Edgar Filing: CSG SYSTEMS INTERNATIONAL INC

csgs-def14a_20180517.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No. )

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CSG SYSTEMS INTERNATIONAL, INC.

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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Notice of 2018 Annual Meeting of Stockholders and Proxy Statement

Meeting Date: May 17, 2018

CSG Systems International, Inc.

6175 S. Willow Drive, Greenwood Village, Colorado 80111

NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

OF CSG SYSTEMS INTERNATIONAL, INC.

Date:	May 17, 2018

Time:	8:00 a.m. local time

Place:	Sofitel Chicago Water Tower Hotel 20 East Chestnut Street Chicago, Illinois 60611

Agenda:	1.	To elect three Class III Directors nominated by our Board of Directors;
	2.	To approve, on an advisory basis, the compensation of our named executive officers;
	3.	To approve the amendment and restatement of the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan;
	4.	To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2018; and
	5.	To transact any other business that properly comes before the meeting or any adjournment or postponement of the meeting.

Record Date:	The Board of Directors fixed the close of business on March 21, 2018, as the record date for determining the stockholders who are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof.

All stockholders are cordially invited to attend the meeting.

By Order of the Board of Directors of CSG Systems International, Inc.

Gregory L. Cannon

Secretary

April 3, 2018

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE STOCKHOLDER MEETING TO BE HELD ON MAY 17, 2018: The proxy statement and

our Annual Report on Form 10-K are available at www.proxyvote.com.

The Securities and Exchange Commission (“SEC”) has adopted a “Notice and Access” rule that allows companies to deliver a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) to stockholders in lieu of a paper copy of the proxy statement, related materials, and our annual report to stockholders.

The Notice of Internet Availability provides instructions as to how stockholders can access the proxy materials online, contains a listing of matters to be considered at the meeting, and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online, or by completing and returning a proxy card. Shares held in “street name” may be voted by providing voting instructions to the institution that holds your shares. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability.

All stockholders are welcome to attend the annual meeting. If you attend the meeting and are a stockholder of record, you may vote in person. If you wish to attend and vote at the meeting and your shares are held in “street name,” you will need to obtain a proxy from the institution that holds your shares and should advise such institution not to vote your shares. A proxy which you give will not be used if you attend the meeting in person and so request.

TABLE OF CONTENTS
TABLE OF CONTENTS

	Page		Page
Proxy Summary	i	Role of Benchmarking in Determining Compensation and Peer Group	25
Questions and Answers About the 2018 Annual Meeting and Voting	1		25
	1	Role of Benchmarking in Determining Compensation	25
Corporate Governance and Board of Directors	4	Peer Group Used for Benchmarking	25
Overview	4	2017 Compensation	26
Directors	4	2017 Annual Base Salaries	26
Director Independence	4	2017 Results for Incentive Compensation Programs	26
Corporate Governance Practices and Documents	4	2017 Annual Performance Bonuses	26
Majority Voting	4	2017 Discretionary Bonus Awards	28
Communications with the Board	5	2017 Long-Term Incentive Awards	28
Director Attendance at Board Meetings	5	Other Considerations	30
Annual Meeting Attendance	5	Other Benefits and Employment Agreements	30
Board Committees	5	Tax Deductibility of Executive Compensation	30
Audit Committee	6	Report of the Compensation Committee	31
Compensation Committee	6	Executive Compensation Tables	32
Determining Executive Officer Compensation and Use of Independent Compensation Consultant		2017 Summary Compensation Table	32
	6	2017 Grants of Plan-Based Awards	33
Determining Non-Employee Director Equity Awards	6	Outstanding Equity Awards at December 31, 2017	34
Risks Related to Compensation Policies and Practices for All Employees	7	2017 Stock Vested	37
	7	2017 Non-Qualified Deferred Compensation	38
Compensation Committee Interlocks and Insider Participation	7	Employment Agreements	39
Compensation Committee Interlocks and Insider Participation	7	Employment Agreements with Mr. Griess, Mr. Wiese, Mr. Kennedy, and Mr. Shepherd	39
Nominating and Corporate Governance Committee	7		39
What We Look for in Director Nominees	7	Potential Payments Upon Termination of Employment	41
Stockholder Recommended Director Candidates	8	Termination for Death, Disability, or Voluntary Resignation	41
Annual Board Member Evaluation Process	8	Termination for Cause	41
Risk and Compliance Oversight	8	Termination Without Cause Prior to a Change of Control	41
Board Leadership Structure	9	Termination Without Cause After a Change of Control	42
Code of Ethics and Business Conduct	9	CEO Pay Ratio	43
Other Board Information	9	Proposal 2 – Advisory Vote to Approve the Compensation of Our Named Executive Officers	44
Compensation of Directors	10		44
2017 Director Compensation	10	Proposal 3 – Approval of the Amendment and Restatement of the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan	45
Proposal 1 – Election of Directors	11
Nominees for Class III Directors – Term to Expire in 2021	11
Class I Directors – Term to Expire in 2019	13	Proposal 4 – Ratification of the Appointment of KPMG LLP As Our Independent Registered Public Accounting Firm for Fiscal 2018	52
Class II Directors – Term to Expire in 2020	15
Beneficial Ownership of Common Stock	17
Principal Stockholders	17	Pre-approval Policies and Procedures	52
Directors and Executive Officers	18	Report of the Audit Committee	53
Share Ownership Guidelines	19	Related Party Transactions	54
Hedging and Pledging Policy	19	Stockholder Proposals	54
Section 16(a) Beneficial Ownership Reporting Compliance	19	Householding	54
Executive Compensation – Compensation Discussion and Analysis	20	Annual Report on Form 10-K and Other SEC Filings	55
	20	Other Matters	55
Executive Summary	20	Appendix A: Use and Reconciliations of Non-GAAP Financial Measures	56
Company Overview and Business Strategy	20		56
Our Overall 2017 Performance	20	Appendix B: CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan	58
2017 Executive Compensation Highlights	21		58
Pay-for-Performance Compensation Program	21
2017 Say-on-Pay Results	21
Solid Governance and Compensation Practices	22
Key Compensation Governance Factors	22
Determining Executive Compensation	23
Role of the Independent Compensation Consultant and Management	23
Compensation Mix	24

Proxy Summary

2018 ANNUAL MEETING
This summary highlights information contained in this Proxy Statement. It is intended to assist you in your review of the proposals to be acted upon, and to provide key information about CSG Systems International, Inc. For more complete information on any specific topic, please refer to the Table of Contents on the previous page.

Meeting:	2018 Annual Meeting of Stockholders
Date:	May 17, 2018
Time:	8:00 a.m. local time
Place:	Sofitel Chicago Water Tower Hotel 20 East Chestnut Street, Chicago, Illinois 60611
Record Date:	March 21, 2018
These proxy materials are being made available to stockholders starting on or about April 3, 2018.

Proposals To Be Voted Upon
Proposal		Board Recommendation	Page #
1. To elect three Class III Directors nominated by our Board of Directors		For Each Nominee	11
2. To approve, on an advisory basis, the compensation of our named executive officers		For	44
3. To approve the amendment and restatement of the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan		For	45
4. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2018		For	52


DIRECTOR NOMINEES
Name	Age	Director Since	Occupation	Independent	Committee Membership
Bret C. Griess	49	2016	President and Chief Executive Officer	No	None
Frank V. Sica	67	1994	Partner of Tailwind Capital, director of JetBlue Airways, Kohl’s Corporation and Safe Bulkers, Inc.	Yes	Compensation
James A. Unruh	77	2005	Founding Principal of Alerion Capital Group, LLC	Yes	Compensation Nominating and Corporate Governance


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2017 Business Highlights

Key highlights of our 2017 performance include the following:

•	Improved our annual revenue growth to 4%, thus increasing our 2017 total revenues to $789.6 million, driven largely by the 7% growth in our cloud and related solutions revenues;

•	Extended our market-leading position supporting the broadband and video market with the successful conversions of over four million customer accounts, additional new logos, and increased adoption of our solutions;

•	Expanded and strengthened our relationship with two of our largest clients through the end of 2021;

•	Nearly doubled our recurring managed services offering around the globe by delivering sustainable business value by improving operational efficiencies, lowering costs, and enhancing the customer experience;

•	Expanded our footprint in the communications and entertainment arena as a trusted digital transformation partner, as well as into new verticals, such as the Internet of Things (“IoT”) and Smart Cities, with our Ascendon SaaS, cloud-based platform; and

•	Generated profitable operating results and strong cash flows, and ended 2017 with a solid balance sheet, all of which support our continued investments in the business. Our strong results plus a balanced capital allocation policy all work together to drive long-term shareholder value.

Governance PRACTICES

Our corporate governance practices are reviewed regularly. We believe they reflect best practices, as highlighted below:

•	Majority voting for uncontested director elections with plurality voting for contested director elections;

•	Independent Board Chair;

•	All other directors independent (other than our Chief Executive Officer);

•	Regular executive sessions of independent directors;

•	Independent Audit, Compensation, and Nominating and Corporate Governance Committees;

•	Independent compensation consultant;

•	Structured annual board member evaluation process conducted by an independent third-party governance expert;

•	Board engagement in long-term succession planning and talent management discussions;

•	Meaningful director and executive stock ownership guidelines;

•	Anti-hedging, anti-short sale, and anti-pledging policies;

•	Annual independent director evaluation of the Chief Executive Officer;

•	Code of Ethics and Business Conduct for directors, officers, and employees;

•	Regular stockholder engagement to understand stockholders’ views and insights;

•	Annual advisory approval of executive compensation;

•	Limitations on consideration given to our named executive officers (to include no excise tax gross-ups) upon the occurrence of a change of control;

•	Limited perquisites; and

•	No evergreen provisions for equity plans.

Compensation Highlights

Our compensation program is designed to attract and retain highly qualified executives and create incentive compensation opportunities aligned with our strategic goals and evolving competitive and governance practices.

Highlights for 2017 include:

•	95% of the votes cast on our 2017 say-on-pay proposal were in favor of our executive compensation program and policies;

•	At least 55% of total target compensation for each executive was based on the achievement of key financial measures; and

•

We executed on many of our key strategic initiatives during 2017 and met or exceeded several of our key financial and stock price targets. As a result, our named executive officers earned their annual performance bonus payouts, and in some cases, an additional discretionary bonus, and the majority of their potential performance-based stock vesting under our executive compensation program.


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QUESTIONS AND ANSWERS ABOUT THE 2018 ANNUAL MEETING AND VOTING

Why am I receiving these materials?

CSG Systems International, Inc. (“we,” “us,” “our,” or the “Company”) will hold our 2018 Annual Meeting of Stockholders on May 17, 2018 (the “Annual Meeting”). These proxy materials explain the items of business that will be brought to a vote at the Annual Meeting.

As a stockholder, you are invited to attend and vote at our Annual Meeting, or at any adjournment or postponement thereof. To ensure your vote is counted, our Board of Directors (the “Board”) is soliciting your proxy to vote on your behalf.

What information is contained in this proxy statement?

This proxy statement explains the proposals to be voted on at the Annual Meeting, describes the voting process, and provides information about corporate governance,

our Board, and the compensation of our directors and certain executive officers.

How do I get electronic access to the proxy materials?

You may view our proxy materials at www.proxyvote.com.

What items of business will be voted on at the Annual Meeting?

Four proposals are scheduled to be voted on at the Annual Meeting:

Proposal		Board recommendation
Proposal 1—To elect three Class III Directors nominated by our Board		FOR each nominee
Proposal 2—To approve, on an advisory basis, the compensation of our named executive officers		FOR
Proposal 3—To approve the amendment and restatement of the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan		FOR
Proposal 4—To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2018		FOR

Each of these proposals is discussed in this proxy statement. We also will transact any other business that properly comes before the Annual Meeting.

What shares can I vote?

You are entitled to one vote for each share of our common stock that you own as of the close of business on March 21, 2018 (the “record date”). You also can vote all shares for which you hold a valid proxy. At the close of

business on the record date, there were 33,672,324 shares of our common stock outstanding and entitled to vote at the Annual Meeting.

May I attend the Annual Meeting?

You may attend the Annual Meeting only if you were a stockholder of the Company as of the record date or you hold a valid proxy for the Annual Meeting. You can vote

your shares even if you do not attend the Annual Meeting, and we encourage you to do so.


		2018 Proxy Statement \| 1

May I vote my shares in person at the Annual Meeting?

If you are a stockholder of record—meaning you hold our common stock in your name with our transfer agent—you may vote those shares in person at the Annual Meeting. If you are a beneficial owner—meaning that a broker, bank, trustee, or other nominee holds your common stock in “street name”—you can vote at the Annual Meeting only if you obtain a legal proxy from the record holder giving you the right to vote the shares.

Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the Annual Meeting.

May I vote my shares without attending the Annual Meeting?

You may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you will receive a “Notice of Internet Availability,” which explains how to access the proxy materials online, contains a listing of matters to be considered at the meeting, and describes how shares can be voted by

telephone, online, or by completing and returning a proxy card. If you hold shares beneficially in “street name”, your broker, bank, trustee, or nominee has the right to vote the shares, but should provide you a means to give voting instructions.

May I change or revoke my vote?

You may change or revoke your vote at any time before we take the vote at the Annual Meeting.

If you are a stockholder of record, there are three ways to change or revoke your vote before the conclusion of the Annual Meeting: (1) deliver a new proxy bearing a later date (which automatically revokes your earlier proxy) by mail, telephone, or over the Internet; (2) provide a written notice of revocation to our Secretary at our principal offices listed on the first page of this proxy statement; or (3) attend the Annual Meeting, specifically revoke your proxy, and vote in

person. If you attend the Annual Meeting but do not specifically revoke your previously granted proxy, your proxy will remain in effect.

If you are a beneficial owner, you may change your vote by submitting new voting instructions to your broker, bank, trustee, or nominee. Alternatively, if you have obtained a legal proxy from your broker, bank, trustee, or nominee giving you the right to vote your shares, you can attend the Annual Meeting and vote in person.

How many shares must be present or represented to conduct business at the Annual Meeting?

We can hold the Annual Meeting and transact business if a majority of the issued and outstanding shares of common stock entitled to vote are present in person or represented by proxy at the Annual Meeting. Abstentions are counted for the purpose of determining whether there is a quorum.

“Broker non-votes” are counted for the purpose of determining whether there is a quorum as long as the bank, broker, or nominee uses its “discretionary authority” to vote on Proposal 4 (auditor ratification). Broker non-votes and discretionary authority are described below.


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What is the voting requirement to approve each of the proposals?

For Proposal 1, the election of directors, each nominee who receives a majority of the votes cast will be elected as director. A majority of votes cast means that the number of votes cast FOR a director’s election exceeds the number of votes cast AGAINST that director’s election. Each of Proposals 2, 3 and 4 will be approved if the proposal receives the affirmative FOR vote of a majority of the shares present in person or represented by proxy and entitled to vote at the Annual Meeting.

Abstentions and broker non-votes are not considered votes cast on Proposal 1, the election of directors, and will not affect the outcome of the election of directors. With respect to Proposals 2, 3 and 4, abstentions and broker

non-votes will have the same effect as AGAINST votes. With respect to the election of directors, in the event a director does not receive a majority of the votes cast, that director will be required to submit his or her resignation to the Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board.

Although the advisory vote to approve the compensation of our named executive officers (“NEOs”) for 2017 is non-binding, as provided by law, our Board and the Compensation Committee will review the results of the votes and will consider the results in making future decisions on executive compensation.

How are votes counted?

Votes cast in person or by proxy will be tabulated by the inspector of elections appointed for the Annual Meeting. If you provide specific instructions on your proxy card, your shares will be voted as you instruct. If you do not give instructions, your shares will be voted as recommended by the Board as follows:

•

FOR the election of each of the three Class III Directors nominated by our Board and named in this proxy statement;

•

FOR the approval, on an advisory basis, of the compensation of our named executive officers;

•

FOR the approval of the amendment and restatement of the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan; and

•

FOR the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2018.

What happens if additional matters are presented at the Annual Meeting?

We are not aware of any business to be acted upon at the Annual Meeting other than the four proposals described in this proxy statement. If you grant a proxy, the individuals named as proxy holders, Brian A. Shepherd and Gregory L. Cannon, and each or either of them, will have the discretion to vote your shares on any additional

matters properly presented for a vote at the Annual Meeting. If for any reason a nominee is not available as a candidate for director, the proxy holders will vote your proxy for such other candidate or candidates as the Board may nominate.

Who will bear the cost of soliciting votes for the Annual Meeting?

We will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials, and soliciting votes. If you choose to access the proxy materials or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. Our directors, executives, and regular employees,

without additional remuneration, and their appointed agents, may solicit proxies or votes in person, by telephone, or by electronic communication. We will request banks, brokers, and other fiduciaries to forward proxy materials to the owners of stock held in their names and will reimburse the reasonable out-of-pocket expenses incurred in connection with that distribution.

Where can I find the voting results of the Annual Meeting?

We will announce voting results of the Annual Meeting in a Current Report on Form 8-K filed with the

SEC no later than four business days after the Annual Meeting.


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CORPORATE GOVERNANCE AND BOARD OF DIRECTORS

Overview

We are committed to maintaining sound corporate governance practices. The Board has formalized several policies, procedures, and standards of corporate governance, including our Corporate Governance Guidelines, some of

which are described below. We continue to monitor best practices and legal and regulatory developments with a view to further revising our governance policies and procedures, as appropriate.

Directors

The Board currently consists of nine directors, including: David G. Barnes, Ronald H. Cooper, Marwan H. Fawaz, Bret C. Griess, Janice I. Obuchowski, Donald B. Reed, Frank V.

Sica, Donald V. Smith, and James A. Unruh. See Proposal 1 - Election of Directors on page 11 for more information regarding our directors.

Director Independence

The Board has determined that every Board member except Mr. Griess, our President and Chief Executive Officer (“CEO”), is an “independent director” as defined in the applicable rules of The NASDAQ Stock Market, Inc. (“NASDAQ”). We believe that having a Board made up

predominantly of independent, experienced directors with independent oversight by a non-executive Chair (as further described below) is in the best interests of our Company and our stockholders.

Corporate Governance Practices and Documents

The Board encourages you to visit our corporate governance page on our website at http://ir.csgi.com/documents.cfm, which provides information about our corporate governance practices and includes the following documents:

•

Committee charters;

•

Code of Ethics and Business Conduct;

•

Corporate Governance Guidelines; and

•

Share Ownership Guidelines.

Information on our website is not incorporated by reference in this proxy statement.

Majority Voting

We use a majority voting standard in the election of directors. Thus, in any “uncontested election” of directors (i.e., an election where the number of nominees does not exceed the number of directors to be elected), each nominee to the Board will be elected by the vote of a “majority of the votes cast,” meaning that the number of votes cast “for” a director’s election must exceed the number of votes cast “against” that director’s election. The election of directors at the Annual Meeting is an uncontested election. Abstentions and broker non-votes

will not count as votes cast for purposes of this provision. If any incumbent director does not receive a majority of votes cast in favor of his or her re-election to the Board, that director will be required to submit his or her resignation to the full Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board. In the case of a contested election, directors will continue to be elected by a plurality vote.


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Communications with the Board

We invite stockholders or any other interested party to send written communications to the Board or to individual Board members. Please send your letter in care of the Secretary of the Company at the address of our principal offices as shown on the first page of this proxy statement. If a letter relates to publicly available information about the Company or our stock, the Secretary will respond to the writer directly. If a letter is primarily commercial in nature or, at the

discretion of the Secretary, relates to an improper or irrelevant topic, the Secretary will make a record of it, but will not transmit the communication to the Board. Any letter that relates to accounting, internal accounting controls, or auditing matters will be forwarded to the Chair of the Audit Committee. All other letters will be forwarded to the entire Board or to the individual Board member(s) to whom they are addressed.

Director Attendance at Board Meetings

During 2017, the Board held five meetings. All directors attended at least 75% of the total number of meetings of the Board and of the committees on which they served during 2017, except for Mr. Hughes who failed to attend 75% of the meetings due to health issues prior to his

passing in June 2017. In addition, during 2017 the Board held four executive sessions during which only independent directors were present.

Annual Meeting Attendance

Historically, very few stockholders have attended our annual meetings; almost all stockholders who vote do so by proxy. Accordingly, directors are not required to attend our annual meetings. We expect employee director(s) to attend if their schedules permit, and non-employee directors are welcome to attend if they wish. All of our

directors attended our 2017 Annual Meeting, except for Mr. Hughes and Mr. Sica. The Board scheduled our 2018 Annual Meeting to coincide with a regular quarterly meeting of the Board so that all members present at the quarterly meeting of the Board can attend the Annual Meeting as well.

Board Committees

Director	Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee
David G. Barnes	C
Ronald H. Cooper	M	C
Marwan H. Fawaz			M
Bret C. Griess
Janice I. Obuchowski	M		C
Donald B. Reed	M
Frank V. Sica		M
Donald V. Smith		M	M
James A. Unruh		M	M

“C” Chair

“M” Member

Chair of the Board


		2018 Proxy Statement \| 5

Audit Committee

The Audit Committee’s primary purposes are to oversee our accounting and financial reporting processes, the audits of our financial statements, and our risk and compliance management programs.

As required by the Audit Committee charter (located at http://ir.csgi.com/documents.cfm), all members of the Audit Committee satisfy all NASDAQ requirements applicable to audit committee members and are “independent” as defined by the rules promulgated by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and by NASDAQ. The Board has determined that Mr. Barnes, Mr. Cooper, and Mr. Reed are “audit committee financial experts” as defined by applicable SEC rules. The Audit Committee held four meetings during 2017.

Compensation Committee

The Compensation Committee’s primary purposes are to review and recommend senior management compensation and benefit policies, evaluate the performance of our executive officers, and review and recommend the compensation of our executive officers. In addition, the Compensation Committee has independent authority to administer and grant equity awards under our equity plans and annual performance bonuses for executive officers. The Compensation Committee also is responsible for ongoing oversight and evaluation of our compensation policies and practices for employees generally as they relate to risk management. The Compensation Committee may delegate any of its responsibilities to a subcommittee or the Chair of the Compensation Committee. The Compensation Committee may also delegate to one or more of our officers the authority to grant awards to non-executive officers and employees of our Company under our equity compensation plans.

As required by the Compensation Committee charter (located at http://ir.csgi.com/documents.cfm), all members of the Compensation Committee are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and are “independent” as defined by the rules promulgated by the SEC under the Exchange Act, and by NASDAQ. The Compensation Committee may delegate its authority in accordance with the Compensation Committee charter. The Compensation Committee held five meetings during 2017.

Determining Executive Officer Compensation and Use of Independent Compensation Consultant. To assist the Compensation Committee with its responsibilities, the Compensation Committee retains an independent compensation consultant, consults with our CEO and our head of Human Resources, and draws upon the extensive business experience of its members. The Compensation Committee directs the independent compensation consultant to prepare a comprehensive formal assessment of the competitiveness of our executive officer compensation program, including a comparison of the principal components of our program (base salaries, performance bonuses, and equity awards) with those of a peer group of other public companies. The Compensation Committee considers this assessment and other data provided by the independent compensation consultant in arriving at its decisions or recommendations to the Board with respect to base salaries, performance bonuses, and long-term incentives for our executive officers. For additional information about our executive compensation program, processes, and procedures, see the Compensation Discussion and Analysis beginning on page 20.

The Compensation Committee periodically evaluates the qualifications of its independent compensation consultant. For 2017, the Compensation Committee continued the engagement of Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent compensation consultant. During 2017, Pearl Meyer provided only executive compensation guidance to the Compensation Committee and did not provide any other services to the Company. During 2017 the Compensation Committee requested information from Pearl Meyer, our executives, and our Board members in order to assess the independence of Pearl Meyer as the Committee’s compensation consultant and to determine whether Pearl Meyer’s work raised any conflict of interest. Based on the information provided, the Compensation Committee determined that Pearl Meyer was independent and that the work of Pearl Meyer did not raise a conflict of interest.

Determining Non-Employee Director Equity Awards. In making equity awards to our non-employee directors, the Compensation Committee considers relevant information provided by the independent compensation consultant and the recommendations of our Nominating and Corporate Governance Committee and the Board.


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Risks Related to Compensation Policies and Practices for All Employees. The Compensation Committee does not believe that risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. A number of the factors considered by the Compensation Committee when it develops executive compensation recommendations have the effect of mitigating risk. Additionally, executive officers and certain members of senior management regularly review our employee compensation policies and practices, including the elements of our compensation programs, to determine whether any element or program design encourages excessive risk taking. The Board and senior management consider the following factors that reduce the likelihood of excessive risk taking:

•	Our “clawback” policy included in our executive employment agreements authorizes us, in certain cases, to reduce or cancel, or require recovery of, all or a portion of an executive officer’s annual bonus or long-term incentive compensation award;

•	Our compensation program consists of a balance of multiple elements, including base salary, annual cash incentive programs, and, for some employees, long-term equity incentive awards that are earned over a number of years;

•	The structure of our annual cash incentives for executive officers includes multiple performance measures that are objective and quantifiable, with a corresponding minimum and maximum payout range, and our sales compensation plan includes provisions to mitigate risk to the Company;

•	A significant portion of our executive officers’ pay is tied to long-term equity awards based on the achievement of pre-determined financial and stock performance measures that we believe align the long-term interests of our executives with those of our stockholders;

•	Our executive officers are subject to stock ownership guidelines and must comply with our insider trading policy;

•	We have effective management processes, including a formal risk assessment process and strong internal controls; and

•	Our Board and Audit Committee maintain regular oversight of our risk management program.

Compensation Committee Interlocks and Insider Participation. No member of the Compensation Committee has ever been an officer or employee of the Company. In 2017, no member of the Compensation Committee had any relationship or transaction with the

Company that would require disclosure as a “related person transaction” under SEC rules. In addition, during 2017, none of our executive officers served on the board of directors or compensation committee of any other entity whose executive officer(s) served as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee’s primary purposes are to: (1) identify individuals qualified to become Board members; (2) recommend to the Board nominees for election as directors and directors for appointment to Board committees; (3) evaluate the Board’s performance, in conjunction with the new formal and structured annual board evaluation process conducted by an independent service provider; (4) review and recommend the compensation of our directors; and (5) develop and recommend for Board approval our Corporate Governance Guidelines and Code of Ethics and Business Conduct.

The Nominating and Corporate Governance Committee charter (located at http://ir.csgi.com/documents.cfm) requires that a majority of the members be independent directors. The Nominating and Corporate Governance Committee held four meetings during 2017.

What We Look for in Director Nominees. In recommending nominees for election as directors, the Nominating and Corporate Governance Committee reviews the present composition of the Board to determine the qualities, skills, and areas of expertise needed to enable the Board and its committees to properly discharge their responsibilities. When there is a need, the Nominating and Corporate Governance Committee utilizes the services of executive search firms with well-established board practices to assist in the identification and recruitment of qualified director nominees. This process supports our objective of recruiting highly qualified candidates that meet our specific criteria for skills, professional and governance experience, diversity, and the personal attributes we are seeking, as discussed in more detail below. The Nominating and Corporate Governance Committee considers it necessary for the Board to have at least one independent member who qualifies as an “audit committee financial expert” and takes that requirement into account when recommending nominees. When identifying and assessing a candidate’s qualifications, the Nominating and Corporate Governance Committee considers, among other things: (1) the number and type of other boards on which the candidate serves; (2) the candidate’s other business and professional commitments and potential conflicts of interest; (3) the candidate’s ability and


		2018 Proxy Statement \| 7

willingness to devote the required amount of time to service as a Board member and as a member of one or more Board committees; and (4) the candidate’s age, background, reputation, independence, experience, skills, and judgment.

Although we do not have a written policy on diversity, our Nominating and Corporate Governance Committee considers the diversity of the Board’s membership when nominating directors. We interpret the term “diversity” in its broadest sense and believe it encompasses many attributes, including age, background, experience, skills, substantive expertise, gender, ethnicity, geography, and education. Our Board is particularly interested in maintaining a collective group of individuals with experience in operations, finance, accounting, marketing, human resources, sales, and international business, particularly in the technology and communication service provider and related industries. We also consider whether nominees are active or retired executive officers of public or private companies and whether they have ever served on the board of a public company.

Our Board members also should display the personal attributes necessary to be effective directors: integrity, sound judgment, independence, ability to operate collaboratively, and a fiduciary commitment to the Company and our stockholders. We believe the current members of our Board have a diverse set of business and

personal experiences, backgrounds, and expertise, and that they all share the personal attributes described above.

Stockholder Recommended Director Candidates. The Nominating and Corporate Governance Committee will consider qualified nominees recommended by our stockholders for election as directors in the same manner that the committee considers other director candidates. A stockholder who wishes to recommend a nominee for the Board should submit the recommendation in writing to the Secretary of the Company indicating the proposed nominee’s qualifications and other relevant biographical information and providing written confirmation that the proposed nominee consents to serve as a director if nominated and elected. See Stockholder Proposals on page 54 of this proxy statement for additional requirements and information. Our Secretary will forward qualifying recommendations from stockholders to the Chair of the Nominating and Corporate Governance Committee for further review and consideration. Our bylaws provide that stockholder nominations for election to the Board are subject to certain advance notice and informational requirements. Stockholders may obtain a copy of the relevant bylaw provisions from our Secretary at CSG Systems International, Inc., 6175 S. Willow Drive, Greenwood Village, Colorado, 80111.

Annual Board Member Evaluation Process

The Board is committed to a rigorous annual self-evaluation process. The Chair of the Nominating and Corporate Governance Committee coordinates an annual evaluation process, conducted by an independent, third-party consultant. For the first annual evaluation conducted in 2017, the consultant surveyed the full board and select management team members, to evaluate the Board's and the Board committees' performance and procedures to determine whether they were functioning effectively. The

results of the annual evaluation were discussed and considered by the full Board at the November 2017 Board meeting and the Board was satisfied that no immediate changes were necessary to improve their performance. Regular annual Board evaluations will continue to include a Board survey process, with additional emphasis on the Board’s nominees for election at the then upcoming Annual Meeting.

Risk and Compliance Oversight

The Board is responsible for oversight of our risks. To administer our risk and compliance management program, we established a Business Risk Committee comprised of our executive officers, chaired by our Chief Financial Officer (“CFO”), and coordinated by our internal audit department. The internal audit department reports directly to the Audit Committee, and prepares a quarterly report for the Audit Committee summarizing material existing and emerging business risks.

We also maintain a formal risk assessment and risk mitigation program that is administered by our CFO. Executive officers, in conjunction with members of our internal audit department, review this program periodically throughout the year. This program is intended to: (1) identify those risks that are most likely to affect our business; (2) assign an executive to be responsible for monitoring and mitigating those risks; and (3) provide a formal mechanism for the assigned executive to report back periodically on the adequacy and effect of mitigation efforts. The Audit Committee and the Board review the


8 \| 2018 Proxy Statement

results of this program at each regularly scheduled meeting. In addition, our Chief Compliance Officer has a reporting relationship to the Audit Committee and provides a quarterly report to the Committee on compliance risks, issues, and activities.

The Board believes our current leadership structure facilitates its oversight of risk by combining independent leadership through the Board and the Audit Committee, along with an experienced Business Risk Committee with intimate knowledge of our business, industry, and challenges.

Board Leadership Structure

The Board does not have a policy regarding separation of the roles of CEO and Chair of the Board. The Board believes it is in the best interests of the Company to make that determination based on current circumstances. The Board has determined that an independent director serving as Chair is in our best interests at this time. Since 2010, Mr. Reed has served as Chair of the Board. Our Board believes this structure ensures a greater role for independent directors in the active oversight of our business, including risk management oversight, and in

setting agendas and establishing Board priorities and procedures. This structure also allows our CEO to focus to a greater extent on the management of our day-to-day operations.

In the future, if the Board believes it would be in the best interests of the Company and our stockholders, the Board may decide that one person should serve as both CEO and Chair of the Board.

Code of Ethics and Business Conduct

Our Board has adopted a Code of Ethics and Business Conduct applicable to all directors, officers, and employees of the Company. Our Code of Ethics and Business Conduct and Corporate Governance Guidelines are available on our website on the Investor Relations page, under Governance Documents, located at http://ir.csgi.com/documents.cfm. Information on our

website is not incorporated by reference in this proxy statement. We will disclose on our website any amendments to our Code of Ethics and Business Conduct, or any waiver of a provision of our Code of Ethics and Business Conduct that is required to be disclosed under applicable rules of the SEC.

Other Board Information

There are no family relationships between any of our directors or executive officers. There are no arrangements between any director, nominee, or executive officer of the Company and any other person pursuant to which such director, nominee, or executive officer was selected for such position. There are also no material legal proceedings

pending to which any of our directors, officers, affiliates of the Company, or shareholders of more than 5% of our stock (or any associates of any of the foregoing) is a party adverse to the Company.


		2018 Proxy Statement \| 9

COMPENSATION OF DIRECTORS

After consultation with the Compensation Committee's independent compensation consultant, including an analysis of peer and market practices, the Board has set the director compensation program to be in line with similar companies in our industry. For 2017, our director compensation program consisted of the following:

Role		Committee	Equity Grant Shares (1)		Annual Cash Retainer Amount (2)
Board Member (3)				3,000	$	75,000
Chair of the Board					$	50,000
Chair of Committee (4)		Audit			$	16,000
		Compensation			$	16,000
		Nominating and Corporate Governance			$	10,000

(1)	Each non-employee director receives an annual equity grant in the form of restricted stock awards as determined by the Compensation Committee, which vests one year from the grant date.
(2)	Cash retainers are paid in advance in quarterly installments subject to such non-employee director's continued service on the Board.
(3)	A director who is an officer or employee of the Company does not receive additional compensation for serving as a director or committee member. Mr. Griess is the only current officer or employee of the Company who serves as a director, and he does not currently serve on any Board committee.
(4)	Members of a committee do not receive an additional fee.

2017 Director Compensation

The following table contains information about the compensation of our non-employee directors for 2017. All amounts have been rounded to the nearest dollar and pro-rated for actual time of service on the Board or committees.

Name		Fees Earned		Stock Awards (1)		Total
David G. Barnes		$	91,000	$	116,160	$	207,160
Ronald H. Cooper			89,500		116,160		205,660
Marwan H. Fawaz			75,000		116,160		191,160
John L. M. Hughes (2)			41,500		-		41,500
Janice I. Obuchowski			82,500		116,160		198,660
Donald B. Reed			125,000		116,160		241,160
Frank V. Sica			79,000		116,160		195,160
Donald V. Smith			75,000		116,160		191,160
James A. Unruh			75,000		116,160		191,160
Totals		$	733,500	$	929,280	$	1,662,780

(1)	This column reflects the aggregate grant date fair value of restricted stock awards granted during the year computed in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. The aggregate grant date fair value is calculated using the closing price of our common stock on the date of grant, August 16, 2017. Each Board member was granted 3,000 shares of restricted stock in 2017 which will vest one year from the date of grant. The aggregate number of restricted stock awards outstanding as of December 31, 2017, for each Board member is 3,000 shares (except for Mr. Hughes who did not receive a restricted stock award in 2017), for a total of 24,000 shares for all Board members.
(2)	Mr. Hughes served as the Chair of an ad hoc committee from April 1, 2017, until his passing in June. As a foreign (U.K.) citizen, Mr. Hughes was subject to mandatory U.S. tax withholding on his director fees which were deducted from his compensation.


10 \| 2018 Proxy Statement

PROPOSAL 1 – ELECTION OF DIRECTORS

The Board is divided into three classes presently consisting of three Class I Directors, three Class II Directors, and three Class III Directors. Class I consists of Ronald H. Cooper, Janice I. Obuchowski, and Donald B. Reed, whose terms will expire at the 2019 annual meeting of stockholders. Class II consists of David G. Barnes, Marwan H. Fawaz, and Donald V. Smith, whose terms will expire at the 2020 annual meeting of stockholders. Class III consists of Bret C. Griess, Frank V. Sica, and James A. Unruh, whose terms will expire at the Annual Meeting.

The Board, upon recommendation by the Nominating and Corporate Governance Committee, has nominated Mr. Griess, Mr. Sica, and Mr. Unruh to be elected as Class III Directors at the Annual Meeting. Unless the proxy is marked

otherwise, the person acting under the accompanying proxy will vote to elect Mr. Griess, Mr. Sica, and Mr. Unruh as the Class III Directors to serve until the 2021 annual meeting of stockholders. The proxy may not be voted for more than three directors. If a nominee is unable to serve, then the person acting under the proxy may vote the proxy for the election of a substitute nominee. The Company presently expects that all three nominees will be able to serve, and each of the director nominees has consented to serve as directors on the Board.

The following chart outlines the areas of expertise that each director serving on the Board possesses. In addition, we have provided a brief summary of those skills with each director’s biographical information below.

Director Skills and Experience	David Barnes	Ronald Cooper	Marwan Fawaz	Bret Griess	Janice Obuchowski	Donald Reed	Frank Sica	Donald Smith	James Unruh
Accounting / Finance	●	●		●		●	●	●	●
Capital Markets / Debt Financing	●						●	●	●
Corporate Governance	●	●	●	●	●	●	●	●	●
Executive Leadership	●	●	●	●	●	●	●	●	●
Government / Public Policy		●			●	●		●
Information Security / Privacy			●	●
International	●	●	●	●	●	●	●	●	●
Marketing / Sales		●	●	●		●		●	●
Mergers / Acquisitions	●	●	●	●			●	●	●

The Board Recommends a Vote FOR the Election of Each of the Three Nominees for Class III Director.

The following information relates to the Board’s nominees for election at the Annual Meeting and to the other directors of the Company whose terms of office will continue after the Annual Meeting:

Nominees for Class III Directors – Term to Expire in 2021:

BRET C. GRIESS

	Age: 49 Director Since: January 2016		President and CEO

Mr. Griess currently serves as our President and CEO. He joined the Company in 1996 and held a variety of positions in Operations and Information Technology, until being appointed Executive Vice President of Operations in February 2009, Chief Operations Officer in March 2011, and President in June 2015. In January 2016, Mr. Griess was

appointed President and CEO and a member of our Board. Mr. Griess holds an M.A. degree in Management and a B.S. degree in Management from Bellevue University in Nebraska, and an A.A.S. degree from the Community College of the Air Force.


		2018 Proxy Statement \| 11

Skills and Qualifications

Financial Experience: Significant executive experience in operational finance, financial management, risk assessment, capital planning, and strategic business development.

Industry Experience: Extensive knowledge of the businesses and markets we serve, which provides our

Board with an acute understanding of business practices and special industry concerns.

Leadership Experience: Our current President and CEO. Brings executive level leadership, strategic thinking, business development, and strong financial oversight skills to the Board.

FRANK V. SICA

Age: 67
Director Since: October 1994

Board Committees:

Other Public Directorships:

• Compensation Committee

• JetBlue Airways

• Kohl’s Corporation

• Safe Bulkers, Inc.

Mr. Sica is currently a Partner of Tailwind Capital (a private equity firm) since 2006. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. During that period, Mr. Sica was also President of Menemsha Capital Partners, Ltd., a private investment firm. From 2000 until 2003, he was President of Soros Private Funds Management, where he oversaw the direct real estate and private equity investment activities of Soros. In 1998, he joined Soros Fund Management where he was a

Managing Director responsible for Soros’ private equity investments. Mr. Sica was also previously Managing Director for Morgan Stanley Merchant Banking Division. He currently serves as a director on the boards of JetBlue Airways, Kohl’s Corporation, and Safe Bulkers, Inc. Mr. Sica holds an M.B.A. degree from the Tuck School of Business at Dartmouth College and a B.A. degree from Wesleyan University.

Skills and Qualifications

Corporate Governance: Broad experience serving as a director of multiple large public companies.

Financial Experience: Wide-ranging experience in venture capital, private equity, mergers and acquisitions, capital markets, management recruitment, executive compensation, and strategic planning across a broad range of commercial industries from his work at Morgan

Stanley, Soros, and now at Tailwind Capital. Experience in investment banking serving global clients and in structuring international mergers and acquisitions.

Industry Experience: Comprehensive understanding of our business and markets, having served as a director of our Company for over 20 years.

JAMES A. UNRUH

Age: 77
Director Since: June 2005

Board Committees:

• Compensation Committee

• Nominating and Corporate Governance Committee

Former Public Directorships Held During the Past Five Years:

• Prudential Financial, Inc. (May 2015)

• CenturyLink, Inc. (May 2012)

• Tenet Healthcare Corporation (May 2017)

Mr. Unruh became a founding Principal of Alerion Capital Group, LLC (a private equity investment company) in 1998 and currently holds such position. Mr. Unruh was an executive with Unisys Corporation (a global information technology company) from 1987 to 1997, including serving as its Chairman and CEO from 1990 to 1997. From 1982 to 1986, Mr. Unruh held various executive positions, including Senior Vice President–Finance and CFO with Burroughs Corporation, a predecessor of Unisys

Corporation. Prior to 1982, Mr. Unruh was CFO with Memorex Corporation and also held various executive positions with Fairchild Camera and Instrument Corporation, including CFO. Mr. Unruh formerly served as director on the boards for Tenet Healthcare Corporation, Prudential Financial, Inc. and CenturyLink, Inc. during the past five years. He holds an M.B.A. degree from the University of Denver and a B.S. degree from the University of Jamestown.


12 \| 2018 Proxy Statement

Skills and Qualifications

Corporate Governance: Significant experience serving as a director of several public and private companies with global operations.

Financial Experience: Broad-based understanding of investments and corporate development in pursuing long-term strategic business objectives as a principal of Alerion Capital Group and as Senior Vice President–Finance and CFO with Burroughs Corporation.

Leadership Experience: Unique combination of expertise in Information Technology together with business and financial management experience gained through executive positions held at multinational technology firms. Chairman and CEO with Unisys Corporation and Senior Vice President–Finance and CFO with Burroughs Corporation.

Class I Directors – Term to Expire in 2019:

RONALD H. COOPER

Age: 61
Director Since: November 2006

Board Committees:

• Audit Committee

• Compensation Committee (Chair)

Mr. Cooper is presently retired. He most recently served as the President and CEO of Clear Channel Outdoor Americas, Inc. (an outdoor advertising company) from 2009 through 2012. Prior to this position, he was a Principal at Tufts Consulting LLC from 2006 through 2009. Previously, he spent nearly 25 years in the cable and telecommunications industry, most recently at Adelphia Communications where he served as President and COO from 2003 to 2006. Prior to Adelphia, Mr. Cooper held a series of executive positions at AT&T Broadband, RELERA

Data Centers & Solutions, MediaOne and its predecessor Continental Cablevision, Inc. He has served on various boards of directors and committees with the National Cable Television Association, California Cable & Telecommunications Association, Cable Television Association for Marketing, New England Cable Television Association, and Outdoor Advertising Association of America. Mr. Cooper holds a B.A. degree from Wesleyan University.

Skills and Qualifications

Corporate Governance: Director and committee positions with various industry associations and non-profit boards of directors.

Industry Experience: Nearly 25 years of experience in the communications industry serving in executive positions at Adelphia, AT&T Broadband, RELERA Data Centers & Solutions, MediaOne and its predecessor Continental Cablevision.

Leadership Experience: Served in multiple senior executive roles, including as President and CEO of Clear Channel Outdoor Americas, Inc. and as President and COO at Adelphia Communications. Experience in the acquisition and development of executive talent.

JANICE I. OBUCHOWSKI

Age: 66
Director Since: November 1997

Board Committees:

Other Public Directorships:

• Audit Committee

• Nominating and Corporate Governance Committee (Chair)

• Orbital ATK

• Inmarsat

Ms. Obuchowski is the founder and President of Freedom Technologies, Inc. (a firm providing public policy, strategic, and engineering advice to companies in the communications sector, government agencies, and international clients), a position she has held since

1992. In 2003, Ms. Obuchowski was appointed by President George W. Bush to serve as Ambassador and Head of the U.S. Delegation to the World Radiocommunication Conference. She has served as Assistant Secretary for Communications and Information at the Department of


		2018 Proxy Statement \| 13

Commerce, Administrator for the National Telecommunications and Information Administration (“NTIA”), and as the head of international government relations at NYNEX Corporation. Ms. Obuchowski currently serves as a director on the boards for Orbital ATK and

Inmarsat. She also has served on several non-profit and other publicly traded company boards. She holds a J.D. degree from Georgetown University and a B.A. degree from Wellesley College, and also attended the University of Paris.

Skills and Qualifications

Corporate Governance: Broad governance experience from her service as a director of multiple public companies and non-profit organizations.

Industry Experience: Extensive knowledge and expertise on various facets of the competitive landscape and government regulations impacting the communications and information technology sectors. Experience in international business affairs through her current and prior board positions, government appointments supporting

international communications policies, and as head of international government relations at NYNEX corporation.

Leadership Experience: Current President of Freedom Technologies, Inc. and former Chairman of Frontline Wireless. Led the NTIA, the government agency with Internet and telecommunications policy, federal spectrum management, and government research facility responsibilities. Responsible for major U.S. delegations and support personnel at international conferences.

DONALD B. REED

Age: 73
Director Since: May 2005

Chair of the Board Since: January 2010

Board Committees:

• Audit Committee

Mr. Reed is presently retired. He served as CEO of Cable & Wireless Global from 2000 to 2003. Cable & Wireless Global, a subsidiary of Cable & Wireless plc, is a provider of Internet Protocol (“IP”) and data services to business customers in the U.S., United Kingdom, Europe, and Japan. From June 1998 until May 2000, Mr. Reed served Cable & Wireless in various other executive positions. Mr. Reed’s career includes 30 years at NYNEX

Corporation (now part of Verizon), a regional telephone operating company. From 1995 to 1997, Mr. Reed served NYNEX Corporation as President and Group Executive with responsibility for directing the company’s regional, national, and international government affairs, public policy initiatives, legislative and regulatory matters, and public relations. Mr. Reed holds a B.A. degree in History from Virginia Military Institute.

Skills and Qualifications

Corporate Governance: Significant experience serving as a director of multiple public companies, including large multinationals, and his current position as Chair of privately-held Oceus Networks Inc.

Financial Experience: Held executive management positions at several multi-billion dollar corporations where he developed expertise in financial management, risk assessment, investment knowledge, and strategic business development.

Leadership Experience: Over 30 years of experience in the domestic and international telecommunications industry including executive leadership positions as CEO for Cable & Wireless Global and as President and Group Executive for NYNEX Corporation. Extensive experience in developing and implementing strategies and policies for the acquisition and development of executive talent.


14 \| 2018 Proxy Statement

Class II Directors – Term to Expire in 2020:

DAVID G. BARNES

	Age: 56 Director Since: February 2014		Board Committees:
			• Audit Committee (Chair)

Mr. Barnes currently serves as Executive Vice President, Global Operations of Stantec Inc., a publicly traded global provider of engineering, consulting, and construction services. From 2009 through 2016, he served as Executive Vice President and CFO of MWH Global Inc., an employee-owned engineering and construction firm. MWH Global Inc. was acquired by Stantec Inc. in 2016. From 2006 to

2008, he was Executive Vice President of Western Union Financial Services. From 2004 to 2006, Mr. Barnes served as CFO of Radio Shack Corporation, and from 1999 to 2004, he was Vice President, Treasurer, and U.S. CFO for Coors Brewing Company. Mr. Barnes holds an M.B.A. degree from the University of Chicago and a B.A. degree from Yale University.

Skills and Qualifications

Corporate Governance: Significant knowledge of public company governance functions such as approval of annual budgets and compensation, and experience being accountable to stakeholders for the organization’s financial performance, gained through executive financial positions at public companies. Also served as a director of MWH Global Inc.

Financial Experience: Almost 30 years of experience in finance and strategic development gained from a wide spectrum of well-known and respected companies,

including Western Union Financial Services, Radio Shack Corporation, and Coors Brewing Company. Hands-on strategic, financial, and business development experience in emerging and mature markets at both domestic and global companies.

Leadership Experience: Oversaw all financial activities for the United States business and performed the global investor relations function at Coors. Extensive experience in driving shareholder value in a variety of complex international businesses.

MARWAN H. FAWAZ

	Age: 55 Director Since: March 2016		Board Committees:		Other Public Directorships:
			• Nominating and Corporate Governance Committee		• Synacor, Inc.

Mr. Fawaz is currently the CEO of Nest Labs, Inc., an Alphabet Inc. company. With more than 28 years of experience in the media, cable, telecommunications, and broadband industries, Mr. Fawaz offers a wealth of knowledge and expertise, developed from his time as Executive Vice President and CEO of Google/Motorola Mobility from 2012 to 2013 and Executive Vice President of Strategy and Operations and Chief Technology Officer of Charter Communications from 2006 to 2011. In addition, he served as Senior Vice President and Chief

Technology Officer of Adelphia Communications from 2003 to 2006 and held leadership positions for other cable industry companies such as MediaOne, among others. He was the founder and principal of Sarepta Advisors, a strategic advisory and consulting group supporting the technology, media, and telecommunications industries. He holds an M.S. degree in Electrical and Communication Engineering and a B.S. degree in Electrical Engineering, both from California State University at Long Beach.


		2018 Proxy Statement \| 15

Skills and Qualifications

Corporate Governance: Significant experience serving as a director of another public company and as an advisory board member to a number of large corporations with global operations.

Industry Experience: Over 28 years of experience in the media, cable, telecommunications, and broadband industries, serving in executive positions at Google/Motorola Mobility, Charter Communications,

Adelphia Communications, and MediaOne. Comprehensive understanding of the business practices and technology used by our largest customers.

Leadership Experience: Served in multiple senior executive roles, including CEO of Google/Motorola Mobility and Executive Vice President of Strategy and Operations and Chief Technology Officer of Charter Communications.

DONALD V. SMITH

Age: 75
Director Since: January 2002

Board Committees:

• Compensation Committee

• Nominating and Corporate Governance Committee

Mr. Smith is presently retired. Previously, he served as Senior Managing Director of Houlihan Lokey Howard & Zukin, Inc., an international investment banking firm with whom he had been associated from 1988 through 2009 and where he served on the board of directors. From 1978 to 1988, he served as a Principal with Morgan

Stanley & Co. Inc., where he headed the company’s valuation and reorganization services. He also serves on the board of directors of several non-profit organizations. Mr. Smith holds an M.B.A. degree from the Wharton Graduate School of the University of Pennsylvania and a B.S. degree from the United States Naval Academy.

Skills and Qualifications

Corporate Governance: Significant experience serving as a director of several public and non-profit companies.

Financial Experience: Over 40 years of expertise in financial, investment, and valuation analysis as an executive with international investment firms, notably as Senior Managing Director of Houlihan Lokey Howard & Zukin, Inc., and as Principal with Morgan Stanley & Co. Inc., dealing with corporate finance, mergers, acquisitions, financial

restructurings, and other financial activities. Provided international investment banking advice and service to clients in various industries around the world.

Industry Experience: Significant advisory experience in markets directly related to our core competency, namely business services, data processing, software, and Information Technology.


16 \| 2018 Proxy Statement

BENEFICIAL OWNERSHIP OF COMMON STOCK

The table below sets forth each stockholder known by us to own beneficially more than 5% of our outstanding common stock as of February 28, 2018.

Percentage ownership calculations for beneficial ownership are based on 33,519,197 shares outstanding at the close of business on February 28, 2018.

Principal Stockholders

Name and Address of Beneficial Owner		Shares of Common Stock Beneficially Owned			Percentage of Common Stock Outstanding
BlackRock, Inc.			5,039,778	(1)	15.04%
55 East 52nd Street
New York, New York 10055
The Vanguard Group, Inc.			3,719,174	(2)	11.10%
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
Renaissance Technologies LLC			2,380,522	(3)	7.10%
800 Third Avenue
New York, New York 10022

(1)	Based on Schedule 13G/A filed with the SEC on January 23, 2018 by BlackRock, Inc.
(2)	Based on Schedule 13G/A filed with the SEC on February 8, 2018 by The Vanguard Group, Inc.
(3)	Based on Schedule 13G/A filed with the SEC on February 14, 2018 by Renaissance Technologies LLC.


		2018 Proxy Statement \| 17

Directors and Executive Officers

The table below sets forth to our knowledge the beneficial ownership of common stock held by each director and each NEO of the Company included in the 2017 Summary Compensation Table on page 32, individually, and by all directors and executive officers of the Company as a group, as of February 28, 2018.

Beneficial ownership is determined in accordance with SEC rules, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and include shares of common stock issuable

upon vesting or exercise of equity awards within 60 days of February 28, 2018. Except as otherwise indicated, all of the shares reflected in the table are shares of common stock and all persons listed below have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. The information is not necessarily indicative of beneficial ownership for any other purpose. Percentage ownership calculations for beneficial ownership are based on 33,519,197 shares outstanding at the close of business on February 28, 2018.

Name		Total Shares of Common Stock Beneficially Owned (1) (2)		Percentage of Common Stock Outstanding
David G. Barnes			11,800	*
Ronald H. Cooper			24,768	*
Marwan H. Fawaz			6,000	*
Bret C. Griess			292,195	*
Kenneth M. Kennedy			62,570	*
Janice I. Obuchowski			40,731	*
Donald B. Reed			38,868	*
Brian A. Shepherd			66,145	*
Frank V. Sica			24,550	*
Donald V. Smith			20,000	*
James A. Unruh			38,098	*
Randy R. Wiese			98,405	*
All directors and executive officers as a group			724,130	2.16%

*	Less than 1% of the outstanding common stock.

(1)	Each person named has sole voting and investment power over the shares owned by him or her, except that Ms. Obuchowski has shared voting and investment power with respect to 3,000 shares owned jointly with her husband.
(2)	Includes restricted shares of common stock awarded under the 2005 Stock Incentive Plan of the Company, which have not vested. Each holder of restricted shares may vote such shares but may not sell, transfer, or encumber such shares until they vest in accordance with the applicable restricted stock award agreement. The persons named in the table below held the numbers of unvested restricted shares shown opposite their respective names as of February 28, 2018.
	Name			Number of Restricted Shares That Have Not Vested
	David G. Barnes				3,000
	Ronald H. Cooper				3,000
	Marwan H. Fawaz				3,000
	Bret C. Griess				98,360
	Kenneth M. Kennedy				21,253
	Janice I. Obuchowski				3,000
	Donald B. Reed				3,000
	Brian A. Shepherd				31,071
	Frank V. Sica				3,000
	Donald V. Smith				3,000
	James A. Unruh				3,000
	Randy R. Wiese				50,677
	Total				225,361


18 \| 2018 Proxy Statement

Share Ownership Guidelines

The Board has established share ownership guidelines for our directors and executive officers. Each executive officer is expected to attain the minimum ownership level within four years of his or her date of appointment, and beginning in February 2018, they may not sell any granted/retained shares of stock in the corporation until the requirements are met. Directors do not have a specific timeframe to attain their share ownership requirements, and they may not sell any granted/retained shares of stock in the corporation until the requirements are met. All directors are in compliance subject to applicable grace periods and other transfer limitations.

Ownership levels are determined based on the common stock owned by each individual, excluding any unvested shares of restricted stock.

Below is a summary of the current required minimum share ownership levels:

Minimum Share Ownership Level (1)
CEO		Value equal to three times annual base salary
Other executive officers		Value equal to annual base salary
Directors		Value equal to five times annual cash compensation

(1)	Beginning February 2018, NEO's granted or retained shares of stock in the Company may not be sold until ownership requirements are met; this is consistent with current guidelines for directors.

Hedging and Pledging Policy

As part of our insider trading policy, all employees, including our executive officers, and non-employee directors (and their designees) are prohibited from engaging in short sales of our securities, establishing

margin accounts, or otherwise pledging our securities and engaging in transactions that are designed to hedge or offset any decrease in the market value of our stock.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our officers (as defined in the applicable regulations) and directors, and persons who beneficially own more than 10% of our common stock, to file certain reports of ownership and changes of ownership of our equity securities with the SEC. Officers, directors, and stockholders who own more than 10% of such shares are required by SEC regulation to furnish to the Company copies of all Section 16(a) forms which they file.

Based solely on our review of the copies of such forms submitted to us and written representations from certain reporting persons, we believe that all filings required by

our officers and directors were timely filed for the year ended December 31, 2017, except for the following:

•	one Form 4 for Rolland B. Johns relating to the grant of a stock award, the Form 4 for which was filed on February 27, 2017; and

•	one Form 4 for each of David G. Barnes, Ronald H. Cooper, Marwan H. Fawaz, Janice I. Obuchowski, Donald B. Reed, Frank V. Sica, Donald V. Smith, and James A. Unruh relating to the grant of a stock award, the Form 4 for each which was filed on September 19, 2017.


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EXECUTIVE COMPENSATION –

COMPENSATION DISCUSSION AND ANALYSIS

This section explains our 2017 executive compensation program as it relates to the following named executive officers (“NEOs”). Compensation information for the NEOs is presented in the tables following this discussion.

NEO		Position
Bret C. Griess		President and CEO
Randy R. Wiese		Executive Vice President and CFO
Kenneth M. Kennedy (1)		Executive Vice President and President, Technology and Product
Brian A. Shepherd (2)		Executive Vice President and Group President

(1)	Mr. Kennedy was named Executive Vice President and President, Technology and Product in October 2017, expanding his role to oversee all product development, product management, platform architecture and operations across the Company’s solutions portfolio.
(2)	Mr. Shepherd was named Executive Vice President and Group President of the Company, in October 2017, expanding his role to lead the profit and loss organizations for all global business.

Executive Summary

Company Overview and Business Strategy

We are one of the world's largest and most established providers of business support solutions (“BSS”), primarily serving the global communications industry, and a trusted partner to some of the most well-known companies around the globe. We help our clients simplify the complexity of a rapidly changing business landscape, bringing more than 35 years of experience supporting the world’s most respected communications, media and entertainment service providers. We make their hardest decisions simpler and smarter as they work to evolve their business from a single-product offering to highly complex and competitive multi-product offerings, while also delivering increasingly differentiated, real-time, and personalized experiences for their customers.

We offer BSS and revenue management, customer experience, and digital monetization solutions for every stage of the customer lifecycle so service providers can deliver an outstanding customer experience that adapts to their customers’ rapidly changing demands. Our solutions are built on proven public and private cloud platforms, with out-of-the-box and managed service models that adapt to fit their unique business needs and enable the transformative change required to create personalized experiences that drive loyalty and retention.

Our goal is to be the most trusted provider of world-class cloud and software-based solutions to service providers around the globe by helping make our clients’ hardest decisions simpler and smarter, no matter the challenge. We believe that by successfully executing on this goal we can grow our revenues and earnings, and therefore, create long-term value for our clients, employees, and

stockholders. Our strategic focus to accomplish this goal is as follows:

•	Create more long-term, recurring relationships within the communications industry;

•	Expand our product and services portfolio through continuous innovation;

•	Deliver on our commitments; and

•	Bring new skills and talents to market.

In summary, we are focused on helping our clients compete more effectively and successfully in an ever-changing market.

Our Overall 2017 Performance

We had a solid performance in 2017, delivering positive financial and operational results, executing on many of our key strategic initiatives, and continuing to expand and extend our relationships with many of our clients.

Key highlights of our 2017 performance include the following:

•	Improved our annual revenue growth to 4%, thus increasing our 2017 total revenues to $789.6 million, driven largely by the 7% growth in our cloud and related solutions revenues;

•	Extended our market-leading position supporting the broadband and video market with the successful conversions of over four million customer accounts, additional new logos, and increased adoption of our solutions;

•	Expanded and strengthened our relationship with two of our largest clients through the end of 2021;


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•	Nearly doubled our recurring managed services offering around the globe by delivering sustainable business value through improving operational efficiencies, lowering costs, and enhancing the customer experience;

•	Expanded our footprint in the communications and entertainment arena as a trusted digital transformation partner, as well as into new verticals, such as the Internet of Things (“IoT”) and Smart Cities, with our Ascendon SaaS, cloud-based platform; and

•	Generated profitable operating results, strong cash flows, and ended 2017 with a solid balance sheet, all of which support our continued investments in the business. Our strong results plus a balanced capital allocation policy all work together to drive long-term shareholder value.

2017 Executive Compensation Highlights

Our executive compensation program is reviewed each year for alignment with our business strategy and evolving market and governance practices for executive compensation. We believe that our current programs are aligned to these goals.

Additionally, after considering compensation within our peer group and consulting with Pearl Meyer, the Compensation Committee (the “Committee”) independently assessed the value and competitiveness of each NEO’s compensation including various pay components. Based upon their assessment, the Board and the Committee made the following decisions regarding the framework for the 2017 executive compensation program:

Base salary. The Board increased our CEO’s base salary by 3.8%, our CFO’s base salary by 2.2%, and the base salaries for our other two NEOs by 3.0% to further align with the corresponding median levels of our blended peer group and industry survey data.

Annual incentive program. The Committee maintained Mr. Griess’ target bonus percentage at 150% of base salary. Consistent with prior years, the target bonus percentages for our other NEOs were set at 100% of base salary. For more information, see 2017 Compensation on page 26.

Discretionary Bonus Awards. In 2017, we achieved record revenue results, surpassing our targets and delivering industry-leading growth of four percent, reflecting significant progress on the execution of our multi-year business transformation and strategic plan. The discretionary bonuses set forth in the 2017 Summary Compensation Table on page 32 were approved by the Board to reward the identified executives for their unique and significant contributions toward these notable 2017 achievements.

Long-term incentive (“LTI”) program. For the February 2017 annual grant, the Committee maintained the LTI award program with 60% of each NEO’s award granted in the form of performance-based restricted stock.

The performance-based restricted stock granted vests over three years if we achieve predetermined financial targets, or in full if a predetermined stock price or total shareholder return (“TSR”) target is achieved at the end of the third year. The other 40% of each NEO’s award is in the form of time-based restricted stock that vests ratably over four years.

For more information on our executive compensation program, see 2017 Compensation beginning on page 26.

Pay-for-Performance Compensation Program

At least 55% of each NEO’s total target compensation for 2017 was based on our achievement of key financial measures under our annual and LTI programs.

We executed on many of our key strategic initiatives during 2017 and met or exceeded several of our key financial and stock price targets. As a result, our NEOs achieved payouts and performance-based stock vesting under our executive compensation program as follows:

•	Earned a payout of 103.0% of target under the annual incentive program (“Annual Performance Bonus Program”) for 2017;

•	Vested 100% of the first tranche for the 2017 performance-based restricted stock award;

•	Did not vest in the second tranche of the 2016 award; and

•	Vested in the remaining 2% of the first tranche and 100% of the second and third tranches of the 2015 award, based on the achievement of the stock price measure target in the third and final year of the award.

For more information, see 2017 Compensation beginning on page 26.

2017 Say-on-Pay Results

Ninety-five percent of the votes cast on our 2017 say-on-pay proposal were in favor of our executive compensation program and policies. When making compensation decisions for our NEOs, the Committee considers the voting results of our annual say-on-pay proposal along with other factors, such as our pay-for-performance philosophy and a competitive market analysis of peer companies to determine compensation practices. The Committee considered the results of the 2017 advisory vote and did not make significant changes to the program based on the voting results.


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Solid Governance and Compensation Practices

WHAT WE DO			WHAT WE DO NOT DO
✔	Majority of executive officer pay is performance-based	✘	No repricing or replacing of underwater options without shareholder approval
✔	Meaningful share ownership guidelines	✘	No income tax gross-ups in executive employment agreements
✔	Clawback policy for executive officers	✘	No excessive perquisites
✔	Independent compensation consultant, hired by Committee	✘	No dividends or dividend equivalents paid on unvested time-based or performance-based shares (dividends accrue and are paid only upon vesting)
✔	Include “double-trigger” change of control provisions	✘	No “single-trigger” change of control vesting of equity awards
✔	Limit post-employment and change of control benefits	✘	No hedging or pledging of the Company’s securities is permitted
✔	Hold annual say-on-pay vote
✔	Design incentive plans to maximize deductibility of awards under applicable tax laws and regulations

Key Compensation Governance Factors

We believe that the following governance and compensation practices reinforce our business strategy, culture, and values.

We have a clawback policy that covers our executive officers. The policy authorizes us to reduce or cancel, or require the recovery of, all or a portion of an executive officer’s annual bonus or LTI compensation award for intentional misconduct that leads to a material restatement of the financial statements of the Company. For additional information, see Employment Agreements on page 39.

No potential income tax gross-ups. A key feature of the executive officers’ amended and restated employment agreements is the exclusion of potential income tax gross-ups for change of control benefits. For additional information regarding the agreements, see Employment Agreements on page 39.

We design performance-based compensation to reflect our business strategy and enhance stockholder value. We use certain pre-determined financial and stock performance measures to determine compensation under our annual incentive and LTI programs. Each measure represents a key metric that reflects on the execution of our long-term business strategy to enhance stockholder value. For additional information about our business strategy, see Company Overview and Business Strategy on page 20.

We emphasize the long term. A significant portion of our NEOs’ total compensation is in the form of long-term equity awards, 60% of which is performance-based restricted stock that fully vests if we achieve specific financial, relative TSR, or stock price measures.

We align the financial interests of our executives with the interests of our stockholders through equity awards and share ownership guidelines. Each NEO must own at least the threshold level of our shares that is consistent with our share ownership guidelines. For additional information, see Share Ownership Guidelines on page 19.

We have a policy prohibiting hedging and pledging transactions involving our stock. Our NEOs and other insiders are prohibited from selling our stock short, pledging our stock as collateral, or entering into transactions in puts or calls that raise similar concerns regarding speculation in our stock. For additional information, see Hedging and Pledging Policy on page 19.

We provide only limited perquisites and other benefits. Our NEOs are generally eligible for few perquisites or benefits outside those available to our employees. We discontinued our executive financial planning benefit effective December 31, 2017, further limiting perquisites to our NEOs. For additional information, see the 2017 Summary Compensation Table on page 32.


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We rely on the advice of an independent compensation consultant. The Committee has engaged an independent compensation consultant that does not provide any services to management and that had no relationship with management prior to the engagement.

No dividends or dividend equivalents paid on unvested stock awards. We do not pay dividends or dividend equivalents on unvested stock awards. Dividends accrue on time-based and performance-based restricted stock awards and are paid only upon vesting of any restricted stock awards.

Determining Executive Compensation

Each year during its February meeting, the Committee certifies the following for the previous fiscal year: (1) the level of performance attained for our pre-determined performance metrics; (2) the amount payable under the Annual Performance Bonus Program, our annual incentive program; and (3) the vesting levels for our performance-based restricted stock awards. The Committee also evaluates and recommends to the Board the base salary for each of our NEOs as well as the performance metrics and target levels for the Annual Performance Bonus Program and performance-based restricted stock awards for the current year. The target levels typically are established based upon our initial internal financial targets and adjusted for a pre-established growth factor for performance-based restricted stock awards that extend over a three-year period.

When making compensation decisions and recommendations, the Committee considers the following key factors:

•	Competitive peer group and market information and guidance provided by Pearl Meyer;

•	Our financial and operational performance;

•	Progress on key strategic initiatives;

•	Individual performance reviews and compensation recommendations provided by the CEO regarding the other NEOs;

•	Committee and Board evaluations, both formal and informal, of the NEOs; and

•	A comparison of our actual results with the target measures for the annual performance bonus and LTI awards.

As required by the Committee’s charter, the CEO may not be present when either the Committee or the Board discuss or vote on CEO compensation.

The Committee undertakes considerable analysis when determining metrics to be used in both its Annual Performance Bonus Program and performance-based equity awards.

The Committee selects a combination of metrics that, if achieved in the long-term, will most likely result in positive shareholder return. Goals are established to effectively incent management to achieve long-term results while maintaining the consistent operational excellence our customers have come to expect.

Our performance-based equity awards to our executives employ a multiple-year time horizon, with the shares in each award eligible for vesting upon achievement of the specified performance metrics. Up to 100% of the eligible shares may vest each year if the minimum metric threshold is achieved. If the executives earn less than 100% vesting based on the level of achievement against the performance targets for a particular year within the three-year incentive-performance period, the executives have the opportunity to earn the remaining vesting percentage if certain performance criteria are met in the second or third year.

The Committee believes that executive compensation based on the achievement of performance-based metrics that are tied to the short- and long-term strategy of our business incentivizes management to invest in the success of the business, while also linking executive compensation to increasing stockholder value.

Role of the Independent Compensation Consultant and Management

The Committee has sole authority and discretion to retain and terminate compensation consultants, independent legal counsel, and other advisers to help the Committee perform its responsibilities. It has the sole authority to approve the fees, scope, and other terms of engagement with its compensation consultant and other advisers, with full funding provided by the Company. The Committee is responsible for determining the independence of its compensation consultant and other advisers. Management is available at the Committee’s request to assist the consultant by providing historical pay data and perspective on our competitive environment for recruiting managerial talent.

For 2017, the Committee continued to engage Pearl Meyer as its independent compensation consultant to advise it on executive compensation matters. The Committee instructed Pearl Meyer to take a broad view of the competitive compensation landscape to assist the Committee in structuring a compensation program for our NEOs. We believe this broader perspective has enabled us to attract and retain a highly talented executive team. Pearl Meyer reviewed compensation data publicly available from peer companies and from published survey sources, using position matches and data analyses to identify the most appropriate comparisons among executives of similar titles and responsibilities. For additional information regarding the companies in the peer group component and the pay of our NEOs compared to the peer group, see Role of Benchmarking in Determining Compensation and Peer Group on page 25.


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Compensation Mix

The compensation program for each of our NEOs includes the following components, which together comprise “Total Direct Compensation”: (1) base salary, (2) an annual

performance bonus, and (3) two types of LTI awards. The objective of each component and the form in which each is delivered if earned is outlined as follows:

Core Component	Purpose	Percentage of Total Direct Compensation	Form
Base salary	Provide base compensation that is competitive and reflects the scope of responsibility, level of authority, and overall duties of the position	14-24%	Cash
Annual incentive program	Provide an annual bonus opportunity that is tied to predetermined Company performance goals and achievement of individual performance objectives ("Annual Performance Bonus Program")	22-24%	Performance- based cash
Long-term	Provide performance-based equity awards tied to predetermined Company performance goals over a three-year period	31-38%	Performance- based equity
incentive program	Provide time-based equity awards that vest ratably over a four-year period	21-26%	Time-based equity

Total Direct Compensation. The Committee targets Total Direct Compensation (the sum of all three core compensation components) for our NEOs to be between the 65^th and 75^th percentiles of our peer group’s total

direct compensation. The following table shows how our NEOs’ compensation levels compare (on a percentile basis) to our blended peer group and industry survey data for Total Direct Compensation.

NEO	Base Salary	Total Cash Compensation	Total Direct Compensation
Bret C. Griess	Near the 50th	Above the 75th	Between the 50th and 75th
Randy R. Wiese	Near the 50th	Above the 75th	Between the 50th and 75th
Kenneth M. Kennedy	Near the 50th	Above the 75th	Near the 75th
Brian A. Shepherd	Near the 50th	Above the 75th	Near the 75th

The charts below illustrate the percentage of compensation our CEO and other NEOs on average would generally receive, if paid at target level, for each core compensation component, based on 2017 target compensation:


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Role of Benchmarking in Determining Compensation and Peer Group

Role of Benchmarking in Determining Compensation

To assist the Committee in establishing 2017 compensation for the NEOs, Pearl Meyer provided a competitive assessment using peer group compensation information and industry survey data for the primary elements of our NEO compensation packages. Pearl Meyer developed benchmarking market data by blending the peer group and industry survey data equally. The peer group composition is described in the next section. The industry survey data was comprised of technology companies, represented in the Culpepper and Radford compensation surveys, with revenues ranging from $500 million to $1 billion.

The Committee recognizes that peer group comparisons and industry survey data may not be perfectly aligned because the executive titles and responsibilities at peer group companies may not be directly comparable to those of our NEOs with similar or equivalent titles.

Our compensation philosophy is intended to ensure leadership continuity as part of our succession planning and to leverage variable incentive pay tied to Company performance. The Committee generally considers Total Direct Compensation (including target bonus) for a NEO to

be competitive if it is between the 65^th and 75^th percentile of the blended peer group and industry survey data.

To achieve the desired pay positioning, base salaries are generally targeted at the 50^th percentile and target annual performance bonus (assuming targeted performance levels are achieved) and total LTI value are generally targeted between the 50^th and 75^th percentiles.

Peer Group Used for Benchmarking

The peer group used for compensation benchmarking is reviewed annually to ensure its composition and characteristics remain consistent with our objectives. The peer group used to determine 2017 compensation, as listed in the following table, includes companies in the software and data processing industries, which were selected for their comparable size, product, service offerings, customers, and markets. Their revenues ranged in size from $261 million to $2.1 billion at year-end 2016. Informatica Corporation and Solera Holdings Inc. were removed from our 2017 peer group as they were acquired in August 2015 and March 2016, respectively, and compensation information was not available for the 2017 compensation analysis.

2017 Company Peer Group

ACI Worldwide, Inc.		Fair Isaac Corporation
Blackbaud, Inc.		Interactive Intelligence Group, Inc. (2)
BroadSoft, Inc. (1)		ModusLink Global Solutions, Inc.
Cardtronics, Inc.		NeuStar, Inc. (3)
CoreLogic, Inc.		Sonus Networks, Inc.
DST Systems, Inc.		Sykes Enterprises, Incorporated
Echo Global Logistics, Inc.		Synchronoss Technologies, Inc.
Euronet Worldwide, Inc.		Verint Systems Inc.
Everi Holdings Inc.		WEX Inc.
Exlservice Holdings, Inc.

(1)	BroadSoft, Inc. was acquired in February 2018.
(2)	Interactive Intelligence Group, Inc. was acquired in December 2016.
(3)	NeuStar, Inc. was acquired in August 2017.


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2017 Compensation

2017 Annual Base Salaries

For 2017, the Committee recommended to the Board, and the Board approved, the following base salaries for our NEOs:

NEO	2017 Base Salary		2016 Base Salary		% Increase in Base Salary from 2016
Bret C. Griess	$	675,000	$	650,000	3.8%
Randy R. Wiese	$	424,371	$	415,236	2.2%
Kenneth M. Kennedy	$	381,100	$	370,000	3.0%
Brian A. Shepherd	$	412,000	$	400,000	3.0%

The Board increased the salaries of each of our NEOs in 2017 to more closely align their salaries with the corresponding median levels of the blended peer group and industry survey data, commensurate with competitive market practice for the duties and responsibilities of their positions.

2017 Results for Incentive Compensation Programs

In 2017, we used total GAAP revenues and the non-GAAP measures of Adjusted Net Income, Adjusted EPS, and Non-GAAP Operating Margin Percentage to establish certain performance goals for our executive compensation programs and to measure the effectiveness of our NEOs under such programs. These measures were chosen by the Committee because they demonstrate the overall performance of our company and gauge the NEOs’ effectiveness in managing the performance of the business.

We reported solid financial results for 2017. Below are our financial results as reported under U.S. generally accepted accounting principles (“GAAP”), along with other corresponding non-GAAP measures used in our compensation programs in 2017:

•

Total GAAP revenues of $789.6 million;

•

GAAP operating income of $105.7 million and Non-GAAP Operating Income of $142.1 million;

•

GAAP Operating Margin Percentage of 13.4% and Non-GAAP Operating Margin Percentage of 18.0%;

•

GAAP net income of $61.4 million and Adjusted Net Income of $93.8 million; and

•

GAAP EPS of $1.87 and Adjusted EPS of $2.85.

Please see Use and Reconciliations of Non-GAAP Financial Measures in Appendix A on page 56 for additional information regarding the use and adjustments of non-GAAP financial measures used by the Company, as well as

a full reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure.

2017 Annual Performance Bonuses

Annual performance bonuses are awarded under the terms of our Annual Performance Bonus Program.

The annual performance bonus for each NEO is determined based on the following formula:

Base Salary. The starting point for each NEO’s bonus calculation is the NEO’s base salary.

NEO Target Bonus Percentage. The Committee provides competitive bonus opportunities for the NEOs for the achievement of annual performance goals. After considering the competitive compensation information provided by Pearl Meyer, the Committee decided to maintain a 150% target bonus percentage for the CEO and 100% target bonus percentages for the other NEOs.

The 2017 and 2016 target bonus percentages of base salary for each NEO were as follows:

NEO	2017 Target Bonus %	2016 Target Bonus %
Bret C. Griess	150%	150%
Randy R. Wiese	100%	100%
Kenneth M. Kennedy	100%	100%
Brian A. Shepherd	100%	100%


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Company Performance Percentage. The Company performance percentage is based on our performance against two pre-established financial performance measures (Revenue and Non-GAAP Operating Margin Percentage). If we achieve the target levels of performance for both measures, the Company performance percentage achieved will be 100%. If we miss the minimum threshold

performance for either measure, the Company performance percentage will be zero (0%). If we exceed target levels, the Company performance percentage can exceed 100%. The following table shows our financial results with respect to the 2017 targets for Revenue and Non-GAAP Operating Margin Percentage:

2017 Results (1)

2017 Target

(100% Payout)

2017 Minimum

Threshold

Revenue (in millions)

789.6

775.5

760.0

Non-GAAP Operating Margin Percentage (2)