| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On November 8, 2023, Fair Isaac Corporation (the “Company”) announced that Stephanie Covert, the Company’s Executive Vice President, Software, is transitioning out of her role with the Company. In connection with her separation, Ms. Covert and the Company entered into a Letter Agreement, dated as of November 2, 2023 (the “Letter Agreement”), pursuant to which Ms. Covert resigned from her position as Executive Vice President, Software effective November 2, 2023, but will remain employed by the Company in a non-executive officer position as the Company’s Vice President, Software Technology through December 31, 2023 (the “Term”). The Letter Agreement replaces Ms. Covert’s existing letter agreement with the Company.
During the Term, Ms. Covert will receive a base salary at an annualized rate of $500,000. Ms. Covert will remain eligible to participate in the Company’s Management Incentive Plan (“MIP”) for fiscal year 2023, with her MIP award for fiscal year 2023 being $375,000, less applicable withholdings, subject to her continued employment through the date on which such MIP award is earned in accordance with the MIP. Ms. Covert will not be eligible to participate in the MIP for fiscal year 2024 or for any future fiscal year. Additionally, if Ms. Covert remains employed with the Company through December 10, 2023, then the number of restricted stock units (“RSUs”), market stock units (“MSUs”) and performance stock units (“PSUs”) previously granted to her and scheduled to vest on or prior to December 10, 2023 shall vest subject to the terms of the applicable plans and respective grant agreements under which such RSUs, MSUs and PSUs were granted.
The Letter Agreement provides that in the case of either (1) Ms. Covert’s voluntary resignation of employment for any reason prior to December 9, 2023, or (2) the termination of Ms. Covert’s employment as a result of the expiration of the Term, she will be entitled to the following pay and benefits: (A) a lump sum severance payment equal to three months of her final base salary, (B) outplacement services for six months provided by the Company’s preferred provider, and (C) continuation of certain benefits pursuant to COBRA for 12 months. Ms. Covert’s receipt of these retention pay and benefits is conditioned on her execution of a release of claims against the Company, her compliance with the terms of her proprietary information and inventions agreement, post-employment restrictions agreement and other agreements in effect between her and the Company, her cooperation in the transition of her duties, and the return of all Company property in her possession.
The Letter Agreement also provides that the Company’s standard Management Agreement between Ms. Covert and the Company remains in effect. The Management Agreement provides that if Ms. Covert’s employment is terminated by the Company without Cause or if she resigns for Good Reason within 60 days before or two years following a change of control Event that occurs during the term of the Management Agreement (each as defined in the Management Agreement), then she will be entitled to the following severance pay and benefits:(i) a cash payment in an amount equal to one times the sum of (a) her annual base salary in effect on the last day of her employment, plus (b) the annual cash incentive payment last paid to her before the termination of her employment, such cash payment to be made in a lump sum on the 70th day following her separation from service (subject to certain exceptions), (ii) continuation of certain benefits pursuant to COBRA for 12 months, and (iii) the vesting of her unvested stock options, RSUs and PSUs.
The foregoing description of the Letter Agreement is a summary only and is qualified by reference to the full text of the Letter Agreement attached to this Current Report on Form 8-K as Exhibit 10.1. The foregoing description of the Management Agreement is a summary only and is qualified by reference to the full text of the Form of Management Agreement and amendments thereto, incorporated by reference into this Current Report on Form 8-K as Exhibits 10.2, 10.3 and 10.4.
