Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Approval of Changes to 2020 Short-term Incentive Plan ("STIP")
This change impacts all STIP eligible employees, a significant portion of our employees globally, including each of our executive officers.
On
•Capital Expenditures ("CAPEX"), weighted 40 percent
•Cost Containment, weighted 40 percent
•Revenue and Operating Income of our Health business, weighted 20 percent
The above metrics will be used to determine 2020 STIP attainment.
The performance goals for each of these new metrics are based on performance for the second half of 2020, to align with our near-term business objectives. Individual performance may modify the award payout ± 25 percent for our executive officers, as was previously the case. Maximum potential STIP payout for our executive officers was reduced from 200 percent of target to 150 percent of target, and a minimum level of profitability (Operating Income) was established for threshold STIP pool funding to occur.
This revised 2020 STIP program continues to hold the officer group accountable for shared corporate performance metrics and goals, while also emphasizing and holding leaders accountable for the results they can most influence. Our STIP program is designed to drive behaviors that will support our company being well positioned during, and coming out of, the COVID-19 pandemic.
Approval of Changes to Previously Granted Performance Stock Units ("PSU")
2020 PSU Grant
This change impacts all employees at WEX that received a relevant 2020 PSU award, including all executive officers.
On
Since that time, the severity of the impact of COVID-19 on the global economy,
and general economic uncertainty, increased significantly. In light of this, on
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PSU award to total shareholder return ("TSR"), relative to other companies in the S&P 400 index, and set the payout scale (% of target) as shown in the following table:
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The performance period will continue to end on
The Committee believes that the revised 2020 PSU program aligns our compensation program with the long-term interests of our stockholders and will continue to support our objectives of actual pay levels being commensurate with actual annual and multi-year performance outcomes.
2019 PSU Grant
This change impacts all employees at WEX that received a relevant 2019 PSU award, including all executive officers.
On
Effective
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If earned, PSUs will continue to cliff vest in
The Committee believes that the revised 2019 PSU program continues to align our compensation program with the long-term interests of our stockholders, and will continue to support our objectives of actual pay levels being commensurate with actual annual and multi-year performance outcomes.
Approval of the PSUs and Restricted Stock Units ("RSUs")
Business Continuity Grant
Selected employees across the company - at the Senior Vice President, Vice President, Senior Director, Senior Manager, Manager and Individual Contributor levels - received the Award, in addition to all executive officers.
On
• Further align and focus a broad group of key employees on our stock price and TSR outperformance relative to other companies in the S&P 400 index during, and coming out of, a time of significant economic uncertainty and business disruption created by the COVID-19 pandemic. • Motivate a broad group of high-performing employees whom the Committee believes are important to the Company's continued TSR outperformance and especially critical to achieving success in the current uncertain and evolving COVID-19 economic environment. This additional compensation opportunity is designed to motivate these employees in a manner strongly aligned with the long-term interests of our stockholders. The past success of these employees is demonstrated by the Company's historic TSR outperformance during the one- and three-year periods endedDecember 31, 2019 , as shown in the following table: [[Image Removed: a3rdgrid.jpg]]
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• Support strong ongoing pay and performance alignment. Our pay-for-performance philosophy, as described in our annual proxy statement, is structured to reward above median performance with commensurate actual pay outcomes (and vice versa for below median performance). Our Committee regularly reviews the pay and performance relationship for continued alignment based on a balanced, strongly performance-based executive pay program.
The Committee approved a grant date target Award value of
The PSUs have a three-year performance measurement period, commencing with the grant date, and vesting of the PSUs is tied to the Company's TSR relative to other companies in the S&P 400 index. The PSUs provide for a threshold, target and maximum number of shares that may be earned based upon achievement of relative TSR performance goals adopted by the Compensation Committee, as shown on the following performance and payout scale:
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As shown above, median TSR must be exceeded for target PSU payout to occur, and 60thpercentile TSR performance must be exceeded for an above target PSU payout to occur. The PSUs, which constitute 75% of the Award, are intended to complement other elements of the compensation program, which has included absolute financial goals and awards linked to absolute stock price growth. The foregoing description of the PSUs does not purport to be complete and is qualified in its entirety by reference to the form of PSU award agreement, a copy of which is filed as Exhibit 10.3 hereto, and is incorporated by reference herein.
The RSUs, which constitute the remaining 25% of the Award, vest 50 percent two years from the date of grant, and 50 percent three years from the date of grant.
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Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. Exhibit No. Description 10.1 Form of Letter to Holders of a Performance-Based Restricted Stock UnitAgreement (2020 Grant)* 10.2 Form of Letter to Holders of a Performance-Based Restricted Stock Unit Agreement (2019 Grant)* 10.3 Form ofJune 2020 Performance Share Unit Agreement* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
* Management contract or compensatory plan or arrangement.
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