The compensation program for executive officers is designed to drive our Company’s performance in alignment with our business strategies and core values. As administered by our Compensation Committee (the “Committee”), thisour compensation program seeks to enhance stockholder value by linkingclosely link the financial interests of our Company’s executives with those of our stockholders. The program reinforcesreflects a performance-based pay philosophy which we believe contributed to achieve the following objectives:achievement of strong fiscal 2012 Company results, including the following:
Net income growth of 29%; and
GAAP earnings per share growth of 42%.
Compensation Highlights
| | | | |
Emphasis on Pay for Performance | • | Attract and retain talented• | | Base salaries for executive officers who can lead us in the achievement of our business objectives; |
| remained largely flat; |
| | • | Provide | Cash compensation that is competitive within the relevant industry peer group,increasingly weighted toward short-term cash incentives, with plan funding based upon Company performance and equitable among our Company’s executive officers;individual awards linked closely to individual performance; |
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| | • | Motivate | Emphasis on long-term incentives to align executives’ interests with those of our stockholders, and reward executive officers basedshift towards vehicles the value of which depends on achievement of Companyboth meeting the Company’s financial performance targets and individual performance objectives; andincreases in our stock price. |
Competitive Pay Packages | | • | | Target total direct compensation at the median among the companies with which we compete for executive talent, with pay above that level where strong performance or prior experience warrants higher pay; |
| • | Align our executive officers’• | | Equity-based long-term incentive grants upon commencement of employment to attract top candidates and immediately provide significant alignment of the executive’s interests with those of our stockholders. |
| | |
Quality Pay Practices and Policies | | • | | No single-trigger accelerated vesting or payment for equity awards upon a change in control; |
| | • | | Executive stock ownership guidelines that encourage ownership and further align our executives’ interests with those of our stockholders; |
| | • | | Annual peer group review with appropriate adjustments to ensure valid comparisons; |
| | • | | No tax gross-ups allowed except in relation to relocation benefits and required spousal travel; |
| | • | | Independent compensation consultant engaged by the Committee does not provide any other services to the Company. |
Overview forof Fiscal 20102012 Compensation Program
We enteredIn making compensation decisions at the outset of fiscal 2010 amid an extremely challenging economic2012 and business environment. Moreover, many of our clients faced additional pressures from heightened regulation, notablythroughout the CARD Act and the Dodd-Frank Wall Street Reform Act. As we exited fiscal 2010 in September, we saw indications of stabilization or modest growth across our business — but not yet any robust recovery — as high levels of unemployment and a difficult housing market continued to overhang the markets we serve in the United States. In response to these continuing markets challenges, our executive officers continued to reengineer our business by redeploying resources to high priority growth initiatives, while controlling overall operating expenses. In compensating our executive officers,year, the Committee took into accountsought to reinforce the challenging economic environment, the success of ongoing reengineeringlinkage between Company performance and expense management efforts and the need to drive continued engagement and retention. It also considered early signs of growth in the fiscal fourth quarter period as reflected in both revenue and bookings results.
Base salary increasesexecutive compensation. In keeping with this objective, base salaries for executive officers in fiscal
20102012 continued to
reflectremain flat as part of the
Company’s focus on expense management. Sevenmovement torebalance the mix of our current ninecompensation elements to more prominently feature performance-based cash incentives and equity. Our Chief Financial Officer was the only continuing named executive officer to receive a salary increase for fiscal 2012, and newly hired named executive officers received a base salary equal to or lower than their predecessors’ base salaries.
Short-term cash incentive award levels increased in fiscal 2012 compared to prior years in large part due to strong Company financial performance. At the beginning of the fiscal year, our Board of Directors approved a revenue target of $655 million and a net income target of $95 million. These performance metrics were employed forused by the entireCommittee to determine funding of the fiscal 2010 year2012 bonus pool and to drive sustainable top and bottom line growth, balancing both short and longer term considerations. Our fiscal 2012 results of $671 million in revenue and $97 million in net income exceeded both targets. Individual award levels also reflected strong individual performance by our named executive officers in fiscal 2012.
To align executive interests with the remaining two joiningcreation of stockholder value, equity-based incentive compensation represents a substantial portion of total compensation, and we have shifted the Company in mid-year. Of these seven, only three received base salary increases in fiscal 2010 with the CEO not being onemix of these.
Balancing Company performance outcomes with the need to drive continued engagement and retentionequity awards toward those that are performance-based instead of key contributors across the Company, our Compensation Committee supported only fractional funding of short-term cash incentives in fiscal 2010 representing 25.8 percent of target. For the seven executive officers who were employed for the entire fiscal year, cash incentive awards reflected this fractional funding with a strong link to individual performance. Consistent with this approach, two of these seven received no cash incentive bonus. The two executive officers who joined the Company during fiscal 2010 received guaranteed bonuses, prorated for partial year participation, per the terms of their respective new hire arrangements.
simply time-vested. Long-term incentive awards to executive officers in fiscal
2010 occurred2012 were granted in December
20092011 as part of the Company’s annual year-end performance review
and compensation process.
The Committee made use of the new flexibility provided by the 2012 LTIP, which allows for performance-based awards in a variety of equity formats, when it delivered approximately one-half of the targeted annual long-term award value to top executives in the form of performance share units (“PSUs”), which were designed to reward the achievement of established revenue and net income goals. The remaining one-half of targeted annual long-term award value took the form of non-qualified stock options of which, as in previous years, up to one-half could be exchanged in advance of the grant effective date for time-vested restricted stock units (“RSUs) on a three-for-one basis. The Committee also approved one-time RSU awards for senior executives, covering 75,000 shares in aggregate and vesting ratably over four years, to facilitate adoption of this performance-based design shift.In addition to the long-term incentive awards granted as part of the Company’s annual year-end performance review and compensation process, the Committee made a number of equity awards in fiscal 2012 to executive officers who were new to the Company or newly promoted to their positions. These new hire and promotion awards are intended to rapidly align our stockholders’ interests and those of new executive officers, and in the case of external hires, to induce offer acceptance.
Named Executive Officers for Fiscal 2012
Our named executive officers for fiscal 2012 consist of the following persons, representing the two persons who served as our Chief Executive Officer during the fiscal year, the person who served as our Chief Financial Officer during the fiscal year, the three most highly paid executive officers other than the Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of fiscal 2012, and one other person who would have been included in the latter category but for the fact that she was not serving as an executive officer at fiscal year-end 2012:
William Lansing, Chief Executive Officer,
Dr. Mark Greene, former Chief Executive Officer,
Michael Pung, Executive Vice President and Chief Financial Officer,
Charles Ill, Executive Vice President, Sales, Services and Marketing,
James M. Wehmann, Executive Vice President, Scores,
Dr. Stuart C. Wells, Executive Vice President and Chief Technology Officer, and
Deborah Kerr, former Executive Vice President and Chief Technology Officer.
Chief Executive Officer
Dr. Greene retired from his position as Chief Executive Officer in January 2012, at which time he was succeeded by Mr. Lansing. Mr. Lansing had served on the Company’s board of directors for six years prior to his appointment as Chief Executive Officer and had been extensively involved in the Company’s business strategy and planning during that time. He also brought to the role prior public company CEO experience, including business experience in the Company’s industry.
In connection with Mr. Lansing’s appointment as Chief Executive Officer, the Company entered into a Letter Agreement with him that set forth the terms of his compensation arrangements, which is described in detail later in this proxy statement. In negotiating the compensation package, the Committee considered both market competitive practices and the compensation the Company had been paying to Dr. Greene as Chief Executive Officer. The Letter Agreement provides for an initial annual base salary of $675,000, which is the same as Dr. Greene’s annual base salary at the time of his retirement, and eligibility to receive a cash incentive award payable from 0% to 200% of his annual base salary at the rate in effect at the end of such fiscal year, with a target equal to 100% of his annual base salary, which is also the same cash incentive arrangement that was applicable to Dr. Greene. For fiscal 2012, Mr. Lansing’s Letter Agreement guaranteed him a cash incentive payout equal to the target amount prorated for a partial year of service.
Under the Letter Agreement, Mr. Lansing also received an equity grant upon the commencement of his employment consisting of an option to purchase 300,000 shares, half of which he elected to convert prior to the grant date to RSUs on a three-for-one basis, and a PSU award with a target value of 50,000 shares and a maximum value of 100,000 shares. In light of Mr. Lansing’s role as a director of the Company before becoming an executive officer, the terms and performance goals of Mr. Lansing’s fiscal 2012 PSU award were the same as those applicable to the PSU awards made to the incumbent executive officers in December 2011. In determining these awards,the size and composition of the equity award, the Committee relied upon competitiveconsidered the importance of creating an immediate, material alignment of Mr. Lansing’s interests with those of our stockholders, both in terms of granting him a significant ownership stake in the Company and in terms of emphasizing equity vehicles that are closely linked to the Company’s financial performance and stock price, and also considered market practices for inducement awards to a top executive. In light of those objectives, the Committee followed its established approach for equity awards made to new executive officers of granting awards that typically carry two to three times the value of a standard annual award that would be made to a person in that role with a mix of award types.
The graph below illustrates the strong performance emphasis on Mr. Lansing’s targeted fiscal 2012 compensation data prepared by its outside advisor, Towers Watson, andpackage. The information is presented on a reviewfull-year annualized basis, valuing one-third of individual executive performance. The Company also engaged in a plannedhis new hire long-term incentive award cycle in July 2010 designedyear one:
In connection with Dr. Greene’s retirement as Chief Executive Officer, the Company entered into a Transition Agreement with him pursuant to rewardwhich he would serve as Advisory Council Chair for a period extending beyond the end of fiscal 2012 and retain top performers. Ofreceive an annual base salary of $250,000 in that role. In consideration for his execution of a release of claims against the 83 stock-based awards grantedCompany, his compliance with the terms of the Transition Agreement
(which includes non-solicitation and non-disparagement provisions) and other agreements in July, only four involved executive officer recipientseffect between him and our CEO did not receive such an award.
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Determination of Compensation
To implement our compensation philosophy, our compensation program consists of three key elements: base salary, short-term cash incentives and long-term equity incentive equity awards. We do not use a specific formula to set compensation amounts under each element but instead attempt to reflect market competitive levels tied to role and the performance level of the executive officer as measured against individual goals closely linked to company performance. The factors considered in determining each compensation element include, but are not limited to, the following:
The executive’s performance compared to his or her goals and objectives;
The qualifications of the executive and his or her potential for development and performance in the future; and
| | |
| • | The executive’s performance compared to his or her goals and objectives; |
|
| • | The qualifications of the executive and his or her potential for development and performance in the future; and |
|
| • | Whether the executive’s total compensation, and each element thereof, is at or above the market median for comparable jobs at companies with whom we compete for executive talent. |
The position of the executive’s total compensation, and each element thereof, in relation to the market median for comparable jobs at companies with whom we compete for executive talent and in relation to other positions at our Company.
Members of executive management participate in the Committee’s meetings at the Committee’s request. Management’s role is to contribute input and analysis which the Committee considers in making its decisions. Management does not participate in the final determination of the amount or form of executive compensation to be paid to the members of executive management. However, the Committee relies heavily on the insights of our CEO and Chief Human Resources Officer in determining compensation for the executive officers, other than the CEO. The Committee also consults with its outside compensation consultant Towers Watson, prior to making a final determination of the compensation for such executive officers. Prior to making decisions impacting executive compensation, the Committee refers to tally sheetscomprehensive statements prepared by management reflectingthat reflect the amount and elements of each executive’s total compensation.
The Committee leads an annual performance review process of the CEO in connection with the determination of his compensation. As part of this process, one or more Committee membersand/or the Chairman of the Board meet with each senior executive to discuss the CEO’s performance using a structured interview approach. In addition, each Board member completes a written evaluation form for the CEO and submits it to the Committee. Based on these interviews and written evaluations, as well as on its own determinations regarding the CEO’s performance, the Committee prepares a final performance review for the CEO. The Committee then submits a recommendation for the CEO’s compensation to the Board for discussion. Following such discussion, the Committee finalizes its determination of the CEO’s compensation and informs the CEO of such determination, together with the final performance review.
In connection with our fiscal 20102012 executive compensation program, the Committee reviewed tally sheetssummaries prepared by management reflecting current and proposed base salary, cash incentive and long-term incentive equity award levels for our incumbent executives. Each element was analyzed relative to survey data published in the Towers PerrinWatson Executive Compensation DataBank (2009)(2011), which reflects compensation provided by a broad range of companies that can be broken down by industry grouping. Comparisons were made against the 761789 companies in the General Industry grouping of the survey and against the 3130 companies in the Technology, Hardware, Semiconductors, Software Products and Services Industry grouping of the survey. Data were size-adjusted for our annual revenue using regression analysis. The
As a second source of market competitive information, the Committee did not usealso considered data from a more specific group of 22 peer companies that were selected as being similar in size to the Company and operating in
the application software and data processing/outsourced services sub-industries within the Global Industry Classification Standard taxonomy. The composition of the peer group dueis reviewed annually, with adjustments made as the Committee, with the assistance of its compensation consultants, believes is appropriate to maintain comparability within the diverse nature ofemployment marketplace. The 22 peer companies used in the companies with which we compete for executive talent. fiscal 2012 compensation process are as follows:
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ACI Worldwide | | JDA Software Group |
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Advent Software | | Mentor Graphics |
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ANSYS | | MicroStrategy |
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Autodesk | | NetScout Systems |
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Blackbaud | | Nuance Communications |
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Cadence Design Systems | | Parametric Technology |
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Citrix Systems | | Pegasystems |
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Compuware | | Quest Software |
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FactSet Research Systems | | Synopsys |
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Informatica | | TIBCO Software |
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Jack Henry & Associates | | Total System Services |
The Committee considered this survey and peer group information in addition to the factors described above when setting the compensation levels for our executives for fiscal 2010.2012. In particular, the Committee soughtaimed to ensure thatset the total direct compensation paid to each executive and each individual element thereof, would be at or above the market median as reflected in the survey data provided by Towers Watson. For fiscal 2011, we plan to continue to target total compensation,Watson and, each element thereof, atwhere the value of an individual’s performance or, in the case of new hires, prior experience warrant, above the median of the peer groups identified by Towers Watson.
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Use of Consultants
From time to time and as noted above, theThe Committee uses outside compensation consultants to assist it in analyzing our Company’s compensation programs and assessing market levels of compensation. ManagementFor the first part of fiscal 2012, the Committee engaged Towers Watson to provide market compensation data, input on final compensation levels for each executive officer and analysis of the constitution of our peer group, as described above. In July 2012 the Committee engaged Compensia to perform the annual analysis Towers Watson had been performing, starting with compensation levels for executive officers for fiscal 2013. In addition, Compensia re-evaluated the constitution of our peer group and conducted a study of board compensation practices. The Committee viewed this change in independent consultants as appropriate given the previously long tenure of its relationship with Towers Watson and the fact that Compensia worked closely with many technology companies with large West Coast-based workforces, similar to that of the Company.
Stockholder Vote
At our last Annual Meeting of Stockholders held on February 7, 2012, we asked our stockholders to approve, by advisory vote, the compensation of our named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosures contained in our proxy statement for that Annual Meeting. The proposal was approved by our stockholders with approximately 97% of the votes cast being “for” approval. In light of the overwhelming approval of our executive compensation practices by our stockholders, the Committee has maintained those practices over the past year. The Committee continues to evaluate and adjust the Company’s compensation practices as it deems appropriate to advance the best interests of the Company and in particular our Chief Human Resources Officer, may also use outside compensation consultants for similar purposes. Where a compensation consultant is engaged to help determine the amount or form of compensation specific to executives or directors, the Committee directly engages such consultant. While the same consulting firm may provide services to both the Committee and management in certain circumstances, it is our general practice to have the Committee and management utilize different personnel from such firms in these circumstances.
its stockholders.Elements of Compensation
The fiscal 20102012 executive compensation program consisted of three key elements: (1) base salary; (2) short-term cash incentives; and (3) long-term incentives in the form of stock options, PSUs and restricted stock units.
RSUs. We do not use a specific formula to determine the mix between compensation elements but instead attempt to achieve an appropriate balance between short-term cash compensation and long-term equity compensation while reflecting market competitive levels tied to role structure and the performance level of the executive officer as measured against individual goals closely linked to Company performance. | | | | |
Compensation Element | | | | Purpose and Philosophy |
Base Salary | | • | | Provides executive officers with financial stability and predictable cash flow; |
| | • | | Determined by evaluating base salaries of comparable roles within peer group companies and the broader marketplace. |
| | |
Short-Term Cash Incentives | | • | | Rewards the achievement of annual Company and individual performance goals; |
| | • | | Expressed as a targeted percentage of base salary with this percentage indexed to peer group companies and the broader marketplace; |
| | • | | Participant may earn between zero and 200% of target, depending both upon Company and individual performance. |
| | |
Long-Term Incentives | | • | | Directly links a significant portion of total executive officer compensation to the market value of Company stock, while promoting retention through multi-year vesting; |
| | • | | Stock options carry an exercise price equal to the fair market value of our stock on the date of grant such that value is only created for the holder to the extent our stock price rises from the date of grant; |
| | • | | Performance Share Units (PSUs) are earned based upon the extent to which Company financial targets are achieved with as few as zero and as many as 200% of targeted PSUs possible. Earned shares are then subject to multi-year vesting, promoting continued linkage to Company stock price while promoting retention; |
| | • | | Restricted Stock Units (RSUs) represent a more stable equity-based compensation vehicle, ensuring linkage to Company stock price performance while promoting retention over a multi-year vesting period. |
Base Salary
Base salaries serve to provide our executive officers with financial stability and predictable cash flow. Base salaries for executive officers are determined by reviewing and comparing salaries and the corresponding job descriptions offered for similar positions in the survey data provided by Towers Watson,our outside compensation consultant, as described above. The Committee generally uses the market median reflected in this data as a lower threshold for base salaries for executive officers.reference point. However, as with the other elements of total compensation, the Committee retains full discretion to set base salaries depending on the particular circumstances. Because the base salary is a part of the total compensation package that is designed to attract, retain and motivate executives, all factors that are considered in setting the other elements of an executive’s total compensation may be considered by the Committee in determining base salary. In addition
Only one of our continuing named executive officers experienced an increase in base salary as part of the Company’s annual year-end performance review and compensation process in November 2011. Mr. Pung, our Executive Vice President and Chief Financial Officer, received an increase of 6.7%, related to market competitive analysis and strong individual performance. Of the three new named executive officers who took office in fiscal 2012, two received the same annual base salary that their respective predecessors had received, and one received an annual base salary slightly below that of his predecessor. This conservative approach reflects the Committee’s continued commitment to favor incentive compensation elements directly linked to the market median forachievement of targeted financial goals and the position, the primary other factors that are typically considered are described above under“Determinationcreation of Compensation — Overview.”
stockholder value.Short-Term Cash Incentives
We offer a short-term incentive opportunity in the form of cash incentive awards to all of our executive officers. These incentive awards are paid from a single, centralized pool fundedthat supports short-term cash incentive payments made to our executive officers under our Management Incentive Plan and to other eligible employees under our Broad-Based Incentive Plan.
A participant’s payout under our cash incentive plans is calculated as follows:
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Budget Factor | | = | | The budgeted level of bonus pool funding in the fiscal year’s operating plan divided by the aggregate amount of plan participants’ target-level awards (i.e., Participant Target % x Participant Base Salary). Fiscal year 2012 = 75% |
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Company Performance Factor | | = | | A value ranging from 0 to 133%, reflecting the extent to which Company revenue and net income targets are achieved. Fiscal year 2012 = 105.5% |
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Participant Performance Factor | | = | | A value ranging from 0 to 200% reflecting the extent to which individual participant performance goals were achieved. |
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Participant Target % | | = | | The percentage of each participant’s annual base salary that represents a target cash incentive payout amount, as determined by market competitive practices. |
As an illustrative example, a participant with an annual base salary of $200,000, a Participant Target % of 50% of base salary, and a Participant Performance Factor of 125% would have received a cash incentive payout of $98,906 for fiscal 2012.
The Budget Factor was 75% in fiscal 2012, meaning that if the Company achieved target levels of revenue and net income, a plan participant could expect to receive 75% of his or her targeted bonus amount (Participant Target % multiplied by Participant Base Salary) unless such amount was adjusted upward or downward based on his or her Participant Performance Factor. Reflecting challenging market conditions, short-term cash incentive award funding levels in fiscal years 2008 through 2010 had been conservative and well below market competitive levels. Starting in fiscal 2011, as market conditions and Company financial goal achievement focused onperformance began to improve, the Committee instituted a multi-year plan to return short-term cash incentive award funding to market competitive levels. In fiscal 2011, the Company’s Budget Factor was 50%, and the Committee planned for a Budget Factor of 75% in fiscal 2012 as a significant increase in cash incentive payouts. For fiscal 2013, the Committee has set the targeted funding such that the Budget Factor will be 100%.
The Committee used the funding curve expressed below to determine the actual size of the bonus pool:
| | | | | | | | |
| Financial Metric | | Threshold
Funding Level | | Targeted
Funding Level | | Maximum
Funding Level | | Actual
Performance* |
Revenue | | £$620 million | | $655 million | | ³$670 million | | $671 million |
Net Income | | £$84 million | | $95 million | | ³$105 million | | $97 million |
Company Performance Factor | | 0% | | 100% | | 133% | | 105.5% |
| * | The financial results were calculated by excluding the impact of fiscal year acquisitions from the revenue number and excluding the net impact of fiscal year acquisitions and one-time restructuring costs from the net income number. |
Where Company results fall between funding levels, the Committee has discretion in determining the Company Performance Factor. In fiscal 2012, both revenue and net income. Individual awards from thisincome exceeded the target, and revenue performance was above the amount that would trigger maximum funding. In light of these results, the Committee determined that the Company Performance Factor was 105.5%. In conjunction with the 75% Budget Factor, the cumulative impact of Company-wide adjustments affecting payouts made to all participants in the pool are then based onwas a targeted percentagemultiplier of base salary79%, equal to the product of 75% and on105.5%.
The Participant Performance Factor is a function of the extent to which individual performance results against established goals.goals are achieved. These goals can include Company-wide metrics as well as business unit metrics and goals that are highly specific to the functions over which the individual has primary responsibility. The annualized cash incentive target for the CEO is 100% of base salary (as set forth in his employment agreement described below) and for each other executive officer is 50% of base salary. These targets wereCEO’s goals are established by the Committee based on a review ofafter considering input from each outside director, and the survey data provided by Towers Watson and described above, with a goal of setting the short-term incentive opportunity at or above the market median reflected in this data. In addition to participation in this centralized incentive pool, beginning in fiscal 2011 the executive officer overseeing our Scores segment will also participate in a commission-based incentive plan with related earnings directly linked to the growth of our myFICO.com B2C scores business.
As stated above, we incorporate a significant individual performance component in our short-term incentive program. Even if we achieve our revenue and net income targets, the full amount that would be paid to our executive officers is subject to modification based upon individual performance evaluations. The CEO’s individual performance evaluation is completed annually by the Committee, as described above, and the CEO’s cash incentive award is determined and paid following the end of the fiscal year.Committee. Individual performance evaluationsgoals for eachthe executive officerofficers other than the CEO are established by the CEO, and evaluations for those executives are completed semiannuallyannually by the CEO and reviewed by the Committee.
Each executive officer’s performance evaluation seeks to assess his or her individual results against established goals. In addition to shared corporate goals, many factors considered for each executive officer (i.e., the “established goals”) are highly specific to the functions over which he or she has primary responsibility. Therefore, for example, an executive in charge of sales is evaluated on different factors than our general counsel. Each evaluation includes an overall performance rating on a five-point scale as follows:1-Unacceptable,2-Needs
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Improvement,3-Achieved Expectations,4-Exceeded Expectations,and5-Exceptional. For fiscal 2010, with the exception of the “Unacceptable” rating, each of the remaining four ratings was applied.
Each of the performance ratings described above corresponds to a multiplier ranging from zero to two. The multiplier is applied to the original target award percentage to determine the executive’s “performance-weighted target award.” As a result, if If an executive receives either of the lowest two overall performance ratings
(which correspond toon a
multiplier of zero),five-point scale, his or her
target cash award
wouldwill generally be reduced to zero.
On the other hand,Conversely, if an executive receives the highest overall performance rating,
(which corresponds to a multiplier of two), his or her
target cash award
wouldcould be increased to
200%as much as two times the target amount. Distribution guidelines applicable to the Participant Performance Factor ensure that participants in the short-term cash incentive program are not all ranked on the high or low end of
the five-point scale but are instead distributed above and below the target levels. Discretion can be exercised to make adjustments within the five-point scale.As provided in their respective employment agreements, Mr. Lansing’s Participant Target % is 100% of annual base salary, for the CEO, or 100% of base salary for each other executive. Final award amounts to each executive officer may also incorporate an element of Committee discretion, as described below.
After the beginning of each fiscal year, our Board of Directors approves financial goals for our Company. These financial goals form the basis for the revenue and net income targets used to determine whether, and the
extentother named executive officers each have a Participant Target % of 50% of annual base salary. These target percentages represent market competitive levels for executives in their respective roles.The three named executive officers who were new to our Company in fiscal 2012 each received a guaranteed minimum cash incentive payout as part of their employment agreements: Mr. Lansing was guaranteed $450,000, and each of Mr. Wehmann and Dr. Wells was guaranteed $100,000. The other two named executive officers who received a cash incentive payout for fiscal 2012 received high Participant Performance Factors such that their payouts approximated their target payouts calculated with respect to Participant Target % and annual base salary. Mr. Pung’s high Participant Performance Factor was largely driven by effective expense controls in a year that included two acquisitions, which we will fund the award pool for our short-term incentive programs applicablecontributed to all employees. In fiscal 2010, the Committee selected revenue andsignificant growth in net income targets of $616.7 million and $69.5 million, respectively, for the short-term incentive program.
After each quarter end, the Committee reviews our financial results and assesses progress toward the full-year revenue and net income targets. Based on this assessment, the Committee may fund a portion of the award pool at such time. After the first fiscal quarter of 2010, the Committee determined that we were on target to achieve our financial performance targets and, therefore, funded $2.42 million to the award pool. After the second fiscal quarter of 2010, the Committee did not fund any amount to the award pool due to poor quarterly performance and its related determination that we were not on target to achieve our financial performance targets. After the third fiscal quarter of 2010, the Committee funded $2.74 million to the award pool notwithstanding its determination that we were still not on target to achieve our original revenue and net income targets. It did so in recognition of the fact that the Companyincome. Mr. Ill’s high Participant Performance Factor was on track to achieve annual earnings per share in line with the original financial goals approvedlargely driven by the Board of Directors for the year, as well as the need to have at least some level of bonus pool available to retain key employees. Despite solid fourth quarter financial results, which included achievement of targeted quarterly revenue, and bookings (an indicator of future revenues) which were significantly above plan, we did not accrue a fourth quarter incentive pool due to increased fourth quarter operating expenses. Inclusive of a small number of new hire inducement bonuses, this resulted in a total award pool of $5.4 million for the fiscal year.
While the total amount funded to the award pool for a fiscal year is expected to correlate with our performance relativecontributions he made to our financial performance targets, such targets are not an “all or nothing” goal, nor is the actual amount funded a simple function of the extent to which the targets have been achieved. The Committee has discretion to determine the actual amount funded based on factors it deems relevant. For instance,strong revenue results in fiscal 2010 the Committee funded the award pool at $5.4 million, approximately 25.8 percent of target. In doing so, the Committee funded the bonus pool at a level which it deemed necessary to drive the continued engagementhis leadership role with sales, services and retention for key talent operating in an extremely challenging market.
Cash awards under the short-term incentive plan are determined and paid to eligible employees (including executive officers) after the fiscal year end. The total amount paid out to all eligible employees, if any, is the amount funded to the award pool for the full fiscal year. Each eligible employee typically receives approximately his or her pro rata share of the total payout based on his or her performance-weighted target award (using his or her year-end performance evaluation). However, while the performance-weighted target award for each employee as applied to the available pool dictates a directionally appropriate award for such employee, the actual amount paid to any particular employee is subject to management discretion (or the discretion of the Committee, in the case of executive officers) which may make adjustments based on various factors, including internal peer equity considerations linked to variations in base salaries and differences in individual performance contributions. With respect to the former, individual bonus awards may be adjusted to offset the impact associated with modest base salary differences between individuals within the same job level and with similar performance profiles. With respect to individual performance contributions, bonus awards may be adjusted to recognize that providing performance ratings on only a five-point scale does not always provide for sufficient granularity, and adjustments may be made to reflect that an employee was very close to receiving a higher or lower performance rating. Since short-term
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Long-Term Equity Incentivesincentive plan funding for fiscal 2010 was intended to reward and retain participants who delivered strong performance results, assessment of individual performance ultimately determined whether a fiscal 2010 short-term incentive award was received.
Occasionally, we may agree to guarantee a portion or all of the short-term incentive for an executive officer. Typically, this occurs when we feel it is necessary in order to attract a desirable executive candidate. For instance, in fiscal 2010 we guaranteed a prorated short-term incentive bonus for Charles Ill, who joined the Company in February as executive vice president, sales and marketing, in the amount of $166,667. We also guaranteed Jordan Graham, who joined the Company in August as executive vice president, scores and president of consumer services, a prorated short-term incentive bonus for fiscal 2010 in the amount of $50,000 and a short-term incentive bonus for fiscal 2011 in the amount of $225,000. We typically do not guarantee any short-term incentive beyond the fiscal year in which an executive is hired and, in some circumstances, the first full fiscal year thereafter.
Long-Term Incentives
The third key element of our executive compensation program
isfor fiscal 2012 was long-term incentive equity
awards under our 1992 Long-term Incentive Plan (the “LTIP”).awards. This component of compensation is used to
enhancedrive achievement of the
total compensation package for key management and, in particular, to linkCompany’s financial targets while linking compensation to the market value of our Company’s
Common Stock. Equitycommon stock. The annual awards
are intended to align executives’ interests in managing the Company with stockholders’ interests. The primary types of equity awards utilizedreceived by the
Committee arenamed executive officers in fiscal 2012 consisted of stock options,
up to one half of which could be converted into RSUs at the executive’s election prior to grant, and
restricted stock units. Grants of equity awards toPSUs. In addition, the executive officers
typically fall into onereceived a one-time grant of
three categories: (1) new hire or promotion grants; (2) performance-based grants at year-end; or (3) special purpose grants. Regardless of type, all such grants are made byRSUs in fiscal 2012.In determining annual awards for fiscal 2012, the Committee after review and considerationestablished a range of the information provided by Towers Watson, and in consultation with our CEO and Chief Human Resources Officer.
The key factors considered by the Committee in determining the year-end awards for each named executive officer for fiscal 2010 were (i) individual performance, (ii) the Towers Watsonbased on market data and analysis provided by our outside compensation consultant and described above under“Determination of Compensation — Peer Group Analysis,Analysis.”(iii) internal peer equity, (iv)The placement of any given award within that market-determined range was based largely on job responsibilities and individual performance during the current valueprior fiscal year, or for newly hired executives, their prior experience and the Committee’s desire to quickly align their interests with those of each executive officer’s equity holdings in the Company, and (v) job responsibilities. The Committee used the Towers Watson data and analysis to determine market median levels of equity awards for each executive position.our stockholders. The Committee also considered other factors in determining the actual awards based on particular circumstances for each executive. For instance, if the Towers Watson data suggested that two executive positions should have significantly differing annual awards to be at the market median, but the Committee believed that the FICO executives in these roles were of similar importance and value to FICO, the Committee might adjust the actual awards to bring them closer in line with each other. If the Committee determined that an annual equity award to a particular executive at approximately the market median would leave such executive meaningfully below an appropriate level in terms of total equity value outstanding, the Committee might increase the annual award. The Committee might also increase an executive’s annual award if it determined that his individual performance entitled him to be rewarded above the market median, or if it identified significant retention risk with respect to the executive.
Similar factors to those described in the preceding paragraph are considered in the context of new hire/promotion grants and special purpose grants. For instance, in July 2010, the Committee determined that we faced significant potential retention risk with respect to approximately 83 key senior leaders, including four of our executive officers. The Committee determined that the most appropriate action to drive continued retention and alignment with stockholders would be to selectively grant additional equity, in the form of restricted stock units, to these key individuals. Therefore, the Committee approved special purpose grants of 192,500 restricted stock units to these senior leaders, 32,500 of which were granted to the four executive officers in total. In addition, one of the four executive officer, recipients received a special award of 22,500 non-qualified stock option shares.
such as internal pay equity and concerns about retention risk.The Committee permits executives and certain other senior level employees to designate a portion of annual equity awards granted to them to be in the form of restricted stock unitsRSUs rather than stock options. The primary reason for this practice is to maximize the perceived value of equity awards among employees while maintaining an economically-equivalenteconomically equivalent impact to the Company. The maximum portion of an equity award that a senior executive may elect to receive in the form of restricted stock unitsRSUs is 50% of the stock option shares designated for grant. The
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portion of an equity grant that an executive elects to receive in the form of restricted stock unitsRSUs is converted from stock options using a valuation ratio of one restricted stock unitRSU for every three shares subject to a stock option. Stock options and restricted stock unitsRSUs granted by the Committee generally vest in four equal annual installments beginning on the first anniversary of the grant date.
The annual equity awards granted by the Committee in previous years typically consisted of a mix of stock options, some of which could be converted into RSUs as described above, and time-vested RSUs. Fiscal 2012 was the first year that PSUs were included in the award mix, representing one-half of the targeted annual equity grants made in December 2011 to the Company’s executive officers. The Committee introduced the PSUs to motivate top performance from its executives and to further align the Company’s compensation practices with those of its peers. The awards contained threshold, target and maximum performance levels. The number of performance shares subject to equity awards granted to employees was 1,549,511 in fiscal 2010, 1,467,216 in fiscal 2009, 1,339,325 in fiscal 2008, 1,904,853 in fiscal 2007, 3,363,800 shares in fiscal 2006, and 4,115,030 in fiscal 2005. The significantly lower number of shares in recent years relative to fiscal 2005 and 2006 reflects the Committee’s objective, in alignment with observed market trends, to reduce the broad-based use of equity compensation and to more frequently utilize restricted stock unit grants (as opposed to stock option grants) as a means of reducing the overall number of shares subject to awards. In light of this objective, in 2008 the Company amended its 1992 Long-term Incentive Plan to eliminate the evergreen provision that had previously caused the number of shares available for awards thereunder to be increased each year by a number of shares equal to 4% of the total number of common shares outstandingdeemed earned at the end of the most recently concluded fiscal year.
Executive Officer Employment Agreements — Dr. Mark N. Greene
On February 13, 2007, the Company entered into a letter agreement with Dr. Mark Greene providing for his employment as Chief Executive Officer2012 reflected 160% of the Company, andtarget amounts, which was calculated on June 30, 2008 the Company and Dr. Greene entered into an amendment thereof in response to provisions of Section 409Abasis of the Internal Revenue CodeCompany’s strong performance in fiscal 2012 relative to revenue and regulations thereunder (as so amended,net income metrics approved by the “Greene Letter Agreement”).
Pursuant to the Greene Letter Agreement, the initial term of Dr. Greene’s employmentCommittee. In accordance with the Company commenced on February 14, 2007, and will expire on February 13, 2012. He will be entitled to receive a base salary at an annualized rate of $550,000, which is subject to upward adjustment from time to time as determined by the Committee and is currently $625,000. He will also be eligible to participate in benefit plans that are generally available to our executives. For each full fiscal year of his employment, Dr. Greene will be eligible for a short-term incentive award opportunity payable from 0% to 200% of his base salary, with a target equal to 100% of his annual base salary, pursuant to terms and conditions established by the Committee from time to time. For fiscal 2007, Dr. Greene was guaranteed a minimum short-term incentive award at the target percentage, prorated basedPSU earnings model below, performance on the portion50% weighted revenue component of the fiscal 2012 PSU model of $671 million (excluding the impact of fiscal year he was employed by the Company, so long as he remained employed by the Company through the endacquisitions) yielded 200% funding of such fiscal year. We also paid Dr. Greene a sign-on bonus of $100,000 after commencement of his employment.
Dr. Greene’s initial equity grants pursuant to the Company’s LTIP consisted of an option to purchase 125,000 shares of the Company’s Common Stockthat component, and
restricted stock units covering 41,667 shares of the Company’s Common Stock. These awards vest in four equal annual installments beginningperformance on the
first anniversary50% weighted net income component of
$97 million (excluding the
grant date,net impact of fiscal year acquisitions and
the options have an exercise price equal to the closing market priceone-time restructuring costs) yielded 120% funding of
our Common Stockthat component.
PSUs are earned on the grant date. For each full fiscal yearbasis of his employment, Dr. Greene will be eligible for an annual equity grant based on achievement of objectives established bya one-year performance period but vest over the Committee (the “Annual Equity Award”). At target performance, the Annual Equity Award will be for an option to purchase 100,000 shares of our Common Stock at fair market value as offour years following the date of grant. Some or allThis structure allows the Committee to reward performance for a time period over which the Company has visibility, but creates long-term alignment with stockholders and retention incentives by distributing the payout over an additional three years.
The Committee has the discretion to make grants outside of the Annual Equity Award mayannual cycle for special purposes and to executives newly hired or promoted. Mr. Lansing’s equity grants are discussed above under“Chief ExecutiveOfficer.” Upon commencing employment, Mr. Wehmann and Dr. Wells each received non-qualified stock options, up to half of which could be converted by their election to RSUs, and PSUs subject to the same terms and conditions as those granted to other executive officers in December 2011. Dr. Wells had provided services to
the Company as a contractor before he was hired as an executive officer, and on that basis the Committee thought it was appropriate to hold him accountable for the Company’s financial performance for the whole fiscal year instead of adjusting the performance period for his PSUs. The Committee’s decision to maintain the fiscal-year performance period for Mr. Wehmann’s PSU award was related to his responsibility for the Company’s scores business, which is critical to the financial success of the Company overall, as the Committee wanted to ensure rapid alignment of his focus against fiscal 2012 Company financial targets. In each case, the new executive officer received a sizeable grant of stock options relative to the annual grants received by the incumbent executive officers in the last annual grant cycle as an inducement to accept the Company’s employment offer, while the size of the PSU award was scaled back from the level of the annual awards to reflect a partial year of service.
The Committee also decided to make a one-time grant of RSUs to the executive officers in fiscal 2012. The Committee has made use of such one-time grants in the past for motivational and retention purposes and thought that it was an important compensation element in fiscal 2012. The change in the compensation program of having half of the value of the annual equity award being granted in the form of restricted stock units or other equity-based awards thata new type of award (PSUs), compounded by the unknown impact market forces would have an equivalent economic valueon the executives’ ability to the potential option award.
If we terminate Dr. Greene’s employment without Cause, or if he resigns for Good Reason (each as defined below), Dr. Greene will be entitled toearn PSUs, created a lump sum payment equal to two times his then current base salary plus two times the actual annual incentive award last paid to him, and he will receive continuationlevel of medical and dental benefits for two years. Dr. Greene’s receipt of these severance amounts is conditioned on his delivery of anagreed-upon form of release and certain other conditions specifieduncertainty in the Greene Letter Agreement. Underlong-term incentive package that the Greene Letter Agreement, “Cause” includes Dr. Greene’s commissionCommittee wanted to mitigate as it promoted high performance and retention value. The Committee is not making use of a felony, willful act of fraud or material dishonesty related to his employment with the Company or likely to cause material harm to the Company, continued failure to perform his duties with the Company, or material breach of a Company policy. “Good Reason” includes a substantial diminutionRSUs in his status or position with the Company, relocation of his principal office by more than 40 miles, or material breach by the Companyfiscal 2013 except as part of the Greene Letter Agreement.
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Executive Officer Employment Agreements — Thomas A. Bradley
On March 11, 2009, the Company entered into a letter agreement with Thomas Bradley providing for his employment as Executive Vice President and Chief Financial Officer of the Company (the “Bradley Letter Agreement”). On November 19, 2010, the Company and Mr. Bradley entered into an amended letter agreement (the “Bradley Transition Agreement”) pursuant to which Mr. Bradley resigned from his officer position effective November 18, 2010, but will remain an employee of the Company through April 15, 2011 and receive an annual base salary of $320,000. Pursuant to the Transition Agreement, the Company agreed with Mr. Bradley that when he ceased to be Executive Vice President and Chief Financial Officer on November 18, 2010, it was a Qualifying Termination under the Bradley Letter Agreement, entitling him to the severance payments described therein. It was also agreed that Mr. Bradley would not receive any short-term incentive compensation for fiscal 2010 or 2011. Mr. Bradley’s Management Agreement with the Company was not affected by the Transition Agreement.
Pursuant to the Bradley Letter Agreement (prior to amendment by the Bradley Transition Agreement), the initial term of Mr. Bradley’s employment with the Company commenced on April 6, 2009, and was to expire on April 5, 2012. He was entitled to receive a base salary at an annualized rate of $450,000, subject to upward adjustment from time to time as determined by the Committee. He also was eligible to participate in benefit plans generally available to our executives. For each full fiscal year during the term of his employment, Mr. Bradley was to be eligible for a short-term incentive award opportunity payable from 0% to 100% of his annual base salary, with a target equal to 50% of his annual base salary, pursuant to terms and conditions established by the Committee from time to time. For fiscal year 2009, Mr. Bradley was guaranteed a minimum short-term incentive award of $112,500.
Mr. Bradley’s initial equity grant pursuant to the Company’s LTIP consisted of an option to purchase 225,000 shares of the Company’s Common Stock. This award was to vest in four equal annual installments beginning on the first anniversary of the grant date, and has an exercise price equal to the closing market price of our Common Stock on the grant date. For each full fiscal year of his employment, Mr. Bradley was to be eligible for an annual equity grant based on achievement of objectives established by the Committee (the “Annual Equity Award”). Some or all of the Annual Equity Award was permitted to be in the form of RSUs that have an equivalent economic value to an option award.
Pursuant to the Bradley Letter Agreement, subject to certain conditions, if Mr. Bradley’s employment was terminated by the Company without Cause or if he voluntary resigned for Good Reason (each as defined below) prior to the expiration of the term of the Letter Agreement, and such termination did not occur in connection with a change of control event, Mr. Bradley would be entitled (i) to the sum of his then-current annual base salary plus the total incentive bonus payment paid to him for the fiscal year preceding the termination, and (ii) for a period of 12 months following the effective date of termination, to continue to participate in any insured group health and group life insurance plan orongoing program of the Company at the Company’s expense. Pursuantallowing executives to the Bradley Transition Agreement, it was agreed that Mr. Bradley’s end of employment with the Company would entitle him to severance pursuant to these provisions, based on his new annual base salary rate of $320,000 and $0 for his incentive bonus for fiscal 2010, subject to him fulfilling all of the conditions for receiving such severance under the Bradley Letter Agreement.
Under the Bradley Letter Agreement, “Cause” included Mr. Bradley’s commission of a felony, willful act of fraud or material dishonesty related to his employment with the Company or likely to cause material harm to the Company, continued failure to perform his duties with the Company, or material breach of a Company policy. “Good Reason” included a material reduction in his authority or reporting relationships within the Company, or material breach by the Company of the Bradley Letter Agreement.
Executive Officer Employment Agreements — Charles Ill
On January 15, 2010, the Company entered into a letter agreement with Charles Ill as Executive Vice President, Sales and Marketing of the Company (the “Ill Letter Agreement”). The term of the Ill Letter Agreement is from February 1, 2010 through January 31, 2013. Pursuant to the Ill Letter Agreement, Mr. Ill received a signing bonus of $83,333 upon commencement of his employment and is entitled to receive a base salary at an annualized rate of $500,000, subject to upward adjustment from time to time during the term of the Ill Letter Agreement as determined by the Committee. He is also eligible to participate in benefit plans that are generally available to the
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Company’s executives. For each full fiscal year during the term of his Letter Agreement, Mr. Ill is eligible for an incentive award opportunity payable from 0% to 100% of his annual base salary, with a target equal to 50% of his annual base salary, pursuant to terms and conditions established by the Committee from time to time. For fiscal year 2010, Mr. Ill was guaranteed an incentive bonus of no less than $167,667, provided that Mr. Ill remained actively employed by the Company on the regular payout date for bonuses under the Company’s Management Incentive Plan for fiscal year 2010.
Mr. Ill was also entitled to an initial equity grant pursuant to the Company’s LTIP consisting of an option to purchase 250,000 shares of the Company’s common stock, with an exercise price equal to the fair market value of the Company’s common stock as of the date of grant (the date Mr. Ill commenced his employment with the Company). In accordance with the policies and practices of the Company, Mr. Ill elected to receive RSUs in lieu of approximately one-half of the shares of the initial option award on the basis of one RSU for every three shares of the initial option award that were foregone. As a result, Mr. Ill’s initial equity grant consisted of 41,666 RSUs and an option to purchase 125,002 shares of the Company’s common stock, both of which are subject to four-year ratable vesting. For each full fiscal year of his employment, Mr. Ill is to be eligible for an annual equity grant based on achievement of objectives established by the Committee (the “Annual Equity Award”). Some or all of the Annual Equity Award may be in the form of RSUs that have an equivalent economic value to an option award.
Subject to certain conditions, if Mr. Ill’s employment is terminated by the Company without Cause or if he voluntarily resigns for Good Reason (each as defined below) prior to the expiration of the term of the Ill Letter Agreement, and such termination does not occur in connection with a change of control event, Mr. Ill will be entitled (i) to the sum of his then-current annual base salary plus the total incentive bonus payment paid to him for the fiscal year preceding the termination (or, if the termination occurs before Mr. Ill receives his incentive bonus for fiscal year 2010, the amount of Mr. Ill’s minimum guaranteed incentive bonus for fiscal 2010), and (ii) for a period of 12 months following the effective date of termination, to continue to participate in any insured group health and group life insurance plan or program of the Company at the Company’s expense. Under the Ill Letter Agreement, “Cause” includes Mr. Ill’s commission of a felony, willful act of fraud or material dishonesty related to his employment with the Company or likely to cause material harm to the Company, continued failure to perform his duties with the Company, or material breach of a Company policy. “Good Reason” includes a material reduction in his authority or reporting relationships within the Company, or material breach by the Company of the Ill Letter Agreement.
Executive Officer Employment Agreements — Jordan Graham
On July 28, 2010, the Company entered into a letter agreement with Jordan Graham as Executive Vice President, Scores and President of FICO Consumer Services (the “Graham Letter Agreement”). The term of the Graham Letter Agreement is from August 2, 2010 through December 31, 2013. Pursuant to the Graham Letter Agreement, Mr. Graham received a signing bonus of $200,000 upon commencement of his employment and is entitled to receive a base salary at an annualized rate of $450,000, subject to upward adjustment from time to time during the term of the Graham Letter Agreement as determined by the Committee. He is also eligible to participate in benefit plans that are generally available to the Company’s executives. For each full fiscal year during the term of his Letter Agreement, Mr. Graham will participate in two different cash incentive bonus plans. The first is an incentive award opportunity, under the annual Management Incentive Plan in which all of our executive officers (except Dr. Greene) participate, payable from 0% to 100% of his annual base salary, with a target equal to 50% of his annual base salary, pursuant to terms and conditions established by the Committee from time to time. Mr. Graham was guaranteed an incentive bonus of no less than $50,000 for fiscal year 2010, and $225,000 for fiscal year 2011, provided in each case that Mr. Graham remains actively employed by the Company on the regular payout date for bonuses under the Company’s Management Incentive Plan for each such fiscal year. The second is an incentive award opportunity under the Company’s Consumer Services Incentive Plan, starting with fiscal year 2011. Prior to each year, the Committee and Mr. Graham will jointly establish a goal under this plan for the Company’s Consumer Services business. Mr. Graham’s incentive compensation under this plan will be $0 if such goal is not achieved, $200,000 if such goal is achieved, and may increase substantially for performance in excess of such goal (based on a formula to be established jointly by the Committee and Mr. Graham prior to each year).
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Mr. Graham was also entitled to an initial equity grant pursuant to the Company’s LTIP consisting of an option to purchase 200,000 shares of the Company’s common stock, with an exercise price equal to the fair market value of the Company’s common stock as of the date of grant (the date Mr. Graham commenced his employment with the Company). In accordance with the policies and practices of the Company, Mr. Graham elected to receive RSUs in lieu of approximately one-half of the shares of the initial option award on the basis of one RSU for every three shares of the initial option award that were foregone. As a result, Mr. Graham’s initial equity grants consisted of 33,333 RSUs and an option to purchase 100,001 shares of the Company’s common stock, both of which are subject to four-year ratable vesting. For each full fiscal year of his employment, Mr. Graham is to be eligible for an annual equity grant based on achievement of objectives established by the Committee (the “Annual Equity Award”). Some or all of the Annual Equity Award may be in the form of RSUs that have an equivalent economic value to an option award.
Subject to certain conditions, if Mr. Graham’s employment is terminated by the Company without Cause or if he voluntarily resigns for Good Reason (each as defined below) prior to January 1, 2013, and such termination does not occur in connection with a change of control event, Mr. Graham will be entitled (i) to the sum of 1.75 times his then-current annual base salary, plus the total incentive bonus payment paid to him for the fiscal year preceding the termination (or, if the termination occurs before Mr. Graham receives his incentive bonus for fiscal year 2011, the amount of Mr. Graham’s minimum guaranteed incentive bonus for fiscal 2011), and (ii) for a period of 12 months following the effective date of termination, to continue to participate in any insured group health and group life insurance plan or program of the Company at the Company’s expense. In the event any such termination of Mr. Graham’s employment occurs on or after January 1, 2013, but prior to the expiration of the term of the Graham Letter Agreement, Mr. Graham will be entitled to the same severance amounts and benefits, except that his then-current annual base salary will not be multiplied by 1.75 for purposes of determining the cash severance amount he is to receive.
Under the Graham Letter Agreement, “Cause” includes Mr. Graham’s commission of a felony, willful act of fraud or material dishonesty related to his employment with the Company or likely to cause material harm to the Company, continued failure to perform his duties with the Company, or material breach of a Company policy. “Good Reason” includes a material reduction in his authority or reporting relationships within the Company, or material breach by the Company of the Graham Letter Agreement.
Executive Officer Employment Agreements — Deborah Kerr
On January 12, 2009, the Company entered into a letter agreement with Deborah Kerr as Executive Vice President, Chief Technology and Products Officer of the Company (the “Kerr Letter Agreement”). The term of the Kerr Letter Agreement is from February 2, 2009 through February 2, 2012. Pursuant to the Kerr Letter Agreement, Ms. Kerr received a signing bonus of $100,000 upon commencement of her employment and is entitled to receive a base salary at an annualized rate of $450,000, subject to upward adjustment from time to time during the term of the Kerr Letter Agreement as determined by the Committee. Her base salary is currently $500,000. She is also eligible to participate in benefit plans that are generally available to the Company’s executives. For each full fiscal year during the term of her Letter Agreement, Ms. Kerr is eligible for an incentive award opportunity payable from 0% to 100% of her annual base salary, with a target equal to 50% of her annual base salary, pursuant to terms and conditions established by the Committee from time to time. For fiscal year 2009, Ms. Kerr was guaranteed an incentive bonus of no less than $145,000, provided that Ms. Kerr remained actively employed by the Company on the regular payout date for bonuses under the Company’s Management Incentive Plan for fiscal year 2009.
Ms. Kerr was also entitled to an initial equity grant pursuant to the Company’s LTIP consisting of an option to purchase 225,000 shares of the Company’s common stock, with an exercise price equal to the fair market value of the Company’s common stock as of the date of grant (the date Ms. Kerr commenced her employment with the Company). In accordance with the policies and practices of the Company, Ms. Kerr elected to receive RSUs in lieu ofconvert a portion of the
sharesvalue of their stock option grants into RSUs.The graphs below depict the evolution of the initial option award onlong-term incentive program to increasingly emphasize the basis of one RSU for every three shares of the initial option award that were foregone. As a result, Ms. Kerr’s initial equity grants consisted of 26,250 RSUs and an option to purchase 146,250 sharesachievement of the Company’s commonfinancial targets and the creation of shareholder value through grants of PSUs and stock bothoptions, respectively, and the de-emphasis of time-vested RSUs. The values reflected assume that all executives elect to convert the maximum allowable portion of their annual stock option grants to RSUs, which has been the typical pattern over time, and depicts PSUs at target level.
As reflected in the last graph above, the equity award made to Mr. Lansing in December 2012 included 70,000 stock options, in addition to the stock options granted as a component of his annual award (up to one-half of which are subjectcan be converted to four-year ratable vesting. For each full fiscal year of her employment, Ms. Kerr is to be eligible for an annual equity grant based on achievement of objectives established by the Committee (the “Annual Equity Award”). Some or all of the Annual Equity Award may be in the form of RSUs that have an equivalent economic value to an option award.
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Subject to certain conditions, if Ms. Kerr’s employment is terminated by the Company without Cause or if she voluntarily resigns for Good Reason (each as defined below) prior to the expiration of the term of the Kerr Letter Agreement, and such termination does not occur in connection with a change of control event, Ms. Kerr will be entitled (i) to the sum of her then-current annual base salary plus the total incentive bonus payment paid to her for the fiscal year preceding the termination (or, if the termination occurred before Ms. Kerr received her incentive bonus for fiscal year 2009, the amount of Ms. Kerr’s minimum guaranteed incentive bonus for fiscal 2009), and (ii) for a period of 12 months following the effective date of termination, to continue to participate in any insured group health and group life insurance plan or program of the Company at the Company’s expense. Under the Kerr Letter Agreement, “Cause” includes Ms. Kerr’s commission of a felony, willful act of fraud or material dishonesty related to her employment with the Company or likely to cause material harm to the Company, continued failure to perform her duties with the Company, or material breach of a Company policy. “Good Reason” includes a material reduction in her authority or reporting relationships within the Company, or material breach by the Company of the Kerr Letter Agreement.
Executive Officer Management Agreements
Each of our executive officers is a party to a Management Agreement with the Company. The Management Agreements are for a fixed term with automatic one-year extensions. Except in the case of Dr. Greene, if during the term of the Management Agreements a change of control Event occurs, and if the executive officer’s employment is terminated in connection with or within one year following the Event due to an involuntary termination by the Company without Cause or for Good Reason by the executive (as defined in the Management Agreement), we will pay such officer a severance amount equal to one times such officer’s then-current annual base salary, plus an amount equal to the total incentive payments made to the officer during the prior fiscal year,RSUs) and the officer will be eligiblePSUs. The Committee decided to participate in group health and life insurance plans for twelve months following his termination date at our expense. In addition, all of such officer’s unvestedgrant him the 70,000 additional stock options, which cannot be converted to RSUs, in recognition of strong Company and restricted stock units will vestindividual performance in full, subject to certain limitations specified in the Management Agreement. The officer’s receipt of these severance amounts is conditioned on the officer’s delivery of a release of claims and agreement not to solicit Company employees for one year following termination of employment. Dr. Greene’s Management Agreement provides the same general provisions in the case of a termination of employment in connection with or following a change of control Event, except that Dr. Greene’s severance will be in the amount of two times base salary, two times the incentive payments for the prior fiscal year, and 24 months of continued group health and life insurance.
2012.Severance and Retirement Arrangements
We sponsor the Fair Isaac Severance Benefits Plan, which is an ERISA-qualified severance benefit plan in which all employees, including executives, participate. Under this plan, an employee receives severance benefits in the event that he or she is involuntarily terminated due to the elimination of his or her position with the Company. The level of such benefits is determined based on the employee’s years of service and assigned job level. If an executive officer is terminated under circumstances that would trigger benefits under both this plan and his or her Management Agreement, such executive would receive benefits under whichever is more favorable to him or her, but not both.
We offer a 401(k) plan for all eligible employees, and our executive officers are eligible to receive a Company matching contribution on amounts they contribute to the 401(k) plan as follows: 100% match of the first 3% of eligible compensation contributed by the executive officer, followed by a 50% match of the next 2% of eligible compensation contributed by the executive officer. Our executive retirement and savings plan allows our vice presidents and more senior officers to defer up to 25% of their base salary and 75% of their cash incentive awards into an investment account. Amounts in this account are payable upon certain termination events as specified in the plan.
Other Compensation Arrangements
Each of our current named executive officers is party to a Letter Agreement that, among other things, provides for pay and benefits in the event of termination of employment by the Company without cause or by the executive for good reason, and a Management Agreement that provides for pay and benefits in the event of such a termination in connection with a change in control. The Committee believes that these severance and change-in-control arrangements are meaningful recruitment and retention devices, are important components in a competitive compensation package for the named executive officers, and will mitigate concerns that the executives may have regarding their continued employment prior to or following a change in control, thereby allowing them to focus their undivided attention on advancing the interests of the Company and its stockholders.
Our executive officers participate in our general employee benefit plans and programs, including health and dental benefits, on the same terms as all of our other full-time employees. We have historically offered an employee stock purchase plan that gives all eligible employees the opportunity to purchase shares of our Common Stock at a
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15% discount off the fair market value of our Common Stock, as determined under the plan. However, the Board of Directors suspended this plan effective January 1, 2009. We also pay the premiums for group life, accidental death and dismemberment, and business travel accident insurance for all eligible employees, including executive officers, in a coverage amount based upon their base salary.
Equity Award Grant Processes
Equity awards granted to named executive officers in fiscal 2012 were granted under the 2012 LTIP or, in the case of stock options and RSUs granted in December 2011, our 1992 Long-term Incentive Plan (“1992 LTIP”), which has since expired. Equity awards for all executive officers are approved by the Committee. The exercise price of stock options is set at fair market value on the date of grant, with annual equity awards generally granted by the Committee during December of each fiscal year. Under both the 2012 LTIP and the 1992 LTIP, fair market value is defined as the closing price of our Common Stockcommon stock on the date of grant. The Committee has delegated authority to our CEO to approve the granting of equity awards to employees who are not executive officers, subject to certain parameters approved by the Committee. The exercise price of stock options granted by our CEO is set using the formula described above.
Executive Stock Ownership Guidelines
In November 2009, the Board of Directors adopted stock ownership guidelines for the Company’s executive officers. The stock ownership guidelines are expressed as a fixed number of shares, varying by role, pegged to a particular level of underlying value. For the Chief Executive Officer, the target is 100,000 shares. For Executive Vice Presidents, the target is 50,000 shares. For Senior Vice Presidents, the target is 25,000 shares. The guidelines provide that executive officers should achieve the stated target within five years of appointment. AllAs of the end of fiscal 2012, all executive officers who have been serving for at least five years currently meethad met the targeted stock ownership guidelines.
level applicable to their role or were making acceptable progress to their target level.Shares of stock owned by the executive officers for satisfying the stock ownership requirements (a) include shares the individual owns outright, shares owned by the individual’s immediate family, shares owned in trust for the individual, shares held in a trust or estate controlled by the individual, or of which the individual is settlorsettler or administrator and shares held in an individual’s account under a personal or employer savings plan; (b) include shares under restriction requiring only the passage of time and the individual’s continued service to cause the restriction’s removal; (c) include vested unexercised stock options such that said options will be counted toward the ownership guideline by calculating the pre-tax margin value and dividing by the current fair market value per share; and (d) exclude unvested stock options, unvested performance-based shares, and cash compensation plans based on stock appreciation.
Consideration of Tax and Accounting Matters
Section 162(m) of the Internal Revenue Code generally precludes a public corporation from taking a federal income tax deduction for compensation paid in excess of one million dollars per year to certain covered officers. Under this section, compensation that qualifies as performance-based is excludable in determining what compensation amount shall qualify for tax deductibility.
The Committee considers the Company’s ability to fully deduct compensation in accordance with the limitations of Section 162(m) in structuring our compensation programs. However, the Committee retains the authority to authorize the payment of compensation that may not be deductible if it believes such payments would be in the best interests of the Company and its stockholders.
The Committee will continue to consider ways to maximize the deductibility of executive compensation while retaining the flexibility to compensate executive officers in a manner deemed appropriate relative to their performance and to competitive compensation levels and practices at other companies.
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Compensation Committee Report The Committee has discussed and reviewed the “Compensation Discussion and Analysis” with management. Based upon this review and discussion, the Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference in our Annual Report onForm 10-K.
Submitted by the Compensation Committee:
Margaret L. Taylor, Chair
Alex W. Hart
ChairA. George Battle
Rahul N. Merchant
Compensation Policies and Practices in Relation to Risk Management
The Company’s management and Compensation Committee are committed to continually assessing the structure of the Company’s compensation programs in the context of recognized best practices. Total compensation consists of a mix of fixed and variable elements, and among our officers a significant component of total compensation comes in the form of long-term equity incentives that vest over several years. The stock ownership guidelines in place for our executive officers also work to align our executives’ long-term interests with those of our stockholders.
Our cash incentive program applicable to both executives and other employees is structured to reward achievement of diverse goals, some of which are tied to Company-wide performance and some of which are tied to business unit performance, but all of which are designed to benefit the Company and its stockholders on a long-term basis. In addition, the Compensation Committee retains discretion to adjust awards under the cash incentive program if a payout determined under the formula is not appropriate in the circumstances, and maximum award levels are in place to limit windfalls. Finally, our system of internal controls places a strong focus on avoiding undue financial risk through rigorous review processes.
In light of the risk-limiting features of its compensation policies and practices, the Company has concluded that any risks arising from its compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.
COMPENSATION OF NAMED EXECUTIVESCompensation Consultant Conflict of Interest Analysis
The Compensation Committee has considered the relationships that the compensation consultants it engaged in fiscal 2012 have had with the Company, the members of the Compensation Committee and our executive officers, as well as the policies that the consultants have in place to maintain their independence and objectivity, and has determined that no conflicts of interest arose from the work performed by such consultants.
SUMMARY COMPENSATION TABLE FOR FISCAL 2010
The following table summarizes all compensation earned in fiscal 2012, 2011 and 2010 by our Chief Executive Officer, Chief Financial Officer and the three most highly compensated executive officers other than our Chief Executive Officer and Chief Financial Officer who were serving as executive officers at fiscal year-end 2010. These five individuals are referred to herein as our named executive officers.
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Change in
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Pension Value
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | and Non-
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Qualified
| | | | | | | |
| | | | | | | | | | | | | | | | | | Non-Equity
| | | Deferred
| | | | | | | |
| | | | | | | | | | | | Stock
| | | Option
| | | Incentive
| | | Compensation
| | | All Other
| | | | |
| | | Fiscal
| | | Salary
| | | Bonus
| | | Awards
| | | Awards
| | | Plan
| | | Earnings
| | | Compensation
| | | Total
| |
| | | Year
| | | ($)1
| | | ($)
| | | ($)2
| | | ($)2
| | | ($)3
| | | ($)
| | | ($)4
| | | ($)
| |
Name and Principal Position(a) | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | |
| |
| Mark Greene | | | 2010 | | | | 625,000 | | | | — | | | | 248,875 | | | | 787,500 | | | | 161,800 | | | | — | | | | 15,913 | | | | 1,839,088 | |
| Chief Executive Officer | | | 2009 | | | | 625,000 | | | | — | | | | 159,725 | | | | 543,474 | | | | 160,500 | | | | — | | | | 22,738 | | | | 1,511,437 | |
| | | | 2008 | | | | 613,462 | | | | — | | | | 720,675 | | | | 1,274,625 | | | | — | | | | — | | | | 71,475 | | | | 2,680,237 | |
Thomas Bradley5 | | | 2010 | | | | 450,000 | | | | — | | | | — | | | | 350,000 | | | | — | | | | — | | | | 11,589 | | | | 811,589 | |
| Former Executive Vice | | | 2009 | | | | 207,692 | | | | — | | | | — | | | | 1,287,000 | | | | 112,500 | | | | — | | | | 8,377 | | | | 1,615,569 | |
| President and Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles Ill6 | | | 2010 | | | | 317,308 | | | | 83,333 | | | | 1,082,936 | | | | 928,765 | | | | 166,667 | | | | — | | | | 330 | | | | 2,579,339 | |
| Executive Vice President | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Jordan Graham6 | | | 2010 | | | | 60,577 | | | | 200,000 | | | | 782,659 | | | | 796,008 | | | | 50,000 | | | | — | | | | 297 | | | | 1,889,541 | |
| Executive Vice President Scores and President of FICO Consumer Services Division | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deborah Kerr7 | | | 2010 | | | | 450,961 | | | | — | | | | 296,585 | | | | 552,007 | | | | 100,000 | | | | — | | | | 10,130 | | | | 1,409,683 | |
| Executive Vice President and Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (a) | | Fiscal
Year
(b) | | | Salary
($)(1)
(c) | | | Bonus
($)
(d) | | | Stock
Awards
($)(2)(3)
(e) | | | Option
Awards
($)(2)(3)
(f) | | | Non-Equity
Incentive
Plan
($)(4)
(g) | | | Change in
Pension Value
and Non-
Qualified
Deferred
Compensation
Earnings
($)
(h) | | | All Other
Compensation
($)(5)
(i) | | | Total
($)
(j) | |
William Lansing(6) | | | 2012 | | | | 430,961 | | | | 450,000 | (7) | | | 3,558,000 | | | | 1,696,500 | | | | — | | | | — | | | | 35,246 | | | | 6,170,707 | |
Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mark Greene(8) | | | 2012 | | | | 403,654 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,880 | | | | 411,534 | |
Former Chief Executive Officer | | | 2011 | | | | 665,385 | | | | — | | | | 346,200 | | | | 1,043,445 | | | | 310,000 | | | | — | | | | 16,796 | | | | 2,381,826 | |
| | | 2010 | | | | 625,000 | | | | — | | | | 248,875 | | | | 787,500 | | | | 161,800 | | | | — | | | | 15,913 | | | | 1,839,088 | |
Michael Pung(9) | | | 2012 | | | | 395,192 | | | | — | | | | 1,244,600 | | | | 295,012 | | | | 195,000 | | | | — | | | | 159,148 | | | | 2,288,951 | |
Executive Vice President and Chief Financial Officer | | | 2011 | | | | 357,692 | | | | — | | | | 592,500 | | | | 777,000 | | | | 100,000 | | | | — | | | | 10,371 | | | | 1,837,563 | |
Stuart Wells(6) | | | 2012 | | | | 548,573 | (10) | | | 100,000 | (7) | | | 2,420,205 | | | | 1,676,277 | | | | — | | | | — | | | | 6,484 | | | | 4,751,539 | |
Executive Vice President and Chief Technology Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
James Wehmann(6) | | | 2012 | | | | 184,615 | | | | 200,000 | (11) | | | 1,879,786 | | | | 1,366,014 | | | | — | | | | — | | | | 264 | | | | 3,630,679 | |
Executive Vice President, Scores | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Charles Ill | | | 2012 | | | | 550,000 | | | | — | | | | 1,600,200 | | | | 354,000 | | | | 300,000 | | | | — | | | | 10,441 | | | | 2,814,641 | |
Executive Vice President | | | 2011 | | | | 529,616 | | | | — | | | | 851,900 | | | | 477,000 | | | | 175,000 | | | | — | | | | 13,074 | | | | 2,046,589 | |
| | | 2010 | | | | 317,308 | | | | 83,333 | | | | 1,082,936 | | | | 928,765 | | | | 166,667 | | | | — | | | | 330 | | | | 2,579,339 | |
Deborah Kerr(12) | | | 2012 | | | | 341,538 | | | | — | | | | 2,442,148 | | | | 1,117,500 | | | | — | | | | — | | | | 8,607 | | | | 3,909,793 | |
Former Executive Vice President and Chief Technology Officer | | | 2011 | | | | 500,000 | | | | — | | | | 474,800 | | | | 477,000 | | | | 140,000 | | | | — | | | | 10,130 | | | | 1,601,930 | |
| | | 2010 | | | | 450,961 | | | | — | | | | 296,585 | | | | 552,007 | | | | 100,000 | | | | — | | | | 10,130 | | | | 1,409,683 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| (1) | | |
1 | | Annualized base salaries for fiscal 20102012 for the NEO’snamed executive officers were as follows: Mr. Lansing — $675,000; Dr. Greene — $625,000;$675,000; Mr. BradleyPung — $450,000;$400,000; Dr. Wells — $500,000; Mr. Wehmann — $400,000; Mr. Ill — $500,000; Mr. Graham — $450,000 and$550,000; Ms. Kerr — $500,000. The different amounts reflected inIn January 2012, Dr. Greene’s salary was reduced to $250,000 pursuant to the Salary column above are because Messrs. Ill and Graham joined the Company during fiscal 2010 and Ms. Kerrterms of his Transition Agreement. In November 2011, Mr. Pung received a salary increase from $375,000 to $500,000 due$400,000 when he was promoted to market competitive factors in May 2010.Executive Vice President. In April 2012, Ms. Kerr’s salary was reduced to $100,000 pursuant to the terms of her Transition Agreement. |
|
2(2) | | The amounts in this columnthe “Stock Awards” and “Option Awards” columns represent the aggregate grant date fair value of each award granted during the fiscal year, computed in accordance with FASB ASC Topic 718, and do not reflect whether the named executive officer |
33
| | |
| | has actually realized a financial benefit from the award. For information on the assumptions used to calculate the value of the awards, refer to Note 1714 of the Company’s Consolidated Financial Statements in the Annual Report onForm 10-K for the fiscal year ended September 30, 2010,2012, as filed with the SEC. |
| (3) | Stock Awards include the grant date fair value of time-based RSU awards under the 1992 LTIP and PSU awards under the 2012 LTIP granted December 13, 2011. The PSUs granted under the 2012 LTIP were tied to the achievement of certain performance goals during fiscal 2012 and the named executive officer must be an employee on the vesting dates of December 13th of 2012, 2013, 2014 and 2015 in order to realize earned PSU value. The values included in the table for the PSUs are at target value, representing the probable outcome of the performance conditions as calculated at the time of grant. The maximum value of the award on the grant date assuming the highest level of performance conditions achieved would be $3,558,000 vs. target of $1,779,000 for Mr. Lansing; $1,185,357 vs. target of $592,679 for Mr. Pung; $1,281,300 vs. target of $640,650 for Dr. Wells; $867,600 vs. target of $433,800 for Mr. Wehmann; $1,422,400 vs. target of $711,200 for Mr. Ill; and $1,422,400 vs. target of $711,200 for Ms. Kerr. |
In accordance with her Transition Agreement, Ms. Kerr forfeited her PSU award. The other named executive officers earned 160% of their respective target award, resulting in 80,000 units for Mr. Lansing, 26,668 units for Mr. Pung, 24,000 units for Dr. Wells, 16,000 units for Mr. Wehmann, and 32,000 units for Mr. Ill.
Ms. Kerr’s time-based RSU and stock option awards that were outstanding at the time she entered into her Transition Agreement were subject to an accounting modification due to her change in employment status. The modification resulted in an aggregate fair value of $1,605,448, which amount is included in the amounts reported for Stock Awards and Option Awards.
3(4) | | Dr. Greene’s non-equity incentive award isRepresents amounts paid in the first quarter of fiscal 2013 based on his employment agreement. Messrs. Ill and Graham’s non-equity incentive awards forperformance during fiscal 2010 were guaranteed pursuant to the Ill Letter Agreement and Graham Letter Agreement, respectively. Ms. Kerr’s non-equity incentive award for fiscal 2010 was determined2012 under theour Management Incentive Plan, which provided for an award opportunity after the fiscal year end. Pursuant to the Bradley Transition Agreement, Mr. Bradley did not receive a payout under the 2010 Management Incentive Plan. |
|
4(5) | | The amounts shown for fiscal 20102012 are detailed in the supplemental table below entitled “All Other Compensation Table.” |
|
5(6) | | Mr. Bradley announced his intention to retire fromLansing, Dr. Wells and Mr. Wehmann joined the Company on November 16, 2010,January 27, 2012, April 25, 2012 and in connection therewith resigned as Executive Vice President and Chief Financial Officer effective November 18, 2010. Pursuant to the Bradley Transition Agreement, Mr. Bradley will remain an employee of the Company through April 15, 2011. Mr. Bradley joined the Company in April 2009 and therefore he does not have compensation data included in this table for fiscal 2008. Michael Pung, who was the Company’s Vice President, Finance and Investor Relations, was appointed Senior Vice President and Chief Financial Officer on November 18, 2010. |
|
6 | | Messrs. Ill and Graham joined the Company in February 2010 and August 20101, 2012, respectively, and therefore they do not have compensation data included in this table for prior periods. |
| (7) | Represents the minimum cash incentive payment guaranteed by the new executive officer’s Letter Agreement. The executive officer participated in the Management Incentive Plan and could have been awarded a higher amount pursuant to that program, which would have then been reported in the “Non-Equity Incentive Plan” column, but was awarded the guaranteed amount. |
7(8) | | Ms. Kerr joinedDr. Greene announced his intention to resign from the Company on January 24, 2012, and in February 2009connection therewith resigned as Chief Executive Officer effective January 26, 2012. Pursuant to his Transition Agreement, as amended, Dr. Greene remained an employee of the Company until December 18, 2012. |
| (9) | Mr. Pung was appointed Chief Financial Officer on November 18, 2010, and was not a named executive officer for fiscal year 2009,2010, and therefore she does not have compensation data included in this table for fiscal 2008 or 2009.that period. |
| (10) | $350,496 of this amount represents the consulting fees paid to Dr. Wells during fiscal 2012, but prior to his accepting an executive position with the Company. |
| (11) | $100,000 of this amount represents a signing bonus paid to Mr. Wehmann pursuant to his Letter Agreement. The remaining $100,000 of this amount represents the minimum cash incentive payment guaranteed to Mr. Wehmann by his Letter Agreement. Mr. Wehmann participated in the Management Incentive Plan and could have been awarded a higher amount pursuant to that program, which would have then been reported in the “Non-Equity Incentive Plan” column, but was awarded the guaranteed amount. |
| (12) | Ms. Kerr was employed by the Company as Executive Vice President and Chief Technology Officer from the beginning of fiscal 2012 through April 25, 2012, as of which date she remained employed in a non-executive capacity until December 19, 2012 pursuant to her Transition Agreement. |
All Other Compensation Table
| | | | | | | | | | | | | | | | | | | | | |
| | | Mark
| | | Thomas
| | | Charles
| | | Jordan
| | | Deborah
| |
Elements of All Other Compensation | | Greene | | | Bradley | | | Ill | | | Graham | | | Kerr | |
| |
401(k) Match($)1 | | | 9,615 | | | | 11,292 | | | | — | | | | — | | | | 9,800 | |
Life Insurance Premium($)2 | | | 413 | | | | 297 | | | | 330 | | | | 297 | | | | 330 | |
| Housing/Relocations($) | | | — | | | | — | | | | — | | | | — | | | | — | |
Spousal Travel($)3 | | | 3,123 | | | | — | | | | — | | | | — | | | | — | |
Tax Gross Ups($)3,4 | | | 1,517 | | | | — | | | | — | | | | — | | | | — | |
Other($)5 | | | 1,245 | | | | — | | | | — | | | | — | | | | — | |
| Amount Paid Upon Termination, Severance, or Constructive Termination or Change of Control($) | | | — | | | | — | | | | — | | | | — | | | | — | |
| TOTAL($) | | | 15,913 | | | | 11,589 | | | | 330 | | | | 297 | | | | 10,130 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Elements of All Other Compensation | | William
Lansing | | | Mark
Greene | | | Michael
Pung | | | Stuart
Wells | | | James
Wehmann | | | Charles
Ill | | | Deborah
Kerr | |
401(k) Match($)(1) | | | 9,800 | | | | 6,138 | | | | 9,762 | | | | 6,154 | | | | — | | | | 10,077 | | | | 8,277 | |
Life Insurance Premium($)(2) | | | 446 | | | | 446 | | | | 264 | | | | 330 | | | | 264 | | | | 364 | | | | 330 | |
Housing/Relocation($) | | | — | | | | — | | | | 110,568 | (3) | | | — | | | | — | | | | — | | | | — | |
Tax Gross Ups($) | | | — | | | | — | | | | 38,554 | (4) | | | — | | | | — | | | | — | | | | — | |
Other($) | | | 25,000 | (5) | | | 1,296 | (6) | | | — | | | | — | | | | — | | | | — | | | | — | |
Total($) | | | 35,246 | | | | 7,880 | | | | 159,148 | | | | 6,484 | | | | 264 | | | | 10,441 | | | | 8,607 | |
| (1) | | |
1 | | Represents the aggregate value of the Company’s cash contribution under the FICO 401(k) Plan during fiscal 2010.2012. |
|
2(2) | | Represents the aggregate incremental cost for each of the named executive officer’s basic life insurance premium, which is offered to all employees at one times current salary. |
| (3) | Represents expenses, including a home sale incentive payment of $55,000, related to Mr. Pung’s relocation from Minnesota to California. Further expenses related to this relocation will be accrued in fiscal 2013. |
3(4) | | Reflects the value associated with personal commercial aircraft travel of Dr. Greene’s spouse who was required by the Company to attend certain Company events. The value of such spousal travel was imputed to income for Dr. Greene, and the Company issued aRepresents gross-up payment, shown in the tax gross ups row, to substantially offset related tax liabilities. |
|
4 | | Effective January 1, 2009 the Company established a policy that provides only two permissible reasons forgross-up payments to offset imputed income: (i)income for the cost of Mr. Pung’s relocation. Company policy allows gross-ups only for required spousal travel and Company sponsored relocation costs, when the business event requires the spouseapplicable. |
| (5) | Represents legal costs incurred by Mr. Lansing to attend and (ii) relocation charges whennegotiate his employment package with the Company, moves an executive to another geographical location.as provided in his Letter Agreement. |
|
5(6) | | The Company pays forRepresents 25% of Dr. Greene’s annual membership atto the Minneapolis ClubClub. The Company paid for this annual membership as this membershipit is used primarily for business purposes. Twenty-five percent of this annualthe cost is imputed to Dr. Greene as income |
34
| | |
| | representing secondary personal use. The Company does not make gross up payments to offset any related tax liabilities associated with this imputed income. |
GRANTS OF PLAN-BASED AWARDS IN 2010FISCAL 2012
The following table summarizes grants of plan-based compensation awards made during fiscal 20102012 to our named executive officers.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | All Other
| | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Stock
| | | All Other
| | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Awards:
| | | Option
| | | | | | Grant
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | Number
| | | Awards:
| | | Exercise
| | | Date Fair
| |
| | | | | | | | | Estimated Possible Payouts
| | | Estimated Future Payouts
| | | of
| | | Number of
| | | or Base
| | | Value of
| |
| | | | | | | | | Under Non-Equity Incentive
| | | Under Equity Incentive
| | | Shares
| | | Securities
| | | Price of
| | | Stock and
| |
| | | | | | | | | Plan Awards2 | | | Plan Awards | | | of Stock
| | | Underlying
| | | Option
| | | Option
| |
| | | | | | Approval
| | | Threshold
| | | Target
| | | Maximum
| | | Threshold
| | | Target
| | | Maximum
| | | or Units
| | | Options
| | | Awards
| | | Awards
| |
Name
| | Grant Date
| | | Date
| | | ($)
| | | ($)
| | | ($)
| | | ($)
| | | ($)
| | | ($)
| | | (#)
| | | (#)
| | | ($/SH)
| | | ($)3
| |
(a) | | (b)1 | | | (c) | | | (d) | | | (e) | | | (f) | | | (g) | | | (h) | | | (i) | | | (j) | | | (k) | | | (l) | | | (m) | |
| |
| Mark Greene | | | 12/18/2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 112,500 | 4 | | | 20.31 | | | | 787,500 | |
| | | | 12/18/2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12,500 | 6 | | | — | | | | — | | | | 248,875 | |
| | | | 02/14/2007 | | | | 02/07/2007 | 5 | | | 0 | | | | 625,000 | | | | 1,250,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Thomas Bradley | | | 12/18/2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 50,000 | 4 | | | 20.31 | | | | 350,000 | |
| | | | 10/12/2009 | | | | — | | | | 0 | | | | 225,000 | | | | 450,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Charles Ill | | | 02/01/2010 | | | | 01/15/20107 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 125,002 | 4 | | | 22.01 | | | | 928,765 | |
| | | | 02/01/2010 | | | | 01/15/20107 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 41,666 | 6 | | | — | | | | — | | | | 902,486 | |
| | | | 07/23/2010 | 7 | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,500 | 6 | | | — | | | | — | | | | 180,450 | |
| | | | 01/15/2010 | | | | — | | | | 166,667 | | | | 250,000 | | | | 500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Jordan Graham | | | 08/02/2010 | | | | 07/16/20108 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 100,001 | 4 | | | 23.86 | | | | 796,008 | |
| | | | 08/02/2010 | | | | 07/16/20108 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 33,333 | 6 | | | — | | | | — | | | | 782,659 | |
| | | | 07/16/2010 | 8 | | | — | | | | 50,000 | | | | 225,000 | | | | 450,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Deborah Kerr | | | 12/18/2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 52,501 | 4 | | | 20.31 | | | | 367,507 | |
| | | | 12/18/2009 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 5,833 | 6 | | | — | | | | — | | | | 116,135 | |
| | | | 07/23/2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 22,500 | 4 | | | 24.45 | | | | 184,500 | |
| | | | 07/23/2010 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 7,500 | 6 | | | — | | | | — | | | | 180,450 | |
| | | | 10/12/2009 | | | | — | | | | 0 | | | | 250,000 | | | | 500,000 | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | All Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#)
(j) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(k) | | | Exercise
or Base
Price of
Option
Awards
($/SH)
(l) | | | Grant
Date Fair
Value of
Stock
and
Option
Awards
($)
(m)(4) | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name (a) | | Grant
Date
(b) | | | Approval
Date
(c)(1) | | | Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards(2) | | | Estimated Future Payouts
Under Equity Incentive
Plan Awards(3) | | | | | |
| | | | Threshold
($)
(d) | | | Target
($)
(e) | | | Maximum
($)
(f) | | | Threshold
($)
(g) | | | Target
($)
(h) | | | Maximum
($)
(i) | | | | | |
William Lansing | | | — | | | | | | | | 450,000 | | | | 675,000 | | | | 1,350,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 01/27/2012 | | | | 01/21/2012 | | | | | | | | | | | | | | | | 0 | | | | 50,000 | | | | 100,000 | | | | | | | | | | | | | | | | 1,779,000 | |
| | | 01/27/2012 | | | | 01/21/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 50,000 | (5) | | | | | | | | | | | 1,779,000 | |
| | | 01/27/2012 | | | | 01/21/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 150,000 | (6) | | | 36.01 | | | | 1,696,500 | |
Mark Greene | | | | | | | | | | | 0 | | | | 675,000 | | | | 1,350,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Michael Pung | | | — | | | | | | | | 0 | | | | 200,000 | | | | 400,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | 0 | | | | 16,667 | | | | 33,334 | | | | | | | | | | | | | | | | 592,679 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,000 | (5) | | | | | | | | | | | 355,600 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 8,333 | (5) | | | | | | | | | | | 296,321 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 25,001 | (6) | | | 35.99 | | | | 295,012 | |
Stuart Wells | | | — | | | | | | | | 100,000 | | | | 250,000 | | | | 500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 04/25/2012 | | | | 04/24/2012 | | | | | | | | | | | | | | | | 0 | | | | 15,000 | | | | 30,000 | | | | | | | | | | | | | | | | 640,650 | |
| | | 04/25/2012 | | | | 04/24/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 41,666 | (5) | | | | | | | | | | | 1,779,555 | |
| | | 04/25/2012 | | | | 04/24/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 125,002 | (6) | | | 43.05 | | | | 1,676,277 | |
James Wehmann | | | — | | | | | | | | 100,000 | | | | 200,000 | | | | 400,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 04/01/2012 | | | | 03/07/2012 | | | | | | | | | | | | | | | | 0 | | | | 10,000 | | | | 20,000 | | | | | | | | | | | | | | | | 433,800 | |
| | | 04/01/2012 | | | | 03/07/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 33,333 | (5) | | | | | | | | | | | 1,445,986 | |
| | | 04/01/2012 | | | | 03/07/2012 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 100,001 | (6) | | | 43.90 | | | | 1,366,014 | |
Charles Ill | | | — | | | | | | | | 0 | | | | 275,000 | | | | 550,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | 0 | | | | 20,000 | | | | 40,000 | | | | | | | | | | | | | | | | 711,200 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,000 | (5) | | | | | | | | | | | 533,400 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,000 | (5) | | | | | | | | | | | 355,600 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | (6) | | | 35.99 | | | | 354,000 | |
Deborah Kerr | | | — | | | | | | | | 0 | | | | 250,000 | | | | 500,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | 0 | | | | 20,000 | | | | 40,000 | | | | | | | | | | | | | | | | 711,200 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,000 | (5) | | | | | | | | | | | 533,400 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 10,000 | (5) | | | | | | | | | | | 355,600 | |
| | | 12/13/2011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | (6) | | | 35.99 | | | | 1,117,500 | |
| (1) | | |
1 | | The grant date reported for the non-equity incentive plan awards“Approval Date” indicated above is the date that the Compensation Committee approved the 2010 Management Incentive Plan, except forcompensation packages, including the equity awards, to be provided to Mr. Lansing, Dr. GreeneWells and Messrs. Ill and Graham. See Approval Date footnotes for detail regardingMr. Wehmann, respectively, upon commencement of their awards.employment. |
|
2(2) | | For Dr. Greene, theThe amounts shown in these columns represent the estimated threshold (or minimum), target, and maximum possible cash incentive awards under Dr. Greene’s employment agreement with zero beingfor each of the threshold (or minimum),named executive officers. Under our Management Incentive Plan, Mr. Lansing’s target amount is equal to 100% of his base salary representing target and his maximum amount is equal to 200% of his base salary; for each of the other named executive officers, the target amount is equal to 50% of his or her base salary, representing maximum. Using this scale,and the maximum amount Dr. Greene could receiveis equal to 100% of his or her base salary. |
Our Management Incentive Plan does not provide a threshold payment level. Amounts reported in the “Threshold” column above for Mr. Lansing, Dr. Wells and Mr. Wehmann represent guaranteed minimum cash incentive payments provided in those new executive officers’ respective employment agreements.
Pursuant to Dr. Greene’s and Ms. Kerr’s Transition Agreements, these executive officers were not eligible for a payout under the Management Incentive Plan for fiscal 2012.
Additional detail regarding the determination of cash incentives to executives for fiscal 2012 is included above under “Compensation Discussion and Analysis.” Actual payments are set forth in the “Summary Compensation Table” above.
| (3) | Amounts shown reflect PSUs granted under his employment agreement is dependent on bothour 2012 LTIP and were subject to the Company’s performance against established financial goals and Dr. Greene’s individual performance. Financialachievement of specific performance goals reflecting bothrelated to revenue growth and net income growth for the Company, and individual performance goals are establishedmetrics approved by the Board at the beginning of the fiscal year. The Compensation Committee then uses achievement against these goalsCommittee. Ms. Kerr’s PSU award was forfeited pursuant to determine whether, and the extent to which, any cash incentive awards will be paid. Thus, Dr. Greene can have his target cash incentive reduced to zero based on poor Company or individual performance, or doubled based on strong Company and individual performance. |
|
| | her Transition Agreement. For Messrs. Bradley, Ill and Graham and Ms. Kerr, the amounts shown in these columns represent estimated threshold (or minimum), target, and maximum possible cash awards under our 2010 Management Incentive Plan with zero being the threshold (or minimum), 50% of base salary representing target and 100% of base salary representing maximum. Using this scale, the amount an executive could receive under this plan is dependent on both the Company’s performance against established financial goals and the executive’s individual performance. Financial performance goals, reflecting both revenue growth and net income growth for the Company, and individual performance goals are established by the Board at the beginning of the fiscal year. The Compensation Committee then uses achievement against these goals to determine whether, and the extent to which, any cash incentive awards will be paid. Thus, each of theseall other named executive officers, (except for Messrs. Ill160% of the target awards were earned, 25% of the earned units vested on December 13, 2012 and Graham) can have his or her target cash incentive reducedthe remaining 75% are scheduled to zero based on poorvest in three equal, annual installments beginning December 13, 2013 (subject to the named executive officers’ continued employment with the Company or individual performance, orthrough each applicable vesting date.) |
35
| (4) | | |
| | doubled based on strong Company and individual performance. Mr. Ill’s threshold (or minimum) of $166,667 reflects that the Ill Letter Agreement guaranteed him a minimum cash incentive in this amount. Mr. Graham’s threshold (or minimum) of $50,000 reflects that the Graham Letter Agreement guaranteed him a minimum cash incentive in this amount. Pursuant to the Bradley Transition Agreement, Mr. Bradley did not receive a payout under the 2010 Management Incentive Plan. |
|
| | Additional detail regarding the determination of cash incentives to executives for fiscal 2010 is included above under “Compensation Discussion and Analysis.” |
|
3
| | Represents the grant date fair value of each stock option, RSU or restricted stock unit,PSU, as applicable, computed in accordance with FASB ASC Topic 718. The values included in the table for the PSUs are at target value, representing the probable outcome of the performance conditions as calculated at the time of grant. |
| (5) | These RSUs vest in shares in four equal increments on the first four anniversaries of the grant date. These awards do not pay dividend equivalents. |
4(6) | | These stock option awards vest in four equal increments on the first four anniversaries of the grant date and expire seven years after the grant date. |
|
5 | | The Compensation Committee met on this date to approve the terms of Dr. Greene’s original employment agreement, which provides for his eligibility for an incentive award opportunity payable from 0% to 200% of his base salary, with a target equal to 100% of his annual base salary. |
|
6 | | These restricted stock unit awards vest in shares in four equal increments on the first four anniversaries of the grant date and do not pay dividend equivalents. |
|
7 | | The Compensation Committee met on this date to approve the terms of the Ill Letter Agreement, which provided for his initial equity awards upon joining the company and a guaranteed cash incentive of $166,667 for fiscal 2010. |
|
8 | | The Compensation Committee met on this date to approve the terms of the Graham Letter Agreement, which provided for his initial equity awards upon joining the company and a guaranteed cash incentive of $50,000 for fiscal 2010 and $225,000 for fiscal 2011. |
The Company is a party to employment agreementsLetter Agreements with Messrs. Lansing, Pung and Wehmann and Dr. Wells and Transition Agreements with Dr. Greene, Messrs. Bradley,Mr. Ill and Graham and Ms. Kerr. AllKerr, as described below.
Executive Officer Letter Agreement — William Lansing
In connection with his appointment as Chief Executive Officer, effective on January 26, 2012, the Company entered into a Letter Agreement with Mr. Lansing. Pursuant to the Letter Agreement, Mr. Lansing will receive an annual base salary of $675,000, which is subject to upward adjustment from time to time during the term of the Letter Agreement as determined by the Compensation Committee. For each full fiscal year of the Company during the term of the Letter Agreement, Mr. Lansing will be eligible to receive a cash incentive award payable from 0% to 200% of his annual base salary at the rate in effect at the end of such agreementsfiscal year, with a target equal to 100% of his annual base salary, pursuant to the Company’s Management Incentive Plan and the awards described in this tableterms and conditions established by the Compensation Committee from time to time. Mr. Lansing’s cash incentive award for fiscal year 2012 was guaranteed to be no less than $450,000, his target amount prorated for a partial year of service.
Pursuant to the Letter Agreement, Mr. Lansing received, upon the commencement of his employment, an option to purchase 300,000 shares of the common stock of the Company, up to one-half of which could be converted upon Mr. Lansing’s election to RSUs on a three-for-one basis, and a PSU award with a target value of 50,000 shares of common stock and a maximum value of 100,000 shares. The options and converted RSUs are explained further in “Compensation Discussion and Analysis.”
We do not use a specific formulasubject to
determine compensation levels but instead attempt to achieve an appropriate balance between short-term cash compensation and long-term equity compensation while reflecting market competitive levels tied to role structurefour-year ratable vesting, and the
PSUs that are earned through the satisfaction of fiscal 2012 performance
levelmetrics will vest in four equal, annual tranches beginning December 13, 2012.For each full fiscal year that he is employed during the term of the executive officer. A numberLetter Agreement, Mr. Lansing will be eligible for an annual equity grant based on achievement of factors, describedobjectives established by the Compensation Committee. Some or all of such annual equity grant may be in the form of RSUs, PSUs or other equity that have an equivalent economic value to an option award.
If Mr. Lansing’s employment is terminated by the Company without Cause or if he voluntary resigns for Good Reason (both as defined in the Letter Agreement) prior sections above, are consideredto the expiration of the term of the Letter Agreement, Mr. Lansing will be entitled to the following severance pay and benefits pursuant to the Letter Agreement: (1) a cash payment in determining each compensation element. Aligning executive interestsan amount equal to two times the sum of (a) his annual base salary in effect on the last day of his employment (but in no event less than $675,000), plus (b) the annual cash incentive payment last paid to him before the termination of his employment, such cash payment to be made in a lump sum on the 70th day following Mr. Lansing’s separation from service, and (2) continuation of certain benefits pursuant to COBRA for 18 months. If a termination of employment were to occur prior to payment of the cash incentive payment for fiscal year 2012, a value of $450,000 would have been assigned to that portion of the calculation. Mr. Lansing’s receipt of these severance pay and benefits would be conditioned on his execution of a release of claims against the Company, his compliance with the creationterms of stockholderany agreements in effect between him and the Company, his cooperation in the transition of his duties, and his agreement not to disparage the Company.
Mr. Lansing’s Letter Agreement also provides that the Company will reimburse him up to $25,000 in advisory fees related to the review and negotiation of materials related to the Company’s employment offer and will reimburse him annually up to $25,000 related to financial planning and/or personal income tax preparation and accounting services.
Executive Officer Transition Agreement — Mark Greene
Pursuant to his retirement from the position of the Company’s Chief Executive Officer on January 24, 2012, Dr. Greene entered into a Transition Agreement with the Company, which was subsequently amended, pursuant to which he remained employed by the Company as Advisory Council Chair until December 18, 2012 (the “Greene Separation Date”) and received an annual base salary of $250,000 in such capacity. Because Dr. Greene’s employment was not terminated before the Greene Separation Date, he was entitled to the following retention pay and benefits: (1) a cash payment equal to $1,001,000, calculated as (a) two times the sum of (i) his annual base salary ($250,000) and (ii) the annual cash incentive payment last made to Dr. Greene before his retirement as Chief Executive Officer ($310,000), (b) minus a pro rata share of the cash payment he was to receive under his Transition Agreement before it was amended, under which he was to serve as Advisory Council Chair until January 26, 2013 ($119,000), such cash payment to be made in a lump sum on the 60th day after the Greene Separation Date, and (2) continuation of certain benefits pursuant to COBRA for 18 months (at an estimated cost to the Company of $24,466). Dr. Greene’s receipt of these retention pay and benefits was conditioned on his execution of a release of claims against the Company, his compliance with the terms of the Transition Agreement (which includes non-solicitation and non-disparagement provisions) and other agreements in effect between him and the Company, and his cooperation in the transition of his duties.
Executive Officer Letter Agreement — Michael Pung
Mr. Pung entered into a Letter Agreement with the Company on February 6, 2012, pursuant to which he will receive an annual base salary of $400,000, subject to upward adjustment from time to time as determined by the Compensation Committee. For each full fiscal year of the Company during the term of the Letter Agreement, Mr. Pung will be eligible to receive a cash incentive award payable from 0% to 100% of his annual base salary at the rate in effect at the end of such fiscal year, with a target equal to 50% of his annual base salary, pursuant to the Company’s Management Incentive Plan and the terms and conditions established by the Compensation Committee from time to time.
For each full fiscal year that he is employed during the term of the Letter Agreement, Mr. Pung will be eligible for an annual equity grant based on achievement of objectives established by the Compensation Committee. Some or all of such annual equity grant may be in the form of RSUs, PSUs or other equity awards that have an equivalent economic value equity-basedto an option award.
If Mr. Pung’s employment is terminated by the Company without Cause or if he voluntary resigns for Good Reason (both as defined in his Letter Agreement) prior to the expiration of the term of the Letter Agreement, he will be entitled to the following severance pay and benefits pursuant to the Letter Agreement: (1) a cash payment in an amount equal to one times the sum of (a) his annual base salary in effect on the last day of his employment, plus (b) the annual cash incentive compensation generally representspayment last paid to him before the termination of his employment, such cash payment to be made in a substantiallump sum on the 70th day following his separation from service (subject to certain exceptions), and (2) continuation of certain benefits pursuant to COBRA for 12 months. Mr. Pung’s receipt of these severance pay and benefits would be conditioned on his of a release of claims against the Company, his compliance with the terms of any agreements in effect between him and the Company, his cooperation in the transition of his duties, and his agreement not to disparage the Company.
Executive Officer Transition Agreement — Charles Ill
Mr. Ill entered into a Transition Agreement with the Company on April 25, 2012 pursuant to which he was to continue in his role as Executive Vice President — Sales, Services and Marketing through no later than September 30, 2012 and will subsequently remain employed by the Company to provide transition assistance through February 22, 2013 (the “Ill Separation Date”). Mr. Ill will continue to receive his annual base salary of
$550,000 while he is employed by the Company. He also was eligible to receive a cash incentive payment of between 0% and 100% of his annual base salary under the Management Incentive Plan for fiscal year 2012 but will not be eligible for a cash incentive payment for fiscal year 2013. He will also receive a continuation of life insurance benefits for 12 months following the Ill Separation Date.
If Mr. Ill’s employment is not terminated before the Ill Separation Date in accordance with the terms of his Transition Agreement (which allows for termination by the Company only for Cause, as defined therein, in connection with a change in control pursuant to the Management Agreement, or because of death or disability), he will be entitled to the following retention pay and benefits: (1) a cash payment equal to one times the sum of (a) his annual base salary ($550,000) and (b) the greater of (i) the annual cash incentive payment made to Mr. Ill under the Management Incentive Plan for fiscal year 2011 ($175,000) and fiscal year 2012 ($300,000), such cash payment to be made in a lump sum following the Ill Separation Date, and (2) continuation of certain benefits pursuant to COBRA for 12 months. Mr. Ill’s receipt of these retention pay and benefits is conditioned on his execution of a release of claims against the Company, his compliance with the terms of his Transition Agreement (which includes non-solicitation and non-disparagement provisions) and other agreements in effect between him and the Company, and his cooperation in the transition of his duties.
Executive Officer Letter Agreement — James Wehmann
Mr. Wehmann entered into a Letter Agreement with the Company on March 7, 2012, and his employment with the Company commenced on April 1, 2012. Pursuant to the Letter Agreement, Mr. Wehmann will receive an annual base salary of $400,000, subject to upward adjustment from time to time as determined by the Compensation Committee. The Letter Agreement also provided for a signing bonus of $100,000 to be paid when Mr. Wehmann’s employment commenced. For each full fiscal year of the Company during the term of the Letter Agreement, Mr. Wehmann will be eligible to receive a cash incentive award payable from 0% to 100% of his annual base salary at the rate in effect at the end of such fiscal year, with a target equal to 50% of his annual base salary, pursuant to the Company’s Management Incentive Plan and the terms and conditions established by the Compensation Committee from time to time. For fiscal 2012, the Letter Agreement guaranteed a minimum cash incentive payment of 50% of Mr. Wehmann’s annual base salary, prorated to reflect a partial year of service.
The Letter Agreement provided for an initial equity award consisting of an option to purchase 200,000 shares of common stock of the Company, up to one-half of which could be converted upon Mr. Wehmann’s election to RSUs on a three-for-one basis, and a PSU award with a target value of 10,000 shares of common stock and a maximum value of 20,000 shares. The options and converted RSUs are subject to four-year ratable vesting, and the PSUs that are earned through the satisfaction of fiscal 2012 performance metrics will vest in four equal, annual tranches beginning December 13, 2012. For each full fiscal year that he is employed during the term of the Letter Agreement, Mr. Wehmann will be eligible for an annual equity grant based on achievement of objectives established by the Compensation Committee. Some or all of such annual equity grant may be in the form of RSUs, PSUs or other equity awards that have an equivalent economic value to an option award.
If Mr. Wehmann’s employment is terminated by the Company without Cause or if he voluntary resigns for Good Reason (both as defined in his Letter Agreement) prior to the expiration of the term of the Letter Agreement, he will be entitled to the following severance pay and benefits pursuant to the Letter Agreement: (1) a cash payment in an amount equal to one times the sum of (a) his annual base salary in effect on the last day of his employment, plus (b) the annual cash incentive payment last paid to him before the termination of his employment, such cash payment to be made in a lump sum on the 70th day following his separation from service (subject to certain exceptions), and (2) continuation of certain benefits pursuant to COBRA for 12 months. If a termination of employment were to occur prior to payment of the cash incentive payment for fiscal year 2012, a value of $100,000 would have been assigned to that portion of total executive compensation. While generallythe calculation. Mr. Wehmann’s receipt of lesser value than equity-based incentives, non-equity-based incentives similarly align executive intereststhese severance pay and benefits would be conditioned on his release of claims against the Company, his compliance with the creationterms of stockholder value dueany agreements in effect between him and the Company, his cooperation in the transition of his duties, and his agreement not to disparage the Company.
Executive Officer Letter Agreement — Stuart Wells
Dr. Wells entered into a Letter Agreement with the Company on April 24, 2012, and his employment with the Company commenced on April 25, 2012. Pursuant to the factLetter Agreement, Dr. Wells will receive an annual base salary of $500,000, subject to upward adjustment from time to time as determined by the Compensation Committee. For each full fiscal year of the Company during the term of the Letter Agreement, Dr. Wells will be eligible to receive a cash incentive award payable from 0% to 100% of his annual base salary at the rate in effect at the end of such fiscal year, with a target equal to 50% of his annual base salary, pursuant to the Company’s Management Incentive Plan and the terms and conditions established by the Compensation Committee from time to time. For fiscal 2012, the Letter Agreement guaranteed Dr. Wells a minimum cash incentive payment of $100,000.
The Letter Agreement provided for an initial equity award consisting to an option to purchase 250,000 shares of common stock of the Company, up to one-half of which could be converted upon Dr. Wells’ election to RSUs on a three-for-one basis, and a PSU award with a target value of 15,000 shares of common stock and a maximum value of 30,000 shares. The options and converted RSUs are subject to four-year ratable vesting, and the PSUs that non-equity-based incentives are fundedearned through the satisfaction of fiscal 2012 performance metrics will vest in four equal, annual tranches beginning December 13, 2012. For each full fiscal year that he is employed during the term of the Letter Agreement, Dr. Wells will be eligible for an annual equity grant based uponon achievement of objectives established by the extentCompensation Committee. Some or all of such annual equity grant may be in the form of RSUs, PSUs or other equity awards that have an equivalent economic value to an option award.
If Dr. Wells’ employment is terminated by the Company without Cause or if he voluntary resigns for Good Reason (both as defined in his Letter Agreement) prior to the expiration of the term of the Letter Agreement, he will be entitled to the following severance pay and benefits pursuant to the Letter Agreement: (1) a cash payment in an amount equal to one times the sum of (a) his annual base salary in effect on the last day of his employment, plus (b) the annual cash incentive payment last paid to him before the termination of his employment, such cash payment to be made in a lump sum on the 70th day following his separation from service (subject to certain exceptions), and (2) continuation of certain benefits pursuant to COBRA for 12 months. If a termination of employment were to occur prior to payment of the cash incentive payment for fiscal year 2012, a value of $100,000 would have been assigned to that portion of the calculation. Dr. Wells’ receipt of these severance pay and benefits would be conditioned on his release of claims against the Company, his compliance with the terms of any agreements in effect between him and the Company, his cooperation in the transition of his duties, and his agreement not to disparage the Company.
Executive Officer Transition Agreement — Deborah Kerr
Ms. Kerr entered into a Transition Agreement with the Company pursuant to which she resigned from her position as Executive Vice President, Chief Technology Officer effective April 25, 2012 but remained employed by the Company achieves targeted growth goals. For more detailin a consultative capacity until December 19, 2012 (the “Kerr Separation Date”). Ms. Kerr received an annual base salary of $100,000 in her consultative capacity and was not eligible to receive a cash incentive payment under the Company’s Management Incentive Plan for fiscal year 2012. Ms. Kerr’s outstanding options and RSUs continued to vest until the Kerr Separation Date, but she forfeited her PSUs pursuant to the Transition Agreement.
Because Ms. Kerr’s employment was not terminated before the Kerr Separation Date, she was entitled to the following retention pay and benefits: (1) a cash payment equal to $240,000, calculated as one times the sum of (a) her annual base salary ($100,000) and (b) the annual cash incentive payment made to Ms. Kerr under the Management Incentive Plan for fiscal year 2011 ($140,000), such cash payment to be made in a lump sum following the Kerr Separation Date, and (2) continuation of certain benefits pursuant to COBRA for 12 months (at an estimated cost to the Company of $73). Ms. Kerr’s receipt of these retention pay and benefits was conditioned on compensation, please refer to “Compensation Discussionher execution of a release of claims against the Company, her compliance with the terms of her Transition Agreement (which includes non-solicitation and Analysis.”
36non-disparagement provisions) and other agreements in effect between her and the Company, and her cooperation in the transition of her duties.
OUTSTANDING EQUITY AWARDS AT 20102012 FISCAL YEAR-END | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | Stock Awards | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Equity
| | | Equity
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Incentive
| | | Incentive
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Plan
| | | Plan
| |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Awards:
| | | Awards:
| |
| | | Option Awards | | | | | | | | | | | | Number of
| | | Market or
| |
| | | | | | | | | | | | Equity
| | | | | | | | | | | | Number
| | | | | | Unearned
| | | Payout
| |
| | | | | | | | | | | | Incentive
| | | | | | | | | | | | of
| | | | | | Shares,
| | | Value of
| |
| | | | | | | | | | | | Plan Awards:
| | | | | | | | | | | | Shares
| | | Market
| | | Units or
| | | Unearned
| |
| | | | | | Number of
| | | Number of
| | | Number
| | | | | | | | | | | | or Units
| | | Value of
| | | Other
| | | Shares,
| |
| | | | | | Securities
| | | Securities
| | | of Securities
| | | | | | | | | | | | of Stock
| | | Shares or
| | | Rights
| | | Units or
| |
| | | | | | Underlying
| | | Underlying
| | | Underlying
| | | | | | | | | | | | That
| | | Units of
| | | That
| | | Other
| |
| | | | | | Unexercised
| | | Unexercised
| | | Unexercised
| | | Option
| | | | | | | | | Have
| | | Stock That
| | | Have
| | | Rights That
| |
| | | | | | Options
| | | Options
| | | Unearned
| | | Exercise
| | | Option
| | | | | | Not
| | | Have Not
| | | Not
| | | Have Not
| |
| | | | | | (#)
| | | (#)
| | | Options
| | | Price
| | | Expiration
| | | | | | Vested
| | | Vested
| | | Vested
| | | Vested
| |
Name
| | Grant
| | | Exercisable
| | | Unexercisable
| | | (#)
| | | ($)
| | | Date
| | | Grant
| | | (#)
| | | ($)1
| | | (#)
| | | ($)
| |
(a) | | Date | | | (b) | | | (c) | | | (d) | | | (e) | | | (f) | | | Date | | | (g) | | | (h) | | | (i) | | | (j) | |
| |
| Mark Greene | | | 02/14/2007 | | | | 93,750 | | | | 31,2502 | | | | — | | | | 39.62 | | | | 02/13/2014 | | | | 02/14/2007 | | | | 10,4163 | | | | 256,859 | | | | — | | | | — | |
| | | | 12/18/2007 | | | | 56,250 | | | | 56,2502 | | | | — | | | | 34.26 | | | | 12/17/2014 | | | | 12/18/2007 | | | | 6,2503 | | | | 154,125 | | | | — | | | | — | |
| | | | 12/18/2008 | | | | 25,782 | | | | 77,3442 | | | | — | | | | 14.16 | | | | 12/17/2015 | | | | 07/08/2008 | | | | 7,5003 | | | | 184,950 | | | | — | | | | — | |
| | | | 12/18/2009 | | | | — | | | | 112,5002 | | | | — | | | | 20.31 | | | | 12/17/2016 | | | | 12/18/2008 | | | | 8,5933 | | | | 211,903 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/18/2009 | | | | 12,5003 | | | | 308,250 | | | | — | | | | — | |
| Thomas Bradley | | | 04/06/2009 | | | | 56,250 | | | | 168,7502 | | | | — | | | | 15.51 | | | | 04/05/2016 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | 12/18/2009 | | | | — | | | | 50,0002 | | | | — | | | | 20.31 | | | | 12/17/2016 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Charles Ill | | | 02/01/2010 | | | | — | | | | 125,0022 | | | | — | | | | 22.01 | | | | 01/31/2017 | | | | 02/01/2010 | | | | 41,6663 | | | | 1,027,484 | | | | — | | | | — | |
| | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 07/23/2010 | | | | 7,5003 | | | | 184,950 | | | | — | | | | — | |
| Jordan Graham | | | 08/02/2010 | | | | — | | | | 100,0012 | | | | — | | | | 23.86 | | | | 08/01/2017 | | | | 08/02/2010 | | | | 33,3333 | | | | 821,992 | | | | — | | | | — | |
| Deborah Kerr | | | 02/02/2009 | | | | 36,563 | | | | 109,6872 | | | | — | | | | 13.22 | | | | 02/01/2016 | | | | 02/02/2009 | | | | 19,6873 | | | | 485,481 | | | | — | | | | — | |
| | | | 12/18/2009 | | | | — | | | | 52,5012 | | | | — | | | | 20.31 | | | | 12/17/2016 | | | | 12/18/2009 | | | | 5,8333 | | | | 143,842 | | | | — | | | | — | |
| | | | 07/23/2010 | | | | — | | | | 22,5002 | | | | — | | | | 24.45 | | | | 07/22/2017 | | | | 07/23/2010 | | | | 7,5003 | | | | 184,950 | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name (a) | | Option Awards | | | Stock Awards | |
| | | Grant
Date | | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#)
(g) | | | Market
Value of
Shares or
Units of
Stock That
Have Not
Vested
($)(1)
(h) | | | Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other
Rights
That
Have
Not
Vested
(#)
(i) | | | Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other
Rights That
Have Not
Vested
($)
(j) | |
| | Grant
Date | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
(b) | | | Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
(c) | | | Equity
Incentive
Plan Awards:
Number
of Securities
Underlying
Unexercised
Unearned
Options
(#)
(d) | | | Option
Exercise
Price
($)
(e) | | | Option
Expiration
Date
(f) | | | | | | |
William Lansing | | | 02/06/2006 | | | | 895 | | | | — | | | | — | | | | 44.66 | | | | 02/05/2016 | | | | 01/27/2012 | | | | 50,000 | (3) | | | 2,213,000 | | | | — | | | | — | |
| | | 02/06/2006 | | | | 30,000 | | | | — | | | | — | | | | 44.66 | | | | 02/05/2016 | | | | 01/27/2012 | | | | 80,000 | (4) | | | 3,540,800 | | | | — | | | | — | |
| | | 02/12/2007 | | | | 11,250 | | | | — | | | | — | | | | 40.01 | | | | 02/11/2017 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 02/05/2008 | | | | 11,250 | | | | — | | | | — | | | | 25.25 | | | | 02/04/2018 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 02/01/2011 | | | | 11,250 | | | | — | | | | — | | | | 25.87 | | | | 01/31/2021 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | 01/27/2012 | | | | — | | | | 150,000 | (2) | | | — | | | | 36.01 | | | | 01/26/2019 | | | | — | | | | — | | | | — | | | | — | | | | — | |
Mark Greene | | | 12/18/2008 | | | | — | | | | 25,781 | (2) | | | — | | | | 14.16 | | | | 12/17/2015 | | | | 12/18/2008 | | | | 2,864 | (3) | | | 126,761 | | | | — | | | | — | |
| | | 12/18/2009 | | | | — | | | | 56,250 | (2) | | | — | | | | 20.31 | | | | 12/17/2016 | | | | 12/18/2009 | | | | 6,250 | (3) | | | 276,625 | | | | — | | | | — | |
| | | 12/13/2010 | | | | — | | | | 98,438 | (2) | | | — | | | | 24.03 | | | | 12/12/2017 | | | | 12/13/2010 | | | | 7,292 | (5) | | | 322,744 | | | | — | | | | — | |
Michael Pung | | | 11/21/2005 | | | | 14,000 | | | | — | | | | — | | | | 47.45 | | | | 11/20/2012 | | | | 12/18/2008 | | | | 2,500 | (3) | | | 110,650 | | | | — | | | | — | |
| | | 12/18/2008 | | | | — | | | | 2,500 | (2) | | | — | | | | 14.16 | | | | 12/17/2015 | | | | 08/24/2009 | | | | 1,125 | (3) | | | 49,792 | | | | — | | | | — | |
| | | 12/18/2009 | | | | — | | | | 5,000 | (2) | | | — | | | | 20.31 | | | | 12/17/2016 | | | | 12/18/2009 | | | | 5,000 | (3) | | | 221,300 | | | | — | | | | — | |
| | | 11/18/2010 | | | | — | | | | 75,000 | (2) | | | — | | | | 23.84 | | | | 11/17/2017 | | | | 07/23/2010 | | | | 2,250 | (3) | | | 99,585 | | | | — | | | | — | |
| | | 12/13/2011 | | | | — | | | | 25,001 | (2) | | | — | | | | 35.99 | | | | 12/12/2018 | | | | 11/18/2010 | | | | 25,000 | (5) | | | 1,106,500 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 10,000 | (3) | | | 442,600 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 8,333 | (3) | | | 368,819 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 26,668 | (4) | | | 1,180,326 | | | | | | | | | |
Stuart Wells | | | 04/25/2012 | | | | — | | | | 125,002 | (2) | | | — | | | | 43.05 | | | | 04/24/2019 | | | | 04/25/2012 | | | | 41,666 | (3) | | | 1,844,137 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 04/25/2012 | | | | 24,000 | (4) | | | 1,062,240 | | | | — | | | | — | |
James Wehmann | | | 04/01/2012 | | | | — | | | | 100,001 | (2) | | | — | | | | 43.90 | | | | 03/31/2019 | | | | 04/01/2012 | | | | 33,333 | (3) | | | 1,475,319 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 04/01/2012 | | | | 16,000 | (4) | | | 708,160 | | | | — | | | | — | |
Charles Ill | | | 02/01/2010 | | | | — | | | | 62,500 | (2) | | | — | | | | 22.01 | | | | 01/31/2017 | | | | 02/01/2010 | | | | 20,832 | (3) | | | 922,024 | | | | — | | | | — | |
| | | 12/13/2010 | | | | 1,637 | | | | 45,000 | (2) | | | — | | | | 24.03 | | | | 12/12/2017 | | | | 07/23/2010 | | | | 3,750 | (3) | | | 165,975 | | | | | | | | | |
| | | 12/13/2011 | | | | — | | | | 30,000 | (2) | | | — | | | | 35.99 | | | | 12/12/2018 | | | | 12/13/2010 | | | | 10,000 | (5) | | | 442,600 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 02/15/2011 | | | | 7,500 | (5) | | | 331,950 | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 15,000 | (3) | | | 663,900 | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 10,000 | (3) | | | 442,600 | | | | — | | | | — | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 32,000 | (4) | | | 1,416,320 | | | | — | | | | — | |
Deborah Kerr | | | 02/02/2009 | | | | — | | | | 36,562 | (2) | | | — | | | | 13.22 | | | | 02/01/2016 | | | | 02/02/2009 | | | | 6,562 | (3) | | | 290,434 | | | | — | | | | — | |
| | | 12/18/2009 | | | | — | | | | 26,250 | (2) | | | — | | | | 20.31 | | | | 12/17/2016 | | | | 12/18/2009 | | | | 2,916 | (3) | | | 129,062 | | | | — | | | | — | |
| | | 07/23/2010 | | | | — | | | | 11,250 | (2) | | | — | | | | 24.45 | | | | 07/22/2017 | | | | 07/23/2010 | | | | 3,750 | (3) | | | 165,975 | | | | — | | | | — | |
| | | 12/13/2010 | | | | — | | | | 45,000 | (2) | | | — | | | | 24.03 | | | | 12/12/2017 | | | | 12/13/2010 | | | | 10,000 | (5) | | | 442,600 | | | | — | | | | — | |
| | | 12/13/2011 | | | | — | | | | 30,000 | (2) | | | — | | | | 35.99 | | | | 12/12/2018 | | | | 12/13/2011 | | | | 10,000 | (3) | | | 442,600 | | | | | | | | | |
| | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | 12/13/2011 | | | | 15,000 | (3) | | | 663,900 | | | | — | | | | — | |
| (1) | | |
1 | | The market value of restricted stock units that have not vested was determined by multiplying the closing market price of the Company’s Common Stockcommon stock on September 30, 20102012 ($24.66)44.26) by the number of restricted stock units. |
|
2(2) | | These stock option awardsoptions vest in four equal increments on the first four anniversaries of the grant date, subject to the named executive officer’s continued employment. |
| (3) | These RSUs vest in shares in four equal increments on the first four anniversaries of the grant date, subject to the named executive officer’s continued employment. |
3(4) | These earned PSUs vest in shares in four equal increments on the 13th of December in 2012, 2013, 2014 and 2015, subject to the named executive officer’s continued employment. |
| (5) | These restricted stock unit awards vest in shares in four equal increments on the first four anniversaries of the grant date, subject to the named executive officer’s continued employment.employment and with the following provision for performance-based accelerated vesting if the Company met certain revenue and non-GAAP net income targets for fiscal 2011 and fiscal 2012. The financial goals for fiscal 2011 were met and one-half of the restricted stock units scheduled to vest on the third and fourth anniversaries of the date of grant vested on the first anniversary of the date of grant; the financial goals for fiscal 2012 were met as well and one-half of the total restricted stock units scheduled to vest on the third and fourth anniversaries of the date of grant vested on the second anniversary of the date of grant instead. |
2010FISCAL 2012 OPTION EXERCISES AND STOCK VESTED
| | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | Stock Awards |
| | | Number of
| | | | | | | |
| | | Shares
| | Value
| | | Number of
| | |
| | | Acquired
| | Realized
| | | Shares Acquired
| | Value Realized
|
| | | on Exercise
| | on Exercise
| | | On Vesting
| | on Vesting
|
Name
| | (#)
| | ($)
| | | (#)
| | ($)1
|
(a) | | (b) | | (c) | | | (d) | | (e) |
| Mark Greene | | | — | | | | — | | | | | 20,157 | | | | 427,889 | |
| Thomas Bradley | | | — | | | | — | | | | | — | | | | — | |
| Charles Ill | | | — | | | | — | | | | | — | | | | — | |
| Jordan Graham | | | — | | | | — | | | | | — | | | | — | |
| Deborah Kerr | | | — | | | | — | | | | | 6,563 | | | | 142,877 | |
| | | | | | | | | | | | | | | | | | |
| | | Option Awards | | | | | Stock Awards | |
Name
(a) | | Number of
Shares
Acquired
on Exercise
(#)
(b) | | | Value
Realized
on Exercise
($)(1)
(c) | | | | | Number of
Shares Acquired
on Vesting
(#)
(d) | | | Value Realized
On Vesting
($)(2)
(e) | |
William Lansing | | | 22,500 | | | | 473,512 | | | | | | — | | | | — | |
Mark Greene | | | 403,908 | | | | 5,746,062 | | | | | | 20,155 | | | | 757,208 | |
Michael Pung | | | 81,000 | | | | 1,341,768 | | | | | | 10,312 | | | | 401,198 | |
Stuart Wells | | | — | | | | — | | | | | | — | | | | — | |
James Wehmann | | | — | | | | — | | | | | | — | | | | — | |
Charles Ill | | | 75,865 | | | | 1,722,618 | | | | | | 29,792 | | | | 1,129,254 | |
Deborah Kerr | | | 130,289 | | | | 3,028,949 | | | | | | 19,895 | | | | 740,917 | |
| (1) | Equal to the number of shares acquired on exercise multiplied by the difference between the closing price of a share of the Company’s common stock on the date of exercise and the exercise price of the options. |
| (2) | |
1 | | Equal to the number of shares vested multiplied by the closing price of a share of the Company’s Common Stockcommon stock on the date of vesting. |
37
NON-QUALIFIED DEFERRED COMPENSATION FOR 2010FISCAL 2012 | | | | | | | | | | | | | | | | | | | | | |
| | | Executive
| | Registrant
| | | | Aggregate
| | |
| | | Contributions in
| | Contributions in
| | Aggregate Earnings
| | Withdrawals/
| | Aggregate Balance
|
| | | Last FY
| | Last FY
| | in Last FY
| | Distributions
| | at Last FYE
|
Name
| | ($)1
| | ($)
| | ($)2
| | ($)
| | ($)3
|
(a) | | (b) | | (c) | | (d) | | (e) | | (f) |
| |
| Mark Greene | | | — | | | | — | | | | 4,829 | | | | — | | | | 61,882 | |
| Thomas Bradley | | | 196,875 | | | | — | | | | 16,908 | | | | — | | | | 270,888 | |
| Charles Ill | | | — | | | | — | | | | — | | | | — | | | | — | |
| Jordan Graham | | | — | | | | — | | | | — | | | | — | | | | — | |
| Deborah Kerr | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Name (a) | | Executive
Contributions in
Last FY
($)(1)
(b) | | | Registrant
Contributions in
Last FY
($)
(c) | | | Aggregate Earnings
in Last FY
($)(2)
(d) | | | Aggregate
Withdrawals/
Distributions
($)
(e) | | | Aggregate Balance
at Last FYE
($)
(f) | |
William Lansing | | | — | | | | — | | | | — | | | | | | | | — | |
Mark Greene | | | — | | | | — | | | | 13,196 | | | | — | | | | 76,403 | (3) |
Michael Pung | | | — | | | | — | | | | — | | | | — | | | | — | |
Stuart Wells | | | — | | | | — | | | | — | | | | | | | | — | |
James Wehmann | | | — | | | | — | | | | — | | | | — | | | | — | |
Charles Ill | | | 100,480 | | | | — | | | | 2,917 | | | | — | | | | 103,397 | |
Deborah Kerr | | | — | | | | — | | | | — | | | | — | | | | — | |
| (1) | | |
1 | | The amounts reported in this column were reported in the Summary Compensation Table as part of eachthe individual’s compensation for the fiscal year ended September 30, 2010.2012. |
|
2(2) | | The amounts reported in this column were not reported in the Summary Compensation Table as part of each individual’s compensation for the most recent fiscal year because none of the earnings are considered to be “above market” or “preferential.” |
|
3(3) | | Of the amounts shown in this column, the following amounts were previously reported as compensation to the respective individuals in the Summary Compensation Table in previous years: Mark Greene, $14,808 for fiscal 2007, $49,135 forin fiscal 2008 and $0 for$14,808 in fiscal 2009; Thomas Bradley, $51,923 for fiscal 2009.2007. |
This plan is intended for a select group of employees of the Company who are in the highest salary band. Employees can defer up to 25% of base salary and up to 75% of incentive award compensation into the plan. These are considered irrevocable elections and stay in place for the entire calendar year. The Company does not make any employer contributions to this plan, and employees are always 100% vested in their contributions. Employees make their own investment election decisions from a select group of investment choices chosendesignated by the Company.
Participating employees also make an irrevocable election for distributions from the plan at retirement. If they terminate employment prior to retirement, then participating employees will receive their distribution on the first day of the seventh calendar month following separation from service due to any reason.
ESTIMATEDPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL OR TERMINATION BENEFITS AT 2010 FISCAL YEAR-END
The tablesinformation below quantifydescribes the estimated payments and benefitscompensation that would be provided to ourbecome payable under existing plans and arrangements if a named executive officer’s employment terminates under certain circumstances or if a change in control of the Company occurs. Certain termination provisions also appear in some of the named executive officers’ employment agreements, as described above.
Executive Officer Management Agreements
Each of our executive officers is a party to a Management Agreement with the Company. The Management Agreements are for a fixed term with automatic one-year extensions. Except in connection withthe case of Mr. Lansing and Dr. Greene, if during the term of the Management Agreements a change of control Event occurs, and if the executive officer’s employment is terminated within 60 days before or one year following the Event due to an involuntary termination by the Company without Cause or for Good Reason by the executive (as defined in the Management Agreement), the executive will be entitled to the following pay and benefits: (i) a cash payment in an amount equal to one times the sum of (a) his or her annual base salary in effect on the last day of his or her employment, plus (b) the annual cash incentive payment last paid to him or her before the termination of his or her employment, such cash payment to be made in a lump sum on the 70th day following his or her separation from service (subject to certain exceptions), and (ii) continuation of certain benefits pursuant to COBRA for 12 months. In addition, all of such officer’s unvested stock options, restricted stock units and performance share units will vest in full, subject to certain limitations specified in the Management Agreement. The officer’s receipt of these severance amounts is conditioned on the officer’s delivery of a release of claims and agreement not to solicit Company employees for one year following termination of employment.
Mr. Lansing’s Management Agreement provides the same general provisions in the case of a termination of employment in connection with or following a change of control Event, except that Mr. Lansing’s severance will be in the amount of three times the sum of base salary and the greater of the incentive payment for the prior fiscal year or $450,000, and he is entitled to 18 months of continued benefits pursuant to COBRA. Dr. Greene’s Management Agreement provided for two times the sum of base salary and the incentive payments for the prior fiscal year and 24 months of continued benefits.
If an executive officer receives any payment or benefit under his management agreement following termination of employment, he will not be entitled to receive severance benefits under his Letter Agreement.
Severance Arrangements
We sponsor the Fair Isaac Severance Benefits Plan, which is an ERISA-qualified severance benefit plan in which all employees, including executives, participate. Under this plan, an employee receives severance benefits in the event that he or she is involuntarily terminated due to the elimination of his or her position with the Company. The level of such benefits is determined based on the employee’s years of service and assigned job level. If an executive officer is terminated under circumstances that would trigger benefits under both this plan and his or her Management Agreement, such executive would receive benefits under whichever is more favorable to him or her, but not both.
Equity Awards
Under the stock option and RSU agreements entered into pursuant to the 1992 LTIP, those equity awards will vest in full upon an award recipient’s death or disability. The 2012 LTIP also provides for full vesting of equity awards granted under that plan, including stock options and RSUs, in the event of a recipient’s death or disability. In addition, the award agreements for the PSUs granted to executive officers under the circumstances indicated. In all cases,2012 LTIP provide that those awards will fully vest upon the information assumes thatdeath or disability of the triggering event occurred on the last day of fiscal 2010, and the price per share of our Common Stock is the closing market price as of that date (which was $24.66). The management agreements relating toaward recipient or upon a change in control in which the Company does not survive as an operating company or only survives as a subsidiary of another entity; if the death or disability or change in control occurs during the performance period, the target number of units will be deemed earned and other employment agreements that wewill vest in full, and if the death or disability or change in control occurs after the units have entered into with our named executive officersbeen earned but before they are describedfully vested, the number of earned units will vest in detail elsewhere in this proxy statement under “Compensation Discussion and Analysis.”
None of the tables below reflect amounts that would be payable to our named executive officersfull.Insurance Benefits
All FICO employees are covered under our Short and Long Term Disability Policies. All FICO employees are covered under these policies. For the first threesix months of a disability, the employee continues to receivereceives 60% of base salary under the Short Term Disability Policy. After threesix months of disability, the employee becomes eligible to receive 50% of base salary (up to a maximum of $5,000 per month) under the Long Term Disability Policy. These payments continue for the first five years as long as the employee is deemed disabled undercannot perform the policy, untilessential functions of his or her own occupation. If after five years the employee is still unable to perform the essential functions of his or her own occupation, he or she can receive benefits until he or she reaches the age of 65. Supplemental disability insurance can also be purchased by employees to increase the percentage of base salary to which they are entitled under the policies.
The tables belowAll employees are also exclude amounts payable in the event of death of a named executive officer to his or her named beneficiaries undercovered by a Company-provided life insurance policy. All employees are covered under this policy, which provides for the lump sum payment of one times the employee’s base salary in the event of death, or two times base salary in the event of accidental death. Additional amounts may be payable under a Company-provided business travel accident insurance policy.
38
Estimated Payments That Would Have Been Made to the Named Executive Officers
The tables below quantify the estimated payments and benefits that would have been provided to our named executive officers employed by us at the date of this proxy statement in connection with the termination of their employment under the circumstances indicated. In all cases, the information assumes that the triggering event occurred on the last day of fiscal 2012, and the price per share of our common stock is the closing market price as of September 28, 2012, the last trading day of the fiscal year (which was $44.26). Benefits payable under our Short and Long Term Disability Policies and Company-provided life insurance policy are not reflected in the following tables. Please see the description of the Transition Agreements for Dr. Greene and Ms. Kerr above for information about the retention pay and benefits each received upon his or her termination of employment in December 2012.Mark GreeneWilliam Lansing
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Termination
| | | | | | | | | | |
| | | | | | | | | | | | by Us
| | | | | | | | | | |
| | | | | | | | | | | | Without
| | | | | | | | | | |
| | | | | | | | | | | | Cause
| | | | | | | | | | |
| | | | | | | | | | | | Following a
| | | | | | | | | | |
| | | | | | | | | | | | Change in
| | | | | | | | | | |
| | | | | | | | | Termination
| | | Control or
| | | | | | | | | | |
| | | | | | | | | by Us
| | | by the NEO
| | | | | | | | | | |
| | | | | | | | | Without
| | | with Good
| | | | | | | | | | |
| | | | | | | | | Cause or by
| | | Reason
| | | | | | | | | | |
| | | Voluntary
| | | Termination
| | | NEO with
| | | Following a
| | | | | | | | | | |
| | | Termination
| | | by Us for
| | | Good
| | | Change in
| | | | | | | | | | |
| | | by NEO
| | | Cause
| | | Reason
| | | Control
| | | Retirement
| | | Disability
| | | Death
| |
Payment or Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| |
| Value of Cash Severance | | | — | | | | — | | | | 1,571,000 | | | | 1,571,000 | | | | — | | | | — | | | | — | |
Value of Benefits1 | | | — | | | | — | | | | 33,034 | | | | 33,034 | | | | — | | | | — | | | | — | |
| Market Value of Accelerated Stock Option Awards2 | | | — | | | | — | | | | — | | | | 1,301,487 | | | | — | | | | 1,301,487 | | | | 1,301,487 | |
| Market Value of Accelerated Restricted Stock Unit Awards3 | | | — | | | | — | | | | — | | | | 1,116,087 | | | | — | | | | 1,116,087 | | | | 1,116,087 | |
| Total | | | — | | | | — | | | | 1,604,034 | | | | 4,021,608 | | | | — | | | | 2,417,574 | | | | 2,417,574 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Payment or Benefit | | Voluntary
Termination
by NEO
($) | | | Termination
by Us for
Cause
($) | | | Termination
by Us
Without
Cause or by
NEO with
Good
Reason
($) | | | Termination
by Us
Without
Cause in
Connection
with a
Change in
Control or
by the NEO
with Good
Reason in
Connection
with a
Change in
Control
($) | | | Retirement
($) | | | Disability
($) | | | Death
($) | |
Value of Cash Severance(1) | | | — | | | | — | | | | 2,250,000 | | | | 3,375,000 | | | | — | | | | — | | | | — | |
Value of Benefits(2) | | | — | | | | — | | | | 21,654 | | | | 21,654 | | | | — | | | | — | | | | — | |
Market Value of Accelerated Stock Option Awards(3) | | | — | | | | — | | | | — | | | | 6,639,000 | | | | — | | | | 6,639,000 | | | | 6,639,000 | |
Market Value of Accelerated Restricted Stock Unit Awards(4) | | | — | | | | — | | | | — | | | | 2,213,000 | | | | — | | | | 2,213,000 | | | | 2,213,000 | |
Market Value of Accelerated Performance Share Unit Awards(5) | | | — | | | | — | | | | — | | | | 3,540,800 | | | | — | | | | 3,540,800 | | | | 3,540,800 | |
Total | | | — | | | | — | | | | 2,271,654 | | | | 15,789,454 | | | | — | | | | 12,392,800 | | | | 12,392,800 | |
| (1) | Pursuant to Mr. Lansing’s Letter Agreement, he is entitled to a lump sum payment equal to two times the sum of his current base salary plus the annual incentive award last paid to him if his employment is terminated by the Company without cause or by him for good reason. The Letter Agreement further provides that if his employment were so terminated prior to payment of the cash incentive for fiscal 2012, a value of $450,000 would be assigned to that portion of the calculation. Mr. Lansing’s Management Agreement provides for the same payments and benefits in the event his employment is terminated by the Company without cause or by Mr. Lansing for good reason within 60 days before or one year following a change in control, except that the lump sum payment is calculated as three times the sum of his base salary plus annual incentive award. |
| (2) | |
1
| | ThePursuant to Mr. Lansing’s Letter Agreement, the Company is obligated to provide benefits to Dr. GreeneMr. Lansing at existing levels for 2418 months post-termination if his employment is terminated by the Company without cause or by Dr. GreeneMr. Lansing for good reason. Mr. Lansing’s Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Mr. Lansing for good reason (whetherwithin 60 days before or not such termination followsone year following a change in control).control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. |
|
2(3) | | The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010, of $24.66. |
| | September 28, 2012, of $44.26. Mr. Lansing’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
3(4) | | The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Mr. Lansing’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
Thomas Bradley
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Termination
| | | | | | | | | | |
| | | | | | | | | | | | by Us
| | | | | | | | | | |
| | | | | | | | | | | | Without
| | | | | | | | | | |
| | | | | | | | | | | | Cause
| | | | | | | | | | |
| | | | | | | | | | | | Following a
| | | | | | | | | | |
| | | | | | | | | | | | Change in
| | | | | | | | | | |
| | | | | | | | | Termination
| | | Control or
| | | | | | | | | | |
| | | | | | | | | by Us
| | | by the NEO
| | | | | | | | | | |
| | | | | | | | | Without
| | | with Good
| | | | | | | | | | |
| | | | | | | | | Cause or by
| | | Reason
| | | | | | | | | | |
| | | Voluntary
| | | Termination
| | | NEO with
| | | Following a
| | | | | | | | | | |
| | | Termination
| | | by Us for
| | | Good
| | | Change in
| | | | | | | | | | |
| | | by NEO
| | | Cause
| | | Reason
| | | Control
| | | Retirement
| | | Disability
| | | Death
| |
Payment or Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| |
| Value of Cash Severance | | | — | | | | — | | | | 562,500 | | | | 562,500 | | | | — | | | | — | | | | — | |
| Value of Benefits1 | | | — | | | | — | | | | 15,292 | | | | 15,292 | | | | — | | | | — | | | | — | |
| Market Value of Accelerated Stock Option Awards2 | | | — | | | | — | | | | — | | | | 1,761,563 | | | | — | | | | 1,761,563 | | | | 1,761,563 | |
| Market Value of Accelerated Restricted Stock Unit Awards | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Total | | | — | | | | — | | | | 577,792 | | | | 2,339,355 | | | | — | | | | 1,761,563 | | | | 1,761,563 | |
| (5) | The amounts shown represent the earned performance share units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Mr. Lansing’s Management Agreement and the terms of the equity award provide for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
Michael Pung
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Payment or Benefit | | Voluntary
Termination
by NEO
($) | | | Termination
by Us For
Cause
($) | | | Termination
by Us
Without
Cause or by
NEO with
Good
Reason
($) | | | Termination
by Us
Without
Cause
in Connection
with a
Change in
Control or
by the NEO
with Good
Reason
in Connection
with a
Change in
Control
($) | | | Retirement
($) | | | Disability
($) | | | Death
($) | |
Value of Cash Severance(1) | | | — | | | | — | | | | 500,000 | | | | 500,000 | | | | — | | | | — | | | | — | |
Value of Benefits(2) | | | — | | | | — | | | | 790 | | | | 790 | | | | — | | | | — | | | | — | |
Market Value of Accelerated Stock Option Awards(3) | | | — | | | | — | | | | — | | | | 4,757,994 | | | | — | | | | 4,757,994 | | | | 4,577,994 | |
Market Value of Accelerated Restricted Stock Unit Awards(4) | | | — | | | | — | | | | — | | | | 2,399,246 | | | | — | | | | 2,399,246 | | | | 2,399,246 | |
Market Value of Accelerated Performance Share Unit Awards(5) | | | — | | | | — | | | | — | | | | 1,180,326 | | | | — | | | | 1,180,326 | | | | 1,180,326 | |
Total | | | — | | | | — | | | | 500,790 | | | | 8,838,356 | | | | — | | | | 8,337,566 | | | | 8,337,566 | |
| (1) | Pursuant to Mr. Pung’s Letter Agreement, he is entitled to a lump sum payment equal to one times the sum of his current base salary plus the annual incentive award last paid to him if his employment is terminated by the Company without cause or by Mr. Pung for good reason. Mr. Pung’s Management Agreement provides for the same payments and benefits in the event his employment is terminated by the Company without cause or by Mr. Pung for good reason within 60 days before or one year following a change in control. |
1(2) | | ThePursuant to Mr. Pung’s Letter Agreement, the Company is obligated to provide benefits to Mr. BradleyPung at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Mr. BradleyPung for good reason. Mr. Pung’s Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Mr. Pung for good reason (whetherwithin 60 days before or not |
39
| | |
| | such termination followsone year following a change in control).control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. |
|
2(3) | | The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010, of $24.66. |
| September 28, 2012, of $44.26. Mr. Pung’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
| (4) | The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Mr. Pung’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
| (5) | The amounts shown represent the earned performance share units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Mr. Pung’s Management Agreement and the terms of the equity award provide for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
Charles Ill
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Termination
| | | | | | | | | | |
| | | | | | | | | | | | by Us
| | | | | | | | | | |
| | | | | | | | | | | | Without
| | | | | | | | | | |
| | | | | | | | | | | | Cause
| | | | | | | | | | |
| | | | | | | | | | | | Following a
| | | | | | | | | | |
| | | | | | | | | | | | Change in
| | | | | | | | | | |
| | | | | | | | | Termination
| | | Control or by
| | | | | | | | | | |
| | | | | | | | | by Us
| | | the NEO with
| | | | | | | | | | |
| | | | | | | | | Without
| | | Good Reason
| | | | | | | | | | |
| | | Voluntary
| | | Termination
| | | Cause or by
| | | Following a
| | | | | | | | | | |
| | | Termination
| | | by Us For
| | | NEO with
| | | Change in
| | | | | | | | | | |
| | | by NEO
| | | Cause
| | | Good Reason
| | | Control
| | | Retirement
| | | Disability
| | | Death
| |
Payment or Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| |
| Value of Cash Severance | | | — | | | | — | | | | 666,667 | | | | 666,667 | | | | — | | | | — | | | | — | |
| Value of Benefits1 | | | — | | | | — | | | | 16,096 | | | | 16,096 | | | | — | | | | — | | | | — | |
| Market Value of Accelerated Stock Option Awards2 | | | — | | | | — | | | | — | | | | 331,255 | | | | — | | | | 331,255 | | | | 331,255 | |
| Market Value of Accelerated Restricted Stock Unit Awards3 | | | — | | | | — | | | | — | | | | 1,212,434 | | | | — | | | | 1,212,434 | | | | 1,212,434 | |
| Total | | | — | | | | — | | | | 682,763 | | | | 2,226,452 | | | | — | | | | 1,543,689 | | | | 1,543,689 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Payment or Benefit | | Voluntary
Termination
by NEO
($) | | | Termination
by Us For
Cause
($) | | | Termination
by Us
Without
Cause or by
NEO with
Good Reason
($) | | | Termination
by Us
Without
Cause
in Connection
with a
Change in
Control or
by the NEO
with Good
Reason
in Connection
with a
Change in
Control
($) | | | Retirement
($) | | | Disability
($) | | | Death
($) | |
Value of Cash Severance(1) | | | — | | | | — | | | | — | | | | 725,000 | | | | — | | | | — | | | | — | |
Value of Benefits(2) | | | — | | | | — | | | | — | | | | 16,142 | | | | — | | | | — | | | | — | |
Market Value of Accelerated Stock Option Awards(3) | | | — | | | | — | | | | — | | | | 6,085,750 | | | | — | | | | 6,085,750 | | | | 6,085,750 | |
Market Value of Accelerated Restricted Stock Unit Awards(4) | | | — | | | | — | | | | — | | | | 2,969,049 | | | | — | | | | 2,969,049 | | | | 2,969,049 | |
Market Value of Accelerated Performance Share Unit Awards(5) | | | — | | | | — | | | | — | | | | 1,416,320 | | | | — | | | | 1,416,320 | | | | 1,416,320 | |
Total | | | — | | | | — | | | | — | | | | 11,212,261 | | | | — | | | | 10,471,119 | | | | 10,471,119 | |
| (1) | Pursuant to Mr. Ill’s Management Agreement, he is entitled to a lump sum payment equal to one times the sum of his current base salary plus the annual incentive award last paid to him if his employment is terminated by the Company without cause or by Mr. Ill for good reason within 60 days before or one year following a change in control. See the description of Mr. Ill’s Transition Agreement above for information about retention pay and benefits payable to Mr. Ill following February 22, 2013 if his employment is not terminated before such date. |
| (2) | |
1
| | ThePursuant to Mr. Ill’s Management Agreement, the Company is obligated to provide benefits to Mr. Ill at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Mr. Ill for good reason (whetherwithin 60 days before or not such termination followsone year following a change in control).control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. See the description of Mr. Ill’s Transition Agreement above for information about retention pay and benefits payable to Mr. Ill following February 22, 2013 if his employment is not terminated before such date. |
|
2(3) | | The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010, of $24.66. |
| | September 28, 2012, of $44.26. Mr. Ill’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
3(4) | | The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Mr. Ill’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
40
Jordan Graham
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Termination
| | | | | | | | | | |
| | | | | | | | | | | | by Us
| | | | | | | | | | |
| | | | | | | | | | | | Without
| | | | | | | | | | |
| | | | | | | | | | | | Cause
| | | | | | | | | | |
| | | | | | | | | | | | Following a
| | | | | | | | | | |
| | | | | | | | | Termination
| | | Change in
| | | | | | | | | | |
| | | | | | | | | by Us
| | | Control or by
| | | | | | | | | | |
| | | | | | | | | Without
| | | the NEO with
| | | | | | | | | | |
| | | | | | | | | Cause or by
| | | Good Reason
| | | | | | | | | | |
| | | Voluntary
| | | Termination
| | | NEO with
| | | Following a
| | | | | | | | | | |
| | | Termination
| | | by Us For
| | | Good
| | | Change in
| | | | | | | | | | |
| | | by NEO
| | | Cause
| | | Reason
| | | Control
| | | Retirement
| | | Disability
| | | Death
| |
Payment or Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| |
| Value of Cash Severance | | | — | | | | — | | | | 1,012,500 | | | | 1,012,500 | | | | — | | | | — | | | | — | |
| Value of Benefits1 | | | — | | | | — | | | | 1,472 | | | | 1,472 | | | | — | | | | — | | | | — | |
| Market Value of Accelerated Stock Option Awards2 | | | — | | | | — | | | | — | | | | 80,001 | | | | — | | | | 80,001 | | | | 80,001 | |
| Market Value of Accelerated Restricted Stock Unit Awards3 | | | — | | | | — | | | | — | | | | 821,992 | | | | — | | | | 821,992 | | | | 821,992 | |
| Total | | | — | | | | — | | | | 1,013,972 | | | | 1,915,965 | | | | — | | | | 901,993 | | | | 901,993 | |
| (5) | The amounts shown represent the earned performance share units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Mr. Ill’s Management Agreement and the terms of the equity award provide for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
James Wehmann
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Payment or Benefit | | Voluntary
Termination
by NEO
($) | | | Termination
by Us For
Cause
($) | | | Termination
by Us
Without
Cause or by
the NEO
with Good
Reason
($) | | | Termination
by Us
Without
Cause
in Connection
with a
Change in
Control or
by the NEO
with Good
Reason
in Connection
with a
Change in
Control
($) | | | Retirement
($) | | | Disability
($) | | | Death
($) | |
Value of Cash Severance(1) | | | — | | | | — | | | | 500,000 | | | | 500,000 | | | | — | | | | — | | | | — | |
Value of Benefits(2) | | | — | | | | — | | | | 15,848 | | | | 15,848 | | | | — | | | | — | | | | — | |
Market Value of Accelerated Stock Option Awards(3) | | | — | | | | — | | | | — | | | | 4,426,044 | | | | — | | | | 4,426,044 | | | | 4,426,044 | |
Market Value of Accelerated Restricted Stock Unit Awards(4) | | | — | | | | — | | | | — | | | | 1,475,319 | | | | — | | | | 1,475,319 | | | | 1,475,319 | |
Market Value of Accelerated Performance Share Unit Awards(5) | | | — | | | | — | | | | — | | | | 708,160 | | | | — | | | | 708,160 | | | | 708,160 | |
Total | | | — | | | | — | | | | 515,848 | | | | 7,125,371 | | | | — | | | | 6,609,523 | | | | 6,609,523 | |
| (1) | Pursuant to Mr. Wehmann’s Letter Agreement, he is entitled to a lump sum payment equal to one times the sum of his current base salary plus the annual incentive award last paid to him if his employment is terminated by the Company without cause or by Mr. Wehmann for good reason. The Letter Agreement further provides that if his employment were so terminated prior to payment of the cash incentive for fiscal 2012, a value of $100,000 would be assigned to that portion of the calculation. Mr. Wehmann’s Management Agreement provides for the same payments and benefits in the event his employment is terminated by the Company without cause or by Mr. Wehmann for good reason within 60 days before or one year following a change in control. |
1(2) | | ThePursuant to Mr. Wehmann’s Letter Agreement, the Company is obligated to provide benefits to Mr. GrahamWehmann at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Mr. GrahamWehmann for good reason. Mr. Wehmann’s Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Mr. Wehmann for good reason (whetherwithin 60 days before or not such termination followsone year following a change in control).control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. |
|
2(3) | | The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Mr. Wehmann’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
|
3(4) | | The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Mr. Wehmann’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
Deborah Kerr
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | Termination
| | | | | | | | | | |
| | | | | | | | | | | | by Us
| | | | | | | | | | |
| | | | | | | | | | | | Without
| | | | | | | | | | |
| | | | | | | | | | | | Cause
| | | | | | | | | | |
| | | | | | | | | | | | Following a
| | | | | | | | | | |
| | | | | | | | | Termination
| | | Change in
| | | | | | | | | | |
| | | | | | | | | by Us
| | | Control or by
| | | | | | | | | | |
| | | | | | | | | Without
| | | the NEO with
| | | | | | | | | | |
| | | | | | | | | Cause or by
| | | Good Reason
| | | | | | | | | | |
| | | Voluntary
| | | Termination
| | | NEO with
| | | Following a
| | | | | | | | | | |
| | | Termination
| | | by Us For
| | | Good
| | | Change in
| | | | | | | | | | |
| | | by NEO
| | | Cause
| | | Reason
| | | Control
| | | Retirement
| | | Disability
| | | Death
| |
Payment or Benefit | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | | | ($) | |
| |
| Value of Cash Severance | | | — | | | | — | | | | 645,000 | | | | 645,000 | | | | — | | | | — | | | | — | |
| Value of Benefits1 | | | — | | | | — | | | | 13,149 | | | | 13,149 | | | | — | | | | — | | | | — | |
| Market Value of Accelerated Stock Option Awards2 | | | — | | | | — | | | | — | | | | 1,487,924 | | | | — | | | | 1,487,924 | | | | 1,487,924 | |
| Market Value of Accelerated Restricted Stock Unit Awards3 | | | — | | | | — | | | | — | | | | 814,273 | | | | — | | | | 814,273 | | | | 814,273 | |
| Total | | | — | | | | — | | | | 658,149 | | | | 2,960,346 | | | | — | | | | 2,302,197 | | | | 2,302,197 | |
| (5) | The amounts shown represent the earned performance share units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Mr. Wehmann’s Management Agreement and the terms of the equity award provide for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
Stuart Wells
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Payment or Benefit | | Voluntary
Termination
by NEO
($) | | | Termination
by Us For
Cause
($) | | | Termination
by Us
Without
Cause or by
NEO with
Good
Reason
($) | | | Termination
by Us
Without
Cause
in Connection
with a
Change in
Control or
by the NEO
with Good
Reason
in Connection
with a
Change in
Control
($) | | | Retirement
($) | | | Disability
($) | | | Death
($) | |
Value of Cash Severance(1) | | | — | | | | — | | | | 600,000 | | | | 600,000 | | | | — | | | | — | | | | — | |
Value of Benefits(2) | | | — | | | | — | | | | 5,458 | | | | 5,458 | | | | — | | | | — | | | | — | |
Market Value of Accelerated Stock Option Awards(3) | | | — | | | | — | | | | — | | | | 5,532,589 | | | | — | | | | 5,532,589 | | | | 5,532,589 | |
Market Value of Accelerated Restricted Stock Unit Awards(4) | | | — | | | | — | | | | — | | | | 1,844,137 | | | | — | | | | 1,844,137 | | | | 1,844,137 | |
Market Value of Accelerated Performance Share Unit Awards(5) | | | — | | | | — | | | | — | | | | 1,062,240 | | | | — | | | | 1,062,240 | | | | 1,062,240 | |
Total | | | — | | | | — | | | | 605,458 | | | | 9,044,424 | | | | — | | | | 8,438,966 | | | | 8,438,966 | |
| (1) | |
1
| | The CompanyPursuant to Dr. Wells’ Letter Agreement, he is obligatedentitled to provide benefitsa lump sum payment equal to Ms. Kerr at existing levels for 12 months post-terminationone times the sum of his current base salary plus the annual incentive award last paid to him if herhis employment is terminated by the Company without cause or by Ms. KerrDr. Wells for good reason. The Letter Agreement further provides that if his employment were so terminated prior to payment of the cash incentive for fiscal 2012, a value of $100,000 would be assigned to that portion of the calculation. Dr. Wells’ Management Agreement provides for the same payments and benefits in the event his employment is terminated by the Company without cause or by Dr. Wells for good reason (whetherwithin 60 days before or not such termination followsone year following a change in control).control. |
| (2) | Pursuant to Dr. Wells’ Letter Agreement, the Company is obligated to provide benefits to Dr. Wells at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Dr. Wells for good reason. Dr. Wells’ Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Dr. Wells for good reason within 60 days before or one year following a change in control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. |
41
| (3) | | |
2
| | The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Dr. Wells’ Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
|
3(4) | | The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2010,28, 2012, of $24.66.$44.26. Dr. Wells’ Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
| (5) | The amounts shown represent the earned performance share units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 28, 2012, of $44.26. Dr. Wells’ Management Agreement and the terms of the equity award provide for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
OTHER INFORMATION
Equity Compensation Plan Information
| | | | | | | | | | | | | |
| | | Number of
| | | | | | | |
| | | Securities to be
| | | | | | | |
| | | Issued upon
| | | | | | Number of Securities
| |
| | | Exercise of
| | | Weighted Average
| | | Remaining Available
| |
| | | Outstanding
| | | Exercise Price of
| | | for Future Issuance
| |
| | | Options
| | | Outstanding
| | | Under Equity
| |
Plan Category | | and Rights | | | Options and Rights | | | Compensation Plans | |
| |
Equity compensation plans approved by security holders1 | | | 7,663,194 | | | $ | 30.182 | | | | 9,291,9423 | |
| Equity compensation plans not approved by security holders4 | | | 120,828 | | | $ | 33.91 | | | | 1,784,181 | |
| Total | | | 7,784,022 | | | $ | 30.25 | | | | 11,076,1233 | |
| | | | | | | | | | | | |
Plan Category | | Number of
Securities to be
Issued upon
Exercise of
Outstanding
Options
and Rights | | | Weighted Average
Exercise Price of
Outstanding
Options and Rights | | | Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans | |
Equity compensation plans approved by security holders | | | 5,535,137 | (1) | | $ | 33.02 | (2) | | | 7,154,655 | (3) |
Equity compensation plans not approved by security holders | | | 13,085 | (4) | | $ | 30.86 | | | | — | |
Total | | | 5,548,222 | | | $ | 33.01 | (2) | | | 7,154,655 | (3) |
| (1) | | |
1 | | IncludesThis amount represents the Company’s adopted and not terminated equity compensation plans approved by stockholders under whichshares of Company securities (a)common stock that may be issued upon the exercise of outstanding stock options or the vesting of restricted stock units and/or (b) are available for future issuance: the LTIP; and one remaining plan acquired as part of our acquisition of HNC Software, Inc. (the “HNC Legacy Approved Plan”). Both have shares of common stock available for future issuance at September 30, 2010. A total of 5,756,253 shares of Common Stock are available for future issuanceperformance share units granted under the LTIP. A total of 827,723 shares of Common Stock are available for future issuance under the remaining HNC Legacy Approved Plan. |
|
| | This HNC Legacy Approved Plan permitted the issuance of options through the tenth anniversary of the plan’s adoption, the exercise price of which is equal to the fair market value on the date of grant. Under NYSE rules, use of HNC Legacy Approved Plan is limited, among other ways, to grants to persons who were not employed by the Company immediately prior to the HNC acquisition. No options have been issued under the HNC Legacy Approved Plan since the Company’s acquisition of HNC in August 2002,1992 LTIP and the Company has no present plans or commitments to issue additional options under this plan, which is scheduled to expire in April 2011.2012 LTIP. |
|
2(2) | | The weighted-average exercise price set forth in this column is calculated excluding outstanding restricted stock unit and performance share unit awards, since recipients are not required to pay an exercise price to receive the shares subject to these awards. |
|
3(3) | | This amount includes (a) 4,446,689 shares available for future issuance under the 2012 LTIP and (b) 2,707,966 shares available for issuance under the Company’s 1999 Employee Stock Purchase Plan (“ESPP”); however, the Board of Directors has suspended the planESPP effective January 1, 2009, and (b) the2009. There are no shares available for future issuance set forthunder the 1992 LTIP, which expired in footnote (1) above.February 2012. |
|
4(4) | | IncludesThis amount represents the Company’s adopted and not terminated equity compensation plans not approved by stockholders under whichshares of Company securities (a)common stock that may be issued upon the exercise of outstanding stock options and/or (b) are available for future issuance:granted under the 2003 Employment Inducement Award Plan (the “EIAP”(“EIAP”); and an individual option grant to our Chairman of the Board, Mr. Battle. For a description of the material features of. There are no shares available for future issuance under the EIAP, see Note 17 of the Company’s Consolidated Financial Statements in the Annual Report onForm 10-K for the fiscal year ended September 30, 2010. Mr. Battle has 16,875 vested options outstanding, granted to himwhich was terminated in February 2002. These shares have an exercise price equal to the fair market value on the grant date.2012. |
How can stockholders submit proposals for the 20122014 Annual Meeting and otherwise?
Under the SEC rules, if a stockholder wants us to include a proposal in our proxy statement and proxy card for our 20122014 Annual Meeting, the proposal must be received by our Corporate Secretary, 901 Marquette Avenue,181 Metro Drive, Suite 3200, Minneapolis, Minnesota55402-3232,700, San Jose, California 95110, no later than 5:00 p.m. local time on August 29, 2011,September 9, 2013, to be considered for inclusion in the proxy statement and proxy card for that meeting. Stockholder communications to the Board, including any such communications relating to director nominees, may also be addressed to our Corporate Secretary at that address. The Board believes that no more detailed process for these communications is
42
appropriate, due to the variety in form, content and timing of these communications. The Secretary will forward the substance of meaningful stockholder communications, including those relating to director candidates, to the Board or the appropriate committee upon receipt.
In order for business, other than a stockholder proposal included in our proxy statement and proxy card, to be properly brought by a stockholder before the 20122014 Annual Meeting, the stockholder must give timely written notice thereof to the Corporate Secretary and must otherwise comply with our Bylaws. Our Bylaws provide that, to be timely, a stockholder’s notice must be received by our Corporate Secretary at our principal executive offices no fewer than 90 days nor more than 120 days prior to the first anniversary of the date of the preceding year’s Annual Meeting. In the case of an Annual Meeting which is held more than 25 days before or after such anniversary date, in order for notice by the stockholder to be considered timely, it must be received no later than the close of business on the 10th day following the date of the first public announcement of the date of the Annual Meeting.
Can I access the Proxy Material on the Internet?
Yes. The Proxy Material is located on the “Investors” page of our website atwww.fico.com, and at the following cookies-free website that can be accessed anonymously:http://investors.fico.com/phoenix.zhtml?c=67528&p=proxy.
May I request a copy of the Company’s Annual Report onForm 10-K?
Yes. We will mail without charge, upon written request, a copy of our Annual Report onForm 10-K for the fiscal year ended September 30, 2010,2012, including the consolidated financial statements, schedules and list of exhibits and any particular exhibit specifically requested. Requests should be sent to: Fair Isaac Corporation, 901 Marquette Avenue,181 Metro Drive, Suite 3200, Minneapolis, Minnesota55402-3232,700, San Jose, California 95110, Attn: Investor Relations. The Annual Report onForm 10-K is also available on the “Investors” page of our website atwww.fico.com.
By Order of the Board of Directors
Mark
MARK R. Scadina
SCADINAExecutive Vice President, General Counsel and Secretary
43January 7, 2013
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
We encourage you to take advantage of Internet or telephone voting.
Both are available 24 hours a day, 7 days a week.
Internet and telephone voting is available through 11:59 PM Eastern Time the day prior to the annual meeting date.
INTERNET
http://www.proxyvoting.com/fico
Use the Internet to vote your proxy. Have your proxy card in hand when you access the web site.
OR
TELEPHONE
1-866-540-5760
Use any touch-tone telephone to vote your proxy. Have your proxy card in hand when you call.
If you vote your proxy by Internet or by telephone, you do NOT need to mail back your proxy card.
To vote by mail, mark, sign and date your proxy card and return it in the enclosed postage-paid envelope.
Your Internet or telephone vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed and returned your proxy card.
86204-1
6FOLD AND DETACH HERE6
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
FAIR ISAAC CORPORATION ATTN: NANCY FRASER 200 SMITH RANCH ROAD SAN RAFAEL, CA 94903 | | | | |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSAL 2, “TWO YEARS” ON PROPOSAL 3, AND “FOR” PROPOSAL 4.
| | Please mark your votes as
indicated in this example | | x |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
1. ELECTION OF DIRECTORSVOTE BY INTERNET -www.proxyvote.com | | FOR | | AGAINST | | ABSTAIN | | | | FOR | | AGAINST | | ABSTAIN | | | | | | | | | FOR | | AGAINST | | ABSTAIN |
| |
1.1 A. George Battle | | o | | oUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you access the website and follow the instructions to obtain your records and to create an electronic voting instruction form. | | o | | 1.6 William J. Lansing | | o |
| | | o | | oVOTE BY TELEPHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the meeting date. Have your proxy card in hand when you call and follow the instructions. | | | 2. | | To approve the advisory (non-binding) resolution relating to the Company’s executive officer compensation as disclosed in this Proxy Statement. | | |
| | | o | | VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. | | o | | | | |
| | | | | Your Internet or telephone vote authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card. | | | | | | |
| | | | | ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receive all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. | | | | | | |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
| | | | |
| | M51199-P31629 | | KEEP THIS PORTION FOR YOUR RECORDS |
| | | | |
| | | | | DETACH AND RETURN THIS PORTION ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
FAIR ISAAC CORPORATION | | | | | | | | | | | | | | | | | | | | | | | |
1.2 Nicholas F. Graziano | | o | | o | | o | | 1.7 Rahul N. Merchant | | o | | o | | o | | | | | | | 1 YEAR | | 2 YEARS | | 3 YEARS | | ABSTAIN |
| | | | | | | | | | | | | | | | | 3. | | Advisory (non-binding) vote on the desired frequency of seeking approval of the Company’s executive officer compensation. | | o | | o | | o | | o |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
1.3 Mark N. Greene | | o | | o | | o | | 1.8 Margaret L. Taylor | | o | | o | | o | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
1.4 Alex W. Hart | | o | | o | | o | | 1.9 Duane E. White | | o | | o | | o | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | The Board of Directors recommends you vote FOR the following Nominees: | | | | | | | | | | | | | | | | |
| | 1. | | Election of Directors | | For | | Against | | Abstain | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1a. A. George Battle | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | 1b. Nicholas F. Graziano | | ¨ | | ¨ | | ¨ | | | | | | The Board of Directors recommends you vote FOR proposals 2 and 3. | | For | | Against | | Abstain | | |
| | | | 1c. Braden R. Kelly | | ¨ | | ¨ | | ¨ | | | | | | 2. | | To approve the advisory (non-binding) resolution relating to the Company’s executive officer compensation as disclosed in the Proxy Statement. | | ¨ | | ¨ | | ¨ | | |
| | | | 1d. James D. Kirsner | | ¨ | | ¨ | | ¨ | | | | | | 3. | | To ratify the appointment of Deloitte & Touche LLP as the Company’s independent auditors for the current fiscal year. | | ¨ | | ¨ | | ¨ | | |
| | | | 1e. William J. Lansing | | ¨ | | ¨ | | ¨ | | | | | | 4. | | In their discretion upon such other business as may properly come before the meeting or any postponement or adjournment thereof. | | | | | | | | |
| | | | 1f. Rahul N. Merchant | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | |
| | | | 1g. David A. Rey | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | |
| | | | 1h. Duane E. White | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | |
| | For address change and/or comments, mark here. (see reverse for instructions) | | ¨ | | | | | | | | | | | | | | | | | | | | | | | | |
| | Please indicate if you plan to attend this meeting. | | ¨ Yes | | ¨ No | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Signature [PLEASE SIGN WITHIN BOX] | | Date | | | | | | | | | FOR | Signature (Joint Owner) [PLEASE SIGN WITHIN BOX] | | AGAINST | | ABSTAIN |
|
1.5 James D. Kirsner | | o | | o | | oDate | | | | | | | | | | |
Each stockholder may be asked to present valid picture identification,
such as driver’s license or employee identification badge, in addition to this admission ticket.
4. | | | | |
| | To ratify Admission Ticket | | |
FAIR ISAAC CORPORATION
2013 ANNUAL MEETING OF STOCKHOLDERS
ADMISSION TICKET
Please present this ticket for admittance of the
stockholder(s) named on the reverse side.
Admittance will be based upon availability of seating.
NON-TRANSFERABLE
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and Form 10-K are available atwww.proxyvote.com.
M51200-P31629
| | | | | | | | | | |
FAIR ISAAC CORPORATION Annual Meeting of Stockholders February 12, 2013 This proxy is solicited by the appointmentBoard of Deloitte &Touche LLP as the Company’s independent auditors for the current fiscal year.Directors |
| | | | oThe undersigned hereby appoints William J. Lansing, Mark R. Scadina and Nancy E. Fraser, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse, all the shares of Common Stock of Fair Isaac Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on February 12, 2013, or any postponement or adjournment thereof. THIS PROXY WHEN EXECUTED WILL BE VOTED BY THE UNDERSIGNED STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE ON THE EXECUTED PROXY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL 1, AND “FOR” PROPOSALS 2 AND 3. | | o | | o |
| | | | | Address change/comments: | | | | | | |
| | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | 5. | | In their discretion upon such other business as may properly come before the meeting. |
| | | | | | | | | | |
| | | | | | | I plan to attend the meeting | | o | YES |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | Mark Here for
Address Change
(If you noted any address changes and/or Comments
SEE REVERSE
| o |
| | | | |
Note: Sign exactly as your name appears on this proxy card. If shares are held jointly, each holder should sign. When signing as attorney, executor, administrator, trustee or guardian,comments above, please give full title as such. If corporation or partnership, please sign in firm name by authorized person. |
Each stockholder may be asked to present valid picture identification,
such as driver’s license or employee identification badge, in addition to this admission ticket.
Admission Ticket
FAIR ISAAC CORPORATION
2011 ANNUAL MEETING OF STOCKHOLDERS
ADMISSION TICKET
Please present this ticket for admittance of the
stockholder(s) named on the reverse side.
Admittance will be based upon availability of seating.
NON-TRANSFERABLE
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Stockholders.The Proxy Statement and the 2010 Annual Report to Stockholders are available at: http://investors.fico.com/phoenix.zhtml?c=67528&p=proxy
6FOLD AND DETACH HERE6
PROXY IS SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING FEBRUARY 1, 2011
The undersigned hereby appoints Mark N. Greene, Mark R. Scadina and Nancy E. Fraser, or any of them, as proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote, as designated on the reverse, all the shares of Common Stock of Fair Isaac Corporation that the undersigned is entitled to vote at the Annual Meeting of Stockholders to be held on February 1, 2011, or any postponement or adjournment thereof.
THIS PROXY WHEN EXECUTED WILL BE VOTED BY THE UNDERSIGNED STOCKHOLDER. IF NO SUCH DIRECTIONS ARE MADE ON THE EXECUTED PROXY, THIS PROXY WILL BE VOTED “FOR” ALL NOMINEES LISTED IN PROPOSAL 1, “FOR” PROPOSALS 2 AND 4, AND “2 YEARS” FOR PROPOSAL 3.
| | | | |
| | | | |
| Address Change/Comments
(Mark themark corresponding box on the reverse side)
| | | side.) BNY MELLON SHAREOWNER SERVICES
P.O. BOX 3550
SOUTH HACKENSACK, NJ 07606-9250
(Continued and to be marked, dated and signed on the other side)reverse side
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| | | | 86204-1
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