Compensation of Non-Employee Directors

Featured Image

Compensation of Non-Employee Directors

We compensate non-employee directors for their service on the Board with a combination of cash and equity awards, the amounts of which are commensurate with their role and involvement, and consistent with peer company practices. In setting director compensation, we consider the significant amount of time our directors expend in fulfilling their duties as well as the skill level required of members of our Board.  We intend to compensate our non-employee directors in a way that is competitive, attracts and retains a high caliber of directors, and aligns their interests with those of our stockholders. Mr. Scharf, who was our Chief Executive Officer in fiscal year 2016, did not receive additional compensation for his service as a director.

The Compensation Committee, which is comprised solely of independent directors, has the primary responsibility for reviewing and considering any revisions to our director compensation program. The Compensation Committee undertook its annual review of the type and form of compensation paid to our non-employee directors in connection with their service on the Board and its committees for fiscal year 2016. The Compensation Committee considered the results of an independent analysis completed by FW Cook. As part of this analysis, FW Cook reviewed non-employee director compensation trends and data from companies comprising the same executive compensation peer group used by the Compensation Committee in connection with its review of executive compensation. After consultation with FW Cook based on this review process, the Compensation Committee made no changes to our non-employee directors’ compensation for fiscal year 2016.

Highlights of our Non-Employee Directors Compensation Program

Among the highlights of our program are:

  • no fees are paid for board meeting attendance;
  • there is an emphasis on equity in the overall compensation mix to further align interests with stockholders;
  • special roles (such as independent Chair and Committee Chairs) are fairly recognized for their additional time commitments;
  • annual restricted stock units are granted under a fixed-value formula with short-term vesting to support independence;
  • a robust stock ownership guideline of five times the annual board membership retainer supports alignment with stockholders’ interests; and
  • other benefits are limited (e.g., matching of charitable contributions).

 

Annual Retainers Paid in Cash

Each non-employee director receives an annual cash retainer for his or her service on the Board, as well as additional cash retainers if he or she serves as the independent Chair, on a committee or as the chair of a committee. The following table lists the cash retainer amounts in effect during fiscal year 2016.

Type of RetainerAmount of Retainer
Annual Board Membership$105,000
Independent Chair$165,000
Audit and Risk Committee Membership$20,000
Compensation Committee Membership$10,000
Nominating and Corporate Governance Committee Membership$10,000
Audit and Risk Committee Chair$25,000
(in addition to member retainer)
Compensation Committee Chair$20,000
(in addition to member retainer)
Nominating and Corporate Governance Committee Chair$15,000
(in addition to member retainer)

U.S. based directors may defer the payment of all or a portion of the cash retainer payments.  All cash retainers are paid in quarterly installments throughout the year unless a director elected to defer the payment. Directors are also reimbursed for customary expenses incurred while attending meetings of the Board and its committees.

Equity Compensation

Each non-employee director also receives an annual equity grant. In fiscal year 2016, a grant with a grant date value of $180,000 was awarded to each non-employee director on November 19, 2015. In the November following the date of a director’s election or appointment to the Board, the director receives a prorated initial grant based on the partial year of board service. Grants to all non-employee directors were made in the form of restricted stock units, which vest on the first anniversary of the grant dates, but may be accelerated upon completion of service on the Board or in other limited circumstances. Directors may elect to defer settlement of all or a portion of their equity grants.

Stock Ownership Guidelines

The stock ownership guidelines for our non-employee directors specify that each director should own shares of our common stock equal to five times the annual board membership retainer. Equity interests that count toward the satisfaction of the ownership guidelines include shares owned outright by the director, shares jointly owned and restricted shares and restricted stock units payable in shares. Directors have five years from the date they become a member of the Board to attain these ownership levels. Each non-employee director with at least five years of service on our Board currently meets or exceeds the ownership guidelines. We also have an insider trading policy which, among other things, prohibits directors from hedging the economic risk of their stock ownership or pledging their shares.

Charitable Matching Gift Program

Our non-employee directors may participate in our Board Charitable Matching Gift Program. Under this program, Visa will match contributions to eligible non-profit organizations, up to a maximum of $15,000 per director per calendar year.

Director Compensation Table for Fiscal Year 2016

The following tables provide information on the total compensation earned by each of our non-employee directors who served during fiscal year 2016.

director-comp

(1)  Additional information describing these fees is included under the heading Fees Earned or Paid in Cash.
(2)  Represents the aggregate grant date fair value of the awards granted to each director computed in accordance with stock-based accounting rules (Financial Standards Accounting Board (“FASB”) ASC Topic 718). Assumptions used in the calculation of these amounts are included in Note 16 – Share-based Compensation to our fiscal year 2016 consolidated financial statements, which are included in our Annual Report on Form 10-K filed with the SEC on November 15, 2016. As of September 30, 2016, each non-employee director had 2,246 unvested restricted stock units outstanding, except for Lloyd A. Carney who had 1,497 unvested restricted stock units outstanding and Gary A. Hoffman who did not have any unvested restricted stock units.
(3)  Amounts include the matching contributions we made on behalf of our directors for fiscal year 2016 pursuant to our Board Charitable Matching Gift Program.
(4)  Mr. Carney received a prorated stock award based on the portion of the Board year he served as a Director.
(5)  Mr. Hoffman was appointed to the Board effective June 21, 2016. Accordingly, he received prorated compensation under the director compensation policies described above. The All Other Compensation reflects $133,338 in compensation during fiscal year 2016 in consideration for his services as a director of Visa Europe that were paid to Mr. Hoffman after the Company acquired Visa Europe on June 21, 2016, and does not include compensation for his service from October 1, 2015 through February 29, 2016. This amount was converted from the Great British Pound using the exchange rate on the last day of the fiscal year, September 30, 2016.
(6)  Mr. Shanahan did not stand for re-election as a member of the Board at the Company’s 2016 annual meeting of stockholders.

Fees Earned or Paid in Cash

The following table sets forth additional information with respect to the amounts reported in the “Fees Earned or Paid in Cash” column in the Director Compensation Table above for fiscal year 2016.

fees-paid-or-earned-in-cash

(1)  Mr. Hoffman was appointed to the Board effective June 21, 2016. The amounts shown reflect prorated fees Mr. Hoffman earned for service during the portion of the fiscal year 2016 during which he served as a director.
(2)  Mr. Shanahan did not stand for re-election as a member of the Board at the Company’s 2016 annual meeting of stockholders. The amounts shown reflect prorated fees Mr. Shanahan earned for service during the portion of the fiscal year 2016 during which he served as a director.

Fiscal Year 2017 Director Compensation

After consultation with FW Cook, and pursuant to the compensation review process described above, the Compensation Committee made certain changes to the non-employee director compensation program which will be effective for fiscal year 2017.  The Compensation Committee considered FW Cook’s advice that the changes are consistent with our peer group.  Specifically, the annual equity grant value to be awarded in fiscal year 2017 to our non-employee directors was increased to $185,000; the additional cash retainer for our independent Chair was increased to $185,000; and the additional cash retainer for the Chair of our Nominating and Corporate Governance Committee was increased to $20,000.  Effective for fiscal year 2018, the annual equity grant will vest immediately upon grant. There have been no other changes to our non-employee director compensation program for fiscal year 2017.

Title Goes Here