UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x Filed by a Party other than the Registrant o
Check the appropriate box:
| o | Preliminary Proxy Statement | ||||
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
| x | Definitive Proxy Statement | ||||
| o | Definitive Additional Materials | ||||
| o | Soliciting Material under §240.14a-12 | ||||
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| x | No fee required. | ||||
| o | Fee paid previously with preliminary materials. | ||||
| o | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
Xerox Holdings Corporation
YOUR VOTE IS VERY IMPORTANT
Dear Shareholders:
You are cordially invited to attend the 2023 Annual Meeting of Shareholders (Annual Meeting) of Xerox Holdings Corporation (Xerox), to be held at 8:00 a.m., Eastern Time, on Thursday, May 25, 2023, at 501 Merritt 7 in Norwalk, Connecticut. Your Board of Directors and management look forward to greeting those shareholders who are able to attend.
At the Annual Meeting you will be asked to consider and vote upon proposals to: (i) elect eight directors to our Board of Directors; (ii) ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023; (iii) approve, on an advisory basis, the 2022 compensation of our named executive officers; (iv) select, on an advisory basis, the frequency of future advisory votes on the compensation of our named executive officers; (v) approve an amendment to our Performance Incentive Plan to increase the total number of shares authorized and available for issuance under the Plan; and (vi) consider a shareholder proposal to provide shareholders the right to ratify termination pay, if properly presented at the Annual Meeting.
In June 2022, we announced the unexpected passing of our former CEO and Vice Chairman, John Visentin. During his time at Xerox, John was a visionary leader who navigated the Company through unprecedented times and challenges. As a champion for innovation, he embraced and enhanced Xerox’s legacy as a print and services provider and embarked on a transformative journey that broadened the company’s expertise and offerings. We are grateful for John’s many significant contributions in helping to guide the transformation of our Company.
Our Board unanimously recommends that you vote “FOR” all nominees for director, “FOR” ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2023, “FOR” the non-binding executive compensation proposal, “1 YEAR” as the frequency of future advisory votes on the compensation of our named executive officers, "FOR" approval of an amendment to increase the total number of shares authorized for issuance under our Performance Incentive Plan, and “AGAINST” the shareholder proposal for a shareholder right to ratify termination pay, if properly presented at the Annual Meeting.
Your vote is important — no matter how many or how few shares you may own. Whether or not you plan to attend the Annual Meeting, please submit your proxy as soon as possible. You may submit a proxy via the Internet, by telephone or, if applicable, by signing, dating, and mailing the proxy card. Specific instructions for shareholders of record who wish to use Internet or telephone proxy procedures are included in the enclosed Proxy Statement. Any shareholder attending the Annual Meeting may vote at the Annual Meeting even if a proxy has been returned.
The accompanying notice of meeting and the Proxy Statement provide specific information about the Annual Meeting and explain the various proposals. Please read these materials carefully.
Thank you for your continued support of Xerox.
For the Board of Directors,
James L. Nelson | Steven J. Bandrowczak | ||||
Chairman of the Board | Chief Executive Officer | ||||
The accompanying Proxy Statement is dated April 10, 2023 and is first being distributed to shareholders on or about April 10, 2023.
NOTICE OF 2023 ANNUAL MEETING OF SHAREHOLDERS
You are cordially invited to attend the 2023 Annual Meeting of Shareholders of Xerox Holdings Corporation to be held at 8:00 a.m., Eastern Time, on Thursday, May 25, 2023, at 501 Merritt 7, Norwalk, CT 06851. We look forward to meeting our shareholders who are able to attend.
Shareholders will be asked to:
1.Elect each of the eight directors named in the enclosed Proxy Statement;
2.Ratify the appointment of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
3.Approve, on an advisory basis, the 2022 compensation of our named executive officers;
4.Select, on an advisory basis, the frequency of future advisory votes on the compensation of our named executive officers;
5.Approve an amendment to the Company's Performance Incentive Plan, as amended through
October 21, 2021, to increase the total number of shares of common stock authorized and available for issuance under the Plan; and
October 21, 2021, to increase the total number of shares of common stock authorized and available for issuance under the Plan; and
6.Consider a shareholder proposal to provide shareholders with the right to ratify termination pay, if properly presented at the Annual Meeting.
Shareholders will also be asked to consider such other business as may properly come before the Annual Meeting.
Voting:
You are eligible to vote if you were a shareholder of record at the close of business on March 31, 2023.
Ensure that your shares are represented at the meeting by voting in one of several ways:
 | VIA THE INTERNET. | ||||
 | BY TELEPHONE. | ||||
 | BY MAIL. | ||||
 | AT THE ANNUAL MEETING. | ||||
Please review the Notice of Internet Availability of Proxy Materials or accompanying proxy card for voting instructions, and submit your proxy as soon as possible to ensure that your shares are represented, even if you plan to attend the Annual Meeting. Voting now will not limit your right to change your vote or to attend the Annual Meeting.
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Shareholders to be Held on May 25, 2023.
The Proxy Statement and 2022 Annual Report are available at
www.xerox.com/investor.
If you have any questions or require assistance in voting your shares, you should call HKL & Co., LLC, Xerox’s proxy solicitor for the Annual Meeting, toll-free at (844) 218-8384 (from the U.S. and Canada) or at (212) 468-5380 (from other locations) (Banks and Brokerage firms may call collect at (212) 468-5380). Alternatively, you can email HKL & Co., LLC at Xerox@hklco.com.
By order of the Board of Directors,
Flor M. Colón
Deputy General Counsel and Corporate Secretary
Norwalk, Connecticut
April 10, 2023
TABLE OF CONTENTS
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties. The words “anticipate”, “believe”, “estimate”, “expect”, “intend”, “will”, “plan”, “should”, “targeting”, “projecting”, “driving”, and similar expressions, as they relate to us, our business or operations, our performance and/or our technology, are intended to identify forward-looking statements. These statements reflect management’s current beliefs, assumptions, and expectations and are subject to a number of factors that may cause actual results to differ materially, including those factors that are set forth in Xerox and Xerox Corporation’s combined Annual Report on Form 10-K for the year ended December 31, 2022, and Xerox’s and Xerox Corporation’s other filings with the U.S. Securities and Exchange Commission (SEC). These forward-looking statements speak only as of the date of the Proxy Statement or as of the date to which they refer, and Xerox and Xerox Corporation assume no obligation to update any forward-looking statements as a result of new information or future events or developments, except as required by law.
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PROXY STATEMENT
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
The following are some of the questions that you may have about this proxy statement (Proxy Statement) and the answers to those questions. The information in this section does not provide all of the information that may be important to you with respect to this Proxy Statement. Therefore, we encourage you to read the entire Proxy Statement, which was first made available on or about April 10, 2023, for more information about these topics.
The Annual Meeting
The 2023 Annual Meeting of Shareholders (Annual Meeting) of Xerox Holdings Corporation (Xerox or the Company), will be held beginning at 8:00 a.m., Eastern Time, at 501 Merritt 7 in Norwalk, Connecticut, on Thursday, May 25, 2023.
What is the purpose of the Annual Meeting?
At the Annual Meeting shareholders will consider and vote on the following matters:
1.Election of the eight nominees named in this Proxy Statement to our Board of Directors (Board), each for a term of one year;
2.Ratification of the appointment of PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
3.Approval, on an advisory basis, of the 2022 compensation of our named executive officers;
4.Selection, on an advisory basis, of the frequency of future advisory votes on the compensation of our named executive officers;
5.Approval of an amendment to the Company’s Performance Incentive Plan, as amended through October 21, 2021, to increase the total number of shares of common stock authorized and available for issuance under the Plan; and
6.Consideration of a shareholder proposal to require shareholder ratification of termination pay, if properly presented at the Annual Meeting.
Shareholders will also be asked to consider any other business that may properly come before the Annual Meeting. In addition, our management will respond to appropriate questions from shareholders.
How do I vote?
Beneficial owners will receive a separate Notice of Internet Availability of Proxy Materials (Notice) with voting instructions from the bank, broker or other holder of record where the shares of common stock, par value $1.00 per share of the Company (Common Stock), or Series A Preferred Stock, par value $1.00 per share, are held that must be followed in order for those shares to be voted. Beneficial owners should follow the instructions from their bank, broker or other holder of record in order for their shares to be voted. If you hold your shares through a broker, bank, or other nominee and wish to vote at the Annual Meeting, you must obtain a “legal proxy” from your broker, bank, or other nominee for you to vote at the Annual Meeting (and not your broker, bank or nominee).
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Registered shareholders can vote in any one of four ways:
| BY INTERNET | BY TELEPHONE | ||||
If you have Internet access, you may vote your shares by following the “Vote by Internet” instructions included in the Notice or on the proxy card you may have received. If you vote via the Internet, do not return your proxy card. | If you received written materials, you may vote your shares by following the “Vote by Telephone” instructions on the enclosed proxy card. If you vote by telephone, do not return your proxy card. | ||||
| BY MAIL | AT THE ANNUAL MEETING | ||||
| If you received written materials, you may vote by completing and signing the proxy card enclosed with this Proxy Statement and promptly mailing it in the enclosed postage-prepaid envelope. The shares you own will be voted according to your instructions on the proxy card you mail. If you sign and return your proxy card but do not indicate your voting instructions on one or more of the matters listed, the shares you own will be voted by the named proxies in accordance with the recommendations of our Board. | We will distribute written ballots to any shareholder of record or authorized representative of a shareholder of record who wants to vote in person at the Annual Meeting instead of by proxy. If you submit a proxy or voting instructions via the Internet, telephone or mail, you do not need to vote at the Annual Meeting. Voting in person will revoke any proxy previously given. If you hold your shares through a broker, bank, or other nominee, you must obtain a legal proxy from your broker, bank, or nominee for you to vote at the Annual Meeting. See below under “How can I attend the Annual Meeting?” | ||||
If you vote by Internet, telephone or mail, you authorize each of the three directors, whose names are listed on the proxy card accompanying this Proxy Statement, to act as your proxies to represent you and vote your shares as you direct.
How does the Board recommend that I vote?
The Board recommends that you vote:
•“FOR” the election of each of the eight directors named in this Proxy Statement;
•“FOR” the ratification of the appointment of PwC as our independent registered public accounting firm for the fiscal year ending December 31, 2023;
•“FOR” the approval, on an advisory basis, of the 2022 compensation of our named executive officers;
•“1 YEAR” for the selection, on an advisory basis, of the frequency of future advisory votes on the compensation of our named executive officers;
•“FOR” the approval of an amendment to the Company’s Performance Incentive Plan to increase the total number of shares of common stock authorized and available for issuance under the Plan; and
•“AGAINST” a shareholder proposal to require shareholder ratification of termination pay, if properly presented at the Annual Meeting.
Who can attend the Annual Meeting? How do I attend the Annual Meeting?
Only shareholders of record of our Common Stock and Series A Preferred Stock at the close of business on March 31, 2023, (the “Record Date”) or persons holding a valid proxy for the Annual Meeting have a right to attend the Annual Meeting. In-person admission to the Annual Meeting will be on a first-come, first-served basis. We reserve the right to restrict admission to the meeting or limit the number of representatives for any entity that may be admitted to the meeting for security or health and safety reasons, at our sole discretion.
Registered shareholders will be admitted to the Annual Meeting upon providing a valid form of government-issued photo identification, such as a driver’s license or passport. Your name will be verified against the list of shareholders of record on the Record Date prior to your admission to the Annual Meeting.
Beneficial owners will be admitted to the Annual Meeting upon providing your most recent brokerage statement, along with a valid form of government-issued photo identification, such as a driver’s license or passport, and an
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admission ticket. Please see “How do I register for the Annual Meeting and receive an admission ticket?” If you own shares in street name and wish to vote those shares at the Annual Meeting, you must obtain a “legal proxy” from your broker, bank or nominee.
No cameras, recording equipment, large bags, or packages will be permitted at the Annual Meeting. The use of cell phones, smart phones, tablets, and other personal communication devices for any reason during the Annual Meeting is strictly prohibited.
A live audio-only webcast of the Annual Meeting will be available at www.news.xerox.com/investors for shareholders that wish to listen to the meeting as a guest. You will not be able to vote your shares or submit questions during the meeting if you listen to the meeting through the webcast.
In the event that it is not possible or advisable to hold our Annual Meeting in person, we will announce alternative arrangements for the meeting in additional proxy materials filed with the SEC and included on our investor website at www.news.xerox.com/investors as promptly as practicable, which may include holding the meeting solely by means of remote communication. Please monitor the www.news.xerox.com/investors website for updated information.
If you have any further questions regarding admission to the Annual Meeting, please call Xerox Shareholder Services at (203) 849-2315.
How do I register for the Annual Meeting and receive an admission ticket?
To ensure that we are able to accommodate all shareholders that seek to attend while also administering our special health and safety protocols in an orderly fashion, we are requiring beneficial owners that wish to attend the Annual Meeting in person to request an admission ticket in advance by calling Xerox Shareholder Services at (203) 849-2315, or by mailing a written request, along with proof of your ownership of our Common Stock or Series A Preferred Stock as of the Record Date, to Xerox Holdings Corporation, Shareholder Services, 201 Merritt 7, Norwalk, CT 06851 — Attention Corporate Secretary.
All calls and written requests for admission tickets must be received by no later than the close of business on May 15, 2023.
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PROPOSAL 1 — ELECTION OF DIRECTORS
Shareholders annually elect directors to serve for one year and until their successors have been elected and have been qualified. Based on the director nomination process described below, the eight persons whose biographies appear below have been nominated by the Board to serve as directors based on the recommendation of the Corporate Governance Committee. Six of the director nominees currently serve on the Board. There are two new director nominees, Mr. Bandrowczak who was appointed to the Board in August 2022, and Mr. Giordano who was recommended as a director candidate by Steven D. Miller and ultimately appointed to the Board in July 2022.
Confident in the direction and future of Xerox, director Joseph J. Echevarria, who has served on the Board since 2017, has decided not to stand for reelection. We thank him for his many significant contributions in helping to guide the transformation of our Company. Pursuant to our By-Laws, the Board has reduced the size of the Board from nine to eight effective at the Annual Meeting.
Three of the director nominees, Messrs. Jesse A. Lynn, Steven D. Miller, and James L. Nelson, are being nominated by the Board pursuant to the Nomination and Standstill Agreement, dated January 26, 2021, between the Company and Carl C. Icahn and certain of his affiliates. Mr. Scott Letier is being nominated by the Board pursuant to the Nomination and Standstill Agreement, dated January 26, 2021, between the Company and Darwin Deason. See 2021 Nomination and Standstill Agreements for further information.
Each nominee brings to us valuable experience from a variety of fields. The biographical information presented regarding each nominee’s specific experience, qualifications, attributes, and skills led our Board to the conclusion that he or she should serve as a director. We believe that each of the nominees has demonstrated business acumen, an ability to exercise independent and sound judgment, an understanding of the Company’s business environment, and a commitment to serve the Company and our Board. We also value their significant experience on other public company boards of directors and board committees. The Board has determined that each of the nominees (other than Steven Bandrowczak, Chief Executive Officer of the Company) is independent under The Nasdaq Stock Market LLC (Nasdaq) corporate governance rules and the Company’s independence standards.
It is expected that all nominees proposed by our Board will be able to serve on the Board if elected. Although not anticipated, if for any reason a nominee is unable to serve, the proxies may use their discretion to vote for a substitute nominated by the Board.
Diversity and Tenure
The Board is continuously seeking highly qualified, diverse candidates to add to the range of skills and experiences represented on our Board. The eight individuals nominated for election at our 2023 Annual Meeting bring valuable diversity to the Board. Two of the eight director nominees are women. One of our nominees is Hispanic or Latinx and one is African American. The eight director nominees range in age from 34 to 73. In addition, each director nominee contributes to the Board’s overall diversity by providing a variety of perspectives, personal and professional experiences, and backgrounds. The tenure of the directors who are standing for election at this Annual Meeting averages approximately two years.
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Board Skills and Diversity Matrix
As a Nasdaq-listed company, the Company is required to disclose Board level diversity statistics using a Nasdaq-mandated form of matrix. The information provided in the matrix below includes the key qualifications, skills, and attributes that each of our director nominees possesses that were most relevant to the decision to nominate him or her to serve on the Board. The lack of a mark does not mean the director does not possess that qualification or skill, or that other qualities were not also considered; rather, a mark indicates a specific area of focus or expertise on which the Board relied most heavily. Each director nominee’s biography below describes his or her qualifications and relevant experience in more detail.
Board Skills and Diversity Matrix
(As of April 10, 2023)
| Bandrowczak | Giordano | Letier | Lynn | Maynard- Elliott | Miller | Nelson | Paláu-Hernández | |||||||||||||||||||
| Skills & Experience | ||||||||||||||||||||||||||
| Technology | • | • | • | • | • | |||||||||||||||||||||
| Leadership | • | • | • | • | • | |||||||||||||||||||||
| Global Business | • | • | • | • | • | • | ||||||||||||||||||||
| Financial | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Business Operations | • | • | • | • | • | • | ||||||||||||||||||||
| Public/Private Company Boards & Governance | • | • | • | • | • | • | • | • | ||||||||||||||||||
| Tenure & Independence | ||||||||||||||||||||||||||
| Tenure (years) | 1 | 1 | 5 | 2 | 2 | 2 | 2 | 2 | ||||||||||||||||||
| Independence | • | • | • | • | • | • | • | |||||||||||||||||||
| Diversity | ||||||||||||||||||||||||||
| (As of April 10, 2023) | ||||||||||||||||||||||||||
| Demographics | ||||||||||||||||||||||||||
| Age | 62 | 41 | 62 | 52 | 54 | 34 | 73 | 66 | ||||||||||||||||||
| Gender | M | M | M | M | F | M | M | F | ||||||||||||||||||
| Self-Identified Diversity Categories | ||||||||||||||||||||||||||
| African American or Black | • | |||||||||||||||||||||||||
| Hispanic or Latinx | • | |||||||||||||||||||||||||
| White | • | • | • | • | • | |||||||||||||||||||||
| LGBTQ+ | ||||||||||||||||||||||||||
| Director Did Not Disclose | • | |||||||||||||||||||||||||
In addition to the qualifications, skills, and attributes referenced above, we have provided below the principal occupation and other information about the relevant experience, qualifications, attributes, or skills that the Board has concluded qualify each of the nominees to serve as a director of the Company. Each director nominee has consented to being named in this Proxy Statement, and has agreed to serve if elected. Certain terms used in the biographies may be unfamiliar to you, so we are defining them here.
Xerox securities owned means the Company’s Common Stock, including vested Deferred Stock Units (DSUs) issued under the 2021 Amendment and Restatement of the 2004 Equity Compensation Plan for Non-Employee Directors, as amended (2004 Directors Plan).
Options/Rights means unvested DSUs and restricted stock units (RSUs) issued under the 2004 Directors Plan and unvested RSUs, earned performance share units (PSUs), and stock options awarded under the 2019 Amendment and Restatement of the Xerox Holdings Corporation Performance Incentive Plan, as amended (2004 Performance Incentive Plan) and/or Xerox Holdings Corporation Performance Incentive Plan, as amended (2020 Performance Incentive Plan), as applicable.
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Immediate family means the spouse, the minor children and any relatives sharing the same home as the nominee.
Unless otherwise noted, all Xerox securities held are owned beneficially by the nominee. Beneficial ownership means he or she has or shares voting power and/or investment power with respect to the securities, even though another name (that of a broker, for example) may appear in the Company’s records. All ownership figures are as of March 31, 2023.
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 | Steven J. Bandrowczak Age: 62 Director since: 2022 Xerox securities owned: 214,272 shares of Common Stock Options/Rights: 41,990 stock options; 486,916 RSUs Occupation: Chief Executive Officer of Xerox Holdings Corporation Education: B.S. in Computer Science, Long Island University; M.S. in Technology Management, Columbia University Board Committees: None — Chief Executive Officer | ||||
Other Directorships (past 5 years): Fuji Xerox (April 2019 to November 2019).
Other Background: Mr. Bandrowczak was named Chief Executive Officer of Xerox Holdings Corporation effective August 2022. He joined Xerox in 2018, as President and Chief Operations Officer. Prior to joining Xerox, Mr. Bandrowczak served as Chief Operating Officer and Chief Information Officer at Alight Solutions, where he was responsible for the application portfolio and technical infrastructure of the organization. Throughout his career, Mr. Bandrowczak also held senior leadership positions at various multi-billion-dollar global companies, including Avaya, Nortel, Lenovo, DHL and Avnet. He teaches “Leading Disruptive Change in Digital Economy” at Columbia University for the Master of Science program and is a mentor at Columbia University’s Center for Technology Management.
 | Philip V. Giordano Age: 41 Director since: 2022 Xerox securities owned: 0 Vested Options/Rights: 16,225 unvested DSUs Occupation: Founder and Chief Investment Officer, Livello Capital Management Education: B.S. in Finance and Accounting, New York University Board Committees: Finance, Technology | ||||
Other Background: Mr. Giordano is the Chief Investment Officer of Livello Capital Management, a registered investment advisor, which he founded in 2019. He was previously with Goldman Sachs as the Head of Distressed Research (2015-2018), a proprietary risk-taking role within the firm. In this role, Mr. Giordano led the distressed investing effort and all workout processes within corporate credit, reporting into the Global Head of Credit. As the Head of Distressed Research, Mr. Giordano and his team were responsible for identifying key investable themes and opportunities, trade execution and portfolio and risk management. Prior to joining Goldman Sachs, Mr. Giordano spent 11 years with Deutsche Bank (2004-2015), most recently as senior analyst in the Distressed Products Group; covering autos, airlines, industrials and financials. Mr. Giordano began his career as an analyst at Citigroup in the investment banking division.
 | Scott Letier Age: 62 Director since: 2018 Xerox securities owned: 4,384 shares of Common Stock, 44,428 vested DSUs Options/Rights: 18,919 unvested DSUs Occupation: Managing Director of Deason Capital Services, LLC Education: B.B.A. with a concentration in accounting, Southern Methodist University — Cox School of Business Board Committees: Finance (Chair), Technology | |||||||
Other Directorships (past 5 years): Conduent Incorporated (since 2018); serves on various private company boards of directors, including MV Transportation, Inc.; Colvin Resources Group; Gardenuity, Inc.; Fund Advisory Board of Griffis Residential.
Other Background: Mr. Letier has been Managing Director of Deason Capital Services, LLC (DCS), the family office for Darwin Deason, since July 2014. Prior to joining DCS, Mr. Letier was the Managing Director of JFO Group, LLC, the family office for the Jensen family, from September 2006 to July 2014. Mr. Letier has over 20
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years of prior leadership roles serving as a private equity investment professional and chief financial officer, and began his career in the audit group at Ernst & Whinney (now Ernst & Young). Mr. Letier has served on numerous boards in the past, and currently serves as Chair of the Board of Directors of Conduent Incorporated, a provider of business process outsourcing services. He also serves on the boards of directors of several private companies: as Chair of the Board of Directors of Gardenuity, Inc., a gardening and wellness tech enabled retailer; MV Transportation, Inc., the leading provider of para-transit services and the largest privately owned passenger transportation contracting firm in the United States; Colvin Resources Group, a Dallas based search and staffing firm; and the fund advisory board of Griffis Residential, a Denver based multi-family real estate management and investment firm. Mr. Letier also served as a director of The Dallas College Foundation for 21 years (March 2001 to December 2022), including as Treasurer, member of the Foundation’s Executive Committee and Chairman of the audit and finance/investment committees. Mr. Letier is a Certified Public Accountant.
With over 25 years of prior leadership roles and service on other company boards and committees, Mr. Letier brings to the Board expertise relevant to Xerox, including his significant audit experience and investment and financial expertise serving as a private equity investment professional and chief financial officer.
Jesse A. Lynn Age: 52 Director Since: 2021 Xerox securities owned: 9,368 vested DSUs Options/Rights: 18,766 unvested DSUs Occupation: General Counsel, Icahn Enterprises L.P. Education: B.A., University of Michigan; J.D., Boston University School of Law Board Committees: Compensation, Corporate Governance | |||||
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Other Directorships (past 5 years): Crown Holdings, Inc. (since 2022); FirstEnergy Corp. (since 2021); Conduent Incorporated (since 2019); Cloudera, Inc. (2019-2021); Herbalife Nutrition Ltd. (2014-2021); The Manitowac Company, Inc. (2015-2018).
Other Background: Jesse A. Lynn has been General Counsel of Icahn Enterprises L.P. (Nasdaq: IEP), a diversified holding company engaged in a variety of businesses, including investment, energy, automotive, food packaging, real estate, home fashion and pharma, since 2014. Mr. Lynn has also served as Chief Operating
Officer of Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds, since April 2021. From 2004 to 2014, Mr. Lynn was Assistant General Counsel of Icahn Enterprises. Prior to joining Icahn Enterprises, Mr. Lynn worked as an associate at the law firms of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. from 2000 until 2004, and Gordon Altman Butowsky Weitzen Shalov & Wein from 1996 to 2000. Mr. Lynn has been a director of: Crown Holdings, Inc., a supplier of packaging products for consumer goods and industrial products, since December 2022; FirstEnergy Corp., an electric utility, since March 2021; and Conduent Incorporated, a provider of business process outsourcing services, since April 2019. Mr. Lynn was previously a director of: Cloudera, Inc., a provider of enterprise data cloud services, from August 2019 through October 2021; Herbalife Nutrition Ltd., a nutrition company, from April 2014 to January 2021; and The Manitowoc Company, Inc., a capital goods manufacturer, from April 2015 to February 2018. Carl C. Icahn has or previously had non-controlling interests in each of Crown Holdings, FirstEnergy, Conduent, Cloudera, Herbalife and Manitowoc through the ownership of securities.
Mr. Lynn brings to the Board legal and financial expertise gained both in private practice as well as his positions with Icahn Enterprises, and his experience as a director of other public companies.
 | Nichelle Maynard-Elliott Age: 54 Director Since: 2021 Xerox securities owned: 13,940 vested DSUs Options/Rights: 19,832 unvested DSUs Occupation: Former Executive Director, Mergers & Acquisitions, for Praxair, Inc. (a wholly-owned subsidiary of Linde plc) Education: B.A. in Economics, Brown University; J.D., Columbia University School of Law Board Committees: Audit, Compensation (Chair) | ||||
Other Directorships (past 5 years): Element Solutions Inc. (since 2018); Lucid Group, Inc. (since 2021).
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Other Background: Ms. Maynard-Elliott was Executive Director, Mergers & Acquisitions, for Praxair, Inc., a worldwide industrial gases company, from July 2011 to May 2019, where among other things, she advised Praxair on its $90 billion merger in 2018 with the Linde Group. She was responsible for evaluating and negotiating global acquisitions, divestitures, joint ventures, and other business combinations. Ms. Maynard- Elliott joined Praxair in 2003. Prior to Praxair, Ms. Maynard-Elliott served as an associate at the law firms of Kelley Drye & Warren LLP, Pryor Cashman LLP, and Weil, Gotshal & Manges LLP. Ms. Maynard-Elliott has served as an independent director of Element Solutions Inc., a global specialty chemicals firm, since 2018 and currently serves as Chair of its Audit Committee. Ms. Maynard-Elliott has served as an independent director of Lucid Group, Inc., a manufacturer of electric vehicles, since 2021, and currently serves as a member of its Nomination and Governance Committee. She also serves as a trustee of The Advisor’s Inner Circle Fund III and Chair of its Governance Committee, and as a director of Chiron Capital Allocation Fund Ltd. and Chair of its Governance Committee.
With over 25 years of extensive financial and legal experience in mergers and acquisitions, business development and strategic alliances, Ms. Maynard-Elliott has a proven track record of creating shareholder value and this makes her a valuable addition to the Board. In addition, over the course of her executive and legal careers, Ms. Maynard-Elliott has been actively involved in seeking to influence and develop diverse and inclusive cultures in traditionally white male-dominated environments.
 | Steven D. Miller Age: 34 Director Since: 2021 Xerox securities owned: 13,944 vested DSUs Options/Rights: 18,918 unvested DSUs Occupation: Portfolio Manager, Icahn Capital L.P. Education: B.S., Duke University Board Committees: Finance, Technology (Chair) | ||||||||||
Other Directorships (past 5 years): Herc Holdings (May 2022 to March 2023); Conduent Incorporated (since February 2021); Bausch Health Companies Inc. (since March 2021).
Other Background: Mr. Miller has been a portfolio manager for Icahn Capital L.P., a subsidiary of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, since October 2020. He is responsible for analysis and engagement in connection with investments by Icahn Capital in public securities. Prior to joining Icahn Capital, Mr. Miller was an analyst in the New York office of BlueMountain Capital Management, LLC from 2013 to 2019. From 2011 to 2013, he was an analyst in the New York office of Goldman, Sachs & Co. Mr. Miller has served as a director of: Conduent Incorporated, a provider of business process outsourcing services, since February 2021, where he serves as Chair of the Risk Committee and a member of the Audit Committee; Bausch Health Companies, since March 2021, where he serves as Chair of the Finance and Transactions Committee and the Audit Committee; and Herc Holdings from May 2022 to March 2023, where he served as an Audit Committee observer. Carl C. lcahn has a non-controlling interest in each of Conduent Incorporated and Bausch Health Companies Inc. Mr. Miller brings to the Board his investment and financial expertise, experience with complex debt matters, and experience serving as an investment professional.
 | James L. Nelson Age: 73 Director Since: 2021 Xerox securities owned: 12,778 vested RSUs Options/Rights: 24,899 unvested RSUs Occupation: Chief Executive Officer and Director, Global Net Lease, Inc. Education: Directors College program at Stanford University Law School; Director Program at the University of Chicago Booth Business School Board Committees: Chairman of the Board; Audit, Technology, Corporate Governance (Chair) | |||||||||||||
Other Directorships (past 5 years): Chewy, Inc. (since 2021); Roman DBDR Tech Acquisition Corp. (2020-2021); Herbalife Nutrition Ltd. (2014-2021); Caesars Entertainment Corporation, a casino-entertainment company (2019-2020); Icahn Enterprises GP (2001-2019); New York REIT, Inc. (2015-2017).
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Other Background: Mr. Nelson currently serves as the Chief Executive Officer of Global Net Lease, Inc. (GNL), a publicly-traded real estate investment trust, a position he has held since July 2017 and, since March 2017, as a director of GNL. He previously served as a member of GNL’s Audit Committee. He also currently serves as a director of Chewy, Inc., an online retailer of pet foods and other pet-related products, where he is Chair of the Audit Committee. Mr. Nelson previously served as a director for Roman DBDR Tech Acquisition Corp., a special purpose acquisition company, or SPAC, formed for the purpose of effecting a business combination with one or more businesses with a focus on companies in the technology, media, and telecom industries, from 2020 to 2021; Herbalife Nutrition Ltd. from 2014 to January 2021, where he was lead director from 2019 to 2021, and a member of the Audit Committee; Caesars Entertainment Corporation, a casino-entertainment company, from March 2019 to October 2020, where he was a member of the Audit Committee; Icahn Enterprises GP from June 2001 to March 2019, where he was a member of the Audit Committee; New York REIT, Inc. from November 2015 until June 2017; Viskase Companies, Inc. from April 2003 through April 2010; American Entertainment Properties Corp. from December 2003 until March 2013; Tropicana Entertainment Inc. from March 2010 until May 2014; Orbitex Financial Services Group from August 1995 until March 2001; Cequel Communications, an owner and operator of a large cable television system, from April 2008 to November 2012; Take Two Interactive Software, Inc., a publisher, developer, and maker of video games and video game peripherals, from April 2010 through November 2013; and Voltari Corporation (f.k.a. Motricity Inc.) from June 2011 to September 2015, where he was Chairman of Voltari’s board of directors from January 2012 to September 2015. Carl C. Icahn had controlling interests in Herbalife Nutrition Ltd., Caesars Entertainment Corporation, and Tropicana Entertainment Inc. Mr. Nelson also previously served as Chairman and Chief Executive Officer of Eaglescliff Corporation, a specialty investment banking, consulting, and wealth management company, from 1986 until 2009; Chairman and Chief Executive Officer of Orbit Aviation, Inc., a company engaged in the acquisition and completion of Boeing Business Jets for private and corporate clients, from March 1998 through 2003; and Chief Executive Officer and co-chairman of Orbitex Management, Inc., a financial services company in the mutual fund sector, from August 1995 until July 1999.
With over 25 years of prior leadership roles and service on other company boards and committees, Mr. Nelson brings to the Board expertise relevant to Xerox, including his significant audit experience and his investment and financial expertise from serving as a director and chief executive officer.
 | Margarita Paláu-Hernández Age: 66 Director Since: 2021 Xerox securities owned: 15,500 Shares of Common Stock, 14,287 vested DSUs Options/Rights: 18,766 unvested DSUs Occupation: Founder and Chief Executive Officer, Hernández Ventures Education: B.A., University of San Diego; J.D., UCLA School of Law Board Committees: Compensation, Corporate Governance | ||||
Other Directorships (past 5 years): Conduent Incorporated (since 2019); Herbalife Nutrition, Ltd. (2018-2021); Occidental Petroleum (since 2020); ALJ Regional Holdings, Inc. (2015 to 2019); Apartment Income REIT Corporation (since 2021).
Other Background: In 1988, Ms. Paláu-Hernández founded Hernández Ventures, where she currently serves as Chief Executive Officer. Hernández Ventures is a privately held entity involved in Spanish media, and business and real estate ventures. Prior to founding Hernández Ventures, Ms. Paláu-Hernández was an attorney with the law firm McCutcheon, Black, Verleger & Shea. Ms. Paláu-Hernández served as United States Representative to the United Nations General Assembly 73rd Session from 2018 to 2019, with the personal rank of Ambassador. Ms. Paláu-Hernández has served as a director of: Conduent Incorporated, a provider of business process outsourcing services, since 2019, where she is Chair of the Corporate Governance Committee and a member of the Compensation Committee; and Apartment Income REIT Corporation, since 2021, where she is a member of the Audit, Compensation and Human Resources, and Governance and Corporate Responsibility Committees. From 2018 to 2021, she served as a director of Herbalife Nutrition, Ltd., where she was a member of the Compensation, Audit and Environmental, Social & Governance Committees. From 2020 to 2022, she served as a director of Occidental Petroleum, where she was a member of the Executive Compensation and Environmental Health & Safety Committees. From 2015 to 2019, she served as a director of ALJ Regional Holdings, Inc., a company focused on acquiring and operating customer service-based businesses, where she was a member of the Compensation, Nominating and Corporate Governance Committees.
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Ms. Paláu-Hernández also currently serves on the following boards: Vice Chair, National Museum of the American Latino at the Smithsonian, since 2021; Chair, Yale School of Management Council of Global Advisors, since 2016; Ex-Officio Board Member, Yale School of Management Board of Advisors, since 2016; and Board Member; UCLA Medical Board of Advisors, since 2020. Ms. Paláu-Hernández is a trustee emeritus of UCLA School of Law Board of Advisors and University of San Diego Board of Trustees.
With over 30 years of experience, Ms. Paláu-Hernández brings to the Board expertise relevant to Xerox, including her significant entrepreneurial experience in setting up companies and her leadership, global business, and financial expertise from serving on the boards of other public companies.
The Board unanimously recommends a vote
FOR
the election of each of the eight directors nominated by the Board.
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2021 Nomination and Standstill Agreements
On January 26, 2021, the Company entered into a Nomination and Standstill Agreement with Carl C. Icahn and certain of his affiliates (collectively, the “Icahn Group” and such agreement, the “Icahn Nomination Agreement”) and a separate Nomination and Standstill Agreement with Darwin Deason ("Deason" and such agreement, the "Deason Nomination Agreement" and, together with the Icahn Nomination Agreement, the "Nomination Agreements").
Under the Icahn Nomination Agreement, each of the current directors Jesse A. Lynn and Steven D. Miller is designated as an “Icahn Designee” on the Board, and current director James L. Nelson is designated as an “Independent Designee” on the Board. Also, under the Deason Nomination Agreement, current director Scott Letier is designated as the “Deason Designee” on the Board.
If any Icahn Designee, the Independent Designee, or the Deason Designee resigns from the Board or is not serving on the Board following his or her election or appointment (for any reason other than as a result of not being nominated by the Company for election at an annual meeting of shareholders or not being elected by shareholders at any annual meeting), then the Icahn Group or Deason, as applicable, has the right to designate a replacement who is approved by the Company, with such approval not to be unreasonably withheld, and who otherwise satisfies the requirements of the applicable Nomination Agreement.
The Company is not required to include the Icahn Designees, the Independent Designee or the Deason Designee on any slate of directors subsequent to that for the 2021 Annual Meeting. However, for any annual meeting of shareholders subsequent to the 2021 Annual Meeting, the Company has agreed to notify the Icahn Group or Deason, as applicable, no less than forty-five days before the advance notice deadline set forth in the By-Laws whether any of the Icahn Designees, the Independent Designee or the Deason Designee will be nominated by the Company for election as a director at such annual meeting.
Under the Icahn Nomination Agreement, one Icahn Designee is required to resign from the Board if the Icahn Group does not have a net long position (as defined in the Icahn Nomination Agreement) in at least 19,838,590 shares of Common Stock, and both Icahn Designees are required to resign from the Board if the Icahn Group does not have a net long position in at least 9,919,295 shares of Common Stock, all subject to applicable anti- dilution adjustment. Under the Deason Nomination Agreement, the Deason Designee is required to resign from the Board if Deason does not have a net long position in at least 9,919,295 shares of Common Stock, all subject to applicable anti-dilution adjustment. Each of the Nomination Agreements includes certain specified limits on the size of the Board, subject to the terms of those respective agreements. Under the applicable Nomination Agreements, the Icahn Group, Deason and their respective controlled affiliates have agreed to certain standstill and voting commitments during the particular specified periods set forth in the respective Nomination Agreement.
The foregoing descriptions of the Nomination Agreements do not purport to be complete and are qualified in their entirety by reference to the complete text of such Nomination Agreements, which are filed as Exhibits 10.1 and 10.2 to the Company’s Current Report on Form 8-K dated January 26, 2022, respectively, and filed with the SEC.
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CORPORATE SOCIAL RESPONSIBILITY
For generations, Xerox has stood for innovation, quality, and an excellent customer experience. Led by the core values our founder established more than a half-century ago, we strive to conduct business ethically and in an environmentally and socially conscious manner. We are the company that revolutionized the office, created printing-on-demand, and repeatedly reinvented and transformed to keep pace with the demands of our customers and the market. We set goals, track our progress, communicate, and share best practices to improve the quality of work and life, keeping to the core value of corporate citizenship.
Today, we honor this heritage by turning investments in innovation into products and services that help our customers and clients be more productive, profitable and sustainable. We are helping define the future of work and enabling printing beyond paper with new technologies designed to disrupt the market and change the way we think about workflows and information processes. This is our contribution to a more sustainable world.
Reaching Net Zero by 2040
With climate change being one of the defining issues of our time, we fast-tracked our net zero goal by 10 years to 2040, and integrated climate change-related risks and opportunities into our Enterprise Risk Management. We shared our roadmap to reach net zero in our 2022 Corporate Social Responsibility Report (CSR). Our roadmap covers our full value chain, and focuses on improving processes and energy efficiency as well as designing environmentally responsible products and clean technologies that extend beyond print. Our interim goal is to reduce our Scope 1 and Scope 2 Green House Gas (GHG) emissions at least 60% by 2030, against the Company’s 2016 baseline. This is in line with the ambitious science-based global warming target, validated and approved by the Science Based Targets initiative (SBTi). Our GHG emissions are third-party assured in accordance with ISO 14064-3:2019, and are updated in our progress summary as new data becomes available. In 2022, Xerox was named to CDP’s Annual "A List” for climate change transparency and performance. CDP is a nonprofit organization that runs the global disclosure system for investors, companies, and regions to manage their environmental impacts.
Xerox has long paired its technology with sustainability, influencing not just our industry but others. Serving as an ENERGY STAR Charter Partner, Xerox helped the U.S. Environmental Protection Agency (EPA) create its standards and still works with the agency today. Since 1993, more than 500 Xerox® products have achieved ENERGY STAR registration. In 2022, 100% of our eligible new products have achieved ENERGY STAR and EPEAT registration. ENERGY STAR requirements serve as the foundation for other eco-labels such as Electronic Products Environmental Assessment Tool (EPEAT) that is composed of criteria spanning corporate and product requirements. EPEAT product criteria combine comprehensive requirements for design, production, energy use, and recycling, with ongoing independent verification of manufacturer claims.
Circular economy initiatives remain a part of our business strategy. Our first commercial product in 1959, the Xerox 914, introduced electronics remanufacturing long before the term “circular economy” became popular. Our vision was to transform Xerox manufacturing, operations, offices, and facilities into waste-free workplaces. We had this same vision for our clients’ workplaces: a world where electronics and supplies at the end of their useful life would come full circle to become raw materials for tomorrow’s technology. In this model, quality and performance are not compromised, precious natural resources are conserved, and waste becomes obsolete. Six decades later, we continue to demonstrate that a circular economy delivers environmental, economic, and societal benefits. To meet this commitment, we have developed several collection and waste reduction programs, while also designing technology to align with the circular economy’s key elements. The majority of spent toner cartridges and other consumables returned through Green World Alliance, Xerox's customer recycling program, are recycled, reused, or remanufactured. We continue to make progress towards increasing the post-consumer recycled content in our eco-label eligible devices.
Our Corporate Social Responsibility Goals
We report our environmental and social goals and a status of our progress toward achieving those goals in our CSR Report which is available on our website at www.xerox.com/en-us/about/corporate-social-responsibility, as well as in our Corporate Social Responsibility Progress Summary, also available from xerox.com under “About Xerox — Corporate Information — Corporate Social Responsibility.” Information about Environment, Health, Safety, and Sustainability at Xerox, including details of our initiatives with respect to carbon footprint, paper, clean air & water, waste, chemical management, and health & safety, is available on our website at www.xerox.com/en-us/about/ehs. Information on the Xerox website, including the above-referenced information and materials, is not incorporated by reference into this Proxy Statement.
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Diversity, Inclusion, and Belonging
We know the power of having a global and diverse team. It is one of the reasons Xerox has been successful for more than 115 years. By having a diverse workforce, we gain the benefit of different ways of looking at our business, leading to innovative breakthroughs for our customers and more engaging work for our people. Research shows diverse companies have more engaged, productive, and innovative workforces and in turn perform better financially.
In 2022, women made up approximately 26 percent of the Xerox workforce and 38 percent of our Executive Committee – a reflection of our commitment to gender diversity and inclusion at the highest level. We continue to focus on improving the representation of women in professional roles and creating more opportunities in leadership for women across Xerox and within our Board.
These accomplishments are the direct result of our Diversity, Inclusion, and Belonging (DIB) roadmap, which reflects the foundation set by our first modern-day Chief Executive Officer (CEO), Joseph Wilson. Thanks to his vision, social responsibility, diversity, and inclusion became a part of our value system and helped forge who we are today – a workplace where everyone can thrive and reach full potential.
As the world changes, we continue to evolve to turn today's challenges into opportunities, incorporating new elements within our DIB strategy including employee listening sessions that educate and cultivate belonging.
Our DIB roadmap continues to focus on the areas where we can deliver the most meaningful impact:
•Diverse Pipeline: We aim to recruit, hire, and promote more woman globally, as well as underrepresented talent within the U.S. for professional-level job roles. Our pipeline is governed by Xerox's diversity policy known as the Wilson Rule.
•Partnership: We build relationships with external organizations to help ensure our talent pools reflect the markets and communities we serve. For example, we are working with AI vendors using their unique algorithms to increase the pool of women and underrepresented candidates for our job openings.
•Culture Change: We leveled-up our culture cohesion by hosting organization-wide DIB learning events and listening sessions and expanding the number of Employee Resource Groups (ERGs) to 10, welcoming a disability-focused ERG called Enable All. In 2022, we held our third annual All of Us Together DIB event. This global event is planned by members of our ERGs and is open to all Xerox employees.
•Community Outreach: We foster relationships with partners that reflect the communities that we serve. Examples of these partnerships include our work with A Better Chance and the Thurgood Marshall College Fund Leadership Institute to provide mentorship, sponsorship, and scholarship support to youth of color, providing equality-opportunities for more successful career outcomes. In the U.K., we partner with the Black Young Professionals Network to mentor black professionals and provide career opportunities.
•Accountability: We are committed to being transparent about our DIB progress. We measure progress against our Environmental, Social, and Governance (ESG) metrics and leverage our Corporate Social Responsibility Report to inform the public about our strategy and progress. In 2022, we completed an assurance audit against Social Key Performance Indicators that confirmed the accuracy our methodology.
More information about our global DIB initiatives and strategies is available on our website at www.xerox.com/en-us/jobs/diversity. Information on the Xerox website, including the above-referenced information, is not incorporated by reference into this Proxy Statement.
Environmental, Social, and Governance (ESG) Initiatives
At our core is a deep and long-lasting commitment to ESG, a pledge to inspire and support our people, conduct business ethically across the value chain, and preserve our planet. This commitment stems from our corporate values established over 60 years ago, which include: succeeding through satisfied customers; delivering quality and excellence in all we do; requiring a premium return on assets; using technology to develop market leaders; valuing and empowering our employees; and behaving responsibly as a corporate citizen.
We continue this legacy by creating products and services that help our customers to be more productive, profitable, and sustainable. We deliver solutions that drive customer success and enable a new, better world.
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We do this in our own operations, as well as in workplaces, communities, and cities around the world. We recognize the world’s challenges such as climate change and human rights, and understand the role we play.
Our pledge to inspire and support our people, conduct business ethically, and protect our planet remains at the core of everything we do. At Xerox, we believe in continuously improving, and we apply this mentality to ensuring we are always finding ways to improve the sustainability of our operations.
The Xerox 2022 CSR report describes our management approach related to ESG. Our work aligns with the United Nations Sustainable Development Goals (SDGs), which provide a framework to end poverty, protect the planet, and improve the lives and prospects of everyone, everywhere. To ensure we are responsive to all stakeholders, Xerox has also been reporting in accordance with the Sustainability Accounting Standards Board (SASB) and the Task Force on Climate Change Related Disclosures (TCFD).
The content of our website, including the above-referenced information, is not incorporated by reference into this Proxy Statement.
Xerox’s CSR report highlights include:
Our Employees
As of December 31, 2022, we had approximately 20,500 employees, a reduction of approximately 2,800 (12.0%) employees since December 31, 2021. The reduction in headcount resulted from net attrition (attrition net of gross hires), restructuring, as well as the impact of organizational changes including employee transfers associated with shared services arrangements.
On a geographic basis, approximately 10,300 employees were located in the U.S., and approximately 10,200 employees were located outside the U.S. We had approximately 11,900 employees or approximately 60% of our employees engaged in providing services to customers (direct service and managed services), and approximately 3,000 engaged in direct sales.
Approximately 20% of our employees are represented by unions or similar organizations, such as workers' councils, with approximately 90% located outside the U.S. As of December 31, 2022, approximately 25% of our employees were women and 30% of our U.S. employees self-identified as diverse.
Employee Safety
At Xerox, we are committed to maintaining a safe workplace environment for our people. We have an incident reporting process, workplace safety inspections, and hazard analysis that allows improvements in areas where we can reduce or prevent incidents. Several methods are also used to raise employee safety awareness including site-specific hazard management, off-the-job safety information, and communications regarding safety concerns. In 2022, Xerox’s Day Away from Work Case Injury Rate was 0.39, which was an 5.4% increase from the 2021 rate of 0.37, and better than the 2022 targeted rate of 0.44 by 11.4%.
Talent Management and Workforce Development
Talent management and workforce development are critical for the future of Xerox and fueling business growth and innovation. We use high-impact practices and technology to drive global workforce capability and integrate learning with work. Our organization and talent planning processes include reviews with business leaders to build our talent pipeline. More broadly, Human Resources (HR) provides a forum for management to review the future needs of the organization, noting strengths, gaps, and strategies to build strong teams for the next chapter at Xerox. During our most recent organization and talent planning process, we identified the potential successors for critical roles. We utilize a third-party, online learning platform that is available to all Xerox employees for self-directed learning, which supports skill and career growth.
The Company is also committed to accelerating the careers of high-potential, diverse employees and women along with identifying more diverse candidates for open roles. For example, Vista, our high-potential development program, recently completed its second year, and we are preparing to launch the third cohort in early 2023. This is a one-year program that provides opportunities for our highest-potential employees across the globe, to accelerate their career development through education, experience, and exposure. This program also includes individualized career coaching, mentorship, and networking opportunities with Executive Committee and Senior Leadership members, which accelerates our talent pipeline, retains early talent, and increases employee engagement.
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Additionally, our leaders embrace and support the Wilson Rule, which requires that one out of every three final candidates for professional roles be diverse. Finally, we provide ongoing diversity training sessions to managers to reinforce the importance of a diverse workforce.
Global Learning Innovation
We adopt a blended technology-led learning model to drive the Xerox business and talent strategies. Learning is delivered to our staff using an appropriate modality to support professional development and build capabilities across the company, on time, and in a cost-effective manner. Our Learning and Development (L&D) function is focused on business agility and driving digital transformation across our workforce.
Our employees have access to a global learning platform that includes an extensive portfolio of online courses, virtual classroom events, simulations, job aids, and other learning and development resources. Learning topics include critical job-specific information and technical upskilling, management development and professional effectiveness, productivity tools for project management, client service, negotiations, technology solutions, ethics, diversity and inclusion, and information security. As our business evolves, we will continue to leverage technology to identify new skills or capabilities required to ensure we remain competitive in the global market. Our L&D function partners with Xerox business leaders to design capability-building programs, and the Xerox senior leadership champions a long-term vision to continually develop the skills of our employees.
Total Rewards
Our success depends on attracting, retaining, and motivating a highly productive, global workforce. To achieve this, we take pride in offering our employees a comprehensive Total Rewards program that includes various compensation, benefits, and work-life programs. Our programs are designed to achieve the following objectives:
•Drive shareholder value: support our business strategy and culture.
•Align with performance: incentivize the right behaviors - when the Company wins, our employees win.
•Support our talent strategy: attract, retain, and motivate a productive workforce.
As with most global companies, our compensation and benefits vary based on employee eligibility, and local practices and regulations. We benchmark our programs to ensure we remain competitive with our peers and the markets we serve, and to maintain alignment with our short-term and long-term business goals.
Our compensation offerings include base pay and short-term and long-term incentive programs. Our short-term programs include: a Management Incentive Plan (MIP), designed to drive Xerox’s pay for performance culture and incentivize our leaders to help Xerox achieve sustainable growth; sales compensation programs to tightly align our sales force with business goals; and a Profit Share Plan (PSP), designed to give a broad population of our employees an opportunity to share in the organization’s success. A Long-Term Incentive (LTI) equity-based program reinforces alignment of our leaders and key talent with shareholders.
Our benefit offerings provide our employees with choice and flexibility to help them reach their health and financial goals. Our offerings include the following core programs: health care, wellness, retirement, paid time off, life and disability insurance, and access to voluntary benefits.
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Philanthropy and Community Involvement
From our earliest days as a company, Xerox has demonstrated a steadfast commitment to corporate social responsibility. Our greatest goal is to facilitate employee-driven philanthropy. Together, Xerox and our employees are creating real impact and sustainable change for the greater good. In 2022, Xerox employees volunteered for approximately 24,400 hours.
Our efforts are focused on four strategic areas to maximize change:
•Strong vibrant communities: Xerox invests in communities where our people and clients live and work, strengthening ties with our stakeholders, and embedding Xerox into the fabric of communities around the world. We encourage our people to give back to the causes they believe in, by providing employees with a day each year to volunteer at a cause of their choice. Xerox also offers a limited employee match to certain charitable organizations.
•Education and workforce preparedness: Xerox supports the role of education in society, through colleges, universities, science, technology, engineering, and math (STEM) education programs, and workforce development programs that prepare the next generation of leaders, inventors, and scientists.
•Science and technology: Xerox invests in scientific research and partnerships to serve the long-term strategic interests of the Company and our world.
•Disaster relief: Xerox provides aid to our employees and their neighbors in crises during natural disasters.
Corporate Governance of ESG
The Corporate Governance Committee of the Board has oversight for ESG. The Committee reviews significant shareholder relations issues and environmental and CSR matters, ensuring that our actions align with our core values and citizenship priorities. The CSR Council, comprised of senior executives who manage specific CSR topic areas, has centralized oversight of the Company’s management approach, including policies, goals, strategies, and actions to drive progress. The primary mission of the CSR Council is to drive strategies with a client-centric impact, across Xerox globally, to advance our legacy of leadership in corporate citizenship. Actions taken must meet our stakeholders’ expectations, including customers, employees, investors, regulators, and communities worldwide.
We demonstrate our Board and executive staff's commitment to ESG as follows:
•Investor outreach: Each year, Xerox conducts regular outreach with our investors to facilitate candid discussions about our business and strategy. In 2022, the company hosted 25 calls and meetings with 12 different investors providing feedback about ESG reporting metrics, diversity, and executive compensation practices. We include ESG metrics in the compensation criteria for all senior management, which covers climate change, a balanced workforce, succession planning, board refreshment, and workplace safety.
•Investor Day: Xerox hosted an Investor Day Event in February 2022 - Now & Next - with our investors and analysts. During this event, Xerox executives provided an overview of the Company's strategic priorities, which included a discussion of ESG priorities such as our Roadmap to Net Zero, as well as discussed business solutions and financial services that make everyday work better for clients.
Annual training regarding ethics, privacy, DIB, and security are required for all of our employees. Additional specialized training is required for certain roles and numerous training programs are available for employees to take on their own initiative.
A variety of proprietary and leading industry security features are also used to protect Xerox® devices from malicious attacks. Xerox's robust security and education market solutions were recognized by KeyPoint Intelligence with the Buyers Lab (BLI) 2021-2022 PaceSetter Awards for Worldwide Document Imaging Security for Production and Office solutions, as well as for the Education Market in North America.
Xerox takes data protection very seriously. Xerox’s information security and privacy programs are designed to comply with applicable laws and regulations and are based on industry standards and best practices such as the National Institute of Technology (NIST) Cybersecurity Framework, ISO 27001. Xerox Privacy Policy notice ensures that the processing of personal data is based on the subject’s consent, as individuals have a right to withdraw or alter consent at any time for future processing. Please refer to Xerox’s privacy website at
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www.xerox.com/privacy for further information. The content of our website, including the above-referenced information, is not incorporated by reference in this proxy statement unless expressly noted.
Adherence to our policies and procedures governing data protection is enforced through a combination of technical and manual safeguards over our systems and facilities, disciplinary actions against employees, audit rights, and other contractual rights against our vendors.
CORPORATE GOVERNANCE
Code of Business Conduct and Ethics
Xerox is committed to the highest standards of business integrity and corporate governance. All of our directors, executives, and employees are required to act ethically under our codes of conduct. In addition, our directors must act in accordance with our Code of Business Conduct and Ethics for Members of the Board; our principal executive officer, principal financial officer and principal accounting officer, among others, must act in accordance with our Finance Code of Conduct; and all of our executives and employees must act in accordance with our Code of Business Conduct. Each of these codes of conduct can be accessed through our website at xerox.com/governance (under Board Conduct and Ethics), xerox.com/en-us/about/corporate-social-responsibility/finance-code-of-conduct, and xerox.com/governance (under Code of Business Conduct), respectively. Our Corporate Governance Guidelines and the charters of our Audit, Compensation, Corporate Governance, and Finance Committees can be accessed through our website at xerox.com/governance. They are also available to any shareholder who requests them in writing addressed to Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851, Attention: Corporate Secretary. We will disclose any future amendments to, or waivers from, provisions of our Code of Business Conduct and Ethics for members of the Board, our Code of Business Conduct, and our Finance Code of Conduct for our officers, on our website as promptly as practicable and in accordance with applicable U.S. Securities and Exchange Commission (SEC) and Nasdaq rules. The Corporate Governance Committee of the Board periodically reviews and reassesses the adequacy of our overall corporate governance, Corporate Governance Guidelines, and committee charters.
Director Nomination Process
The Corporate Governance Committee considers candidates for Board membership recommended by Board members, management, shareholders, and others (see below). The Corporate Governance Guidelines require that a substantial majority of the Board consist of independent directors and that management representation on the Board should be limited to Company senior management. There are no specific minimum qualifications that the Corporate Governance Committee believes must be met by prospective candidates; however, the Corporate Governance Committee applies the criteria set forth in our Corporate Governance Guidelines. These criteria include, among other things, the candidate’s broad perspective, integrity, independence of judgment, experience, expertise, diversity, ability to make independent analytical inquiries, understanding of the Company’s business environment, and willingness to devote adequate time and effort to Board responsibilities. The Corporate Governance Committee does not assign specific weight to particular criteria, and no particular criterion is necessarily applicable to all prospective nominees.
Pursuant to the Icahn Nomination Agreement as discussed above, current directors Jesse A. Lynn and Steven D. Miller are the Icahn Designees and James L. Nelson is the Independent Designee, with the Icahn Group having the right to replace any of its director designees during the period covered by the Icahn Nomination Agreement with individuals selected by the Icahn Group and who are subject to Company approval. Pursuant to the Deason Nomination Agreement as discussed above, current director Scott Letier is the Deason Designee, with Deason having the right to replace its director designee during the period covered by the Deason Nomination Agreement with an individual selected by Deason and who is subject to Company approval. In addition, in July 2022, after considering multiple candidates over the course of several weeks, Philip V. Giordano was appointed to the Board with the recommendation of the Corporate Governance Committee. Mr. Bandrowczak was appointed to the Board in August 2022, following his appointment as Chief Executive Officer of the Company.
Board Diversity
Our Corporate Governance Guidelines dictate that diversity should be considered by the Corporate Governance Committee in the director identification and nomination process. Although the Board does not establish specific goals with respect to diversity, the Board’s overall diversity is a significant consideration in the director nomination process. This means that the Corporate Governance Committee seeks nominees who bring a
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variety of business backgrounds, experiences, and perspectives to the Board. In February 2020, the Board amended our Corporate Governance Guidelines to require that the initial list of candidates from which new, management-supported director nominees are chosen by the Corporate Governance Committee should include, but not necessarily be limited to, qualified women and minority candidates. We believe that the backgrounds and qualifications of the directors, considered as a group, should provide a broad diversity of experience, professions, skills, geographic representations, knowledge, and abilities that will allow the Board to fulfill its responsibilities. See Board Skills and Diversity Matrix.
Shareholders who wish to recommend individuals for consideration by the Corporate Governance Committee may do so by submitting a written recommendation to the Secretary of the Company at Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851. Submissions must include sufficient biographical information concerning the recommended individual, including age, employment, and current board memberships (if any) for the Corporate Governance Committee to consider. The submission must be accompanied by the written consent of the nominee to stand for election if nominated by the Board and to serve if elected by the shareholders. Recommendations received no earlier than November 12, 2023, and no later than December 12, 2023, will be considered for nomination at the 2024 Annual Meeting of Shareholders.
Shareholder Proxy Access
In March 2020, the Board adopted Amended and Restated By-Laws which added Section 13 to Article I of the By-Laws, to permit a shareholder, or a group of up to twenty (20) shareholders, owning three percent (3%) or more of the Company’s outstanding Common Stock continuously for at least three (3) years, to nominate and include in the Company’s proxy materials director candidates constituting up to the greater of two (2) directors or twenty percent (20%) of the Board, provided that the shareholder(s) and the nominee(s) satisfy the requirements specified in the By-Laws, including the requirement to provide timely notice of the proxy access nomination to the Company. For the 2024 Annual Meeting of Shareholders, to be considered timely, such notice of proxy access nomination must be received by the Company no earlier than November 12, 2023, and no later than December 12, 2023. The By-Laws are available on our website at www.xerox.com/governance (under By-Laws).
Shareholder Right to Call a Special Shareholder Meeting
In February 2022, the Board amended the Company’s By-Laws to permit shareholders holding a combined 20% of the Company’s voting stock to call a special meeting of shareholders. The By-Laws are available on our website at xerox.com/governance (under By-Laws).
Shareholder Action by Written Consent
At the 2022 Annual Meeting of Shareholders, the Company’s shareholders approved an amendment to the amended and restated Certificate of Incorporation of the Company that permits shareholders entitled to cast the minimum number of votes that would be necessary to authorize an action at a meeting at which all shareholders entitled to vote thereon were present and voting to act by written consent to take any action permitted to be taken by shareholders under applicable New York law and our By-Laws.
Board Leadership Structure
The Board’s goal is to achieve the best board leadership structure for effective oversight and management of the Company’s affairs. The Board believes that there is no single, generally accepted approach to providing board leadership, and that each possible leadership structure must be considered in the context of the individuals involved and the specific circumstances facing a company. Accordingly, what the Board believes is the right board leadership structure may vary as circumstances warrant.
The Company’s governance documents provide the Board with flexibility to select the appropriate leadership structure for the Company. Our policies do not preclude the Chief Executive Officer (CEO) from also serving as Chairman of the Board. This flexibility has allowed the Board to utilize its experience and knowledge to appoint the most qualified director as Chairman of the Board, while maintaining the ability to separate the Chairman of the Board and CEO roles when desirable.
During the Board’s evaluation of its leadership structure, the Board took into account many factors, including the specific needs of the Board and the business, our Corporate Governance Guidelines, and the best interests of our shareholders. Upon recommendation of the Corporate Governance Committee, the non-employee directors of the Board concluded that the current leadership structure continues to be the right leadership structure for the
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Company at this time, and that it is in the best interests of the shareholders to maintain the separate Chairman and CEO roles currently in place. This structure allows our CEO to focus on the operations of our business while the independent Chairman focuses on leading the Board in its responsibilities. The Board deems this overall board governance structure appropriate as it benefits from the CEO’s knowledge of the Company operations and substantial board experience, while maintaining Board independence in the Chairman role. Our independent Chairman leads the Board in its responsibilities by performing the following duties: presiding at executive sessions of the independent directors; calling special meetings of the independent directors, as needed; addressing individual Board member performance matters, as needed; and serving as liaison on Board-wide issues between the independent directors and the CEO.
Under our Corporate Governance Guidelines, each regularly scheduled Board meeting must include an executive session of all directors and the CEO and a separate executive session attended only by the independent directors.
Our Board is currently 89% comprised of directors who qualify as independent directors. We have an independent Chairman and each of our standing Board committees is comprised solely of independent directors, including our Corporate Governance Committee, which establishes our corporate governance policy and monitors the effectiveness of this policy at the Board level.
Risk Oversight
Our Board has ultimate oversight responsibility for our Enterprise Risk Management (ERM) process. The Board oversees our ERM process through the Audit Committee, which previews the ERM assessment and process for subsequent review by the Board. Our ERM process is designed to strengthen our risk-management capability and to assess, monitor, and manage all categories of business risk, including strategic, operational, compliance, and financial reporting. The Company’s Chief Financial Officer (CFO) is responsible for the Company’s ERM function through the Enterprise Risk Steering Committee, which includes the majority of the direct reports to the CEO, as well as our Chief Information Officer, our Controller, and our Chief Audit Executive. The Enterprise Risk Steering Committee inspects risk mitigation plans and progress, identifies and addresses emerging risks, and shares mitigation best practices across the Company. Additionally, to ensure that ERM is integrated with our business management, the Company’s Management Committee, the Business Ethics and Compliance Office, and various internal control committees monitor risk exposure and the effectiveness of how we manage these risks.
While the Board has ultimate oversight responsibility for the risk management process, various committees of the Board have been delegated responsibility for oversight of certain aspects of risk management. In addition to its responsibility to oversee the overall ERM process, the Audit Committee focuses on financial risk, including risks associated with internal control, audit, financial reporting, and disclosure matters, and also on oversight of our Ethics, Litigation, Information, and Cyber Security risk mitigation plans and progress. In addition, the Compensation Committee seeks to incent executive employees in a manner that discourages unnecessary or inappropriate risk-taking, while encouraging a level of risk-taking behavior consistent with the Company’s business strategy. In parallel, the Board’s Finance Committee oversees aspects of our Global Economy risk, and on an as needed basis, special sub-Committees are established to focus on specific business risks.
We believe that our leadership structure supports the risk oversight function of the Board. Our CEO serves on the Board, and is able to promote open communication between management and directors relating to risk. Additionally, each Board committee is comprised solely of independent directors, and all directors are actively involved in the risk oversight function.
Director Independence
A director is not considered independent unless the Board determines that he or she has no material relationship with the Company. The Board has adopted categorical standards to assist in both its determination and the Corporate Governance Committee’s recommendation as to each director’s independence. Under these categorical standards, a director will be presumed not to have a material relationship with the Company if:
(1)he or she satisfies the bright-line independence and other applicable requirements under the listing standards of Nasdaq and all other applicable SEC rules regarding director independence, in each case from time to time in effect;
(2)he or she is not a current employee (and none of his or her “immediate family members” is employed as an “executive officer,” each as defined by the Nasdaq rules) of a company that has made payments to, or received payments from, the Company or any of its consolidated subsidiaries
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for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more; and
(3)in the event that he or she serves as an executive officer or director of a charitable organization, the Company and its consolidated subsidiaries have not made payments to the charity in excess of the greater of 5% of the charity’s revenues or $200,000.
Our Board has determined that all of the nominees for election as directors are independent under the Nasdaq rules and our Corporate Governance Guidelines, with the exception of Steven Bandrowczak, our Chief Executive Officer.
In addition, the Corporate Governance Committee reviews relationships involving members of the Board, their immediate family members and affiliates, and transactions in which members of the Board, their immediate family members and their affiliates have a direct or indirect interest in which the Company is a participant, to determine whether such relationship or transaction is material and could impair a director’s independence. In making independence determinations, the Board considers all relevant facts and circumstances from the point of view of both the director and the persons or organizations with which the director has relationships, including with respect to those directors covered by the 2022 Nomination Agreements discussed above. See Certain Relationships and Related Person Transactions.
Based on the results of the aforementioned review, 87.5% of our nominees for election as directors are deemed to be independent.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Related Person Transactions Policy
The Board has adopted a policy addressing the Company’s procedures with respect to the review, approval, and ratification of “related person transactions” that are required to be disclosed pursuant to Item 404(a) of Regulation S-K of the Securities Act of 1933, as amended (Regulation S-K). The policy provides that any transaction, arrangement or relationship, or series of similar transactions, in which the Company will participate or has participated and a “related person” (as defined in Item 404(a) of Regulation S-K) has or will have a direct or indirect material interest, and which exceeds $120,000 in the aggregate, is subject to review (each such transaction, a Related Person Transaction). In its review of Related Person Transactions, the Corporate Governance Committee reviews the material facts and circumstances of the transaction and takes into account certain factors, where appropriate, based on the particular facts and circumstances, including: (i) the nature of the “related person’s” interest in the transaction; (ii) the significance of the transaction to the Company and to the “related person”; and (iii) whether the transaction is likely to impair the judgment of the “related person” to act in the best interest of the Company.
No member of the Corporate Governance Committee may participate in the review, approval, or ratification of a transaction with respect to which he or she is a “related person.”
Certain Employment Arrangements
We actively recruit qualified candidates for our employment needs. Relatives of our executive officers and other employees are eligible for hire. In 2022, we had one non-executive employee who is a family member of a former executive officer, who was employed by Xerox, and received more than $120,000 in annual compensation (salary, incentive cash awards, equity awards and commissions). This is a routine employment arrangement entered into in the ordinary course of business with compensation commensurate with that of the employee’s peers, and the terms of employment are consistent with the Company’s human resources policies. For 2022, the compensation of Kimberly Finley, spouse of Joseph H. Mancini, Jr., our former Chief Accounting Officer who retired on May 6, 2022, was $433,536. Ms. Finley is Director, Tax Accounting at Xerox, and has been with Xerox for over 30 years. The Corporate Governance Committee reviewed and approved this arrangement in accordance with the Company’s Related Person Transactions Policy.
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BOARD OF DIRECTORS AND BOARD COMMITTEES
Committee Functions, Membership and Meetings
Our Board has five standing committees: Audit, Compensation, Corporate Governance, Finance, and Technology. Set forth below is a summary of the responsibilities of each Board committee, the number of committee meetings held during 2022 for each committee and a list of the members of each committee. From time to time or as necessary, the Board also forms special committees to provide oversight and/or review of specific matters.
Audit Committee (13 meetings)
A copy of the charter of the Audit Committee is posted on the Company’s website at xerox.com/governance.
The responsibilities of the Audit Committee include:
•Oversee the integrity of the Company’s financial statements;
•Oversee the Company’s compliance with legal and regulatory requirements;
•Oversee the Company’s risk assessment policies and practices, including the ERM process, and preview the ERM assessment and process for subsequent review by the Board;
•Assess qualifications and independence of the Company’s independent registered public accounting firm;
•Assess performance of the Company’s independent registered public accounting firm and the internal audit function;
•Review the Company’s audited financial statements, including the Company’s “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and recommend to the Board their inclusion in the Company’s Annual Report on Form 10-K;
•Review changes in working capital policies and procedures with management; and
•Review and approve the Company’s Code of Business Conduct.
The Audit Committee is also responsible for the preparation of the Audit Committee Report that is included below in this Proxy Statement beginning on page 83.
Members: Nichelle Maynard-Elliott and James L. Nelson.
Chair: Mr. Echevarria
The Board has determined that all the members of the Audit Committee are (1) independent under the Company’s Corporate Governance Guidelines and under the applicable SEC and Nasdaq rules, and (2) financially literate. Messrs. Echevarria and Nelson, and Ms. Maynard-Elliott, are “audit committee financial experts” as defined by the SEC. Designation or identification of a person as an audit committee financial expert does not impose any duties, obligations or liabilities that are greater than the duties, obligations, and liabilities imposed on such person as a member of the Audit Committee and the Board in the absence of such designation or identification.
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Compensation Committee (11 meetings)
A copy of the charter of the Compensation Committee is posted on the Company’s website at xerox.com/governance.
The responsibilities of the Compensation Committee include:
•Oversee development and administration of the Company’s executive compensation plans;
•Set the compensation of the CEO and other executive officers;
•Review and approve the performance goals and objectives with respect to the compensation of the CEO and other executive officers;
•Oversee the evaluation of the CEO and other executive officers;
•Have sole authority to retain and terminate the consulting firms engaged to assist the Compensation Committee in the evaluation of the compensation of the CEO and other executive officers;
•Be directly responsible for oversight of the work of the compensation consultants, including determination of compensation to be paid to any such consultant by the Company;
•Conduct an independence assessment of any compensation consultants to the Compensation Committee, including consideration of the six independence factors required under SEC rules and Nasdaq listing standards; and
•Review and approve employment, severance, change-in-control, termination, and retirement arrangements for executive officers.
The Compensation Committee is also responsible for reviewing and discussing the Compensation Discussion and Analysis (CD&A) with management, and has recommended to the Board that the CD&A be included in the Company’s Proxy Statement (beginning on page 30) and incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. The CD&A discusses the material aspects of the Company’s compensation objectives, policies, and practices. The Compensation Committee’s report appears on page 59 of this Proxy Statement.
The Compensation Committee has not delegated its authority for compensation for executive officers. The Compensation Committee has, however, delegated authority to the CEO under the Company’s equity plan to grant equity awards to employees who are not executive officers or officers directly reporting to the CEO. The CEO is also responsible for reviewing goals, evaluating performance, and setting the compensation for officers who are not executive officers or officers directly reporting to the CEO.
The Compensation Committee has retained Frederic W. Cook & Co., Inc. (FW Cook) as an independent consultant to the Compensation Committee. FW Cook provides no services to management and provides an annual letter to the Compensation Committee regarding its independence, which the Compensation Committee reviews and determines whether there is any conflict of interest. Based on its review for 2022, the Compensation Committee determined that FW Cook’s work has not raised any conflict of interest and that such firm is independent. The consultant’s responsibilities are discussed beginning on page 48 of this Proxy Statement.
Members: Jesse A. Lynn, Nichelle Maynard-Elliott, and Margarita Palàu-Hernàndez.
Chair: Ms. Maynard-Elliott
The Board has determined that all the members of the Compensation Committee are independent under the Company’s Corporate Governance Guidelines and Nasdaq corporate governance rules. In addition, each Committee member is a “non-employee director” as defined in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (Exchange Act).
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee was or is an officer or employee of the Company or any of its subsidiaries. In addition, no member of our Board of Directors is, or has a family member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the Company serve on the compensation committee of such other entity.
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Corporate Governance Committee (6 meetings)
A copy of the charter of the Corporate Governance Committee is posted on the Company’s website at www.xerox.com/governance.
The responsibilities of the Corporate Governance Committee include:
•Identify and recommend to the Board individuals to serve as directors of the Company and on Board committees;
•Advise the Board regarding Board composition, procedures, and committees;
•Develop, recommend to the Board, and annually review the Corporate Governance Guidelines applicable to the Company;
•Review significant environmental and corporate social responsibility matters;
•Administer the Company’s Related Person Transactions Policy;
•Evaluate and recommend director compensation to the Board; and
•Oversee the annual Board and committee evaluation processes.
The Corporate Governance Committee recommends to the Board nominees for election as directors of the Company and considers the performance of incumbent directors in determining whether to recommend their nomination.
Members: Jesse A. Lynn, James L. Nelson, and Margarita Palàu-Hernàndez.
Chairman: Mr. Nelson
The Board has determined that all the members of the Corporate Governance Committee are independent under the Company’s Corporate Governance Guidelines and the Nasdaq rules.
Finance Committee (6 meetings)
A copy of the charter of the Finance Committee is posted on the Company’s website at xerox.com/governance.
The responsibilities of the Finance Committee include:
•Review the Company’s cash position, capital structure and strategies, financing strategies, insurance coverage, and dividend policy;
•Review the adequacy of funding of the Company’s funded retirement plans and welfare benefit plans in terms of the Company’s purposes; and
•Review the Company’s policy on derivatives, and annually determine whether the Company and its subsidiaries shall enter into swap and security-based swap transactions that are not cleared with a Commodity Exchange Act registered clearing organization.
Members: Philip V. Giordano, Scott Letier, and Steven D. Miller.
Chair: Mr. Letier
The Board has determined that all the members of the Finance Committee are independent under the Company’s Corporate Governance Guidelines and the Nasdaq rules.
Technology Committee (5 meetings)
A copy of the charter of the Technology Committee is posted on the Company’s website at xerox.com/governance.
The responsibilities of the Technology Committee include:
•Review, and advise the Board with respect to, the strategic direction of the Company’s Innovation business unit (PARC) and the Company’s software business (CareAR) in matters of technology, innovation and capital allocation, including investments in research and development, and commercial initiatives; and
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•Identify, and advise the Board with respect to, risks and opportunities that could have a significant impact on the operations and strategic goals of PARC and/or CareAR.
Members: Philip V. Giordano, Scott Letier, Steven D. Miller, and James L. Nelson.
Chair: Mr. Miller
The Board has determined that all the members of the Technology Committee are independent under the Company’s Corporate Governance Guidelines and the Nasdaq rules.
Attendance of Directors
Thirteen (13) meetings of the Board and forty-one (41) meetings of the Board committees were held in 2022. Directors attended approximately 98.5% of the total number of meetings of the Board, and Board committees on which they served, during the period in which they served as a Xerox director, unless they had been recused from the meeting. To encourage transparency and free exchange of information, all directors generally attended all the Board committee meetings, regardless of whether they were a member of the committee that was meeting. The Company’s policy generally is for all members of the Board to attend the Annual Meeting of Shareholders. We believe that attendance at meetings is only one means by which directors may contribute to the effective management of the Company, and that the contributions of all directors have been substantial and are highly valued.
SUMMARY OF DIRECTOR ANNUAL COMPENSATION
2022 Compensation of Directors
Compensation for our directors is determined by the Corporate Governance Committee and approved by the full Board. Directors who are our employees receive no additional compensation for serving as a director. Accordingly, Mr. Bandrowczak did not receive any additional compensation for his service on the Board during 2022.
During 2022, the annual cash retainer for directors was $85,000 (for the period from the 2022 Annual Meeting to the 2023 Annual Meeting); the value of the annual equity retainer for directors was $200,000 (for the period from one annual meeting to the next annual meeting); the chair of the Audit Committee received an additional $30,000; Audit Committee members each received an additional $15,000; the chair of the Compensation Committee received an additional $25,000; Compensation Committee members each received an additional $12,500; the chair of the Corporate Governance Committee received an additional $20,000; the chairs of the Finance Committee and Technology Committee received an additional $15,000; and the Corporate Governance Committee, Finance Committee and Technology Committee members each received an additional $10,000. The additional fee for the independent (non-executive) Chairman of the Board was $100,000 per year. In addition, there is an annual total compensation cap of $750,000 for each non-employee director. Because we have an independent Chairman of the Board, we do not have a Lead Independent Director.
Directors currently receive their annual equity retainer in the form of RSUs, unless they elect to receive DSUs (new DSUs) (described below) instead of RSUs, with such election to be made prior to the year in which the new DSUs are earned. RSUs generally vest one year following the date of grant and are paid out in shares of Common Stock within 30 days of the vesting date. New DSUs generally vest one year following the date of grant but are not paid out until 30 days following a director’s termination of Board service.
As of May 20, 2021, and until otherwise changed by the Board, the annual cash fee of $85,000, the cash fee for serving as independent (non-executive) Chairman of the Board and the various committee cash fees are paid in the form of additional RSUs or additional new DSUs, as elected by the individual directors, and are paid for service from annual meeting to annual meeting. Directors receive cash reimbursement for out-of-pocket expenses incurred in connection with their service on the Board. This change in the program was adopted by the Board beginning in May 2021, and will remain in effect until otherwise changed by the Board.
All non-employee directors are expected to establish a meaningful equity ownership interest in the Company, which is currently equal in value to five times the annual Board cash retainer. This requirement shall be achieved within five years of the initial date of election as director and may be achieved by a director holding RSUs, DSUs (including old DSUs as described below) or a combination of both.
Prior to 2019, the director’s annual equity retainer was paid by Xerox Corporation in DSUs (old DSUs). By serving on the Board for a period of approximately one and a half years, a director would hold old DSUs equivalent in value (as of date of grant) to at least three times a director’s current annual cash retainer. The
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longer a director served on the Board and was paid an equity retainer in the form of old DSUs, the larger his or her equity ownership interest in the Company would become because, by their terms, all old DSUs are required to be held by directors until the earlier of one year after the termination date of Board service or the date of death. If there is a change in control of the Company, the terms of the 2004 Directors Plan provide that DSUs (old and new) be paid out in cash as soon as practicable.
Each director is prohibited from engaging in short-swing trading and trading in puts and calls with respect to Xerox stock and is prohibited from using any strategies or products to hedge against potential changes in the value of Xerox stock (collectively, hedging). “Short sales” are also prohibited. Under the Company’s insider trading policy, directors are permitted to buy or sell Xerox securities only during a “window period,” which is the period commencing on the day that is one full trading day following the announcement of quarterly earnings and ending on (and including) the fifteenth day of the last month of the quarter during which the earnings announcement is made. The only exception to this restriction is for directors who have entered into trading plans pursuant to SEC Rule 10b5-1. In addition, under the Company’s insider trading policy, directors are prohibited from pledging Xerox stock, including depositing Xerox securities in margin accounts at brokerage firms, or using Xerox stock as collateral.
DSUs are a bookkeeping entry that represent the right to receive one share of Common Stock at a future date. Vested DSUs include the right to receive dividend equivalents, which are credited in the form of additional DSUs, at the same time and in approximately the same amounts that the holder of an equivalent number of shares of Common Stock would be entitled to receive in dividends. Vested RSUs (which are issued in the form of Common Stock following vesting) receive regular cash dividends at the same time and in the same amount as other shareholders, subject to vesting. Dividend equivalents are not credited with respect to DSUs or RSUs that have not vested; however, when DSUs or RSUs initially vest, they are credited with dividend equivalents equal to the dividends that would have been paid during the vesting period. DSU dividend equivalents are paid in the form of additional DSUs, and RSU dividend equivalents are paid in the form of cash. The DSUs and RSUs are issued under the 2004 Directors Plan, which was approved by Xerox Corporation shareholders at the 2004 Annual Meeting of Shareholders, adopted in 2019 by Xerox Holdings Corporation upon consummation of the merger of Xerox Corporation into a subsidiary of Xerox (Reorganization) and amended and restated, with shareholder approval, in 2021. Awards that were outstanding prior to the Reorganization are to be paid in shares of Xerox stock.
Individually, the compensation for each non-employee director for the year 2022, which under our director compensation program covers the period May 2022 to May 2023, was as follows:
| Name of Director | Fees Earned or Paid in Cash $ (1)(2) | Stock Awards $ (2) | Option Awards $ | Non-Equity Incentive Plan Compensation $ | Change in Pension Value and Non-Qualified Deferred $ | All Other Compensation $ (3) | Total $ | ||||||||||||||||
| Joseph J. Echevarria | 125,000 | 200,000 | — | — | — | — | 325,000 | ||||||||||||||||
Philip Giordano (4) | 87,500 | 166,667 | 254,167 | ||||||||||||||||||||
| Scott Letier | 110,000 | 200,000 | — | — | — | — | 310,000 | ||||||||||||||||
| Jesse A. Lynn | 107,500 | 200,000 | — | — | — | — | 307,500 | ||||||||||||||||
| Nichelle Maynard-Elliott | 125,000 | 200,000 | — | — | — | — | 325,000 | ||||||||||||||||
| Steven D. Miller | 110,000 | 200,000 | — | — | — | — | 310,000 | ||||||||||||||||
| James L. Nelson | 230,000 | 200,000 | — | — | — | — | 430,000 | ||||||||||||||||
| Margarita Palàu-Hernàndez | 107,500 | 200,000 | — | — | — | — | 307,500 | ||||||||||||||||
_____________________
(1)Although the amount of cash fees is shown in this column, all cash fees will be paid in the form of RSUs or DSUs as elected by the individual directors. This column reflects the value of the RSUs or DSUs, as the case may be, that were awarded in payment of the cash fees.
(2)The value of compensation awarded in the form of DSUs or RSUs is reflected in this column. The amount presented in this column reflects the aggregate grant date fair value of the DSUs and RSUs awarded during 2022, computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation, and excludes dividend equivalents accrued during the period. A discussion of the assumptions used in calculating the fair value of such awards may be found in Note 23 (Stock-Based Compensation) to our 2022, audited financial statements of our Annual Report on Form 10-K filed with the SEC on February 23, 2023.
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Effective January 1, 2019, we changed from awarding DSUs quarterly in advance to awarding DSUs and/or RSUs annually on the date of the annual meeting of shareholders. The DSUs and/or RSUs awarded annually are for the period from annual meeting to annual meeting, rather than the fiscal year in which they were awarded, and fully vest when the director completes the year of service from one annual meeting to the next annual meeting. For 2022, all but one Director elected to receive DSUs instead of RSUs for the equity portion of their compensation.
The total number of DSUs (vested and unvested and including DSU dividend equivalent units) held by each director as of December 31, 2022 is as follows: Mr. Echevarria, 74,622; Mr. Giordano, 16,225; Mr. Letier, 63,347; Mr. Lynn, 28,134; Ms. Maynard-Elliott, 33,772; Mr. Miller, 32,862; and Ms. Palàu-Hernàndez, 33,053. The total number of RSUs held by Mr. Nelson as of December 31, 2022 is 24,899.
(3)In accordance with applicable SEC rules, dividend equivalents accrued in 2022, on DSUs and RSUs are not included in “All Other Compensation” because those amounts were factored into the grant date fair values of the DSUs and RSUs.
(4)Amounts shown for Mr. Giordano are prorated because he joined the Board in July 2022.
For information on compensation for Mr. Bandrowczak, a director and the CEO of Xerox, see the Summary Compensation Table beginning on page 59.
SECURITIES OWNERSHIP
Ownership of Company Securities
Based on a review of filings with the SEC, the Company has determined that the following persons hold more than 5% of the outstanding shares of the Company. Applicable percentage ownership is based on 156,954,674 shares outstanding as of March 1, 2023. To our knowledge, except as noted in the table below, no person or entity is the beneficial owner of more than 5% of the voting power of the Company’s stock.(1)
| Common Stock | Series A Preferred Stock | Percent of Total Current Voting Power (3) | |||||||||||||||
Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | Amount and Nature of Beneficial Ownership | Percent of Class (2) | |||||||||||||
| Mr. Carl C. Icahn c/o Icahn Capital LP 16690 Collins Avenue, PH-1 Sunny Isles Beach, FL 33160 | 34,245,314 (4) | 21.82% | — | — | 21.73% | ||||||||||||
| Darwin Deason 5956 Sherry Ln., Suite 800 Dallas, TX 75225 | 15,283,657 (5) | 9.74% | 180,000 | 100% | 10.12% | ||||||||||||
| BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | 14,336,874 (6) | 9.13% | — | — | 9.10% | ||||||||||||
| The Vanguard Group, Inc. 100 Vanguard Blvd. Malvern, PA 19355 | 13,116,464 (7) | 8.36% | — | — | 8.32% | ||||||||||||
| Dimensional Fund Advisors LP 6300 Bee Cave Road, Building One, Austin, TX 78746 | 9,426,609 (8) | 6.00% | — | — | 5.98% | ||||||||||||
_____________________
(1) The words “group” and “beneficial” are as defined in regulations issued by the SEC. Beneficial ownership under such definition means possession of sole voting power, shared voting power, sole dispositive power, or shared dispositive power. The information provided in this table is based solely upon the information contained in the most recent Schedule 13G or 13G/A (or in the case of Mr. Icahn and Mr. Deason, the most recent Schedule 13D/A) filed by the named entity with the SEC. BlackRock, Inc. is a registered investment adviser under the Investment Advisers Act of 1940, as amended, and has subsidiaries that are also investment advisers under the Investment Advisers Act with beneficial ownership of the reported shares.
(2) Percentage ownership of our Series A Preferred Stock in the table is based on 180,000 shares of Series A Preferred Stock outstanding as of March 1, 2023.
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(3) As of March 1, 2023, there were 156,954,674 shares of our Common Stock and 180,000 shares of our Series A Preferred Stock outstanding and entitled to vote at the Annual Meeting. Each share of Common Stock is entitled to one vote on each matter voted upon. Holders of shares of Series A Preferred Stock are entitled to vote with the holders of shares of Common Stock, as a single class. The shares of Series A Preferred Stock were convertible into 6,741,571 shares of Common Stock as of March 1, 2023, and are entitled to one vote for each 10 shares of Common Stock into which they are convertible. As a result, the shares of Series A Preferred Stock are entitled to an aggregate of 674,157 votes. This column is intended to show total current voting power, and does not take into account shares of our Common Stock that may be acquired within 60 days of March 1, 2023, pursuant to the conversion of Series A Preferred Stock.
(4) Based solely on the Schedule 13D/A filed on April 30, 2022, represents shares of Common Stock held by Carl C. Icahn and the following group of entities associated with Mr. Icahn: Icahn Partners Master Fund LP (Icahn Master), Icahn Offshore LP (Icahn Offshore), Icahn Partners LP (Icahn Partners), Icahn Onshore LP (Icahn Onshore), Icahn Capital LP (Icahn Capital), IPH GP LLC (IPH), Icahn Enterprises Holdings L.P. (Icahn Enterprises Holdings), Icahn Enterprises G.P. Inc. (Icahn Enterprises GP), Beckton Corp. (Beckton) and Mr. Icahn (collectively, the Reporting Persons). A business address of each of Icahn Master, Icahn Offshore, Icahn Partners, Icahn Onshore, Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton, and Mr. Icahn is 16690 Collins Avenue, PH-1, Sunny Isles Beach, FL 33160. The Reporting Persons may be deemed to be the beneficial owner of, in the aggregate, 34,245,314 shares of Common Stock.
Icahn Master has sole voting power and sole dispositive power with regard to 14,246,924 shares of Common Stock. Icahn Offshore has shared voting power and shared dispositive power with regard to such shares. Icahn Partners has sole voting power and sole dispositive power with regard to 19,998,390 shares of Common Stock. Icahn Onshore has shared voting power and shared dispositive power with regard to such shares. Each of Icahn Capital, IPH, Icahn Enterprises Holdings, Icahn Enterprises GP, Beckton, and Mr. Icahn has shared voting power and shared dispositive power with regard to 34,245,314 shares of Common Stock.
(5) Based solely on the Schedule 13D/A filed on May 3, 2021, Darwin Deason has sole voting power and sole dispositive power for 15,283,657 shares of Common Stock (including 6,741,572 shares issuable on the conversion of 180,000 shares of Series A Preferred Stock), and has no shared dispositive or shared voting power for any of the shares.
(6) Based solely on the Schedule 13G/A filed on February 1, 2023, BlackRock, Inc. and its subsidiary companies have sole voting power for 14,019,525 shares of Common Stock and sole dispositive power for 14,336,874 shares of Common Stock.
(7) Based solely on the Schedule 13G/A filed on February 9, 2023, the Vanguard Group, Inc. and its subsidiary companies have sole voting power for 0 shares of Common Stock, sole dispositive power for 12,874,479 shares of Common Stock, shared voting power for 133,046 shares of Common Stock, and shared dispositive power for 241,985 shares of Common Stock.
(8) Based solely on the Schedule 13G/A filed on February 10, 2023, Dimensional Fund Advisors L.P. and its subsidiary companies have sole voting power for 9,302,734 shares of Common Stock, sole dispositive power for 9,426,609 shares of Common Stock, shared voting power for 0 shares of Common Stock and shared dispositive power for 0 shares of Common Stock.
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Shares of Common Stock of the Company owned beneficially by the directors and nominees for director, each of the executive officers named in the Summary Compensation Table, and all directors and current executive officers as a group, as of March 1, 2023, were as follows.
| Name of Beneficial Owner | Amount Beneficially Owned | Total Stock Interest | ||||||
| Steven J. Bandrowczak | 214,272 | 743,178 | ||||||
| John Bruno | 0 | 301,886 | ||||||
| Joseph J. Echevarria | 0 | 74,622 | ||||||
| Philip Giordano | 0 | 16,225 | ||||||
| Xavier Heiss | 86,000 | 292,545 | ||||||
| A. Scott Letier | 4,384 | 67,731 | ||||||
| Jesse A. Lynn | 0 | 28,134 | ||||||
| Nichelle Maynard-Elliott | 0 | 33,772 | ||||||
| Steven D. Miller | 0 | 32,862 | ||||||
| James L. Nelson | 12,778 | 37,667 | ||||||
| Louis J. Pastor | 62,881 | 239,144 | ||||||
| Margarita Paláu-Hernández | 15,500 | 48,553 | ||||||
| All directors and executive officers as a group (17) | 593,266 | 2,392,255 | ||||||
Percent Owned by Directors and Executive Officers: Each director and executive officer beneficially owns less than 1% of the aggregate number of shares of Common Stock outstanding at March 1 2023. The amount beneficially owned by all directors and executive officers as a group was approximately 0.38%.
Amount Beneficially Owned: The numbers shown are the shares of Common Stock considered beneficially owned by the directors and executive officers identified as “Named Executive Officers” in accordance with SEC rules. Shares of Common Stock which directors and executive officers had a right, within 60 days of March 1, 2023, to acquire upon the exercise of options or rights or upon vesting of performance share units, deferred stock units or restricted stock units are included on a gross basis. However, Messrs. Echevarria, Giordano, Letier, Lynn, Miller and Nelson and Mmes. Maynard-Elliott and Paláu-Hernández each hold deferred stock units granted as part of such individual’s director compensation which, until paid out following termination of Board service, do not permit voting of the underlying shares of Xerox Common Stock, and therefore are not included in the Amount Beneficially Owned column (but are included in the Total Stock interest Column). Shares held in a grantor retained annuity trust or by family members and vested shares, the receipt of which have been deferred under one or more equity compensation programs, are also included. All of these are counted as outstanding for purposes of computing the percentage of Common Stock outstanding and beneficially owned by such person (but are not deemed to be outstanding for computing the percentage ownership of any other person shown in the table).
Total Stock Interest: The numbers shown include the amount shown in the Amount Beneficially Owned column, plus stock options, performance shares, restricted stock units, and deferred stock units, as applicable, held by directors and executive officers that are not exercisable or payable within 60 days of February 28, 2023.
Address: Unless otherwise noted, the address of each person named in the table is c/o Xerox Holdings Corporation, 201 Merritt 7, Norwalk, CT 06851.
DELINQUENT SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and 10% or greater shareholders, to file with the SEC reports of ownership and changes in ownership of Common Stock of the Company. Based solely on our review of those reports and written representations that no other reports were required to be filed, the Company believes that all Section 16 reports for its directors and executive officers were timely filed during 2022.
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EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
LETTER FROM THE COMMITTEE CHAIR
Dear Xerox Shareholders:
As the new Chair of the Compensation Committee, I would like to introduce myself. I have been a member of the Board since 2021, serving on the Audit Committee. In May of last year, in addition to my ongoing role on the Audit Committee, I accepted the Compensation Committee Chair role. Xerox’s unique practice, encouraging all directors to attend all committee meetings, proved invaluable for my transition to the Compensation Committee. Having already sat in on previous Compensation Committee meetings, I was aware of the issues being considered, shareholder input received in the past, changes we made in response to that feedback, and the changes we were still discussing.
The tragic and sudden passing of our previous CEO in June of last year was an event that we had hoped not to confront. While we remain saddened by this loss, I am also extremely proud of the work the Board did during a time of crisis at Xerox. Our succession plan was activated, and continuity of management remained intact. The entire Board and management team worked tirelessly on an extensive process to evaluate our options, with every member attending meetings to discuss and debate the various challenges and opportunities posed by this event. The Compensation Committee, working with management and its advisors and considering shareholder feedback from previous years, ensured that the new CEO pay package did not include certain criticized provisions from the past, including single-trigger severance and sign-up cash bonuses. The teamwork and efficiency that went into that decision-making process stands as a testament to the governance principles of Xerox and the unique way that your Board operates.
The Compensation Committee focuses on maintaining a compensation program that aligns with our shareholders’ interests. We work to align the program with drivers of profitability, sustainable growth, and value creation for our shareholders. We believe our executive compensation program will evolve over time to reflect changes in our corporate strategy and competitive environment, and we continually evaluate Xerox’s compensation program from that perspective.
As part of this focus, we take into consideration the feedback we receive through direct conversations with our shareholders and the results of our annual say-on-pay votes. In the weeks prior to our 2022 Annual Meeting, and during our most recent shareholder outreach program, I had an opportunity to speak with many of you directly and we have incorporated your feedback in Compensation Committee discussions.
While many of the shareholders we engaged with were pleased with the changes made to our Compensation Program in 2022, several still expressed a preference that Xerox adopt relative metrics in our Executive Long-Term Incentive Program (E-LTIP). This has been the subject of discussion in the Compensation Committee for some time. We previously believed that the use of absolute metrics provided simplification during a period of transition for the Company. However, for 2023, the Compensation Committee has adopted relative metrics for Xerox’s 2023 E-LTIP by linking the entire PSU grant (60% of our executives' total long-term incentive (LTI) opportunity) to a relative Total Shareholder Return (rTSR) metric. Additionally, there was still lingering concern among a small minority of our shareholders about the possibility of continued use of one-time cash retention incentive awards. The decision to grant these awards in 2020, was not taken lightly and occurred only in response to the unforeseen and extraordinary circumstances Xerox confronted with the global COVID-19 pandemic and supply chain disruptions. Barring unforeseeable and extraordinary events, the Company does not foresee granting similar discretionary awards in the future. Finally, some of our shareholders felt that the disclosure regarding Xerox’s Transaction Bonus Framework was not clear. We have enhanced that disclosure to provide greater detail and clarity around this unique program aimed at providing equity incentives to create new lines of business with characteristics and value propositions distinct from our primary business of Print and Services.
We are confident that the significant changes to our executive compensation program last year and this year will support our strategies and initiatives, secure our talent, and drive shareholder value creation. The Compensation Committee knows that our work is never done, and we remain committed to aligning Xerox’s compensation program to the core principles outlined above.
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We invite you to consider the additional information about our compensation philosophy and decisions contained in the Compensation Discussion and Analysis (CD&A) of this Proxy Statement. Our “Say-on-Pay” proposal (Proposal 4) can be found on page 30 of this Proxy Statement, and the Board recommends that you vote ‘FOR’ this proposal. We value the opinions of our shareholders, and the Compensation Committee will take into account the outcome of this vote when making future compensation decisions.
Sincerely,
Nichelle Maynard-Elliott
Chair, Compensation Committee
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EXECUTIVE SUMMARY
SAY-ON-PAY VOTES AND SHAREHOLDER ENGAGEMENT
Each year, Xerox engages with shareholders to explain the Compensation Committee's decisions regarding executive compensation and to understand shareholders’ perspectives on our executive compensation programs and policies, as well as shareholders' views on our pay structure and organization.
Last year, our outreach efforts, which in most many cases included participation by the Compensation Committee Chair, occurred in the Spring leading up to our annual meeting, and again in the Winter after our annual meeting. We actively engaged with shareholders owning approximately 50% of our shares. As is the case each time we engage, the directors attending these meetings found shareholders’ feedback to be candid and robust across a wide range of topics. The Committee continues, as always, to consider shareholder feedback in making decisions related to our executive compensation programs.
At our 2022 Annual Meeting of Shareholders, approximately 70% of votes cast for the say-on-pay proposal were in favor of our executive compensation programs and policies. Even though this result indicates significant shareholder support for our executive compensation programs and practices, it is lower than our desired level. Based on shareholder feedback, investors generally support the design and structure of our executive compensation programs and practices, but they had questions about the lack of use of relative metrics and a perceived lack of detailed disclosure regarding the Transaction Bonus Framework.
We believe that our approach to engaging openly with our shareholders increases corporate accountability, improves decision-making, and ultimately creates long-term value. We are committed to:
•Accountability: Drive and support leading corporate governance and board practices to promote oversight, accountability, and good decision-making.
•Transparency: Maintain high levels of transparency on a range of financial, governance, and corporate responsibility issues to build trust and sustain two-way dialogue that supports our business success.
•Robust Engagement: Proactive engagement with shareholders and stakeholder groups, in dialogue on a range of topics to identify emerging trends and issues which inform our thinking and approach.
•Incorporation of Feedback: As a result of our engagement with shareholders, we receive valuable commentary and insights regarding our governance and compensation practices. We refine our programs to balance feedback from our shareholders and what we believe is needed to effectively motivate our executive officers and achieve our goals.
In direct response to shareholder feedback, the Company has taken the following significant and thoughtful actions:
•Focused shareholder outreach on our executive compensation programs, and included the Chair of the Compensation Committee of the Board of Directors in most of the conversations with shareholders;
•Comprehensive review of incentive plan design, resulting in significant changes for 2023; and
•Enhanced disclosure of certain elements of our compensation philosophy practices and program design choices.
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2022 / 2023 Shareholder Engagement Cycle
Our Board of Directors and management team maintain a robust and continuous shareholder engagement program. Our program calls for proactive engagement throughout the year with a significant and diverse portion of our institutional shareholders, on any topics they wish to discuss. Topics typically include matters related not only to executive compensation, but also to business results and initiatives, human capital management, and environmental, social and governance (ESG) matters. This year however, we acknowledged it was important to focus our efforts on making meaningful changes to increase support from shareholders above the approximately 70% we received in the 2022 Say-on-Pay vote. We used what would have been our Fall outreach period to instead review and redesign our annual and long-term incentive plans in response to shareholder feedback. We began proactive outreach in Winter 2023 to communicate program changes and solicit shareholder feedback.
While our Board of Directors and management team have regular contact with shareholders regarding business performance and operations, this year we focused our compensation, governance, and corporate responsibility related outreach efforts in the Fall and early Winter months of 2022. This timing better enabled us to communicate important new design changes to our annual and long-term incentive plans, and respond to previous shareholder feedback in a more meaningful way.
| Shareholder Outreach - 2022 | |||||
| Percent Contacted 74.45% | Percent Engaged 49.65% | ||||
We pursued multiple avenues for shareholder engagement, including video and teleconference meetings with shareholders who accepted our invitations to engage.
The Chair of the Compensation Committee and members of our management team directly involved in compensation design, ESG/sustainability, and diversity and human capital matters participated in the shareholder meetings on these topics, yielding a highly constructive dialogue on all sides. Feedback received from our shareholders throughout the year is regularly shared with all members of the Board of Directors. We will continue to reach out to our shareholders and consider how best to align our executive compensation programs with shareholder interests. The following table summarizes key points we have heard from shareholders and how we have responded.
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Commitment to Investor Engagement
| What We Heard From Investors | Our Perspective / Actions Taken | |||||||
Concern about the use of positive discretion for 2020 retention awards. | •In 2020, the Compensation Committee determined that granting special awards, in the form of cash and RSUs, was a necessary and reasonable response to the challenges posed by the global COVID-19 pandemic and was the most effective tool to secure the retention of key employees needed to continue to move the Company forward through its transformation. •With the benefit of shareholder outreach, management and the Board of Directors believe some shareholders that withheld support in 2022 did so in response to a concern about the application of upward discretion in 2020. •The Compensation Committee views the use of discretion in the 2020 retention awards as extraordinary action taken in response to unprecedented and completely unforeseen circumstances, and not a routine feature of executive compensation at Xerox. Any similar use of discretion in the future by the Compensation Committee will only be in response to extraordinary and unprecedented circumstances. | |||||||
Confusion regarding the Transaction Bonus Framework. | •We have enhanced disclosure language related to the Transaction Bonus Framework to highlight: (i) the potential need to incentivize leaders to develop and execute strategies for individual business units that may not necessarily be accretive to the financial metrics used in the Xerox annual and long-term incentive programs; (ii) the direct link between any potential payout and realized shareholder value; and (iii) the fact that no named executive officers or Section 16 officers have been granted any awards under this framework. | |||||||
Changes to the compensation plans to support business turnaround strategy, including a preference for use of relative metrics in the LTI plan. | •Based on shareholder feedback for the preference of relative metrics, we redesigned the 2023 annual cash incentive plan (Management Incentive Plan or MIP) to remove past metrics relating to Absolute Revenue(1) Adjusted(1) Operating Margin and Free Cash Flow(1) in favor of Adjusted(1) EBITDA in an effort to enhance line of sight with profitability and shareholder value creation associated with our redefined business strategy. | |||||||
•We also redesigned our 2023 E-LTIP to remove 2022 E-LTIP metrics relating to Absolute Share Price(1) hurdles and Cumulative Adjusted(1) EPS in favor of a relative TSR design to improve alignment with market practices as well as strengthen the relationship between executive pay and shareholder value creation. | ||||||||
Interest in Xerox’s executive succession plan. | •We have enhanced disclosure around the Board’s succession planning. | |||||||
Interest in the CEO compensation plan. | •We have enhanced disclosure regarding the new CEO compensation plan. | |||||||
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Interest in Human Capital Management. | •We have enhanced disclosure regarding our ESG metric in the annual cash management incentive plan (MIP), included our EEO-1 data in the Proxy and will be including shareholder engagement data in our future CSR reports. | |||||||
| Interest in incentive metrics. | •Eliminated overlapping metrics. •Adopting relative LTI. •Converting ERG metrics from modifier to a weighted metric. | |||||||
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
We will continue to reach out to our shareholders and consider how best to align our executive compensation programs with shareholder interests.
Fiscal 2023 Strategic Priorities
Our long-term strategic objective is to grow the share of our customers' technology spending, as well as the Total Addressable Market (TAM), through expanded penetration of existing solutions and the development of new, digital solutions. We believe Xerox’s globally recognizable brand, our deep understanding of clients’ industries and businesses, and client trust have afforded us a path to win in IT and digital services – markets where we already have leading solutions and where we are investing to develop future vertical solutions.
Our strategic priorities for 2023 are: Customer Success, Focus on Profitability, and Shareholder Returns.
These priorities are foundational to how we will deliver sustainable, profitable growth over the long-term.
Customer Success: We are employing a holistic, client-centric approach to delivering essential products and services that address the productivity challenges of a hybrid workplace and distributed workforce. The global COVID-19 pandemic has accelerated the transformation of the workplace into a more flexible, hybrid environment. In response, we continue to invest in innovation to bolster and diversify our portfolio of offerings for hybrid workplace environments, including investments in Workflow Central and Digital Services such as Capture & Content and Customer Engagement Services, which enable work to flow seamlessly between the office and home. By focusing our sales efforts on providing solutions closely aligned to clients’ needs, rather than products, we believe we can grow our revenue while improving customer efficiencies.
Focus on Profitability: We are implementing a more flexible cost base and operating model to expand margins and direct investments towards margin-accretive growth opportunities with nearer-term returns. Project Own It delivered approximately $2.2 billion of gross cost savings from 2018 to 2022, and the behaviors and processes instilled by this program remain engrained in our DNA. Just as we will focus on making it easier to do business with Xerox, we will look to make it easier to do business within Xerox by investing in processes that drive incremental organizational efficiencies and enable the types of collaboration required to offer holistic solutions for our clients.
Shareholder Returns: We are managing the business with the aim of optimizing free cash flow(1) generation, and return at least 50% of free cash flow(1) to shareholders. We expect to focus on driving higher profits, but we also remain focused on generating more cash flow per profit dollar. In 2022, FITTLE entered into a Receivables Funding Agreement that we expect to improve Xerox’s cash flow profile while continuing to support FITTLE’s growth. We also intend to concentrate on inventory efficiency, which we expect to improve as supply chain conditions normalize.
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
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| 2023 Strategic Initiatives | ||||||||
| Customer Success | Focus on Profitability | Shareholder Returns | ||||||
Employ a holistic, client-centric approach to delivering essential products and services. Invest in innovation to bolster and diversify our portfolio of offerings for hybrid workplace environments. Focus our sales efforts on providing solutions closely aligned to clients’ needs that improve costumer outcomes. | Implement a more flexible cost base and operating model and direct investments towards margin-accretive growth opportunities with nearer-term returns. Continue to prioritize behaviors and processes instilled by Project Own It. Invest in processes that drive incremental organizational efficiencies and enable the types of collaboration required to offer holistic solutions for our clients. | Optimize free cash flow(1) generation, and return at least 50% of free cash flow(1) to shareholders. Generate more cash flow per profit dollar through improvements in working capital and mechanisms such as FITTLE’s Receivables Funding Agreement. | ||||||
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
Fiscal 2022 Achievements
Fiscal 2022 was a challenging year as revenue and profitability were impacted by an uncertain and unpredictable macroeconomic environment, which included increasing inflation and higher interest rates, supply chain challenges, currency disruption, and a war in Ukraine. These challenges, and particularly the effects of supply chain disruptions on product availability and logistics costs, had an overall negative impact on the Company's results, primarily through the first three quarters of 2022. Through these challenges, our management team remained focused on stabilizing the business and laying the foundation for future growth, all while prioritizing efforts to continue progressing our ESG targets. The following are some key accomplishments in Fiscal 2022:
•Achieved gross cost savings of $450 million in 2022 under Project Own It, helping offset an unprecedented level of product and service cost inflation. Since its inception in the second half of 2018, Project Own It has generated approximately $2.2 billion in gross cost savings, freeing up cash to reinvest in our operations, targeted adjacencies, and new markets. We also began commercializing certain efficiencies developed internally, such as Robotic Process Automation (RPA) and advanced security solutions.
•Returned approximately 200% ($287 million) of adjusted(1) free cash flow, to shareholders through share repurchases and dividends in 2022, while lowering our debt balance by $520 million, including the prepayment of $700 million of long-term notes.
•Grew equipment revenue approximately 7% at constant currency(1), reflecting higher demand, primarily for our Mid-range products, and improved product availability. Meaningfully decreased orders backlog(2) on a year-over-year basis but remained above pre-pandemic levels. Also grew Contractual Print Services(3) revenue low single digits at constant currency(1), including the benefit of recent acquisitions.
•Delivered double-digit growth in our IT services business, including further commercialization of advanced services such as RPA and Master Data Management, and in our Digital Services business, including incremental customer engagement services through our acquisition of Go Inspire.
•Grew FITTLE originations high single digits. FITTLE entered into a receivables funding solution (the Receivables Funding Agreement) with an affiliate of HPS Investment Partners to sell pools of future lease receivables, primarily covering U.S. direct leases (including leases originated through XBS) through January 2024. The Receivables Funding Agreement, which anticipates FITTLE receivables sales of approximately $600 million in 2023, represents a strategic shift in the Company’s approach
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to funding FITTLE’s growth. Allowing FITTLE to focus on being an asset-light, best-in-class provider and servicer of equipment leases while freeing up Xerox’s operating cash.
•Spun out two businesses incubated at PARC: Mojave, an energy efficient HVAC technology development business; and Novity, an industrial predictive maintenance business. Both companies were spun out as separate, independent businesses, with Xerox continuing to hold a noncontrolling minority share. The transactions allow Xerox to preserve free cash flow(1) as Mojave and Novity invest for growth, all while maintaining the opportunity to realize value from their future success.
•Utilizing our diversity, inclusion and belonging (DIB) roadmap, which enables us to amplify our impact on employees and society, we continued to execute on key priorities in five focus areas: building a diverse pipeline; strengthening relationships with external organizations; reinforcing a Company-wide culture of belonging; extending our reach into the communities that we serve; and fostering accountability by measuring our progress against our ESG metrics. We are engaging our employees in our DIB journey through our ten employee resource groups and employee listening sessions.
•Xerox employees volunteered for approximately 24,400 hours in 2022. Our company-wide volunteer efforts are focused on four strategic areas to maximize change: building strong and vibrant communities; investing in education and workforce preparedness; supporting scientific research and technology for our Company and the world; and providing aid to our employees and neighbors in crises.
_________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
(2) Order backlog is measured as the value of unfulfilled sales orders, shipped and non-shipped, received from our customers waiting to be installed, including orders with future installation dates. It includes printing devices as well as IT hardware associated with our IT service offerings. Backlog at December 31, 2022, of $246 million excludes sales orders from Russia, and Powerland Computers, Ltd. which was acquired in the first quarter of 2022.
(3) Reflects revenues from service, maintenance and rentals.
Chief Executive Officer Transition
On June 28, 2022, Giovanni (John) Visentin, our Vice Chairman and Chief Executive Officer passed away unexpectedly due to complications from an ongoing illness. In the ordinary course of business, the Compensation Committee actively reviews the Company’s plan for executive succession. Because of the strong process in place recognizing the importance of continuity of management, the Compensation Committee activated an intensified effort to take action on its long-standing and carefully planned management succession plans to ensure a smooth transition for its employees, customers, and shareholders. The Compensation Committee met several times, consulted with external advisors as well as members of management, and exhausted all options to address the CEO transition. Following Mr. Visentin’s death and the conclusion of the Compensation Committee's management assessment, Steve Bandrowczak, our President and Chief Operations Officer since 2018, was appointed to serve as the Interim Chief Executive Officer (in addition to his positions as President and Chief Operations Officer).
As part of an extensive evaluation process, which included Board consideration of external candidates, Mr. Bandrowczak was asked to present his strategic vision for Xerox. On August 2, 2022, the Board ultimately appointed Mr. Bandrowczak as the Company’s permanent CEO and as a director on our Board based on key reasons, including business continuity and stability, vision, and strategy. In connection with his appointment as the permanent Chief Executive Officer, Mr. Bandrowczak relinquished the titles of President and Chief Operations Officer.
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New Chief Executive Officer Compensation
In connection with his appointment as Chief Executive Officer, Mr. Bandrowczak and Xerox executed an "at will" offer letter setting forth the terms of his employment as Chief Executive Officer. Pursuant to the offer letter, Mr. Bandrowczak is entitled to an annual base salary of $1 million and is eligible to receive an annual bonus targeted at 150% of his base salary. Further, Mr. Bandrowczak received a special, one-time promotional restricted stock unit grant with a grant date fair value of $3 million, which will vest over a three-year period following the date of grant, subject to his continued employment through the applicable vesting dates. This promotional grant was designed to provide greater immediate ownership coming into the new role. The value of this grant was determined to bridge the gap between the value of his original 2022 equity grant ($4.1 million) for his role as COO and the value of his award of $7.5 million for serving as the CEO. During Xerox's annual 2023 grant cycle Mr. Bandrowczak will be entitled to receive a long-term incentive award with a grant date fair value of $7.5 million.
The following table compares the annual base salary, bonus and LTI targets for each of Messrs. Visentin and Bandrowczak:
| Name | Annual Base Salary $ | Annual Bonus Target Rate | Annual Bonus Target Amount $ | LTI Target $ | Total Direct Compensation $ | ||||||||||||
| Giovanni (John) Visentin, Former Vice Chairman and Chief Executive Officer | 1,200,000 | 150 | % | 1,800,000 | 10,000,000 | 13,000,000 | |||||||||||
| Steven J. Bandrowczak, Chief Executive Officer (Effective 08/02/2022) | 1,000,000 | 150 | % | 1,500,000 | 7,500,000 | 10,000,000 | |||||||||||
2022 Named Executive Officers
This Compensation Discussion and Analysis explains the key elements of the compensation of our Company’s Named Executive Officers (NEOs) and describes the objectives and principles underlying our Company’s executive compensation program for 2022. For 2022, our NEOs were:
| Executive | Current Title | ||||
| Steven J. Bandrowczak | Chief Executive Officer | ||||
John Bruno(1) | President and Chief Operating Officer | ||||
| Xavier Heiss | Executive Vice President, Chief Financial Officer | ||||
| Louis J. Pastor | Executive Vice President, Chief Corporate Development Officer and Chief Legal Officer | ||||
| Joanne Collins Smee | Executive Vice President and President Americas | ||||
Giovanni (John) Visentin(2) | Former Vice Chairman and Chief Executive Officer | ||||
________
(1) Mr. Bruno was hired as President and Chief Operating Officer effective November 14, 2022 to succeed Mr. Bandrowczak, who was appointed permanent CEO on August 2, 2022.
(2) Mr. Visentin, the Former Vice Chairman and Chief Executive Officer passed away on June 28, 2022.
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OUR EXECUTIVE COMPENSATION GUIDING PRINCIPLES
The following core principles reflect our philosophy with respect to NEO compensation. These principles, established and refined from time to time by the Compensation Committee, are intended to:
•Reward our senior executives for attaining financial performance targets;
•Hold our senior executives accountable for the performance of the business units, divisions or functions for which they are responsible; and
•Motivate our senior executives to collectively make decisions about the Company that will deliver enhanced value to our shareholders over the long term.
| Executive Compensation Guiding Principles | ||
Reinforce our Business Objectives and Values • Reward contributions that increase profit, revenue, cash flow, and shareholder value. • Develop and maintain the commitment of our customers and employees. • Continue commitment to diversity, inclusion, and belonging while supporting our talent strategy. | ||
Link Pay and Company Performance without Motivating Unnecessary Risk • Over 80% of our NEO compensation on average is designed to be at risk, and actual compensation varies from year to year based on performance and share appreciation. • Through an independent risk analysis, the Compensation Committee monitors whether our compensation programs motivate executives to take unnecessary risk that could jeopardize the financial health and future of the Company. • Incentive opportunities based on both annual and long-term incentive plan objectives are designed to promote strong annual results and the Company’s long-term viability and success. • NEOs are required to own shares of Company stock in order to further align their financial risk and rewards with those of our shareholders. | ||
Be Fair and Competitive • The Compensation Committee reviews peer group compensation data as well as other third-party compensation surveys annually to ensure that our executive compensation programs are competitive. • Our compensation program ensures pay levels are aligned with performance, individual contributions, and other factors. • The practices we use to set base pay, retirement and savings, and health and welfare benefits for the NEOs are generally consistent with the practices used to set compensation and benefits for our other senior level employees. | ||
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Executive Compensation Best Practices
The Compensation Committee regularly reviews executive compensation best practices and makes changes to the Company’s programs as appropriate. Our program reflects best practices as follows:
| What We Do | What We Don’t Do | ||||
✓ Emphasize pay for performance to align executive compensation with our business strategy and promote creation of long-term shareholder value. ✓ Use multiple sources of data including peer group and survey information as reference points to assess total target compensation. ✓ Require double-trigger vesting of equity awards upon a change in control. ✓ Impose clawback provisions enabling recovery of annual and long-term incentive compensation, non-qualified pension benefits, and severance payments under the Officer Severance Program in the event of detrimental activity. ✓ Maintain stock ownership and post-retirement stock holding requirements for executive officers. ✓ Require non-compete and non-solicitation agreements during employment and post-employment, as permissible under local law. ✓ Provide minimal executive perquisites. ✓ Design compensation programs with controls to mitigate risk. ✓ Engage an independent compensation consultant that advises the Compensation Committee on executive compensation and non-employee director compensation matters and performs no other services for Xerox. ✓ Conduct continuous shareholder outreach to discuss matters related to executive compensation and corporate governance. | ✗ NO payment of dividends or dividend equivalents before RSUs are vested or PSUs are earned. Additionally, no payment of dividends or dividend equivalents on stock options, or on PSUs earned in excess of target performance. ✗ NO accrual of additional benefits under our non-qualified pension plans, which were frozen in 2012, and no Company contributions under our non-qualified deferred compensation plan, which was closed to new contributions after 2018. ✗ NO payment of tax gross-ups on perquisites other than in connection with relocation and tax equalization for international assignment allowances. ✗ NO excise tax gross-ups in change-in-control arrangements. ✗ NO hedging or pledging of Xerox stock by executive officers. ✗ NO employment agreements (unless customary under applicable law or in connection with new hire arrangements). | ||||
Compensation Structure
Our compensation structure includes base salary, annual cash incentive (Management Incentive Plan or MIP) and long-term equity incentive (Executive Long-Term Incentive Program or E-LTIP) awards.
Overall, the aggregate total target compensation of our NEOs is within the competitive range of peer group and survey medians. In addition, the mix of pay elements as a percent of total target compensation is similar to that of our peers.
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| Type of Pay | Purpose | Key Characteristics | ||||||
| Base Salary | ||||||||
| Fixed | • Fixed cash compensation based on the individual’s experience, skills and competencies, relative to competitive market value of the role. | • Reflects competitive market conditions and individual performance. • Commensurate with scope of responsibility, internal value of the position, and impact to the Company, reflecting internal pay equity. | ||||||
| Annual Cash Incentive (MIP) | ||||||||
| Performance-Based | • Variable cash compensation motivates achievement of annual strategic goals, as measured by objective, pre-established financial and strategic metrics. | • Target opportunities are based on market data and reflect impact to the Company. • Metrics are intended to drive consistent growth and shareholder value creation by measuring successful execution of our current strategy. • Inclusion of ESG metric underscores the importance of our environment, safety, and people in a measurable and objective way. • Actual awards are based on achievement of measurable performance targets. | ||||||
| Long-Term Incentives (E-LTIP) | ||||||||
| Restricted Stock Units (RSUs) | • Aligns with market practice. • Promotes retention in a highly competitive marketplace. | • Comprises 40% of LTI grant. • Graded service-based vesting schedule (33%, 33% and 34%, on the first, second, and third anniversaries of the grant date). | ||||||
| Performance-Based Restricted Stock Units (PSUs) | • Aligns compensation with key indicators of success of our strategy. • Encourages focus on long-term shareholder value creation through profitable growth and increase in stock price over time. • Promotes retention through long-term performance achievement and vesting requirements. • Aligns with succession planning objectives. | • Comprises 60% of LTI grant. • Cliff vesting three-years from grant date. • Payouts based on achieving performance metrics reflecting creation of shareholder value. | ||||||
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Linking Pay to Performance
In 2022, our compensation programs demonstrated alignment between the compensation paid to our Named Executive Officers and the Company performance results they delivered. Our executive compensation programs are designed to:
•Pay for performance
•Attract and retain first-class talent
•Reward past performance
•Motivate future performance
Our executive compensation program is aligned with our business strategy, and designed to create long-term shareholder value. By making performance a substantial element of compensation, we link our executives’ interests to the interests of our shareholders. We reward NEOs when the Company achieves short- and long-term performance objectives, and we reduce or eliminate performance-based compensation when the Company does not achieve those objectives.
2022 COMPENSATION ACTIONS
Base Salary
| Executive | Annual Base Salary ($) | ||||
Steven J. Bandrowczak(1) | 1,000,000 | ||||
John Bruno(2) | 750,000 | ||||
Xavier Heiss(3) | 511,733 | ||||
| Louis J. Pastor | 550,000 | ||||
Joanne Collins Smee(4) | 575,000 | ||||
| Giovanni (John) Visentin | 1,200,000 | ||||
________
(1) Mr. Bandrowczak's base salary reflects a change after his promotion to CEO on August 2, 2022. Prior to his promotion, Mr. Bandrowczak's base salary was $650,000.
(2) Mr. Bruno was hired as President and Chief Operating Officer effective November 14, 2022.
(3) Mr. Heiss’ base salary is denominated and paid in euros; the amount shown in U.S. dollars reflects the December 2022 average exchange rate of 1.0573 USD per EUR.
(4) Ms. Collins Smee's base salary reflects a change after her promotion to EVP and President, Americas on June 3, 2022. Prior to this promotion, Ms. Collins Smee's base salary was $550,000.
Performance Metrics, Results and Payout: 2022 MIP
For 2022, we eliminated the overlap in metrics in our annual and long-term incentive plan designs, which aligns with executive compensation best practices and institutional shareholder and proxy advisor guidelines. We also introduced ESG as a weighted metric after introducing it as a modifier in 2021, to further reinforce the significance and criticality of these objectives. The 2022 MIP goals were aligned with our 2022 strategic plan and financial forecasting at the time they were established.
For each metric, subject to that metric’s weighting: (i) the payout for achieving target-level performance is 100% of the target incentive amount; (ii) the payout for achieving maximum-level performance is 200% of the target incentive amount; (iii) the payout for achieving threshold-level performance is 50% of the target incentive amount; and (iv) if performance results for the metric are below threshold level, achievement for that metric is zero and is weighted in the overall payout factor calculation.
There is no payout unless at least one metric is achieved at or above the threshold level established by the Compensation Committee. Payouts are made proportionately for performance results at levels between threshold and target, and between target and maximum.
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The 2022 performance measures and (weightings) for our MIP were:
•Free Cash Flow(1) (40%)
•Absolute Revenue (unadjusted for currency)(1) (20%)
•Adjusted(1) Operating Margin (20%)
•Environmental, Social and Governance (ESG) (20%)
These metrics directly align the interests of approximately 1,300 MIP eligible leaders with the interests of our shareholders. For 2022, we did not achieve threshold performance for Free Cash Flow(1). For Absolute Revenue, performance was between target and maximum, which resulted in a payout factor of 144.8% of target (weighted payout of 29.0%). Adjusted(1) Operating Margin performance was between threshold and target, which resulted in a payout factor of 53.3% of target (weighted payout of 10.7%). For the ESG portion of the MIP, the Compensation Committee evaluated performance relative to the following objectives (weightings):
ESG Objectives:
•Environmental (5%) — Implement Climate Change Awareness Training for all active, full-time employees corporate-wide
•Safety (5%) — Improve Days Away From Work (DAFW) case rate worldwide
•Social (10%) — Increase representation of women and diverse employees at professional levels
Total performance against the stated ESG objectives was above target, which when weighted, resulted in an overall payout of 26.5% of target.
Overall, for 2022, due to a failure to achieve threshold for Free Cash Flow(1), MIP payouts were significantly below target with a payout factor of 66.2% of target. A summary is displayed in the table below.
2022 MIP Results (in millions, except % data)
| Performance Measure | Weight | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | Actual 2022 Performance Results | Payout Range (Payout Factor) | Weighted Payout Factor | ||||||||||||||||
Free Cash Flow(1) | 40.0% | $320 | $425 | $520 | $102 | Below Threshold (0)% | 0% | ||||||||||||||||
Absolute Revenue (1) | 20.0% | $5,400 | $7,200 | $7,800 | $7,469 | Between Target and Max 144.8% | 29.0% | ||||||||||||||||
Adjusted(1) Operating Margin | 20.0% | 4.5% | 6.0% | 7.0% | 4.6% | Between Threshold and Target 53.3% | 10.7% | ||||||||||||||||
| ESG | 20.0% | Above Target | 26.5% | ||||||||||||||||||||
| 66.2% | |||||||||||||||||||||||
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
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2022 MIP Payout
| Executive | Annual Base Salary ($) | Target MIP Incentive (% of Salary) | Target MIP Incentive ($) | Payout Factor | Actual 2022 MIP Payout ($) | ||||||||||||
Steven J. Bandrowczak(1) | 1,000,000 | 125% / 150% | 1,500,000 | 66.2% | 679,929 | ||||||||||||
John Bruno(2) | 750,000 | 125% | 937,500 | —% | — | ||||||||||||
Xavier Heiss(3) | 511,733 | 100% | 511,733 | 66.2% | 372,144 | ||||||||||||
| Louis J. Pastor | 550,000 | 100% | 550,000 | 66.2% | 355,825 | ||||||||||||
Joanne Collins Smee(4) | 575,000 | 100% | 575,000 | 66.2% | 365,480 | ||||||||||||
| Giovanni (John) Visentin | 1,200,000 | 150% | 1,800,000 | 66.2% | 595,800 | ||||||||||||
_____________________
(1) Upon his promotion to CEO, Mr. Bandrowczak’s target MIP as a percentage of base salary increased from 125% to 150% of base salary; his target MIP value represents the prorated value for his service in his previous role and current role.
(2) With his hiring in November 2022, Mr. Bruno was ineligible to participate in the 2022 MIP.
(3) Mr. Heiss’ base salary is denominated and paid in euros; it is shown in U.S. dollars (USD) at the December 2022 average exchange rate of 1.0573 USD per EUR.
(4) Upon her promotion to EVP and President, Americas, Ms. Collins Smee received a base salary increase from $550,000 to $575,000; her target MIP value represents the prorated value for her service in her previous role and in current role.
Performance Metrics, Results and Payout: 2022 E-LTIP
Our E-LTIP awards are granted annually, and were made under the Xerox Holdings Corporation Performance Incentive Plan.
Our 2022 E-LTIP design includes awards granted in the form of performance share units (PSUs) (60%) and time-vesting restricted stock units (RSUs) (40%). The grant date for these awards was January 12, 2022, to closely align with the underlying performance period for the PSUs. Earned PSUs cliff-vest three years from the grant date, subject to the Compensation Committee’s certification of performance results. In direct response to shareholder feedback, the Compensation Committee redesigned the PSU financial metrics for the 2022 grants. Absolute Revenue (unadjusted for currency) and Free Cash Flow(1) have been replaced by Adjusted(1) Earnings Per Share (EPS), to emphasize profitability while eliminating overlapping metrics with the MIP. RSUs vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date, and 34% on the third anniversary of the grant date. PSUs are earned based on achieving pre-established performance goals over a three-year performance period (2022 through 2024).
Following the vesting of RSUs and the later of any earning and vesting of PSUs, dividend equivalents are paid in cash on vested shares in an amount equal to the dividends the executive would have received had the executive owned the same number of shares of Xerox Common Stock (but not to exceed the target number of shares for PSUs) throughout the vesting period.
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The 2022 performance measures and (weightings) for our E-LTIP were:
2022 E-LTIP
| Vehicle | Performance Measure | Mix | Weighting | Performance Period | Vesting | Rationale | ||||||||||||||
| Performance Share Units (PSUs) | Adjusted(1) Earnings per Share | 60% | 50% | January 2022—December 2024 (cumulative) | Cliff vesting on the third anniversary of the grant date (subject to performance results) | Focuses on profitability while eliminating overlapping metrics (Absolute Revenue and Free Cash Flow(1) with the MIP | ||||||||||||||
Absolute Share Price(1) | 50% | Last 20-trading-day average closing price at the end of the performance period (December 2024), plus the value of accumulated dividends during the 3-year performance period | Focuses on stock price appreciation and achieving goals to maximize shareholder returns (inclusive of accumulated dividends), which is appropriate during the organization’s transformational period | |||||||||||||||||
| Restricted Stock Units (RSUs) | Service-based | 40% | NA | January 2022—December 2024 | Vesting schedule of 33%, 33%, and 34%, on the first, second, and third anniversaries of the grant date, respectively | Aligns with market practice and promotes retention in a highly competitive marketplace | ||||||||||||||
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
2022 E-LTIP Grant Values
| Executive | 2022 E-LTIP ($) | PSUs (60%) ($) | RSUs (40%) ($) | ||||||||
| Steven J. Bandrowczak | 4,100,000 | 2,460,000 | 1,640,000 | ||||||||
| John Bruno | — | — | — | ||||||||
| Xavier Heiss | 2,500,000 | 1,500,000 | 1,000,000 | ||||||||
| Louis J. Pastor | 1,900,000 | 1,140,000 | 760,000 | ||||||||
| Joanne Collins Smee | 1,400,000 | 840,000 | 560,000 | ||||||||
| Giovanni (John) Visentin | 10,000,000 | 6,000,000 | 4,000,000 | ||||||||
2022 Off-Cycle E-LTIP Awards
As previously disclosed, upon his appointment as CEO, after the death of our former Vice Chairman and CEO, Mr. Bandrowczak received a $3 million promotional RSU grant. The $3 million award represents a market adjustment to reflect his new role as CEO, which would provide him a total LTI grant value of $7.1 million in 2022. In 2023, he will receive an annual LTI grant with a target value of $7.5 million. Upon his hiring in November, Mr. Bruno received a $3 million new hire RSU grant. This award was intended to induce Mr. Bruno to
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join Xerox. This was the only equity award Mr. Bruno received in 2022. In 2023, he will receive an annual LTI grant with a target value of $4.5 million.
Performance Results and Payout: 2020 E-LTIP
The 2020 E-LTIP was based on three years of performance (2020 through 2022) with all financial measures based on total Company results. For additional information on the 2020 E-LTIP performance measures and definitions, refer to Exhibit 10(e)(43) of the Xerox Corporation Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 28, 2020.
Threshold performance levels were not met for any of the three financial metrics: Absolute Share Price(1), Absolute Revenue (unadjusted for currency)(1) and Free Cash Flow(1), resulting in no payout.
The Compensation Committee did not modify or adjust any in-cycle performance awards to reflect the challenges to the business to ensure that executive pay remained aligned with the shareholder experience. A summary is displayed in the table below.
2020 PSU Results (in millions, except share price)
| Performance Measure | Weight | Threshold (50% payout) | Target (100% payout) | Maximum (200% payout) | Actual 2020 PSU Award Performance Results(2) | Performance Results | Weighted Payout Factor | ||||||||||||||||
Absolute Share Price(1) | 50 | % | $37.00 | $40.00 | $45.00 | $18.35 | Below Threshold (0)% | 0% | |||||||||||||||
Absolute Revenue(1) | 25 | % | $25,157 | $25,607 | $26,207 | $21,167 | Below Threshold (0)% | 0% | |||||||||||||||
Free Cash Flow(1) | 25 | % | $3,310 | $3,610 | $3,910 | $1,226 | Below Threshold (0)% | 0% | |||||||||||||||
| Actual 2020 E-LTIP PSU Award Performance Factor | 0% | ||||||||||||||||||||||
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
(2) Actual results for Absolute Revenue reflects three-year cumulative revenue (2020-2022) as reported in the Consolidated Statements of (Loss) Income, in the Company’s 2022 Annual Report on Form 10-K. Actual results for Free Cash Flow reflects three-year cumulative Free Cash Flow (2020-2022) as reflected in the "Non-GAAP Financial Measures" section, by respective performance year.
Transaction Bonus Framework for New Business Unit Monetization
Xerox is undergoing a strategic transformation of the business. Recognizing the importance of creating value for shareholders, Xerox is actively pursuing the development and monetization of new business units. These efforts require Xerox leaders to develop and execute business strategies that may not necessarily be reflected in, or accretive to, the financial metrics used in our annual and long-term incentive programs. On January 12, 2022, after six months of deliberation and discussion, the Compensation Committee approved the Transaction Bonus Framework for new business unit monetization. The purpose of the Transaction Bonus Framework is to create a program to incentivize executives to successfully monetize a new business unit concept through any number of potential liquidity events (e.g., spin-out to Xerox shareholders, sale to strategic buyer, or sale to financial buyer).
The Transaction Bonus Framework allows the Committee the flexibility to reward Xerox executives, excluding the CEO, with the opportunity to earn a bonus based on the shareholder value that is created from a successful liquidity event. The frameworks allows for a transaction bonus to be earned based on a specified percentage to be determined, but not to exceed 1% of the increase, if any, in the fair market value of the designated business unit between (i) the time the Grant Instrument was awarded, and (ii) the time of the liquidity event, with the result adjusted for relevant changes in capital structure. Entitlement to payment will be subject to additional conditions relating to continued employment and non-engagement in certain activity. Payment will generally be in a lump sum, with the form of payout, whether cash or securities, to be determined in advance of payment.
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This incentive framework will expire if a liquidity event has not occurred within 10 years. Also, if the liquidity event fails to produce value for shareholders, no incentive compensation will be earned. The Compensation Committee has full discretion to determine how much of the value created should be awarded to the participant to ensure fairness and alignment with value delivered.
Importantly, there are(1) no grants to disclose and no current compensation value associated with this bonus framework for any named executive officers or Section 16 officers. However, the Compensation Committee believes it is important for shareholders to understand how the program works in the event the Committee decides at some point in the future to award incentives related to the successful monetization of a business unit.
Looking Ahead to 2023
The Compensation Committee, in its ongoing process of soliciting, reflecting on, and incorporating shareholder feedback, and in support of the Company’s long-term business strategy, has taken the following actions for 2023:
1.Evolving the MIP: In 2023, the Company will be embarking upon a reinvention program which will require tremendous focus and energy. We recognize it is important to have the right management team, and the right incentive structure for this journey. Accordingly, the 2023 MIP was redesigned to align with our new strategic plan. The new design will drive a pay for performance culture on an annual basis with the achievement of strategic and functional objectives. The 2023 MIP will utilize Adjusted(1) EBITDA as its primary metric (80% weighting for the CEO and 60% weighting for other NEOs). We believe that Adjusted(1) EBITDA makes for an excellent financial metric as it strongly correlates with TSR and reflects the Company's operational profitability.
In 2022 we added ESG as a metric rather than a modifier and assigned it a 20% weighting. For 2023, the four ESG goals are:
•Climate Change: Establish GHG inventory and data collection system
•Safety: Improve workplace safety
•Diversity, Inclusion, and Belonging: Improve representation of people of color in professional levels
•Diversity, Inclusion, and Belonging: Improve representation of women in professional levels
We believe the continued inclusion of ESG in the MIP is critical to align with shareholder and stakeholder interests.
The remaining 20% of the MIP weighting for NEOs, excluding the CEO, will be on business and functional goals, which will differ by executives depending on their roles and responsibilities. The Compensation Committee does not intend to exercise any discretion and intends to limit payouts to a formulaic application of the weighted performance results.
2.Return to Relative Performance Goals: The 2023 E-LTIP design continues to be weighted heavily to performance-based awards, with 60% of the target award granted as PSUs and 40% as RSUs. In direct response to shareholder feedback, the Committee redesigned the PSUs to focus on using relative metrics. The PSUs will measure Xerox's relative total shareholder return (rTSR) against two indices over a three-year performance period. The two indices are the S&P Technology Hardware Select Industry Index (90% weighting) and the S&P 400 Information Technology Sector (10% weighting). We chose to use two indices to reflect our long-term strategy to evolve beyond a hardware company as we expand our software and services offerings. Similar to the 2022 E-LTIP awards, PSUs are subject to 3-year-cliff, performance-based vesting, and RSUs are subject to service-based vesting on a schedule of 33%, 33%, and 34%, on the first, second, and third anniversaries of the grant date, respectively.
3.Strengthening Shareholder Outreach and Responsiveness: We will continue to reach out to our shareholders and consider how best to align our executive compensation programs with shareholder interests.
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
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GOVERNANCE OF THE EXECUTIVE COMPENSATION PROGRAM
Oversight
The Compensation Committee administers the executive compensation program on behalf of the Board and our shareholders.
All directors who serve on the Compensation Committee are independent directors in accordance with applicable Nasdaq standards, including heightened independence requirements for Compensation Committee members. Their biographies appear beginning on page 7 of this Proxy Statement.
The Compensation Committee’s responsibilities are discussed beginning on page 21 of this Proxy Statement. A complete description of the Compensation Committee’s responsibilities and functions appears in its charter, which can be found on our website at www.xerox.com/governance.
Role of Independent Compensation Consultant
The Compensation Committee has retained the services of an independent compensation consulting firm, FW Cook, to assist with its responsibilities. The compensation consultant generally attends Compensation Committee meetings and provides advice to the Compensation Committee. The compensation consultant also meets regularly with Compensation Committee members without management being present. FW Cook reports only to the Compensation Committee, and has not performed any other work for the Company since being retained as an independent consultant to the Compensation Committee. As provided in its charter, the Compensation Committee has the authority to determine the scope of FW Cook’s services, and may terminate the engagement at any time. The Compensation Committee reviewed FW Cook’s independence under SEC and Nasdaq rules, and determined there is no conflict of interest.
During fiscal year 2022, FW Cook provided the following services:
•Regularly updated the Compensation Committee on trends in executive compensation and proactively advised on emerging trends and best practices, including in connection with the prolonged impact of the global COVID-19 pandemic on performance and compensation design;
•Reviewed officer compensation levels and the Company’s overall performance compared to a peer group made up of organizations with which the Company is likely to compete for executive expertise and/or which share with the Company a similar business model in one or more areas;
•Reviewed incentive compensation designs for MIP and E-LTIP programs;
•Advised the Compensation Committee on peer group companies for pay and performance comparisons;
•Reviewed the Compensation Discussion and Analysis and related compensation tables for this Proxy Statement;
•Reviewed Compensation Committee meeting materials with management and the Committee Chair before distribution;
•Attended Compensation Committee meetings and, as requested, meetings in executive session;
•Offered independent analysis and input on CEO compensation;
•Due to the unusual circumstances surrounding the death of the former CEO, FW Cook advised the Committee on compensation for the newly appointed CEO; and
•Advised on other compensation matters as required.
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PROCESS FOR SETTING COMPENSATION
Competitive Market Information
Each year, the Compensation Committee receives and reviews a report comparing the compensation of our NEOs with the compensation of the NEOs of the companies in our peer group. This comparison includes peer group compensation data from the most recent proxy statements for these elements of pay:
•Base salary
•Performance-based annual Management Incentive Plan (MIP)
•Total cash compensation (base salary plus MIP)
•Performance-based Executive Long-Term Incentive Program (E-LTIP)
•Total compensation (total cash compensation plus E-LTIP)
The Compensation Committee reviews the peer group total target compensation (including the individual elements noted above) for each NEO. The competitive peer group market data is prepared, analyzed, and presented to the Compensation Committee by FW Cook, the Committee’s independent compensation consultant. FW Cook also provides a broader set of survey data that is size-adjusted to reflect companies of similar revenue scope.
When setting compensation, the Compensation Committee also reviews the Company’s performance in relation to the peer group as well as individual performance and contributions by each NEO.
Peer Group
The Compensation Committee regularly reviews the composition of the compensation peer group, and makes modifications as appropriate. The 2021 peer group was approved without change by the Compensation Committee in July 2022, following an assessment and guidance from FW Cook.
The Compensation Committee has determined that these peer group companies on the whole are:
•Appropriate in size (considering revenue, market capitalization, EBIT, enterprise value, and assets);
•Comparable in terms of business complexity and industry focus;
•Companies with which Xerox is likely to compete for executive talent; and/or
•Companies that share a similar business model and/or similar business content in one or more areas to our traditional business.
As we grow our position in strategically adjacent businesses, invest in innovation, and scale new businesses, the Compensation Committee will continue to re-evaluate the peer group and make changes as needed.
| 2022 Peer Group | ||||||||
| Applied Materials, Inc. | Juniper Networks, Inc. | Western Digital Corporation | ||||||
| CGI Group Inc. | Keysight Technologies | Zebra Technologies | ||||||
| DXC Technology Company | Motorola Solutions, Inc. | |||||||
| Flex Ltd. | NCR Corporation | |||||||
| Hewlett Packard Enterprise Company | NetApp, Inc. | |||||||
| HP, Inc. | Seagate Technology plc | |||||||
| Jabil Inc. | TE Connectivity Ltd. | |||||||
CEO and NEO Performance Goals
Following a thorough review of the external market, business outlook, business plan and budgets, the Compensation Committee sets performance goals for the CEO. The CEO in turn sets performance goals, aligned with his objectives, for the other NEOs. For 2022, Mr. Bandrowczak had the same performance goals as all other NEOs.
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Compensation Determination
As shown in the chart below, the Compensation Committee follows a thorough and multi-faceted process to establish compensation for our NEOs.
| Compensation Committee Assessment | Compensation Committee Considerations | Final Steps | ||||||||||||
• Overall Company performance • Past contributions • Expected future contributions • Succession planning objectives • Retention objectives • Internal pay equity • Peer group data | • Evaluation of CEO’s performance relative to specified performance objectives • CEO’s evaluation of the management team, their contributions, and performance • CEO’s recommendations for compensation actions for other NEOs • Competitive executive pay practices • Financial feasibility • CEO’s self-assessment | • Input from the Compensation Committee’s independent consultant • Review of evolving market practices, regulatory developments, the market for executive talent, and compensation philosophy from the Compensation Committee’s independent consultant • After receiving input from the CEO, the Compensation Committee makes its own assessments and formulates compensation amounts; once all components of compensation are established, the Compensation Committee verifies that the total compensation for each NEO is appropriate and competitive | ||||||||||||
Total Target Compensation
As previously noted, the Compensation Committee follows a thorough and multi-faceted process to establish total target compensation for our NEOs. Below is the 2022 total target compensation for the NEOs as approved by the Compensation Committee.
Annual Base Salary ($)(1) | Target MIP (% of Salary)(1) | Target MIP ($)(1) | E-LTIP (RSUs and Target PSUs) ($) | Total Target Compensation (Base + Target MIP + E-LTIP) ($) | |||||||||||||
Steven J. Bandrowczak(2) | 1,000,000 | 150% | 1,500,000 | 7,500,000 | 10,000,000 | ||||||||||||
John Bruno(3) | 750,000 | 125% | 937,500 | 4,500,000 | 6,187,500 | ||||||||||||
Xavier Heiss(4) | 511,733 | 100% | 511,733 | 2,500,000 | 3,523,466 | ||||||||||||
| Louis J. Pastor | 550,000 | 100% | 550,000 | 1,900,000 | 3,000,000 | ||||||||||||
Joanne Collins Smee(5) | 575,000 | 100% | 575,000 | 1,400,000 | 2,550,000 | ||||||||||||
| Giovanni (John) Visentin | 1,200,000 | 150% | 1,800,000 | 10,000,000 | 13,000,000 | ||||||||||||
___________
(1) Reflects annual base salary and target incentive; actual payouts are based on NEO service in each role.
(2) For Mr. Bandrowczak - represents total target compensation (on an annualized basis) after his appointment to CEO in August 2022.
(3) For Mr. Bruno - represents total target compensation (on an annualized basis) upon his hire in November 2022. He did not participate in the MIP in 2022, and will receive his first annual E-LTIP in 2023.
(4) Mr. Heiss’ base salary and MIP are denominated and paid in euros. The amount shown in U.S. dollars reflect the December 2022 average exchange rate of 1.0573 USD per EUR.
(5) For Ms. Collins Smee - represents total target compensation (on an annualized basis) after her promotion to President, Americas in June 2022.
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Target Pay Mix
The charts below show the 2022 pay mix for our NEOs and the portion of their total compensation that is at risk. The target pay in the charts represents base salary, target MIP incentive awards, and grants of E-LTIP incentive awards at target (which include a PSU and RSU component).
•89% of pay for our CEO is at risk and creates alignment with shareholders
•84% of pay for our other NEOs is at risk and creates alignment with shareholders
Setting MIP Targets and Determining Payout
The following chart shows our annual process for setting MIP targets and determining payout of the prior year’s awards. This process typically takes place in the first quarter of each year.
| Role | Responsibility | |||||||
Board of Directors | • Reviews Company results for prior year • Considers annual operating plan for the current year | |||||||
CEO | • With the Chief Financial Officer (CFO), assesses prior year performance • Recommends actions related to payment of awards based on prior year performance • Recommends to the Compensation Committee performance measures for the current year • Recommends establishment of MIP incentive target awards for the current year for the other NEOs | |||||||
Compensation Committee | • With the input of the CEO and CFO, assesses prior year performance against goals • With the input of the CEO, determines awards earned for the prior year • Sets performance measures and weightings for the current year, including the threshold, target and maximum goals for each measure, payout ranges, potential adjustment categories, and overall design | |||||||
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Setting E-LTIP Targets and Determining Grants
The following chart shows our annual process for setting E-LTIP targets and determining grants. This process typically takes place in the first quarter of each year.
| E-LTIP Planning Process | ||||||||
Actions the Compensation Committee takes annually with respect to E-LTIP awards | • For completed performance periods, determines the number of PSUs, if any, earned by each NEO based on the results for the performance period. • For the new PSU cycle, establishes overall design, performance measures and weightings; threshold, target, and maximum achievement levels for each measure with associated payout ranges. | |||||||
Specific actions taken for 2022 E-LTIP Grants | • Approved new E-LTIP grant values and grant dates for NEOs. • Approved program design, performance measures and weightings; set threshold, target, and maximum achievement levels for each measure with associated payout ranges. | |||||||
Process for Determining MIP and E-LTIP Results and Payouts
After the end of each fiscal year, the CFO certifies the financial results used by the Compensation Committee to make compensation decisions. The CFO attends Compensation Committee meetings to discuss financial targets and results for the annual Management Incentive Plan (MIP) and the Executive Long-Term Incentive Program (E-LTIP) as described in the CD&A. Executive officer compensation decisions are made by the Compensation Committee after discussing recommendations with the CEO and the Chief Human Resources Officer. The Compensation Committee meets in executive session to review and approve compensation actions for the CEO.
MIP
•Each performance measure is assessed and calculated independently. The weighted results of each measure, if achieved at least at the threshold level, are added together to determine the overall payout factor.
•Subject to the Compensation Committee’s review and approval, any material unusual or infrequent charges or gains/(losses) may be excluded from the MIP incentive calculations in order to obtain normalized operational results of the business.
•Even if pre-established performance measures are achieved, the Compensation Committee retains the discretion to adjust the calculated incentive payout, as it deems appropriate, based on overall Xerox performance. The Compensation Committee may use its discretion to adjust a payout based on individual performance, provided that an individual executive’s award never exceeds 2 times the executive’s target award opportunity.
E-LTIP
•Performance results for each PSU performance metric, subject to that metric’s weighting, are combined to determine the number of PSUs earned, as a percentage of the target number of PSUs awarded, as follows: (i) achieving threshold performance equates to 50% of target; (ii) achieving target performance equates to 100% of target; (iii) achieving maximum performance equates to 200% of target; and (iv) if performance results for the metric are below the threshold level, zero achievement is used for that metric when calculating the percentage of PSUs earned.
•Payouts are made proportionately for achievement between threshold and target, and between target and maximum. No PSUs are earned if performance is below the threshold level for all of the performance metrics established by the Compensation Committee. Payout of PSUs is conditioned on actual achievement of the pre-established performance measures and satisfaction of the service-based vesting requirements.
•The target numbers of PSUs and RSUs granted to our NEOs were determined by dividing the approved E-LTIP grant-date values (dollar amount) by the fair value on the grant date (or last trading day prior to the grant date if the market was closed on the grant date).
•For RSUs, fair value is the closing price of Xerox Common Stock on the date of grant.
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•For 2022, PSUs, fair value was determined as follows: one-half based on the closing price of Xerox Common Stock on the grant date (for Cumulative, Adjusted(1) Earnings per Share metric), and one-half based on a Monte Carlo valuation (for Absolute Share Price(1) metric).
•Any earned PSUs are paid as shares, as soon as practicable following the later of such approval or the PSU vesting date.
________
(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
Risk Assessment
FW Cook, the independent consultant to the Compensation Committee, conducted an assessment of risk arising from the Company’s compensation programs. The assessment included reviews of our pay mix, incentive plan metrics and goal setting, performance appraisals, and other risk mitigation policies.
Based on the assessment of programs covering our executives for 2022, the Compensation Committee determined that our compensation plans, programs, and practices do not motivate behavior that is reasonably likely to have a material adverse impact on the Company. The Compensation Committee believes that our programs encourage appropriate behavior while balancing risk and reward, consistent with the interests of our shareholders.
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PENSION AND SAVINGS PLANS
Pension and Savings Plans
The only NEO who participated in a pension plan in 2022 was Mr. Heiss, as described below. The other NEOs were eligible to participate in the Company’s tax-qualified defined contribution plan, the Xerox Corporation Savings Plan, as described below.
Xerox Corporation Savings Plan (401(k) Savings Plan)
Messrs. Bandrowczak, Bruno, Pastor, and Visentin and Ms. Collins Smee were eligible to participate in the Company’s 401(k) Savings Plan in the same manner as all other U.S. employees covered by the plan. Except for Mr. Pastor and Mr. Heiss (who is not eligible), each of these NEOs participated in the 401(k) Savings Plan in 2022. These NEOs were eligible to contribute a portion of their eligible pay on a tax-deferred or Roth basis, subject to IRS qualified plan compensation limits, the IRS annual limit on 401(k) deferral contributions, and the plan’s limit on the percentage of pay contributed by highly compensated employees. The Company matched 50% of employee contributions up to the first 6% of eligible compensation contributed by the participating NEOs in the same manner it matched all other eligible participants' contributions. The matching contributions were deposited in January 2023 and were 100% vested per the 401(k) Saving Plan provisions.
The Xerox Corporation Supplemental Savings Plan, a non-qualified deferred compensation plan, was closed to new contributions after 2018, but the existing account balance of Mr. Visentin continued to generate earnings in accordance with the terms applicable to all participants with existing account balances in that plan, until his death in June 2022. See Non-Qualified Deferred Compensation for the 2022 Fiscal Year for further information.
French Pension and Retirement Plans
Mr. Heiss, a citizen of France and employee of Xerox SAS, France, was eligible to participate in the following pension or retirement plans in 2022:
•Defined Contribution Pension Plan for Directors of Xerox SAS, France
•Contributions to the plan are based on earnings up to an annual cap of €205,680
•Payments are managed by AXA, the program administrator, and are payable upon retirement (but not before age 62)
•Earnings are credited to a participant’s account based on market investments selected by the participant
•Retirement Indemnities Plan
•French pension plan required under the Convention Collective d’Enterprise Xerox S.A.S. (10 December 2015) (XF-CBA), a collective bargaining agreement between the Company’s French subsidiary and certain French trade unions
•Benefits are forfeited if an employee terminates before age 62
Mr. Heiss is not covered by U.S. tax-qualified or non-qualified plans (nor any retirement plans of other Xerox locations where he was previously on assignment).
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PERQUISITES AND PERSONAL BENEFITS
General Benefits
The Company generally offers medical and dental coverage, life insurance, accidental death insurance, and disability benefit programs or plans to all employees, as well as customary vacation, leave of absence and other similar policies. NEOs are eligible to participate in these programs and plans on the same basis as all other salaried employees, except as otherwise provided.
Perquisites
The Compensation Committee periodically reviews the perquisites provided to NEOs. The Compensation Committee believes its policies regarding perquisites are conservative compared to those of other companies. The Company does not pay tax gross-ups in connection with perquisites (other than in connection with tax equalization for the international assignment allowances noted below):
•Financial Planning: All NEOs are eligible to receive Company-paid financial planning assistance (up to $10,000 every two years). Solid financial planning by experts reduces the amount of time and attention that NEOs devote to their finances and maximizes the value of their compensation.
•Chartered Aircraft: For purposes of security, productivity, and efficiency, the Board of Directors requires the CEO to use chartered aircraft for business travel. Employees are permitted to accompany the CEO on the Company chartered aircraft solely for business purposes with prior authorization by the CEO.
•The CEO was also eligible to use the Company chartered aircraft for personal travel and permitted to be accompanied by family members and guests. The CEO (formerly Mr. Visentin, and currently Mr. Bandrowczak) was wholly responsible for the tax consequences related to any personal use of Company chartered aircraft. The Company did not provide gross-ups or other tax protection related to the personal use of chartered aircraft.
•Home Security: Until his death in June 2022, Mr. Visentin received home security services to address safety concerns resulting from his position as our Vice Chairman & CEO. Mr. Bandrowczak became eligible for home security services upon his appointment as CEO effective August 2022.
•International Assignment Allowances: Mr. Heiss, a citizen of France, was on international assignment during 2022. As is customary for Xerox employees on international assignment, Mr. Heiss received an international assignment allowance in 2022, consistent with Company polices.
For additional information and the total costs to the Company for providing perquisites and personal benefits to the NEOs during fiscal 2022, see the “All Other Compensation” column of the Summary Compensation Table.
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CHANGE IN CONTROL BENEFITS
All our current NEOs have change in control severance agreements. These agreements are in the best interests of both the Company and our shareholders because they foster the continuous employment and dedication of key management without potential distraction or personal concern if Xerox were the potential subject of an acquisition or other change in control event. The Compensation Committee periodically reviews our change in control severance agreements against benchmark data to ensure that our arrangements are consistent with market practice.
Under the change in control severance agreements, if employment terminates involuntarily (other than for cause, death, or disability) or voluntarily for Good Reason within two years following a change in control, the NEO would be entitled to:
•Two times the sum of their annual base salary and target annual incentive award;
•Continuation of specified welfare benefits at active employee rates for a period of 24 months; and
•Accelerated vesting of outstanding equity awards.
These agreements require that the executive agree to remain an employee of the Company for nine months following a “potential change in control” (as defined therein) or until the date upon which the NEO is first entitled to receive the benefits described above, if earlier. Severance payments to NEOs following a change in control are generally not conditioned on non-competition or non-solicitation obligations. Good Reason is defined in the change in control severance agreements.
Xerox does not provide any of the NEOs with excise tax reimbursement on severance payments.
Additional information and the amount of the estimated payments and benefits payable to the NEOs (assuming a change in control of Xerox and a qualifying termination of employment) are presented under the Potential Payments Upon Termination or Change in Control table.
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EMPLOYMENT AND SEPARATION
NEOs serve at the will of the Board. This enables the Board to remove an NEO, consistent with applicable laws, whenever it is in the best interests of the Company, with discretion of the Compensation Committee to decide on an appropriate severance package (except for benefits that have vested or in the case of a change in control). When an NEO is removed from his or her position, the Compensation Committee exercises its business judgment in determining whether any special severance arrangement is appropriate considering all relevant circumstances, including years of service with the Company, past accomplishments, the reasons for separation, and requirements under applicable local law.
The Compensation Committee approved an Officer Severance Program in July 2018, the terms of which were extended in December 2022, with no substantive changes to the existing program design. The Officer Severance Program will expire on December 31, 2024, unless the Compensation Committee takes action to further extend it. Under the Officer Severance Program, an officer who is eligible to participate in the program due to a qualifying termination as defined therein will be entitled to receive:
•One year (two years for Mr. Bandrowczak) of salary continuance and continuation of specified health and welfare benefits at active employee rates;
•Prorated annual incentive award for the year of termination; and
•At the Compensation Committee’s discretion, continued vesting of outstanding equity awards during the one-year (two-year for Mr. Bandrowczak) salary continuance period.
The Officer Severance Program includes a covenant not to engage in activity that is detrimental to the Company, and payments and benefits under the program are conditioned upon the NEO’s execution of a release of claims against the Company and a non-competition/non-solicitation agreement.
The NEOs are generally eligible for the Officer Severance Program, except that the Officer Severance Program:
(1) excludes from eligibility an officer with a written agreement providing for severance benefits upon separation; and
(2) contains a non-duplication provision, pursuant to which payments and benefits under the Officer Severance Program are reduced by amounts required to be paid to the officer as severance under another arrangement or by operation of law. Thus, the treatment of Mr. Heiss under the Officer Severance Program would be as follows:
•Any amounts payable to Mr. Heiss would be reduced by the severance benefits received under the Convention Collective d’Enterprise Xerox S.A.S. (10 December 2015) (XF-CBA), a collective bargaining agreement between the Company’s French subsidiary and certain French trade unions (XF-CBA). (See the Potential Payments Upon Termination or Change in Control section for further information).
Except as described above, if the Compensation Committee does not approve a severance arrangement under the Officer Severance Program for an NEO whose employment is terminated, that officer would be covered under the Company’s standard U.S. severance policy, as applicable at the time of the separation.
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OTHER FEATURES OF OUR EXECUTIVE COMPENSATION PROGRAM
Stock Ownership Requirements
We require each NEO to build and maintain a meaningful level of stock ownership.
| Level | Ownership Requirement | ||||
| CEO | 5 times base salary | ||||
| Other NEOs | 3 times base salary | ||||
NEOs must retain at least 50% of the shares acquired through the vesting of their annual E-LTIP awards, net of taxes, until they achieve their required level of ownership. Once achieved, NEOs must continue to hold that amount of stock as long as they remain with the Company. They also remain subject to a holding requirement following separation from employment (including retirement) for six months for the CEO and three months for other NEOs. The holding requirement essentially restricts the CEO from selling these shares prior to two earnings announcements following separation from employment (prior to one earnings announcement for other NEOs). For six months following separation, NEOs may only sell shares during a “window period” (as defined below under Trading, Hedging and Pledging). The CEO has the authority to permit discretionary hardship exceptions (other than for himself) from the ownership and holding requirements to enable participants with financial need to access their vested shares; to date no such exception has ever been requested.
Shares that count toward ownership requirements include (i) shares owned outright (whether or not held in street name), (ii) outstanding unvested restricted stock and RSUs, and (iii) PSUs when performance results have been determined.
Trading, Hedging and Pledging
Under the Company’s insider trading policy, executive officers are permitted to buy or sell Xerox securities only during a “window period,” which is the period commencing on the day that is one full trading day following announcement of quarterly earnings and ending on (and including) the fifteenth day of the last month of the quarter during which the earnings announcement is made. The only exception to the window-period restriction described in the preceding sentence is for executive officers who have entered into trading plans pursuant to SEC Rule 10b5-1.
Executive officers are prohibited from engaging in short-swing trading and trading in options (including puts, calls, and straddles), and from otherwise engaging in transactions that hedge or offset, or are designed to hedge or offset, any decrease in the market value of Xerox securities. “Short sales” are also prohibited. Our anti- hedging policies and practices also apply to directors. In addition, executive officers are prohibited from pledging Xerox securities, including depositing Xerox securities in margin accounts at brokerage firms, and from using Xerox securities as collateral.
Compensation Recovery Policy (Clawbacks)
The Officer Severance Program (see Employment and Separation) and, typically, any individual separation arrangement with an NEO, includes a provision that rescinds severance payments if the recipient engages in activity that is detrimental to the Company. Clawback arrangements may also be included in letter agreements with executives.
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In addition, the following plans provide for compensation recovery.
•Under the 2004 Performance Incentive Plan and the Xerox Holdings Corporation Performance Incentive Plan (as amended and restated to date), if the Compensation Committee determines that an NEO has engaged in activity that is detrimental to the Company, it may cancel any awards granted to that individual. In addition, if such a determination is made before any change in control of Xerox, the Compensation Committee may rescind any payment or delivery of an equity or annual cash incentive award that occurred from six months before the detrimental activity. For this purpose, detrimental activity may include:
•A violation of a non-compete agreement with the Company;
•Disclosing confidential information (except for reporting and other communications protected by “whistle blower” provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd Frank));
•Soliciting an employee to terminate employment with the Company;
•Soliciting a customer to reduce its level of business with the Company; and
•Engaging in any other conduct or act that is determined to be injurious, detrimental, or prejudicial to any interest of the Company.
If a payment or award is rescinded, the NEO will be expected to pay the Company the amount of any gain realized, or payment received in a manner the Compensation Committee, or its delegate requires.
•Our E-LTIP equity award agreements, under the 2004 Performance Incentive Plan and Xerox Holdings Corporation Performance Incentive Plan (as amended and restated to date), include a clawback provision that applies if an accounting restatement is required to correct any material non-compliance with financial reporting requirements as required under Dodd Frank. Under this provision, the Company can recover, for the three prior years, any excess incentive-based compensation (over what would have been paid under the accounting restatement) from executive officers or former executive officers.
•Annual incentive awards to NEOs under the MIP are also subject to the above clawback provisions.
•Under the Xerox Corporation Supplemental Savings Plan, if a participant, including an NEO, is found to have engaged in detrimental activity, the Plan Administrator may reduce or rescind the matching contribution account balance and not pay such amounts to that individual.
CERTAIN TAX IMPLICATIONS OF EXECUTIVE COMPENSATION
Section 162(m) of the Internal Revenue Code of 1986, as amended (Section 162(m)), limits to $1 million per year the federal income tax deduction available to public corporations for compensation paid for any fiscal year to the corporation’s CEO and other NEOs, as well as certain former NEOs. As a result, compensation paid in excess of $1 million to each of our NEOs will generally not be deductible.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with Xerox management. Based upon its review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be incorporated by reference in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, and be included in the Proxy Statement for the 2023 Annual Meeting of Shareholders.
Nichelle Maynard-Elliot, Chair
Jesse A. Lynn
Margarita Paláu-Hernández
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SUMMARY COMPENSATION TABLE
The Summary Compensation Table below provides compensation information for the CEO, the CFO, and the next three most highly compensated executive officers who served during the fiscal year ended December 31, 2022, (collectively referred to as NEOs). The table includes the dollar value of base salary earned, bonus, stock and option awards, non-equity incentive plan compensation earned, change in pension value, if any, above-market non-qualified deferred compensation earnings, if any, and all other compensation, whether paid or deferred.
For a summary of the Compensation Committee’s decisions on the compensation awarded to our NEOs for fiscal 2022, please refer to the CD&A beginning on page 31.
Summary Compensation Table
Compensation elements reported in this Summary Compensation table and its accompanying notes are in U.S. dollars and rounded to the nearest dollar. For Mr. Heiss, compensation other than stock awards are denominated and paid in euros; the amount shown in U.S. dollars reflects the December 2022 average exchange rate of 1.0573 USD per EUR:
•1.0573USD per EUR for 2022
•1.1348USD per EUR for 2021
•1.2295USD per EUR for 2020
| Name & Principal Position | Year | Salary ($) (A) | Bonus ($) (B) | Stock Awards ($) (C) | Option Awards ($) (D) | Non-Equity Incentive Plan Compensation ($) (E) | Change in Pension Value and NQDC Earnings ($) (F) | All Other Compensation ($) (G) | Total ($) | ||||||||||||||||||||
| Steven J. Bandrowczak Chief Executive Officer | 2022 | 763,315 | — | 7,100,017 | — | 679,929 | — | 18,006 | 8,561,267 | ||||||||||||||||||||
| 2021 | 525,000 | — | 3,650,020 | — | 340,200 | — | 159 | 4,515,379 | |||||||||||||||||||||
| 2020 | 525,000 | 262,500 | 5,105,099 | — | — | — | 6,899 | 5,899,498 | |||||||||||||||||||||
| John Bruno President and Chief Operating Officer | 2022 | 99,432 | — | 3,000,003 | — | — | — | 938 | 3,100,373 | ||||||||||||||||||||
| Xavier Heiss Executive Vice President, Chief Financial Officer | 2022 | 500,997 | — | 2,500,033 | — | 372,144 | — | 156,133 | 3,529,307 | ||||||||||||||||||||
| 2021 | 499,312 | — | 2,000,014 | — | 323,554 | — | 562,799 | 3,385,679 | |||||||||||||||||||||
| 2020 | 468,619 | 222,148 | 1,610,141 | — | — | 447,575 | 358,526 | 3,107,009 | |||||||||||||||||||||
| Louis J. Pastor Executive Vice President, Chief Corporate Development Officers and Chief Legal Officer | 2022 | 537,500 | — | 1,900,044 | — | 355,825 | — | 95 | 2,793,464 | ||||||||||||||||||||
| 2021 | 500,000 | 1,550,021 | — | 324,000 | — | — | 2,374,021 | ||||||||||||||||||||||
| 2020 | 500,000 | 250,000 | 2,120,090 | — | — | — | 116,057 | 2,986,147 | |||||||||||||||||||||
| Joanne Collins Smee Executive Vice President and President, Americas | 2022 | 551,894 | — | 1,400,028 | — | 365,480 | — | 9,150 | 2,326,552 | ||||||||||||||||||||
| Giovanni (John) Visentin Former Vice Chairman and Chief Executive Officer | 2022 | 590,090 | — | 10,000,047 | — | 595,800 | — | 6,399 | 11,192,336 | ||||||||||||||||||||
| 2021 | 1,200,000 | — | 10,000,023 | — | 1,166,400 | — | 52,454 | 12,418,877 | |||||||||||||||||||||
| 2020 | 1,200,000 | 16,000,092 | — | — | — | 44,268 | 18,144,360 | ||||||||||||||||||||||
_____________________
(A)2022: Mr. Bandrowczak was appointed to Chief Executive Officer, effective August 2, 2022; his base salary increase was prorated through fiscal year end. Mr. Bruno was hired as Chief Operating Officer, effective November 14, 2022; his base salary represents base salary earned through from his hire date. Ms. Collins Smee was promoted to EVP and President, Americas, effective June 3, 2022; her base salary increase was prorated through fiscal year end. Mr. Visentin passed away on June 28, 2022.
2021: Mr. Heiss was promoted to the Chief Financial Officer role effective January 1, 2021.
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(B)Annual MIP awards appear as “Non-Equity Incentive Plan Compensation” in column E. For 2020, the amounts shown represent the special one-time Management Retention Award approved by the Compensation Committee as part of the December 2020, Special Incentive Awards; no payouts were made under the MIP in respect of 2020.
(C)The amounts shown in this column represent the aggregate grant date fair values of equity awards in the form of PSUs and RSUs granted to our NEOs for each respective year, computed in accordance with FASB ASC Topic 718, Compensation — Stock Compensation. A discussion of the assumptions used in calculating the fair value of such awards may be found in Note 23 (Stock-Based Compensation) to our 2022 audited financial statements of our Annual Report on Form 10-K filed with the SEC on February 23, 2023. PSU awards under the 2022 E-LTIP were granted on January 12, 2022, and are reported at target performance. The grant-date fair value of these PSU awards at maximum performance would be as follows: Mr. Bandrowczak — $4,920,000; Mr. Heiss — $3,000,019; Mr. Pastor — $2,280,046; Ms. Collins Smee - $1,680,042; and Mr. Visentin - $12,000,047.
(D)Stock options were not granted in 2020, 2021, or 2022.
(E)The Non-Equity Incentive Plan payments under the 2022 MIP, based on 2022 performance, were approved by the Compensation Committee in February 2023. Actual payout as a percentage of target was 66.2% for each of the NEOs. For more information, see the 2022 Performance-Based Annual Management Incentive Plan section in the CD&A.
(F)Mr. Heiss participates in the Retirement Indemnities Plan, a French pension plan that we are required to maintain under a collective agreement with our employees in France. The change in pension value shown in this column is calculated by determining the change in the present value of the benefits from December 31, 2021 to December 31, 2022 (but if the change in the present value of the benefit is negative then it is not shown). The present value is computed using the FASB ASC Topic 715 assumptions in effect for the corresponding fiscal year end and assuming the benefit is paid at the earliest retirement date at which unreduced benefits are payable (age 62). See the Pension Benefits for the 2022 Fiscal Year section for more detail.
•For Mr. Heiss in 2022 — these assumptions include a discount rate of 0.75% for the Retirement Indemnities Plan, social charge rate of 46.5%. The Retirement Indemnities Plan does not pay any benefits to a participant who terminates employment before age 62.
•For Mr. Heiss in 2021 — these assumptions include a discount rate of 0.35% for the Retirement Indemnities Plan, social charge rate of 46.5%.
(G)The table below entitled “All Other Compensation Table” provides additional data on the amounts included under the “All Other Compensation” column.
All Other Compensation Table
| Name | Year | Personal Use of Aircraft ($) (A) | International Assignment Allowances ($) (B) | Relocation Expenses ($) (C) | Tax Related Reimbursements ($) (D) | 401(k), SSP, & DC Employer Contribution ($) (E) | Mobility Stipend ($) | Miscellaneous ($) (F) | Total All Other Compensation ($) (G) | ||||||||||||||||||||
| Steven J. Bandrowczak | 2022 | — | — | — | — | 9,150 | — | 8,856 | 18,006 | ||||||||||||||||||||
| 2021 | — | — | — | — | — | — | 159 | 159 | |||||||||||||||||||||
| 2020 | — | — | — | — | — | — | 6,899 | 6,899 | |||||||||||||||||||||
| John Bruno | 2022 | — | — | — | — | 938 | — | — | 938 | ||||||||||||||||||||
| Xavier Heiss | 2022 | — | 83,598 | — | 58,738 | 6,524 | — | 7,273 | 156,133 | ||||||||||||||||||||
| 2021 | — | 147,156 | 28,307 | 373,226 | 7,002 | — | 7,108 | 562,799 | |||||||||||||||||||||
| 2020 | — | 170,769 | 22,042 | 151,184 | 7,587 | — | 6,944 | 358,526 | |||||||||||||||||||||
| Louis J. Pastor | 2022 | — | — | — | — | — | — | 95 | 95 | ||||||||||||||||||||
| 2021 | — | — | — | — | — | — | — | — | |||||||||||||||||||||
| 2020 | — | — | 48,861 | 42,196 | — | 25,000 | — | 116,057 | |||||||||||||||||||||
| Joanne Collins Smee | 2022 | — | — | — | — | 9,150 | — | — | 9,150 | ||||||||||||||||||||
| Giovanni (John) Visentin | 2022 | 4,814 | — | — | — | — | — | 1,585 | 6,399 | ||||||||||||||||||||
| 2021 | 50,333 | — | — | — | — | — | 2,121 | 52,454 | |||||||||||||||||||||
| 2020 | 42,278 | — | — | — | — | — | 1,990 | 44,268 | |||||||||||||||||||||
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Compensation reported in this table is in U.S. dollars and rounded to the nearest dollar. For Mr. Heiss compensation is denominated and paid in euros; the amount shown in U.S. dollars reflects the December 2022 average exchange rate of 1.0573 USD per EUR:
•1.0573USD per EUR for 2022
•1.1348USD per EUR for 2021
•1.2295USD per EUR for 2020
(A)For reasons of productivity, security and efficiency, the Company requires the CEO (formerly Mr. Visentin, and currently Mr. Bandrowczak) to use Company chartered aircraft for business travel. The CEO may also use the Company chartered aircraft for personal travel. The compensation value of personal usage of Company chartered aircraft is calculated based on the aggregate incremental cost to the Company, using the incremental aircraft operating rate based on the number of flight hours used, and primarily includes the cost of fuel, maintenance and other variable costs (such as the cost of landing fees, crew on the road expenses, trip related service and maintenance, airport taxes and fees). The CEO is also allowed to bring guests, such as family members, on the Company chartered aircraft. The Company does not provide gross-ups or other tax protection related to the CEO's personal use of Company chartered aircraft.
(B)Mr. Heiss, a citizen of France, received certain benefits in connection with his international assignment in the U.S. Included in this column are Mr. Heiss’ assignment allowance €28,453 ($30,084), automobile allowance €10,646 ($11,256), pension inclusion €9,765 ($10,325), the cost of his incremental housing allowance €30,202 ($31,933), and other assignment related costs including immigration.
(C)For 2022, there are no relocation costs.
(D)For 2022, the amount shown for Mr. Heiss reflects tax preparation fee under Xerox’s international assignment policy in the amount of €55,555 ($58,738).
(E)For U.S. employees, this column includes the employer contribution, if any, under the 401(k) Savings Plan and Xerox Corporation Supplemental Savings Plan (SSP). For Mr. Heiss, this column includes the employer contribution under the Defined Contribution Pension Plan for Directors of Xerox SAS France. See the Pension and Savings Plans section for more information.
(F)Amounts in this column for 2022, include identity theft protection, financial planning assistance, and incidental benefits of de minimis value. For Mr. Visentin and Mr. Bandrowczak, it includes home security services to address safety concerns resulting from their position ($1,585 and $8,856 respectively). For Mr. Heiss, it also includes a seniority bonus of (€6,879) ($7,273) that is a customary annual payment in France.
(G)In accordance with applicable SEC rules, dividend equivalents paid in 2022, on PSUs and RSUs are not included in “All Other Compensation” because those amounts were factored into the grant date fair values of the PSUs and RSUs.
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GRANTS OF PLAN-BASED AWARDS IN 2022
The following table provides additional detail regarding RSUs and PSUs granted to each of the NEOs under the 2022 E-LTIP and potential amounts payable under the 2022 MIP. Threshold, target, and maximum award opportunities are provided for PSUs and the MIP, as applicable.
| Estimated Future Payout Under Non-Equity Incentive Awards (B) | Estimated Future Payout Under Equity Incentive Awards (C) | All Other Stock Awards: Number of Shares or Stock Units (#) (D) | Grant Date Fair Value of Stock Awards ($) (E) | ||||||||||||||||||||||||||||||||
| Name | Award | Grant Date (A) | Date of Action (A) | Thresh. ($) | Target ($) | Max ($) | Thresh. (#) | Target (#) | Max (#) | ||||||||||||||||||||||||||
| Steven J. Bandrowczak | 2022 MIP | 513,542 | 1,027,083 | 2,054,166 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (PSU) | 1/12/2022 | 1/12/2022 | 46,875 | 93,750 | 187,500 | 2,460,000 | |||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 1/12/2022 | 1/12/2022 | 69,433 | 1,640,007 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 8/2/2022 | 8/2/2022 | 176,679 | 3,000,009 | |||||||||||||||||||||||||||||||
| John Bruno | 2022 MIP | ||||||||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 11/14/2022 | 10/27/2022 | 194,679 | 3,000,003 | |||||||||||||||||||||||||||||||
| Xavier Heiss | 2022 MIP | 255,867 | 511,733 | 1,023,466 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (PSU) | 1/12/2022 | 1/12/2022 | 28,583 | 57,165 | 114,330 | 1,500,010 | |||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 1/12/2022 | 1/12/2022 | 42,338 | 1,000,024 | |||||||||||||||||||||||||||||||
| Louis J. Pastor | 2022 MIP | 275,000 | 550,000 | 1,100,000 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (PSU) | 1/12/2022 | 1/12/2022 | 21,723 | 43,446 | 86,892 | 1,140,023 | |||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 1/12/2022 | 1/12/2022 | 32,177 | 760,021 | |||||||||||||||||||||||||||||||
| Joanne Collins Smee | 2022 MIP | 267,042 | 552,084 | 1,104,168 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (PSU) | 1/12/2022 | 1/12/2022 | 16,007 | 32,013 | 64,026 | 840,021 | |||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 1/12/2022 | 1/12/2022 | 23,709 | 560,007 | |||||||||||||||||||||||||||||||
| Giovanni (John) Visentin | 2022 MIP | 900,000 | 1,800,000 | 3,600,000 | |||||||||||||||||||||||||||||||
| 2022 E-LTIP (PSU) | 1/12/2022 | 1/12/2022 | 122,400 | 244,799 | 489,598 | 6,000,023 | |||||||||||||||||||||||||||||
| 2022 E-LTIP (RSU) | 1/12/2022 | 1/12/2022 | 169,349 | 4,000,023 | |||||||||||||||||||||||||||||||
(A)The “Grant Date” is the effective date of the equity awards. The “Date of Action” is the date on which the values of the awards were approved by the Compensation Committee and, for Mr. Visentin and Mr. Bandrowczak, the Board of Directors.
(B)These columns reflect the threshold, target, and maximum payout opportunities under the 2022 MIP set by the Compensation Committee. The MIP measures and weightings for 2022 were Free Cash Flow(1) (40%), Absolute Revenue (unadjusted for currency)(1) (20%), Adjusted(1) Operating Margin (20%), and ESG (20%). For purposes of this table, the amount shown as the “threshold” payout was determined assuming achievement of the minimum performance level. If threshold performance was not achieved on the performance measures, there would be no MIP payout. For 2022, the MIP payout is 66.2% of target. See Performance Metrics, Results and Payout: 2022 MIP in the CD&A.
(C)The threshold, target, and maximum payout opportunities for the 2022 E-LTIP PSU awards, as well as the design and methodology for determining the 2022 E-LTIP PSU awards, were approved by the
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Compensation Committee. The target number of PSUs granted to each of our NEOs was determined by dividing the approved E-LTIP target award value by an equal weighting of (1) the closing price of Xerox Common Stock on the grant date (or last trading day prior to the grant date if the market was closed on the grant date) for the Adjusted(1) Earnings per Share (EPS) measure, and (2) the closing price of Xerox Common Stock on the grant date multiplied by the Monte Carlo fair value factor (a commonly-used methodology to determine the fair value factor for market-based metrics) with respect to the Absolute Share Price(1) measure, rounded up to the nearest whole share.
The performance measures and weightings for the portion of the 2022 E-LTIP award granted as PSUs are: Adjusted(1) EPS (Cumulative) (50%) and Absolute Share Price(1)(50%).
PSUs under the 2022 E-LTIP can be earned by achieving three-year performance goals at least at the threshold level. The performance period for the Adjusted(1) EPS (Cumulative) measure is January 1, 2022 through December 31, 2024. Absolute Share Price(1) is measured based on the 20-trading day average price at the end of the three-year performance period, plus the value of accumulated dividends during the three-year performance period. The service period and vesting date for the PSUs is three years from the grant date; earned PSUs will be determined and paid after the 2024 performance results have been certified by the CFO and approved by the Compensation Committee.
The threshold column reflects the lowest number of PSUs that could be earned if performance is achieved at the threshold level for only one performance measure. If threshold performance is not achieved on any of the performance measures, no PSUs are earned. See Compensation Committee Actions Relating to E-LTIP Awards in the CD&A for additional information. The target column reflects the number of PSUs that could be earned if target performance is achieved on all performance measures. The maximum column reflects the greatest number of PSUs that could be earned if maximum or higher performance is achieved on all three performance measures. The number of PSUs earned is interpolated if the Company’s performance is between threshold and target or between target and maximum, as determined by the Compensation Committee.
(D)This column includes the E-LTIP RSU awards granted to our NEOs in 2022. 2022 E-LTIP RSUs will vest 33% on the first anniversary of the grant date, 33% on the second anniversary of the grant date, and 34% on the third anniversary of the grant date. The number of RSUs granted was determined by dividing the approved award value by the closing market price on the grant date (or the last trading day before the grant date if the stock market was closed on the grant date) and rounding up to the nearest whole share.
(E)The grant date fair value reported in this column with respect to PSU awards reported in column (C) is based on the number of shares granted at target and fair value Monte Carlo valuation ($26.24) as described in footnote (C). The value reported in this column with respect to RSU awards reported in column (D) is based on the number of shares granted at target and the grant date closing market price of $23.62 as described in footnote (D).
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(1) Refer to the “Non-GAAP Financial Measures” section for a reconciliation of the non-GAAP financial measure or an explanation of the performance measure.
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OUTSTANDING EQUITY AWARDS AT 2022 FISCAL YEAR-END
The following table displays unvested equity awards held by each of the NEOs on December 31, 2022.
| Option Awards | Stock Awards | |||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options Exercisable (#) (A) | Number of Securities Underlying Unexercised Options Unexercisable (#) (B) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (C) | Market Value of Shares or Units of Stock That Have Not Vested ($) (C) | Equity Incentive Plan | |||||||||||||||||||