DEF 14A of Kyndryl Holdings, Inc.
Filed Jun 14, 2023 · FY20230001140361-23-029850
Board of Directors
Board of Directors
Proposal 1—Election of Directors
Proposal 1—Election of Directors Our Board currently consists of 10 members and, until the conclusion of our 2027 Annual Meeting of stockholders, will be divided into three classes, with each class consisting, as nearly as possible, of one-third of the total number of directors. This temporary classified Board structure is intended to provide continuity of leadership during Kyndryl’s first years of operation as an independent, public company. The directors designated as Class I directors have terms expiring at the 2025 Annual Meeting, the directors designated as Class II directors have terms expiring at the 2023 Annual Meeting and the directors designated as Class III directors have terms expiring at the 2024 Annual Meeting. Any director elected at the 2023 or 2024 Annual Meeting will belong to the class whose term expires at such Annual Meeting and will hold office for a three-year term or until his or her successor has been duly elected and qualified.
Proposal 1—Election of Directors
| CLASS I | CLASS II | CLASS III | | TERMS EXPIRING AT THE 2025 ANNUAL MEETING | NOMINEES FOR ELECTION AT THE 2023 ANNUAL MEETING | TERMS EXPIRING AT THE 2024 ANNUAL MEETING | | • Janina Kugel • Denis Machuel • Rahul N. Merchant | • John D. Harris II • Jana Schreuder • Howard I. Ungerleider | • Dominic J. Caruso • Stephen A. M. Hester • Shirley Ann Jackson • Martin Schroeter |
Proposal 1—Election of Directors
Beginning at the 2025 Annual Meeting, and at each annual meeting thereafter, all of our directors up for election at such meeting will be elected annually and will hold office until the following Annual Meeting or until his or her successor has been duly elected and qualified or until his or her earlier resignation or removal. Effective as of the conclusion of the 2027 Annual Meeting, our Board will therefore no longer be divided into three classes. Upon the recommendation of the Nominating and Governance Committee, the Board has considered and nominated the following slate of Class II nominees for a three-year term expiring at our 2026 Annual Meeting or until their successors are duly elected and qualified: John D. Harris II, Jana Schreuder and Howard I. Ungerleider. Unless otherwise instructed, the persons named in the form of Proxy Card (proxyholders) attached to this Proxy Statement intend to vote the proxies held by them for the election of John D. Harris II, Jana Schreuder and Howard I. Ungerleider. If any of these nominees ceases to be a candidate for election by the time of the 2023 Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.
Proposal 1—Election of Directors
| | The Board recommends that you vote FOR the election of each of the Class II nominees set forth above. |
Proposal 1—Election of Directors
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
| JOHN D. HARRIS II | COMMITTEE: Nominating and Governance | AGE 62 | INDEPENDENT DIRECTOR since 2021 | | Former Vice President of Business Development, Raytheon Company and Chief Executive Officer, Raytheon International Inc., a multinational aerospace and defense company | Qualifications, Attributes and Skills • Global business experience as former chief executive officer of Raytheon International Inc. and vice president of business development of Raytheon Company • Technology, digital and/or cybersecurity experience as former president of the Raytheon Technical Services Company and as former general manager of Raytheon’s Intelligence, Information and Services business • Government service as former member of the National Advisory Council on Minority Business Enterprise with the U.S. Department of Commerce and Radio Technical Commission for Aeronautics (RTCA) NexGen Advisory Committee of the U.S. Department of Transportation • Outside board experience as a director of Cisco Systems Inc., Flex Ltd., and Exxon Mobil Corporation | Relevant Experience Mr. Harris served as chief executive officer of Raytheon International Inc. from 2013 until 2020. Mr. Harris also served as vice president of business development for Raytheon Company during his tenure. Mr. Harris joined Raytheon in 1983 and held positions of increasing responsibility, including vice president of operations and contracts for Raytheon’s former electronic systems business, vice president of contracts for the company’s government and defense businesses until 2003, and vice president of contracts and supply chain for Raytheon Company until 2010, when he was named president of the Raytheon Technical Services Company, a role he served in until 2013. Mr. Harris served on the RTCA NextGen Advisory Committee, the National Advisory Council on Minority Business Enterprise with the U.S. Department of Commerce and the Association of the United States Army’s Council of Trustees. Mr. Harris serves as a board member for Cisco Systems Inc., Flex Ltd., and Exxon Mobil Corporation. | |
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
| JANA SCHREUDER | COMMITTEE: Compensation and Human Capital (Chair) | AGE 64 | INDEPENDENT DIRECTOR since 2021 | | Retired Executive Vice President, Chief Operating Officer, Northern Trust Corporation, a financial services company | Qualifications, Attributes and Skills • Global business experience as former chief operating officer of Northern Trust Corporation • Technology, digital and/or cybersecurity experience as former president of operations and technology at Northern Trust Corporation • Financial experience as former chief risk officer and head of corporate risk management and president of wealth management at Northern Trust Corporation • Affiliation with leading business association as a member of Women Corporate Directors • Outside board experience as a director of Avantax, Inc. and The Bank of N.T. Butterfield & Son Limited | Relevant Experience Ms. Schreuder served as executive vice president and chief operating officer of Northern Trust Corporation from 2014 until she retired from that role in 2018. Ms. Schreuder joined Northern Trust in 1980 and during her tenure held multiple roles as a member of the management team, including service as chief risk officer from 2005 to 2006, president of operations and technology from 2006 to 2011 and president of wealth management from 2011 to 2014. Ms. Schreuder is a member of Women Corporate Directors. Ms. Schreuder currently sits on the boards of Avantax, Inc. and The Bank of N.T. Butterfield & Son Limited. Additionally, during the past five years, she served as a director of LifePoint Health Inc. | |
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
| HOWARD I. UNGERLEIDER | COMMITTEE: Compensation and Human Capital | AGE 54 | INDEPENDENT DIRECTOR since 2021 | | President and Chief Financial Officer, Dow Inc., a materials, polymer, chemicals and biological sciences enterprise | Qualifications, Attributes and Skills • Global business experience as president and chief financial officer of Dow Inc. • Financial expertise as chief financial officer of Dow Inc., DowDuPont and The Dow Chemical Company • Managed the financial complexities of the historic merge-and-spin of DowDuPont, an $86 billion holding company comprised of The Dow Chemical Company and DuPont from September 2017 to April 2019 • Financial leadership for The Dow Chemical Company’s strategic ownership restructuring of its Dow Corning Corporation silicones business joint venture completed in 2016 • Affiliation with leading business and public policy associations as Chair of the Business Leaders for Michigan business roundtable and the Michigan Climate Executive Advisory Group • Outside board experience as a former director of Wolverine Bancorp, Inc. | Relevant Experience Mr. Ungerleider has served as president and chief financial officer of Dow Inc. since April 2019. In 1990, he joined The Dow Chemical Company and subsequently held various positions, including chief financial officer from 2014 to 2015. In 2016, he was appointed chief financial officer of DowDuPont effective upon the merger of The Dow Chemical Company and E.I. du Pont de Nemours and Company (DuPont). Mr. Ungerleider served in this role from 2017 until April of 2019, when Dow Inc. separated from DowDuPont. Mr. Ungerleider is chairman of the Dow Company Foundation and serves on the Board of Directors of FCLTGlobal, the Michigan Israel Business Bridge and the Rollin M. Gerstacker Foundation. Mr. Ungerleider is also Chair of the Business Leaders for Michigan business roundtable and the Michigan Climate Executive Advisory Group. | |
Class II Director Nominees for Election to a 3-Year Term Expiring in 2026
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Directors Continuing in Office
Directors Continuing in Office
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| DOMINIC J. CARUSO | COMMITTEE: Audit (Chair) | AGE 65 | INDEPENDENT DIRECTOR since 2021 | | Retired Executive Vice President and Chief Financial Officer, Johnson & Johnson, a global healthcare products company | Qualifications, Attributes and Skills • Global business experience as former chief financial officer of Johnson & Johnson • Financial expertise as former chief financial officer of Johnson & Johnson • Affiliation with leading business and public policy association as former co-chair of the U.S. Chamber of Commerce Global Initiative on Health and the Economy • Outside board experience as a director of McKesson Corporation | Relevant Experience Mr. Caruso served as the executive vice president and chief financial officer of Johnson & Johnson from 2007 until his retirement in 2018. Earlier in his career, Mr. Caruso served Centocor, Inc. as vice president, finance and chief financial officer from 1994 to 1998, and as senior vice president and chief financial officer from 1998 until the acquisition of Centocor by Johnson & Johnson in 1999. Mr. Caruso then joined Johnson & Johnson and served in various executive positions until his appointment as the executive vice president and chief financial officer in 2007. Mr. Caruso is a director of McKesson Corporation. Mr. Caruso previously served as the co-chair of the U.S. Chamber of Commerce Global Initiative on Health and the Economy and currently serves on the Board of Trustees of The Children’s Hospital of Philadelphia and the Cystic Fibrosis Foundation. | |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| STEPHEN A. M. HESTER | COMMITTEE: Nominating and Governance (Chair) | AGE 62 | LEAD INDEPENDENT DIRECTOR since 2021 | | Chairman, easyJet plc, a leading international airline Chairman, Nordea Bank Abp, a leading Nordic financial services group | Qualifications, Attributes and Skills • Global business experience as former group chief executive of RSA Insurance Group, of Royal Bank of Scotland Group and of British Land plc • Financial expertise as former chief financial officer of Abbey National plc and Credit Suisse First Boston • Outside board experience as chairman of easyJet plc and chairman of Nordea Bank Abp, former senior independent director of Centrica plc, and former deputy chairman of Northern Rock | Relevant Experience Mr. Hester currently serves as chairman of easyJet plc and as chairman of Nordea Bank Abp. Mr. Hester served as chief executive officer of RSA Insurance Group from 2014 until his retirement in June 2021. Prior to joining RSA, he was group chief executive of Royal Bank of Scotland from 2008 to 2013, chief executive of British Land plc from 2004 to 2008, and chief operating officer and chief financial officer of Abbey National plc from 2002 to 2004. Mr. Hester began his career at Credit Suisse First Boston in 1982 and held positions of increasing responsibility, including chief financial officer and global head of the fixed income division. Additionally, during the past five years, he served as senior independent director of Centrica plc. | |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| SHIRLEY ANN JACKSON | COMMITTEE: Nominating and Governance | AGE 76 | INDEPENDENT DIRECTOR since 2021 | | Retired President, Rensselaer Polytechnic Institute, a leading science and technology university that brings technical innovation to the marketplace | Qualifications, Attributes and Skills • Leadership and technology experience as former president of Rensselaer Polytechnic Institute • Industry and research experience as a theoretical physicist at the former AT&T Bell Laboratories • Government service as a member of the United States Secretary of Energy Advisory Board, the Defense Science Board, the International Security Advisory Board to the United States Secretary of State, former chairman of the U.S. Nuclear Regulatory Commission and co-chair of the President’s Intelligence Advisory Board, and former member of the President’s Council of Advisors on Science and Technology • Regulatory experience as a former member of the board of governors of the Financial Industry Regulatory Authority (FINRA) and as former chairman of the U.S. Nuclear Regulatory Commission • Affiliation with leading business and public policy associations as a member of the Council on Foreign Relations, former university vice chair of the Council on Competitiveness and former member of the board of the World Economic Forum USA • Formerly tenured professor at Rensselaer Polytechnic Institute and Rutgers University • Outside board experience as a former director of a number of corporations including FedEx Corporation, Public Service Enterprise Group Incorporated (PSEG), and International Business Machines Corporation (IBM) | Relevant Experience Dr. Jackson was a theoretical physicist at the former AT&T Bell Laboratories from 1976 to 1991, consultant to the former AT&T Bell Laboratories from 1991 to 1995, professor of theoretical physics at Rutgers University from 1991 to 1995, and chairwoman of the U.S. Nuclear Regulatory Commission from 1995 to 1999. Dr. Jackson was president of Rensselaer Polytechnic Institute for more than two decades, from 1999 until her retirement in 2022. She is a member of the United States Secretary of Energy Advisory Board, the Defense Science Board and the International Security Advisory Board to the United States Secretary of State. She has also served as co-chair of the President’s Intelligence Advisory Board. Dr. Jackson is a fellow of the Royal Academy of Engineering (U.K.), the American Academy of Arts and Sciences, the American Association for the Advancement of Science and the American Physical Society. She is a member of the U.S. National Academy of Engineering and the American Philosophical Society. Dr. Jackson is a recipient of the National Medal of Science, the highest award in science and engineering awarded by the U.S. Government. Dr. Jackson is a member of the Council on Foreign Relations. She is a Regent Emerita and former Vice-Chair of the Board of Regents of the Smithsonian Institution, a past president of the American Association for the Advancement of Sciences and an honorary trustee of the Brookings Institution. Additionally, during the past five years, she served as a director of FedEx Corporation, PSEG, and IBM. | |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| MARTIN SCHROETER | | AGE 58 | CHAIRMAN since 2021 | | Chairman and Chief Executive Officer, Kyndryl | Qualifications, Attributes and Skills • Global business and leadership experience as chief executive officer of Kyndryl and senior vice president of global markets of IBM • Technology, digital and/or cybersecurity experience as chief executive officer of Kyndryl and service in various roles at IBM • Financial expertise as senior vice president and chief financial officer of IBM • Affiliation with leading business and public policy association as a member of the Business Roundtable and the Council on Foreign Relations | Relevant Experience Mr. Schroeter was named the first chief executive officer of Kyndryl in January 2021. Previously, Mr. Schroeter served in a variety of business line and finance executive positions at IBM including senior vice president of global markets from 2018 until 2020, responsible for IBM’s global sales, customer relationships and satisfaction and worldwide geographic operations and overseeing IBM’s marketing and communication functions and building IBM’s brand and reputation globally, and senior vice president and chief financial officer from 2014 until 2017, leading IBM’s finance function. Earlier in his career, Mr. Schroeter served as general manager of IBM global financing, managing a total asset base in excess of $37 billion, and had served numerous roles in Japan, the United States and Australia. Mr. Schroeter is a member of the Business Roundtable and the Council on Foreign Relations. | |
CLASS III DIRECTORS, WITH TERMS EXPIRING AT THE 2024 ANNUAL MEETING
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| JANINA KUGEL | COMMITTEE: Compensation and Human Capital | AGE 53 | INDEPENDENT DIRECTOR since 2021 | | Former Chief Human Resources Officer, Siemens AG, a diversified manufacturing and technology company | Qualifications, Attributes and Skills • Global business experience as former chief human resources officer of Siemens AG • Government service as a former member of the Innovation Council for the Federal Ministry of Digitization and the Council of Future of Work for the Federal Ministry of Labor and Social Affairs of Germany • Affiliation with a leading business and public policy association as a member of the Supervisory Board of the German Pension Benefit Guaranty Association and co-chair of the Digital Council of the Confederation of German Employers’ Associations • Academic experience as a member of the International Advisory Board of the IESE Business School in Spain and the University Council of the Technical University of Munich • Outside board experience as a director of TUI AG and Thinkproject GmbH | Relevant Experience Ms. Kugel served as the chief human resources officer and member of the managing board of Siemens AG from 2015 until 2020. Ms. Kugel joined Siemens AG in 2001 as vice president of group strategy in the communications sector and in 2005, was appointed director of global commercial excellence before becoming director of human resources in 2009. In 2012, Ms. Kugel joined Osram where she served as chief human resources officer until 2013, when she returned to Siemens AG to serve as corporate vice president of human resources and chief diversity officer. Ms. Kugel serves on the Board of TUI AG and Thinkproject GmbH, and is a member of the Supervisory Board of the German Pension Benefit Guaranty Association (Pensions-Sicherungs-Verein) and the co-chair of the Digital Council of the Confederation of German Employers’ Associations (Bundesvereinigung der Deutschen Arbeitgeberverbände). Ms. Kugel is also a member of the International Advisory Board of the IESE Business School in Spain and the University Council of the Technical University of Munich. Since 2020, Ms. Kugel has served as senior advisor to EQT, AB Group and Boston Consulting Group, Inc. Ms. Kugel is also a member of the Board of Trustees of Deutsche AIDS Stiftung (German AIDS Foundation). | |
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| DENIS MACHUEL | COMMITTEE: Audit | AGE 59 | INDEPENDENT DIRECTOR since 2021 | | Chief Executive Officer, The Adecco Group, a leading human resources and temporary staffing firm | Qualifications, Attributes and Skills • Global business experience as chief executive officer of The Adecco Group and former chief executive officer of Sodexo S.A. • Technology and digital experience as the former chief digital officer of Sodexo S.A. • Affiliation with leading business and public policy associations as a former member of the G7 Business for Inclusive Growth coalition and the Consumer Goods Forum | Relevant Experience Mr. Machuel has served as chief executive officer of The Adecco Group since July 2022. Prior to this, Mr. Machuel served as the chief executive officer of Sodexo S.A. from 2018 until 2021. Mr. Machuel joined Sodexo in 2007 as the managing director of benefits and rewards services for central and eastern Europe. In 2012, he became chief executive officer of Sodexo benefits and rewards worldwide. Mr. Machuel joined the Sodexo Group Executive Committee in 2014, and from 2015 until 2018, served as group chief digital officer and from 2017 until 2018, served as deputy chief executive officer of Sodexo. Additionally, between 2016 and 2017, Mr. Machuel served as chief executive officer of personal and home services at Sodexo. Mr. Machuel has also served as a member of the G7 Business for Inclusive Growth coalition and the Consumer Goods Forum. | |
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| RAHUL N. MERCHANT | COMMITTEE: Audit | AGE 66 | INDEPENDENT DIRECTOR since 2021 | | Former Senior Executive Vice President and Head of Client Services & Technology, TIAA-CREF, a financial services company | Qualifications, Attributes and Skills • Global business experience as former senior executive vice president and head of client services and technology at TIAA • Technology, digital and/or cybersecurity experience as former executive vice president and chief information and operations officer at Federal National Mortgage Association (Fannie Mae) and former senior vice president, chief information officer and chief technology officer at Merrill Lynch, Pierce, Fenner & Smith Incorporated • Government service as former citywide chief information and innovation officer of New York City • Outside board experience as a director of Juniper Networks, Inc. | Relevant Experience Mr. Merchant served as a senior executive vice president at TIAA from 2015 until his retirement in April 2022. While at TIAA, Mr. Merchant led a variety of organizations including chief information officer, client services, and digital transformation. Prior to serving in this role, Mr. Merchant served as citywide chief information and innovation officer for the City of New York from 2012 until 2014. From 2006 until 2009, Mr. Merchant served as executive vice president, chief information and operations officer and member of the executive committee at the Fannie Mae, and senior vice president, chief information officer and chief technology officer at Merrill Lynch, Pierce, Fenner & Smith Incorporated from 2000 until 2006. Mr. Merchant also serves as a director for Juniper Networks, Inc. | |
CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Committees of the Board
Committees of the Board Our Board has three standing committees—Audit Committee, Compensation and Human Capital Committee and Nominating and Governance Committee. Each Committee is comprised solely of directors who satisfy the independence criteria established by the Board, which reflect the standards of the NYSE and the rules of the SEC, including the heightened independence requirements that apply to Audit Committee and Compensation and Human Capital Committee members. Each Committee has a written charter that sets forth the Committee’s duties and responsibilities.
Committees of the Board
| Director | Independent | Kyndryl Committees | | | | | | | | | | | | Audit | Compensation and Human Capital | Nominating and Governance | | Dominic J. Caruso | | | | | | John D. Harris II | | | | | | Stephen A. M. Hester | | | | | | Shirley Ann Jackson | | | | | | Janina Kugel | | | | | | Denis Machuel | | | | | | Rahul N. Merchant | | | | | | Jana Schreuder | | | | | | Howard I. Ungerleider | | | | | | Number of Committee Meetings in fiscal year 2023 | | 6 | 6 | 4 |
Committees of the Board
| | Lead Independent Director | | Committee Chair | | Committee Member | | Audit Committee Financial Expert |
Committees of the Board
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Committees of the Board
Each committee reviews its charter at least annually to ensure such charters reflect evolving trends and best practices. The Charter of each committee can be found on our website, investors.kyndryl.com, under Corporate Responsibility: Governance: Governance Documents: Committee Charters.
Committees of the Board
| AUDIT COMMITTEE | | | | Members and Qualifications | | Key Responsibilities | | DOMINIC J. CARUSO—CHAIR | | The Committee is responsible for overseeing reports of our financial results, audit reporting, internal controls, adherence to our code of ethics and compliance with applicable laws and regulations. Concurrent with that responsibility, as set out more fully in the Committee’s Charter, the Committee has other key responsibilities, including: • selecting the independent registered public accounting firm, approving all related fees and compensation, overseeing such firm’s work and reviewing its selection with the Board; • preapproving the proposed services to be provided by the independent registered public accounting firm; • reviewing the procedures of the independent registered public accounting firm to ensure its independence and other qualifications for services performed for us; • reviewing any significant changes in accounting principles or developments in accounting practices and the effects of those changes on our financial reporting; • assessing the effectiveness of our internal audit function and overseeing the adequacy of internal controls, key controls and processes in specific areas, including cybersecurity, and enterprise risk management processes; • overseeing the Company’s efforts to develop and implement policies, procedures, and strategies for identifying, managing and monitoring cybersecurity and data privacy matters; and • meeting with management prior to each quarterly earnings release and periodically to discuss the appropriate approach to earnings press releases and the type of financial information and earnings guidance to be provided to analysts and rating agencies. | | | Mr. Caruso has many years of experience as a public company chief financial officer, including direct involvement in the preparation of financial statements and setting financial disclosure policy. | | | DENIS MACHUEL | | | | | Mr. Machuel has valuable experience overseeing a public company chief financial officer and financial reporting as the chief executive officer of multiple public companies. | | | RAHUL N. MERCHANT | | | | | Mr. Merchant has many years of experience in the financial services industry, as well as prior service as the chair of the audit committee of another public company board. Mr. Merchant has technology and cybersecurity experience through his roles as CIO and CTO at major financial entities. | |
Committees of the Board
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Committees of the Board
| NOMINATING AND GOVERNANCE COMMITTEE | | | | Members and Qualifications | | Key Responsibilities | | STEPHEN A. M. HESTER—CHAIR | | The Committee is devoted to the continuing review, definition and articulation of our governance structure and practices. Concurrent with that responsibility, as set out more fully in the Committee’s Charter, the Committee has other key responsibilities, including: • leading the search for qualified individuals for election as our directors based on all appropriate criteria, including candidates’ business or professional experience, the diversity of their background and their talents and perspectives, reviewing and assessing the independence of each director nominee and planning for future Board and Committee refreshment actions; • advising on all matters concerning directorship practices, and on the function, composition and duties of the committees of the Board; • reviewing and assessing the independence of all of our non-management directors annually and assessing transactions with related persons; • developing and making recommendations to the Board regarding a set of corporate governance guidelines; • reviewing and recommending to the Board the form and amount of our non-management director compensation; • reviewing our position and practices on significant corporate political or charitable contributions, environmental matters and corporate responsibility matters; and • reviewing and considering stockholder proposals. | | | Mr. Hester has valuable international governance experience gained through serving as the chief executive officer of public companies in Europe and serving as a member of multiple public company boards in the role of chairman worldwide. | | | JOHN D. HARRIS II | | | | | Mr. Harris has governance experience gained through serving a wide range of roles, including as the head of business development and the CEO of a subsidiary at a public company, as well as serving as a member of other public company boards. | | | SHIRLEY ANN JACKSON | | | | | Dr. Jackson has a broad governance perspective gained through serving as the president at a major research university and in senior leadership positions in government, industry and research. She has also served on several public company boards, including in leadership positions as the chair of a governance committee and the Lead Director of another public company. | |
Committees of the Board
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Committees of the Board
| COMPENSATION AND HUMAN CAPITAL COMMITTEE | | | | Members and Qualifications | | Key Responsibilities | | JANA SCHREUDER—CHAIR | | The Compensation and Human Capital Committee has responsibility for defining and articulating our overall executive compensation philosophy and key compensation policies, including the material risks associated with executive compensation structure, policies and programs. Concurrent with that responsibility, as set out more fully in the Committee’s Charter, the Committee has other key responsibilities, including: • reviewing and approving the corporate goals and objectives relevant to the CEO’s compensation, evaluating, together with the other independent members of the Board, the CEO’s performance in light of those goals and objectives and, based on such evaluation, recommending the CEO’s compensation level for approval by the independent members of the Board; • administering and approving all elements of compensation for the Company’s non-CEO executive officers; • annually reviewing and discussing with management the Company’s compensation policies and practices as applied to employees generally to assess whether any risks arising from such structures, policies and programs are reasonably likely to have a material adverse effect on the Company; • reviewing our human capital management and inclusion, diversity and equity practices; • overseeing and approving the management continuity planning process; • overseeing the evaluation of management; • approving, by direct action or through delegation, participation in and all awards, grants and related actions under our equity plan; • monitoring compliance with stock ownership and clawback guidelines; and • evaluating, on at least an annual basis, whether any work provided by the Committee’s compensation consultant raised any conflict of interest and pre-approving any services to be provided to the Company or its subsidiaries by any of the Committee’s compensation consultants. | | | Ms. Schreuder brings to our Committee her perspective as a former public company chief operating officer and chair of another public company compensation committee, as well as valuable risk management experience. | | | JANINA KUGEL | | | | | Ms. Kugel brings to our Committee over a decade of experience as a human resources executive, including as a chief human resources officer responsible for executive recruitment and compensation as well as diversity, equity and inclusion. | | | HOWARD I. UNGERLEIDER | | | | | As president and chief financial officer of Dow Inc., Mr. Ungerleider brings to our Committee public company financial planning experience and an understanding of the link between such financial planning and incentive compensation. | |
Committees of the Board
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Board Corporate Governance Guidelines
| • | director compensation and stock ownership; |
Director Compensation
Director Compensation Our Board has adopted a director compensation program for fiscal 2023, as described below, pursuant to which each of our non-employee directors receives a cash retainer and an annual equity award in the form of restricted stock units (RSUs) for their services to the Board and its committees. Mr. Schroeter, Chairman and Chief Executive Officer, does not receive separate compensation for his service on the Board. The Board believes that annual compensation for non-employee directors should consist of both a cash component, designed to compensate members for their service on the Board and its committees, and an equity component, designed to align the interests of directors and stockholders. In addition, each director will be reimbursed for out-of-pocket expenses in connection with his or her services. This program enables continued attraction and retention of highly qualified directors and to address the time, effort and accountability required by active board membership. Director compensation is periodically reviewed by the Nominating and Governance Committee and the Board, usually on an annual basis.
Director Compensation
| Fiscal 2023 Annual Compensation | Fiscal 2023 Additional Annual Cash Retainers | | | | Lead Independent Director | $45,000 | | | Board Committee Chairmanship | | | | Audit | $30,000 | | | Compensation and Human Capital | $22,500 | | | Nominating and Governance | $22,500 |
Director Compensation
The cash retainer is paid in installments and prorated for partial years of service. The annual RSU grant is made on the date of the annual meeting each year, has an annual target value of $200,000 and fully vests on the earlier of the anniversary of the grant date and the date of our next annual meeting following the grant date (provided that the date of the meeting is at least 50 weeks after the grant date). Accordingly, on July 28, 2022, we granted each of our non-employee directors 19,399 RSUs that vest in full on the date of the 2023 Annual Meeting, subject to the director’s continued service through such date. Our directors are subject to the Stock Ownership Guidelines described under “2023 Executive Compensation—Compensation Discussion and Analysis—Additional Compensation Information—Stock Ownership Guidelines.” Pursuant to such guidelines, our non-employee directors are required to retain 100% of the shares of our common stock underlying the RSUs, net of any amounts required to pay taxes, until they achieve the ownership required by the guidelines.
Director Compensation
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Director Compensation
The table below sets forth information regarding the compensation of each of our non-employee directors for the fiscal year ended March 31, 2023.
Director Compensation
| Name(1) | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | | Dominic J. Caruso | 130,000 | 200,004 | 330,004 | | John D. Harris II | 100,000 | 200,004 | 300,004 | | Stephen A. M. Hester | 167,500 | 200,004 | 367,504 | | Shirley Ann Jackson | 100,000 | 200,004 | 300,004 | | Janina Kugel | 100,000 | 200,004 | 300,004 | | Denis Machuel | 100,000 | 200,004 | 300,004 | | Rahul N. Merchant | 100,000 | 200,004 | 300,004 | | Jana Schreuder | 122,500 | 200,004 | 322,504 | | Howard I. Ungerleider | 100,000 | 200,004 | 300,004 |
Director Compensation
| (1) Represents the aggregate grant date fair value of RSUs granted during fiscal 2023 computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (Topic 718). The assumptions used in the valuation are discussed in Note 15 “Stock-Based Compensation” to the financial statements included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2023 (Fiscal 2023 10-K). As of March 31, 2023, each of our non-employee directors had 19,399 RSUs outstanding, which will vest on July 27, 2023, subject to continued service through such date. |
Director Compensation
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Director Compensation
| 2023 Executive Compensation | |
How Our NEOs Are Paid
| | Payment Form | Performance and/or Service Condition | Compensation Objective | | BASE SALARY | • Cash | • NA | • Provide market-competitive, fixed level of compensation • Attract and retain critical talent | | ANNUAL CASH BONUS | • Cash | • CHC Committee annually evaluates a broad range of financial and non-financial metrics • Fiscal 2023 annual cash bonus was earned based on the Company’s achievement of revenue, Adjusted EBITDA and ESG goals for the fiscal year, subject to adjustment upwards or downwards for individual performance | • Tie compensation to business performance and individual performance for the fiscal year • Attract and retain critical talent | | LONG-TERM EQUITY INCENTIVE | • Equity— Performance Share Units (65% of Long- Term Equity Incentive) | • CHC Committee annually evaluates a broad range of financial and non-financial metrics • Vesting of fiscal 2023 awards is tied to meeting performance objectives related to Adjusted Operating Cash Flow, Total Signings and Relative TSR, in each case, over a 3-year period | • Tie compensation to business performance • Attract and retain critical talent • Align NEOs’ interests with that of stockholders | | | • Equity— Restricted Stock Units (35% of Long- Term Equity Incentive) | • Vesting ratably over four years, subject to employment through each applicable vesting date | • Attract and retain critical talent • Align NEOs’ interests with that of stockholders |
Role of Compensation Consultants
Role of Compensation Consultants In connection with the Spin-off, our CHC Committee engaged FW Cook to serve as the CHC Committee’s independent compensation consultant. FW Cook and its affiliates do not provide any services to the Company or any of the Company’s affiliates other than advising the CHC Committee on executive compensation and the Nominating and Governance Committee on director compensation. At the CHC Committee’s request, in fiscal 2023, FW Cook advised the CHC Committee on general marketplace trends in executive compensation, made proposals for executive compensation programs, assisted in the development of a group of peer companies for inclusion in competitive market analyses of compensation and otherwise advised the CHC Committee with regard to the compensation of our Chief Executive Officer and other executives. FW Cook also reviewed this Compensation Discussion and Analysis and advised the CHC Committee with respect to the SEC’s new pay vs. performance disclosure requirement. The CHC Committee has assessed the independence of FW Cook pursuant to the applicable rules and determined that its engagement does not raise any conflict of interest.
Role of Compensation Consultants
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Use of Competitive Data
Use of Competitive Data Our CHC Committee believes it is important to clearly understand the relevant market for executive talent to inform its decision-making and ensure that our compensation program for executive officers attracts and retains key talent. Accordingly, the CHC Committee, working with FW Cook, has developed a group of peer companies to inform the Company’s executive compensation decisions, which is reviewed annually to ensure that the companies constituting the peer group continue to provide meaningful and relevant compensation comparisons. The peer group was initially established in November 2021 following the Spin-off and subsequently reviewed in October 2022, when the CHC Committee determined that no changes were necessary. The peer group for fiscal 2023 (Peer Group) consisted of the 15 companies set forth below.
Use of Competitive Data
| • Accenture plc | • Cognizant Technology Solutions Corporation | • Leidos Holdings, Inc. | | • Aon plc | • DXC Technology Company | • Marsh & McLennan Companies, Inc. | | • Automatic Data Processing, Inc. | • Fidelity National Information Services, Inc. | • Salesforce, Inc. | | • Booz Allen Hamilton Holding Corporation | • Fiserv, Inc. | • Science Applications International Corporation | | • Cisco Systems, Inc. | • Hewlett Packard Enterprise Company | • VMware, Inc. |
Use of Competitive Data
The CHC Committee believes the Peer Group companies are an appropriate reference to inform the Company’s executive compensation decisions based on several important criteria:
Use of Competitive Data
| • | their listing on a U.S. stock exchange and subjection to reporting obligations similar to Kyndryl’s; |
Use of Competitive Data
| • | the similarity of their industry classification to Kyndryl’s classification; |
Use of Competitive Data
| • | the extent to which they compete with Kyndryl for executive talent and for investors; |
Use of Competitive Data
| • | the similarity in the scale of their business to that of Kyndryl’s; and |
Use of Competitive Data
| • | general comparability of key size measures, primarily revenue and number of employees. |
Use of Competitive Data
At the time the Peer Group was reviewed and approved in October 2022, the Company’s revenue was at approximately the 60th percentile of the Peer Group. While our CHC Committee reviews compensation levels for comparable roles within the Peer Group to inform its determinations regarding the compensation of our executive officers, our CHC Committee does not rely solely on data from the Peer Group in establishing the compensation for our executive officers nor does our CHC Committee target a specific competitive position versus the Peer Group. Our CHC Committee also refers to other resources, including published compensation data from other third-party surveys. The compensation data of the Peer Group and such other resources are considered alongside the Company’s pay-for-performance and long-term value creation objectives in determining the compensation for our executive officers that best aligns management’s interests with those of our stockholders.
Use of Competitive Data
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
Annual Cash Bonus
Annual Cash Bonus
| | LINK TO COMPENSATION PHILOSOPHY | Annual cash bonus opportunities are intended to encourage NEOs, as well as other employees, to focus on multiple performance objectives that are key to creating stockholder value by delivering financial, operating and strategic performance that is aligned with our business strategy and stockholder interests. | | The CHC Committee annually evaluates a broad range of financial and non-financial metrics, including metrics relating to the Company’s environmental, social and governance (ESG) strategies, to determine the appropriate annual bonus award metrics. | | |
Annual Cash Bonus
The CHC Committee determined to award the NEOs two cash bonus opportunities under the Kyndryl Annual Incentive Plan for Executives in calendar year 2022 to align with the three-month transition period resulting from the Company’s decision to change its fiscal year-end from December 31 to March 31 and our new fiscal year. Target amounts for both cash bonus opportunities were equal to 200% of their respective base salaries for Messrs. Schroeter and Keinan and 125% of their respective base salaries for Messrs. Wyshner and Sebold and Ms. Charbonnier. As part of its review and market check in November 2021, the CHC Committee determined that setting the NEOs’ target short-term cash incentives at these levels furthered the CHC Committee’s objective of awarding compensation opportunities that are majority performance-based and tied to the Company’s business results.
Annual Cash Bonus
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
TRANSITION PERIOD CASH BONUS OPPORTUNITY The NEOs’ target cash bonus opportunity for the three-month transition period was prorated to reflect the three-month performance period (January 1, 2022 through March 31, 2022) and the payout was capped at 200% of target. The table below sets forth the performance metrics selected by the CHC Committee, their relative weightings, the target amounts approved by the CHC Committee with respect to each metric based on the Company’s budget for the transition period and the CHC Committee’s rationale for the selection of each metric.
Annual Cash Bonus
| Metric | Weighting | Target Amount | Rationale for Selection | | Revenue | 50% | $4.311 billion | • Used by management to assess our financial performance • Used by investors to assess our business | | Adjusted EBITDA(1) | 50% | $556 million | • Used by management to assess our financial performance • Used by investors to assess our business • CHC Committee believes this metric provides a reliable indicator of the strength of our financial results |
Annual Cash Bonus
| (1) Defined as income (loss) before income taxes, separation-related costs, workforce rebalancing and restructuring charges, transaction-related and integration-related items, goodwill and long-lived asset impairment charges, foreign currency impacts of highly inflationary countries, significant litigation costs, amortization of intangible assets, stock-based compensation, pension related expenses, interest expense, depreciation expense, amortization of prepaid software and amortization of transition and transformation costs. |
Annual Cash Bonus
The outcome of our performance with respect to the revenue and adjusted EBITDA goals set forth above was subject to adjustment of 10% upwards or downwards based on the Company’s achievement of strategic goals. The table below sets forth the strategic goals selected by the CHC Committee and the rationale for its selection.
Annual Cash Bonus
| Strategic Goal | Rationale for Selection | | Year-over-year(1) Kyndryl Consult (formerly Advisory & Implementation Services, or A&IS) signings growth of 20% | • Kyndryl Consult signings are expected to produce higher profit margins and therefore are expected to lead to greater profitability | | Fiscal year 2023 year-beginning-backlog improvement of better than -4.1% year-over-year(2) | • Backlog may be predictive of future revenues |
Annual Cash Bonus
| (1) Transition period from January 1, 2022 through March 31, 2022 vs. quarter ended March 31, 2021 |
Annual Cash Bonus
| (2) April 1, 2022 vs. January 1, 2021 |
Annual Cash Bonus
The following tables set forth the payout percentages for threshold, target and maximum achievement as a percentage of the target revenue and adjusted EBITDA amounts. To the extent that performance fell between the applicable threshold, target or maximum levels for each of these metrics, payouts were determined using linear interpolation. To the extent that performance fell below the applicable threshold levels no payouts would have been made in connection with our performance with respect to such goal.
Annual Cash Bonus
| Revenue (50% Weighting) | Below Threshold | Threshold | Target | Maximum | | % of Goal Attainment | <95% | 95% | 100% | 106% | | % of Target Payout | 0% | 20% | 100% | 200% |
Annual Cash Bonus
| Adjusted EBITDA (50% Weighting) | Below Threshold | Threshold | Target | Maximum | | % of Goal Attainment | <90% | 90% | 100% | 110% | | % of Target Payout | 0% | 50% | 100% | 200% |
Annual Cash Bonus
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
Automatic Adjustments and CHC Committee Discretion The financial results for the transition period were subject to adjustment up or down to remove the impact of currency movements and any material impact of changes in GAAP or other accounting standards. In addition, with CHC Committee approval, the financial results for the transition period were subject to adjustment up or down for unplanned acquisitions or divestitures, loss of contracts not novated in the Spin-off, extraordinary changes, material changes to commercial agreements driven by a change in the strategies of the Company’s former parent, or, in exceptional circumstances, impairments, if such situations occurred and adjustment was recommended by the CEO. Finally, under the Kyndryl Annual Incentive Plan for Executives, the CHC Committee has discretion to change the incentive formula or increase, reduce or eliminate a participant’s award, in each case at any time up to the date of payment. Determination of Transition Period Achievement and Payouts The table below shows the actual results based on the Company’s transition period performance and the payouts associated with each of the transition period metrics as a percentage of target. The amounts set forth in the table reflect the Company’s actual performance, adjusted to remove the impact of currency movements and IBM content flow-through. The CHC Committee exercised its discretion to adjust for content flow-through from the Company’s former parent, which are consulting and maintenance services that are delivered by the Company’s former parent as part of the client contracts novated to Kyndryl in the Spin-off. The CHC Committee determined this adjustment was appropriate as revenues, costs and expenses from IBM content flow-through are due to services performed by IBM, rather than the Company. Adjusted EBITDA is a non-GAAP measure and defined as net income (loss) excluding net interest expense, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased/fixed assets, charges related to lease terminations, transaction-related costs, pension costs other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges, impairment expense, significant litigation costs and foreign currency impacts of highly inflationary countries, with a further adjustment to reflect the currency rates used in initial target setting.
Annual Cash Bonus
| | Revenue | Adjusted EBITDA | | Actual performance, as adjusted | $4.338 billion | $544 million | | % of Target Payout | 111% | 89% |
Annual Cash Bonus
The results set forth above produced a weighted payout percentage of 100% of target. Despite the Company’s achievement of both strategic goals, with Kyndryl Consult signings growth of 48% year-over-year and fiscal year 2023 year-beginning-backlog improvement of -2.0%, the CHC Committee determined that an upward revision of the weighted payout percentage was not appropriate in the context of the overall attainment results. Based on the performance achieved, each of the NEOs earned a cash bonus for the transition period as follows, which amounts are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table:
Annual Cash Bonus
| Name | Base salary (prorated) | Target bonus as a percentage of base salary | Target bonus potential | Weighted payout percentage | Transition period bonus payment | | Martin Schroeter | $250,000 | 200% | $500,000 | 100% | $500,000 | | David Wyshner | $195,000 | 125% | $243,750 | 100% | $243,750 | | Elly Keinan | $200,000 | 200% | $400,000 | 100% | $400,000 | | Edward Sebold | $166,667 | 125% | $208,333 | 100% | $208,333 | | Maryjo Charbonnier | $153,750 | 125% | $192,188 | 100% | $192,188 |
Annual Cash Bonus
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
FISCAL 2023 CASH BONUS OPPORTUNITY The NEOs’ cash bonus for the Company’s 2023 fiscal year beginning April 1, 2022 and ending March 31, 2023 was capped at 200% of their respective target cash bonus opportunity. The tables below set forth the performance metrics selected by the CHC Committee, their relative weightings, the target amounts and qualitative goals approved by the CHC Committee with respect to each metric based on the Company’s fiscal 2023 budget and ESG strategy and the CHC Committee’s rationale for the selection of each metric. In particular, the revenue goal reflected the fact that fiscal year 2023 revenue was expected to decline, in part due to the Company’s anticipated strategic Accounts initiative to address low margin accounts, and, due to the nature of the Company’s business, was primarily driven by actions taken and contracts entered into prior to the Spin-off. The CHC Committee also determined to decrease the relative weighting of the revenue goal for the foregoing reasons and to reflect the Company’s focus on profitability.
Annual Cash Bonus
| Metric | Weighting | Target Amount | Rationale for Selection | | Adjusted EBITDA | 60% | $2.352 billion | • Used by management to assess our financial performance • Used by investors to assess our business • CHC Committee believes this metric provides a reliable indicator of the strength of our financial results | | Revenue | 30% | $17.434 billion | • Used by management to assess our financial performance • Used by investors to assess our business | | ESG | 10% | (1) | • Encourages management to focus on the achievement of environmental, social, and governance goals that the CHC Committee believes furthers the Company’s strategy |
Annual Cash Bonus
| (1) The strategic ESG objectives and four specific related qualitative goals are as follows: |
Annual Cash Bonus
| Strategic ESG Objectives | Goal | | E: Environmentally Sound Practices | Establish our carbon baseline, set targets and announce Science Based Targets initiative (SBTi) targets by fiscal year 2023 year-end | | S: Attract, retain and motivate our workforce, ensuring critical skills to enable growth and a thriving culture | Increase global employee engagement Advance key diversity goals globally | | G: Governance, Ethics and Transparency | Establish foundation for the culture, systems and platforms for enhancing governance, ethics and transparency |
Annual Cash Bonus
The CHC Committee retained discretion to determine the relative weightings of the four qualitative goals within the ESG metric. For each NEO, the outcome of our performance with respect to the revenue, adjusted EBITDA and ESG goals set forth above was subject to adjustment upwards (but not above 200% of target) or downwards based on individual performance, provided that the sum of the individual payouts could not exceed the total overall funding level of the executive officer pool. The following tables set forth the payout percentages for threshold, target and maximum achievement as a percentage of the target revenue and adjusted EBITDA amounts. To the extent that performance fell between the applicable levels for each of these metrics set forth in the table below, payouts were determined using linear interpolation. To the extent that performance fell below the applicable threshold levels, no payouts would have been made in connection with our performance with respect to such goal.
Annual Cash Bonus
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
| Revenue (30% Weighting) | Below Threshold | Threshold | | Target | | Maximum | | % of Goal Attainment | <95% | 95% | 98% | 100% | 102% | 105% | | % of Target Payout | 0% | 20% | 90% | 100% | 110% | 200% |
Annual Cash Bonus
| Adjusted EBITDA (60% Weighting) | Below Threshold | Threshold | | Target | | Maximum | | % of Goal Attainment | <90% | 90% | 95% | 100% | 105% | 110% | | % of Target Payout | 0% | 50% | 80% | 100% | 150% | 200% |
Annual Cash Bonus
Automatic Adjustments and CHC Committee Discretion The financial results for fiscal 2023 were subject to adjustment to remove the impact of currency movements and any material impact of changes in GAAP or other accounting standards. In addition, with CHC Committee approval, the financial results for the 2023 fiscal year were subject to adjustment for unplanned acquisitions or divestitures, loss of contracts not novated in the Spin-off, special items adjusted for in the Company’s public disclosures including without limitation impairments and gains and losses on divestitures or sales of assets, and material changes to commercial agreements driven by a change in the strategies of the Company’s former parent if such situations occurred. Finally, under the Kyndryl Annual Incentive Plan for Executives, the CHC Committee has discretion to change the incentive formula or increase, reduce or eliminate a participant’s award, in each case at any time up to the date of payment. Determination of Fiscal 2023 Achievement and Payouts The table below shows the actual results based on the Company’s fiscal 2023 performance and the payouts associated with each of the fiscal 2023 metrics as a percentage of target. The dollar amounts set forth in the table reflect the Company’s actual performance, adjusted to remove the impact of currency movements.
Annual Cash Bonus
| | Revenue | Adjusted EBITDA | ESG | | Actual performance, as adjusted | $18.055 billion | $2.202 billion | (1) | | % of Target Payout | 157% | 72% | 100% |
Annual Cash Bonus
| (1) The % of target payout with respect to the ESG objectives was determined based on the Company’s achievement of key ESG goals of establishing the Company’s carbon baseline and announcing Science-Based Targets initiative targets, increasing global employee engagement, advancing key diversity goals globally and establishing a foundation for the culture, systems and platforms for enhancing governance, ethics and transparency. Adjusted EBITDA is a non-GAAP measure and defined as net income (loss) excluding net interest expense, depreciation and amortization (excluding depreciation of right-of-use assets and amortization of capitalized contract costs), charges related to ceasing to use leased/fixed assets, charges related to lease terminations, transaction-related costs, pension costs other than pension servicing costs and multi-employer plan costs, stock-based compensation expense, workforce rebalancing charges, impairment expense, significant litigation costs and foreign currency impacts of highly inflationary countries, with a further adjustment to reflect the currency rates used in initial target setting. |
Annual Cash Bonus
The results set forth above produced a weighted payout percentage of 100% of target. The CHC Committee determined not to adjust the weighted payout percentage for the individual performance of any of the NEOs. Based on the performance achieved, each of the NEOs earned a cash bonus for fiscal 2023 as follows, which amounts are reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table:
Annual Cash Bonus
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Annual Cash Bonus
| Name | Base salary | Target bonus as a percentage of base salary | Target bonus potential | Weighted payout percentage | Fiscal 2023 bonus payment | | Martin Schroeter | $1,000,000 | 200% | $2,000,000 | 100% | $2,000,000 | | David Wyshner | $780,000 | 125% | $975,000 | 100% | $975,000 | | Elly Keinan | $800,000 | 200% | $1,600,000 | 100% | $1,600,000 | | Edward Sebold | $666,667 | 125% | $833,333 | 100% | $833,333 | | Maryjo Charbonnier | $615,000 | 125% | $768,750 | 100% | $768,750 |
Long-Term Equity Incentives
Long-Term Equity Incentives
Long-Term Equity Incentives
| | LINK TO COMPENSATION PHILOSOPHY | Long-term equity incentive awards are intended to ensure that our NEOs have a continuing stake in our long-term success, are motivated to achieve longer-term performance objectives linked to our business strategy and receive compensation tied to stockholder value creation. We grant long-term equity incentive (LTI) awards under the Amended and Restated Kyndryl 2021 Long-Term Performance Plan (LTPP). | | In determining the size and award mix of the annual long-term incentive opportunity, the CHC Committee considers a number of factors, including competitive market data. The CHC Committee currently awards a mix of performance share units (PSUs) and time-vesting restricted stock units (RSUs) to NEOs as part of the annual long-term incentive opportunity. | | | | Once performance share unit awards have been granted, the number of shares that an NEO will receive on vesting, if any, depends on the Company’s attainment of specific financial or strategic targets. | | | | Finally, the CHC Committee considers time-vesting restricted stock units an important tool to retain key talent and ensure that executives have a continuing stake in our long-term success. | | |
Long-Term Equity Incentives
As part of the review of the compensation of our NEOs undertaken by the CHC Committee in November 2021 following the Spin-off, our CHC Committee reviewed the target long-term equity incentives of each of the NEOs, including in comparison to market data. Because the compensation review was undertaken late in 2021, no changes were made to the NEOs’ target long-term equity incentives in fiscal 2023. The target LTI amounts for the NEOs are set forth below and represent the following percentages of their respective total target compensation:
Long-Term Equity Incentives
| Name | Target LTI ($) | Target LTI (% of Total Target Compensation) | | Martin Schroeter | 10,500,000 | 78% | | David Wyshner | 4,000,000 | 70% | | Elly Keinan | 7,600,000 | 76% | | Edward Sebold | 1,500,000 | 50% | | Maryjo Charbonnier | 1,000,000 | 42% |
Long-Term Equity Incentives
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Long-Term Equity Incentives
| In August 2022, the CHC Committee granted the fiscal 2023 annual long-term equity incentive awards under the LTPP in the form of PSUs and RSUs. The CHC Committee determined to balance its goals of tying our NEOs’ compensation to achievement of business objectives and attracting and retaining the best talent by awarding 65% of the total target award opportunity in the form of PSUs and 35% of the total target award opportunity in the form of time-vesting RSUs for each of our executive officers. | |
Long-Term Equity Incentives
The CHC Committee determined to link the vesting of the PSUs to the achievement of the Company’s business objectives and the creation of stockholder value by basing the vesting of the PSUs on the Company’s adjusted operating cash flow, total signings and total shareholder return (TSR) relative to that of the companies in the S&P 400 Mid-Cap Index over the three-year performance period from April 1, 2022 through March 31, 2025 (the Performance Period). The table below sets forth these performance metrics, their relative weightings and the CHC Committee’s rationale for the selection of each metric.
Long-Term Equity Incentives
| Metric | Weighting | Rationale for Selection | | Adjusted Operating Cash Flow(1) | 50% | • Used by management to evaluate our operating results, plan strategic investments and assess our ability and need to incur and service debt • Used by investors to assess our business • CHC Committee believes this metric is an indicator of the strength of our operating results | | Total Signings(2) | 25% | • Used by management as a tool to monitor the performance of the business including the business’ ability to attract new customers and sell additional scope into our existing customer base • Used by investors to assess our business • CHC Committee believes this metric is an indicator of future value creation | | Relative TSR(3) | 25% | • Reflects the performance of Kyndryl’s stock relative to its peers; payout also capped at target if absolute TSR is negative |
Long-Term Equity Incentives
| (1) “Adjusted Operating Cash Flow” means cash flow from operations with the following add-backs: separation-related costs, workforce rebalancing and restructuring charges, transaction-related and integration-related items, goodwill and long-lived asset impairment charges, foreign currency impacts of highly inflationary countries, significant litigation costs, amortization of intangible assets, stock-based compensation, and pension costs other than pension servicing costs and multi-employer plan costs. |
Long-Term Equity Incentives
| (2) “Signings” means an initial estimate of the value of a customer’s commitment under a contract. “Total Signings” means the aggregate amount of all Signings during the Performance Period. |
Long-Term Equity Incentives
| (3) TSR is determined by dividing (a) (x) the average closing stock price of the five trading days ending on the last day of the Performance Period (March 31, 2025), assuming that dividends during the Performance Period are reinvested in additional shares of the issuing entity’s stock, less (y) the average closing stock price of the five trading days ending on the first day of the performance period (April 1, 2022) by (b) the average closing stock price of the five trading days ending on the first day of the performance period (April 1, 2022). In order to compare Kyndryl’s Relative TSR with that of the companies in the S&P 400 Mid-Cap Index, each company in the S&P 400 Mid-Cap Index as of April 1, 2022 (collectively, the PSU Peer Group) will be ranked in order of its TSR (provided that any company that ceases to be a member of the PSU Peer Group after April 1, 2022 because it ceases to be listed on a securities exchange will cease to be a member of the PSU Peer Group). Kyndryl’s percentile rank among the companies in the PSU Peer Group will then be used to determine the percentage vesting of PSUs as further described below. |
Long-Term Equity Incentives
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Long-Term Equity Incentives
The table below sets forth the total target value of the fiscal 2023 long-term equity incentive awards made to each NEO as well as the fair market value on the grant date of the RSUs and the target value of the PSUs, assuming that the target level of performance is achieved.
Long-Term Equity Incentives
| Name | (A) RSU Award Value(1) | (B) 50% of PSU Adj Op Cash Flow(2) | (C) 25% of PSU Total Signings(2) | (D) 25% of PSU Relative TSR(3) | Total LTI Award Value (A+B+C+D) | | Martin Schroeter | $3,675,000 | $3,412,500 | $1,706,250 | $1,706,250 | $10,500,000 | | David Wyshner | $1,400,000 | $1,300,000 | $650,000 | $650,000 | $4,000,000 | | Elly Keinan | $2,660,000 | $2,470,000 | $1,235,000 | $1,235,000 | $7,600,000 | | Edward Sebold | $525,000 | $487,500 | $243,750 | $243,750 | $1,500,000 | | Maryjo Charbonnier | $350,000 | $325,000 | $162,500 | $162,500 | $1,000,000 |
Long-Term Equity Incentives
| (1) The number of RSUs our NEOs received was determined by dividing the values in the table above by the average of the high and low prices of our common stock on the NYSE on the grant date ($10.615). |
Long-Term Equity Incentives
| (2) The target number of PSUs our NEOs received that will vest based upon our achievement of Adjusted Operating Cash Flow and Total Signings was determined by dividing the values in the table above by the average of the high and low prices of our common stock on the NYSE on the grant date ($10.615). |
Long-Term Equity Incentives
| (3) The target number of PSUs our NEOs received that will vest based upon our achievement of Relative TSR was determined by dividing the values in the table above by the product of the average of the high and low prices of our common stock on the NYSE on the grant date and a Monte Carlo valuation percentage. |
Long-Term Equity Incentives
RSUs. The RSUs vest in four equal annual installments beginning on the anniversary of the grant date, subject to the NEO’s continued employment with the Company through each applicable vesting date. PSUs. The PSUs vest upon the CHC Committee’s certification of the extent to which the performance criteria have been achieved during the Performance Period. The table below sets forth the percentage of PSUs that vest upon our achievement of below threshold, threshold, target and maximum performance for each of the performance criteria.
Long-Term Equity Incentives
| | Adjusted Operating Cash Flow | | Total Signings | | Relative TSR | | | Performance Level | Kyndryl Performance Rate vs. Target | Percentage of PSUs that vest (out of a target of 50%) | Kyndryl Performance Rate vs. Target | Percentage of PSUs that vest (out of a target of 25%) | Kyndryl Percentile Rank | Percentage of PSUs that vest (out of a target of 25%) | | Below Threshold | Below 80% | 0% | Below 80% | 0% | Below 25th | 0% | | Threshold | 80% | 25% | 80% | 5% | 25th | 12.5% | | Target | 100% | 50% | 98%-102% | 25% | 50th | 25% | | Maximum | 120% | 75% | 120% | 37.5% | 90th | 50% |
Long-Term Equity Incentives
If actual performance with respect to a performance criterion is determined by the CHC Committee to fall between the Threshold and Target levels of achievement or the Target and Maximum levels of achievement, then the percentage of PSUs that vest will be determined by linear interpolation. Notwithstanding the foregoing, if our TSR at the end of the Performance Period is negative, the percentage of PSUs that vest in respect of Relative TSR will be capped at 100%. For information about the treatment of the RSUs and PSUs in the event of certain terminations or a change in control, see “Potential Payments upon Termination or Change in Control” below.
Long-Term Equity Incentives
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Other Compensation
Other Compensation EXECUTIVE SEVERANCE AND RETIREMENT PLAN The Company maintains the Kyndryl Executive Severance and Retirement Plan (Severance Plan), which is described in detail under “Potential Payments upon Termination or Change in Control” below. Each of the NEOs is entitled to benefits under the Severance Plan, as set forth under “Potential Payments upon Termination or Change in Control.” The CHC Committee considers it important that the Company not have to engage in case-by-case negotiations with respect to executive departures. The CHC Committee also believes that having a severance plan furthers the Company’s ability to attract and retain talented executives and that being covered under the terms of a severance plan would allow executives to focus on their duties and provide them security in the event of proposed extraordinary transactions. LIMITED PERQUISITES We provide our NEOs with the limited perquisites set forth in the table below. The CHC Committee has determined that these perquisites are necessary to enable the NEOs to perform their duties efficiently and to minimize distractions, and that the benefits the Company receives from providing these perquisites significantly outweighs the cost of providing them.
No Long-Term Employment Agreements
No Long-Term Employment Agreements We generally do not enter into employment agreements with our executives. In connection with the Spin-off, we assumed the offer letters each of Messrs. Schroeter, Wyshner and Keinan and Ms. Charbonnier had with IBM, which set forth their initial compensation terms, but did not contain ongoing obligations such as guaranteed salary or bonus levels, guaranteed equity compensation levels or severance terms.
Risk Management and Mitigation of Compensation Policies and Practices
| Attribute | Risk-Mitigating Effect | | Emphasis on long-term, equity-based compensation at the executive level | • Discourages risk-taking that produces short-term results at the expense of building long-term stockholder value | | Stock options and RSUs vest over four years and PSUs are subject to a three-year performance and vesting period; all are subject to our Clawback Policy | • Helps ensure our executives realize their compensation over a time horizon consistent with achieving long-term stockholder value | | Number of shares that may be earned under our PSU awards are capped | • Reduces the possibility that extraordinary events or formulaic payments could distort incentives or over-emphasize short-term over long-term performance | | Payments under our Annual Incentive Plan are capped | • Reduces the possibility that extraordinary events or formulaic payments could distort incentives | | Robust stock ownership guidelines | • Helps ensure our executives’ economic interests are aligned with the long-term interests of our stockholders | | Prohibition on hedging transactions by Section 16 officers and their Related Parties | • Helps ensure the alignment of interests generated by our executive officers’ equity holdings is not undermined by hedging or similar transactions | | Clawback Policy | • Deters inappropriate actions or decisions by our executives by reducing the potential financial gain to be realized as a result of such actions or decisions | | Use of an independent compensation consultant that performs no other services for the Company | • Helps ensure advice will not be influenced by conflicts of interest |
Summary Compensation Table
Summary Compensation Table The following table presents summary information regarding the total compensation awarded to, earned by, or paid to each of our NEOs for their service in fiscal 2023, the transition period from January 1, 2022 through March 31, 2022 (Tran) and fiscal 2021. Prior to November 3, 2021, such amounts were paid by IBM. Beginning November 3, 2021, such amounts were paid by us.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($)(1) | Bonus ($) | Stock Awards ($)(2) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($)(3) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | All Other Compensation ($)(5) | Total ($) | | Martin Schroeter Chairman and Chief Executive Officer | 2023 | 1,000,000 | — | 10,500,025 | — | 2,000,000 | — | 155,321 | 13,655,346 | | | Tran | 250,000 | — | — | — | 500,000 | — | 24,244 | 774,244 | | | 2021 | 962,122 | 300,000 | 18,849,141 | 4,198,987 | 2,000,000 | — | 66,912 | 26,377,162 | | David Wyshner Chief Financial Officer | 2023 | 780,000 | — | 4,000,027 | — | 975,000 | — | 13,389 | 5,768,416 | | | Tran | 195,000 | — | — | — | 243,750 | — | — | 438,750 | | | 2021 | 242,273 | 146,250 | 11,089,084 | 1,599,619 | 975,000 | — | — | 14,052,225 | | Elly Keinan Group President | 2023 | 800,000 | — | 7,600,020 | — | 1,600,000 | — | 122,389 | 10,122,409 | | | Tran | 200,000 | — | — | — | 400,000 | — | 16,771 | 616,771 | | | 2021 | 651,515 | 2,240,000 | 12,274,703 | 3,039,269 | 1,600,000 | — | 48,736 | 19,854,223 | | Edward Sebold General Counsel and Secretary | 2023 | 666,667 | — | 1,500,020 | — | 833,333 | — | 67,500 | 3,067,520 | | | Tran | 166,667 | — | — | — | 208,333 | — | 3,750 | 378,750 | | | 2021 | 619,356 | 125,000 | 2,365,295 | 599,855 | 833,333 | — | 66,412 | 4,609,252 | | Maryjo Charbonnier Chief Human Resources Officer | 2023 | 615,000 | — | 1,000,028 | — | 768,750 | — | 52,349 | 2,436,127 | | | Tran | 153,750 | — | — | — | 192,188 | — | — | 345,938 | | | 2021 | 300,511 | 990,500 | 2,536,373 | 399,908 | 770,000 | — | 11,019 | 5,008,311 |
Summary Compensation Table
| (1) Amounts in this column reflect the salary earned during the relevant fiscal period, whether paid or deferred under our Excess Plan. |
Summary Compensation Table
| (2) Amounts in this column reflect the aggregate grant date fair value of stock awards granted to the NEOs during each of the periods presented, computed in accordance with Topic 718 using the assumptions discussed in Note 15 - “Stock-Based Compensation” to the financial statements for the fiscal year ended March 31, 2023 included in our Fiscal 2023 10-K. The amounts for the PSUs granted in fiscal 2023 included within the total amount in the “Stock Awards” column reflect the grant date fair value based upon the probable outcome of the performance conditions (as described under “Compensation Discussion and Analysis – Elements of Compensation and Compensation Decisions – Long-Term Incentives”) as of the grant date. If the highest level of performance was achieved then the aggregate grant date fair value of the PSUs granted in fiscal 2023 would have been the following higher amounts: Mr. Schroeter -- $10,670,654; Mr. Wyshner -- $4,065,035; Mr. Keinan -- $7,723,527; Mr. Sebold -- $1,524,399; and Ms. Charbonnier -- $1,016,280. |
Summary Compensation Table
| (3) Reflects the cash incentive bonuses earned by the NEOs. See “Compensation Discussion and Analysis— Elements of Compensation and Compensation Decisions—Annual Cash Bonus.” |
Summary Compensation Table
| (4) We do not provide any of our executives with any above-market or preferential earnings on non-qualified deferred compensation. |
Summary Compensation Table
| (5) Amounts shown in this column include the following for fiscal 2023: for Messrs. Schroeter, Wyshner, Keinan and Sebold and Ms. Charbonnier, 401(k) matching contributions of $15,250, $8,175, $18,300, $18,300 and $18,300, respectively; for Messrs. Schroeter, Keinan and Sebold and Ms. Charbonnier, automatic contributions by us to the Kyndryl Excess Plan of $71,700, $53,700, $34,200 and $30,131, respectively. Also shown in this column for Messrs. Schroeter and Keinan, is ground transportation for fiscal 2023 and the transition period of $36,689 and $11,452 and $33,164 and $6,946, respectively. |
Summary Compensation Table
| Amounts shown in this column also include the following perquisites for fiscal 2023: For Mr. Schroeter, personal financial planning, annual executive physical and personal use of aircraft; for Mr. Wyshner, personal financial planning; for Mr. Keinan, personal financial planning and annual executive physical; for Mr. Sebold, personal financial planning and for Ms. Charbonnier, annual executive physical. |
Summary Compensation Table
| The aggregate incremental cost to the Company of Mr. Schroeter’s personal use of company-provided aircraft reported above is based on our actual invoiced amount from a third-party provider for the variable costs incurred on each trip. Since the aircraft is used primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as management fees. Mr. Schroeter’s personal travel on Company-provided aircraft is limited to an aggregate incremental cost to the Company not to exceed $200,000 per year. |
Summary Compensation Table
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Summary Compensation Table
| In addition, and in limited circumstances, Messrs. Schroeter and Keinan had family members accompany each on business travel on a company-provided aircraft for which we incurred no incremental costs. |
Summary Compensation Table
| The aggregate incremental cost to the Company of Messrs. Schroeter’s and Keinan’s personal use of company-provided ground transportation is calculated, for use of both a company-leased and company-owned car and company driver, by multiplying the apportioned personal use by the driver’s overtime salary and annual variable vehicle costs. The apportioned personal use includes total driving hours allocated to personal activities. For use of an authorized car service, the incremental cost is the full cost to the company for such service. |
Grants of Plan-Based Awards in Fiscal 2023
Grants of Plan-Based Awards in Fiscal 2023 The following table sets forth grants of plan-based awards to the NEOs during the fiscal year that ended March 31, 2023.
Grants of Plan-Based Awards in Fiscal 2023
| Name | Grant Date | Award Type | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards(3) ($) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Martin Schroeter | | Annual Cash Bonus | 120,000 | 2,000,000 | 4,000,000 | | | | | | | | 8/1/2022(2) | FY23 PSU | | | | 30,931 | 618,611 | 1,005,243 | | 6,825,016 | | | 8/1/2022 | FY23 RSU | | | | | | | 346,209 | 3,675,009 | | David Wyshner | | Annual Cash Bonus | 58,500 | 975,000 | 1,950,000 | | | | | | | | 8/1/2022(2) | FY23 PSU | | | | 11,783 | 235,663 | 382,952 | | 2,600,025 | | | 8/1/2022 | FY23 RSU | | | | | | | 131,889 | 1,400,002 | | Elly Keinan | | Annual Cash Bonus | 96,000 | 1,600,000 | 3,200,000 | | | | | | | | 8/1/2022(2) | FY23 PSU | | | | 22,388 | 447,757 | 727,605 | | 4,940,018 | | | 8/1/2022 | FY23 RSU | | | | | | | 250,589 | 2,660,002 | | Edward Sebold | | Annual Cash Bonus | 50,000 | 833,333 | 1,666,666 | | | | | | | | 8/1/2022(2) | FY23 PSU | | | | 4,419 | 88,374 | 143,608 | | 975,013 | | | 8/1/2022 | FY23 RSU | | | | | | | 49,459 | 525,007 | | Maryjo Charbonnier | | Annual Cash Bonus | 46,125 | 768,750 | 1,537,500 | | | | | | | | 8/1/2022(2) | FY23 PSU | | | | 2,946 | 58,917 | 95,740 | | 650,020 | | | 8/1/2022 | FY23 RSU | | | | | | | 32,973 | 350,008 |
Grants of Plan-Based Awards in Fiscal 2023
| (1) Reflects the possible payout under the Annual Cash Bonus awarded to the NEO for fiscal 2023. See “Compensation Discussion and Analysis—Elements of Compensation and Compensation Decisions—Annual Cash Bonus”. The amount paid out is included in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |
Grants of Plan-Based Awards in Fiscal 2023
| (2) Reflects the PSU award granted to the NEO as part of the fiscal 2023 long-term incentive award. Amounts reported in the “Threshold” column assume that 5% of the target PSUs will vest and amounts reported in the “Maximum” column assume that 162.5% of the target PSUs will vest. |
Grants of Plan-Based Awards in Fiscal 2023
| (3) Computed in accordance with Topic 718 using the assumptions discussed in Note 15 - “Stock-Based Compensation” to the financial statements for the fiscal year ended March 31, 2023 included in the Fiscal 2023 10-K. |
Grants of Plan-Based Awards in Fiscal 2023
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Outstanding Equity Awards at March 31, 2023
Outstanding Equity Awards at March 31, 2023 The following table sets forth the number of securities underlying outstanding equity awards for each of our NEOs as of March 31, 2023.
Outstanding Equity Awards at March 31, 2023
| Name | Grant Date | Option Awards(1)(2) | | | | Stock Awards(2) | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested (13) ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested(13) ($) | | Martin Schroeter | 2/1/2021(3) | | | | | 127,380 | 1,880,129 | | | | | 12/16/2021(4) | | | | | 177,520 | 2,620,195 | | | | | 12/16/2021(5) | | | | | | | 152,170 | 2,246,029 | | | 12/16/2021 | 160,511 | 481,536 | 17.78 | 12/16/2031 | | | | | | | 8/1/2022(11) | | | | | 346,209 | 5,110,045 | | | | | 8/1/2022(12) | | | | | | | 755,002 | 11,143,829 | | David Wyshner | 10/1/2021(6) | | | | | 105,446 | 1,556,383 | | | | | 10/1/2021(3) | | | | | 44,124 | 651,270 | | | | | 12/16/2021(4) | | | | | 67,627 | 998,175 | | | | | 12/16/2021(5) | | | | | | | 57,970 | 855,637 | | | 12/16/2021 | 61,147 | 183,443 | 17.78 | 12/16/2031 | | | | | | | 8/1/2022(11) | | | | | 131,889 | 1,946,682 | | | | | 8/1/2022(12) | | | | | | | 287,622 | 4,245,301 | | Elly Keinan | 4/1/2021(3) | | | | | 67,378 | 994,499 | | | | | 12/16/2021(4) | | | | | 128,491 | 1,896,527 | | | | | 12/16/2021(5) | | | | | | | 110,142 | 1,625,696 | | | 12/16/2021 | 116,180 | 348,540 | 17.78 | 12/16/2031 | | | | | | | 8/1/2022(11) | | | | | 250,589 | 3,698,694 | | | | | 8/1/2022(12) | | | | | | | 546,479 | 8,066,029 | | Edward Sebold | 6/3/2019(7) | | | | | 4,936 | 72,855 | | | | | 6/7/2019(8) | | | | | 1,334 | 19,690 | | | | | 6/8/2020(9) | | | | | 2,914 | 43,011 | | | | | 5/3/2021(3) | | | | | 11,192 | 165,194 | | | | | 12/16/2021(4) | | | | | 25,361 | 374,328 | | | | | 12/16/2021(5) | | | | | | | 21,739 | 320,868 | | | 12/16/2021 | 22,930 | 68,791 | 17.78 | 12/16/2031 | | | | | | | 8/1/2022(11) | | | | | 49,459 | 730,015 | | | | | 8/1/2022(12) | | | | | | | 107,859 | 1,591,999 | | Maryjo Charbonnier | 8/2/2021(10) | | | | | 22,012 | 324,897 | | | | | 8/2/2021(3) | | | | | 10,692 | 157,814 | | | | | 12/16/2021(4) | | | | | 16,908 | 249,562 | | | | | 12/16/2021(5) | | | | | | | 14,493 | 213,917 | | | 12/16/2021 | 15,287 | 45,861 | 17.78 | 12/16/2031 | | | | | | | 8/1/2022(11) | | | | | 32,973 | 486,681 | | | | | 8/1/2022(12) | | | | | | | 71,907 | 1,061,348 |
Outstanding Equity Awards at March 31, 2023
| (1) Stock options vest in four equal annual installments beginning on the anniversary of the grant date. |
Outstanding Equity Awards at March 31, 2023
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Outstanding Equity Awards at March 31, 2023
| (2) For information on vesting upon specified termination events or a change in control, see “Potential Payments upon Termination or Change in Control.” |
Outstanding Equity Awards at March 31, 2023
| (3) These RSUs vest on November 3, 2023. |
Outstanding Equity Awards at March 31, 2023
| (4) These RSUs vest in three equal annual installments on December 16, 2023, December 16, 2024 and December 16, 2025. |
Outstanding Equity Awards at March 31, 2023
| (5) The PSU awards granted on December 16, 2021 will vest, if at all, based on the increase in the Company’s share price from an “Initial Share Price” of $19.388 over the three-year performance period beginning on December 16, 2021 and ending on December 15, 2024 (the “Performance Period”). The actual number of PSUs that become vested is based on the highest multiple of the Initial Share Price set out in the tiers below which is maintained for at least 90 consecutive calendar days during the Performance Period. |
Outstanding Equity Awards at March 31, 2023
| We have reflected the threshold (Tier 1) number of shares for each of the NEOs because our performance as of March 31, 2023 was below threshold. The actual number of shares that will be distributed with respect to these PSU awards is not yet determinable. |
Outstanding Equity Awards at March 31, 2023
| | Multiple of Initial Share Price | Performance Vesting Level | | Tier 1 | 1.25x | 50% | | Tier 2 | 1.50x | 100% | | Tier 3 | 1.75x | 150% | | Tier 4 | 2.00x | 200% |
Outstanding Equity Awards at March 31, 2023
| (6) Of these previously disclosed sign-on retention restricted stock units (“RRSUs”), 8,113 vested on October 1, 2023, and 97,333 vest on October 1, 2024. |
Outstanding Equity Awards at March 31, 2023
| (7) These RRSUs vested in full on June 3, 2023. |
Outstanding Equity Awards at March 31, 2023
| (8) These RSUs vested on June 7, 2023. |
Outstanding Equity Awards at March 31, 2023
| (9) Of these RSUs, 50% vested on June 8, 2023 and 50% vest on June 8, 2024. |
Outstanding Equity Awards at March 31, 2023
| (10) These RRSUs vest in full on August 2, 2023. |
Outstanding Equity Awards at March 31, 2023
| (11) These RSUs vest in four equal annual installments beginning on the anniversary of the grant date. |
Outstanding Equity Awards at March 31, 2023
| (12) 50% of the PSU awards granted on August 1, 2022 will vest, if at all, based on the Company’s achievement of the Adjusted Operating Cash Flow metric, 25% of such PSU awards will vest, if at all, based on the Company’s achievement of the Total Signings metric and 25% of such PSU awards will vest, if at all, based on the Company’s achievement of the Relative TSR metric. The number of shares reflected for each of the NEOs represents the target number of shares that would vest based on Adjusted Operating Cash Flow and Total Signings and the maximum number of shares that would vest based on Relative Total Shareholder Return. We have reflected the target number of shares for Adjusted Operating Cash Flow and Total Signings and the maximum number of shares for Relative Shareholder Return for each NEO because our performance as of March 31, 2023 was between threshold and target performance with respect to the Adjusted Operating Cash Flow and Total Signings metrics and between target and maximum performance with respect to the Relative Shareholder Return metric. The actual number of shares that will be distributed with respect to the fiscal 2023 PSU awards is not yet determinable. The fiscal 2023 PSU awards vest in proportion to actual performance over the three-year performance period ending on March 31, 2025. See the description of the fiscal 2023 PSU awards in “Compensation Discussion and Analysis—Elements of Compensation and Compensation Decisions—Long-Term Equity Incentives.” |
Outstanding Equity Awards at March 31, 2023
| (13) The market value is based on the closing price on the NYSE of our common stock on March 31, 2023, the last trading day of 2023 ($14.76), multiplied by the number of outstanding shares. |
Outstanding Equity Awards at March 31, 2023
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Option Exercises and Stock Vested in Fiscal 2023
Option Exercises and Stock Vested in Fiscal 2023 The following table provides information regarding RSUs that vested during fiscal 2023 for our NEOs. Our NEOs did not exercise any options during fiscal 2023.
Option Exercises and Stock Vested in Fiscal 2023
| Name | Stock Awards | | | | Number of Shares Acquired on Vesting(1) (#) | Value Realized on Vesting(2) ($) | | Martin Schroeter(3) | 306,440 | 3,149,958 | | David Wyshner | 116,301 | 1,181,999 | | Elly Keinan(3) | 173,620 | 1,791,142 | | Edward Sebold | 38,623 | 416,356 | | Maryjo Charbonnier | 26,388 | 271,621 |
Option Exercises and Stock Vested in Fiscal 2023
| (1) The shares acquired on vesting represent RSUs that vested as follows: |
Option Exercises and Stock Vested in Fiscal 2023
| As to Mr. Schroeter – 123,633 RSUs that vested on May 3, 2022,123,634 RSUs that vested on November 3, 2022 and 59,173 RSUs that vested on December 16, 2022. |
Option Exercises and Stock Vested in Fiscal 2023
As to Mr. Wyshner – 42,825 RSUs that vested on May 3, 2022, 8,108 RSUs that vested on October 1, 2022, 42,826 RSUs that vested on November 3, 2022 and 22,542 RSUs that vested on December 16, 2022. As to Mr. Keinan - 65,395 RSUs that vested on May 3, 2022, 65,395 RSUs that vested on November 3, 2022 and 42,830 RSUs that vested on December 16, 2022. As to Mr. Sebold – 10,862 RSUs that vested on May 3, 2022, 1,325 RSUs that vested on June 7, 2022, 2,412 RSUs that vested on June 8, 2022, 10,863 RSUs that vested on November 3, 2022, 8,453 RSUs that vested on December 16, 2022 and 4,708 RSUs that vested on December 31, 2022. As to Ms. Charbonnier – 10,376 RSUs that vested on May 3, 2022, 10,377 RSUs that vested on November 3, 2022 and 5,635 RSUs that vested on December 16, 2022.
Option Exercises and Stock Vested in Fiscal 2023
| (2) The value realized on vesting is based on the average high and low of our common stock on the NYSE on the vesting date. If vesting occurs on a day on which the NYSE is closed, the value realized on vesting is based on the average high and low of our stock price on the last trading day prior to the vesting date. |
Option Exercises and Stock Vested in Fiscal 2023
| (3) This table does not include Kyndryl RSUs that vested during fiscal 2023 and that relate to equity awards granted to Messrs. Schroeter and Keinan prior to their respective retirements from IBM which, upon their respective retirements, remained outstanding and subject to vesting as if they had been employed by IBM on each applicable vesting date. |
Pension Benefits in Fiscal 2023
Pension Benefits in Fiscal 2023 During fiscal 2023, no NEOs participated in either a tax-qualified or non-qualified defined benefit plan sponsored by the Company.
Pension Benefits in Fiscal 2023
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Non-Qualified Deferred Compensation for Fiscal 2023
Non-Qualified Deferred Compensation for Fiscal 2023 The following table provides information regarding contributions, earnings and balances for our NEOs under the Kyndryl Excess Plan, as well as under the IBM Excess 401(k) Plus Plan, in which they participated in fiscal 2021 and maintain balances, but to which they may not make further contributions. Under each of the plans, deferred account balances are fully vested at all times. In addition, neither plan provides any opportunity for above-market or preferential earnings, nor does either plan provide any minimum internal rate of return. Additionally, the Kyndryl Excess Plan and the IBM Excess 401(k) Plus Plan do not permit “hardship” withdrawals. The Kyndryl Excess Plan and the IBM Excess 401(k) Plus Plan are not funded, and plan participants have only an unsecured contractual commitment by the applicable company to pay amounts owed under each plan. Each of these plans is further described below.
Non-Qualified Deferred Compensation for Fiscal 2023
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($)(2) | Aggregate Earnings in Last FY ($)(3) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($)(4) | | Martin Schroeter(5) Kyndryl Excess Plan IBM Excess 401 (k) Plus Plan | | | | | | | | — | 71,700 | 4,993 | — | 78,269 | | | — | — | (589) | — | 7,711 | | David Wyshner Kyndryl Excess Plan IBM Excess 401 (k) Plus Plan | | | | | | | | — | — | — | — | — | | | — | — | — | — | — | | Elly Keinan(5) Kyndryl Excess Plan IBM Excess 401 (k) Plus Plan | | | | | | | | — | 53,700 | 3,732 | — | 58,693 | | | — | — | (84) | — | 2,173 | | Edward Sebold Kyndryl Excess Plan IBM Excess 401 (k) Plus Plan | | | | | | | | 622,917 | 34,200 | 12,924 | — | 774,405 | | | — | — | (171,974) | — | 1,614,147 | | Maryjo Charbonnier Kyndryl Excess Plan IBM Excess 401 (k) Plus Plan | | | | | | | | 27,265 | 30,131 | 350 | — | 67,288 | | | — | — | — | — | — |
Non-Qualified Deferred Compensation for Fiscal 2023
| (1) The amounts in this column are reported as compensation for fiscal 2023 in the “Base Salary” and “Non-Equity Incentive Plan Compensation” columns of the Summary Compensation Table. |
Non-Qualified Deferred Compensation for Fiscal 2023
| (2) Represents the amount of the automatic contribution made by us in accordance with the Kyndryl Excess Plan. The amounts in this column are reported as compensation for fiscal 2023 in the “All Other Compensation” column of the Summary Compensation Table. |
Non-Qualified Deferred Compensation for Fiscal 2023
| (3) Amounts in this column are not reported as compensation for fiscal 2023 in the Summary Compensation Table since they do not reflect above-market or preferential earnings. |
Non-Qualified Deferred Compensation for Fiscal 2023
| (4) Amounts in this column include the following aggregate amounts for each of the following NEOs reported as compensation to such NEOs for previous periods in the “Base Salary,” “Non-Equity Incentive Plan Compensation” and “All Other Compensation” columns of the Summary Compensation Table: Mr. Schroeter, $71,700 in fiscal 2023, $10,303 in previous periods; Mr. Keinan: $53,700 in fiscal 2023, $3,615 in previous periods; Mr. Sebold, $657,117 in fiscal 2023, $214,806 in previous periods; Ms. Charbonnier, $57,396 in fiscal 2023. |
Non-Qualified Deferred Compensation for Fiscal 2023
| (5) This table does not include Kyndryl RSUs that relate to equity awards granted to Messrs. Schroeter and Keinan prior to their respective retirements from IBM and which, upon their respective retirements, remained outstanding and subject to vesting as if they had been employed by IBM on each applicable vesting date. |
Non-Qualified Deferred Compensation for Fiscal 2023
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The following table describes the potential payments and benefits under the Company’s compensation and benefit plans and contractual agreements to which the NEOs would have been entitled if a termination of employment or change in control occurred on the last business day of fiscal 2023. The only agreements, arrangements or plans that entitle the NEOs to severance, perquisites or other enhanced benefits upon termination of their employment or a change in control are:
Potential Payments upon Termination or Change in Control
| • | the Severance Plan; and |
Potential Payments upon Termination or Change in Control
| • | the terms of the NEOs’ equity awards. |
Potential Payments upon Termination or Change in Control
The amounts shown in the table do not include:
Potential Payments upon Termination or Change in Control
| • | payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms or operation in favor of the NEOs; and |
Potential Payments upon Termination or Change in Control
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Potential Payments upon Termination or Change in Control
| • | distributions of previously vested plan balances under the Kyndryl 401(k) Plan, the Kyndryl Excess Plan and the IBM Excess Plan (see “—Non-Qualified Deferred Compensation for Fiscal 2023” above for information about the Kyndryl Excess Plan and the IBM Excess Plan). |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| Name | Termination without Cause ($) | Qualifying Termination following a Change in Control ($) | Qualifying Retirement ($) | Disability ($) | Death ($) | | Martin Schroeter | | | | | | | Cash Severance Payment(1) | 4,000,000 | 8,000,000 | — | — | — | | Acceleration of Equity Awards(2) | — | 23,233,111 | 9,610,369 | 23,233,111 | 23,233,111 | | Value of Continuing Benefits(3) | 38,773 | 38,773 | — | — | — | | Outplacement Benefit(4) | 4,500 | 4,500 | — | — | — | | Total | 4,043,273 | 31,276,384 | 9,610,369 | 23,233,111 | 23,233,111 | | David Wyshner | | | | | | | Cash Severance Payment(1) | 2,535,000 | 3,997,500 | — | — | — | | Acceleration of Equity Awards(2) | — | 10,342,156 | — | 10,342,156 | 10,342,156 | | Value of Continuing Benefits(3) | 44,796 | 44,796 | — | — | — | | Outplacement Benefit(4) | 4,500 | 4,500 | — | — | — | | Total | 2,584,296 | 14,388,952 | — | 10,342,156 | 10,342,156 | | Elly Keinan | | | | | | | Cash Severance Payment(1) | 3,200,000 | 5,600,000 | — | — | — | | Acceleration of Equity Awards(2) | — | 16,450,005 | 6,589,720 | 16,450,005 | 16,450,005 | | Value of Continuing Benefits(3) | 37,260 | 37,260 | — | — | — | | Outplacement Benefit(4) | 4,500 | 4,500 | — | — | — | | Total | 3,241,760 | 22,091,765 | 6,589,720 | 16,450,005 | 16,450,005 | | Edward Sebold | | | | | | | Cash Severance Payment(1) | 2,166,667 | 3,416,668 | — | — | — | | Acceleration of Equity Awards(2) | — | 3,351,215 | 1,405,093 | 3,351,215 | 3,351,215 | | Value of Continuing Benefits(3) | 38,773 | 38,773 | — | — | — | | Outplacement Benefit(4) | 4,500 | 4,500 | — | — | — | | Total | 2,209,940 | 6,811,156 | 1,405,093 | 3,351,215 | 3,351,215 | | Maryjo Charbonnier | | | | | | | Cash Severance Payment(1) | 1,998,750 | 3,151,875 | — | — | — | | Acceleration of Equity Awards(2) | — | 2,516,388 | — | 2,516,388 | 2,516,388 | | Value of Continuing Benefits(3) | — | — | — | — | — | | Outplacement Benefit(4) | 4,500 | 4,500 | — | — | — | | Total | 2,003,250 | 5,672,763 | — | 2,516,388 | 2,516,388 |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| (1) Cash Severance Payments: |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | Under the Severance Plan, as described more fully below, each NEO is entitled to cash severance in the event of a termination without Cause or, solely following a Change in Control, with Good Reason, subject to certain conditions; |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | The amounts of the cash severance payments included in the table assume that there is no notice period prior to the termination without Cause; and |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | The cash severance payments included in the table assume there would be no cutback of payments to avoid subjecting the NEOs to an excise tax under Section 280G of the Code. |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| (2) Acceleration of Equity Awards: |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | The values under “Acceleration of Equity Awards” are presented as the sum of the values as of the last business day of fiscal 2023 of the additional benefit from the acceleration of vesting, if any, of RSUs, stock options and PSUs that would have occurred as a result of termination under the different circumstances presented. |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | The value of accelerated stock options, for purposes of this table, was determined by subtracting the exercise price of the original stock option from the closing stock price on the NYSE of $14.76 at March 31, 2023, and multiplying the result, if a positive number (in-the-money), by the number of option shares that would vest as a result of termination. Because the stock options held by the NEOs were not in-the-money at March 31, 2023, no amount relating to such options is included in the table. |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | With respect to Messrs. Schroeter, Keinan and Sebold, a termination without cause would constitute a “qualifying LTPP retirement” as described under “—Treatment of Outstanding Equity Awards in the Event of Certain Qualifying Terminations” below. |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| (3) Value of Continuing Benefits: |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | Reflects the cost of providing continued group health coverage (on the same basis as actively employed employees of the Company), for a period of 18 months, assuming fiscal 2023 rates; and |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| • | The amounts included in the table assume that there is no notice period prior to the termination without Cause. |
Potential Payments to NEOs upon Termination of Employment or Change in Control Table
| (4) Reflects the estimated cost of six months of outplacement services. |
Treatment of Outstanding Equity Awards in the Event of a Change in Control
Treatment of Outstanding Equity Awards in the Event of a Change in Control In the event of a change in control (as defined in the LTPP):
Treatment of Outstanding Equity Awards in the Event of a Change in Control
| • | if the acquirer or successor company in such change in control has agreed to provide for the substitution, assumption, exchange or other continuation of awards granted pursuant to the LTPP, then, if the participant’s employment with or service to the Company or an affiliate is terminated by the Company or affiliate without cause (and other than due to death or disability) on or within 24 months following a change in control, unless otherwise provided by the CHC Committee, all options and stock appreciation rights held by such participant will become immediately exercisable with respect to 100% of the shares subject to such options and stock appreciation rights, and the restricted period (and any other conditions) will expire immediately with respect to 100% of the shares of restricted stock and restricted stock units and any other awards (other than other cash-based awards) held by such participant (including a waiver of any applicable performance conditions); provided that if the vesting or exercisability of any award would otherwise be subject to the achievement of performance conditions, the portion of such award that will become fully vested and immediately exercisable will be based on the assumed achievement of actual or target performance as determined by the CHC Committee; |
Treatment of Outstanding Equity Awards in the Event of a Change in Control
| • | if the acquirer or successor company in such change in control has not agreed to provide for the substitution, assumption, exchange or other continuation of awards granted pursuant to the LTPP, then unless otherwise provided by the CHC Committee, all stock options and stock appreciation rights held by such participant will become immediately exercisable with respect to 100% of the shares subject to such stock options and stock appreciation rights, and the restricted period (and any other conditions) will expire immediately with respect to 100% of the shares of restricted stock and restricted stock units and any other awards (other than other cash-based award) held by such participant (including a waiver of any applicable performance conditions); provided that if the vesting or exercisability of any award would otherwise be subject to the achievement of performance conditions, the portion of such award that will become fully vested and immediately exercisable will be based on the assumed achievement of actual or target performance as determined by the CHC Committee; and |
Treatment of Outstanding Equity Awards in the Event of a Change in Control
| • | the CHC Committee may, upon at least 10 days’ advance notice to the affected participants, cancel any outstanding award and pay to the holders thereof, in cash, securities or other property (including of the acquiring or successor company), or any combination thereof, the value of such awards based upon the price per share received or to be received by other stockholders of the Company in the event (it being understood that any stock option or stock appreciation right having a per-share exercise or hurdle price equal to, or in excess of, the fair market value (as of the date specified by the CHC Committee) of a share subject thereto may be canceled and terminated without any payment or consideration therefor). |
Treatment of Outstanding Equity Awards in the Event of a Change in Control
Notwithstanding the above, the CHC Committee will exercise such discretion over the timing of settlement of any award subject to Code Section 409A at the time such award is granted. To the extent practicable,
Treatment of Outstanding Equity Awards in the Event of a Change in Control
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Treatment of Outstanding Equity Awards in the Event of a Change in Control
these provisions will occur in a manner and at a time that allows affected participants the ability to participate in the change in control transaction with respect to the shares subject to their awards.
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (“Item 402(u)”), the Company is providing the following reasonable estimate of the ratio of the median of the annual total compensation of all of our employees (except Martin Schroeter, our Chief Executive Officer), to the annual total compensation of Mr. Schroeter, calculated in a manner consistent with Item 402(u). For fiscal 2023, our last completed fiscal year:
CEO Pay Ratio
| • | The median of the annual total compensation of all of our employees, excluding our CEO, was $38,068. |
CEO Pay Ratio
| • | The annual total compensation of our CEO was $13,655,346. |
CEO Pay Ratio
| • | Based on this information, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all of our employees except our CEO was 359:1. |
CEO Pay Ratio
We determined that, as of January 1, 2023, our employee population consisted of 87,708 individuals. Approximately 91% of our employees work outside the U.S., with workforce hubs in India, Poland, Brazil, Japan, Czechia and Hungary. To identify our “median employee” from this employee population, we obtained from our internal compensation system annual base salary amounts for fiscal 2023 for each employee in the employee population. We believe this consistently applied compensation measure reasonably reflects annual compensation across our employee base. Base salary amounts for employees paid in currencies other than U.S. dollars were converted to U.S. dollars based on the foreign exchange rates as of March 31, 2023. We annualized the base salary amounts for any permanent employees in the employee population who were employed by us for less than the full fiscal year. We then ranked the resulting base salaries for all of the employees in the employee population other than our CEO to determine our median employee.
CEO Pay Ratio
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Pay vs. Performance
Pay vs. Performance In accordance with Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid (calculated as provided in Item 402(v) of Regulation S-K) and certain financial performance of the Company. For further information concerning the CHC Committee’s compensation philosophy, including the pay for performance pillar of that philosophy, and how the CHC Committee aligns executive compensation with the Company’s performance, see “Executive Compensation – Compensation Discussion and Analysis.”
Pay vs. Performance
| | | | | | Value of initial fixed $100 investment based on: | | | | | Year | Summary compensation table total for PEO ($) | Compensation actually paid to PEO ($)(1) | Average summary compensation table total for non-PEO named executive officers ($)(2) | Average compensation actually paid to non-PEO named executive officers ($)(2)(3) | Total shareholder return(4) | Peer group total shareholder return(5) | Net Income ($ mil.) (6) | Adjusted EBITDA ($ mil.)(7) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 13,655,346 | 19,183,372 | 5,348,618 | 6,928,885 | 55 | 78 | (1,374) | 2,202 | | Trans | 774,244 | (6,991,872) | 445,052 | (2,150,363) | 49 | 91 | (229) | 536 | | 2021 | 26,377,162 | 23,074,107 | 10,881,003 | 8,995,352 | 67 | 94 | (2,319) | 2,049 |
Pay vs. Performance
| (1) To calculate the compensation actually paid (CAP) to Mr. Schroeter, our principal executive officer (PEO) in each of the periods presented, the following amounts were deducted from and added to Summary Compensation Table (SCT) total compensation: |
Pay vs. Performance
| Year | SCT Total ($) | Deductions: Stock Award and Option Award Amounts Presented in SCT ($)(a) | Additions: Value of Stock and Option Awards calculated in accordance with SEC methodology for determining CAP ($)(b) | CAP ($) | | 2023 | 13,655,346 | 10,500,025 | 16,028,051 | 19,183,372 | | Trans | 774,244 | — | (7,766,116) | (6,991,872) | | 2021 | 26,377,162 | 23,048,128 | 19,745,073 | 23,074,107 |
Pay vs. Performance
| (a) Reflects the following amounts: |
Pay vs. Performance
| Year | Stock Awards ($) | Option Awards ($) | Total Deductions ($) | | 2023 | 10,500,025 | — | 10,500,025 | | Trans | — | — | 0 | | 2021 | 18,849,141 | 4,198,987 | 23,048,128 |
Pay vs. Performance
| (b) Pursuant to Item 402(v)(2)(iii)(C), the equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year- or period-end fair value of any equity awards granted in the applicable year or period that are outstanding and unvested as of the end of the year or period; (ii) the amount of change as of the end of the applicable year or period (from the end of the prior fiscal year or period) in fair value of any awards granted in prior years or periods that are outstanding and unvested as of the end of the applicable year or period; (iii) for awards that are granted and vest in same applicable year or period, if any, the fair value as of the vesting date; (iv) for awards granted in prior years or periods that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year or period) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, if any, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year or period prior to the vesting date |
Pay vs. Performance
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Pay vs. Performance
that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year or period. The valuation assumptions used to calculate fair values did not materially differ from those disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments are as follows:
Pay vs. Performance
| Year | Fair Value of Current Year/Period Equity Awards at Year/Period End ($) | Change in Value of Prior Years’ Awards Unvested at Year/Period End ($) | Vesting Date Fair Value of Current Year/ Period Equity Awards ($) | Change in Fair Value of Prior Years’ Awards that Vested in Year/Period ($) | Prior Year-End Fair Value of Prior Year Awards that Failed to Vest During Year/ Period ($) | Dollar Value of Dividends Paid During Year/Period ($) | Equity Value Included in CAP ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) = (b) + (c) + (d) + (e) - (f) + (g) | | 2023 | 15,165,473 | 1,635,418 | — | (772,840) | — | — | 16,028,051 | | Trans | — | (7,766,116) | — | — | — | — | (7,766,116) | | 2021 | 19,745,073 | — | — | — | | — | 19,745,073 |
Pay vs. Performance
| (2) The non-PEO named executive officers included Messrs. Wyshner, Keinan, and Sebold and Ms. Charbonnier for each of the periods indicated. |
Pay vs. Performance
| (3) To calculate the average compensation actually paid (CAP) to the non-PEO named executive officers, the following amounts were deducted from and added to the average Summary Compensation Table (SCT) total compensation: |
Pay vs. Performance
| Year | Average SCT Total ($) | Deductions: Average Stock Award and Option Award Amounts Presented in SCT ($)(a) | Additions: Average Value of Stock and Option Awards calculated in accordance with SEC methodology for determining CAP ($)(b) | CAP ($) | | 2023 | 5,348,618 | 3,525,024 | 5,105,291 | 6,928,885 | | Trans | 445,052 | — | (2,595,415) | (2,150,363) | | 2021 | 10,881,003 | 8,476,027 | 6,590,376 | 8,995,352 |
Pay vs. Performance
| (a) Reflects the following amounts: |
Pay vs. Performance
| Year | Average Stock Awards | Average Option Awards | Total Deductions | | 2023 | 3,525,024 | — | 3,525,024 | | Trans | — | — | 0 | | 2021 | 7,066,364 | 1,409,663 | 8,476,027 |
Pay vs. Performance
| (b) Reflects the following amounts: |
Pay vs. Performance
| Year | Average Fair Value of Current Year/Period Unvested Equity Awards at Year/ Period End ($) | Average Change in Value of Prior Years’ Awards Unvested at Year/ Period End ($) | Average Vesting Date Fair Value of Current Year/ Period Equity Awards ($) | Average Change in Value of Prior Years’ Awards that Vested in Year/ Period ($) | Average Prior Year-End Fair Value of Prior Year Awards that Failed to Vest During Year/ Period ($) | Average Dollar Value of Dividends Paid During Year/ Period ($) | Equity Value Included in Average CAP ($) | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) = (b) + (c) + (d) + (e) - (f) + (g) | | 2023 | 4,731,195 | 588,814 | — | (214,718) | — | — | 5,105,291 | | Trans | — | (2,594,197) | — | (1,219) | — | — | (2,595,415) | | 2021 | 6,635,965 | (45,590) | — | — | — | — | 6,590,376 |
Pay vs. Performance
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Pay vs. Performance
| (4) Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends (if any) for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period. The beginning of the measurement period is November 4, 2021, the date our stock commenced regular-way trading on the NYSE. |
Pay vs. Performance
| (5) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the following published industry index: the S&P 400 IT Sector GICS Level 1 Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K, included in our Annual Report for the fiscal year ended March 31, 2023. |
Pay vs. Performance
| (6) The dollar amounts reported represent the amount of net income (loss) reflected in the Company’s audited financial statements for the applicable year or period. |
Pay vs. Performance
| (7) Adjusted EBITDA is defined in “Executive Compensation — Compensation Discussion and Analysis — Annual Cash Bonus.” |
Relationships Between Compensation Actually Paid and Company Performance
Relationships Between Compensation Actually Paid and Company Performance In executing on its pay for performance philosophy, the CHC Committee uses several performance measures to align executive compensation with Company performance, not all of which are presented in the Pay versus Performance table. In addition, the CHC Committee seeks to balance risk by tying incentives to both short-term and long-term performance goals, and therefore does not specifically align the Company’s performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.
Relationships Between Compensation Actually Paid and Company Performance
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Relationships Between Compensation Actually Paid and Company Performance
Compensation Actually Paid and Cumulative TSR Compensation Actually Paid and Adjusted EBITDA Compensation Actually Paid and Net Income Due to our change in fiscal year-end, the Pay vs. Performance Table and preceding charts include a three month transition period from January 1, 2022 through March 31, 2022. Compensation Actually Paid and Company performance during the transition period is not comparable to fiscal 2021 or fiscal 2023 because it represents a shorter time period.
Relationships Between Compensation Actually Paid and Company Performance
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
Relationships Between Compensation Actually Paid and Company Performance
PEO and non-PEO CAP for fiscal 2021 is greater than fiscal 2023 due to one-time equity awards provided to each of our NEOs in connection with our spin-off from IBM (as described in greater detail in our 2022 proxy statement “Executive Compensation—Compensation Discussion and Analysis—Long-Term Equity Incentives”). The awards were granted outside of our annual compensation program. They consisted of 1/3 of PSUs linked to achievement of share price hurdles, 1/3 of stock options, and 1/3 of RSUs. None of the Spin-off PSUs have been earned as of the end of fiscal 2023. The change in PEO and non-PEO CAP in each period reflected in the preceding charts is directionally correlated to our TSR and stock price because a significant majority of NEO compensation is granted in the form of equity compensation.
Relationships Between Compensation Actually Paid and Company Performance
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |
DILUTION
| Number of Outstanding Equity Awards | Number of Shares Remaining Available for Future Grants | Proposed Share Increase | Shares of Common Stock Outstanding as of May 30, 2023 | Dilution | | 20,888,661(1) | 7,814,152(2) | 17,000,000(3) | 227,844,131 | 16.7%(4) |
DILUTION
| (4) Dilution is calculated by dividing (a) the sum of (1) the 20,888,661 outstanding equity awards, (2) the 7,814,152 shares remaining available for future grants under the Existing Plan as of May 30, 2023 and (3) the 17,000,000 additional shares requested to be made available for grant if this proposal is approved by stockholders by (b) the sum of (1), (2) and (3) above and the 227,844,131 shares of common stock outstanding as of May 30, 2023. |
Non-Employee Director Compensation Limit
Non-Employee Director Compensation Limit Non-employee directors may not receive awards for service as non-employee directors in any fiscal year with a value (together with any cash fees) in excess of $750,000.
DIRECTORS AND EXECUTIVE OFFICERS
DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth information regarding the beneficial ownership of shares of our common stock as of May 30, 2023, by each of our directors and named executive officers and all of our directors and executive officers as a group.
DIRECTORS AND EXECUTIVE OFFICERS
| | Number of Shares or Units Beneficially Owned as of May 30, 2023(1) | | | | Name | Shares of Common Stock Owned Directly and Indirectly(2) | Options Exercisable and Restricted Stock Units Vesting Within 60 Days of May 30, 2023(3) | Total Beneficial Ownership(4) | | Martin Schroeter | 481,008 | 187,504 | 668,512 | | David Wyshner | 115,789 | 61,147 | 176,936 | | Elly Keinan | 176,180 | 121,166 | 297,346 | | Edward Sebold | 26,832 | 30,650 | 57,482 | | Maryjo Charbonnier | 16,874 | 15,287 | 32,161 | | Dominic J. Caruso | 10,990 | 19,399 | 30,389 | | John D. Harris II | 11,046 | 19,399 | 30,445 | | Stephen A. M. Hester | 18,792 | 19,399 | 38,191 | | Shirley Ann Jackson | 17,716 | 19,399 | 37,115 | | Janina Kugel | 8,792 | 19,399 | 28,191 | | Denis Machuel | 14,157 | 19,399 | 33,556 | | Rahul N. Merchant | 10,990 | 19,399 | 30,389 | | Jana Schreuder | 10,990 | 19,399 | 30,389 | | Howard I. Ungerleider | 30,990 | 19,399 | 50,389 | | All directors and executive officers as a group (15 individuals) | 970,630 | 612,100 | 1,582,730 |
DIRECTORS AND EXECUTIVE OFFICERS
| (1) Each individual and member of the group has sole investment power with respect to the shares owned. As of May 30, 2023, (i) no director or executive officer beneficially owned 1% or more of the outstanding common stock of the Company and (ii) the directors and executive officers as a group beneficially owned less than 1% of the outstanding common stock of the Company (including common stock they can acquire within 60 days). |
DIRECTORS AND EXECUTIVE OFFICERS
| (2) Included are shares of common stock owned outright. |
DIRECTORS AND EXECUTIVE OFFICERS
| (3) The number of shares shown in this column are not currently outstanding but are deemed beneficially owned because the individual has the right to acquire them pursuant to options exercisable or restricted stock units settling within 60 days of May 30, 2023 as follows: Mr. Schroeter – 26,993 RSUs vesting within 60 days of May 30, 2023 and 160,511 options exercisable; Mr. Wyshner – 61,147 options exercisable; Mr. Keinan – 4,986 RSUs vesting within 60 days of May 30, 2023 and 116,180 options exercisable; Mr. Sebold – 7,720 RSUs vesting within 60 days of May 30, 2023 and 22,930 options exercisable; Ms. Charbonnier - 15,287 options exercisable; each of Messrs. Caruso, Harris, Hester, Machuel, Merchant and Ungerleider, Dr. Jackson and Mses. Kugel and Schreuder – 19,399 RSUs vesting on July 27, 2023; All directors and executive officers as a group – 224,580 RSUs vesting within 60 days of May 30, 2023 and 387,520 options exercisable. |
DIRECTORS AND EXECUTIVE OFFICERS
| (4) These amounts are the sum of the number of shares shown in the prior columns. |
DIRECTORS AND EXECUTIVE OFFICERS
| PROXY SUMMARY | CORPORATE GOVERNANCE & BOARD MATTERS | 2023 EXECUTIVE COMPENSATION | AUDIT MATTERS | STOCK OWNERSHIP INFORMATION | FREQUENTLY ASKED QUESTIONS | ANNEX A |