Nuance Communications, Inc.

One Wayside Road

Burlington, MA 01803

NOTICE OF THE 2019 ANNUAL MEETING OF SHAREHOLDERS

Dear Shareholders:

The 2019 Annual Meeting of Shareholders (the “2019 Annual Meeting”) of Nuance Communications, Inc. (the “Company”) will be held at the Company’s headquarters located at One Wayside Road, Burlington, MA 01803, on January 17, 2019 at 8:00 a.m. local time, for the following purposes:

The Company is relying upon the U.S. Securities and Exchange Commission rules that allow issuers to furnish proxy materials to its shareholders via the Internet. Pursuant to these rules, instead of mailing a printed copy of the Company’s proxy materials to each shareholder, the Company has elected to provide access to its proxy materials over the Internet. Accordingly, with the exception of certain shareholders who requested to receive printed copies of the Company’s proxy materials by mail, shareholders of record will receive a Notice of Internet Availability of Proxy Materials that explains how to access and review the Company’s proxy materials on the Internet, how to submit the proxy card on the Internet, and how to request to receive a printed copy of the Company’s proxy materials. The Company expects to mail the Notice of Internet Availability of Proxy Materials on or about December 4, 2018.

The Board of Directors has fixed the close of business on November 21, 2018 as the record date for determination of shareholders entitled to notice of, and to vote at, the 2019 Annual Meeting and at any postponements or adjournments thereof. A list of shareholders entitled to vote at the 2019 Annual Meeting will be available at the meeting being held at One Wayside Road, Burlington, MA 01803 and for ten days prior to the 2019 Annual Meeting.

The Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018 accompanies this Notice of the 2019 Annual Meeting of Shareholders and the proxy statement. These documents may also be accessed free of charge at www.proxyvote.com.

Please refer to the proxy statement for further information with respect to the business to be transacted at the 2019 Annual Meeting.

By Order of the Board of Directors,

Wendy Cassity

Secretary

Burlington, Massachusetts

December 4, 2018

Dear Fellow Shareholders:

It is an honor and a privilege to join Nuance as its CEO. I was attracted to Nuance for its reputation, foresight and history of innovation. We have unique technologies and world-class employees that together have built this company into the market leader in conversational artificial intelligence and cloud solutions.

This is an exciting time for Nuance and I believe the company is at a pivotal point in its evolution. In my first year, I have worked diligently with the Board and the management team to conduct a comprehensive review of Nuance and its businesses. We conducted an in-depth analysis of the company’s portfolios, products, services and offerings for every business to determine what each needed to thrive long-term. Following this review, it is clear that our strategy to innovate and develop conversational AI solutions specialized for designated business-to-business markets is working, and we are executing on a comprehensive plan to simplify our operations to enable focus on these growth markets. The review also identified changes we can make to better allocate our time and resources to increase long-term value for shareholders, leading to the announcement of our intent to spin off the Automotive Segment, sell our Imaging Business Segment and wind-down two non-core businesses.

I am committed to increased transparency and dialogue with our shareholders. As we execute against our strategy, I promise to keep investors informed of our progress, good and bad. In my first 100 days, I met shareholders owning almost 50% of our outstanding shares to listen to their perspectives to help guide Nuance and ultimately drive long-term value for shareholders. There is much work to do, but our strategy is clear, the team is invigorated, and we are executing on our plan.

In closing, I want you to know my optimism and conviction in Nuance’s future has only grown with time. I look forward to continuing to work with our great team here, our customers and our shareholders. From all of us at Nuance, we thank you for your support. We appreciate your confidence in the business and we look forward to delivering on our commitments to you.

Sincerely,

Mark Benjamin

Chief Executive Officer

Dear Shareholders:

From the entire Board of Nuance, we would like to thank all of our shareholders for their support for Nuance.

Over the last year, we have had the distinct pleasure of speaking with many of you. The feedback was clear – shareholders were frustrated with the company’s past governance practices and wanted to see these concerns addressed.

A New Day at Nuance

The management and Board of Nuance have undergone a dramatic transformation in last year:

The refreshed Board implemented numerous changes to our governance and compensation practices. During this process, we continued to solicit shareholder feedback, ensuring your views were a key part of our decision making throughout the year. The refreshed look of this year’s Proxy reflects the feedback we took from our shareholder outreach.

Executive Compensation Redesign

A key priority for this year was conducting a complete overhaul of our executive compensation practices. We were and are committed to putting in place a new program that was simple to understand, easy to communicate and aligned pay with long-term performance.

To accomplish this, the Compensation Committee took a clean-sheet approach to the program. We hired a new compensation consultant and reached out to shareholders owning approximately 65% of our outstanding shares and spoke with shareholders owning approximately 40% of our outstanding shares to get their feedback on the elements of the executive compensation program the Compensation Committee was considering. Our shareholders’ views helped inform our decisions in crafting an appropriate long-term program.

Going Forward

The Board is committed to ongoing shareholder engagement and we look forward to maintaining an open dialogue with our shareholders. The substantial changes we have made are intended to be responsive to shareholder feedback and to be a signal that this is a new chapter in our history.

Sincerely,

The Nuance Board of Directors

Proxy Statement Summary

This Proxy Statement provides information for shareholders of Nuance Communications, Inc. (“we,” “us,” “our,” “Nuance” or the “Company”), as part of the solicitation of proxies by the Company and its board of directors (the “Board”) from holders of the outstanding shares of the Company’s common stock (“Common Stock”), for use at the Company’s annual meeting of shareholders to be held at the Company’s headquarters located at One Wayside Road, Burlington, MA 01803, on January 17, 2019 at 8:00 a.m. local time, and at any adjournments or postponements thereof (the “2019 Annual Meeting”).

This summary highlights select information that is provided in more detail throughout this Proxy Statement. This summary does not contain all of the information you should consider before voting. You should read the full Proxy Statement before casting your vote.

2019 Annual Meeting

Voting Items

The following table summarizes the proposals to be considered at the 2019 Annual Meeting and the Board voting recommendations with respect to each proposal.

2018 Nuance Developments

Recent Event Highlights

In response to shareholder feedback and the results of our proxy ballot items at last year’s annual meeting of shareholders (the “2018 Annual Meeting”), the Board made a number of significant changes to the Company’s corporate governance and executive compensation program during the past year.

In the past year, we:

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The Board also underwent a thoughtful process to restructure the Company’s executive compensation program. Actions taken during the past year in furtherance of such restructuring included completely refreshing the membership of the Compensation Committee, hiring a new compensation consultant and extensive engagement with shareholders. During the fall, Nuance reached out to shareholders owning approximately 65% of our outstanding shares and spoke with shareholders owning approximately 40% of our outstanding shares and the Chairman of the Board, Lloyd Carney, and Compensation Committee Chair, Sanjay Vaswani, participated in a majority of these engagements. All shareholder feedback was shared with the full Board and helped to shape changes made to our executive compensation program.

The timeline below summarizes recent key events:

The Company has undergone meaningful change in response to shareholder feedback. The Board and management are committed to continued engagement on an ongoing basis and view these changes as a significant step in the right direction.

Business Overview

We are a leading provider of voice recognition and natural language understanding solutions. We work with companies around the world, from banks and hospitals to airlines, telecommunications carriers, and automotive manufacturers and suppliers, who use our solutions and technologies to create better experiences for their customers and their users by enhancing the users’ interaction and increasing productivity and customer satisfaction. In addition, our solutions increasingly utilize our innovations in artificial intelligence (“AI”), including cognitive sciences and machine learning to create smarter, more natural experiences with technology.

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Using advanced analytics and algorithms, our technologies create personalized experiences and transform the way people interact with information and the technology around them. We market and sell our solutions and technologies around the world directly through a dedicated sales force, and also through a global network of resellers, including system integrators, independent software vendors, value-added resellers, distributors, hardware vendors, telecommunications carriers and e-commerce websites.

Nuance Business Segments

Mark Benjamin Appointed as CEO

In April 2018, the Board appointed Mark Benjamin as CEO, succeeding Paul Ricci who had been CEO since September 2000. Mr. Benjamin is a dynamic leader who brings 25 years of experience in technology markets and a fresh perspective to Nuance. Prior to his appointment, Mr. Benjamin had no prior professional or personal experience with any of the Company’s current or former Board members.

Upon joining the Company, Mr. Benjamin laid out four key priorities for 2018 to accelerate momentum in our core businesses and to put Nuance on a clear path toward its goal to drive consistent organic growth and deliver shareholder returns.

Key Priorities for 2018

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Strategic Review

As one of the key priorities identified by Mr. Benjamin, he and the rest of the Board and management undertook a comprehensive review of our long-term strategy and our business and operations. At the conclusion of the review, the Company determined the following:

2018 Performance Update

We accelerated our efforts to position the Company for growth and long-term value creation with our comprehensive review of our portfolio, business and organizational structure. While conducting this review, our performance remained strong as shown in our fiscal 2018 financial results by generating growth and meaningful cash flow. We believe our efforts and results in fiscal 2018 positions us for growth for 2019 and beyond. Some of the highlights of our performance supporting our belief include:

Additionally, we achieved the following in fiscal 2018:

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A reconciliation of the GAAP to non-GAAP financial measures is set forth in Annex A to this Proxy Statement.

Board Implemented Significant Corporate Governance Changes

Board Composition & Refreshment

During the past year, the Board undertook a holistic review of our governance practices and board composition. This resulted in a thoughtful and comprehensive Board refreshment, focused on ensuring that the Board is comprised of members with the right skills and experience to oversee Nuance effectively. Based on our mapping of director skills to Nuance’s strategic priorities, we prioritized the following attributes when identifying new director candidates:

The outcome of this refreshment process resulted in the Company:

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Our revamped Board’s comprehensive set of skills and diverse backgrounds are designed to ensure effective oversight of our business strategy and our corporate governance practices. The Board includes two women, and members from varying ethnic and professional backgrounds. The members of our newly-constituted Board are:

Nuance Board of Directors

Each of our non-employee directors has extensive professional experience. The chart below highlights areas in which we believe certain directors have particularly deep experience relevant to the Company’s current profile and strategic needs:

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2018 Shareholder Engagement on Compensation

Given the results of our 2018 advisory vote on executive compensation and subsequent shareholder feedback, a key priority for the Board was to conduct a comprehensive review of the Company’s executive compensation program and to implement an executive compensation program for fiscal year 2019 that is responsive to shareholder feedback.

Shareholder feedback was an essential element in the redesign of our executive compensation program. In total, during 2018, we reached out to shareholders owning approximately 65% of our outstanding shares and spoke with shareholders owning approximately 40% of our outstanding shares, to solicit feedback on a variety of governance related topics, including the compensation program changes under consideration. Our Chairman of the Board, Lloyd Carney, and our Compensation Committee Chairman, Sanjay Vaswani, participated in a majority of the discussions with shareholders.

A few common themes arose from shareholder engagement, which we summarize below and describe in more detail in the Compensation Discussion and Analysis section of this Proxy Statement. The Board took action on this feedback and considered it in the redesign of the executive compensation program.

2018 Compensation Program Feedback and 2019 Program Changes

Feedback Under Consideration for 2020 Program

As discussed, our shareholder engagement efforts were integral to informing the Board’s decisions regarding changes to the executive compensation program. Shareholders were largely complimentary of the changes the Board was considering and understood that given that the Company is undergoing a strategic review and evaluating the proper business mix for the long-term, the executive compensation program would continue to evolve.

In connection with our outreach efforts, shareholders also provided feedback for the Board to consider in the evolution of the program:

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The Board is committed to being responsive to shareholder feedback. In light of the meaningful changes arising from our strategic review of the business, including the commitment to spin off the Automotive Segment, sell our Imaging Business Segment and wind-down non-core businesses, the Board felt the 2019 long-term incentive program structure would best align the full management team during this transition. The Board plans to revisit the compensation program design in 2019 and will strongly consider this feedback as we design the 2020 executive compensation program. In advance of formalizing the 2020 executive compensation program, the Board intends to continue to engage with shareholders to further solicit their feedback.

2018 Shareholder Engagement on Governance

Given the results of the vote on the shareholder proposal included in our 2018 proxy statement calling for a shareholder right to call special meetings, the Board publicly committed during the year to amend the Bylaws to provide for such a right. During the shareholder outreach campaign discussed above, we solicited shareholders’ input on the threshold number of shareholders that should be required to call special meetings.

The majority of shareholders consulted expressed support for a minimum threshold of 20%. Some shareholders consulted indicated that, while they had voted for last year’s shareholder proposal, which called for a 10% threshold, they had done so in order to signal their desire for the Company to permit the shareholders to call a special meeting generally, not to express support for the 10% threshold specifically. Others expressed no view and deferred to the judgment of the Board. Of those who expressed support for a 20% threshold, many articulated concerns that a 10% threshold was too low for Nuance, particularly in light of the Company’s current shareholder profile, and could enable investors who did not have the Company’s long-term interest in mind to exploit the right.

In light of the feedback received, the Board agreed in November 2018 to amend the Bylaws to provide that shareholders holding 20% or more of the Company’s outstanding stock may call a special meeting of shareholders.

Strong Governance and Compensation Practices

We are committed to good corporate governance, which encompasses properly managing compensation risk in order to promote the long-term interests of our shareholders.

Additionally, we have the following practices in place:

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PROXY STATEMENT

ANNUAL MEETING OF SHAREHOLDERS

January 17, 2019

This proxy statement (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 2019 Annual Meeting of Shareholders of the Company to be held on January 17, 2019 at 8:00 a.m., local time, at the Company’s office located at One Wayside Rd Burlington, MA 01803 (the “2019 Annual Meeting”). We intend to mail a Notice of Internet Availability of Proxy Materials, and this Proxy Statement and the accompanying form of proxy to shareholders to certain requesting shareholders, on or about December 4, 2018.

TABLE OF CONTENTS

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VOTING RIGHTS

Each share of Common Stock entitles the holder thereof to one vote on matters to be acted upon at the 2019 Annual Meeting, including the election of directors. Votes cast in person or by proxy at the 2019 Annual Meeting will be tabulated by Broadridge Financial Solutions, Inc., the Inspector of Elections. Any proxy that is voted according to the instructions included in the Notice of Internet Availability of Proxy Materials or 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 described in Proposal One; (ii) ”FOR” approval of amending and restating the Company’s Amended and Restated 2000 Stock Plan as described in Proposal Two; (iii) ”FOR” the nonbinding advisory resolution regarding the compensation of the Company’s named executive officers under Proposal Three; (iv) “FOR” ratification of the appointment of BDO USA, LLP as the Company’s independent registered public accounting firm described in Proposal Four; (v) “AGAINST” the shareholder proposal described in Proposal Five; and (vi) as the proxy holders deem advisable in their sole discretion on any other matters that may properly come before the 2019 Annual Meeting. A shareholder may indicate when it votes by the Internet, by telephone or on the enclosed proxy that it is abstaining from voting on a particular matter (an “abstention”). A broker may indicate 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 2019 Annual Meeting. In general, Delaware law and the 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 but not entitled to vote, 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 November 21, 2018 have the right to receive notice of and to vote at the 2019 Annual Meeting. On November 21, 2018, the Company had 287,429,253 shares of Common Stock issued and outstanding.

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PROXIES

Proxies for use at the 2019 Annual Meeting are being solicited by the Company from its shareholders. 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 2019 Annual Meeting and the election to vote in person. Attendance at the 2019 Annual Meeting will not by itself constitute the revocation of a proxy.

SHAREHOLDER PROPOSALS AND DIRECTOR NOMINATIONS FOR THE 2020 ANNUAL MEETING OF SHAREHOLDERS

Shareholders may present proper proposals or nominations for inclusion in the Company’s proxy statement and for consideration at next year’s annual meeting of shareholders by submitting their proposals or nominations in writing to the Company’s Secretary in a timely manner. The Bylaws require that certain information and acknowledgements with respect to the proposal or nomination be set forth in the shareholder’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. In addition, the Bylaws were filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission (the “SEC”) on November 9, 2018 and may be accessed through the SEC’s website at www.sec.gov/edgar.

Inclusion of Shareholder Proposals in Proxy Statement

Proposals of shareholders that are intended to be presented at the Company’s 2020 Annual Meeting of Shareholders (the “2020 Annual Meeting”) must comply with the requirements of SEC Rule 14a-8. A shareholder’s proposal must be delivered to or mailed and received by us no later than August 6, 2019 in order for it to be included in the Company’s proxy statement and form of proxy relating to the meeting.

Inclusion of Director Nominees in Proxy Statement

The Bylaws provide that a shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years an aggregate of at least 3% of the outstanding Common Stock, may nominate and include in the Company’s proxy materials director nominees constituting up to 20% of the number of directors in office as of the deadline for such nomination, provided that the shareholder(s) and nominee(s) satisfy the requirements in the Bylaws. To be timely, a nomination notice and required information must be delivered to or mailed and received by the Secretary at our principal executive offices not later than the close of business on the 120th day and not earlier than the close of business on the 150th day prior to the anniversary of the date (as stated in our proxy materials) the definitive proxy statement with respect to the preceding year’s annual meeting was first sent to shareholders; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary of the preceding year’s annual meeting, notice by the shareholder to be timely must be so received no earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of (i) the 60th day prior to such annual meeting or (ii) the 10th day following the date on which we publicly announce the meeting date. Assuming the date of our 2020 Annual Meeting is not so advanced or delayed, shareholders who wish to include a director nominee in our 2020 proxy statement must notify us no earlier than July 7, 2019 and no later than the close of business on August 6, 2019. Such notice must provide the information required by our Bylaws.

Inclusion of Shareholder Proposals or Nominations in Annual Meeting Agenda but Not in Proxy Statement

A shareholder proposal or a nomination for director to be presented at the Company’s 2020 Annual Meeting that is not to be included in the Company’s proxy statement and form of proxy relating to the meeting must be delivered to or mailed and received by the Company (a) not later than the close of business on the 90th calendar day, nor earlier than the close of business on the 120th day, prior to the first anniversary of the preceding year’s annual meeting, or (b) not later than the close of business on the 45th calendar day, nor earlier than the close of business on the 75th calendar day, prior to the first anniversary of the date on which we first mailed our proxy materials for the preceding year’s annual

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meeting, whichever period occurs first. Assuming the date of our 2020 Annual Meeting is not so advanced or delayed, shareholders who wish to make a proposal at the 2020 Annual Meeting must notify us no earlier than September 19, 2019 and no later than the close of business on October 19, 2019. Such notice must provide the information required by the Bylaws with respect to each matter the shareholder proposes to bring before the 2020 Annual Meeting.

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 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.

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PROPOSAL ONE

ELECTION OF DIRECTORS

At the 2019 Annual Meeting, nine directors will be elected to the Board. The Nominating Committee of the Board of Directors recommended, and the Board of Directors approved, Lloyd Carney, Mark Benjamin, Daniel Brennan, Thomas Ebling, Robert Finocchio, Laura Kaiser, Michal Katz, Mark Laret, and Sanjay Vaswani as nominees for election at the 2019 Annual Meeting. The term of office of each person elected as a director will continue until the next annual meeting of shareholders or until a successor has been elected and qualified.

Information Regarding the Nominees for Election as Directors

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Vote Required; Recommendation of the Board

Each nominee for director shall be elected to the Board if the votes cast for such nominee’s election exceed the votes against and withheld from such nominee’s election. Unless marked to the contrary, proxies received will be voted “FOR ALL” the Board’s nominees. Withhold votes 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 BOARD UNANIMOUSLY RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR ALL” ON THE ELECTION OF THE FOREGOING NOMINEES TO SERVE AS DIRECTORS UNTIL THE NEXT ANNUAL MEETING OF SHAREHOLDERS.

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CORPORATE GOVERNANCE

Corporate Governance Overview and Shareholder Engagement

We are committed to good corporate governance, which we believe promotes the long-term interests of our shareholders and strengthens our Board of Directors and management accountability. Highlights of our corporate governance practices include the following:

We believe that effective corporate governance should also include regular, constructive conversations with our shareholders. The Board and management conducted extensive shareholder outreach throughout fiscal 2018 to solicit feedback on the Company’s corporate governance. During the fall of 2018 alone, we reached out to shareholders owning approximately 65% of our outstanding shares and spoke with shareholders owning approximately 40% of our outstanding shares. Our Chairman, Lloyd Carney and our Compensation Committee Chair, Sanjay Vaswani participated in a majority of these engagements. In response to such feedback and a comprehensive assessment of Nuance’s governance practice, the Board made a number of significant changes to the Company’s corporate governance and during the past year, notably those highlighted above. The Company also either recomposed or refreshed the membership of all of its committees.

Board Leadership Structure

Our current leadership structure splits the roles of CEO and Chairman. Our Corporate Governance Guidelines provide our Board of Directors with flexibility to select the appropriate leadership structure based on the specific needs of our business and the best interests of our shareholders. Our prior CEO served as both Chairman and CEO. When Mr. Benjamin joined the Company in April 2018 as CEO, he was appointed to our Board as a director but not as Chairman. In June 2018, prior director Robert Frankenberg resigned as our Lead Independent Director and Mr. Laret was appointed Lead Independent Director. In September 2018, the Board eliminated the Lead Independent Director role, and Mr.  Carney was appointed as Chairman when he joined the Board in September 2018.

Independence of our Board

The Board has determined that Messrs. Brennan, Carney, Ebling, Finocchio, Laret and Vaswani and Mses. Kaiser and Katz are independent under the director independence standards of the Nasdaq Stock Market LLC (“Nasdaq”) and the SEC, including Rule 10A-3(b)(1) under the Securities Exchange Act of 1934, as amended. The Board has also determined that each member of our standing committees is independent within the meaning of both Nasdaq’s and the SEC’s director independence standards. In making these determinations, the Board solicited information from each of our directors regarding whether such director, or any member of his or her immediate family, had a direct or indirect material interest in any transaction involving Nuance, or received personal benefits outside the scope of such person’s normal consideration.

There are no family relationships among any of our directors or executive officers.

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Corporate Governance Guidelines

The Board is governed by its Corporate Governance Guidelines, which were adopted by the Board in November 2016 and are available under “Corporate Governance – Governance Documents” in the Investors section of our website, www.nuance.com. These guidelines cover, among other items, the following significant topics:

Board Selection Process and Qualifications.    The Nominating & Governance Committee is responsible reviewing the skills and characteristics required of prospective Board members and is responsible for recommending to the Board candidates for directorship. Among the criteria the Board may consider are experience and diversity, and, with respect to diversity, the Board may consider such factors as gender, race, ethnicity, differences in professional background, experience at policy making levels in business, finance and technology and other areas, education, skill, and other individual qualities and attributes. While the Company does not have a formal policy with regard to the consideration of diversity in identifying Director nominees; the Board does endorse the value of seeking qualified directors from backgrounds 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 four other public companies without first obtaining specific approval from the Board. Each director is required to notify the Chairman and the Chair of the Nominating & Governance Committee upon a change in principal professional responsibilities. The Nominating & 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 75 years. The Board encourages, and the Company will reimburse the costs associated with, directors participating in continuing director education. The Board believes that term limits may result in the loss of long-serving directors who over time have developed unique and valuable insights into the Company’s business and therefore can provide a significant contribution to the Board. As a result, there are no term limits on Board service.

Board Leadership.    The leadership of the Board shall include a Chairman of the Board and, if the Chairman of the Board is an employee, a Lead Independent Director designated by the Nominating & Governance Committee. The Lead Independent Director, who shall be independent under the independence rules of Nasdaq, shall serve as the focal point for non-employee directors in resolving conflicts with the CEO, or other non-employee directors, and coordinating feedback to the CEO on behalf of non-employee directors regarding business issues and Board management.

Committees.     The current committee structure of the Board includes the following standing committees: Audit, Compensation and Nominating and Governance. Additional committees may be created or disbanded upon approval of the Board. The Nominating & Governance Committee recommends, and the full Board approves, the composition of the Board’s standing committees. 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 Composition

In fiscal year 2018, the size of the Board was expanded from seven to nine, and seven new members were appointed to the Board: Messrs. Benjamin, Brennan, Carney, Ebling and Vaswani, Ms. Kaiser and Ms. Katz.    

During the year, the Board reviewed the organization of our all of our committees, with a focus on independence and the strategic needs and direction of the Company, and made the following changes:

Prior director Mr. Janeway resigned from the Board in March 2018, and Messrs. Frankenberg, and Quigley and Ms. Martin resigned from the Board in June 2018.

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Committees of the Board of Directors

The composition, duties and responsibilities of our committees are as set forth below. Each of these committees has a written charter approved by our Board. Copies of these committee charters as well as our corporate governance guidelines are available, without charge, upon request in writing to Nuance Communications, Inc., One Wayside Road, Burlington, MA 01803, Corporate Secretary, or under “Corporate Governance – Governance Documents” in the Investors section of our website, www.nuance.com.

In January 2018, the Board consolidated the former separate Nominating and Governance Committees into a combined Nominating & Governance Committee. All members of the committees are appointed by the Board and meet the independence requirements of the respective committees on which they serve.

Functions of the Committees

Audit Committee

The Audit Committee currently consists of Messrs. Brennan, Finocchio, and Laret. Mr. Finocchio serves as Chairman of the Audit Committee. The Audit Committee held eight meetings during fiscal year 2018.

The Audit Committee is responsible for reviewing the engagement of the Company’s independent registered public accounting firm, reviewing the annual financial statements, considering matters relating to accounting policy and internal controls, reviewing whether non-audit services provided by the independent registered public accounting firm affect the accountants’ independence and reviewing the scope of annual audits.

Each of Messrs. Brennan, Finocchio and Laret is a non-employee director who meets the applicable requirements for financial literacy. The Board has determined that Messrs. Brennan and Finocchio are audit committee financial experts as defined by Item 407(d)(5)(ii) of Regulation S-K of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In addition, our Board has determined that each of Messrs. Brennan, Finocchio, and Laret meets the definition of an “independent director” for purposes of serving on an audit committee under Rule 10A-3 and the Nasdaq rules. None of our Audit Committee members simultaneously serve on the audit committees of more than three public companies, including ours.

The Audit Committee Report is included in this Proxy Statement.

Compensation Committee

The Compensation Committee currently consists of Ms. Kaiser and Messrs. Ebling and Vaswani. Mr. Vaswani serves as Chairman of the Compensation Committee. Our Board has determined that each of Ms. Kaiser and Messrs. Ebling and Vaswani meet the definition of an “independent director” under Nasdaq corporate governance standards and under the Exchange Act. The Compensation Committee held nine meetings during fiscal year 2018.

The Compensation Committee oversees, evaluates and approves compensation plans, policies and practices applicable to, and approves the compensation of, the Company’s executive officers. The Compensation Committee also administers the Company’s equity-based incentive compensation except to the extent that authority to administer the plans has been delegated to the CEO to administer such plans as to non-executive personnel. The Compensation Committee Report and the Compensation Discussion and Analysis are included elsewhere in this Proxy Statement.

The Compensation Committee retains the right to engage independent advisors to assist in fulfilling its charter and is responsible for assessing their performance and independence as required under any applicable law, regulation, or listing standard. The Compensation Committee engaged Compensia to serve as its independent advisor through August 2018. In August 2018, the Compensation Committee selected Semler Brossy as its new advisor after a formal search process. For the periods of their respective engagements, Semler Brossy and Compensia advised the Compensation Committee with respect to trends in executive compensation, review of market information, and assessment of compensation actions required under its charter.

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Neither Compensia nor Semler Brossy provided any other services to us nor received compensation from us 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 Nasdaq, the Compensation Committee has determined that its relationships with each of Compensia and Semler Brossy have not raised any conflict of interest.

Compensation Committee Interlocks and Insider Participation

None of the members of the Compensation Committee has been or is an officer or employee of the Company. In addition, 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.

Nominating & Governance Committee

In January 2018, the Board of Directors combined the previously separate Nominating Committee and Governance Committee to form a Nominating & Governance Committee. Mr. Laret serves as the Chairman of the Nominating & Governance Committee and Ms. Katz, and Mr. Vaswani serve as members. During fiscal year 2018, the Governance Committee and the Nominating Committee each held one meeting and the combined Nominating & Governance Committee held nine meetings.

The Nominating & Governance Committee oversees the corporate governance practices of the Board, including its annual self-evaluation process. It also considers and periodically reports to the full Board on matters relating to the identification, selection, qualification of candidates to serve as directors and recommends to the Board on an annual basis the candidates to be nominated by the Board for election as directors at the Company’s annual meeting of shareholders.

Consideration of Director Nominees

Shareholder Nominees

The Nominating & Governance Committee will consider properly submitted shareholder nominations for candidates for membership on the Board as well as candidates recommended for consideration by the Nominating & Governance Committee as described below under “Identifying and Evaluating Nominees for Directors.” Any shareholder 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 shareholders. In addition, shareholder nominations should be submitted within the time frame as specified under “Shareholder Proposals and Director Nominations for the 2020 Annual Meeting of Shareholders” above for inclusion in the proxy materials or agenda, as appropriate, and addressed to: Nuance Communications, Inc., Attention: Corporate Secretary, One Wayside Road, Burlington, MA 01803.

A shareholder that instead desires to merely recommend a candidate for consideration by the Nominating & Governance Committee shall direct the recommendation in writing to Nuance Communications, Inc., Attention: Secretary, 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.

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 shareholders, directors are encouraged to attend annual meetings of the Company. All seven of our then-serving directors attended the 2018 Annual Meeting in person or telephonically.

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Communication with the Board of Directors

Although we do not have a formal policy regarding communications with the Board of Directors, shareholders 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: Corporate Secretary, One Wayside Road, Burlington, MA 01803. Shareholders who would like their submission directed to a particular 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 applicable to all of our directors, officers and employees. Our Code of Business Conduct and Ethics can be found at “Corporate Governance – Governance Documents” in the Investors section of our website, www.nuance.com. 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. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Business Conduct and Ethics affecting our executive officers, we will disclose the nature of such amendment or waiver on that website or in a Current Report on Form 8-K.

Stock Ownership Guidelines

In 2006, the Board adopted stock ownership guidelines for our executive officers and the non-employee directors. These guidelines were adopted to further align the interests of our executive officers and non-employee directors with the interests of our shareholders. Under these guidelines, the target share ownership levels are five times base salary for our CEO, three times base salary for our other executive officers, and three times the annual cash retainer for our non-employee directors. Shares of Common Stock subject to outstanding and unexercised options, whether or not vested, as well as shares of 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 our Common Stock on a quarterly basis.

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 oversees management of financial risks, including investment and foreign currency fluctuation risk mitigation policies and risks. The Board’s oversight on cybersecurity includes reporting and updates from senior management and the Company’s experts in areas such as cybersecurity threats, and technologies and solutions deployed internally and for the benefit of Company’ customers and technologies, policies and procedures to address these risks. 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 has responsibility for the direct management and oversight of legal, financial, cybersecurity, privacy and commercial compliance matters, which includes identifying areas of risk and implementing policies, procedures and practices to mitigate the identified risks. Additionally, the CFO, the Chief Legal Officer and the Senior Director of Corporate Compliance provide regular reports to the Audit Committee concerning financial, tax, legal and compliance related risks and the Company’s experts report to the Board on cybersecurity. Management also provides the Audit Committee with periodic reports 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.

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Compensation Risk Assessment

In November 2018, the Compensation Committee conducted its annual review of Nuance’s compensation philosophy and strategy inclusive of compensation-related risk management. The Compensation Committee reviews the Company’s compensation programs for executives and employees, including both short term compensation and long-term equity-based incentive awards. We believe that the mix and design of the elements of our executive compensation are well balanced and do not encourage management to take or assume unreasonable risk.

Compensation of Non-Employee Directors

Non-employee director compensation is recommended by the Compensation Committee and approved by the Board. In recommending non-employee director compensation levels to the Board, the Compensation Committee generally considers market information provided and reviewed by its independent compensation consultants regarding the non-employee pay practices of the peer companies described in the Compensation Discussion and Analysis below. Cash compensation is paid quarterly in arrears. Equity awards are provided under our 1995 Directors’ Stock Plan on an annual basis, which has been approved by our shareholders. The Company also reimburses non-employee directors for their expenses in connection with their attendance at Board and committee meetings.

The structure of our annual non-employee director compensation program is outlined below:

Committee member, committee chair, independent Chairman of the Board and Lead Independent Director fees were paid in addition to the annual board service retainer. The committee chair fee is paid in lieu of the committee member fee for the chair of a committee.

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Cash and equity compensation paid to non-employee members of the Board during fiscal 2018 is outlined in the table below:

DIRECTOR COMPENSATION

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EXECUTIVE COMPENSATION, MANAGEMENT AND OTHER INFORMATION

Information Concerning Current Executive Officers

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COMPENSATION DISCUSSION AND ANALYSIS

This Compensation Discussion and Analysis section (“CD&A”) describes the material elements of our executive officer compensation programs and policies for fiscal 2018, the principles and objectives of our decisions with respect to fiscal 2018 compensation for our named executive officers (the “Named Executive Officers” or “NEOs”) and the changes we have made to better align our programs with our pay-for-performance philosophy.

Named Executive Officers

Our NEOs for the fiscal year ending September 30, 2018 are:

Current Executive Officers:

Executive Transition

Fiscal 2018 was a year of transition of our executive team. Following an extensive search process, the Board appointed Mark Benjamin as our CEO and as a member of the Board, effective in April 2018. As previously planned, our former Chairman and CEO, Paul Ricci, stepped down in March, and Daniel Tempesta, the Company’s CFO, served as our interim CEO until Mr. Benjamin’s start date. In addition:

Further information regarding the compensation decisions related to these transitions is described below.

Executive Summary

Business Overview

We are a leading provider of voice recognition and natural language understanding solutions. We work with companies around the world, from banks and hospitals to airlines, telecommunications carriers, and automotive manufacturers and suppliers, who use our solutions and technologies to create better experiences for their customers and their users by enhancing the users’ interaction and increasing productivity and customer satisfaction. In addition, our solutions increasingly utilize our innovations in artificial intelligence (“AI”), including cognitive sciences and machine learning to create smarter, more natural experiences with technology.

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Using advanced analytics and algorithms, our technologies create personalized experiences and transform the way people interact with information and the technology around them. We market and sell our solutions and technologies around the world directly through a dedicated sales force, and also through a global network of resellers, including system integrators, independent software vendors, value-added resellers, distributors, hardware vendors, telecommunications carriers and e-commerce websites.

Strategic Review

As one of the key priorities identified by Mr. Benjamin, he and the rest of the Board and management undertook a comprehensive review of our long-term strategy and our business segments. At the conclusion of the review, the Company determined the following:

Nuance Business Segments

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Fiscal 2018 Performance Update

We accelerated our efforts to position the Company for growth and long-term value creation with our comprehensive review of the portfolio, products, services and offerings of the business. While conducting this review, our performance remained strong as shown in our fiscal 2018 financial results by generating growth and meaningful cash flow. We believe our efforts and results in fiscal 2018 positions us for growth in 2019 and beyond. Some of the highlights of our performance supporting our belief include:

Additionally, we achieved the following in fiscal 2018:

A reconciliation of the non-GAAP to GAAP financial measures is set forth in Annex A to this Proxy Statement.

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Compensation Philosophy and Objectives

Our compensation philosophy was 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:

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.

Compensation Governance Practices

Our executive compensation program also includes a number of key features intended to manage compensation risk, which are highlighted below:

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Compensation Elements

In fiscal 2018, the compensation arrangements of our NEOs included the following elements:

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 annual compensation opportunities of our executive officers, including the NEOs, is variable in nature, the payment and value of which depends on our financial results.

To achieve this objective, we use performance-based annual bonuses under the AIP that may be paid out in cash or RSUs, or a combination of both, with or without additional vesting requirements. We also grant long-term incentive compensation under our Long-Term Incentive Program (“LTIP”) in the form of time-based RSUs and PSUs that are settled in shares of our Common Stock.

The performance measures we establish for the performance-based annual bonuses and the PSUs are designed to promote shareholder returns, market share increase and revenue and earnings growth.

In addition, the Compensation Committee uses a combination of different financial measures, both GAAP and non-GAAP, in designing the performance-based awards for our executive officers’ short-term and long-term incentive compensation opportunities. Our definition of these measures, as well as a discussion of how they are used in our executive compensation program, is set forth in this CD&A. A reconciliation of the GAAP to non-GAAP financial measures is set forth in Annex A to this Proxy Statement.

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2018 Shareholder Engagement

At the 2018 Annual Meeting, we received 9.7% support for the shareholder advisory vote on the compensation of our NEOs for the fiscal year ended September 30, 2017 (the “Say-on-Pay vote”). Given poor results from the shareholder advisory vote and the feedback received from shareholders following the 2018 Annual Meeting, the Board embarked on a wholesale review and redesign of our executive compensation program, led by a completely refreshed Compensation Committee.

Shareholder feedback was an essential element in the redesign of our executive compensation program. In total, following the 2018 Annual Meeting, we reached out to shareholders owning approximately 65% of our outstanding shares and spoke with shareholders owning approximately 40% of our outstanding shares, to solicit feedback on a variety of governance-related topics, including the executive compensation program changes under consideration. Our Chairman of the Board, Lloyd Carney, and our Compensation Committee Chairman, Sanjay Vaswani, participated in a majority of the discussions with shareholders.

The steps taken to ensure thoughtful responsiveness to shareholder feedback are summarized below:

Robust Process to Ensure Responsiveness to Shareholder Feedback

Shareholder feedback from these meetings was communicated to the entire Board and helped inform the Compensation Committee’s decision-making for our fiscal 2019 executive compensation program. Broadly, our shareholders expressed support for refreshing the Compensation Committee and articulating our executive compensation philosophy and principles as a guide to align executive pay with Company performance and the creation of

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long-term shareholder value. More specifically, a few common themes arose from shareholder engagement, which are described in more detail below and which were reflected in the redesign of our 2019 executive compensation programs.

Key Elements of NEO Compensation Program for Fiscal 2018 and Fiscal 2019

The Compensation Committee began the transformation of our executive compensation program in fiscal 2018 and intends to continue that progress in fiscal 2019. In designing our fiscal 2019 executive compensation program, the Compensation Committee was focused on migrating all NEOs to the same incentive structure. During the shareholder engagement process, we received consistent positive feedback regarding the design structure of Mr. Benjamin’s compensation, which incorporates many of our shareholder’s requests.

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As a result, the Compensation Committee aligned our fiscal 2019 executive compensation program for our NEOs to be consistent with Mr. Benjamin’s compensation arrangements, while incorporating further shareholder feedback solicited during the year. Below is a summary of the year-over-year changes to our executive compensation program:

Please note that because Mr. Benjamin was hired after the start of fiscal 2018, for fiscal 2018 the chart above refers to the executive compensation program for our NEOs other than Mr. Benjamin.

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Feedback Under Consideration for Fiscal 2020 Program

As discussed, our shareholder engagement efforts were integral to informing the Compensation Committee’s decisions regarding changes to the executive compensation program. Shareholders were largely complimentary of the changes the Compensation Committee was considering and understood that given that the Company is undergoing a strategic review and evaluating the proper business mix for the long-term, the executive compensation program would continue to evolve.

In connection with our outreach efforts, shareholders provided feedback for the Compensation Committee to consider in the evolution of the program:

The Board and the Compensation Committee are committed to being responsive to shareholder feedback. In light of the meaningful changes arising from the Strategic Review, including the commitment to spin off the Automotive Segment, the sale of our Imaging Business Segment and the wind down of two non-core businesses, the Compensation Committee felt the 2019 long-term incentive program structure described above would best align the full management team during this transition. The Compensation Committee plans to revisit the compensation program design in 2019 and will strongly consider this feedback as we design the 2020 executive compensation program. In advance of formalizing the 2020 executive compensation program, the Company intends to continue to engage with shareholders to further solicit their feedback.

New CEO Compensation

In March 2018, Nuance’s long-term CEO and Chairman, Paul Ricci, resigned. The Board conducted an extensive search for a new CEO and appointed Mr. Benjamin on April 23, 2018. Further details regarding Mr. Benjamin’s hiring and employment agreement can be found in the “Employment Agreement with Mr. Benjamin” section.

As mentioned above, in response to shareholder feedback through the Say-on-Pay vote as well as engagement, the Board was in the process of considering a number of changes in order to ensure our fiscal 2019 executive compensation program design was responsive to shareholder feedback. During this time, Mark Benjamin was hired and a new hire package was needed in order to recruit him as CEO. Below is a summary of Mr. Benjamin’s initial compensation arrangement, which was structured to take into account shareholder feedback received up until that point:

(1) Values based on the value of the shares underlying the awards (assuming vesting at target levels in the case of the PSUs). Please note that the value for the PSUs in the Summary Compensation Table reflects an approximately 25% higher value than the value of PSUs assuming target performance due to the assumptions used in calculating the accounting value of the award, as described in the footnotes to the Summary Compensation Table.

Additionally, in order to recruit Mr. Benjamin in light of compensation forfeited by leaving his prior employer, the Board committed to a $2 million make-whole RSU grant in fiscal 2018 and a guarantee that Mr. Benjamin’s 2019 LTIP will have a grant date fair value of at least $6 million.

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The Board believed that this level of compensation and structure was appropriate to attract a high caliber CEO with the potential to drive significant value to Nuance shareholders.

Compensation-Setting Process

Compensation-Setting Process

The Compensation Committee reviews the compensation of our executive officers, including the NEOs, 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 review process, the Compensation Committee conducts a review of the performance of each executive officer, including our CEO.

Our CEO typically presents to the Compensation Committee his evaluation of each executive officer (other than himself), which includes a review of the executive officer’s contribution and performance during the last fiscal year (compared against the performance objectives established at the beginning of the fiscal year for the executive officer), strengths, weaknesses, and development plans. Our human resources department also assists in the performance reviews of our executive officers.

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 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.

In addition, in making its compensation decisions for our executive officers for fiscal 2018, the Compensation Committee considered the competitive job market, its desire to retain our executive officers so as to not jeopardize the business transformation and the costs (both direct and indirect) associated with having to replace one or more executive officers when making its compensation decisions.

Compensation Peer Group

The Compensation Committee reviews annually the compensation for comparable positions within our industry, the historical compensation levels of our executive officers and the individual performance of our executive officers evaluated against their individual objectives established for the preceding fiscal year.

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 the case of one survey) and above $1 billion (in the case of another).

The Compensation Committee, with the assistance of Compensia, updated the compensation peer group in June 2017 to frame and evaluate the Compensation Committee’s fiscal 2018 compensation analysis. The group consisted of the following companies:

The Compensation Committee, with the assistance of Compensia, made several changes to the peer group in July 2018 for purposes of fiscal 2019 compensation analyses to adjust for M&A activity and to better align with our revenue and market capitalization. At that time, the Compensation Committee removed Autodesk, Cerner, Red Hat, Inc., VeriFone

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Systems, Inc. and Verisign, Inc. from the group used for fiscal 2019 and added Open Text, CDK Global, WEX, Dolby Laboratories, LogMein, and Pegasystems.

Fiscal 2018 Executive Compensation Actions and Decisions

During fiscal 2018, the Compensation Committee took the following actions with respect to the compensation of the NEOs:

Additionally, in December 2017, recognizing the transition the Company was undergoing, the Compensation Committee granted a one-time additional TSR PSU award to each of Messrs. Tempesta, Weideman, and Maripuri to ensure they remained focused on business operations during the leadership transition. These awards are scheduled to vest on September 30, 2019, generally subject to the applicable Named Executive Officer’s continued employment through that date, if relative TSR is at or above the 60th percentile relative to the S&P Software & Services Select Industry Index. Due to Mr. Maripuri’s separation from the Company, his award was forfeited and will not be eligible to vest. The Compensation Committee granted these Enhanced Performance Incentive Awards because it believed they would be an effective tool to promote retention among the executive team and facilitate a seamless onboarding process for Mr. Benjamin, while further aligning the executives’ interests with shareholders and incentivizing long-term value creation. The TSR PSU awards granted to Messrs. Tempesta, Weideman, and Maripuri are described in more detail below.

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Base Salary

We use base salary to provide our executive officers, including the NEOs, 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 a review of 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. Based on these considerations, the Compensation Committee approved an increase in the base salaries of Messrs. Tempesta and Siegel for fiscal 2018, which the Compensation Committee believes brought their base salaries more in line with market levels. Generally, we tie the performance-based incentive compensation opportunities and post-employment compensation arrangements for each executive officer to his or her base salary.

The base salaries of the NEOs during fiscal 2018 were as follows:

Fiscal 2018 Performance-Based Annual Bonus

Consistent with our compensation philosophy, the Compensation Committee has designed our executive compensation program to provide that a significant level of our executive officers’ compensation opportunities are performance-based. To help accomplish this objective, under our AIP, we provide for performance-based annual bonus opportunities for our executive officers, including the NEOs, based on the achievement of corporate performance objectives established at the beginning of the fiscal year.

During fiscal 2018, the Compensation Committee established performance objectives and payout targets under our AIP for our executive officers, including the NEOs, which were 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 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 annual bonus opportunity expressed as a percentage of his or her base salary. The target annual bonus opportunity for each executive officer for fiscal 2018 was determined by the Compensation Committee based, in part, on a review of market data for our compensation peer group, as well as internal pay parity considerations. The amount of each executive officer’s actual bonus payment was based on the extent to which we achieved or exceeded the pre-established target level for each performance measure (up to a maximum percentage of 125%) that may be paid to any executive officer. Our bonus program grants the Compensation Committee the authority to modify individual bonuses up or down if in the view of the Compensation Committee, such an adjustment would be appropriate under the circumstances. The Compensation Committee did not exercise such discretion with respect to fiscal 2018 bonus payouts, which were based solely on financial results.

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The target bonus opportunities of the NEOs for fiscal 2018 were as follows:

Corporate Performance Measures

For fiscal 2018, annual bonuses were to be earned based on our actual performance as measured against two equally-weighted financial performance measures: net new bookings and cash flow from operations-per-share, which the Compensation Committee determined were critical to the successful execution of our fiscal 2018 operating plan. The minimum, target and maximum performance levels for each of these measures for fiscal 2018 were as set forth below and the plan provides for interpolation between minimum and target levels, and between target and maximum levels:

For additional information on these performance measures, please refer to the GAAP to Non-GAAP Reconciliation provided set forth in Annex A to this Proxy Statement

These corporate performance measures were selected by the Compensation Committee after considering the financial objectives contained in our annual operating plan, our longer-term strategic objectives, the relationship between our annual and long-term incentive compensation plans and feedback from our shareholders concerning the selection of performance measures for our incentive compensation awards.

Fiscal 2018 Bonus Decisions

For fiscal 2018, our reported net new bookings were $1.74 million and our cash flow from operations-per-share was $1.50 per share. After reviewing these financial results, the Compensation Committee approved the payment of bonuses at 94% of the target bonus opportunity levels, based on the weighted achievement of the net new bookings target and the cash flow from operations per share target and consistent with our annual bonus plan matrix for fiscal 2018, as described above. The Compensation Committee did not exercise its discretion to adjust the notional funding level of the annual bonus pool for fiscal 2018.

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The actual bonus payments to the NEOs for fiscal 2018 were as follows:

Fiscal 2019 Annual Performance-Based Bonuses

For fiscal 2019 the Compensation Committee has approved a redesign of the AIP to put an emphasis on combination of both Company and business line financial performance, with appropriate weighting based on the participating employee’s role. The new structure of the AIP for fiscal 2019 is as follows:

*This may be based on net new bookings (NNB) or similar metrics.

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Long-Term Incentive Compensation

We provide long-term incentive compensation to our executive officers, including the NEOs, under our LTIP in the form of RSUs and PSUs. These awards are designed to align the interests of our executive officers and our shareholders 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 of generally granting at least 50% of all long-term incentive awards for each executive officer (based on the nominal number of shares underlying the award as of the grant date) in the form of performance-based equity awards that vest based on the achievement of pre-established performance measures, generally subject to the executive officer’s continued employment through the end of the performance period. The Compensation Committee believes that this provides an effective alignment of the interests of our executive officers and our shareholders.

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 that will be earned only if they remain employed with us for several years.

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 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 the section entitled “Competitive Positioning” above and replacement costs.

Design of Performance-Based Equity Awards

Annual PSU awards granted to the NEOs (other than Mr. Benjamin) in fiscal 2018 were, when granted, generally eligible to be earned and vest based on the achievement of financial measures over three one-year performance periods, generally subject to the NEO’s employment through the date the Compensation Committee certifies achievement of the applicable performance objectives. This design was intended to reflect certain characteristics of our business:

Prior to November 2018, annual PSU awards granted in fiscal 2017 that were aligned to fiscal 2019 performance objectives, and annual PSU awards granted in fiscal 2018 that were aligned to fiscal 2020 performance objectives were also subject to a modifier based on relative TSR over a three-year performance period, which could adjust the number of PSUs earned up or down by up to 25% of the PSUs otherwise earned. In November 2018, after an extensive outreach with our shareholders, the Compensation Committee eliminated this relative TSR modifier for these outstanding awards and implemented one- and two-year relative TSR performance conditions for these PSUs. As a result, outstanding PSUs granted in fiscal 2017 are now eligible to vest based on our TSR in fiscal 2019 relative to the TSR or the S&P Software & Services Select Industry Index for that period, and PSUs granted in fiscal 2018 are now eligible to vest based on our TSR from the beginning of fiscal 2019 and ending at the end of fiscal 2020 relative to the TSR of the S&P Software & Services Select Industry Index for that period.

The Compensation Committee structured Mr. Benjamin’s PSU award to be earned and vest based on relative TSR (measured against the S&P Software & Services Select Industry Index) over a 3-year performance period, at a range of 0%-200% of the PSUs subject to the award, generally subject to Mr. Benjamin’s continued employment through the end of the performance period. In addition to approving the TSR PSU awards for Messrs. Tempesta, Maripuri and Weideman and making the adjustments with respect to previously granted PSUs, each as described above, the Compensation Committee, after receiving positive feedback with respect to Mr. Benjamin’s PSU award in connection with our

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shareholder outreach efforts, approved changes to our LTIP program beginning fiscal 2019 to provide that PSUs will be earned and vest based on relative TSR (measured against the S&P Software & Services Select Industry Index) over a 3-year performance period, at a range of 0%-200% of the PSUs subject to the award, generally subject to continued employment through the date that performance is determined.

Fiscal 2018 Equity Award Decisions and Outcomes

In December 2017, the Compensation Committee approved annual equity awards for our executive officers, including the NEOs (other than Messrs. Benjamin and Ricci). As in prior years, the Compensation Committee determined that, with respect to the PSU awards granted to Messrs. Siegel, Tempesta, Maripuri, Monserrat and Weideman, it would establish the performance measures for PSUs and set target levels for such measures at or shortly after the beginning of each fiscal year covered by the award. In connection with Mr. Benjamin’s appointment as our CEO, he was granted RSUs and PSUs as described above. Mr. Ricci was not granted any equity awards in fiscal 2018.

In addition, to ensure retention during the CEO transition, as well as to maintain their focus on driving the achievement of key financial objectives, in December 2017, the Compensation Committee approved a one-time TSR PSU award for each of Messrs. Tempesta, Maripuri and Weideman. These PSU awards will vest only if we achieve or exceed the 60^th percentile of stock performance as compared to the S&P Software & Services Select Industry Index over a 2-year performance period and the NEO remains employed through the end of the performance period.

A summary of the equity awards authorized for each of our NEOs during fiscal 2018, and the achievement of performance objectives for previously-authorized equity awards with a fiscal 2018 performance period, is below. Note that the awards included in the summary below as authorized during fiscal 2018 for each NEO do not include equity awards that were authorized in previous years, even if the applicable performance objectives were determined, and the award was considered granted for accounting purposes, during fiscal 2018. For this reason, the number of shares and the dollar values listed in the tables below differ from the shares and dollar values listed in the tables that follow this CD&A. In addition, certain of the awards listed in the tables below are listed as multiple grants in such tables.

Mr. Benjamin:

On May 7, 2018, the Compensation Committee authorized the following equity awards for Mr. Benjamin:

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Mr. Tempesta:

On December 29, 2017, the Compensation Committee authorized the following equity awards for Mr. Tempesta:

On December 29, 2017, the Compensation Committee selected the performance measures and set the related target levels for the fiscal 2018 performance periods for PSU awards that were authorized for grant to Mr. Tempesta on July 21, 2015, November 20, 2015, November 15, 2016 and December 29, 2017.

On May 7, 2018, the Compensation Committee approved an adjustment to the measurement of non-GAAP earnings-per-share and the cash flow from operations target to neutralize the impact of 2017 U.S. tax reform legislation. On November 19, 2018, the Compensation Committee certified the level of achievement of the performance objectives for PSU awards with a fiscal 2018 performance period.

Details of these performance objective targets and levels of achievement are as follows:

For additional information on these performance measures, please refer to the GAAP to Non-GAAP Reconciliation provided set forth in Annex A to this Proxy Statement. Percentage achievement is based on interpolation between minimum and target and target and maximum.

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Mr. Weideman:

On December 29, 2017, the Compensation Committee authorized the following equity awards for Mr. Weideman:

On December 29, 2017, the Compensation Committee selected the performance measures and set the related target levels for the fiscal 2018 performance periods for PSU awards that were authorized for grant to Mr. Weideman on December 1, 2015, December 22, 2016 and December 29, 2017. On May 7, 2018, the Compensation Committee approved an adjustment to the measurement of the non-GAAP earnings per share target to neutralize the impact of 2017 U.S. tax reform legislation. In January 2018 the Dragon TV line of business was moved into the Enterprise segment and came under Mr. Weideman’s oversight. Mr. Weideman’s targets were not amended to reflect this change at the time of the reorganization. On November 19, 2018, the Compensation Committee certified the level of achievement of the performance objectives for PSU awards with a fiscal 2018 performance period, which at this time included a modification to the performance objectives to include the Dragon TV line of business because this was under Mr. Weideman’s leadership during this period. This adjustment positively affected the achievement of the performance objectives associated with his awards. With this adjustment, Mr. Weideman received an additional 59,653 shares. Details of the performance objective targets and levels of achievement for PSUs with a fiscal 2018 performance period are as follows:

For additional information on these performance measures, please refer to the GAAP to Non-GAAP Reconciliation provided set forth in Annex A to this Proxy Statement Percentage achievement is based on interpolation between minimum and target and target and maximum.

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Mr. Monserrat:

On February 1, 2018, prior to Mr. Monserrat being elected an executive officer, the following equity awards were authorized for Mr. Monserrat:

On March 29, 2018, prior to being elected an executive officer, the performance measures were selected, and related target levels were set for the PSU awards that were approved for grant to Mr. Monserrat on February 1, 2018. On May 7, 2018, the Compensation Committee approved an adjustment to the measurement of non-GAAP earnings-per-share to neutralize the impact of 2017 U.S. tax reform legislation. In addition, the Compensation Committee amended the segment targets for Mr. Monserrat as detailed below. Mr. Monserrat’s PSU vesting condition was originally aligned to a full-year Imaging segment target. However, because he did not commence employment with the Company until January 2018, the Compensation Committee felt it was appropriate to base the vesting of Mr. Monserrat’s award solely on achievement related to the second half of fiscal 2018 and adjusted his award accordingly. On November 19, 2018, the Compensation Committee certified the level of achievement of the performance objectives for Mr. Monserrat’s PSUs.

Details of these performance objective targets and levels of achievement are as follows:

For additional information on these performance measures, please refer to the GAAP to Non-GAAP Reconciliation provided set forth in Annex A to this Proxy Statement. Percentage achievement is based on interpolation between minimum and target and target and maximum.

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Mr. Maripuri:

On December 29, 2017, the Compensation Committee authorized the following equity awards for Mr. Maripuri:

On December 29, 2017, the Compensation Committee selected the performance measures and set the related target levels for the fiscal 2018 performance periods for PSU awards that were authorized for grant to Mr. Maripuri on December 22, 2016 and December 29, 2017. On May 7, 2018, the Compensation Committee approved an adjustment to the measurement of the non-GAAP earnings per share target to neutralize the impact of 2017 U.S. tax reform legislation. On November 19, 2018, the Compensation Committee certified the level of achievement of the performance objectives for the PSU awards with a fiscal 2018 performance period.

Mr. Maripuri’s employment terminated on September 28, 2018. Pursuant to Mr. Maripuri’s separation agreement, he is to be provided with an enhanced cash severance based on the final achievement of his fiscal 2018 performance-based awards, not to exceed 125,000 shares, which will be paid in cash on September 30, 2019, subject to compliance with certain restrictive covenants in favor of the Company and its affiliates. Please see the section named “Separation Agreement with Mr. Maripuri” for further details on his separation terms.

Details of performance measures and outcomes for Mr. Maripuri are as follows:

For additional information on these performance measures, please refer to the GAAP to Non-GAAP Reconciliation provided set forth in Annex A to this Proxy Statement. Percentage achievement is based on interpolation between minimum and target and target and maximum.

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Mr. Siegel:

On December 29, 2017, the Compensation Committee authorized the following equity awards for Mr. Siegel:

Mr. Siegel’s employment terminated on September 28, 2018. Pursuant to Mr. Siegel’s Release and Separation Agreement, performance-based equity awards that were subject to performance measurements for fiscal 2018 and thereafter were paid out as an enhanced severance payment as to 67% of the shares subject to such awards aligned to fiscal 2018 performance (with respect to 21,775 shares in the aggregate) and the remainder of such awards were forfeited upon his termination. Time-based equity awards (with respect to 32,500 shares in the aggregate) that were scheduled to vest on September 30, 2018 were paid out in an equivalent cash value using the closing price as quoted on Nasdaq on September 28, 2018 ($17.32). Please see the section named “Separation Agreement with Mr. Siegel” for further details on his separation terms.

Other Compensation-Related Information

Compensation Risk Assessment

In November 2018, 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 within market norms for our industry and that our compensation policies and practices do not create incentives to take excessive or unreasonable risk.

Stock Ownership Guidelines

In 2006, the Board of Directors adopted stock ownership guidelines for our executive officers and the non-employee directors. These guidelines were adopted to further align the interests of our executive officers and non-employee directors with the interests of our shareholders.

Required share ownership levels are five times base salary for our CEO, three times base salary for our other executive officers, and three times the annual cash retainer for the non-employee directors.

Only shares owned outright are counted towards satisfaction of the guideline. Unvested and unearned awards, do not count 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.

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As of the end of fiscal 2018, Messrs. Tempesta and Weideman had satisfied our stock ownership guidelines and Messrs. Benjamin and Monserrat (who joined the Company in fiscal 2018) had not yet. All NEOs currently employed by us are in compliance with the 25% retention requirement.

Compensation Recovery Policy (“Clawback”)

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 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.

Derivatives Trading, Hedging and Pledging Policies

We prohibit our executive officers and members of the Board 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 the Board from pledging their equity securities or using such securities as collateral for a loan.

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 protection. 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 NEOs, with certain perquisites and personal benefits, including reimbursement for tax and financial planning services, 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, certain of 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.

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

Post-Employment Compensation

The Compensation Committee has approved agreements with our CEO and certain other executive officers, including each of the other NEOs, which provide for certain payments and benefits upon certain specified terminations of employment, including certain specified terminations of employment following a change of 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.

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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 shareholder value when analyzing a potential transaction that could involve a change of control of the Company.

Further details of these agreements are outlined in the narrative following the “Potential Payments upon Termination or Change of Control” table further in this proxy.

Equity Granting Policy

We grant promotion or retention awards, or newly-hired employee equity awards, generally 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 inducement awards, which may be granted promptly following the closing of an acquisition or upon the hiring of an employee. Effective with the hiring of Mr. Benjamin, we changed the granting frequency from monthly to quarterly beginning with the July 2018 granting cycle.

Equity awards issued in lieu of paying cash for annual bonuses are granted promptly following final determination of achievement and payout levels by the Compensation Committee and vest shortly after the date of grant.

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.

Tax Considerations

Section 162(m) of the Internal Revenue Code (Section 162(m)) limits the tax deductibility of compensation for certain executive officers that is more than $1 million. Prior to the enactment of 2017 U.S. tax reform legislation, there was an exception to this deduction limitation for compensation that qualified as “performance-based compensation.” The 2017 U.S. tax reform legislation repealed the performance-based compensation exception to Section 162(m) and made certain other changes Section 162(m), generally effective for taxable years beginning after December 31, 2017. As a result, beginning in fiscal 2019, compensation paid to certain current and former executive officers in excess of $1 million in a taxable year generally will not be deductible unless such compensation qualifies for transition relief applicable to legally-binding contracts that were in effect on November 2, 2017. The Compensation Committee takes into consideration the potential deductibility of the compensation as one of the factors to be considered when establishing the Company’s executive compensation program. However, the Compensation Committee believes that its primary responsibility is to provide a compensation program that attracts, retains and rewards the executive officers and other key employees that are important to the Company’s success. Accordingly, the Compensation Committee may, in its judgment, authorize compensation payments that are limited as to tax deductibility. The Compensation Committee will continue to monitor the effect of tax reform on the Company’s executive compensation program.

COMPENSATION COMMITTEE REPORT

The Compensation Committee has reviewed and discussed with management the 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, through incorporation by reference, in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2018.

The Compensation Committee:

Sanjay Vaswani, Chairman

Thomas Ebling

Laura Kaiser

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FISCAL 2018 SUMMARY COMPENSATION TABLE

The following table sets forth, for the period indicated, the compensation earned, paid to, or received by the Company to the NEOs during fiscal 2018, fiscal 2017, and fiscal 2016.