Vistaprint 2012 Annual Report Download - page 126

below, he can exercise his options only on dates when the high price per share of Vistaprint’s ordinary
shares on NASDAQ is at least $75.00, representing a 50% or greater shareholder return above Vistaprint’s
share price before the July 28, 2011 strategy announcement.
‰To emphasize long-term performance, the options vest over seven years. They have an eight-year term.
‰The aggregate value of Mr. Keane’s options granted in May and August 2012 represents the total approx-
imate value of all long-term incentive awards of any kind that Vistaprint would have granted to Mr. Keane
over a four-year period, and our Supervisory Board has passed resolutions that Vistaprint shall not grant
any additional long-term incentive award in any form (including equity or long-term cash awards) to
Mr. Keane until fiscal 2016 at the earliest.
‰The value of the option granted to each of our other executive officers represents the total approximate
value of all traditional share options that Vistaprint would have granted to each executive officer over a
four-year period, and our Supervisory Board has passed resolutions that Vistaprint shall not grant any
additional share options to our current executive officers until fiscal 2016 at the earliest.
Shareholder engagement. As part of the executive compensation redesign process described above, at the
direction of our Compensation Committee, we reached out in two stages to our eight largest non-management
shareholders, who at that time beneficially owned approximately 67% of our outstanding ordinary shares, to seek
their feedback on our executive compensation program. First, we sought our shareholders’ thoughts and sugges-
tions on overall executive compensation design. The two primary themes that emerged from these initial dis-
cussions were that the shareholders that responded to our request for feedback unanimously wanted a
compensation program based on Vistaprint’s performance and that, while different shareholders suggested a
number of different metrics for measuring performance, the most commonly suggested metric was total share-
holder return. Once our Compensation Committee had decided on a draft executive compensation design featur-
ing multi-year, premium-priced share options, as described above, we reached out to the same shareholders a
second time to seek their input on that design. All of the shareholders who gave us input were supportive of our
proposed design.
Discontinuation of certain pay practices. At our Annual General Meeting of Shareholders held on
November 3, 2011, our shareholders voted in favor of our executive compensation program for fiscal 2011 by a
slim margin, with 50.4% of votes cast in favor of the compensation program. We believe that the primary reason
for this low level of majority support for our 2011 executive compensation program was the dissatisfaction of a
proxy advisory firm and some of our major shareholders with our practice of including excess parachute payment
tax gross-up provisions in the executive retention agreements we enter into with our executives, which the proxy
advisor and some of our shareholders consider to be a problematic pay practice. Accordingly, our Compensation
Committee decided that, after August 1, 2012, we will no longer include such tax gross-up provisions in the
executive retention agreements that we enter into with our future executives.
Pay for performance. The total compensation package for our executive officers is weighted heavily
toward compensation based on Vistaprint’s operating and share price performance. For fiscal 2012, our Chief
Executive Officer had 98% of his total compensation at risk through our annual and long-term cash and equity
incentive programs. Our other executive officers had an average of 75% of their total compensation at risk for
fiscal 2012. Our annual and long-term cash incentive programs are dependent on Vistaprint’s revenue and earn-
ings per share performance, while our equity incentive programs are dependent on the performance of our share
price. Attainment of the annual and long-term cash incentives are based on financial goals that the Compensation
Committee believes are highly challenging, but achievable.
After we announced our new five-year growth strategy in July 2011, our share priced declined, which may
result in a lower total shareholder return for Vistaprint as compared to some of our peers. We believe that by set-
ting the exercise price of our executives’ premium-priced share options at $50.00 per share, which is higher than
the highest of the three-, six-, and twelve-month trailing averages of Vistaprint’s share price as of the date of the
strategy announcement, we have further aligned our executive officers’ interests with those of our shareholders
through share price appreciation and future total shareholder return.
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