fds20171027_def14a.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549


SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the Securities

Exchange Act of 1934 (Amendment No. )

 

Filed by the Registrant

 

Filed by a Party other than the Registrant

  

 

 

Check the appropriate box:

 

Preliminary Proxy Statement

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to §240.14a-12

 

 

FACTSET RESEARCH SYSTEMS INC.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

1.

Title of each class of securities to which transaction applies:

 

2.

Aggregate number of securities to which transaction applies:

 

3.

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

4.

Proposed maximum aggregate value of transaction:

 

5.

Total fee paid:

 

 

 

Fee paid previously with preliminary materials.

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

1.

Amount Previously Paid:

 

2.

Form, Schedule or Registration Statement No.:

 

3.

Filing Party:

 

4.

Date Filed:

 

 

 

 

 

 

 

 

 

 

October 30, 2017

 

 

 

Dear FactSet Stockholder:

 

         You are cordially invited to attend the 2017 Annual Meeting of Stockholders of FactSet Research Systems Inc., which will be held at our corporate headquarters at 601 Merritt 7, Norwalk, Connecticut 06851 on Tuesday, December 19, 2017, at 3:00 p.m. (Eastern Time). I look forward to seeing you at the meeting.

 

         Details of the business to be conducted at the Annual Meeting are given in the attached Notice of Annual Meeting and Proxy Statement. Your vote is important. Whether or not you plan to attend the meeting in person, you are requested to complete, sign, date and promptly return the enclosed proxy card in the envelope provided or through Internet voting. Your proxy will be voted at the Annual Meeting in accordance with your instructions. If you do not specify a choice on one of the proposals described in this proxy statement, your proxy will be voted as recommended by the Board of Directors. If you hold your shares through an account with a brokerage firm or other nominee or fiduciary such as a bank, please follow the instructions you receive from such brokerage firm or other nominee or fiduciary to vote your shares.

 

If you plan to attend the meeting in person, please respond affirmatively to the request by marking the box on the proxy card. You will be asked to present valid picture identification. No recordings or photography will not be permitted at the meeting.

 

         On behalf of the Board of Directors, I would like to express our appreciation for your continued support and loyalty.

 

Sincerely,

 

 

F. Philip Snow
Chief Executive Officer

 

 

 

 

FACTSET RESEARCH SYSTEMS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

 

December 19, 2017
3:00 p.m. Eastern Time

 

Dear Stockholder:

 

        The 2017 Annual Meeting of Stockholders of FactSet Research Systems Inc. (“FactSet” or the “Company”), a Delaware corporation, will be held at the Company’s corporate headquarters at 601 Merritt 7, Norwalk, Connecticut 06851, on Tuesday, December 19, 2017, at 3:00 p.m. (Eastern Time) for the following purposes:

 

 

1.

To elect three directors to the Board of Directors.

 

 

2.

To ratify the appointment of the accounting firm of Ernst & Young LLP as FactSet’s independent registered accounting firm for the fiscal year ending August 31, 2018.

 

 

3.

To approve, by non-binding vote, the compensation of the Company’s named executive officers.

 

 

4.

To approve the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated.

 

 

5.

To approve the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated.

 

 

6.

To approve the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated.

 

 

7.

To recommend, by non-binding vote, the frequency of executive compensation voting.

 

To act upon such other business as may properly come before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

These items are more fully described in the following pages, which are made part of this notice. Only stockholders of record at the close of business on October 25, 2017, are entitled notice of, and to vote at, this meeting.

 

The Company is pleased to take advantage of the Securities and Exchange Commission rules again this year that allow FactSet to furnish these proxy materials, including its Annual Report on Form 10-K, to stockholders on the Internet. The Company believes that posting these materials on the Internet expedites stockholders’ receipt of the information that they need, while lowering the costs of printing and delivery and reducing the environmental impact of its Annual Meeting. The Company mailed to its stockholders of record and beneficial owners the Notice of Internet Availability of Proxy Materials containing instructions on how to access these proxy materials, including FactSet’s Annual Report on Form 10-K, on the Internet, as well as how to vote by Internet and mail.

 

To request and receive a free paper copy of the Proxy materials, please call 1-866-641-4276 and follow the instructions to log in and order the materials by mail, or you may request a copy by email at investorvote@computershare.com with “Proxy Materials FactSet Research Systems Inc.” in the subject line, or by logging onto www.envisionreports.com/FDS and click “Cast Your Vote” or “Request Materials.” FactSet encourages you to record your vote via the Internet as it is convenient and saves on printing costs.

 

As a stockholder of FactSet, your vote is important. Whether or not you plan to attend the Annual Meeting in person, it is important that you vote as soon as possible to ensure that your shares are represented.

 

 BY ORDER OF THE BOARD OF DIRECTORS

 

Rachel R. Stern

Senior Vice President, General Counsel and Secretary

Norwalk, Connecticut

October 30, 2017

 

 

 

 

TABLE OF CONTENTS

 

 

Page

Annual Meeting Overview

1

Voting Information

2

Corporate Governance

 

Board Leadership Structure

6

Business Experience and Qualifications of Board Members

7

Director Independence

10

Legal Proceedings

10

Board Responsibilities, Meetings and Committees

11

Additional Corporate Governance Information

12

Director Compensation Program

13

Director Summary Compensation Table

14

Director Nominations

14

Proposal 1: Election of Directors

16

Audit Committee Report

17

Proposal 2: Ratification of Independent Registered Public Accounting Firm

18

Independent Registered Public Accounting Firm’s Fees and Services

18

Executive Compensation

 

Executive Officers

19

Compensation Discussion and Analysis

20

Compensation and Talent Committee Report

27

Summary Compensation Table

28

Grants of Plan-Based Awards

29

Outstanding Equity Awards (Restricted Stock) at Fiscal Year-End

30

Outstanding Equity Awards (Stock Options) at Fiscal Year-End

31

Option Exercises and Stock Vested

32

Nonqualified Deferred Compensation

32

Pension Benefits

32

Potential Payments upon Termination or Change in Control

32

Proposal 3: Advisory Vote on Executive Compensation

34

Proposal 4: Approve the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated

35

Proposal 5: Approve the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated

44

Proposal 6: Approve the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated

48

Proposal 7: Determine Frequency of Advisory Vote on Executive Compensation

51

Security Ownership of Certain Beneficial Owners and Management

52

Equity Compensation Plan Information

54

Certain Relationships and Related Transactions

54

Other Matters

55

Appendix

 

Appendix A: FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated

56

Appendix B: FactSet Research Systems Inc. Non-Employee Directors’ Stock Option And Award Plan, as Amended and Restated

75

Appendix C: FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated

81

 

 

 

 

 

 

FACTSET RESEARCH SYSTEMS INC.
601 Merritt 7
Norwalk, Connecticut 06851

 

 

PROXY STATEMENT FOR THE 2017 ANNUAL MEETING

 

 

Annual Meeting Overview

 

Purpose of Meeting

 

The Board of Directors of FactSet Research Systems Inc. (“FactSet” or the “Company”) delivers this Proxy Statement and voting instructions in connection with the solicitation of proxies, which will be voted at the Annual Meeting of Stockholders of FactSet (the “Meeting”). The Meeting will be held at 3:00 p.m. (Eastern Time) on Tuesday, December 19, 2017, at 601 Merritt 7 Norwalk, Connecticut 06851, and any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”). The Proxy Statement was made available to FactSet’s stockholders on October 30, 2017. The specific proposals to be considered and acted upon at the Meeting are summarized in the accompanying Notice. Each proposal is described in more detail in this Proxy Statement.

 

Record Date and Share Ownership

 

The only outstanding voting security of FactSet is its common stock, $0.01 par value per share. Stockholders of record at the close of business on October 25, 2017, will be entitled to vote at the Meeting on the basis of one vote for each share of FactSet common stock held. On October 25, 2017, there were 39,109,746 shares of FactSet common stock outstanding.

 

Submitting and Revoking Your Proxy

 

If you complete and submit your proxy, the persons named as proxies will follow your instructions. If you submit a proxy card but do not fill out the voting instructions on the proxy card, the persons named as proxies will vote your shares as follows:

 

 

1.

To elect three directors to the Board of Directors.

 

 

2.

To ratify the appointment of the accounting firm of Ernst & Young LLP as FactSet’s independent registered accounting firm for the fiscal year ending August 31, 2018.

 

 

3.

To approve, by non-binding vote, the compensation of the Company’s named executive officers.

 

 

4.

To approve the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated.

 

 

5.

To approve the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated.

 

 

6.

To approve the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated.

 

 

7.

To recommend an annual vote on executive compensation.

 

In addition, if other matters are properly presented for voting at the Meeting, the persons named as proxies will vote on such matters in accordance with their best judgment. FactSet has not received notice of other matters that may be properly presented for vote at the Meeting. Your stockholder vote is important. Stockholders of record may vote their proxies by Internet, telephone or mail. Stockholders who execute proxies may revoke them at any time before they are exercised by written notice to the Secretary of the Company at or prior to the Meeting by timely delivery of a valid, later-dated proxy or by voting by ballot at the Meeting. The cost of the solicitation of proxies will be borne by FactSet.

 

1

 

 

Expenses of Solicitation

 

FactSet will bear the entire cost of preparing, printing and mailing this Notice and Proxy Statement, the enclosed proxy card, the Company’s 2017 Annual Report on Form 10-K (the “Annual Report”) and any additional solicitation material that FactSet may provide to stockholders which is estimated to be approximately $175,000. The solicitation of proxies will be conducted primarily by mail, but may also include Internet telephone, facsimile or oral communications by directors, officers or regular employees of the Company acting without special compensation. If you hold your shares through a bank, broker or other holder of record and share a single address and same last name with another stockholder, you may have received notice that only one Proxy Statement and Annual Report will be sent to your address unless you instructed the holder of record to the contrary. This practice, known as “householding”, reduces multiple mailings to your household and also reduces the Company’s printing and postage costs. If you have any questions or wish to receive additional copies of FactSet’s 2017 Proxy Statement or Annual Report, please contact the Company’s Investor Relations Department at 1-203-810-1000. The mailing address is 601 Merritt 7, Norwalk, Connecticut 06851 and its website address is http://investor.factset.com.

 

Availability of FactSet’s Fiscal 2017 Annual Report on Form 10-K

 

FactSet will mail, upon written request and without charge, a copy of the Annual Report, including the consolidated financial statements, schedule and list of exhibits. Requests should be sent to: FactSet Research Systems Inc., 601 Merritt 7, Norwalk, Connecticut 06851, Attn: Investor Relations. The Company’s Annual Report is also available at http://investor.factset.com.

 

 

Voting Information

 

Why am I receiving these proxy materials?

The Board of Directors of the Company (the “Board”) is asking for your proxy for use at the Meeting, to be held at its corporate headquarters at 601 Merritt 7 Norwalk, Connecticut 06851 on Tuesday, December 19, 2017 at 3:00 p.m. (Eastern Time), and at any adjournment or postponement of the Meeting. As a stockholder, you are invited to attend the Meeting and are entitled to and requested to vote on the items of business described in this Proxy Statement.

 

What is a proxy? 

A proxy is another person you authorize to vote on your behalf. FactSet asks stockholders to instruct the proxy how to vote so that all common shares may be voted at the Meeting even if the holders do not attend the Meeting.

 

Who is soliciting my vote? 

The Board of Directors of the Company is soliciting your vote.

 

When were the enclosed solicitation materials first given to stockholders? 

FactSet initially mailed to stockholders of the Company the Proxy Statement, proxy card and Notice on November 3, 2017.

 

What is the purpose of the Meeting?

The Meeting will be held for the following purposes:

 

 

To elect three directors to the Board of Directors;

 

 

To ratify the appointment of the accounting firm of Ernst & Young LLP as FactSet’s independent registered public accounting firm for the fiscal year ending August 31, 2018;

 

 

To vote on a non-binding advisory resolution to approve the compensation of the Company’s named executive officers;

 

 

To approve the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated;

 

 

To approve the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated;

 

 

To approve the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated;

 

 

To conduct an advisory vote on the frequency of executive compensation votes in the future; and

 

 

To act upon such other business as may properly come before the Meeting or any adjournment or postponement of the Meeting.

 

2

 

 

What are the Board of Director’s recommendations?

FactSet’s Board of Directors recommends that you vote:

 

 

FOR the election of each director nominee named in this Proxy Statement (Proposal 1);

 

 

FOR the ratification of the appointment of Ernst & Young LLP as FactSet’s independent registered accounting firm for the fiscal year ending August 31, 2018 (Proposal 2);

 

 

FOR the approval of the compensation awarded to the Company’s named executive officers (Proposal 3);

 

 

FOR the approval of the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (Proposal 4);

 

 

FOR the approval of the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (Proposal 5);

 

 

FOR the approval of the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (Proposal 6);

 

 

Every 1 YEAR for the frequency of the stockholder advisory vote regarding executive compensation (Proposal 7).

 

How do I vote? 

For stockholders whose shares are registered in their own names, as an alternative to voting in person at the Meeting, you may vote via the Internet, by telephone, or for those stockholders who receive a paper proxy card in the mail, by mailing a completed proxy card. For those stockholders who receive a Notice of Internet Availability of Proxy Materials, it provides information on how to access your proxy card, which contains instructions on how to vote via the Internet or by telephone. For those stockholders who receive a paper proxy card, instructions for voting via the Internet or by telephone are set forth on the proxy card. Those stockholders who receive a paper proxy card and voting instructions by mail, and who elect to vote by mail, should sign and return the mailed proxy card in the prepaid and addressed envelope that was enclosed with the proxy materials, and your shares will be voted at the Meeting in the manner you direct. If your proxy card is properly completed and received, and if it is not revoked, before the Meeting, your shares will be voted at the Meeting according to the instructions indicated on your proxy card. In the event that you return a signed proxy card on which no directions are specified, your shares will be voted FOR the election of each of the director nominees listed (Proposal 1), FOR the ratification of Ernst & Young LLP as FactSet’s independent registered public accounting firm for the fiscal year ending August 31, 2018 (Proposal 2), FOR the approval of the fiscal 2018 compensation awarded to the Company’s named executive officers (Proposal 3), FOR the approval of the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated (Proposal 4), FOR the approval of the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (Proposal 5), FOR the approval of the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated (Proposal 6), and FOR an ANNUAL advisory vote to approve executive compensation (Proposal 7). To the Company’s knowledge, no other matters will be presented at the Meeting. However, if any other matters of business are properly presented, the proxy holders named on the proxy card are authorized to vote the shares represented by proxies according to their judgment.

 

If your shares are held in a brokerage account, you should receive instructions from your record holder that must be followed in order for your record holder to vote your shares per your instructions. Many banks and brokerage firms have a process for their beneficial holders to provide instructions via the Internet or over the telephone. If Internet or telephone voting is unavailable from your bank or brokerage firm, please complete and return the enclosed voting instruction card. If you are the beneficial owner of shares held in “street name” and you do not give instructions as to how to vote, your broker may have authority to vote your shares on certain discretionary items, but not other, non-discretionary items, as determined by the New York Stock Exchange (“NYSE”). Proposal 1 (election of directors), Proposal 3 (approval of compensation), Proposal 4 (approval of the Amended Stock Option and Award Plan), Proposal 5 (approval of the Amended Non-Employee Directors’ Stock Option and Award Plan), Proposal 6 (approval of Employee Stock Purchase Plan), and Proposal 7 (approval of annual advisory vote on executive compensation) are considered non-discretionary items and thus brokers are not permitted to vote your shares in these matters unless you provide instructions to your broker on how to vote your shares. In other words, if you have not given your broker voting instructions, your broker will not be able to vote your shares with respect to any matter other than ratification of the appointment of Proposal 2 (FactSet’s independent registered public accounting firm).

 

3

 

 

How many votes does it take to pass each matter? 

If a quorum is present at the meeting, the approval of each proposal requires the number of votes described below:

 

Under FactSet’s amended by-laws, the nominees for election as directors of the Company are elected by majority vote, meaning that in an uncontested director election when the number of votes cast “for” a director exceeds the number of votes cast “against” that director, the nominee will be elected as a director. If a director does not receive a majority vote in an uncontested election, the director shall not be elected and shall submit his or her offer of resignation for consideration by the Nominating and Corporate Governance Committee within 90 days from the date of the election. That committee will then consider all of the relevant facts and circumstances and recommend to the Board the action to be taken with respect to such offer of resignation and in determining whether to accept such offer. An incumbent director who does not receive a majority vote will continue to serve as a director until the earlier of 1) a period of 90 days from the date of the election, 2) the date upon which the Board of Directors appoints an individual to fill the office held by that director, or 3) the date of that director’s resignation.

 

The ratification of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ended August 31, 2018, requires that a majority of the votes cast at the Meeting (either in person or by proxy) be voted “for” this proposal.

 

The approval of a resolution approving the compensation of FactSet’s named executive officers as disclosed in this Proxy Statement is an advisory vote; however, the Company values the opinions of its stockholders and will take into account the outcome of this vote in considering future compensation arrangements.

 

The approval of the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated, requires that a majority of the votes cast at the Meeting (either in person or by proxy) be voted “for” this proposal.

 

The approval of the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated, requires that a majority of the votes cast at the Meeting (either in person or by proxy) be voted “for” this proposal.

 

The approval of the FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated, requires that a majority of the votes cast at the Meeting (either in person or by proxy) be voted “for” this proposal.

 

The determination of how often a resolution to approve executive officer compensation will be submitted to an advisory vote of stockholders will be determined by a majority of the votes cast at the meeting, except that if no option receives a majority of the votes cast at the meeting, FactSet will consider the option that receives the most votes as the option selected by stockholders.

 

Who is entitled to vote at the Meeting and how many votes do they have? 

Only holders of record of FactSet common stock at the close of business on October 25, 2017, will be entitled to vote at the Meeting. Each share has one vote.

 

Who can attend the Meeting? 

All stockholders as of October 25, 2017, or their duly appointed proxies, may attend the Meeting. In order to be admitted to the Meeting, a stockholder must own Company stock on the Record Date. If your shares are held in the name of a broker, bank, custodian, nominee or other record holder (“street name”), you must obtain a proxy, executed in your favor, from the holder of record (that is, your broker, bank, custodian, or nominee) to be able to vote at the Meeting.

 

What is a quorum of stockholders? 

If a majority of the shares outstanding and entitled to vote on the Record Date are present, either in person or by proxy, the Company will have a quorum at the Meeting. Any shares represented by proxies that are marked for, against, withhold, or abstain from voting on a proposal will be counted as present in determining whether there is a quorum. If a broker, bank, custodian, nominee, or other record holder of the Company’s common stock indicates on a proxy card that it does not have discretionary authority to vote certain shares on a particular matter, and if it has not received instructions from the beneficial owners of such shares as to how to vote on such matters, the shares held by that record holder will not be voted on such matter (referred to as “broker non-votes”) but will be counted as present for purposes of determining whether there is a quorum. Since there were 39,109,746 shares of common stock outstanding on October 25, 2017, the presence of holders of 19,554,874 shares is a quorum. FactSet must have a quorum to conduct the Meeting.

 

Vote Tabulation

The appointed inspector of elections from Computershare will tabulate votes cast by proxy or in person at the Meeting. If you abstain from voting on any or all proposals you will be included in the number of stockholders present at the Meeting for the purposes of determining the presence of a quorum.

 

4

 

 

What are broker non-votes?

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute broker non-votes. Broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as non-discretionary matters.

 

How are abstentions and broker non-votes treated? 

Abstentions and broker non-votes count for purposes of determining the presence of a quorum. Abstentions and broker non-votes have no effect on the determination of whether a nominee or any of the proposals have received the vote of a majority of the shares of common stock present or represented by proxy and voting at the Meeting. However, abstentions and broker non-votes could prevent the approval of a proposal where the number of affirmative votes, though a majority of the votes represented and cast, does not constitute a majority of the required quorum.

 

What does it mean if I receive more than one proxy card or instruction form? 

If you receive more than one proxy card or instruction form, it means that you have multiple accounts with FactSet’s transfer agent and/or a broker or other nominee or fiduciary or you may hold your shares in different ways or in multiple names (e.g., joint tenancy, trusts, and custodial accounts). Please vote all of your shares.

 

How do I revoke my proxy and change my vote prior to the Meeting?

If you submit the enclosed proxy card, you may change your vote at any time before voting takes place at the Meeting. You may change your vote in one of four ways: (1) You may deliver to the Secretary of FactSet Research Systems Inc., Rachel R. Stern, 601 Merritt 7, Norwalk, Connecticut 06851, a written notice dated later than the proxy you want to revoke, stating that the proxy is revoked, (2) you may complete and send in another proxy card or voting instruction form with a later date, (3) you may attend the Meeting and vote in person, or (4) for shares you hold beneficially or in street name, you may change your vote by submitting a later dated voting instruction form to your broker or other nominee or fiduciary, or if you obtained a legal proxy form giving you the right to vote your shares, by attending the Meeting and voting in person.

 

Why did I receive a one-page notice in the mail regarding the Internet availability of proxy materials instead of a full set of printed proxy materials?

Pursuant to the notice and access rules adopted by the Securities and Exchange Commission (“SEC”), the Company is making this Proxy Statement and its Annual Report available to its stockholders over the Internet. As a result, unless you have previously requested electronic access to FactSet’s proxy materials or the receipt of paper proxy materials, you will receive a Notice of Internet Availability of Proxy Materials containing instructions on how to access this Proxy Statement and Annual Report over the Internet, how to request a printed or e-mail copy of these materials and how to vote by Internet and mail. The Company will mail the Notice of Internet Availability of Proxy Materials on or about November 3, 2017. The Notice of Internet Availability of Proxy Materials is not a proxy card and cannot be used to vote your shares. In addition, if you are voting online, you will be prompted to consent to receiving proxy materials electronically in future years. Choosing to receive your future proxy materials electronically will save the Company the cost of printing and mailing documents to you and will reduce the impact of its annual meetings on the environment. If you choose to receive future proxy materials electronically, you will receive an e-mail next year with instructions containing a link to those materials and a link to the proxy voting site. Your election to receive proxy materials electronically will remain in effect until you terminate it.

 

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

Most FactSet stockholders hold their shares as a beneficial owner through a broker or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

 

Stockholder of Record - If your shares are registered directly in your name with the Company’s transfer agent, Computershare Shareowner Services, you are considered, with respect to those shares, the stockholder of record, and the Notice was sent directly to you by FactSet. As the stockholder of record, you have the right to grant your voting proxy directly to FactSet or to vote in person at the Meeting. If you requested to receive printed proxy materials, FactSet has enclosed or sent a proxy card for you to use. You may also vote on the Internet or by telephone.

 

Beneficial Owner - If your shares are held in an account at a brokerage firm, bank, broker-dealer, trust, or other similar organization, like the vast majority of the Company’s stockholders, you are considered the beneficial owner of shares held in street name, and the Notice was forwarded to you by that organization. As the beneficial owner, you have the right to direct your broker, bank, trustee, or nominee how to vote your shares, and you are also invited to attend the Meeting. Since a beneficial owner is not the stockholder of record, you may not vote your shares in person unless you obtain a “legal proxy” from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares at the Meeting.

 

5

 

 

CORPORATE GOVERNANCE

 

Board Leadership Structure

 

The Board believes that the Company’s stockholders are best served if the Board retains the flexibility to adapt its leadership structure to applicable facts and circumstances, which necessarily change over time. Accordingly, the Company’s Corporate Governance Principles provide that the Board may combine or separate the roles of the Chairman of the Board of Directors (“Chairman”) and Chief Executive Officer (“CEO”), as it deems advisable. Philip A. Hadley has served as Chairman since his unanimous appointment on September 5, 2000. Mr. Hadley stepped down from his role as CEO of FactSet on July 1, 2015 but continues to be an employee of the Company. The Company’s current certificate of incorporation and by-laws provide that the Chairman may be an employee or officer of FactSet.

 

F. Philip Snow assumed the role of CEO on July 1, 2015, having been an employee of FactSet since 1996. The Board believes Mr. Snow’s leadership acumen combines a deep knowledge of FactSet clients, a commitment to its employees and a vision for the Company’s continued growth. The Board has determined that this leadership structure, under which the roles of Chairman and CEO are separate, is currently in the best interest of the Company’s stockholders. This structure permits Mr. Snow to focus on the management of the Company’s day-to-day operations, while continuing to benefit from the knowledge and experience of Mr. Hadley. Meanwhile, Mr. Hadley, as Chairman, focuses on developing agendas that ensure that the Board’s time and attention are focused on the most critical matters.

 

Director Independence

Each of the directors other than Mr. Hadley and Mr. Snow, are independent (see “Director Independence”), and the Board believes that the independent directors provide effective oversight of management. To support this, the Board appointed James J. McGonigle as the Company’s Lead Independent Director. Mr. McGonigle has served in this position since September 2005. As Lead Independent Director, Mr. McGonigle’s responsibilities include:

 

 

Coordinating and moderating executive sessions of the Board’s independent directors.

 

 

Advising the Chairman as to the quality, quantity and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties.

 

 

Holding regular update sessions with both the CEO and the Chairman.

 

 

Acting as the principal liaison between the independent directors and the Chairman on sensitive issues.

 

 

Performing such other duties as the Board may from time to time delegate to the Lead Independent Director to assist the Board in the fulfillment of its responsibilities.

 

The Board believes that these responsibilities appropriately and effectively complement FactSet’s current Chairman and CEO structure.

 

6

 

 

Business Experience and Qualifications of Board Members

 

The following discussion presents information about the persons who comprise FactSet’s Board of Directors, including the three nominees for election.

 

Robin A. Abrams  
   

Committees:  

Nominating and Corporate Governance Committee (Member)

 

Audit Committee (Member)

   

Term:

Nominated for a three-year term, which would expire in concurrence with the Annual Meeting of Stockholders in 2020 

   

Director Since

2011

 

Ms. Abrams, age 66, is a financial consultant who currently serves as a member of the Board of Directors of: HCL Technologies Ltd., a global offshore IT and software development company; Sierra Wireless, Inc., a leader in the design and delivery of customized connected lifestyle devices and services; and Lattice Semiconductor Corporation, a global leader in smart connectivity solutions. She also serves on the Board of Directors of the privately held company Zephyr Sleep Technologies of Canada, a developer of sleep technology. In addition, Ms. Abrams serves on the board of trustees for the Anita Borg Institute for Women and Technology. From August 2006 to January 2007, Ms. Abrams served as Interim CEO of ZILOG, Inc., a provider of integrated microcontroller products, where she also served as a director from 2004 to 2010. From July 2004 to July 2006, she served as CEO of Firefly Communications, Inc., a company with a range of mobile products that address the youth market. She received her B.A. in political science and history and her J.D. from the University of Nebraska.

 

Ms. Abrams brings to the Board a wealth of experience at technology companies, which FactSet seeks to leverage to enhance its own development processes. She has seen how several highly successful technology companies stay ahead of their competition through properly planning their product development strategy. Her previous experiences as an executive officer at several technology companies makes Ms. Abrams an important resource for the Board as it assesses financial and strategic decisions.

 

Scott A. Billeadeau

 
   

Committees:

Audit Committee (Chair)

   

Term: 

Current term expires in concurrence with the Annual Meeting of Stockholders in 2018

   

Director Since:

2001

 

Mr. Billeadeau, age 56, is Partner and Senior Portfolio Manager of Walrus Partners LLC, and a co-portfolio manager of the firm’s Micro-cap strategy. Mr. Billeadeau was a Managing Director of Small-cap and Mid-cap Growth Strategies at Fifth Third Asset Management (“Fifth Third”). Prior to working at Fifth Third, he was a Principal, Founder and Senior Portfolio Manager with Paladin Investment Associates, LLC (“Paladin”) between March 2003 and October 2012, where he spent eight years managing over $2 billion in small-cap and mid-cap assets for Bank of America and Nations Bank. Mr. Billeadeau received a B.A. in Economics from Princeton University and has earned the right to use the Chartered Financial Analyst designation and is a member of the CFA Institute.

 

Mr. Billeadeau provides to the Board expertise in corporate finance, accounting and strategy, including experience gained as a Managing Director of Fifth Third, a public company, and Paladin. Through this experience, he has developed expertise in several valued areas including strategic development, business development and finance. Mr. Billeadeau also brings a background in organizational leadership and management, and experience serving as a director for privately held companies. His involvement in the financial industry has provided him experience as an outside board member and audit committee member. Mr. Billeadeau serves as the Financial Expert of the Audit Committee.

 

7

 

 

Malcolm Frank

 
   

Committees:

Compensation and Talent Committee (Member)

   

Term:

Nominated for a three-year term, which would expire in concurrence with the Annual Meeting of Stockholders in 2020

   

Director Since:

2016

 

Mr. Frank, age 51, currently serves as Executive Vice President, Chief Strategy Officer and Chief Marketing Officer. Cognizant Technology Solutions Corp. (“Cognizant”), a provider of custom information technology, consulting and business process outsourcing services. Prior to joining Cognizant in 2005, he was co-founder, President and CEO of CXO systems, an independent software vendor providing dashboard solutions for senior managers. In addition, he was the founder, President, CEO and chairman of Nervewire Inc., a leading management consulting and systems integration firm. Prior to founding Nervewire, Mr. Frank was a co-founder, executive officer and SVP at Cambridge Technology Partners, where he ran Worldwide Marketing, Business Development and several business units. Mr. Frank is a graduate of Yale University with a degree in Economics.

 

Mr. Frank provides to the Board more than two decades of experience in the information technology industry as well as expertise in corporate strategy and marketing. Mr. Frank is a recognized industry thought leader and is a frequent speaker on key issues of IT management. He has been profiled by Forbes magazine and ABC’s 20/20 and is the subject of a Harvard Business School case study on Leadership and Management.

 

Philip A. Hadley

 
   

Committees: 

Chairman of the Board of Directors

   

Term:  

Current term expires in concurrence with the Annual Meeting of Stockholders in 2018

   

Director Since:

2000

 

Mr. Hadley, age 55, served as FactSet’s CEO from 2000 until stepping down on July 1, 2015. He remains an employee of the Company, serving in a senior advisory role to management. He joined FactSet in 1985 as a consultant and was the Company’s Vice President, Sales from 1986 to 1989, and Senior Vice President and Director of Sales and Marketing from 1989 to 2000. Prior to joining the Company, Mr. Hadley was employed by Cargill Corporation. He currently serves as a member of the board of advisors of Kum & Go and RS Energy Group. Mr. Hadley received a B.B.A. in Accounting from the University of Iowa, has earned the right to use the Chartered Financial Analyst designation and is a member of the CFA Institute.

 

As Chairman and former CEO, Mr. Hadley brings to the Board his thorough knowledge of FactSet’s business, strategy, people, operations, competition and financial position. He provides recognized executive leadership and vision. In addition, Mr. Hadley brings with him a global network of client and industry relationships.

 

Sheila B. Jordan

 
   

Committees:

Audit Committee (Member)

   

Term:

Current term expires in concurrence with the Annual Meeting of Stockholders in 2019

   

Director Since:

2016

 

Ms. Jordan, age 53, currently serves as Senior Vice President, Chief Information Officer at Symantec Corporation (“Symantec”), a global leader in cybersecurity. Ms. Jordan has served in this role since February 2014 and is responsible for driving Symantec's information technology strategy and operations with a focus on building and supporting the global information technology effort. She serves as global executive sponsor for the Symantec Women’s Action Network, a networking forum to help support and encourage female employees to achieve their potential. Prior to joining Symantec, Ms. Jordan spent nine years at Cisco Systems Inc., where she served as Senior Vice President of IT, Communication and Collaboration. Previously, Ms. Jordan held leadership roles at Grand Circle Corporation, as Chief Information Officer and Executive Vice President, and at The Walt Disney Company, where she was a Senior Vice President for Destination Disney and Vice President of Marketing and Sales Finance. Ms. Jordan currently serves as a director for NextSpace, a provider of innovative physical and virtual infrastructure for entrepreneurs, and sits on the CIO Advisory Board for SnapLogic. She received her Bachelor’s degree from the University of Central Florida and an M.B.A. from the Florida Institute of Technology.

 

8

 

 

Ms. Jordan brings to the Board extensive expertise in strategy, information technology and driving enterprise collaboration across multiple channels including various mobile platforms. She is a frequent speaker about collaboration, mobility, Bring Your Own Device (BYOD) issues and women's leadership.

 

James J. McGonigle

 
   

Committees:

Nominating and Corporate Governance Committee (Chair)

 

Compensation and Talent Committee (Member)

   

Term:

Current term expires in concurrence with the Annual Meeting of Stockholders in 2019

   

Director Since:

2002

 

Mr. McGonigle, age 54, currently serves as an adjunct professor at Georgetown University and Escuela Superior de Administración y Dirección de Empresas (ESADE) in Barcelona, Spain. He is the former Chairman and CEO of The Corporate Executive Board Company (“CEB”). During his tenure at CEB he held a variety of positions including: special advisor to the Board of Directors from July 2007 until April 2009; Director and Chairman of the Board from July 2005 until July 2007; CEO from July 1998 until July 2005; and General Manager from October 1997 until July 1998. From 1995 until October 1997 Mr. McGonigle was the General Manager of the corporate division of The Advisory Board Company. Mr. McGonigle received a B.A. from the Woodrow Wilson School at Princeton University and a J.D. from Harvard Law School. On September 19, 2005, he was named the Lead Independent Director of the Board.

 

Mr. McGonigle brings to the Board leadership experience, including service as the CEO of a public company for over seven years. This role required industry knowledge combined with operational and management expertise. In addition, Mr. McGonigle brings to the Board market and corporate governance insights from his experience as an outside public company board member.

 

Laurie Siegel

 

 

 

Committees:

Compensation and Talent Committee (Chair)

   

Term:

Nominated for a three-year term, which would expire in concurrence with the Annual Meeting of Stockholders in 2020

   

Director Since:

2015

 

Ms. Siegel, age 61, is the President of LAS Advisory Services with a background in business and human resources consulting. She currently serves as a member of the Board of Directors of CenturyLink, Inc. (“CenturyLink”), a global broadband telecommunications and data hosting company, and of Volt Information Sciences, Inc. (“Volt”), a provider of global infrastructure solutions in technology, information services and staffing acquisition. In addition, she serves as a member of the Board of Directors of Junior Achievement of New Jersey and the Morristown Festival of Books. She retired in September 2012 from Tyco International Ltd., a diversified manufacturing and service company, where she had served as Senior Vice President of Human Resources and Internal Communications since 2003. From 1994 to 2002, she held various positions with Honeywell International Inc., including Vice President of Human Resources – Specialty Materials. Ms. Siegel currently serves as an advisor to the G100 Network and teaches at the Ross School of Business at the University of Michigan and the Cornell School of Industrial and Labor Relations. Ms. Siegel received an M.B.A. and a Master’s degree in City and Regional Planning, both from Harvard University. She completed her Bachelor’s degree at the University of Michigan.

 

Ms. Siegel’s key qualifications, experiences and skills include executive experience with multi-national companies, as well as human resources and executive compensation expertise. She serves as the Compensation Chair of both the CenturyLink and Volt boards. She also serves as a member of the Nominating/Corporate Governance Committee of the Volt board. Ms. Siegel brings to FactSet’s Board substantial experience as a human resources executive with large global enterprises as well as substantial public company board experience.

 

9

 

 

F. Philip Snow

 
   

Committees:

Chief Executive Officer

   

Term:

Current term expires in concurrence with the Annual Meeting of Stockholders in 2019

   

Director Since:

2015

 

Mr. Snow, age 53, was named CEO of FactSet on July 1, 2015, having served as President since July 1, 2014. Mr. Snow joined FactSet in 1996 as a Consultant before moving to the Asia Pacific region to hold positions in the Tokyo and Sydney offices. Following his move back to the U.S. in 2000, Mr. Snow held various sales leadership roles prior to assuming the role of Senior Vice President, Director of U.S. Investment Management Sales in 2013. Mr. Snow received a B.A. in Chemistry from the University of California at Berkeley and a Masters of International Management from the Thunderbird School of Global Management. He has earned the right to use the Chartered Financial Analyst designation.

 

Joseph R. Zimmel

 
   

Committees:

Audit Committee (Member)

 

Nominating and Corporate Governance Committee (Member)

   

Term:

Current term expires in concurrence with the Annual Meeting of Stockholders in 2018

   

Director Since:

2007

 

Mr. Zimmel, age 64, is a financial consultant and retired Managing Director of Goldman, Sachs & Co. From December 2001 until November 2002, Mr. Zimmel served as an Advisory Director to the Goldman Sachs Group. In the investment banking division at Goldman, Sachs & Co., Mr. Zimmel held the position of Managing Director of the Communications, Media & Entertainment Group for the Americas from 1999 to 2001, after acting as a Managing Director and a co-head of the group from 1992 to 1999. In addition to his appointment to FactSet’s Board, Mr. Zimmel serves a director for several privately held companies.

 

Mr. Zimmel’s background in finance and advisory roles is complemented by his knowledge of FactSet and its industry. His contributions are augmented by his experience serving as an outside director of a public company and multiple private companies. In addition, Mr. Zimmel’s employment at Goldman, Sachs & Co., including service in senior leadership positions, brings a valued perspective to the Board and to the Audit Committee.

 

Director Independence

 

Mr. McGonigle serves as the Lead Independent Director and Chair of the Nominating and Corporate Governance Committee. He presides over executive sessions of the non-management directors. The independent directors, who constitute seven of the nine members, and a majority of the directors of the Company, meet at least four times annually after the end of each scheduled quarterly meeting of the Board. On October 24, 2017, the Company’s Board reviewed the independence of its directors under the applicable standards of the NYSE and the NASDAQ Stock Market (“NASDAQ”). Each director, other than Messrs. Hadley and Snow, qualifies as “independent” in accordance with those published listing requirements. In determining that each individual who served as a member of the Board in fiscal 2017 (other than Messrs. Hadley and Snow) is or was independent, the Board considered that, in the ordinary course of business, transactions may occur between the Company and entities with which some of FactSet’s directors are affiliated. The Board unanimously determined that the relationships discussed were not material. No unusual discounts or terms have been extended.

 

Legal Proceedings

 

Over the past ten years, no director or nominee has been involved in:

 

 

Legal proceedings, such as SEC securities fraud enforcement actions against any director or nominee;

 

10

 

 

 

Judicial or administrative proceedings resulting from involvement in mail or wire fraud or fraud in connection with any business activity;

 

 

Judicial or administrative proceedings based on violations of federal or state securities, commodities, banking or insurance laws and regulations, or any settlement to such actions; and

 

 

Disciplinary sanctions or orders imposed by a stock, commodities, or exchange or other self-regulatory organization.

 

Board Responsibilities

 

The Board has adopted corporate governance guidelines which help govern the Company. You can access these corporate governance guidelines, along with each of its Board Committee charters, at the Corporate Governance Highlights page of the Investor Relations section of the Company’s website at http://investor.factset.com or request a free copy by contacting Investor Relations at FactSet Research Systems Inc., 601 Merritt 7, Norwalk, Connecticut 06851. Directors owe a duty of care to the Company and must act on an informed basis, in good faith and in the honest belief that the action they take is in the best interests of FactSet. Directors are expected to attend all Board meetings and participate actively, offering their candid views and their well-informed, deliberate judgment. Directors should inform themselves using all material information reasonably available to them prior to making a business decision. Whenever a director is unable to attend a meeting, he or she should contact the Chairman or Secretary promptly after the meeting to become informed on the subjects discussed, views expressed and actions taken, if any. Directors should have a full understanding of the Company’s business and the issues relevant to it. Directors are expected to be prepared to discuss matters listed on the agenda for each meeting, should review materials sent in advance of such meetings and, when appropriate, ask questions of management. The Company does not have a policy with regard to directors’ attendance at annual stockholder meetings, but FactSet does expect each director to attend all Board meetings. The Board met seven times during fiscal 2017, four of which were regularly scheduled quarterly meetings.

 

Board Meetings

 

The Board is comprised of nine members, seven of whom are independent directors. The Company’s Board of Directors has the following three standing committees: (1) an Audit Committee, (2) a Compensation and Talent Committee and (3) a Nominating and Corporate Governance Committee. Each of the committees operates under a written charter adopted by the Board. All the committee charters are available on FactSet’s website at http://investor.factset.com. The Board delegates various responsibilities and authority to different Board Committees. Committees regularly report on their activities and actions to the full Board. All directors attended (in person or telephonically) over 95% of the meetings of the full Board during fiscal 2017. All directors who served on committees of the Board attended over 75% of the meetings of the committees on which they served during fiscal 2017.

 

Board Committees

 

The following table identifies the committee members as of October 30, 2017:

 

 

Committee Name

Independent Directors

Audit

 

Compensation

 

Nominating and Corporate

      and Talent   Governance

Robin A. Abrams

Member

     

Member

Scott A. Billeadeau(1)

Chair

       

Malcolm Frank

   

Member

   

Sheila B. Jordan

Member

       

James J. McGonigle(2)

   

Member

 

Chair

Laurie Siegel

   

Chair

   

Joseph R. Zimmel

Member

     

Member

 

 

(1)

Financial Expert

 

 

(2)

Lead Independent Director

 

Audit Committee

The Audit Committee assists the Board in fulfilling its oversight review of FactSet’s internal and external financial reporting processes. Its primary responsibilities include: meeting with financial management and the independent auditors to review FactSet’s system of internal controls; assessing the quality of FactSet’s accounting principles and financial reporting; reviewing the external audit process as conducted by FactSet's independent auditors; reviewing the financial information provided to stockholders and other external parties; and preparing the report of the Audit Committee included in the Proxy Statement on a yearly basis. The Board has determined that Mr. Billeadeau qualifies as the “audit committee financial expert” as defined in Item 401(h) of Regulation S-K of the Securities Exchange Act of 1934, as amended. The Board has also determined that each member of the Audit Committee is independent under the standards of the NYSE and NASDAQ and has sufficient knowledge in reading and understanding the Company’s financial statements to serve on the Audit Committee. The Audit Committee met six times during fiscal 2017.

 

11

 

 

Under the Audit and Non-Audit Service Pre-Approval Policy adopted by the Audit Committee, all audit and non-audit services to be performed by the independent registered public accounting firm for the Company require pre-approval by the Audit Committee. In some cases, pre-approval relates to audit or non-audit services that fall within certain established buckets, and in other cases a particular defined task or scope of work may be pre-approved subject to a specific budget. Pre-approvals may be granted by either the full Audit Committee or the Chair of the Audit Committee. The Audit Committee may not delegate pre-approval authority to management.

 

Compensation and Talent Committee

The primary responsibilities of the Compensation and Talent Committee are to review and approve the compensation policies for the CEO, named executive officers (NEOs) and other direct reports to the CEO of the Company, oversee the Company’s administration of its equity-based compensation policies, approve grants of share-based awards to officers and employees of the Company under its option plans (individually or in the aggregate), and review annual performance goals for the Company’s principal executive officers in conjunction with assessing the quality of the performance of those executive officers. The Compensation and Talent Committee also assists in all matters relating to recruiting, hiring, and retaining the Company’s directors, officers and employees. No fees were paid to compensation consultants by FactSet as no consulting services were provided to the Board or Compensation and Talent Committee related to executive or director compensation during fiscal 2017. The Compensation and Talent Committee met eight times during fiscal 2017.

 

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee reviews the qualifications of candidates for nomination as directors, makes recommendations to the Board regarding prospective nominees to the Board, issues recommendations to the Board regarding corporate governance issues and, as appropriate, assists in succession planning for senior management of FactSet. The Committee also develops and recommends to the Board for its approval an annual evaluation process of the effectiveness of the Board and its committees. The Committee oversees the annual evaluations. The members of the Nominating and Corporate Governance Committee are independent under the listing standards of the NYSE and the NASDAQ. The Nominating and Corporate Governance Committee met twice during fiscal 2017.

 

Additional Corporate Governance Information

 

FactSet is committed to maintaining the highest standards of business conduct and corporate governance, which the Company believes are essential to running its business efficiently, serving its stockholders well and maintaining integrity in the marketplace.

 

Code of Business Conduct

The Company has adopted a Code of Business Conduct and Ethics (the “Ethics Code”) that applies to all of the Company’s employees, including the Company’s principal executive officer, principal financial officer and principal accounting officer, all other officers and the Company’s directors. A copy of the Ethics Code is available on the Company’s website at http://investor.factset.com on the Corporate Governance page of the Investor section. You may also request a copy of the Ethics Code by writing to Investor Relations, FactSet Research Systems Inc., 601 Merritt 7, Norwalk, Connecticut 06851. Any amendment to the Ethics Code (other than technical, administrative or non-substantive amendments) and any waiver of a provision of the Ethics Code that applies to a member of FactSet’s Board or one of its executive officers will be promptly disclosed on the Corporate Governance Highlights page of the Investor section of its website.

 

Contacting the Board

Stockholders and other interested parties may contact the Board, the Lead Independent Director or non-management directors as a group by sending their correspondence to: Board of Directors (or other appropriate group), c/o Corporate Secretary, FactSet Research Systems Inc., 601 Merritt 7, Norwalk, Connecticut 06851; email address: Board@factset.com. The Corporate Secretary will review all communications and forward them to the Chairman or the Lead Independent Director, as appropriate. The Corporate Secretary may, however, filter out communications that do not relate to the Company’s business activities, operations or its public disclosures, but will maintain a record of these communications and make them available to the Chairman or the Lead Independent Director (solicitations will not be recorded or forwarded). Any communications received by the Chairman or Lead Independent Director regarding concerns relating to accounting, internal accounting controls or auditing matters will be immediately brought to the attention of the Audit Committee and will be handled in accordance with the procedures established by the Audit Committee to address these matters.

 

12

 

 

Director Compensation Program

 

The general policy of the Board is that compensation for independent directors should be a mix of cash and equity-based compensation. FactSet does not pay management directors for Board service in addition to their regular employee compensation. The Compensation and Talent Committee, which consists solely of independent directors, has the primary responsibility for reviewing and considering any revisions to director compensation. The Board reviews the committee’s recommendations and determines the amount of director compensation. Each non-employee director is provided access to the FactSet service, at no charge, which allows them to utilize the Company’s suite of products.

 

For fiscal 2017, Director compensation consisted of:

 

 

An annual retainer of $35,000. Each director may choose to receive the retainer as a quarterly cash payment, or receive the equivalent value in non-qualified stock options.

  

 

An equity grant having an intended value of $75,000.

 

For fiscal 2017, all directors with the exceptions of Ms. Jordan and Mr. Frank opted to receive the $35,000 retainer in non-qualified stock options.

 

Equity Compensation

The FactSet Research Systems Inc. 2008 Non-Employee Directors’ Stock Option and Award Plan (the “existing Director Plan”) provides for the grant of share-based awards, including stock options, to non-employee directors of FactSet. Proposal 5 of this Proxy Statement requests approval of the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated.

 

Annual Grant

Under the existing Director Plan, the Compensation and Talent Committee may award an annual equity grant to each non-employee director on or around January 15th of each year. The number of option shares to be granted in order to deliver the intended value will be determined on the grant date using an option-pricing model. As such, the Compensation and Talent Committee recommended and the Board approved an annual equity grant of 2,104 non-qualified stock options to each of the then seven non-employee directors on January 13, 2017. Additionally, each non-employee director was given an award of $35,000 with the option to receive the value in either a cash retainer or non-qualified stock options. All directors with the exception of Ms. Jordan and Mr. Frank, opted for the equity grant of 982 non-qualified stock options. The strike price for all non-qualified stock options was $170.24 per share, being equal to the closing price of the Company’s common stock on that date. The grant date fair value for all non-qualified stock options was $35.65. The non-qualified stock options granted to directors vest 100% after three years on the anniversary date of the grant and expire seven years from the date the options were granted. The Company does not have stock ownership guidelines that require directors to own Company stock.

 

New Director One-Time Grant

New directors may receive a one-time option grant, typically on or around January 15th after the new director’s first annual meeting. At the recommendation of the Compensation and Talent Committee, Ms. Jordan and Mr. Frank were granted a new director one-time grant of 2,104 stock options on January 13, 2017, at an exercise price of $170.24 and intended fair value of $75,000. The non-qualified stock options granted to Ms. Jordan and Mr. Frank vest 100% after three years on the anniversary date of the grant and expire seven years from the date the options were granted.

 

Expenses  

The Company pays or reimburses directors for travel, lodging and related expenses incurred in connection with attending Board, Committee and stockholder meetings and other Company business related events. From time to time, the Company may reimburse a director’s expenses for their participation in third party-supplied continuing education related to the director’s Board or Committee service. Director expense reimbursements during fiscal 2017 totaled less than $25,000 per director.

 

13

 

 

Director Summary Compensation Table

 

The following table provides information as to compensation for services of the non-employee directors during fiscal 2017.

 

Name

 

Fees Earned or

Paid in Cash (1)

   

Stock Awards

   

Option Awards (2)

   

Non-Equity

Incentive Plan Compensation

   

Change in

Pension Value

and Non-

Qualified

Deferred

Compensation Earnings

   

All Other Compensation

   

Total

 

Robin A. Abrams

  $ --     $ --     $ 110,000     $ --     $ --     $ --     $ 110,000  

Scott A. Billeadeau

  $ --     $ --     $ 110,000     $ --     $ --     $ --     $ 110,000  

Malcolm Frank

  $ 35,000     $ --     $ 75,000     $ --     $ --     $ --     $ 110,000  

Sheila B. Jordan

  $ 35,000     $ --     $ 75,000     $ --     $ --     $ --     $ 110,000  

Joseph E. Laird, Jr. (3)

  $ --     $ --     $ --     $ --     $ --     $ --     $ --  

James J. McGonigle

  $ --     $ --     $ 110,000     $ --     $ --     $ --     $ 110,000  

Laurie Siegel

  $ 11,667     $ --     $ 110,000     $ --     $ --     $ --     $ 121,667  

Joseph R. Zimmel

  $ --     $ --     $ 110,000     $ --     $ --     $ --     $ 110,000  

 

 

(1)

On January 12, 2016, the Compensation and Talent Committee approved a compensation policy for directors, whereby each director receives an annual retainer of $35,000 and an equity grant having an intended value of $75,000 for a calendar year of service from January through December 2017. Each director may choose to receive the retainer as a quarterly cash payment, or receive the equivalent value in non-qualified stock options. For calendar year 2017, all directors with the exception of Ms. Jordan and Mr. Frank opted to receive the $35,000 retainer in non-qualified stock options. Ms. Siegel’s cash payment relates to calendar year 2016.

 

 

(2)

The amounts in the Option Awards column represent the aggregate grant date fair values, computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Share-Based Payment, (“ASC Topic 718”), of stock option awards issued during fiscal 2017 pursuant to the existing Director Plan. For information on the valuation assumptions with respect to stock option grants, refer to the notes to the consolidated financial statements contained in FactSet’s Annual Report. There can be no assurance that these grant date fair values will be realized by the non-employee directors. The actual gain that a non-employee director may receive from exercising an option sometime in the future may be higher or lower than these reported amounts, and these options have value only if the price of the Company’s stock increases above the option’s exercise price. On January 13, 2017, FactSet granted 2,104 stock options to each of the Company’s non-employee directors. Additionally, each non-employee director was given an award of $35,000 with the option to receive the value in either a cash retainer or non-qualified stock options. All directors with the exception of Ms. Jordan and Mr. Frank, opted for the equity grant of 982 non-qualified stock options. The strike price for all non-qualified stock options was $170.24 per share, being equal to the closing price of the Company’s common stock on that date. The grant date fair value for all non-qualified stock options was $35.65. At August 31, 2017, the non-employee directors had the following outstanding stock option awards, some of which were not fully or partially vested: Robin A. Abrams, 19,269 options; Scott A. Billeadeau, 19,066 options; Malcolm Frank, 4,208 options; Sheila B. Jordan, 4,208 options; James J. McGonigle, 19,066 options; Laurie Siegel, 7,920 options; and Joseph R. Zimmel, 19,066 options.

 

 

(3)

Prior to the 2016 Annual Meeting held on December 20, 2016, the Board of Directors of FactSet accepted the resignation of Joseph E. Laird, Jr., Director, and his related responsibilities as a member of the Compensation and Talent Committee. Mr. Laird’s resignation was effective December 20, 2016, the date of the Company’s 2016 Annual Meeting of Stockholders. The amounts presented here represent Mr. Laird’s compensation through his date of resignation.

 

 

Director Nominations

 

The Nominating and Corporate Governance Committee is responsible for the nomination of directors and making recommendations to the Board regarding prospective nominees. The Nominating and Corporate Governance Committee from time to time reviews the appropriate skills and characteristics required of board members, including factors that it seeks in board members such as diversity of business experience, viewpoints, personal background and diversity of skills in finance, technology, marketing, international business and other areas that are expected to contribute to an effective Board. In evaluating potential candidates for the Board, the Nominating and Corporate Governance Committee considers these factors in the light of the specific needs of the Board at that time. The description of each nominee set forth in the “Business Experience and Qualification of Board Members” section includes the primary individual experience, qualifications, attributes and skills of each of the Company’s directors that led to the conclusion that each director should serve as a member of the Board at this time. Nominees for the Board should be committed to enhancing long-term shareholder value and must possess a high level of personal and professional ethics, sound business judgment and integrity. The Board is composed of a diverse group of leaders. The Board encourages selection of directors who will contribute to FactSet’s overall corporate goals: responsibility to its stockholders, technology leadership, effective execution, high client satisfaction and superior employee working environment.

 

14

 

 

The Nominating and Corporate Governance Committee will consider director nominees recommended by stockholders in written communications to FactSet’s Secretary prior to August 1 for the ensuing election. Any such communication must follow the guidelines set forth in the FactSet Research Systems Inc. Director Nominee Selection Policy, a copy of which may be found on the Company’s website at http://investor.factset.com on the Corporate Governance page of the Investor section. The policy lists selection criteria including integrity, professionalism and sound business judgment. The Nominating and Corporate Governance Committee will consider any nominee recommended by a stockholder in accordance with its policy under the same criteria as any other potential nominee.

 

The Nominating and Corporate Governance Committee will select nominees for directors pursuant to the following process:

 

Identification of director candidates based upon suggestions from directors and senior management, recommendations by stockholders and potentially a director search firm.

 

Review of each candidate’s qualifications by the Nominating and Corporate Governance Committee to determine which candidates best meet the Board’s required and desired criteria. The review of the nominee’s qualifications includes capabilities, availability to serve, conflicts of interest and other relevant factors. The Committee shall search for individuals as nominees with the highest personal and professional integrity, who shall have demonstrated strong ability and judgment and who shall be effective in serving the long-term interest of stockholders.

 

Interviews of an interested candidate by the Chair of the Nominating and Corporate Governance Committee, at least one other committee member and the CEO.

 

Report to the Board by the Nominating and Corporate Governance Committee on the selection process.

 

Recommendation by the Nominating and Corporate Governance Committee of a nominee to the Board.

 

Formal nomination of the candidate by the Board for inclusion in the slate of directors for the Meeting or appointment by the Board to fill a vacancy between stockholder meetings.

 

For candidates proposed to it, the Nominating and Corporate Governance Committee requires: (i) the candidate’s full name, address, email and phone number; (ii) a verbal statement by the candidate that he or she wishes to be nominated and is willing and able to serve as a director; (iii) a verbal statement of the good faith belief by the proposing stockholder that the candidate meets the Company’s criteria, and (iv) such other written documentation as the Committee may request to permit a determination by the Board as to whether such candidate meets the required and desired director selection criteria set forth in the FactSet By-laws, Corporate Governance Guidelines and the FactSet Research Systems Inc. Director Nominee Selection Policy.

 

15

 

 

Proposal 1: Election of Directors

 

Stockholders will elect three directors at the Meeting. If elected, the directors will hold office for a term not exceeding three years or until a successor is elected and qualified. Your proxy will be voted in favor of those persons to serve as directors, unless you indicate to the contrary on the proxy.

 

Management expects that the nominees will be available for election. However, if a nominee is not a candidate when the election occurs, your proxy will be voted to elect another nominee to be designated by the Nominating and Corporate Governance Committee of the Board to fill any vacancy. Business experience and qualifications on these nominees and the other members of the Board is presented in this Proxy Statement under the caption “Business Experience and Qualifications of Board Members.”

 

Vote Required: The three nominees for election as directors of the Company who receive a majority number of “FOR votes cast at the meeting (either in person or by proxy) will be elected as directors.

 

FactSet’s Board recommends that Robin A. Abrams, Malcolm Frank, and Laurie Siegel each be elected to serve a three-year term expiring in concurrence with the Annual Meeting of Stockholders for 2020.

 

16

 

 

AUDIT COMMITTEE REPORT

 

The Board has charged the Audit Committee with a number of responsibilities, including review of the adequacy of FactSet’s financial reporting, accounting systems and controls. The Board has reviewed independence for audit committee members as defined in both the NYSE and NASDAQ and has determined that each member of the Audit Committee met each listing’s standard. The Audit Committee has a direct line of communication with FactSet’s independent public accountants.

 

The responsibilities of the Audit Committee are set forth in its Charter, which is available on the Company’s website at http://investor.factset.com. In fulfilling its responsibility, the Audit Committee discusses with the Company’s independent public auditors the overall scope and specific plans for their audit. The Audit Committee has reviewed FactSet’s audited consolidated financial statements for fiscal 2017 with management and with Ernst & Young LLP. Such review included discussions concerning the quality of accounting principles as applied and significant judgments affecting FactSet’s consolidated financial statements. In addition, the Audit Committee has discussed with Ernst & Young LLP matters such as the quality and acceptability of FactSet’s accounting principles applied in its financial reporting, as adopted by the Public Company Accounting Oversight Board (“PCAOB”). Lastly, the Audit Committee has received and reviewed the written disclosures and the letter from Ernst & Young LLP concerning such auditors’ independence from FactSet and has discussed with Ernst & Young LLP its independence, as required by the PCAOB.

 

In reliance on the reviews and discussions conducted with management and the independent public auditors, the Audit Committee has recommended to the Board and the Board has approved the inclusion of the audited consolidated financial statements for fiscal year ended August 31, 2017, in FactSet’s Fiscal 2017 Annual Report on Form 10-K, for filing with the SEC.

 

 

SUBMITTED BY THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

 

 

Scott A. Billeadeau, Chair         

Robin A. Abrams

Sheila B. Jordan

Joseph R. Zimmel

 

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Proposal 2: Ratification of Independent Registered Public Accounting Firm

 

Beginning with the audit of FactSet’s 2014 fiscal year, Ernst & Young LLP has served as FactSet’s independent registered public accounting firm. Their initial appointment was ratified by stockholders at the 2013 Annual Meeting. The Audit Committee has again appointed Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2018. A representative from Ernst & Young LLP will attend the Meeting to respond to appropriate questions and make a statement should they desire to do so.

 

Independent Registered Public Accounting Firm’s Fees and Services

 

The following table shows the total fees billed or accrued for professional services provided to FactSet by Ernst & Young LLP, for fiscal years ended 2017 and 2016.

 

   

Fiscal 2017

   

Fiscal 2016

 
                 

Audit fees (1)

  $ 799,700     $ 618,500  

Audit-related fees (2)

    25,000       165,041  

Tax fees (3)

    60,000        

All other fees (4)

    1,853       95,402  

Total

  $ 886,553     $ 878,943  

 

 

(1)

Represents fees for professional services rendered for the integrated audit of FactSet’s annual consolidated financial statements and of its internal control over financial reporting, for review of the interim consolidated financial statements included in quarterly reports on Form 10-Q and for services that are normally provided by in connection with statutory and regulatory filings or engagements.

 

 

(2)

Represents fees for assurance and related services that are reasonably related to the performance of the audit or review of FactSet’s consolidated financial statements and are not reported under Audit Fees.

 

 

(3)

Tax fees were for services related to tax consulting and planning services.

 

 

(4)

All other fees represent fees for professional services other than the services reported above, including permissible consulting services and subscriptions to accounting research software.

 

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services

The Audit Committee’s policy is to pre-approve all audit and permissible non-audit services to be provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to report periodically to the Audit Committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular services on a case-by-case basis.

 

The Audit Committee has determined that the provision of non-audit services by Ernst & Young LLP during fiscal 2017 and 2016, respectively, was compatible with maintaining the independence of each firm. During fiscal 2017 and 2016, all professional services provided by Ernst & Young LLP were pre-approved by the Audit Committee in accordance with this policy.

 

Audit Partner and Audit Firm Rotation

The Audit Committee’s policy is that the audit engagement partner should rotate off the Company’s account no less frequently than every five years. With respect to audit firm rotation, the Audit Committee believes that it is inappropriate to establish a fixed limit on the tenure of the independent auditor. Continuity and the resulting in-depth knowledge of the Company strengthen the audit. Moreover, the mandatory partner rotation policy expressed above, normal turnover of audit personnel, the Audit Committee’s policy regarding the hiring of auditor personnel and the Audit Committee’s practices restricting non-audit engagements of the independent auditor, all mitigates against any loss of objectivity that theoretically could arise from a long-term relationship. As provided in the Audit Committee’s Charter and as further described below, the Audit Committee regularly evaluates its independent registered public accounting firm. The Audit Committee will periodically consider alternatives to ensure that the Audit Committee and the Company’s stockholders are receiving the best audit services available.

 

Auditor Independence

As noted in the Audit Committee Charter and in the Audit Committee Report, the independent auditor reports directly to the Audit Committee and the Audit Committee is charged with evaluating its independence.

 

FactSet’s Board recommends that you vote to ratify the Audit Committee’s appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending August 31, 2018.

 

18

 

 

EXECUTIVE OFFICERS

 

The following are the Company’s executive officers at August 31, 2017:

 

 

Name of Officer 

Age

Office Held with the Company 

Officer Since

 

F. Philip Snow

53

Chief Executive Officer

2014

Mark J. Hale

44

Executive Vice President, Chief Operating Officer

2015

John W. Wiseman

49

Executive Vice President, Global Head of Sales and Client Solutions

2017

Maurizio Nicolelli

49

Senior Vice President, Chief Financial Officer

2009

Edward Baker-Greene

54

Senior Vice President, Chief Human Resources Officer

2015

Rachel R. Stern

52

Senior Vice President, Strategic Resources and General Counsel

2009

 

 

F. Philip Snow’s business experience is listed in the section titled “Corporate Governance” on page 10.

 

Mark J. Hale – Executive Vice President, Chief Operating Officer. Mr. Hale joined the Company in 1995 as a software engineer. During his tenure at FactSet, Mr. Hale has held several positions of increasing responsibility including Head of Software Engineering, and most recently, Senior Vice President, Director of Content Operations. Mr. Hale received a B.S. in Electrical and Computer Engineering from Carnegie Mellon University.

 

John W. Wiseman - Executive Vice President, Global Head of Sales and Client Solutions. Mr. Wiseman joined FactSet in 2004 as Vice President in the sales department. During his tenure at FactSet, Mr. Wiseman held several positions of responsibility including Senior Vice President, Global Head of Strategic Partnerships & Alliances and was named Executive Vice President, Global Head of Sales and Client Solutions in fiscal 2017. Prior to his experience with FactSet, Mr. Wiseman was a Senior Managing Director at Bear Stearns & Co. Inc. Mr. Wiseman received a B.A. in Political Science and Management Science from Duke University and a Master’s of Business Administration from the University of Edinburgh.

 

Maurizio Nicolelli – Senior Vice President, Chief Financial Officer. Mr. Nicolelli joined the Company in 1996 as the Senior Accountant and held the position of Chief Accountant from 1999 to 2001. From 2002 to 2009, he served as Vice President and Comptroller of the Company. From October 2009 to 2013, he occupied the position of Senior Vice President, Principal Financial Officer and was named Chief Financial Officer in fiscal 2014. Prior to joining FactSet, he was employed at PricewaterhouseCoopers LLP. He holds a B.S. in Political Science from Syracuse University and an M.B.A. in Accounting from St. John's University. Mr. Nicolelli is a CPA licensed in the state of New York.

 

Edward Baker-Greene – Senior Vice President, Chief Human Resources Officer. Mr. Baker-Greene joined FactSet in June 2015 from Voya Financial, formerly ING, U.S., where he was Head of Human Resources for Retirement Solutions, Operations, and Information Technology. Previously, Mr. Baker-Greene worked at Fidelity Investments for 13 years. At Fidelity, he was a part of the Personal and Workplace Investing division, where he held roles in business and human resources capacities, including Senior Vice President/Managing Director, Relationship Management. Mr. Baker-Greene began his professional career as a lawyer focusing on employment law, recruiting, talent management and human capital management. Mr. Baker-Greene received a B.A. from Tufts University and a J.D. from the University of Virginia School of Law.

 

Rachel R. Stern Senior Vice President, Strategic Resources and General Counsel. Ms. Stern joined FactSet in 2001 as General Counsel. In addition to the Legal Department at FactSet, she is responsible for Facilities and Real Estate Planning; and Third-Party Content and Strategic Partnerships. Ms. Stern is admitted to practice in New York, and Washington D.C., and as House Counsel in Connecticut. Ms. Stern received a B.A. from Yale University, an M.A. from the University of London and a J.D. from the University of Pennsylvania Law School.

 

 

19

 

 

Compensation Discussion & Analysis

 

This Compensation Discussion and Analysis (“CD&A”) section describes the general objectives, principles and philosophy of the Company’s executive compensation program, focused primarily on the compensation of the NEOs and the Company’s Chairman during fiscal 2017 whom are listed as follows:

 

 

Philip Snow - Chief Executive Officer

 

 

Mark J. Hale - Executive Vice President, Chief Operating Officer

 

 

John W. Wiseman – Executive Vice President, Global Head of Sales and Client Solutions

 

 

Maurizio Nicolelli – Senior Vice President, Chief Financial Officer

 

 

Edward Baker-Greene – Senior Vice President, Chief Human Resources Officer

 

 

Philip A. Hadley – Chairman of the Board of Directors

 

 

Scott G. Miller – Former Executive Vice President, Global Director of Sales

 

On April 7, 2017, FactSet announced Scott G. Miller’s separation from the Company and his position as named executive officer Executive Vice President, Global Director of Sales.  Mr. Miller's departure from the Company was effective on April 21, 2017.

 

Compensation Philosophy

 

The compensation programs are designed to attract, motivate and retain employees who can successfully execute the strategy, create new product offerings, grow FactSet’s client base and take care of its clients. FactSet’s executive compensation is structured to encourage decisions and behaviors that align with the long-term interests of the Company’s stockholders. The Compensation and Talent Committee of the Board oversees the Company’s executive compensation program, including the evaluation and approval of compensation plans, policies and programs offered to the Company’s CEO, NEOs and the CEO’s direct reports. The Compensation and Talent Committee operates under a written charter adopted by the Board and is comprised entirely of independent, non-employee directors.

 

The Compensation and Talent Committee has designed the executive compensation policies for the Company’s NEOs to meet the following goals and principles:

 

 

Linkage between the Company performance and executive compensation.

 

 

Pay not only based on current operating results, but also rewards for progress towards future growth.

 

 

Total compensation packages for different roles that balance external market pay with an internal framework.

 

 

Reflect qualitative factors beyond the quantitative financial metrics as key considerations in the determination of individual executive compensation payments.

 

 

Attract and retain talented personnel by considering compensation offered for similar positions by other companies in the technology and financial information industries.

 

 

Linkage between Company performance and executive compensation.

In making compensation decisions, the Compensation and Talent Committee sought to reinforce the linkage between the Company performance and executive compensation. The Compensation and Talent Committee has designed the executive compensation program to motivate, retain, engage and appropriately reward the Company’s executive officers. Individual compensation levels for the NEOs are based on the collective company operating performance, including annual subscription value (“ASV”) and earnings per share (“EPS”) growth, and individual performance toward executing FactSet’s strategy, accelerating growth, and contributing to company-wide results. By encouraging NEOs to strive for outstanding individual and team performances, they are expected in turn to drive the positive performance of the Company as a whole.

 

Pay not only based on current operating results, but also rewards for progress towards future growth.

A substantial portion of an executive officer’s compensation is subject to achieving both short-term and long-term performance objectives that enhance stockholder value. Cash compensation rewards annual (short-term) performance, while equity-based compensation promotes an ownership mindset (long-term). Equity-based compensation, specifically stock options, represents a significant portion of total compensation. With stock options, executives only benefit if the Company’s stock price appreciates from the date of grant of the award. The Compensation and Talent Committee has also viewed options as a method, not only of encouraging the NEOs to drive Company performance in the long-term, but also of encouraging the retention of officers. While there are currently no minimum share ownership requirements for any NEO, NEOs’ interests as stockholders and option holders have been aligned in the past with those of stockholders due in part to the large share ownership such officers have an opportunity to build or have maintained. The allocation between annual cash compensation and long-term equity compensation is based primarily on an evaluation of an executive’s overall role and contributions to the Company, taking into account competitive practices.

 

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Total compensation packages for different roles that balance external market pay with an internal framework.

Total compensation packages are established by balancing external market pay with an internal framework considering each employee's contribution to FactSet. The Compensation and Talent Committee determines compensation and stock-based incentive awards for the NEOs at the same time as it approves pools for the Company as a whole. For NEOs, compensation includes cash elements, which are targeted to be in line with the market, and equity opportunities that can be worth substantially more as the Company grows and achieves targets in line with strategic plans.

 

Define qualitative factors beyond the quantitative financial metrics.

The Compensation and Talent Committee reviews the individual goals of each NEO at the end of each fiscal year to determine the executive’s performance relative to stated objectives, which include well-defined qualitative factors in addition to quantitative metrics such as ASV and EPS growth. These include governance objectives, visibility and engagement in global offices, and exposure to employees, key clients, investors and analysts. The NEO’s achievement of certain goal levels will guide or influence, with the application of some discretion by the Compensation and Talent Committee, that executive’s bonus and equity award for the fiscal year just completed as well as salary levels for the coming fiscal year.

 

Attract and retain talented personnel.

The Company operates in several highly competitive labor markets and must ensure that total compensation compares well with that offered by competitors in those markets. The Compensation and Talent Committee has designed executive compensation bearing in mind the compensation offered by other companies in the technology and financial information industry, to the extent such information is publicly available.

 

Elements of Compensation

 

FactSet’s executive compensation program works to embed the goals and principles explained above across the various elements of compensation. The three major elements of FactSet’s executive officer compensation in fiscal 2017 continued to be:

 

Base salary;

 

Variable cash incentive awards (annual bonus); and

 

Long-term, equity-based incentive awards.

 

Base Salary

Base salaries are intended to be sufficiently competitive to attract and retain key employees. The Compensation and Talent Committee reviews salaries on an annual basis and makes periodic adjustments to base salary based on individual performance and contributions, market trends, competitive position and FactSet’s financial situation. The Compensation and Talent Committee did not use a formula to review base salaries, and no one factor was weighted more heavily than another. The goal is to ensure that total cash compensation packages (including base salaries and annual bonuses of the NEOs) generally remain competitive with the 50th percentile when compared to peer group companies.

 

Annual Bonus

The Compensation and Talent Committee has designed an annual cash incentive program to stimulate and support a high-performance environment by tying such incentive compensation to the attainment of qualitative and quantitative goals and by recognizing superior performance. Each NEO had objectives that were established at the beginning of the year (or at the date of beginning the current role) and reviewed with the NEO. Annual Company-level performance goals serve both to motivate executives as well as to increase stockholder returns by focusing executive performance on the attainment of those goals identified as having a positive impact on the Company’s short and long-term business results. In the normal course of business, the Committee determines the bonuses for the NEOs based on their operational and financial performance. The bonus amounts are not determined by a predefined formula. Rather, they are judgment-based, and based upon achievement of individual goals, overall company performance for the fiscal year and a review of performance and compensation at peer companies. For each NEO, management prepares for the Compensation and Talent Committee a recommendation for compensation change. The recommendations are then reviewed and discussed by the Compensation and Talent Committee.

 

21

 

 

Long-term, Equity-based Incentive Awards

A significant portion of total compensation to each NEO is long-term incentive compensation, which includes equity-based incentive awards. The Compensation and Talent Committee determines the size of the long-term, equity-based incentives according to each NEO’s position within FactSet, competitive benchmarking, performance and contributions to the Company. FactSet’s philosophy is built on the principles that equity compensation should seek to align employees’ actions with stockholder interests; attract, retain, and motivate highly qualified executives; and balance the focus on short and longer-term performance objectives. The Compensation and Talent Committee believes that it has been successful in achieving this alignment through the use of equity-based compensation, which includes the use of options and restricted stock awards. The Compensation and Talent Committee takes into account each NEO’s performance history, his or her potential for future advancement, the CEO’s recommendations for awards (other than his own) and the value of existing vested and unvested outstanding equity awards. The relative weight given to each of these factors varies among individuals at the Compensation and Talent Committee’s discretion. The equity-based plan awards are typically granted subsequent to the end of each fiscal year in order to be synchronized with the year-end performance review process and the timing of the annual bonus payments.

 

Post-Termination Compensation

FactSet does not standardly provide any post-employment benefits to its NEOs or any employees.

 

Tax Considerations

In establishing individual executives’ compensation levels, the Company does not explicitly consider accounting and tax issues. The Company’s tax deduction for compensation paid to each of the NEOs who are subject to the compensation limits of Section 162(m) of the Internal Revenue Code is capped at $1 million. Section 162(m) provides an exemption from the $1 million cap for compensation qualifying as “performance-based.” The intension is for FactSet’s annual bonus and long-term incentive award programs for NEOs to qualify for that exemption. For the fiscal years presented in this Proxy Statement, FactSet believes the stock-based awards granted under the Company’s stock option and award plan meet the requirement of Section 162(m). As of August 31, 2017, the Company’s annual bonus plan does not meet the requirements because it is not stockholder approved. The Compensation and Talent Committee reserves the right to provide compensation that does not qualify under Section 162(m).

 

Forfeiture of Prior Compensation

On October 24, 2017, the Board adopted an Incentive Compensation Clawback Policy applicable, at the Board’s discretion, to the Company’s Section 16 filers in the event of material restatement of the Company’s financial statements due to willful misconduct. During the 2017 fiscal year, other than a provision in its existing FactSet Research Systems Inc Stock Option and Award Plan, as Amended and Restated allowing for clawback rights in accordance with listing requirements and award agreements, the Company did not have any additional clawback or reimbursement provisions in effect related to any bonus, incentive payment or other compensation received by an officer in the event of a restatement, evidence of fraud or other misconduct.

 

Additionally, the existing FactSet Research Systems Inc Stock Option and Award Plan, as Amended and Restated, authorizes the Board to recover, or “clawback,” equity compensation from an NEO based on their engagement in any competitive activities or acts of solicitation during their period of employment and for two years thereafter, including:

 

Own, manage, operate, join or control, be employed by or participate in the ownership, management, operation or control of, or be a consultant to or connected in any other manner with, any business, firm or corporation which is similar to or competes with a principal business of FactSet or its subsidiaries (Competitive Activity) or

 

For themselves or any person or business entity, induce or attempt to induce any employee of FactSet or its subsidiaries to terminate employment with the Company or its subsidiaries or solicit, entice, take away or employ any person employed by the Company or its subsidiaries (Solicitation).

 

For these purposes, the officer’s ownership of securities of a public company not in excess of one percent of any class of such securities shall not be considered to be competition with the Company or its subsidiaries. If the officer engages in a competitive activity or solicitation, as determined by the Board in good faith, all options then held by the officer shall expire as of the date that the officer first engaged in such activity and the Company shall have the right to acquire any shares of stock then owned by the officer as the result of the exercise of an award at a price equal to the lesser of the fair market value of such shares or the aggregate exercise price paid therefore by the officer. The Company shall also have the right to require the officer to return to the Company any other gain (whether or not realized) the officer had on the exercise of any awards granted.

 

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Process of Determining Annual Executive Compensation

 

The Compensation and Talent Committee reviews and makes decisions about executive policies and plans, including the amount of base salary, annual bonus and long term incentive awarded to the NEOs. To achieve the objectives and principles of its executive compensation program, the Compensation and Talent Committee considered individual quantitative and qualitative performance results, overall Company performance and the overall cost of its compensation program to the Company. The CEO and other executives may assist the Compensation and Talent Committee from time to time in its evaluation of compensation elements or program design or by providing historical information, year-over-year comparisons and clarifications regarding job duties and performance. For fiscal 2017 and preceding years, the Compensation and Talent Committee did not utilize the services of a compensation consultant.

 

The Compensation and Talent Committee did not consider any forms of compensation other than salary, bonus and equity awards. FactSet has not entered into any employment agreements with any of its NEOs and as such, FactSet is not bound by any contractual salary, incentive grants or other compensation requirements for the NEOs. Perquisites have historically constituted 5% or less of each NEO’s total compensation and represent the dollar value of matching contributions to the FactSet 401(k) Plan made by FactSet on behalf of each NEO, use of Company automobiles and medical and dental benefits paid by the Company on behalf of the NEO.

 

In fiscal 2017, the Compensation and Talent Committee worked with management in the compensation review process as follows:

 

Performance Evaluation - The CEO’s performance is reviewed by the Compensation and Talent Committee with input from the other non-employee members of the Board. The CEO annually reviews the performance of each other executive officer who reports to him, including the NEOs listed in the Summary Compensation Table. The Compensation and Talent Committee and Mr. Snow identified appropriate performance measures and recommended performance objectives that were used in determining annual and long-term awards. More specifically, the Compensation and Talent Committee reviewed materials outlining the individual performance of each NEO with respect to their goals and objectives for the past year, both qualitative and quantitative, measured against financial goals for the Company’s performance as well as quantitative performance in the individual executive’s functional area. Management also provided the Compensation and Talent Committee with materials regarding the overall financial performance of the Company as well as operational and strategic accomplishments during the past fiscal year.

 

Compiled Benchmark Data - Management prepared benchmarking and competitive data with respect to historical compensation and its defined peer group. The Compensation and Talent Committee utilized this information in connection with establishing NEO compensation plans and parameters at its meetings.

 

Compensation Approvals - The Compensation and Talent Committee reviewed materials detailing the historical salary, bonus, total cash, equity awards and total compensation levels of the NEOs and other members of the Company’s Executive Committee. The conclusions reached and recommendations made based on the performance reviews, including with respect to salary adjustments and annual bonus and long-term incentive award amounts are presented to the Compensation and Talent Committee for approval.

 

The Compensation and Talent Committee members then made their determinations as to the annual bonus and equity awards for the just completed fiscal year and base salary for the upcoming year for each NEO. Management did not participate in this deliberation and the CEO was not present for discussions regarding his own compensation. At the same meeting, the Compensation and Talent Committee approved the total bonus and equity award pools for the Company’s operational areas as a whole, so that compensation to the NEOs was made in the larger context of compensation for all the Company’s employees.

 

Use of Performance Targets to Derive Compensation - In fiscal 2017, corporate financial goals related to ASV growth and EPS targets were agreed with management and approved by the full Board. In addition, individual objectives were established for each executive officer relating to strategic growth through new product innovation, acquisition integration, people-related leadership and other business priorities. At the end of the fiscal year, the CEO used his judgment to evaluate the performance of the other NEOs against their personal objectives, taking into account performance for the just-completed fiscal year versus predefined commitments for the fiscal year; unforeseen financial, operational and strategic issues of the Company; and any other information deemed relevant by the CEO. Although no specific levels of compensation were tied to the achievement of these growth targets and goals, the Compensation and Talent Committee took such performance into account in determining the dollar amount of bonuses and equity awards to recommend for each NEO. No other specific items of corporate performance were taken into account in making the compensation decisions.

 

23

 

 

2017 Performance

 

Goals and Objectives

The Compensation and Talent Committee agreed on the NEOs’ performance and related compensation through conversation and discussion. In conjunction with its review of the performance of the Company as a whole, the Compensation and Talent Committee determined the actual size of bonus payments and equity-based grants awarded to each of the NEOs based on the Compensation and Talent Committee’s subjective view of the executives’ achievement of qualitative goals set out in materials provided to the Compensation and Talent Committee by management. The fiscal 2017 goals of each NEO were as follows:

 

Mr. Snow’s goals included: Financial targets including ASV and EPS growth. Progressing strategic plans, including implementation of Strategic Business Units (“SBU”), expanding the product platform both organically and through acquisitions, and driving new organizational design execution and recruiting for key leadership roles. Continued exposure to employees, key clients, investors and analysts.

 

Mr. Hale’s goals included: Execute on 2017 operating plan including delivering key product and infrastructure initiatives. Drive efficiency across the businesses, including continuing to add capabilities in low cost locations. Improve Enterprise Risk Management processes and show quantifiable improvements.

 

Mr. Wiseman’s goals were updated upon transition into his new role at the start of the 3rd quarter, and included: drive significant ASV growth; restructure sales to better align with the regional structure; develop and implement more accurate ways to track sales efficiency; and execute on strategic initiatives to further penetrate Company’s largest accounts.

 

Mr. Nicolelli’s goals included: maintain margins and grow EPS; improve budgeting and tracking process for expenses; and develop metrics for each product area.

 

Mr. Baker-Greene’s goals included: define and expand total rewards programs; partner with CEO on new organizational design and the formation of the SBUs; and support the integration of newly acquired employees.

 

 Factors Considered in Determining NEO Compensation

 

 

ASV was $1.32 billion, up 5.7% organically.

 

Revenues were $1.221 billion.

 

Diluted EPS for fiscal 2017 was $6.51.

 

FactSet added 539 net new clients, increasing the number of clients by 12.8% over the prior year. In terms of users, 4,910 net new users were added during fiscal 2017.

 

FactSet returned $341.9 million to stockholders in the form of share repurchases and dividends.

 

FactSet continued to diversify its suite of products through strategic acquisitions and product investments including Vermilion Holdings Limited (“Vermilion”) in the first quarter of fiscal 2017, along with both BI-SAM Technologies (“BISAM”) and Interactive Data Managed Solutions, renamed FactSet Digital Solutions Group (“FDSG”), in the third quarter of fiscal 2017.

 

FactSet was selected as the “Best Market Data Provider” for the first time and “Best Data Analytics Provider” for the second consecutive year at the Inside Market Data and Inside Reference Data Awards.

 

FactSet was recognized as the “Best Performance Measurement System Provider” by Waters Rankings.

 

FactSet was awarded the “Best Client Services Solution” at the FTF News Technology Innovation Awards.

 

FactSet was honored with the “Best Data Provider to Wealth Managers” by WealthBriefing European Awards.

 

FactSet was recognized as the “Best Data Provider – Fixed Income and Credit” in the Fund Technology and Wall Street Letter Awards and “Best Risk Management Technology Provider” by MENA FM Fund Services Awards.

 

FactSet was recognized as a Great Place to Work® as one of the U.K.’s Best Workplaces™ in the Medium category for the ninth time, ranking at 40.

 

The Compensation and Talent Committee considered all compensation to each NEO at the same time it determined the Company’s annual bonus and equity incentive awards pools. No NEO participated in any Compensation and Talent Committee discussions of that executive’s own compensation. Based on the above, the Compensation and Talent Committee reached the following decisions in regards to the compensation of each NEO:

 

24

 

 

Base Salary

Mr. Miller separated from the Company during fiscal year 2017. Mr. Wiseman was promoted to his new role during fiscal 2017. As a result, the Compensation and Talent Committee recommended that his salary be increased to $300,000 up from $238,000 effective May 8, 2017. Mr. Wiseman had also received a $13,000 increase on October 1, 2016, prior to becoming an NEO. In October 2016, the Compensation and Talent Committee recommended that Mr. Snow’s fiscal 2017 base salary be increased to $400,000 from $350,000 based on his performance relative to his fiscal 2016 goals, as well as ensuring his base salary remains competitive with industry peers. The Compensation and Talent Committee also recommended an increase to the annual base salary for Messrs. Baker-Greene and Nicolelli of $25,000 each.

 

Annual Bonus

Fiscal 2017 annual bonus decisions emphasized rewarding performance as FactSet realized growth across all key metrics in the past 12 months, which included organic ASV growth of 5.7%, the addition of 539 net new clients, 4,910 new users, the successful acquisition and integration of Vermilion Holdings Limited (acquired in November 2017), BI-SAM Technologies (acquired in March 2017), and Interactive Data Managed Solutions (acquired in March 2017). The Company also achieved a significant reorganization through the creation of five SBUs. Due to the financial and operational growth of FactSet during fiscal 2017, the Compensation and Talent Committee awarded the NEOs the following annual bonus amounts:

 

Name

 

Bonus Amount ($)

 

F. Philip Snow

  $ 850,000  

Mark J. Hale

  $ 425,000  

John W. Wiseman

  $ 475,000  

Maurizio Nicolelli

  $ 500,000  

Edward Baker-Greene

  $ 325,000  

 

Stock Option Awards

The NEOs received annual equity awards that are comprised of 100% service-based stock options. These grants vest 20% on the anniversary date of the grant over a five-year period. The Compensation and Talent Committee believed this was the most effective way to promote equity ownership by the executives, reward them for solid operating performance and retain them. Stock options have been intended to align incentives with long-term stock performance and the interests of stockholders and act as a motivational and retention tool. All NEOs received an annual grant in November 2016. Mr. Wiseman, at the time of his promotion to the role of Executive Vice President, Global Head of Sales and Client Solutions, in July 2017, received a service-based stock option grant of 18,033 stock option awards with a value of $750,000 to vest 20% on the anniversary date of the grant over a five-year period.

 

Compensation of the Chairman of the Board of Directors

 

Mr. Hadley remains an employee of the Company, serving in a senior advisory role to management mostly focused on the fundamentals offerings in content. Mr. Hadley’s base salary is reviewed annually by the Compensation and Talent Committee and is adjusted after an analysis and evaluation of the Company’s performance as compared to annual financial goals and operating objectives and other annual goals, such as the continued growth and advancement of the Company and the development of growth strategies for future years. The Compensation and Talent Committee generally determines the annual bonus of and the number of stock options to be granted to the Chairman in a manner consistent with the factors discussed above for other executive officers.

 

For fiscal 2017, Mr. Hadley received a salary of $300,000, consistent with his salary as of July 1, 2016, when he stepped down from his role as CEO of FactSet. In addition to his regular salary, the Compensation and Talent Committee awarded Mr. Hadley an incentive bonus of $100,000 for 2017. Mr. Hadley’s bonus was based upon such factors as the financial performance of the Company, successful transition of leadership responsibilities to the new CEO and the development and advisement of the Company’s executive management team. Mr. Hadley was not granted any additional stock option or restricted stock grants in fiscal 2017.

 

Peer Group Executive Compensation Review

 

The Compensation and Talent Committee is provided executive compensation data of similarly situated NEOs at companies determined to be comparable by the Compensation and Talent Committee. The peer group consists of The Advisory Board Company, CoStar Group, Inc., CEB Inc., IHS Markit Ltd, Morningstar, Inc., MSCI Inc., Solera Holdings Inc., SS&C Technologies, T. Rowe Price and Verint Systems Inc.

 

25

 

 

In addition to the identified peer group, the compensation provided to NEOs at the following companies was reviewed by the Compensation and Talent Committee: Federated Investors, Janus Capital Group, Inc., NASDAQ OMX, Verisk Analytics and Waddell & Reed Financial, Inc. The materials presented to the Compensation and Talent Committee detailed the company compensation by type, including salary, bonus and equity awards. The Compensation and Talent Committee believes that its total target compensation for NEOs is competitive. When considering peer compensation levels, the Compensation and Talent Committee focuses on total compensation comparisons, as FactSet has, and will continue to emphasize long-term equity more prominently than peer companies. The Committee believes that the Company’s pay mix is reflective of the goals of retaining top talent and aligning executives with shareholder returns.

 

26

 

 

COMPENSATION AND TALENT COMMITTEE REPORT

 

The Compensation and Talent Committee (the “Committee”) is responsible for administering FactSet’s executive compensation policies and practices. The Committee is comprised solely of independent directors and reports regularly to the Board. Independent directors are not eligible to participate in any of the plans or programs the Committee administers. In fiscal 2017, the Committee reviewed compensation, including equity-based awards, for each NEO and the CEO’s direct reports. The Committee reviews and approves the aggregate number of equity-based awards granted to all employees of FactSet. The Committee also reviews the compensation, including stock and option-based awards, for each member of senior management including those employees who report directly to the CEO. The Committee believes that the fiscal 2017 compensation of the NEOs was aligned with FactSet’s performance and returns to stockholders and provided a balanced mix between base pay and incentive compensation.

 

The Compensation and Talent Committee reviewed and discussed with management the “Compensation Discussion and Analysis” above and recommended to the Board that it be included in this Proxy Statement. The Compensation and Talent Committee has represented to management that, to the extent that the “Compensation Discussion and Analysis” purports to disclose the Compensation and Talent Committee’s deliberations and philosophy in making executive compensation decisions and policy, it is accurate and materially complete.

 

SUBMITTED BY THE COMPENSATION AND TALENT COMMITTEE OF THE BOARD OF DIRECTORS

 

Laurie Siegel, Chair

Malcolm Frank

James J. McGonigle

 

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EXECUTIVE COMPENSATION

 

The tables below present compensation information for each NEO followed by a narrative discussion of compensation that each NEO could receive when their employment with the Company terminates under various circumstances or upon a change in control of the Company. The tables include footnotes and other narrative explanations important for your understanding of the compensation information in each table.

 

The first table below, the Summary Compensation Table, sets forth the compensation earned by the NEOs for services rendered in all capacities to FactSet for each respective fiscal year. The Company’s NEOs include FactSet’s Principal Executive Officer (“PEO”), Principal Financial Officer (“PFO”) and the three most highly compensated executive officers (other than the PEO and PFO) during fiscal 2017. Additionally, compensation of FactSet’s Chairman, Philip A. Hadley is included below.

 

Summary Compensation Table

 

The following table summarizes the compensation earned or awarded to each NEO for fiscal years 2017, 2016 and 2015.

 

                     

Stock

   

Option

   

All Other

         
     

Salary

   

Bonus

(1)  

Awards

(2)  

Awards

(3)  

Compensation

(4)  

Total

 

Name and Principal Position

Year

 

($)

   

($)

   

($)

   

($)

   

($)

   

($)

 
                                                   

F. Philip Snow

2017

  $ 400,000     $ 850,000     $     $ 1,300,000     $ 41,694     $ 2,591,694  

Chief Executive Officer

2016

  $ 350,000     $ 800,000     $     $     $ 49,576     $ 1,199,576  
 

2015

  $ 295,000     $ 650,000     $     $ 7,354,398     $ 48,521     $ 8,347,919  

Mark J. Hale

2017

  $ 300,000     $ 425,000     $     $ 350,000     $ 31,928     $ 1,106,928  

Executive Vice President,

2016

  $ 300,000     $ 450,000     $     $ 1,600,000     $ 29,491     $ 2,379,491  

Chief Operating Officer

2015

  $ 262,000 (6)    $ 500,000     $     $ 380,015     $ 38,857     $ 1,180,872  

John W. Wiseman(7)

2017

  $ 256,000 (8)    $ 475,000     $     $ 930,000     $ 34,273     $ 1,695,273  

Executive Vice President, Global

                                                 

Head of Sales and Client Solutions

                                                 

Maurizio Nicolelli

2017

  $ 300,000     $ 500,000     $     $ 700,000     $ 36,271     $ 1,536,271  

Senior Vice President,

2016

  $ 275,000     $ 450,000     $     $ 300,000     $ 47,241     $ 1,072,241  

Chief Financial Officer

2015

  $ 230,000     $ 325,000     $     $ 250,016     $ 39,874     $ 844,890  

Edward Baker-Greene(7)

2017

  $ 300,000     $ 325,000     $     $ 325,000     $ 53,307     $ 1,003,307  

Senior Vice President,

2016

  $ 275,000     $ 350,000     $     $ 800,000     $ 53,802     $ 1,478,802  

Chief Human Resources Officer

                                                 

Philip A. Hadley(10)

2017

  $ 300,000     $ 100,000     $     $     $ 49,689     $ 449,689  

Chairman of the Board of Directors

2016

  $ 300,000     $ 450,000     $     $     $ 57,013     $ 807,013  

Former Chief Executive Officer

2015

  $ 338,000     $ 1,200,000     $ 485,544     $     $ 58,127     $ 2,081,671  

Scott G. Miller(11)(12)

2017

  $ 194,000     $     $     $ 400,000     $ 408,259     $ 1,002,259  

Former Executive Vice President

2016

  $ 275,000     $ 600,000     $     $ 850,000     $ 45,618     $ 1,770,618  

Global Director of Sales

2015

  $ 169,000     $ 1,250,000     $     $ 1,000,000     $ 28,917     $ 2,447,917  

 

 

 

(1)

The Bonus column lists discretionary cash bonuses awarded for services rendered during the applicable fiscal year. Annual variable compensation payments are made within two months following the end of each fiscal year. See the detailed description of the Annual Bonus in the preceding CD&A under the sub-heading Annual Bonus.

 

 

(2)

The amounts set forth in the Stock Awards column represent the aggregate grant date fair value, computed in accordance with ASC Topic 718. The assumptions made for the valuation of the stock awards are disclosed in the Notes to the Consolidated Financial Statements included in the Company’s fiscal 2017 Annual Report on Form 10-K.

 

 

(3)

The amounts set forth in the Option Awards column represent the aggregate grant date fair value computed in accordance with ASC Topic 718. The Company utilizes a lattice-binomial model to estimate the fair value of new stock options on the date of grant. The assumptions made for the valuation of option awards are disclosed in the Notes to Consolidated Financial Statements included in the Company’s fiscal 2017 Annual Report on Form 10-K. A stock option has value only if the Company’s stock price increases above the option exercise price (an in-the-money option). If an NEO exercises an in-the-money option, they would then realize an actual gain. Any gain actually realized for options exercised in 2017 is reported in the Option Exercises and Stock Vested table.

 

 

(4)

Amounts in the All Other Compensation column reflect the value of matching contributions to the FactSet 401(k) Plan made by FactSet on behalf of each NEO, use of Company automobiles, and medical and dental benefits paid by the Company on behalf of the NEO. FactSet matches up to 4% of employees’ bi-weekly earnings, capped at the IRS annual maximum. There were no other perquisites and other personal benefits for NEOs. Fiscal 2017 amounts for personal use of Company automobiles (related to depreciation and applicable taxes) were $5,870, $324, $1,166, $19,456, $25,829 and $11,130, for Messrs. Snow, Hale, Nicolelli, Baker-Greene, Hadley, and Miller, respectively.

 

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(5)

Includes 120,000 options granted to Mr. Snow on July 1, 2015, in conjunction with his appointment to CEO.

 

 

(6)

In March 2015, in concurrence with his appointment to Executive Vice President, Chief Operating Officer, Mr. Hale’s salary was increased from $230,000 to $300,000. Salary amount is a weighted average for fiscal 2015.

 

 

(7)

For Messrs. Wiseman and Baker-Greene, compensation is shown only for the years that they were NEOs.

 

 

(8)

In May 2017, in concurrence with his appointment to Executive Vice President, Global Head of Sales and Client Solutions, Mr. Wiseman’s salary was increased from $238,000 to $300,000. Salary amount is a weighted average for fiscal 2017.

 

 

(9)

Includes 18,033 options granted to Mr. Wiseman on July 6, 2017, in conjunction with his appointment to Executive Vice President, Global Head of Sales and Client Solutions.

 

 

(10)

Mr. Hadley stepped down from his position as CEO, effective July 1, 2015, at which time he ceased to be an NEO. Mr. Hadley remains an employee of the Company, serving in a senior advisory role to management. Due to his role as Chairman, Mr. Hadley’s compensation and benefits are included in the Summary Compensation information. Mr. Hadley's salary was adjusted as of July 1, 2015 to reflect his new role and responsibilities.

 

 

(11)

On April 7, 2017, FactSet announced Scott G. Miller’s separation from the Company and his position as Executive Vice President, Global Director of Sales. Mr. Miller's departure from the Company was effective on April 21, 2017. Salary amount shown is pro rata for fiscal year 2017 based on his departure. Included in Mr. Millers All Other Compensation column is a $375,000 separation payment.

 

 

(12)

Upon joining FactSet in January 2015, Mr. Miller received an annual base salary of $275,000 and was guaranteed a performance bonus of at least $625,000 for fiscal 2015. Mr. Miller received a $625,000 performance bonus in cash when fiscal 2015 bonuses were paid during October 2015. In addition, Mr. Miller received a $625,000 signing bonus, which was paid in January 2015. Salary amount shown is pro rata for fiscal year 2015 based on his start date.

 

Grants of Plan-Based Awards

 

Non-Equity Incentive Compensation. The Company did not award non-equity incentive compensation during fiscal 2017 to any of its NEOs.

 

Stock Awards. For fiscal 2017, the Compensation and Talent Committee believes that, the most effective way to promote equity ownership for each NEO is to reward them for solid operating performance and the best way to retain them is to award service-based stock options as the vehicles for equity-based compensation. As a result, the Company granted service-based stock option awards to its NEOs during fiscal 2017 instead of restricted stock awards in order to achieve the desired benefits. It should be noted that, had restricted stock or restricted stock units been granted, and the vesting conditions applicable to such an award related exclusively to the passage of time and continued employment, the vesting period would have been a minimum of 36 months, except in the event of a change of control.

 

Option Awards. As previously noted in the foregoing CD&A, the Compensation and Talent Committee recommended the issuance of option awards during fiscal 2017. As such, in November 2016, the NEOs were granted service-based stock option awards under the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated.

 

Service-based stock option grant. Stock options have been intended to align incentives with long-term stock performance and the interests of stockholders and act as a motivation and retention tool. The service-based stock options granted on November 1, 2016, vest 20% on each anniversary date of the grant over a five-year period.

 

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The following table provides information on all option awards granted during fiscal 2017 to each of FactSet’s NEOs. There can be no assurance that the grant date fair value, as listed in this table, of the option awards will ever be realized. The grant date fair value of these awards are included in the “Option Awards” column of the Summary Compensation Table.

 

Name

Grant

Date (1)(2)

 

Threshold

   

Target(2)

   

Maximum

   

All Option Awards:

Number of Securities Underlying Options

   

Exercise

Price ($)

   

Grant Date

Fair Value of

Option Awards ($)(3)

 
                                       

F. Philip Snow

11/1/16

          32,961       32,961       32,961     $ 152.28     $ 1,300,000  

Mark J. Hale

11/1/16

          8,874       8,874       8,874     $ 152.28     $ 350,000  

John W. Wiseman

11/1/16

          4,565       4,565       4,565     $ 152.28     $ 180,000  
 

7/6/17

(4)          18,033       18,033       18,033     $ 160.58     $ 750,000  

Maurizio Nicolelli

11/1/16

          17,748       17,748       17,748     $ 152.28     $ 700,000  

Edward Baker-Greene

11/1/16

          8,240       8,240       8,240     $ 152.28     $ 325,000  

Scott G. Miller(5)

11/1/16

          10,142       10,142       10,142     $ 152.28     $ 400,000  

 

*     Each of the above-mentioned option awards are service-based and do not contain performance criteria.

 

 

(1)

On September 23, 2016, the Compensation and Talent Committee approved the total number of option awards to be allocated among all eligible employees and specifically approved the option awards to be granted to each NEO and all other senior members of management as part of the Company’s annual equity grant. At that time, the Compensation and Talent Committee designated November 1, 2016, as the actual grant date, at an option exercise price equal to 100% of the closing price of the Company’s common stock on the NYSE on that date.

 

 

(2)

Options granted on November 1, 2016, vest 20% on each anniversary date of the grant over a five-year period.

 

 

(3)

The amounts set forth in the Grant Date Fair Value of Option Awards column represent the aggregate grant date fair value computed in accordance with ASC Topic 718. The Company utilizes a lattice-binomial model to estimate the fair value of new stock options on the date of grant. The assumptions made for the valuation of option awards are disclosed in the Notes to Consolidated Financial Statements included in the Company’s fiscal 2017 Annual Report on Form 10-K. A stock option has value only if the Company’s stock price increases above the option exercise price (an “in-the-money” option). If an NEO exercises an in-the-money option, he would then realize an actual gain. Any gain actually realized for options exercised in fiscal 2017 is reported in the “Option Exercises and Stock Vested” table below.

 

 

(4)

Includes 18,033 options granted to Mr. Wiseman on July 6, 2017, in conjunction with his appointment to Executive Vice President, Global Head of Sales and Client Solutions. These options vest 20% on each anniversary date of the grant over a five-year period.

 

 

(5)

Upon Mr. Miller’s separation from FactSet, the Company accelerated the vesting of 2,029, or 20%, of these option awards. The remaining 8,113, or 80%, were forfeited upon Mr. Miller’s separation from the Company on April 21, 2017.

 

 

Outstanding Equity Awards (Restricted Stock) at Fiscal Year-end

 

The following table sets forth information regarding the number of shares and the value of unvested restricted stock awards held by the NEOs at August 31, 2017.

 

Name

 

Grant

Date

   

Number of Shares of Stock

That Have Not Vested (1)

   

Market Value of Shares of Stock That Have Not Vested (2)

 
                         

F. Philip Snow

 

11/1/13

      783     $ 123,072  

Mark J. Hale

 

11/1/13

      1,370     $ 215,337  

John W. Wiseman

 

11/1/13

      392     $ 61,615  

Maurizio Nicolelli

 

11/1/13

      979     $ 153,879  

Edward Baker-Greene

              $  

Philip A. Hadley

 

11/1/13

      2,153     $ 338,409  

Scott G. Miller

              $  

 

 

(1)

The stock awards granted on November 1, 2013 cliff vested 60% on November 1, 2016 and the remaining 40% will vest on November 1, 2018.

 

 

(2)

The market value of the restricted stock awards that have not vested is calculated by multiplying the number of shares that have not vested by the closing price of FactSet common stock on August 31, 2017, which was $157.18.

 

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Outstanding Equity Awards (Stock Options) at Fiscal Year-end

 

 

The table below shows each NEOs outstanding option grants at August 31, 2017. For each outstanding option grant, the table shows the stock options that have vested (or that are “Exercisable”) and those not yet vested (or that are “Unexercisable”).

 

 

 

     

Number of Options

   

Exercise

   

Name

Grant Date

 

Exercisable (1)

     

Unexercisable

   

Price

 

Expiration Date

                               

F. Philip Snow

11/8/10

    7,334             $ 88.40  

11/8/17

 

11/1/11

    4,729             $ 94.84  

11/1/21

 

11/1/12

    9,007   (2)     481     $ 92.22  

11/1/22

 

11/3/14

      (3)     21,237     $ 131.31  

11/3/24

 

7/1/15

    26,667   (4)     93,333     $ 164.90  

7/1/25

 

11/1/16

      (6)     32,961     $ 152.28  

11/1/26

Mark J. Hale

11/1/11

    9,458             $ 94.84  

11/1/21

 

11/1/12

    15,130   (2)     850     $ 92.22  

11/1/22

 

11/3/14

      (3)     10,088     $ 131.31  

11/3/24

 

11/2/15

    6,802   (6)     27,197     $ 175.20  

11/2/25

 

11/1/16

      (6)     8,874     $ 152.28  

11/1/26

John Wiseman

11/1/11

    72             $ 94.84  

11/1/21

 

11/1/12

    620   (2)     202     $ 92.22  

11/1/22

 

11/3/14

      (3)     3,318     $ 131.31  

11/3/24

 

5/1/15

      (5)     1,334     $ 159.14  

5/1/25

 

11/2/15

    446   (6)     1,785     $ 175.20  

11/2/25

 

11/1/16

      (6)     4,564     $ 152.28  

11/1/26

 

7/6/17

      (6)     18,033     $ 160.58  

7/6/27

Maurizio Nicolelli

11/1/11

    5,675             $ 94.84  

11/1/21

 

11/1/12

    9,928   (2)     559     $ 92.22  

11/1/22

 

11/3/14

      (3)     6,637     $ 131.31  

11/3/24

 

11/2/15

    1,275   (6)     5,100     $ 175.20  

11/2/25

 

11/1/16

      (6)     17,748     $ 152.28  

11/1/26

Edward Baker-Greene

6/1/15

      (5)     4,854     $ 166.74  

6/1/25

 

11/2/15

    3,400   (6)     13,600     $ 175.20  

11/2/25

 

11/2/17

      (6)     8,240     $ 152.28  

11/1/26

Philip A. Hadley

11/1/11

    18,916             $ 94.84  

11/1/21

 

11/1/12

    23,721   (2)     1,247     $ 92.22  

11/1/22

 

 

(1)

Unless noted below, 20% of each option grant is exercisable one year after the grant date, with the remainder vesting at a rate of 1.67% per month.

 

 

(2)

Included in the options granted on November 1, 2012 are performance-based options. Based upon the achievement of certain ASV and EPS growth targets as of August 31, 2014, 20% of the performance-based options became eligible to vest. These performance-based options vested 40% on November 1, 2014 and then 1.67% per month thereafter. The remaining performance-based options that did not become eligible to vest (representing 80% of the original grant) were recorded as pre-vesting forfeitures as of August 31, 2014.

 

 

(3)

Options granted on November 3, 2014, cliff vest 60% after three years of service (on November 3, 2017) and the remaining 40% vest after five years (on November 3, 2019).

 

 

(4)

These options vest 11.11% upon each anniversary date of the grant and will be fully vested after nine years (on July 1, 2024).

 

 

(5)

These options cliff vest 60% on the third anniversary date of the award and the remaining 40% cliff vest after the fifth anniversary date of the award.

 

 

(6)

These options vest 20% each anniversary date of the award over a five-year period.

 

Mr. Miller, upon his separation from the Company and his named executive officer position as Executive Vice President, Global Director of Sales, effective April 21, 2017, had 53,279 stock options outstanding, all of which were unvested. In conjunction with his departure, the vesting of certain of these outstanding options was accelerated. In total, 17,074 of his outstanding grants were deemed exercisable on his effective date of departure, with the remaining 36,205 options forfeited. In accordance with the terms of the FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated, Mr. Miller then had 90 days in which to exercise these options. Any options not exercised at the end of this period were forfeited.

 

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Option Exercises and Stock Vested 

 

The following table sets forth information regarding the number and value of stock options exercised and stock awards vested for each NEO during fiscal 2017. Exercised options and restricted stock are not required to be held for a specified period.

 

   

Option Awards

   

Stock Awards

 
                         
   

Number of Shares

Acquired on

Exercise

   

Value Realized on

Exercise(1)

   

Number of

Shares Acquired

on Vesting(2)

   

Value Realized on

Vesting(3)

 
                         

F. Philip Snow

    6,250     $ 573,500       1,174     $ 178,777  

Mark J. Hale

        $       2,054     $ 312,783  

John W. Wiseman

        $           $  

Maurizio Nicolelli

    20,429     $ 1,620,998       1,467     $ 233,395  

Edward Baker-Greene

        $           $  

Philip A. Hadley

    33,333     $ 3,050,636       7,138     $ 1,089,516  

Scott G. Miller

    17,074     $ 429,996           $  

 

 

(1)

Based upon the market price of the purchased shares on the exercise date less the option exercise price paid for such shares.

 

 

(2)

60% of the stock awards granted on November 1, 2013 to Messrs. Snow, Hale, Nicolelli and Hadley vested on November 1, 2016, with the remaining 40% to vest on November 1, 2018.

 

 

(3)

Value realized represents the closing value of the underlying stock on the vesting date.

 

Nonqualified Deferred Compensation 

 

The Company does not have a Compensation Deferral Program, thus the nonqualified deferred compensation table has been omitted for fiscal 2017.

 

Pension Benefits

 

 

The Company does not have a Pension Program thus no pension retirement benefits were paid to executives in fiscal 2017.

 

Potential Payments upon Termination or Change in Control

 

At the end of fiscal 2017, the Company did not have employment agreements with any of the NEOs. The Company sponsors equity incentive compensation plans that provide the NEOs with additional compensation in connection with a termination of employment and/or change of control under the following circumstances.

 

Change in Control

Upon the occurrence of a Change in Control, (i) all option awards granted to a NEO which have not been exercised, which have not expired by their terms, or for which restrictions have not yet lapsed shall immediately be fully exercisable for the remainder of their respective terms and all restrictions shall lapse and conditions deemed satisfied, and (ii) the Compensation and Talent Committee may, in its sole discretion, determine that such option awards be immediately terminated, in which case the NEO will be paid an amount in cash (subject to any applicable withholding taxes) in respect of each option award equal to the difference between the fair market value of a share and the exercise price of such option award.

 

Death or Disability

Upon the NEO’s death, any unexercised option award to the extent exercisable on the date of the NEO’s death may be exercised in whole or in part, at any time within one year after the NEO’s death, by a beneficiary or an estate. If a NEO becomes disabled, any unexercised option award to the extent exercisable at the date of such termination of employment due to disability may be exercised in whole or in part, at any time within one year after the date of termination.

 

Termination without Cause

If the Company terminates the NEO for any reason other than cause, death or disability, then any unexercised option award, to the extent exercisable at the date of such termination of employment, may be exercised, in whole or in part, at any time within three months after such termination of employment; provided, however, that if the NEO dies within the three-month period following such termination of employment, the option award may be exercised by the deceased NEO’s personal representative or by the person to whom the option award is transferred by will or the applicable laws of descent and distribution within 180 days of the NEO’s death, but in no event beyond the scheduled expiration of the option award.

 

32

 

 

Termination with Cause

 

Upon termination with cause, all unexercised awards terminate immediately.

 

Employee Stock Purchase Plan

 

Upon termination of employment, all amounts in the participant’s account are paid to the participant.

 

 

Potential Payments upon Termination of Employment or a Change in Control Table

The information in the table below summarizes the compensation that would be paid under plans and contractual arrangements in effect as of August 31, 2017 to each of the NEOs in the event of termination of such executive’s employment with the Company and/or change of control of the Company as of that date. The amounts assume that the listed officer left FactSet effective August 31, 2017, and that the price per share of FactSet common stock on that date was $157.18. The amounts are based upon the difference between $157.18 and the exercise price of the unvested award held by the NEO at August 31, 2017.

 

 

Name of Officer

 

Death or

Disability

   

Termination

Without Cause

   

Termination

With Cause

   

Change in

Control(1)

 
                                 

F. Philip Snow

  $ -     $ -     $ -     $ 865,241  

Mark J. Hale

  $ -     $ -     $ -     $ 575,012  

John W. Wiseman

  $ -     $ -     $ -     $ 182,937  

Maurizio Nicolelli

  $ -     $ -     $ -     $ 448,843  

Edward Baker-Greene

  $ -     $ -     $ -     $ 40,376  

Philip A. Hadley

  $ -     $ -     $ -     $ 419,401  

 

 

(1)

The Change in Control payout is applicable to (a) all option awards granted to Company employees which have not been exercised, which have not expired by their terms, or for which restrictions have not yet lapsed shall immediately be fully exercisable and (b) all stock awards granted to Company employees which have not vested or for which restrictions have not yet lapsed shall immediately be fully vested.

 

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Proposal 3: Advisory Vote on the Fiscal 2017 Compensation of the Company’s Named Executive Officers

 

As required by Section 14A of the Securities and Exchange Act of 1934, FactSet seeks an advisory, non-binding stockholder vote with respect to compensation awarded to its NEOs.

 

As previously discussed in the CD&A, FactSet designs its compensation programs to maintain a performance and achievement-oriented environment throughout the Company. FactSet’s executive compensation program is overseen by the Company’s Compensation and Talent Committee to encourage decisions and behaviors that align with the long-term interests of the Company’s stockholders. The Compensation and Talent Committee has designed the executive compensation policies for the Company’s NEOs to meet the following goals and principles:

 

 

Ensure executive compensation is aligned with FactSet’s corporate strategies and business objectives.

 

 

Balance an executive officer’s compensation between short-term and long-term performance objectives that enhance stockholder value by linking rewards to measurable corporate and individual performance.

 

 

Maintain executive compensation at levels commensurate with relative contributions of other members of senior management.

 

 

Reflect qualitative factors beyond the quantitative financial metrics as key considerations in the determination of individual executive compensation payments.

 

 

Attract and retain talented personnel by considering compensation offered for similar positions by other companies in the technology and financial information industries.

 

Required Vote

FactSet asks its stockholders to indicate their support for the compensation awarded to its NEOs as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives the Company’s stockholders the opportunity to express their views on FactSet’s NEO compensation. This vote is not intended to address any specific item of compensation, but rather the overall compensation of the NEOs and the philosophy, policies and practices described in this proxy statement. Accordingly, the Company asks its stockholders to vote “FOR” the following resolution at the meeting:

 

“RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2017 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, the compensation tables and related notes and narrative.”

 

The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation and Talent Committee, or its Board. The Company’s Board and its Compensation and Talent Committee value the opinions of the stockholders and will take into account the outcome of this vote in considering future compensation arrangements.

 

FactSet’s Board Recommends that you vote “FOR the approval of Fiscal 2017 Compensation of the
Named Executive Officers as Disclosed in the Proxy Statement.

 

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Proposal 4: Approval of FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated

 

In 2004, FactSet’s Board adopted, and its stockholders approved, the FactSet Research Systems Inc. Stock Option and Award Plan. In 2010, FactSet’s Board adopted, and its stockholders approved, an amendment and restatement of the plan. On October 24, 2017, FactSet’s Board adopted a second amendment and restatement of the plan, renamed the Stock Option and Award Plan, as Amended and Restated (the “Long Term Incentive Plan” or “LTIP”), subject to and effective upon stockholder approval, in order to increase the number of shares reserved for issuance under the LTIP, incorporate several provisions that are favorable to FactSet’s stockholders, add performance measures, extend the term of the LTIP so that it will survive ten years from approval, and make certain other changes to update the LTIP.

 

As of the date of this Proxy Statement, the Board estimates that the LTIP has only enough shares reserved to provide for equity incentive grants through the fiscal year 2018. Since FactSet’s ability to grant equity incentive compensation to eligible individuals is an integral part of its compensation practices, the Board is requesting stockholder approval to add 5,750,000 shares of common stock to the LTIP’s share reserve so that FactSet may continue to grant awards after fiscal year 2018. At the same time, the Board made several changes to the terms of the LTIP that are favorable to stockholders.

 

Summary of the Proposal

 

FactSet operates in a challenging marketplace in which its success depends to a great extent on its ability to attract and retain employees of the highest caliber. One of the tools the Board regards as essential in addressing these human resource challenges is a competitive equity incentive program. FactSet’s employee equity incentive program provides a range of incentive tools and sufficient flexibility to permit the Compensation and Talent Committee to implement them in ways that will make the most effective use of the shares FactSet’s stockholders authorize for incentive purposes.

 

As of October 24, 2017, FactSet had approximately 800,000 shares remaining for future awards under the LTIP. On October 24, 2017, the Board adopted the Long Term Incentive Plan, subject to approval by stockholders at the Annual Meeting, which increases by 5,750,000 the aggregate maximum number of shares of common stock that may be issued under the LTIP, so that the new total share reserve for grants under the LTIP will be 17,250,000 shares of common stock.

 

The Compensation and Talent Committee believes that increasing the shares reserved for issuance under the LTIP is necessary for FactSet to continue to offer a competitive equity incentive program. Based upon recent equity award requirements, the Board believes that the additional shares will provide the Company with enough shares to continue to offer competitive equity compensation through fiscal year 2022. If the stockholders do not approve the proposed share increase, the Board believes the Company will not be able to continue to offer competitive equity packages to retain its current employees and hire new employees in the next 12 months and future years. This could significantly hamper FactSet’s plans for growth and adversely affect its ability to operate its business. In addition, if the Company was unable to grant competitive equity awards, it may be required to offer additional cash-based incentives in lieu of equity to compete for talent. This could have a significant effect upon the Company’s quarterly results of operations and balance sheet and not be competitive with other companies that offer equity.

 

The Board believes that the LTIP will continue to serve a critical role in attracting and retaining the high caliber employees essential to FactSet’s success and in motivating them to strive to meet its goals. Therefore, the Board urges you to vote to approve the adoption of the LTIP.

 

Stockholder-Favorable Amendments to the Long Term Incentive Plan

In connection with this proposal, the Compensation and Talent Committee made several material changes to the LTIP that are favorable to FactSet’s stockholders, as follows:

 

 

Eliminated automatic full vesting upon a change in control of the Company. Rather, the LTIP now has a “double trigger” vesting provision so that awards will vest only if (i) the awards are not assumed, continued or substituted by an acquirer in a transaction, or (ii) the awards are assumed, continued or substituted by an acquirer in a transaction but the grantee’s service is involuntarily terminated within the 24-month period after the transaction, and, in the case of performance awards, the acceleration is limited to either (a) assumed achievement of the applicable performance goals at 100% of target with the result prorated based on the period of the grantee’s actual service during the applicable full performance period, or (b) actual achievement of the applicable performance goals, as determined by the Compensation and Talent Committee.

     

 

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Changed the LTIP’s definition of “change in control” to increase the change in beneficial ownership trigger from a 20% change in ownership to a more-than-50% change in ownership and confirm that consummation (and not just stockholder approval) of a transaction is needed so that the LTIP does not have a “liberal” change in control definition.

 

 

Expanded the LTIP’s clawback language and, separately, on October 24, 2017, the full Board adopted an Incentive Compensation Clawback Policy.

 

 

Added a one-year minimum vesting requirement for 95% of the shares subject to awards granted under the LTIP.

 

 

Revised the share recycling provision so that it is clear that the LTIP provides for gross share counting. The number of shares remaining for grant under the LTIP is reduced by the gross number of shares subject to options and stock appreciation rights settled on a net basis. Shares withheld for taxes in connection with options or stock appreciation rights or tendered in payment of an option’s exercise price are not recycled. Also, shares withheld or reacquired by the Company for tax withholding are not added back to the pool for future awards.

 

 

Confirmed that shares purchased in the open market with proceeds from the exercise of options will not be added back to the pool for future awards.

 

 

Expanded the LTIP’s performance-based award provisions to include performance criteria for which the Board is also seeking stockholder approval and included separate annual award limits based on the type of the award. The LTIP establishes a list of measures of business and financial performance from which the Compensation and Talent Committee may construct predetermined performance goals that must be met for an award to vest.

 

 

Changed the provisions on dividend equivalents so that they cannot be paid currently on any unvested restricted share unit awards and cannot be paid at all with respect to options or stock appreciation rights.

 

 

Clarified the provisions on dividends on restricted shares so that they cannot be paid currently on any unvested restricted shares but rather would be accumulated and paid upon vesting of the underlying award.

 

 

Changed the LTIP to limit transferability of options only for estate planning purposes. All other awards are nontransferable.

 

 

Other Key Features of the Long Term Incentive Plan

The following is a summary of other key features of the LTIP of particular interest to FactSet’s stockholders that the Compensation and Talent Committee believe reflect best practices:

 

 

There is no “evergreen” annual share increase provision.

 

 

The LTIP prohibits repricing of stock options and stock appreciation rights without the approval of stockholders.

 

 

No discount from fair market value is permitted in setting the exercise price of stock options and stock appreciation rights.

 

 

Each share subject to a “full value” award (i.e. restricted share or restricted share unit) will reduce the number of shares remaining available for grant under the LTIP by 2.5 shares.

 

 

The LTIP has a fixed term of ten years.

 

Performance-Based Awards

The LTIP is designed to preserve the Company’s ability to deduct in full for federal income tax purposes the compensation recognized by its executive officers in connection with certain types of awards. Section 162(m) of the Internal Revenue Code (the “Code”) generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to any of the “covered employees,” consisting of the chief executive officer and any of the three other most highly compensated officers of a publicly held company other than the chief financial officer. However, qualified performance-based compensation is excluded from this limit. To enable compensation in connection with stock options, stock appreciation rights, certain restricted shares and restricted share unit awards, performance shares, performance units, and cash-based awards granted under the LTIP to qualify as “performance-based” within the meaning of Section 162(m) of the Code, the shareholders are being asked to approve certain material terms of the LTIP. By approving the LTIP, the shareholders will be specifically approving, among other things:

 

 

the eligibility requirements for participation in the LTIP;

 

 

the maximum numbers of shares for which stock-based awards intended to qualify as performance-based may be granted to an employee in any fiscal year;

 

 

the maximum dollar amount that a grantee may receive under a cash-based award intended to qualify as performance-based in any fiscal year; and

 

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the performance measures that may be used by the Compensation and Talent Committee to establish the performance goals applicable to the grant, vesting, settlement, or payment of awards that are intended to result in qualified performance-based compensation.

 

While the Compensation and Talent Committee believes that compensation provided by such awards under the LTIP generally will be deductible by the Company for federal income tax purposes, under certain circumstances, such as a change in control of the Company, compensation paid in settlement of certain awards may not qualify as performance-based. Further, the Compensation and Talent Committee retains the discretion to grant awards to covered employees that are not intended to qualify for deduction in full under Section 162(m) of the Code.

 

Historical Award Information

 

Common measures of an equity incentive plan’s cost include burn rate, dilution and overhang. The burn rate, or run rate, refers to how fast a company uses the supply of shares authorized for issuance under its equity incentive plan. Over the last two years, the Company has maintained an average equity run rate of only 2.9% of shares of common stock outstanding per year. Dilution measures the degree to which FactSet’s stockholders’ ownership has been diluted by stock-based compensation awarded under the plan and also includes shares that may be awarded under the plan in the future (“overhang”).

 

The following table shows how the Company’s key equity metrics have changed over the past two years:

 

Key Equity Metrics:

 

2017

   

2016

 

Equity Run Rate (1)

    2.7 %     3.1 %

Overhang (2)

    11.2 %     12.5 %

Dilution (3)

    8.9 %     8.8 %

 

 

1.

Equity run rate is calculated by dividing the number of shares subject to equity awards granted during the year by the weighted-average number of shares outstanding during the year.

 

 

2.

Overhang is calculated by dividing (a) the sum of (x) the number of shares subject to equity awards outstanding at the end of the year and (y) the number of shares available for future grants, by (b) the number of shares outstanding at the end of the year.

 

 

3.

Dilution is calculated by dividing the number of shares subject to equity awards outstanding at the end of the fiscal year by the number of shares outstanding at the end of the fiscal year.

 

Shares Requested

 

The maximum aggregate number of shares the Compensation and Talent Committee is requesting stockholders authorize under the LTIP is 17,750,000, which reflects an addition of 5,750,000 shares. The total overhang resulting from this share request represents approximately 25% of the number of shares of FactSet’s common stock outstanding as of October 24, 2017. The Board considered several factors in determining the amount of shares requested as set forth above, including the intention to authorize sufficient shares to provide for the needs of a reasonable incentive program through fiscal year 2022.

 

The Board believes that the LTIP will serve a critical role in attracting and retaining the high caliber employees essential to FactSet’s success and in motivating these individuals to strive to meet its goals. Therefore, the Board urges you to vote to approve the adoption of the LTIP.

 

Summary of the Long Term Incentive Plan

 

The following summary of the LTIP is qualified in its entirety by the specific language of the LTIP, a copy of which is attached to this Proxy Statement as Appendix A.

 

Purpose and Overview

The purpose of the LTIP is to provide a means by which key employees of FactSet and its subsidiaries, both inside and outside the U.S., can acquire and maintain Company stock ownership, thereby strengthening their commitment to the success of the Company and its subsidiaries and their desire to remain employed by the Company and its subsidiaries. The LTIP also is intended to attract, employ and retain key employees and to provide such employees with additional incentive and reward opportunities designed to encourage them to enhance the profitable growth of the Company and its subsidiaries. The LTIP provides for the grant of stock options, stock appreciation rights, restricted shares, restricted share units, performance units, performance shares, and cash awards. Provisions have been included in the LTIP to meet the requirements for deductibility of executive compensation under Section 162(m) of the Code to qualify awards under the LTIP as performance-based compensation.

 

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Administration 

The LTIP is administered by the Compensation and Talent Committee, which consists of not less than two persons who are directors of the Company, each of whom qualifies as an “outside director” within the meaning of Section 162(m) of the Code and a “non-employee director” within the meaning of Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934 (the “1934 Act”). The Compensation and Talent Committee, in its sole discretion, has the power to grant awards under the LTIP, determine the terms of these awards, amend awards, interpret the provisions under the LTIP, and take any action that it deems necessary or advisable for the administration of the LTIP. The Compensation and Talent Committee may delegate any or all of its authority to administer the LTIP as it deems appropriate, to the extent delegating such authority is not prohibited by law. The Compensation and Talent Committee may adopt sub-plans to govern participation by employees outside the U.S..

 

Eligibility and Participation. 

Eligibility to participate in the LTIP is limited to key employees of the Company and its subsidiaries. Participation in the LTIP is at the discretion of the Compensation and Talent Committee. As of October 24, 2017, approximately 450 employees would be eligible for grants under the LTIP.

 

Limits on Awards Under the Plan

Subject to adjustment as provided under the LTIP, the total number of shares available for grant under the LTIP will not exceed 17,250,000 shares. To enable compensation provided in connection with certain types of awards intended to qualify as “performance-based” within the meaning of Section 162(m) of the Code, the LTIP establishes a limit on the maximum aggregate number of shares or dollar value for which such awards may be granted to an employee in any fiscal year. Subject to adjustment as provided in the LTIP: (i) the maximum number of shares that may be made subject to awards granted under the LTIP during a fiscal year to any one person in the form of options or stock appreciation rights is, in the aggregate, 500,000 shares; (ii) the maximum number of shares that may be made subject to awards granted under the LTIP during a fiscal year to any one person in the form of performance shares, performance units, restricted shares, or restricted share units is, in the aggregate, 500,000 shares; (iii) in connection with awards granted under the LTIP during a fiscal year to any one person in the form of performance shares, performance units, or restricted share units, the maximum cash amount payable thereunder is the amount equal to the number of shares made subject to the award, as limited by (ii) above, multiplied by the fair market value as determined as of the payment date; and (iv) in connection with awards granted under the LTIP during a fiscal year to any one person in the form of performance units or cash awards, the maximum cash amount payable under such performance units or cash awards is, in the aggregate, $5,000,000; provided, however, that each of the foregoing limitations will be multiplied by two when applied to awards granted to any individual during the fiscal year in which such individual first commences employment with the Company or an affiliate; and provided, further, that the limitations set forth above will be multiplied by the number of fiscal years over which the applicable performance period spans (in whole or in part), if the performance period is longer than 12 months’ duration, when applied to performance-based awards. If an award is terminated, surrendered or canceled in the same year in which it was granted, such award nevertheless will continue to be counted against the limitations set forth above for the fiscal year in which it was granted.

 

In addition, to comply with applicable tax rules, the LTIP also limits the number of shares that may be issued upon the exercise of incentive stock options granted under the LTIP to 17,250,000 shares of common stock.

 

Share Counting

Each share subject to an option or stock appreciation right under the LTIP will be counted against the LTIP’s share limit described above as one share. Each one share subject to an award other than options and stock appreciation rights granted pursuant to the LTIP or forfeited or repurchased as described below will be counted for purposes of the LTIP’s share limit described above as two and one-half shares.

 

If an outstanding award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares acquired pursuant to an award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the grantee’s purchase price, the shares allocable to the terminated portion of such award or such forfeited or repurchased shares will again be available for issuance under the LTIP. Shares will not be deemed to have been issued pursuant to the LTIP with respect to any portion of an award that is settled in cash. Upon payment in shares pursuant to the exercise of a stock appreciation right, the number of shares available for issuance under the LTIP will be reduced by the gross number of shares for which the stock appreciation right is exercised. If the exercise price of an option is paid by tender to the Company, or attestation to the ownership, of shares owned by the grantee, or by means of a net exercise, the number of shares available for issuance under the LTIP will be reduced by the gross number of shares for which the option is exercised. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to awards will not again be available for issuance under the LTIP. Shares purchased in the open market with proceeds from the exercise of options will not be added to the LTIP’s share limit.

 

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Adjustments for Capital Structure Changes

In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, share combination, or other change in the corporate structure of the Company affecting the shares, the Compensation and Talent Committee will adjust the number and class of shares which may be delivered under the LTIP, the number, class and price of shares subject to outstanding awards (including the exercise price), and the numerical limits in the LTIP, in such manner as the Compensation and Talent Committee (in its sole discretion) determines to be appropriate including to prevent the dilution, diminution or enlargement of such awards and any such adjustment may, in the sole discretion of the Compensation and Talent Committee, take the form of options covering more than one class of shares. The number of shares subject to any award will be a whole number. Any such adjustment will be conclusive and binding for all purposes of the LTIP.

 

Minimum Vesting 

No more than 5% of the aggregate number of shares of common stock authorized under the LTIP may be issued pursuant to awards that provide for service-based vesting over a period of less than one year or performance-based vesting over a performance period of less than one year.

 

Prohibition of Option and SAR Repricing

The LTIP expressly provides that, without the approval of a majority of the votes cast in person or by proxy at a meeting of FactSet’s stockholders, the Compensation and Talent Committee may not provide for any of the following with respect to underwater options or stock appreciation rights: (i) either the cancellation of such outstanding options or stock appreciation rights in exchange for the grant of new options or stock appreciation rights at a lower exercise price or the amendment of outstanding options or stock appreciation rights to reduce the exercise price, (ii) the issuance of new full value awards in exchange for the cancellation of such outstanding options or stock appreciation rights, or (iii) the cancellation of such outstanding options or stock appreciation rights in exchange for payments in cash.

 

Stock Options

Options granted under the LTIP may be either incentive stock options within the meaning of Section 422 of the Code or nonqualified stock options. The option exercise price may not be less than the fair market value of the stock on the date the option is granted. Options are non-transferable or assignable other than by will or law of descent and distribution; provided, however, that with the approval of the Compensation and Talent Committee, options may be transferred to immediate family members or to a trust for the benefit of such family members. The exercise price may be paid in cash, by net exercise, by broker-assisted cashless exercise, or with previously acquired shares of Company common stock. No dividend equivalents will be paid with respect to option shares. Option may have up to a ten year term. Options expire earlier upon expiration of a post-termination exercise period. The terms of each stock option will be determined by the Compensation and Talent Committee at the time of grant.

 

Stock Appreciation Rights

Stock appreciation rights may, but need not, relate to options. The Compensation and Talent Committee determines the terms of each stock appreciation right at the time of grant. Any freestanding stock appreciation right may not be granted at less than the fair market value of the stock on the date the stock appreciation right is granted and cannot have a term of longer than ten years. At the discretion of the Compensation and Talent Committee, the payment upon stock appreciation right exercise may be in cash, shares of Company common stock or a combination thereof. No dividend equivalents will be paid with respect to stock appreciation rights.

 

Restricted Shares and Restricted Share Units

The LTIP provides for the grant of restricted shares or restricted share units to employees of the Company or its Subsidiaries in such amounts as the Committee, in its sole discretion, will determine.

 

Restricted shares may be subject to vesting conditions based on such service or performance criteria as the Compensation and Talent Committee specifies, including the attainment of one or more performance goals similar to those described below in connection with performance awards. Shares acquired pursuant to a restricted share award may not be transferred by the grantee until vested. Unless otherwise provided by the Compensation and Talent Committee, upon termination of employment, a grantee will forfeit any restricted shares as to which the vesting restrictions have not lapsed prior to the grantee’s termination of employment.

 

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The Compensation and Talent Committee may grant restricted share units under the LTIP, which represent rights to receive shares of FactSet’s common stock at a future date determined in accordance with the grantee’s award agreement. No monetary payment is required for receipt of restricted share units or the shares issued in settlement of the award, the consideration for which is furnished in the form of the grantee’s services to the Company. The Compensation and Talent Committee may grant restricted share unit awards subject to the attainment of one or more performance goals similar to those described below in connection with performance awards, or may make the awards subject to vesting conditions similar to those applicable to restricted share awards. Unless otherwise provided by the Compensation and Talent Committee, upon termination of service, a grantee will forfeit any restricted share units, which have not vested prior to the grantee’s termination of service.

 

During the vesting period, grantees who hold restricted shares will have the right to dividends, however, the dividends will be subject to the same vesting schedule as the underlying shares. Grantees who hold restricted shares have the right to vote such shares as the record owner thereof. During the vesting period, grantees who hold restricted share units will have the right to dividend equivalent payments only if provided by the Compensation and Talent Committee in the award agreement, and any such dividend equivalents will be subject to the same vesting schedule as the underlying restricted share units. Grantees who hold restricted share units will not have the right to vote the underlying shares until shares are issued to the grantee to settle the award.

 

Cash Awards

The Compensation and Talent Committee may grant cash awards on such terms and conditions as it may determine, including, without limitation, awards in connection with any short-term or long-term cash incentive program established by the Company or an affiliate and those intended to qualify for the performance-based exception under Section 162(m) of the Code.

 

Performance Units, Performance Shares, and other Performance Awards

The LTIP provides for the grant of performance units and performance shares. Each performance unit will have an initial value that is established by the Compensation and Talent Committee on or before the grant date. Each performance share will have an initial value equal to the fair market value of a share on the grant date.

 

For purposes of qualifying awards of performance units, performance shares and other awards under the LTIP as performance-based compensation under Section 162(m) of the Code, the Compensation and Talent Committee may set restrictions based upon performance goals. Prior to the beginning of the applicable performance period or such later date as permitted under Section 162(m) of the Code, the Compensation and Talent Committee would establish one or more performance goals applicable to the award. The Compensation and Talent Committee may set performance goals based upon the achievement of Company-wide, subsidiary, departmental, regional, functional, divisional, business unit or individual goals, applicable federal or state securities laws, or any other basis (including, without limitation, relative to the performance of other corporations) determined by the Compensation and Talent Committee in its sole discretion.

 

The Compensation and Talent Committee, in its discretion, may base performance goals on one or more of the following such measures as may apply to an individual, one or more business units, divisions, or affiliates, or on a company-wide basis, and in absolute terms, relative to a base period, or relative to the performance of one or more comparable companies, peer groups, or an index covering multiple companies: annual subscription value; client count; user count; revenue; sales; expenses; operating income; gross margin; operating margin; earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization; pre-tax profit; net operating income; net income; economic value added; free cash flow; operating cash flow; balance of cash, cash equivalents and marketable securities; stock price; earnings per share; return on stockholder equity; return on capital; return on assets; return on investment; total stockholder return; employee satisfaction; employee retention; market share; customer satisfaction; product development; research and development expenses; completion of an identified special project; completion of a joint venture or other corporate transaction (including acquisitions or divestitures); completion of post-transaction integration; and talent development. Following completion of the applicable performance period, the Compensation and Talent Committee will certify in writing the extent to which the applicable performance goals have been attained and the resulting value to be paid to the grantee. The Compensation and Talent Committee retains the discretion to eliminate or reduce, but not increase, the amount that would otherwise be payable on the basis of the performance goals attained to a grantee who is a “covered employee” within the meaning of Section 162(m) of the Code. However, no such reduction may increase the amount paid to any other grantee.

 

Transferability of Awards

Awards granted under the LTIP may not be transferred except by will or the laws of descent and distribution and, during his or her lifetime, any options or awards may be exercised only by the employee; provided, however, that with the approval of the Compensation and Talent Committee, options may be transferred to immediate family members or to a trust for the benefit of such family members.

 

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Change of Control

If a Change of Control (as defined below, and more specifically in the LTIP) occurs, the surviving, continuing, successor or purchasing entity or its parent may, without the consent of any grantee, either assume or continue outstanding awards or substitute substantially equivalent awards for its stock. Any awards which are not assumed or continued in connection with a Change of Control or exercised or settled prior to the Change of Control will terminate effective as of the time of the Change of Control.

 

The LTIP also authorizes the Compensation and Talent Committee, in its discretion and without the consent of any grantee, to cancel each or any award denominated in shares of stock upon a Change of Control in exchange for a payment to the grantee with respect each vested share subject to the cancelled award of an amount equal to the excess of the consideration to be paid per share of common stock in the Change of Control transaction over the exercise price per share, if any, under the award.

 

The Compensation and Talent Committee only has discretion to accelerate vesting of awards in connection with a Change of Control if (i) the awards are not assumed, continued or substituted by an acquirer in a transaction, or (ii) the awards are assumed, continued or substituted by an acquirer in a transaction but the grantee’s employment is involuntarily terminated within the 24-month period after the transaction (so-called “double trigger” vesting), and in the case of performance awards the acceleration is limited to (a) assumed achievement of the applicable performance goals at 100% of target with the result prorated based on the period of the grantee’s actual service during the applicable full performance period, or (b) actual achievement of the applicable performance goals, as determined by the Compensation and Talent Committee.

 

For purposes of the LTIP, “Change of Control” generally means that any of the following events have occurred: (a) a person or entity becomes the beneficial owner of more than 50% of the then-outstanding voting stock of the Company; (b) during any period of two consecutive years, individuals who at the beginning of such period constitute the Board (together with any new director whose election by the Board or whose nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the directors then in office; (c) all or substantially all of the business of the Company is disposed of pursuant to a merger, consolidation or other transaction in which the Company is not the surviving corporation or the Company combines with another company and is the surviving corporation (unless the shareholders of the Company immediately following such merger, consolidation, combination, or other transaction beneficially own, directly or indirectly, more than 50% of the aggregate voting stock or other ownership interests of (x) the entity or entities, if any, that succeed to the business of the Company or (y) the combined company); (d) the Company is a party to a merger, consolidation, sale of assets or other reorganization, or a proxy contest, as a consequence of which the Board in office immediately prior to such transaction or event constitutes less than a majority of the Board thereafter; or (e) the sale of all or substantially all of the assets of the Company or a liquidation or dissolution of the Company.

 

Amendment or Termination of the LTIP

The Board may from time to time in its discretion amend or modify the LTIP without the approval of the stockholders of the Company, except as such stockholder approval may be required to permit transactions in shares pursuant to the LTIP to be exempt from liability under Section 16(b) of the 1934 Act or under the listing requirements of any securities exchange on which are listed any of the Company’s equity securities. The LTIP will terminate in 2027 on the tenth anniversary of the date the shareholders approved the LTIP.

 

Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the LTIP and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.

 

Incentive Stock Options. A grantee recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Grantees who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option will normally recognize a capital gain or loss upon the sale of the shares equal to the difference, if any, between the sale price and the purchase price of the shares. If a grantee satisfies such holding periods upon a sale of the shares, the Company will not be entitled to any deduction for federal income tax purposes. If a grantee disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the option exercise date and the exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the grantee upon the disqualifying disposition of the shares generally should be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code.

 

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In general, the difference between the option exercise price and the fair market value of the shares on the date of exercise of an incentive stock option is treated as an adjustment in computing the grantee’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to grantees subject to the alternative minimum tax.

 

Nonqualified Stock Options. Options not designated or qualifying as incentive stock options are nonqualified stock options having no special tax status. A grantee generally recognizes no taxable income upon receipt of such an option. Upon exercising a nonqualified stock option, the grantee normally recognizes ordinary income equal to the difference between the exercise price paid and the fair market value of the shares on the date when the option is exercised. If the grantee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the exercise date, will be taxed as capital gain or loss. The Company generally should be entitled to a tax deduction equal to the amount of ordinary income recognized by the grantee as a result of the exercise of a nonqualified stock option, except to the extent such deduction is limited by applicable provisions of the Code.

 

Stock Appreciation Rights. A grantee recognizes no taxable income upon the receipt of a stock appreciation right. Upon the exercise of a stock appreciation right, the grantee generally will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the exercise price. If the grantee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the grantee in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Code.

 

Restricted Shares. A grantee acquiring restricted shares generally will recognize ordinary income equal to the excess of the fair market value of the shares on the “determination date” over the price paid, if any, for such shares. The “determination date” is the date on which the grantee acquires the shares unless the shares are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture (e.g., when they become vested). If the determination date follows the date on which the grantee acquires the shares, the grantee may elect, pursuant to Section 83(b) of the Code, to designate the date of acquisition as the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date on which the shares are acquired. If the grantee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired pursuant to a restricted share award, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date, will be taxed as capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the grantee on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

 

Restricted Share Units, Performance, and Cash-Based Awards. A grantee generally will recognize no income upon the receipt of a restricted share unit, performance share, performance unit, or cash-based award. Upon the settlement of such awards, grantees normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any substantially vested shares of stock received. If the grantee is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the grantee receives restricted shares, the grantee generally will be taxed in the same manner as described above under “Restricted Shares.” Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date (as defined above under “Restricted Shares”), will be taxed as capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the grantee on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

 

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Section 162(m) of the Code. The LTIP is designed to preserve the Company’s ability to deduct in full for federal income tax purposes the compensation recognized by its executive officers in connection with certain types of awards. Section 162(m) of the Code generally denies a corporate tax deduction for annual compensation exceeding $1 million paid to any of the “covered employees,” consisting of the chief executive officer and any of the three other most highly compensated officers of a publicly held company other than the chief financial officer. However, qualified performance-based compensation is excluded from this limit. While the Board believes that compensation provided by such awards under the LTIP generally will be deductible by the Company for federal income tax purposes, under certain circumstances, such as a Change of Control of the Company, compensation paid in settlement of certain awards may not qualify as performance-based. Further, the Compensation and Talent Committee retains the discretion to grant awards to covered employees that are not intended to qualify for deduction in full under Section 162(m) of the Code.

 

Equity Granted to Certain Persons

FactSet cannot currently determine the benefits or number of shares subject to awards that may be granted in the future to executive officers and employees under the LTIP.

 

The following table sets forth information with respect to all grants made under the LTIP to NEOs, all current executive officers as a group, and all employees as a group, since the inception of the LTIP.

 

Name

 

Number of

Non-Qualified

Stock Options

   

Number of Restricted Shares

 
                 

Named Executive Officers

               

F. Philip Snow, Chief Executive Officer

    219,500       4,631  

Mark J. Hale, Executive Vice President, Chief Operating Officer

    160,103       11,058  

John W. Wiseman, Executive Vice President, Global Head of Sales and Client Services

    54,969       2,048  

Maurizio Nicolelli, Senior Vice President, Chief Financial Officer

    91,850       5,801  

Edward Baker-Greene, Senior Vice President, Chief Human Resources Officer

    30,094        

Scott G. Miller, Former Executive Vice President, Global Director of Sales

    53,279        

All Executive Officers as a Group (8 persons)

    807,341       46,639  

All Directors who are not Executive Officers

           

Each Nominee for Election as Director

           

Each Associate of any such Directors, Executive Officers or Nominees

           

Each other Person who Received 5% of such Options

           

All Employees including current Officers who are not Executive Officers as a Group

    8,962,442       966,092  

 

 

 

New Long Term Incentive Plan Benefits

No awards will be granted under the LTIP prior to its approval by the stockholders of the Company. All awards will be granted at the discretion of the Compensation and Talent Committee, and, accordingly, are not yet determinable.

 

FactSet’s Board recommends that you vote “FOR” the approval of The FactSet Research Systems Inc. Stock Option and Award Plan, as Amended and Restated.

 

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Proposal 5: Approval of FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated

 

In 2008, FactSet’s Board adopted, and its stockholders approved, FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan. On October 24, 2017, FactSet’s Board adopted an amendment and restatement of the plan, renamed the Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated (the “Director Plan”), subject to and effective upon stockholder approval, to increase the number of shares reserved for issuance under the plan, add the ability to grant restricted shares and restricted share units, add an annual grant limit, clarify the share recycling provision, extend the term of the plan so that it will survive ten years from approval, and make certain other changes to update the plan.

 

Summary of the Proposal

 

The Board seeks directors who accept high levels of responsibility and devote substantial time to their service as directors. The Board is asking FactSet stockholders to approve the Director Plan so that the Company can use it to attract and retain the best available personnel for service as non-employee directors and to encourage their continued service on the Board.

 

As of the date of this Proxy Statement, the Board estimates that the Director Plan has only enough shares reserved to provide for grants through the 2018 fiscal year. Since FactSet’s ability to grant awards to directors is an integral part of its compensation practices, the Board is requesting stockholder approval to add 250,000 shares of common stock to the Director Plan’s share reserve so that it may continue to grant awards after fiscal year 2022.

 

The Board strongly believes that the approval of the Director Plan is essential to FactSet’s continued success. The non-employee directors have an interest in this proposal.

 

Summary of the Director Plan

 

The following summary of the Director Plan is qualified in its entirety by the specific language of the Director Plan, a copy of which is attached to this Proxy Statement as Appendix B.

 

Changes to the Director Plan

The following is a summary of the material changes Compensation and Talent Committee made to the Director Plan:

 

 

Increased the number of shares reserved for issuance under awards granted under the Director Plan from 250,000 to 500,000 shares.

 

 

Added the ability to grant restricted shares and restricted share units under the Director Plan.

 

 

Added a $500,000 annual fiscal year limit on the combined grant date value of grants under the Director Plan and cash compensation paid to any non-employee director.

 

 

Added a provision similar to the one in the LTIP providing that each share subject to a “full value” award (i.e. restricted share or restricted share unit) will reduce the number of shares remaining available for grant under the Director Plan by 2.5 shares.

 

 

Revised the share recycling provision so that it is clear that the Director Plan provides for gross share counting. The number of shares remaining for grant under the Director Plan is reduced by the gross number of shares subject to options settled on a net basis. Shares withheld for taxes in connection with options or tendered in payment of an option’s exercise price are not recycled. Also, shares withheld or reacquired by the Company for tax withholding are not added back to the pool for future awards.

 

 

Confirmed that shares purchased in the open market with proceeds from the exercise of options will not be added back to the pool for future awards.

 

 

Extended the term of the Director Plan so that it will expire in 2027 on the tenth anniversary of the shareholders’ approval of the plan, subject to the Board’s right to terminate the plan earlier.

 

Administration

The Director Plan is administered by the Board. The Board has the authority to grant awards, determine the provisions of award agreements, and decide all matters relating to administration of the plan.

 

Awards

The Director Plan permits the grant of nonqualified stock options, restricted shares and restricted share units.

 

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Share Reserve

A total of 500,000 shares are reserved for issuance under the Director Plan. The shares may be either authorized but unissued shares, required shares, treasury shares, or any combination thereof.

 

Each share subject to an option under the Director Plan will be counted against the Director Plan’s share limit described above as one share. Each one share subject to an award other than options granted pursuant to the plan or forfeited or repurchased as described below will be counted for purposes of the plan’s share limit described above as two and one-half shares.

 

If an outstanding award for any reason expires or is terminated or canceled without having been exercised or settled in full, or if shares acquired pursuant to an award subject to forfeiture or repurchase are forfeited or repurchased by the Company for an amount not greater than the grantee’s purchase price, the shares allocable to the terminated portion of such award or such forfeited or repurchased shares will again be available for issuance under the plan. Shares will not be deemed to have been issued pursuant to the plan with respect to any portion of an award that is settled in cash. If the exercise price of an option is paid by tender to the Company, or attestation to the ownership, of shares owned by the grantee, or by means of a net exercise, the number of shares available for issuance under the plan will be reduced by the gross number of shares for which the option is exercised. Shares withheld or reacquired by the Company in satisfaction of tax withholding obligations pursuant to awards will not again be available for issuance under the plan. Shares purchased in the open market with proceeds from the exercise of options will not be added to the plan’s share limit.

 

Eligibility

Only non-employee directors are eligible to participate in the Director Plan. As of October 24, 2017, approximately seven non-employee directors would be eligible for grants under the plan.

 

Options

The Board may grant nonqualified options to non-employee directors and determine the number of shares to be subject to the option. The option exercise price may not be less than the fair market value of the stock on the date the option is granted. Options are non-transferable or assignable other than by will or law of descent and distribution; provided, however, that with the approval of the Board, options may be transferred to immediate family members or to a trust for the benefit of such family members. The exercise price may be paid in cash, by net exercise, by broker-assisted cashless exercise, or with previously acquired shares of Company common stock. Options may have up to a seven year term. Options expire earlier upon expiration of a post-termination exercise period. The terms of each stock option will be determined by the Board at the time of grant.

 

Restricted Shares and Restricted Share Units

The plan provides for the grant of restricted shares or restricted share units to non-employee directors in such amounts as the Board, in its sole discretion, may determine.

 

Restricted shares may be subject to vesting conditions specified by the Board. Shares acquired pursuant to a restricted share award may not be transferred by the grantee until vested. Unless otherwise provided by the Board, upon termination of service, a grantee will forfeit any restricted shares as to which the vesting restrictions have not lapsed prior to the grantee’s termination of service.

 

The Board may grant restricted share units under the plan, which represent rights to receive shares of FactSet’s common stock at a future date determined in accordance with the grantee’s award agreement. No monetary payment is required for receipt of restricted share units or the shares issued in settlement of the award, the consideration for which is furnished in the form of the grantee’s services to the Company. The Board may grant restricted share unit awards subject to time or performance-based vesting. Unless otherwise provided by the Board, upon termination of service, a grantee will forfeit any restricted share units which have not vested prior to the grantee’s termination of service.

 

During the vesting period, grantees who hold restricted shares will have the right to dividends, however, the dividends will be subject to the same vesting schedule as the underlying shares. Grantees who hold restricted shares have the right to vote such shares as the record owner thereof. During the vesting period, grantees who hold restricted share units will have the right to dividend equivalent payments only if provided by the Board in the award agreement, and any such dividend equivalents will be subject to the same vesting schedule as the underlying restricted share units. Grantees who hold restricted share units will not have the right to vote the underlying shares until shares are issued to the grantee to settle the award.

 

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Adjustments Upon Changes in Capitalization

If there is a stock split, reverse stock split, stock dividend, combination or reclassification of the shares, recapitalization, merger, or other transaction as described in the plan, appropriate adjustments will be made to outstanding awards.

 

Change of Control

In the event of a “Change of Control” of the Company as defined in the LTIP, all outstanding options under the Director Plan will become fully vested and the Board will have the right to provide that outstanding options will be canceled and cashed out or adjusted to represent options to receive cash or other consideration, and all outstanding restricted shares and restricted share units shall become fully vested.

 

Amendment and Termination of the Plan

The Board may amend the Director Plan at any time. Unless sooner terminated by action of the Board, the Director Plan will terminate in 2027 on the tenth anniversary of the date on which the shareholders approved the Director Plan. The Board may not grant awards under the Director Plan after such termination date, but awards granted before that date will continue to be effective in accordance with their terms.

 

Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the Director Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.

 

Nonqualified Stock Options.   A grantee generally recognizes no taxable income upon receipt of a nonqualified stock option. Upon exercising a nonqualified stock option, the grantee normally recognizes ordinary income equal to the difference between the exercise price paid and the fair market value of the shares on the date when the option is exercised. Upon the sale of stock acquired by the exercise of a nonqualified stock option, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the exercise date, will be taxed as capital gain or loss. The Company generally should be entitled to a tax deduction equal to the amount of ordinary income recognized by the grantee as a result of the exercise of a nonqualified stock option, except to the extent such deduction is limited by applicable provisions of the Code.

 

Restricted Shares.   A grantee acquiring restricted shares generally will recognize ordinary income equal to the excess of the fair market value of the shares on the “determination date” over the price paid, if any, for such shares. The “determination date” is the date on which the grantee acquires the shares unless the shares are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture (e.g., when they become vested). If the determination date follows the date on which the grantee acquires the shares, the grantee may elect, pursuant to Section 83(b) of the Code, to designate the date of acquisition as the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date on which the shares are acquired. Upon the sale of shares acquired pursuant to a restricted share award, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date, will be taxed as capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the grantee on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

 

Restricted Share Units. A grantee generally will recognize no income upon the receipt of a restricted share unit. Upon the settlement, grantees normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any substantially vested shares of stock received. Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date (as defined above), will be taxed as capital gain or loss. The Company generally should be entitled to a deduction equal to the amount of ordinary income recognized by the grantee on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

 

Equity Granted to Certain Persons under the Director Plan

The Company cannot currently determine the benefits or number of shares subject to awards that may be granted in the future directors under the Director Plan.

 

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The following table sets forth information, with respect to all grants made under the existing FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, since the inception of the plan.

 

Name

 

Number of Shares

 
         

Named Executive Officers

       

F. Philip Snow, Chief Executive Officer

     

Mark J. Hale, Executive Vice President, Chief Operating Officer

     

John W. Wiseman, Executive Vice President, Global Head of Sales and Client Services

     

Maurizio Nicolelli, Senior Vice President, Chief Financial Officer

     

Edward Baker-Greene, Senior Vice President, Chief Human Resources Officer

     

Scott G. Miller, Former Executive Vice President, Global Director of Sales

     

All Executive Officers as a Group (8 persons)

     

All Directors who are not Executive Officers

    141,503  

Each Nominee for Election as Director

     

Each Associate of any such Directors, Executive Officers or Nominees

     

Each Other Person who Received 5% of such Options

     

All Employees Including Current Officers who are not Executive Officers as a Group

     

 

New Director Plan Benefits

No awards will be granted under the Director Plan prior to its approval by the stockholders of the Company. All awards will be granted at the discretion of the Committee, and, accordingly, are not yet determinable.

 

FactSet’s Board recommends that you vote “FOR” the approval of The FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated.

 

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Proposal 6: Approval of FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated

 

In 2008, FactSet’s Board adopted, and its stockholders approved, the 2008 Employee Stock Purchase Plan. In 2014, FactSet’s Board adopted, and its shareholders approved an amendment and restatement of the plan. On October 24, 2017, FactSet’s Board adopted an amendment and restatement of the plan, renamed the Employee Stock Purchase Plan, as Amended and Restated (the “ESPP”), subject to and effective upon stockholder approval, to make certain changes to update the existing plan.

 

Summary of the Proposal 

 

The Compensation and Talent Committee believes that the ESPP is a valued benefit for FactSet’s eligible employee base. Allowing employees to purchase shares of the Company’s common stock through the ESPP motivates high levels of performance and provides an effective means of encouraging employee commitment to the success of the Company and recruiting new employees.

 

As of the date of this Proxy Statement, the Board estimates that the ESPP has enough shares reserved to provide for participation through the 2022 fiscal year. Since FactSet’s ability to allow employees to purchase shares at a discount under this plan is an integral part of its compensation practices, the Board is requesting stockholder approval that FactSet may continue to allow participation after fiscal year 2018.

 

Summary of the ESPP

 

The following summary of the ESPP is qualified in its entirety by the specific language of the ESPP, a copy of which is attached to this Proxy Statement as Appendix C.

 

General

The ESPP provides eligible employees with the opportunity to acquire the Company’s common stock at a discount. The plan is intended to qualify as an “employee stock purchase plan” under Section 423 of the Code for U.S. participants. The ESPP also permits the Company to include its non-U.S. employees in offerings not intended to qualify under Section 423 of the Code. The Compensation and Talent Committee may adopt sub-plans to govern participation by employees outside the U.S.. The sub-plans may have terms that are different than the terms of the base plan.

 

Share Reserve

A total of 500,000 shares have been reserved for issuance under the ESPP. In the event of any stock split, stock dividend or other change in the capital structure of the Company, appropriate adjustments will be made in the number, kind and purchase price of shares under the ESPP.

 

Administration

The ESPP is administered by the Compensation and Talent Committee. All determinations of the Compensation and Talent Committee are final and binding on all persons having an interest in the ESPP.

 

Eligibility

Any individual who is employed by the Company in the U.S. on a full-time or part-time basis on the enrollment date (the first day of each offering period), other than an individual working not more than 20 hours per week or five months in a year, is eligible to participate in the ESPP starting with the first offering period after ninety days of service. Currently, employees in the United Kingdom are also eligible to participate in the plan subject to the terms of a sub-plan that governs their participation.

 

Offering Period

The ESPP is implemented by offering periods lasting three months (one quarter) in duration with a new offering period commencing on March 1, June 1, September 1 and December 1 of each year. To participate in the ESPP, each eligible employee must authorize payroll deductions pursuant to the ESPP. Such payroll deductions may not exceed 10% of the base compensation that he or she receives on each pay day during the offering period.

 

Option Purchase Price

Shares of FactSet’s common stock may be purchased under the ESPP at a purchase price equal to 85% of the lesser of the fair market value of FactSet’s common stock on (i) the first day of the offering period or (ii) the last day of the offering period. The fair market value of the common stock on a given date is generally the closing sale price of the common stock as reported on the New York Stock Exchange for such date.

 

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Payroll Deductions and Purchase of Shares

Payroll deductions are accumulated on behalf of participating employees throughout the offering period. The number of shares of common stock a participant may purchase in each offering period is determined by dividing the total amount of payroll deductions withheld from the participant’s compensation during that offering period by the purchase price. The participant is subject to a limit on the number of shares that may be purchased during each offering period in addition to legal limits that apply under Section 423 of the Code. For example, under Section 423 of the Code, no participant may purchase shares under the ESPP having a fair market value (measured on the first day of the offering period in which the shares are purchased) exceeding $25,000 for each calendar year in which the purchase right is outstanding at any time.

 

Withdrawal

Generally, a participant may withdraw from an offering period at any time by written notice without affecting his or her eligibility to participate in future offering periods.

 

Termination of Employment

Upon termination of a participant’s employment for any reason, his or her option and participation in the ESPP will immediately cease. The payroll deductions credited to the participant’s account (to the extent not used to make a purchase of FactSet’s common stock) will be returned to him or her or, in the case of death, to the person or persons entitled thereto as provided in the ESPP.

 

Change of Control

In the event of a Change of Control (as defined in the Long Term Incentive Plan), the Company make take action to terminate the final offering period or cash-out the participant.

 

Amendment and Termination of the Plan

The Board may at any time and for any reason amend or terminate the ESPP. No amendment will be effective unless it is approved by the holders of a majority of the votes cast at a duly held stockholders’ meeting, if such amendment would require stockholder approval in order to comply with Rule 16b-3 or Section 423 of the Code.

 

Certain Federal Income Tax Information

The following discussion is intended to be a general summary only of the U.S. federal income tax aspects of purchase rights granted under the ESPP and not of state or local taxes that may be applicable. Tax consequences may vary depending on the particular circumstances, and administrative and judicial interpretations of the application of the federal income tax laws are subject to change. Participants in the ESPP who are residents of or are employed in a country other than the U.S. may be subject to taxation in accordance with the tax laws of that particular country in addition to or in lieu of U.S. federal income taxes.

 

A participant recognizes no taxable income either as a result of commencing participation in the ESPP or purchasing common stock under the terms of the ESPP. If a participant disposes of shares purchased under the ESPP within either two years from the first day of the applicable offering period or within one year from the purchase date, known as disqualifying dispositions, the participant will realize ordinary income in the year of such disposition equal to the amount by which the fair market value of the shares on the purchase date exceeds the purchase price. The amount of the ordinary income will be added to the participant’s basis in the shares, and any additional gain or resulting loss recognized on the disposition of the shares will be a capital gain or loss, which will be long-term if the participant’s holding period is more than twelve months.

 

If the participant disposes of shares purchased under the ESPP at least two years after the first day of the applicable offering period and at least one year after the purchase date, the participant will realize ordinary income in the year of disposition equal to the lesser of (i) the excess of the fair market value of the shares on the date of disposition over the purchase price or (ii) 15% of the fair market value of the shares on the first day of the applicable offering period. The amount of any ordinary income will be added to the participant’s basis in the shares, and any additional gain recognized upon the disposition after such basis adjustment will be a long-term capital gain. If the fair market value of the shares on the date of disposition is less than the purchase price, there will be no ordinary income and any loss recognized will be a long-term capital loss. Any ordinary income recognized by a participant upon the disqualifying disposition of the shares generally should be deductible by the Company for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code or the regulations thereunder.

 

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New ESPP Benefits

No benefits will be available under the ESPP prior to its approval by the stockholders of the Company. Because benefits under the ESPP will depend on employees’ elections to participate and the fair market value of the Company’s common stock at various future dates, it is not possible to determine the benefits that will be received by employees if the ESPP is approved by the stockholders.

 

Employee Stock Purchase Plan for Certain Persons

The benefits or amounts to be received by any participant or group of participants under the ESPP are indeterminable at the date of this proxy statement because participation and the level of payroll deductions are subject to the discretion of each associate. The aggregate numbers of shares of Company common stock purchased by certain persons and groups under the ESPP, since its initial adoption in 2008 are as follows:

 

Name

 

Shares Purchased

 
         

Named Executive Officers

       

F. Philip Snow, Chief Executive Officer

    2,764  

Mark J. Hale, Executive Vice President, Chief Operating Officer

    2,733  

John W. Wiseman, Executive Vice President, Global Head of Sales and Client Services

    2,768  

Maurizio Nicolelli, Senior Vice President, Chief Financial Officer

    1,253  

Edward Baker-Greene, Senior Vice President, Chief Human Resources Officer

    102  

Scott G. Miller, Former Executive Vice President, Global Director of Sales

     

All Executive Officers as a Group (8 persons)

    12,497  

All Directors who are not Executive Officers

     

Each Nominee for Election as Director

     

Each Associated of any such Directors, Executive Officers or Nominees

     

Each Other Person who Received 5% of such Options

     

All Employees Including Officers who are not Executive Officers as a Group

    129,312,120  

 

 

FactSet’s Board recommends that you vote “FOR” the approval of The FactSet Research Systems Inc. Employee Stock Purchase Plan, as Amended and Restated.

 

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Proposal 7: Advisory Vote on the Frequency of Executive Compensation Votes in the Future

 

In addition to providing stockholders with the opportunity to cast an advisory vote on executive compensation, the Dodd-Frank Act entitles the Company’s stockholders to indicate how frequently FactSet should seek future advisory (non-binding) votes on the compensation of its named executive officers. Stockholders may indicate whether they would prefer an advisory vote on executive compensation once every one, two, or three years, or abstain from voting on the proposal.

 

While the Company will continue to monitor developments in this area, after careful consideration of the frequency alternatives, the Board believes that conducting an advisory vote on named executive officer compensation every year is appropriate for the Company and its stockholders at this time. The Company values the opinion of its stockholders and believes that an annual say-on-pay vote will best reinforce FactSet’s desire to communicate with its stockholders. An annual say-on-pay vote will allow the Company’s stockholders to regularly express a view on FactSet’s compensation policies and practices. In addition, holding stockholder advisory votes each year on executive compensation will enhance stockholder communication, and will allow the Company to consider expressed concerns or other feedback of the stockholders and then to engage with stockholders and respond to such input.

 

Required Vote

You may cast your vote on your preferred voting frequency by choosing the option of one year, two years or three years or you may abstain from voting on this proposal. You are not voting to approve or disapprove the Board of Directors' recommendation.

 

The say-on-frequency vote is advisory, and therefore not binding on the Company, the Compensation and Talent Committee or its Board. FactSet’s Board and its Compensation and Talent Committee will review the voting results and take them into consideration when making future decisions regarding the frequency with which the advisory vote on executive compensation will be held. If no option receives a majority of the votes cast, the Board will consider the option that receives the most votes to be the option preferred by the stockholders.

 

FactSet’s Board Recommends that you vote for a “1 YEAR” Frequency regarding Future Advisory Votes on Executive Officer Compensation.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following tables set forth information known to FactSet with respect to beneficial ownership of the Company’s common stock as of October 25, 2017 for (i) each director and nominee, (ii) each holder of 5.0% or greater of FactSet common stock, (iii) FactSet’s Principal Executive Officer, Principal Financial Officer and the three most highly compensated executive officers (other than the Principal Executive Officer and Principal Financial Officer) named in the table entitled “Summary Compensation Table” and (iv) all executive officers and directors as a group.

 

Beneficial ownership is determined under the rules of the SEC and generally includes voting or investment power with respect to securities. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, to FactSet’s knowledge the persons named in the table below have sole voting and investment power with respect to all shares of FactSet common stock beneficially owned. The number of shares beneficially owned by each person or group as of October 25, 2017, includes shares of FactSet common stock that such person or group had the right to acquire on or within 60 days after October 25, 2017, including, but not limited to, upon the exercise of options or the vesting of restricted stock awards.

 

For each beneficial owner and individual included in the tables below, percentage ownership of common stock is calculated by dividing the number of shares beneficially owned by the 39,109,746 shares of FactSet common stock outstanding at October 25, 2017. Any securities that were not outstanding but subject to options exercisable within 60 days after October 25, 2017, were deemed to be outstanding in determining the percentage owned by such person, but were not deemed to be outstanding in determining the percentage owned by any other person.

 

Principal Holders

 

The only persons known by the Company to be beneficial owners of more than 5% of FactSet’s common stock are the following:

 

Name and Address of

Beneficial Owner(1)

 

Number of Shares Beneficially

Owned at October 25, 2017

   

Percentage of

Common Stock

 
             

The Vanguard Group, Inc.

100 Vanguard Boulevard

Malvern, PA 19355

    3,587,000       9.2 %

Loomis, Sayles & Company, L.P

One Financial Center

Boston, MA 02111

    3,023,000       7.7 %

BAMCO, Inc

767 Fifth Avenue

49th Floor

New York, NY 10153

    2,993,000       7.7 %

BlackRock Fund Advisors

400 Howard Street

San Francisco, CA 94105

    2,934,000       7.5 %

 

 

(1)

Number of shares beneficially owned was obtained from filings made with the SEC pursuant to Sections 13(d), 13(f) or 13(g) of the Exchange Act.

 

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Directors and Named Executive Officers

 

The table below sets forth, as of October 25, 2017, information regarding the beneficial ownership of the Company’s common stock by (1) each director and the named executive officers of the Company and (2) all Directors and Executive Officers of the Company as a group (14 persons).

 

 

   

Number of Shares Beneficially

   

Percentage of

 

Name(1)

 

Owned at October 25, 2017 (2)

   

Common Stock

 
             

Philip A. Hadley (3)

    863,737       2.2 %

F. Philip Snow (4)

    71,854       **  

Mark J. Hale (5)

    51,992       **  

Maurizio Nicolelli (6)

    30,093       **  

James J. McGonigle (7)

    28,148       **  

Scott A. Billeadeau (7)

    9,918       **  

Robin A. Abrams (8)

    9,756       **  

Joseph R. Zimmel (7)

    9,553       **  

Edward Baker-Greene (9)

    8,548       **  

John W. Wiseman(10)

    4,690       **  

Laurie Siegel

    100       **  

Sheila B. Jordan

          **  

Malcolm Frank

          **  
                 

All Directors and Executive Officers as a group (14 persons)

    1,101,114       2.8 %


  ** Percentage of FactSet common stock is less than 1%.

 

 

(1)

The address for each of these beneficial owners is FactSet Research Systems Inc., 601 Merritt 7, Norwalk, Connecticut 06851.

 

 

(2)

Beneficial ownership includes shares that may be acquired upon exercise of options exercisable within 60 days of October 25, 2017.

 

 

(3)

Includes 43,806 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(4)

Includes 67,553 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(5)

Includes 46,870 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(6)

Includes 26,244 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(7)

Includes 9,553 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(8)

Includes 9,756 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(9)

Includes 8,448 shares of FactSet common stock issuable upon the exercise of stock options.

 

 

(10)

Includes 4,690 shares of FactSet common stock issuable upon the exercise of stock options.

 

Mr. Miller separated from the Company and his named executive officer position as Executive Vice President, Global Director of Sales, effective April 21, 2017.  Per guidance from the Section 16(a) of the Securities Exchange Act of 1934, FactSet filed a final Form 5 on behalf of Mr. Miller on October 6, 2017.  The Form 5 disclosed that Mr. Miller held no beneficial ownership in FactSet as of the final Form 5 filing date.  Mr. Miller is no longer subject to Section 16 of the Exchange Act after October 6, 2017.

 

Section 16(a) Beneficial Ownership Reporting Compliance

 

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s executive officers, directors and persons who own more than 10% of FactSet’s common stock to file reports of ownership and changes in ownership with the SEC. These persons are required to provide FactSet with copies of all Section 16(a) forms that they file. Based solely upon a review of SEC Forms 3, 4 and 5 furnished to the Company and written representations from the Company’s executive officers and directors, the Company believes that those persons complied with all Section 16(a) filing requirements during fiscal 2017 with respect to transactions in the Company’s stock. One Form 5 was filed on October 26, 2017 on behalf of an executive officer, reflecting his charitable gift of 3,500 shares of FactSet common stock on December 30, 2015. This Form 5 should have been filed within two business days of the transaction, but was inadvertently omitted. Upon discovery of this oversight, FactSet immediately rectified the situation by filing a Form 5 on October 26, 2017.

 

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EQUITY COMPENSATION PLAN INFORMATION

 

The following table summarizes as of August 31, 2017, the number of outstanding equity awards granted to employees and non-employee directors, as well as the number of equity awards remaining available for future issuance, under FactSet’s equity compensation plans:

 

 (In thousands, except per share data)

   

 

           

(c)

 
   

 

 

   

 

 

   

Number of securities remaining

 
   

(a)

   

 

   

available for future issuances under

 
   

Number of securities

to be issued upon exercise

   

(b)

Weighted-average

   

equity compensation plans (excluding

 

Plan category

 

of outstanding options and

restricted stock vesting

   

exercise price of

outstanding options

   

securities reflected in column (a))

 
                   

Equity compensation plans approved by security holders

    3,548 (1)   $ 139.29 (2)     1,230 (3)

Equity compensation plans not approved by security holders

                 

Total

    3,548 (1)   $ 139.29 (2)     1,230 (3)

 

 

(1)

Includes shares of FactSet common stock subject to outstanding restricted stock that will entitle each holder to the issuance of one share of common stock as they vest.

 

 

(2)

Calculated without taking into account shares of FactSet common stock subject to outstanding restricted stock that will become issuable as they vest, without any cash consideration or other payment required for such shares.

 

 

(3)

Includes 333,172 shares available for future issuance under the FactSet Research Systems Inc. Non-Employee Directors’ Stock Option and Award Plan, as Amended and Restated.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

 

The Board is committed to upholding the highest legal and ethical conduct in fulfilling its responsibilities and recognizes that related party transactions can present a heightened risk of potential or actual conflicts of interest. Accordingly, as a general matter, it is FactSet’s preference to avoid related party transactions. FactSet’s Audit Committee Charter requires that members of the Audit Committee, all of whom are independent directors, review and approve all related party transactions for which such approval is required under applicable law, including SEC, NYSE and NASDAQ rules. For purposes of this section, “related person” and “transaction” have the meanings contained in Item 404 of Regulation S-K. Under these rules, a related person is a director, executive officer, nominee for director, or 5% stockholder of the company since the beginning of the last fiscal year and their immediate family members. The Company monitors any transaction or series of transactions in which the Company is a participant, the amount involved exceeds $120,000, and a related person has a direct or indirect material interest. The Audit Committee would determine whether the related person has a material interest in a transaction and would approve, ratify, rescind, or take other action with respect to the transaction in its discretion. In accordance with listing requirements, the Company does not have relationships with any directors in which the director is compensated in excess of $120,000, excluding fees for board service.

 

In fiscal 2017, there were no related-person transactions under the relevant standards. In addition, the Audit Committee is responsible for reviewing and investigating any matters pertaining to the integrity of management, including conflicts of interest and adherence to FactSet’s Code of Business Conduct and Ethics. Under the Code of Business Conduct and Ethics, directors, officers and all other members of the workforce are expected to avoid any relationship, influence or activity that would cause or even appear to cause a conflict of interest. FactSet’s Corporate Governance Principles require a director to promptly disclose to the Board any potential or actual conflict of interest involving him or her. Under the Principles, the Board will determine an appropriate resolution on a case-by-case basis. All directors must excuse themselves from any discussion or decision affecting their personal, business or professional interests. All related party transactions shall be disclosed in FactSet’s applicable filings with the SEC as required under the applicable rules.

 

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OTHER MATTERS

 

Proposals of Stockholders

 

Proposals of stockholders intended to be presented at the 2018 Annual Meeting of Stockholders must be received by FactSet, attention of Rachel R. Stern, the Company’s Secretary, at its principal executive offices, no later than August 1, 2018, or such other date as determined with reference to the Company’s By-laws, as amended, as applicable, to be included in the 2018 Proxy Statement.

 

Delivery of Documents to Stockholders Sharing an Address 

 

If you are a beneficial owner, but not the record holder, of Company shares, your broker, bank or other nominee may deliver only one copy of the Company’s Proxy Statement and Annual Report to multiple stockholders who share an address unless that nominee has received contrary instructions from one or more of the stockholders. The Company will deliver promptly, upon written or oral request, a separate copy of the Proxy Statement and Annual Report to a stockholder at a shared address to which a single copy of the documents were delivered. A stockholder who wishes to receive a separate copy of the Proxy Statement and Annual Report, now or in the future, should submit their request to the Company’s Investor Relations Department at 1-203-810-1000 or by submitting a written request to Rachel R. Stern, Secretary, 601 Merritt 7, Norwalk, Connecticut 06851. Beneficial owners sharing an address who are receiving multiple copies of proxy materials and Annual Reports and wish to receive a single copy of such materials in the future will need to contact your broker, bank or other nominee to request that only a single copy of each document be mailed to all stockholders at the shared address in the future.

 

Other Business

 

The Board does not intend to bring any other business before the Meeting and so far as is known to the Board, no matters are to be brought before the Meeting except as specified in the Notice of the Meeting. However, as to any other business, which may properly come before the Meeting, it is intended that proxies, in the form enclosed, will be voted in respect thereof in accordance with the judgment of the persons voting such proxies.

 

 

Rachel R. Stern
Senior Vice President, General Counsel and Secretary
Norwalk, Connecticut

October 30, 2017

 

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APPENDIX A

 

FACTSET RESEARCH SYSTEMS INC.

STOCK OPTION AND AWARD PLAN,

AS AMENDED AND RESTATED