest and Taxes (Adjusted EBIT). Consequently, an annual incentive of 64.4% was paid, which includes the results of the strategic modifier.
Long Term Incentive Plan. Throughout the three-year period, the company continued to invest in our long-term success. We have invested in our platforms, systems, products, brand, and talent to reduce the complexities of shipping and mailing for our clients, achieve operational excellence, and leverage economies of scale and experience. In March 2016, the Committee approved the financial objectives for the 2016-2018 PSU cycle. PSU awards for the 2016-2018 cycle utilize three-year cumulative performance metrics in determining payouts. The three-year performance period resulted in a 0% multiplier.

The following tables compare the actual payouts in 2018 and 2017:

Annual Incentive
2018 Actual Payout
Factor as a % of Target
2017 Actual Payout
Factor as a % of Target
Percentage Point Change
2018 vs. 2017
Financial Objectives
 
61.1
%
 
27.5
%
 
 
 
Strategic Modifier(1)
 
3.3
%
 
4.8
%
 
 
 
Total Payout Factor
 
64.4
%
 
32.3
%
 
32.1
 
Long-Term Incentive
2018 Actual Unit Multiplier
Value (2016 - 2018
PSU cycle)
2017 Actual Unit Multiplier
Value (2015 - 2017
PSU cycle)
Total Multiplier Change
2018 vs. 2017
Adjusted Earnings per Share
 
0.00
 
 
0.13
 
 
 
 
Adjusted Free Cash Flow
 
0.00
 
 
0.05
 
 
 
 
TSR Modifier(2)
 
N/A
 
 
(0.04
)
 
 
 
Total Multiplier/Payout Value
 
0.00
 
 
0.14
 
 
(.14
)
(1)The strategic modifier objectives in 2018 included (i) Voice of the Client, measured as an overall Net Promoter Score (NPS) and (ii) High Performance Culture, measured through an annual employee survey. The strategic modifier of 3.3% was awarded by the Executive Compensation Committee.
(2)The TSR Modifier (TSR) is a cumulative three-year modifier, which modifies the final payout by up to +/- 25% based on the company’s TSR as compared to the company’s peer group (see page 48). The relative TSR modifier for the 2015 – 2017 PSU cycle was -20%. The 2016-2018 PSU award did not incorporate a TSR Modifier.

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Compensation Discussion and Analysis

CEO 2018 Compensation

 

   

The independent members of the board of directors increased Mr. Lautenbach’s base salary for 2018 to $1,000,000, with his annual incentive target remaining at 135%, and long-term incentive target increased to $6,500,000. The CEO’s long-term incentive mix includes 60% PSUs, 20% performance-based Restricted Stock Units (RSUs), and 20% Nonqualified Stock Options (NSOs), strongly aligning his compensation to shareholder interests.

The target compensation package of our CEO reflects Pitney Bowes’ performance-linked pay philosophy and is competitive when compared to our peer group and two third-party compensation survey reports (see description on competitive benchmarking of compensation on pages 52 to 54).

The following chart illustrates that 89% of the CEO’s pay is at risk based on company performance.

Pitney Bowes CEO % of Pay
   

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Compensation Discussion and Analysis

CEO Target and Actual Realizable Compensation. The chart below demonstrates how our compensation structure is strongly linked to company performance and shows that based on the company’s performance in 2018, compared to the target value, 31% of the CEO’s total potential compensation was realized as of February, 2019. For this purpose, realized compensation includes base pay, annual incentive, value of RSUs vested, value of PSUs earned, and value of the options vested.
   
 
CEO Target and Actual Realizable Compensation

   

(1)
Target Realizable Compensation represents 2018 base salary, 2018 target annual incentive paid in February, 2019, and: (i) the prorated grant date target value of the RSU awards which vested in February, 2019 (ii) the grant date target value of the 2016-2018 PSU award which vested in February, 2019, and (iii) the prorated grant date target value of the 2016, 2017, and 2018 option awards which vested in February, 2019.
(2)
Actual Realized Compensation represents 2018 base salary, 2018 actual annual incentive paid in February, 2019, and: (i) the value realized upon vesting of the RSU awards in February, 2019, (ii) the value of the 2016-2018 PSU award based on the final performance factor of 0.00 and (iii) the value of the prorated vesting in February 2019 of the option awards.

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Compensation Discussion and Analysis

Executive Compensation Program Structure

   

Compensation Philosophy

 

   

We link executive compensation to the performance of the company as a whole. We believe executives with higher levels of responsibility and a greater ability to influence enterprise results should receive a greater percentage of their compensation as performance-based compensation. Compensation for our NEOs varies from year to year primarily based on achievement of enterprise-wide objectives and in some instances individual performance. We emphasize enterprise-wide performance, as compared to individual business unit performance, to break down any internal barriers that can arise in organizations that emphasize individual performance. We believe our compensation structure encourages reasonable risk-taking but discourages taking excessive risks.

Our executive compensation program is designed to recognize and reward outstanding achievement and to attract, retain, and motivate our leaders. Over the course of each year, we solicit feedback from our major stockholders regarding our executive compensation program, and management speaks individually to stockholders who wish to provide input. At the company’s annual meeting of stockholders in 2018, stockholders voted in favor of the company’s executive compensation by 94.4% of the votes cast.

Below is an overview of key aspects of our pay philosophy.

Overall Objectives
Compensation levels should be sufficiently competitive to attract and retain talent;
   
 
 
 
Compensation should reflect leadership position and responsibility;
   
 
 
 
Executive compensation should be linked to the performance of the company as a whole; and
   
 
 
 
Compensation should motivate our executives to deliver our short and long-term business objectives and strategy.
Pay Mix Principles
Compensation should be tied to short-term performance and creation of long-term stockholder value and return;
   
 
 
 
Performance-based compensation should be a significant portion of total compensation for executives with higher levels of responsibility and a greater ability to influence enterprise results; and
   
 
 
 
Executives should own meaningful amounts of Pitney Bowes stock to align their interests with Pitney Bowes’ stockholders.
Pay for Performance
Incentive compensation should reward both short-term and long-term performance;
   
 
 
 
A significant portion of our compensation should be variable based on performance; and
   
 
 
 
The annual and long-term incentive components should be linked to operational outcomes, financial results or stock price performance.

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Compensation Discussion and Analysis

Stockholder Engagement — Executive Compensation

   

It is our practice to conduct stockholder outreach calls and meetings twice a year in the spring and fall. We contact stockholders holding approximately 50% of our outstanding shares and actively seek their views on various governance topics and executive compensation matters. We also periodically engage proxy advisory firms for their viewpoints. If requested, various board members are available to discuss these matters with our investors.
   

   

Strong Compensation and Pay Governance Practices

   

We believe our executive compensation program demonstrates a strong link between pay and performance in its design and exhibits strong governance pay practices. The following lists the principal pay for performance and governance practices adopted by the board.


100% of annual incentive is tied to financial
metrics
   
 

100% of long-term incentive is equity based for NEOs and tied to financial metrics, growth in our share price, and relative shareholder value
   
 

Double trigger vesting in our change of control provisions
   
 

Significant stock ownership guidelines for senior executives and directors
   
 

Enhanced disclosure of performance targets
   
 

Independent compensation consultant performing no other services for the company
   
 

Clawback provisions in the event of financial restatement
   
 

Annual stockholder advisory vote on executive compensation
   
 

Significant CEO pay at risk (89%)
   
 

Independent Chairman of bo