Pitney Bowes (PBI)

Benchmarking

To ensure that Pitney Bowes’ executive compensation is competitive in the marketplace, the Committee establishes our target compensation structure based on companies with revenues in the $6 to $10 billion range. We determined the competitiveness of our compensation structure using Towers Perrin’s published executive compensation reports, and the Committee engages Frederic W. Cook & Co., Inc. as its independent compensation consultant to assist it in the evaluation of senior executive compensation.

The Committee reviews the competitiveness of each executive’s compensation with a view towards determining the optimal mix of compensation components. The Committee noted that although the compensation for Mr. Martin was significantly higher than the compensation for other executive officers of the company, his amounts were in line with the median of the market data for chief executive officers of similar size companies.

The Committee has engaged Frederic W. Cook & Co., Inc. in a limited capacity to provide, under the oversight of the Committee, benchmarking analysis on compensation trends along with their views on specific compensation programs designed by company management. Representatives from Frederic W. Cook & Co., Inc. are also frequently invited to attend the Committee meetings. In addition, the company’s human resources department and the Committee have discussed with Frederic W. Cook & Co., Inc. the design of programs that affect executive officer compensation.

Frederic W. Cook & Co., Inc. provides market data that includes reference points for the Committee’s evaluation of compensation decisions, but is not the sole basis for determining appropriate compensation design, compensation targets, or individual pay levels. At any point in time, compensation targets and individual pay levels may be above or below the median for a variety of reasons. For example, target levels may be affected by:

Pitney Bowes operates in a number of different business segments, and different portions of our business reside in different competitive arenas. Many of our businesses compete with privately-held companies as well as publicly-held companies that are based in countries outside the United States where prevailing compensation practices may be significantly different.

While Pitney Bowes does not have a competitor that is in a majority of our businesses, the Committee annually reviews our actual compensation payouts against a peer group of publicly traded companies with comparable revenue, market capitalization, total assets, net income and number of employees. In the absence of competitive benchmarks, this peer group was created to enable the Committee to analyze the competitive market for the talent and skill required to lead a business of complexity and size similar to that of Pitney Bowes.

In 2008, at the Committee’s request, Frederic W. Cook & Co., Inc., the company’s independent consultant, conducted a review and prepared a report of the composition of the company’s peer group. The independent consultant recommended deleting five companies from the peer group, generally because either the companies were no longer comparable in size or line of business, or the data was no longer readily accessible. It also recommended adding new companies, on the basis of their similarity to the company in size (as determined by revenue, market capitalization, net income, and employee base) and industry. After reviewing and discussing this report with Frederic W. Cook & Co., Inc., the Committee selected a new peer group comprised of 17 companies that more closely align to the company’s size and lines of business. Of these 17

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Benchmarking

To ensure that Pitney Bowes’ executive compensation is competitive in the marketplace, the Committee establishes our target compensation structure based on companies with revenues in the $6 to $10 billion range. We determined the competitiveness of our compensation structure using Towers Perrin’s published executive compensation reports, and the Committee engages Frederic W. Cook & Co., Inc. as its independent compensation consultant to assist it in the evaluation of senior executive compensation.

The Committee has engaged Frederic W. Cook & Co., Inc. in a limited capacity to provide, under the oversight of the Committee, benchmarking analysis on compensation trends along with their views on specific compensation programs designed by company management. Representatives from Frederic W. Cook & Co., Inc. are also frequently invited to attend the Committee meetings. In addition, the company’s human resources department and the Committee have discussed with Frederic W. Cook & Co., Inc. the design of programs that affect executive officer compensation.

Frederic W. Cook & Co., Inc. provides market data that includes reference points for the Committee’s evaluation of compensation decisions, but is not the sole basis for determining appropriate compensation design, compensation targets, or individual pay levels. At any point in time, compensation targets and individual pay levels may be above or below the median for a variety of reasons. For example, target levels may be affected by:

• 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.

Pitney Bowes operates in a number of different business segments, and different portions of our business reside in different competitive arenas. Many of our businesses compete with privately-held companies as well as publicly-held companies that are based in countries outside the United States where prevailing compensation practices may be significantly different.

While Pitney Bowes does not have a competitor that is in a majority of our businesses, the Committee reviews our actual compensation payouts against a peer group of sixteen publicly traded companies with comparable revenue, market capitalization, total assets, net income and number of employees on an annual basis. In the absence of competitive benchmarks, this peer group was created to enable the Committee to analyze the competitive market for the talent and skill required to lead a business of complexity and size similar to that of Pitney Bowes. The Committee selected this group based on recommendations by Frederic W. Cook & Co., Inc., the Committee’s independent consultant. This group consists of industrial, technology and service companies and excludes companies in the financial services, transportation, hotel, energy, natural resources and aviation industries. The peer group of companies that we consider in reviewing executive compensation includes:

Affiliated Computer Services, Inc.;
Agilent Technologies, Inc.;
American Standard Companies Inc.;
Avaya Inc.;

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Benchmarking

To ensure that Pitney Bowes’ executive compensation is competitive in the marketplace, the Committee establishes the target compensation structure based on companies with revenues in the $6 to $10 billion range. We determined the competitiveness of our compensation structure using Towers Perrin’s published executive compensation reports, and the Committee engages Frederic W. Cook & Co., Inc. as its independent compensation consultant to assist it in the evaluation of senior executive compensation.

This information provides reference points for the evaluation of compensation decisions, but is not the sole basis for determining appropriate compensation design, compensation targets, or individual pay levels. At any point in time compensation targets and individual pay levels may be above or below the median for a variety of reasons. For example, target levels may be affected by:

• 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.

Pitney Bowes operates in a number of different business segments, and different portions of our business reside in different competitive arena. Many of our businesses compete with privately-held companies as well as publicly-held companies that are based in countries outside the United States where prevailing compensation practices may be significantly different.

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