DEF 14A of Evertec, Inc.
Filed Apr 10, 2024 · FY20230001559865-24-000018
Company governance documents and resources
| Clawback Policy | 34 | | Summary compensation table | 35 | | Grants of plan-based awards | 36 | | Outstanding equity awards at fiscal year end | 37 | | Stock vested | 38 | | Employment agreements | 38 | | Severance policy | 38 | | Potential payments upon termination of employment | 39 | | Potential payments upon change in control | 40 | | Payments upon termination or a change in control | 42 | | Compensation committee interlocks and insider participation | 42 | | Pension benefits and non-qualified deferred compensation | 42 | | Compensation Committee Report | 43 | | CEO Pay Ratio | 44 | | Overview | 44 | | Pay versus performance | 45 | | Overview | 45 | | Security ownership | 49 | | Overview | 49 | | Security ownership of certain beneficial owners | 49 | | Security ownership of management | 49 | | Proposal 3: Ratification of appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm | 51 | | Overview | 51 | | Principal accounting fees and services | 51 | | Audit Committee Report | 53 | | Certain relationships and related party transactions | 54 | | Related Party Transactions Policy | 54 | | Related Party Transactions | 54 | | Proxy Statement for the 2024 Annual Meeting | 55 | | General | 55 | | Record Date and shares outstanding | 56 | | Quorum | 56 | | Voting of proxies | 56 | | Voting of shares | 56 | | Required votes/effect of abstentions and broker non-votes | 56 | | How you can vote | 57 | | Revocation of proxies | 58 | | Voting results | 58 | | Solicitation | 58 | | Householding of proxy materials | 58 | | Other matters | 59 | | Stockholder proposals for the 2025 annual meeting of stockholders | 59 | | Other business | 59 | | Appendix A | i |
Summary—director nominees
Summary—director nominees
Proposal 1 Election of directors
Proposal 1 Election of directors
Proposal 1 Election of directors
| The Board unanimously recommends that you vote “FOR” the election of each of the director nominees listed below. |
Proposal 1 Election of directors
| Information about director nominees |
Proposal 1 Election of directors
The individuals identified below have been nominated to stand for election for a term that expires at the Company’s 2025 annual meeting of stockholders. Each of these individuals has consented to be named as a nominee in this Proxy Statement and to serve as a director until the expiration of his or her respective term and until such nominee’s successor has been duly elected or qualified or until the earlier resignation or removal of such nominee. All director nominees currently serve as members of our Board. There are no family relationships between any current director, executive officer or director nominee. If any one or more of the nominees named in this Proxy Statement becomes unable to serve for any reason, the Board may designate substitute nominees, unless the Board by resolution provides for a lesser number of directors. In this event, the proxy holders will vote for the election of such substitute nominee or nominees. Below please find a summary of each director nominee’s principal occupation, experience and qualifications. All ages shown are as of the filing date of this Proxy Statement with the SEC.
Proposal 1 Election of directors
| | Frank G. D’Angelo Age: 78 Mr. D’Angelo has been Chairman of the Board since February 2014 and a director since September 2013. Since June 2015 he has served as Operating Partner in Hill Path, a private equity partnership, and as a partner in Bridgeport Partners, a private investment firm since June 2019. From May 2019 until October 2021, he served as Executive Vice President and President of NCR Banking. Mr. D’Angelo has over 40 years of experience in the financial services, digital banking and payments industries. He is a former chairman of the Electronic Funds Transfer Association, served on the Payments Advisory Council of the Federal Reserve Bank of Philadelphia, and served as a director for Walsh University (Ohio). Mr. D’Angelo’s experience in the financial services industry, as well as in operations and management, provides great value to our Board. | | Chairman of the Board • Director since 2014 • Independent • Compensation Committee Chair • Information Technology Committee | | | | Morgan M. Schuessler, Jr. Age: 53 Mr. Schuessler has been a director and the Company’s President and CEO since April 2015. Previously, he served as President of International for Global Payments, Inc., overseeing the company’s business outside of the Americas, spanning 23 countries throughout Europe and Asia. Mr. Schuessler currently serves on the board of directors of Endeavor Puerto Rico, the Wharton Executive Education Board, and the Smithsonian Institution National Board. Mr. Schuessler has over 20 years of experience in the payments industry; accordingly, he is well-versed in the intricacies of the Company’s core business and has developed management and oversight skills required to make significant contributions to the Board. | | President and CEO • Director since 2015 | |
Proposal 1 Election of directors
| | Kelly Barrett Age: 59 Ms. Barrett has been a director since May 2021. From 2016 until her retirement in 2020, Ms. Barrett was the Senior Vice President of Home Services at The Home Depot. Ms. Barrett joined The Home Depot in 2003, where she held various senior management positions, including as Vice President of Internal Audit and Corporate Compliance, and Controller. Ms. Barrett currently serves as board member of Piedmont Office Realty Trust, Inc. (NYSE: PDM), The Aaron’s Company, Inc. (NYSE: AAN), and Americold Realty Trust (NYSE: COLD). Her leadership roles in the community currently include serving on the board of the Metro Atlanta YMCA (where she formerly served as chair); the National Association of Corporate Directors, Atlanta Chapter board; the Georgia Tech Foundation Board of Trustees; and as a member of the Advisory Board of Scheller College of Business at Georgia Tech (where she also formerly served as chair). She has previously served on the board of the Girl Scouts of Greater Atlanta and on the non-profit organization Partnership Against Domestic Violence and the Atlanta Rotary Club. She is also a Certified Public Accountant in the state of Georgia and NACD Directorship Certified. Ms. Barrett’s substantial experience in leadership roles, strategy and ERM, coupled with service on several boards, is of great service to the Company. | | Director since 2021 • Independent • Compensation Committee • Information Technology Committee | | | | Olga Botero Age: 60 Ms. Botero has been a director since September 2014. She is the founder and Managing Director of C&S Customer and Strategy, a consulting firm focused on supporting IT and digital and cybersecurity management for leading companies in Latin America, and co-founder and Chair of Seccuri, Inc. From 2011 until January 2024 she was a Senior Advisor to the Boston Consulting Group. She is the Co-Chair of the Women Corporate Directors Foundation Colombia Chapter and a fellow at the National Association of Corporate Directors (NACD) Board Leadership Fellow program. She serves as an independent director of the Altipal S.A.S. Board of Directors since April 2022, serving as chair of their Audit Committee and member of their Innovation Committee. She also serves as an independent member of the Audit Committee of Group Coppel in Mexico, a family-owned group with businesses in retail, financial services and real estate; and as an independent advisor of Grupo Montoya, a family owned group with businesses in music, automobile and real estate in Colombia and Panama. Ms. Botero has over 25 years of experience in leadership roles in financial services, telecommunications and technology. She also has Climate Leadership and ESG certificates issued by the Diligent Institute. Her experience, expertise in cybersecurity and technology, and knowledge of Latin American markets are an asset to the Company. | | Director since 2014 • Independent • Audit Committee • Information Technology Committee Chair | | | | Virginia Gambale Age: 64 Ms. Gambale has been a director since May 2023. Ms. Gambale founded and has served since 2003 as Managing Partner of Azimuth Partners, Inc., a strategic advisory firm that develops growths, innovation and transformation strategies and planning for technology companies. Prior to founding Azimuth in 2003, she worked at Deutsche Bank, where she was a General Partner and Managing Director of ABS Ventures, responsible for the management of the Tech Venture group and Head of Deutsche Bank Strategic Ventures. Before Deutsche Bank, Ms. Gambale was the Chief Information Officer for Global Investment Banking at Merrill Lynch. Ms. Gambale currently serves as a director for Nutanix, Inc. (NYSE: NTNX), Virtu Financial, Inc. (NYSE: VIRT), and Jamf Holding Corp. (NASDAQ: JAMF). She’s also an Adjunct Faculty Member for Colombia University. Her substantial experience in leadership roles, IT and fintech are of great value to the Company. | | Director since 2023 • Independent • Audit Committee • Information Technology Committee | |
Proposal 1 Election of directors
| | Jorge A. Junquera Age: 75 Mr. Junquera has been a director since April 2012. Since July 2015, he has served as Managing Partner at Kohly Capital, LLC, a private investment company. He has over 40 years of experience in the banking and financial services industries. Until his retirement in 2015, Mr. Junquera was Vice Chairman of the board of directors of Popular, Inc. (“Popular”). Prior to becoming Vice Chairman, he was the Chief Financial Officer of Popular and Supervisor of Popular’s Financial Management Group. He currently serves as a director for Sacred Heart University (PR) and Equalize Community Development Fund (NYSE: EQCDX). Mr. Junquera’s substantial experience managing financial institutions and serving on various boards of directors provides him with unique expertise and valuable perspective to assist the Board. | | Director since 2012 • Independent • Audit Committee • Nominating and Corporate Governance Committee | | | | Iván Pagán Age: 65 Mr. Pagán has been a director since May 2019. For twenty-two years until his retirement in February 2019, Mr. Pagán was the Head of Corporate Development at Popular, where he managed mergers and acquisitions, divestitures, corporate reorganization and strategic alliances for Popular, completing significant transactions in the United States, Latin American, Puerto Rico and the Caribbean. Mr. Pagán currently serves as a member of the board of directors of Centro Financiero BHD in the Dominican Republic. Mr. Pagán’s substantial expertise in financial and M&A matters, experience in the Caribbean and Latin American markets, and knowledge of the Company’s operations are an asset to the Company. | | Director since 2019 • Independent • Audit Committee • Information Technology Committee | | | | Aldo J. Polak Age: 50 Mr. Polak has been a director since May 2019. Mr. Polak founded The ALP Group LLC, which will focus on merchant banking services, and where he serves as Managing Partner since April 2024. From November 2021 until January 2024, he was Managing Director at Mizuho, and from April 2021 until October 2021, he was the Managing Member of Ionos Capital Partners LLC, an investment vehicle company. Prior to that, Mr. Polak served as Chief Investment & Development Officer at Cisneros Group of Companies, a private conglomerate focused on digital advertising, media and entertainment, real estate and new technologies, from April 2019 to April 2021. Before his tenure at Cisneros, he spent over 15 years as an investment banker in Wall Street, including heading the Latin America efforts at LionTree, a global investment and merchant banking firm, from 2013 to March 2019. He currently serves on the boards of two charitable organizations, LatinoU and Reaching U, and is chairman of the latter. He is also involved with Endeavor as a panelist and mentor to entrepreneurs. Mr. Polak’s significant experience in M&A, strategy and corporate development, and his network of corporate relationships in Latin America and in the payments sector provide great value to the Board. | | Director since 2019 • Independent • Compensation Committee • Information Technology Committee | | | | Alan H. Schumacher Age: 77 Mr. Schumacher has been a director since April 2013. For 23 years he worked at American National Can Corporation, a manufacturing company, as well as at American National Can Group Inc, a manufacturer of metal cans, where he served as Vice President, Controller and Chief Accounting Officer until 1997 and as Executive Vice President and Chief Financial Officer from 1997 until his retirement in 2000. He is a former member of the Federal Accounting Standards Advisory Board, and currently serves as a director of Warrior Met Coal, Inc. (NYSE: HCC), Albertsons Companies, Inc. (NYSE: ACI), and Pendrick Capital Partners LLC. Mr. Schumacher has substantial expertise in accounting, reporting, audit and financial matters and, as such, is able to provide valuable contributions to our Board in its oversight functions. | | Director since 2013 • Independent • Audit Committee Chair • Nominating and Corporate Governance Committee | |
Proposal 1 Election of directors
| | Brian J. Smith Age: 68 Mr. Smith has been a director since February 2016. Mr. Smith served in various executive level positions in The Coca-Cola Company, including as President and Chief Operating Officer from January 2019 until September 2022, and as a senior executive from October 2022 until his retirement in February 2023. From 2016 until December 2018, he served as President of its Europe, Middle East and Africa (EMEA) Group and, prior to that, he held other strategic and management roles. Mr. Smith serves as an independent director for Arca Continental (BMV: AC). He also serves as a director for Intercrew/Mantra Chain, a digital assets decentralized exchange platform headquartered in Switzerland, with operations in Hong Kong, Dubai, the United States, and Brazil, and as an independent director for Grupo Romero, a privately held multinational group headquartered in Perú with operations and companies in various industries and sectors, and presence throughout Latin America. Like other members of the Board, Mr. Smith has substantial managerial experience in Latin America. His extensive expertise in management and corporate strategy makes him a valuable asset to the Company. | | Director since 2016 • Independent • Compensation Committee • Nominating and Corporate Governance Committee Chair | |
Proposal 1 Election of directors
| Vote Required The vote of the holders, present or represented by proxy, of capital stock of the Company representing a majority of the votes of capital stock of the Company entitled to vote thereon present in person or by proxy at the Annual Meeting is required to elect a director. |
Board vacancies
| Director compensation |
Board vacancies
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | Frank G. D’Angelo | 153,500 | 177,500 | 331,000 | | Kelly Barrett | 97,500 | 132,500 | 230,000 | | Olga Botero | 105,000 | 132,500 | 237,500 | | Virginia Gambale(3) | 60,164 | 132,500 | 192,664 | | Jorge A. Junquera | 101,000 | 132,500 | 233,500 | | Iván Pagán | 100,000 | 132,500 | 232,500 | | Aldo J. Polak | 97,500 | 132,500 | 230,000 | | Alan H. Schumacher | 113,500 | 132,500 | 246,000 | | Brian J. Smith | 25,500 | 217,500 | 243,000 |
Compensation discussion and analysis
| Competitive compensation practices |
Compensation discussion and analysis
As part of the Company’s comprehensive review of its compensation programs and practices, the Compensation Committee, with input from FW Cook, annually reviews and approves an executive compensation peer group to assist in evaluating the competitiveness of NEO compensation in terms of both dollar opportunity and compensation structure and design. Evertec’s industry continues to experience consolidation, the result of which has been a historical scarcity of peer replacements of appropriate size and business focus. In an effort to widen the aperture of potential comparable companies for consideration, the Compensation Committee considers several factors such as: •the extent to which the peer companies compete with Evertec in one or more lines of business for executive talent and for investors, •the statistical reliability in terms of the total number of companies in the peer set, •the comparability of revenues, market capitalization, total assets and number of employees, and •a “peer of peer” analysis. The compensation peer group that the Compensation Committee used to make its NEO compensation decisions in 2023 was the following:
Compensation discussion and analysis
| Peer Group | | | | ACI Worldwide | EVO Payments | MoneyGram International | | Black Knight | ExlService Holdings | Q2 Holdings | | CSG Systems International | Green Dot Corp. | Repay Holdings Corporation | | Euronet Worldwide | Jack Henry & Associates | WEX | | Everi Holdings | International Money Express | Verra Mobility |
Compensation discussion and analysis
FW Cook last conducted a peer group review in December 2023. The Compensation Committee decided to keep the same peer group listed above for NEO compensation decisions for the year 2024. As previously discussed, Evertec’s compensation philosophy targets the market median, which the Compensation Committee views as appropriate given Evertec’s positioning relative to its peers based on size factors including market capitalization. Given the Company’s headquarters are located in Puerto Rico, the Compensation Committee must balance the challenges of attracting and retaining experienced local executive talent with talent from the mainland United States and elsewhere. The Compensation Committee’s access to competitive benchmarking is a critical element to understanding the current environment for executive talent. Along with other factors, this information enables the Compensation Committee to make well-informed decisions on recruitment and retention of key executives. FW Cook last prepared a benchmark compensation study on behalf of the Compensation Committee for NEOs in February 2024 and for directors in July 2023.
Compensation discussion and analysis
We provide our NEOs and other employees with a base salary to compensate them for services rendered during the year. This fixed element of our compensation program is determined for each executive based on position and scope of responsibility. Annual base salary for our NEOs is subject to review and approval by the Compensation Committee. In reviewing base salaries, the Compensation Committee may consider, among other factors: •changes in the executive’s individual responsibility, •analysis of the executive’s compensation, both internally (i.e., relative to other Company officers) and externally (i.e., relative to similarly situated executives at peer companies), and •individual executive performance. Having considered these factors, and to ensure that our total compensation packages are competitive with those provided by our peer companies and our competitors for top executive talent, and after consultation with FW Cook, the Compensation Committee approved the following base salaries for our NEOs, effective as of July 1, 2023:
Compensation discussion and analysis
| Annual cash incentive |
Compensation discussion and analysis
Our Compensation Committee, with FW Cook’s recommendations, places considerable weight on the achievement of certain quantitative factors as reflected in the corporate component of the Company’s annual cash incentive program, thus strengthening our commitment to a pay-for-performance compensation philosophy. The target annual cash incentive as a percentage of salary is a mix between corporate performance, business metric (as applicable) and individual performance elements. •For our CEO and CFO: the corporate and individual objective components were established at 90% and 10% of the overall cash incentive targets, respectively. •For NEOs in charge of business segments: (i) business metrics were established for (a) Mr. Rospigliosi, at 60% and (b) Mr. Vizcarrondo, at 30%; and (ii) corporate and individual objective components were established (a) for Mr. Rospigliosi, at 20% and 20%, respectively, and (b) for Mr. Vizcarrondo, at 50% and 20%, respectively, of the overall incentive targets. •For NEOs with support functions (to which the business metric was not applicable): the corporate and individual objective components were established for Mr. Viglianco at 75% and 25% of the overall cash incentive targets, respectively. Under the corporate component of the annual cash incentive program, the Compensation Committee included financial performance goals related to “Revenues” and “Adjusted Net Income” for 2023, as shown in the table below, which directly align to our overall strategy and support increases in stockholder value. The financial performance measures, their relative weightings, the threshold, target and maximum achievement levels and actual performance (ranging from 50% payout of target at threshold to 150% payout of target at maximum with linear interpolation between the performance levels) for 2023, as approved by the Compensation Committee, were as follows:
Compensation discussion and analysis
For purposes of calculating the annual cash incentive for 2023, the Compensation Committee approved a modification to “Revenues” to exclude the impact of the Sinqia acquisition. Furthermore, under the annual cash incentive program, our NEOs were eligible to earn 0% to 150% of the individual component based on each executive’s individual performance, which is assessed and given a performance rating. If the NEO’s individual performance rating is “Below Minimum Acceptable Performance,” such NEO will not receive any portion of the annual cash incentive, regardless of the corporate component or business metric results. Other ratings for NEOs will result in the individual performance component being modified by factors ranging from 50% for a rating of “Needs Development” to 150% for a rating of “Exceptional Performance.” For 2023, none of our NEOs received a rating of “Below Minimum Acceptance Performance.” The corporate performance metric was calculated at 135.65% payout. The executive’s successful implementation and completion (or lack thereof) of audit observations, ERM action items and achievement of the financial budget are also considered as part of the actual cash incentive payout calculation. The actual incentive payout for each of our NEOs for 2023 was as follows:
Compensation discussion and analysis
| NEOs | Target Cash Incentive (%) | Corporate Performance (%) | Business Metric (%) | Individual Performance (%) | Target Cash Incentive ($) | Actual Cash Incentive Payout ($)(1) | | Morgan M. Schuessler, Jr. | 125 | 90 | — | 10 | 1,040,000 | 1,413,665 | | Joaquín A. Castrillo | 85 | 90 | — | 10 | 382,500 | 514,452 | | Guillermo Rospigliosi | 85 | 20 | 60 | 20 | 334,375 | 453,309 | | Diego Viglianco | 85 | 75 | — | 25 | 382,500 | 482,462 | | Miguel Vizcarrondo | 85 | 50 | 30 | 20 | 334,375 | 450,904 |
Compensation discussion and analysis
| Long-term equity incentives |
Compensation discussion and analysis
In connection with our initial public offering, we adopted the 2013 Plan. We granted stock options, restricted stock, and RSUs under the 2013 Plan until May 20, 2022, which is the date the 2022 Plan was adopted. The Compensation Committee was delegated the responsibility to administer the 2013 Plan and has been delegated the responsibility to administer the 2022 Plan. Our Compensation Committee believes that a long-term incentive design linked to strong pay-for-performance principles is appropriate to ensure executive ownership and linkage to the long-term interests of Evertec’s stockholders. In 2023 both performance-based and time-based RSUs were designed for the dual purpose of serving as an incentive vehicle to help ensure that key employees’ compensation is linked to the Company’s overall performance in future years and as an important retention mechanism. The Compensation Committee has established Adjusted EBITDA as the primary performance measure for performance-based equity awards while ensuring focus on TSR through the use of a performance modifier. Accordingly, performance-based RSUs earned based on Adjusted EBITDA performance (“EBITDA RSUs”) are adjusted upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to companies in the Russell 2000 Index (for more information, see “Relative TSR Multiplier” in table under “Performance-Based RSU Award Granted in 2023” below). For details on the reconciliation of our GAAP to non-GAAP results, please refer to the results provided in the Company’s Annual Report on Form 10-K for fiscal year ended December 31, 2023. All unvested RSUs granted to NEOs have dividend equivalent rights, which entitle the RSU holders to the same value per share as our stockholders for dividends declared between the date of the grant and the settlement date of the RSUs. Dividend equivalents are subject to the same terms and conditions as the corresponding unvested RSUs and are accumulated and paid only upon the vesting and settlement of the underlying RSUs.
RSU distribution mix
RSU distribution mix The long-term equity incentive grant approved by the Compensation Committee for our CEO and other NEOs in February 2023 had the following distribution mix between time-based RSUs and performance-based RSUs:
RSU distribution mix
| Name | Long-Term Equity Incentive Total Award Value ($) | RSUs Granted | | | | | | Time-Based (#)(1) | Performance-Based (#)(2) | Total (#) | | Morgan M. Schuessler, Jr. | 6,074,000 | 57,847 | 92,526 | 150,373 | | Joaquín A. Castrillo | 1,660,000 | 18,068 | 23,341 | 41,409 | | Guillermo Rospigliosi | 1,300,000 | 14,149 | 18,279 | 32,428 | | Diego Viglianco | 1,660,000 | 18,068 | 23,341 | 41,409 | | Miguel Vizcarrondo | 1,300,000 | 14,149 | 18,279 | 32,428 |
RSU distribution mix
(1)As of the grant date, February 24, 2023, the closing common stock price was $36.75. (2)As of the grant date, February 24, 2023, the Monte Carlo simulation value was $42.67.
Time-based RSU award granted in February 2023
Time-based RSU award granted in February 2023 The time-based RSUs granted to NEOs on February 24, 2023 vest in three substantially equal installments on February 24, 2024, 2025, and 2026, provided that the NEO remains continuously employed with the Company through the vesting date, except as otherwise set forth in the applicable award agreement. The actual number of time-based RSUs granted was determined by dividing the award dollar value by the price of our common stock on the close of business of the date of grant.
Performance-based RSU award granted in February 2023
Performance-based RSU award granted in February 2023 The performance-based RSUs granted to NEOs on February 24, 2023 vest on February 24, 2026. The actual number of performance-based RSUs granted was determined by dividing the award dollar value by a Monte Carlo simulation value that factors future stock prices for the Company and companies in the Russell 2000 Index. The Adjusted EBITDA performance measure was calculated for the one-year period commencing on January 1, 2023 and ended on December 31, 2023 (the “2023 Adjusted EBITDA”), relative to the goals set by the Compensation Committee for this same period. The EBITDA RSUs are earned according to the table below, and are subject to a three-year service period before vesting measured from the date of the grant:
Performance-based RSU award granted in February 2023
| Performance Level* | 2023 Adjusted EBITDA (amounts in millions)($) | Payout Percentage | | Maximum | 294.1 | 200% | | Target | 267.4 | 100% | | Threshold | 254.0 | 60% | | Less Than Threshold | 254.0 | 0% |
Performance-based RSU award granted in February 2023
*Performance between levels is linearly interpolated. The Company’s 2023 Adjusted EBITDA for the purposes of determining share-based compensation was $286.4 million. As previously described Adjusted EBITDA is defined as EBITDA further adjusted to exclude unusual items and other adjustments. For purposes of determining share-based compensation the Compensation Committee approved a modification to the Adjusted EBITDA to exclude the impact of the Sinqia acquisition. The 2023 performance-based awards yielded a payout of 171% of the target number of performance-based shares. The earned number of EBITDA RSUs shall be then modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period from the grant date. The following table summarizes the relationship between the Company’s actual TSR performance when compared with the TSR performance of the members of the Russell 2000 Index and the associated modifier for the performance achieved:
Performance-based RSU award granted in February 2023
| Performance Level* | Company Percentile Rank vs. Russell 2000 Index | Relative TSR Multiplier | | Maximum | 75th Percentile or Above | 1.25 | | Target | 50th Percentile | 1.00 | | Threshold | 35th Percentile or Below | 0.75 |
Performance-based RSU award granted in February 2023
*Performance between levels is linearly interpolated.
Special retention grant for our CEO
Special retention grant for our CEO In addition, the Compensation Committee, after consultation with FW Cook, approved a one-time special retention grant of 155,359 time-based RSUs valued at $6,000,000 for Mr. Schuessler, with a grant date of December 6, 2023 and 100% cliff vesting on the fourth anniversary of the grant date (the “Special Retention Grant”), provided that he remains continuously employed with the Company through the vesting date, except as otherwise set forth in his A&R Employment Agreement (as defined in the “Employment agreements” section of this CD&A). The Committee based this decision on the desire to recognize Mr. Schuessler’s execution of his strategic vision for the Company after significant acquisitions by the Company during 2023 and to properly incentivize and encourage Mr. Schuessler to remain as the Company’s CEO and President through the aforementioned vesting date. To enhance its retention efforts and balance stockholder interests, the Committee structured the Special Retention Grant to include more stringent vesting conditions than the Company’s normal time-based awards, with a four-year cliff vesting period. The Committee approved the size and structure of the Special Retention Grant after reviewing Mr. Schuessler’s current holding power associated with outstanding awards and analyzing other special awards among industry peers and in the broader marketplace as provided by the Committee’s independent compensation consultant.
Special retention grant for our CEO
| Name | One-Time Special Retention Grant Total Award Value ($)* | Time-Based RSUs Granted (#) | | Morgan M. Schuessler, Jr. | 6,000,000 | 155,359 |
Payouts of previously granted performance-based RSU awards that vested in 2023
Payouts of previously granted performance-based RSU awards that vested in 2023 In 2020 the Compensation Committee approved grants of performance-based awards to certain NEOs (the “2020 EBITDA RSU Awards”). Pursuant to the 2020 EBITDA RSU Awards, the participating NEOs were eligible to earn the awarded RSUs vesting on February 27, 2023, only to the extent that performance was achieved against certain pre-established goals. The 2020 EBITDA RSU Awards were set to be earned according to the table below, and were subject to a three-year service period before vesting measured from the date of the grant:
Payouts of previously granted performance-based RSU awards that vested in 2023
| Performance Level(1) | Evertec 1-Year Adj. EBITDA for 2020 (amounts in millions)($) | Payout Percentage | | Maximum | 261.7 or above | 200% | | Target | 237.9 | 100% | | Threshold | 230.8 | 60% | | Less Than Threshold | below 230.8 | 0% |
Payouts of previously granted performance-based RSU awards that vested in 2023
(1) Performance between levels is linearly interpolated. The Company’s Adjusted EBITDA for the one-year period that commenced on January 1, 2020 and ended on December 31, 2020 was $240.5 million; therefore, the performance level was met with a payout percentage of 111.7%. The TSR of the 2020 EBITDA RSU Awards was 8.61%, which ranked in the 51st percentile of the Russell 2000 Index. Thus, final award earnout at vesting was 101%.
Awards granted in 2024
Awards granted in 2024 In February 2024 the Compensation Committee approved a grant of time-based RSUs to the NEOs, vesting in three substantially equal installments on February 28, 2025, 2026 and 2027, provided that the NEO remains continuously employed with the Company during such time period except as otherwise set forth in the applicable award agreement. For the 2024 performance-based RSUs, the Compensation Committee continued to use an Adjusted EBITDA target with the TSR Modifier as the metrics for such awards. The Adjusted EBITDA performance metric for 2024 shall be calculated for the one-year period commencing on January 1, 2024 and ending on December 31, 2024, relative to the goals set by the Compensation Committee for this same period. The EBITDA RSUs are earned according to performance level targets and are also subject to a three-year service period, measured from the date of the grant, before vesting. As in the past, the earned number of EBITDA RSUs will then be modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period. The February 2024 grant approved by the Compensation Committee for our CEO and other NEOs had the following distribution mixes between time-based RSUs and performance-based RSUs:
Awards granted in 2024
| Name | Total Award Value ($) | RSUs Granted | | | | | | Time-based (#)(1) | Performance-based (#)(2) | Total (#) | | Morgan M. Schuessler, Jr. | 6,400,000 | 61,998 | 106,448 | 168,446 | | Joaquín A. Castrillo | 1,660,000 | 18,378 | 25,486 | 43,864 | | Guillermo Rospigliosi* | — | — | — | — | | Diego Viglianco | 1,660,000 | 18,378 | 25,486 | 43,864 | | Miguel Vizcarrondo | 1,300,000 | 14,392 | 19,959 | 34,351 |
Christmas bonus
Christmas bonus In 2023 each of our NEOs received a Christmas bonus. As a general rule, Puerto Rico law requires companies to pay employees who worked more than 700 hours during a 12-month period, from October 1st of the prior year to September 30th of the year in which the Christmas bonus will be paid, an amount not less than $600 as a Christmas bonus, which must be paid on or before the 15th day of December of each year. In 2023 our practice was to pay a Christmas bonus to employees in Puerto Rico in an amount equivalent to approximately 4.17% of the employee’s base salary for employees hired before October 29, 2012 and 3.00% of the employee’s base salary for employees hired after this date.
Benefits and perquisites
We believe our approach to establishing goals and objectives and setting targets with payouts at multiple levels of performance, combined with the evaluation of performance results, assists in mitigating excessive risk-taking that could harm the Company’s value or reward poor judgment by our executives. Several features of our programs reflect sound risk management practices. Furthermore, FW Cook, our independent compensation consultant, is aware of the potential risks in compensation programs and assisted with the implementation of the following plan design features of the Company’s cash and equity incentive programs for our executives that reduce the likelihood of excessive risk-taking: •balanced mix of incentives: cash and equity compensation, annual and long-term incentives, and time-based and performance-based (revenue, earnings, and TSR) metrics •maximum payout levels for annual cash incentive for 2023 for our NEOs were capped as follows: 187.5% of the base salary for Mr. Schuessler and 127.5% of the base salary for Messrs. Castrillo, Rospigliosi, Viglianco and Vizcarrondo. •maximum payout levels for performance-based RSUs granted in 2023 were capped at 250% of target •equity awards are subject to multi-year vesting •compliance and ethical behaviors are integral factors considered in all performance assessments •executive and senior officers are subject to the Company’s Stock Ownership Guidelines and Clawback Policy, which is a significant risk mitigator We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.
Benefits and perquisites
We have in place a Clawback Policy that intends to encourage sound financial reporting and increase individual accountability. The policy is administered by the Board, which may delegate its authority under the policy to the Compensation Committee, to the extent required by applicable rules. The Clawback Policy applies to all short or long-term cash incentives and bonuses, stock options, equity or equity-based awards, including without limitation RSUs, and other incentive compensation (collectively, “Incentive Compensation,” as defined in the policy). All (i) officers (as defined by Section 16 of the Exchange Act), (ii) executive vice-presidents, and (iii) any other designated employee of the Company that the Board designates are considered “Covered Officers” under the policy (as defined therein). If a Triggering Event (as defined in the policy) occurs, which includes a requirement that we prepare an accounting restatement due to material noncompliance with any financial reporting requirement, the policy provides for the forfeiture or recoupment from the Covered Officer from any of the following sources in the Board’s discretion: prior Incentive Compensation payments, future Incentive Compensation payments, cancellation of outstanding equity award, future equity awards, and direct repayment. If a Triggering Event occurs with respect to a Covered Officer, the Board will seek to require the forfeiture or repayment of the pre-tax amount of the award, vesting or amount of any Incentive Compensation (as defined in the policy) received by the Covered Officer, such amount to be equal to the difference between the compensation received and the amount that would have been received had it been calculated based on the accounting restatement, as applicable, within the three (3) years lookback period. The Board may from time to time request that a Covered Officer certify on a form acceptable to the Board that he or she has not engaged in conduct constituting a Triggering Event.
Benefits and perquisites
| Summary compensation table |
Benefits and perquisites
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($)(3) | Total ($) | | Morgan M. Schuessler, Jr. President and CEO | 2023 | 816,000 | 24,960 | 12,074,000(4) | 1,413,665 | 43,186 | 14,371,811 | | | 2022 | 781,100 | 824,000 | 5,750,000 | 871,777 | 57,544 | 8,284,421 | | | 2021 | 751,100 | 22,866 | 5,250,000 | 1,355,384 | 118,829 | 7,498,179 | | Joaquín A. Castrillo Executive Vice President, CFO and Treasurer | 2023 | 423,919 | 18,750 | 1,660,000 | 514,452 | 36,761 | 2,653,882 | | | 2022 | 392,044 | 416,577 | 1,550,000 | 294,802 | 34,454 | 2,687,877 | | | 2021 | 380,625 | 16,094 | 1,424,000 | 412,110 | 49,979 | 2,282,808 | | Guillermo Rospigliosi Executive Vice President and Group Head of Latam* | 2023 | 387,653 | 11,801 | 1,300,000 | 453,309 | 19,897 | 2,172,660 | | | 2022 | 376,362 | 51,458 | 1,300,000 | 293,194 | 11,474 | 2,032,488 | | | 2021 | 365,400 | 11,124 | 1,214,000 | 376,038 | 28,664 | 1,995,226 | | Diego Viglianco Executive Vice President and COO | 2023 | 422,500 | 13,500 | 1,660,000 | 482,462 | 7,616 | 2,586,078 | | | 2022 | 362,500 | 211,850 | 1,300,000 | 310,031 | 8,355 | 2,192,736 | | | 2021 | 184,039 | — | 856,039 | 334,662 | 127,982 | 1,502,722 | | Miguel Vizcarrondo Executive Vice President and Chief Product and Innovation Officer | 2023 | 387,653 | 16,391 | 1,300,000 | 450,904 | 24,964 | 2,179,912 | | | 2022 | 376,362 | 415,914 | 1,300,000 | 325,124 | 15,009 | 2,432,409 | | | 2021 | 365,400 | 15,450 | 1,214,000 | 376,038 | 15,197 | 1,986,085 |
Benefits and perquisites
| Grants of plan-based awards |
Benefits and perquisites
| Outstanding equity awards at fiscal year end |
Benefits and perquisites
| Stock vested |
Benefits and perquisites
| Potential payments upon termination of employment |
For our other NEOs
| Potential payments upon change in control |
For our Other NEOs
| Payments upon termination or a change in control |
For our Other NEOs
| Pension benefits and non-qualified deferred compensation |
CEO Pay Ratio
CEO Pay Ratio The SEC requires that U.S. publicly-traded companies disclose the ratio of their CEO’s compensation to that of their median employee. The table below sets forth the following: (i) the 2023 total annual compensation of Mr. Schuessler, as shown in the Summary Compensation Table of this Proxy Statement (the “2023 CEO Compensation”), (ii) the total annual compensation of our median employee in 2023 (the “2023 Median Employee Compensation”), and (iii) the ratio comparing the 2023 CEO Compensation to the 2023 Median Employee Compensation (the “CEO Pay Ratio”):
CEO Pay Ratio
| CEO Pay Ratio | | | 2023 CEO Compensation ($) | 14,371,811 | | 2023 Median Employee Compensation ($) | 36,761 | | CEO Pay Ratio | 391:1 |
CEO Pay Ratio
For purposes of the CEO Pay Ratio calculation, paySmart and Sinqia employees were omitted because they were acquired during fiscal year 2023. Sinqia has approximately 2,000 employees, while paySmart has approximately 60 employees. The 2023 CEO Compensation and the 2023 Median Employee Compensation were determined using the same methodology that we used to determine our NEO’s annual total compensation for the Summary Compensation Table. To identify the median employee as of December 31, 2023, we used a consistently applied compensation measure which considered: base salary, applicable statutory bonuses, stock awards, annual cash incentive, and other compensation elements, such as the Company matching employee contributions toward the savings and retirement plans. As previously discussed in the CD&A of this Proxy Statement, the 2023 CEO Compensation included a one-time special retention grant of $6,000,000. Excluding that special award, our CEO’s total compensation for 2023 would have been $8,371,811 (the “2023 Adjusted CEO Compensation”). The ratio comparing the 2023 Adjusted CEO Compensation with the 2023 Median Employee Compensation is 228:1. Our Compensation practices and programs ensure compensation programs are fair and equitable and are aligned with our business objectives. The SEC rules for identifying the median compensated employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, exclusions and assumptions that reflect their compensation practices. As such, the pay ratio reported above may not be comparable to the pay ratio reported by other companies, even those in a related industry or of a similar size and scope. Other companies may have different employment practices, regional demographics or may utilize different methodologies and assumptions in calculating their pay ratios.
Pay versus performance
Pay versus performance In accordance with rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
Pay versus performance
| Year | Summary Compensation Table Total for Morgan M. Schuessler, Jr. ($)(¹) | Compensation Actually Paid to Morgan M. Schuessler, Jr. ($)(¹)(²)(³) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(¹) | Average Compensation Actually Paid to Non-PEO NEOs ($)(¹)(²)(³) | Value of Initial Fixed $100 Investment based on:(4) | | Net Income ($) (in millions) | Adjusted EBITDA ($) (in millions)(⁵) | | | | | | | TSR ($) | Peer Group TSR ($) | | | | (a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | | 2023 | 14,371,811 | 22,774,290 | 2,398,133 | 4,045,664 | 122.99 | 216.19 | 80 | 292.0 | | 2022 | 8,284,421 | (1,211,534) | 2,376,560 | 704,449 | 96.73 | 138.11 | 239 | 269.5 | | 2021 | 7,498,179 | 17,225,866 | 1,941,710 | 3,750,040 | 148.53 | 191.60 | 161 | 294.8 | | 2020 | 5,318,246 | 8,968,920 | 1,386,293 | 1,925,877 | 116.29 | 143.23 | 105 | 240.5 |
Pay versus performance
(1) Mr. Schuessler was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
Pay versus performance
| 2020 | 2021 | 2022 | 2023 | | Joaquín A. Castrillo | Joaquín A. Castrillo | Joaquín A. Castrillo | Joaquín A. Castrillo | | Guillermo Rospigliosi | Guillermo Rospigliosi | Luis A. Rodríguez | Guillermo Rospigliosi | | Luis A. Rodríguez | Diego Viglianco | Diego Viglianco | Diego Viglianco | | Miguel Vizcarrondo | Miguel Vizcarrondo | Miguel Vizcarrondo | Miguel Vizcarrondo |
Pay versus performance
(2) The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation table total with certain adjustments as described in footnote 3 below. (3) Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards column are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation table.
Pay versus performance
| Year | Summary Compensation Table Total for Morgan M. Schuessler, Jr. ($) | Exclusion of Change in Pension Value for Morgan M. Schuessler, Jr. ($) | Exclusion of Stock Awards and Option Awards for Morgan M. Schuessler, Jr. ($) | Inclusion of Pension Service Cost for Morgan M. Schuessler, Jr. ($) | Inclusion of Equity Values for Morgan M. Schuessler, Jr. ($) | Compensation Actually Paid to Morgan M. Schuessler, Jr. ($) | | 2023 | 14,371,811 | — | (12,074,000) | — | 20,476,479 | 22,774,290 |
Pay versus performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Change in Pension Value for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($) | Average Inclusion of Pension Service Cost for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2023 | 2,398,133 | — | (1,480,000) | — | 3,127,531 | 4,045,664 |
Pay versus performance
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables:
Pay versus performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Morgan M. Schuessler, Jr. ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Morgan M. Schuessler, Jr. ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Morgan M. Schuessler, Jr. ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Morgan M. Schuessler, Jr. ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Morgan M. Schuessler, Jr. ($) | Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Morgan M. Schuessler, Jr. ($) | Total - Inclusion of Equity Values for Morgan M. Schuessler, Jr. ($) | | 2023 | 16,307,511 | 3,439,082 | — | 729,886 | — | — | 20,476,479 |
Pay versus performance
| Year | Average Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non-PEO NEOs ($) | Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included for Non-PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2023 | 2,364,661 | 627,049 | — | 135,821 | — | — | 3,127,531 |
Pay versus performance
(4) The Peer Group TSR set forth in this table utilizes the S&P Composite 1500 Information Technology Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on Form 10-K for the year ended December 31, 2023. The comparison assumes $100 was invested for the period starting December 31, 2019, through the end of the listed year in the Company and in the S&P Composite 1500 Information Technology Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. (5) We determined Adjusted EBITDA, which is a non-GAAP measure, to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2023. We define “EBITDA” as earnings before interest, taxes, depreciation and amortization and “Adjusted EBITDA” as EBITDA further adjusted to exclude unusual items and other adjustments. See Appendix A for a reconciliation of GAAP and non-GAAP financial measures to our results, as reported in the Company’s Annual Report on Form 10-K for the fiscal year ended on December 31, 2023. Adjusted EBITDA may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company TSR
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, the Company’s cumulative TSR period over the four (4) most recently completed fiscal years, and the S&P Composite 1500 Information Technology Index TSR over the same period.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our Net Income during the four (4) most recently completed fiscal years.
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted EBITDA
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted EBITDA The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and adjusted EBITDA during the four (4) most recently completed fiscal years.