WEX INC.
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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant þ
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)) | |
| þ | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material under §240.14a-12 |
WRIGHT EXPRESS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
| þ | No fee required. | |
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 |
| (1) | Title of each class of securities to which transaction applies: | ||
| (2) | Aggregate number of securities to which transaction applies: | ||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | ||
| (4) | Proposed maximum aggregate value of transaction: | ||
| (5) | Total fee paid: | ||
| o | Fee paid previously with preliminary materials. | |
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
| (1) | Amount Previously Paid: | ||
| (2) | Form, Schedule or Registration Statement No.: | ||
| (3) | Filing Party: | ||
| (4) | Date Filed: | ||
Table of Contents
April 21,
2011
Dear Fellow Stockholders,
You are invited to attend our 2011 annual meeting of
stockholders. The meeting will be held on Friday, May 20,
2011, at 8:00 a.m., Eastern Time, at the Wright Express
Corporation Long Creek Campus located at 225 Gorham Road, South
Portland, Maine.
At the meeting we will:
| • | elect three directors for three-year terms, | |
| • | conduct an advisory vote on executive compensation, | |
| • | conduct an advisory vote on the frequency of future executive compensation advisory votes, | |
| • | vote to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2011, and | |
| • | consider any other business properly coming before the meeting. |
Whether or not you attend the annual meeting, it is important
that your shares be represented and voted at the meeting. As a
stockholder of record, you can vote your shares by signing and
dating the enclosed proxy card and returning it by mail in the
enclosed envelope. If you decide to attend the annual meeting
and vote in person, you may then revoke your proxy. If you hold
your stock in “street name,” you should follow the
instructions provided by your bank, broker or other nominee.
On behalf of the Board of Directors and the employees of Wright
Express Corporation, we would like to express our appreciation
for your continued interest in the Company.
Sincerely,
Michael E. Dubyak
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Table of Contents
NOTICE OF 2011 ANNUAL MEETING
OF STOCKHOLDERS
April 21, 2011
The 2011 annual meeting of stockholders of Wright Express
Corporation will be held on Friday, May 20, 2011, at
8:00 a.m., Eastern Time, at the Wright Express Corporation
Long Creek Campus located at 225 Gorham Road, South Portland,
Maine, 04106. At the meeting we will:
| • | elect three directors for three-year terms, | |
| • | conduct an advisory vote on executive compensation, | |
| • | conduct an advisory vote on the frequency of future executive compensation advisory votes, | |
| • | vote to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2011, and | |
| • | consider any other business properly coming before the meeting. |
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to be Held on May 20,
2011:
The proxy statement and annual report to stockholders are
available at
http://ir.wrightexpress.com.
Stockholders who owned shares of our common stock at the close
of business on March 22, 2011 are entitled to attend and
vote at the meeting and any adjournment or postponement of the
meeting. A complete list of registered stockholders will be
available at least 10 days prior to the meeting at our
offices located at 225 Gorham Road, South Portland, Maine, 04106.
By Order of the Board of Directors,
Hilary A. Rapkin
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND
CORPORATE SECRETARY
TABLE OF
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Table of Contents
This proxy statement describes the proposals on which you may
vote as a stockholder of Wright Express Corporation. It contains
important information to consider when voting.
The Company’s board of directors, or the Board, is sending
these proxy materials to you in connection with the Board’s
solicitation of proxies. Our annual report to stockholders and
our proxy materials were first mailed on or about April 21,
2011.
Your vote is important. Please complete, execute and promptly
mail your proxy card as soon as possible even if you plan to
attend the annual meeting.
VOTING
YOUR SHARES
Stockholders who owned the Company’s common stock at the
close of business on March 22, 2011, the record date, may
attend and vote at the annual meeting. Each share is entitled to
one vote. There were 38,545,551 shares of common stock
outstanding on the record date.
How do I
vote?
| • | You may vote by mail if you hold your shares in your own name. |
You do this by completing and signing your proxy card and
mailing it in the enclosed prepaid and addressed envelope.
| • | You may vote in person at the meeting. |
We will pass out ballots to any record holder who wants to vote
at the meeting. However, if you hold your shares in “street
name,” you must request a proxy from your stockbroker in
order to vote at the meeting. Holding shares in street name
means you hold them through a brokerage firm, bank or other
nominee, and as a result, the shares are not held in your
individual name but through someone else.
If you hold your shares in street name, you should follow the
instructions provided by your bank, broker or other nominee,
including any instructions provided regarding your ability to
vote by telephone or through the Internet.
How do I
vote my shares held in the Wright Express Corporation Employee
Savings Plan?
If you participate in our Wright Express Corporation Employee
Savings Plan, commonly referred to as the “401(k)
Plan,” shares of our common stock equivalent to the value
of the common stock interest credited to your account under the
plan will be voted automatically by the trustee in accordance
with your instruction, if it is received by May 17, 2011.
Otherwise, the share equivalents credited to your account will
be voted by the trustee in the same proportion that it votes
share equivalents for which it receives timely instructions from
all plan participants.
Please refer to the “Information about Voting
Procedures” section.
1
Table of Contents
PROPOSALS TO
VOTE ON
| ITEM 1. | ELECTION OF DIRECTORS |
Our nominees for director this year are:
| • | Rowland T. Moriarty | |
| • | Michael E. Dubyak | |
| • | Ronald T. Maheu |
Each nominee is presently a director of the Company and has
consented to serve a new three-year term.
We recommend a vote FOR these nominees.
| ITEM 2. | ADVISORY VOTE ON EXECUTIVE COMPENSATION |
We are providing you with the opportunity to vote to approve, on
an advisory, non-binding basis, the compensation of the
executive officers named in the Summary Compensation Table under
“Executive Compensation,” whom we refer to as our
“named executive officers” or NEOs, as disclosed in
this proxy statement in accordance with the SEC’s rules.
This proposal, which is commonly referred to as
“say-on-pay,”
is required by the recently enacted Dodd-Frank Wall Street
Reform and Consumer Protection Act of 2010, which added
Section 14A to the Securities Exchange Act of 1934, or
Exchange Act. Section 14A of the Exchange Act also requires
that stockholders have the opportunity to cast an advisory vote
with respect to whether future executive compensation advisory
votes will be held every one, two or three years, which is the
subject of Item 3.
Our executive compensation programs are designed to attract,
motivate, and retain our executive officers, who are critical to
our success. The “Executive Compensation” section of
this proxy statement beginning on page 21, including
“Compensation Discussion and Analysis,” describes in
detail our executive compensation programs and the decisions
made by the Compensation Committee with respect to the fiscal
year ended December 31, 2010.
Wright Express’ philosophy regarding executive compensation
is straightforward: reward our executives for their
contributions to the Company’s annual and long-term
performance by tying a significant portion of their total
compensation to key drivers of increased stockholder value.
Reflecting our
pay-for-performance
philosophy, a significant portion of executive compensation is
performance-based, subject to increase when results exceed
corporate targets, reduction when results fall below target and
elimination if results do not achieve threshold levels of
performance.
The Board believes this link between compensation and the
achievement of our annual and long-term business goals has
helped drive our performance over time, including our strong
performance in 2010. At the same time, we believe our program
does not encourage excessive risk-taking by management. As
discussed in Compensation Discussion and Analysis, our executive
compensation program features a number of key factors designed
to align the interests of our executives with those of our
stockholders.
Our Board is asking stockholders to approve a non-binding
advisory vote on the following resolution:
RESOLVED, that the compensation paid to Wright Express’
named executive officers, as disclosed in accordance with the
Securities and Exchange Commission’s compensation
disclosure rules, including the Compensation Discussion and
Analysis, the compensation tables and any related material
disclosed in this proxy statement, is hereby approved.
As an advisory vote, this proposal is not binding. Neither the
outcome of this advisory vote nor of the advisory vote included
in Item 3 overrules any decision by the Company or the
Board (or any committee of the Board), creates or implies any
change to the fiduciary duties of the Company or the Board (or
any committee of the Board), or creates or implies any
additional fiduciary duties for the Company or the Board (or any
committee of the Board). However, our Compensation Committee and
Board value the opinions expressed by our stockholders in their
vote on this proposal and will consider the outcome of the vote
when making future compensation decisions for named executive
officers.
We recommend a vote FOR approval of the compensation
of our named executive officers.
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Table of Contents
| ITEM 3. | FUTURE EXECUTIVE COMPENSATION ADVISORY VOTES |
In Item 2, we are providing you with the opportunity to
vote to approve, on an advisory, non-binding basis, the
compensation of our named executive officers. In this
Item 3, we are asking our stockholders to cast a
non-binding advisory vote regarding the frequency of future
executive compensation advisory votes. You may vote for a
frequency of every one, two, or three years, or you may abstain
on the proposal.
The Board will take into consideration the outcome of this vote
in making a determination about the frequency of future
executive compensation advisory votes. However, because this
vote is advisory and non-binding, the Board may decide that it
is in the best interests of our stockholders and the Company to
hold the advisory vote to approve executive compensation more or
less frequently.
After careful consideration, the Board believes that, at this
time, an executive compensation advisory vote should be held
every year, and therefore our Board recommends that you vote for
a frequency of every ONE YEAR for future executive compensation
advisory votes.
The Board believes that an annual executive compensation
advisory vote will facilitate more direct stockholder input
about executive compensation. An annual executive compensation
advisory vote is consistent with our policy of reviewing our
compensation program annually, as well as being accountable to
our stockholders on corporate governance and executive
compensation matters. We believe an annual vote would be the
best governance practice for our Company at this time and in the
best interests of the Company and its stockholders.
We recommend a vote for a frequency of every “ONE
YEAR” for future executive compensation advisory
votes.
| ITEM 4. | RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2011 |
The Audit Committee of the Board has selected
Deloitte & Touche LLP, or D&T, as the independent
registered public accounting firm for the Company’s fiscal
year 2011. Stockholder ratification of the appointment is not
required under the laws of the State of Delaware, but the Audit
Committee has decided to request that the stockholders ratify
the appointment. A representative of D&T will be present at
the meeting to answer appropriate questions from stockholders
and will have the opportunity to make a statement on behalf of
the firm, if he or she so desires.
If this proposal is not approved by our stockholders at the 2011
annual meeting, the Audit Committee will reconsider its
selection of D&T. Even if the selection is ratified, the
Audit Committee may, in its discretion, select a different
independent registered public accounting firm at any point
during the year if it determines that making a change would be
in the best interests of the Company and our stockholders.
We recommend a vote FOR the ratification of
Deloitte & Touche LLP as our independent registered
public accounting firm.
OTHER
BUSINESS
We know of no other business to be considered at the meeting,
and the deadline for stockholders to submit proposals or
nominations has passed. However, if:
| • | other matters are properly presented at the meeting, or at any adjournment or postponement of the meeting, and | |
| • | you have properly submitted your proxy, |
then Michael E. Dubyak or Melissa D. Smith will vote your shares
on those matters according to his or her best judgment.
3
Table of Contents
THE BOARD
OF DIRECTORS
BOARD
LEADERSHIP
Our Board is led by our Chairman, Mr. Dubyak, who is also
our President and Chief Executive Officer. The Chairman leads
all meetings of the Board at which he is present, sets meeting
schedules and agendas and manages information flow to the Board
to ensure appropriate understanding and discussion regarding
matters of interest or concern to the Board. The Chairman also
has such additional powers and performs such additional duties
consistent with organizing and leading the actions of the Board
as may be prescribed.
In addition to our Chairman, the Board has appointed
Dr. Moriarty as our Vice Chairman and Lead Director.
Dr. Moriarty chairs meetings of the independent directors
in executive session and chairs any meetings at which the
Chairman is not present. In addition, he facilitates
communications between other members of the Board and the
Chairman. The Lead Director is authorized to call meetings of
the independent directors and is available to consult with any
of the Company’s senior executives regarding any concerns
an executive may have. Dr. Moriarty aids in the preparation
of meeting agendas and is authorized to meet with stockholders
as a representative of the independent directors.
Our Board believes that having one person serve as chairman and
chief executive officer allows that individual to use his
substantial knowledge gained from both roles to lead the Company
most effectively, and to provide strong and consistent
leadership, without risking overlap or conflict of roles. Our
chief executive officer is also more familiar with our business
and strategy than an independent, non-employee Chairman would be
and is thus better positioned to focus the Board’s agenda
on the key issues facing the Company. Our Board further believes
that with the appointment of Dr. Moriarty as our Vice
Chairman and Lead Director, the Board has in place a leadership
structure that provides an independent view of governance and
business-related matters for both stockholders and other parties.
THE
BOARD’S ROLE IN RISK OVERSIGHT
Our Board oversees our risk management processes directly, and
through a risk management program overseen by the Company’s
Senior Vice President, General Counsel and Corporate Secretary,
who reports directly to the Chief Executive Officer. Risks are
identified and prioritized by management, and each prioritized
risk is then referred by the full Board to a Board committee for
oversight. In general, our Board oversees risk management
activities relating to business strategy, acquisitions, capital
allocation, organizational structure and certain operational
risks; our Audit Committee oversees risk management activities
related to financial controls and legal and compliance risks;
our Compensation Committee oversees risk management activities
relating to the Company’s compensation policies and
practices and management succession planning; and our Corporate
Governance Committee oversees risk management activities
relating to Board composition. In addition, the Board receives
periodic assessments, as necessary, from each committee with
regard to its respective oversight activities, and annually
reviews the Company’s risk management program as a whole.
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Table of Contents
MEMBERS
OF THE BOARD OF DIRECTORS
|
Rowland T. Moriarty Age 64 Class III Director Since 2005 Term Expires 2011 |
Dr. Moriarty served as the non-executive Chairman of the Board of Directors of Wright Express Corporation from 2005 until May 2008 and has served as the Vice Chairman and Lead Director since May 2008. He has been Chairman and Chief Executive Officer of Cubex Corporation, a privately-held consulting company, since 1992. From 1981 to 1992, Dr. Moriarty was a professor of business administration at Harvard Business School. Dr. Moriarty has served on the Boards of Directors of Staples, Inc., an office products company, CRA International, Inc., an economic, financial and management consulting services firm and Virtusa Corporation, a global information technology services company, since 1986, 2002 and 2006, respectively. He also served as a director of Trammell Crow Company from December 1997 until December 2006. | |
| The Board concluded that Mr. Moriarty is well suited to serve as a director of the Company because of his experience across a broad spectrum of industries gained as the chairman of CRA International, Inc., as well as his experience as a member of the board of directors of other publicly-traded companies. | ||
|
Michael E. Dubyak Age 60 Class III Director Since 2005 Term Expires 2011 |
Mr. Dubyak has served as our President and Chief Executive Officer since August 1998 and was elected as Chairman of the Board of Directors in May 2008. From November 1997 to August 1998, Mr. Dubyak served as our Executive Vice President of U.S. Sales and Marketing. From January 1994 to November 1997, Mr. Dubyak served us in various senior positions in marketing, marketing services, sales, business development and customer service. From January 1986 to January 1994, he served as our Vice President of Marketing. Mr. Dubyak has more than 30 years of experience in the payment processing, information management services and vehicle fleet and fuel industries. | |
| The Board concluded that Mr. Dubyak is well suited to serve as a director of the Company because of his long experience with the Company and knowledge of the fleet card and payment processing industries. | ||
|
Ronald T. Maheu Age 68 Class III Director Since 2005 Term Expires 2011 |
Mr. Maheu retired in July 2002 from PricewaterhouseCoopers, where he was a senior partner from 1998 to July 2002. Since 2002, Mr. Maheu has been a financial and business consultant. Mr. Maheu was a founding member of Coopers & Lybrand’s board of partners. Following the merger of Price Waterhouse and Coopers & Lybrand in 1998, Mr. Maheu served on both the U.S. and global boards of partners and principals of PricewaterhouseCoopers until June 2001. Since January 2003, Mr. Maheu has served on the Board of Directors and serves on the Audit, Executive and Governance Committees of CRA International, Inc., an international consulting firm headquartered in Boston, Massachusetts. Mr. Maheu also serves on the Board of Directors and the Audit Committee of Virtusa Corporation, a global information technology services company. Mr. Maheu is a certified public accountant. | |
| The Board concluded that Mr. Maheu is well suited to serve as a director of the Company because of his experience with public accounting and subsequent experience as a member of the board of directors of several publicly-traded companies. |
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|
Regina O. Sommer Age 53 Class I Director Since 2005 Term Expires 2012 |
From January 2002 until March 2005, Ms. Sommer served as Vice President and Chief Financial Officer of Netegrity, Inc., a leading provider of security software solutions, which was acquired by Computer Associates International, Inc. in November 2004. Since March 2005, Ms. Sommer has been a financial and business consultant. From October 1999 to April 2001, Ms. Sommer was Vice President and Chief Financial Officer of Revenio, Inc., a privately-held customer relationship management software company. Ms. Sommer was Senior Vice President and Chief Financial Officer of Open Market, Inc., an Internet commerce and information publishing software firm, from 1997 to 1999 and Vice President and Chief Financial Officer from 1995 to 1997. From 1989 to 1994, Ms. Sommer was Vice President at The Olsten Corporation and Lifetime Corporation, providers of staffing and healthcare services. From 1980 to 1989, Ms. Sommer served in various positions from staff accountant to senior manager at PricewaterhouseCoopers. Ms. Sommer has served on the Board of SoundBite Communications, Inc. since 2006, where she is the chair of the Audit Committee and a member of the Compensation Committee. SoundBite is a leading provider of automated voice messaging solutions that are delivered through a software as a service model. Ms. Sommer has been a member of the Board of ING Direct since 2008, the largest direct bank in the United States, where she serves as a member of the Audit, Risk Oversight & Investment and the Governance & Conduct Review Committees. In addition, she has sat on the board of Insulet Corporation since 2008, a publicly held provider of an insulin infusion system for people with insulin-dependent diabetes. She also serves on Insulet’s Audit Committee and Nominating Committee. Ms. Sommer was formerly licensed in Massachusetts as a certified public accountant. | |
| The Board concluded that Ms. Sommer is well suited to serve as a director of the Company because of her past experience as the chief financial officer of two publicly-traded companies. In addition, she brings significant financial expertise across a broad range of industries relevant to the Company’s business, including banking, software development and auditing. | ||
|
Jack VanWoerkom Age 56 Class I Director Since 2005 Term Expires 2012 |
In June 2007, Mr. VanWoerkom joined The Home Depot, Inc., a home improvement retailer, as Executive Vice President, General Counsel and Corporate Secretary. Previously, Mr. VanWoerkom served as Executive Vice President, General Counsel and Secretary of Staples, Inc., an office supply retailer, from March 2003 to June 2007. Before that, Mr. VanWoerkom was Senior Vice President, General Counsel and Secretary of Staples from March 1999 to March 2003. | |
| The Board concluded that Mr. VanWoerkom is well suited to serve as a director of the Company because of his experience with international operations, corporate governance and corporate transactions. |
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|
George L. McTavish Age 68 Class I Director Since 2007 Term Expires 2012 |
Since October 2004, Mr. McTavish has served as the Chairman and CEO of Source Medical Corporation, an outpatient information solutions and services provider for ambulatory surgery centers and rehabilitation clinics. Before joining Source Medical, Mr. McTavish served as Chairman and CEO of BenView Capital, a private investment company from December 2001 to October 2004. Prior to BenView, Mr. McTavish was a full-time consultant for Welsh Carson Anderson & Stowe, an investment buy-out firm in New York City. From 1987 to 1997, Mr. McTavish was Chairman and CEO of Comdata, a provider of information services, financial services and software to the transportation industry. Following the acquisition of Comdata Corporation by Ceridian Corporation in 1995, he was also named as an EVP of Ceridian. He had joined Comdata after serving as chairman and CEO of Hogan Systems, a provider of enterprise software systems to the banking and financial services industries. Mr. McTavish is also a member of the boards of directors of several private businesses. | |
| The Board concluded that Mr. McTavish is well suited to serve as a director of the Company because of his experience as the Chairman and CEO of an information services company and experience as the CEO of several large organizations. | ||
|
Shikhar Ghosh Age 52 Class II Director Since 2005 Term Expires 2013 |
Since August 2008, Mr. Ghosh has been a Senior Lecturer in the Entrepreneurial Management Unit of Harvard Business School. From June 2006 until December 2007, Mr. Ghosh was the CEO of Risk Syndication for the Kessler Group, where he enabled bank clients and their endorsing partners to market credit cards. Mr. Ghosh is also currently the Chairman of three venture-backed companies, Rave Wireless, Inc., Skyhook Wireless and BzzAgent. Rave Wireless builds mobile applications for universities, Skyhook is developing a national positioning system based on WiFi technology and BzzAgent develops word-of-mouth marketing campaigns using the Internet. From June 1999 to June 2004, Mr. Ghosh was Chairman and Chief Executive Officer of Verilytics Technologies, LLC, an analytical software company focused on the financial services industry. In 1993, Mr. Ghosh founded Open Market, Inc., an Internet commerce and information publishing software firm. From 1988 to 1993, Mr. Ghosh was the chief executive officer of Appex Corp., a technology company that was sold to Electronic Data Systems Corporation in 1990. From 1980 until 1988, Mr. Ghosh served in various positions with The Boston Consulting Group, and was elected as a worldwide partner and a director of the firm in 1988. | |
| The Board concluded that Mr. Ghosh is well suited to serve as a director of the Company because of his experience with various technology-related ventures and record of founding companies that have operated in emerging markets. |
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|
Kirk P. Pond Age 65 Class II Director Since 2005 Term Expires 2013 |
From June 1996 until May 2005, Mr. Pond was the President and Chief Executive Officer of Fairchild Semiconductor International, Inc., one of the largest independent, international semiconductor companies. He was the Chairman of the Board of Directors of that company from March 1997 until June 2006 and has since retired from its board in May 2007. Prior to Fairchild Semiconductor’s separation from National Semiconductor, Mr. Pond had held several executive positions with National Semiconductor, including Executive Vice President and Chief Operating Officer and was in the office of the President. Mr. Pond had also held executive management positions with Texas Instruments and Timex Corporation. Mr. Pond is also a former director of the Federal Reserve Bank of Boston. Mr. Pond has been a director of Brooks Automation, Inc., a leading worldwide provider of automation solutions and integrated subsystems to the global semiconductor and related industries, since 2007. Mr. Pond has also been a director of Sensata Technologies Holding N.V., a sensor and electrical protection device manufacturer, since March 2011. | |
| The Board concluded that Mr. Pond is well suited to serve as a director of the Company because of his experience directing a large, publicly traded company with international operations and experience with the technology industry. |
NUMBER OF
DIRECTORS AND TERMS
Our certificate of incorporation provides that our Board shall
consist of such number of directors as is fixed by our By-Laws.
Our By-Laws provide that our Board shall consist of such number
of directors as from time to time is fixed exclusively by
resolution of the Board. Currently, the Board has fixed the size
of the Board at eight directors, who serve staggered terms as
follows:
| • | each director who is elected at an annual meeting of stockholders serves a three-year term and until such director’s successor is duly elected and qualified, subject to such director’s earlier death, resignation or removal, | |
| • | the directors are divided into three classes, | |
| • | the classes are as nearly equal in number as possible, and | |
| • | the term of each class begins on a staggered schedule. |
BOARD AND
COMMITTEE MEETINGS
The Board held eight meetings in 2010. Each of our directors
attended at least 75 percent of the aggregate number of
meetings of the board and meetings of the board committees on
which he or she served in 2010. Seven of our directors attended
all meetings of the Board and one attended seven of the eight.
Our independent directors meet in executive session in at least
one regularly scheduled in-person Board meeting. As provided in
our Corporate Governance Guidelines, we expect directors to
attend the annual meeting of stockholders. All of our directors
attended the 2010 annual meeting of stockholders.
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Our Board has created the following committees:
|
NAME OF COMMITTEE |
NUMBER OF |
|||||
|
AND MEMBERS
|
COMMITTEES OF THE BOARD OF DIRECTORS | MEETINGS IN 2010 | ||||
|
Audit
|
||||||
|
Ronald T. Maheu (Chair) Regina O. Sommer George L. McTavish |
The Audit Committee must be comprised of at least three directors appointed by a majority of the Board. The Audit Committee oversees our accounting and financial reporting processes, as well as the audits of our financial statements and internal control over financial reporting. All members of the Audit Committee are independent under the rules of the New York Stock Exchange, or the NYSE, and the applicable rules of the Securities and Exchange Commission, or the SEC. In addition, each member of the Audit Committee is required to have the ability to read and understand fundamental financial statements. Unless determined otherwise by the Board, the Audit Committee shall have at least one member who qualifies as an “audit committee financial expert” as defined by the rules of the SEC. Our Board has determined that Mr. Maheu qualifies as an “audit committee financial expert.” | 9 | ||||
|
Compensation
|
||||||
|
Kirk P. Pond (Chair) Shikhar Ghosh Regina O. Sommer |
The Compensation Committee must be comprised of at least two directors appointed by a majority of the Board. The Compensation Committee oversees the administration of our equity incentive plans and certain of our benefit plans, reviews and administers all compensation arrangements for executive officers and our Board and establishes and reviews general policies relating to the compensation and benefits of our officers and employees. All members of the Compensation Committee are independent under the rules of the NYSE. | 6 | ||||
|
Corporate Governance
|
||||||
|
Jack VanWoerkom (Chair) Shikhar Ghosh Rowland T. Moriarty Kirk P. Pond |
The Corporate Governance Committee is comprised of that number of directors as our Board shall determine. Currently, there are four directors serving on the committee. The Corporate Governance Committee’s responsibilities include identifying and recommending to the Board appropriate director nominee candidates and providing oversight with respect to corporate governance matters. All members of the Corporate Governance Committee are independent under the rules of the NYSE. | 4 | ||||
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|
NAME OF COMMITTEE |
NUMBER OF |
|||||
|
AND MEMBERS
|
COMMITTEES OF THE BOARD OF DIRECTORS | MEETINGS IN 2010 | ||||
|
Finance Committee
|
||||||
|
Rowland T. Moriarty (Chair) George L. McTavish Michael E. Dubyak |
The Finance Committee is comprised of that number of directors as our Board shall determine. The Finance Committee was constituted on December 3, 2010. Prior to December 3, 2010, this committee was known as the M&A Committee, which met eight times in 2010. Currently, there are three directors serving on the committee. The Finance Committee’s responsibilities include advising the Board and the Company’s management regarding potential corporate transactions, including strategic investments, mergers, acquisitions and divestitures. The Finance Committee also oversees the Company’s debt or equity financings, credit arrangements, investments, and capital structure and capital policies. | 8 | ||||
COMPENSATION
COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our Compensation Committee (the members of which
are listed in the table in the “Board and Committee
Meetings” section) is or was one of our or our
subsidiaries’ former officers or employees. During 2010,
there were no Compensation Committee interlocks as required to
be disclosed under SEC rules.
DIRECTOR
COMPENSATION
In 2010, the compensation committee requested that
DolmatConnell & Partners, Inc., or DCP, review our
director compensation plan and provide the committee with
recommendations on any changes to meet the following objectives
of the compensation plan:
• Attract and retain directors
| • | Compensate our directors for the investment of time they make to support the Company | |
| • | Align director compensation with stockholder interests |
The committee reviewed DC&P’s analysis and agreed that
no significant changes to the Wright Express Corporation
Non-Employee Director Compensation Plan were necessary to meet
the above objectives.
The plan splits the director retainer between cash and equity as
shown below to meet our objectives of attracting and retaining
directors while aligning director compensation with stockholder
interests.
|
Compensation(1)
|
||||
|
Annual lead director cash retainer
(2)
|
$ | 52,700 | ||
|
Annual lead director equity retainer
(2)(3)
|
$ | 102,300 | ||
|
Annual director cash retainer
|
$ | 35,000 | ||
|
Annual director equity retainer
(3)
|
$ | 70,000 | ||
|
Board and committee attendance fee
(4)
|
$ | 2,000 | ||
|
Finance Committee cash retainer
(5)
|
$ | 16,000 | ||
|
Audit Committee chair cash retainer
|
$ | 25,000 | ||
|
Compensation Committee chair cash retainer
|
$ | 12,000 | ||
|
Corporate Governance Committee chair cash retainer
|
$ | 12,000 | ||
|
Finance Committee chair cash retainer
(5)
|
$ | 15,000 | ||
|
New director equity grant
|
$ | 50,000 | ||
| (1) | Members of our Board who are also our employees do not receive compensation for serving as a director. |
10
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| (2) | The lead director receives the cash retainer and equity grant associated with being the lead director and does not receive payment of the annual director cash retainer and annual director equity retainer. | |
| (3) | Equity retainers are granted at the time of the Annual Stockholders’ Meeting. The number of restricted stock units granted is determined by dividing the amount shown above by the then current stock price. Such restricted stock units, or RSUs, vest ratably over a three year period. | |
| (4) | Members of the M&A committee, the predecessor committee to the Finance Committee, received no committee attendance fees. | |
| (5) | On December 2, 2010, the Compensation Committee recommended, and the Board adopted, new fees for members of the Finance Committee, the successor Committee to the M&A Committee effective January 1, 2011. Under the new fee structure, members of the Finance Committee receive a fee of $2,000 per meeting attended and the Chairman receives a cash retainer of $15,000. |
Non-Employee
Directors Deferred Compensation Plan
Director
Compensation
|
Fees Earned or |
Stock |
|||||||||||
|
Paid in
Cash(1) |
Awards
(2) |
Total |
||||||||||
|
Name
|
($) | ($) | ($) | |||||||||
|
Shikhar Ghosh
|
69,000 | 69,996 | 138,996 | |||||||||
|
Ronald T. Maheu
|
94,000 | 69,996 | 163,996 | |||||||||
|
George L. McTavish
|
85,000 | 69,996 | 154,996 | |||||||||
|
Rowland T. Moriarty
|
107,700 | 102,271 | 209,971 | |||||||||
|
Kirk P. Pond
|
83,000 | 69,996 | 152,996 | |||||||||
|
Regina O. Sommer
|
81,000 | 69,996 | 150,996 | |||||||||
|
Jack VanWoerkom
|
71,000 | 69,996 | 140,996 | |||||||||
| (1) | This column reflects 2010 retainer fees paid in deferred stock units to Mr. Ghosh and Mr. McTavish. All amounts result in deferred stock units equal in value to the closing price of Wright Express common stock on each of the pricing dates, which was as follows: $34.95 on April 29, 2010; $33.27 on July 29, 2010; $44.87 on November 8, 2010; and, $53.10 on February 14, 2011. The February 14, 2011 award was for fees earned in the fourth quarter of 2010. The aggregate number of deferred stock units outstanding as of December 31, 2010 for Mr. Gosh was 16,310 and for Mr. McTavish was 11,310. To determine the number of deferred stock units a director receives, the total amount of cash earned is divided by the closing price of Wright Express Stock on the date of the award. | |
| (2) | This column is the fair value of stock awards granted on May 15, 2010. The fair values of these awards were determined in accordance with accounting standards. For the Board of Directors, the Compensation Committee decided to use the closing price of our common stock as reported by the New York Stock Exchange on the day that the award is granted as the fair market value of the common stock. The following table indicates the full grant date fair value of stock awards made during 2010 to certain directors. The aggregate number of RSUs outstanding for each director as of December 31, 2010 is as follows: Mr. Ghosh — 4,985; Mr. Maheu — 4,985; Mr. McTavish — 4,985; Dr. Moriarty — 7,397; Mr. Pond — 4,985; Ms. Sommer — 4,985; and Mr. VanWoerkom — 4,985. |
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The following table indicates the full grant date fair value of
stock awards made during 2010 to certain directors.
Grant
Date Fair Values
|
April 29, 2010 |
July 29, 2010 |
November 8, 2010 |
February 14, 2011 |
May 15, 2010 |
||||||||||||||||
|
DSUs |
DSUs |
DSUs |
DSUs |
RSUs |
||||||||||||||||
|
Name
|
($) | ($) | ($) | ($) | ($) | |||||||||||||||
|
Shikhar Ghosh
|
20,725 | 14,705 | 18,711 | 14,656 | 69,996 | |||||||||||||||
|
Ronald Maheu
|
— | — | — | — | 69,996 | |||||||||||||||
|
George McTavish
|
24,710 | 18,698 | 22,704 | 18,638 | 69,996 | |||||||||||||||
|
Rowland Moriarty
|
— | — | — | — | 102,271 | |||||||||||||||
|
Kirk Pond
|
— | — | — | — | 69,996 | |||||||||||||||
|
Regina Sommer
|
— | — | — | — | 69,996 | |||||||||||||||
|
Jack VanWoerkom
|
— | — | — | — | 69,996 | |||||||||||||||
NON-EMPLOYEE
DIRECTOR OWNERSHIP GUIDELINES
On September 7, 2006, the Compensation Committee
established and approved equity ownership guidelines for all
non-employee directors. “Equity” for the purpose of
these guidelines is defined to include shares of the
Company’s common stock, vested restricted stock units and
deferred stock units. Under the guidelines of the equity
ownership program, all directors are expected to own equity
equal in value to at least three times each director’s
annual director cash retainer or non-executive chairman cash
retainer. The Compensation Committee assesses progress against
the guidelines each year on July 31. Directors have three
years from July 31, 2007, or, if later, three years
following their appointment to the Board, to achieve this level
of ownership. All of our non-executive directors exceed the
holdings in the guidelines.
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Table of Contents
PRINCIPAL
STOCKHOLDERS
This table shows common stock that is beneficially owned by our
directors, our chief executive officer, our chief financial
officer and our next three most highly compensated executive
officers as of December 31, 2010, whom we refer to as our
“named executive officers,” and all persons known to
us to own 5 percent or more of the outstanding Company
common stock, as of March 9, 2011.
AMOUNT
AND NATURE OF SHARES BENEFICIALLY OWNED
|
Total |
Percent of |
|||||||||||||||
|
Common Stock |
Right To |
Securities |
Outstanding |
|||||||||||||
|
Name and
Address(1)
|
Owned(2) | Acquire(3) | Owned(4) | Shares | ||||||||||||
|
Principal Stockholders:
|
||||||||||||||||
|
Blackrock
Inc.(5)
|
2,934,263 | — | 2,934,263 | 7.6 | % | |||||||||||
|
40 East 52nd Street
|
||||||||||||||||
|
New York NY 10022
|
||||||||||||||||
|
TimesSquare Capital Management,
LLC(6)
|
2,705,161 | — | 2,705,161 | 7.0 | % | |||||||||||
|
1177 Avenue of the Americas — 39th Floor
|
||||||||||||||||
|
New York, NY 10036
|
||||||||||||||||
|
Neuberger Berman
Inc.(7)
|
2,182,142 | — | 2,182,142 | 5.7 | % | |||||||||||
|
605 Third Avenue
|
||||||||||||||||
|
New York, NY 10158
|
||||||||||||||||
|
Wells Fargo and
Company(8)
|
2,598,327 | — | 2,598,327 | 6.7 | % | |||||||||||
|
420 Montgomery Street
|
||||||||||||||||
|
San Francisco, CA 94104
|
||||||||||||||||
|
Executive Officers and Directors:
|
||||||||||||||||
|
Michael E.
Dubyak(9)
|
88,631 | 83,363 | 171,994 | * | ||||||||||||
|
Melissa D.
Smith(10)
|
37,536 | 24,952 | 62,488 | * | ||||||||||||
|
David D. Maxsimic
|
25,222 | 7,632 | 32,854 | * | ||||||||||||
|
George Hogan
|
5,530 | 6,174 | 11,704 | * | ||||||||||||
|
Hilary Rapkin
|
13,716 | 2,290 | 16,006 | * | ||||||||||||
|
Shikhar Ghosh
|
— | — | — | * | ||||||||||||
|
Ronald T. Maheu
|
4,656 | — | 4,656 | * | ||||||||||||
|
George L. McTavish
|
4,000 | — | 4,000 | * | ||||||||||||
|
Rowland T.
Moriarty(11)
|
72,001 | — | 72,001 | * | ||||||||||||
|
Kirk P.
Pond(12)
|
18,856 | — | 18,856 | * | ||||||||||||
|
Regina O. Sommer
|
4,956 | — | 4,956 | * | ||||||||||||
|
Jack VanWoerkom
|
5,656 | — | 5,656 | * | ||||||||||||
|
Directors and Executive Officers as a Group
(19 Persons)(13)
|
319,628 | 151,656 | 471,284 | 1.2 | % | |||||||||||
| * | Less than 1% | |
| (1) | Unless otherwise noted, the business address for the individual is care of Wright Express Corporation, 97 Darling Avenue, South Portland, ME 04106. | |
| (2) | Unless otherwise noted, includes shares for which the named person has sole voting and investment power or has shared voting and investment power with his or her spouse. Excludes shares that may be acquired through stock option exercises or that are restricted stock unit holdings. This column does not include the following number of shares which will be acquired by our non-employee directors 200 days after their retirement from our Board: 20,966 shares by Mr. Ghosh; 9,023 shares by Mr. Maheu; 17,503 shares by Mr. McTavish; 11,999 shares by Dr. Moriarty; 6,498 shares by Mr. Pond; 6,564 shares by Ms. Sommer, and 6,606 shares by Mr. VanWoerkom. All shares identified in this column are held through brokerage accounts and are believed to be pledged as security. |
13
Table of Contents
| (3) | Includes shares that can be acquired through stock option exercises or the vesting of restricted stock units through May 9, 2011. Excludes shares that may not be acquired until on or after May 9, 2011. | |
| (4) | Includes common stock and shares that can be acquired through stock option exercises or the vesting of restricted stock units through May 9, 2011. | |
| (5) | This information was reported on a Schedule 13G filed by Blackrock Inc. (“Blackrock”) with the SEC on February 9, 2011. The Schedule 13G reported that Blackrock has sole voting power over 2,934,263 shares and has sole power to dispose 2,934,263 shares. The percentage reported is based on the assumption that Blackrock has beneficial ownership of 2,934,263 shares of common stock on March 9, 2011. | |
| (6) | This information was reported on a Schedule 13G/A filed by TimesSquare Capital Management, LLC (“TimesSquare”) with the SEC on February 9, 2011. The Schedule 13G/A reported that TimesSquare has sole voting power over 2,281,561 shares and sole power to dispose of 2,705,161 shares. The percentage reported is based on the assumption that TimesSquare holds 2,705,161 shares of common stock on March 9, 2011. | |
| (7) | This information was reported on a Schedule 13G/A filed by Neuberger Berman Inc. and Neuberger Berman, LLC with the SEC on February 14, 2011. The Schedule 13G/A indicates that each has sole voting power over 1,655,661 shares and shared dispositive power over 2,182,142 shares. The percentage reported is based on the assumption that each has beneficial ownership of 2,182,142 shares of common stock on March 9, 2011. | |
| (8) | This information was reported on a Schedule 13G filed by Wells Fargo and Company with the SEC on January 25, 2011. The Schedule 13G indicates that each has sole voting power over 1,850,146 shares, shared voting power over 6,572 shares, sole dispositive power over 2,558,045 shares and shared dispositive power over 43,260 shares. The percentage reported is based on the assumption that each has beneficial ownership of 2,598,327 shares of common stock on March 9, 2011. | |
| (9) | Includes 19,365 shares of common stock held in a grantor retained annuity trust for which Mr. Dubyak is the trustee and beneficiary. | |
| (10) | As of March 9, 2011, Ms. Smith served as our Chief Financial Officer and Executive Vice President, Finance and Operations. As of April 6, 2011, Ms. Smith was appointed as our President, North America and Steven Elder was appointed as our Senior Vice President and Chief Financial Officer. | |
| (11) | Includes 19,000 shares held indirectly through Rubex, LLC. Dr. Moriarty is the Chief Investment Officer and Managing Member of Rubex, LLC and disclaims beneficial ownership of those shares except to the extent of his interest in them. | |
| (12) | Includes 2,500 shares held indirectly through the Pond Family Foundation; 700 shares held indirectly through the Loretta A. Pond Trust; and 3,000 shares held by Mr. Pond’s spouse. Mr. Pond disclaims beneficial ownership of those shares except to the extent of his pecuniary interest in them. | |
| (13) | In addition to the officers and directors named in this table, eight other executive officers were members of this group as of March 9, 2011. The information contained in this table also reflects Mr. Elder’s holdings as of March 9, 2011 even though he was not appointed an executive officer until April 6, 2011. |
DIRECTOR
INDEPENDENCE
We have considered the independence of each member of the Board.
To assist us in our determination, we reviewed NYSE requirements
and our general guidelines for independence, which are part of
our corporate governance guidelines.
To be considered independent: (1) a director must be
independent as determined under Section 303A.02(b) of the
NYSE Listed Company Manual and (2) in the Board’s
judgment, the director must not have a material relationship
with the Company (either directly or as a partner, shareholder
or officer of an organization that has a relationship with the
Company).
The Board has established guidelines to assist it in determining
whether a director has a material relationship with the Company.
Under these guidelines, a director will not be considered to
have a material relationship with the Company if (1) he or
she is independent as determined under Section 303A.02(b)
of the NYSE Listed Company Manual and (2) he or she:
(i) serves as an executive officer of another company which
is indebted to the Company, or to which the Company is indebted,
provided that the total amount of either
14
Table of Contents
company’s indebtedness to the other is less than one
percent of the total consolidated assets of the company he or
she serves as an executive officer; (ii) serves as an
officer, director or trustee of a tax exempt organization,
provided that the Company’s discretionary contributions to
such organization are less than the greater of $1 million
or 2 percent of that organization’s consolidated gross
revenues; or (iii) serves as a director of another company
with which the Company engages in a business transaction or
transactions, provided that the director owns less than
5 percent of the equity interests of such other company and
recuses himself or herself from deliberations of the Board with
respect to such transactions. In addition, ownership of a
significant amount of the Company’s stock, by itself, does
not constitute a material relationship. For relationships not
covered by the guidelines set forth above, the determination of
whether a material relationship exists shall be made by the
other members of the Board of Directors who are independent as
defined above.
Based on our guidelines and NYSE corporate governance standards,
we have determined that the following directors are independent:
Shikhar Ghosh, Ronald T. Maheu, George L. McTavish, Rowland T.
Moriarty, Kirk P. Pond, Regina O. Sommer and Jack VanWoerkom.
DIRECTOR
NOMINATIONS
The Corporate Governance Committee is composed entirely of
independent directors as determined by the Board in accordance
with its independence guidelines and the listing standards of
the NYSE. Among the committee’s responsibilities is
recommending candidates for nomination to the Board. In that
capacity, the Corporate Governance Committee, with
Mr. Moriarty abstaining, recommended Mr. Moriarty for
election by our stockholders and, unanimously recommended
Messrs. Dubyak and Maheu for election.
Messrs. Moriarty, Dubyak and Maheu have served as members
of our Board since February 2005.
The Corporate Governance Committee will consider candidates
nominated by stockholders for next year’s meeting in the
same manner as candidates nominated by the Corporate Governance
Committee. If the Board determines to nominate a
stockholder-recommended candidate and recommends his or her
election, then that nominee’s name will be included in the
proxy card for the next annual meeting. Our stockholders also
have the right under our By-Laws to directly nominate director
candidates and should follow the procedures outlined in the
answer to the question section entitled “How do I
submit a stockholder proposal, including suggesting a candidate
for nomination as a director to the Corporate Governance
Committee, for next year’s annual meeting?”
To be timely, a stockholder’s notice to the Secretary must
be delivered to or mailed and received not earlier than
January 20, 2012 nor later than February 20, 2012.
However, in the event that the annual meeting is called for a
date that is not within 25 days before or after
May 20, 2012, notice by the stockholder must be received no
earlier than 120 days prior to the annual meeting and no
later than the later of the 90th day prior to the annual meeting
or the tenth day following the day on which notice of the date
of the annual meeting is mailed or publicly disclosed.
Stockholder nominations must be addressed to:
Wright Express Corporation
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
Director
Qualifications
The qualifications for directors are described in our Corporate
Governance Guidelines and the guidelines for evaluating director
nominees are in the Corporate Governance Committee’s
charter, each of which is available on our website. In addition,
the Corporate Governance Committee believes that a nominee for
the position of director must meet the following specific,
minimum qualifications:
| • | Nominees should have a reputation for integrity, honesty and adherence to high ethical standards. | |
| • | Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the Company. |
15
Table of Contents
| • | Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committees. | |
| • | Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders. | |
| • | Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent the interests of all the Company’s stockholders and to fulfill the responsibilities of a director. |
Our Corporate Governance Committee does not have a policy with
respect to diversity, but believes that our Board, taken as a
whole, should embody a diverse set of skills, experiences and
backgrounds. Our Board currently is comprised of eight
directors, one of whom is a woman and another of whom is an
Asian Indian. The Committee intends to be mindful of the
diversity, with respect to gender, race and national origin, of
our current Board members in connection with future nominations
of directors not presently serving on the Board. In addition,
our Corporate Governance Committee’s charter provides that
nominees shall not be discriminated against on the basis of
race, religion, national origin, sex, sexual orientation,
disability or any other basis prescribed by law.
Application
of Criteria to Existing Directors
The re-nomination of existing directors is not viewed as
automatic, but is based on continuing qualification under the
criteria listed above. In addition, the Corporate Governance
Committee considers the existing directors’ performance on
the Board and any committee, which shall include consideration
of the extent to which the directors undertook continuing
director education.
The backgrounds and qualifications of the directors considered
as a group are to provide a significant breadth of experience,
knowledge and abilities in order to assist the Board in
fulfilling its responsibilities. The rationale for the
Company’s determination that each director is well suited
to serve on the Board is specified with his or her respective
biographical entry under the “Members of the Board of
Directors” section of this proxy statement.
COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
The Board believes that the Chief Executive Officer and his
designees speak for the Company. Individual Board members may,
from time to time, meet or otherwise communicate with various
constituencies who are involved with the Company. It is,
however, expected that Board members would do so with the
knowledge of and, absent unusual circumstances or as
contemplated by the committee charters, only at the request of
the Company’s senior executives.
The Board will give appropriate attention to written
communications that are submitted by stockholders and other
interested parties, and will respond if and as appropriate.
Absent unusual circumstances or as contemplated by the committee
charters, the Vice Chairman and Lead Director shall, subject to
advice and assistance from the General Counsel, (1) be
primarily responsible for monitoring communications from
stockholders and other interested parties, and (2) provide
copies or summaries of such communications to the other
directors as he considers appropriate.
If you wish to communicate with the Board or the independent
members of the Board, you may send your communication in writing
to:
Independent Director Communication
Wright Express Corporation
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
Wright Express Corporation
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
You should include your name and address in the written
communication and indicate whether you are a stockholder.
16
Table of Contents
Governance
Disclosures on Our Website
Complete copies of our corporate governance guidelines,
committee charters and code of conduct are available on the
Corporate Governance section of our website, at
www.wrightexpress.com. In accordance with NYSE rules, we
may also make disclosure of the following on our website:
| • | the identity of the presiding director at meetings of independent directors; | |
| • | the method for interested parties to communicate directly with the presiding director or with the independent directors as a group; | |
| • | the identity of any member of our audit committee who also serves on the audit committees of more than three public companies and a determination by our Board that such simultaneous service will not impair the ability of such member to effectively serve on our audit committee; and | |
| • | contributions by us to a tax exempt organization in which any independent director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues. |
INDEPENDENT
REGISTERED PUBLIC ACCOUNTANT
AUDIT
COMMITTEE REPORT
The board of directors appointed us as an audit committee to
monitor the integrity of Wright Express’ consolidated
financial statements, its system of internal controls and the
independence and performance of its internal audit department
and independent registered public accounting firm. As an audit
committee, we select the independent registered public
accounting firm.
We are governed by a written charter adopted by the Board, which
is available through the Investor Relations page of the
Company’s website at www.wrightexpress.com.
Our committee consisted of three non-employee directors at the
time that the actions of the committee described in this report
were undertaken. Each member of the audit committee is
“independent” within the meaning of the New York Stock
Exchange rules and the Securities Exchange Act of 1934. Wright
Express’ management is responsible for the financial
reporting process, including the system of internal controls,
and for the preparation of consolidated financial statements in
accordance with generally accepted accounting principles. Wright
Express’ independent registered public accounting firm is
responsible for auditing those financial statements. Our
responsibility is to monitor and review these processes.
However, we are not professionally engaged in the practice of
accounting or auditing. We have relied, without independent
verification, on the information provided to us and on the
representations made by Wright Express’ management and
independent registered public accounting firm.
In fulfilling our oversight responsibilities, we discussed with
representatives of Deloitte & Touche LLP, the
independent registered public accounting firm for fiscal year
2010, the overall scope and plans for their audit of the
consolidated financial statements for fiscal year 2010. We met
with them, with and without Wright Express management present,
to discuss the results of their examinations, their evaluations
of the Company’s internal control over financial reporting
and the overall quality of Wright Express’ financial
reporting. We reviewed and discussed the audited consolidated
financial statements for fiscal year 2010 with management and
the independent registered public accounting firm.
We also reviewed the report of management contained in the
Annual Report on
Form 10-K
for the fiscal year ended December 31, 2010, filed with the
SEC, as well as the Report of Independent Registered Public
Accounting Firm included in the annual report on
Form 10-K
related to their audit of (i) the consolidated financial
statements and (ii) the effectiveness of internal control
over financial reporting. We continue to oversee the
Company’s efforts related to its internal control over
financial reporting and management’s preparations for the
evaluation in fiscal year 2011.
We discussed with the independent registered public accounting
firm the matters required to be discussed by Statement of
Auditing Standards (“SAS”) No. 61,
Communication with Audit Committees, as amended, as
adopted by the Public Company Accounting Oversight Board,
including a discussion of Wright Express’
17
Table of Contents
accounting principles, the application of those principles, and
the other matters required to be discussed with audit committees
under generally accepted auditing standards.
In addition, we received from the independent registered public
accounting firm the letter and the written disclosures required
by the applicable requirements of the Public Company Accounting
Oversight Board, and discussed the disclosures with them, as
well as other matters relevant to their independence from
management and Wright Express. In evaluating the independence of
our independent registered public accountant, we considered
whether the services they provided beyond their audit and review
of the consolidated financial statements were compatible with
maintaining their independence. We also considered the amount of
fees they received for audit and non-audit services.
Based on our review and these meetings, discussions and reports,
we recommended to the board of directors that the audited
consolidated financial statements for fiscal year 2010 be
included in the Annual Report on
Form 10-K.
THE AUDIT COMMITTEE
Ronald T. Maheu, Chair
Regina O. Sommer
George L. McTavish
AUDITOR
SELECTION AND FEES
Auditor
Selection
The Audit Committee has selected D&T as the Company’s
independent registered public accountant for the 2011 fiscal
year. D&T has served as the Company’s independent
registered public accountants since our initial public offering.
Audit
Fees
The following is a description of the fees billed to the Company
by D&T for the years ended December 31, 2009 and 2010:
| December 31, | ||||||||
| 2009 | 2010 | |||||||
|
Audit
Fees(1)
|
$ | 1,151,693 | $ | 1,546,820 | ||||
|
Audit-Related
Fees(2)
|
86,372 | 106,000 | ||||||
|
Tax Fees
|
— | — | ||||||
|
All Other Fees
|
— | — | ||||||
|
Total
|
$ | 1,238,065 | $ | 1,652,820 | ||||
| (1) | These are the aggregate fees for professional services by D&T in connection with their audits of the annual financial statements, included in the annual report on Form 10-K, reviews of the financial statements included in quarterly reports on Forms 10-Q and audits of our internal control over financial reporting, as well as fees associated with the statutory audits of certain of our foreign entities. | |
| (2) | These are the aggregate fees for professional services by D&T in connection with the audit of the Wright Express Employee Savings Plan and their assistance in providing accounting consultation services on completed and potential acquisitions. |
Pre-Approval
Policies and Procedures
The Audit Committee has adopted a policy regarding pre-approval
of audit and non-audit services performed by D&T. According
to the policy, the Audit Committee shall pre-approve all audit
services to be provided to the Company, whether provided by the
principal independent registered public accountant or other
firms, and all other permitted services (review, attest and
non-audit) to be provided to the Company by the independent
registered public accountant; provided, however, that de minimis
permitted non-audit services may instead be approved in
accordance with applicable SEC rules. The independent registered
public
18
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accountant is not authorized to provide any prohibited non-audit
services (as defined in
Rule 2-01(c)(4)
of
Regulation S-X).
The Chairman of the Audit Committee has the authority to
pre-approve any permitted services on behalf of the Audit
Committee and shall notify the full committee of such approval
at its next meeting.
Since our initial public offering on February 16, 2005, the
Audit Committee has pre-approved all of the services performed
by D&T.
EXECUTIVE
OFFICERS
Non-Director
Members of the Executive Management Team
|
Melissa D. Smith Age 42 President, North America |
Melissa D. Smith has served as our President, North America since April 6, 2011. She served as our Chief Financial Officer and Executive Vice President, Finance and Operations from November 2007 to April 2011. Before that, she was our Senior Vice President, Finance and Chief Financial Officer from September 2001 until November 2007. From May 1997 to August 2001, Ms. Smith held various positions on increasing responsibility with the Company. Ms. Smith serves on the Board of Directors of Wright Express Financial Services Corporation. Ms. Smith began her career at Ernst & Young. | |
|
Gareth Gumbley Age 38 Executive Vice President, International |
Gareth Gumbley has served as our Executive Vice President, Wright Express International since January 1, 2011. In this new role, Mr. Gumbley is responsible for the Company’s international operations and the execution of its global expansion strategy. Prior to joining Wright Express, Mr. Gumbley was Chief Executive Officer of Euronet Worldwide’s epay division from May 2008 to May 2010. Mr. Gumbley was a Senior Vice President and Officer of Euronet Worldwide from May 2008 to May 2010. His responsibilities included the strategy and operational development of the epay division, including acquisitions in existing and emerging markets. He also served as Managing Director of epay Australia, New Zealand and India, a Euronet Worldwide Company, from November 2004 to May 2008. Mr. Gumbley started his career at News Corporation leading multiple start-ups in the payments and telecommunications industries. | |
|
David D. Maxsimic Age 51 Executive Vice President, Sales and Marketing |
David D. Maxsimic has served as our Executive Vice President, Sales and Marketing since November 2007. Before that, he was our Senior Vice President, Sales and Marketing from January 2003 until November 2007. From November 1997 to January 2003, Mr. Maxsimic held various positions of increasing responsibility with the Company. | |
|
Steven Elder Age 42 Senior Vice President and Chief Financial Officer |
Steven Elder has served as our Senior Vice President and Chief Financial Officer since April 6, 2011. Before that, he was our Vice President, Corporate Finance and Treasurer from December 2007 until his promotion in April 2011. Prior to that, he was our Vice President, Investor Relations and Treasurer from September 2005 until December 2007. Mr. Elder has worked for the Company for over 13 years, during which time he served in a variety of financial roles of increasing responsibility. Mr. Elder began his career at Ernst & Young. | |
|
George W. Hogan Age 50 Senior Vice President and Chief Information Officer |
George Hogan has been our Senior Vice President and Chief Information Officer since November 2007. Mr. Hogan joined Wright Express in January 2007 as Vice President of Enterprise Architecture. Before that, he was Vice President, Commercial, Loyalty and Back Office Application Development at Visa USA/Inovant, the credit card company, from August 2000 to January 2007. |
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Table of Contents
|
Robert C. Cornett Age 58 Senior Vice President, Human Resources |
Robert C. Cornett has served as our Senior Vice President, Human Resources since February 2005. Prior to that, Mr. Cornett served as our Vice President, Human Resources from April 2002 until February 2005. | |
|
Jamie Morin Age 47 Senior Vice President, Client Service Operations |
Jamie Morin has served as our Senior Vice President, Client Service Operations since January 2007. From August 2005 to December 2006, Ms. Morin served as our Vice President of Business Initiatives Management. From December 1997 to August 2005, she held various positions of increasing responsibility with the Company. | |
|
Hilary A. Rapkin Age 44 Senior Vice President, General Counsel and Corporate Secretary |
Hilary A. Rapkin has served as our Senior Vice President, General Counsel and Corporate Secretary since February 2005. From January 1995 to February 2005, Ms. Rapkin held various position of increasing responsibility with the Company. Ms. Rapkin is a member of the American Bar Association, the Maine State Bar Association, the Association of Corporate Counsel, the Society of Corporate Secretaries and Governance Professionals and the New England Legal Foundation. | |
|
Richard K. Stecklair Age 62 Senior Vice President, Corporate Payment Solutions |
Richard K. Stecklair has served as our Senior Vice President, Corporate Payment Solutions since December 2007 and was appointed as an executive officer by our Board of Directors in March 2009. Before that, he was our Vice President, Corporate Fleet Sales from December 2006 until December 2007. From January 2003 until December 2006, Mr. Stecklair served as our Vice President and General Manager, Wright Express Direct Sales. | |
|
Gregory Strzegowski Age 45 Senior Vice President, Corporate Development |
Gregory Strzegowski has served as our Senior Vice President, Corporate Development since October 2009. Before that, he was our Vice President, International, Business Development and Mergers and Acquisitions from December 2007 until October 2009. From March 2002 until November 2007, Mr. Strzegowski served as our Vice President and Controller. | |
|
Kenneth Janosick Age 49 Senior Vice President, Small Business Solutions |
Kenneth Janosick has been our Senior Vice President, Small Business Solutions since December 2010. He joined Wright Express as Vice President, Product and Marketing in January 2009 and served in that role until December 2010. Before that, Mr. Janosick was a First Vice President at JPMorgan Chase bank from November 2006 until November 2009 with responsibility for Relationship Banking and Investments and the Small Business Division. Prior to that, he held various positions with JPMorgan Chase and Washington Mutual Bank. While with JPMorgan Chase, Mr. Janosick developed product growth strategies for consumer and small business segments including formulating business marketing plans. |
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Table of Contents
EXECUTIVE
COMPENSATION
COMPENSATION
DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis, or CD&A,
describes our compensation objectives and programs for our
executive officers. The CD&A also describes the specific
decisions, and the process supporting those decisions, which
were made with respect to 2010 for the executive officers named
in the Summary Compensation Table. We refer to these persons as
our “named executive officers” or “NEOs.”
The following discussion includes statements regarding
performance targets in the limited context of our compensation
programs. These targets should not be understood to be
statements of management’s expectations of our future
results or other guidance. Investors should not apply these
targets in any other context.
Executive
Summary
Wright Express’ philosophy regarding executive compensation
is straightforward: reward our executives for their contribution
to the Company’s annual and long-term performance by tying
a significant portion of their total compensation to key drivers
of increased stockholder value. The elements of our
executives’ total compensation are base salary, cash
incentive awards, stock incentive awards, and retirement and
other employee benefits. A significant portion of executive
compensation is performance-based, subject to increase when
results exceed corporate targets, reduction when results fall
below target and elimination if results do not achieve threshold
levels of performance. The performance measures used in our
compensation programs include adjusted revenue, adjusted net
income and other operational and strategic goals. Please refer
to the notes to the table of performance objectives on
page 28 for an explanation of how our performances measures
that are non-GAAP financial measures are calculated.
2010 was a strong year for Wright Express. Total revenue
grew 24% over 2009. We added more than 500,000 gross new fleet
cards to our North American Portfolio, increased spend volume in
our Corporate Card business by more than 43% over 2009 and
expanded our international presence with the acquisition of our
Australian fuel and prepaid card businesses. Our continued focus
on innovation and industry leading customer service allowed us
to increase customer retention to the highest level in recent
history. Wright Express stockholders experienced an increase of
44% in their investment based on total shareholder return as
measured from December 31, 2009 to December 31, 2010.
This total shareholder return positions Wright Express in the
top quartile of our Peer Group (as defined below) for 2010.
Wright Express is executing its near-term strategy effectively,
as shown in our annual financial success, and building long-term
value by creating US and international growth opportunities and
focusing on customer retention.
The compensation paid to our NEOs reflects their contribution to
Wright Express’ success in 2010. In order to tie NEO total
compensation to the performance of the Company:
| • | 50% of the 2010 short-term incentive program, or STIP, payout to NEOs was based on the Company’s financial results as compared to our goal for Adjusted Net Income, or ANI, in STIP. ANI, for the purposes of STIP, was $101.6 million against a target of $96.9 million. This resulted in a payment of 135% of target bonus for ANI performance. | |
| • | 20% of the 2010 STIP payout to NEOs was based on the achievement of revenue targets. Revenue, as defined in the STIP, was just above the 2010 STIP target of $371 million, resulting in a payout of 100.7% of target bonus for revenue performance. | |
| • | 30% of the 2010 STIP payout to NEOs was based on specific business drivers of revenue and ANI including MasterCard revenue, new corporate fleet cards, voluntary customer attrition and International business metrics. As discussed below, achievement against these goals varied, resulting in payouts of 25% to 200% of target bonus depending on the specific metric. |
The combined achievement under the STIP resulted in the NEOs
receiving an average STIP payment of 139% of target. As a result
of the STIP payments, our NEOs total cash compensation, on
average, was between the 50th and 75th percentiles of
the market data provided by our consultant in September of 2008
and 2009. This compensation is consistent with our overall
business performance for 2010, which was in the top quartile
compared to our Peer Group (as defined below).
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Table of Contents
In 2010, in addition to the cash compensation earned by the
NEOs, we made a grant of equity (referred to below as the
“2010 Growth Grant”) as part of our long-term
incentive program, or LTIP. Given the Company’s focus on
profitable growth over the next three years, an equity grant was
made, to each executive, that is in or near the top quartile of
the competitive market data provided by the compensation
consultant retained by the Compensation Committee, or the
Committee. The CEO’s grants are evenly split between stock
options and performance vested restricted stock units, or PSUs.
The other NEOs’ equity grants are made up 40% of time
vested restricted stock units, or RSUs, and 60% PSUs. The level
of PSUs that will be earned will depend on the metrics described
below in the detailed discussion of our long-term incentive
compensation. We believe that if the maximum level of PSUs
become vested as a result of the performance of the Company, the
total compensation provided to the NEOs (based on the grant date
fair value shown in the Summary Compensation Table below) will
reflect an appropriate
pay-for-performance
alignment.
On average, half of the NEOs’ cash compensation is variable
and related to Company performance and nearly 70% of their total
compensation (including equity) is aligned with the performance
of the Company. The Committee is confident that the compensation
programs outlined in this CD&A are market competitive and
provide the appropriate incentive for the NEOs to achieve above
market financial performance for the stockholders.
Other notable aspects of our executive compensation practices
include the following:
| • | We have stock ownership guidelines for our executives and Directors. | |
| • | We have eliminated perquisites for executives with the exception of the Executive Deferred Compensation Plan. | |
| • | An independent executive compensation consultant is retained by the Committee each year to provide objective advice to the Committee. | |
| • | We conducted a compensation risk assessment and found that there is not a reasonable likelihood that our compensation programs present significant risk to the Company. |
Our compensation program for 2011, continues to adhere to our
basic executive compensation philosophy, although we have placed
a heavier emphasis on revenue growth in our STIP and LTIP and we
have used annual performance metrics for our 2011 PSUs.
The Committee remains committed to providing our NEOs with
competitive compensation opportunities that allow for
significant upside when the Company is performing well above
target and the stockholders are receiving returns commensurate
with that level of performance. We remain focused on our
pay-for-performance
alignment and vigilant to avoid compensation arrangements that
would incent excessive risk taking.
Compensation
Philosophy
Wright Express is a global provider of business payment
processing and information management solutions. We compete for
both clients and employees with significantly larger companies.
Our primary differentiator in this competitive market is our
client-centered partnering approach. Our clients count on this
when they outsource their branded business to us. The experience
and performance of our associates, including the members of our
executive team, are critical to sustaining this level of
differentiation. Our chairman, president and chief executive
officer has been with the Company for 25 years and has been
instrumental in guiding this approach and in our resulting
growth. The other members of our executive team bring
significant industry
and/or
Company experience which is critical to our continued success.
Accordingly, in addition to being designed to support our goals
of achieving strong
year-over-year
and long-term growth and stockholder value, our compensation
programs reflect the competitive environment in which we operate
and our focus on differentiation in the marketplace through
continuity of leadership and culture.
Our compensation programs are designed and administered to
balance the achievement of near-term operational results and
long-term growth goals with the ultimate objective of increasing
long-term stockholder value. We achieve this by structuring our
compensation programs to:
| • | Attract and retain high-performing talent | |
| • | Drive outstanding operational and financial performance |
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| • | Align executive and stockholder interests for profitable long-term growth |
Compensation
Objectives
We recognize the role total compensation plays in achieving our
objectives of attracting, retaining and motivating our
high-performing associates, including our executives, to achieve
results. The chart below identifies the compensation elements
and method of delivery used to support each of our compensation
objectives.
| Primary Objective | ||||||||||||
|
Align Interests for |
||||||||||||
|
Element of |
Drive |
Growth with |
||||||||||
|
Compensation
|
Reward Period | Attract | Retain | Performance | Stockholders | Method of Delivery | ||||||
|
Base Salary
|
Ongoing | þ | þ | -Cash | ||||||||
|
Cash Incentive
|
Annual(1) | þ | þ | þ | þ | - Cash | ||||||
|
Equity Incentive
|
Annual(1) | þ | þ | þ | þ | - Restricted Stock Units | ||||||
|
- Performance Based Restricted Stock Units
|
||||||||||||
| - Non Qualified Stock Options | ||||||||||||
|
Benefits and Perquisites
|
Ongoing | þ | þ | - Health and Welfare Benefits | ||||||||
|
- Deferred Compensation Program
|
||||||||||||
| - Automobile(2) | ||||||||||||
| - Financial Planning(2) | ||||||||||||
| - 401(k) | ||||||||||||
| - Employment Agreements | ||||||||||||
| (1) | Cash and Equity Incentives are generally provided on an annual basis. From time to time, the Committee approves grants of cash or equity to executives in addition to the grants provided under these annual programs in order to reward for achievement of critical near-term milestones in the pursuit of long-term growth. | |
| (2) | The Financial Planning Perquisite was eliminated effective December 31, 2010. The executive automobile perquisite will be eliminated effective December 31, 2011. |
We believe the compensation of our executives should, and does,
reflect the performance and ultimate success of our Company. In
setting compensation levels for each executive, we evaluate
total direct compensation (base salary plus short-term incentive
at target plus long-term equity incentive at target) against
multiple factors including:
| • | Company success in achieving pre-determined revenue, adjusted net income and other operational and strategic goals | |
| • | Market and peer group comparison data | |
| • | The value of the unique skills and experience each executive brings to our Company and the importance of his or her continued leadership in the Company |
Annually, we reevaluate each compensation element with a focus
on total direct compensation. We also evaluate equity ownership
levels for each executive. The purpose of this review is to
appropriately reward and motivate our executive team to increase
stockholder value with a focus on providing compensation at
above target levels when Company performance is above target and
compensation below target levels when we do not achieve our
performance goals.
In evaluating the components of compensation and the metrics
used to determine individual and Company performance, the
Committee considers whether these factors drive an appropriate
level of risk taking. The Committee believes that the mix and
design of the elements of compensation incent management to
assume appropriate levels of risk to achieve both near-term
operational goals and long-term growth. The Committee reviews
the strategic, financial, and execution risks and exposures
associated with the initiatives that drive our
23
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performance based incentive compensation. In addition, the
Committee believes the following ensure an appropriate level of
risk in our compensation programs:
| • | A competitive base salary which provides executives with ongoing income | |
| • | Minimum thresholds and maximum performance caps in incentive plans | |
| • | Incentive plan funding based on actual results measured against pre-approved financial and operational goals and metrics that are clearly defined in all plans | |
| • | The use of both time based and performance based incentives | |
| • | Multi-year vesting of stock compensation to provide value through long-term appreciation of stockholder value | |
| • | Stock ownership guidelines that align executives’ interests with those of our stockholders |
Annual
Process of the Compensation Committee
The Committee is responsible for review and oversight of
executive compensation. This includes approval of corporate
goals and objectives used in the compensation programs for
executives as well as setting executive compensation and
approving annual incentive plan payouts and long-term incentive
stock grants. The Committee meets at least once each quarter. In
addition to the three independent directors who serve on the
Committee, typical attendance at these meetings includes the
Senior Vice President, Human Resources, the Vice President of HR
Strategy, Compensation and Benefits and the Associate General
Counsel and Assistant Corporate Secretary. Mr. Dubyak, our
Chairman, President and CEO, generally joins two meetings each
year to discuss the mid-year and
end-of-year
appraisal of his performance with the Committee. Otherwise, he
generally does not attend Committee meetings. The Committee also
meets in executive session as needed with no members of
management present. Only the independent directors are entitled
to vote on proposals that come before the Committee.
In the first quarter of each fiscal year, the Committee reviews
the Board’s assessment of the CEO’s performance with
him and reviews the Company’s results for the prior year.
In addition, the Committee approves the following as explained
in the Annual Review of Executive Compensation section:
| • | Changes to executive base salaries and incentive targets, if any, for the current year | |
| • | Short-Term Incentive Program, or STIP, payout, if any, for the previous fiscal year | |
| • | STIP design and targets for the current fiscal year | |
| • | Vesting of performance-based stock units granted under the long-term incentive program, or LTIP, if any, for previous years | |
| • | LTIP metrics, targets and grants for the current year |
Agenda items for the second quarter vary each year but always
include a review of Company performance and progress toward the
achievement of incentive plan targets.
The Committee generally conducts its annual review of executive
compensation in the third quarter of each year. The Committee is
provided a report from the independent compensation consultant
which compares the compensation of the Company’s executives
to a Peer Group of companies, details appropriate survey data
and provides recommendations for compensation actions to be
taken for the upcoming fiscal year.
In the final quarter of each fiscal year, management generally
presents the Committee with recommended executive compensation
changes for each element of compensation. Included in this
presentation is a total direct compensation and wealth
accumulation review for each member of the executive team. The
review shows proposed total direct compensation in the context
of historical compensation and current and projected wealth
accumulated through the compensation provided by the Company.
The design of the STIP and LTIP is typically discussed over
multiple meetings prior to the actual approval of the plans in
the first quarter of each year. The discussions generally focus
on the metrics to be utilized, the difficulty of the metric
levels and the weightings for each category of metric.
24
Table of Contents
Role of
the Compensation Consultant
In 2010, the Committee utilized DolmatConnell &
Partners, Inc., or DC&P, to provide advice regarding the
Company’s executive compensation practices. DC&P
reported directly to the Committee and the primary services it
provided were an evaluation of executive officers’ base
salaries, annual incentive targets and long-term incentive
targets relative to identified peers and the broader market and
a recommendation of compensation ranges for each executive
officer. In addition, DC&P provided a
pay-for-performance
review comparing compensation levels with peer financial
performance indicators. DC&P also provided advice on the
design of the Company’s incentive plans, a review of
Director compensation and updates regarding legislative and
regulatory changes that affect executive compensation. DC&P
did not provide any other services to the Company.
Role of
the Executive Officers
In approving compensation levels, the Committee reviews
competitive market data, Company performance and
Mr. Dubyak’s recommendations regarding total direct
compensation for the executive officers. Mr. Dubyak
provides the Committee with an assessment of each executive
officer’s performance to support his recommendations. These
assessments include the results of specific operational and
strategic goals as well as progress in the area of succession
planning and concerns, if any, in the area of retention of the
executive officer. Mr. Dubyak does not provide
recommendations for his own compensation. Ms. Smith, who
served as CFO and Executive Vice President, Finance and
Operations until April 6, 2011 and now serves as our
President, North America, attended meetings as needed to respond
to requests for information from the Committee.
Peer
Group
The peer group used by the Company is established by the
compensation consultant, based on input from management and a
review by the Committee. It is generally reviewed each year and
modified as needed to reflect our growth and to account for
changes due to market consolidation among peers.
In May 2009, changes were made to the Peer Group in order to
better reflect the market for executives in which Wright Express
competes. The following companies were utilized in the
consultant’s executive compensation assessment in the fall
of 2009, which was utilized for the establishment of fiscal year
2010 compensation.
|
2010 |
||||||||||||||||||||||||
|
2010 |
2010 |
Fiscal |
||||||||||||||||||||||
|
2010 |
2010 |
Fiscal |
Fiscal |
Year |
||||||||||||||||||||
|
2010 Fiscal |
Revenue |
Fiscal |
Year |
Year |
End |
|||||||||||||||||||
|
Year End |
Fiscal |
Year |
End |
End |
1-Year Total |
|||||||||||||||||||
|
Market Cap |
Year |
End |
Net Income |
Total Assets |
Shareholder |
|||||||||||||||||||
|
Company
|
($Millions) | ($Millions) | Basic EPS | ($Millions) | ($Millions) | Return | ||||||||||||||||||
|
Alliance Data Systems
|
$ | 3,649 | $ | 2,791 | $ | 3.72 | $ | 194 | $ | 8,272 | 10 | % | ||||||||||||
|
CSG Systems
|
$ | 646 | $ | 549 | $ | 0.68 | $ | 22 | $ | 880 | (1 | )% | ||||||||||||
|
Cybersource Corp.
|
$ | 1,416 | $ | 265 | $ | 0.16 | $ | 11 | $ | 596 | 68 | % | ||||||||||||
|
Euronet Worldwide, Inc.
|
$ | 886 | $ | 1,038 | $ | (0.75 | ) | $ | (38 | ) | $ | 1,409 | (21 | )% | ||||||||||
|
Global Cash Access Holdings
|
$ | 205 | $ | 606 | $ | 0.27 | $ | 17 | $ | 458 | (57 | )% | ||||||||||||
|
Global Payments, Inc.
|
$ | 3,360 | $ | 1,642 | $ | 2.56 | $ | 203 | $ | 2,039 | 18 | % | ||||||||||||
|
Heartland Payment Systems, Inc.
|
$ | 592 | $ | 1,864 | $ | 0.91 | $ | 35 | $ | 561 | 18 | % | ||||||||||||
|
TNS, Inc.
|
$ | 545 | $ | 527 | $ | 0.33 | $ | 9 | $ | 645 | (19 | )% | ||||||||||||
|
Total System Services, Inc.
|
$ | 2,992 | $ | 1,718 | $ | 1.00 | $ | 194 | $ | 1,952 | (9 | )% | ||||||||||||
|
Veriphone Holdings, Inc.
|
$ | 2,938 | $ | 1,002 | $ | 1.16 | $ | 99 | $ | 1,075 | 154 | % | ||||||||||||
|
Wright Express Corporation
|
$ | 1,768 | $ | 390 | $ | 2.28 | $ | 88 | $ | 2,098 | 44 | % | ||||||||||||
The peer group was modified in May 2009, to remove four
companies which had either been acquired or had market
capitalization levels outside of the range recommended by
DC&P. CheckFree Corporation, eFunds, Advanta Corporation
and Moneygram International, Inc. were removed and replaced by
the following five companies: Alliance Data Systems Corporation,
CSG Systems International, Inc., Cybersource Corporation, Global
Cash Access Holdings, Inc. and TNS Inc. In May of 2009, the
average last month end market capitalization of the companies
added to the peer group was $974 million compared to market
capitalization for the Company for the same period of
$910 million. We have relatively few industry competitors
who are
25
Table of Contents
publicly traded and US-based, and have found that the majority
of companies that provide similar service offerings are somewhat
larger than we are with respect to annual revenues.
Consequently, the majority of the companies in our peer group
are also larger than we are with respect to annual revenues. We
have recognized this disparity in size in benchmarking efforts
by referencing 40th percentile peer group pay data, rather than
the median (50th percentile).
While the peer group listed above and the other survey data
referred to below was used to compare our executives’
compensation to the market, the Committee believes that
understanding compensation practices for these companies similar
to us in size and industry is only one important element in
determining the appropriate compensation level for each of our
executives. As outlined more fully below, the compensation of
any individual executive may vary from the specific market data
based on factors such as the individual’s performance, the
scope of the duties performed by that individual, the importance
of the position to the Company and internal equity.
Annual
Review of Executive Compensation
Based on the above peer group and the other data discussed
below, DC&P provided recommended ranges of compensation for
base salary, total cash and total direct compensation for each
executive for 2010. DC&P collected comparable position data
on each executive from two sources:
| • | Proxy data at the 40th percentile for the companies in our peer group (where a peer position matched) | |
| • | Market survey data at the 25th, 50th and 75th percentile for companies of comparable revenue |
This data was blended equally where comparable peer data was
available to produce a target compensation range for that
executive. We believe market survey data at the
50th percentile for companies of comparable revenues is the
appropriate target in order to meet our objectives of attracting
and retaining talent. However, given the average revenue of our
identified peer group, we believe the 40th percentile of
the companies in our peer group is more appropriate than the
50th percentile in targeting compensation that will both
attract and retain the members of our executive team. DC&P
used the following surveys in establishing the
50th percentile market survey data for companies of our
size for 2010 compensation:
| • | Mercer US Americas Executive Remuneration Database (revenue range: $200 million — $500 million) | |
| • | Watson Wyatt ECS Top Management Compensation Survey (revenue range $200 million — $500 million) |
Data from companies in our revenue category who participated in
these surveys was aggregated and incorporated into the target
compensation ranges provided to the Committee by DC&P. The
Committee did not receive data identified for any individual
Company in these surveys. DC&P provides the Committee and
the Company’s human resources department with the current
placement of each executive within the target range. Management
uses the DC&P data to provide the Committee with
recommended base salary changes, annual cash incentive targets
and long-term equity targets for each of the executive officers.
In determining 2010 compensation, the Committee also examined
the following in addition to the competitive data:
| • | Summary of performance for each of the executive officers | |
| • | A Tally Sheet of each executive’s actual compensation for the years 2007-2009, including cash, equity and all other compensatory benefits and perquisites | |
| • | Company performance against strategic and operational goals for the previous fiscal year | |
| • | Proposed performance goals for the annual and long-term incentive programs for the upcoming fiscal year | |
| • | Summary of board feedback on Mr. Dubyak’s leadership of the Company in achieving results against goals for the fiscal year |
Total compensation summaries, showing historic, current and
proposed total direct compensation for each executive officer
are reviewed by the Committee each year. These summaries provide
the target value of all components of the executive
officers’ proposed compensation as well as the deferred
compensation, benefits,
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perquisites and exit pay in the event of various termination
scenarios, including a change of control. The purpose of this
review is to assess whether the overall compensation package is
consistent with the individual executive’s contribution
toward Company performance. Annual review of the total
compensation summaries also provides the Committee with a view
of the impact of historical changes to compensation over time
and an opportunity to assess effectiveness in attracting and
retaining our executives and driving high performance.
The Committee looks at the total impact of all
year-over-year
changes in executive compensation to decide whether changes are
necessary and appropriate. In reviewing total cash and equity
compensation, the Committee considers the retention value of the
long-term equity currently held by the executive and the impact
that retirement or voluntary termination would have on the
executive. Based on this review, the Committee can decide to
adjust one or more elements of an executive’s total
compensation. The Committee aims to provide competitive total
direct compensation and assesses an executive’s total
compensation package when looking at the executive’s
competitive standing relative to the market.
Compensation levels for 2010 were based on the Committee’s
review of executive total compensation in September 2009 and
February of 2010. At the time of the September 2009 review, all
named executive officer base, total cash and total direct
compensation fell within 15% of the market composite identified
by our compensation consultant.
2010
Executive Compensation Overview
Base Salary. Base salary is provided at a
competitive level in order to attract and retain key talent and
is reviewed annually. Annual adjustments to base salary are made
based on a review of both the individual performance assessed by
the CEO and reported to the Committee by management and the
location of the executive officer’s current base salary in
the target range provided by DC&P. After a year of no base
salary increases in 2009, each of the named executive officers
received a base salary increase consistent with the
recommendations made by DC&P. The increases were 2.63% for
Mr. Dubyak, 3% for Mr. Maxsimic and Ms. Rapkin
and 9.4% for Ms. Smith and 25% for Mr. Hogan,
reflecting an adjustment to their base salaries consistent with
DC&P’s recommendation.
Annual Incentive Compensation. The short-term
annual incentive compensation program (STIP) is an annual bonus
opportunity for associates at all levels of the organization who
generally share the same key goals, other than those on
commission and departmental incentive plans. The actual payouts
of the STIP are contingent upon Committee-approved financial
performance goals. For the executive officers, a
performance-based bonus focuses management on our fiscal year
financial results and strategic initiatives approved by the
Committee at the beginning of each year.
At the target level of performance, named executive officer STIP
payouts would be on average slightly below the median total cash
compensation of the market composite identified by our
compensation consultant. At the maximum level of performance,
which would represent performance that significantly exceeded
target goals, STIP payouts would be at or above the
75th percentile of this market composite. If we fail to
meet the threshold level goals as defined by the Committee, the
executive officers receive no payout under the STIP. In 2010,
the Company was required to achieve threshold results for
adjusted net income in order for any portion of the STIP to be
paid to any employees, including the executive officers. This
threshold was $77,534,000. In establishing our targets for the
2010 STIP, we utilized the following principles regarding the
likelihood of achievement of the various performance levels:
|
Payout as a |
||||||||||||||||
|
Estimated |
Percentage of |
|||||||||||||||
|
Performance Level
|
Achievability | Target STIP | ||||||||||||||
|
Threshold
|
90 | % | 25 | % | ||||||||||||
|
Target
|
75 | % | 100 | % | ||||||||||||
|
Maximum
|
25 | % | 200 | % | ||||||||||||
Each year, management proposes performance level goals based on
estimated achievability and current factors supporting or
inhibiting achievement. The goals for 2010 were approved by the
Committee in March 2010 and progress toward these goals was
reported by the CEO to the Board of Directors throughout the
year.
27
Table of Contents
2010 STIP performance objectives and final payout factors used
for each of the executive officers are shown below:
|
2010 |
||||||||||||||
|
Target |
Earned |
|||||||||||||
|
Performance |
Actual |
Payout |
||||||||||||
|
Company Goals
|
Weight | Threshold | Goal | Maximum | Result(1) | Factor(2) | ||||||||
|
Adjusted Net
Income(3)
|
50 | % | $77,534,000 | $96,917,000 | $110,485,000 | $101,672,000 | 135% | |||||||
|
PPG Adjusted
Revenue(4)
|
20 | % | $315,555,000 | $371,241,000 | $389,803,000 | $371,375,000 | 100.7% | |||||||
|
Corporate New Fleet Cards
|
10 | % | 330,000 | 390,000 | 420,000 | 506,000 | 200% | |||||||
|
Corporate Voluntary Attrition
|
10 | % |
2.4% of all fleet cards |
2% of all fleet cards |
1.8% of all fleet cards |
1.2% of all fleet cards |
200% | |||||||
|
MasterCard Revenue
|
10 | % | $40,000,000 | $46,500,000 | $50,000,000 | $51,900,000 | 200% | |||||||
|
International
Budget(5)
|
(5) | $13,200,000 | $12,000,000 | $10,800,000 | $13,200,000 | 25% | ||||||||
|
Average NEO STIP payout as a
percentage of target based on 2010 performance |
139% |
|||||||||||||
| (1) | Result as determined under the 2010 Wright Express Corporation Short-Term Incentive Program. | |
| (2) | Payout factor represents payout level based on 25 percent payout for threshold performance, 100 percent payout for target performance and 200 percent payout for maximum performance including interpolation on a straight-line basis between these levels of performance based on the actual result. | |
| (3) | Adjusted net income, or ANI, is defined by the Company as net income adjusted for fair value changes of derivative instruments, the amortization of purchased intangibles, the net impact of tax rate changes on the Company’s deferred tax asset and related changes in the tax-receivable agreement, non-cash asset impairment charges and the gains on the extinguishment of a portion of the tax receivable agreement. | |
| (4) | PPG adjusted revenue is revenue adjusted for changes in fuel prices. We use this adjustment in our incentive programs to ensure that payouts are not artificially increased or decreased by changes in the price of fuel. The 2010 revenue goals and revenue results were adjusted to a PPG of $2.80 for the purposes of calculating STIP payout. | |
| (5) | International Budget is defined as Total International Pre-Tax Loss and Capital Spend. As discussed below, only Mr. Hogan was subject to this metric. |
We have generally used adjusted net income and PPG adjusted
revenue as performance measures in our STIP. They represent key
areas of focus for continued growth and stockholder return. For
2010, we decreased the weight of the ANI metric for NEOs with
the exception of Mr. Hogan from 60% to 50% and increased
from 20% to 30% the total weighting of the three business goals
for new fleet cards, voluntary customer attrition and MasterCard
revenue.
For Mr. Hogan, the mix of metrics was 50% ANI, 30% PPG
adjusted revenue and 20% international financial MBO in
recognition of his critical role in our international expansion
in 2010. Achievement against the goal for the international
financial metric was at threshold level, which resulted in a
total payout against total target of 102.7%, which is lower than
the other NEOs.
The bonus targets for the NEOs employed on December 31,
2010 ranged from 45 percent to 100 percent of base
salary. These targets were unchanged from 2009 with the
exception of Mr. Maxsimic’s STIP target which was
increased based on market and peer analysis conducted by
DC&P and the decision to eliminate his separate sales
incentive which had traditionally been paid in addition to STIP.
Our executives’ STIP targets are set based primarily on the
target ranges provided by DC&P. Their current STIP
percentages represent what we believe is appropriate positioning
within these targets based on their experience, performance and
role in the Company.
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Table of Contents
Named executives received 2010 STIP payment as shown below based
on the achievement outlined in the previous chart:
|
Percentage |
Percentage |
Percentage |
||||||||||||||||||||||
|
of Eligible |
of Eligible |
of Eligible |
Actual Percentage |
|||||||||||||||||||||
|
Eligible |
Earnings at |
Earnings at |
Earnings at |
of Eligible Earnings |
Actual |
|||||||||||||||||||
|
Named Executive Officer
|
Earnings(1) | Threshold | Target | Maximum | Paid | Award | ||||||||||||||||||
|
Michael E. Dubyak
|
$ | 526,457 | 25.0 | % | 100.0 | % | 189.9 | % | 147.6 | % | $ | 777,261 | ||||||||||||
|
Melissa D. Smith
|
$ | 345,385 | 15.0 | % | 60.0 | % | 120.0 | % | 88.6 | % | $ | 305,956 | ||||||||||||
|
David D. Maxsimic
|
$ | 307,615 | 18.75 | % | 75.0 | % | 150.0 | % | 110.7 | % | $ | 340,623 | ||||||||||||
|
George W. Hogan
|
$ | 242,308 | 11.25 | % | 45.0 | % | 90.0 | % | 46.2 | % | $ | 111,994 | ||||||||||||
|
Hilary A. Rapkin
|
$ | 235,838 | 11.25 | % | 45.0 | % | 90.0 | % | 66.4 | % | $ | 156,686 | ||||||||||||
| (1) | STIP Eligible Earnings include total gross pay for the applicable plan year excluding salary or wages classified by the Company as disability pay, commission/incentive pay and bonuses. |
In addition to the STIP payments detailed in this section, the
Committee determined that Mr. Hogan would receive a
discretionary cash bonus of $50,000 for his extraordinary
efforts in support of Wright Express’ international
expansion in 2010, which were not reflected in the performance
result for the international finance metric in STIP. His total
cash incentive payout in 2010 was $161,994.
Long-Term Incentive Compensation. The
Company provides long-term equity-based incentives through the
Wright Express Corporation Long-Term Incentive Program, or LTIP.
Grants under the LTIP have generally been provided as a mix of
performance-based restricted stock units, or PSUs, which vest
from 0% to 200% based on the achievement of performance goals
and restricted stock units, or RSUs, which vest based on the
passage of time. The metric used to determine the vesting of
PSUs has generally been the achievement of adjusted net income
targets
and/or
revenue targets set by the Committee. PSUs and RSUs generally
vest over a three or four year period of employment. Executive
overall compensation is weighted more heavily toward equity than
cash as compared to non-executive employees.
The 2010 LTIP was implemented pursuant to our 2005 Equity and
Incentive Plan which allows us to grant employees and directors
stock options, stock awards (including restricted stock units),
stock appreciation rights, performance-contingent awards and
other awards. Eligible participants include executive officers
and other selected employees in the Company. Each of the
executive officers received a grant in 2010 through the LTIP.
The Committee grants stock awards at the fair market value of
the stock at the time of grant. In determining the size of
equity grants to executive officers, the Committee considers the
survey data described above. The Committee also reviews
potential equity ownership as a percentage of shares outstanding
for each executive versus comparable positions within the peer
group. Management does not grant awards without Committee
approval. With the exception of limited grants to newly hired
associates, grants are generally awarded in the first quarter of
each year.
2010 Growth Grant. In March 2010, executive
LTIP award targets for the annual grant were set after
consideration of the data provided by DC&P. The 2010 Growth
Grant was designed to support our long-term strategic plan and
reward each of the NEOs for his or her contribution to the
achievement of plan goals through 2012. While other NEO equity
grants were 60% PSUs and 40% time vested RSUs,
Mr. Dubyak’s grant was evenly split between stock
options and PSUs in an effort to further align his interests
with our stockholders. The RSUs and options in the 2010 Growth
Grant vest equally over three years on the anniversary of the
grant date. The PSUs vest, assuming performance criteria are
met, on the third anniversary of the grant.
Mr. Dubyak’s 2010 equity grant value is larger than
the other NEOs due to the scope of his role as Chairman,
President and CEO and the stock options granted to
Mr. Dubyak include a holding period of two years from
vesting date for the net proceeds of any exercise. In
determining the appropriate level for each of the named
executive officer grants, the Committee reviewed a range of
values provided by DC&P with the midpoint of the range
being a blend of peer data and market data for the roles held by
Mr. Dubyak, Ms. Smith and Mr. Maxsimic. Given the
lack of comparable peer positions for the remaining two NEOs,
only market data was used to determine their appropriate LTIP
targets.
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Table of Contents
The following table reflects the vesting factors approved for
the PSUs in the 2010 Growth Grant in March of 2010:
|
Metric Weighting
|
||||
|
2012 PPG Adjusted Revenue
|
60% | |||
|
2012 Reported ANI
|
40% | |||
In addition to the metrics outlined above, regardless of the
performance against the metrics, no shares would be earned by
the NEOs unless 2010-2012 average Return on Invested Capital or
ROIC was at or above a pre-established threshold. This
“hurdle” was established to ensure that revenue is
sustainable at our current margin, which supports the long-term
financial strength of the Company.
The payout rate, which is also sometimes referred to as the
“conversion level” of PSUs to shares of Company common
stock, for each of the metrics is determined in accordance with
the following schedule:
| PSU Conversion Levels | ||
|
Company Performance
|
Shares Issued as a Percent of PSU Target Award | |
|
Below Threshold
|
0% | |
|
Threshold*
|
50% | |
|
Target*
|
100% | |
|
Maximum*
|
200% | |
|
Above Maximum
|
200% | |
| * | The conversion level is ratable between threshold, target, and maximum based on actual performance. |
Threshold performance must be achieved for both the PPG Adjusted
Revenue and Reported ANI metrics for any PSUs to vest.
Amendment of 2010 Growth Grant. On
April 8, 2011, the Committee amended the performance-based
restricted stock units originally granted in March 2010 to
the NEOs. At the time of the amendment, payout under the
original 2010 PSUs was considered to be “probable”
under applicable accounting standards.
As amended, the achievement of a targeted ROIC objective will be
a separate and independent performance metric, rather than a
condition to any payout with respect to the PPG Adjusted Revenue
and Reported ANI metrics. The following table reflects the three
vesting factors for the 2010 PSUs, as amended for the NEOs:
|
Metric Weighting
|
||||
|
2012 PPG Adjusted Revenue
|
45% | |||
|
2012 Reported ANI
|
30% | |||
|
2010-2012 Average ROIC
|
25% | |||
The threshold, target and maximum amounts for the PPG Adjusted
Revenue and Reported ANI metrics have not been changed from
those established at the time of grant in March 2010. Threshold,
target and maximum amounts were established by the Committee in
April 2011 for the new separate and independent ROIC metric. The
target level for the new ROIC metric was set at an amount equal
to the baseline “hurdle” ROIC level that was included
in the original award. The threshold and maximum levels are
lower and higher, respectively, than the original baseline
“hurdle” ROIC level.
Because detailed disclosure of performance goals relating to
future revenue, ANI and ROIC could be harmful to our competitive
position and is not material to an investor’s understanding
of 2010 compensation, we have sought and received confidential
treatment of the specific metrics from the SEC. In addition,
specifically disclosing performance goals for these metrics
could put us at harm when negotiating future contracts with both
customers and suppliers. The performance targets for each metric
were considered reasonably difficult to achieve at the time they
were set based on our historic levels of performance and
internal projections for future growth.
The Committee approved the amendment of the 2010 PSUs in order
to strengthen the alignment of the awards with the goal of the
original grant, which was to incentivize long-term growth. The
amendments improve the alignment of the 2010 PSUs with the
Company’s business and acquisition strategy by better
supporting the
30
Table of Contents
Company’s objective of acquiring businesses that will
support long-term growth, even though, on a short-term basis
such acquisitions may reduce the likelihood of the baseline ROIC
level being met at the end of 2012.
The Committee concluded that the amended 2010 PSUs also continue
to achieve the original objective of ensuring that revenue from
ongoing operations is sustainable, which supports the
Company’s long-term financial strength. In acting to
approve the amendment, the Committee took into consideration
that the amendment will cause the 2010 PSUs to become subject to
the limitation on deductibility imposed by Section 162(m)
of the Internal Revenue Code. The Committee determined that the
benefits of amending the 2010 PSUs outweighed the potential loss
of tax deductibility.
The Committee also took into consideration that
(1) following the Company’s September 2010 acquisition
of RD Card Holdings Australia Pty Ltd., now referred to as
Wright Express Australia, and the March 2011 acquisition of
rapid! PayCard, the Company’s ROIC satisfied the baseline
ROIC level and (2) the Company will not record any current
incremental compensation expense in connection with this
amendment because payout under the 2010 PSUs was considered to
be “probable” under applicable accounting standards at
the time of the amendment.
Given the goals of the 2010 Growth Grant, as amended, if the
maximum level of PSUs become vested as a result of the
performance of the Company, the Committee believes the total
compensation provided to the NEOs would reflect an appropriate
pay-for-performance
alignment.
Tax Deductibility of
Compensation. Section 162(m) of the
Internal Revenue Code generally places a limit of
$1 million on the amount of compensation that Wright
Express may deduct in any one year with respect to its CEO and
the other three officers (other than the Chief Financial
Officer) whose compensation is required to be reported to our
stockholders pursuant to the Exchange Act by reason of being
among the most highly paid executive officers, other than our
CFO. Wright Express receives no federal income tax deduction for
any compensation that is (a) over $1 million and
(b) is not performance-based as defined under
Section 162(m). The STIP as well as the PSU and options
components of our LTIP are generally intended to provide fully
tax-deductible compensation. As discussed above, the PSUs
originally granted in March 2010 will not qualify as
performance-based compensation under Section 162(m). The
time-based RSU component of our LTIP and discretionary cash
bonuses are not considered performance-based under
Section 162(m). The Committee has the authority to adjust
payments under the STIP and LTIP up or down at its discretion
with the exception of any adjustments which may increase or
accelerate payment to any participant who is impacted by
Section 162(m). The Committee may approve compensation that
is not considered performance-based under Section 162(m)
when it believes that such compensation is appropriate and
consistent with our goal of building long-term stockholder
value. In 2010, Mr. Dubyak received $436,364 in
non-deductible compensation over the $1 million limit
imposed by Section 162(m) of the Internal Revenue Code. No
other named executive officers received non-deductible
compensation over the 162(m) limit of $1 million.
Executive Officer Equity Ownership
Guidelines. We believe executive ownership of
Company securities demonstrates a commitment to continued
success and aligns the efforts of our executives with
stockholders. The Committee established equity ownership
guidelines for all executive officers in October 2005.
“Equity,” for the purposes of executive officer
ownership guidelines, includes shares of our common stock and
ownership interests in the Wright Express Common Stock Fund held
in the Company’s 401(k) Plan. It does not include any RSUs
or PSUs prior to their vesting and conversion to shares of stock.
In December of 2010, the Committee voted to increase the
ownership requirements under the policy. These new guidelines
require Mr. Dubyak to hold securities equal in value to at
least 4 times his annual base salary (an increase from the prior
guideline of 3 times), Executive Vice Presidents to hold 2.5
times their annual base salaries (an increase from the prior
guideline of 1 times) and all other executive officers to hold
1.5 times their annual base salaries (an increase from the prior
guideline of 1 times). Beyond these ownership guidelines, the
Company does not have a policy specifying a minimum period of
time an executive must hold some or all of the Company shares
obtained upon exercise of options or vesting of stock units. The
policy requires existing officers to achieve their required
ownership level within four years and newly appointed officers
must now achieve their required ownership within three years of
appointment.
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Table of Contents
The annual measurement date under the guidelines is
July 31 of each year. For 2010, all named executive
officers were in compliance with the guidelines as in effect
prior to the amendment in December 2010. The Committee will
continue to monitor compliance with the new policy.
Employment Agreements. The Company provides
employment agreements which include severance and change of
control benefits to attract and retain key executive officers.
In the event, or threat, of a change of control transaction,
these agreements reduce uncertainty and provide compensation for
the significant levels of executive engagement and support
required during an ownership transition that results in the
termination of their employment. In addition, our employment
agreements contain non-compete, non-solicitation,
non-disparagement and non-disclosure provisions which protect
the Company in the event that an executive terminates his or her
employment. These employment agreements represent competitive
severance and change of control benefits based on analysis
conducted and reviewed by the Committee annually to assess
whether the total value to an executive provided by the
agreement remains at the level needed to attract and retain
executives without being considered excessive in the opinion of
the Committee. The specific material provisions of these
contracts are discussed in the “Employment Agreements,
Severance and Change of Control Benefits” section of this
proxy.
Benefits and Perquisites. We provide
competitive benefits to attract and retain high performing
associates at all levels. This includes a health and welfare
benefits package and a 401(k) plan. We offer a modest
perquisites package to executives representing the benefits we
have identified as most critical in attracting and retaining
executives.
Nonqualified Deferred Compensation. The
Company administers an Executive Deferred Compensation Plan, or
EDCP, that provides each of the executive officers with the
opportunity to defer up to 80 percent of base salary
and/or up to
98 percent of annual incentive compensation. The Company
provides a match of up to 6 percent of the
participant’s annual incentive compensation deferred into
the EDCP. Investment income on contributions and Company match
is accrued for participants to reflect performance of investment
funds identified by each participant during their annual
election period. The investment funds and their performance used
to calculate earnings in the EDCP generally mirror those used in
the 401(k) Plan.
Each of the named executives serving in his or her role at the
time of election chose to defer a portion of his or her 2010
bonus into the EDCP in 2011. No named executive deferred a
portion of his or her base salary into the EDCP in 2010.
Prior to our initial public offering, we offered the Wright
Express Corporation Supplemental Investment and Savings Plan, or
SERP, which allowed participants to defer compensation. The SERP
was frozen to new contributions on December 31, 2004.
Mr. Dubyak and Ms. Smith have balances in this plan,
which continue to earn investment returns based on the funds
they selected. These investment returns are market competitive
for the type of funds offered; there is no preferential interest
earned in either the EDCP or SERP accounts. No other executive
officers participated in the SERP when it was an active plan.
Other Benefits. The Company historically
provided personal financial advisory services, a
Company-sponsored automobile and limited use of the corporate
country club membership to the named executive officers. The
named executives were responsible for the taxes on the value of
these benefits. In December 2010, the Company eliminated the
personal financial advisory benefit and the limited use of the
country club membership to each named executive officer
effective January 1, 2011. Executive base salaries were
increased by the value of this benefit on January 1, 2011.
Executives with Company sponsored automobiles are also required
to surrender their Company-sponsored automobile by
December 31, 2011, at which time their base salary will be
increased by the value of this benefit.
Travel. Directors and executive officers, when
traveling on Wright Express business, are reimbursed for their
travel costs. No personal travel for directors or executive
officers was reimbursed in 2010.
The aggregate value of all perquisites received by each of the
executive officers in 2010 is detailed in the footnotes to the
Summary Compensation Table.
32
Table of Contents
COMPENSATION
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee is comprised entirely of independent
directors as determined by the Board of Directors in accordance
with its independence guidelines and the listing standards of
the New York Stock Exchange.
The compensation committee is responsible for review and
oversight of executive compensation. This includes approval of
corporate goals and objectives used in the compensation programs
for executives as well as setting executive compensation and
approving annual incentive plan payouts and long-term incentive
stock grants. In connection with that responsibility, the
compensation committee reports to the Board on the
Company’s activities at each meeting of the Board. The
compensation committee charter, which describes in detail the
purpose, structure, membership, authority, responsibilities,
procedures and administration of the compensation committee is
available on the Company’s website.
The compensation committee reviewed and discussed the
Compensation Discussion and Analysis with members of senior
management and, based on this review and discussion, the
committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the
Company’s annual report on
Form 10-K
and proxy statement on Schedule 14A.
THE
COMPENSATION COMMITTEE
Kirk P. Pond, Chair
Shikhar Ghosh
Regina O. Sommer
33
Table of Contents
SUMMARY
COMPENSATION TABLE
|
Change in Pension |
||||||||||||||||||||||||||||||||||||
|
Value and |
||||||||||||||||||||||||||||||||||||
|
Nonqualified |
||||||||||||||||||||||||||||||||||||
|
Non-Equity |
Deferred |
|||||||||||||||||||||||||||||||||||
|
Stock |
Option |
Incentive Plan |
Compensation |
All Other |
||||||||||||||||||||||||||||||||
|
Salary |
Bonus |
Awards |
Awards |
Compensation |
Earnings |
Compensation |
Total |
|||||||||||||||||||||||||||||
|
Name and Principal Position
|
Year | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($)(5) | ($)(6) | ($)(7) | ($) | |||||||||||||||||||||||||||
|
Michael E. Dubyak
|
2010 | $ | 526,457 | — | $ | 939,375 | $ | 1,867,346 | $ | 777,261 | $ | 25,232 | $ | 103,983 | $ | 4,239,654 | ||||||||||||||||||||
|
Chairman, President and
|
2009 | $ | 515,000 | $ | 25,880 | $ | 499,990 | $ | 718,897 | $ | 1,000,000 | $ | 34,412 | $ | 107,167 | $ | 2,901,346 | |||||||||||||||||||
|
Chief Executive Officer
|
2008 | $ | 492,082 | — | $ | 1,199,979 | — | — | $ | (41,976 | ) | $ | 55,980 | $ | 1,706,065 | |||||||||||||||||||||
|
Melissa D.
Smith(8)
|
2010 | $ | 345,385 | — | $ | 486,596 | — | $ | 305,956 | $ | 8,353 | $ | 58,947 | $ | 1,205,237 | |||||||||||||||||||||
|
Chief Financial Officer and
|
2009 | $ | 320,000 | — | $ | 176,990 | $ | 258,598 | $ | 382,464 | $ | 9,962 | $ | 67,904 | $ | 1,215,918 | ||||||||||||||||||||
|
Executive Vice President,
|
2008 | $ | 320,000 | — | $ | 369,997 | — | — | $ | (22,947 | ) | $ | 46,184 | $ | 713,234 | |||||||||||||||||||||
|
Finance and Operations
|
||||||||||||||||||||||||||||||||||||
|
David D. Maxsimic
|
2010 | $ | 307,615 | — | $ | 328,781 | — | $ | 340,623 | — | $ | 54,397 | $ | 1,031,416 | ||||||||||||||||||||||
|
Executive Vice President,
|
2009 | $ | 300,000 | — | $ | 164,995 | $ | 235,097 | $ | 378,680 | — | $ | 64,170 | $ | 1,142,942 | |||||||||||||||||||||
|
Sales and Marketing
|
2008 | $ | 300,000 | — | $ | 369,997 | — | — | — | $ | 46,223 | $ | 716,220 | |||||||||||||||||||||||
|
George W.
Hogan(9)
|
2010 | $ | 242,308 | $ | 50,000 | $ | 194,639 | — | $ | 111,994 | — | $ | 44,442 | $ | 643,383 | |||||||||||||||||||||
|
Senior Vice President, IT and Chief Information Officer
|
||||||||||||||||||||||||||||||||||||
|
Hilary A. Rapkin
|
2010 | $ | 235,838 | — | $ | 164,398 | — | $ | 156,686 | — | $ | 44,822 | $ | 601,744 | ||||||||||||||||||||||
|
Senior Vice President,
|
2009 | $ | 230,000 | — | $ | 87,489 | $ | 131,499 | $ | 206,172 | — | $ | 55,777 | $ | 710,937 | |||||||||||||||||||||
|
General Counsel and
|
2008 | $ | 226,923 | — | $ | 234,984 | — | — | — | $ | 46,263 | $ | 508,170 | |||||||||||||||||||||||
|
Corporate Secretary
|
||||||||||||||||||||||||||||||||||||
| (1) | Includes amounts that may be contributed by each named executive officer on a pre-tax basis to the Company’s 401(k) plan and Executive Deferred Compensation Plan. | |
| (2) | In March 2010, at the time the compensation committee approved Mr. Dubyak’s Short-Term Incentive Program payout of $1,000,000 (the maximum amount payable under that program), the compensation committee also approved a discretionary bonus with respect to 2009 performance to Mr. Dubyak in the amount of $25,880. In January 2011, the compensation committee approved a discretionary bonus, with respect to 2010 performance, to Mr. Hogan in the amount of $50,000. | |
| (3) | The amounts shown in this column represent the aggregate grant date fair value of stock awards made during 2010, 2009, and 2008, respectively, calculated in accordance with FASB ASC Topic 718. For 2010, assumptions used in the calculation of these amounts are included in Note 19 to the Company’s audited financial statements for the fiscal year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2011. For 2009, assumptions used in the calculation of these amounts are included in Note 20 to the Company’s audited financial statements for the fiscal year ended December 31, 2009, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 26, 2010. For 2008, assumptions used in the calculation of these amounts are included in Note 21 to the Company’s audited financial statements for the fiscal year ended December 31, 2008, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 27, 2009. For PSUs granted on March 3, 2010, these amounts reflect the grant date fair value of such awards based upon the probable outcome at the time of grant. The value of the 2010 awards at the grant date assuming that the highest level of performance conditions was achieved was $3,757,500, $834,165, $563,625, $333,666 and $281,843 for Mr. Dubyak, Ms. Smith, Mr. Maxsimic, Mr. Hogan and Ms. Rapkin, respectively. The value of the 2008 awards at the grant date assuming that the highest level of performance conditions was achieved was $2,399,959, $739,994, $739,994, and $293,970 for Mr. Dubyak, Ms. Smith, Mr. Maxsimic, and Ms. Rapkin, respectively. | |
| (4) | The amounts shown in this column represent the aggregate grant date fair value of option awards made during 2010 and 2009, calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 19 to the Company’s audited financial statements for the fiscal year ended December 31, 2010, included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 28, 2011. The amounts reflected in this column do |
34
Table of Contents
| not represent the actual amounts paid to or realized by the named executive officers for these awards during fiscal year 2010 and 2009, respectively. | ||
| (5) | The amounts shown reflect the cash incentive awarded in March 2011 for 2010 Short-Term Incentive program results, and March 2010 for 2009 Short-Term Incentive Program results and include amounts contributed by each Named Executive Officer on a pretax basis to the Company’s Executive Deferred Compensation Plan. There were no cash incentives awarded for the 2008 Short Term Incentive Program. | |
| (6) | The amounts shown reflect Supplemental Executive Retirement Account earnings. | |
| (7) | The following table describes the elements that are represented in the “All Other Compensation” column for 2010: |
ALL OTHER
COMPENSATION
|
401(k) |
EDCP |
|||||||||||||||||||
|
Company |
Financial |
Employer |
Employer |
|||||||||||||||||
|
Vehicle |
Planning |
Match |
Match |
Total |
||||||||||||||||
|
Name
|
($)(a) | ($)(b) | ($) | ($) | ($) | |||||||||||||||
|
Michael E. Dubyak
|
$ | 13,750 | $ | 15,948 | $ | 14,285 | $ | 60,000 | $ | 103,983 | ||||||||||
|
Melissa D. Smith
|
$ | 13,250 | $ | 8,491 | $ | 14,258 | $ | 22,948 | $ | 58,947 | ||||||||||
|
David D. Maxsimic
|
$ | 11,552 | $ | 8,945 | $ | 14,179 | $ | 19,721 | $ | 54,397 | ||||||||||
|
George W. Hogan
|
$ | 11,490 | $ | 8,747 | $ | 13,461 | $ | 10,744 | $ | 44,442 | ||||||||||
|
Hilary A. Rapkin
|
$ | 11,279 | $ | 8,663 | $ | 12,510 | $ | 12,370 | $ | 44,822 | ||||||||||
| (a) | Reflects the value of the annual lease and maintenance costs that were paid on behalf of the executive by the Company. |
| (b) | Reflects the financial advisory services value plus the travel and expense reimbursement for the financial advisor. |
| (8) | Until April 6, 2011, Ms. Smith served as our Chief Financial Officer and Executive Vice President, Finance and Operations. As of April 6, 2011, Ms. Smith was appointed as our President, North America and Steven Elder was appointed as our Senior Vice President and Chief Financial Officer. | |
| (9) | Mr. Hogan was not a named executive officer during 2009 and 2008, and therefore no information is presented for these years. |
35
Table of Contents
GRANTS OF
PLAN-BASED
AWARDS
The following table represents all plan-based awards granted to
the named executive officers in 2010:
|
All |
||||||||||||||||||||||||||||||||||||||||||||||
|
Other |
All Other |
|||||||||||||||||||||||||||||||||||||||||||||
|
Stock |
Option |
|||||||||||||||||||||||||||||||||||||||||||||
|
Awards: |
Awards: |
Exercise |
||||||||||||||||||||||||||||||||||||||||||||
|
Number |
Number of |
or Base |
Grant Date |
|||||||||||||||||||||||||||||||||||||||||||
|
Estimated Future Payouts Under |
Estimated Future Payouts Under |
of Shares |
Securities |
Price of |
Fair Value of |
|||||||||||||||||||||||||||||||||||||||||
| Non-Equity Incentive Plan Awards | Equity Incentive Plan Awards(2) |
of Stock |
Underlying |
Option |
Stock and |
|||||||||||||||||||||||||||||||||||||||||
|
Type of |
Grant |
Threshold |
Target |
Maximum |
Threshold |
Target |
Maximum |
or Units |
Options |
Awards |
Option Awards |
|||||||||||||||||||||||||||||||||||
|
Name
|
Award(1) | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#)(3) | (#)(4) | ($/Sh) | ($) | ||||||||||||||||||||||||||||||||||
|
Michael E. Dubyak
|
STIP | — | $ | 132,135 | $ | 528,540 | $ | 1,000,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| NQO | 3/3/2010 | — | — | — | — | — | — | — | 131,250 | $ | 30.06 | $ | 1,867,346 | |||||||||||||||||||||||||||||||||
| PSU | 3/3/2010 | — | — | — | 31,250 | 62,500 | 125,000 | — | — | — | $ | 939,375 | ||||||||||||||||||||||||||||||||||
|
Melissa D. Smith
|
STIP | — | $ | 52,500 | $ | 210,000 | $ | 420,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| RSU | 3/3/2010 | — | — | — | — | — | — | 9,250 | — | — | $ | 278,055 | ||||||||||||||||||||||||||||||||||
| PSU | 3/3/2010 | — | — | — | 6,938 | 13,875 | 27,750 | — | — | — | $ | 208,541 | ||||||||||||||||||||||||||||||||||
|
David D. Maxsimic
|
STIP | — | $ | 57,938 | $ | 231,750 | $ | 463,500 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| RSU | 3/3/2010 | — | — | — | — | — | — | 6,250 | — | — | $ | 187,875 | ||||||||||||||||||||||||||||||||||
| PSU | 3/3/2010 | — | — | — | 4,688 | 9,375 | 18,750 | — | — | — | $ | 140,906 | ||||||||||||||||||||||||||||||||||
|
George W. Hogan
|
STIP | — | $ | 28,125 | $ | 112,500 | $ | 225,000 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| RSU | 3/3/2010 | — | — | — | — | — | — | 3,700 | — | — | $ | 111,222 | ||||||||||||||||||||||||||||||||||
| PSU | 3/3/2010 | — | — | — | 2,775 | 5,550 | 11,100 | — | — | — | $ | 83,417 | ||||||||||||||||||||||||||||||||||
|
Hilary A. Rapkin
|
STIP | — | $ | 26,651 | $ | 106,605 | $ | 213,210 | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
| RSU | 3/3/2010 | — | — | — | — | — | — | 3,125 | — | — | $ | 93,938 | ||||||||||||||||||||||||||||||||||
| PSU | 3/3/2010 | — | — | — | 2,344 | 4,688 | 9,376 | — | — | — | $ | 70,461 | ||||||||||||||||||||||||||||||||||
| (1) | Type of Award: STIP = Short Term Incentive Program (cash); NQO = Non-Qualified Stock Option; RSU = Restricted Stock Unit; PSU = Performance-Based Restricted Stock Unit. All awards are granted under our 2005 Equity and Incentive Plan. | |
| (2) | Performance-based restricted stock units or PSUs granted on March 3, 2010 vest on the third anniversary of the grant based on the achievement of predetermined performance goals for the Company’s annual revenue and adjusted net income for 2012 and the return on invested capital metric as defined in the plan. The number of PSUs received by each named executive officer was determined by dividing the total award amount granted by the fair market value of our common stock on the date of grant. | |
| (3) | Restricted stock units or RSUs granted on March 3, 2010 vest over 3 years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. The number of RSUs received by each named executive officer was determined by dividing the total award amount granted by the fair market value of our common stock on the date of grant. | |
| (4) | Non-Qualified Stock Options granted on March 3, 2010 vest over 3 years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. The number of stock options received by each named executive officer was determined by dividing the total award amount granted by the compensation committee by the Black-Scholes valuation of our common stock. |
36
Table of Contents
OPTION
EXERCISES AND STOCK VESTED
The following table represents stock options exercised and stock
vested in 2010 by each of the named executive officers.
| Option Awards | Stock Awards | |||||||||||||||
|
Number of |
Value |
Number of |
Value |
|||||||||||||
|
Shares |
Realized |
Shares |
Realized |
|||||||||||||
|
Acquired on |
Upon |
Acquired on |
on Vesting |
|||||||||||||
|
Name
|
Exercise (#) | Exercise ($) | Vesting (#) | ($) | ||||||||||||
|
Michael E. Dubyak
|
61,342 | $ | 1,501,784 | 29,571 | $ | 909,907 | ||||||||||
|
Melissa D. Smith
|
— | — | 9,511 | $ | 292,527 | |||||||||||
|
David D. Maxsimic
|
11,729 | $ | 252,035 | 9,366 | $ | 288,096 | ||||||||||
|
George W. Hogan
|
8,410 | $ | 182,828 | 3,111 | $ | 95,264 | ||||||||||
|
Hilary A. Rapkin
|
9,093 | $ | 194,283 | 6,221 | $ | 196,987 | ||||||||||
37
Table of Contents
OUTSTANDING
EQUITY AWARDS
The following table represents stock options and unvested stock
units held by each of the named executive officers as of
December 31, 2010.
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||
|
Equity |
Equity |
|||||||||||||||||||||||||||||||||||
|
Incentive |
Incentive |
|||||||||||||||||||||||||||||||||||
|
Equity |
Plan |
Plan Awards |
||||||||||||||||||||||||||||||||||
|
Incentive |
Awards |
Market or |
||||||||||||||||||||||||||||||||||
|
Plan |
Number of |
Payout |
||||||||||||||||||||||||||||||||||
|
Awards: |
Market |
Unearned |
Value of |
|||||||||||||||||||||||||||||||||
|
Number of |
Number of |
Number of |
Number of |
Value of |
Shares, |
Unearned |
||||||||||||||||||||||||||||||
|
Securities |
Securities |
Securities |
Shares or |
Shares or |
Units |
Shares, |
||||||||||||||||||||||||||||||
|
Underlying |
Underlying |
Underlying |
Units of |
Units of |
or Other |
Units or |
||||||||||||||||||||||||||||||
|
Unexercised |
Unexercised |
Unexercised |
Option |
Stock That |
Stock That |
Rights That |
Other Rights |
|||||||||||||||||||||||||||||
|
Options |
Options |
Unearned |
Exercise |
Option |
Have Not |
Have Not |
Have Not |
That Have Not |
||||||||||||||||||||||||||||
|
(#) |
(#) |
Options |
Price |
Expiration |
Vested |
Vested |
Vested |
Vested |
||||||||||||||||||||||||||||
|
Name
|
Exercisable | Unexercisable(1) | (#) | ($) | Date | (#)(2) | ($)(3) | (#)(4) | ($)(3) | |||||||||||||||||||||||||||
|
Michael E. Dubyak
|
19,900 | — | $ | 13.51 | 02/13/17 | 35,071 | $ | 1,613,266 | — | — | ||||||||||||||||||||||||||
| 58,304 | — | $ | 13.60 | 03/05/17 | — | — | 83,656 | $ | 3,848,176 | |||||||||||||||||||||||||||
| 131,250 | — | $ | 30.06 | 03/03/18 | — | — | — | — | ||||||||||||||||||||||||||||
|
Melissa D. Smith
|
7,418 | 7,418 | — | $ | 13.51 | 02/13/17 | 20,939 | $ | 963,194 | — | — | |||||||||||||||||||||||||
| 10,304 | 20,640 | — | $ | 13.60 | 03/05/17 | — | — | 21,632 | $ | 995,072 | ||||||||||||||||||||||||||
|
David D. Maxsimic
|
4,248 | 6,373 | — | $ | 13.51 | 02/13/17 | 17,727 | $ | 815,442 | — | — | |||||||||||||||||||||||||
| 19,241 | — | $ | 13.60 | 03/05/17 | 18,542 | $ | 852,932 | |||||||||||||||||||||||||||||
|
George W. Hogan
|
3,127 | — | $ | 13.51 | 02/13/17 | 9,461 | $ | 435,206 | — | — | ||||||||||||||||||||||||||
| 10,582 | — | $ | 13.60 | 03/05/17 | — | — | 9,781 | $ | 449,926 | |||||||||||||||||||||||||||
|
Hilary A. Rapkin
|
4,000 | — | $ | 13.51 | 02/13/17 | 10,209 | $ | 469,614 | — | — | ||||||||||||||||||||||||||
| 10,204 | — | $ | 13.60 | 03/05/17 | — | — | 8,919 | $ | 410,274 | |||||||||||||||||||||||||||
| (1) | Non-Qualified Stock Options expiring on February 13, 2017 were granted on February 13, 2009 and vest over two years at a rate of one half of the total award per year beginning on the first anniversary of the grant date. Non-Qualified Stock Options expiring on March 5, 2017 were granted on March 5, 2009 and those expiring on March 3, 2018 were granted on March 3, 2010 and each vests over three years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. | |
| (2) | The following Table shows the RSUs, by grant date, which have not yet vested as of December 31, 2010: |
|
March 30, |
March 31, |
March 5, |
March 3, |
Total |
||||||||||||||||
|
Name
|
2007 (#) | 2008 (#) | 2009 (#) | 2010 (#) | (#) | |||||||||||||||
|
Michael E. Dubyak
|
10,549 | 0 | 24,522 | 0 | 35,071 | |||||||||||||||
|
Melissa D. Smith
|
3,008 | 0 | 8,681 | 9,250 | 20,939 | |||||||||||||||
|
David D. Maxsimic
|
3,384 | 0 | 8,093 | 6,250 | 17,727 | |||||||||||||||
|
Hilary A. Rapkin
|
1,786 | 1,007 | 4,291 | 3,125 | 10,209 | |||||||||||||||
|
George W. Hogan
|
471 | 839 | 4,451 | 3,700 | 9,461 | |||||||||||||||
|
Grant Date
|
Stock Award Vesting Schedule | |
|
March 30, 2007
|
Vests at a rate of one quarter of the total award per year beginning on the first anniversary of the grant date | |
|
March 31, 2008
|
Vests at a rate of one quarter of the total award per year beginning on the first anniversary of the grant date | |
|
March 5, 2009
|
Vests at a rate of one third of the total award per year beginning on the first anniversary of the grant date | |
|
March 3, 2010
|
Vests at a rate of one third of the total award per year beginning on the first anniversary of the grant date |
| (3) | Reflects the value as calculated based on the closing price of the Company’s common stock ($46.00) on December 31, 2010. | |
| (4) | These amounts represent the number of PSUs granted assuming target performance conditions are met. The PSUs granted on September 7, 2007, which lapsed on December 31, 2010, would have converted to RSUs based on the achievement of predetermined performance goals for the Company’s annual revenue and adjusted net income for 2010. The PSUs granted on March 3, 2010, may convert to RSUs based on the achievement of |
38
Table of Contents
| predetermined performance goals for the Company’s annual revenue and adjusted net income for 2012 and the return on invested capital metric as defined in the plan. The following table shows the PSUs, by grant date, where achievement of the performance conditions have not yet been determined as of December, 31, 2010: |
|
September 7, 2007 |
March 3, 2010 |
Total |
||||||||||
|
Name
|
(#) | (#)(a) | (#) | |||||||||
|
Michael E. Dubyak
|
21,156 | 62,500 | 83,656 | |||||||||
|
Melissa D. Smith
|
7,757 | 13,875 | 21,632 | |||||||||
|
David D. Maxsimic
|
9,167 | 9,375 | 18,542 | |||||||||
|
George W. Hogan
|
4,231 | 5,550 | 9,781 | |||||||||
|
Hilary A. Rapkin
|
4,231 | 4,688 | 8,919 | |||||||||
| (a) | These shares are reflected at target performance. If the shares were to vest at maximum performance, the shares would vest as follows: Mr. Dubyak - 125,000 shares; Ms. Smith - 27,750; Mr. Maxsimic - 18,750; Mr. Hogan - 11,100; and, Ms. Rapkin - 9,376. |
NONQUALIFIED
DEFERRED COMPENSATION
The following table represents the amounts deferred by each of
the named executive officers in the Wright Express Corporation
Executive Deferred Compensation Plan, or EDCP, and the Wright
Express Corporation Supplemental Investment & Savings
Plan, or SERP. The EDCP and SERP, which was frozen to new
contributions on December 31, 2004, are described in the
Non-qualified Deferred Compensation section of the Compensation
Discussion and Analysis.
|
Executive |
Registrant |
Aggregate |
Aggregate |
|||||||||||||||
|
Contributions in |
Contributions in |
Earnings in |
Balance at |
|||||||||||||||
|
Name
|
Plan | Last FY ($) | Last FY ($)(1) | Last FY ($)(2) | Last FYE ($)(3) | |||||||||||||
|
Michael E. Dubyak
|
SERP | — | — | 25,232 | (4) | 330,898 | (4) | |||||||||||
| EDCP | 46,636 | 46,636 | 64,558 | 745,851 | ||||||||||||||
|
Melissa D. Smith
|
SERP | — | — | 8,353 | (4) | 58,482 | (4) | |||||||||||
| EDCP | 18,357 | 18,357 | 12,346 | 150,459 | ||||||||||||||
|
David D. Maxsimic
|
EDCP | 68,125 | 20,437 | 24,269 | 299,018 | |||||||||||||
|
George W. Hogan
|
EDCP | 6,720 | 6,720 | 2,193 | 37,121 | |||||||||||||
|
Hilary A. Rapkin
|
EDCP | 9,401 | 9,401 | 6,000 | 71,276 | |||||||||||||
| (1) | Participant contributions to the Wright Express Corporation EDCP are matched on annual incentive compensation payments only. Wright Express matches the executives’ incentive compensation deferral up to a maximum of 6% of their total incentive compensation award. | |
| (2) | The company does not pay above-market interest rates on non-qualified deferred compensation. | |
| (3) | Portions of the amounts shown in this column have been previously reported in the Salary, Non-Equity Incentive Plan Compensation and All Other Compensation columns of the Summary Compensation Table in previous years, as follows: |
|
Non-Equity |
||||||||||||||||
|
Incentive Plan |
All Other |
|||||||||||||||
|
Name
|
Salary | Compensation | Compensation | Total | ||||||||||||
|
Michael E. Dubyak
|
— | 424,765 | 163,514 | 588,279 | ||||||||||||
|
Melissa D. Smith
|
— | 59,589 | 59,589 | 119,178 | ||||||||||||
|
David D. Maxsimic
|
37,363 | 105,711 | 58,023 | 201,097 | ||||||||||||
|
George W. Hogan
|
— | 17,464 | 17,464 | 34,928 | ||||||||||||
|
Hilary A. Rapkin
|
— | 31,439 | 31,439 | 62,878 | ||||||||||||
| (4) | Includes the earnings and balance on December 31, 2010, of the SERP which is explained in the Nonqualified Deferred Compensation section of the Compensation Discussion and Analysis. |
39
Table of Contents
During the year ended December 31, 2010, participants were
given the opportunity to select among various funds in the SERP
and EDCP. The table below shows the funds available to
participants and their annual rate of return for the year ended
December 31, 2010. The investment alternatives in the EDCP
are the same as those available under our 401(k) plan with the
exception of the BlackRock S&P 500 Index Fund. The
comparable fund used in the 401(k), Merrill Lynch Equity Index
Trust Tier 13, is a collective trust and cannot be
used in a non-qualified plan such as the EDCP.
| Rate of Return | ||||
|
SERP
|
||||
|
Principal Global Investors Money Market
|
(0.42 | )% | ||
|
Principal Global Investors Bond & Mortgage Securities
|
11.19 | % | ||
|
Principal Global Investors Government & High Quality
Bond
|
5.40 | % | ||
|
Principal Global Investors Balanced
|
13.15 | % | ||
|
Principal Global Investors LargeCap Growth
|
17.88 | % | ||
|
Principal Global Investors LargeCap Value
|
13.60 | % | ||
|
Principal Global Investors MidCap Blend
|
23.58 | % | ||
|
Principal Global Investors Diversified International
|
13.25 | % | ||
|
EDCP
|
||||
|
American Funds Growth Fund of America (R-4)
|
9.39 | % | ||
|
BlackRock S&P 500 Index (I)
|
14.75 | % | ||
|
The Oakmark Equity & Income Fund
|
9.50 | % | ||
|
Davis New York Venture Fund Incorporated (Y)
|
12.40 | % | ||
|
DWS RREEF Real Estate Securities Fund (A)
|
28.66 | % | ||
|
American EuroPacific Growth Fund (R-4)
|
9.93 | % | ||
|
Goldman Sachs Large Cap Value Fund
|
12.56 | % | ||
|
Perkins MidCap Value Fund
|
14.65 | % | ||
|
Prudential Jennison Small Comp
|
25.62 | % | ||
|
ML Retirement Reserves
|
0.01 | % | ||
|
Oppenheimer Developing Markets Fund (A)
|
26.98 | % | ||
|
Victory Small Business Opportunity Fund (A)
|
21.53 | % | ||
|
PIMCO Total Return Fund (A)
|
8.56 | % | ||
|
Principal High Yield Fund
|
13.76 | % | ||
|
Goldman Sachs Growth Opportunities Fund
|
19.10 | % | ||
|
Wright Express Corporation Common Stock Fund
|
38.10 | % | ||
40
Table of Contents
EMPLOYMENT
AGREEMENTS, SEVERANCE AND CHANGE OF CONTROL BENEFITS
The Company provides employment agreements which include
severance and change of control benefits to attract and retain
key executive officers. In the event, or threat, of a change of
control transaction, these agreements reduce uncertainty and
provide compensation for the significant levels of executive
engagement and support required during an ownership transition
that results in the termination of their employment. These
employment agreements represent competitive severance and change
of control benefits based on analysis conducted by
DolmatConnell & Partners, Inc. and reviewed by the
Compensation Committee. The Compensation Committee reviews these
agreements annually to assess whether the total value to an
executive provided by the agreement remains at the level needed
to attract and retain executives without being considered
excessive in the opinion of the Compensation Committee. The
agreements contain the following provisions:
| Mr. Dubyak | Ms. Smith | Mr. Maxsimic(1) | Mr. Hogan | Ms. Rapkin | |||||||||||
| Basic Severance Benefit | |||||||||||||||
|
Severance Payment
|
2x (base salary plus target bonus) |
1x (base salary plus target bonus) | 1x base salary | ||||||||||||
|
Accelerated Vesting of Equity
|
2 years | 1 year | None | ||||||||||||
|
Health Benefit Continuation
|
1 year | 1 year | None | ||||||||||||
|
Change of
Control(2)
(COC) Severance Benefit
(Double Trigger: requires COC and loss of comparable position) |
|||||||||||||||
|
Severance Payment
|
3x (base salary plus target bonus) |
2x (base salary plus target bonus) | |||||||||||||
|
Accelerated Vesting of Equity
|
100 percent | ||||||||||||||
|
Health Benefit Continuation
|
3 years | 2 years | |||||||||||||
|
Other Agreement Provisions
|
|||||||||||||||
|
280G Gross
Up(3)
|
Yes | No | |||||||||||||
|
Non-Compete(4)
|
|||||||||||||||
|
Non-Solicitation
(5)
|
2 years for without cause COC termination; 1 year otherwise | ||||||||||||||
|
Non-Disparagement
(6
|
|||||||||||||||
|
Non-Disclosure(7)
|
Indefinitely | ||||||||||||||
| (1) | On April 6, 2011, Mr. Maxsimic signed an Executive Retention Agreement with the Company pursuant to which Mr. Maxsimic agreed to enhanced non-competition and non-solicitation obligations for up to two years following the termination of his employment for any reason (the “Restricted Period”). In consideration for these provisions, the Agreement provides that (1) certain stock option, restricted stock unit and performance-based restricted stock unit awards granted to Mr. Maxsimic in 2009, 2010 and 2011 (the “Outstanding Awards”) will continue to vest in the event that his employment is terminated without cause or upon constructive discharge and (2) the Company will grant to him a restricted stock unit award with respect to a number of shares of Company Common Stock equal to $100,000 divided by the closing price of the Common Stock on the New York Stock Exchange on the date of grant (the “New 2011 RSU Award”). Fifty percent (after satisfaction of tax withholding obligations) of the number of shares of Common Stock that otherwise would be delivered to Mr. Maxsimic with respect to any shares delivered pursuant to the continued vesting of the Outstanding Awards (other than stock options) will be deposited in escrow with the Company through and until the end of the Restricted Period. In the event that Mr. Maxsimic violates the Agreement’s non-competition and non-solicitation provisions, the escrowed shares will be forfeited back to the Company for no consideration. The Agreement modifies and supersedes the non-competition and non-solicitation provisions contained in the Employment Agreement, effective as of October 28, 2005, by and between the Company and Mr. Maxsimic except that the restricted period in the agreement will revert back to the restricted period in the employment agreement on the second anniversary of the March 10, 2010 grant. |
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Table of Contents
| (2) | “Change of control” means, in summary: (i) an acquisition of 50 percent or more of either the then-outstanding shares of common stock or the combined voting power of the then-outstanding voting securities excluding certain specified acquisitions; (ii) a change in the composition of the Board such that the individuals who constitute the Board at that point in time cease to constitute a majority of the Board; (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of shares or assets of another Company excluding certain specified transactions; or (iv) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. | |
| (3) | In the event any payment or distribution to Mr. Dubyak under his employment agreement is determined to be subject to additional taxes under Section 280G of the Internal Revenue Code, he is entitled to receive a payment on an after-tax basis equal to the excise taxes imposed, and any penalties and interest. The decision to provide Mr. Dubyak with a 280G gross up was made at the time his agreement was executed in October 2005, after reviewing the standard provisions of agreements for executives at his level. The terms of these agreements continue from their original execution dates; no affirmative action was taken to renew the terms of the agreements. | |
| (4) | Each of the employment agreements signed by the executive officers contains a provision which restricts the executive from performing any acts which advance the interests of any existing or prospective competitors of Wright Express during the period specified in the agreement. | |
| (5) | Each of the employment agreements signed by the executive officers contains a provision which restricts the executive from soliciting customers or employees to terminate their relationship with the Company. | |
| (6) | Each of the employment agreements signed by the executive officers contains a provision which restricts them from making any statements or performing any acts intended or reasonably calculated to advance the interest of any existing or prospective competitor or in any way to injure the interests of or disparage the Company. | |
| (7) | Each of the employment agreements signed by the executive officers contains a provision which restricts the executive from disclosing confidential information as defined in the agreement. |
42
Table of Contents
POTENTIAL
PAYMENTS UPON TERMINATION OF EMPLOYMENT
The following chart shows the payments to each Named Executive
Officer which would be made as a result of possible termination
scenarios assuming each had occurred on December 31, 2010:
|
Voluntary |
||||||||||||||||||||
|
Termination or |
Involuntary |
|||||||||||||||||||
|
Involuntary |
Termination |
Change in |
||||||||||||||||||
|
Termination For |
Without |
Control With |
||||||||||||||||||
|
Cause |
Cause |
Termination |
Disability |
Death |
||||||||||||||||
|
Named Executive Officer
|
($) | ($) | ($) | ($) | ($) | |||||||||||||||
|
Michael E. Dubyak
|
||||||||||||||||||||
|
Acceleration of Equity
Awards(1)
|
— | $ | 6,515,390 | $ | 10,089,168 | — | $ | 10,089,168 | ||||||||||||
|
Salary and Benefits Continuation
|
— | $ | 1,068,188 | $ | 1,618,943 | — | — | |||||||||||||
|
Short Term Incentive Program
|
— | $ | 1,057,080 | $ | 1,585,620 | $ | 528,540 | $ | 528,540 | |||||||||||
|
Non-Qualified
Plan(2)
|
$ | 983,478 | $ | 983,478 | $ | 983,478 | $ | 983,478 | $ | 983,478 | ||||||||||
|
280G Gross-up
|
— | — | $ | 2,701,155 | — | — | ||||||||||||||
|
Total
|
$ | 983,478 | $ | 9,624,136 | $ | 16,978,364 | $ | 1,512,018 | $ | 11,601,186 | ||||||||||
|
Melissa D. Smith
|
||||||||||||||||||||
|
Acceleration of Equity
Awards(1)
|
— | $ | 1,411,094 | $ | 2,868,013 | — | $ | 2,868,013 | ||||||||||||
|
Salary and Benefits Continuation
|
— | $ | 355,833 | $ | 711,666 | — | — | |||||||||||||
|
Short Term Incentive Program
|
— | $ | 210,000 | $ | 420,000 | $ | 210,000 | $ | 210,000 | |||||||||||
|
Non-Qualified
Plan(2)
|
$ | 172,226 | $ | 172,226 | $ | 172,226 | $ | 172,226 | $ | 172,226 | ||||||||||
|
Total
|
$ | 172,226 | $ | 2,149,153 | $ | 4,171,905 | $ | 382,226 | $ | 3,250,239 | ||||||||||
|
David D.
Maxsimic(3)
|
||||||||||||||||||||
|
Acceleration of Equity
Awards(1)
|
— | — | $ | 2,498,841 | — | $ | 2,498,841 | |||||||||||||
|
Salary and Benefits Continuation
|
— | $ | 309,000 | $ | 652,403 | — | — | |||||||||||||
|
Short Term Incentive Program
|
— | $ | 231,750 | $ | 463,500 | $ | 231,750 | $ | 231,750 | |||||||||||
|
Non-Qualified
Plan(2)
|
$ | 210,456 | $ | 210,456 | $ | 210,456 | $ | 210,456 | $ | 210,456 | ||||||||||
|
Total
|
$ | 210,456 | $ | 751,206 | $ | 3,825,200 | $ | 442,206 | $ | 2,941,047 | ||||||||||
|
George W. Hogan
|
||||||||||||||||||||
|
Acceleration of Equity
Awards(1)
|
— | — | $ | 1,329,585 | — | $ | 1,329,585 | |||||||||||||
|
Salary and Benefits Continuation
|
— | $ | 250,000 | $ | 534,403 | — | — | |||||||||||||
|
Short Term Incentive Program
|
— | — | $ | 225,000 | $ | 112,500 | $ | 112,500 | ||||||||||||
|
Non-Qualified
Plan(2)
|
$ | 23,682 | $ | 23,682 | $ | 23,682 | $ | 23,682 | $ | 23,682 | ||||||||||
|
Total
|
$ | 23,682 | $ | 273,682 | $ | 2,112,670 | $ | 136,182 | $ | 1,465,767 | ||||||||||
|
Hilary A. Rapkin
|
||||||||||||||||||||
|
Acceleration of Equity
Awards(1)
|
— | — | $ | 1,340,458 | — | $ | 1,340,458 | |||||||||||||
|
Salary and Benefits Continuation
|
— | $ | 236,900 | $ | 507,978 | — | — | |||||||||||||
|
Short Term Incentive Program
|
— | — | $ | 213,210 | $ | 106,605 | $ | 106,605 | ||||||||||||
|
Non-Qualified
Plan(2)
|
$ | 52,474 | $ | 52,474 | $ | 52,474 | $ | 52,474 | $ | 52,474 | ||||||||||
|
Total
|
$ | 52,474 | $ | 289,374 | $ | 2,114,120 | $ | 159,079 | $ | 1,499,537 | ||||||||||
| (1) | For purposes of these calculations, the stock price used to calculate potential payments was the closing price on December 31, 2010, being $46.00. | |
| (2) | As used in this table, Non-Qualified Plan Payout includes the participants’ balances in their EDCP and SERP accounts. | |
| (3) | On April 6, 2011, Mr. Maxsimic signed an Executive Retention Agreement with the Company pursuant to certain stock option, restricted stock unit and performance-based restricted stock unit awards granted in 2009, 2010 and 2011 will continue to vest in the event that his employment is terminated without cause or upon constructive discharge. Fifty percent (after satisfaction of tax withholding obligations) of the number of shares of Common Stock that otherwise would be delivered pursuant to the continued vesting of the outstanding awards (other than stock options) will be deposited in escrow until the end of the restricted period as defined in the agreement. The payments reflected above do not give effect to that agreement as it became effective on April 6, 2011. |
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Table of Contents
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table provides information about shares of common
stock that may be issued under the Company’s equity
compensation plans as of December 31, 2010. The
Company’s only equity plan, the 2010 Equity and Incentive
plan, has been approved by our stockholders.
|
Number of Securities |
||||||||||||
|
Number of |
Remaining Available |
|||||||||||
|
Securities to be |
for Future Issuance |
|||||||||||
|
Issued Upon |
Weighted-Average |
Under Equity |
||||||||||
|
Exercise of |
Exercise Price of |
Compensation Plans |
||||||||||
|
Outstanding Options |
Outstanding Options |
(Excluding Securities |
||||||||||
|
and Restricted |
(Excludes Restricted |
Reflected in First |
||||||||||
|
Stock Units |
Stock Units) |
Column) |
||||||||||
|
Plan Category
|
(#) | ($) | (#) | |||||||||
|
Equity compensation plans approved by Company security holders
|
1,183,503 | $ | 17.32 | 4,515,851 | ||||||||
SECTION 16(A)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of the reports and written representations
submitted to us, we believe that during 2010 all filings with
the SEC by our officers, directors and 10 percent
stockholders timely complied with requirements for reporting
ownership and changes in ownership of our common stock under
Section 16(a) of the Securities Exchange Act of 1934.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Our Board has adopted written policies and procedures for the
review of any transaction, arrangement or relationship in which
Wright Express is a participant, the amount involved exceeds
$120,000, and one of our executive officers, directors, director
nominees or 5 percent stockholders (or their immediate
family members), each of whom we refer to as a “related
person,” has a direct or indirect material interest.
If a related person proposes to enter into such a transaction,
arrangement or relationship, which we refer to as a
“related person transaction,” the related person must
report the proposed related person transaction to our General
Counsel. The policy calls for the proposed related person
transaction to be reviewed and, if deemed appropriate, approved
by our Board’s Audit Committee. Whenever practicable, the
reporting, review and approval will occur prior to entry into
the transaction. If advance review and approval is not
practicable, the committee will review, and, in its discretion,
may ratify the related person transaction. The policy also
permits the chairman of the Audit Committee to review and, if
deemed appropriate, approve proposed related person transactions
that arise between meetings, subject to ratification by the
Audit Committee at its next meeting. Any related person
transactions that are ongoing in nature are reviewed annually.
A related person transaction reviewed under the policy will be
considered approved or ratified if it is authorized by the Audit
Committee after full disclosure of the related person’s
interest in the transaction. The Audit Committee will review and
consider such information regarding the related person
transaction as it deems appropriate under the circumstances.
The Audit Committee may approve or ratify the transaction only
if the committee determines that, under all of the
circumstances, the transaction is not inconsistent with the
Company’s best interests. The committee may impose any
conditions on the related person transaction that it deems
appropriate.
In addition to the transactions that are excluded by the
instructions to the SEC’s related person transaction
disclosure rule, the Board has determined that the following
transactions do not create a material direct or indirect
interest on behalf of related persons and, therefore, are not
related person transactions for purposes of this policy:
| • | interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10 percent |
44
Table of Contents
| equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, (c) the amount involved in the transaction equals less than the greater of $750,000 or 1 percent of the annual consolidated gross revenues of the other entity that is a party to the transaction, and (d) the amount involved in the transaction equals less than 2 percent of the Company’s annual consolidated gross revenues; and |
| • | a transaction that is specifically contemplated by provisions of the Company’s charter or bylaws. |
There were no relationships or related transactions in 2010
which required review under the policy.
The policy provides that transactions involving compensation of
executive officers shall be reviewed and approved by the
Compensation Committee in the manner specified in its charter.
INFORMATION
ABOUT VOTING PROCEDURES
How is
my vote counted?
You may vote “for” each director nominee or withhold
your vote from one or more of the nominees.
You may vote “for” or “against” or
“abstain” from voting on the proposals regarding the
advisory vote on executive compensation and ratification of the
independent registered public accounting firm. If you abstain
from voting on either of these proposals, it will have the same
effect as a vote “against” the proposal.
You may vote for “One Year,” “Two Years,”
“Three Years” or “abstain” on the proposal
regarding the advisory vote on frequency of future executive
compensation advisory votes. Abstentions will be included in the
denominator in calculating whether any of the three frequency
choices has received majority support.
If you provide your voting instructions on your proxy, your
shares will be voted:
| • | as you instruct, and | |
| • | according to the best judgment of the persons named in the proxy if a proposal comes up for a vote at the meeting that is not on the proxy. |
If you do not indicate a specific choice on the proxy you sign
and submit, your shares will be voted:
| • | for the three named nominees for directors, | |
| • | for the approval of the company’s executive compensation, | |
| • | for ONE YEAR, as the frequency of future votes on executive compensation, and | |
| • | for the ratification of Deloitte & Touche LLP as the auditors. |
What
if I do not vote?
The effect of not voting will depend on how your share ownership
is registered. If you own shares as a registered holder and you
do not vote, then your unvoted shares will not be represented at
the meeting and will not count toward the quorum requirement. If
a quorum is obtained, then your unvoted shares will not affect
whether a proposal is approved or rejected.
If you are a shareholder whose shares are not registered in your
name and you do not vote, then your bank, broker or other holder
of record may still represent your shares at the meeting for
purposes of obtaining a quorum. In the absence of your voting
instructions, your bank, broker or other holder of record will
be able to vote your shares in its discretion regarding the
ratification of the Company’s independent auditors.
However, your bank, broker or other holder of record will not be
able to vote your shares in its discretion in the election of
directors, the advisory vote on executive compensation or the
advisory vote on the frequency of future executive compensation
advisory votes. Therefore, you must vote your shares if
you want them to be counted for purposes of these votes.
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Table of Contents
What
if I change my mind after I submit my proxy?
You may revoke your proxy and change your vote by:
| • | signing a proxy card with a later date and returning it before the polls close at the meeting, or | |
| • | voting at the meeting. |
What
happens if a director nominee is unable to stand for
election?
The Board may reduce the number of directors or select a
substitute nominee. In the latter case, if you have submitted
your proxy, the persons named in the proxy can vote your shares
for a substitute nominee. The person you authorize to vote on
your behalf cannot vote for more than three nominees.
What
constitutes a quorum?
In order for business to be conducted at the meeting, a quorum
must be present. A quorum consists of the holders of one-third
of the shares of common stock issued and outstanding on the
record date and entitled to vote.
Shares of common stock represented in person or by proxy
(including shares that abstain or do not vote with respect to
one or more of the matters to be voted upon) will be counted for
purposes of determining whether a quorum exists. If a quorum is
not present, the meeting will be adjourned until a quorum is
obtained.
How
many votes are needed to approve the election of the
directors?
Directors will be elected by a plurality of the votes cast at
the meeting.
How
many votes are needed to approve the advisory vote on executive
compensation, the advisory vote on the frequency of future
executive compensation advisory votes, and to ratify the
selection of the independent registered public accounting
firm?
The affirmative vote of the holders of a majority of the shares
present at the meeting in person, or by proxy, and entitled to
vote is required for: approval of the advisory vote on executive
compensation; approval of one of the three frequency options
under the advisory vote on the frequency of future executive
compensation advisory votes; and approval of the ratification of
the selection of the independent registered public accounting
firm. An abstention will be included in the denominator for
purposes of determining the number of affirmative votes required
for approval. A broker non-vote will be treated as not being
entitled to vote on the proposal and will not be counted for
purposes of determining whether the proposal has been approved.
With respect to Item 3, if none of the frequency options
receives the vote of the holders of a majority of the shares
present at the meeting in person, or by proxy, and entitled to
vote, we will consider the frequency option (one year, two years
or three years) receiving the highest number of votes cast by
stockholders to be the frequency that has been recommended by
stockholders.
What
is the effect of not submitting my proxy if my shares are held
in the Wright Express Corporation Employee Savings
Plan?
The trustee for the Wright Express Corporation Employee Savings
Plan, which is often referred to as the 401(k) plan, will vote
the shares of participants who do not give specific instructions
in the same proportion as those shares voted by plan
participants who return proxies.
What
does it mean if I receive more than one proxy
card?
It means that you hold your shares in multiple accounts. Please
be sure to complete and submit all proxies that you received to
ensure that all your shares are voted.
46
Table of Contents
Where
do I find voting results of the meeting?
We will announce preliminary voting results at the annual
meeting. We will also publish the preliminary or, if available,
the final results in a current report on
Form 8-K
within four business days of the end of the meeting. You may
access a copy electronically on our website or through the
SEC’s “EDGAR” website at www.sec.gov.
Voting results will be tabulated and certified by our transfer
agent, American Stock Transfer & Trust Company.
Who
pays the cost for proxy solicitation?
The Company pays for distributing and soliciting proxies. As a
part of this process, the Company reimburses brokers, nominees,
fiduciaries and other custodians for reasonable fees and
expenses in forwarding proxy materials to stockholders. The
Company does not intend to use an outside proxy solicitation
firm to solicit votes, but employees of the Company or its
subsidiaries may solicit proxies through mail, telephone, the
Internet or other means. Employees do not receive additional
compensation for soliciting proxies. The Company may use an
outside proxy solicitation firm to advise it in connection with
assessing the impact of the votes cast during the solicitation
period.
How do
I submit a stockholder proposal, including suggesting a
candidate for nomination as a director to the Corporate
Governance Committee, for next year’s annual
meeting?
Any proposal that a stockholder wishes to be considered for
inclusion in our proxy statement and proxy card for the 2012
annual meeting of stockholders must comply with the requirements
of
Rule 14a-8
under the Exchange Act and must be submitted to the Corporate
Secretary, 97 Darling Avenue, South Portland, ME 04106, no later
than December 22, 2011. However, in the event that the
annual meeting is called for a date that is not within thirty
days before or after May 20, 2012, notice by the
stockholder must be received a reasonable time before we begin
to print and mail our proxy materials for the 2012 annual
meeting of stockholders.
If a stockholder wishes to present a proposal before the 2012
annual meeting but does not wish to have a proposal considered
for inclusion in our proxy statement and proxy in accordance
with
Rule 14a-8
or to nominate someone for election as a director, the
stockholder must give written notice to our Corporate Secretary
at the address noted above. To be timely, a stockholder’s
notice to the Secretary must be delivered to or mailed and
received not earlier than January 21, 2012, nor later than
February 20, 2012. However, in the event that the annual
meeting is called for a date that is not within twenty-five days
before or after May 20, 2012, notice by the stockholder
must be received no earlier than 120 days prior to the
annual meeting and no later than the later of the 90th day prior
to the annual meeting or the tenth day following the day on
which notice of the date of the annual meeting is first mailed
or publicly disclosed. The Company’s By-Laws contain
specific procedural requirements regarding a stockholder’s
ability to nominate a director or submit a proposal to be
considered at a meeting of stockholders. The By-Laws are
available on our website at www.wrightexpress.com, under
the Corporate Governance tab.
For next year’s annual meeting of stockholders, the persons
appointed by proxy to vote stockholders’ shares will vote
those shares according to their best judgment on any stockholder
proposal the Company receives after February 20, 2012.
What
is “householding”?
“Householding” means that we deliver a single set of
proxy materials to households with multiple stockholders,
provided such stockholders give their affirmative or implied
consent and certain other conditions are met.
Some households with multiple stockholders already may have
provided the Company with their affirmative consent or given a
general consent to householding. We will provide only one set of
proxy materials to each such household, unless we receive
contrary instructions.
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Table of Contents
We will promptly deliver separate copies of our proxy statement
and annual report, or deliver multiple copies in the future, at
the request of any stockholder who is in a household that
participates in the householding of the Company’s proxy
materials. You may call our Investor Relations department at
(866) 230-1633
or send your request to:
Wright Express Corporation
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wrightexpress.com
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wrightexpress.com
If you currently receive multiple copies of the Company’s
proxy materials and would like to participate in householding,
please contact the Investor Relations department at the above
address.
What
is meant by “incorporation by
reference”?
“Incorporation by reference” means that we refer to
information that previously has been filed with the SEC, so the
information should be considered as part of the filing you are
reading. Based on SEC rules, the sections entitled “Audit
Committee Report” and the “Compensation Committee
Report,” of this proxy statement and the information
regarding the Audit Committee Charter and the independence of
the Audit Committee members specifically are not
incorporated by reference into any other filings with the SEC.
You receive this proxy statement as part of the proxy materials
for the annual meeting of stockholders. You may not consider
this proxy statement as material for soliciting the purchase or
sale of our Company’s common stock.
How do
I obtain directions to the annual meeting, notify you that I
will attend the annual meeting or request future copies of your
proxy materials?
Seating is limited and, therefore, we request that you please
notify us if you intend to attend the annual meeting in person.
In order to do so, you may either:
| • | write or email the Investor Relations office at this address: |
Wright Express Corporation
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wrightexpress.com
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wrightexpress.com
- or
-
| • | call the Investor Relations department at (866) 230-1633. |
If you need directions on how to get to our Long Creek Campus
offices in order to attend our annual meeting, please refer to
our website at
http://www.wrightexpress.com/About/directions.html
or contact our Investor Relations office.
If you require copies of these or any future proxy materials,
please refer to the Investor Relations page of our website at
www.wrightexpress.com or contact our Investor Relations
office.
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Table of Contents
How do I
request a copy of your annual report on
Form 10-K?
We will provide you with a copy, without charge, of our
Form 10-K,
including the financial statements, for our most recently ended
fiscal year, upon request to our Investor Relations Department.
By Order of the Board of Directors,
Hilary A. Rapkin
SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND
CORPORATE SECRETARY
April 21, 2011
SOUTH PORTLAND, MAINE
49
Table of Contents
ANNUAL MEETING OF STOCKHOLDERS OF
WRIGHT EXPRESS CORPORATION
May 20, 2011
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR ANNUAL MEETING TO BE HELD ON MAY 20, 2011:
FOR ANNUAL MEETING TO BE HELD ON MAY 20, 2011:
The
Notice of Meeting, Proxy Statement and Annual Report to
Stockholders
are available at http://ir.wrightexpress.com
are available at http://ir.wrightexpress.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
your proxy card in the
envelope provided as soon
as possible.
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| Please detach along perforated line and mail in the envelope provided. |
g 20303040030000000000 2
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052011 |
| PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
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The Board of Directors recommends a vote FOR each nominee.
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The
Board of Directors recommends a vote FOR Proposal 2.
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1. Election of Directors: To elect three directors for three-year terms.
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FOR | AGAINST | ABSTAIN | ||||||||||
c FOR ALL NOMINEES c WITHHOLD AUTHORITY FOR ALL NOMINEES c FOR ALL EXCEPT (See instructions below) |
NOMINEES: O Rowland T. Moriarty O Ronald T. Maheu O Michael E. Dubyak |
2. To approve, in an advisory (non-binding) vote,
the compensation of our named executive officers.
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c | c | c | ||||||||
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The Board of Directors recommends a vote of every ONE YEAR for Proposal 3. |
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| 1 year | 2 years | 3 years | ABSTAIN | ||||||||||
3. To determine, in an advisory (non-binding) vote, whether a stockholder vote to approve the compensation of our named executive officers should occur every one, two or three years.
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c | c | c | c | |||||||||
The
Board of Directors recommends a vote FOR Proposal 4.
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| FOR | AGAINST | ABSTAIN | |||||||||||
4.
To ratify the selection of Deloitte & Touche LLP as the
Company’s independent registered public accounting firm for the year ending December 31, 2011.
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c | c | c | ||||||||||
INSTRUCTIONS: To withhold authority to vote for any individual
nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next
to each nominee you wish to withhold, as shown
here: n
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Whether or not you attend the annual meeting, it is
important that your shares be represented and voted at the meeting. As a stockholder of
record, you can vote your shares by signing and dating the enclosed proxy card and returning
it by mail in the enclosed envelope. If you decide to attend the annual meeting and vote
in person, you may then revoke your proxy. If you hold your stock in “street name,”
you should follow the instructions provided by your bank, broker or
other nominee. |
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To change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method. |
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Signature of Stockholder
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Date: | Signature of Stockholder | Date: | ||||||||||||||||||
| Note: | Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. |
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Table of Contents
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WRIGHT EXPRESS CORPORATION
2011 ANNUAL MEETING OF STOCKHOLDERS - May 20, 2011
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Michael E. Dubyak and Melissa D. Smith as proxies, each with full
power of substitution, to represent and vote as designated on the reverse side, all the shares of
Common Stock of Wright Express Corporation which the undersigned would be entitled to vote if personally
present at the Annual Meeting of Stockholders to be held at the Wright Express Corporation Long Creek Campus
offices, at 225 Gorham Road, South Portland, Maine, 04106, on Friday, May 20, 2011, at 8:00 a.m., Eastern Time,
or any adjournment or postponement thereof.
The proxy will be voted as specified, or if you do not
indicate a specific choice on the proxy you sign and submit, your shares will be voted: for the three named nominees for
directors; for the approval of the company’s executive compensation; for one year on the proposal regarding the frequency
of future votes on executive compensation; and, for the ratification of Deloitte & Touche LLP as the auditors. If you sign
and submit a proxy, Michael E. Dubyak and Melissa D. Smith are authorized to vote your shares according to their best
judgment on any other matters that are properly presented at
the meeting, or at any adjournment or postponement thereof.
(Continued and to be signed on the reverse side.)
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TABLE OF CONTENTS
VOTING YOUR SHARESPROPOSALS TO VOTE ONTHE BOARD OF DIRECTORSPRINCIPAL STOCKHOLDERSINDEPENDENT REGISTERED PUBLIC ACCOUNTANTEXECUTIVE OFFICERSEXECUTIVE COMPENSATIONSUMMARY COMPENSATION TABLEGRANTS OF PLAN-BASED AWARDSOPTION EXERCISES AND STOCK VESTEDOUTSTANDING EQUITY AWARDSNONQUALIFIED DEFERRED COMPENSATIONEMPLOYMENT AGREEMENTS, SEVERANCE AND CHANGE OF CONTROL BENEFITSPOTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENTSECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANSSECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCECERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSINFORMATION ABOUT VOTING PROCEDURES