SEC Form DEF 14A filed by Kyndryl Holdings Inc.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934 (Amendment No.   )

Filed by the Registrant ☒

Filed by a Party other than the Registrant  ☐

Check the appropriate box:

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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As we have done each year, we are furnishing our proxy materials to stockholders primarily over the Internet. This process expedites your receipt of the proxy materials, reduces the cost of the Annual Meeting and conserves natural resources. Stockholders of record as of the close of business on May 28, 2024 will either receive a Proxy Card or a Notice of Internet Availability of Proxy Materials for the Annual Meeting. The notice contains instructions on how to access our Proxy Statement and Annual Report for the fiscal year ended March 31, 2024 and submit your proxy online.

Your vote is important to us. Even if you plan to attend the Annual Meeting, we recommend that you promptly submit your proxy with your voting instructions. You may do this over the Internet, as well as by telephone or mail. Please review the instructions regarding each of these options on your Proxy Card or Notice of Internet Availability of Proxy Materials.

I hope that you can join us for our 2024 Annual Meeting so that you can hear firsthand about our strong execution and the accelerated progress we are making as the world's largest IT infrastructure services provider. Our scale, our know-how, our indispensability and our freedom of action as an independent company have given us opportunities to return to profitable growth, while continuing to serve our customers extremely well. We’re driving powerful business dynamics for value creation, and we’ll continue to be bold and ambitious about how we come together to deliver value with our partners for our customers.

Thank you for your continued confidence in Kyndryl.

This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information you should consider. You should read the entire Proxy Statement carefully before voting. The proxy materials, including this Proxy Statement, the Annual Report for the fiscal year ended March 31, 2024 and the Proxy Card, or the Notice of Internet Availability of Proxy Materials, as applicable, are being distributed beginning on or about June 12, 2024 to all stockholders entitled to vote.

Voting Matters

Stockholders will be asked to vote on the following matters at the Annual Meeting. Whether or not you plan to attend the Annual Meeting, we encourage you to promptly submit your proxy with your voting instructions. You may do this over the Internet, as well as by telephone or mail. See “Frequently Asked Questions—8. Can I vote my shares without attending the Annual Meeting?”

Our Business

ABOUT US

Kyndryl is the world’s largest IT infrastructure services provider, serving thousands of enterprise customers in more than 60 countries. The Company designs, builds, manages and modernizes the complex, mission-critical information systems that the world depends on every day.

OUR GLOBAL BUSINESS PRACTICE AREAS

OUR FISCAL 2024 BUSINESS HIGHLIGHTS

OUR STRATEGIC FOCUS AREAS

Governance Highlights

Board of Directors

BOARD ATTRIBUTES

 

KYNDRYL BOARD

Executive Compensation Highlights

COMPENSATION PHILOSOPHY AND OBJECTIVES

Our executive compensation philosophy is governed by three key principles:

OUR EXECUTIVE COMPENSATION BEST PRACTICES

Proposal 1—Election of Directors

Our Board currently consists of 10 members and, until the conclusion of our 2027 Annual Meeting of stockholders, will be divided into three classes, with each class consisting, as nearly as possible, of one-third of the total number of directors. This temporary classified Board structure is intended to provide continuity of leadership during Kyndryl’s first years of operation as an independent, public company. The directors designated as Class I directors have terms expiring at the 2025 Annual Meeting, the directors designated as Class II directors have terms expiring at the 2026 Annual Meeting and the directors designated as Class III directors have terms expiring at the 2024 Annual Meeting. Any director elected at the 2024 Annual Meeting will belong to the class whose term expires at such Annual Meeting and will hold office for a three-year term or until his or her successor has been duly elected and qualified.

Beginning at the 2025 Annual Meeting, and at each annual meeting thereafter, all of our directors up for election at such meeting will be elected annually and will hold office until the following Annual Meeting or until his or her successor has been duly elected and qualified or until his or her earlier resignation or removal. Effective as of the conclusion of the 2027 Annual Meeting, our Board will therefore no longer be divided into three classes.

Our Company’s Board Corporate Governance Guidelines provide that, subject to review by the Nominating and Governance Committee and the Board, at the first annual meeting after turning age 75, non-management directors shall not stand for reelection. With respect to Shirley Ann Jackson, the Board unanimously approved a waiver to this policy and strongly believe she should continue on the Kyndryl Board due to her extensive leadership experience, as well as her performance and contributions to the Board and the Nominating and Governance Committee. Dr. Jackson’s leadership experience as former president of a preeminent science and technology university, government and regulatory experience, outside board experience and technological expertise gives Kyndryl an important unique perspective on the Board.

Upon the recommendation of the Nominating and Governance Committee, the Board has considered and nominated the following slate of Class III nominees for a three-year term expiring at our 2027 Annual Meeting or until their successors are duly elected and qualified: Dominic J. Caruso, Stephen A.M. Hester, Shirley Ann Jackson and Martin Schroeter.

Unless otherwise instructed, the persons named in the form of Proxy Card (proxyholders) attached to this Proxy Statement intend to vote the proxies held by them for the election of Dominic J. Caruso, Stephen A.M. Hester, Shirley Ann Jackson and Martin Schroeter. If any of these nominees ceases to be a candidate for election by the time of the 2024 Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.

Class III Director Nominees for Election to a 3-Year Term Expiring in 2027

Directors Continuing in Office

CLASS I DIRECTORS, WITH TERMS EXPIRING AT THE 2025 ANNUAL MEETING

CLASS II DIRECTORS, WITH TERMS EXPIRING AT THE 2026 ANNUAL MEETING

Kyndryl Board of Directors—Experience and Skills

Kyndryl’s Board of Directors brings together ten leaders with a variety of backgrounds in key industries and professions from a wide array of senior executive and leadership roles. Our directors empower our Board with operational experience, financial expertise and academic leadership, as well as extensive research and innovation experience. In addition, many of our directors have a background in facilitating technological change in their organizations and possess digital and cybersecurity experience. Together, they bring a well-rounded perspective and offer a wealth of knowledge for understanding and navigating contemporary business issues so that we can continue to focus on our growth as an independent company.

Director Nomination Process

OVERVIEW

Our Nominating and Governance Committee is responsible for recommending qualified candidates for election to the Board, consistent with the criteria approved by the Board and set forth in our Board Corporate Governance Guidelines and Nominating and Governance Committee Charter. The Board is responsible for selecting nominees for election.

Our Nominating and Governance Committee and the Board seek to ensure that the Board, as a whole, possesses the expertise, qualifications, attributes and skills to carry out its oversight responsibilities effectively and to align with our long-term strategies. Accordingly, our Board Corporate Governance Guidelines provide that individuals are nominated to join the Board based on all appropriate criteria, which may include strength of character, mature judgment, familiarity with our business and industry, independence of thought, ability to work collegially, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, business or professional experience, the diversity of their background and their array of talents and perspectives.

Our directors invest the time and effort necessary to understand the Company’s business and financial strategies and challenges, a policy reflected in our Board Corporate Governance Guidelines. Our directors’ commitment to their oversight responsibilities is reflected by the 100% attendance of directors at Board and Committee meetings in fiscal year 2024. As part of the process, the Nominating and Governance Committee, pursuant to its charter, reviews directors’ service on other boards, as well as other engagements, to ensure directors have sufficient time to devote to the Company and re-assess this information before nomination to the Board. Since our inception as a public company, we do not believe that any one of our directors have served on more than four public company boards or have been otherwise “overboarded”. Further, our guidelines provide that no member of the Audit Committee will serve on more than three public company audit committees, including the Company’s, without prior approval of the Board or unless disclosed on our website or Proxy Statement.

Because the evaluation of these criteria involves the exercise of careful business judgment, the Nominating and Governance Committee and the Board do not have specific minimum qualifications that are applicable to all director candidates.

DIVERSITY

The Nominating and Governance Committee Charter provides that, as part of its ongoing responsibility to search for qualified individuals for election as directors, the Committee recruits talented candidates for the Board. While there is no formal diversity policy, the Committee and the Board carefully consider work experiences along with a range of backgrounds and perspectives, including gender, race, ethnicity, culture, nationality and geography, when evaluating whether the Board has the right mix of skills, experience and expertise to effectively oversee the management and governance of the Company.

DIRECTOR CANDIDATE SEARCH

The Nominating and Governance Committee and the Board identify candidates through a variety of means, including:

In identifying prospective director candidates, the Nominating and Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources. The Nominating and Governance Committee also may, but is not required to, retain a third-party search firm in order to assist it in identifying qualified candidates. The Nominating and Governance Committee and the Board use the same criteria for evaluating director candidates regardless of the source of the referral.

STOCKHOLDER RECOMMENDATIONS AND NOMINATIONS

The Nominating and Governance Committee will consider director candidates recommended by stockholders. Any recommendation submitted to the Secretary of the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include information that would be required under the rules of the SEC to be included in a Proxy Statement soliciting proxies for the election of such candidate and a written consent of the candidate to serve as one of our directors if elected.

All recommendations for nomination received by the Secretary that satisfy our Bylaw requirements relating to director nominations will be presented to the Nominating and Governance Committee for its consideration. Stockholders must also satisfy the notification, timeliness and information requirements set forth in our Bylaws. See “Frequently Asked Questions—18. How do I submit an item of business for the 2025 Annual Meeting?”

Stockholders wishing to propose a candidate for consideration may do so by submitting the information described in this section to: Kyndryl Holdings, Inc., Attention: Corporate Secretary’s Office, One Vanderbilt Avenue, 15^th Floor, New York, New York 10017.

In addition, our Bylaws permit a stockholder, or a group of up to 20 stockholders, that has continuously owned for three years at least 3% of the Company’s outstanding common stock, to nominate and include in the Company’s annual meeting proxy materials up to the greater of two directors or 20% of the number of directors to be elected at the annual meeting (Proxy Access), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in our Bylaws, which are posted on our investor relations website at investors.kyndryl.com. Stockholder requests to include stockholder-nominated directors in the Company’s proxy materials for our 2025 Annual Meeting of stockholders pursuant to our Proxy Access bylaw must be received by the Company no earlier than January 13, 2025 and no later than February 12, 2025.

Director Attendance

All directors are expected to make every effort to attend all meetings of the Board, meetings of the committees of which they are members and the Annual Meeting of Stockholders. In the Company’s 2024 fiscal year:

Director Independence

Under our Board Corporate Governance Guidelines and NYSE rules, a director is not independent unless our Board affirmatively determines that he or she does not have a direct or indirect material relationship with us or any of our subsidiaries.

Our Board Corporate Governance Guidelines define independence in accordance with current NYSE standards for listed companies and require that our Nominating and Governance Committee and our Board review the independence of all directors at least annually.

In making its independence determinations, our Board reviewed all information known to it (including information identified through annual directors’ questionnaires), including the various commercial transactions and relationships between us and our subsidiaries and the entities with which certain of our directors are or have been affiliated. The Board determined that the transactions identified were not material and did not affect the independence of any of our non-employee directors under either our Board Corporate Governance Guidelines or the applicable NYSE rules.

Board Leadership Structure

Selecting a company’s leadership structure is one of the most important tasks of any Board. There is not a one-size-fits-all model for board leadership, which is why our Bylaws provide that the Board has the duty to elect a Chairman of the Board from among its members annually. The Board believes that Kyndryl and its stockholders are best served by maintaining this flexibility and that a permanent leadership policy is not appropriate. Therefore, our governing documents enable the Board to determine the appropriate Board leadership structure for the Company and allow the roles of Chairman of the Board and Chief Executive Officer to be filled by the same or different individuals. Additionally, our Board Corporate Governance Guidelines provide that the Company will have a Lead Independent Director whenever the Chairman of the Board is a non-independent director.

Currently, Mr. Schroeter serves as Chairman of the Board and Chief Executive Officer. Combining the role of Chairman and Chief Executive Officer at this time ensures that the Chairman has significant experience in the technology services business and ongoing executive responsibility for the Company. In the Board’s view, this approach enables the Board to better understand the Company and work with management to

enhance stockholder value. In addition, the Board believes that this structure enables it to better fulfill its risk oversight responsibilities and allows the Chief Executive Officer to more effectively communicate the Board’s view to management.

The Lead Independent Director position provides strong, independent leadership for the Board. It is the opinion of the Board that Mr. Hester’s diverse, international executive leadership and public company board experience make him exceptionally qualified to lead the independent members of the Board in their oversight of management. Mr. Hester’s leadership experience includes roles as a Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, as well as serving as Chairman of the Board for multiple companies in diverse industries. Under our Board Corporate Governance Guidelines, Mr. Hester as the Lead Independent Director has significant and robust duties and responsibilities, including:

The Board considers its current leadership structure to be appropriate for the Company at this time. The Board believes that the responsibilities of the Lead Independent Director and the highly independent composition of the Board help to ensure appropriate oversight of the Company’s management by the Board and optimal functioning of the Board.

Board and Committee Oversight of Strategy and Risk Management

The Board is responsible for the overall oversight of management in the execution of its responsibilities. In this oversight role, the Board regularly reviews the Company’s long-term business strategy and works with management to set the short-term and long-term strategic objectives of the Company and to monitor progress on those objectives. Strategy discussions are an integral part of each Board meeting. In addition, on an annual basis, the Company devotes significant time to a full strategic review with senior management and other subject matter experts.

One of the significant important oversight responsibilities for our Board is with respect to risk management related to us and our business. The Board executes this oversight with a multi-tiered approach through oversight by the entire Board, as well as through its Audit Committee, Compensation and Human Capital Committee and Nominating and Governance Committee, each of which assists the Board in overseeing a part of our overall risk management and regularly reports to the Board, as discussed below. In that way, risk oversight responsibilities are shared by all committees of the Board, with each committee responsible for oversight of matters most aligned with the responsibilities set forth in its charter. We believe that allocating responsibility to a committee with relevant knowledge and experience provides a more focused and deeper oversight of risk. This allows for a multi-tiered approach to risk oversight, with the full Board retaining overall oversight responsibility.

Our senior leadership team is responsible for managing our enterprise risk management program under the oversight of the Audit Committee. Responsibility for managing each of our highest priority risks is assigned to one or more members of our senior leadership team. Our enterprise risk management program is designed to identify, assess and manage our risk exposures, and management regularly reports to the Board and its committees on our material operational, strategic and financial risks (over the short-, intermediate- and long-term) and plans to monitor, manage and mitigate these risks, as described below.

Each committee also, when desired by the applicable committee, meets with outside advisors (including consultants and experts) in executing its risk oversight responsibilities.

 

The Board is responsible for the overall oversight of our enterprise risk management program and receives regular updates from management on our material operational, strategic and financial risks (over the short-, intermediate- and long-term) and plans to monitor, manage and mitigate these risks. With respect to operational and strategic risks, the Board receives periodic updates from: our Chief Information Security Officer, Chief Information Officer, Security & Resiliency global practice leader and other senior leaders with respect to cybersecurity and data privacy matters; our Chief Human Resources Officer on inclusion, diversity and equity matters; and our Global Head of Corporate Affairs and Senior Vice President, Sustainability & Impact Officer with respect to environmental and corporate responsibility matters. The Board considers the foregoing matters so critical to our business that it maintains concurrent oversight over them with its Audit Committee, Compensation and Human Capital Committee and Nominating and Governance Committee, respectively.

The Audit Committee periodically reviews our accounting, reporting and financial practices and risk exposures, including with respect to the integrity of our financial statements, our financial reporting, our administrative, financial and disclosure controls, our enterprise risk management program, compliance with legal and regulatory requirements, our engagement with Kyndryl’s independent auditor and our cybersecurity and data privacy controls. Through its regular meetings with management, including the finance, legal, internal audit and information security functions, and Kyndryl’s independent registered public accounting firm, the Audit Committee reviews and discusses all significant areas of our business and related risks and summarizes for the Board areas of risk, including cyber risk, and any mitigating factors. With respect to compliance matters, the Audit Committee receives regular updates from our Chief Compliance Officer, who reports to our General Counsel. With respect to enterprise risk management, the Audit Committee receives regular updates from our Senior Vice President & General Auditor. With respect to cybersecurity-related matters, the Audit Committee receives periodic updates from our Chief Information Security Officer, Chief Information Officer, Security & Resiliency global practice leader and other senior leaders.

The Compensation and Human Capital Committee considers, and discusses with management, management’s assessment of certain risks, including whether any risks arising from our compensation structure, policies and programs for our employees are reasonably likely to have a material adverse effect on us. The Compensation and Human Capital Committee also receives input from its independent compensation consultant as to whether any risks arising from our compensation structure, policies and programs for our employees are reasonably likely to have a material adverse effect on us. The Compensation and Human Capital Committee also reviews and assesses risks relating to our human capital practices. In this capacity, the Compensation and Human Capital Committee oversees management succession planning, oversees human capital management and our inclusion, diversity and equity practices and assesses the ability of our compensation programs to attract and retain high-performing talent.

The Nominating and Governance Committee oversees and evaluates programs and risks associated with Board organization, membership and structure and corporate governance, including director independence and related person transactions. The Nominating and Governance Committee also oversees and assesses risks associated with our corporate responsibility initiatives, including our environmental and sustainability goals and initiatives.

Management Succession Planning

Succession planning is a key component of our talent strategy and the Board, and the Compensation and Human Capital Committee actively to provide oversight of management’s succession planning process. Our Board is actively engaged in discussions and periodically reviews senior leadership succession planning and development, including annually with the CEO. The Compensation and Human Capital Committee oversees the management continuity planning process, is responsible for reviewing and evaluating the succession plans relating to all executive officer positions and for making recommendations to the Board on individuals to occupy these positions.

Board and Committee Self-Evaluation Process

As part of its strong governance practices and policies, the Company has a robust board and committee self-evaluation process. Our multi-part process is designed to elicit honest and candid feedback from directors in multiple formats and at different times to ensure that the Board and its committees are operating effectively and that its processes reflect best practices. The steps below outline the formal evaluation process; however, the totality of the evaluation process is dynamic and ongoing with feedback discussed among Board members throughout the year.

Committees of the Board

Our Board has three standing committees—Audit Committee, Compensation and Human Capital Committee and Nominating and Governance Committee. Each Committee is comprised solely of directors who satisfy the independence criteria established by the Board, which reflect the standards of the NYSE and the rules of the SEC, including the heightened independence requirements that apply to Audit Committee and Compensation and Human Capital Committee members. Each Committee has a written charter that sets forth the Committee’s duties and responsibilities.

Each committee reviews its charter at least annually to ensure such charters reflect evolving trends and best practices. The Charter of each committee can be found on our website, investors.kyndryl.com, under Corporate Responsibility: Governance: Governance Documents: Committee Charters.

Compensation and Human Capital Committee Oversight of Kyndryl Compensation

Kyndryl Code of Conduct

Our code of ethics is The Kyndryl Code of Conduct. The Kyndryl Code of Conduct is applicable to all of our directors, officers and employees, including our Chairman and Chief Executive Officer, Chief Financial Officer, Controller and other senior financial officers. The Kyndryl Code of Conduct sets forth our policies and expectations on a number of topics, including conflicts of interest, compliance with laws (including insider trading laws), use of our assets and business conduct and fair dealing. The Kyndryl Code of Conduct also satisfies the requirements for a code of ethics, as defined by Item 406 of Regulation S-K promulgated by the SEC. The Kyndryl Code of Conduct can be found on our website at investors.kyndryl.com under Corporate Responsibility: Governance: Governance Documents: The Kyndryl Code of Conduct.

To the extent applicable, we will disclose within four business days any substantive changes in, or waivers of, The Kyndryl Code of Conduct granted to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions, by posting such information on our website as set forth above rather than by filing a Current Report on Form 8-K. In the case of a waiver for an executive officer or a director, the required disclosure also will be made available on our website within four business days of the date of such waiver.

Securities Trading Policy

The Company has had a securities trading policy since its inception as an independent public company that prohibits trading by any person while in possession of material, non-public information in violation of applicable law. The policy establishes quarterly trading windows during which Company directors, executive officers and key employees are unable to trade Kyndryl securities, as the announcement of annual and quarterly financial results has the potential to have a material impact on Kyndryl securities. Directors, executive officers and key employees must request pre-approval to perform any transactions with their Kyndryl securities during open trading periods. For information regarding the Company’s prohibition on the hedging and pledging of Company stock, see “2024 Executive Compensation—Compensation Discussion and Analysis—Additional Compensation Information—Prohibition on Hedging and Pledging of Company Stock” of this Proxy Statement.

Board Corporate Governance Guidelines

Our Board Corporate Governance Guidelines assist the Board in guiding our governance practices. Our Board Corporate Governance Guidelines are periodically reviewed by the Nominating and Governance Committee and Board, and any changes determined by the Nominating and Governance Committee to be appropriate in light of emerging governance practices or otherwise are submitted to the full Board for consideration. These guidelines describe the Board’s views in a number of areas, including:

Our Board Corporate Governance Guidelines can be found on our website at investors.kyndryl.com under Corporate Responsibility: Governance: Governance Documents: Board Corporate Governance Guidelines.

Communications with the Board

The method by which stockholders and other interested parties may communicate with the Board, individual directors, the non-management directors as a group, or with the Chair, can be found on our website at investors.kyndryl.com under Corporate Responsibility: Governance: Board of Directors: Contact the Board.

Investor Engagement

We consistently and proactively engage with our investor community. Our discussions includes a broad range of topics, including our business transformation, strategy, industry trends, financial performance, corporate governance, executive compensation and corporate citizenship. Our engagement is conducted by members of our Board, our Chief Executive Officer, our Chief Financial Officer, our Global Head of Investor Relations and other members of our senior leadership team across many of the Company’s functions including Legal, Finance, Business Operations, Human Resources and Corporate Responsibility. We engage with existing and potential stockholders to ensure their understanding of our strategy, to seek their input and feedback, and for us to remain well-informed regarding their perspectives.