Tracey G. Engelhardt
DELUXEAbout Tracey G. Engelhardt
Senior Vice President and President, Print at Deluxe (DLX). At year-end 2024, Engelhardt had 3 years in her current role and 30 years of service with Deluxe, indicating deep institutional knowledge and operational stewardship of the Print segment . 2024 performance outcomes driving her pay included a company-wide blended AIP payout of 70.6% and Print segment-specific results of 81% attainment on segment revenue and a 117% payout on the Print strategic initiative (personal check unit retention at 98%), with a committee downward adjustment applied to align with shareholder interests . Company context: FY2024 enterprise comparable adjusted revenue was $2.111B with segment mix of Merchant Services 18% (+5.4% YoY), B2B Payments 14% (-3.8%), Data Solutions 11% (+10.5%), and Print 57% (-4.5%), and enterprise comparable adjusted EBITDA and EPS of $406.5M and $3.26, respectively (non-GAAP) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Deluxe Corporation | SVP, President, Print | 3 years in role; 30 years of service (as of YE 2024) | Print AIP metrics: 81% revenue attainment; strategic initiative payout 117% (personal check unit retention 98%); blended AIP payout 70.6% after committee downward adjustment |
Fixed Compensation
| Year | Approved Base Salary ($) | Salary Paid ($) | All Other Compensation ($) | Notes |
|---|---|---|---|---|
| 2024 | 620,000 | 615,000 | 37,097 | Includes 401(k) contribution of $12,075 and personal travel to a company-sponsored event plus associated tax gross-ups totaling $24,242 |
| 2023 | 600,000 | 575,000 | 59,324 | — |
Performance Compensation
Annual Incentive Plan (AIP) – 2024 Design and Outcomes
| Metric | Weight | Target | Result | Notes |
|---|---|---|---|---|
| Print Revenue | 30% (for Print NEO) | $1,205M | 81% | Segment-specific revenue metric for Engelhardt |
| Enterprise Comparable Adjusted EBITDA | 30% | $406M | 80% | Company-wide |
| Enterprise Comparable Adjusted EPS | 20% | $3.26 | 84% | Company-wide |
| Strategic Initiatives (Print) | 20% | See thresholds/targets in Strategic Initiatives table | 117% (Print); blended for Engelhardt 71% | Print initiative centered on personal check unit retention (98%) |
| Blended Calculated Payout | — | — | 79.3% (Print) | Before committee discretion |
| Committee Adjustment | — | — | (8.7) pts | Downward adjustment to enhance alignment |
| Actual Payout % | — | — | 70.6% | Applied uniformly to NEOs |
| Actual AIP Cash Payout ($) | — | $461,250 target | $325,643 | Based on eligible base salary of $615,000 and 75% target |
Strategic initiative thresholds/targets used by the committee for 2024 included Print personal check unit retention ≥91%/94%/97% (threshold/target/maximum), with additional initiatives for other segments (for blended enterprise context) .
Long-Term Incentives (LTI) – 2024 Grants and Terms
| Grant Date | Instrument | Target/Granted (#) | Grant Date Fair Value ($) | Vesting | Performance Metrics/Terms |
|---|---|---|---|---|---|
| 2/14/2024 | RSU | 30,075 | 599,996 | 3-year ratable in equal thirds on each anniversary | Time-based; accrues dividend equivalents paid at vest |
| 2/14/2024 | PSU – Cumulative Revenue | 15,038 target | 279,105 | 3-year performance period 1/1/2024–12/31/2026; cliff vest if earned | 50% weight of PSUs on revenue; thresholds: 90% (50% payout) to 106% (200% payout); relative TSR modifier ±25% |
| 2/14/2024 | PSU – Cumulative Free Cash Flow | 15,037 target | 279,087 | 3-year performance period 1/1/2024–12/31/2026; cliff vest if earned | 50% weight of PSUs on FCF; thresholds: 80% (50% payout) to 110% (200% payout); relative TSR modifier ±25% |
2024 Target LTI value (split 50/50 between RSUs and PSUs): $1,200,000; target counts as shown above . RSU grant value based on $19.95 close; PSU fair value based on Monte Carlo value of $18.56 .
Stock Vested in 2024
| Type | Shares Vested (#) | Value Realized on Vest ($) |
|---|---|---|
| RSUs | 14,575 | 299,770 |
| PSUs | 4,190 | 83,842 |
Multi-Year Compensation Snapshot (SCT)
| Year | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Comp ($) | Change in Pension/Deferred Earnings ($) | All Other Comp ($) | Total ($) |
|---|---|---|---|---|---|---|
| 2024 | 615,000 | 1,158,188 | 325,643 | 5,889 | 37,097 | 2,141,817 |
| 2023 | 575,000 | 1,162,882 | 471,169 | 6,436 | 59,324 | 2,274,811 |
Equity Ownership & Alignment
Beneficial Ownership (as of Feb 24, 2025)
| Holder | Shares Beneficially Owned | % of Class | Components/Notes |
|---|---|---|---|
| Tracey G. Engelhardt | 186,604 | <1% | Includes 44,477 options exercisable within 60 days and 74,015 RSUs |
Shares outstanding at record date: 44,717,410 (context for % ownership) .
Outstanding Equity Awards at FY2024 Year-End (Tracey G. Engelhardt)
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Stock options
- 2/21/2018: 4,793 exercisable; $73.21 strike; expires 2/21/2025
- 4/1/2019: 10,684 exercisable; $44.69 strike; expires 4/1/2029
- 2/18/2020: 20,772 exercisable; $39.62 strike; expires 2/18/2030
- 3/1/2021: 9,766 exercisable / 3,255 unexercisable; $41.27 strike; expires 3/1/2031
- All unexercisable options vest ratably over 4 years from grant .
- As of 12/31/2024, all NEO option exercise prices exceeded the $22.59 YE stock price; underwater options had no reported acceleration value .
-
Unvested RSUs (time-based; 3-year ratable vesting)
- 3/1/2021 grant: 757 units; $17,101 MV
- 2/16/2022 grant: 6,167 units; $139,313 MV
- 2/15/2023 grant: 20,461 units; $462,214 MV
- 2/14/2024 grant: 30,075 units; $679,394 MV
-
PSUs (unearned; performance periods and target counts shown)
- 1/1/2022–12/31/2024: 4,903 and 5,291 units (two PSU tranches); $114,828 and $123,915 MV
- 1/1/2023–12/31/2025: 7,673 and 7,673 units; $173,322 and $173,333 MV
- 1/1/2024–12/31/2026: 7,519 and 7,519 units; $169,843 and $169,854 MV
- 2024 PSU payout curve: revenue threshold 90% (50%), target 100% (100%), max 106% (200%); FCF threshold 80% (50%), target 100% (100%), max 110% (200%), with TSR modifier ±25% .
Ownership Policies and Alignment
- Stock ownership guidelines: 2.5x base salary for NEOs; five years to comply; all NEOs in compliance .
- Retention: executives below guideline must retain 100% of net shares from option exercises/vesting until target met .
- Hedging/pledging: prohibited for executive officers; no pledging allowed; no hedging instruments permitted .
Employment Terms
Severance and Change-of-Control Economics (Hypothetical termination on Dec 31, 2024)
| Scenario | Cash Severance ($) | Other Cash ($) | Acceleration – RSUs ($) | Acceleration – PSUs ($) | Total ($) |
|---|---|---|---|---|---|
| Change in Control | 930,000 | 45,000 | 1,298,021 | 1,372,704 | 3,645,725 |
| Without Cause | 620,000 | 45,000 | 1,298,021 | 688,671 | 2,651,692 |
| Death or Disability | — | — | 1,298,021 | 688,671 | 1,986,692 |
| Approved Retirement | — | — | 1,298,021 | 688,671 | 1,986,692 |
Key provisions and mechanics:
- Severance plan (non-CEO NEOs): Without cause/Good Reason → 12 months’ salary, up to $25,000 outplacement (captured in “Other Cash”), and a $20,000 employment transition payment; pro rata bonus; equity acceleration per award terms .
- Change-in-control (non-CEO NEOs): 18 months’ salary lump sum, up to $25,000 outplacement, and a $20,000 transition payment; equity acceleration/treatment per award terms; amounts above assume PSUs at target when not assumed .
- Equity treatment: If awards not assumed on CoC, full acceleration at target for PSUs; if assumed, double-trigger protections within 12 months post-CoC (RSUs/Options full vest; PSUs pro rata for Good Reason after first year, payout at actual performance end-of-period) .
- Rule of 75: Engelhardt meets the “rule of 75”; upon committee approval, RSUs fully accelerate on termination without cause; she is also eligible for “Approved Retirement” if granted .
- Clawback: Incentive Compensation Recovery Policy compliant with Dodd-Frank; 3-year lookback on restatements regardless of fault; detrimental conduct recovery; awards also subject to plan-level clawback and no repricing of underwater options without shareholder approval .
Deferred Compensation
| Item | 2024 Amount ($) |
|---|---|
| Aggregate Earnings in Last Fiscal Year | 7,685 |
| Aggregate Balance at Year-End | 43,717 |
Compensation Structure Analysis
- Mix and pay-for-performance: 2024 actual included $1.158M in stock awards, $615k salary, and $325.6k AIP payout; stock awards were roughly flat YoY (2024: $1.158M vs 2023: $1.163M), indicating stable equity emphasis while cash AIP flexed down with performance and committee discretion (70.6% payout) .
- AIP rigor and discretion: The committee applied a downward discretion resulting in a uniform 70.6% payout despite blended calculated payouts around 79%, maintaining alignment with shareholders after 2024 outreach .
- LTI performance focus: PSUs tie to 3-year cumulative revenue and FCF with a relative TSR modifier (±25%), promoting multi-year value creation; beginning 2025, PSUs return to traditional three-year goal setting (not fixed annual growth) per shareholder feedback .
- Governance safeguards: No hedging/pledging; robust clawback; minimum vesting; no option repricing without shareholder approval .
Risk Indicators & Red Flags
- Tax gross-ups: All other compensation for 2024 includes personal travel to a company-sponsored event with associated tax gross-ups ($24,242), which some investors view unfavorably, though the dollar amount is modest .
- Underwater options: As of 12/31/2024, all NEO options were underwater vs $22.59 YE price, reducing near-term exercise/sale pressure but also diminishing option incentive value unless price recovers .
- Say-on-pay sentiment: Company noted “lower” support in 2024 and undertook significant investor engagement, leading to compensation design and disclosure enhancements (e.g., PSU goal setting) .
Equity Vesting and Potential Selling Pressure
- Near-term RSU vesting cadence: RSUs vest in equal one-third annual installments from grant dates (e.g., 2/14/2024 RSUs vest on 2/14/2025, 2026, 2027), creating periodic taxable events that may necessitate share sales to cover taxes; retention policy requires executives below ownership guidelines to hold 100% of net shares until compliant .
- 2024 vesting realized: Engelhardt realized 14,575 RSUs and 4,190 PSUs vesting in 2024; similar scheduled RSU cliffs in 2025–2027 may create episodic supply, though no pledging/hedging and guideline compliance mitigate alignment risk .
Compensation Peer Group (Benchmarking Context)
- Deluxe benchmarks NEO compensation against a peer group reviewed with FW Cook (independent advisor); peers include a mix of payments/data and legacy print comparables (e.g., Evertec, Broadridge, Equifax, WEX, Jack Henry & Associates, Pitney Bowes, Quad Graphics, etc.) to reflect Deluxe’s transformation and talent market .
Employment & Contracts (Additional)
- Severance plan conditions include release of claims; confidentiality, non-competition, and non-solicitation obligations apply, with forfeiture and recoupment of equity gains upon competitive activity or termination for cause; release from certain restrictions occurs upon termination without cause .
Investment Implications
- Alignment: Significant multi-year PSU exposure to revenue and free cash flow with a TSR modifier supports pay-for-performance; stock ownership guidelines and prohibitions on pledging/hedging further align interests .
- Retention vs. supply overhang: Meaningful unvested RSUs and multi-cycle PSUs create strong retention incentives but also predictable vesting events that may introduce minor selling pressure to cover taxes; 2024 realized vesting evidences ongoing cadence .
- Change-in-control and departure economics: Non-CEO severance levels (1.0x salary; 1.5x salary on CoC) are moderate by market standards, with well-defined equity treatment; Engelhardt’s “rule of 75” status increases the likelihood of RSU acceleration upon certain terminations, modestly elevating departure optionality/retention risk if conditions are met .
- Governance and risk: Committee’s downward AIP discretion, enhanced disclosure post-shareholder outreach, clawback, and no-repricing rule point to improving governance rigor; small tax gross-up usage is a watch item but not material .