Pitney Bowes (PBI)

Compensation levels should be sufficiently competitive to attract and retain talent

To ensure that Pitney Bowes’ current and long-term executive compensation is competitive in the marketplace, the Executive Compensation Committee of the board of directors (the “Committee”) establishes our target compensation structure based on companies with revenues in the $6 to $10 billion range. We developed our data on compensation levels within this group of companies using Towers Perrin’s published executive compensation reports. Annually, the Committee reviews our actual compensation payouts against a peer group of publicly traded companies with comparable revenue, market capitalization and total stockholder return. On the recommendation of Frederic W. Cook & Co., Inc., the Committee’s independent consultant, this peer group was revised during 2008 to include companies that more closely align to our size and lines of business. For a list of these companies and details of these changes, please see pages 26-27.

The Committee strives to set compensation of our named executive officers at the market median, although individual levels can vary for a variety of reasons as discussed above. Actual compensation may be above or below the median based on actual performance.

Compensation levels should be sufficiently competitive to attract and retain talent

To ensure that Pitney Bowes’ current and long-term 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 developed our data on compensation levels within this group of companies using Towers Perrin’s published executive compensation reports. Annually, the Committee reviews our actual compensation payouts against a peer group of sixteen publicly traded companies with comparable revenue, market capitalization and total stockholder return. For a list of these companies, please see pages 29 and 30. After considering this information, and after consulting with Frederic W. Cook & Co., Inc., the Committee’s independent consultant, the Committee determined that this peer group is appropriate.

The Committee strives to set executive compensation generally at the market median, although individual levels can vary for a variety of reasons as discussed in the section “Role of the Executive Compensation Committee in Determining Executive Compensation.” Actual compensation may be above or below the median based on actual performance.

Compensation levels should be sufficiently competitive to attract and retain talent

To ensure that Pitney Bowes’ current and post-employment 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 developed our data on compensation levels within this group of companies using Towers Perrin’s published executive compensation reports. Annually, the Committee reviews our actual compensation payouts against a peer group of sixteen publicly traded companies with comparable revenue, market capitalization and total stockholder return. After considering this information, and after consulting with Frederic W. Cook & Co., Inc., the Committee’s independent consultant, the Committee determined that this peer group is appropriate.

The Committee strives to set executive compensation generally at the market median, although individual levels can vary for a variety of reasons as discussed below. Actual compensation may be above or below the median based on actual performance.