DEFA14A: Sabre Corp Urges Stockholders to Approve 2024 Omnibus Incentive Plan Despite ISS Recommendation Against

Sabre Corporation is urging stockholders to approve the 2024 Omnibus Incentive Compensation Plan, highlighting its importance for attracting and retaining talent, despite a negative recommendation from Institutional Shareholder Services (ISS) based on peer group comparison flaws.

Summary

• Sabre Corporation is seeking stockholder approval for its 2024 Omnibus Incentive Compensation Plan, which aims to replace the 2023 plan and increase the number of shares authorized for issuance.
• The company believes the plan is crucial for incentivizing team members and aligning their interests with the long-term growth and profitability of Sabre.
• While proxy advisory firm Glass Lewis & Co. supports the proposal, Institutional Shareholder Services (ISS) recommends against it, citing quantitative tests that Sabre believes are flawed due to inappropriate peer group comparisons.
• Sabre argues that ISS's peer group includes companies with fundamentally different business models, particularly those in the Consumer Services sector like hoteliers and restaurants, which do not accurately reflect Sabre's technology focus.
• Sabre contends that its burn rate of 5.20% in 2023 is consistent with other technology companies and lower than the ISS 2024 value-adjusted burn rate benchmark of 5.95% for Software & Services companies in the Russell 3000 (excluding the S&P 500).
• The company warns that failure to approve the plan would limit its ability to issue equity-based awards, potentially hindering its ability to recruit, retain, and motivate employees, and could force detrimental actions like reducing equity compensation or its scope.
• Sabre's Board of Directors unanimously recommends stockholders vote FOR the 2024 Omnibus Incentive Compensation Plan.
• Stockholders are also asked to vote on the election of directors, ratification of the appointment of Ernst & Young LLP as independent auditors, approval of the 2024 Director Equity Compensation Plan, approval of an amendment to the Certificate of Incorporation regarding officer exculpation, and approval of an advisory vote on executive compensation.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company faces a negative recommendation from ISS, it is actively defending its compensation plan and highlighting its benefits. The unanimous support from the Board and positive recommendation from Glass Lewis provide some counterbalance.

Positives

• The 2024 Omnibus Plan is designed to align management with long-term stockholder interests and the achievement of strategic initiatives.
• Glass Lewis & Co., a proxy advisory firm, issued a voting recommendation supporting Proposal 3.
• ISS supports Sabre's say-on-pay proposal, noting the pay and performance alignment of the executive compensation program.
• The ISS report generally viewed the features of the 2024 Omnibus Plan and Sabre's grant practices (other than the burn rate) as positive.

Negatives

• ISS recommends stockholders vote against Proposal 3, applying quantitative tests that Sabre believes have significant shortcomings when applied to its industry, business model, and equity compensation needs.
• The ISS reports analysis uses a peer group containing members with fundamentally different business models from Sabre's technology focus.
• The ISS report fails to take into account the significant role the 2024 Omnibus Plan would play in Sabre's overall compensation program.
• The ISS report does not address the significant implications for Sabre and its stockholders if the 2024 Omnibus Plan is not approved.

Risks

• Failure to approve the 2024 Omnibus Plan would severely limit Sabre's ability to issue equity-based awards to current and future team members.
• If Proposal 3 is not approved, it could also require Sabre to take one or more actions that could be detrimental to its ability to continue creating value for stockholders, including reducing the amount or proportion of compensation paid to team members in equity-based awards, decreasing their long-term alignment with investors, or reducing the proportion of team members that receive equity compensation, limiting the scope of Sabre's employee base that is aligned with stockholders.

Future Outlook

The document emphasizes the importance of the 2024 Omnibus Plan for attracting and retaining talent, which is critical for implementing Sabre's growth strategies and delivering modern distribution and retailing technology.

Management Comments

• Our Board of Directors continues to unanimously recommend you cast your vote FOR all proposals.
• The 2024 Omnibus Plan is intended to promote the interests of Sabre and our stockholders and is a critical part of our overall compensation program.
• We believe our compensation program is consistent with those of other technology companies, appropriately incentivizes and rewards our team members, and has been effective in aligning their long-term interests with those of our stockholders.
• We believe approval of Proposal 3 and the related increase in additional shares for use in attracting and retaining talent will be critical to maintaining a key aspect of this compensation program.

Industry Context

Sabre positions itself as a technology company competing for talent with other technology firms, justifying its broad-based equity compensation program. The document highlights the differences between Sabre's business model and those of companies in the broader Consumer Services sector, which ISS uses for peer group comparisons.

Comparison to Industry Standards

• Sabre argues that its compensation practices are consistent with those of other technology companies.
• The company claims its 2023 burn rate of 5.20% is lower than the ISS 2024 value-adjusted burn rate benchmark of 5.95% for Software & Services companies in the Russell 3000 (excluding the S&P 500).
• The document criticizes ISS for comparing Sabre to companies in the Consumer Services GICS sector, including hoteliers, restaurants, and entertainment venues, which have fundamentally different business models.

Corporate Governance

Stakeholder Impact

• Approval of the 2024 Omnibus Plan is expected to positively impact team members by providing incentives and rewards.
• Failure to approve the plan could negatively impact team members by limiting equity-based awards.
• The company believes the plan is designed to align management with long-term stockholder interests.
• The company warns that failure to approve the plan could require it to take actions that could be detrimental to its ability to continue creating value for stockholders.

Next Steps

• Stockholders are encouraged to read the proxy statement and additional materials and submit their proxy or voting instructions as soon as possible.
• Stockholders are asked to vote on the election of directors, ratification of the appointment of Ernst & Young LLP as independent auditors, approval of the 2024 Omnibus Incentive Compensation Plan, approval of the 2024 Director Equity Compensation Plan, approval of an amendment to the Certificate of Incorporation regarding officer exculpation, and approval of an advisory vote on executive compensation.

Key Dates

Keywords

Omnibus Incentive Compensation Plan, Proxy Statement, Stockholders, Equity Compensation, ISS, Burn Rate, Sabre