Evertec, Inc.

Road 176, Km. 1.3

San Juan, Puerto Rico 00926

April 9, 2018

Dear Stockholder:

On behalf of the Board of Directors and officers of Evertec, Inc., we are pleased to invite you to attend our 2018 Annual Meeting of Stockholders to be held at the Condado Vanderbilt Hotel—Dorado Room, 1055 Ashford Avenue, San Juan, Puerto Rico 00907, on Thursday, May 24, 2018 at 9:00 a.m. Atlantic Standard Time (the “Annual Meeting”).

At the Annual Meeting, you will be asked to vote on three proposals described in detail in the accompanying notice of the Annual Meeting and Proxy Statement. The Proxy Statement also contains other information that you should read and consider before voting.

Your vote is very important to us. Whether or not you expect to attend the Annual Meeting in person, please submit your proxy or voting instructions over the Internet, the telephone, or by mail as soon as possible to ensure that your shares are represented at the Annual Meeting and your vote is properly recorded. If you decide to attend the Annual Meeting, you will be able to vote in person, even of you previously submitted your proxy.

If you have any questions concerning the Annual Meeting, and you are the shareholder of record of your shares, please contact our Investor Relations department at IR@evertecinc.com or (787) 773-5442. If your shares are held by a broker or other nominee, please contact your broker or other nominee for questions concerning the Annual Meeting.

We look forward to seeing you at the Annual Meeting and appreciate your continued support.

Sincerely,

Frank G. D’Angelo Chairman of the Board of Directors		Morgan M. Schuessler, Jr. President and Chief Executive Officer

Evertec, Inc.

Road 176, Km. 1.3

San Juan, Puerto Rico 00926

NOTICE OF THE 2018 ANNUAL MEETING OF STOCKHOLDERS

Your vote is important to us. Please exercise your stockholder right to vote.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING:

The Company’s Proxy Statement and Annual Report are available at

www.proxyvote.com.

By Order of the Board of Directors,

Luis A. Rodríguez-González

General Counsel and Secretary of the Board of Directors

April 9, 2018

Table of Contents

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ii    Evertec, Inc. - 2018 Proxy Statement    

PROXY SUMMARY

Introduction

This summary highlights information contained elsewhere in this Proxy Statement, but does not contain all of the information that you should consider before voting your shares. Please read the entire Proxy Statement, our Form 10-K for the year ended on December 31, 2017 and the Company’s Annual Report for the fiscal year ended on December 31, 2017 (the “Annual Report”) for complete information regarding the 2018 Annual Meeting of Stockholders (the “Annual Meeting”), the proposals to be voted on at the Annual Meeting and our performance for the year ended on December 31, 2017.

Except as otherwise indicated, the terms “Evertec,” “we,” “us,” “our Company,” and “the Company” refer to Evertec, Inc. and its subsidiaries on a consolidated basis.

2018 Annual Meeting of Stockholders

 

Date:

Thursday, May 24, 2018

Time:

9:00 a.m. (AST)

Location:

Condado Vanderbilt Hotel

Dorado Room

1055 Ashford Avenue

San Juan, Puerto Rico 00907

Record Date:

March 29, 2018

 

 

Cast Your Vote

Stockholders as of the Record Date may cast their vote in the following ways:

 

Internet		Phone		Mail		In Person
Visit www.proxyvote.com. You will need the 16-digit number included in your proxy card or notice.		Call 1-800-690-6903. You will need the 16-digit number included in your proxy card or notice.		Send your completed and signed proxy card to the address on your proxy card.		If you plan to vote in person, you will need to bring a photo ID and proof of your ownership of Evertec, Inc. stock as of the Record Date.

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PROXY SUMMARY

2    Evertec, Inc. - 2018 Proxy Statement    

PROXY SUMMARY

    Evertec, Inc. - 2018 Proxy Statement    3

Evertec, Inc.

Road 176, Km. 1.3

San Juan, Puerto Rico 00926

PROXY STATEMENT FOR THE 2018

ANNUAL MEETING OF STOCKHOLDERS

General

The enclosed Proxy Statement, which was first mailed to stockholders on or about April 9, 2018, is solicited on behalf of the Board of Directors (the “Board” or “Board of Directors”) of Evertec, Inc., a Commonwealth of Puerto Rico corporation, for use at the Company’s 2018 Annual Meeting of Stockholders to be held on May 24, 2018 (the “Annual Meeting”), and any adjournments or postponements thereof. The Annual Meeting will be held at 9:00 a.m. Atlantic Standard Time, at the Condado Vanderbilt Hotel, Dorado Room, located at 1055 Ashford Avenue, San Juan, Puerto Rico 00907.

Record Date and Shares Outstanding

The close of business on March 29, 2018 has been fixed as the Record Date for determining the stockholders of record entitled to notice of and to vote at the Annual Meeting. At the close of business on the Record Date, there were outstanding and entitled to vote 72,429,141 shares of our common stock, $0.01 par value per share (the “Common Stock”).

Quorum

In order for the Company to conduct the Annual Meeting, the holders of a majority of the outstanding shares of Common Stock eligible to vote at the meeting must be represented in person or by proxy at the Annual Meeting. This is referred to as a quorum. Votes cast in person or by proxy at the Annual Meeting will be received and tabulated by a representative of The Carideo Group, the Inspector of Elections appointed for the Annual Meeting. The Inspector of Elections will determine whether or not a quorum is present. Abstentions and broker non-votes will be counted for purposes of establishing a quorum. A “broker non-vote” occurs when a brokerage firm returns a signed proxy card but does not vote shares on a particular proposal because the proposal is not a routine matter and the brokerage firm has not received voting instructions from the beneficial owner of the shares. For further discussion of broker non-votes, see “—Required Votes / Effect of Abstentions and Broker Non-Votes.”

Voting of Proxies

If any stockholder is unable to attend the Annual Meeting, such stockholder may vote by proxy. Shares of Common Stock represented by properly executed proxies, duly returned and not revoked, will be voted in accordance with the instructions contained therein. Except as discussed below with regard to shares held in “street name” by a bank or broker, if no instruction is indicated on the proxy, the shares of Common Stock represented thereby will be voted as follows:

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PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS

The execution of a proxy will in no way affect a stockholder’s right to attend the Annual Meeting and vote in person.

Voting of Shares

Each share of Common Stock entitles the holder thereof to one vote upon any proposal submitted for a vote at the Annual Meeting. All shares entitled to vote and represented in person or by valid proxies received through the Internet, by telephone or mail will be voted at the Annual Meeting in accordance with the instructions indicated in those proxies.

Required Votes / Effect of Abstentions and Broker Non-Votes

The vote required for approval of each matter to be voted on is as set forth in the table below. Under certain circumstances, as shown in the table below, banks, brokers or other nominees are prohibited from exercising discretionary authority for beneficial owners who have not provided voting instructions to the bank, broker or other nominee (this is known as a “broker non-vote”). In these cases, and in cases where the stockholder abstains from voting on a matter, those shares will be counted for the purpose of determining if a quorum is present, but will not be included as votes cast with respect to those matters. Whether a bank, broker or other nominee has authority to vote its shares on uninstructed matters is determined by the New York Stock Exchange (“NYSE”) rules. The following table sets forth the effect of abstentions and broker non-votes on each proposal to be voted on:

How You Can Vote

Vote in Person

If you hold shares in your own name, you may vote by proxy or in person at the Annual Meeting. If you wish to vote your shares in person at our Annual Meeting, you may either bring your proxy card or notice of Internet availability of proxy materials (the “Notice of Internet Availability”) to the meeting or request a ballot at the meeting.

If your shares of Common Stock are held in the name of a bank, broker or other nominee, you will receive instructions from your bank, broker or other nominee that you must follow in order for your shares to be voted.

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PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS

Please follow their instructions carefully. Also, please note that if the holder of record of your shares is a broker, bank or other nominee and you wish to vote in person at the Annual Meeting, you must request a legal proxy from your bank, broker or other nominee that holds your shares evidencing that you were a holder of shares as of the Record Date and present that proxy and proof of identification at the Annual Meeting.

To vote by proxy, you may select one of the following options:

Vote by Internet

You can vote your shares on the Internet until 11:59 p.m. (ET) on May 23, 2018. We have made this Proxy Statement and other proxy materials available to our stockholders through the Internet. The website for Internet voting (www.proxyvote.com) is shown on your proxy card or Notice of Internet Availability, as applicable. Internet voting is available 24 hours a day, seven days a week. You will be given the opportunity to confirm that your instructions have been properly recorded. If you vote on the Internet, you do NOT need to return your proxy card, if you received one. You can also vote your shares on the Internet by scanning the QR code shown on your proxy card or Notice of Internet Availability, as applicable, with your mobile device.

Vote by Telephone

You can vote your shares by telephone until 11:59 p.m. (ET) on May 23, 2018, by calling the toll-free telephone number (at no cost to you) shown on your proxy card or Notice of Internet Availability, as applicable. Telephone voting is available 24 hours a day, seven days a week. Easy-to-follow voice prompts allow you to vote your shares and confirm that your instructions have been properly recorded. Our telephone voting procedures are designed to authenticate the stockholders by using individual control numbers. If you vote by telephone, you do NOT need to return your proxy card if you received one.

Vote by Mail

If you received your proxy materials by mail, simply mark your proxy card, date and sign it, and return it using the postage-paid envelope provided or return it to the following address: Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. In order for your votes to be included in the final tallies, your proxy card must be received by the date and time of the Annual Meeting.

Revocation of Proxies

If a proxy is properly executed and returned to the Company in time to be voted at the Annual Meeting, it will be voted as specified in the proxy, unless it is properly revoked prior thereto. If you hold shares of Common Stock in your own name and vote by proxy, you may revoke that proxy at any time before it is voted at the Annual Meeting. You may do this by: (1) signing another proxy card with a later date or a notice of revocation and returning it to us prior to the Annual Meeting (please deliver to the Corporate Secretary of the Company, located at Road 176, Km. 1.3, San Juan, Puerto Rico 00926); (2) voting again by telephone or on the Internet before 11:59 p.m. (ET) on May 23, 2018; or (3) attending the Annual Meeting in person and casting a ballot. If a bank, broker or other nominee holds your shares of Common Stock, you must follow the instructions provided by the bank, broker or other nominee if you wish to change your vote.

Voting Results

The preliminary voting results will be announced at the Annual Meeting and published within four business days after they are known in a Current Report on Form 8-K filed with the Securities and Exchange Commission (the “SEC”).

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PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS

Solicitation

The Company will bear the entire cost of solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement and the Annual Report, and any additional solicitation materials furnished to the stockholders. Nevertheless, stockholders voting by Internet, telephone or mail should be aware that there may be costs associated with electronic access, such as usage charges from Internet or telephone service providers, for which they may be responsible.

The original solicitation of proxies may be supplemented by a solicitation by mail, in person, by telephone, or by other electronic means by a proxy solicitor contracted by the Company, whose fees will be paid for by the Company, and directors, officers or employees of the Company, who will not receive any additional compensation for such services.

Householding of Proxy Materials

The SEC has adopted rules that permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements with respect to two or more stockholders sharing the same address by delivering a single proxy statement addressed to those stockholders. This process, which is commonly referred to as “householding,” provides extra convenience for stockholders and cost savings for us. The Company and some brokers household proxy materials, delivering a single Notice of Internet Availability of Proxy Materials or Proxy Statement and Annual Report to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker or us that they or we will be householding materials to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding or if you are receiving multiple copies of the Proxy Statement and wish to receive only one, please notify your broker if your shares are held in a brokerage account or the Company if you hold Common Stock directly. Requests in writing should be directed to our Corporate Secretary and sent to the following address: Evertec, Inc., Road 176, Km. 1.3, San Juan, Puerto Rico 00926. Requests may also be made by calling the Corporate Secretary at (787) 759-9999 ext. 4806.

    Evertec, Inc. - 2018 Proxy Statement    7

CORPORATE GOVERNANCE

Overview

The Company’s business affairs are conducted under the direction of the Company’s Board of Directors in accordance with the Puerto Rico General Corporation Law of 2009, as amended, the Company’s charter (the “Charter”), and Amended and Restated By-Laws (the “By-Laws”). Members of the Board are informed of the Company’s business through discussions with management by reviewing materials provided to them and by participating in meetings of the Board and its committees.

Board Composition

Our Board is currently comprised of nine directors. Mr. Rivera and Ms. Loubriel were nominated to the Board by Popular, Inc. (“Popular”) under its director nominee rights granted by the Stockholder Agreement, by and among the Company, Popular and the other stockholders parties thereto, as amended (the “Stockholder Agreement”). Mr. Schuessler has been the management director since April 1, 2015, and shall continue to be the management director for so long as he holds the office of CEO of Evertec Group LLC, our principal operating subsidiary (“Evertec Group”).

In accordance with the Stockholder Agreement, if there are any vacancies on our Board, then a committee consisting of our entire Board (other than any directors who are to be replaced because Popular has lost the right to nominate them) has the right to nominate the individuals to fill such vacancies, which nominees must be reasonably acceptable to Popular for so long as it owns, together with its affiliates, at least 5% of our outstanding Common Stock.

As of the Record Date, the Board was in compliance with the NYSE rules with respect to maintaining the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee comprised entirely of independent directors.

Board Leadership Structure

The Board recognizes that one of its key responsibilities is to evaluate and determine its optimal leadership structure so as to provide independent oversight of management. The Board understands that there is no single, generally accepted approach to providing Board leadership, and that the right Board leadership structure may vary as circumstances warrant.

Based on its most recent review of the Company’s leadership structure, the Board continues to believe that its current leadership structure is optimal for the Company because it provides the Company with strong and consistent leadership. In considering its leadership structure, the Board has taken a number of factors into account. Board and committee processes and procedures, including regular executive sessions of non-management directors and a regular review of the Company’s and our executive officers’ performance, provide substantial independent oversight of our management’s performance. The Board has the ability to change its structure, subject to any limitations under the Stockholder Agreement, should that be deemed appropriate and in the best interests of the Company and its stockholders.

The Board’s current policy, per our Corporate Governance Guidelines, is to maintain the offices of Chairperson of the Board and Chief Executive Officer (“CEO”) separate, subject to any temporary combination of those roles in connection with a CEO transition. Although our Chairman of the Board is an independent director, if in the future a non-independent director serves as Chairperson of the Board, the board will appoint a lead director to serve as the liaison between the Chairperson and the independent and non-employee directors.

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CORPORATE GOVERNANCE

Board Committees

The Board has four standing committees, described below: the Audit Committee; the Compensation Committee; the Nominating and Corporate Governance Committee; and the Information Technology Committee. Each of these standing committees is composed entirely of independent directors, except for the Information Technology Committee in which Mr. Rivera is a member. The Stockholder Agreement provides that, unless otherwise prohibited by applicable law, regulation or the NYSE rules (including the independence requirements described above), Popular has the right to representation on each committee of the Board in the same proportion as the number of directors, if any, nominated by Popular out of the total number of directors-for so long as Popular owns, together with its affiliates, at least 5% of our outstanding Common Stock.

Audit Committee

Our Audit Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company’s website at www.evertecinc.com in the “Investors” section under “Corporate Information” and “Governance Documents.” Our Board has determined that Messrs. Schumacher, Junquera, Smith and Ms. Loubriel each qualify as an “audit committee financial expert,” as defined in Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As indicated above, each of the members of our Audit Committee qualifies as independent, as defined in the Exchange Act and under the NYSE rules. Pursuant to our Audit Committee Charter and our By-Laws, our Audit Committee must consist of at least three board members (including a chairperson) who must meet at least four times a year, including once every fiscal quarter.

In compliance with the NYSE rules, the Board made a formal determination that the simultaneous service on more than three audit committees of public companies by Mr. Schumacher does not impair his ability to serve on our Audit Committee nor does it represent or in any way create a conflict of interest for the Company.

The Audit Committee assists the Board in its oversight of (i) our financial reporting process, with respect to the integrity of our financial statements and our internal controls over financial reporting; (ii) our independent registered public accounting firm’s qualifications, independence and performance; (iii) the performance of our internal audit function; (iv) our management policies regarding risk assessment and management; and (v) our compliance with laws and regulations. The Audit Committee is also responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm and the establishment of procedures for handling complaints. Our Audit Committee met twelve times during 2017.

Compensation Committee

Our Compensation Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company’s website at www.evertecinc.com in the “Investors” section under “Corporate Information” and “Governance Documents.” As indicated above, each of the members of our Compensation Committee qualifies as independent under the NYSE rules. Pursuant to our Compensation Committee Charter and our By-Laws, our Compensation Committee must consist of at least three board members (including a chairperson) who meet at least once a year, and each member shall be a non-employee director, as defined in the Exchange Act. The Compensation Committee reviews and recommends policy relating to the compensation and benefits of our officers, directors and employees, including reviewing and approving corporate goals and objectives relevant to compensation of the CEO and other senior officers, evaluating the performance of these officers in light of those goals and objectives, and reviewing and approving the compensation of these officers based on such evaluations. The Compensation Committee also produces a report on executive officer compensation as required by the SEC, which is included in this Proxy Statement. Our Compensation Committee met three times during 2017.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company’s website at

    Evertec, Inc. - 2018 Proxy Statement    9

CORPORATE GOVERNANCE

www.evertecinc.com in the “Investors” section under “Corporate Information” and “Governance Documents.” As indicated above, each of the members of our Nominating and Corporate Governance Committee qualifies as independent under the NYSE rules. Pursuant to our Nominating and Corporate Governance Committee Charter and our By-Laws, our Nominating and Corporate Governance Committee must consist of at least three board members (including a chairperson) who meet at least once a year. The responsibilities of our Nominating and Corporate Governance Committee include (i) assisting the Board in identifying individuals qualified to serve as members of the Board; (ii) recommending to the Board the director nominees for the next annual meeting of stockholders—in each case subject to the terms of the Stockholder Agreement; (iii) reviewing and recommending to the Board a set of corporate governance guidelines; and (iv) leading the Board in its review of the performance of the Board and Board committees. For a further description of our director nomination process under our Stockholder Agreement, see “—Certain Relationships and Related Transactions—Related-Party Transactions Stockholder Agreement—Director Nomination Rights.” Our Nominating and Corporate Governance Committee met once during 2017.

Information Technology Committee

Our Information Technology Committee acts pursuant to a written charter (as amended and restated) adopted by the Board, a copy of which is publicly available on the Company’s website at www.evertecinc.com in the “Investors” section under “Corporate Information” and “Governance Documents.” As indicated above, one of the members of our Information Technology Committee does not qualify as independent under the NYSE rules. The NYSE rules do not require members of other committees such as an Information Technology Committee to comply with the applicable independence requirements. Pursuant to our Information Technology Committee Charter and our By-Laws, our Information Technology Committee must consist of at least three board members (including a chairperson) who meet at least twice a year. The Information Technology Committee assists the Board (i) in the integrity of the Company’s information and technology systems; and (ii) in overseeing the Company’s IT-related risks, IT security and cybersecurity, and IT infrastructure and strategy. Our Information Technology Committee met four times during 2017.

Other Committees

Our By-Laws provide that our Board may establish one or more additional committees. As of the Record Date, the Board has not established any additional committees besides those described in this Proxy Statement.

Risk Oversight

The Company has in place an Enterprise Risk Management Policy (the “ERM Policy”), the overall purpose and scope of which is the execution of risk management processes that provide for risk and exposure monitoring, the embedding or integration of risk management into all activities as an integral part of the Company’s business activities, and the development of comprehensive internal controls and assurance processes linked to key risks. As a result, the Company continuously implements risk management processes that ensure the Company complies with existing regulatory and industry standards, thereby protecting the value of the Evertec brand and reputation by applying a disciplined approach to risk management, governance and internal controls.

Our Board is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees. Among other areas, the Board is directly involved in overseeing risks related to the Company’s overall strategy, including product, go-to-market and sales strategy, executive officer succession, business continuity, crisis preparedness and corporate reputational risks.

The committees of the Board execute their oversight responsibility for risk management as follows:

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CORPORATE GOVERNANCE

Furthermore, a Management Operating Committee (the “MOC”) that is comprised of members of senior management (including our CEO, COO, CFO, General Counsel, heads of our business segments and such other officers of the Company as the CEO deems necessary or advisable for the proper conduct of the business of the Company) was created to assist the Audit Committee with risk oversight responsibilities. The MOC delegates risk responsibilities throughout the Company through the Company’s Risk Officer, Risk Owners and Risk Working Groups in order to define the Company’s risk appetite through a combination of limits and tolerances, and ensure that processes are implemented to identify, measure and assess risks. The ERM Policy requires regular reporting to ensure proper documentation of the Company’s ERM activities. The Risk Officer has been delegated the primary responsibility of reporting risk summaries to the Audit Committee, and compiling an annual ERM report. Members of senior management also report information regarding the Company’s risk profile directly to the Board from time to time.

The Board believes that the work undertaken by the Board, the Board’s committees, the MOC and the Company’s senior management team enables the Board to effectively oversee the Company’s risk management processes.

Code of Ethics

We have adopted a Code of Ethics that applies to all our directors, officers and employees, including our CEO and CFO. Our Code of Ethics is posted on our website at www.evertecinc.com in the “Investors” section under “Corporate Information” and “Governance Documents.” We intend to include on our website any amendments to, or waivers from, a provision of the Code of Ethics that applies to our principal executive officer, principal financial officer, principal accounting officer, or controller that relates to any element of the “code of ethics,” as defined by the SEC.

Meetings of the Board of Directors and Corporate Governance Matters

The Board met nine times during 2017. The Board’s operation and responsibilities are governed by the Charter, the By-Laws, charters for the Board’s standing committees, Puerto Rico law and the Stockholder Agreement. The Charter and By-Laws generally eliminate the personal liability of each of our directors for breaches of fiduciary duty as a director and indemnify directors and officers as described below.

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CORPORATE GOVERNANCE

Indemnification of Directors and Officers

Our Charter and By-Laws limit the liability of our directors to the maximum extent permitted by Puerto Rico law. However, if Puerto Rico law is amended to authorize corporate action further limiting or eliminating the personal liability of directors, then the liability of our directors will be limited or eliminated to the fullest extent permitted by Puerto Rico law, as so amended.

Our Charter and By-Laws provide that we will, from time to time, to the fullest extent permitted by law, indemnify our directors and officers against all liabilities and expenses in any suit or proceeding, arising out of their status as an officer or director or their activities in these capacities. We will also indemnify any person who, at our request, is or was serving as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and is involved in a suit or proceeding arising out of such position. We may, by action of our Board, provide indemnification to our employees and agents within the same scope and effect as the foregoing indemnification of directors and officers.

The right to be indemnified includes the right of an officer or a director to be paid expenses, including, without limitation, attorneys’ fees, in advance of the final disposition of any proceeding, provided that, if required by law, we receive an undertaking to repay such expenses if it is determined that the officer or director is not entitled to be indemnified.

Our Board may take certain action it deems necessary to carry out these indemnification provisions, including purchasing insurance policies. Neither the amendment nor the repeal of these indemnification provisions, nor the adoption of any provision of our Charter and By-Laws inconsistent with these indemnification provisions, will eliminate, reduce or adversely affect any rights to indemnification relating to such person’s status or any activities prior to such amendment, repeal or adoption.

Our By-Laws provide that we may maintain insurance covering certain liabilities of our officers, directors, employees and agents, whether or not we would have the power or would be required under Puerto Rico law to indemnify them against such liabilities. We maintain a directors’ and officers’ liability insurance policy (“D&O Liability Insurance”) for the protection of our directors and certain of our officers.

We have entered into separate indemnification agreements with each of our directors in connection with his or her appointment to the Board. These indemnification agreements will require us to, among other things, indemnify our directors against liabilities that may arise by reason of their status or service as directors. We believe these provisions will assist in attracting and retaining qualified individuals to serve as directors and officers. These indemnification agreements also require us to advance any expenses incurred by the directors as a result of any proceeding against them as to which they could be indemnified and to use reasonable efforts to cause our directors to be covered by our D&O Liability Insurance policy. A director is not entitled to indemnification by us under such agreements if (i) the director did not act in good faith and in a manner he or she deemed to be reasonable and consistent with, and not opposed to, our best interests; or (ii) with respect to any criminal action or proceeding, the director had reasonable cause to believe his or her conduct was unlawful.

To our knowledge, currently there is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification by us is sought, nor are we aware of any threatened litigation or proceeding that may result in a claim for indemnification.

Procedures for Communications With the Board

Stockholders and any interested party may communicate directly with the Board. All communications should be directed to our Corporate Secretary at the address below and should prominently indicate on the outside of the envelope that it is intended for the Board of Directors or for non-management directors. If no director is specified, the communication will be forwarded to the entire Board. Communications to the Board should be sent to: Evertec, Inc., Board of Directors, care of the Corporate Secretary, Road 176, Km. 1.3, San Juan, Puerto Rico 00926.

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CORPORATE GOVERNANCE

Director Attendance Policy

The Company does not have a formal policy with regard to Board member attendance at the Company’s annual meetings of stockholders. All directors are encouraged to attend each annual stockholders’ meeting to provide our stockholders with an opportunity to communicate with directors about issues affecting the Company; however, attendance is not mandatory. Last year, all of our directors standing for re-election at the Company’s 2017 Annual Meeting of Stockholders attended the meeting, with the exception of Mr. Smith, who was unable to assist due to personal reasons. As required by the Company’s By-Laws, the Board must meet immediately after the Company’s annual stockholders’ meeting. During 2017, none of our directors attended less than 75% of their Board and respective committee meetings.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires that our directors, executive officers, and holders who own more than ten percent of any registered class of the Company’s equity securities file with the SEC initial reports of beneficial ownership and report changes in beneficial ownership of Common Stock and other equity securities. Such reports are filed on Form 3, Form 4 and Form 5 under the Exchange Act, as appropriate. Reporting persons holding the Company’s stock are required by the Exchange Act to furnish the Company with copies of all Section 16(a) reports they file.

To the Company’s knowledge, based solely on the Company’s review of copies of these reports, and written representations from such reporting persons that no other reports were required, the Company believes that all filings required to be made by reporting persons holding the Company’s stock were correctly and timely filed for the fiscal year ended December 31, 2017 in accordance with Section 16A(a), except for: (i) an amended report filed by each of our executive officers reporting the corrected total amount of securities acquired, (ii) one late filing by each of our executive officers, except Mr. Rospigliosi, relating to the reporting of Common Stock withheld by the Company to pay the tax liability of such executive officer in connection with the vesting of restricted stock units granted; and (iii) one late filing by Mr. Steurer related to reporting a grant of restricted stock units.

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PROPOSAL 1: ELECTION OF DIRECTORS

Overview

The Board currently consists of nine directors, seven of whom our Board has determined are independent. Under the Company’s Charter, By-Laws and the Stockholder Agreement, the size of the Board is currently fixed at nine.

Director Qualifications. In making its recommendations of nominees to the Board, the Nominating and Corporate Governance Committee identifies candidates who meet the current challenges and needs of the Board. In determining whether it is appropriate to add or remove individuals, the Nominating and Corporate Governance Committee considers issues of judgment, diversity, age, skills, expertise, background, character, and experience. In making such decisions, the Nominating and Corporate Governance Committee considers, among other things, an individual’s business experience, industry experience and financial expertise. The Nominating and Corporate Governance Committee also considers the independence, financial literacy and financial expertise standards required by our committees’ charters and applicable laws, rules and regulations, and the ability of the candidate to devote the time and attention necessary to serve as a director and a committee member. While the Company does not have a formal diversity policy with respect to director nominations, it considers business diversity (including an appropriate combination of business acumen, educational experience, work experience and the other items noted above), as well as traditional diversity concepts such as race and nationality, as two of a number of factors it considers to identify qualified nominees for directors.

Identifying and Evaluating Nominees for Director. In the event that vacancies are anticipated or otherwise arise, the Nominating and Corporate Governance Committee shall consider various potential candidates for directorship. The Nominating and Corporate Governance Committee coordinates with a professional search firm to successfully identify candidates with the requisite qualifications and characteristics, focusing on director candidates with expertise in the payments industry and Latin America markets. Candidates may also come to the attention of the Board through management, current directors, stockholders or other persons. Candidates are evaluated at regular or special meetings of the Nominating and Corporate Governance Committee and may be considered at any point during the year.

Stockholder Nominees. The Nominating and Corporate Governance Committee will consider candidates for director recommended by stockholders. If a stockholder wishes to nominate a candidate to be considered for election as a director at the Company’s 2019 annual meeting of stockholders, he or she must use the procedures as set forth in the Company’s By-Laws. The nomination should generally include the candidate’s name, home and business contact information, detailed biographical data, relevant qualifications for membership on our Board, information regarding any relationships between the candidate and us within the last three years, including stockholdings in us, and a written indication by the candidate of his or her willingness to serve, and should be sent to the Nominating and Corporate Governance Committee in care of the Corporate Secretary at: Road 176, Km. 1.3, San Juan, Puerto Rico 00926. If a stockholder wishes simply to propose a candidate for consideration as a nominee for any of the Board’s committees, the stockholder should submit any pertinent information regarding the candidate to the corresponding committee, care of the Company’s Corporate Secretary by mail to this same address.

The Nominating and Corporate Governance Committee and the Board of Directors will evaluate recommendations for director nominees submitted by directors, management, professional search firms or stockholders in the same manner, using the criteria stated above. All director nominees must submit a completed form of directors’ and officers’ questionnaire, as well as a completed questionnaire to determine independence, financial literacy, financial expertise and risk management experience as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Nominating and Corporate Governance Committee.

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PROPOSAL 1: ELECTION OF DIRECTORS

Recommendation of the Board of Directors

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS

THAT YOU VOTE “FOR” THE ELECTION OF EACH OF

THE COMPANY’S DIRECTOR NOMINEES LISTED BELOW.

Information about Director Nominees

Each of the individuals identified below has been nominated to stand for election for a term that expires at the Company’s 2019 annual meeting of stockholders. Each of these individuals has consented to be named as a nominee in this Proxy Statement and to serve as a director until the expiration of his or her respective term and until such nominee’s successor has been duly elected or qualified or until the earlier resignation or removal of such nominee. The Nominating and Corporate Governance Committee recommended each of the nominees for selection, and each is currently serving on our Board. There are no family relationships between any director, executive officer or director nominee. As described in more detail in the “Certain Relationships and Related Transactions” section of this Proxy Statement, as of the Record Date, Popular has nominated Mr. Rivera and Ms. Loubriel as members of our Board pursuant to the terms of our Stockholder Agreement. Ages specified below are as of the Record Date for the Annual Meeting.

Should any one or more of the nominees named in this Proxy Statement become unable to serve for any reason, the Board may designate substitute nominees, unless the Board by resolution provides for a lesser number of directors. In this event, the proxy holders will vote for the election of such substitute nominee or nominees.

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PROPOSAL 1: ELECTION OF DIRECTORS

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PROPOSAL 1: ELECTION OF DIRECTORS

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PROPOSAL 1: ELECTION OF DIRECTORS

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PROPOSAL 1: ELECTION OF DIRECTORS

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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Overview

The Audit Committee and the Board intend to appoint Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public account firm for the fiscal year ending December 31, 2018. During the fiscal year ended December 31, 2017, Deloitte served as the independent public auditor of the Company and also provided certain audit-related services.

Neither the Charter nor our By-Laws require that the stockholders ratify the appointment of Deloitte as the Company’s independent auditors. However, the Board is submitting the selection of Deloitte to the Company’s stockholders for ratification as a matter of good corporate governance and practice. If the stockholders do not ratify the appointment, the Audit Committee and the Board will reconsider whether or not to appoint Deloitte, but may nonetheless appoint such independent auditors. Even if the appointment is ratified, the Audit Committee and the Board, in their discretion, may change the appointment at any time during the year if they determine that such change would be in the best interests of the Company and its stockholders.

The audit reports of Deloitte on the Company’s consolidated financial statements for the fiscal year ended December 31, 2017 did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.

Deloitte audited the consolidated financial statements as of and for the year ended December 31, 2017, included in the Company’s Annual Report on Form 10-K and, as part of the audit, has issued a report, included as part of Item 8 of the Company’s Annual Report on Form 10-K, on the effectiveness of our internal control over financial reporting as of December 31, 2017.

Representatives of Deloitte are expected to attend the Annual Meeting. They will have the opportunity to make a statement at the Annual Meeting, if they so desire, and will be available to respond to any appropriate questions brought to their attention by stockholders.

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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Principal Accounting Fees and Services

The following table presents the aggregated fees billed for professional services provided by Deloitte, as the Company’s independent registered public accounting firm, for the fiscal year ending 2017 and 2016, as indicated below.

Audit Fees. This category includes fees and expenses related to the audit of our annual financial statements and the effectiveness of our internal controls over financial reporting. This category also includes the review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent auditors in connection with regulatory filings or engagements, consultations provided on audit and accounting matters that arose during, or as a result of, the audits or the reviews of interim financial statements, reviews of offering documents and registration statements for debt and issuance of related comfort letters, reviews of acquisition and integration accounting in connection with reviews of business combinations, review of required regulatory filings of financial statements of business acquired, additional audit work necessary for acquired businesses, and the preparation of any written communications on internal control matters.

Audit-Related Fees. This category consists of assurance and related services that are reasonably related to the performance of the audit or review of our financial statements and are not reported above under “Audit Fees.”

All Other Fees. This category consists of fees for services other than fees for the services listed in the other categories.

Pre-Approval Policies. Pursuant to the rules and regulations of the SEC, before the Company’s independent public accountant is engaged to render audit or non-audit services, the engagement must be approved by the Company’s Audit Committee or entered into pursuant to the committee’s pre-approval policies and procedures. The policy granting pre-approval to certain specific audit and audit-related services and specifying the procedures for pre-approving other services is set forth in the Amended and Restated Charter of the Audit Committee.

Recommendation of the Board of Directors

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR”

THE RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP

AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

FOR THE FISCAL YEAR 2018.

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BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS

Executive Officers

The following contains biographical information about the Company’s executive officers. Ages are as of the Record Date for the Annual Meeting.

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BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS

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BIOGRAPHICAL INFORMATION OF OUR EXECUTIVE OFFICERS

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COMPENSATION DISCUSSION AND ANALYSIS

Executive Summary

2017 Performance Highlights

2017 was a challenging year for the Company because of the effects of the catastrophic Hurricanes Irma and Maria, which severely impacted Puerto Rico and the Caribbean during the second half of the year. The Company and its employees demonstrated inspiring commitment and resiliency during and in the aftermath of these hurricanes, which created a difficult operating environment and deeply affected the local economies. Despite these challenges, we believe we displayed strong commitments to our communities, our clients, our employees, and our stockholders during 2017.

Financially in 2017, the Company’s GAAP diluted earnings per common share amounted to $0.76, a decrease of 25% compared with 2016. The Company’s 2017 Adjusted Earnings per common share amounted to $1.47, a decrease of 12%. Total revenue for 2017 was $407.1 million, an increase of 5% compared with $389.5 million in 2016. For the year ended December 31, 2017, Adjusted EBITDA was $178.0 million, a decrease of 5% compared with $187.7 million in the prior year.

Other highlights for 2017 include:

Executive Compensation Highlights

The Company’s intent is to ensure that the total compensation paid to our executive officers is fair, reasonable and competitive. Furthermore, Evertec’s compensation philosophy has been, and continues to be, to target the market 25th percentile in recognition of the size differentials that exist between Evertec and our peer companies, as well as the challenges in identifying good business matches within desired size parameters.

Our compensation program for our NEOs consists of the following core elements:

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COMPENSATION DISCUSSION AND ANALYSIS

On November 2017, after having consulted with its independent compensation consulting firm, F.W. Cook, the Company approved special, one-time, compensation measures. The Compensation Committee believed that these actions were critically important and necessary to assist the Company in retaining key individuals in light of the humanitarian disaster caused by the direct hit of Hurricane Maria and its aftermath in Puerto Rico, as well as taking into account the admirable performance of the executives during and immediately after the hurricanes.

Named Executive Officers (NEOs)

The table below sets forth a list of our NEOs for 2017. All of our NEOs, expect for Mr. Steurer, are employed by Evertec Group. Mr. Steurer is employed by Evertec USA, LLC. All of our NEOs also serve in similar functions for the Company.

Compensation Philosophy and Objectives

The Compensation Committee is responsible for establishing, implementing and continually monitoring adherence with our general compensation philosophy and objectives. As part of its duties and responsibilities, the Compensation Committee determines our CEO’s compensation, approves the compensation of our other executive officers and directors, and administers our equity-based compensation plans, in which our NEOs may participate. The Compensation Committee is also charged with overseeing the risk assessment of our compensation arrangements applicable to our executive officers and other employees, and reviewing and considering the relationship between risk management policies and practices, and compensation.

The Compensation Committee meets as often as necessary, but at least once annually. While ultimate responsibility for compensation recommendations rests with the Compensation Committee, the Compensation Committee has the authority to hire a compensation consultant to assist it in fulfilling its duties.

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COMPENSATION DISCUSSION AND ANALYSIS

The Compensation Committee uses F.W. Cook to assist it in undertaking a comprehensive review of our entire executive compensation program. The Compensation Committee assessed the independence of F.W. Cook and whether its work raised any conflict of interest, taking into consideration the independence factors set forth in applicable SEC and NYSE rules, and determined that F.W. Cook was independent.

This Compensation Discussion and Analysis reflects a discussion of our compensation objectives and philosophy, as well as the elements of our total NEO compensation packages in addition to information regarding certain compensation changes implemented for 2017 and 2018. The Compensation Committee may conduct further review of the executive compensation philosophy and objectives from time to time and reserves the right to make changes to the executive compensation practices as it considers appropriate.

The Committee’s intent is to ensure that the total compensation paid to our executive officers is fair, reasonable and competitive. Furthermore, Evertec’s compensation philosophy has been and continues to be to target the 25th percentile of the peer groups listed further below in recognition of the size differentials that exist between Evertec and the peer companies, as well as the challenges in identifying good business matches within desired size parameters.

The philosophy embedded in our compensation program is to:

Compensation for our NEOs has been designed to provide rewards commensurate with each NEO’s contribution. Our executive compensation strategy is designed to:

Role of Executive Officers in Compensation Decisions

Our CEO defines and recommends to the Compensation Committee the corporate and personal objectives for each of our other NEOs annually. The Compensation Committee has the authority to modify these objectives as deemed necessary and approve the final incentive opportunity which will be communicated by the CEO to such NEOs.

Our CEO reviews the performance of each of our other NEOs annually and formulates recommendations based on these reviews, including recommendations with respect to salary adjustments and annual incentive award target and actual payout amounts. These recommendations are presented to the Compensation Committee, which has the discretion to modify any recommended adjustments or awards to executives, including our NEOs.

The Compensation Committee has final approval over all compensation decisions for our NEOs and approves recommendations regarding cash and equity awards to all of our NEOs. Although the CEO is present to discuss recommendations pertaining to each of our other NEOs, our CEO is not permitted to attend those portions of any meetings of the Compensation Committee at which the CEO’s performance or compensation is discussed, unless specifically invited by the Compensation Committee.

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COMPENSATION DISCUSSION AND ANALYSIS

Competitive Compensation Practices

Since 2014, as part of the Company’s comprehensive review of its compensation programs and practices, the Compensation Committee, with assistance from F.W. Cook, established an executive compensation peer group to assist in evaluating the competitiveness of NEO compensation in terms of both dollar opportunity and compensation structure and design.

In narrowing its focus of comparable companies for consideration, the Compensation Committee, in general, utilized the following factors for screening purposes: (i) the extent to which the peer companies compete with Evertec in one or more lines of business, for executive talent and for investors; (ii) comparability of revenues, market capitalization, total assets and number of employees; (iii) statistical reliability in terms of the total number of companies in the peer set; and (iv) the prevalence of companies in the peer frames of other similarly situated competitors (i.e., “peer of peer” analysis). Given the Company’s location in Puerto Rico, the Compensation Committee must balance the challenges of attracting and retaining experienced local executive talent with talent from the mainland United States and elsewhere. To this end, the Compensation Committee also reviews from time to time compensation data for several publicly traded companies that are native to Puerto Rico in an effort to monitor the local marketplace for executive talent.

As a matter of good governance practice, the Compensation Committee is committed to periodically reviewing the list of peer companies to ensure the appropriateness of this group on an ongoing basis and make changes, if necessary. Such a review was conducted in the fall of 2016 with the assistance of F.W. Cook. As a result of this review, the Compensation Committee decided to remove Fidelity National Information Services and Fiserv, and add Black Knight Financial Services and Verifone Systems to the peer group. Additionally, Heartland Payment Systems was removed from the peer group due to its acquisition by Global Payments. For 2017, our peer group included the following companies:

Evertec’s compensation philosophy has been and continues to be to target the 25th percentile of the above peer group in recognition of the size differentials that exist between Evertec and the peer companies, as well as the challenges in identifying good business matches within the desired size parameters.

The Compensation Committee’s access to competitive benchmarking is a critical element to understanding the current environment for executive talent. Along with other factors, this information enables the Compensation Committee to make well-informed decisions on recruitment and retention of key executives.

F.W. Cook last prepared a benchmark compensation study for the Compensation Committee for NEOs in February of 2017, and for directors in July of 2017.

Elements of Compensation

The Compensation Committee believes the compensation packages provided to our executives, including our NEOs, should include both cash and equity-based incentives that reward performance against established goals and that discourage management from taking unnecessary and/or excessive risks that may harm the Company.

Our compensation program for our NEOs consists of the following core elements:

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COMPENSATION DISCUSSION AND ANALYSIS

Base Salary

We provide our NEOs and other employees with a base salary to compensate them for services rendered during the year. This fixed element of our compensation program is determined for each executive based on position and scope of responsibility. Annual base salary for our NEOs is subject to review by the Compensation Committee for possible increase at the Board’s sole discretion. In reviewing base salaries, the Compensation Committee may consider (i) changes in the executive’s individual responsibility; (ii) analysis of the executive’s compensation both internally (i.e., relative to other Evertec officers) and externally (i.e., relative to similarly situated executives at peer companies); and (iii) the executive’s individual performance, among other factors.

Having considered these factors and to ensure total compensation packages that are competitive with those provided by the peer companies in which we compete for top executive talent, and after consultation with F.W. Cook, the Compensation Committee approved the following base salaries for our NEOs, which were increased effective as of June 30, 2017.

In February 2018, upon the recommendation of the Compensation Committee, Evertec’s Board approved a base salary increase for Mr. Steurer of 4.76% (to $330,000), mainly due to the assumption of increased responsibilities. Mr. Steurer is the only NEO who received a base salary increase.

Annual Cash Bonus

Our Compensation Committee, with F.W. Cook’s recommendations, places considerable weight on the achievement of certain quantitative factors as reflected in the corporate component of the cash bonus under the Company’s annual cash bonus program, thus strengthening our commitment to a pay-for-performance compensation philosophy.

In February 2017, the Compensation Committee reaffirmed the Company’s annual cash bonus program. For our CEO and CFO, the corporate and individual objective components were established at 90% and 10% of the overall bonus targets, respectively. For NEOs in charge of business segments, a business metric was established at 60%, and the corporate and individual components were established at 20% and 20% of the overall bonus targets, respectively. For executives with support functions, (to which the business metric was not applicable), the corporate component and individual components were established at 90% and 10% of the overall bonus targets, respectively.

Under the annual cash bonus program, the Compensation Committee establishes specific performance objectives for the Company, as well as threshold, target and maximum levels based on actual achievement.

The corporate component of the potential cash bonus was to be triggered if the Company achieved at least 95% of each of our revenue (weighted at 40%) and Adjusted Net Income (weighted at 60% targets for the fiscal year, with our NEOs receiving 50% of the corporate component at the 95% performance level, up to 150% of the corporate component at 110% of our targeted corporate metrics, with linear interpolation between the 95% and 110% performance levels. Furthermore, our NEOs were eligible to earn a cash bonus of 0% to 150% of the individual component based on each executive’s individual performance.

Performance through August 2017 indicated that the NEOs were on track to surpass certain of the relevant performance metrics. However, the effects of Hurricanes Irma and Maria and their aftermath dramatically affected their attainability. In November 2017, after consultation with F.W. Cook, and in recognition of the performance of the NEOs prior to these unexpected and catastrophic events and their exemplary

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COMPENSATION DISCUSSION AND ANALYSIS

performance during and immediately after the hurricanes, the Compensation Committee recommended to the Board, and the Board approved, the Cash Bonus Adjustment. The “Cash Bonus Adjustment” consists of an adjustment to the calculation of the 2017 NEOs cash bonuses whereby the bonus targets would be evaluated as of a date prior to the hurricanes and the results would be annualized for purposes of the 2017 cash bonus, subject to a cap of 100% of the original target bonus percentage.

The target annual cash bonus as a percentage of salary is a mix between corporate performance, business metric, and individual performance elements. Also, the executive’s successful implementation and completion of audit observations, enterprise risk management action items and achievement of the financial budget are considered as part of the actual bonus payout calculation. The actual bonus payout after the implementation of the Cash Bonus Adjustment for each of our NEOs for 2017 were as follows:

The actual bonus payouts described in the table above and paid to our NEOs for fiscal year 2017 were calculated based on the Company’s performance until August 31, 2017, which performance was then annualized as per the Cash Bonus Adjustment. August 31, 2017 was the date prior to the hurricanes that the Compensation Committee used for the Cash Bonus Adjustment. The results of the annualized performance calculation showed that management was above 100% of the relevant revenue and Adjusted Net Income targets. Accordingly, the Compensation Committee approved a payment based on the cap of 100% of the targets.

In February 2018, the Compensation Committee approved the Company’s annual cash bonus program for the year 2018, as follows. For our CEO and CFO, the corporate and individual objective components were established at 90% and 10% of the overall bonus targets, respectively. For executives in charge of business segments, a business metric was established at 60%, and the corporate and individual components were established at 20% and 20% of the overall bonus targets, respectively. For executives with support functions (to which the business metric is not applicable), the corporate component and individual components were established at 75% and 25% of the overall bonus targets, respectively.

In addition, the Compensation Committee, in consultation with F.W. Cook, approved an additional screen to strengthen and reward individual performance and accountability and, at the same time, implement a minimum level of individual performance necessary in order for our NEOs to receive the annual cash bonus for 2018 (the “Cash Bonus Modifier”). Pursuant to the Cash Bonus Modifier, a NEO’s individual objective component of the annual cash bonus will be assessed and given a performance rating. If the NEO’s individual performance rating is “unacceptable,” such NEO will not receive an annual cash bonus. Other ratings for NEOs will result in the individual performance component to be modified by factors ranging from 50% for a rating of “needs development” to 150% for a rating of “exceptional performance.”

Long-Term Equity Incentives

In connection with our initial public offering, we adopted the Evertec, Inc. 2013 Equity Incentive Plan (the “2013 Plan”), under which stock options, restricted stock and other equity awards have been granted. The Compensation Committee has been delegated the responsibility to administer these plans. Our Compensation Committee believes that a long-term incentive design linked to strong pay-for-performance principles is appropriate to ensure executive ownership and linkage to the long-term interests of Evertec stockholders. As a result, since 2015, our NEOs have been awarded with grants of restricted stock units (“RSUs”) under the 2013 Plan. RSU awards provide for the grant of both performance-based and time-based

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COMPENSATION DISCUSSION AND ANALYSIS

RSUs designed for the dual purpose of serving as an incentive vehicle to help ensure that key employees are linked to the Company’s overall performance in future years and as a retention mechanism.

Following a comprehensive review of the Company’s long-term incentive plan, in 2016 the Compensation Committee established Adjusted EBITDA as the primary performance measure while maintaining focus on total stockholder return (“TSR”) through the use of a performance modifier. The TSR modifier adjusts the shares earned based on the core Adjusted EBITDA performance upwards or downwards (+/- 25%) based on the Company’s relative TSR at the end of the three-year performance period as compared to companies in the Russell 2000 Index. The Compensation Committee’s decision was influenced by the macroeconomic conditions currently present in Puerto Rico and a focus to place more emphasis on operational performance that is within management’s control.

For 2017, the Compensation Committee approved grants of performance-based RSUs and time-based RSUs to its NEOs, including its CEO, to be granted with a distribution mix of 50% time-based units and 50% performance-based units.

Performance-based RSUs

The Adjusted EBITDA performance measure was calculated for the one-year period commencing on January 1, 2017 and ending on December 31, 2017, relative to the goals set by the Compensation Committee for this same period. The shares earned according to the table below are also subject to a three-year service period before vesting measured from the date of the grant:

The earned number of EBITDA RSUs are then modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period. The following table summarizes the relationship between the Company’s actual TSR performance when compared with the TSR performance of the members of the Russell 2000 Index and the associated modifier for the performance achieved:

Time-based RSUs

The time-based RSUs granted by the Company to its NEOs will vest in three equal installments on February 24, 2018, 2019 and 2020, provided that the NEO remains continuously employed with the Company during such time period except as otherwise set forth in the applicable award agreement.

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COMPENSATION DISCUSSION AND ANALYSIS

The 2017 long term equity incentive awards to our NEOs were as follows:

The total award dollar value was divided equally between time-based RSUs and performance-based RSUs. The actual number of RSUs granted for time-based RSUs was determined by dividing the award dollar value by the price of our Common Stock on the close of business of the date of grant. The actual number of RSUs granted for performance-based RSUs tied to Adjusted EBITDA with a TSR modifier was determined by dividing the award dollar value by a Monte Carlo simulation value that factors future stock prices for the Company and companies in the Russell 2000 Index.

As the Adjusted EBIDTA threshold target for 2017 was not achieved principally due to the effects of Hurricane Maria, the performance RSUs Awards for our NEOs for 2017 were automatically forfeited.

For 2018, the Compensation Committee reaffirmed using an Adjusted EBITDA target with the TSR Modifier for the performance-based RSUs. The Adjusted EBITDA performance measure for 2018 shall be calculated for the one-year period commencing on January 1, 2018 and ending on December 31, 2018, relative to the goals set by the Compensation Committee for this same period. The shares earned according to the table below are also subject to a three-year service period before vesting measure from the date of the grant:

As in 2017, the earned number of EBITDA RSUs will then modified by relative TSR performance, which will continue to be measured against the Russell 2000 Index over a three-year period. For 2018, the Compensation Committee approved grants of time-based RSUs and performance-based RSUs to its NEOs, to be granted with a distribution mix of 50% time-based units and 50% performance-based units; provided, however, that the distribution mix for our CEO will be 40% time-based units and 60% performance-based units.

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COMPENSATION DISCUSSION AND ANALYSIS

The 2018 long term equity incentive awards for our NEOs are as follows:

Special Retention Grant

As reported in the Company’s Form 8-K filed on November 13, 2017, on November 10, 2017 the Compensation Committee recommended, after consultation with F.W. Cook, and the Board approved a one-time special grant of RSUs pursuant and subject to the Company’s 2013 Equity Incentive Plan as a retention grant to all executives and certain key employees (the “Retention Grant”). The Compensation Committee believed that this action was necessary to assist the Company in retaining key individuals in light of the humanitarian disaster caused by the direct hit of Hurricane Maria and its aftermath in Puerto Rico. The hardships associated with this catastrophic event severely heightened the possibility that executives and key employees would entertain and accept offers from competitors located outside Puerto Rico and, in particular, in the United States. As we previously disclosed in Item 1A of the Company’s most recent Annual Report on Form 10-K under the Risk Factor titled “The ability to recruit, retain and develop qualified personnel is critical to our success and growth,” recruiting and retaining qualified personnel in Puerto Rico is particularly challenging, given the poor state of the Puerto Rican economy and the increased emigration of Puerto Ricans following Hurricanes Irma and Maria; as such, the Company’s efforts to retain and develop personnel may also result in significant additional expenses.

The RSUs under the Retention Grant were granted on November 20, 2017 and the number of RSUs granted were based on the Company’s closing common stock price on the grant date. These RSUs are subject to time-based restrictions and will vest 40% on the second anniversary and 60% on the third anniversary of the date of the grant. The following table sets forth the total award value approved for the Retention Grant for each of our 2017 NEOs:

Other Compensation

Statutory Cash Bonus Payment

In 2017, each NEO received a Christmas bonus. As a general rule, Puerto Rico law requires companies to provide employees who worked more than 700 hours in a year an amount which cannot be less than $600 as

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COMPENSATION DISCUSSION AND ANALYSIS

a Christmas bonus, which must be paid on or before the 15th day of December. In 2017, our practice was to pay a Christmas bonus to employees in Puerto Rico in an amount equivalent to 4.17% of the employee’s base salary for employees hired before October 29, 2012 and 3.00% of the employee’s base salary for employees hired after this date.

Benefits and Perquisites

Our NEOs participate in the same benefit programs as the rest of our general employee population. These benefits include health insurance coverage, short- and long-term disability insurance, and life insurance, among others. In addition, in order to better enable us to attract, retain and motivate employees for key positions, we provide limited perquisites to our NEOs to assist them in carrying out their duties and increasing productivity. We believe these perquisites, which do not constitute a significant portion of our NEOs’ total compensation package, are reasonable, customary with local practice, and consistent with our overall compensation philosophy. In 2017, these perquisites included the use of Company-owned automobiles, periodic comprehensive medical examinations, and club membership fees for certain of our NEOs.

Most of our NEOs, as well as all other employees, were eligible to participate in the Evertec Group Savings and Investment Plan in 2017. This plan is a tax-qualified retirement savings plan (similar to a 401(k) plan) to which all of our Puerto Rico employees were able to contribute up to $15,000 in 2017 on a pre-tax basis-and up to 10% after tax-of their total annual compensation. We match 50% of the employee contributions up to 3% of base salary. All matching contributions to the Evertec Group Savings and Investment Plan vest 20% each year over a five-year period. In 2017, Mr. Steurer was the only NEO not to participate in the Evertec Group Savings and Investment Plan.

Tax Deductibility of Executive Compensation

The Compensation Committee intends that all applicable compensation payable for NEOs be deductible for income tax purposes, unless there are valid compensatory reasons for paying non-deductible amounts in order to ensure competitive levels of total compensation. For 2017, the Company was not subject to the limitations of Section 162(m) of the U.S. Internal Revenue Code.

Stock Ownership Guidelines

The Stock Ownership Guidelines for directors, NEOs and certain other key employees of the Company, as adopted by our Compensation Committee, were established to align the financial interest of the directors and certain officers of the Company with those of the Company’s stockholders. The guidelines provide for ownership levels to be based on the fair market value of the Company’s Common Stock.

Furthermore, the Compensation Committee believes that the investment community values stock ownership by the Company’s directors and NEOs and that share ownership demonstrates a commitment to and belief in the long- term profitability of the Company. Our NEOs and other key officers are generally subject to the following ownership guidelines:

In July 2017, the Stock Ownerships Guidelines applicable to our directors were revised and amended by the Compensation Committee to maintain an ownership level of 5 times the directors annual cash retainer with a 5-year period to attain.

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COMPENSATION DISCUSSION AND ANALYSIS

Anti-Hedging Policy

Pursuant to our Insider Trading Policy, all our directors, executives and employees may not engage in speculative transactions in Evertec securities. Furthermore, all directors and employees are prohibited from engaging in any transaction in which they profit if the value of our Common Stock declines.

Compensation Risk Assessment

We believe our approach to establishing goals and objectives and setting targets with payouts at multiple levels of performance, combined with the evaluation of performance results, assist in mitigating excessive risk-taking that could harm the Company’s value or reward poor judgment by our executives. Several features of our programs reflect sound risk management practices. Furthermore, our independent compensation consultant is aware of the potential risks in compensation programs and assisted with the implementation of the following plan design features of the Company’s cash and equity incentive programs for our executives that reduce the likelihood of excessive risk-taking:

We believe that risks arising from our compensation policies and practices for our employees are not reasonably likely to have a material adverse effect on the Company.

Summary Compensation

The following table summarizes the total compensation of each of our NEOs for services rendered during 2017, 2016 and 2015.

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COMPENSATION DISCUSSION AND ANALYSIS

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COMPENSATION DISCUSSION AND ANALYSIS

Grants of Plan-Based Awards

The following table sets forth certain information for plan-based awards granted to each of our NEOs for 2017.