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PBI » Topics » Actions Taken by the Executive Compensation Committee in 2007

This excerpt taken from the PBI DEF 14A filed Mar 27, 2008.

Actions Taken by the Executive Compensation Committee in 2007

In 2007, in accordance with its charter, the Committee took the following significant actions during the year:

      

  • The Committee approved the 2007 incentive plan objectives for:
     
       

  • annual incentives,
     
       

  • cash incentive units, and
     
       

  • the performance criteria as required under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).
     
     

  • The Committee endorsed for approval by the independent members of the board compensation changes for Murray D. Martin, who was elected the company’s new president and chief executive officer effective May 14, 2007, and Michael J. Critelli, who was elected the company’s executive chairman effective May 14, 2007.

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    In 2007, the Committee approved or endorsed for approval by the board the following policy changes that are designed to strengthen our compensation programs in light of evolving best practices:

          

  • The Committee endorsed for approval by the board and the company’s stockholders the 2007 Stock Plan which contains some significant changes from the company’s 2002 Stock Plan.
     
       

    Some of the more significant changes are that the 2007 Plan:
     
        —   

    includes a “double trigger” change of control payment mechanism requiring a termination of employment either by the company without cause or by the employee for “good reason” within two years after a change of control of the company;
     
        —  

    changes the definition of fair market value from average of the high and low to the closing price of Pitney Bowes common stock on the date of grant;
     
        —  

    revises the definition of disability to two years following the start of a long-term disability;
     
        —  

    expands the “clawback provision” for gross misconduct and violation of the company’s confidentiality agreements to allow the Committee to require forfeiture of outstanding awards;
     
        —  

    adds a minimum performance period of one year for performance grants; and
     
        —  

    increases the maximum award per individual from 400,000 to 600,000 shares.
     
     

  • The Committee amended the company’s Key Employee Incentive Plan (“KEIP”) which governs the annual incentive plan and the long-term cash incentive unit plan:
     
        —  

    to require employees to forfeit vested and unvested awards if the company determines that the employee has engaged in gross misconduct;
     
        —  

    to eliminate the requirement that the size of the annual incentive fund be limited to 41/2% of the company’s income from continuing operations before income taxes as this requirement is no longer necessary given the other performance criteria under the plan; and
     
        —  

    to revise change of control calculations for both annual incentives and long-term cash incentives to use the participant’s current target value of the award at the time of the change of control.

    • The Committee reviewed the stock ownership of the company’s executive officers and decided to amend the company’s Executive Stock Ownership Policy as detailed below in the section “Executive Stock Ownership Policy.”

    In 2007, the Committee conducted the following reviews with the help of its outside consultant, Frederic W. Cook & Co., Inc.:

    • To assist the Committee in benchmarking the company’s compensation programs, it reviewed a report from Frederic W. Cook & Co., Inc. on the executive compensation landscape and compensation data from the company’s peer group.

    • The Committee reviewed an analysis conducted by Frederic W. Cook & Co., Inc. regarding pay for performance of the company’s former CEO.

    • The Committee reviewed various alternatives developed by Frederic W. Cook & Co., Inc. to measure total stockholder return for CIUs granted beginning in 2008.

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