A L L I A N C E D A T A 3

Risk Committee/
Members: John C. Gerspach, Jr. Rajesh Natarajan Timothy J. Theriault	Chair: Timothy J. Theriault 2020 Meetings: 2 2020 Attendance: 100%

Following the 2020 annual meeting of stockholders, our board of directors formed the risk committee as an additional regular committee. The primary function of the risk committee is to assist our board of directors in fulfilling its oversight responsibilities with respect to our Enterprise Risk Management Framework, including:

Specifically, the risk committee's responsibilities and duties include, among others:

Throughout the year, the risk committee may meet with and receive reports from, among others, representatives of the company's independent registered public accounting firm, regulators and outside experts and the company's chief risk officer, chief security officer, general counsel, and vice president of global audit, as appropriate. These meetings and reports cover a wide variety of topics, including, among others, information technology, cybersecurity and physical security, privacy compliance, disaster recovery, operational, fraud management, human capital management, capital, liquidity and funding and data quality. As discussed further under the caption 'Risk Oversight Function of the Board of Directors' on page 9, the risk committee has the primary responsibility for overseeing the company's enterprise risk framework, receiving and reviewing at least quarterly such risk information and reporting to the full board of directors those material risks that the risk committee believes appropriate for review by the full board of directors.

Assuming the stockholders elect our director nominees, the 2021 risk committee will consist of John C. Gerspach, Jr., Karin J. Kimbrough, Rajesh Natarajan and Timothy J. Theriault, and Mr. Theriault will continue as the chair. Our board of directors has determined that all current members and nominees for the risk committee are independent and each of Messrs. Gerspach, Natarajan and Theriault possesses experience in identifying, assessing and managing the risk exposures of large, complex companies.

EXECUTIVE SESSION:

We regularly conclude our board of directors' meetings with executive sessions. First, either the board chair or the CEO leads the board of directors in a director-only executive session. After the CEO leaves the meeting, the board chair then leads the non-management members of the board of directors in an executive session. Each committee meeting may also conclude, at the election of such committee members, with an executive session. At the conclusion of each quarterly meeting of the audit committee, Mr. Gerspach, the committee chair, leads an executive session during which the chief financial officer, or CFO, the vice president of global audit and representatives of the independent registered public accounting firm may each meet separately with the committee. The risk committee may also elect to meet with the chief risk officer in executive session apart from management. The compensation committee meets in executive session to discuss compensation matters regarding the CEO.

DIRECTOR SELECTION PROCESS:

Identification and Selection of Candidates for Nomination to the Board of Directors

The nominating & corporate governance committee identifies nominees by first evaluating the current members of our board of directors willing to continue in service. The nominating & corporate governance committee developed and maintains a skills matrix to assist in the consideration of the appropriate balance of experience, skills and attributes required of a director and to be represented on the board of directors as a whole. The skills matrix is based on the company's strategic plan and is reviewed and updated by the nominating & corporate governance committee on a regular basis. The nominating & corporate governance committee evaluates candidates against the skills matrix when determining whether to recommend candidates for initial election to the board of directors and when determining whether to recommend currently serving directors for re-election. Current members of our board of directors with skills and experience that are relevant to our business and who are willing to continue in service are considered for re-nomination, balancing the value of continuity of service by existing members of our board of directors with that of obtaining relevant new skills, experience or perspective. In March 2019, on recommendation by the nominating & corporate governance committee, our board of directors adopted, and in April 2019 amended the nominating & governance committee charter to include, the 'Rooney Rule' concept - a commitment to include women and underrepresented minority candidates in every pool from which board nominees are chosen.

The nominating & corporate governance committee has two primary methods, other than those proposed by our stockholders, as discussed below, for identifying new candidates for possible inclusion in our recommended slate of director nominees. On a periodic basis, the nominating & corporate governance committee solicits ideas for possible candidates from a number of sources - members of our board of directors, individuals personally known to either our senior level executives or the members of the board of directors, and research, including subscription-based portal resources that contain search tools to identify specific skill sets, diversity and relationships of potential candidates to the company, members of management and current directors. The nominating & corporate governance committee has also from time to time used its authority under its charter to retain, at our expense, one or more third-party search firms to identify candidates. If the nominating & corporate governance committee retains one or more search firms, they may be asked to identify possible candidates who meet the minimum and desired qualifications, to interview and screen such candidates (including conducting appropriate background and reference checks), to act as a liaison among the board of directors, the nominating & corporate governance committee and each candidate during the screening and evaluation process, and thereafter to be available for consultation as needed by the nominating & corporate governance committee. Regardless of the method by which new candidates are identified, every pool from which board nominees are chosen will include women and underrepresented minority candidates, consistent with the board's adoption of the 'Rooney Rule' concept.

Further, any stockholder, or a group of up to 20 stockholders, owning continuously for at least 3 years shares of our company representing an aggregate of at least 3% of the voting power entitled to vote in the election of directors, may nominate and include in our proxy materials director nominees constituting up to 20% of our board, provided that the stockholder(s) and the nominee(s) satisfy the requirements in our bylaws. In accordance with Section 3.5 of our bylaws, for consideration at our 2022 annual meeting, such proxy access nominations must be made by notice in writing and received by our Corporate Secretary no sooner than November 15, 2021 and no later than December 15, 2021. Each such notice must comply with the requirements set forth in our bylaws. Further, a stockholder who wishes to recommend a prospective nominee for our nominating & corporate governance committee to consider for election to our board of directors may notify our Corporate Secretary as set forth below in writing with whatever supporting material the stockholder considers appropriate. Nominations and recommendations should be addressed to: Joseph L. Motes III, Corporate Secretary, Alliance Data Systems Corporation, 7500 Dallas Parkway, Suite 700, Plano, Texas 75024.

The nominating & corporate governance committee will consider all candidates identified through the processes described above, and will evaluate each of them, including incumbents, based on the same criteria. Once the nominating & corporate governance committee has identified a candidate, the committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on information provided to the nominating & corporate governance committee with the recommendation of the candidate, as well as the committee's own knowledge of the candidate, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the need for additional board members to fill current or future vacancies or expand the size of the board of directors and the likelihood that the candidate can satisfy the minimum and desired qualifications set forth in our corporate governance guidelines, as well as the applicable qualification requirements of the NYSE and the SEC. There are no firm prerequisites to qualify as a candidate for our board of directors, but we seek a diverse group of candidates who possess the requisite background, knowledge, experience, expertise and time, as well as, where appropriate, diversity with respect to race/ethnicity and gender, that would strengthen and increase the diversity, skills and qualifications of the board of directors as set forth in the skills matrix. We seek director candidates who have the time to make a significant contribution to the board of directors, to our company, and to our stockholders. Each member of our board of directors is expected to ensure that other existing and planned future commitments do not materially interfere with his or her service as a director. Directors are expected to attend meetings of the board of directors and the board committees on which they serve and to spend the time needed to prepare for meetings. If the nominating & corporate governance committee determines, in consultation with the board chair and other board members as appropriate, that additional consideration is warranted, it may request a third-party search firm to gather additional information about the candidate's background and experience and to report its findings to the nominating & corporate governance committee.

The nominating & corporate governance committee also considers such other relevant factors as it deems appropriate, including the current composition of

the board of directors, the balance of management and independent directors and the need for audit committee or other particular expertise. In connection with this evaluation, the nominating & corporate governance committee determines whether to interview the candidate, and if warranted, one or more members of the nominating & corporate governance committee, and others as appropriate, will interview candidates in person or by videoconference or telephone. After completing this evaluation and interview, and the evaluations of other candidates, the nominating & corporate governance committee makes a recommendation to the full board of directors as to the persons who should be nominated, and the board of directors determines the nominees to recommend to our stockholders after considering the recommendation and report of the nominating & corporate governance committee and, in some cases, conducting additional interviews with such candidates.

DIRECTOR SUCCESSION AND RETIREMENT POLICY:

Director succession planning is also a focus of the nominating & corporate governance committee with an emphasis on striking a balance between board refreshment and the need for new or additional skill sets with maintaining the institutional knowledge about our business and operating history. Our corporate governance guidelines provides a mandatory retirement age of 75, but allow directors turning 75 to complete their term. Our guidelines also allows the nominating & corporate governance committee and the board of directors to nominate for re-election a director who has surpassed the age of 75 if it is in the best interests of the company and its stockholders. The average age of our director nominees standing for election at this year's annual meeting of stockholders is 61, and no nominee is near the mandatory retirement age at this time.

RISK OVERSIGHT FUNCTION OF THE BOARD OF DIRECTORS:

Management is responsible for the day-to-day handling of risks our company faces, implementing and supervising risk management processes and policies and reporting regularly to the board and its committees. Ultimately, our board of directors, as a whole and through its committees, maintains responsibility for the oversight of risk management. In June 2020, the risk committee of the board of directors assumed the primary responsibility for overseeing our enterprise risk framework, evaluating the risk information provided by our chief risk officer and reporting to the full board of directors those material risks appropriate for escalation that might adversely affect the achievement of our strategic, financial, compliance, operational and enterprise objectives.

Our chief risk officer oversees a risk management group consisting of enterprise risk personnel, including risk advisors dedicated to each business segment. Collectively, this group works with the segment business leaders and their

subject matter experts to identify, assess, respond to and monitor internal and external risks. Further, consideration is given to interrelated risks and emerging risk themes across the enterprise to provide an integrated risk view and enhanced reporting to the risk and audit committees regarding key risks faced by the enterprise and highlighting those critical risks that may be appropriate for deeper review by the board of directors, based on a combination of the likelihood of occurrence of the risk, the potential impact of the risk and the utilization of mitigating controls. This summary is provided to the risk and audit committees and the board of directors and reviewed in-depth with the risk and audit committees at least semi-annually. In addition, the board of directors is informed of each committee's risk oversight and related activities through regular in-meeting updates from each committee chair and committee meeting minutes are available for review by any director. Finally, on at least an annual basis, our board of directors reviews our long-term strategic plans, including discussion of strategic, operational and competitive risks.

For a discussion about risk oversight in our compensation program design, see 'Assessment of Risk in Compensation Program Design' contained in Compensation Discussion and Analysis on page 27.

BOARD OVERSIGHT OF INFORMATION SECURITY, INCLUDING CYBERSECURITY AND DATA PRIVACY:

Data Privacy

We are committed to the responsible handling of personal information, and we balance our product development activities with a commitment to transparency, fairness and non-discrimination. We designed our multi-layered information security and data privacy programs and practices to ensure the security and responsible use of the information and data our stakeholders entrust to us. Our programs leverage third-party assessments and advice regarding best practices from consultants, peer companies and advisors. We closely track proposed privacy legislative and regulatory changes and adjust the program as the privacy landscape evolves.

Information Security, including Cybersecurity

Our information security program, based upon the NIST Cybersecurity Framework, deploys a defense-in-depth strategy to ensure that security is an integral part of our technology investment. An essential component of our program is a regular cadence of tabletop exercises, associate training, testing associates through phishing simulations, and retraining when necessary. We maintain an active network of collaboration with law enforcement, industry groups, Information Sharing and Analysis Centers, and peers in the areas of threat intelligence, response and detection, and program best practices. We continuously assess the risks and threats and dynamically adjust our program and investments as required.

Director and director nominee Independence:

We have adopted general standards for determination of director independence that are consistent with the NYSE listing standards. For a director to be deemed independent, the board of directors must affirmatively determine that the director has no material relationship with us or our subsidiaries, affiliates or any member of our senior management or his or her affiliates. Our board of directors annually reviews the independence of its non-employee directors and we disclose the board's determination in the proxy statement for each annual meeting of our stockholders. In making this determination, the board of directors considers relationships and transactions during the past three years between each director or any member of his or her immediate family, on the one hand, and our company, our subsidiaries, affiliates and senior management, on the other hand. For relationships not covered by certain bright-line criteria set forth in the listing standards of the NYSE, the determination of whether the relationship is material and, therefore, whether the director would be independent, is made by the board of directors. Directors have an affirmative obligation to inform the board of directors of any material changes in their circumstances or relationships that may impact their designation as 'independent.' Additional independence requirements established by the SEC and the NYSE apply to members of the audit committee and compensation committee.

The board of directors undertook a review of director independence and considered transactions and relationships between each of the director nominees and us (including our subsidiaries, affiliates and senior management). The audit committee and board of directors reviewed Ms. Kimbrough's status as a current employee of LinkedIn Corporation, a subsidiary of Microsoft Corporation. Alliance Data engages in business transactions with LinkedIn and Microsoft. The payments made by Alliance Data to Microsoft during the past three years fall below the NYSE independence standards' thresholds of materiality for a director who is a current employee of a company to which Alliance Data made, or from which Alliance Data received, payments, and Ms. Kimbrough had no direct or indirect material interest in those transactions. As a result of this review, the board of directors affirmatively determined that none of Ballou, Gerspach, Kimbrough, Natarajan, Theriault, Tucker or Turney has a material relationship with us and, therefore, each is independent as defined by the rules and regulations of the SEC and the listing standards of the NYSE.

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS:

Since the beginning of the last fiscal year, the company has not entered into any transactions, nor are there any proposed transactions, in which the company was, or is to be, a participant and in which any related person had or is expected to have a direct or indirect material interest.

Our board of directors has adopted a written related party transactions policy, which prohibits us from entering into any 'related party transaction' unless the audit committee approves such transaction in accordance with the guidelines set forth in the policy, or the transaction is approved by a majority of disinterested directors of the company. In approving any related party transaction, the audit committee must determine that the transaction is beneficial to the company and the terms of the related party transaction are fair to the company.

For purposes of our related party transactions policy, a 'related party' is: (1) any director, director nominee or executive officer of the company; (2) any five percent or greater stockholder of the company; or (3) any immediate family member of any of these persons. A 'related party transaction' includes any transaction (including any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness)), or series of related transactions, or any material amendment to any such transaction, in which the company, or any of its subsidiaries, is a participant, the aggregate amount of which exceeds $120,000 and in which the related party has or will have a direct or indirect material interest (other than solely as a result of being a director or a less than 10 percent beneficial owner of another entity). Our related party transactions policy deems the following transactions to be pre-approved and does not require further review: (1) compensation of directors that has been approved in accordance with the compensation committee charter; (2) employment and compensation of an executive officer that has been approved in accordance with the compensation committee charter; (3) a transaction in which the interest of the related party arises solely from the ownership of a class of the company's equity securities and all holders of that class receive the same benefit on a pro rata basis; (4) transactions involving certain indemnification payments and payments under directors and officers liability insurance policies; (5) a transaction in which the rates or charges involved therein are determined by competitive bids; (6) a transaction that involves services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services; and (7) certain company charitable contributions.

At each audit committee meeting, management shall recommend any related party transactions, if applicable, to be entered into by the company. After review, the audit committee shall approve or disapprove such transactions and at each subsequently scheduled meeting, management shall update the audit committee as to any material change to those approved transactions. The audit committee shall establish such guidelines as it determines are necessary or appropriate for management to follow in its dealings with related parties in related party transactions.

All related party transactions of which management is aware are required to be disclosed to the audit committee. If management becomes aware of an existing related party transaction that has not been pre-approved by the audit committee, management is required to promptly notify the chair of the audit committee and such transactions shall be submitted to the audit committee for its review and determination of whether to ratify such transaction. If management, in consultation with the company's CEO or CFO, determines that it is not practicable to wait until the next audit committee meeting, the chair of the audit committee has the delegated authority during the period between audit committee meetings, to review and determine whether any such transaction should be approved, or ratified, as the case may be. The chair of the audit committee shall report to the audit committee any transactions reviewed by him or her pursuant to this delegated authority at the next audit committee meeting.

STAKEHOLDER ENGAGEMENT:

Stakeholder engagement remains an important part of our corporate governance practices and is essential to our ongoing business transformation.

The board and management value our stockholders' opinions and feedback. We regularly engage in meaningful dialogue with our stakeholders through our quarterly earnings calls, investor meetings and conferences and other channels for communication. We use the information and viewpoints gathered in our discussions to help inform our governance practices, including the board refreshment plan developed and implemented by the nominating & corporate governance committee.

In 2020, aligned with the commencement of our CEO's tenure, we conducted an investor perception study to solicit strategic guidance for our stockholder communications, obtain insights into company perceptions, identify significant value drivers and establish a benchmark from which we can measure our progress.

Additionally, in 2020, we conducted a broader perception survey inclusive of a more wide-ranging list of stakeholders. The purpose of this assessment was to identify ESG priorities to help us achieve the following objectives: assess ESG priorities and understand why they matter; engage associates and external stakeholders to gain insight and alignment on priorities; prioritize sustainability reporting standards to continue strengthening our disclosure; identify key performance metrics, and draft goals from which targets can be established.

COMMUNICATIONS WITH THE BOARD OF DIRECTORS:

We welcome and encourage stockholder communication with the board of directors. The board of directors provides a process for stockholders and interested parties to send communications to the board of directors or any individual director. Stockholders and interested parties may forward communications to the board of directors or any individual director through the Corporate Secretary. Communications should be addressed to Joseph L. Motes III, Corporate Secretary, Alliance Data Systems Corporation, 7500 Dallas Parkway, Suite 700, Plano, Texas 75024. All communications will be compiled by the office of the Corporate Secretary and submitted to the board of directors or the individual directors on a periodic basis. The Corporate Secretary, however, reserves the right not to forward any abusive, threatening, or otherwise inappropriate communications. Stockholders and interested parties may also submit questions or comments to the board of directors through our Corporate Ethics Office by email at [email protected] or, on an anonymous basis if desired, through the Ethics Helpline at (877) 217-6218 or www.alliancedata.ethicspoint.com. Concerns relating to accounting, internal control over financial reporting or auditing matters will be brought to the attention of the audit committee and handled in accordance with our procedures with respect to such matters.

CODE OF ETHICS:

We have adopted codes of ethics that apply to our senior financial officers, our board of directors and our associates. The Alliance Data Systems Code of Ethics for Senior Financial Officers, the Code of Ethics for Board Members and the Code of Ethics for associates are posted on our website, found at http://www.alliancedata.com. A copy of each is also available upon written request directed to Joseph L. Motes III, Corporate Secretary, Alliance Data Systems Corporation, 7500 Dallas Parkway, Suite 700, Plano, Texas 75024. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding an amendment to or waiver from a provision of our code of ethics, if any, by posting such information on our website.

POLITICAL CONTRIBUTIONS AND ACTIVITY:

Engagement in political, legislative and regulatory processes can be important to the success of the company. The company works to educate government officials and impact legislative and regulatory matters (at the federal and state levels) on issues important to the best interests of the company and its associates, customers, and clients. This effort often involves working with industry partners and outside consultants and, at times, engaging directly with government officials and their staffs. The company has adopted a Political Contributions and Activity Policy that sets forth the ways by which the company and its associates may participate in political, legislative and regulatory processes. All political contributions and activities comply with applicable laws, and we disclose our contributions publicly as required by law.

Eligible associates may also voluntarily participate in the political process by supporting the company's non-partisan political action committee, the Alliance Data Political Action Committee, or ADPAC, which is governed by comprehensive federal regulations that require the filing of reports with the Federal Election Commission among other reporting and disclosure requirements. Following the January 2021 political violence and election-related controversy in Washington, D.C., the ADPAC board suspended contributions and will periodically reassess the situation to determine when and on what criteria contributions will be resumed. Our general counsel provides compliance and oversight for the company's political engagements. For further information, please see our Political Contributions and Activity Policy, available on our website at http://www.alliancedata.com.

SUSTAINABILITY STRATEGY:

The nominating & corporate governance committee of our board of directors is responsible for overseeing and advising management on the company's sustainability strategy, policies and programs. Alliance Data recognizes that to grow our business and prosper over time, we must meet the needs and evolving expectations of a broad range of stakeholders, including clients, customers, associates, stockholders, regulators, policy makers and our communities. The nominating & corporate governance committee will continue to work with management to further develop the company's ESG policies and programs and provide transparent reporting on ESG metrics.

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PROPOSAL ONE:

election of directors

Our nominating & corporate governance committee evaluated and recommended to our board of directors, and our board of directors has nominated, the following eight individuals, Ralph J. Andretta, Roger H. Ballou, John C. Gerspach, Jr., Karin J. Kimbrough, Rajesh Natarajan, Timothy J. Theriault, Laurie A. Tucker and Sharen J. Turney, for election as a director, each to hold office for a term of one year until the annual meeting of stockholders in 2022 and until his or her respective successor is duly elected and qualified. With the exception of Ms. Kimbrough, each of the director nominees is currently serving as a member of our board of directors. Ms. Kimbrough was recommended to the nominating & corporate governance committee by a third-party search firm.

SKILLS MATRIX AND DESCRIPTION OF DIRECTOR KNOWLEDGE, SKILLS AND EXPERIENCE:

The matrix below provides information regarding our nominees' knowledge, skills and experience that are most relevant in light of our company's business, long-term strategies and risks. Additional description regarding each of these categories is available in the key following this matrix. All of the nominees listed in the matrix currently serve on our company's board of directors, except Ms. Kimbrough. Our nominees represent a broad range of backgrounds and experience, and each nominee possesses numerous competencies not identified below. The fact that a nominee is not designated as having a particular attribute does not indicate that the nominee does not possess that attribute or would not be able to make a meaningful contribution to the board's decision-making or oversight in that area. Demographic information regarding our nominees is also included in the matrix.

	Accounting / Auditing / Risk Management. As a public company conducting business globally, our complex accounting and financial reporting functions are subject to a rigorous program of controls and procedures and our board plays an important role in oversight of our robust audit and enterprise risk management organizations. Directors with experience in these areas are critical to evaluating and providing effective oversight of our financial statements and financial reporting and our management of the risks inherent in our business operations.			Human Capital / Compensation. The success of our enterprise depends in part on our ability to attract, retain and develop top leaders and a high-performing workforce in markets that are highly competitive for available talent. Directors who have board-level experience with public company executive compensation and broad-based incentive planning, or who have managed or overseen the human resources/compensation function at an operating company help position our company for success in these areas.
	Business Operations. Our business is complex, employing approximately 8,000 associates and using sophisticated technologies to provide data-driven marketing, loyalty and payment solutions to large, consumer-based businesses in a variety of industries across the globe. Directors with 'hands-on' experience developing and implementing operating plans and business strategies at companies with similarly sophisticated business operations have a practical understanding of how such organizations operate in increasingly sophisticated and disruptive competitive environments.			Independence. Independent directors are uniquely situated to provide unbiased oversight of our management and to work with our senior leaders to develop our company's strategic plans. Our board currently consists of, and if all of the director nominees to serve on the board are elected at the annual meeting, will continue to consist exclusively of independent directors, other than the CEO. All directors currently serving on the board's audit, compensation, nominating & corporate governance and risk committees are independent, and if all of the director nominees are elected at the annual meeting, each of those committees will continue to be populated exclusively by independent directors.
	CEO / Executive Leadership. Executive leaders have an understanding of organizations and the drivers of individual and team growth and development. Directors with experience serving as a CEO or senior executive enhance the board's perspective of our organization's operations and challenges.			Information Technology / Cybersecurity / Privacy. Our data-driven business depends on the effective use of complex information technology systems, the safeguarding of data from cybersecurity risks and the protection and responsible, transparent use of consumer data in accordance with applicable privacy regulations and good stewardship practices. Directors with experience implementing or overseeing sophisticated technology and technology strategies, the management and mitigation of cybersecurity risks and compliance with privacy regulations help ensure proper risk management and oversight of these important drivers of our business.
	Corporate Governance / Ethics. We are an ethics-driven organization, and our board - and in particular the nominating & corporate governance committee - provides a foundation for and oversight of our integrity-based culture. Our board's good governance practices and our company's focus on ESG matters and sustainability benefit from directors who are well-informed with respect to today's dynamic governance and ethics environment and who have experience serving on the nominating & corporate governance or comparable committees of other boards.			International Operations. We conduct business worldwide and have associates and offices in many countries located outside of the United States. The quality of our board's oversight and strategic guidance is enhanced by directors whose understanding of diverse business environments, economic conditions and cultures has been informed by service as a director or senior leader at one or more companies with international operations.
	Corporate Finance / Capital Management. Our corporate finance activities include debt and equity market transactions and stock repurchase programs. We allocate capital in various ways to run our operations, grow our business and return value to stockholders. Director experience in these areas is important for effective oversight of our company's financial affairs.			Mergers & Acquisitions. We have a history of undertaking significant acquisitions and dispositions and may continue to do so in the future. Board members with experience in material M&A transactions enhance the decision-making underlying strategic M&A activities and ensures informed oversight of the processes attendant to completing complex transactions.
	Financial Expertise / Literacy. Our business involves complex financial transactions, accounting and reporting requirements. Directors with an understanding of finance and financial reporting processes are able to effectively monitor and assess our operating and strategic performance and ensure accurate financial reporting and robust controls. Substantially all of our nominees are financially literate and two of our nominees satisfy the 'accounting or related financial management expertise' criteria set forth in the New York Stock Exchange listing standards.			Other Public Company Board Experience. Public companies must comply with a variety of complex accounting, disclosure and other compliance obligations, and public company boards have significant oversight and other duties. Directors with experience serving on the boards and board committees of other public companies understand public company reporting responsibilities, corporate governance trends and practices and other issues commonly faced by public companies, and have insight into board operations, board/management relations, agenda setting, succession planning and other board duties and activities.
				Relevant Industry Experience. Our board's nominating & corporate governance committee uses a skills matrix to identify the diverse skills and experience our board needs to address the dynamic environment in which we operate our business. Directors with experience in industries in which we or our customers operate provide us with a better understanding of the challenges and opportunities facing our business.

2021 DIRECTOR NOMINEES AND PROPOSED COMMITTEE MEMBERSHIPS:

international operations. Our board of directors believes Mr. Gerspach's expertise, particularly with respect to banking, financial, audit, risk management and global operations, will benefit our business and the board's overall mix of skills, making him well-qualified for re-election as a director.
KARIN J. KIMBROUGH /	Compensation Committee • Risk Committee
Age: 52
Ms. Kimbrough is a nominee for director. Ms. Kimbrough has served as the chief economist for LinkedIn Corporation since January 2020. She served as the assistant treasurer for Google, Inc. from October 2017 to December 2019. Prior to that, Ms. Kimbrough served as a managing director and head of macroeconomic policy at Bank of America Merrill Lynch from December 2014 to October 2017. Ms. Kimbrough was employed by the Federal Reserve Bank of New York from 2005 to October 2014, serving as vice president and the director for the financial stability market monitoring function in the markets group from 2010 to October 2014 and as a manager for analytical development from 2005 to 2010. Prior to that, Ms. Kimbrough served as an economist and strategist, foreign exchange desk, at Morgan Stanley from 2000 to 2005. Ms. Kimbrough is currently a director of Fannie Mae, where she serves as a member of the audit committee, compensation committee and nominating and corporate governance committee. Ms. Kimbrough holds a Bachelor's degree from Stanford University, a Master's degree in public policy from Harvard University and a PhD in economics from the University of Oxford. Ms. Kimbrough's qualifications include executive-level experience as an economist focused on consumer trends and financial markets, and expertise in financial stability risks assessments, capital markets and financial markets, including serving as a public company board member and as a member of public company audit, compensation, and nominating and corporate governance committees. Our board of directors believes that Ms. Kimbrough's significant expertise in the banking, financial services, data and technology industries will benefit our business and the board's overall mix of skills, making her well-qualified for election as a director.
RAJESH NATARAJAN /	Nominating & Corporate Governance Committee • Risk Committee
Age: 51
Mr. Natarajan has served as a director since June 2020. Mr. Natarajan has served as the executive vice president of products and engineering of RingCentral, Inc. since December 2020. He served as the executive vice president and chief product and technology officer of Ancestry.com from February 2017 to November 2020. He served in senior leadership positions with increasing responsibility in the areas of technology and product development at Intuit, Inc. from 2014 to 2017, including as senior vice president and chief information security and fraud officer, and at PayPal Holdings, Inc. from 2006 to 2014, including as vice president, platform engineering and operations. Prior to that, Mr. Natarajan was employed by Sabre Holdings Corporation, where he served in various management positions with increasing responsibility in the area of technology from 1995 to 2006, including as an early member of the development team that founded Travelocity.com. Mr. Natarajan holds a Bachelor's degree in mechanical engineering from Jawaharlal Nehru Technology University in India and a Master's degree in industrial engineering from Clemson University. Mr. Natarajan's qualifications include executive experience in roles requiring expertise in information technology, cybersecurity, engineering, operations and product development. Our board of directors believes Mr. Natarajan's expertise, particularly with respect to business operations, technology development, information technology and cybersecurity, will benefit our business and the board's overall mix of skills, making him well-qualified for re-election as a director.
TIMOTHY J. THERIAULT /	Audit Committee • Risk Committee (Chair)
Age: 60
Mr. Theriault has served as a director since October 2016. Mr. Theriault served as an advisor to the chief executive officer of Walgreens Boots Alliance, Inc. from June 2015 until November 2016. Prior to that, he served as executive vice president and global chief information officer of Walgreens Boots Alliance, Inc. from July 2014 to June 2015. He served in senior leadership positions with increasing responsibility at Walgreen Co. from October 2009 to July 2014, including as senior vice president and chief information, innovation and improvement officer. Prior to that, Mr. Theriault was employed by Northern Trust Corporation, where he served in various executive and management positions with increasing responsibility in the area of information technology from May 1991 to October 2009 and July 1982 to October 1989. Mr. Theriault served as director of end user computing and advanced technologies for S. C. Johnson & Son, Inc., from October 1989 to May 1991. He currently serves as a director and a member of the financial & investment and compliance committees of Wellmark Blue Cross and Blue Shield. Mr. Theriault previously served as a director of Vitamin Shoppe, Inc. from 2016 until its acquisition in 2019 and was lead director of the Depository Trust Clearing Corporation. Mr. Theriault holds a Bachelor's degree from Illinois State University and completed the Harvard Business School advanced management program. Mr. Theriault brings significant expertise in information technology and cybersecurity to our board. Together with his financial sophistication, banking, global operations, risk management and compensation experience gained as a senior executive in the financial services, health care and retail industries and service on public company boards, including as a member of public company audit and compensation

committees, Mr. Theriault's expertise and experience broaden the board's skill set and enhance its ability to understand and oversee risk, including those associated with information technology, cybersecurity and bank regulatory matters. The board of directors believes Mr. Theriault is well-qualified for re-election as a director.
LAURIE A. TUCKER /	Compensation Committee • Nominating & Corporate Governance Committee (Chair)
Age: 64
Ms. Tucker has served as a director since June 2015. Ms. Tucker has served as the founder and chief strategy officer for marketing consultancy firm, Calade Partners LLC since January 2014. Ms. Tucker served as the senior vice president-corporate marketing of FedEx Services, Inc., a subsidiary of FedEx Corporation, a public company engaged in transportation, e-commerce and business services, from 2000 to 2013 and was employed by FedEx in various capacities of increasing experience and responsibilities since 1978. Ms. Tucker currently serves as a director, a member of the audit committee, and the chair of the corporate governance and nominating committee of Forward Air Corporation. Ms. Tucker holds a Bachelor's degree and an MBA from the University of Memphis. Ms. Tucker's qualifications include financial and compensation expertise, global operations experience and strong leadership skills developed as a public company board member, including as a member of public company audit, compensation and nominating and corporate governance committees, and as a senior executive serving in various roles at a large multinational public company. These credentials, together with her expertise and experience in e-commerce, retail, technology, customer service and corporate marketing, add significant value to the board of directors and make Ms. Tucker a well-qualified candidate for re-election as a director.
SHAREN J. TURNEY /	Compensation Committee (Chair) • Nominating & Corporate Governance Committee
Age: 64
Ms. Turney has served as a director since June 2019. Ms. Turney served as the chief executive officer of Russia-based jeans brand Gloria Jeans from November 2018 until November 2019, and as a director of Sweden-based designer sock and underwear brand Happy Socks AB from January 2018 until November 2019. She served as president and chief executive officer of Victoria's Secret, a division of publicly-traded national retailer L Brands, Inc., from July 2006 until February 2016, and as president and chief executive officer of Victoria's Secret Direct, the brand's catalogue and e-commerce arm, from May 2000 until July 2006. Prior to that, Ms. Turney served for 10 years in various executive roles including president and chief executive officer of Neiman Marcus Direct, the direct marketing division of luxury brand retailer Neiman Marcus Group. Ms. Turney served as a director of M/I Homes, Inc. from January 2011 until February 2018, a director of FULLBEAUTY Brands from July 2016 to September 2018 and a director of Nationwide Children's Hospital, Inc., including as chairman of the board of its Research Institute, from 2012 to 2018. She holds a Bachelor's degree from the University of Oklahoma and serves on the Baker Retailing Center Industry Advisory Board at Wharton School at the University of Pennsylvania. Ms. Turney is currently a director of the University of Oklahoma Foundation, where she serves as a member of the investment committee. Ms. Turney has also served as an advisor to several retailers and technology companies. Ms. Turney's qualifications include executive and/or board-level experience in the retail industry, including as an executive officer of a Fortune 500 fashion retailer, loyalty, marketing and digital/e-commerce expertise, global operations experience, service on public company boards, including as a member of public company compensation and nominating and corporate governance committees, financial expertise and executive leadership at companies operating in industries relevant to our business. Our board of directors believes Ms. Turney's expertise, particularly with respect to her retail and digital/e-commerce marketing experience, will benefit our business and enhance our understanding of our customers' businesses, making her well-qualified for re-election as a director.

ROLE OF PROXIES IN ELECTION OF DIRECTORS:

John J. Chesnut and Laura Santillan, and each of them, as proxies, will have full discretion to cast votes for other persons in the event any nominee is unable to serve. Our board of directors has no reason to believe that any nominee will be unable to serve if elected. If a quorum is present, directors are elected by a majority of the votes cast, at the meeting or by proxy. This means that the eight nominees will be elected if they receive more 'For' votes than 'Against' votes. In accordance with Section 3.3.1 of our bylaws, any nominee who is currently serving as a director and does not receive a majority of votes cast shall immediately tender his or her resignation for consideration by our board of directors. Our board of directors will evaluate whether to accept or reject such resignation, or whether other action should be taken. The board of directors will publicly disclose its decision to accept or reject such resignation and its rationale within 90 days from the date of certification of the director election results.

EXECUTIVE OFFICERS

TIMOTHY P. KING/ Executive Vice President • Chief Financial Officer • Age: 58
Mr. King, executive vice president and chief financial officer, joined us in June 2010 and assumed his current position in June 2019. Prior to assuming his current position, he served as chief administrative officer and chief financial officer for our Card Services segment. Before joining the company, Mr. King served as vice president and director of finance at HSBC from January 2001 to June 2010. Prior to that, from April 1995 to January 2001, he served as first vice president at MBNA. Mr. King holds a Bachelor's degree from Colorado College and an MBA from the Amos Tuck School of Business at Dartmouth College. Mr. King holds a master of accountancy and was a Certified Public Accountant.
	TAMMY M. MCCONNAUGHEY / Executive Vice President • Operations and Credit Risk, Card Services • Age: 47
	Ms. McConnaughey, executive vice president, operations and credit risk, Card Services, joined us in June 1992. Ms. McConnaughey has served in senior leadership positions within our Card Services business with increasing responsibility over her nearly thirty-year tenure across collections, customer care and credit risk, most recently as senior vice president of operations and credit risk, Card Services.
JOSEPH L. MOTES III / Executive Vice President • Chief Administrative Officer • General Counsel • Secretary • Age: 59
Mr. Motes, executive vice president, chief administrative officer, general counsel and secretary, joined us in July 2015 and assumed his current executive vice president and chief administrative officer position in June 2019 while continuing as general counsel and secretary. Before joining the company, Mr. Motes was with Akin, Gump, Strauss, Hauer & Feld, LLP for nearly 20 years, and was the partner and lead relationship manager for Alliance Data. Mr. Motes holds a Bachelor's degree in geology from Trinity University and a J.D. from Southern Methodist University Dedman School of Law, where he served as editor-in-chief of the SMU Law Review.
	LAURA SANTILLAN/ Senior Vice President • Chief Accounting Officer • Age: 49
	Ms. Santillan, senior vice president and chief accounting officer, joined us in February 2004 and assumed her current position in February 2010. Ms. Santillan has served in various capacities of increasing responsibility, including as senior vice president, finance since December 2009 and vice president, finance since October 2007. Before joining the company, she served as senior manager of reporting for Dresser, Inc. from February 2002 to February 2004 and director of financial reporting for Wyndham International, Inc. from 1997 to 2002. Prior to that, she was with Ernst & Young LLP from 1993 to 1997. Ms. Santillan holds a Bachelor's degree from Southern Methodist University and is a Certified Public Accountant in the state of Texas.

COMPENSATION

COMMITTEE REPORT

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement.

This report has been furnished by the current members of the compensation committee.

Timothy J. Theriault

Laurie A. Tucker

Sharen J. Turney, Chair

COMPENSATION

DISCUSSION AND ANALYSIS

OVERVIEW:

We consider our total executive compensation package integral to our ability to grow and improve our business. In determining appropriate compensation for our executive officers, the compensation committee uses the philosophy and methodologies described in this Compensation Discussion and Analysis. By design, we have tailored, with the guidance of external compensation consultants, a mix of compensation elements appropriate for our business. Our executive compensation program is structured at competitive levels and is designed to reward executive officers when the company achieves above industry-average performance. Our program, however, is also structured to significantly reduce rewards for performance below expectations. In certain instances, additional compensation considerations may be essential to enable the compensation committee to attract and retain the right leaders to guide and execute strategic initiatives in critical periods or challenging business environments. The compensation committee believes that this holistic approach will attract, retain and motivate executive officers with the quality and profile required to successfully lead the company and each of its segments in our highly competitive and evolving industries.

Our compensation programs, practices and policies are reviewed and evaluated on an ongoing basis to address evolving best practices and changing regulatory requirements. We list below some of the more significant best practices we have adopted and the practices we have avoided.

Key Executive Management Changes in 2020

The board of directors implemented a leadership transition beginning in 2019 pursuant to succession planning undertaken in anticipation of the divestiture of our Epsilon® segment, which was completed on July 1, 2019, and additional initiatives designed to simplify the company's narrative and focus capital on our highest earning and growth assets. The culmination of this leadership transition resulted in continuing realignment of our named executive officers, or NEOs, as described in additional detail below.

CEO Succession. Effective February 3, 2020, Ralph J. Andretta was appointed president, chief executive officer and a director. Charles L. Horn, who had transitioned from executive vice president and chief financial officer to executive vice president and vice chairman of the company in June 2019, served as acting CEO during the interim period pending Mr. Andretta's appointment. Following Mr. Andretta's appointment, Mr. Horn continues to serve as executive vice president and senior advisor, providing valuable continuity with a current focus on international operations, operating efficiencies and strategic initiatives.

Other Executive Management Appointments. In June 2020, Valerie E. Greer joined us as senior vice president and chief commercial officer, Card Services where her responsibilities include the growth and profitability of the Card Services segment through attracting and retention of brand partners and card members. Tammy M. McConnaughey, a nearly 30-year veteran with Alliance Data, oversees functions extending from customer care operations to credit risk management. Due to their pivotal performance in 2020 and the instrumental place in the success of the Card Services segment that represents a substantial portion of our business, the board of directors promoted both Ms. Greer and Ms. McConnaughey to the executive management team as executive vice president, chief commercial officer, Card Services and executive vice president, operations and credit risk, Card Services, respectively.

Objectives of Compensation

The objectives of our executive compensation program are to compete for top executive talent to lead our company and complete strategic initiatives, to retain current executive officers, to reward our executive officers for meeting our growth and profitability objectives and to align the interests of our executive officers with those of our stockholders. Total direct compensation for our executive officers in 2020 was a combination of three components:

We use each component of compensation to satisfy one or more of our compensation objectives. The compensation committee places a significant portion of the overall target compensation for our executive officers 'at risk' in the form of performance-based non-equity incentive compensation and long-term equity incentive compensation, without encouraging excessive or unnecessary risk-taking. According to the survey results provided by our external executive compensation consultant, our target percentage of executive compensation 'at risk' for 2020 was

consistent with our proxy peer group.

Retention. We believe that continuity in our executive leadership is critical to long-term success. To encourage executive retention and foster a focus on long-term results, the vast majority of the long-term equity incentive compensation granted to our executive officers is subject to multi-year vesting schedules. In addition, the compensation committee has occasionally granted special retention awards designed to encourage retention of our executive officers. In 2021, the compensation committee granted long-term equity incentive compensation to our executive officers with a three-year performance period to incentivize continuous growth and improvement in our return on equity metric. Further details of these compensation practices are included on page 31 under the caption 'Elements of Executive Compensation.'

Pay for Performance. A confluence of factors sparked change in our pay-for-performance approach in 2020, beginning with the appointment of a tenured financial-industry executive as our new CEO, the onset of a global pandemic and new board leadership, including both the board chair and the chair of the compensation committee. Historic focus on both (1) revenue and earnings before taxes, or EBT, growth to incentivize company performance; and (2) objective relative total stockholder return, or rTSR, aligned the interests of our NEOs and other executive officers with the interests of our stockholders in creating long-term value. We retained these elements. However, in response to concerns expressed by associates putting forth substantial efforts to respond to pandemic-induced challenges as well as feedback from new executive management, the compensation committee, in consultation with its external executive compensation consultant, reviewed alternatives and made changes. First, the compensation committee broadened the scope of our annual performance incentives through the introduction in August 2020 of a balanced scorecard that encompasses a broad array of both financial and non-financial metrics important to all stakeholders-inclusive of stockholders, customers, associates, collectors, and consumer accountholders.

Further, in response to feedback from proxy advisors, for 2021, the compensation committee both (1) selected a new financial metric for long-term equity incentive compensation to differentiate from, and not overlap with, those financial metrics utilized in annual performance-based non-equity incentive compensation; and (2) established a three-year performance metric with cliff-vesting at the end of the full three-year performance period. The compensation committee selects target performance measures for annual performance-based non-equity incentive compensation as well as long-term equity incentive compensation that it believes are integral to achieving both growth and profitability objectives. Further, performance-based compensation generally pays out or vests only upon achievement of a threshold performance target, while also establishing stretch targets. Further details of these compensation practices are included on page 31 under the caption 'Elements of Executive Compensation.'

Assessment of Risk in Compensation Program Design. The compensation committee reviewed the design of our compensation program for both our executive officers and other officers and key contributors who receive performance-based compensation and assessed the potential for our compensation program to encourage excessive risk-taking. The compensation committee considered the following characteristics of our compensation program, among others:

•	a balance of both short- and long-term performance-based incentive compensation;

•	a balance within equity incentive compensation of both time-based restricted stock units and performance-based restricted stock units, some of which may also be subject to further time-based vesting restrictions;

•	the use of multiple performance metrics in incentive compensation, utilizing both consolidated and business unit-specific performance measures that include a mix of financial and non-financial objectives;

•	the definition of performance metrics at the beginning of the performance period, which may include adjustments for significant corporate events;

•	inclusion of maximum payout limitations under our omnibus incentive plans;

•	stock ownership guidelines applicable to certain key executives;

•	standardized equity grant and forfeiture procedures;

•	ability of the compensation committee to apply discretion in determining payouts for incentive compensation; and

•	clawback provisions contained in various executive compensation plans and agreements.

As a result of this review, the compensation committee believes that the design of our compensation program provides multiple, effective safeguards against, and does not promote, unnecessary or excessive risk-taking that is reasonably likely to have a material adverse effect on Alliance Data.

Prohibitions on Hedging and Pledging of Our Securities. Our insider trading policies prohibit directors, executive

officers and associates, together with certain of their family members and controlled entities, from engaging in hedging transactions with respect to our securities. These prohibited transactions include the use of financial instruments, including prepaid variable forward contracts, equity swaps, collars and exchange funds, that are designed to hedge or offset any decrease in market value of such person's holdings in our equity securities. Furthermore, our insider trading policies prohibit directors, executive officers and designated associates, together with certain of their family members and controlled entities, from (i) trading in puts, calls or other derivative securities; (ii) engaging in short sales with respect to our securities; (iii) holding our securities in a margin account; and (iv) pledging our securities as collateral for a loan. These policies help to ensure that the interests of our directors, executive officers and associates remain aligned with those of our other stockholders.

Clawback Provisions. Under the 2020 Omnibus Incentive Plan, 2015 Omnibus Incentive Plan and 2010 Omnibus Incentive Plan, if our financial statements are required to be restated due to errors, omissions, fraud or misconduct, the compensation committee may direct the company to recover all or a portion of any award or any past or future compensation from any participant or former participant with respect to any fiscal year of the company for which financial results are negatively affected by such restatement. Such recoveries will be limited to those participants or former participants who had knowledge or reasonably should have had knowledge of such errors, omissions, fraud or misconduct and failed to take reasonable steps to bring it to the attention of the appropriate individuals, or who personally and knowingly engaged in practices that materially contributed to the restatement. Further, under the 2020 Omnibus Incentive Plan, 2015 Omnibus Incentive Plan and 2010 Omnibus Incentive Plan, the compensation committee has the authority to cancel or require repayment of an award in the event a participant or former participant breaches any non-solicitation, non-competition or confidentiality agreement entered into with us.

Alignment with Stockholders. We believe that our executive officers should maintain at least a minimum position in our common stock so that their interests are aligned with those of our stockholders. Our stock ownership guidelines require our executive officers to maintain an investment position in our common stock equal to a multiple of his or her base salary. With compliance measured from the date of hire or promotion, the stock ownership guidelines include shares owned outright, vested but unexercised stock options and 70% of unvested time-based restricted stock units. Further, until compliance is achieved, executive officers must hold at least 50% of net shares acquired at vesting and are restricted from selling below the compliance threshold thereafter. While no burn-in period is provided prior to measuring compliance, the board of directors expects executives to reach the prescribed thresholds within five years.

As of February 26, 2021, all current NEOs have holdings that meet or exceed the guidelines, except for Mr. Horn, who had notified the company of his intention to retire from his position as executive vice president and chief financial officer in 2019, but has continued his service in an advisory role at the request of the board of directors and has not received a stock award as part of his compensation since 2018.

2020 'Say-on-Pay' Advisory Vote on Executive Compensation. At our 2020 annual meeting of stockholders, stockholders expressed substantial support at 94% approval for the 'say-on-pay' advisory vote on the compensation of our NEOs. We believe these results represent strong investor support for our overall compensation philosophy and decisions. The compensation committee evaluated the results of the 2020 'say-on-pay' vote together with the other factors discussed in this Compensation Discussion and Analysis. These factors included the committee's assessment of retention of executives, alignment of performance targets with growth and profitability objectives and the analysis of pay practices of our proxy peer group, each of which is evaluated in the context of the committee's fiduciary duty to act as such directors determine is in the best interests of our stockholders. Based on its analysis, the compensation committee did not make any changes to the executive compensation program or policies as a direct result of the 2020 'say-on-pay' advisory vote. However, in light of the efforts of executive management and associates across the enterprise to respond to the unprecedented challenges presented by the pandemic, the compensation committee undertook a comprehensive review of market conditions following the completion of the 2020 annual meeting of stockholders and seating of the new board chair and chair of the compensation committee. Based on the unique conditions experienced in 2020 and the continuing uncertainties in macroeconomic conditions and forecasts, in mid-August 2020, the compensation committee took the unique step of establishing a new annual performance-based non-equity incentive compensation plan in the form of balanced scorecards. These balanced scorecards encompassed a range of both

financial and non-financial metrics keyed to three categories, stockholders, customers and associates. Further, in response to feedback from proxy advisors and in consultation with its external executive compensation consultant, for 2021, the compensation committee both (1) selected a new financial metric for long-term equity incentive compensation to differentiate from, and not overlap with, those financial metrics utilized in annual performance-based non-equity incentive compensation; and (2) established a three-year performance metric with cliff-vesting at the end of the full three-year performance period only. See 'Looking Forward: Fiscal Year 2021 Long-Term Incentive Compensation' on page 38.

We currently provide stockholders an annual 'say-on-pay' advisory vote on the compensation of our NEOs and will continue to do so through our next stockholder advisory vote regarding the frequency of holding advisory votes on executive compensation, which will be no later than our annual meeting of stockholders in 2023.

Determining Compensation

Role of the Compensation Committee. The compensation committee reviews and approves the compensation for our non-CEO executive officers from the time of their hire or promotion to such roles, and, together with the other independent directors, approves the compensation of our CEO. The compensation committee typically sets the total direct compensation for our executive officers near the beginning of each year. This timing allows us to consider the performance of the company and each potential recipient in the prior year, as well as expectations for the upcoming year. Performance-based short-term non-equity incentive compensation and long-term equity incentive compensation targets and scales are established and grants are awarded as early as practicable in the year, contingent upon the availability of the prior year's financial results, to maximize the time period over which the applicable performance incentives apply. Consistent with our practice of granting equity-based awards for new hires, promotions and associates that have joined the company as a result of a merger or acquisition on a date certain each month (currently the 15th of each month or the next business day), long-term equity incentive compensation awards for executive officers are made on February 15 (or the next business day) of each year, or such other pre-determined date following release of the company's earnings for the prior fiscal year as is appropriate. In the event there exists material information that we have not yet disclosed, the compensation committee may delay or defer the grant of any equity-based awards until all disclosures are current. Material changes to pay levels for individuals are typically made only upon a significant change in job responsibilities.

With the appointment of a new CEO in early 2020 and continuation of the leadership transition, the compensation committee, or with respect to the CEO, the board of directors, approved compensation levels in early 2021 for those executive officers previously identified and for each newly designated executive officer at the time of their promotion or shortly thereafter. For our new executive officers named in this leadership transition, their compensation, prior to consideration by the compensation committee or the board, remains consistent with our philosophy of compensating all associates on a competitive basis with a mid-market target for all skilled positions in all geographic locations based on relevant peer or industry group data. Some amounts may be higher or lower based on factors such as skill levels, performance, seniority, workload, span of control, retention considerations and institutional knowledge. For additional information on the process for establishing compensation, see 'Elements of Executive Compensation' on page 31 and 'Competitive Considerations' below. In addition, aligned with the aforementioned compensation objectives and our industry peers, the compensation committee considered the strategic direction of new executive leadership in addition to the impact of the COVID-19 pandemic on our operations and, in mid-August 2020, determined that it was in our and our stockholders' best interests to adopt a new balanced scorecard design for 2020 annual performance-based non-equity incentive compensation where financial and non-financial metrics were set. Please see 'Annual Performance-Based Non-Equity Incentive Compensation' on page 31 for additional information.

Role of the Chief Executive Officer. Typically, our CEO makes compensation recommendations to the compensation committee with respect to our non-CEO executive officers. The compensation committee may accept or adjust the CEO's recommendations in its sole discretion and also makes a recommendation regarding the CEO's compensation to the full board of directors. The CEO does not make any recommendations to the compensation committee or to the board of directors relating to performance measures, targets or similar items that affect CEO compensation. Moreover, the CEO is recused from discussions of CEO compensation during board of directors and compensation committee meetings.

Role of the Compensation Consultant. In 2020, the compensation committee directly engaged the assistance of an external executive compensation consultant, Meridian Compensation Partners, LLC, or Meridian, for its industry knowledge and experience in advising on executive compensation matters. The compensation committee has considered and assessed all relevant factors, including, but not limited to, those set forth in Rule 10C-1(b)(4)(i) through

(vi) under the Securities Exchange Act of 1934, as amended, that could give rise to a potential conflict of interest with respect to Meridian. Based on this review, we are not aware of any conflict of interest that has been raised by the work performed by Meridian. In particular, Meridian assisted the compensation committee in 2020 with competitive market analysis, peer assessment, consultation and review of compensation policies and practices.

Competitive Considerations

In determining appropriate levels of compensation, the compensation committee considers the competitive market for talent and compensation levels provided by comparable companies to minimize significant differences that could negatively impact our ability to attract and retain skilled executive officers. As mentioned above, the compensation committee engaged Meridian to, among other things, assist with competitive market analysis and peer assessment. For conducting market review, Meridian formed and surveyed two data sets: a general industry group and a proxy peer group. The general industry group encompasses companies of similar size based on revenue. The proxy peer group consists of public companies that are currently monitored as competitors or are in similar industries and have similar revenue or market capitalization.

Proxy Peer Group. Meridian reviewed the compensation practices for the proxy peer group set forth below with whom we compete for business and talent. This approach provides us with a balanced perspective, reflecting industry, performance and company size considerations as they affect executive pay. Meridian collected, analyzed and presented comprehensive market data, including base salary and target short- and long-term incentive amounts, for each of our executive officers, including our then current NEOs, from both published proxy data and proprietary data sources.

For 2020, the companies comprising the proxy peer group included:

Proxy Peer Group Assessment and Changes for Fiscal Year 2021. In November 2020, the compensation committee, with the assistance of Meridian, reviewed the companies comprising the proxy peer group. At that time, in preparation for determining executive compensation packages for fiscal year 2021, the compensation committee selected the same 15 proxy peer companies listed above, with the only change being the addition of Capital One Financial Corporation and the removal of Popular, Inc. for 2021.

Market Review. Market data provides an important benchmark by indicating what an executive officer could expect to earn at a comparable company and what we might expect to pay if we should have to recruit and compete for outside executive talent. Market data, however, is only one factor that the compensation committee considers in assessing the reasonableness of compensation provided to our NEOs. The compensation committee also considers other relevant factors, including an NEO's experience, breadth of knowledge, talent supply and demand that may be industry or application specific, cost constraints, internal compensation equity considerations, company performance, individual performance, expected future contributions, prior compensation and retention risk for each NEO.

Based on publicly available data in December 2019 when the compensation determinations for 2020 were made, our market capitalization was below the 25^th percentile and our annual revenue was below the 50^th percentile for this proxy peer group; our one-year total stockholder return was below the 25^th percentile relative to the proxy peer group.

When conducting the market review, the compensation committee reviews each component of compensation in relation to certain percentiles of both the proxy peer group and the general industry group surveyed. Generally, the compensation committee targets at the 50^th percentile each component of our NEOs total direct compensation (base salary plus target performance-based non-equity incentive compensation plus target long-term equity incentive compensation). However, the compensation committee may set any element of an NEO's total direct compensation above or below the 50^th percentile based on factors such as an NEO's skill level, performance, seniority, workload, span of control, retention considerations and institutional knowledge. We believe compensation provided to our NEOs, vis-à-vis the proxy peer group and the general industry group companies surveyed, is appropriate given our performance record and the tenure of our executive officers. Actual performance above or below each of the established targets for our performance-based non-equity incentive compensation and long-term equity incentive compensation results in actual compensation that may be higher or lower than the target percentiles. See discussion for results of non-equity incentive compensation and long-term equity compensation under 'Annual Performance-Based Non-Equity Incentive Compensation' on page 31 and 'Long-Term Equity Incentive Compensation' on page 35.

ELEMENTS OF EXECUTIVE COMPENSATION:

The main elements of our executive compensation program are base salary, an annual performance-based non-equity incentive and a long-term equity incentive, the majority of which is performance-based.

Base Salary

While a meaningful portion of our NEOs and other executive officers' compensation is contingent upon meeting specified performance targets, we pay our executive officers a base salary as fixed compensation for their time, efforts and commitments throughout the year. To aid in attracting and retaining qualified executive officers, the compensation committee seeks to keep base salary competitive by considering, among other factors, the nature and responsibility of the position and, to the extent available, salary norms for persons in comparable positions at our proxy peer group; the expertise of the individual; and the competitiveness in the market for the executive officer's services.

Annual Performance-Based Non-Equity Incentive Compensation

The purpose of performance-based non-equity incentive compensation is to provide an incentive to our NEOs and other executive officers to contribute to our annual growth and profitability objectives and to retain such executive officers. The compensation committee focuses on matching rewards with results and encourages executive officers to make significant contributions toward our financial results by providing a basic reward for reaching threshold expectations, plus an upside for reaching our aspirational goals.

Overview. At the beginning of 2020, consistent with its precedent approach, the compensation committee set performance targets for consolidated and segment revenue and EBT related to payout of our annual performance-based non-equity incentive compensation. With the onset of the global pandemic in the first quarter of 2020, these performance targets quickly became unattainable as every facet of our business from consumer lending to coalition and short-term loyalty programs were impacted by the sudden and complete global shutdown of travel and commercial activity. By contrast, efforts of executive officers and associates across the enterprise ramped up-responding immediately to shift 95% of the workforce to work-from-home while simultaneously implementing forbearance programs to meet the needs of consumer accountholders stressed by widespread furloughs and layoffs; expanding hours of customer care operations; working with customers to shift marketing and program timing; and adding reward options for collectors. As pandemic restrictions endured and supply chains were strained, efforts ensued to create targeted programs and strategies with our clients to drive both in-store and ecommerce sales. Quick adaptation to pandemic-related challenges resulted in successful achievement of significant sequential improvement in our financial results from the low point experienced in the second quarter of 2020 through the fourth quarter of 2020.

In addition, 2020 represented a year where Alliance Data planned to undertake significant change through strategic investments in innovation and additional capabilities to improve our competitive positioning and consumer accountholder experience. Those initiatives continued and through the perseverance of both the executive

management team and associates, were achieved, including launch of the Enhanced Digital Suite℠, the selection of Fiserv for a core processing platform and launch of the two-year transition process, the acquisition of Bread® and the offering of new Comenity-branded financial products such as the cash-back Comenity Card℠.

In light of the efforts of executive management and associates across the enterprise to respond to the unprecedented challenges presented by the pandemic, the compensation committee undertook a comprehensive review of market conditions following the completion of the 2020 annual meeting of stockholders and seating of the new board chair and chair of the compensation committee. Further, our new CEO introduced the balanced scorecard approach to annual incentive compensation utilized at peer financial industry companies. To achieve equitable compensation for the extensive effort by associates across the enterprise to respond to the COVID-19 business environment, the compensation committee, together with executive management and relevant business leaders, designed a set of five balanced scorecards to provide greater ownership across a range of metrics and clarity in a time of significant disruption. The five sets of balanced scorecards encompass a selection of both financial and non-financial metrics keyed to up to three categories, including stockholders, customers and associates, as appropriate, for each of the corporate, Card Services, banking, AIR MILES® and BrandLoyalty portions of the business. The inclusion of non-financial targets allows us to equally prioritize initiatives of significance in value-creation, for example, risk, control and regulatory matters, customer and client relationships and human capital management. Only two of these balanced scorecards apply to our NEOs as discussed below.

Based on the unique conditions experienced in 2020 and the continuing uncertainties in macroeconomic conditions and forecasts, in mid-August 2020, the compensation committee, in consultation with its external executive compensation consultant, took the unique step of establishing a new annual performance-based non-equity incentive compensation plan in the form of balanced scorecards, setting threshold and/or target goals at levels it considered appropriately rigorous. At the time of establishing these new plans, the compensation committee was aware that the performance-based long-term equity incentive compensation measured on EBT would be forfeited for failure to achieve the targets established in early 2020 that were identical to those originally established in the annual performance-based non-equity incentive compensation plan being replaced. As discussed above, the compensation committee does not believe that the targets set for each of these metrics promote unnecessary or excessive risk-taking that is reasonably likely to have a material adverse effect on Alliance Data.

Balanced Scorecards. The tables below set forth the various metrics established for the corporate and Card Services balanced scorecards on which Messrs. King and Motes and Ms. McConnaughey were compensated. Messrs. Andretta and Horn and Ms. Greer are discussed in 'Other Non-equity Incentive Plan Arrangements for 2020' below.

For each balanced scorecard performance metric, measurement was either pass/fail or based on threshold and target levels of achievement. Payout for the balanced scorecards provides for equal weighting of each metric within the scorecard categories of stockholder, customer and associate, as applicable, with the results for the categories weighted as shown in the tables. For those metrics that were not simply pass/fail, the compensation committee established threshold and target levels with the target equating to the 100% payout level and no payout exceeding 100% even in the case of significant overperformance. Threshold refers to the minimum acceptable level of performance and target is the desired level of performance. For performance that exceeds the threshold but does not meet the target, payout increases ratably until the target is reached. For each scorecard metric, payout is determined by assigning scores, either a 0, 0.75 or 1, assigned for performance, multiplied by the category weighting and added together for total payout percentage. Performance below the established threshold and ratings of 'fail' received a score of 0; performance that met or exceeded the threshold, but did not meet the target, received a score along the range from 0.75 to 0.99; and performance that met or exceeded the target and ratings of 'pass' received a score of 1. Establishing a maximum payout amount under our non-equity incentive plan deters excessive risk-taking, while having an equitable payout amount that can be earned at a defined performance threshold encourages goal attainment. No payout is made for performance below the minimum threshold.

2020 Balanced Scorecard Results. Metrics in the corporate balanced scorecard were met or exceeded in each case, resulting in 100% achievement as shown above. The corporate balanced scorecard applied to each of Messrs. King and Motes. Metrics in the Card Services balanced scorecard were met or exceeded in each case other than revenue, which fell between the established threshold and target, calculating to greater than 98% achievement to which the compensation committee applied its discretion to increase payout to 100% for this population based on its view that revenue was negatively impacted by certain regulatory changes to promotional interest plans as well as continuing macroeconomic factors affecting late fee revenue and waivers. The Card Services balanced scorecard applied to Ms. McConnaughey.

Other Non-equity Incentive Plan Arrangements for 2020. For Mr. Andretta, who was appointed president and CEO effective February 3, 2020, annual non-equity incentive plan compensation for 2020 remains as set forth in his offer letter, with a target payout percentage at 150% of annualized base salary with 20% linked to strategic and operational objectives established by the board and 80% at the board's discretion in early 2021. For Ms. Greer, who joined us in June 2020, annual non-equity incentive plan compensation for 2020 was guaranteed by her offer letter discussed in more detail below under the heading 'Other Plans or Agreements Governing Executive Compensation - Offer Letter to Valerie E. Greer,' with a target payout percentage at 150% of annualized base salary. Mr. Horn, who in 2018 first announced his intention to retire from the company in 2019 and served as acting CEO beginning in November 2019 and through Mr. Andretta's appointment, continues to serve as executive vice president and senior advisor with a focus on international operations, operating efficiencies and strategic initiatives. In 2020, the compensation committee provided a separate annual non-equity incentive plan for Mr. Horn with a payout of up to a maximum of 200% of his base salary at the compensation committee's discretion in light of the fact that Mr. Horn received no long-term equity incentive compensation in 2019 or 2020.

The compensation committee approved payout of $1,300,000 in annual performance-based incentive compensation for Mr. Horn based on his contributions leading the LoyaltyOne® segment in re-positioning their programs to respond to the pandemic, including efforts to streamline current and future reward inventory sourcing at BrandLoyalty as well as adapting rewards available through the AIR MILES Reward Program to items focused on home fitness and entertainment in lieu of travel. Further, the compensation committee recognized Mr. Horn's valuable contributions to strategic initiatives, including the acquisition of Bread.

For Mr. Andretta, the board of directors approved a 100% payout with respect to both of his annual performance-based non-equity incentive compensation plan components based on his performance guiding the company through continuing pandemic constraints while building the framework for future success through the addition and recognition of future leadership, protection of the balance sheet, maintenance of appropriate liquidity and capital ratios and expansion of capabilities and product offerings.

Performance Measurement and Awards Granted for Fiscal Year Ended 2020. The compensation committee, and the board of directors with respect to the CEO, approves the performance goals and incentive levels for each of our NEOs and assigns a relative weighting to each performance measure under our non-equity incentive compensation plan. The following tables set forth the individual calculations for the non-equity incentive plan compensation payouts for the 2020 performance year. NEOs typically have a target payout amount that approximates a percentage of his or her annualized base salary. As described above, payout of annual performance-based non-equity incentive plan compensation for our NEOs is generally contingent upon meeting segment-specific and/or consolidated targets, which this year are linked to the applicable balanced scorecard. Target amounts for non-equity incentive plan compensation subject to the applicable balanced scorecard for each of Mr. King, Ms. McConnaughey and Mr. Motes are set at 100% of their respective base salaries.

The target non-equity incentive plan compensation for each of Ralph J. Andretta, Valerie E. Greer, Charles L. Horn, Timothy P. King, Tammy M. McConnaughey and Joseph L. Motes III is set forth in the first column of the following table. The actual non-equity incentive plan payout percentage, prior to the adjustments to such payouts discussed below, are set forth in the middle column of the following table.

Discretionary Adjustments. Our CEO may recommend to the compensation committee adjustments with respect to each payout of performance-based non-equity incentive compensation (other than with respect to CEO's own payment amount). The compensation committee may adjust the payout of performance-based non-equity incentive compensation of the executive officers other than the CEO, and the board of directors may adjust the CEO's payout

of performance-based non-equity incentive compensation, as well as that of any other executive officer. In determining whether and to what extent any such discretionary adjustments will be made, the compensation committee or board of directors, as applicable, typically considers the value provided by the relevant executive officer, as demonstrated by the challenges addressed and particular expertise required of such executive officer during the fiscal year. For 2020, both the compensation committee and the board of directors, as applicable, made adjustments to the performance-based non-equity incentive compensation for certain of our current named executive officers. For each of Ms. McConnaughey and Mr. Motes, the compensation committee elected for certain discretionary increases of approximately 10-15% to their balanced scorecard payouts. For Ms. McConnaughey, the compensation committee recognized her results in the areas of fraud reduction and management of credit losses. For Mr. Motes, the compensation committee recognized his leadership, strategy and advisory roles during the executive transitions, particularly with regard to guidance for new executives in leadership roles in a public company, in addition to the assumption of new responsibilities as chief administrative officer. For Mr. Andretta, the board of directors elected for a 50% increase to his annual performance-based non-equity incentive compensation payout based on his performance discussed above in guiding the company through continuing pandemic constraints while building the framework for future success through the addition and recognition of future leadership, protection of the balance sheet, maintenance of appropriate liquidity and capital ratios and expansion of capabilities and product offerings.

Looking Forward: Fiscal Year 2021 Annual Non-Equity Incentive Compensation. The compensation committee plans to continue the utilization of balanced scorecards in 2021, with all NEOs other than Mr. Horn, for whom the opportunity to earn up to a maximum of 200% of his base salary at the discretion of the compensation committee continues.

Long-Term Equity Incentive Compensation

We grant long-term equity incentive awards to encourage retention and foster a focus on long-term results, as well as to align the interests of our NEOs and other executive officers with those of our stockholders. In granting these awards, the compensation committee may establish such restrictions, performance measures and targets as it deems appropriate. Awards of long-term equity incentive compensation pay out only upon attainment of a threshold level of pre-determined performance targets, which for 2020 included EBT and a performance-based award with market conditions, rTSR, as well as continued employment of the executive officer.

In determining the size of long-term equity incentive awards, the compensation committee generally also considers, among other factors, the value of total direct compensation for comparable positions at our proxy peer group, company and individual performance against strategic plans, the number and value of long-term equity incentive awards previously granted, the allocation of overall equity awards attributed to our executive officers relative to all equity awards and the relative proportion of long-term incentives within the total direct compensation mix.

In 2020, we granted long-term equity incentive compensation to our senior management and executive officers, including our NEOs, pursuant to our 2015 Omnibus Incentive Plan and 2020 Omnibus Incentive Plan. As permitted by each plan, the board of directors has delegated its authority under the plan to the compensation committee, except for purposes of awards to the CEO.

Terms of Awards. After taking into consideration the long-term incentive practices in the marketplace, we believe that an equity mix of performance-based restricted stock units and time-based restricted stock units provides a conservative and balanced approach. The portion granted in time-based restricted stock units is intended to provide not only some stability in our equity program and increase retention, but also to promote direct alignment with stockholders through our executives' stock holdings. The portion granted in performance-based restricted stock units, whose vesting criteria are tied to selected components of our financial performance, is intended to focus and incentivize our executives to deliver exceptional performance. Performance-based restricted stock unit grants may be subject to both achievement of performance criteria as well as time-based restrictions to vest. For all grants, the recipient must be employed by us at the time of vesting to receive the stock.

The 45-day average fair market value of the company's common stock as quoted on the NYSE as of the date of grant is utilized as the basis for determining the specific number of either time-based or performance-based restricted stock unit awards to be granted.

Awards Granted During 2020. In 2020, consistent with the objective of placing a significant portion of the overall target compensation for our executive officers 'at risk' as discussed above, our board of directors and compensation committee approved equity grants for Messrs. Andretta, King and Motes, which were awarded on February 18, 2020. For Mr. Andretta, who joined us in February 2020, performance-based restricted stock units were based on multiple

metrics over multiple timeframes, namely 35% subject to rTSR for 2020-2021, 10% subject to certain strategic objectives and 35% subject to the board's discretion, consistent with the terms of his offer letter discussed in more detail below under the heading 'Other Plans or Agreements Governing Executive Compensation - Offer Letter to Ralph J. Andretta. For Messrs. King and Motes, performance-based restricted stock units were based on multiple metrics over multiple timeframes, namely 45% subject to rTSR for 2020-2021, 25% subject to 2020 EBT and 10% subject to certain strategic objectives. Performance-based restricted stock units for Ms. McConnaughey were subject solely to 2020 EBT, consistent with all other performance-based restricted stock unit awards to equity-eligible Alliance Data associates. Ms. Greer joined Alliance Data in June 2020, and performance-based grants are only awarded in February. Establishing a maximum payout amount under our long-term equity incentive plan helps deter excessive risk-taking, while having a minimum payout amount that can be earned at a defined performance threshold encourages goal attainment. No payout is made for performance below the minimum threshold.

Performance-based and time-based equity grants for 2020 were made to our NEOs as follows:

The time-based restricted stock units vest over three years, with 33% of the awards vesting in February 2021, and the remaining 33% and 34% scheduled to vest in each of February 2022 and 2023, respectively, provided the executive officer is employed by us at each vesting date. Each of the performance-based restricted stock unit equity awards is also subject to the executive officer's employment with us at such vesting date.

2020 EBT: The performance-based restricted stock unit equity awards subject to a 2020 EBT performance metric vest over three years, provided that we meet pre-determined EBT goals for fiscal year 2020. To achieve 25% to 150% of the target award, the compensation committee set the 2020 EBT goal on a fixed scale between $1,045.5 million and $1,414.5 million. The 100% achievement threshold approximates a 66.6% growth over our 2019 EBT performance.

2020-2021 rTSR: The performance-based restricted stock unit equity awards subject to a 2020-2021 rTSR performance metric vest in February 2022, provided that we meet a pre-determined rTSR goal for fiscal years 2020 and 2021. To achieve 0% to 175% of the target award, the compensation committee set the 2020-2021 rTSR goal on a fixed scale measured against the companies within the S&P 500 as of January 1, 2020, calculated based on the average trading price of the company and S&P 500 companies over the 30 trading days preceding January 1, 2020 and the 30 days preceding January 1, 2022, where the rTSR meets or exceeds the 25^th to the 100^th percentile. Despite percentile achievement, where absolute TSR is a negative return, achievement will be capped at 100%.

2020 Strategic Objectives: The performance-based restricted stock unit equity awards subject to strategic and operational objectives performance metrics vest over three years, provided that the NEO develop, implement or execute strategic plans in some or all of the following areas, as applicable: fraud prevention, capital structure or liquidity management, human capital development and management, operational efficiency improvement, product enhancement or development, technology management and deployment and overall strategic positioning. Achieved payout is subject to the discretion of the compensation committee or board of directors, as appropriate.

Performance Measurement for Fiscal Year Ended 2020. The compensation committee set the performance targets for consolidated EBT related to payout of our performance-based restricted stock units at the beginning of 2020 based on certain assumptions about our performance and subject to adjustment for certain defined factors. For 2020, our reported consolidated EBT was $394.5 million and thus, neither the threshold nor the target was met for these 2020 awards. As a result, the compensation committee determined the payout to be 0% for these 2020 performance-based restricted stock units. For the 30 trading days preceding January 1, 2019 and the 30 days preceding January 1, 2021, our S&P 500 TSR achievement measured below the 25^th percentile, resulting in payout at 0% for these 2019-2020 performance-based restricted stock units. The payout for the 2020-2021 rTSR performance-based restricted stock units will be determined when the full measurement can occur, after December 31, 2021.

In determining the payout for the 2020 performance-based restricted stock units for which the metric was certain strategic objectives, the compensation committee, and the board of directors with respect to the CEO, assessed the performance of Messrs. Andretta, King and Motes in the development, implementation and execution of strategic plans within their span of control and in light of the particular challenges presented by macroeconomic conditions in 2020. The strategic objectives included increased fraud prevention, improvements in capital structure and liquidity, human capital development and management, projects to improve operational efficiency and reduce costs to serve, enhancement of product offerings, technology management and deployment and general strategic planning. For each NEO, the compensation committee or board of directors did not assign a specific weighting to any of the individual strategic goals, and instead performed a holistic review of each's performance in the aggregate. For Mr. Motes, the compensation committee recognized his leadership, strategy and advisory roles during the executive transitions, with particular emphasis on diversity, equity and inclusion efforts and legal support for acquisition and outsourcing initiatives, in addition to the assumption of new responsibilities as chief administrative officer. For Mr. King, the compensation committee noted that Mr. King's focus had primarily been implementation rather than on strategy or development. Following its assessment, the compensation committee applied its discretion to the payout for these 2020 performance-based restricted stock units for Messrs. Motes and King at 100% and 50%, respectively. For Mr. Andretta, the board of directors recognized his leadership and strategy that culminated in positive results in all of the designated areas, but in particular, for completion of those initiatives as the selection of Fiserv as the core processing platform for Card Services and the acquisition of Bread to add digital installment lending capabilities. In addition to performance related to the strategic objectives, the board of directors assessed Mr. Andretta's performance based on the effectiveness of his leadership and determined that all performance objectives have been met despite unprecedented circumstances. For Mr. Andretta, the board of directors exercised its discretion with respect to the performance-based restricted stock units whose metrics were 2020 strategic objectives and 2020 discretionary performance resulting in a payout of each at 150%.

For additional information related to these payouts, please see the 'Fiscal Year 2020 Grants of Plan-Based Awards' and 'Fiscal Year 2020 Outstanding Equity Awards at Fiscal Year-End' tables on pages 44 and 46, respectively.

Looking Forward: Fiscal Year 2021 Long-Term Incentive Compensation.

For fiscal year 2021, the compensation committee, and the board of directors with respect to the CEO, adjusted our long-term incentive compensation plan for our executive officers to consist of 60% performance-basedrestricted stock units and 40% time-based restricted stock units. The performance-based restricted stock units are subject to an annual return on equity, or ROE, metric with threshold, target and maximum goals for each of 2021, 2022 and 2023 and then modified by an rTSR metric at the conclusion of the three-year period ended December 31, 2023. For the ROE metric, threshold, target and maximum goals from 50% to 150% achievement may be calculated on a scale interpolated between the fixed threshold, target and maximum goal amounts, with the average of such achievement adjusted +/- 20% by the rTSR modifier measurement, for a 30% to 170% payout. Following any such adjustment, restrictions will lapse with respect to 100% of the performance-based restricted stock unit awards in February 2024, provided that the executive is employed by us on such vesting date. The high proportion of performance-based awards reflects our pay-for-performance philosophy. The compensation committee believes the combined annual return on equity over three years and three-year rTSR goals for the performance shares can be characterized as challenging to achieve, but attainable with the application of significant skill and effort on the part of our executive officers. The macroeconomic impact of COVID-19 may continue to significantly impact 2021 financial results and measurement of performance-based non-equity incentive compensation and long-term incentive compensation, which the compensation committee and the board of directors will continue to monitor. The time-based awards encourage retention, and are linked to stockholder value and ownership, which are also important goals of our executive compensation program. The compensation committee plans to continue to review our compensation plans to support our current and long-term business strategy, to continue to align pay with stockholder interests and sustain good governance practices.

Perquisites

With limited exceptions, the compensation committee's policy is to provide personal benefits and perquisites to our NEOs that are substantially similar to those offered to our other associates at or above the level of vice president. The personal benefits and perquisites that may be available to our NEOs in addition to those available to our other associates include the opportunity to elect and receive at no cost enhanced life insurance and an annual physical. For additional information about the perquisites given to our NEOs in 2020, see the 'Fiscal Year 2020 All Other Compensation' table on page 43.

REASONABILITY OF COMPENSATION:

In determining appropriate compensation levels during the course of 2020, the compensation committee reviewed all forms of executive compensation, including base salary, performance-based non-equity incentive compensation, long-term equity incentive awards, ratios of vested to unvested equity previously granted to our executive officers, realizable amounts from equity previously granted to our executive officers, the company's contributions to the Alliance Data Systems 401(k) and Retirement Savings Plan and Executive Deferred Compensation Plan and the value of any perquisites received for the 2020 performance year. The compensation committee, and the board of directors with respect to the CEO, have each determined that the total 2020 compensation paid to our executive officers was reasonable and not excessive based on: the challenges presented by the leadership transition; the significant effort and skill required to continue executing effectively for all of our stakeholders in the unprecedented macroeconomic conditions presented by the COVID-19 pandemic; the continuing evaluation, initiation and work to complete strategic initiatives, including further corporate integration and identification and implementation of operational efficiencies in 2020, specifically the divestiture of Precima®, the investment in new technology and capabilities with the launch of the Enhanced Digital Suite, the selection of Fiserv for a core processing platform and launch of the two-year transition process, the acquisition of Bread and the offering of new Comenity-branded financial products such as the cash-back

Comenity Card; and other applicable factors and known information, such as the market data provided by Meridian. For 2020, the compensation committee, with the assistance of Meridian, targeted the 50^th percentile of both our proxy peer group and the general industry group surveyed for each of base salary, target total cash compensation (base salary plus target performance-based non-equity incentive compensation) and target total direct compensation (base salary plus target performance-based non-equity incentive compensation plus target long-term equity incentive compensation) for all NEOs, excluding exigent circumstances.

TAX CONSIDERATIONS:

Internal Revenue Code Section 162(m) generally limits the deductibility of compensation in excess of $1.0 million that is paid to a 'covered employee' in any fiscal year. For these purposes, 'covered employees' consist of our CEO, our CFO and the three other most highly compensated executive officers. An individual determined to be a covered employee for any year beginning after December 31, 2016, will continue to be a covered employee for all future years, regardless of changes in the individual's compensation or position. The compensation committee considers the deductibility under Section 162(m) of compensation awarded to executives to the extent reasonably practical and consistent with our objectives, but the compensation committee may nonetheless approve compensation that does not fall within these requirements and may authorize compensation that results in non-deductible amounts above the limits if it determines that such compensation is in our best interests.

OTHER PLANS OR AGREEMENTS GOVERNING EXECUTIVE COMPENSATION:

Offer Letter to Ralph J. Andretta

Effective February 3, 2020, the board of directors appointed Ralph J. Andretta as president, chief executive officer and a member of the board. The board set Mr. Andretta's annual base salary at $990,000, prorated from his start date for 2020. Mr. Andretta's 2020 performance-based non-equity incentive plan target payout percentage was set at 150% of his annualized base salary, with performance measured 20% on strategic and operational objectives established by the board and 80% at the board's discretion at measurement in early 2021. Mr. Andretta's long-term equity incentive compensation was based on an award level of $3,712,500, with (i) 20% granted in time-based restricted stock units vesting 33%/33%/34% on the first, second and third anniversary of the grant date provided that Mr. Andretta remains employed by us on such dates and (ii) 80% granted in performance-based restricted stock units, of which 35% are subject to an rTSR performance metric, 10% are subject to certain strategic objectives and the remaining 35% are subject to the board's discretion, and all of which, if earned, will vest over three years as described above. For Mr. Andretta's total compensation, the compensation committee targeted the 50^th percentile of CEOs of both our proxy peer group and the general industry group. Further, in recognition of the earned compensation forfeited upon termination of Mr. Andretta's prior employment, the board approved a make-whole award in the aggregate amount of $5,954,850 distributed to Mr. Andretta as follows: a $1,860,000 cash payment in March 2020, a $972,677 cash payment in each of July 2020 and January 2021, a $620,000 grant of time-based restricted stock units vesting over three years as described above and a $1,529,496 grant of time-based restricted stock units vesting over two years, each made in February 2020.

Offer Letter to Valerie E. Greer

On June 29, 2020, Valerie E. Greer joined our Card Services segment as senior vice president and chief commercial officer. Ms. Greer's annual base salary was set at $600,000, prorated from her start date for 2020. Ms. Greer's non-equity incentive plan target payout percentage is 150% of her annualized base salary, with 2020 non-equity incentive plan compensation guaranteed at full payout. Pursuant to her offer letter, Ms. Greer's 2020 long-term equity incentive compensation award reflected an amount of $600,000 granted in time-based restricted stock units vesting 33%/33%/34% on the first, second and third anniversary of the grant date provided that Ms. Greer remains employed by us on such dates. Further, in recognition of the earned compensation forfeited upon termination of Ms. Greer's prior employment, Ms. Greer was offered a make-whole consisting of a $360,000 grant of time-based restricted stock units vesting over three years as described above and a $346,000 cash payment with half paid in December 2020 and the remainder to be paid in December 2021.

Change in Control - Impact on Outstanding Equity

Under our equity incentive plans, the compensation committee, as the plan administrator, may accelerate vesting of stock options and restricted stock or restricted stock units in the event of a change in control. Further, if a participant's employment or other service is terminated by the company or other surviving entity without cause or the participant resigns for good reason within 12 months after a change in control, all restrictions on any awards held by the

participant will lapse and the awards will be immediately and fully vested. Further, stock options will be exercisable until the earlier of the end of the option term or the end of the one year period following such event.

Executive Deferred Compensation Plan

We maintain an Executive Deferred Compensation Plan, which permits our executive officers and certain other highly compensated associates to defer up to 50% of their base salary and incentive compensation (as defined in the Executive Deferred Compensation Plan) on a pre-tax basis. Deferrals under the Executive Deferred Compensation Plan are unfunded and subject to the claims of our creditors. Each participant in the Executive Deferred Compensation Plan is 100% vested in their account, and account balances accrue interest at a rate established and adjusted periodically by the compensation committee. For additional information relating to our NEOs' participation in the Executive Deferred Compensation Plan, please see the 'Fiscal Year 2020 Nonqualified Deferred Compensation' table on page 48.

Alliance Data Systems 401(k) and Retirement Savings Plan

The Alliance Data Systems 401(k) and Retirement Savings Plan is a defined contribution plan that is qualified under IRC Section 401(k). Eligible associates can participate in the 401(k) and Retirement Savings Plan immediately upon joining the company and after 180 days of employment begin receiving company matching contributions. The 401(k) and Retirement Savings Plan covers eligible U.S. associates of the company and all of its U.S. subsidiaries. The company matches dollar-for-dollar up to five percent of the associate's eligible compensation. All company matching contributions are immediately vested.

Indemnification Agreements

We have entered into indemnification agreements with each of our NEOs so that they may serve the company without undue concern for their protection in connection with their services. These agreements provide that we indemnify such persons against certain liabilities that may arise by reason of their status or service as an officer, to advance their expenses incurred as a result of a proceeding as to which they may be indemnified and to cover such persons under any directors' and officers' liability insurance policy that we may choose to maintain. These indemnification agreements are intended to provide indemnification rights to the fullest extent permitted by Delaware law and are in addition to any other rights the indemnitee may have under our certificate of incorporation, bylaws and applicable law.

DIRECTOR AND EXECUTIVE

OFFICER COMPENSATION

The following tables and accompanying narratives set forth the compensation paid to our NEOs for the fiscal years ended December 31, 2020, 2019 and 2018:

SUMMARY COMPENSATION TABLE:

2020 Grants of Plan Based Awards table on page 44. Awards included in the Stock Awards and Option Awards columns were granted pursuant to the 2015 Omnibus Incentive Plan, except Ms. Greer's award that was granted pursuant to the 2020 Omnibus Incentive Plan in July 2020. Additional details are included on page 35 under the caption 'Long-Term Equity Incentive Compensation.'

(4)

This column reflects the amounts paid to each NEO in February 2021, 2020 and 2019 representing amounts earned for 2020, 2019 and 2018 performance. For the 2020 performance year, these amounts are the actual amounts earned under the awards described in the Fiscal Year 2020 Grants of Plan-Based Awards table on page 44. These payout amounts were computed in accordance with pre-determined formulas for the calculation of performance-based non-equity incentive compensation under applicable balanced scorecards as well as the terms of certain other non-equity incentive plan arrangements and the applicable weightings set forth on page 34 in the Compensation Discussion and Analysis.

(5)

Amounts in this column consist entirely of above-market earnings on compensation deferred pursuant to the Executive Deferred Compensation Plan. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and the 9.0% annual interest rate credited by the company on account balances during 2020.

(6)	See the Fiscal Year 2020 All Other Compensation table on page 43 for further information regarding amounts included in this column.

FISCAL YEAR 2020 ALL OTHER COMPENSATION:

FISCAL YEAR 2020 GRANTS OF PLAN-BASED AWARDS:

The following table provides information about equity and non-equity awards granted to the NEOs in 2020, including performance-based non-equity incentive compensation awards and restricted stock unit awards. Each award is shown separately for each NEO, with the corresponding vesting schedule for each equity award in the footnotes following this table.

units lapsed. The restrictions will lapse on 6,083 units on 2/18/22 and on 6,268 units on 2/18/23.

(9)	The award is for 12,685 shares of common stock represented by time-based restricted stock units. The restrictions will lapse on 4,186 units on 7/15/21, on 4,186 units on 7/15/22 and on 4,313 units on 7/15/23.

(10)	The award is for 7,611 shares of common stock represented by time-based restricted stock units constituting a make-whole award included in Ms. Greer's offer letter. The restrictions will lapse on 2,511 units on 7/15/21, on 2,512 units on 7/15/22 and on 2,588 units on 7/15/23.

(11)

No equity awards were granted to Mr. Horn in 2020 due to his intention to retire from the company in 2019, as announced on July 26, 2018. However, at the request of the board of directors, Mr. Horn has continued his service as part of the company's leadership transition. See 'Reasonability of Compensation' on page 38.

(12)	The award is for 1,931 shares of common stock represented by time-based restricted stock units. The restrictions lapsed on 637 units on 2/18/21 and will lapse on 637 units on 2/18/22 and on 657 units on 2/18/23.

(13)

The award is for 2,414 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the EBT performance metric for 2020 at the time of vesting. On 2/18/21, the 2,414 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(14)

The award is for 4,344 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the rTSR performance metric for 2020-2021 at the time of vesting. Following any such adjustment, the restrictions will lapse on 100% of such shares on 2/18/22.

(15)

The award is for 965 shares of common stock represented by performance-based restricted stock units, which could be adjusted down based on the strategic and operational objectives performance metrics for 2020 at the time of vesting. On 2/18/21, 50% of the original award of 965 performance-based restricted stock units granted on 2/18/20, or 483 units, were earned and the restrictions on 159 units lapsed. The restrictions will lapse on 159 units on 2/18/22 and on 165 units on 2/18/23.

(16)	The award is for 1,757 shares of common stock represented by time-based restricted stock units. The restrictions lapsed on 579 units on 2/18/21 and will lapse on 580 units on 2/18/22 and on 598 units on 2/18/23.

(17)

The award is for 7,025 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the EBT performance metric for 2020 at the time of vesting. On 2/18/21, the 7,025 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(18)	The award is for 1,839 shares of common stock represented by time-based restricted stock units. The restrictions lapsed on 606 units on 2/18/21 and will lapse on 607 units on 2/18/22 and on 626 units on 2/18/23.

(19)

The award is for 2,299 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the EBT performance metric for 2020 at the time of vesting. On 2/18/21, the 2,299 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(20)

The award is for 4,138 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the rTSR performance metric for 2020-2021 at the time of vesting. Following any such adjustment, the restrictions will lapse on 100% of such shares on 2/18/22.

(21)

The award is for 919 shares of common stock represented by performance-based restricted stock units, which could be adjusted up or down based on the strategic and operational objectives performance metrics for 2020 at the time of vesting. On 2/18/21, 100% of the original award of 919 performance-based restricted stock units granted on 2/18/20 were earned and the restrictions on 303 units lapsed. The restrictions will lapse on 303 units on 2/18/22 and on 313 units on 2/18/23.

FISCAL YEAR 2020 OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END:

The following table provides information on the holdings of restricted stock units by the NEOs. This table includes unvested restricted stock units. Each equity award is shown separately for each NEO, with the corresponding vesting schedule for each award in the footnotes following this table.

(10)

Stock units subject to time-based restrictions. The restrictions subsequently lapsed on 595 units on 2/16/21 and on 637 units on 2/18/21; the restrictions are scheduled to lapse on 608 units on 12/16/21, on 365 units on 2/15/22, on 637 units on 2/18/22, on 627 units on 12/16/22 and on 657 units on 2/18/23.

(11)	Stock units subject to additional time-based restrictions. On 2/16/21, based on having met an EBT performance metric for 2018, the additional time-based restrictions subsequently lapsed on 730 units.

(12)	Stock units subject to performance-based restrictions. On 2/18/21, the 2,414 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(13)	Stock units subject to performance-based restrictions, which could be adjusted up or down based on the rTSR performance metric for 2020-2021 at the time of vesting. Following any such adjustment, the restrictions will lapse on 100% of such shares on 2/18/22.

(14)

Stock units subject to performance-based restrictions. On 2/18/21, based on having met strategic and operational objectives performance metrics for 2020, 50% of the original award of 965 performance-based restricted stock units granted on 2/18/20, or 483 units, were earned and the restrictions on 159 units lapsed. The restrictions will lapse on 159 units on 2/18/22 and on 165 units on 2/18/23.

(15)	Stock units subject to time-based restrictions. The restrictions subsequently lapsed on 661 units on 2/16/21 and on 579 units on 2/18/21; the restrictions are scheduled to lapse on 406 units on 2/15/22, on 580 units on 2/18/22 and on 598 units on 2/18/23.

(16)	Stock units subject to additional time-based restrictions. On 2/16/21, based on having met an EBT performance metric for 2018, the additional time-based restrictions subsequently lapsed on 807 units.

(17)	Stock units subject to performance-based restrictions. On 2/18/21, the 7,025 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(18)	Stock units subject to time-based restrictions. The restrictions subsequently lapsed on 403 units on 2/16/21 and on 606 units on 2/18/21; the restrictions are scheduled to lapse on 248 units on 2/15/22, on 607 units on 2/18/22, and on 626 units on 2/18/23.

(19)	Stock units subject to additional time-based restrictions. On 2/16/21, based on having met an EBT performance metric for 2018, the additional time-based restrictions subsequently lapsed on 247 units.

(20)	Stock units subject to performance-based restrictions. On 2/16/21, the 1,457 performance-based restricted stock units granted on 2/15/19 were forfeited due to failure to meet the rTSR performance metric for 2019-2020.

(21)	Stock units subject to performance-based restrictions. On 2/18/21, the 2,299 performance-based restricted stock units granted on 2/18/20 were forfeited due to failure to meet the EBT performance metric for 2020.

(22)	Stock units subject to performance-based restrictions, which could be adjusted up or down based on the rTSR performance metric for 2020-2021 at the time of vesting. Following any such adjustment, the restrictions will lapse on 100% of such shares on 2/18/22.

(23)

Stock units subject to performance-based restrictions. On 2/18/21, based on having met strategic and operational objectives performance metrics for 2020, 100% of the original award of 919 performance-based restricted stock units granted on 2/18/20 were earned and the restrictions on 303 units lapsed. The restrictions will lapse on 303 units on 2/18/22 and on 313 units on 2/18/23.

FISCAL YEAR 2020 OPTION EXERCISES AND STOCK VESTED:

The following table provides information on stock option exercises and restricted stock units vested during 2020:

All values in this table reflect gross amounts before payment of any applicable withholding tax and broker commissions. For Stock Awards, the value realized on vesting is calculated by multiplying the number of shares vested by the average of the high and low prices of our common stock on the NYSE during the trading hours on the date of vesting.

FISCAL YEAR 2020 NONQUALIFIED DEFERRED COMPENSATION:

The table below provides information on the nonqualified deferred compensation of the NEOs in 2020, including contributions by each NEO and by the company and earnings on contributions credited during 2020:

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL:

The information below shows estimated payouts to our NEOs in the event of a termination of employment following a change in control, assuming such termination occurred as of December 31, 2020. In accordance with rules prescribed by the SEC, the amounts included with respect to equity awards have been calculated using the closing price of our common stock on December 31, 2020, which was $74.10. A change in control, however, did not occur on December 31, 2020 and our NEOs were not terminated on that date.

While the information below provides an estimate of the payments that may be made to NEOs, actual payments upon termination can only be determined at the time of such NEO's actual termination. The information below includes only those benefits, if any, that are enhanced or increased as a result of the event of termination and do not include benefits that the NEO is entitled to receive regardless of the termination, including (1) any base salary earned but not yet paid; (2) amounts contributed to or accrued and earned under broad-based employee benefit plans or deferred compensation plans; and (3) basic continuation of medical, dental, life and disability benefits.

We do not have any employment, severance or other change in control agreements with continuing benefits with any of our NEOs.

Pursuant to our long-term equity grant agreements, in the event of a change in control, if the compensation committee fails to exercise its discretion to accelerate the award or fails to provide for the award's assumption, substitution or other continuation, or in any event, if the executive is terminated within 12 months after a change in control, such awards would automatically vest, resulting in a payout of $4,113,069,$97,812, $932,104, $855,855, $1,503,934 and $789,610, respectively, to each of Messrs. Andretta, Horn, King and Motes and Mses. Greer and McConnaughey assuming such event occurred on December 31, 2020.

All unvested shares of restricted stock or restricted stock units granted to such NEO will be forfeited upon termination of employment for any reason other than where such NEO's employment or other service is terminated by the company or other surviving entity without cause or the NEO resigns for good reason within 12 months after a change in control, in which case all restrictions on any awards held by such NEO will lapse and the awards will be immediately and fully vested. Notwithstanding the foregoing, the compensation committee may exercise its discretion to accelerate the vesting of any restricted stock units granted to the NEO upon that NEO's termination of employment for any reason other than for cause, subject to any restrictions in the 2020 Omnibus Incentive Plan and 2015 Omnibus Incentive Plan under which such restricted stock units were granted.

EQUITY COMPENSATION PLAN INFORMATION - OUTSTANDING GRANTS AND SECURITIES AVAILABLE FOR FUTURE ISSUANCE:

As of December 31, 2020, as a result of grants made under all of our equity plans, there were outstanding 333,814 unvested time-based restricted stock units, 221,226 unvested performance-based restricted stock units, and 22,227 unvested performance-based restricted stock units subject to an rTSR market condition. The following table provides information as of December 31, 2020 with respect to shares of our common stock that were issued under prior plans that have since expired and are still outstanding and shares of our common stock that may be issued under the 2020 Omnibus Incentive Plan or the 2015 Employee Stock Purchase Plan:

Following certain significant corporate events, unusual and non-recurring corporate events or changes in applicable laws, regulations or accounting principles, the compensation committee has the authority, subject to certain restrictions set forth in the respective plan documents, under each of the 2020 Omnibus Incentive Plan, 2015 Omnibus Incentive Plan and 2010 Omnibus Incentive Plan to waive performance conditions relating to an award and to make adjustments to any award that the compensation committee feels are appropriate. Further, the compensation committee may reduce payout amounts under performance-based awards if, in the discretion of the compensation committee, such a reduction is appropriate. The compensation committee may not, however, increase the payout amount for any such performance-based award. In addition, these plans do not permit stock options to be 'repriced' at a lower exercise price, or otherwise modified or amended in such a manner that would constitute a 'repricing.'

DIRECTOR COMPENSATION:

The compensation committee annually reviews and approves the form and amount of board compensation for non-employee directors. Members of our board of directors who are also officers or associates of our company, currently only Mr. Andretta, do not receive compensation for their services as a director. The compensation committee considers the comprehensive market data collected and analyzed by Meridian as a benchmark for competitive pay. Meridian utilized the same peer group as was used to evaluate executive compensation.In considering and determining director compensation, the compensation committee reviews each element of director compensation. All directors are reimbursed for reasonable out-of-pocket expenses incurred while serving on the board of directors and any committee of the board of directors. Non-employee director compensation typically includes an annual cash retainer, cash meeting fees and annual equity awards consisting of restricted stock units. The annual retainers and equity awards, if any, are paid at the beginning of the director's service year, and prior year meeting fees are paid at the end of the service year.

Annual Retainers and Meeting Fees. For the 2020-2021 service term of the board of directors, which began in June 2020 and ends in May 2021, non-employee directors receive an annual cash retainer of $75,000. The board chair receives an additional cash retainer of $150,000; the audit committee chair receives an additional cash retainer of $25,000, while each other audit committee member receives an additional cash retainer of $5,000; the risk committee chair receives an additional cash retainer of $25,000; and each of the compensation committee chair and the nominating & corporate governance committee chair receives an additional cash retainer of $20,000. Non-employee directors also receive meeting fees on a per meeting basis as follows: $1,500 per board of directors meeting, $1,000 per committee meeting for non-chair committee members, and $1,500 per committee meeting for committee chairs. Each of these retainers and meeting fees are paid at the election of the director as either cash or partially or entirely in equity.

Annual Equity Award. For the 2020-2021 service term of the board of directors, which began in June 2020 and ends in May 2021, non-employee directors received an annual equity award of $140,000. Time-based restrictions on the restricted stock units granted to non-employee directors will lapse on the earlier of (1) June 21, 2030 or (2) termination of the director's service on our board of directors, but in any case no earlier than June 21, 2021. In addition to our stock ownership guidelines for our directors and executive officers, we have also built stock ownership restrictions into the grants of equity made to the non-employee directors since 2008, with each grant of restricted stock units containing restrictions that lapse on the earlier of 10 years from the date of grant or termination of the director's service on our board of directors. For additional information on our stock ownership guidelines, see 'Director Stock Ownership Guidelines' on page 52.

The following table provides information concerning the compensation of our non-employee directors for the fiscal year ended December 31, 2020. Messrs. Anderson, Jensen and Minicucci did not stand for election at our 2020 Annual Meeting of Stockholders in June 2020. Messrs. Gerspach and Natarajan were elected to our board of directors on June 9, 2020.

(2)	This column includes the following amounts deferred pursuant to the Non-Employee Director Deferred Compensation Plan: $143,000 by Mr. Ballou. See footnotes (5) and (10) for elections to receive amounts in the form of equity in lieu of cash with standard vesting restrictions.

(3)	This amount includes $13,722 in cash paid for dividend equivalent rights on restricted stock that vested in 2020.

(4)	As of December 31, 2020, Mr. Ballou held 10,611 restricted stock units.

(5)

As of December 31, 2020, Mr. Gerspach held 5,152 restricted stock units. Mr. Gerspach elected to receive 100% of his meeting fees for meetings held during 2020 as well as 100% of his annual cash retainer and committee retainer for the 2020-2021 service term in the form of equity in lieu of cash with standard vesting restrictions.

(6)	This amount includes $8,729 in cash paid for dividend equivalent rights on restricted stock that vested in 2020.

(7)	This amount includes $25,312 in cash paid for dividend equivalent rights on restricted stock that vested in 2020.

(8)	As of December 31, 2020, Mr. Natarajan held 2,956 restricted stock units.

(9)	As of December 31, 2020, Mr. Theriault held 5,581 restricted stock units.

(10)

As of December 31, 2020, Ms. Tucker held 9,252 restricted stock units. Ms. Tucker elected to receive 50% of her meeting fees for meetings held during 2019 and 2020 as well as 50% of her annual cash retainer and committee retainer for the 2020-2021 service term in the form of equity in lieu of cash with standard vesting restrictions.

(11)	As of December 31, 2020, Ms. Turney held 3,915 restricted stock units.

The amounts reported in the Stock Awards and Option Awards columns reflect the dollar amount, without any reduction for risk of forfeiture, of the estimate of the aggregate compensation cost to be recognized over the service period as of the grant date under ASC 718, which represents the closing market price of our common stock of $47.40 per share on the grant date of June 22, 2020 for awards granted to non-employee directors. Awards granted in 2020 and included in the Stock Awards column were granted pursuant to the 2015 Omnibus Incentive Plan.

Director Stock Ownership Guidelines. Our stock ownership guidelines require our directors to maintain an investment position in our common stock equal to five times his or her annual retainer. Until compliance is achieved, directors must hold at least 50% of net shares acquired at vesting and are restricted from selling below the compliance threshold thereafter. In addition to our stock ownership guidelines, each grant of restricted stock units to our non-employee directors contains restrictions that lapse on the earlier of 10 years from the date of grant or upon termination of the director's service on our board of directors. Given these restrictive terms, our stock ownership guidelines permit these restricted stock units to be included when calculating the investment position for non-employee directors.As of March 31, 2021, all current non-employee directors have holdings that meet or exceed the guidelines, except for Mr. Natarajan, who joined the board in 2020.

Non-Employee Director Deferred Compensation Plan. We offer our non-employee directors the option to defer up to 50% of their cash compensation under our Non-Employee Director Deferred Compensation Plan. Any non-employee director is eligible to participate in the Non-Employee Director Deferred Compensation Plan. To be eligible to make contributions, a director must complete and file an enrollment form prior to the beginning of the calendar year in which the director performs the services for which the election is to be effective. Mr. Ballou elected to make such a deferral in 2020. Participants in the Non-Employee Director Deferred Compensation Plan are always 100% vested in their contributions and related earnings. The amounts reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column are comprised entirely of above-market earnings on compensation deferred pursuant to the Non-Employee Director Deferred Compensation Plan, as described below. Above-market earnings represent the difference between market interest rates determined pursuant to SEC rules and the 9.0% annual interest rate credited by the company on contributions during 2020. This interest rate may be adjusted periodically by the compensation committee that oversees both the Non-Employee Director Deferred Compensation Plan and the Executive Deferred Compensation Plan.

Indemnification Agreement. We have also entered into an indemnification agreement with each of our directors. These indemnification agreements contain substantially the same terms as described above with respect to our executive officers.

CEO PAY RATIO:

In determining compensation for executive officers and non-executive associates, we consider many relevant factors, including responsibility, skills, experience, and market data. Similar to our use of a compensation consultant for NEOs discussed on page 29, we conduct an extensive analysis of market pay based on the responsibilities and necessary skills for each position at the company. We seek to compensate all associates on a competitive basis and target mid-market compensation rates for all positions in all geographic locations.

Our CEO to 'median employee' pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u)

of Regulation S-K. As there has been no change to our employee population or our employee compensation arrangements that we believe would significantly impact the disclosure, we have calculated the ratio using the total compensation of the same median employee identified during 2019. We identified this median employee by examining the annual total cash compensation for all individuals, excluding our CEO, who were employed by us on October 1, 2019. We believe the use of annual total cash compensation for all associates is a consistently applied compensation measure because we do not widely distribute annual equity incentive awards to associates. During 2019, only 7% of our approximately 8,500 associates at that time received equity incentive awards. Our calculation of annual total cash compensation included base salary or earnings, bonus and commissions. We included all company associates (excluding the CEO), whether employed on a full-time, part-time, temporary or seasonal basis, and we annualized the compensation for those associates who were not employed for the full year of 2019. No exclusions or exemptions were utilized. We applied a foreign currency to U.S. dollar exchange rate as of the last business day, December 31, 2019, to the compensation elements paid in any foreign currency.

After identifying the median employee based on total cash compensation, we calculated annual total compensation for such associate using the same methodology we use for our NEOs as set forth in the Summary Compensation Table of this proxy statement. The annual total compensation for fiscal year 2020 for our CEO was $12,299,988 and for our median employee was $64,869. The resulting ratio of the compensation for our CEO to the compensation for our median employee in 2020 is approximately 190:1. Excluding $6,346,767 in make-whole amounts provided to Mr. Andretta in 2020 pursuant to his offer letter that represent compensation forfeited upon resignation of his prior employment, which the board of directors approved as a one-time amount to attract Mr. Andretta to lead the company, the resulting ratio of the compensation for our CEO to the compensation for our median employee in 2020 would have been approximately 98:1.

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information regarding the beneficial ownership of our common stock as of March 31, 2021 (or such other date as set forth below): (1) by each director and nominee for director; (2) by each of our NEOs; (3) by all of our current directors and executive officers as a group; and (4) by each person known by us to be the beneficial owner of more than 5% of our outstanding common stock. Except as otherwise indicated, the named beneficial owner has sole voting and investment power with respect to the shares held by such beneficial owner. The shares owned by our directors and NEOs are subject to the terms of the individual's customary brokerage account agreements.