UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.  )

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þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

 

FIDELITY NATIONAL INFORMATION SERVICES, INC.

(Name of Registrant as Specified In Its Charter)

 

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

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Fidelity National Information Services, Inc.

601 Riverside Avenue

Jacksonville, Florida 32204

 

April 18, 2007

 

Dear Shareholder:

 

On behalf of the Board of Directors, I cordially invite you to attend the annual meeting of shareholders of Fidelity National Information Services, Inc. The meeting will be held on May 23, 2007 at 10:00 a.m., Eastern Daylight Time, in the Peninsular Auditorium at 601 Riverside Avenue, Jacksonville, Florida 32204. The formal Notice of Annual Meeting and Proxy Statement for this meeting are attached to this letter.

 

The Notice of Annual Meeting and Proxy Statement contain more information about the annual meeting, including:

 

 

Whether or not you plan to attend the annual meeting, please vote by one of these outlined methods to ensure that your shares are represented and voted in accordance with your wishes. This will help us avoid the expense of sending follow-up letters to ensure that a quorum is represented at the annual meeting, and will assure that your vote is counted if you are unable to attend.

 

On behalf of the Board of Directors, I thank you for your cooperation.

 

Sincerely,

 

 

William P. Foley, II

Executive Chairman

 

Fidelity National Information Services, Inc.

601 Riverside Avenue

Jacksonville, Florida 32204

 

 

NOTICE OF

ANNUAL MEETING OF SHAREHOLDERS

 

 

To the Shareholders of Fidelity National Information Services, Inc.

 

Notice is hereby given that the 2007 Annual Meeting of Shareholders of Fidelity National Information Services, Inc. will be held on May 23, 2007 at 10:00 a.m., Eastern Daylight Time, in the Peninsular Auditorium at 601 Riverside Avenue, Jacksonville, Florida 32204 for the following purposes:

 

 

The Board of Directors set April 16, 2007 as the record date for the meeting. This means that owners of Fidelity National Information Services, Inc. common stock at the close of business on that date are entitled to:

 

 

All shareholders are cordially invited to attend the meeting in person. However, even if you plan to attend the annual meeting in person, please read these proxy materials and cast your vote on the matters that will be presented at the meeting. You may vote your shares through the Internet, by telephone, or by mailing the enclosed proxy card. Instructions for our registered shareholders are described under the question “How do I vote?” on page 1 of the proxy statement.

 

Sincerely,

 

 

Todd C. Johnson

Corporate Secretary

 

Jacksonville, Florida

April 18, 2007

 

 

PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE (OR VOTE VIA TELEPHONE OR INTERNET) TO ASSURE REPRESENTATION OF YOUR SHARES.

 

 

TABLE OF CONTENTS

 

Fidelity National Information Services, Inc.
601 Riverside Avenue
Jacksonville, Florida 32204

 

 

PROXY STATEMENT

 

 

The enclosed proxy is solicited by the Board of Directors (the “Board”) of Fidelity National Information Services, Inc. (the “Company” or “FIS”) for use at the Annual Meeting of Shareholders to be held on May 23, 2007 at 10:00 a.m., Eastern Daylight Time, or at any adjournment thereof, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Shareholders. The meeting will be held in the Peninsular Auditorium at 601 Riverside Avenue, Jacksonville, Florida.

 

It is anticipated that such proxy, together with this proxy statement, will be first mailed on or about April 25, 2007 to all shareholders entitled to vote at the meeting.

 

The Company’s principal executive offices are located at 601 Riverside Avenue, Jacksonville, Florida 32204, and its telephone number at that address is (904) 854-8100.

 

Unless stated otherwise or the context otherwise requires, all references in this proxy statement to “us,” “we,” “our,” the “Company” or “FIS” are to Fidelity National Information Services, Inc., a Georgia corporation formerly known as Certegy Inc., and its subsidiaries; all references to “Certegy” are to Certegy Inc., and its subsidiaries, prior to the Certegy Merger described below; all references to “Former FIS” are to Fidelity National Information Services, Inc., a Delaware corporation, and its subsidiaries, prior to the Certegy Merger; all references to “old FNF” are to Fidelity National Financial, Inc., a Delaware corporation that owned a majority of our shares through November 9, 2006; and all references to FNF are to Fidelity National Financial, Inc. (formerly known as Fidelity National Title Group, Inc.), formerly a subsidiary of old FNF.

 

Our business operations and organizational structure result from the February 1, 2006, business combination of Certegy and Former FIS (the Certegy Merger), pursuant to which Former FIS was merged into a wholly-owned subsidiary of Certegy. Immediately after the Certegy Merger, the stockholders of Former FIS, including its then-majority stockholder old FNF, owned approximately 67.4% of our outstanding common stock. Accordingly, for accounting and financial reporting purposes, the Certegy Merger was treated as a reverse acquisition of Certegy by Former FIS under the purchase method of accounting pursuant to U.S. generally accepted accounting principles. The Certegy Merger was also a tax free merger under section 368(a) of the Internal Revenue Code. Following the Certegy Merger, our name changed from “Certegy Inc.” to “Fidelity National Information Services, Inc.” and our New York Stock Exchange trading symbol from “CEY” to “FIS”. Old FNF (after other transactions in which it distributed all of its assets other than its ownership in FIS) merged with and into FIS (the FNF Merger). Upon completion of the FNF Merger, FIS became an independent publicly traded company, and old FNF ceased to exist. The assets distributed by old FNF prior to the FNF Merger included its ownership in Fidelity National Title Group, Inc., which following the FNF Merger renamed itself Fidelity National Financial, Inc.

 

Your shares can be voted at the annual meeting only if you vote by proxy or if you are present and vote in person. Even if you expect to attend the annual meeting, please vote by proxy to assure that your shares will be represented.

 

Who is entitled to vote?

 

All record holders of FIS common stock as of the close of business on April 16, 2007 are entitled to vote. On that day, 192,548,626 shares were issued and outstanding and eligible to vote. Each share is entitled to one vote on each matter presented at the annual meeting.

 

What shares are covered by the proxy card?

 

The proxy card covers all shares held by you of record (i.e., shares registered in your name), and any shares held for your benefit in FIS’s 401(k) plan and Employee Stock Purchase Plan.

 

What if I am a beneficial holder rather than an owner of record?

 

If you hold your shares through a broker, bank, or other nominee, you will receive separate instructions from the nominee describing how to vote your shares.

 

How do I vote?

 

There are three ways to vote by proxy, other than by attending the annual meeting and voting in person:

 

 

What does it mean to vote by proxy?

 

It means that you give someone else the right to vote your shares in accordance with your instructions. In this case, we are asking you to give your proxy to our Executive Chairman and our President and Chief Executive Officer, who are sometimes referred to as the “proxy holders.” By giving your proxy to the proxy holders, you assure that your vote will be counted even if you are unable to attend the annual meeting. If you give your proxy but do not include specific instructions on how to vote on a particular proposal described in this proxy statement, the proxy holders will vote your shares in accordance with the recommendation of the Board for such proposal.

 

On what am I voting?

 

You will be asked to consider two proposals at the annual meeting.

 

 

What happens if other matters are raised at the meeting?

 

Although we are not aware of any matters to be presented at the annual meeting other than those contained in the Notice of Annual Meeting, if other matters are properly raised at the meeting in accordance with the procedures specified in FIS’s charter and bylaws, all proxies given to the proxy holders will be voted in accordance with their best judgment.

 

What if I submit a proxy and later change my mind?

 

If you have submitted your proxy and later wish to revoke it, you may do so by doing one of the following: giving written notice to the Corporate Secretary; submitting another proxy bearing a later date (in any of the permitted forms); or casting a ballot in person at the annual meeting.

 

Who will count the votes?

 

FIS’s proxy solicitor, Morrow & Co., will serve as proxy tabulator and count the votes, and the results will be certified by the inspector of election.

 

How many votes must each proposal receive to be adopted?

 

The following votes must be received:

 

 

What constitutes a quorum?

 

A quorum is present if a majority of the outstanding shares of common stock entitled to vote is represented. Broker non-votes and abstentions will be counted for purposes of determining whether a quorum is present.

 

What are broker non-votes?

 

Broker non-votes occur when nominees, such as banks and brokers holding shares on behalf of beneficial owners, do not receive voting instructions from the beneficial holders at least ten days before the meeting. If that happens, the nominees may vote those shares only on matters deemed “routine” by the NYSE, such as election of directors or ratification of auditors. Nominees cannot vote on non-routine matters, unless they receive voting instructions from beneficial holders, resulting in so-called “broker non-votes.” For purposes of the Georgia law requirement that the number of shares present or represented by proxy and entitled to vote approving proposal No. 2 exceed the number of shares present or represented by proxy and entitled to vote opposing it, broker non-votes will have no effect.

 

What effect does an abstention have?

 

With respect to Proposal No. 1, abstentions or directions to withhold authority will not be included in vote totals and will not affect the outcome of the vote. With respect to Proposal No. 2, for purposes of the Georgia law requirement that the number of shares present or represented by proxy and entitled to vote approving proposal No. 2 exceed the number of shares present or represented by proxy and entitled to vote opposing it, abstentions will have no effect.

 

Who pays the cost of soliciting proxies?

 

We pay the cost of the solicitation of proxies, including preparing and mailing the Notice of Annual Meeting of Shareholders, this proxy statement and the proxy card. Following the mailing of this proxy statement, directors, officers and employees of the Company may solicit proxies by telephone, facsimile transmission or other personal contact, for which services such persons will receive no additional compensation. Brokerage houses and other nominees, fiduciaries and custodians who are holders of record of shares of common stock will be requested to forward proxy soliciting material to the beneficial owners of such shares and will be reimbursed by the Company for their charges and expenses in connection therewith at customary and reasonable rates. In addition, the Company has retained Morrow & Co. to assist in the solicitation of proxies for an estimated fee of $12,500 plus reimbursement of expenses.

 

What if I share a household with another shareholder?

 

We have adopted a procedure approved by the Securities and Exchange Commission, or SEC, called “householding.” Under this procedure, shareholders of record who have the same address and last name and do not participate in electronic delivery of proxy materials will receive only one copy of our Annual Report and Proxy Statement unless one or more of these shareholders notifies us that they wish to continue receiving individual copies. This procedure will reduce our printing costs and postage fees. Shareholders who participate in householding will continue to receive separate proxy cards. Also, householding will not in any way affect dividend check mailings. If you are eligible for householding, but you and other shareholders of record with whom you share an address currently receive multiple copies of our Annual Reports and/or Proxy Statements, or if you hold stock in more than one account, and in either case you wish to receive only a single copy of the Annual Report or Proxy Statement for your household, please contact our transfer agent, Continental Stock Transfer & Trust (in writing: 17 Battery Place, 8th Floor, New York, NY 10004; by telephone: (212) 509-4000). If you participate in householding and wish to receive a separate copy of the 2006 Annual Report or this Proxy Statement, or if you do not wish to participate in householding and prefer to receive separate copies of future Annual Reports and/or Proxy Statements, please contact Continental Stock Transfer & Trust as indicated above. Beneficial shareholders can request information about householding from their banks, brokers or other holders of record. The Company hereby undertakes to deliver promptly upon written or oral request, a separate copy of the annual report to shareholders, or proxy statement, as applicable, to a Company shareholder at a shared address to which a single copy of the document was delivered.

 

Information About the Nominees for Election

 

The names of the nominees for election as directors of the Company and certain biographical information concerning each of them is set forth below:

 

 

Lee A. Kennedy.  Lee A. Kennedy has served as a director and Chief Executive Officer of FIS since March 5, 2001. He served as the Chairman of FIS from his appointment to this position in February 2002 until February 2006. Prior to his re-appointment as President in February 2006, Mr. Kennedy served as the President of FIS from March 2001 until May 2004. Prior to that, he served as President, Chief Operating Officer and director of Equifax Inc., a leading provider of consumer credit and other business information, from June 1999 until June 29, 2001. From June 1997 to June 1999, Mr. Kennedy served as Executive Vice President and Group Executive of Equifax. From July 1995 to July 1997 he served as President of Equifax Payment Services, a division of Equifax. Mr. Kennedy currently serves as a director of Equifax.

 

Keith W. Hughes.  Keith W. Hughes has served as a director of FIS since August 2002. Mr. Hughes is currently a self-employed consultant to domestic and international financial services institutions. From November

2000 to April 2001, he served as Vice Chairman of Citigroup Inc. Mr. Hughes was named to that position in 2000 when Citigroup acquired Associates First Capital Corporation, a leading finance company, where he had served as Chairman and Chief Executive Officer since February 1995. Mr. Hughes joined Associates in 1981 and held several other executive positions during his tenure there, including President from August 1991 to February 1995. Mr. Hughes serves as a director of Texas Industries Inc., a major producer of cement, concrete and structural steel, and Pilgrim’s Pride, the second largest poultry company in the United States.

 

James K. Hunt.  James K. Hunt has served as a director of FIS since April 2006. Mr. Hunt is the founding Managing Partner of Bison Capital Asset Management, LLC, which is a multi-fund limited private equity partnership, which makes non-control equity investments in middle market growth companies, and has been for more than five years. Prior to founding Bison Capital, Mr. Hunt was the President of SunAmerica Corporate Finance and Executive Vice President of SunAmerica Investments (subsequently, AIG SunAmerica).

 

Richard N. Massey.  Richard N. Massey has served as a director of FIS since November 2006. Mr. Massey also served as a director of old FNF from January 2006 until the FNF Merger in November 2006. Mr. Massey also became a director of FNF in October 2006. Mr. Massey is currently Executive Vice President and General Counsel of Alltel Corporation and has been since January 2006. From 2000 until 2006, Mr. Massey served as Managing Director of Stephens Inc., a private investment bank, during which time his financial advisory practice focused on software and information technology companies.

 

Information About Our Directors Continuing in Office

 

Term Expiring 2008

 

 

Marshall Haines.  Marshall Haines has served as a director of FIS since February 2006. Since March 2004, Mr. Haines has been a principal of Tarrant Partners, L.P., an affiliate of Texas Pacific Group. Prior to joining Tarrant Partners, Mr. Haines worked with Bain Capital for ten years, specializing in leveraged buyout transactions in a variety of industries.

 

David K. Hunt.  David K. Hunt has served as a director of FIS since June 2001. Mr. Hunt is a private investor. He previously served as the non-executive Chairman of the Board of OnVantage, Inc. from October 2004 until December 2005. Prior to that, he served as the Chairman and Chief Executive Officer of PlanSoft Corporation, an internet-based business-to-business solutions provider in the meeting and convention industry, a position he held from May 1999 to October 2004. From January 1997 to April 1999, he served as President, Chief Executive Officer, and a director of Global Payment Systems, a transaction processing service provider.

 

Cary H. Thompson has served as a director of FIS since February 2006 and served as a director of old FNF from 1992 until the FNF Merger in November 2006. Mr. Thompson became a director of FNF in October 2006. Mr. Thompson currently is a Senior Managing Director with Bear Stearns & Co. Inc. and has been since 1999. From 1996 to 1999, Mr. Thompson was a director and Chief Executive Officer of Aames Financial Corporation. Mr. Thompson served as a managing director of Nat West Capital Markets from May 1994 to June 1996. Mr. Thompson also serves on the Board of Directors of SonicWall Corporation.

 

Term Expiring 2009

 

 

William P. Foley, II.  William P. Foley, II has served as a director of FIS since February 2006 and is the Executive Chairman of the Board. As of October 2006, Mr. Foley became the Chairman and Chief Executive Officer of FNF and has served as a director of FNF since its formation on May 24, 2005. Mr. Foley was also the Chairman of the Board and Chief Executive Officer of old FNF, and served in both capacities since that company’s formation in 1984. Mr. Foley is a director of Florida Rock Industries, Inc.

 

Robert M. Clements.  Robert M. Clements was elected to the Board on July 1, 2006. Mr. Clements is the Chairman and CEO of EverBank Financial Corp., the holding company for EverBank. Mr. Clements joined EverBank in 1994 and has served as President and CEO of EverBank Financial Corporation since its formation in 1997. Prior to joining EverBank, Mr. Clements was a Vice President of Merrill Lynch & Co., where he was a member of the firm’s leveraged buyout group. Mr. Clements was previously elected to the Board of Directors of FNF in April 2006, but resigned from the FNF Board of Directors to join the FIS Board.

 

Thomas M. Hagerty.  Thomas M. Hagerty has served as a director of FIS since February 2006. Mr. Hagerty served as a director of old FNF from January 2005 until the FNF Merger in November 2006. Mr. Hagerty also became a director of FNF in October 2006. Mr. Hagerty is a Managing Director of Thomas H. Lee Partners, L.P. From July 2000 through April 2001, Mr. Hagerty also served as the Interim Chief Financial Officer of Conseco, Inc. On December 17, 2002, Conseco, Inc. voluntarily commenced a case under Chapter 11 of the United States Code in the United States Bankruptcy Court, Northern District of Illinois, Eastern Division. He has been employed by Thomas H. Lee Partners, L.P. and its predecessor, Thomas H. Lee Company, since 1988. Prior to joining Thomas H. Lee Partners, L.P., Mr. Hagerty worked in the mergers and acquisitions department of Morgan Stanley & Co., Inc. Mr. Hagerty currently serves as a director of MGIC Investment Corporation.

 

Daniel D. (Ron) Lane.  Daniel D. (Ron) Lane has served as a director of FIS since February 2006. Mr. Lane served as a director of old FNF from 1989 until the FNF Merger in November 2006. Mr. Lane became a director of FNF in October 2006. Since February 1983, Mr. Lane has been a principal, Chairman and Chief Executive Officer of Lane/ Kuhn Pacific, Inc., a corporation that comprises several community development and home building partnerships, all of which are headquartered in Newport Beach, California. He is on the Board of Directors of CKE Restaurants, Inc. Mr. Lane also is an active member of the Board of Trustees of the University of Southern California.

 

The bylaws of the Company provide that our Board shall consist of at least five and no more than fifteen directors. Our directors are divided into three classes, each class as nearly equal in number as possible. The Board determines the number of directors within these limits. The term of office of only one class of directors expires in each year. The directors elected at this annual meeting will hold office for a term of three years or until their successors are elected and qualified. The current number of directors is eleven.

 

At this annual meeting, the following persons, each of whom is a current director of the Company, have been nominated to stand for election to the Board for a three-year term expiring in 2010:

 

Lee A. Kennedy
Keith W. Hughes
James K. Hunt
Richard N. Massey

 

The Board believes that each of the nominees will stand for election and will serve if elected as a director.

 

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” EACH OF THE LISTED NOMINEES.

 

General Information About KPMG LLP

 

Although shareholder ratification of the appointment of our independent registered public accounting firm is not required by our bylaws or otherwise, we are submitting the selection of KPMG LLP to our shareholders for ratification as a matter of good corporate governance practice. Even if the selection is ratified, the audit committee in its discretion may select a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of us and our shareholders. If our shareholders do not ratify the audit committee’s selection, the audit committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of independent registered public accounting firm.

 

In choosing our independent registered public accounting firm, our audit committee conducts a comprehensive review of the qualifications of those individuals who will lead and serve on the engagement team, the quality control procedures the firm has established, and any issue raised by the most recent quality control review of the firm. The review also includes matters required to be considered under the SEC rules on “Auditor Independence,” including the nature and extent of non-audit services to ensure that they will not impair the independence of the accountants.

 

Representatives of KPMG LLP are expected to be present at the annual meeting. These representatives will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

 

Principal Accounting Fees and Services

 

The Audit Committee has appointed KPMG LLP to audit the consolidated financial statements of the Company for the 2007 fiscal year. KPMG LLP has continuously acted as independent registered public accounting firm for the Company commencing in March 2006. Prior to that date, Ernst & Young LLP was our independent registered public accounting firm, as discussed below. For services rendered to us during or in connection with our years ended December 31, 2006 and 2005, we were billed the following fees by the respective accounting firm:

 

 

In accordance with the requirements of the Sarbanes-Oxley Act of 2002, all audit and audit-related work and all non-audit work performed by KPMG LLP is approved in advance by the audit committee, including the proposed fees for such work.

 

Audit Fees.  Audit fees consisted principally of fees for the audits, registration statements and other filings related to the Company’s 2006 and 2005 financial statements, and audits of the Company’s subsidiaries required for regulatory reporting purposes, including billings for out of pocket expenses incurred.

 

Audit-Related Fees.  Audit-related fees in 2006 and 2005 consisted principally of fees for SAS 70 audits and audits of employee benefit plans including billings for out of pocket expenses incurred.

 

Tax Fees.  Tax fees for 2006 and 2005 consisted principally of fees for tax compliance, tax planning and tax advice.

 

All Other Fees.  All other fees for 2006 consisted principally of fees for identity theft/privacy enablement services and information technology risk assessment services. The Company incurred no similar fees in 2005.

 

Approval of Accountants’ Services

 

SEC rules require that, before a company’s independent auditor is engaged to provide any audit or permissible non-audit services, the engagement must be pre-approved by the audit committee or entered into pursuant to pre-approval policies and procedures established by the audit committee. The Company’s Audit Committee has not established a pre-approval policy at this time. Rather, the Audit Committee as a whole reviews and pre-approves all audit and permissible non-audit services to be provided by KPMG LLP.

 

Changes in and Disagreements with Accountants

 

As a result of the consummation of the Certegy Merger on February 1, 2006, the stockholders of Former FIS acquired a majority of the outstanding common stock of FIS; consequently, for accounting and financial reporting purposes, the business combination was treated as a reverse acquisition of Certegy by Former FIS. Ernst & Young LLP, or Ernst & Young, was the independent registered public accounting firm for Certegy, while KPMG LLP served as the independent auditors for Former FIS. On March 13, 2006, FIS’s Audit Committee decided to engage KPMG LLP as FIS’s independent registered public accounting firm to examine its consolidated financial statements for the fiscal year ending December 31, 2006, and chose not to continue the engagement of Ernst & Young after the completion of the audit for the fiscal year ended December 31, 2005.

 

Ernst & Young’s reports on Certegy’s consolidated financial statements for the year ended December 31, 2005 did not contain an adverse opinion or disclaimer of opinion, nor were such reports qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audit of the financial statements for the fiscal year ended December 31, 2005 including the subsequent interim period through March 13, 2006, there were no disagreements between FIS and Ernst & Young on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of Ernst & Young, would have caused it to make reference to the subject matter of the disagreements in connection with its report on FIS’s consolidated financial statements for the fiscal year ended December 31, 2005. None of the reportable events described under Item 304(a)(1)(v) of Regulation S-K occurred during fiscal year 2005 or subsequently through March 13, 2006. During fiscal year 2005 and subsequently through March 13, 2006, FIS did not consult with Ernst & Young with respect to any of the matters or events set forth in Items 304(a)(2)(i) and (ii) of Regulation S-K. In addition, there were no disagreements with KPMG LLP, whether resolved or unresolved, on any matter of accounting principles or practices, financial statement disclosures, or auditing scope or procedure that, if not resolved to KPMG LLP’s satisfaction, would have caused by KPMG LLP to make reference to the subject matter of the disagreement in connection with its report for the fiscal year ended December 31, 2006. For more information concerning KPMG LLP’s engagement by the Company, see the section of this proxy statement entitled “Report of the Audit Committee.”

 

THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE “FOR” THE RATIFICATION OF KPMG LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE 2007 FISCAL YEAR.

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth information regarding beneficial ownership of our common stock by each shareholder who is known by the Company to beneficially own 5% or more of our common stock;

 

 

 

 

Security Ownership of Management and Directors

 

The following table sets forth information regarding beneficial ownership of our common stock by:

 

 

The number of our common shares beneficially owned by each individual or group is based upon information in documents filed by such person with the SEC, other publicly available information or information available to us. Percentage ownership in the following table is based on 192,460,824 shares of FIS common stock outstanding as of March 31, 2007. Unless otherwise indicated, each of the shareholders has sole voting and investment power with respect to the shares of common stock beneficially owned by that shareholder. The number of shares beneficially

owned by each shareholder is determined under rules issued by the SEC. The information is not necessarily indicative of beneficial ownership for any other purpose.

 

 

 

 

The executive officers of the Company as of the date of this Proxy Statement are set forth in the table below. Certain biographical information with respect to those executive officers who do not also serve as directors follows the table. There are no family relationships among the executive officers, directors or nominees for director, except that Messrs. Francis R. and Michael A. Sanchez are brothers.

 

 

Brent B. Bickett has served as an Executive Vice President, Strategic Planning of FIS since February 2006. Mr. Bickett joined old FNF in January 1999 and currently holds the position of President of FNF and he has served in that position since October 2006. Mr. Bickett formerly held the position of Executive Vice President, Corporate Finance of old FNF, and was responsible for mergers and acquisitions and business development efforts. Prior to joining old FNF, Mr. Bickett was a member of the Investment Banking Division of Bear, Stearns and Co. Inc. from August 1990 until January 1999, serving since 1997 as a Managing Director of that firm’s real estate, gaming, lodging and leisure group.

 

Jeffrey S. Carbiener has served as Executive Vice President and Chief Financial Officer of FIS since February 2006, and served as the Executive Vice President and Group Executive, Check Services, from June 2001 until February 2006. Mr. Carbiener previously served as Senior Vice President, Equifax Check Solutions, a unit of Equifax Inc., from February 1998 until June 2001. Prior to that, he held various other positions with Equifax business units since 1991.

 

Francis K. Chan has served as Senior Vice President, Chief Accounting Officer and Controller since December 2005 and manages the accounting and financial reporting functions. Additionally, Mr. Chan is responsible for the Company’s Sarbanes-Oxley 404 compliance. From July 1995 through December 2005, Mr. Chan served as Vice President and Controller of old FNF. Prior to that, Mr. Chan was employed by KPMG LLP.

 

Ronald D. Cook has served as Senior Vice President and General Counsel since May 2006, and served as the Company’s Senior Vice President and Associate General Counsel from September 2002 through February 2006. Prior to that, Mr. Cook founded and managed a private law firm in Tampa, Florida from August 1998 through September 2003. He was Assistant Vice President and Associate Group Counsel for Equifax Inc. from May 1993 until August 1998.

 

Kelly D. Feese has served as Senior Vice President and Director of Human Resources since February 2006. In that capacity, she is responsible for overseeing all personnel and employee benefit programs for the Company, as well as employment-related legal matters. Prior to joining FIS, Ms. Feese served as Senior Vice President and Director of Human Resources for old FNF since 2003. Ms. Feese began her career with FNF in 1990 as a member of

the legal department and was subsequently promoted to Senior Vice President, Employment Counsel for old FNF in 2002.

 

Michael L. Gravelle has served as Executive Vice President, Legal of FIS since June 2006 and served as Senior Vice President and General Counsel of FIS from February 2006 until May 2006. Prior to that, since 2003, he served as Senior Vice President of old FNF and as Senior Vice President, General Counsel and Secretary of Former FIS. Mr. Gravelle joined Former FIS from Alltel Information Services, Inc., which he joined in 1993 and where he served as Senior Vice President, General Counsel and Secretary since 2000.

 

Gary A. Norcross has served as Executive Vice President, Integrated Financial Solutions of FIS since February 2006. Prior to that, he held the position of President of Integrated Financial Solutions of Former FIS since June 1996. He served Former FIS in various capacities since May 1988.

 

Frederick C. Parvey has served as Executive Vice President and Chief Information Officer since May 2006. Prior to his appointment as CIO, Mr. Parvey served as Senior Vice President, Director of Real Estate and Construction from April 2003. Mr. Parvey joined Former FIS from Alltel Information Services, where he served as Senior Vice President, U.S. Operations from January 2002 until April 2003 and as Senior Vice President, Technology Services, Residential Lending Solutions from May 1997 to January 2002.

 

Francis R. Sanchez has served as Executive Vice President, Enterprise Banking Solutions of FIS since February 2006. Prior to that, since April 2004, he served as an Executive Vice President of Former FIS and President of the Leveraged Product Development division. Prior to joining Former FIS, Mr. Sanchez served in many positions at Sanchez Computer Associates, Inc. since 1980, including as Chief Executive Officer. Sanchez Computer Associates, Inc., a Nasdaq listed international bank technology company that specialized in real-time banking systems for the global market, enterprise customer integration systems and complete internet banking outsourcing, was acquired by Former FIS in April 2004.

 

Michael A. Sanchez has served as Executive Vice President, International of FIS, and is responsible for FIS business globally outside of North America. Prior to that, he was in charge of international business for Former FIS. Prior to joining Former FIS in April 2004, he was the founder and Chairman of Sanchez Computer Associates, Inc., having served with that company since its inception in 1980.

 

Daniel T. Scheuble has served as Executive Vice President, Mortgage Processing Services of FIS since April 2006. Mr. Scheuble joined Former FIS in 2003 as Chief Information Officer of the Mortgage Servicing Division. Before joining Former FIS, Mr. Scheuble was Chief Information Officer at GMAC Residential and prior to that, he was the Executive Vice President and Chief Information Officer of Loan Operations for HomeSide Lending.

 

Alan L. Stinson has served as an Executive Vice President, Finance of FIS since February 2006. Mr. Stinson joined old FNF in October 1998 as Executive Vice President of Financial Operations, and in June 1999 was appointed Chief Financial Officer of old FNF. Mr. Stinson is the Co-Chief Operating Officer of FNF and he has served in that position since October 2006. Prior to his employment with old FNF, Mr. Stinson was Executive Vice President and Chief Financial Officer of Alamo Title Holding Company from 1994 to 1998. He was employed by Deloitte & Touche, LLP from 1980 to 1994.

 

Eric Swenson has served as Executive Vice President, Lender Processing Services of FIS since April 2006. Prior to that time, Mr. Swenson was an Executive Vice President of old FNF and served as the President of the Lender Outsourcing Division of Former FIS from January 2004 until April 2006. From August 2001 through December 2003, Mr. Swenson held several positions with Fidelity National Information Solutions, Inc., which was a majority-owned subsidiary of old FNF, including Executive Vice President, Chief Operating Officer and President. Prior to August 2001, Mr. Swenson was an Executive Vice President and Regional Manager with old FNF.

 

Introduction

 

In this compensation discussion and analysis, we provide an overview of our compensation programs, including the objectives of such programs and the rationale for each element of compensation, for our Executive Chairman and our Chief Executive Officer, as well as our other named executive officers.

 

We also provide information regarding compensation decisions made by our former parent company, old FNF, which relate to compensation paid to our named executive officers. Certain executives, including Messrs. Foley, Stinson, and Bickett, provided services during 2006 to both old FNF and FNF, in addition to us. The compensation committee of old FNF set the total compensation to be paid to these “shared executives” for such services, and allocated a portion of the total compensation to us based on the proportion of each executive’s time expected to be spent providing services to us. Our compensation committee reviewed and approved the allocation. Amounts that we report in this proxy statement reflect only compensation allocated to and paid by us.

 

Although we underwent significant organizational changes in 2006, including the consummation of the Certegy Merger in February 2006 and the FNF Merger in November 2006, our compensation objectives, as summarized below, remain consistent.

 

Objectives of our Compensation Program

 

We have a history of delivering strong results for our shareholders, and we believe our practice of linking compensation with corporate performance has contributed significantly to our track record. Since the Certegy Merger (February 1, 2006) through the end of our first quarter 2007 (March 31, 2007), we have delivered a shareholder return of 15.8%. Our current market capitalization is approximately $9.2 billion, which reflects an increase of approximately $1.7 billion since the Certegy Merger.

 

Our compensation programs are designed to attract and motivate high performing executive talent with the objective of delivering long-term stockholder value. We believe that the most effective way of accomplishing this objective is by linking the compensation of our named executive officers to our specific annual and long-term strategic goals and thereby aligning the interests of the executives with those of our stockholders. To this end, a significant portion of each named executive officer’s total annual compensation is linked to company-wide performance goals with specific, measurable results. Executives will generally be rewarded only when and if the pre-established performance goals are met or exceeded. We also believe that material stock ownership by executives assists in aligning their interests with those of our stockholders and strongly motivates executives to build long-term stockholder value. Our stock-based compensation programs assist in creating this link. Finally, we desire to provide our executives with total compensation that is competitive relative to the compensation paid to similarly situated executives of our peer companies, and which is sufficient to motivate, reward and retain those individuals with the leadership abilities and skills necessary for achieving our ultimate objective: the creation of long-term stockholder value.

 

Role of Compensation Committee and Executive Officers in Determining Executive Compensation

 

Our compensation committee has the responsibility to approve and monitor all compensation for our named executive officers. Our Executive Chairman and our Chief Executive Officer also play an important role in determining executive compensation levels, by making recommendations to the compensation committee regarding salary adjustments and incentive awards for their direct reports. These recommendations are based on a review of an executive’s performance and job responsibilities. The compensation committee may exercise its discretion in modifying any recommended salary adjustments or incentive awards for our executives. The Executive Chairman and the Chief Executive Officer do not make recommendations to the compensation committee with respect to their own compensation.

 

With respect to 2006 compensation levels for our shared executives, Messrs. Foley, Stinson and Bickett, our compensation committee reviewed and approved the compensation levels allocated to us by old FNF. Prior to the FNF Merger, our compensation committee met again and re-approved the 2006 compensation levels for these executives. The objectives of old FNF’s compensation programs and the role of its compensation committee and executive officers in setting compensation were essentially the same as for our company.

 

Messrs. Kennedy and Carbiener served as executive officers of Certegy prior to the Certegy Merger and now only provide services to us. In connection with the consummation of the Certegy Merger, we entered into employment agreements with Messrs. Kennedy and Carbiener, replacing their change in control agreements. These employment agreements establish, among other things, minimum annual salaries and annual cash incentive targets. They also provide for the payment of a cash bonus upon closing of the Certegy Merger in consideration for foregoing certain change in control payments and other matters, all as described below. These agreements were approved by our board of directors in connection with the approval of the Certegy Merger in September 2005. Our compensation committee reviewed and approved the 2006 compensation levels set forth in their employment agreements.

 

Establishing Executive Compensation Levels

 

We believe total compensation must be set at market competitive levels to attract highly qualified talent, motivate our employees to perform at their highest levels, reward outstanding achievement, and retain those individuals with the leadership abilities and skills necessary for building long-term stockholder value.

 

We generally set total compensation for our executives near the 50^th percentile, or market median, of our peer comparables. We consider an executive to be competitively paid if the executive’s total compensation is within 85% to 115% of the market median. However, when necessary to attract or retain exceptional talent, we may target compensation above the median.

 

In furtherance of the objectives of our compensation program, our compensation committee, together with the compensation committee of old FNF, engaged Strategic Apex Group, an independent compensation consultant, to conduct an annual review of our compensation programs for our named executive officers, as well as for other key executives. Strategic Apex Group provided the committees with relevant market data and alternatives to consider when making compensation decisions for the named executive officers.

 

Strategic Apex Group relied on nationally recognized executive compensation surveys as the primary source of market research presented to the compensation committees with respect to our named executive officers.

 

With respect to the total compensation levels for our shared executives, Messrs. Foley, Stinson, and Bickett, Strategic Apex Group provided the compensation committee of old FNF with a marketplace analysis based on industry specific surveys, as well as a survey based on certain old FNF peer companies. Strategic Apex Group also provided the compensation committee of old FNF with an estimate of the total compensation to be allocated to us for the services of the shared executives based upon an estimate of the time the executives would spend providing services to us. The allocation was approved by the compensation committee of old FNF, and subsequently approved by our compensation committee.

 

With respect to the total compensation levels for Messrs. Kennedy and Carbiener, Strategic Apex Group provided our compensation committee with a marketplace analysis based on a general industry survey consisting of about 340 companies, excluding financial services companies, and a financial services survey consisting of about 150 financial services companies. Strategic Apex Group also reviewed and compared each element of the total compensation of Messrs. Kennedy and Carbiener, as well as other key executives, against the compensation of senior management at two of our competitors, Fiserv, Inc. and First Data Corporation.

 

The compensation information provided by Strategic Apex Group, including salary surveys and peer comparables, provided a basis for the evaluation of total executive compensation paid to our named executive officers.

 

The compensation committee also considered other important factors, including our financial performance and the individual performance, experience, and responsibilities of our executives, including the impact the executives are expected to have on our future success. The committee also considered the importance of motivating,

rewarding and retaining top-caliber executive talent, as well as the roles our executives played in the successful consummation of the Certegy Merger and the FNF Merger.

 

The approach to benchmarking compensation in the marketplace described above is annually reviewed and updated by our compensation committee. Due to the significant organizational changes we experienced in 2006, the compensation committee has modified the list of peer companies it expects to consider for 2007.

 

Allocation of Total Compensation for 2006

 

We compensate our executives through a mix of base salary, annual cash incentive and long-term equity-based incentive. The compensation committee generally allocates the amount of compensation under each component based on its determination as to the appropriate ratio of performance-based compensation to other forms of regularly-paid compensation. In making this determination, the compensation committee considers the level of responsibility, the individual skills, experience and, contribution of each executive officer, and the ability of each executive to impact company-wide performance and create long-term stockholder value. The compensation committee also seeks to provide each executive officer with a level of assured cash compensation commensurate with the executive’s professional status in the form of base salary, although our main emphasis is on at-risk, performance-based pay.

 

The majority of our named executive officer’s 2006 target compensation was allocated to performance-based incentives, including annual cash incentives, long-term equity awards and, with respect to Messrs. Kennedy and Carbiener, a special bonus in consideration of the cancellation of their change in control agreements in connection with the closing of the Certegy Merger.

 

The compensation committee believes performance-based incentive compensation comprising 80% to 85% of total target compensation is appropriate. The compensation committee also believes a significant portion of annual performance-based compensation should be allocated to equity-based compensation in order to effectively align the interests of the executives with our stockholders. For 2006, a majority of our named executive officers’ total compensation was provided in the form of nonqualified stock options.

 

2006 Executive Compensation Components

 

For 2006, the principal components of compensation for our named executive officers consisted of:

 

 

We also provided our executives with certain retirement and employee benefit plans as well as limited perquisites, although these items are not significant components of our compensation programs.

 

Below is a summary of each element of our 2006 compensation programs.

 

Base Salary

 

We seek to provide each of our named executive officers with a level of assured cash compensation for services rendered during the year sufficient, together with performance-based incentive awards, to motivate the executive to consistently perform at a high level. However, base salary is a relatively small component of our total compensation package, as our emphasis is on performance-based, at-risk pay. The compensation committee typically reviews salary levels at least annually as part of our performance review process, as well as in the event of promotions or other changes in executive officers’ positions with the company.

 

Annual Performance-Based Cash Incentive

 

Our practice is to award annual cash incentives based upon the achievement of specific performance goals. At our 2006 annual meeting, our stockholders approved our Annual Incentive Plan, or annual incentive plan, which

was designed to allow cash incentive awards paid thereunder to qualify as deductible performance-based compensation within the meaning of section 162(m) of the Internal Revenue Code. The annual incentive plan includes a set of performance goals that can be used in setting incentive awards under the plan. We use the annual incentive plan to provide a substantial portion of the executives’ total compensation in the form of at-risk pay.

 

Annual incentive targets are established by our compensation committee for each named executive officer as a percentage of the individual’s base salary. Actual payout, however, can range from zero to two times (three times for Mr. Foley) the target incentive opportunity, depending on achievement of the pre-established goals. No annual incentive payments are made to an executive officer, however, if the pre-established, minimum performance threshold is not met. The ranges of possible payments under the annual incentive plan are set forth in the Grants of Plan-Based Awards table under the column Estimated Possible Payouts Under Non-Equity Incentive Plan Awards.

 

During the first quarter of 2006, our compensation committee established performance goals relating to the incentive targets described above and set a threshold performance level that needed to be achieved before any awards could be paid. These performance goals were specific, table driven measures, and the compensation committee did not retain discretion to increase the amount of the incentive awards.

 

Annual incentive awards for 2006 for the named executive officers were based on meeting weighted objectives for organic revenue growth (2006 target of 5% growth) and earnings before interest, taxes, depreciation, and amortization, or EBITDA (2006 target of 10% growth), two key measures in evaluating the performance of our business. For 2006, our actual financial results relating to the performance goals exceeded the target levels (our 2006 organic revenue growth was 8.8%, and 2006 EBITDA growth was 10.6%). Consequently, the incentive awards earned by our named executive officers for 2006 exceeded their target levels. The annual incentive amounts earned under the annual incentive plan were approved by the compensation committee and are reported in the Summary Compensation Table under the column Non-Equity Incentive Plan Compensation.

 

Certain Contractual Bonuses in Connection with the Certegy Merger

 

Messrs. Kennedy and Carbiener received bonuses in connection with the Certegy Merger on February 1, 2006. These bonuses are required by the employment agreements with Messrs. Kennedy and Carbiener, which replaced their change in control agreements. A description of the employment agreements can be found in the narrative following the Grants of Plan-Based Awards table and in the Potential Payments Upon Termination or Change in Control section. As consideration for the cancellation of the change in control agreements, their agreement to remain employed by us following the Certegy Merger, and their agreement to abide by certain restrictive covenants contained in the employment agreements, Mr. Kennedy was paid $6,250,000 and Mr. Carbiener was paid $500,000, in each case, upon the completion of the Certegy Merger. The bonus amounts paid to the executives are listed in the Bonus column in the Summary Compensation Table.

 

Long-Term Equity Incentive Awards

 

We use our stockholder approved amended and restated Stock Incentive Plan, or stock plan, for long-term incentive awards. We have historically used nonqualified stock options as our primary form of equity compensation, although the plan is an omnibus plan that authorizes us to grant stock appreciation rights, restricted stock and restricted stock units. We believe stock options assist in our goal of creating long term stockholder value by linking the interests of our named executive officers, who are in positions to directly influence stockholder value, with the interests of our stockholders. A description of our stock plan, as well as certain equity plans we assumed in connection with the Certegy Merger and the FNF Merger, can be found under the heading “Stock Incentive Plans” following the Grants of Plan-Based Awards table.

 

Our general practice is to make awards during the fourth quarter of each year at a meeting of the compensation committee held following the release of third quarter earnings. We also may grant awards in connection with significant new hires or promotions. However, due to the significant organizational changes we underwent in 2006, grants made in 2006 were awarded to correspond with the closing of the Certegy Merger and the FNF Merger, as explained below.

 

In 2006, the compensation committee approved grants of nonqualified stock options to each of our named executive officers pursuant to our stock plan. Messrs. Kennedy and Carbiener were awarded an option to purchase 750,000 and 350,000 shares, respectively, pursuant to the terms of their employment agreements. Mr. Foley was awarded an option to purchase 830,000 shares, and Messrs. Stinson and Bickett were each awarded an option to purchase 230,000 shares, in connection with the closing of the FNF Merger. Stock option award levels for Messrs. Kennedy and Carbiener were agreed to in connection with the negotiation of their employment agreements and are set forth in the their employment agreements. Stock option award levels for Messrs. Foley, Stinson, and Bickett were determined based on an analysis of peer comparables data provided to the compensation committee by Strategic Apex Group. In each case, the stock options were awarded with an exercise price equal to the fair market value of a share on the date of grant, vest proportionately each year over three years based on continued employment with us (except for the option grant to Mr. Carbiener, which vests over four years), and have a seven year term. Prior to exercise of the stock options, the named executive officers do not have voting or dividend rights with respect to the shares underlying the options.

 

Further details of the stock option grants made in 2006 to our named executive officers are provided in the Grant of Plan-Based Awards table and related footnotes.

 

In addition, we assumed certain outstanding stock options and shares of restricted stock in connection with the Certegy Merger and the FNF Merger. The awards were converted into options to purchase shares of our stock and shares of our restricted stock, with equitable adjustments to preserve their intrinsic value. These assumed awards remain subject to the terms and conditions of the plans under which they were awarded.

 

Further details of the assumed equity awards held by our named executive officers are provided in the Outstanding Equity Awards at Fiscal Year End table and related footnotes.

 

Finally, upon the consummation of the Certegy Merger on February 1, 2006, all options to purchase Certegy stock and all shares of restricted stock and restricted stock units outstanding immediately prior to the Certegy Merger vested in full, including certain outstanding awards held by Messrs. Kennedy and Carbiener. In addition, upon the consummation of the Certegy Merger, all options to purchase Former FIS stock with performance-based vesting conditions vested in full, including certain outstanding options held by Messrs. Foley, Stinson and Bickett.

 

Retirement and Employee Benefit Plans

 

Our named executive officers generally participate in the same compensation and benefit plans as our other executives and employees, with the exception of Messrs. Kennedy and Carbiener who also participate in the frozen Fidelity National Information Services, Inc. Pension Plan, or pension plan, and the Special Supplemental Executive Retirement Plan, or special plan. In addition, Mr. Kennedy participates in our Supplemental Executive Retirement Plan, or SERP. All employees in the United States, including our named executive officers, are eligible to participate in our 401(k) plan and our Employee Stock Purchase Plan, or ESPP. In addition, our named executive officers generally participate in the same health and welfare plans as our other employees.

 

Pension Plan

 

Executive pensions are not a significant component of our compensation programs. However, in connection with the Certegy Merger, we acquired the pension plan. Shortly thereafter, we froze the pension plan, effective May 31, 2006, and do not offer pensions to new employees. No pension benefits will accrue after the freeze date. Of the named executive officers, only Messrs. Kennedy and Carbiener participate in the pension plan. We discuss material terms of the pension plan in the narrative following the Pension Benefits table.

 

Supplemental Executive Retirement Plan

 

The SERP was adopted by Certegy for certain of its executive officers, including Mr. Kennedy, and became effective on November 5, 2003. We assumed sponsorship of the SERP in the Certegy Merger. The SERP is a nonqualified defined benefit pension plan that is intended to provide retirement benefits that supplement the retirement benefits provided under the pension plan. Mr. Kennedy is the only named executive officer who participates in the SERP. Material terms of the SERP are described in the narrative following the Pension Benefits table.

 

Executive Life and Supplemental Retirement Benefit Plan and Special Supplemental Executive Retirement Plan

 

We also maintain the Executive Life and Supplemental Retirement Benefit Plan, which we refer to as the split dollar plan, and the Special Supplemental Executive Retirement Plan, which we refer to as the special plan. The split dollar plan was established by Certegy in connection with the spin-off of Certegy from Equifax Inc. The purpose of the plan was to reward executives for their service to Certegy and to provide an incentive for future service and loyalty. The plan provides benefits through life insurance policies on the lives of participants. To address changes in applicable law resulting from the Sarbanes-Oxley Act of 2002, the split dollar plan was amended in 2003 to eliminate certain executive officers’ deferred cash accumulation benefits under the split dollar plan. As a result of the amendment, Messrs. Kennedy and Carbiener retained death benefits under the split dollar plan, but no longer have deferred cash accumulation benefits under the split dollar plan. To replace the lost cash accumulation benefits, Certegy adopted the special plan. The special plan provides participants with a benefit opportunity comparable to the deferred cash accumulation benefit opportunity that would have been available had they been able to continue participation in the split dollar plan. Information regarding Messrs. Kennedy’s and Carbiener’s benefits under the special plan, as well as material terms of the special plan, can be found in the Nonqualified Deferred Compensation table and accompanying narrative.

 

401(k) Plan

 

We sponsor a defined contribution savings plan that is intended to be qualified under section 401(a) of the Internal Revenue Code. The plan contains a cash or deferred arrangement under section 401(k) of the Internal Revenue Code, as well as an employee stock ownership plan feature. Participating employees may contribute up to 40% of their eligible compensation, but not more than statutory limits (generally $15,000 in 2006). We contribute an amount equal to 50% of each participant’s voluntary contributions under the plan, up to a maximum of 6% of eligible compensation for each participant. Matching contributions are initially invested in shares of our common stock, although a participant may subsequently direct the trustee to invest those funds in any other investment option available under the plan.

 

A participant may receive the value of his or her vested account balance upon termination of employment. A participant is always 100% vested in his or her voluntary contributions. Vesting in matching contributions occurs on a pro rata basis over a period of three years.

 

Deferred Compensation Plans

 

We also provide our named executive officers, as well as other key employees, with the opportunity to defer receipt of their compensation under a non-qualified deferred compensation plan. None of the named executive officers currently have account balances under the deferred compensation plan. Mr. Carbiener participated in Certegy’s deferred compensation plan. In connection with the Certegy Merger, Certegy’s deferred compensation plan was terminated and Mr. Carbiener’s account balance was distributed. This distribution is reflected in the Nonqualified Deferred Compensation table.

 

Employee Stock Purchase Plan

 

We also sponsor an ESPP which provides a program through which our executives and employees can purchase shares of our common stock through payroll deductions and through matching employer contributions. Participants may elect to contribute between 3% and 15% of their salary into the ESPP through payroll deduction. At the end of each calendar quarter, we make a matching contribution to the account of each participant who has been continuously employed by us or a participating subsidiary for the last four calendar quarters. For most employees, matching contributions are equal to 1/3 of the amount contributed during the quarter that is one year earlier than the quarter in which the matching contribution is made. For certain officers, including our named executive officers, and for employees who have completed at least ten consecutive years of employment with us, the matching contribution is 1/2 of such amount. The matching contributions, together with the employee deferrals, are used to purchase shares of our common stock on the open market. Our stockholders approved the ESPP at our 2006 annual meeting.

 

Health and Welfare Benefits

 

We sponsor various broad-based health and welfare benefit plans for our employees. Certain executives, including the named executive officers, are provided with additional life insurance. The taxable portion of the premiums on this additional life insurance is reflected in the Summary Compensation Table under the column All Other Compensation and related footnote.

 

Perquisites and Other Benefits

 

We provide few perquisites to our executives. In general, the perquisites provided are intended to help our executives be more productive and efficient and to protect us and the executive from certain business risks and potential threats. In 2006, certain executive officers received the following perquisites: assistance with financial planning, personal use of corporate aircraft and club memberships. The compensation committee regularly reviews the perquisites granted to our executive officers and believes they are reasonable and within market practice. Further detail regarding executive perquisites in 2006 can be found in the Summary Compensation Table under the column All Other Compensation and related footnote.

 

Post-Termination Compensation and Benefits

 

We have entered into employment agreements with each of our named executive officers. These agreements provide us and the executives with certain rights and obligations following a termination of employment, and in some instances, following a change in control. We believe these agreements are necessary to protect our legitimate business interests, as well as to protect the executives in the event of certain termination events. A description of the material terms of the agreements can be found in the narrative following the Grants of Plan-Based Awards table and in the Potential Payments Upon Termination or Change in Control section.

 

Share Ownership Guidelines

 

We established formal stock ownership guidelines on March 14, 2006 for all corporate officers, including the named executive officers, and members of our board, to encourage such individuals to own a multiple of their base salary (or annual retainer) in our common stock. The guidelines call for the executive to reach the ownership multiple within five (5) years. Unvested shares of restricted stock count towards meeting the guidelines. The guidelines, including those applicable to non-employee directors, are as follows:

 

 

Each of our named executive officers and each of our non-employee directors, except Robert M. Clements, Marshall Haines and James K. Hunt, met the stock ownership guidelines as of December 31, 2006. The compensation committee may consider the guidelines and the executive’s satisfaction of such guidelines in determining executive compensation.

 

Tax and Accounting Considerations

 

The compensation committee considers the impact of tax and/or accounting treatment in determining executive compensation.

 

Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount we may deduct in any one year for compensation paid to our Chief Executive Officer and each of our other four most highly-paid executive officers. There is, however, an exception to this limit for certain performance-based compensation. Compensation paid under our annual incentive plan and our stock plan is generally deductible as performance-based compensation. However, in certain situations, the compensation committee may approve compensation that will not meet these requirements.

 

Beginning on January 1, 2003, we elected to account for stock-based payments, including stock option grants, in accordance with the Statement of Financial Accounting Standards No. 123. Effective January 1, 2006, we began accounting for stock-based payments in accordance with Statement of Financial Accounting Standards No. 123 (revised), which we refer to as FAS 123(R).

 

Compensation Committee Report

 

The compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by item 402(b) of Regulation S-K with management, and the compensation committee recommended to the board that the Compensation Discussion and Analysis be included in this Proxy Statement.

 

THE COMPENSATION COMMITTEE

 

Thomas M. Hagerty, Chairman

Cary H. Thompson

Daniel D. (Ron) Lane

 

Executive Compensation

 

The following table contains compensation information for our named executive officers as defined in Item 402(a)(3) of Regulation S-K as promulgated by the SEC. The information in this table includes compensation earned by the individuals for services with FIS or with old FNF while FIS was still an operating segment of old FNF. The amounts of compensation shown below do not necessarily reflect the compensation such person will receive in the future, which could be higher or lower.

 

Summary Compensation Table

 

 

 

 

 

The following table sets forth information concerning awards granted to the named executive officers during the fiscal year ended December 31, 2006. It does not include awards that were assumed in the FNF Merger:

 

Grants of Plan-Based Awards

 

 

 

 

Employment Agreements

 

We have entered into employment agreements with a limited number of our senior executives, including our named executive officers. Additional information regarding post-termination benefits provided under these employment agreements can be found in the “Potential Payments Upon Termination or Change in Control” section.

 

William P. Foley, II

 

We entered into a three-year employment agreement with Mr. Foley, effective October 24, 2006, to serve as our Executive Chairman, with a provision for automatic annual extensions beginning on the first anniversary of the effective date and continuing thereafter unless either party provides timely notice that the term should not be extended. Under the terms of the agreement, Mr. Foley’s minimum annual base salary is $500,000, with an annual cash bonus target equal to 250% of his annual base salary, with higher or lower amounts payable depending on performance relative to targeted results. Mr. Foley is entitled to supplemental disability insurance sufficient to provide at least 2/3 of his pre-disability base salary, and Mr. Foley and his eligible dependents are entitled to medical and other insurance coverage we provide to our other top executives as a group. Mr. Foley is also entitled to the payment of initiation and membership dues in any social or recreational clubs that we deem appropriate to maintain our business relationships, and he is eligible to receive equity grants under our equity incentive plans, as determined by our compensation committee.

 

Mr. Foley’s employment agreement contains provisions related to the payment of benefits upon certain termination events. The details of these provisions are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Lee A. Kennedy

 

We entered into a four year employment agreement with Mr. Kennedy, effective as of the consummation of the Certegy Merger on February 1, 2006, to serve as our Chief Executive Officer. Under the terms of the agreement, Mr. Kennedy’s minimum annual base salary is $750,000, with an annual cash bonus target equal to 200% of his annual base salary, with higher or lower amounts payable depending on performance relative to targeted results. Mr. Kennedy is entitled to supplemental disability insurance sufficient to provide at least 2/3 of his pre-disability base salary, and Mr. Kennedy and his eligible dependents are entitled to medical and other insurance coverage we provide to our other top executives as a group. Mr. Kennedy is also entitled to the payment of initiation and membership dues in any social or recreational clubs that we deem appropriate to maintain our business relationships. Pursuant to the agreement, Mr. Kennedy was granted stock options to purchase 750,000 shares of our common stock as of the effective date of the consummation of the Certegy Merger, vesting in three annual installments beginning on the first anniversary of the effective date.

 

Mr. Kennedy’s employment agreement contains provisions related to the payment of benefits upon certain termination events. The details of these provisions are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Jeffrey S. Carbiener

 

We entered into a three year employment agreement with Mr. Carbiener, effective as of the consummation of the Certegy Merger on February 1, 2006, to serve in an executive and managerial capacity. Mr. Carbiener presently serves as our Executive Vice President and Chief Financial Officer. Under the terms of the agreement, Mr. Carbiener’s minimum annual base salary is $400,000, with an annual cash bonus target equal to 150% of his annual base salary, with higher or lower amounts payable depending on performance relative to targeted results.

Mr. Carbiener is entitled to our standard benefits available to our other executives. Pursuant to the agreement, Mr. Carbiener was granted stock options to purchase 350,000 shares of our common stock as of the effective date of the consummation of the Certegy Merger, vesting in four annual installments beginning on the first anniversary of the effective date.

 

Mr. Carbiener’s employment agreement contains provisions related to the payment of benefits upon certain termination events. The details of these provisions are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Alan L. Stinson

 

We entered into a three-year employment agreement with Mr. Stinson, effective October 24, 2006, to serve as our Executive Vice President, Finance, with a provision for automatic annual extensions. Under the terms of the agreement, Mr. Stinson’s minimum annual base salary is $300,000, with an annual cash bonus target equal to 150% of his annual base salary, with higher or lower amounts payable depending on performance relative to targeted results. Mr. Stinson is entitled to supplemental disability insurance sufficient to provide at least 2/3 of his pre-disability base salary, and Mr. Stinson and his eligible dependents are entitled to medical and other insurance coverage we provide to our other top executives as a group. Mr. Stinson is also entitled to the payment of initiation and membership dues in any social or recreational clubs that we deem appropriate to maintain our business relationships, and he is eligible to receive equity grants under our equity incentive plans, as determined by our compensation committee.

 

Mr. Stinson’s employment agreement contains provisions related to the payment of benefits upon certain termination events. The details of these provisions are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Brent B. Bickett

 

We entered into a three-year employment agreement with Mr. Bickett, effective October 24, 2006, to serve as our Executive Vice President, Strategic Planning, with a provision for automatic annual extensions. Under the terms of the agreement, Mr. Bickett’s minimum annual base salary is $300,000, with an annual cash bonus target equal to 150% of his annual base salary, with higher or lower amounts payable depending on performance relative to targeted results. Mr. Bickett is entitled to supplemental disability insurance sufficient to provide at least 2/3 of his pre-disability base salary, and Mr. Bickett and his eligible dependents are entitled to medical and other insurance coverage we provide to our other top executives as a group. Mr. Bickett is also entitled to the payment of initiation and membership dues in any social or recreational clubs that we deem appropriate to maintain our business relationships, and he is eligible to receive equity grants under our equity incentive plans, as determined by our compensation committee.

 

Mr. Bickett’s employment agreement contains provisions related to the payment of benefits upon certain termination events. The details of these provisions are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Stock Incentive Plans

 

We use our stockholder approved amended and restated Stock Incentive Plan, or stock plan, for long-term incentive compensation of our executive officers. The stock plan is administered by our compensation committee and permits the granting of stock options, including incentive and nonqualified stock options, restricted stock, and restricted stock units. The awards may be subject to time-based and/or performance-based vesting, and if specified in the award agreement, may become fully vested if we experience a change in control. Further details are set forth in the “Potential Payments Upon Termination or Change in Control” section.

 

Our compensation committee is authorized to make awards under the stock plan to our and our subsidiary’s officers, key employees and other service providers, as well as our non-employee directors. The stock plan was most recently submitted for stockholder approval at our 2006 annual meeting, at which time stockholders approved an increase in the number of shares of common stock reserved for issuance under the plan by 4,000,000 shares.

We also maintain a long-term incentive plan that we assumed in connection with the Certegy Merger, the Former FIS 2005 Stock Incentive Plan, or Former FIS plan. Certain of our named executive officers continue to hold outstanding stock options under the Former FIS plan, which options we assumed in connection with the Certegy Merger and converted into options to purchase our stock. Although the outstanding awards remain subject to the terms of the Former FIS plan, no further awards may be granted under this plan.

 

In addition, we maintain several long-term incentive plans that we assumed in connection with the FNF Merger, including the FNF 2004 Omnibus Incentive Plan and the amended and restated FNF 2001 Stock Incentive Plan, collectively the assumed FNF stock plans. Prior to the FNF Merger, the compensation committee of old FNF granted awards of stock options and restricted stock to certain officers and non-employee directors of old FNF pursuant to the terms of these plans. Certain of our named executive officers continue to hold outstanding awards under the assumed FNF stock plans, which awards we assumed in connection with the FNF Merger and converted into options to purchase our stock and shares of our restricted stock, as the case may be. Although the outstanding awards remain subject to the terms of the assumed FNF stock plans, the plans have been frozen with respect to new awards and no future awards may be granted under these plans.

 

The following table sets forth information concerning unexercised stock options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2006:

 

Outstanding Equity Awards at Fiscal Year-End

 

 

 

 

The following table sets forth 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 the fiscal year ended December 31, 2006 for each of the named executive officers on an aggregated basis:

 

Option Exercises and Stock Vested

 

The following table sets forth information with respect to each plan that provides for payments or other benefits at, following, or in connection with retirement:

 

Pension Benefits

 

 

 

 

The pension plan is a tax-qualified defined benefit pension plan. This plan became effective in July of 2001, and is a successor plan to the Equifax Inc. U.S. retirement income plan, from which it was spun off. As a successor plan, it carries forward rights and benefits that derive from participants’ employment with Equifax Inc., and is based on the restatement of the Equifax Inc. U.S. retirement income plan that was generally effective January 1, 1997. As previously discussed, we assumed the pension plan in connection with the Certegy Merger and froze it effective May 31, 2006. Full vesting occurred for all active pension plan participants when we froze the plan. No pension benefits will accrue after the freeze date. We will distribute pension plan benefits in the form of lump sums and annuity contracts after we receive a determination letter from the Internal Revenue Service.

 

The pension plan provides normal retirement benefits, early retirement benefits, death benefits and disability benefits. A participant’s normal or early retirement monthly pension benefit is generally determined according to the following formula:

 

 

Final average monthly earnings are based on the 36 month period when the participant’s earnings are the highest and that produces the highest final average monthly earnings amount. Not all compensation earned from us is used in the calculation of benefits. The earnings that are used are the higher of:

 

 

Earnings do not include payments from any equity-based performance incentive plans, deferred bonuses, stock options income, capital gains from shares of stock purchased with stock options, moving expenses, relocation expenses, mileage reimbursement and other special compensation items. In addition, the amount of earnings taken into account in calculating benefits is limited by the annual maximums established by the Internal Revenue Service.

 

Early retirement benefits are provided upon attaining age 55 with at least 5 years of service or age 50 with the sum of age and years of service equal to at least 75. Mr. Kennedy is currently eligible for early retirement benefits under the pension plan. Early retirement benefits are equal to the participant’s normal retirement benefit reduced by 3% per year — 0.25% per month — for the first 5 years and reduced by 5% per year — 5/12% per month — thereafter for the period of time prior to the participant’s normal retirement date. Disability benefits are equal to the participant’s normal retirement benefit and commence when the participant attains age 65; however, eligible participants can elect instead to receive their early retirement benefits on the later of attainment of early retirement age — age 55 with 5 years of service — or the date of termination of employment due to the disability. The death benefits are provided if the participant dies before benefits have commenced. For participants who, as of the date of death, have attained a threshold age and years of service that would entitle them to receipt of retirement benefits, the death benefits are a monthly pension payable in a straight life annuity commencing on the last day of the month coincident with or immediately following the participant’s earliest retirement age, with the amount of the monthly payments equal to the amount that would have been payable to the participant’s surviving spouse if the participant had (1) incurred a termination of employment on his date of death, or, if earlier, his actual date of employment termination, (2) survived to his earliest retirement age, (3) commenced receiving his accrued benefit in the form of a qualified joint and survivor annuity at his earliest retirement age and (4) died immediately thereafter.

 

The normal form of benefit is a straight life annuity; however, if the participant is married when benefits commence, unless waived, benefits are paid in a qualified joint and 50% survivor annuity. Instead of these default payment forms, participants can elect to receive their benefits in any of the following actuarial equivalent forms: a ten year certain and life annuity; a joint and 25%, 33%, 50%, 67%, 75% or 100% survivor annuity; or a straight life annuity.

 

The SERP

 

The SERP provides benefits that supplement benefits under our pension plan. Mr. Kennedy is the only named executive officer who participates in the SERP. Normal retirement benefits under the SERP, which are payable at age 60, are equal to 50% of the participant’s average compensation, multiplied by a fraction — not greater than 1 — equal to the participant’s years of credited service divided by 30 years. Mr. Kennedy’s prior service with predecessor entities is recognized under the SERP. Average compensation is computed by averaging the participant’s compensation for the highest three calendar years in the ten calendar years preceding retirement. Compensation for this purpose includes salary and annual bonuses, but not income from long-term incentive compensation, stock options, restricted stock, restricted stock units or similar grants. Early retirement benefits under the SERP, which a participant is entitled to on the earlier of age 55 with 5 years of service or age 50 with the sum of age and years of service equal to at least 75, are determined under the same formula. Early retirement benefits commence at the participant’s normal retirement age or, at the participant’s election, at an earlier date, subject to a reduction of 5/12 of 1% for each full month or portion thereof that the commencement precedes the first day of the month following the date the participant would reach his normal retirement age. Mr. Kennedy is currently eligible for early retirement benefits under the SERP. Benefits become 100% vested after 10 years of service. The normal form of benefit is a straight life annuity; however, if the participant is married when benefits commence, unless waived, benefits are paid in a qualified joint and 50% survivor annuity. Additionally, instead of these default payment forms, participants can elect to receive their benefits in any of the following actuarial equivalent forms: a ten year certain and life annuity; a joint and 25%, 50%, 75% or 100% survivor annuity; or a lump sum. Benefits under the SERP are reduced by benefits payable under the pension plan and by the benefit, if any, payable on the date of retirement under the special plan described below. We do not have a policy of granting extra years of service under the pension plan or SERP.

 

The following table sets forth information with respect to each defined contribution or other plan that provides for the deferral of compensation on a basis that is not tax-qualified:

 

Nonqualified Deferred Compensation

 

 

 

 

The Certegy Deferred Compensation Plan

 

Certegy maintained a nonqualified deferred compensation plan for senior executives that allowed deferrals of annual base salary and annual and long-term incentives. Participants’ deferrals were credited to book-keeping accounts that were debited or credited to reflect the performance of investment vehicles selected by the participants. The plan was terminated in connection with the Certegy Merger. Mr. Carbiener was our only named executive officer with an account balance in the plan in 2006. He received a distribution of his entire plan account balance in July of 2006.

 

The Special Plan

 

The special plan provides participants with a benefit opportunity comparable to the deferred cash accumulation benefit that would have been available had they been able to continue participation in the split dollar plan. Participants’ interests under the special plan are based on the excess of the cash surrender value of a life insurance policy on the executive over the total premium payments paid by us. A participant’s interest fluctuates based on the performance of investments in which the participants’ interest is deemed invested. The special plan provides that following a change in control, which occurred when we merged with Certegy, the participants may select investments; however, their right to select investments is forfeited if they violate the plan’s non-competition provisions within one year after termination of employment. To date, investment decisions regarding Messrs. Kennedy’s and Carbiener’s participant interests have been made by a third party investment advisor. The table below shows the investments available for selection, as well as the rates of return for those investments for 2006.

 

 

Messrs. Kennedy and Carbiener are fully vested in their special plan benefits, except that their benefits are forfeited if they die or if their employment is terminated by us for cause. For this purpose, the term “cause” means the participant’s willful and continued failure to do his duties even after we make a written demand for performance, or willful actions by the participant that injure us. Benefits are distributed after the plan administrator declares a rollout event, which can be done no sooner than the latest of (1) fifteen years after the participant’s commencement date under the split dollar plan, (2) the participant’s sixtieth birthday or (3) after the participant retires or becomes permanently disabled. For this purpose, the term “retire” means the participant’s termination of employment after (1) turning age sixty-five, (2) turning age fifty-five and having five years of vesting service or (3) turning age fifty and having the participant’s age plus years of benefit service equal at least seventy-five. The administrator may also declare a rollout event if payments under the plan have not yet begun and a participant violates the plan’s non-competition provisions within a one-year period after termination of employment. If a participant terminates for good reason, or if the participant’s job is eliminated, payments must begin fifteen years after the participant’s commencement date under the split dollar plan or after the participant turns sixty years old, whichever is later. For this purpose, the term “good reason” generally means termination of employment by the participant within the period beginning six months before and ending three years after a change in control due to (1) an adverse change in the participant’s title or assignment of duties inconsistent with participant’s position, (2) a reduction of salary, (3) our failure to continue existing incentive, compensation and employee benefit plans or (4) our requiring the participant to move more than 35 miles from the location of the participant’s office prior to a change in control. The Certegy Merger constituted a change in control for these purposes. Participants can also elect to get payments earlier if both (1) seven years have passed since the participant’s commencement date under the split dollar plan and (2) the participant retires or turns sixty years old.

 

A participant can elect to get the payments in either a single lump sum or in installments over a period of between two and ten years. If the participant elects installment payments, we will credit the undistributed principal amount with 5% simple annual interest. If a participant elects to receive a lump sum distribution, we can make the distribution either in cash or by transferring an interest in the policy. If the benefit is less than $10,000, or the

participant violates the plan’s non-competition provisions within a one-year period after termination of employment, then the administrator can force a lump sum distribution. Unless a participant violates the plan’s non-competition provisions within one-year after termination of employment, we will pay an additional gross up based on the administrator’s estimate of the tax savings realized by us by being able to deduct the payments from our federal, state and local taxes. Participants’ benefits derive solely from the terms of the special plan and are unsecured. Participants do not have rights under the insurance policies.

 

In connection with the Certegy Merger, we funded a rabbi trust with sufficient monies to pay all future required insurance premiums under the split-dollar plan and to pay all of the participant interests as defined in the special plan, including with respect to Mr. Carbiener. The amounts necessary to pay the premiums and interests of Mr. Kennedy were previously funded.

 

Potential Payments Upon Termination or Change in Control

 

In this section, we discuss the nature and estimated value of payments and benefits we would provide to our named executive officers in the event of termination of employment or a change in control. The types of termination situations include a voluntary termination by the executive, with and without good reason, a termination by us either for cause or not for cause, termination after a change in control, and termination in the event of disability or death. To arrive at an estimated value of the payments and benefits upon the termination or change in control, the disclosure rules require that we assume the termination and change in control occurred on the last business day of our 2006 fiscal year, which ended December 31. The estimates are considered forward-looking information that fall within the safe harbors for disclosure of such information. The actual payments and benefits that would be provided upon a termination of employment would be based on the named executive officers’ compensation and benefit levels at the time of the termination of employment and the value of accelerated vesting of stock-based awards is dependent on the value of the underlying stock.

 

For each type of employment termination, the named executive officers would be entitled to benefits that are available generally to our domestic salaried employees, such as distributions under our 401(k) savings plan, certain disability benefits and accrued vacation. In accordance with the disclosure rules, we have not described or provided an estimate of the value of any payments or benefits under plans or arrangements that do not discriminate in scope, terms or operation in favor of a named executive officer and that are generally available to all salaried employees. In addition to these generally available plans and arrangements, Messrs. Kennedy and Carbiener also have benefits under the frozen Certegy pension plan, the split dollar plan and the special plan and Mr. Kennedy would receive benefits under our SERP. These plans, and Messrs. Kennedy’s and Carbiener’s benefits under them, are discussed in the Compensation Discussion & Analysis section, the Pension Benefits table and the Nonqualified Deferred Compensation table and accompanying narratives.

 

Potential Payments under Employment Agreements

 

As discussed previously, we have entered into employment agreements with Messrs. Foley, Kennedy, Carbiener, Stinson and Bickett. These agreements contain provisions for the payment of severance benefits following certain termination events. Following is a summary of the payments and benefits our named executive officers would receive in connection with various employment termination scenarios.

 

Under the terms of the employment agreements with Messrs. Foley, Kennedy, Stinson and Bickett, if the executive’s employment is terminated by FIS for any reason, other than for cause or due to disability, or by the executive for good reason or, in the case of Mr. Foley, for any reason during the 6-month period following a change in control, or in the case of Mr. Kennedy, for any reason during the 1-year period following a change in control, then the executive is entitled to receive:

 

 

 

For purposes of the agreements with Messrs. Foley, Kennedy, Stinson and Bickett, “cause” means the executive’s:

 

 

For purposes of the agreements with Messrs. Foley, Kennedy, Stinson and Bickett, “good reason” includes:

 

 

 

 

For purposes of the agreements with Messrs. Foley, Kennedy, Stinson and Bickett, “change in control” means:

 

 

Under the terms of the employment agreement with Mr. Carbiener, if his employment is terminated by FIS for any reason, other than for cause or due to disability, or by the executive for good reason, then he is entitled to receive:

 

 

For purposes of Mr. Carbiener’s agreement, “cause” means the executive’s:

 

 

The term “good reason” means a termination by Mr. Carbiener during the period commencing 60 days and expiring 1 year after a “change in control,” which is defined as:

 

 

If the employment of Messrs. Foley, Kennedy, Carbiener, Stinson, and Bickett is terminated by FIS for cause or by the executive without good reason (except in the cases of Messrs. Foley and Kennedy, who may terminate their employment without good reason during the 6-month period and 1-year period, respectively, following a change in control and receive the full severance benefits described above), our only obligation under the employment agreements is the payment of any accrued obligations.

 

If the employment of Messrs. Foley, Kennedy, Stinson, and Bickett is terminated due to death or disability, we will pay the executive, or his estate:

 

 

In addition, the employment agreements with Messrs. Foley, Kennedy, Stinson and Bickett provide for supplemental disability insurance sufficient to provide at least 2/3 of the executive’s pre-disability base salary. For purposes of the agreements with Messrs. Foley, Kennedy, Stinson and Bickett, the executive will be deemed to have a “disability” if he is entitled to receive long-term disability benefits under our long-term disability plan.

 

If Mr. Carbiener’s employment is terminated due to death or disability, we will pay the executive, or his estate, his annual base salary through February 1, 2009, which is the last day of the term of his agreement, in a lump sum or as otherwise directed by the executive or his estate.

 

For purposes of the agreement with Mr. Carbiener, the executive will be deemed to have a “disability” if he fails to perform his employment duties on account of illness or other incapacity for a period of ninety (90) consecutive days.

 

Each employment agreement also provides for a tax gross-up if the total payments and benefits made under the agreement or under other plans or arrangements are subject to the federal excise tax on excess parachute payments and the total of such payments and benefits exceed 103% of the safe harbor amount for that tax. A gross-up payment is not made if the total parachute payments are not more than 103% of the safe harbor amount. In that case, the executive’s payments and benefits would be reduced to avoid the tax. In general terms, the safe harbor amounts for this purpose are $1 less than 3 times the named executive officer’s average W-2 income for the five years before the year in which the change in control occurs. The named executive officers’ 2006 W-2 income would be used to determine their safe harbor amounts if a change in control were to occur between 2007 and 2011. Accordingly, we think this income should be considered when determining whether we will be required to pay any gross-up payments under the employment agreements. Based on current compensation and benefit levels, if 2006 W-2

income is included when determining the named executive officers’ safe harbor amounts, none of the named executive officers would incur an excess parachute payment excise tax and no gross-up payments would be required. If 2006 W-2 income is not included, which would have only been the case if a change in control had occurred in 2006, Messrs. Kennedy, Carbiener, Stinson and Bickett would have incurred the excise tax and become entitled to gross-up payments of $4,199,954, $1,349,112, $1,598,014, and $1,519,725, respectively. These gross-up amounts are not included in the estimated cash severance payments described below. Mr. Foley would have incurred no excise tax and would not have become entitled to a gross-up payment.

 

The agreements also provide us and our shareholders with important protections and rights, including the following:

 

 

Potential Payments under Stock Plans

 

In addition to the post-termination rights and obligations provided in the employment agreements, our stock incentive plans, including the stock plan, the assumed FNF stock plans and the Former FIS plan, provide for the potential acceleration of vesting and, if applicable, payment of equity awards in connection with a change in control. Under our stock plan, a participant’s award agreement may specify that upon the occurrence of a change in control outstanding stock options will become immediately exercisable and any restriction imposed on restricted stock or restricted stock units will lapse. The stock option award agreements held by our named executive officers provide for accelerated vesting upon a change in control. Under the assumed FNF stock plans, outstanding options become immediately exercisable and any restrictions imposed on restricted stock lapse upon a change in control. The Former FIS plan provides that if we are consolidated with or acquired by another entity in a merger, sale of all or substantially all of our assets or otherwise, or in the event of a change in control, the treatment of the stock options is determined by the merger or consolidation agreement, which may provide for, among other things, accelerated vesting of stock options. For purposes of the Former FIS plan, a “change in control” would occur if a person or group other than us or other prior stockholders acquires more than 50% of our voting stock or all or substantially all of our assets and the assets of our subsidiaries.

 

For purposes of the stock plan, the term “change in control” means the occurrence of any of the following events:

 

 

For purposes of the assumed FNF stock plans, the term “change in control” means the occurrence of any of the following events:

 

 

Potential Death Benefits

 

In addition to the death benefits provided under the employment agreements, Messrs. Kennedy’s and Carbiener’s designated beneficiaries would be entitled to death benefits under the split dollar plan. As discussed in the Compensation Discussion and Analysis, Messrs. Kennedy and Carbiener retained death benefits under this plan when it was amended in connection with the passage of the Sarbanes-Oxley Act of 2002 to remove the deferred cash accumulation benefits. Mr. Kennedy’s death benefit is $5,000,000 and Mr. Carbiener’s death benefit is $2,000,000.

 

Estimated Cash Severance Payments

 

Our estimate of the cash severance amounts that would be provided to the named executive officers assumes that their employment terminated on the last business day of our 2006 fiscal year, which ended December 31. In general, the cash severance benefit would be payable in a lump sum within 30 days from the termination date. However, to the extent Section 409A of the Internal Revenue Code would apply to the severance payments, the payments would be deferred for six months following termination. If the payments are deferred, the amounts that would otherwise have been paid during the six month period would be paid in a lump sum after the six month period has expired.

 

For a termination of employment by us not for cause, a termination by the executive for good reason or, in the case of Mr. Foley and Mr. Kennedy, a termination related to a change in control as described above, the named executive officers would receive the following amounts: Mr. Foley $8,723,463; Mr. Kennedy $6,750,000; Mr. Carbiener $833,333; Mr. Stinson $1,797,174; and Mr. Bickett $1,797,174. For a termination of employment due to disability, the named executive officers would receive the following amounts: Mr. Foley $1,047,222; Mr. Kennedy $1,125,000; Mr. Carbiener $833,333; Mr. Stinson $362,863; and Mr. Bickett $362,863. For a termination of employment due to death, the named executive officers would receive the following amounts: Mr. Foley $1,047,222; Mr. Kennedy $6,125,000; Mr. Carbiener $2,833,333; Mr. Stinson $362,863; and Mr. Bickett $362,863. The amounts shown for Messrs. Kennedy and Carbiener include $5,000,000 and $2,000,000, respectively, for death benefits provided under the split dollar plan.

 

Estimated Equity Values

 

As disclosed in the Outstanding Equity Awards at Fiscal Year-End table, Messrs. Foley, Stinson and Bickett have outstanding unvested stock options and restricted stock awards and Messrs. Kennedy and Carbiener have outstanding unvested stock options. Under the terms of the stock plan and the assumed FNF stock plans and award agreements, these stock options and restricted stock awards would vest upon a change in control. In addition, we have assumed for purposes of this disclosure that any unvested stock options granted under the Former FIS plan held by the named executive officers would vest upon a change in control. In addition, under the employment agreements of Messrs. Foley, Kennedy, Stinson and Bickett, these stock options and restricted stock awards would vest upon any termination of employment by us not for cause, a termination by the executive for good reason or, in the case of Mr. Foley and Mr. Kennedy, a termination related to a change in control. In any other termination event, all of these unvested stock options and restricted stock awards would expire at the employment termination date. The following estimates are based on a stock price of $40.09 per share, which was the closing price of our common stock on the last

business day of our 2006 fiscal year. The stock option amounts reflect the excess of this share price over the exercise price of the unvested stock options that would vest. The restricted stock amounts were determined by multiplying the number of shares that would vest by $40.09.

 

The estimated value of the stock options held by the named executive officers that would vest upon a change in control would be as follows: Mr. Foley $24,662,760; Mr. Kennedy $457,500; Mr. Stinson $3,643,303; Mr. Bickett $3,643,303; and Mr. Carbiener $213,500. These same amounts would vest upon a termination of the named executive officers’ employment by us not for cause, a termination by the executives for good reason or, in the case of Mr. Foley and Mr. Kennedy, a termination related to a change in control as described above. The estimated value of restricted stock awards held by Messrs. Foley, Stinson and Bickett that would vest upon a change in control or upon such a termination of employment would be $592,490, $82,946 and $82,946, respectively.

 

Estimated Value of Continuation of Health and Life Insurance Benefits

 

As noted in the description of the employment agreements, with the exception of Mr. Carbiener, the named executive officers are entitled to a continuation of only health and life insurance benefits for three years following a termination of employment by us not for cause, a termination by the executive for good reason, or in the case of Mr. Foley and Mr. Kennedy a termination related to a change in control as described above. The estimated value of the continuation of health and life insurance benefits for three years is as follows: Mr. Foley $801, Mr. Kennedy $66,800, Mr. Stinson $801, Mr. Bickett $801, and Mr. Carbiener $2,852.

 

Compensation Committee Interlocks and Insider Participation

 

The compensation committee is currently composed of Thomas M. Hagerty (Chair), Cary H. Thompson and Daniel D. Lane. During fiscal year 2006, no member of the compensation committee was a former or current officer or employee of FIS or any of its subsidiaries. In addition, during fiscal year 2006, none of our executive officers served (i) as a member of the compensation committee or board of directors of another entity, one of whose executive officers served on the compensation committee, or (ii) as a member of the compensation committee of another entity, one of whose executive officers served on our board.

 

Director Compensation

 

Directors who are our salaried employees receive no additional compensation for services as a director or as a member of a committee of our board. All non-employee directors receive an annual retainer of $40,000, payable quarterly, plus $1,500 for each board or committee meeting he attends. The chairman and each member of the audit committee receives an additional annual fee (payable in quarterly installments) of $24,000 and $12,000, respectively, for their service on the audit committee. The Chairman and each member of the compensation committee and the corporate governance and nominating committee receives an additional annual fee (payable in quarterly installments) of $15,000 and $6,000, respectively, for their service on such committees. We also reimburse each non-employee director for all reasonable out-of-pocket expenses incurred in connection with attendance at board and committee meetings. Finally, each member of our board is eligible to participate in our deferred compensation plan to the extent he elects to defer any board or committee fees.

 

The following table sets forth information concerning the compensation of our directors for the fiscal year ending December 31, 2006: