GARTNER INC
For the period ended Jun 6, 2024. Filed Apr 16, 2024.
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Jun 6, 2024 · Filed Apr 16, 2024
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Contents
Compensation Setting Process for
COMPENSATION SETTING PROCESS FOR 2023
This section explains the objectives of the Company’s compensation policies; what the compensation program is designed to reward; each element of compensation and why the Company chooses to pay each element; how the Company
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Compensation Discussion & Analysis
determines the amount (and, where applicable, the formula) for each element of pay; and how each compensation element and the Company’s decisions regarding that element fit into the Company’s overall compensation objectives and affect decisions regarding other elements.
The Objectives of the Company’s Compensation Policies
| The objectives of our compensation policies are threefold: | |
|---|---|
| ➣ | To attract, motivate and retain highly talented, creative and entrepreneurial individuals by paying market-based compensation. |
| ➣ | To motivate our executives to maximize the performance of our Company through pay-for-performance compensation components based on the achievement of corporate performance targets that are aggressive, but attainable, given economic conditions. |
| ➣ | To seek to ensure that our compensation structure and levels are reasonable from a stockholder perspective. |
What the Compensation Program Is Designed to Reward
Our guiding philosophy is to provide a significant portion of executive compensation linked to corporate performance, thereby ensuring alignment and focus on Gartner’s performance. In addition, we believe that the design of the total compensation package should be competitive with the marketplace from which we hire our executive talent in order to achieve our objectives and attract and retain individuals who are critical to our long-term success. Our talent segment continues to be very competitive.
Our compensation program for executive officers is designed to compensate individuals for achieving and exceeding corporate performance objectives collectively. We believe this type of compensation encourages outstanding team performance (not simply individual performance), which helps build stockholder value.
Both short-term and long-term incentive compensation is earned by executives only upon the achievement of certain measurable performance objectives that are deemed by the Compensation Committee and management to be critical to the Company’s short-term and long-term success. The amount of compensation ultimately earned will increase or decrease depending upon Company performance and the underlying price of our Common Stock (in the case of long-term equity-based incentive compensation).
Principal Compensation Elements and Objectives
To achieve the objectives noted above, our executive compensation program consists of three principal elements:
| Base Salary | ➣ | Pay competitive salaries to attract and retain the executive talent necessary to develop and implement our corporate strategy and business plan. |
|---|---|---|
| ➣ | Reflect responsibilities of the position, experience of the executive and the marketplace in which we compete for talent. | |
| Short-Term Incentive Compensation (cash bonuses) | ➣ | Motivate executives to generate outstanding performance and achieve or exceed annual operating plan. |
| ➣ | Align compensation with results. | |
| Long-Term Incentive Compensation (equity awards) | ➣ | Seek to ensure rewards are commensurate with long-term performance and promote retention. |
| ➣ | Align executive rewards with long-term stock price appreciation. | |
| ➣ | Facilitate the accumulation of Gartner shares by executives, thereby enhancing ownership and ensuring greater alignment with stockholders. |
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Compensation Discussion & Analysis
How the Company Determines Executive Compensation
In General
In February 2023, the Compensation Committee established performance objectives for short-term (bonus) and long-term (equity) incentive awards at levels that it believed would motivate performance and be adequately challenging, while also considering the current economic climate and uncertainty. The target performance objectives set for 2023 were intended to drive the level of performance necessary to enable the Company to achieve its operating plan, while ensuring alignment with investor expectations.
The Compensation Committee believes that using a one-year performance period for our long-term incentive awards helps accelerate growth and sustain performance. If we have a strong year, the goals for the following year typically are established on top of the high bar that was already set. If we instead had a three-year performance period and the Company overachieved in the first year, the bar would be set lower in years 2 and 3 and might demotivate our executives. A three-year performance period may also be less aggressive if business cycle risks are factored into long-term goals, while a one-year performance period allows us more readily to factor in changes in market conditions. In addition, our one-year performance period, based on CV, already considers multi-year revenue that is likely to occur.
The short-term and long-term incentive objectives provide executives with an opportunity to increase their total compensation package based upon the over-achievement of Company performance; similarly, in the case of under-achievement of Company performance, the value of incentive awards will fall below their target value, decreasing the total compensation opportunity. In addition, we assign a greater weighting to long-term awards than short-term awards in order to promote long-term decision-making to deliver top corporate performance, align management to stockholder interests and retain executives. We believe that long-term equity-based awards with vesting terms that are based on the achievement of pre-set financial targets and additional time-vesting serve as a strong retention incentive.
Determining Awards
Salary, short-term and long-term incentive compensation levels for executive officers (other than the CEO) are recommended by the CEO to the Compensation Committee, but the Compensation Committee has full authority to set such compensation. In formulating his recommendation to the Compensation Committee, the CEO undertakes a performance review of these executives and considers input from human resources personnel at the Company, as well as benchmarking data from the compensation consultant and external market data (discussed below).
Salary, short-term and long-term incentive compensation levels for the CEO are established by the Compensation Committee within the parameters of Mr. Hall’s employment agreement with the Company. In making its determination with respect to Mr. Hall’s compensation, the Compensation Committee evaluates his performance in conjunction with the Governance Committee and after soliciting additional input from the Chairman of the Board and other directors; considers input from the Committee’s compensation consultant; and reviews benchmarking data pertaining to CEO compensation practices at our peer companies and general trends. See Certain Employment Agreements with Executive Officers – Mr. Hall - Employment Agreement below for a detailed discussion of Mr. Hall’s agreement.
Benchmarking and Peer Group
Executive compensation planning for 2023 began mid-year in 2022. The Compensation Committee approved the peer group of companies to be used for executive compensation benchmarking purposes and other relevant analyses (the “Peer Group”) for pay decisions effective for 2023.
The Compensation Committee reviews the Peer Group annually to achieve comparability based on Gartner’s operating characteristics, labor market relevance and revenue scope. In 2022, following a review of the Peer Group, the Compensation Committee approved modest adjustments to the Peer Group and eliminated two companies due to their being acquired by other companies in 2022. The remaining Peer Group includes 18 publicly-traded companies that are similar to Gartner in terms of industry, revenues, business model, and with whom Gartner competes for executive talent. At the time of the analysis, Gartner’s revenue ranked at the 55 th percentile relative to the Peer Group. The 2023 Peer Group serves as the basis of the executive benchmarking and 2023 target total compensation adjustments.
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Compensation Discussion & Analysis
The 2023 Peer Group companies were:
| Adobe Inc. | Akamai Technologies, Inc. | Aon plc | Autodesk, Inc. | Cadence DesignSystem |
|---|---|---|---|---|
| Equifax Inc. | Intuit Inc. | Moody’sCorporation | NielsenHoldings plc | ServiceNow, Inc. |
| Splunk Inc. | SS&C Technologies Holdings, Inc. | Synopsys Inc. | The Interpublic Group Companies, Inc. | ThomsonReuters Corporation |
| VeriskAnalytics,Inc. | VMware, Inc.* | Workday, Inc. |
*VMware, Inc. was acquired in November 2023.
Our Compensation Committee commissioned Exequity, its independent compensation consultant, to perform a competitive analysis of our executive compensation practices relative to the Peer Group, the primary reference, and secondarily to survey data. Exequity’s findings were considered by the Compensation Committee and by management for 2023 executive compensation planning. The compensation study utilized market data from Aon/Radford’s Total Compensation Measurement database.
The Compensation Committee does not target NEO’s pay to a specified percentile relative to the Peer Group, but rather reviews Peer Group market data at the 25 th, 50 thand 75 thpercentile for each element of compensation, including Base Salary, Target Total Cash (Base Salary plus Target Bonus) and Target Total Compensation (Target Total Cash plus target long-term incentives). Individual total target compensation may be higher or lower than the 50 th percentile based on a number of factors, including experience and tenure, retention and succession planning considerations. In addition to the compensation benchmarking, the Compensation Committee considers Company and individual performance and internal equity in evaluating and determining executive compensation recommendations.
In addition, the Compensation Committee annually reviews an analysis conducted by Exequity that evaluates the connection between Gartner’s NEO realized pay and Company performance as measured by Total Shareholder Return and Shareholder Value creation. The analysis considers both 1-year and 3-year pay and performance for Gartner relative to the Peer Group. Exequity’s analysis indicated that pay realized by Gartner’s NEOs are aligned with Company performance.
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Compensation Discussion & Analysis
Executive Compensation Elements Generally
Pay Mix
The following charts illustrate the relative mix of target compensation elements for the NEOs in 2023. Long-term incentive compensation is 100% performance-based consisting of stock-settled stock appreciation rights (“SARs”) and performance-based restricted stock units (“PSUs”), and represents a large majority of compensation provided to our NEOs (86% to the CEO and 71% to all other NEOs). We weight compensation more heavily towards long-term incentives because it contributes to the delivery of top performance over the long-term and the retention of employees more than any other element of compensation.
Base Salary
We set base salaries of executive officers when they join the Company or are promoted to an executive role by evaluating the responsibilities of the position, the experience of the individual (both previously and in-role at Gartner) and the marketplace in which we compete for executive talent. In addition, where possible, we consider salary information for comparable positions from our Peer Group or other available market data sources. In determining whether to award salary merit increases, we consider published projected U.S. salary increase data for the technology industry and general market, as well as available world-wide salary increase data. Mr. Hall’s base salary is established each year by the Compensation Committee after completion of Mr. Hall’s performance evaluation for the preceding year. The following table sets forth the 2022 and 2023 base salary of each NEO and the corresponding year-over-year percentage increase:
| NEO | 2022 Base Salary ($) | 2023 Base Salary ($)(1) | Percentage Increase |
|---|---|---|---|
| Eugene A. Hall | 935,443 | 963,506 | 3.0% |
| Craig W. Safian | 648,900 | 668,367 | 3.0% |
| Alwyn Dawkins | 535,600 | 551,668 | 3.0% |
| Scott Hensel | 525,300 | 541,059 | 3.0% |
| Robin Kranich | 535,600 | 551,668 | 3.0% |
(1)Effective as of April 1, 2023.
Short-Term Incentive Compensation (Cash Bonuses)
All annual bonuses to executive officers are granted pursuant to Gartner’s Executive Performance Bonus Plan. The plan is designed to motivate executive officers to achieve goals relating to the performance of Gartner, its subsidiaries or business units, or other objectively determinable goals, and to reward them when those objectives are satisfied. We believe that the relationship between proven performance and the amount of short-term incentive compensation paid promotes, among executives, decision-making that increases stockholder value and promotes Gartner’s success.
Bonus targets for all NEOs, including Mr. Hall, were based solely upon achievement of 2023 company-wide financial performance objectives. The financial objectives and weightings used for 2023 executive officer bonuses were:
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Compensation Discussion & Analysis
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which measures overall profitability from business operations (weighted 50%), on an FX neutral basis, and
Revenue, which measures our ability to generate revenue growth on an annual basis (weighted 50%), on an FX neutral basis.
For 2023, each NEO was assigned a bonus target that was expressed as a percentage of salary, which varied from 95% to 125% of salary depending upon the executive’s level of responsibility and in a majority of the cases was 5% greater than the previous year. The Compensation Committee approved these increases to better align with market bonus targets. Our NEOs’ 2023 annual bonus targets as a percentage of base salary were 125% for Mr. Hall; and 95% for each of Messrs. Safian, Dawkins and Hensel and Ms. Kranich. The maximum payout for the 2023 bonus was 200% of target if the maximum level of EBITDA and Revenue were achieved; the threshold payout was $0 if minimum levels were not achieved; if EBITDA and Revenue levels are achieved above threshold and between threshold and target or target and maximum, interpolation is used to determine the payout of the bonus. The following table sets forth the threshold, target and maximum payout amounts for each NEO:
| NEO | Threshold ($) | Target ($) | Maximum ($) |
|---|---|---|---|
| Eugene A. Hall | 0 | 1,204,383 | 2,408,766 |
| Craig W. Safian | 0 | 634,949 | 1,269,898 |
| Alwyn Dawkins | 0 | 524,085 | 1,048,170 |
| Scott Hensel | 0 | 514,006 | 1,028,012 |
| Robin Kranich | 0 | 524,085 | 1,048,170 |
The chart below describes the performance metrics applicable to our 2023 short–term incentive compensation plan. The Compensation Committee believes performance goals should be rigorous, exceeding market norms, but achievable and create strong alignment between our executives and the interests of our shareholders. With respect to the performance goals for EBITDA, the Compensation Committee determined that they were appropriate after taking into consideration (1) the full year financial impact of certain 2022 actions, including significant investments in new hires, that were necessary to fuel 2023 and future growth, (2) the planned sale of our TalentNeuron business in early Q1 2023 (which lowered our EBITDA expectation), (3) the current economic outlook and investor expectations, and (4) the recalculation of our prior year results to eliminate foreign currency impact. The combination of these factors led to a lower plan goal at target for EBITDA compared to prior year actual performance; however, the Revenue goal at target required over 4% growth over 2022 actual performance.
In February 2024, the Compensation Committee certified that the results for each performance metric under the bonus plan, measured on an FX neutral basis, were as follows:
| 2023 PerformanceObjective/ Weight | < Minimum(0%) | Target(100%) | =/> Maximum (200%) | Actual Results |
|---|---|---|---|---|
| 2023 EBITDA/50% | $942 million | $1,263 million | $1,409 million | $1,491 million |
| 2023 Revenue/50% | $4,878 million | $5,871 million | $6,066 million | $5,906 million |
The EBITDA result in the table above translated to a payout percentage of 200%. For the Revenue component, the result above translated to a payout percentage of 117.9%. Since each objective was weighted 50%, based on these results, the Compensation Committee determined that earned cash bonuses under the predetermined goals and formula for each NEO were 159% of the respective target bonus amount. These payments were made in February 2024. See Summary Compensation Table – Non-Equity Incentive Plan Compensation for the specific cash bonuses earned by our NEOs in 2023 based on the bonus formula, actual performance and their respective bonus targets.
Long-Term Incentive Compensation (Equity Awards)
Promoting stock ownership is a key element of our compensation program philosophy. Stock-based incentive compensation helps ensure focus on value creation, promotes retention and aligns management with stockholder
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Compensation Discussion & Analysis
interests. We have evaluated different types of long-term incentives based on their motivational value, cost to the Company and appropriate share utilization under our stockholder-approved Gartner, Inc. Long-Term Incentive Plan (the “LTIP”) and believe that SARs and PSUs create the right balance of motivation, retention and alignment with stockholders and share utilization.
SARs permit executives to realize value based on an increase in the Company’s stock price over time, promoting alignment with stockholders. SAR value can be realized only after the SAR vests. Our SARs are stock-settled with a seven-year exercise term. When the SAR is exercised, the executive receives shares of our Common Stock equal in value to the aggregate appreciation in the price of our Common Stock from the date of grant to the exercise date for all SARs exercised. Therefore, SARs only have value to the extent the price of our Common Stock exceeds the grant price of the SAR. In this way, SARs motivate our executives to increase stockholder value and thus align their interests with those of our stockholders.
PSUs offer executives the opportunity to receive our Common Stock contingent on the achievement of performance goals and continued service over the vesting period. PSU recipients are eligible to earn a target number of restricted stock units only if stipulated one-year performance goals are achieved during the year of grant. The amount of units earned can increase if the Company over-performs (up to 200% of their target number of units) or decrease (including no earning of any units) if the Company under-performs. Following the Compensation Committee’s assessment of the Company’s performance versus predetermined goals, the vesting of the units earned will remain subject to the recipient’s continued service through each of the first four anniversaries of the award grant date. PSUs encourage executives to increase stockholder value while promoting executive retention over the long-term. Earned shares have value even if our Common Stock price does not increase, which is not the case with SARs.
The value of long-term incentive awards granted to executives each year is based on several factors, including external market practices, the Company’s financial performance, the value of awards granted in prior years, succession considerations and individual performance. For 2023, the Compensation Committee increased the target value of the LTI awards for NEOs from last year based on consideration of these factors. The CEO’s target LTI award increased by 9.6%, Messrs. Safian, Dawkins and Hensel and Ms. Kranich’s target LTI awards increased by 10.6%.
Consistent with weightings in prior years, the 2023 long-term incentive plan equity mix consists of 30% granted in SARs and 70% granted in PSUs. PSUs deliver value utilizing fewer shares than SARs since the executive can earn the full share rather than just the appreciation in value over the grant price. Additionally, the cost efficiency of PSUs enhances the Company’s ability to conservatively utilize the LTIP share pool and ensure alignment between pay and Company performance. For purposes of determining the number of SARs awarded, the allocated SAR award value is divided by the Black-Scholes-Merton valuation on the date of grant using assumptions appropriate on that date. For purposes of determining the target number of PSUs awarded, the allocated target PSU award value is divided by the closing price of our Common Stock on the date of grant as reported by the New York Stock Exchange.
All SARs and PSUs vest 25% per year, commencing one year from the grant date and on each anniversary thereof, subject to continued service on the applicable vesting date, and, in the case of PSUs, the achievement of the performance goal. We believe that this vesting schedule effectively focuses our executives on delivering long-term value growth for our stockholders and drives retention. The maximum payout for the 2023 PSUs was 200% of target in the event the maximum level of CV was achieved; the PSUs were subject to forfeiture if minimum levels of performance were not achieved.
The chart below describes the performance metrics applicable to the PSU portion of our 2023 long–term incentive compensation element measured on an FX neutral basis. In February 2024, the Compensation Committee certified the result as follows:
| 2023 PerformanceObjective/Weight | < Minimum(0%) | Target(100%) | =/> Maximum (200%) | Actual(measured at12/31/23) | ActualGrowthYOY |
|---|---|---|---|---|---|
| Contract Value/100% | $4,042 million | $4,814 million | $5,030 million | $4,839 million | 7.7% |
Based on the results set forth above, the Compensation Committee determined that 113.9% of the target number of PSUs was earned based on the preestablished performance goals, with 25% of the earned awards vested on the first
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Compensation Discussion & Analysis
anniversary of the grant date. See Grants of Plan-Based Awards Table – Possible Payouts Under Equity Incentive Plan Awards and accompanying footnotes below for the actual number of SARs and PSUs awarded to our NEOs.
Additional Compensation Elements
We maintain a non-qualified deferred compensation plan for our highly compensated employees, including our executive officers, to assist eligible participants with retirement and tax planning by allowing them to defer otherwise earned compensation in excess of amounts permitted to be deferred under our 401(k) plan. The non-qualified deferred compensation plan allows eligible participants to defer up to 50% of base salary and/or 100% of bonus to a future period. In addition, as a further inducement to participate in this plan, the Company presently matches contributions by executive officers using the same formula as for the 401(k) plan, subject to certain limits. For more information concerning this plan, see Non-Qualified Deferred Compensation Table and accompanying narrative and footnotes below.
In order to further achieve our objective of providing a competitive compensation package, we provide various other benefits to our executive officers that are typically available to, and expected by, persons in senior business roles. Our basic executive perquisites program includes 35 days paid time off (PTO) annually, severance and change in control benefits (discussed below) and relocation services where necessary due to a promotion. Our executive officers are also entitled to participate in other benefits programs that are available to all U.S. associates, including our employee stock purchase plan and our healthcare plans, as well as receive 401(k) match. Mr. Hall’s perquisites, severance and change in control benefits are governed by his employment agreement with the Company, which is discussed in detail below under Certain Employment Agreements with Executive Officers – Mr. Hall - Employment Agreement. For more information concerning perquisites, see Other Compensation Table and accompanying footnotes below.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.