UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.WASHINGTON, DC 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrantþ
Filed by a Party other than the Registranto¨
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¨ | Preliminary Proxy Statement | |||||
¨ | Soliciting Material Under Rule | |||||
¨ | Confidential, Only (as permitted by Rule 14a-6(e)(2)) | |||||
Pursuant to § 240.14a-12 | ||||||
þ | Definitive Proxy Statement | |||||
¨ | Definitive Additional Materials | |||||
Fair Isaac Corporation
FAIR ISAAC CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
þ No fee required.
¨ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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¨ Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing.
1) Amount previously paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 12, 2013,
AND PROXY STATEMENT
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Please take notice that the Annual Meeting of the Stockholders of Fair Isaac Corporation (“Annual Meeting”) will be held at the time and place and for the purposes indicated below.
TIME | ||
9:30 A.M., local time, on Tuesday, February |
PLACE | Offices of Fair Isaac San |
ITEMS OF BUSINESS | 1. | To elect |
2. | A non-binding advisory vote to approve the compensation of our named executive officers disclosed in this proxy statement; |
3. | ||
To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending September 30, |
4. | To transact such other business as may properly come before the meeting or any adjournment thereof. |
All of the above matters are more fully described in the accompanying proxy statement. |
RECORD DATE | You can vote if you were a stockholder of record at the close of business on December |
ANNUAL REPORT | Our |
VOTING | Your Vote |
ADMITTANCE TO MEETING | Admittance to the Annual Meeting will be limited to stockholders. If you are a stockholder of record and plan to attend, please detach the admission ticket from your proxy card and bring it with you to the Annual Meeting. Stockholders who arrive at the Annual Meeting without an admission ticket will be required to present identification matching the corresponding stockholder account name at the registration table located outside the meeting room. If you are a stockholder whose shares are held by a bank, broker or other nominee, you will be asked to certify to such ownership at the registration table prior to the Annual Meeting. |
Mark R. Scadina |
Executive Vice President, General Counsel and Secretary
901 Marquette Avenue,181 Metro Drive, Suite 3200Minneapolis, Minnesota700
55402-3232San Jose, California 95110
Proxy Statement
Why did I receive this proxy statement?
The Board of Directors is soliciting your proxy to vote at the Annual Meeting of Stockholders (“Annual Meeting”) to be held on February 1, 2011,12, 2013, because you were a stockholder of Fair Isaac Corporation (“FICO,” “the Company,” “we,” “our,” “us”) at the close of business on December 8, 2010,17, 2012, the record date, and are entitled to vote at the meeting.
This proxy statement, the proxy card and the Annual Report onForm 10-K (the “Proxy Material”) are being mailed to stockholders beginning on or about December 27, 2010.January 7, 2013. The proxy statement summarizes the information you need to know to vote at the Annual Meeting. You do not need to attend the Annual Meeting to vote your shares.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
If your shares are registered directly in your name with our transfer agent, BNY Mellon Shareowner Services (“BNY Mellon”),Computershare Limited, you are considered the “stockholder of record” with respect to those shares. We sent the Proxy Material directly to you. You have the right to vote these shares directly.
If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the “beneficial owner” of shares held in street name. In this case, the Proxy Material has been forwarded to you by your broker, bank or nominee who is considered the stockholder of record with respect to those shares. As the beneficial owner, you have the right to direct your broker, bank or nominee how to vote your shares by using the voting instruction card included in the mailing or by following their instructions for voting by telephone or the Internet.
What am I voting on?
Election of | ||
Non-binding advisory vote to approve the compensation of our named executive officers as disclosed in this proxy statement; | ||
Ratification of the appointment of Deloitte & Touche LLP (“Deloitte”) as our independent registered public accounting firm for the fiscal year ending September 30, | ||
Any other such business as may properly come before the meeting or any adjournment thereof. |
The Board recommends a voteFOReach of the nominees to the Board of Directors,FORthe advisory approval of the compensation of our named executive officers as disclosed in this proxy statement, in favor of holding the non-binding advisory vote to approve our executive officer compensation practices everyTWO YEARS, andFORthe ratification of Deloitte’s appointment as independent registered public accounting firm for the fiscal year ending September 30, 2011.
What is the voting requirement to elect the directors (Proposal 1)?
To be elected, each director requires that the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. The Company requires that all nominees submit an irrevocable letter of resignation as a condition to being named as a nominee, which resignation will be effective if (i) the
your broker, bank, trust or other nominee does not receive voting instructions from you. Therefore, broker non-votes will not be counted “FOR” or “AGAINST” a nominee.
What is the voting requirement for advisory approval of the named executive officer compensation practices disclosed in this proxy statement (Proposal 2)?
The affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting is necessary for advisory approval of the named executive officer compensation practices disclosed in this proxy statement. Because your vote on executive compensation is advisory, it will not be binding upon the Company or the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when considering future executive officer compensation programs. Abstentions will be counted toward a quorum and have the effect of negative votes with respect to this proposal. In the event that a broker indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular matter, such broker non-votes will also be counted toward a quorum and will have the same effect as negative votes. All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will tabulate affirmative votes, negative votes, abstentions and broker non-votes.
What is the voting requirement to ratify the appointment of Deloitte (Proposal 4)3)?
The affirmative vote of a majority of the shares present or represented by proxy and entitled to vote at the Annual Meeting is necessary to ratify the appointment of Deloitte as our independent auditors for the fiscal year ending September 30, 2011.2013. Abstentions will be counted toward a quorum and have the effect of negative votes with respect to this proposal. In the event that a broker indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular matter, such broker non-votes will also be counted toward a quorum and will have the same effect as negative votes. All votes will be tabulated by the inspector of election appointed for the Annual Meeting, who will tabulate affirmative votes, negative votes, abstentions and broker non-votes.
What if other business is properly brought before the Annual Meeting for stockholder action?
The Board knows of no other matters to be presented for stockholder action at the Annual Meeting. However, if other matters are properly brought before the Annual Meeting, the persons named as proxies in the accompanying proxy card will have discretion with respect to how to vote the shares represented by them.
How many votes do I have?
You are entitled to one vote for each share of Common Stockcommon stock that you hold for each nominee for director and for each other matter presented for a vote at the Annual Meeting. There is no cumulative voting.
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You may vote using any of the following methods:
Proxy card. Be sure to complete, sign and date the card and return it in the prepaid envelope. If you are a stockholder of record and you return your signed proxy card without indicating your voting preferences, the persons named in the proxy card will voteFORthe election of directors,FOR the advisory approval of the compensation of our named executive officers disclosed in this proxy statement, andFOR the ratification of the appointment of Deloitte as our independent registered public accounting firm for fiscal 2013.
By telephone or the Internet. The telephone and Internet voting procedures we established for stockholders of record are designed to authenticate your identity, allow you to give your voting instructions and confirm that these instructions have been properly recorded. The availability of telephone and Inter-
net voting for beneficial owners will depend on the voting processes of your broker, bank or nominee. Therefore, we recommend that you follow the voting instructions in the materials you receive. | ||
In person at the Annual Meeting. All stockholders may vote in person at the Annual Meeting. If you are a beneficial owner of shares, you must obtain a legal proxy from your broker, bank or nominee and present it to the inspector of election with your ballot when you vote at the meeting.
What can I do if I change my mind after I vote my shares?
If you are a stockholder of record, you may revoke your proxy at any time before it is voted at the Annual Meeting by:
Sending written notice of revocation to the Corporate Secretary of FICO;
Submitting a new, proper proxy by telephone, Internet or paper ballot after the date of the revoked proxy; or
Attending the Annual Meeting and voting in person.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank or nominee. You may also vote in person at the Annual Meeting if you obtain a legal proxy as described in the answer to the previous question.
Who will count the vote?
Representatives of BNY MellonBroadridge Financial Solutions, Inc. will tabulate the votes and act as the inspector of election.
What shares are included on the proxy card?
The shares on your proxy card represent shares you own.
Is my vote confidential?
Any proxy, ballot or other voting material that identifies the particular vote of a stockholder and contains the stockholder’s request for confidential treatment will be kept confidential, except in the event of a contested proxy solicitation or as may be required by law. We may be informed whether or not a particular stockholder has voted and will have access to any comment written on a proxy, ballot or other material and to the identity of the commenting stockholder. The inspector of election will be an independent third party not under our control.
What constitutes a quorum?
As of the record date, 39,904,49135,237,956 shares of FICO Common Stockcommon stock were issued and outstanding. A majority of the outstanding shares, present or represented by proxy, constitutes a quorum for the purpose of adopting proposals at the Annual Meeting. If you submit a properly executed proxy, then you will be considered part of the quorum.
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Who can attend the Annual Meeting?
All stockholders as of the record date may attend the Annual Meeting but must have an admission ticket. If you are a stockholder of record, the ticket attached to the proxy card will admit you. If you are a beneficial owner, you may request a ticket by writing to the Corporate Secretary, 901 Marquette Avenue,181 Metro Drive, Suite 3200, Minneapolis, Minnesota55402-3232,700, San Jose, California 95110, or by faxing your request to612-758-6002. 408-535-1529. You must provide evidence of your ownership of shares with your ticket request, which you can obtain from your broker, bank or nominee. We encourage you or your broker to fax your ticket request and proof of ownership in order to avoid any mail delays. Stockholders who arrive at the Annual Meeting without an admission ticket will be required to present identification matching the corresponding stockholder account name at the registration table located outside the meeting room. If you are
a stockholder whose shares are held by a bank, broker or other nominee, you will be asked to certify to such ownership at the registration table prior to the Annual Meeting.
What are FICO’s costs associated with this proxy solicitation?
We have hired Innisfree M&A Incorporated to assist in the distribution of Proxy Material and solicitation of votes for $10,000 plus reasonableout-of-pocket expenses. FICO employees, officers and directors may also solicit proxies. We will bear the expense of preparing, printing and mailing the Proxy Material, and reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonableout-of-pocket expenses for forwarding proxy and solicitation materials to the owners of Common Stock.
How can I obtain the Company’s corporate governance information?
The following FICO corporate governance documents are available on our website atwww.fico.comon the “Investors” page and are also available in print and free of charge, to any stockholder who requests them:
Corporate Governance Guidelines;
Board Committee Charters — Audit Committee; Governance, Nominating and Executive Committee; and Compensation Committee;
Code of Business Conduct and Ethics;
Code of Ethics for Senior Financial Management; and
Director Independence Criteria.
The Company is listed on the New York Stock Exchange (“NYSE”). As an NYSE-listed company, our Chief Executive Officer must certify annually that he is not aware of any violation by the Company of NYSE corporate governance listing standards as of the date of that certification. The most recent Chief Executive Officer’s certification was filed with the NYSE on March 4, 2010.
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Do any stockholders own more than five percent of FICO’s stock?
Yes. As of November 30, 2010,the dates indicated below in footnotes (3) through (7), publicly available information indicated that certain stockholders were beneficial owners of more than five percent of the outstanding shares of our Common Stock.common stock. The information in the table below the following question is as reported in their filings with the Securities and Exchange Commission (“SEC”). The percentages noted in the table are as provided by the shareholder as of the date of their filing and not as of November 30, 2012. We are not aware of any other beneficial owner of more than five percent of our Common Stock.
What is the security ownership of directors and executive officers?
In addition to the information described in the preceding question, the following table sets forth the beneficial ownership of our Common Stockcommon stock as of November 30, 2010,2012, for each director and nominee for director, each executive officer named in the Summary Compensation Table below, and by all directors, nominees and executive officers of the Company as a group.
Directors, Nominees, Executive Officers | Beneficial Ownership1 | |||||||
and 5% Stockholders | Number | Percent2 | ||||||
Southeastern Asset Management, Inc.3 | 9,356,483 | 23.4 | % | |||||
6410 Poplar Avenue Suite 900 Memphis, TN 38119 | ||||||||
BlackRock Inc.3 | 2,932,029 | 7.3 | % | |||||
(BlackRock Institutional Trust Company, N.A., BlackRock Fund Advisors, BlackRock Investment Management, LLC) 40 East 52nd Street New York, NY 10022 | ||||||||
Royce & Associates3 | 2,718,657 | 6.8 | % | |||||
745 Fifth Avenue New York, NY 10151 | ||||||||
Mark Greene4 | 293,939 | * | ||||||
A. George Battle5 | 210,111 | * | ||||||
Alex Hart6 | 150,706 | * | ||||||
Margaret Taylor7 | 150,264 | * | ||||||
William Lansing8 | 82,895 | * | ||||||
James Kirsner9 | 74,975 | * | ||||||
Thomas Bradley10 | 68,750 | * | ||||||
Deborah Kerr11 | 55,061 | * | ||||||
Nicholas Graziano12 | 40,516 | * | ||||||
Duane White13 | 20,250 | * | ||||||
Jordan Graham | 0 | — | ||||||
Charles Ill | 0 | — | ||||||
Rahul Merchant | 0 | — | ||||||
All executive officers, directors and nominees as a group (18 persons)14 | 1,780,924 | 4.4 | % |
Directors, Nominees, Executive Officers and 5% Stockholders | Beneficial Ownership(1) | |||||||
Number | Percent(2) | |||||||
Eaton Vance Management(3) | 4,721,336 | 13.2 | % | |||||
2 International Place, Boston, MA 02110 | ||||||||
BlackRock Inc.(4) | 2,723,261 | 7.6 | % | |||||
40 East 52nd Street New York, NY 10022 | ||||||||
Ariel Investments, LLC(5) | 2,701,645 | 7.6 | % | |||||
200 E. Randolph Drive, Suite 2900, Chicago, IL 60601 | ||||||||
Royce & Associates(6) | 2,520,357 | 7.1 | % | |||||
745 Fifth Avenue New York, NY 10151 | ||||||||
Vanguard Group, Inc.(7) | 1,981,038 | 5.5 | % | |||||
100 Vanguard Blvd., Malvern, PA 19355 | ||||||||
William Lansing(8) | 170,145 | * | ||||||
A. George Battle(9) | 157,213 | * | ||||||
Mark Greene(10) | 149,872 | * | ||||||
James Kirsner(11) | 98,225 | * | ||||||
Michael Pung(12) | 81,083 | * | ||||||
Charles Ill(13) | 79,157 | * | ||||||
Deborah Kerr(14) | 75,781 | * | ||||||
Duane White(15) | 41,000 | * | ||||||
Rahul Merchant(16) | 23,250 | * | ||||||
Nicholas Graziano(17) | 11,650 | * | ||||||
David Rey(18) | 8,625 | * | ||||||
Stuart Wells(19) | 6,000 | * | ||||||
James Wehmann(20) | 4,000 | * | ||||||
Braden Kelly | 0 | — | ||||||
All executive officers and directors as a group (19 persons)(21) | 1,437,246 | 4.1 | % |
* | ||
Represents holdings of less than 1%. |
To the Company’s knowledge, the persons named in the table have sole voting and |
If the named person holds stock options exercisable on or prior to January 29, |
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pursuant to the preceding sentence are not deemed issued and outstanding for purposes of the percentage calculation with respect to any other stockholder. |
(3) | Information as to this person is based on the report on the Schedule 13G/A filed by this person as of January 11, 2012. |
Information as to this person (including affiliated entities) is based on the report on the |
(5) | Information as to this person is based on the report on the Schedule 13G/A filed by this person as of February 14, 2012. Ariel Investments has |
(6) | Information as to this person is based on the report on the Schedule 13G/A filed by this person as of January 11, 2012. |
(7) | Information as to this person (including affiliated entity) is based on the report on the Schedule 13G filed by this person as of February 9, 2012. The Vanguard Group has sole voting power as to 53,131 shares, |
Includes options to purchase |
Includes options to purchase |
Includes options to purchase |
Includes options to purchase | ||
Includes options to purchase |
Includes options to purchase |
Includes options to purchase |
(15) | Includes options to purchase 30,500 shares. |
(16) | Includes options to purchase 22,250 shares. |
Includes options to purchase 7,750 shares. |
(18) | Includes options to purchase 7,288 shares. |
(19) | Includes restricted stock units representing 6,000 shares. |
(20) | Includes restricted stock units representing 4,000 shares. |
(21) | Includes the shares in notes |
Section 16(a) Beneficial Ownership Reporting Compliance
Directors and persons who are considered “officers” of the Company for purposes of Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and greater than ten percent stockholders (“Reporting Persons”) are required to file reports with the SEC showing their holdings of and transactions in the Company’s securities. Our employees generally prepare these reports on the basis of information obtained from each director and officer. Based on the information available to us, we believe that all reports required by Section 16(a) of the Exchange Act to be filed by its directors, executive officers, and greater than 10% owners during the last fiscal year were filed on time.
ELECTION OF DIRECTORS
How many directors are being elected this year?
Our Bylaws specify that the Board of Directors will establish by vote how many directors will serve on the Board. The Board of Directors has set the number of directors at nine, eacheight, consisting of whom is upthe seven incumbent directors and one nominee for election each year.
How are directors elected?
To be elected, the number of votes cast “FOR” a director nominee must exceed the number of votes cast “AGAINST” that nominee. The Company requires that all nominees submit an irrevocable letter of resignation as a condition to being named as a nominee, which resignation will be effective if (i) the nominee fails to receive a sufficient number of votes to be elected and (ii) the Board accepts such resignation. Cumulative voting for the election of directors is not permitted.
What is the length of the term?
Each director is elected for a one yearone-year term, or until a replacement who duly meets all requirements is duly elected.
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Our Governance, Nominating and Executive Committee selects nominees on the basis of recognized achievements and their ability to bring various skills and experience to the deliberations of the Board, as described in more detail in the Corporate Governance Guidelines available on our website atwww.fico.com. The Governance, Nominating and Executive Committee also strongly values diversity and seeks opportunities to promote diversity within the Company’s leadership. This viewpoint is reflected in our Corporate Governance Guidelines and our Governance, Nominating and Executive Committee Charter, both of which include diversity as a consideration the Governance, Nominating and Executive Committee takes into account when assessing our incumbents and nominees.
All of the current nominees to the Board were recommended as nominees by the Governance, Nominating and Executive Committee, and the full Board voted unanimously to designate them as nominees for election at the Annual Meeting. All of the nominees are presently serving on our Board.
Are there any arrangements or understandings pursuant to which the nominees for the Board were selected?
Two of the nominees who are currently serving on our Board — Nicholas Graziano and Duane White (the “Agreed Nominees”) — were nominated for election to the Board at the 2009 Annual Meeting pursuant to an agreement (the “Sandell Agreement”) between the Company and certain stockholders of the Company that arewere affiliated with Sandell Asset Management Corp. (collectively, the “Sandell Group”). However, the Sandell Agreement did not require us to nominate the Agreed Nominees (or anyone else) for election at this year’s or last year’ssuccessive Annual Meeting,Meetings, and in accordance with a July 29, 2009 amendment to the Sandell Agreement, the Sandell Group no longer has any representative on or influence over the composition of the Company’s Board.
Are stockholders able to nominate director candidates?
Yes. Our Governance, Nominating and Executive Committee considers director candidates recommended by stockholders who are entitled to vote for the election of directors at the Annual Meeting and comply with the notice procedures described below. A stockholder who wishes to nominate a candidate must send a written notice to the FICO Corporate Secretary. Each notice must include the following information about the nominee:
Name, age, and business and residence addresses;
Principal occupation or employment;
Class, series and number of shares of FICO beneficially owned, and additional detailed “ownership information” regarding derivatives, voting arrangements, dividend interests, and related matters (as described in detail in our Bylaws);
A statement of the person’s citizenship; and
Any other information that must be disclosed about nominees in proxy solicitations pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder (including the nominee’s written consent to be named as a nominee and to serve as a director if elected).
Each notice must also include the following information about the nominating stockholder and any beneficial owner on whose behalf the nomination is made:
The name and address, as they appear in our records; | ||
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A description of all agreements pursuant to which the nomination is being made, and any material interest of such stockholder or beneficial owner, or any affiliates or associates of such person, in such nomination;
A representation that the stockholder giving notice intends to appear in person or by proxy at the Annual Meeting to nominate the persons named in its notice;
A representation whether the stockholder or the beneficial owner intends, or is part of a group that intends, to deliver a proxy statement or form of proxy to holders of at least the percentage of FICO’s outstanding shares required to elect the nominee or otherwise solicit proxies from stockholders in support of the nomination; and
Any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the Exchange Act, and the rules and regulations promulgated thereunder.
We may require any proposed nominee to furnish such other information as may reasonably be required by us to determine the eligibility of the proposed nominee to serve as a director.
Our Corporate Secretary must receive this information not less than 90 days nor more than 120 days prior to the anniversary date of the immediately preceding 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.
What happens if a nominee becomes unavailable to serve once placed on the ballot?
Each of the nominees has consented to being named in the proxy statement and to serve if elected. If any nominee becomes unavailable to serve, however, the persons named in the enclosed form of proxy intend to vote the shares represented by the proxy for the election of such other person or persons as may be nominated or designated by the Board of Directors, unless either they are directed by the proxy to do otherwise or the Board of Directors instead reduces the number of directors.
Director Nominees
Set forth below is biographical information for each director nominee, as well as information regarding the particular experience, qualifications, attributes or skills of our current directorsthe nominees that led the Governance, Nominating and Executive Committee to conclude that they should serve as members of the Board:
A. George Battle.Battle. Director since August 1996 and Chairman of the Board of Directors since February 2002; Chair of the Governance, Nominating and Executive Committee; Member of the Compensation Committee; Age 66.
From January 2004 to August 2005, Mr. Battle served as Executive Chairman at Ask Jeeves, Inc., a provider of information search and retrieval services. From December 2000 until January 2004, Mr. Battle served as Chief Executive Officer at Ask Jeeves. From 1968 until his retirement in 1995, Mr. Battle was an employee and then partner at Arthur Andersen LLP and Andersen Consulting (now known as Accenture Ltd.), global accounting and consulting firms. Mr. Battle’s last position at Andersen Consulting was Managing Partner, Market Development, responsible for Andersen Consulting’s worldwide industry activities, its Change Management and Strategic Services offerings, and worldwide marketing and advertising. Mr. Battle is a director at the following public companies in addition to FICO: Netflix, Inc., LinkedIn Corporation, OpenTable, Inc., Expedia, Inc., and Workday, Inc. Within the last five years, Mr. Battle served on the board of Advent Software, Inc., OpenTable, Inc.,a public company, and Expedia, Inc. He is also served as a director atof the Masters Select family of funds. Mr. Battle received an undergraduate degree from Dartmouth College and an M.B.A. from the Stanford University Business School.
Mr. Battle brings strong leadership, seasoned business acumen, and a long career of diverse experience to the Board of Directors. He is our longest serving director, has in the past sat on all of our standing Board committees, and has extensive historical knowledge about the Company’s business units, technologies, and culture. We value his more than 25 years as a business consultant with a national consulting firm and his prior experience as a chief executive officer. He also serves on a number of other public and private company boards, which provides us with important perspectives on corporate governance and other matters, as well as best practices enacted at other companies.
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Since January 2011, Mr. Graziano has been a partner and Senior Managing Director of Corvex Management LP. From September 2009 through December 15, 2010, Mr. Graziano served as Portfolio Manager for Omega Advisors. From September 2006 to July 2009, Mr. Graziano was a Managing Director at Sandell Asset Management Corp., an investment manager. From February 2004 to July 2006, Mr. Graziano was an investment analyst with Icahn Associates Corp, a multi-billion dollar global hedge fund. From February 2002 to February 2004, Mr. Graziano was an analyst with March Partners LLC, a global event-driven hedge fund. From May 1999 to May 2000, and from September 2000 to October 2001, Mr. Graziano was employed as a Vice President in the Investment Banking Department at Thomas Weisel Partners, an investment bank. From May 2000 to September 2000, Mr. Graziano was Vice President of Business Development at Forbes.com, the online subsidiary of Forbes, Inc. From 1995 to 1999, Mr. Graziano was employed by Salomon Smith Barney as an Associate in the Financial Sponsors Group. Currently, Mr. Graziano is not a director at any other public company in addition to FICO. Within the last five years, Mr. Graziano served on the following public company boards: InfoSpace, Inc. and WCI Communities, Inc. Mr. Graziano earned an undergraduate degree and an M.B.A. from Duke University.
Mr. Graziano brings a strong background in capital markets and financial acumen to the Board of Directors. He is qualified as an “audit committee financial expert” as defined under SEC guidelines, and as such, he serves on the Company’s Audit Committee. Mr. Graziano also provides the Company with expertise in capital markets, risk management, and corporate finance, and his extensive experience in the hedge fund industry brings valuable perspective from the investor community.
Mark N. Greene.Braden R. Kelly. DirectorNominee; Age 42.
Mr. Kelly has been a Senior Advisor at Health Evolution Partners, a private equity firm focused on the health care industry, since February 2007; Age 56.
not a director at the followingof any other public company in addition to FICO: Capella Education Company.
Mr. HartKelly has extensive experience in thea strong financial services industry,background and brings valuable insightwould contribute a critical business and corporate development perspective to the Board of Directors from having previously served as Presidentthrough his extensive experience with strategic mergers and Chief Executive Officer atacquisitions, a major international company where our products and services are used. Because of this experience, Mr. Hart has a deep understanding ofkey growth opportunity for the strategic and operational issues we face and provides valuable insight to our Board as we review our strategic initiatives. Mr. Hart also currently serves on other publicly-traded boards in the financial
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In 2001, Mr. Kirsner served as a consultant and interim Chief Operating Officer at Tukman Capital Management, an equity management firm. From 1993 until 2001, Mr. Kirsner was the Chief Financial Officer and head of Barra Ventures at Barra, Inc., an investment risk management services company. From 1967 until 1993, Mr. Kirsner was an audit professional with Arthur Andersen LLP, an international accounting and consulting firm. Mr. Kirsner was a partner in the firm from 1977 until his retirement in 1993. Mr. Kirsner is a director at the following public company in addition to FICO: Advent Software, Inc. Within the past five years, Mr. Kirsner has also served on the board of the following public company boards:company: Bank of Marin Bancorp, and he previously served on the board of Ask Jeeves, Inc. Mr. Kirsner received his undergraduate and mastersmaster’s degrees from Wharton School of Business at the University of Pennsylvania.
Mr. Kirsner brings extensive financial and accounting expertise to the Board of Directors. He serves as Chair of the Company’s Audit Committee and is qualified as an “audit committee financial expert” as defined under SEC guidelines. His significant public accounting, investment, and audit committee experience provide Mr. Kirsner with the financial acumen and leadership skills necessary to serve as Chair of our Audit Committee. He also serves on another publicly-traded board in the software industry, which provides us with additional valuable perspectives on our industry and on issues affecting similarly-situated publicly-traded companies.
William J. Lansing.Lansing. Director since February 2006; Member ofAge 54.
Since January 2012, Mr. Lansing has served as the Audit Committee; Age 52.
Mr. Lansing is the only member of management who serves on our Board of Directors. As our Chief Executive Officer, Mr. Lansing has extensive, first-hand knowledge of our corporate strategy, business units, operations, and employees, as well as the opportunities, risks and challenges faced by our Company. Mr. Lansing brings to his roles as an executive officer and director an extensive background in management through his past chief executive officer and other senior management positions held at various companies, including his current and prior directorship posts.companies. His experience in the technology industry, particularly in the areas of the Internet ande-commerce, provides significant value across several of our business units. Mr. Lansing also has a strong financial background that qualifies him as an “audit committee financial expert” as defined under SEC guidelines, and as such, he serves on the Company’s Audit Committee. In addition, Mr. Lansing holds a law degree, which provides us with unique, valuable perspectives on many Company matters.
Rahul N. Merchant.Merchant. Director since February 2010; Member of the AuditCompensation Committee; Age 54.
Since 2009,April 2012, Mr. Merchant has beenserved as New York City’s first Citywide Chief Information and Innovation Officer and as Commissioner of the Department of Information, Technology and Telecommunications. From 2009 to April 2012, Mr. Merchant was a partner at Exigen Capital, a private equity firm based in New York City. From 2006 until 2008, Mr. Merchant was Executive Vice President, Chief
Information Officer and Member of the Executive Committee at Fannie Mae. In this role, he led and transformed the Technology and Operations groups. From 2000 until 2006, Mr. Merchant was Senior Vice President and Chief Technology Officer at Merrill Lynch & Co. Mr. Merchant has also held senior leadership positions at Cooper Neff and Associates, Lehman Brothers, Sanwa Financial Products and Dresdner Bank. Currently, Mr. Merchant is a director at the following public company: Level 3 Communications, Inc. Within the past five years, Mr. Merchant alsohas served
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Mr. Merchant brings over 30 years of experience in management, operations, and information technology to the Board of Directors includingthrough the variety of leadership positions he has held in both the private and public sectors. His experience as a former member of the Executive Committee of Fannie Mae.Mae gives him particular insight into the needs of and challenges faced by one of the key markets our Company serves.
David A. Rey. Director since October 2011; Member of the Audit Committee; Age 62.
From December 2008 to May 2011, Mr. MerchantRey served as Executive Vice President and Chief Client Relationship Officer of UnitedHealth Group. From 1972 until 2008, Mr. Rey was an employee and then partner at Accenture (previously Andersen Consulting and Arthur Andersen & Co.), a global consulting firm. Mr. Rey served as both the Global Managing Partner of the healthcare industry practice and, as a Senior Managing Partner, led Accenture’s large client relationship development program. Mr. Rey does not serve on any other public board in addition to FICO nor has ahe served on any public boards in the past five years. Mr. Rey holds an undergraduate degree from the University of California.
Mr. Rey brings financial reporting and accounting expertise to the Board of Directors, as well as global, cross-industry experience in developing and sustaining the kind of large client relationships that increasingly drive our Company’s business growth. Mr. Rey’s strong financial background that qualifies him as an “audit committee financial expert” as defined under SEC guidelines, and as such, he serves on the Company’s Audit Committee. He also serves on another publicly-traded board inhas particular expertise with respect to analytic and other needs of the technologyhealthcare industry, which providesrepresents a key market opportunity for our Company with additional valuable perspectives on issues affecting similarly-situated publicly-traded companies.
Margaret L. Taylor.Duane E. White. Director since December 1999;2009; Chair of the Compensation Committee; Member of the Governance, Nominating and Executive Committee; Age 59.
Since 2006, Mr. White has served as a Managing Director at Polihua Holdings LLC, a consulting firm working with companies in the financial services and healthcare industries. Through his position with Polihua Holdings, Mr. White was a consultant to Total System Services, Inc. (“TSYS”TSYS��), leading TSYS’s healthcare initiatives, and continued this role in an employee capacity as President of TSYS’s healthcare division commencing in June 2007. Mr. White ceased to be an employee at TSYS on January 31, 2009, but continuescontinued to work with this company as a consultant through Polihua Holdings.Holdings until April 2011. From 2002 to 2006, Mr. White was with UnitedHealth Group (“UHG”) as Chief Operating Officer for Exante Financial Services, a financial servicesstart-up company within UHG. Prior to UHG, Mr. White served as Director of the specialty finance group at Marquette Financial Companies from 2000 to 2002, as Executive Vice President of corporate services at Arcadia Financial Ltd. from 1997 to 2000 and as President of the mortgage subsidiary of First Bank System (now US Bancorp) from1993-1996. 1993 to 1996. Currently, Mr. White does not serve on any other public board in addition to FICO. Mr. White received an undergraduate degree from the University of Wisconsin — Eau Claire and an M.B.A. from Harvard University.
Mr. White brings extensive experience in the financial services and healthcare industries to the Board of Directors, and he brings valuable insight to the Board from having previously served as a senior leader within large companies where our products and services are highly relevant. Mr. White’s proven executive leadership track record has included oversight of sales, operations, technology, human resources and legal functions, allowing him to contribute a broad range of insights to the Board and Compensation Committee.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE.
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ADVISORY VOTE ON EXECUTIVE OFFICER COMPENSATION
Pursuant to Section 14A of the Exchange Act, the Company seeks a non-binding advisory vote from its stockholders to approve the compensation of our named executive officers as described under “Executive Compensation — Compensation Discussion and Analysis” and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in this proxy statement.
This proposal gives our stockholders the opportunity to express their views on the Company’s executive officer compensation. Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Compensation Committee will take into account the outcome of the vote when making future executive officer compensation decisions.
As we discuss below in our Compensation Discussion and Analysis, we believe that our compensation policies and decisions are designed to deliver a performance-based pay philosophy, are aligned with the long-term interests of our stockholders and are competitive. The Company’s principal compensation policies, which enable the Company to attract and retain talented executive officers to lead the Company in the achievement of our business objectives, include:
We make annual cash compensation decisions based on assessment of the Company’s performance against measurable financial goals, as well as each executive’s individual performance.
We emphasize long-term incentive compensation awards that collectively reward executive officers based on individual performance, external and internal peer equity compensation practices, and the executive officer’s job responsibilities.
We have expanded the use of performance-based incentives in fiscal 2012 by delivering approximately one-half of the targeted annual long-term award value to top executives in the form of performance share units.
We design pay practices to retain a highly talented and experienced senior executive team.
We require stock ownership by our senior executive officers.
As a result, we are presenting this proposal, which gives you as a stockholder the opportunity to approve our executive officer compensation as disclosed in this proxy statement by voting for or against the following resolution:
RESOLVED, that the stockholders approve the compensation of the Company’s named executive officers, as disclosed in the Compensation Discussion and Analysis, the compensation tables, and the related disclosure contained in the Company’s Proxy Statement for its 20112013 Annual Meeting.
We have decided to hold an advisory vote on executive compensation annually until the next vote is held regarding the frequency of stockholder votes on executive compensation. The next advisory vote on executive compensation will be held at our 2014 Annual Meeting.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS BELIEVES THAT THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS IS APPROPRIATE AND RECOMMENDS A VOTE “FOR” THE APPROVAL OF THE NAMED EXECUTIVE OFFICER COMPENSATION AS DESCRIBEDDISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND THE COMPENSATION TABLES AND OTHERWISE IN THIS PROXY STATEMENT.
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It is the responsibility of the Audit Committee to select and retain independent auditors. Our Audit Committee has appointed Deloitte as our independent auditors for the Company’s fiscal year ending September 30, 2011.2013. Although stockholder ratification of the Audit Committee’s selection of independent auditors is not required by our Bylaws or otherwise, we are submitting the selection of Deloitte to stockholder ratification so that our stockholders may participate in this important corporate decision. If not ratified, the Audit Committee will reconsider the selection, although the Audit Committee will not be required to select different independent auditors for the Company.
Representatives of Deloitte will be present at the Annual Meeting and will have an opportunity to make a statement and respond to questions from stockholders present at the meeting.
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by the Company’s independent registered public accounting firm for the fiscal years ended September 30, 20102012 and September 30, 2009,2011, for the audit of our annual financial statements for, and fees for other services rendered by the firm during those respective periods.
2010 | 2009 | |||||||
Audit Fees | $ | 2,004,000 | $ | 2,269,000 | ||||
Audit-Related Fees | 537,000 | 629,000 | ||||||
Tax Fees | 356,000 | 115,000 | ||||||
All Other Fees | 2,000 | 2,000 | ||||||
Total | $ | 2,899,000 | $ | 3,015,000 | ||||
2012 | 2011 | |||||||
Audit Fees | $ | 2,126,000 | $ | 2,094,000 | ||||
Audit-Related Fees | 516,000 | 486,000 | ||||||
Tax Fees | 237,000 | 257,000 | ||||||
All Other Fees | 2,000 | 2,000 | ||||||
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|
|
| |||||
Total | $ | 2,881,000 | $ | 2,839,000 | ||||
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Audit Fees. Audit fees consisted of fees for services rendered in connection with the annual audit of our consolidated financial statements, quarterly reviews of financial statements included in our quarterly reports onForm 10-Q, and the audit of internal control over financial reporting. Audit fees also consisted of services provided in connection with statutory audits, consultation on accounting matters and SEC registration statement services.
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Tax Fees. Tax services consisted of fees for tax consultation and tax compliance services.
All Other Fees. All other fees consisted of fees for access to an online library of accounting and financial reporting literature.
Our Audit Committee considers whether the provision of services other than for audit fees is compatible with maintaining our independent auditor’s independence, and has determined that these services for fiscal 20102012 and 20092011 were compatible. The services described above were approved by the Audit Committee pursuant toRule 2-01 ofRegulation S-X under the Exchange Act.
Policy on Audit Committee Preapproval of Audit and Non-Audit Services of Independent Auditors
Our Audit Committee is responsible for appointing, setting compensation, and overseeing the work of the independent auditors. The Audit Committee has established a policy regarding preapproval of all audit and permitted non-audit services provided by the independent auditors.
On an ongoing basis, management communicates specific projects and categories of service for which it requests the advance approval of the Audit Committee. The Audit Committee reviews these requests and advises
management if the Audit Committee approves the engagement of the independent auditors. On a periodic basis, management reports to the Audit Committee regarding the actual spending for such projects and services compared to the approved amounts. The Audit Committee may also delegate the ability to preapprove audit and permitted non-audit services to a subcommittee consisting of one or more members, provided that any such preapprovals are reported on at the next Audit Committee meeting.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING SEPTEMBER 30, 2011.
How does FICO determine if a director is independent?
Our Board of Directors has determined that all of the current directors except Dr. GreeneMessrs. Battle, Graziano, Kirsner, Merchant, Rey and White meet its independence standards, which are set forth in the Corporate Governance Guidelines on our website atwww.fico.com,. and that if he is elected, Mr. Kelly will meet those standards as well. The Board defines an independent director as one who has no material relationship with the Company and its subsidiaries either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company. In addition, independent directors must meet the requirements to be considered independent directors as defined under the current rules of the NYSE.
Are there any directors who are not independent or nominees who are not expected to be independent at the time of their election?
Yes. Dr. GreeneMr. Lansing is not independent, as he is employed by us as our CEO.
Are there any family relationships between any of the nominees, continuing directors and executive officers of FICO?
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We maintain a written policy for the approval of any related person transactions that we are required to report in the annual proxy statement.transactions. A related person,“Related Person,” for purposes of our policy, means:
Any person who is, or at any time since the beginning of our last fiscal year was, a director or executive officer or a nominee for director;
Any person known to be the beneficial owner of more than 5% of our common stock; or
Any immediate family member of the foregoing persons.
“Immediate family members” include children, stepchildren, parents, stepparents, spouses, siblings, mothers- andfathers-in-law, sons- anddaughters-in-law, brothers- andsisters-in-law and any other person (other than a tenant or employee) sharing the household of one of these individuals.
Under the Related Persons Transaction Policy, any transaction, arrangement or relationship between us and a related personRelated Person (a “Related Persons Transaction”) must be reviewed by the Audit Committee, except that the following transactions, arrangements or relationships are exempt under the Policy:policy:
Payment of compensation by the Company to a director or executive officer of the Company for such person’s service to the Company in that capacity;
Transactions available to all employees or all stockholders of the Company on the same terms; and
Transactions, which when aggregated with the amount of all other transactions between the Company and the Related Person or any entity in which the Related Person has an interest, involve less than $120,000 in a fiscal year.
In determining whether to approve a Related Persons Transaction, the Audit Committee will also consider the following:
Whether the terms are fair to the Company;
Whether the transaction is material to the Company;
The importance of the Related Persons Transaction to the Related Persons;
The role the Related Person has played in arranging the Related Persons Transaction;
The structure of the Related Persons Transaction; and
The interests of all Related Persons in the Related Persons Transaction.
We will only enter into a Related Persons Transaction if the Audit Committee determines that the Related Persons Transaction is beneficial to the Company, and the terms of the Related Persons Transaction are fair to the Company.
Did any Related Persons Transactions occur during fiscal 2012?
No.
What is the leadership structure of the Board of Directors?
The Board of Directors does not have a policy with respect to the separation of the offices of Chairman of the Board and Chief Executive Officer. The Board of Directors believes that it is in the best interests of the Company for the Board of Directors to make a determination on this matter when it elects a new Chief Executive Officer or Chairman. The Board of Directors has determined that, currently, the most effective leadership structure is to have a separate Chairman of the Board, a position held by Mr. Battle since 2002, and Chief Executive Officer, a position held by Mr. GreeneLansing since 2007,January 2012, as it provides us the best access to the judgments and experience of both individuals while providing a mechanism for the Board’s independent oversight of management. As a result, the Chairman presides over the meetings of the Board of Directors and the stockholders, and the Chief Executive Officer is allowed more time to focus energies on the management of the Company’s business.
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Our management is responsible for defining the various risks facing the company,Company, formulating risk management policies and procedures, and managing the company’sCompany’s risk exposures. Our Board of Directors’ responsibility is to monitor the company’sCompany’s risk management processes by informing itself concerning our material risks and evaluating whether management has reasonable controls in place to address the material risks. The Audit Committee of the Board of Directors has been monitoring management’s responsibility in the area of risk oversight. Accordingly, our internal risk management team regularly reports to the Audit Committee on our major risk exposures and the steps management has taken to monitor and control such exposures, including our risk assessment and risk management policies. The Audit Committee, in turn, reports on the matters discussed at the committee level to the full Board of Directors.
What committees of the Board of Directors does FICO have?
Our boardBoard has three standing committees:committees: Audit, Compensation,Audit; Compensation; and Governance, Nominating and Executive. All of the members of the committees are independent directors under the NYSE listing standards. Each
committee’s charter expressly provides that the committee has the sole discretion to retain, compensate, and terminate its advisors. Current copies of the charters of the three committees are available on our website atwww.fico.com.
Which directors are on each committee? Who chairs the committees?
Name of Non-employee Director | Audit | Compensation | Governance, Nominating and Executive | |||||||||
A. George Battle | ||||||||||||
X | C | |||||||||||
Nicholas F. Graziano | X | |||||||||||
James D. Kirsner | C | X | ||||||||||
Rahul N. Merchant | X | |||||||||||
David A. Rey | X | |||||||||||
Duane E. White | C | X | ||||||||||
C = Chair
X = Committee Member
Audit Committee
What is the role of the Audit Committee? How often did it meet in fiscal 2010?2012?
The Audit Committee assistsis appointed by the Board to oversee and assist the Board in its oversight of:overseeing:
The integrity of our financial statements;
The qualifications and independence of our independent auditor;
The performance of our internal audit function and independent auditor; and The Company’s compliance with legal and regulatory requirements related to financial affairs and reporting. The | ||
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Yes, and on an annual basis it provides an Audit Committee Report wherein it states that it recommends to the Board that the audited financial statements be included in our Annual Report onForm 10-K. The Audit Committee Report for this year follows.
The Audit Committee selects and retains an independent registered public accounting firm as the Company’s independent auditor and assists the Board in overseeing (1) the integrity of the Company’s financial statements, (2) the independent auditor’s qualifications and independence, (3) the performance of the Company’s internal audit function and independent auditor, and (4) the compliance by the Company with legal and regulatory requirements related to financial affairs and reporting. The Board of Directors has adopted a written charter for the Audit Committee that addresses the responsibilities of the Audit Committee. This charter is available on the “Investors” page of our website atwww.fico.com.
While the Audit Committee has the responsibilities and powers set forth in its charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and
applicable legal and other requirements. These are the responsibilities of management and the independent auditor. Additionally, in performing its oversight function, the Audit Committee necessarily relies on the work and assurances of, and information provided by, management and the independent auditor.
Deloitte & Touche LLP (“Deloitte”) served as the Company’s independent auditor for the fiscal year ended September 30, 2010.2012. In fiscal 2010,2012, the Audit Committee met and held discussions with management and Deloitte on numerous occasions. In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management and Deloitte the Company’s quarterly consolidated financial statements prior to the filing of each Quarterly Report onForm 10-Q and the audited consolidated financial statements included in the Annual Report onForm 10-K for the fiscal year ended September 30, 2010.2012. The Audit Committee discussed with Deloitte matters required to be discussed by Codification of Statements on Auditing Standards, AU Section 380 (Communication with Audit Committees). Deloitte also provided to the Audit Committee the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant’s communications with the Audit Committee concerning independence, and the Audit Committee discussed with Deloitte the firm’s independence.
Based upon the Audit Committee’s discussions with management and the independent auditor, and the Audit Committee’s review of the representations of management and the report of the independent auditor to the Audit Committee, the Audit Committee recommended to the Board of Directors that the audited consolidated financial statements be included in the Company’s Annual Report onForm 10-K for the fiscal year ended September 30, 2010,2012, as filed with the SEC.
Submitted by the Audit Committee:
James D. Kirsner, Chair
Nicolas F. GrazianoWilliam J. LansingRahul N. Merchant
David A. Rey
Are all members of the Audit Committee financially literate according to the NYSE standards?
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Yes. All of our Audit Committee members have been determined to be “audit committee financial experts” under the SEC regulations.
Is the Audit Committee charter available on the Internet?
Yes. The Audit Committee Charter is available on our website atwww.fico.comon the “Investors” page.
Compensation Committee
What is the role of the Compensation Committee? How often did it meet in fiscal 2010?2012?
The Compensation Committee has overall oversight responsibility for the directors’ and executive officers’ compensation plans and the compensation policies and programs of the Company. Among other responsibilities, the Compensation Committee:
Reviews and approves the level and terms of the executive officers’ annual and long-term compensation;
Administers our 2012 Long-Term Incentive Plan (the “2012 LTIP”), as well as makes recommendations to the Board of Directors regarding the adoption of other incentive plans;
Makes recommendations to the Governance, Nominating and Executive Committee with respect to the form and amount of director compensation, and, jointly with the Governance, Nominating and Executive Committee, recommends changes in director compensation to the Board; and
Monitors compliance by directors and officers with the Company’s stock ownership guidelines.
The Compensation Committee met fourteenfifteen times in fiscal 2010.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee serves or has served as membersan officer of our Compensation Committee during the fiscal year ended September 30, 2010. Mr. Loren was a nonemployee director. Messrs. Hart and White and Ms. Taylor are and were nonemployee directors.company. No executive officer serves, or in the past has served, as a member of the Board of Directors or Compensation Committee of any entity that has any of its executive officers serving as a member of our Board of Directors or Compensation Committee.
Is the Compensation Committee Charter available on the Internet?
Yes. The Compensation Committee Charter is available on our website atwww.fico.comon the “Investors” page.
Governance, Nominating and Executive Committee
What is the role of the Governance, Nominating and Executive Committee? How often did it meet in fiscal 2010?2012?
The Governance, Nominating and Executive Committee currently consists of the Chairman of the Board and the chairs of the Audit Committee and Compensation Committee. Among other responsibilities, the Governance, Nominating and Executive Committee:
Reviews annually with the Board the composition of the Board, the requisite skills and characteristics of new Board members, and the performance and continued tenure of incumbent Board members; | ||
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Develops and recommends to the Board the criteria for identifying and evaluating director candidates, and recommends candidates for election or reelection to the Board;
Establishes the agenda for each Board meeting in cooperation with the CEO and appropriate senior management;
Recommends the membership of the Audit and Compensation Committees;
Reviews and assesses the adequacy of the Corporate Governance Guidelines and recommends any proposed changes to the Board for approval;
Receives recommendations of the Compensation Committee with respect to the form and amount of director compensation, and, jointly with the Compensation Committee, recommends changes in director compensation to the Board;
Takes action between meetings, subject to defined limits, with respect to investment, budget and capital and exploratory expenditure matters arising in the normal course of the Company’s business; and
Takes action between meetings, subject to defined limits, to sell, lease, pledge, mortgage or otherwise dispose of property or assets of the Company.
During fiscal 2010,2012, the Governance, Nominating and Executive Committee met fivenine times.
Is the Governance, Nominating and Executive Committee Charter available on the Internet?
Yes. The Governance, Nominating and Executive Committee Charter is available on our website atwww.fico.comon the “Investors” page.
How many times did the Board of Directors meet in fiscal 2010?2012? What is the attendance record of the directors?
During fiscal 2010,2012, the Board of Directors met tenseven times. Each director attended at least 75% of the aggregate of the total number of meetings of the Board of Directors and the total number of meetings held by all committees of the Board on which he or she served. Health permitting, all Board members are expected to attend our Annual Meeting. All directors that were standing for re-electionserving on the Board at that time attended the 20102012 Annual Meeting.
What do I do if I want to communicate with members of the Board of Directors?
Stockholders and other interested parties may communicate with nonmanagementnon-employee directors by sending written communications to the Board of Directors or specified individual directors by addressing their communications to the Corporate Secretary, Fair Isaac Corporation, 901 Marquette Avenue,181 Metro Drive, Suite 3200, Minneapolis, Minnesota55402-3232.700, San Jose, California 95110. The communications will be collected by the Corporate Secretary and delivered, in the form received, to the presiding director, or, if so addressed, to a specified director.
Do the independent members of the Board of Directors meet in executive sessions?
Our Corporate Governance Guidelines provide that independent directors will meet in executive session without the Chief Executive Officer or other management present at each regular Board meeting. A. George Battle, the Chairman of the Board, is independent and presides at executive sessions held in accordance with our Corporate Governance Guidelines. In fiscal 2010, the Board held four executive sessions with no management directors or management present.
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The table below summarizes the compensation paid by the Company to each non-employee director for the year ended September 30, 2010.
Change in | ||||||||||||||||||||||||||||
Pension | ||||||||||||||||||||||||||||
Value and | ||||||||||||||||||||||||||||
Fees | Nonqualified | |||||||||||||||||||||||||||
Earned or | Non-Equity | Deferred | ||||||||||||||||||||||||||
Paid in | Stock | Option | Incentive Plan | Compensation | All Other | |||||||||||||||||||||||
Cash | Awards | Awards | Compensation | Earnings | Compensation | Total | ||||||||||||||||||||||
($)1 | ($) | ($)2, 3 | ($) | ($) | ($) | ($) | ||||||||||||||||||||||
Name(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | |||||||||||||||||||||
A. George Battle | 105,000 | — | 91,800 | — | — | — | 196,800 | |||||||||||||||||||||
Nicholas F. Graziano | 44,000 | — | 91,800 | — | — | — | 135,800 | |||||||||||||||||||||
Alex W. Hart | 45,000 | — | 91,800 | — | — | — | 136,800 | |||||||||||||||||||||
James D. Kirsner | 56,000 | — | 91,800 | — | — | — | 147,800 | |||||||||||||||||||||
William J. Lansing | 44,000 | — | 91,800 | — | — | — | 135,800 | |||||||||||||||||||||
Rahul N. Merchant | 40,000 | — | 286,081 | — | — | — | 326,081 | |||||||||||||||||||||
Margaret L. Taylor | 57,000 | — | 91,800 | — | — | — | 148,800 | |||||||||||||||||||||
Duane E. White | 45,000 | — | 91,800 | — | — | — | 136,800 | |||||||||||||||||||||
Allan Z. Loren | 5,000 | 4 | — | — | — | — | — | 5,000 | ||||||||||||||||||||
John S. McFarlane | 3,000 | 4 | — | 51,060 | 5 | — | — | — | 54,060 |
Name (a) | Fees Earned or Paid in Cash ($) (b) | Stock Awards ($)(10), (11) (c) | Option Awards ($)(10), (12) (d) | Non-Equity Incentive Plan Compensation ($) (e) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f) | All Other Compensation ($) (g) | Total ($) (h) | |||||||||||||||||||||
A. George Battle | 130,000 | (1) | — | 163,875 | — | — | — | 293,875 | ||||||||||||||||||||
Nicholas F. Graziano | 61,000 | (2) | 81,216 | 81,951 | — | — | — | 224,167 | ||||||||||||||||||||
James D. Kirsner | 79,000 | (3) | 81,216 | 81,951 | — | — | — | 242,167 | ||||||||||||||||||||
William J. Lansing | 15,000 | (4) | — | — | — | — | — | 15,000 | ||||||||||||||||||||
Rahul N. Merchant | 60,000 | (5) | — | 163,875 | — | — | — | 223,875 | ||||||||||||||||||||
David A. Rey | 65,000 | (6) | — | 293,700 | — | — | — | 358,700 | ||||||||||||||||||||
Duane E. White | 73,250 | (7) | 77,980 | 85,215 | — | — | — | 236,445 | ||||||||||||||||||||
Alex W. Hart | 22,000 | (8) | — | — | — | — | 9,312 | (13) | 31,312 | |||||||||||||||||||
Margaret L. Taylor | 32,500 | (9) | — | — | — | — | 14,300 | (13) | 46,800 |
(1) | ||
Includes $120,000 annual chairman retainer |
(2) | Includes $60,000 annual retainer paid quarterly to Mr. Graziano during fiscal 2012. Also includes $1,000 for his role in the |
(3) | Includes $75,000 annual and audit committee chair retainers paid quarterly to Mr. Kirsner during |
(4) | Represents one quarter of Mr. Lansing’s annual |
(5) | Represents the annual retainer paid quarterly to Mr. Merchant during fiscal 2012. |
Mr. Rey’s “Fees Earned or Paid in Cash” includes $30,000 in annual retainer fees foregone by Mr. Rey to receive 2,288 stock options instead. The amount recognized for financial statement reporting purposes in fiscal 2012 with respect to such options, which was $29,996, is excluded from the “Options Awards” column. Also included in this column is $30,000 in annual retainer fees paid in cash to Mr. Rey quarterly during fiscal 2012 and $5,000 for eight selection committee meetings and for his role in the CEO interview process. |
(7) | Includes $56,250 prorated annual and compensation committee chair retainers as Mr. White assumed the chair role in February 2012. Also includes: $15,000 paid as his annual retainer prior to his assuming the chair role, $2,000 for his role in the CEO interview process and for additional extraordinary compensation committee work. |
(8) | Includes a prorated annual retainer paid through Mr. Hart’s retirement from the board in February 2012 and $2,000 for his role in the CEO interview process and for additional extraordinary compensation committee work. |
(9) | Includes prorated annual and compensation committee chair retainers paid through Ms. Taylor’s retirement from the board in February 2012, $5,000 for eight selection committee meetings and interviews, and $2,500 for additional extraordinary compensation committee work. |
(10) | The amounts in this column represent the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718. |
As of September 30, |
(12) | As of September 30, 2012, the option awards outstanding for each director are as follows: Mr. Battle — |
Amounts represent retirement gifts given in recognition of Mr. |
How were Directorsnon-employee directors compensated for fiscal 2010?2012?
The following describes compensation components were paid to our non-employee directors for our nonmanagement directors. Dr. Greene receives no compensation for his service as a director other than his employee pay.
Annual retainer fees;
An equity grant upon initial election to the Chairman ofBoard; and
An annual equity grant.
Beginning with the Board received $1,000 for each Board or committee meeting attended. The Chairman received one fourth of his annual retainer of $100,000 for services as Chairman, but no additional amounts based on the number of meetings attended or for being the chair of any standing committees.
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Each non-employee director is entitled to receive an annual retainer fee as follows: $120,000 for the Chairman, $75,000 for the chairs of our standing committeesAudit and Compensation Committees, and $60,000 for all other nonmanagementnon-employee directors.
Upon initial election to convert their annual retainer feethe Board, each non-employee director is entitled to options in fiscal 2010.
Are there Stock Ownership Guidelinesstock ownership guidelines for the directors?
Yes. Our policy requires nonmanagementnon-employee directors to own outright 1,000 shares of FICO stock within one year12 months of beginning service on the board,Board, and to hold 7,50010,000 shares within five years of beginning service on the board. In addition, theBoard. For purposes of satisfying these stock ownership guidelines, recommendthe 1,000 shares that nonmanagement directors retain 75%are to be owned within 12 months of all options exercised, netinitial election or appointment may include only outstanding shares free of costs, until the targetsany restrictions that are met and 25% thereafter. Shares of stock ownedheld by the directors for satisfyingnon-employee director personally, and the stock ownership requirements, other than10,000 shares that are to be owned within five years of initial election or appointment may include any of the first 1,000following shares (a) include shares the individual owns outright, shares ownedor share equivalents held by the individual’s immediatenon-employee director, by members of his or her immediately family, shares owned in trust for the individual, shares heldhis or her benefit, in a trust or estate controlled by the individual,him or her or of which the individualhe or she is settlorsettler or administrator, and shares heldor in an individual’s account maintained by him or her under a personal or employer savings plan; (b) includeplan: (i) outstanding shares under restriction requiringfree of any restrictions, (ii) outstanding shares subject to restrictions so long as the lapse of the restrictions is contingent only on the passage of time and the individual’snon-employee director’s continued service on the Board, (iii) shares subject to causerestricted stock units so long as the restriction’s removal; (c) includevesting of such units is contingent only on the passage of time and the non-employee director’s continued service on the Board, and (iv) the share equivalent value of vested but 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.
Are the Directorsdirectors covered by any insurance policies?
Yes. Directors are covered under our director and officer liability insurance policies for claims alleged in connection with their service as directors. We have entered into indemnification agreements with all of our directors agreeing to indemnify them to the fullest extent permitted by law for claims alleged in connection with their service as directors.
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Compensation PhilosophyIntroduction
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:
Revenue growth of 9%;
Net income growth of 29%; and
GAAP earnings per share growth of 42%.
Compensation Highlights
Emphasis on Pay for Performance | • | Base salaries for executive officers | ||
remained largely flat; | ||||
• | Cash compensation | |||
• | Emphasis on long-term incentives to align executives’ interests with those of our stockholders, and | |||
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; | ||
• | 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
In 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.
rebalance 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.
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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Overview
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 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.
Committee Process
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.
Peer Group Analysis
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:
ACI Worldwide | JDA Software Group | |
Advent Software | Mentor Graphics | |
ANSYS | MicroStrategy | |
Autodesk | NetScout Systems | |
Blackbaud | Nuance Communications | |
Cadence Design Systems | Parametric Technology | |
Citrix Systems | Pegasystems | |
Compuware | Quest Software | |
FactSet Research Systems | Synopsys | |
Informatica | TIBCO Software | |
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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The 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.
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.
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 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.”
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:
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% | ||
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% | ||
Participant Performance Factor | = | A value ranging from 0 to 200% reflecting the extent to which individual participant performance goals were achieved. | ||
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.
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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.
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.
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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 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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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.
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.
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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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Severance and Retirement Arrangements
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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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.
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.
32
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:
Duane E. White,
A. 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.
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.
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) | ||
Annualized base salaries for fiscal |
The amounts in |
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 |
(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.
Represents amounts paid in the first quarter of fiscal 2013 based on |
The amounts shown for fiscal |
Mr. | ||
(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. |
Dr. Greene announced his intention to resign from the Company on January 24, 2012, and in |
(9) | Mr. Pung was appointed Chief Financial Officer on November 18, 2010, and was not a named executive officer for fiscal |
(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) | ||
Represents the aggregate value of the Company’s cash contribution under the FICO 401(k) Plan during fiscal |
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 $55,000, related to Mr. Pung’s relocation from Minnesota to California. Further expenses related to this relocation will be accrued in fiscal 2013. |
Represents gross-up | ||
(5) | Represents legal costs incurred by Mr. Lansing to |
Represents 25% of Dr. Greene’s annual membership |
34
representing secondary personal use. |
The following table summarizes grants of plan-based compensation awards made during fiscal 20102012 to our named executive officers.
All Other | ||||||||||||||||||||||||||||||||||||||||||||||||
Stock | All Other | |||||||||||||||||||||||||||||||||||||||||||||||
Awards: | Option | Grant | ||||||||||||||||||||||||||||||||||||||||||||||
Number | Awards: | Exercise | Date Fair | |||||||||||||||||||||||||||||||||||||||||||||
Estimated Possible Payouts | Estimated Future Payouts | of | Number of | or Base | Value of | |||||||||||||||||||||||||||||||||||||||||||
Under Non-Equity Incentive | Under Equity Incentive | Shares | Securities | Price of | Stock and | |||||||||||||||||||||||||||||||||||||||||||
Plan Awards2 | Plan Awards | of Stock | Underlying | Option | Option | |||||||||||||||||||||||||||||||||||||||||||
Approval | Threshold | Target | Maximum | Threshold | Target | Maximum | or Units | Options | Awards | Awards | ||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Date | ($) | ($) | ($) | ($) | ($) | ($) | (#) | (#) | ($/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) | ||
The |
The amounts shown in these columns represent the estimated threshold (or minimum), target, and maximum possible cash incentive awards |
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 | |
her Transition Agreement. For |
35
(4) | ||
| Represents the grant date fair value of each stock option, RSU or |
(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. |
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. | ||
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.”
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 $73). Ms. Kerr’s receipt of these retention pay and benefits was conditioned on compensation, please refer to “Compensation Discussionher execution of a release of claims against the Company, her compliance with the terms of her Transition Agreement (which includes non-solicitation and Analysis.”
36non-disparagement provisions) and other agreements in effect between her and the Company, and her cooperation in the transition of her duties.
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Option Awards | Number of | Market or | ||||||||||||||||||||||||||||||||||||||||||
Equity | Number | Unearned | Payout | |||||||||||||||||||||||||||||||||||||||||
Incentive | of | Shares, | Value of | |||||||||||||||||||||||||||||||||||||||||
Plan Awards: | Shares | Market | Units or | Unearned | ||||||||||||||||||||||||||||||||||||||||
Number of | Number of | Number | or Units | Value of | Other | Shares, | ||||||||||||||||||||||||||||||||||||||
Securities | Securities | of Securities | of Stock | Shares or | Rights | Units or | ||||||||||||||||||||||||||||||||||||||
Underlying | Underlying | Underlying | That | Units of | That | Other | ||||||||||||||||||||||||||||||||||||||
Unexercised | Unexercised | Unexercised | Option | Have | Stock That | Have | Rights That | |||||||||||||||||||||||||||||||||||||
Options | Options | Unearned | Exercise | Option | Not | Have Not | Not | Have Not | ||||||||||||||||||||||||||||||||||||
(#) | (#) | Options | Price | Expiration | Vested | Vested | Vested | Vested | ||||||||||||||||||||||||||||||||||||
Name | Grant | Exercisable | Unexercisable | (#) | ($) | 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) | ||
The market value of restricted stock units that have not vested was determined by multiplying the closing market price of the Company’s |
These stock |
(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. |
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 |
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 | (#) | ($) | (#) | ($)1 | |||||||||||||
(a) | (b) | (c) | (d) | (e) | |||||||||||||
Mark Greene | — | — | 20,157 | 427,889 | |||||||||||||
Thomas Bradley | — | — | — | — | |||||||||||||
Charles Ill | — | — | — | — | |||||||||||||
Jordan Graham | — | — | — | — | |||||||||||||
Deborah Kerr | — | — | 6,563 | 142,877 |
Option Awards | Stock Awards | |||||||||||||||||
Name | Number of Shares Acquired on Exercise (#) (b) | Value Realized on Exercise ($)(1) (c) | Number of Shares Acquired on Vesting (#) (d) | Value Realized On Vesting ($)(2) (e) | ||||||||||||||
William Lansing | 22,500 | 473,512 | — | — | ||||||||||||||
Mark Greene | 403,908 | 5,746,062 | 20,155 | 757,208 | ||||||||||||||
Michael Pung | 81,000 | 1,341,768 | 10,312 | 401,198 | ||||||||||||||
Stuart Wells | — | — | — | — | ||||||||||||||
James Wehmann | — | — | — | — | ||||||||||||||
Charles Ill | 75,865 | 1,722,618 | 29,792 | 1,129,254 | ||||||||||||||
Deborah Kerr | 130,289 | 3,028,949 | 19,895 | 740,917 |
(1) | Equal to the number of shares acquired on exercise multiplied by the difference between the closing price of a share of the Company’s common stock on the date of exercise and the exercise price of the options. |
(2) | ||
Equal to the number of shares vested multiplied by the closing price of a share of the Company’s |
37
Executive | Registrant | Aggregate | ||||||||||||||||||
Contributions in | Contributions in | Aggregate Earnings | Withdrawals/ | Aggregate Balance | ||||||||||||||||
Last FY | Last FY | in Last FY | Distributions | at Last FYE | ||||||||||||||||
Name | ($)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) | ||
The amounts reported in this column were reported in the Summary Compensation Table as part of |
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.” |
Of the amounts shown in this column, the following amounts were previously reported as compensation |
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.”
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.
All 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 $44.26). Benefits payable under our Short and Long Term Disability Policies and Company-provided life insurance policy are not reflected in the following tables. Please see the description of the Transition Agreements for Dr. Greene and Ms. Kerr above for information about the retention pay and benefits each received upon his or her termination of employment in December 2012.Termination | ||||||||||||||||||||||||||||
by Us | ||||||||||||||||||||||||||||
Without | ||||||||||||||||||||||||||||
Cause | ||||||||||||||||||||||||||||
Following a | ||||||||||||||||||||||||||||
Change in | ||||||||||||||||||||||||||||
Termination | Control or | |||||||||||||||||||||||||||
by Us | by the NEO | |||||||||||||||||||||||||||
Without | with Good | |||||||||||||||||||||||||||
Cause or by | Reason | |||||||||||||||||||||||||||
Voluntary | Termination | NEO with | Following a | |||||||||||||||||||||||||
Termination | by Us for | Good | Change in | |||||||||||||||||||||||||
by NEO | Cause | Reason | Control | Retirement | Disability | Death | ||||||||||||||||||||||
Payment or Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
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) | ||
|
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 28, 2012, of $44.26. Mr. Lansing’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September |
Termination | ||||||||||||||||||||||||||||
by Us | ||||||||||||||||||||||||||||
Without | ||||||||||||||||||||||||||||
Cause | ||||||||||||||||||||||||||||
Following a | ||||||||||||||||||||||||||||
Change in | ||||||||||||||||||||||||||||
Termination | Control or | |||||||||||||||||||||||||||
by Us | by the NEO | |||||||||||||||||||||||||||
Without | with Good | |||||||||||||||||||||||||||
Cause or by | Reason | |||||||||||||||||||||||||||
Voluntary | Termination | NEO with | Following a | |||||||||||||||||||||||||
Termination | by Us for | Good | Change in | |||||||||||||||||||||||||
by NEO | Cause | Reason | Control | Retirement | Disability | Death | ||||||||||||||||||||||
Payment or Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
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. |
Pursuant to Mr. Pung’s Letter Agreement, the Company is obligated to provide benefits to Mr. |
39
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 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) | ||
|
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 28, 2012, of $44.26. Mr. Ill’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability. |
The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September |
40
Termination | ||||||||||||||||||||||||||||
by Us | ||||||||||||||||||||||||||||
Without | ||||||||||||||||||||||||||||
Cause | ||||||||||||||||||||||||||||
Following a | ||||||||||||||||||||||||||||
Termination | Change in | |||||||||||||||||||||||||||
by Us | Control or by | |||||||||||||||||||||||||||
Without | the NEO with | |||||||||||||||||||||||||||
Cause or by | Good Reason | |||||||||||||||||||||||||||
Voluntary | Termination | NEO with | Following a | |||||||||||||||||||||||||
Termination | by Us For | Good | Change in | |||||||||||||||||||||||||
by NEO | Cause | Reason | Control | Retirement | Disability | Death | ||||||||||||||||||||||
Payment or Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
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 $100,000 would be assigned to that portion of the calculation. Mr. Wehmann’s Management Agreement provides for the same payments and benefits in the event his employment is terminated by the Company without cause or by Mr. Wehmann for good reason within 60 days before or one year following a change in control. |
Pursuant to Mr. Wehmann’s Letter Agreement, the Company is obligated to provide benefits to Mr. |
The amounts shown represent thein-the-money value of unexercisable stock options that would immediately become exercisable upon the applicable triggering event, based on the Company’s closing stock price on September |
The amounts shown represent the restricted stock units that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September |
Termination | ||||||||||||||||||||||||||||
by Us | ||||||||||||||||||||||||||||
Without | ||||||||||||||||||||||||||||
Cause | ||||||||||||||||||||||||||||
Following a | ||||||||||||||||||||||||||||
Termination | Change in | |||||||||||||||||||||||||||
by Us | Control or by | |||||||||||||||||||||||||||
Without | the NEO with | |||||||||||||||||||||||||||
Cause or by | Good Reason | |||||||||||||||||||||||||||
Voluntary | Termination | NEO with | Following a | |||||||||||||||||||||||||
Termination | by Us For | Good | Change in | |||||||||||||||||||||||||
by NEO | Cause | Reason | Control | Retirement | Disability | Death | ||||||||||||||||||||||
Payment or Benefit | ($) | ($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||
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) | ||
|
(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) | ||
| 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 |
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 |
(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. |
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) | ||
This amount represents the | ||
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. |
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 |
This amount represents the |
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
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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.
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.
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 R. Scadina
Executive Vice President, General Counsel and Secretary
Dated: December 27, 2010
43January 7, 2013
FAIR ISAAC CORPORATION ATTN: NANCY FRASER 200 SMITH RANCH ROAD SAN RAFAEL, CA 94903 | ||||||||||||||||||||||||||||||
VOTE 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. | |||||||||||||||||||||||||||
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. | |||||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||||||
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 | Signature (Joint Owner) [PLEASE SIGN WITHIN BOX] | ||||||||||||||||||||||||||||||||||
Date |
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.
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 | |||||||||||||||||||||||||||
The 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. | |||||||||||||||||||||||||||
Address change/comments: | |||||||||||||||||||||||||||
(If you noted any address changes and/or |
side.)
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