DEF 14A of Jack Henry & Associates Inc

Filed Oct 3, 2024 · FY20240000779152-24-000102

Open on EDGAR

Fiscal 2025 Director Nominees
Fiscal 2025 Director Nominees
Fiscal 2025 Director Nominees
| 8 of 9 nominees are independent | 3 of 9 nominees are women | 60 years average age | 8 years average tenure |
Fiscal 2025 Director Nominees
| Name | Title | Director Since | Independent | Committees & Roles | | David B. Foss | Executive Board Chair | 2017 | O | | | Matthew C. Flanigan | Vice Chair and Lead Director | 2007 | ü | Audit, Human Capital & Compensation | | Thomas H. Wilson, Jr. | Director | 2012 | ü | Audit (Chair), Governance | | Thomas A. Wimsett | Director | 2012 | ü | Audit, Risk and Compliance (Chair) | | Shruti S. Miyashiro | Director | 2015 | ü | Human Capital & Compensation (Chair), Risk and Compliance | | Wesley A. Brown | Director | 2015 | ü | Audit | | Curtis A. Campbell | Director | 2021 | ü | Governance (Chair), Human Capital & Compensation | | Tammy S. LoCascio | Director | 2024 | ü | Human Capital & Compensation, Risk and Compliance | | Lisa M. Nelson | Director | 2024 | ü | Audit, Governance |
New Director Nominees
New Director Nominees The following nominees were appointed by the Board of Directors as of July 22, 2024.
New Director Nominees
| Tammy S. LoCascio | Lisa M. Nelson | | Ms. LoCascio, age 55, is Senior Executive Vice President and Chief Operating Officer of First Horizon Corporation, the holding company for First Horizon Bank. She brings extensive experience to the Board with banking strategy, technology, and operations as well as human capital management. | Ms. Nelson, age 61, is President, International at Equifax, Inc. She brings to the Board deep knowledge and experience of management of technology companies, in addition to strategic acquisitions and implementation of growth initiatives. |
New Director Nominees
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Executive Compensation Highlights
Executive Compensation Highlights Say-On-Pay Advisory Vote and Advisory Vote Frequency Each year the stockholders are given the opportunity to offer a “say-on-pay” advisory vote at the Company’s Annual Meeting of Stockholders. At last year’s Annual Meeting, 94% of the votes cast on say-on-pay were voted in favor of fiscal year 2023 executive compensation, with the stockholders also approving, on an advisory basis, continuing to hold yearly advisory votes on executive compensation. Compensation Philosophy Our executive compensation programs are designed to achieve the following objectives: 1.Attract, retain, and motivate highly qualified executives by offering competitive compensation. 2.Link performance and executive pay by tying annual cash bonus amounts to achievement of key objectives under the Company’s annual business plans, as well as specific strategic goals. 3.Reward competitive performance in comparison with peers in our industry. 4.Reward the creation of long-term stockholder value through long-term incentive compensation awards and encourage significant stock ownership to further align our executives’ interests with those of our stockholders.
Corporate Governance Highlights
Corporate Governance Highlights •A majority of the Company's directors are independent in accordance with Nasdaq standards and all members of Board committees are independent. •The Lead Director is independent. •Executive sessions of independent directors are led by the Lead Director at each Board meeting. •Directors are limited to service on no more than three other public company boards. •Directors are restricted from standing for reelection after they reach 70 years old, except in exceptional circumstances as determined by the Board. •Directors are limited to 12 total years of service for any director first elected after May 14, 2021.
Corporate Governance Highlights
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ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
| | The Board recommends that you vote “For” the election of each of the nominees for election to the Board. |
Procedure
Procedure At the Annual Meeting, the stockholders will elect nine directors to hold office for one-year terms ending at the 2025 Annual Meeting of Stockholders or until their successors are elected and qualified. The Board has nominated nine of the Company's current ten directors for re-election at the Annual Meeting. Jacque R. Fiegel is not seeking re-election and her Board service will end on the date of the Annual Meeting. The Board has approved a decrease in its size from ten members to nine effective immediately prior to the Annual Meeting. The stockholders are entitled to one vote per share on each matter submitted to vote at any meeting of the stockholders. Unless contrary instructions are given, the persons named in the enclosed Proxy Card or their substitutes will vote “FOR” the election of the nominees named below. Each of the nominees has consented to serve as director. However, if any nominee at the time of election is unable to serve or is otherwise unavailable for election, and as a result other nominees are designated by the Board, the persons named in the enclosed Proxy Card or their substitutes intend to vote for the election of such designated nominees.
Director Qualifications and Selection
Director Qualifications and Selection Under the Company’s Corporate Governance Guidelines, the Governance Committee is charged with the responsibility for determining the appropriate skills and characteristics required of Board members and are to consider such factors as experience, strength of character, maturity of judgment, technical skills, diversity, and age in assessing the needs of the Board. The Corporate Governance Guidelines specify that a majority of the members shall qualify as independent under applicable Nasdaq Global Select Market (“Nasdaq”) listing standards. While the term “diversity” is not specifically defined in the Corporate Governance Guidelines and there is no formal policy regarding application of the term, it has been the practice of the Governance Committee to apply the term broadly, resulting in Board composition over the years that has reflected diversity in race, gender, and age, as well as diversity in business experience and in representation of the markets served by the Company. While the Company has a nomination policy by which stockholders may recommend to the Governance Committee certain prospective directors for consideration (See “Corporate Governance—Stockholder Recommended Director Candidates,” below), no such recommendation has been received. If such a recommendation is received in the future, it will be evaluated in the same manner as any other recommendation to the Governance Committee. The Governance Committee nomination process varies depending upon the particular expertise and skill set sought by the Governance Committee. The process can be informal, consisting of solicitation of suggestions of possible candidates from other Board members and management, contacting candidates to determine interest level, and in-person interviews to determine “fit.” The Governance Committee has also used a more formal process utilizing a recruiting firm to identify candidates,
Director Qualifications and Selection
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Director Qualifications and Selection
screening of recommendations, followed by telephone and in-person interviews, background checks, and Governance Committee evaluation and nomination. The Governance Committee expects to continue use of both formal and informal processes to identify appropriate candidates for the Board. The Company’s Board has also adopted a “Proxy Access for Director Nominations” bylaw as part of the Company’s Amended and Restated Bylaws (the “Bylaws”). The proxy access bylaw permits a stockholder, or certain groups of stockholders, meeting the requirements contained in the proxy access bylaw to nominate and include in the Company’s proxy materials director nominees constituting up to two individuals or 20% of the Board (whichever is greater). See “Corporate Governance—Stockholder Nominated Director Candidates” below for more information.
Nominees for Election
Nominees for Election The Board currently has ten members serving terms of office ending at the Annual Meeting. The Board has approved a decrease in its size from ten members to nine effective immediately prior to the Annual Meeting. Jacque R. Fiegel is not seeking re-election and her Board service will end on the date of the Annual Meeting. The Company is grateful for Ms. Fiegel's valuable contributions throughout her years of Board service. Ms. Fiegel served on the Governance Committee and Risk and Compliance Committee during fiscal year 2024. The nominees for election as directors of the Company are as follows:
Nominees for Election
| Name | Position with Company | Director Since | | David B. Foss | Executive Board Chair | 2017 | | Matthew C. Flanigan | Vice Chair and Lead Director | 2007 | | Thomas H. Wilson, Jr. | Director | 2012 | | Thomas A. Wimsett | Director | 2012 | | Shruti S. Miyashiro | Director | 2015 | | Wesley A. Brown | Director | 2015 | | Curtis A. Campbell | Director | 2021 | | Tammy S. LoCascio | Director | 2024 | | Lisa M. Nelson | Director | 2024 |
Nominees for Election
The Board has determined to nominate Mr. Brown as a continuing director to serve until the 2025 Annual Meeting despite Mr. Brown reaching the age of 70, which age ordinarily prevents a director's nomination based on the mandatory retirement restrictions in the Company's Corporate Governance Guidelines. The Corporate Governance Guidelines permit the Board to waive this restriction in the case of exceptional circumstances. The Board determined that the unfortunate and untimely passing of director Laura Kelly in fiscal 2024 qualified as such an exceptional circumstance and waived the restriction for Mr. Brown, which permitted Mr. Brown's nomination for director at the Annual Meeting.
Director Compensation
Director Compensation The Human Capital & Compensation Committee reviews annually the compensation for non-employee directors, as well as comparative compensation data for peer companies provided by its independent advisor. If the Human Capital & Compensation Committee determines that a change to non-employee director compensation is advisable, it provides a recommendation to the Board and the Board considers this recommendation for approval. The following table sets forth compensation paid to our non-employee directors in fiscal 2024. A director who is employed
Director Compensation
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Director Compensation
by the Company does not receive any separate compensation for service on the Board. The compensation paid to Mr. Foss as an employee is detailed below at “Executive Compensation.”
Director Compensation
| Name | Fees Earned or Paid in Cash | Stock Awards | Options Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | | ($) | ($) (1) (2) | ($) | ($) | ($) | ($) | | Matthew C. Flanigan | 165,000 | 177,475 | - | - | - | 342,475 | | Thomas H. Wilson, Jr. | 130,000 | 177,475 | - | - | - | 307,475 | | Jacque R. Fiegel | 95,000 | 177,475 | - | - | - | 272,475 | | Thomas A. Wimsett | 130,000 | 177,475 | - | - | - | 307,475 | | Laura G. Kelly(3) | 82,500 | 177,475(4) | - | - | - | 259,975 | | Shruti S. Miyashiro | 125,000 | 177,475 | - | - | - | 302,475 | | Wesley A. Brown | 105,000 | 177,475 | - | - | - | 282,475 | | Curtis. A. Campbell | 95,000 | 177,475(4) | - | - | - | 272,475 | | Tammy S. LoCascio(5) | | | | | | | | Lisa M. Nelson(5) | | | | | | |
Director Compensation
(1) These amounts reflect the aggregate grant date fair value of restricted stock units granted in the fiscal year ended June 30, 2024, in accordance with FASB ASC Topic 718. For assumptions used in determining the fair value of restricted stock units granted, see Note 10 to the Company’s 2024 consolidated financial statements in our Annual Report on Form 10-K for the year ended June 30, 2024. (2) As of June 30, 2024, each director listed, other than Ms. Kelly, Ms. LoCascio, and Ms. Nelson, held an aggregate of 1,173 unvested restricted stock units. (3) Director Laura Kelly passed away on March 15, 2024. A pro-rata portion of her fiscal 2024 restricted stock unit award equal to the period from her date of death through the Annual Meeting was cancelled pursuant to the terms of the award agreement. (4) Includes amounts deferred pursuant to the Company’s Non-Employee Director Deferred Compensation Plan. (5) Mses. LoCascio and Nelson were appointed to the Board on July 22, 2024, and received no compensation in fiscal year 2024. Summary of Fiscal 2024 Compensation Elements
Director Compensation
| Annual Compensation Elements | Amount | | Board Retainer (non-employee directors)* | $70,000 | | Lead Director* | $50,000 | | Audit Committee Retainer* | $20,000 | | Human Capital & Compensation Committee & Risk and Compliance Committee Retainer* | $15,000 | | Governance Committee Retainer* | $10,000 | | Additional Audit Committee, Human Capital & Compensation Committee, Risk and Compliance Committee Chair Retainer* | $25,000 | | Additional Governance Committee Chair Retainer* | $15,000 | | Annual Equity Award** | $180,000 |
Director Compensation
* All retainers are paid in cash quarterly in arrears ** Equity compensation is paid annually to the non-employee directors in the form of restricted stock units.
Director Compensation
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Director Compensation
In fiscal 2024, the directors listed above were not eligible to participate in any non-equity incentive compensation plan from the Company or any pension plan of the Company. Non-employee directors are eligible for and may elect to participate in the Company’s Non-Employee Director Deferred Compensation Plan. In fiscal 2024, only the restricted stock unit awards to non-employee directors were eligible for deferral and two of the non-employee directors elected deferral of all or part of their award. Deferred amounts are maintained by the Company in bookkeeping accounts. Stock awards that are deferred are deemed invested in the Company’s common stock, and deemed dividends paid on deferred equity awards are invested in a Federal Rate fund. The deferred amounts are unsecured obligations of the Company. Restricted stock units that are deferred under the Company’s Non-Employee Director Deferred Compensation Plan may be settled in stock or, at the option of the Human Capital & Compensation Committee, in cash. Earnings on deferred amounts are not included in the above table because plan earnings were not preferred or above market.
Fiscal 2024 Compensation Components
| Component | | Metrics | Performance/ Vesting Period | More Information | | Base Salary | | Fixed and recurring cash compensation set at market competitive levels to attract and retain highly qualified and effective executives. | | Page 36 | | Annual Incentive Cash Bonus | | Variable cash compensation tied 75% to annual adjusted operating income versus budget target and 25% tied to achievement of strategic goals. | One year | Page 36 | | Long-Term Incentive Compensation | Performance share awards (60%) | Performance shares cliff vest based on Jack Henry’s (1) relative total shareholder return against our Compensation Peer Group plus our two reference peers (60%), (2) three-year compound annual growth rate for organic revenue (20%), and (3) three-year non-GAAP adjusted operating margin expansion (20%). | Three years | Page 42 | | | Restricted stock unit awards (40%) | Time-based restricted stock units vest in equal annual installments based on continued service. | Three years | Page 46 |
Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards
Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards In fiscal 2022, the HC&C Committee made three separate performance share grants to our then named executive officers (“2022 Named Executives”) based on three separate measures of comparative performance. One was based on relative total shareholder return ("TSR"), one was based on the Company’s compound annual growth rate (“CAGR”) for non-GAAP adjusted revenue (“Organic Revenue Growth”), and one was based on the Company's non-GAAP adjusted operating margin expansion (“Operating Margin Expansion”). TSR is calculated as (i) the sum of change in stock price plus dividends over the measurement period, divided by (ii) the beginning stock price. This calculation assumes reinvestment of dividends. Our TSR performance has a meaningful and direct impact on the compensation earned by our 2022 Named Executives. The TSR performance share grant comprised approximately 60% of the total performance share grant target value. The TSR performance share grant in fiscal 2022 vested at the end of three years based on TSR over the three-year period in comparison to the companies in the S&P Software & Services Index (the “S&P 1500 S&S”) plus any members of the fiscal 2022 Compensation Peer Group not otherwise included in the S&P 1500 S&S (together, the “2022 TSR Peer Group”). The Company produced a TSR of 4.98% over the three-year period ending June 30, 2024, using the average closing price of the last 30 calendar days of fiscal 2024. This TSR resulted in an achievement of the 60th percentile against the fiscal 2022 TSR Peer Group, which correlated to a final payout of 133.33% of the 2022 Named Executive’s target TSR performance shares.
Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards
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Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards
The Organic Revenue Growth performance share grant comprised approximately 20% of the total fiscal 2022 performance share grant target value and vested at the end of three years based on the Company’s Organic Revenue Growth CAGR, which is adjusted for the impact of deconversion fees and acquisitions and divestitures during the performance period, against a threshold, target, and maximum percentage goal set by the HC&C Committee based on the annual budget of the Company and available forecasts, with the purpose of setting meaningful and challenging targets. The Company produced an Organic Revenue Growth CAGR of 7.6% over the three-year period ending June 30, 2024, resulting in a final payout of 106.7% of the 2022 Named Executive’s target Organic Revenue Growth performance shares. The Operating Margin Expansion performance share grant comprised approximately 20% of the total fiscal 2022 performance share grant target value and vested at the end of three years based on the Company’s Operating Margin Expansion, which is adjusted for the impact of deconversion fees and acquisitions and divestitures during the performance period, against a threshold, target, and maximum percentage goal set by the HC&C Committee based on the annual budget of the Company and available forecasts, with the purpose of setting meaningful and challenging targets. The Company produced an Operating Margin Expansion of 0.5% over the three-year period ending June 30, 2024, resulting in a final payout of 0% of the 2022 Named Executive’s target Operating Margin Expansion performance shares. This result demonstrates that the targets set by the HC&C Committee are challenging and in keeping with the Company’s desire to focus on performance-based and at-risk pay.
Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards
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Compensation Philosophy and Objectives
| Compensation Element | Purpose | | Base salary | •Attract and retain highly qualified executives | | Annual incentive cash bonus | •Support pay-for-performance orientation •Focus executives on executing the annual operating plan and key financial and non-financial measures of success as established by the Board | | Long-term incentive compensation | •Align interests of executives and stockholders •Support a stock ownership culture •Drive long-term value creation •Encourage retention of executives | | Broad-based benefits | •Attract and retain highly qualified executives •Named Executives at Jack Henry participate in the same benefit programs available to our full-time employees | | Termination provisions | •Align management and stockholder interests to review attractive business alternatives |
Process for Establishing Compensation
Committee with respect to the compensation of the Company’s independent directors. The HC&C Committee Chair approves any additional work performed by Meridian on behalf of management. The HC&C Committee has assessed the independence of Meridian and determined that no conflict of interest exists under the rules established by the SEC and Nasdaq. The HC&C Committee reviews the independence of its advisors annually. In making compensation decisions, the HC&C Committee compared each element of total direct compensation against a peer group of publicly traded companies in the software, payments, and data processing industries against which the HC&C Committee believes we compete in the market for executive talent. We collectively refer to this group as the “Compensation Peer Group.” In selecting companies for the Compensation Peer Group, the HC&C Committee has considered multiple criteria, including industry, annual revenue, and market capitalization. For fiscal 2024, the Compensation Peer Group was comprised of the following companies:
Process for Establishing Compensation
*Black Knight, Inc. was included as part of the fiscal 2024 Compensation Peer Group for benchmarking, but was acquired in the first quarter of fiscal 2024. Splunk Inc. was included as part of the fiscal 2024 Compensation Peer Group for benchmarking, but was acquired in the third quarter of fiscal 2024. The Compensation Peer Group is reviewed annually and, as appropriate, updated by the HC&C Committee to make sure that members of the group are consistent with the Company’s industry and financial scope and comparable in terms of size and labor pool. For comparison purposes, the Company’s annual revenue, net income, and market capitalization were within a reasonable range of the median of the members of the Compensation Peer Group. In addition to the Compensation Peer Group, two companies, Fiserv, Inc. and Fidelity National Information Services, Inc. (together, the “Reference Peers”), were identified whose business models more closely align with the Company, but who both have larger revenue and market capitalization. The HC&C Committee used data from both our Compensation Peer Group and our Reference Peers to inform our executive compensation program design and to track current market trends, but only the Compensation Peer Group was used in compensation benchmarking assessments. To benchmark each element of total compensation for our Named Executives, Meridian provided data from two key sources: (1) public filings for the companies in our Compensation Peer Group and (2) an executive compensation survey reflective of our industry and the general industry. In reviewing compensation survey data, the HC&C Committee considered data for companies with annual revenues similar to the Company. In setting fiscal 2024 compensation, the HC&C Committee reviewed competitive market data for the Compensation Peer Group at the 25th, 50th, and 75th percentiles for base salary, target bonus, target cash compensation, long-term incentive compensation, and target total compensation. In setting total cash compensation and long-term incentive compensation, the HC&C Committee
Process for Establishing Compensation
recognized that there are certain limitations in the market data available for the Compensation Peer Group. Thus, in addition to considering levels of compensation suggested by market data, the HC&C Committee also considered other relevant factors including performance against pre-identified objectives under business plans for the preceding fiscal year, individual performance reviews, change in job duties, and internal equity for compensation levels among our executives. The allocation between cash, non-cash, short-term, and long-term incentive compensation is measured against the practices of our Compensation Peer Group and Reference Peers and reflects the HC&C Committee’s determination of the appropriate compensation mix among base pay, target annual cash incentives, and long-term equity incentives to encourage retention and performance. Actual cash and equity incentive awards are determined by the performance of the Company and the individual, depending on the type of award, compared to established goals.
Annual Incentive Cash Bonuses
Annual Incentive Cash Bonuses Annual Incentive Plan It is our practice to provide our Named Executives with the opportunity to earn annual incentive cash bonus compensation through programs that reward attainment of key objectives under corporate annual business plans. The objectives that underlie our annual incentive compensation programs may vary between fiscal years and between the Named Executives, but generally include objectives that reward attainment by the Company of targeted adjusted operating income as well as strategic executive goals. In setting the fiscal 2024 bonus amounts a Named Executive is eligible to earn for achieving specified objectives, the HC&C Committee considered published survey data and targeted bonus and target total cash compensation levels at or near the 50th percentile of the Compensation Peer Group. Bonus opportunities for achieving objectives are generally established as a percentage of an executive’s base salary and the percentages increase with job scope and complexity. Executives have the opportunity to earn reduced bonus amounts if a minimum level (threshold) of performance against an objective is achieved and can
Annual Incentive Cash Bonuses
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Annual Incentive Cash Bonuses
also earn increased bonus amounts for performance in excess of the level of targeted performance (subject to a maximum of 200% of the established target amount). The decision as to whether to offer an annual incentive cash bonus program to our Named Executives for any fiscal year, the type and funding of any program offered, and the objectives that underlie any program, are subject to the discretion of the HC&C Committee and its assessment of general and industry specific conditions existing during the applicable period. In determining the amount that a Named Executive is eligible to earn under an incentive cash bonus program, the HC&C Committee may also exercise negative discretion to reduce an award based on its assessment of the executive’s contribution and accountability for the objectives that are the subject of the bonus, the internal equity of the executive’s bonus opportunity as compared to bonus opportunities for our other executives, and any other factors the HC&C Committee considers relevant. To provide an appropriate structure for cash bonus incentives, the Company’s stockholders previously approved the 2017 Annual Incentive Plan. Cash bonus incentives for fiscal 2024 were structured under the 2017 Annual Incentive Plan. The fiscal 2024 incentive cash bonus plan established for the Named Executives was based 75% upon achievement of the Company’s annual adjusted budget operating income target and 25% upon the achievement of strategic executive goals set for the Named Executives as a group by the HC&C Committee. The achievement of these strategic executive goals is based on the HC&C Committee’s holistic determination of the performance of all strategic executive goals in the aggregate, with one payout factor determined based on the HC&C Committee assessment between 0% and 200% of target. In addition, the strategic executive goals portion of the plan is subject to an individual modifier for each specific Named Executive based on the HC&C Committee’s evaluation. This individual modifier can increase or decrease the strategic executive goal outcome 25% up or down for that Named Executive. The entire incentive cash bonus payout is limited to 200% of target for each Named Executive, even if the combined operating income target achievement and the strategic executive goal achievement, with applicable individual modifier, exceeds 200%. However, the fiscal 2024 annual incentive plan provided that no part of the incentive cash bonus was payable unless the Company’s performance on the adjusted operating income measurement was at or above the minimum threshold for achievement.
Annual Incentive Cash Bonuses
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Annual Incentive Cash Bonuses
The adjusted operating income performance target for the Named Executives in fiscal 2024, which achievement composes 75% of the targeted annual incentive cash bonus, was established from the annual budget of the Company as approved by the Board of $494.5 million of adjusted operating income. The annual budget was developed by management with input from the Board in a thorough process that builds upon departmental forecasts and considers historical performance, industry dynamics, and macro-economic trends. This $494.5 million of adjusted operating income was reached by adjusting the approved GAAP operating income target of $505.7 million to remove $13.1 million of anticipated operating income from deconversion fees during the fiscal year and adding back $1.9 million of anticipated operating income loss for the first two months of fiscal 2024 from an acquisition made two months into fiscal 2023, consistent with the Company’s non-GAAP adjustment practices in financial earnings releases. The HC&C Committee designed the fiscal 2024 annual incentive cash bonus plan to require that the adjusted operating income after all bonuses are paid be no less than $494.5 million. Based on $28.5 million of anticipated amounts to be expensed as target corporate bonuses that are dependent on achievement of certain operating income performance levels in the fiscal year, and accounting for the average strategic executive goal achievement including individual modifiers in fiscal 2024 of greater than 100% as described below, the 100% payout target for adjusted operating income before bonus payments was $523.2 million. For purposes of the determining payouts under the annual incentive cash bonus plan, the HC&C Committee adjusts operating income to remove the impact of deconversion fees, acquisitions and divestitures, sales of assets, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earnings releases for the relevant periods. Because annual bonuses may only be paid out to the extent post-bonus adjusted operating income exceeds the $494.5 million threshold, the threshold for adjusted operating income pre-bonus is a function of total bonus pool size, rather than a set percentage of target. For fiscal 2024, the pre-bonus adjusted operating income threshold was 94.6% of target, below which no bonus was payable, with a target amount at 100% and up to a maximum at 110%. Bonus payouts for
Annual Incentive Cash Bonuses
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Annual Incentive Cash Bonuses
adjusted operating income achievement ranged from 0% of target at threshold performance to 200% of targeted bonus at maximum performance, with additional breakpoints between threshold and target and between target and maximum. The adjusted operating income results used for the performance target were calculated by adjusting the actual operating income results for fiscal 2024 of $489.4 million to remove operating income related to non-GAAP adjustments as applied by management in financial earnings releases and as approved by the HC&C Committee. These adjustments included removing deconversion fees during the fiscal year of $13.1 million and adding back actual operating loss for the fiscal 2023 acquisition for the two months without a comparable period in fiscal 2024 of $2.2 million, $16.4 million related to expenses incurred under the voluntary employee departure incentive payment program, a voluntary separation program offered by the Company to certain eligible employees during fiscal 2024, and amounts expensed as corporate bonuses at June 30, 2024 of $29.2 million, which were dependent upon achievement of certain operating income performance levels in the fiscal year. This outcome of $524.1 million of pre-bonus adjusted operating income in fiscal 2024, or 100.2% of target, resulted in a 100.7% payout of target for the Named Executives. The strategic executive goals, which compose 25% of the targeted annual incentive cash bonus, were set by the HC&C Committee based on the Company’s business strategies and objectives. For fiscal 2024, the HC&C Committee adopted six strategic goals for the Named Executives, which included achieving specified customer and employee satisfaction ratings, delivery of important corporate initiatives, milestones and product delivery timelines, implementation of programs and systems, implementing process and control improvements, and achieving customer sales targets. These strategic goals are keys to financial and business success for the Company and thus contribute to producing income and stockholder returns over the long-term. The HC&C Committee grades the strategic payout based on a holistic determination of all goals in the aggregate, with
Annual Incentive Cash Bonuses
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Annual Incentive Cash Bonuses
one payout factor determined based on the HC&C Committee’s assessment. Based on exceeding benchmark scores for customer and employee satisfaction ratings, meeting or exceeding implementation schedules for identified initiatives and products, execution on process and control improvements, and positive customer sales results, the HC&C Committee determined that the six strategic executive goals earned a payout of 115% of target. Potential bonus payouts related to the strategic executive goals range from 0% to 200%. The maximum bonus was intended to be payable only upon truly superior performance. The HC&C Committee intended for this bonus plan to provide a strong incentive for management to meet and exceed budgetary income and identified strategic goals in fiscal 2024. The strategic executive goals payout factor applies to all Named Executives, but is also subject to an individual modifier of up to 25% increase or decrease as determined by the HC&C Committee. The individual modifier is applicable in situations of significant under- or over-performance by an individual. In fiscal 2024, the HC&C Committee applied a 25% positive individual modifier to Ms. Carsley’s strategic executive goal payout factor, resulting in a 143.8% strategic executive goal attainment percentage for Ms. Carsley. This individual modifier was applied to recognize the individual performance and accomplishments of Ms. Carsley during fiscal 2024, including specifically the improvements and achievements Ms. Carsley directed within the Company’s finance department. The HC&C Committee did not apply a positive or negative individual modifier to any other Named Executive. The full fiscal 2024 incentive bonuses paid, including amounts paid for achievement of individual performance goals, were as follows:
Annual Incentive Cash Bonuses
| Named Executive | Target Annual Incentive (as % of base) | Performance on Incentive Measures | | Annual Incentive Payout - FY2024 | | | | | Adjusted Operating Income Performance (75% of Bonus) | Strategic Executive Goals Performance (25% of Bonus) (1) | % of Target | Amount ($) | | David B. Foss | 150% | 100.7% | 115% | 104.3% | 1,352,968 | | Gregory R. Adelson | 100% | 100.7% | 115% | 104.3% | 611,573 | | Mini L. Carsley | 100% | 100.7% | 143.8% | 111.5% | 577,097 | | Craig K. Morgan | 90% | 100.7% | 115% | 104.3% | 411,615 | | Stacey E. Zengel | 50% | 100.7% | 115% | 104.3% | 203,680 |
Annual Incentive Cash Bonuses
(1)The HC&C Committee applied a 25% positive individual modifier to Ms. Carsley’s strategic executive goal payout factor. The HC&C Committee continues to believe that annual cash bonus opportunities are highly effective motivators for management employees and are instrumental in obtaining excellent performance in comparison with the Company’s competitors in both strong and weak economic environments. The HC&C Committee will in future years continue to thoroughly review the effects of the bonus plan on results achieved and will make any changes to the bonus plan deemed necessary.
Annual Incentive Cash Bonuses
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Long-Term Incentive Compensation
Long-Term Incentive Compensation We believe that equity awards have been instrumental in building the Company, retaining talent, and encouraging management to take a long-term view with regard to strategic decisions they face. Equity awards also help focus executive and employee attention on managing the Company from the perspective of an owner with an equity stake in the business. The HC&C Committee has the authority to grant restricted stock awards of various types and to determine the terms of the restrictions on granted shares. Starting in fiscal 2020, the long-term incentive awards have consisted of a mix of performance shares and time-based restricted stock units. In fiscal 2024, the HC&C Committee allocated the long-term incentive award value at approximately 60% performance shares and 40% time-based restricted stock units. The HC&C Committee determined this mix was appropriate to ensure our Named Executives are aligned with stockholders through stock ownership and also to encourage retention. The fiscal 2024 total grant amounts for long-term incentive compensation were determined with reference to comparable aggregate grants of long-term incentive compensation by other members of the Compensation Peer Group and published survey data and were roughly targeted at the 50th percentile of the Compensation Peer Group. The aggregate target value was then divided with approximately 60% applied to performance share awards and approximately 40% applied to time-based restricted stock unit awards. In determining the level of award for a Named Executive, the HC&C Committee also considers relevant factors such as achievement of previously identified objectives, the executive’s performance, the current equity ownership and equity awards held by the individual executive, and the internal equity of the level of award granted to the executive compared to awards granted to other executives. In reviewing the award levels for our Named Executives, the HC&C Committee believes it is appropriate to consider the Company’s performance against key objectives under its corporate business plan for the preceding fiscal year, including objectives related to revenue and earnings targets, and whether the Company’s performance during the
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
preceding fiscal year benefited stockholders as measured by the market price of the Company’s common stock. In administering the equity compensation programs, the HC&C Committee considers the dilutive effect of the Company’s aggregate equity awards during any fiscal year. Performance Shares A portion of the grants to the Named Executives for fiscal 2024 were structured as performance shares that vest only on the achievement of Company performance goals and thus strongly reflect the principle of pay-for-performance. A grant of performance shares is a contractual right to receive stock and/or cash in the future if vesting conditions are met. In fiscal 2024, the HC&C Committee decided to utilize three separate measures of comparative performance to determine the vesting amount of performance shares. These three specific grants of performance shares in fiscal 2024 to the Named Executives vest at the end of a three-year performance period based on the following: (1) the total shareholder return over the three-year period in comparison to the companies in the Compensation Peer Group plus the Reference Peers (“TSR Peer Group”) (comprising approximately 60% of the total performance shares grant value), (2) the Company’s compound organic annual revenue growth rate (“CAGR”) for revenue over the three-year period against a target Organic Revenue Growth CAGR, where Organic Revenue Growth removes the impact of deconversion fees, acquisitions and divestitures, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earnings releases for the relevant periods (comprising approximately 20% of the total performance shares grant value), and (3) the expansion of the Company’s non-GAAP adjusted operating margin over the three-year period against a target non-GAAP adjusted operating margin expansion, where non-GAAP operating margin removes the impact of deconversion fees, acquisitions and divestitures, sales of assets, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earnings releases for the relevant periods (comprising approximately 20% of the total performance shares grant value). For the purpose of the TSR grants, TSR was defined as ending stock price minus beginning stock price (adjusted for splits and similar changes) plus dividends per share paid over the performance period, all divided by the beginning stock price. A target amount of stock was set for each Named Executive that may be earned if TSR at the end of the three-year period is at the 50th percentile in comparison to the TSR Peer Group. Vesting ranges from 25% of target performance shares at the 25th percentile to the maximum amount of the grant (200% of target) at or above the 80th percentile relative to the TSR Peer Group. No shares will vest if performance is below the 25th percentile threshold.
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
For purposes of the three-year Organic Revenue Growth CAGR grants, the following principles apply: •non-GAAP adjusted revenue is calculated by adjusting GAAP revenue for deconversion fee revenue, acquisitions and divestitures, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earning releases, for the relevant periods; •three-year Organic Revenue Growth is calculated by (a) the quotient equal to the Company’s non-GAAP adjusted revenue for the final fiscal year of the performance period and dividing it by the Company’s non-GAAP adjusted revenue for the fiscal year ending immediately prior to the beginning of the performance period, (b) raised to an exponent of one-third, and (c) subtracting one; and •an acquisition or divestiture by the Company during the performance period will result in an adjustment to the goal, base year results, and/or final year results, as appropriate, by the HC&C Committee to ensure the grant results are not materially benefited nor penalized by the acquisition or divestiture. The HC&C Committee set a threshold, target, and maximum three-year Organic Revenue Growth CAGR percentage goal based on the annual budget of the Company and available forecasts and with the purpose of setting meaningful and challenging targets, with vesting for performance shares ranging from 50% of target at threshold performance, 100% of target at target performance, and 200% of target at maximum performance and above. For the fiscal 2024 three-year Organic Revenue Growth CAGR grants, threshold was set at 6.5%, target was set at 7.0%, and maximum was set at 8.5%. No performance shares vest for achievement below threshold.
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
For purposes of the three-year non-GAAP adjusted operating margin expansion grants, the following principles apply: •non-GAAP adjusted revenue is calculated by adjusting GAAP revenue for deconversion fee revenue, acquisitions and divestitures, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company's earnings releases, for the relevant periods; •non-GAAP adjusted operating income is calculated by adjusting GAAP operating income for operating income from deconversion fees and operating income/loss from acquisitions, divestitures, sales of assets, and, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company's earnings releases, for the relevant periods; •three-year non-GAAP adjusted operating margin expansion is calculated by (a) an amount equal to non-GAAP adjusted operating income for the final fiscal year of the performance period divided by non-GAAP adjusted revenue for the final fiscal year of the performance period, less (b) an amount equal to non-GAAP adjusted operating income for the fiscal year ending immediately prior to the beginning of the performance period divided by non-GAAP adjusted revenue for the fiscal year ending immediately prior to the beginning of the performance period; and •an acquisition or divestiture by the Company during the performance period will result in an adjustment to the goal, base year results, and/or final year results, as appropriate, by the HC&C Committee to ensure the grant results are not materially benefited nor penalized by the acquisition or divestiture. The HC&C Committee set a threshold, target, and maximum three-year non-GAAP adjusted operating margin expansion percentage goal based on the annual budget of the Company and available forecasts and with the purpose of setting meaningful and challenging targets, with vesting for performance shares ranging from 50% of target at threshold performance, 100% of target at target performance, and 200% of target at maximum performance and above. For the
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
fiscal 2024 three-year non-GAAP adjusted operating margin expansion grants, threshold was set at 0.3%, target was set at 0.7%, and maximum was set at 1.0%. No performance shares vest for achievement below threshold. The fiscal 2024 awards were structured to provide incentives for long-term performance and retention. Retention is encouraged by grant terms which immediately forfeit all awards that have not vested in the event that the grantee’s employment with the Company is terminated for any reason other than in the event of death, incapacity, retirement, or in connection with any change in control. The use of performance shares allows for flexibility in addressing the orderly retirement of grantees. The fiscal 2024 performance share awards contain terms which allow for the pro-rata vesting of awards upon retirement based on full months of service following the date of grant. For this purpose, retirement is defined as termination with the stated purpose of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. With respect to a retirement during the term, at the end of the three-year term of the grant, the award will be calculated, and a pro-rata portion will be settled to the grantee based on completed full months of service. For example, if an eligible grantee retires 18 months after the grant date, he or she would be credited with 18 months of service and would be entitled to one-half of any amount that vests on performance measured at the end of the three-year grant. Death or incapacity of a grantee is addressed in the same manner, with pro-rata vesting based on completed months of service. Upon a change in control of the Company and a qualified termination of the grantee, the target number of performance shares (or, with respect to TSR grants, if higher, the number of shares that would have vested based on actual TSR achievement if the change in control date were the measuring date for TSR measurement) vest and will be settled, regardless of the performance measures achieved.
Long-Term Incentive Compensation
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Long-Term Incentive Compensation
Restricted Stock Units In fiscal 2024, the long-term incentive compensation included restricted stock unit grants to the Named Executives. The fiscal 2024 restricted stock unit awards were structured to provide incentives for long-term performance and retention. The shares vest one-third on each of the three subsequent anniversaries. Retention is encouraged by grant terms which immediately forfeit all awards that have not vested in the event that the grantee’s employment with the Company is terminated for any reason, other than in the event of retirement or in connection with a change in control. The fiscal 2024 restricted stock unit awards contain terms which allow for continued vesting in accordance with the vesting schedule of all unvested awards upon retirement. For this purpose, retirement is defined as termination with the express reason of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. The grantee must also remain actively employed as a full-time employee for six months following the date of the award to qualify for such continued vesting. Further, the grantee must abide by certain restrictive covenants, including non-competition, non-solicit, and non-disparagement covenants. Any breach of such restrictive covenants will result in a forfeiture of all remaining non-settled awards. Upon a change in control of the Company and a qualified termination of the grantee, all unvested restricted stock units vest in full and will be settled.
Termination Benefits Agreements and Executive Severance Plan
Termination Benefits Agreements and Executive Severance Plan On June 30, 2024, each of the Named Executives was a participant in the Executive Severance Plan (the “Severance Plan”) that is discussed in this Proxy Statement under the caption “Agreements with Executive Officers and Potential Payments upon Termination or Change in Control” on page 57. The Severance Plan provides that each Named Executive who experiences a qualifying termination not in connection with a change in control receives severance payments. The amount of such severance payments for the Chief Executive Officer is equal to two times the Chief Executive Officer’s annual base salary, paid ratably over two years, and, for the other Named Executives, one and a half times the Named Executive’s annual base salary, paid ratably over one and a half years. The Named Executives also receive a prorated amount of the annual bonus the Named Executive would have received for the current performance year had the Named Executive remained employed through the end of such performance year, paid in a single lump sum at the same time as annual bonus payments are made to active annual bonus participants for such performance year. The Named Executives would also receive an amount equal to the cost of health benefit continuation premiums for 18 months, paid in a lump sum. The treatment of equity awards held by the terminated Named Executive would not be impacted by the Severance Plan, but would be controlled by the terms set out in those individual awards.
Termination Benefits Agreements and Executive Severance Plan
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Termination Benefits Agreements and Executive Severance Plan
The Severance Plan also provides that each Named Executive who experiences a qualifying termination in connection with a change in control receives severance payments. The amount of such severance payments for the Chief Executive Officer is equal to two times the annual base salary and two times the target annual bonus, and, for other Named Executives, one and a half times the annual base salary and one and a half the target annual bonus, also paid in a lump sum. The Named Executives will also receive a lump sum prorated amount of target annual bonus for the year in which the termination occurs and an amount equal to the cost of health benefit continuation premiums for 18 months. Equity awards held by the terminated Named Executive, other than those awards that already contain provisions governing the treatment of the awards in the event of a change in control termination (which will be controlled by the terms of such awards), will fully vest upon a qualifying termination in connection with a change in control, with any performance-based awards vesting as if target-level achievement were met. All Severance Plan payments are conditional upon the terminated executive’s execution and nonrevocation of a release of claims against the Company and adherence to certain restrictive covenants set forth in the Severance Plan. The benefits provided were determined primarily by reference to comparative data provided to the HC&C Committee by its independent advisor. The benefits are believed by the HC&C Committee to be sufficient to provide the desired incentive and security to retain crucial personnel in a time of disruption and to help attract and retain top executive talent. The change in control benefits provided in the Severance Plan reflect the concern of the Board that any future threatened or actual change in control, such as an acquisition or merger, could cause disruption and harm to the Company in the event of the resulting loss of any of its key executives. No severance payments are eligible to be paid under the Severance Plan unless a Named Executive’s employment is terminated by the Company without “Cause” or by the Named Executive for “Good Reason” (both as defined in the Severance Plan). The HC&C Committee believes that agreements such as the Severance Plan should not include provisions that would obligate an acquirer of the Company to make large cash payouts to our Named Executives simply because a change in control has occurred. Because of this concern, the occurrence of a change in control event alone will not trigger any cash payment obligations to our Named Executives under the Severance Plan. Change in control severance payment obligations only arise if the Named Executive’s employment is terminated by the Company without “Cause” or by the Named Executive for “Good Reason” within the period commencing 90 days prior to and for two years following a change in control (i.e., “double trigger”). The Company does not provide, nor has it ever provided, excise tax gross-up payments to any employee in the event of a change in control and termination. The Severance Plan has no set term and will continue until terminated by the HC&C Committee. However, unless a Severance Plan participant consents, generally, the Severance Plan may not be terminated or amended in a manner that is materially adverse to a participant without 12-months’ notice to each participant. As set forth in the Severance Plan, certain exceptions apply where an amendment or termination is in connection with a change in control. The Severance Plan specifies that it does not confer on the executives any right to continued employment and shall not interfere with the right of the Company to terminate the executives at any time.
Deferred Compensation Plan
the Company to offer deferral of all types of compensation, including salary, bonus, and equity grants, to date the Company has only offered a program to defer receipt of equity compensation upon vesting of performance shares and restricted stock units. Amounts deferred are deemed invested in investments selected by the participant from a limited number of choices. The Deferred Compensation Plan is intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. Performance shares or restricted stock units that are deferred under the Company’s Deferred Compensation Plan may be settled in stock or, at the option of the HC&C Committee, in cash. Ms. Carsley participated in the Deferred Compensation Plan in fiscal 2024.
Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information At regularly scheduled meetings during June, July, and August of each year, the HC&C Committee approves the upcoming fiscal year target total compensation for Named Executives, including base salary, annual incentive cash bonus amounts, and long-term incentive compensation awards. In addition, the HC&C Committee approves the prior fiscal year incentive cash bonus achievement level and payout amounts as well as results and settlement of any performance-based long-term incentive compensation awards. By established practice, the grant date for the long-term incentive compensation equity awards for Named Executives occurs in early August of each year, prior to the Company’s release of fiscal year-end financial results. It is the Board’s and the HC&C Committee’s belief that maintaining a consistent grant practice is in the best interests of the Company and minimizes the risk that annual awards are granted opportunistically for the benefit of executive officers. For fiscal 2024,
Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
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Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
Named Executives were granted performance shares and restricted stock units in August 2023. The Company has in the past granted stock option awards to Named Executives, with the last such awards being granted in 2016. Stock option awards are not currently a component of executive compensation design, but it is possible that in the future the HC&C Committee may choose to grant stock option awards to Named Executives. The HC&C Committee does not take material nonpublic information into account when determining the timing and terms of annual equity award grants. In addition, the Company does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
Fiscal 2024 Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
Fiscal 2024 Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information During fiscal 2024, none of our Named Executives were granted stock option awards.
Fiscal 2024 Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
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Summary Compensation Table
Summary Compensation Table The following table sets forth certain information with regard to the compensation paid to (1) Mr. Foss (our Chief Executive Officer during fiscal 2024), (2) Ms. Carsley (our Chief Financial Officer), and (3) Messrs. Adelson, Morgan, and Zengel (the Company’s three other most highly compensated executive officers that were serving as executive officers as of the end of fiscal 2024) (collectively, our “Named Executives”) during the fiscal years ended June 30, 2024, 2023, and 2022.
Summary Compensation Table
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | | | ($) | ($) | ($) (1) | ($) | ($) (2) | ($) (3) | ($) | | David B. Foss Chief Executive Officer | 2024 | 865,000 | - | 8,728,670 | - | 1,352,968 | 16,500 | 10,963,138 | | | 2023 | 858,750 | - | 8,571,735 | - | 991,979 | 16,562 | 10,439,026 | | | 2022 | 840,000 | - | 7,557,777 | - | 1,345,365 | 15,250 | 9,758,392 | | Gregory R. Adelson President and Chief Operating Officer | 2024 | 580,750 | - | 2,038,836 | - | 611,573 | 16,788 | 3,247,947 | | | 2023 | 556,602 | - | 1,478,556 | - | 405,645 | 10,812 | 2,451,615 | | | 2022 | 480,721 | - | 1,203,071 | - | 481,879 | 14,173 | 2,179,844 | | Mimi L. Carsley (4) Chief Financial Officer and Treasurer | 2024 | 496,375 | - | 1,684,218 | - | 577,097 | 26,506 | 2,784,196 | | | 2023 | 475,000 | - | 1,479,246 | - | 356,517 | - | 2,310,763 | | Craig K. Morgan General Counsel and Secretary | 2024 | 434,300 | - | 938,072 | - | 411,615 | 19,403 | 1,803,390 | | | 2023 | 415,917 | - | 982,948 | - | 290,250 | 18,278 | 1,707,393 | | | 2022 | 370,076 | - | 522,806 | - | 319,562 | 14,761 | 1,227,205 | | Stacey E. Zengel Former Senior Vice President and President of Jack Henry Bank Solutions | 2024 | 386,830 | - | 375,906 | - | 203,680 | 16,692 | 983,108 | | | 2023 | 380,187 | - | 394,028 | - | 138,239 | 10,812 | 923,266 | | | 2022 | 368,175 | - | 374,555 | - | 207,390 | 14,857 | 964,977 |
Summary Compensation Table
(1)Reflects grants of performance shares and restricted stock units on August 4, 2021, August 4, 2022, and August 4, 2023, under the Company’s Equity Incentive Plan to the Named Executives. The 2023 amount for Ms. Carsley includes a one-time grant of restricted stock units on July 17, 2022 in connection with her joining the Company. Information about the assumptions used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2024. (2)Reflects amounts paid to the Named Executives following the end of the fiscal year based upon achievement of performance goals under the Company’s Annual Incentive Plans. These amounts were earned and accrued in the fiscal year listed and paid in the following fiscal year. (3)Reflects matching contributions to the individual’s accounts pursuant to the Company’s 401(k) Retirement Savings Plan (the “Retirement Plan”). (4)Ms. Carsley was not a Named Executive during fiscal 2022.
Grants of Plan-Based Awards Table
Grants of Plan-Based Awards Table The following table presents information on awards granted to the Named Executives during the fiscal year ended June 30, 2024 under our 2017 Annual Incentive Plan with respect to performance
Grants of Plan-Based Awards Table
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Grants of Plan-Based Awards Table
targets set for fiscal 2024 and our 2015 Equity Incentive Plan with respect to grants of performance shares and restricted stock units made during fiscal year 2024.
Grants of Plan-Based Awards Table
| Name | Grant Date | Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (#)(3) | ($)(4) | | David B. Foss | 8/4/2023 | 0 | 1,297,500 | 2,595,000 | - | - | - | - | - | | | 8/4/2023 | - | - | - | 4,206 | 16,825 | 33,650 | - | 3,757,527 | | | 8/4/2023 | - | - | - | 2,805 | 5,609 | 11,218 | - | 924,756 | | | 8/4/2023 | - | - | - | 2,805 | 5,609 | 11,218 | - | 924,756 | | | 8/4/2023 | - | - | - | - | - | - | 18,695 | 3,121,631 | | Gregory R. Adelson | 8/4/2023 | 0 | 586,500 | 1,173,000 | - | - | - | - | - | | | 8/4/2023 | - | - | - | 983 | 3,930 | 7,860 | - | 877,687 | | | 8/4/2023 | - | - | - | 655 | 1,310 | 2,620 | - | 215,980 | | | 8/4/2023 | - | - | - | 655 | 1,310 | 2,620 | - | 215,980 | | | 8/4/2023 | - | - | - | - | - | - | 4,367 | 729,189 | | Mimi L. Carsley | 8/4/2023 | 0 | 517,750 | 1,035,500 | - | - | - | - | - | | | 8/4/2023 | - | - | - | 812 | 3,247 | 6,494 | - | 725,153 | | | 8/4/2023 | - | - | - | 541 | 1,082 | 2,164 | - | 178,389 | | | 8/4/2023 | - | - | - | 541 | 1,082 | 2,164 | - | 178,389 | | | 8/4/2023 | - | - | - | - | - | - | 3,607 | 602,287 | | Craig K. Morgan | 8/4/2023 | 0 | 394,740 | 789,480 | - | - | - | - | - | | | 8/4/2023 | - | - | - | 452 | 1,808 | 3,616 | - | 403,780 | | | 8/4/2023 | - | - | - | 302 | 603 | 1,206 | - | 99,417 | | | 8/4/2023 | - | - | - | 302 | 603 | 1,206 | - | 99,417 | | | 8/4/2023 | - | - | - | - | - | - | 2,009 | 335,458 | | Stacey E. Zengel | 8/4/2023 | 0 | 195,330 | 390,660 | - | - | - | - | - | | | 8/4/2023 | - | - | - | 181 | 724 | 1,448 | - | 161,690 | | | 8/4/2023 | - | - | - | 121 | 242 | 484 | - | 39,899 | | | 8/4/2023 | - | - | - | 121 | 242 | 484 | - | 39,899 | | | 8/4/2023 | - | - | - | - | - | - | 805 | 134,418 |
Grants of Plan-Based Awards Table
(1)Represents the range of possible payouts for fiscal 2024 to our Named Executives under the Annual Incentive Plan. For fiscal 2024, threshold achievement for adjusted operating income would result in a $0 payout and our Named Executives would only begin to receive bonus payments for adjusted operating income to the extent achievement exceeded this threshold. (2)Performance shares granted on August 4, 2023, under the Company’s 2015 Equity Incentive Plan. (3)Restricted stock units granted on August 4, 2023, under the Company’s 2015 Equity Incentive Plan. (4)The amounts in the table represent the grant date fair value of the awards. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2024.
Grants of Plan-Based Awards Table
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Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards
Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards The annual base salaries of the Named Executives were evaluated in fiscal 2024 in relation to competitive data, changes in job duties, and individual and corporate performance. The annual base salary of Mr. Foss remained at $865,000, Mr. Adelson’s salary increased 2.0% to $586,500, Ms. Carsley’s salary increased 9.0% to $517,750, Mr. Morgan’s salary increased 2.0% to $438,600, and Mr. Zengel’s salary increased 2.0% to $390,660. Fiscal 2024 base salary changes did not go into effect for Named Executives until January 2024. For the year ended June 30, 2024, the Named Executives had the opportunity to earn cash incentive bonuses under the Company’s annual incentive cash bonus plan. As set forth in greater detail in “Compensation Discussion and Analysis—Annual Incentive Cash Bonuses” above, the performance goals for the Named Executives were based on achieving adjusted operating income targets established in the Company’s annual budget and the achievement of strategic executive goals set for the Named Executives as a group. The adjusted operating income component of the incentive plan set performance targets, thresholds for minimum performance, maximums for superior performance, and required that for any bonus to be paid, the minimum threshold of adjusted operating income had to be achieved. For the year ended June 30, 2024, actual adjusted operating income was 100.2% of budgeted adjusted operating income. The achievement for the strategic executive goals component of the incentive plan is based on the HC&C Committee’s holistic determination of the performance of all strategic executive goals in the aggregate, with one payout factor determined based on such assessment. For the year ended June 30, 2024, the HC&C Committee made a qualitative assessment that the strategic executive goals resulted in a 115% achievement. In addition, the annual incentive bonus plan allows for the HC&C Committee to apply an individual modifier of up to 25% increase or decrease to each individual Named Executive’s strategic executive goal component payout. For the year ended June 30, 2024, the HC&C Committee applied a 25% positive individual modifier to Ms. Carsley’s strategic executive goal payout factor. The resulting payouts to the Named Executives were 104.3% of target for Mr. Foss, 104.3% for Mr. Adelson, 111.5% for Ms. Carsley, 104.3% for Mr. Morgan, and 104.3% for Mr. Zengel. On August 4, 2023, the Company entered into performance share agreements with each of the Named Executives, with the threshold, target, and maximum share amounts listed in the above table. The performance share agreements entered into with the Named Executives in fiscal year 2024 are identical except for the number of shares. Each grant is comprised of three separate grants of performance shares that vest at the end of a three-year performance period based on the following: (1) the TSR over the three-year period in comparison to the companies in Compensation Peer Group plus the Reference Peers (comprising approximately 60% of the total performance shares grant value), (2) the Company’s Organic Revenue Growth CAGR over the three-year period against a target Organic Revenue Growth CAGR, where Organic Revenue Growth removes the impact of deconversion fees, acquisitions and divestitures during the performance period, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earnings releases for the relevant periods (comprising approximately 20% of the total performance shares grant value), and (3) the expansion of the Company’s non-GAAP adjusted operating margin over the three-year period against a target non-GAAP adjusted operating margin, where non-GAAP adjusted operating margin removes the impact of deconversion fees, acquisitions and divestitures during the performance period, sales of assets, as approved by the HC&C Committee, any other one-time non-GAAP adjustments that management makes in the Company’s earnings releases for the relevant period (comprising approximately 20% of the total performance shares grant value). See
Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards
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Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards
“Compensation Discussion and Analysis—Long Term Incentive Compensation—Performance Shares,” on page 42 for more information about the fiscal 2024 performance share grants. On August 4, 2023, the Company granted time-based restricted stock units to each of the Named Executives. The grants were identical for each of the Named Executives except for the number of restricted stock units. Each restricted stock unit is the economic equivalent of one share of common stock. Amounts may be settled in common stock of the Company or cash or any combination thereof. The restricted stock units vest in three equal annual installments beginning on the first anniversary of the grant date based on continued service with the Company.
Outstanding Equity Awards at Fiscal Year End Table
Outstanding Equity Awards at Fiscal Year End Table The following table provides information regarding outstanding stock options, restricted stock units, and performance shares held by the Named Executives as of June 30, 2024.
Outstanding Equity Awards at Fiscal Year End Table
| | | Option Awards | | | Stock Awards | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (2) | | David B. Foss | 7/1/2016 | 11,685 (4) | - | - | - | - | - | - | | | 8/4/2021 | - | - | - | - | - | 23,331 | 3,873,413 | | | 8/4/2021 | - | - | - | 5,184 | 860,648 | - | - | | | 8/4/2022 | - | - | - | - | - | 21,625 | 3,590,183 | | | 8/4/2022 | - | - | - | 9,611 | 1,595,618 | - | - | | | 8/4/2023 | - | - | - | - | - | 28,043 | 4,655,699 | | | 8/4/2023 | - | - | - | 18,695 | 3,103,744 | - | - | | Gregory R. Adelson | 8/4/2021 | - | - | - | - | - | 3,714 | 616,598 | | | 8/4/2021 | - | - | - | 825 | 136,967 | - | - | | | 8/4/2022 | - | - | - | - | - | 3,730 | 619,255 | | | 8/4/2022 | - | - | - | 1,658 | 275,261 | - | - | | | 8/4/2023 | - | - | - | - | - | 6,550 | 1,087,431 | | | 8/4/2023 | - | - | - | 4,367 | 725,009 | - | - | | Mimi L. Carsley | 7/17/2022 | - | - | - | 1,052 | 174,653 | - | - | | | 8/4/2022 | - | - | - | - | - | 2,739 | 454,729 | | | 8/4/2022 | - | - | - | 1,217 | 202,046 | 0 | 0 | | | 8/4/2023 | - | - | - | - | - | 5,411 | 898,334 | | | 8/4/2023 | - | - | - | 3,607 | 598,834 | - | - | | Craig K. Morgan | 8/4/2021 | - | - | - | - | - | 1,614 | 267,956 | | | 8/4/2021 | - | - | - | 358 | 59,435 | - | - | | | 8/4/2022 | - | - | - | - | - | 2,480 | 411,730 | | | 8/4/2022 | - | - | - | 1,102 | 182,954 | | 0 | | | 8/4/2023 | - | - | - | - | - | 3,014 | 500,384 | | | 8/4/2023 | - | - | - | 2,009 | 333,534 | - | - | | Stacey. E. Zengel | 8/4/2021 | - | - | - | - | - | 1,156 | 191,919 | | | 8/4/2021 | - | - | - | 257 | 42,667 | - | - | | | 8/4/2022 | - | - | - | - | - | 663 | 110,071 | | | 8/4/2022 | - | - | - | 442 | 73,381 | - | - | | | 8/4/2023 | - | - | - | - | - | 403 | 66,906 | | | 8/4/2023 | - | - | - | 805 | 133,646 | - | - |
Outstanding Equity Awards at Fiscal Year End Table
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Outstanding Equity Awards at Fiscal Year End Table
(1)Represents time-based restricted stock units granted to each Named Executive except Ms. Carsley on August 4, 2021, granted to each Named Executive on August 4, 2022 and August 4, 2023, and granted to Ms. Carsley on July 17, 2022. Restricted stock units typically vest in three equal annual installments, beginning on the first anniversary of the respective grant date based on continued service with the Company. (2)Amounts calculated by multiplying the closing market price of our common stock on June 30, 2024 ($166.02 per share) by the number of shares issuable under the restricted stock unit and performance share agreements. (3)Represents performance shares. For awards made in calendar years 2021, 2022 and 2023, performance shares vest based on (1) TSR against a selected peer group over a three-year performance period (where no performance shares vest if TSR over the three-year period is below the 25th percentile and 200% vest with performance at or above the 80th percentile), (2) the Company’s organic revenue CAGR over the three-year period against a target organic revenue CAGR (where no performance shares vest if three-year CAGR revenue is below 6.5% for fiscal 2022 awards, 7% for fiscal 2023 awards, and 6.5% for fiscal 2024 awards and 200% vest with performance at or above 9.0% for fiscal 2022 awards, 9.5% for fiscal 2023 awards, and 8.5% for fiscal 2024 awards), and (3) the expansion of the Company’s non-GAAP adjusted operating margin over the three-year period against a target non-GAAP adjusted operating margin (where no performance shares vest if three-year non-GAAP adjusted operating margin is below 1.0% for fiscal 2022 awards, 0.1% for fiscal 2023 awards, and 0.3% for fiscal 2024 awards and 200% vest with performance at or above 2.1% for fiscal 2022 awards and 1.0% for fiscal 2023 and fiscal 2024 awards). Share amounts disclosed reflect the target number of shares that could vest upon performance at target. (4)The option exercise price is $87.27. The option vested and became exercisable on July 1, 2019. The option expiration date is July 1, 2026.
Option Exercises and Stock Vested Table
Option Exercises and Stock Vested Table The following table provides information on stock option exercises by the Named Executives and stock awards (restricted stock units and performance shares) that vested during fiscal year 2024.
Option Exercises and Stock Vested Table
| Option Awards | | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting ($) | Value Realized on Vesting ($) | | David B. Foss (1) (2) (3) (4) | - | - | 33,705 | 5,592,226 | | Gregory R. Adelson (1) (2) (3) | - | - | 3,211 | 538,630 | | Mimi L. Carsley (3) (5) | - | - | 1,662 | 279,824 | | Craig K. Morgan (1) (2) (3) | - | - | 1,600 | 268,998 | | Stacey E. Zengel (1) (2) (3) | - | - | 971 | 162,725 |
Option Exercises and Stock Vested Table
(1)Value of the shares acquired on August 29, 2023, at the closing market price of such shares on August 28, 2023. (2)Value of the shares acquired on August 3, 2023, at the closing market price of such shares on August 2, 2023. (3)Value of the shares acquired on August 4, 2023, at the closing market price of such shares on August 3, 2023. (4)Value of the shares acquired on January 1, 2024, at the closing market price of such shares on December 29, 2023.
Option Exercises and Stock Vested Table
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Option Exercises and Stock Vested Table
(5)Value of the shares acquired on July 17, 2023, at the closing market price of such shares on July 14, 2023.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation The following table sets forth the contributions made by our Named Executives and the earnings accrued on all such contributions under the Company’s non-qualified Deferred Compensation Plan during the fiscal 2024.
Nonqualified Deferred Compensation
| Name | Executive Contributions in Last Fiscal Year | Registrant Contributions in Last Fiscal Year | Aggregate Earnings (Losses) in Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End | | | ($) | ($) | ($) (1) | ($) | ($) (2) | | David B. Foss | - | - | - | - | - | | Gregory R. Adelson | - | - | 4,200 | - | 621,832 | | Mimi L. Carsley | - | - | - | - | - | | Craig K. Morgan | - | - | - | - | - | | Stacey E. Zengel | - | - | - | - | - |
Nonqualified Deferred Compensation
(1)These amounts were not included in the Summary Compensation Table because plan earnings were not preferential or above market. (2)The executive contributions included in this column for Mr. Adelson relate to an award of performance shares that was granted to Mr. Adelson before he was a Named Executive and therefore were not previously reported in the Summary Compensation Table. Under the Company’s non-qualified Deferred Compensation Plan adopted in 2014, our Named Executives may voluntarily defer a portion of their compensation to one or more future years. While the plan allows the Company to offer deferral of all types of compensation, including salary, bonus and equity grants, to date the Company has only offered a program to defer receipt of equity compensation upon vesting of performance shares and restricted stock units. Dividends payable on the deferred shares are invested in the Jack Henry federal rate fund. Aggregate earnings (losses) represents stock price appreciation (or depreciation) on deferred shares, dividends, and interest paid on prior dividends. Performance shares and restricted stock units that are deferred under the Company’s Deferred Compensation Plan may be settled in stock or, at the option of the HC&C Committee, in cash.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control The Named Executives would each receive certain payments and benefits in the event of certain types of termination of employment. In addition to the items discussed below, the Named Executives may be entitled to benefits that are generally available to all salaried Company employees, including distributions under the 401(k) plan, certain disability benefits, and accrued vacation. Because these payments or benefits do not discriminate in scope, terms, or operation in favor of the Named Executive, such payments and benefits are not included below. The following descriptions are qualified in their entirety by reference to the relevant agreements. The Company has no employment contracts with any of its executive officers.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
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Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
Change in Control Termination As of June 30, 2024, each of the Named Executives, was a participant in the Severance Plan. Under the Severance Plan, change in control has the meaning given it under the Company’s 2015 Equity Incentive Plan, which defines change in control as (i) an acquisition of 20% or more of the stock of the Company, (ii) when individuals who make up the Board, or individuals who join the Board who were approved in advance by at least a majority of the incumbent Board, cease to constitute at least a majority of the Board, (iii) consummation of a transaction where persons who were stockholders immediately prior to the transaction own 50% or less of the voting power after the transaction, (iv) consummation of a transaction where less than a majority of members of the resulting Board following the transaction were members of the Board who approved the transaction, or (v) approval by the stockholders of a liquidation of the Company or sale of all or substantially all of the Company’s assets. The Severance Plan provides a lump sum cash payment severance benefit for the Chief Executive Officer equal to 200% of the Chief Executive Officer’s annual salary and target annual incentive bonus. The Severance Plan provides a lump sum cash payment severance benefit for the Named Executives other than the Chief Executive Officer equal to 150% of the Named Executive’s annual salary and target annual incentive bonus. These cash benefits are paid in a lump sum payment within 60 days following the executive’s termination. In addition, the Named Executives will receive a lump sum prorated amount of target annual bonus for the current fiscal year and welfare benefit consisting of payments equal to the cost of health benefit continuation premiums for 18 months. The termination benefits under the Severance Plan will be paid only upon a termination of the Named Executive by the Company without “Cause” or by the Named Executive for “Good Reason” (both as defined in the Severance Plan) during the 90 days prior to and the two years following any change in control (i.e., “double trigger”). In order for a Named Executive to receive severance benefits under the Severance Plan, the Named Executive must execute and not revoke an effective release of claims and comply with a two-year post-employment non-competition covenant, a two-year post-employment customer and employee non-solicitation covenant, and a continuous non-disparagement covenant, as well as any other confidentiality agreements or other agreements between the Named Executive and the Company. Upon a change in control, all unvested restricted stock units that are not assumed, substituted, or replaced by the successor or surviving entity (or a parent or subsidiary thereof) in connection with the change in control will become vested immediately prior to the change in control. Any unvested restricted stock units that are assumed, substituted, or replaced by the successor or surviving entity (or a parent or subsidiary thereof) in connection with a change in control will remain outstanding and upon a qualified termination of the grantee 90 days prior to or 2 years after the change in control all such unvested restricted stock units will vest. Any unvested restricted stock units will vest upon a qualified termination of the grantee 90 days prior to or 2 years after the change in control. Upon a change in control, all performance shares automatically convert into time-based awards. The number of such converted shares for TSR-based awards shall equal the greater of the number of target shares for such award or the number of shares that would have vested based on actual TSR achievement if the change in control date were the measuring date for TSR measurement. The number of such converted shares for grants other than TSR-based awards shall equal the number of target shares for such award. If the surviving entity does not assume this award, or substitute or replace it with an award with substantially identical economic terms, then all shares shall vest in full. If the surviving entity does assume, substitute, or replace this award in connection with a
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
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Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
change in control, all such shares shall vest in full upon a qualified termination of the grantee 90 days prior to or 2 years after the change in control. The table below reflects the cash severance benefit payments and estimated welfare benefit payments that would be paid under the Severance Plan, as if the triggering events occurred on June 30, 2024, the last day of the last completed fiscal year. The table also shows the value as of June 30, 2024, of all issued restricted stock units and performance shares with respect to which restrictions would lapse upon a change in control and termination. The below table assumes the performance shares vested at target rather than actual TSR achievement.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
| Name | Cash Payment Severance Benefit ($) | Welfare Benefit ($) | Equity Incentive Vesting ($) | Total ($) | | David B. Foss | 5,622,500 | 28,701 | 17,679,304 | 23,330,505 | | Gregory R. Adelson | 2,346,000 | 46,979 | 3,460,521 | 5,853,500 | | Mimi L. Carsley | 2,071,000 | 43,812 | 2,328,597 | 4,443,409 | | Craig K. Morgan | 1,644,750 | 28,375 | 1,755,994 | 3,429,119 | | Stacey E. Zengel | 1,074,315 | 28,700 | 618,591 | 1,721,606 |
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
Under the 2017 Annual Incentive Plan, the HC&C Committee, in its sole discretion, has the option to accelerate time periods for purposes of vesting of, or receiving payment with respect to, an incentive award in connection with a change in control. The 2017 Annual Incentive Plan defines change in control to include (i) an acquisition of more than 50% of the common stock or the voting power of the Company, (ii) certain changes to the composition of the Board resulting in incumbent directors no longer constituting a majority of the Board, (iii) certain mergers or sales of all or substantially all of the Company’s assets, and (iv) stockholder approval of complete liquidation or dissolution of the Company. Death, Disability, Retirement, Termination without Cause and Resignation for Good Reason The Severance Plan provides that each Named Executive who is terminated by the Company without “Cause” or who terminates their employment for “Good Reason” (both as defined in the Severance Plan) not in connection with a change in control, shall receive severance payments equal to two times the sum of current annual base salary for the Chief Executive Officer, paid ratably over two years, and one and a half times the annual base salary for other Named Executives, paid ratably over one and a half years. The Named Executives also receive a prorated amount of the annual bonus the Named Executive would have received for the current performance year had the Named Executive remained employed through the end of such performance year, paid in a single lump sum at the same time as annual bonus payments are made to active annual bonus participants for such performance year. In addition, the Named Executives receive a lump sum welfare benefit equal to the cost of health benefit continuation premiums for 18 months. In order for a Named Executive to receive severance benefits under the Severance Plan, the Named Executive must execute and not revoke an effective release of claims and comply with a two-year post-employment non-competition covenant, a two-year post-employment customer and employee non-solicitation covenant, and a continuous non-disparagement covenant, as well as any other confidentiality agreements or other agreements between the Named Executive and the Company.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
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Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
The table below reflects the cash severance benefit payments and estimated welfare benefit payments that would be paid under the Severance Plan, as if the triggering events occurred on June 30, 2024, the last day of the last completed fiscal year.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
| Name | Cash Payment Severance Benefit ($) | Welfare Benefit ($) | Total ($) | | David B. Foss | 3,027,500 | 28,701 | 3,056,201 | | Gregory R. Adelson | 1,466,250 | 46,979 | 1,513,229 | | Mimi L. Carsley | 1,294,375 | 43,812 | 1,338,187 | | Craig K. Morgan | 1,052,640 | 28,375 | 1,081,015 | | Stacey E. Zengel | 781,320 | 28,700 | 810,020 |
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
Performance shares contain terms which allow for the pro-rata vesting of awards upon a Named Executive’s death, disability, or retirement based on full months of service following the grant date. Retirement is defined in the performance share awards as termination with the stated purpose of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. With respect to a Named Executive’s death, disability, or retirement during the term, at the end of the three-year term of the grant, the award will be calculated and a pro-rata portion will be settled to the grantee based on completed full months of service. For example, if an eligible grantee dies, becomes disabled, or retires 18 months after the start of the fiscal year for which the award was granted, he or she would be credited with 18 months of service and would be entitled to one-half of any amount that vests on performance measured at the end of the three-year grant. The following table summarizes the severance benefits due to the Named Executives upon their death, disability, or retirement under their applicable performance share award agreements (in each case assuming their death, disability or retirement occurred on June 30, 2024). As of June 30, 2024, only Mr. Foss, Mr. Adelson, and Mr. Zengel were eligible for retirement under the performance share award definition. Mr. Zengel retired from the Company effective June 30, 2024. On the date of his retirement, Mr. Zengel qualified for the definition of retirement under his outstanding performance share awards. The below table shows the benefits actually due to Mr. Zengel under his outstanding performance share awards, assuming the TSR and other performance metrics occur at target.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
| Name | Performance Share Vesting (1) ($) | | David B. Foss | 7,818,767 | | Gregory R. Adelson | 1,391,912 | | Mimi L. Carsley | 602,597 | | Craig K. Morgan | 709,237 | | Stacey E. Zengel | 368,786 |
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
(1)These calculations represent the value of unvested performance share awards at June 30, 2024 based on the closing share price at that date that would become vested upon their death,
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
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Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
disability, or retirement (if eligible) and assumes the TSR and other performance metrics were at target. Restricted stock units contain terms which allow for continued vesting in accordance with the vesting schedule of all unvested awards upon a Named Executive’s retirement. For this purpose, retirement is defined as termination with the express reason of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. The grantee must also remain actively employed as a full-time employee for six months following the date of the award to qualify for such continued vesting. Further, the grantee must abide by certain restrictive covenants, including non-competition, non-solicit, and non-disparagement covenants. Any breach of such restricted covenants will result in a forfeiture of all remaining non-settled awards. The following table summarizes the severance benefits due to the Named Executives upon their retirement under their applicable restricted stock unit award agreements (in each case assuming their retirement occurred on June 30, 2024). As of June 30, 2024, only Mr. Foss, Mr. Adelson, and Mr. Zengel were eligible for retirement. Mr. Zengel retired from the Company effective June 30, 2024. On the date of his retirement, Mr. Zengel qualified for the definition of retirement for the outstanding restricted unit awards. The following table summarizes the benefits actually due to Mr. Zengel under his outstanding restricted stock units, assuming his continued compliance with restrictive covenants.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
| Name | Restricted Stock Unit Vesting (1) ($) | | David B. Foss | 5,560,010 | | Gregory R. Adelson | 1,137,237 | | Stacey E. Zengel | 249,694 |
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
(1)These calculations represent the value of unvested restricted stock unit awards at June 30, 2024 based on the closing share price at that date that would continue to vest following retirement assuming ongoing compliance with restrictive covenants. Under Mr. Foss’ stock option agreement, upon his disability or death, Mr. Foss (or his estate) would have up to one year to exercise any vested options, but in no event beyond the expiration date. Upon resignation or termination not for cause, Mr. Foss would have up to 90 days to exercise any vested options, but in no event beyond the expiration date.
PAY RATIO DISCLOSURE
PAY RATIO DISCLOSURE Our compensation and benefits philosophy and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. Compensation rates are benchmarked based on job level and responsibilities and are set to be market-competitive in the location in which the jobs are performed. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop, and contribute. We employ approximately 7,200 people in the U.S. at 19 Company locations with a majority of our employees working from remote locations. Under rules adopted pursuant to the Dodd-Frank Act of 2010, Jack Henry is required to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to David Foss, our Chief Executive Officer, during the fiscal year ended June 30, 2024. To determine the median employee, we identified our employee population as of June 30, 2024. This population consisted of 7,182 employees. We are required to identify the median employee using a “consistently applied compensation measure” (“CACM”). We chose a CACM of calculating the actual base salary earnings (or base wages for hourly employees, which is exclusive of overtime wages) and annual bonus during the fiscal year across the employee population, excluding our Chief Executive Officer. We believe actual base salary earnings (or base wages for hourly employees, which is exclusive of overtime wages) and annual bonus is a reasonable basis on which to identify the median employee because those employees who receive commissions, equity awards, or overtime pay represent a relatively small portion of our employee population. After identifying our median employee based on actual base salary earnings and annual bonus, we then calculated the annual total compensation for this employee using the same methodology we use for our Named Executives as set forth in the fiscal 2024 Summary Compensation Table included in this Proxy Statement. Based on this calculation, this median employee’s annual total compensation for fiscal 2024 was $86,594. The annual total compensation of the Chief Executive Officer for fiscal 2024 (as set forth in the Summary Compensation Table on page 52) was $10,963,138 resulting in a pay ratio of 127 to one.
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE The below disclosure provides information regarding the Company’s performance and the “compensation actually paid” (“CAP”) to our principle executive officer (“PEO”) and our other non-PEO Named Executives (collectively, the “Other NEOs”) in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K. For a discussion of the Company’s philosophy and objectives for executive compensation, please review the Compensation Discussion and Analysis beginning on page 29.
PAY VERSUS PERFORMANCE
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PAY VERSUS PERFORMANCE
| Year | Summary Compensation Table Total for PEO ($) (1) | Compensation Actually Paid to PEO ($) (2) | Average Summary Compensation Table Total for Non-PEO Named Executives Officers ($) (3) | Average Compensation Actually Paid to Non-PEO Named Executives Officers ($) (4) | Value of Initial Fixed $100 Investment on June 30, 2020 Based on | | Net Income (in thousands) ($) | Non-GAAP Adjusted Operating Income (in thousands) ($) (6) | | | | | | | Total Shareholder Return ($) (5) | Peer Group Total Shareholder Return ($) (5) | | | | 2024 | 10,963,138 | 11,309,667 | 2,204,660 | 1,835,286 | 94.57 | 184.18 | 381,816 | 524,099 | | 2023 | 10,439,026 | 4,308,412 | 1,535,887 | 553,341 | 94.07 | 144.74 | 366,646 | 472,936 | | 2022 | 9,758,392 | 15,054,940 | 1,679,606 | 2,269,083 | 100.03 | 111.53 | 362,916 | 454,482 | | 2021 | 8,692,656 | (392,735) | 1,595,708 | 342,431 | 89.86 | 133.46 | 311,469 | 405,500 |
PAY VERSUS PERFORMANCE
(1)Mr. Foss was the Company’s PEO for fiscal years 2021, 2022, 2023, and 2024. (2)The below table provides the adjustments required by SEC rules to calculate CAP amounts from the Summary Compensation Table (“SCT”) Total of our PEO. SCT Total and CAP amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v) of Regulation S-K.
Calculation of Compensation Actually Paid to PEO
Calculation of Compensation Actually Paid to PEO
Calculation of Compensation Actually Paid to PEO
| | 2024 | 2023 | 2022 | 2021 | | Summary Compensation Table Total | $10,963,138 | $10,439,026 | $9,758,392 | $8,692,656 | | (Deduct): Amount reported for stock and option awards in SCT Total for the covered fiscal year | (8,728,670) | (8,571,735) | (7,557,777) | (6,447,156) | | Add: Fair value at fiscal year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 7,460,927 | 5,964,481 | 8,685,477 | 4,389,636 | | Add (Deduct): Year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | 666,228 | (1,294,656) | 1,941,564 | (3,169,451) | | Add (Deduct): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | 948,044 | (2,228,704) | 2,227,284 | (3,858,419) | | (Deduct): Fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | — | — | — | — | | CAP Amounts (as calculated) | $11,309,667 | $4,308,412 | $15,054,940 | $(392,735) |
Calculation of Compensation Actually Paid to PEO
The fair value of the equity awards was calculated in the same manner as the Company uses to calculate the grant date fair value of the awards, but with updated assumption values as of the measurement date. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2024. (3)The dollar amounts reported are the average amounts of total compensation reported for the Other NEOs for each corresponding year in the “Total” column of the SCT. For each of fiscal 2024, 2023, 2022, and 2021, the Other NEOs were as follows: •Fiscal 2024: Gregory R. Adelson, Mimi L. Carsley, Craig K. Morgan, and Stacey E. Zengel. •Fiscal 2023: Gregory R. Adelson, Mimi L. Carsley, Craig K. Morgan, Stacey E. Zengel, and Kevin D. Williams
Calculation of Compensation Actually Paid to PEO
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Calculation of Compensation Actually Paid to PEO
•Fiscal 2022: Kevin D. Williams, Gregory R. Adelson, Craig K. Morgan, Stacey E. Zengel, and Teddy I. Bilke •Fiscal 2021: Kevin D. Williams, Gregory R. Adelson, Craig K. Morgan, and Teddy I. Bilke (4)The below table provides the adjustments required by SEC rules to calculate the average CAP amount from the SCT Total of our Other NEOs. SCT Total and CAP amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v) of Regulation S-K.
Calculation of Average Compensation Actually Paid to Other NEOs
Calculation of Average Compensation Actually Paid to Other NEOs
Calculation of Average Compensation Actually Paid to Other NEOs
| | 2024 | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total | $2,204,660 | $1,535,887 | $1,679,606 | $1,595,708 | | (Deduct): Average amount reported for stock and option awards in SCT Total for the covered fiscal year | (1,259,258) | (866,956) | (892,433) | (745,656) | | Add: Average fair value at fiscal year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 1,044,536 | 617,691 | 1,025,592 | 507,689 | | Add (Deduct): Average year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | (87,939) | (291,438) | 174,528 | (406,496) | | Add (Deduct): Average change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | (66,713) | (208,992) | 281,790 | (608,813) | | (Deduct): Average fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | — | (232,852) | — | — | | Average CAP Amounts (as calculated) | $1,835,286 | $553,341 | $2,269,083 | $342,431 |
Calculation of Average Compensation Actually Paid to Other NEOs
The fair value of the equity awards was calculated in the same manner as the Company uses to calculate the grant date fair value of the awards, but with updated assumption values as of the measurement date. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2024. (5)Total Shareholder Return (“TSR”) represents the cumulative TSR for the measurement period beginning on June 30, 2020 of each fiscal year 2021, 2022, 2023, and 2024, respectively, assuming the value of the investment including reinvestment of dividends was $100. The TSR Peer Group consists of the S&P 1500 Software and Services Index, which is used for our Stock Performance presentation set forth in our Annual Report on Form 10-K for the year ended June 30, 2024. (6)Our Company-Selected Measure is non-GAAP adjusted operating income (see page 36 in the Compensation Discussion and Analysis for a discussion of this metric in executive compensation design). Non-GAAP adjusted operating income is a non-GAAP financial measure that excludes or has otherwise been adjusted for one-time non-GAAP adjustments made by management in financial earnings releases to remove the impact of deconversion fees, acquisitions and divestitures, gain/loss on sale of assets, and any other one-time non-GAAP adjustments as approved by the HC&C Committee and also adds back corporate bonuses that are dependent on achievement of certain operating income performance levels in the fiscal year.
Relationship Between Compensation Actually Paid and Performance
Relationship Between Compensation Actually Paid and Performance The below graphs show the relationship of “compensation actually paid” to our PEO and Other NEOs to (a) the TSR of both the Company and the S&P 1500 Software and Services Index, (b) the Company’s net income, and (c) the Company’s Non-GAAP adjusted operating income.
Relationship Between Compensation Actually Paid and Performance
| 66 | 2024 Proxy Statement | |
Relationship Between Compensation Actually Paid and Performance
| | 2024 Proxy Statement | 67 |

DEF 14A of Jack Henry & Associates Inc

Fiscal 2025 Director Nominees

Fiscal 2025 Director Nominees

Fiscal 2025 Director Nominees

New Director Nominees

New Director Nominees

New Director Nominees

Executive Compensation Highlights

Corporate Governance Highlights

Corporate Governance Highlights

ELECTION OF DIRECTORS

ELECTION OF DIRECTORS

Procedure

Director Qualifications and Selection

Director Qualifications and Selection

Director Qualifications and Selection

Nominees for Election

Nominees for Election

Nominees for Election

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Director Compensation

Fiscal 2024 Compensation Components

Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards

Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards

Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards

Total Shareholder Return, Organic Revenue Growth, Non-GAAP Adjusted Operating Margin Expansion, and Results of Fiscal 2022 Performance Share Awards

Compensation Philosophy and Objectives

Process for Establishing Compensation

Process for Establishing Compensation

Process for Establishing Compensation

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Annual Incentive Cash Bonuses

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Long-Term Incentive Compensation

Termination Benefits Agreements and Executive Severance Plan

Termination Benefits Agreements and Executive Severance Plan

Termination Benefits Agreements and Executive Severance Plan

Deferred Compensation Plan

Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Polices and Practices Related to the Grant of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Fiscal 2024 Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Fiscal 2024 Grants of Certain Equity Awards Close in Time to the Release of Material Nonpublic Information

Summary Compensation Table

Summary Compensation Table

Summary Compensation Table

Grants of Plan-Based Awards Table

Grants of Plan-Based Awards Table

Grants of Plan-Based Awards Table

Grants of Plan-Based Awards Table

Grants of Plan-Based Awards Table

Grants of Plan-Based Awards Table

Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards

Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards