EQUIFAX INC. - DEF 14A

UNITED STATES

 

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

SCHEDULE 14A

 

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

 

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1550 Peachtree Street, N.W.
Atlanta, Georgia 30309
www.equifax.com

 

Dear Fellow Shareholder:

 

First and foremost, I want to thank you for your continued investment in Equifax. The past year has been one of the most important in our company’s history. Your Board of Directors and management team have been intensely focused on implementing meaningful changes to our data security systems, technology platforms and risk management processes, in an effort to strengthen our culture, underpin our business strategy and rebuild our relationships with consumers, customers, shareholders and other stakeholders.

 

As part of this transformational journey, we made important changes to our leadership team. We appointed Mark Begor as Chief Executive Officer to lead our company on the path back to growth and market leadership. Mark has established a “tone at the top” for the organization, which prioritizes data security and risk management while maintaining a vital focus on consumers and our customers. We also hired experienced leaders to fill key roles, including our Chief Information Security Officer, Chief Technology Officer, President of U.S. Information Solutions and Senior Vice President of Enterprise Risk and Compliance.

 

At the Board level, we remain committed to robust governance and responsible oversight. Following our 2018 Annual Meeting, we evaluated the voting results and took a number of actions designed to further enhance the effectiveness of our oversight. Among other things, we refreshed the composition of our Audit and Technology Committees, increased the Board’s exposure to, and participation in, security training and crisis management planning, and oversaw an annual third party assessment of our security program. Most recently, we appointed Heather Wilson, Chief Data Scientist of L Brands, Inc., to our Board and Technology Committee. Heather brings expertise in data, analytics and risk management; these core competencies closely align with our business strategy and its associated risks.

 

In my role as Independent Chairman, I have continued to engage directly with our shareholders in an effort to be transparent about our continued progress and actions taken following the 2017 cybersecurity incident. During the past year, we conducted one-on-one engagement with holders of approximately 57% of our outstanding shares.

 

Our interactions with investors have provided us with valuable feedback on Board composition, risk management, human capital management, corporate governance and executive compensation, among other topics. We value our shareholders and will continue to evaluate and integrate investor feedback into our Board discussions and business decisions.

 

On behalf of the Board, I invite you to attend our 2019 Annual Meeting of Shareholders, which will be held on May 2, 2019 at 9:30 a.m., Central Time, at our Equifax Workforce Solutions headquarters located at 11432 Lackland Road, St. Louis, Missouri, 63146. A notice of the meeting and our 2019 Proxy Statement containing important information about the matters to be voted upon and instructions on how to vote your shares follow this letter.

 

Your vote is very important to us. Please vote now even if you plan to attend the Annual Meeting in person. Thank you for your continued support of Equifax.

 

Sincerely,

 

 

 

Mark L. Feidler

Independent Chairman of the Board of Directors

March 22, 2019

 

 

1550 Peachtree Street, N.W.
Atlanta, Georgia 30309

 

 

Notice of 2019 Annual Meeting of Shareholders

 

 

WHEN:

 

May 2, 2019

9:30 a.m., Central Time

 

WHERE:  

 

Equifax Workforce Solutions

11432 Lackland Road

St. Louis, Missouri 63146

 

RECORD DATE:

 

March 1, 2019

AGENDA:
1. Elect the 10 director nominees named in the accompanying Proxy Statement.
2. Hold a non-binding, advisory vote on the compensation paid to the Company’s named executive officers (commonly referred to as a “say-on-pay” proposal).
3. Ratify the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for 2019.
4. Consider other business properly brought before the meeting or any adjournment or postponement thereof.


 

Proxies in the form furnished are being solicited by the Board of Directors of Equifax Inc. for this meeting.

YOUR VOTE IS VERY IMPORTANT. PLEASE SUBMIT YOUR PROXY OR VOTING INSTRUCTIONS AS SOON AS POSSIBLE, WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING. Most shareholders have a choice of voting over the Internet, by telephone or by using a traditional proxy card. Please refer to the enclosed proxy materials or the information forwarded by your bank, broker or other holder of record to see which voting methods are available to you.

Proxy materials were first made available to shareholders beginning on March 22, 2019.

 

By order of the Board of Directors,

 

Lisa M. Stockard

March 22, 2019 Assistant Secretary

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to Be Held on May 2, 2019. The Notice, Proxy Statement and Annual Report to are available at www.proxyvote.com.

 

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
  VIA THE INTERNET
Visit the website listed on your proxy card
BY MAIL
Sign, date and return your proxy card in the enclosed envelope
   
BY TELEPHONE IN PERSON
Call the telephone number on your proxy card Attend the Annual Meeting and vote in person

 

ELECTION TO RECEIVE ELECTRONIC DELIVERY OF FUTURE ANNUAL MEETING MATERIALS.

 

You can expedite delivery and avoid costly mailings by confirming in advance your preference for electronic delivery. For further information on how to take advantage of this cost-saving service, please see page 79 of the Proxy Statement.

 

Table of Contents

 

PROXY SUMMARY 4
   
PROPOSALS TO BE VOTED ON 15
   
PROPOSAL 1   Election of Director Nominees 15
   
BOARD LEADERSHIP & CORPORATE GOVERNANCE 19
   
PROPOSAL 2 Advisory Vote to Approve Named Executive Officer Compensation 28
   
EXECUTIVE COMPENSATION 30
   
Compensation Discussion and Analysis 30
Compensation Committee Interlocks and Insider Participation 51
Summary Compensation Table 52
2018 Grants of Plan-Based Awards 54
Additional Discussion of Material Items in Summary Compensation and Grants of Plan-Based Awards Tables 55
Outstanding Equity Awards at 2018 Fiscal Year-End 56
Option Exercises and Stock Vested in Fiscal Year 2018 57
Retirement Plans 57
Pension Benefits at 2018 Fiscal Year-End 57
Non-Qualified Deferred Compensation 58
Potential Payments Upon Termination or Change In Control 60
CEO Pay Ratio 67
Equity Compensation Plan Information 68
Compensation Committee Report 68
   
DIRECTOR COMPENSATION 69
   
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS 70
   
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 72
   
AUDIT COMMITTEE REPORT 72
   
PROPOSAL 3 Ratification of Appointment of Ernst & Young LLP as Independent Registered Public Accounting Firm for 2019 73
   
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING 75

 

EQUIFAX INC. - 2019 Proxy Statement    3

 
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PROXY SUMMARY

 

This summary highlights certain information contained in this Proxy Statement. This summary does not contain all of the information that you should consider, and we encourage you to read the entire Proxy Statement before voting.

 

Equifax 2019 Annual Meeting Information

 

Date May 2, 2019
Time 9:30 a.m., Central Time
Place Equifax Workforce Solutions, 11432 Lackland Road, St. Louis, Missouri 63146

 

Items for Vote   Board Voting Recommendation
1 Election of 10 directors   FOR ALL NOMINEES
2 Advisory vote to approve named executive officer compensation (Say on Pay)   FOR
3 Ratification of appointment of Ernst & Young LLP as independent registered public accounting firm for 2019   FOR

 

In addition, shareholders may be asked to consider any other business properly brought before the meeting or any adjournment or postponement thereof.

 

Voting and Admission Information

 

Voting. Holders of our common stock as of the record date, March 1, 2019, are entitled to notice of and to vote at our 2019 Annual Meeting. Each share of common stock outstanding on the record date is entitled to one vote for each director nominee and one vote for each of the other proposals to be voted on at our 2019 Annual Meeting. Even if you plan to attend our 2019 Annual Meeting in person, please cast your vote as soon as possible.

 

REVIEW YOUR PROXY STATEMENT AND VOTE IN ONE OF FOUR WAYS:
VIA THE INTERNET
Visit the website listed on your proxy card
  BY MAIL
Sign, date and return your proxy card in the enclosed envelope
       
BY TELEPHONE
Call the telephone number on your proxy card
  IN PERSON
Attend the Annual Meeting and vote in person

 

Admission. Equifax shareholders as of the record date are entitled to attend the 2019 Annual Meeting. To attend, shareholders must present proof of stock ownership and a valid photo ID. Please review the admission procedures in this Proxy Statement under “Questions and Answers about the Annual Meeting.”


 

EQUIFAX INC. - 2019 Proxy Statement    4

 
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Our Company

 

Overview

 

Equifax Inc. is a global data, analytics and technology company. We use unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. We operate or have investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region, and employ approximately 11,000 employees worldwide.

 

We understand that credit reporting agencies like Equifax have an important responsibility to protect the personal data we hold, to provide accurate information to financial institutions making important risk decisions and to facilitate greater access to credit for consumers. We recognize the disruption and impact that the 2017 cybersecurity incident caused for consumers and our customers and feel a strong duty to ensure that the financial ecosystem is functioning in a way that benefits consumers, safeguards their personal data and is fueled by accurate and complete information.

 

EFX2020 Strategy

 

Since his appointment in April 2018, our Chief Executive Officer, Mark Begor, has been leading Equifax through a significant transformation, including the investment of substantial resources to achieve our vision of becoming a trusted global leader in data, advanced analytics and technology. In February 2019, we outlined the key strategic initiatives that comprise EFX2020, our multi-year business transformation strategy. This strategy is designed to help focus our efforts on the following imperatives:

 

 

Our business strategy is described in more detail in our 2018 Annual Report on Form 10-K filed with the SEC on February 21, 2019.

 

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Update on Key Business Initiatives

 

We operate in many markets around the globe but are committed to operating as “One Equifax,” a single organization with the same goals and values across all of our locations. Under the leadership of our CEO and with oversight by our Board, we are focused on a culture of security, technology, risk management and investment in our employees. In addition, we are making meaningful changes to become a more consumer-friendly credit bureau. Through this commitment to culture, we are able to drive business growth, create solutions for our customers and continuously improve the lives of consumers. Our key achievements in each of these areas are described below.

 

 

 FOCUS ON SECURITY

 

 

Data is at the core of our business and our highest priority is protecting and safeguarding the information with which we have been entrusted

In 2018, we launched a multi-year initiative to transform our security processes, technology and infrastructure:

  Appointed seasoned security expert Jamil Farshchi as our new Chief Information Security Officer, reporting directly to the CEO

 

  Established a “security-first” culture, including in-depth training for our employees and our Board

 

  Added a significant number of new team members to our security organization

 

  Added a cybersecurity performance measure under our annual bonus plan

 

  Developed a cyber audit framework for the Board to more effectively assess and address cybersecurity issues

 

  Evaluated the maturity of our security program, as determined by a third party assessor that measured our progress toward goals we established by reference to the NIST security framework, a voluntary framework consisting of standards, guidelines and best practices to manage security-related risk

 

  Achieved our 2018 goals for security program improvements, which directly correspond to the new cybersecurity performance measure added to the 2018 annual bonus plan

 

 

FOCUS ON TECHNOLOGY

 

 

  
In 2018, we began a multi-year technology transformation plan that represents the largest investment program in Equifax history, with the complete focus of the entire leadership team on rebuilding our technology infrastructure, accelerating our migration to a public cloud environment, employing virtual private cloud deployment techniques, and rationalizing and rebuilding our application portfolio using cloud-focused services:

  Appointed experienced leader Bryson Koehler as our new Chief Technology Officer, reporting directly to the CEO

 

  Refreshed over half of the technology leadership team to include top talent from market-leading technology organizations

 

  Hired approximately 1,000 new technology department employees, many of whom have experience with cloud technology

 

  Initiated a cloud and data migration of our data and systems, bringing us closer to our goal of leading our industry in data and technology security capabilities

  
In February 2019, we appointed Heather Wilson, Chief Data Scientist of L Brands, Inc., as a new independent director and a member of the Technology Committee; she brings deep knowledge of data science and its impact on business transformation across several industries that will benefit our Board, our Company and our customers

 

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ENHANCED RISK MANAGEMENT PROCESSES

 

 

  
Our Board and CEO have reinforced our “tone at the top” and focus on risk management, and have been instrumental in making meaningful progress in rebuilding trust and credibility with consumers and our customers

  The addition of a cybersecurity performance measure under our annual bonus plan reinforces these cultural changes by further aligning our executives’ incentives with progress against our security program goals

 

  
In an effort to strengthen our enterprise risk management program, we have implemented a new Enterprise Risk Management (“ERM”) framework, based on the “three lines of defense” model for establishing effective checks and balances

  
Established a new Risk Office, with a direct line of communication to the Board, to enhance and coordinate the second line of defense under our updated ERM framework

  Appointed a new SVP for Enterprise Risk and Compliance, Kent Lindner, who leads the Risk Office and meets regularly with the Board, the Audit Committee and the Technology Committee

 

  Created an ERM team within the Risk Office to develop, enhance, deploy and manage risk program elements

 

  
Key elements of our ERM program include:

  Enhancements to our enterprise risk framework, including components and coordination

 

  Risk data aggregation and reporting, creating unified risk and issue capture, analysis and reporting

 

  Promoting a risk culture, including coordinated training, communication and evaluation plans

  
The technology and security transformation activities described above will continue to be fundamental to our enhanced risk management by ensuring disciplined and coordinated coverage of technology and security risks

 

 

IMPROVEMENTS FOR CONSUMERS AND IMPACT ON OUR COMMUNITY

 

 

  
Since 2017, we have invested substantial resources on services to assist consumers and improve the consumer experience:

  Made our TrustedID® Premier service, an identity theft protection and credit file monitoring product, available for free to all U.S. consumers for twelve months and later extended the free credit file monitoring services, through another provider, for an additional twelve months for impacted U.S. consumers

 

  Launched our Lock & Alert™ service that allows U.S. consumers to quickly lock and unlock their Equifax credit file, online or through an app—for free, for life

 

  
We have made, and continue to make, improvements in our call centers and consumer-facing portals to ensure that we are consumer-friendly at every touchpoint:

  Expanded call center hours, improved phone systems, reduced time to answer calls and improved the way in which we greet consumers

 

  Committed to invest over $50 million in our consumer-facing portals and service centers to enhance consumer experience

 

  
We have made investments to support efforts to facilitate financial well-being and financial inclusion for individuals, families and small businesses around the world:

  Invested in the On the Rise Financial Center in Atlanta, where we are headquartered, which collaborates with local credit unions to provide counseling and financial coaching

 

  Provided consumers with educational content and information they needed following Hurricane Michael in October 2018

 

  Assisted consumers impacted by the federal government shutdown by offering them a free credit report service in February 2019

 

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ONE EQUIFAX TEAM – FOCUS ON HUMAN CAPITAL MANAGEMENT AND CORPORATE CULTURE

 

 

  
As a global company, we operate in many markets around the world but are committed to operating as “One Equifax,” a single organization with the same goals and values across all of our locations:

  We foster a strong, engaged workplace that is centered around excellence in teamwork, technology, security, risk management and integrity

 

  Members of our Board interact with employees at different levels of management, both formally and informally, to better understand company culture and the employee operating environment

 

  Our CEO regularly engages with employees around the world through in-person town hall meetings, weekly email remarks and key stakeholder meetings

 

  We continue to enhance our robust training program for all employees, especially in the areas of security and compliance

 

  We also demonstrate the value of our employees through recognition programs, referral programs for new hires, employee satisfaction surveys, professional development programs and numerous other initiatives

 

  
At Equifax, we attract top talent by providing opportunities to grow and lead within our company and regularly undertake talent initiatives to engage, develop and retain our top talent

  In 2018, we added more than 1,000 full-time technology and security professionals to our workforce to help us develop an industry-leading security organization

 

  
Diversity and inclusion are important elements of our culture and workforce development and, in 2018, we continued to invest in our global women’s development initiatives

 

 

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Board Leadership and Composition

 

Board Leadership Structure

 

  In September 2017, we separated the roles of Chairman and CEO, and appointed independent director Mark Feidler to serve as Independent Chairman of the Board

 

  In April 2018, we appointed Mark Begor as our CEO and a member of the Board

 

  Our Independent Chairman works closely with our CEO and has a broad set of responsibilities including:

 

   Calling meetings of the Board and setting meeting agendas in coordination with the CEO

 

   Presiding at all meetings of the Board and advising the CEO on decisions reached, and suggestions made, at executive sessions of the Board

 

   Facilitating communication among the outside directors, the CEO and other members of management

 

   Meeting directly with management and other employees of the Company

 

   Being available for consultation and direct communication with shareholders

 

Board Composition and Refreshment

 

  In February 2019, the Board elected Heather Wilson, the Chief Data Scientist of L Brands, Inc., as a new independent director and a member of the Technology Committee

 

  Ms. Wilson’s deep knowledge of data science and its impact on business transformation will be of tremendous value to our Company, our Board and our customers as we execute our multi-year technology transformation and implement our business imperatives

 

  Since October 2017, we have added three independent directors with relevant expertise to enhance the overall mix of skills and experience on our Board

 

  Our Committees have also undergone significant refreshment:

 

  The Technology Committee is comprised of three of our newest directors, each of whom brings relevant experience: Scott McGregor, Robert Selander and Heather Wilson. They serve alongside John McKinley, who brings important institutional knowledge and strong leadership to the Committee to enable it to effectively carry out its oversight duties

 

   In addition, Tom Hough began serving as our Audit Committee chair in May 2018. His past experience as Vice Chair of Ernst & Young has proved invaluable as the Company navigates complex financial and accounting issues

 

  In November 2018, Mark Templeton, former member of our Audit and Technology Committees, retired from the Board

 

  The Board will continue to seek out highly-qualified director candidates as part of the Board succession plan to enhance the experience and diversity of our Board to align with our overall strategy

 

Shareholder Engagement

 

  Following our 2018 Annual Meeting, our Independent Chairman Mark Feidler and members of management conducted investor outreach meetings with shareholders representing approximately 57% of our shares

 

  Independent Chairman Mark Feidler participated in one-on-one investor meetings, during which we discussed a number of business and governance-related topics, including Board refreshment and skill sets, company culture and cultural changes, risk oversight, human capital management, executive compensation and corporate governance

 

  The feedback from our investors and other stakeholders was shared with, and reviewed by, our Governance and Compensation Committees, as well as the full Board

 

 

 

Independent, Diverse
and Refreshed Board

 

Independent Chairman of the Board

 

30% of our directors are women

 

3 new Independent Directors since October 2017

 

Significant refreshment of Audit and Technology Committees

 

57%

CONDUCTED INVESTOR
OUTREACH MEETINGS WITH
SHAREHOLDERS REPRESENTING
APPROXIMATELY 57%
OF OUR SHARES

 

 

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Enhancements to Board Risk Oversight

 

Following the 2017 cybersecurity incident, our Board of Directors and management team have taken extensive steps designed to prevent this type of incident from happening again and to earn back the trust of consumers, customers, shareholders and other stakeholders. Key structural developments at the Board level include:

 

Full Board

 

The Board enhanced its engagement on data security and crisis management planning, with heightened Board attention to cybersecurity risks and trends, approach to managing these risks, and incorporating cybersecurity as a strategic component of the Company’s business:

 

  Increased Board-level engagement with respect to data security education, including annual cybersecurity training for directors

 

  Added cybersecurity to the list of skills that the Governance Committee should consider in its assessment of Board membership criteria

 

  Cybersecurity is now a regular part of the agenda for the Board’s annual strategy review

 

  Enhanced risk escalation processes to support rapid escalation and internal notification of cybersecurity incidents and to ensure that those with decision-making authority on trading restrictions and pre-clearance requests have notice of any potential security incident

 

  Full Board participates in annual tabletop crisis simulation exercises with the senior leadership team

 

In an effort to strengthen our ERM program, we have implemented a new risk framework based on the “three lines of defense” model for establishing effective checks and balances, which is used by leading financial institutions. See “How We Manage Risk” and “Board Oversight of Risk” on pages 25-26

 

  Established a new Risk Office with a direct line of communication to the Board, led by our new SVP for Enterprise Risk and Compliance

 

The Board is overseeing a transformation of Equifax’s technology infrastructure described under “Focus on Technology” on page 6

 

         

Technology Committee

 

The Technology Committee’s expanded responsibilities include:

 

  Oversight of cybersecurity and technology-related risks and management efforts to monitor and mitigate those risks

 

  Oversight of data security in a manner more similar to the Audit Committee’s oversight of financial risks

 

Pursuant to its charter, the Technology Committee oversees an annual third party assessment of the Company’s security program

 

The Technology Committee receives regular reports directly from the CISO, the CTO and the internal audit department in connection with quarterly joint meetings of the Audit and Technology Committees

 

The CISO and CTO meet with the Technology Committee in executive session on a quarterly basis

 

All members are required to be independent directors

 

 

 

 

 

 

 

 

 

Audit Committee

 

The Audit Committee and Technology Committee coordinate on risk management oversight with respect to cybersecurity, including through quarterly joint committee meetings

 

The Audit Committee receives regular reports directly from the CISO, the CTO and the internal audit department in connection with quarterly joint meetings of the Audit and Technology Committees

 

The Company’s outside auditor attends all joint meetings of the Audit and Technology Committees

 

 
   

Governance Committee

 

The Governance Committee has responsibility for continued monitoring of the Company’s implementation of recommendations relating to data security oversight developed by the Special Committee formed after the 2017 cybersecurity incident

 

 
       

 

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Compensation Program Highlights and Key Changes for 2018 and 2019

 

Executive Compensation Philosophy

 

The Compensation Committee of the Board of Directors is primarily responsible for the Company’s executive compensation policies and plans.
The Committee works to ensure that pay incentives are performance-based and aligned with shareholders’ interests, while guarding against metrics or goals that create inappropriate or excessive risk likely to have an adverse effect on the Company.
The Committee has designed and continuously reviews our compensation program to ensure we are providing competitive pay to attract and retain executive talent.

 

Compensation Program Changes

 

In late 2017 and early 2018, the Compensation Committee undertook a comprehensive review of our short- and long-term incentive compensation program and considered shareholder feedback when it made changes to the 2018 program. In February 2019, in connection with our recently-announced business transformation strategy, the Committee made changes to our long-term incentive program. The changes for 2018 and 2019 are outlined below:

 

What We Changed Details
Added Cybersecurity Metric to Annual Bonus Plan   Beginning with the 2018 annual incentive plan, the Committee added a cybersecurity performance measure as one of the metrics to evaluate performance of all employees, including our executives. This cybersecurity metric is the same measure used to assess the overall strength of our security program, thus ensuring our compensation program reinforces our overall security program goals. The cybersecurity metric remains a component under the 2019 annual incentive plan.
Adopted Enhanced Clawback Policy   In 2018, we revised our compensation clawback policy to add a financial and reputational harm standard. Under the revised policy, the Board may recover incentive compensation awarded to employees in the event of misconduct or failure of oversight that results in significant financial or reputational harm.
Adopted Change In Control Severance Plan

  In February 2019, the Committee adopted a new Change in Control Severance Plan (the “CIC Plan”) for senior executives, including our NEOs other than Mr. Begor. The Committee worked with its outside compensation consultant to design a plan with market-standard terms that will provide executives security in the event of a change in control of the Company. The CIC Plan ensures that our executives objectively evaluate potential transactions that may be in the best interest of our shareholders, despite the potential negative consequences such transactions may have on them personally. The CIC Plan will not apply to Mr. Begor, whose change in control protections as contained in his employment agreement were already aligned with the core provisions of the CIC Plan.

 

  Eliminated CIC Letter Agreements. Other than as described above with respect to our CEO, all of our executives with individual change in control agreements (the “CIC Letter Agreements”) agreed to give up their individual agreements and become subject to the new CIC Plan.

 

  Reduced CIC Severance Multiples. Under the CIC Letter Agreements, certain executives were entitled to a severance multiple of 3x. Following the elimination of the CIC Letter Agreements, the severance multiple upon a change in control was set at 2x for all executives other than the CEO, representing a significant decrease in the benefit payable.

 

  Eliminated CIC Tax Gross-Ups. Under the CIC Letter Agreements, certain executives were entitled to tax gross-up benefits in connection with a change in control. Following the elimination of the CIC Letter Agreements, we do not offer tax gross-up benefits in connection with a change in control.

 

Implemented Changes to 2019 Direct Compensation

   No Increase in Base Salary or Annual Bonus Opportunity for NEOs. The Committee determined that our NEOs will not receive any increase to base salary or target bonus opportunity for 2019. The only compensation increases for our NEOs for 2019 relate to our long-term incentive program (described below), which creates greater focus on stock price and multi-year performance and thereby enhances alignment between management and shareholders.

 

  2019 Equifax Transformation Leadership Program. In connection with our EFX2020 multi-year business transformation strategy (see page 5 for details), the Committee reformulated the long-term incentive program for 2019 to more closely align incentives with our near- and long-term goals. The Equifax Transformation Leadership Program (the “2019 ETLP”) increases the target long-term incentive award opportunity for each NEO and a select group of our senior leadership team members, each of whom is integral to the successful execution of our strategy. In conjunction with the increased opportunity, the degree of overall performance risk has been substantially increased. The Committee expects to revert back to our traditional long-term incentive structure in 2020. The 2019 ETLP is described in detail on pages 49-51.

 

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Compensation Best Practices

 

   Strong emphasis on performance-based compensation, with 85% of CEO pay considered “at-risk”  

Enhanced compensation clawback policy with financial and reputational harm standard, including in supervisory capacity

 

Double-trigger change-in-control cash severance benefits and vesting of equity awards

 

Anti-hedging and -pledging policy for officers and directors

 

Independent Compensation Committee advised by independent compensation consultant

 

Meaningful share ownership requirements for senior officers

 

No re-pricing of underwater stock options

 

No income tax gross-ups other than for relocation or foreign tax expenses

 

   Mix of short-term and long-term incentives and performance metrics  
   Added cybersecurity performance measure to 2018 and 2019 annual incentive plans  
Adopted a new change in control severance plan applicable to executive officers, including NEOs who previously had individual change in control agreements. This eliminated income tax gross-ups and reduced payments in connection with a change in control  
All stock options granted under 2019 long-term incentive program are premium-priced  
   Capped annual and long-term performance-based awards  

 

Corporate Governance Highlights

 

Independent Board 9 of our 10 director nominees are independent
Board Refreshment The Governance Committee has implemented a succession plan to identify highly-qualified and diverse director candidates taking into account scheduled retirements
  Since October 2017, the Board appointed three new independent directors with expertise and skill sets in executive management, cybersecurity, technology and data and analytics, while also enhancing the gender diversity of the Board
  The Board periodically engages an independent consultant to facilitate its annual Board and committee self-evaluation process
  The Governance Committee will continue its ongoing succession planning in 2019 to identify additional highly-qualified and diverse director candidates
  Upon election of the Board’s nominees at the 2019 Annual Meeting, the average independent director tenure will be 5.4 years
Separated Chair and CEO Roles, with Independent Chairman

In September 2017, we separated the roles of CEO and Chairman, and Mark Feidler was appointed to serve as Independent Chairman of the Board

Mr. Feidler will continue to serve as Independent Chairman

Board Diversity 30% of our Board members are women
Annual Board Leadership Evaluation and Succession Planning

The Board annually reviews the leadership structure to determine whether a combined Chairman and CEO role or separate roles is in the best interests of shareholders

The Board annually evaluates the CEO’s performance and conducts a rigorous review and assessment of the succession planning process for the CEO and other top officers

Annual Director Election Each director is elected on an annual basis
Limits on Outside Board Service Outside directors are limited to service on four other public company boards and our CEO is limited to two other public company boards
Director and Executive Stock Ownership Each independent director is required to own Equifax common stock with a market value of at least five times his or her annual cash retainer. New directors have five years to achieve the ownership requirements
Our CEO and our other senior executive officers are required to own Equifax common stock with a market value of at least six and three times their base salary, respectively, within five years of assuming their respective positions

 

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Rigorous Trading Policy and Protocols We enhanced our risk escalation processes to support rapid escalation and internal notification of potentially significant events, such as a potential data breach, including the impact of such events on our decision of whether to halt trading under the insider trading policy
      We also broadened the group of employees subject to pre-clearance to include employees below the senior leadership team level
      These refinements made to our trading policy and risk escalation notification procedures ensure that those with decision-making authority on trading restrictions and pre-clearance requests have notice of any potential security incident
  Our insider trading policy prohibits our directors, officers and employees from owning financial instruments or participating in investment strategies that hedge the economic risk of owning Equifax stock
  We prohibit executive officers and directors from pledging Equifax securities as collateral for loans (including margin loans)
Proxy Access Bylaws Our bylaws include a proxy access provision that allows shareholders meeting certain requirements to nominate directors and have such nominees included in the proxy statement
No “Poison Pill” We do not have a stockholder rights plan, or “poison pill,” in place
Oversight of Political Contributions and Lobbying Activities Our Governance Committee has oversight authority regarding Company political activity (including corporate political expenditures) pursuant to our political engagement policy
We disclose aggregate annual political contributions made directly by the Company with corporate funds on our website
  In March 2019, we revised our political engagement policy to specifically address lobbying activities and our Governance Committee’s oversight of such activities

 

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Our Director Nominees

 

Our Board recommends that you vote FOR each of the director nominees named below for terms that expire at the 2020 Annual Meeting. This year’s Board nominees include our new independent director, Heather Wilson, the Chief Data Scientist of L. Brands, Inc. The following table provides summary information about each nominee, and you can find additional information under “Proposal 1, Election of Director Nominees” on page 15.

 

 
         

MARK W. BEGOR
Chief Executive Officer
of Equifax Inc.

 

Age: 60
Director since 2018

MARK L. FEIDLER
Independent Chairman

Founding Partner of
MSouth Equity Partners

Age: 62
Director since 2007

Committees:

Compensation, Governance

G. THOMAS HOUGH

Retired Americas Vice
Chair of Ernst & Young LLP

Age: 64
Director since 2016

Committees:

Audit (Chair)

ROBERT D. MARCUS

Former Chairman and
Chief Executive Officer of Time Warner Cable Inc.

Age: 53

Director since 2013

Committees:

Compensation (Chair),

Governance

SIRI S. MARSHALL

Retired SVP, General
Counsel and Chief
Governance & Compliance
Officer of General Mills,
Inc.

Age: 70

Director since 2006

Committees:

Compensation,
Governance (Chair)

         
         

SCOTT A. MCGREGOR

Former President and
Chief Executive Officer of Broadcom Corporation

Age: 62

Director since 2017

Committees:

Audit, Technology

JOHN A. MCKINLEY

Chief Executive Officer of SaferAging, Inc. and Co-Founder of LaunchBox
Digital

Age: 61

Director since 2008

Committees:

Audit,
Technology (Chair)

 

ROBERT W. SELANDER

Former President and
Chief Executive Officer of Mastercard Incorporated
and Mastercard
International

Age: 68

Director since 2018

Committees:

Compensation, Technology

 

ELANE B. STOCK

Former Group President
of Kimberly-Clark International

Age: 54

Director since 2017

Committees:

Audit, Governance

HEATHER H. WILSON

Chief Data Scientist of L Brands, Inc.

Age: 47

Director since Feb. 2019

Committees:

Technology

 

 

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PROPOSALS TO BE VOTED ON

 

PROPOSAL 1 Election of Director Nominees

 

All members of our Board are elected to serve until the next annual meeting of shareholders and until their successors have been elected and qualified. The 10 nominees for election listed below have consented to being named in this Proxy Statement and to serve if elected. This year’s nominees include one new independent director, Heather Wilson, Chief Data Scientist of L Brands, Inc. All director nominees attended 75% or more of the aggregate of the meetings of the Board and of the committees of the Board on which such directors served during 2018. All of the director nominees then serving attended the 2018 Annual Meeting.

 

Our director nominees have a variety of backgrounds, which reflects the Board’s continuing objective to achieve a diversity of perspective, experience, knowledge, ethnicity and gender. As more fully discussed under “Director Membership Criteria and Nomination Processes” on page 24, director nominees are considered on the basis of a range of criteria, including their business knowledge and background, reputation and global business perspective. They must also have demonstrated experience and ability that is relevant to the Board’s oversight role with respect to Company business and affairs. Presented below is biographical information for each of the nominees.

 

THE BOARD RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH NOMINEE LISTED BELOW.

 

Our Director Nominees

 

  MARK W. BEGOR
  Director since 2018
Age 60
Chief Executive Officer
  Mr. Begor has served as our Chief Executive Officer and as a director since April 2018. Prior to joining Equifax, Mr. Begor was a Managing Director in the Industrial and Business Services group at Warburg Pincus, a global private equity investment firm, since June 2016. Prior to Warburg Pincus, Mr. Begor spent 35 years at General Electric Company (“GE”), a global industrial and financial services company, in a variety of operating and financial roles. During his career at GE, Mr. Begor served in a variety of roles leading multibillion dollar units of the company, including President and CEO of GE Energy Management from 2014 to 2016, President and CEO of GE Capital Real Estate from 2011 to 2014, and President and CEO of GE Capital Retail Finance (Synchrony Financial) from 2002 to 2011. Mr. Begor served on the Fair Isaac Corporation (FICO) board of directors from 2016 to 2018.
 

Overview of Board Qualifications

 

The Board believes that it is important to have the Company’s Chief Executive Officer also serve as a director. The Board values Mr. Begor’s broad depth of leadership experience, including 35 years at General Electric, and his proven track record of growing and strengthening businesses.

   

 

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  MARK L. FEIDLER
  Director since 2007
Age 62
Independent

Independent Chairman of the Board
Compensation Committee
Governance Committee
 

Founding Partner of MSouth Equity Partners, a private equity firm based in Atlanta, since February 2007. Mr. Feidler was President and Chief Operating Officer and a director of BellSouth Corporation, a telecommunications company, from 2005 until January 2007. Mr. Feidler served as its Chief Staff Officer during 2004. From 2001 through 2003, Mr. Feidler was Chief Operating Officer of Cingular Wireless and served on the Board of Directors of Cingular from 2005 until January 2007.

 

Other Public Directorships

 

  New York Life Insurance Company (Lead Director)

 

Overview of Board Qualifications

 

Mr. Feidler has extensive operating, financial, legal and regulatory experience through his prior position with a major regional telecommunications company, as well as expertise in private equity investments and acquisitions. This background is relevant to us as we market our products to companies in telecommunications and other vertical markets, while his private equity experience is relevant to our new product development, marketing and acquisition strategies. His public company operating experience and background in financial, accounting, technology and risk management are an important resource for our Board.

   
   
  G. THOMAS HOUGH
 

Director since 2016
Age 64
Independent

 

Audit Committee (Chair)

 

Retired Americas Vice Chair of Ernst & Young LLP, an international public accounting firm. He was Vice Chair of Assurance Services of Ernst & Young from 2009 to July 2014, and Americas Vice Chair until his retirement in September 2014. Mr. Hough joined Ernst & Young in 1978 and became a partner in 1987. During his career at Ernst & Young, he led various teams across the firm, including serving as Vice Chair and Southeast Area Managing Partner from 2000 to 2009 and Vice Chair of Human Resources from 1996 to 2000.

 

Other Public Directorships

 

  Publix Super Markets, Inc.

•  Federated Fund Family

•  Haverty Furniture Companies, Inc.

Overview of Board Qualifications

 

Mr. Hough brings invaluable experience in audit, accounting, finance and corporate governance. His background in financial accounting and risk management, including leadership experience at a major international accounting firm, is of particular importance to our Board.

 
  ROBERT D. MARCUS
 

Director since 2013
Age 53
Independent
 
Compensation Committee (Chair)
Governance Committee

 

 

Former Chairman and Chief Executive Officer of Time Warner Cable Inc., a provider of video, high-speed data and voice services, from January 2014 until the company was acquired by Charter Communications in May 2016. He was named a director of Time Warner Cable Inc. in July 2013 and served as President and Chief Operating Officer from 2010 to 2013. Prior thereto, he was Senior Executive Vice President and Chief Financial Officer from January 2008 and Senior Executive Vice President from August 2005. Mr. Marcus joined Time Warner Cable Inc. from Time Warner Inc. where he held various senior positions from 1998. From 1990 to 1997, he practiced law at Paul, Weiss, Rifkind, Wharton & Garrison.

 

Other Public Directorships

 

•  Ocean Outdoor Limited

Overview of Board Qualifications

 

Mr. Marcus has extensive operating, financial, legal and regulatory experience through his position as Chairman and CEO of Time Warner Cable, as well as expertise in mergers and acquisitions. This background is relevant to us as we market our products to data and telecommunications companies and other vertical markets. His public company operating and finance experience and background in legal and regulatory matters are an important resource for our Board.

 

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  SIRI S. MARSHALL
  Director since 2006
Age 70
Independent
 
Compensation Committee
Governance Committee (Chair)
  Retired Senior Vice President, General Counsel, Secretary and Chief Governance and Compliance Officer of General Mills, Inc., a global diversified foods maker and distributor, where she served in that position from 1994 until her retirement in January 2008. She is on the Board of Directors of Direct Relief and the Yale Law School Center for the Study of Corporate Law, and on the Board of Advisors of Manchester Capital Management, Inc. During the past five years, Ms. Marshall also served as a director of Ameriprise Financial, Inc., a diversified financial services company, Alphatec Holdings, Inc., a provider of spinal fusion technologies, BioHorizons, Inc., a dental implant and biologics company, and as a Distinguished Advisor to the Straus Institute for Dispute Resolution. In February 2011, Ms. Marshall received the Sandra Day O’Connor Board Excellence Award from DirectWomen.

Overview of Board Qualifications

 

Ms. Marshall’s over 13 years of executive experience at General Mills provides a valuable perspective on our organizational management, legal, compliance, regulatory and government affairs, consumer products business and corporate governance. The Board particularly values her broad experience with other public company boards, including as a director of a large financial institution, as well as her perspective and insight gained through her service on the executive, compensation and governance committees of other public companies and her leading role in corporate law and dispute resolution matters.

 
  SCOTT A. MCGREGOR
 

Director since 2017
Age 62
Independent
 
Audit Committee
Technology Committee

 

 

Former President, Chief Executive Officer and Director of Broadcom Corporation, a world leader in wireless connectivity, broadband and networking infrastructure. Mr. McGregor served in those positions from 2005 until the company was acquired by Avago in 2016. From 2016 to 2017, Mr. McGregor served on the board of directors of Xactly Corporation. Mr. McGregor served on the board of directors of Ingram Micro, Inc. from 2010 to 2016. From 2001 to 2005, Mr. McGregor served as President and Chief Executive Officer of the Philips Semiconductors division of Royal Philips Electronics. Prior thereto, Mr. McGregor was head of Philips Semiconductors’ Emerging Business unit from 1998. Mr. McGregor served in various senior management positions of Santa Cruz Operations, Inc. from 1990 to 1997.

 

Other Public Directorships

 

•  Applied Materials, Inc.

Overview of Board Qualifications

 

Mr. McGregor has extensive executive management, cybersecurity, information technology and risk management experience gained in over ten years as President and Chief Executive Officer of Broadcom and in senior positions at Royal Philips Electronics. This experience is particularly important to us as we continue to focus on strengthening our data security.

 
  JOHN A. MCKINLEY
  Director since 2008
Age 61
Independent
 
Audit Committee
Technology Committee (Chair)
  Chief Executive Officer of SaferAging, Inc., a senior care service provider based in Washington, D.C., and Co-founder of LaunchBox Digital, a venture capital firm in Washington, D.C. Mr. McKinley was Chief Technology Officer of News Corporation from July 2010 to September 2012. He was President, AOL Technologies and Chief Technology Officer from 2003 to 2005 and President, AOL Digital Services from 2004 to 2006. Prior thereto, he served as Executive President, Head of Global Technology and Services and Chief Technology Officer for Merrill Lynch & Co., Inc., from 1998 to 2003; Chief Information and Technology Officer for GE Capital Corporation from 1995 to 1998; and Partner, Financial Services Technology Practice, for Ernst & Young International from 1982 to 1995.

Overview of Board Qualifications

 

The Board highly values Mr. McKinley’s extensive background in managing complex global technology operations as chief technology officer at a number of leading global companies. These skills are highly relevant to the Board’s oversight of risks and opportunities in our technology operations, including data and cybersecurity, risk management and capital investments. The Board also values his technology and industry experience gained from his twelve years as a partner in Ernst & Young’s financial services technology practice, as well as his entrepreneurial insights.

 

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  ROBERT W. SELANDER
  Director since 2018
Age 68
Independent
 
Compensation Committee
Technology Committee
 

Former President and Chief Executive Officer of Mastercard Incorporated and Mastercard International from 1997 to 2010. He joined Mastercard International Inc. in 1994, where he served as President of Mastercard’s Europe, Middle East, Africa and Canada regions until his appointment as President and Chief Executive Officer. Prior to Mastercard, he spent 20 years with Citicorp/Citibank, N.A., where he held several leadership positions including managing parts of Citibank’s Consumer Financial Services business in the United States, Brazil, Puerto Rico and the United Kingdom.

 

Other Public Directorships

 

•  HealthEquity, Inc. (Independent Chairman)

 

•  The Western Union Company

 

Overview of Board Qualifications

 

Mr. Selander has extensive global business, leadership and financial services experience gained in over 13 years as President and Chief Executive Officer of Mastercard Incorporated and Mastercard International and in senior positions at Citibank. Mr. Selander also has substantial board of director experience having served as a director of Mastercard Incorporated, Mastercard International, the Hartford Financial Services Group, Inc., The Western Union Company and HealthEquity, Inc.

 
  ELANE B. STOCK
  Director since 2017
Age 54
Independent
 
Audit Committee
Governance Committee
 

Former Group President of Kimberly-Clark International, a division of Kimberly-Clark Corporation, a leading global consumer products company. She served in that position from 2014 until January 2017. From 2012 to 2014, Ms. Stock was the Global President for Kimberly-Clark Professional, and from 2010 to 2012, she was the Chief Strategy Officer of Kimberly-Clark Corporation. Prior to Kimberly-Clark, Ms. Stock was the National Vice President of Strategy for the American Cancer Society from 2008 to 2010 and Regional Manager of Georgia Pacific’s (Koch Industries) Color-Box business from 2007 to 2008. From 1992 to 2001 and 2005 to 2007, she held progressive management positions at McKinsey & Company, including managing partner of the Dublin, Ireland office.

 

Other Public Directorships

 

•  YUM! Brands, Inc.

 

•  Reckitt Benckiser Group PLC

 

Overview of Board Qualifications

 

Ms. Stock brings extensive strategy, diversified operations and multi-national experience in leading global consumer and B2B businesses. Her expertise in branding, marketing, sales, strategic planning and international business development is particularly important as Equifax develops and markets new products and services for consumers and businesses across the world.

 
  HEATHER H. WILSON
  Director since 2019
Age 47
Independent
 
Technology Committee
  Chief data scientist of L Brands, Inc., an American fashion retailer, since 2016. From 2012 to 2016, Ms. Wilson served as chief data officer at American International Group, Inc. (AIG). From 2010 to 2012, she was chief data officer of Citigroup and Global Head of Decision Sciences. Prior thereto, Ms. Wilson was global head of innovation and advanced technology at Kaiser Permanente from 2007 to 2010.

Overview of Board Qualifications

 

The Board highly values Ms. Wilson’s technology experience, executive leadership and expertise in analytics, data science and artificial intelligence. Her technological insight, particularly her deep knowledge of data science and its impact on business transformation across several industries, is of tremendous value to our company, our Board and our customers as we execute our multi-year technology transformation and implement our business imperatives. Ms. Wilson has also been a steady supporter of diversity, launching the Kaiser Permanente Women in Technology group, serving as an executive member of Citi4Women at Citigroup, founding the Global Women in Technology at AIG and acting as executive sponsor of Girls Who Code.

 

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Board Skills Matrix

 

The Board skills matrix below represents some of the key skills that our Board has identified as particularly valuable to the effective oversight of the Company and the execution of our strategy. This matrix highlights the depth and breadth of the skills of our directors standing for election.

 

Experience, Expertise
or Attribute
  Begor  Feidler  Hough  Marcus  Marshall  McGregor  McKinley  Selander  Stock  Wilson
Executive Leadership &
Business Operations
                   
CEO Experience                         
CFO Experience                            
CTO Experience                             
EFX Industry Knowledge                           
Technology/Cybersecurity                         
Finance/Financial Industry                     
Accounting                           
Risk Management                   
International Business                    
Strategy Development                   
Mergers & Acquisitions                     
Consumer Marketing                      
Legal/Regulatory                           
Corporate Governance                       

 

BOARD LEADERSHIP & CORPORATE GOVERNANCE

 

Equifax Corporate Governance

 

Our Board of Directors and management team are committed to achieving and maintaining high standards of corporate governance, ethics and integrity. We conduct our business in a manner that is socially responsible, value-based and in compliance with the law. We periodically review our governance policies and practices against evolving standards and make changes as appropriate. We also value the perspectives of our shareholders and other stakeholders, including our employees and the communities in which we operate, and take steps to implement their points of view when warranted.

 

Investor engagement over the last several years has prompted review of and changes to our governance practices, and our Board remains committed to continuous improvement. See “Corporate Governance Highlights” on pages 12-13 for a summary of our key governance practices. In addition, following our 2018 Annual Meeting, we conducted investor outreach meetings with shareholders representing approximately 57% of our shares. Our Independent Chairman, Mark Feidler, participated in one-on-one investor meetings, during which we discussed a number of business and governance-related topics, including Board refreshment and skill sets, company culture and cultural changes, risk oversight, human capital management, executive compensation and corporate governance. Those conversations provided valuable insight that has informed the Board’s decision-making on several of the improvements to our corporate governance described in this Proxy Statement.

 

The following sections summarize our corporate governance policies and practices including our Board leadership structure, our criteria for director selection and the responsibilities and activities of our Board and its committees. Our corporate governance documents, including the Governance Guidelines, our Board committee charters and our Code of Ethics and Business Conduct applicable to directors, officers and employees, are available at https://www.equifax.com/about-equifax/corporate-governance, or in print upon request to Equifax Inc., Attn: Office of Corporate Secretary, P.O. Box 4081, Atlanta, Georgia 30302, telephone (404) 885-8000. The Code of Ethics and Business Conduct provides our policies and expectations on a number of topics, including our commitment to good citizenship, providing transparency in our public disclosures, prohibiting insider trading, avoiding conflicts of interest, honoring the confidentiality of sensitive information, preservation and use of Company assets, compliance with all laws and operating with integrity in all that we do.

 

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Board Leadership Structure

 

The Board annually reviews its leadership structure, and our governance documents provide the Board with the flexibility to select the appropriate leadership structure for us at any given time. In prior years, the roles of Chairman and CEO were combined. However, after the 2017 cybersecurity incident, and simultaneous with the appointment of our interim CEO, the Board determined to adjust its leadership structure to separate the roles of Chairman and CEO. Mark Feidler, who had previously served as a leader for the independent directors in his role as Presiding Director, was elected to the role of Independent Chairman. The Board concluded that this new structure would allow our then-interim CEO to focus his attention on leading the Company’s response to the 2017 cybersecurity incident and efforts to rebuild trust with shareholders, consumers, customers and other stakeholders.

 

In connection with the appointment of Mr. Begor as our CEO, the Board re-evaluated the leadership structure and determined to retain the current structure of separate Chairman and CEO roles, with Mr. Feidler continuing to serve as our Independent Chairman. This structure provides for direct independent oversight of management and clearly delineates the role of the Board as a source of insight and oversight for management. The Board believes this leadership structure, which also includes a majority independent Board and fully independent Board committees, best serves the objectives of the Board’s independent oversight of the Company’s business and affairs at this time.

 

INDEPENDENT CHAIRMAN OF THE BOARD

 

Mark Feidler

 

The role and responsibilities of Independent Chairman include:

 

Calling meetings of the full Board or of the non-management directors
Establishing the agenda for each Board meeting, in coordination with the CEO
Presiding at all meetings of the Board
Advising the CEO of decisions reached and suggestions made at the executive sessions of the non-management directors
Facilitating communication between the directors and with the CEO
Meeting directly with management and other employees of the Company
Calling special meetings of shareholders
Presiding at meetings of shareholders
Being available for consultation and direct communication with shareholders

 

Annual Self-Evaluations

 

Our Board continually seeks to improve its performance. We have a rigorous annual Board and committee self-evaluation process, which presents the opportunity to examine the Board’s effectiveness and practices and identify areas for improvement. Our Governance Committee annually reviews and recommends the specific format to use for that year’s Board evaluation.

 

 

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Board Evaluation Process for 2018-2019

 

The Board periodically engages an independent consultant to facilitate its annual Board and committee self-evaluation process, as it did most recently in connection with the 2017-2018 review cycle. This year, based upon the recommendation of the Governance Committee, the Board determined it was appropriate to implement the standard process for the 2018-2019 evaluation process. Under the standard process, each director completed written Board and committee evaluation questionnaires. The questionnaire responses were then aggregated by the Office of Corporate Secretary without individual attribution and reviewed by the Independent Chairman as well as the committee chairs. The Independent Chairman then participated in one-on-one discussions with each of the other directors, during which they discussed the response summaries. The Independent Chairman reviewed the evaluation results with the full Board of Directors in February 2019. Following review, the Board and its committees identified various opportunities to strengthen the effectiveness of the Board’s practices, structures, competencies and communications. For example, in response to feedback discussed as part of the Governance Committee self-evaluation, the Governance Committee identified an opportunity to enhance the new director orientation process by designating a member of the Board to participate in a one-on-one onboarding session with each new director.

 

Committees of the Board of Directors

 

The Board has four standing committees, all of which are comprised of independent directors as defined in the New York Stock Exchange (“NYSE”) rules. The Board appoints committees to help carry out its duties and work on key issues in greater detail than is generally possible at Board meetings. Committees regularly review the results of their meetings with the Board. In 2018, the full Board held 18 meetings and the standing committees held a total of 34 meetings.

 

Committee Composition

 

       Committee Memberships
Name   Independent  Audit  Compensation  Governance  Technology
Mark W. Begor                
Mark L. Feidler             
G. Thomas Hough              
Robert D. Marcus             
Siri S. Marshall             
Scott A. McGregor            
John A. McKinley            
Robert W. Selander            
Elane B. Stock             
Heather H. Wilson             
Meetings held in 2018      8  9  9  8

 

= Independent Chairman

= Audit Committee Financial Expert

= Committee Chair

 

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Committee Responsibilities

 

Each committee operates pursuant to a written charter which is available on the Company’s website at www.equifax.com/about-equifax/corporate-governance. The following summarizes the oversight responsibilities of each committee:

 

Audit Committee Direct authority to appoint, review and discharge our independent auditors
  Reviews and pre-approves the services provided by our independent auditors and reviews the independence of that firm
  Reviews our audited and unaudited financial statements, earnings press releases and financial information and discusses the same with our independent auditors and management
  Reviews the integrity of our financial reporting process and the adequacy and effectiveness of our financial and information technology controls
  Oversees our regulatory compliance program and administers our Code of Ethics and Business Conduct
  Reviews our policies related to enterprise risk assessment and risk management
  Oversees our internal audit function
  Meets separately with the internal and external auditors to ensure full and frank communications with the Committee
  Coordinates with the Technology Committee on risk management with respect to cybersecurity
Compensation Committee Approves and oversees our executive compensation programs and policies
  Determines executive officer compensation
  Oversees an annual risk assessment of our compensation programs
  Approves employee compensation and benefit plans
  Monitors the effectiveness and funded status of our retirement and 401(k) plans
  Advises management and the Board on succession planning and other significant human resources matters
  Establishes and reviews compliance with the Company’s stock ownership guidelines
  Reviews and approves the creation or revision of any clawback policy
  Reviews the CD&A and other proxy statement disclosures related to executive compensation, and determines whether to recommend to the Board the inclusion of the CD&A in the proxy statement
Governance Committee Reviews and makes recommendations to the Board regarding director nominees and director independence
  Makes recommendations to the Board with respect to Board and committee organization, membership and function
  Oversees an annual review of the effectiveness of the Board and its committees
  Recommends to the Board, and monitors compliance with, our Governance Guidelines and other corporate governance matters
  Exercises oversight of director compensation program and makes recommendations on such compensation for approval of the Board
  Reviews and discusses with management the Company’s responses to shareholder proposals or determines another committee of the Board appropriately responsible for reviewing a particular proposal
Technology Committee Oversees cybersecurity and technology-related risk management in coordination with the Audit Committee
  Oversees our technology strategy and significant technology investments
  Receives regular reports directly from the CISO, the CTO and the internal audit department, including in executive session without other members of management present
  Makes recommendations to the Board as to scope, direction, quality, investment levels and execution of technology strategies
  Oversees engagement of outside advisors to review the Company’s cybersecurity program
  Provides guidance on technology as it may pertain to, among other things, investments, mergers, acquisitions and divestitures, research and development investments, key competitor and partnership strategies and security concerns

 

Director Independence

 

Our Governance Guidelines provide that a substantial majority of our Board should be independent. Our Guidelines for Determining the Independence of Directors, which may be accessed on our website at www.equifax.com/about-equifax/corporate-governance, meet or exceed the requirements of Securities and Exchange Commission (“SEC”) rules and regulations and the NYSE listing standards.

 

The Board has affirmatively determined that all director nominees (other than our CEO, Mr. Begor) are independent under the applicable NYSE listing standards, SEC rules and our Guidelines for Determining the Independence of Directors. In making these determinations, the Board considered the types and amounts of the commercial dealings between the Company and the companies and organizations with which the directors are affiliated. The Board views the independence analysis as an ongoing consideration and will continue to monitor these relationships.

 

Each director is an equal participant in decisions made by the full Board. All of our standing Committees are comprised solely of independent directors.

 

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Board Refreshment and Succession Planning

 

The Governance Committee regularly assesses the requirements of the Board and makes recommendations regarding its size, composition and structure. The Governance Committee is focused on how the experience and skill set of each individual director complements those of fellow directors to create a balanced Board with diverse viewpoints, skills and expertise and reflecting a diversity of experiences, gender, ethnicity and age. As part of its ongoing strategic review regarding Board refreshment, the Governance Committee seeks to anticipate future needs for expertise in new and emerging markets, security, technology and regulatory compliance, while also enhancing the diversity on our Board. Among other things, the Governance Committee considers committee composition and chair rotation as part of its overall succession planning process.

 

Since the 2017 cybersecurity incident, the Governance Committee and the Board have actively sought new directors that can provide valuable guidance as the Company continues to focus on strengthening the Company’s core technology and security competencies and executing on our EFX2020 multi-year business transformation strategy. The Board believes that the additions of Scott McGregor in October 2017, Robert Selander in March 2018 and Heather Wilson in February 2019 provide our Board with additional broad-based executive management experience, as well as enhanced expertise in security, technology, risk management, data and analytics.

 

Board Tenure and Refreshment

 

Pursuant to our Bylaws and Governance Guidelines, we have a mandatory retirement age of 72 (65 for employee-directors) after which a director will not be elected or re-elected unless he or she continues in a position or in business or professional activities or possesses special qualifications that the Governance Committee and Board determine would be of substantial benefit to the Company. The following table shows the tenure of our non-management directors, which is well distributed to create a balanced Board, with five new independent directors joining the Board over the last three years. Since 2013, we have decreased the average tenure of our independent director nominees from 10.4 years to 5.4 years. Individual and average tenure information for our Board (following election of the nine independent director nominees named in this Proxy Statement at the 2019 Annual Meeting) is as follows:

 

TENURE OF NON-MANAGEMENT DIRECTORS

 

 

Committee Tenure and Refreshment

 

The Governance Committee is responsible for reviewing the composition of committees of the Board. In its review of committee composition, the Governance Committee considers the responses collected during the Board and committee annual self-evaluations, as well as the past experience and relevant skills of each director. Since the 2017 cybersecurity incident, the Governance Committee and the Board have placed a renewed emphasis on refreshing the committees of the Board to ensure each committee has the appropriate relevant mix of skills and experience. Following the 2017 cybersecurity incident, each of the four standing committees of the Board is comprised of at least 50% of directors who were not members of such committee prior to September 2017. In particular, three of the four Technology Committee members joined the Board after September 2017. Individual tenure information for each committee is as follows:

 

TENURE OF AUDIT AND TECHNOLOGY COMMITTEE MEMBERS

 

 

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Director Membership Criteria and Nomination Processes

 

Process for Identifying and Evaluating Director Nominees

 

When the need to fill a new Board seat or vacancy arises, the Governance Committee proceeds in the manner it deems appropriate to identify a qualified candidate or candidates. Candidates may be identified through the engagement of an outside search firm, recommendations from independent directors, the Chairman of the Board, management or other advisors to the Company, and recommendations by shareholders. The Governance Committee Chair and Chairman of the Board are provided with copies of the resumes for any potential candidates so identified and review them as appropriate with the Governance Committee, our CEO and the full Board. Our most recent addition to the Board, Heather Wilson, was identified as a potential candidate by an outside search firm.

 

Our Governance Committee determines the selection criteria and qualifications for director nominees. As set forth in our Governance Guidelines, these criteria include, among other things, a director candidate’s integrity and ethical standards, independence from management, the ability to provide sound and informed judgment, a history of achievement that reflects superior standards and willingness to commit sufficient time. With respect to the last three additions to the Board, the Governance Committee was also very focused on expertise in data security, risk management, data and analytics and information technology. Since 2018, cybersecurity is one of the skills that the Governance Committee considers in its assessment of Board membership criteria. The Governance Committee and the Board also consider whether the candidate is independent under the standards described under “Director Independence” on page 22 and whether the candidate is financially literate.

 

Although the Committee does not have a formal diversity policy for Board membership, it considers whether a director nominee contributes or will contribute to the Board in a way that can enhance the perspective and experience of the Board as a whole through, among other things, diversity in gender, age, ethnicity and professional experience. When current Board members are considered for nomination for re-election, the Committee also takes into consideration their prior Board contributions, performance and meeting attendance records. The effectiveness of the Board’s skills, expertise and background, including its diversity, is also considered as part of the Board’s annual self-assessment.

 

Directors are limited to service on four other public company boards, not including our Board. Audit Committee members may not serve on the audit committee of more than three public companies absent a Board determination that such service will not impair the ability of such member to serve effectively on the Company’s Audit Committee. In addition, when our CEO is a member of our Board, he or she may not serve on more than two other public company boards.

 

Procedures for Shareholders to Recommend Director Nominees

 

The Governance Committee will consider for possible nomination qualified Board candidates that are submitted by our shareholders using the same process that applies to candidates identified by other sources. Shareholders wishing to make such a submission may do so by sending the following information to the Governance Committee by November 23, 2019, c/o Equifax Inc., Attn: Office of Corporate Secretary, P.O. Box 4081, Atlanta, Georgia 30302: (1) a nomination notice in accordance with the procedures set forth in Section 1.12 of our Bylaws; (2) a request that the Governance Committee consider the shareholder’s candidate for inclusion in the Board’s slate of nominees for the applicable meeting; and (3) along with the shareholder’s candidate, an undertaking to provide all other information the Committee or the Board may request in connection with their evaluation of the candidate. See “How do I submit a proposal or director nominee for the 2020 Annual Meeting of Shareholders?” on page 79. A copy of our Bylaws is available on our website at www.equifax.com/about-equifax/corporate-governance or by writing to the Corporate Secretary.

 

Any shareholder’s nominee must satisfy the minimum qualifications for any director described above in the judgment of the Governance Committee and the Board. In evaluating shareholder nominees, the Committee and the Board may consider all relevant information, including the factors described above, and additionally may consider the size and duration of the nominating shareholder’s holdings in the Company; whether the nominee is independent of the nominating shareholder and able to represent the interests of the Company and its shareholders as a whole; and the interests and/or intentions of the nominating shareholder.

 

Director Orientation and Continuing Education

 

Upon joining our Board, directors participate in an orientation program regarding our Company, including business operations, strategy, regulation, governance and company policies. New for 2019, an existing member of our Board will be designated to participate in the orientation process and conduct a one-on-one session with each new director. In addition to the onboarding process, members of senior management regularly present reports at Board meetings and review the operating plan and strategy of each of our business units and the Company as a whole, as well as provide periodic training sessions regarding regulatory compliance and governance issues. The Board also conducts periodic visits to our key facilities and Board members participate in crisis management simulations and/or training with management. Board members also may attend outside director continuing education programs at Company expense to assist them in keeping pace with developments in corporate governance and other critical issues relating to the operations of public company boards. In 2018, the Board implemented enhanced Board-level engagement with respect to data security education and crisis management planning, including in connection with our new director orientation program.

 

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Management Succession Planning and Talent Development Process

 

Our Board is accountable for the development, implementation and continual review of a succession plan for the CEO and other executive officers. As part of its responsibilities under its charter, the Compensation Committee oversees the succession planning process for the CEO and the senior leadership team. The process ensures that critical business capabilities are safeguarded, executive development is prioritized and strategic talent is leveraged to focus on current and new business imperatives. In light of the appointment of a new CEO last year, the Compensation Committee has undertaken refreshed succession and development plans, including continued practices such as monitoring each of the CEO’s direct reports for high potential internal CEO succession candidates, all of whom have ongoing exposure to the Board and are reviewed annually with the Board by the CEO and the Chief Human Resources Officer. The Compensation Committee and the Board also review the foregoing in executive session on a regular basis.

 

How We Manage Risk

 

We have a comprehensive enterprise-wide risk management (“ERM”) program focused on the application of controls over the following risk types:

 

•  operational •  reputational •  data security
•  financial •  technology   strategic
•  legal and regulatory compliance •  privacy •  other risks that could adversely affect our business

 

In an effort to strengthen our ERM program, we have implemented an enterprise risk management framework based on the “three lines of defense” model for establishing effective checks and balances, which is used by leading financial institutions.

 

LINES OF DEFENSE
 
                     
The first line of defense, the operational line, is the business unit or corporate support unit, such as IT, data security, finance and human resources. Business unit and corporate support unit leaders are directly responsible for managing risks and controls in their processes.   The second line of defense provides risk and regulatory compliance oversight, and is primarily comprised of the Risk Office and the Enterprise Compliance Office. They have a direct reporting line to the Board of Directors and are responsible for establishing frameworks, policies and standards, performing independent risk-based monitoring and testing, and independently identifying and assessing material risks, including IT and data security risks.   The third line of defense, the internal audit department, as supplemented by third party support, audits the effectiveness of the oversight of the second line of defense and performs direct audits of the first line of defense. Internal audit is responsible for providing the Audit and Technology Committees and senior management with an independent assessment and assurance regarding the design and effectiveness of the risk management framework.
         

 

The implementation and execution of our ERM program is supervised by our Risk Office, with each business unit and corporate support unit having primary responsibility for assessing and mitigating risks within its respective areas of responsibility. Our recently-appointed SVP for Enterprise Risk and Compliance leads the Risk Office and meets regularly with the Board, the Audit Committee and the Technology Committee. An ERM team within the Risk Office develops, enhances, deploys and manages risk program elements.

 

 

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Board Oversight of Risk

 

Our Board oversees risk management at the Company. The Board exercises direct oversight of strategic risks to the Company and other risk areas not delegated to one of its committees.

 

The risk management roles and responsibilities of the Board and its committees are:

 

BOARD OF DIRECTORS
Monitors our “tone at the top” and risk culture and oversees principal risks facing the Company
On an annual basis, the Board performs an enterprise risk assessment with management to review the principal risks and monitors the steps management is taking to map and mitigate these risks
  The Board then sets the general level of risk appropriate for the Company through business strategy reviews
  Risks are assessed throughout the business, focusing on (i) financial, operational and strategic risks, and (ii) ethical, legal, privacy, data security (including cybersecurity), regulatory and other compliance risks

 

 

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Related Person Transaction Policy

 

The Board has adopted a written policy for approval of transactions between the Company and its directors, director nominees, executive officers, greater than 5% beneficial owners and their respective immediate family members (each, a “Related Person”), where the amount of the transaction is expected to exceed $120,000 in a single calendar year. The policy provides that the Audit Committee reviews transactions subject to the policy and decides whether or not to approve or ratify those transactions. In doing so, the Audit Committee determines whether the transaction is in the best interests of the Company. In making that determination, the Audit Committee takes into account the following, among other factors it deems appropriate:

 

the extent of the Related Person’s interest in the transaction;
whether the transaction is on terms generally available to an unaffiliated third-party under the same or similar circumstances;
the benefits to the Company;
the availability of other sources for comparable products or services; and
the terms of the transaction.

 

The Governance Committee also determines the impact or potential impact on a director’s independence in the event the Related Person is a director, an immediate family member of a director, or an entity in which a director is a partner, shareholder or executive officer.

 

Certain Relationships and Related Person Transactions of Directors, Executive Officers and 5 Percent Shareholders

 

During 2018, the Company was not a participant in any transaction or series of transactions in which the amount involved did or may exceed $120,000 in which any Related Person had or will have a direct or indirect material interest, other than the compensation arrangements (including with respect to equity compensation) described in “Executive Compensation” beginning on page 30 and “Director Compensation” on page 69.

 

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PROPOSAL 2 Advisory Vote to Approve Named Executive Officer Compensation

 

Summary

 

As we do each year, and as required by Section 14A of the Securities Exchange Act, we are seeking advisory shareholder approval of the compensation of our named executive officers (“NEOs”) as disclosed in the section of this Proxy Statement titled “Executive Compensation” beginning on page 30. This vote is commonly referred to as “say-on-pay.” Shareholders are being asked to vote on the following advisory resolution:

 

“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of Equifax’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission (which disclosure shall include the Compensation Discussion and Analysis, the compensation tables, and any related material).”

 

Our executive compensation program aligned closely with our performance and shareholder interests.

 

We provide competitive pay opportunities that reflect best practices and strong governance standards
(See pages 35-36 for details)

  The Compensation Committee annually reviews our executive compensation program to ensure that it provides competitive pay opportunities for executives who drive operating performance and that the program demonstrates a commitment to strong corporate governance. Attracting and retaining the right talent remains a high priority for us as we focus on executing the strategic initiatives that underpin EFX2020, our multi-year business transformation strategy

 

  The Committee establishes appropriate performance targets based on our strategic and operating plans and achievement of targets in the prior year

 

  The Committee retains an independent compensation consultant to assist in aligning our program with our shareholders’ interests and current market practices, and to guard against programs that create any inappropriate or excessive risk likely to have a material adverse effect on the Company

 

We made changes to our 2018 and 2019 compensation programs to further align pay with our strategic initiatives and the interests of shareholders and the Company
(See page 33 for details)

  In response to shareholder feedback and the Committee’s review of the program, the Committee made a number of changes to the 2018 and 2019 compensation programs, highlighted below:

 

2018

  The Committee added a cybersecurity performance metric to the 2018 annual incentive plan (“AIP”) that can reduce, but not increase, payouts based on performance against our security goals

 

  The Board adopted an enhanced compensation clawback policy that allows the Company to recover incentive compensation in the event of misconduct or failure of oversight that results in significant financial or reputational harm

 

  The Committee eliminated from the long-term incentive award mix performance shares tied to three-year cumulative Adjusted EPS from the long-term incentive plan to avoid any incentive to limit spending on cybersecurity

 

2019

–  The Committee determined that our NEOs will not receive any increase to base salary or target bonus opportunity for 2019. The only compensation increases for our NEOs for 2019 relate to our long-term incentive program, which creates greater focus on stock price and multi-year performance and thereby enhances alignment between management and shareholders

 

–  The Committee adopted a new Change in Control Severance Plan (the “CIC Plan”) for senior executives, including our NEOs other than Mr. Begor, whose change in control protections as contained in his employment agreement were already aligned with the core provisions of the CIC Plan

 

–  All executives with individual change in control agreements (the “CIC Letter Agreements”) agreed to give up their individual agreements and become subject to the new CIC Plan

 

–  Following elimination of the CIC Letter Agreements:

 

   The severance multiple upon a change in control was set a 2x for all executives other than the CEO, reflecting a decrease from the 3x multiple payable under certain CIC Letter Agreements

   We do not offer tax gross-up benefits in connection with a change in control

  In connection with our EFX2020 strategy, the Committee reformulated the long-term incentive program and adopted the 2019 Equifax Transformation Leadership Program in order to align incentives with our near- and long-term goals

 

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Our performance-based compensation program has delivered payouts that align with performance
(See page 44 for details)

   Awards to our NEOs under the 2018 annual incentive plan paid out at or below target, reflecting performance versus financial, strategic and individual goals

   The equity granted to our NEOs (other than RSUs) is subject to performance and can result in no payout if goals are not met or stock option exercise price is not exceeded. As a result:

 The 2016 performance share grant that measured three-year relative TSR paid out at 27.5% of target

 

 The 2017 TSR performance share grant was tracking below threshold (no payment) at December 31, 2018

 

 The 2017 performance share grant that measures three-year cumulative Adjusted EPS was tracking below threshold (no payment) at December 31, 2018

 

 The 2018 TSR performance share grant was tracking near threshold (payout of 53%) at December 31, 2018

 

 Stock options granted in 2017 and 2018 were underwater (exercise price above the stock price) as of December 31, 2018

 

Board Recommendation

 

Our Board believes that the information provided above and within the “Executive Compensation” section of this Proxy Statement demonstrates that our executive compensation program is designed appropriately and is working to ensure that management’s interests are aligned with those of our shareholders and support long-term value creation.

 

Although the vote is non-binding, the Board of Directors and the Compensation Committee will review the voting results in connection with their ongoing evaluation of Equifax’s executive compensation program.

 

THE BOARD RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE RESOLUTION SET FORTH ABOVE.

 

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EXECUTIVE COMPENSATION

 

Compensation Discussion and Analysis

 

Quick Reference

 

To assist shareholders in finding important information, this Compensation Discussion and Analysis (CD&A) section is organized as follows:

 

    Page
     
Executive Summary   31
     
How We Determine the Total Amount of Compensation   35
     
Analysis of 2018 Compensation Decisions   36
     
Actions Taken with Respect to 2019 Compensation   49

 

This CD&A discusses the compensation decisions for the NEOs listed in the Summary Compensation Table on page 52 of this Proxy Statement. The NEOs are:

 

NEO   Position in 2018   Years in Position
at End of 2018
(rounded)
  Years of Service
at End of 2018
(rounded)
Mark W. Begor   Chief Executive Officer   1   1
John W. Gamble, Jr.   Corporate Vice President and Chief Financial Officer   5   5
Jamil Farshchi   Chief Information Security Officer   1   1
John J. Kelley III   Corporate Vice President, Chief Legal Officer and Corporate Secretary   6   6
Bryson R. Koehler   Chief Technology Officer   1   1
Paulino do Rego Barros, Jr.   Interim Chief Executive Officer; President–U.S. Information Solutions*   <1   9

 

* During 2018, Mr. Barros served as interim Chief Executive Officer from January 1, 2018 to April 16, 2018 and as President–U.S. Information Solutions (“USIS”) from July 20, 2018 to December 31, 2018.

 

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Executive Summary

 

Our Business

 

Equifax is a data, analytics and technology company. We use unique data, innovative analytics, technology and industry expertise to power organizations and individuals around the world by transforming knowledge into insights that help make more informed business and personal decisions. We operate or have investments in 24 countries in North America, Central and South America, Europe and the Asia Pacific region, and employ approximately 11,000 employees worldwide.

 

EFX2020 Strategy

 

Since his appointment in April 2018, our Chief Executive Officer, Mark Begor, has been leading Equifax through a significant transformation, including the investment of substantial resources to achieve our vision of becoming a trusted global leader in data, advanced analytics and technology. In February 2019, we outlined the key strategic initiatives that comprise EFX2020, our multi-year business transformation strategy. This strategy is designed to help focus our efforts on the following imperatives:

 

 

2018 Performance Highlights

 

Revenue:
$3.41 billion
a 1.5% increase
from 2017
Adjusted EPS:*
$5.79
a 3% decrease
from 2017
Transformation
investment:
$326.2 million
Dividends paid to
shareholders:
$187.9 million
consistent with
2017 levels

 

Adjusted EPS is a non-GAAP financial measure. Reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP financial measures can be found under “Non-GAAP Measures” on the Investor Relations page of our website at www.equifax.com.

 

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Our Incentive Programs Align Payouts with Our Financial Performance

 

Our 2018 compensation program metrics established in the first quarter of 2018 were:

 

Annual Incentive Plan (AIP) Opportunity

 

Overview:      Based on the Company’s attainment of objective, pre-established financial, individual and security program performance goals
Plan Components:  

   Financial Performance Measures: Corporate Operating Revenue (15%) was used to measure top line business growth and Corporate Adjusted EPS (65%) was used to measure the bottom line profitability of such growth(1) (2)

   Individual Performance Measures: Individual Goals (20%)

•   Cybersecurity Performance Measure: Security Goal may reduce AIP amounts between 0% and 25%

Key Financial Performance Metrics:  

   Corporate Operating Revenue from continuing operations increased 1.5% to $3.41 billion

•   Corporate Adjusted EPS from continuing operations decreased 3% to $5.79

 

(1) Corporate Adjusted EPS for 2018 as reported in this Executive Compensation section is a non-GAAP financial measure used by the Company for incentive measurement purposes. Reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP financial measures can be found under “Non-GAAP Measures” on the Investor Relations page of our website at www.equifax.com. For incentive measurement purposes, Corporate Operating Revenue and Corporate Adjusted EPS are adjusted to be stated in constant dollars at our budgeted 2018 foreign exchange rates. For 2018, Corporate Adjusted EPS was further adjusted to allocate part of an unbudgeted corporate-level income tax benefit from the corporate plan to participating business unit plans.
(2) Due to Mr. Barros’s role as President—USIS from July 20, 2018 through December 31, 2018, a portion of his 2018 AIP outcome was tied to specific business unit-level financial goals, as described in further detail under “Analysis of 2018 Compensation Decisions” beginning on page 36.

 

Long-Term Incentive (LTI) Plan Opportunity

 

Overview:   •   Rewards stock performance on both an absolute basis and relative to the S&P 500 Index
Plan Components:  

•   Performance shares based on total shareholder return (TSR) (50%)

•   RSUs (25%)

•   Stock options (25%)

Key Financial Performance Metrics:   •   For performance shares, three-year cumulative TSR relative to companies included in the S&P 500 Index (of which we are a member) provides a broad index for comparison and alignment with shareholder investment choices

 

Say-on-Pay Voting Results in 2018

 

In evaluating our executive compensation program, one factor our Compensation Committee considers is the results of the most recent annual shareholder advisory vote on executive compensation or “say-on-pay” vote. At our 2018 Annual Meeting, approximately 85% of the votes cast approved our executive compensation program. Following our 2018 Annual Meeting, the Committee continued to review our compensation program and practices and how effective each is in our ability to attract and retain talent. The Committee continues to take steps to ensure that pay opportunities are performance-based, with a mix of fixed and at-risk variable pay.

 

Shareholder Outreach and Engagement

 

As part of our ongoing shareholder engagement program, feedback received from shareholders on our executive compensation program is shared with the full Board and the Compensation Committee. The Committee considers this feedback in its review of our compensation program, as well as compensation plan and benchmarking advice from its independent compensation consultant.

 

Following the 2018 Annual Meeting, Independent Chairman Mark Feidler and members of management conducted investor outreach meetings with shareholders representing approximately 57% of our shares. During these one-on-one investor meetings, we discussed a number of business and governance-related topics, including risk management, human capital management and executive compensation.

 

Based on shareholder recommendations, we continue to enhance our proxy disclosures regarding changes to executive compensation programs. Going forward, the Company will maintain an active dialogue with shareholders and continue to evaluate and integrate feedback into Board discussions, including topics such as metrics that drive the NEOs’ short and long-term incentive compensation.

 

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Compensation Program Highlights and Key Changes for 2018 and 2019

 

Executive Compensation Philosophy

 

The Compensation Committee is primarily responsible for the Company’s executive compensation policies and plans.
The Committee works to ensure that pay incentives are performance-based and aligned with shareholders’ interests, while guarding against metrics or goals that create inappropriate or excessive risk likely to have an adverse effect on the Company.
The Committee has designed and continuously reviews our compensation program to ensure we are providing competitive pay to attract and retain executive talent.

 

Compensation Program Changes

 

In late 2017 and early 2018, the Compensation Committee undertook a comprehensive review of our short- and long-term incentive compensation program and considered shareholder feedback when it made changes to the 2018 program. In February 2019, in connection with our recently-announced EFX2020 business transformation strategy, the Committee made changes to our long-term incentive program. The changes for 2018 and 2019 are outlined below:

 

What We Changed   Details
Added Cybersecurity Metric to Annual Bonus Plan   Beginning with the 2018 annual incentive plan, the Committee added a cybersecurity performance measure as one of the metrics to evaluate performance of all employees, including our executives. This cybersecurity metric is the same measure used to assess the overall strength of our security program, thus ensuring our compensation program reinforces our overall security remediation goals. The cybersecurity metric remains a component under the 2019 annual incentive plan.
Adopted Enhanced Clawback Policy   In 2018, the Board revised our compensation clawback policy to add a financial and reputational harm standard. Under the revised policy, the Board may recover incentive compensation awarded to employees in the event of misconduct or failure of oversight that results in significant financial or reputational harm.
Adopted Change In Control Severance Plan   In February 2019, the Committee adopted a new Change in Control Severance Plan (the “CIC Plan”) for senior executives, including our NEOs other than Mr. Begor. The Committee worked with its outside compensation consultants to design a plan with market-standard terms that will provide executives security in the event of a change in control of the Company. The CIC Plan ensures that our executives objectively evaluate potential transactions that may be in the best interest of our shareholders, despite the potential negative consequences such transactions may have on them personally. The CIC Plan will not apply to Mr. Begor, whose change in control protections as contained in his employment agreement were already aligned with the core provisions of the CIC Plan.
    Eliminated CIC Letter Agreements. Other than as described above with respect to our CEO, all of our executives with individual change in control agreements (the “CIC Letter Agreements”) agreed to give up their individual agreements become subject to the new CIC Plan.
    Reduced CIC Severance Multiples. Under the CIC Letter Agreements, certain executives were entitled to a severance multiple of 3x. Following the elimination of the CIC Letter Agreements, the severance multiple upon a change in control was set at 2x for all executives other than the CEO, representing a significant decrease in the benefit payable.
    Eliminated CIC Tax Gross-Ups. Under the CIC Letter Agreements, certain executives were entitled to tax gross-up benefits in connection with a change in control. Following the elimination of the CIC Letter Agreements, we do not offer tax gross-up benefits in connection with a change in control.
Implemented Changes to 2019 Direct Compensation   No Increase in Base Salary or Annual Bonus Opportunity for NEOs. The Committee determined that our NEOs will not receive any increase to base salary or target bonus opportunity for 2019. The only compensation increases for our NEOs for 2019 relate to our long-term incentive program (described below), which creates greater focus on stock price and multi-year performance and thereby enhances alignment between management and shareholders.
    2019 Equifax Transformation Leadership Program. In connection with EFX2020, our multi-year business transformation strategy (see page 5 for details), the Committee reformulated the long-term incentive program for 2019 to more closely align incentives with our near- and long-term goals. The Equifax Transformation Leadership Program (the “2019 ETLP”) increases the target long-term incentive award opportunity for each NEO and a select group of our senior leadership team members, each of whom is integral to the successful execution of our strategy. In conjunction with the increased opportunity, the degree of overall performance risk has been substantially increased. The Committee expects to revert back to our traditional long-term incentive structure in 2020. The 2019 ETLP is described in further detail under “Actions Taken with Respect to 2019 Compensation” beginning on page 49.

 

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2018 Target Pay Mix

 

As illustrated in the chart below, the Company emphasizes long-term equity awards and annual performance-based cash incentives so that a substantial portion of each executive’s total compensation opportunity is linked directly to the Company’s stock price or otherwise driven by performance (85% of total direct compensation for our CEO and an average of 68% for the other NEOs):

 

 

* Percentages calculated based upon annualized base salary, target annual incentive and the target grant date value of annual long-term incentive awards, excluding one-time, special awards. The percentages do not total 100% due to rounding.

 

Compensation Best Practices

  Strong emphasis on performance-based compensation, with 85% of CEO pay considered “at-risk”
  Mix of short-term and long-term incentives and performance metrics
  Added cybersecurity performance measure to 2018 and 2019 annual incentive plans
  Adopted a new change in control severance plan applicable to executive officers, including NEOs who previously had individual change in control agreements. This eliminated income tax gross-ups and reduced payments in connection with a change in control
  All stock options granted under 2019 long-term incentive program are premium-priced
  Capped annual and long-term performance-based awards
  Enhanced compensation clawback policy with financial and reputational harm standard, including in supervisory capacity
  Double-trigger change-in-control cash severance benefits and vesting of equity awards
  Anti-hedging and -pledging policy for officers and directors
  Independent Compensation Committee advised by independent compensation consultant
  Meaningful share ownership requirements for senior officers
  No re-pricing of underwater stock options
  No income tax gross-ups other than for relocation or foreign tax expenses


 

 

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How We Determine the Total Amount of Compensation

 

Role of the Compensation Committee, Management and Compensation Consultants in Determining Executive Compensation

 

For information on how the Compensation Committee works with management and independent compensation consultants in making executive pay decisions, see “Role of the Compensation Committee and Management in Determining Executive Compensation” on page 47 and “Compensation Consultant Services and Independence” on pages 47-48.

 

Compensation Elements and Objectives

 

Element Objectives
Base Salary    Provides competitive pay to attract and retain experienced and successful executives
Annual Incentive    Encourages and rewards valuable contributions to our annual financial and operational performance objectives
Plan (AIP)    Designed to reward high performance and achievement of financial, individual and security program goals by key employees, including our NEOs
Long-Term •   Rewards stock performance on both an absolute basis and relative to the S&P 500 Index
Incentive Plan (LTI)    TSR performance shares provide a comprehensive and relevant comparison for our share price performance as an S&P 500 Index member and also align with shareholder interests, as higher cumulative TSR results in higher returns for shareholders
     RSUs are time-vested and primarily encourage retention and alignment with long-term shareholder interests
     Stock options are time-vested and provide value only to the extent our stock price increases, thereby aligning executives’ interests with those of shareholders
Retirement
Benefits
   Provide post-retirement security. Such benefits directly reward continued service and indirectly reward individual performance
Perquisites    For a discussion of the business objectives for providing perquisites, and the details of perquisites provided, see page 45
Provision of Change-in-Control Protection    For a discussion of the business objectives for providing change-in-control protection, and the details of change-in-control protection provided, see pages 46-47 and 64-66

 

Benchmarking Process and Use of a Peer Group

 

Peer Group Used for Compensation Purposes

 

We consider market pay practices and our relative size and performance versus peers when setting target pay opportunities for our executives, in addition to evaluations of individual performance. The Compensation Committee uses benchmarking as one of several inputs for decision-making with respect to setting competitive executive pay levels.

 

For 2018, we conducted a detailed market review of executive pay to evaluate each element of pay competitiveness, reviewed pay practices of our peers and the broader market, and compared performance against market data as described below. This analysis was discussed and reviewed by the Compensation Committee with its independent compensation consultant. Two primary types of market data were used to compile this analysis:

 

General industry data, focusing on data from those companies similar in size to the Company, was drawn from the Aon Hewitt Total Compensation by Industry database, Willis Towers Watson U.S. General Industry Executive Database and the Mercer Benchmark Database. The Compensation Committee utilizes this broad-based, third-party survey data to gain a general understanding of the current compensation practices and trends in the market. Competitive market practice is only one of several factors considered by the Compensation Committee when approving the elements and amounts of compensation awarded to senior executives.
   
Peer group proxy data, for 2018 long-term incentives (and, for the CFO only, for base salary) was drawn from available proxy statements and public reports for the following 13 publicly-held companies:

 

2018 Peer Group

 

Alliance Data Systems Corp. Fidelity National Financial, Inc. Intuit Inc.
Automatic Data Processing Inc. Fidelity National Information Services, Inc. Moody’s Corp.
CGI Group Inc. Fiserv Inc. Paychex Inc.
DST Systems Inc. FTI Consulting Inc. The Western Union Co.
Dun & Bradstreet Corp.    

 

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The Compensation Committee selected this peer group in 2009 primarily based upon criteria such as companies against which we compete directly or indirectly for capital, executive talent and, in some cases, business. Because there were no publicly-held, stand-alone direct U.S. competitors across all of our businesses at the time, we focused on similarly complex companies that compete with us in a significant aspect of our business, have similar customers, or are in the business of data and analytics-based business solutions delivered through technology. Industries represented by these companies included information and delivery systems, publishing, specialized finance, information technology consulting services, data processing, outsourced services and application software.

 

2019 Peer Group

 

In September 2018, following review and based on the recommendations of its independent compensation consultant, the Committee revised its peer group to include the 17 publicly-held companies set forth below:

 

Alliance Data Systems Corp. First Data Corporation Paychex, Inc.
Black Knight, Inc. Fiserv, Inc. Total System Services, Inc.
Broadridge Financial Solutions, Inc. Gartner, Inc. TransUnion
CoreLogic, Inc. Global Payments, Inc. Verisk Analytics, Inc.
FactSect Research Systems, Inc. Jack Henry & Associates, Inc. Worldpay, Inc.
Fidelity National Information Services Moody’s Corporation  

 

These companies were chosen because they are similarly-sized companies providing data and analytics-based business solutions through technology. The revenues of the companies in our new peer group range from 1/3x to 3x our revenue.

 

Peer Group for Performance Shares

 

The 2018 peer group described above was deemed appropriate for compensation purposes, but the stock performance of those companies does not necessarily adjust based on the same economic factors as ours. For that reason, the Committee believes that a broader peer group is more appropriate for evaluating TSR performance for performance shares issued under our LTI program. Therefore, the Compensation Committee uses the companies in the S&P 500 Index (of which we are a member) as the comparator group for that purpose.

 

Use of “Tally Sheets” and Wealth Accumulation Analysis

 

On a regular basis, the Compensation Committee’s independent compensation consultant prepares “tally sheets” relating to compensation of the NEOs. The tally sheets quantify the total compensation package, the impact of stock price change on the value of existing long-term incentives, the wealth created from prior equity grants and amounts payable upon hypothetical employment change events. The summaries allow the Committee to assess the cumulative impact of its past compensation decisions. Tally sheet review in 2018 did not lead to any specific compensation program changes.

 

Other Factors Considered in Setting Pay Opportunities for NEOs

 

The CEO and the Compensation Committee consider a number of factors in addition to the market data in determining individual pay amounts (base salaries, payout of the individual portion of short-term incentive and annual equity grants). Such factors include an individual’s general level of performance, the individual’s demonstrated success in meeting or exceeding business objectives and creating shareholder value, job market conditions, our operating environment and business challenges, the individual’s importance to our business, succession planning considerations, salary budget guidelines and the individual’s pay in the context of others at the Company. The application of discretion based on such factors may result in pay opportunities that are different from market as determined above. The Committee has not adopted a policy with regard to the relationship of compensation among the CEO and the other NEOs or other employees and exercises its discretion in determining actual and relative compensation levels. Overall compensation opportunities reflect our executives’ positions, responsibilities and tenure.

 

Analysis of 2018 Compensation Decisions

 

2018 CEO Compensation

 

On April 16, 2018, Mark Begor was appointed as our Chief Executive Officer. On March 27, 2018, the Company entered into an employment agreement with Mr. Begor to serve as Chief Executive Officer (the “CEO Employment Agreement”). The Committee conducted a comprehensive market review in connection with the approval of his new hire compensation package. Under the Employment Agreement, Mr. Begor’s base salary is $1.5 million and he is eligible for an annual incentive bonus of 100% of his annual base salary with a maximum payout of 200% of annual base salary, depending on the achievement of performance criteria established by the Board. Mr. Begor’s base salary and annual incentive target opportunity were prorated for 2018, reflecting his partial year of service. On May 4, 2018, in accordance with the Employment Agreement, Mr. Begor received an initial equity award with a value of $7 million, consisting of (i) $3.5 million in performance shares, (ii) $1.75 million in time-based RSUs and (iii) $1.75 million in stock options. In addition, Mr. Begor was awarded a one-time special grant in the amount of $10 million, comprised of equity awards in the same proportions as the initial equity

 

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award above (the “New Hire Award”). The one-time New Hire Award was granted to compensate Mr. Begor for foregoing pay that had already been earned from his prior employer in order to assume the role of Equifax CEO. The terms of Mr. Begor’s Employment Agreement are discussed in further detail under “CEO Employment Agreement” on page 46.

 

2018 Other NEO Compensation

 

Messrs. Gamble, Kelley, Farshchi and Koehler

 

In February 2018, following a thorough review and taking into account the 2017 cybersecurity incident, the Compensation Committee took the actions described below with respect to 2018 compensation for Messrs. Gamble and Kelley. Messrs. Farshchi and Koehler were hired in late February 2018 and June 2018, respectively. The Committee considered relevant market data in connection with the approval of their individual new hire compensation packages.

 

Base Salary. Messrs. Gamble and Kelley each received a base salary increase of 3.0% effective February 17, 2018. These increases were part of the normal merit increase process. Messrs. Farshchi and Koehler were hired in 2018 and their base salaries were set at $500,000 and $625,000, respectively.

 

2018 AIP Opportunities. Mr. Gamble’s target annual cash incentive opportunity, expressed as a percentage of base salary earned, increased to 75% in 2018 compared to 60% in 2017. Mr. Kelley’s target annual cash incentive opportunity was unchanged from 2017. Messrs. Farshchi and Koehler were hired in 2018 and their target annual cash incentive opportunities were set at 60% and 75%, respectively.

 

2018 LTI Opportunities. For Messrs. Gamble and Kelley, 2018 long-term incentive opportunities were informed by market data and individual performance. Messrs. Farshchi and Koehler were hired in 2018 and their target long-term incentive opportunities were informed by market data.

 

Mr. Barros

 

On September 26, 2017, Mr. Barros was appointed as our interim CEO and the Compensation Committee approved adjustments to his compensation package to reflect the changed scope of his role. During 2018, Mr. Barros served as interim CEO from January 1, 2018 to April 16, 2018. During that period, he received a monthly cash payment of $25,000 in addition to his existing annual base salary. When he became interim CEO, he continued to participate in the AIP with a target opportunity of 60% of his modified base salary with a maximum payout of 120% of salary. He also received a one-time appointment grant of $1.5 million in time-vested RSUs which vest three years from the grant date. Mr. Barros also received a special cash incentive opportunity of $500,000 in connection with his assumption of the role of interim Chief Executive Officer, which was paid on April 16, 2018.

 

During the period from April 17, 2018 to December 31, 2018, Mr. Barros received a monthly cash payment of $25,000 in addition to his then-effective annual base salary ($484,100). After leaving the role of interim CEO, he continued to participate in the AIP with a target opportunity of 60% of his modified base salary with a maximum payout of 120% of salary.

 

2018 Annual Cash Incentive Structures and Outcomes

 

Summary

 

Annual cash incentive awards are designed to reward the achievement of near-term business goals. In addition to financial metrics, annual incentive awards are based on an assessment of individual leadership qualities and contributions toward the achievement of business and strategic goals. In 2018, the Compensation Committee added a cybersecurity performance measure as one of the metrics under the AIP.

 

When setting the range of performance goals for Corporate Adjusted EPS and Corporate Operating Revenue at the outset of the fiscal year, the Compensation Committee considers our financial results from the prior year and our annual operating budget for the coming year. The Committee also considers the history of attainment of goals in prior years, economic and industry conditions, industry sector performance and the views of our shareholders.

 

The 2018 corporate financial performance goals for the NEOs with Company-wide responsibilities were based on Corporate Adjusted EPS (used to measure profitability) and Corporate Operating Revenue (used to measure top line business growth). We refer to this as the Corporate Plan. The financial goals for business unit leaders were focused primarily on relevant business unit revenue and operating income performance (used to measure unit growth and profitability), as well as Corporate Adjusted EPS (to emphasize profitability of the Company as a whole). We refer to these as Business Unit Plans.

 

Establishment of Corporate-Level Financial Goals

 

The Compensation Committee established corporate financial goals required to earn a cash incentive award for 2018 in a manner that was designed, within reasonable limits, to encourage achievement that exceeds target goals and penalize underachievement. The financial goals under our compensation program are established with reference to the projections set forth in our annual operating budget, which is approved by the Board. We set challenging but achievable goals, including maximum payout opportunities requiring exceptional performance, for the Company and our executives in order to drive the achievement of our short- and long-term objectives. In 2018, Messrs. Begor, Farshchi, Gamble, Kelley and Koehler were participants in the Corporate Plan. For the portions of 2018 that Mr. Barros served as interim CEO (January 1, 2018 to April 16, 2018) and during the period prior to his assumption of the role of President–USIS (April 17, 2018 to July 19, 2018), he was a participant in the Corporate Plan and his performance goals under the AIP were solely corporate-level financial goals.

 

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The corporate-level financial goals under the AIP were as follows:

 

Performance Measure(1)   Weight
(%)
  Threshold
(25% payout)
  Target
(100% payout)
  Maximum
(200% payout)
Corporate Adjusted EPS   65   $5.42   $6.00
(10.6% above Threshold)(2)
  $6.24
(15.0% above Threshold)(3)
Corporate Operating Revenue   15   $3.285 billion   $3.553 billion
(8.1% above Threshold)(2)
  $3.695 billion
(12.5% above Threshold)(3)

 

(1) Corporate Adjusted EPS for 2018 as reported in this Executive Compensation section is a non-GAAP financial measure used by the Company for incentive measurement purposes. Reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP financial measures can be found under “Non-GAAP Measures” on the Investor Relations page of our website at www.equifax.com. For incentive measurement purposes, Corporate Operating Revenue and Corporate Adjusted EPS are adjusted to be stated in constant dollars at our budgeted 2018 foreign exchange rates. For 2018, Corporate Adjusted EPS was further adjusted to allocate part of an unbudgeted corporate-level income tax benefit from the corporate plan to participating business unit plans.
   
(2) Based on our publicly-disclosed strategic goals, long-term financial objectives and performance expectations for 2018.
   
(3) Set based on our most challenging “stretch” goals for 2018.

 

Payouts for achievement between threshold and target, and between target and maximum, are determined based upon straight line interpolation. For 2018, Corporate Adjusted EPS was further adjusted to allocate part of an unbudgeted corporate-level income tax benefit from the corporate plan to participating business unit plans. Pursuant to the terms of the AIP, awards are subject to the Committee’s authority to reduce awards through the exercise of its negative discretion and an individual award limit of $5 million.

 

Establishment of Business Unit-Level Financial Goals

 

The Compensation Committee established a Business Unit Plan for the Workforce Solutions, USIS, Global Consumer Solutions and International business units. The Compensation Committee established business unit-level financial goals required to earn a cash incentive award for 2018 in a manner designed, within reasonable limits, to encourage achievement that exceeds target goals and penalizes underachievement. Each Business Unit Plan included a corporate-level financial goal (Corporate Adjusted EPS) at a 30% weighting.

 

For the portion of 2018 that Mr. Barros served as President–USIS (July 20, 2018 to December 31, 2018), he participated in the Business Unit Plan for the USIS business unit.

 

The 2018 business unit objectives for Mr. Barros (during the portion of 2018 he participated in a Business Unit Plan) were established as follows:

 

USIS Plan—Performance Measures   Weight
(%)
  Threshold
(25% payout)
  Target
(100% payout)
  Maximum
(200% payout)
Corporate Adjusted EPS   30   $5.42   $6.00   $6.24
USIS Operating Revenue   30   $1.233 billion   $1.305 billion   $1.357 billion
USIS Operating Income   20   $520.3 million   $561.8 million   $595.5 million

 

Evaluation of Individual NEO Performance

 

Individual personal objectives are specific to each NEO and are subject to adjustment over the course of the year in view of business circumstances. In 2018, the general performance objectives for the leadership team included:

 

execution on our business strategy;
   
strategic growth through new product innovation, technology and analytical services, product synergies, acquisitions that provide greater geographic diversity, and expansion of data sources;
   
development of scalable processes, leveraging applications and managing expenses to ensure expense growth does not exceed revenue growth; and
   
non-financial goals that are important to the Company’s success, including objectives related to data security and enterprise risk management, as well as people-related objectives such as talent management and demonstrating leadership through behavior consistent with Company values.

 

Key objectives for our NEOs and other members of the senior leadership team are typically addressed in the first quarter of each year, in connection with the preparation of the Company’s business plan and overall strategy. At the end of each year, the CEO evaluates the performance of the other NEOs, taking into account performance for the just-completed versus predefined commitments for such year, as well as any unforeseen financial, operational and strategic issues and any other relevant information. These performance evaluations are subject to the review and approval of the Compensation Committee, which also evaluates the performance of the CEO in a similar manner, with input from the full Board.

 

For 2018, the plan structure set individual performance rating categories and award opportunities at needs improvement (no individual performance award), achieves expectations (award at 100% of Target), exceeds expectations (award at 150% of Target) and distinguished (award at 200% of Target).

 

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Cybersecurity Performance Measure

 

In 2018, the Compensation Committee added a cybersecurity performance measure as one of the metrics under the AIP. The Committee believes that a cybersecurity performance measure that impacts compensation will support the Company’s goal of leading our industry in data security. Performance relating to the cybersecurity metric will not increase, but it may decrease, the actual amount payable under the AIP. The extent of this reduction may range between 0% to 25% of the total AIP amount otherwise payable.

 

For 2018, the Compensation Committee, in consultation with the Technology Committee, established an objective cybersecurity performance measure that was designed to assess the Company’s progress in improving the maturity of its security program. The Company’s security program maturity is measured against goals established with respect to the National Institute of Standards and Technology (“NIST”) cybersecurity framework, which is a voluntary framework consisting of standards, guidelines and best practices to manage cybersecurity-related risk. The NIST framework enables organizations to benchmark and improve their information security based on five identified functions deemed critical to an effective security program: identify, protect, detect, respond and recover. The Compensation Committee, based on the recommendation of the Technology Committee, established a threshold and target level of achievement for the AIP cybersecurity performance measure based on the NIST framework. These levels measure the progress the Company has made in enhancing its cybersecurity program. The target level is intended to be challenging yet reasonably achievable.

 

As contemplated under the Technology Committee charter, a third party consulting firm assisted the Technology Committee in establishing the security performance goal and measuring the Company’s progress for 2018 for purposes of evaluating the effectiveness of the Company’s overall security program. For AIP purposes, if the Company performed at threshold or below for the cybersecurity measure, then the AIP amount otherwise payable would be reduced by 25%. If the Company performed between threshold and target for the cybersecurity measure, then the AIP amounts otherwise payable would be reduced between 0% and 25% based on achievement between the threshold and target levels. If the Company achieved target or above for the cybersecurity measure, there would be no reduction to the AIP amount otherwise payable.

 

For 2018, the Company’s performance for the cybersecurity measure was above target. As a result, the AIP amounts otherwise payable to the NEOs were not reduced.

 

Overview of 2018 Annual Cash Incentive Awards

 

In February 2019, the Compensation Committee reviewed each NEO’s performance against the pre-established 2018 performance goals as approved by the Committee. Awards could range from 0% of the executive’s award goal (for performance below the threshold level) to 200% of the individual’s award target (for performance at the maximum level). Awards paid to our NEOs under the 2018 AIP were determined based upon achievement measured against specified financial goals (80% weighting) and individual objectives (20% weighting). The cybersecurity performance measure could also reduce an AIP amount otherwise payable by 0% to 25%. As described above, the Company’s performance for the cybersecurity measure was above target and AIP amounts otherwise payable were not reduced. The target and maximum incentives, along with a summary of the actual 2018 awards earned by the NEOs, are set forth in the table below. A detailed description of how each NEO’s 2018 incentive award was achieved follows the table.

 

Named Executive Officer   Base
Salary
($)
  Target Incentive
(as Percentage
of Salary) (%)
  Target
Incentive
($)
  Maximum
Incentive
($)(1)
  Achievement
(as Percentage
of Salary) (%)
  Earned 2018
Incentive as
Percentage of
Target (%)
  2018
Incentive ($)
M. Begor(2)   1,009,615   100   1,009,615   2,019,230   80   80   806,833
J. Gamble   681,622   75   511,217   1,022,434   75   100   510,781
J. Farshchi(3)   403,846   60   300,000   600,000   60   100   299,745
J. Kelley   538,332   60   322,999   645,998   60   100   322,724
B. Koehler(4)   317,308   75   237,981   475,962   75   100   237,778
P. Barros(5)   781,660   60   468,996   937,992   53   88   413,388

 

(1) The maximum incentive for each is 200% of Target.
(2) Pursuant to the terms of his employment agreement, Mr. Begor’s $1,500,000 base salary and annual incentive target opportunity were prorated for 2018, reflecting his appointment as CEO on April 16, 2018.
(3) Mr. Farshchi’s $500,000 base salary was prorated for 2018, reflecting his appointment as CISO on February 26, 2018; however, his annual incentive opportunity was calculated based upon his full year base salary.
(4) Mr. Koehler’s $625,000 base salary and annual incentive target opportunity were prorated for 2018, reflecting his appointment as CTO on June 14, 2018.
(5) Base salary includes monthly cash payments.

 

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Determination of each NEO’s Performance and Annual Cash Incentive

 

Mark Begor, Chief Executive Officer

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65  $6.00   $5.79    75   $490,663 
Corporate Operating Revenue   15  $ 3.553 billion   $ 3.41 billion    75   $114,247 
Individual Objectives   20  $201,923    Distinguished    100(1)   $201,923 

 

(1) Mr. Begor was rated as “Distinguished” by the Board based on his leadership, but in consideration of the Company’s total shareholder return in 2018 and the early-stage nature of the transformational activities, the Committee concluded not to apply the same scale that applied to other NEOs and delivered the individual objectives component on an unadjusted basis at 100% of target.

 

Mr. Begor achieved a rating of “Distinguished” based on his achievements for 2018. These achievements included:

 

Developing EFX2020, our multi-year business transformation strategy, including our technology transformation plan to modernize our infrastructure and applications while migrating to the public cloud.
Recruiting and hiring key members of our leadership team who are critical to the future of our business, including our new Chief Technology Officer and our new President of USIS.
Investing in the continued strengthening of our data security program, including enhancing our core security competencies and reinforcing a “security first” culture throughout the Company at all levels.
Rebuilding trust with our customers, consumers, regulators, shareholders and other stakeholders through in-person meetings, public appearances and other engagement and outreach activities.
Realigning our organization to move employees out of corporate and into our four business units in an effort to move decision-making and resources closer to our customers.
Assisting with the enhancement and strengthening of the Company’s risk management program, including overseeing the establishment of our Risk Office and hiring of a new SVP for Enterprise Risk and Compliance.
Working to expand our core competency of data and analytics by adding new data assets and enhancing our analytics capabilities.
Investing in new product innovation such as our NeuroDecision Technology, a machine learning credit scoring methodology.

 

John Gamble, Corporate Vice President and Chief Financial Officer

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65   $6.00   $5.79    75   $248,446 
Corporate Operating Revenue   15   $ 3.553 billion   $ 3.41 billion    75   $57,849 
Individual Objectives   20   $102,243    Distinguished    200   $204,486 

 

Mr. Gamble achieved a rating of “Distinguished” based on his achievements for 2018. These achievements included:

 

Refinancing our debt obligations to eliminate near-term maturities and increase liquidity, including:

 

  Overseeing a successful $1 billion public debt offering in May 2018;
  Renegotiating our revolving credit facility in September 2018, increasing the borrowing amount from $900 million to $1.1 billion and extending the maturity date from November 2020 to September 2023; and
  Refinancing our $225 million accounts receivable securitization in November 2018 to extend the maturity date to November 2020.

 

Managing our balance sheet to accommodate over $300 million in transformation investments in 2018.
Working effectively with the legal department and outside auditors to prepare and timely file our quarterly and financial reports.
Overseeing the internal audit department’s expanded scope with respect to technology and security related audit activities.
Continuing to improve business performance transparency and performance drivers in the management of financial monitoring, reporting and analysis.
Providing effective support for mergers, acquisitions and other enterprise initiatives.
Further developing global finance organization skills and capabilities.

 

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Jamil Farshchi, Chief Information Security Officer

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65  $6.00   $5.79    75   $145,797 
Corporate Operating Revenue   15  $ 3.553 billion   $ 3.41 billion    75   $33,948 
Individual Objectives   20  $60,000    Distinguished    200   $120,000 

 

Mr. Farshchi achieved a rating of “Distinguished” based on his achievements for 2018. These achievements included:

 

Improving our cybersecurity program by expanding the breadth and depth of detection, response and recovery capabilities.
Implementing our new 24 x 7 x 365 security operations center.
Overseeing a comprehensive assessment of our security program by a third party assessor.
Achieving our 2018 goals for security program improvements, which directly correspond to the new cybersecurity performance measure added to the 2018 AIP.
Refining our security policies and technical standards.
Regaining key ISO and payment card industry compliance certifications.
Recruiting, integrating and developing approximately 180 security professionals.
Contributing to thought leadership through numerous organizations and forums, including by engaging in Atlanta for the Advances of Security (ATLAS), which brings together 22 Atlanta CISOs.
Being recognized as CISO of the Year by CIO Dive, a leading industry news publisher.

 

J. Kelley, Corporate Vice President, Chief Legal Officer and Corporate Secretary

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65  $6.00   $5.79    75   $156,974 
Corporate Operating Revenue   15  $ 3.553 billion   $ 3.41 billion    75   $36,550 
Individual Objectives   20  $64,600    Distinguished    200   $129,200 

 

Mr. Kelley achieved a rating of “Distinguished” based on his achievements for 2018. These achievements included:

 

Leading our response to the lawsuits and investigations stemming from the 2017 cybersecurity incident.
Overseeing our regulatory and government relations operations, including with respect to our response to the 2017 cybersecurity incident and pending legislation in the U.S. Congress.
Overseeing the legal department’s review and preparation of our numerous SEC filings and other public disclosures, including without limitation our quarterly reports on Form 10-Q, our annual report on Form 10-K and the proxy statement filed in connection with our 2018 Annual Meeting.
Overseeing the implementation of corporate governance reforms, including Board committee charter amendments, adoption of our enhanced clawback policy and updates to our insider trading program and procedures.
Overseeing our comprehensive, Board-directed shareholder engagement program, which resulted in meetings with holders of approximately 57% of our outstanding shares since the 2018 Annual Meeting.
Improving the legal department’s support of, and alignment with, our business units.
Providing effective support for mergers, acquisitions and other enterprise initiatives.

 

Bryson Koehler, Chief Technology Officer

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65  $6.00   $5.79    75   $115,656 
Corporate Operating Revenue   15  $ 3.553 billion   $ 3.41 billion    75   $26,930 
Individual Objectives   20  $47,596    Distinguished    200   $95,192 

 

Mr. Koehler achieved a rating of “Distinguished” based on his achievements for 2018. These achievements included:

 

Designing our long-term, cloud-based technology strategy.
Executing on our initial migration to the public cloud and employing virtual private cloud deployment techniques.
Developing a plan to rationalize and rebuild our portfolio application using cloud-focused services.
Prioritizing security when determining technology decisions.
Effectively overseeing our increased technology investment, including hiring approximately 1,000 new technology department employees.

 

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Paulino Barros, Interim Chief Executive Officer; President—USIS

 

Effective January 1, 2018 to July 31, 2018:

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   65  $6.00   $5.79    75      $132,383 
Corporate Operating Revenue   15  $ 3.553 billion   $ 3.41 billion    75   $30,824 
Individual Objectives   20  $54,480    Exceeds    150   $81,720 

 

Effective August 1, 2018 to December 31, 2018:

 

Objectives   Weight
(%)
  Target
Level
   Actual
Results
   Actual as a %
of Target
   2018
Incentive
 
Corporate Adjusted EPS   30   $6.00   $5.79    146 (1)   $86,000 
USIS Operating Revenue   30   $ 1.305 billion   $ 1.247 billion    40   $23,481 
USIS Operating Income   20   $ 561.8 million   $ 441.7 million    0   $0 
Individual Objectives   20   $39,319    Exceeds    150   $58,980 

 

(1) Corporate Adjusted EPS for 2018 as reported in this Executive Compensation section is a non-GAAP financial measure used by the Company for incentive measurement purposes. Reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP financial measures can be found under “Non-GAAP Measures” on the Investor Relations page of our website at www.equifax.com. For incentive measurement purposes, Corporate Operating Revenue and Corporate Adjusted EPS are adjusted to be stated in constant dollars at our budgeted 2018 foreign exchange rates. For 2018, Corporate Adjusted EPS was further adjusted to allocate part of an unbudgeted corporate-level income tax benefit from the corporate plan to participating business unit plans.

 

Mr. Barros achieved a rating of “Exceeds” based on his achievements for 2018. These achievements included:

 

Stewarding the Company as interim Chief Executive Officer following announcement of the 2017 cybersecurity incident through the appointment of Mr. Begor in April 2018.
Exhibiting strategic leadership following the initial response to the 2017 cybersecurity incident, including with respect to the recruitment and hiring of key IT and security professionals such as our CISO, Mr. Farshchi.
Rebuilding trust with our customers, consumers, regulators and other stakeholders through in-person meetings, public appearances and other engagement and outreach activities.
Ensuring the smooth transition of Mr. Begor as Chief Executive Officer and thereafter serving as the President—USIS, from July 2018 through February 2019.
Working to regain the trust and confidence of our customers and reestablish sales across the entire USIS portfolio.

 

Long-Term Equity Incentive Compensation

 

Summary

 

In February 2018, following a thorough review and taking into account feedback from investors, the Committee changed the 2018 LTI award mix for NEOs to consist of TSR performance shares (weighted 50%), RSUs (25%) and stock options (25%), as described in detail below. The Committee’s purpose in establishing this award mix was to ensure that long-term incentive pay opportunities remain primarily performance-based, as well as provide more line-of-sight and become nearer to market in design. The Committee also eliminated from the award mix the performance shares tied to three-year cumulative Adjusted EPS to avoid any incentive to limit spending on cybersecurity.

 

TSR performance shares have a value based on the performance of our stock relative to companies in the S&P 500 Index after a three-year period. Performance shares are “at risk” and, because stock performance is reflective of underlying business fundamentals, the TSR performance shares motivate achievement of the Company’s long-term financial and strategic performance objectives.
RSUs provide motivation and retentive value through a three-year cliff vesting schedule.
Stock options align senior officers’ interests with those of shareholders by rewarding financial performance that creates shareholder value over time, linking value to stock-price performance, and serving as a retention vehicle.

 

The Committee considers individual performance relative to the prior year and the prior year’s awards in granting long-term incentives. The value of equity grants increases with the level of position, and for the CEO and other NEOs is the largest element of the total compensation package. In determining the value of long-term incentive awards to executive officers other than the CEO, the Committee considers numerous factors including the benchmarking data described above, individual performance, the annual budget for equity awards and share run rate (a measure of actual equity-grant activity in relation to the total number of shares outstanding at the Company).

 

Performance Shares

 

TSR performance shares will be earned, if at all, based on the percentile ranking of the Company’s cumulative TSR compared to the TSR of the companies in the S&P 500 Index (as constituted on the initial grant date, subject to certain adjustments) after a three-year performance period. This metric aligns with shareholder interests as higher cumulative TSR results in higher relative returns for shareholders as well as ensuring a correlation between performance and payouts. TSR performance shares granted in 2017 and later accrue dividend equivalent units which vest at the same time and at the same level of award attainment as the underlying shares.

 

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The number of TSR performance shares payable is the target award multiplied by a percentage (from 0% to 200%) calculated by taking the average of the payout percentages achieved for each of the last four quarters of the performance period based upon the Company’s cumulative TSR percentile ranking through the end of each such quarter. The award payout will nonetheless be capped at 100% if the Company’s average cumulative TSR percentile rank for the last four quarters of the performance period is equal to or greater than 50th percentile but the Company’s three-year cumulative TSR for the performance period is negative. Basing the award payout on the average of the payout percentages for each of the last four quarters of the three-year performance period counterbalances potential late performance period volatility and reflects performance over the whole period.

 

Payouts in February 2021 (if any) for the performance shares awarded on March 5, 2018 will be based on the following scale, with straight-line interpolation between the threshold and maximum levels:

 

TSR PERFORMANCE SHARES: PERFORMANCE/PAYOUT SCALE

 

Company TSR
Percentile
Performance Share Payout as a
% of Target
90th 200%
70th 150%
50th 100%
30th 50%
Below 30th 0%

 

The TSR performance shares granted in 2018 were tracking at the 31st percentile (53% payment) at December 31, 2018.

 

Stock Options

 

The exercise price of stock options granted in 2018 is equal to the fair market value of our stock on the grant date. The stock options vest ratably over three years, assuming continued employment with the Company. The term of the stock options granted in 2018 is 10 years from the grant date, with certain exceptions in connection with a termination of employment or job elimination. Stock options granted in 2018 were underwater (exercise price above the stock price) as of December 31, 2018.

 

RSUs

 

RSUs represent the right to receive unrestricted shares of our common stock once applicable service vesting requirements are satisfied. The RSUs issued to NEOs vest on the third anniversary of the grant date. RSUs granted in 2017 and later accrue dividend equivalent units. RSUs are used primarily for retention purposes.

 

Determination of 2018 LTI Grant Values

 

The Compensation Committee determined long-term incentive grant values by establishing a dollar value for each NEO other than the CEO and then converting this dollar value to a number of performance shares, RSUs and stock options based on the closing stock price of the Company’s common stock on the relevant grant date. The number of stock options granted is equal to the market value allocated to that component divided by 25% of fair market stock value on the grant date.

 

The following table details the target grant value used by the Compensation Committee to determine the number of performance shares, RSUs and stock options granted to each NEO in 2018. Actual grant date values, computed in accordance with applicable accounting standards, are disclosed in the “2018 Grants of Plan-Based Awards” table on page 54. The actual value of equity awards that may be realized by the NEOs will depend on their continued service and our future stock price performance.

 

TARGET GRANT VALUE FOR 2018 ANNUAL EQUITY AWARDS

 

Name  Target Grant
Value ($)
   Target Number of
Performance Shares
Granted
   Number of
RSUs Granted
   Number of
Options Granted
 
M. Begor(1)   7,000,000    31,122    15,561    62,246 
J. Gamble(2)   1,350,000    5,562    2,781    11,128 
J. Farshchi(2)   750,000    3,090    1,545    6,182 
J. Kelley(2)   1,075,000    4,429    2,215    8,859 
B. Koehler(3)   900,000    3,644    1,822    7,289 
P. Barros(2)   725,000    2,987    1,494    5,974 

 

(1) The Committee approved annual equity awards to Mr. Begor with a May 4, 2018 grant date. The closing stock price on such date was $112.46. See “CEO Employment Agreement” on page 46 for a detailed discussion of equity awards provided to the CEO in 2018.
(2) The Committee approved annual equity awards to Messrs. Gamble, Farshchi, Kelley and Barros with a March 5, 2018 grant date. The closing stock price on such date was $121.35.
(3) The Committee approved an annual equity award to Mr. Koehler with a July 27, 2018 grant date. The closing stock price on such date was $123.49.

 

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2018 New Hire LTI Awards

 

In addition to the annual LTI award, in connection with his appointment as CEO, Mr. Begor was awarded a one-time New Hire Award in the amount of $10 million. The one-time New Hire Award was granted to compensate Mr. Begor for foregoing pay that had already been earned from his prior employer in order to assume the role of Equifax CEO. The terms of Mr. Begor’s Employment Agreement, including details regarding the New Hire Award, are discussed under “CEO Employment Agreement” on page 46.

 

In connection with their new leadership positions with the Company and to compensate them for foregoing pay previously earned at their prior employers, in addition to the annual LTI award, Messrs. Farshchi and Koehler were granted additional RSUs with grant date fair values of $2,250,000 and $4,800,000, respectively. Mr. Farshchi’s RSUs vest equally on the first and second anniversaries of the grant date (March 5, 2018). Mr. Koehler’s RSUs vest in three equal increments beginning on the first anniversary of the grant date (July 27, 2018).

 

2018 Special LTI Awards

 

To ensure continuity of leadership following the appointment of Mr. Begor as our CEO, in addition to the annual LTI award grant, Messrs. Gamble and Kelley were each granted additional RSUs and stock options with an aggregate grant date fair value of $1,000,000, and Mr. Barros was granted additional RSUs with an aggregate grant date fair value of $500,000. The RSUs vest on the third anniversary of the grant date (July 27, 2018) and the stock options vest in three equal increments beginning on the first anniversary of the grant date.

 

2016-2018 Performance Share Awards

 

In February 2019, the Compensation Committee approved the vesting and payment of the FY2016-FY2018 performance shares at 27.5% of their target award level. The Committee’s determination was based on the Company’s achievement of total shareholder return relative to companies in the S&P 500 Index (as constituted on the initial grant date, subject to certain adjustments) over the three-year performance period ended December 31, 2018. The number of performance shares payable was the target award multiplied by a percentage (from 0% to 200%) that was calculated by taking the average of the payout percentages achieved for each of the last four quarters of the performance period, based upon the Company’s cumulative TSR percentile ranking through the end of each such quarter, as shown in the “Outstanding Equity Awards at 2018 Fiscal Year-End” table on page 56. The FY2016-FY2018 performance share awards were paid to Messrs. Gamble, Kelley and Barros.

 

Decline in Value of Long-Term Incentives Demonstrates Intended Link to Performance

 

Our performance-based executive compensation program has operated as designed to align executive pay with performance. Following the announcement of the 2017 cybersecurity incident, the value of LTI awards held by our NEOs has declined significantly, consistent with our strong performance-based program design:

 

Because all LTI is denominated in equity, it declined in value at least commensurate with the stock price decline after the announcement. Further, because all LTI awards except RSUs are subject to performance and can result in no payout if goals are not met or stock option exercise price is not exceeded, most award values declined even more precipitously:

 

Award Performance Measure Vesting Date Actual or Projected Payout
2016 performance shares Three-year relative TSR December 31, 2018 Paid out at 27.5% of target
2017 performance shares Three-year relative TSR December 31, 2019 Tracking below threshold (no payment) at December 31, 2018
2017 performance shares Three-year cumulative Adjusted EPS December 31, 2019 Tracking below threshold (no payment) at December 31, 2018
2018 performance shares Three-year relative TSR December 31, 2020 Tracking between threshold and target (payout of 53%) at December 31, 2018
2017 stock options Stock price December 31, 2019
(final vesting date)
Underwater (exercise price above the stock price) as of December 31, 2018
2018 stock options Stock price December 31, 2020
(final vesting date)
Underwater (exercise price above the stock price) as of December 31, 2018

 

The chart below compares the target grant date fair value of outstanding LTI awards held by our NEOs to the value of such awards as of December 31, 2018:

 

 

This chart reflects the following: (i) outstanding LTI compensation values; (ii) value for TSR performance shares assumes payout at the relative price and performance level achieved as of the applicable date; (iii) value for Adjusted EPS performance shares assumes payout based on expected achievement of the performance measure as of the applicable date; and (iv) intrinsic value of outstanding stock options, all of which were underwater (exercise price above the stock price) as of December 31, 2018.

 

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Equity Award Grant Practices

 

We have a written policy on equity grants designed to formalize our equity grant practices and ensure that equity awards will be made on specified dates. The Compensation Committee reviews and approves annual equity-based awards to senior executives who are reporting officers under Section 16 of the Exchange Act in the first calendar quarter of each year (around the time of their annual performance reviews). In accordance with our policy and shareholder-approved 2008 Omnibus Incentive Plan, the Committee has delegated specific authority to the CEO to approve grants to non-executive officers and other eligible employees, typically in the fall of each year following their annual talent review cycle. We may make equity awards at other times during the year for new hires or other reasons, such as a job promotion or as a result of an acquisition.

 

We generally schedule Board and Committee meetings at least a year in advance and, as noted above, make annual equity awards to our NEOs at around the same time every year.

 

Retirement and Other Benefits

 

Our NEOs receive retirement, deferred compensation and other benefits that are designed to be part of a competitive package to attract and retain executive talent. We maintain the following retirement, deferred compensation and other benefit plans, in which all or some of our NEOs participate:

 

401(k) Plan. The 401(k) Plan is a tax-qualified defined contribution plan that permits eligible employees (including NEOs) to defer a portion of their compensation and receive Company matching contributions.

 

Supplemental Retirement Plan. The Supplemental Retirement Plan for Executives of Equifax Inc. (the “SERP”) covers certain of our NEOs as well as certain senior executive officers designated by the Compensation Committee. The SERP provides monthly supplemental retirement benefits after retirement. The SERP was closed to new participants after January 1, 2016. After that date, NEOs and other executives may instead be eligible to receive supplemental retirement contributions under the plan described below.

 

Supplemental Contribution Plan. In 2016, we amended the Executive Deferred Compensation Plan (the “EDCP”) to establish a supplemental retirement contributions program (the “Supplemental Contribution Plan”) for senior executive officers designated by the Compensation Committee. The Supplemental Contribution Plan provides for an annual contribution equal to 10% of the sum of the eligible executive’s base salary and bonus earned for the year. NEOs who participate in the SERP are not eligible to participate in the Supplemental Contribution Plan.

 

Deferred Compensation Plans. The NEOs and other executives are eligible to participate in the Company’s non-qualified deferred compensation plans. These plans allow participants to elect to defer cash compensation and receipt of shares of Company stock on vesting of RSU awards. Deferred amounts are payable upon the executive’s retirement or other termination of employment.

 

Other Benefits. We provide our NEOs with benefits generally available to our U.S. employees, including medical, dental, vision, life insurance and disability insurance benefits. We also provide our NEOs with certain perquisites that the Company believes enhances their performance of services for the Company, including an annual physical, financial planning and personal liability insurance.

 

A more complete description of these plans is provided under “Additional Discussion of Material Items in Summary Compensation and Grants of Plan-Based Award Tables” on page 55, “Pension Benefits at 2018 Fiscal Year-End” on page 57 and “Non-Qualified Deferred Compensation” on page 58.

 

Limited Perquisites

 

We offer limited perquisites to our executive officers. Perquisites for our executives have the following objectives:

 

maximizing the value of Company-provided compensation through provision of an annual financial planning allowance;
ensuring executives’ continued health and ability to render services to the Company through an annual physical program;
avoiding the executives having personal liability incidents interfere with work responsibilities by providing personal liability insurance; and
providing monthly relocation living allowances under certain circumstances, as approved by the Compensation Committee, where the executive is expected to return after a relocation assignment.

 

The NEOs are eligible to receive financial planning and tax services in an annual amount of up to $50,000 for the CEO and $10,000 for other NEOs ($12,500 in their first year for newly-hired executives), comprehensive medical examinations and personal excess liability insurance ($10 million for the CEO and $5 million for the other NEOs). Mr. Begor does not receive a number of perquisites provided to our former CEO, namely, life insurance, home security and payment of club dues. In 2018, we provided relocation benefits to Mr. Begor in connection with his relocation to Atlanta as part of his appointment as CEO. The attributed costs of perquisites are included in the “All Other Compensation” column of the Summary Compensation Table on page 52 and Note 9 thereto. Since 2011, we no longer provide tax reimbursement on the value of the applicable perquisite other than relocation and foreign tax expenses.

 

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CEO Employment Agreement

 

On March 27, 2018, the Company entered into an employment agreement with Mr. Begor to serve as Chief Executive Officer (the “CEO Employment Agreement”). The term of the Employment Agreement commenced on April 16, 2018, and will continue until terminated in accordance with its terms. Under the Employment Agreement, Mr. Begor’s base salary is $1.5 million (pro-rated for 2018), subject to increase, but not decrease, by the Board or the Compensation Committee, and he is eligible for an annual incentive bonus of 100% of his annual base salary (the “Target Annual Bonus Opportunity”) with a maximum payout of 200% of annual base salary, depending on the achievement of performance criteria established by the Board. For 2018, Mr. Begor’s Target Annual Bonus Opportunity was pro-rated.

 

Under the Employment Agreement, in May 2018, Mr. Begor was granted an initial long-term incentive award with a value of $7 million, consisting of (i) $3.5 million in performance shares, (ii) $1.75 million in time-based RSUs and (iii) $1.75 million in stock options. In addition, Mr. Begor was awarded a one-time New Hire Award in the amount of $10 million, comprised of equity awards in the same proportions and with the same vesting terms as the initial equity award above. Mr. Begor is eligible to receive additional equity grants in 2019 and future years, as determined by the Board or the Compensation Committee in its sole discretion, provided that the total value at grant will be at least $7 million annually. Mr. Begor’s current and future equity awards and other incentive compensation, except for his New Hire Award, are subject to the Company’s enhanced clawback policy adopted in March 2018. The one-time New Hire Award was granted to compensate Mr. Begor for foregoing pay that had already been earned from his prior employer in order to assume the role of Equifax CEO. In structuring Mr. Begor’s compensation package, the Committee and Board deemed it appropriate to structure the New Hire Award in a form that was similar to the structure of his prior compensation package. With this in mind, the Committee and Board concluded that the Company’s enhanced clawback policy should not apply to such award. Mr. Begor participates in the Company’s incentive, savings, retirement and welfare benefit plans and programs made available to newly-appointed senior executives. Mr. Begor also receives perquisites that include health care, financial planning and a tax preparation services allowance. These perquisites serve the important business purposes of ensuring that our CEO is aware of his personal health and receives adequate assistance in managing his personal finances, each of which enables him to focus his time on managing our business.

 

If Mr. Begor is terminated by the Company without “cause” (other than due to “disability” or death) or resigns for “good reason” (each as defined in the Employment Agreement), he will be entitled to receive, provided he signs a release of claims against the Company and complies with applicable restrictive covenants, (i) a severance payment equal to twice the sum of (x) his annual base salary and (y) his target annual bonus opportunity for the year of termination, (ii) any accrued but unpaid annual bonus plus a pro rata annual bonus for the year of termination, (iii) full acceleration of vesting as of the termination date of the New Hire Award (subject, in the case of performance-based awards, to certification by the Board of the Company’s performance), (iv) for all other equity awards, continued vesting under the Company’s equity incentive plan until the second anniversary of the termination date (subject, in the case of performance-based awards, to certification by the Board of the Company’s performance), with vested stock options being exercisable until the second anniversary of termination (or, to the extent such options vest within the 90 days before such second anniversary, until such 90 day period after such vesting has elapsed) (but not beyond their original expiration date) and (v) access to the Company’s health plan for two years or the lesser period permitted by the Company’s general benefits plans and applicable law and monthly payments of or an amount equal to premiums for continuation of healthcare coverage under Section 4980B of the Code or comparable law (“COBRA”) for 24 months.

 

If Mr. Begor is terminated by the Company without “cause” (other than due to “disability” or death) or resigns for “good reason” within the period six months prior to and two years after a “change in control” (each as defined in the Employment Agreement), he will be entitled to receive, provided he signs a release of claims against the Company and complies with applicable restrictive covenants, (i) a lump sum payment equal to three times the sum of (x) his annual base salary and (y) his target annual bonus opportunity for the year of termination, (ii) any accrued but unpaid annual bonus plus a pro rata annual bonus for the year of termination, (iii) full vesting of any outstanding equity awards (subject, in the case of performance-based awards, to the determination of achievement of the performance measures in accordance with the applicable award agreement and incentive plan) and (iv) access to the Company’s health plan for two years or the lesser period permitted by the Company’s general benefits plans and applicable law and monthly payments of or an amount equal to premiums under COBRA for 24 months.

 

Mr. Begor is required to own and hold Company stock having a value equal to six times his annual base salary within five years of his appointment.

 

The Employment Agreement contains confidentiality, non-competition and non-solicitation restrictions during the term of the Employment Agreement and for certain specified periods thereafter, that are comparable to the restrictions applicable to other senior executives.

 

Except as described above, employment agreements are not used with respect to any other executive officer, each of whom is employed on an “at will” basis.

 

Change in Control Arrangements

 

We had previously entered into change in control agreements with certain executive officers, including Messrs. Gamble, Kelley and Barros, which are more fully described under “Potential Payments Upon Termination or Change in Control” beginning on page 60. In February 2019, the Compensation Committee adopted the Equifax Inc. Change in Control Severance Plan (the “CIC Plan”), which replaced the prior change in control agreements between the Company and all executive officers who previously were party to an existing change in control agreement, including Messrs. Gamble, Kelley and Barros. Messrs. Farshchi and Koehler were not previously party to an individual change in control agreement with the Company. The CIC Plan applies to each of our NEOs and senior executives, except our CEO.

 

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The severance benefits applicable to Mr. Begor in the event of a change of control are contained in his employment agreement with the Company, as described above. See “2019 Change in Control Severance Plan” on pages 65-66 for more information on the CIC Plan.

 

Consideration of Certain Tax Effects

 

The Company’s annual tax deduction for compensation paid to each of the NEOs and certain other current or former officers who are subject to the compensation limits of Code Section 162(m) is capped at $1 million. Section 162(m) previously provided an exemption from the $1 million cap for compensation qualifying as “performance-based” compensation if certain requirements were met. Prior to the fiscal year ended December 31, 2018, we historically designed our annual incentive and long-term incentive programs for NEOs to qualify for that exemption. As a result of tax legislation that was enacted December 22, 2017, the exemption for performance-based compensation was repealed effective for tax years beginning after December 31, 2017, and the number of employees who are considered “covered employees” subject to the Section 162(m) limit was expanded to include the Chief Financial Officer (who was previously excluded) and certain former NEOs and other officers.

 

As a result of these changes, compensation in excess of $1 million paid to covered employees will not be deductible in 2018 or future years unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017 and not materially modified on or after such date. The Compensation Committee has taken steps that it deemed appropriate with the intention of preserving the deductibility of certain awards granted prior to the enactment of this tax legislation. Due to the uncertainties of the scope of the transition relief, however, there are no assurances that any compensation paid to our covered employees will be or will remain exempt from Section 162(m)’s deduction limit.

 

The Compensation Committee will continue to consider these implications, including the potential lack of deductibility under Section 162(m), among several factors when making compensation decisions, but the Compensation Committee has provided and reserves the right to provide compensation that does not qualify as deductible under Section 162(m).

 

Compensation Design Process

 

Role of the Compensation Committee and Management in Determining Executive Compensation. The Compensation Committee reviews and makes decisions about executive policies and plans, including the amount of base salary, cash bonus and long-term incentive awarded to our NEOs. Our CEO and other executives may assist the Committee from time to time in its evaluation of compensation elements or program design or by providing mathematical calculations, historical information, year-over-year comparisons and clarification regarding job duties and performance. In addition, for the 2018 Annual Incentive Plan, the Committee considered recommendations from members of management concerning the performance metric related to cybersecurity. The Compensation Committee also considers recommendations from its compensation consultant and competitive data and makes decisions, as it deems appropriate, on executive compensation based on its assessment of individual performance and achievement of goals both by the individual and the Company.

 

The CEO’s performance is reviewed by the Compensation Committee with input from the other non-management members of the Board. The CEO annually reviews the performance of each other executive officer who reports to him, including the NEOs. The conclusions reached and recommendations made based on these reviews, including with respect to salary adjustments and annual award amounts, are presented to the Compensation Committee for approval. Members of management play various additional roles in this process:

 

The CEO makes recommendations to the Compensation Committee regarding salary merit increases and compensation packages for the executive officers (other than himself) based on his evaluation of the performance of the executives who report to him.
The Chief Human Resources Officer and her staff provide the Compensation Committee with details of the operation of our various compensation plans, including the design of performance measures for our annual incentive plan and the design of our equity incentive program.
The Chief Financial Officer provides information and analysis relevant to the process of establishing performance targets for our annual cash incentive plan as well as any other performance-based awards and presents information regarding the attainment of corporate and business unit financial goals for the preceding year.
The Chief Legal Officer attends meetings of the Compensation Committee to provide input on legal issues, respond to questions about corporate governance and assist in the preparation of minutes.

 

The Compensation Committee considers these recommendations and exercises discretion in modifying any recommended adjustments or awards to executives based on considerations it deems appropriate. Although members of our management team participate in the executive compensation process, the Compensation Committee also meets regularly in executive session without any members of the management team present. The Compensation Committee makes the final determination of the executive compensation package provided to each of our NEOs.

 

Compensation Consultant Services and Independence. The Compensation Committee has the authority to engage independent advisors to assist it in fulfilling its responsibilities. The Committee retained Meridian Compensation Partners LLC (“Meridian”), a national executive compensation consulting firm, to provide advice with respect to 2018 compensation for our NEOs and other officers. Meridian performed services solely on behalf of the Committee and did not provide any other services to us. Management of the Company had no role in selecting the Committee’s compensation consultant and had no separate relationship with Meridian. The Committee assessed the independence of Meridian pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent Meridian from independently representing the Committee.

 

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Meridian performed the following services for the Committee in 2018: reviewed market benchmarking data and prepared market data for the CEO position; updated tally sheets; assessed incentive risk and proxy disclosure; assisted with the development of our 2019 peer group; reviewed regulatory and governance guidance and pay-for-performance updates. Meridian assisted the Committee in determining appropriate levels of compensation for the CEO and other executive officers. The firm attended all regular Committee meetings in 2018 upon invitation and participated in executive sessions without management present.

 

In January 2019, the Committee retained Frederic W. Cook & Co., Inc. (“FW Cook”), a national executive compensation consulting firm, to provide advice with respect to 2019 compensation for our NEOs and other officers. FW Cook performs services solely on behalf of the Committee and does not provide any other services to us. Management of the Company had no role in selecting the Committee’s compensation consultant and has no separate relationship with FW Cook. The Committee has assessed the independence of FW Cook pursuant to SEC and NYSE rules and concluded that no conflict of interest exists that would prevent FW Cook from independently representing the Committee. FW Cook assisted the Committee in determining appropriate levels of compensation for the CEO and other executive officers for 2019.

 

Management of Compensation-Related Risk

 

In establishing and reviewing the Company’s executive compensation program, the Compensation Committee considers whether the program encourages unnecessary or excessive risk-taking and has concluded that it does not. The Committee reviewed our material compensation programs and noted numerous ways in which risk is effectively managed or mitigated. This evaluation for 2018, which was conducted with the assistance of management and the Committee’s then-current outside compensation consultant (Meridian), covered a wide range of practices and policies. All plans were deemed to have substantial risk mitigators which, in the most material incentive plans, include a balanced mix of fixed and variable pay and short- and long-term incentives; use of multiple performance measures including corporate, business unit and individual performance weightings in incentive plans; a portfolio of long-term equity incentives including time-based and performance-based measures; caps, discretion in payment, oversight by non-plan participants, significant stock ownership guidelines, pre-approval requirements for executive stock transactions; and the existence of policies prohibiting Company stock hedging and pledging and requiring executive incentive compensation recoupment in specified circumstances.

 

The Compensation Committee has also reviewed the Company’s overall enterprise risks and how compensation programs for employees generally impacted individual behavior that could exacerbate these enterprise risks. Board and management processes are in place to oversee risk associated with global compensation programs and practices, including, but not limited to, regular business reviews; alignment of compensation plan goals with our annual and long-term strategic goals and performance expectations; review of enterprise risk management by the Board as part of the annual strategy and budget reviews; and other appropriate internal controls. The Committee concluded that the Company’s compensation plans, programs and policies, considered as a whole, including applicable risk-mitigation features, are not reasonably likely to have a material adverse effect on the Company.

 

Policies on Clawback of Incentive Compensation

 

Enhanced Clawback Policy. In March 2018, the Board adopted an enhanced clawback policy. The policy covers all employees, including executive officers, and applies to equity awards and other incentive compensation awarded to such employees (excluding the one-time New Hire Award granted to our CEO in May 2018 as described under “Employment Agreement and Change in Control Severance Plan”). The Compensation Committee has discretion to apply the policy to recover and recoup incentive compensation in all of the events described below.

 

The provisions of the policy are summarized in the table below:

 

Events that Trigger Action   Covered Persons   Covered Awards
Material restatement with misconduct     Current and former employees   Annual and long-term incentives awarded within three-year period preceding the date the misconduct is discovered
Material restatement without misconduct     Current and former executives   Excess amount of annual and long-term incentives awarded within three-year period preceding the restatement date
Materially inaccurate financial statements or performance metrics with misconduct   Current and former employees   Annual and long-term incentives awarded within three-year period preceding the date the misconduct is discovered
Materially inaccurate financial statements or performance metrics without misconduct     Current and former employees   Excess amount of annual and long-term incentives awarded within three-year period preceding the date the inaccuracy is discovered
Misconduct resulting in significant financial and/or reputational harm and the employee either engaged in the misconduct or failed to fulfill his or her supervisory responsibility to prevent another employee from engaging in such misconduct   Current and former employees   Annual and long-term incentives awarded within three-year period preceding the date the misconduct is discovered    

 

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The policy also provides that the Company will disclose its decision to take action, the number of employees impacted and their seniority, and the aggregate amount of the clawback/forfeiture if the underlying circumstances of the misconduct are publicly disclosed. The policy provides that the Committee may limit or eliminate disclosure if the events are not publicly disclosed or if disclosure would be likely to result in or exacerbate any litigation or other proceeding against the Company or its officers or directors, violate applicable law with respect to privacy, violate legal privilege or breach a contractual obligation.

 

Under the terms of award agreements issued under our 2008 Omnibus Incentive Plan, employees, including the NEOs, who violate the agreement’s non-compete, non-solicitation and non-disclosure restrictions or who engage in certain other activities detrimental to the Company may be subject to financial consequences, including cancellation of their outstanding equity awards or recovery by the Company of all gains from exercised stock options and vested shares received during the period beginning six months prior to the date of the violation. In addition, these recovery means are also applicable to the incentive equity awards of any employee who is terminated for cause, as determined in the sole discretion of the Committee.

 

These clawback policies are in addition to any policies or recovery rights provided under applicable law.

 

Stock Ownership Requirements

 

The Compensation Committee recognizes the critical role that executive stock ownership has in aligning the interests of management with those of shareholders. As such, we maintain a formal stock ownership policy, under which our CEO and our other senior executives are required to acquire and hold Equifax common stock with a market value of six times base salary and three times base salary, respectively, within five years of assuming their respective positions. A reduction in ownership to one half of these requirements is allowed for executives age 60 or older who are eligible for retirement. As of December 31, 2018, all of our executive officers were in compliance with our stock ownership requirements.

 

Hedging and Pledging Policies

 

Under our insider trading policy, we prohibit hedging the economic risk of ownership of our common stock through short sales or the purchase or sale of options, puts, calls, straddles, equity swaps or other derivative securities that are directly linked to Company stock, by our directors, officers and employees. We also prohibit our directors and executive officers from holding our stock in a margin account or pledging our stock as collateral for a loan.

 

Actions Taken with Respect to 2019 Compensation

 

Context for 2019 Compensation Decisions

 

Following the 2017 cybersecurity incident, the Compensation Committee undertook a comprehensive review of our short- and long-term incentive compensation program, taking into consideration the perspective of our shareholders. In February 2018, the Committee made certain changes in an effort to ensure compensation reflected key business priorities and Company-wide focus on data security, while also ensuring that the Company can attract and retain talented employees in order to create value for shareholders and provide appropriate incentives for executives managing those data security efforts. One such change was the addition of a cybersecurity performance measure as a metric under the 2018 AIP. Achievement of this cybersecurity metric cannot increase an NEO’s payout under the AIP, but underachievement will decrease the payout. The Committee also changed the LTI program to eliminate the three-year cumulative Adjusted EPS metric in the performance shares to avoid possible incentive to limit spending on cybersecurity. The resulting 2018 LTI mix consisted of performance shares tied to three-year relative cumulative TSR (weighted 50%), stock options (25%) and time-based RSUs with a three-year cliff vesting schedule (25%).

 

Transforming Our LTI Approach to Reflect EFX2020 Business Transformation Strategy

 

In February 2019, in connection with our previously-announced business transformation strategy, the Compensation Committee reformulated the long-term incentive program for 2019 to align incentives with our near- and long-term goals.

 

Since his appointment in April 2018, our Chief Executive Officer, Mark Begor, has been leading Equifax through a significant transformation, including the investment of substantial resources to achieve our objective of becoming a trusted global leader in data security, advanced analytics and technology. On February 21, 2019, we outlined the key strategic initiatives that comprise EFX2020, our multi-year business transformation strategy, as described further on page 5. Our business strategy is described in more detail in our 2018 Annual Report on Form 10-K.

 

To strengthen the alignment between our NEOs and our shareholders, and to reward efforts related to driving the Company’s progress towards delivering on our strategic objectives, the Committee modified our long-term incentive program for 2019 by adopting the Equifax Transformation Leadership Program (“2019 ETLP”). The 2019 ETLP, which includes the NEOs and senior leadership team members who are integral to the successful execution of our strategy, increases over 2018 levels the grant date fair value of the total long-term

 

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incentive opportunity and utilizes more challenging performance thresholds required to earn payouts. The 2019 ETLP is intended to motivate our NEOs and key leaders to achieve the specific goals as outlined in our EFX2020 multi-year business transformation strategy, which were designed to shape corporate performance for the long term and drive shareholder returns, consistent with the multi-year performance periods in the 2019 ETLP. The Committee intends to revert to the traditional long-term incentive structure in 2020.

 

The components of the 2019 ETLP include TSR performance shares, premium-priced stock options and time-based RSUs. Notably, the entirety of the incremental award opportunity delivered in 2019 is tied to performance shares and premium-priced stock options, which are earned only if our team delivers results that meet or exceed the performance criteria. The design of the 2019 ETLP acknowledges the increased efforts of our executive officers to lead the successful execution of our core strategic imperatives tied to our business strategy, focuses executive officers on efficiently achieving key targets under EFX2020 within a designated time frame, and uses performance-based equity award structures to drive alignment of the interests of our executives and shareholders.

 

The following table illustrates the grant date fair value of long-term incentives awarded under the 2018 LTIP and the 2019 ETLP to our CEO and other current NEOs, excluding Mr. Barros, who is not a participant in the 2019 ETLP.

 

    2018 LTIP   2019 ETLP
Name   TSR
Performance
Shares
($)
  Stock
Options
($)
  RSUs
($)
  2018 Total
($)
  TSR
Performance
Shares
($)
  Premium
Priced
Stock
Options
($)
  RSUs
($)
  2019 Total
($)
M. Begor   3,500,000   1,750,000   1,750,000   7,000,000   6,000,000   3,250,000   1,750,000   11,000,000
J. Gamble   675,000   337,500   337,500   1,350,000   1,518,750   843,750   337,500   2,700,000
J. Farshchi   375,000   187,500   187,500   750,000   843,750   468,750   187,500   1,500,000
J. Kelley   537,500   268,750   268,750   1,075,000   1,209,375   671,875   268,750   2,150,000
B. Koehler   450,000   225,000   225,000   900,000   1,012,500   562,500   225,000   1,800,000
                         
                    Target Value
Increased
  Target
Value
Unchanged
   

 

Under the 2019 ETLP:

 

all stock options are now premium-priced, split evenly based on grant date fair value into three equally weighted tranches with exercise prices set at premiums of 115%, 125% and 135% to the fair market value on the date of grant, reflecting a significant shift from the options granted in 2018;
the grant date fair value of the stock options and TSR performance shares are increased versus comparable awards in 2018;
the grant date fair value of the time-vested RSUs remains unchanged versus 2018, and so time-vested RSUs comprise a significantly smaller percentage of the overall long-term incentive opportunity because the increase in grant date fair value is allocated to the performance-based components of the 2019 ETLP; and
the increased grant date fair value components of the 2019 ETLP, consisting of premium-priced stock options and TSR performance shares, will be forfeited if a recipient retires before vesting.

 

Performance Shares. This metric aligns with shareholder interests as higher cumulative TSR results in higher returns for shareholders and ensures a close correlation between performance and payouts. Performance shares are earned, if at all, based on the percentile ranking of the Company’s cumulative TSR compared to the TSR of the companies in the S&P 500 Index (as constituted on the initial grant date, subject to certain adjustments) after a three-year performance period. TSR performance shares granted in 2017 and later accrue dividend equivalent units, which are payable only with regard to earned shares that are delivered upon settlement.

 

The number of TSR performance shares payable to executives is calculated by multiplying the target award by a percentage (from 0% to 200%) as illustrated in the table below:

 

Company TSR
Percentile
  Performance Share Payout as a
% of Target
90th   200%
70th   150%
50th   100%
30th   50%
Below 30th   0%

 

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The percentage is determined by taking an average of the payout percentages achieved for each of the last four quarters of the performance period based on the Company’s cumulative TSR percentile ranking through the end of each such quarter. Basing the award payout on the average of the payout percentages for each of the last four quarters of the three-year performance period counterbalances potential late performance period volatility and reflects performance over the whole period. If our team does not deliver threshold performance, the value of the performance shares will be $0. In addition, in the event that cumulative TSR is negative over the three-year performance period, the payout is capped at 100% of the target shares irrespective of the Company’s TSR percentile rank versus peers.

 

Premium-Priced Stock Options. The use of premium-priced stock options, rather than traditional stock options with an exercise price equal to the fair market value on the grant date, tightens the link between our long-term incentive compensation and creation of shareholder value by ensuring that executives receive gains only after a preferred return is first delivered to investors, thereby reducing the possibility that broad industry or market growth, as opposed to Company-specific performance, leads to executive gains. If our team is not able to drive share price returns in excess of the exercise price before the expiration date, the realized value of these stock options will be $0.

 

The exercise prices of stock options granted in 2019 were set above the fair market value of our stock in three equally weighted tranches (based on fair value on the date of grant) with exercise prices of 115%, 125% and 135% of the fair market value of our stock. The premium-priced stock options vest on the third anniversary of the grant date, assuming continued employment with the Company. The term of the premium-priced stock options is six years from the grant date.

 

RSUs. We use RSUs to retain our employees over the long-term and simultaneously inspire our team to focus on corporate performance. The RSUs issued to NEOs vest on the third anniversary of the grant date. RSUs granted in 2017 and later accrue dividend equivalent units. The value of RSUs varies directly with the market price of our common stock, which creates an added incentive to make decisions that will build shareholder value over the long-term.

 

Other Actions in 2019

 

No Increase in Base Salary or Annual Bonus Opportunity for NEOs. The Committee determined that our NEOs will not receive any increase to base salary or target bonus opportunity for 2019. The only compensation increases for our NEOs for 2019 relate to our long-term incentive program (described above), which creates greater focus on stock price and multi-year performance and thereby enhances alignment between management and shareholders.
   
Adopted Change In Control Severance Plan. In February 2019, the Committee adopted a new Change in Control Severance Plan (the “CIC Plan”) for senior executives, including our NEOs other than Mr. Begor. The Committee worked with its outside compensation consultants to design a plan with market-standard terms that will provide executives security in the event of a change in control of the Company. The CIC Plan ensures that our executives objectively evaluate potential transactions that may be in the best interest of our shareholders, despite the potential negative consequences such transactions may have on them personally. The CIC Plan will not apply to Mr. Begor, whose change in control protections as contained in his employment agreement were already aligned with the core provisions of the CIC Plan. See “2019 Change in Control Severance Plan” on pages 65-66 for more details regarding the new CIC Plan.
   
  Eliminated CIC Letter Agreements. Other than as described above with respect to our CEO, all of our executives with individual change in control agreements (the “CIC Letter Agreements”) agreed to give up their individual agreements become subject to the new CIC Plan.
     
  Reduced CIC Severance Multiples. Under the CIC Letter Agreements, certain executives were entitled to a severance multiple of 3x. Following the elimination of the CIC Letter Agreements, the severance multiple upon a change in control was set at 2x for all executives other than the CEO, representing a significant decrease in the benefit payable.
     
  Eliminated CIC Tax Gross-Ups. Under the CIC Letter Agreements, certain executives were entitled to tax gross-up benefits in connection with a change in control. Following the elimination of the CIC Letter Agreements, we do not offer tax gross-up benefits in connection with a change in control.

 

The Compensation Committee will continue to monitor our executive compensation program to ensure that it is consistent with the Company’s objectives, provides appropriate incentives to management, and remains competitive with other companies in the industries in which we operate or with which we compete for executive talent.

 

Compensation Committee Interlocks and Insider Participation

 

Phillip Humann, Mark Feidler, Robert Marcus, Siri Marshall and Robert Selander were members of the Compensation Committee during 2018. Mr. Humann retired from the Board on May 3, 2018. None of these directors is or has been an executive officer of the Company, or had any relationship requiring disclosure by the Company under the SEC’s rules requiring disclosure of certain relationships and related party transactions. None of the Company’s executive officers served as a director or a member of a compensation committee (or other committee serving an equivalent function) of any other entity, the executive officers of which served as a director of the Company or a member of the Compensation Committee during 2018.

 

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Summary Compensation Table

 

The following table presents information regarding compensation of the NEOs for services rendered during 2018, 2017 and 2016. The table includes values for contingent compensation such as unvested or unpaid stock awards and unexercised stock options. The executives may never realize the value of certain items included in the column headed “Total,” or the amounts realized may differ materially from those listed in the table.

 

Name and
Principal Position
  Year   Salary
($)(2)
  Bonus
($)(3)
  Stock
Awards
($)(4)
  Option
Awards
($)(5)
  Non-Equity
Incentive Plan
Compensation
($)(6)
  Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings
($)(7)(8)
  All Other
Compensation
($)(9)
  Total
($)
Mark W. Begor(1)
Chief Executive Officer
  2018   1,009,615   0   14,473,853   3,372,803   806,833   0   350,608   20,013,712
                   
                   
John W. Gamble, Jr.
Corporate Vice President and Chief Financial Officer
  2018   681,622   0   1,649,314   664,725   510,781   355,500   17,043   3,878,985
  2017   660,164   0   1,095,714   224,257   0   878,600   16,831   2,875,567
  2016   632,243   0   1,244,532   0   758,692   443,000   16,640   3,095,107
Jamil Farshchi(1)
Chief Information Security Officer
  2018   403,846   65,000   2,888,573   148,837   299,745   0   87,557   3,893,558
                   
                   
John J. Kelley III
Corporate Vice President,
Chief Legal Officer and Corporate Secretary
  2018   538,332   0   1,415,257   610,097   322,724   338,000   19,864   3,244,274
  2017   548,939   0   872,185   178,780   0   688,000   16,831   2,304,735
  2016   546,312   0   957,302   0   655,547   615,400   21,135   2,795,696
Bryson R. Koehler(1)
Chief Technology Officer
  2018   317,308   0   5,566,312   178,584   237,778   0   81,282   6,381,264
                   
                   

Paulino do Rego Barros, Jr.(1)

Former Interim CEO;
Former President, U.S.
Information Solutions

  2018   781,660   500,000   1,117,290   143,829   413,388   778,900   532,355   4,267,422
  2017   561,450   0   2,088,394   120,497   0   476,700   477,393   3,724,434
                   
(1) Messrs. Begor, Farshchi and Koehler were hired in 2018. Mr. Barros was an executive officer, but not an NEO, for 2016.
   
(2) Salary represents base salary paid to each of the NEOs for each year shown. Amounts shown are not reduced to reflect the individuals’ election, if any, to defer receipt of salary under the Executive Deferred Compensation Plan.
   
(3) The entire annual incentive bonus is included under the “Non-Equity Incentive Plan Compensation” column because it was subject to a performance-based condition (cap) based on the Company’s operating income for the applicable year for purposes of Code Section 162(m), as described under “Consideration of Certain Tax Effects” on page 47. Amount for Mr. Barros reflects a cash bonus payable upon the successful completion of his role as interim Chief Executive Officer in April 2018. Amount for Mr. Farshchi includes a one-time, new hire cash payment of $65,000. Amounts shown are not reduced to reflect the individual’s election, if any, to defer receipt of awards under the Executive Deferred Compensation Plan.
   
(4) For each NEO, the amounts in this column represent the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 without regard to estimated forfeitures related to service-based vesting conditions. Stock awards in 2018 included time-vested RSUs and TSR performance shares. For the 2018 TSR performance share awards, the value at the grant date is determined under the Monte Carlo valuation model consistent with the estimated full cost to be recognized over the three-year performance period based on the probable outcome of the performance conditions. The calculations reflect an accounting value for the 2018 TSR performance share grants of: (i) $145.96 per share for the awards to Messrs. Gamble, Farshchi, Kelley and Barros, which was 120.28% of our closing stock price of $121.35 on the March 5, 2018 grant date; (ii) $135.27 per share for the award to Mr. Begor, which was 120.28% of our closing stock price of $112.46 on the May 4, 2018 grant date; and (iii) $148.53 per share for the award to Mr. Koehler, which was 120.28% of our closing stock price of $123.49 on the July 27, 2018 grant date. Assumptions used in the calculation of the amounts in this column are described in Note 8 to our audited consolidated financial statements for the fiscal year ended December 31, 2018, in our 2018 Form 10-K.
   
  The value of the 2018 time-vested RSU and TSR performance share awards, assuming the highest level of performance under the performance share awards would be achieved (200% of the target), based on the closing price of our common stock on the respective grant dates are as follows: Mr. Begor $24,697,730; Mr. Gamble, $2,461,142; Mr. Farshchi, $3,339,589; Mr. Kelley, $2,061,713; Mr. Koehler, $6,107,569; and Mr. Barros, $1,553,272. The NEOs may never realize any value from the performance shares, and to the extent they do, the amounts realized may have no correlation to the amounts reported above.
   
  In addition to the annual LTI award for 2018, in connection with his appointment as CEO, Mr. Begor was awarded a one-time New Hire Award in the amount of $10 million. The one-time New Hire Award was granted to compensate Mr. Begor for foregoing pay that had already been earned from his prior employer in order to assume the role of Equifax CEO. In connection with their new leadership positions with the Company and to compensate them for foregoing pay previously earned at their prior employers, in addition to the annual LTI award for 2018, Messrs. Farshchi and Koehler were granted additional RSUs with grant date fair values of $2,250,000 and $4,800,000, respectively. In addition to the annual LTI award for 2018, Messrs. Gamble and Kelley were each granted additional RSUs and stock options with an aggregate grant date fair value of $1,000,000, and Mr. Barros was granted additional RSUs with an aggregate grant date fair value of $500,000.
   
(5) The amount in this column shows the aggregate grant date fair value computed in accordance with FASB ASC Topic 718. The amount is based on the fair value of the stock option award as estimated using the binomial model multiplied by the number of shares subject to the option award. Assumptions used in the binomial model for calculation of the amounts in this column are described in Note 8 to our audited consolidated financial statements for the fiscal year ended December 31, 2018, in our 2018 Form 10-K.

 

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(6) Represents annual incentive awards paid under the Annual Incentive Plan for services performed in 2018 and 2016, respectively. In response to the cybersecurity incident, the Board exercised its negative discretion to eliminate payments to our NEOs under the 2017 Annual Incentive Plan. Amounts shown are not reduced to reflect the NEO’s election, if any, to defer receipt of awards under the Executive Deferred Compensation Plan.
   
(7) For Messrs. Gamble, Kelley and Barros, the amounts in this column reflect the aggregate increase (or decrease), if any, of accumulated pension benefit accruals for such NEOs under the Supplemental Retirement Plan for Executives of Equifax Inc. (“SERP”) in the applicable fiscal year. There are no above-market or preferential earnings on compensation deferred on a basis that is not tax-qualified, including such earnings on non-qualified contribution plans. The pension accrual amounts represent the difference in present value liability (measured at the respective fiscal year-end dates shown in the table) based on the assumptions shown in the text following the “Pension Benefits at 2018 Fiscal Year-End” table on page 57. Year-over-year changes in pension value generally are driven in large part by changes in actuarial pension assumptions as well as increases in service, age and compensation. The fluctuations in pension value resulting from the change in discount rates or mortality table assumptions resulted in an increase in the benefits payable to participants under the SERP.
   
(8) For Messrs. Gamble, Kelley and Barros, the amounts in this column reflect the actuarially-determined increase at December 31 of the applicable year in the present value of such NEO’s accumulated benefits under the SERP, at the earliest unreduced retirement age, determined using interest rate, mortality and other assumptions consistent with those used in the Company’s financial statements and includes amounts which the NEO may not currently be entitled to receive because such amounts are not vested. Above-market or preferential earnings are not available under our two nonqualified deferred compensation plans, the Executive Deferred Compensation Plan and the Director and Executive Stock Deferral Plan. See “Pension Benefits at 2018 Fiscal Year-End” on page 57 for more information on pension benefits.
   
(9) The “All Other Compensation” column for 2018 includes the following:

 

Name   Perquisites
and Personal
Benefits(a)
($)
  Relocation and
Living Expenses(b)
($)
  Tax
Reimbursements(c)
($)
  Company
Contributions
to Defined
Contribution
Plans(d)
($)
  Insurance
Premiums(e)
($)
  Total
($)
M. Begor   56,196   70,750   24,163   197,983   1,516   350,608
J. Gamble   8,000           8,250   793   17,043
J. Farshchi   5,446           82,111       87,557
J. Kelley   10,821           8,250   793   19,864
B. Koehler   15,436           65,846       81,282
P. Barros   24,288   355,754   143,270   8,250   793   532,355
(a) The amounts in this column are based on the aggregate incremental cost to the Company, if any, with respect to tax and financial planning services, annual medical examinations, spousal travel to attend business-related events and event tickets, none of which exceeded $25,000 as a category for any NEO except for Mr. Begor, whose total includes $50,000 for tax and financial planning services.
   
(b) Amount for Mr. Begor reflects reimbursement for relocation and temporary living expenses. Amount for Mr. Barros reflects $40,353 for his relocation and $315,401 incurred for his living expenses in connection with his prior assignment in Australia.
   
(c) The Company does not provide tax reimbursements on the value of perquisites and personal benefits received by the NEOs other than those provided to other employees. The Company’s standard policy for employees is to provide a tax gross-up for relocation assistance. Mr. Barros’s relocation assistance includes $105,110 related to a tax gross-up payment on the relocation and living expenses and $38,160 for payment of foreign taxes. Mr. Begor’s relocation assistance includes $24,163 related to a tax gross-up payment on the relocation and living expenses.
   
(d) For Messrs. Begor, Farshchi and Koehler, the amounts in this column reflect the aggregate increase (or decrease), if any, of accumulated benefit accruals for such individuals under the Company’s Supplemental Contribution Plan in the applicable fiscal year as well as a Company match of 100% of the first 4% of compensation (subject to the government limit on compensation of $275,000 in 2018) contributed on a pre-tax or after-tax basis to the tax-qualified profit sharing and 401(k) Plan. For Messrs. Gamble, Kelley and Barros, the amounts reflect a Company match of 50% of the first 6% of compensation (subject to the government limit on compensation of $275,000 in 2018) contributed on a pre-tax or after-tax basis to the tax-qualified profit sharing and 401(k) Plan. See “401(k) Plan” on page 55 and “Supplemental Contribution Plan” on page 59.
   
(e) Represents insurance premiums paid for NEO personal excess liability insurance.

 

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2018 Grants of Plan-Based Awards

 

Set forth below is information regarding awards provided to the NEOs in 2018. The non-equity incentive awards were made under the Annual Incentive Plan (“AIP”) which is part of our shareholder-approved amended and restated 2008 Omnibus Incentive Plan (the “2008 Omnibus Incentive Plan”). The equity awards were also made under the 2008 Omnibus Incentive Plan.

 

        Estimated Possible
Payouts Under Non-Equity
Incentive
Plan Awards(2)
  Estimated Future
Payouts
Under Equity
Incentive
Plan Awards(3)
  All Other
Stock
Awards:
Number of
Shares of
Stock or
  All Other
Option
Awards:
Number of
Securities
Underlying
  Exercise
or Base
Price of
Option
  Grant
Date Fair
Value of
Stock
and
Option
Name(1)   Grant
Date
  Threshold
($)
  Target
($)
  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  Units(4)
(#)
  Options
(#)
  Awards
($/Sh)
  Awards(5)
($)
M. Begor                                            
AIP   3/27/18   403,846   1,009,615   2,019,231                            
PS   5/4/18               15,561   31,122   62,244               4,209,776
PS (N)   5/4/18               22,231   44,461   88,922               6,014,101
RSUs   5/4/18                           15,561           1,749,990
RSUs (N)   5/4/18                           22,230           2,499,986
Options   5/4/18                               62,246   112.46   1,388,837
Options (N)   5/4/18                               88,919   112.46   1,983,966
J. Gamble                                            
AIP   2/15/18   204,486   511,216   1,022,432                            
PS   3/5/18               2,781   5,562   11,124               811,828
RSUs   3/5/18                           2,781           337,474
RSUs (S)   7/27/18                           4,049           500,011
Options   3/5/18                               11,128   121.35   267,916
Options (S)   7/27/18                               16,196   123.49   396,809
J. Farshchi                                            
AIP   2/2/18   120,000   300,000   600,000                            
PS   3/5/18               1,545   3,090   6,180               451,016
RSUs   3/5/18                           1,545           187,486
RSUs (N)   3/5/18                           18,542           2,250,072
Options   3/5/18                               6,182   121.35   148,837
J. Kelley                                            
AIP   2/15/18   129,200   322,999   645,998                            
PS   3/5/18               2,215   4,429   8,858               646,456
RSUs   3/5/18                           2,215           268,790
RSUs (S)   7/27/18                           4,049           500,011
Options   3/5/18                               8,859   121.35   213,288
Options (S)   7/27/18                               16,196   123.49   396,809
B. Koehler                                            
AIP   4/24/18   95,192   237,981   475,962                            
PS   7/27/18               1,822   3,644   7,288               541,257
RSUs   7/27/18                           1,822           224,999
RSUs (N)   7/27/18                           38,870           4,800,056
Options   7/27/18                               7,289   123.49   178,584
P. Barros                                            
AIP   2/15/18   187,598   468,996   937,992                            
PS   3/5/18               1,494   2,987   5,974               435,982
RSUs   3/5/18                           1,494           181,297
RSUs (S)   7/27/18                           4,049           500,011
Options   3/5/18                               5,974   121.35   143,829

 

(1) AIP = 2018 Annual Incentive Plan; PS = TSR performance shares granted under annual LTIP; PS (N) = new hire grant of TSR performance shares; RSUs = time-vested RSUs granted under annual LTIP; RSUs (N) = new hire grant of time-vested RSUs; RSUs (S) = special one-time grant of time-vested RSUs; Options = non-qualified stock options granted under annual LTIP; Options (N) = new hire grant of non-qualified stock options; Options (S) = special one-time grant of non-qualified stock options.
   
(2) The amounts shown represent the range of possible dollar payouts that could have been earned under the 2018 Annual Incentive Plan. The amount in the “Threshold” column assumes the Company achieved the minimum performance level required for the granting of AIP awards, and that the NEO was rated “achieves expectations” for the individual performance portion of the award (100% of threshold), resulting in an award equal to 40% of his or her award target.
   
(3) Represents grants to each NEO during 2018 of performance shares under our 2008 Omnibus Incentive Plan. TSR performance shares granted are earned, if at all, based on our TSR performance after a three-year period relative to the TSR after the same period for the companies in the S&P 500 Index as of the grant date. TSR performance shares accrue dividend equivalent units which vest at the same time and at the same level of award attainment as the underlying shares. Information regarding performance targets, vesting and additional performance share award details is set forth under “Long-Term Equity Incentive Compensation” beginning on page 42.
   
(4) Represents the number of RSUs granted to each NEO during 2018. The RSUs will vest, subject to continued employment, on the third anniversary of the grant date, except that Mr. Farshchi’s new hire grant vests 50% on each of the first and second anniversaries of the grant date and Mr. Koehler’s new hire grant vest ratably over three years. Dividend equivalents accrue on unvested shares. Additional information regarding RSUs is set forth under the heading “Long-Term Equity Incentive Compensation” on page 43.
   
(5) Represents full grant date fair value of stock and option awards granted to each NEO in 2018 computed in accordance with FASB ASC Topic 718, excluding the estimated effect of forfeitures. The stock options vest, subject to continued employment, ratably on each of the first, second and third anniversaries of the grant date.

 

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Additional Discussion of Material Items in Summary Compensation and Grants of Plan-Based Awards Tables

 

Our executive compensation policies and practices, pursuant to which the compensation set forth in the Summary Compensation Table and the Grants of Plan-Based Awards Table was paid or awarded, are described under “Compensation Discussion and Analysis” beginning on page 30. A summary of certain material terms of our compensation plans and arrangements is set forth below.

 

2018 Annual Incentive Plan. Annual incentive opportunities awarded to our NEOs are earned based on Company performance against one-year operating objectives and individual performance metrics. The actual amount of annual incentive earned by each NEO pursuant to the individual performance portion is reported in the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table. Annual incentive plan thresholds, targets and maximums are identified for each NEO in the “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” column of the “2018 Grants of Plan-Based Awards” table on page 54. Additional information regarding the design of the annual incentive plan is included in the CD&A.

 

401(k) Plan. We sponsor a tax-qualified 401(k) Plan in which eligible salaried employees may participate in either a basic plan or an enhanced plan put into place following the 2008 freeze of certain benefits payable to non-grandfathered employees under the USRIP as summarized below. In 2018, we matched either 50% of the first 6% of pay, or 100% of 4% of pay an employee contributed on a pre-tax or after-tax basis to the plan (subject to the government limit on compensation, or $275,000 in 2018) (the “basic plan”). Participants, excluding participants in the SERP, also receive a direct Company contribution (the “enhanced plan”), under which Equifax may make a contribution of between 1.5% and 4% of pay based on years of service, even if employees do not choose to make a 401(k) Plan contribution, and also may provide a 100% match on employee 401(k) Plan contributions up to 4% of pay compared to a 50% match on the first 6% of employees’ contributions in the previous 401(k) Plan. Effective as of January 1, 2019, the Company approved a change to the 401(k) Plan to eliminate the direct Company contribution and increase the discretionary match under the enhanced plan to 100% of the first 5% of pay contributed by the employee.

 

U.S. Retirement Income Plan. The USRIP is a tax-qualified defined benefit plan that covered eligible salaried U.S. employees. The USRIP has been frozen for U.S. employees who did not meet certain grandfathering criteria (i.e., those employees who were not retirement-eligible on the freeze date, which includes all of the NEOs), and provide these employees and certain other employees not eligible to participate in the USRIP with an enhanced 401(k) Plan described above. The pension plan amendments freeze service credit as of December 31, 2008, and salary increases as of December 31, 2012. Certain NEOs participate in the Supplemental Retirement Plan for Executives of Equifax Inc. (“SERP”) and do not participate in the enhanced 401(k) Plan. The changes did not affect our U.S. retirees, former employees with vested benefits or employees who were eligible to retire prior to January 1, 2009 (the “grandfathered group”). Members of the grandfathered group who were still employed on December 31, 2014 had their pension benefits fully frozen on this date.

 

Executive Life and Supplemental Retirement Benefit Plan. The Executive Life Plan provides executive life insurance benefits, which may also include capital accumulation benefits. The Executive Life Plan’s grantor trust is used to ensure that the insurance premiums due under this plan are paid in case we fail to make scheduled payments following a change in control, as defined in the trust agreement. The Executive Life Plan was amended and restated effective July 2002 to provide that executive officers will receive only life insurance benefits and no retirement benefits under the plan, in order to make permanent our suspension of premium payments after July 30, 2002 in compliance with Sarbanes-Oxley Act prohibitions against company loans to their executive officers.

 

EQUIFAX INC. - 2019 Proxy Statement    55

 
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Outstanding Equity Awards at 2018 Fiscal Year-End

 

      Option Awards  Stock Awards
Name  Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
  Number of
Securities
Underlying
Unexercised
Options
Unexercisable(1)
(#)
  Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
  Option
Exercise
Price
($)
  Option
Expiration
Date
 Number of
Shares or
Units of
Stock That
Have Not
Vested
(#)
   Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(2)
  Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units,
or Other Rights
That Have Not
Vested
(#)
   Equity
Incentive
Plan Awards:
Market or
Payout Value
of Unearned
Shares, Units,
or Other
Rights That
Have Not
Vested
($)(2)
M. Begor  0  88,919  0  112.46  5/4/2028                
   0  62,246  0  112.46  5/4/2028                
                  22,453(3)   2,091,048        
                  15,717(3)   1,463,724        
                         89,814(11)   8,364,378
                         62,868(11)   5,854,897
J. Gamble  3,462  6,923  0  129.93  2/16/2027               
   0  11,128  0  121.35  3/5/2028               
   0  16,196  0  123.49  7/27/2028               
                  4,295(4)   399,993        
                  2,667(4)   248,378        
                  2,818(4)   262,440        
                  4,076(4)   379,598        
                  2,362(9)   219,973        
                         10,668(10)   993,511
                         11,272(11)   1,049,761
J. Farshchi  0  6,128  0  121.35  3/5/2028               
                  18,790(5)   1,749,913        
                  1,565(5)   145,748        
                         6,262(11)   583,180
J. Kelley  2,760  5,519  0  129.93  2/16/2027               
   0  8,859  0  121.35  3/5/2028               
   0  16,196  0  123.49  7/27/2028               
                  3,303(6)   307,608        
                  2,123(6)   197,715        
                  2,244(6)   208,984        
                  4,076(6)   379,598        
                  1,817(9)   169,217        
                         8,492(10)   790,860
                          8,976(11)   835,935
B. Koehler  0  7,289  0  123.49  7/27/2028               
                  39,137(7)   3,644,829        
                  1,834(7)   170,800        
                         7,338(11)   683,388
P. Barros  1,860  3,720  0  129.93  2/16/2027               
   0  5,974  0  121.35  3/5/2028               
                  2,312(8)   215,317        
                  1,432(8)   133,362        
                  13,460(8)   1,253,530        
                  1,514(8)   140,999        
                  4,076(8)   379,598        
                  1,272(9)   118,461        
                         5,728(10)   533,449
                         6,052(11)   563,623
(1) Options vest one-third annually for three years following the grant date.
(2) Based on the closing price of Equifax common stock ($93.13) on December 31, 2018.
(3) RSUs vest on May 4, 2021.
(4) RSUs vest on February 18, 2019 (4,295), February 16, 2020 (2,667), March 5, 2021 (2,818) and July 27, 2021 (4,076).
(5) RSUs vest on March 5, 2019 (9,395), March 5, 2020 (9,395) and March 5, 2021 (1,565).
(6) RSUs vest on February 18, 2019 (3,303), February 16, 2020 (2,123), March 5, 2021 (2,244) and July 27, 2021 (4,076).
(7) RSUs vest on July 27, 2019 (13,045), July 27, 2020 (13,046) and July 27, 2021 (14,880).

 

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(8) RSUs vest on February 18, 2019 (2,312), February 16, 2020 (1,432), December 1, 2020 (13,460), March 5, 2021 (1,514) and July 27, 2021 (4,076).
(9) Performance shares granted during 2016 that were earned based on Equifax’s performance for the three-year performance period ended December 31, 2018; the performance shares did not vest until performance was approved by the Compensation Committee in February 2019 and therefore were unvested as of December 31, 2018.
(10) Maximum (200% of target) of performance shares granted during 2017 that may be earned based on Equifax’s performance, as determined by the Compensation Committee, following the completion of the three-year performance period ended December 31, 2019.
(11) Maximum (200% of target) of performance shares granted during 2018 that may be earned based on Equifax’s performance, as determined by the Compensation Committee, following the completion of the three-year performance period ending December 31, 2020.

 

Option Exercises and Stock Vested in Fiscal Year 2018

 

   Option Awards   Stock Awards 
Name  Number of Shares
Acquired on
Exercise
(#)
   Value
Realized On
Exercise
($)(1)
   Number of RSU
Shares Acquired
on Vesting
(#)
   Value of RSUs
Realized on
Vesting
($)(2)
   Number of
Performance
Shares Acquired
on Vesting
(#)
   Value of
Performance
Shares
Realized
on Vesting
($)(3)
 
M. Begor   0    0    0    0    0    0 
J. Gamble   0    0    4,302    497,096    14,560    1,682,408 
J. Farshchi   0    0    0    0    0    0 
J. Kelley   0    0    3,585    414,247    12,133    1,401,968 
B. Koehler   0    0    0    0    0    0 
P. Barros   0    0    2,599    300,314    8,797    1,016,493 
(1) The value realized upon stock option exercises during 2018 was calculated based on the difference between the market price of Equifax common stock at the time of exercise and the exercise price of the option.
(2) The value realized for RSUs was determined by multiplying the number of units that vested during 2018 by the market price of Equifax common stock on the respective vesting date.
(3) The value realized for performance shares was determined by multiplying the number of units that vested (target award times the payout percentage earned of 169.2%) by the market price of Equifax common stock on February 20, 2018 ($115.55).

 

Retirement Plans

 

The following table shows the present value at December 31, 2018 of accumulated benefits payable to each of our NEOs at the earliest unreduced retirement age (age 60 or current age for executives over the age of 60), including the number of years of service credited to each NEO, under the SERP. Age 60 is the earliest age at which a participant can begin receiving an unreduced early retirement benefit under the SERP. No pre-retirement mortality was assumed. Messrs. Gamble, Kelley and Barros are currently eligible for retirement under the SERP.

 

Pension Benefits at 2018 Fiscal Year-End

 

Name  Number of Years
Credited Service
(#)
   Present Value of
Accumulated Benefit(1)
($)
   Payments During
Last Fiscal Year(s)
($)
 
M. Begor   N/A(2)   N/A(2)    N/A(2) 
J. Gamble   5    2,040,200    0 
J. Farshchi   N/A(2)    N/A(2)    N/A(2) 
J. Kelley   6    2,302,600    0 
B. Koehler   N/A(2)    N/A(2)    N/A(2) 
P. Barros   9    3,358,200    0 
(1) These values were determined using interest rate and mortality rate assumptions consistent with those used in the Company’s consolidated financial statements.
(2) Messrs. Begor, Farshchi and Koehler are not participants in the SERP.

 

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Supplemental Retirement Plan. The SERP covers the NEOs and other senior executive officers designated by the Compensation Committee. Messrs. Begor, Farshchi and Koehler do not participate in the SERP. The plan provides benefits that supplement the USRIP benefits. The SERP provides an annual benefit equal to 2.5% of “average annual earnings” times years of service as a senior executive officer (up to 10 years), plus 1.67% of average annual earnings multiplied by years of service as a senior executive officer in excess of 10 years (up to 20 years). “Average annual earnings” for this purpose means the highest paid 36 consecutive months of employment and includes base salary and annual incentives. For service as a senior executive officer in excess of 20 years or in a position other than as a senior executive officer, a participant receives a “restoration benefit” using a formula similar to that of the USRIP, without the IRS limits on compensation. In general, only actual years of service with the Company are credited for purposes of determining the SERP benefit. Effective January 1, 2011, the Company prospectively eliminated additional years of SERP service credit for new employment or other agreements. In November 2015, the Company closed the SERP to new participants.

 

The benefit under the SERP is reduced by the benefit payable under the USRIP and is paid without regard to the limitations under Code Sections 401(a) and 415. However, the maximum aggregate benefit from both the SERP and the USRIP cannot exceed 50% of the executive’s average total earnings.

 

The normal retirement age under the SERP is age 65. However, participants can retire early once they reach age 55 if they have five years of service under the plan. The benefit would be reduced to reflect the early commencement of the benefit.

 

The benefit for senior executive officer service is unreduced at age 60, with reductions from age 60 for those who retire prior to age 60. The “restoration benefit” is reduced from normal retirement age to the participant’s early retirement age in the same manner as the USRIP. The normal form of benefit and optional forms of benefit are the same as those in the USRIP.

 

Non-Qualified Deferred Compensation

 

The following table sets forth information regarding the NEOs’ participation in our non-qualified deferred compensation plans in 2018. All of the balances relate to executives’ own deferred amounts. Cash deferrals are invested in investment funds available to the general public. Stock deferrals are deferred as stock equivalent units with earnings and losses solely attributable to changes in our stock price. We do not make any additional contributions to such plans, except as explained on page 59 with respect to the Supplemental Contribution Plan.

 

   Non-Qualified Deferred Compensation for 2018 Fiscal Year 
Name  Executive
Contributions
in Last FY(1)
($)
   Registrant
Contributions
in Last FY(2)
($)
   Aggregate
Earnings
in Last FY(3)
($)
   Aggregate
Withdrawals/
Distributions
($)
   Aggregate
Balance
at Last FYE(4)
($)
 
M. Begor   0    187,533    0    0    187,533 
J. Gamble   0    N/A    0    0    0 
J. Farshchi   0    72,303    0    0    72,303 
J. Kelley   0    N/A    0    0    0 
B. Koehler   0    58,196    0    0    58,196 
P. Barros   0    N/A    (84,199)   0    1,211,893 
(1) These amounts include salary contributions made by NEOs to the Executive Deferred Compensation Plan and stock deferred to the Director and Executive Stock Deferral Plan. Accordingly, cash deferral amounts are included in the amounts reported in the “Salary” column in the Summary Compensation Table.
(2) These amounts represent the Company’s contribution on behalf of the NEO under the Supplemental Contribution Plan. Participants in the SERP are not eligible to participate in the Supplemental Contribution Plan.
(3) Aggregate earnings in the last fiscal year are not reflected in the Summary Compensation Table because earnings were neither preferential nor above-market. These amounts include earnings (losses), dividends and interest provided on current contributions and existing balances, including the change in value of the underlying investment options in which the NEO is deemed to be invested. These amounts are not reported in the Summary Compensation Table as compensation.
(4) These amounts represent each NEO’s aggregate balance in the Executive Deferred Compensation Plan and the Director and Executive Stock Deferral Plan and/or the Supplemental Contribution Plan as of December 31, 2018. The numbers also include the contributions made by each NEO to the Executive Deferred Compensation Plan, which are also reported in the “Salary” column of the Summary Compensation Table.

 

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Supplemental Contribution Plan. After the SERP was closed to new participants in 2015, the Company amended its Executive Deferred Compensation Plan to add provisions to permit senior executive officers designated by the Compensation Committee to receive supplemental retirement contributions (the “Supplemental Contribution Plan”). NEOs and senior executive officers who participate in the SERP are not eligible to participate in the Supplemental Contribution Plan. Messrs. Begor, Farshchi and Koehler participate in the Supplemental Contribution Plan.

 

The Supplemental Contribution Plan provides for an annual contribution equal to 10% of the sum of the eligible executive’s base salary and annual bonus earned for the year. The Company’s contributions are credited to an account for the executive and the executive directs the investments of the account among designated investment alternatives. The account fully vests upon the executive’s completion of three years of service after the date the executive becomes a participant in the plan. The account also fully vests upon the executive’s termination of employment as a result of death or disability.

 

Upon the executive’s termination of employment after age 55 (or in the event of death or disability), the vested amount credited to the account is payable in a lump sum or in annual installments over a period of up to 15 years. If the executive terminates employment prior to age 55 (except for death or disability), the vested account is not payable until the executive attains age 55 and is paid in a lump sum.

 

Deferred Compensation Plans. We maintain two deferred compensation plans that allow for certain management employees to defer the receipt of compensation (such as salary, incentive compensation and/or stock from vested shares) until a later date based on the terms of the plans. The benefits under our deferred compensation plans are represented by the assets of a grantor trust which, through our funding, makes investments in certain mutual funds and stock. The purpose of this trust is to ensure the distribution of benefits by participants in the deferred compensation plans. However, all benefits under the plan are non-funded obligations of the Company and are subject to the claims of creditors.

 

Director and Executive Stock Deferral Plan. This plan permits the directors, NEOs and other eligible employees to defer taxes upon the vesting of RSUs. Participants may defer 25%, 50%, 75% or 100% of the portion of the grant that is vesting. Stock deferrals track the performance of our common stock, without credit for dividends. The participant receives the right to a number of shares of deferred stock. In general, amounts deferred under the plan are not paid until the participant retires. However, participants may also establish sub-accounts from which amounts are to be paid on specific pre-retirement timetables established by the director or executive officer, referred to as a scheduled withdrawal. Amounts deferred are paid in our common stock, either in a lump sum or in annual installments over a period of up to 15 years for retirement distributions, or up to five years for a scheduled withdrawal. The Company makes no contributions to this plan but pays all administrative costs and expenses.

 

Executive Deferred Compensation Plan. This nonqualified plan is a tax deferred compensation program for a limited number of executives, including NEOs, and provides a tax favorable vehicle for deferring annual compensation, including base salary and annual incentive. Under the plan, an executive may defer up to 75% of his or her base salary and up to 100% of any incentive payment. Amounts deferred are credited with gains or losses which mirror the performance of benchmark investment funds selected by the participant from among several publicly-available investment funds. The plan does not offer any above-market or preferential rates of return to the NEOs. Amounts deferred are paid, at the participant’s option, either in a lump sum or in annual installments over a period of up to 15 years for retirement or termination distributions, or up to five years for a scheduled withdrawal. The Company pays all administrative costs and expenses of the plan.

 

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Potential Payments Upon Termination or Change In Control

 

The following tables summarize the value of potential payments and benefits that our NEOs would receive if they had terminated employment on December 31, 2018 under the circumstances shown. The tables exclude amounts that would be paid in the normal course of continued employment, such as accrued but unpaid salary and earned annual bonus for 2018, and vested account balances in our 401(k) Plan that are generally available to all of our active U.S. salaried employees. The tables also reflect the amounts that the NEOs would receive under our new CIC Plan, which was adopted in February 2019 and applies to our NEOs other than Mr. Begor. Messrs. Farshchi and Koehler were not party to an individual change in control agreement with the Company prior to their participation in the CIC Plan as of February 2019. Actual amounts to be paid can only be determined at the time of such executive’s termination of service.

 

M. BEGOR

Payment or benefit  Voluntary
termination
by the NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO
with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)    6,000,000(2)    9,000,000(3)    0    0    0 
Pension/supplemental retirement plan(4)   0    0    0    0    0    187,533    187,533 
Executive compensation deferral program(6)   0    0    0    0    0    0    0 
Life insurance benefits   0    0    0    4,320(7)    0    0    250,000(8) 
Disability benefits   0    0    0    828(9)    0    503,400(10)    0 
Healthcare benefits   0    0    43,509(12)    43,509(12)    0    156,900(13)    7,800(14) 
Perquisites and other personal benefits(15)   0    0    50,000    50,000    0    50,000    50,0000 
Tax gross-up   0    0    0    0    0    0    0 
Market value of stock options vesting on termination   0    0    0    0    0    0    0 
Market value of restricted                                   
stock vesting on termination   0    0    6,273,237(17)    10,644,409(19)    0    10,644,409(19)    10,644,409(19) 
TOTAL   0    0    12,366,746    19,743,066    0    11,542,242    11,139,742 

 

J. GAMBLE

Payment or benefit  Voluntary
termination by the NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO
with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2018)
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2019)
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)    158,094(2)    6,086,698(3)    2,397,762(18)    0    0    0 
Pension/supplemental retirement plan(4)   2,040,200    2,040,200    2,040,200    2,040,200    2,040,200    2,040,200    2,040,200    1,030,200(5) 
Executive compensation deferral program(6)   0    0    0    0    0    0    0    0 
Life insurance benefits   0    0    0    4,320(7)    0    0    0    1,250,000(8) 
Disability benefits   0    0    0    828(9)    0    0    805,300(10)    0 
Healthcare benefits   0    0    0    52,410(11)    27,754(12)    0    135,300(13)    7,800(14) 
Perquisites and other personal benefits(15)   0    0    0    10,000    10,000    0    0    0 
Tax gross-up   0    0    0    0    0    0    0    0 
Market value of stock options vesting on termination   0    0    0    0    0    0    0    0 
Market value of restricted                                        
stock vesting on termination   0    0    0    3,112,125(19)    3,112,125(19)    0    3,112,125(19)    3,112,125(19) 
TOTAL   2,040,200    2,040,200    2,198,294    11,306,582    7,587,841    2,040,200    6,092,925    5,400,125 

 

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J. FARSHCHI

Payment or benefit  Voluntary
termination by the NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO
with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2018)
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2019)
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)    38,462(2)    38,462(3)    1,600,000(18)    0    0    0 
Pension/supplemental retirement plan(4)   0    0    0    0    0    0    72,303    72,303 
Executive compensation deferral program(6)   0    0    0    0    0    0    0    0 
Life insurance benefits   0    0    0    0    0    0    0    250,000(8) 
Disability benefits   0    0    0    0    0    0    1,511,400(10)    0 
Healthcare benefits   0    0    0    0    49,106(12)    0    98,700(13)    200(14) 
Perquisites and other personal benefits(15)   0    0    0    10,000    10,000    0    0    0 
Tax gross-up   0    0    0    0    0    0    0    0 
Market value of stock options vesting on termination   0    0    0    0    0    0    0    0 
Market value of restricted stock vesting on termination   0    0    0    2,187,251(19)    2,187,251(19)    0    2,187,251(19)     2,187,251(19) 
TOTAL   0    0    38,462    2,235,713    3,846,357    0    3,869,654    2,509,754 

 

J. KELLEY

Payment or benefit  Voluntary
termination by the
NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO
with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2018)
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2019)
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)    166,480(2)    6,486,333(3)    1,731,389(18)    0    0    0 
Pension/supplemental retirement plan(4)   2,302,600    2,302,600    2,302,600    2,302,600    2,302,600    2,302,600    2,302,600    1,197,700(5) 
Executive compensation deferral program(6)   0    0    0    0    0    0    0    0 
Life insurance benefits   0    0    0    4,320(7)    0    0    0    250,000(8) 
Disability benefits   0    0    0    828(9)    0    0    664,000(10)    0 
Healthcare benefits   0    0    0    63,435(11)    38,420(12)    0    143,800(13)    5,000(14) 
Perquisites and other personal benefits(15)   0    0    0    10,000    10,000    0    0    0 
Tax gross-up   0    0    0    0    0    0    0    0 
Market value of stock options vesting on termination   0    0    0    0    0    0    0    0 
Market value of restricted stock vesting on termination   0    0    0    2,522,799(19)    2,522,799(19)    0    2,522,799(19)    2,522,799(19) 
TOTAL   2,302,600    2,302,600    2,469,080    11,390,315    6,605,208    2,302,600    5,633,199    3,975,499 

 

EQUIFAX INC. - 2019 Proxy Statement    61

 
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B. KOEHLER

Payment or benefit  Voluntary
termination by the NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO
with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2018)
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2019)
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)    48,077(2)    48,077(3)    2,187,500(18)    0    0    0 
Pension/supplemental retirement plan(4)   0    0    0    0    0    0    58,196    58,196 
Executive compensation deferral program(6)   0    0    0    0    0    0    0    0 
Life insurance benefits   0    0    0    0    0    0    0    250,000(8) 
Disability benefits   0    0    0    0    0    0    1,401,400(10)    0 
Healthcare benefits   0    0    0    0    49,633(12)    0    104,000(13)    200(14) 
Perquisites and other personal benefits(15)   0    0    0    10,000    10,000    0    0    0 
Tax gross-up   0    0    0    0    0    0    0    0 
Market value of stock options vesting on termination   0    0    0    0    0    0    0    0 
Market value of restricted stock vesting on termination   0    0    0    4,157,323(19)    4,157,323(19)    0    4,157,323(19)    4,157,323(19) 
TOTAL   0    0    48,077    4,215,400    6,404,456    0    5,720,919    4,465,719 

 

P. BARROS

Payment or benefit  Voluntary
termination
by the NEO
($)
   Termination
by us for
cause
($)
   Termination
by us
without
cause or by
the NEO with
good reason
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2018)
($)
   Termination
by us without
cause or by
the NEO with
good reason
following a
change in
control
(2019)
($)
   Retirement
($)
   Disability
($)
   Death
($)
 
Severance payments   0    0(1)