Fiserv’s board of directors has adopted a new severance policy for all executive officers that is similar to a shareholder-proposed policy that won approval earlier this year.
Under the new policy, whenever the company enters into a new employment, severance or separation agreement with an executive officer that provides cash benefits that exceed 2.99 times the sum of the salary and target bonus, the company will include an advisory vote on that severance arrangement at the next annual shareholders meeting, Fiserv said in a filing Monday with the Securities and Exchange Commission. The same will be true whenever the company establishes a new severance policy generally that affects such severance cash benefits.
The board adopted the policy on Nov. 16, according to the filing, which also noted the new policy was recommended by the board’s talent and compensation committee.
“In response to the vote and based on subsequent feedback from investors, the Board determined that it was in the best interest of our shareholders to adopt the executive officer cash severance policy that was filed yesterday,” Fiserv Spokesperson Ann Cave said Tuesday in an email.
At the Brookfield, Wisconsin-based company’s annual meeting in May, Fiserv shareholders approved a non-binding proposal that was similar to the new policy. It required certain severance agreements and termination payments for senior managers be put to a shareholder vote.
Specifically, the shareholder proposal asked the board to seek investor approval for senior managers’ new or renewed pay packages that provide severance or termination payments with an estimated value exceeding 2.99 times the sum of the executive’s base salary plus a target bonus, according to the company’s proxy filing.
That shareholder proposal passed by a slim margin. Shareholders cast 280,816,645 votes, or 50.7%, in favor of the proposal, and 272,826,480 votes, or 49.3%, against it, according to a May filing with the SEC. The result was notable because the company’s board had recommended voting against the proposal.
The board said at that time that the proposal was unnecessary in light of prior policy moves; that it would create risk in aligning management and shareholder interests; and that it would restrict its ability to structure executive compensation.
The shareholder who made the proposal wasn’t identified and Cave declined to provide that information.
The board gives the talent and compensation committee the authority to interpret policy provisions and make determinations, such as “the value of any non-cash items, as well as the present value of any cash or non-cash benefits payable over a period of time,” the filing this week said.
Faced with profit margin and inflationary pressures, Fiserv in recent months has cut workers and sold off business units. Meanwhile, the company has promised to create jobs at a new Berkeley Heights, New Jersey campus in exchange for state tax credits. It has requested similar benefits in Wisconsin, as it relocates its global headquarters from Brookfield, Wisconsin to Milwaukee.