DEF 14A of Fair Isaac Corp
Filed Jan 25, 2023 · FY20220001193125-23-015159
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
| | Page | | Outstanding Equity Awards at Fiscal 2022 Year End | 53 | | Fiscal 2022 Option Exercises and Stock Vested | 54 | | Non-Qualified Deferred Compensation for Fiscal 2022 | 54 | | Potential Payments Upon Termination or Change in Control | 56 | | Executive Officer Management Agreements | 56 | | Severance Arrangements | 57 | | Equity Awards | 57 | | Insurance Benefits | 57 | | Estimated Payments That Would Have Been Made to the Named Executive Officers | 58 | | Equity Compensation Plan Information | 64 | | CEO Pay Ratio | 65 | | HELPFUL INFORMATION AND ONLINE RESOURCES | 66 | | OTHER INFORMATION | 70 |
Our Director Nominees
Our Director Nominees
Our Director Nominees
| Name | Age | Years as Director | Principal Occupation | Independent | Committee Memberships | | | Other Current Public Boards | | | | | | | AC(1) | GNEC(2) | LDCC(3) | | | Braden R. Kelly | 52 | 10 | Partner of Health Evolution Partners | Yes | | | | — | | Fabiola R. Arredondo | 56 | 3 | Managing Partner of Siempre Holdings LLC | Yes | | | | 2 | | James D. Kirsner | 79 | 16 | Former Chief Financial Officer and head of Barra Ventures at Barra, Inc. | Yes | | | | — | | William J. Lansing | 64 | 17 | Chief Executive Officer of Fair Isaac Corporation | No | | | | — | | Eva Manolis | 59 | 4 | Former Vice President of Amazon.com, Inc. | Yes | | | | 1 | | Marc F. McMorris | 54 | 7 | Co-Chief Executive Officer and Co-Founder of Carrick Capital Partners, LLC | Yes | | | | — | | Joanna Rees | 61 | 8 | Managing Partner of West.Ventures | Yes | | | | — | | David A. Rey | 72 | 12 | Former Executive Vice President and Chief Client Relationship Officer of UnitedHealth Group | Yes | | | | — |
Our Director Nominees
| AC = Audit Committee(1) |
Our Director Nominees
| GNEC = Governance, Nominating and Executive Committee(2) |
Our Director Nominees
| LDCC = Leadership Development and Compensation Committee(3) |
Our Director Nominees
= Member = Chair
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS
Director Nominee Selection Process
Director Nominee Selection Process 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 the “Investors” page of our website at www.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, and the Governance, Nominating and Executive Committee takes this into account when assessing our incumbents and candidates. Our Board currently includes three female directors and two racially/ethnically diverse directors. 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, and all have been previously elected by our stockholders.
Director Nominee Biographies
Director Nominee Biographies Set forth below is biographical information for each director nominee, as well as information regarding the particular experience, qualifications, attributes or skills of the nominees that led the Governance, Nominating and Executive Committee to conclude that they should serve as members of the Board. Each of these nominees is currently serving as a member of the Board. Our Board of Directors has determined that Messrs. Kelly, Kirsner, McMorris and Rey and Mses. Arredondo, Manolis and Rees meet its independence standards, which are set forth in the Corporate Governance Guidelines on the “Investors” page of our website at www.fico.com. 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 New York Stock Exchange (“NYSE”). Mr. Lansing is not independent, as he is employed by us as our CEO. 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. Braden R. Kelly. Director since 2013 and Chairman of the Board of Directors since February 2016; Chair of the Governance, Nominating and Executive Committee; Member of the Leadership Development and Compensation Committee; Age 52. Mr. Kelly has been a Partner at Health Evolution Partners, a private equity investment firm focused on the health care industry, since January 2015 and has served in various positions at Health Evolution Partners, including Investment Partner from June 2013 to December 2014 and Senior Advisor from August 2008 to May 2013. From August 1995 to December 2006, Mr. Kelly was an employee and then Partner and Managing Director at General Atlantic Partners LLC, a global private equity investment firm focused on technology growth investing. Prior to joining General Atlantic Partners, Mr. Kelly worked in the investment banking division of Morgan Stanley & Co. as a member of the mergers, acquisitions and restructuring department. Mr. Kelly does not serve on any other public company boards nor has he served on any other public company boards in the past five years. Mr. Kelly earned an undergraduate degree from the University of Notre Dame. Mr. Kelly has a deep financial background and contributes a critical business and corporate development perspective to the Board of Directors through his extensive experience with strategic mergers and acquisitions, a key growth opportunity for the Company. Mr. Kelly’s extensive analysis of the technology and health care industries through his work as a private equity investor provides him with valuable insight into the business environments in which our Company and the companies in some of our key markets operate. The Board also benefits from Mr. Kelly’s significant experience as a strategic advisor to companies and his global experience working with growth companies in the United States, Europe and India. Fabiola R. Arredondo. Director since 2020; Member of the Leadership Development and Compensation Committee; Age 56. Ms. Arredondo has been the Managing Partner of Siempre Holdings, a private, single family investment office based in Greenwich, Connecticut, since 2001. Ms. Arredondo previously held senior operating roles at Yahoo! Inc., the British Broadcasting Corporation (BBC) and Bertelsmann SE & Co. KGaA. Since March 2017, Ms. Arredondo has served as a director of Campbell Soup Company, where she also serves as a member of the Audit Committee and the Finance and Corporate Development Committee. Since March 2015, Ms. Arredondo has served as a director of Burberry PLC, where she also serves as a member of the Nomination and Remuneration Committees. Ms. Arredondo joined the Board of Governors of FINRA in December 2022. From January 2007 to January 2016, Ms. Arredondo also served on the board of Experian PLC. Ms. Arredondo received a bachelor’s degree in political science from Stanford University, and an M.B.A. from Harvard Business School. Ms. Arredondo brings a wealth of domestic and international operational and strategic experience as a former senior executive in the digital technology and media fields to the Board of Directors. She also has extensive public, private and non-profit board experience in a number of relevant areas, including: business model transformations; investment acquisition, integration and disposition skills; and the development of e-commerce distribution networks and effective digital marketing and sales initiatives. James D. Kirsner. Director since 2007; Chair of the Audit Committee; Member of the Governance, Nominating and Executive Committee; Age 79. 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 does not serve on any other public company boards nor has he served on any other public company boards in the past five years. Mr. Kirsner received his undergraduate and master’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, public company CFO, 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 has also served on the board of another publicly traded company 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. Director since 2006; Age 64. Since January 2012, Mr. Lansing has served as the Company’s Chief Executive Officer. From February 2009 to November 2010, Mr. Lansing served as Chief Executive Officer and President at Infospace, Inc. From 2004 until 2007, Mr. Lansing served as Chief Executive Officer and President at ValueVision Media, Inc. From 2001 to 2003, he served as a General Partner at General Atlantic LLC, a global private equity firm. From 2000 to 2001, he was Chief Executive Officer at NBC Internet, Inc., an integrated Internet media company. From 1998 to 2000, he served as President, then as Chief Executive Officer at Fingerhut Companies, Inc., a direct marketing company. From 1996 to 1998, he was Vice President, Corporate Business Development at General Electric Company. In 1996, he was Chief Operating Officer/Executive Vice President at Prodigy, Inc. From 1986 through 1995, Mr. Lansing worked with McKinsey & Company, Inc. Mr. Lansing also served as Chairman of the Board for Shutterfly, Inc. from February 2017 to September 2019. He holds an undergraduate degree from Wesleyan University and a J.D. from Georgetown University.
Director Nominee Biographies
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. His experience in the technology industry, particularly in the areas of the Internet and e-commerce, provides significant value across several of our business units. Eva Manolis. Director since 2018; Member of the Leadership Development and Compensation Committee; Age 59. Ms. Manolis formerly served as Vice President of Consumer Shopping Experience from May 2010 to August 2016, and previously held various management positions beginning in 2005, at Amazon.com, Inc., an electronic commerce and cloud-computing company, where she led the worldwide development of core consumer-facing features, functionality and user interface designs across multiple websites, mobile apps, and business lines. Prior to joining Amazon, Ms. Manolis co-founded and served as Senior Vice President of Products at Shutterfly, Inc. from 1999 to 2002, and served as Senior Vice President, Product and Operations at KeepMedia, Inc., an online content provider, from 2002 to 2005. From October 2016 through September 2019, Ms. Manolis served on the board of Shutterfly, Inc., a public company, where she also served as a member of the Governance Committee. Since August 2019, Ms. Manolis has served as a director of iRobot, Inc., a public company, where she serves on the Audit Committee. Ms. Manolis earned Bachelor of Science and Master of Science degrees in Electrical Engineering from Brown University. Ms. Manolis brings a strong background in leadership and management in the technology industry, with a focus on designing and building innovative customer products and services. We value her deep expertise in this area, as well as her knowledge of corporate governance matters from her service on the board of directors of Shutterfly, Inc. Marc F. McMorris. Director since 2015; Member of the Audit Committee; Age 54. Mr. McMorris has been Co-Chief Executive Officer at Carrick Capital Partners, a private equity investment firm that he co-founded, since March 2021. From January 2012 to March 2021, Mr. McMorris served as the Managing Director of Carrick Capital Partners. From September 1999 to December 2011, Mr. McMorris served in various leadership positions at General Atlantic, LLC, a global private equity investment firm focused on technology growth investing, including Managing Director from 2003 to December 2011. Mr. McMorris does not serve on any other public company boards nor has he served on any other public company boards in the past five years. Mr. McMorris earned an undergraduate degree from the University of Pennsylvania and an M.B.A. from Wharton School of Business at the University of Pennsylvania. Mr. McMorris’s extensive experience in evaluating companies in the financial services and technology industries, together with his mergers and acquisitions experience, provides a strong complement to our Board. He currently provides guidance to technology companies in several different areas, including software as a service (“SaaS”), an area of strong focus for the Company moving forward. He is also qualified as an “audit committee financial expert” as defined under SEC guidelines. Joanna Rees. Director since 2015; Chair of the Leadership Development and Compensation Committee; Member of the Governance, Nominating and Executive Committee; Age 61. Since June 2016, Ms. Rees has been the Managing Partner of West.Ventures, a venture studio providing marketing and brand expertise and investment capital to leading high growth private companies. West client companies have included Twitter, Square, Impossible Foods, Inception Fertility, GoFundMe, Newfront Insurance, Braintree and Proxy, to name a few. Previously (from 2012 to June 2016) Ms. Rees was a Managing Director of Soda Rock Partners, an investment and consulting firm, where she served as an investor, board member and senior advisor to multiple high growth companies. In 1996, Ms. Rees founded VSP Capital, a San Francisco-based venture capital firm, where she served as Managing Partner until 2011. During her tenure with VSP Capital, Ms. Rees served on the board of more than 25 private, venture-backed companies across a broad range of industries. From 1995 to 1996, Ms. Rees worked at Vrolyk & Company, a boutique merchant bank, and from 1993 to 1995, Ms. Rees worked at BA Securities, an investment banking subsidiary of Bank of America. Ms. Rees spent her early career in advertising and brand management. From 1984 to 1989, she held several senior marketing management positions with Groupe Danone, a $20+ billion global consumer products firm, with her last position as head of new product development. Ms. Rees began her career at Benton & Bowles (now DMB&B), an advertising agency, working on multiple consumer brands. Ms. Rees was the co-creator of the Build Brand Value CEO forum, which she ran from 1997 to 2003 as part of VSP Capital. Within the last five years, Ms. Rees served on the board of Care.com, Inc., a public company. Ms. Rees earned a B.S. from Duke University and an M.B.A. from Columbia University. Ms. Rees’s leadership and experience in investing in, advising and building leading growth companies are valuable to the Company as it seeks to continue to grow its business and broaden its portfolio with innovative new product categories. Ms. Rees has deep connections across a wide range of industries, including the technology and education industries, and access to thought leaders worldwide. David A. Rey. Director since 2011; Member of the Audit Committee; Age 72. From December 2008 to May 2011, Mr. Rey 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 Ltd. (previously Andersen Consulting and Arthur Andersen LLP), 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 company boards nor has he served on any other public company boards in the past five years. Mr. Rey holds a B.S. in Industrial Engineering and Operations Research from the University of California, Berkeley. 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 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 2018, Mr. Rey earned the CERT Certificate in Cybersecurity Oversight from the National Association of Corporate Directors (NACD). THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES LISTED ABOVE.
DIRECTOR COMPENSATION PROGRAMS
DIRECTOR COMPENSATION PROGRAMS
Non-Employee Director Compensation
Non-Employee Director Compensation The following compensation components are paid to our non-employee directors:
Non-Employee Director Compensation
| • | Annual retainer fees; |
Non-Employee Director Compensation
| • | An equity grant upon initial election to the Board; and |
Non-Employee Director Compensation
| • | Annual equity grants. |
Non-Employee Director Compensation
Our Compensation Program for Non-Employee Directors, initially adopted on December 8, 2016 and amended on March 1, 2022 (the “Program”), for fiscal 2022 was as described below. Under the Program, each non-employee director was entitled to receive annual retainer fees in the amounts set forth below and was paid in cash quarterly in arrears during their annual term commencing upon their election or re-election at each Annual Meeting of Stockholders. Such amounts are pro-rated for appointments made to the Board of Directors, Chair of a standing Board committee or Chairman of the Board between Annual Meetings.
Non-Employee Director Compensation
| Base annual retainer fee payable to all non-employee directors | $60,000 | | Additional annual retainer fee payable to Chairs of the Board’s Audit Committee, Leadership Development and Compensation Committee and Governance, Nominating and Executive Committee | $25,000 | | Additional annual retainer fee payable to Independent Chairman of the Board | $100,000 | | Additional annual retainer fee payable to non-Chair members of the Audit Committee, Leadership Development and Compensation Committee and Governance, Nominating and Executive Committee | $15,000 |
Non-Employee Director Compensation
The stock price used for purposes of all calculations made under the Program equaled the average closing price of a share of the Company’s stock for the trading days within the 30-calendar-day period that ended on the eleventh calendar day before the date of grant. Each non-employee director had the right, prior to the Annual Meeting, to elect to receive some or all of these annual retainer fees in the form of fully vested nonqualified stock options instead of cash. A director who elected to receive some or all of these annual retainer fees in the form of a stock option received an option to purchase a number of shares equal to the amount of the retainer or portion of the retainer being converted divided by the Black-Scholes value of an option. Upon initial election to the Board, each non-employee director was entitled to receive a number of nonqualified stock options subject to three-year ratable vesting equal to $460,000 divided by the Black-Scholes value of a nonqualified stock option. The director was able to elect to convert either 50% or 100% of these stock options to RSUs subject to three-year ratable vesting. The number of RSUs was determined by dividing the aggregate Black-Scholes value of the nonqualified stock options being exchanged by the value of an RSU. Annual equity grants made to non-employee directors who were re-elected at the 2022 Annual Meeting of Stockholders after serving on the Board at least since the previous Annual Meeting were in the form of stock options subject to one-year cliff vesting equal to $230,000 divided by the Black-Scholes value of a nonqualified stock option, and each committee chair received an additional annual grant in the form of stock options subject to one-year cliff vesting equal to $30,000 divided by the Black-Scholes value of a nonqualified stock option. Each director was able to elect to convert either 50% or 100% of these stock options to RSUs subject to one-year cliff vesting. The number of RSUs was determined by dividing the aggregate Black-Scholes value of the nonqualified stock options being exchanged by the value of an RSU. Equity awards granted upon an Annual Meeting that are subject to vesting will vest upon the dates of successive Annual Meetings. Our Program is expected to remain unchanged for fiscal 2023.
DIRECTOR COMPENSATION FOR FISCAL 2022
DIRECTOR COMPENSATION FOR FISCAL 2022 The table below summarizes the compensation paid by the Company to each non-employee director for the fiscal year ended September 30, 2022.
DIRECTOR COMPENSATION FOR FISCAL 2022
| Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(9)(10) | Option Awards ($)(9)(11) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | | Fabiola Arredondo | 75,000(2) | 225,844 | — | — | — | — | 300,844 | | Braden R. Kelly | 200,000(3) | 255,322 | — | — | — | — | 455,322 | | James D. Kirsner | 92,500(4) | 255,322 | — | — | — | — | 347,822 | | Eva Manolis | 37,500(5) | — | 224,316 | — | — | — | 261,816 | | Marc F. McMorris | 75,000(6) | — | 224,316 | — | — | — | 299,316 | | Joanna Rees | 100,000(7) | — | 253,608 | — | — | — | 353,608 | | David A. Rey | 75,000(8) | 113,159 | 112,158 | — | — | — | 300,317 |
DIRECTOR COMPENSATION FOR FISCAL 2022
| All fees under this column represent fees paid to the directors under the Program described above. The Program anticipates fees commencing with the directors’ election year (February/March to February/March), whereas the compensation reported in this table is that paid during our fiscal year (October through September). Fees that are paid in cash are paid quarterly in arrears. Fees that, at the election of the director, are paid in stock options are paid in one annual grant upon the director’s election to the Board. As a result, when a director’s election with respect to receiving fees in cash or stock options changes from one year to the next, the director’s compensation disclosed in this column differs from the annual fees described under “Non-Employee Director Compensation” above. Messrs. Kirsner and McMorris, and Ms. Manolis, made election changes during fiscal 2022.(1) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents the $75,000 annual board and committee retainers which would have been paid in cash in quarterly installments following her re-election that were forgone by Ms. Arredondo to instead receive 482 stock options in one grant upon her re-election. The amount recognized for financial statement reporting purposes in fiscal 2022 with respect to such options, which was $73,153, is excluded from the “Option Awards” column.(2) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents the $200,000 annual board, committee, independent chairman of the board and committee chair retainers which would have been paid in cash in quarterly installments following his re-election that were forgone by Mr. Kelly to instead receive 1,285 stock options in one grant upon his re-election. The amount recognized for financial statement reporting purposes in fiscal 2022 with respect to such options, which was $195,024, is excluded from the “Option Awards” column.(3) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents $92,500 of the annual board, committee chair and committee retainers paid to Mr. Kirsner in cash in fiscal 2022.(4) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents $37,500 of the annual board and committee retainers paid to Ms. Manolis in cash in the third and fourth quarters of fiscal 2022.(5) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents the $75,000 annual board and committee retainers which would have been paid in cash in quarterly installments following his re-election that were forgone by Mr. McMorris to instead receive 482 stock options in one grant upon his re-election. The amount recognized for financial statement reporting purposes in fiscal 2022 with respect to such options, which was $73,153, is excluded from the “Option Awards” column.(6) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Represents $100,000 in annual board, committee chair and committee retainers which would have been paid in cash in quarterly installments following her re-election that were foregone by Ms. Rees to instead receive 643 stock options in one grant upon her re-election. The amount recognized for financial statement reporting(7) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| purposes in fiscal 2022 with respect to such options, which was $97,588, is excluded from the “Option Awards” column. |
DIRECTOR COMPENSATION FOR FISCAL 2022
| Includes (i) $60,000 in annual board and committee retainers paid quarterly to Mr. Rey in cash during fiscal 2022, and (ii) $15,000 in annual board and committee retainers which would have been paid in cash in quarterly installments following his re-election that were forgone by Mr. Rey to instead receive 97 stock options in one grant upon his re-election. The amount recognized for financial statement reporting purposes in fiscal 2022 with respect to such options, which was $14,722, is excluded from the “Option Awards” column.(8) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| The amounts in this column represent the aggregate grant date fair value of each award computed in accordance with FASB ASC Topic 718. For information on the assumptions used to calculate the value of the awards, refer to Note 15 of the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as filed with the SEC.(9) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| As of September 30, 2022, the RSU awards outstanding for each director are as follows: Ms. Arredondo —844; Mr. Kelly — 537; Mr. Kirsner — 537; Ms. Manolis — 0; Mr. McMorris — 0; Ms. Rees — 0; and Mr. Rey — 238.(10) |
DIRECTOR COMPENSATION FOR FISCAL 2022
| As of September 30, 2022, the option awards outstanding for each director are as follows: Ms. Arredondo — 3,101; Mr. Kelly — 26,632; Mr. Kirsner — 715; Ms. Manolis — 14,259; Mr. McMorris — 14,170; Ms. Rees — 26,178; and Mr. Rey — 16,803.(11) |
Overview of Fiscal 2022 Executive Compensation Program
| Emphasis on Pay for Performance | • Base salaries are adjusted infrequently and, accordingly, the base salaries for our executive officers remained flat in fiscal 2022, other than an increase for one executive officer to recognize strong contributions and to bring her salary into parity with peer executives; | | | • Variable short-term cash incentive compensation plan funding is based upon Company performance, with individual awards linked closely to individual performance; and | | | • Emphasis on long-term incentive compensation opportunities to align our executive officers’ interests with those of our stockholders, with two-thirds of their target long-term incentive compensation value weighted towards performance-based equity vehicles, the value of which depends on meeting the Company’s financial performance targets and our stock price performance. | | Quality Pay Practices and Policies | • Only “double-trigger” accelerated vesting or payment for equity awards upon a change in control of the Company; | | | • Executive stock ownership guidelines that require ownership and further align our executive officers’ interests with those of our stockholders; | | | • Prohibition on hedging of Company common stock; | | | • A compensation recovery, or “clawback,” policy pertaining to both cash and equity incentive-based compensation; | | | • Mandatory minimum vesting period of one year for equity awards; |
Overview of Fiscal 2022 Executive Compensation Program
| • Annual compensation peer group review with appropriate updates to ensure valid comparisons; | | • No tax “gross-ups” allowed except with respect to relocation benefits and required spousal travel; and | | • Independent compensation consultant engaged by the LDCC that does not provide any other services to the Company. |
Overview of Fiscal 2022 Executive Compensation Program
In making compensation decisions at the outset of fiscal 2022 and throughout the year, the LDCC continued to reinforce the link between Company performance and executive compensation. The target level of short-term cash incentive awards for each executive officer, expressed as a percentage of annual base salary, remained unchanged in fiscal 2022. At the beginning of the fiscal year, our Board of Directors approved an Adjusted Revenue target of $1,350.0 million and an Adjusted EBITDA target of $590.5 million. These performance measures were selected by the LDCC to determine funding of the fiscal 2022 cash incentive pools and to drive sustainable top-line and bottom-line growth, balancing both short-term and longer-term considerations. These target goals were higher than the target goals used in the fiscal 2021 short-term cash incentive plan. Our fiscal 2022 results of $1,377.3 million in Adjusted Revenue (which for fiscal 2022 was the same as GAAP Revenue) and $668.3 million in Adjusted EBITDA exceeded target, resulting in funding under both the Broad-Based and Management Incentive Plans at 123.8% of target. Our Adjusted Revenue and Adjusted EBITDA measures are discussed further on pages 37 and 38 of this proxy statement, and Adjusted EBITDA is reconciled to net income in Appendix A to this proxy statement. In selecting these two financial performance measures, both of which are used to determine short-term cash incentive funding and Performance Share Unit (“PSU”) earnings, the LDCC took into account the fact that the Company continues to pursue a strategic shift in the focus of its software segment toward a cloud-based platform while preserving the value of legacy solutions. As a result, it is making significant investments in technology infrastructure and solution innovation which tend to sacrifice short-term performance on certain other measures (e.g., earnings per share) in favor of enabling longer-term stockholder value creation. The LDCC believes that these performance measures best balance the delivery of steady growth against the investments the Company is making. Importantly, using a one-year performance period for short-term cash incentive plan funding and the determination of the number of PSUs earned (which are then subject to multi-year time-based vesting) allows the LDCC to reward performance for a time period over which the Company has reasonable visibility. Setting goals over a longer term is particularly difficult because of complexities linked to the strategic shift in focus for our software segment and relatively long sales cycle time. To address the importance of longer-term performance measures, we have established a relative total stockholder return metric in our Market Share Unit (“MSU”) vehicle over one-, two-, and three-year performance periods, as described in more detail below. To align our executive officers’ interests with the creation of stockholder value, long-term equity incentive compensation represents a large majority of their target total direct compensation opportunity, and we have continued to maintain a diverse mix of equity award types which favor those that are performance-based instead of simply time-based. This mix of long-term equity incentive vehicles helps ensure that our executive compensation program operates effectively across a wide variety of business scenarios. Long-term equity incentive awards to our executive officers in fiscal 2022 were granted in December 2021 as part of the Company’s annual year-end performance review and rewards planning process. Two-thirds of the annual long-term equity incentive awards were performance-based, with only one-third time-based. Specifically, the LDCC granted one-third of the target annual long-term equity incentive award value to our executive officers in the form of PSUs, which were designed to reward the achievement of pre-established annual Adjusted Revenue and Adjusted EBITDA goals. Based on our actual performance with respect to these measures, 195.3% of the target PSUs granted in fiscal 2022 were earned. The LDCC granted another one-third of the target annual long-term equity incentive award value in the form of MSUs. MSUs are earned based on our total stockholder return relative to the Russell 3000 Index over performance periods of one, two, and three years. Based on our one-year total stockholder return from December 1, 2021 to November 30, 2022, 200% of the target awards for the first performance period of the fiscal 2022 MSUs were earned. Based on our two-year total stockholder return from December 1, 2020 to November 30, 2022, 106% of the target awards for the second performance period of the fiscal 2021 MSUs were earned. Based on our three-year stockholder return from December 1, 2019 to November 30, 2022, 178% of the target awards for the third performance period of the fiscal 2020 MSUs were earned. Third period earned MSUs delivered to participants are less units earned in the first and second periods. Our strong linkage of pay and performance is illustrated in the chart below showing aggregate target and realized compensation for our six named executive officers. The dollar amounts shown for the target total direct compensation figures reflect the grant date fair value of equity awards. The dollar amounts shown for the realized total direct compensation figures reflect fiscal 2022 realized PSUs at 195.3% of targeted earnings and fiscal 2022 MSUs at 200% of the target awards for the first performance period with earnings for the second and third performance periods reflected at target. As discussed below, named executive officer Claus Moldt was not eligible for, nor did he receive, a short-term cash incentive payment in fiscal 2022.
Preview of Fiscal 2023 Compensation Program
Preview of Fiscal 2023 Compensation Program The LDCC’s decisions made at the outset of fiscal 2023 reflect a continuation of the philosophy employed during fiscal 2022 with close alignment between earnings opportunity and company performance. Specifically, our emphasis on long-term equity incentive awards continues and the long-term incentive program continues to reflect a strong emphasis on performance-based vehicles. As described more fully below, and as was the case in fiscal 2022, two-thirds of the value of annual equity awards made to our executive officers in fiscal 2023 involved performance-based vehicles. For fiscal 2023, the LDCC retained Adjusted Revenue and Adjusted EBITDA as the two financial performance measures used to determine short-term cash incentive plan funding and PSU earnings, equally weighted at 50% each. With PSUs representing one-third of long-term equity incentive award value, the LDCC also continued to place one-third of long-term equity incentive award value on MSUs which are earned over one-, two-, and three-year performance periods based on relative total stockholder return versus the Russell 3000 Index.
Determination of Compensation
Determination of Compensation LDCC Process Members of executive management participate in the LDCC’s meetings at the LDCC’s request. Management’s role is to contribute input and analysis, which the LDCC considers in making its decisions. The LDCC is not bound by management’s recommendations, but the LDCC relies on the insights of our CEO and Chief Human Resources Officer in determining compensation for our executive officers, other than our CEO. The LDCC also consults with its external compensation consultant during its review of executive officer compensation. Prior to making decisions on executive compensation, the LDCC refers to comprehensive statements and reports prepared by its compensation consultant and management that reflect the amount and elements of each executive officer’s target total direct compensation opportunity relative to competitive market practices. The LDCC conducts an annual performance review of our CEO in connection with the determination of his compensation. As part of this process, one or more LDCC members and/or the Chairman of our Board of Directors meet with each senior executive to discuss our CEO’s performance using a structured interview approach. In addition, each Board member completes a written evaluation of our CEO and submits it to the LDCC. Based on these interviews and written evaluations, as well as on its own determinations regarding our CEO’s performance, the LDCC prepares a final performance review for our CEO. The LDCC then submits a recommendation for our CEO’s compensation to our Board of Directors for discussion. Following such discussion, the LDCC finalizes its determination of our CEO’s compensation and informs our CEO of such determination, together with the final performance review. Compensation Peer Group In connection with our fiscal 2022 executive compensation program, the LDCC reviewed summary reports prepared by its compensation consultant and by management reflecting current and proposed base salary, short-term cash incentive and equity award levels for our executive officers. Each element was analyzed relative to the Company’s compensation peer group. The peer group consisted of 20 companies that were selected as being similar in size to the Company and operating in the application software, data processing and outsourced services, research and consulting services, and financial exchanges and data sub-industries within the Global Industry Classification Standard taxonomy. The 20 peer companies that were included in the analysis referenced by the LDCC when it set compensation for fiscal 2022 were as follows:
Determination of Compensation
| | Revenue ($ in millions) | Market Capitalization ($ in millions) | Operating Income ($ in millions) | Net Income ($ in millions) | | 75(th)percentile of peer group | $2,531 | $31,924 | $688 | $482 | | 50(th)percentile of peer group | $1,715 | $16,111 | $363 | $316 | | 25(th) percentile of peer group | $1,319 | $10,733 | $154 | $70 | | Company | $1,356 | $12,587 | $418 | $365 | | Percentile rank | 30% | 36% | 59% | 61% |
Determination of Compensation
The LDCC considered the peer group information in addition to company and individual performance when setting the compensation levels for our executive officers for fiscal 2022. The LDCC does not benchmark total compensation or individual elements of compensation to particular percentiles but aims to create competitive pay packages that reflect the Company’s performance and that are generally intended to deliver above market median compensation if long-term equity incentive awards pay out at or above target based on challenging required levels of performance. Use of Compensation Consultant The LDCC retains an external compensation consultant to assist it in analyzing our executive compensation program and assessing market levels of compensation. For fiscal 2022, the LDCC engaged Compensia, Inc. to provide competitive practice and market compensation data, advice regarding the design of compensation programs for our executive officers and non-employee directors, input regarding specific compensation actions for our executive officers, analysis of the composition of our compensation peer group, and analysis concerning the structure of and any necessary amendments to our 2021 Long-Term Incentive Plan (“2021 LTIP”). Compensation Consultant Conflict of Interest Analysis The LDCC has considered the relationships that the compensation consultant it engaged in fiscal 2022 has had with the Company, the members of the LDCC and the Company’s executive officers, as well as the policies that the consultant has in place to maintain its independence and objectivity and has determined that no conflicts of interest arose from the work performed by such consultant. Stockholder Advisory Vote on Named Executive Officer Compensation At our last Annual Meeting of Stockholders held on March 1, 2022, 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 90.4% of the votes cast being “for” approval (or 90.2%, including abstentions). The LDCC continues to evaluate and adjust the Company’s compensation policies and practices as it deems appropriate to advance the best interests of the Company and its stockholders, and the Company engages in periodic discussions with certain of our largest stockholders to obtain feedback on our compensation policies and practices. In light of the high approval rate of our executive compensation program, policies, and practices by our stockholders at our last Annual Meeting, the LDCC largely maintained the existing compensation program, policies, and practices during fiscal 2022.
Elements of Compensation
Elements of Compensation The fiscal 2022 executive compensation program consisted of three principal elements: (1) base salary; (2) short-term cash incentives; and (3) long-term equity incentives in the form of PSUs, MSUs, and RSUs.
Elements of Compensation
| Compensation Element | Purpose and Philosophy | | Base Salary | • Base salary provides our executive officers with financial stability and predictable cash flow. | | | • Individual base salaries are determined by evaluating the executive officer’s role within the Company, experience, performance, and potential for development, as well as the base salaries of comparable roles within the peer group companies and the broader marketplace. | | Short-Term Cash Incentives | • Our short-term cash incentive plan rewards the achievement of annual Company and individual performance goals. | | | • Target cash incentive payment amounts are expressed as a percentage of base salary determined with reference to the peer group companies and the broader marketplace. | | | • Participants may earn between zero and 250% of their target cash incentive award opportunities, depending both upon Company and individual performance. | | Long-Term Equity Incentives | • Long-term equity incentive awards directly link a significant portion of each executive officer’s target total direct compensation to the market value of our common stock, while promoting retention through multi-year vesting and performance periods. | | | • PSUs are earned based upon the extent to which annual Company financial performance targets are achieved with as few as zero and as many as 200% of the target PSUs eligible to be earned. Earned units are then subject to multi-year time-based vesting, promoting continued linkage to the market price of our common stock while also promoting retention. | | | • MSUs are earned based on our relative total stockholder return measured over one-year, two-year, and three-year performance periods with as few as zero and as many as 200% of the target MSUs eligible to be earned. | | | • RSUs represent a more stable equity-based compensation vehicle, ensuring linkage to the stock price performance of our common stock while promoting retention over a multi-year time-based vesting period. |
Elements of Compensation
| Named Executive Officer | Target Payout for Fiscal 2022 | Amount Attributable to Company Performance Factor | Participant Performance Factor | Actual Payout for Fiscal 2022 | | William Lansing | $750,000 | $928,500 | 129% | $1,200,000 | | Michael McLaughlin | $200,000 | $247,600 | 111% | $275,000 | | Stephanie Covert | $250,000 | $309,500 | 121% | $375,000 | | Mark Scadina | $200,000 | $247,600 | 121% | $300,000 | | James Wehmann | $250,000 | $309,500 | 121% | $375,000 | | Totals | $1,650,000 | $2,042,700 | — | $2,525,000 |
Elements of Compensation
Long-Term Equity Incentives in Fiscal 2022 The third key element of our executive compensation program for fiscal 2022 was long-term equity incentives in the form of equity awards. This element of compensation is used to drive achievement of the Company’s financial targets while linking compensation to the market value of its common stock. The Company has chosen to emphasize long-term equity incentives in our executive compensation program to help to ensure strong alignment with our stockholders over time. In determining the value of annual equity awards for fiscal 2022, the LDCC considered an analysis of competitive market data prepared by its compensation consultant and described above under “Determination of Compensation — Compensation Peer Group,” the individual performance of each executive officer, the need to reinforce positive levels of collaboration and teamwork across members of the executive team, and our retention objectives. The competitive market data analysis for fiscal 2022 showed that peer group total direct compensation increased 2% at the median and decreased 1% at the 75th percentile with the cash component increasing 6% and 13% at the median and 75th percentile, respectively, and median long-term incentive value being relatively flat year-over-year. Coupled with continued strong company and individual performance results, this trend in peer group compensation data contributed to flat year-over-year compensation for our executive officers across all pay components with the one exception being Ms. Covert who received both a base salary increase and an increase in the value of her fiscal 2022 long-term incentive award to both recognize her strong contributions and to bring her compensation package into parity with her peers. The modest year-over-year decrease in the long-term incentive pay component for executive officers other than Ms. Covert was attributable to our methodology for converting the intended grant date value of long-term incentive award to share units. As explained below, we convert intended grant date value to share units using the average closing stock price during the 30-calendar day period ending on the 11th day prior to the date of grant. This averaging period is considered a best practice to offset daily stock price volatility, and the 10-day gap prior to the grant date provides our executive officers with a reasonable period of time during which to decide what portion, if any, of designated RSU value to exchange for non-qualified stock options using an economically equivalent value also tied to the 30-day average price. For fiscal 2022, the 30-day average price was $373.85 per share, compared to the grant date value (December 10, 2021) price being $407.49 per share – a difference that added 9.0% to the cost of fiscal 2022 annual long-term incentive awards. In fiscal 2021, awards with the same intended grant date value involved a 30-day average price of $457.72 per share, compared to the grant date value (December 10, 2020) price being $506.91 per share – a difference that added 10.8% to the cost of fiscal 2021 annual long-term incentive awards. To strongly align the interests of our executive officers and stockholders, we place two-thirds of annual long-term incentive value on performance-based vehicles in the form of PSUs and MSUs, considerably higher than the 52% average for our peer group. The proportion of each type of equity award granted in fiscal 2022 is broken down as follows:
Elements of Compensation
| Performance Share Units 1/3 | Market Share Units 1/3 | Restricted Stock Units 1/3 |
Elements of Compensation
Performance Share Units (“PSUs”). For fiscal 2022, PSUs represented one-third of the target annual equity awards granted in December 2021 to our executive officers. The PSUs granted in fiscal 2022 were earned on the basis of a one-year performance period but any earned shares vest over three years following the date of grant. The LDCC used a one-year performance period because market uncertainties made it difficult to accurately forecast our Adjusted Revenue and Adjusted EBITDA beyond that point, as described in detail on page 32 above. The LDCC believes the complexity of our major products, along with the complexity of our major customers, yields a very long selling cycle, which in turn contributes significant uncertainty into our revenue stream and resulting EBITDA. Using a one-year performance period allows the LDCC to reward performance for a time period over which the Company has better visibility instead of creating goals over a longer term that are more likely to be problematic. In addition, requiring that any earned shares vest over an additional two years creates long-term alignment with our stockholders and satisfies our retention objectives. The maximum number of PSUs that could have been earned over the fiscal 2022 performance period by each named executive officer was specified in the applicable award agreement. In each case, the named executive officer could earn as little as 0% and as much as 200% of the target number of PSUs. The LDCC retained discretion to determine the actual number of PSUs that were earned and established the following earnings matrix when the awards were granted to inform its discretion:
Elements of Compensation
Based on the Company’s above-target performance of $1,377.3 million of Adjusted Revenue and $668.3 million of Adjusted EBITDA in fiscal 2022, and using the above matrix as a guide, the LDCC applied a multiplier of 195.3% to the target number of PSUs. The target number of PSUs and the actual number of PSUs earned by each named executive officer for fiscal 2022 performance that were settled for shares of our common stock are as follows:
Elements of Compensation
| Named Executive Officer | Target Number of PSUs Granted for Fiscal 2022 | Actual Number of PSUs Earned for Fiscal 2022 | | William Lansing | 12,483 | 24,380 | | Michael McLaughlin | 3,567 | 6,967 | | Stephanie Covert | 5,350 | 10,449 | | Mark Scadina | 3,567 | 6,967 | | James Wehmann | 5,350 | 10,449 | | Claus Moldt | 5,350 | 10,449 |
Elements of Compensation
One-third of the earned PSUs were paid following the end of fiscal 2022 and two-thirds will vest over the next two fiscal years provided the named executive officer remains with the Company as of each vesting date or vesting of the PSUs continues pursuant to the terms of the applicable award agreement. Market Share Units (“MSUs”). For fiscal 2022, MSUs represented one-third of the target annual equity awards granted in December 2021 to our executive officers. The MSUs granted in fiscal 2022 (as well as those granted in fiscal 2021 and fiscal 2020) are earned based on the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of one, two, and three years. The LDCC decided to measure performance over a total of three years to integrate a longer, multi-year performance period into the Company’s equity compensation program. The number of MSUs earned by a named executive officer in each of the one- and two-year performance periods is determined by taking one-third of the target units in the applicable award agreement multiplied by the relative return factor for the relevant performance period. The number of MSUs earned by a named executive officer in the three-year performance period is determined by taking the total number of the target units in the applicable award agreement multiplied by the relative return factor for the relevant performance period, and then subtracting any shares of our common stock earned in the one-year and two-year performance periods from the result. The total number of shares earned in the one-year and two-year periods is not adjusted if the three-year calculation, less shares earned in prior periods, is a negative number. The relative return factor for each performance period is calculated as follows:
Elements of Compensation
| Relative TSR Performance (Fiscal 2020, 2021 and 2022) | Relative Return Factor | | +33.33% or greater | 200% | | +16.67% | 150% | | 0% | 100% | | -12.5% | 50% | | -25% or less | 0% |
Elements of Compensation
Restricted Stock Units (“RSUs”). For fiscal 2022, RSUs represented the final one-third of the target annual equity awards granted in December 2021 to our executive officers. The RSUs granted in fiscal 2022 provide a link to our stock price performance, as well as promote our retention objectives over a multi-year vesting period. Generally, the RSUs granted by the LDCC vest in four equal annual installments beginning on the first anniversary of the grant date. As in prior fiscal years, the LDCC permitted our executive officers to exchange up to 100% of their annual time-vested RSUs for non-qualified stock options (“NQSOs”) on an economically equivalent basis, while maintaining the existing four-year annual vesting requirement. In connection with the retention of this flexibility, which was initially implemented in fiscal 2015, the LDCC determined that NQSOs provide attractive leverage to the recipient and permit the holder to determine when taxable income events occur via a decision to exercise their NQSOs. In fiscal 2022, however, none of our named executive officers elected to receive a NQSO in exchange for an RSU award. In the event that a named executive officer was to make such an election, the ratio constituting an economically equivalent basis would be determined as follows:
Elements of Compensation
In fiscal 2022, the value of one “whole” share was determined to be $373.85, while the value of one “option” share was determined to be $103.8174. The resulting ratio was 3.601 “option” shares for each “whole” share, meaning our executive officers could receive a NQSO for that number of shares equal to 3.601 multiplied by the number of shares that would be subject to their RSU for fiscal 2022. These values were used to convert the intended grant date value of long-term incentive awards to stock units. The actual closing price on the December 10, 2021 date of grant was $407.49 per share – a factor which contributed 9.0% to the year-over-year increase in long-term incentive award values. Evolution of Long-Term Equity Incentive Program The following charts depict the evolution of our long-term equity incentive program over the last several years to increasingly emphasize performance-based vehicles over those based solely on continued service with the Company. The values reflected (i) assume that all executive officers elected to convert the maximum allowable portion of their annual stock option grants from fiscal 2011 through fiscal 2013 to RSUs, which was the typical pattern, and (ii) depicts PSUs and MSUs at target level. The fiscal 2014–2022 chart reflects RSUs, although our executive officers may have elected to convert those RSUs to stock options on an economically equivalent basis, as described above. The fiscal 2013 chart reflects the annual grants made to our named execu- tive officers other than our CEO, who received an additional 70,000 stock options that were not convertible into RSUs and are not reflected in the chart.
Retirement Arrangements
Retirement Arrangements We offer a Section 401(k) plan for all eligible employees. Under this program, our executive officers (like all of our eligible employees) can receive a Company matching contribution on amounts they contribute to the Section 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 executive officers to defer up to 25% of their base salary and 75% of their short-term cash incentive awards into an investment account. Amounts in this account are payable upon certain employment termination events as specified in the plan. In November 2018, the LDCC approved the inclusion of retirement provisions in the award agreements for the equity awards granted to our executive officers beginning in December 2018. Such provisions allow for continued vesting of outstanding equity awards upon an executive officer’s retirement provided that (i) such executive officer is 55 or older and has at least 5 years of continuous service as an employee (which must be immediately preceding the date of termination) and (ii) the sum of such executive officer’s age as of the date of his or her termination plus their years of service as an employee equals at least 75. In order to qualify for continued vesting, the executive officer must provide at least one year’s notice of his or her retirement and must also be available to provide service to the Company, if requested, during the continued vesting period. In addition, during the continued vesting period, the executive officer may not become employed by another entity or organization. The LDCC approved the inclusion of the retirement provisions in order to enhance retention of the current executive officers, to improve the executive transition process by ensuring sufficient time to plan for a successor and to ensure continued support from the former executive officer following retirement.
Post-Employment Compensation Arrangements
Post-Employment Compensation Arrangements Each of our named executive officers who is a current executive officer is party to a Letter Agreement that, among other things, provides for payments and benefits in the event of termination of employment by the Com- pany without cause or by the executive officer for good reason, and a Management Agreement that provides for payments and benefits in the event of such a termination of employment in connection with a change in control of the Company. These agreements are described in detail later in this proxy statement. The LDCC believes that these severance and change-in-control arrangements are meaningful recruitment and retention devices, are important components in a competitive compensation package for our named executive officers, and will mitigate concerns that the executive officers may have regarding their continued employment prior to or following a change in control of the Company, thereby allowing them to focus their undivided attention on advancing the interests of the Company and its stockholders. The change-in-control arrangements are “double-trigger” (that is, they require both a change in control of the Company and a termination of employment without cause or by the executive officer for good reason within 24 months of the change in control) and the named executive officers are not eligible to receive tax payments or gross-ups in connection with any change-in-control arrangement. As noted above, we entered into the Moldt Letter Agreement with Mr. Moldt in connection with his transition to the role of Vice President, Technology in January 2022, which agreement governed the terms of his employment through his termination date of December 31, 2022.
Equity Award Grant Processes
Equity Award Grant Processes Equity awards granted to our named executive officers in fiscal 2022 were granted under the 2021 LTIP. Equity awards for all executive officers are approved by the LDCC. The LDCC 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 LDCC. The exercise price of stock options is set at fair market value of our common stock on the date of grant, with annual equity awards generally granted by the LDCC on a pre-determined day in December of each fiscal year.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table summarizes all compensation earned in fiscal 2022, 2021 and 2020 by our named executive officers.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Fiscal Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan ($)(4) | Change in Pension Value and Non- Qualified Deferred Compensation Earnings ($) | All Other Compensation ($)(5) | Total ($) | | William Lansing | 2022 | 750,000 | — | 16,942,011 | — | 1,200,000 | — | 21,770 | 18,913,781 | | Chief Executive Officer | 2021 | 750,000 | — | 17,458,576 | — | 1,200,000 | — | 21,169 | 19,429,745 | | | 2020 | 750,000 | — | 11,128,051 | 918,823 | 1,200,000 | — | 38,750 | 14,035,624 | | Michael McLaughlin | 2022 | 400,000 | — | 4,841,157 | — | 275,000 | — | 27,570 | 5,546,728 | | Executive Vice President and Chief Financial Officer | 2021 2020 | 400,000 400,000 | — — | 4,987,921 1,146,829 | — — | 275,000 275,000 | — — | 11,597 19,320 | 5,674,518 1,841,149 | | Stephanie Covert(6) | 2022 | 480,769 | — | 7,261,057 | — | 375,000 | — | 9,866 | 8,126,692 | | Executive Vice President, Software | 2021 | 400,000 | — | 4,987,921 | — | 350,000 | — | 10,180 | 5,748,101 | | Mark Scadina(7) | 2022 | 400,000 | — | 4,841,157 | — | 300,000 | — | 30,084 | 5,571,242 | | Executive Vice President, General Counsel and Corporate Secretary | | | | | | | | | | | James Wehmann | 2022 | 500,000 | — | 7,261,057 | — | 375,000 | — | 11,846 | 8,147,903 | | Executive Vice President, Scores | 2021 | 500,000 | — | 7,482,737 | — | 375,000 | — | 11,646 | 8,369,383 | | | 2020 | 500,000 | — | 3,782,767 | — | 375,000 | — | 12,215 | 4,669,982 | | Claus Moldt((8)) | 2022 | 500,000 | — | 7,261,057 | — | — | — | 12,615 | 7,773,673 | | Former Executive Vice President and Chief Technology Officer | 2021 | 500,000 | — | 7,482,737 | — | 350,000 | — | 11,646 | 8,344,383 | | | 2020 | 500,000 | — | 3,782,767 | — | 350,000 | — | 30,415 | 4,663,182 |
SUMMARY COMPENSATION TABLE
| The amounts in the “Stock Awards” column represent the aggregate grant date fair value of each award granted during the fiscal year, computed in accordance with FASB ASC Topic 718, and do not reflect whether the named executive officer 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 15 of the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as filed with the SEC.(1) |
SUMMARY COMPENSATION TABLE
| Stock Awards for fiscal 2022 include the grant date fair value of time-based RSU awards, PSU awards and MSU awards granted on December 10, 2021 under the 2021 LTIP.(2) |
SUMMARY COMPENSATION TABLE
| The PSUs were tied to the achievement of certain performance goals during fiscal 2022, and the named executive officer must be an employee on the vesting dates of December 10(th) of 2022, 2023 and 2024 in order to realize the 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 $10,173,396 vs. target of $5,086,698 for Mr. Lansing; $2,907,034 vs. target of $1,453,517 for Mr. McLaughlin; $4,360,144 vs. target of $2,180,072 for Ms. Covert; 2,907,034 vs. $1,453,517 for Mr. Scadina; $2,907,034 vs. target of $1,453,517 for Mr. Wehmann; and $4,360,144 vs. target of $2,180,072 for Mr. Moldt. The named executive officers earned 195.3% of their respective target award, resulting in 24,380 units for Mr. Lansing; 6,967 units for Mr. McLaughlin; 10,449 units for Ms. Covert; 6,967 units for Mr. Scadina; 10,449 units for Mr. Wehmann; and 10,449 units for Mr. Moldt. |
SUMMARY COMPENSATION TABLE
| The MSUs were tied to the achievement of certain performance goals over three performance periods ending on November 30, 2022, 2023 and 2024. The named executive officers must be employed on the vesting dates of December 10(th) of 2022, 2023 and 2024 in order to realize the earned MSU value. The values included in the table for the MSUs 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 $13,537,230 vs. target of $6,768,615 for Mr. Lansing; $3,868,246 vs. target of $1,934,123 for Mr. McLaughlin; $5,801,826 vs. target of $2,900,913 for Ms. Covert; $3,868,246 vs. $1,934,123 for Mr. Scadina; $5,801,826 vs. target of $2,900,913 for Mr. Wehmann; and $5,801,826 vs. target of $2,900,913 for Mr. Moldt. Based on our total stockholder return of 24.89% for fiscal 2022, 200% of the MSUs granted in fiscal 2022 were earned at the conclusion of the first performance period ending on November 30, 2022. |
SUMMARY COMPENSATION TABLE
| The amounts in the “Option Awards” column represent the grant date fair value of stock options which the named executive officer elected to receive in exchange for a portion of his annual RSU award in the applicable year, computed in accordance with FASB ASC Topic 718. For information on the assumptions used to calculate the value of the stock options, refer to Note 15 of the Company’s Consolidated Financial Statements in the Annual Report on Form 10-K for the fiscal year ended September 30, 2022, as filed with the SEC.(3) |
SUMMARY COMPENSATION TABLE
| Represents amounts paid in the first quarter of fiscal 2023 based on performance during fiscal 2022 under our Management Incentive Plan.(4) |
SUMMARY COMPENSATION TABLE
| The amounts shown for fiscal 2022 are detailed in the supplemental table below entitled “All Other Compensation Table.”(5) |
SUMMARY COMPENSATION TABLE
| As permitted by SEC rules, because fiscal 2021 was Ms. Covert’s first year as a named executive officer, the compensation paid to her prior to fiscal 2021 is not included in this table.(6) |
SUMMARY COMPENSATION TABLE
| As permitted by SEC rules, because fiscal 2022 was Mr. Scadina’s first year as a named executive officer, the compensation paid to him prior to fiscal 2022 is not included in this table.(7) |
SUMMARY COMPENSATION TABLE
| Mr. Moldt served as our Executive Vice President and Chief Technology Officer through January 5, 2022, when he transitioned to a non-executive officer position as Vice President, Technology, which position he held until his employment terminated effective December 31, 2022.(8) |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022 The following table summarizes grants of plan-based compensation awards made during fiscal 2022 to our named executive officers.
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| | | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | William Lansing | | 0 | 750,000 | 1,875,000 | | | | | | | | 12/10/2021 | | | | 0(2) | 12,483(2) | 24,966(2) | | 6,768,615 | | | 12/10/2021 | | | | 0(3) | 12,483(3) | 24,966(3) | | 5,086,698 | | | 12/10/2021 | | | | | | | 12,483(4) | 5,086,698 | | Michael McLaughlin | | 0 | 200,000 | 500,000 | | | | | | | | 12/10/2021 | | | | 0(2) | 3,567(2) | 7,134(2) | | 1,934,123 | | | 12/10/2021 | | | | 0(3) | 3,567(3) | 7,134(3) | | 1,453,517 | | | 12/10/2021 | | | | | | | 3,567(4) | 1,453,517 | | Stephanie Covert | | 0 | 250,000 | 625,000 | | | | | | | | 12/10/2021 | | | | 0(2) | 5,350(2) | 10,700(2) | | 2,900,913 | | | 12/10/2021 | | | | 0(3) | 5,350(3) | 10,700(3) | | 2,180,072 | | | 12/10/2021 | | | | | | | 5,350(4) | 2,180,072 | | Mark Scadina | | 0 | 200,000 | 500,000 | | | | | | | | 12/10/2021 | | | | 0(2) | 3,567(2) | 7,134(2) | | 1,934,123 | | | 12/10/2021 | | | | 0(3) | 3,567(3) | 7,134(3) | | 1,453,517 | | | 12/10/2021 | | | | | | | 3,567(4) | 1,453,517 | | James Wehmann | | 0 | 250,000 | 625,000 | | | | | | | | 12/10/2021 | | | | 0(2) | 5,350(2) | 10,700(2) | | 2,900,913 | | | 12/10/2021 | | | | 0(3) | 5,350(3) | 10,700(3) | | 2,180,072 | | | 12/10/2021 | | | | | | | 4,370(4) | 2,180,072 | | Claus Moldt | | 0 | 0 | 0 | | | | | | | | 12/10/2021 | | | | 0(2) | 5,350(2) | 10,700(2) | | 2,900,913 | | | 12/10/2021 | | | | 0(3) | 5,350(3) | 10,700(3) | | 2,180,072 | | | 12/10/2021 | | | | | | | 5,350(4) | 2,180,072 |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| The amounts shown in these columns represent the estimated threshold (or minimum), target, and maximum possible cash incentive awards for each of the named executive officers. Under our Management Incentive Plan, Mr. Lansing’s target amount is equal to 100% of his base salary and the target amount for each of the other named executive officers is equal to 50% of their base salary. The maximum amount in each case equals 2.5 times the target amount, which would result if the Company Performance Factor was 125% and the Participant Performance Factor was 200%. There is no threshold (or minimum) level of awards under the Management Incentive Plan. Additional detail regarding the determination of cash incentives to executives for fiscal 2022 is included above under “Compensation Discussion and Analysis.” Actual payments are set forth in the “Summary Compensation Table” above.(1) |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| Amounts shown reflect MSUs that were granted under our 2021 LTIP and are subject to the achievement of specific performance goals related to the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of one, two and three years, approved by the LDCC, with no threshold (or minimum) levels of performance. On December 5, 2022, the LDCC certified that for all named executive officers, 200% of the target awards for the first performance period were earned for that tranche of awards eligible to vest on December 10, 2022. The remaining portion of the target awards may be earned subject to achievement of specific performance goals for the two- and three-year performance periods and then subsequently vest subject to the named executive officer’s continued Service as a Service Provider (as defined in the 2021 LTIP) through December 10, 2023 and December 10, 2024, respectively. These awards do not pay dividend equivalents.(2) |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| Amounts shown reflect PSUs that were granted under our 2021 LTIP and were subject to the achievement of specific performance goals related to adjusted revenue and adjusted EBITDA metrics approved by the LDCC, with no threshold (or minimum) levels of performance. For all named executive officers, 195.3% of the target awards were earned, one-third of the earned units vested on December 10, 2022 and the remaining two-thirds are scheduled to vest in two annual installments beginning December 10, 2023 (subject to the named executive officer’s continued Service as a Service Provider (as defined in the 2021 LTIP)). These awards do not pay dividend equivalents.(3) |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| Reflects RSUs that were granted under our 2021 LTIP which vest in four equal increments on the first four anniversaries of the grant date subject to the named executive officer’s continued Service as a Service Provider (as defined in the 2021 LTIP). These awards do not pay dividend equivalents.(4) |
GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2022
| Represents the grant date fair value of each stock option, MSU, PSU, or RSU, as applicable, computed in accordance with FASB ASC Topic 718. The values included in the table for the MSU and PSUs are at target value, representing the probable outcome of the performance conditions as calculated at the time of grant.(5) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| Name | | | | | | | Stock Awards | | | | | | | Option Awards | | | | | | Grant Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(1) | | | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | | | | | | | William Lansing | 12/10/2018 | 40,572 | 13,523(2) | — | 185.05 | 12/09/2025 | 12/08/2019 | 3,836(3) | 1,580,470 | — | — | | | 12/10/2019 | 4,892 | 4,890(2) | — | 354.18 | 12/09/2026 | 12/10/2019 | 6,820(4) | 2,809,908 | 14,800(7) | 6,097,641 | | | — | — | — | — | — | — | 12/10/2020 | 7,647(3) | 3,150,640 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 13,594(5) | 5,600,864 | 20,392(8) | 8,401,708 | | | — | — | — | — | — | — | 12/10/2021 | 12,483(3) | 5,143,121 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 24,380(6) | 10,044,804 | 6,241(9) | 2,571,354 | | Michael McLaughlin | — | — | — | — | — | — | 08/05/2019 | 3,748(3) | 1,544,213 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 487(3) | 200,649 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 650(4) | 267,807 | 1,411(7) | 581,346 | | | — | — | — | — | — | — | 12/10/2020 | 2,184(3) | 899,830 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 3,884(5) | 1,600,247 | 5,826(8) | 2,400,370 | | | — | — | — | — | — | — | 12/10/2021 | 3,567(3) | 1,469,640 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 6,966(6) | 2,870,062 | 1,783(9) | 734,614 | | Stephanie Covert | — | — | — | — | — | — | 12/10/2018 | 662(3) | 272,751 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 876(3) | 360,921 | — | — | | | — | — | — | — | — | — | 08/25/2020 | 2,362(3) | 973,168 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 2,184(3) | 899,830 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 3,884(5) | 1,600,247 | 5,826(8) | 2,400,370 | | | — | — | — | — | — | — | 12/10/2021 | 5,350(3) | 2,204,254 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 10,449(6) | 4,305,092 | 2,675(9) | 1,102,127 | | Mark Scadina | 12/10/2018 | 5,526 | 1,841(2) | — | 185.05 | 12/09/2025 | 12/10/2018 | 552(3) | 227,430 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 1,340(3) | 552,093 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 650(4) | 267,807 | 3,876(7) | 1,596,951 | | | — | — | — | — | — | — | 12/10/2020 | 2,184(3) | 899,830 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 3,884(5) | 1,600,247 | 5,826(8) | 2,400,370 | | | — | — | — | — | — | — | 12/10/2021 | 3,567(3) | 1,469,640 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 6,967(6) | 2,870,474 | 1,783(9) | 734,614 | | James Wehmann | — | — | — | — | — | — | 12/10/2018 | 1,325(3) | 545,913 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 1,608(3) | 662,512 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 2,144(4) | 883,349 | 4,653(7) | 1,917,083 | | | — | — | — | — | — | — | 12/10/2020 | 3,277(3) | 1,350,157 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 5,826(5) | 2,400,370 | 8,740(8) | 3,600,967 | | | — | — | — | — | — | — | 12/10/2021 | 5,350(3) | 2,204,254 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 10,449(6) | 4,305,092 | 2,675(9) | 1,102,127 | | Claus Moldt | — | — | — | — | — | — | 12/08/2018 | 1,325(3) | 545,913 | — | — | | | — | — | — | — | — | — | 08/21/2019 | 1,430(3) | 589,174 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 1,608(3) | 662,512 | — | — | | | — | — | — | — | — | — | 12/10/2019 | 2,144(4) | 883,349 | 4,653(7) | 1,917,083 | | | — | — | — | — | — | — | 12/10/2020 | 3,277(3) | 1,350,157 | — | — | | | — | — | — | — | — | — | 12/10/2020 | 5,826(5) | 2,400,370 | 8,740(8) | 3,600,967 | | | — | — | — | — | — | — | 12/10/2021 | 5,350(3) | 2,204,254 | — | — | | | — | — | — | — | — | — | 12/10/2021 | 10,449(6) | 4,305,092 | 2,675(9) | 1,102,127 |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| The market value of stock awards that have not vested was determined by multiplying the closing market price of the Company’s common stock on September 30, 2022 ($412.01) by the number of stock awards.(1) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These stock options vest in four equal increments on the first four anniversaries of the grant date, subject to the named executive officer’s continued employment.(2) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These RSUs vest in shares in four equal increments on the first four anniversaries of the grant date, subject to the named executive officer’s continued employment.(3) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These earned PSUs vest in shares in three equal increments on the 10th of December in 2020, 2021, and 2022, subject to the named executive officer’s continued employment.(4) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These earned PSUs vest in shares in three equal increments on the 10th of December in 2021, 2022, and 2023, subject to the named executive officer’s continued employment.(5) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These earned PSUs vest in shares in three equal increments on the 10th of December in 2022, 2023, and 2024, subject to the named executive officer’s continued employment.(6) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These MSUs are earned upon achievement of performance goals related to the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of one, two and three years ending November 30 and then vest on the 10th of December in 2020, 2021 and 2022, subject to the named executive officer’s continued employment.(7) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These MSUs are earned upon achievement of performance goals related to the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of one, two and three years ending November 30 and then vest on the 10th of December in 2021, 2022, and 2023, subject to the named executive officer’s continued employment.(8) |
OUTSTANDING EQUITY AWARDS AT FISCAL 2022 YEAR END
| These MSUs are earned upon achievement of performance goals related to the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of one, two and three years ending November 30 and then vest on the 10th of December in 2022, 2023, and 2024, subject to the named executive officer’s continued employment.(9) |
FISCAL 2022 OPTION EXERCISES AND STOCK VESTED
FISCAL 2022 OPTION EXERCISES AND STOCK VESTED
FISCAL 2022 OPTION EXERCISES AND STOCK VESTED
| | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized On Vesting ($)(1) | | William Lansing | 0 | 0 | 42,633 | 17,356,960 | | Michael McLaughlin | 0 | 0 | 7,313 | 3,260,999 | | Stephanie Covert | 0 | 0 | 5,776 | 2,443,343 | | Mark Scadina | 0 | 0 | 12,172 | 4,956,322 | | James Wehmann | 0 | 0 | 16,028 | 6,527,010 | | Claus Moldt | 0 | 0 | 11,356 | 4,740,059 |
FISCAL 2022 OPTION EXERCISES AND STOCK VESTED
| Equal to the number of shares vested multiplied by the closing price of a share of the Company’s common stock on the date of vesting.(1) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| Name | Executive Contributions in Last FY ($)(1) | Registrant Contributions in Last FY ($) | Aggregate Earnings in Last FY ($)(2) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | | William Lansing | 950,481 | — | (409,600) | — | 1,816,330(3) | | Michael McLaughlin | — | — | — | — | — | | Stephanie Covert | — | — | — | — | — | | Mark Scadina | — | — | — | — | — | | James Wehmann | 406,250 | — | (774,468) | — | 1,879,889(4) | | Claus Moldt | 67,500 | — | (27,220) | — | 95,042(5) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| The amount reported in this column has been reported in the fiscal 2022 Summary Compensation Table as part of the individual’s compensation.(1) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| The amount reported in this column was not reported in the Summary Compensation Table as part of the individual’s compensation for the most recent fiscal year because none of the earnings are considered to be “above market” or “preferential.”(2) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| Of the amount shown in this column, $549,518 was previously reported as compensation to Mr. Lansing in the Summary Compensation Table for years prior to fiscal 2022.(3) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| Of the amount shown in this column, $1,479,038 was previously reported as compensation to Mr. Wehmann in the Summary Compensation Table for years prior to fiscal 2022.(4) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
| Of the amount shown in this column, $39,897 was previously reported as compensation to Mr. Moldt in the Summary Compensation Table for years prior to fiscal 2022.(5) |
NON-QUALIFIED DEFERRED COMPENSATION FOR FISCAL 2022
This plan is intended for a select group of employees of the Company who are in the highest salary band. Employees can defer up to 25% of base salary and up to 75% of incentive award compensation into the plan. These elections are irrevocable and stay in place for the entire calendar year. The Company does not make any employer contributions to this plan, and employees are always 100% vested in their contributions. Employees make their own investment election decisions from a select group of investment choices designated by the Company. Participating employees also make an irrevocable election for distributions from the plan at retirement. If they terminate employment prior to retirement, then participating employees will receive their distribution on the first day of the seventh calendar month following separation from service due to any reason.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL The information below describes the compensation that would become payable under existing plans and arrangements if a named executive officer’s employment terminates under certain circumstances or if a change in control of the Company occurs.
Michael McLaughlin
Michael McLaughlin
Michael McLaughlin
| Payment or Benefit | Voluntary Termination by NEO ($) | 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) | — | — | 675,000 | 675,000 | — | — | — | | Value of Benefits(2) | — | — | 29,520 | 29,520 | — | — | — | | Market Value of Accelerated Stock Option Awards(3) | — | — | — | — | — | — | — | | Market Value of Accelerated RSU Awards(4) | — | — | — | 4,114,332 | — | 4,114,332 | 4,114,332 | | Market Value of Accelerated PSU Awards(5) | — | — | — | 4,738,116 | — | 4,738,116 | 4,738,116 | | Market Value of Accelerated MSU Awards(6) | — | — | — | 2,403,666 | — | 2,403,666 | 2,403,666 | | Total | — | — | 704,520 | 11,960,634 | — | 11,256,114 | 11,256,114 |
Michael McLaughlin
| Pursuant to Mr. McLaughlin’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. McLaughlin for good reason. Mr. McLaughlin’s Management Agreement provides for the same payments in the event his employment is terminated by the Company without cause or by Mr. McLaughlin for good reason within 60 days before or two years following a change in control.(1) |
Michael McLaughlin
| Pursuant to Mr. McLaughlin’s Letter Agreement, the Company is obligated to provide benefits to Mr. McLaughlin at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Mr. McLaughlin for good reason. Mr. McLaughlin’s Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Mr. McLaughlin for good reason within 60 days before or two years following a change in control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period.(2) |
Michael McLaughlin
| Mr. McLaughlin currently does not have any stock options that would accelerate.(3) |
Michael McLaughlin
| The amounts shown represent the RSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. Mr. McLaughlin’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) |
Michael McLaughlin
| The amounts shown represent the earned PSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. Mr. McLaughlin’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.(5) |
Michael McLaughlin
| The amounts shown represent the unearned MSUs that would immediately be earned and vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01 and a relative total stockholder return performance of 0% in the adjusted performance period. The terms of the(6) |
Michael McLaughlin
| equity award provide for such acceleration upon a termination of employment for reasons other than Cause in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability. |
Stephanie Covert
Stephanie Covert
Stephanie Covert
| Payment or Benefit | Voluntary Termination by NEO ($) | 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) | — | — | 875,000 | 875,000 | — | — | — | | Value of Benefits(2) | — | — | 16,800 | 16,800 | — | — | — | | Market Value of Accelerated Stock Option Awards(3) | — | — | — | — | — | — | — | | Market Value of Accelerated RSU Awards(4) | — | — | — | 4,710,924 | — | 4,710,924 | 4,710,924 | | Market Value of Accelerated PSU Awards(5) | — | — | — | 5,905,339 | — | 5,905,339 | 5,905,339 | | Market Value of Accelerated MSU Awards(6) | — | — | — | 3,004,377 | — | 3,004,377 | 3,004,377 | | Total | — | — | 891,800 | 14,512,440 | — | 13,620,640 | 13,620,640 |
Stephanie Covert
| Pursuant to Ms. Covert’s Letter Agreement, she is entitled to a lump sum payment equal to one times the sum of her current base salary plus the annual incentive award last paid to her if her employment is terminated by the Company without cause or by Ms. Covert for good reason. Ms. Covert’s Management Agreement provides for the same payments in the event her employment is terminated by the Company without cause or by Ms. Covert for good reason within 60 days before or two years following a change in control.(1) |
Stephanie Covert
| Pursuant to Ms. Covert’s Letter Agreement, the Company is obligated to provide benefits to Ms. Covert at existing levels for 12 months post-termination if her employment is terminated by the Company without cause or by Ms. Covert for good reason. Ms. Covert’s Management Agreement provides for the same benefits in the event her employment is terminated by the Company without cause or by Ms. Covert for good reason within 60 days before or two years following a change in control. The amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period.(2) |
Stephanie Covert
| Ms. Covert currently does not have any stock options that would accelerate.(3) |
Stephanie Covert
| The amounts shown represent the RSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. Ms. Covert’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) |
Stephanie Covert
| The amounts shown represent the earned PSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. Ms. Covert’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.(5) |
Stephanie Covert
| The amounts shown represent the unearned MSUs that would immediately be earned and vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01 and a relative total stockholder return performance of 0% in the adjusted performance period. The terms of the equity award provide for such acceleration upon a termination of employment for reasons other than Cause in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability.(6) |
James Wehmann
James Wehmann
James Wehmann
| Payment or Benefit | Voluntary Termination by NEO ($) | 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) | — | — | 875,000 | 875,000 | — | — | — | | Value of Benefits(2) | — | — | 29,472 | 29,472 | — | — | — | | Market Value of Accelerated Stock Option Awards(3) | — | — | — | — | — | — | — | | Market Value of Accelerated RSU Awards(4) | — | — | — | 4,762,836 | — | 4,762,836 | 4,762,836 | | Market Value of Accelerated PSU Awards(5) | — | — | — | 7,588,811 | — | 7,588,811 | 7,588,811 | | Market Value of Accelerated MSU Awards(6) | — | — | — | 3,846,114 | — | 3,846,114 | 3,846,114 | | Total | — | — | 904,472 | 17,102,233 | — | 16,197,761 | 16,197,761 |
James Wehmann
| 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. Mr. Wehmann’s Management Agreement provides for the same payments in the event his employment is terminated by the Company without cause or by Mr. Wehmann for good reason within 60 days before or two years following a change in control.(1) |
James Wehmann
| Pursuant to Mr. Wehmann’s Letter Agreement, the Company is obligated to provide benefits to Mr. Wehmann at existing levels for 12 months post-termination if his employment is terminated by the Company without cause or by Mr. Wehmann for good reason. Mr. Wehmann’s Management Agreement provides for the same benefits in the event his employment is terminated by the Company without cause or by Mr. Wehmann for good reason within 60 days before or two years following a change in control. The(2) |
James Wehmann
| amounts shown represent the total cost of COBRA premiums for continuing such benefits over the applicable time period. |
James Wehmann
| Mr. Wehmann currently does not have any stock options that would accelerate.(3) |
James Wehmann
| The amounts shown represent the RSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. Mr. Wehmann’s Management Agreement provides for such acceleration upon a termination of employment in connection with a change in control, and the terms of the equity awards provide for such acceleration upon death or disability.(4) |
James Wehmann
| The amounts shown represent the earned PSUs that would immediately vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01. 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.(5) |
James Wehmann
| The amounts shown represent the unearned MSUs that would immediately be earned and vest upon the applicable triggering event, based on the Company’s closing stock price on September 30, 2022, of $412.01 and a relative total stockholder return performance of 0% in the adjusted performance period. The terms of the equity award provide for such acceleration upon a termination of employment for reasons other than Cause in connection with a change in control, and the terms of the equity award provides for such acceleration upon death or disability.(6) |
CEO PAY RATIO
CEO PAY RATIO As required by Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the median of the annual total compensation of all our employees and the annual total compensation of our Chief Executive Officer, William Lansing (our “CEO”). For fiscal 2022:
CEO PAY RATIO
| • | the median of the annual total compensation of all our employees, other than our CEO, was $89,641; |
CEO PAY RATIO
| • | the annual total compensation of our CEO was $18,913,781; and |
CEO PAY RATIO
| • | the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was 211 to 1. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules. |
CEO PAY RATIO
We identified the employee with compensation at the median of the annual total compensation of all our employees using the following methodology:
CEO PAY RATIO
| • | In determining our employee population, we considered the 3,418 individuals, excluding our CEO, who were employed by us and our consolidated subsidiaries on August 31, 2022, whether employed on a full-time, part-time, seasonal or temporary basis. We did not include any contractors or other non-employee workers in our employee population. |
CEO PAY RATIO
| • | To identify our median employee, we chose to use a consistently applied compensation measure, which we selected as annual base salary rate plus target annual bonus and actual sales incentive commissions paid and the grant-date fair value of long-term incentives granted for the 12-month period ending August 31, 2022. For simplicity with respect to part-time employees, we calculated annual base salary rate by multiplying the full-time equivalent annual base salary rate times a factor representing the percentage of full-time schedule regularly worked as of August 31, 2022 for part-time employees. |
CEO PAY RATIO
| • | For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using the applicable exchange rates in effect on August 31, 2022. |
CEO PAY RATIO
| • | For permanent employees hired during fiscal 2022, we annualized their salary or base pay as if they had been employed for the entire 12-month measurement period. We did not make any cost-of-living adjustment. |
CEO PAY RATIO
Using this methodology, we identified the individual at the median of our employee population, who was a Business Operations Lead Analyst based in Roseville, Minnesota. We then calculated the annual total compensation for this individual using the same methodology we used to calculate the amount reported for our CEO in the “Total” column of the Summary Compensation Table as set forth in this proxy statement. As disclosed in the Summary Compensation Table, the annual total compensation for fiscal 2022 for our CEO was $18,913,781. Because SEC rules for identifying the median of the annual total compensation of all employees allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their employee population and compensation practices, the pay ratio reported by other companies may not be comparable to our pay ratio, as other companies have different employee populations and compensation practices and may have used different methodologies, exclusions, estimates, and assumptions in calculating their pay ratios. As explained by the SEC when it adopted Item 402(u), the rule was not designed to facilitate comparisons of pay ratios among different companies, but rather to allow stockholders to better understand and assess each particular company’s compensation practices and pay ratio disclosures.