RECORD DATE | | You may nevertheless attend the annual meeting, revoke their proxy, and vote their shares in person. Please read the accompanying proxy statement and proxy card for information on the annual meeting and voting. By Order Of The Board Of Directors
Julie A. Waters
Vice President, General Counsel
St. Petersburg, Florida
March 25, 2008
FIRST ADVANTAGE CORPORATION
12395 First American Way
Poway, California 92064
PROXY STATEMENT
for
Annual Meeting of Stockholders
April 29, 2008
The board of directors of First Advantage Corporation is soliciting proxies for use at the annual meeting of stockholders to be held in the Eagle Auditorium of our offices, located at 12395 First American Way, Poway, California 92064, on April 29, 2008 at 9:00 a.m., Pacific Time, and at any adjournments thereof. On or about March 27, 2008, we began sending the attached notice of annual meeting, this proxy statement, the enclosed proxy card, and our annual report for 2007 (which is not part of the proxy soliciting materials) to all holders of record of our Class A and Class B common stock entitled to receive such materials and vote.
Frequently Asked Questions About The Annual Meeting
Q: | What will be voted on at the annual meeting? |
A: | The purpose of the annual meeting is to elect our directors for a one-year term and to transact any other business that may properly be presented. |
Q: | Does First Advantage Corporation have a recommendation on voting? |
A: | Yes. The board of directors recommends that you vote “FOR” the nominees for director set forth in the attached proxy card. |
Q: | Who is entitled to vote at the meeting? |
A: | HoldersAnnual Meeting if you were a stockholder of record of our Class A common stock and our Class B common stock at the close of business on March 10, 2008April 18, 2022. | | | VOTING BY PROXY | |
To ensure your shares are eligible to vote at the annual meeting. On March 10, 2008, there were 11,524,745 shares of Class A common stock outstanding and 47,726,521 shares of Class B common stock outstanding.
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Q: | What shares can I vote? |
A: | Youvoted, you may vote allyour shares ownedover the Internet, by you as of March 10, 2008. This includes all shares you hold directly astelephone or by completing, signing and returning a proxy card. Voting procedures are described on the record holderfollowing page and all shares you hold indirectly ason the beneficial owner. |
Q: | How many votes will I have? |
A: | Holders of our Class A common stock will have one vote for each share held of record on March 10, 2008. The holder of our Class B common stock will have ten votes for each shareheld of record on March 10, 2008. Cumulative voting is not permitted. The First American Corporation, along with its joint venture with Experian Information Solutions, Inc. owns 100% of our outstanding Class B common stock, and therefore controls approximately 97% of our voting power.proxy card.
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Q: | What is the difference between record ownership and beneficial ownership? | |
A: | Most stockholders own their shares through a stockbroker or other nominee rather than directly in their own names. There are some differences in how to vote, depending on how you hold your shares. |
| You are the record owner of shares if those shares are registered directly in your name with our transfer agent. The transfer agent for our Class A common stock is Wells Fargo Shareowner Services. We act as our own transfer agent for our Class B common stock. As the record holder of shares, you may vote such shares in person at the annual meeting or grant your voting proxy directly by completing the enclosed proxy card. |
| You are the beneficial owner of shares if you hold those shares in “street name” through a stockbroker, bank, trustee or other nominee, including shares held on your behalf in the First Advantage Corporation 401(k) Savings Plan. If you are a beneficial owner, these proxy materials are being sent to you through your |
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| | stockbroker or other nominee together with a voting instruction card. In order to vote, you must completeBy Order of the voting instruction card provided by your stockbroker or other nominee to direct the record holder how to vote your shares or obtain a valid proxy from the stockbroker or other nominee who is the record ownerBoard of your shares giving you authority to vote your shares in person at the meeting.Directors,
| | | | | Executive Vice President, General Counsel & Corporate Secretary | | | | | 
Bret T. Jardine |
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting To Be Held on June 15, 2022: This Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Form 10-K”) are available free of charge at https://investors.fadv.com/financials-filings/sec-filings and at www.proxydocs.com/FA. A list of stockholders of record at the close of business on April 18, 2022 will be open for examination by any stockholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the Annual Meeting at our principal executive offices at 1 Concourse Parkway NE, Suite 200, Atlanta, Georgia 30328, and electronically during the Annual Meeting by registering at www.proxydocs.com/FA.
PROXY VOTING METHODS A: | You can vote on matters that come before the meeting in two ways: |
If, at the close of business on April 18, 2022, you were a stockholder of record you may vote your shares by proxy at the Annual Meeting. If you were a stockholder of record, you may vote your shares in advance over the Internet, by telephone or by mail. You may also revoke your proxies at the times and in the manner described in the General Information section of this Proxy Statement. For shares held through a broker, bank or other nominee, you may submit voting instructions to your broker, bank or other nominee. Please refer to information from your broker, bank or other nominee on how to submit voting instructions. If you are a stockholder of record, your Internet, telephone or mail vote must be received by 10:00 a.m., Eastern Time, on June 15, 2022 to be counted. If you hold shares through a broker, bank or other nominee, please refer to information from your bank, broker or nominee for voting instructions. To vote by proxy if you are a stockholder of record: BY INTERNET You can comeGo to the annual meetingwebsite www.proxydocs.com/FA and vote in person; orfollow the instructions, 24 hours a day, seven days a week.
You can vote by filling out, signing and returningwill need the proxy cardcontrol number included on your Notice of Internet Availability of Proxy Materials or voting instructionon your proxy card. BY TELEPHONE | If you wish to vote at the annual meeting, and you are a beneficial owner of your shares, you must have a legal proxy in your favor executed by the stockbroker or other nominee who is the record owner. |
| Whether or not you plan to attend the annual meeting in person, please fill in and sign the enclosed proxy card or instruction card and return it promptly. |
A: | Yes. You may revoke your proxy after you have signed and returned it at any time before the proxy is voted at the annual meeting. There are three ways to revoke your proxy: |
You may send in another proxy card withFrom a later date;touch-tone telephone, dial (866) 506-3604 and follow the recorded instructions, 24 hours a day, seven days a week.
You may notify Bret Jardine, Secretarywill need the control number included on your Notice of First Advantage Corporation, in writing before the annual meeting that you have revoked your proxy;Internet Availability of Proxy Materials or You may vote in person at the annual meeting.
Q: | What is the quorum requirement? |
A: | A quorum of stockholders is necessary to hold a valid meeting. A majority of the outstanding shares of Class A and Class B common stock on March 10, 2008 taken as a whole, present in person or represented by proxy at the beginning of the annual meeting, constitutes a quorum. Ifyou have returned a properly signed proxy card, you will be considered present at the meeting and counted in determining the presence of a quorum.
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| Shares represented by proxies that withhold authority to vote for a nominee for election as a director or that reflect abstentions or “broker non-votes” (i.e., shares represented at the meeting held by brokers or nominees and to which (i) instructions have not been received from the beneficial owners or persons entitled to vote and (ii) the broker or nominee does not have the discretionary voting power on a particular matter) will be treated as shares that are present for purposes of determining the presence of a quorum. Abstentions and broker non-votes will not otherwise affect the voting. |
Q: | How will my proxy be voted? |
A: | Shares represented by a properly executed and returned proxy will be voted at the meeting in accordance with the directions noted on the proxy card. If you sign and return the proxy card but do not make specific choices, the proxy holders named in the proxy card will vote your shares “FOR” the election of all nominees for director recommended by the board and listed on the proxy card. Anand Nallathambi and Julie Waters, our chief executive officer and general counsel, respectively, have agreed to act as proxy holders. Any undirected shares that you hold in the First Advantage Corporation 401(k) Savings Plan will be voted in the same proportion as those shares that have been directed by other participants in the plan. |
Q: | What is the voting requirement? |
A: | In the election of directors, you may vote “FOR” all of the nominees or your vote may be “WITHHELD” with respect to one or more of the nominees. In the election of directors, the persons receiving the highest number of “FOR” votes will be elected. |
Q: | Who counts the votes cast at the annual meeting? |
A: | Lisa Steinbach, vice president and controller of our company, acting as the inspector of election, |
| will tabulate votes at the annual meeting. The inspector of election’s duties include |
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| determining the number of shares represented at the meeting and entitled to vote, determining the qualification of voters, conducting and accepting the votes, and, when the voting is completed,ascertaining and reporting the number of shares voted, or abstaining from voting, for the election of directors.
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PROPOSAL NUMBER ONE
ELECTION OF DIRECTORS
NOMINEES FOR ELECTION OF DIRECTORS
Our charter documents require our entire board of directors to be elected annually. Our board has designated the persons listed below as candidates for election. Each is currently serving as a director. Unless otherwise specified in the proxy card, the proxies solicited by the board will be voted “FOR” the election of these candidates. In case any of these candidates becomes unavailable to stand for election to the board, an event that is not anticipated, the proxy holders will have full discretion and authority to vote or refrain from voting for any substitute nominee in accordance with their judgment.
The terms of directors elected at the annual meeting expire at the 2009 annual meeting or as soon thereafter as their successors are duly elected and qualified. The board has no reason to believe that any of the nominees will be unable or unwilling to serve as a director if elected.
Directors are elected by a plurality vote of shares present at the meeting, meaning that the nominee with the most affirmative votes for a particular seat is elected for that seat. If you do not vote for a particular nominee, or if you withhold authority to vote for a particular nominee on your proxy card your vote will not count either “for” or “against” the nominee.
Ten directors will be standing for election at the annual meeting. None of the nominees has a family relationship with the other nominees, any existing director or any executive officer of our company. Pursuant to the stockholders agreement dated as of December 13, 2002 among The First American Corporation, Pequot Private Equity Fund II, L.P. and us, The First American Corporation and each of its affiliates has agreedin order to vote its shares for one nominee designated by Pequot. However, Pequot hastelephone.
BY MAIL If you have not designated a nominee to the board of directors. The board recommends a vote “FOR” the election of each nominee listed below.
Parker Kennedy, Chairman and Director since 2003. Mr. Kennedy, 60, was president of our parent company, The First American Corporation, until 2004, where he served as executive vice president from 1986 to 1993, was appointed to its board of directors in 1987, and was named chairman and chief executive officer in 2003. Mr. Kennedy has been employed by The First American Corporation’s primary subsidiary, First American Title Insurance Company, since 1977. He was appointed vice president of that company in 1979, and in 1981 he joined its board of directors. During 1983, he was appointed executive vice president of First American Title Insurance Company, and in 1989 was appointed its president. He now serves as its chairman, a position to which he was appointed in 1999.
Anand Nallathambi, Director since 2007 and member of our acquisition committee. Mr. Nallathambi, 46, was appointed to serve as Chief Executive Officer of First Advantage in March 2007 and President of First Advantage in September 2005 following First Advantage’s acquisition of the Credit Information Group from The First American Corporation. Prior to joining First Advantage, Mr. Nallathambi served as president of First American’s Credit Information Group and as president of First American Appraisal Services from 1996 to 1998. Mr. Nallathambi also serves as a member of the board of Dorado, Inc., a privately held company, and the Consumer Data Industry Association, an international trade association. Mr. Nallathambialready received a masters in business administrationproxy card, you may request a proxy card from California Lutheran University after obtaining a bachelorus by following the instructions on your Notice of arts degree in economics from Loyola University in Madras, India.
J. David Chatham, Director since 2003 and memberInternet Availability of our audit committee. Mr. Chatham, 57, has been a director of The First American Corporation since 1989. Mr. Chatham currently serves as chairman of The First American Corporation’s audit committee and executive committee. Mr. Chatham has also been a member of the board of directors of First American Title Insurance Company since 1989. Since 1972, he has been president and chief executive officer of Chatham Holdings, Inc., a real estate development company.Proxy Materials.
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Barry Connelly, Director since 2003 and member of our audit committee. Mr. Connelly, 67, servesMark your selections on the board of directors of Collection House Limited, a company quotedproxy card.
Date and sign your name exactly as it appears on the Australian Exchange. In December 2002, he retired from the Consumer Data Industry Association after 33 years of service, including eight years as president. During his tenure with the Consumer Data Industry Association, he was a contributor in drafting the first Fair Credit Reporting Act in 1970 and its successor in 1997.your proxy card. Jill Kanin-Lovers, Director since 2006 and member of our nominating and corporate governance committee and chairperson of our compensation committee. Ms. Kanin-Lovers, 56, was a senior vice president of human resources at Avon Products, Inc. from 1998 to 2004. Before joining Avon, she was vice president, global operations, HR at IBM. Prior to IBM, she was senior vice president, worldwide compensation and benefits, at American Express. Ms. Kanin-Lovers is a member of the board of directors of BearingPoint Inc., a global management and technology consulting firm where she chairs the compensation committee and serves on the nominating and corporate governance committee, Dot Foods, one of the nation’s largest food redistributors where she chairs the compensation committee, and Heidrick & Struggles, a leading global search firm, where she chairs the compensation committee and serves on the audit committee. Currently, she teaches “Corporate Governance and Business Ethics” for the Rutgers University Mini-MBA program and “Executive Compensation” for the Rutgers University Global Executive HR master’s program.
Frank V. McMahon, Director since April 2006 and chairperson of our acquisition committee. Mr. McMahon, 48, serves as vice chairman and chief financial officer of The First American Corporation since 2006. Previously, Mr. McMahon was a managing director of the Investment Banking Division of Lehman Brothers, Inc. and was responsible for managing their western region financial institutions group as well as their U.S. asset management sector from 1999 to 2006. Prior to that, Mr. McMahon was a Managing Director at Merrill Lynch.
Donald Nickelson, Director since 2003 and member of our compensation and acquisition committees and chairperson of our nominating and corporate governance committee. Mr. Nickelson, 75, serves as vice chairman and director of Harbour Group Industries, Inc., a leveraged buy-out firm. In addition, Mr. Nickelson serves as a director of Adolor Corporation, where he is a member of the compensation committee, audit committee and nominating and governance committee, and serves on the advisory board of Celtic Pharmaceutical Holdings, L.P., a global private equity firm focused on the biotechnology and pharmaceutical industries and based in Bermuda. Mr. Nickelson also holds directorship positions for several non-public companies, including Desiccare, Inc., where he serves as chairman of the board, and Del Industries. Prior to joining Harbour Group, he served as president of PaineWebber Group, an investment banking and brokerage firm, from 1988 to 1990. Mr. Nickelson also served as chairman of the Pacific Stock Exchange and director of the Chicago Board Options Exchange, Inc.
Donald Robert, Director since 2003 and member of our compensation committee. Mr. Robert, age 48, is currently chief executive officer and a director of Experian Group Limited, a global information technology business listed on the London Stock Exchange. Prior to his current appointment, Mr. Robert served as chief executive officer of Experian North America and chief operating officer and president of its Information Solutions business unit, beginning in April 2001. From 1995 to 2001, Mr. Robert was a group executive of The First American Corporation with responsibility for its Consumer Information and Services Group. From 1992 to 1995, Mr. Robert was president of Credco, Inc., now First Advantage Credco, the nation’s largest specialized credit reporting company and one of our wholly-owned subsidiaries.
D. Van Skilling, Director since 2005 and member of our audit committee. Mr. Skilling, 74, currently serves as President of Skilling Enterprises and is a member of the boards of directors of The First American Corporation, where he sits on the audit, executive and nominating and corporate governance committees; Onvia, where he serves on the nominating and governance committee and chairs the compensation committee; American Business Bank, where he is a member of the compensation committee, and Verascape. Mr. Skilling formerly served as the chairman and chief executive officer of Experian Information Solutions, Inc. (formerly TRW Information Systems Services), a position he was appointed to in 1996.
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David Walker, Director since 2003 and member of our acquisition committee and chairperson of our audit committee. Mr. Walker, 54, isMail the Director of Programs of Accountancy and Social Responsibility and Corporate Reportingproxy card in the Collegeenclosed postage-paid envelope provided to you.
YOUR VOTE IS IMPORTANT TO US. THANK YOU FOR VOTING.
Table of Business Administration at the University of South Florida in St. Petersburg, and is a consultant on corporate governance matters, both roles he has held since 2002. From 1975 through 2002, Mr. Walker was with Arthur Andersen LLP, serving as a partner in the firm from 1986 through 2002. Mr. Walker is also a member of the boards of directors of CommVault Systems, Inc. and Chicos FAS, Inc., where he chairs their respective audit committees and Technology Research Corporation, Inc. where he chairs its compensation committee. INFORMATION ABOUT OUR BOARD OF DIRECTORS
Composition of Board and Committees
Our board of directors oversees our business and affairs and monitors the performance of management. Management is responsible for the day-to-day operations of our company. As of the date of this proxy statement, our board has ten directors and the following committees: audit, nominating and corporate governance, compensation and acquisition. The membership during the last fiscal year and the function of each of the committees are described below. Each of the committees, except the nominating and corporate governance committee, is required to be comprised of three or more members of the board.
We held eight board meetings in 2007. Each director attended at least 75% of all board meetings and applicable committee meetings, except that Messrs. McMahon and Nickelson attended only one of the two meetings of the acquisition committee held in 2007. We strongly encourage our board of directors to attend our annual meeting of stockholders, and any member who misses three consecutive annual meetings will be removed. The following table lists membership of our board of directors and board committees:Contents
Web links throughout this document are provided for convenience only, and the content on the referenced websites does not constitute a part of this Proxy Statement.
FIRST ADVANTAGE CORPORATION 1 Concourse Parkway NE, Suite 200, Atlanta, GA 30328 Telephone: (888) 314-9761 PROXY STATEMENT Annual Meeting of Stockholders June 15, 2022 GENERAL INFORMATION Why am I being provided with these materials? We are providing this Proxy Statement to you in connection with the solicitation by the Board of Directors (the “Board” or “Board of Directors”) of First Advantage Corporation of proxies to be voted at our Annual Meeting of Stockholders to be held on June 15, 2022 (the “Annual Meeting”) and at any postponements or adjournments of the Annual Meeting. We either (1) mailed you a Notice of Internet Availability of Proxy Materials (“Notice of Internet Availability”) notifying each stockholder entitled to vote at the Annual Meeting how to vote and how to electronically access a copy of this Proxy Statement and our Annual Report for the fiscal year ended December 31, 2021 (referred to as the “Proxy Materials”) or (2) mailed you a paper copy of the Proxy Materials and a proxy card in paper format. If you have not received, but would like to receive, a paper copy of the Proxy Materials and a proxy card in paper format, you should follow the instructions for requesting such materials contained in the Notice of Internet Availability. Except where the context requires otherwise, references to “First Advantage,” “the Company,” “we,” “us,” and “our” refer to First Advantage Corporation. What am I voting on? There are two proposals scheduled to be voted on at the Annual Meeting: Proposal No. 1: Election of the two Class I director nominees listed in this Proxy Statement. | • | | Proposal No. 2: Ratification of the appointment of Deloitte & Touche LLPas our independent registered public accounting firm for 2022. |
Who is entitled to vote? Stockholders as of the close of business on April 18, 2022 (the “Record Date”) may vote at the Annual Meeting or any postponement or adjournment thereof. As of that date, there were 152,982,128 shares of our common stock outstanding. Holders of our common stock have one vote for each share held as of the Record Date, including shares: Held directly in your name as “stockholder of record” (also referred to as “registered stockholder”); and Held for you in an account with a broker, bank or other nominee (shares held in “street name”). Street name holders generally cannot vote their shares directly and instead must instruct the brokerage firm, bank or nominee how to vote their shares. What constitutes a quorum? The presence in person or by proxy of stockholders holding a majority in voting power of the issued and outstanding shares of capital stock entitled to vote at the Annual Meeting constitutes a quorum for the Annual Meeting. Abstentions and “broker non-votes” are counted as present for purposes of determining a quorum. What if a quorum is not present at the Annual Meeting? If a quorum is not present at the scheduled time of the Annual Meeting, the person presiding over the Annual Meeting may adjourn the Annual Meeting until a quorum is present or represented. How many votes are required to approve each proposal? Under our Amended and Restated Bylaws (the “Bylaws”), directors are elected by a plurality vote, which means that the director nominees with the greatest number of votes cast, even if less than a majority, will be elected. There is no cumulative voting. Under our Bylaws, the proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022 (Proposal No. 2) requires the vote of the holders of a majority of the voting power of the shares of common stock present in person or represented by proxy and entitled to vote at the Annual Meeting. It is important to note that the proposal to ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022 (Proposal No. 2) is non-binding and advisory. While the ratification of Deloitte & Touche LLP as our independent registered public accounting firm is not required by our Bylaws or otherwise, if our stockholders fail to ratify the selection, we will consider it notice to the Board and the Audit Committee to consider the selection of a different firm. What is a “broker non-vote”? A broker non-vote occurs when shares held through a broker are not voted with respect to a proposal because (1) the broker has not received voting instructions from the stockholder who beneficially owns the shares and (2) the broker lacks the authority to vote the shares at its discretion. Under current Nasdaq listing rules, Proposal No. 1 is considered a non-routine matter, and a broker will lack the authority to vote uninstructed shares at their discretion on this proposal. Proposal No. 2 is considered a discretionary matter, and a broker will be permitted to exercise its discretion to vote uninstructed shares on this proposal. How are votes counted? With respect to the election of directors (Proposal No. 1), you may vote “FOR” or “WITHHOLD” with respect to each nominee. Votes that are “WITHHELD” will have the same effect as an abstention and will not count as a vote “FOR” or “AGAINST” a director because directors are elected by plurality voting. Broker non-votes will have no effect on the outcome of Proposal No. 1. With respect to the ratification of our independent registered public accounting firm (Proposal No. 2), you may vote “FOR,” “AGAINST,” or “ABSTAIN.” Abstentions are counted as a vote “AGAINST” this proposal. There are no broker non-votes with respect to Proposal No. 2, as brokers are permitted to exercise discretion to vote uninstructed shares on this proposal. If you sign and submit your proxy card without providing voting instructions, your shares will be voted in accordance with the recommendation of the Board with respect to the Proposals. How does the Board recommend that I vote? Our Board recommends that you vote your shares: “FOR” each of the Class I director nominees set forth in this Proxy Statement; and “FOR” the ratification of the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for 2022. Who will count the vote? Representatives of Mediant Communications, Inc. (“Mediant”) will tabulate the votes and act as inspectors of election. How do I vote my shares without attending the Annual Meeting? If you are a stockholder of record, you may vote by authorizing a proxy to vote on your behalf at the Annual Meeting. Specifically, you may authorize a proxy: | • | | By Internet—You may submit your proxy by going to www.proxydocs.com/FA and by following the instructions on how to complete an electronic proxy card. You will need the control number included on your Notice of Internet Availability or your proxy card in order to vote by Internet. |
| • | | By Telephone—You may submit your proxy by dialing (866) 506-3604 and by following the recorded instructions. You will need the control number included on your Notice of Internet Availability or on your proxy card in order to vote by telephone. |
| • | | By Mail—If you have received a proxy card, you may vote by mail by signing and dating the enclosed proxy card where indicated and by returning the card in the postage-paid envelope provided to you. You should sign your name exactly as it appears on the proxy card. If you are signing in a representative capacity (for example, as guardian, executor, trustee, custodian, attorney or officer of a corporation), indicate your name and title or capacity. |
Internet and telephone voting facilities will close at 10:00 a.m., Eastern Time, on June 15, 2022, for the voting of shares held by stockholders of record as of the Record Date. Proxy cards with respect to shares held of record must be received no later than 10:00 a.m., Eastern Time, June 15, 2022. If you hold your shares in street name, you may submit voting instructions to your broker, bank or other nominee. In most instances, you will be able to do this over the Internet, by telephone or by mail. Please refer to information from your bank, broker or other nominee on how to submit voting instructions. How do I attend and vote my shares at the Virtual Annual Meeting? This year’s Annual Meeting will be a completely virtual meeting of stockholders. You may attend the Annual Meeting via the Internet. Any stockholder can register and attend the Annual Meeting live online at www.proxydocs.com/FA and enter the control number shown on your Notice of Internet Availability of Proxy Materials, proxy card or the instructions that accompanied your proxy materials. If you virtually attend the Annual Meeting you can vote your shares electronically, and submit your questions during the Annual Meeting. A summary of the information you need to attend the Annual Meeting and vote via the Internet is provided below: instructions on how to attend and participate via the internet, including a unique link to access the annual meeting and how to demonstrate proof of stock ownership, will be emailed to you after completion of your registration; | • | | assistance with questions regarding how to attend and participate via the internet will be provided in the instructional email you will receive after completion of your registration andon the day of the Annual Meeting; |
stockholders may vote and submit questions while attending the Annual Meeting via the internet; and you will need the control number that is included in your proxy card or the instructions that accompanied your proxy materials in order to enter the Annual Meeting and to vote during the Annual Meeting. Will I be able to participate in the online Annual Meeting on the same basis I would be able to participate in a live annual meeting? The Annual Meeting will be held in a virtual meeting format only and will be conducted via live audio webcast. The online meeting format for the Annual Meeting will enable full and equal participation by all our stockholders from any place in the world at little to no cost. We designed the format of the online Annual Meeting to ensure that our stockholders who attend our Annual Meeting will be afforded the same rights and opportunities to participate as they would at an in-person meeting and to enhance stockholder access, participation and communication through online tools. We plan to take the following steps to provide for such an experience: providing stockholders with the ability to submit appropriate questions in advance of the meeting; providing stockholders with the ability to submit appropriate questions real-time via the meeting website, limiting questions to one per stockholder unless time otherwise permits; and answering as many questions submitted in accordance with the meeting rules of conduct as appropriate in the time allotted for the meeting. How do I vote online during the Annual Meeting? If you are a stockholder of record, you may vote your shares by attending the 2022 Annual Meeting of Stockholders online and following the on-screen voting instructions. If you hold your shares in “street name,” you may need to follow additional instructions provided by your broker in order to vote your shares and submit questions during the Annual Meeting. After obtaining a valid legal proxy from your broker or nominee, you must submit proof via email of your legal proxy reflecting the number of shares you hold along with your name and address to Mediant at dsmsupport@mediantonline.com. Requests must be labeled as “Legal Proxy” and be received no later than 5:00 p.m., Eastern Time, on June 14, 2022. A confirmation of email with additional instructions on how to vote at the Annual Meeting will be issued after a valid legal proxy has been received. What if during the check-in time or during the meeting I have technical difficulties or trouble accessing the virtual meeting website? If you encounter any technical difficulties with the virtual meeting website on the meeting day, please call the technical support number that will be posted in the instructional email you will receive after completion of your registration and on the day of the Annual Meeting. Technical support will be available starting at 9:45 a.m., Eastern Time, on Wednesday, June 15, 2022 and until the meeting has finished. What does it mean if I receive more than one Notice of Internet Availability or proxy card on or about the same time? It generally means you hold shares registered in more than one account. To ensure that all your shares are voted, please vote once for each Notice of Internet Availability or proxy card you receive. May I change my vote or revoke my proxy? Yes. Whether you have voted by Internet, telephone or mail, if you are a stockholder of record, you may change your vote and revoke your proxy by: voting by Internet or telephone at a later time than your previous vote and before the closing of those voting facilities at 10:00 a.m., Eastern Time, on June 15, 2022; submitting a properly signed proxy card, which has a later date than your previous vote, and that is received no later than 10:00 a.m., Eastern Time, June 15, 2022; attending the virtual Annual Meeting and voting in person; or delivering a written statement to that effect to our Corporate Secretary, provided such statement is received no later than June 14, 2022. If you hold shares in street name, please refer to information from your bank, broker or other nominee on how to revoke or submit new voting instructions. Could other matters be decided at the Annual Meeting? As of the date of this Proxy Statement, we do not know of any matters to be raised at the Annual Meeting other than those referred to in this Proxy Statement. If other matters are properly presented at the Annual Meeting for consideration and you are a stockholder of record and have submitted a proxy, the named proxies will have the discretion to vote on those matters for you. Who will pay for the cost of this proxy solicitation? We will pay the cost of soliciting proxies. Proxies may be solicited on our behalf by our directors, officers or employees of the Company (for no additional compensation) in person or by telephone, e-mail or facsimile transmission. Brokers and other nominees will be requested to solicit proxies or authorizations from beneficial owners and will be reimbursed for their reasonable expenses. PROPOSAL NO. 1—ELECTION OF DIRECTORS Our amended and restated certificate of incorporation provides for a classified board of directors divided into three classes. Scott Staples and Susan R. Bell constitute a class with a term that expires at the annual meeting of stockholders in 2022 (the “Class I Directors”); James L. Clark and Bianca Stoica constitute a class with a term that expires at the annual meeting of stockholders in 2023 (the “Class II Directors”); and Joseph Osnoss, John Rudella, and Judith Sim constitute a class with a term that expires at the Annual Meeting of Stockholders in 2024 (the “Class III Directors”). Upon the recommendation of the Nominating and Corporate Governance Committee, the full Board has considered and nominated the following slate of Class I nominees for a three-year term expiring at the annual meeting of stockholders in 2025: Scott Staples and Susan R. Bell. Action will be taken at the Annual Meeting for the election of these two Class I director nominees. Unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) attached to this Proxy Statement intend to vote the proxies held by them for the election of Scott Staples and Susan R. Bell. All of the nominees have indicated that they will be willing and able to serve as directors. If any nominee becomes unwilling or unable to serve as a director, the Board may propose another person in place of that nominee, and the individuals designated as your proxies will vote to appoint that proposed person. Alternatively, the Board may decide to reduce the number of directors constituting the full Board. Nominees for Election to the Board of Directors in 2022 The following information describes the offices held, ages (as of the date of this Proxy Statement), other business directorships and the class and term of each director nominee, as well as the experiences, qualifications, attributes or skills that caused the Board to determine that the director-nominee should serve as a director. Class I – Directors Whose Term Expires in 2022 | | | | | Name | | Age | | Principal Occupation and Other Information | Scott Staples | | 56 | | Scott Staples has served as our Chief Executive Officer since April 2017. Prior to joining First Advantage, Mr. Staples co-founded Mindtree Ltd., a digital transformation and IT Services company, and served as President Americas & Global Head of Business Groups for 17 years. Mr. Staples spent the first 10 years of his career in various roles at Cambridge Technology Partners, Gemini Consulting and Prudential. Mr. Staples holds a B.A. from the University of Delaware and an M.B.A. from Fairleigh Dickinson University, Madison, New Jersey. Mr. Staples was selected to serve as a director because of his deep knowledge of our business and his significant executive management and leadership experience. | | | | Susan R. Bell | | 59 | | Susan R. Bell has served as our director since June 2021. Ms. Bell currently serves as a member of the boards of directors of Rollins, Inc., RPC, Inc., and Marine Products Corporation and serves on the audit committees of those corporations. She also serves as chair of the Audit Committee of Rollins, Inc. In 2020, Ms. Bell retired from Ernst & Young LLP (“EY”) after a 36-year career in public accounting, serving in key leadership roles, including Global Financial Accounting Advisory Services Power & Utilities sector leader, Office Managing Partner of EY Atlanta, GA, and Southeast Region Risk Advisory practice leader. Simultaneous with those respective roles, Ms. Bell served as external audit partner or independent quality review partner on external audits. Prior to leading EY’s Southeast Region Risk Advisory practice, Ms. Bell served as an audit and |
| | | | | | | | | business advisory partner at EY and as an audit partner for Arthur Andersen. Ms. Bell graduated summa cum laude from Mississippi State University with a Bachelor of Professional Accountancy and is a Certified Public Accountant in Georgia and Tennessee. Ms. Bell was selected to serve as a director because of her experience in accounting and auditing and her experience with audit committees and boards. |
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE. Continuing Members of the Board of Directors The following information describes the offices held, ages (as of the date of this Proxy Statement), other business directorships and the class and term of each director whose term continues beyond the Annual Meeting and who is not subject to election this year. Class II – Directors Whose Term Expires in 2023 | | | | | Name | | Age | | Principal Occupation and Other Information | James L. Clark | | 60 | | James L. Clark has served as our director since June 2021. Since 2012, Mr. Clark is the President and Chief Executive Officer of the Boys & Girls Clubs of America. Mr. Clark began his career at the Milwaukee Journal Sentinel in 1979, where he served in senior leadership roles in distribution, marketing and customer service operations and advanced to Senior Vice President. He departed the media company after 24 years to become President and CEO of the Boys & Girls Clubs of Greater Milwaukee in 2004, for which he had served as a board member. Mr. Clark previously served as a director of Boxlight Corporation and on the governance committee. Mr. Clark holds a Business Administration degree from the University of Wisconsin-Milwaukee. Mr. Clark was selected to serve as a director because of his experience as a public company director. | | | | Bianca Stoica | | 28 | | Bianca Stoica has served as our director since January 2020. Ms. Stoica is a Director of Silver Lake, which she joined in 2015. She graduated summa cum laude from The Wharton School of the University of Pennsylvania, where she received a B.S. in Economics with concentrations in Finance and Accounting and a minor in Mathematics. Ms. Stoica was selected to serve as a director because of her experience in private equity investing and knowledge and understanding of business and corporate strategy. |
Class III– Directors Whose Term Expires in 2024 | | | | | Name | | Age | | Principal Occupation and Other Information | Joseph Osnoss | | 44 | | Joseph Osnoss has served as a director since January 2020. Mr. Osnoss is a Managing Partner of Silver Lake, which he joined in 2002. From 2010 to 2014, he was based in London, where he helped oversee the firm’s activities in EMEA. Prior to joining Silver Lake, Mr. Osnoss worked in investment banking at Goldman, Sachs & Co. In addition to First Advantage, Mr. Osnoss is currently a member of the board of directors of Carta, Cegid, Clubessential Holdings, EverCommerce where he serves on the Compensation Committee, Global Blue where he serves on its Nomination and Compensation Committee, LightBox, Relativity, and Zuora. He previously served as Chairman of the Board of Cast & Crew and as a board director of Cornerstone OnDemand, Instinet, Interactive Data, Mercury Payment Systems, Sabre Corporation, and Virtu Financial. Mr. Osnoss graduated summa cum laude from Harvard College with an A.B. in Applied Mathematics and a citation in French Language. He has remained involved in academics, including as a Visiting Professor in Practice at the London School of Economics; a member of the Dean’s Advisory Cabinet at Harvard’s School of Engineering and Applied Sciences; a participant in The Polsky Center Private Equity Council at the University of Chicago; and a Trustee of Greenwich Academy. Mr. Osnoss was selected to serve as a director because of his extensive experience in private equity investing, domestic and international experience, and service on the boards of directors of other companies. | | | | John Rudella | | 51 | | John Rudella has served as our director since January 2020. Mr. Rudella is a Director of Silver Lake, which he joined in 2014. Prior to joining Silver Lake, Mr. Rudella served as a U.S. Navy SEAL where he held a variety of leadership positions, worked in technology development, and made multiple deployments to Africa and the Middle East. Mr. Rudella holds a B.S. in Aeronautical Engineering from the U.S. Naval Academy and a M.S. from the Industrial College of the Armed Forces. In addition to First Advantage, Mr. Rudella currently serves on the board of the Station Foundation. He previously served on the board of Ancestry.com. Mr. Rudella was selected to serve as a director because of his experience in private equity investing and knowledge and understanding of business and corporate strategy. | | | | Judith Sim | | 53 | | Judith Sim has served as our director since June 2021. Ms. Sim previously held various customer-related and marketing positions at Oracle Corporation from 1991 to April 2020, including as its Chief Marketing Officer from 2005 to April 2020. She has significant leadership and executive experience from her position as head of marketing programs at Oracle, including experience in field marketing, corporate communications, global customer programs, advertising, campaigns, events and corporate branding. Ms. Sim has been a member of the board of directors at Fortinet Inc, since 2015, serving as the chair of the Human Resources Committee and a member of the Corporate Governance and ESG Committees. She was also a member of the board of directors of the San Francisco Chamber of Commerce from 2015 to 2020. Ms. Sim received a B.S. in dietetics from the University of California at Davis. Ms. Sim was selected to serve as a director because of her significant go-to-market experience and her experience as a public company director. |
THE BOARD OF DIRECTORS AND CERTAIN GOVERNANCE MATTERS Our Board of Directors directs and oversees the management of our business and affairs and has three standing committees: the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee. In addition, from time to time, special committees may be established under the direction of the Board of Directors when necessary to address specific issues. Director Independence and Independence Determinations Under the rules of the Nasdaq Stock Market (“Nasdaq”), a director is not independent unless our Board of Directors affirmatively determines that he or she does not have a material relationship with us or any of our subsidiaries (either directly or as a partner, stockholder or officer of an organization that has a relationship with us or any of our subsidiaries). Ownership of a significant amount of our stock, by itself, does not constitute a material relationship. Our Corporate Governance Guidelines define an “independent” director in accordance with Rule 5605(a)(2) of the Nasdaq rules. In addition, audit and compensation committee members are subject to the additional independence requirements of applicable SEC rules and Nasdaq listing standards. Our Corporate Governance Guidelines require our Board of Directors to review the independence of all directors at least annually. In the event a director has a relationship with the Company that is relevant to his or her independence and is not addressed by the objective tests set forth in the Nasdaq independence definition, our Board of Directors will determine, considering all relevant facts and circumstances, whether such relationship is material. Our Board of Directors has affirmatively determined that each of our directors and director nominees, other than Scott Staples, is independent in accordance with Nasdaq rules. In making its independence determinations, our Board of Directors considered and reviewed all information known to it (including information identified through directors’ questionnaires). Director Nomination Process Our Board seeks to ensure that it is composed of members whose particular experience, qualifications, attributes, and skills, when taken together, will allow the Board to satisfy its oversight responsibilities effectively. As specified in our Corporate Governance Guidelines, in identifying candidates for membership on the Board, the Nominating and Corporate Governance Committee may take into account (1) minimum individual qualifications, including strength of character, mature judgment, familiarity with the Company’s business and industry, independence of thought and an ability to work collegially with the other members of the Board, and (2) all other factors it considers appropriate, which may include age, diversity of background, existing commitments to other businesses, potential conflicts of interest with other pursuits, legal considerations such as antitrust issues, corporate governance background, various and relevant career experience, relevant technical skills, relevant business or government acumen, financial and accounting background, technology background, compliance background, executive compensation background and the size, composition and combined expertise of the existing Board. As the application of these factors involves the exercise of judgment, the Nominating and Corporate Governance Committee does not have a standard set of fixed qualifications that is applicable to all director candidates, although the Nominating and Corporate Governance Committee does at a minimum assess each candidate’s strength of character, mature judgment, industry knowledge or business experience and his or her ability to satisfy independence standards. In addition, while the Board considers diversity of viewpoints, background and experiences, the Board does not have a formal diversity policy. In identifying prospective director candidates, the Nominating and Corporate Governance Committee may seek referrals from other members of the Board, management, stockholders and other sources, including third party recommendations.The Nominating and Corporate Governance Committee also may, but need not, retain a search firm in order to assist it in identifying candidates to serve as directors of the Company. The Nominating and Corporate Governance Committee utilizes the same criteria for evaluating candidates regardless of the source of the referral. | | | | | | | | | | | | | | | | | | | Board Diversity Matrix (As of April 26, 2022) | | | | | | | | Board Size: | | | | | | | | | | | | | | | | | | | | Total Number of Directors | | | 7 | | | | | | | | | | | Female | | | Male | | | Non-Binary | | | Did Not
Disclose
Gender | | | | | | | | Gender: | | | | | | | | | | | | | | | | | | | | | | | Directors | | | 3 | | | | 4 | | | | 0 | | | | 0 | | | | | | Number of Directors who identify in Any of the Categories Below: | | | | | | | | | | | | | | | | African American or Black | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | Alaskan Native or Native American | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | Asian (other than South Asian) | | | 1 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | South Asian | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | Hispanic or Latinx | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | Native Hawaiian or Pacific Islander | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | | | | White | | | 2 | | | | 4 | | | | 0 | | | | 0 | | | | | | | | Two or More Races or Ethnicities | | | 0 | | | | 0 | | | | 0 | | | | 0 | | | | | LGBTQ+ | | | 0 | | | | | Persons with Disabilities | | | 0 | |
In connection with its annual recommendation of a slate of nominees, the Nominating and Corporate Governance Committee also may assess the contributions of those directors recommended for re-election in the context of the Board evaluation process and other perceived needs of the Board. When considering whether the nominees have the experience, qualifications, attributes and skills, taken as a whole, to enable the Board to satisfy its oversight responsibilities effectively in light of our business and structure, the Board focused primarily on the nominees’ contributions to our and our subsidiaries’ success in recent years and on information discussed in each of the nominee’s biographical information set forth above. We believe that our director nominees provide an appropriate mix of experience and skills relevant to the size and nature of our business. In particular, with respect to Mr. Staples, our Board of Directors considered his deep knowledge of our business and his significant executive management and leadership experience and with respect to Ms. Bell, our Board of Directors considered her experience in accounting and auditing and her experience with audit committees and boards. This process resulted in the Board’s nomination of the incumbent Class I directors named in this Proxy Statement and proposed for election by you at the upcoming Annual Meeting. The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. Any recommendation submitted to the Corporate Secretary of the Company should be in writing and should include any supporting material the stockholder considers appropriate in support of that recommendation, but must include all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Section 14(a) of the Exchange Act, and the rules and regulations promulgated thereunder, including such person’s written consent to being named in the Company’s Proxy Statement as a nominee of the stockholder and to serving as a director if elected. Stockholders wishing to propose a candidate for consideration may do so by submitting the proposed candidate’s full name and address, résumé and biographical information to the attention of the Corporate Secretary of the Company, 1 Concourse Parkway NE, Suite 200, Atlanta, Georgia 30328. All recommendations for nomination received by the Corporate Secretary that satisfy our Bylaw requirements relating to director nominations will be presented to the Nominating and Corporate Governance Committee for its consideration. Stockholders also must satisfy the notification, timeliness, consent and information requirements set forth in our Bylaws. These requirements are also described under “Stockholder Proposals for the 2023 Annual Meeting.” Additionally, in connection with the initial public offering (the “IPO”) of our common stock in June 2021, we entered into a stockholders’ agreement with SLP Fastball Aggregator, L.P., Workday, Inc. and management stockholders. Pursuant to the stockholders’ agreement, so long as SLP Fastball Aggregator, L.P. and its affiliates collectively own at least 5% of all outstanding shares of our stock entitled to vote generally in the election of directors, the Silver Lake Transferee Group (as defined therein) have the right, but not the obligation, to nominate to the Board a number of individuals equal to the percentage of the issued and outstanding common stock owned by the Silver Lake Transferee Group multiplied by the total number of directors of the Board (rounded up to the nearest whole number). We have three directors on our Board who are current employees of Silver Lake Group, L.L.C. (together with its affiliated entities, successors and assignees, “Silver Lake”), and who were recommended by Silver Lake as director nominees pursuant to the stockholders agreement: Ms. Stoica is a Class II director and Messrs. Osnoss and Rudella are Class III directors. See “Transactions Related to Directors, Equity Holders, and Executive Officers” for a discussion of the stockholders’ agreement. Controlled Company Exemption We qualify as a “controlled company” under the corporate governance rules of the Nasdaq Listing Rules because Silver Lake, controls a majority of the voting power of our outstanding common stock. Therefore, we are not required to have a majority of our Board of Directors be independent, nor are we required to have a compensation committee or an independent nominating function. However, we are not currently relying on the exemptions from these corporate governance requirements. Executive Sessions Executive sessions, which are meetings of the non-management members of the Board, are regularly scheduled throughout the year. In addition, at least once a year, the independent directors will meet in a private session that excludes management and any non-independent directors. Joseph Osnoss presides at the executive sessions. Leadership Structure Joseph Osnoss has served as our Chairperson since 2020. As provided in our Corporate Governance Guidelines, the Board does not have a policy on whether or not the roles of Chairperson and Chief Executive Officer should be separate. Accordingly, the Board of Directors believes that it should be free to make a choice from time to time regarding a leadership structure that is in the best interests of the Company and its stockholders. At this time, the Board believes that the Mr. Osnoss is best situated to serve as Chairperson and that the Company’s current separated roles of Chairperson and Chief Executive Officer is appropriate. Mr. Osnoss has extensive experience in private equity investing, domestic and international experience, and service on the boards of directors of other companies. Mr. Osnoss serves as Chairperson, while Mr. Staples serves as our Chief Executive Officer. Communications with the Board As described in our Corporate Governance Guidelines, stockholders and other interested parties who wish to communicate with the chairperson of any of the Audit, Compensation, or Nominating and Corporate Governance Committees, or to the non-management or independent directors as a group, may do so by addressing such communications or concerns to the General Counsel of the Company, 1 Concourse Parkway NE, Suite 200, Atlanta, Georgia 30328, who will forward such communication to the appropriate party. Such communications may be done confidentially or anonymously. Board Committees and Meetings The following table summarizes the current membership of each of the Board’s Committees. | | | | | | | | | | Committees Audit Committee | | Compensation
Committee | | Nominating and
Corporate Governance
Committee | Name of DirectorJoseph Osnoss
| | Audit | | | Nominating
and
Corporate
Governance | | | Compensation | | | Acquisition | | Parker Kennedy
| | | | | | | | | | | | X | Anand NallathambiSusan R. Bell
| | | | | | | | | Chair | | X | | | J. David ChathamJames L. Clark
| | | | | | X | John Rudella | | | | Chair | | | Judith Sim | | X | | | | | | | | | | Chair | Barry ConnellyBianca Stoica
| | X | | | X | | | | | | | | Jill Kanin-Lovers
| | | | | X | | | X | * | | | | Frank McMahon
| | | | | | | | | | | X | * | Donald Nickelson
| | | | | X | * | | X | | | X | | Donald Robert
| | | | | | | | X | | | | | D. Van Skilling
| | X | | | | | | | | | | | David Walker
| | X | * | | | | | | | | X | |
All directors are expected to make their best effort to attend all meetings of the Board, meetings of the committees of which they are members and the annual meeting of stockholders. During the year ended December 31, 2021, the Board held two meetings, the Audit Committee held three meetings, the Compensation Committee held two meetings and the Nominating and Corporate Governance Committee held two meetings. During fiscal 2021, all of our directors attended at least 75% of the meetings of the Board and committees during the time in which he or she served as a member of the Board or such committee. X =Audit Committee Member; X* = Committee Chair
Our boardAudit Committee consists of Ms. Bell, who serves as the Chair, Ms. Sim and Ms. Stoica. Ms. Bell and Ms. Sim have been determined to be “independent,” consistent with our Audit Committee charter, Corporate Governance Guidelines, SEC rules and Nasdaq listing standards applicable to boards of directors in general and audit committees in particular. Our Board of Directors has determined that each of our directors is independent within the meaning of applicable NASDAQ Stock Market and Securities and Exchange Commission rules, except for Mr. Kennedy, who is chairman and chief executive officer of our parent company, The First American Corporation, Mr. Nallathambi, who is our chief executive officer and president, and Mr. McMahon, who is the vice chairman and chief financial officer of The First American Corporation. However, we are a “controlled company” within the meaning of the NASDAQ Marketplace Rules because The First American Corporation controls more than 50% of our voting power. As such, we are relying on NASDAQ Marketplace Rule 4350(c)(5), which allows controlled companies to be exempt from rules requiring (a) the compensation and nominating committees to be composed solely of independent directors; (b) the compensation of the executive officers to be determined by a majority of the independent directors or by a compensation committee composed solely of independent directors; and 3
(c) director nominees to be selected or recommended for the board’s selection either by a majority of the independent directors or by a nominating committee composed solely of independent directors. In considering director independence, the board studied the shares of First Advantage common stock beneficially owned by each of the directorsMs. Bell qualifies as set forth under “Security Ownership of Certain Beneficial Owners and Management,” although the board generally believes that stock ownership tends to further align a director’s interests with those of First Advantage’s other stockholders. As part of this review, the board considered the fact that Mr. Robert is the chief executive officer of Experian Group, a subsidiary which owns approximately 6.5% of our Class A common stock, and determined that this relationship does not interfere with the exercise of Mr. Robert’s independence from First Advantage and its management.
Audit Committee. Our board established the audit committee for the primary purposes of overseeing the financial reporting processes of our company and audits of our financial statements. Our board of directors has made an affirmative determination that each member of the audit committee (a) is an “independent director” as that term is defined by NASDAQ Marketplace Rules and (b) satisfies NASDAQ Marketplace Rules relating to financial literacy and experience. Our board of directors has further determined that Messrs. Chatham and Walker satisfy the criteria for being an “audit committee financial expert” as such term is defined in Item 407(d)(5) of Regulation S-K promulgated by the Securities and Exchange Commission.S-K.
The audit committee is solely responsible for duties and responsibilities of the Audit Committee are set forth in its charter, which may be found at https://investors.fadv.com/corporate-governance/documents-charters, and include assisting the Board of Directors in overseeing the following: selecting and hiring our independent registered certified public accounting firm (“independent public accountants”); approving in advance all audit services and related fees and terms;auditors, and approving in advance all the audit and non-audit services if any, providedto be performed by our independent public accountantsauditors; assisting the Board of Directors in evaluating the qualifications, performance and related fees and terms. The audit committee also oversees our internal control system, evaluates the independence of our independent public accountants, overseesauditors; assisting the Board of Directors in monitoring the quality and integrity of our financial statements and our accounting and financial reporting; assisting the Board of Directors in monitoring our compliance with legal and regulatory requirements; reviewing the adequacy and effectiveness of our internal audit function, reviewscontrol over financial informationreporting processes; assisting the Board of Directors in our quarterly reports, and oversees the audit performed by our independent public accountants. The committee reports any significant developments with respect to its duties to the full board. The audit committee met 11 times during 2007. Our board of directors has adopted a written audit committee charter (a copy of which may be viewed on the Corporate Governance page of the Investor Relations section of our website located at www.fadv.com or a printed copy may be obtained by making a written request to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716). Compensation Committee. The compensation committee is responsible for recommending compensation arrangements for our executive officers; evaluatingmonitoring the performance of our chief executive officer;internal audit function;
reviewing with management and administering our compensation plans. All membersindependent auditors our annual and quarterly financial statements; overseeing our technology security and data privacy programs; establishing procedures for the receipt, retention and treatment of complaints received by us regarding accounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and preparing the audit committee report that the rules and regulations of the compensationSEC require to be included in our annual Proxy Statement. The Audit Committee shall also prepare the report of the committee are independent under the standards for independence establishedrequired by the applicable NASDAQ Marketplace Rules. The compensation committee met 11 times during 2007. Our board of directors has adopted a written compensation committee charter (a copy of which may be viewed on the Corporate Governance pagerules and regulations of the Investor Relations section ofSEC to be included in our website located at www.fadv.com or a printed copy may be obtained by making a written request to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716). The compensation committee establishes and reviews our overall compensation philosophy. The committee reviews the performance of our chief executive officer and has the sole authority to determine his compensation and reviews and approves the salary of our other executive officers. The committee reviews and recommends to the board for approval our incentive and equity compensation plans, oversees those who are responsible for administering those plans and approves all equity compensation plans that are not subject to stockholder approval. The compensation committee also has the authority to retain compensation consultants as it deems necessary and the sole authority to approve such consultant’s fees. When setting executive officer compensation, in the first quarter of each year, the Chief Executive Officer presents a report to the compensation committee containing his recommendation of the upcoming year’s salary, bonus and long-term incentive award levels for certain executive officers other than himself. The committee takes the Chief Executive Officer's report under advisement and meets with its own compensation consultant. To obtain objective compensation information, in 2007 the compensation committee engaged Mercer LLC as its compensation consultant. Mercer was engaged by the compensation committee, and the committee has the full authority to manage all aspects of Mercer’s engagement, including approving Mercer’s compensation on a monthly basis and the ability, in the compensationannual Proxy Statement. 4
committee’s sole discretion, to terminate the engagement. Examples of projects assigned to the consultant included the evaluation of the composition of the peer group of companies used to evaluate appropriate compensation levels, evaluation of levels of executive compensation as compared to general market compensation data and the peer companies’ compensation data, and evaluation of proposed compensation programs or changes to existing programs.
The compensation committee believes that both management and the consultant provide useful information and points of view to assist the compensation committee in determining its own views on compensation. Although the compensation committee receives information and recommendations regarding the design of the compensation program and level of compensation for the executive officers from both the consultant and management, the compensation committee makes the final decisions as to the design and levels of compensation for these executives.
The compensation committee uses the chief executive officer’s report, together with reports that may be prepared by its consultant, to set executive officer salaries and bonuses for the upcoming year. Executive officers are not present during compensation committee or board of directors deliberations concerning their compensation. The chairman of the board is present when setting the chief executive officer's salary and bonus.
Compensation Committee Interlocks and Insider Participation. The members of the compensation committee for 2007 were Ms. Kanin-Lovers and Messrs. Nickelson and Robert. Lawrence Lenihan, a former director, served on the committee until April 26, 2007. No member of this committee was at any time during the 2007 fiscal year or at any other time an officer or employee of the company, and no member had any relationship with us requiring disclosure under Item 404 of Regulation S-K. None of our executive officers have served on the board of directors or compensation committee of any other entity that has or has had one or more executive officers who served as a member of our board of directors or our compensation committee during the 2007 fiscal year.
Nominating and Corporate Governance Committee.Committee Our boardNominating and Corporate Governance Committee consists of directorsMessrs. Clark and Osnoss and Ms. Sim, who serves as the Chair. Each of Messrs. Clark and Osnoss and Ms. Sim has established a nominatingbeen determined to be “independent” as defined by our Corporate Governance Guidelines and corporate governance committee to (i) assistNasdaq listing standards. The duties and responsibilities of the boardNominating and Corporate Governance Committee are set forth in its charter, which may be found at https://investors.fadv.com/corporate-governance/documents-charters, and include the following: assisting our Board of Directors in identifying individuals qualified to become directorsprospective director nominees and recommending nominees to the board for nomination candidates for election or reelection toBoard of Directors; overseeing the board or to fill board vacancies, developevaluation of the Board of Directors and recommend to our boardmanagement; developing and recommending a set of corporate governance principles and (ii) lead the board in complying with those principles. All members of the nominating committee are independent under the standards for independence established by the applicable NASDAQ Marketplace Rules. The nominating and corporate governance committee met once during 2007. The nominating and corporate governance committee acts under a written charter adopted by our board of directors (a copy of which may be viewed on the Corporate Governance page of the Investor Relations section of our website located at www.fadv.com or obtained by making a written request to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716) specifying, among other things, the following minimum qualifications for candidates recommended for election to the board:
impeccable character and integrity;guidelines;
the ability to communicate effectively withrecommending members of the board, management, auditors and outside advisors;
a willingness to act independently;
substantial experience in business, with educational institutions, governmental entities or non-profit organizations;
the ability to read and understand financial statements and financial analysis;
the ability to analyze complex business matters;
no criminal history or a background which could reasonably be expected to damage the reputationfor each committee of our company;
5
does not currently serve as a director, officer or employeeBoard of or a consultant to, a direct competitor of our company;Directors; and
does not causeotherwise taking a leadership role in shaping our companycorporate governance and overseeing our strategy as it relates to violate independence requirements under applicable law orenvironmental and social matters.
Compensation Committee Our Compensation Committee consists of Mses. Bell and Stoica and Mr. Rudella, who serves as the NASDAQ Marketplace Rules. The committee also will consider, among other factors, whether an individual has any direct experience with our company or its subsidiaries (whether as a director, officer, employee, supplier or otherwise); the individual’s experience in the industry in which our company operates; the individual’s other obligationsChair. Each of Mses. Bell and time commitments; whether the individual is an employee of a company or institution having a board of directors on which a senior executive of our company serves; whether the individual has specific knowledge, skills or experience that may be of value to our company or a committee of the board; whether an individualStoica and Mr. Rudella has been recommendeddetermined to be “independent” as defined by a stockholder of our company, an independent member of the board, another member of the board, senior management of our company or a customer of our company;Corporate Governance Guidelines and the findings of any third parties that may be engagedNasdaq listing standards applicable to assist the committee in identifying directors.
The nominating and corporate governance committee regularly assesses the appropriate size of the board and whether any vacancies on the board are anticipated. Various potential candidates for director are then identified. Candidates may come to the attention of the committee through current board members, professional search firms, stockholders or industry sources. In evaluating the candidate, the committee will consider factors other than the candidate’s qualifications, including the current composition of the board, the balance of management and independent directors, the need for audit committee expertise and the evaluations of other prospective nominees. In connection with this evaluation, the committee determines whether to interview the prospective nominee, and if warranted, one or more members of the committee, and others as appropriate, interview prospective nominees. After completing this evaluation and interview, the committee makes a recommendation to the full board as to the persons who should be nominated by the board, and the board determines the nominees after considering the recommendation and report of the committee.
The nominating and corporate governance committee recommended the slate of directors proposed for election at the annual meeting, which was unanimously approved by the full board of directors, including unanimous approval by the independent directors.
As part of its role in developing and complying with corporate governance policies, the nominating and corporate governance committee advises the board and the various committees on effective management and leadership, reviews the governing documents of the company (including our certificate of incorporation, bylaws, corporate governance policies and guidelines and code of conduct), provides ongoing advice with respect to conflicts of interest that may arise, and evaluates the current and future governance needs and obligations of the company, our board and the committees in light of “best practices” developments.
Acquisition Committee. In December 2006, our board of directors formed an acquisition committee for the purpose of evaluating and approving potential acquisitions or dispositions of businesses. The powers of the acquisition committee were delegated to the committee by the full board of directors. The members of this committee are Messrs. Nallathambi, McMahon (chairperson), Nickelson and Walker. This committee met twice in 2007.
Procedure for Stockholder Nominations of Directors
Nominations for the election of directors may only be made by the boardboards of directors in consultation with its nominatinggeneral and corporate governance committee. A stockholder of record who has the power to vote ten percent or morecompensation committees in particular.
The duties and responsibilities of the outstanding capital stock of our company may recommend to the committee up to one candidate for consideration as a nomineeCompensation Committee are set forth in any 12-month period. The committee will consider a stockholder nominee only if a stockholder gives written notice to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon 6
Parkway, St. Petersburg, Florida 33716 not later than the close of business on November 1 of the year immediately preceding the year of the annual meeting of stockholders at which the stockholder desires to have his or her candidate presented to the board. Each such notice must include the name, address and telephone number of the potential nominee; a detailed biography of the potential nominee; and evidence of stock ownership by the presenting stockholder, including the number of shares owned. Nominees properly proposed by eligible stockholders will be evaluated by the nominating and corporate governance committee in the same manner as nominees identified by the committee. To date, no stockholder or group of stockholders having the power to vote ten percent or more of our capital stock has put forth any director nominees.
Stockholder Communications
Our stockholders may communicate directly with the members of the board of directors or individual members by writing directly to it or them in care of Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716. Stockholders are required to provide appropriate evidence of their stock ownership with any communications. Communications received in writing are distributed to our board or to individual directors as appropriate depending on the facts and circumstances outlined in the communication received.
CORPORATE GOVERNANCE MATTERS
CODE OF CONDUCT
We have adopted a code of conduct that applies to our chief executive officer, chief financial officer, controller and all of our other officers, employees and directors (a copy ofits charter, which may be viewed onfound at https://investors.fadv.com/corporate-governance/documents-charters, and include the Corporate Governance page of the Investor Relations sectionfollowing:
oversight of our website located at www.fadv.com or obtained by making a written request to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716). BUSINESS RELATIONSHIPS AND RELATED TRANSACTIONS
We effectively commenced operations on June 5, 2003 with our acquisition of The First American Corporation’s screening technology divisionexecutive compensation policies and US SEARCH.com, Inc. As consideration for these acquisitions, we issued 100% of our outstanding Class B common stock to The First American Corporationpractices;
reviewing and 100% of our Class A common stock to former stockholders of US SEARCH.com, Inc. Each share of our Class B common stock entitles the holder to ten votes in any meeting of stockholders. As a result, The First American Corporation received approximately 80% of the outstanding capital stock of our company and approximately 98% of the voting power in our company. Former stockholders of US SEARCH.com, Inc. received the remaining approximately 20% of our outstanding capital stock. Pequot Capital Management, Inc., formerly a stockholder of US SEARCH.com, Inc., received approximately 10% of our Class A common stock in the transaction. The First American Corporation and Pequot Capital Management, Inc. entered into a stockholders agreement concurrently with the acquisitions that grants Pequot Capital Management, Inc. certain registration rights and the right to sell shares of our Class A common stock at the same time The First American Corporation sells any of our shares under certain circumstances, and generally requires The First American Corporation to vote for one nominee for director designated by Pequot Capital Management, Inc. We and The First American Corporation entered into a reimbursement agreement whereby we reimburse The First American Corporation for the actual expenses incurred by us in connection with the participation by certain of our employees in The First American Corporation’s supplemental benefit plan. In 2007, we reimbursed The First American Corporation $585,603 for actual and interest costs for Anand Nallathambi’s participation in the supplemental benefit plan.
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On November 7, 2005, we entered into an operating agreement with a subsidiary of The First American Corporation that sets forth the terms under which, we along with The First American Corporation subsidiary, jointly own and operate LeadClick Holding Company, LLC. We have ownership of 70% of LeadClick Holding Company LLC, with the remaining 30% being owned by The First American Corporation subsidiary.
The First American Corporation provides certain legal, financial, technology, administrative and managerial support services to us pursuant to a service agreement that was entered into on January 1, 2004. Under the terms of the service agreement, human resources systems and payroll systems and support, network services and financial systems are provided at an annual cost of approximately $300,000. In addition, certain other services including pension and 401(k) expenses, corporate and medical insurance, personal property leasing and company car programs are provided at actual cost. The initial term of the agreement was for one year, with automatic self renewals every six months. The First American Corporation incurred approximately $0.3 million in service fees for the year ended December 31, 2007.
The First American Corporation and certain of its affiliates provided sales and marketing, legal, financial, technology, leased facilities, leased equipment and other administrative services to the Credit Information Group. As part of our acquisition of the Credit Information Group from The First American Corporation, we entered into an amended and restated services agreement with The First American Corporation on September 14, 2005. Under the terms of this agreement, human resources systems and payroll systems and support, network services and financial systems are provided by The First American Corporation at an annual cost of approximately $4.5 million. In addition, certain other services including pension and 401(k) expenses, corporate and medical insurance, personal property leasing and company car programs are provided at actual cost. The initial term of the agreement was for one year, with automatic self renewals every six months The amounts allocated to the Credit Information Group are based on management’s assumptions (primarily usage, time incurred and number of employees) as to the proportion of the services used by the Credit Information Group in relation to the actual costs incurred by The First American Corporation and its affiliates in providing the services. The Company incurred approximately $4.5 million in service fees for the year ended December 31, 2007.
We also entered into an agreement with The First American Corporation to lease the Credit Information Group’s office space in Poway, California. The lease is for an initial term of five years with a one-time option to renew the term for an additional five years. The rent payable under the lease is approximately $169,000 per month, and we are obligated to pay all costs and expensesapproving matters related to the property, including operating expenses, maintenance and taxes, which were approximately $2.0 million for the year ended December 31, 2007.
Effective January 1, 2003, we and a subsidiarycompensation of The First American Corporation entered into an agreement whereby we will act as an agent in selling renters insurance. We receive a commission of 12% of the insurance premiums and 20% of the profits (as defined in the agreement) of the insurance premiums written. Commissions earned in 2007 were approximately $1.5 million.
We perform employment screening and hiring management services for The First American Corporation. Total revenue from The First American Corporation was approximately $3.0 million for the year ended December 31, 2007.
First American Real Estate Solutions, LLC (“FARES”), a joint venture between The First American Corporation and Experian Information Solutions, Inc. (“Experian”), owns 50% of a joint venture that provides mortgage credit reports and operations support to a nationwide mortgage lender. In accordance with the terms of the joint venture operating agreement, the mortgage and consumer credit reporting operation of FARES receives a merge fee per credit report issued and is reimbursed for certain operating costs. In connection with the acquisition of the Credit Information Group, FARES entered into an outsourcing agreement where we continue to provide these services to the nationwide mortgage lender. These earnings totaled $4.8 million for the year ended December 31, 2007. Total merge fees were $6.2 million for the year ended December 31, 2007. Total reimbursement for operating costs was $3.7 million for the year ended December 31, 2007.
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We, through a subsidiary, perform tax consulting services for The First American Corporation pursuant to a training grants & incentives services agreement which was entered into in August 2007. We identify grants and tax credits, and match them with First American’s training curriculum and complete the necessary applications as a part of the service offering. Our fees for the training grant services are payable at twenty percent (20%) of the total amount of each approved training grant arranged by us for the benefit of The First American Corporation. As of date, there has been no significant revenue recognized under this agreement.
We, through a subsidiary, provide publicly available bankruptcy information to The First American Corporation pursuant to a data license and information services agreement dated December 27, 2007. The annual fee for these services is $75,000 ($6,250 per month).
We have a license agreement between First American Corelogic, Inc., a subsidiary of The First American Corporation,our Chief Executive Officer and our subsidiary First Advantage Credco, LLC that allows First Advantage Credco to resell First American Corelogic’s property, valuation models and document image products to First Advantage Credco’s end-user customers. This agreement was approved in March 2008.
We have a flood zone determination wholesale service provider agreement, dated March 1, 2008, between First American Hazard Certification LLC, a subsidiary of The First American Corporation and First Advantage Credco, LLC. Under the terms of this agreement, we are permitted to re-sell flood products provided by First American to First Advantage Credco’s end-user customers. All product costs and pricing are market-based.
We have a hiring management license and service agreement, dated January 11, 2008, between a subsidiary of ours, First Advantage Enterprise Screening, and First American. Under the terms of the agreement, we license hiring management solution software to First American and provide certain services and maintenance for the software. The fees for this agreement are an annual fee of $305,000 (invoiced quarterly) plus one-time implementation services of $126,700.
Experian owns approximately 6% of a combination of First Advantage’s Class A and Class B common shares and is considered a related party. The cost of credit reports purchased by us from Experian was $28.8 million for the year ended December 31, 2007. We sell background and lead generation services to Experian. Total revenue from these sales was $100,000 for the year ended December 31, 2007.
Related Party Transaction Approval Policy. It is our policy that the audit committee review and approve in advance all related party transactions that are required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the Securities and Exchange Commission. If advance approval is not feasible, the audit committee must approve or ratify the transaction at the next scheduled meeting of the committee. Transactions required to be disclosed pursuant to Item 404 include any transaction between First Advantage and any officer, director or certain affiliates of First Advantage that has a value in excess of $120,000. In reviewing related party transactions, the audit committee evaluates all material facts about the transaction, including the nature of the transaction, the benefit provided to First Advantage, whether the transaction is on commercially reasonable terms that would have been available from an unrelated third-party and any other factors necessary to its determination that the transaction is fair to First Advantage. Our board of directors has adopted a written Statement of Policy With Respect to Related Party Transactions (a copy of which may be viewed on the Corporate Governance page of the Investor Relations section of our website located at www.fadv.com or a printed copy may be obtained by making a written request to Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716).
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EXECUTIVE OFFICERS
Our executive officers, in addition to Parker Kennedy and Anand Nallathambi are listed below:
Todd Mavis, 46, joined the company as executive vice president-operations on August 1, 2007. Prior to joining the company, Mr. Mavis served as president and chief executive officer of Danka Business Systems from April 2004 to March 2006, having joined Danka Business Systems in 2001. From 1997 to 2001, Mr. Mavis was executive vice president of Mitchell International, a leading information provider and software developer for insurance and related industries. From 1996 to 1997, Mr. Mavis was senior vice president—worldwide sales and marketing of Checkmate Electronics, Inc. Mr. Mavis holds a bachelor of arts degree in marketing and administration from the University of Oklahoma and a masters degree in business administration from San Diego State University.
John Lamson, 57, chief financial officer and executive vice president since 2003. Prior to joining the company, Mr. Lamson served as chief financial officer of First American Real Estate Information Services Inc., a wholly-owned subsidiary of The First American Corporation, a position he held from September 1997 to June 2003. Prior to that, Mr. Lamson served as chief financial officer of a financial institution and as a certified public accountant with Arthur Andersen Co. Mr. Lamson is a member of the American Institute of Certified Public Accountants and holds a bachelor of arts degree in business administration from the University of South Florida.
Akshaya Mehta, 48, executive vice president-corporate infrastructure since August 2007. From 2003 to August 2007, Mr. Mehta served the company as chief operating officer and executive vice president. Previously, Mr. Mehta served as executive vice president and chief operating officer of American Driving Records, Inc., a wholly-owned subsidiary of ours. Mr. Mehta has over 15 years of management experience and over 20 years of technology development expertise. Prior to joining American Driving Records, Inc. in 1999, Mr. Mehta served as division vice president of product development at Automatic Data Processing, Inc., vice president of development at Security Pacific Bank, and Deputy Head of Development at UBS London. Mr. Mehta earned a masters degree in computer science at the Imperial College of the University of London after obtaining a bachelor of science degree in physics and medical physics from the same university.
Julie Waters, 41, vice president and general counsel since 2004. Prior to joining the company, Ms. Waters was general counsel for USA Floral Products, Inc., formerly a publicly traded company listed on NASDAQ. Ms. Waters was previously employed as in-house counsel for Teco Corporation and Spalding Evenflo Corporation. Ms. Waters received her juris doctorate from George Washington University after receiving a bachelor of arts degree in English and Rhetoric Communications from the University of Virginia.
Evan Barnett, 60, president of our multifamily services segment since 2003. Previously, Mr. Barnett held senior management positions with Omni International Corporation and related entities, including positions as CFO and Executive Vice President. Prior to his tenure with Omni International, he was employed as a certified public accountant with Grant Thornton LLP. Mr. Barnett served as president of the National Association of Screening Agencies from 2000 to 2003. Mr. Barnett holds agent licensure for property and casualty insurance. He graduated from The American University with a bachelor of science degree in accounting and a master’s degree in business administration in financial management.
Bart Valdez, 45, president of our employment services segment since 2003. Mr. Valdez was named president of HireCheck, Inc. in October 2002 after joining HireCheck, Inc. in October 2000 as its chief operating officer. From August 2001 until October 2002, he also served as president of Substance Abuse Management, Inc. From June of 1998 until he joined HireCheck, Inc., Mr. Valdez served as vice president of business development and operations for Employee Information Services, Inc., HireCheck, Inc., Substance Abuse Management, Inc. and Employee Information Services, Inc. which are now part of our employment services segment. He received his bachelor of science degree from Colorado State University and his master’s degree in business administration from the University of Colorado.
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Andrew Macdonald, 44, was appointed senior vice president of corporate development in September 2007 and continues to serve as president of First Advantage Litigation Consulting, LLC, part of our investigative and litigation support services segment, a position he has held since January 2006. Mr. Macdonald joined the company in 2002 through the HireCheck, Inc. acquisition of Employee Health Programs, Inc. where he served as president and chief financial officer. Following the acquisition, Mr. Macdonald served as president of First Advantage Occupational Health Services Corp. and then as vice president and corporate development officer for First Advantage. Mr. Macdonald received his bachelor of arts degree in business administration from Emory University.
Howard Tischler, 54, president of our dealer services segment, joined the company in September 2005 through the acquisition of the Credit Information Group from The First American Corporation. Mr. Tischler also oversees Teletrack, Inc., our specialty finance credit reporting company, and our interest in LeadClick Media, Inc. Prior to joining First Advantage, Mr. Tischler served as president of First American Credit Management Solutions, Inc. and served as chief executive officer and president of Credit Online until its merger with DealerTrack, Inc. in 2003. Since 2003, Mr. Tischler has served on the board of DealerTrack, which became a publicly traded company in December 2005. Mr. Tischler received his bachelor of science degree in mathematics from the University of Maryland and his masters of science degree in engineering and operations research from the George Washington University and serves on its Engineering Advisory Board.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth information, as of March 10, 2008, concerning (a) each person that is known to us to be the beneficial owner of more than 5% of First Advantage Corporation’s Class A common stock and Class B common stock; (b) each of our named executive officers; (c) each director; and (d) all of the directors and executive officers as a group. Unless otherwise indicated, to our knowledge, all persons listed below have sole voting and investment power with respect to their shares, except to the extent spouses share authority under applicable law. Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission. In computing the number and percentage of shares beneficially owned by a person, shares that may be acquired by such person within 60 days of March 10, 2008 are counted as outstanding, while these shares are not counted as outstanding for computing the percentage ownership of any other person.
| | | | | | | | | | | | | | Class A Common | | | Class B Common | | Name(1) | | Number of
Shares
Beneficially
Owned | | Percent
of
Class(2) | | | Number of
Shares
Beneficially
Owned | | Percent
of
Class(2) | | Holders of 5% or More | | | | | | | | | | | FADV Holdings LLC(3)(4) The First American Corporation First American Real Estate Information Services, Inc. First American Real Estate Solutions LLC 1 First American Way Santa Ana, California 92797 | | 47,726,521 | | 81.5 | % | | 47,726,521 | | 100 | % | Pequot Capital Management, Inc.(5) 500 Nyala Farm Road Westport, Connecticut 06880 | | 2,162,446 | | 3.7 | % | | 0 | | * | | Ronald J. Juvonen (6) c/o Downtown Associates 674 Unionville Road Suite 105 Kennett Square Pennsylvania 19348 | | 674,621 | | 1.1 | % | | 0 | | * | | Experian Information Solutions, Inc.(4)(7) 475 Anton Boulevard 4th Floor Costa Mesa, California 92626 | | 3,784,642 | | 6.4 | % | | 0 | | * | | Maverick Capital, Ltd.(8) 300 Crescent Court 18th Floor Dallas, Texas 75201 | | 1,073,145 | | 1.8 | % | | 0 | | * | | Directors | | | | | | | | | | | Parker Kennedy(9)(21) | | 34,448 | | * | | | 0 | | * | | Anand Nallathambi(10) | | 296,390 | | 0.5 | % | | 0 | | * | | J. David Chatham(11)(12) | | 12,448 | | * | | | 0 | | * | | Barry Connelly(11) | | 10,948 | | * | | | 0 | | * | | Frank McMahon(19)(21) | | 3,451 | | * | | | 0 | | * | | Donald Nickelson(11) | | 10,948 | | * | | | 0 | | * | | Donald Robert(11) | | 15,948 | | * | | | 0 | | * | | Jill Kanin-Lovers(20) | | 2,616 | | * | | | 0 | | * | | D. Van Skilling(13) | | 10,116 | | * | | | 0 | | * | | David Walker(11) | | 13,948 | | * | | | 0 | | * | | Named Executive Officers Who Are Not Directors | | | | | | | | | | | John Lamson(14) | | 237,109 | | 0.4 | % | | 0 | | * | | Akshaya Mehta(15) | | 232,424 | | 0.4 | % | | 0 | | * | | Bart Valdez(16) | | 138,992 | | 0.2 | % | | | | | | Evan Barnett(17) | | 117,800 | | 0.2 | % | | 0 | | * | | Other Named Executive Officer in 2007 | | | | | | | | | | | John Long(18) | | 760,725 | | 0.2 | % | | | | | | All Directors and Executive Officers as a group (19 persons) | | 1,329,686 | | 1.9 | % | | 0 | | * | |
* | Represents holdings of less than one percent. |
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(1) | Unless otherwise indicated, the address for each of the persons set forth in the table is in care of First Advantage Corporation, 100 Carillon Parkway, St. Petersburg, Florida 33716, and attention: Bret Jardine, secretary. |
(2) | Percentage ownership of each class is calculated based on 11,524,745 shares of Class A common stock and 47,726,521 shares of Class B common stock outstanding, in each case as of March 10, 2008, plus, in the case of percentage ownership of Class A common stock with respect to The First American Corporation, the number of Class A common shares The First American Corporation may acquire within 60 days of March 10, 2008 upon full conversion of the Class B common stock owned by it on such date into Class A common stock on a one-for-one basis. |
(3) | The number of shares of Class A common stock reported includes 47,726,521 shares of Class A common stock that may be acquired upon full conversion of 47,726,521 shares of Class B common stock within 60 days of March 10, 2008. |
(4) | As reported in Amendment No. 2 to Schedule 13D by The First American Corporation; FADV Holdings LLC, a Delaware limited liability company; First American Real Estate Solutions LLC, a California limited liability company; and First American Real Estate Information Services, Inc., a California corporation, filed jointly as a “group” within the meaning of Section13(d)(3) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), FADV Holdings LLC currently is the record owner of 47,726,521 shares of Class B common stock, which are convertible on a one-to-one basis into Class A common stock at the option of FADV Holdings LLC and upon the occurrence of certain events. Subject to FADV Holdings LLC’s operating agreement and the Omnibus Agreement (defined below) with Experian Information Solutions, Inc., an Ohio corporation, FADV Holdings LLC and The First American Corporation share voting and dispositive power with respect to 47,726,521 Class B shares because FADV Holdings LLC is the direct owner of such shares and The First American Corporation holds a controlling interest in FADV Holdings LLC (62.5917%); with First American Real Estate Solutions LLC and First American Real Estate Information Services, Inc., as holders of 36.2840% and 1.1243%, respectively, of the outstanding equity of FADV Holdings LLC. According to Amendment No 2 to Schedule 13D, pursuant to the terms of the Amended and Restated Omnibus Agreement (“Omnibus Agreement”) between The First American Corporation and Experian Information Solutions, Inc., and pursuant to the operating agreement of FADV Holdings LLC, The First American Corporation and Experian Information Solutions, Inc. have the right to cause FADV Holdings LLC to distribute shares of the Class B common stock to The First American Corporation, First American Real Estate Information Services, Inc. and Experian Information Solutions, Inc., resulting in 43,726,521 shares of Class A common stock being held by The First American Corporation; 536,585 shares of Class A common being held by First American Real Estate Information Services, Inc.; and 3,463,415 shares of Class A common stock being held by Experian Information Solutions, Inc., immediately following the distribution. The distribution of 3,463,415 shares of Class A common stock to Experian Information Solutions, Inc. is based upon Experian Information Solutions, Inc.’s pro rata portion membership interest in First American Real Estate Solutions, LLC (20%), as more fully described in footnote 7 below. |
(5) | Consists of 2,105,130 shares of Class A common stock, warrants convertible into 41,462 shares of Class A common stock, and options to purchase up to 15,854 shares of Class A common stock exercisable within 60 days of March 10, 2008 held of record by Pequot Private Equity Fund II, L.P. Pequot Capital Management, Inc., the investment manager of Pequot Private Equity Fund II, L.P., holds voting and dispositive power of the shares held of record by Pequot Private Equity Fund II, L.P. |
(6) | As reported in Amendment No. 1 to Schedule 13G dated February 13, 2008 filed with the Securities and Exchange Commission. Ronald J. Juvonen, managing member of Downtown Associates, L.L.C., general partner of Downtown Associates I, L.P., Downtown Associates II, L.P., Downtown Associates III, L.P. and Downtown Associates V, L.P. (collectively referred to as the “Downtown Funds”) filed the Amendment No. 1 to Schedule 13G with the Securities and Exchange Commission on February 13, 2008 with respect to 674,621 shares. These shares are held by Downtown Associates I, L.P., Downtown Associates II, L.P. and Downtown Associates III, L.P. (collectively referred to as the “Downtown Funds”). The general partner of the Downtown Funds is Downtown Associates, L.L.C. (the “General Partner”). Ronald J. Juvonen, as the Managing Member of the General Partner, has sole power to vote and direct the disposition of all shares of
|
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| the Class A Common Stock held by the Downtown Funds. For purposes of the reporting requirements of the Exchange Act, Mr. Juvonen is deemed to be the beneficial owner of such securities.
|
(7) | As reported in Amendment No. 1 to Schedule 13G dated February 14, 2006 filed with the Securities and Exchange Commission. Experian Information Solutions, Inc. filed Amendment No. 1 to Schedule 13G with the Securities and Exchange Commission on February 14, 2006 since it may deemed as part of a group with FADV Holdings LLC, The First American Corporation, First American Real Estate Information Solutions, Inc., and First American Real Estate Solutions as a result of Experian Information Solutions, Inc.’s 20% ownership interest in First American Real Estate Solutions. First American Real Estate Solutions owns a 36.2840% membership interest in FADV Holdings (with the other members being First American, which owns a 62.5917% membership interest, and First American Real Estate Information Solutions, Inc., which owns a 1.1243% membership interest). Experian Affiliate Acquisition, LLC, a Delaware limited liability company, in which Experian Information Solutions, Inc. is the sole member, owns beneficially 321,227 shares of Class A common stock and holds full voting and dispositive power of the shares held of record by it. Experian Information Solutions, Inc. does not have voting power or dispositive power over any of the shares owned by FADV Holdings, except that it may cause FADV Holdings, under certain circumstances, to distribute 17,317,073 shares of Class B stock to First American Real Estate Solutions, which would be required to distribute 20% to Experian Information Solutions, Inc. Such Class B common stock would convert automatically into 3,463,415 shares of Class A common stock. Following the distribution of the Class B common stock, it would convert into Class A common stock, resulting in Experian Information Solutions, Inc. owning approximately 6.5% of our Class A common stock. Experian Information Solutions, Inc. expressly disclaims the existence of a group with any or all of FADV Holdings, The First American Corporation, First American Real Estate Information Solutions, Inc. and First American Real Estate Solutions. |
(8) | As reported in Amendment No. 1 to Schedule 13G dated February 14, 2008 filed with the Securities and Exchange Commission. Maverick Capital Management, LLC filed the Amendment No. 1 to Schedule 13G with the Securities and Exchange Commission on February 14, 2008 with respect to 1,073,145 shares. Maverick Capital, Ltd. is an investment adviser registered under Section 203 of the Investment Advisers Act of 1940 and, as such, may be deemed to have beneficial ownership of the Shares which are the subject of this filing through the investment discretion it exercises over its clients’ accounts. Maverick Capital Management, LLC is the General Partner of Maverick Capital, Ltd. Mr. Ainslie is the manager of Maverick Capital Management, LLC and is granted sole investment discretion pursuant to Maverick Capital Management, LLC’s Regulations. |
(9) | Includes options to purchase up to 10,002 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 946 Restricted Stock Units vesting within 60 days of March 10, 2008 held by Mr. Kennedy. |
(10) | Includes options to purchase up to 183,466 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 261 shares that are held for the benefit of Mr. Nallathambi by the trustee of the First Advantage Corporation 401(k) Savings Plan. |
(11) | Includes options to purchase up to 10,002 shares of Class A common stock exercisable within 60 days of March 10, 2008 held by Messrs. Chatham, Connelly, Nickelson, Robert and Walker and 946 Restricted Stock Units vesting within 60 of March 10, 2008. Each Restricted Stock Unit is equal to one share of Class A Common Stock upon vesting at which time the restriction ceases. |
(12) | Includes 1,500 Class A common stock held by Mr. Chatham’s spouse. |
(13) | Includes options to purchase up to 4,170 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 946 Restricted Stock Units vesting within 60 of March 10, 2008. |
(14) | Includes options to purchase up to 201,680 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 4,219 shares that are held for the benefit of Mr. Lamson by the trustee of the First Advantage 401(k) Plan. |
(15) | Includes options to purchase up to 210,000 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 692 shares that are held for the benefit of Mr. Mehta by the trustee of the First Advantage 401(k) Plan. |
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(16) | Includes options to purchase up to 126,680 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 881 shares that are held for the benefit of Mr. Valdez by the trustee of the First Advantage 401(k) Plan. |
(17) | Includes options to purchase up to 105,000 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 693 shares that are held for the benefit of Mr. Barnett by the trustee of the First Advantage 401(k) Plan. |
(18) | Includes options to purchase up to 685,880 shares of Class A common stock exercisable within 60 days of March 10, 2008. As of March 2007, Mr. Long resigned and is no longer an officer. |
(19) | Includes options to purchase up to 2,505 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 946 Restricted Stock Units vesting within 60 days of March 10, 2008. Each Restricted Stock Unit is equal to one share of Class A common stock upon vesting at which time the restriction ceases. |
(20) | Includes options to purchase up to 1,670 shares of Class A common stock exercisable within 60 days of March 10, 2008 and 946 Restricted Stock Units vesting within 60 days of March 10, 2008. Each Restricted Stock Unit is equal to one share of Class A common stock upon vesting at which time the restriction ceases. |
(21) | Messrs. Kennedy and McMahon have entered into agreements with First American requiring them to exercise these option awards and restricted stock awards at the direction of First American and to remit any after-tax benefits they receive as a result. |
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The following table sets forth as of March 10, 2008 the total number of common shares of The First American Corporation beneficially owned and the percentage of the outstanding shares so owned, based on 92,137,077 shares of The First American Corporation common stock outstanding on that date, by:
each named executive officer; and
alloverseeing administration and monitoring of the directorsour incentive and executive officers as a group.
Unless otherwise indicated in the notes following the table, those listed are the beneficial owners of the listed shares of The First American Corporation with sole voting and investment power (or, in the case of individual stockholders, shared power with such individual’s spouse) over the shares listed. The First American Corporation common shares subject to rights exercisable within 60 days of March 10, 2008 are treated as outstanding when determining the amount and percentage beneficially owned by a person or entity.
| | | | | | Name | | Number of The
First American
Corporation
Common
Shares | | Percent
of
Class | | Directors | | | | | | Parker Kennedy(1)(2) | | 3,507,371 | | 3.8 | % | Anand Nallathambi(3) | | 92,465 | | * | | J. David Chatham(4) | | 39,881 | | * | | Barry Connelly | | 0 | | * | | Frank McMahon(5) | | 155,416 | | * | | Donald Nickelson | | 0 | | * | | Donald Robert | | 732 | | * | | Jill Kanin-Lovers | | 0 | | * | | D. Van Skilling(6) | | 33,355 | | * | | David Walker | | 0 | | * | | Named Executive Officers Who Are Not Directors | | | | | | John Lamson(7) | | 4,800 | | * | | Akshaya Mehta(8) | | 8,617 | | * | | Bart Valdez(9) | | 2,790 | | * | | Evan Barnett(10) | | 7,402 | | * | | Other Named Executive Officer in 2007 | | | | | | | | | John Long | | 0 | | * | | All Directors and Executive Officers as a group (19 persons) | | 3,862,571 | | 4.1 | % |
* | Represents holdings of less than one percent. |
(1) | Of the shares credited to Parker S. Kennedy, chairman of the board and chief executive officer of First American, 14,470 shares are owned directly and 3,111,086 shares are held by Kennedy Enterprises, L.P., a California limited partnership of which Parker S. Kennedy is the sole general partner and D. P. Kennedy, Parker S. Kennedy’s father, is one of the limited partners. The limited partnership agreement pursuant to which the partnership was formed provides that the general partner has all powers of a general partner as provided in the California Uniform Limited Partnership Act, provided that the general partner is not permitted to cause the partnership to sell, exchange or hypothecate any of its shares of stock of First American without the prior written consent of all of the limited partners. Of the shares held by the partnership, 462,885 are allocated to the capital accounts of Parker S. Kennedy. The balance of the shares held by the partnership is allocated to the capital accounts of the other limited partners, who are family members of the Kennedys. Except to the extent of his voting power over the shares allocated to the capital accounts of the limited partners, Parker S. Kennedy disclaims beneficial ownership of all shares held by the partnership other than those allocated to his own capital accounts. |
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(2) | Includes options to purchase up to 374,000 shares exercisable within 60 days of March 10, 2008, and 11,131 shares that are allocated to Mr. Kennedy’s employee stock ownership sub-account under the “ESOP” portion of First American’s 401(k) Savings Plan. |
(3) | Includes options to purchase up to 81,000 shares exercisable within 60 days of March 10, 2008 and 4030 shares are held for the benefit of Mr. Nallathambi by the trustee of the First Advantage 401(k) Savings Plan. |
(4) | Includes options to purchase up to 11,750 shares exercisable within 60 days of March 10, 2008. |
(5) | Includes options to purchase up to 120,000 shares exercisable within 60 days of March 10, 2008 and 6932 Restricted Stock Units vested within 60 days of March 10, 2008. |
(6) | Includes 2,365 shares held by a nonprofit corporation for which Mr. Skilling serves as a director and officer. In his capacity as an officer, Mr. Skilling has the power, acting alone, to direct the voting and disposition of the shares. Also includes 2,356 shares held in three trusts for which Mr. Skilling serves as the trustee. In this position, Mr. Skilling has the power to direct the voting and disposition of the shares. Includes options to purchase up to 18,500 shares exercisable within 60 days of March 10, 2008. |
(7) | Includes 4,000 shares exercisable within 60 days of March 10, 2008. |
(8) | Includes options to purchase up to 8,000 shares exercisable within 60 days of March 10, 2008 and 617 shares are held for the benefit of Mr. Mehta by the trustee of the First Advantage 401(k) Savings Plan. |
(9) | Includes 1,365 shares held for the benefit of Mr. Valdez by the trustee of the First Advantage 401(k) Savings Plan. |
(10) | Includes 2 shares that are held for the benefit of Mr. Barnett by the trustee of the First Advantage 401(k) Savings Plan. |
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EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Overview. Thisequity-based compensation discussion describes and analyzes our compensation practices for the following named executive officers:
Anand Nallathambi, chief executive officer and presidentplans.
Akshaya Mehta,reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer, evaluating our Chief Executive Officer’s performance in light of those goals and
| objectives, and, either as a committee or together with the other independent directors (as directed by the Board of Directors), determining and approving, or making recommendations to the Board of Directors with respect to, our Chief Executive Officer’s compensation level based on such evaluation; |
reviewing and approving, or making recommendations to the Board of Directors with respect to, the compensation of our other executive vice president–corporate infrastructureofficers, including annual base salary, bonus and equity-based incentives and other benefits; John Lamson, chief financial officerreviewing and executive vice presidentrecommending the compensation of our directors;
Evan Barnett, president of Multifamily Services Segmentreviewing and discussing annually with management our “Compensation Discussion and Analysis” disclosure required by SEC rules;
Bart Valdez, president of Employer Services Segment
John Long, former chief executive officer
The principal elements of our executive compensation program are:
long-term equity incentives that can be in the form of stock options, restricted stock and restricted stock units, although restricted stock units are currently only being offered to certain members of management.
other supplemental benefits related to job and work assignments.
We attempt to position the aggregate of these elements at a level commensurate with our size and sustained performance and to base a significant portion of overall compensation on company and individual performance.
Objectives and Philosophy. The overall objectives of our executive compensation program are to:
Enable First Advantage to attract, motivate and retain key executive talent essential to the achievement of our short-term and long-term business objectives;
Provide compensation competitive with others in our industry;
Emphasize performance based compensation that may only be earned on the achievement of pre-defined business goals and superior individual performance;
Reward senior executives for achieving pre-defined business goals and objectives; and
Align the interests of our executives with stockholders.
In setting base salaries for each named executive officer during 2007,preparing the compensation committee reviewed information about compensation levels for similar positionsreport required by the SEC to be included in companies comparable to First Advantage and his or her individual contribution. The compensation committee based the 2007our annual incentive award on performance relative to pre-established goals, including earnings per share targets, business unit pre-tax profit targets and certain enhancements to company operations each executive is responsible for. Restricted Stock Units, options and restricted stock were granted to provide the opportunity for long-term compensation based upon the performance of our Class A common stock over time and as a retention tool for key executive talent.
Compensation Process.
Compensation Committee. Executive officer compensation is administered by a three-member compensation committee of our board of directors. Ms. Kanin-Lovers and Messrs. Nickelson and Robert are the members of the compensation committee, with Ms. Kanin-Lovers serving as chairperson since April 2, 2007. Prior to April 2, 2007, Mr. Robert served as chairperson of the committee. Our board of directors appoints the compensation committee members and has delegated to the compensation committee the direct responsibility for, among other matters:
approving, in advance, the compensation and employment arrangements for our executive officers;
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reviewing all compensation and benefit plans and programs in which our executive officers participate;Proxy Statement; and
reviewing and recommending changesmaking recommendations with respect to our equity compensation plans. Our Compensation Committee makes the final determination regarding the annual compensation of our Chief Executive Officer and our other executive officers, taking into consideration, among other things, each individual’s performance and contributions to the Company. As part of the Compensation Committee’s compensation setting process, the Compensation Committee will meet separately with the Chief Executive Officer, the Company’s principal human resources executive and any other corporate officers, as it deems appropriate, and the Compensation Committee may also invite any director, management of the Company and such other persons as it deems appropriate from time to time in order to carry out its responsibilities. Our Chief Executive Officer and other executive officers do not participate in the determination of their own respective compensation. With respect to director compensation, our Compensation Committee reviews and recommends to the full Board of Directors the form and amount of director compensation, and the full Board then reviews these recommendations and makes a final determination on the compensation of our directors. Pursuant to the Compensation Committee Charter, the Compensation Committee has the authority to retain or obtain the advice of compensation consultants, legal counsel and other advisors to assist in carrying out its responsibilities. In late 2021, the Company retained Pearl Meyer & Partners, LLC to serve as its compensation consultant. Committee Charters and Corporate Governance Guidelines Our commitment to good corporate governance is reflected in our Corporate Governance Guidelines, which describe our Board of Directors’ views and policies on a wide range of governance topics. These Corporate Governance Guidelines are reviewed from time to time by our Nominating and Corporate Governance Committee and, to the extent deemed appropriate in light of emerging practices, revised accordingly, upon recommendation to and approval by our Board of Directors. Our Corporate Governance Guidelines and other corporate governance information are available on our website at https://investors.fadv.com/corporate-governance/documents-charters. Global Code of Conduct and Ethics We have adopted a written code of business conduct and ethics that applies to all our equity-based plans as appropriate, subject to stockholder approval as required. Our board of directors has determined that each committee member is independent under the NASDAQ Marketplace Rules, the Securities and Exchange Commission rules and the relevant securities laws, and that each member is an “outside director” as defined in Section 162(m) of the Internal Revenue Code of 1986, as amended. The compensation committee met 11 times in 2007.
Role of Compensation Experts. The compensation committee is authorized to engage compensation consultants and to obtain, at company expense, compensation surveys, reports on the design and implementation of compensation programs forour directors, officers and employees, including our Chief Executive Officer, Chief Financial Officer, and Chief Accounting Officer. The Global Code of Conduct and Ethics sets forth our policies and expectations on a number of topics, including
conflicts of interest, compliance with laws, use of our assets and business conduct and fair dealing. A current copy of the code is posted on our website at https://investors.fadv.com/corporate-governance/documents-charters. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website. Oversight of Risk Management The Board has extensive involvement in the oversight of risk management related to us and our business. Our Chief Executive Officer and other dataexecutive officers will regularly report to the non-executive directors and documentation the compensation committee considers appropriate. The compensation committee hasAudit Committee, the sole authorityCompensation Committee, and the Nominating and Corporate Governance Committee to retainensure effective and terminate any outside counsel or other experts or consultants engagedefficient oversight of our activities and to assist it in evaluatingproper risk management and the compensationongoing evaluation of management controls. The Audit Committee is responsible for overseeing management of risks related to our financial statements and financial reporting process, business continuity, and operational risks, the qualifications, independence, and performance of our independent auditors, the performance of our internal audit function, legal and regulatory matters, and our compliance policies and procedures. Through its regular meetings with management, including the accounting, legal, and internal audit functions, the Audit Committee reviews and discusses significant areas of our business and summarizes for the Board the most material areas of risk and the appropriate mitigating factors. In addition, our Board receives periodic detailed operating performance reviews from management. We believe that the leadership of our Board of Directors provides appropriate risk oversight of our activities. Hedging Policy The Company’s Securities Trading Policy requires executive officers and directors to consult the Company’s General Counsel prior to engaging in transactions involving the Company’s securities. In order to protect the Company from exposure under insider trading laws, executive officers and directors are encouraged to enter into pre-programmed trading plans under Exchange Act Rule 10b5-1. The Company’s Securities Trading Policy prohibits directors and employees (including officers) from trading in options, warrants, puts and calls or similar instruments on the Company’s securities or selling such securities short. In addition, directors and employees (including officers) are prohibited from engaging in any transactions (including variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or offset any decrease in the market value of the Company’s equity securities without first receiving pre-clearance from the Company’s General Counsel. Executive Officers of the Company Set forth below is certain information regarding each of our current executive officers, including the sole authority to approve such consultants’ fees and other retention terms. In 2007, the compensation committee engaged Mercer as its compensation consultant. Examples of projects assignedthan Scott Stapleswhose biographical information is presented under “Nominees for Election to the consultant include the evaluationBoard of the composition of the peer group of companies, evaluation of levels of our executive compensation as compared to general market compensation and to First Advantage’s peer companies, and evaluation of proposed compensation programs or changes to existing programs. During 2007, the following peer companies were consideredDirectors in determining compensation:2022.” | | | | | Acxiom CorporationName | | Efunds Corporation | Alliance Data Systems CorporationAge | | Equifax IncorporatedPrincipal Occupation and Other Information | Ceridian Corporation | | Fair Isaac Corporation | Checkfree Corporation | | infoUSA Incorporated | Choicepoint Incorporated | | Talx Corporation | The D&B Corporation | | Teletech Holdings Incorporated |
At the direction of the compensation committee, Mercer conducted an analysis of market compensation levels for our executive officers during the latter part of 2007 to determine if additional or different peer companies should be considered. At the January 28, 2008 compensation committee meeting, the committee selected the peer companies to be considered in determining compensation for 2008. During the review of peer companies, the committee considered, among other criteria, the benefits of expanding the sample size of peer companies for purposes of evaluating compensation levels and accounted for peers that may have been acquired or were no longer deemed to be a peer group of First Advantage. Data sources for this review included publicly reported compensation information for the named executive officers of a group of 18 peer companies, as well as published compensation surveys conducted by major consulting firms. The peer companies included in this analysis were selected from among U.S.-based publicly held companies that are comparable to us in size and industry. This group of 18 peer companies includes:
| | | Acxiom CorporationDavid L. Gamsey | | Fidelity National Information Services | Alliance Data Systems Corporation64 | | David L. Gamsey has served as our Executive Vice President and Chief Financial Officer since February 2016. Prior to First Consulting Group,Advantage, Mr. Gamsey was at Air Serv Corporation from April 2008 to February 2016, where he served as Chief Financial Officer and Chief Operating Officer. Prior to this, Mr. Gamsey was the Chief Financial Officer at Beecher Carlson from January 2005 to February 2008, Innotrac Corporation from February 2000 to January 2005 and AHL Services, Inc. from September 1995 to February 2000. Mr. Gamsey spent 16 years of his career at Price Waterhouse and Arthur Andersen. Mr. Gamsey received his B.B.A. in Accounting, with distinction, from Emory University. Mr. Gamsey is a licensed CPA. |
| | | | | CBIZ, Inc.Bret T. Jardine | | FTI Consulting Inc. | Choicepoint Incorporated55 | | Global Payments, Inc.Bret T. Jardine has served as our Executive Vice President, General Counsel and Corporate Secretary since January 2011. From November 2009 to December 2010, Mr. Jardine was the head of the legal department of the First Advantage business, which had been an operating division within First American and was later spun off to a company that became known as Corelogic and then was subsequently sold in December 2010. Prior to that, in 2009 when First Advantage was previously a public company, Mr. Jardine was acting General Counsel until November of that year. Before joining First Advantage in August 2004, Mr. Jardine practiced law at Zimmet, Unice, Salzman, Heyman and Jardine PA for nearly a decade, with experience in class actions and regulatory inquiries as well as corporate transactional work and corporate governance. Mr. Jardine holds a B.A. in Political Science from the University of Florida and a J.D. from Stetson University College of Law. | The D&B Corporation | | | Joseph Jaeger | | Infousa, Inc. | Experian63 | | Intersections, Inc.Joseph Jaeger has served as the President, Americas of First Advantage since January 2021. Before this role, he had served as our Chief Revenue Officer since September 2015. Prior to First Advantage, Mr. Jaeger held a variety of roles at human resources technology companies, including Vice President, Sales and Vice President Americas at Kronos from November 2008 to September 2015, Chief Executive Officer of Focal Point Solutions from April 2008 to November 2008 and executive sales, marketing and services leadership roles at Authoria from March 1999 to March 2008. He also served as Sales Director and Vice President, Sales and Marketing at Health Payment Review and HBO & Company in the healthcare software industry from March 1993 to December 1998. Mr. Jaeger graduated from Indiana University with a B.S. in Business and completed the “Leading High Impact Teams” Program at Northwestern University’s Kellogg School. |
PROPOSAL NO. 2—RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Audit Committee has selected Deloitte & Touche LLP to serve as our independent registered public accounting firm for 2022. Although ratification is not required by our Bylaws or otherwise, the Board is submitting the selection of Deloitte & Touche LLP to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm. If our stockholders fail to ratify the selection, it will be considered as notice to the Board and the Audit Committee to consider the selection of a different firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders. A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting. The representative will also have the opportunity to make a statement if he or she desires to do so, and the representative is expected to be available to respond to appropriate questions. The shares represented by your proxy will be voted “FOR” the ratification of the selection of Deloitte & Touche LLP unless you specify otherwise. Audit and Non-Audit Fees The following table presents fees for professional services rendered by our independent registered public accounting firm, Deloitte & Touche LLP, for the years ended December 31, 2021 and 2020: | | | | | | | | | | | | 2021 | | | 2020 | | Audit fees(1) | | $ | 1,210,000 | | | $ | 1,402,500 | | Audit-related fees(2) | | | 177,000 | | | | 1,788,500 | | Tax fees(3) | | | 409,723 | | | | 352,991 | | All other fees(4) | | | -- | | | | -- | | Total: | | $ | 1,796,723 | | | $ | 3,543,991 | |
Equifax Incorporated(1) | | Paychex, Inc. | Fair Isaac Corporation | | Teletech Holdings Incorporated | Viad Corporation | | Total System Services, Inc.Includes the aggregate fees billed in each of the last two fiscal years for professional services rendered for the audit of the Company’s annual financial statements and the reviews of quarterly financial statements. The fees include services that are normally provided in connection with statutory or regulatory filings or engagements. |
| (2) | Includes the aggregate fees billed in each of the last two fiscal years for services performed that are related to the Company’s SEC filings (including costs relating to the IPO in June 2021 and subsequent follow-on offeringin November 2021), services performed that are related to purchase accounting (including costs relating to the January 2020 acquisition of substantially all of the equity interests of the Company), and other research and consultation services. |
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| (3) | Includes the aggregate fees billed in each of the last two fiscal years for professional services rendered for tax compliance, tax advice, and tax planning. |
| (4) | Deloitte & Touche LLP did not provide any other services during the period. |
The Audit Committee considered whether providing the non-audit services shown in this table was compatible with maintaining Deloitte & Touche LLP’s independence and concluded that it was.
Pre-Approval Policy for Services of Independent Registered Public Accounting FirmConsistent with SEC rules regarding auditor independence and the Audit Committee’s charter, the Audit Committee has responsibility for the appointment, compensation, retention, oversight and, when necessary, termination of the independent registered public accounting firm. In exercising this responsibility, the Audit Committee has established procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm and, subject to the next sentence, pre-approves all audit and permitted non-audit services provided by any independent registered public accounting firm prior to each engagement. As part of such procedures, the Audit Committee has delegated to its chair the authority to review and pre-approve any such services in between the Audit Committee’s regular meetings. Any such pre-approval will be subsequently considered and ratified by the Audit Committee at the next regularly scheduled meeting. All services to the Company provided by Deloitte & Touche LLP after the adoption of the pre-approval policy in 2021 were approved in accordance with the pre-approval policy. YOUR BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022. REPORT OF THE AUDIT COMMITTEE The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee. Additionally, a brief description of the primary responsibilities of the Audit Committee is included in this Proxy Statement under “The Board of Directors and Certain Governance Matters—Board Committees and Meetings—Audit Committee.” Under the Audit Committee charter, our management is fundamentally responsible for the financial statements and disclosures. The independent registered public accounting firm is responsible for auditing our financial statements and expressing an opinion as to their conformity with accounting principles generally accepted in the United States of America. In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Company with management and with the independent registered public accounting firm. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence, and discussed with the independent registered public accounting firm their independence. Based on this analysis,upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to the Board that the audited financial statements of the Company be included in the 2021 Form 10-K for filing with the SEC. Submitted by the Audit Committee of the Company’s Board of Directors: Susan R. Bell, Chair Judith Sim Bianca Stoica EXECUTIVE COMPENSATION Emerging Growth Company Status As an “emerging growth company,” we are required to provide executive compensation committee targetsinformation for the following individuals: (i) the Company’s principal executive officer (“PEO”), during the fiscal year, regardless of compensation; (ii) the two most highly compensated executive officers (other than the PEO) who were serving as executive officers of the Company at the end of the fiscal year and whose total compensation levels (base salary, annual incentive opportunitywas greater than $100,000; and (iii) up to two additional persons who served as executive officers (other than as the estimated value of long-term incentive awards asPEO) during the fiscal year but were not serving in that capacity at the end of the date they are granted) for our executive officers generally at betweenfiscal year if their total compensation is higher than any of the median and the 75th percentile of competitive market levels. The compensation committee considers this to be within the range of competitive market practice. Role of Our Executive Officers in the Compensation Process. In the first quarter of each year, the chief executive officer presents a report to the compensation committee recommending the upcoming year’s salary, bonus for the prior year, and long-term incentive award levels forother two named executive officers as well as other executives,in the preceding group. Our named executive officers (“Named Executive Officers”) for 2021 include our Chief Executive Officer (Scott Staples) and our two most highly compensated executive officers, other than himself. our Chief Executive Officer (Joseph Jaeger, our President, Americas, and David L. Gamsey, our Chief Financial Officer & Executive Vice President). For 2021, we had no former executive officers who would qualify as Named Executive Officers.
Summary Compensation Table The following table sets forth information concerning the compensation committee uses this reportearned by our Named Executive Officers, during our fiscal year ended December 31, 2021. SUMMARY COMPENSATION TABLE | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NAME AND PRINCIPAL POSITION | | YEAR | | SALARY
($)(1) | | BONUS
($) | | STOCK
AWARDS
($)(2) | | OPTION
AWARDS(3) | | NON-EQUITY
INCENTIVE
PLAN
COMPENSATION
($)(4) | | ALL
OTHER
COMPENSATION
($)(5) | | TOTAL
($) | | | | | | | | | | Scott Staples | | | | 2021 | | | | | 600,000 | | | | | -- | | | | | -- | | | | | 6,165,446 | | | | | 400,000 | | | | | 4,350 | | | | | 7,169,796 | | Chief Executive Officer | | | | 2020 | | | | | 450,007 | | | | | 750,000 | | | | | 4,192,412 | | | | | -- | | | | | 277,300 | | | | | 4,275 | | | | | 5,673,994 | | | | | | | | | | | Joseph Jaeger | | | | 2021 | | | | | 500,000 | | | | | -- | | | | | 527,045 | | | | | 1,806,409 | | | | | 500,000 | | | | | 4,350 | | | | | 3,337,804 | | President, Americas | | | | 2020 | | | | | 499,995 | | | | | 750,000 | | | | | 1,222,787 | | | | | -- | | | | | 432,100 | | | | | 4,275 | | | | | 2,909,157 | | | | | | | | | | | David L. Gamsey | | | | 2021 | | | | | 500,000 | | | | | -- | | | | | -- | | | | | 1,287,185 | | | | | 250,000 | | | | | 4,350 | | | | | 2,041,535 | | Chief Financial Officer & Executive Vice President | | | | 2020 | | | | | 400,006 | | | | | 750,000 | | | | | 873,419 | | | | | -- | | | | | 172,800 | | | | | 4,275 | | | | | 2,200,500 | |
| (1) | The amounts reported in this column represent each Named Executive Officer’s base salary earned during 2021. |
| (2) | We granted restricted stock units (“RSUs”) under the First Advantage Corporation 2021 Omnibus Incentive Plan (the “2021 Equity Plan”) to Mr. Jaeger pursuant to a form of restricted stock unit agreement (the “RSU Agreement”). 50% of the RSUs are subject solely to time-based vesting criteria, and the other 50% of the RSUs are subject to both time and performance-based vesting criteria. The performance-vesting RSUs are subject to market conditions and an implied performance condition as defined under applicable accounting standards. With regards to the 2021 RSUs granted to Mr. Jaeger, approximately 20.33% of the performance-based RSUs had satisfied the performance-based vesting criteria as of the grant date. The grant date fair value of performance-vesting RSUs was computed based upon the probable outcome of the performance conditions as of the grant date in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. Achievement of the performance conditions for the performance-vesting RSUs that had not satisfied the performance-based vesting criteria as of the grant date was not deemed probable on the grant date and, accordingly, no value is included in the table for these RSUs pursuant to the SEC’s disclosure rules. Assuming achievement of the performance conditions, the aggregate grant date fair value of the performance-vesting RSUs that had not satisfied the performance-based vesting criteria as of the grant date would have been $348,955. See Note 10 (“Share-based Compensation”) to our audited consolidated financial statements included in our 2021 Form 10-K for a discussion of the valuation of our equity-based awards. |
| (3) | In connection with our IPO, we granted stock options to each of our Named Executive Officers under the 2021 Equity Plan pursuant to a form of nonqualified stock option agreement (the “Option Agreement”). 50% of the stock options are subject solely to time-based vesting criteria, and the other 50% of the stock options are subject to both time and performance-based vesting criteria. The performance-vesting stock options are subject to market conditions and an implied performance condition as defined under applicable accounting standards. The grant date fair value of performance-vesting stock options was computed based upon the probable outcome of the performance conditions as of the grant date in accordance with FASB ASC Topic 718. Achievement of the performance conditions for the performance-vesting stock options that had not satisfied the performance-based vesting criteria as of the grant date was not deemed probable on the grant date and, accordingly, no value is included in the table for these options pursuant to the SEC’s disclosure rules. Assuming achievement of the performance conditions, the aggregate grant date fair values of the performance-vesting stock options that had not satisfied the performance-based vesting criteria as of the grant date would have been: $6,002,396 for Mr. Staples, $1,758,637 for Mr. Jaeger, and $1,253,145 for Mr. Gamsey. See Note 10 to our audited consolidated financial statements included in our 2021 Form 10-K for a discussion of the valuation of our equity-based awards. |
| (4) | The amounts reported in this column represent the annual incentive bonus amounts earned by each Named Executive Officer pursuant to our Management Incentive Compensation Plan (the “MICP” and as described below under “—Management Incentive Compensation Plan”). |
| (5) | The amounts reported in this column represent the discretionary employer matching contribution under the 401(k) Plan for each Named Executive Officer. |
Employment Agreements with Named Executive Officers The Company entered into an employment letter agreement with each of our Named Executive Officers, which sets forth standard terms summarizing annual base salary, bonus, and benefits. The employment letter agreements also provide for certain severance payments that may be due following termination of employment under certain circumstances, subject to execution of a release of claims and compliance with certain restrictive covenants. Staples Employment Agreement Pursuant to Mr. Staples’ employment letter agreement, dated March 1, 2017 (the “Staples Employment Agreement”), Mr. Staples serves as our Chief Executive Officer. The following terms and events are provided by the reportsStaples Employment Agreement: Employment Term The Staples Employment Agreement has no specified employment term and may be terminated by either the Company or Mr. Staples at any time and for any reason or no reason. In the event of Mr. Staples’ voluntary resignation, he is required to provide 30 days’ notice and, if so requested by the Company, will continue working on a full-time basis in his then current role through the expiration of the 30-day notice period. Compensation and Benefits Mr. Staples is entitled to an initial base salary of $450,000 (increased to $600,000 in 2021), which is subject to annual review and increase pursuant to employee compensation policies in effect from time to time. In addition, he is eligible to receive an annual performance cash bonus under the MICP in a target amount equal to $350,000 for 2018 and thereafter (increased to $400,000 in 2021), payable based on the Company’s achievement of revenues and Adjusted EBITDA targets that are established by our Board of Directors in consultation with Mr. Staples. Restrictive Covenants Under the Staples Employment Agreement, Mr. Staples is subject to the following restrictive covenants: (i) confidentiality during employment and perpetually upon termination, (ii) non-use of trade secrets during employment and perpetually upon termination, (iii) non-competition during employment and for 12 months following termination, (iv) non-solicitation of employees and non-solicitation of customers, suppliers, and other business relations during employment and for 12 months following termination, and (v) mutual non-disparagement during employment and perpetually upon termination. Severance Mr. Staples is not entitled to any severance payments upon termination due to death, disability, for Cause or without Good Reason (as such terms are defined in the Staples Employment Agreement). Pursuant to the Staples Employment Agreement, if the Company terminates Mr. Staples’ employment without Cause or he resigns for Good Reason, then subject to his continued material compliance with the restrictive covenants and his timely execution, without revocation, of an effective release of claims in favor of the Company and its affiliates, he will be entitled to continued payment of his base salary for the lesser of (i) 12 months and (ii) the period commencing on his termination date and ending on the day preceding the date he begins to provide at least half-time services (whether as an employee, contractor or otherwise) to another person or entity, to be paid in accordance with the standard payroll schedule. Definitions Under the Staples Employment Agreement, “Cause” is defined as (i) any act or omission by the executive constituting dishonesty, fraud or other malfeasance, which in any such case is materially injurious to the financial condition or business reputation of the Company or any of its consultantaffiliates; (ii) the executive’s conviction of, or pleading nolo contendere to, determine executive officer compensation forany felony or a misdemeanor involving moral turpitude (or the upcoming year. Executive officers are not present during compensation committeeequivalents thereof in any other jurisdiction in which the Company or boardany of directors deliberations concerning their compensation. The reportits affiliates conducts business); (iii) any material misrepresentation or material breach of any of the terms of the Staples Employment Agreement or any willful failure by the chief executive officer includesto carry out or comply with any lawful and reasonable directive of our Board of Directors, or any willful failure by the executive to carry out his responsibilities as Chief Executive Officer, which breach or failure is not remedied by the executive within 30 days after receiving written notice from our Board of Directors specifying such breach or failure; (iv) any judgment made by a discussioncourt of competent jurisdiction or any binding arbitration award made by an arbitral body against the executive or the Company that has the effect of materially diminishing the executive’s ability to perform the duties of the quantitativeexecutive’s position (including, without limitation, any such determination or award enforcing any proprietary information and qualitative performance forinventions or similar agreement with a third party). Under the prior yearStaples Employment Agreement, “Good Reason” is defined as well as an assessment(i) a material breach by the chiefCompany of the material terms of the Staples Employment Agreement including, but not limited to, the failure of the Company to make any material payment or provide any material benefit specified thereunder; (ii) any material adverse change in the nature or scope of the executive’s authority, duties or responsibilities (however, the executive officercontinuing in his current role on a divisional or business unit basis, following the acquisition of the Company and its subsidiaries by a larger entity will not be Good Reason); or (iii) a reduction in the executive’s base salary; however, the executive may not resign for Good Reason unless: (x) the executive provided the Company with at least 30 days prior written notice of the executive’s intent to resign for Good Reason (which notice must be provided within 90 days following the occurrence of the event(s) purported to constitute Good Reason); and (y) the Company has not remedied the alleged violation(s) within the 30 day period. Jaeger Employment Agreement Pursuant to Mr. Jaeger’s employment letter agreement, dated August 14, 2015 and amended on May 19, 2016 (“the Jaeger Employment Agreement”), Mr. Jaeger serves as our President, Americas. The following terms and events are provided by the Jaeger Employment Agreement. Employment Term The Jaeger Employment Agreement has no specified employment term and may be terminated by either the Company or Mr. Jaeger at any time and for any reason or no reason. Compensation and Benefits Mr. Jaeger is entitled to an initial base salary of $500,000 (unchanged in 2021), which is subject to annual review and increase pursuant to employee compensation policies in effect from time to time. In addition, he is eligible to participate in the MICP, pursuant to which he may receive an annual performance bonus in an amount equal to 100% of his base salary (unchanged in 2021), which is payable based on the achievement of quantitative and qualitative goals and objectives. Components of Compensation.
The components of our 2007 compensation program were structuredannual objectives with respect to provide compensation competitive with comparable companies to reward the achievement of certain financial and business objectives and as a retention tool for key executive talent.
Base Salaries. Base salaries for our executive officers were set within ranges, targeted around the competitive norm for similar executive positions in similar companies. Individual salaries may be above or below the competitive norm based on the individual’s contribution to business results, capabilities and qualifications, potential and the importance of the individual’s position to our success. In this context, similar companies are defined as those that are comparable to us in size and scope, and in the nature of their businesses. Our executive officers do not have employment agreements. During 2007, salaries of our named executive officers were adjusted as follows. Mr. Nallathambi’s salary was increased from $525,000 to $575,000 in early 2007 in recognition of Mr. Nallathambi's performance in 2006. Mr. Nallathambi's salary was further increased to $625,000 in connection with his appointment as chief executive officer effective as of March 30, 2007 to reflect his promotion and to acknowledge the additional responsibilities he assumed at that time. Mr. Lamson’s salary was increased from $275,000 to $350,000 in recognition of his achievement of key objectives to effectively manage cash flow and control company, expenses, to make Mr. Lamson’s base salary more commensurate with that of other chief financial officers for similarly sized companies and for his key role in working with the investment community on behalf of the company. Mr. Mehta’s salary increased from $310,000 to $336,000 as a result of his key role in strategic projects for the company, including his oversight of shared services, informational security, operational compliance, and other corporate infrastructure projects. Mr. Barnett’s salary was increased from $275,000 to $288,750 as a result of the achievement of significant performance milestones for his segment, including integration of operations within the Multi-Family Services Segment, expansion of renter’s insurance, and development of new products. Mr. Valdez’s salary increased from $275,000 to $285,000 due to his role in international expansion in Asia, integration of multiple platforms in the Employer Services Segment, and success in the implementation of cross-selling initiatives.
Annual Cash Incentive Awards. Our annual bonus plan awards were intended to: (i) compensate executive officers if strategic and financial performance targets are achieved and (ii) reward executive officers for performance in those activities that are most directly under their control and for which they are accountable. Corporate, business unit, and individual performance goals underperformance.
Restrictive Covenants Under the annual incentive plan were linkedJaeger Employment Agreement, Mr. Jaeger is subject to our annualthe following restrictive covenants: (i) confidentiality during employment and perpetually upon termination, (ii) non-use of trade secrets during employment and perpetually upon termination, (iii) non-competition during employment and for 12 months following termination (but such non-compete will be suspended during any period where there is a good faith dispute that the Company is not paying compensation otherwise due to him), (iv) non-solicitation of employees and non-solicitation of customers, suppliers, and other business planrelations during employment and budget. The total cash compensation (the sum of salaryfor six months following termination, and bonus)(v) mutual non-disparagement during employment and perpetually upon termination. Severance Mr. Jaeger is not entitled to any severance payments upon termination due to death, disability, for our executive officers was intendedCause or without Good Reason (as such terms are defined in the Jaeger Employment Agreement). Pursuant to be competitive with market practicethe Jaeger Employment Agreement, if the Company terminates Mr. Jaeger’s employment without Cause or he resigns for similar executive positions in similar companies when performance goals under the annual bonus plan are achieved. In February 2007, the compensation committee adopted the senior executive annual incentive program for fiscal year 2007, which set the performance measurementsGood Reason, then subject to be used to determine whether certain senior executives,his continued material compliance with the exceptionrestrictive covenants and his timely execution, without revocation, of Mr. Nallathambi, were eligible to receive a bonus for 2007. Mr. Nallathambi’s
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senior executive annual incentive program was adoptedan effective release of claims in March 2007 due to his promotion to chief executive officer on March 31, 2007. Cash incentive awards issued under the 2007 senior executive annual incentive program are subject to adjustment at the compensation committee’s discretion. In making such adjustments, the committee may take into account subjective factors outside the performance measurement goals set for each executive officer at the beginningfavor of the year.
Bonuses granted under the 2007 senior executive annual incentive program were expressed as a percentage of base salaryCompany and were awarded based on achieving certain quantitative and qualitative performance goals. However, no bonuses canits affiliates, he will be paid under the 2007 senior executive annual incentive program if threshold quantitative goals related to corporate financial performance are not met.
Messrs. Lamson, Mehta, Barnett and Valdez were entitled to a cash bonus if First Advantage achieved earnings of at least $1.21 per share and additional cash payments if certain enhancements to company operations were achieved. No cash bonus would have been paid if the threshold corporate financial goal was not met. In particular, if at least 80% of the earnings per share goal was not obtained ($0.97 per share), no cash bonus would be paid. For Messrs. Barnett and Valdez, the pre-tax profits of their respective segments was part of their qualitative performance goals.
Mr. Nallathambi was entitled to a cash bonus if First Advantage achieved earnings per share of at least 80% of the earnings per share goal ($0.97 per share). The maximum percentagecontinued payment of his base salary available for a cash bonus was 125% if First Advantage achieved earningsperiod of at least $1.21 per share. If earnings per share was at least 80%12 months, to be paid in accordance with the standard payroll schedule.
Definitions Under the Jaeger Employment Agreement, “Cause” is defined as (i) any willful act or omission by the executive constituting dishonesty, fraud or other malfeasance, which in any such case is injurious to the financial condition or business reputation of the earnings per share goal ($0.97 per share)Company or any if its affiliates; (ii) the executive’s conviction of, or pleading nolo contendere to any felony or a misdemeanor involving moral turpitude (or the equivalents thereof in any other jurisdiction in which the Company or any if its affiliates conducts business); (iii) any material misrepresentation or significant breach of any of the terms of the Jaeger Employment Agreement or any significant failure the executive to carry out his obligations under the Jaeger Employment Agreement; or (iv) any judgment made by a court of competent jurisdiction or any binding arbitration award made by an arbitral body against the Company that has the effect of materially diminishing the executive’s ability or willingness to perform his duties or the ability or willingness of the Company to accept the executive’s performance of such duties (including, without limitation, any such determination or award enforcing any proprietary information and inventions or similar agreement with a third party). Under the Jaeger Employment Agreement, “Good Reason” is defined as (i) a significant reduction of the executive’s duties, position, or responsibilities, relative to the executive’s duties, position, or responsibilities in effect immediately prior to such reduction (however, the executive continuing in his same general role on a divisional or business unit basis, following the acquisition of the Company by a larger entity, will not be considered a significant reduction of duties position or responsibilities); (ii) a reduction in the executive’s base salary as in effect immediately prior to such reduction except to the extent (x) of the base salaries of substantially all other executive officers of the Company are proportionally reduced or (y) there is a specified amount of reduction in base salaries which is applied comparably to substantially all other executive offers of the Company; or (iii) the relocation of the executive to a facility or location more than 35 miles from the executive’s current place of employment. Gamsey Employment Agreement Pursuant to Mr. Gamsey’s employment letter agreement, dated December 17, 2015, (the “Gamsey Employment Agreement”), Mr. Nallathambi wouldGamsey serves as our Chief Financial Officer and Executive Vice President. The following terms and events are provided by the Gamsey Employment Agreement. Employment Term The Gamsey Employment Agreement has no specified employment term and may be terminated by either the Company or Mr. Gamsey at any time and for any reason or no reason, upon written notice to the other party. Compensation and Benefits Mr. Gamsey is entitled to a cashan initial base salary of $400,000 (increased to $500,000 in 2021), which is subject to annual review and adjustment (but not reduction for the same responsibilities) pursuant to employee compensation policies in effect from time to time. In addition, he is eligible to participate in the MICP, pursuant to which he may receive an annual performance bonus in an amount equal to 50% of his base salary. In additionsalary (unchanged in 2021), which is payable based on the achievement of annual objectives with respect to company, business unit, and individual performance. Restrictive Covenants Under the cash bonus,Gamsey Employment Agreement, Mr. Nallathambi was eligible for an equity bonus of 5,000 shares of restricted stock if First Advantage achieved earnings of at least $1.00 per share, 40,000 shares of restricted stock based if First Advantage achieved earnings of at least $1.21 per share and 55,000 shares of restricted stock if First Advantage achieved earnings of at least $1.30 per share. The equity awardGamsey is subject to vesting overthe following restrictive covenants: (i) confidentiality during employment and perpetually upon termination, (ii) non-use of trade secrets during employment and perpetually upon termination, (iii) non-competition during employment and for 12 months following termination, (iv) non-solicitation of employees and non-solicitation of customers, suppliers, and other business relations during employment and for 12 months following termination, and (v) mutual non-disparagement during employment and perpetually upon termination. Severance Mr. Gamsey is not entitled to any severance payments upon termination due to death, disability, for Cause or without Good Reason (as such terms are defined in the Gamsey Employment Agreement). Pursuant to the Gamsey Employment Agreement, if the Company terminates Mr. Gamsey’s employment without Cause or he resigns for Good Reason, then subject to his continued material compliance with the restrictive covenants and his timely execution, without revocation, of an effective release of claims in favor of the Company and its affiliates, he will be entitled to (i) continued payment of his base salary for a period of four years fromnine months following the termination date, to be paid in accordance with the standard payroll schedule; and (ii) reimbursement for the monthly COBRA premium paid by the executive and his spouse for a period of nine months following the termination date. Definitions Under the Gamsey Employment Agreement, “Cause” is defined as (i) any willful act or omission by the executive constituting dishonesty, fraud or other willful malfeasance, which in any such case is injurious to the financial condition or business reputation of the award. NoCompany or any of its affiliates; (ii) the executive’s conviction of, or pleading nolo contendere to, any felony or a misdemeanor involving moral turpitude (or the equivalents thereof) in any jurisdiction in which the Company or any of its affiliates conducts business; (iii) any material misrepresentation or significant breach of any of the terms of the Gamsey Employment Agreement or any significant failure by the executive to carry out his obligations thereunder (other than due to disability); or (iv) any judgment made by a court of competent jurisdiction or any binding arbitration award made by an arbitral body against the executive that has the effect of materially diminishing his ability to perform the duties of his employment (including, without limitation, any such determination or award enforcing any proprietary information and inventions or similar agreement with a third party). Notwithstanding the foregoing, with respect to any proposed termination for Cause under subsection (iii) above, the Company will provide the executive with written notice of such assertion of termination for Cause, describing such act(s) allegedly constituting Cause in reasonable detail, at least 10 business days prior to the proposed termination date. During the notice period, the executive will be given an opportunity to cure any such act(s) constituting Cause, or if such act, by its nature, cannot reasonably be expected to be cured within such notice period, he will be given a reasonable opportunity to discuss the situation with our Board of Directors prior to expiration of such notice period. Under the Gamsey Employment Agreement, “Good Reason” is defined as (i) a material diminution in the executive’s base compensation; (ii) a material diminution in the executive’s authority, duties, or responsibilities; (iii) a material diminution in the authority, duties, or responsibilities of an employee to whom the executive reports; (iv) a material diminution in the budget over which the executive has authority; (v) a material change in the geographic location at which the executive performs services; or (vi) any other action or inaction that constitutes a material breach of the Gamsey Employment Agreement by the Company. Management Incentive Compensation Plan We maintain a Management Incentive Compensation Plan, pursuant to which participants (including our Named Executive Officers) may receive a cash bonus each year, based on the achievement of specified annual targeted business plan objectives established by the Board of Directors. Bonus payments under the MICP are made following the completion of the Company’s annual financial audit, typically in April of the following year. Targets under the MICP are generally established as a percentage of each participant’s base salary. Our Board of Directors determines the amount of funds to be paid out each year under the MICP based on the level at which the objectives are achieved for such year. The results of the Company’s annual performance management program contribute to how the funds are allocated to individual participants, and other determining measures include Company and/or equitybusiness unit/functional results. For Mr. Staples, pursuant to the Staples Employment Agreement, the bonus would have been awarded to Mr. Nallathambi if threshold quantitative goals related to corporatepayment under the MICP in 2021 was based solely on the Company’s achievement of revenues and Adjusted EBITDA targets that were established by our Board of Directors in consultation with him. For our other senior leaders, including Messrs. Jaeger and Gamsey, the bonus payment under the MICP in 2021 was based on the achievement of annual objectives with the following allocation: one-third company financial performance, were not met.one-third business unit or department financial performance, and one-third individual performance. The weight offollowing table summarizes the fiscal 2021 bonus earned by each Named Executive Officer under the MICP in 2021 based on actual bonus achieved, as compared to the target opportunity, for each of the performance measurements and the percentage of goals achieved for each named executive officers is as follows:our Named Executive Officers. | | | | | | | | | | | | | Name | | Quantitative
Measurement
Corporate Goals | | | Individual Qualitative
Measurement | | | Maximum Percentage
of Base Salary
(Maximum Potential
Bonus) | | | Percentage of
Maximum
Potential Bonus
Awarded as a
Bonus in 2007 | | Anand Nallathambi | | 100 | % | | 0 | % | | 125 | % | | (1)125 | % | Akshaya Mehta | | 100 | % | | 25 | % | | 125 | % | | 98 | % | John Lamson | | 100 | % | | 25 | % | | 125 | % | | 125 | % | Evan Barnett | | 25 | % | | 100 | % | | 125 | % | | 103 | % | Bart Valdez | | 25 | % | | 100 | % | | 125 | % | | 84 | % |
| | | | | | | | | | | | | Name | | 2021 Base
Salary ($) | | | Target MICP
Bonus Amount ($) | | | Actual MICP
Bonus Paid ($)(1) | | Scott Staples | | | 600,000 | | | | 400,000 | | | | 400,000 | | Joseph Jaeger | | | 500,000 | | | | 500,000 | | | | 500,000 | | David L. Gamsey | | | 500,000 | | | | 250,000 | | | | 250,000 | |
| (1) | In addition2021, Mr. Staples’s bonus payment under the MICP was based the level of achievement against the fixed dollar target bonus set forth above and tied to achieving 125%Company financial performance only. The bonus payment |
| under the MICP in 2021 for each of Messrs. Jaeger and Gamsey was calculated by multiplying each Named Executive Officer’s base salary by their target bonus opportunity for 2021 (100% and 50% of base salary, respectively), which amount was then adjusted by an overall achievement factor based on the level of achievement of the cash componentapplicable performance metrics (with the following allocation: one-third Company financial performance, one-third business unit financial performance, and one-third individual performance). |
Outstanding Equity Awards at 2021 Year End The following table includes certain information with respect to restricted stock awards, RSUs, and stock options held by the Named Executive Officers as of December 31, 2021. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END | | | | | | | | | | | | | | | | | | | | | NAME/AWARD | | GRANT
DATE | | NUMBER OF
SECURITIES
UNDERLINING
UNEXERCISED
OPTIONS
exercisable
(#)(1) | | NUMBER OF
SECURITIES
UNDERLINING
UNEXERCISED
OPTIONS
unexercisable
(#)(2) | | EQUITY
INCENTIVE
PLAN AWARDS:
NUMBER OF
SECURITIES
UNDERLINING
UNEXERCISED
UNEARNED
OPTIONS
(#)(3) | | OPTION
EXERCISE
PRICE
($) | | OPTION
EXPIRATION
DATE | | NUMBER
OF
SHARES
OR
UNITS OF
STOCK
THAT
HAVE
NOT
VESTED
(#)(4) | | MARKET
VALUE
OF SHARES
OR
UNITS OF
STOCK
THAT HAVE
NOT VESTED
($)(5) | | EQUITY
INCENTIVE
PLAN
AWARDS:
NUMBER OF
UNEARNED
SHARES,
UNITS
OR OTHER
RIGHTS
THAT HAVE
NOT VESTED
(#)(6) | | EQUITY
INCENTIVE
PLAN
AWARDS:
MARKET
VALUE OF
UNEARNED
SHARES, UNITS
OR OTHER
RIGHTS
THAT HAVE
NOT VESTED
($)(7) | Scott Staples | | | | | | | | | | | | | | | | | | | | | Nonqualified stock option | | 6/22/2021 | | 429,200 | | 861,943 | | 854,861 | | 15.00 | | 6/22/2031 | | n/a | | n/a | | n/a | | n/a | Restricted stock | | 2/9/2020 | | n/a | | n/a | | n/a | | n/a | | n/a | | 874,713 | | 16,654,536 | | 867,526 | | 16,517,695 | Joseph Jaeger | | | | | | | | | | | | | | | | | | | | | Nonqualified stock option | | 6/22/2021 | | 125,750 | | 252,540 | | 250,466 | | 15.00 | | 6/22/2031 | | n/a | | n/a | | n/a | | n/a | Restricted stock | | 2/9/2020 | | n/a | | n/a | | n/a | | n/a | | n/a | | 255,124 | | 4,857,561 | | 253,028 | | 4,817,653 | Restricted stock unit | | 12/22/2021 | | n/a | | n/a | | n/a | | n/a | | n/a | | 30,082 | | 572,761 | | 19,918 | | 385,413 | David L. Gamsey | | | | | | | | | | | | | | | | | | | | | Nonqualified stock option | | 6/23/2021 | | 89,606 | | 179,951 | | 178,473 | | 15.00 | | 6/22/2031 | | n/a | | n/a | | n/a | | n/a | Restricted stock | | 2/9/2020 | | n/a | | n/a | | n/a | | n/a | | n/a | | 182,232 | | 3,469,697 | | 180,736 | | 3,441,213 |
| 1) | Amounts represent nonqualified stock options that were vested as of his bonus,December 31, 2021. |
| 2) | Amounts in this column represent the number of time-based vesting nonqualified stock options (“Time Options”) that have not vested on or prior to December 31, 2021. The Time Options provide that, subject to the executive’s continued employment through the applicable vesting date, 20% of the Time Options become time vested on each of the first five anniversaries of January 31, 2021. |
| 3) | Amounts in this column represent the number of performance-based vesting nonqualified stock options (“Performance Options”) that have not vested on or prior to December 31, 2021. The Performance Options provide that, subject to the executive’s continued employment through the applicable vesting date, upon each occurrence of a Realization Event (as defined in the Option Agreement), the number of Performance Options that vest will equal the excess, if any, of (i) the total number of Performance Options as of such Realization Event over (ii) the number of Performance Options that had vested prior to such Realization Event; provided that, as of any time, the percentage of the Performance Options that are vested may not exceed the product of (A) the percentage of the Time Options that are vested as of such time (after giving effect to any accelerated vesting contemplated by the applicable Option Agreement), and (B) the MOM Percentage (as defined in the applicable Option Agreement) as of such time. Performance Options that would have vested pursuant to the preceding sentence but for the proviso thereof will vest at such time as doing so would not violate such proviso. |
| 4) | Amounts in this column represent the number of time-based vesting restricted shares and RSUs (“Time Awards”) that have not vested on or prior to December 31, 2021. The Time Awards provide that, subject to the executive’s continued employment through the applicable vesting date, 20% of the Time Awards become time vested on each of the first five anniversaries of the vesting commencement date (January 31, 2021 or, solely with respect to Mr. Nallathambi was awarded 45,000 shares ofJaeger’s restricted stock based upon earnings per share of $1.24 for fiscal year 2007. The restricted stock vests ratably over four years at 25% per year.unit award, June 23, 2021). |
| 5) | Amounts reported have been calculated using $19.04, which was the closing price of our common stock on December 31, 2021, the last business day of our 2021 fiscal year. |
| 6) | Amounts in this column represent the number of performance-based vesting restricted shares and RSUs (“Performance Awards”) that have not vested on or prior to December 31, 2021. The Performance Awards provide that, subject to the executive’s continued employment through the applicable vesting date, upon each occurrence of a Realization Event (as defined in the applicable award agreement), the number of Performance Awards that vest will equal the excess, if any, of (i) the total number of Performance Awards as of such Realization Event over (ii) the number of Performance Awards that had vested prior to such Realization Event; provided that, as of any time, the percentage of the Performance Awards that are vested may not exceed the product of (A) the percentage of the Time Awards that are vested as of such time (after giving effect to any accelerated vesting contemplated by the applicable award agreement), and (B) the MOM Percentage (as defined in the applicable award agreement) as of such time. Performance Awards that would have vested pursuant to the preceding sentence but for the proviso thereof will vest at such time as doing so would not violate such proviso. |
| 7) | Amounts reported have been calculated using $19.04, which was the closing price of our common stock on December 31, 2021, the last business day of our 2021 fiscal year. |
Long-Term Equity Incentive Compensation.Compensation “Top-Up” Options We currently administer In connection with the IPO, all outstanding Class A LP Units, Class B LP Units, and Class C LP Units of Fastball Holdco, L.P., the previous direct parent company of the Company, were exchanged for 130,000,000 shares of the Company’s common stock. In addition, in connection with the IPO we granted to each holder of Class C LP Units, including each of our long-term incentive compensationNamed Executive Officers, nonqualified options to purchase shares of our common stock. This option grant was intended to restore to the Class C unitholders the same leverage, or amount of equity at work, that each such Class C unitholder had with respect to their vested and unvested Class C LP Units prior to their conversion into shares of our common stock (for example, if 10,000 Class C LP Units converted into 4,000 shares of common stock, the option grant would need to cover at least 6,000 shares of our common stock) but also covered a number of additional shares of our common stock equal to 25% of the number of shares needed to provide the same leverage, rounded up to the nearest 5,000 shares (so, for example, if 6,000 shares of our common stock was necessary to restore leverage, the option grant would provide for an additional 1,500 shares, for a total of 7,500 shares subject to the option grant). Mr. Staples was granted 2,146,004 options, Mr. Jaeger was granted 628,756 options, and Mr. Gamsey was granted 448,030 options pursuant to our 2021 Equity Plan and the Option Agreement described below. These options have a per share exercise price equal to the IPO offering price of $15.00 per share, a 10-year term and the same vesting terms and conditions as the Class C LP Units from which they were converted (i.e., 50% time-vesting and 50% performance-vesting), and were vested or unvested in the same proportion as the corresponding grant of Class C LP Units was vested and unvested immediately prior to the IPO (for example, if the time-vesting portion of a grant of Class C LP Units was 40% vested immediately prior to the IPO, then the one-half of the option grant subject to time-based vesting was also 40% vested). Under the Option Agreement, the nonqualified stock options are subject to both time and performance vesting conditions as follows: 50% of the nonqualified stock options are Time Options, subject solely to time-based vesting criteria. Subject to the executive’s continued employment through the First Advantage Corporation 2003 Incentive Compensation Plan. A totalapplicable vesting date, 20% of 7.0 million shares of Class A common stock are available for issuance under the plan. The plan is administered by the compensation committee. At December 31, 2007, 4,614,560 shares of Class A common stock and 340,499 shares of restricted stock were outstanding under the plan.Time Options vest over three years at a rate of 33.4% for the first year and 33.3% forbecome time vested on each of the two following years. Each option grant expires ten years afterfirst five anniversaries of January 31, 2020. The other 50% of the grant date. Restrictednonqualified stock vests over three years atoptions are Performance Options, subject to both time and performance-based vesting criteria. Subject to the executive’s continued employment through the applicable potential vesting date, upon each occurrence of a rateRealization Event (as defined in the Option Agreement), the number of 33.3%Performance Options that vest will equal the excess, if any, of | (i) the total number of Performance Options as of such Realization Event over (ii) the number of Performance Options that had vested prior to such Realization Event; provided that, as of any time, the percentage of the Performance Options that are vested may not exceed the product of (A) the percentage of the Time Options that are vested as of such time (after giving effect to any accelerated vesting contemplated by the Option Agreement), and (B) the MOM Percentage (as defined in the Option Agreement) as of such time. Performance Options that would have vested pursuant to the preceding sentence but for the proviso thereof will vest at such time as doing so would not violate such proviso. |
The Option Agreement provides that upon a termination of the executive’s employment for the first two years and 33.4% for the last year. Restricted stock units vest over three years at a rate of 33.3% for the first two years and 33.4% for the last year.any reason: 21all unvested Time Options and all Performance Options that have not satisfied the time vesting condition will be immediately forfeited for no consideration (even if such Performance Options have satisfied the performance vesting condition prior to such termination), and
The primary purposesany Performance Options that have satisfied the time vesting condition but not the performance vesting condition will (x) if such termination of employment is for any reason other than without Cause (as defined in the Option Agreement), be immediately forfeited for no consideration upon the date of such termination, and (y) solely if such termination of employment is without Cause (and other than due to death or permanent disability), remain outstanding and be eligible to satisfy the performance vesting condition upon future Realization Events that occur during the term of the long-term incentive program arePerformance Options, subject to aligna restrictive covenant violation not having occurred.
Upon a termination of the interests of executive officersexecutive’s employment for Cause or upon a restrictive covenant violation, all vested and other key employees with those of our stockholdersunvested nonqualified stock options will terminate and to attract and retain key executive talent. Employees eligiblebe forfeited for no consideration. The Option Agreement further provides that the long-term incentive program include those who are determined by the compensation committee to beCompensation Committee may, in key policy-setting and decision-making roles, and to have responsibilities that contribute significantly to achieving our earnings goals. The size of an individual’s long-term incentive award is based primarily on individual performance, the individual’s responsibilities and position. Long-term incentive award values are intended to be competitive with market practice for similar executive positions in similar companies. In 2005, we provided an opportunity for executive officers to elect to receive restricted stock units representing our stock in lieu of some its sole discretion (A) vest any and/or all of the executive officers’ annual bonus payments. To provide an incentive to acquire our shares through this program, and thereby align executive officers’ interests more closely with those of our stockholders, we provided a 33% match on these restrictedunvested nonqualified stock unit purchases. These restricted stock units were subject to vesting requirements based on the executive’s continued employment. Eligibility for this program was determined by the compensation committee in its discretion. We may decide to offer this opportunity again in the future. Currently, this program is not being offered.
In 2006, the compensation committee adopted the Flexible Long-Term Incentive Plan. This plan was offered in 2006 and in 2007 and was administered under the 2003 Incentive Compensation Plan. The purpose of this plan was to ensure that First Advantage achieves its long-term goals and objectives. Participants in the program were identified at the beginning of each year. Participants were permitted to make an annual election of the form of awards from among (i) stock options (our current program), (ii) restricted stock (full-value shares of stock), (iii) restricted stock units (phantom units that the participant can convert to full-value shares at some future date of their choosing), or (iv) a combination thereof. All equity incentives granted under the planOption Agreement at such time or such other time or times and on such other conditions as the Compensation Committee determines and (B) upon a change of control, provide for any of the following, including any combination thereof, with respect to all or any portion of the nonqualified stock options (provided that, except as specifically contemplated by clause (z) of this sentence, in no event will any unvested nonqualified stock options that have a 3-year graded time-based vesting schedule. Continued employment and satisfactory performance is required to meetspread value in excess of $0.00 be forfeited without the vesting requirements. Participants making an election can choose to receivepayment of consideration on a change of control): (x) the nonqualified stock options and restricted stock/units (l-value share/unit for every 3may be continued, assumed, or have new rights substituted therefor; (y) the nonqualified stock options may be terminated in exchange for an amount of cash equal to the participant elects not to receive). If participants do not make an election at a chosen datespread value of the nonqualified stock options; and (z) if Silver Lake retains any interest in February, the participant receives options as a default election.
In 2008, the compensation committee decided to discontinue the Flexible Long-Term Incentive Plan and to instead offer only restricted stock units to participants who are identified at the beginningour Company or any successor entity following such change of each year. Participationcontrol, all then unvested Performance Options may, in the new long term incentive plan, which is administered under the 2003 Incentive Compensation Plan, may vary from year to year. The committee determined that awards of restricted stock units as opposed to other forms of equity grants providesCommittee’s sole discretion, be tested for superior alignment of executives’ interests with our shareholders’ interest and simultaneously encourages employee stock ownership. Additionally, the committee believes that the use of restricted stock units is a valuable executive retention tool. All equity incentives granted under the plan have a 3-year graded time-based vesting schedule. Continued employment and satisfactory performance is required to meet the vesting requirements.
Participation in The First American Corporation’s Benefit Plans. The First American Corporation maintains a pension plan and a supplemental benefit plan. Employees of First Advantage and its subsidiaries who were participants in The First American Corporation’s defined benefit pension plan prior to First Advantage’s June 5, 2003 acquisition of The First American Corporation’s screening technology division, and who have become employees of First Advantage or its subsidiaries in connection with such acquisition generally are permitted to continue their participationchange of control by deeming that Silver Lake sold 100% of its interest in our Company in such change of control for cash, cash equivalents and/or Marketable Securities (as defined in the pension plan,Option Agreement), with any Performance Options that do not vest as a result of such testing being automatically forfeited for no consideration upon the consummation of such change of control. Notwithstanding the foregoing, upon a change of control, if the percentage of Time Options that are vested prior to giving effect to this sentence is less than the Realization Percentage (as defined in the Options Agreement), then, upon such change of control, the vesting of those Time Options, if any, that are scheduled to vest on the next anniversary of the January 31, 2020 vesting commencement date will be accelerated to the extent available to employeesdate of First American. Assuch change of December 31, 2001, no new participants were permitted to participatecontrol, but if such additional vesting would result in the defined benefit pension plan. Currently, only Messrs. Nallathambi and Lamson participatetime vested percentage being in excess of the Realization Percentage, the number of Time Options that will vest upon the change of control by virtue of this plan.
The First American Corporation maintains an executive supplemental benefit plansentence will be reduced so that provides retirement benefits for, and pre-retirement death benefits with respectthe time vested percentage after giving effect to certain key management personnel. Undersuch accelerated vesting equals the plan, which was amended in 2007 upon retirement at normal retirement date (the later of age 62 or, completion of 10 years of service), a participant receives a joint life and 50% survivor annuity benefit equal to 30% of “final average compensation.” “Final average compensation” is determined for those five calendar years of
22
employment preceding retirement in which final average compensation is the highest. Final average compensation includes base salary and commissions, cash bonuses and stock bonuses that are granted to compensate for past services.
The benefit is reduced by 5.952% for each year prior to age 62 in which retirement occurs.
To be eligible to receive benefits under the plan, a participant must be at least age 55, have been one of The First American Corporation’s employees, or an employee of one of its subsidiaries, for at least 10 years and, unless waived by its board of directors, covered by the plan for at least five years. A pre-retirement death benefit is provided consisting of 10 annual payments, each of which equals 50% of final average compensation.Realization Percentage. In the event of a “changetermination of the executive’s employment without Cause, which occurs during the 12-month period following a change of control, all then-unvested Time Options will vest in control” (asfull and the time vesting condition for any Performance Options will be deemed to have been satisfied.
Restrictive Covenants under Option Agreement Under the Option Agreement, each Named Executive Officer is subject to the following restrictive covenants: (i) confidentiality during employment and perpetually upon termination, (ii) non-competition during the period commencing on the grant date and ending on the second anniversary of the date of the executive’s termination of employment (such period, referred to as the restricted period), (iii) non-solicitation of employees, no hire, and non-solicitation of customers, suppliers, and other business relations during the restricted period, (iv) assignment of inventions, and (v) non-disparagement during employment and perpetually upon termination. Definitions under Option Agreement Under the Option Agreement, “Aggregate Proceeds” means, with respect to Silver Lake (and without duplication), the (i) aggregate cash or cash equivalents received for all Cash Liquidity Events prior to and including (if applicable) the applicable Realization Event, (ii) the aggregate market value (calculated as of the date of the relevant In Kind Distribution) of the securities distributed in all In Kind Distributions prior to and including (if applicable) the applicable Realization Event, (iii) the aggregate market value (calculated as of the date of such Exchange Realization Event) of the Marketable Securities received in all Exchange Realization Events prior to and including (if applicable) such Realization Event, and (iv) the amount of (A) all distributions received through and including (if applicable) the date of such Realization Event minus (B) the amount of all tax distributions as of such date, in each case, calculated after deducting any commercially reasonable fees, expenses, discounts or similar amounts paid or owed by Silver Lake to a third party in respect of each such Realization Event. Under the Option Agreement, “Cost of Shares Transferred” means, with respect to any Realization Event, (i) the per share cost, as determined in good faith by the Compensation Committee, of the shares acquired by Silver Lake at any time (excluding any acquisition from a member or former member of Silver Lake) multiplied by (ii) the number of Investor Shares (or, without duplication, the equivalent thereof in Public Investor Securities, as applicable) disposed of in all Realization Events up to and including such Realization Event. In the event that members of Silver Lake have acquired shares at different per share prices as of any Realization Event, for purposes of clause (i), the weighted average cost of acquisition as of such Realization Event will be used. Under the Option Agreement, “Investor Shares” means the shares beneficially owned by Silver Lake or any securities received by Silver Lake in respect thereof (other than in a Realization Event). Under the Option Agreement, “Marketable Securities” means securities publicly traded on a national securities exchange or the Nasdaq Global Market that (i) are not subject to any of the following: (A) contractual limitations on sale, (B) limitations on sale arising from the need to comply with applicable securities laws relating to insider trading or any insider trading policy of the applicable issuer, or (C) limitations on sale pursuant to securities laws, and (ii) represent, together with all of securities of the applicable issuer held by Silver Lake, not more than 10% of the outstanding shares of such issuer. Under the Option Agreement, “MOM Percentage” is defined as, with respect to any Realization Event, if: (i) the Aggregate Proceeds divided by the Cost of Shares Transferred equals 2.0 or less, 0%; (ii) the Aggregate Proceeds divided by the Cost of Shares Transferred equals 3.0 or greater, 100%; and (iii) if the Aggregate Proceeds divided by the Cost of Shares Transferred equals a number that is greater than 2.0 but less than 3.0, a percentage between 0% and 100% to be determined using straight-line linear interpolation. Under the Option Agreement, “Realization Event” means any transaction or other event in the plan)which (i) Investor Shares are transferred by any member of The First American Corporation, a participant who retires after the change in control shall receive the same benefits as if he or she were retiring upon the attainment of normal retirement date. Currently, only Mr. Nallathambi, along with two other employees of First Advantage, participates in this plan.
Stock Ownership Requirements. We doSilver Lake to an entity that is not currently have any policy or guidelines that require a specified ownership of our common stock by our directors or executive officers or stock retention guidelines applicable to equity-based awards granted to directors and executive officers. We do, however, encourage senior executives to build ownership commensurate with their level within the organization. In addition, the compensation committee, as part of Silver Lake for cash or cash equivalents (each such event, a “Cash Liquidity Event”); (ii) Investor Shares are distributed by Silver Lake in kind to its deliberations duringpartners and/or members (other than to any permitted transferee), (each such event, an “In Kind Distribution”); or (iii) Investor Shares are exchanged by Silver Lake for Marketable Securities (such event, an
“Exchange Realization Event”), but if Investor Shares are exchanged by Silver Lake for securities which are not yet Marketable Securities, the year, reviews stock ownership by our directorsExchange Realization Event will occur as and officers. Aswhen such securities become Marketable Securities. Under the Option Agreement, “Realization Percentage” means, as of March 10, 2008, our executive officersthe date of a Realization Event, a fraction (expressed as a group owned approximately 2%percentage) determined by dividing (i) the aggregate number of our outstanding Class A common stock. Stock Option Practices. We have awardedInvestor Shares transferred, exchanged or distributed in all stock optionsRealization Events prior to purchase our Class A common stock to executive officers atand including such Realization Event, by (ii) the fair market value of our common stock at the grant date. Stock options are only issued four times per year on pre-established grant dates. These award dates occur after the release of our quarterly financial results. All awards are approved by the compensation committee. For 2008, it is the intent of compensation committee that only restricted stock units will be awarded to certain levels of management. To the extent restricted stock units are awarded in 2008, the issuance shall be only four times a year based on the identical pre-established grant dates established by the compensation committee for the issuance of options.
Perquisites and Other Personal Benefits. Supplemental benefits are offered to selected executive officers where they are specifically related to job and work assignments. Our philosophy is to de-emphasize executive perquisites so we only provide certain executive officers with a reimbursement for dues of social organizations for the purpose of enhancing business opportunities and with automobile allowances related to job and work assignments.
Post-termination Compensation.
In 2007, none of our executive officers had change in control agreements. The First Advantage Corporation 2003 Incentive Compensation Plan calls for accelerated vesting of all awards in the event of a change in control of The First American Corporation or us. In addition, Mr. Nallathambi participates in the First American Corporation’s supplemental benefit plan, which calls for accelerated vesting of all benefits in the event of a change in control of The First American Corporation. On March 2, 2007, Mr. Long, our former chief executive officer, and First Advantage entered into a transition agreement in connection with his resignation. Under the terms of the transition agreement Mr. Long received a cash severance payment of $4.4 million that was paid in two equal installments between April 2007 and March 2008. In addition, Mr. Long received an acceleration of all
23
of his unvested options, effective March 30, 2007. All of his previously vested options (including those with accelerated vesting) are exercisable until the earlier of exercise date under the respective option agreement with First Advantage or December 31, 2008. The transition agreement further provides for the accelerated vesting of two restricted stock awards, effective March 30, 2007. An additional restricted stock award made to Mr. Long in 2007 continues to vest during the term of the restrictive covenantsnumber set forth in clause (i) of this definition plus the transition agreement. The restrictive covenantstotal number of Investor Shares beneficially owned by Silver Lake after giving effect to such Realization Event.
RSUs We granted 50,000 RSUs to Mr. Long agreedJaeger pursuant to include certain noncompetition, nonsolicitation and nondisparagement obligations forthe RSU Agreement. Under the RSU Agreement, the RSUs have the same vesting terms as the nonqualified stock options describe above, except the 20% per year time-based vesting is based on a periodJune 23, 2021 vesting commencement date. Approximately 20.33% of 24 months, ending March 2, 2009. Restricted stock units that werethe performance-based RSUs granted to Mr. Long in 2006 continueJaeger satisfied the performance-based vesting criteria as of the grant date (December 22, 2021). Other Compensation Retirement Benefits We maintain a defined contribution plan (the “401(k) Plan”) for all full-time United States employees, including our Named Executive Officers. The 401(k) Plan is intended to vest accordingqualify as a tax-qualified plan under Section 401(a) of the Code. Each participant may contribute up to 60% of such participant’s eligible compensation to the terms401(k) Plan subject to annual limitations and the Company may make discretionary matching contributions. Health and Welfare Benefits We provide various employee benefit programs to our Named Executive Officers, including medical, dental, vision, health savings account, flexible spending accounts, disability insurance, and life and accidental death and dismemberment insurance. These benefit programs are available to all of First Advantage’s 2003 Incentive Compensation Plan. Mr. Long receives a consultant fee of $150,000 per annum, which expiresour U.S. full-time employees. We design our employee benefits programs to be affordable and competitive in September 2009, and COBRA coverage continuation coverage for up to 18 months from the date of his resignation at costs equivalent to those applicable to active First Advantage employees. Tax Implications of Executive Compensation. Our aggregate deductions for each named executive officer compensation are potentially limited by Section162(m) of the Internal Revenue Code of 1986, as amended,relation to the extent the aggregate amount paid to an executive officer exceeds $1.0 million, unless it is paid under a predetermined objective performance plan meeting certain requirements, or satisfies onemarket, as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of various other exceptions specified in the Internal Revenue Code. The compensation committee considers adoption of plans which can satisfy the requirements of Section 162(m); however, its overall compensation philosophy is not dictated by meeting such requirements.
Summary Compensation Table
The following table shows the compensation for each individual who served at any time during 2007 as our principal executive officerapplicable laws and our principal financial officer,practices and the other three most highly compensated executive officers who were serving as our executive officers at the fiscal year ended December 31, 2007 and whose total compensation (othercompetitive market.
No Pension Benefits Other than items disclosed under column (h) below) exceeded $100,000. We refer to each of the individuals named in the table below as “named executive officers”. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position (a) | | Year
(b) | | Salary
($)
(c) | | | Bonus
($) (2)
(d) | | | Stock
Awards
($) (3)
(e) | | Option
Awards
($) (3)
(f) | | Non-Equity
Incentive Plan
Compensation
($) (1)
(g) | | Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(h) | | All Other
Compensation
($) (6)
(i) | | Total
Compensation
($)
(j) | Anand Nallathambi, Chief Executive Officer and President | | 2007 2006 | | $ | 625,000 525,000 | | | $ | — — | | | $ | 562,564 420,043 | | $ | 1,176,159 815,527 | | $ | 781,250 615,235 | | $ | (5) 314,630 | | $ | 36,778 34,018 | | $ | 3,166,875 2,724,453 | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | 2007 2006 | | $ | 336,000 310,000 | | | $ | — — | | | $ | 423,031 242,052 | | $ | 190,095 476,047 | | $ | 328,734 346,812 | | $ | 86,999 53,563 | | $ | 17,550 17,400 | | $ | 1,382,409 1,445,874 | John Lamson, Chief Financial Officer and Executive Vice President | | 2007 2006 | | $ | 350,000 275,000 | | | $ | — — | | | $ | 348,158 179,658 | | $ | 300,940 472,530 | | $ | 437,500 326,562 | | $ | 28,175 33,365 | | $ | 21,965 23,376 | | $ | 1,486,738 1,310,491 | Evan Barnett, President of Multifamily Services Segment | | 2007 2006 | | $ | 288,750 275,000 | | | $ | — 74,250 | (2) | | $ | 286,212 162,648 | | $ | 73,530 230,683 | | $ | 295,969 160,704 | | $ | 1,887 4,160 | | $ | 16,350 16,200 | | $ | 962,698 923,645 | Bart Valdez, President of Employer Services Segment | | 2007 | | $ | 285,000 | | | $ | — | | | $ | 132,058 | | $ | 171,810 | | $ | 238,616 | | $ | 365 | | $ | 16,350 | | $ | 844,199 | John Long(4), Former Chief Executive Officer | | 2007 2006 | | $ | 251,731 600,000 | (4) | | $ | — — | | | $ | 2,399,748 397,279 | | $ | 1,220,669 1,461,819 | | $ | 0 703,125 | | $ | (5) 424,736 | | $ | 3,004,294 32,345 | | $ | 5,719,182 3,619,304 |
(1) | Annual bonus amounts for 2007 consisted entirely of cash for all named executive officers, except Mr. Nallathambi who also received 45,000 restricted stock, which vest ratably over a four-year period. |
(2) | Reflects a portion of Mr. Barnett’s 2006 annual incentive plan award for which a specific performance metric was modified by the compensation committee to reflect business conditions occurring after the plan metrics were originally approved by the compensation committee. The actual payment was based on the performance level achieved and was calculated consistent with the terms of the annual incentive plan. |
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(3) | The dollar amounts recorded in the table for the stock awards and the option awards have been computed in accordance with Statement of Financial Accounting Standards No.123, (as revised in 2004) (“SFAS No.123R”). Under SFAS 123R, our compensation cost relating to a stock or option award is generally computed over the period of time in which the named executive officer is required to provide service to us in exchange for the award. For more information about the assumptions used to determine the cost these awards reported in the table, see Note 2, “Summary of Significant Accounting Policies” to First Advantage’s consolidated financial statements as set forth in the First Advantage’s Form 10-K for the year ended December 31, 2007. These option awards are for First Advantage Corporation and First American Corporation. |
(4) | Mr. Long resigned as Chief Executive Officer effective as of March 30, 2007. Mr. Long's salary for 2007 reflects a pro-rata portion of his $650,000 annual salary through his termination date of March 30, 2007, plus $82,500 of unused but accrued vacation pay. |
(5) | For Mr. Nallathambi, this reflects an increase in the value of Mr. Nallathambi's accounts under The First American Corporation Pension Plan and The First American Corporation Deferred Compensation Plan aggregating $21,999, offset by a loss of $36,875 in the First American SERP. For Mr. Long, this reflects an increase in the value of Mr. Long's account under The First American Corporation Deferred Compensation Plan in the amount of $47,799, offset by a loss of $1,205,059 in The First American Corporation Pension Plan and The First American SERP. |
(6) | The table below sets forth a detailed breakdown of the items which comprise “All Other Compensation” for 2007: |
| | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Perquisites
and other
Personal
Benefits(7) | | Payments/Accruals
on Termination
Plans | | | Registrant
Contributions
to Defined
Contribution
Plans(8) | | Insurance
Premiums | | | Tax
Reimbursements | | Discounted
Securities
Purchases | | Other | | | Total All
Other | Anand Nallathambi, Chief Executive Officer and President | | $ | 29,377 | | | — | | | $ | 6,750 | | $ | 651 | | | — | | — | | | — | | | $ | 36,778 | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | $ | 10,800 | | | — | | | $ | 6,750 | | | — | | | — | | — | | | — | | | $ | 17,550 | John Lamson, Chief Financial Officer and Executive Vice President | | $ | 14,289 | | | — | | | $ | 6,750 | | $ | 926 | | | — | | — | | | — | | | $ | 21,695 | Evan Barnett, President of Multifamily Services Segment | | $ | 9,600 | | | — | | | $ | 6,750 | | | — | | | — | | — | | | — | | | $ | 16,350 | Bart Valdez, President of Employer Services Segment | | $ | 9,600 | | | — | | | $ | 6,750 | | | — | | | — | | — | | | — | | | $ | 16,350 | John Long, Former Chief Executive Officer | | $ | 4,521 | | $ | 585,464 | (9) | | $ | 0 | | $ | 87,256 | (10) | | — | | — | | $ | 2,327,053 | (11) | | $ | 3,004,294 |
(7) | Reflects car allowances and club membership dues. |
(8) | Represents First Advantage’s matching contribution in February 2008 to participants’ 2007 deferrals in the First Advantage 401(k) Savings Plan. |
(9) | Reflects Mr. Long's distributions from the First American Corporation Deferred Compensation Plan for salary and/or bonus payments deferred during prior years. |
(10) | Reflects medical and dental insurance premiums paid by First Advantage under Mr. Long's transition agreement of $80,358 plus $6,898 for annual premiums under The First American Corporation Deferred Compensation Plan for covered death benefits. |
(11) | Represents a severance payment of $2,200,000 and $112,500 of consulting fees paid to Mr. Long per the terms of his transition agreement. Also, includes $14,553 of legal fees reimbursed to Mr. Long in conjunction with his resignation. |
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Grants of Plan-Based Awards
The following table provides information concerning equity-based compensation granted to the named executive officers during 2007 under any plan.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant
Date | | Plan | | Estimated Future
Payouts
Under Non-Equity
Incentive
Plan Awards (1) | | Estimated Future
Payouts Under Equity
Incentive Plan Awards
(2) | | | All
Other
Stock
Awards:
Number
of
Shares
of Stock
or Units
(#) | | | All Other
Option
Awards:
Number of
Securities
Underlying
Options (#) | | | Exercise
or Base
Price of
Option
Awards
($/Sh) | | Grant
Date
Fair
Value of
Stock
and
Option
Awards | | | | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | | | | Anand Nallathambi, Chief Executive Officer and President | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | | | | 100,000 | (3) | | $ | 26.76 | | $ | 2,676,000 | | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 36,160 | (4) | | | | | $ | 26.76 | | $ | 967,642 | | | 3/15/2007 | | FADV 2003
Incentive
Compensation
Plan | | | | | | | | 5,000 | | 40,000 | | 55,000 | (2) | | | | | | | | | | | | | | | 3/30/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | | | | 50,000 | (5) | | $ | 23.97 | | $ | 1,198,500 | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 20,000 | (3) | | | | | $ | 26.76 | | $ | 535,200 | John Lamson, Chief Financial Officer and Executive Vice President | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 20,000 | (3) | | | | | $ | 26.76 | | $ | 535,200 | Evan Barnett, President of Multifamily Services Segment | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 13,333 | (3) | | | | | $ | 26.76 | | $ | 356,791 | Bart Valdez, President of Employer Services Segment | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 13,333 | (3) | | | | | $ | 26.76 | | $ | 356,791 | John Long, Former Chief Executive Officer | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 50,000 | (3) | | | | | $ | 26.76 | | $ | 1,338,000 | | | 2/22/07 | | FADV 2003 Incentive Compensation Plan | | | | | | | | | | | | | | | 36,160 | (4) | | | | | $ | 26.76 | | $ | 967,642 |
(1) | Each of the named officers participated in the 2007 senior executive annual incentive program. The annual cash incentive award earned by the named officer in 2007 under the plan is shown in the Summary Compensation Table under the column captioned “Non-Equity Incentive Plan Compensation.” No future awards will be made under the plan’s 2007 annual cash incentive award. The 2007 senior executive annual incentive program is described in greater detail in the section of the proxy statement captioned, “Compensation Discussion and Analysis—Components of Compensation—Annual Cash Incentive Awards.” |
(2) | This award represents the annual bonus plan, as approved by the compensation committee, based on achieving certain earnings per share levels for 2007. In February 2008, the compensation committee determined Mr. Nallathambi earned 45,000 shares of restricted stock. These shares will vest in one-quarter increments over the next 4 years (2009, 2010, 2011 and 2012). |
(3) | Reflects awards under the 2006 Flexible Long-Term Incentive Plan, which is a sub plan under the 2003 Incentive Compensation Plan. Select executives may elect to receive the full value of their award as stock option shares or one-third of the value of the award as either restricted shares or restricted stock units, or a combination of stock options, restricted shares and restricted stock units. The stock awards for Messrs. Nallathambi, Mehta, Lamson, Barnett and Valdez are restricted shares that vest in one-third increments over
|
26
| the next three years (2008, 2009 and 2010). The stock award for Mr. Long was also restricted shares that were scheduled to vest in one-third increments over the next three years, but the vesting schedule was accelerated upon his resignation in March 2007 to one-third of the shares vesting in March 2007 and remaining shares vesting in equal installments in March 2008 and 2009. The stock options for Mr. Nallathambi vest in one-third increments over the next three years (2008, 2009 and 2010) and will expire in February 2017.
|
(4) | These awards represent a portion of Messrs. Nallathambi's and Long's 2006 bonus plan. The compensation committee determined in February 2007 that Messrs. Nallathambi and Long each earned 36,160 shares based on attaining certain earnings per share levels. The threshold award under their 2006 plan was for 16,000 restricted shares and the target and maximum awards were for 40,000 shares. These restricted shares vest in one-quarter increments over the next 4 years (2008, 2009, 2010 and 2011). Upon Mr. Long's resignation in March 2007, the vesting on his 36,160 shares was fully accelerated. |
(5) | Represents a special stock option grant by the compensation committee in recognition of Mr. Nallathambi's promotion to Chief Executive Officer. These stock options vest in one-third increments over the next 3 years (2008, 2009 and 2010) and will expire in March 2017. |
Additional Information Relating to Our Summary Compensation and Grants of Plan-Based Awards Tables
We have no employment agreements with our named executive officers.
The compensation plans under which remuneration was paid and grants in the following table were made to our named executive officers are generally described in under “Compensation Discussion and Analysis” above.
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Outstanding Equity Awards at Fiscal Year-End – First Advantage Corporation
The following table provides information concerning unexercised options, unvested stock and equity incentive plan awards outstanding as of December 31, 2007 for each named executive officer.
| | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | Name | | Year
of
Option
Grant | | Number of Securities
Underlying
Unexercised Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | Number
of
Shares
or Units
of Stock
That
Have
Not
Vested
(#) | | Market
Value of
Shares
or
Units of
Stock
That
Have
Not
Vested
($)(1) | | Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
(#) | | Equity
Incentive
Plan
Awards:
Market
or Payout
Value of
Unearned
Shares,
Units or
Other
Rights
That
Have Not
Vested
($) | | | | Exercisable | | Unexercisable | | | | | | | Anand Nallathambi, | | 2005 | | 133,400 | | 66,600 | | $ | 27.070 | | 9/15/2015 | | | | | | | — | | — | Chief Executive Officer and President | | 2007 | | | | 100,000 | | $ | 26.760 | | 2/22/2017 | | | | | | | | | | | | 2007 | | | | 50,000 | | $ | 23.970 | | 3/30/2017 | | | | | | | | | | | | | | | | | | | | | | | 57,981 | | $ | 954,947 | | | | | Akshaya Mehta, | | 2003 | | 50,000 | | | | $ | 21.625 | | 6/4/2013 | | | | | | | — | | — | Executive Vice President – Corporate Infrastructure | | 2003 | | 85,000 | | | | $ | 18.400 | | 12/22/2013 | | | | | | | | | | | | 2005 | | 50,025 | | 24,975 | | $ | 19.490 | | 2/22/2015 | | | | | | | | | | | | | | | | | | | | | | | 39,223 | | $ | 646,003 | | | | | John Lamson, | | 2003 | | 50,000 | | | | $ | 21.625 | | 6/4/2013 | | | | | | | — | | — | Chief Financial Officer and Executive Vice President | | 2003 | | 50,000 | | | | $ | 18.400 | | 12/22/2013 | | | | | | | | | | | | 2005 | | 50,025 | | 24,975 | | $ | 19.490 | | 2/22/2015 | | | | | | | | | | | | 2006 | | 13,360 | | 26,640 | | $ | 24.930 | | 2/21/2016 | | | | | | | | | | | | | | | | | | | | | | | 37,354 | | $ | 615,220 | | | | | Evan Barnett, | | 2003 | | 50,000 | | | | $ | 21.625 | | 6/4/2013 | | | | | | | — | | — | President of Multifamily Services Segment | | 2003 | | 25,000 | | | | $ | 18.400 | | 12/22/2013 | | | | | | | | | | | | 2005 | | 20,010 | | 9,990 | | $ | 19.490 | | 2/22/2015 | | | | | | | | | | | | | | | | | | | | | | | 26,733 | | $ | 440,293 | | | | | Bart Valdez, | | 2003 | | 50,000 | | | | $ | 21.625 | | 6/4/2013 | | | | | | | — | | — | President of Employer Services Segment | | 2003 | | 25,000 | | | | $ | 18.400 | | 12/22/2013 | | | | | | | | | | | | 2005 | | 16,675 | | 8,325 | | $ | 19.490 | | 2/22/2015 | | | | | | | | | | | | 2006 | | 13,360 | | 26,640 | | $ | 24.930 | | 2/21/2016 | | | | | | | | | | | | | | | | | | | | | | | 15,663 | | $ | 257,970 | | | | | John Long, | | 2003 | | 267,500 | | | | $ | 21.625 | | 12/31/2008 | | | | | | | — | | — | Former Chief Executive Officer | | 2003 | | 118,380 | | | | $ | 18.400 | | 12/31/2008 | | | | | | | | | | | | 2005 | | 150,000 | | | | $ | 19.490 | | 12/31/2008 | | | | | | | | | | | | 2006 | | 150,000 | | | | $ | 24.930 | | 12/31/2008 | | | | | | | | | | | | | | | | | | | | | | | 46,275 | | $ | 762,149 | | | | |
(1) | Based on the December 31, 2007 closing stock price of $16.47. |
28
Outstanding Equity Awards at Fiscal Year-End – The First American Corporation
The following table provides information concerning unexercised options as of December 31, 2007 for each named executive officer under The First American Corporation’s 1996 Stock Option Plan, 1997 Director’s Stock Plan and 2006 Incentive Compensation Plan.
| | | | | | | | | | | | Option Awards | Name | | Year
of
Option
Grant | | Number of Securities
Underlying
Unexercised Options
(#) | | Option
Exercise
Price
($) | | Option
Expiration
Date | | | | Exercisable | | Unexercisable | | | Anand Nallathambi, Chief Executive Officer and President(1) | | 2000 | | 6,000 | | | | $ | 14.00 | | 2/24/2010 | | | 2001 | | 15,000 | | | | $ | 19.20 | | 12/13/2011 | | | 2002 | | 10,000 | | | | $ | 19.10 | | 7/23/2012 | | | 2003 | | 20,000 | | 10,000 | | $ | 22.85 | | 2/27/2013 | | | 2004 | | | | 20,000 | | $ | 30.56 | | 2/26/2014 | | | 2005 | | | | 30,000 | | $ | 36.55 | | 2/28/2015 | | | | | | | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | 2002 | | 8,000 | | | | $ | 18.89 | | 1/24/2012 | John Lamson, Chief Financial Officer and Executive Vice President(1) | | 2003 2003 | | 1,000 1,000 | | 1,000 1,000 | | $ $ | 26.35 26.35 | | 3/12/2013 4/1/2013 | | | | | | | | | | | | | Evan Barnett, President of Multifamily Services Segment | | | | — | | — | | | | | | Bart Valdez, President of Employer Services Segment | | | | — | | — | | | | | | John Long, Former Chief Executive Officer | | | | — | | — | | | | | |
(1) | On January 4, 2007, The First American Corporation announced that the special subcommittee of its Audit Committee completed its review of The First American Corporation’s historical stock option granting practices and related tax and accounting matters. In the course of its four month review, the special subcommittee conducted an extensive investigation and evaluated all option grants made under the company’s 1996 Stock Option Plan, 1997 Director’s Stock Plan and 2006 Incentive Compensation Plan. The special subcommittee determined that the company used incorrect measurement dates for financial reporting purposes with respect to a number of stock option grants made between 1996 and 2006 and improperly accounted for the mispriced options under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” and Statement of Financial Accounting Standards No. 123 (revised), “Share-Based Payment”. The special subcommittee determined that these errors were the result of date selection methods, internal control deficiencies and the misapplication of technical accounting provisions. As a result of these findings: |
Mr. Nallathambi’s options were re-priced from $10.75 to $14.00, from $18.08 to $19.20 and from $16.50 to $19.10;
Mr. Lamson’s options were re-priced from $21.89 to $26.35 and from $24.67 to $26.35.
29
Options Exercised and Stock Vested
The following table provides information concerning each exercise of stock options, SARs and similar instruments and each vesting of stock, including restricted stock, restricted stock units and similar instruments, during 2007 for each of the named executive officers on an aggregate basis.
| | | | | | | | | | | | | | | Option Awards | | | Stock Awards | Name | | Number
of Shares
Acquired
on
Exercise
(#) | | Value
Realized
on
Exercise
($) | | | Number
of Shares
Acquired
on
Vesting
(#) | | Value
Realized
on
Vesting
($) | Anand Nallathambi, Chief Executive Officer and President | | 50,000 | | $ | 755,740 | (1) | | 10,893 | | $ | 289,526 | | | | | | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | 4,000 | | $ | 116,846 | (2) | | 11,554 | | $ | 306,884 | | | | | | John Lamson, Chief Financial Officer and Executive Vice President | | 16,000 | | $ | 490,361 | (3) | | 3,910 | | $ | 104,123 | | | | | | Evan Barnett, President of Multifamily Services Segment | | | | | | | | 7,667 | | $ | 203,640 | | | | | | Bart Valdez, President of Employer Services Segment | | | | | | | | 1,163 | | $ | 30,971 | | | | | | John Long, Former Chief Executive Officer | | 37,620 | | $ | 379,460 | (4) | | 64,557 | | $ | 1,634,050 |
(1) | These stock options were awarded in February 2004 and February 2005 by The First American Corporation. |
(2) | These stock options were awarded in January 2002 by The First American Corporation. |
(3) | These stock options were awarded in February 2000, and March and April 2003 by The First American Corporation. |
(4) | These stock options include 6,000 that were awarded in February and July 2002 by The First American Corporation. |
The First American Corporation Benefit Plans
Certain of our employees are eligible to participate in the following benefit plans maintained by The First American Corporation for the benefit of certain officers and employees of The First American Corporation and its subsidiaries, including our and our subsidiaries’ officers and employees.
30
Pension Plan and Supplemental Benefit Plan
The following table provides information with respect to eachour 401(k) Plan, our employees, including the Named Executive Officers, do not participate in any plan that provides for retirement payments and benefits, or otherpayments and benefits to the named executive officersthat will be provided primarily following or in connection with, retirement.
| | | | | | | | | | | Name | | Plan Name | | Number
of Years
of
Credited
Service
(#) | | | Present
Value of
Accumulated
Benefit
($) | | Payments
During
Last
Fiscal
Year ($) | Anand Nallathambi, | | The First American Corporation Pension Plan | | 13.00 | (1) | | $ | 44,228 | | | Chief Executive Officer and President | | The First American Corporation Executive Supplemental
Benefit Plan | | | | | $ | 1,252,860 | | | | | | | | Akshaya Mehta, | | — | | — | | | | — | | | Executive Vice President—Corporate Infrastructure | | | | | | | | | | | | | | | | John Lamson, | | The First American Corporation Pension Plan | | 8.25 | | | $ | 72,941 | | | Chief Financial Officer and Executive Vice President | | | | | | | | | | | | | | | | Evan Barnett, | | The First American Corporation Pension Plan | | 7.25 | | | $ | 84,126 | | | President of Multifamily Services Segment | | | | | | | | | | | | | | | | Bart Valdez, | | The First American Corporation Pension Plan | | 7.25 | | | $ | 9,103 | | | President of Employer Services Segment | | | | | | | | | | | | | | | | John Long, | | The First American Corporation Pension Plan | | 16.58 | | | $ | 101,967 | | | Former Chief Executive Officer | | The First American Corporation Pension Restoration Plan | | 16.58 | | | $ | 70,211 | | |
(1) | Mr. Nallathambi's service was underreported last year at 11 years; this represents a correction. |
Additional Information Relating to Our Pension Plan and Supplemental Benefit Plan TableNo Nonqualified Deferred Compensation
Pension Plan. Employees of First Advantage and its subsidiaries who were participants in The First American Corporation’s defined benefit pension plan prior to First Advantage’s June 5, 2003 acquisition of The First American Corporation’s screening technology division, and who have becomeDuring 2021, our employees, of First Advantage or its subsidiaries in connection with such acquisition generally are permitted to continue their participation inincluding the pension plan, to the extent available to employees of First American. As of December 31, 2001, no new participants were permitted to participate in the defined benefit pension plan.
In order to participate, during plan years ending on or prior to December 31, 1994, an employee was required to contribute 1.5% of pay (i.e., salary, plus cash bonuses, commissions and other pay) to the plan. As a result of amendments to the pension plan that were adopted in 1994, during plan years commencing after December 31, 1994, an employee wasNamed Executive Officers, did not required to contribute to, the plan in order to participate. As a result of further amendments, which were adopted in 2000, the pension plan will not accept new participants after December 31, 2001.
A participant generally vests in his accrued benefit attributable to The First American Corporation’s contributions upon the completion of three years of service or if earlier, the attainment of normal retirement age while an employee. Normal retirement age is defined under the plan as the later of the employee’s attainment of age 65 or his third anniversary of participation in the plan.
31
Upon retirement at normal retirement age, an employee receives full monthly benefits which are equal, when calculated as a life annuity:
to 1% of the first $1,000 and 1.25% of remaining final average pay (i.e., the average of the monthly "pay," as defined above, during the five highest paid consecutive calendar years out of the last ten years prior to retirement) times the number of years of credited service with First American and its subsidiaries (including First Advantage and its subsidiaries) as of December 31, 1994; and
to 3/4% of the first $1,000 and 1% of the remaining final average pay times the number of years of credited service with First American and its subsidiaries (including First Advantage and its subsidiaries) subsequent to December 31, 1994.
Effective December 31, 2000, First American’s pension plan was amended to exclude from the calculation of benefitsearn any pay earned after December 31, 2001, and any service earned after December 31, 2005.
Effective December 31, 2002, First American’s pension plan was amended to reduce the rate at which future benefits accrue for participants who had not yet attained age 50 by spreading the accrual of the benefit that would have accrued during 2003 – 2005 over extended periods ranging from 5 to 20 years, depending on the participant’s age as of December 31, 2002. The pension plan was amended in February 2008 to eliminate benefit accruals for service after April 30, 2008.
An employee with at least three years of participation in the plan may elect to retire after attaining age 55, but prior to age 65, and receive reduced benefits.
The First American Corporation funds the plan based on actuarial determinations of the amount required to provide the stated benefits. The benefits are not subject to deduction for Social Security payments or any other offsets. Currently, Messrs. Nallathambi, Lamson, Barnett and Valdez have 13.00, 8.25, 7.25 and 7.25 years, respectively, of credited service. At his resignation, Mr. Long had 16.58 years of credited service.
The compensation levels shown in the table are less than those set forth in the summary compensation table because the federal tax law limits the maximum amount of pay that may be considered in determining benefits under the tax-qualified pension plan, and The First American Corporation’s pension restoration plan, which is described below, does not make up for these limits for pay exceeding $275,000. The limit on pay that could be recognized by tax-qualified retirement plans was $200,000 in 1989. This amount was adjusted for inflation for each year through 1993, when the limit was $235,840. In 1993, this limit was decreased to $150,000 for plan years beginning in 1994. The $150,000 limit has been adjusted for inflation and was increased to $160,000 as of January 1, 1997, and to $170,000 as of January 1, 2000. The highest final average pay that could be considered in determining benefits accruing under the pension plan before 1994 is $219,224, and since First American’s pension plan does not consider pay earned after December 31, 2001, the highest final average pay that can be considered in determining benefits accruing after 1993 is $164,000.
During 1996, The First American Corporation adopted its pension restoration plan. This plan is an unfunded, nonqualified plan designed to make up for the benefit accruals that are restricted by the indexed $150,000 pay limit. However, in order to limit its expense, the pension restoration plan does not make up for benefit accruals on compensation exceeding $275,000. The pension restoration plan also makes up for benefits that cannot be paid from The First American Corporation’s pension plan because of limitations imposed by the federal tax laws. Vesting of benefits payable to an employee under The First American Corporation’s pension restoration plan occurs at the same time that vesting occurs for that employee in his or her pension plan benefits. The pension restoration plan is effective as of January 1, 1994, but only covers selected pension plan participants who were employees of The First American Corporation or its participating subsidiaries on that date. As noted above, January 1, 1994, is the date as of which the pay limit for the pension plan was reduced from $235,840 to $150,000. The pension restoration plan excludes pay earned after December 31, 2001, as does the pension plan. The pension restoration plan was amended in February 2008 to eliminate benefit accruals for service after April 30, 2008.
32
Supplemental Benefit Plan. The First American Corporation maintains an executive supplemental benefit plan that it believes assists in attracting and retaining highly qualified individuals for upper management positions. The plan provides retirement benefits for, and pre-retirement death benefitsamounts with respect to, certain key management personnel selected by The First American Corporation’s board of directors, and may include our executives or executives of our subsidiaries at and to the extent selected by The First American Corporation’s board of directors. Under the plan, which was amended in 2007 upon retirement at normal retirement date (the later of age 62 or, completion of ten years of service), a participant receives a joint life and 50% survivor annuity benefit equal to 30% of “final average compensation.” “Final average compensation” is the average annual compensation, composed of base salary, plus cash and stock bonuses, for those five calendar years of employment preceding retirement in which such compensation is the highest.
The benefit is reduced by 5.952% for each year prior to age 62 in which retirement occurs.
To be eligible to receive benefits under the plan, a participant must be at least age 55, have been an employee of The First American Corporation, or an employee of one of its subsidiaries (including our subsidiaries and us), for at least ten years and, unless waived by The First American Corporation’s board of directors, covered by the plan for at least five years. A pre-retirement death benefit is provided consisting of ten annual payments, each of which equals 50% of final average compensation. Vesting of rights under the plan is accelerated in the event of a change in control (as defined in the plan) of The First American Corporation.
The supplemental benefit plan is unfunded and unsecured. The First American Corporation purchases insurance, of which The First American Corporation is the owner and beneficiary, on the lives of the participants in the plan. This insurance is designed to recover, over the life of the plan, The First American Corporation’s costs incurred with respect to the plan. Currently, only Mr. Nallathambi and two additional employees have been selected by The First American Corporation board to participate in the plan. Prior to his resignation, Mr. Long also participated in the plan. No amounts are payable by us in connection with this plan, other than the reimbursable expenses for administration of the plan.
On October 11, 2005, the company and The First American Corporation entered into a reimbursement agreement, which requires the company to reimburse The First American Corporation for the actual costs associated with the participation of our executives or our subsidiaries’ executives in the supplemental benefit plan. In 2007, we reimbursed The First American Corporation $585,603 for actual and interest costs for Mr. Nallathambi’s participation in the supplemental benefit plan.
33
Nonqualified Deferred Compensation
The following table provides information with respect to eachany defined contribution or other plan sponsored by us that provides for the deferral of compensation on a basis that is not tax-qualified for each namedtax-qualified.
No Perquisites We generally do not provide perquisites or personal benefits to our executive officer.officers. | | | | | | | | | | | | | | | | Name | | Executive
Contribution in
Last Fiscal Year
($) | | Registrant
Contribution in
Last Fiscal Year
($) | | Aggregate
Earnings in
Last Fiscal Year
($) | | Aggregate
Withdrawals in
Last Fiscal Year
($) | | Aggregate
Balance at Last
Fiscal Year-end
($) | Anand Nallathambi, Chief Executive Officer and President | | $ | 62,789 | | $ | 0 | | $ | 21,757 | | $ | 0 | | $ | 385,342 | | | | | | | Akshaya Mehta, Executive Vice President—Corporate Infrastructure | | $ | 445,971 | | $ | 0 | | $ | 86,999 | | $ | 0 | | $ | 1,336,107 | | | | | | | John Lamson, Chief Financial Officer and Executive Vice President | | $ | 38,000 | | $ | 0 | | $ | 27,627 | | $ | 0 | | $ | 296,196 | | | | | | | Evan Barnett, President of Multifamily Services Segment | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | | | | | | Bart Valdez, President of Employer Services Segment | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | | | | | | John Long, Former Chief Executive Officer | | $ | 42,368 | | $ | 0 | | $ | 47,799 | | $ | 585,464 | | $ | 0 |
Additional Information Relating to Our Nonqualified Deferred Compensation Plan TableCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Deferred Compensation Plan. The First American Corporation’s deferred compensation plan offers to a select group of management and highly compensated employees of The First American Corporation and its subsidiaries, including our subsidiaries and us, the opportunity to elect to defer portions of salary, commissions and bonuses. A committee appointed by The First American Corporation’s board is responsible for administering the plan, which became effective January 1, 1998. The First American Corporation maintains a deferral account for each participating employee on a fully vested basis for all deferrals. Participants can choose to have their cash benefits paid in one lump sum or in quarterly payments upon termination of employment or death. Subject to the terms and conditionsDuring 2021, none of the plan, participants also may elect to schedule in-service withdrawalsmembers of deferred compensation and the earnings and losses attributable thereto. For all participants who joined the plan prior to December 31, 2001, the plan provides a pre-retirement life insurance benefit equal to the lesser of 15 times the amount deferred in a participant’s first year of participation or $2.0 million. The life insurance benefit is reduced beginningour Compensation Committee has at age 61 by 20% per year. Participants who join the plan after December 31, 2001, are not eligible for any life insurance benefit. The First American Corporation pays a portion of the cost of such life insurance benefits. Messrs. Lamson, Mehta and Nallathambi participate in this plan. Prior to his resignation, Mr. Long also participated in this plan. The plan is unfunded and unsecured.
34
Potential Payments Upon Termination or Change in Control
| | | | | | | | | | | | | | | | | | | | | | | | Name | | Benefit | | Termination
with Cause
or for Good
Reason | | Termination
without
Cause or
Good
Reason | | Voluntary
Termination | | Death | | Disability | | Change in
Control | | Retirement | Anand Nallathambi, | | Stock Options (1): | | $ | 0 | | $ | 720,120 | | $ | 720,120 | | $ | 904,020 | | $ | 904,020 | | $ | 904,020 | | $ | — | Chief Executive Officer and President | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 954,947 | | $ | 802,369 | | $ | 954,947 | | $ | — | | | Pension Plan (2): | | $ | 44,228 | | $ | 44,228 | | $ | 44,228 | | $ | 28,409 | | $ | 44,228 | | $ | 44,228 | | $ | — | | | Supplemental Benefit Plan (2): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 5,496,722 | | $ | 1,904,350 | | $ | 6,183,644 | | $ | — | | | Deferred Compensation Plan (2): | | $ | 385,342 | | $ | 385,342 | | $ | 385,342 | | $ | 675,982 | | $ | 385,342 | | $ | 385,342 | | $ | — | | | Paid Time-Off (2): | | $ | 69,357 | | $ | 69,357 | | $ | 69,357 | | $ | 69,357 | | $ | 69,357 | | $ | 69,357 | | $ | — | | | Total Value: | | $ | 498,927 | | $ | 1,219,047 | | $ | 1,219,047 | | $ | 8,129,437 | | $ | 4,109,666 | | $ | 8,541,538 | | $ | 0 | | | | | | | | | | Akshaya Mehta, | | Stock Options (1): | | $ | 0 | | $ | 121,840 | | $ | 121,840 | | $ | 121,840 | | $ | 121,840 | | $ | 121,840 | | $ | — | Executive Vice President—Corporate Infrastructure | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 646,003 | | $ | 32,495 | | $ | 646,003 | | $ | — | | | Pension Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Supplemental Benefit Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Deferred Compensation Plan (2): | | $ | 1,336,107 | | $ | 1,336,107 | | $ | 1,336,107 | | $ | 1,336,107 | | $ | 1,336,107 | | $ | 1,336,107 | | $ | — | | | Paid Time-Off (2): | | $ | 37,477 | | $ | 37,477 | | $ | 37,477 | | $ | 37,477 | | $ | 37,477 | | $ | 37,477 | | $ | — | | | Total Value: | | $ | 1,373,584 | | $ | 1,495,424 | | $ | 1,495,424 | | $ | 2,141,427 | | $ | 1,527,919 | | $ | 2,141,427 | | $ | 0 | | | | | | | | | | John Lamson, | | Stock Options (1): | | $ | 0 | | $ | 15,540 | | $ | 15,540 | | $ | 31,080 | | $ | 31,080 | | $ | 31,080 | | $ | 15,540 | Chief Financial Officer and Executive Vice President | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 615,220 | | $ | 111,617 | | $ | 615,220 | | $ | 0 | | | Pension Plan (2): | | $ | 72,941 | | $ | 72,941 | | $ | 90,808 | | $ | 45,853 | | $ | 72,941 | | $ | 72,941 | | $ | 90,808 | | | Supplemental Benefit Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Deferred Compensation Plan (2): | | $ | 296,196 | | $ | 296,196 | | $ | 296,196 | | $ | 416,196 | | $ | 296,196 | | $ | 296,196 | | $ | 296,196 | | | Paid Time-Off (2): | | $ | 39,038 | | $ | 39,038 | | $ | 39,038 | | $ | 39,038 | | $ | 39,038 | | $ | 39,038 | | $ | 39,038 | | | Total Value: | | $ | 408,175 | | $ | 423,715 | | $ | 441,582 | | $ | 1,147,387 | | $ | 550,872 | | $ | 1,054,475 | | $ | 441,582 | | | | | | | | | | Evan Barnett, | | Stock Options (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | President of Multifamily Services Segment | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 440,293 | | $ | 42,015 | | $ | 440,293 | | $ | 0 | | | Pension Plan (2): | | $ | 84,126 | | $ | 84,126 | | $ | 90,718 | | $ | 45,921 | | $ | 84,126 | | $ | 84,126 | | $ | 90,718 | | | Supplemental Benefit Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Deferred Compensation Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Paid Time-Off (2): | | $ | 35,538 | | $ | 35,538 | | $ | 35,538 | | $ | 35,538 | | $ | 35,538 | | $ | 35,538 | | $ | 35,538 | | | Total Value: | | $ | 119,664 | | $ | 119,664 | | $ | 126,256 | | $ | 521,752 | | $ | 161,679 | | $ | 559,957 | | $ | 126,256 |
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| | | | | | | | | | | | | | | | | | | | | | | | Name | | Benefit | | Termination
with Cause
or for Good
Reason | | Termination
without
Cause or
Good
Reason | | Voluntary
Termination | | Death | | Disability | | Change in
Control | | Retirement | Bart Valdez, | | Stock Options (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | — | President of Employer Services Segment | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 257,970 | | $ | 38,375 | | $ | 257,970 | | $ | — | | | Pension Plan (2): | | $ | 9,103 | | $ | 9,103 | | $ | 9,103 | | $ | 5,985 | | $ | 9,103 | | $ | 9,103 | | $ | — | | | Supplemental Benefit Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Deferred Compensation Plan (2): | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | | | Paid Time-Off (2): | | $ | 32,970 | | $ | 32,970 | | $ | 32,970 | | $ | 32,970 | | $ | 32,970 | | $ | 32,970 | | $ | — | | | Total Value: | | $ | 42,073 | | $ | 42,073 | | $ | 42,073 | | $ | 296,925 | | $ | 80,448 | | $ | 300,043 | | $ | 0 | | | | | | | | | | John Long | | Stock Options (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | — | Former Chief Executive Officer | | Restricted Stock Restricted Stock Units (1): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 691,180 | | $ | 0 | | $ | 691,180 | | $ | — | | | Pension Plan (2): | | $ | — | | $ | — | | $ | 172,178 | | $ | — | | $ | — | | $ | — | | $ | — | | | Supplemental Benefit Plan (2): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | — | | | Deferred Compensation Plan (2): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | — | | | Paid Time-Off (2): | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | 0 | | $ | — | | | Total Value: | | $ | 0 | | $ | 0 | | $ | 172,178 | | $ | 691,180 | | $ | 0 | | $ | 691,180 | | $ | 0 |
(1) | Based on the December 31, 2007 closing stock price of $16.47 for First Advantage stock options, restricted stock and restricted stock unit awards, and the December 31, 2007 closing stock price of $34.12 for The First American Corporations’ stock option awards. |
(2) | Based on plan valuations and accrued obligations as of December 31, 2007. |
Additional Information Relating to Potential Payments Upon Employment Termination or Change in Control
Change in Control Arrangements
In 2007, nonetime been one of our executive officers had change in control agreements. However, the First Advantage Corporation 2003 Incentive Compensation Plan calls for accelerated vesting of all awards in the event of a change in control of The First American Corporation or us. In addition, Mr. Nallathambi participates in the First American Corporation’s supplemental benefit plan, which calls for accelerated vesting of all benefits in the event of a change in control of The First American Corporation.
A “change in control” for purposes of The First American Corporation’s supplemental benefit plan means any one of the following:
a merger or consolidation in which stockholders of The First American Corporation end up owning less than 50% of the voting securities of the surviving entity;
the sale, transfer or other disposition of all or substantially all of The First American Corporation’s assets or the complete liquidation or dissolution of The First American Corporation;
a change in the composition of The First American Corporation’s board over a two-year period without the consent of a majority of the directors in office at the beginning of the two-year period; or
the acquisition or accumulation by certain persons of at least 25% of The First American Corporation’s voting securities.
36
A “change in control” for purposes of the First Advantage Corporation 2003 Incentive Compensation Plan means any one of the following:
an acquisition in one transaction or a series of transactions by any person which results in such person owning more than 50% of the voting power in The First American Corporation (other than directly from The First American Corporation);
an acquisition in one transaction or a series of transactions by any person which results in such person owning more than 50%employees. None of our voting power (other than directly from us);
a merger, consolidationexecutive officers currently serves, or similar transaction involving The First American Corporation, unless (a) stockholders of The First American Corporation end up owning more than 50% ofhas served during the voting securities oflast completed fiscal year, on the surviving entity, (b) a majority of the board of The First American Corporation prior to the transaction constitutes at least a majority of the board of the surviving entity, and (c) The First American Corporation and its affiliates own collectively 50%compensation committee or more of the voting power of the surviving entity;
a merger, consolidation or similar transaction involving us, unless (a) our stockholders end up owning more than 50% of the voting securities of the surviving entity, (b) a majority of our board of directors prior to the transaction constitutes at least a majority of the board of the survivingany other entity and (c) we and our affiliates own collectively 50%that has one or more of the voting power of the surviving entity;
the composition of The First American Corporation’s board is changed without the consent ofexecutive officers serving as a majority of the directors in office;
the compositionmember of our board is changed without the consentBoard of a majority of the directors in office;
any approval of any planDirectors or proposal for the liquidation or dissolution of The First American Corporation or us;
any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of the assets or business of The First American Corporation to any person (other than a transfer to a company that we own or that is owned by The First American Corporation or the distribution to The First American Corporation’s stockholders of the stock or any other assets of a company that we own or that is owned by The First American Corporation); or
any sale, lease, exchange, transfer or other disposition (in one transaction or a series of related transactions) of all or substantially all of our assets or business to any person (other than a transfer to a company that we own or that is owned by The First American Corporation, the distribution to our stockholders of the stock or any other assets of a company that we own or is owned by The First American Corporation, or a transfer or distribution to The First American Corporation or its affiliates).
Compensation Committee. 37
Director CompensationCOMPENSATION OF DIRECTORS
The following table providescontains information concerning the compensation of Ms. Bell, Mr. Clark, and Ms. Sim. Mr. Osnoss, Mr. Rudella, and Ms. Stoica are employees of Silver Lake and did not receive any compensation as directors of the Company. The compensation paid to Mr. Staples, our directorsChief Executive Officer, is presented in the section entitled “Executive Compensation” above. Director Compensation Table for the period January 1, 2007 through December 31, 2007. Pursuant to Item 402(k)(2)(i) of Regulation S-K, directors who are also named executive officers have been omitted from this table.2021 | | | | | | | | | | | | | Name | | Fees Earned or
Paid in Cash
($) | | Stock
Awards
($)(1) | | Option
Awards
($)(2) | | Total
($) | Parker Kennedy(4) | | | — | | $ | 14,432 | | $ | 19,285 | | $ | 33,717 | J. David Chatham | | $ | 61,500 | | $ | 14,432 | | $ | 18,409 | | $ | 94,341 | Barry Connelly | | $ | 63,000 | | $ | 14,432 | | $ | 18,409 | | $ | 95,841 | Jill Kanin-Lovers | | $ | 60,500 | | $ | 14,432 | | $ | 11,316 | | $ | 86,248 | Frank V. McMahon(4) | | | — | | $ | 14,432 | | $ | 20,520 | | $ | 34,952 | Donald Nickelson | | $ | 61,500 | | $ | 14,432 | | $ | 18,409 | | $ | 94,341 | Donald Robert | | $ | 53,000 | | $ | 14,432 | | $ | 18,409 | | $ | 85,841 | D. Van Skilling | | $ | 61,500 | | $ | 14,432 | | $ | 23,290 | | $ | 99,222 | David Walker | | $ | 77,000 | | $ | 14,432 | | $ | 18,409 | | $ | 109,841 | Lawrence Lenihan, Jr. (Pequot Capital)(3) | | $ | 6,500 | | | __ | | $ | 18,409 | | $ | 24,909 |
| | | | | | | | | | | | | | | | Name | | Fees Earned or
Paid in
Cash($)(1) | | Equity
Awards
($)(2) | | Total
($) | Susan R. Bell | | | | 38,750 | | | | | 225,000 | | | | | 263,750 | | James L. Clark | | | | 27,500 | | | | | 225,000 | | | | | 252,500 | | Judith Sim | | | | 35,000 | | | | | 225,000 | | | | | 260,000 | |
| (1) | The dollar amounts recorded inAmounts reflect the table foraggregate amount of cash retainers paid during 2021. |
| (2) | Amounts reflect the restricted stock awards have beenfull grant-date fair value of RSUs granted during 2021 computed in accordance with SFAS No. 123R. Under SFAS 123R,ASC Topic 718, rather than the amounts paid to or realized by the named individual. See Note 10 to our compensation cost relating to a stock or option award is generally computed over the period of time in which the director is required to provide service to us in exchange for the award. For more information about the assumptions used to determine the cost these awards reported in the table, see Note 2. “Summary of Significant Accounting Policies” to First Advantage’saudited consolidated financial statements as set forthincluded in the First Advantage’sour 2021 Form 10-K for the year ended December 31, 2007. The grant date fair value of each director’s 2007 restricted stock grant was: $65,000 for eacha discussion of the directors. The restricted shares vest ratably over a three year-period. |
| Asvaluation of December 31, 2007, Ms Kanin-Lovers and Messrs. Kennedy, Chatham, Connelly, McMahon, Nickelson, Robert, Van Skilling, Walker and Lenihan each held 2,838 shares of restricted stock. |
(2) | The values set forth in this column relate to option awards that were granted in 2003, 2004, 2005 and 2006. The dollar amounts recorded in the table for the option awards have been computed in accordance with SFAS No. 123R. Under SFAS 123R, our compensation cost relating to a stock or option award is generally computed over the period of time in which the director is required to provide service to us in exchange for the award. For more information about the assumptions used to determine the cost these awards reported in the table, see Note 2. “Summary of Significant Accounting Policies” to First Advantage’s consolidated financial statements as set forth in the First Advantage’s Form 10-K for the year ended December 31, 2007. |
| Ms Kanin-Lovers and Messrs. Kennedy, Chatham, Connelly, McMahon, Nickelson, Robert, Van Skilling, Walker and Lenihan held vested options to purchase 1,670, 10,002, 10,002, 10,002, 2,505, 10,002, 10,002, 4,170, 10,002, and 15,831 shares, respectively, as of December 31, 2007. There were no option grants to non-employee directors made in 2007. |
(3) | Mr. Lenihan chose not to stand for reelection at the 2007 annual meeting and stepped down from the board effective at that meeting on April 26, 2007. Pursuant to the stockholders agreement among The First American Corporation, Pequot Private Equity Fund II, L.P. and us, The First American Corporation and each of its affiliates has agreed to vote its shares for one nominee designated by Pequot. Mr. Lenihan was Pequot’s designated director in 2006. Pequot has not chosen a designee to replace Mr. Lenihan. |
(4) | Messrs. Kennedy and McMahon have entered into agreements with First American requiring them to exercise these option awards and restricted stock awards at the direction of First American and to remit any after-tax benefits they receive as a result. |
38
For 2007, non-employee directors received a yearly fee of $30,000. “Non-employee director” means a member of the board who is not also an employee or consultant of the company, a subsidiary or an affiliate. In addition, non-employee directors received the following additional compensation: (i) a chair retainer fee of $10,000 per year for the audit committee chair; (ii) a chair retainer fee of $4,000 per year for the compensation committee chair; (iii) a chair retainer fee of $2,500 per year for the nominating and corporate governance committee chair; (iv) a member retainer fee of $10,000 per year for each member of the audit committee; (v) a member retainer fee of $4,000 per year for each member of the compensation committee; (vi) a member meeting fee of $1,500 for each meeting of the board; and (vii) a member meeting fee of $1,000 for each meeting attended by members of the audit committee, compensation committee and nominating and corporate governance committee. Non-employee directors also receive an option to acquire 5,000 shares of our Class A common stock upon election to the board. Non-employee directors who have served for six months or more also receive restricted shares of our Class A common stock valued at $65,000 upon reelection. In all cases, the exercise price of options is the fair market value of our Class A common stock on the date of grant. Finally, First Advantage reimburses the directors for travel expenses incurred in connection with their duties as directors of First Advantage.
In addition, the company’s by-laws provide each director with certain indemnification rights and we have entered into an indemnity agreement with each member of the board of directors.
39
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
The compensation committee of the board of directors has reviewed and discussed the Compensation Discussion and Analysis included on pages 18 through 24 of this proxy statement with management.
Based on this review and discussion, the compensation committee recommends to the board of directors that the Compensation Discussion and Analysis be included in First Advantage’s Annual Report on Form 10-K for the year ended December 31, 2007 and in this proxy statement each to be filed with the Securities and Exchange Commission.
By the Compensation Committee of the Board of
Directors:
Jill Kanin-Lovers, Chairman
Donald Nickelson, Director
Donald Robert, Director
40
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, as well as persons who own ten percent or more of our outstanding Class A and Class B common stock, to file an initial report of beneficial ownership of company stock and reports of changes in beneficial ownership thereafter with the Securities and Exchange Commission. Section 16(a) requires these insiders to deliver copies of all reports filed under Section 16(a) to us. Based solely on a review of these copies available to us, we believe that directors, officers and ten percent stockholders have complied with all applicable Section 16(a) filing requirements for 2007, except that Messrs. Kennedy and McMahon each inadvertently filed a single Form 4 reporting one transaction late due to a policy change at The First American Corporation regarding stock ownership requirements for its executives.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The firm of PricewaterhouseCoopers LLP has been selected by the audit committee of our board as the independent registered certified public accounting firm to audit the books and accounts of our company and its subsidiaries for the fiscal year ending December 31, 2007. This firm has served as independent public accountants for our company since 2003. A representative of PricewaterhouseCoopers LLP is expected to be present at the annual meeting and will have an opportunity to make any desired statement and to answer any appropriate questions by stockholders.
The following table sets forth fees billed to us by PricewaterhouseCoopers LLP for professional services rendered for 2007 and 2006:
| | | | | | | | | | 2007 | | 20061 | Audit Fees | | $ | 1,629,800 | | $ | 1,784,265 | Audit-Related Fees | | $ | 119,048 | | $ | 96,000 | Tax Fees | | $ | 90,078 | | $ | 78,613 | All Other Fees | | $ | 1,800 | | $ | 1,500 | | | | | | | | Total | | $ | 1,840,726 | | $ | 1,960,378 | | | | | | | |
1
| In the 2006 proxy statement, the Company reported $1,713,978 in fees billed by PricewaterhouseCoopers LLP for 2006. Subsequent billings after the filing of the proxy statement are reflected in the table above and include all fees for 2006.equity-based awards.
|
Audit Fees. This category includes the aggregate fees billed for professional services rendered for the auditsAs of our consolidated financial statements for fiscal years 2007 and 2006, respectively, for the reviews of the financial statements included in our quarterly reports on Form 10-Q and for services that are normally provided by PricewaterhouseCoopers LLP in connection with statutory and regulatory filings or engagements for the relevant fiscal year.
Audit-Related Fees. This category includes the aggregate fees billed during the period for fiscal years 2007 and 2006, respectively, for assurance and related services by PricewaterhouseCoopers LLP that are reasonably related to the performance of the audits or reviews of the financial statements and are not reported above under “Audit Fees,” and generally consist of fees for due diligence accounting consultation with respect to our registration statements, the audit of our 401(k) plans and agreed-upon procedure reports.
Tax Fees. This category includes the aggregate fees billed for fiscal years 2007 and 2006, respectively, for professional services rendered by PricewaterhouseCoopers LLP for tax advice and tax planning, including the preparation of certain state tax returns.
41
All Other Fees. This category includes the aggregate fees billed during the period for fiscal years 2007 and 2006, respectively, for products and services provided by PricewaterhouseCoopers LLP that are not reported above under “Audit Fees,” “Audit-Related Fees,” or “Tax Fees.” In 2007 and 2006, these fees related to the renewal of a subscription to a library of accounting literature.
The audit committee has considered the compatibility of the non-audit services performed by and fees paid to PricewaterhouseCoopers LLP in fiscal year 2007 and has determined that such services and fees were compatible with the independence of the accountants. During fiscal year 2007, PricewaterhouseCoopers LLP did not utilize any personnel in connection with the audit other than its full-time, permanent employees.
Policy for Approval of Audit and Non-audit Services. The audit committee has adopted an approval policy regarding the approval of audit and non-audit services provided by the independent public accountants, which approval policy describes the procedures and the conditions pursuant to which the audit committee may grant general pre-approval for services proposed to be performed by our independent public accountants. All services provided by our independent public accountants, both audit and non-audit, must be pre-approved by the audit committee. Our audit committee has delegated to the chairman of the audit committee the authority to grant pre-approvals of non-audit services provided by PricewaterhouseCoopers LLP. The decisions of the chairman of the audit committee to pre-approve such a service are required to be reported to the audit committee at its next regularly scheduled meeting.
In determining whether to approve a particular audit or permitted non-audit service, the audit committee will consider, among other things, whether such service is consistent with maintaining the independence of the independent public accountants. The audit committee will also consider whether the independent public accountants are best positioned to provide the most effective and efficient service to our company and whether the service might be expected to enhance our ability to manage or control risk or improve audit quality.
42
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
In the performance of its oversight function, the audit committee has met and held discussions with management of First Advantage, who represented to the audit committee that our company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles. The audit committee has reviewed and discussed the consolidated financial statements with both management and our company’s independent registered certified public accounting firm, PricewaterhouseCoopers LLP. The audit committee also discussed with our company’s independent registered certified public accounting firm matters required to be discussed by Statement on Auditing Standards No. 61 (Communication with Audit Committees), as currently in effect.
Our company’s independent registered certified public accountants also provided to the audit committee the written disclosures and the letter required by the current version of Independence Standards Board Standard No. 1 (Independence Discussions with Audit Committees), and the audit committee discussed their independence with the independent registered certified public accountants. In this connection, the audit committee has considered whether the provision of non-auditing services (and the aggregate fees billed for these services) in fiscal 2007 by PricewaterhouseCoopers LLP to First Advantage is compatible with maintaining the independent registered certified public accounting firm’s independence.
Based upon the reports and discussions described in this report, the audit committee recommended to the board of directors that the audited consolidated financial statements be included in First Advantage’s annual report on Form 10-K for the fiscal year ended December 31, 2007, filed with2021, the Securities and Exchange Commission.
Byfollowing non-employee directors held the Audit Committeefollowing number of the Board of Directors:
David Walker, Chairman
J. David Chatham, Director
Barry Connelly, Director
D. Van Skilling, Director
43
GENERAL INFORMATION
Stockholder Proposals
In order for a proposal by a stockholder to be included in the proxy statement and proxy for the 2009 annual meeting, we must receive such proposal at our principal executive office, to the attention of Bret Jardine, Secretary of First Advantage Corporation, at 100 Carillon Parkway, St. Petersburg, Florida 33716 no later than December 31, 2008 (which is not more than 120 days prior to the anniversary of the mailing date of this proxy statement), assuming that the date of the annual meeting to be held in 2009 is not changed by more than 30 days from the date of this annual meeting. In such event, we will provide notice of the date by which such proposals must be received in order to be included. Our determination of whether we will oppose inclusion of any proposal in its proxy statement and proxy will be made on a case-by-case basis in accordance with its judgment and the rules and regulations promulgated by the Securities and Exchange Commission. Proposals received after December 31, 2008 will not be considered for inclusion in our proxy materials for the 2009 annual meeting.
Pursuant to the rules and regulations promulgated by the Securities and Exchange Commission, any stockholder who intends to present a proposal at the 2009 annual meeting without requesting that we include such proposal in our proxy statement should be aware that he or she must notify us at our principal executive office, attention secretary, not later than February 10, 2009 (which is 45 days prior to the anniversary of the mailing date of this proxy statement) of the intention to present the proposal. Otherwise, we may exercise discretionary voting with respect to such stockholder proposal pursuant to authority conferred by proxies to be solicited by our board and delivered in connection with the meeting.
As of the date of this proxy statement, the board is not aware of any matters to come before the annual meeting other than those set forth on the notice accompanying this proxy statement. If any other matters come before the annual meeting, the proxy card, if executed and returned, gives discretionary voting authority to the persons named as proxy holders, Anand Nallathambi and Julie Waters, our chief executive officer and general counsel, respectively, with respect to such matters.
Annual Report
All stockholders of record as of the Record Date have been sent, or are concurrently herewith being sent, a copy of our annual report for the fiscal year ended December 31, 2007. Such report contains our certified consolidated financial statements and the certified consolidated financial statements of our subsidiaries for the fiscal year ended December 31, 2007.
No Incorporation by Reference
The report of the compensation committee of the board of directors on executive compensation and the audit committee report above are not deemed to be “filed” with the Securities and Exchange Commission, and shall not be incorporated by reference into any of our prior or future filings made under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate such information by reference.
Additional Information
Under the Delaware General Corporation Law, you will not have any appraisal rights in connection with the actions to be taken at the annual meeting.
Beginning on April 19, 2008 a list of holders of record of our Class A and Class B common stock as of the Record Date will be available at our principal executive office during ordinary business hours for examination by any stockholder holding any class of our common stock on the Record Date for any purpose germane to the annual meeting.
44
Our company will pay the cost of preparing, assembling and mailing the attached letter from our president, notice of annual meeting, this proxy statement, the enclosed proxy card, and the solicitation of proxies. Our directors, officers and other regular employees may solicit proxies. None of them will receive any additional compensation for such solicitation. People soliciting proxies may contact you in person, by telephone, via e-mail or by facsimile. We will pay brokers or other persons holding stock in their names or the names of their nominees for their reasonable and customary expenses of forwarding soliciting material to their principals.
We will, upon the written request of any person who is a beneficial owner of our Class A or Class B common stock on the Record Date, furnish without charge a copy of our annual report on Form 10-K for the year ended December 31, 2007, together with the accompanying financial statements. We will also furnish a copy of the exhibits to the annual report, if requested. Such requests should contain a representation that the person requesting this material was a beneficial owner of the our Class A common stock or Class B common stock on the Record Date and be sent to the secretary of our company at the address indicated on the first page of this proxy statement.
By Order of the Board of Directors
Julie Waters
Vice President,
General Counsel
St. Petersburg, Florida
March 25, 2008
45
FIRST ADVANTAGE CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
To Be Held
Tuesday, April 29, 2008, 9:00 a.m.
in the
EAGLE AUDITORIUM
at
FIRST ADVANTAGE CORPORATION
12395 FIRST AMERICAN WAY
POWAY, CALIFORNIA 92064
RSUs: | | | First Advantage Corporation
12395 First American Way
Poway, CA 92064Name
| | proxyNumber of
RSUs
Outstanding | Susan R. Bell | | 15,000 | James L. Clark | | 15,000 | Judith Sim | | 15,000 |
Effective upon the consummation of the IPO, we adopted an annual compensation policy covering each of our non-employee directors. Under this policy, each of our non-employee directors who is not employed by Silver Lake will receive an annual cash retainer of $50,000, payable in arrears, and an annual equity award consisting of restricted stock units valued at approximately $175,000, in each case, with a one-year vesting period. If such individual is not employed by Silver Lake, our Audit Committee Chair and Audit Committee members will also receive an additional annual cash retainer of $20,000 and $10,000, respectively; our Compensation Committee Chair and Compensation Committee members will also receive an additional annual cash retainer of $15,000 and $7,500, respectively and our Nominating and Corporate Governance Committee Chair and Nominating and Corporate Governance Committee members will receive an additional annual cash retainer of $10,000 and $5,000 respectively, in each case to be paid on a quarterly basis in arrears. In addition, in connection with the IPO, we granted each of our non-employee directors who was not employed by Silver Lake RSUs valued at approximately $225,000, in each case, with a three-year vesting period. We expect to make similar grants to any newly elected or appointed non-employee director who is not employed by Silver Lake. EQUITY COMPENSATION PLAN INFORMATION The following table sets forth, as of December 31, 2021, certain information related to our compensation plans under which shares of our common stock may be issued. | | | | | | | | | | | | | Plan category: | | Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants, and Rights | | | Weighted-Average
Exercise Price of
Outstanding Options,
Warrants, and
Rights(2) | | | Number of Securities
Available for Future
Issuance Under Equity
Compensation Plans
(excludes securities
reflected in first
column) | | Equity compensation plans approved by security holders(1) | | | -- | | | | -- | | | | -- | | 2021 Equity Plan | | | 4,055,415 | | | $ | 15.33 | | | | 10,551,501 | | 2021 Employee Stock Purchase Plan | | | -- | | | | -- | | | | 1,525,000 | | Equity compensation plans not approved by security
holders (3) | | | 3,519,563 | | | $ | 6.66 | | | | -- | | | Total | | | 7,574,978 | | | $ | 11.11 | | | | 12,076,501 | |
| (1) | The 2021 Equity Plan and the 2021 Employee Stock Purchase Plan allow for future grants of securities. The maximum number of shares that may be granted under the 2021 Equity Plan is 17,525,000 shares without giving effect to any “evergreen” increase, pursuant to which such “Absolute Share Limit” is automatically increased on the first day of each calendar year commencing on January 1, 2022 and ending on January 1, 2030 in an amount equal to the lesser of (x) 2.5% of the total number of shares of common stock outstanding on the last day of the immediately preceding calendar year and (y) a number of shares as determined by the Board. Restricted stock, stock options and restricted stock units are counted on a one-for-one basis. The securities reflected in the table above do not reflect vested and unvested shares of restricted stock that were issued under the 2021 Equity Plan. Number of securities to be issued upon exercise or vesting includes securities that may be issued upon satisfaction of performance criteria. The maximum number of shares that may be granted under the 2021 Employee Stock Purchase Plan is 1,525,000 shares. |
| (2) | Weighted average exercise price relates only to outstanding options. |
| (3) | Represents shares issuable under the Class B LP Option Grant Agreement after conversion of the pre-IPO options pursuant to the form of option conversion notice in connection with our IPO. The Class B Options expire ten years subsequent to the date of grant. The Company will not make future grants under the Class B LP Option Grant Agreement. See also Note 10 to our audited financial statements included in our 2021 Form 10-K. |
OWNERSHIP OF SECURITIES The following table sets forth information regarding the beneficial ownership of shares of our common stock as of April 26, 2022 by (1) each person known to us to beneficially own more than 5% of our outstanding common stock, (2) each of our directors and named executive officers and (3) all of our directors and executive officers as a group. Beneficial ownership is determined in accordance with the rules of the SEC, and includes common stock of which that person has the right to acquire beneficial ownership within 60 days of April 26, 2022. | | | | | | | | | Name | | Amount and Nature of
Beneficial Ownership | | | Percent of Common Stock
Outstanding | | Greater than 5% Stockholders: | | | | | | | | | Entities affiliated with Silver Lake(1) | | | 89,880,679 | | | | 58.8% | | Named Executive Officers and Directors: | | | | | | | | | Scott Staples(2) | | | 4,442,020 | | | | 2.9% | | David L. Gamsey(3) | | | 692,970 | | | | * | | Joseph Jaeger(4) | | | 903,516 | | | | * | | Joseph Osnoss(5) | | | 115,936 | | | | * | | Susan R. Bell(6) | | | 5,000 | | | | * | | James L. Clark(6) | | | 5,000 | | | | * | | John Rudella(5) | | | 15,224 | | | | * | | Judith Sim(6) | | | 5,000 | | | | * | | Bianca Stoica(5) | | | 7,811 | | | | * | | All executive officers and directors as a group
(10 persons)(7) | | | 5,881,667 | | | | 4.1% | |
| * | Indicates less than one percent of common stock. |
| (1) | Consists of 89,557,840 shares of common stock held of record by SLP Fastball Aggregator, L.P. and 322,839 shares of common stock held by Silver Lake Group, L.L.C. SLP V Aggregator GP, L.L.C. is the general partner of SLP Fastball Aggregator, L.P. Silver Lake Technology Associates V, L.P. is the managing member of SLP V Aggregator GP, L.L.C. SLTA V (GP), L.L.C. is the general partner of Silver Lake Technology Associates V, L.P. Silver Lake Group, L.L.C., is the managing member of SLTA V (GP), L.L.C. The managing members of Silver Lake Group, L.L.C. are Egon Durban, Kenneth Hao, Gregory Mondre, and Joseph Osnoss. The principal business address for each of the entities identified in this paragraph is c/o Silver Lake Group, L.L.C., 2775 Sand Hill Road, Suite 100 Menlo Park, CA 94025. |
| (2) | Includes 1,520,866 shares of unvested restricted stock and 643,800 shares underlying vested options. |
| (3) | Includes 316,849 shares of unvested restricted stock and 134,409 shares underlying vested options. |
| (4) | Includes 443,585 shares of unvested restricted stock and 188,626 shares underlying vested options. The number of shares of common stock reported includes 10,000 shares underlying RSUs that vest within 60 days of April 26, 2022. |
| (5) | Mr. Osnoss is a Managing Partner and Managing Member of Silver Lake, and each of Mr. Rudella and Ms. Stoica is a Director of Silver Lake. |
| (6) | The number of shares of common stock reported includes 5,000 shares underlying RSUs that vest within 60 days of April 26, 2022. |
| (7) | Includes 2,281,300 shares of unvested restricted stock and 1,015,757 shares underlying vested options. |
TRANSACTIONS WITH RELATED PERSONS Statement of Policy Regarding Transactions with Related Persons Our Board of Directors has adopted a written Related Person Transaction Policy to assist it in reviewing, approving and ratifying transactions with related persons and to assist us in the preparation of related disclosures required by the SEC. This proxy is solicitedRelated Person Transaction Policy supplements our other policies that may apply to transactions with related persons, such as the Corporate Governance Guidelines of our Board of Directors and our Global Code of Conduct and Ethics. The Related Person Transaction Policy provides that all transactions with related persons covered by the policy must be reviewed and approved or ratified by the Audit Committee or disinterested and independent members of the Board of Directors and that any employment relationship or transaction involving an executive officer and any related compensation must be approved or recommended for the approval of the Board of Directors by the Compensation Committee. In reviewing transactions with related persons, the Audit Committee or disinterested members of the Board of Directors, as applicable, will consider all relevant facts and circumstances, including, without limitation: the relationship of the related person to the Company; the nature and extent of the related person’s interest in the transaction; the material terms of the transaction; the importance of the transaction both to the Company and to the related person; the business rationale for engaging in the transaction; whether the transaction would likely impair the judgment of a director or executive officer to act in the best interest of the Company; whether the value and the terms of the transaction are substantially similar as compared to those of similar transactions previously entered into by the Company with non-related persons, if any; and any other matters that management or the Audit Committee or disinterested directors, as applicable, deem appropriate. The Audit Committee or disinterested members of the Board of Directors, as applicable, will not approve or ratify any related person transaction unless it determines in good faith that, upon consideration of all relevant information, the related person transaction is in, or is not inconsistent with, the best interests of the Company. The Audit Committee or the disinterested and independent members of the Board of Directors, as applicable, may also conclude, upon review of all relevant information, that the transaction does not constitute a related person transaction and thus that no further review is required under the policy. Generally, the Related Person Transaction Policy applies to any current or proposed transaction that would be required to be disclosed pursuant to Item 404(a) of Regulation S-K in which: the Company was or is to be a participant; the amount involved exceeds $120,000; and any related person (i.e., a director, director nominee, executive officer, greater than 5% beneficial owner and any immediate family member of such person) had or will have a direct or indirect material interest. Transactions Related to Directors, Equity Holders, and Executive Officers Stockholders’ Agreement In connection with the IPO, we entered into a stockholders’ agreement with Silver Lake, Workday, Inc. and management stockholders. This agreement grants Silver Lake the right to nominate to our Board of Directors a number of directors proportionate to the percentage of the issued and outstanding common stock owned by Silver Lake and its affiliates and certain transferees so long as Silver Lake and its affiliates and certain of their transferees own at least 5% of our outstanding common stock. In addition, in the event of a vacancy on the Board of Directors, Silver Lake, its affiliates and certain transferees who designated such director shall have the right to have the vacancy filled by a new Silver Lake director-designee. In addition, the stockholders’ agreement grants to Silver Lake and its affiliates and certain of their transferees certain governance rights for as long as Silver Lake and its affiliates and certain of their transferees maintain ownership of at least 25% of our outstanding common stock, including rights of approval over change of control transactions, entry into joint ventures or similar business alliance having a fair market value of more than $100 million, incurrence of debt for borrowed money in excess of $100 million, the increase or reduction in the size of our Board of Directors, the initiation of any liquidation, dissolution, bankruptcy or other insolvency proceeding, appointment or termination of our chief executive officer, or any material change in the nature of our business. In the stockholders’ agreement, we granted Silver Lake and Workday, Inc. the right to cause us, at our expense, to file registration statements under the Securities Act covering resales of our common stock held by Silver Lake and Workday, Inc. Under the stockholders’ agreement, certain holders of registrable securities party thereto are also provided with customary “piggyback” registration rights with certain exceptions. The stockholders’ agreement also requires us to indemnify certain of our stockholders and their affiliates in connection with any registrations of our securities. The stockholders’ agreement imposes significant restrictions on transfers of shares of our common stock held by management stockholders immediately prior to the closing of the IPO. Generally, shares are nontransferable by any means, except (i) certain transfers to a management stockholder’s estate or trust, (ii) transfers approved by our Board of Directors, (iii) transfers to us or our designee, (iv) transfers in amounts not to exceed the applicable “catch-up amount” to be determined based on sales of common stock by Silver Lake and (v) pursuant to the proper exercise of piggyback registration rights. Such transfer restrictions terminate upon the earliest of (i) the 18-month anniversary of the closing of the IPO, (ii) the first date following the closing of the IPO as of which Silver Lake holds less than 25% of our issued and outstanding shares of common stock and (iii) a change of control where the consideration paid includes publicly traded securities. Agreements with Officers In addition, we have certain agreements with our officers which are described in the section entitled “Executive Compensation.” Director Indemnification We have entered into indemnification agreements with our directors, which agreements require us to indemnify these individuals to the fullest extent permitted under Delaware law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified. We believe that these indemnification and advancement provisions and insurance are useful to attract and retain qualified directors. STOCKHOLDER PROPOSALS FOR THE 2023 ANNUAL MEETING If any stockholder wishes to propose a matter for consideration at our 2023 annual meeting of stockholders (the “2023 Annual Meeting”), the proposal should be mailed by certified mail return receipt requested, to our Corporate Secretary, First Advantage Corporation, 1 Concourse Parkway NE, Suite 200, Atlanta, Georgia 30328. To be eligible under the SEC’s stockholder proposal rule (Rule 14a-8(e) of the Exchange Act) for useinclusion in our Proxy Statement for the 2023 Annual Meeting, a proposal must be received by our Corporate Secretary on or before December 29, 2022. Failure to deliver a proposal in accordance with this procedure may result in it not being deemed timely received. In addition, our Bylaws permit stockholders to nominate candidates for director and present other business for consideration at our annual meeting of stockholders. To make a director nomination or present other business for consideration at the 2023 Annual Meeting, you must submit a timely notice in accordance with the procedures described in our Bylaws. To be timely, a stockholder’s notice must be delivered to the Corporate Secretary at the principal executive offices of our Company not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our 2023 Annual Meeting, such a proposal must be received on or after February 15, 2023, but not later than March 17, 2023. In the event that the date of the 2023 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from the anniversary date of this year’s Annual Meeting of Stockholders, notice by the stockholder to be timely must be so delivered not earlier than the 120th day prior to the 2023 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2023 Annual Meeting or the tenth day following the day on which public announcement of the date of the 2023 Annual Meeting is first made. The Bylaws have additional requirements that must also be followed in connection with submitting nominations or other business at an annual meeting. In addition to satisfying the foregoing requirements under the Company’s bylaws, to comply with the universal proxy rules (once effective), shareholders who intend to solicit proxies in support of director nominees other than First Advantage’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than April 29, 2008.17, 2023. HOUSEHOLDING OF PROXY MATERIALS SEC rules permit companies and intermediaries such as brokers to satisfy delivery requirements for proxy statements and notices of internet availability of proxy materials with respect to two or more stockholders sharing the same address by delivering a single proxy statement or a single notice addressed to those stockholders. This process, which is commonly referred to as “householding,” provides cost savings for companies by reducing printing and mailing costs. While the Company does not household, some brokers with account holders who are Company stockholders may household proxy materials, delivering a single proxy statement or notice of internet availability of proxy materials to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be householding materials to your address, householding will generally continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate proxy statement or notice of internet availability of proxy materials, or if your household is receiving multiple copies of these documents and you wish to request that future deliveries be limited to a single copy, please notify your broker. You can also request prompt delivery of a copy of the Proxy Statement and Annual Report by contacting us in writing at First Advantage Corporation, 1 Concourse Parkway NE, Suite 200, Atlanta, Georgia 30328 or by phone at (888) 314-9761. OTHER BUSINESS The sharesBoard does not know of any other matters to be brought before the meeting. If other matters are presented, the proxy holders have discretionary authority to vote all proxies in accordance with their best judgment. | | | | | By Order of the Board of Directors, | | | | |
| | | | | Bret T. Jardine Executive Vice President, General Counsel & Corporate Secretary |
We make available, free of charge on our website, all of our filings that are made electronically with the SEC, including Forms 10-K, 10-Q and 8-K. To access these filings, go to our website (https://investors.fadv.com/financials-filings/sec-filings). Copies of our Annual Report on Form 10-K for the year ended December 31, 2021, including financial statements and schedules thereto, filed with the SEC, are also available without charge to stockholders upon written request addressed to: Corporate Secretary First Advantage Class A Corporation 1 Concourse Parkway NE, Suite 200 Atlanta, Georgia 30328 
YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/FA • Cast your vote online P.O. BOX 8016, CARY, NC 27512-9903 Have your Proxy Card ready Follow the simple instructions to record your vote PHONE Call 1-866-506-3604 Use any touch-tone telephone Have your Proxy Card ready Follow the simple recorded instructions MAIL Mark, sign and date your Proxy Card Fold and return your Proxy Card in the postage-paid envelope provided You must register to attend the meeting online and/or Class B common stock you hold onparticipate at www.proxydocs.com/FA First Advantage Corporation Annual Meeting of Stockholders For Stockholders of record as of willApril 18, 2022 TIME: Wednesday, June 15, 2022 10:00 AM, Eastern Time PLACE: Annual Meeting to be voted as you specifyheld live via the Internet—please visit www.proxydocs.com/FA for more details. This proxy is being solicited on behalf of the reverse side. By signingBoard of Directors The undersigned hereby appoints Bret T. Jardine and dating this proxy, you revoke all prior proxies and appoint Anand Nallathambi and Julie Waters,Steven Marks (the “Named Proxies”), and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote yourall the shares as directed onof capital stock of First Advantage Corporation which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters shown on the reverse side.
If no choice is specified the proxy will be voted “FOR” the nominees for director listed herein, and at the discretion of the proxy holders onupon such other matters thatas may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the Annual Meetingmeeting and all adjournments.
See reverse for voting instructions.
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The Board of Directors Recommends a Vote FOR all nominees listed below.
| | | | | | | | | | | | | | | | | | | 1. Election of directors: | | 01 | | Parker Kennedy | | 06 | | Donald Nickelson | | ¨ | | | Vote FOR all nominees (except as marked) | | ¨ | | | Vote WITHHELD from all nominees | | | 02 | | Anand Nallathambi | | 07 | | Donald Robert | | | | | | | | | | | 03 | | J. David Chatham | | 08 | | Jill Kanin-Lovers | | | | | | | | | | | 04 | | Barry Connelly | | 09 | | D. Van Skilling | | | | | | | | | | | 05 | | Frank McMahon | | 10 | | David Walker | | | | | | | | |
| | | (Instructions: To withhold authority to vote for any indicated nominee, write the number(s) of the nominee(s) in the box provided to the right.) | | |
revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
First Advantage Corporation Annual Meeting of Stockholders Please make your marks like this: X THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR EACH NOMINEE LISTED HEREIN.ON PROPOSALS 1 AND 2 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. Election of Class I Directors FOR WITHHOLD 1.01 Scott Staples FOR #P2# #P2# 1.02 Susan R. Bell FOR #P3# #P3# FOR AGAINST ABSTAIN 2. To ratify the appointment of Deloitte & Touche LLP as our independent registered public FOR accounting firm for 2022. #P4# #P4# #P4# 3. To consider such other business as may properly come before the Annual Meeting and any adjournments or postponements thereof. You must register to attend the meeting online and/or participate at www.proxydocs.com/FA Authorized Signatures—Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date | | | Address Change? Mark Box ¨ Indicate changes below:
| | Dated: | | | | | | | | | | | | | Signature(s) in Box | | | Please sign exactly as your name(s) appear on Proxy. If held in joint tenancy, all persons must sign. Trustees, administrators etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the proxy. Partnerships and limited liability companies should sign in partnership or applicable entity name by an authorized person. |
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