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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.           )

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Definitive Proxy Statement

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Definitive Additional Materials

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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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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

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GRAPHIC

320 Park Avenue, 29th Floor
New York, New York 10022
(212) 277-7100

April 26, 2019

Dear Stockholder:

On behalf of the board of directors of ExlService Holdings, Inc., we are pleased to invite you to the 2019 Annual Meeting of Stockholders, which will be held on June 17, 2019 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 26, 2019, 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 18, 2019, 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,  

GRAPHIC


GRAPHIC

Garen K. Staglin
Chairman


Rohit Kapoor
Vice Chairman and CEO

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GRAPHIC

NOTICE OF 2019 ANNUAL MEETING OF STOCKHOLDERS

Dear Stockholder:

You are cordially invited to the 2019 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, 320 Park Avenue, 29th Floor, New York, New York 10022 on June 17, 2019 at 8:30 AM, Eastern Time, for the purposes of voting on the following matters:

    1.
    the amendment of the Company's amended and restated certificate of incorporation to effect a phased declassification of the board of directors over the next three years;

    2.
    the election of three Class I members of the board of directors of the Company;

    3.
    the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for fiscal year 2019;

    4.
    the approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company; 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 18, 2019, 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 320 Park Avenue, 29th Floor, New York, New York 10022, for a period of 10 days prior to the date of the Annual Meeting and at the Annual Meeting itself. Please note that there are identification, verification of ownership and other requirements for in-person attendance at the Annual Meeting, as described in the enclosed Proxy Statement beginning on page 7 under the heading "Information Concerning Voting and Solicitation."

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

 

 

GRAPHIC

 

 

Ajay Ayyappan
Senior Vice President,
General Counsel and Corporate Secretary

New York, New York
April 26, 2019


TABLE OF CONTENTS

  Page  

2019 PROXY STATEMENT SUMMARY

  1

INFORMATION CONCERNING VOTING AND SOLICITATION

 
7

OUR BOARD OF DIRECTORS

 
11

CORPORATE GOVERNANCE

 
24

OUR EXECUTIVE OFFICERS

 
31

EXECUTIVE COMPENSATION

 
33

Compensation, Discussion and Analysis

 
33

Compensation Committee Report

 
49

Summary Compensation Table

 
50

STOCK OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

 
68

CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS

 
71

REPORT OF THE AUDIT COMMITTEE

 
72

PROPOSAL 1: AMENDMENT OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A PHASED DECLASSIFICATION OF THE BOARD OF DIRECTORS OVER THE NEXT THREE YEARS

 
73

PROPOSAL 2: ELECTION OF DIRECTORS

 
75

PROPOSAL 3: RATIFICATION OF THE APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 
77

PROPOSAL 4: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION

 
80

STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2020 ANNUAL MEETING

 
82

MISCELLANEOUS

 
83

OTHER MATTERS

 
84

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PROXY STATEMENT

2019 PROXY STATEMENT SUMMARY

Summary

Below is a summary of selected key components of this proxy statement, including information regarding this year's stockholder meeting, nominees for our board of directors, summary of our business, performance highlights and selective executive compensation information. This summary does not contain all of the information that you should consider prior to submitting your proxy, and you should review the entire proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Form 10-K").

    Annual Meeting Information
    Time and Date:
8:30 AM (Eastern Time)
June 17, 2019
 



 
    Record Date:
April 18, 2019
 
   
    Place:
    ExlService Holdings, Inc.
    320 Park Avenue, 29th Floor
    New York, New York 10022
 




 
    Voting:
Stockholders as of the record date are entitled to vote
   

Meeting Agenda, Voting Matters and Recommendations

  The Board of Directors recommends a vote FOR the following proposals:
  1. the amendment of the Company's amended and restated certificate of incorporation to effect a phased declassification of the board of directors over the next three years (page 73);  
  2. the election of three Class I members of the board of directors of the Company (page 75);  
  3. the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of the Company for fiscal year 2019 (page 77);  
  4. the approval, on a non-binding advisory basis, of the compensation of the named executive officers of the Company (page 80); and  
  5. the transaction of such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.  

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Board and Corporate Governance Highlights
(Based on current board profile and practices)


Board of Directors Composition

    >
    Ten directors, all of whom are independent, except for our Vice Chairman & CEO

    >
    Independent board chairman

    >
    Standing board committees composed solely of independent chairs and members

    >
    Seasoned board of directors, with diverse experience, including in insurance, healthcare, utilities, banking and financial services, finance/accounting, global business and technology

    >
    Diversity in age, gender and other important characteristics

    >
    If approved at the Annual Meeting, annual director elections


Board Accountability

    >
    Majority voting standard for uncontested elections

    >
    Annual board- and committee-level evaluations

    >
    Regularly-held executive session of non-management directors

    >
    Robust executive and director equity ownership guidelines

    >
    Independent board of directors evaluation of CEO performance and compensation

GRAPHIC

Director Qualifications

Our board of directors reflects an effective and diverse mix of skills and experience appropriate for our Company and industry. Our directors have the following attributes:

 


GRAPHIC


Executive Leadership


GRAPHIC


Board Experience

GRAPHIC


Finance and Accounting


GRAPHIC


Client and Industry Expertise

GRAPHIC


Global Experience


GRAPHIC


Risk Oversight / Management

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    Class I Board Nominations
    Name
(Year Joined Board)


Principal Occupation*

Committee Membership

    Rohit Kapoor
(November 2002)
  Co-founder of EXL Inc. in April 1999; Vice Chairman and CEO of the Company since April 2012   N/A    
    Anne Minto
(March 2013)

 
Qualified lawyer and member of Law Society of Scotland; former executive of Centrica plc, Shell UK and Smiths Group plc; non-executive director for Tate and Lyle and Shire plc (2010-2018)   Compensation Committee (Chair), Nominating and Governance Committee  
    Jaynie Studenmund
(September 2018)
  Former Chief Operating Officer of Overture Services, Inc.; Director for CoreLogic, Inc. and Pinnacle Entertainment, Inc.   Audit Committee, Compensation Committee    
*
A complete list of each nominee's business experience and directorships is listed below beginning on page 14.

Our Business

We are an operations management and analytics company that helps businesses enhance revenue growth and improve profitability. Using proprietary platforms, methodologies and our full range of digital capabilities, we look deeper to help companies transform their businesses, functions and operations, to help them deliver better customer experience and business outcomes, while managing risk and compliance. We serve our customers in the insurance, healthcare, travel, transportation and logistics, banking and financial services and utilities industries, among others. Headquartered in New York, we have approximately 29,100 professionals in locations throughout the United States, Europe, Asia (primarily India and the Philippines), Latin America, Australia and South Africa.

Performance Highlights for 2018

 

 

 

 

Company 3 Year Performance
Revenue and Segment Information ($ in millions)


 

 

 

 
Revenue (Year-over-year growth %)

 

 

 


2016


YOY%


2017


YOY%


2018


YOY%

 

 

Insurance Segment

  $ 206.3   3.2 % $ 234.8   13.8 % $ 258.1   9.9 %

 

 

Healthcare Segment

    68.7     24.4 %   77.0     12.2 %   84.4     9.6 %  

 

 

Travel, Transportation and Logistics Segment

  69.4   11.4 % 71.0   2.3 % 70.2   -1.0 %

 

 

Finance and Accounting Segment

    79.4     1.2 %   86.5     9.0 %   97.9     13.2 %  

 

 

All Other

  96.5   -12.7 % 83.1   -13.9 % 87.2   4.8 %

 

 

Analytics Segment

    165.7     35.7 %   209.9     26.7 %   285.3     35.9 %  

 

 

Consolidated

  $ 686.0   9.1 % $ 762.3   11.1 % $ 883.1   15.8 %

We improved our annual revenues from $762.3 million in fiscal year 2017 to $883.1 million in fiscal year 2018, and also achieved numerous other successes, including the acquisition of a healthcare analytics company and a $150 million strategic investment in our Company by The Orogen Group. For more information regarding these and other business highlights, please see pages 33 to 34 below and the 2018 Form 10-K.

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The graphs below compare our 1-year, 3-year and 5-year total stockholder return ("TSR") with that of the companies comprising Nasdaq, S&P 500 and our peer group. As shown in the table, our 3-year TSR outperformed all but one of our market benchmarks while our 5-year TSR outperformed all of our market benchmarks.

LOGO

        (1)
        Cumulative growth rate as of December 31, 2018.

        (2)
        Peer group TSR data excludes Convergys Corporation, which was acquired in October 2018, and DST Systems, which was acquired in April 2018.

2018 Compensation Highlights

    Named Executive Officers

    Name

Title

    Rohit Kapoor   Vice Chairman and CEO    
    Vishal Chhibbar   Executive Vice President and CFO  
    Pavan Bagai   President and Chief Operating Officer    
    Nagaraja Srivatsan   Executive Vice President and Chief Growth Officer  
    Nalin Miglani   Executive Vice President and Chief Human Resources Officer    

 

  2018 Standard Annual Compensation

  Compensation
Component


Rohit
Kapoor


Vishal
Chhibbar


Pavan
Bagai


Nagaraja
Srivatsan


Nalin
Miglani


 
  Salary $ 720,000 $ 437,671 $ 301,448 $ 441,370 $ 440,137  
  Non-Equity Incentive Plan Compensation 532,748 173,210 133,946 172,987 164,579
  Equity Awards 3,791,277 928,709 1,339,363 753,076 809,936  
  Other Compensation(1) 61,484 11,465 74,407 8,640 8,640
  Total $ 5,105,509 $ 1,551,056 $ 1,849,164 $ 1,376,073 $ 1,423,292  
(1)
For each named executive officer, this category includes, if applicable, his perquisites and personal benefits, changes in pension value, Company-paid life insurance premiums and Company contributions to our 401(k) plan. A detailed discussion of the compensation components for each named executive officer for fiscal year 2018 is provided in the "Summary Compensation Table for Fiscal Year 2018" beginning on page 50.

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On an annual basis, we submit to our stockholders a vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as described in this proxy statement. We refer to this vote as "say-on-pay". Please refer to our Compensation Discussion and Analysis, beginning on page 33 for a complete description of our 2018 compensation program.

Below are a few highlights of our executive compensation:

    >
    95% Say-on-Pay Approval of 2017 Compensation:  At our 2018 Annual Meeting of Stockholders, our stockholders approved, on a non-binding advisory basis, the compensation paid to our named executive officers for fiscal year 2017. Approximately 95% of the votes present in person or by proxy voted in favor of fiscal year 2017 compensation.

    >
    Annual Bonus Program Based Upon Financial Performance Criteria:  Our Compensation Committee approved the continued use of our annual bonus program, which was based upon the following performance criteria:

      Company Wide Metrics—Adjusted profit before tax ("PBT") and revenue
      Business Line Metrics—Revenue and Business Operating Income (BOI)
      Individual Metrics—Linked to areas of performance that are specific to each executive

    >
    Long-Term Equity Incentive Program:  We also continued our equity incentive program, which includes 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 total stockholder return-linked restricted stock units, and
      Revenue-linked restricted stock units.

    >
    2018 Performance:  We delivered the following revenue and Adjusted PBT (as described below) performance in 2018.

      Annual Incentive Program:  As measured under our annual incentive plan, we delivered 88.2% of our Adjusted PBT target and 97.7% of our revenue performance target.

      Equity Incentive Program:  This was the third and final performance year for the 2016 performance-based restricted stock units. We achieved 90.52% of the revenue target for the revenue-linked restricted stock units resulting in 5.24% of target funding of those grants. The Company's TSR performance was at the 40th percentile amongst its peer group, resulting in the executives earning 68.25% of the 2016 relative TSR-linked restricted stock units pursuant to the terms of the original grant.

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Compensation Mix:

LOGO

Auditor Matters

As a matter of good corporate practice, we are seeking your ratification of Deloitte & Touche LLP as our independent registered public accounting firm for fiscal year 2019. The following sets forth fees of Deloitte & Touche LLP, who served as our independent registered public accounting firm for fiscal year 2018.

 

 

2018
(in thousands)


 

Audit Fees

$ 1,425

 

Audit-Related Fees

 

 

Tax Fees

523

 

All Other Fees

54  

 

Total

$ 2,002

For more information on our auditors, including individual components of 2018 audit fees and our change in auditors, see pages 77 to 79.

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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 2019 Annual Meeting of Stockholders (the "Annual Meeting") to be held at the New York offices of the Company, 320 Park Avenue, 29th Floor, New York, New York, 10022 on June 17, 2019, at 8:30 AM, Eastern Time, and any adjournments or postponements thereof.

In accordance with rules and regulations adopted by the Securities and Exchange Commission (the "SEC"), 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 26, 2019. This proxy statement and the form of proxy relating to the Annual Meeting will be made available via the Internet to stockholders on or prior to 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 18, 2019, the record date for the Annual Meeting, can vote at the Annual Meeting. As of the close of business on April 18, 2019, the record date, we had 34,354,362 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 16, 2019.

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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 18, 2019, must be present, in person or by proxy, to conduct business at 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: Amendment of the Amended and Restated Certificate of Incorporation to Effect a Phased Declassification of the Board of Directors over the Next Three Years

We are seeking approval of an amendment of Section 6 of our Amended and Restated Certificate of Incorporation to declassify the board over a three-year phase out period (see pages 73 to 74 below), which when completed will allow for the election of all directors on an annual basis. This requires the affirmative vote of the holders of at least 662/3% of the voting power of the

then-outstanding shares of the Company, voting together as a single class. For purposes of the vote on Proposal 1, abstentions and broker non-votes (as described below) will have the effect of a vote against Proposal 1.

Proposal 2: Election of Directors

Under our Fourth Amended and Restated By-Laws (our "by-laws"), directors who are standing for election at the Annual Meeting will be elected by the affirmative vote of a majority of votes cast (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee) by stockholders in person or represented by proxy and entitled to vote at the Annual Meeting. If any incumbent nominee for director receives a greater number of votes "against" his or her election than votes "for" such election, our by-laws provide that such person shall tender to the board of directors his or her resignation as a director. You may cast your vote in favor of electing all of the nominees as directors, against one or more nominees, or abstain from voting your shares. For purposes of the vote on Proposal 2, abstentions and broker non-votes will have no effect on the results of the vote.

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Other Proposals

The ratification of the appointment of our independent registered public accounting firm, the advisory (non-binding) approval of the compensation of our named executive officers 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 3 (ratification of the appointment of our independent registered public accounting firm), 4 (advisory (non-binding) vote on executive compensation), or such other items properly presented and to be acted upon at the Annual Meeting, abstentions will have the effect of a vote against these proposals. Broker non-votes will have the effect of a vote against Proposal 4, but because Proposal 3 is a "routine" proposal where brokers have discretionary authority to vote in the absence of instruction, there will be no broker non-votes.

If you submit your proxy, but do not mark your voting preference, the proxy holders will vote your shares (i) FOR the amendment of the amended and restated certificate of incorporation, (ii) FOR the election of the Class I nominees for director, (iii) FOR the

ratification of the appointment of our independent registered public accounting firm, (iv) FOR the approval on an advisory (non-binding) basis of the compensation of our named executive officers, and (v) as described below, in the judgment of the proxy holder on any other matters properly 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 and approval on an advisory (non-binding) basis of the compensation of our named executive officers. 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, which at the Annual Meeting is 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.

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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 (or a proxy signed by a stockholder of record delegating voting authority to the attendee), before entering the Annual Meeting. Attendees will be required to sign in, and 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) 624-5913.

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OUR BOARD OF DIRECTORS

Our board of directors currently consists of ten 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
(Term expires 2019)*


Class II
(Term expires 2020)*


Class III
(Term expires 2021)*


 
    Rohit Kapoor   David Kelso   Deborah Kerr    
    Anne Minto   Som Mittal   Nitin Sahney  
    Jaynie Studenmund   Clyde Ostler   Garen Staglin    
            Vikram Pandit**    
*
Subject to approval by the Company's stockholders of Proposal 1 at the Annual Meeting, the board of directors will be declassified and elected annually over a three-year phase-out period.
**
Mr. Pandit was appointed to the board as a Class III director under the terms of an Investment Agreement as described on pages 12 to 13 below.

2019 Nominees

GRAPHIC

Upon the recommendation of our Nominating and Governance Committee, we are pleased to propose our three (3) existing Class I directors as nominees for re-election as directors at the Annual Meeting.

If Proposal 1 is approved by the Company's stockholders, upon the filing of the amendment to the certificate of incorporation set forth on Appendix A attached hereto, the classification of our board of directors will be phased out over the next three Annual Meetings of Stockholders, such that directors will be elected annually. Accordingly, (i) at the Annual Meeting, each of the Class I director nominees elected by our stockholders will be elected to hold office for a term of one year, or until their successors are duly elected and qualified in accordance with our by-laws, (ii) at the 2020 Annual Meeting of Stockholders, each of the Class I and Class II director nominees elected by our stockholders will be elected to hold office for a term of one year, or until their successors are duly elected and qualified in accordance with our by-laws, and (iii) at the 2021 Annual Meeting of

Stockholders, each of Class I, Class II and Class III director nominees elected by our stockholders will be elected to hold office for a term of one year, or until their successors are duly elected and qualified in accordance with our by-laws, and thereafter the classification of the board of directors will terminate in its entirety. As such, if elected, each of the Class I director nominees will serve a term or one year on our board of directors, until our 2020 Annual Meeting of Stockholders or until their successors are duly elected and qualified in accordance with our by-laws.

If Proposal 1 is not approved by the Company's stockholders, and if elected, each of the Class I director nominees will serve a term of three years on our board of directors, until our 2022 Annual Meeting of Stockholders or until their successors are duly elected and qualified in accordance with our by-laws.

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We believe that our director nominees and continuing directors, individually and together as a whole, possess the requisite skills, experience and qualifications necessary to maintain an effective board to serve the best interests of the Company and its stockholders.

Director Qualifications

GRAPHIC

The board of directors considers it paramount to achieving excellence in corporate governance to assemble a board of directors that, taken together, has the skills, qualifications, experience and attributes appropriate for functioning as the board of directors of our Company and working productively with management. The Nominating and Governance Committee of the Board is responsible for recommending nominees that are qualified and that bring a diverse set of skills and qualifications to oversee the Company effectively.

The Nominating and Governance Committee has not formally established any minimum qualifications for director candidates. However, in light of our business, the primary areas of experience, qualifications and attributes typically sought by the Nominating and Governance Committee in director candidates include, but are not limited to, the following primary areas:

    Executive Leadership
GRAPHIC   Experience holding significant leadership positions, including as a CEO or head of a significant business, to help us drive business strategy, growth and performance.

 

 

Finance and Accounting
GRAPHIC   Experience with finance, accounting or financial reporting processes, to help drive financial performance.

 

 

Global Experience
GRAPHIC   Experience working outside of the United States or with multinational companies, to help facilitate our global expansion.

 

 

Board Experience
GRAPHIC   Understanding of public company board of director and fiduciary duties, to help provide perspective on corporate governance best practices and related matters.

 

 

Client and Industry Expertise
GRAPHIC   Experience with our key client industries, including insurance, healthcare, banking and financial services,finance/accounting, and our other capabilities, to help deepen our knowledge of our key industry verticals and markets in which we do business.

 

 

Risk Oversight / Management
GRAPHIC   Experience assessing and overseeing the overall risk profile of multinational public companies.

We note that, in addition to satisfying these general qualifications considered by the Nominating and Governance Committee in connection with a director nomination, Vikram S. Pandit was appointed to the Board on October 4, 2018 as a Class III director pursuant to the

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terms of an Investment Agreement, dated as of October 1, 2018 (the "Investment Agreement"), between the Company and Orogen Echo LLC, an affiliate of The Orogen Group LLC (the "Purchaser"). The Investment Agreement was entered into in connection with our issuance to the Purchaser of $150,000,000 in aggregate principal amount of 3.50% Convertible Senior Notes due October 1, 2024 (the "notes"). For so long as the Purchaser has the right to nominate a director to the Board under the Investment Agreement, we have, subject to the terms of the Investment Agreement, agreed to include such person in our slate of nominees for election to our board of directors at each of our annual meetings of stockholders at which directors are to be elected, and to use our reasonable best efforts to cause the election of such person to our board of directors. The Purchaser's right to nominate a director will terminate if Purchaser and its affiliates beneficially own less than 50% of the number of shares of our common stock deemed beneficially owned by the Purchaser and its affiliates immediately following the issuance of the notes (which, for purposes of the Investment Agreement, includes shares of our common stock issuable upon conversion of the notes).

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Board of Directors

The names, ages and principal occupations (which have continued for at least the past five years unless otherwise indicated) and 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. There are no family relationships among any of our directors or executive officers.

Class I Directors (Terms Expiring at the Annual Meeting)

Rohit Kapoor  |

  Director since November 2002, Vice Chairman and CEO since April 2012   Independent: No  

 

 

 
GRAPHIC   Rohit Kapoor—Age: 54—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. He previously served as our President and CEO from May 2008 to March 2012. Mr. Kapoor's business experience and directorships are detailed below. The Company has concluded that, in connection with Mr. Kapoor's experience as a founder and current role as CEO of the Company, Mr. Kapoor should serve as a director.

Committees: N/A

Business Experience at the Company

    Vice Chairman and CEO (2012 – present)
    President and CEO (2008 – 2012)
    Various senior leadership roles, including CFO and COO (2000 – 2008)

Other Business Experience

    Business head, Deutsche Bank, a financial services provider (1999 – 2000)
    Various capacities at Bank of America in the United States and Asia, including India (1991 – 1999)

Public Directorships during Past Five Years

    Director and member of the audit committee, CA Technologies, Inc., a software services company (NASDAQ: CA) (2002 – 2018)

Other Relevant Experience

    Chairman, National Association of Software and Services Companies ("NASSCOM") BPM Council.
    Member, Board of Directors, America India Foundation (AIF)

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Anne E. Minto  |

  Director since March 2013   Independent: Yes  

 

 

 
GRAPHIC   Anne E. Minto—Age: 65—is a qualified lawyer and member of the Law Society of Scotland. Ms. Minto's business experience and directorships are detailed below. 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 Ms. Minto should serve as a director.

Committees: Compensation (Chair), Nominating and Governance

Business Experience

    Lawyer and member of Law Society of Scotland
    Former Group Director, Human Resources and member of the executive committee, Centrica plc, an energy and services company (2002 – 2011)
    Prior senior management roles at Shell UK and Smiths Group plc

Public Directorships During the Past Five Years

    Director, chairman of the remuneration committee and member of the audit and nomination committees, Tate & Lyle plc, a global provider of specialty food products (LSE: TATE) (2012 – present)
    Director, chairman of the remuneration committee and member of the nomination and governance committee, Shire plc, a global biopharmaceutical company (NASDAQ: SHPG, LSE: SHP) (2010 – 2018)

Other Relevant Experience

    Non-executive director, Court of the University of Aberdeen
    Chairman, University of Aberdeen Development Trust and University of Aberdeen Operating Board
    Fellow, Chartered Institute of Personnel & Development and the City and Guilds of London Institute
    Fellow, Chartered Institute of Management
    Former Deputy Director-General of the Engineering Employer's Federation

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Jaynie M. Studenmund  |

  Director since September 2018   Independent: Yes  

 

 

 
GRAPHIC   Jaynie M. Studenmund—Age: 64—is a seasoned executive with significant experience advising and leading digital companies. Ms. Studenmund's business experience and directorships are detailed below. The Company has concluded, based in part on Ms. Studenmund's extensive public company board experience, together with her knowledge and experience in the digital, financial services, health care and consumer business sectors, that Ms. Studenmund should serve as a director.

Committees: Audit*, Compensation

Business Experience

    Chief Operating Officer, Overture Services, a pioneer in paid search and search engine marketing (2001 – 2004)
    President & Chief Operating Officer, PayMyBills, the leading consumer bill payment and presentment company (1999 – 2001)
    Previously for over two decades served as Executive Vice President and Head of Consumer Businesses for three of the nation's largest banks, which today form the backbone of Chase and Wells Fargo's retail franchises in California.

Public Directorships During the Past Five Years

    Director and member of the compensation committee and nomination and governance committee, CoreLogic, Inc. (NYSE: CLGX) (2012 – present)
    Director and member of the contracts committee, audit committee and nomination and governance committee, Western Asset Management (2004 – present), a major fixed income fund, and director of affiliated funds for Western Asset Management
    Director, compensation committee chair and member of the compliance committee, Pinnacle Entertainment (Nasdaq: PNK) until its acquisition in 2018 (2012 – 2018)
    Director, compensation committee chair and member of the audit committee, Lifelock (Nasdaq: LOCK) until its acquisition in 2017 (2015 – 2017)

Other Relevant Experience

    NACD Board Leadership Fellow
    Life trustee and board chair, Huntington Hospital

   

*
Audit committee financial expert under applicable SEC rules and regulations.

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Class II Directors (Terms Expiring in 2020)

David Kelso  |

  Director since July 2006   Independent: Yes  

 

 

 
GRAPHIC   David B. Kelso—Age: 66—is a financial advisor for Kelso Advisory Services, a company he started in 2003. Mr. Kelso's business experience and directorships are detailed below. The Company has concluded, based in part on 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, that Mr. Kelso should serve as a director.

Committees: Audit*, Nominating and Corporate Governance (Chair)

Business Experience

    Financial Advisor, Kelso Advisory Services (2003 – present)
    Senior Advisor, Inductis, Inc., a strategy and analytics company, until its acquisition by the Company (June 2004 – June 2006)
    Chairman, Aetna Life Insurance Co., Executive Vice President, Strategy and Finance and member of the Office of the Chairman for Aetna, Inc., a managed healthcare company (2001 – 2003)
    Executive Vice President, Chief Financial Officer and Managing Director, Chubb Corporation, a property and casualty insurer (1996 – 2001)

Public Directorships During Past Five Years

    Director and member of audit committee and finance & investment committee, Assurant, Inc., a global provider of risk management products and services (NYSE: AIZ) (2007 – 2015)

Other Directorships

    Lead independent director and chair of the audit, nominating and valuation committees, Sound Shore Fund, an equity mutual fund (2006 – present)
    Director, Aspen Holdings Limited, a property and casualty reinsurance company (2005 – 2011)

Other Relevant Experience

    Board of Trustees, Darden School Foundation of the University of Virginia Darden School of Business

   

*
Audit committee financial expert under applicable SEC rules and regulations.

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Som Mittal  |

  Director since December 2013   Independent: Yes  

 

 

 
GRAPHIC   Som Mittal—Age: 67—has held various corporate leadership roles in the IT industry since 1989 and extensive experience in the engineering and automotive sectors. His business experience and directorships are detailed below. The Company has concluded, based in part on Mr. Mittal's business experience as President of NASSCOM and his knowledge of the global outsourcing industry, that Mr. Mittal should serve as a director.

Committees: Compensation, Nominating and Corporate Governance

Business Experience

    Chairman and President, NASSCOM, a trade body for the IT and business process management industries in India (2008 – 2014)
    Prior leadership roles at Wipro, and at Digital, Compaq and HP
    Prior executive roles at Larsen & Toubro, Escorts and Denso

Public Directorships During Past Five Years

    Director and chairman of customer service committee and IT strategy committee, member of nomination and remuneration committee and other committees, Axis Bank, Ltd., a financial services company (NSE:Axis) (2011 – present)
    Director and member of audit and risk management committee, Cyient Ltd., an engineering design services company (NSE:CYIENT) (2014 – present)
    Director and chairman of nomination and remuneration committee, Sheela Foam Ltd., a manufacturing company (NSE: SFL) (2016 – present)

Other Directorships

    Tata SIA Airlines, Ltd., an Indian airline joint venture between TATA and Singapore Airlines with Indian and international operations (2015 – present)

Other Relevant Experience

    Prior member, Board of Governors, Indian Institute of Corporate Affairs
    Prior Committee Member, Indian Prime Minister's National e-Governance Program
    Member/trustee of educational institutions and non-governmental organizations

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Clyde Ostler  |

  Director since December 2007   Independent: Yes  

 

 

 
GRAPHIC   Clyde W. Ostler—Age: 72—is a retired executive of Wells Fargo and during his 40-year tenure held numerous senior leadership positions within that organization. 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.

Committees: Audit (Chair)*, Compensation

Business Experience

    Leadership positions within Wells Fargo including: Group Executive Vice President, Wells Fargo & Co., Vice Chairman, Wells Fargo Bank California NA, President, Wells Fargo Family Wealth, 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
    Served on the Senior Management Committee of Wells Fargo for over 25 years

Public Directorships During the Past Five Years

    Director, member of the audit committee and compensation committee, McClatchy Company, a publishing company (NYSE: MNI) (2013 – present)

Other Directorships

    Advisory Director Emeritus, FTV Capital, a private global investment company

   

*
Audit committee financial expert under applicable SEC rules and regulations.

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Class III Directors (Terms Expiring in 2021)

Deborah Kerr  |

  Director since January 2015   Independent: Yes  

 

 

 
GRAPHIC   Deborah Kerr—Age: 47—is a proven technology leader in the software industry with more than 25 years of diverse management experience. Ms. Kerr's business experience and directorships are detailed below. The Company has concluded, based in part on Ms. Kerr's experience in the technology, digital, marketing, operations and software and services industries, and her general management experience, that Ms. Kerr should serve as a director.

Committees: Compensation, Nominating and Corporate Governance

Business Experience

    Managing Director, Warburg Pincus, a private equity firm (2019 – present) and previously Senior Advisor (2017 – 2019)
    Executive Vice President and Chief Product and Technology Officer, Sabre Corporation (NASDAQ: SABR), a global technology company (2013 – 2017)
    Executive Vice President, Chief Product and Technology Officer, Fair Isaac Corporation (FICO), an analytics software company (2009 – 2012)
    Prior senior leadership roles with Hewlett Packard, Peregrine Systems and NASA's Jet Propulsion Laboratory

Public Directorships during Past Five Years

    Director and member of the audit committee, International Airlines Group (BMAD: IAG, LSE: IAG) (2018 – present)
    Director and member of the audit committee, NetApp (NASDAQ: NTAP), a hybrid cloud and data services company (2017 – present)
    Director and member of the human resources, compensation and benefits committee, Chico's FAS, Inc., a specialty retailer of women's apparel (NYSE: CHS) (2017 – present)
    Director, D+H Corporation (TSX: DH), a provider of technology solutions and products to the financial industry (2013 – 2017)

Other Directorships

    Director and chair of the technology committee, Mitchell International Inc., a provider of technology solutions and services to the property and casualty industry (2010 – 2013)

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Vikram S. Pandit  |

  Director since October 2018   Independent: Yes  

 

 

 
GRAPHIC   Vikram S. Pandit—Age: 62—is Chairman and Chief Executive Officer of the Orogen Group, which makes significant long-term strategic investments in financial services companies and related businesses. Mr. Pandit's business experience and directorships are detailed below. Mr. Pandit was appointed to the Board pursuant to the terms of an Investment Agreement, dated as of October 1, 2018, between the Company and Orogen Echo LLC, an affiliate of The Orogen Group LLC. The Company has concluded, based in part on Mr. Pandit's more than 30 years of experience in the financial services industry, including his experience as Chief Executive Officer and a member of the board of directors of Citigroup Inc. (NYSE: C), that Mr. Pandit should serve as a director.

Committees: Audit

Business Experience

    Chairman and Chief Executive Officer, The Orogen Group (July 2016 – present)
    Chairman, TGG Group (February 2014 – June 2016)
    Chief Executive Officer, Citigroup Inc. (December 2007 – October 2012)

Public Directorships During the Past Five Years

    Director and member of the nominating and governance and finance committees, Virtusa Corporation (NASDAQ: VRTU) (2017 – present)
    Director, chair of the human resources and compensation committee and member of the corporate governance and nominating committee, Bombardier Inc. (TSX: BBD) (2014 – present)
    Director, Citigroup Inc. (December 2007 – October 2012)

Other Relevant Experience

    Chairman, Fair Square Financial Holdings (2017 – present)
    Chairman, JM Financial Credit Solutions Ltd. (2014 – present)
    Member of the Board of Overseers of Columbia Business School
    Member of the Board of Visitors of Columbia School of Engineering
    Member of the Board of Trustees of Columbia Business School until 2016

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Nitin Sahney  |

  Director since January 2016   Independent: Yes  

 

 

 
GRAPHIC   Nitin Sahney—Age: 56—is a leader in the healthcare industry with over 25 years of experience across all areas of healthcare. Mr. Sahney's business experience and directorships are detailed below. The Company has concluded, based in part on Mr. Sahney's experience as CEO of Omnicare, Inc. and his expertise in the healthcare industry garnered from more than two decades of experience, that Mr. Sahney should serve as a director.

Committees: Audit, Compensation

Business Experience

    Founder, Member-Manager and Chief Executive Officer, Pharmacord, LLC, a company that helps biopharma manufacturers address product access hurdles (2016 – present)
    Operating Advisor, Clayton Dubilier & Rice Funds, a private equity firm (2016 – 2017)
    President and CEO (2014 – 2015) and President and COO (2012 – 2014) of Omnicare Inc., a former New York Stock Exchange-listed Fortune 500 company in the long-term care and specialty care industries
    Manager of a healthcare investment fund (2008 – 2010)
    Founder and CEO of RxCrossroads, a specialty pharmaceutical company (2001 – 2007)
    Prior leadership positions with Cardinal Healthcare, a global healthcare services and products company

Other Relevant Experience

    Director, Option Care Enterprises, Inc. (2019 – present)
    Member of the Board of Trustees, University of Louisville (2017 – present)

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Garen K. Staglin  |

  Director since June 2005, Chairman of the Board since February 2014   Independent: Yes  

 

 

 
GRAPHIC   Garen K. Staglin—Age: 74—has over 40 years of experience in the financial services and technology industries. Mr. Staglin's business experience and directorships are detailed below. 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.

Committees: Compensation, Nominating and Corporate Governance

Business Experience

    Chief Executive Officer of eONE Global LP, an emerging payments company (2001 – 2004)
    Chief Executive Officer of Safelite Auto Glass, a provider of glass claim solutions (1993 – 1999)

Public Directorships during Past Five Years

    Director, chairman of the compensation and member of the governance committee, SVB Financial Group (NASDAQ:SIVB), a financial services provider (2011 – present)

Other Directorships

    Senior Advisor and Advisory Director, FTV Capital, a private global investment company (2004 – present)
    Vice Chairman, Profit Velocity Solutions, a manufacturing analytics firm (2007 – present)
    Chairman, Nvoice Payments, an electronic payment service provider (2010 – present)
    Advisory Director, Specialized Bicycle, a manufacturer of cycling equipment (1995 – 2014)
    Other directorships completed prior to 2014 include: Bottomline Technologies, a provider of payment and invoice automation software and services (2007 – 2012); Solera Holdings, a public automotive insurance software service provider (2005 – 2011); First Data Corporation, a payments solutions provider (1992 – 2003); and Global Document Solutions, a private document processing outsourcing company (2005 – 2010)

Other Relevant Experience

    Co-Founder and Co-Chairman, One Mind (1995 – present)
    Founder and President, BringChange2Mind (2009 – 2014)
    Co-Chairman, UCLA Centennial Capital Campaign (2014 – present)

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CORPORATE GOVERNANCE

Director Independence

In determining director independence, the board of directors considered the transactions and relationships set forth below under "Certain Relationships and Related Person Transactions—Related Party Transactions." Based on its review of all applicable relationships, 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. Each member of our board of directors attended at least 75% of the aggregate meetings of our board of directors and the committees on which they served during 2018. 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 2018 Annual Meeting of Stockholders attended such meeting.

LOGO

LOGO

Board Leadership Structure

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

LOGO

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), and our CEO, 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

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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. As a result, the Company will 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.

Majority Voting in Director Elections

Under our by-laws, directors who are standing for election in an uncontested election are elected by the affirmative vote of a majority of votes cast (meaning the number of shares voted "for" a nominee must exceed the number of shares voted "against" such nominee) in person or represented by proxy and entitled to vote at the meeting. If any incumbent nominee for director in an uncontested election receives a greater number of votes "against" his or her election than votes "for" such election, our by-laws provide that such person shall tender to the board of directors his or her resignation as a director. (In contested elections, directors will be 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.) An uncontested election means an election in which the number of nominees for director is not greater than the number to be elected.

Committees

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

GRAPHIC


GRAPHIC

Audit Committee.

Our Audit Committee oversees and assists our board of directors in fulfilling its oversight responsibilities with respect to 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, stock exchanges and others; our compliance with legal and regulatory requirements; our independent registered public accounting firm's qualifications and independence; the audit of our financial statements; the performance of our internal audit function and independent registered public accounting firm; and the Company's cyber security program and cyber strategy-related risks.    

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 specified related-party transactions as required by the rules of the Nasdaq Stock Market, and oversees the Company's cyber security program and cyber strategy-related risks.

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The Audit Committee was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (the "Exchange Act"). Our Audit Committee annually reviews and assesses the adequacy of the Audit Committee charter and its own performance. 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. Our board of directors has determined that all of the members of the Audit Committee meet the independence and experience requirements of the Nasdaq Stock Market and the federal securities laws for audit committee membership.

Nominating and Governance Committee.

Our Nominating and Governance Committee is responsible for: (i) identifying and recommending candidates for election to our board of directors using selection criteria approved by our board of directors, (ii) developing and recommending to our board of directors Corporate Governance Guidelines that are applicable to us, and (iii) overseeing our 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.   GRAPHIC

GRAPHIC

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., 320 Park Avenue, 29th Floor, New York, New York 10022, 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, ethical standards and integrity; independence; diversity of professional and personal backgrounds; skills and experience; other public company directorships; and financial literacy and expertise; communication skills; and ability and willingness to comply with Company policies and procedures.

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

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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 Nominating and Governance Committee also oversees our director onboarding and training program, which provides new directors with training regarding the Company's policies and procedures and specific requirements that may be needed based on the director's committee memberships. Our Nominating and Governance Committee annually reviews and assesses the adequacy of the Nominating and Governance Committee charter and its own performance.

The members of our Nominating and Governance Committee are appointed by our board of directors. Our board of directors has determined that all of the members of the Nominating and Governance Committee 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 Vice Chairman and 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   GRAPHIC

GRAPHIC

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, Vice Chairman and CEO or other senior executive compensation and to carry out its duties. For 2018, our Compensation Committee retained the services of Frederick W. Cook & Co., Inc. ("FW Cook"), a qualified and independent compensation consultant, to aid the Compensation Committee in performing its review of executive compensation including executive compensation benchmarking and peer group analysis. Our Compensation Committee annually reviews and assesses the adequacy of the Compensation Committee charter and its own performance. Additional information regarding our Compensation Committee's processes and procedures for considering executive compensation are addressed in the Compensation

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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 new members of our Compensation Committee must be recommended by our Nominating and Governance Committee. Our board of directors has determined that all members of the Compensation Committee meet the independence requirements of the Nasdaq Stock Market and federal securities laws for compensation committee membership.

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.

LOGO

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 and cyber security risk. The Audit Committee regularly reviews and discusses with management our major financial risk and cyber security 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. Once a year, the full board receives a report from management on the Company's readiness and capability to prevent, detect and respond to a cyber-attack.

In addition, we maintain Risk Appetite Guidelines that describe certain categories of risk and qualitative and quantitative thresholds considered by the Company to be consistent with its strategic objectives. These guidelines are designed to serve as a reference in assessing and implementing strategy, and to be actionable by management such that they are meaningful from an operational perspective.

Compensation Committee Interlocks and Insider Participation

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

During 2018, 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.

Other Directorships

The Board maintains a practice whereby our directors disclose to the Board any offers to be a director of any other organization, which is then evaluated by the Board for potential business and other conflicts.

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Code of Conduct and Ethics; Corporate Governance Guidelines

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. Our Code of Conduct and Ethics is reviewed annually by the Audit Committee. 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.
      320 Park Avenue, 29th Floor
      New York, New York 10022

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 of the Board of Directors
      ExlService Holdings, Inc.
      320 Park Avenue, 29th Floor
      New York, New York 10022
      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 a review of the reports furnished to us, or written

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representations from reporting persons that all reportable transaction were reported, the Company's officers, directors and greater than ten percent owners timely filed all reports they were required to file under Section 16(a) with respect to transactions during fiscal year 2018, except for the following Form 4s that were filed subsequent to the due date on account of administrative error: one report (one transaction) for each of Messrs. Staglin, Kapoor, Bagai, Bhalla, Chhibbar, Miglani and Srivatsan and one report (one transaction) for each of Mr. Rembert de Villa and Ms. Nancy Saltzman, each a former officer of the Company.

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OUR EXECUTIVE OFFICERS
    Name
Position
Biographical Information
 
       
    Rohit
Kapoor
(age 54)
  Vice Chairman and CEO   See section entitled "Our Board of Directors" above.    
       
    Ajay Ayyappan
(age 41)

 
Senior Vice President, General Counsel and Corporate Secretary   Mr. Ayyappan has served as our Senior Vice President, General Counsel and Corporate Secretary since December 2018 and our Vice President, Acting General Counsel and Corporate Secretary since August 2018. He previously served as Vice President, Deputy General Counsel and Assistant Secretary from April 2014 to August 2018 and Vice President and Assistant General Counsel from March 2007 to March 2014. Prior to joining us, Mr. Ayyappan was a corporate associate at the law firm of Morgan, Lewis & Bockius LLP.  
    Pavan
Bagai
(age 57)
  President and Chief Operating Officer   Mr. Bagai 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.    
       
    Vikas
Bhalla
(age 47)


 
Executive Vice President and Head of Insurance   Mr. Bhalla 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 51)
  Executive Vice President and CFO   Mr. Chhibbar 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.    
       
    Samuel
Meckey
(age 48)


 
Executive Vice President   Mr. Meckey has served as an Executive Vice President since November 2018. Prior to joining us, Mr. Meckey served as President of UnitedHealth Group's Optum Global Solutions and before that has held various executive roles at UnitedHealth Group, where he was employed from May 2004 to June 2018. Prior to joining UnitedHealth Group, Mr. Meckey was an officer and naval aviator in the United States Navy from May 1992 to August 2002.  

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    Name
Position
Biographical Information
 
       
    Nalin Miglani
(age 58)
  Executive Vice President and Chief Human Resource Officer   Mr. Miglani 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 the Company. Prior to joining the Company, 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.    
       
    Nagaraja Srivatsan
(age 52)

 
Executive Vice President and Chief Growth Officer   Mr. Srivatsan joined the Company as Executive Vice President and Chief Growth Officer in December 2016. Mr. Srivatsan is responsible for overseeing our sales and marketing, consulting, and strategy functions. Previously, he worked at Cognizant Technology Services beginning in 2002, where he served as Senior Vice President and Venture Partner, working with emerging businesses and ventures in the healthcare and life science industry. Mr. Srivatsan was Senior Vice President of Client Solutions at Silverline Technologies from 2001 to 2002, Chief technology Officer and Executive Vice President of Global Delivery at SeraNova from 1998 to 2001, and a Director at SEI Information Technology from 1992 to 1998.  

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Named Executive Officers

As determined in accordance with SEC rules, our "named executive officers" for 2018 are:

    >
    Rohit Kapoor, our Vice Chairman and CEO;

    >
    Vishal Chhibbar, our Executive Vice President and CFO;

    >
    Pavan Bagai, our President and Chief Operating Officer;

    >
    Nagaraja Srivatsan, our Executive Vice President and Chief Growth Officer; and

    >
    Nalin Miglani, our Executive Vice President and Chief Human Resources Officer.

Executive Summary

2018 Financial Highlights

We improved our annual revenues from $762.3 million in fiscal year 2017 to $883.1 million in fiscal year 2018 (an increase of over 15%), completed one acquisition and closed a strategic $150 million convertible notes investment from The Orogen Group. In addition, we increased our global footprint with the opening of three delivery centers, won 50 new clients, received numerous awards and industry recognitions and launched a global version of our analytics-driven subrogation platform Subrosource™ to derive additional recoveries, which has been deployed across Europe, UK, Europe and Asia.

Our Compensation Committee paid bonuses as a result of our achievement of 97.7% of our revenue target and 88.2% of our adjusted profits before tax ("Adjusted PBT") target, and based on achievement of individual and other performance measures as described below.

Total Stockholder Return

The graphs below compare our 1-year, 3-year and 5-year total stockholder return ("TSR") with that of the companies comprising Nasdaq, S&P 500 and our peer group. As shown in the table, our TSR outperformed all but one of our market benchmarks.

GRAPHIC

        (1)
        Cumulative growth rate as of December 31, 2018.

        (2)
        Peer group TSR data excludes Convergys Corporation, which was acquired in October 2018, and DST Systems, which was acquired in April 2018.

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Acquisitions, Finance and Equity Transactions

    >
    We completed the acquisition of SCIOinspire Holdings, Inc. ("SCIO"), a leading health analytics solution and services company that specializes in identifying opportunities and prescribing actions to drive operational performance and address the healthcare waste epidemic while improving care quality.

    >
    We entered into an investment agreement with Orogen Echo LLC, an affiliate of The Orogen Group LLC, relating to the issuance by the Company to Orogen Echo LLC of $150 million aggregate principal amount of 3.50% Convertible Senior Notes due October 1, 2024.

Awards and Industry Recognition

    >
    Our people are our primary assets, and they continue to be recognized across the industry.

    >
    As in prior years, we continued to receive numerous industry recognitions and awards, including the DSCI 2017 award for "Best Privacy Practices in the IT/ITeS/BPM industry, pointing to our commitment to innovation and excellence.

Clients and Operations

    >
    In 2018 we won 50 new clients compared to the 42 new clients we won in 2017.

    >
    We consolidated our London offices to support our growing UK and European business and opened new delivery centers in Chennai, India and in West Hartford, CT and Lee's Summit, MO.

    >
    We announced the global rollout of a digital Know Your Customer (KYC) solution in collaboration with HSBC that delivers faster turnaround times, more accurate due diligence and significant cost efficiencies.

    >
    We announced a partnership with TransUnion to create a seamless technology solution for lenders to comply with the new Current Expected Credit Loss Accounting rule.

    >
    We launched a global version of our analytics-driven subrogation platform Subrosource™ to derive additional recoveries, which has been deployed across Europe, UK, Europe and Asia.

Summary of Key Compensation Considerations & Decisions in 2018

The following highlights the Compensation Committee's key considerations and compensation decisions in 2018 and with respect to performance for 2018.

    Considerations and Decisions
   

>

Say on Pay Approval: 95% of our stockholders approved, on a non-binding basis (excluding broker non-votes), of our compensation of our named executive officers.

 
   

>

Base Salaries: We provided appropriate increases to base salaries in 2018 as described below (in 2017, we held base salaries constant).

   
   

>

Annual Bonuses: We based our annual bonuses on achievement of company goals (Adjusted PBT & revenue), business unit goals (total revenues & business operating income) and personal performance goals.

 
   

>

Equity Incentives: We continued to grant a mix of time-based and performance-based restricted stock units (revenue- & TSR-linked performance goals).

   

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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 2018, which were adopted to drive performance and to align our executives' interests with those of our stockholders.


What We Do
   

  Align Our Executive Pay with Performance   Link a significant portion of each NEO's total compensation to the achievement of specific performance goals, as described below.

Variable compensation is "at-risk" and rewards performance and contributions to both short- and long-term financial performance.

 
   

  Use Appropriate Peer Groups When Establishing Compensation   Established a peer group to help us review market practices and design a competitive compensation program. The criteria for peer group selection include similar market capitalization, scope of operations, potential mobility of talent and industry alignment.

Set compensation of our executive officers at levels that we believe are appropriate relative to the compensation paid to similarly situated officers of our peers, giving consideration to market and other factors.

   
   

  Ensure Equity Compensation Best Practices   Design equity incentives to encourage our executives to maintain a long-term view of stockholder value creation, to encourage retention & to ensure a significant portion of the award is performance-based.

Hold dividends accrued under our equity awards, if any, until the recipient vests in the underlying shares or units.

 
   

  Maintain an Independent Compensation Committee   Compensation decisions for our NEOs are approved by a Compensation Committee composed of non-employee independent directors.

Compensation Committee is advised by an independent consultant who reports directly to the Compensation Committee & provides no other services to the Company or management.

   
   

  Mitigate Risks   Mix and design of our compensation programs serves to mitigate operational, financial, legal, regulatory, strategic & reputational risks.  
   

  Maintain a Clawback Policy   Maintain a compensation recovery policy 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.    
   

  Maintain a Robust Stock Ownership Policy   Maintain a stock ownership policy that requires our CEO 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. Covered executives have five years from Dec. 2014 (or, if later, their hire date) to attain the required stock ownership levels.

We maintain 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.

As of December 31, 2018, all covered executives and directors were in compliance with the stock ownership policy.

 

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What We Don't Do
   

  No Option Repricing   We prohibit option repricing without stockholder approval.  
   

  No Excessive Overhang or Dilution   We do not have excessive overhang or dilution from equity grants.    
   

  No Excessive Perquisites   We provide our named executive officers with only limited perquisites and personal benefits that serve an important business purpose in addition to the regular benefits offered to all employees.

We consider the perquisites and personal benefits that we offer to our executives in India to be customary benefits which allow us to remain competitive for top talent.

 
   

  No Tax Gross-Ups   We do not provide "gross-ups" to any of our named executive officers, including 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").    
   

  No Hedging or Pledging   We maintain a policy that 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 directly or indirectly owned by any of them.

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.

 


Overview of Compensation Policies and Philosophies

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 innovation, collaboration, excellence, 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:

   

>

  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   GRAPHIC
        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.

 

>

 

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

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        greater influence on long-term results, thereby making a significant portion of their total compensation dependent on long-term stock price 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.   GRAPHIC

 

>

 

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.

 

>

 

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

        GRAPHIC   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.

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 and equity incentive program. The financial performance measures with respect to our named executive officers' incentive bonuses and equity incentive awards are largely based on the achievement of Company-wide goals. In addition, the incentive bonuses payable under our annual incentive bonus program 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 end of the prior year or the beginning of the year. At the end of the year or performance period, in the case of our equity incentive program, our Compensation Committee reviews and certifies our performance achievement, 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 and personal performance goals, as described below. These measures reflect targets that are intended to encourage stretch performance.

    >
    Assessment of Individual Performance.  Individual performance has a strong impact on the compensation of our employees, including our executive officers. The evaluation of an individual's performance determines a portion of the payouts for each of our named

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      executive officers made under our incentive bonus program and also influences any changes in base salary.

        For Messrs. Chhibbar, Bagai, Srivatsan and Miglani, our Compensation Committee receives a performance assessment and compensation recommendation from our Vice Chairman and CEO. The performance assessments are based on each of our named executive officer's respective self-evaluations and subsequent performance appraisals conducted by our Vice Chairman and CEO. Our Compensation Committee reviews the performance assessments of these executive officers with our Vice Chairman and 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.

        For Mr. Kapoor, our board of directors receives a self-evaluation prepared by Mr. Kapoor and provides feedback to our Chairman. Our Chairman then discusses the consolidated feedback from the board of directors with our Compensation Committee. Our board of directors and Compensation Committee evaluates the self-evaluation and feedback as well as Mr. Kapoor's performance, leadership accomplishments and overall competence and evaluates the achievement of established objectives.

    >
    Review of Peer Company Market Data.  At the time compensation decisions were made for our U.S.-based and other senior executive officers in 2018, 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 2018 were as follows:
Peer Group Companies
    Blackbaud   Genpact Limited    
    Convergys Corporation(1)   LiveRamp Holdings  
    CSG Systems International, Inc.   Sykes Enterprises    
    DST Systems(2)   Virtusa  
    EPAM Systems   WNS (Holdings) Limited    
(1)
Convergys Corporation was acquired by SYNNEX Corporation in October 2018.
(2)
DST Systems was acquired by SS&C Technologies in April 2018.

The compensation data for our peer group is compiled directly by FW Cook, the independent consultant to the Compensation Committee. The peer group compensation data was supplemented by global general industry and industry-specific survey data. The data from the surveys was scaled to our size by FW Cook based on revenues or corresponding revenue ranges as provided by the surveys. Management separately engaged Aon Consulting for the limited purpose of providing a survey of compensation data (the parameters of which were not prepared by Aon Consulting) for individuals in our global general industry holding analogous positions to our executive officers. While the Compensation Committee reviewed and considered the data provided by these surveys, it did not consider or review the compensation

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paid to executives at the component companies included within such surveys and did not use this information or any other data as a definitive benchmark to set executive compensation for fiscal year 2018.

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 reviews compensation information provided by FW Cook and the Aon survey in order to evaluate each executive's base pay, incentive bonus and equity incentives when changes in compensation are considered. 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, evaluation of management performance, changes in the scope of managerial responsibilities, and consideration of the business environment, and considers such matters in making compensation decisions.

    >
    Role of the Compensation Committee's Independent Compensation Consultant.  For 2018, the Compensation Committee retained the services of FW Cook, 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, FW Cook 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 FW Cook as compensation consultant for the Compensation Committee.

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Components of Executive Compensation for 2018

For 2018, 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.

   

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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 Vice Chairman and CEO and the other named executive officers during the 2018 fiscal year.

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).

GRAPHIC

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 2018, 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.

 

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Upon completing its review and as shown in the table below, and considering base salaries were held constant for 2017, the Compensation Committee determined that it was appropriate to increase the base salary for each of our named executive officers in recognition of their individual contributions and the Company's performance. The fixed compensation paid to Mr. Bagai is paid in Indian Rupees but we have included the percentage increase with respect to his fixed compensation in U.S. dollars. Further, this amount covers not only base salary for Mr. 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 



2017 Base Salary /
Annual Fixed
Compensation
(Effective April 1, 2017)
 





2018 Base Salary /
Annual Fixed
Compensation
(Effective April 1, 2018)
 





% Increase /
Decrease
 



 

 

Rohit Kapoor

  $ 620,000   $ 720,000 (2)   16.13 %  

 

 

Vishal Chhibbar

  400,000   450,000   12.50 %

 

 

Pavan Bagai

    360,106 (1)   407,077 (3)   13.04 %  

 

 

Nagaraja Srivatsan

  415,000   450,000   8.43 %

 

 

Nalin Miglani

    410,000     450,000     9.76 %  
(1)
The exchange rate used for the annual fixed compensation conversion from Indian rupees to U.S. dollars for Mr. Bagai was 63.87 INR to 1 USD, which was the exchange rate on December 31, 2017.
(2)
Mr. Kapoor's base salary increased to $720,000, effective January 1, 2018.
(3)
The exchange rate used for the annual fixed compensation conversion from Indian rupees to U.S. dollars for Mr. Bagai was 63.87 INR to 1 USD, which was the exchange rate on December 31, 2017.

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 December 2017 for the year 2018 for bonuses payable in respect of 2018 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 our assessment of each named executive officer's performance relative to his predetermined individual performance goals. If our performance falls short of target, 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. Although the Compensation Committee has not historically done so, it has the discretion to adjust an award payout from the amount yielded by the formula at the end of the performance period.

Our Compensation Committee considered the following when establishing the awards for 2018:

    >
    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 2018, our Compensation Committee established the following bonus targets (expressed as a

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      percentage of base salary or annual fixed compensation) as well as maximum bonus targets for each named executive officer.

    Name
Bonus Target
Bonus Maximum
       
    Rohit Kapoor   150% of base salary   300% of base salary  
    Vishal Chhibbar   75% of base salary   150% of base salary    
    Pavan Bagai   75% of annual fixed compensation   150% of annual fixed compensation  
    Nagaraja Srivatsan   75% of base salary   150% of base salary    
    Nalin Miglani   75% of base salary   150% of base salary  
    >
    Performance Measures.  Our executives were eligible to earn annual bonuses based on their achievement of company-wide performance metrics, business line or other company performance metrics and individual performance, as described in the tables below.

 

 

Name 



Company-Wide
Performance(1)
 



Individual
Performance
 



Business Line or Other
Company Performance(2)
 



 

 

Rohit Kapoor

  65 % 15 % 20 %

 

 

Vishal Chhibbar

    60 %   20 %   20 %  

 

 

Pavan Bagai

  65 % 15 % 20 %

 

 

Nagaraja Srivatsan

    60 %   20 %   20 %  

 

 

Nalin Miglani

  60 % 20 % 20 %
(1)
Based 50% on the Company's Adjusted PBT goal and 50% on the Company's revenue goal, for all employees whose incentive bonus is linked to Company-wide financial performance, including our named executive officers.
(2)
Based on total revenue and business operating income for specific business units. Business operating income is a component for measuring business unit performance that is computed as the business unit's gross margin less direct operating expenses.

In 2018, the Compensation Committee continued to set the business line and other Company performance goals as well as the individual performance goals described above for all named executive officers to ensure the executives were properly focused on both the Company's Adjusted PBT and revenue goals, aggregate of business units' performance on revenue and Adjusted PBT goals and other areas of performance that are unique to their positions within the organization. We decided to move away from basing our annual bonus in part on Adjusted EPS and, instead, to base it in part on Adjusted PBT targets because of the uncertain effect of proposed U.S. tax reforms on the Company and the Adjusted EPS calculation. Adjusted PBT, by its nature, is a measure that is unaffected by the then-current year's taxation. 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 2018, the portion of incentive bonus payments that were subject to financial performance measures could have

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      ranged from zero to 200% of target depending on the achievement of performance goals, as follows:

  Adjusted PBT Goals 

Revenue Goals 

    % of Adjusted PBT Achieved
Compared to Target Goal

 
% of Target Portion
Funded

 
% of Revenues Achieved
Compared to Target Goal

 
% of Target Portion
Funded

 
    Less than 90%   0%   Less than 90%   0%    
    At 90%   25%   At 90%   25%  
    From 90% to 100%   Linear interpolation from 25% to 100%   From 90% to 100%   Linear interpolation from 25% to 100%    
    At 100%   100%   At 100%   100%  
    From 100% to 110%   Linear interpolation from 100% to 200%   From 100% to 110%   Linear interpolation from 100% to 200%    
    Above 110%   200%   Above 110%   200%  

      In 2018, our Compensation Committee established an Adjusted PBT target of $141.3 million and a revenue target of $867.0 million. Based on our performance during the 2018 fiscal year, we achieved 88.2% of our Adjusted PBT target, and 97.7% of our revenue target.

      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.

    >
    Individual Performance Measures.  As discussed above, each of our named executive officers earns a portion of his 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, other goals, such as client and employee satisfaction metrics, are capable of objective measurement. The individual performance measures are generally based on strategic performance indicators such as improving sales productivity, strengthening our sales effectiveness, supporting inorganic growth through mergers and acquisitions, improving recruitment capabilities, enhancing market recognition, advancing our technological and automation capabilities and achieving revenue growth targets within specific areas.

    >
    Determination of Individual Performance Achievement.  Mr. Kapoor made performance assessments and compensation recommendations for Messrs. Chhibbar, Bagai, Srivatsan and Miglani 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 pursuing our M&A strategy, managing the finance function, developing investor relations, and growing the finance and accounting business. For Mr. Bagai, our Compensation Committee noted his contribution in providing leadership to the analytics business, managing operations, driving cost efficiencies, and improving margins of operational geographies. For Mr. Srivatsan, our Compensation Committee noted his contribution in turning around the consulting business, leading the sales function and implementing the new marketing position of the Company. For Mr. Miglani, our Compensation Committee noted his contribution in promoting diversity, building the talent base and creating an organization for a digital future, while enabling integration of acquired companies. For Mr. Kapoor, the Compensation Committee noted his contribution in building a strong leadership team, meeting business metric targets, and leading the strategic transformation of the company as a leader in global digital transformation services.

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    >
    Actual Bonus Payments.  The table below sets out the 2018 incentive bonuses paid to our named executive officers in March 2019.
    Name


Earned 2018
Incentive Bonus ($)


     
    Rohit Kapoor   532,748  
    Vishal Chhibbar     173,210    
    Pavan Bagai(1)   133,946  
    Nagaraja Srivatsan     172,987    
    Nalin Miglani   164,579  
(1)
The exchange rate used for the bonus conversion from Indian rupees to U.S. dollars for Mr. Bagai was 69.77 INR to 1 USD, which was the exchange rate on December 31, 2018.

Long-Term Equity Incentives

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 or shortly following 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 than stock options because restricted stock awards are full value awards, and our Compensation Committee can award fewer shares than an equivalent value of stock options.

Fiscal Year 2018 Awards

Under our equity compensation program, our executive officers received restricted stock units under the 2015 Amendment and Restatement of the 2006 Omnibus Award Plan (the "2015 Plan"). Subsequent awards were made pursuant to the 2018 Omnibus Incentive Plan approved by the Company's stockholders at the annual meeting of stockholders held in June 2018. We awarded restricted stock units to all of our named executive officers in the portions shown below.

GRAPHIC

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    >
    The Time-Vested RSUs 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 2018 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 aggregate revenue target over the grant's three year performance period of January 1, 2018 to December 31, 2020 and continuous employment through December 31, 2020—we call these awards "Revenue-Linked PRSUs." The ultimate amount of Revenue-Linked PRSUs that a recipient earns may be up to 200% of the target award of Revenue-Linked RSUs. To the extent the Company's revenue falls in between 90% and 98%, the percentage of Revenue-Based RSUS earned will be determined based on straight line interpolation calculated using a revenue target range between 90% and 100% and a funding range between 0% and 100%. Likewise, if performance is between 102% and 110%, the percentage of Revenue-Based RSUs earned will be determined based on straight line interpolation calculated using a revenue target range between 100% and 110% and a funding range between 100% and 200%. The chart below sets forth the revenue target achievement thresholds and corresponding funding percentage:
      Revenue Target Achievement 

Funding Percentage 

      110% or more   200%    
      98% to 102%   100%  
      90% or less   0%    
        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, 2018 to December 31, 2020 and continuous employment through December 31, 2020—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 traded on either the NYSE or NASDAQ stock markets in our 8-digit Global Industry Classification Standard sub-industry group. This comparator set is more appropriate than the compensation peer group for this purpose as it provides a more robust comparison of our performance to the marketplace by the inclusion of more companies and eliminating size as a selection criteria, which is more relevant for compensation than performance comparison. For the Relative TSR-Linked PRSUs granted in 2018, the Company included 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.

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        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 or more   200%    
    65.0   150%  
    50.0   100%    
    35.0   50%  
    20.0 or less   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 2018. 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     30,005     15,003     15,002    
    Vishal Chhibbar   7,350   3,675   3,675  
    Pavan Bagai     10,600     5,300     5,300    
    Nagaraja Srivatsan   5,960   2,980   2,980  
    Nalin Miglani     6,410     3,205     3,205    

Payout of Awards Granted in Prior Fiscal Years

This was the third and final performance year for the 2016 performance-based restricted stock units. We achieved 90.52% of the revenue target for the revenue-linked restricted stock units resulting in 5.24% of target funding of those grants. The Company's TSR performance was at the 40th percentile amongst its peer group, resulting in the executives earning 68.25% of the 2016 relative TSR-linked restricted stock units pursuant to the terms of the original grant.

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 officer in India, Mr. Bagai, is eligible to participate in the Company's

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pension benefit, health and welfare and fringe benefit plans otherwise available to executive employees in India.

We generally do not provide significant perquisites or personal benefits to executive officers other than our Vice Chairman and CEO and our executive officers in India. Our Vice Chairman and CEO is provided a limited number of perquisites which we believe are reasonable and consistent with market trends, which are intended to be part of a competitive overall compensation program. A discussion of the benefits provided to our Vice Chairman and CEO is provided under "Employment Agreements" beginning on page 52.

Risk and Compensation Policies

Our Compensation Committee has taken into account its discussions with management and FW Cook 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 the Company. This conclusion was based on the features of our compensation programs, practices and policies set forth under "Key Corporate Governance Features" beginning on page 35.

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 2018 Year-End" beginning on page 58.

We have provided change-in-control severance protection for some 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.

Looking Forward to 2019

For fiscal 2019, we generally continued the annual bonus program and our long-term equity incentives for fiscal 2018, subject, of course, to new performance goals. As mentioned previously, the Adjusted PBT target was in place for determining a portion of the annual incentive awards in 2018 due to the uncertain effect of U.S. tax reform on the Company. Since the enactment of the Tax Cuts and Jobs Act of 2017 on December 22, 2017, the Compensation Committee determined to return to the Adjusted EPS target for that portion of the 2019 annual incentive awards.

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Deductibility Cap on Executive Compensation

The Tax Cuts and Jobs Act of 2017 significantly altered our ability to deduct for federal income tax purposes compensation paid to certain of our executives. Prior to its passage, Section 162(m) of the Code limited our ability to deduct compensation paid to our named executive officers (other than our chief financial officer) in excess of $1 million per year, unless the compensation was "performance-based", as described in the regulations under Code Section 162(m). In general, the Tax Cuts and Jobs Act of 2017 eliminated the exception from Code Section 162(m)'s deduction limits for performance-based compensation, clarified that chief executive officers are covered by the deduction limitation, and made certain other changes, including providing for transition relief for written binding contracts in effect on November 2, 2017.

As in the past, our Compensation Committee expects to continue to take into consideration the tax deductibility of compensation, but reserves the right to authorize payments that may not be deductible if it believes that the payments are appropriate and consistent with our compensation philosophy.

Despite the changes made to Code Section 162(m) outlined above, our Compensation Committee does not anticipate a shift away from variable or performance-based compensation payable to our named executive officers. Similarly, we do not expect to apply less rigor in the process by which we establish performance goals or evaluate performance against pre-established goals with respect to compensation paid to our named executive officers.

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 for the fiscal year ended December 31, 2018, and our proxy statement relating to the Annual Meeting.

    COMPENSATION COMMITTEE

 

 

Ms. Anne Minto (Chair)
Ms. Deborah Kerr
Mr. Som Mittal
Mr. Clyde W. Ostler
Mr. Garen K. Staglin
Ms. Jaynie M. Studenmund

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Summary Compensation Table for Fiscal Year 2018

The following table sets forth information for compensation earned in fiscal years 2016, 2017 and 2018 by our named executive officers:

 

 

Name and
Principal Position
 




Year 

Salary
($)
 



Bonus
($)
 



Stock
Awards
($)(2)
 




Non-Equity
Incentive
Plan
Compensation
($)(3)
 






Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(4)
 









All Other
Compensation
($)
 




Total
($)
 



 

 

Rohit Kapoor

    2018     720,000         3,791,277     532,748         61,484     5,105,509    

 

 

Vice Chairman &

    2017     620,000         3,145,687     591,028         41,413     4,398,128    

 

 

CEO

    2016     615,027         4,005,938     525,043         47,129 (5)   5,193,137    

 

 

Vishal Chhibbar

  2018   437,671     928,709   173,210     11,465   1,551,056  

 

 

Executive Vice President

  2017   400,000     717,639   252,608     8,990   1,379,237  

 

 

and CFO

  2016   411,054     747,775   210,992     108,340 (6) 1,478,161  

 

 

Pavan Bagai

    2018     301,448         1,339,363     133,946     17,124     57,284     1,849,164    

 

 

President & Chief

    2017     296,139         1,134,418     265,561     6,059     66,207     1,768,384    

 

 

Operating Officer

    2016     262,895 (1)       1,335,313     200,449     11,170     72,453 (7)   1,882,280    

 

 

Nagaraja Srivatsan

  2018   441,370     753,076   172,987     8,640   1,376,073  

 

 

Executive Vice President

  2017   415,000     651,057   302,701     8,490   1,377,248  

 

 

and Chief Growth Officer

  2016             (8)  

 

 

Nalin Miglani

    2018     440,137         809,936     164,579         8,640     1,423,292    

 

 

Executive Vice President

    2017     410,000         705,312     249,083         8,490     1,372,885    

 

 

and Chief Human Resources Officer

    2016     407,514         640,950     231,104         8,340 (9)   1,287,908    

(1)
The amount set forth in the "Salary" column for Mr. Bagai includes $126,666 of base salary, $125,747 of a cash supplementary allowance, $27,519 of housing allowance (which Mr. Bagai elected to receive in cash), $10,750 of car allowance (which Mr. Bagai elected to receive in cash), and $10,766 of travel and medical allowance (which Mr. Bagai elected to receive in cash). The values set forth in this column are before any compensation reduction under any Company 401(k) savings or non-qualified plan.
(2)
Amounts reflect the total grant date fair value of awards recognized for financial statement reporting purposes for the fiscal years ended December 31, 2016, 2017 and 2018, in accordance with FASB ASC Topic 718 (disregarding any forfeiture assumptions). Assumptions used in the calculation of these amounts are included (i) for 2018, in footnotes 2 and 24 to the audited financial statements for the fiscal year ended December 31, 2018, included in the 2018 Form 10-K; (ii) for 2017, in footnotes 2 and 21 to the audited financial statements for the fiscal year ended December 31, 2017, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2018; and (iii) for 2016, in footnotes 2 and 18 to the audited financial statements for the fiscal year ended December 31, 2016, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 15, 2017. With respect to stock awards granted in 2018, the table below sets forth the value attributable to performance restricted stock units valued at target achievement. Performance restricted stock units granted in 2018 may pay out up to 200% of the target award, which would have amounted to the grant date fair values listed as the maximum total grant date fair value for each named executive officer in the table below.
 

 

 

Name 



Target Total Grant Date Fair Value ($) 

Maximum Total Grant Date Fair Value ($) 

 

 

 

Rohit Kapoor

    1,973,574     3,947,147    
 

 

 

Vishal Chhibbar

  483,446   966,893  
 

 

 

Pavan Bagai

    697,215     1,394,430    
 

 

 

Nagaraja Srivatsan

  392,019   784,038  
 

 

 

Nalin Miglani

    421,618     843,236    
(3)
Reflects the cash incentive bonuses earned in respect of 2018 and paid in 2019. For details on our annual incentive bonus program, see "Compensation Discussion and Analysis—Incentive Bonus" beginning on page 42.

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(4)
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 2018" beginning on page 57.
(5)
Amount for Mr. Kapoor includes the travel allowance 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 ($35,180), costs associated with use of an automobile and driver in India, car lease, tax preparation assistance in India, contributions to our 401(k) plan, and Company-paid life insurance premiums.
(6)
Amount for Mr. Chhibbar includes contributions to our 401(k) plan and Company-paid life insurance premiums and tax preparation assistance.
(7)
Amount for Mr. Bagai includes housing allowance ($38,699), contributions to Employees' Provident Fund Scheme (a statutorily required defined contribution program for Indian employees) ($15,200), costs associated with use of an automobile and driver in India, and home internet and telephone charges.
(8)
Amount for Mr. Srivatsan includes contributions to our 401(k) plan and Company-paid life insurance premiums.
(9)
Amount for Mr. Miglani includes contributions to our 401(k) plan and Company-paid life insurance premiums.

Unless otherwise specified, U.S. dollar figures in this proxy statement have been converted from Indian rupees at a rate of 69.77 Indian rupees to $1.00, the Indian rupee to U.S. dollar exchange rate in effect as of December 31, 2018. Some of the information in the Summary Compensation Tables for fiscal years 2016 and 2017 was converted using the exchange rates in effect as set forth below:

 

 

Fiscal Year 



Rate 

Exchange Rate of INR per US$1 

 

 

2017

  December 31, 2017   63.87  

 

 

2016

  December 31, 2016     67.94    

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Grants of Plan-Based Awards Table for Fiscal Year 2018

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 2018:

 

 

 

      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










Grant Date
Fair Value
of Stock
and Option




 

 

Name 



Grant
Date
 



Threshold
($)
 



Target
($)
 



Maximum
($)
 



Threshold
(#)
 



Target
(#)
 



Maximum
(#)
 



Units
(#)
 



Awards(5)
($)
 



 

 

Rohit Kapoor

                1,080,000     2,160,000                                  

 

        2/22/2018                             15,003 (2)   30,006           908,882    

 

        2/22/2018                             15,002 (3)   30,004           1,064,692    

 

        2/22/2018                                         30,005 (4)   1,817,703    
                     

 

 

Vishal Chhibbar

      313,459   626,918            
                     

 

 

  2/22/2018           3,675 (2) 7,350     222,632  
                     

 

 

  2/22/2018           3,675 (3) 7,350     260,815  
                     

 

 

  2/22/2018               7,350 (4) 445,263  

 

 

Pavan Bagai

                271,538     543,076