TABLE OF CONTENTS

Each of Proposals 1, 2, and 3 will be approved if the proposal receives the affirmative FOR vote of a majority of the votes cast on the proposal.  For purposes of the election of directors, a majority of votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election.

Abstentions are considered votes cast for Proposals 2 and 3, and thus have the same effect as AGAINST votes. Abstentions are not considered votes cast for Proposal 1, the election of directors.  Broker non-votes are not considered votes cast with respect to Proposals 1 and 2, and will not affect the outcome on those matters.   With respect to the election of directors, in the event a director

does not receive a majority of the votes cast that director will be required to submit his or her resignation to the full Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board.  

Although the advisory vote to approve executive compensation is non-binding, as provided by law, our Board and the Compensation Committee will review the results of the vote and will consider the results in making future decisions on executive compensation.

Votes cast in person or by proxy will be tabulated by the inspector appointed for the Annual Meeting.  If you provide specific instructions on your proxy card, your shares will be voted as you instruct. If you do not give instructions, your shares will be voted as recommended by the Board as follows: 

We are not aware of any business to be acted upon at the Annual Meeting other than the three proposals described in this proxy statement. If you grant a proxy, the individuals named as proxy holders, Peter E. Kalan and Joseph T. Ruble, and each or either of them, will have the

discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason a nominee is not available as a candidate for director, the proxy holders will vote your proxy for such other candidate or candidates as the Board may nominate.

We will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. Our directors, executives, and regular employees, without additional remuneration, and

their appointed agents, may solicit proxies or votes in person, by telephone or by electronic communication. We will request banks, brokers, and other fiduciaries to forward proxy materials to the owners of stock held in their names and will reimburse the reasonable out-of-pocket expenses incurred in connection with that distribution.

We intend to announce voting results on a Current Report on Form 8-K filed with the SEC no later than four business days after the Annual Meeting.

Our current directors include: David G. Barnes, Ronald H. Cooper, John L. M. Hughes, Peter E. Kalan,

Janice I. Obuchowski, Donald B. Reed, Frank V. Sica, Donald V. Smith, and James A. Unruh.

The Board has determined that every Board member except Mr. Kalan, our President and Chief Executive Officer (“CEO”), is an “independent director” as defined in the applicable rule of The Nasdaq Stock Market, Inc., or NASDAQ. We believe that having a Board made up

predominantly of independent, experienced directors with independent oversight by a non-executive Chair (as further described below) benefits our Company and our stockholders.

In November 2014, the Board approved a majority voting standard in the election of directors.  Thus, in any “uncontested election” of directors (i.e., an election where the number of nominees does not exceed the number of directors to be elected), each nominee to the Board will be elected by the vote of a “majority of the votes cast,” meaning that the number of votes cast “for” a director’s election must exceed the number of votes cast “against” that director’s election.  Abstentions and broker non-votes

will not count as votes cast for purposes of this provision.  If any incumbent director does not receive a majority of votes cast in favor of his or her re-election to the Board, that director will be required to submit his or her resignation to the full Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board.  In the case of a contested election, directors will continue to be elected by a plurality vote.

We invite stockholders to send written communications to the Board or to individual Board members. Please send your letter in care of the Secretary of the Company at the address shown on the first page of this proxy statement. If a letter relates to publicly available information about the Company or our stock, the Secretary will respond to the writer directly. If a letter is primarily commercial in nature or relates to an improper or irrelevant topic, the Secretary

will make a record of it, but will not transmit the communication to the Board. Any letter that relates to accounting, internal accounting controls, or auditing matters will be forwarded to the Chair of the Audit Committee. All other letters will be forwarded to the entire Board or to the individual Board member(s) to whom they are addressed.

Historically, very few stockholders have attended the Company’s annual meetings of stockholders; almost all stockholders who vote do so by proxy. Accordingly, directors are not required to attend our annual meetings. We expect employee directors to attend if their schedules permit, and non-employee directors are welcome to attend if they wish. All of our directors except for David G. Barnes and Frank V. Sica attended our 2014

Annual Meeting. The Board has scheduled our 2015 Annual Meeting to coincide with a regular quarterly meeting of the Board so that all members present at the quarterly meeting of the Board can attend the Annual Meeting as well.

During 2014, the Board held four meetings. All directors attended at least 75% of the total number of meetings of the Board and of the committees on which they served. In

addition, the Board held four executive sessions during 2014 during which only independent directors were present.

Audit Committee

The Audit Committee is presently composed of Mr. Barnes (Chair), Ms. Obuchowski, and Mr. Reed. The Audit Committee’s primary purposes are to oversee our accounting and financial reporting processes, the audits of our financial statements, and our risk and compliance management programs.

As required by the Audit Committee Charter (located at http://ir.csgi.com/documents.cfm), all members of the Audit Committee satisfy all NASDAQ requirements applicable to audit committee members and are “independent” as defined by the rules promulgated by the SEC under the Exchange Act, and by NASDAQ. The Board has determined that Messrs. Barnes and Reed are “audit committee financial experts” as defined by applicable rules. The Audit Committee held four meetings during 2014.

Risk and Compliance Oversight. To administer our risk and compliance management program, we established a Business Risk Committee comprised of our named executive officers (“NEOs”)(see the Compensation Discussion and Analysis beginning on page 18), chaired by our Chief Financial Officer (“CFO”), and coordinated by our internal audit department. The internal audit department reports directly to the Audit Committee, and prepares a quarterly

report for the Audit Committee summarizing material existing and emerging business risks.

We also maintain a formal risk assessment and risk mitigation program that is administered by our CFO. Executive officers, in conjunction with members of our internal audit department, review this program periodically throughout the year. This program is intended to: (1) identify those risks that are most likely to affect our business; (2) assign an executive to be responsible for monitoring and mitigating those risks; and (3) provide a formal mechanism for the assigned executive to report back periodically on the adequacy and effect of mitigation efforts. The Audit Committee and the Board review the results of this program at each regularly scheduled meeting. In addition, our Chief Compliance Officer has a reporting relationship to the Audit Committee and provides a quarterly report to the Committee on compliance risks, issues, and activities.

Compensation Committee

The Compensation Committee presently is composed of Messrs. Cooper, Hughes, Sica (Chair), Smith and Unruh. The Compensation Committee’s primary purposes are to review and recommend senior management compensation and benefit policies, evaluate the performance of our executive officers, and review and recommend the compensation of our executive officers. In

addition, the Compensation Committee has independent authority to administer and grant equity awards under our equity plans and our Performance Bonus Program for executive officers. The Compensation Committee also is responsible for ongoing oversight and evaluation of our compensation policies and practices for employees generally as they relate to risk management.

As required by the Compensation Committee Charter (located at http://ir.csgi.com/documents.cfm), all members of the Compensation Committee are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986 and are “independent” as defined by the rules promulgated by the SEC under the Exchange Act, and by NASDAQ. The Compensation Committee meets at least quarterly, and held four meetings during 2014.

Determining Executive Officer Compensation and Use of Independent Compensation Consultant. To assist it with its responsibilities, the Compensation Committee retains an independent compensation consultant, consults with our CEO and Senior Vice President of Human Resources, and draws upon the extensive business experience of its members. The Compensation Committee directs the independent compensation consulting firm to prepare a comprehensive formal assessment of the competitiveness of our executive officer compensation program, including a comparison of the principal components of our program (base salaries, performance bonuses, and equity awards) with those of a peer group of other public companies. The Compensation Committee considers this assessment and other data provided by the consultant in arriving at its decisions or recommendations to the Board with respect to base salaries, performance bonuses, and long-term incentives for our executive officers. For additional information about our executive compensation program, see the Compensation Discussion and Analysis beginning on page 18.

The Compensation Committee periodically evaluates the qualifications of its independent compensation consultant. In August 2011, the Compensation Committee selected Pearl Meyer & Partners (“PM&P”) as its independent compensation consultant. During 2014, PM&P provided only executive compensation guidance to the Compensation Committee and did not provide any other services to the Company. During 2014, the Compensation Committee requested information from PM&P, our executives, and our Board members in order to assess the independence of PM&P as the Committee’s compensation consultant and to determine whether PM&P’s work raised any conflict of interest. Based on the information provided, the Compensation Committee determined that PM&P was

independent and that the work of PM&P did not raise a conflict of interest.

Determining Non-Employee Director Equity Awards. In making equity awards to our non-employee directors, the Compensation Committee considers relevant information provided by the independent compensation consultant and the recommendations of our Nominating and Corporate Governance Committee and the Board.

Risks Related to Compensation Policies and Practices for All Employees. The Compensation Committee does not believe that any risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. A number of the factors considered by the Compensation Committee when it develops executive compensation recommendations have the effect of mitigating risk. Additionally, executive officers and certain members of senior management regularly review our employee compensation policies and practices, including the elements of our compensation programs, to determine whether any element or program design encourages excessive risk taking. The Board and senior management consider the following factors that reduce the likelihood of excessive risk taking:

Compensation Committee Interlocks and Insider Participation. No member of the Compensation

Committee has ever been an officer or employee of the Company. In 2014, no member of the Compensation Committee had any relationship or transaction with the Company that would require disclosure as a “related person transaction” under SEC rules. During 2014, none of our executive officers served on the board of directors or compensation committee of any other entity whose executive officer(s) served as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee presently is composed of Messrs. Cooper (Chair), Hughes, Smith, and Ms. Obuchowski. The Nominating and Corporate Governance Committee’s primary purposes are to: (1) identify individuals qualified to become Board members; (2) recommend to the Board nominees for election as directors and directors for appointment to Board committees; (3) evaluate the Board’s performance; (4) review and recommend the compensation of our directors; and (5) develop and recommend for Board approval our Corporate Governance Guidelines and Code of Conduct.

The Nominating and Corporate Governance Committee Charter (located at http://ir.csgi.com/documents.cfm) requires that a majority of the members be independent directors. The Nominating and Corporate Governance Committee held four meetings during 2014.

What We Look for in Director Nominees. In recommending nominees for election as directors, the Nominating and Corporate Governance Committee reviews the present composition of the Board to determine the qualities, skills, and areas of expertise needed to enable the Board and its committees to properly discharge their responsibilities. The Nominating and Corporate Governance Committee utilizes the services of a leading international executive search firm with a well-established board practice to assist in the identification and recruitment of qualified director nominees.  This process supports our objective of recruiting highly qualified candidates that meet our specific criteria for skills, professional and governance experience, diversity, and the personal attributes we're seeking as discussed in more detail below. The Nominating and Corporate Governance Committee considers it necessary for the Board to have at least one independent member who qualifies as an “audit committee financial expert” and takes that requirement into account when recommending nominees. When identifying and assessing a candidate’s qualifications, the Nominating and Corporate Governance Committee considers, among other things: (1) the number and type of other boards on which

the candidate serves; (2) the candidate’s other business and professional commitments and potential conflicts of interest; (3) the candidate’s ability and willingness to devote the required amount of time to service as a Board member and as a member of one or more Board committees; and (4) the candidate’s age, background, reputation, independence, experience, skills and judgment.

Our Nominating and Corporate Governance Committee considers the diversity of the Board’s membership when nominating directors. We interpret the term “diversity” in its broadest sense and believe it encompasses many attributes, including age, background, experience, skills, substantive expertise, gender, ethnicity, geography, and education. Our Board is particularly interested in maintaining a collective group of individuals with experience in operations, finance, accounting, marketing, human resources, sales, and international business, particularly in the technology and communication service provider and related industries. We also consider whether nominees are active or retired executive officers of public or private companies and whether they have ever served on the board of a public company.

Our Board members also should display the personal attributes necessary to be effective directors: integrity, sound judgment, independence, ability to operate collaboratively, and a fiduciary commitment to the Company and our stockholders. We believe the current members of our Board have a diverse set of business and personal experiences, backgrounds and expertise, and that they all share the personal attributes described above.

Stockholder Recommended Director Candidates. The Nominating and Corporate Governance Committee will consider qualified nominees recommended by our stockholders for election as directors. A stockholder who wishes to recommend a nominee for the Board should submit the recommendation in writing to the Secretary of the Company indicating the proposed nominee’s qualifications and other relevant biographical information and providing written confirmation that the proposed nominee consents to serve as a director if nominated and elected.  See Stockholder Proposals on page 42 of this proxy statement for additional requirements and information.  Our Secretary will forward qualifying recommendations from stockholders to the Chair of the Nominating and Corporate Governance Committee for further review and consideration. Our bylaws provide that stockholder nominations for election to the Board are subject to certain advance notice and informational requirements. Stockholders may obtain a copy of the relevant bylaw provisions from our Secretary at CSG Systems International, Inc., 9555 Maroon Circle, Englewood, Colorado 80112.

Since 2005, an independent director has served as non-executive Chair of the Board. Currently, Mr. Reed serves in that position. We believe it is beneficial to separate the roles of Board Chair and CEO for two reasons: the responsibilities of each position can be clearly delineated, and each individual can devote more time to a single position.

Our Corporate Governance Guidelines permit the Board to modify this leadership structure. In the future, if the Board believes it would be in the best interest of the Company and our stockholders, the Board may decide that one person should serve as both CEO and Board Chair.

Our Board has adopted a Code of Conduct applicable to all directors, officers, and employees of the Company and our subsidiaries. Our Code of Conduct and Corporate Governance Guidelines are available on our website under Investor Relations, Corporate Governance, located at http://ir.csgi.com/documents.cfm. Information on our website is not incorporated by reference in this proxy

statement. We will disclose on our website any amendments to our Code of Conduct, or any waiver of a provision of our Code of Conduct that is required to be disclosed under applicable rules of the SEC. Historically, we have had minimal substantive changes to our Code of Conduct, and there have not been any waivers that are required to be disclosed.

There are no family relationships between any of our directors or executive officers. There are no arrangements between any director, nominee, or executive officer of the Company and any other person pursuant to which such

director, nominee, or executive officer was selected for such position. None of our directors have been involved in any legal proceedings during the past 10 years required to be disclosed in this proxy statement.

During 2014, each non-employee director of the Company received an annual fee of $75,000, payable in quarterly installments. Additionally, each non-employee director receives an annual equity grant of restricted stock as determined by the Compensation Committee, which vests on the first anniversary of the grant. The annual Chair retainers in 2014, also paid in quarterly installments, were as follows:

A director who is an officer or employee of the Company does not receive additional compensation for serving as a director or committee member. Mr. Kalan is the only current officer or employee of the Company who serves as a director, and he does not currently serve on any Board committee.

The following table contains information about the compensation of the Company’s non-employee directors

for 2014. All amounts have been rounded to the nearest dollar.

The Board established share ownership guidelines for our directors and executive officers in 2007 and amended the guidelines in 2012 and 2014. Below is a summary of the required minimum share ownership levels:  

Each executive officer is expected to attain the minimum ownership level within four years of his or her date of appointment. Directors do not have a specific timeframe to attain their share ownership requirements, but they may not sell any granted/retained shares of stock in the corporation until the requirements are met.  

Ownership levels are determined based on the common stock owned by each individual, excluding any unvested shares of restricted stock. As of February 28, 2015, each of our executive officers and directors owned shares consistent with the applicable ownership guidelines.

As part of our insider trading policy, all employees, including our executive officers, and non-employee directors (and their designees) are prohibited from engaging in short sales of our securities, establishing

margin accounts, or otherwise pledging our securities and engaging in transactions that are designed to hedge or offset any decrease in the market value of our stock.

Section 16(a) of the Securities Exchange Act of 1934 requires our officers (as defined in the applicable regulations) and directors, and persons who beneficially own more than 10% of a class of the Company’s equity securities registered under such Act, to file certain reports of ownership and changes of ownership of the Company’s equity securities with the SEC. Officers, directors, and stockholders who own more than 10% of such shares are required by SEC regulation to furnish to the Company copies of all Section 16(a) forms which they file.

Based solely on our review of the copies of such forms submitted to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our officers and directors were complied with for the year ended December 31, 2014.

Company Overview and Business Strategy

We are one of the world's largest and most established providers of business support solutions. We primarily serve the communications industry, whose businesses have evolved from a single product offering to highly complex, highly competitive, multi-service product offerings. Our solutions help service providers streamline and scale operations, introduce and adapt products and services to meet changing consumer demands, and address the challenges and opportunities brought about by changes to their businesses. Our approach has centered on using the best technology for the various functions required to provide world-class solutions.

Our business strategy is to grow our revenues, profitability, and long-term stockholder value by focusing on the following:

Our Overall 2014 Performance

We had a solid performance in 2014, delivering good financial and operational results, executing on many of our key strategic initiatives, and continuing to expand and extend our relationships with many of our clients.

Key highlights of our 2014 performance include the following:

Enhanced Capital Allocation Strategy

Our strong operating model and financial position allows us to return capital to stockholders, and also allows us to continue to invest in the long-term growth of our business.  

In February 2015, we announced a planned increase in our capital allocation to stockholders and an improvement in our capital structure, which include the following key items:

In summary, we continue to execute in a challenging business environment by delivering on our business objectives and enhancing our capital strategy.

2014 Executive Compensation Highlights

Our executive compensation program is intended to:

After considering compensation within our peer group and consulting with PM&P, the Compensation Committee (“Committee”) independently assessed the value and competitiveness of each NEO’s compensation including various pay components. Based upon their assessment, the Board and the Committee made the following decisions regarding the framework for the 2014 executive compensation program:

Base salary. The Board elected to leave our CEO’s base salary unchanged and increased the base salaries of our other three NEOs in the aggregate by 4% to make their salaries more consistent with the corresponding median levels within our peer group.

Annual incentive program. The Committee increased the CEO’s total performance-based compensation opportunity from 60% to 63%, by adjusting his Target Bonus Percentage from 150% to 200% of base salary under the 2014 Annual Performance Bonus Plan. The CEO’s maximum annual bonus opportunity is also 200% of base salary, pursuant to the terms of the stockholder approved plan. The Target Bonus Percentages for the other NEOs remained unchanged. For more information, see 2014 Compensation on page 24.

Long-term incentive program. The Committee maintained the long-term incentive, or LTI, award program with 60% of each NEO’s award granted in the form of performance-based restricted stock. Performance-based restricted stock vests ratably over three years if we achieve predetermined financial targets, or a predetermined stock price target at the end of the third year. The other 40% of each NEO’s award is in the form of time-based restricted stock that vests ratably over four years.

For more information on our executive compensation program, see 2014 Compensation beginning on page 24.

Pay-for-Performance Compensation Program

At least 55% of each NEO’s total target compensation for 2014 was based on our achievement of key financial measures under our annual and long-term incentive plans.

While we delivered on many of our key initiatives during 2014, we did not fully meet our financial targets.  As a result, our NEOs did not fully achieve their potential performance-based compensation. Our NEOs:

For more information see 2014 Compensation beginning on page 24.

2014 Say-on-Pay Results

Ninety-six percent (96%) of the votes cast at our 2014 annual meeting of stockholders approved, on an advisory basis, the compensation paid to our NEOs.  When making compensation decisions for our NEOs, the Committee considers the results of the annual advisory vote of our stockholders along with other factors, such as our pay-for-performance philosophy and a competitive market analysis of peer companies. In addition, the Committee instructed PM&P to review our base pay, annual performance bonus, and long-term incentive award programs for alignment with stockholder interests and our year over year company performance. We believe our incentive programs demonstrate a strong link between the pay of our NEOs, the Company’s performance, and stockholder returns.

Key Compensation Governance Factors

In addition to fostering a compensation program that focuses on pay for performance, we believe that the following governance and compensation practices reinforce our business strategy, culture and values.

We design performance-based compensation to reflect our business strategy and enhance stockholder value. We use revenue, Adjusted Operating Income, Adjusted Net Income, Adjusted EPS, and Stock Price measures, as the financial performance metrics for our performance pay program.  Each measure represents a key financial metric that reflects on the execution of our long-term business strategy to enhance stockholder value. For additional information about our business strategy, see Company Overview and Business Strategy on page 18.

We emphasize the long term. A significant portion of our NEOs total compensation is in the form of long-term equity awards, 60% of which is performance-based restricted stock that fully vests only if we achieve specific financial or stock price measures.

We align the financial interests of our executives with the interests of our stockholders through equity awards and share ownership guidelines. Each NEO owns at least the threshold level of our shares that is consistent with our share ownership guidelines. For additional information, see Share Ownership Guidelines on page 17.

We have a policy prohibiting hedging and pledging transactions involving our stock. Our NEOs and other insiders are prohibited from selling our stock short, pledging our stock as collateral, or entering into transactions in puts or calls that raise similar concerns regarding speculation in our stock. For additional information, see Hedging and Pledging Policy on page 17.

We provide only limited perquisites and other benefits. Our NEOs are generally eligible for few perquisites or benefits that are not available to our employees. For additional information, see the 2014 Summary Compensation Table on page 29.

We rely on the advice of an independent compensation consultant. The Committee has engaged an independent compensation consultant that does not provide any services to management and that had no relationship with management prior to the engagement.  

Determining Executive Compensation

Each year during its February meeting, the Committee certifies the following for the previous fiscal year: the level of performance attained, the amount payable under the Annual Performance Bonus plan, and the vesting levels for our performance-based restricted stock awards.  The Committee also evaluates and recommends to the Board the base salary for each of our NEOs for the current year, as well as determines the performance metrics and target levels for the current year’s Annual Performance Bonus plan and performance-based restricted stock awards. The target levels typically are established based upon our initial internal financial targets and adjusted for a pre-established growth factor for performance-based restricted stock awards that extend over a three-year period.

When making compensation decisions and recommendations, the Committee considers the following key factors:

As required by the Committee’s charter, the CEO may not be present when either the Committee or the Board discuss or vote on CEO compensation.

Role of the Independent Compensation Consultant and Management

The Committee has sole authority and discretion to retain and terminate compensation consultants, independent legal counsel, and other advisers to help the Committee perform its responsibilities. Additionally, it has the sole authority to approve the fees, scope, and other terms of engagement with its compensation consultant and other advisers, with full funding provided by the Company. The Committee is responsible for determining the

independence of its compensation consultant and other advisers. Management is available at the Committee’s request to assist the consultant by providing historical pay data and perspective on the Company’s competitive environment for recruiting managerial talent.

For 2014, the Committee engaged PM&P to advise it on executive compensation matters for the third consecutive year. The Committee instructed PM&P to take a broad view of the competitive compensation landscape to assist the Committee in structuring a compensation program for our NEOs. We believe this broader perspective has enabled us to attract and retain a highly talented executive team. PM&P reviewed compensation data available from peer company proxy statements and published survey sources using position matches and data analyses to

identify the most appropriate comparisons among executives of similar titles and responsibilities. For additional information regarding the peer group component companies and pay of our NEOs compared to the peer group, see Role of Benchmarking in Determining Compensation and Peer Group on page 22.

Compensation Mix

The compensation program for each of our NEOs includes the following components, which together comprise Total Direct Compensation: base salary, an annual performance bonus, and two types of long-term incentive awards.  The objective of each component and the form in which each is delivered if earned is outlined as follows:

Role of Benchmarking in Determining Compensation

To assist the Committee in establishing 2014 compensation for the NEOs, PM&P provided a competitive assessment using peer group compensation information and industry survey data for the primary elements of our NEO compensation packages.  PM&P developed benchmarking market data by blending the peer group and industry survey data equally.  The peer group composition is described in the next section.  The industry survey data was comprised of technology companies, represented in the Culpepper and Radford compensation surveys, with revenues ranging from $500 million to $1 billion.  

The Committee recognizes that peer group comparisons and industry survey data may not be perfectly aligned because the executive titles and responsibilities at peer group companies may not be comparable to those of our NEOs with similar or equivalent titles.

The Committee generally considers total direct compensation (including target bonus) for a NEO to be competitive if it is between the 65^th and 75^th percentile of the blended peer group and industry survey data.  To achieve the desired pay positioning, base salaries are generally targeted at the 50^th percentile and target annual performance bonus (assuming targeted performance levels are achieved) and total long-term incentive value

are generally targeted between the 50^th and 75^th percentiles.

Peer Group Used for Benchmarking

The peer group used for benchmarking is reviewed annually to ensure that its composition and characteristics remain consistent with our objectives. PM&P reviewed companies with a comparable range of annual revenue in the data processing, outsourced services, and application software industries. In addition to providing written materials to the Committee, PM&P discussed with the Committee its experiences and observations regarding the compensation practices and philosophies of other companies.

The peer group used in 2013 was also used to determine 2014 compensation. Our 2014 peer group, listed in the table below, was comprised of companies with revenues ranging in size from $223 million to $3.8 billion at year-end 2013.

The Committee approved a revised peer group in late 2014 for 2015 benchmarking purposes.  Two companies, TeleTech and SalesForce.com, were eliminated from the peer group.  TeleTech was eliminated because the company’s CEO, as a founder, receives compensation based on his founder status.  SalesForce.com was eliminated upon further consideration of revenue size and comparability of business mix.

          2014 Company Peer Group

Base Salary. We aim to provide a base salary that is:

Peer group comparisons may not align perfectly because executive responsibilities at peer group companies may not be entirely consistent with responsibilities of our NEOs with similar titles.

Annual Performance Bonus. The objectives for the annual performance bonus are to:

The Committee considered the information and advice provided by PM&P before making its own assessment and then recommended base salaries to the Board and established annual bonus targets for each of the NEOs.

Long-Term Incentive Awards. The objectives for the long-term incentive awards are to:

Our equity component includes annual grants of restricted stock, of which 60% vests ratably over a three-year period only if key financial milestones towards the three-year objectives are achieved and the remaining 40% is time-based and vests over a four-year period.

Equity grants to our NEOs generally are made annually, concurrent with their individual performance reviews. The Committee considers equity awards together with the other elements of compensation in designing compensation packages that are competitive within our peer group. Because comparative data with respect to performance-based equity awards is limited, the Committee makes an independent assessment after consultation with PM&P (based on available data and the members’ extensive business experience) as to the number of shares to grant to each NEO.

Total Direct Compensation. The Committee targets Total Direct Compensation (the sum of all three core compensation components) for our NEOs to be between 65% and 75% of our peer group’s total direct compensation. The following table shows how our NEO’s compensation levels compare (on a percentile basis) to our peer group company information for Total Direct Compensation.

Other. NEOs are eligible for substantially the same benefits as our other employees, and also may participate in our nonqualified deferred compensation plans.  For more information, see Other Benefits and Employment Agreements on page 27.

2014 Annual Base Salaries

For 2014, the Committee recommended to the Board (and the Board approved) the following base salaries:

The Board elected to leave our CEO’s base salary unchanged and increased the base salaries of our other NEOs in the aggregate by 4% to make their salaries more consistent with the corresponding median levels within our peer group.

2014 Annual Performance Bonuses

Annual performance bonuses are awarded under the terms of our Performance Bonus Plan. Each year, the Committee establishes Company objectives that apply to each NEO for the current year.

The annual performance bonus for each NEO is determined based on the following formula:

Base Salary. The starting point for each NEO’s bonus calculation is the NEO’s base salary.

NEO Target Bonus Percentage. The target bonus percentage may vary among the NEOs. After considering the competitive compensation information provided by

PM&P, the Committee decided to increase our CEO’s target bonus percentage from 150% to 200% of base salary.  The CEO’s maximum annual bonus opportunity is $1.2 million (which is 200% of his base salary).

The target bonus percentages for the other NEOs were not changed. The other NEO’s maximum annual bonus opportunity remains unchanged at 100% of their base salary. The Committee provides competitive target bonus opportunities for the NEOs and sets the annual performance goals at stretch levels.

The 2014 and 2013 target bonus percentages of base salary for each NEO are as follows:

Company Performance Percentage. The Company performance percentage, which is based on the Company’s performance against two pre-established financial performance measures, is the same for all of the NEOs. If the Company achieves the target levels of performance for both measures, the Company performance percentage achieved will be 100%.  If the Company misses the minimum threshold performance for either measure, the Company performance percentage will be zero (0%). The following table shows the Company’s performance with respect to the 2014 targets for revenue and Adjusted Operating Income:

Based on our actual 2014 performance for revenue and Adjusted Operating Income as compared to the targets, the Company performance percentage achieved was calculated at 44.4% and was certified by the Committee.

2014 NEO Individual Performance Percentage. The final component of the annual performance bonus is a determination by the Committee of each NEO’s achievement (up to 100%, which is also the maximum) of individual performance objectives. This evaluation is based upon the common and unique objectives described below. These non-financial objectives are important to our success and are designed to enhance stockholder value over the long term.

Common objectives. Common elements of NEO objectives include operational and functional responsibilities. Specifically, each NEO has multiple objectives associated with the stewardship of the NEO’s areas of responsibility. The particular objectives vary by NEO, but typically include achieving both near- and long-term business objectives and meeting budget expectations.

Unique objectives. The following are examples of categories of individual objectives unique to one or more of the NEOs based on area of responsibility within the Company:  

The Committee met in February 2015 to consider the 2014 performance of each NEO as compared to the individual’s performance goals. Mr. Kalan, our CEO, reviewed the 2014 performance of the other NEOs and presented information to the Committee for consideration. After evaluating each NEO’s performance, the Committee assigned each NEO an individual performance percentage of 100% for 2014.

The following table shows the calculation of the annual performance bonus earned by each NEO for 2014:

2014 Discretionary Bonus Awards

During 2014, we expanded and extended our contract with Comcast, our largest customer, through July 2019.  This contract provides the framework for Comcast to consolidate 10 million residential customer accounts processed by a competitor onto our billing solution over the next few years.  In February 2015 the Board approved the one-time discretionary cash bonuses set forth in the 2014 Summary Compensation Table on page 29.  The purpose of the

bonuses is to reward the executives for their contributions in connection with this contract.

2014 Long-Term Incentive Awards

The Committee historically has made restricted stock awards to our NEOs in two forms: performance-based awards that vest over a three-year period if specified performance-based criteria are met, and time-based awards that vest in equal increments on the anniversary of the

grant date over a four-year period.  In determining the number of shares of restricted stock to be granted and the balance between performance-based and time-based shares, the Committee considered market data and advice from PM&P.  See the 2014 Grants of Plan-Based Awards table on page 30 for additional information on 2014 grants.

The table below summarizes key terms of the NEOs long-term incentive awards, as well as the Company's performance compared to the financial targets, for those tranches eligible to vest for 2014 related to awards granted in 2014, 2013, and 2012.

2014 Performance Compensation Results. Based upon our 2014 financial results as certified by the Committee:

Accrued Dividends on Unvested Shares

Our restricted stock award agreements provide for the accrual of dividends for unvested shares of restricted stock.  The accrued dividends are subject to the same vesting schedule as the underlying shares and are forfeited if the underlying shares are forfeited.  The Company has paid a quarterly cash dividend since June 2013.

Other Benefits and Employment Agreements

The Committee does not believe that perquisites and other benefits should play a major role in the overall compensation program of our NEOs. We offer our NEOs the opportunity to defer a portion of their annual base salary and annual performance bonus through a 401(k) plan that is generally available Company-wide, and

through a more restricted (i.e., participation is limited to vice presidents and above) non-qualified deferred compensation program. Both of these plans include Company matching contributions. The Committee views these deferral programs as individual retirement planning options and not as long-term compensation. The amount of our contributions for each NEO is reported in a footnote to the 2014 Summary Compensation Table on page 29.

Our executive officers also have employment agreements with the Company. See Employment Agreements beginning on page 34 for additional information.

Tax Deductibility of Executive Compensation

Section 162(m) of the Internal Revenue Code limits to $1 million the amount of compensation we can deduct in any one year for compensation paid to our CEO and each of the three most highly-compensated executive officers employed at the end of the year (other than our CFO).  However, the $1 million limit generally does not apply to compensation that is performance-based and provided under a stockholder-approved plan. While the Committee considers the deductibility of compensation as one factor in determining executive compensation, the Committee also looks at other factors in making its decisions and retains the flexibility to grant discretionary awards that it determines to be consistent with the Company’s goals for our executive compensation program even if the awards are not deductible by the Company for tax purposes.