Edgar Filing: Nuance Communications, Inc.

DEF 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

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NUANCE COMMUNICATIONS, 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 ANNUAL MEETING OF STOCKHOLDERS

Dear Stockholders:

The Annual Meeting of Stockholders of Nuance Communications, Inc. (the “Company”) will be held at the Company’s office located at 1198 East Arques Avenue, Sunnyvale, CA 94085, on January 27, 2016 at 2:00 p.m. local time, for the purpose of considering and acting upon the following proposals:

(1)

To elect nine members of the Board of Directors to hold office until the next annual meeting of stockholders or until their respective successors have been elected and qualified;

(2)

To approve the Company’s Amended and Restated 2000 Stock Plan, as described in the attached Proxy Statement;

(3)

To approve a non-binding advisory resolution regarding the compensation of the Company’s named executive officers;

(4)

To ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2016; and

(5)

To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.

We will be using the U.S. Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders via the Internet. Pursuant to these rules, instead of mailing a printed copy of the Company’s proxy materials to each stockholder we have elected to provide access to our proxy materials over the Internet. Accordingly, with the exception of certain requesting stockholders who will receive printed copies of the Company’s proxy materials by mail, stockholders of record will receive a Notice of Internet Availability of Proxy Materials and may vote at the Annual Meeting and any postponements or adjournments of the meeting. We expect to mail the Notice of Internet Availability of Proxy Materials on or about December 18, 2015, at least 40 calendar days prior to the Annual Meeting date.

The Board of Directors has fixed the close of business on December 3, 2015 as the record date for determination of stockholders entitled to notice of, and to vote at, the Annual Meeting and at any postponements or adjournments thereof. A list of stockholders entitled to vote at the Annual Meeting will be available at the meeting being held at 1198 East Arques Avenue, Sunnyvale, CA 94085 and for ten days prior to the Annual Meeting.

The Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015 accompanies this Notice of Annual Meeting of Stockholders and Proxy Statement. These documents may also be accessed on the Broadridge Financial hosted site www.proxyvote.com.

Please refer to the Proxy Statement, which forms a part of this Notice and is incorporated herein by reference, for further information with respect to the business to be transacted at the annual meeting.

By Order of the Board of Directors,

Adam Bruce Bowden

Secretary

Burlington, Massachusetts

December 18, 2015

NUANCE COMMUNICATIONS, INC.

One Wayside Road

Burlington, MA 01803

YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED ENVELOPE.

Important Notice Regarding the Availability of Proxy Materials for

the Annual Meeting of Stockholders to be Held on January 27, 2016

This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the proxy materials before voting.

The Company’s proxy statement and Annual Report on Form 10-K for the fiscal year ended September 30, 2015 are available at the Broadridge Financial hosted site www.proxyvote.com. Please have the information that is printed in the box marked by the arrow g LOGO

and follow the sample instructions to vote.

If you want to receive a paper or e-mail copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy as instructed below on or before January 13, 2016 to facilitate timely delivery. Shareholders may select one of the following methods:

1) By Internet: www.proxyvote.com

2) By Telephone: 1-800-579-1639

3) By E-Mail*: sendmaterial@proxyvote.com

PROXY STATEMENT

ANNUAL MEETING OF STOCKHOLDERS

January 27, 2016

This Proxy Statement is furnished in connection with the solicitation by Nuance Communications, Inc. (the “Company”) on behalf of the Board of Directors (the “Board” or the “Board of Directors”) of proxies for use at the Annual Meeting of Stockholders of the Company to be held on January 27, 2016 at 2:00 p.m., local time, at the Company’s office located at 1198 East Arques Avenue, Sunnyvale, CA 94085 (the “Annual Meeting”). We intend to mail and make available this Proxy Statement and the accompanying form of proxy to stockholders on or about December 18, 2015.

VOTING RIGHTS

Each share of the Company’s common stock (the “Common Stock”) entitles the holder thereof to one vote on matters to be acted upon at the Annual Meeting, including the election of directors. Votes cast in person or by proxy at the Annual Meeting will be tabulated by Broadridge Financial Solutions, Inc., the Inspector of Elections. Any proxy that is returned using the form of proxy enclosed or voted by Internet according to the instructions included on the proxy card will be voted in accordance with the instructions thereon, and if no instructions are given, will be voted (i) FOR the election of all of the director nominees as provided under Proposal 1 herein, (ii) FOR approval of the Company’s Amended and Restated 2000 Stock Plan under Proposal 2 herein, (iii) FOR the nonbinding advisory resolution regarding the compensation of the Company’s named executive officers under Proposal 3 herein, (iv) FOR ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm under Proposal 4 herein, and (v) as the proxy holders deem advisable in their sole discretion on any other matters that may properly come before the Annual Meeting. A stockholder may indicate on the enclosed proxy or its substitute that it is abstaining from voting on a particular matter (an “abstention”). A broker may indicate on the enclosed proxy or its substitute that it does not have discretionary authority as to certain shares to vote on a particular matter (a “broker non-vote”). Abstentions and broker non-votes are each tabulated separately.

The Inspector of Elections will determine whether or not a quorum is present at the Annual Meeting. In general, Delaware law and our bylaws provide that a majority of the shares issued and outstanding and entitled to vote, present in person or represented by proxy, constitutes a quorum. Abstentions and broker non-votes of shares that are entitled to vote are treated as shares that are present in person or represented by proxy for purposes of determining the presence of a quorum.

In determining whether a proposal has been approved, abstentions are treated as present in person or represented by proxy and entitled to vote, but not as voting for such proposal, and hence have the same effect as votes against such proposal, while broker non-votes are not treated as present in person or represented by proxy, and hence have no effect on the vote for such proposal.

RECORD DATE AND SHARE OWNERSHIP

Holders of record of Common Stock as of the close of business on December 3, 2015 have the right to receive notice of and to vote at the Annual Meeting. On December 3, 2015, the Company had issued and outstanding 310,743,905 shares of Common Stock.

PROXIES

Proxies for use at the Annual Meeting are being solicited by the Company from its stockholders. Any person giving a proxy in the form accompanying this Proxy Statement has the power to revoke it at any time before its exercise by (i) filing with the Secretary of the Company a signed written statement revoking his or her proxy or (ii) submitting an executed proxy bearing a date later than that of the proxy being revoked. A proxy may also be revoked by attendance at the Annual Meeting and the election to vote in person. Attendance at the Annual Meeting will not by itself constitute the revocation of a proxy.

STOCKHOLDER PROPOSALS

Proposals of stockholders that are intended to be presented at the Company’s 2017 Annual Meeting of Stockholders must comply with the requirements of SEC Rule 14a-8 and must be received by the Company no later than August 20, 2016 in order to be included in the Company’s proxy statement and form of proxy relating to the meeting. A stockholder proposal or a nomination for director for the Company’s 2017 Annual Meeting of Stockholders that is not to be included in the Company’s proxy statement and form of proxy relating to the meeting must be received by the Company no earlier than September 29, 2016 and no later than October 29, 2016. The Company’s bylaws require that certain information and acknowledgements with respect to the proposal or nomination be set forth in the stockholder’s notice. A copy of the relevant bylaw provision is available upon written request to Nuance Communications, Inc., One Wayside Road, Burlington, MA 01803, Attention: Investor Relations. Further, our Amended and Restated Bylaws dated as of November 6, 2007 (the “Bylaws”) were filed as an exhibit to our Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on November 13, 2007.

PROXY SOLICITATION COSTS

The expense of solicitation of proxies will be borne by the Company. In addition to solicitation of proxies by mail, certain officers, directors and Company employees, who will receive no additional compensation for their services, may solicit proxies by telephone, telegraph or in person. The Company is required to request brokers and nominees who hold stock in their name to furnish this proxy material to beneficial owners of the stock and will reimburse such brokers and nominees for their reasonable out-of-pocket expenses in so doing. In addition, we have engaged Alliance Advisors to assist in the solicitation of proxies and provide related advice and informational support for a service fee of $17,000 plus reimbursement of out-of-pocket expenses.

PROPOSAL NUMBER 1

ELECTION OF DIRECTORS

The Nominating Committee of the Board of Directors recommended, and the Board of Directors approved, Paul A. Ricci, Robert J. Finocchio, Robert J. Frankenberg, Brett Icahn, William H. Janeway, Mark R. Laret, Katharine A. Martin, Philip J. Quigley and David S. Schechter as nominees for election at the Annual Meeting. At the Annual Meeting, nine directors will be elected to the Board. Except as set forth below, unless otherwise instructed, the persons appointed in the accompanying form of proxy will vote the proxies received by them for the nominees named below, who are all presently directors of the Company. Messrs. Icahn and Schechter are being nominated for election to our Board pursuant to a Nomination and Standstill Agreement (the “Nomination and Standstill Agreement’) dated October 7, 2013 by and among the Company and certain affiliates of Icahn Capital L.P. In the event that any nominee becomes unavailable, the proxy holders will vote in their discretion for a substitute nominee. The term of office of each person elected as a director will continue until the next Annual Meeting of Stockholders or until a successor has been elected and qualified.

Information Regarding the Nominees for Election as Directors

The following information with respect to the principal occupation or employment, other affiliations and business experience during the last five years of the nominees has been furnished to the Company by such nominees. Except as indicated, the nominees have had the same principal occupation during the last five years.

Paul A. Ricci, 59, has served as our Chairman since March 2, 1999 and our Chief Executive Officer since August 21, 2000. From May 1992 to August 2000, Mr. Ricci held several positions at Xerox including, President, Desktop Systems Division, President, Software Solutions Division, and Vice President, Corporate Business Development. Between June 1997 and March 1999, Mr. Ricci served as Chairman of the Board of Directors of Nuance Communications, Inc. (formerly, ScanSoft Inc.), which was then operating as an indirect wholly-owned subsidiary of Xerox. Mr. Ricci’s leadership position at the Company, his management abilities and experience, and his extensive knowledge of our industry qualify him to serve as a member of our Board of Directors.

Robert J. Finocchio, 63, was appointed by the Board of Directors on April 29, 2015. Mr. Finocchio has been a Dean’s Executive Professor at Santa Clara University’s Leavey School of Business since September 2000 and was a former chairman of its Board of Trustees. From July 1997 to September 2000, he served as Chairman of Informix Corporation and from July 1997 to July 1999, he served as its Chief Executive Officer and President where he led the reconstruction and return to growth and profitability of the enterprise database software company. From December 1988 to May 1997, Mr. Finocchio held several positions at 3Com Corporation, including President of 3Com Systems, Executive Vice President of Network Systems Operations and Executive Vice President of Field Operations. He also served in numerous executive and management roles at IBM, Rolm Corporation and Bank of America. Mr. Finocchio also serves on the boards of Broadcom Corporation, Echelon Corporation, JustAnswer.com, Silver Peak Corporation and Vistage International. Mr. Finocchio’s experience as chairman and chief executive officer of a technology company, executive leadership positions at various technology companies, and other board memberships qualifies him to be a member of our board of directors.

Robert J. Frankenberg, 68, has served as a director since March 13, 2000 and lead director since April 20, 2005. Mr. Frankenberg is owner of NetVentures, a management consulting firm. From December 1999 to July 2006, Mr. Frankenberg served as Chairman of Kinzan, Inc., an Internet Services software platform provider. From May 1997 to July 2000, Mr. Frankenberg served as Chairman, President and Chief Executive Officer of Encanto Networks, Inc., a developer of hardware and software designed to enable the creation of businesses on the Internet. From April 1994 to August 1996, Mr. Frankenberg was Chairman, President and Chief Executive Officer of Novell, Inc., a producer of network and office software. Mr. Frankenberg is a director of Polycom Inc. and Rubicon Project, Inc. Mr. Frankenberg also serves on several boards of privately held companies. Previously, Mr. Frankenberg served as a director of National Semiconductor, Electroglas, Inc., Extended Systems Incorporated, Secure Computing Inc., and Wave Systems, Inc. Mr. Frankenberg serves as Chairman of our Audit and Compensation Committees and also serves on our Governance and Nominating Committees. Mr. Frankenberg’s experience as chairman, president and chief executive officer of numerous technology companies and his significant board experience (both with the Company and elsewhere) provides expertise in

technology, business operations, corporate development, strategy, financial reporting, governance and board best practices.

Brett Icahn, 36, has served as a director since October 7, 2013. Mr. Icahn is currently responsible for co-executing an investment strategy across all industries as a Portfolio Manager of the Sargon Portfolio for Icahn Capital LP, the entity through which Carl C. Icahn manages investment funds. Prior to April 2010, Mr. Icahn served as an investment analyst for Icahn Capital LP and in a variety of investment advisory roles for Carl Icahn since 2002. Mr. Icahn was previously a director of: Cadus Corporation, a company engaged in the acquisition of real estate for renovation or construction and resale, from January 2010 to February 2014; Voltari Corporation, a mobile data services provider, from January 2010 to August 2014; American Railcar Industries, Inc., a railcar manufacturing company, from January 2007 to June 2014; Take-Two Interactive Software Inc., a publisher of interactive entertainment products, from April 2010 to November 2013; and The Hain Celestial Group, Inc., a natural and organic products company, from July 2010 to November 2013. American Railcar Industries is indirectly controlled by Carl C. Icahn. Mr. Icahn also has or previously had a non-controlling interest in our Company, Hain Celestial, Take-Two Interactive Software, Cadus, and Voltari through the ownership of securities. Brett Icahn is Carl Icahn’s son. Mr. Icahn received a B.A. from Princeton University. Mr. Icahn was appointed to the Board pursuant to the Nomination and Standstill Agreement. Mr. Icahn serves on our Board of Directors as a designee of Carl Icahn and his affiliated entities. Mr. Icahn’s experience in investing and service on other boards of directors provides expertise in investing, corporate strategy and corporate governance.

William H. Janeway, 72, has served as a director since April 2004. Mr. Janeway is a Senior Advisor at Warburg Pincus LLC and has been employed by Warburg Pincus LLC since July 1988. Prior to joining Warburg Pincus LLC, Mr. Janeway served as Executive Vice President and a director at Eberstadt Fleming Inc. from 1979 to July 1988. Mr. Janeway is a director of several privately held companies. Mr. Janeway holds a B.A. from Princeton University and a Ph.D. from Cambridge University, where he studied as a Marshall Scholar. From 2004 through 2013 affiliates of Warburg Pincus owned more than 10% of the shares of the Company. Mr. Janeway serves on our Nominating Committee. As a private equity investor, Mr. Janeway brings strategic insights and financial experience to the Board. He has evaluated, invested in and served as a board member on numerous companies and is familiar with a full range of corporate and board functions.

Mark R. Laret, 61, has served as a director since June 3, 2010. Since April 2000, Mr. Laret has served as CEO of the University of California San Francisco Medical Center. Mr. Laret serves as a director of Varian Medical Systems, Inc. Mr. Laret earned a B.A. from UCLA and a master’s degree in political science from the University of Southern California. Mr. Laret serves on our Audit and Governance Committees. Mr. Laret’s corporate executive experience in the healthcare industry, his significant professional expertise and background in medical and technical issues qualifies him to be a member of our Board of Directors.

Katharine A. Martin, 53, has served as a director since December 17, 1999. Since September 1999, Ms. Martin has served as a Member of Wilson Sonsini Goodrich & Rosati, Professional Corporation. Prior thereto, Ms. Martin was a Partner of Pillsbury Madison & Sutro LLP. Ms. Martin also serves on the board of directors of Wilson Sonsini Goodrich & Rosati, a Professional Corporation, the Wilson Sonsini Goodrich & Rosati Foundation, a nonprofit organization, The Gateway School, a nonprofit organization, and WildAid, a nonprofit organization. In January 2016, Ms. Martin will also serve on the board of YMCA of Silicon Valley, a nonprofit organization. Ms. Martin serves as Chairman of our Governance Committee. Ms. Martin has twenty-eight years’ experience practicing corporate and securities law, and has extensive experience representing public companies. Ms. Martin brings to the Board expertise in corporate governance, acquisitions, capital market transactions and securities law.

Philip J. Quigley, 73, has served as a director since the consummation of our acquisition of the former Nuance Communications, Inc. in September 2005, and was originally appointed to the Board in accordance with the terms of the Merger Agreement pursuant to which the Company acquired the former Nuance Communications, Inc. Mr. Quigley served as Chairman, President, and Chief Executive Officer of Pacific Telesis Group, a telecommunications holding company in San Francisco, California, from April 1994 until his retirement in December 1997. He also served as a director of Wells Fargo & Company from 1994 to April 2013. Mr. Quigley serves as an advisor or director to several private organizations. Mr. Quigley serves on our Audit Committee.

Mr. Quigley has extensive leadership and business management experience, which he acquired over a 30-year career in the telecommunications industry, including during that time as chairman, president and CEO of Pacific Telesis Group. Mr. Quigley’s experience at Pacific Telesis included mergers and acquisitions, and also provided him with extensive financial management experience.

David S. Schechter, 40, has served as a director since October 7, 2013. Mr. Schechter is currently responsible for co-executing an investment strategy across all industries as a Portfolio Manager of the Sargon Portfolio for Icahn Capital LP, and High River LP. Prior to April 2010, Mr. Schechter served as a Managing Director for Icahn Capital LP and in a variety of investment advisory roles for Mr. Icahn since 2004, providing investment and strategic advice across multiple industries, asset classes, and geographies. Prior to joining Mr. Icahn in January 2004, Mr. Schechter served as a Vice President of Global Special Situations at Citigroup, a unit responsible for making proprietary investments in distressed situations. . Mr. Schechter was previously a director of; Mentor Graphics Corporation, an electronic design automation software company, from October 2013, to March 2015; Hain Celestial Group Inc., a natural and organic food and personal care products company, from July 2010 to November 2013; WebMD Health Corp., an online health information provider, from June 2012 to August 2013; Federal-Mogul Corporation, a supplier of automotive powertrain and safety components, from December 2007 to October 2012; WestPoint Home LLC, a home textiles manufacturer, from November 2007 to December 2011; XO Holdings, a competitive provider of telecom services, from March 2009 to August 2011. Federal-Mogul, WestPoint Home and XO Holdings each are indirectly controlled by Carl C. Icahn. Mr. Icahn also has or previously had a non-controlling interest in our Company, Mentor Graphics, Hain Celestial, WebMD, WCI Communities and BKF Capital through the ownership of securities. Mr. Schechter received a B.S. in Economics, cum laude, from the Wharton School at the University of Pennsylvania in May 1997. Mr. Schechter was appointed to the Board pursuant to the Nomination and Standstill Agreement. Mr. Schechter serves on our Board of Directors as a designee of Carl Icahn and his affiliated entities. Mr. Schechter’s experience in investing and service on other boards of directors provides expertise in investing, corporate strategy and corporate governance.

Required Vote

The nine nominees receiving the highest number of affirmative votes of the shares of the Company’s Common Stock present at the Annual Meeting in person or by proxy and entitled to vote shall be elected as directors. Unless marked to the contrary, proxies received will be voted “FOR ALL” the Board’s nominees. Abstentions and broker non-votes will not affect the outcome of the vote.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE “FOR ALL” THE ELECTION OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS.

CORPORATE GOVERNANCE

Board of Director Meetings and Committees

The Board of Directors held a total of 7 (seven) meetings during the fiscal year ended September 30, 2015. Each director attended at least 75% of the aggregate number of meetings of the Board of Directors and the committees of the Board of Directors on which he or she served.

Board Independence

The Board of Directors has determined that Ms. Martin and each of Messrs. Finocchio, Frankenberg, Icahn, Janeway, Laret, Quigley and Schechter are independent within the meaning of the listing standards of the NASDAQ Stock Market.

Committees of the Board of Directors

The Board of Directors has Audit, Nominating, Governance and Compensation Committees as standing committees. These committees meet regularly throughout the year and also hold special meetings or act by written consent from time to time as appropriate. The Board has delegated various responsibilities and authority to its committees as generally described below. The committees regularly report on their activities and actions to the Board. Each of these committees has adopted a written charter. All members of the committees are appointed by the Board of Directors, and are non-employee directors.

Audit Committee

The Audit Committee currently consists of Messrs. Frankenberg, Laret, Myers and Quigley, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable U.S. Securities and Exchange Commission, or SEC, rules and the listing standards of the NASDAQ Stock Market. The Audit Committee held 7 (seven) meetings during the fiscal year ended September 30, 2015. Mr. Frankenberg serves as Chairman of the Audit Committee.

The Board of Directors has determined that Mr. Frankenberg is an audit committee financial expert as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Mr. Frankenberg’s relevant experience includes his service as the Chief Executive Officer of Novell, Inc., where he actively supervised that company’s principal financial officer, and his service as a member of several other audit committees.

The Audit Committee reviews the engagement of the Company’s independent registered public accounting firm, reviews annual financial statements, considers matters relating to accounting policy and internal controls, reviews whether non-audit services provided by the independent registered public accounting firm affect the accountants’ independence and reviews the scope of annual audits in accordance with a written Audit Committee Charter.

The Audit Committee Report is included in this Proxy Statement. In addition, the Board of Directors adopted an Amended and Restated Charter for the Audit Committee in March 2015, a copy of which is available on the Company’s Web site at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/audit-committee/index.htm

Nominating Committee

The Nominating Committee currently consists of Messrs. Frankenberg, Myers and Janeway, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable U.S. Securities and Exchange Commission, or SEC, rules and the listing standards of the NASDAQ Stock Market. Mr. Myers serves as the Chairman of the Nominating Committee. The Nominating Committee held 3 (three) meetings during the fiscal year ended September 30, 2015.

The mandate of the Nominating Committee is to ensure that the Board of Directors is properly constituted to meet its fiduciary obligations to stockholders and the Company. The Nominating Committee was formed to

consider and periodically report on matters relating to the identification, selection and qualification of the Board of Directors and candidates nominated to the Board of Directors and its committees.

The Board of Directors adopted a written charter for the Nominating Committee in April 2004, a copy of which is available on the Company’s Web site at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/nominating-committee/index.htm

Governance Committee

The Governance Committee currently consists of Ms. Martin and Messrs. Frankenberg and Laret, each of whom is independent within the meaning of the requirements of the Sarbanes-Oxley Act of 2002, applicable SEC rules and the listing standards of the NASDAQ Stock Market. Ms. Martin serves as the Chairman of the Governance Committee. The Governance Committee held 1 (one) meeting during the fiscal year ended September 30, 2015.

The mandate of the Governance Committee is to ensure that the Board of Directors and the Company have and follow appropriate governance standards. To carry out this purpose, the Governance Committee develops and recommends to the Board the governance principles applicable to the Company and oversees the evaluation of the Board.

The Board of Directors adopted a written charter for the Governance Committee in March 2004, a copy of which is available on the Company’s Web site at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/governance-committee/index.htm

Compensation Committee

The Compensation Committee currently consists of Messrs. Frankenberg and Myers, each of whom is (i) independent within the meaning of the listing standards of the NASDAQ Stock Market, (ii) a non-employee director within the meaning of Section 16 of the Exchange Act and (iii) an “outside” director within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended. Mr. Frankenberg serves as the Chairman of the Compensation Committee. The Compensation Committee held 10 (ten) meetings during the fiscal year ended September 30, 2015.

The mandate of the Compensation Committee is to review and recommend to the Board of Directors the Company’s compensation and benefit policies, and oversee, evaluate and approve compensation plans, policies and practices for the Company’s executive officers. The Board of Directors adopted a written charter for the Compensation Committee in March 2014, a copy of which is available on the Company’s Web site at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/compensation-committee/index.htm

The Compensation Committee Report and the Compensation Discussion and Analysis are included elsewhere in this Proxy Statement.

Consideration of Director Nominees

Stockholder Nominees

The Nominating Committee will consider properly submitted stockholder nominations for candidates for membership on the Board of Directors as well as candidates recommended for consideration by the Nominating Committee as described below under “Identifying and Evaluating Nominees for Directors.” Any stockholder nominations must comply with the requirements of the Company’s Bylaws and should include all information relating to such nominee as would be required to be disclosed in solicitations of proxies for the election of such nominee as a director pursuant to Regulation 14A under the Exchange Act, such nominee’s written consent to be named in the proxy statement as a nominee and to serve as a director if elected, as well as a written statement executed by such nominee acknowledging that as a director of the Company, such nominee will owe a fiduciary duty under the General Corporation Law of the State of Delaware exclusively to the Company and its stockholders. In addition, stockholder nominations should be submitted within the time frame as specified under

“Stockholder Proposals” above and addressed to: Nuance Communications, Inc., Attention: General Counsel, One Wayside Road, Burlington, MA 01803.

A stockholder that instead desires to merely recommend a candidate for consideration by the Nominating Committee shall direct the recommendation in writing to Nuance Communications, Inc., Attention: General Counsel, One Wayside Road, Burlington, MA 01803, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years and evidence of the nominating person’s ownership of Company stock.

Director Qualifications

In discharging its responsibilities to nominate candidates for election to the Board of Directors, the Nominating Committee has not specified any minimum qualifications for serving on the Board of Directors. However, the Nominating Committee endeavors to evaluate, propose and approve candidates with business experience and personal skills in technology, finance, marketing, financial reporting and other areas that may be expected to contribute to an effective Board of Directors. The Nominating Committee seeks to ensure that the Board of Directors is composed of individuals who have experience relevant to the needs of the Company and who have the highest professional and personal ethics, consistent with the Company’s values and standards. Candidates should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience.

Identifying and Evaluating Nominees for Directors

The Nominating Committee utilizes a variety of methods for identifying and evaluating director nominees. Candidates may come to the attention of the Nominating Committee through current members of the Board of Directors, professional search firms, stockholders or other persons. These candidates are evaluated at regular or special meetings of the Nominating Committee and may be considered at any point during the year. As described above, the Nominating Committee considers properly submitted stockholder nominations and recommendations for candidates for the Board of Directors. Following verification of the stockholder status of persons proposing candidates, nominations and recommendations are aggregated and considered by the Nominating Committee. If any materials are provided by a stockholder in connection with the nomination or recommendation of a director candidate, such materials are forwarded to the Nominating Committee. The Nominating Committee also reviews materials provided by professional search firms or other parties in connection with a nominee who is not proposed by a stockholder.

Pursuant to the terms of a Nomination and Standstill Agreement, dated October 7, 2013, with High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Enterprises G.P. Inc., Icahn Enterprises Holdings L.P., IPH GP LLC, Icahn Capital LP, Icahn Onshore LP, Icahn Offshore LP, and Beckton Corp. (collectively, the “Icahn Group”), the Company agreed to appoint two persons designated by the Icahn Group to the Board of Directors (the “Icahn Designees”). Pursuant to such agreement, for any annual meeting of the Company’s stockholders after the 2014 Annual Meeting, the Company must notify the Icahn Group in writing no less than 45 calendar days in advance of the Company’s advance notice deadline if either or both of the Icahn Designees will not be nominated by the Company for election as a director at such annual meeting.

Compensation Committee Interlocks and Insider Participation

The Compensation Committee currently consists of Messrs. Frankenberg and Myers. None of the members of the Compensation Committee has been or is an officer or employee of the Company. None of the Company’s executive officers serve on the board of directors or compensation committee of a company that has an executive officer that serves on the Company’s Board or Compensation Committee.

Annual Meeting Attendance

Although we do not have a formal policy regarding attendance by members of the Board of Directors at our annual meetings of stockholders, directors are encouraged to attend annual meetings of the Company. Six (6) of our then-nine directors attended the 2015 annual meeting of stockholders.

Communication with the Board of Directors

Although we do not have a formal policy regarding communications with the Board of Directors, stockholders who are interested in communicating with the Board of Directors are encouraged to do so by submitting an email to generalcounsel@nuance.com or by writing to us at Nuance Communications, Inc., Attention: General Counsel, One Wayside Road, Burlington, MA 01803. Stockholders who would like their submission directed to a member of the Board of Directors may so specify.

Code of Ethics

Our Board of Directors adopted an amended and restated Code of Business Conduct and Ethics for all of our directors, officers and employees in September 2015. Our Code of Business Conduct and Ethics can be found on our website: http://www.nuance.com/company/company-overview/company-policies/corporate-governance/code-of-ethics/index.htm. We will provide to any person without charge, upon request, a copy of our Code of Business Conduct and Ethics. Such a request should be made in writing and addressed to Nuance Communications, Inc., Attention: Investor Relations, One Wayside Road, Burlington, MA 01803.

Stock Ownership Guidelines

On August 11, 2006, the Board of Directors adopted stock ownership guidelines for our executive officers and the non-employee members of the Board of Directors. These guidelines were adopted to further align the interests of our executive officers and non-employee members of the Board of Directors with the interests of our stockholders. Under these guidelines, the target share ownership levels are five times base salary for our chief executive officer, three times base salary for our other executive officers, and three times the annual cash retainer for the non-employee members of the Board of Directors. Shares of the Company’s common stock subject to outstanding and unexercised options, whether or not vested, as well as shares of the Company’s common stock subject to outstanding and unvested restricted stock awards are not counted for purposes of satisfying these guidelines. We have not specified a time period during which individuals must be in compliance with the guidelines, however, until an individual has reached the appropriate target level, he or she is required to retain 25% of the net shares received as a result of the exercise of stock options or vesting of restricted stock or restricted stock unit awards. Satisfaction of the stock ownership guidelines is calculated based on the closing market price of the Company’s common stock on a quarterly basis.

Corporate Governance Guidelines

Our corporate governance principles are set forth in our “Corporate Governance Guidelines.” These guidelines cover the following significant topics:

Board Selection Process. It is expected that all directors will be alert to potential Board candidates with appropriate skills and characteristics and communicate information regarding Board selection matters to the Nominating Committee. The Nominating Committee is expected to exercise initiative in recommending to the Board candidates for directorships and Board committee assignments. The Company does not have a formal policy with regard to the consideration of diversity in identifying Director nominees; however, the Board endorses the value of seeking qualified directors from backgrounds otherwise relevant to the Company’s mission, strategy and business operations and perceived needs of the Board at a given time.

Director’s Eligibility, Education, and Term of Office. Directors may not serve on the Board of Directors of more than five other public companies. Directors are reimbursed for costs incurred in connection with participating in director education programs. Each director is required to notify the Chairman upon a job change. The Governance Committee may consider such change of status in recommending to the Board whether the director

should continue serving as a member of the Board. Directors who are not nominated for re-election by the Board must retire from the Board at the conclusion of any term during which the director reaches the age of seventy-five years.

Committees. The current committee structure of the Board includes the following committees: Audit, Compensation, Nominating and Governance. The charters of each standing committee are reviewed periodically with a view to delegating committees with the authority of the Board concerning specified matters appropriate to such committee.

Board’s Role in Risk Oversight

The Board has an active role, as a whole and also at the committee level, in overseeing management of Company risk. This role is one of informed oversight rather than direct management of risk. The Board regularly reviews and consults with management on strategic direction, challenges and risks faced by the Company. The Board also reviews and discusses with management quarterly financial results and forecasts. The Audit Committee of the Board oversees management of financial risks, including its investment policies. The Compensation Committee of the Board is responsible for overseeing the management of risks relating to and arising from the Company’s compensation plans and arrangements. These committees provide regular reports, generally on a quarterly basis, to the full Board.

Management is tasked with the direct management and oversight of legal, financial, and commercial compliance matters, which includes identification and mitigation of associated areas of risk. The Chief Financial Officer, the Chief Accounting Officer and Sr. Director of Corporate Compliance provide regular reports to the Audit Committee concerning financial, tax and compliance related risks. In addition, the Audit Committee receives periodic reports from management on the Company’s compliance programs and efforts, investment policy and practices, and compliance with debt covenants. Management and the Company’s compensation consultant provide analysis of risks related to the Company’s compensation programs and practices to the Compensation Committee.

The Board’s Leadership Structure

The Board currently combines the role of Chairman and Chief Executive. The Board believes that the Chief Executive Officer is best situated to serve as Chairman because he is the director most familiar with the Company’s business and industry and is therefore best able to identify the strategic priorities to be discussed by the Board. The Board believes that combining the role of Chairman and Chief Executive Officer facilitates information flow between management and the Board and fosters strategic development and execution. The Board has appointed Robert Frankenberg as the lead independent director. The lead independent director serves as the focal point for independent directors, coordinating feedback to the CEO on behalf of the independent directors regarding business issues and board management. The lead independent director and the other independent directors meet regularly without the CEO present.

Compensation Risk Assessment

In November 2015, the Compensation Committee and management considered whether the Company’s compensation programs for employees create incentives for employees to take excessive or unreasonable risks that could materially harm the Company. The Compensation Committee believes that our compensation programs are typical for our industry and that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Compensation of Non-Employee Directors

The non-employee members of the Board of Directors receive a cash retainer for Board and Board committee service, 25% of which is payable on a quarterly basis following the fiscal quarter of service, as follows:


Board/Committee	Applicable Retainer
Board	$	50,000
Audit Committee Chair	$	30,000
Audit Committee Member	$	15,000
Compensation Committee Chair	$	25,000
Compensation Committee Member	$	15,000
Nominating Committee Chair	$	10,000
Nominating Committee Member	$	5,000
Governance Committee Chair	$	10,000
Governance Committee Member	$	5,000
Lead Director	$	20,000

The Company also reimburses the non-employee members of the Board of Directors for their expenses in connection with their attendance at meetings.

The non-employee members of the Board of Directors are also eligible to participate in the 1995 Directors’ Stock Plan, as amended (the “Directors’ Plan”). The Directors’ Plan provides that an initial restricted stock unit award for 30,000 shares of the Company’s common stock will be granted to individuals upon first joining the Board of Directors as a non-employee director, with a purchase price equal to $0.001 per share. In addition, the non-employee members of the Board of Directors are eligible to automatically receive annual restricted stock unit awards for 15,000 shares of the Company’s common stock on January 1 of each year, provided that, on such date, he or she has served on the Board of Directors for at least six months, with a purchase price equal to $0.001 per share. All restricted stock unit awards granted to the non-employee members of the Board of Directors vest in equal annual increments over a three-year period, subject to his or her continuous service to the Company through each such vesting date.

The following table provides information regarding the actual cash and equity compensation earned, paid to and received by the non-employee members of the Board of Directors during fiscal 2015:

FISCAL 2015 DIRECTOR COMPENSATION TABLE


Name	Fees Earned or Paid in Cash ($)		Stock Awards ($)(1) (2)		Total ($)
Robert J. Finocchio		25,000		466,470		491,470
Robert J. Frankenberg		135,000		213,285		348,285
Brett Icahn		50,000		213,285		263,285
William H. Janeway		55,000		213,285		268,285
Mark R. Laret		70,000		213,285		283,285
Katharine A. Martin		60,000		213,285		273,285
Mark B. Myers		90,000		213,285		303,285
Philip J. Quigley		65,000		213,285		278,285
David S. Schechter		50,000		213,285		263,285

(1)

Amounts reported in the Stock Awards column represent the grant date fair value with respect to the restricted stock unit awards granted to their non-employee members of the Board of Directors during fiscal 2015, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”) based on the closing market price of the Company’s common stock on the grant date (which was $14.22 per share for the annual award and $15.55 for the initial award issued to Mr. Finocchio). During fiscal 2015, no non-employee directors forfeited shares. The grant date fair value of each restricted stock unit award granted during fiscal 2015 is set forth in the following table:


Name	Grant Date		Shares		Value ($)
Mr. Finocchio		April 29, 2015		30,000		466,470
Mr. Frankenberg		January 1, 2015		15,000		213,285
Mr. Icahn		January 1, 2015		15,000		213,285
Mr. Janeway		January 1, 2015		15,000		213,285
Mr. Laret		January 1, 2015		15,000		213,285
Ms. Martin		January 1, 2015		15,000		213,285
Mr. Myers		January 1, 2015		15,000		213,285
Mr. Quigley		January 1, 2015		15,000		213,285
Mr. Schechter		January 1, 2015		15,000		213,285

(2)	The aggregate number of unvested shares of the Company’s common stock subject to outstanding stock awards held by each non-employee member of the Board of Director as of September 30, 2015 is set forth in the following table:


Name	Unvested Shares Subject to Outstanding Stock Awards
Mr. Finocchio		30,000
Mr. Frankenberg		30,000
Mr. Icahn		35,000
Mr. Janeway		30,000
Mr. Laret		30,000
Ms. Martin		30,000
Mr. Myers		30,000
Mr. Quigley		30,000
Mr. Schechter		35,000

There were no outstanding shares of the Company’s common stock subject to outstanding stock options as of September 30, 2015. There were no stock options granted to the non-employee directors during fiscal 2015.

EXECUTIVE COMPENSATION, MANAGEMENT AND OTHER INFORMATION

Information Concerning Current Executive Officers Who Are Not Directors

A. Bruce Bowden, 46, joined the Company in October 2010 as our Executive Vice President of Corporate Strategy and Development and was elected as an Executive Officer on November 15, 2010. In October 2014, Mr. Bowden expanded his role by taking over responsibility of our global legal organization. Previously, Mr. Bowden was employed by Nokia from June 2006 through April 2010 in a number of different positions, most notably as Vice President and Global Head of Mergers and Acquisitions. Prior to joining Nokia, Mr. Bowden served as Director, Corporate Strategy & Development (head of North American M&A) for PepsiCo from November 2004 through June 2006.

Earl H. Devanny, III, 63, joined the Company in April 2014 and currently serves as our President, Healthcare Division and was elected an executive officer on April 30, 2014. Prior to joining the Company, Mr. Devanny served as chairman and CEO of TriZetto Corporation from July, 2010 to May, 2013. He also held several executive roles at Cerner Corporation, most recently as president, over an eleven year period from 1999 through 2010.

William Robbins, 48, joined the Company in December 2013 and currently serves as our Executive Vice President of Worldwide Sales and was elected an Executive officer on January 17, 2014. Prior to joining the Company, Mr. Robbins served as Chief Operating Officer of [24]7 from January 2013 to December 2013. Prior to joining [24]7, Mr. Robbins held various leadership roles, including the role of executive vice president, Worldwide Sales & Services, in addition to other leadership roles at Symantec.

Daniel D. Tempesta, 45, was appointed as the Company’s Executive Vice President of Finance and Chief Financial Officer on July 21, 2015. Prior to his appointment as Chief Financial Officer, Mr. Tempesta served as the Company’s Chief Accounting Officer, Corporate Controller and Senior Vice President of Finance. He joined the Company in March 2008. Previously, Mr. Tempesta was with Teradyne, Inc. from February 2004 to February 2008 where he held several positions, including Chief Accounting Officer and Corporate Controller. Prior to that Mr. Tempesta was in the audit practice of PricewaterhouseCoopers L.L.P.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the following Compensation Discussion and Analysis included in this Proxy Statement. Based on its review and discussion with management, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement and, by reference, in the Company’s Annual Report on Form 10-K for the fiscal year ending September 30, 2015.

The Compensation Committee:

Mr. Frankenberg, Chairman

Mr. Myers

COMPENSATION DISCUSSION & ANALYSIS

Compensation Discussion and Analysis (“CD&A”)

This CD&A provides information regarding the fiscal 2015 compensation of our principal executive officer, our current and former principal financial officer, and the three executive officers (other than our principal executive officer and principal financial officer) who were our most highly-compensated executive officers as of the end of fiscal 2015. These individuals were:

•

Paul A. Ricci, our Chief Executive Officer and Chairman of our Board of Directors (our “CEO”):

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Thomas L. Beaudoin, our former Executive Vice President and Chief Financial Officer;

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Daniel Tempesta, our current Executive Vice President and Chief Financial Officer;

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A. Bruce Bowden, our Executive Vice President, Corporate Strategy and Development and Legal;

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Earl H. Devanny III, our President, Healthcare Division; and

•

William Robbins, our Executive Vice President, Worldwide Sales.

Fiscal 2015 Management Changes

In October 2014, Mr. Bowden’s role expanded to include leadership of our global legal organization.

In July 2015, Mr. Beaudoin resigned from his position as our Executive Vice President and Chief Financial Officer effective July 31, 2015.

On July 21, 2015, Mr. Tempesta was appointed as our Executive Vice President and Chief Financial Officer.

These executive officers were our named executive officers (the “Named Executive Officers”) for fiscal 2015. In this Compensation Discussion and Analysis, Nuance Communications, Inc. is referred to as “our,” “us,” “we,” or “the Company.”

This CD&A describes the material elements of our executive compensation program during the fiscal year ended September 30, 2015. It also provides an overview of (1) our stockholder engagement and executive compensation program updates following our 2013-2014 stockholder advisory vote on our named executive officer compensation, (2) our fiscal 2015 business highlights, (3) our executive compensation philosophy, as well as our principal compensation policies and practices and (4) an analysis of how and why the Compensation Committee of our Board of Directors (the “Compensation Committee”) arrived at the specific compensation decisions for our executive officers, including the Named Executive Officers, in fiscal 2015, and discusses the key factors that the Compensation Committee considered in determining the compensation of our executive officers.

Fiscal 2015 Business Summary

In fiscal 2015, we continued to improve our performance, evolve our business toward recurring revenue models, execute upon our formal transformation program, and position the Company for increased future revenue growth.

Our improved performance is evidenced in several key metrics, with the exception of recurring revenue; represent some of the metrics considered by the Compensation Committee when assessing the performance-based compensation of our executive officers’ for fiscal 2015.

•

Bookings. In fiscal 2015, total bookings were $2,389.0 million, down from $2,441.9 million in fiscal 2014. Bookings, which include both net new bookings and renewals, can vary significantly from quarter to quarter due to timing and size of renewals.

•

Net New Bookings. In fiscal 2015, total net new bookings were $1,450.4 million, up 4% from $1,400.6 million in fiscal 2014.

•

Revenue. Fiscal 2015 non-GAAP revenue of $1,979.1 million was down slightly from $1,987.1 million in fiscal 2014. Fiscal year 2015 GAAP revenue was $1,931.1 million, up slightly from $1,923.5 million in fiscal 2014.

•

Recurring Revenue. Total fiscal 2015 non-GAAP recurring revenue at the end of fiscal 2015 was $1,314.7 million and represented 66% of total non-GAAP revenue, compared to $1,263.3 million and 64% in fiscal 2014.

•

Margins. Our fiscal 2015 non-GAAP operating margin was 26.2%, compared to 23.7% in fiscal 2014. Non-GAAP operating margin improvement resulted from a 70 basis point improvement in non-GAAP gross margins, from 62.2% in fiscal 2014 to 62.9% in fiscal 2015, as we achieved gross margin expansion in each revenue line item. In addition, we experienced cost reductions in all major operating expense line items as we intensified our commitment in 2015 to deliver cost efficiencies and drive greater profitability for the business.

•

Net Income. Fiscal 2015 non-GAAP net income was $411.6 million, or $1.27 per diluted share, compared to $360.1 million, or $1.12 per diluted share, in fiscal 2014. We recognized GAAP net loss of $(115.0) million, or $(0.36) per share, compared to GAAP net loss of $(150.3) million, or $(0.47) per share, in fiscal 2014.

•

Cash Flow. Nuance reported record full-year cash flow from operations of $487.6 million, up 36% compared to $358.1 million in fiscal 2014, benefitting from strong profitability, growing deferred revenues and Days Sales Outstanding (“DSO”) improvements. Cash Flow from Operations (“CFFO”) as a percent of non-GAAP net income was 118%, up from 99% a year ago, well in excess of our annual target of 100%. Nuance ended fiscal 2015 with $568.8 million in cash, cash equivalents and marketable securities.

•

Deferred Revenue. Nuance ended fiscal 2015 with total deferred revenue of $668.2 million, up 22% compared to $548.1 million a year ago.

See Annex B for a reconciliation of GAAP financial measures.

In 2015, we initiated a formal transformation program designed to focus our product investments on our best growth opportunities, increase operating efficiencies, reduce costs and further enhance shareholder value through share buybacks. We intensified our focus in Q415 and are pleased with progress evidenced by year-over-year improvements in gross margins, operating margins and earnings-per-share. We continued to reallocate investments toward our growth opportunities, including for example our automotive solutions, Dragon Medical, multi-channel cloud, voice biometrics solutions, and multi-function printer (MFP) offerings.

Within this program, we have targeted expense reductions, and reduced expenditures broadly in cost of goods sold and operating expenses, which contributed to our improved year-over-year performance. Actions to date, under this program, have already contributed to annualized savings and represent substantial progress toward our goal. We also continued to execute under our stock repurchase plan. As of September 30, 2015 we had repurchased 31.2 million shares of our common stock, and we had $490.0 million remaining under the Board’s $1.0 billion repurchase authorization.

The ongoing transition of our business model and financial results were carefully considered by the Compensation Committee in reaching its decisions regarding the performance-based compensation of our executive officers for fiscal 2015, as discussed in more detail below.

Fiscal 2015 Executive Compensation Highlights

Consistent with our compensation philosophy, the target total direct compensation opportunities of our executive officers, including the Named Executive Officers, are directly tied to performance measures designed to increase our revenue and profitability and, thereby, produce long-term stockholder value. As a result of our financial performance and the achievement of some of the target levels established for these performance measures in fiscal 2015, the compensation actually earned by our executive officers ranged from 75% to 110% of their target total direct compensation opportunities.

For fiscal 2015, the Compensation Committee took the following actions with respect to the compensation of the Named Executive Officers:

•

Base salary. With the exception of Messrs. Bowden and Tempesta, maintained their annual base salaries at their fiscal 2014 levels. In connection with the expansion of his role, the Compensation Committee adjusted Mr. Bowden’s base salary to reflect his expanded responsibilities. Mr. Tempesta’s base salary was adjusted by the Compensation Committee as a result of his promotion to Executive Vice President and Chief Financial Officer.

•

Annual Bonus. With the exception of Mr. Tempesta, maintained their target bonus opportunities at their fiscal 2014 levels. The Compensation Committee adjusted Mr. Tempesta’s target bonus opportunity as a result of his promotion to Executive Vice President and Chief Financial Officer. The Compensation Committee awarded annual bonuses that ranged from 0% to 125% of their target bonus opportunity based on our level of achievement of the annual bonus plan’s performance objectives. Further details on these decisions, including the level of discretion exercised by the Compensation Committee, may be found in the Short-Term Incentive section below.

•

Equity Awards. Approved equity awards in amounts that the Compensation Committee believed to be competitive, satisfied our retention objectives, and rewarded them for individual performance and expected future contributions. Half of these awards were entirely performance-based, the value of which will be earned only if they achieve the performance goals established annually for such awards.

In addition, the Compensation Committee approved an amendment in June 2015 to the Employment Agreement with our CEO. See the “Employment Agreements” section below for a description of this amendment.

Stockholder Engagement and Executive Compensation Program Updates Following 2013, 2014 and 2015 Say-on-Pay Vote

Over the last several years and following disappointing results with respect to the stockholder advisory vote on our Named Executive Officer compensation (the “Say-on-Pay” vote), including our most recent Say-On-Pay proposal in 2015 where approximately 85% of the votes cast were voted against the fiscal 2014 compensation of our named executive officers. We have engaged with our largest holders over the past several years and one of the major proxy advisory firms. During fiscal 2015, we reached out to shareholders representing 63 percent of our outstanding stock and had direct dialogue with holders representing approximately 54 percent of our outstanding stock.

The Compensation Committee has made a number of material changes to the compensation arrangements for our CEO as part of their commitment to developing and maintaining an executive compensation program that aligns with our business objectives, rewards for meaningful performance, and is supported by our stockholders. These changes are intended to help drive positive business results by further increasing accountability and enhancing the link between individual pay and our financial and operational performance.

The key changes made by the Compensation Committee to our CEO’s compensation arrangements since the 2013 Annual Meeting of Stockholders are summarized in the following chart.


What We Heard from Investors	Practice prior to Fiscal 2014	How We Have Responded
The value of the equity awards granted to our CEO were excessive and did not effectively align to our performance.	Our CEO received equity awards as follows: —750,000 time-based restricted stock awards (“TBRSA’s”) that would vest in equal annual installments over three years —750,000 performance-based restricted stock units (“PBRSU’s”) that were to be earned based on performance goals established annually over a three-year period.	—Fiscal 2014—Reduced the target grant value of our CEO’s equity award by 75% which approximated the market median of our compensation peer group, 50% of which was performance-based and 50% of which was time-based. —Fiscal 2015—Continued with the practice of aligning the target grant value of our CEO’s equity award to the approximate market median. Our CEO was issued with a market-based award of 500,000 RSU’s that were issued 50% in time-based restricted stock units (“TBRSUs”) and 50% in PBRSUs. —Fiscal 2016—Granted our CEO an equity award of 500,000 PBRSUs with a target grant value which approximated the market median, with 100% of the award performance-based which would only be earned if we achieve our objectives in fiscal 2017.

Discouraged use of similar performance measures for our annual bonus program and long-term incentive compensation.	The single performance measure used for our annual bonus program in fiscal 2013 was revenue only. Revenue was also used as a performance measure in our long-term incentive compensation awards.	—Changed the performance measures for our annual bonus program. For fiscal 2014 and 2015, bonuses are not on similar measures, but are on measures based on an intersection of the achievement of pre-established non-GAAP revenue and earnings-per-share target levels.

Expressed concern that the performance measures for our long-term incentive awards were not truly “long-term” as they are established and measured over three consecutive one-year periods.	The performance measures for our CEO’s long-term incentive awards were based 50% on non-GAAP revenue and 50% on non-GAAP earnings-per-share over one-year periods.	—During the first quarter in fiscal 2014, our CEO’s performance-based awards were redesigned to be measured over a two-year performance period based on a strategic leadership succession planning goal.

What We Heard from Investors

Practice prior to Fiscal 2014

How We Have Responded

—Established a two-year performance period based on relative total stockholder return (“TSR”) to be measured against the NASDAQ Composite Index for the performance-based award which in December 2012 was redesigned from a one-year measurement period to this two-year metric.

—In fiscal 2014 and 2015, we added a Company gross and net new bookings measure to create a focus on future revenue growth during our business transition.

The following chart highlights the impact of the actions taken by the Compensation Committee to our CEO’s target total direct compensation opportunity for each of the past five fiscal years demonstrating the Compensation Committee’s commitment to providing a meaningful response to our stockholder’s feedback.

LOGO

Chief Executive Officer Total Compensation Alignment to Total Shareholder Return

As depicted in the five-year chart below of our CEO Total Compensation versus Total Shareholder Return Compensation, the actions that have been taken by the Compensation Committee have resulted in a more favorable alignment of Mr. Ricci’s and our stockholders’ interests.

LOGO

Total Compensation reflected above is as reported in the summary compensation table in each of the applicable fiscal years.

Executive Compensation-Related Policies and Practices

We endeavor to maintain sound executive compensation policies and practices, including compensation-related corporate governance standards, consistent with our executive compensation philosophy. During fiscal 2015, we maintained the following policies and practices, including both policies and practices we have implemented to drive performance and policies and practices that either prohibit or minimize behaviors that we do not believe serve our stockholders’ long-term interests:

What We Do

Maintain a Compensation Committee comprised solely of independent directors who have established effective means for communicating with our stockholders regarding their executive compensation ideas and concerns.

Enable the Compensation Committee to engage and retain its own advisors. During fiscal 2015, the Compensation Committee continued to engage Compensia, Inc. to assist with its responsibilities. Compensia performs no other services for the Company.

The Compensation Committee conducts an annual review of our executive compensation strategy, including a review of the compensation peer group used for comparative purposes, and, to help avoid creating any such risks that would be reasonably likely to have a material adverse effect on us, an annual review of our compensation-related risk profile.

Design the equity awards granted to our executive officers to vest or be earned over multi-year periods, which is consistent with current market practice, and better serves our long-term value creation goals and retention objectives.

Design our executive compensation program to use performance-based short-term and long-term incentive compensation awards to align of the long-term interests of our executive officers with the interests of our stockholders.

Provide modest amounts of perquisites and other personal benefits to our executive officers which serve a sound business purpose.

Require that all change-in-control payments and benefits are based on a “double-trigger” arrangement (that is, they first require both a change-in-control of the Company and a qualifying termination of employment before an executive officer is eligible to receive any such payments and benefits).

Provide that all change-in-control payment and benefit amounts and multiples are within reasonable market norms.

Maintain a rigorous stock ownership policy for our executive officers which require each of them to beneficially own a specified amount of our common stock computed as a multiple of their annual base salary.

Maintain a compensation recovery (“clawback”) policy which provides that, in the event we are required to prepare an accounting restatement, we may recover from our executive officers any incentive compensation erroneously paid or awarded in excess of what would have been paid under the accounting restatement.

Our Board of Directors reviews the risks associated with our key executive positions on an annual basis so that we have an adequate succession strategy and plans are in place for our most critical positions.

Prohibit our executive officers and members of our Board of Directors from speculating in our equity securities, including the use of short sales, “sales against the box” or any equivalent transaction involving our equity securities, or engaging in any other hedging transactions with respect to our equity securities. In addition, we prohibit our employees, executive officers, and members of our Board of Directors from pledging their equity securities or using such securities as collateral for a loan.

What We Do Not Do

Offer pension arrangements, defined benefit retirement plans, or nonqualified deferred compensation plans to our executive officers.

Provide any tax reimbursement payments or “gross-ups” in connection with any severance or change-in-control payments or benefits to our executive officers.

Pay dividends or dividend equivalents on unvested or unearned restricted stock unit and performance-based restricted stock unit awards.

Reprice options to purchase shares of our common stock without stockholder approval.

Compensation Philosophy

Our compensation philosophy is designed to promote our business objectives on the principle that our strategic and operational achievements result from the coordinated efforts of all employees working toward common strategic goals. Our guiding compensation principles focus on:

•

aligning the interests of our executive officers and our stockholders and customers by offering significant levels of at-risk compensation in the form of a) an annual short-term incentive bonus opportunity, and b) both time-based and performance-based restricted stock unit awards for shares of our common stock so that the long-term incentives available to our executive officers are directly correlated to our financial performance;

•

paying our executive officers on the basis of their value to the organization;

•

maintaining a compensation program that ensures compensation levels that are competitive with those of other organizations in our labor markets, based on our current financial condition; and

•

attracting, retaining, and motivating the best employees.

Compensation Objectives and Challenges

Our overall compensation objective is to compensate our executive officers and other employees in a manner that attracts and retains the caliber of individuals needed to manage and staff a dynamic, highly-complex business in an innovative industry. For our executive officers, including the Named Executive Officers, we seek to align our executive compensation program with the interests of our stockholders by tying a significant portion of their total compensation to the performance of our common stock.

Currently, we face challenges in hiring and retaining executive officers due to a number of factors that contribute to a relatively small pool of executive talent being available. We believe that this makes recruiting and retaining executive officers difficult, and our executive compensation program takes into account and seeks to address these challenges, including the following:

•

Highly Competitive Voice Recognition and Natural Language Understanding Industry — The market for voice recognition solutions and natural language understanding technologies is highly competitive, rapidly evolving, and fragmented, and is subject to changing technologies, shifting customer needs, and the frequent introduction of new products and services. Our position as a pioneer in this innovative and highly-competitive industry makes us a more attractive employer to some executives but a less attractive employer to others. In addition, our success has made our executive officers more attractive as candidates for employment with other companies, creating additional challenges for us to retain them.

•

Executive Background — We hire deeply-experienced managers with specific experience in key functional areas who have operated in a fast-moving environment similar to the one in which we operate. The number of executives with the most desirable experience in our industry is relatively low and these executives are difficult to find. We have expanded our recruiting efforts both geographically and into other industries and sectors, which leads to increased complexity in recruiting efforts and has required us to be more aggressive with our executive compensation packages.

•

Corporate Environment — We are a demanding employer and our fast-moving, challenging culture is not always suited to the executives who comprise the talent pool from which we recruit. Like many companies in very dynamic markets, we place extraordinary demands on executive time and attention. This means that often prospective executives are more focused on equity compensation, and the Compensation Committee applies our compensation practices accordingly. The Compensation Committee believes that offering competitive long-term incentive compensation awards with strong upside opportunities in our compensation packages better aligns the interests of our executive officers and our stockholders. If performance is not achieved, the compensation realized by our executive officers is accordingly reduced.

•

Replacement Cost — When determining the compensation for a current executive officer who has been with us for a substantial period of time, the Compensation Committee takes into consideration what it may cost to hire that executive officer’s replacement. The Compensation Committee believes that replacement cost is highly relevant to an executive officer’s compensation because it is what we would have to pay if the executive officer left us given the factors described above and it likely approximates the executive officer’s own perceived value in the competitive environment for executive talent.

Our objective is to implement strategies for delivering compensation that align current opportunities with the overall software industry, provide sufficient emphasis on “pay-for-performance” and are appropriately aligned with our financial goals and long-term stockholder returns.

Compensation-Setting Process

Authority, Role, and Operation of the Compensation Committee

The current members of the Compensation Committee are Messrs. Frankenberg (Chair) and Myers. The Board of Directors created the Compensation Committee to discharge its responsibilities relating to the compensation of our executive officers. The Compensation Committee has overall responsibility for approving and evaluating our executive compensation program and related policies and practices. The mandate of the Compensation Committee is to review and recommend to our Board of Directors the compensation and benefit

policies for the Company, and oversee, evaluate, and approve compensation plans, policies and programs for our executive officers.

The Compensation Committee has adopted a written charter approved by our Board of Directors, which discusses in detail its responsibilities, and which is available on our corporate website at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/compensation-committee/index.htm.

The Compensation Committee establishes all elements of compensation paid to our CEO and reviews management’s recommendations for and approves all elements of compensation paid to our other executive officers, including the other Named Executive Officers. Our CEO, in consultation with our Senior Vice President and Chief Human Resources Officer, submits all recommendations regarding the compensation of our other executive officers to the Compensation Committee for its review and approval. The Compensation Committee also reviews the compensation of the non-employee members of our Board of Directors and recommends changes, when appropriate, to our Board of Directors.

In carrying out its responsibilities, the Compensation Committee may engage outside consultants and/or consult with our human resources department from time to time. The Compensation Committee also may obtain advice and assistance from internal or external legal, accounting or other advisers that it selects. The Compensation Committee may delegate any of its responsibilities to one or more subcommittees, to the extent permitted by applicable law. The Compensation Committee did not delegate any responsibilities to a subcommittee during fiscal 2015.

The Compensation Committee reviews the compensation of our executive officers, including the Named Executive Officers, annually to ensure that it is consistent with our compensation philosophy, corporate and individual performance, changes in the market, and our executive officers’ individual responsibilities. During the first quarter of our fiscal year, or in conjunction with the Company-wide performance process, the Compensation Committee conducts a review of the performance of each executive officer, including our CEO.

Our CEO presents to the Compensation Committee his evaluation of each executive officer, which includes a review of his or her contribution and performance during the last fiscal year (compared against the performance objectives that our CEO and Compensation Committee established at the beginning of the fiscal year for the executive officer), strengths, weaknesses, development plans and succession potential. Our human resources department also assists in the performance reviews of our executive officers, all of whom report directly to our CEO.

The Compensation Committee then makes its own assessments using our CEO’s presentation and, based on this assessment, approves each executive officer’s annual bonus payment, if any, for the last completed fiscal year, including any discretionary adjustments to such awards, and the elements of each executive officer’s total direct compensation opportunity, including performance-based compensation, for the current fiscal year, taking into account, in each case, our CEO’s evaluation, the scope of the executive officer’s responsibilities and experience, and its own evaluation of the competitive market.

The Compensation Committee believes that strong, long-term corporate performance is achieved with a corporate culture that encourages a long-term focus by our executive officers, including the Named Executive Officers. At the beginning of fiscal 2015, the Compensation Committee reviewed the key objectives of our operating plan and determined the performance measures that will provide focus on our continued revenue, bookings and earnings-per-share growth. In fiscal 2015, while still in the midst of a business transition which focused on strengthening our recurring revenue growth, the Compensation Committee defined the key measures that would best provide a balance between maintaining revenue during this transition and maintaining a focus on earnings-per-share. In fiscal 2015, our CEO’s performance objectives were based on achievement of the non-GAAP revenue, bookings and non-GAAP earnings-per-share target levels established by the Compensation Committee that aligned with our fiscal 2015 operating plan, while the performance objectives for the other Named Executive Officers were based on the financial objectives established for the Company as a whole and their respective business functions and responsibilities. The corporate, financial, and individual performance objectives for our executive officers are established in a manner such that target attainment is not assured; meaning that the executive officers’ receipt of compensation for performance at or above target will require significant effort on their part.

Role of Compensation Committee Advisor

The Compensation Committee retained Compensia, Inc., a national compensation consulting firm, to serve as its independent advisor for fiscal 2015. Compensia advises the Compensation Committee with respect to trends in executive compensation, compensation peer group selection, the determination and design of compensation plans and arrangements, the assessment of competitive pay levels and mix (for example, the proportion of “fixed” pay to “variable” pay and the proportion of annual cash pay to long-term incentive pay), total equity utilization levels compared to market, and setting compensation levels. As part of its engagement, Compensia conducted executive and non-employee director compensation analyses to be used in connection with the Compensation Committee fiscal 2015 compensation actions.

The Compensation Committee may replace an advisor or hire additional advisors at any time. Compensia did not provide any other services to us and received no compensation other than with respect to the services described above.

Based on the consideration of the various factors as set forth in the rules of the SEC and the listing standards of the NASDAQ Stock Market, the Compensation Committee has determined that its relationship with Compensia and the work of Compensia on behalf of the Compensation Committee has not raised any conflict of interest.

Competitive Positioning

Each year, to determine the competitiveness of our overall executive compensation program, the Compensation Committee reviews the compensation for comparable positions within our industry, the historical compensation levels of our executive officers, and the individual performance of executive officers evaluated against their individual objectives established for the preceding fiscal year. The Compensation Committee believes the group of companies that it uses for these purposes constitutes an appropriate peer group because we compete for the same employee pool at the executive level, are in the same or similar industry, and are of generally similar size as measured by revenue and market capitalization. The Compensation Committee obtains compensation data about these companies from compensation surveys, publicly-available proxy statements, and other public filings. In addition, this data is supplemented by Radford executive compensation survey data representing a broader group of technology companies that are of similar size with revenues between $1 billion to $3 billion.

In July 2014, the Compensation Committee, with the assistance of Compensia, updated the compensation peer group to account for change in our total revenue and revenue growth, market capitalization, and business/industry focus. At that time, the Compensation Committee removed VMware, Inc. from the peer group due to differences in revenue and market capitalization. It also removed BMC Software, Inc. from the peer group as a result of its acquisition. The Compensation Committee added Adobe Systems, Incorporated, LinkedIn Corporation, and Teradata Corporation to the peer group, noting their financial and business/industry similarities to us. The compensation peer group for the remainder of fiscal 2014 and to frame and evaluate the Compensation Committee’s fiscal 2015 compensation analysis, consisted of the following companies:


Adobe Systems Incorporated		Parametric Technology Corporation
Akamai Technologies, Inc.		Red Hat, Inc.
Autodesk, Inc.		Salesforce.com, Inc.
Cadence Design Systems, Inc.		Synopsys, Inc.
Citrix Systems, Inc.		Teradata Corporation
Cerner Corporation		TIBCO Software, Inc.
Informatica Corporation		Verifone Systems, Inc.
LinkedIn Corporation		VeriSign, Inc.
MICROS Systems, Inc.

In July 2015, the Compensation Committee, with the assistance of Compensia, once again updated the compensation peer group to account for change in our total revenue and revenue growth, market capitalization, and business/industry focus. At that time, the Compensation Committee removed salesforce.Com, Inc. from the peer group due to differences in revenue and market capitalization. It also removed MICROS Systems, Inc. and

TIBCO Software, Inc. from the peer group as a result of their acquisitions. Subsequent to the review of the peer group, Informatica Corporation was also acquired, thus causing it to be removed from the peer group. The Compensation Committee added Allscripts Healthcare Solutions and Intuit to the peer group, noting their financial and business and/or industry similarities to us. The compensation peer group for the remainder of fiscal 2015 consisted of the following companies:


Adobe Systems Incorporated		LinkedIn Corporation
Akamai Technologies, Inc.		Parametric Technology Corporation
Allscripts Healthcare Solutions, Inc.		Red Hat, Inc.
Autodesk, Inc.		Synopsys, Inc.
Cadence Design Systems, Inc.		Teradata Corporation
Cerner Corporation		Verifone Systems, Inc.
Citrix Systems, Inc.		VeriSign, Inc.
Intuit, Inc.

The Compensation Committee used the updated compensation peer group to frame and evaluate its fiscal 2016 compensation analysis.

Compensation Elements

In fiscal 2015, the compensation arrangements of our executive officers, including the Named Executive Officers, comprised the following elements:

•

base salary;

•

a performance-based annual bonus opportunity;

•

long-term incentive compensation in the form of equity awards;

•

company retirement and other welfare benefits;

•

personal benefits; and

•

post-employment compensation payments and benefits.

Our compensation philosophy places an emphasis on “at-risk” pay with a balanced focus between short-term and long-term strategic objectives. Consistent with this philosophy, the majority of the target total direct compensation opportunities of our executive officers, including the Named Executive Officers, is variable in nature, the payment and value of which depends on our financial results.

To achieve this objective, we use a performance-based annual bonus plan that may be paid out in cash or shares of our common stock (with or without additional vesting requirements) or a combination of both cash and shares, of which has mainly been paid in shares of our common stock, and long-term incentive compensation in the form of time-based restricted stock unit awards that may be settled for shares of our common stock, time-based restricted stock awards that may be settled for shares of our common stock, and performance-based restricted stock unit awards that may be settled for shares of our common stock.

The performance measures we establish for the annual bonus plan and the performance-based restricted stock unit awards are designed to promote stockholder return, market share increase, and revenue and earnings growth.

For fiscal 2015, the Compensation Committee elected, in consideration of the volatile nature of the software industry, compounded by the major transition of our business evolving towards recurring revenue model, to establish performance measures and related target levels for the performance-based restricted stock unit awards that were based on our fiscal 2015 financial performance as measured by non-GAAP revenue at the corporate and segment levels, corporate and segment level gross bookings, net new corporate bookings, non-GAAP earnings-per-share, segment profit margin, non-GAAP operating expense, and cash flow, while our fiscal 2015 annual bonus plan was based on the intersection of non-GAAP revenue and non-GAAP earnings-per-share

achievement. These performance measures were selected based on the Compensation Committee’s belief that these measures best position us for sustained growth in the future.

Base Salary

We use base salary to provide our executive officers, including the Named Executive Officers, with a basic fixed amount of compensation. Base salary levels reflect each executive officer’s responsibilities, performance, and expertise and are intended to be competitive with the base salary levels of comparable positions at the companies in our compensation peer group.

The Compensation Committee establishes base salary levels based, in part, on market data for our compensation peer group, as well as the job performance and level of experience of each individual executive officer, internal pay parity considerations, and replacement costs. Generally, we tie the performance-based incentive compensation opportunities and post-employment compensation arrangements for each executive officer to his or her base salary.

In October 2014, the Compensation Committee reviewed the base salaries of our executive officers, including each of the Named Executive Officers, and determined that no adjustments would be made to their base salary levels for fiscal 2015, with the exception of Mr. Bowden’s as described below.

In October 2014, in connection with an expansion of Mr. Bowden’s role, taking over leadership responsibility of our global legal team in addition to his corporate strategy and development role, the Compensation Committee approved an increase in his annual base salary from $375,000 to $400,000.

In July 2015, in connection with his promotion to Executive Vice President and Chief Financial Officer, the Compensation Committee approved an increase in the annual base salary of Mr. Tempesta from $360,500 to $400,000.

The base salaries of the Named Executive Officers during fiscal 2015 were as follows:


Named Executive Officer	Fiscal 2014 Base Salary		Fiscal 2015 Base Salary		Change
Mr. Ricci	$	800,000	$	800,000		—
Mr. Beaudoin	$	500,000	$	500,000		—
Mr. Bowden(1)	$	375,000	$	400,000		6.67	%
Mr. Devanny	$	700,000	$	700,000		—
Mr. Robbins	$	450,000	$	450,000		—
Mr. Tempesta(2)		N/A	$	400,000		10.96	%

(1)	Mr. Bowden’s base salary increase was effective as of October 7, 2014.

(2)	Mr. Tempesta’s base salary increase was effective as of July 21, 2015.

Short-Term Incentive Compensation

Consistent with our compensation philosophy, the Compensation Committee has designed our executive compensation program to ensure that a significant level of our executive officers’ target total direct compensation opportunity is at risk. To help accomplish this objective, we provide for performance-based bonus opportunities for our executive officers, including the Named Executive Officers, based on the achievement of corporate performance objectives established at the beginning of the year.

During fiscal 2015, the Compensation Committee adopted an annual executive bonus plan for our executive officers, including the Named Executive Officers, which was designed to promote the attainment of specific financial objectives (as reflected in our annual operating plan) while, at the same time, supporting our longer-term strategic business objectives, and encouraging leadership and teamwork (the “2015 Executive Officer Bonus Plan”). The Compensation Committee, after consultation with our CEO, established two financial performance measures, as well as minimum, target, and maximum performance levels for each measure. In addition, each executive officer was assigned a target bonus opportunity that generally reflected his or her position

and is expressed as a percentage of his or her base salary. The amount of each executive officer’s actual bonus payment was to be based on the extent to which we achieve or exceed the pre-established target level for each performance measure (up to a maximum percentage of 150%) that may be paid out to any executive officer.

After the end of the fiscal year, the Compensation Committee reviewed our performance against the financial performance measures and made its bonus decisions. The Compensation Committee had the discretion to approve bonus payments which were higher or lower than an executive officer’s target bonus opportunity depending on its evaluation of his or her individual performance for the fiscal year. Annual bonus payments may be paid out in cash or shares of our common stock or a combination of both cash and shares, of which has mainly been paid in shares of our common stock, which may be subject to additional vesting requirements as established by the Compensation Committee.

Target Bonus Opportunities

In November 2014, for purposes of the 2015 Executive Officer Bonus Plan, the Compensation Committee reviewed the fiscal 2015 target bonus opportunity for each executive officer, including each Named Executive Officer, and determined that, at that time, no adjustments were necessary or appropriate, with the exception of Mr. Tempesta who received an increase as a result of his promotion in July 2015.

The target bonus opportunities of the Named Executive Officers for fiscal 2015 were as follows:


Named Executive Officer	Fiscal 2015 Target Bonus Opportunity (as a Percentage of Base Salary)
Mr. Ricci		150	%
Mr. Beaudoin		85	%
Mr. Tempesta(1)		75	%
Mr. Bowden		75	%
Mr. Devanny		79	%
Mr. Robbins		78	%

1)	In connection with Mr. Tempesta’s promotion to Executive Vice President and Chief Financial Officer, his target bonus opportunity was increased by the Compensation Committee in July 2015 from 60% to 75% of his base salary.

Corporate Performance Measures

Under the 2015 Executive Officer Bonus Plan, annual bonuses were to be funded based on our actual performance as measured against the intersection of two corporate financial measures, non-GAAP revenue and non-GAAP earnings-per-share growth, which the Compensation Committee determined were critical to the successful execution of our fiscal 2015 operating plan. The 2015 Executive Bonus Plan provided for full funding at the target bonus opportunity level if we achieved non-GAAP revenue of $2.03 billion and non-GAAP earnings-per-share of $1.15 per share. However, the Executive Officer Bonus Plan permits varying funding levels based on results of the intersection of both financial measures. Funding levels under the 2015 Executive Officer Bonus Plan ranged from a minimum level of 25% to a maximum of 150%.

For purposes of the 2015 Executive Officer Bonus Plan, we calculated non-GAAP revenue and non-GAAP earnings-per-share in the same manner that we calculate this measure for purposes of our quarterly earnings announcements. In performing this calculation, we either included or excluded items in six general categories, each of which are described below.

•

Acquisition-Related Revenue and Cost of Revenue. We include revenue and cost of revenue related to acquisitions that would otherwise have been recognized but for the purchase accounting treatment of these transactions. Non-GAAP revenue also includes revenue that we would have otherwise recognized had we not acquired intellectual property and other assets from the same customer.

•

Acquisition-Related Costs, Net. We have completed a number of acquisitions, which result in operating expenses which would not otherwise have been incurred. These acquisition-related costs are included in the following categories: (i) transition and integration costs; (ii) professional service fees; and (iii) acquisition related adjustments. These categories are further discussed as follows:

•

Transition and integration costs include retention payments, transitional employee costs, earn-out payments treated as compensation expense, as well as the costs of integration-related services, including services provided by third parties.

•

Professional service fees include third-party costs related to the acquisition and legal and other professional service fees associated with disputes and regulatory matters related to acquired entities.

•

Acquisition-related adjustments include adjustments to acquisition-related items that are required to be marked to fair value each reporting period, such as contingent consideration, and other items related to acquisitions for which the measurement period has ended, such as gains or losses on settlements of pre-acquisition contingencies.

•

Amortization of Acquired Intangible Assets. We exclude the amortization of acquired intangible assets from the calculation of non-GAAP expense and income measures including earnings-per-share.

•

Costs Associated with IP Collaboration Agreement. To gain access to a third party’s extensive speech recognition technology and natural language and semantic processing technology, we have entered into IP collaboration agreements, with terms that ranged between five and six years. Depending on the agreement, some or all intellectual property derived from these collaborations will be jointly owned by the two parties. For the majority of the developed intellectual property, we will have sole rights to commercialize such intellectual property for periods ranging between two to six years, depending on the agreement. For non-GAAP purposes, we consider these long-term contracts and the resulting acquisitions of intellectual property from the third-party over the agreements’ terms to be an investing activity, outside of its normal, organic, continuing operating activities, and, are therefore excluded from our non-GAAP results.

•

Non-Cash Expenses. We exclude the following non-cash expenses when calculating non-GAAP earnings-per-share: (i) stock-based compensation; (ii) certain accrued interest; and (iii) certain accrued income taxes.

•

Other Expenses. We exclude certain other expenses that are the result of unplanned events and arose outside of the ordinary course of continuing operations when calculating non-GAAP earnings-per-share. Included in these expenses are items such as restructuring charges, asset impairments, and other charges (credits), net. These items also include losses from the extinguishment of our convertible debt and adjustments from changes in fair value of share-based instruments relating to the issuance of our common stock with security price guarantees payable in cash. Other items such as consulting and professional service fees related to assessing strategic alternatives and our transformation program, and gains or losses on non-controlling strategic equity interests, are also excluded.

Fiscal 2015 Bonus Decisions

For fiscal 2015, our reported non-GAAP revenue was $1,980 million and our non-GAAP earnings-per-share was $1.27 per share. After reviewing our financial results, the Compensation Committee approved the funding of bonuses at 100% of the target bonus opportunity level. With respect to the bonus payments for each of the Named Executive Officers, in November 2015 the Compensation Committee exercised its discretion to approve the bonus payments to each of the Named Executive Officers as follows:

•

Mr. Ricci received a bonus payment equal to 100% of his target bonus opportunity based on the achievement of the intersection of our non-GAAP revenue and non-GAAP earnings-per-share, in particular the overachievement of the earnings-per-share target.

•

Mr. Beaudoin was not eligible for any bonus payment as a result of his termination of employment in July 2015.

•

Mr. Tempesta received a bonus payment equal to 125% of his target bonus opportunity based on his strong performance on many strategic objectives he completed during fiscal 2015 both prior to and after his promotion to Executive Vice President and Chief Financial Officer.

•

Mr. Bowden received a bonus payment equal to 118% of his target bonus opportunity based on his achievement and execution of many strategic initiatives completed during fiscal 2015 and for being a key participant in driving the results of the business.

•

Mr. Devanny received a bonus payment equal to 0% of his target bonus opportunity.

•

Mr. Robbins received a bonus payment equal to 93% of his target bonus opportunity based on his performance in assisting in the achievement of our fiscal 2015 financial results.

The fiscal 2015 bonus payments for the Named Executive Officers were made entirely in the form of restricted stock unit awards that are settled in shares of our common stock. The number of shares of our common stock subject to these awards was determined by dividing the amount of the bonus earned by the closing market price of our common stock on November 20, 2015, or $20.08 per share, which was the date the Compensation Committee approved the final allocation of the 2015 Executive Officer Bonus Plan. These restricted stock unit awards vested in full on December 4, 2015.

The actual bonus payments to the Named Executive Officers for fiscal 2015 were as follows:


Named Executive Officer	Percentage of Fiscal 2015 Target Bonus Opportunity Earned			Actual Fiscal 2015 Bonus ($)		Actual Fiscal 2015 Bonus (as number of shares of common stock)
Mr. Ricci		100	%	$	1,200,000		59,760
Mr. Tempesta(1)		125	%	$	315,000		15,687
Mr. Bowden		118	%	$	355,000		17,679
Mr. Devanny		0	%	$	0		0
Mr. Robbins		93	%	$	325,000		16,185

(1)	This bonus payment was pro-rated as a result of Mr. Tempesta’s promotion effective in July 2015.

Long-Term Incentive Compensation Philosophy

Consistent with our compensation philosophy, the Compensation Committee has designed our executive compensation program to provide that a significant level of our executive officers’ target total direct compensation opportunity is at risk. All of their long-term incentive compensation is at risk as it is subject to the volatility of our stock price with 50% of their long-term incentive compensation delivered in the form of performance-based restricted stock unit awards of which are earned only if the performance targets are achieved.

The Compensation Committee structures these awards to reflect the unique characteristics of our business:

•

A business in a highly-competitive and rapidly-changing industry;

•

A business with a long-term strategy based on both acquisitions as well as organic growth; and

•

A business in the midst of a major transformation of our business model.

As a result, the Compensation Committee has determined that it is in our best interests to select the performance measures and set the related target levels for our performance-based restricted stock unit awards using an annual approach, including measures which drive longer-term performance, with the exception of a portion of our CEO’s awards as described below. Not only does this approach enable the Compensation Committee to set performance goals that are responsive to our near-term and long-term objectives, it also minimizes the risk that these goals will become unattainable because of unforeseen or changing circumstances by providing the committee with the opportunity to adapt the measures to the rapidly changing environment. This “annual performance period” approach also allows the Compensation Committee to be responsive to ever-changing business conditions and maintains focus on key measures in the midst of the transformation of our business model.

In addition, by determining the size of each performance-based restricted stock unit award at the beginning of each three-year performance cycle, the Compensation Committee is able to ensure that each executive officer has a significant portion of his annual and near-term total direct compensation opportunity at risk, underscoring our emphasis on performance results and reinforcing our retention objectives.

At the same time, the Compensation Committee believes that, consistent with our compensation philosophy, the target total direct compensation opportunities of our executive officers should be predicated on their value to the organization. This is particularly true in the case of Mr. Ricci. As our Chief Executive Officer since September 2000, and Chairman of our Board of Directors since 1999, Mr. Ricci has played a critical role in our ongoing success over the past 16 years, both as our senior executive officer and a visionary in a dynamic and continuously-changing industry. During his tenure, Mr. Ricci has successfully led us through significant strategic acquisitions and business alliances that have transformed us into a leading provider of speech solutions. At the same time, under his guidance we have embarked on an aggressive plan to transform our business model, with an increasing concentration of our revenue coming from our hosting, term licensing and transaction based offerings, which are recurring revenue streams, and a decreasing proportion of our revenues coming from perpetual license models. Given his industry stature, Mr. Ricci continues to be a potential candidate for leadership positions at other companies that may seek to recruit him with a lucrative compensation package.

The implementation of these principles can be illustrated by the equity awards that the Compensation Committee has granted to Mr. Ricci over the past four fiscal years. Over that period, in recognition of his leadership and to directly link his compensation to our financial and operational performance, a significant portion of Mr. Ricci’s target total direct compensation opportunity has consisted of the opportunity to earn shares of our common stock that is heavily weighted towards specific performance objectives. The Compensation Committee, however, did take into consideration the significant feedback that we received from our stockholders and over the last three years has materially reduced the grant value of these awards as depicted in table entitled “Chief Executive Officer-Approved Equity Awards,”

For purposes of this discussion, the terms “issuance date” and “grant date” are defined as follows:

“Issuance Date” means the date on which the Compensation Committee approved the issuance of equity award to the Named Executive Officers. The per share value of these awards on such date is equal to the closing market price of our common stock as quoted on NASDAQ on the date that the Compensation Committee approves the issuance of the award.

“Grant Date” means the date on which the vesting or performance terms of the equity awards are known and agreed upon between the Company and the Named Executive Office. The per share value of the awards on such date is equal to the closing market price of our common stock as quoted on NASDAQ on the date that the Compensation Committee approves these terms of the award. For time-based equity awards, the issuance date and grant date are the same as the vesting terms are known when the Compensation Committee issues the award. For performance-based restricted stock unit awards, there will be a difference between the issuance date and the grant date for the second and third installments of the awards as a result of the timing of when the performance measures and related target levels are established for each of these installments.

Chief Executive Officer Long-Term Incentive Compensation Analysis

In response to our shareholders feedback requesting additional clarity on the design of our long-term incentive awards, we have added additional information to provide clarity on the way the Compensation

Committee has designed the long-term incentive compensation awards for our executive officers, with a specific emphasis on the awards for Mr. Ricci.

The “Approved Equity Award Table” is intended to illustrate the following:

•

Reflect the face value of the awards authorized by the Compensation Committee on each Issuance Date over fiscal years 2012-2016 (that is, the number of shares of our common stock issued multiplied by the stock price on the date of issuance),

•

Show how the values reflected in table differ from what is reported in the Summary Compensation Table that accompanies this Compensation Discussion and Analysis as a result of the timing of the determination of the performance measures and related target levels for the performance-based stock unit awards by the Compensation Committee. Unlike most companies, which grant and establish the performance measures and related target levels for the entire award at the time of issuance, the Compensation Committee approves the reservation of shares of our common stock for the performance-based stock unit awards at the Issuance Date, but does not select the performance measure or measures and the related target levels for each installment of the awards until the beginning of each one-year performance period. As a result, under the SEC’s executive compensation disclosure rules, these subsequent award installments are not reported in the Summary Compensation Table until the fiscal year in which the performance measures and related target levels are established.

•

Reflect the material reduction in long-term incentive value delivered to Mr. Ricci over this four-year period with emphasis on the fiscal 2016 award that was granted 100% in performance-based units in response to stockholder feedback to align compensation with performance.

The “Equity Award Opportunity Table” is intended to illustrate the following:

•

Show the change from face value on the issuance date, as depicted in approved equity award table, to the face value on the Grant Date once the performance measures and related target levels for the fiscal period are established.

•

Provide a comparison of the Grant Date fair value versus the value on the date the shares are actually earned by Mr. Ricci.

•

Show that in years when our stock price declined from the Grant Date to the date the shares were actually earned, Mr. Ricci’s realized compensation value also declined. Conversely, in a period in which our stock price increased from the grant date to the date the shares were actually earned, Mr. Ricci’s realized compensation exceeded the grant date value. Both scenarios demonstrate the strong alignment of Mr. Ricci’s long-term incentive award value with the creation of stockholder value.

CHIEF EXECUTIVE OFFICER

APPROVED EQUITY AWARDS

FISCAL 2013 — FISCAL 2016

Type of
Award

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Total Face Value on
Issuance Date

Nov 11, 2011 (FY12)

(1,500,000 shares)

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

$19,350,000

(750,000 shares)

LOGO

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

$19,350,000

(750,000 shares)

Dec 17, 2012 (FY13)

(1,500,000 shares)

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

$16,740,000

(750,000 shares)

LOGO

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

$16,740,000

(750,000 shares)

Nov 12, 2013 (FY14)

(500,000 shares)

$3,927,500

(250,000 shares)

$3,927,500

(250,000 shares)

LOGO

$3,927,500

(250,000 shares)

$3,927,500

(250,000 shares)

Dec 15, 2014 (FY15)

(500,000 shares)

$3,507,500

(250,000 shares)

$3,507,500

(250,000 shares)

LOGO

$3,750,500

(250,000 shares)

$3,507,500

(250,000 shares)

Nov 20, 2015 (FY16) (500,000 shares)

—

LOGO

—

$10,040,000

(500,000 shares)

$10,040,000

(500,000 shares)

CHIEF EXECUTIVE OFFICER

EQUITY AWARD OPPORTUNITY

FISCAL 2013 — FISCAL 2016

Type of

Award

FY 2012

FY 2013

FY 2014

FY 2015

FY 2016

FY 2017

Nov 11, 2011 (FY12)

(1,500,000 shares)

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

$6,450,000

(250,000 shares)

LOGO

$6,320,000

(250,000 shares)

$5,580,000

(250,000 shares)

$3,927,500

(250,000 shares)

Dec 17, 2012 (FY13)

(1,500,000 shares)

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

$5,580,000

(250,000 shares)

LOGO

$5,580,000

(250,000 shares)

$3,927,500

(250,000 shares)

$702,235

(50,000 shares)

$2,854,000

(200,000 shares)

Nov 12, 2013 (FY14)

(500,000 shares)

$3,927,500

(250,000 shares)

LOGO

$3,927,500

(250,000 shares)

Dec 15, 2014 (FY15)

(500,000 shares)

$3,507,500

(250,000 shares)

LOGO

$5,020,000

(250,000 shares)

Nov 20, 2015 (FY16)

(500,000 shares)

—

LOGO

$10,040,000

(500,000 shares)

PROJECTED

Equity Award Grant Date Value

$23,190,000

$19,885,000

$16,991,235

$8,527,500

$10,040,000

Amount Realized from Equity Award

$9,969,500

$16,039,730

$18,799,853

(1)

The amount shown reflects the Grant Date fair value (under ASC718) of each installment of the performance-based restricted stock unit awards as determined in the fiscal year in which the performance measures and related target levels for that installment were established by the Compensation Committee.

(2)

This amount represents the total Grant Date fair value of Mr. Ricci’s long-term incentive compensation opportunity for fiscal 2013, fiscal 2014, fiscal 2015, and (on a projected basis assuming a grant date fair value of $20.08 per share) fiscal 2016 and fiscal 2017 combining the grant date fair value (under ASC718) of the installment of each time-based restricted stock unit award to be earned during that fiscal year and the grant date fair value of the installment of each performance-based restricted stock unit award for which the performance measures and related target levels were established and the shares of our common stock subject to such installment were to be earned during such fiscal year. As explained in the narrative discussion introducing this table, these grant date fair values are not necessarily consistent with the grant date fair value amounts reported in the Summary Compensation Table for the fiscal year covered.

Long-Term Incentive Compensation Earned

As illustrated by the foregoing tables, a significant portion of Mr. Ricci’s long-term incentive compensation opportunity is comprised of performance-based restricted stock unit awards, which derive their value based on our specific financial and operational performance, and time-based restricted stock unit awards, the value of

which is dependent on the performance of our stock price (which is directly influenced by our financial and operational performance). This compensation is wholly “at risk” and contingent on his ability to lead us to achieve our short-term and long-term objectives. The variable nature of these awards and their direct link to our actual business results can be illustrated by the following chart:

LOGO

Represented in the Summary Compensation Table on page 52 is the Grant Date fair value of the TBRSU award granted on December 15, 2014 and the Grant Date value of the PBRSU award originally issued by the Compensation Committee to our CEO on December 17, 2012 and aligned to fiscal 2015 targets. See the following table for reconciliation:

Date of Issuance

Date of
Grant

# of
Shares

Grant Date
Value

Type of Award

12/15/2014

250,000

3,507,500

Time-based shares vesting 9/30/2016

Total grants issued in FY2015

250,000

3,507,500

12/17/2012*

12/31/2014

200,000

2,854,000

Performance award tied to Fiscal 2015 Corporate Financial Targets

Total grants issued prior to FY2015 and accounted for in FY15

200,000

2,854,000

Total Value Reported in Stock Award Column

450,000

6,361,500

On November 12, 2013, in connection with this installment of Mr. Ricci’s fiscal 2015 performance-based restricted stock unit award, the Compensation Committee granted performance-based restricted stock unit awards providing an incentive for over-achievement of the performance goals, as discussed elsewhere in this Compensation Discussion and Analysis.

Long-Term Incentive Compensation

We provide long-term incentive compensation to our executive officers, including the Named Executive Officers, in the form of restricted stock unit (“RSU”) awards for shares of our common stock which are to be earned pursuant to both time and performance conditions. The multi-year performance-based and time-based vesting requirements of these equity awards are designed to align the interests of our executive officers and our stockholders and to provide each individual executive officer with a significant incentive to manage us from the perspective of an owner and to remain employed with us.

The Compensation Committee has maintained a multi-year practice whereby at least 50% of the value of all equity awards granted to the Named Executive Officers, would be performance-based awards to be earned or settled based on the achievement of pre-established target levels for one or more performance measures. The Compensation Committee believes that this equity mix provides a more effective alignment of the interests of our executive officers and our stockholders.

The Compensation Committee also believes that the commitment to grant a mix of both time-based and performance-based equity awards enhances our ability to retain our executive officers by providing a portion of their long-term incentive compensation opportunity in the form of full value equity awards (such as RSU awards) that will be earned only if they remain employed with us for several years.

Typically, the Compensation Committee reviews our executive officers’ prior fiscal year’s performance at its first meeting of the fiscal year and will grant equity awards if deemed appropriate within the first quarter of the fiscal year. Further, the Compensation Committee determines the value of the equity awards that it grants to each executive officer based on its evaluation of his or her performance, his or her skills, expertise, and experience, his or her expected future contributions, its retention objectives for the executive officer, the status of their outstanding equity awards (including the projected value of these awards in future fiscal years), its evaluation of our financial and operational performance for the preceding fiscal year, and its review of the compensation data described in “Competitive Positioning” above and replacement costs.

Performance Measures

In addition to non-GAAP revenue and non-GAAP earnings-per-share performance measures, certain of the long term incentive equity awards are based on the measurement of bookings, net new bookings, cash flow, and management business objectives important for our long term growth and for maintaining focus on our revenue and earnings-per-share during a major transformation in our business model.

For the purposes of fiscal 2015 equity awards, “bookings” were defined to represent the estimated gross revenue value of transactions at the time of contract execution, except for maintenance and support offerings. For fixed price contracts, the bookings value represents the gross total contract value. For contracts where revenue is based on transaction volume, the bookings value represents the contract price multiplied by the estimated future transaction volume during the contract term, whether or not such transaction volumes are guaranteed under a minimum commitment clause. The maintenance and support bookings value represents the amounts billed in the period the customer is invoiced.

Net new bookings represents the estimated revenue value at the time of contract execution from new contractual arrangements or the estimated revenue value incremental to the portion of value that will be renewed under pre-existing arrangements.

Recurring revenue represents the sum of recurring product and licensing, on-demand, and maintenance and support revenues as well as the portion of professional services revenue delivered under ongoing subscription contracts. Recurring Product and Licensing revenue comprises term-based and ratable licenses as well as revenues from royalty arrangements.

Fiscal 2015 Annual Equity Awards

In December 2015, the Compensation Committee approved annual equity awards to our executive officers, including Messrs. Ricci, Beaudoin, Tempesta and Robbins. Mr. Bowden’s annual equity award was granted by the Compensation Committee in October 2014 at the time of his expansion of responsibilities. These awards were granted 50% in the form of RSU awards with time-based vesting requirements (“TBRSU awards”), and 50% in the form of RSU awards with performance-based vesting requirements (“PBRSU awards”). The Compensation Committee believed that this combination struck an appropriate balance between creating a long-term retention incentive for our executive officers and establishing performance goals that further align the interests of our executive officers with our business objectives for the next two fiscal years and with increasing stockholder value.

As in prior years, the Compensation Committee determined that, with respect to the PBRSU awards, it would establish the performance measures and set target levels for such measures at or shortly after the begin-

ning of each fiscal year covered by the award. As described above in the discussion of Mr. Ricci’s long-term incentive compensation, the Compensation Committee believes that, at this time, selecting measures and setting target levels on an annual basis allows it to assess progress and changes in our business and changes in our industry to ensure that the measures and related target levels selected align with our progress and strategic priorities and what it believes are in our long-term best interests.

The equity awards granted to Mr. Ricci and the Named Executive Officers during fiscal 2015 were as follows:

Named Executive Officer

Date of Issuance

Type of
Equity
Award

Number of
Shares of
Common Stock
Subject to
Equity Award

Face Value
of Equity
Award

Vesting or Performance
Conditions

Mr. Ricci

December 15, 2014

TBRSU

250,000

3,507,500

The shares are subject to time-based vesting, 100% of the shares vest on September 30, 2016.

December 15, 2014

PBRSU

250,000

3,507,500

From 0% to 100% of these shares will vest upon certification by the Compensation Committee following fiscal 2016 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2016.

Mr. Beaudoin

December 15, 2014

TBRSU

50,000

701,500

20,000 of these shares vest on September 30, 2016 and 30,000 of these shares vest on September 30, 2017.

December 15, 2014

PBRSU

50,000

701,500

Up to 20,000 of these shares will vest upon certification by the Compensation Committee following fiscal 2016 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2016 and up to 30,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2017.

Named Executive Officer

Date of Issuance

Type of
Equity
Award

Number of
Shares of
Common Stock
Subject to
Equity Award

Face Value
of Equity
Award

Vesting or Performance
Conditions

December 31, 2014

PBRSU

15,000

214,050

From 0% to 100% of these shares to vest and be earned if the Company exceeds the target level for the performance metrics established with respect to the fiscal 2015 increments of the performance-based restricted stock unit awards approved by the Compensation Committee in fiscal 2013 and fiscal 2014.

Mr. Tempesta

December 15, 2014

TBRSU

30,000

420,900

10,000 shares vest on September 30, 2016 and 20,000 shares vest on September 30, 2017.

December 15,
2014

PBRSU

30,000

420,900

Up to 10,000 of these shares will vest upon certification by the Compensation Committee following fiscal 2016 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2016 and up to 20,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2017.

January 27, 2015

PBRSU

9,325

128,405

Up to 7,500 of these shares will vest upon certification by the Compensation Committee following fiscal 2015 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2015 and up to 1,825 shares subject to similar

Named Executive Officer

Date of Issuance

Type of
Equity
Award

Number of
Shares of
Common Stock
Subject to
Equity Award

Face Value
of Equity
Award

Vesting or Performance
Conditions

performance-based vesting requirements established for the one-year period ending September 30, 2016.

January 27, 2015

TBRSU

9,325

128,405

7,500 shares vest on September 30, 2015 and 1,825 shares vest on September 30, 2016.

July 21, 2015

PBRSU

66,000

1,115,400

Up to 26,000 of these shares will vest upon certification by the Compensation Committee following fiscal 2016 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2016. Up to 20,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2017 and up to 20,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2018.

July 21, 2015

TBRSU

66,000

1,115,400

The shares are subject to time-based vesting, 26,000 shares vest on September 30, 2016, 20,000 shares vest on September 30, 2017 and 20,000 shares vest on September 30, 2018.

Mr. Bowden

October 7, 2014

PBRSU

75,000

1,103,250

Up to 25,000 of these shares will vest upon certification by the Compensation Committee following the first-half of fiscal 2015 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee

Named Executive Officer

Date of Issuance

Type of
Equity
Award

Number of
Shares of
Common Stock
Subject to
Equity Award

Face Value
of Equity
Award

Vesting or Performance
Conditions

and completed over the seven-month performance period ending April 30, 2015. Up to 25,000 of these shares will vest upon certification by the Compensation Committee following the first-half of fiscal 2016 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the six-month performance period ending March 31, 2016 and up to 25,000 shares subject to similar performance-based vesting requirements established for the six-month period ending March 31, 2017.

October 7, 2014

TBRSU

75,000

1,103,250

25,000 shares vest on March 31, 2015, 25,000 shares vest on March 31, 2016 and 25,000 shares vest on March 31, 2017.

December 31, 2014

PBRSU

9,375

133,781

January 27, 2015

PBRSU

50,000

688,500

Performance-based award with 100% of the shares tied to Company performance in fiscal 2015.

Mr. Devanny

December 31, 2014

PBRSU

25,000

356,750

From 0% to 100% of these shares to vest and be earned if the Company exceeds the target level for the

Named Executive Officer

Date of Issuance

Type of
Equity
Award

Number of
Shares of
Common Stock
Subject to
Equity Award

Face Value
of Equity
Award

Vesting or Performance
Conditions

performance metrics established with respect to the fiscal 2015 increments of the performance-based restricted stock unit awards approved by the Compensation Committee in fiscal 2014.

Mr. Robbins

December 15, 2014

TBRSU

61,250

859,338

21,250 shares vest on September 30, 2015, 20,000 shares vest on September 30, 2016 and 20,000 shares vest on September 30, 2017.

December 15,
2014

PBRSU

61,250

859,338

Up to 21,250 of these shares will vest upon certification by the Compensation Committee following fiscal 2015 of the achievement of the performance-based objectives for such shares as determined by the Compensation Committee and completed over the one-year performance period ending September 30, 2015. Up to 20,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2016 and up to 20,000 shares subject to similar performance-based vesting requirements established for the one-year period ending September 30, 2017.

December 31,
2014

PBRSU

15,625

222,969

From 0 to 100% of these shares to vest and be earned if the Company exceeds the target level for the performance metrics established with respect to the fiscal 2015 increments of the performance-based restricted stock unit awards approved by the Compensation Committee in fiscal 2014 and fiscal 2015.

In November 2015, the Compensation Committee certified the level of attainment of the performance measures for the fiscal 2015 PBRSU awards, the installments of which were granted in the fiscal years specified in the Fiscal 2015 Grants of Plan Based Awards Table. Each Named Executive Officer’s target number of shares of our common stock subject to the PBRSU award, the percentage of achievement of the performance measures, and the actual number of shares of our common stock earned in connection with this installment were as follows:


Named Executive Officer	Number of Shares Subject to Award Increment		Fiscal 2015 Performance Measure	Percentage of Achievement of Performance Measure			Number of Shares Earned under Award Increment
Mr. Ricci		66,667	Up to 66,667 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(1). Up to an additional 16,667 shares will vest on a scale for overachievement of this goal.		97	%		61,667
		66,667	Up 66,667 shares subject to award will vest if bookings equal $2.288 billion(1). Up to an additional 16,667 shares will vest on a scale for overachievement of this goal.		104	%		79,334
		66,666	Up to 66,666 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(1). Up to an additional 16,666 shares will vest on a scale for overachievement of this goal.		110	%		83,333

Total		200,000						224,333

Mr. Beaudoin(6)		20,000	Up to 20,000 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(2). Up to an additional 5,000 shares will vest on a scale for overachievement of this goal.		0	%		0
		20,000	Up 20,000 shares subject to award will vest if bookings equal $2.288 billion(2). Up to an additional 5,000 shares will vest on a scale for overachievement of this goal.		0	%		0
		20,000	Up to 20,000 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(2). Up to an additional 5,000 shares will vest on a scale for overachievement of this goal.		0	%		0
		20,000	20,000 shares subject to award will vest for achievement of Cash Flow From Operations (CFFO) which will equal 100% of non-GAAP Net Income.		0	%		0


Named Executive Officer	Number of Shares Subject to Award Increment		Fiscal 2015 Performance Measure	Percentage of Achievement of Performance Measure			Number of Shares Earned under Award Increment
		20,000	Up to 20,000 shares subject to the award will vest based on strategic organizational objectives with milestones that would vest 25%; 50% of shares and 25% of shares.		0	%		0
		25,000	Up to 25,000 shares subject to award will vest based on strategic organizational objectives with separate milestones that would vest 25%; 50% of shares and 25% of shares, respectively(7).		75	%		18,750

Total		125,000						18,750

Mr. Tempesta		7,917	Up to 7,917 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(2).		97	%		6,729
		7,917	Up 7,917 shares subject to award will vest if bookings equal $2.288 billion(2).		104	%		7,917
		7,917	Up to 7,917 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(2).		110	%		7,917
		11,873	Up to 11,875 shares subject to award will vest for achievement of functional operating expense(3).		97	%		11,873
		5,938	5,938 shares subject to award will vest for delivery of an enhanced quote-to-cash plan no later than September 30, 2015.		100	%		5,938
		5,938	5,938 shares subject to award will vest for delivery of FY15 transformation plan and development of additional savings opportunities delivered no later than September 30, 2016.		100	%		5,938

Total		47,500						46,312

Mr. Bowden		17,500	Up to 17,500 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(2). Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		97	%		14,875
		17,500	Up 17,500 shares subject to award will vest if bookings equal $2.288 billion(2). Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		104	%		20,625


Named Executive Officer	Number of Shares Subject to Award Increment		Fiscal 2015 Performance Measure	Percentage of Achievement of Performance Measure			Number of Shares Earned under Award Increment
		17,500	Up to 17,500 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(2), Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		110	%		20,625
		8,750	Up to 8,750 shares subject to award will vest ratably based on level of achievement of FY15 mergers & acquisition management revenue target.		88	%		7,700
		8,750	8,750 shares subject to award will vest based on achievement of projected FY16 revenue for acquisitions signed during FY15.		103	%		8,750
		17,500	Up to 17,500 shares subject to award will vest based on strategic organizational objectives with separate milestones that would vest 25, 50% of shares and 25% of shares respectively.		100	%		17,500
		25,000	50% of shares subject to award will vest for achievement of FY15 acquisition related revenue and 50% of shares subject to award will vest for achievement of FY15 acquisition-related operating margin.		50	%		12,500
		25,000	Up to 25,000 shares subject to award will vest based on strategic organizational objectives with separate milestones that would vest 25%, 50% of shares and 25% of shares, respectively(7).		75	%		18,750

Total		137,500						121,325

Mr. Devanny		10,000	Up to 10,000 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(2). Up to an additional 2,500 shares will vest on a scale for overachievement of this goal.		97	%		8,500
		10,000	Up 10,000 shares subject to award will vest if bookings equal $2.288 billion(2). Up to an additional 2,500 shares will vest on a scale for overachievement of this goal.		104	%		12,500


Named Executive Officer	Number of Shares Subject to Award Increment		Fiscal 2015 Performance Measure	Percentage of Achievement of Performance Measure			Number of Shares Earned under Award Increment
		10,000	Up to 10,000 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(2). Up to an additional 2,500 shares will vest on a scale for overachievement of this goal.		110	%		12,500
		23,333	Up to 23,333 shares subject to award will vest if healthcare segment revenue target level is achieved(2). Up to an additional 5,833 shares will vest on a scale for overachievement of this goal.		100	%		23,333
		23,333	Up to 23,333 shares subject to award will vest if healthcare segment bookings target is achieved(2). Up to an additional 5,833 shares will vest on a scale for overachievement of this goal.		102	%		29,166
		23,334	Up to 23,334 shares subject to award will vest if healthcare segment margin target is achieved(2). Up to an additional 5,834 shares will vest on a scale for overachievement of this goal.		101	%		24,501

Total		100,000						110,500

Mr. Robbins		6,250	Up to 6,250 shares subject to award will vest if non-GAAP revenue equals or exceeds $2.033 billion(2). Up to an additional 1,563 shares will vest on a scale for overachievement of this goal.		97	%		5,312
		6,250	Up 6,250 shares subject to award will vest if bookings equal $2.288 billion(2). Up to an additional 1,563 shares will vest on a scale for overachievement of this goal.		104	%		7,813
		6,250	Up to 6,250 shares subject to award will vest if non-GAAP earnings-per-share equal or exceed $1.15 per share(2). Up to an additional 1,563 shares will vest on a scale for overachievement of this goal.		110	%		7,813
		6,250	6,250 shares subject to award will vest if sales operating expense target is achieved(4). Up to an additional 1,563 shares will vest on a scale for overachievement of this goal.		96	%		7,812


Named Executive Officer	Number of Shares Subject to Award Increment		Fiscal 2015 Performance Measure	Percentage of Achievement of Performance Measure			Number of Shares Earned under Award Increment
		12,500	Up to 12,500 shares subject to award will vest if management sales plan revenue equals or exceeds $2.058 billion(5). Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		96	%		7,500
		12,500	Up to 12,500 shares subject to award will vest if management sales plan bookings equal or exceeds $2.388 billion(5). Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		100	%		12,500
		12,500	Up to 12,500 shares subject to award will vest if management sales net new plan bookings equals or exceeds $1.616 billion(5). Up to an additional 3,125 shares will vest on a scale for overachievement of this goal.		90	%		0

Total		62,500						48,750

(1)

These awards provided for linear interpolation of the award payout as follows: 85% achievement of the corporate performance measure would result in the vesting of 65% of the shares subject to the award increment. For achievement above 85%, the vesting of the award shares would be linear up to full vesting of the award increment. The Award also has opportunity for overachievement of targets up to 125% of the shares.

(2)

These awards provided for linear interpolation of the award payout as follows: 92% achievement of the corporate performance measure would result in the vesting of 60% of the shares subject to the award increment. For achievement above 92%, the vesting of the award shares would be linear up to full vesting of the award increment. Award also has opportunity for overachievement of targets up to 125% of the shares.

(3)

This award provided for linear interpolation of the award payout as follows: 101.5% achievement of the operating expense measure would result in the vesting of 25% of the shares subject to the award increment. For achievement above 101.5%, the vesting of the award shares would be linear up to full vesting of the award increment.

(4)

(5)

These awards provided for linear interpolation of the award payout as follows: 92% achievement of the corporate performance measure would result in the vesting of 20% of the shares subject to the award increment. For achievement above 92%, the vesting of the award shares would be linear up to full vesting of the award increment. Award also has opportunity for overachievement of targets up to 125% of the shares.

(6)

Mr. Beaudoin terminated his employment on July 31, 2015, and, therefore, was not eligible to receive any shares of our common stock that would have otherwise been earned for achieving the target performance levels for his awards other than the awards that were aligned to the strategic M&A goal that were earned prior to his termination date.

(7)	6,250 of these shares that were aligned to a strategic portion of the organizational objective were amended by the Compensation Committee to extend measurement period from April 30, 2015 to July 30, 2015 to provide

for additional time to complete the initiative. The Compensation Committee determined the adjusted measurement date was more appropriate to ensure that the necessary information was available to complete the objective in a meaningful way.

Retirement, Welfare, and Personal Benefits

We offer our United States employees, including our executive officers, comprehensive health and welfare programs including medical, wellness, dental, vision, disability, life insurance, and accidental death and dismemberment, In addition, we offer a Section 401(k) plan and Employee Stock Purchase Plan. Our executive officers are offered the same level of benefits as our other employees.

We provide our executive officers, including the Named Executive Officers, with certain personal benefits, including reimbursement for tax and financial planning services, and a car allowance (if applicable), the incremental costs to us of which are reflected in the Summary Compensation Table below. The Compensation Committee believes these personal benefits are reasonable and consistent with our overall executive compensation program, because they better enable us to attract and retain superior individuals for our key executive positions. In addition, these personal benefits are provided to ensure our executive officers’ health and financial affairs are taken care of in a manner that enables them to focus their full attention on their respective positions. The Compensation Committee reviews and approves the personal benefits provided to our executive officers on an annual basis.

Enhanced welfare benefits and other personal benefits provided to our CEO and other executive officers are as follows:

•

An annual medical examination for each executive officer, with the exception of Mr. Ricci who receives a wellness reimbursement allowance of up to $50,000.

•

With the exception of Mr. Ricci, each executive officer is eligible to receive a $500,000 term life insurance policy at our expense.

•

Mr. Ricci receives a $1 million term life insurance policy at our expense.

•

Our executive officers are eligible for an enhanced long-term disability benefit that provides for payment of 60% of their eligible earnings capped at a maximum of $18,500 per month, with the exception of Mr. Ricci who is not subject to this maximum limit and has a benefit that provides for payment of 60% of his base salary. In addition, the Named Executive Officers have an enhanced “Own Occupation” provision that provides for continuation of benefits beyond two years if they cannot return to their own occupation.

•

Personal aircraft use:

•

To increase the number of in-person meetings with our customers, as well as to reduce the physical strain of heavy travel schedules, we own a corporate aircraft and also lease charter aircraft from time to time for business-related travel. The Compensation Committee has adopted a policy permitting corporate-owned or leased aircraft to be available for the personal use of Mr. Ricci for his protection and the protection of our assets, and to reduce his travel time and allow him to devote more time to work duties. The Compensation Committee approved personal use of the corporate-owned or leased aircraft by Mr. Ricci in fiscal 2015 and reviews the personal usage on a quarterly basis. We determine the value of personal use of corporate-owned or leased aircraft based on the aggregate incremental cost to us for such use.

•

A tax and financial planning reimbursement benefit.

Employment Agreements

Employment Agreement with Mr. Ricci

During his tenure as our CEO, we have reflected the terms and conditions of Mr. Ricci’s employment with us in a written employment agreement. Prior to fiscal 2015, we last entered into an amended and restated employment agreement with Mr. Ricci in November 2011 (the “Employment Agreement”). This agreement,

which had a term of three years, set forth the terms and conditions of his employment, including his compensation and the circumstances under which he would be eligible to receive payments and benefits in the event of his termination of employment, including a termination of employment in connection with a change in control of the Company.

On November 12, 2013, our Board of Directors approved an amendment to the Employment Agreement (Amendment No. 1) to:

•

extend its term for an additional year through November 11, 2015 (subject to extension for additional one-year terms upon the mutual written consent of Mr. Ricci and our Board of Directors as provided in the Employment Agreement); and

•

set forth his base salary, target bonus opportunity, and equity awards for fiscal 2014.

In addition, the Amendment No. 1 to the Employment Agreement eliminated the tax “gross-up” related to reimbursements for up to $50,000 of services provided under an enhanced executive medical program, $25,000 of tax and financial planning services, and a $20,000 car allowance. Finally, Amendment No. 1 to the Employment Agreement restricted the post-retirement reimbursement allowance provided in such agreement to a maximum of $25,000 per year and $250,000 in the aggregate.

On June 18, 2015, our Board of Directors approved an additional amendment (Amendment No. 2) to the Employment Agreement to:

•

extend its term for an additional year through November 11, 2016 (subject to extension for additional one-year terms upon the mutual written consent of Mr. Ricci and our Board of Directors as provided in the Employment Agreement);

•

provide a commitment to set the performance goals for the performance units aligned to fiscal 2016 no later than the November 2015 Board of Directors’ meeting with agreement that the fiscal 2016 performance goals will have the same scaling index as used for the fiscal 2015 performance shares. Under mutual agreement, the commitment date to finalize the fiscal 2016 performance goals was extended to be established no later than December 30, 2015;

•

provide for continuation of payment of the allowances and executive wellness benefits through any applicable severance period;

•

eliminate the post-retirement medical benefit;

•

increase the continuing payments and benefits if his employment is involuntarily terminated by us other than for “cause,” including “death” or “disability” and a “notice of non-Renewal” as defined in the Employment Agreement, to two times from one and one-half times of his base salary, as then in effect;

•

increase the continuing payments and benefits if his employment is involuntarily terminated by us as a result of a change in control of the Company to two and one-half times from two times of his base salary, as then in effect;

•

provide for a lump sum payment of $500,000, less applicable taxes; and

•

provide for treatment of performance-based stock unit awards which are aligned to a fiscal year in which a Notice of Non-Renewal is given. Depending on timing of the notice of non-renewal being triggered, the amendment provides for the treatment of the performance shares as follows:

Trigger of Non-Renewal by Company prior to April 1 — performance shares would be deemed fully achieved at the target performance level and would vest upon termination of the Employment Agreement; or

ii.

Trigger of Non-Renewal by Executive prior to April 1 or Company after April 1 — performance shares for first half of the year would be determined based on actual performance for the pro-rated period and would be deemed fully earned at the target performance level for the second half of the year. Shares determined for the first half of the year and deemed earned for the second half of the year at the target performance level would then vest upon the termination of the Employment Agreement.

Post-Employment Compensation

On our behalf, the Compensation Committee has entered into agreements with our CEO and certain other executive officers, including each of the other Named Executive Officers, which provide for certain payments and benefits upon certain specified terminations of employment, including certain specified terminations of employment following a change in control of the Company. In exchange for these payments and benefits, each executive officer must release the Company from any claims relating to his or her employment and termination of employment.

We believe that these protections are necessary to help motivate and retain our executive officers and, in some cases, helped induce them to forego other opportunities or leave their then-current employment for the uncertainty of a demanding position in a new and unfamiliar organization. We also believe that these protections will help our executive officers maintain continued focus and dedication to their responsibilities to help maximize stockholder value when analyzing a potential transaction that could involve a change in control of the Company.

The post-employment payments and benefits which the Named Executive Officers are eligible to receive are described in more detail in “Employment, Severance, and Change in Control Agreements” below.

Other Compensation Policies

Stock Ownership Policy

We believe that our executive officers, including the Named Executive Officers, should own and hold shares of our common stock to further align their interests and actions with the interests of our stockholders. Our executive officers are expected to own and hold that number of shares of our common stock that correspond to their position within the Company. We have not specified a time period during which an executive officer must be in compliance with our stock ownership policy, however, until he or she has reached the appropriate ownership level, he or she is required to retain 25% of the net shares received upon the exercise of an option to purchase shares of our common stock or vesting of a restricted stock or restricted stock unit award.

The current stock ownership levels are as follows:


Individual Subject to Stock Ownership Policy		Minimum Required Level of Stock Ownership
Chief Executive Officer		Five times current annual base salary
Other Executive Officers		Three times current annual base salary

As of the end of fiscal 2015, our CEO and each of the other Named Executive Officers satisfied his or her stock ownership level as specified above, with the exception of Mr. Robbins who joined the Company during fiscal 2014 and Mr. Tempesta who was promoted to an executive officer position during fiscal 2015.

Compensation Recovery Policy

We maintain a compensation recovery (“clawback”) policy which provides that, in the event that we are required to prepare an accounting restatement, we may recover from any executive officer any incentive compensation erroneously paid or awarded in excess of what would have been paid under the accounting restatement. This policy applies prospectively to incentive compensation paid or awarded after December 7, 2012, its date of adoption, and covers the three-year period preceding the date on which we are required to prepare the accounting restatement.

Equity Award Grant Policy

During fiscal 2014, any equity award granted to an employee as either a promotion or retention award or to a newly-hired eligible employee was generally granted on the 15th day of the month (or the first business day thereafter if such day was not a business day) or the last day of the month following the effective date of the promotion, retention, or hire (or the first business day thereafter if such day was not a business day), with the exception of an inducement award, which was granted promptly following the closing of an acquisition or upon the hiring of an employee. In the case of an award issued pursuant to our annual bonus program, such award was granted upon final allocation and final approval of payment of such bonus by the Compensation Committee.

To streamline our equity award grant practices, effective November 1, 2014, we modified the policy to grant equity awards to an employee as either a promotion or retention award or to a newly-hired eligible employee to be granted on the first day of the month (or the first business day thereafter if such day is not a business day) with the exception of an inducement award, which will be granted promptly following the closing of an acquisition or upon the hiring of an employee. In the case of an award issued pursuant to our annual bonus program, such award will be granted upon final allocation and final approval of payment of such bonus by the Compensation Committee.

The Compensation Committee does not grant equity awards in anticipation of the release of material nonpublic information. Similarly, we do not time the release of material nonpublic information about the Company based on equity award grant dates.

Derivatives Trading, Hedging, and Pledging Policies

We prohibit our executive officers and members of our Board of Directors from speculating in our equity securities, including the use of short sales, “sales against the box” or any equivalent transaction involving our equity securities, or engaging in any other hedging transactions with respect to our equity securities. In addition, we prohibit our employees, executive officers, and members of our Board of Directors from pledging their equity securities or using such securities as collateral for a loan.

Tax and Accounting Considerations

Income Tax Deduction Limitation

Section 162(m) of the Internal Revenue Code imposes an annual $1 million limit on the deductibility of compensation paid to certain executive officers of public companies, unless the compensation qualifies as “performance-based” compensation or satisfies the requirements of another exception to the deduction limit. In determining executive compensation, the Compensation Committee considers, among other factors, the possible tax consequences to the Company and to our executive officers of their compensation arrangements. The ultimate tax consequences of these arrangements, including but not limited to tax deductibility by the Company, are subject to many factors, however, that are beyond the Compensation Committee’s and the Company’s control (such as changes in the tax laws and regulations or interpretations thereof and the timing and nature of various decisions by executive officers regarding the exercise of options to purchase shares of our common stock and other rights).

In addition, the Compensation Committee believes that it is important that it retain maximum flexibility in administering our executive compensation program to meet its stated objectives. For these reasons, although the Compensation Committee considers tax deductibility as one of the factors in determining executive compensation, it does not necessarily limit compensation to those levels or types of compensation that will be deductible. The Compensation Committee will consider alternative forms of compensation consistent with our compensation objectives, which may preserve deductibility when it considers such objectives to be in the best interests of the Company and our stockholders.

Taxation of “Parachute” Payments

Section 280G of the Internal Revenue Code disallows a tax deduction to a company for what is defined as an “excess parachute payment,” while Section 4999 of the Internal Revenue Code imposes a 20% excise tax on

any person who receives an “excess parachute payment.” The Compensation Committee believes that the provision of any tax payment or tax “gross-up” protection for executive officers in the context of a change in control of the Company is not appropriate, and, therefore, no longer provides for any tax reimbursement or “gross-up” payment for our executive officers, including our Chief Executive Officer, whose employment agreement does not contain any such provision.

Accounting for Stock-Based Compensation

We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718 (“FASB ASC Topic 718”) in connection with our share-based compensation awards. FASB ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including options to purchase shares of the company’s stock, based on the grant date fair value of these awards. We perform this calculation for financial reporting purposes and report these amounts in the compensation tables below, even though our executive officers may never realize any value from their awards. FASB ASC Topic 718 also requires companies to recognize the compensation cost of their share-based compensation awards in their income statements over the period that an employee or director is required to render service in exchange for the stock option or other award.

FISCAL 2015 SUMMARY COMPENSATION TABLE

The following table sets forth, for the period indicated, the compensation earned, paid to, or received by the Company to the Named Executive Officers during fiscal 2015, fiscal 2014, and fiscal 2013.


Name and Principal Position	Year		Salary ($)		Bonus ($)			Stock Awards ($)(1)		Option Awards ($)(1)		Non-Equity Incentive Plan Compensation ($)			All Other Compensation ($)			Total ($)
Paul A. Ricci		2015	$	800,000		—		$	6,361,500		—	$	1,200,000	(2)	$	199,943	(3)	$	8,561,443
Chief Executive Officer		2014		800,000		—			16,412,235		—		600,000			127,521			17,939,756
		2013		800,000		—			27,900,000		—		300,000			226,829			29,226,829

Thomas L. Beaudoin (4)		2015	$	433,462		—		$	2,493,250		—	$	—		$	23,682	(5)	$	2,950,394
Executive Vice President		2014		469,231		—			2,091,875		—		212,500			24,390			2,797,996
and Chief Financial Officer		2013		450,000		—			3,069,000		—		95,625			30,528			3,645,153

Daniel Tempesta (6)		2015	$	363,654	$	37,500	(7)	$	2,514,005		—	$	315,000	(8)	$	8,331	(9)	$	3,238,490
Executive Vice President and Chief Financial Officer

A. Bruce Bowden		2015	$	399,808		—		$	3,256,375		—	$	355,000	(10)	$	16,863	(11)	$	4,028,046
Executive Vice President Corporate		2014		375,000		—			1,689,100		—		250,000			8,976			2,323,076
Strategy and Development and Legal		2013		375,000		—			1,897,200		—		140,625			14,212			2,427,037

Earl H. Devanny(12)		2015	$	700,000		—		$	1,427,000		—		—		$	48,532	(13)	$	2,175,532
President		2014		323,077		—			5,309,700		—		128,544			27,621			5,788,942
Healthcare Division		2013		—		—			—		—		—			—			—

William Robbins (14)		2015	$	450,000		—		$	1,751,213		—	$	325,000	(15)	$	3,054	(16)	$	2,529,267
Executive Vice President		2014		354,808		—			2,855,000		—		138,793			2,945			3,351,546
Worldwide Sales		2013		—		—			—		—		—			—			—

(1)

The amounts reported in this column do not reflect the compensation actually received by the Named Executive Officer. Instead, the amounts reported represent the grant date fair value of the stock awards granted in each covered fiscal year, as computed in accordance to FASB ASC Topic 718. The assumptions used to calculate the grant date fair value of the stock awards reported in the Stock Awards column are set forth under Note 15 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for fiscal 2015 filed with the SEC on November 19, 2015. The amounts reported in the Stock Awards column include performance shares that were issued to Mr. Ricci in prior fiscal year however accounted for in this fiscal period upon establishment of fiscal 2015 performance goals. The table below illustrates the dates the grants were issued to Mr. Ricci and the grant date value of each award.

Date of Issuance

Date of Grant

# of Shares

Grant Date Value

Type of Award

12/15/2014

250,000

3,507,500

Time-based shares vesting 9/30/2016

Total grants issued in FY2015

250,000

3,507,500

12/17/2012

12/31/2014

200,000

2,854,000

Performance award tied to Fiscal 2015 Corporate Financial Targets

Total grants issued prior to FY2015 and accounted for in FY15

200,000

2,854,000

Total Value Reported in Stock Award Column

450,000

6,361,500

Excluded from the Stock Awards Column are shares that would vest only if financial metrics were overachieved. Details of these achievements for fiscal 2015 are further detailed in the Compensation Discussion and Analysis Report above and in the Grants of Plan Based Awards.

(2)	Mr. Ricci received his bonus pursuant to the Company’s Fiscal 2015 Bonus Plan in the form of a restricted stock unit award for 59,760 shares of our common stock having a value equal to $1,200,000. This award vested in full on December 4, 2015.

(3)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Matching contributions to Section 401(k) plan	$	4,000
Reimbursement for tax and financial planning services		8,435
Reimbursement for Legal Services		22,080
Personal use of Company-owned and leased aircraft travel*		126,927
Enhanced long term disability benefits		12,522
Premiums for term life insurance policy		3,450
Fixed Car Allowance		20,000
Chairman’s Club		2,529

Total	$	199,943

For purposes of the Summary Compensation Table, we value the aggregate incremental cost to the Company for personal use of the Company-owned aircraft using a method that takes into account the cost of fuel, trip related cabin services, crew travel expenses, on-board catering, landing fees, trip related hangar parking costs and other variable costs. Since our aircraft is used primarily for business travel, the calculation does not include the fixed costs that do not change based on usage, such as pilots’ salaries, the acquisition cost of the aircraft and the cost of maintenance not related to trips. We value the aggregate incremental cost to the Company for personal use of Company-leased aircraft at an amount equal to the actual cost incurred by the Company for each flight.

(4)	Mr. Beaudoin terminated employment on July 31, 2015.

(5)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Matching contributions to Section 401(k) plan	$	3,600
Reimbursement for tax and financial planning services		5,000
Enhanced long term disability benefits		438
Fixed Car Allowance		12,115
Chairman’s Club		2,529

Total	$	23,682

(6)	Mr. Tempesta was appointed as Executive Vice President of Finance and Chief Financial Officer on July 21, 2015.

(7)	Mr. Tempesta received a cash bonus payment for completion of a strategic business initiative.

(8)	Mr. Tempesta received his bonus pursuant to the Company’s 2015 Bonus Plan in the form of a restricted stock unit award for 15,687 shares of our common stock having a value equal to $315,000. This award vested in full on December 4, 2015.

(9)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Matching contributions to Section 401(k) plan	$	5,300
Enhanced long term disability benefits		502
Chairman’s Club		2,529

Total	$	8,331

(10)	Mr. Bowden received his bonus pursuant to the Company’s 2015 Bonus Plan in the form of a restricted stock unit award for 17,679 shares of our common stock having a value equal to $355,000. This award vested in full on December 4, 2015.

(11)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Matching contributions to Section 401(k) plan	$	4,923
Reimbursement for tax and financial planning services		5,000
Reimbursement for Executive Enhanced Wellness Benefit		3,886
Enhanced long term disability benefits		525
Chairman’s Club		2,529

Total	$	16,863

(12)	Mr. Devanny started with the Company on April 14, 2014.

(13)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Matching contributions to Section 401(k) plan	$	5,300
Enhanced long term disability benefits		526
Travel Allowance		40,177
Chairman’s Club		2,529

Total	$	48,532

(14)	Mr. Robbins started with the Company on December 16, 2013.

(15)	Mr. Robbins received his bonus pursuant to the Company’s 2015 Bonus Plan in the form of a restricted stock unit award for 16,185 shares of our common stock having a value equal to $325,000. This award vested in full on December 4, 2015.

(16)	The amount reported in the All Other Compensation column for fiscal 2015 consists of the following items:


Enhanced long term disability benefits	$	525
Chairman’s Club		2,529

Total	$	3,054

FISCAL 2015 GRANTS OF PLAN BASED AWARDS TABLE

The following table sets forth all plan-based awards granted to the Named Executive Officers during fiscal 2015. The equity awards identified in the table below are also reported in the Outstanding Equity Awards at Fiscal Year End table.


					Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1)						Estimated Future Payouts Under Equity Incentive Plan Awards						All Other Stock Awards Number of Shares of Stock or Units (#)		Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)(2)
Name	Issuance Date		Grant Date		Threshold ($)		Target ($)		Maximum ($)		Threshold (#)		Target (#)		Maximum (#)				Exercise or Base Price of Option Awards ($/Sh)	Grant Date Fair Value of Stock and Option Awards ($)(2)
Paul A. Ricci(3)(4)		12/15/2014		12/15/2014														250,000			3,507,500
		12/17/2012		12/31/2014								700,000		200,000		250,000					2,854,000
				10/01/2014	$	300,000	$	1,200,000	$	1,800,000
Thomas L. Beaudoin(5)		12/15/2014		12/15/2014														50,000			701,500
		12/17/2012		12/31/2014								30,000		50,000		62,500					713,500
		11/12/2013		12/31/2014								6,000		10,000		12,500					142,700
		11/12/2013		12/31/2014								—		20,000		20,000					285,400
		11/12/2013		12/31/2014								5,000		20,000		20,000					285,400
		4/30/2014		12/31/2014								6,250		25,000		25,000					364,750	(6)
				10/01/2014	$	106,250	$	425,000	$	637,500
Daniel D. Tempesta(7)		12/15/2014		12/15/2014														30,000			420,900
		1/27/2015		1/27/2015														9,325			128,405
		7/21/2015		7/21/2015														66,000			1,115,400
		12/17/2012		8/19/2015								9,000		15,000		15,000					268,200
		12/31/2013		8/19/2015								5,250		8,750		8,750					156,450
		12/31/2013		8/19/2015								2,969		11,875		11,875					212,325
		12/31/2013		8/19/2015								—		4,375		4,375					78,225
		1/27/2015		8/19/2015								—		1,562		1,562					27,929
		1/27/2015		8/19/2015								—		5,938		5,938					106,171
				10/01/2014	$	63,050	$	252,200	$	378,300
Adam B. Bowden(8)		10/7/2014		10/7/2014														75,000			1,103,250
		12/17/2012		12/31/2014								22,500		37,500		46,875					535,125
		11/12/2013		12/31/2014										12,500		12,500					178,375
		11/12/2013		12/31/2014										12,500		12,500					178,375
		10/7/2014		12/31/2014								6,250		25,000		25,000					364,750	(6)
		1/27/2015		6/16/2015								9,000		15,000		15,000					268,950
		1/27/2015		6/16/2015										5,000		5,000					89,650
		1/27/2015		6/16/2015										5,000		5,000					89,650
		1/27/2015		6/16/2015										25,000		25,000					448,250
				10/01/2014	$	75,000	$	300,000	$	450,000
Earl H. Devanny(9)		04/30/2014		12/31/2014								60,000		100,000		125,000					1,427,000
				10/01/2014	$	136,250	$	545,000	$	817,500
William Robbins(10)		12/15/2014		12/15/2014														61,250			859,338
		12/31/2013		12/31/2014								11,250		18,750		23,438					267,563
		12/31/2013		12/31/2014								4,500		22,500		28,125					321,075
		12/15/2014		12/31/2014								3,000		15,000		18,750					214,050
		12/15/2014		12/31/2014								1,563		6,250		7,813					89,188
				10/01/2014	$	87,500	$	350,000	$	525,000

(1)

The Company’s Fiscal 2015 Bonus Plan provides that annual bonuses are to be paid primarily in shares of our common stock, which may be subject to additional vesting requirements, as determined by the Compensation Committee. The amounts reported in this section as “Threshold,” “Target” and “Maximum” possible payouts are estimated amounts and assume that each Named Executive Officer participating in the Fiscal 2015 Bonus Plan would receive a payment based solely upon the level at which the plan is funded. The actual amount paid to each Named Executive Officer was determined based upon his or her individual performance during the fiscal year. The actual bonus payments to each Named Executive Officer and the form of payment are disclosed in Compensation Disclosure and Analysis above.

(2)

The amounts reported represent the grant date fair value of each equity award assuming payout at the target award level, computed in accordance with FASB ASC Topic 718. The amounts reported in this column do not correspond to the actual value that may ultimately be realized by the Named Executive Officer from his or her equity awards.

(3)

This table does not include performance-based restricted stock unit awards covering 250,000 shares of our common stock that will vest only if Mr. Ricci achieves the fiscal 2016 corporate financial targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of fiscal 2016, there was no grant date fair value for the awards for financial reporting purposes at the date of issuance. The award provides that if the annual performance targets are not achieved, the award will be forfeited.

(4)

The amounts reported in the Stock Awards column include performance shares that were issued to Mr. Ricci in prior fiscal year however accounted for in this fiscal period upon establishment of fiscal 2015 performance goals. The table below illustrates the dates the grants were issued to Mr. Ricci and the grant date value of each award. As noted in the table the fiscal year 2015 grants consisted of 250,000 shares of time-based awards and 250,000 shares of performance based awards. The performance based award issued in fiscal 2015 of 250,00 shares will be aligned to fiscal 2016 targets which will be established in the first quarter of the fiscal year.


Date of Issuance	Date of Grant		# of Shares		Grant Date Value		Type of Award
12/15/2014		12/15/2014		250,000	$	3,507,500	Time-based shares vesting 9/30/2016
Total grants issued in FY2015				250,000	$	3,507,500
12/17/2012		12/31/2014		200,000	$	2,854,000	Performance award tied to Fiscal 2015 Corporate Financial Targets
Total grants issued prior to FY2015 and accounted for in FY15				200,000	$	2,854,000
Total Value Reported in Stock Award Column				450,000	$	6,361,500
Not Included and issued in FY2015		12/15/2014		250,000	$	3,507,500	Performance award tied to Fiscal 2016 Corporate Financial Targets

(5)

This table does not include performance-based restricted stock unit awards covering 70,000 shares of our common stock that will vest only if Mr. Beaudoin achieves the fiscal 2016 corporate targets and 30,000 shares of our common stock that will vest only if Mr. Beaudoin achieves the fiscal 2017 corporate targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of each applicable fiscal year, there was no grant date fair value for the awards for financial reporting purposes at the date of issuance. The award provides that if the annual performance targets are not achieved, the award will be forfeited. Mr. Beaudoin terminated his employment on July 31, 2015 and forfeited any unvested awards.

(6)

There are 6,250 shares that were aligned to a portion of the organizational objective that were amended by the Compensation Committee to extend measurement period from April 30, 2015 to July 30, 2015 to provide for additional time to complete the initiative. The Compensation Committee determined the adjusted measurement date was more appropriate to ensure that the necessary information was available to them in order to determine the completion of the objective in a meaningful way.

(7)	This table does not include performance-based restricted stock unit awards covering 57,825 shares of our common stock that will vest only if Mr. Tempesta achieves the fiscal 2016 corporate targets and 40,000

shares of our common stock that will vest only if Mr. Tempesta achieves his fiscal 2017 corporate targets and 20,000 shares of our common stock that will vest only if Mr. Tempesta achieves his fiscal 2018 targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of each applicable fiscal year, there was no grant date fair value for the awards for financial reporting purposes at the date of issuance. The award provides that if the annual performance targets are not achieved, the award will be forfeited.

(8)

This table does not include performance-based restricted stock unit awards covering 25,000 shares of our common stock that will vest only if Mr. Bowden achieves the first-half fiscal 2016 corporate targets, 50,000 shares of our common stock that will vest only if Mr. Bowden achieves his fiscal 2016 corporate targets, and 25,000 shares of our common stock that will vest only if Mr. Bowden achieves his first-half fiscal 2017 corporate targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of each applicable fiscal year, there was no grant date fair value for the awards for financial reporting purposes at the date of issuance. The award provides that if the annual performance targets are not achieved, the award will be forfeited.

(9)

This table does not include a performance-based restricted stock unit award covering 66,666 shares of our common stock that will vest only if Mr. Devanny achieves his fiscal 2016 corporate targets and 33,334 shares of our common stock that will vest only if Mr. Devanny achieves his fiscal 2017 corporate targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of each applicable fiscal year, there was no grant date fair value for the awards for financial reporting purposes at the date of grant. The award provides that if the annual performance targets are not achieved, the award will be forfeited.

(10)

This table does not include performance-based restricted stock unit awards covering 41,250 shares of our common stock that will vest only if Mr. Robbins achieves the fiscal 2016 corporate targets and 20,000 shares of our common stock that will vest only if Mr. Robbins achieves the fiscal 2017 corporate targets. For purposes of FASB ASC Topic 718, since the annual performance targets for this award will not be set until the beginning of each applicable fiscal year, there was no grant date fair value for the awards for financial reporting purposes at the date of issuance. The award provides that if the annual performance targets are not achieved, the award will be forfeited.

FISCAL 2015 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE

The following table sets forth all outstanding equity awards held by each Named Executive Officer as of September 30, 2015. For purposes of valuing the outstanding awards, the amounts below are based on a per share price of $16.37 for the Company’s common stock, which was the closing market price of the common stock as reported on the NASDAQ Global Select Market on September 30, 2015.


											Stock Awards
	Option Awards															Equity Incentive Plan Awards: Number of Unearned Shares, or Units or Other Rights That Have Not Vested (#)			Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Name	Grant Date		Number of Securities Underlying Unexercised Options Exercisable (#)		Number of Securities Underlying Unexercised Options Unexercisable (#)		Option Exercise Price ($)		Option Expiration Date		Number of Shares or Units of Stock That Have Not Vested (#)			Market Value of Shares or Units of Stock That Have Not Vested ($)
Paul A. Ricci		—		—		—		—		—		500,000	(1)	$	8,185,000		812,500	(2)	$	13,300,625
		6/23/2009		800,000		—		12.00		6/23/2016		—			—		—			—
		11/04/2009		1,000,000		—		13.60		11/04/2016		—			—		—			—
		11/15/2010		1,000,000		—		16.44		11/15/2017		—			—		—			—
Thomas Beaudoin(3)		—		—		—		—		—		—			—		—			—
Daniel Tempesta		—		—		—		—		—		117,825	(4)		1,928,795		165,325	(5)		2,706,370
A. Bruce Bowden		—		—		—		—		—		75,000	(6)		1,227,750		221,875	(7)		3,632,094
Earl H. Devanny		—		—		—		—		—		100,000	(8)		1,637,000		225,000	(9)		3,683,250
William Robbins		—		—		—		—		—		102,500	(10)		1,677,925		139,375	(11)		2,281,569

(1)	These shares of common stock were granted pursuant to one time-based restricted stock award of 250,000 shares which vested on November 11, 2015 and one time-based restricted stock unit of 250,000 shares vesting on September 30, 2016.

(2)

These stock awards are performance-based and will vest only upon achievement of certain pre-established financial performance targets. The vesting of 200,000 of the shares of our common stock subject to the award is based upon the achievement of fiscal 2015 non-GAAP revenue, bookings and non-GAAP earnings-per-share targets with the opportunity to receive up to an additional 50,000 shares for overachievement of these goals. Upon the filing of the Company’s Annual Report on Form 10-K with the SEC on November 19, 2015, it was determined that targets were achieved at a level to vest 224,333 shares and 25,667 shares were forfeited. 250,000 of these shares are tied to a strategic leadership goal that if achieved will vest in Q1-2016. As of September 30, 2015, 187,500 out of the 250,000 shares were deemed achieved and will time-vest upon final conclusion of the final milestone due in Q1-2016. 50,000 of these shares are tied to a relative total shareholder return target with the opportunity to achieve an additional 12,500 shares for overachievement. The measurement of achievement for this goal was on October 29, 2015 and was achieved at a level to vest 42,380 shares. The remaining 20,120 shares were forfeited. The vesting of the remaining 250,000 shares of our common stock subject to the award is based upon the achievement of fiscal 2016 corporate financial targets to be established in the first quarter of fiscal 2016.

(3)	Mr. Beaudoin terminated employment with the Company on July 31, 2015 and therefore has no outstanding equity awards as of September 30, 2015.

(4)	These shares of common stock were granted pursuant to 117,825 time-based restricted stock units; 57,825 shares vest on September 30, 2016; 40,000 shares vest on September 30, 2017 and 20,000 shares vest on September 30, 2017.

(5)

These stock awards are performance-based and will vest only upon the achievement of certain pre-established financial performance targets. The vesting of 47,500 of the shares of our common stock subject to the award is based upon the achievement of fiscal 2015 non-GAAP revenue, bookings, non-GAAP earnings-per-share, operating expense target and strategic business objectives. Upon the filing of the Company’s Annual Report on Form 10-K with the SEC on November 19, 2015, it was determined that targets were achieved at a level to vest 46,312 shares and 1,188 shares were forfeited. The vesting of the

remaining 117,825 shares of our common stock subject to the awards is based upon achievement of fiscal 2016, (57,825 shares), fiscal 2017 (40,000 shares) and fiscal 2018 (20,000 shares) performance targets. The annual performance targets for these awards will be set at the beginning of each applicable fiscal year.

(6)	These shares of common stock were granted pursuant to 75,000 time-based restricted stock units; 25,000 shares vest on March 31, 2016; 25,000 shares vest on September 30, 2016; and 25,000 shares vest on March 31, 2017.

(7)

These stock awards are performance-based and will vest only upon the achievement of certain pre-established financial performance targets. The vesting of 112,500 of the shares of our common stock subject to the award is based upon the achievement of fiscal 2015 non-GAAP revenue, bookings, non-GAAP earnings-per-share, M&A revenue and strategic M&A objectives with the opportunity to receive an additional 9,375 shares for overachievement of corporate financial targets. Upon the filing of the Company’s Annual Report on Form 10-K with the SEC on November 19, 2015, it was determined that these targets had been achieved at a level that would to vest 102,575 shares and 19,300 shares were forfeited. The vesting of the remaining 100,000 shares of our common stock subject to the award is based upon achievement of fiscal 2016 (75,000 shares) and 2017 (25,000 shares) performance targets. The annual performance targets for these awards will be set at the beginning of each applicable fiscal year.

(8)	These shares of common stock were granted pursuant to 100,000 time-based restricted stock units; 66,666 shares vest on September 30, 2016; and 33,334 shares vest on September 30, 2017.

(9)

These stock awards are performance-based and will vest only upon the achievement of certain pre-established financial performance targets. The vesting of 100,000 of the shares of our common stock subject to the award is based upon the achievement of fiscal 2015 non-GAAP revenue, bookings, non-GAAP earnings-per-share, healthcare segment revenue, healthcare segment bookings and healthcare segment margin targets with the opportunity to receive an additional 25,000 shares for overachievement of goals. Upon the filing of the Company’s Annual Report on Form 10-K with the SEC on November 19, 2015, it was determined that these targets had been achieved at a level that would vest 110,500 shares and 14,500 shares were forfeited. The vesting of the remaining 100,000 shares of our common stock subject to the award is based upon achievement of fiscal 2016 (66,666 shares) and 2017 (33,334 shares) performance targets. The annual performance targets for these awards will be set at the beginning of each applicable fiscal year.

(10)	These shares of common stock were granted pursuant to 102,500 time-based restricted stock units; 41,250 shares vest on December 16, 2015; 20,000 on September 30, 2016; 21,250 on December 16, 2016 and 20,000 shares vest on September 30, 2017.

(11)

These stock awards are performance-based and will vest only upon the achievement of certain pre-established financial performance targets. The vesting of 62,500 of the shares of our common stock subject to the award is based upon the achievement of fiscal 2015 non-GAAP revenue, bookings, non-GAAP earnings-per-share, sales operating expense, management plan revenue, management plan net new bookings and management plan booking targets with the opportunity to receive an additional 15,625 shares for overachievement of goals. Upon the filing of the Company’s Annual Report on Form 10-K with the SEC on November 19, 2015, it was determined that these targets had been achieved at a level that would vest 48,750 shares and 29,375 shares were forfeited. The vesting of the remaining 61,250 shares of our common stock subject to the award is based upon achievement of fiscal 2016 (41,250 shares) and 2017 (20,000 shares) performance targets. The annual performance targets for these awards will be set at the beginning of each applicable fiscal year.

FISCAL 2015 OPTION EXERCISES AND STOCK VESTED TABLE

The following table sets forth all stock options exercised and the value realized upon exercise, and all other equity awards vested and the value realized upon vesting, by the Named Executive Officers during fiscal 2015.


	Option Awards				Stock Awards
Name	Number of Shares Acquired on Exercise (#)		Value Realized on Exercise ($)(1)		Number of Shares Acquired on Vesting (#)		Total Value Realized on Vesting ($)(2)
Paul A. Ricci		400,000	$	1,850,664		1,085,113	$	16,792,134
Thomas L. Beaudoin		100,000		235,346		172,725		2,635,413
Daniel Tempesta		—		—		115,963		1,810,996
Adam Bruce Bowden		—		—		156,672		2,423,432
Earl H. Devanny		—		—		184,714		2,923,030
William Robbins		—		—		145,929		2,149,981

(1)	Values calculated based on actual sale price less cost of option upon exercise.

(2)	Value calculated by multiplying the number (#) of shares vesting and the closing price on date of vest less par value of shares.

PENSION OR NONQUALIFIED DEFERRED COMPENSATION PLANS

The Company had no pension plans or nonqualified deferred compensation arrangements in which the Named Executive Officers participated during fiscal 2015.

EMPLOYMENT, SEVERANCE AND CHANGE IN CONTROL AGREEMENTS

Chief Executive Officer

Mr. Ricci serves as our Chief Executive Officer and Chairman of the Board of Directors. The Company entered into an amended and restated employment agreement (the “Employment Agreement”) with Mr. Ricci on November 11, 2011. Subject to earlier termination as provided below, the Company will employ Mr. Ricci for a term of three years commencing on November 11, 2011 through November 11, 2014. This term of employment may be extended for successive additional terms of one year each (each, a “Successive One-Year Term”) with mutual written notice of intention to extend by the Company and Mr. Ricci at least 180 days prior to the end of the initial three-year term or any Successive One-Year Term. The Company or Mr. Ricci may terminate the Employment Agreement after the initial term or after any Successive One-Year Term by giving written notice of intent to terminate the Employment Agreement (a “Notice of Non-Renewal”). This agreement was subsequently amended on November 12, 2013 (the “Amendment No. 1”) which extended the term for an additional year through November 11, 2015.

On June 18, 2015, the Board of Directors approved an amendment to the Employment Agreement (the “Amendment No. 2”) which superseded Amendment No. 1 entered into on November 12, 2013. Amendment No. 2 extended the term of the Employment Agreement for an additional year through November 11, 2016. Amendment No. 2 may be extended by mutual written consent of the Company and Mr. Ricci at least 180 days prior to November 11, 2016 or the expiration of any Successive One-Year Term.

Pursuant to the terms and conditions of Amendment No. 2, Mr. Ricci, in his capacity as our Chief Executive Officer, will continue to receive an annual base salary of $800,000, a target annual performance-based incentive award opportunity, based upon the achievement of one or more pre-established financial performance objectives as established by the Compensation Committee, of up to 150% of his base salary. Pursuant to Amendment No. 2, the financial performance objectives to be established by the Compensation Committee for fiscal 2015 will be related to the Company’s achievement of pro forma revenue and earnings or other performance target levels. Once the financial performance objectives have been approved by the Compensation Committee, they may not be changed. A further commitment was provided to the Executive whereas the fiscal 2016 goals for the performance units will be established no later than the November 2015 Board of Directors meeting as well as the commitment to maintaining the same scaling index as used for the fiscal 2015 performance shares. Under mutual agreement, the commitment date to finalize the fiscal 2016 performance goals was extended to be established no later than December 30, 2015. In fiscal 2015, Mr. Ricci continued to be eligible for up to $25,000 of tax and financial planning services per calendar year and to receive a $20,000 car allowance per calendar year. Both these allowances were enhanced to provide for continuation of allowances during any applicable severance period. Pursuant to Amendment No. 1, tax “gross-up” payments for the tax and financial planning services and car allowance were eliminated.

Pursuant to the Amendment No. 2, Mr. Ricci’s post-retirement medical benefit that provided for a maximum reimbursement of $250,000 in the aggregate was eliminated. In addition, Mr. Ricci continues to be eligible to receive an enhanced long term disability benefit which provides for 60% of his base eligible earnings and continued payment of premiums by the Company for a $1 million term life insurance policy.

Pursuant to Amendment No. 2, Mr. Ricci would be provided with a lump sum payout of $500,000 in the event he is involuntarily terminated without Cause.

If Mr. Ricci terminates his employment following receipt of a Notice of Non-Renewal from the Company or his employment is terminated by the Company for a reason other than cause, death or disability (each as defined in the Employment Agreement) then, subject to his compliance with the conditions to receive any severance payments or benefits (as defined in the Employment Agreement), as enhanced by Amendment No. 2, he will now be eligible to receive through the term of the Severance Period (as defined below): (i) continuing payments of two (2) times his base salary, calculated by taking the average of the last ninety (90) days of employment, during the Severance Period, plus 150% of his target performance bonus (or the amount actually received in the fiscal year prior to the year of termination of employment, whichever is higher) which had been in effect in the fiscal year ending prior to the year of termination of employment, (ii) continued payment by the Company of the group

medical, dental and vision continuation coverage premiums for him and his eligible dependents under the Consolidated Budget Reconciliation Act of 1985, as amended (“COBRA”) during the Severance Period under the Company’s group health plans, as then in effect; (iii) continued payment of the annual premium for the remaining term of the life insurance policy in the event of disability or non-renewal; (iv) a lump sum payout of $500,000, less applicable withholding; (v) the continued vesting for a period of twenty-four (24) months for his outstanding stock options and stock purchase right or restricted stock units; and (vi) an extended period of time to exercise any outstanding and vested stock options for a period of two (2) years or until their original expiration date, whichever is earlier.

In the case of termination due to a Notice of Non-Renewal by (a) Mr. Ricci or (b) by the Company between April 1^st in any year and one hundred and eighty (180) days prior to the end of the Employment Term, then, with respect to any grant of performance-based restricted stock units or shares of performance-based restricted stock for which, as of the date on which the Notice of Non-Renewal is given (the “Notice Date”), both the applicable performance period has not yet ended and the performance period is scheduled to end in the Company’s fiscal year in which the Notice Date occurs, vesting of the units or shares will be determined as follows:

(A) the grant will be divided equally into Parts 1 and 2,

(B) the applicable performance goals for Part 1 shares/units will be based on metrics/milestones aligned to the first half of the fiscal year,

(C) actual performance at the end of the first half of the fiscal year will determine the portion of Part 1 (if any) that is eligible to vest, with any remaining portion of Part 1 being forfeited (subject to subsection (vii) below),

(D) the units or shares that become eligible to vest under Clause (C) above will vest on the last day of the Employment Term if Executive does not terminate his employment before that date,

(E) the original performance goals for the grant will apply to Part 2 and the performance goals will be deemed achieved at one hundred percent (100%) of target levels, thus determining the number of units or shares in Part 2 that are eligible to vest, and

(F) the number of units or shares eligible to vest under Clause (E) will vest on the last day of the Employment Term if Executive does not terminate his employment before that date.

If the Company (a) provides a Notice of Non-Renewal earlier than the last business day of March in any year or (b) terminates Executive for a reason other than Cause, Death or Disability (including following a termination due to a Notice of Non-Renewal but before the end of the Employment Term), then the goals for any unvested performance-based restricted stock units or performance-based shares of restricted stock will be deemed achieved at one hundred percent (100%) of target levels and will be vested on the last day of employment. (For the purposes of clarity, this Section will also apply to any unvested performance-based restricted stock units or performance-based shares of restricted stock not described immediately above.)

Amendment No. 2 also permits Mr. Ricci, after the expiration of Mr. Ricci’s eligibility for COBRA described above, to participate in the Company’s group medical, dental and vision plans, provided that (A) the Company will not be required to provide such participation if the Company determines that such participation would violate applicable law for the Company or for other participants in the plans, (B) Mr. Ricci, if permitted to so participate, will pay the full cost of such participation as determined by the Company, and (C) Executive’s participation, if any, will end no later than a period of ten years after the expiration of his eligibility for COBRA.

If Mr. Ricci’s employment with the Company is terminated due to his death or his becoming disabled, then he or his estate (as the case may be) will be eligible, as enhanced by Amendment No. 2, to receive (i) an amount equal two (2) times his base salary at the time of the death or disability plus an amount equal to 100% of his target performance bonus, as then in effect in the fiscal year ending prior to the death or disability, (ii) continued payment of the annual premium for the remaining term of his life insurance policy; (iii) immediate 100% vesting of any stock options or stock awards held by him that were outstanding and unvested immediately prior to his termination of employment, (iv) an extended period of time to exercise any outstanding and vested stock options for a period of two years or until their original expiration date, (v) Company-paid coverage for a period of up to

three years or as eligible under COBRA for him (if applicable) and his eligible dependents under the Company’s health benefit plans (or, at the Company’s option, coverage under a separate plan), providing benefits that are no less favorable than those provided under the Company’s plans immediately prior to his death,; (vi) a lump sum payment of $500,000, less applicable tax withholding; and (vii) all compensation and benefits from the Company for which he is eligible under other policies or plans.

If, (i) at any time during the employment term Mr. Ricci resigns for good reason (as defined in the Employment Agreement); or (ii) within 12 months following a change of control of the Company (as defined in the Employment Agreement), his employment with the Company is terminated for a reason other than (A) cause, (B) his becoming disabled or (C) his death, then, he will be eligible to receive the severance payments and benefits set forth above and the lump sum payment of $500,000, less applicable tax withholdings; provided, however that he will receive, as enhanced by Amendment No. 2, (i) two and one-half times his base salary as then in effect, (ii) plus an amount equal to two times his target performance bonus which had been in effect in the fiscal year ending prior to the year of termination of employment, and (iii) immediate 100% acceleration of any outstanding and unvested stock options or other equity awards rather than continued vesting over the Severance Period.

If Mr. Ricci terminates employment with the Company (i) after providing a Notice of Non-Renewal or (ii) other than for good reason (as defined in the Employment Agreement), or if his employment with the Company is terminated for cause, then he will receive payment of the accrued obligations (as defined in the Employment Agreement) but he will not be eligible to receive any other compensation or benefits (including, without limitation, accelerated vesting of stock options and unvested Stock Awards) from the Company, except to the extent provided under the applicable stock option agreement(s), Company benefit plans or as may be required by law (for example, under COBRA).

For purposes of his Employment Agreement includes Amendment No. 1 and Amendment No. 2, the term “Severance Period” means the period beginning on the date of Mr. Ricci’s termination of employment with the Company and ending on the date 18 months later for all reasons other than a termination of employment following a change in control of the Company or for good reason. “Severance Period” for a termination of employment following a change in control of the Company or for a termination of employment by Mr. Ricci for good reason means the period beginning on the date of his termination of employment with the Company and ending on the date twenty-four (24) months later.

Mr. Ricci has agreed not to compete with the Company or solicit the Company’s employees or customers during the period in which he is receiving severance payments from the Company. For all termination of employment situations described above, in order for Mr. Ricci to receive the severance payments and benefits described above, he must execute and deliver to the Company, and not revoke, a full general release of claims.

The following table describes the estimated payments and benefits that would be received by Mr. Ricci upon a termination of his employment by the Company without cause (as defined in the Employment Agreement) or by him for good reason (as defined in the Employment Agreement) in connection with a change of control of the Company, or due to his retirement, death or disability. For purposes of valuing Mr. Ricci’s equity awards, the amounts below are based on a per share price of $16.37 for the Company’s common stock, which was the closing market price of the common stock as reported on the NASDAQ Global Select Market on September 30, 2015.


	Termination (without cause)— Other than CIC, including non- renewal by Company prior to April 1st in any year:		Notice of Non-Renewal by Executive or by Company between April 1st in any year and 180 days prior to end of contract term:		Termination—CIC or Good Reason		Death/Disability:
Severance	$	1,600,000	$	1,600,000	$	2,000,000	$	1,600,000
Bonus		1,800,000		1,800,000		2,400,000		1,200,000
Equity		12,276,750		10,230,625		12,276,750		12,276,750
Benefits continuation		31,970		31,970		42,626		63,939
Lump Sum Payout		500,000		500,000		500,000		500,000
Term Life Premium		41,400		41,400		41,400		41,400
Allowance Continuation		142,500		142,500		190,000		—

Total	$	16,392,620	$	14,346,495	$	17,450,776	$	15,682,089

Other Named Executive Officers

Mr. Tempesta

Mr. Tempesta served as the Company’s Chief Accounting Officer, Corporate Controller and Senior Vice President of Finance since March 2008 and was appointed our Executive Vice President and Chief Financial Officer in July 2015.

In the event Mr. Tempesta’s employment is involuntarily terminated without cause and not for death or disability and provided he executes our standard severance agreement, which includes a full release of claims, he will be eligible to receive severance payments and benefits consisting of twelve (12) months base salary and twelve (12) months Company-paid health insurance under COBRA. If Mr. Tempesta’s employment is terminated without cause within twelve (12) months following a change in control of the Company, he will be eligible to receive severance payments and benefits consisting of twelve (12) months base salary and twelve (12) months Company-paid health insurance under COBRA, plus immediate acceleration of all of his outstanding and unvested time-based restricted stock awards.

On November 12, 2013, the Compensation Committee approved an enhanced term Change of Control and Severance Agreement (the “Tempesta Agreement”) with Mr. Tempesta whereas for an initial term through September 30, 2015, which provides for an automatic renewal of additional one year terms, he will receive an enhancement of his post-change of control severance payments and benefits in the form of (i) severance upon a resignation for “good reason” in addition to termination of employment without cause”; (ii) a lump sum payment equal to 100% of the annual target bonus for the year of termination, or the year preceding the change of control, if greater, and (iii) upon a change of control, performance shares for the year of the change of control will convert to time-based shares and vest in full at target based on continued service through the end of the performance period, or upon earlier termination without “cause” or for “good reason.” In July 2015, the Compensation Committee approved an extension of this agreement for an additional one-year term which now extends through September 30, 2016, which provides for an automatic renewal of additional one year term. If this agreement is not renewed after September 30, 2016, Mr. Tempesta will revert back to his original post-employment compensation terms as set forth in his employment offer letter.

Mr. Bowden

Mr. Bowden has served as our Executive Vice President of Corporate Strategy and Development since October 15, 2010, was elected an Executive Officer on November 15, 2010 and expanded his role in October 2014 to have oversight of our global legal organization.

In the event Mr. Bowden’s employment is involuntarily terminated without cause and not for death or disability and provided he executes our standard severance agreement, which includes a full release of claims, he will be eligible to receive severance payments and benefits consisting of six (6) months base salary and six (6) months Company-paid health insurance under COBRA. If Mr. Bowden’s employment is terminated without cause within twelve (12) months following a change in control of the Company, he will be eligible to receive severance payments and benefits consisting of twelve (12) months base salary and twelve (12) months Company-paid health insurance under COBRA, plus immediate acceleration of all of his unvested time-based restricted stock awards.

On November 12, 2013, the Compensation Committee approved an enhanced term Change of Control and Severance Agreement (the “Bowden Agreement”) with Mr. Bowden whereas for an initial term through September 30, 2015, which provides for an automatic renewal of additional one year terms, he will receive an increase in severance in the event of termination of employment without cause other than within twelve (12) months following a change of control of the Company from six (6) months to twelve (12) months of base salary and Company paid COBRA medical continuation coverage for twelve (12) months following termination. In addition, pursuant to the Bowden Agreement, Mr. Bowden will receive an enhancement of his post-change of control severance payments and benefits in the form of (i) severance upon a resignation for “good reason” in addition to termination of employment without cause”; (ii) a lump sum payment equal to 100% of the annual target bonus for the year of termination, or the year preceding the change of control, if greater, and (iii) upon a

change of control, performance shares for the year of the change of control will convert to time-based shares and vest in full at target based on continued service through the end of the performance period, or upon earlier termination without “cause” or for “good reason.” In July 2015, the Compensation Committee approved an extension of this agreement for an additional one-year term which now extends through September 30, 2016, which provides for an automatic renewal of additional one year term. If this agreement is not renewed after September 30, 2016, Mr. Bowden will revert back to his original post-employment compensation terms as set forth in his employment offer letter.

Mr. Devanny

Mr. Devanny has served as our President, Healthcare Division since April 14, 2014 and was elected an Executive Officer effective on April 30, 2014.

Mr. Devanny was provided with the standard Change of Control and Severance Agreement that was adopted by our Compensation Committee on November 12, 2013. This agreement provides for an initial term through September 30, 2016 which provides for an automatic renewal of additional one year terms. In the event Mr. Devanny’s employment is terminated involuntarily by the Company without cause and not for death or disability and provided he executes our standard severance agreement, which includes a full release of claims, he will be eligible to receive severance payments and benefits consisting of twelve (12) months base salary and twelve (12) months Company-paid health insurance under COBRA.

If Mr. Devanny’s employment is terminated without cause within twelve (12) months following a change in control of the Company or upon a resignation for “good reason” within twelve (12) months following a change in control of the Company, he will be eligible to receive severance payments and benefits consisting of (i) twelve (12) months base salary, (ii) a lump sum payment equal to 100% of the annual target bonus for the year of termination, or the year preceding the change of control, if greater, (iii) twelve (12) months Company-paid health insurance under COBRA, (iv) immediate acceleration of all of his unvested time-based restricted stock awards, and (v) conversion of the performance shares for the year of the change of control to time-based shares and will vest in full at target based on continued service through the end of the performance period, or earlier if terminated without “cause” or for “good reason.”

Mr. Robbins

Mr. Robbins has served as our Executive Vice President of Worldwide Sales since December 16, 2013 and was elected an Executive Officer on January 17, 2014.

Mr. Robbins was provided with the standard Change of Control and Severance Agreement that was adopted by our Compensation Committee on November 12, 2013. This agreement provides for an initial term through September 30, 2015 which provides for an automatic renewal of additional one year terms. In the event Mr. Robbins’s employment is terminated involuntarily by the Company without cause and not for death or disability and provided he executes our standard severance agreement, which includes a full release of claims, he will be eligible to receive severance payments and benefits consisting of twelve (12) months base salary and twelve (12) months Company-paid health insurance under COBRA.

If Mr. Robbins’s employment is terminated without cause within twelve (12) months following a change in control of the Company or upon a resignation for “good reason” within twelve (12) months following a change in control of the Company, he will be eligible to receive severance payments and benefits consisting of (i) twelve (12) months base salary (ii) a lump sum payment equal to 100% of the annual target bonus for the year of termination, or the year preceding the change of control, if greater, (iii) twelve (12) months Company-paid health insurance under COBRA, (iv) immediate acceleration of all of his unvested time-based restricted stock awards, and (v) conversion of the performance shares for the year of the change of control to time-based shares and will vest in full at target based on continued service through the end of the performance period, or earlier if terminated without “cause” or for “good reason.”

In July 2015, the Compensation Committee approved an extension of this agreement for an additional one-year term which now extends through September 30, 2016, which provides for an automatic renewal of additional one year term.

The following tables sets forth the estimated payments and benefits that would be received by the Named Executive Officers (other than our Chief Executive Officer) upon a termination of employment by the Company without cause (as defined in each individual Change of Control and Severance Agreement) and an involuntary termination in connection with a change in control of the Company. For purposes of valuing equity awards held by each Named Executive Officer, the amounts below are based on a per share price of $16.37 of the Company’s common stock, which was the closing market price of the common stock as reported on the NASDAQ Global Select Market on September 30, 2015.

Termination of Employment Without a Change in Control


Name	Severance Payment Upon Termination		Accelerated Vesting of Unvested Equity Awards		Continuation of Benefits		Total
Thomas L. Beaudoin(1)	$	500,000		—	$	21,313	$	521,313
Daniel Tempesta	$	400,000		—	$	21,313	$	421,313
A. Bruce Bowden	$	400,000		—	$	21,313	$	421,313
Earl H. Devanny	$	700,000		—	$	24,524	$	724,524
William Robbins	$	450,000		—	$	21,313	$	471,313

Termination of Employment With a Change in Control


Name	Severance Payment Upon Termination		Accelerated Vesting of Unvested Equity Awards		Bonus		Continuation of Benefits		Total
Thomas L. Beaudoin(1)	$	500,000	$	—	$	425,000	$	21,313	$	946,313
Daniel Tempesta	$	400,000	$	2,997,982	$	300,000	$	21,313	$	3,719,295
A Bruce Bowden	$	400,000	$	2,455,350	$	300,000	$	21,313	$	3,176,663
Earl H. Devanny	$	700,000	$	2,728,156	$	545,000	$	16,349	$	3,989,505
William Robbins	$	450,000	$	2,353,044	$	350,000	$	21,313	$	3,174,357

(1)	Thomas Beaudoin voluntarily terminated from the Company on July 31, 2015 and therefore is no longer eligible for these benefits.

EQUITY COMPENSATION PLAN INFORMATION

As of September 30, 2015, there were 2,923,989 shares of the Company’s common stock subject to issuance upon the exercise of outstanding stock options under all of our equity compensation plans referred to in the table below, at a weighted average exercise price of $14.01 per share, and with a weighted average remaining term of 1.41 years. As of September 30, 2015, there were 11,708,049 shares of the Company’s common stock subject to full value awards outstanding. As of September 30, 2015, there were 17,624,981 shares of the Company’s common stock available for issuance under our equity compensation plans.

The following table provides information as of September 30, 2015 with respect to the shares of common stock that may be issued under our equity compensation plans.


	(a) Number of Securities to be Issued Upon Exercise of Options			(b) Weighted Average Exercise Price of Outstanding Options		(c) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Equity compensation plans approved by shareholders(1)		2,804,500	(2)	$	14.15		26,436,827	(3)
Equity compensation plans not approved by shareholders(4)(5)		34,694	(6)	$	14.04		141,708

Total equity compensation plans		2,839,194		$	14.15		26,578,535

(1)	Consists of our 1995 Directors’ Stock Option Plan, 1995 Employee Stock Purchase Plan, and 2000 Stock Plan.

(2)	Excludes 11,422,634 securities to be issued upon vesting of restricted stock units.

(3)	Includes 8,953,554 shares of the Company’s Common Stock available for future issuance under the 1995 Employee Stock Purchase Plan.

(4)	Includes grants under our 2000 Nonstatutory Stock Option Plan, and our 1999 Stock Plan (formerly the eScription 1999 Stock Option Plan.

(5)

Excludes options assumed by the Company in the acquisitions of the BeVocal, Inc., VoiceSignal Technologies, Inc., eScription, Inc., Snap-In Software, Inc., and Vlingo Corporation. As of September 30, 2015 a total of 84,795 shares of the Company’s Common Stock were issuable upon exercise of the assumed options. The weighted average exercise price of the outstanding assumed options is $9.24 per share and they have an average weighted life remaining of 3.03 years. Of the 84,795 shares outstanding, 84,104 were exercisable as of September 30, 2015. No additional options may be granted under the plans related to the assumed options, with the exception of the plan assumed in the Vlingo acquisition as described below.

(6)	Excludes securities to be issued upon vesting of restricted stock units under the Company’s assumed 2003 Snap-In Software, Inc. Plan. As of September 30, 2015, 4,665 shares of the Company’s Common Stock were issuable upon the vesting of such restricted stock units.

DESCRIPTION OF PLANS NOT ADOPTED BY STOCKHOLDERS

2000 Nonstatutory Stock Option Plan (the “NSO Plan”)

In August 2000, the Board of Directors approved our NSO Plan. The NSO Plan has not been approved by our stockholders. The NSO Plan, which has been amended from time to time, provides for the grant of nonstatutory stock options to employees and consultants. A total of 10,150,000 shares of Common Stock have been reserved for issuance under the NSO Plan. Of this amount, as of September 30, 2015, options with respect to 33,334 shares were outstanding, and no shares were available for future grants as this plan expired on August 15, 2010. All of the outstanding options were granted with an exercise price at or above fair market value. All outstanding options have an exercise price of $14.00 per share. Vesting schedules of the options ranged from two to four years, and they have a maximum term of ten years. Shares subject to this plan are included in the table above.

1999 eScription Stock Plan (Assumed as part of the eScription acquisition)

In May 2008, in connection with the eScription acquisition, the Company assumed the 1999 eScription Stock Option Plan (the “1999 Plan”). The 1999 Plan provides for the grant of incentive and non-qualified stock options or stock purchase rights to employees and consultants that were not employed by the Company prior to the time of the acquisition. A total of 3,852,710 shares of Common Stock have been reserved for issuance under the 1999 Plan. Of this amount, as of September 30, 2015, options with respect to 29,440 shares were outstanding, and no shares were available for future grants as this plan expired on August 9, 2009. All outstanding options were granted with an exercise price at or above fair market value, ranging from $0.83 to $19.86 per share with an average per share price of $5.16. Vesting schedules of the options ranged from three to four years, and have a maximum term of ten years. Shares subject to this plan are included in the table above unless otherwise footnoted.

2003 Snap-In Software, Inc. Stock Plan (Assumed as part of the Snap-In acquisition)

In October 2008, in connection with the Snap-In acquisition, the Company assumed the 2003 Snap-In Software, Inc. Stock Option Plan (the “2003 Plan”). The 2003 Plan provides for the grant of incentive and non-qualified stock options or stock purchase rights to employees and consultants that were not employed by the Company prior to the time of the acquisition. A total of 1,850,499 shares of Common Stock have been reserved for issuance under the 2003 Plan. Of this amount, as of September 30, 2015, options with respect to 10,308 shares were outstanding, stock purchase rights with respect to 4,665 shares were outstanding, and there are no shares available for future grants. All outstanding options were granted with an exercise price at or above fair market value, ranging from $1.00 to $17.89 per share with an average per share price of $8.66. Vesting schedules of the options ranged from three to four years, and have a maximum term of ten years. Shares subject to this plan are included in the table above unless otherwise footnoted. This plan expired on July 13, 2013.

2006 Mobeus Corporation Stock Incentive Plan (Assumed as part of the Vlingo (formerly known as Mobeus Corporation) acquisition)

In June 2012, in connection with the Vlingo Acquisition, (formerly Mobeus Corporation) the Company assumed each option to purchase Vlingo common stock that was unvested immediately prior to the completion of the merger and issued pursuant to the 2006 Mobeus Corporation (“Vlingo”) Stock Option Plan (the “2006 Plan”). The 2006 Plan provides for the grant of incentive and non-qualified stock options, restricted stock and restricted stock units to employees and consultants that were not employed by the Company prior to the time of the acquisition. A total of 345,319 shares of Common Stock have been reserved for issuance under the 2006 Plan. Of this amount, as of September 30, 2015, options with respect to 29,577 shares were outstanding, and 141,708 shares were available for future grants. All outstanding options were granted with an exercise price at or above fair market value, ranging from $2.07 to $20.04 per share with an average per share price of $14.67. Vesting schedules of the options ranged up to four years, and have a maximum term of ten years. Shares subject to this plan are included in the table above unless otherwise footnoted. This plan expires on December 16, 2016.

TRANSACTIONS WITH RELATED PERSONS

It is the policy of our Board of Directors that all transactions required to be reported pursuant to Item 404 of Regulation S-K be subject to approval by the Audit Committee of our Board of Directors. In furtherance of relevant NASDAQ rules and our commitment to corporate governance, the charter of the Audit Committee provides that the Audit Committee shall review and approve any proposed related party transactions including, transactions required to be reported pursuant to Item 404 of Regulation S-K for potential conflict of interest situations.

Our Audit Committee considers all of the available material facts and circumstances of a related person transaction, including: the direct and indirect interests of the related persons; in the event the related person is a director or nominee for director (or immediate family member of a director or an entity with which a director is affiliated), the impact that the transaction will have on a director’s or nominee for director’s independence; the risks, costs and benefits of the transaction to us; and whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances.

After considering all such facts and circumstances, our Audit Committee and our Board of Directors determines whether approval or ratification of the related person transaction is in our best interests. For example, if our Audit Committee determines that the proposed terms of a related person transaction are reasonable and at least as favorable as could have been obtained from unrelated third parties, it will recommend to our Board of Directors that such transaction be approved or ratified. In addition, if a related person transaction will compromise the independence of one of our directors or nominees for director, our Audit Committee may recommend that our Board of Directors reject the transaction if it could affect our ability to comply with securities laws and regulations or NASDAQ listing requirements.

The policies and procedures described above are included in the charter for the Audit Committee, which is available on the Company’s website at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/audit-committee/index.htm

Transactions and Relationships with Directors, Director Nominees, Executive Officers and Five Percent Stockholders

We believe that there has not been any transaction or series of transactions during fiscal 2015, with the exception of the disclosure below, to which we were or are to be a participant in which the amount involved exceeds $120,000 and in which any director, nominee for director, executive officer or holder of more than five percent of our Common Stock, or members of any such person’s immediate family, had or will have a direct or indirect material interest, other than compensation described in this section and the sections titled “Executive Compensation, Management and Other Information,” or “Director Compensation” elsewhere in this proxy statement.

As a global employer of approximately 13,500 employees, in Fiscal 2015, the Company employed a person who is an immediate family member of one of our named executive officers, the son of Thomas Beaudoin; Mr. Beaudoin’s son earned approximately $145,000 during fiscal 2015.

The compensation paid to the immediate family member is in accordance with such family member’s established compensation plan for the year, which plan includes performance-based compensation aligned to the attainment of defined goals, such as quota objectives for individuals involved in sales. The employee’s compensation plan is reviewed annually by his or her manager, and the earnings opportunity and performance objectives for such employees are consistent with the compensation plans of other Nuance employees functioning in comparable roles. None of the named executive officers who have an immediate family member employed by the Company has the authority to set such employee’s compensation plan. The Company believes that the annual compensation paid to each of these employees is appropriate and comparable with the compensation paid for similar positions by other leading employers.

PROPOSAL NUMBER 2

APPROVAL OF THE AMENDED AND RESTATED 2000 STOCK PLAN

The stockholders are being asked to approve the Company’s Amended and Restated 2000 Stock Plan (as amended, the “2000 Plan”). The 2000 Plan includes the following material changes:

•

An increase to the number of shares of Common Stock authorized for issuance from 72,600,000 shares to 74,600,000 shares, or an increase of 2,000,000 shares.

•

Revisions of the share recycling language to provide that upon exercise of stock appreciation rights the 2000 Plan share reserve will be reduced by the full number of shares exercised, regardless of the number of shares of Common Stock actually issued in such payment.

•

Certain clarifications to language regarding performance-based awards including language to permit the 2000 Plan administrator to make equitable adjustments to performance awards in response to unusual or non-recurring events affecting the Company, revisions to administrative procedures relating to awards intended to qualify as “performance-based compensation” under Section 162(m) of the Internal Revenue Code, including revisions to the definition of the “performance period.”

•

A revision to the definition of “consultant” to limit the definition to natural persons.

The foregoing amendments will enable the Company to continue to use the 2000 Plan to assist in recruiting, motivating and retaining talented employees to help achieve the Company’s business goals.

In December 2015, the Board of Directors approved the 2000 Plan, including the amendments described above, subject to approval from the Company’s stockholders at the Annual Meeting. If the stockholders approve the 2000 Plan, as described below and attached hereto as Annex A, it will replace the version of the 2000 Plan approved by our stockholders at the 2015 Annual Meeting. If stockholders do not approve the 2000 Plan, the version of the 2000 Plan approved by our stockholders at the 2015 Annual Meeting will remain in effect without amendment. The Company’s executive officers and directors have interests in this proposal. Other than the proposed changes described above, there are no material changes to the 2000 Plan.

As of December 4, 2015, the following table updates equity compensation plan information from what was reported as of our fiscal year end, September 30, 2015. This table includes active plans only.

Number of Shares
Available Under

All Plans (not

counting share

requests)

Number of
Options
Outstanding

Weighted Average
Exercise Price of
Outstanding
Options

Weighted Average
Remaining Term
of Outstanding
Options

Number of
Outstanding Full-
Value Awards

16,459,889

2,914,782

$14.03

1.23

9,625,998

In fiscal 2015, 2014, and 2013, the Company granted gross awards covering a total of 9,727,179 shares, 10,433,391 shares and 11,823,560 shares respectively. Based on our business plan, we currently forecast granting options and full value awards (in the form of restricted shares and restricted stock units) covering approximately 10,900,000 shares over the coming fiscal period, which is equal to 3.5% of our common shares outstanding as of December 3, 2015. The Board considered the need for grants to retain and reward existing employees, for anticipated new hires and in connection with the acquisition of new businesses. The Company projects cancellation of options and forfeitures of restricted stock and restricted stock unit awards of approximately 1,200,000 shares over the coming fiscal year. If our expectation of cancellations and forfeitures is accurate, our net grants (grants less cancellations and forfeitures) over the next fiscal year would be approximately 9,800,000 shares, or approximately 3.1% of our common shares outstanding as of December 3, 2015. The Company anticipates the requested increase is necessary and appropriate to satisfy anticipated needs of our current business plan. We anticipate seeking approval for additional shares, as needed to cover future grants under our 2000 Plan at our next annual meeting of stockholders. However, a change in business conditions or Company strategy could alter any of these projections.

In considering the requested increase, the Board also took into account certain additional criteria relating to potential impact on shareholders. The potential dilution from the 2,000,000 share increase requested is 1%, based on total common shares outstanding (measured as of September 30, 2015). Dilution represents the number of equity awards granted, less cancellations, as a percentage of total outstanding shares. Over the past three fiscal years, the Company’s average annual dilution was 2.7%. The Board also considered the Company’s historical burn rate, which measures the annual rate at which shares are granted under our equity plans (as a percentage of total outstanding shares) in evaluating the size of the requested share increase. Over the past three fiscal years, our burn rate has averaged 3.0%. The Board also considered the additional overhang, which measures the number of shares subject to equity awards outstanding but unexercised or unvested, plus the number of shares available to be granted, as a percentage of total shares. As of December 4, 2015 the Company had outstanding grants of 2,914,782 stock options, and 9,625,998 restricted stock units. The foregoing, along with 16,459,889 shares remaining available for future grant under our stock plans and the new share request of 2,000,000 shares, would represent approximately 9% of our total outstanding common shares as of December 3, 2015 of shares, calculated on a fully diluted basis. Over the past three fiscal years, our overhang has averaged 9.3%. Considering the Company’s historical broad-based equity grant practices and the foregoing information, the Board believes the additional share authorization to be appropriate and necessary to meet the objectives of our equity program and in the best interest of shareholders.

We strongly believe that the proposed amendment to the 2000 Plan is essential to the Company’s continued success. The Company’s employees are its most valuable assets. Stock options and other awards such as those provided under the 2000 Plan are vital to the Company’s ability to attract and retain outstanding and highly skilled individuals in the extremely competitive labor markets in which the Company must compete. Such awards also are crucial to our ability to motivate employees to achieve the Company’s goals. While the Company does not have any specific plans or commitments to issue stock options or awards under the 2000 Plan at this time, for the reasons stated above and to ensure the Company can continue to grant stock awards to key employees of the Company at levels determined appropriate by the Board and the Compensation Committee of the Board, the stockholders are being asked to approve the amendment to the 2000 Plan.

In fiscal year 2015, we granted 250,000 shares of time-based awards and 250,000 shares of performance-based awards to our CEO (see Fiscal 2015 Annual Equity Awards section on page 37 for more detail). Both the time-based awards and the performance-based awards were granted on December 15, 2014, and have a face value of $3,507,500 each. Fifty percent of the value of this grant is considered performance-based.

Description of the 2000 Plan

The following general description of the material features of the 2000 Plan is qualified in its entirety by reference to the full text of the 2000 Plan, which is included as Annex A hereto.

General

The purpose of the 2000 Plan is to attract and retain the best available personnel for positions of substantial responsibility with the Company, to provide additional incentive to the employees, directors and consultants of the Company and employees and consultants of its parent and subsidiary companies and to promote the success of the Company’s business. The 2000 Plan authorizes the Board of Directors or one or more of its committees to grant stock options, restricted stock units, rights to purchase restricted stock and stock appreciation rights (each an “Award”).

Administration

The 2000 Plan may generally be administered by the Board or a committee appointed by the Board (as applicable, the “Administrator”). The Administrator may make any determinations deemed necessary or advisable for the 2000 Plan. To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the 2000 Plan shall be administered by a committee of two or more “outside directors” within the meaning of Section 162(m) of the Code (to enable the Company to receive a federal tax deduction for certain compensation paid under the Plan).

Number of Shares of Common Stock Available Under the Incentive Plan

Assuming stockholders approve this proposal, a total of 74,600,000 shares of Common Stock will be reserved for issuance under the 2000 Plan. As of December 4, 2015, 16,459,889 shares of Common Stock were available for issuance under our stock plans.

If any outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares acquired pursuant to an Award subject to forfeiture are forfeited by the Company, the shares allocable to the terminated portion of such Award or such forfeited shares shall again be available for grant under the 2000 Plan. Shares shall not be deemed to have been granted pursuant to the 2000 Plan (a) with respect to any portion of an Award that is settled in cash or (b) to the extent such shares are withheld in satisfaction of tax withholding obligations. Upon payment in shares pursuant to the exercise of a stock appreciation right, the number of shares available for grant under the 2000 Plan shall be reduced by the total number of shares subject to the stock appreciation right, regardless of the number of shares actually issued in such payment (i.e., shares withheld to satisfy the exercise price of the stock appreciation right will not remain available for issuance under the 2000 Plan). If the exercise price of an option is paid by tender to the Company of shares underlying the option, the number of shares available for grant under the 2000 Plan will be reduced by the net number of shares for which the option is exercised.

Eligibility

Nonstatutory stock options, stock purchase rights (i.e., awards of restricted stock), restricted stock units and stock appreciation rights may be granted under the 2000 Plan to employees, directors and consultants (who may only be natural persons) of the Company and employees and consultants of any parent or subsidiary of the Company. Incentive stock options may be granted only to employees. The Administrator, in its discretion, selects the employees, directors and consultants to whom Awards may be granted, the time or times at which such Awards will be granted, and the exercise price and number of shares subject to each such grant; provided, however, the exercise price of a stock option and a stock appreciation right may not be less than 100% of the fair market value of the Common Stock on the date such Award is granted.

Limitations

Section 162(m) of the Code places limits on the deductibility for federal income tax purposes of compensation paid to certain executive officers of the Company. In order to preserve the Company’s ability to deduct the compensation income associated with certain Awards granted to such persons, the 2000 Plan provides that no service provider may be granted, in any fiscal year of the Company, options or stock appreciation rights to purchase more than 1,500,000 shares of Common Stock or 1,000,000 restricted stock awards or restricted stock units. Notwithstanding the limit on grants of options or stock appreciation rights, however, in connection with such individual’s initial employment with the Company, he or she may be granted options or stock appreciation rights to purchase up to an additional 1,500,000 shares of Common Stock.

In addition to the foregoing limits, in any fiscal year, non-employee directors may receive awards under the 2000 Plan not exceeding a fair value of $750,000 (increased to $1,000,000 in connection with a director’s initial service). While the Company does not currently contemplate making awards non-employee directors under the 2000 Plan, the Board believes it is appropriate and in the best interests of shareholders to include a separate restriction on potential awards to non-employee directors under the 2000 Plan.

Terms and Conditions of Options

Each option is evidenced by a stock option agreement between the Company and the optionee, and is subject to the following terms and conditions:

(a) Exercise Price. The Administrator determines the exercise price of options at the time the options are granted. The exercise price of a stock option may not be less than 100% of the fair market value of the Common Stock on the date such option is granted; provided, however, that the exercise price of an incentive stock option granted to a more than 10% stockholder may not be less than 110% of the fair market value on

the date such option is granted. The fair market value of the Common Stock is generally determined with reference to the closing sale price for the Common Stock (or the closing bid if no sales were reported) on the last market trading day prior to the date the option is granted.

The Company’s by-laws provide that it may not reduce the exercise price of any stock option, including stock appreciation right, outstanding or to be granted in the future under the 2000 Plan; cancel options in exchange for the re-grant of options at a lower exercise price, whether or not the cancelled options are returned to the available pool for grant; replace underwater options with restricted stock in an exchange, buy-back or other scheme; or replace any options with new options having a lower exercise price or accelerated vesting schedule in an exchange, buy-back or other scheme.

(b) Exercise of Option; Form of Consideration. The Administrator determines when options become exercisable, and may in its discretion; accelerate the vesting of any outstanding option in connection with the termination of a participant’s employment with the Company. The means of payment for shares issued upon exercise of an option is specified in each option agreement. The 2000 Plan permits payment to be made by cash, check, other shares of Common Stock of the Company (with some restrictions), cashless exercises, any other form of consideration permitted by applicable law, or any combination thereof.

(c) Term of Option. No stock option or stock appreciation right granted under the 2000 Plan may have a term greater than seven years after the date of grant. In the case of an incentive stock option granted to a 10% shareholder, the term of the option may be no more than five (5) years from the date of grant. No option may be exercised after the expiration of its term.

(d) Termination of Service. The Administrator determines the length of the post-termination exercise period of a stock option. In the absence of a time specified in a participant’s Award agreement, a participant may exercise the option within three months of such termination, to the extent that the option is vested on the date of termination, (but in no event later than the expiration of the term of such option as set forth in the option agreement), unless such participant’s service relationship terminates due to the participant’s death or disability, in which case the participant or the participant’s estate or the person who acquires the right to exercise the option by bequest or inheritance may exercise the option, to the extent the option was vested on the date of termination, within 12 months from the date of such termination.

(e) Nontransferability of Options. Unless otherwise determined by the Administrator, options granted under the 2000 Plan are not transferable other than by will or the laws of descent and distribution, and may be exercised during the optionee’s lifetime only by the optionee.

(f) Other Provisions. The stock option agreement may contain other terms, provisions and conditions not inconsistent with the 2000 Plan as may be determined by the Administrator.

Stock Purchase Rights

In the case of stock purchase rights, (i.e. rights to acquire restricted stock), unless the Administrator determines otherwise, the Award agreement will grant the Company a repurchase option exercisable upon the termination of the participant’s service with the Company for any reason (including death or disability). The purchase price for shares repurchased pursuant to the restricted stock purchase agreement will generally be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option will lapse at a rate determined by the Administrator including, if the Administrator has determined it is desirable for the stock purchase right to qualify as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code, the repurchase option will lapse based on the achievement of performance goals. The Administrator will determine the number of shares granted pursuant to a stock purchase right, but as discussed above, the Administrator will not be permitted to grant restricted stock and restricted stock units in excess of the limits described above.

Restricted Stock Units

The Administrator may grant restricted stock units under the 2000 Plan. Each restricted stock unit award will be evidenced by an Award agreement that will specify the period of restriction, the number of shares granted

and all other terms and conditions as the Administrator may determine in its sole discretion, including, without limitation whatever conditions to vesting it determines to be appropriate. For example, the Administrator may set restrictions based on the achievement of specific performance goals. The Administrator will determine the number of shares granted pursuant to a restricted stock unit award, but as discussed above, the Administrator will not be permitted to grant restricted stock and restricted stock units in excess of the restricted stock limit.

Stock Appreciation Rights

The Administrator may grant stock appreciation rights either alone or in tandem with stock options. A stock appreciation right is the right to receive the appreciation in fair market value of Common Stock between the exercise date and the date of grant. The Company can pay the appreciation in either cash or shares of Common Stock. The Administrator will determine the exercise price of a stock appreciation right, which will be no less than 100% of the fair market value of the Common Stock on the date of grant, and the term of each stock appreciation right. Stock appreciation rights will become exercisable at the times and on the terms established by the Administrator, subject to the terms of the 2000 Plan. The Administrator will determine the number of shares granted to a service provider pursuant to a stock appreciation right, subject to the annual grant limit described above.

After termination of service with the Company, a participant will be able to exercise the vested portion of his or her stock appreciation right for the period of time stated in the Award agreement. If no such period of time is stated in a participant’s Award agreement, a participant will generally be able to exercise his or her stock appreciation right for (i) three months following his or her termination for reasons other than death or disability, and (ii) one year following his or her termination due to death or disability. In no event will a stock appreciation right be exercised later than the expiration of its term.

Performance Goals

As discussed above, under Section 162(m) of the Internal Revenue Code, the annual compensation paid to the Chief Executive Officer and to each of the Company’s three other most highly-paid executive officers, other than the Chief Financial Officer, may not be deductible to the extent it exceeds $1 million. However, we are able to preserve the deductibility of compensation in excess of $1 million if the conditions of Section 162(m) are met. These conditions include stockholder approval of the 2000 Plan, setting limits on the number of Awards that any individual may receive, and for Awards other than options, establishing performance criteria that must be met before the Award actually will vest or be paid.

The 2000 Plan permits us to pay compensation that qualifies as performance-based under Section 162(m). Thus, the Administrator, in its discretion, may make performance goals applicable to a participant during a specified performance period. In the Administrator’s discretion, one or more of the following performance goals may apply: annual revenue, cash position, controllable profits, customer satisfaction MBOs, earnings per share, individual objectives, net income, new orders, operating cash flow, operating income, return on assets, return on equity, return on sales, and total shareholder return. Any criteria used may be measured, as applicable, in absolute terms or in relative terms (including passage of time and/or against another company or companies), on a per-share basis, against the performance of the Company as a whole or any segment of the Company, and on a pre-tax or after-tax basis. Following the completion of each performance period, the Administrator will certify in writing whether the applicable performance goals have been achieved for such performance period. A participant will only be eligible to receive payment pursuant to a performance-based award if such performance goals have been achieved, unless otherwise permitted under Section 162(m). In determining the amounts earned by a participant pursuant to an award intended to qualify as “performance-based compensation” under Section 162(m), the Administrator will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Administrator may deem relevant to the assessment of individual or corporate performance for the performance period.

Adjustments upon Changes in Capitalization

In the event that the stock of the Company changes by reason of any stock split, reverse stock split, stock dividend, combination, reclassification or other similar change in the capital structure of the Company effected without the receipt of consideration, appropriate adjustments will be made in the number and class of shares of Common Stock subject to the 2000 Plan, the number of shares of Common Stock that may be issued pursuant to Awards of restricted stock and restricted stock units, the maximum number of shares of Common Stock that may be issued to service providers in any fiscal year pursuant to Awards, the number and class of shares of stock subject to any outstanding Award, and the exercise price of any such outstanding Award.

In the event of a liquidation or dissolution, any unexercised Award will terminate. The Administrator may, in its sole discretion, provide that each participant will have the right to exercise all or any part of the Award, including shares as to which the Award would not otherwise be exercisable.

In connection with any merger of the Company with or into another corporation or the sale of all or substantially all of the assets of the Company, each outstanding Award will be assumed or an equivalent Award substituted by the successor corporation. If the successor corporation refuses to assume an Award or to substitute a substantially equivalent Award, the participant will have the right to exercise his or her option and stock appreciation right as to all of the shares subject to the Award, all restrictions on restricted stock will lapse, and all performance goals or other vesting requirements for restricted stock units will be deemed achieved, and all other terms and conditions met. In such event, the Administrator will notify the participant that the Award is fully exercisable for fifteen (15) days from the date of such notice and that the Award terminates upon expiration of such period.

Amendment and Termination of the Plan

The Board may amend, alter, suspend or terminate the 2000 Plan, or any part thereof, at any time and for any reason. However, the Company will obtain stockholder approval for any amendment to the 2000 Plan to the extent the Board determines it necessary and desirable to comply with applicable law. No such action by the Board or stockholders may alter or impair any Award previously granted under the 2000 Plan without the written consent of the participant. Unless terminated earlier, the 2000 Plan will terminate on August 15, 2018.

Plan Benefits

The amount and timing of Awards granted under the 2000 Plan are determined in the sole discretion of the Administrator and therefore cannot be determined in advance. The benefits or amounts that were received by, or allocated to, the Chief Executive Officer, the other Named Executive Officers, all current executive officers as a group, the current directors of the Company who are not executive officers as a group, and all employees, including all current officers who are not executive officers, as a group under the 2000 Plan for the fiscal year ended September 30, 2015 are set forth in the table below:


Name and Position	Number of Options Granted		Average Per Share Exercise Price		Number of Shares of Restricted Stock Granted(1)		Dollar Value of Shares of Restricted Stock Granted($)
Paul A. Ricci		—		—		539,113	$	7,614,454
Thomas L. Beaudoin		—		—		128,852		1,829,411
Daniel Tempesta		—		—		226,947		3,579,180
A. Bruce Bowden		—		—		225,672		3,278,552
Earl H. Devanny		—		—		33,379		485,250
William Robbins		—		—		147,172		2,080,278
Executive Group		—		—		1,301,135		18,867,124
Non-Executive Director Group		—		—		—		—
Non-Executive Officer Employee Group		—		—		8,426,044	$	131,614,892

(1)

Includes restricted stock units issued in under the fiscal 2014 Company bonus program, performance-based awards tied to overachievement of fiscal 2015 targets and performance-based RSU’s that were issued during fiscal 2015 but are tied to future periods, excludes performance-based RSU’s issued in prior periods but tied to fiscal 2015 targets.

The future benefits or amounts that would be received under the 2000 Plan by executive officers and other employees are discretionary and are therefore not determinable at this time. In addition, the benefits or amounts which would have been received by or allocated to such persons for the last completed fiscal year if the 2000 Plan, as amended, had been in effect cannot be determined.

Federal Income Tax Consequences

Incentive Stock Options. An optionee who is granted an incentive stock option does not recognize taxable income at the time the option is granted or upon its exercise, although the exercise is an adjustment item for alternative minimum tax purposes and may subject the optionee to the alternative minimum tax. Upon a disposition of the shares more than two years after grant of the option and one year after exercise of the option, any gain or loss is treated as long-term capital gain or loss. If these holding periods are not satisfied, the optionee recognizes ordinary income at the time of disposition equal to the difference between the exercise price and the lower of (i) the fair market value of the shares at the date of the option exercise or (ii) the sale price of the shares. Any gain or loss recognized on such a premature disposition of the shares in excess of the amount treated as ordinary income is treated as long-term or short-term capital gain or loss, depending on the holding period. Unless limited by Section 162(m), the Company is generally entitled to a deduction in the same amount as the ordinary income recognized by the optionee.

Nonstatutory Stock Options. An optionee does not recognize any taxable income at the time he or she is granted a nonstatutory stock option. Upon exercise, the optionee recognizes taxable income generally measured by the excess of the then fair market value of the shares over the exercise price. Any taxable income recognized in connection with an option exercise by an employee of the Company is subject to tax withholding by the Company. Unless limited by Section 162(m), the Company is generally entitled to a deduction in the same amount as the ordinary income recognized by the optionee. Upon a disposition of such shares by the optionee, any difference between the sale price and the optionee’s exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period.

Stock Purchase Rights (i.e., Restricted Stock) and Restricted Stock Units. A participant generally will not have taxable income at the time an award of restricted stock and restricted stock units is granted. Instead, he or she will recognize ordinary income in the first taxable year in which his or her interest in the shares underlying the Award becomes either (i) freely transferable or (ii) no longer subject to substantial risk of forfeiture. However, a holder of a restricted stock award may elect to recognize income at the time he or she receives the award in an amount equal to the fair market value of the shares underlying the Award (less any amount paid for the shares) on the date the Award is granted.

Stock Appreciation Rights. No taxable income is reportable when a stock appreciation right is granted to a participant. Upon exercise, the participant will recognize ordinary income in an amount equal to the amount of cash received and the fair market value of any shares received. Any additional gain or loss recognized upon any later disposition of the shares would be capital gain or loss.

Section 409A. Section 409A of the Internal Revenue Code imposes certain requirements on non-qualified deferred compensation arrangements. These include requirements with respect to an individual’s election to defer compensation and the individual’s selection of the timing and form of distribution of the deferred compensation. Section 409A also generally provides that distributions must be made on or following the occurrence of certain events (e.g., the individual’s separation from service, a predetermined date, or the individual’s death). Section 409A imposes restrictions on an individual’s ability to change his or her distribution timing or form after the compensation has been deferred. For certain individuals who are considered our “specified employees,” Section 409A requires that such individual’s distribution commence no earlier than 6 months after such

individual’s separation from service. If an award is subject to and fails to satisfy the requirements of Section 409A, the recipient of that award may recognize ordinary income on the amounts deferred under the award, to the extent vested, which may be prior to when the compensation is actually or constructively received. Also, if an award that is subject to Section 409A fails to comply with Section 409A’s provisions, Section 409A imposes an additional 20% federal income tax on compensation recognized as ordinary income, as well as interest on such deferred compensation. In addition, certain states (such as California) have laws similar to Section 409A and as a result, failure to comply with such similar laws may result in additional state income, penalty and interest charges.

Tax Effect for the Company. The Company generally will be entitled to a tax deduction in connection with an Award under the 2000 Plan in an amount equal to the ordinary income realized by a participant and at the time the participant recognizes such income (for example, the exercise of a nonqualified stock option). Special rules limit the deductibility of compensation paid to the Company’s Chief Executive Officer and to each of its other three most highly-paid executive officers, other than the Chief Financial Officer. Under Section 162(m) of the Internal Revenue Code, the annual compensation paid to any of these specified executives will be deductible only to the extent that it does not exceed $1,000,000. However, the Company can preserve the deductibility of certain compensation in excess of $1,000,000 if the conditions of Section 162(m) are met. These conditions include stockholder approval of the 2000 Plan and setting limits on the number of Awards that any individual may receive. The 2000 Plan has been designed to permit the Administrator to grant Awards that qualify as performance-based for purposes of satisfying the conditions of Section 162(m), thereby permitting the Company to continue to receive a federal income tax deduction in connection with such Awards.

THE FOREGOING IS ONLY A SUMMARY OF THE EFFECT OF FEDERAL INCOME TAXATION UPON PARTICIPANTS AND THE COMPANY WITH RESPECT TO THE GRANT AND EXERCISE OF AWARDS UNDER THE 2000 PLAN. IT DOES NOT PURPORT TO BE COMPLETE, AND DOES NOT DISCUSS THE TAX CONSEQUENCES OFA SERVICE PROVIDER’S DEATH OR THE PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY, STATE OR FOREIGN COUNTRY IN WHICH THE SERVICE PROVIDER MAY RESIDE.

Vote Required; Recommendation of the Board

The affirmative vote of a majority of the Company’s Common Stock present at the Annual Meeting in person or by proxy and entitled to vote is required to approve the Amended and Restated 2000 Stock Plan. Unless marked to the contrary, proxies received will be voted “FOR” approval of the Amended and Restated 2000 Stock Plan. Abstentions are treated as shares represented in person or by proxy and entitled to vote at the annual meeting and, therefore, will have the same effect as a vote “Against” the proposal. Broker non-votes will have no effect on the outcome of the vote.

THE NUANCE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT NUANCE

STOCKHOLDERS VOTE “FOR” THE PROPOSED AMENDED AND

RESTATED 2000 STOCK PLAN.

PROPOSAL NUMBER 3:

ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS

Executive compensation is an important matter for the Company and our stockholders. This proposal provides our stockholders with the opportunity to cast an advisory (non-binding) vote on the compensation for the Named Executive Officers, as described in the Compensation Discussion and Analysis section of the Proxy Statement (the “CD&A”).

Our executive compensation program is based on a pay-for-performance philosophy. The Named Executive Officers are compensated in a manner consistent with our business strategy, competitive practice, sound corporate governance principles and stockholder interests. Further, the compensation of the Named Executive Officers is designed to reward the achievement of specific short-term and long-term performance objectives that are directly aligned with the long-term interests of our stockholders.

Executive Compensation Program Highlights

Majority of Compensation is Performance-Related. The Named Executive Officers are compensated primarily in the form of performance-based pay (annual bonuses and time-based and performance-based equity awards). In fiscal 2015, an average of approximately 83% of the target total direct compensation opportunities of the Named Executive Officers were “at risk” based on the market price for our common stock at the time of vesting or tied to the achievement of multiple performance metrics.

Limited Non-Performance Compensation. The base salaries of the Named Executive Officers are at the median of the peer group selected by the Compensation Committee and described in the CD&A and we provide only limited perquisites or other non-performance related compensation to the Named Executive Officers.

Other Compensation Practices. Our policies and practices for the Named Executive Officers are consistent with the interests of our stockholders:

•

We do not offer tax reimbursement (“gross-up”) payments with respect to any post-employment payments or benefits.

•

Our change-in-control payments and benefits are based solely on “double trigger” arrangements, meaning that the Named Executive Officers will receive payments and benefits only if there is both a change in control of the Company and a qualifying termination of employment.

•

We have implemented a compensation recovery (“clawback”) policy in the event of misstatement of earnings.

•

We maintain rigorous stock ownership guidelines.

•

We prohibit the hedging or pledging of our securities.

Fiscal 2015 Compensation Actions and Decisions for Our Named Executive Officers

•

Base Salaries. The base salaries of the Named Executive Officers, with the exception of Messrs. Bowden and Tempesta, were not adjusted during fiscal 2015. Messrs. Bowden and Tempesta were adjusted due to their expanded responsibilities.

•

Short-Term Incentive Compensation. The annual bonus payments received by the Named Executive Officers were consistent with our financial performance which provided for payouts ranging from 0% to 125% of target bonus opportunities as described in the CD&A.

•

Long-Term Incentive Compensation. The long-term incentive compensation awards to our Named Executive Officers in fiscal 2015 included restricted stock unit awards with both multi-year time-based and performance-based vesting requirements. The performance-based restricted stock unit awards will be earned only if we achieve pre-established target levels for non-GAAP revenue, non-GAAP earnings-per-share, net new bookings, and bookings, as well as strategic business objectives that provide for sustainable growth.

•

Our overall share “burn rate” for employee equity awards for fiscal 2015 was 3.07%. Our burn rate was below industry guidelines recommended by Institutional Shareholder Services (determined in accordance with their published guidelines).

Changes to Executive Compensation Program for Fiscal 2015

Following discussions with our major stockholders as described in the Executive Summary of the CD&A, and taking into account our financial performance in 2015, and the outcome of our 2015 Say-on-Pay Vote, we modified our executive compensation program to strengthen the pay-for-performance alignment as follows:

During fiscal 2015 just prior to the Say-on-Pay vote:

•

Revised performance measures for annual bonus opportunity. Continued with distinct performance metrics for Mr. Ricci’s target bonus opportunity for fiscal 2015 which were based on an intersection of the achievement of pre-established non-GAAP revenue and non-GAAP earnings-per-share target levels.

•

Reduced total direct compensation for Mr. Ricci. The total compensation was reduced by 52% from a value of $17.9M to $8.5M, bringing his package more in line with market peer group.

During fiscal 2016 after the Say-on-Pay vote:

•

Continued compensation practices of awarding at-target equity awards that are in line with market-median of peer group.

•

Grant awarded to Mr. Ricci in fiscal 2016 was 100% performance-based aligning a significant portion of his compensation to drive shareholder value.

Based on the above, we request that stockholders approve the compensation of the Named Executive Officers as described in the disclosure rules of the Securities and Exchange Commission pursuant to the following resolution:

RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the “Compensation Discussion and Analysis” section, compensation tables and narrative discussion, is hereby APPROVED.

Vote Required; Recommendation of the Board

The affirmative vote of a majority of the shares of the Company’s common stock present or represented by proxy and voting at the Annual Meeting is required for approval of this proposal. Abstentions are treated as shares represented in person or by proxy and entitled to vote at the Annual Meeting and, therefore, will have the same effect as a vote “Against” the proposal. Broker non-votes will have no effect on the outcome of the proposal.

As an advisory vote, this proposal is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee of the Board of Directors value the opinions of our stockholders, and will consider the outcome of the vote when making future compensation decisions for the Named Executive Officers.

THE NUANCE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT NUANCE

STOCKHOLDERS VOTE “FOR” THE COMPENSATION OF

THE NAMED EXECUTIVE OFFICERS

PROPOSAL NUMBER 4

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

In November 2015, the Audit Committee approved the retention of BDO USA, LLP (“BDO”) as the Company’s independent registered public accounting firm for the fiscal year ended September 30, 2016. A representative of BDO may be present at the Annual Meeting to make a statement if he or she desires to do so, and such representative is expected to be available to respond to appropriate questions.

The stockholders are being asked to ratify the appointment of BDO as independent registered public accounting firm for the Company for the fiscal year ending September 30, 2016. BDO was engaged as the Company’s independent registered public accounting firm by the Audit Committee on October 24, 2004 and has audited the Company’s financial statements since 2004.

Audit Fees During Fiscal Years 2015 and 2014

The following table sets forth the approximate aggregate fees paid by the Company to BDO USA, LLP during the fiscal years ended September 30, 2015 and 2014.


	Fiscal 2015		Fiscal 2014
Audit Fees(1)	$	2,991,141	$	3,039,657
Audit Related Fees(2)		3,279,392		—
Tax Fees(3)		8,337		8,837
All Other Fees		—		—

Total Fees	$	6,278,870	$	3,048,494

(1)

Audit Fees. This category represents fees billed for professional services rendered by the principal accountant for the audits of the registrant’s annual financial statements and internal controls over financial reporting, review of the interim financial statements included in the registrant’s quarterly reports on Form 10-Q, statutory audits and other SEC filings.

(2)

Audit Related Fees. This category represents fees billed for assurance and related services by the principal accountant that are reasonably related to the performance of the audit or review of registrant’s financial statements, primarily related to audits of specific subsidiaries and acquirees and accounting consultations.

(3)	Tax Fees. This category represents fees billed for professional services rendered by the principal accountant for tax compliance in certain international jurisdictions.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Sarbanes-Oxley Act of 2002 and the auditor independence rules of the U.S. Securities and Exchange Commission require all independent registered public accounting firms that audit issuers to obtain pre-approval from their respective audit committees in order to provide professional services without impairing independence. As such, our Audit Committee has a policy and has established procedures by which it pre-approves all audit and other permitted professional services to be provided by our independent registered public accounting firm.

The pre-approval procedures include execution by the Chief Financial Officer and Audit Committee Chairperson, on behalf of the Company and the entire Audit Committee, of an audit and quarterly review engagement letter and pre-approval listing of other permitted professional services anticipated to be rendered during the foreseeable future. Additionally, from time to time, we may desire additional permitted professional services for which specific pre-approval is obtained from the Audit Committee Chairman, acting on behalf of the Company and the entire Audit Committee, before provision of such services commences. In doing this, the Company and Audit Committee have established a procedure whereby a BDO representative, in conjunction with the Chief Financial Officer or Chief Accounting Officer, contacts the Audit Committee Chairman and obtains pre-approval

for such services on behalf of the entire Audit Committee, to be followed by a written engagement letter, as appropriate, confirming such arrangements between BDO and the Company. In addition, on a periodic basis, the entire Audit Committee is provided with a summary of all pre-approved services to date for its review. During the fiscal year ended September 30, 2015, all services provided by our independent registered public accounting firm were pre-approved by the Audit Committee in accordance with this policy.

Vote Required; Recommendation of the Board

Unless marked to the contrary, proxies received will be voted “FOR” approval of the ratification of the appointment of BDO as independent registered public accounting firm for the Company for the fiscal year ending September 30, 2016.

THE NUANCE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT NUANCE

STOCKHOLDERS VOTE “FOR” RATIFICATION OF APPOINTMENT OF BDO USA, LLP AS THE

COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.

AUDIT COMMITTEE REPORT

The Audit Committee of the Board of Directors is responsible for providing an independent, objective review of the Company’s accounting functions and internal controls. During the fiscal year ended September 30, 2015, the Audit Committee was comprised of Messrs. Frankenberg, Laret, Myers, and Quigley, each of whom is independent within the meaning of the listing standards of the NASDAQ Stock Market, and was governed by a written charter first adopted and approved by the Board of Directors in June 2001, and as amended and restated on April 29, 2003, February 24, 2004 and March 25, 2015. A copy of the Company’s Amended and Restated Audit Committee Charter is available on the Company’s Website at http://www.nuance.com/company/company-overview/company-policies/corporate-governance/audit-committee/index.htm. The Audit Committee met 7 (seven) times during the fiscal year ended September 30, 2015.

In connection with the Company’s audited financial statements for the fiscal year ended September 30, 2015, the Audit Committee (1) reviewed and discussed the audited financial statements with management, (2) discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as currently in effect and as adopted by the Public Company Accounting Oversight Board (“PCAOB”), and (3) received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants communications with the audit committee concerning independence and discussed the independent registered public accounting firm’s independence with the independent registered public accounting firm.

The Audit Committee has considered and determined that the provision of the services other than audit services referenced above is compatible with maintenance of the auditor’s independence. Based upon these reviews and discussions, the Audit Committee recommended to the Board of Directors, and the Board of Directors approved, that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2015 for filing with the Securities and Exchange Commission.

Robert J. Frankenberg, Chairman

Mark R. Laret

Mark B. Myers

Philip J. Quigley

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of the Company’s Common Stock as of September 30, 2015, as to (1) each person (or group of affiliated persons) who is known by us to own beneficially more than 5% of the Company’s Common Stock; (2) each of our directors and nominees; (3) each Named Executive Officer; and (4) all directors and executive officers of the Company as a group.

Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to securities. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of the common stock that they beneficially own, subject to applicable community property laws. All shares of Common Stock subject to options or warrants exercisable within 60 days of September 30, 2015 are deemed to be outstanding and beneficially owned by the persons holding those options or warrants for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person. They are not, however, deemed to be outstanding and beneficially owned for the purpose of computing the percentage ownership of any other person.

Subject to the paragraph above, percentage ownership of outstanding shares is based on 309,780,650 shares of Common Stock outstanding as of September 30, 2015.


Name and Address of Beneficial Owner(1)	Number Owned		Percent of Outstanding Shares
Icahn Associates, LLC(2)		60,784,623		19.62	%
767 Fifth Avenue New York, NY 10153
ClearBridge Investments LLC(3)		26,619,509		8.59	%
620 8th Avenue New York, NY 10018
Vanguard Group Inc.(4)		16,322,126		5.27	%
PO Box 2600 Valley Forge, PA 19482
Paul A. Ricci(5)		4,874,873		1.56	%
Robert Finocchio(6)		37,500		*
Robert J. Frankenberg(7)		295,824		*
William H. Janeway(8)		313,580		*
Brett Icahn(9)		45,000		*
Mark L. Laret(10)		66,000		*
Katharine A. Martin(11)		116,000		*
Mark B. Myers(12)		86,001		*
Philip J. Quigley(13)		87,310		*
David Schechter(14)		45,000		*
Thomas L. Beaudoin(15)		197,478		*
Daniel Tempesta(16)		229,453		*
A. Bruce Bowden(17)		290,900		*
Earl H. Devanny(18)		359,137		*
William Robbins(19)		231,993		*
All directors and executive officers as a group (15 persons)(20)		7,276,049		2.23	%

*	Less than 1%.

(1)	Unless otherwise indicated, the address for the following stockholders is c/o Nuance Communications, Inc., One Wayside Road, Burlington, MA 01803.

(2)

The information regarding the beneficial ownership of Carl C. Icahn is based on the Schedule 13D filed jointly with the SEC by High River Limited Partnership, Hopper Investments LLC, Barberry Corp., Icahn Partners Master Fund LP, Icahn Partners Master Fund II LP, Icahn Partners Master Fund III LP, Icahn Offshore LP, Icahn Partners LP, Icahn Onshore LP, Icahn Capital LP, IPH GP LLC, Icahn Enterprises Holdings L.P., Icahn Enterprises G.P. Inc., Beckton Corp. and Carl C. Icahn on December 4, 2013 and the 13f filing dated September 30, 2015.

(3)	This information regarding the beneficial ownership of Clearbridge Investments LLC is based on the 13f filing dated September 30, 2015.

(4)	This information regarding the beneficial ownership of Vanguard Group, Inc. is based on 13f filing dated September 30, 2015.

(5)

Includes options to acquire 2,800,000 shares of the Company’s Common Stock that are exercisable within 60 days of September 30, 2015. Includes 250,000 unvested time-based restricted stock units, 250,000 unvested time-based restricted shares and 516,713 of 562,500 unvested performance-based units with conditions for vesting aligned to fiscal 2014 - 2015 performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to Mr. Ricci that have not been earned totaling 250,000 units. Mr. Ricci does not have voting rights with respect to the shares underlying the restricted stock units. 1,058,160 shares are held in a family trust. Mr. Ricci has voting and investment control over the shares in the Trust.

(6)	Includes 30,000 unvested restricted stock units. Mr. Finocchio does not have voting rights with respect to the unvested restricted stock units.

(7)	Includes 30,000 unvested restricted stock units. Mr. Frankenberg does not have voting rights with respect to the shares underlying the unvested restricted stock units. 265,824 shares are held in a family trust. Mr. Frankenberg has voting and investment control over the shares held in this trust.

(8)	Includes 30,000 unvested restricted stock units. Mr. Janeway does not have voting rights with respect to the unvested restricted stock units.

(9)	Includes 35,000 unvested time-based restricted stock units. Mr. Icahn does not have voting rights with respect to the shares underlying the unvested restricted stock units. Mr. Icahn disclaims beneficial ownership of the shares held by Icahn Associates, LLC.

(10)	Includes 30,000 unvested time-based restricted stock units. Mr. Laret does not have voting rights with respect to the shares underlying the unvested restricted stock units.

(11)	Includes 30,000 unvested time-based restricted stock units. Ms. Martin does not have voting rights with respect to the shares underlying the unvested restricted stock units.

(12)	Includes 30,000 unvested restricted stock units. Mr. Myers does not have voting rights with respect to the shares underlying the unvested restricted stock units.

(13)	Includes 30,000 unvested time-based restricted stock units. Mr. Quigley does not have voting rights with respect to the shares underlying the unvested restricted stock units. 57,310 shares are held in a trust. Mr. Quigley has voting and investment control over the shares in the trust.

(14)	Includes 35,000 unvested time-based restricted stock units. Mr. Schechter does not have voting rights with respect to the shares underlying the unvested restricted stock units. Mr. Schechter disclaims beneficial ownership of the shares held by Icahn Associates, LLC.

(15)	Mr. Beaudoin terminated on July 31, 2015 and all unvested shares were forfeited.

(16)	Includes 117,825 unvested time-based restricted stock units and 46,312 of 47,500 unvested performance-based units with conditions to vesting aligned to fiscal 2015 performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to

Mr. Tempesta that have not been earned totaling 117,825 units. Mr. Tempesta does not have voting rights with respect to the shares underlying the restricted stock units.

(17)

Includes 75,000 unvested time-based restricted stock units and 102,575 of 121,875 unvested performance-based units with conditions to vesting aligned to fiscal 2015 performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to Mr. Bowden that have not been earned totaling 100,000 units. Mr. Bowden does not have voting rights with respect to the shares underlying the restricted stock units.

(18)

Includes 100,000 unvested time-based restricted stock units and 110,500 of 125,000 unvested performance-based units with conditions to vesting aligned to fiscal 2015 performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to Mr. Devanny that have not been earned totaling 100,000 units. Mr. Devanny does not have voting rights with respect to the shares underlying the restricted stock units.

(19)

Includes 102,500 unvested time-based restricted stock units and 48,750 of 78,125 unvested performance-based units with conditions to vesting aligned to fiscal 2015 performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to Mr. Robbins that have not been earned totaling 61,250 units. Mr. Robbins does not have voting rights with respect to the shares underlying the restricted stock units.

(20)

Includes options to acquire 2,800,000 shares of the Company’s Common Stock that are exercisable within 60 days of September 30, 2015, 250,000 unvested time-based restricted shares, 925,325 unvested time-based restricted stock units and 824,851 of 935,000 unvested performance-based units with conditions to vesting aligned to fiscal 2015, and fiscal 2014-2015 in the case of Mr. Ricci, performance goals of which were determined to be achieved in November 2015. Excludes performance-based units that have been issued to the Named Executive Officers that have not been earned totaling 1,564,075 units.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act and the rules of the SEC thereunder require the Company’s executive officers, directors and certain stockholders to file reports of ownership and changes in ownership of the Company’s Common Stock with the SEC. Based solely on a review of the copies of such reports furnished to the Company and representations that no other reports were required during the fiscal year ended September 30, 2015, the Company believes that all directors, officers and beneficial owners of more than 10% of the Company’s Common Stock complied with all filing requirements applicable to them.

Other Matters. Management knows of no business or nominations that will be presented for consideration at the Annual Meeting other than as stated in the Notice of Meeting. If, however, other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented thereby on such matters in accordance with their best judgment.

Not Soliciting Materials. The information contained in this Proxy Statement under the captions “Audit Committee Report” and “Compensation Committee Report” shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission, nor will such information be incorporated by reference into any future filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference in such filing.

HOUSEHOLDING OF ANNUAL MEETING MATERIALS.

Some banks, brokers and other nominee record holders may participate in the practice of “householding” proxy statements and their accompanying documents. This means that only one copy of our annual report, proxy statement or Notice of Internet Availability of Proxy Materials is sent to multiple stockholders in your household. We will promptly deliver a separate copy of these documents without charge to you upon written request to Nuance Communications, Inc., One Wayside Road, Burlington, Massachusetts 01803 or upon telephonic request to 781-565-5000, Attn: Investor Relations. If you want to receive separate copies of our proxy statements in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.

ANNEX A

NUANCE COMMUNICATIONS, INC.

(FORMERLY KNOWN AS SCANSOFT, INC.)

2000 STOCK PLAN

(As Amended and Restated January 27, 2016)

1. Purposes of the Plan. The purposes of this Plan are:

•

to attract and retain the best available personnel for positions of substantial responsibility,

•

to provide additional incentive to Employees, Directors and Consultants, and

•

to promote the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Stock Purchase Rights, Stock Appreciation Rights, and Restricted Stock Units.

2. Definitions. As used herein, the following definitions shall apply:

(a) “Administrator” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.

(b) “Affiliate” means any corporation or other entity (including, but not limited to partnerships and joint ventures) controlled by, or under common control with the Company.

(c) “Affiliated SAR” means a SAR that is granted in connection with a related Option, and which automatically will be deemed to be exercised at the same time that the related Option is exercised.

(d) “Applicable Laws” means the requirements relating to the administration of equity-based awards under U.S. state corporate laws, U.S. federal and state securities laws, the Code, any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws of any foreign country or jurisdiction where Awards are, or will be, granted under the Plan.

(e) “Annual Revenue” means the Company’s or a business unit’s net sales for the Fiscal Year, determined in accordance with generally accepted accounting principles; provided, however, that prior to the Fiscal Year, the Committee shall determine whether any significant item(s) shall be excluded or included from the calculation of Annual Revenue with respect to one or more Participants.

(f) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Purchase Rights, Stock Appreciation Rights, and Restricted Stock Units.

(g) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

(h) “Board” means the Board of Directors of the Company.

(i) “Cash Position” means the Company’s level of cash and cash equivalents.

(j) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a section of the Code herein will be a reference to any successor or amended section of the Code.

(k) “Committee” means a committee of Directors appointed by the Board in accordance with Section 4 of the Plan.

(l) “Common Stock” means the common stock of the Company.

(m) “Company” means Nuance Communications, Inc. (formerly known as ScanSoft, Inc.) a Delaware corporation. With respect to the definitions of the Performance Goals, the Committee may determine that “Company” means Nuance Communications, Inc. and its consolidated subsidiaries.

A-1

(n) “Consultant” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services to such entity; provided, further, that a Consultant will include only those persons to whom the issuance of Shares may be registered under Form S-8 of the Securities Act of 1933, as amended.

(o) “Controllable Profits” means as to any Plan Year, a business unit’s Annual Revenue minus (a) cost of sales, (b) research, development, and engineering expense, (c) marketing and sales expense, (d) general and administrative expense, (e) extended receivables expense, and (f) shipping requirement deviation expense.

(p) “Customer Satisfaction MBOs” means as to any Participant for any Plan Year, the objective and measurable individual goals set by a “management by objectives” process and approved by the Committee, which goals relate to the satisfaction of external or internal customer requirements.

(q) “Director” means a member of the Board.

(r) “Disability” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(s) “Earnings Per Share” means as to any Fiscal Year, the Company’s or a business unit’s Net Income, divided by a weighted average number of common shares outstanding and dilutive common equivalent shares deemed outstanding, determined in accordance with generally accepted accounting principles.

(t) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(u) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(v) “Fair Market Value” means, as of any date, the value of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market of The NASDAQ Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

(w) “Fiscal Year” means the fiscal year of the Company.

(x) “Freestanding SAR” means a SAR that is granted independent of any Option.

(y) “Incentive Stock Option” means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code and the regulations promulgated thereunder.

(z) “Individual Objectives” means as to a Participant, the objective and measurable goals set by a “management by objectives” process and approved by the Committee (in its discretion).

(aa) “Net Income” means as to any Fiscal Year, the income after taxes of the Company for the Fiscal Year determined in accordance with generally accepted accounting principles, provided that prior to the Fiscal Year, the Committee shall determine whether any significant item(s) shall be included or excluded from the calculation of Net Income with respect to one or more Participants.

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(bb) “New Orders” means as to any Plan Year, the firm orders for a system, product, part, or service that are being recorded for the first time as defined in the Company’s order Recognition Policy.

(cc) “Non-Employee Director” means a Director who is not an Employee.

(dd) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

(ee) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(ff) “Operating Cash Flow” means the Company’s or a business unit’s sum of Net Income plus depreciation and amortization less capital expenditures plus changes in working capital comprised of accounts receivable, inventories, other current assets, trade accounts payable, accrued expenses, product warranty, advance payments from customers and long-term accrued expenses, determined in accordance with generally acceptable accounting principles.

(gg) “Operating Income” means the Company’s or a business unit’s income from operations but excluding any unusual items, determined in accordance with generally accepted accounting principles.

(hh) “Option” means a stock option granted pursuant to the Plan.

(ii) “Optionee” means the holder of an outstanding Option or Stock Purchase Right granted under the Plan.

(jj) “Optioned Stock” means the Shares subject to an Award.

(kk) “Parent” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(ll) “Participant” means the holder of an outstanding Award, which shall include an Optionee.

(mm) “Performance Goals” means the goal(s) (or combined goal(s)) determined by the Committee (in its discretion) to be applicable to a Participant with respect to an Award. As determined by the Committee, the Performance Goals applicable to an Award may provide for a targeted level or levels of achievement using one or more of the following measures: (a) Annual Revenue, (b) Cash Position, (c) Controllable Profits, (d) Customer Satisfaction MBOs, (e) Earnings Per Share, (f) Individual Objectives, (g) Net Income, (h) New Orders, (i) Operating Cash Flow, (j) Operating Income, (k) Return on Assets, (l) Return on Equity, (m) Return on Sales, and (n) Total Shareholder Return. The Performance Goals may differ from Participant to Participant and from Award to Award. The Performance Goals may differ from Participant to Participant and from Award to Award. The Committee shall have the authority to make equitable adjustments to Performance Goals in recognition of extraordinary or non-recurring events affecting the Company or any Subsidiary or the financial statements of the Company or any Subsidiary, in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

(nn) “Performance Period” means a period, from one quarter to twenty (20) quarters in duration, selected by the Committee of during which the performance of the Company or any Subsidiary, division, segment or strategic business unit thereof or any individual is measured for the purpose of determining the extent to which an Award subject to Performance Goals has been earned.

(oo) “Plan” means this 2000 Stock Plan, as amended and restated.

(pp) “Restricted Stock” means Shares acquired pursuant to a grant of Stock Purchase Rights under Section 9 of the Plan or pursuant to the early exercise of an Option.

(qq) “Restricted Stock Purchase Agreement” means a written agreement between the Company and the Participant evidencing the terms and restrictions applying to stock purchased under a Stock Purchase Right. The Restricted Stock Purchase Agreement is subject to the terms and conditions of the Plan and the Notice of Grant.

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(rr) “Restricted Stock Unit” means an Award granted to a Participant pursuant to Section 11.

(ss) “Return on Assets” means the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by average net Company or business unit, as applicable, assets, determined in accordance with generally accepted accounting principles.

(tt) “Return on Equity” means the percentage equal to the Company’s Net Income divided by average stockholder’s equity, determined in accordance with generally accepted accounting principles.

(uu) “Return on Sales” means the percentage equal to the Company’s or a business unit’s Operating Income before incentive compensation, divided by the Company’s or the business unit’s, as applicable, revenue, determined in accordance with generally accepted accounting principles.

(vv) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(ww) “Section 16(b)” means Section 16(b) of the Exchange Act.

(xx) “Service Provider” means an Employee, Director or Consultant.

(yy) “Share” means a share of the Common Stock, as adjusted in accordance with Section 14 of the Plan.

(zz) “Stock Appreciation Right” or “SAR” means an Award, granted alone or in connection with an Option, which pursuant to Section 10 is designated as a SAR.

(aaa) “Stock Purchase Right” means the right to purchase Shares pursuant to Section 9 of the Plan.

(bbb) “Subsidiary” means a “subsidiary corporation”, whether now or hereafter existing, as defined in Section 424(f) of the Code.

(ccc) “Tandem SAR” means an SAR that is granted in connection with a related Option, the exercise of which will require forfeiture of the right to purchase an equal number of Shares under the related Option (and when a Share is purchased under the Option, the SAR will be canceled to the same extent).

(ddd) “Total Shareholder Return” means the total return (change in share price plus reinvestment of any dividends) of a Share.

3. Stock Subject to the Plan. Subject to the provisions of Section 14 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 74,600,000 Shares (the “Plan Maximum”). If any outstanding Award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if Shares acquired pursuant to an Award subject to forfeiture or repurchase are forfeited to or repurchased by the Company, the Shares allocable to the terminated portion of such Award or such forfeited or repurchased Shares shall again be available for grant under the Plan. Shares shall not be deemed to have been granted pursuant to the Plan (a) with respect to any portion of an Award that is settled in cash or (b) to the extent such Shares are withheld in satisfaction of tax withholding obligations. Upon payment in Shares pursuant to the exercise of a Stock Appreciation Right, the number of Shares available for grant under the Plan shall be reduced by the total number of Shares subject to the Stock Appreciation Right regardless of the number of Shares actually issued in such payment. If the exercise price of an Option is paid by tender to the Company of Shares underlying the Option, the number of Shares available for grant under the Plan shall be reduced by the net number Shares for which the Option is exercised. The Shares may be authorized, but unissued, or reacquired Common Stock.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

(ii) Section 162(m). To the extent that the Administrator determines it to be desirable to qualify Awards granted hereunder as “performance-based compensation” within the meaning of Section 162(m)

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of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code. For purposes of qualifying grants of Awards as “performance-based compensation” under Section 162(m) of the Code, the Committee, in its discretion, may set restrictions based upon the achievement of Performance Goals during a specified Performance Period. The Performance Goals shall be set by the Committee on or before the latest date permissible to enable the Awards to qualify as “performance-based compensation” under Section 162(m) of the Code. In granting Awards which are intended to qualify under Section 162(m) of the Code, the Committee shall follow any procedures determined by it from time to time to be necessary or appropriate to ensure qualification of the Awards under Section 162(m) of the Code (e.g., in determining the Performance Goals). Following the completion of each Performance Period, the Committee will certify in writing whether the applicable Performance Goals have been achieved for such Performance Period. A Participant will be eligible to receive payment pursuant to an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code for a Performance Period only if the Performance Goals for such period are achieved, unless otherwise permitted under Section 162(m) of the Code. In determining the amounts earned by a Participant pursuant to an Award intended to qualify as “performance-based compensation” under Section 162(m) of the Code, the Committee will have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the Performance Period.

(iii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

(iv) Other Administration. Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

(i) to determine the Fair Market Value;

(ii) to select the Service Providers to whom Awards may be granted hereunder;

(iii) to determine the number of Shares to be covered by each Award granted hereunder;

(iv) to approve forms of agreement for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder. Such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions in connection with the termination of a Participant’s status as a Service Provider, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(vi) to construe and interpret the terms of the Plan and awards granted pursuant to the Plan;

(vii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(viii) to modify or amend each Award (subject to Section 17(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Awards longer than is otherwise provided for in the Plan;

(ix) to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares to be issued upon exercise of an Award that number of Shares having a Fair

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Market Value equal to the minimum amount required to be withheld, or such other amount permitted without causing adverse accounting consequences. The Fair Market Value of the Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by a Participant to have Shares withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(x) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

(xi) to allow a Participant to defer the receipt of payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; or

(xii) to make all other determinations deemed necessary or advisable for administering the Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.

5. Eligibility. Nonstatutory Stock Options, Stock Purchase Rights, Stock Appreciation Rights, and Restricted Stock Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Limitations.

(a) Each Option shall be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds $100,000, such Options shall be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options shall be taken into account in the order in which they were granted. The Fair Market Value of the Shares shall be determined as of the time the Option with respect to such Shares is granted.

(b) The following limitations shall apply to grants of Options and Stock Appreciation Rights:

(i) No Service Provider shall be granted, in any Fiscal Year, Options or Stock Appreciation Rights covering more than 1,500,000 Shares.

(ii) In connection with his or her initial service, a Service Provider may be granted Options or Stock Appreciation Rights covering up to an additional 1,500,000 Shares, which shall not count against the limit set forth in subsection (i) above.

(iii) The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 14.

(iv) If an Option or Stock Appreciation Right is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Option or Stock Appreciation Right will be counted against the limits set forth in subsections (i) and (ii) above. For this purpose, if the exercise price of an Option or Stock Appreciation Right is reduced, the transaction will be treated as a cancellation of the Option or Stock Appreciation Right and the grant of a new Option or Stock Appreciation Right.

(c) The exercise price of any Option or SAR outstanding or to be granted in the future under the Plan shall not be reduced or cancelled and re-granted at a lower exercise price, regardless of whether or not the Shares subject to the cancelled Options or SARs are put back into the available pool for grant. In addition, the Administrator shall not replace underwater Options or SARs with restricted stock or cash in an exchange, buy-back or other scheme. Moreover, the Administrator shall not replace any Options or SARs with new options or stock appreciation rights having a lower exercise price or accelerated vesting schedule in an exchange, buy-back or other scheme.

(d) Non-Employee Director Awards. Notwithstanding any contrary provision in the Plan, no Participant who is a Non-Employee Director may be granted Awards during any Fiscal Year having a grant date fair value in

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excess of $750,000, increased to $1,000,000 in connection with his or her initial service, calculated using the assumptions and methods used for recording compensation expense in the Company’s financial statements.

7. Term of Plan. Subject to Section 20 of the Plan, the Plan shall become effective upon its adoption by the Board. It shall continue until August 15, 2018 unless terminated earlier under Section 17 of the Plan.

8. Stock Options

(a) Term of Option. The term of each Option shall be stated in the Award Agreement, but in no event shall the term of an Option be more than seven (7) years from the date of grant. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

(b) Option Exercise Price and Consideration.

(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option shall be no less than 100% of the Fair Market Value per Share on the date of grant. In the case of an Incentive Stock Option granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price shall be no less than 110% of the Fair Market Value per Share on the date of grant.

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised.

(iii) Form of Consideration. The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator shall determine the acceptable form of consideration at the time of grant. Such consideration may consist entirely of:

(1) cash;

(2) check;

(3) other Shares which have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

(4) consideration received by the Company under a cashless exercise program implemented by the Company in connection with the Plan;

(5) a reduction in the amount of any Company liability to the Participant, including any liability attributable to the Participant’s participation in any Company-sponsored deferred compensation program or arrangement;

(6) any combination of the foregoing methods of payment; or

(7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder shall be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

(1) An Option shall be deemed exercised when the Company receives: (i) written or electronic notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to

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exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with any applicable withholding taxes). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option shall be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 14 of the Plan.

(2) Exercising an Option in any manner shall decrease the number of Shares thereafter available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s death or Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for three (3) months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified by the Administrator, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination. If, on the date of termination, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall revert to the Plan. If, after termination, the Participant does not exercise his or her Option within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s estate or by a person who acquires the right to exercise the Option by bequest or inheritance, but only to the extent that the Option is vested on the date of death. In the absence of a specified time in the Award Agreement, the Option shall remain exercisable for twelve (12) months following the Participant’s termination. If, at the time of death, the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option shall immediately revert to the Plan. The Option may be exercised by the executor or administrator of the Participant’s estate or, if none, by the person(s) entitled to exercise the Option under the Participant’s will or the laws of descent or distribution. If the Option is not so exercised within the time specified herein, the Option shall terminate, and the Shares covered by such Option shall revert to the Plan.

9. Stock Purchase Rights.

(a) Rights to Purchase. Stock Purchase Rights may be issued either alone, in addition to, or in tandem with other Awards granted under the Plan and/or cash awards made outside of the Plan. After the Administrator determines that it will offer Stock Purchase Rights under the Plan, it shall advise the offeree in writing or electronically, of the terms, conditions and restrictions related to the offer, including the number of Shares that the

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offeree shall be entitled to purchase (subject to the limits set forth in Section 3), the price to be paid, and the time within which the offeree must accept such offer. The offer shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator. The following limitations shall apply to grants of Stock Purchase Rights:

(i) No Service Provider shall be granted, in any Fiscal Year, Stock Purchase Rights covering more than 1,000,000 Shares.

(ii) The foregoing limitation shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 14.

(iii) If a Stock Purchase Right is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Stock Purchase Right will be counted against the limit set forth in subsection (i) above.

(b) Repurchase Option. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the purchaser’s service with the Company for any reason (including death or Disability). The purchase price for Shares repurchased pursuant to the Restricted Stock Purchase Agreement shall be the original price paid by the purchaser and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at a rate determined by the Administrator.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion.

(d) Rights as a Stockholder. Once the Stock Purchase Right is exercised, the purchaser shall have the rights equivalent to those of a stockholder, and shall be a stockholder when his or her purchase is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Stock Purchase Right is exercised, except as provided in Section 14 of the Plan.

10. Stock Appreciation Rights

(a) Grant of SARs. Subject to the terms and conditions of the Plan, a SAR may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion. The Administrator may grant Affiliated SARs, Freestanding SARs, Tandem SARs, or any combination thereof.

(b) Number of Shares. The Administrator will have complete discretion to determine the number of SARs granted to any Service Provider, subject to the limits set forth in Section 3 of the Plan.

(c) Exercise Price and Other Terms. The Administrator, subject to the provisions of the Plan, will determine the terms and conditions of SARs granted under the Plan; provided, that, the exercise price of a SAR is at least 100% of the Fair Market Value of the Shares subject to the SAR; provided, further, the exercise price of Tandem or Affiliated SARs will equal the exercise price of the related Option.

(d) Exercise of Tandem SARs. Tandem SARs may be exercised for all or part of the Shares subject to the related Option upon the surrender of the right to exercise the equivalent portion of the related Option. A Tandem SAR may be exercised only with respect to the Shares for which its related Option is then exercisable. With respect to a Tandem SAR granted in connection with an Incentive Stock Option: (i) the Tandem SAR will expire no later than the expiration of the underlying Incentive Stock Option; (ii) the value of the payout with respect to the Tandem SAR will be for no more than one hundred percent (100%) of the difference between the exercise price of the underlying Incentive Stock Option and the Fair Market Value of the Shares subject to the underlying Incentive Stock Option at the time the Tandem SAR is exercised; and (iii) the Tandem SAR will be exercisable only when the Fair Market Value of the Shares subject to the Incentive Stock Option exceeds the Exercise Price of the Incentive Stock Option.

(e) Exercise of Affiliated SARs. An Affiliated SAR will be deemed to be exercised upon the exercise of the related Option. The deemed exercise of an Affiliated SAR will not necessitate a reduction in the number of Shares subject to the related Option.

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(f) Exercise of Freestanding SARs. Freestanding SARs will be exercisable on such terms and conditions as the Administrator, in its sole discretion, will determine.

(g) SAR Agreement. Each SAR grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the SAR, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

(h) Expiration of SARs. An SAR granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 8(c) also will apply to SARs.

(i) Payment of SAR Amount. Upon exercise of a SAR, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

(ii) The number of Shares with respect to which the SAR is exercised.

At the discretion of the Administrator, the payment upon SAR exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

11. Restricted Stock Units.

(a) Grant of Restricted Stock Units. Restricted Stock Units may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Restricted Stock Units granted to each Participant, subject to the limits set forth in Section 3 of the Plan. The following limitations shall apply to grants of Restricted Stock Units:

(i) No Service Provider shall be granted, in any Fiscal Year, Restricted Stock Units covering more than 1,000,000 Shares.

(ii) The foregoing limitation shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 14.

(iii) If a Restricted Stock Unit is cancelled in the same fiscal year of the Company in which it was granted (other than in connection with a transaction described in Section 14), the cancelled Restricted Stock Unit will be counted against the limit set forth in subsection (i) above.

(b) Value of Restricted Stock Units. Each Restricted Stock Unit will have an initial value that is established by the Administrator on or before the date of grant.

(c) Performance Objectives and Other Terms. The Administrator will set performance objectives or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Restricted Stock Units that will be paid out to the Service Providers. The time period during which the performance objectives or other vesting provisions must be met will be called the “Performance Period.” Each award of Restricted Stock Units will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. The Administrator may set performance objectives based upon the achievement of Company-wide, divisional, or individual goals, applicable federal or state securities laws, or any other basis determined by the Administrator in its discretion.

(d) Earning of Restricted Stock Units. After the applicable Performance Period has ended, the holder of Restricted Stock Units will be entitled to receive a payout of the number of Restricted Stock Units earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding performance objectives or other vesting provisions have been achieved. After the grant of a Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any performance objectives or other vesting provisions for such Restricted Stock Unit.

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(e) Form and Timing of Payment of Restricted Stock Units. Payment of earned Restricted Stock Units will be made as soon as practicable after the expiration of the applicable Performance Period. The Administrator, in its sole discretion, may pay earned Restricted Stock Units in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Restricted Stock Units at the close of the applicable Performance Period) or in a combination thereof.

(f) Cancellation of Restricted Stock Units. On the date set forth in the Award Agreement, all unearned or unvested Restricted Stock Units will be forfeited to the Company, and again will be available for grant under the Plan.

12. Leaves of Absence. Unless the Administrator provides otherwise or as otherwise required by applicable law, vesting of Awards granted hereunder will be treated as follows during a leave of absence of a Participant:

(a) Statutory Leave of Absence. Vesting credit will continue during a leave of absence if the leave satisfies each of the following requirements: (a) the leave is approved by the Company, (b) the leave is mandated by applicable law, and (c) the Participant takes the leave in accordance with such law and complies with applicable Company leave policies (a leave meeting all such requirements being a “Statutory Leave of Absence”).

(b) Approved Personal Leave of Absence. Vesting credit will not continue (and instead will be tolled or suspended) during any leave of absence that is not a Statutory Leave of Absence (a “Personal Leave of Absence”). For purposes of clarification, a Participant will not cease to be a Service Provider during any Company-approved Personal Leave of Absence so long as the Participant complies with applicable law and applicable Company leave policies.

(c) Incentive Stock Options. For purposes of Incentive Stock Options, if a leave of absence continues for more than ninety (90) days, then the Option shall be treated for tax purposes as a Nonstatutory Stock Option at the end of the three (3)-month period measured from the 91st day of such leave, unless Optionee’s reemployment upon expiration of such leave is guaranteed by statute or contract.

13. Non-Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award shall contain such additional terms and conditions as the Administrator deems appropriate.

14. Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, the number and class of Shares that may be delivered under the Plan and/or the number, class, and price of Shares covered by each outstanding Award, and the numerical Share limits in Sections 3, 6, 9 and 11 of the Plan, shall be proportionately adjusted for any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Administrator shall notify each Participant as soon as practicable prior to the effective date of such proposed transaction. The Administrator in its discretion may provide for a Participant to have the right to exercise his or her Award until ten (10) days prior to such transaction as to all of the Optioned Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Administrator may provide that any Company repurchase option applicable to any Shares purchased upon exercise of an Award shall lapse as to all such Shares, provided the proposed dissolution or liquidation takes place at the time and in the manner

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contemplated. To the extent it has not been previously exercised, an Award will terminate immediately prior to the consummation of such proposed action.

(c) Merger or Asset Sale. In the event of a merger of the Company with or into another corporation, or the sale of substantially all of the assets of the Company, each outstanding Award shall be assumed or an equivalent option or right substituted by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume or substitute for the Award, the Participant will fully vest in and have the right to exercise all of his or her outstanding Options and Stock Appreciation Rights, including Shares as to which such Awards would not otherwise be vested or exercisable, all restrictions on Restricted Stock will lapse, and, with respect to Restricted Stock Units, all Performance Goals or other vesting criteria will be deemed achieved at target levels and all other terms and conditions met. In addition, if an Option or Stock Appreciation Right becomes fully vested and exercisable in lieu of assumption or substitution in the event of a merger or sale of assets, the Administrator will notify the Participant in writing or electronically that the Option or Stock Appreciation Right will be fully vested and exercisable for a period of 15 days from the date of such notice, and the Option or Stock Appreciation Right will terminate upon the expiration of such period.

For the purposes of this paragraph, the Award shall be considered assumed if, following the merger or sale of assets, the Award confers the right to purchase or receive, for each Share subject to the Award immediately prior to the merger or sale of assets, the consideration (whether stock, cash, or other securities or property) or, in the case of a Stock Appreciation Right upon the exercise of which the Administrator determines to pay cash or a Restricted Stock Unit which the Administrator can determine to pay in cash, the fair market value of the consideration received in the merger or sale of assets by holders of Common Stock for each Share held on the effective date of the transaction (and if holders were offered a choice of consideration, the type of consideration chosen by the holders of a majority of the outstanding Shares); provided, however, that if such consideration received in the merger or sale of assets is not solely common stock of the successor corporation or its Parent, the Administrator may, with the consent of the successor corporation, provide for the consideration to be received upon the exercise of an Option or Stock Appreciation Right or upon the payout of a Restricted Stock Unit, for each Share subject to such Award (or in the case of Restricted Stock Units, the number of implied shares determined by dividing the value of the Restricted Stock Units by the per Share consideration received by holders of Common Stock in the merger or sale of assets), to be solely common stock of the successor corporation or its Parent equal in fair market value to the per Share consideration received by holders of Common Stock in the merger or sale of assets.

Notwithstanding anything in this Section 14(c) to the contrary, an Award that vests, is earned or paid-out upon the satisfaction of one or more Performance Goals will not be considered assumed if the Company or its successor modifies any of such Performance Goals without the Participant’s consent; provided, however, a modification to such Performance Goals only to reflect the successor corporation’s corporate structure post-merger or post-sale of assets will not be deemed to invalidate an otherwise valid Award assumption.

15. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company, nor will they interfere in any way with the Participant’s right or the Company’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

16. Date of Grant. The date of grant of an Award shall be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination shall be provided to each Participant within a reasonable time after the date of such grant.

17. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Board may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Law. Notwithstanding the foregoing, the Company shall also obtain stockholder approval of any Plan amendment or any exchange, buy-back or other scheme which would purport to reprice or otherwise cancel and replace any Option or SAR as described in Section 6(c) of the Plan.

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(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan shall impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan shall not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

18. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares shall comply with Applicable Laws and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

19. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.

20. Stockholder Approval. The Plan shall be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted. Such stockholder approval shall be obtained in the manner and to the degree required under Applicable Laws.

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Annex B

Reconciliation of GAAP to Non-GAAP Financial Measures

Use of non-GAAP Financial Measures

We utilize a number of different financial measures, both Generally Accepted Accounting Principles (“GAAP”) and non-GAAP, in analyzing and assessing the overall performance of the business, for making operating decisions and for forecasting and planning for future periods. Our annual financial plan is prepared both on a GAAP and non-GAAP basis, and the non-GAAP annual financial plan is approved by our board of directors. Continuous budgeting and forecasting for revenue and expenses are conducted on a consistent non-GAAP basis (in addition to GAAP) and actual results on a non-GAAP basis are assessed against the annual financial plan. The board of directors and management utilize these non-GAAP measures and results (in addition to GAAP results) to determine our allocation of resources. In addition and as a consequence of the importance of these measures in managing the business, we use non-GAAP measures and results in the evaluation process to establish management’s compensation. For example, our annual bonus program payments are based upon the achievement of consolidated non-GAAP revenue and consolidated non-GAAP earnings-per-share financial targets. We consider the use of non-GAAP revenue helpful in understanding the performance of our business, as it excludes the purchase accounting impact on acquired deferred revenue and other acquisition-related adjustments to revenue. We also consider the use of non-GAAP earnings-per-share helpful in assessing the organic performance of the continuing operations of our business. By organic performance we mean performance as if we had owned an acquired business in the same period a year ago. By continuing operations we mean the ongoing results of the business excluding certain unplanned costs. While our management uses these non-GAAP financial measures as a tool to enhance their understanding of certain aspects of our financial performance, our management does not consider these measures to be a substitute for, or superior to, the information provided by GAAP financial statements. Consistent with this approach, we believe that disclosing non-GAAP financial measures to the readers of our financial statements provides such readers with useful supplemental data that, while not a substitute for GAAP financial statements, allows for greater transparency in the review of our financial and operational performance.

Nuance Communications, Inc.

Supplemental Financial Information — GAAP to Non-GAAP Reconciliations

(in millions)

Unaudited

Total Recurring Revenue


	FY 2014		FY 2015
GAAP Revenue	$	1,228.4	$	1,280.5
Adjustment		34.9		34.1

Non-GAAP Revenue	$	1,263.3	$	1,314.7

Total Revenue


	FY 2014		FY 2015
GAAP Revenue	$	1,923.5	$	1,931.1
Adjustment		63.6		47.9

Non-GAAP Revenue	$	1,987.1	$	1,979.1

B-1

GAAP net loss


	FY 2014			FY 2015
GAAP net loss	$	(115,010	)	$	(150,343	)
Acquisition-related adjustment — revenue		47,933			63,634
Acquisition-related adjustment — cost of revenue		(2,770	)		(41,540	)
Acquisition-related costs, net		14,379			24,218
Cost of revenue from amortization of intangible assets		63,646			60,989
Amortization of intangible assets		104,630			109,063
Restructuring and other charges, net		23,669			19,443
Non-cash stock-based compensation		176,776			192,964
Non-cash interest expense		29,378			36,719
Non-cash income taxes		15,199			(22,172	)
Costs associated with IP collaboration agreements		10,500			19,748
Change in fair value of share-based instruments		204			4,358
Loss of extinguishment of debt		17,714			—
Other		25,362			5,670

Non-GAAP net income	$	411,610		$	360,137

Non-GAAP diluted net income per share	$	1.27		$	1.12
Diluted weighted average common shares outstanding		323,940			322,816

B-2

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The Board of Directors recommends you vote FOR

the following Nominees:

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Election of Directors

For All

Withhold All

For All Except

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Paul A. Ricci

Robert J. Finocchio

Robert J. Frankenberg

Brett Icahn

William H. Janeway

Mark R. Laret

Katharine A. Martin

Philip J. Quigley

David S. Schechter

To approve a non-binding advisory resolution regarding Executive Compensation.

To ratify the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending September 30, 2016.

For

Against

Abstain

NOTE: Such other business as may properly come before the meeting or any adjournment thereof.

The Board of Directors recommends you vote FOR proposals 2, 3 and 4.

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Against

Abstain

To approve the Amended and Restated 2000 Stock Plan.

Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.

SHARES

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Date

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Date

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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Proxy/10k Combo is/are available at www.proxyvote.com.



						NUANCE COMMUNICATIONS, INC. Annual Meeting of Stockholders January 27, 2016

				The undersigned stockholder of Nuance Communications, Inc., a Delaware corporation (the “Company”), hereby acknowledges receipt of the Notice of Annual Meeting of Stockholders and accompanying Proxy Statement, each dated December 11, 2015 and hereby appoints Paul A. Ricci, Daniel D. Tempesta, and Adam Bruce Bowden or one of them, proxies and attorney-in-fact, each with full power of substitution, to represent the undersigned at the Annual Meeting of Stockholders of Nuance Communications, Inc. to be held on January 27, 2016 at 2:00 p.m. local time, at Company’s office located at 1198 East Arques Avenue, Sunnyvale, CA 94085 and at any adjournment thereof, and to vote all shares of Common Stock of the Company held of record by the undersigned on December 3, 2015 as hereinafter specified upon the proposals listed, and with discretionary authority upon such other matters as may properly come before the meeting. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Continued and to be signed on reverse side