Executive stock ownership policy
As Amended 4 September 2007
The purpose of the Pitney Bowes Inc. Executive Stock Ownership Policy (the "Policy") is to:
Emphasise the link between Executives and the long-term interests of shareholders; and
Enhance the image of the company by openly communicating to investors, lenders, market analysts and the public that the Executives' interests are tied directly to the long-term success of the company through personal capital investment in company stock.
For purposes of this Policy, "Executives" are Vice Presidents and above (Band G and above under the company banding structure).
Executives who are reporting officers under Section 16 of the Securities Exchange Act of 1934 (the "Covered Executives") are expected to accumulate shares of company stock toward target ownership levels that are based on a multiple of salary and a retention ratio for owned shares or shares acquired upon exercise vesting of stock options or owning restricted stock and/or restricted stock units. Ownership status for the Covered Executives will be reported to the Executive Compensation Committee on an annual basis.
The multiple of salary component is as follows:
Multiple of Base Salary
Chief Executive Officer
Executive Chairman and/or Chief Operating Officer
Other Section 16 Officers
The number of shares required to be held by a Covered Executive is equal to base salary at previous year-end times the multiple of salary requirement divided by the average of the closing price of Pitney Bowes common stock on the last trading day of each of the prior two years. For international Executives, the salary will be converted using the average of the monthly average conversion rates for the year.
The retention ratio is 100% of "net profit shares". The Covered Executives are expected to hold 100% of the shares remaining after payment of the option price and taxes owed upon exercise and/or hold 100% of newly vested shares of restricted stock after the payment of applicable taxes until the multiple of salary requirement is met.
After the multiple of salary requirement is met, a Covered Executive may sell shares acquired previously in the market as well as shares acquired through the exercise of stock options or the vesting of restricted stock awards. If the executive is promoted into a position with a higher multiple he or she will be required to retain additional shares. In alignment with best practice guidance from organisations such as the National Association of Corporate Directors, Covered Executives are expected to balance the acquisition of meaningful amounts of company stock with partial portfolio diversification. While a Covered Executive is not discouraged from increasing the absolute level of holdings of Pitney Bowes stock the company does not want its stock to comprise a disproportionate percentage of the executive's net worth.
Prior to any sale of company stock, Covered Executives are required to seek clearance as specified in the Corporate Policy on Insider Trading and to notify the Chief Executive Officer. Covered Executives are also expected to comply with all relevant securities regulations at the time of any sale of company stock.
Shares Counting Toward Ownership
Shares that would be counted as owned by an Executive for purposes of this Policy include: 1) shares owned outright (i.e. held individually or as co-owner with a spouse including those in the 401(k) plan); 2) shares owned but held in trust or in the name of an immediate family member; 3) 60% of restricted stock, 60% of restricted stock units, 60% of vested stock options; and 4) notional shares of company stock owned in the Deferred Incentive Savings Plan and/or the 401(k) Restoration plan.
A substantial portion of an Executive's long-term incentive compensation is awarded in the form of equity-based compensation which serves as the primary vehicle for aligning the interests of Executives with long-term shareholders. In addition, Executives have access to various vehicles to assist in building their ownership over time, including 1) the ability to elect investment of company matching contributions in the 401(k) Plan and the 401(k) Restoration Plan in company stock; 2) retention of shares acquired upon exercise of stock options or vesting of restricted stock and restricted stock units; 3) participation in the dividend reinvestment plan; and 4) the ability to elect a notional investment of company stock in the company's deferred incentive savings plan.