United States

Securities and Exchange Commission

Washington, D.C. 20548

 

SCHEDULE 14A

(Rule 14a-101)

 

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

 

Check the appropriate box:

☐	Preliminary Proxy Statement
☐	Confidential, for Use of the Commission Only (as Permitted by Rule 14a-6(e)(2))
☒	Definitive Proxy Statement
☐	Definitive Additional Materials
☐	Soliciting Material Pursuant to § 240.14a-12

 

ExlService Holdings, Inc.

(Name of Registrant as Specified in Its Charter)

 

N/A

(Name of Person(s) Filing Proxy Statement, If Other Than the Registrant)

 

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280 Park Avenue, 38^th Floor  

New York, New York 10017  

(212) 277-7100

 

PROXY STATEMENT

 

Annual Meeting of Stockholders

 

June 19, 2015

 

Dear Stockholder:

 

On behalf of the board of directors of ExlService Holdings, Inc., I am pleased to invite you to the 2015 Annual Meeting of Stockholders, which will be held on June 19, 2015 in New York, New York.

 

The Annual Meeting will begin with discussion and voting on the matters set forth on the accompanying Notice of the Annual Meeting and Proxy Statement, followed by discussion of other business matters properly brought before the Annual Meeting.

 

Pursuant to rules promulgated by the Securities and Exchange Commission, we are providing access to our proxy materials over the Internet. On or about April 30, 2015, we will mail a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) to each of our stockholders of record and beneficial owners at the close of business on April 23, 2015, the record date for the Annual Meeting. On the date of mailing of the Internet Notice, all stockholders and beneficial owners will have the ability to access all of the proxy materials on a website referred to in the Internet Notice. These proxy materials will be available free of charge.

 

Even if you choose to attend the Annual Meeting in person, you are encouraged to review the proxy materials and vote your shares in advance of the meeting by Internet or phone. The Internet Notice will contain instructions to allow you to request copies of the proxy materials to be sent to you by mail. Any proxy materials sent to you will include a proxy card that you may use to cast your vote by completing, signing and returning the proxy card by mail (or voting instruction form, if you hold shares through a broker). Your vote is extremely important, and we appreciate you taking the time to vote promptly. If you attend the Annual Meeting, you may withdraw your proxy should you wish to vote in person.

 

The board of directors and management look forward to seeing you at the Annual Meeting.

 

	Sincerely,
	Garen K. Staglin
	Chairman

 

  

 

280 Park Avenue, 38^th Floor  

New York, New York 10017  

(212) 277-7100

 

NOTICE OF 2015 ANNUAL MEETING OF STOCKHOLDERS

 

Dear Stockholder:

 

You are cordially invited to the 2015 Annual Meeting of Stockholders of ExlService Holdings, Inc., a Delaware corporation (the “Company”). The Annual Meeting will be held at the New York offices of the Company, 280 Park Avenue, 38^th Floor, New York, New York 10017 on June 19, 2015 at 8:30 AM, Eastern Standard Time, for the purposes of voting on the following matters:

 

1.

the election of three Class III members of the board of directors of the Company for a term of three years each;

 

2.

the ratification of the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for fiscal year 2015;

 

3.

the approval of the compensation of the named executive officers of the Company;

 

4.

the approval of the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan; and

 

5.

the transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

 

If you are a stockholder of record at the close of business on April 23, 2015, you are entitled to vote at the Annual Meeting. A list of stockholders as of the record date will be available for examination for any purpose germane to the Annual Meeting, during ordinary business hours, at the Company’s executive offices at 280 Park Avenue, 38^th Floor, New York, New York 10017, for a period of 10 days prior to the date of the Annual Meeting and at the Annual Meeting itself.

 

Whether or not you expect to attend the Annual Meeting in person, the Company encourages you to promptly vote and submit your proxy by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Voting by proxy will not deprive you of the right to attend the Annual Meeting or to vote your shares in person. You can revoke a proxy at any time before it is exercised by voting in person at the Annual Meeting, by delivering a subsequent proxy or by notifying the inspector of elections in writing of such revocation prior to the Annual Meeting. YOUR SHARES CANNOT BE VOTED UNLESS YOU EITHER (I) VOTE BY USING THE INTERNET, (II) VOTE BY PHONE, (III) REQUEST PROXY MATERIALS BE SENT TO YOU BY MAIL AND THEN USE THE PROXY CARD PROVIDED BY MAIL TO CAST YOUR VOTE BY COMPLETING, SIGNING AND RETURNING THE PROXY CARD BY MAIL OR (IV) ATTEND THE ANNUAL MEETING AND VOTE IN PERSON.

  

	By Order of the Board of Directors
	Nancy Saltzman
	Executive Vice President,
	General Counsel and Secretary

 

New York, New York

April 30, 2015

 

 

TABLE OF CONTENTS 

		Page
INFORMATION CONCERNING VOTING AND SOLICITATION		4
OUR BOARD OF DIRECTORS		7
CORPORATE GOVERNANCE		10
OUR EXECUTIVE OFFICERS		15
EXECUTIVE COMPENSATION		17
PRINCIPAL STOCKHOLDERS		62
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS		63
REPORT OF THE AUDIT COMMITTEE		64
PROPOSAL 1 ELECTION OF DIRECTORS		65
PROPOSAL 2 RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM		66
PROPOSAL 3 ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION		68
PROPOSAL 4 APPROVAL OF THE 2015 AMENDMENT AND RESTATEMENT OF THE 2006 OMNIBUS AWARD PLAN		69
STOCKHOLDER PROPOSALS FOR THE 2016 ANNUAL MEETING		77
MISCELLANEOUS		78
OTHER MATTERS		79
ANNEX A		A-1

 

 

SUMMARY

 

Below is a summary of selected key components of this Proxy Statement, including highlights of our 2014 performance, key information regarding this year’s stockholder meeting, nominees for our Board of Directors and selective executive compensation information. This summary does not contain all of the information that you should consider, and you should review the entire Proxy Statement and our Annual Report on Form 10-K.

 

2014 Business Highlights

 

We improved our annual revenues from $478.8 million in fiscal year 2013 to $499.3 million in fiscal year 2014 (which includes the effect of one-time disentanglement costs of $26.3 million), acquired Overland Solutions, Inc. (a leading provider of underwriting support services) and Blue Slate Solutions, LLC (which specializes in transforming business operations), entered into a $50.0 million five-year revolving credit facility and authorized a three-year, $20.0 million annual common stock repurchase program. We also received numerous awards and industry recognition, won 26 new clients of which 10 were Fortune 500 companies, and opened four new delivery centers: Alabang, Philippines; Dallas, Texas; and Cebu, Philippines and a new Analytics Center of Excellence in Mumbai, India. For more information regarding these and other business highlights, please see page 19 and our Form 10-K.

 

Annual Meeting

 

Time and Date:	8:30 AM (Eastern Standard Time), June 19, 2015	Record Date:	April 23, 2015
Place:	ExlService Holdings, Inc. 280 Park Avenue, 38th Floor New York, New York 10017	Voting:	Stockholders as of the  record date are entitled to vote

 

Proposals and Voting Recommendations

 

Proposal		Board Recommendation		Page Reference
Proposal 1 – Election of Class III Directors		For all nominees		65
Proposal 2 – Ratification of Ernst & Young LLP as independent registered public accounting firm for 2015		For		66
Proposal 3 – Approval of the compensation of the named executive officers of the company		For		68
Proposal 4 – Approval of 2015 Amendment and Restatement of the 2006 Omnibus Award Plan		For		69

 

 

Director Nominees

 

We are seeking your vote FOR all of the Class III director nominees listed below:

 

Name		Age		Director Since		Independent		Committee/Position
Deborah Kerr		43		January 2015		Yes		Audit Committee Member Compensation Committee Member
Dr. Mohanbir Sawhney		51		November 2005		Yes		Nominating and Governance Committee Member Audit Committee Member
Garen K. Staglin		70		June 2005		Yes		Chairman of the Board Compensation Committee Member Nominating and Governance Committee Member

 

Auditor Matters

 

As a matter of good corporate practice, we are seeking your ratification of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2015. For more information on our auditors, including 2014 audit fees, see page 66.

		2014  (in thousands)
Audit Fees	$	1,302
Audit-Related Fees		211
Tax Fees		10
All Other Fees		3
Total	$	1,526

 

Executive Compensation

 

On an annual basis, we submit an advisory vote to approve our executive compensation. We are seeking your approval, on a non-binding basis, of the compensation of our named executive officers. Please refer to our Compensation Discussion and Analysis, starting on page 17 for a complete description of our 2014 compensation program.

 

2014 Executive Compensation Highlights

 

•

98% Say on Pay Approval Last Year: At our 2014 Annual Meeting of Stockholders, approximately 98% of our stockholders approved (on a non-binding basis and excluding broker non-votes) the compensation paid to our named executive officers for fiscal year 2013.

 

•

Implementation of Redesigned Performance Criteria: Our Compensation Committee implemented redesigned performance criteria for our annual bonus program:

○

Company Wide Metrics – Adjusted EPS and revenue

○

Business Line Metrics – Revenues, new client revenues and gross margin achievement

 

•

Transition to an All Cash Annual Bonus Program: We utilized an all-cash annual incentive bonus program during 2014, as opposed to a mix of cash and equity, as the Compensation Committee believes an all-cash program is more aligned with market compensation practices and is more easily understood by program participants.

 

•

Rolled-Out New Long-Term Equity Incentive Program: We moved from an all time-based long-term incentive program to granting a mix of time-vested restricted stock units and performance-based restricted stock units. The performance-based restricted stock units were comprised of:

 

 

○

Relative TSR linked restricted stock units, and

○

Revenue linked restricted stock units.

 

•

Strong Performance: For 2014, the Compensation Committee established performance targets which were intended to encourage stretch performance. We came close to achieving our Adjusted EPS target (96.6%) and exceeded our total revenue performance target (101.5%), as each was adjusted and determined by the Compensation Committee to reflect the effect of certain acquisitions.

○

Our strong revenue achievement resulted in our executives banking one-third of revenue-linked restricted stock units.

 

•

Adopted New Compensation Best-Practice Policies: During 2014 we implemented a stock ownership policy, a clawback policy, a prohibition on hedging transactions and restrictions on pledging transactions, all of which are consistent with evolving public-company executive compensation practices.

 

Approval of our Omnibus Award Plan

 

We are requesting you approve the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (the “2015 Plan”), which amends and restates the 2006 Omnibus Award Plan (the “2006 Plan”) to increase the total number of shares reserved for grants of awards under the 2015 Plan by 1.7 million shares and make certain other changes.

 

Our 2006 Plan has been previously approved twice by our stockholders, most recently last year at the 2014 Annual Meeting of Stockholders. The 2015 Plan, like the 2006 Plan, provides us a means to attract and retain key individuals and to provide a means by which these individuals can acquire ownership in our Company and earn incentive compensation.

 

Key Features of the 2006 Plan Retained in the 2015 Plan

 

•

The 2015 Plan has a minimum performance period of 1 year over which the attainment of one or more performance goals may be measured for the purpose of determining a participant’s right to the payment of a performance compensation award.

•

The 2015 Plan does not contain a “liberal” change in control definition.

•

The 2015 Plan allows us to grant a variety of types of awards, including: options, SARs, restricted stock and restricted stock units (time-vested or performance-vested), other stock awards and cash-based awards.

•

The 2015 Plan provides for administration by our Compensation Committee (or independent members of our Board of Directors).

•

Awards are subject to our general clawback policy (our 2015 Plan makes an explicit reference to said policy).

 

Additional Key Features of the 2015 Plan

 

•

The annual value of awards granted to our non-employee directors is capped.

•

The 2015 Plan explicitly prohibits Company cash buyouts of underwater options or SARs.

•

Dividends or dividend equivalents may not be paid on unearned shares of restricted stock or restricted stock units under the 2015 Plan.

•

The 2015 Plan adds flexible share usage provisions.

•

Increases the maximum number of shares and amounts payable to participants under performance compensation awards designed to be tax deductible under Section 162(m) of the Code.

 

 

280 Park Avenue, 38^th Floor  

New York, New York 10017  

(212) 277-7100

 

PROXY STATEMENT

 

INFORMATION CONCERNING VOTING AND SOLICITATION

 

This Proxy Statement is being furnished to you in connection with the solicitation by the board of directors of ExlService Holdings, Inc., a Delaware corporation (“us,” “we,” “our” or the “Company”), of proxies to be used at our 2015 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the New York offices of the Company, 280 Park Avenue, 38^th Floor, New York, New York, 10017 on June 19, 2015, at 8:30 AM, Eastern Standard Time, and any adjournments or postponements thereof.

 

In accordance with rules and regulations adopted by the Securities and Exchange Commission, instead of mailing a printed copy of our proxy materials to each stockholder of record, the Company furnishes proxy materials via the Internet. If you received a Notice of Internet Availability of Proxy Materials (the “Internet Notice”) by mail, you will not receive a printed copy of our proxy materials other than as described herein. Instead, the Internet Notice will instruct you as to how you may access and review all of the important information contained in the proxy materials. The Internet Notice also instructs you as to how you may submit your proxy over the Internet or by phone. If you received an Internet Notice by mail and would like to receive a printed copy of our proxy materials, you should follow the instructions for requesting proxy materials included in the Internet Notice.

 

It is anticipated that the Internet Notice will be sent to stockholders on or about April 30, 2015. This proxy statement and the form of proxy relating to the Annual Meeting will be made available via the Internet to stockholders on the date that the Internet Notice is first sent.

 

Who Can Vote

 

Only stockholders who own shares of our common stock at the close of business on April 23, 2015, the record date for the Annual Meeting, can vote at the Annual Meeting. As of the close of business on April 23, 2015, the record date, we had 33,298,121 shares of common stock outstanding and entitled to vote. Each holder of common stock is entitled to one vote for each share held as of the record date for the Annual Meeting. There is no cumulative voting in the election of directors.

 

How You Can Vote

 

If your shares are registered directly in your name with Computershare Trust Company, N.A., our transfer agent (which means you are a “stockholder of record”), you can vote your proxy by (i) Internet, (ii) by phone or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. Please refer to the specific instructions set forth in the Internet Notice. You will not be able to vote your shares unless you use one of the methods above to designate a proxy or by attending the Annual Meeting.

 

If you are the beneficial owner of shares held in the name of a brokerage, bank, trust or other nominee as a custodian (also referred to as shares held in “street name”), your broker, bank, trustee or nominee will provide you with materials and instructions for voting your shares. In addition to voting by mail, a number of banks and brokerage firms participate in a program provided through Broadridge Financial Solutions, Inc. (“Broadridge”) that

 

 

offers telephone and Internet voting options. Votes submitted by telephone or by using the Internet through Broadridge’s program must be received by 11:59 p.m. Eastern Time, on June 18, 2015.

 

Voting at the Annual Meeting. Voting by Internet, phone or mail will not limit your right to vote at the Annual Meeting if you decide to attend in person. Our board of directors recommends that you vote by Internet, phone or mail as it is not practical for most stockholders to attend the Annual Meeting. If you are a “stockholder of record,” you may vote your shares in person at the Annual Meeting. If you hold your shares in “street name,” you must obtain a proxy from your broker, bank, trustee or nominee giving you the right to vote the shares at the Annual Meeting or your vote at the Annual Meeting will not be counted.

 

Revocation of Proxies

 

You can revoke your proxy at any time before it is exercised in any of the following ways:

•

by voting in person at the Annual Meeting;

•

by submitting written notice of revocation to the inspector of elections prior to the Annual Meeting; or

•

by submitting another properly executed proxy of a later date to the inspector of elections prior to the Annual Meeting.

 

Required Vote; Effect of Abstentions and Broker Non-Votes

 

Quorum

 

A quorum, which is a majority of the issued and outstanding shares of our common stock as of April 23, 2015, must be present to hold the Annual Meeting. A quorum is calculated based on the number of shares represented by the stockholders attending the Annual Meeting in person and by their proxy holders. If you indicate an abstention as your voting preference for all matters to be acted upon at the Annual Meeting, your shares will be counted toward a quorum but they will not be voted on any matter.

 

Proposal 1: Election of Directors

 

Under our by-laws, directors are elected by the affirmative vote of a plurality of votes cast in person or represented by proxy and entitled to vote at the Annual Meeting. You may cast your vote in favor of electing the nominees as directors, withhold your vote on one or more nominees or abstain from voting your shares. For purposes of the vote on Proposal 1, abstentions and broker non-votes (as described below) will have no effect on the results of the vote.

 

Other Proposals

 

The ratification of the appointment of our independent registered public accounting firm, the approval of the compensation of our named executive officers, the approval of the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan and each other item to be acted upon at the Annual Meeting will require the affirmative vote of a majority of shares present in person or represented by proxy and entitled to vote at the Annual Meeting. You may cast your vote in favor of or against these proposals or you may abstain from voting your shares. For purposes of the vote on Proposals 2 (ratification of the appointment of our independent registered public accounting firm), 3 (approval of the compensation of our named executive officers), 4 (approval of the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan or such other items to be acted upon at the Annual Meeting, abstentions will have the effect of a vote against these proposals.

 

If you submit your proxy, but do not mark your voting preference, the proxy holders will vote your shares (i) FOR the election of the nominees for director, (ii) FOR the ratification of the appointment of our independent registered public accounting firm, (iii) FOR the approval of the compensation of our named executive officers, (iv) FOR the approval of the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan, and (v) as described below, in the judgment of the proxy holder on any other matters presented at the Annual Meeting.

 

Shares Held in “Street Name” by a Broker

 

If you are the beneficial owner of shares held in “street name” by a broker, then your broker, as the record holder of the shares, must vote those shares in accordance with your instructions. If you fail to provide instructions to your broker, under the New York Stock Exchange rules (which apply to brokers even though our shares are listed

 

 

on the NASDAQ Stock Market), your broker will not be authorized to exercise its discretion and vote your shares on “non-routine” proposals, including the election of directors, approval of the compensation of our named executive officers and approval of the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan. As a result, a “broker non-vote” occurs. However, without your instructions, your broker would have discretionary authority to vote your shares only with respect to “routine” proposals, including at the Annual Meeting, the ratification of the appointment of our independent registered public accounting firm.

 

Other Matters to Be Acted Upon at the Meeting

 

Our board of directors presently is not aware of any matters, other than those specifically stated in the Notice of Annual Meeting, which are to be presented for action at the Annual Meeting. If any matter other than those described in this Proxy Statement is presented at the Annual Meeting on which a vote may properly be taken, the shares represented by proxies will be voted in accordance with the judgment of the person or persons voting those shares.

 

Adjournments and Postponements

 

Any action on the items of business described above may be considered at the Annual Meeting at the time and on the date specified above or at any time and date to which the Annual Meeting may be properly adjourned or postponed.

 

Solicitation of Proxies

 

We will pay the cost of printing and mailing proxy materials and posting them on the Internet. Upon request, we will reimburse brokers, dealers, banks and trustees, or their nominees, for reasonable expenses incurred by them in forwarding proxy materials to beneficial owners of shares of our common stock.

 

Internet Availability of Proxy Materials

 

Our Notice of Annual Meeting, proxy statement and form of proxy card are each available at www.proxyvote.com. You may access these materials and provide your proxy by following the instructions provided in the Internet Notice.

 

Important

 

Please promptly vote and submit your proxy by (i) Internet (by following the instructions provided in the Internet Notice), (ii) by phone (by following the instructions provided in the Internet Notice) or (iii) by requesting that proxy materials be sent to you by mail that will include a proxy card that you can use to vote by completing, signing, dating and returning the proxy card in the prepaid postage envelope provided. This will not limit your right to attend or vote at the Annual Meeting.

 

All Annual Meeting attendees may be asked to present valid, government-issued photo identification (federal, state or local), such as a driver’s license or passport, and proof of beneficial ownership if you hold your shares through a broker, bank, trust or other nominee, before entering the Annual Meeting. Attendees may be subject to security inspections. Video and audio recording devices and other electronic devices will not be permitted at the Annual Meeting.

 

If you have any further questions about voting your shares or attending the Annual Meeting, please call our Investor Relations Department at (212) 277-7109.

 

 

OUR BOARD OF DIRECTORS

 

Our board of directors currently consists of eight directors divided into three classes, with each director serving a three-year term and one class being elected at each year’s annual meeting of stockholders. The current composition of our board of directors is as follows:

Class I Directors (term expiring in 2016):		Rohit Kapoor, our Vice Chairman and Chief Executive Officer (“CEO”) Anne E. Minto
Class II Directors (term expiring in 2017):		David B. Kelso Som Mittal Clyde W. Ostler
Class III Directors (term expiring in 2015):		Deborah Kerr Dr. Mohanbir Sawhney Garen K. Staglin, our Chairman

 

The election of our Class III directors will take place at the Annual Meeting. If elected, each of the Class III director nominees will serve on our board of directors until our 2018 Annual Meeting of Stockholders or until their successors are duly elected and qualified in accordance with our by-laws.

 

Board of Directors

 

The names, ages and principal occupations (which have continued for at least the past five years unless otherwise indicated) and certain other information, including the specific experience, qualifications, attributes or skills that led to the conclusion that such person should serve as a director of the Company, with respect to each of the nominees and continuing directors are set forth below.

 

Nominees for Terms Expiring in 2015

 

Deborah Kerr—Age: 43—has served as a member of our board of directors since January 2015. Ms. Kerr has served as the Executive Vice President and Chief Product and Technology Officer at Sabre Corporation since 2013 and is responsible for leading the global product and technology organization. Prior to her appointment at Sabre Corporation, Ms. Kerr served as Executive Vice President, Chief Product and Technology Officer at Fair Isaac Corporation (FICO) from 2009 until 2012. Ms. Kerr previously held senior leadership roles with Hewlett-Packard, Peregrine Systems and NASA’s Jet Propulsion Laboratory. From 2010 to 2013, Ms. Kerr was a member of the board of directors of Mitchell International Inc. and was Chair of the Technology Committee. Ms. Kerr is currently an Independent Director of D+H Corporation, which provides technology solutions and products to the financial services industry. The Company has concluded, based in part on Ms. Kerr’s experience driving business through innovative technology solutions and more than 20 years of diverse management experience that Ms. Kerr should serve as a director.

 

Dr. Mohanbir Sawhney—Age: 51—has served as a member of our board of directors since November 2005. Dr. Sawhney is a recognized author, scholar and consultant on marketing, innovation and technology. He is the McCormick Foundation Professor of Technology and the Director of the Center for Research in Technology & Innovation at the Kellogg School of Management, Northwestern University, where he has been a member of the faculty since September 1993. Dr. Sawhney advises several large technology companies worldwide and has authored six management books. The Company has concluded, based in part on Dr. Sawhney’s scholarly and business experience that Dr. Sawhney should serve as a director.

 

Garen K. Staglin—Age: 70—has served as our Chairman since February 2014 and as a member of our board of directors since June 2005. Mr. Staglin has over 40 years of experience in the financial services and technology industries. From 2001 to 2004 he was Chief Executive Officer of eONE Global LP, an emerging payments company, and from 1993 – 1999 he was CEO of Safelite Auto Glass, a provider of glass claim solutions. Mr. Staglin serves as a director on the boards of directors of several public and private companies and non-profit corporations. In the past five years, Mr. Staglin has served on the public company board of directors of Bottomline Technologies,

 

 

Inc. and of Solera Holdings, Inc. and is presently serving on the board of SVB Financial Group.  Additional prior public board experience includes First Data Corporation, CyberCash, Inc., and Quick Response Services.  Private board experience includes Specialized Bicycle, NVoice Payments, Profit Velocity Solutions, and Winecountry.com.  Non-profit board experience includes One Mind, IMHRO, and BringChange2Mind.  The Company has concluded, based in part on Mr. Staglin’s experience in the financial services and technology industries and his past experience as a member of public company boards of directors that Mr. Staglin should serve as a director.

 

Directors with Terms Expiring in 2016

 

Rohit Kapoor—Age: 50—co-founded EXL Inc. in April 1999 and has served as our Vice Chairman and CEO since April 2012 and as a director since November 2002. Mr. Kapoor served as our President and CEO from May 2008 to March 2012, as our Chief Financial Officer (“CFO”) from November 2002 until June 2005 and from September 2006 to March 2007, as our Chief Operating Officer from June 2007 until April 2008 and as President and CFO of EXL Inc. since August 2000. Prior to founding EXL Inc., Mr. Kapoor served as a business head of Deutsche Bank from July 1999 to July 2000. From 1991 to 2000, Mr. Kapoor served in various capacities at Bank of America in the United States and Asia, including India. Mr. Kapoor was appointed as a member of the board of directors of CA, Inc. on April 7, 2011. The Company has concluded that in connection with Mr. Kapoor’s experience as a founder and current role as CEO of the Company, he should serve as a director.

 

Anne E. Minto—Age: 61—has served as a member of our board of directors since March 2013. Ms. Minto is a qualified lawyer and member of the Law Society of Scotland. She is a Fellow of the Chartered Institute of Personnel & Development, the Chartered Institute of Management and the City and Guilds of London Institute. She was Group Director Human Resources and a member of the executive committee at Centrica plc from 2002 until her retirement in 2011. Ms. Minto previously held senior management roles at Shell UK and Smiths Group plc and was Deputy Director-General of the Engineering Employers’ Federation. Based in the UK, Ms. Minto is a non-executive director of Shire plc and a non-executive director of Tate & Lyle plc where she serves as Chairman of the Remuneration Committees of both companies. She is also a non-executive director of the Court of the University of Aberdeen and Vice Chairman of the University of Aberdeen Development Trust. She was awarded an OBE in 2000 for services to the engineering industry in the UK. The Company has concluded, based in part on Ms. Minto’s extensive experience as a member of international company boards and of management in the human resources field, together with her knowledge and experience of the European business and regulatory environment that she should serve as a director.

 

Directors with Terms Expiring in 2017

 

David B. Kelso—Age: 62—has served as a member of our board of directors since July 2006. Mr. Kelso is a financial advisor for Kelso Advisory Services, a company he started in 2003. Mr. Kelso served as a senior advisor to Inductis, Inc. from June 2004 through June 2006 at which time the firm was acquired by the Company. From September 2001 through September 2003, Mr. Kelso served as Chairman of the Aetna Life Insurance Co. as well as the Executive Vice President, Strategy and Finance and a member of the Office of the Chairman for Aetna, Inc. From 1996 to 2001, Mr. Kelso was Executive Vice President, Chief Financial Officer and Managing Director of the Chubb Corporation. Mr. Kelso currently serves on the Board of Directors of the Sound Shore Fund where he is the lead independent director and Chair of the Audit, Nominating, and Valuation Committees. From 2005 to 2010, Mr. Kelso was a member of the Board of Directors of Aspen Holdings Limited. From 2007 to 2015, Mr. Kelso served on the Board of Assurant, Inc. and was a member of its Audit Committee and Finance & Investment Committee. Mr. Kelso’s business experience with Inductis, his management and operating experience at major public companies, his expertise in finance, strategy and investments, and his board and committee service at other global companies led to the conclusion that he should serve as a director.

 

Som Mittal—Age: 63—has served as a member of our board of directors since December 2013.  Mr. Mittal served as President of National Association of Software and Services Companies (“NASSCOM”), a trade body for the IT and business process management industries in India from 2008 through January 2014.  Mr. Mittal has held various corporate leadership roles in the IT industry since 1989, including at companies such as Wipro, Digital India, Compaq and HP. He also has extensive experience in the engineering, manufacturing and automotive industries, having held executive roles with Larsen & Toubro, Escorts and Denso. Mr. Mittal became an

 

 

Independent Director of Axis Bank in October 2011 and Cyient Ld. in April 2014. He is a member of the Board of Governors of the Indian Institute of Corporate Affairs. Mr. Mittal has been a committee member with the Indian Prime Minister’s National e-Governance Program and is part of several committees of the Government of India. Besides being an Advisor to several companies he is also deeply associated with education as he is on the Board of Governors of several of them. The Company has concluded, based in part on Mr. Mittal’s business experience as President of NASSCOM and his knowledge of the outsourcing industry, that Mr. Mittal should serve as a director. 

 

Clyde W. Ostler—Age: 68—has served as a member of our board of directors since December 2007. Mr. Ostler served as a Group Executive Vice President of Wells Fargo and Company, Vice Chairman of Wells Fargo Bank California, and President of Wells Fargo Family Wealth from 2002 until his retirement in 2011. Mr. Ostler served in a number of capacities during his forty year tenure with Wells Fargo, including Vice Chairman in the Office of the President, Chief Financial Officer, Chief Auditor, Head of Retail Branch Banking, Head of Information Technology, Head of Institutional and Personal Investments and Head of Internet Services. Mr. Ostler has also served on a number of for-profit and non-profit boards of directors. Mr. Ostler was appointed to the board of The McClatchy Company in March 2013. The Company has concluded, based in part on Mr. Ostler’s business experience through his positions at Wells Fargo & Company that Mr. Ostler should serve as a director.

 

There are no family relationships among any of our directors or executive officers.

 

 

CORPORATE GOVERNANCE

 

Director Independence

 

Our board of directors has determined that all of the members on our board of directors, other than Mr. Kapoor, meet the independence requirements of the Nasdaq Stock Market and federal securities laws.

 

Meeting Attendance

 

Our directors are expected to attend all board of directors meetings and meetings of committees on which they serve. Directors are also expected to spend sufficient time and meet as frequently as necessary to discharge their responsibilities properly. Overall, during 2014, our board of directors met 13 times. Each member of our board of directors attended at least 75% of our board of directors meetings during the period in 2014 in which he or she served on our board of directors. It is our policy that all of our directors should attend our Annual Meetings of Stockholders absent exceptional cause. All of the persons who were members of the board of directors at the time of our 2014 Annual Meeting of Stockholders attended such meeting.

 

Board Leadership Structure

 

Our board of directors is currently led by Garen K. Staglin, our Chairman, and Rohit Kapoor, our Vice Chairman and CEO.

 

Our by-laws provide that our Chairman or, in the absence of our Chairman, our Lead Director (if there is a Lead Director serving at such time), or in the absence of both our Chairman and Lead Director, our CEO, shall call meetings of our board of directors to order and shall act as the chairman thereof. In the absence of our Chairman, our Lead Director (if there is a Lead Director serving at such time), our CEO and a majority of our directors present may elect as chairman of the meeting any director present. Independent directors meet at least quarterly in executive session without any management directors or  members of the Company’s management present. The Lead Director or, in the absence of the Lead Director, a director chosen by the directors meeting in executive session, presides at all executive sessions.

 

Consolidating the Vice Chairman and CEO positions allows our CEO to contribute his experience and perspective regarding management and leadership of the Company towards the goals of improved corporate governance and greater management accountability. In addition, the presence of our Chairman ensures that the board can retain sufficient delineation of responsibilities, such that our Chairman and our Vice Chairman and CEO may each successfully and effectively perform and discharge their respective duties and, as a corollary, enhance our prospects for success. The Company will thus benefit from the ability to integrate the collective leadership and corporate governance experience of our Chairman and our Vice Chairman and CEO, while retaining the ability to facilitate the functioning of the board of directors independently of our management and to focus on our commitment to corporate governance.

 

For the foregoing reasons, our board of directors has determined that its leadership structure is appropriate and in the best interests of our stockholders at this time.

 

Committees

 

Our board of directors currently has three standing committees: the Audit Committee, the Nominating and Governance Committee and the Compensation Committee.

 

Audit Committee. Our Audit Committee oversees and assists our board of directors in fulfilling its oversight responsibilities with respect to:

 

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our accounting and financial reporting processes, including the integrity of the financial statements and other financial information provided by us to our stockholders, the public, any stock exchange and others;

 

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our compliance with legal and regulatory requirements;

 

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our independent registered public accounting firm’s qualifications and independence;

 

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the audit of our financial statements; and

 

 

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the performance of our internal audit function and independent registered public accounting firm.

 

Our Audit Committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent registered public accounting firm, and our independent registered public accounting firm reports directly to our Audit Committee. Our Audit Committee also reviews and approves certain related-party transactions as required by the rules of the Nasdaq Stock Market. The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the “Exchange Act”). A copy of our Audit Committee charter can be found on our website at www.exlservice.com. Information on our website referred to in this proxy statement does not constitute a part of this proxy statement.

 

The members of our Audit Committee are appointed by our board of directors. All members of our Audit Committee must also be recommended by our Nominating and Governance Committee. Mr. Kelso, Ms. Kerr, Mr. Ostler and Mr. Sawhney are the current members of our Audit Committee. Mr. Ostler is the chairman of our Audit Committee. Messrs. Kelso and Ostler qualify as audit committee financial experts under the rules of the Securities and Exchange Commission (“SEC”) implementing Section 407 of the Sarbanes-Oxley Act of 2002. Our board of directors has determined that Mr. Kelso, Ms. Kerr, Mr. Ostler and Mr. Sawhney meet the independence and experience requirements of the Nasdaq Stock Market and the federal securities laws for audit committee membership. During 2014, our Audit Committee met seven times. Each member of our Audit Committee attended at least 75% of our Audit Committee’s meetings in 2014 during the period in which he or she served on our Audit Committee.

 

Nominating and Governance Committee. Our Nominating and Governance Committee identifies individuals qualified to become members of our board of directors (consistent with criteria approved by our board of directors), selects, or recommends that our board of directors select, candidates for election to our board of directors, develops and recommends to our board of directors Corporate Governance Guidelines that are applicable to us and oversees board of director and management evaluations. A copy of our Nominating and Governance Committee charter can be found on our website at www.exlservice.com.

 

Our Nominating and Governance Committee has a policy, reflected in such committee’s charter, of considering director candidates recommended by our stockholders. Candidate recommendations should be sent to our Nominating and Governance Committee, c/o ExlService Holdings, Inc., 280 Park Avenue, 38^th Floor, New York, New York 10017, Attention: Corporate Secretary. Our Nominating and Governance Committee evaluates all candidates in the same manner regardless of the source of the recommendation. Our Nominating and Governance Committee, in making its selection of director candidates, considers the appropriate skills and personal characteristics required in the light of the then-current makeup of our board of directors and in the context of our perceived needs at the time. The Nominating and Governance Committee considers a number of factors in selecting director candidates, including, among others:

 

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the ethical standards and integrity in personal and professional dealings of the candidate;

 

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the independence of the candidate under legal, regulatory and other applicable standards;

 

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the diversity of our existing board of directors, so that we maintain a body of directors from diverse professional and personal backgrounds;

 

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whether the skills and experience of the candidate will complement that of our existing board of directors;

 

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the number of other public company boards of directors on which the candidate serves or intends to serve, with the expectation that the candidate would not serve on the boards of directors of more than three other public companies;

 

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the ability and willingness of the candidate to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her board of directors’ duties;

 

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the ability of the candidate to read and understand fundamental financial statements and understand the use of financial ratios and information in evaluating our financial performance;

 

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the willingness of the candidate to be accountable for his or her decisions as a director;

 

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the ability of the candidate to provide wise and thoughtful counsel on a broad range of issues;

 

 

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the ability and willingness of the candidate to interact with other directors in a manner that encourages responsible, open, challenging and inspired discussion;

 

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whether the candidate has a history of achievements that reflects high standards;

 

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the ability and willingness of the candidate to be committed to, and enthusiastic about, his or her performance for us as a director, both in absolute terms and relative to his or her peers;

 

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whether the candidate possesses the courage to express views openly, even in the face of opposition;

 

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the ability and willingness of the candidate to comply with the duties and responsibilities set forth in our Corporate Governance Guidelines and by-laws;

 

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the ability and willingness of the candidate to comply with the duties of care, loyalty and confidentiality applicable to directors of publicly traded companies organized in our jurisdiction of incorporation;

 

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the ability and willingness of the candidate to adhere to our Code of Conduct and Ethics, including, but not limited to, the policies on conflicts of interest expressed therein; and

 

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such other attributes of the candidate and external factors as our board of directors deems appropriate.

 

Our Nominating and Governance Committee reviews written and oral information provided by and about candidates and considers any additional criteria it feels is appropriate to ensure that all director nominees possess appropriate skills and experience to serve as a member of our board of directors.

 

Although our Nominating and Governance Committee does not have a formal policy with regard to diversity of board members, pursuant to our Corporate Governance Guidelines, our board of directors seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. This assessment includes an individual’s independence, as well as consideration of diversity, age, skills and experience in the context of the needs of the board of directors. Our Nominating and Governance Committee reviews and makes recommendations regarding the composition of our board of directors in order to ensure that the board has an appropriate breadth of expertise and its membership consists of persons with sufficiently diverse and independent skill sets and backgrounds.

 

The members of our Nominating and Governance Committee are appointed by our board of directors. During 2014, our Nominating and Governance Committee met five times. Each appointed member of our Nominating and Governance Committee attended at least 75% of our Nominating and Governance Committee’s meetings in 2014 during the period in which he or she served on our Nominating and Governance Committee. Mr. Kelso, Ms. Minto, Mr. Mittal, Mr. Sawhney and Mr. Staglin are the current members of our Nominating and Governance Committee. Mr. Kelso is the chairman of our Nominating and Governance Committee. Our board of directors has determined that Mr. Kelso, Ms. Minto, Mr. Mittal, Mr. Sawhney and Mr. Staglin meet the independence requirements of the Nasdaq Stock Market and federal securities laws.

 

Compensation Committee. Our Compensation Committee reviews and recommends policies relating to compensation and benefits of our directors, officers and employees and is responsible for approving the compensation of our CEO and other executive officers. Our Compensation Committee also reviews, evaluates and makes recommendations to our board of directors with respect to our incentive compensation plans and equity-based plans and administers the issuance of awards under our equity incentive plans. Our Compensation Committee charter permits the committee to form and delegate authority to subcommittees when appropriate, provided that the subcommittees are composed entirely of directors who satisfy the applicable independence requirements of the Nasdaq Stock Market. Any such subcommittee must have a published committee charter. Our Compensation Committee charter also permits the committee to retain advisors, consultants or other professionals to assist the Compensation Committee to evaluate director, CEO or other senior executive compensation and to carry out its duties. For 2014, our Compensation Committee retained the services of Frederick W. Cook & Co., Inc. (“Cook & Co.), a qualified and independent compensation consultant, to aid the Compensation Committee in performing its review of executive compensation. Additional information regarding our Compensation Committee’s processes and procedures for considering executive compensation are addressed in the Compensation Discussion and Analysis below. A copy of our Compensation Committee charter can be found on our website at www.exlservice.com.

 

The members of our Compensation Committee are appointed by our board of directors. All members of our Compensation Committee appointed after the formation of our Nominating and Governance Committee in

 

 

September 2006 in connection with our initial public offering must also be recommended by our Nominating and Governance Committee. Ms. Kerr, Ms. Minto, Mr. Mittal, Mr. Ostler and Mr. Staglin are the current members of our Compensation Committee. Mr. Staglin served as the chairman of our Compensation Committee through December 31, 2014 and Ms. Minto presently serves as its chairman. Our board of directors has determined that Ms. Kerr, Ms. Minto, Mr. Mittal, Mr. Ostler and Mr. Staglin meet the independence requirements of the Nasdaq Stock Market and federal securities laws. During 2014, our Compensation Committee met seven times. Each member of our Compensation Committee attended at least 75% of our Compensation Committee’s meetings in 2014 during the period in which he or she served on our Compensation Committee.

 

Risk Oversight

 

Our board of directors provides risk oversight. Our management assists the board in identifying strategic and operating risks that could affect the achievement of our business goals and objectives, assessing the likelihood and potential impact of these risks and proposing courses of action to mitigate and/or respond to these risks. These risks are reviewed and discussed periodically with the full board of directors as part of the business and operating review.

 

Our management is responsible for management of our day-to-day risks, and, because we are exposed to financial risks in multiple areas of our business, day-to-day risk management activities and processes are performed by multiple members of our senior and other management. Our board of directors primarily relies on the Audit Committee for oversight of our risk management. The Audit Committee regularly reviews and discusses with management our major financial risk exposures and the steps management has taken to monitor, control and manage such exposures, including our risk assessment and risk management guidelines and policies. In addition, our management maintains, as part of our disclosure controls and procedures, a separate disclosure committee that, as part of its review of our quarterly and annual reports, helps facilitate understanding by the Audit Committee and our full board of directors of new or changing risks affecting us.

 

Compensation Committee Interlocks and Insider Participation

 

Ms. Kerr, Ms. Minto, Mr. Mittal, Mr. Ostler and Mr. Staglin are the members of our Compensation Committee.

 

During 2014, none of our executive officers served as a member of the board of directors or compensation committee of any entity that has one or more executive officers who serve on our board of directors or Compensation Committee.

 

Code of Conduct and Ethics; Corporate Governance Guidelines

 

In accordance with SEC rules, our board of directors has adopted a Code of Conduct and Ethics that is applicable to our directors, officers and employees and which outlines the high ethical standards that we support and details how our directors, officers and employees should conduct themselves when dealing with fellow employees, clients, suppliers, competitors and the general public. A copy of our Code of Conduct and Ethics can be found on our website at www.exlservice.com.

 

Our board of directors has also adopted a set of Corporate Governance Guidelines to assist our board of directors in the exercise of its responsibilities. The Corporate Governance Guidelines reflect the commitment of our board of directors to monitor the effectiveness of policy and decision-making, both at the board and senior management levels, and to enhance stockholder value over the long term. A copy of our Corporate Governance Guidelines can be found on our website at www.exlservice.com.

 

Communications with the Board

 

Stockholders interested in contacting our board of directors, our Chairman or any individual director are invited to do so by writing to:

 

Board of Directors of ExlService Holdings, Inc.

c/o Corporate Secretary

ExlService Holdings, Inc.

280 Park Avenue, 38^th Floor

New York, New York 10017

 

 

All other stockholder communications addressed to our board of directors will be referred to our Chairman and tracked by our Corporate Secretary. Stockholder communications specifically addressed to a particular director will be referred to that director.

 

Complaints and concerns relating to our accounting, internal accounting controls or auditing matters should be communicated to our Audit Committee, which consists solely of non-employee directors. Any such communication may be anonymous and may be reported to our Audit Committee through our General Counsel by writing to:

 

Audit Committee

ExlService Holdings, Inc.

280 Park Avenue, 38^th Floor

New York, New York 10017

Attn: General Counsel

 

All such concerns will be reviewed under Audit Committee direction and oversight by our General Counsel, our Head of Internal Audit or such other persons as our Audit Committee determines to be appropriate. Confidentiality will be maintained to the fullest extent possible, consistent with the need to conduct an adequate review. Prompt and appropriate corrective action will be taken when and as warranted in the judgment of our Audit Committee. We prepare periodic summary reports of all such communications for our Audit Committee.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Exchange Act requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership on Forms 3, 4 and 5 with the SEC. Officers and directors are required to furnish us with copies of all Forms 3, 4 and 5 they file.

 

Based solely on our review of the copies of such forms we have received, we believe that all of our officers and directors complied with all Section 16(a) filing requirements applicable to them with respect to transactions during fiscal year 2014.

 

 

OUR EXECUTIVE OFFICERS

 

The table below sets forth information regarding our executive officers.

 

Name		Age		Position
Rohit Kapoor		50		Vice Chairman and CEO
Pavan Bagai		53		President and Chief Operating Officer of the Company
Henry Schweppe		52		President, Global Business and Marketing
Vikas Bhalla		43		Executive Vice President and Head of Insurance
Vishal Chhibbar		47		Executive Vice President and CFO
Rembert de Villa		58		Executive Vice President, Head of Healthcare
Nalin Miglani		54		Executive Vice President and Chief Human Resource Officer
Nancy Saltzman		49		Executive Vice President, General Counsel and Corporate Secretary of the Company

 

Biographical information for Rohit Kapoor can be found in “Our Board of Directors” above.

 

Pavan Bagai—Age: 53—has served as our President and Chief Operating Officer since April 2012, as our Chief Operating Officer from May 2008 to March 2012 and as Vice President, Head of Outsourcing Services of EXL India from June 2006 until April 2008. He previously served as Vice President, Research and Analytics of EXL India from December 2004 to May 2006, as Vice President, Operations of EXL India from November 2003 to November 2004 and as Vice President, Strategic Businesses of EXL India from July 2002 to November 2003. Prior to joining us, Mr. Bagai served in various capacities in several business areas across markets in Europe and Asia, including India, at Bank of America beginning in 1985.

 

Henry Schweppe —Age: 52—has served as out President, Global Business and Marketing, since October 2014. He has responsibility for sales and account management across all business lines and geographies and EXL’s Marketing function as well as strategic leadership over a number of EXL’s businesses, including: Travel, Transportation & Logistics; Finance and Accounting; and Business Transformation.  Mr. Schweppe’s more than 25 years of business experience span multiple industries, including financial services, retail, consumer products and healthcare. Prior to joining EXL, Mr. Schweppe spent 12 years at IBM, where he held various executive leaderships roles in IBM’s North American Global Process Services organization, including, General Manager Finance and Accounting, General Manager Customer Care and Industry Verticals, and VP Sales-North America.   Prior to IBM, Mr. Schweppe was a partner at PricewaterhouseCoopers.

 

Vikas Bhalla—Age: 43—has served as our Executive Vice President and Head of Insurance since January 2014, and as our Head of Outsourcing since November 2009. He previously served as Vice President, Operations of EXL India from June 2006 to October 2009 and as Vice President, Migrations, Quality and Process Excellence of EXL India from April 2002 to June 2006 and as Director, Quality Initiatives of EXL India from May 2001 to March 2002. From May 1998 to May 2001, Mr. Bhalla served in various capacities at General Electric, including as the Quality Leader and E-Business Leader for GE Plastics India.

 

Vishal Chhibbar—Age: 47—has served as our Executive Vice President and CFO since April 2012 and as our CFO since June 2009. He has over 25 years of professional experience in finance. Prior to joining us, Mr. Chhibbar was with GE Capital in various leadership roles. Since 2005, Mr. Chhibbar has served as the Regional Head, Group Financial Planning for Strategy and Treasury for GE Capital, Australia and New Zealand. In 2004 and 2005, Mr. Chhibbar was Chief Financial Officer for GE Capital, South Korea. From 1998 to 2004, Mr. Chhibbar was the Chief Financial Officer for GE Capital, Indonesia and Malaysia. Mr. Chhibbar is a Chartered Accountant and an Associate Member of CPA, Australia.

 

Rembert de Villa—Age: 58—has served as our Executive Vice President, Head of Healthcare since January 2014 and also as our Chief Strategy Officer from April 2012 to January 2014. He previously served as our Global Head of Client Management and Chief Strategy Officer from September 2010 to April 2012 and as our Managing Principal and Head of Transformation Services from April 2008 to August 2010. Prior to joining us, Mr. de Villa served as Global Practice Leader, Strategic Services at MasterCard Advisors from December 2005 through April 2008 and as Vice President and Financial Services Practice Leader for North America at Capgemini Ernst & Young from March 2003 to December 2005. Prior to his time at Capgemini Ernst & Young, Mr. de Villa was a Partner at A.T. Kearney’s Global Financial Institutions Group.

 

 

Nalin K. Miglani—Age: 54—has served as our Executive Vice President, Chief Human Resource Officer since December 2014. Mr. Miglani is responsible for the global human resources function at EXL. Prior to joining EXL, he was the Chief HR and Corporate Development Officer for Nutreco, based in Amsterdam, Netherlands, from March 2013 to November 2014. Mr. Miglani also served as the Chief HR and Communications Officer for Tata Global Beverages Company, London, UK, from June 2008 to February 2013. In addition, Mr. Miglani held various global and regional HR leadership roles around the world during his career at The Coca-Cola Company and British American Tobacco.

 

Nancy Saltzman—Age: 49—has served as our Executive Vice President and General Counsel since April 2014. Ms. Saltzman also serves as Corporate Secretary of the Company. Prior to joining us, Ms. Saltzman was a Senior Vice President, the General Counsel and Corporate Secretary for Westcon Group, Inc. from January 2005 to April 2014. Prior to joining Westcon Group, Inc., Ms. Saltzman was a Senior Associate with the law firm of Dewey Ballantine LLP from October 1998 to April 2000, the Associate General Counsel and Vice President Investor Relations at Chartwell Re Corporation from October 1995 to October 1998 and prior to that an Associate with the law firm of Dewey Ballantine LLP from September 1992 to October 1995.

 

 

EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Executive Summary –Business Highlights and Key Compensation Decisions

 

Our named executive officers in 2014 were: Rohit Kapoor, our Vice Chairman and CEO; Vishal Chhibbar, our Executive Vice President and CFO; Pavan Bagai, our President and Chief Operating Officer; Rembert de Villa, our Executive Vice President and Head of Healthcare; Nancy Saltzman our Executive Vice President, General Counsel and Corporate Secretary, and William A. Bloom, our former President, Global Client Services. Mr. Bloom resigned his employment effective July 18, 2014 to pursue interests unrelated to the Company’s business and our discussion of our compensation programs is focused on our named executive officers who were serving at the end of our 2014 fiscal year.

 

The Company had a successful 2014 from the perspective of achieving various financial performance goals that drive the creation of stockholder value, but also with respect to making strategic acquisitions, attaining industry recognition for our outstanding client-service, reorganizing our internal business units, winning new clients and expanding our operations.  In addition, we implemented our redesigned compensation program during 2014 that is more aligned with market compensation practices and more easily-understood by our executives.  Under this new program, we offer our executives the opportunity to earn annual cash bonuses based on achievement of revenue and Adjusted EPS targets (as described below).  We also granted our executives a mix of time-vested restricted stock units that vest over four years and performance-vested restricted stock units, half of which vest based on revenue achievement over three years and half of which vest based on relative total stockholder return over three years.

 

As a result of our performance, our Compensation Committee granted modest increases in base salary or fixed compensation payable to certain of our named executive officers and funded our bonus pool based on an achievement of approximately 101.5% for the revenue component and 96.6% for the Adjusted EPS component.  Moreover, our performance resulted in our executives banking one-third of their revenue-linked performance-vested restricted stock units. We have determined to remove this banking feature described under “Compensation and Discussion Analysis – Long-Term Equity Incentives” on page 28 from revenue-based performance restricted stock units granted in fiscal year 2016.

 

Finally, during 2014 we implemented a stock ownership policy, a clawback policy, a prohibition on hedging transactions and restrictions on pledging transactions, all of which are consistent with evolving public-company executive compensation practices.

 

Overview

 

We believe that the long-term success of companies that provide outsourcing, transformation and analytics services globally is linked to their ability to recruit, train, motivate and retain employees at every level. There is significant competitive pressure in our industry for qualified managers with a track record of achievement. It is critical that we recruit, train, motivate and retain highly talented individuals at all levels of the organization who are committed to our core values of accountability, innovation, excellence, urgency, integrity and mutual respect. We believe that our executive compensation programs are integral to achieving this end.

 

Our Compensation Committee bases its executive compensation programs on the following objectives, which guide us in establishing all of our compensation programs:

 

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Compensation should be based on the level of job responsibility, individual performance and our performance. As employees progress to higher levels in the organization, they are able to more directly affect our results and strategic initiatives, and therefore an increasing proportion of their pay should be linked to our performance and tied to creation of stockholder value. Our programs should deliver top-tier compensation in return for top-tier individual and company performance; conversely, where individual performance and/or our performance falls short of expectations, the programs should deliver lower-tier compensation. In addition, the objectives of pay-for-performance and retention must be balanced. Even in periods of temporary downturns in our performance,

 

 

the programs should continue to ensure that successful, high-achieving employees remain motivated and committed.

 

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Compensation should balance long-term focus that is linked to stockholder value as well as short-term financial objectives. Consistent with this philosophy, equity-based compensation should be higher for persons with higher levels of responsibility and greater influence on long-term results, thereby making a significant portion of their total compensation dependent on long-term stock appreciation. In addition, compensation should focus management on achieving short-term performance goals in a manner that supports and ensures long-term success and profitability.

 

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Compensation should reflect the value of the job in the marketplace. We compete for talent globally. In order to attract and retain a highly skilled workforce, we must remain competitive with the pay of other employers who compete with us for talent in the relevant markets.

 

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Compensation programs should be easy to understand. We believe that all aspects of executive compensation should be clearly, comprehensibly and promptly disclosed to employees in order to effectively motivate them. Employees need to easily understand how their efforts can affect their pay, both directly through individual performance accomplishments, and indirectly through contributing to our achievement of strategic, financial and operational goals. We also believe that compensation for our employees should be administered uniformly across the company and should be administered with clear-cut objectives and performance metrics.

 

Key Corporate Governance Features

 

Our compensation programs, practices and policies are reviewed and re-evaluated periodically and are subject to change from time to time. Our executive compensation philosophy is focused on pay for performance and is designed to reflect appropriate governance practices aligned with the needs of our business. Listed below are some of the Company’s more significant practices and policies that were in effect during fiscal 2014, which were adopted to drive performance and to align our executives’ interests with those of our stockholders.

 

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Pay for performance. We link a significant portion of each named executive officer’s total compensation to the achievement of specific performance goals, as described below. Such variable compensation is “at-risk” and not guaranteed, and rewards performance and contributions to both short-term and long-term financial performance of the Company.

 

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Appropriate choice and use of peer groups. We have thoughtfully selected a peer group of companies with similar market capitalization or scope of operations to us, to help us review current market practices and design a competitive compensation program. We set total compensation of our executive officers at levels the Compensation Committee believes are appropriate relative to the total compensation paid to similarly situated executive officers of our peer companies, giving consideration to market and other factors as well.

 

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Equity compensation best practices. Our equity plans prohibit option repricing without stockholder approval. We do not have excessive overhang or dilution from equity grants. Our equity incentives are designed to encourage our executives to maintain a long-term view of stockholder value creation and to encourage retention.

 

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Limited perquisites and personal benefits. We provide our named executive officers with only limited perquisites and personal benefits in addition to the regular benefits offered to all employees, and we believe that each perquisite and personal benefit we offer serves an important business purpose. We consider the perquisites and personal benefits that we offer to our executives stationed in India to be customary benefits which allow us to remain competitive for top talent.

 

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Independent decision-making. Compensation decisions for our named executive officers are approved by an independent Compensation Committee. Our Compensation Committee is advised by an independent consultant who reports directly to the Compensation Committee and provides no services to the Company or management.

 

 

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Risk mitigation. We believe the mix and design of our compensation programs serve to mitigate operational, financial, legal, regulatory, strategic and reputational risks.

 

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No excise tax gross-ups. We do not provide “gross-ups” for any excise taxes imposed with respect to Section 280G (change-in-control payments) or Section 409A (nonqualified deferred compensation) of the U.S. Internal Revenue Code of 1986, as amended (which we refer to as the “Code”).

 

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Clawback Policy. We implemented a compensation recovery policy in 2014 that allows the Company to recover compensation (including both cash and/or equity awards) previously paid to one or more officers in the event of a financial restatement caused by noncompliance with reporting requirements that impacts the applicable performance metric if, in the opinion of our Board or Compensation Committee, the identified executive’s misconduct was a material factor causing the restatement.

 

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Stock Ownership Policy. We also adopted a stock ownership policy in 2014 that requires our Chief Executive Officer to maintain stock ownership equal to at least six times his base salary and that requires the other members of our executive committee to maintain stock ownership of at least two times their respective base salaries. We adopted this policy December of 2014 and our covered executives have five years from its adoption date (or, if later, their hire date) to attain the required stock ownership levels. We adopted a similar stock ownership policy for our non-employee directors that requires directors to maintain stock ownership of at least five times their respective annual retainers.

 

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Anti-Hedging and Pledging Restrictions. We implemented a policy that, effective January 1, 2015, prohibits our officers and directors subject to the requirements of Section 16 of the Exchange Act, which includes our executive officers, from engaging in any hedging transactions with respect to Company stock they directly or indirectly own. In addition, under this policy, Reporting Persons are only permitted to pledge shares of our stock that exceed those required to be owned under our Stock Ownership Policy described above.

 

2014 Business Highlights

 

We improved our annual revenues from $478.8 million in fiscal year 2013 to $499.3 million in fiscal year 2014 (which includes the effect of one-time disentanglement costs of $26.3 million).  Our revenue growth in fiscal year 2014 was led by our Analytics & Business Transformation segment and specifically Analytics, which grew 44.1% year over year. Our particularly noteworthy achievements and areas of growth include the following:

 

Acquisitions, Finance and Equity Transactions

 

•

Acquired Overland Solutions, Inc. (“Overland”) for $53.0 million in cash. Overland, based in Overland Park, KS, is a leading provider of underwriting support services including premium audit, commercial and residential underwriting surveys and outsourced loss control services for the P&C industry.

 

•

Acquired Blue Slate Solutions, LLC (“Blue Slate”) on July 1, 2014 which specializes in transforming operations through business process optimization, data integration and analytics by leveraging innovative techniques and technologies.

 

•

Entered into a $50.0 million five-year revolving credit facility and, in the first quarter of 2015, exercised an option to increase the commitments under the credit agreement to $100.0 million.

 

•

Authorized a three-year, $20.0 million annual common stock repurchase program, effective immediately. Shares may be purchased through December 31, 2017 by the Company on the open market and through private transactions.

 

 

Awards and Industry Recognition

 

•

Received an Innovation Award from international consultancy Alsbridge, Inc., for the Company’s use of analytics and automation to improve receivables management processes for the leading UK energy supplier.

 

•

Positioned in the “Leaders” quadrant of the “Magic Quadrant for Finance and Accounting BPO,” published by Gartner on May 28, 2014.

 

•

Named a leader in the transportation management segment of the 2014 “HfS Blueprint Report: Supply Chain Management BPO,” published by HfS Research.

 

•

Certified in Everest’s marketing framework for best practices in safeguarding sensitive and confidential client information by adopting the new BPS (Business Process Services) Code of Conduct.

 

•

Awarded as an “Industry Leader” for security in the business process management (“BPM”) sector for major, industry-first initiatives in information security by NASSCOM and the Data Security Council of India.

 

Clients and Operations

 

•

We changed our reporting segments nomenclature in 2014 to Operations Management (previously called Outsourcing Services) and Analytics and Business Transformation (previously called Transformation Services) in order to more accurately reflect the changing nature of our engagements with our clients.

 

•

In 2014 we won 26 new clients of which 10 were Fortune 500 companies in addition to the 10 from 2013 and up from 8 in 2012.

 

•

We opened four new delivery centers including the establishment of a new Analytics Center of Excellence in Mumbai, India focused on providing decision analytics services to the banking and financial services vertical. Other centers were opened in Alabang, Philippines, adding 570 workstations of additional delivery capacity, in Dallas, Texas to serve our F&A clients, and in Cebu, Philippines adding over 300 workstations of additional delivery capacity.

 

•

Launched an integrated Accounts Receivables Management solution, which combines benchmarking and best practices with state-of-the-art technology and powerful analytics.

 

In addition, following the end of fiscal year 2014, we signed an agreement to acquire analytics firm RPM Direct, LLC (“RPM”) for consideration of $47.0 million in cash plus contingent cash consideration of up to $23.0 million and approximately $4.0 million of restricted stock. The acquisition closed in the first quarter of 2015. RPM specializes in analyzing large consumer data sets to segment populations, predict response rates, forecast customer lifetime value, design and execute targeted, multi-channel marketing campaigns. RPM has focused on the insurance industry, including property & casualty, life and health, since its inception in 2001.

 

Summary of Key Compensation Decisions in 2014

 

The following highlights the Compensation Committee’s key compensation decisions in 2014 and with respect to performance for 2014.

 

•

Say-on-Pay Approval. At our 2014 Annual Meeting of Stockholders, approximately 98% of our stockholders approved (on a non-binding basis and excluding broker non-votes) the compensation of our named executive officers, as disclosed in our annual proxy statement for fiscal year 2013 pursuant to the compensation disclosure rules of the SEC. In our Compensation Committee’s review and evaluation of our compensation program for 2014, our Compensation Committee viewed the strong support from our stockholders as indicative that our

 

 

compensation program for our named executive officers was designed and implemented to the satisfaction of the interests of our stockholders.

 

•

Implementation of Redesigned Performance Criteria. The Compensation Committee implemented the redesigned performance criteria of our annual incentive bonus program. The Company-wide performance measures for 2014 were (1) earnings per share, adjusted to remove the after-tax impact of stock-based compensation and the amortization of intangible assets (which we refer to as “Adjusted EPS”) and (2) total revenues. With respect to the performance criteria for our separate business lines, we redesigned the performance goals to focus on the business line’s total revenues, new client revenues and gross margin achievement. We believe this mix of performance goals streamlines the performance criteria of our annual incentive bonus program and focuses our senior executives’ efforts on performance measures that demonstrate our profitability to stockholders. We also utilized an all-cash annual incentive bonus program during 2014, as opposed to a mix of cash and equity. Our Compensation Committee believes that an all-cash program is more aligned with market compensation practices and is more easily understood by program participants.

 

•

Performance Targets. For 2014, the Compensation Committee established performance targets which were intended to encourage stretch performance. We came close to achieving our Adjusted EPS target (96.6%) and exceeded our total revenue performance target (101.5%), as each was adjusted and determined by the Compensation Committee to reflect the effect of certain acquisitions.

 

•

Base Salaries. In April 2014, we implemented modest increases to Messrs. Chhibbar’s, Bagai’s and de Villa’s base salaries averaging approximately 4.6%.

 

•

Bonuses and Equity Incentives. In 2014, we largely achieved our annual incentive bonus targets, and we achieved 101.6% performance under our revenue-based restricted stock units such that our executives banked one-third of their target awards, which is the maximum amount that may be banked in either the first or second year of our three-year program.

 

Our Compensation Committee’s Processes

 

Our Compensation Committee has established a number of processes to assist it in ensuring that our executive compensation programs are achieving their objectives. Among those are the following:

 

•

Assessment of Company Performance. Our Compensation Committee uses financial performance measures to determine a significant portion of the payouts under our annual incentive bonus program. The financial performance measures with respect to our named executive officers’ incentive bonuses are largely based on the achievement of Company-wide goals. In addition, the incentive bonuses payable to our senior executives who have responsibility for business lines are tied to such business lines’ financial or other performance. These Company-wide and business-line performance measures are established by our Compensation Committee annually at the beginning of the year. At the end of the year, our Compensation Committee reviews and certifies our performance achievement for that year, and considers the appropriateness of adjustments to the performance criteria and calculations of performance achievement.

 

We generally pay bonuses at target when we achieve the established financial measures that are set forth in our annual operating plan. These measures reflect targets that are intended to encourage stretch performance. The remainder of an individual’s payout under our incentive bonus program is determined by individual performance.

 

•

Assessment of Individual Performance. Individual performance has a strong impact on the compensation of certain employees, including our executive officers. The evaluation of an individual’s performance determines a portion of the payouts for Mr. Chhibbar and Ms. Saltzman made under our incentive bonus program and also influences any changes in base salary.

 

For Mr. Chhibbar and Ms. Saltzman, our Compensation Committee receives a performance assessment and compensation recommendation from our CEO. The performance assessments are based on

 

 

each of our named executive officer’s respective self-evaluations and subsequent performance appraisals conducted by our CEO. Our Compensation Committee reviews the performance assessments of these executive officers with our CEO, and evaluates the achievement of established objectives by each executive officer and his or her business line (if applicable), as well as the executive officer’s contribution to our performance, leadership accomplishments and overall competence. In determining the numerical performance rating that translates into specific payouts under our incentive bonus program and also influences any changes in base salary, our Compensation Committee may exercise its judgment based on our board of directors’ interactions with such executive officers.

 

•

Review of Peer Company Market Data. At the time compensation decisions were made for our U.S.-based and other senior executive officers in 2014, our Compensation Committee reviewed publicly available compensation data for companies that are engaged in business and technology services like us. The Compensation Committee took into account whether the companies had market capitalizations or annual revenues similar to ours, as well as the relevance of their geographic areas. The companies that composed our peer group for 2014 were as follows:

Peer Group Companies
Altisource Portfolio Solutions S.A.		IGATE Corporation
Ciber, Inc.		Sapient Corporation
Computer Task Group, Incorporated		Solera Holdings, Inc.
Convergys Corporation		Sykes Enterprises, Incorporated
CSG Systems International, Inc.		Syntel Inc.
EPAM Systems, Inc.		TeleTech Holdings, Inc.
Genpact Limited		Virtusa Corporation
HMS Holdings Corp.		WNS (Holdings) Limited

 

The compensation data for our peer group is compiled directly by Cook & Co., the independent consultant to the Compensation Committee. The peer group compensation data was supplemented by global general industry and technology industry survey data. The data from the surveys was scaled to our size by Cook & Co. based on revenues or corresponding revenue ranges as provided by the surveys. While the Compensation Committee reviewed and considered the data provided by these surveys, it did not consider or review the compensation paid to executives at the component companies included within such surveys and did not use this information or any other data as a benchmark to set executive compensation for fiscal year 2014.

 

Our Compensation Committee uses the compensation data to obtain a general understanding of current market practices, so it can design our executive compensation program to be competitive. Market data is not used exclusively, but rather as a point of reference to draw comparisons and distinctions. The Compensation Committee also takes into account an executive officer’s job responsibilities, performance, qualifications and skills in determining individual compensation levels.

 

•

Total Compensation Review. Our Compensation Committee determines the categories and presentation of compensation information required to evaluate each executive’s base pay, incentive bonus and equity incentives when changes in compensation are considered by our Compensation Committee and requests Cook & Co. compile such information. Compensation decisions are designed to promote our fundamental business objectives and strategy. Our Compensation Committee periodically reviews related matters such as succession planning and management, changes in the scope of managerial responsibilities, evaluation of management performance and consideration of the business environment, and considers such matters in making compensation decisions.

 

•

Role of the Compensation Committee’s Independent Compensation Consultant. Effective as of mid-2013 and continuing for 2014, the Compensation Committee retained the services of Cook & Co., a qualified and independent compensation consultant, to aid the Compensation Committee in performing its duties. The

 

 

Compensation Committee’s compensation consultant assists in collecting and evaluating external market data regarding executive compensation and performance, selecting peer group companies, reviewing the proxy statement, and advising the Compensation Committee on developing trends and best practices in executive compensation, director compensation, and equity and incentive plan design. Other than performing these consulting services, Cook & Co. does not provide other services to us or our executive officers. We have affirmatively determined that no conflict of interest has arisen in connection with the work of Cook & Co. as compensation consultant for the Compensation Committee.

 

Components of Executive Compensation for 2014

 

For 2014, the compensation of executive officers consisted of the following five primary components:

Compensation Component			Description			Objectives
Base Salary			•      Fixed compensation that is reviewed annually and is based on performance, experience, responsibilities, skill set and market value.			•      Provide a base level of compensation that corresponds to the job function performed. •      Attract, retain, reward and motivate qualified and experienced executives.
Annual Incentives			•      “At-risk” compensation earned based on performance measured against pre-established annual goals. •      Goals are tailored to each executive’s position.			•      Incentivize executives to achieve annual goals that ultimately contribute to long-term company growth and stockholder return.
Long-Term Incentives			•      “At-risk” compensation in the form of restricted stock unit awards whose value fluctuates according to stockholder value. •      50% of the award vests based on continued service. •      50% vests based on achievement of revenue and total stockholder return goals.			•      Align executive interests with those of stockholders. •      Reward continuous service with the company. •      Incentivize executives to achieve goals that drive company performance over the long-term.
Other Benefits			•      Broad-based benefits provided to company employees (e.g., health and group insurance), a retirement savings plan and other personal benefits where appropriate.			•      Provide a total compensation package that is competitive with the marketplace and addresses unique needs, especially for overseas executives.
Severance and Change in Control Protections			•      Protect executives during potentially tumultuous corporate transaction. •      Provide reduced post-employment compensation upon other involuntary terminations.			•      Allow executives to focus on generating stockholder value during a change in control transaction. •      Provide market-competitive post-employment compensation recognizing executives likely require more time to find subsequent employment.

 

 

Compensation Mix

 

Consistent with our compensation philosophy, our compensation program balances base salary, short-term incentive and long-term incentive opportunities provided to our executive officers. The following charts illustrate the mix of target compensation components for the Chief Executive Officer and the other named executive officers during the 2014 fiscal year. We have excluded the restricted stock units attributable to the 2013 fiscal year annual incentive program as those units do not relate to our fiscal year 2014 compensation program, and the annual bonus plan has been restructured to an all-cash plan for fiscal year 2014 and going forward.

 

As illustrated by the charts below, the majority of compensation that may be earned by our named executive officers is tied to the achievement of financial performance metrics (annual performance bonuses and PRSUs) or fluctuates with the underlying value of our common stock (RSUs).

 

Vice Chairman & CEO Compensation Mix	NEO’s Compensation Mix (Excluding VC & CEO)

 

 Detailed Review of Compensation Components

 

Base Salary

 

As discussed above, we provide our executive officers fixed compensation commensurate with their performance, experience, responsibilities, skill set and market value. This attracts and retains an appropriate caliber of talent for the position and provides a base wage that is not subject to our performance risk. In setting base salaries for 2014, our Compensation Committee considered:

 

Individual Performance		The degree to which the executive met and exceeded expectations.
Market Data		Geographical and market data to test reasonableness of compensation.
Overall Compensation Mix		Senior employees should have a greater portion of their compensation tied to increasing stockholder value.

 

 

Upon completing its review and as shown in the table below, the Compensation Committee determined that it was appropriate to keep Mr. Kapoor’s base salary the same in recognition of his many individual accomplishments and the Company’s performance. In addition, the Compensation Committee determined to increase the base salaries of Messrs. Chhibbar, Bagai and de Villa due to their individual contributions and the Company’s performance. The fixed compensation paid to Messrs. Chhibbar and Bagai is paid in Indian Rupees and the decrease shown below reflects exchange rate fluctuations. We have included the percentage increase with respect to their fixed compensation in their home currency (INR). Further, these amounts cover not only base salary for Messrs. Chhibbar and Bagai, but also amounts available as a travel allowance, an automobile allowance, a housing allowance, a medical allowance and a cash supplementary allowance, consistent with compensation practices in India.

 

Name		2013 Base Salary / Annual Fixed Compensation				2014 Base Salary / Annual Fixed Compensation (Effective April 2014)				% Increase / Decrease
Rohit Kapoor		$	565,000			$	565,000				0.0%
Vishal Chhibbar		$	328,886			$	298,387				-9.3% (5.7% INR)
Pavan Bagai		$	352,377			$	322,581				-8.5%  (6.7% INR)
Rembert de Villa		$	385,000			$	390,000				1.3%
Nancy Saltzman			N/A			$	325,000				N/A
William A. Bloom		$	530,000			$	530,000				0.0%

 Incentive Bonus

 

We have established an annual incentive bonus program in order to align our executive officers’ goals with our performance targets for the current year and to encourage meaningful contributions to our future financial performance. Our Compensation Committee approved the framework of our incentive bonus program in early 2014 for bonuses payable in respect of 2014 performance. Under the program, bonus target amounts, expressed as a percentage of base salary or annual fixed compensation, are established for participants at the beginning of each year unless their employment agreements contain different terms. Funding of potential bonus payouts for the year are determined by our financial results for the year relative to predetermined performance measures, and may be increased or decreased depending upon the executive’s individual performance against his or her performance goals. If our performance falls short of target, as was true for 2014 performance, our aggregate funding of the annual cash bonus incentive pool declines. If we do not achieve a minimum threshold for the established financial performance objectives, then the bonus pool is not funded for that particular objective. At the end of the performance period, our Compensation Committee has discretion to adjust an award payout from the amount yielded by the formula.

 

Our Compensation Committee considered the following when establishing the awards for 2014:

 

•

Bonus Targets. Bonus targets were established based on job responsibilities and comparable market data. Our objective was to set bonus targets such that total annual cash compensation was within the broad middle range of market data and a substantial portion of that compensation was linked to our performance. Consistent with our executive compensation policy, individuals with greater job responsibilities had a greater proportion of their total compensation tied to our performance. During 2014, our Compensation Committee established the following bonus targets (expressed as a percentage of base salary or annual fixed compensation) as well as maximum bonus targets for each named executive officer. In setting these targets, the Compensation Committee increased Mr. Kapoor’s target from 85% of his base salary in 2013 to 100% of his base salary in 2014 to increase the percentage of his compensation that was directly tied to Company performance.

 

 

Name		Bonus Target		Bonus Maximum
Rohit Kapoor		100% of base salary		200% of base salary
Vishal Chhibbar		50% of annual fixed compensation		100% of annual fixed compensation
Pavan Bagai		75% of annual fixed compensation		150% of annual fixed compensation
Rembert de Villa		75% of base salary		150% of base salary
Nancy Saltzman		50% of base salary		100% of base salary
William A. Bloom		75% of base salary		150% of base salary

 

•

Annual Bonuses Exclusively Denominated in Cash. As part of our effort to streamline our compensation program and make it more easily understandable, the Compensation Committee decided to denominate annual bonus opportunities in cash as opposed to a mix of cash and equity. The Committee believes cash bonuses also more clearly align with market compensation practices and make the Company’s overall compensation program more competitive. The long-term retention and performance features associated with equity grants continue to be an important part of the Company’s compensation mix, as described below.

 

•

Performance Measures. Our executives were eligible to earn annual bonuses based on their achievement of company-wide performance metrics and, in some cases, individual performance and business line or other company performance metrics, as described in the tables below.

 

Name		Company-Wide Performance(1)		Individual Performance		Business Line or Other Company Performance
Rohit Kapoor		100%(2)		—		—
Vishal Chhibbar(5)		60%		20%		20%(3)
Pavan Bagai		100%(2)		—		—
Rembert de Villa		40%(4)		—		60%(4)
Nancy Saltzman		60%		20%		20%(3)
William Bloom		100%(2)		—		—

 

(1)

Based 50% on the Company’s Adjusted EPS goal and 50% on the Company’s revenues goal, for all employees whose incentive bonus is linked to Company-wide financial performance, including our named executive officers.

 

(2)

The individual performance component for Mr. Kapoor, Mr. Bagai and Mr. Bloom was eliminated and merged with the Company-wide performance component for 2014, as communicated in the proxy statement filed in connection with our 2014 Annual Meeting of Stockholders.

 

(3)

For Mr. Chhibbar and Ms. Saltzman, 20% of each of their 2014 target cash bonus was dependent on performance against budgeted goals for G&A expenses of their respective departments.

 

(4)

The weightage of financial performance of the healthcare business line for Mr. de Villa was increased from 30% in 2013 to 60% for 2014, specifically with respect to revenue (24%), new client revenue (12%) and contribution margin percentages (24%). The weightage for his individual performance has been eliminated for 2014. The weightage for the Company-wide performance component has been increased from 30% in 2013 to 40% for 2014.

 

(5)

For Mr. Chhibbar, the individual performance weightage was reduced from 40% to 20% and his Company-wide performance weightage increased from 40% to 60% as communicated in the proxy statement filed in connection with our 2014 Annual Meeting of Stockholders.

 

The Compensation Committee believes Messrs. Kapoor’s and Bagai’s annual bonus should be entirely based on the Company’s Adjusted EPS and revenues goals due to the nature of their positions as Vice Chairman and CEO and President and Chief Operating Officer, respectively. The Committee believed it was important to set the individual and/or business line or other Company performance goals described above for Messrs. Chhibbar and de Villa and Ms. Saltzman to ensure the executives were properly focused on both the Company’s Adjusted EPS and revenue goals, and other areas of performance that are unique to their positions within the organization. The Compensation Committee believes achievement of these performance metrics will drive our business and, in turn, lead to increased stockholder value.

 

 

•

Determination of Financial Performance Achievement. In 2014, the portion of incentive bonus payments that were subject to financial performance measures could have ranged from zero to 200% of target depending on the achievement of performance goals, as follows:

 

% of Adjusted EPS Achieved  Compared to Target Goal:		% of Target Portion Funded:
Less than 90%		0%
At 90%		25%
From 90% to 100%		Linear interpolation from 25% to 100%
At 100%		100%
From 100% to 110%		Linear interpolation from 100% to 200%
Above 110%		200%

 

% of Revenues Achieved  Compared to Target Goal:		% of Target Portion Funded:
Less than 90%		0%
At 90%		25%
From 90% to 100%		Linear interpolation from 25% to 100%
At 100%		100%
From 100% to 110%		Linear interpolation from 100% to 200%
Above 110%		200%

  

In 2014, our Compensation Committee established an Adjusted EPS target of $1.85 and a revenue target of $501.81 million. Based on our performance during the 2014 fiscal year, we achieved 96.6% of our Adjusted EPS target, and 101.5% of our revenues target. The targets were adjusted by our Compensation Committee to include the effect of the Blue Slate and Overland acquisitions.

 

The bonus pool funding for employees whose bonuses are tied to the performance of specific business lines is determined by targets established for such businesses by our Compensation Committee.

 

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Individual Performance Measures. As discussed above, Mr. Chhibbar and Ms. Saltzman may earn a portion of their respective annual incentive bonuses based on the achievement of individual performance measures. These goals are designed to balance the attention of our named executive officers between the achievement of near-term objectives that improve specific processes or performance metrics and long-term objectives for us. While some of the goals are subjective, certain other goals, such as client and employee satisfaction metrics, are capable of objective measurement. The individual performance measures were generally as follows:

 

 

Name		Individual Performance Goals
Vishal Chhibbar		•      Achievement of corporate financial targets •      Business growth through strategic acquisitions/executive sponsorship of F&A CoE •      Capabilities and strategic initiatives with special focus on profitability •      Strengthening finance department leadership, organization and operations
Nancy Saltzman		•      Manage and execute all aspects of public company compliance and strategic assignments •      Leadership and legal functional capability development •      Evaluate company global risk profile and identify areas for mitigation/improvement

 

Determination of Individual Performance Achievement.

 

Mr. Kapoor made performance assessments and compensation recommendations for Mr. Chhibbar and Ms. Saltzman, and our Compensation Committee approved the recommendations after reviewing similar considerations for such named executive officers. For Mr. Chhibbar, our Compensation Committee noted his role in enabling the Company to keep track of all relevant financial metrics, playing a key role in acquisitions, strengthening the finance department’s personnel and procedures and effectively engaging with investors and the broader investment community. For Ms. Saltzman, our Compensation Committee noted her role in managing and executing Company compliance and strategic assignments, strengthening the legal function and assessing and managing our global risk profile.

 

•

Actual Bonus Payments.

 

The table below sets out the 2014 incentive bonuses paid to our named executive officers in March 2015. Mr. Bloom did not receive a bonus due to his resignation prior to the end of the performance period.

Name			Earned 2014 Incentive Bonus ($)
Rohit Kapoor			535,760
Vishal Chhibbar			130,457	(1)
Pavan Bagai			222,188	(1)
Rembert de Villa			124,676
Nancy Saltzman(2)			110,002

  

(1)

The exchange rate used for the bonus conversion from Indian rupees to U.S. dollars for Mr. Chhibbar and Mr. Bagai was 63.03.

 

(2)

Ms. Saltzman joined the Company on April 21, 2014. Her bonus has been pro-rated based on the number of days from date of joining until December 31, 2014.

 

Long-Term Equity Incentives

 

Like the annual bonus program, the Compensation Committee implemented a streamlined equity incentive design in fiscal year 2014. Under this new program, our executive officers continued to receive restricted stock units under the 2006 Omnibus Award Plan (the “2006 Plan”). We awarded restricted stock units to all of our named executive officers, other than Ms. Saltzman, in the portions shown below. Ms. Saltzman was awarded Time-Vested RSUs as part of her joining to attract her candidature, for long-term retention and to replace certain equity awards she forfeited as a result of her departure from her prior employer.

 

 

•      The Time-Vested RSUs are subject to Standard Graded Vesting – 10% after first year, an additional 20% after second year, an additional 30% after third year and an additional 40% after fourth year (except for Mr. Kapoor, whose restricted stock units will vest in increments of 25% on each of the first four anniversaries of the grant date), subject to continuous service with the Company through the applicable vesting date. •      The Committee believes these Time-Vested RSUs provide an important role in promoting retention of our executive officers.

•

The “Performance-Vested” portion of the 2014 RSUs (“PRSUs”) are split into two types that each vest based on separate performance measures as follows:

 

○

Revenue-Linked PRSUs: 50% of these performance-based restricted stock unit awards will cliff-vest on December 31 of the third fiscal year in the performance period, subject to achievement of threshold Company revenues against an annual revenue target for such third fiscal year and continuous employment through December 31, 2016 — we call these awards “Revenue-Linked PRSUs.”

 

§

Up to one-third of Revenue-Linked PRSUs may also be “banked” based on the Company’s actual revenue performance against annual revenue targets in each of the first and second years of the performance period.

 

•

For example, the awards granted in February 2014 would cliff-vest on December 31, 2016, subject to achievement of Company revenues against the threshold target for 2016, but up to one-third of the units may be banked based on actual revenue performance for each of 2014 and 2015. The ultimate amount of Revenue-Linked PRSUs that a recipient earns, which may be up to 200% of the target award of Revenue-Linked RSUs, will equal the greater of (x) the Revenue-Linked PRSUs earned based on achievement of the annual revenue target for the third fiscal year of the performance period, and (y) the sum of the banked Revenue-Linked PRSUs earned in the first and second year of the grant.

 

•

Based on the Company’s performance during fiscal 2014, our executives banked one-third of their Revenue-Linked PRSUs based on exceeding the $517.71 million annual revenue target, which includes the Compensation Committee’s adjustment to include the effect of the Blue Slate and Overland transactions and excludes the effect of disentanglement costs.

 

Relative TSR-Linked PRSUs: The remaining 50% of the performance-based restricted stock unit awards cliff-vest on December 31 of the third fiscal year in the performance period, based on the achievement of relative total stockholder return performance of the Company against a peer group over the grant’s three-year performance period of January 1, 2014 to December 31, 2016 and continuous employment through December 31, 2016 — we call these awards “Relative TSR-Linked PRSUs.” The Company’s TSR for the TSR performance period will be computed and then compared to the TSR of the companies in the TSR peer group, which is comprised of the public companies in our 8-digit Global Industry Classification Standard sub-industry group. A participant shall earn 200%, 100% or 0% of the Relative TSR-Linked PRSUs, as applicable, if the Company’s TSR for the performance period equals or exceeds the 80th, 50th or 20th percentile, respectively, of the TSR peer group, when ranked by TSR for the TSR performance period. The percentage of Relative TSR-Linked PRSUs earned will be determined based on straight-line interpolation to the extent the Company’s TSR falls in between the 20th and 80th percentiles, as per the chart below:

 

 

TSR Peer Group Percentile		Percentage of Relative TSR-Linked PRSUs Earned
80.0		200%
50.0		100%
20.0		0%

 

•     The Committee believes the PRSUs focus our executives on key drivers of our Company’s business that will ultimately lead to creation of additional stockholder value.

 

The table below shows the amount of Time-Vested and Performance-Vested RSUs our Compensation Committee awarded our named executive officers in 2014. In general, the Compensation Committee believes that the size of the award granted to an executive officer should increase based on the executive officer’s level of responsibility within the Company.

 

Name		Time Vested RSUs			Revenue-Linked PRSUs			Relative TSR-Linked PRSUs
Rohit Kapoor		37,500			18,750			18,750
Vishal Chhibbar		7,000			3,500			3,500
Pavan Bagai		11,500			5,750			5,750
Rembert de Villa		5,000			2,500			2,500
Nancy Saltzman		20,000			—			—
William Bloom		11,500			5,750			5,750

  

The Committee continues to believe that long-term equity awards provide employees with the incentive to stay with us for longer periods of time, which in turn, provides us with greater stability as we grow. These incentives foster the long-term perspective necessary for continued success in our business because the value of the awards is directly linked to long-term stock price performance, and they ensure that our executive officers are properly focused on stockholder value.

 

Moreover, the Committee favors restricted stock unit awards as these awards offer executives the opportunity to receive shares of our common stock on the date that the restrictions lapse. Such awards serve both to reward and retain executives because value is linked to the price of our stock on the date that the restriction lapses, and the executive must generally remain in employment through the date that the restrictions lapse. Restricted stock unit awards provide a significant degree of alignment of interests between our executives and stockholders.

 

The Committee also believes that the mix between Time-Vested RSUs and Performance-Vested RSUs provides an appropriate balance between incentivizing our executives to continue their employment with the Company and to ensure they are focused on long-term financial performance and generating stockholder value, which will enable them to realize additional compensation.

 

Finally, restricted stock units are potentially less dilutive to stockholders’ equity because restricted stock awards are full value awards, and our Compensation Committee can award fewer restricted stock unit awards than an equivalent value of stock options.

 

 

Looking Forward to 2015

 

Following our redesign of our annual bonus program and our long-term equity incentives last year, the Compensation Committee determined to continue these programs as described above in fiscal 2015, subject of course, to new performance goals.

 

Effective April 1, 2015 the Compensation Committee approved a modest increase in base salary for certain named executive officers.

 

For the Relative TSR-Linked PRSUs granted in 2015, the Company implemented a negative TSR cap. Under the negative TSR cap, if the total stockholder return is negative over the course of the three year performance period, no named executive officer may receive greater than 100% funding of the TSR-Linked PRSUs.

 

We have revised our annual incentive bonus program to provide each named executive officer the opportunity to earn a portion of his or her bonus based on the achievement of individual performance goals.

 

In the second quarter of 2015 we entered into a new employment agreement with Mr. Kapoor that is effective as of January 1, 2016. Mr. Kapoor’s new agreement provides for an initial employment term that extends until December 31, 2017 and automatically renews for successive one-year periods unless terminated with 120 days prior notice. Under his new agreement, Mr. Kapoor’s annual base salary will be increased to $600,000 and his target annual cash bonus opportunity will continue to equal 100% of his base salary with a maximum of 200% of his base salary. In addition, Mr. Kapoor will continue to remain eligible to receive equity awards with vesting terms no less favorable than ratable vesting over four years from the date of grant.

 

Mr. Kapoor’s new employment agreement also provides him with certain severance payments and benefits if his employment is terminated without cause or if he resigns for good reason. Absent a change in control, Mr. Kapoor will generally receive the payments and benefits described in the section titled Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End, but will also be treated as continuing his employment for two years after his termination date for purposes of determining whether he may vest in any annual equity awards (but not one-time or special grants) according to the terms and conditions applicable to such awards. If Mr. Kapoor is terminated without cause or he resigns for good reason within 12 months following a change in control (or prior to if at the request of an acquirer or in connection with or anticipation of the change in control), Mr. Kapoor will receive a lump sum payment equal to 24 months of his base salary, plus the benefits described in the section titled Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End. Mr. Kapoor’s new employment agreement also contains a “modified cut-back” provision such that any payments that constitute “excess parachute payments” under Section 280G of the Code will be reduced to an amount that does not trigger the applicable excise taxes, to the extent such reduced amount is larger than the amount Mr. Kapoor would have received on a present-value net-after-tax basis (including excise taxes) absent such a reduction. Mr. Kapoor’s new agreement continues to provide him with certain post-termination health benefits that are similar to those that are described in the section titled Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End and also provides him with access to the Company’s group health plan following his termination of employment.

 

As provided in his new employment agreement and pursuant to the terms of our 2006 Plan, Mr. Kapoor received an award of 100,000 PRSUs (the “Target Award”) in the second quarter of 2015 that he may earn based on the Company’s average stock price exceeding certain targets during the 60 day period prior December 31, 2017 and contingent upon his continuous service through that date. The amount of PRSUs Mr. Kapoor ultimately receives may be between 0% and 200% of his Target Award, based on actual performance. Mr. Kapoor will vest in a portion of his PRSUs representing his service from January 1, 2015 through his termination date plus an additional year (the “Enhanced Pro-Rata Portion”) if his employment terminates prior to a change in control due to a termination without cause, his death or disability, or his resignation for good reason.  In addition, a portion of the PRSUs outstanding as of the date of a change of control will convert to Time-Vested RSUs (“CIC RSUs”), based on the Company’s average stock price during the 60 days prior to the change in control, that cliff-vest on December 31, 2017, contingent upon Mr. Kapoor’s continued employment through that date. An Enhanced Pro-Rata Portion of any such

 

 

CIC RSUs will vest immediately upon Mr. Kapoor’s termination of employment on or after a change in control due to his termination without cause, death or disability, resignation for good reason, failure to assume, continue or substitute the CIC RSUs by an acquirer. Finally, if Mr. Kapoor’s employment is terminated prior to a change in control at the request of an acquirer or that otherwise arose in connection with or in anticipation of a change in control he will vest in the greater of the Enhanced Pro-Rata Portion of the CIC RSUs (assuming his employment continued through the change in control) or the PRSUs he would have received due to his termination without cause, absent a change in control.

 

Benefits and Perquisites

 

We offer employee benefits coverage in order to:

 

•

provide our global workforce with a reasonable level of financial support in the event of illness or injury; and

 

•

provide market-competitive benefits that enhance productivity and job satisfaction through programs that focus on work/life balance.

 

The benefits available for all U.S. employees include customary medical and dental coverage, disability insurance and life insurance. In addition, our 401(k) plan provides a reasonable level of retirement income reflecting employees’ careers with us. A number of our U.S. employees, including our U.S.-based named executive officers, participate in these plans. The cost of employee benefits is partially borne by our employees, including our named executive officers. Our named executive officers in India, Messrs. Chhibbar and Bagai, are eligible to participate in the Company’s pension benefit, health and welfare and fringe benefit plans otherwise available to executive employees stationed in India.

 

We generally do not provide significant perquisites or personal benefits to executive officers other than our CEO and our executive officers stationed in India. Our CEO is provided a limited number of perquisites whose primary purpose is to minimize distractions from his attention to our important initiatives and to be competitive. A discussion of the benefits provided to our CEO is provided under “Employment Agreements” beginning on page 37.

 

Severance and Change-in-Control Benefits

 

Each named executive officer is party to an employment agreement or letter that sets forth the terms of his or her employment, including compensation, which was negotiated through arms’-length contract negotiations. Under these employment agreements or letters, we are obligated to pay severance or other enhanced benefits upon termination of their employment. A discussion of the severance and other enhanced benefits provided to our named executive officers is provided under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

We have provided change-in-control severance protection for certain of our executive officers, including our named executive officers. Our Compensation Committee believes that such protection is intended to preserve employee morale and productivity and encourage retention in the face of the disruptive impact of an actual or rumored change in control. In addition, for executive officers, the program is intended to align executive officers’ and stockholders’ interests by enabling executive officers to consider corporate transactions that are in the best interests of our stockholders and other constituents without undue concern over whether the transactions may jeopardize the executive officers’ own employment.

 

Senior executive officers, including our named executive officers, have enhanced levels of benefits based on their job level, seniority and probable loss of employment after a change in control. We also consider it likely that it will take more time for senior executive officers to find new employment.

 

 

Deductibility Cap on Executive Compensation

 

Our Compensation Committee’s general policy is that compensation should qualify as tax deductible to the Company for federal income tax purposes whenever possible, to the extent consistent with our overall compensation goals. Under Section 162(m) of the Code, compensation paid to certain of our named executive officers (other than our chief financial officer) in excess of $1 million per year is not deductible unless the compensation is “performance-based” as described in the regulations under Section 162(m). Compensation is generally “performance-based” if it is determined using pre-established objective formulas and criteria approved by stockholders within the past five years. Compensation awards under our 2006 Plan generally are designed to maximize tax deductibility by satisfying the performance-based compensation exception to Section 162(m). The performance-based provisions of our 2006 Plan were approved by our stockholders at the 2014 Annual Meeting of Stockholders. Changes in applicable tax laws and regulations as well as factors beyond the control of the Compensation Committee can adversely impact the deductibility of compensation paid to our executive officers who are covered by Section 162(m). Our Compensation Committee believes that mathematical formulas cannot always anticipate and fairly address every situation that might arise. The Compensation Committee therefore retains the authority to adjust compensation in the case of unexpected, unusual or non-recurring events or to attract and retain key executive talent, even if this results in the payment of non-deductible compensation or to otherwise award or pay non-deductible compensation if the Committee deems it in the best interests of the Company and its stockholders to do so.

 

Our Compensation Committee may make payments that are not fully deductible if, in its judgment, such payments are necessary to achieve our compensation objectives and to protect stockholder interests.

 

Subject to stockholder approval, our Compensation Committee has approved the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (the “2015 Plan”). As described in greater detail under Proposal 4 located on page 69, the 2015 Plan reserves additional shares for issuance and makes certain other changes to the 2006 Plan.

 

Compensation Committee Report

 

The Compensation Committee of the board of directors of ExlService Holdings, Inc. has reviewed and discussed the Compensation Discussion and Analysis with our management and, based on such review and discussion, has recommended to the board of directors of ExlService Holdings, Inc. that the Compensation Discussion and Analysis be included in our Annual Report on Form 10-K, and our proxy statement relating to the Annual Meeting.

  

COMPENSATION COMMITTEE Ms. Anne Minto (Current Chairman)  Mr. Garen K. Staglin (Chairman during 2014) Ms. Deborah Kerr  Mr. Som Mittal  Mr. Clyde W. Ostler

 

Summary Compensation Table for Fiscal Year 2014

 

The following table sets forth information for compensation earned in fiscal years 2012, 2013 and 2014 by our named executive officers:

Name and Principal Position		Year		Salary ($)			Bonus ($)(11)		Stock Awards ($)(4)		Option Awards ($)		Non-Equity Incentive Plan Compensation ($)(5)		Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(6)		All Other Compensation ($)			Total ($)
Rohit Kapoor Vice Chairman & CEO		2014 2013 2012		565,000 553,904 515,027			— — —		2,164,263 2,276,711 1,021,267		— — 997,850		535,760 169,070 334,096		— — —		44,198 38,433 85,517	(7)		3,309,221 3,038,118 2,953,757
Vishal Chhibbar Executive Vice President and CFO		2014 2013 2012		250,272 250,119 208,169	(2)		— 6,129 23,601		415,549 381,028 146,391		— — 113,090		130,457 109,880 147,900		8,066 7,529 7,024		35,879 24,205 43,508	(8)		840,222 778,890 689,682
Pavan Bagai President & Chief Operating Officer		2014 2013 2012		235,363 225,475 237,347	(3)		— 28,381 9,832		681,554 720,673 370,312		— — 332,617		222,188 126,568 227,949		9,010 8,511 6,500		84,938 68,747 76,577	(9)		1,233,053 1,178,356 1,261,133
Rembert de Villa Executive Vice President &  Head of Healthcare		2014 2013 2012		388,767 382,534 372,004			— 6,715 8,839		332,637 315,996 158,528		— — 82,041		124,676 144,183 280,045		— — —		8,250 8,250 14,034			854,330 857,679 915,491
Nancy Saltzman Executive Vice President, General Counsel & Corporate Secretary		2014 2013 2012		227,055 — —			— — —		566,800 — —		— — —		110,002 — —		— — —		3,211 — —			907,068 — —
William A. Bloom(1) Former President, Global Client Services		2014 2013 2012		288,959 526,301 511,270			— — 10,713		712,925 744,616 402,017		— — 332,617		— 170,797 363,858		— — —		14,679 21,105 33,382	(10)		1,016,563 1,462,820 1,653,856

(1)

Mr. Bloom voluntarily resigned from the Company effective July 18, 2014. The amount set forth in the “Salary” and “Bonus” columns are pro-rated amounts based on the number of days Mr. Bloom was employed by the Company. The amount set forth in the “Stock Awards” column is based on the fair market value of the awards as of the grant date and does not take into account any subsequent forfeitures.

 

(2)

The amount set forth in the “Salary” column for Mr. Chhibbar includes $123,354 of base salary, $40,844 of a cash supplementary allowance, $74,012 of housing allowance (which Mr. Chhibbar elected to receive instead of cash), $10,275 of travel allowance (which Mr. Chhibbar elected to receive instead in cash), $1,549 of a special car allowance (which Mr. Chhibbar elected to receive instead of cash) and $238 of medical allowance (which Mr. Chhibbar elected to receive instead in cash).

 

(3)

The amount set forth in the “Salary” column for Mr. Bagai includes $109,323 of base salary, $92,007 of a cash supplementary allowance, $24,661 of housing allowance (which Mr. Bagai elected to receive instead in cash), $9,107 of travel allowance (which Mr. Bagai elected to receive instead in cash), $238 of medical allowance (which Mr. Bagai elected to receive instead in cash), and $27 of a special car allowance (which Mr. Bagai elected to receive instead in cash).

 

(4)

Amounts reflect the total grant date fair value of awards recognized for financial statement reporting purposes for the fiscal years ended December 31, 2012, 2013 and 2014, in accordance with FASB ASC Topic 718 (disregarding any forfeiture assumptions). Assumptions used in the calculation of these amounts are included (i) for 2014, in footnotes 2 and 14 to the audited financial statements for the fiscal year ended December 31, 2014, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27,_2015; (ii) for 2013, in footnotes 2 and 13 to the audited financial statements for the fiscal year ended December 31, 2013, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 3, 2014; and (iii) for 2012, in footnotes 2 and 13 to the audited financial statements for the fiscal year ended December 31, 2012, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 7, 2013.

 

 

With respect to stock awards granted in 2014, the table below sets forth the value attributable to performance restricted stock units valued at target achievement:

Name		Target Total Grant Date Fair Value ($)
Rohit Kapoor			1,110,563
Vishal Chhibbar			207,305
Pavan Bagai			340,573
Rembert de Villa			148,075
William A. Bloom			340,573

 

Performance restricted stock units granted in 2014 may pay out up to 200% of the target award, which would have amounted to the following grant date fair values for each named executive officer:

Name		Maximum Total Grant Date Fair Value ($)
Rohit Kapoor			2,221,126
Vishal Chhibbar			414,610
Pavan Bagai			681,146
Rembert de Villa			296,150
William A. Bloom			681,146

 
Ms. Saltzman was not awarded any performance restricted stock units in 2014.

 

(5)

Reflects the cash incentive bonuses earned in respect of 2014 and paid in 2015. For details on our annual incentive bonus program, see “Compensation Discussion and Analysis—Incentive Bonus” beginning on page 25.

 

(6)

Reflects the present value of accruals under the Gratuity Plan for Indian Employees. Information regarding our Gratuity Plan (including the assumptions used to calculate these amounts) may be found under “Pension Benefits for Fiscal Year 2014” beginning on page 49.

 

(7)

Amount for Mr. Kapoor includes the travel allowance ($27,456) provided for under his employment agreement, to be used for once-a-year business class airfare for himself and his family between the United States and India, costs associated with use of an automobile and driver, car lease rental and home internet and telephone charges.

 

(8)

Amount for Mr. Chhibbar includes contributions to the Employees’ Provident Fund Scheme (a statutorily required defined contribution program for Indian employees) ($14,803), costs associated with use of an automobile and driver in India, car lease, and home internet and telephone charges.

 

(9)

Amount for Mr. Bagai includes housing allowance ($40,933), contributions to Employees’ Provident Fund Scheme (a statutorily required defined contribution program for Indian employees) ($13,119), costs associated with use of an automobile and driver in India, car lease, and home internet and telephone charges.

 

(10)

Amount for Mr. Bloom includes tax planning fees and a payment to gross up the tax planning fees so that the economic benefit to him was the same as if such benefit were provided on a non-taxable basis.

 

(11)

There were no discretionary bonuses paid out for 2014.

 

For this executive compensation disclosure, U.S. dollar figures for 2014 have been converted from Indian rupees at a rate of 63.03 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect on December 31, 2014. Due to exchange rate fluctuations, the amounts set forth in the compensation tables and the following disclosure with respect to Messrs. Chhibbar’s and Bagai’s salary are slightly different than the amounts set forth in the “Compensation Discussion and Analysis” section above. The amounts set forth in the “Compensation Discussion and Analysis” section above were reported as U.S. dollar figures converted from Indian rupees at a rate of 62.00 rupees to $1.00, which was the Indian rupee to U.S. dollar exchange rate in effect on January 31, 2014, the date on which Messrs. Chhibbar’s and Bagai’s 2014 annual fixed compensation value was approved. For this executive compensation disclosure, U.S. dollar figures for 2013 have been converted from Indian rupees at a rate of 61.78 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect on December 31, 2013 and U.S. dollar figures for 2012 have been converted from Indian rupees at a rate of 54.99 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect on December 31, 2012.

 

 

Grants of Plan-Based Awards Table for Fiscal Year 2014

 

The following table sets forth information concerning grants of stock and option awards and non-equity incentive plan awards granted to our named executive officers during fiscal year 2014:

				Estimated Future 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 ($)
Name		Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)			Maximum (#)
Rohit Kapoor		—		—		565,000		1,130,000									—			—
		2/13/14								—		18,750	(2)		37,500		—			480,563	(6)
		2/13/14								—		18,750	(3)		37,500		—			630,000	(6)
		2/13/14															37,500	(4)		961,125
		2/13/14															3,612	(5)		92,576
Vishal Chhibbar		—		—		144,799		289,599									—			—
		2/13/14								—		3,500	(2)		7,000		—			89,705	(6)
		2/13/14								—		3,500	(3)		7,000		—			117,600	(6)
		2/13/14															7,000	(4)		179,410
		2/13/14															1,125	(5)		28,834
Pavan Bagai		—		—		234,314		468,629									—			—
		2/13/14								—		5,750	(2)		11,500		—			147,373	(6)
		2/13/14								—		5,750	(3)		11,500		—			193,200	(6)
		2/13/14															11,500	(4)		294,745
		2/13/14															1,804	(5)		46,237
Rembert de Villa		—		—		291,575		583,151									—			—
		2/13/14								—		2,500	(2)		5,000		—			64,075	(6)
		2/13/14								—		2,500	(3)		5,000		—			84,000	(6)
		2/13/14															5,000	(4)		128,150
		2/13/14															2,201	(5)		56,412
Nancy Saltzman		—		—		113,527		227,055									—			—
		4/21/14															20,000	(4)		566,800
William A. Bloom		—		—		216,719		433,438									—			—
		2/13/14								—		5,750	(2)		11,500					147,373	(6)
		2/13/14								—		5,750	(3)		11,500					193,200	(6)
		2/13/14															11,500	(4)		294,745
		2/13/14															3,028	(5)		77,608

(1)

These amounts reflect the target and maximum cash incentive bonuses set for 2014. For details of our annual incentive bonus program, see “Compensation Discussion and Analysis – Incentive Bonus” beginning on page 25.

 

(2)

Represents annual awards of Revenue-Linked PRSUs granted under the 2006 Plan, subject to the vesting set forth in footnote 7.

 

(3)

Represents annual awards of Relative TSR-Linked PRSUs granted under the 2006 Plan, subject to the vesting set forth in footnote 7.

 

(4)

Represents annual awards of restricted stock units granted under the 2006 Plan, subject to the vesting set forth in footnote 7.

 

(5)

Represents bonus-related restricted stock units, granted in respect of 2013 performance pursuant to the 2013 annual incentive bonus program. Such restricted stock units were granted under the 2006 Plan, subject to the vesting set forth in footnote 7.

 

(6)

The grant date fair value of the estimated future payouts under equity incentive plan awards are based on the Monte Carlo value.

 

 

(7)

The vesting schedules of the stock grants mentioned in the table are as follows (subject to continued employment through each applicable vesting date):

Name		Grant Date		Vesting Start Date		Vesting Schedule
Rohit Kapoor		2/13/2014		2/13/2014		Restricted Stock Units: Vesting over 4 years – 25% each year
		2/13/2014		2/13/2014		Revenue-Linked PRSUs: 100% vesting on 12/31/2016, subject to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
		2/13/2014		2/13/2014		Relative TSR-Linked PRSUs: 100% vesting on 12/31/2016
		2/13/2014		2/13/2014		Restricted Stock Units (2013 Bonus-Related): Vesting over 3 years – 33.33% each year
Vishal Chhibbar		2/13/2014		2/13/2014		Restricted Stock Units: Vesting over 4 years – 10%, 20%, 30% and 40%
		2/13/2014		2/13/2014		Revenue-Linked PRSUs: 100% vesting on 12/31/2016, subject to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
		2/13/2014		2/13/2014		Relative TSR-Linked PRSUs: 100% vesting on 12/31/2016
		2/13/2014		2/13/2014		Restricted Stock Units (2013 Bonus Related): Vesting over 3 years – 33.33% each year
Pavan Bagai		2/13/2014		2/13/2014		Restricted Stock Units: Vesting over 4 years – 10%, 20%, 30% and 40%
		2/13/2014		2/13/2014		Revenue-Linked PRSUs: 100% vesting on 12/31/2016, subject to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
		2/13/2014		2/13/2014		Relative TSR-Linked PRSUs: 100% vesting on 12/31/2016
		2/13/2014		2/13/2014		Restricted Stock Units (2013 Bonus Related): Vesting over 3 years – 33.33% each year
Rembert de Villa		2/13/2014		2/13/2014		Restricted Stock Units: Vesting over 4 years – 10%, 20%, 30% and 40%
		2/13/2014		2/13/2014		Revenue-Linked PRSUs: 100% vesting on 12/31/2016, subject to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
		2/13/2014		2/13/2014		Relative TSR-Linked PRSUs: 100% vesting on 12/31/2016
		2/13/2014		2/13/2014		Restricted Stock Units (2013 Bonus Related): Vesting over 3 years – 33.33% each year
Nancy Saltzman		4/21/2014		4/21/2014		Restricted Stock Units: Vesting over 4 years – 10%, 20%, 30% and 40%
William A. Bloom		2/13/2014		2/13/2014		Restricted Stock Units: Vesting over 4 years – 10%, 20%, 30% and 40%
		2/13/2014		2/13/2014		Revenue-Linked PRSUs: 100% vesting on 12/31/2016, subject to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
		2/13/2014		2/13/2014		Relative TSR-Linked PRSUs: 100% vesting on 12/31/2016
		2/13/2014		2/13/2014		Restricted Stock Units (2013 Bonus Related): Vesting over 3 years – 33.33% each year

 

Employment Agreements

 

Rohit Kapoor

 

Mr. Kapoor serves as our Vice Chairman and CEO, and is based at our executive offices in New York, New York. We entered into an employment agreement with him, effective September 30, 2006, which has been amended from time to time. Mr. Kapoor’s employment agreement will be automatically extended for successive 12-

 

 

month periods at the end of any fixed term unless either party provides the other with 120 days’ notice of its desire not to extend the agreement.

 

Salary and Bonus. Mr. Kapoor’s base salary remained at $565,000, effective April 1, 2014. Mr. Kapoor’s base salary can be increased at our sole discretion and cannot be decreased unless a Company-wide decrease in pay is implemented. His base salary must not be less than the base salary of any other employee of the Company subject to Section 16 of the Exchange Act, other than those who become employed by the Company by means of an acquisition of a corporation or business and become employees of the Company subject to a preexisting employment arrangement. Mr. Kapoor can earn an annual cash bonus, with a target of 100% of base salary and a maximum of 200% of base salary, based upon the attainment of criteria determined by our Compensation Committee.

 

Equity Grants. Mr. Kapoor remains eligible to receive stock options and/or restricted stock awards annually during the term, in amounts and forms we determine. Any stock options will be granted with an exercise price equal to the fair market value of our common stock at the time of grant. Any future stock option or restricted stock awards will vest 25% per year over four years, unless otherwise agreed.

 

Benefits. Mr. Kapoor is eligible to participate in all employee benefit plans we provide to senior executives and employees generally. If we require Mr. Kapoor to relocate, we will pay the relocation costs. We will reimburse him for the after-tax cost of maintaining his existing home. He will need to use his best efforts to mitigate our cost by either renting or selling his home.

 

Personal Benefits.

 

We provide Mr. Kapoor with certain personal benefits, including:

 

•       certain club memberships;

 

•       furniture and equipment for a home office;

 

•       term life insurance policy with a face value of $500,000;

 

•       education allowance for private school tuition for executive’s children through secondary school during the period when the executive and his immediate family live outside the United States in connection with Company business;

 

•       once-a-year business class airfare between the United States and India (or India and the United States, as applicable) for the executive and his family;

 

•       reimbursement of additional taxes the executive must pay because he either works or lives in India or travels to India for work;

 

•       up to $12,000 for personal tax and estate planning expenses during the term of the agreement;

 

•       expenses associated with maintaining an automobile in the United States (including up to $1,400 per month for lease or loan payments for Mr. Kapoor);

 

•       up to $12,000 per year for expenses associated with maintaining an automobile in India (including the cost of a driver);

 

•       personal security for the executive and his family while in India;

 

 

•       reimbursement for first-class business travel; and

 

•       $150 per diem billeting allowance for each night that the executive does not stay in a hotel during travel to India on Company business, thereby saving us from incurring boarding and lodging expenses.

 

Mr. Kapoor’s employment agreement also includes severance, termination and noncompetition provisions which are described below under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

Please refer to page 31 of the Compensation Discussion and Analysis for a summary of the material revisions to Mr. Kapoor’s employment agreement made during the 2015 fiscal year.

 

Vishal Chhibbar

 

Mr. Chhibbar serves as our Executive Vice President and CFO, and is based in India. We entered into an employment agreement with him, effective May 1, 2009, which will continue until termination.

 

Salary, Bonus and Equity. Mr. Chhibbar’s annual fixed compensation, measured in his home currency of Indian rupees, was increased by 5.7% effective April 1, 2014. Mr. Chhibbar’s annual fixed compensation includes base salary, as well as amounts available as a leave travel allowance, a housing allowance, an automobile allowance, a medical allowance and a cash supplementary allowance. In addition, under his agreement, Mr. Chhibbar can earn an annual cash bonus, with a target of 50% of annual fixed compensation and a maximum of 100% of annual fixed compensation, based upon the attainment of criteria determined by our Compensation Committee. Mr. Chhibbar is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee.

 

Mr. Chhibbar’s employment agreement also includes severance, termination and noncompetition provisions which are described below under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

Pavan Bagai

 

Mr. Bagai serves as our President and Chief Operating Officer, and is based in India. We entered into an employment agreement with him, effective July 31, 2002 and a severance letter, effective March 15, 2011, each of which will continue until termination.

 

Salary, Bonus and Equity. Mr. Bagai’s annual fixed compensation, measured in his home currency of Indian rupees, was increased by 6.7% effective April 1, 2014. Mr. Bagai’s annual fixed compensation includes base salary, as well as amounts available as a leave travel allowance, a housing allowance, an automobile allowance, a medical allowance and a cash supplementary allowance. In addition, Mr. Bagai can earn an annual cash bonus, with a target of 75% of annual fixed compensation and a maximum of 150% of annual fixed compensation in 2014, based upon the attainment of criteria determined by our Compensation Committee. Mr. Bagai is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee.

 

Mr. Bagai’s employment and severance agreements also include severance, termination and noncompetition provisions which are described below under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

Rembert de Villa

 

Mr. de Villa serves as our Executive Vice President and Head of Healthcare and is based at our executive offices in New York, New York. We entered into an offer letter with him, effective as of March 20, 2008, and severance letter, effective as of March 15, 2011.

 

 

Salary, Bonus and Equity. Mr. de Villa’s base salary was increased from $385,000 to $390,000 (i.e., by 1.3%), effective April 1, 2014. Mr. de Villa can earn an annual cash bonus, with a target of 75% of base salary and a maximum of 150% of base salary in 2014, based upon the attainment of criteria determined by our Compensation Committee. Mr. de Villa is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee.

 

Mr. de Villa’s offer and severance letters also include severance and termination provisions which are described below under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

Nancy Saltzman

 

Ms. Saltzman serves as our Executive Vice President, General Counsel and Corporate Secretary, and is based at our executive offices in New York, New York. We entered into an offer letter with her effective as of March 14, 2014.

 

Salary, Bonus and Equity. Ms. Saltzman’s base salary is $325,000. Ms. Saltzman can earn an annual cash bonus, with a target of 50% of base salary and a maximum of 100% of base salary in 2014, based upon the attainment of criteria determined by our Compensation Committee. Ms. Saltzman is also eligible, subject to performance and other conditions, to receive annual equity awards at the discretion of the Compensation Committee. Ms. Saltzman’s offer letter provided for an initial equity award of 20,000 restricted stock units granted in 2014 that will vest according to the schedule described below under “Outstanding Equity Awards at Fiscal 2014 Year-End” beginning on page 41.

 

Ms. Saltzman’s offer letter also include severance and termination provisions which are described below under “Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End” beginning on page 51.

 

William A. Bloom

 

Mr. Bloom served as our President, Global Client Services, and was based at our executive offices in New York, New York. We entered into an employment agreement with Mr. Bloom, effective July 12, 2010. Mr. Bloom voluntarily resigned from the Company effective July 18, 2014.

 

Salary, Bonus and Equity. Mr. Bloom’s base salary remained at $530,000, effective April 1, 2014. Mr. Bloom’s base salary was reviewed annually for increase. Mr. Bloom could have earned an annual cash bonus, with a target of 75% of base salary and a maximum of 150% of base salary, based upon the attainment of criteria determined by our Compensation Committee. Mr. Bloom was also eligible, subject to performance and other conditions, to receive an annual target equity award of 25,000 restricted stock units.

 

Mr. Bloom’s employment agreement also included severance, termination and noncompetition provisions; however, Mr. Bloom did not receive any additional incentive payouts as a result of his resignation.

 

2014 Awards

 

Please refer to pages 25 and 29 of the Compensation Discussion and Analysis for a description of the material terms regarding our annual incentive bonus program and the restricted stock unit awards listed in the table above.

 

 

Outstanding Equity Awards at Fiscal 2014 Year-End

 

The following table sets forth the equity awards we have made to our named executive officers that were outstanding as of December 31, 2014: 

		Option Awards								Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable(1)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)(2)		Market Value of Shares or Units of Stock That Have Not Vested ($)(4)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4)(5)
Rohit Kapoor		150,000		—		11.88		7/26/2016
		150,000		—		16.96		1/23/2018
		196,400		—		8.75		2/10/2019
		73,125		24,375		19.76		2/3/2021
		48,750		48,750		24.77		2/7/2022
										9,375		269,156
										1,244		35,715
										18,750		538,313
										56,250		1,614,938
										1,347		38,672
										37,500		1,076,625
										3,612		103,701
										6,250		179,438		12,500		358,875
														18,750		538,313
Vishal Chhibbar		60,109		—		9.59		6/1/2019
		5,530		4,420		19.76		2/3/2021
		3,315		7,735		24.77		2/7/2022
										1,700		48,807
										2,975		85,412
										554		15,905
										10,800		310,068
										594		17,054
										7,000		200,970
										1,125		32,299
										1,167		33,505		2,333		66,980
										—		—		3,500		100,485

 

 

		Option Awards								Stock Awards
Name		Number of Securities Underlying Unexercised Options (#) Exercisable(1)		Number of Securities Underlying Unexercised Options (#) Unexercisable(1)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)(2)		Market Value of Shares or Units of Stock That Have Not Vested ($)(4)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3)		Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(4)(5)
Pavan Bagai		—		13,000		19.76		2/3/2021
		9,750		22,750		24.77		2/7/2022
										5,000		143,550
										8,750		251,213
										817		23,456
										921		26,442
										20,700		594,297
										11,500		330,165
										1,804		51,793
										1,917		55,037		3,833		110,045
										—		—		5,750		165,083
Rembert de Villa		40,000		—		23.82		4/24/2018
		25,000		—		8.75		2/10/2019
		6,630		4,420		19.76		2/3/2021
		2,925		6,825		24.77		2/7/2022
										1,700		48,807
										2,625		75,364
										884		25,380
										1,127		32,356
										8,100		232,551
										5,000		143,550
										2,201		63,191
										833		23,915		1,667		47,860
										—		—		2,500		71,775
Nancy Saltzman										20,000		574,200
William A. Bloom		—		—		—		—		—		—		—		—

(1)

The stock option awards in this table became or will become vested and exercisable in accordance with the following schedules (generally subject to continued employment through each applicable vesting date):

Option Expiration Date  (mm/dd/yyyy)		Vesting Schedule of Original Grant
7/26/2016		For Mr. Kapoor, 25% of the options vested on each of November 14, 2006, November 14, 2007, November 14, 2008 and November 14, 2009.
1/23/2018		For Mr. Kapoor, 25% of the options vested on each of January 23, 2009, January 23, 2010, January 23, 2011 and January 23, 2012.

 

 

Option Expiration Date  (mm/dd/yyyy)		Vesting Schedule of Original Grant
4/24/2018		For Mr. de Villa, 10% of the options vested on April 24, 2009, an additional 20% of the options vested on April 24, 2010, an additional 30% of the options vested on April 24, 2011 and the remaining 40% of the options vested on April 24, 2012.
2/10/2019		For Mr. Kapoor, 25% of the options vested on each of February 10, 2010, February 10, 2011, February 10, 2012 and February 10, 2013.
		For Mr. de Villa, 10% of the options vested on February 10, 2010, an additional 20% of the options vested on February 10, 2011, an additional 30% of the options vested on February 10, 2012 and the remaining 40% of the options vested on February 10, 2013.
6/1/2019		For Mr. Chhibbar, 10% of the options vested on June 1, 2010, an additional 20% of the options vested on June 1, 2011, an additional 30% of the options vested on June 1, 2012 and the remaining 40% of the options vested on June 1, 2013.
2/3/2021		For Mr. Kapoor, 25% of the options vested on each of February 3, 2012, February 3, 2013 and February 3, 2014. The remaining 25% of the options will vest on February 3, 2015.   For the named executive offices other than Mr. Kapoor, 10% of the options vested on February 3, 2012, an additional 20% of the options vested on February 3, 2013 and an additional 30% of the options vested on February 3, 2014. The remaining 40% of the options will vest on February 3, 2015.
2/7/2022		For Mr. Kapoor, 25% of the options vested on each of February 7, 2013 and February 7, 2014. An additional 25% of the options will vest on each of February 7, 2015 and February 7, 2016.   For the named executive officers other than Mr. Kapoor, 10% of the options vested on February 7, 2013 and an additional 20% of the options vested on February 7, 2014. An additional 30% of the options will vest on February 7, 2015 and the remaining 40% of the options will vest on February 7, 2016.

(2)

The restricted stock unit awards in this table vest and convert to shares in accordance with the following schedules (generally subject to continued employment through each applicable vesting date):

 

 

Name		# of Units Unvested as of 12/31/14		Vesting Schedule of Original Grant
Rohit Kapoor		9,375		25% of the restricted stock units vested on each of February 3, 2012, February 3, 2013 and February 3, 2014.  The remaining 25% of the restricted stock units will vest on February 3, 2015.
		1,244		33.33% of the restricted stock units vested on each of February 7, 2013 and February 7, 2014.  The remaining 33.33% of the restricted stock units will vest on February 7, 2015.
		18,750		25% of the restricted stock units vested on each of February 7, 2013 and February 7, 2014.  An additional 25% of the restricted stock units will vest on each of February 7, 2015 and February 7, 2016.
		56,250		25% of the restricted stock units vested on February 8, 2014.  An additional 25% will vest on each of February 8, 2015, February 8, 2016 and February 8, 2017.
		1,347		33.33% of the restricted stock units vested on February 8, 2014.  An additional 33.33% will vest on each of February 8, 2015 and February 8, 2016.
		37,500		25% of the restricted stock units will vest on each of February 13, 2015, February 13, 2016, February 13, 2017 and February 13, 2018.
		3,612		33.33% of the restricted stock units will vest on each of February 13, 2015, February 13, 2016 and February 13, 2017.
		6,250		100% of the Revenue-Linked PRSUs will vest on December 31, 2016.  This amount represents the number of Revenue-Linked PRSUs that were “banked” pursuant to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
Vishal Chhibbar		1,700		10% of the restricted stock units vested on February 3, 2012, an additional 20% of the restricted stock units vested on February 3, 2013 and an additional 30% of the restricted stock units vested on February 3, 2014.  The remaining 40% of the restricted stock units will vest on February 3, 2015.
		2,975		10% of the restricted stock units vested on February 7, 2013 and an additional 20% of the restricted stock units vested on February 7, 2014.  An additional 30% of the restricted stock units will vest on February 7, 2015 and the remaining 40% of the restricted stock units will vest on February 7, 2016.
		554		33.33% of the restricted stock units vested on each of February 7, 2013 and February 7, 2014.  The remaining 33.33% of the restricted stock units will vest on February 7, 2015.
		10,800		10% of the restricted stock units vested on February 8, 2014.  An additional 20% of the restricted stock units will vest on February 8, 2015, an additional 30% of the restricted stock units will vest on February 8, 2016 and the remaining 40% of the restricted stock units will vest on February 8, 2017.
		594		33.33% of the restricted stock units vested on February 8, 2014.  An additional 33.33% of the restricted stock units will vest on each of February 8, 2015 and February 8, 2016.

 

 

Name		# of Units Unvested as of 12/31/14		Vesting Schedule of Original Grant
		7,000		10% of the restricted stock units will vest on February 13, 2015, an additional 20% of the restricted stock units will vest on February 13, 2016, an additional 30% of the restricted stock units will vest on February 13, 2017 and the remaining 40% of the restricted stock units will vest on February 13, 2018.
		1,125		33.33% of the restricted stock units will vest on each of February 13, 2015, February 13, 2016 and February 13, 2017.
		1,167		100% of the Revenue-Linked PRSUs will vest on December 31, 2016.  This amount represents the number of Revenue-Linked PRSUs that were “banked” pursuant to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
Pavan Bagai		5,000		10% of the restricted stock units vested on February 3, 2012, 20% of the restricted stock units vested on February 3, 2013, and an additional 30% of the restricted stock units vested on February 3, 2014.  The remaining 40% of the restricted stock units will vest on February 3, 2015.
		8,750		10% of the restricted stock units vested on February 7, 2013 and an additional 20% of the restricted stock units vested on February 7, 2014.  An additional 30% of the restricted stock units will vest on February 7, 2015 and the remaining 40% of the restricted stock units will vest on February 7, 2016.
		817		33.33% of the restricted stock units vested on each of February 7, 2013 and February 7, 2014.  The remaining 33.33% of the restricted stock units will vest on February 7, 2015.
		921		33.33% of the restricted stock units vested on February 8, 2014.  An additional 33.33% will vest on each of February 8, 2015 and February 8, 2016.
		20,700		10% of the restricted stock units vested on February 8, 2014.  An additional 20% of the restricted stock units will vest on February 8, 2015, an additional 30% of the restricted stock units will vest on February 8, 2016 and the remaining 40% of the restricted stock units will vest on February 8, 2017.
		11,500		10% of the restricted stock units will vest on February 13, 2015, an additional 20% of the restricted stock units will vest on February 13, 2016, an additional 30% of the restricted stock units will vest on February 13, 2017 and the remaining 40% of the restricted stock units will vest on February 13, 2018.
		1,804		33.33% of the restricted stock units will vest on each of February 13, 2015, February 13, 2016 and February 13, 2017.
		1,917		100% of the Revenue-Linked PRSUs will vest on December 31, 2016.  This amount represents the number of Revenue-Linked PRSUs that were “banked” pursuant to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
Rembert de Villa		1,700		10% of the restricted stock units vested on February 3, 2012, 20% of the restricted stock units vested on February 3, 2013 and an additional 30% of the restricted stock units vested on February 3, 2014.  The remaining 40% of the restricted stock units will vest on February 3, 2015.

 

Name		# of Units Unvested as of 12/31/14		Vesting Schedule of Original Grant
		2,625		10% of the restricted stock units vested on February 7, 2013 and an additional 20% of the restricted stock units vested on February 7, 2014.  An additional 30% of the restricted stock units will vest on February 7, 2015 and the remaining 40% of the restricted stock units will vest on February 7, 2016.
		884		33.33% of the restricted stock units vested on each of February 7, 2013 and February 7, 2014.  The remaining 33.33% of the restricted stock units will vest on February 7, 2015.
		1,127		33.33% of the restricted stock units vested on February 8, 2014.  An additional 33.33% will vest on each of February 8, 2015 and February 8, 2016.
		8,100		10% of the restricted stock units vested on February 8, 2014.  An additional 20% of the restricted stock units will vest on February 8, 2015, an additional 30% of the restricted stock units will vest on February 8, 2016 and the remaining 40% of the restricted stock units will vest on February 8, 2017.
		5,000		10% of the restricted stock units will vest on February 13, 2015, an additional 20% of the restricted stock units will vest on February 13, 2016, an additional 30% of the restricted stock units will vest on February 13, 2017 and the remaining 40% of the restricted stock units will vest on February 13, 2018.
		2,201		33.33% of the restricted stock units will vest on each of February 13, 2015, February 13, 2016 and February 13, 2017.
		833		100% of the Revenue-Linked PRSUs will vest on December 31, 2016.  This amount represents the number of Revenue-Linked PRSUs that were “banked” pursuant to the banking feature described in “Compensation Discussion and Analysis – Long-Term Equity Incentives” on page 28.
Nancy Saltzman		20,000		10% of the restricted stock units will vest on April 21, 2015, an additional 20% of the restricted stock units will vest on April 21, 2016, an additional 30% of the restricted stock units will vest on April 21, 2017 and the remaining 40% of the restricted stock units will vest on April 21, 2018.

(3)

The performance restricted stock unit awards in this table vest and convert to shares in accordance with the following schedules (generally subject to continued employment through the applicable vesting date and achievement of applicable performance goals):

 

 

Name		# of Units Unvested as of 12/31/14		Vesting Schedule of Original Grant
Rohit Kapoor		12,500		100% of the Revenue-Linked PRSUs will vest on December 31, 2016, subject to the banking feature described in “Compensation Discussion and Analysis–Long-Term Equity Incentives” on page 28.
		18,750		100% of the Relative TSR-Linked PRSUs will vest on December 31, 2016.
Vishal Chhibbar		2,333		100% of the Revenue-Linked PRSUs will vest on December 31, 2016, subject to the banking feature described in “Compensation Discussion and Analysis–Long-Term Equity Incentives” on page 28.
		3,500		100% of the Relative TSR-Linked PRSUs will vest on December 31, 2016.
Pavan Bagai		3,833		100% of the Revenue-Linked PRSUs will vest on December 31, 2016, subject to the banking feature described in “Compensation Discussion and Analysis–Long-Term Equity Incentives” on page 28.
		5,750		100% of the Relative TSR-Linked PRSUs will vest on December 31, 2016.
Rembert de Villa		1,167		100% of the Revenue-Linked PRSUs will vest on December 31, 2016, subject to the banking feature described in “Compensation Discussion and Analysis–Long-Term Equity Incentives” on page 28.
		2,500		100% of the Relative TSR-Linked PRSUs will vest on December 31, 2016.

(4)

The price used in determining the market values set forth in this table is $28.71, which was the closing price of our stock on December 31, 2014.

 

(5)

The amounts shown in this column reflect target performance. Fiscal year 2014 was the first year the Company granted performance based restricted stock units and there is no threshold performance level.

 

(6)

Mr. Bloom has no outstanding equity awards at fiscal 2014 year-end because all of his equity awards were either exercised or forfeited as a result of his resignation.

 

 

 

Option Exercises and Stock Vested During Fiscal Year 2014

 

The following table provides additional information about the value realized by our named executive officers on option award exercises and stock award vesting during fiscal year 2014:

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
Rohit Kapoor											18,750				464,906
											9,375				237,281
											1,551				39,256
											9,375				236,109
											1,243				31,305
											673				17,111
											18,750				476,719
Vishal Chhibbar											4,000				99,180
											1,275				32,270
											687				17,388
											850				21,407
											553				13,927
											296				7,526
											1,200				30,510
Pavan Bagai			30,000				426,660				5,000				123,975
			8,563				141,356				3,750				94,913
			11,336				188,574				797				20,172
			10,101				169,949				2,500				62,963
			12,110				209,939				817				20,576
			12,890				226,454				459				11,670
			19,500				164,190				2,300				58,478
Rembert de Villa			4,231				81,766				3,200				79,344
			17,500				339,469				1,275				32,270
			3,269				64,324				1,097				27,765
											750				18,889
											883				22,238
											563				14,314
											900				22,883
Nancy Saltzman			—				—				—				—

 

 

 

		Option Awards								Stock Awards
Name		Number of Shares Acquired on Exercise (#)				Value Realized on Exercise ($)				Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
William A. Bloom			21,000				194,156				3,750				94,913
			21,000				176,820				1,577				39,914
			7,000				83,260				2,500				62,963
			14,000				166,466				1,243				31,305
			14,000				146,125				729				18,535
			10,000				110,678				2,300				58,478
			15,000				166,920
			15,000				171,300
			4,493				46,305
			1,400				14,423
			3,123				32,208
			984				10,188
			2,844				30,004
			5,885				62,275
			5,000				42,030
			5,000				41,487
			5,000				41,625
			5,000				40,408
			5,000				41,361
			5,000				40,805
			7,500				57,331
			7,500				56,207
			6,271				44,722
			4,000				36,231
			14,000				134,277
			1,229				6,294
			271				1,424
			9,750				3,707

 

Pension Benefits For Fiscal Year 2014

 

The following table discloses the present value of accumulated benefits payable to each of the named executive officers and the years of service credited to each named executive under the Gratuity Plan for Indian Employees as of December 31, 2014:

 

Name		Plan Name			Number of Years Credited Service (#)(1)				Present Value of Accumulated Benefit ($)				Payments During Last Fiscal Year ($)
Vishal Chhibbar		Gratuity Plan for Indian Employees			6				38,100				0
Pavan Bagai		Gratuity Plan for Indian Employees			12				64,072				0

 

(1)

Consists of the number of years of service credited as of December 31, 2014 for the purpose of determining benefit service under the Gratuity Plan. Credited service is determined based on the completed years of continuous employment (rounded to the nearest whole number of years) with the Company since the executive’s date of hire.

 

 

(2)

Liabilities with regard to the Gratuity Plans are determined by actuarial valuation using the projected unit credit method. Under this method, we determine our liability based upon the discounted value of salary increases until the date of separation arising from retirement, death, resignation or other termination of services. Critical assumptions used in measuring the plan expense and projected liability under the projected unit credit method include the discount rate, expected return on assets and the expected increase in the compensation rates. Details regarding the assumptions used in the calculation of these amounts are included in footnote 11 to the audited financial statements for the fiscal year ended December 31, 2014 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2015.

 

We are required to provide all Indian employees with benefits under the Gratuity Plan, a defined benefit pension plan in India. Distributions from the Gratuity Plan are made in a single lump sum following retirement from the Company. An executive’s benefit under the Gratuity Plan is determined at any time as the executive’s annual base salary (determined based on the executive’s most recent monthly base salary) divided by 26, multiplied by 15, and the product multiplied by the executive’s completed years of continuous service with the Company. An executive has a vested and nonforfeitable right to payment of his accrued Gratuity Plan benefit only after five years of service. The present value of Mr. Chhibbar’s and Mr. Bagai’s accumulated benefits has been determined based on their monthly base salary rates in effect on December 31, 2014, which were $11,007 and $9,255, respectively.

 

 

Potential Payments upon Termination or Change in Control at Fiscal 2014 Year-End

 

Rohit Kapoor

 

Severance. If Mr. Kapoor’s employment were terminated by us without “cause” or by the executive for “good reason” (in each case, as described below) on December 31, 2014, he would have been entitled to severance consisting of:

 

•          continuation of his base salary for 24 months;

 

•          his actual bonus, if any, earned for the year of termination, determined as if he had been employed for the full year of termination, paid ratably over the remaining period of base salary payments;

 

•          costs of continued COBRA coverage under the Company’s group health plan on behalf of the executive and his eligible dependents (described in more detail below), until the earlier of (x) the 18-month anniversary of termination and (y) the date the executive becomes eligible to receive comparable benefits from a subsequent employer; and

 

•          continuation of life insurance coverage until the earlier of (x) the 18-month anniversary of termination and (y) the date the executive commences employment with a subsequent employer.

 

“Cause” will occur when:

 

•          there is a final nonappealable conviction of, or pleading of no contest to, (1) a felony, or (2) a crime of moral turpitude that causes serious economic injury or serious injury to our reputation;

 

•          the executive engages in fraud, embezzlement, self-dealing, gross negligence, dishonesty or other gross and willful misconduct that causes serious and demonstrable injury to us;

 

•          the executive materially violates any of our material policies;

 

•          the executive willfully and continually fails to substantially perform his duties (other than for reason of physical or mental incapacity) which continues beyond 15 days after we notify him in writing of his need to substantially improve his performance; provided that a failure to achieve performance objectives will not by itself constitute cause and no act or failure to act shall be considered “willful” unless done or failed to be done by the executive in bad faith and without a reasonable belief that his actions or omission was in our best interest;

 

•          the executive fails to reasonably cooperate in a governmental investigation involving us;

 

•          the executive materially, knowingly and intentionally fails to comply with applicable laws with respect to the execution of the Company’s business operations (subject to a presumption of good faith if the executive is following advice of counsel);

 

•          the executive fails to follow our board of directors’ lawful instructions and does not remedy the failure for 15 days after we give him written notice;

 

•          the executive’s use of alcohol or drugs materially interferes with the performance of his duties; or

 

•          the executive fails to take reasonable steps to end certain affiliations specified in his employment agreement within six months after a request by our board of directors.

 

 

“Good reason” means:

 

•        the executive’s duties or responsibilities are substantially reduced, he is required to report to anyone other than our board of directors, or his title as our officer is adversely changed; however, if following a change in control, his new title and authority are similar to his old title and authority, then any change in the executive’s title will not constitute a significant reduction in his duties and authorities;

 

•        the executive’s base salary is reduced (other than in connection with a Company-wide decrease in pay), or his target annual bonus opportunity is reduced below 75% of his base salary;

 

•        the office or location where the executive is based (whether in the metropolitan New York City area or Delhi, India) is moved more than 30 miles, and the new location is more than 30 miles from his primary residence (however, any relocation between the metropolitan New York City area and Delhi, India would not constitute “good reason,” as described further below); or

 

•        we breach any material term of the executive’s employment agreement.

 

For Mr. Kapoor, “good reason” does not include a request by our board of directors that he relocate to India. Also, successive relocations of Mr. Kapoor between the metropolitan New York City area and the metropolitan Delhi, India area will also not constitute good reason, as long as each location where we base Mr. Kapoor is within 30 miles of the last business location at which Mr. Kapoor was based in that metropolitan area and within 30 miles of Mr. Kapoor’s principal residence in that metropolitan area.

 

If the executive plans to terminate his employment for good reason, he must notify us within 30 days following the date the executive first becomes aware of the circumstances giving rise to good reason and must allow us 15 days to remedy the problem.

 

If the executive assumes the title and/or duties of chief financial officer, any subsequent relinquishment of such title and/or duties will not constitute good reason.

 

Change-in-Control Severance. If a termination described above occurs within 12 months following a “change in control” that satisfies the requirements of Section 409A of the Code, the executive will receive, in lieu of the severance described above, (1) a lump sum payment of $999,000, and (2) the costs of continued COBRA coverage under the Company’s group health plan on behalf of the executive and his eligible dependents (described in more detail below), until the earlier of (x) the 18-month anniversary of termination and (y) the date the executive becomes eligible to receive comparable benefits from a subsequent employer. If the change in control referenced in the preceding sentence does not satisfy the requirements of Section 409A of the Code, the $999,000 payment will not be paid in a lump sum but will instead be paid ratably for 24 months.

 

A “change in control” (as generally defined in Mr. Kapoor’s employment agreement and the 2006 Plan) means any of the following events:

 

•        any person or group becomes a beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of more than 50% (50% or more in the 2006 Plan) of either (1) the combined voting power of our then-outstanding voting securities entitled to vote in the election of directors or (2) our outstanding shares of common stock, assuming all rights to acquire common stock through options, warrants, conversion of convertible stock or debt, and the like are exercised;

 

•        a majority of the members of our board of directors changes from those in office as of the date of Mr. Kapoor’s employment agreement or the effective date of the 2006 Plan (as applicable), except that the election of any new director whose election or nomination was approved by at least two-thirds of our incumbent directors will not be regarded towards a change in the majority for these purposes;

 

•        our dissolution or liquidation;

 

 

•        the sale, transfer or other disposition of all or substantially all of our business or our assets; or

 

•        consummation of a reorganization, recapitalization, merger, consolidation or similar transaction with another entity which requires the approval of our stockholders; however, any such transaction will not be a change in control if after the transaction:

 

○

more than 50% of the total voting power of the resulting entity or its ultimate parent is represented by what were our outstanding voting securities before the transaction in substantially the same proportion among holders;

 

○

no person or group is or becomes the beneficial owner of more than 50% (50% or more in the 2006 Plan) of the total voting power of the outstanding voting securities eligible to elect members of our board of directors of the parent or surviving company; and

 

○

at least a majority of the members of our board of directors of the parent or surviving company following the transaction were our board members when our board first approved the transaction.

 

Death or Disability. If Mr. Kapoor’s employment terminates due to his death or is terminated by either the executive or us due to his disability, he (or his estate) will be entitled to a prorated portion of his projected bonus amount for the year of termination.

 

Post-Termination Health Benefits. When Mr. Kapoor’s employment ends for any reason other than termination by us for cause or a voluntary termination by the executive, we will pay on behalf of the executive and his eligible dependents the cost of continued coverage under our group health plan for 18 months in accordance with applicable U.S. federal law governing continuation of group health plan coverage (“COBRA”). These payments will end when the executive becomes eligible for comparable health benefits from a subsequent employer. If the executive elects coverage under COBRA, we have agreed to help him obtain an individual health policy at his cost when his COBRA coverage expires.

 

Noncompetition and Nonsolicitation Provisions. Mr. Kapoor is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement, nonsolicitation and no-hire restrictions during his employment and for one year thereafter. However, if we do not renew Mr. Kapoor’s employment agreement term upon its scheduled expiration, the noncompetition restrictions will not apply unless we continue to pay him his base salary during the one-year noncompetition period.

 

Equity Award Treatment

 

If Mr. Kapoor’s employment ends at the expiration of the term of his employment agreement because we give a notice of nonrenewal of the term of that agreement, or if a change in control occurs (as defined in the 2006 Plan), any portion of his stock options that would have vested in the one-year period following the termination of employment or change in control (as applicable) will become vested on the termination date or the consummation of the change in control (as applicable).

 

If Mr. Kapoor’s employment is terminated by us without cause in specific contemplation of or following a change in control, or if Mr. Kapoor resigns for good reason following a change in control, his stock options and restricted stock units will become fully vested and exercisable. Mr. Kapoor will need to execute a standard release of employment-related claims in order for his stock option and restricted stock units to vest in such a case.

 

In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2014, which was $28.71.

 

 

Indicative Payouts for Rohit Kapoor

 

The following table summarizes the amounts payable to Mr. Kapoor upon a change in control or termination of his employment with us on December 31, 2014:

 

Payments upon Termination		Death ($)				Disability ($)				Expiration of the Employment Terms ($)				Termination for Good Reason or Without Cause ($)				Change in Control ($)				Termination Without Cause Following Change in Control ($)				Termination for Good Reason Following Change in Control ($)				Termination Without Cause in Specific Contemplation of Change in Control ($)
Base salary payout			—				—				—				1,130,000				—				999,000				999,000				1,130,000
Bonus payout			535,760				535,760				—				535,760				—				—				—				—
Life insurance			—				—				3,929				3,929				3,929				3,929				3,929				3,929
Health insurance			25,127				25,127				25,127				25,127				—				25,127				25,127				25,127
Stock options (unvested and accelerated)			—				—				314,194				—				314,194				410,231				410,231				410,231
Restricted stock units (unvested and accelerated)			—				—				—				—				1,435,356				3,677,107				3,677,107				3,677,107
Performance restricted stock  units (unvested and accelerated)			—				—				—				—				358,789				1,076,625				1,076,625				1,076,625

 

Please refer to page 31 of the Compensation Discussion and Analysis for a summary of the material revisions to Mr. Kapoor’s employment agreement made during the 2015 fiscal year.

 

Vishal Chhibbar

 

Either Mr. Chhibbar or we may terminate Mr. Chhibbar’s employment at any time (though Mr. Chhibbar must give us three months’ advance notice upon a termination without good reason). If Mr. Chhibbar’s employment with the Company is terminated by the Company without “cause” or by Mr. Chhibbar for “good reason,” as summarized below, Mr. Chhibbar will receive a cash severance payment equal to one times his total annual fixed compensation then in effect, paid in installments over a 12-month period.

 

On a “change in control” (as defined in the 2006 Plan), the vesting of all of Mr. Chhibbar’s outstanding equity awards will be advanced by one year. For example, if one of Mr. Chhibbar’s awards was vesting following Standard Graded Vesting and he had been 10% vested in the award immediately prior to the change in control, Mr. Chhibbar will be 30% vested in the award immediately after the change in control. In addition, all of Mr. Chhibbar’s outstanding equity awards will become fully vested if, following or in specific contemplation of a change in control, he is terminated without cause or if, following a change in control, he voluntarily terminates his employment for good reason.

 

Mr. Chhibbar’s severance payments and termination-related equity acceleration are subject to his execution of a release of claims against us. Mr. Chhibbar is subject to confidentiality restrictions at all times, as well as noncompetition, nondisparagement and nonsolicitation restrictions during his employment and for one year thereafter.

 

The definitions of “cause” and “good reason” described below apply to Messrs. Chhibbar, Bagai, de Villa and Bloom unless stated otherwise.

 

“Cause” will occur when:

 

 

•          there is a final nonappealable conviction of, or pleading of no contest to, (1) a crime of moral turpitude which causes serious economic injury or serious injury to our reputation or (2) a felony;

 

•          the executive engages in fraud, embezzlement, gross negligence, self-dealing, dishonesty or other gross and willful misconduct which causes serious and demonstrable injury to us;

 

•          the executive materially violates any of our material policies;

 

•          the executive willfully and continually fails to substantially perform his duties (other than for reason of physical or mental incapacity) which continues beyond 15 days after we notify him in writing of his need to substantially improve his performance; provided that a failure to achieve performance objectives will not by itself constitute cause and no act or failure to act shall be considered “willful” unless done or failed to be done by the executive in bad faith and without a reasonable belief that his actions or omission was in our best interest;

 

•          the executive fails to reasonably cooperate in a governmental investigation involving us;

 

•          the executive materially, knowingly and intentionally fails to comply with applicable laws with respect to the execution of the Company’s business operations (subject to a presumption of good faith if the executive is following advice of counsel);

 

•          the executive fails to follow his supervisor’s (or our board of directors’) lawful instructions and does not remedy the failure for 15 days after we give him written notice; or

 

•          the executive’s use of alcohol or drugs materially interferes with the performance of his duties.

 

“Good reason” means, without the executive’s prior written consent:

 

•         the executive’s duties or responsibilities are substantially reduced, or he is required to report to anyone other than our board of directors, or our president and CEO (or in the case of Mr. de Villa, he is required to report to anyone other than our President, Global Client Services);

 

•         the executive’s title as our officer is adversely changed; however, if following a change in control (as defined in the 2006 Plan), his new title and authority are similar to his old title and authority, then any change in the executive’s title will not constitute a significant reduction in his duties and authorities;

 

•         the executive’s base salary or annual cash bonus opportunity is reduced, other than in connection with a proportionate reduction impacting all members of our executive committee; or

 

•         we breach any material term of the executive’s employment agreement or severance agreement.

 

If the executive plans to terminate his employment for good reason, he must notify us within 30 days following the date the executive first becomes aware of the circumstances giving rise to good reason and must allow us 30 days to remedy the problem (15 days for Mr. Chhibbar).

 

In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2014, which was $28.71.

 

 

Indicative Payouts of Vishal Chhibbar

 

The following table summarizes the amounts payable to Mr. Chhibbar upon a change in control or termination of his employment with us on December 31, 2014:

 

Payments upon Termination		Death ($)				Disability ($)				Expiration of the Employment Terms ($)				Termination for Good Reason or Without Cause ($)				Change in Control ($)				Termination Without Cause Following Change in Control ($)				Termination for Good Reason Following Change in Control ($)				Termination Without Cause in Specific Contemplation of Change in Control ($)
Base salary payout			—				—				—				293,511				—				293,511				293,511				293,511
Bonus payout			—				—				—				—				—				—				—				—
Life insurance			—				—				—				—				—				—				—				—
Health insurance			—				—				—				—				—				—				—				—
Stock options (unvested and accelerated)			—				—				—				—				52,620				70,035				70,035				70,035
Restricted stock units (unvested and accelerated)			—				—				—				—				209,583				710,515				710,515				710,515
Performance restricted stock units (unvested and accelerated)			—				—				—				—				66,923				200,970				200,970				200,970
Government-required payouts(1)			38,100				38,100				—				38,100				—				38,100				38,100				38,100

(1)

Represents distributions under the Gratuity Plan, which is due to Mr. Chhibbar because he has earned over five years of credited service.

 

Pavan Bagai

 

Either Mr. Bagai or we may terminate Mr. Bagai’s employment at any time with one month’s notice (or pay one month’s salary in lieu of notice). If Mr. Bagai is terminated by us without “cause” (other than due to disability) at any time following a change in control or in specific contemplation of a change in control, or if Mr. Bagai resigns for “good reason” following a “change in control” (as defined in the 2006 Plan), Mr. Bagai will receive a cash severance payment equal to twelve months’ of his then-current annual fixed compensation, payable in twelve equal monthly installments.

 

On a change in control (as defined in the 2006 Plan), the vesting of all of Mr. Bagai’s outstanding equity awards will be advanced by one year. For example, if one of Mr. Bagai’s awards was following Standard Graded Vesting and he had been 10% vested in the award immediately prior to the change in control, Mr. Bagai will be 30% vested in the award immediately after the change in control. In addition, all of Mr. Bagai’s outstanding equity awards will become fully vested if, following or in specific contemplation of a change in control, he is terminated without cause or, following a change in control, he voluntarily terminates his employment for good reason.

 

Mr. Bagai’s severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. Bagai is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for two years following termination of his employment.

 

In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2014, which was $28.71.

 

 

Indicative Payouts for Pavan Bagai

 

The following table summarizes the amounts payable to Mr. Bagai upon a change in control or termination of his employment with us on December 31, 2014:

 

Payments upon Termination		Death ($)				Disability ($)				Expiration of the Employment Terms ($)				Termination for Good Reason or Without Cause ($)				Change in Control ($)				Termination Without Cause Following Change in Control ($)				Termination for Good Reason Following Change in Control ($)				Termination Without Cause in Specific Contemplation of Change in Control ($)
Base salary payout			—				—				—				317,309				—				317,309				317,309				317,309
Bonus payout			—				—				—				—				—				—				—				—
Life insurance coverage			—				—				—				—				—				—				—				—
Health insurance			—				—				—				—				—				—				—				—
Stock options (unvested and accelerated)			—				—				—				—				154,765				205,985				205,985				205,985
Restricted stock units (unvested and accelerated)			—				—				—				—				470,212				1,420,915				1,420,915				1,420,915
Performance restricted stock units (unvested and accelerated)			—				—				—				—				109,988				330,165				330,165				330,165
Government-required payouts(1)			64,072				64,072				—				64,072				—				64,072				64,072				64,072

(1)

Represents distributions under the Gratuity Plan, which is due to Mr. Bagai because he has earned over five years of credited service.

 

Rembert de Villa

 

Either Mr. de Villa or we may terminate Mr. de Villa’s employment at any time. If we terminate Mr. de Villa’s employment without “cause,” Mr. de Villa will receive a cash severance payment equal to three months of base salary, payable in accordance with our regular payroll practices. If Mr. de Villa is terminated by us without “cause” at any time following a “change in control” (as defined in the 2006 Plan) or in specific contemplation of a change in control, or if Mr. de Villa resigns for “good reason” after six months following a change in control, Mr. de Villa will receive (a) a one-time lump sum severance payment equal to three months of his then-current base salary and (b) beginning on the three-month anniversary of his termination, payment of his then-current base salary for nine months through our regular payroll practices. Beginning three months after his termination, Mr. de Villa is required to actively seek comparable employment, and upon subsequent employment, we will reduce his continued salary payments by any base salary Mr. de Villa receives from another employer during such severance period.

 

On a change in control (as defined in the 2006 Plan), the vesting of all of Mr. de Villa’s outstanding equity awards will be advanced by one year. For example, if one of Mr. de Villa’s awards was following Standard Graded Vesting and he had been 10% vested in the award immediately prior to the change in control, Mr. de Villa will be 30% vested in the award immediately after the change in control. In addition, all of Mr. de Villa’s outstanding equity awards will become fully vested if, following or in specific contemplation of a change in control, he is terminated without cause or if, following a change in control, he voluntarily terminates his employment for good reason.

 

Mr. de Villa’s severance payments and termination-related equity acceleration are subject to his execution of a waiver and release of claims against us. Mr. de Villa is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for one year following termination of his employment.

 

 

In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2014, which was $28.71.

 

Indicative Payouts for Rembert de Villa

 

The following table summarizes the amounts payable to Mr. de Villa upon a change in control or termination of his employment with us on December 31, 2014:

 

Payments upon Termination		Death ($)				Disability ($)				Expiration of the Employment Terms ($)				Termination for Good Reason or Without Cause ($)				Change in Control ($)				Termination Without Cause Following Change in Control ($)				Termination for Good Reason Following Change in Control ($)				Termination Without Cause in Specific Contemplation of Change in Control ($)
Base salary payout			—				—				—				97,500				—				390,000				390,000				390,000
Bonus payout			—				—				—				—				—				—				—				—
Life insurance coverage			—				—				—				—				—				—				—				—
Health insurance			—				—				—				—				—				—				—				—
Stock options (unvested and accelerated)			—				—				—				—				51,084				66,450				66,450				66,450
Restricted stock units (unvested and accelerated)			—				—				—				—				209,727				621,198				621,198				621,198
Performance restricted stock units (unvested and accelerated)			—				—				—				—				47,802				143,550				143,550				143,550

 

Nancy Saltzman

 

Either Ms. Saltzman or we may terminate Ms. Saltzman’s employment at any time (with 30 days advance notice). If we terminate Ms. Saltzman’s employment without “cause,” Ms. Saltzman will receive (a) a one-time lump sum severance payment equal to three months of her then-current base salary and (b) beginning on the three-month anniversary of her termination, payment of her then-current base salary for nine months through our regular payroll practices and (c) continued health and dental insurance benefits through the severance period (or, if earlier, until she and her dependents are covered under a subsequent employer’s plan). Beginning three months after her termination, Ms. Saltzman is required to actively seek comparable employment, and upon subsequent employment, we will reduce her continued salary payments by any base salary Ms. Saltzman receives from another employer during such severance period.

 

If Ms. Saltzman is terminated by us without “cause” at any time following a “change in control” (as defined in the 2006 Plan) or in specific contemplation of a change in control, or if Ms. Saltzman resigns for “good reason” after six months following a change in control, Ms. Saltzman will receive (a) the severance payments described above and (b) immediate vesting as of the termination date of any portion of restricted stock units which are unvested as of the termination date.

 

Ms. Saltzman’s severance payments and termination-related equity acceleration are subject to her execution of a waiver and release of claims against us. Ms. Saltzman is subject to confidentiality restrictions at all times, as well as noncompetition and nonsolicitation restrictions for one year following termination of her employment.

 

In quantifying potential payments for purposes of this disclosure, we have quantified our equity-based payments by using the closing price of our stock on December 31, 2014, which was $28.71.

 

 

Indicative Payouts for Nancy Saltzman

 

The following table summarizes the amounts payable to Ms. Nancy Saltzman upon a change in control or termination of her employment with us on December 31, 2014:

 

Payments upon Termination		Death ($)				Disability ($)				Expiration of the Employment Terms ($)				Termination Without Cause ($)				Change in Control ($)				Termination Without Cause Following Change in Control ($)				Termination for Good Reason Following Change in Control ($)				Termination Without Cause in Specific Contemplation of Change in Control ($)
Base salary payout			—				—				—				325,000				—				325,000				—				—
Bonus payout			—				—				—				—				—				—				—				—
Life insurance coverage			—				—				—				—				—				—				—				—
Health insurance			—				—				—				8,802				—				8,802				—				—
Stock options (unvested and accelerated)			—				—				—				—				—				—				—				—
Restricted stock units (unvested and accelerated)			—				—				—				—				57,420				574,200				574,200				574,200
Performance restricted stock units (unvested and accelerated)			—				—				—				—				—				—				—				—

 

William A. Bloom

 

Mr. Bloom voluntarily resigned effective July 18, 2014 and was not entitled to nor did he receive any payments above already earned amounts (e.g. salary) as a result of his resignation.

 

Director Compensation for Fiscal Year 2014

 

The following table sets forth information for compensation earned in fiscal year 2014 by our non-executive directors:

 

Name(1)		Fees Earned or Paid in Cash ($)				Stock Awards ($)(3)(4)				Option Awards ($)(3)(4)				All Other Compensation ($)				Total ($)
David Kelso			17,500				97,010				65,467				—				179,977
Clyde Ostler			85,000				55,070				—				—				140,070
Anne Minto			35,000				119,960				30,218				30,027	(7)			185,178
Som Mittal(8)			65,000				56,447				—				—				121,447
Mohanbir Sawhney			67,500				62,746				—				—				130,246
Garen Staglin (5)			117,534				213,999				—				18,000	(6)			331,533
Vikram Talwar(2)			—				—				—				—				—

(1)

Mr. Kapoor’s compensation during 2014 was based solely on his role as Vice Chairman and CEO, as disclosed in the “Summary Compensation Table for Fiscal Year 2014” beginning on page 34 and discussed in “Compensation Discussion and Analysis” beginning on page 17. He does not receive any additional compensation for his services as a director.

 

(2)

Mr. Talwar announced his retirement as a member of the Board effective as of February 5, 2014. Mr. Staglin succeeded Mr. Talwar as Chairman of the Board. Mr. Talwar agreed, pursuant to our letter agreement with him dated February 5, 2014, to provide consulting services for the period beginning February 5, 2014 through April 30, 2014 in order to support the transition of his

 

 

Chairman position to Mr. Staglin. Mr. Talwar agreed not to receive any fees for these consulting services, other than continued vesting of his existing restricted stock unit grant during the service period.

 

(3)

Amounts reflect the aggregate grant date fair value of stock awards and option awards recognized for financial statement reporting purposes for the fiscal year ended December 31, 2014, in accordance with FASB ASC Topic 718 (disregarding any forfeiture assumptions). Assumptions used in the calculation of these amounts are included in footnotes 2 and 14 to our audited financial statements for the fiscal year ended December 31, 2014 included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2015. Each director (other than Mr. Staglin) was granted only one stock award in 2014. Mr. Kelso and Ms. Minto were granted only one option award in 2014.

 

(4)

The outstanding equity awards held by our directors on December 31, 2014 is set forth on the table below:

  

Name		No. of Securities Underlying Unexercised Options (#) Exercisable				No. of Securities Underlying Unexercised Options (#) Unexercisable				No. of Shares or Units of Stock That Have Not Vested
Vikram Talwar			—				—				—
David Kelso			68,253				—				3,208
Clyde Ostler			62,723				—				1,935
Anne Minto			3,093				—				4,000
Som Mittal			—				—				2,021
Mohanbir Sawhney			9,470				—				2,184
Garen Staglin			47,723				—				8,016

 

(5)

Mr. Staglin’s fees include a prorated fee of $2,466 for his service as Lead Director from January 1, 2014 - February 5, 2014 and $45,068 as prorated fee for service as Chairman from February 5, 2014 through the end of the year.

 

(6)

For Mr. Staglin, amount reflects our reimbursement for costs associated with secretarial services.

 

(7)

For Ms. Minto, amount reflects our reimbursement to her for tax planning fees ($30,027). The Company has agreed to pay a subsequent amount to Ms. Minto to gross up the reimbursement of tax planning fees so that the economic benefit to her was the same as if such benefit were provided on a non-taxable basis. The amount of such subsequent payment has not yet been determined.

 

(8)

Mr. Mittal received a reimbursement for tax planning fees in 2014. The Company has agreed to pay a subsequent amount to Mr. Mittal to gross up the reimbursement of such tax planning fees so that the economic benefit to him was the same as if such benefit were provided on a non-taxable basis. The amount of such subsequent payment has not yet been determined.

 

From January 1, 2014 through June 30, 2014, non-employee directors were eligible to receive an annual retainer fee in the amount of $45,000. Effective July 1, 2014, the annual retainer was increased to $55,000 per annum. The non-executive Chairman of our board of directors is eligible to receive an additional retainer of $150,000 which is paid $50,000 in cash and $100,000 in equity. The Lead Director of our board of directors (if there is a Lead Director serving at such time) is eligible to receive an additional annual fee of $25,000. New non-employee directors who join our board of directors during a calendar quarter are eligible to receive the full fee for such calendar quarter. From January 1, 2014 through June 30, 2014, the chairperson of our Audit Committee was eligible to receive an additional annual fee of $15,000, and other members of our Audit Committee were eligible to receive an additional annual fee of $10,000. The Chairpersons of committees other than our Audit Committee were eligible to receive an additional annual fee of $10,000, and members of committees other than our Audit Committee were eligible to receive an additional annual fee of $7,500. Effective July 1, 2014, the Audit Chairperson fee was increased to $20,000 per annum and the Chairperson fee for our other Committees was increased to $15,000 per annum. There are no additional fees payable for attendance at our board or committee meetings (whether in person, telephonic or otherwise). Each member of our board of directors may elect to receive all or a portion of his or her annual fees earned for service on our board of directors whether as part of the annual retainer or committee chairperson fee or otherwise, that would otherwise be payable in cash, in the form of a grant of stock options under the 2006 Plan. We make quarterly cash payments to our directors who elect to receive a portion of their director fees in the form of cash.

 

For 2014 directors who elected to receive any portion of their cash director fees in the form of stock options prior to the end of 2013 received a stock option grant effective as of the first business day of 2014. Each stock

 

 

option grant (i) has a per share exercise price equal to the fair market value of a share of our common stock on the date of grant (which, under the 2006 Plan, is determined to be the average of the high and low prices on the trading day prior to the date of grant), (ii) vests and becomes exercisable on December 31 of the year in which the option is granted, subject to the director remaining as a member of our board through such date, and (iii) is otherwise subject to the terms and conditions of the 2006 Plan. The number of shares of our common stock subject to the stock option will be determined such that the Black-Scholes value (as determined by us) of the stock option is equal to the dollar amount of director fees the director is electing to receive as a stock option. Effective for calendar year 2015, we eliminated this option and all director fees will be paid in cash quarterly in arrears.

 

From January 1, 2014 through June 30, 2014, new non-employee directors who join our board of directors were eligible to receive restricted stock units representing 4,000 shares of our common stock and each non-employee director received a grant on the anniversary of his board service date of restricted stock units representing 4,000 shares of our common stock. Effective July 1, 2014, the Company decided to transition to making an annual grant to all directors with an approximate value of $100,000 on the date of the Annual Stockholders’ meeting. In order to transition to this new program, any director with an anniversary hire date between July 1, 2014 and the date of the 2015 Annual Stockholders’ meeting will receive a pro rata grant based upon the number of days between the anniversary date and the date of the Annual Stockholders’ meeting.

 

The grants provide that the restricted stock units will vest on the earliest of:

 

•

the first anniversary of the date of grant;

 

•

the date on which the director’s term as a member of our board of directors expires if the director is not subsequently elected to a new term on our board of directors; and

 

•

the occurrence of a “change in control,” as defined in the 2006 Plan.

 

Holders of restricted stock units do not receive the underlying shares of common stock until the units have vested and are settled. The restricted stock units issued to each of our non-employee directors will settle on the earliest of:

 

•

such director’s death;

 

•

180 days following the end of such director’s term on our board of directors; and

 

•

the occurrence of a “change in control,” as defined in the 2006 Plan that satisfies the requirements of Section 409A of the Code.

 

Risk and Compensation Policies

 

Our Compensation Committee has taken into account its discussions with management regarding our compensation practices and has concluded that any risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on us.

 

 

PRINCIPAL STOCKHOLDERS

 

Unless otherwise indicated, the table below sets forth, as of March 16, 2015, information with respect to the beneficial ownership of our common stock by:

 

•

each of our directors and each of our named executive officers;

 

•

each person who is known to be the beneficial owner of more than 5% of our common stock; and

 

•

all of our current directors and executive officers as a group.

 

The amounts and percentages of common stock beneficially owned as of March 16, 2015 are reported on the basis of the regulations of the SEC governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days of March 16, 2015. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities. Except as otherwise indicated below, each of the persons named in the table has sole voting and investment power with respect to the securities beneficially owned by such person as set forth opposite such person’s name.

 

		Beneficial Ownership
Name and Address of Beneficial Owner(1)		Shares			Percentage (%)(2)
FMR LLC(3)		4,239,903			12.4
Blackrock, Inc.(4)		2,740,430			8.0
Wasatch Advisors, Inc.(5)		2,760,477			8.0
Columbia Wanger Asset Management LLC(6)		2,530,500			7.4
Wellington Management Group, LLP(7)		2,272,636			6.6
Vanguard Group, Inc.(8)		2,115,813			6.2
TimesSquare Capital Management, LLC(9)		1,866,873			5.4
Rohit Kapoor(10)		1,883,882			5.5
Pavan Bagai(11)		123,781			*
William Bloom(12)		20,551			*
Vishal Chhibbar(13)		82,240			*
Rembert de Villa(14)		86,273			*
David B. Kelso(15)		73,253			*
Deborah Kerr		0			*
Anne E. Minto(16)		3,093			*
Som Mittal		0			*
Clyde W. Ostler(17)		62,723			*
Nancy Saltzman(18)		2.000			*
Dr. Mohanbir Sawhney(19)		9,470			*
Garen K. Staglin(20)		52,723			*
All current directors and executive officers as a group (15 persons)(21)		2,397,646			7.05

*	Less than 1%.

 

(1)	Unless otherwise noted, the business address of each beneficial owner is c/o ExlService Holdings, Inc., 280 Park Avenue, 38th Floor, New York, New York 10017.

 

(2)	Based on 34,317,246 shares outstanding as of March 16, 2015.

 

(3)	Based on the Schedule 13G/A filed on February 13, 2015, FMR LLC had sole voting power with respect to 1,358,461 shares and sole dispositive power with respect to 4,923,903 shares. The business address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.

 

(4)	Based on the Schedule 13G/A filed on January 12, 2015, BlackRock, Inc. had sole voting power with respect to 2,648,555 shares and sole dispositive power with respect to 2,740,430 shares. The business address of Blackrock, Inc. is 55 East 52nd Street, New York, New York 10022.

 

(5)	Based on the Schedule 13G/A filed on February 15, 2015. The business address of Wasatch Advisors Inc. is 505 Wakara Way, 3rd Floor, Salt Lake City, Utah 84108.

 

(6)

Based on the Schedule 13G/A filed on February 11, 2015, Columbia Wanger Asset Management LLC had sole voting power with respect to 2,349,500 shares and sole dispositive power with respect to 2,530,500 shares. The business address of Columbia Wanger Asset Management LLC is 227 W Monroe Street, Suite 3000, Chicago, Illinois 60606.

 

 

(7)

Based on the Schedule 13G/A filed on February 12, 2015, Wellington Management Group, LLC had shared voting power with respect to 2,066,989 shares and shared dispositive power with respect to 2,272,636 shares. The business address of Wellington Management Group, LLC c/o Wellington Management Company, LLP is 280 Congress Street, Boston, Massachusetts 02210.

 

(8)

Based on the Schedule 13G filed on February 9, 2015, Vanguard Group, Inc. had sole voting power with respect to 43,855 shares, sole dispositive power with respect to 2,075,258 shares and shared voting power with respect to 40,555 shares. The business address of Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, PA 19355.

 

(9)

Based on the Schedule 13G/A filed on February 10, 2015, TimesSquare Capital Management, LLC had sole voting power with respect to 1,833,003 shares and sole dispositive power with respect to 1,886,873 shares. The business address of TimesSquare Capital Management, LLC is 7 Times Square, 42nd Floor, New York, New York 10036.

 

(10)

As of March 16, 2015, Mr. Kapoor had sole voting and dispositive power with respect to 1,506,515 shares and shared voting and dispositive power with respect to 501,185 shares. The amount reported in the table above included 84,000 shares of our common stock owned indirectly by Mr. Kapoor through a spousal lifetime access trust. Mr. Kapoor’s spouse and Mr. Kapoor’s sister-in-law are the co-trustees of this trust and share dispositive and voting control over the shares in the trust. The amount reported in the table above also included 177,134 shares of our common stock owned indirectly by Mr. Kapoor through a three-year grantor retained annuity trust for which Mr. Kapoor is the sole trustee and 126,183 shares of our common stock owned indirectly by Mr. Kapoor through a two-year grantor retained annuity trust for which Mr. Kapoor is the sole trustee.  The amount reported in the table above also included 84,000 shares of our common stock owned indirectly by Mr. Kapoor through a spousal lifetime access trust for Mr. Kapoor’s spouse. Mr. Kapoor and Mr. Kapoor’s sister-in-law are the co-trustees of this trust and share dispositive and voting control over the shares in the trust. The amount reported in the table above also included 333,185 shares of our common stock owned indirectly by Mr. Kapoor through a family trust. Barclays Wealth Trust (US), N.A. is the trustee of the family trust and Mr. Kapoor is the investment advisor to the trustee. The amount reported in the table above also included 667,025 shares of our common stock of which Mr. Kapoor has the right to acquire beneficial ownership within 60 days.

 

(11)	This amount includes 32,500 shares of our common stock of which Mr. Bagai has the right to acquire beneficial ownership within 60 days.