DEF 14A 1 ssnc-def14a_20210519.htm DEF 14A ssnc-def14a_20210519.htm
SS&C Technologies Holdings, Inc.
Shareholder Annual Meeting in a DEF 14A on 04/06/2021   Download
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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SS&C TECHNOLOGIES HOLDINGS, INC.

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SS&C TECHNOLOGIES HOLDINGS, INC.

80 Lamberton Road

Windsor, Connecticut 06095

April 6, 2021

My Fellow Shareholders:

You are cordially invited to attend the 2021 Annual Meeting of Stockholders of SS&C Technologies Holdings, Inc. to be held on Wednesday, May 19, 2021 at 9:00 a.m. (EDT), virtually, via live audio webcast.

At the 2021 annual meeting, you will be asked to (i) elect one Class II Director to our Board of Directors for the ensuing three years; (ii) approve, in an advisory vote, the compensation of our named executive officers; and (iii) ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm.  The Board recommends that you vote for the director nominee nominated by our Board, that you approve the compensation of our named executive officers and that you ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm.

We hope you will be able to attend the 2021 annual meeting.  Whether or not you plan to attend the 2021 annual meeting, it is important that your shares are represented.  Therefore, we urge you to promptly vote your shares by one of the methods we offer.

 

 

Sincerely,

 

WILLIAM C. STONE

Chairman of the Board & Chief Executive Officer

 

YOUR VOTE IS IMPORTANT

 

 

 

 

 

 


 

 

 

TABLE OF CONTENTS

 

 

2020 PERFORMANCE HIGHLIGHTS

3

HIGHLIGHTS OF PROPOSALS BEING VOTED UPON

3

PROPOSAL 1 ELECTION OF DIRECTOR

5

Directors’ Recommendation

5

BOARD OF DIRECTORS AND MANAGEMENT

6

Information Regarding Directors and Director Nominees

6

Corporate Governance Matters

8

Board Determination of Independence

9

Stockholders Agreement

9

Director Nomination Process

9

Criteria and Diversity

9

Board Meetings and Attendance

10

Director Attendance at Annual Meeting of Stockholders

10

Board Leadership Structure

10

Board Committees

10

Risk Oversight

12

Communications with the Board

12

Code of Business Conduct and Ethics

12

Executive Officers Who Are Not Directors

13

PROPOSAL 2 ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION

14

Directors’ Recommendation

15

EXECUTIVE AND DIRECTOR COMPENSATION

16

Compensation Discussion and Analysis

16

Executive Compensation Objectives

16

Key Developments in 2020

16

Process For Administering Our Executive Compensation Practices

17

Guidance from Independent Compensation Consultant

18

Competitive Landscape

19

Components of Our Executive Compensation

19

Compensation Mix

19

Base Salary

20

Annual Cash Bonus

21

Incentive Equity Awards

22

Performance-Based Stock Option Awards

22

Time-Based Stock Option Awards

22

Benefits and Perquisites

23

Severance and Change of Control Benefits

23

Stock Ownership Guidelines, Anti-Hedging and Pledging Policy and Clawback Policy

23

Accounting and Tax Implications

24

Report of the Compensation Committee

24

Summary Compensation Table

25

Chief Executive Officer Employment Agreement

25

Chief Legal Officer Employment Agreement

26

2020 Grants of Plan-Based Awards

28

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement  | i


 

 

 

 

 

 

 

 

 

 

ii  |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

SS&C TECHNOLOGIES HOLDINGS, INC.

80 Lamberton Road

Windsor, Connecticut 06095

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held on May 19, 2021

The 2021 Annual Meeting of Stockholders of SS&C Technologies Holdings, Inc. will be held virtually on Wednesday, May 19, 2021 at 9:00 EST a.m., to consider and act upon the following matters:

 

1.

To elect one Class II Director to our Board of Directors, to serve for a term ending at the 2024 annual meeting and until his successor has been duly elected and qualified;

 

2.

To approve, in an advisory vote, the compensation of our named executive officers;

 

3.

To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

 

4.

To transact such other business as may properly come before the 2021 annual meeting and any adjournment thereof.

Stockholders of record at the close of business on March 22, 2021, the record date for the 2021 annual meeting, are entitled to notice of and to vote at the meeting.

To attend the Annual Meeting as a stockholder, vote your shares electronically and submit questions online during the meeting, you must log in to www.virtualshareholdermeeting.com/SSNC2021 using the 16-digit control number found on your proxy card, voting instruction form or Notice of Internet Availability. If you are not a stockholder or do not have your 16-digit control number, you may still view the meeting online by logging onto the site, but you will not be able to vote or submit questions.

To increase efficiency, minimize costs and reduce our carbon footprint, most stockholders will not receive paper copies of our proxy materials.  Instead, we will use the internet as our key means of furnishing proxy materials to our stockholders, under the “Notice and Access” model permitted by the SEC, including the notice and proxy statement, a proxy card, and our 2020 annual report.  We will send these stockholders a notice with instructions for accessing the proxy materials and voting via the internet.  The notice will also explain how stockholders may obtain paper copies of our proxy materials if they so choose.  Some stockholders may also receive our annual meeting materials in paper form.  You may elect to receive your materials in either format.

Your vote is important, regardless of the number of shares you own. Whether or not you plan to attend the 2021 annual meeting virtually, we hope you will take the time to vote your shares.  If your shares are held in “street name,” meaning they are held for your account by a bank, broker or other nominee, you will receive instructions from the holder of record that you must follow for your shares to be voted. Even if you plan to attend the 2021 annual meeting, please vote now using one of the above methods. You can change your vote at the meeting if you choose to do so.

 

 

By Order of the Board of Directors,

 

JOSEPH J. FRANK

Senior Vice President, Chief Legal Officer and Secretary

Dated: April 6, 2021

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 1


 

SS&C TECHNOLOGIES HOLDINGS, INC.
80 Lamberton Road

Windsor, Connecticut 06095

 

Proxy Statement for the 2021 Annual Meeting of Stockholders

 

To Be Held on May 19, 2021

 

Our 2021 Annual Meeting of Stockholders will be held virtually on Wednesday, May 19, 2021, at 9:00 a.m. EST.  The virtual meeting can be accessed at www.virtualshareholdermeeting.com/SSNC2021.  To attend the Annual Meeting as a stockholder, vote your shares electronically and submit questions online during the meeting, you must log in to the website listed above using the 16-digit control number found on your proxy card, voting instruction form or Notice of Internet Availability. If you are not a stockholder or do not have your 16-digit control number, you may still view the meeting online by logging onto the site, but you will not be able to vote or ask questions.  You will not be able to attend the Annual Meeting in person.  If you have any questions about the 2021 annual meeting, please contact Joseph J. Frank, our Corporate Secretary, by telephone at (646) 971-5467 or by sending a written request for information via email to CorpLegal@sscinc.com.

See the section of this proxy statement entitled “Information About the 2021 Annual Meeting” beginning on page 47 for details on the voting process and how to attend the 2021 annual meeting.

Information about this Proxy Statement

You have received this proxy statement because the Board of Directors of SS&C Technologies Holdings, Inc., which we refer to as SS&C Holdings, SS&C or the Company, is soliciting your proxy to vote your shares at the 2021 annual meeting and at any adjournment or postponement of the 2021 annual meeting. This proxy statement includes information we are required to provide to you under the rules of the SEC, and is designed to assist you in voting your shares. Only stockholders of record at the close of business on March 22, 2021 are entitled to receive notice of, and to vote at, the 2021 annual meeting.

 

 

 

Important Notice Regarding Availability of
Proxy Materials for the 2021 Annual Meeting of Stockholders to be Held on May 19, 2021

We are first making available and/or mailing this proxy statement and the accompanying proxy at no charge on or about April 6, 2021 to our stockholders of record as of March 22, 2021.  Most stockholders will not receive paper copies of our proxy materials, as we will use the internet as our key means of furnishing proxy materials to our stockholders, under the “Notice and Access” model permitted by the SEC. We will send these stockholders a notice with instructions for accessing the proxy materials and voting via the internet. Stockholders may also receive our annual meeting materials in paper form at no charge.  You may elect to receive your materials in either format. Please see “How We Use the E-Proxy Process (Notice & Access)” on page 48 for more information. In addition, we will furnish copies of the exhibits to our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 upon written request of any stockholder and the payment of an appropriate processing fee.  Please address all such requests to SS&C Investor Relations at 80 Lamberton Road, Windsor, Connecticut 06095.

This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are available for viewing, printing and downloading at http://www.ssctech.com/2021annualmeeting.  This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are also available on the SEC’s website at http://www.sec.gov.

 

2 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

2020 Performance Highlights

We believe the Company’s 2020 performance was exceptional, as evidenced by the following results:

 

Our GAAP diluted earnings per share experienced 41.6% growth in 2020, from $1.66 in 2019 to $2.35 in 2020.  Our adjusted diluted earnings per share experienced 12.3% growth in 2020, from $3.83 in 2019 to $4.30 in 2020.

 

Our net income for 2020 was $625.2 million, as compared to 2019 net income of $438.5 million, an increase of 42.6%, and 2018 net income of $103.2 million, an increase in 2019 of 324.9% as compared to 2018.

 

Our 2020 Adjusted Consolidated EBITDA was $1,854.0 million, as compared to 2019 Adjusted Consolidated EBITDA of $1,827.9 million, an increase of 1.4%, and 2018 Adjusted Consolidated EBITDA of $1,281.2 million as compared to 2019, an increase of 42.7%.

 

We acquired three businesses:

 

(i)

Captricity, a provider of enterprise-grade cloud-based machine learning solutions that enables fast, scalable and highly accurate extraction of handwritten and machine-printed data from paper documents, for approximately $15.1 million on March 24, 2020;

 

(ii)

Innovest, a provider of web-based technology systems for trust accounting and unique asset servicing to support the accounting and reporting needs of trust companies, banks, private banks, retirement plan administrators and others, for approximately $99.1 million in cash and 0.4 million shares of our common stock on May 15, 2020; and

 

(iii)

Millennium Consulting Services and Millennium Seminar Services, a provider of a broad array of consulting and training services to insurance companies and insurance regulators, for approximately $2.7 million on December 16, 2020.

 

We paid down $738.2 million of net debt, bringing our net leverage ratio to 3.39 times Consolidated EBITDA as of December 31, 2020.

 

We held over 95% revenue retention, with total revenues for 2020 of $4,667.9 million, as compared to 2019 total revenues of $4,632.9 million, an increase of 0.8%, and 2018 total revenues of $3,421.1 million, an increase in 2019 of 35.4% as compared to 2018.

 

We prioritized the health and safety of our employees and implemented a number of safety measures to ensure that we could sustain our business operations through the unprecedented onset of the COVID-19 pandemic. On the recommendation of regulators and health organizations around the world, we closed certain locations and seamlessly transitioned our workforce to 99% remote in March 2020. For essential functions we have implemented work rotations with the primary goal of ensuring our employees’ and clients’ health and safety.

 

We offered our assistance, expertise and technological resources to our customers, proving the value of our investments in worldwide resiliency. We increased interest for cloud hosting and outsourced services as firms in this remote working environment looked to us to provide access to production systems, and augment their staff and processing capability.  

Highlights of Proposals Being Voted Upon

This summary highlights information that is relevant to certain proposals being voted on at the Annual Meeting. Additional discussion of these proposals is contained elsewhere in this proxy statement, which we encourage you to review in its entirety.

 

Proposal 1:  Election of Director.

The Board recommends that you vote “FOR” the election of our Class II Director whose term will expire at the 2024 annual meeting: Jonathan E. Michael.  Mr. Michael currently serves as Chair of our Audit Committee and as a member of our Nominating Committee. See the section of this proxy statement entitled “Information Regarding Directors and Director Nominees” beginning on page 6 for additional discussion of our director nominee and his qualifications.

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement |  3


 

Proposal 2:  Advisory Vote to Approve Named Executive Officer Compensation.

The Board recommends that you vote “FOR” the advisory resolution to approve the compensation of our named executive officers (the so-called “say-on-pay”).  The Compensation Discussion and Analysis, beginning at page 16 of this proxy statement, describes the Company’s compensation philosophy and programs in place for 2020. In addition, we undertook a shareholder engagement campaign and determined to make a number of changes to our go-forward executive compensation program on the input we received from this campaign. As a result, we’ve eliminated all 280G excise tax gross ups and single-trigger vesting of equity awards granted on or after December 2020 upon a change in control and adopted market-based corporate governance policies.  We believe the Company’s compensation programs have been effective in motivating and driving our named executive officers to help the Company achieve the strong performance described above and the implementation of a greater mix of performance-based awards will further align our named executive officer pay with the values of our stockholders. We encourage you to approve the compensation of our named executive officers because our executive officers have contributed significantly to the Company’s strong performance.

Proposal 3:  Ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021.

The Audit Committee has appointed the firm of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021, which we refer to as fiscal 2021. This appointment is being presented to the stockholders for ratification at the 2021 annual meeting. We encourage you to vote “FOR” ratification of PricewaterhouseCoopers LLP as our independent registered public accounting firm.

 

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement |  4


 

PROPOSAL 1

Election of Director

Our Certificate provides for a classified Board. This means our Board is divided into three classes, with each class having as nearly as possible an equal number of directors.  The term of service of each class of directors is staggered so that the term of one class expires at each annual meeting of the stockholders.

Our Board currently consists of seven members, divided into three classes as follows:

 

Class I is comprised of Normand A. Boulanger, David A. Varsano and Michael J. Zamkow, each with a term ending at the 2023 annual meeting;

 

Class II is comprised of Jonathan E. Michael, whose term ends at the 2021 annual meeting; and

 

Class III is comprised of Smita Conjeevaram, Michael E. Daniels and William C. Stone, each with a term ending at the 2022 annual meeting.

At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose term is expiring.  Mr. Michael is a current director whose term expires at the 2021 annual meeting.  He has been nominated by the Board upon the recommendation of the Nominating Committee for re-election as a Class II director, with a term ending at the 2024 annual meeting.

 

Unless otherwise instructed in the proxy, all proxies will be voted “FOR” the election of Mr. Michael to a three-year term ending at the 2024 annual meeting, to hold office until his successor has been duly elected and qualified.  Stockholders who do not wish their shares to be voted for Mr. Michael may so indicate by following the directions set out on the proxy card or in the instructions provided in the Notice of Internet Availability of Proxy Materials. Please see “How We Use the E-Proxy Process (Notice & Access)” on page 48 for more information.  Mr. Michael has indicated his willingness to serve on our Board, if elected.  If Mr. Michael is unable to serve, the person acting under the proxy may vote the proxy for a substitute nominee designated by our Board.  We do not contemplate that Mr. Michael will be unable to serve if elected.

A plurality of the shares of common stock present in person or represented by proxy at the 2021 annual meeting and entitled to vote is required to elect the nominee as a director.

 

Directors’ Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF JONATHAN E. MICHAEL

 

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 5


 

Board of Directors and Management

Information Regarding Directors and Director Nominees

Our Certificate provides for the classification of our Board into three classes, each having as nearly an equal number of directors as possible.  The terms of service of the three classes are staggered such that the term of one class expires each year.

Our Board currently consists of seven directors. Class I consists of Normand A. Boulanger, David A. Varsano and Michael J. Zamkow, each with a term ending at the 2023 annual meeting.  Class II consists of Jonathan E. Michael, whose term ends at the 2021 annual meeting.  Class III consists of Smita Conjeevaram, Michael E. Daniels and William C. Stone, each with a term ending at the 2022 annual meeting.  One class is elected each year and members of each class hold office for three-year terms.

Our Nominating Committee has recommended, and the Board has nominated, Mr. Michael for election at the 2021 annual meeting as the Class II director, to serve until the 2024 annual meeting and until his successor has been duly elected and qualified.  Mr. Michael is currently a member of our Board.

The following table and biographical descriptions provide information relating to each director and director nominee, including her/his age and period of service as a director of our company, her/his committee memberships, her/his business experience for at least the past five years, including directorships at other public companies, and certain other information.

 

Name

Age

Present Principal Employment and Prior Business Experience

Class I Directors (terms expiring at the 2023 annual meeting)

Normand A. Boulanger

Vice Chair

59

On February 3, 2020, Mr. Boulanger retired as an employee of SS&C, at which he had worked since 1994, and continues to serve as a director on our Board.  He was elected to serve as a director on our Board in 2006 and appointed Vice Chair in August 2018.  Prior to that, he served as our President and Chief Operating Officer since October 2004, our Executive Vice President and Chief Operating Officer from October 2001 to October 2004, Senior Vice President, SS&C Direct from March 2000 to September 2001, Vice President, SS&C Direct from April 1999 to February 2000, Vice President of Professional Services for the Americas, from July 1996 to April 1999, and Director of Consulting from March 1994 to July 1996.  Prior to joining SS&C, Mr. Boulanger served as Manager of Investment Accounting for The Travelers from September 1986 to March 1994. The Board has concluded that Mr. Boulanger should serve as a director because he has substantial knowledge and experience regarding our operations, employees, targeted markets, strategic initiatives and competitors.

 

 

 

David A. Varsano

Audit Committee

Nominating Committee (Chair)

 

59

Mr. Varsano was elected as one of our directors in March 2011.  He is currently the Chairman of the Board and Chief Executive Officer of Pacific Packaging Products, a company specializing in industrial packaging and related solutions and supply chain management services, which he joined in September 1999.  Prior to joining Pacific Packaging Products, Mr. Varsano served as the Chief Technology Officer and Vice President, Software Development of SS&C from 1995 to 1999 and as Manager of SS&C Direct from 1998 to 1999.  Mr. Varsano currently serves on the Board of Directors of Packaging Distributors of America.  Mr. Varsano previously served on the Board of Directors of Aviv Centers for Living.  The Board has concluded that Mr. Varsano should serve as a director because he has a broad range of experience relevant to our business and a strong understanding of software architectures.

6 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

Name

Age

Present Principal Employment and Prior Business Experience

Class I Directors (terms expiring at the 2023 annual meeting)


Michael J. Zamkow

Compensation Committee

 

65

Mr. Zamkow was elected one of our directors in June 2014.  He retired—after a 17-year career—from Goldman Sachs in November 2001, where he was a partner from 1994 to 2001.  From 1999, Mr. Zamkow was responsible for Goldman Sachs’ fixed income, currency and commodities business.  He is currently a member of the Board of Trustees of Northeastern University.  Mr. Zamkow previously served on the Boards of Directors of the Futures Industry Association and the London Clearing House.  The Board has concluded that Mr. Zamkow should serve as a director because he has extensive experience in the financial services industry.

Class II Director Nominee to be elected at the 2021 annual meeting (term expiring at the 2021 annual meeting)

Jonathan E. Michael

Audit Committee (Chair)

Nominating Committee

67

Mr. Michael was elected as one of our directors in April 2010.  He currently serves as Chairman and Chief Executive Officer of RLI Corp., a publicly traded specialty insurance company, which he joined in 1982.  Mr. Michael has held various positions at RLI Corp., including President and Chief Operating Officer, Executive Vice President and Chief Financial Officer.  Prior to joining RLI Corp., Mr. Michael was associated with the accounting firm Coopers & Lybrand.  He currently serves on the Boards of Directors of RLI Corp. and Maui Jim, Inc. and TADA Cognitive Solutions.  He is also currently a member of the OSF St. Francis Medical Center Community Advisory Board; a member of the Bradley University Board of Trustees; Chairman of Easterseals Central Illinois; and a member and Past Chair of Property Casualty Insurers Association of America (now known as American Property Casualty Insurance Association) Board of Governors. The Board has concluded that Mr. Michael should serve as a director because he has extensive experience in the financial services industry, including companies that we seek to target as clients, as well as extensive operational experience as a director and officer of financial services and insurance companies.

Class III Directors (term expiring at the 2022 annual meeting)

Smita Conjeevaram

Audit Committee

60

0BMs. Conjeevaram was appointed as one of our directors in November 2015 and elected to our Board at the 2016 Annual Meeting of Stockholders.  Ms. Conjeevaram retired in 2013 after a 19-year career in the global investment and hedge fund firm industry.  Her most recent position was as the Chief Financial Officer – Credit Hedge Funds and Deputy Chief Financial Officer – Credit Funds of the Fortress Investment Group LLC, where she served from 2010 to 2013.  Prior to that, Ms. Conjeevaram served as the Chief Financial Officer of Everquest Financial LLC from 2006 to 2009 and Strategic Value Partners LLC from 2004 to 2005.  Ms. Conjeevaram began her career as a tax specialist at two Big-4 public accounting firms and is a certified public accountant.  She currently serves on the Boards of Directors of McGrath RentCorp, SkyWest, Inc. and WisdomTree Investments, Inc.  The Board has concluded that Ms. Conjeevaram should serve as a Director because she has extensive experience in the financial services industry and particularly hedge fund operations.

 

 

 

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 7


 

Name

Age

Present Principal Employment and Prior Business Experience

Class I Directors (terms expiring at the 2023 annual meeting)

Michael E. Daniels

Compensation Committee (Chair)

Nominating Committee

66

1BMr. Daniels was elected as one of our directors in October 2013.  Mr. Daniels retired—after a 36-year career—from International Business Machines Corporation in March 2013 as Senior Vice President and Group Executive IBM Global Services.  Mr. Daniels currently serves on the Boards of Directors of Johnson Controls International Plc and Thomson Reuters.  The Board has concluded that Mr. Daniels should serve as a director because he brings experience as a board and committee member of a public company, a detailed understanding of the computer and information services industry, and expertise in the management of complex technology organizations.

 

William C. Stone

Chairman and Chief Executive Officer

65

Mr. Stone founded SS&C Technologies, Inc., or SS&C, the primary operating company and wholly owned direct subsidiary of SS&C Technologies Holdings, Inc., in 1986 and has served as Chairman of the Board of Directors and Chief Executive Officer since our inception.  He also has served as our President from inception through April 1997 and again from March 1999 until October 2004.  Prior to founding SS&C, Mr. Stone directed the financial services consulting practice of KPMG LLP, an accounting firm, in Hartford, Connecticut and was Vice President of Administration and Special Investment Services at Advest, Inc., a financial services company.  The Board has concluded that Mr. Stone should serve as a director because, as our founder, Chief Executive Officer, and a principal stockholder, Mr. Stone provides a critical contribution to the Board reflecting his detailed knowledge of our company, our employees, our client base, our prospects, the strategic marketplace and our competitors.

 

 Corporate Governance Matters

We believe that good corporate governance and fostering an environment of high ethical standards are important for us to achieve business success and to create value for our stockholders.  Our Board periodically reviews our corporate governance practices in light of regulatory developments and practices at other public companies and makes changes that it believes are in the best interests of the Company and its stockholders.

In 2021, we adopted executive stock ownership guidelines under which our directors and executive officers are expected to accumulate and retain a meaningful level of ownership in our stock. Under the stock ownership guidelines, directors and executive officers have the following ownership requirements:

 

Chief Executive Officer – 10x base annual salary

 

Other Executive Officers – 2x base annual salary

 

Non-Employee Directors – 5x annual cash retainer

We also have adopted an anti-hedging/anti-pledging policy that prohibits our employees and directors from engaging in any transactions that are designed to hedge or speculate on any change in the market value of our common stock.

Our Board also adopted a policy that requires the reimbursement or clawback of all or a portion of any incentive-based compensation award to executive officers when the Committee determines such executive officer’s fraud or intentional misconduct was a significant contributing factor to the need for a restatement.

 

8 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

Board Determination of Independence

Under the applicable rules of the Nasdaq Stock Market, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.  Our Board has determined that none of Ms. Conjeevaram or Messrs. Daniels, Michael, Varsano or Zamkow has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is an “independent director” as defined under Rule 5605(a)(2) of Nasdaq.

Stockholders Agreement

The Company is a party to a Stockholders Agreement, as amended, which we refer to as the Stockholders Agreement, with William C. Stone, our Chairman and Chief Executive Officer.  The Stockholders Agreement entitles Mr. Stone to nominate two directors, one of whom shall be Mr. Stone for so long as he is our Chief Executive Officer.  For more information on the Stockholders Agreement, see the section of this proxy statement entitled “Related Person Transactions—Stockholders Agreement” beginning on page 45.  

Director Nomination Process

The process followed by the Nominating Committee to identify and evaluate director candidates may include requesting recommendations from Board members and others, holding meetings from time to time to evaluate biographical information and background material relating to potential candidates, and conducting interviews of selected candidates by members of the Nominating Committee.

The Nominating Committee considers recommendations for director nominees suggested by its members, other directors, management and other interested parties.  Stockholders may recommend individuals to the Nominating Committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background material, to the Nominating Committee via email at CorpLegal@sscinc.com, attention: Corporate Secretary, SS&C Technologies Holdings, Inc.  Assuming that appropriate biographical information and background material is provided on a timely basis, the Nominating Committee will evaluate stockholder-recommended candidates by following substantially the same process and applying substantially the same criteria as it follows for candidates submitted by others.

In addition, stockholders also have the right under our By-laws to directly nominate director candidates, without any action or recommendation on the part of the Nominating Committee or the Board, by following the procedures set forth in our By-laws and described under “Stockholder Proposals and Director Nominations” beginning on page 50 below.

Criteria and Diversity

In considering whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, the Nominating Committee applies the criteria specified in its charter.  These criteria include the candidate’s integrity, honesty, adherence to ethical standards, demonstrated business acumen, experience, ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company, ability to contribute positively to the decision-making processes of the Company, commitment to understanding the Company and its industry and to regularly attending and participating in meetings of the Board and its committees, ability to understand the sometimes conflicting interests of the various constituencies of the Company and the absence of a conflict of interest.  The Nominating Committee does not assign specific weights to particular criterion, and no particular criterion is a prerequisite for any prospective nominee.  In terms of criteria for composition of the Board, the Nominating Committee considers the backgrounds and qualifications of the directors as a group with the goal of providing a significant breadth of experience, knowledge and abilities to assist the Board in fulfilling its responsibilities.

Although the Nominating Committee considers the value of diversity on the Board, it has not adopted a written policy with regard to the consideration of diversity when evaluating candidates for director.  However, in practice, the Nominating Committee considers diversity of viewpoint, professional experience, education and skill in assessing candidates for the Board to ensure breadth of experience, knowledge and abilities within the Board.  Our Board’s priority in the selection of Board members is identification of members who will further the interests of our stockholders through their management experience, knowledge of our business, understanding of the competitive landscape and familiarity with our targeted markets.

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The director biographies above describe each nominee’s experience, qualifications, attributes and skills that led the Board to conclude that he or she should continue to serve as a member of our Board.  Our Board believes that each of the nominees has realized significant professional and personal achievements and possesses the background, talents and experience that are necessary for the Company’s success and the creation of stockholder value.

Board Meetings and Attendance

During the fiscal year ended December 31, 2020, which we refer to as fiscal 2020, our Board met five times and acted by unanimous written consent in lieu of a meeting six times.  During fiscal 2020, the Audit Committee held six regular meetings and acted by unanimous written consent in lieu of a meeting twice; the Compensation Committee held three regular meetings and acted by unanimous written consent in lieu of a meeting four times; and the Nominating Committee acted by unanimous written consent in lieu of a meeting once.  Each of our current directors attended at least 75% of the aggregate of the total number of meetings of the Board and of the Board committees of which he/she was a member during fiscal 2020.  

Director Attendance at Annual Meeting of Stockholders

We do not have a formal policy regarding directors’ attendance at annual meetings, but all of our directors are encouraged to attend our annual meetings.  All of our Board members attended our 2020 Annual Meeting of Stockholders.

Board Leadership Structure

Mr. Stone has served as Chairman of the Board of Directors and Chief Executive Officer since our inception in 1986, and the provisions of the Stockholders Agreement require that so long as Mr. Stone is a member of our Board and the Chief Executive Officer of the Company, he shall serve as Chairman of the Board.  This Board leadership structure is commonly utilized by public companies in the United States, and we believe that this leadership structure has been effective for us.  Having one person serve as both Chief Executive Officer and Chairman of the Board shows our employees, customers and other constituencies that we are under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations.  We also believe that this leadership structure eliminates the potential for duplication of efforts and inconsistent actions and facilitates open communication between management and our Board.  We do not have a lead independent director.  We recognize that different board leadership structures may be appropriate for companies with different histories or varying equity ownership structures and percentages.  However, we believe our current leadership structure is the optimal board leadership structure for us.

Board Committees

Our Board directs the management of our business and affairs, as provided by Delaware law, and conducts its business through meetings of the Board and three standing committees: the Audit Committee, the Compensation Committee and the Nominating Committee, each of which operates under a charter that has been approved by our Board.  Each committee’s charter is posted on our website, at https://investor.ssctech.com/investor-relations/corporate-governance/governance-documents.  In addition, from time to time, special committees may be established under the direction of the Board to address specific issues.  The table below shows current membership and indicates the chairperson (*) for each of the standing Board committees.  

 

Audit

 

Compensation

 

Nominating

 

Jonathan E. Michael*

Michael E. Daniels*

David A. Varsano*

Smita Conjeevaram

Michael J. Zamkow

Michael E. Daniels

David A. Varsano

 

Jonathan E. Michael

 

Our Board has determined that each member of each of the Board’s three standing committees is independent as defined under the rules of Nasdaq, including, in the case of each member of the Audit Committee, the independence requirements contemplated by Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or Exchange Act, and including, in the case of each member of the Compensation Committee, the independence requirements contemplated by Rule 10C-1 under the Exchange Act and Nasdaq rules.

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Audit Committee

Our Audit Committee assists our Board in its oversight of the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements.  Our Audit Committee’s responsibilities, as set forth in its charter, include:

 

appointing, evaluating, retaining and, when necessary, terminating the engagement of our independent registered public accounting firm;

 

overseeing and assessing the independence of our independent registered public accounting firm;

 

setting the compensation of our independent registered public accounting firm and preapproving all audit services to be provided to the Company;

 

overseeing the work of our independent registered public accounting firm, including through the receipt and consideration of reports from such firm;

 

reviewing and discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures before such financial statements are filed with the Securities and Exchange Commission, or SEC;

 

directing the independent registered public accounting firm to use its best efforts to perform all reviews of interim financial information prior to disclosure by the Company;

 

coordinating our Board’s oversight of internal control over financial reporting, disclosure controls and procedures and our code of business conduct and ethics;

 

overseeing our risk assessment and risk management policies;

 

discussing the Company’s policies with respect to risk assessment and risk management;

 

discussing generally the type and presentation of information to be disclosed in the Company’s earnings press releases, as well as financial information and earnings guidance provided to analysts, rating agencies and others;

 

establishing procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or audit matters and the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;

 

reviewing the Company’s policies and procedures for reviewing and approving or ratifying “related person transactions” and conducting appropriate review and oversight of all related person transactions for potential conflict of interest situations; and

 

preparing the Audit Committee report required by SEC rules, which is included on page 41 of this proxy statement.

 

Our Board has determined that each of the members of its Audit Committee is an “audit committee financial expert” as that term is defined under the rules and regulations of the SEC.

Compensation Committee

Our Compensation Committee has overall responsibility for the Company’s compensation. Our Compensation Committee’s responsibilities, as set forth in its charter, include:

 

reviewing and approving, or making recommendations to our Board with respect to, the compensation of our Chief Executive Officer and our other executive officers;

 

reviewing, and making recommendations to our Board with respect to, incentive-compensation and equity-based plans that are subject to approval by our Board;

 

approving any tax-qualified, non-discriminatory employee benefit plans for which stockholder approval is not sought;

 

administering all of the Company’s stock option, stock incentive, employee stock purchase and other equity-based plans including interpreting the terms of such plans and granting options and making awards under such plans;

 

reviewing and making recommendations to our Board with respect to director compensation;

 

reviewing and discussing with management the Company’s “Compensation Discussion and Analysis” required by Item 402(b) of Regulation S-K, and considering whether it will recommend to our Board that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K, proxy statement on Schedule 14A or information statement on Schedule 14C;

 

preparing an annual report required by Item 407(e)(5) of Regulation S-K; and

 

in its discretion, retaining or obtaining the advice of compensation consultants, legal counsel or other advisors, and overseeing their work.

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Nominating Committee

Our Nominating Committee has overall responsibility for developing Board membership. Our Nominating Committee’s responsibilities, as set forth in its charter, include:

 

identifying individuals qualified to become members of our Board and recommending to our Board the nominees for election as directors at any annual meeting of stockholders and the persons to be elected by the Board to fill any vacancies on the Board;

 

reviewing with the Board the requisite skills and criteria for new Board members as well as the composition of our Board as a whole; and

 

recommending to our Board the directors to be appointed to each committee of the Board.

The processes and procedures followed by the Nominating Committee in identifying and evaluating director candidates are described above under the heading “Director Nomination Process.”  As described above, the Stockholders Agreement provides Mr. Stone with the right to appoint two directors, including himself.

Risk Oversight

Our management is responsible for risk management on a day-to-day basis.  Our Audit Committee is responsible for overseeing our risk management function.  While the Audit Committee has primary responsibility for overseeing risk management, our entire Board of Directors is actively involved in overseeing our risk management.  Our Board and the Audit Committee fulfill their oversight role by discussing with management the policies and practices utilized by management in assessing and managing the risks and providing input on those policies and practices.  We believe that the leadership structure of our Board supports effective risk management oversight due to our Chairman and Chief Executive Officer’s extensive knowledge and understanding of our business and, as noted in “Board Leadership Structure” above, because the combined role of Chairman and Chief Executive Officer facilitates communications between management and our Board.

Communications with the Board

Our Board welcomes the submission of any comments or concerns from stockholders and any interested parties.  Communications should be in writing and addressed to our Corporate Secretary at our principal executive offices and marked to the attention of the Board or any of its committees, individual directors or non-management or independent directors as a group.  All correspondence will be forwarded to the intended recipient(s), except that certain items that are unrelated to the duties and responsibilities of our Board (such as product inquiries and comments, new product suggestions, resumes and other forms of job inquiries, surveys, and business solicitations and advertisements) and material that is unduly hostile, threatening, illegal or similarly unsuitable will be excluded.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics, referred to as the SS&C Code of Business Conduct and Ethics, which covers all directors, officers and employees and includes provisions relating to accounting and financial matters.  The SS&C Code of Business Conduct and Ethics is available on our website at https://investor.ssctech.com/investor-relations/corporate-governance/governance-documents.  If we make any substantive amendments to, or grant any waivers from, the code of ethics for any director or officer, we will disclose the nature of such amendment or waiver on our website at https://investor.ssctech.com/investor-relations/corporate-governance/governance-documents or in a Current Report on Form 8-K filed with the SEC.

 

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Executive Officers Who Are Not Directors

Certain information regarding our executive officers, who are not also directors, is set forth below.  Generally, our Board elects our officers annually, although the Board or an authorized committee of the Board may elect or appoint officers at other times.

 

 

 

 

Name

Age

Position(s)

Rahul Kanwar

46

President and Chief Operating Officer

Patrick J. Pedonti

69

Senior Vice President, Chief Financial Officer and Treasurer

Joseph J. Frank

55

Senior Vice President, Chief Legal Officer and Secretary

Rahul Kanwar has served as our President and Chief Operating Officer since August 2018.  Prior to that, he served as our Executive Vice President and Managing Director, Alternative Assets from September 2017, as our Senior Vice President and Managing Director, Alternative Assets, since January 2011, designated as an executive officer in March 2013 and served as a managing director of SS&C since 2005.  Prior to joining SS&C, Mr. Kanwar was employed by Eisner LLP where he was responsible for managing the Eisnerfast LLC fund administration business.  Mr. Kanwar started his career in public accounting.

Patrick J. Pedonti has served as our Senior Vice President, Chief Financial Officer and Treasurer since August 2002. Prior to that, Mr. Pedonti served as our Vice President and Treasurer from May 1999 to August 2002.  Prior to joining SS&C, from January 1997 to May 1999, Mr. Pedonti was the Vice President and Chief Financial Officer for Accent Color Sciences, Inc., a company specializing in high-speed color printing.

 

Joseph J. Frank has served as our Senior Vice President, Chief Legal Officer and Secretary of SS&C since March 2018.  Prior to joining SS&C, Mr. Frank was a partner at Shearman & Sterling LLP where he served as global co-head of the firm’s Securities Litigation and Enforcement Practice. Mr. Frank also serves on the Executive Committee and the Board of Trustees for Trinity School in Manhattan.

 

 

 

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PROPOSAL 2

Advisory Vote to Approve Named Executive Officer Compensation

We are providing our stockholders the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as “say-on-pay,” is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Exchange Act.

Our executive compensation programs are designed to attract, retain and motivate our named executive officers, who are critical to our success. Under these programs, our named executive officers are rewarded for successful performance on our near-term and longer-term financial and strategic goals and for driving corporate financial performance and stability. The programs contain elements of cash and equity-based compensation and are designed to align the interests of our executives with those of our stockholders.

As described in more detail below, in response to shareholder feedback, we undertook a number of changes in our executive compensation program and corporate governance practices, including, but not limited to, removing the 280G excise tax gross up from our CEO’s employment agreement, eliminating “single trigger” vesting of equity awards granted on or after December 2020 upon a change in control, incorporating additional performance-based elements to our compensation program and implementing a clawback policy, stock ownership guidelines and anti-hedging/anti-pledging policy. We believe that these changes further align our compensation program with the interests of our stockholders and we will continue to engage directly with our stockholders and our independent compensation consultant to make appropriate updates.

The “Executive and Director Compensation” section of this proxy statement beginning on page 16, including the “Compensation Discussion and Analysis,” describes in detail our executive compensation programs and the decisions made by the Compensation Committee and our Board with respect to fiscal 2020. It also details changes made to our executive compensation programs following a stockholder engagement campaign we undertook during 2020 that are intended to further align the interests of our named executive officers with those of our stockholders.

As we describe in the “2020 Performance Highlights” section of this proxy statement beginning on page 3, our executive compensation program supports our business strategy and incentivizes our named executive officers to drive strong performance, even in light of unprecedented business challenges.  We believe our executive compensation program for 2020 is appropriate as evidenced by the Company’s strong performance in 2020:

 

Our total revenues for 2020 were $4,667.9 million, as compared to 2019 total revenues of $4,632.9 million, an increase of 0.8%, and 2018 total revenues of $3,421.1 million, an increase in 2019 of 35.4% as compared to 2018.

 

Our net income for 2020 was $625.2 million, as compared to 2019 net income of $438.5 million, an increase of 42.6%, and 2018 net income of $103.2 million, an increase in 2019 of 324.9% as compared to 2018.

 

Our 2020 Adjusted Consolidated EBITDA (discussed and reconciled to GAAP net income on page 36) was $1,854.0 million, as compared to 2019 Adjusted Consolidated EBITDA of $1,827.9 million, an increase of 1.4%, and 2018 Adjusted Consolidated EBITDA of $1,281.2 million as compared to 2019, an increase of 42.7%.

 

We acquired three businesses:

 

(i)

Captricity, a provider of enterprise-grade cloud-based machine learning solutions that enables fast, scalable and highly accurate extraction of handwritten and machine-printed data from paper documents, for approximately $15.1 million on March 24, 2020;

 

(ii)

Innovest, a provider of web-based technology systems for trust accounting and unique asset servicing to support the accounting and reporting needs of trust companies, banks, private banks, retirement plan administrators and others, for approximately $99.1 million in cash and 0.4 million shares of our common stock on May 15, 2020; and

 

(iii)

Millennium Consulting Services and Millennium Seminar Services, a provider of a broad array of consulting and training services to insurance companies and insurance regulators, for approximately $2.7 million on December 16, 2020.

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We paid down $738.2 million of net debt, bringing our net leverage ratio to 3.39 times Consolidated EBITDA as of December 31, 2020.

Accordingly, our Board is asking stockholders to approve a non-binding advisory vote on the following resolution:

RESOLVED, that the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation discussion and analysis, the compensation tables and any related narrative disclosures in this proxy statement, is hereby approved.0F1

Directors’ Recommendation

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS BY VOTING “FOR” PROPOSAL 2

 

 

1 

Unless otherwise indicated on your proxy or in the instructions provided in the Notice of Internet Availability of Proxy Materials, your shares will be voted “FOR” the approval of the compensation of our named executive officers.

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Executive and Director Compensation

Compensation Discussion and Analysis

Our executive compensation program is overseen and administered by our Compensation Committee, which currently consists of Messrs. Daniels and Zamkow. Our Compensation Committee operates under a written charter adopted by our Board and discharges the responsibilities of the Board relating to the compensation of our executive officers. For 2020, our named executive officers were Messrs. Stone, Kanwar, Pedonti and Frank.

Executive Compensation Objectives

The primary objectives of the Compensation Committee with respect to executive compensation are to:

 

attract, retain and motivate the best possible executive talent;

 

reward successful performance by the named executive officers and the Company; and

 

align the interests of the named executive officers with those of our stockholders by providing long-term equity compensation.

To achieve these objectives, our Compensation Committee seeks to compensate our executives at levels it believes are competitive with those of other companies that compete with us for executive talent in our industry and in our region. As part of our comprehensive Say-on-Pay response and shareholder engagement effort, described further below, our Compensation Committee retained Frederic W. Cook & Co. (“FW Cook”) as its independent compensation consultant to review our executive compensation programs and provide expert analyses, advice and information with respect to executive compensation. In 2020, FW Cook evaluated potential changes to our incentive compensation programs and prepared comparative analyses of executive compensation levels and design at peer companies. Our Compensation Committee will continue to engage FW Cook to advise with respect to the key elements of our compensation program.

Our Compensation Committee has designed our compensation program to reward our named executive officers based on a number of factors across our different elements of compensation. These include individual performance, prior-period compensation and prospects for individual growth and the following key strategic objectives:

 

Strategic Objectives

Element of Compensation

 

Organic and Total Revenue Growth

Annual Bonus Plan: Variable incentive paid for the performance year in cash, a portion will be delivered in equity awards that are subject to multi-year vesting and additional performance requirements starting in 2021

Recurring Revenue

EBITDA

Free Cash Flow

Relative Total Shareholder Return to the S&P 500 Companies

Strategic Acquisitions

Customer Satisfaction

Employee Satisfaction

 

Three-Year Earnings Per Share Growth

Performance-Vesting Equity Awards*

 

* In 2021, we granted performance-vesting stock options as a portion of 2020 compensation that vest based on 3-year average annual growth of earnings per share.

Key Developments in 2020

As with other global organizations, the onset of the COVID-19 pandemic presented unprecedented challenges to the operation and success of our business.  Notwithstanding these challenges, through the leadership and dedication of our named executive officers we were able to successfully navigate the difficult landscape presented during 2020 and deliver strong financial performance while preserving the integrity of our workforce and protecting the health of our employees.  

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Our total revenues for 2020 of $4,667.9 million increased from $4,632.9 million in the prior year and our adjusted diluted earnings per share grew 12.3%.  We also successfully navigated the acquisitions of three businesses and integrated their operations. We provided assistance, expertise and technological resources to our customers, further strengthening our relationships and demonstrating the value of our investments in worldwide resiliency, automation, and outsourcing strategies.

While delivering positive financial and operational results, we prioritized the health and safety of our employees and implemented numerous safety measures to ensure that we could sustain our business operations throughout the pandemic. Following the recommendations of regulators and health organizations around the world, we instituted numerous safety measures with the primary goal of ensuring our clients’ and employees’ health and safety. We were able to seamlessly transition our workforce to 99% remote working arrangements at the onset of the pandemic and have since instituted work rotations for essential functions.  

SS&C Health developed a flu vaccine campaign to increase flu vaccine penetration within the market, and we expect to use this same campaign design for similar outreach with respect to COVID-19 vaccination.  

Process for Administering Our Executive Compensation Practices

Our Compensation Committee has overall responsibility for administering our executive officer compensation program.  Our Chief Executive Officer typically presents salary, bonus and equity compensation recommendations to our Compensation Committee and our Compensation Committee, in turn, considers his recommendations and exercises ultimate approval authority.  Our Chief Executive Officer’s recommendations are based on his years of experience in the financial services and software industries and his desire to motivate the executive officers and ensure their commitment to the Company.  For each executive officer, our Chief Executive Officer prepares a description for our Compensation Committee of the individual’s performance during the prior year and recommends salary, bonus and equity amounts based upon his responsibilities and contributions to the Company’s performance.  For the compensation of our executive officers other than our Chief Executive Officer, our Compensation Committee considers our Chief Executive Officer’s recommendations and discusses his reviews and recommendations with him as part of its deliberations.  For our Chief Executive Officer’s compensation, our Compensation Committee conducts its deliberations without our CEO present.  In this determination, as in other compensation matters, our Compensation Committee exercises its independent judgment.  

At our 2020 Annual Meeting of Stockholders, our stockholders did not express support for the compensation of our named executive officers, with approximately 58% of the votes cast voting against approval of the “say-on-pay” advisory vote on executive compensation. In light of the result of our 2020 “say-on-pay” advisory vote, we undertook a stockholder engagement campaign to discuss our executive compensation programs and corporate governance policies. As part of this campaign, our Compensation Committee reached out to stockholders representing 131.1 million of our shares or 50.7% of our outstanding shares and stockholders representing 102.1 million of our shares or 39.5% of our outstanding shares provided their input regarding our executive compensation and corporate governance practices. In response to this feedback, our Compensation Committee determined to make a number of changes in our executive compensation program and corporate governance practices. We believe that the changes that we have undertaken in our compensation program further align our compensation program with the interests of our stockholders and we will continue to engage directly with stockholders and our independent compensation consultant to make appropriate updates.


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Stockholder Feedback

Actions Taken in Response to Stockholder Feedback

(1)   Eliminate the 280G excise tax gross up from our CEO’s employment agreement

We amended Mr. Stone’s employment agreement to remove his 280G excise tax gross-up protections.  

(2)   Eliminate “single trigger” vesting of equity awards on a change in control

Beginning with our NEO’s 2020 stock option awards, equity awards no longer accelerate and vest immediately on a change in control.  Instead, they will vest only on a “double-trigger” basis if an executive experiences a qualifying termination within 24 months of such change in control transaction.  

(3)   Incorporate additional performance-based elements to our compensation program

We revised our long-term incentive equity program to add performance-vesting stock options so that approximately 50% of the value of our long-term equity incentive awards for our executive officers are in the form of stock options that vest based on our 3-year average annual growth in earnings per share.

(4)   Enhance process for considering competitive data in setting executive compensation

Constructed a 17-company peer group (as described below) to provide a reasonable market reference point in setting our executive compensation

(5)   Adjust the components and mix of our executive compensation program to create greater stockholder alignment

We evaluated and reassessed the components and mix of our executive compensation program to more heavily weight financial performance criteria to our executive officer’s compensation. For 2021 and future years, a portion of annual incentive bonuses that would otherwise be payable in cash will instead be delivered in the form of performance stock units.

(6)   Adopt corporate governance “best practices” including implementing a clawback policy, stock ownership guidelines and an anti-hedging/anti-pledging policy

Adopted a clawback policy that provides for the recoupment and/or forfeiture of certain incentive compensation in the event of a financial restatement resulting from misconduct by our executives.

 

Implemented stock ownership guidelines for our executives and non-employee directors that promote the accumulation and retention of our stock with market leading levels of required stock ownership (e.g., 10x salary for our CEO).  

 

Approved an anti-hedging/anti-pledging policy prohibiting our executives from engaging in any transactions that are designed to hedge or speculate on any change in the market value of our stock.

 

Guidance from Independent Compensation Consultant

Starting in 2020, the Compensation Committee engaged FW Cook to provide executive compensation consulting services to the Compensation Committee as part of its comprehensive “Say-on-Pay” response. FW Cook provided services related to the review of our executive compensation program including reviewing the findings from our shareholder engagement effort and recommending changes to address the feedback we received.  In addition, FW Cook assisted the Compensation Committee in establishing a peer group that will be used as a reference point of competitive information on compensation rates, practices, and policies.  FW Cook is retained by and reports to the Compensation Committee and, upon the request of

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the Compensation Committee, participates in committee meetings. Other than services provided to the Compensation Committee, FW Cook did not provide any services to the Company with respect to 2020.

Competitive Landscape

Working with FW Cook, the Compensation Committee established a peer group in 2020 that will be used to review relevant competitive data as part of its decision-making process.  The peer group was selected considering company size, industry relevance, and shared client base.  The group was constructed such that, in totality, it would represent a reasonable market reference point, placing us near the median of the group in terms of revenue.  Going forward, this group will be reviewed annually for continued suitability.  The companies comprising the peer group are:

Alliance Data Systems

Global Payments

Synopsys

Autodesk

Intuit

Tenemos

Broadridge Financial Solutions

Jack Henry & Associates

VMware

Cerner

Paychex

The Western Union Company

Citrix

SEI Investments

Workday

FactSet Research Systems

Square

 

Components of Our Executive Compensation

For 2020, the primary elements of our annual executive compensation program are:

 

base salary

 

discretionary annual cash bonuses

 

time-based stock option awards

 

performance-based stock option awards with performance periods beginning in 2021

Compensation Mix

 

 

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As discussed above, in response to the feedback we received from our stockholders following our advisory “say-on-pay” vote in 2020, we reassessed the components and mix of our executive officers’ compensation and our Compensation Committee revised our program to more closely link compensation delivered to our executive officers with objective financial criteria and performance. The below table reflects the revisions undertaken in 2021 that will apply for our executive officers going forward.

Components of Executive Officer Compensation

 

Cash Compensation

Equity Compensation

 

Base Salary

Cash Bonus

Performance-Based Stock Options

Time-Based Stock Options

Performance Period

Ongoing

One year (but starting with our 2021 bonuses to be paid in 2022, a portion will be delivered in the form of PSUs)

Three years with vesting determined at the end of the performance period

Four years, 25% at end of year 1 with monthly vesting thereafter

Performance Criteria

N/A

Financial measure of Adjusted EPS growth as well as individual leadership and strategic goals

Financial measure of Adjusted EPS growth

Stock appreciation over time

Alignment to Overall Objectives

Recruit and retain high level talent

Focus executive officers on Adjusted EPS growth as well as individual leadership and strategic goals

Focus executive officers Adjusted EPS growth, which drives long-term value to stockholders

Align executive officers with stockholders through mutually beneficial interest in driving stock price appreciation

 

The remaining discussion in this section focuses on our executive compensation program for 2020, noting the changes that we have made for 2021.

We have no formal or informal policy or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation.  Instead, our Compensation Committee (based in part on input from our Chief Executive Officer) determines subjectively what it believes to be the appropriate level and mix of the various compensation components.  While we describe below the connection between each element of executive compensation and particular compensation objectives, we believe that each element promotes multiple compensation objectives.

Base Salary

Base salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executive officers.  In establishing base salaries for 2020, our Compensation Committee considered a variety of factors, including the seniority of the individual, the level of the individual’s responsibility, the ability to replace the individual, the individual’s tenure at the Company, relative pay among the executive officers, and our Chief Executive Officer’s input.  Generally, we believe that executive base salaries should grow modestly over time and that more of the “upside” of compensation should rest with the performance-based components – that is, cash bonuses and long-term equity incentive compensation.

Base salaries are reviewed at least annually by our Compensation Committee and are adjusted from time to time to realign salaries with market levels after taking into account the performance of the Company and each executive officer’s responsibilities, performance and experience.  In March 2020, our Compensation Committee established the 2020 base salaries of our executive officers as follows: Mr. Stone, $875,000, Mr. Kanwar, $575,000, Mr. Pedonti, $400,000 and Mr. Frank, $750,000.  In March 2021, our Compensation Committee evaluated the base salaries of executive officers and decided not to make any changes from the levels described above.

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Annual Cash Bonus 

The annual cash bonus pool for executive officers is determined under the terms of our Executive Bonus Plan (the “Bonus Plan”). For 2020 performance, the bonus pool applicable to executive officers was funded by our Adjusted Consolidated EBITDA of $1.8 billion, with a payout capped at $92.7 million.  Individual awards reflect the Compensation Committee’s holistic assessment of a broad range of financial and non-financial factors, including Company performance as a whole, performance against specific metrics determined by our Compensation Committee and other factors such as, for 2020, the Company’s and the executive officers’ strong performance in light of the COVID-19 pandemic. The individual performance of each of our executive officers is also taken into consideration.  We believe that this holistic approach to measuring performance ensures that our executives are not over or undercompensated, particularly when performance against specific financial metrics does not provide a complete picture of the Company’s overall performance or our executive officer’s contributions throughout the year.  The financial metrics and strategic imperatives reviewed by the Compensation Committee in determining bonuses were as follows:

 

Key Financial Metrics and Strategic Imperatives

2020 Highlights

Adjusted Revenue Growth

0.3%

Revenue Retention

95.8%

Adjusted Consolidated EBITDA

$1,854.0 million

Strategic Acquisitions

Captricity, Innovest, Millennium Consulting Services and Millennium Seminar Services

Our Compensation Committee made final decisions with respect to 2020 annual bonuses in March 2021.  Financial performance against our key financial metrics are a principal factor in the Compensation Committee’s evaluation of both the Company’s and our executive officers’ performance. Accordingly, the amount available for bonuses to all employees, including our executive officers, varies according to our financial and operational results. In addition to the primary factors set forth above,  the Compensation Committee considered certain non-financial performance when evaluating 2020 bonuses for executive officers, including leadership in the seamless transition to remote work and promotion of the overall health and safety of our employees and clients and focus on customer services, particularly the offering of assistance, expertise and technological resources throughout the pandemic, including regarding an increased interest in our cloud hosting service.

Other key drivers of individual bonus awards for the CEO and other executive officers included the individual performance of each of our executive officers in the context of a number of considerations as well as the positive or adverse impact of events outside the control of management or an individual executive, our revenues and financial position going into the new fiscal year, each executive’s work in managing the business, establishing internal controls, mentoring staff, completing and integrating acquisitions, reducing costs, responding to market conditions and maintaining our profitability. In determining 2020 annual bonus amounts for each executive officer, in addition to its own assessments, our Compensation Committee considered recommendations from the Chief Executive Officer regarding each of the executive officers other than himself.

Bonuses are not based on a predetermined weighting of metrics and our named executive officers do not have formal bonus targets. When assessing results, the Compensation Committee reviews the financial and operational performance of the Company as a whole, relative to prior year’s performance, results versus the annual budget determined by the Board of Directors at the beginning of the year, and versus competitors.

Named Executive Officer

2020 Annual Bonus

William C. Stone

$9,500,000

Rahul Kanwar

$6,500,000

Patrick Pedonti

$2,500,000

Joseph J. Frank

$1,750,000

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 21


 

 

For 2021 compensation and beyond, a portion of our executives’ annual bonuses will be delivered in the form of performance stock units.

 

Incentive Equity Awards

 

Our Compensation Committee believes that equity-based incentive compensation is a critical component of our executive compensation program.  In response to feedback we received from our stockholders regarding the manner in which we incentivize and reward our executive officers, our Compensation Committee determined to change the structure of our incentive equity awards by providing our executive officers with awards of performance-vesting stock options and time-vesting stock options. The grants of performance-vesting stock options described below were made in early 2021 and relate to a 3-year performance period running from the start of 2021 through the end of 2023.  The grants of time-vesting stock option awards, which were made in December of 2020 consistent with our historic practice with respect to performance during the year, were reduced to reflect the grants of performance-based stock options that were expected to be made in early 2021.

 

Performance-Based Stock Option Awards

On March 17, 2021, our named executive officers were granted performance-based stock options that vest at the end of a 3-year performance period based on year-over-year achievement of growth in earnings per share, and have a maximum term of 10 years.  These awards include annual performance growth targets and will measure performance against each annual goal throughout the 3-year performance period. Performance is measured relative to a 3-year average annual growth rate that is established at the beginning of the cycle and held constant. Our executive officers will only be entitled to receive any portion of the performance stock option awards that are earned in a given year if they remain employed through the final determination of the satisfaction of these performance goals after the conclusion of our 2023 fiscal year.  Our Compensation Committee believes that the performance-vesting stock options promote the long-term performance of our company by providing value based on certain financial and operational achievements. Mr. Stone received an option to purchase a target number of 225,000 shares of our common stock, Mr. Kanwar received an option to purchase a target number of 140,000 shares of our common stock, Mr. Pedonti received an option to purchase a target number of 90,000 shares of our common stock, and Mr. Frank received an option to purchase a target number of 75,000 shares of our common stock.

Time-Based Stock Option Awards

On December 22, 2020, our named executive officers were granted stock options that vest over four years from the date of grant, are exercisable at the fair market value of our stock on the date of grant, and have a maximum term of 10 years.  Our Compensation Committee believes that our stock option program is an appropriate equity incentive vehicle because stock options promote long-term performance by providing rewards only if, and to the extent that, our stock price increases.  This aligns the interests of our named executive officers with those of our stockholders and encourages long-term, sustained growth, while also promoting talent retention through multi-year vesting.

The number of options granted to each of our named executive officers was determined by our Compensation Committee based on an assessment of the relative contributions and efforts of each executive officer. For executive officers other than himself, the Compensation Committee also considered recommendations provided by our Chief Executive Officer.  These options have an exercise price of $71.46 per share, which was equal to the closing price of our common stock as reported on The Nasdaq Global Select Market on the date of the grant.

The options awarded on December 22, 2020 vest 25% on the first anniversary of grant and 1/36th each month thereafter until fully vested on the fourth anniversary of grant (subject to acceleration of vesting in connection with a qualifying termination within 24 months of a change of control event and the other terms and conditions set forth in the plan and the award agreements), subject to the recipient’s continued service with the Company on each applicable vesting date.  In response to shareholder feedback, we determined that the options awarded in December would not, unlike grants made in prior years, vest solely upon the occurrence of a change of control and instead, would only vest on a “double-trigger” basis, i.e., if an executive officer’s employment is terminated without cause or resigns for good reason within 24 months of a change in control.


22 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

 

Total Equity Grants for 2020 Compensation Reflecting New Performance-Oriented Design

 

 

 

Time-Based Options

 

 

Performance-Based Options

 

 

 

 

 

Name

 

Time-Based Options*

 

 

Exercise Price ($)

 

 

Grant Date Value ($)

 

 

Performance-Based Options** (at target)

 

 

Exercise Price ($)

 

Grant Date Value*** ($)

 

 

Total Option Value

 

William C. Stone

 

 

225,000

 

 

 

71.46

 

 

 

4,130,754

 

 

 

225,000

 

 

68.52

 

 

4,026,821

 

 

 

8,157,575

 

Rahul Kanwar

 

 

140,000

 

 

 

71.46

 

 

 

2,570,247

 

 

 

140,000

 

 

68.52

 

 

2,505,577

 

 

 

5,075,824

 

Patrick J. Pedonti

 

 

90,000

 

 

 

71.46

 

 

 

1,652,301

 

 

 

90,000

 

 

68.52

 

 

1,610,728

 

 

 

3,263,029

 

Joseph J. Frank

 

 

75,000

 

 

 

71.46

 

 

 

1,376,918

 

 

 

75,000

 

 

68.52

 

 

1,342,274

 

 

 

2,719,192

 

*Reflects time-based stock options granted to our named executive officers on December 22, 2020.

**Reflects performance-based stock options granted to our named executive officers of March 17, 2021.

***Reflects the preliminary grant date fair value.  The actual amount will be reported in our 2022 Proxy Statement.

Benefits and Perquisites

We offer a variety of benefit programs to all eligible employees, including our executive officers.  Our executive officers generally are eligible for the same benefits on the same basis as other employees, including medical, dental and vision benefits, life insurance coverage and short-and long-term disability coverage.  All eligible employees are also able to contribute to our 401(k) plan and receive matching Company contributions under the plan.  In addition, our executive officers are entitled to reimbursement for reasonable business travel and other expenses incurred during the performance of their duties in accordance with our expense reimbursement policy.

We limit the use of perquisites as a method of compensation and provide our executive officers with only those perquisites that we believe are reasonable and consistent with our overall compensation program to better enable us to attract and retain talented employees for key positions.

Severance and Change of Control Benefits

Messrs. Stone and Frank are our only named executive officers with employment agreements.  These agreements entitle each of Messrs. Stone and Frank to specified benefits in the event of the termination of employment under certain circumstances, as described in detail under the captions “CEO Employment Agreement”, “Chief Legal Officer Employment Agreement” and “Potential Payments Upon Termination or Change of Control” below.  Our Compensation Committee believes these employment agreements continue to be beneficial to the Company in retaining Messrs. Stone and Frank. On April 1, 2021, we entered into an amendment to Mr. Stone’s CEO Employment Agreement, which eliminated his 280G excise tax gross up.

The time-based stock options awarded to our named executive officers prior to December 2020 each vest in full immediately prior to the effectiveness of a change of control. Our Compensation Committee determined, however, that for grants made in December 2020 to our executive officers and for future grants, equity incentive awards will only vest if an executive officer experiences a qualifying termination of employment within twenty-four (24) months of a change in control.

Stock Ownership Guidelines, Anti-Hedging and Pledging Policy and Clawback Policy

We maintain executive stock ownership guidelines under which our executive officers are required to accumulate and retain a meaningful level of ownership in our stock. Under the stock ownership guidelines, executive officers have the following ownership requirements:

 

Chief Executive Officer – 10x base annual salary

 

Other Executive Officers – 2x base annual salary

We also have adopted an anti-hedging/anti-pledging policy that prohibits our employees and directors from engaging in any transactions that are designed to hedge or speculate on any change in the market value of our common stock.

Our Board also adopted a policy that requires the reimbursement or clawback of all or a portion of any incentive-based compensation award to executive officers when the Committee determines such executive officer’s fraud or intentional misconduct was a significant contributing factor to the need for a restatement.

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 23


 

Accounting and Tax Implications

The accounting and tax treatment of particular forms of compensation do not materially affect our compensation decisions.  However, we evaluate the effect of such accounting and tax treatment on an ongoing basis and will make modifications to compensation policies where we deem it appropriate.  For instance, Section 162(m) of the Internal Revenue Code generally disallows a tax deduction for compensation in excess of $1.0 million paid by a public company to its chief executive officer and to each other officer (other than the chief financial officer) whose compensation is required to be reported to our stockholders pursuant to the Exchange Act.  However, prior to the enactment of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), certain compensation, including qualified “performance-based compensation,” was not subject to the deduction limit if certain requirements were met.

Under the TCJA, the qualified “performance-based compensation” exemption was repealed, effective for taxable years beginning after December 31, 2017, except to the extent that certain contractual arrangements in place prior to November 2, 2017 are grandfathered under TCJA.

In the exercise of its business judgment, and in accordance with its compensation philosophy, our Compensation Committee continues to have the flexibility to award compensation that is not tax deductible if it determines that such award is in our shareholders’ best interests.

Report of the Compensation Committee

Our Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with our management.  Based on this review and discussion, our Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

By the Compensation Committee of the Board of SS&C Technologies Holdings, Inc.

Michael E. Daniels

Michael J. Zamkow

24 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

 

Summary Compensation Table

The following table contains information with respect to the compensation earned by our named executive officers for the fiscal years ended December 31, 2020, 2019 and 2018.

 

Name and

Principal

Position

 

Year

 

Salary

($)

 

Stock

awards

($)(1)

 

Option

awards

($)(1)

 

Non-equity

incentive plan

compensation

($)(2)

 

All other

compensation

($)(3)

 

Total

($)

William C. Stone

 

2020

 

875,000

 

 

4,130,754

 

9,500,000

 

8,388

 

14,514,142

Chief Executive Officer

 

2019

 

875,000

 

 

6,730,791

 

14,000,000

 

14,534

 

21,620,325

 

 

2018

 

875,000

 

 

4,981,537

 

10,000,000

 

5,584

 

15,862,121

Rahul Kanwar

 

2020

 

575,000

 

 

2,570,247

 

6,500,000

 

8,255

 

9,653,502

Chief Operating Officer

 

2019

 

575,000

 

 

4,113,261

 

6,000,000

 

8,945

 

10,697,206

 

 

2018

 

516,288

 

 

4,204,659

 

4,000,000

 

4,240

 

8,725,187

Patrick J. Pedonti

 

2020

 

400,000

 

 

1,652,301

 

2,500,000

 

8,178

 

4,560,479

Chief Financial Officer

 

2019

 

400,000

 

 

2,617,530

 

2,500,000

 

13,334

 

5,530,864

 

 

2018

 

381,250

 

 

1,992,615

 

1,600,000

 

5,715

 

3,979,580

Joseph J. Frank

 

2020

 

750,000

 

 

1,376,918

 

1,750,000

 

9,885

 

3,886,803

Chief Legal Officer

 

2019

 

750,000

 

 

2,243,597

 

2,250,000

 

9,932

 

5,253,529

 

 

2018

 

608,172

 

1,294,501

 

4,941,172

 

1,600,000

 

6,874

 

8,450,719

(1)

The amounts in this column reflect the aggregate accounting grant date fair value of stock-based awards granted to our named executive officers during the applicable year, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used by us in the valuation of the equity awards are set forth in Note 13 of the notes to our audited consolidated financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the SEC on February 25, 2021.

(2)

Amounts reflected for the applicable year reflect cash bonus awards earned under the Bonus Plan for performance in such year and paid early in the following year, as described in “Executive and Director Compensation – Annual Cash Bonuses” above.

(3)

The amounts in this column reflect, for each named executive officer, the sum of (1) our contributions to the SS&C 401(k) savings plan and (2) our payments of life insurance premiums. In addition, it includes additional restricted stock units in an amount with a value of $1,552 and $2,997 on the date such dividend equivalents were credited by the Company in 2020 and 2019, respectively, to Mr. Frank in accordance with his right to receive any cash dividends and any stock dividends or distributions in the form of additional restricted stock units whenever the Company declares and pays a dividend or distribution of cash or shares in respect of the Company’s common stock.

 

Chief Executive Officer Employment Agreement

On April 1, 2021, we amended Mr. Stone’s employment agreement to remove his entitlement to a 280G excise tax gross up. Mr. Stone’s amended employment agreement provides for the following:

 

The employment of Mr. Stone as the Chief Executive Officer of SS&C Holdings and SS&C;

 

Continuing automatic one-year renewal terms until terminated either by Mr. Stone or us upon 90 days’ notice of non-renewal of his employment;

 

An annual base salary of at least $875,000;

 

An opportunity to receive an annual bonus in an amount to be established by our Board based on Mr. Stone’s and the Company’s performance, as determined by our Compensation Committee;

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 25


 

 

If we terminate Mr. Stone’s employment without cause (as defined below), if Mr. Stone resigns for good reason (as defined below) prior to the end of the term of the employment agreement, or if Mr. Stone receives a notice of non-renewal of the employment term by us, Mr. Stone will be entitled to receive (1) an amount equal to 200% of his base salary and 200% of his average annual bonus, inclusive of stock and restricted stock that he received as a component of such bonus, over the three bonus years preceding the year of termination, (2) accelerated vesting of 50% of his then-unvested options and full vesting of any restricted stock and (3) three years of Company-paid coverage under certain health plans. In the event of Mr. Stone’s death or a termination of Mr. Stone’s employment due to any disability that renders Mr. Stone unable to perform his duties under the agreement for six consecutive months, Mr. Stone or his representative or heirs, as applicable, will be entitled to receive  (1) disability or death benefits (as applicable) in accordance with our programs and arrangements, (2) accelerated vesting as set forth above, and (3) a prorated amount of his average bonus for the three bonus years preceding the year of termination; and

 

Restrictive covenants, including non-competition and non-solicitation covenants pursuant to which Mr. Stone will be prohibited from competing with us or our affiliates and from soliciting our employees or customers during the period beginning on the effective date of Mr. Stone’s amended employment agreement (the “Amended Employment Agreement”) and ending on the date that is two years following Mr. Stone’s termination of employment.

For additional information on the severance and change of control benefits (including estimated costs), see “Potential Payments on Termination” below.

“Cause” means (a) Mr. Stone’s willful and continuing failure (except where due to physical or mental incapacity) to substantially perform his duties; (b) Mr. Stone’s conviction of, or plea of guilty or nolo contendere to, a felony; (c) the commission by Mr. Stone of an act of fraud or embezzlement against us or any of our subsidiaries as determined in good faith by a two-thirds majority of the Board; or (d) Mr. Stone’s breach of any material provision of the Amended Employment Agreement.

 

“Good reason” generally means the occurrence of any of the following events without Mr. Stone’s written consent: (a) an adverse change in Mr. Stone’s employment title; (b) a material diminution in Mr. Stone’s employment duties, responsibilities or authority, or the assignment to Mr. Stone of duties that are materially inconsistent with his position; (c) any reduction in Mr. Stone’s base salary, (d) any breach by us of any material provision of the Amended Employment Agreement, the Stockholders Agreement, or any other governing agreement between us and Mr. Stone; (e) a material diminution in Mr. Stone’s reporting line; or (f) a material diminution in our budget over which Mr. Stone retains authority.

 

Chief Legal Officer Employment Agreement

Mr. Frank’s employment agreement, as amended, provides for the following:

 

The employment of Mr. Frank as (i) Senior Vice President, Chief Legal Officer and Secretary;

 

Continuing automatic one-year renewal terms until terminated either by Mr. Frank or us upon 90 days’ notice of non-renewal of his employment;

 

An annual base salary of at least $750,000;

 

An opportunity to receive an annual bonus in an amount to be established by the Chief Executive Officer based on Mr. Frank’s and the Company’s performance, as determined by our Compensation Committee;

 

A guaranteed annual bonus in an amount not less than $1,250,000, with any excess over such amount to be established by Mr. Stone and our Board based on Mr. Frank’s and the Company’s performance, as determined by our Compensation Committee;

 

An opportunity to receive an annual grant of time-based stock options to purchase an amount of shares between 150,000 and 200,000 at the time of the Company’s normal equity-based award grant cycle (subject to the same vesting and other terms as are generally applicable to annual grants to senior executives under the plan);

 

If we terminate Mr. Frank’s employment without cause (as defined below), if Mr. Frank resigns for good reason (as defined below) prior to the end of the term of the employment agreement, or if Mr. Frank receives a notice of non-renewal of the employment term by us, Mr. Frank will be entitled to receive (1) an amount equal to 75%

26 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

 

 

of his base salary and 75% of his guaranteed annual bonus and (2) reimbursement of the employer portion (for active employees) of insurance premiums for eighteen months of with respect to Mr. Frank’s COBRA premiums under certain health plans.  In the event of Mr. Frank’s death or a termination of Mr. Frank’s employment due to any disability that renders Mr. Frank unable to perform his duties under the agreement for six consecutive months, Mr. Frank or his representative or heirs, as applicable, will be entitled to receive  (1) disability or death benefits (as applicable) in accordance with our programs and arrangements, (2) cash payment equal to the sum of the Mr. Frank’s base salary, guaranteed annual bonus and performance annual bonus for the year in which death or disability occurs, multiplied by the greater of (A) 75% or (B) a fraction, the numerator of which is the number of days during such year that Mr. Frank was employed and the denominator of which is 365; and

 

Restrictive covenants, including non-competition and non-solicitation covenants pursuant to which Mr. Frank will be prohibited from competing with us or our affiliates and from soliciting our employees or customers during the period beginning on the effective date of Mr. Frank’s employment agreement and ending on the date that is two years following Mr. Frank’s termination of employment.

For additional information on the treatment of equity in connection with a termination or change of control (including estimated costs), see “Potential Payments on Termination” below.

“Cause” means (a) Mr. Frank’s willful and continuing failure (except where due to physical or mental incapacity) to substantially perform his duties; (b) Mr. Frank’s conviction of, or plea of guilty or nolo contendere to, a felony; (c) the commission by Mr. Frank of an act of fraud or embezzlement against us or any of our subsidiaries (other than a good faith expense dispute); or (d) Mr. Frank’s breach of any material provision of the Employment Agreement.

 

“Good reason” generally means the occurrence of any of the following events without Mr. Frank’s written consent: (a) an adverse change in Mr. Frank’s employment titles; (b) a material diminution in Mr. Frank’s employment duties, responsibilities or authority, or the assignment to Mr. Frank of duties that are materially inconsistent with his position; (c) any reduction in Mr. Frank’s base salary, guaranteed annual bonus or target performance annual bonus opportunity; (d) any breach by us of any material provision of the Employment Agreement, or any other governing agreement between us and Mr. Frank; or (e) a material diminution in Mr. Frank’s reporting line.

 

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 27


 

2020 Grants of Plan-Based Awards

The following table sets forth information regarding grants of compensation in the form of plan-based awards made during 2020 to our named executive officers.

Name

 

Grant

date(1)

 

 

 

Estimated future

payouts under

non-equity incentive

plan awards(2)

 

 

 

All other

option awards:

number of

securities

underlying

options (#)

 

 

Exercise

price of

option

awards

($/share)

 

Grant date

fair value of

stock and

option awards

($)

 

 

 

 

 

Threshold

($)

 

Target

($)

 

Maximum

($)

 

 

 

 

 

 

 

 

William C. Stone

 

3/15/2021

 

 

9,500,000

 

 

 

 

 

 

 

 

12/22/2020

 

 

 

 

225,000

(3)

 

71.46

 

4,130,754

(4)

Rahul Kanwar

 

3/15/2021

 

 

6,500,000

 

 

 

 

 

 

 

 

12/22/2020

 

 

 

 

140,000

(3)

 

71.46

 

2,570,247

(4)

Patrick J. Pedonti

 

3/15/2021

 

 

2,500,000

 

 

 

 

 

 

 

 

12/22/2020

 

 

 

 

90,000

(3)

 

71.46

 

1,652,301

(4)

Joseph J. Frank

 

3/15/2021

 

 

1,750,000

 

 

 

 

 

 

 

 

12/22/2020

 

 

 

 

75,000

(3)

 

71.46

 

1,376,918

(4)

 

(1)

Cash awards were granted under our Bonus Plan and equity awards were granted under our Second Amended and Restated 2014 Stock Incentive Plan.

(2)

Because our Compensation Committee does not approve individual target amounts, the amounts indicated reflect actual 2020 cash bonus payments for each individual and are included in the Summary Compensation Table above.

(3)

These options are time-based options that vest as to 25% of the number of shares underlying the option on December 22, 2021 and vest as to 1/36th of the number of shares underlying the option each month thereafter until fully vested on December 21, 2024, subject to acceleration of vesting in connection with a change of control.

(4)

Amount reflects the aggregate accounting grant date fair value of stock-based awards to our named executive officers, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. The assumptions used by us in the valuation of the equity awards are set forth in Note 13 of the notes to our audited consolidated financial statements for the year ended December 31, 2020 included in our Annual Report on Form 10-K filed with the SEC on February 25, 2021.

 

28 |  Notice of 2021 Annual Meeting of Stockholder and Proxy Statement


 

 

 

2020 Option Exercises and Stock Vested

The following table sets forth information concerning stock options that were exercised and stock awards that vested by our named executive officers in 2020 and the values realized.

 

 

Option Awards

 

Stock Awards

Name

 

Number of

shares acquired

on exercise (#)

 

Value

realized on

exercise ($)(1)

 

Number of

shares acquired

on vesting (#)

 

Value

realized on

vesting ($)(2)

Patrick J. Pedonti

 

170,000

 

7,934,963

 

 

Joseph J. Frank

 

 

 

4,218

 

252,791

 

(1)

The dollar value realized on exercise represents the difference between the market value of the shares at the time of exercise and the respective per-share exercise price of the options.

(2)

The dollar value realized on vesting represents the market value of the shares at the time of vesting.

Notice of 2021 Annual Meeting of Stockholder and Proxy Statement | 29


 

Outstanding Equity Awards at 2020 Fiscal Year-End

The following equity awards granted to our named executive officers were outstanding as of December 31, 2020.

 

 

Option Awards

 

 

Stock Awards

 

 

Name

 

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

 

 

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

 

 

 

Option

Exercise

Price ($)

 

 

Option

Expiration

Date

 

 

Number of

Units of

Stock That

Have Not

Vested (#)

 

 

 

Market Value of

Units of

Stock That

Have Not

Vested ($)

 

 

William C. Stone

 

 

280,000

 

 

 

 

 

 

 

 

6.74

 

 

10/3/2021

 

 

 

 

 

 

 

 

 

 

 

 

400,000

 

 

 

 

 

 

 

 

11.22

 

 

12/27/2022

 

 

 

 

 

 

 

 

 

 

 

 

340,000

 

 

 

 

 

 

 

 

21.10

 

 

12/20/2023

 

 

 

 

 

 

 

 

 

 

 

 

380,000

 

 

 

 

 

 

 

 

28.27

 

 

12/19/2024

 

 

 

 

 

 

 

 

 

 

 

 

420,000

 

 

 

 

 

 

 

 

33.89

 

 

12/22/2025

 

 

 

 

 

 

 

 

 

 

 

 

300,000

 

 

 

 

 

 

 

 

29.25

 

 

12/21/2026

 

 

 

 

 

 

 

 

 

 

 

 

262,500

 

(1)

 

 

87,500

 

(1)

 

 

40.44

 

 

12/20/2027

 

 

 

 

 

 

 

 

 

 

 

 

250,000

 

(2)

 

 

250,000

 

(2)

 

 

44.28

 

 

12/14/2028

 

 

 

 

 

 

 

 

 

 

 

 

112,500

 

(4)

 

 

337,500

 

(4)

 

 

61.16

 

 

12/20/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

225,000

 

(7)

 

 

71.46

 

 

12/20/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Rahul Kanwar

 

 

80,000

 

 

 

 

 

 

 

 

11.10

 

 

8/30/2022

 

 

 

 

 

 

 

 

 

 

 

 

120,000

 

 

 

 

 

 

 

 

11.22

 

 

12/27/2022

 

 

 

 

 

 

 

 

 

 

 

 

140,000

 

 

 

 

 

 

 

 

21.10

 

 

12/20/2023

 

 

 

 

 

 

 

 

 

 

 

 

160,000

 

 

 

 

 

 

 

 

28.27

 

 

12/19/2024

 

 

 

 

 

 

 

 

 

 

 

 

190,000

 

 

 

 

 

 

 

 

33.89

 

 

12/22/2025

 

 

 

 

 

 

 

 

 

 

 

 

150,000

 

 

 

 

 

 

 

 

29.25

 

 

12/21/2026

 

 

 

 

 

 

 

 

 

 

 

 

40,625

 

(3)

 

 

9,375

 

(3)

 

 

38.66

 

 

9/5/2027

 

 

 

 

 

 

 

 

 

 

 

 

135,000

 

(1)

 

 

45,000

 

(1)

 

 

40.44

 

 

12/20/2027

 

 

 

 

 

 

 

 

 

 

 

 

60,416

 

(5)

 

 

39,584

 

(5)

 

 

54.35

 

 

7/30/2028

 

 

 

 

 

 

 

 

 

 

 

 

150,000

 

(2)

 

 

150,000

 

(2)

 

 

44.28

 

 

12/14/2028

 

 

 

 

 

 

 

 

 

 

 

 

68,750

 

(4)

 

 

206,250

 

(4)

 

 

61.16

 

 

12/20/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

140,000

 

(7)

 

 

71.46

 

 

12/20/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Patrick J. Pedonti

 

 

130,000

 

 

 

 

 

 

 

 

28.27

 

 

12/19/2024

 

 

 

 

 

 

 

 

 

 

 

 

160,000

 

 

 

 

 

 

 

 

33.89

 

 

12/22/2025

 

 

 

 

 

 

 

 

 

 

 

 

120,000

 

 

 

 

 

 

 

 

29.25

 

 

12/21/2026

 

 

 

 

 

 

 

 

 

 

 

 

105,000

 

(1)

 

 

35,000

 

(1)

 

 

40.44

 

 

12/20/2027

 

 

 

 

 

 

 

 

 

 

 

 

100,000

 

(2)

 

 

100,000

 

(2)

 

 

44.28

 

 

12/14/2028

 

 

 

 

 

 

 

 

 

 

 

 

43,750

 

(4)

 

 

131,250

 

(4)

 

 

61.16

 

 

12/20/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

90,000

 

(7)

 

 

71.46

 

 

12/20/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joseph J. Frank

 

 

212,500

 

(6)

 

 

87,500

 

(6)

 

 

48.15

 

 

2/8/2028

 

 

 

 

 

 

 

 

 

 

 

 

87,500

 

(2)

 

 

87,500

 

(2)

 

 

44.28

 

 

12/14/2028