UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934

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þ Definitive Proxy Statement o Definitive Additional Materials
       
o Soliciting Materials 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)

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Notice of the 2011
Annual Meeting
and
Proxy Statement

 

 

 

 

 

 

 

Pitney Bowes Inc.
World Headquarters
1 Elmcroft Road
Stamford, Connecticut 06926-0700
(203) 356-5000


 

 

 

 

 

 

 

 

 

 

 

 

 

 

To the Stockholders:

 

 

 

 

 

 

We will hold our 2011 annual meeting of stockholders at 9:00 a.m. on Monday, May 9, 2011 at our World Headquarters in Stamford, Connecticut.

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 to vote your shares through one of the three convenient methods described in this proxy statement. 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, 2010, to many of our stockholders over the Internet pursuant to Securities and Exchange Commission rules. We urge you to review our Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2010, as well as our Proxy Statement for information on our financial results and business operations over the past year and our strategy. 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 25, 2011 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 vote 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, if specifically requested, 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, 2010 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 to vote via telephone or the Internet, as soon as possible. If you decide to attend the annual meeting and wish to change your vote, you may do so by voting in person at the annual 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.

We look forward to seeing you at the meeting.

Murray D. Martin
Chairman, President and
Chief Executive Officer

Stamford, Connecticut
March 25, 2011


Notice of Meeting:

 

 

 

 

 

 

The annual meeting of stockholders of Pitney Bowes Inc. will be held on Monday, May 9, 2011, at 9:00 a.m. at the company’s World Headquarters, 1 Elmcroft Road, Stamford, Connecticut 06926-0700. Directions to Pitney Bowes’ World Headquarters appear on the back cover page of the proxy statement.

Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 9, 2011:

Pitney Bowes’ 2011 Proxy Statement and Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2010, are available at www.proxyvote.com.

The items of business at the annual meeting are:

 

1.

 

 

 

Election of Directors.

 

2.

 

 

 

Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2011.

 

3.

 

 

 

Amendments to the Restated Certificate of Incorporation and Amended and Restated By-laws to Remove Supermajority Vote Requirements for the Following Actions:

 

 

 

 

 

Proposal 3(a): Removing any director from office

 

 

 

 

 

Proposal 3(b): Certain business combinations

 

 

 

 

 

Proposal 3(c): Amending certain provisions of the Certificate

 

 

 

 

 

Proposal 3(d): Amending certain provisions of the By-laws

 

4.

 

 

 

Advisory Vote on Executive Compensation.

 

5.

 

 

 

Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation.

 

6.

 

 

 

Approval of the Material Terms of the Performance Goals Pursuant to Internal Revenue Code Section 162(m) for the Following Incentive Plans:

 

 

 

 

 

Proposal 6(a): Pitney Bowes Inc. Key Employees Incentive Plan

 

 

 

 

 

Proposal 6(b): Pitney Bowes Inc. 2007 Stock Plan

 

7.

 

 

 

Such other matters as may properly come before the meeting, including any continuation of the meeting caused by any adjournment of the meeting.

Proposal 3 would amend the Certificate and the By-laws to remove supermajority vote requirements with respect to (a) removing any director from office; (b) certain business combinations; (c) amending certain provisions of the Certificate; and (d) amending certain provisions of the By- laws. This summary is qualified by reference to Proposal 3 set forth in the proxy statement for the 2011 annual stockholders meeting and to Annex A thereto, which sets forth the full text of the proposed amendments. You are urged to read Annex A to our 2011 proxy statement in its entirety.

March 18, 2011 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 25, 2011.

Amy C. Corn
Corporate Secretary

NOTICE: Brokers, banks and other nominees are not permitted to vote on our proposals regarding the election of directors, amendments to our Restated Certificate of Incorporation and Amended and Restated By-laws or executive compensation matters without instructions from the beneficial owner. Your vote is important. Therefore, if your shares are held through a broker, bank or other nominee, please instruct your broker, bank or other nominee on how to vote your shares. Unless you provide instructions to your broker, banker or other nominee on how to vote your shares, your shares will not be voted for proposals 1, 3, 4, 5 or 6.


TABLE OF CONTENTS

 

 

 

 

 

Page

Proxy Statement

 

5

The Annual Meeting and Voting

 

5

Annual Meeting Admission

 

5

Who is entitled to vote?

 

5

How do I vote?

 

5

May I change my vote?

 

5

What constitutes a quorum?

 

5

How are votes counted?

 

6

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

 

6

Who will count the votes?

 

7

Multiple Copies of Annual Report to Stockholders

 

7

Electronic Delivery of Annual Report and Proxy Statement

 

7

Stockholder Proposals and Other Business for the 2012 Annual Meeting

 

7

Corporate Governance

 

7

Board of Directors

 

7

Leadership Structure

 

7

Responsibilities and Characteristics of the Lead Director

 

8

Role of the Board of Directors in Risk Oversight

 

8

Director Independence

 

9

Communications with the Board of Directors

 

9

Board Committees and Meeting Attendance

 

10

Audit Committee

 

10

Corporate Responsibility Committee

 

11

Executive Committee

 

11

Executive Compensation Committee

 

11

Finance Committee

 

11

Governance Committee

 

11

Technology Committee

 

12

Revised Board Committee Structure for 2011

 

12

Directors’ Compensation

 

13

Role of Governance Committee in Determining Director Compensation

 

13

Directors’ Fees

 

13

Directors’ Stock Plan

 

13

Directors’ Deferred Incentive Savings Plan

 

13

Directors’ Retirement Plan

 

13

Director Compensation for 2010 Table

 

14

Certain Relationships and Related-Person Transactions

 

15

Compensation Committee Interlocks and Insider Participation

 

15

Security Ownership of Directors and Executive Officers Table

 

16

Beneficial Ownership

 

17

Section 16(a) Beneficial Ownership Reporting Compliance

 

18

Proposal 1: Election of Directors

 

18

Director Qualifications

 

18

Nominees for Election

 

19

Vote Required

 

19

2


 

 

 

 

 

Page

Nominees for Election to One Year Terms

 

20

Incumbent Directors Whose Terms Expire in 2013

 

21

Incumbent Directors Whose Terms Expire in 2012

 

21

Report of the Audit Committee

 

23

Proposal 2: Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2011

 

23

Principal Accountant Fees and Services

 

23

Vote Required

 

24

Proposal 3: Amendments to the Restated Certificate of Incorporation and Amended and Restated By-laws to Remove Supermajority Vote Requirements for the Following Actions:

 

24

Proposal 3(a): Removing any director from office

 

24

Proposal 3(b): Certain business combinations

 

25

Proposal 3(c): Amending certain provisions of the Certificate

 

25

Proposal 3(d): Amending certain provisions of the By-laws

 

25

Vote Required

 

25

Proposal 4: Advisory Vote on Executive Compensation

 

26

Vote Required

 

27

Proposal 5: Advisory Vote on Frequency of Future Advisory Votes on Executive Compensation

 

27

Vote Required

 

28

Proposal 6: Approval of the Material Terms of the Performance Goals Pursuant to Internal Revenue Code Section 162(m) for the Following Incentive Plans:

 

28

Proposal 6(a): Pitney Bowes Inc. Key Employees Incentive Plan

 

29

Proposal 6(b): Pitney Bowes Inc. 2007 Stock Plan

 

30

Vote Required

 

30

Report of the Executive Compensation Committee

 

30

Compensation Discussion and Analysis

 

31

Executive Compensation Tables and Related Narrative

 

45

Additional Information

 

67

Solicitation of Proxies

 

67

Other Matters

 

67

Annex A: Proposed Amendments to the Restated Certificate of Incorporation and the Amended and Restated By-laws to Remove Supermajority Vote Requirements

 

A-1

 

 

 

Directions to Pitney Bowes

 

back cover

3


 

 

 

 

 

 

 

 

 

 

 

 

 

 

Proxy Statement

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 9, 2011, at 9:00 a.m. at the company’s World Headquarters, 1 Elmcroft Road, Stamford, Connecticut, 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 stockholder of record. 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 (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.

Who is entitled to vote?

Record stockholders of Pitney Bowes common stock and $2.12 convertible preference stock at the close of business on March 18, 2011 (the record date) can vote at the meeting. As of the record date 203,847,135 shares of Pitney Bowes common stock and 27,386 shares of $2.12 convertible preference stock were issued and outstanding. Each stockholder has one vote for each share of common stock owned as of the record date, and 16.53 votes for each share of $2.12 convertible preference stock owned as of the record date.

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 grant your proxy to have your shares voted: (i) you may grant your proxy on-line via the Internet by accessing the following website and following the instructions provided: www.proxyvote.com; (ii) you may grant your proxy by telephone (1-800-690-6903); or (iii) if you received your annual meeting material by mail, you may grant your proxy by completing and mailing the proxy card. Alternatively, you may attend the meeting and vote 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.

May I change my vote?

If you are a registered stockholder, you may change your vote at any time before your proxy is voted at the meeting by any of the following methods: (i) you may send in a revised proxy dated later than the first proxy; (ii) you may vote in person at the meeting; or (iii) 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 change your vote.

What constitutes a quorum?

A majority of the shares entitled to vote constitutes a quorum. If you grant your proxy by Internet, telephone or proxy card, you will be considered part of the

5


quorum. Abstentions and broker non-votes are included in the count to determine a quorum. If a quorum is present, director candidates receiving the affirmative vote of a majority of votes cast will be elected. Proposals 2, 4, 5, 6(a) and 6(b) will be approved if a quorum is present and a majority of the votes cast by the stockholders are voted for the proposal. Proposals 3(a), 3(b), 3(c) and 3(d) will be approved if a quorum is present and at least 80% of the voting power of all of the shares entitled to vote generally in the election of directors, voting together as a single class, is voted in favor of the proposal.

How are votes counted?

Brokers, banks and other nominees are not permitted to vote on the election of directors, amendments to our Restated Certificate of Incorporation and Amended and Restated By-laws or executive compensation matters without instructions from the beneficial owner, as discussed in more detail below. Your vote is important. Therefore, if your shares are held through a broker, bank or other nominee, please instruct your broker, bank or other nominee on how to vote your shares. Unless you provide instructions to your broker, banker or other nominee on how to vote your shares, your shares will not be voted for proposals 1, 3, 4, 5 or 6.

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 or if you abstain on one or more agenda items, the effect would be as follows:

Proposal 1:

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

Proposal 2:

If you choose to abstain in the ratification of the Audit Committee’s selection of the independent accountants for 2011, the abstention will have no effect.

Proposal 3 (including Proposal 3(a), Proposal 3(b), Proposal 3(c) and Proposal 3(d)):

If you choose to abstain with respect to the amendments to the Restated Certificate of Incorporation (“Certificate”) and the Amended and Restated By-laws (“By-laws”) to remove supermajority vote requirements for removing any director from office, in the case of Proposal 3(a); for certain business combinations, in the case of Proposal 3(b); for amending certain provisions of the Certificate, in the case of Proposal 3(c); and/or for amending certain provisions of the By-laws, in the case of Proposal 3(d); it will have the same effect in each case as a vote against the proposal. Broker non-votes will have the same effect in each case as a vote against the proposal.

Proposal 4:

The vote on 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. If you choose to abstain, the abstention will have no effect. Broker non-votes would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes would have no effect.

Proposal 5:

The vote on the frequency of the vote on 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. If you choose to abstain, the abstention will have no effect. Broker non-votes would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes would have no effect.

Proposal 6 (including Proposal 6(a) and Proposal 6(b)):

If you choose to abstain in the approval of the material terms of the performance goals in the Pitney Bowes Key Employee Incentive Plan pursuant to Internal Revenue Code Section 162(m), in the case of Proposal 6(a) and/or the terms of the performance goals in the Pitney Bowes Inc. 2007 Stock Plan, in the case of Proposal 6(b), the abstention will have no effect. Broker non-votes would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes would have no effect.

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

If you are a stockholder of record and participate in the company’s Dividend Reinvestment Plan, or the company’s 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 the company’s 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

6


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.

Multiple Copies of Annual Report to Stockholders

In addition to furnishing proxy materials over the Internet, the company takes advantage of the Securities and Exchange Commission’s “householding” rules to reduce the delivery cost of materials. Under such rules, only one Notice or, if paper copies are requested, only one proxy statement, annual report to stockholders including the report on Form 10-K are delivered to multiple stockholders sharing an address unless the company has received contrary instructions from one or more of the stockholders. If a stockholder sharing an address wishes to receive a separate Notice or copy of the proxy materials, he or she may so request by contacting Broadridge Householding Department by phone at 1-800-579-1639 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. A separate copy will be promptly provided following receipt of a stockholder’s request, and such stockholder will receive separate materials in the future. Any stockholder currently sharing an address with another stockholder but nonetheless receiving separate copies of the materials may request delivery of a single copy in the future by contacting Broadridge Householding Department at the number or address shown above. Additional copies of our annual report to stockholders, including the report on Form 10-K or proxy statement will be sent to stockholders free of charge upon written request to Investor Relations, Pitney Bowes Inc., 1 Elmcroft Road, MSC 63-02, Stamford, CT 06926-0700. If you own shares of stock through a bank, broker, trustee or other nominee and receive more than one Pitney Bowes annual report, please contact that entity to eliminate duplicate mailings.

Electronic Delivery of Annual Report and Proxy Statement

This proxy statement and our 2010 annual report may be viewed online at www.proxyvote.com. If you are a stockholder of record and receive the annual meeting material by mail, you can elect to receive future annual reports and proxy statements electronically or by following the instructions provided if you grant your proxy by Internet or by telephone. If you choose this option, you will receive an e-mail for future meetings listing the website locations of these documents and your choice 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.

Stockholder Proposals and Other Business for the 2012 Annual Meeting

If a stockholder wants to submit a proposal for inclusion in the company’s proxy material for the 2012 annual meeting, which is scheduled to be held on Monday, May 14, 2012, it must be received by the corporate secretary by November 26, 2011. 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 by February 9, 2012. There are other procedural requirements in the By-laws pertaining to stockholder proposals and director nominations. The By-laws are posted on the company’s Corporate Governance website at www.pb.com under the caption “Our Company-Leadership & Governance.”

Corporate Governance

Stockholders are encouraged to visit the company’s Corporate Governance website at www.pb.com under the caption “Our Company” for information concerning the company’s 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. The company’s Business Practices Guidelines, which is the company’s Code of Ethics for employees, including the company’s chief executive officer and chief financial officer, is also available on the company’s Leadership & Governance website. We intend to disclose 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.

Board of Directors

Leadership Structure

The company’s chief executive officer also serves as the chairman of the board of directors. The board of directors has a Lead Director who is an independent member of the board of directors. In determining the appropriate leadership structure, the board of directors considered a number of factors, including the

7


effectiveness of the role of independent Lead Director, the candor and dynamics of discussion among the directors and between directors and management, the facility with which directors influence the content of board meeting agendas, and the significance attributed by the company’s external constituents in the worldwide postal markets to the title of chairman.

The board of directors established well-defined responsibilities, qualifications and selection criteria, and term and term limits with respect to the position of Lead Director. This information is set forth in detail in the Governance Principles of the Board of Directors, which can be found on the company’s website at www.pb.com under the caption “Our Company-Leadership & Governance.” A description of the Lead Director responsibilities and characteristics appears below. Additional information may be found in the Governance Principles of the Board of Directors.

The Lead Director should be a member of the Governance Committee. In cases where the board of directors appoints a Lead Director who is not a member of the Governance Committee, the Lead Director will be appointed as an additional member of the Governance Committee to serve during his or her term(s) as Lead Director.

In May 2008, the board of directors appointed James H. Keyes, one of the independent directors, to serve as the board’s Lead Director for an initial term of two years. In May 2010, the board of directors appointed Mr. Keyes to serve as Lead Director for an additional one-year term.

The board of directors believes that the leadership structure it has chosen for Pitney Bowes is appropriate in light of the constructive and candid nature of the discussion at board and committee meetings, as well as the directors’ freedom to participate in the agenda-setting process, the directors’ access to members of senior management outside the presence of the chief executive officer, and the robust role of the Lead Director.

Responsibilities and Characteristics of the Lead Director

The Lead Director chairs meetings of the board of directors in executive session; acts as chairman of the board in situations where the chairman and chief executive officer is unable to serve in that capacity; briefs the chief executive officer, as needed, following discussions by the board in executive session; reviews and provides comment, as appropriate, concerning proposed agendas for meetings of the board of directors; reviews and provides comment, as appropriate, on draft minutes of board of directors meetings prior to their distribution to the full board; communicates informally with the other directors between meetings of the board to foster free and open dialog among directors; reviews and responds, as appropriate, in accordance with guidelines established by the board of directors to communications from stockholders and other interested parties; partners with the Chair of the Governance Committee to provide performance and other feedback to the chief executive officer following the annual joint meeting of the Governance and Executive Compensation Committees; and partners with the Chair of the Executive Compensation Committee to provide compensation information to the chief executive officer following meetings of the board of directors where compensation action is taken with respect to the chief executive officer.

The Lead Director must exhibit the following characteristics and skills: diplomacy, sound judgment, the ability to work collaboratively, to communicate effectively, with clarity and candor, and to recognize and act in accordance with an appropriate balance between (i) active mentor to the chief executive officer and communications aide to the board of directors, and (ii) maintaining an oversight (rather than management) perspective as a member of the board of directors.

Role of the Board of Directors in Risk Oversight

The board of the directors is responsible for oversight of the company’s risk assessment and risk management process. The enterprise risk management process was established to identify, assess, monitor and address risks across the entire company and its business operations. Management is responsible for risk management, including identification and mitigation planning. 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.

Oversight responsibility for each of the company’s identified enterprise wide risks is assigned, upon the recommendation of the Governance Committee and approval by the board of directors, to either a specific committee of the board, or to the full board. Each committee, with the exception of the Executive Committee, is responsible for oversight of one or more of the company’s risks. The assignments are made based upon, in each case, 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, and the Audit Committee oversees risks relating to internal controls. 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.

8


The Audit Committee is responsible for overseeing and reviewing on an ongoing basis the overall process by which management identifies and manages the company’s risks. On an annual basis the board of directors receives a report on the status of all enterprise risks and their related plans.

Management monitors the company’s risks and determines, from time to time, whether new risks should be added 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, emerging risks.

The process for the board’s oversight of mitigation of the company’s enterprise risks was developed in 2006 by the Governance Committee and presented to the board of directors for review and adoption and is reviewed and updated as appropriate from time to time.

Director Independence

The board of directors has conducted its annual review of the independence of each director under the New York Stock Exchange listing standards and the standards of independence, which are set forth in the Governance Principles of the Board of Directors which are available on the company’s website at www.pb.com under the caption “Our Company-Leadership & Governance.”

Based upon its review, the board of directors has concluded in its business judgment that the following directors are independent: Rodney C. Adkins, Linda G. Alvarado, Anne M. Busquet, Anne Sutherland Fuchs, Ernie Green, James H. Keyes, Eduardo R. Menascé, Michael I. Roth, David L. Shedlarz, David B. Snow, Jr. and Robert E. Weissman.

In making this determination, the board of directors considered that in the ordinary course of business, transactions may occur between Pitney Bowes and its subsidiaries and companies or other entities at which some of our directors are executive officers. Under the company’s independence standards, business transactions meeting the following criteria are not considered to be material transactions that would impair a director’s independence.

The director is an employee or executive officer of another company that does business with Pitney Bowes and our annual payments to or from that company in each of the last three fiscal years are in an amount less than the greater of $1 million or two percent of the annual consolidated gross revenues of the company by which the director is employed.

During 2010, Messrs. Adkins, Roth, and Snow were employed at corporations with which Pitney Bowes engages in ordinary course of business transactions. We reviewed all transactions with each of these entities and determined these transactions were made in the ordinary course of business and were below the threshold set forth in our director independence standards referenced above.

Communications with the Board of Directors

The board of directors has established procedures by which stockholders and other interested parties may communicate with the Lead Director, the Audit Committee chair, the independent directors, or the board. Such parties may communicate with the Lead Director via e-mail at lead.director@pb.com, with 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., 1 Elmcroft Road, MSC 65-19, Stamford, CT 06926-0700.

The board of directors has instructed the corporate secretary to assist the Lead Director, the 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 Lead Director;

 

(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 Lead Director. 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 written communications to the full board of directors or to any individual director or directors to whom the communication is directed unless the communication is threatening, illegal or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.

It is the longstanding practice and the policy of the board of directors that the directors attend the annual meeting of stockholders. All directors attended the May 2010 annual meeting.

9


Board Committees and Meeting Attendance

During 2010, 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 seven times in 2010, and the independent directors met in executive session, without any member of management in attendance, six times.

Members of the board of directors serve on one or more of the seven committees described below. Mr. Martin serves as the chair 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. All board committee charters are posted on the company’s website at www.pb.com under the caption “Our Company-Leadership & Governance” and are available in print to stockholders who request them. The members of each of the board committees are set forth in the following chart. As the need arises, the board may utilize ad hoc committees of the board to consider specific issues.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Audit

 

Corporate
Responsibility

 

Executive

 

Executive
Compensation

 

Finance

 

Governance

 

Technology(1)

Rodney C. Adkins

 

 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

X

 

 

Linda G. Alvarado

 

 

 

 

 

X

*

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

Anne M. Busquet

 

 

 

X

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

 

 

Anne Sutherland Fuchs

 

 

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

Ernie Green

 

 

 

 

 

X

 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

James H. Keyes

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

X

*

 

 

 

 

 

 

X

 

 

 

 

Murray D. Martin

 

 

 

 

 

 

 

X

*

 

 

 

 

 

 

 

 

 

 

Eduardo R. Menascé

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

X

 

 

Michael I. Roth

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

 

 

X

*

 

 

 

 

X

 

 

 

 

David L. Shedlarz

 

 

 

X

*

 

 

 

 

 

 

 

 

 

 

X

 

 

 

 

X

 

 

 

 

David B. Snow, Jr.

 

 

 

 

 

 

 

 

 

X

 

 

 

 

 

 

 

 

X

 

 

Robert E. Weissman

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

X

 

 

 

 

 

 

X

*

 

 

 

 


 

 

*

 

 

 

Committee Chair

 

(1)

 

 

 

John MacFarlane was the Chair of the Technology Committee until his death in December 2010.

The Audit Committee, which met six times in 2010, monitors the financial reporting standards and practices of the company and the company’s internal financial controls to confirm compliance with the policies and objectives established by the board of directors and oversees the company’s ethics and compliance programs. The committee appoints independent accountants to conduct the annual audits, and discusses with the company’s 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 the company’s internal accounting controls and the scope and results of the company’s 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. In addition, it oversees management of one or more specific risks as described on pages 8 and 9 of this proxy statement under the title “Role of the Board in Risk Oversight.” The committee meets in executive session with the independent accountants and internal auditor at each committee meeting. The committee’s charter, which was last amended in February 2010, is available on the company’s website at www.pb.com under the heading “Our Company-Leadership & Governance.”

The board of directors has determined that the following members of the Audit Committee, James H. Keyes, Michael I. Roth, David L. Shedlarz and Robert E. Weissman, are “audit committee financial experts,”

10


as that term is defined by regulation of the Securities and Exchange Commission. All audit committee members are independent as independence for audit committee members is defined in the New York Stock Exchange standards.

The Corporate Responsibility Committee, which met three times in 2010, monitored the company’s corporate social responsibility, workforce relations, brand reputation, procurement, product stewardship, environmental health and safety, and operational continuity. In addition, it oversaw management of one or more specific risks as described further under the heading “Role of the Board in Risk Oversight” on pages 8 and 9 of this proxy statement.

The Executive Committee, which met once in 2010, can act, to the extent permitted by applicable law and the company’s Restated Certificate of Incorporation and its Bylaws, on all matters concerning management of the business which may arise between scheduled board of directors meetings and as described in the committee’s charter.

The Executive Compensation Committee, or the Committee, which met eight times in 2010, is responsible for the company’s executive compensation policies and programs. The Committee chair frequently consults with, and the Committee periodically meets in executive session with, Frederic W. Cook & Co., Inc., which we refer to as FWC, its outside consultant. The Committee recommends to all of the independent directors for final approval policies, programs and specific actions regarding the compensation of the chairman and the chief executive officer, and approves the same for all of the executive officers of the company. The Committee also recommends the “Compensation Discussion and Analysis” for inclusion in the company’s proxy statement, in accordance with the rules and regulations of the Securities and Exchange Commission, and reviews and approves allocations of shares in the company’s employee stock plans in connection with the granting of stock options and other stock awards. In addition, it oversees management of one or more specific risks as described further under “Role of the Board in Risk Oversight” on pages 8 and 9 of this proxy statement. The Committee’s charter, which was last amended in February 2011, is available on the company’s website at www.pb.com under the heading “Our Company-Leadership & Governance.”

The Finance Committee, which met five times in 2010, reviews the company’s financial condition and evaluates significant financial policies and activities, oversees the company’s major retirement programs, advises management and recommends financial action to the board of directors. The committee’s duties include monitoring the company’s current and projected financial condition, reviewing and approving major investment decisions, and overseeing the financial operations of the company’s retirement, savings, and post-retirement benefit plans and retirement funds to confirm that plan liabilities are adequately funded and plan assets are prudently managed. The committee recommends for approval by the board of directors the establishment of new plans and any amendments that materially affect cost, benefit coverages, or liabilities of the plans. In addition, it oversees management of one or more specific risks as described further under “Role of the Board in Risk Oversight” on pages 8 and 9 of this proxy statement.

The Governance Committee, which met six times in 2010, recommends nominees for election to the board of directors, determines the duties of and recommends membership in the board committees, reviews executives’ potential for growth, reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board, and, with the chief executive officer, is responsible for succession planning and ensuring management continuity. The Governance Principles of the Board of Directors, which are posted on the company’s website at www.pb.com under the caption “Our Company-Leadership & 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. In addition, it oversees management of one or more specific risks as described further under “Role of the Board in Risk Oversight” on pages 8 and 9 of this proxy statement.

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 the Corporate Secretary, Pitney Bowes Inc., 1 Elmcroft Road, MSC 65-19, Stamford, CT 06926-0700. Recommendations submitted for consideration by the committee in preparation for the 2012 annual meeting of stockholders must be received by January 3, 2012, and 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 the company’s stock entitled to vote at the meeting; (iv) a statement in support of the stockholder’s recommendation, including a description of the

11


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 Securities and Exchange Commission; and (vi) the candidate’s written, signed consent to serve if elected.

The Governance Committee evaluates candidates recommended by stockholders 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 the company’s Corporate Governance website at www.pb.com under the caption “Our Company-Leadership & Governance,” include a description of director qualifications. A discussion of the specific experience and qualifications identified by the committee for directors and nominees may be found under “Director Qualifications” on page 18 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 7 of this proxy statement, stockholders intending to appear at a stockholders’ meeting in order to nominate a candidate for election by the stockholders at the meeting (in cases where the board of directors does not intend to nominate the candidate or where the Governance Committee was not requested to consider his or her candidacy) must comply with the procedures in Article II, Section 6 of the company’s By-laws. The By-laws are posted on the company’s Corporate Governance website at www.pb.com under the caption “Our Company-Leadership & Governance.”

The Technology Committee, which met two times in 2010, monitored the company’s information technology strategy, significant product development activities (including software initiatives), and new technology investments. In addition, it oversaw management of one or more specific risks as described further under “Role of the Board in Risk Oversight” on pages 8 and 9 of this proxy statement.

Revised Board Committee Structure for 2011

On February 14, 2011, the board of directors approved a change in the board committee structure, effective as of March 1, 2011. The Governance Committee recommended the change in structure to reduce the administrative burdens of supporting seven committees while continuing to support the effectiveness of the committees’ oversight role and support of the board functions. The Corporate Responsibility Committee and the Technology Committee were discontinued and matters overseen by them, as appropriate, were reassigned to other committees or to the full board. As of March 1, 2011, members of the board of directors will serve on the committees as described below.

 

 

 

 

 

 

 

 

 

 

 

Name

 

Audit

 

Executive

 

Executive
Compensation

 

Finance

 

Governance

Rodney C. Adkins

 

 

 

X

 

 

 

 

 

 

 

 

X

 

 

 

 

Linda G. Alvarado

 

 

 

 

 

 

 

 

 

X

 

 

 

 

X

 

 

Anne M. Busquet

 

 

 

X

 

 

 

 

 

 

 

 

X

 

 

 

 

Anne Sutherland Fuchs

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

 

 

Ernie Green(1)

 

 

 

 

 

 

 

 

 

 

 

X

 

 

James H. Keyes

 

 

 

 

 

X

 

 

 

 

X

*

 

 

 

 

 

 

X

 

 

Murray D. Martin

 

 

 

 

 

X

*

 

 

 

 

 

 

 

 

Eduardo R. Menascé

 

 

 

 

 

 

 

X

 

 

 

 

 

 

X

 

 

Michael I. Roth

 

 

 

X

 

 

 

 

X

 

 

 

 

 

 

X

*

 

 

 

 

David L. Shedlarz

 

 

 

X

*

 

 

 

 

X

 

 

 

 

 

 

X

 

 

 

 

David B. Snow, Jr.

 

 

 

 

 

 

 

X

 

 

 

 

 

 

X

 

 

Robert E. Weissman

 

 

 

 

 

X

 

 

 

 

X

 

 

 

 

 

 

X

*

 

 


 

 

*

 

 

 

Committee Chair

(1)

 

 

 

In accordance with our policy, Mr. Green will retire prior to the 2011 Stockholders Meeting.

12


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 consults from time to time with a compensation consultant, selected and retained by the committee, as to the competitiveness of the program. In 2006, the Governance Committee reviewed peer group and market data provided by Steven Hall & Partners in considering and determining non-employee director compensation effective January 1, 2007. The following is a summary of the director compensation program.

Directors’ Fees. During 2010, each director who was not an employee of the company received an annual fee of $65,000 and a meeting fee of $1,500 for each board and committee meeting attended. Committee chairs (except for the Audit Committee chair) receive an additional $1,500 for each committee meeting that they chair, and the Audit Committee chair receives an additional $2,000 for each Audit Committee meeting chaired. The Lead Director receives an additional annual retainer of $10,000. All directors are reimbursed for their out-of-pocket expenses incurred in attending board and committee meetings.

The board of directors maintains directors’ stock ownership guidelines, requiring, among other things, that each director accumulate and retain a minimum of 7,500 shares of company common stock within five years of becoming a director of Pitney Bowes. All members of the board of directors are in compliance with these guidelines. The directors’ stock ownership guidelines are available on the company’s Corporate Governance website at www.pb.com under the caption “Our Company-Leadership & Governance.”

Directors’ Stock Plan. Under the Directors’ Stock Plan, in 2010 each director who was not an employee of the company received an award of 2,200 shares of restricted stock which are fully vested upon grant. The shares carry full voting and dividend rights but, unless certain conditions are met, may not be transferred or alienated until the later of (i) termination of service as a director, or, if earlier, the date of a change of control (as defined in the Directors’ Stock Plan), and (ii) the expiration of the six-month period following the grant of such shares. The Directors’ Stock Plan permits certain dispositions of stock granted under the restricted stock program provided that the director effecting the disposition had accumulated and will retain 7,500 shares of common stock. Permitted dispositions are limited to: (i) transfer to a family member or family trust or partnership; and (ii) donations to charity after the expiration of six months from date of grant. The original restrictions would continue to apply to the donee except that a charitable donee would not be bound by the restriction relating to termination of service from the board of directors.

Ownership of shares granted under the Directors’ Stock Plan is reflected in the table on page 16 of this proxy statement showing security ownership of directors and executive officers.

Directors’ Deferred Incentive Savings Plan. The company maintains 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. Deferral elections made with respect to plan years prior to 2004 also included as an investment choice the ability to invest in options to purchase common stock of the company.

Stock options selected by directors as an investment vehicle for deferred compensation were granted through the Directors’ Stock Plan. The Directors’ Stock Plan permits the exercise of stock options granted after October 11, 1999 during the full remaining term of the stock option by directors who have terminated service on the board of directors, provided that service on the board is terminated: (i) after ten years of service on the board; (ii) due to director’s death or disability; or (iii) due to the director having attained mandatory directors’ retirement age. The stock options may be exercised for three months following termination for any other reason. The Directors’ Stock Plan also permits the donation of vested stock options, regardless of the date of grant, to family members and family trusts or partnerships. All outstanding stock options are fully vested.

Directors’ Retirement Plan. The company’s Directors’ Retirement Plan was discontinued, and the benefits previously earned by directors were frozen as of May 12, 1997.

Under this plan, there is no benefit paid to a director who served for less than five years as of May 12, 1997. A director who had met the five-year minimum vesting requirement as of May 12, 1997 will receive an annual retirement benefit calculated as 50% of the director’s retainer in effect as of May 12, 1997, and a director with more than five years of service at retirement will receive an additional ten percent of such retainer for each year of service over five, to a maximum of 100% of such retainer for ten or more years of service. The annual retainer fee in effect as of May 12, 1997, was

13


$30,000. The annual retirement benefit is paid for life. 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. She had completed five years of service as a director as of the date the plan was frozen, and will therefore receive an annual benefit of $15,000.

DIRECTOR COMPENSATION FOR 2010

 

 

 

 

 

 

 

 

 

 

 

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 ($)

Mr. Adkins

 

 

 

83,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

137,153

 

Ms. Alvarado

 

 

 

92,000

 

 

 

 

54,153

 

 

 

 

7,186

 

 

 

 

5,000

 

 

 

 

158,339

 

Ms. Busquet

 

 

 

89,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

143,153

 

Ms. Fuchs

 

 

 

92,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

5,000

 

 

 

 

151,153

 

Mr. Green

 

 

 

86,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

140,153

 

Mr. Keyes

 

 

 

129,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

183,153

 

Mr. Menascé

 

 

 

90,500

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

144,653

 

Mr. McFarlane(5)

 

 

 

89,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

143,153

 

Mr. Roth

 

 

 

107,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

5,000

 

 

 

 

166,153

 

Mr. Shedlarz

 

 

 

106,500

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

5,000

 

 

 

 

165,653

 

Mr. Snow

 

 

 

89,000

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

143,153

 

Mr. Weissman

 

 

 

113,500

 

 

 

 

54,153

 

 

 

 

0

 

 

 

 

0

 

 

 

 

167,653

 

 

(1)

 

 

 

Each non-employee director receives an annual retainer of $65,000 ($16,250 per quarter) and a meeting fee of $1,500 for each board and committee meeting attended. Committee chairs (except for the Audit Committee chair) receive an additional $1,500 for each committee meeting that they chair, and the Audit Committee chair receives an additional $2,000 for each Audit Committee meeting chaired. The Lead Director receives an additional annual retainer of $10,000.

 

(2)

 

 

 

On May 10, 2010, each non-employee director then serving received an award of 2,200 shares of restricted stock. The fair market value of the restricted share awards was calculated using the average of the high and low stock price, $24.97 and $24.26, respectively, as reported on the New York Stock Exchange on May 10, 2010, the date of grant. The closing price on May 10, 2010 on the New York Stock Exchange was $24.91. The grant date fair market value of the restricted stock awards was computed in accordance with the share-based payment accounting guidance under ASC 718. The aggregate number of shares of restricted stock held by each director as of December 31, 2010 is as follows: Mr. Adkins – 8,143 shares; Ms. Alvarado – 26,800 shares; Ms. Busquet – 7,722 shares; Ms. Fuchs – 11,163 shares; Mr. Green – 17,700 shares; Mr. Keyes – 21,800 shares; Mr. Menascé – 16,792 shares; Mr. Roth – 23,600 shares; Mr. Shedlarz – 16,792 shares; Mr. Snow – 10,200 shares; and Mr. Weissman – 16,792 shares. Stock options were not awarded to non-employee directors during 2010. Stock options formerly were available to non- employee directors as an investment choice under the Directors’ Deferred Incentive Savings Plan. Cash fees deferred with respect to plan years prior to 2004 could be invested in options to purchase common stock of the company. The aggregate number of stock options held by each director as of December 31, 2010 is as follows: Mr. Weissman – 1,789.

 

(3)

 

 

 

Ms. Alvarado is the only non-employee director who served on the board of directors during 2010 eligible to receive payments from the now-suspended Directors’ Retirement Plan. Ms. Alvarado is eligible to receive payments upon her retirement from the board of directors.

 

(4)

 

 

 

Ms. Alvarado, Ms. Fuchs, Mr. Roth and Mr. Shedlarz utilized the Pitney Bowes Non-Employee Director Matching Gift Program during 2010. The company matches individual contributions by current and retired non-employee directors, dollar for dollar to a maximum of $5,000 per board member per calendar year.

 

(5)

 

 

 

Mr. McFarlane died in December 2010.

14


Certain 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 of the board of directors of Pitney Bowes Inc. 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 Securities and Exchange Commission (“related persons”). It is the expectation and policy of the board of directors that all related-person transactions will be at arms’ length and on terms that are fair to the company.

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 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.

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 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.

Compensation Committee Interlocks and Insider Participation

During 2010, there were no 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.

15


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
(5)

 

% of Class

Common

 

Rodney C. Adkins

 

 

 

8,368

 

 

 

 

0

 

 

 

 

0.00

%

 

Common

 

Linda G. Alvarado

 

 

 

30,828

 

 

 

 

0

 

 

 

 

0.02

%

 

Common

 

Anne M. Busquet

 

 

 

9,282

 

 

 

 

0

 

 

 

 

0.00

%

 

Common

 

Anne Sutherland Fuchs

 

 

 

12,163

 

 

 

 

0

 

 

 

 

0.01

%

 

Common

 

Ernie Green

 

 

 

30,653

 

 

 

 

0

 

 

 

 

0.02

%

 

Common

 

James H. Keyes

 

 

 

23,902

 

 

 

 

0

 

 

 

 

0.01

%

 

Common

 

Eduardo R. Menascé

 

 

 

17,492

 

 

 

 

0

 

 

 

 

0.01

%

 

Common

 

Michael I. Roth

 

 

 

31,885

 

 

 

 

0

 

 

 

 

0.02

%

 

Common

 

David L. Shedlarz

 

 

 

19,292

 

 

 

 

0

 

 

 

 

0.01

%

 

Common

 

David B. Snow, Jr.

 

 

 

11,200

 

 

 

 

0

 

 

 

 

0.01

%

 

Common

 

Robert E. Weissman

 

 

 

24,530

 

 

 

 

1,789

 

 

 

 

0.01

%

 

Common

 

Murray D. Martin

 

 

 

2,301,196

 

 

 

 

2,169,396

 

 

 

 

1.12

%

 

Common

 

Michael Monahan

 

 

 

370,079

 

 

 

 

344,127

 

 

 

 

0.18

%

 

Common

 

Leslie Abi-Karam

 

 

 

341,162

 

 

 

 

324,626

 

 

 

 

0.17

%

 

Common

 

Patrick Keddy

 

 

 

299,317

 

 

 

 

286,156

 

 

 

 

0.15

%

 

Common

 

Vicki A. O’Meara

 

 

 

88,960

 

 

 

 

79,844

 

 

 

 

0.04

%

 

 

 

 

 

 

 

 

 

 

Common

 

All executive officers and directors as a group (20)

 

 

 

4,349,404

 

 

 

 

3,872,204

 

 

 

 

2.09

%

 

 

(1)

 

 

 

These shares represent common stock beneficially owned as of March 1, 2011 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 203,785,948 of our shares outstanding as of March 1, 2011.

 

(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 and its related excess plan.

 

(4)

 

 

 

Includes, with respect to Mr. Martin, 65,000 shares held in a grantor retained annuity trust.

 

(5)

 

 

 

The director or executive officer has the right to acquire beneficial ownership of this number of shares within 60 days of March 1, 2011 by exercising outstanding stock options. Amounts in this column are also included in the column titled “Shares Deemed to be Beneficially Owned.”

16


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 Securities and Exchange Commission as of the date appearing below.

 

 

 

 

 

Name and Address of Beneficial Owner

 

Amount and Nature of
Beneficial Ownership
of Common

 

Percent of
Common
(1)

 

                           

Dodge & Cox
555 California Street, 40th Floor
San Francisco, CA 94104

 

 

 

18,504,544(2

)

 

 

 

 

9.1%

 

 

                           

State Street Corporation
State Street Financial Center
One Lincoln Street
Boston, MA 02111

 

 

 

16,389,621(3

)

 

 

 

 

8.1%

 

 

                           

NWQ Investment Management Company, LLC
2049 Century Park East, 16th Floor
Los Angeles, CA 90067

 

 

 

14,093,061(4

)

 

 

 

 

6.93%

 

 

                           

BlackRock, Inc.
40 East 52nd Street
New York, NY 10022

 

 

 

12,832,839(5

)

 

 

 

 

6.31%

 

 

                           

The Vanguard Group, Inc.
100 Vanguard Blvd.
Malvern, PA 19355

 

 

 

11,302,920(6

)

 

 

 

 

5.55%

 

 

                           

Capital Research Global Investors
333 South Hope Street
Los Angeles, CA 90071

 

 

 

10,607,678(7

)

 

 

 

 

5.2%

 

 

(1)

 

 

 

There were 203,431,002 of our shares outstanding as of December 31, 2010.

 

(2)

 

 

 

As of December 31, 2010, Dodge & Cox, an investment advisor registered under Section 203 of the Investment Advisers Act of 1940, had sole investment power with respect to 18,504,544 shares and shared voting power with respect to 17,489,544 shares.

 

(3)

 

 

 

As of December 31, 2010, State Street Financial has shared investment and voting power with respect to 16,389,621 shares.

 

(4)

 

 

 

As of December 31, 2010, NWQ Investment Management Company, LLC, an investment advisor, had sole investment power with respect to 14,093,061 shares and sole voting power with respect to 11,489,801 shares.

 

(5)

 

 

 

As of December 31, 2010, BlackRock, Inc., a parent holding company, had sole investment power and sole voting power with respect to 12,832,839 shares.

 

(6)

 

 

 

As of December 31, 2010, The Vanguard Group, Inc., an investment advisor, had sole investment power with respect to 11,043,580 shares, shared investment power with respect to 259,340 shares and sole voting power with respect to 259,340 shares.

 

(7)

 

 

 

As of December 31, 2010, Capital Research Global Investors, an investment advisor, had sole investment power with respect to 10,607,678 shares and sole voting power with respect to 6,607,678 shares.

17


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 Securities and Exchange Commission 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. The company believes that all such forms have been timely filed for 2010.

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 the company’s 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. Among the other criteria applicable to all directors, which are set forth in the Governance Principles of the Board of Directors, are 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 the company’s interests. 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.

Among other things, the board of directors has determined that it is important that the board should include members with the following skills and experiences:

 

 

 

 

Financial acumen for evaluation of the company’s financial statements and capital structure.

 

 

 

 

Significant international experience and experience with emerging markets to help oversee the company’s global operations.

 

 

 

 

Technology acumen, coupled with in-depth understanding of the company’s business and markets, to provide counsel and oversight with regard to the company’s strategy.

 

 

 

 

Significant operating experience, providing the company with specific insight into developing, implementing and assessing the company’s operating plan and business strategy.

 

 

 

 

Human resources experience, including executive compensation experience to help the company attract, motivate and retain world-class talent.

 

 

 

 

Corporate governance experience at publicly traded companies to support the goals of greater transparency, accountability for management and the board, and protection of stockholder interests.

 

 

 

 

Understanding of customer communications and marketing channels to support the company’s customer focus and customer communications and marketing strategy.

The Governance Committee assesses the effectiveness of its criteria when evaluating and recommending new candidates.

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 or continuing to serve are highly qualified, and have the attributes, skills and experience required for service on the board of directors. Additional information about each director is included with biographical information for each appearing below.

18


Nominees for Election

Prior to the 2010 Annual Meeting of Stockholders our board of directors was divided into three classes. Each class consisted, as nearly as possible, of one-third of the total number of directors, and each class had a three-year term ending in successive years. At the 2010 Annual Meeting of Stockholders, a proposal by our board of directors to amend the company’s Certificate and the company’s By-laws to phase out the classification of the board of directors, to provide instead for the annual election of directors, and to make such other conforming and technical changes to the Certificate and By-laws as may be necessary or appropriate was approved by the stockholders. The amended Certificate effecting such changes was filed with the Secretary of State of the State of Delaware on May 12, 2010. The amended Certificate provides for the annual election of directors beginning at the 2011 Annual Meeting of Stockholders. However, any director elected by the stockholders of the company to a three-year term prior to the 2011 Annual Meeting of Stockholders may complete the term to which he or she has been elected.

The board of directors presently has twelve members. There are four directors whose term of office expires in 2011. Each of the nominees for election at the 2011 Annual Meeting of Stockholders is currently a director of the company and was selected by the board of directors as a nominee in accordance with the recommendation of the Governance Committee. If elected at the 2011 Annual Meeting of Stockholders, each of the nominees would serve until the 2012 Annual Meeting of Stockholders and until his successor is elected and has qualified, or until such director’s death, resignation or removal.

Ms. Busquet, Ms. Fuchs, Messrs. Keyes, Shedlarz and Snow were elected in 2009 to three-year terms expiring at the 2012 annual meeting.

Ms. Alvarado, Messrs. Green, McFarlane and Menascé were elected last year to three-year terms expiring at the 2013 annual meeting. After Mr. McFarlane’s death in December 2010, the board of directors was reduced to twelve members.

For the 2011 annual meeting, the Governance Committee recommended to the board of directors, and the board approved, the nomination of Messrs. Adkins, Martin, Roth and Weissman to one-year terms expiring at the 2012 annual meeting.

Information about each nominee for director and each incumbent director, including the nominee’s or incumbent’s age, as of March 1, 2011, is set forth beginning on page 20 of this proxy statement. Unless otherwise indicated, each nominee or incumbent has held his or her present position for at least five years.

Should you choose not to vote for a nominee, you may list on the proxy the name of the nominee for whom you choose not to vote and mark your proxy under proposal 1 for all other nominees, or grant your proxy by telephone or the Internet as described on the proxy voting instruction card. 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 four director nominees.

Vote Required

In accordance with the company’s By-laws, in an uncontested election, a majority of the votes cast is required for the election of directors. This means 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.

19


The board of directors recommends that stockholders vote FOR the election of the following nominees:

NOMINEES FOR ELECTION TO TERMS EXPIRING AT THE 2012 ANNUAL MEETING

 

 

 

 

Rodney C. Adkins, 52, senior vice president, Systems and Technology Group, International Business Machines Corporation, a leading manufacturer of information technologies, since October, 2009. The Systems and Technology Group encompasses all aspects of IBM’s semiconductor, server, storage, system software and retail store solutions businesses. Formerly senior vice president, development & manufacturing, May 2007 – October 2009, and vice president of development, December 2003 – May 2007, IBM Systems and Technology Group. Director since 2007. 
    
As a senior executive of a public technology company, Mr. Adkins brings to the board of directors a broad range of experience, including emerging technologies and services, global business operations, international and emerging markets, and product development.

 

 

Murray D. Martin, 63, chairman, president and chief executive officer of Pitney Bowes Inc. since January 2009; president and chief executive officer, May 2007 – December 2008; president and chief operating officer, October 2004 – May 2007. Director since 2007. (Also a director of The Brink’s Company.)
     
Mr. Martin has extensive experience in business operations, finance, international and emerging markets, emerging technologies and services, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, and product development. With more than twenty years of management experience with Pitney Bowes, Mr. Martin possesses in-depth knowledge and understanding of the company’s business operations, technologies and customers.

 

 

Michael I. Roth, 65, chairman and chief executive officer, The Interpublic Group of Companies, Inc., a global marketing communications and marketing services company. Director since 1995. (Also a director of Gaylord Entertainment Company and The Interpublic Group of Companies, Inc.)  
   
Mr. Roth 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.

 

 

Robert E. Weissman, 70, retired chairman, IMS Health Incorporated, a leading provider of information solutions to the pharmaceutical and healthcare industries. Director since 2001. (Also a director of Cognizant Technology Solutions Corporation, Information Services Group, Inc. and State Street Corporation.)     

Mr. Weissman has broad experience as the former chief executive officer of several public companies, including IMS Health Incorporated, Cognizant Corp. and Dun & Bradstreet, as well as experience as a member of other public company boards of directors. He brings to the board of directors his financial expertise, extensive understanding of business operations, including international operations, capital markets, emerging technologies and services, corporate governance, and executive compensation.

20


INCUMBENT DIRECTORS WHOSE TERMS EXPIRE AT THE 2013 ANNUAL MEETING

 

 

 

 

Linda G. Alvarado, 59, president and chief executive officer of Alvarado Construction, Inc., a Denver-based commercial general contractor, construction management and development firm. Alvarado Construction has successfully developed and constructed numerous multi-million dollar commercial, government, transportation, office, communications, energy, retail, heavy engineering, utility, and technology projects throughout the United States and Latin America. Ms. Alvarado is also co-owner of the Colorado Rockies Major League Baseball Club and President of Palo Alto, Inc. which owns and operates YUM! Brands restaurants in multiple states. Director since 1992. (Also a director of 3M Company.) Formerly a director of Lennox International Inc., The Pepsi Bottling Group Inc. and Qwest Communications International Inc. 
    
As a principal of several diverse businesses, Ms. Alvarado brings to the board of directors her significant operating experience, as well as an understanding of marketing, finance and human resources issues. Her experience as a member of other public company boards of directors contributes to her understanding of global public company issues, including those relating to international markets and government affairs.

 

 

Ernie Green, 72, president and chief executive officer of Ernie Green Industries, Inc., a manufacturer of automotive components, serving, among others, General Motors, Honda and Toyota. Director since 1997. (Also a director of Eaton Corporation. Formerly a director of Dayton Power & Light, Inc.) 
    
As chief executive officer and founder of a privately held company, Mr. Green has a wide range of experience, including business operations, product development, human resources, finance, and global manufacturing and outsourcing. His experience as a member of other public company boards of directors contributes to his knowledge of public company matters, including corporate governance and public affairs.

 

 

Eduardo R. Menascé, 65, retired president, Enterprise Solutions Group, Verizon Communications Inc., a leading provider of wireline and wireless communications. Director since 2001. (Also a director of John Wiley & Sons, Inc., KeyCorp, Hill-Rom Holdings, Inc. and Hillenbrand, Inc.) 
    
Mr. Menascé has broad experience as a former senior executive responsible for a significant international operation of a public company, as well as experience in senior leadership positions with a number of European and Latin American businesses, including business operations, finance and capital markets, international and emerging markets, technology, customer communications and marketing channels, and executive compensation. His experience on other public company boards and as a director of the New York chapter of the National Association of Corporate Directors contributes to his knowledge of public company matters.

INCUMBENT DIRECTORS WHOSE TERMS EXPIRE AT THE 2012 ANNUAL MEETING

 

 

 

 

Anne M. Busquet, 61, principal of AMB Advisors, LLC, an independent consulting firm; former chief executive officer, IAC Local & Media Services, a division of IAC/Interactive Corp., an Internet commerce conglomerate, 2004 – 2006. Director since 2007. (Also a director of Blyth, Inc.)  
   
Ms. Busquet 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 operating experience, including in international markets, marketing channels, emerging technologies and services, and product development.

 

 

 

21


 

 

 

 

Anne Sutherland Fuchs, 63, group president, Growth Brands Division, Digital Ventures, a new division of J.C. Penney Company, Inc., since November, 2010. Formerly, a consultant to private equity firms. Chair of the Commission on Women’s Issues for New York City, since 2002. Director since 2005. (Also a director of Gartner, Inc.)  
   
Ms. Fuchs 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.     

 

 

James H. Keyes, 70, retired chairman, Johnson Controls, Inc., a supplier of automotive systems and facility management and control. Director since 1998. (Also a director of Navistar International Corporation and a trustee of Fidelity Funds. Formerly a director of LSI Logic Corporation.)     

Mr. Keyes has broad experience as former chief executive officer of a public company, experience as a certified public accountant, and experience as a member of other public company boards of directors. He brings to the board of directors his substantial operating experience, financial expertise, experience in capital markets, international markets, corporate governance, and human resources and executive compensation.

 

 

David L. Shedlarz, 62, retired vice chairman of Pfizer Inc., a pharmaceutical, consumer and animal products health company. Formerly vice chairman, 2005 – 2007; executive vice president and chief financial officer, 1999 – 2005, Pfizer Inc. Director since 2001. (Also a director of Teachers Insurance and Annuity Association and The Hershey Company.)
     
Mr. Shedlarz 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.     

 

 

David B. Snow, Jr., 56, chairman and chief executive officer of Medco Health Solutions, Inc., a leading pharmacy benefit manager. Director since 2006. (Also a director of Medco Health Solutions, Inc.) 
    
In addition to his experience as the chief executive officer of a public company, Mr. Snow has a strong background in operations, having served in senior leadership positions at several companies including WellChoice and Oxford Health Plans. Mr. Snow also brings to the board of directors a broad range of experience, including finance and capital markets, emerging technologies, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, corporate governance, and product development.     

22


Report of the Audit Committee

The Audit Committee functions pursuant to a charter that is reviewed annually and was last amended in February 2010. 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 retaining the independent accountants and pre-approving the services they will perform, 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 five of the members of the committee are “independent,” as required by applicable listing standards of the New York Stock Exchange.

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. Finally, the committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountants their independence.

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, 2010, as filed with the Securities and Exchange Commission on February 28, 2011.

By the Audit Committee of the board of directors,

David L. Shedlarz, Chair
Anne M. Busquet
James H. Keyes
Michael I. Roth
Robert E. Weissman

Proposal 2: Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2011

The Audit Committee has appointed Pricewaterhouse-Coopers LLP (“PricewaterhouseCoopers”) as the independent accountants for Pitney Bowes for 2011. Although not required by law, as a matter of good corporate governance this matter is being submitted to the stockholders for ratification. 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 will attend the annual meeting and will 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, 2010 and 2009, were (in millions):

 

 

 

 

 

 

 

2010

 

2009

Audit

 

 

$

 

 7.3

 

 

 

$

 

 7.5

 

Audit-Related

 

 

 

0.5

 

 

 

 

1.4

 

Tax

 

 

 

0.9

 

 

 

 

0.8

 

All Other

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

$

 

8.7

 

 

 

$

 

9.7

 

 

 

 

 

 

The Audit fees for the years ended December 31, 2010 and 2009 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 Securities and Exchange Commission.

The Audit-Related fees for the years ended December 31, 2010 and 2009 were for assurance and related services related to employee benefit plan audits, due diligence related to mergers and acquisitions, and consultations concerning financial accounting and reporting standards.

The Tax fees for the years ended December 31, 2010 and 2009 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 is to pre-approve 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; and procedures required to meet certain regulatory

23


requirements. The committee will not approve any service prohibited by regulation and does not anticipate approving any service in addition to the categories described above. 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. In 2010, all services provided by PricewaterhouseCoopers were pre-approved and no accounting services were approved through a waiver of the pre-approval requirements.

Vote Required

Ratification of the appointment of Pitney Bowes’ independent accountants requires the affirmative vote of a majority of votes cast.

The board of directors recommends that stockholders vote FOR the ratification of PricewaterhouseCoopers LLP as the company’s independent accountants for 2011.

Proposal 3: Amendments to the Restated Certificate of Incorporation and Amended and Restated By-laws to Remove Supermajority Vote Requirements for the Following Actions:

Proposal 3(a): Removing any director from office

Proposal 3(b): Certain business combinations

Proposal 3(c): Amending certain provisions of the Certificate

Proposal 3(d): Amending certain provisions of the By-laws

On February 14, 2011, the board of directors voted to approve, and to recommend to our stockholders that they approve, amendments to the company’s Certificate and the company’s By-laws to remove the supermajority voting requirements described below and replace them with majority vote requirements.

Subject to certain exceptions, currently the Certificate and the By-laws require the affirmative vote of the holders of at least 80% of the voting power of all shares of the company entitled to vote generally in the election of directors, voting together as a single class (the “Supermajority Requirement”), for the following corporate actions:

 

(a)

 

 

 

removing any director from office;

 

(b)

 

 

 

certain business combinations;

 

(c)

 

 

 

altering, amending, adopting any provision inconsistent with or repealing certain provisions in the Certificate described below; and

 

(d)

 

 

 

altering, amending, adopting any provision inconsistent with or repealing certain provisions in the By-laws described below.

Supermajority vote requirements are intended to provide protection against self-interested action by large stockholders and to encourage a person seeking control of a company to negotiate with its board of directors to reach terms that are fair and provide the best results for all stockholders. However, as corporate governance standards have evolved, some investors and commentators now view these provisions as limiting a board’s accountability to stockholders and the ability of stockholders to effectively participate in corporate governance. At the 2010 Annual Meeting of Stockholders, holders of our voting stock approved a stockholder proposal requesting the company take the steps necessary to remove the supermajority vote requirements in the Certificate and the By-laws.

The board of directors considered the arguments in favor of and against removing the Supermajority Requirements from the Certificate and the By-laws, including the views of stockholders who approved the stockholder proposal last year, and determined that it is in the best interests of the company and its stockholders to remove the Supermajority Requirements pursuant to the amendments to the Certificate and the By-laws presented in the following proposals. The voting requirements in the Certificate exclusively related to the company’s preferred stock or preference stock would not be amended.

Proposal 3(a): Removing any director from office

Stockholders are requested in this Proposal 3(a) to approve the amendment of Article Seventh, Section (d) of the Certificate and Article II, Section 5 of the By-laws to remove the Supermajority Requirement for removing any director from office and replace it with the requirement of the affirmative vote of the holders of

24


at least a majority of the voting power of all shares of the company entitled to vote generally in the election of directors, voting together as a single class.

Proposal 3(b): Certain business combinations

Stockholders are requested in this Proposal 3(b) to approve the amendment of Article Tenth, Section 1(A) of the Certificate to remove the Supermajority Requirement for certain business combinations and replace it with the requirement of the affirmative vote of the holders of at least a majority of the voting power of all shares of the company entitled to vote generally in the election of directors, voting together as a single class. The amended voting requirement would continue to be required in addition to any affirmative vote required by law or the Certificate.

Proposal 3(c): Amending certain provisions of the Certificate

Stockholders are requested in this Proposal 3(c) to approve the amendment of Article Seventh, Section (e), Article Eighth, Article Ninth and Article Tenth, Section 6 of the Certificate to remove the Supermajority Requirements for altering, amending, adopting any provision inconsistent with or repealing certain provisions in the Certificate related to:

 

 

 

 

stockholder action by written consent and the calling of special meetings of stockholders;

 

 

 

 

fixing the number of directors and the frequency of electing directors;

 

 

 

 

stockholder nomination of director candidates;

 

 

 

 

filling newly created directorships and vacancies;

 

 

 

 

removing any director from office, with or without cause;

 

 

 

 

altering, amending, adopting any provision inconsistent with or repealing the By-laws; or

 

 

 

 

the vote required for certain business combinations.

The proposed amendment would replace the Supermajority Requirements for the forgoing actions with the requirement of the affirmative vote of the holders of at least a majority of the voting power of all shares of the company entitled to vote generally in the election of directors, voting together as a single class.

Proposal 3(d): Amending certain provisions of the By-laws

Stockholders are requested in this Proposal 3(d) to approve the amendment of Article Ninth of the Certificate to remove the Supermajority Requirements for altering, amending, adopting any provision inconsistent with or repealing certain provisions in the By-laws related to:

 

 

 

 

quorum and voting requirements at stockholder meetings, stockholder action by written consent and the calling of special meetings of stockholders;

 

 

 

 

fixing the number of directors and the frequency of electing directors;

 

 

 

 

stockholder nomination of director candidates;

 

 

 

 

filling newly created directorships and vacancies; or

 

 

 

 

removing any director from office, with or without cause.

The proposed amendment would replace the Supermajority Requirements for the forgoing actions with the requirement of the affirmative vote of the holders of at least a majority of the voting power of all shares of the company entitled to vote generally in the election of directors, voting together as a single class. The proposed amendment would also clarify that the stockholder voting requirement does not apply to the amendment of these provisions of the By-laws by the board of directors.

The descriptions set forth above are summaries of the proposed changes to the Certificate and By-laws. Annex A to these proxy materials shows the changes to the relevant sections of the Certificate and the By-laws proposed by each of the forgoing proposals, in each case with deletions indicated by strike-outs and additions indicated by double underlining. If any of the foregoing proposals are approved by the stockholders, the company will amend its Certificate and By-laws to reflect the amendments that are approved.

Vote Required

As required by the Certificate, each proposal to amend the Certificate and/or By-laws discussed above will be approved if at least 80% of the voting power of all of the shares entitled to vote generally in the election of directors, voting together as a single class, is voted in favor of such proposal.

The board of directors recommends that stockholders vote FOR each of the proposals to amend the Certificate and By-laws to remove the supermajority vote requirements described above and replace them with majority vote requirements.

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Proposal 4: Advisory Vote on Executive Compensation

We are asking stockholders to approve an advisory resolution on the company’s executive compensation as reported in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal and required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or Dodd-Frank Act, provides our stockholders with the opportunity to express their views, on an advisory (non-binding) basis, on our executive compensation for our named executive officers for fiscal year 2010 as described in “Compensation Discussion and Analysis” or “CD&A” beginning on page 31 of this proxy statement, as well as the Summary Compensation Table and other related compensation tables and narratives, on pages 45 through 66 of this proxy statement.

The Committee and the board of directors believe that the compensation program described in the CD&A is an effective incentive for the achievement of positive results, appropriately aligning pay and performance and enabling the company to attract and retain talented executives.

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

 

(1)

 

 

 

Compensation should be tied to performance and long-term stockholder return;

 

(2)

 

 

 

Compensation should reflect leadership position and responsibility, and performance-based compensation should be a greater part of total compensation for more senior positions;

 

(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.

Our executive compensation programs have a number of features designed to promote these objectives:

 

 

 

 

Compensation Tied to Enterprise Performance and Stockholder Return. We link executive compensation to the performance of the company as a whole. It is our belief that executives with higher levels of responsibility and a greater ability to influence enterprise results should have a greater percentage of variable total compensation.

 

 

 

 

Compensation Recovery Policies. We have a recoupment policy that allows us to “clawback” equity or cash awards.

 

 

 

 

Change of Control Arrangements. Our change of control severance payments and vesting of equity awards occur only on a “double trigger” basis, except for unvested equity awards granted under our superseded 2002 Stock Plan. For severance payments to be made and for equity awards to vest, a change of control must occur and an executive officer’s employment must be terminated in qualifying circumstances within two years following the change of control.

 

 

 

 

Stock Ownership Guidelines. We maintain stock ownership guidelines for our executive officers, to further align their interests with those of our stockholders.

 

 

 

 

Compensation Consultant. The Committee’s compensation consultant is FWC. FWC provides no services to the company, but serves solely as the consultant to the Committee.

 

 

 

 

Accessible Leadership. To encourage and facilitate dialogue between our shareholders and the board of directors about our practices and policies, including those relating to executive compensation policies and practices, we have established direct lines of communications for our stockholders to the board of directors.

We urge stockholders to read the CD&A beginning on page 31 of this proxy statement, which 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 45 through 66, which provide detailed information on the compensation of our named executive officers.

Since the third quarter of 2009, management has been focusing on an initiative called Strategic Transformation, the goal of which is to improve operating efficiencies, the way we go to market and how we interact with customers while also reducing our cost structure to make it more flexible. This initiative allowed us to take many steps over the past year to become more agile, efficient and responsive to the changing needs of our customers. While revenues were down 3% for fiscal year 2010 compared to the previous year, management continued to position the company for profitable growth even as it dealt with a second straight year of challenging global economic and business conditions, especially for mail intensive enterprises. During the same period our Strategic Transformation initiative exceeded its goals and we solidified our growth strategies, completing the work of identifying what management believes to be our most attractive market opportunities. We also continued to invest in new products and solutions which enhance customer

26


communications allowing our customers to grow their business.

Other significant accomplishments relating to fiscal year 2010 include:

 

 

 

 

Achieved benefits of $120 million net of system and related investments from the Strategic Transformation program; substantially in excess of our initial guidance to the market;

 

 

 

 

Improved working capital and reduced capital expenditures to achieve $962 million in free cash flow (and $952 million in adjusted free cash flow);

 

 

 

 

Announced 29th consecutive year our board of directors approved an increase in quarterly dividends;

 

 

 

 

Introduced, in January 2011, Vollyä, our new secure digital mail delivery system, made possible by previous investments in new business; and

 

 

 

 

Increased year-over-year equipment sales in the second half of the year, in part due to the launch of the new, web-based Connect+ mailing system.

We urge stockholders to read our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the Securities and Exchange Commission on February 28, 2011, which describes our business and 2010 financial results in more detail.

In accordance with recently adopted Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to indicate their support for our named executive officer compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation for our named executive officers. Accordingly, we are asking our stockholders to vote on the following advisory resolution at the 2011 Annual Meeting:

RESOLVED, that the stockholders of Pitney Bowes Inc. approve, on an advisory basis, the compensation of the company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and narrative in this proxy statement for the company’s 2011 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.

Vote Required

The vote on executive compensation is an advisory vote and the results will not be binding on the board of directors or the company. The affirmative vote of the majority of the votes cast will constitute the stockholders’ non-binding approval with respect to our executive compensation programs.

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

Proposal 5: Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation

In addition to the advisory vote on executive compensation in Proposal 4 above, the Dodd-Frank Act also enables our stockholders to express their preference for having a “say-on-pay” vote every one, two or three years, or to abstain. This advisory (non-binding) “frequency” vote is required once every six years beginning with the 2011 annual meeting.

After careful consideration, the board of directors has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for the company at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year.

While our executive compensation programs are designed to promote a long-term connection between pay and performance, the board of directors recognizes that executive compensation disclosures are made annually. Given that the “say-on-pay” advisory vote provisions are new, holding an annual advisory vote on executive compensation provides the board of directors with more direct and immediate feedback on our compensation. However, stockholders should note that because the advisory vote on executive compensation occurs well after the beginning of the compensation year, and because the different elements of our executive compensation programs are designed to operate in an integrated manner and to complement one another, in many cases it may not be appropriate or feasible to change our executive compensation programs in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of stockholders.

We understand that our stockholders may have different views as to what is an appropriate frequency for advisory votes on executive compensation, and we will carefully review the voting results on this proposal. Stockholders will be able to specify one of four choices for this proposal on the proxy card: one year, two

27


years, three years, or abstain. (Stockholders are not voting to approve or disapprove the board of directors’ recommendation.)

This advisory vote on the frequency of future advisory votes on executive compensation is non-binding on the board of directors. Notwithstanding the recommendation of the board of directors and the outcome of the stockholder vote, the board of directors may in the future decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

Vote Required

The vote on the frequency of future advisory votes on executive compensation is an advisory vote and the results will not be binding on the board of directors or the company. The affirmative vote of the majority of votes cast will constitute the stockholders’ non-binding approval with respect to the frequency of future advisory votes on executive compensation.

Our board of directors recommends that you vote to conduct future advisory votes on executive compensation EVERY YEAR.

Proposal 6: Approval of the Material Terms of the Performance Goals Pursuant to Internal Revenue Code Section 162(m) for the following Incentive Plans:

Proposal 6(a) Pitney Bowes Inc. Key Employees Incentive Plan

Proposal 6(b) Pitney Bowes Inc. 2007 Stock Plan

The Pitney Bowes Inc. awards under its incentive plans are intended to be granted in a way designed to retain or attract, and to provide additional incentive to eligible employees in order to align their efforts with the company and its stockholders, including through the ownership of shares of the company.

The Pitney Bowes Inc. Key Employees Incentive Plan (the “KEIP”) is designed to provide additional cash incentives for key employees of the company through awards related to the achievement of certain performance criteria. The awards are short-term incentives (in the form of annual cash incentives), long- term cash based incentives (e.g., Cash Incentive Units (“CIUs”)), and such other cash incentives as the company deems reasonable and appropriate (e.g., retention awards).

The Pitney Bowes Inc. 2007 Stock Plan (the “Stock Plan”) is designed to align the interest of employees with those of the stockholders through the ownership of stock in the company and to attract, motivate and retain experienced and highly qualified employees who will contribute to the company’s success.

Awards of options and stock appreciation rights granted under the Stock Plan are intended to qualify for the performance-based compensation exception under Section 162(m) of the Internal Revenue Code (the “Code”) pursuant to their respective expected terms. In addition, awards granted under the KEIP and awards of restricted stock, stock units or other stock awards granted under the Stock Plan (“Equity Awards”) may qualify under Section 162(m) of the Code if they are granted with appropriate performance conditions. In order to continue to allow awards granted under the KEIP and the Equity Awards granted under the Stock Plan to qualify as tax-deductible performance-based compensation under Section 162(m) of the Code, the company is asking stockholders to approve the material terms of the performance goals under both the KEIP and the Stock Plan. Stockholders are not being asked to approve any amendment to the KEIP or the Stock Plan or to approve the KEIP or the Stock Plan themselves.

In general, Section 162(m) of the Code places a limit on the deductibility for federal income tax purposes of the compensation paid to a company’s Chief Executive Officer or any of its three other most highly compensated executive officers (other than its Chief Financial Officer). Under Section 162(m) of the Code compensation paid to such persons in excess of $1 million in a taxable year is not generally deductible. However, compensation that qualifies as “performance-based” under Section 162(m) of the Code does not count against the $1 million limitation. One of the requirements of “performance-based” compensation for purposes of Section 162(m) of the Code is that the material terms of the performance goal under which compensation may be paid be disclosed to and approved by the company’s stockholders. For purposes of Section 162(m) of the Code the material terms include (a) the employees eligible to receive compensation, (b) a description of the business criteria on which the performance goal is based and (c) the maximum amount of compensation that can be paid to an employee under the performance goal. Each of these aspects of the Stock Plan and the KEIP is discussed below, and stockholder approval of this Proposal will be deemed to constitute approval of each of these aspects of the Stock Plan and the KEIP for

28


purposes of the approval requirements of Section 162(m) of the Code.

Stockholder approval of the performance goals under the KEIP or for the Equity Awards under the Stock Plan is only one of several requirements under Section 162(m) of the Code that must be satisfied for amounts realized under the KEIP or for the Equity Awards of the Stock Plan in order to qualify for the “performance-based” compensation exemption under Section 162(m) of the Code. Submission of the material terms of the performance goals for the KEIP or for the Equity Awards under the Stock Plan for stockholder approval should not be viewed as a guarantee that the company can deduct all compensation under the KEIP or under the Equity Awards of the Stock Plan. Nothing in this proposal precludes the company, the Committee or the board of directors, as applicable, from making any payment or granting awards under either the KEIP or the Stock Plan that do not qualify for tax deductibility under Section 162(m) of the Code.

Performance Goals. Performance goals under both the KEIP and the Stock Plan are one or more objective performance goals established by the Committee at the time the grant is made, relating to the attainment of targets for one or any combination of the following criteria with respect to the company, any of its subsidiaries, divisions, departments or units or any combination thereof:

revenues

 

return on investment

 

   

gross profit

 

return on operating assets

 

   

earnings before interest and taxes (EBIT)

 

economic value added

 

   

earnings before interest, taxes, depreciation and amortization (EBITDA)

 

organic revenue growth

 

   

income from continuing operations

 

total stockholder return

 

   

operating income

 

return on stockholder equity

 

   

operating profit

 

growth of book or market value of capital stock

 

   

net income

 

free cash flow

 

   

total earnings

 

adjusted free cash flow

 

   

stock price

 

achievement of cost control

 

   

earnings per share

 

adjusted earnings per share

Performance goals are set by the Committee within the time period prescribed by Section 162(m) of the Code.

The board of directors believes that it is in the best interests of the company and its stockholders to enable the company to implement compensation arrangements that qualify as fully tax deductible performance-based compensation in the KEIP and in the Stock Plan. The board of directors is therefore asking stockholders to approve, for purposes of Section 162(m) of the Code, the material terms of the performance goals in both the KEIP and the Stock Plan set forth herein.

Proposal 6(a) Pitney Bowes Inc. Key Employees Incentive Plan

Eligible Employees. Key employees of the company, generally meaning management and executive-level employees, are eligible for grants under the KEIP. The KEIP provides flexibility in creating incentive packages for specific individuals as well as various groups of key employees. The Committee determines who is a key employee. There are currently 8 employees of the company potentially subject to the performance requirements under 162(m) of the Code.

Maximum Compensation. With respect to employees subject to the performance requirements under 162(m) of the Code, no payment will be made for an award granted under the KEIP until the Committee certifies that the applicable performance goals have been attained. Amounts paid on awards granted to “covered employees” during any fiscal year of the company will not exceed $4,000,000 for annual cash awards and $8,000,000 for long-term cash awards, including CIUs.

Description of Principal features of the KEIP

The KEIP is a cash incentive compensation plan administered by the Committee which has discretion to determine the type, terms and conditions and recipients of awards granted under the KEIP. Awards granted to participants in the KEIP may be in the form of annual incentives, CIUs or any other form of award permitted under the KEIP, and will be made subject to the achievement of one or more pre-determined performance goals.

Annual incentives are annual cash payments of specified percentages of base salary, which are paid based upon the achievement of pre-determined corporate, unit and/or individual performance objectives. CIUs represent a right to receive cash, contingent upon the extent to which specified performance criteria are achieved during the related three-year period.

The KEIP does not have a stated term but may be terminated by the board of directors at any time. The board of directors may amend the KEIP to conform to any change in applicable law or for any other reason.

29


A summary description of the other terms of the KEIP can be found on page 22 of our 2006 proxy statement filed with the SEC on March 23, 2006, and such summary description is incorporated herein by reference.

Awards under the KEIP

Please refer to the Summary Compensation Table on pages 46 and 47 of this proxy statement for the amounts paid under the KEIP for the past three fiscal years to the named executive officers. For fiscal year 2010, all executive officers as a group were paid $8,590,536 under the KEIP. Because payments in the KEIP for fiscal 2011 will be determined by comparing actual performance to the performance targets set by the Committee, it is not possible to state the amounts that will be paid under the KEIP in fiscal 2011.

Proposal 6(b) Pitney Bowes Inc. 2007 Stock Plan

Eligible Employees. All employees of the company are eligible to receive awards under the Stock Plan, but awards are generally limited to management and executive-level employees. There are currently 8 employees of the company potentially subject to the performance requirements under Section 162(m) of the Code.

Maximum Compensation. Of the maximum number of shares available for issuance under the Stock Plan, no more than 7,500,000 shares may be issued pursuant to grants other than options or SARs in the aggregate during the term of the plan. A participant may receive multiple awards under the Stock Plan. A maximum of 600,000 shares that are the subject of awards may be granted under the Stock Plan to an individual during any calendar year.

Description of Principal features of the Stock Plan

The Stock Plan is an “omnibus” stock plan that provides for a variety of equity award vehicles to maintain flexibility. The Stock Plan permits the grant of stock options, stock appreciation rights or SARs, restricted stock awards, restricted stock units, stock awards and other stock-based awards.

Participants at the vice president level and above are generally granted a combination of stock options and restricted stock units or RSUs and participants at the manager and director levels are generally granted RSUs. In unique circumstances where needed for attracting, retaining and motivating executive talent, restricted stock may be awarded.

All of the full-time employees of the company and its affiliates are eligible to participate in the Stock Plan. 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.

The Stock Plan has a term of seven years expiring on December 31, 2014, unless terminated earlier by the board of directors. The board of directors may at any time and from time to time and in any respect amend or modify the Stock Plan.

A summary description of the other terms of the Stock Plan can be found on pages 24 through 29 of our 2007 proxy statement filed with the SEC in April 3, 2007, and such summary description is incorporated herein by reference.

Awards under the Stock Plan

Please refer to the Summary Compensation Table on pages 46 and 47 of this proxy statement for the amounts paid under the Stock Plan for the past three fiscal years to the named executive officers. For fiscal year 2010, all executive officers as a group were granted $5,686,040 in stock options and RSUs under the Stock Plan.

Vote Required

Approval of the material terms of the performance goals in each of the KEIP and the Stock Plan pursuant to Section 162(m) of the Code requires the affirmative vote of a majority of votes cast.

A requirement of Section 162(m) of the Code is that the plan’s performance goals be approved at least once every five years to maintain tax deductibility of awards made under the KEIP and the Stock Plan. The Stock Plan was last approved at our 2007 Annual Meeting of Stockholders. This means that in our view, if Proposal 6(b) is not approved with respect to the Stock Plan, we must get an approval from stockholders no later than the 2012 Annual Meeting of Stockholders or risk losing the tax advantages of Section 162(m) of the Code with respect to the Stock Plan. An affirmative vote of the majority of the votes cast for Proposal 6(b) is expected to extend compliance with Section 162(m) of the Code until May 2016.

The board of directors recommends that stockholders vote FOR each of Proposal 6(a) and 6(b).

Report of the Executive Compensation Committee

The Executive Compensation Committee of the board of directors 1) has reviewed and discussed with management the section included below in this proxy statement entitled “Compensation Discussion and Analysis” and 2) based on the review and discussions referred to in item 1) above, the Committee has recommended to the board of directors that the

30


CD&A be included in the company’s Annual Report on Form 10-K for the year ended December 31, 2010 and this proxy statement.

By the Executive Compensation Committee of the board of directors,

James H. Keyes, Chair
Anne Sutherland Fuchs
Eduardo R. Menascé
David B. Snow, Jr.
Robert E. Weissman

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 CD&A, describes the material components of our executive compensation program for our named executive officers. The named executive officers for 2010 are:

 

 

 

 

Mr. Murray D. Martin, Chairman, President and Chief Executive Officer

 

 

 

 

Mr. Michael Monahan, Executive Vice President and Chief Financial Officer

 

 

 

 

Ms. Leslie Abi-Karam, Executive Vice President and President, Mailing Solutions Management

 

 

 

 

Mr. Patrick Keddy, Executive Vice President and President, Mailstream International

 

 

 

 

Ms. Vicki A. O’Meara, Executive Vice President and President, Pitney Bowes Management Services & Government and Postal Affairs

Our key compensation goals are to attract, retain and motivate high performing executives with a commitment to the long-term success of our business. Our compensation package design also builds executive capability for the future.

Our compensation program is based on five 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.

Business Results Highlights

Since the third quarter of 2009, management has been focusing on an initiative called Strategic Transformation, the goal of which is to improve operating efficiencies, the way we go to market and how we interact with customers while also reducing our cost structure to make it more flexible. This initiative allowed us to take many steps over the past year to become more agile, efficient and responsive to the changing needs of our customers. While revenue was down 3% for fiscal year 2010 compared to the previous year, management continued to position the company for profitable growth even as it dealt with a second straight year of challenging global economic and business conditions, especially for mail intensive enterprises. During the same period our Strategic Transformation initiative exceeded its goals and we solidified our growth strategies, completing the work of identifying what management believes to be our most attractive market opportunities. We also continued to invest in new products and solutions which enhance customer communications allowing our customers to grow their business.

Other significant accomplishments relating to fiscal year 2010 include:

 

 

 

 

Achieved benefits of $120 million net of system and related investments from the Strategic Transformation program; substantially in excess of our initial guidance to the market;

 

 

 

 

Improved working capital and reduced capital expenditures to achieve $962 million in free cash flow (and $952 million in adjusted free cash flow);

 

 

 

 

Announced 29th consecutive year our board of directors approved an increase in quarterly dividends;

 

 

 

 

Introduced, in January 2011, Vollyä, our new secure digital mail delivery system, made

31


 

 

 

 

possible by previous investments in new business; and

 

 

 

 

Increased year-over-year equipment sales in the second half of 2010, in part due to the launch of the new, web-based Connect+ mailing system.

We urge stockholders to read our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the Securities and Exchange Commission on February 28, 2011, which describes our business and 2010 financial results in more detail.

Highlights of Executive Compensation Program

The Committee reviews our executive compensation program on an ongoing basis. Highlights of our program include:

 

 

 

 

Compensation Tied to Enterprise Performance and Stockholder Return. 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 have a greater percentage of variable total compensation.

 

 

 

 

Compensation Recovery Policies. We have a recoupment policy that allows us to “clawback” equity or cash awards. For additional information, please see the “Clawback Policy” on pages 41 and 42 of this proxy statement.

 

 

 

 

Change of Control Arrangements. Our change of control severance payments and vesting of equity awards occur only on a “double trigger” basis, except for unvested equity awards granted under our superseded 2002 Stock Plan. Before severance is paid and equity awards vest, a change of control must occur and an executive officer’s employment must be terminated in qualifying circumstances within two years following the change of control. For additional information, please see “Change of Control Arrangements” on page 43 of this proxy statement.

 

 

 

 

Stock Ownership Guidelines. Stock ownership guidelines apply to our executive officers, to further align their interests with those of our stockholders. For additional information, please see “Executive Stock Ownership Policy” on pages 42 and 43 of this proxy statement.

 

 

 

 

Compensation Consultant. The Committee’s compensation consultant is FWC and they only provide services for the Committee. The Committee consults with FWC on all significant compensation decisions. For additional information, please see “Role of the Committee and its Compensation Consultant in Determining Executive Compensation” on page 40 of this proxy statement.

 

 

 

 

Accessible Leadership. To encourage and facilitate dialogue between our shareholders and the board of directors about our practices and policies, including those relating to executive compensation policies and practices, we have established direct lines of communications for our stockholders to the board of directors. For additional information, please see “Board of Directors — Communications with the Board” on page 9 of this proxy statement.

The chart below illustrates the 2010 target compensation mix for the CEO and the average of the 2010 target compensation mix for the other named executive officers.

Compensation Decisions

The material elements and objectives of our executive compensation program did not change from fiscal year 2009 to fiscal year 2010. Our executive compensation program continues to be based on performance measures directly related to our financial goals and to external market performance of the company’s stock price, without encouraging unnecessary or excessive risks. The Committee strives to maintain a balanced compensation program that effectively motivates and

32


retains our executives. The compensation decisions over the past year generally reflected the financial and operational results and objectives for the fiscal year:

 

 

 

 

Due to the global economic and market conditions, the Committee adopted management’s recommendation to suspend merit increases for executives, including named executive officers, in 2009 and 2010.

 

 

 

 

In 2011, merit increases to base salaries resumed for the broad-based employee population and the named executive officers.

 

 

 

 

In addition to annual and long-term incentive opportunities generally consistent with prior years, the Committee approved additional cash performance awards granted under the KEIP to Mr. Monahan, Ms. Abi-Karam, and Ms. O’Meara. In designing these awards, the Committee balanced performance- based requirements with retention and succession planning goals. For additional information, please see “Performance-Based Retention Awards” on page 38 of this proxy statement.

 

 

 

 

The Committee reviewed the design and implementation of the KEIP and our 2007 Stock Plan and determined that the plans do not create risks that are reasonably likely to have a material adverse effect on the company.

 

 

 

 

Effective in 2010, the Committee permitted executive officers to participate in the Employee Stock Purchase Program.

 

 

 

 

In February 2011, the board of directors granted a performance cash award under the KEIP to Mr. Martin of $2.0 million designed to encourage enterprise-wide business results and to assist the board of directors in the completion of a successful succession plan. For additional information, please see “Performance Award” on page 38 of this proxy statement

Conclusion

The Committee believes that the executive compensation program design and implementation satisfies the program objectives and demonstrates the company’s commitment to, and execution of, an effective pay-for-performance compensation program.

Components of Compensation

Overview of Compensation Components

The independent members of the board of directors are responsible for determining the CEO’s compensation, including recommending to the board of directors each specific element of the CEO’s compensation for the CEO and determining the compensation for the other named executive officers. For each named executive officer, the Committee targets total direct compensation levels that strive to ensure that the sum of the base salary, target annual incentive and target long-term incentive is at the median of the data using the Towers Watson’s published executive compensation reports (the “Towers Watson Compensation Report”) (as described in more detail under “Benchmarking” on page 41 of this proxy statement) for each position. In 2010, for named executive officers that sum is on average 107% of the median in the Towers Watson Compensation Report.

We believe that executives should have a greater percentage of variable total compensation than mid-level employees to help ensure that the interests of senior executives are aligned with stockholders. Annual and long-term incentives are designed to reward executives predominately for the achievement of enterprise-wide financial and strategic objectives. However, individual pay-out and grant levels are also influenced by the factors listed below, for which no specific goals or weightings are assigned:

 

 

 

 

potential impact the individual may make on the company now and in the future;

 

 

 

 

internal pay equity;

 

 

 

 

level of experience and skill;

 

 

 

 

individual performance compared with annually established financial, strategic, unit or individual objectives;

 

 

 

 

market competitive salary rates for similar positions; and

 

 

 

 

need to attract and retain executive talent during this period of Strategic Transformation.

33


Compensation for our named executive officers located in the United States consists of the elements identified in the following table:

 

 

 

 

 

 

 

 

 

 

ELEMENT

 

DESIGN & OBJECTIVES

   

KEY HIGHLIGHTS

 

                 

 Base Salary

 

 

Fixed compensation for performing the daily job duties in amounts that are competitive in the markets in which we operate

   

 

Within plus or minus 10% of the median of competitive data using the Towers Watson Compensation Report (as described in more detail under “Benchmarking” on page 41 of this proxy statement)

 

                 

 Annual Incentive

 

 

Variable compensation to reward executives for achieving certain short-term financial and strategic goals that are established at the beginning of each year

   

 

Annual incentives are granted under the KEIP and paid in cash, subject to the company achieving pre-determined objectives established in the first quarter of each year

 

 

 

The maximum annual incentive a named executive officer could receive under the KEIP is $4,000,000

   


 


Subject to a “clawback” (as described in more detail under “Clawback Policy” on pages 41 and 42 of this proxy statement)

 

                 

 Long-Term
 Incentives

 

 Variable compensation to link
 executives to long-term company
 performance and to external
 market performance of our stock
 price


 The long-term incentives mix is
 comprised of three award types:

   50% cash incentive units or
 “CIUs”

 
 25% performance-based
 restricted stock units or “RSUs”

 
 25% stock options

 The maximum long-term incentive
 pay-out a named executive officer
 could receive under the KEIP is
 $8,000,000


 The maximum amount of shares,
 including stock options and
 performance-based RSUs, that
 may be awarded to any individual
 in any plan year under the 2007
 Stock Plan is 600,000

   

 CIUs are granted under the KEIP
 and paid in cash, subject to
 achievement of pre-determined
 financial objectives. The resulting
 unit value is modified by up to
 +/– 25% based on the company’s
 Total Stockholder Return, or the
 “TSR” percentile ranking versus the
 performance of the S&P 500

 Performance-based RSUs are
 granted under the 2007 Stock
 Plan, and vest over four years
 subject to achievement of a pre-
 established performance objective


 Stock options, granted under the
 2007 Stock Plan, are inherently
 performance-based as the
 company’s stock price must
 increase for optionees to realize
 any benefit


 The Committee may also grant
 other long-term incentive awards in
 unique circumstances where
 needed for attracting, retaining or
 motivating executive talent


 Subject to a “clawback” (as
 described in more detail under
 “Clawback Policy” on pages 41 and
 42 of this proxy statement)

 

     

34


ELEMENT

 

DESIGN & OBJECTIVES

 

KEY HIGHLIGHTS

 

               

Retirement
Benefits

 

 

Provides a level of retirement income

 

 

Qualified and non-qualified pension plans for employees hired prior to January 1, 2005. All Pension Plan accruals will be frozen on December 31, 2014, with no further accruals

 

 

 

 

 

 

 

Qualified and non-qualified 401(k) plans with company contributions

 

               

Non-qualified Deferred Compensation Plan

 

 

Provides a savings vehicle in a tax efficient manner

 

 

Ability to voluntarily defer payouts of annual cash incentives, CIUs and base pay into a non-qualified deferred compensation plan

 

               

Stock Purchase Plan

 

 

Broad based program to encourage stock ownership, further aligning the interests of the named executive officers with those of the stockholders

 

 

Ability to purchase up to $25,000 of Pitney Bowes common stock at a 5% discount to the market price

 

               

Other Benefits

 

 

Limited additional benefits, including, financial counseling to assist with compliance of regulations and to provide guidance in managing complex investment, tax, legal and estate matters

 

 

Maximum of $7,500 annual reimbursement for financial counseling

Base Salary

We align base salary for named executive officers with reference to the competitive market median data for base salary using the Towers Watson Compensation Report. For additional information, please see “Benchmarking” on page 41 of this proxy statement. Salaries are reviewed annually.

For 2009 and 2010, due to the global economic and market conditions, the Committee adopted management’s recommendation of no merit increases for executives, including the named executive officers. The Committee has determined that merit increases would be re-instated in 2011 due to increased competition for labor. During 2010, base salaries for our named executives did not increase with the exception of Ms. Abi-Karam, whose salary increased by $10,096 due to a one-time adjustment because the company eliminated a benefit program available to all long-service employees. The increase applied the same formula as used for all long-service employees whose benefit was eliminated.

Annual Incentives

Named executive officers are eligible for annual incentives under the KEIP for achieving challenging enterprise-wide financial and strategic objectives pre-established at the beginning of each year.

The 2010 annual incentive target for our CEO was 160% of base salary, unchanged from 2009. The annual incentive targets for the other named executive officers ranged from 60-80% of base salary, also unchanged from 2009. Annual incentive payments for 2010 were subject to the company first achieving a threshold income from continuing operations objective of $331,379,000, excluding all one-time items.

Actual 2010 income from continuing operations was $460,884,000. The maximum annual incentive a named executive officer could receive under the KEIP, is $4,000,000 before the Committee applies “negative discretion” to reflect the company’s performance against its financial and strategic objectives and the individual’s and business unit performance.

In February 2011, the Committee compared 2010 actual performance to the pre-determined targets.

35


The 2010 financial objectives, weighted at 70% at target, were as follows:

 

 

 

 

 

 

 

 

 

Financial Objectives

 

Weighting

 

Target

 

Actual

 

Performance
Against
Target

Adjusted Earnings Per Share

 

 

 

28

%

 

 

 

$

 

2.40

 

 

 

$

 

2.23

 

 

 

 

93

%

 

Return on Invested Capital

 

 

 

21

%

 

 

 

 

22.5

%

 

 

 

 

21.3

%

 

 

 

 

94

%

 

Adjusted Free Cash
Flow

 

 

 

21

%

 

 

 

$

 

670
million

 

 

 

$

 

952
million

 

 

 

 

142

%

 

The 2010 strategic objectives, weighted at 30% at target, were as follows:

 

 

 

 

 

Strategic Objectives

 

Target
Weighting

 

Performance
against
Target

Execute strategic transformation initiatives

 

 

 

10

%

 

 

 

 

200

%

 

Demonstrate progress on meaningful growth in new areas

 

 

 

10

%

 

 

 

 

75

%

 

Sustain the core business

 

 

 

10

%

 

 

 

 

100

%

 

The 2010 strategic performance objectives were designed to encourage management to focus on the future development and growth of the company while sustaining the core mail business. Overall the strategic performance objectives exceeded target:

 

 

 

 

The Strategic Transformation objective results far exceeded target by achieving $120 million in benefits net of system and related investments, 200% of the $60 million internal target, as well as the implementation of process improvements to enhance how we operate as a global company.

 

 

 

 

Although the company did not meet its revenue targets for demonstrating meaningful growth for new businesses, it met the EBIT targets for the non-mail portions of the business while also investing in new business areas. The specific revenue and EBIT targets for the non-mail portions of the business units are highly confidential and not reported publicly because such disclosure would provide competitors insight into our internal planning processes and would result in meaningful competitive harm. The Committee believed that these objectives had a high degree of difficulty for achievement. Additionally, the Company made significant progress in determining a strategic vision and direction for the future within the context of a changing environment regarding physical mail.

 

 

 

 

The company met its objective to sustain the core mailing business by improving global customer retention by 30% over the prior year.

The Committee used its authority under the Plan to modify final payout by 7.5% based on achievements in customer loyalty, talent and leadership development. The Committee has authority to modify up to 15%.

Based on the above analysis, Mr. Martin made specific recommendations to the Committee for his direct reports. The Committee reviewed Mr. Martin’s recommendations and awarded each of the named executive officers (other than Mr. Keddy who did not receive a payout) an incentive payment in line with the above payout calculations, with the exception of the EVP and President of Mailing Solutions Management, who received $50,000 less due to the performance of Mailing Solutions Management in 2010 amidst the challenging mailing environment.

The resulting annual incentive awards to our named executive officers were as follows:

Annual Incentive Payout

 

 

 

Executive

 

Payout

Murray D. Martin, Chairman, President and Chief Executive Officer

 

 

$

 

1,717,600

 

Michael Monahan, Executive Vice President and Chief Financial Officer

 

 

$

 

488,160

 

Leslie Abi-Karam, Executive Vice President and President, Mailing Solutions Management

 

 

$

 

433,727

 

Vicki O’Meara, Executive Vice President and President, Pitney Bowes Management Services & Government and Postal Affairs

 

 

$

 

395,500

 

Long-Term Incentives

We pay long-term incentives to improve our overall performance by linking the named executive officers’ long-term rewards to our long-term company performance and to the company’s stock price performance. We also pay long-term incentives in order to be competitive in the markets in which we operate.

Stock ownership and equity-related compensation arrangements are key elements to focus executives on increasing stockholder value and to encourage executives to act like a business owner. A substantial portion of an executive’s long-term incentive compensation is awarded in the form of stock compensation and CIUs, which serve as primary vehicles in aligning the interests of executives with long-term stockholders.

The long-term incentive mix is comprised of three award types:

 

 

 

 

50% CIUs;

 

 

 

 

25% performance-based RSUs; and

 

 

 

 

25% stock options.

In determining the amount of long-term awards, the Committee considers the factors discussed under “Overview of Compensation Components” on page 33

36


of this proxy statement. The Committee sets the award targets based on the median in the Towers Watson Compensation Report.

Cash Incentive Units

CIUs are long term cash awards granted annually with three year cycles. At any given time there are three cycles outstanding. Named executive officers are awarded CIUs with payouts based on achieving challenging enterprise-wide financial objectives established at the beginning of each individual year of the three-year cycle. If the threshold level of performance is not met for a calendar year for both of these goals, one-third of the award value will be forfeited. If the income from continuing operations threshold is not met over the three year cycle, the entire award will be forfeited. The maximum long-term incentive pay- out a named executive officer could receive under the KEIP is $8,000,000 and the Committee applies negative discretion to reduce awards based on enterprise financial performance.

CIU payments for the 2008 – 2010 cycle were subject to the company achieving a threshold financial objective of a three-year average of income from continuing operations over the cycle of $480,891,000, excluding all one-time items (as discussed below under the heading “Treatment of Special Items” on pages 43 and 44 of this proxy statement). Actual income from continuing operations for the 2008 – 2010 CIU cycle was $505,839,000. For the 2008 – 2010 CIU cycle, the unit value at target is $1.00.

Since the threshold objective was achieved, the range of the CIU value will be between $0 and $1.80 based upon the achievement of the pre-determined financial goals described below each weighted at 50%.

 

 

 

 

Adjusted earnings per share; and

 

 

 

 

Adjusted free cash flow.

The targets and actual results before applying the TSR modifier for the 2008 – 2010 CIU cycle were:

 

 

 

 

 

2008 – 2010 LTI
Adjusted Earnings Per Share

 

Target

 

Actual

2008

 

 

$

 

2.85

 

 

 

$

 

2.78

 

2009

 

 

$

 

2.67

1

 

 

 

$

 

2.28

 

2010

 

 

$

 

2.40

2

 

 

 

$

 

2.23

 

 

1

 

 

 

Also 2009 component of 2009 – 2011 CIU cycle

 

2

 

 

 

Also 2010 component of 2009 – 2011 and 2010 – 2012 CIU cycles

 

 

 

 

 

2008 – 2010 LTI
Adjusted Free Cash Flow

 

Target

 

Actual

2008

 

 

$

 

685

 

 

 

$

 

836

 

2009

 

 

$

 

745

1

 

 

 

$

 

887

 

2010

 

 

$

 

670

2

 

 

 

$

 

952

 

 

1

 

 

 

Also 2009 component of 2009 – 2011 CIU cycle

 

2

 

 

 

Also 2010 component of 2009 – 2011 and 2010–2012 CIU cycles

For the 2008 – 2010 CIU cycle, the payout factors for adjusted earnings per share and adjusted free cash flow were $0.23 and $0.90, respectively. The TSR modifier in aggregate decreased the CIU payout level for the 2008 – 2010 cycle by 6% resulting in a final payout of $1.06 per unit.

Stock Options

An annual grant of stock options is made during the first quarter of the year, typically after our fourth quarter earnings release has been widely disseminated. The Committee may, from time to time, grant stock options to new executive hires. These grants are typically made at the Committee’s next regularly scheduled meeting.

In special circumstances, the Committee, or in the case of the CEO, the independent members of the board of directors, may determine that it is appropriate to make additional grants to executives during the course of the year. These grants are made at a Committee meeting.

On February 8, 2010, the named executive officers were awarded an annual grant of stock options to purchase common stock of the company under the 2007 Stock Plan at an exercise price of $22.09 per share, the closing price of our common stock on the day of grant. These stock options have a ten-year exercise period and will vest and become exercisable in equal installments over three years commencing on the first anniversary after the date of grant.

Performance-Based Awards

Performance-Based Restricted Stock Units

The 2010 award of performance-based RSUs was made during the first quarter of the year.

In the case of the executive officers, including the named executive officers, commencement of the vesting of the performance-based RSUs is subject to the company achieving an initial financial threshold objective, which, for the 2010 award, was 2010 income from continuing operations equaling or exceeding $331,379,000, excluding all one-time items (as discussed in more detail under “Treatment of Special Items” on pages 43 and 44). Since actual 2010 income

37


from continuing operations was $460,884,000, the 2010 award will vest in four equal installments commencing on the first anniversary of the grant date if the executive is still employed on the vesting date. If the initial threshold had not been achieved, the performance-based RSUs granted in 2010 would have been forfeited.

Performance-Based Retention Awards

In August 2010, the Committee granted performance-based cash awards under the KEIP to Mr. Monahan and Ms. Abi-Karam of $1.1 million and Ms. O’Meara of $1 million designed to encourage enterprise-wide business results and to motivate and retain executive talent as part of a succession plan. These cash awards will vest in 2013 subject to the company achieving a pre-determined 2011 income from continuing operations objective. Provided the initial objective is achieved, the awards are subject to accelerated vesting upon the achievement of pre-determined objectives in the named executive officers’ specific areas of responsibilities. The acceleration of the award for Mr. Monahan is tied to the achievement of objectives directly relating to Strategic Transformation. The acceleration of the awards for Ms. Abi-Karam and Ms. O’Meara are tied to the achievement of forward-looking objectives directly relating to the performance of their respective business units. Our policy is not to disclose forward-looking objectives and metrics because disclosure of such detailed information on business operations and strategic plans in those objectives would result in competitive harm. Since the specific performance objectives for acceleration of the awards are forward-looking, we will not disclose them. The Committee believes that these objectives are aggressive enough to challenge executives to maximize year-over-year growth in their business or functional units but are at the same time reasonable in that they can be achieved by the efficient and diligent execution of operating plans.

In November 2010, the Committee approved an additional grant of performance-based RSUs to Ms. O’Meara, with the cash value of $100,000 for internal pay equity and retention purposes. The vesting of the performance-based RSUs is subject to the company achieving a pre-determined 2011 income from continuing operations objective. If this performance hurdle is achieved the performance-based RSUs will vest in full on February 4, 2014.

The 2011 income from continuing operations objective is the same for the performance-based RSUs granted to Ms. O’Meara in November 2010 and the performance-based retention awards granted in August 2010 to Mr. Monahan, Ms. Abi-Karam and Ms. O’Meara. Since the metric target is forward-looking we will not disclose it but the Committee believes that the objective is challenging but reasonably attainable after diligent execution of the operating plans.

For additional information about these awards, please see “Grants of Plan Based Awards” table on pages 48 and 49 of this proxy statement.

Performance Award

In February 2011, the board of directors granted a performance cash award under the KEIP to Mr. Martin of $2.0 million. This cash award will vest in December 2013 subject to the company achieving a pre-determined 2011 income from continuing operations objective. Provided this initial objective is achieved, the final amount of the award is subject to two equally weighted strategic targets designed to encourage enterprise-wide business results and to assist the board of directors in the completion of a successful succession plan. Since the specific performance objectives for this award are forward-looking, we will not disclose them. The Committee believes that these objectives are aggressive enough to challenge Mr. Martin to maximize year-over-year growth in certain business units but are at the same time reasonable in that they can be achieved by the efficient and diligent execution of operating plans.

Discretionary Bonus

On June 21, 2010, the company awarded Ms. O’Meara a $50,000 promotional sign-on cash award in connection with her appointment as President, Pitney Bowes Management Services.

Retirement Benefits and Deferred Compensation

We use the pension and non-qualified deferred compensation benefits as retention vehicles. Non-qualified plans provide eligible executives with the benefits that would have otherwise been provided under the qualified benefit plans, but for the limitations set forth under the Internal Revenue Code of 1986, as amended (the “Code”). Non-qualified plans benefits are unfunded obligations of the company:

 

 

 

 

subject to claims by our creditors;

 

 

 

 

adjusted on the basis of notional investment returns; and

 

 

 

 

do not receive any above-market earnings.

Effective May 1, 2010 the maximum 401(k) qualified company match and the company match for the non-qualified 401(k) plan was restored to 4%. On

38


December 31, 2014 the pension benefits in the U.S. qualified and non-qualified plans will be frozen with no further accruals after that date.

For additional information, please see the narrative accompanying the “Pension Benefits as of December 31, 2010” table on pages 55 to 57 and the narrative accompanying the “Nonqualified Deferred Compensation for 2010” table on pages 57 to 59 of this proxy statement.

Other Benefits

We provide limited additional benefits to our named executive officers, including financial counseling. We believe that maintaining a financial counseling program is useful for assisting executives with compliance and administration in connection with our complex programs. Named executive officers’ annual financial counseling reimbursement is capped at $7,500.

The supplemental table below is designed to provide additional details on the payments received by our CEO in 2010.

SUPPLEMENTAL TABLE OF CEO PAY RECEIVED IN 2010

 

 

 

 

 

 

 

 

 

Form of Compensation

 

Period
Covered

 

Target
Compensation
($)

 

Total
Received
($)

 

Performance Results Over Performance Period
That Produced the Compensation

Base Salary

 

 

 

2010

 

 

 

 

950,000

 

 

 

 

950,000

   

Due to the global economic and market conditions, our CEO has not received an increase in base salary since 2008.

Annual Incentive

 

 

 

2010

 

 

 

 

1,520,000

 

 

 

 

1,717,600

   

The company surpassed its initial objective of 2010 income from continuing operations of $331,379,000 by $129,505,000. The independent members of the board of directors then compared the pre-determined financial and strategic objectives and targets to actual performance to determine the resulting payout. For additional information, please see “Annual Incentives” on pages 35 and 36 of this proxy statement.

CIUs

 

 

 

2008-2010

 

 

 

 

2,550,000

 

 

 

 

2,703,000

   

This CIU award was the first award granted to Mr. Martin as CEO, resulting in an additional 550,000 units over the prior year’s award. The company surpassed its initial objective of 2008-2010 income from continuing operations of $480,891,000 by $24,948,000. The independent members of the board of directors then compared the pre-determined financial objectives and targets to actual performance to determine the initial payout factor. The TSR modifier adjusted the payment downwards. Based on the 2010 results, the total CIU payout was $1.06 per unit. For additional information, please see “Long-Term Incentives” on pages 36 and 37 of this proxy statement.

Stock Option Exercises

 

 

 

2010

 

 

 

 

N/A

 

 

 

 

0

   

There were no stock option exercises in 2010.

RSU Vesting

 

 

 

2010

 

 

 

 

296,876

 

 

 

 

255,853

   

Vesting of performance-based RSU grant of 11,995 shares. The $296,876 value was the value of the RSU grant, based on the closing price on February 9, 2009, the date of grant. The $255,853 value was determined based on the average of the high and low trading price on February 2, 2010, the vesting date.

All Other

 

 

 

 

 

 

 

 

Compensation

 

 

 

2010

 

 

 

 

N/A

 

 

 

 

80,446

   

For additional information, please see footnote 7 to the Summary Compensation Table on page 47 of this proxy statement.

Total Payments
Received in 2010*

 

 

 

5,706,899

   

This total represents the value of the payments received by our CEO in 2010.

Note: This table differs substantially from the Summary Compensation Table required by the Securities and Exchange Commission and is not meant to be a substitute for that table.

 

*

 

 

 

This amount does not include the value of other benefits, such as pension plan value attributed to 2010, since they are not payments Mr. Martin received in 2010.

39


Executive Compensation Policies, Practices and Guidelines

Role of the Committee and its Compensation Consultant in Determining Executive Compensation

At the beginning of each year, the Committee reviews the financial and strategic objectives for the company for that calendar year based on the metrics that have been recommended by the senior management and approved by the board of directors. In addition, the Committee reviews the recommendations made by senior management regarding base salary and the target levels of annual and long-term incentive compensation for the named executive officers other than the CEO and determines the appropriate financial and strategic objectives, base salary and the target levels of annual and long-term incentive compensation.

The Committee recommends for approval by the independent members of the board of directors the CEO’s base salary and incentive target levels. In making its decisions, the Committee consults with FWC, its outside consultant. FWC Representatives attended all Committee meetings in 2010 and performed no other services for the company or its management. The Committee has the sole authority to hire and terminate its consultant.

At the end of each year, the Committee reviews the financial and strategic accomplishments of the company for that calendar year and determines the annual and long-term incentive compensation for the named executive officers and recommends for approval by the independent members of the board of directors the CEO’s compensation. The Committee also reviews tally sheets provided by the company to evaluate the individual components and the total mix of compensation.

Role of Management in Determining Executive Compensation

In the beginning of the year our CEO, on behalf of senior management, recommends to the Committee financial and strategic objectives for the incentive plans based on the company’s financial and strategic objectives set by the board of directors. In addition, the CEO and the Executive Vice President and Chief Human Resources Officer recommend target levels of annual and long-term incentive compensation for the named executive officers other than the CEO.

At the end of each year, each named executive officer completes a written self assessment of his or her performance against his or her objectives. The CEO recommends individual ratings for each named executive officer other than himself and these ratings are considered by the Committee in determining annual merit base salary increases. The Committee recommends to the independent members of the board of directors an individual rating for the CEO. The Executive Vice President and Chief Human Resources Officer is also consulted in developing recommendations regarding executive compensation as is the Towers Watson Compensation Report. The Committee or the independent members of the board of directors, as applicable, determines the actual base salary increases, if any, that will be awarded.

The CEO evaluates the performance of his executive officer direct reports and recommends incentive compensation actions to the Committee. The actual payout levels for annual incentive compensation are based upon the company’s performance against the pre-determined financial objectives and other criteria such as total shareholder return and customer value, as discussed in further detail under “Annual Incentives” on pages 35 and 36. For long-term incentive compensation, the recommendation to the Committee for payout levels is based on pre-determined financial objectives and a TSR modifier, as discussed in further detail under “Long-Term Incentives” on pages 36 and 37 of this proxy statement.

Tally Sheets

Management provides the Committee and FWC with tally sheets which demonstrate the total mix of the components of compensation for executive officers. The tally sheets show the dollar amount of each of the components of each executive officer’s compensation, including:

 

 

 

 

total cash compensation (base salary and annual incentive);

 

 

 

 

long-term incentive grants and payouts (stock options, performance-based RSUs, restricted stock and long-term cash awards);

 

 

 

 

financial counseling;

 

 

 

 

balances in the qualified and non-qualified pension, defined contribution and other deferred compensation plans;

 

 

 

 

equity and long-term cash plan balances; and

 

 

 

 

amounts that would be payable under various termination scenarios, including involuntary termination, and termination following a change of control, or due to death or disability.

The purpose of these tally sheets is to allow the Committee to analyze the components individually as well as the mix and weighting of the components within the total compensation package.

40


Benchmarking

To ensure that Pitney Bowes’ executive compensation is competitive in the marketplace, the Committee annually reviews the competitiveness of each executive’s total direct compensation (base salary, annual incentive and long-term incentives) with a view towards determining the optimal mix of compensation. The Committee establishes the target total direct compensation structure based on companies with revenues in the $6 to $10 billion range using the Towers Watson Compensation Report. The report is comprised of 82 companies in all industry areas other than those in the financial and energy sector. However, the exact number of companies included in the data for each executive position may vary depending on the structure of the applicable company and whether the company submitted the relevant data. The report is a sub-section of the 2010 US CDD General Industry Executive Database report from Towers Watson. The complete report can be purchased from Towers Watson.

This market data provides reference points for the Committee, but is not the sole basis for determining appropriate compensation design, compensation targets, or individual pay levels. Compensation targets and individual pay levels may vary from the median for various reasons, including:

 

 

 

 

the value of the total rewards package;

 

 

 

 

program design and strategic considerations;

 

 

 

 

affordability;

 

 

 

 

changing competitive conditions;

 

 

 

 

program transition considerations;

 

 

 

 

the definition and scope of the executive’s role;

 

 

 

 

an executive’s individual contributions to the company; or

 

 

 

 

succession or retention.

When determining target compensation for 2010, the Committee noted that the target compensation for our CEO was 103% of the median of the market data for chief executive officers using the Towers Watson Compensation Report. In 2010, the named executive officers target total direct compensation, as a group, was, on average, 107% of the median in the Towers Watson Compensation Report.

While Pitney Bowes does not have a single competitor that is in a majority of our businesses, the Committee annually reviews our relative performance and actual compensation payouts against the relative performance and compensation payouts of the peer group described below. This peer group consists of companies that have revenue, market capitalization and number of employees similar to those of the company. In 2009, this peer group had revenues between $2 billion and $16 billion, net income ranging from a net loss of $3 billion to $1.3 billion in net income as well as market capitalization between $2 billion and $20 billion. We exceed the median of the peer group in terms of revenue and net income (54th percentile and 59th percentile, respectively) and are below median in terms of market capitalization (25th percentile). FWC and the Committee designed the peer group so the Committee could analyze compensation packages, including compensation mix and other benefits, within the competitive market to attract and retain the talent and skill required to lead a business of complexity and size similar to us. Based on this review, the Committee determined that the Pitney Bowes’ total direct compensation package approximates the median of the data from our peer group.

FWC and the Committee determined that the peer group would consist of the companies listed below. In 2010, Affiliated Computer Services, Inc. was acquired by Xerox Corporation and therefore has been removed from our peer group.

Agilent Technologies, Inc.
Alliance Data Systems Corporation
Automatic Data Processing, Inc.
Cognizant Technology Solutions
Computer Sciences Corporation
DST Systems, Inc.
Fiserv, Inc.
Harris Corporation
Ingersoll-Rand Company Limited
ITT Corporation
Lexmark International, Inc.
NCR Corporation
Rockwell Automation, Inc.
R.R. Donnelley & Sons Company
Seagate Technology LLC
Xerox Corporation

In addition, to supplement the information regarding peer companies, the Committee has engaged FWC to provide an analysis on compensation trends relative to the peer group along with their views on specific compensation programs designed by company management.

Clawback Policy

The board of directors has discretion to “clawback,” adjust, recoup or require the forfeiture of any awards made or paid under the 2007 Stock Plan or the KEIP:

 

 

 

 

to any named executive officer in the event of any financial restatement due to a misrepresentation of the financial statements of the company. This applies to payments made or paid during the 36-month period prior to the financial restatement; and

 

 

 

 

to any employee, including named executive officers, whom the board of directors reasonably believes engaged in misconduct or

41


 

 

 

 

breached any provisions in their Proprietary Interest Protection Agreement, which generally provides for confidentiality, and non-competition and non-solicitation of employees and customers for one year following termination of employment.

Agreements with Executives

Employment Agreements

We have not entered into fixed term employment agreements with our named executive officers based in the United States and therefore such officers are “at will” employees. Employees based in the United Kingdom, including Mr. Keddy, have written service agreements. The service agreement with Mr. Keddy has been superseded by the Separation Agreement described below.

Separation Agreement

On December 30, 2010, we entered into a Separation Agreement with Mr. Keddy in connection with his separation from the company on December 31, 2010. Pursuant to UK Law and his prior Services Agreement, for a one year period following his last day of work, Mr. Keddy will be on paid leave in lieu of notice or “Garden Leave.” While on Garden Leave, Mr. Keddy will continue to receive his base salary, payable in equal installments on regular paydays, and benefits, including automobile and fuel allowance, medical insurance and continued accrual of pension benefits. Mr. Keddy’s outstanding and unvested options and RSUs will continue to vest in accordance with their terms during the Garden Leave period. Any outstanding options and RSUs that are unvested as of the last day of Garden Leave will vest in full at that time and the options will remain exercisable for the remainder of their term.

Mr. Keddy received a lump sum severance payment of $273,492 on January 15, 2011 and will receive an additional lump sum severance payment of $273,492 that will be paid on January 31, 2012. Mr. Keddy will also receive severance in an amount equal to $442,720 payable in equal installments on regular paydays over a one year period beginning on the last day of Garden Leave and ending on December 31, 2012. Mr. Keddy will not receive annual incentive payments or long-term incentive awards in 2011 or 2012.

Mr. Keddy is entitled to certain early retirement benefits under the Pitney Bowes Ltd. Pension Plan since his separation from the company was due to a redundancy.

In addition to the benefits described above, additional benefits under the Separation Agreement include: (i) a prorated payout of outstanding CIUs based on his active service, payable at the time such awards are generally paid; and (ii) reimbursement of up to $18,732 in professional financial counseling fees and up to $24,976 for outplacement services. For information on the exchange rates used to calculate all payment amounts please see footnote 7 of the Summary Compensation Table.

The Separation Agreement also provides that Mr. Keddy will be bound by a confidentiality provision, and for the 12-month period following his last day of work, a covenant not to compete with the company and a non-solicitation provision. Pursuant to the Separation Agreement, Mr. Keddy has released and waived any claims that he might have against the company.

Executive Stock Ownership Policy

We maintain an executive stock ownership policy that encourages executives to own substantial amounts of company stock to more closely align our key executives’ interests with the long-term interests of our stockholders. All of our named executive officers are in compliance with the guidelines.

The multiple of base salary required to be held is as follows:

 

 

 

Title

 

Multiple of Base
Salary

Chief Executive Officer

 

5X

Other Executive Officers

 

2X

We calculate the number of shares targeted for retention by multiplying an executive’s annual base salary times the multiple of salary required and dividing by the average closing price of our common stock on the last trading day of each of the prior two years.

In 2007, the Committee approved guidelines providing that executives have five years from the time they become covered by this policy, or receive a promotion, to achieve the required ownership levels. The value of 60% of the performance-based RSUs, restricted stock and unexercised vested stock options and 100% of the shares owned outright or held in trust are counted toward the ownership requirement. The value is calculated using the closing price of our common stock on the last trading day of the previous calendar year.

Until the required ownership levels are met, executives are required to hold 100% of their “net profit shares.” Net profit shares are, with respect to stock options, the shares remaining after payment of the option exercise price and taxes owed upon exercise and, with respect to performance-based RSUs and restricted stock, the shares that remain after the payment of applicable taxes. As long as the multiple of salary requirement is met, an executive may sell shares acquired previously in the market as well as shares acquired through the

42


exercise of stock options or the vesting of restricted stock awards. Executives cannot pledge 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 or collars, with respect to Pitney Bowes securities (other than transactions in employee stock options).

Change of Control

In reviewing our change of control program, we look to market practices and the Committee seeks advice from its consultant, FWC. We believe that the payment and benefit levels triggered by change of control transactions are consistent with current market practice for companies of our size. Our change of control arrangements are intended to encourage those executives most closely connected to a potential change of control to act more objectively, and therefore, in the best interests of our stockholders, despite the fact that such a transaction could result in the executives’ termination. Our change of control protections also encourage executives to remain with the company until the completion of the transaction to enable a successful transition. Except for equity awards made under our now superseded 2002 Stock Plan, accelerated vesting of equity awards and change of control severance payments occur only when an employee is terminated without cause or when an employee voluntarily terminates for good reason (such as a reduction in position, pay or other constructive termination event) within two years following a change of control (a “double trigger” payment mechanism). The change of control, by itself, does not cause severance payments or accelerated vesting of equity awards except for those under the 2002 Stock Plan.

As part of the change of control severance benefits our named executive officers would be reimbursed for any excise taxes imposed on their severance and any other payments under Section 4999 of the Code in the event that 110% of the safe-harbor amount is exceeded. The excise tax gross-up is intended to preserve the level of change of control severance protections that we have determined to be competitive in the marketplace.

Our change of control arrangements fit into our overall compensation objectives because they are aligned with our goal of providing a compensation package sufficiently competitive to attract and retain talent.

Tax and Accounting

Our compensation programs generally satisfy the requirements for full deductibility under Section 162(m) of the Code. Section 162(m) denies the company a tax deduction for certain compensation in excess of $1 million paid to “covered employees” unless the compensation is qualified performance-based compensation. We structure our incentive compensation programs to be 162(m) compliant; however, the Committee weighs the benefits of compliance with Section 162(m) against the potential limitations of such compliance, and may pay compensation that may not be fully deductible if it determines that it is in the company’s best interest to do so.

In determining the number of stock options in the mix of long-term incentives, we value stock options based upon the Black-Scholes valuation methodology, consistent with the provisions of FASB Accounting Standards Codification Topic 718 (“ASC 718”). Key assumptions used to estimate the fair value of stock options include:

 

 

 

 

the volatility of our stock;

 

 

 

 

the risk-free interest rate;

 

 

 

 

expected term; and

 

 

 

 

our dividend yield.

We believe that the valuation technique and the approach utilized to develop the underlying assumptions are appropriate in estimating the fair value of our stock option grants. Estimates of fair value are not intended to predict actual future events or the value ultimately realized by employees who receive equity awards, and subsequent events are not indicative of the reasonableness of the original estimates of fair value made by the company under ASC 718.

In determining the number of RSUs in the mix of long-term incentives, we currently value RSUs based upon the closing price of our common stock on the grant date.

For additional information on the accounting treatment for stock-based awards, see note 12 to the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010.

Treatment of Special Items

In determining performance goals and evaluating enterprise performance results, the Committee may use its discretion and judgment to ensure that management’s rewards for business performance are commensurate with their contributions to that performance while still holding management accountable for the overall results of the business. The Committee believes that the metrics for incentive compensation plans should be specific and objective. However, in exercising its negative discretion, the Committee recognizes that interpretation of the application of pre-determined metrics to results may be necessary from time to time for certain special items, such as changes in company strategy or new accounting pronouncements. The Committee has adopted a philosophy for evaluating

43


previously established metrics in light of special items. Specifically, the Committee may consider whether or not to include the impact of special items on incentive plan targets based on typical competitive practices and the specific circumstances for each special item. In 2010, special items included restructuring charges and asset impairment charges taken and tax adjustments. For the 2008-2010 CIU cycle, special items also included restructuring charges and asset impairment and tax adjustments.

Accounting Items and Reconciliation of GAAP to Non-GAAP Measures

For 2010, the Committee determined that adjusted earnings per share and adjusted free cash flow results may exclude the impact of special items (both positive and negative) such as restructuring charges, legal settlements and write downs of assets which materially impact the comparability of the company’s results of operations.

The following are non-GAAP measures: adjusted earnings per share, adjusted free cash flow, and earnings before interest and taxes used in the return on invested capital calculation.

 

 

 

 

Adjusted earnings per share exclude special items (as discussed above under “Treatment of Special Items”) including the impact of any accounting changes.

 

 

 

 

Adjusted free cash flow is adjusted earnings plus depreciation and amortization, stock option expense and deferred taxes; changes in working capital excluding, other than in 2008 (when it was included), increases in finance receivables, net of reserve account deposits; less capital expenditures, net of disposals and significant pension contributions.

 

 

 

 

Return on invested capital is earnings before interest and taxes excluding special items (as discussed above under “Treatment of Special Items”) divided by a rolling four quarter average of total capital (beginning and ending debt plus equity for each quarter).

This adjusted financial information should not be construed as an alternative to our reported results determined in accordance with GAAP. Further, our definition of this adjusted financial information may differ from similarly titled measures used by other companies.

44


Pitney Bowes Inc.
Reconciliation of Reported Consolidated Results to Adjusted Results

(Unaudited)

 

 

 

 

 

 

 

(Dollars in thousands, except per share data)

 

 

 

 

 

 

 

 

Twelve Months Ended December 31,

 

2010

 

2009

 

2008

GAAP diluted earnings per share from continuing operations, as reported

 

 

$

 

1.50

 

 

 

$

 

2.08

 

 

 

$

 

2.13

 

Restructuring charges and asset impairments

 

 

 

0.59

 

 

 

 

0.15

 

 

 

 

0.69

 

Tax adjustments

 

 

 

0.13

 

 

 

 

0.05

 

 

 

 

(0.04

)

 

 

 

 

 

 

 

 

Diluted earnings per share from continuing operations, as adjusted(1)

 

 

$

 

2.23

 

 

 

$

 

2.28

 

 

 

$

 

2.78

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities,

 

 

 

 

 

 

as reported

 

 

$

 

952,111

 

 

 

$

 

824,068

 

 

 

$

 

1,009,415

 

Capital expenditures

 

 

 

(119,768

)

 

 

 

 

(166,728

)

 

 

 

 

(237,308

)

 

Restructuring payments and discontinued operations

 

 

 

119,566

 

 

 

 

105,090

 

 

 

 

103,273

 

Finance receivables(2)

 

 

 

 

 

 

 

 

 

 

 

(18,675

)

 

Minority interest(2)

 

 

 

 

 

 

 

 

 

 

 

(20,755

)

 

Pension contribution

 

 

 

 

 

 

 

125,000

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted free cash flow(2)

 

 

$

 

951,909

 

 

 

$

 

887,430

 

 

 

$

 

835,950

 

 

 

 

 

 

 

 

GAAP income from continuing operations

 

 

$

 

328,807

 

 

 

 

 

Interest and taxes

 

 

 

407,094

 

 

 

 

 

 

 

 

 

 

 

 

EBIT(3)

 

 

$

 

735,901

 

 

 

 

 

Restructuring charges and asset impairments

 

 

 

182,274

 

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBIT

 

 

$

 

918,175

 

 

 

 

 

 

 

 

 

 

 

 

Invested capital (Rolling 4-quarter average)

 

 

$

 

4,309,702

 

 

 

 

 

 

 

 

 

 

 

 

Return on invested capital (GAAP basis)

 

17.1%

 

 

 

 

Restructuring charges and asset impairments

 

4.2%

 

 

 

 

Other

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted return on invested capital

 

21.3%

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

The sum of the earnings per share amounts may not equal the totals above due to rounding.

 

(2)

 

 

 

The basis for determining adjusted free cash flow was changed in 2009.

 

(3)

 

 

 

EBIT represents earnings before interest and taxes.

Executive Compensation Tables and Related Narrative

The following “Summary Compensation Table” shows all compensation earned or paid for Messrs. Martin, Monahan, Keddy, Ms. Abi-Karam and Ms. O’Meara during or with respect to 2010, 2009 and 2008 for services rendered to the company and its subsidiaries. The “Summary Compensation Table” includes amounts earned and deferred during the periods covered under the Deferred Incentive Savings Plan.

The “Grants of Plan-Based Awards in 2010” table on pages 48 and 49 provides additional information regarding grants made during 2010 to the named executive officers.

45


SUMMARY COMPENSATION TABLE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name and Principal Position

 

Year

 

Salary
($)
(1)

 

Bonus
($)
(2)

 

Stock
Awards
($)
(3)

 

Option
Awards
($)
(4)

 

Non-Equity
Incentive
Plan
Compen-
sation
($)
(5)

 

Change in
Pension
Value
and Non-
qualified
Deferred
Compen-
sation
Earnings
($)
(6)

 

All Other
Compen-
sation
($)
(7)

 

Total ($)

Murray D. Martin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chairman, President

 

 

 

2010

 

 

 

 

950,000

 

 

 

 

0

 

 

 

 

1,187,500

 

 

 

 

1,187,500

 

 

 

 

4,420,600

 

 

 

 

508,288

 

 

 

 

80,446

 

 

 

 

8,334,334

 

and Chief Executive

 

 

 

2009

 

 

 

 

950,000

 

 

 

 

0

 

 

 

 

1,187,500

 

 

 

 

1,187,500

 

 

 

 

2,854,450

 

 

 

 

1,360,339

 

 

 

 

103,272

 

 

 

 

7,643,061

 

Officer

 

 

 

2008

 

 

 

 

941,667

 

 

 

 

0

 

 

 

 

 

 

 

 

1,950,000

 

 

 

 

2,109,000

 

 

 

 

896,908

 

 

 

 

108,853

 

 

 

 

6,006,428

 

 

Michael Monahan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice

 

 

 

2010

 

 

 

 

540,000

 

 

 

 

0

 

 

 

 

300,000

 

 

 

 

300,000

 

 

 

 

1,018,160

 

 

 

 

252,487

 

 

 

 

24,295

 

 

 

 

2,434,942

 

President and Chief

 

 

 

2009

 

 

 

 

540,000

 

 

 

 

0

 

 

 

 

275,000

 

 

 

 

275,000

 

 

 

 

578,000

 

 

 

 

222,692

 

 

 

 

32,261

 

 

 

 

1,922,953

 

Financial Officer

 

 

 

2008

 

 

 

 

525,000

 

 

 

 

0

 

 

 

 

 

 

 

 

500,000

 

 

 

 

560,800

 

 

 

 

178,919

 

 

 

 

93,728

 

 

 

 

1,858,447

 

 

Leslie Abi-Karam

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice

 

 

 

2010

 

 

 

 

535,096

 

 

 

 

0

 

 

 

 

300,000

 

 

 

 

300,000

 

 

 

 

963,727

 

 

 

 

271,468

 

 

 

 

29,603

 

 

 

 

2,399,894

 

President and

 

 

 

2009

 

 

 

 

525,000

 

 

 

 

0

 

 

 

 

275,000

 

 

 

 

275,000

 

 

 

 

520,700

 

 

 

 

296,835

 

 

 

 

47,041

 

 

 

 

1,939,576

 

President, Mailing

 

 

 

2008

 

 

 

 

508,333

 

 

 

 

0

 

 

 

 

 

 

 

 

500,000

 

 

 

 

575,200

 

 

 

 

229,399

 

 

 

 

106,196

 

 

 

 

1,919,128

 

Solutions Management

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Keddy(8)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Executive Vice President

 

 

 

2010

 

 

 

 

392,557

 

 

 

 

0

 

 

 

 

112,500

 

 

 

 

112,500

 

 

 

 

238,500

 

 

 

 

1,424,239

 

 

 

 

1,066,569

 

 

 

 

3,346,865

 

and President,

 

 

 

2009

 

 

 

 

397,635

 

 

 

 

0

 

 

 

 

112,500

 

 

 

 

112,500

 

 

 

 

433,010

 

 

 

 

710,651

 

 

 

 

42,990

 

 

 

 

1,809,286

 

International

 

 

 

2008

 

 

 

 

470,383

 

 

 

 

0

 

 

 

 

 

 

 

 

225,000

 

 

 

 

444,077

 

 

 

 

0

 

 

 

 

44,753

 

 

 

 

1,184,213

 

 

Vicki O’Meara
Executive Vice President

 

 

 

2010

 

 

 

 

500,000

 

 

 

 

50,000

 

 

 

 

262,500

 

 

 

 

162,500

 

 

 

 

395,500

 

 

 

 

 

 

 

 

8,232

 

 

 

 

1,378,732

 

and President, PBMS and

 

 

 

2009

 

 

 

 

500,000

 

 

 

 

0

 

 

 

 

302,500

 

 

 

 

162,500

 

 

 

 

218,500

 

 

 

 

 

 

 

 

13,744

 

 

 

 

1,197,244

 

Government and Postal
Affairs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

Salaries for our named executives did not increase with the exception of Ms. Abi-Karam, whose salary increased by $10,096 in 2010 as a result of a one-time adjustment to salary paid to all eligible employees due to the elimination of a long-service employee benefit program. Mr. Keddy was paid in U.K. pounds sterling. To provide comparability, his salary was converted to U.S. dollars using the conversion rate of $1.546 to £1.00 (which was the average of the monthly average conversion rates for 2010).

 

(2)

 

 

 

On June 21st, 2010, Ms. O’Meara was awarded a $50,000 promotional sign-on cash award in connection with her appointment as President of Pitney Bowes Management Services.

 

(3)

 

 

 

This column includes the value of stock awarded to named executive officers during 2010 and 2009 based upon its grant date fair value, as determined in accordance with the share-based payment accounting guidance under ASC 718. Only performance-based RSUs were granted to the named executive officers in 2010. In addition to the performance-based RSU awards granted to all named executive officers, Ms. O’Meara also received a performance-based RSU award with a cash value of $100,000 on the date of grant. Details regarding the grants of performance-based RSUs can be found in the Grants of Plan-Based Awards in 2010 table and details regarding outstanding stock awards can be found in the Outstanding Equity Awards at 2010 Fiscal Year-End table.

 

(4)

 

 

 

This column includes the value of stock options awarded to named executive officers during 2010, 2009 and 2008 based upon its grant date fair value, as determined in accordance with the share-based payment accounting guidance under ASC 718. Details regarding 2010 stock option award grants can be found in the Grants of Plan- Based Awards in 2010 table and details regarding outstanding stock option awards can be found in the Outstanding Equity Awards at 2010 Fiscal Year-End table.

 

(5)

 

 

 

The majority of compensation for the named executive officers is at-risk and is earned based on company and executive performance against pre-determined financial and strategic objectives. This column includes annual incentive compensation, CIU payouts that vested at the end of 2010, 2009 and 2008 for multi-year performance, and the value of the 2008 performance award which vested in August 2009. The 2010 annual incentive and CIU payout amounts in this column are as follows: for Mr. Martin, annual incentive of $1,717,600 and CIU of $2,703,000 (this CIU award was the first award granted to Mr. Martin as CEO resulting in an increase in 550,000 units from the prior year); for Mr. Monahan, annual incentive of $488,160 and CIU of $530,000; for Ms. Abi-Karam, annual incentive of $433,727 and CIU of $530,000; for Mr. Keddy, CIU of $238,500; and Ms. O’Meara, annual incentive of $395,500. The 2010 amounts in this column include payments that were deferred at the election of the named executive officers under the terms of the Pitney Bowes Deferred Incentive Savings Plan, as follows: annual incentive deferral by Mr. Martin of $125,000; annual incentive deferral by Mr. Monahan of $45,000; and annual incentive deferral by Ms. Abi-Karam of $25,000.

(footnotes continued on next page)

46


SUMMARY COMPENSATION TABLE (CONTINUED)

 

(6)

 

 

 

This column shows the change in the actuarial present value of the accumulated pension benefit during 2010, 2009 and 2008 for Messrs. Martin, Monahan, Keddy, and Ms. Abi-Karam. Ms. O’Meara does not participate in the qualified Pension Plan or the Pension Restoration Plan. For Mr. Keddy, the change in the actuarial present value of the accumulated pension benefit during 2010 includes $569,765 of additional benefits which resulted in connection with his termination of employment and was converted to U.S. dollars using the conversion rate of $1.561 to £1.00 (which is the conversion rate on December 31, 2010). The balance was converted to U.S. dollars using the conversion rate of $1.546 to £1.00 (which was the average of the monthly average conversion rates for 2010).

 

(7)

 

 

 

Amounts shown for 2010 include all other compensation received by the named executive officers that is not reported elsewhere. For 2010, this includes the following: for Mr. Martin, company’s actual cost for spousal travel, financial counseling, life insurance premium paid by the company, company match to Pitney Bowes 401(k) Plan and $57,987 company contribution to Pitney Bowes 401(k) Restoration Plan; for Mr. Monahan, company’s actual cost for spousal travel, financial counseling, life insurance premium paid by the company, company match to Pitney Bowes 401(k) Plan and $12,952 company contribution to Pitney Bowes 401(k) Restoration Plan; for Ms. Abi-Karam, company’s actual cost for spousal travel, financial counseling, life insurance premium paid by the company, and $13,328 company contribution to Pitney Bowes 401(k) Restoration Plan; for Mr. Keddy, $21,930 automobile allowance including fuel cost, $11,000 company match to the defined contribution account in the Pitney Bowes Ltd. Pension Plan, $442,720 for severance payable in equal monthly installments for one year commencing on January 1, 2012, $546,984 for severance payable in two equal installments at the time of termination and the first anniversary of his termination, reimbursement for up to $24,976 for outplacement services and $18,732 for financial counseling, and a long-term service award of $227; and for Ms. O’Meara, financial counseling, life insurance premium paid by the company, and company match to Pitney Bowes 401(k) Plan. For Mr. Keddy, the automobile, fuel cost, and company match was converted to U.S. dollars using the conversion rate of $1.546 to £1.00 (which was the average of the monthly average conversion rates for 2010) and the balance was converted using $1.561 to £1.00 (which was the conversion rate on December 31, 2010). For additional information regarding payments to Mr. Keddy in connection with his termination of employment, please see “Separation Agreement” and Post Termination Payments table on pages 42 and 63, respectively of this proxy statement.

 

(8)

 

 

 

Mr. Keddy was employed in the U.K. through December 31, 2010 at which time his employment with the company terminated, pursuant to a Separation Agreement between Mr. Keddy and the company dated December 30, 2010. For more information on the Separation Agreement please see exhibit (iv) to our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011.

47


GRANTS OF PLAN-BASED AWARDS IN 2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Grant Date

 

Estimated Future Payouts Under Non-Equity
Incentive Plan Awards

 

Estimated
Future Payouts
Under Equity
Incentive
Plan
Awards

 

All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#)

 

All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)

 

Exercise or
Base Price
of Option
Awards
($/Sh)

 

Grant Date
Fair Value of
Stock and
Option
Awards

 

Threshold
($)

 

Target
($)

 

Maximum
($)

 

Target
(#)

Murray D. Martin
(Annual Incentive)
(1)

 

 

 

 

 

76,000

 

 

 

 

1,520,000

 

 

 

 

4,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(CIU)(2)

 

 

 

 

 

58,781

 

 

 

 

2,375,000

 

 

 

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Stock Options)(4)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

421,099

 

 

 

 

22.09

(3)

 

 

 

 

1,187,500

 

(Performance-based
RSUs)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,757

(5)

 

 

 

 

 

 

 

 

 

 

 

 

1,187,500

 

 

Michael Monahan
(Annual Incentive)
(1)

 

 

 

 

 

21,600

 

 

 

 

432,000

 

 

 

 

4,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(CIU)(2)

 

 

 

 

 

14,850

 

 

 

 

600,000

 

 

 

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Stock Options)(4)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106,383

 

 

 

 

22.09

(3)

 

 

 

 

300,000

 

(Performance-based
RSUs)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,581

(5)

 

 

 

 

0

 

 

 

 

 

 

 

 

300,000

 

(Performance Award)(6)

 

 

 

8/13/2010

 

 

 

 

 

 

 

 

1,100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Leslie Abi-Karam
(Annual Incentive)
(1)

 

 

 

 

 

21,404

 

 

 

 

428,077

 

 

 

 

4,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(CIU)(2)

 

 

 

 

 

14,850

 

 

 

 

600,000

 

 

 

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Stock Options)(4)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

106,383

 

 

 

 

22.09

(3)

 

 

 

 

300,000

 

(Performance-based
RSUs)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,581

(5)

 

 

 

 

 

 

 

 

 

 

 

 

300,000

 

(Performance Award)(7)

 

 

 

8/13/2010

 

 

 

 

 

 

 

 

1,100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick Keddy
(Annual Incentive)
(1),(8)

 

 

 

 

 

13,648

 

 

 

 

272,967

 

 

 

 

4,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(CIU)(2)

 

 

 

 

 

5,569

 

 

 

 

225,000

 

 

 

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Stock Options)(4)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

39,894

 

 

 

 

22.09

(3)

 

 

 

 

112,500

 

(Performance-based
RSUs)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,093

(5)

 

 

 

 

0

 

 

 

 

 

 

 

 

112,500

 

 

Vicki O’Meara
(Annual Incentive)
(1)

 

 

 

 

 

17,500

 

 

 

 

350,000

 

 

 

 

4,000,000

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

0

 

 

 

 

0

 

(CIU)(2)

 

 

 

 

 

8,044

 

 

 

 

325,000

 

 

 

 

8,000,000

 

 

 

 

 

 

 

 

 

 

 

 

0

 

 

 

 

0

 

 

 

 

0

 

(Stock Options)(4)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

57,624

 

 

 

 

22.09

(3)

 

 

 

 

162,500

 

(Performance-based
RSUs)

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,356

(5)

 

 

 

 

 

 

 

 

 

 

 

 

162,500

 

 

 

 

11/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,248

(9)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

100,000

 

(Performance Award)(7)

 

 

 

8/13/2010

 

 

 

 

 

 

 

 

1,000,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

 

 

 

Values in this row represent estimated future payouts for the 2010 annual incentive award. The maximum annual incentive a named executive officer could receive under the KEIP is $4,000,000 and the Committee applies negative discretion to reduce the annual awards such that individual payments are in line with financial and strategic enterprise, business unit and/or individual performance. Ms. O’Meara’s annual incentive target increased from 60% to 80% of base salary in connection with her change in responsibilities occurring in July 2010.

 

(2)

 

 

 

Values in this row represent estimated future payouts for the 2010 – 2012 CIU cycle. The maximum long-term incentive a named executive officer could receive under the KEIP is $8,000,000 and the Committee applies negative discretion to reduce long-term awards such that payments are in line with financial enterprise performance.

 

(3)

 

 

 

The exercise price for each option equals the closing price for a share of the company’s common stock on the date of grant. The actual closing price on the February 8, 2010 grant date was $22.09.

 

(4)

 

 

 

The Black-Scholes value for each option granted on February 8, 2010 grant date was $2.82, based on assumptions detailed in note 12 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011.

48


GRANTS OF PLAN-BASED AWARDS IN 2010 (CONTINUED)

 

(5)

 

 

 

Performance-based RSUs were granted based on the actual closing price on the February 8, 2010 grant date of $22.09. A performance metric tied to income from continuing operations was met as of December 31, 2010, however, the awards remain subject to forfeiture over the remaining vesting period.

 

(6)

 

 

 

Values in this row represent a performance award granted under the KEIP. This award is payable in full on August 31, 2013 subject to the achievement of a pre-determined performance metric tied to a 2011 income from continuing operations objective. Payment can be accelerated to February 29, 2012 upon the achievement of a pre-determined objective. There are no threshold or maximum amounts associated with this award. See page 38 in the CD&A for additional information on this performance award.

 

(7)

 

 

 

Values in this row represent a performance award granted under the KEIP. This award is payable in full on August 31, 2013 subject to the achievement of a pre-determined performance metric tied to an income from continuing operations objective. Payment can be accelerated to August 31, 2012 upon the achievement of pre-determined objectives. There are no threshold or maximum amounts associated with this award. See page 38 in the CD&A for additional information on this performance award.

 

(8)

 

 

 

Amounts shown for Mr. Keddy’s incentive award have been converted to dollars using the conversion rate on the day the Committee approved the 2010 incentive targets (February 8, 2010) which was $1.558 to £1. Mr. Keddy’s incentive award was forfeited in connection with the execution of his Separation Agreement.

 

(9)

 

 

 

The actual number of performance-based RSUs granted to Ms. O’Meara was determined using the closing price on the November 8, 2010 grant date of $23.54. These awards are subject to the achievement of a pre-determined performance metric tied to a 2011 income from continuing operations objective. These awards will vest in full on February 4, 2014 and remain subject to forfeiture during the vesting period.

49


Stock Awards

 

 

 

 

The “Stock Awards” column in the “Summary Compensation Table” represents the value of performance-based RSUs and restricted stock awarded during 2010, 2009 and 2008 based upon its grant date fair value, as determined in accordance with the share-based payment accounting guidance; the “All Other Stock Awards” column in the “Grants of Plan-Based Awards in 2010” table represents the number of shares subject to performance-based RSUs granted to each named executive officer during 2010.

 

 

 

 

The “Estimated Future Payouts Under Equity Incentive Plan Awards” column in the “Grants of Plan-Based Awards in 2010” table represents the number of performance-based RSUs granted to Ms O’Meara in 2010 that remain subject to the 2011 performance metric.

 

 

 

 

It is our policy that the number of stock awards to be granted is determined based on the market price of the stock on the date of grant. The 2007 Stock Plan, approved by stockholders on May 14, 2007, defines market price as the closing price for Pitney Bowes stock on the New York Stock Exchange on the date of grant.

Option Awards

 

 

 

 

The “Option Awards” column in the “Summary Compensation Table” represents the value of options awarded during 2010, 2009 and 2008 based upon their grant date fair value, as determined in accordance with the share-based payment accounting guidance; the “All Other Option Awards” column in the “Grants of Plan-Based Awards in 2010” table represents the number of stock options awarded to each of our named executive officers during 2010.

 

 

 

 

It is our policy that stock options are granted only at an exercise price equal to the market price of the stock on the date of grant. The 2007 Stock Plan, approved by stockholders on May 14, 2007, defines market price as the closing price for Pitney Bowes stock on the New York Stock Exchange on the date of grant.

 

 

 

 

Stock options typically have a ten-year exercise period. Non-qualified stock options granted in 2010 vest and become exercisable in equal increments over three years after the date of grant. Incentive stock options granted in 2009 and 2010 vest and become exercisable three years after the date of grant. Non-qualified stock options granted in 2007 and 2008 vest and become exercisable ratably in equal increments over the first four years following the date of grant and incentive stock options vest and become exercisable four years after the date of grant.

 

 

 

 

The aggregate number of shares subject to stock options granted to each named executive officer during 2010 is shown in the “Grants of Plan-Based Awards in 2010” table.

Non-Equity Incentive Plan Compensation

 

 

 

 

The values shown in the “Non-Equity Incentive Plan Compensation” column in the “Summary Compensation Table” include the annual incentive payments earned for 2010, 2009 and 2008, as well as the CIUs that were earned over the three-year periods ending December 31, 2010, December 31, 2009 and December 31, 2008.

 

 

 

 

The non-equity incentive compensation column in the “Grants of Plan-Based Awards in 2010” table show the range of estimated possible future payouts for the 2010 annual incentive payment at varying levels of performance. They also show the range of estimated possible future payouts of the CIUs granted for the 2010-2012 cycle at varying levels of performance.

Change in Pension Value and Non-qualified Deferred Compensation Earnings

 

 

 

 

The “Change in Pension Value and Non-qualified Deferred Compensation Earnings” column in the “Summary Compensation Table” reflects the change in pension value for each of the years shown. Mr. Keddy is covered exclusively by the Pitney Bowes Ltd. Pension Plan.

 

 

 

 

The change in pension value reflects the aggregate change for both the Pension Plan and the Pitney Bowes Pension Restoration Plan.

 

 

 

 

Since the deferred compensation plans are tied to the returns of the investments in the 401(k) Plan, there were no above-market deferred compensation earnings.

All Other Compensation

 

 

 

 

The “All Other Compensation” column in the “Summary Compensation Table” consists of other amounts earned or paid to each named executive officer. With the exception of the

50


 

 

 

 

severance benefits awarded to Mr. Keddy in connection with his termination of employment, many of the benefits described in this column are available to employees other than the named executive officers.

 

 

 

 

The employee discount in the Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan has been included in the Black-Scholes calculation for the fair market value of the exercise price. Therefore, the discount is not included in this column as additional compensation to the executive.

Equity Awards

The next table is provided to present an overview of Pitney Bowes equity awards held as of December 31, 2010 by each named executive officer. It discloses compensation in the form of equity that has previously been awarded, remains outstanding, and is unexercised or unvested.

51


OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Option Awards

 

Stock Awards

 

Grant
Date

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)

 

Option
Exercise
Price ($)

 

Option
Expiration
Date

 

Unrealized
Appreciation ($)
(2)

 

Number of
Shares or Units
of Stock That
Have Not
Vested (#)

 

Market Value of
Shares or Units of
Stock That Have
Not Vested
(3)

 

Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)

 

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)
(3)

Murray D. Martin

 

 

 

2/12/2001

 

 

 

 

107,594

 

 

 

 

0

 

 

 

 

34.1074

 

 

 

 

2/11/2011

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/10/2003

 

 

 

 

75,000

 

 

 

 

0

 

 

 

 

32.1000

 

 

 

 

2/9/2013

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2004

 

 

 

 

75,000

 

 

 

 

0

 

 

 

 

40.0800

 

 

 

 

2/8/2014

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/14/2005

 

 

 

 

100,000

 

 

 

 

0

 

 

 

 

46.9300

 

 

 

 

2/13/2015

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/13/2006

 

 

 

 

119,215

 

 

 

 

0

 

 

 

 

42.6200

 

 

 

 

2/12/2016

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/16/2007

 

 

 

 

243,111

 

 

 

 

78,836

(4)

 

 

 

 

45.4000

 

 

 

 

3/15/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/16/2007

 

 

 

 

0

 

 

 

 

2,202

(5)

 

 

 

 

45.4000

 

 

 

 

3/15/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

300,000

 

 

 

 

297,295

(6)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

0

 

 

 

 

2,705

(7)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

130,208

 

 

 

 

260,417

(8)

 

 

 

 

24.7500

 

 

 

 

2/8/2019

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

0

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

35,985

(9)

 

 

 

 

870,117

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

416,573

(10)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

870,638

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

4,526

(11)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

9,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

53,757

(12)

 

 

 

 

1,299,844

 

 

 

 

 

 

 

 

 

 

Michael Monahan

 

 

 

9/10/2001

 

 

 

 

6,148

 

 

 

 

0

 

 

 

 

41.8755

 

 

 

 

9/9/2011

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2002

 

 

 

 

6,000

 

 

 

 

0

 

 

 

 

40.6800

 

 

 

 

2/10/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/10/2003

 

 

 

 

15,000

 

 

 

 

0

 

 

 

 

32.1000

 

 

 

 

2/9/2013

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2004

 

 

 

 

23,000

 

 

 

 

0

 

 

 

 

40.0800

 

 

 

 

2/8/2014

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/14/2005

 

 

 

 

26,000

 

 

 

 

0

 

 

 

 

46.9300

 

 

 

 

2/13/2015

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/13/2006

 

 

 

 

28,050

 

 

 

 

0

 

 

 

 

42.6200

 

 

 

 

2/12/2016

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/12/2007

 

 

 

 

21,582

 

 

 

 

5,113

(13)

 

 

 

 

48.0300

 

 

 

 

2/11/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/12/2007

 

 

 

 

0

 

 

 

 

2,082

(14)

 

 

 

 

48.0300

 

 

 

 

2/11/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

76,923

 

 

 

 

74,218

(6)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

0

 

 

 

 

2,705

(7)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

30,154

 

 

 

 

60,307

(8)

 

 

 

 

24.7500

 

 

 

 

2/8/2019

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

0

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,334

(9)

 

 

 

 

201,516

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

101,857

(10)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

212,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

4,526

(11)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

9,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,581

(12)

 

 

 

 

328,389

 

 

 

 

 

 

 

 

 

 

Leslie Abi-Karam

 

 

 

9/10/2001

 

 

 

 

2,562

 

 

 

 

0

 

 

 

 

41.8755

 

 

 

 

9/9/2011

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2002

 

 

 

 

5,000

 

 

 

 

0

 

 

 

 

40.6800

 

 

 

 

2/10/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12/9/2002

 

 

 

 

1,667

 

 

 

 

0

 

 

 

 

33.7900

 

 

 

 

12/8/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/10/2003

 

 

 

 

4,418

 

 

 

 

0

 

 

 

 

32.1000

 

 

 

 

2/9/2013

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2004

 

 

 

 

18,000

 

 

 

 

0

 

 

 

 

40.0800

 

 

 

 

2/8/2014

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/14/2005

 

 

 

 

25,000

 

 

 

 

0

 

 

 

 

46.9300

 

 

 

 

2/13/2015

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/13/2006

 

 

 

 

28,050

 

 

 

 

0

 

 

 

 

42.6200

 

 

 

 

2/12/2016

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/12/2007

 

 

 

 

21,582

 

 

 

 

5,113

(13)

 

 

 

 

48.0300

 

 

 

 

2/11/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/12/2007

 

 

 

 

0

 

 

 

 

2,082

(14)

 

 

 

 

48.0300

 

 

 

 

2/11/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

76,923

 

 

 

 

74,218

(6)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

52


OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END (continued)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Name

 

Option Awards

 

Stock Awards

 

Grant
Date

 

Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(1)

 

Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(1)

 

Option
Exercise
Price ($)

 

Option
Expiration
Date

 

Unrealized
Appreciation ($)
(2)

 

Number of
Shares or Units
of Stock That
Have Not
Vested (#)

 

Market Value of
Shares or Units of
Stock That Have
Not Vested
(3)

 

Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested (#)

 

Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested
($)
(3)

Leslie Abi-Karam

 

 

 

2/11/2008

 

 

 

 

0

 

 

 

 

2,705

(7)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(continued)

 

 

 

2/9/2009

 

 

 

 

30,154

 

 

 

 

60,307

(8)

 

 

 

 

24.7500

 

 

 

 

2/8/2019

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8,334

(9)

 

 

 

 

201,516

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

101,857

(10)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

212,881

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

4,526

(11)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

9,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13,581

(12)

 

 

 

 

328,389

 

 

 

 

 

 

 

 

 

 

Patrick Keddy

 

 

 

2/11/2002

 

 

 

 

3,000

 

 

 

 

0

 

 

 

 

40.6800

 

 

 

 

2/10/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9/5/2002

 

 

 

 

10,000

 

 

 

 

0

 

 

 

 

34.7300

 

 

 

 

9/4/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/10/2003

 

 

 

 

15,000

 

 

 

 

0

 

 

 

 

32.1000

 

 

 

 

2/9/2013

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2004

 

 

 

 

20,000

 

 

 

 

0

 

 

 

 

40.0800

 

 

 

 

2/8/2014

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/14/2005

 

 

 

 

22,000

 

 

 

 

0

 

 

 

 

46.9300

 

 

 

 

2/13/2015

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/21/2005

 

 

 

 

0

 

 

 

 

150

(15)

 

 

 

 

37.8029

 

 

 

 

6/1/2011

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/13/2006

 

 

 

 

31,557

 

 

 

 

0

 

 

 

 

42.6200

 

 

 

 

2/12/2016

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/20/2006

 

 

 

 

0

 

 

 

 

153

(16)

 

 

 

 

40.2690

 

 

 

 

6/1/2012

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/12/2007

 

 

 

 

24,280

 

 

 

 

8,094

(13)

 

 

 

 

48.0300

 

 

 

 

2/11/2017

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10/16/2007

 

 

 

 

0

 

 

 

 

165

(17)

 

 

 

 

40.9290

 

 

 

 

5/31/2013

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/11/2008

 

 

 

 

34,615

 

 

 

 

34,616

(6)

 

 

 

 

36.9600

 

 

 

 

2/10/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

12,336

 

 

 

 

24,671

(8)

 

 

 

 

24.7500

 

 

 

 

2/8/2019

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3,409

(9)

 

 

 

 

82,430

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

39,894

(10)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

83,378

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,093

(12)

 

 

 

 

123,149

 

 

 

 

 

 

 

 

 

 

Vicki O’Meara

 

 

 

8/27/2008

 

 

 

 

19,104

 

 

 

 

19,104

(18)

 

 

 

 

33.9100

 

 

 

 

8/27/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/27/2008

 

 

 

 

5,896

 

 

 

 

5,896

(19)

 

 

 

 

33.9100

 

 

 

 

8/27/2018

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8/27/2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,000

(20)

 

 

 

 

120,900

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

17,818

 

 

 

 

35,636

(8)

 

 

 

 

24.7500

 

 

 

 

2/8/2019

 

 

 

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/9/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,925

(9)

 

 

 

 

119,087

 

 

 

 

 

 

 

 

 

 

 

 

11/9/2009

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5,614

(21)

 

 

 

 

135,747

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

53,098

(10)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

110,975

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

0

 

 

 

 

4,526

(11)

 

 

 

 

22.0900

 

 

 

 

2/7/2020

 

 

 

 

9,459

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,356

(12)

 

 

 

 

177,868

 

 

 

 

 

 

 

 

 

 

 

 

11/8/2010

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,248

(22)

 

 

 

 

102,717

 

 

(1)

 

 

 

These columns represent the total number of securities underlying exercisable and unexercisable stock options that were outstanding at the end of 2010. The number of shares subject to the options has been adjusted to reflect the spin-off of Imagistics International Inc. in 2001.

 

(2)

 

 

 

This column represents the difference between the exercise price on the date of grant and the closing price of the company stock on December 31, 2010 on outstanding exercisable and unexercisable options which have not yet been realized.

 

(3)

 

 

 

These amounts were calculated based on the closing price of the company’s common stock of $24.18 per share on December 31, 2010.

 

(4)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 25% per year, with a remaining vesting date of March 16, 2011.

 

(5)

 

 

 

These awards represent ISOs that vest 100% after four years, with a vesting date of March 16, 2011.

 

(6)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 25% per year, with vesting dates of February 11, 2011 and February 11, 2012. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the options continue to vest until December 31, 2011, at which time they will become fully vested and remain excercisable for the remainder of their term. For additional information, please see ‘Separation Agreement’ on page 42 of this proxy statement.

(footnotes continued on next page)

53


OUTSTANDING EQUITY AWARDS AT 2010 FISCAL YEAR-END (continued)

 

(7)

 

 

 

These awards represent ISOs that vest 100% after four years, with a vesting date of February 11, 2012.

 

(8)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 33% per year, with vesting dates of February 9, 2011 and February 9, 2012. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the options continue to vest until December 31, 2011, at which time they will become fully vested and remain excercisable for the remainder of their term.

 

(9)

 

 

 

These awards represent performance-based RSUs that vest at the rate of 25% per year, with vesting dates of February 1, 2011, February 7, 2012 and February 5, 2013. The performance metric tied to income from continuing operations has been met, however, the awards remain subject to forfeiture over the remaining vesting period. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the performance-based RSUs continue to vest until December 31, 2011, at which time they will become fully vested.

 

(10)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 33% per year, with vesting dates of February 8, 2011, February 8, 2012, and February 8, 2013. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the options continue to vest until December 31, 2011, at which time they will become fully vested and remain excercisable for the remainder of their term.

 

(11)

 

 

 

These awards represent ISOs that vest 100% after three years, with a vesting date of February 8, 2013.

 

(12)

 

 

 

These awards represent performance-based RSUs that vest at the rate of 25% per year, with vesting dates of February 1, 2011, February 7, 2012, February 5, 2013, and February 4, 2014. The performance metric tied to income from continuing operations has been met, however, the awards remain subject to forfeiture over the remaining vesting period. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the performance-based RSUs continue to vest until December 31, 2011, at which time they will become fully vested.

 

(13)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 25% per year, with a remaining vesting date of February 12, 2011. For Mr. Keddy, in accordance with the terms of his Separation Agreement, the options will vest on February 12, 2011 and remain excercisable for the remainder of their term.

 

(14)

 

 

 

These awards represent ISOs that vest 100% after four years, with a vesting date of February 12, 2011.

 

(15)

 

 

 

Options are granted under the Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan. Pursuant to the plan, Mr. Keddy can purchase shares beginning on December 1, 2010 until the Expiration Date.

 

(16)

 

 

 

Options are granted under the Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan. Pursuant to the plan, Mr. Keddy can purchase shares beginning on December 1, 2011 until the Expiration Date.

 

(17)

 

 

 

Options are granted under the Pitney Bowes Inc. 1998 U.K. S.A.Y.E. Stock Option Plan. Since the six month anniversary of Mr. Keddy’s retirement will occur prior to the date these shares are available for purchase, Mr. Keddy cannot purchase these shares.

 

(18)

 

 

 

These awards represent non-qualified stock options that vest at the rate of 25% per year, with vesting dates of August 27, 2011 and August 27, 2012.

 

(19)

 

 

 

These awards represent ISOs that vest at the rate of 25% per year, with vesting dates of August 27, 2011 and August 27, 2012.

 

(20)

 

 

 

These awards represent performance-based restricted stock that vest 100% after three years, with a vesting date of August 27, 2011. The performance metric tied to income from continuing operations has been met, however, the awards remain subject to forfeiture over the remaining vesting period.

 

(21)

 

 

 

These awards represent performance-based RSUs that vest 100% on February 5, 2013. The performance metric tied to income from continuing operations has been met, however, the awards remain subject to forfeiture over the remaining vesting period.

 

(22)

 

 

 

These awards represent performance-based RSUs that will vest 100% on February 4, 2014, provided the performance metric tied to 2011 income from continuing operations has been met. These awards remain subject to forfeiture during the vesting period.

54


OPTION EXERCISES AND STOCK VESTED DURING 2010 FISCAL YEAR

 

 

 

 

 

 

 

 

 

Name

 

Option Awards(1)

 

Stock Awards

 

Number of Shares
Acquired on
Exercise (#)

 

Value Realized On
Exercise ($)

 

Number of Shares
Acquired on
Vesting (#)
(2)

 

Value Realized on
Vesting ($)
(3)

Murray D. Martin

 

 

 

0

 

 

 

 

0

 

 

 

 

11,995

 

 

 

 

255,853

 

Michael Monahan

 

 

 

0

 

 

 

 

0

 

 

 

 

2,777

 

 

 

 

59,233

 

Leslie Abi-Karam

 

 

 

0

 

 

 

 

0

 

 

 

 

2,777

 

 

 

 

59,233

 

Patrick Keddy

 

 

 

0

 

 

 

 

0

 

 

 

 

1,136

 

 

 

 

24,231

 

Vicki O’Meara

 

 

 

0

 

 

 

 

0

 

 

 

 

1,641

 

 

 

 

35,003

 

 

(1)

 

 

 

There were no stock option exercises in 2010.

 

(2)

 

 

 

These shares of performance-based RSUs granted on February 9, 2009 vested on February 2, 2010.

 

(3)

 

 

 

These values were determined based on the average of the high and low trading price on the February 2, 2010 vesting date of $21.33.

Pension Benefits

The following table provides information regarding pension payments to the named executive officers. It includes data regarding the Pitney Bowes Pension Plan, Pension Restoration Plan and the Pitney Bowes Ltd. Pension Plan. The Pitney Bowes Pension Plan is a qualified defined benefit pension plan for U.S. employees, while the Pitney Bowes Ltd. Pension Plan is a qualified pension plan for U.K. employees. U.S. named executive officers hired prior to January 1, 2005 are eligible to participate in the Pitney Bowes Pension Plan which is a broad-based tax-qualified plan under which employees generally are eligible to retire with unreduced benefits at age 65. U.S. named executive officers who participate in the Pitney Bowes Pension Plan are also eligible to participate in the Pension Restoration Plan, a non-qualified deferred compensation plan, which provides eligible employees with compensation greater than the $245,000 limit for 2010 and those employees who defer portions of their compensation with benefits based on the same formula used under the qualified plan. The Pension Restoration Plan is offered to approximately 300 of our current active employees to provide for retirement benefits above amounts available under the tax-qualified Pension Plan. Pitney Bowes does not grant extra years of credited service under its pension plans. Payments under the non-qualified Pension Restoration Plan are paid from our general assets. These payments are substantially equal to the difference between the amount that would have been payable under our Pension Plan in the absence of IRS limits on compensation and benefits as applied to qualified plans, and the amount actually paid under our Pension Plan. The Pitney Bowes Pension Restoration Plan, which is a non-qualified deferred compensation plan, does not include special provisions, such as above-market interest rates.

All of the eligible named executive officers are fully vested in their pension benefit.

On December 31, 2014 the U.S. qualified and non-qualified pension benefits will be frozen with no further accruals under those plans after that date.

The amounts reported in the table below equal the present value of the accumulated benefit on December 31, 2010, for the named executive officers under the various Pitney Bowes pension plans determined based on years of service and covered earnings (as described below). The present value has been calculated based on benefits payable that would commence when the executive reaches age 65, and in an amount consistent with the assumptions as described in note 19 to the financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2010, as filed with the SEC on February 28, 2011.

55


PENSION BENEFITS AS OF DECEMBER 31, 2010(1)

 

 

 

 

 

 

 

Name

 

Plan Name

 

Number of Years
Credited Service
(#)

 

Present Value of
Accumulated
Benefit ($)
(2)

Murray D. Martin(3)

 

Pitney Bowes Pension Plan

 

 

 

23.4

 

 

 

 

584,378

 

Murray D. Martin

 

Pitney Bowes Pension Restoration Plan

 

 

 

23.4

 

 

 

 

4,904,820

 

Michael Monahan

 

Pitney Bowes Pension Plan

 

 

 

22.6

 

 

 

 

252,770

 

Michael Monahan

 

Pitney Bowes Pension Restoration Plan

 

 

 

22.6

 

 

 

 

760,509

 

Leslie Abi-Karam

 

Pitney Bowes Pension Plan

 

 

 

26.9

 

 

 

 

348,380

 

Leslie Abi-Karam

 

Pitney Bowes Pension Restoration Plan

 

 

 

26.9

 

 

 

 

998,524

 

Patrick Keddy(4)

 

Pitney Bowes Ltd. Pension Plan

 

 

 

21.7

 

 

 

 

3,854,109

 

 

(1)

 

 

 

Ms. O’Meara is omitted from this table since she is not a pension plan participant.

 

(2)

 

 

 

Material assumptions used to calculate the present value of accumulated benefits under the Pitney Bowes Pension Plan for each named officer are detailed in note 19 to the financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2010. In addition, the mortality table used for the U.S. participants was UP94G and for Mr. Keddy was standard table S1PMA.

 

(3)

 

 

 

Mr. Martin is currently eligible for early retirement. If Mr. Martin were to have retired on December 31, 2010, the present value of the pension benefit payable would have been $6,136,744.

 

(4)

 

 

 

Amount shown for Mr. Keddy’s pension has been converted to U.S. dollars using the conversion rate of $1.561 to £1.00 (which was the conversion rate as of December 31, 2010).