| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On June 5, 2023, the Leadership Development and Compensation Committee (the “Committee”) of the Board of Directors of Fair Isaac Corporation (the “Company”) made a special performance-based retention award to William J. Lansing, the Company’s Chief Executive Officer. The approximately $30 million award was granted 50% in the form of 19,576 target number of Market Share Units (“MSUs”) and 50% in the form of 52,082 non-qualified stock options (“Options”).
This award is intended to secure Mr. Lansing’s continued leadership during the next five years as the Company pursues its market-leading software platform and scores business strategies. Currently 65 years of age, Mr. Lansing has guided the Company through transformative growth since his appointment as CEO in 2012. As evidence of his leadership contributions, during Mr. Lansing’s tenure the Company has achieved cumulative TSR performance versus the Russell 3000 Index that places the Company in the 99th percentile. He has provided invaluable leadership to the Company in terms of business vision, strategic execution, and in attracting and engaging top talent. The Committee believes that retaining Mr. Lansing over at least the next five years is critical to continuing to advance the Company’s strategies and to provide senior leadership team continuity.
In light of these objectives, the Committee conducted an extensive benchmarking analysis based on market data, with the assistance of its independent compensation consultant. Following review and consideration of various factors, including relevant industry data, market competition and Mr. Lansing’s significant leadership contributions, the Committee determined that this special award would help serve its objectives and enhance the retention value of Mr. Lansing’s total compensation package.
The MSUs that are earned will be based on the Company’s total stockholder return relative to the Russell 3000 Index over performance periods of three years (Period 1), four years (Period 2) and five years (Period 3), with one-third (1/3) of the total target number of MSUs being subject to each performance period. Each of these performance periods is two years longer than the annual MSU awards historically granted to the Company’s executive officers, which are over performance periods of one, two and three years. Depending on performance, as few as zero and as many as 200% of the target number of MSUs granted to Mr. Lansing could be earned. Any earned MSUs during each performance period will vest on the relevant grant anniversary date immediately following the conclusion of each performance period (i.e., June 5th of 2026, 2027 and 2028).
The Options will vest and become exercisable as follows: (i) three-fifths (3/5) of the Options shall vest on the third anniversary of the grant date; (ii) one-fifth (1/5) of the Options shall vest on the fourth anniversary of the grant date; and (iii) the remaining one-fifth (1/5) of the Options shall vest on the fifth anniversary of the grant date. The Options have an exercise price of $791.60 per share, the closing price of the Company’s common stock on the grant date, and expire on June 4, 2030.
Any and all shares of common stock that Mr. Lansing receives upon settlement of any earned MSUs or as a result of his exercise of the Options, other than shares that are sold or withheld to pay the exercise price for the Options or to satisfy tax obligations, must be retained by Mr. Lansing until June 5, 2028.
The treatment of outstanding MSUs and Options upon Mr. Lansing’s death or disability, or in connection with a change in control of the Company, will be the same as for other awards of MSUs and Options granted to the Company’s executive officers, as previously disclosed. However, unlike other outstanding awards held by Mr. Lansing and other executive officers, if Mr. Lansing retires, such retirement will not entitle him to acceleration or continued vesting of these retention MSUs and Options.
