DEF 14A of Workday, Inc.
Filed May 7, 2024 · FY20240001104659-24-058010
ELECTION OF DIRECTORS AND GOVERNANCE
ELECTION OF DIRECTORS AND GOVERNANCE Workday’s business and affairs are managed by or under the direction of our Board of Directors. The Board is organized into three classes, with the members of each class up for election once every three years. The Board monitors and reviews with management both the performance of Workday (in relation to its financial objectives, major goals, strategies, and competitors) and Workday’s long-term strategic business plans, as well as other pertinent issues affecting our company. Our Board recommends that you vote FOR each of the below nominees to serve as Class III directors until the 2027 Annual Meeting of Stockholders.
ELECTION OF DIRECTORS AND GOVERNANCE
| NOMINEES | DIRECTOR SINCE | INDEPENDENT | CURRENT COMMITTEES | | Aneel Bhusri, 58 Co-Founder and Executive Chair, Workday | 2005 | | | | Thomas F. Bogan, 72 Former Vice Chair, Corporate Development, Workday | 2022 | | Investment | | Lynne M. Doughtie, 61 Former U.S. Chair and Chief Executive Officer, KPMG LLP | 2021 | | Audit, Compensation |
Nominees for Director
Nominees for Director
Nominees for Director
| ANEEL BHUSRI | | | | Co-Founder and Executive Chair, Workday | | | | Age: 58 Director since 2005 Chair of the Board | Workday Committees: • None | | | Biography | | | | Aneel Bhusri co-founded Workday in 2005 and has served as a Director since then, including as Chair from 2012 to 2014 and from April 2021 to the present. He is our Executive Chair and was our Co-Chief Executive Officer from August 2020 through January 2024 after serving as Chief Executive Officer from 2014 to August 2020. Mr. Bhusri also served as Co-Chief Executive Officer from 2009 to 2014 and as President from 2007 to 2009. From 1993 to 2004, Mr. Bhusri held a number of senior management positions with PeopleSoft, Inc., including Vice Chairman of its board of directors from 1999 to 2002. Mr. Bhusri is currently an advisory partner at Greylock Partners, a Silicon Valley venture capital firm that he has been associated with since 1999, and prior to that time worked at Norwest Venture Partners and Morgan Stanley. He has served as a director of General Motors Company since October 2021 and currently serves as a director of the Workday Foundation. He served as a director of Intel Corporation from 2014 to November 2019 and of Pure Storage, Inc. from 2010 to 2018. | | | | Qualifications | | | | Mr. Bhusri received bachelor’s degrees in electrical engineering and economics from Brown University, and a master’s degree in business administration from Stanford University, where he has served as a member of the Board of Trustees since June 2019. He brings to our Board extensive executive leadership and operational experience, including his experience and familiarity with our business as a co-founder and Executive Chair. | | |
Nominees for Director
| THOMAS F. BOGAN | | | | Former Vice Chair, Corporate Development, Workday | | | | Age: 72 Director since 2022 | Workday Committees: • Investment | | | Biography | | | | Tom Bogan joined Workday in August 2018 through our acquisition of Adaptive Insights and served as Vice Chair, Corporate Development, from February 2021 to January 2022. From February 2020 to February 2021, Mr. Bogan served as Vice Chair with responsibility for our Workday Strategic Sourcing business, and from 2018 to February 2020, he was Executive Vice President of our Planning Business Unit. At Adaptive Insights, Mr. Bogan was Chief Executive Officer and a director from 2015 until its acquisition by Workday. Mr. Bogan has served on the board of Aspen Technology, Inc. since May 2022. From 2007 until January 2019, he was a director of Apptio, Inc., including its Chair from 2012 to January 2019, and a director of Citrix Systems, Inc. from 2003 to 2016. He currently serves as a director of various privately held companies. | | | | Qualifications | | | | Mr. Bogan received a bachelor’s degree in accounting from Stonehill College. He brings to our Board extensive executive leadership experience and expertise in software technology companies, including experience and familiarity with our business. | | |
Nominees for Director
| LYNNE M. DOUGHTIE | | | | Former U.S. Chair and Chief Executive Officer, KPMG LLP | | | | Age: 61 Director since 2021 Independent | Workday Committees: • Audit • Compensation | | | Biography | | | | Lynne M. Doughtie was U.S. Chair and Chief Executive Officer of KPMG LLP, a global leader in audit, tax, transaction, and advisory services, from 2015 until her retirement in June 2020. Prior to that, she served in many leadership roles after joining KPMG in 1985, including as Vice Chair of the firm’s U.S. Advisory business from 2011 to 2015. Ms. Doughtie has been a director of The Boeing Company since January 2021. She also serves on the board of directors of several nonprofit organizations and on the board of advisors of various private companies and educational institutions. | | | | Qualifications | | | | Ms. Doughtie received a bachelor’s degree in accounting from Virginia Tech. She brings to our Board extensive experience in risk management and information security from her years at KPMG, as well as her experience advising organizations on complex global business matters and strategies across industries and financial expertise. | | |
Continuing Directors
Continuing Directors
Continuing Directors
| CHRISTA DAVIES | | | | Chief Financial Officer and Executive Vice President of Global Finance, Aon plc | | | | Age: 53 Director since 2012 Independent | Workday Committees: • Audit Committee (Chair) | | | Biography | | | | Christa Davies is the Chief Financial Officer and Executive Vice President of Global Finance at Aon plc, a global risk management, insurance, and human resources solutions company. She has served as Aon’s Chief Financial Officer since 2008 and as Executive Vice President of Global Finance since 2007. Prior to joining Aon, Ms. Davies spent five years at Microsoft Corporation, most recently as a Corporate Vice President and the Chief Financial Officer of the Platform & Services Division. Ms. Davies has also served as a director of Stripe, Inc. since August 2020. | | | | Qualifications | | | | Ms. Davies received a bachelor’s degree in mechanical engineering, majoring in Aerospace Engineering, from the University of Queensland in Australia, and earned a master’s degree in business administration as a Fulbright Scholar from Harvard Business School. She brings to our Board extensive experience in the software and technology industries, as well as financial expertise. | | |
Continuing Directors
| CARL M. ESCHENBACH | | | | Chief Executive Officer, Workday | | | | Age: 57 Director since 2018 | Workday Committees: • None | | | Biography | | | | Carl M. Eschenbach has been our Chief Executive Officer since February 2024 after serving as our Co-Chief Executive Officer since December 2022. Mr. Eschenbach was a general partner at Sequoia Capital Operations, LLC, a venture capital firm, from 2016 to December 2022, where he currently serves as a venture partner. Prior to that, Mr. Eschenbach spent 14 years at VMware, Inc., a leading innovator in enterprise software, where he held a number of leadership roles in operations, most recently as its President and Chief Operating Officer from 2012 to 2016. Prior to that, Mr. Eschenbach held various sales management positions with Inktomi Corporation, 3Com Corporation, Lucent Technologies, Inc., and EMC Corporation. Mr. Eschenbach served as a director of Aurora Innovation, Inc. from March 2019 to March 2023, UiPath, Inc. from December 2020 to March 2023, Zoom Video Communications, Inc. from 2016 to January 2023, and Snowflake Inc. from May 2019 to April 2023. He has served as a director of Palo Alto Networks, Inc. since 2013. | | | | Qualifications | | | | Mr. Eschenbach received an electronics technician diploma from DeVry University. He brings to our Board over 30 years of operational and sales experience in the technology industry and deep knowledge of high-growth companies. | | |
Continuing Directors
| WAYNE A.I. FREDERICK, M.D. | | | | President Emeritus, Howard University | | | | Age: 52 Director since 2022 Independent | Workday Committees: • Nominating and Governance | | | Biography | | | | Wayne A.I. Frederick, M.D. is the President Emeritus of Howard University, having previously served as the President from 2014 through August 2023, and is the distinguished Charles R. Drew Professor of Surgery at the Howard University College of Medicine. He is also a practicing cancer surgeon at Howard University Hospital. Prior to serving as President, Dr. Frederick served as Howard University’s interim president (elected 2013) after serving as provost and chief academic officer for more than a year. Following his post-doctoral research and surgical oncology fellowships at the University of Texas MD Anderson Cancer Center, Dr. Frederick began his academic career as associate director of the Cancer Center at the University of Connecticut. Upon his return to Howard University, his academic positions included Associate Dean in the College of Medicine, Division Chief in the Department of Surgery, Director of the Cancer Center, and Deputy Provost for Health Sciences. Dr. Frederick is a fellow of the American College of Surgeons and belongs to numerous surgical organizations, including the American Surgical Association. Dr. Frederick served on the board of directors of Forma Therapeutics Holdings, Inc. from July 2020 to October 2022. He has served on the board of directors of Mutual of America Life Insurance Company since September 2020, Humana, Inc. since February 2020, and Insulet Corporation since October 2020, and is also a director of other privately held companies and charitable organizations. | | | | Qualifications | | | | Dr. Frederick received a bachelor’s degree in zoology, a doctor of medicine (M.D.), and a master’s degree in business administration from Howard University. He brings to our Board deep experience in business administration, extensive leadership skills, and insight into the healthcare and education industries. | | |
Continuing Directors
| MARK J. HAWKINS | | | | Former President and CFO Emeritus, Salesforce.com, Inc. | | | | Age: 65 Director since 2023 Independent | Workday Committees: • Audit | | | Biography | | | | Mark J. Hawkins served as President and CFO Emeritus of Salesforce, Inc., a software company, from February 2021 to November 2021, President and Chief Financial Officer from 2017 to February 2021, and Executive Vice President and Chief Financial Officer from 2014 to 2017. Prior to that, he served as Chief Financial Officer and Executive Vice President of Autodesk, Inc., a design software and services company, Chief Financial Officer and Senior Vice President of Finance & IT at Logitech International S.A., a global hardware company, and held various positions at Dell and Hewlett-Packard. Mr. Hawkins has served as a director of SecureWorks Inc. since 2016, Toast, Inc. since April 2020, and Cloudflare, Inc. since June 2022. He currently serves as a director of various privately held companies. | | | | Qualifications | | | | Mr. Hawkins received a bachelor’s degree from Michigan State University and a master’s degree in business administration from the University of Colorado. He brings to our Board extensive experience as an officer and director of publicly traded software and technology companies and financial expertise in the technology industry. | | |
Continuing Directors
| MICHAEL M. MCNAMARA | | | | Co-Founder and Chief Executive Officer, Samara Living Inc. | | | | Age: 67 Director since 2011 Independent | Workday Committees: • Audit • Nominating and Governance (Chair) | | | Biography | | | | Michael M. McNamara is Co-Founder and Chief Executive Officer of Samara Living Inc., a company specializing in factory built housing and additional dwelling units, a position he has held since May 2022. Prior to the formation of Samara Living Inc., Mr. McNamara served as Head of the Samara division of Airbnb, Inc. from January 2020 to May 2022. Mr. McNamara served as a venture partner at Eclipse Ventures, a Silicon Valley venture capital firm, from January 2019 to March 2022. From 2006 to 2018, Mr. McNamara was Chief Executive Officer of Flex Ltd., a company that delivers technology innovation, supply chain, and manufacturing solutions to diverse industries and end markets. He also held other senior roles at Flex after joining the company in 1994. Mr. McNamara has served as a director of Carrier Global Corporation since April 2020 and is also a director of several private companies. Mr. McNamara served as a director of Slack Technologies, Inc. from December 2019 to July 2021, and of Flex from 2005 to 2018. He served as a member of the Visiting Committee of the Sloan School of Management at Massachusetts Institute of Technology (“MIT”) from June 2019 to December 2022, on the board of advisors of MIT from 2014 to June 2019, and on the board of advisors of Tsinghua University School of Economics and Management from 2006 to 2019, and is an advisor to several other private companies and one investment fund. | | | | Qualifications | | | | Mr. McNamara received a bachelor’s degree in industrial management from the University of Cincinnati and a master’s degree in business administration from Santa Clara University. He brings to our Board extensive leadership and experience in managing international operations. His prior service as Flex’s Chief Executive Officer provides a management perspective to business and strategic decisions of the Board. | | |
Continuing Directors
| GEORGE J. STILL, JR. | | | | Partner Emeritus, Norwest Venture Partners | | | | Age: 66 Director since 2009 Lead Independent Director | Workday Committees: • Compensation (Chair) • Nominating and Governance • Investment | | | Biography | | | | George J. Still, Jr. has served as Lead Independent Director since 2012 and as Vice Chair of the Board since 2014. Mr. Still is a partner emeritus at Norwest Venture Partners, a global venture capital firm that he joined in 1989, and was a co-managing partner from 1994 to 2014. Prior to that, he was with Ernst & Young LLP, an accounting firm, and a partner at Centennial Funds, a venture capital firm. Mr. Still led the sole venture investment in PeopleSoft, Inc., where he served as a director from 1991 to 2001. Mr. Still manages Still Capital Partners, LLC, which he founded in 2014. He served as a director and Chairman of the Board of Stillwater Growth Corp I, LLC, a special purpose acquisition company, from February 2021 to December 2022. Mr. Still served on the Board of Advisors at the Tuck School of Business and the Center of Private Equity and Venture Capital at Tuck from 2011 to 2019. He currently serves as a director of two private companies. | | | | Qualifications | | | | Mr. Still received a bachelor’s degree in accounting from Pennsylvania State University and a master’s degree in business administration from the Tuck School of Business at Dartmouth College. He brings to our Board financial and investing acumen through his many years with Norwest Venture Partners. His service as an advisor to technology companies provides a valuable resource for our Board. | | |
Continuing Directors
| JERRY YANG | | | | Founding Partner, AME Cloud Ventures | | | | Age: 55 Director since 2013 Independent | Workday Committees: • Compensation • Investment (Chair) | | | Biography | | | | Jerry Yang is the founding partner of AME Cloud Ventures, an innovation investment firm that he started in 2012. Mr. Yang was a co-founder of Yahoo! Inc., where he served as a director from 1995 to 2012, and as Chief Executive Officer from 2007 to 2009. Mr. Yang also led Yahoo’s investments in Yahoo! Japan Corporation and Alibaba Group Holding Limited. Mr. Yang was a director of Lenovo, Inc. from 2014 to November 2023. He has been a director of Alibaba Group Holding Limited since 2014 and was also a director from 2005 to 2012. He is the Chair of the Stanford University Board of Trustees, and is a director and/or advisor of several other companies and foundations. | | | | Qualifications | | | | Mr. Yang received a bachelor’s degree and a master’s degree in electrical engineering from Stanford University, where he served on the Board of Trustees from 2005 until 2015 and from 2017 to the present. He brings to our Board extensive global leadership skills and deep experience in consumer internet technology. | | |
Considerations in Evaluating Director Nominees
Considerations in Evaluating Director Nominees The Nominating and Governance Committee is responsible for identifying, evaluating, and recommending candidates to the Board of Directors for Board membership, or the Board may conduct the process of identifying and evaluating Board candidates directly. A variety of methods are used to identify and evaluate director nominees, with the goal of maintaining and further developing an experienced and highly qualified Board. Candidates may come to our attention through current members of our Board, professional search firms, stockholders, or other persons. The Nominating and Governance Committee will recommend to the Board for selection all nominees to be proposed by the Board for election by the stockholders, including approval or recommendation of a slate of director nominees to be proposed by the Board for election at each annual meeting of stockholders, and, if requested by the Board, will recommend all director nominees to be appointed by the Board to fill interim director vacancies. The Board will be responsible for nominating members for election to the Board and for filling vacancies on the Board that may occur between annual meetings of stockholders. The Board may, either directly or upon the recommendation of the Nominating and Governance Committee, consider the minimum qualifications set forth below and such other factors as it may deem, from time to time, are in the best interests of Workday and our stockholders.
Non-Employee Director Compensation
Non-Employee Director Compensation Under our current compensation practices, our non-employee directors receive equity compensation for their service as directors, which we believe reinforces alignment with our stockholders and is consistent with our overall compensation philosophy. Our Board of Directors has historically approved annual refresh grants for our non-employee directors in respect of their Board and committee service at levels recommended by our Compensation Committee. Our compensation practices for non-employee directors are reviewed annually by our Compensation Committee. In addition, our executive compensation consultant, Semler Brossy Consulting Group (“Semler Brossy”), analyzes the competitive position of our director compensation program against the peer group used to review our executive compensation and examines how our director compensation levels, practices, and design features compare to members of our compensation peer group. Our Compensation Committee reviews this peer group to assess our director compensation against companies that have a similar size and growth trajectory as Workday and have similar business characteristics, such as companies focused on cloud applications or enterprise software. You can find additional information on our compensation peer group in the “Compensation Discussion and Analysis” section included elsewhere in this Proxy Statement. During fiscal 2024, in accordance with the practices described above, our Compensation Committee reviewed our non-employee director compensation program and recommended that the Board maintain the annual refresh grant of restricted stock units (“RSUs”) to our non-employee directors and to the Chair, Vice Chair, Lead Independent Director, and Committee members at the same levels disclosed in our 2023 Proxy Statement, which are set forth in the table below. The number of RSUs awarded to each director is determined by dividing the value of RSUs approved by the Board for each director by the trailing 20-day simple moving average stock price of Workday’s Class A common stock, calculated using the 20 trading days prior to the date of grant. These equity awards vest in one annual installment on May 5th of the year following the year of grant, assuming continuous service through the vest date.
Non-Employee Director Compensation
| Grant Type | Annual RSU Award | | Non-Employee Director | $320,000 | | Chair of the Board | 50,000 | | Vice Chair of the Board and Lead Independent Director | 50,000 | | Chair of the Audit Committee | 75,000 | | Member of the Audit Committee | 37,500 | | Chair of each of the Board’s other Committees | 50,000 | | Member of each of the Board’s other Committees | 25,000 |
Non-Employee Director Compensation
Additionally, upon joining our Board, a non-employee director will generally be granted an initial equity award in connection with his or her appointment to the Board. New directors joining our Board between annual meetings may also receive a pro-rated annual grant. Our 2022 Equity Incentive Plan provides that a continuing non-employee director may receive awards representing no more than $750,000 total value in any calendar year, and a newly appointed non-employee director may receive awards up to $1,750,000 in total value in the calendar year in which the individual first becomes a non-employee director, provided that any initial award granted in connection with the commencement of his or her initial service as a non-employee director shall not exceed $1,000,000 in value. Consistent with the above, in fiscal 2024, the Compensation Committee granted awards to the non-employee directors as set forth in the following table. We also reimburse directors for travel expenses incurred in connection with attendance at Board meetings and other Workday events and for expenses incurred for continuing education related to their service as directors. Other than as set forth in the table below, in fiscal 2024, we did not pay any cash compensation or other fees to, make any equity awards or non-equity awards to, or pay any other compensation to any person who served as a non-employee director for all or a portion of fiscal 2024 in respect of their service as members of our Board.
Non-Employee Director Compensation
| Name | Grant Date | Number of Shares Subject to RSU Award(1) | Value of RSU Award on the Date of Grant(2) | Total Compensation | | George J. Still, Jr. (Vice Chair) | 6/22/2023 | 2,226 | $491,946 | $491,946 | | Thomas F. Bogan | 6/22/2023 | 1,634 | 361,114 | 361,114 | | Ann-Marie Campbell | 6/22/2023 | 1,634 | 361,114 | 361,114 | | Christa Davies | 6/22/2023 | 1,989 | 439,569 | 439,569 | | Lynne M. Doughtie | 6/22/2023 | 1,811 | 400,231 | 400,231 | | Wayne A.I. Frederick, M.D. | 6/22/2023 | 1,515 | 334,815 | | | | 10/5/2023(3) | 107 | 21,950 | 356,765 | | Mark J. Hawkins | 3/5/2023(4) | 4,011 | 768,307 | | | | 6/22/2023 | 1,515 | 334,815 | | | | 10/5/2023(5) | 161 | 33,028 | 1,136,150 | | Michael M. McNamara | 6/22/2023 | 1,930 | 426,530 | 426,530 | | Lee J. Styslinger III | 6/22/2023(6) | 1,693 | 374,153 | 374,153 | | Jerry Yang | 6/22/2023 | 1,870 | 413,270 | 413,270 |
Non-Employee Director Compensation
RSU awards shown in the table above vested in full on May 5, 2024, other than as indicated in the following footnotes. The following table provides information regarding outstanding equity awards held by non-employee directors as of January 31, 2024:
Non-Employee Director Compensation
| | RSU AWARDS | | | Name | Number of Shares or Units of Stock That Have Not Vested | Market Value of Shares or Units of Stock That Have Not Vested(i) | | George J. Still, Jr. | 2,226 | $647,922 | | Thomas F. Bogan | 1,850 | 538,480 | | | 1,634 | 475,608 | | Ann-Marie Campbell | 1,634 | 475,608 | | Christa Davies | 1,989 | 578,938 | | Lynne M. Doughtie | 919 | 267,493 | | | 1,811 | 527,128 | | Wayne A.I. Frederick, M.D. | 3,280 | 954,710 | | | 1,515 | 440,971 | | | 107 | 31,144 | | Mark J. Hawkins | 4,011 | 1,167,482 | | | 1,515 | 440,971 | | | 161 | 46,862 | | Michael M. McNamara | 1,930 | 561,765 | | Jerry Yang | 1,870 | 544,301 |
Non-Employee Director Compensation
(i) The market value of unvested RSUs is calculated by multiplying the number of unvested shares held by the applicable director by the closing price of our Class A common stock on January 31, 2024, the last trading day of our fiscal year, which was $291.07. (2) The amounts included in the “Value of RSU Award on the Date of Grant” column represent the aggregate grant date fair value of the RSU awards calculated in accordance with Financial Accounting Standards Board, Accounting Standards Codification (“ASC”) Topic 718. The grant date fair value of each RSU award is measured based on the closing price of our Class A common stock on the date of grant. These amounts do not reflect the actual economic value that may ultimately be realized by the directors. (3) Dr. Frederick was granted RSUs on October 5, 2023, in the amount of $25,000 in connection with his appointment as a member of our Nominating and Governance Committee. (4) Mr. Hawkins was granted RSUs on March 5, 2023, in the amount of $750,000 in connection with his appointment to our Board, one-fourth of which vested on March 5, 2024, and the balance of which will vest in equal installments over the following 12 quarters, assuming continuous service through the applicable vesting dates. (5) Mr. Hawkins was granted RSUs on October 5, 2023, in the amount of $37,500 in connection with his appointment as a member of our Audit Committee. (6) Mr. Styslinger, who resigned from our Board on September 7, 2023, continues to provide services to Workday as an advisor. As such, his RSU award vested in full on May 5, 2024 in accordance with the terms of the grant.
Compensation Discussion and Analysis
(1) Mr. Rowe was appointed our Chief Financial Officer effective as of June 12, 2023. (2) Mr. Chakraborty was appointed our Co-President effective as of February 23, 2023, and previously served as our Executive Vice President, Product and Technology. (3) Ms. Larson served as our Chief Financial Officer until June 12, 2023, after which she ceased serving in such role but remained an employee of Workday through November 1, 2023, and continues to provide consulting services to Workday. (4) Mr. Bozzini served as our Chief Operating Officer through January 31, 2024. We refer to the executive officers in the table above collectively in this Compensation Discussion and Analysis and the accompanying compensation tables as our NEOs. The material terms of the compensation provided to our NEOs for fiscal 2024 are described in this section and set forth in more detail in the Summary Compensation Table and other tables that follow this section, as well as in the accompanying footnotes and narrative discussions relating to those tables. This section also discusses our executive compensation philosophy, objectives, and design; how and why the Compensation Committee arrived at the specific compensation policies and decisions involving our executive team, including our NEOs, during fiscal 2024; the role of Semler Brossy, the Compensation Committee’s outside compensation consultant for executive compensation decisions for fiscal 2024; and the peer companies used in evaluating executive officer compensation. The key elements of our fiscal 2024 executive compensation program included base salary, cash bonuses (other than for Mr. Bhusri), equity-based awards, and health and welfare programs. Our executive compensation program has been, and continues to be, weighted more heavily towards long-term incentives, which are delivered via equity grants in the form of RSUs with multi-year vesting, and for Mr. Eschenbach, also in the form of market-based RSUs that vest on achievement of meaningful stock price targets. The Compensation Committee believes that compensation in the form of equity helps to promote sustained, long-term stockholder value creation.
Fiscal 2024 Leadership Structure and Changes
Fiscal 2024 Leadership Structure and Changes In accordance with an established succession plan anticipated at the time of Mr. Eschenbach’s appointment as Co-Chief Executive Officer in December 2022, Mr. Eschenbach assumed sole Chief Executive Officer responsibilities and Mr. Bhusri transitioned to a full-time role as Executive Chair effective February 1, 2024, the start of our fiscal 2025. Mr. Eschenbach has extensive industry knowledge and highly relevant operating and advisory experience that is fundamental to our next phase of growth and our commitment to the continued creation of sustainable stockholder value. As Executive Chair, Mr. Bhusri serves as a strategic advisor to the Chief Executive Officer and other members of executive management and is particularly focused on advising Workday on innovation and the future direction of Workday’s technology platform. The close working relationship of Mr. Bhusri and Mr. Eschenbach began when Mr. Eschenbach joined our Board in 2018, and following this transition we expect it to continue to strengthen and be instrumental in continuing to drive growth and innovation while supporting our customers in their digital transformation journeys. Additionally, effective as of February 1, 2024, James A. Bozzini stepped down as our Chief Operating Officer. Mr. Bozzini continues to serve Workday as Executive Director of Enterprise Transformation. Certain of Mr. Bozzini’s responsibilities as Chief Operating Officer were assumed by other members of Workday management and Workday does not intend to appoint a new Chief Operating Officer at this time. Effective as of June 12, 2023, Barabara Larson stepped down as our Chief Financial Officer and the Board of Directors appointed Zane Rowe to serve as our Chief Financial Officer. Mr. Rowe brings significant financial and leadership experience to the role. As discussed in further detail below, to incentivize Mr. Rowe to accept this position and align his interest with our stockholders’ interests, we provided a compensation package consisting of base salary, a sign-on cash bonus, a target bonus under our annual cash bonus plan, and RSU awards. Ms. Larson continued in employment as Executive Vice President, focused on financial management and operations, through November 1, 2023, and continues to serve as a consultant to Workday. See “Post-Employment Compensation” below for a discussion of the compensation provided to Ms. Larson in her role an Executive Vice President and as a consultant to Workday. On February 23, 2023, Robynne Sisco stepped down as our Co-President, and we promoted one of our proven leaders, Sayan Chakraborty, from the role of Executive Vice President, Product and Technology, to Co-President.
Fiscal 2024 Compensation Highlights
Fiscal 2024 Compensation Highlights • Strengthened our leadership team. We strengthened our leadership team with several new appointments, including appointing Mr. Rowe, a seasoned finance executive, as our Chief Financial Officer. • Expanded our stockholder engagement. To help us better understand the perspectives of our stockholders, we expanded our stockholder engagement program. During fiscal 2024, we engaged with several of our largest stockholders regarding our compensation program and we received valuable feedback during those discussions. See “Directors and Corporate Governance — Stockholder Engagement” for further details. • Adopted a severance and equity acceleration benefit. To remain competitive in attracting top executive talent and to promote consistency across our executives, we amended and restated our executive severance policy to provide severance and equity acceleration benefits to eligible executives in the event Workday terminates their employment without cause outside of a change in control. See “Post-Employment Compensation — Executive Severance and Change in Control Policy” for further details. • Demonstrated strong pay for performance alignment in our cash bonus program. In fiscal 2024, we delivered strong financial and operational performance across key pre-set company performance metrics. The total bonus pool under our cash bonus program for NEOs and all other eligible employees in fiscal 2024 was funded at 100% of target. The Compensation Committee considered this outcome to be appropriate given alignment with the strong stockholder return during the year. See “Elements of Our Executive Compensation Program — Cash Bonuses” for further details. • Continued our emphasis on aligning pay with sustained, long-term stockholder outcomes. As further discussed in “Elements of Our Executive Compensation Program,” for fiscal 2024, we continued to use time-based RSU awards to balance our retention goals in the near-term as well as to motivate our executives to take actions in support of longer-term growth and alignment with stockholder interests.
Executive Compensation Philosophy and Objectives
Executive Compensation Philosophy and Objectives Our ability to compete and succeed in a highly competitive environment is directly correlated to our ability to recruit, incentivize, and retain talented executives. In order to achieve our strategic growth initiatives, we need to attract and retain experienced leaders, as we did in fiscal 2024 with the appointment of Mr. Rowe as our Chief Financial Officer and the promotion of Mr. Chakraborty as our Co-President. Likewise, as Executive Chair, Mr. Bhusri will continue to support our leadership team on innovation and strategic growth initiatives. Our compensation philosophy is designed to establish and maintain a compensation program that attracts and rewards individuals who possess the skills necessary to lead our near-term objectives and create long-term value for our stockholders, expand our business, and assist in the achievement of our strategic goals. Our objective is to motivate and reward behavior consistent with our values, objectives, and performance goals and initiatives. In fiscal 2024, our Compensation Committee reviewed and assessed our compensation philosophy, which is intended to promote Workday’s core values and align with our business strategy. The Compensation Committee believes that a great work environment, substantial employee ownership, and competitive pay and benefits support a winning team, company, and workplace. We believe that the compensation of our executive officers and employees should reflect our performance as an organization, and their performance as individuals. Accordingly, key elements of our total rewards philosophy include the following: Focus on ownership. We believe that our executive officers should share in the ownership of Workday, which we believe best aligns the interests of our executive officers with our stockholders. We use RSUs as our primary equity vehicle for our executive officers, including our NEOs. We believe that RSU awards both align the interests of our executive officers with stockholders, since the value of the RSUs is determined by our stock price, and provide a longer-term focus through a multi-year vesting schedule, while helping to manage dilution to existing investors. Focus on innovation and performance. As an organization, we reward performance and instill a performance-driven mindset, while discouraging excessive risk taking through the use of long-term equity awards and multi-faceted performance goals for our cash bonus plan. Developing great products and successfully bringing them to market is the lifeblood of Workday, and the compensation structure for our executive officers, including our NEOs, is weighted toward long-term equity-based compensation in support of longer-term objectives and innovations. Fair and flexible. The Compensation Committee recognizes the importance of providing fair and equitable rewards to recruit, retain, and motivate top talent. We seek to provide target total direct compensation (base salary, bonus, and equity) that is at or above market norms, and to provide parity and consistency within functions and geographically, while differentiating rewards based on performance and long-term potential. We also believe in adhering to budgets and ensuring transparency, while at the same time retaining the flexibility needed to promote executive retention. The Compensation Committee reviews our compensation structure at least annually and more frequently as needed to ensure focus on different business objectives.
Executive Compensation Philosophy and Objectives
| What We Do | | | | Pay for Performance: We link pay to performance by heavily weighting total compensation to long-term equity awards that align executive interests with the interests of our stockholders. | | | Independent Compensation Advisor: The Compensation Committee selects and engages its own independent advisor. | | | Peer Group Analysis: The Compensation Committee reviews external market data when making compensation decisions and annually reviews our peer group with its independent compensation consultant. | | | Compensation Risk Assessment: The Compensation Committee conducts an annual assessment of our executive and broad-based compensation programs to promote prudent risk management. | | | Compensation Committee Independence and Experience: The Compensation Committee is comprised solely of independent directors who have extensive relevant experience. | | | Stock Ownership Guidelines: Executives are subject to stock ownership guidelines equal to a multiple of their respective annual base salaries (for Mr. Eschenbach and Mr. Bhusri, 6x Mr. Eschenbach’s base salary, and 3x for other executive officers) or a set dollar amount for other members of our Board of Directors ($600,000). | | | Clawback Policy: Our Officer Recoupment Policy for Section 16 officers is compliant with the new Nasdaq Global Select Market listing requirements and requires the forfeiture, recovery, or reimbursement of excess incentive-based compensation from a Section 16 officer in the event of a restatement of Workday’s financial results. |
Role of the Compensation Committee
Role of the Compensation Committee Pursuant to its charter and in accordance with the rules of the Nasdaq Global Select Market, the Compensation Committee is responsible for reviewing, evaluating, and approving the compensation arrangements of our executive officers and for establishing and maintaining our executive compensation policies and practices. Our Compensation Committee seeks input and receives recommendations from members of our executive management team when discussing the performance and compensation of other executive officers, and in assessing the financial and accounting implications of our compensation programs and hiring decisions. The Compensation Committee is authorized to engage its own independent advisors to provide advice on matters related to executive compensation and general compensation programs. For additional information on the Compensation Committee, see “Committees of the Board of Directors — Compensation Committee” elsewhere in this Proxy Statement. During fiscal 2024, our Compensation Committee, with the assistance of its compensation consultant, Semler Brossy, reviewed and determined our executive compensation, including base salaries, bonuses, and equity awards, to help ensure our compensation program continued to align with stockholder interests and Workday’s long-term business and operational goals, and provided appropriate rewards and incentives for our executive officers. The Compensation Committee reviewed the performance of our executive officers, including Mr. Eschenbach, whose fiscal 2024 compensation was primarily determined at the time of his hiring towards the end of fiscal 2023, taking into consideration financial, operational, customer, strategic, product, and competitive factors, as well as the succession planning objectives for our various executive officer positions. The Compensation Committee also reviewed a study by Semler Brossy regarding the compensation of executives at the companies in our compensation peer group. We do not benchmark the compensation levels of our executive officers to specific percentiles of our peer companies, but we do review and consider the peer group information among various other factors in making compensation decisions. No executive officer participated in the discussions of the Compensation Committee or the independent Board session regarding their own performance and compensation. Following deliberation, the Compensation Committee and independent members of our Board approved the cash compensation to be paid to our NEOs and granted RSU awards to our NEOs, each as described below and in the Summary Compensation Table.
Role of the Compensation Consultant
Role of the Compensation Consultant The Compensation Committee retained Semler Brossy to advise on our fiscal 2024 executive compensation programs and practices and our executive compensation decisions, given its expertise in the technology industry, especially with other cloud and enterprise software companies. During fiscal 2024, Semler Brossy provided the following services as requested by the Compensation Committee: • assisted in the development of the compensation peer group we used to understand market competitive compensation practices; assisted in the review and design of Mr. Rowe’s compensation package in connection with his appointment to Chief Financial Officer and advised on the long-term strategy and design of Mr. Bhusri’s future compensation package as Executive Chair; reviewed and assessed our compensation practices and the cash and equity compensation levels of our executive officers (including an equity retention analysis), including our NEOs, and also for members of our Board of Directors; • reviewed and assessed our current compensation programs to determine any changes that may need to be implemented in order to remain competitive with the market, as well as conducting an equity burn rate and overhang analysis; • assisted in the review and assessment of the design and strategy of our annual and long-term incentives, including the design of our company-wide bonus plan; • advised on the strategy and implementation of our commitment to reduce stock-based compensation expense; • reviewed and assessed our current severance and change in control benefits against peer practices and assisted with the design of our Executive Severance and Change in Control Policy that was restated in fiscal 2024; and • advised on regulatory developments relating to executive compensation and collaborated on the risk assessment relating to employee compensation. Other analyses relating to executive compensation for fiscal 2024 were conducted internally by our compensation team and were reviewed by the Compensation Committee. Such analyses included gathering and analyzing relevant data and reviewing and advising on principal aspects of executive compensation. Base salaries, equity awards, severance terms, and bonuses for our executive officers were among the items reviewed by the Compensation Committee based on third-party market data. During fiscal 2024, the Compensation Committee reviewed the fees provided to Semler Brossy relative to Semler Brossy’s revenues, the services provided by Semler Brossy to the Compensation Committee, any relationships between Semler Brossy and its consultants and our executive officers, any stock ownership of Workday by Semler Brossy, and other factors relating to Semler Brossy’s independence. Based on such review, the Compensation Committee concluded that Semler Brossy is independent within the meaning of the listing standards of the Nasdaq Global Stock Market and that its engagement did not present any conflict of interest. The Compensation Committee has retained Semler Brossy to advise on our executive compensation programs and practices for the fiscal year ending January 31, 2025.
Compensation Peer Group
Compensation Peer Group We maintain a compensation peer group selected from companies with a focus on applications software, systems software, internet services and infrastructure, media and entertainment, and interactive media and services, with revenues generally between one-third to three times our trailing 12 months revenue, and/or market capitalization generally between one-third to three times our market capitalization. Our peer group has been further refined by targeting companies with similar business characteristics, such as those focused on cloud applications or enterprise software, those with a focus on innovation and research and development, and/or those with a strong talent brand. We also have generally sought to include companies with revenue growth of greater than or equal to 10% and market capitalization to revenue ratios of greater than or equal to 5.0 where possible. Annually, the Compensation Committee engages Semler Brossy to assist in the review of our compensation peer group. At the end of fiscal 2023, after considering input from Semler Brossy, the Compensation Committee determined to adopt the following compensation peer group for fiscal 2024 compensation decisions:
Compensation Peer Group
| Activision Blizzard, Inc. | Palo Alto Networks, Inc. | | Adobe Inc. | Salesforce, Inc. | | Atlassian Corporation* | ServiceNow, Inc. | | Autodesk, Inc. | Shopify Inc. | | Block, Inc. | Snowflake Inc.* | | Crowdstrike Holdings, Inc.* | Splunk Inc. | | Electronic Arts Inc. | Twilio Inc. | | Intuit Inc. | VMware, Inc. | | Okta, Inc. | Zoom Video Communications, Inc. |
Compensation Peer Group
* Added to the peer group for fiscal 2024. We removed Coupa Software Incorporated, PayPal Holdings, Inc., and Twitter, Inc. (now known as X Corp.) from the peer group as they did not meet one or more of the criteria discussed above or were otherwise no longer considered to be meaningful comparison points based on business focus and strategy. In addition to removing these three peers, the Compensation Committee also added the companies indicated above to help ensure a robust peer set and given their strong comparability in terms of size and business dynamics. Workday was positioned at the 51st percentile for revenue and the 37th percentile for market valuation within this group at the time the group was selected. While the Compensation Committee and our Board of Directors consider the compensation levels of the executives at the companies in our compensation peer group to provide a general understanding of market practices among similar companies, we do not specifically set compensation levels based on the percentile levels reflected by the compensation peer group.
Cash Bonuses
Cash Bonuses In response to stockholder feedback on increased disclosure regarding the performance metrics we use or may use in our cash bonus program, our Compensation Committee adopted our Omnibus Bonus Plan in early fiscal 2024. Our Omnibus Bonus Plan is designed to motivate and reward eligible employees for their contributions toward the achievement of certain of Workday’s performance goals. Our Compensation Committee established the annual cash bonus plan for fiscal 2024 under, and subject to the terms and conditions of, the Omnibus Bonus Plan. During fiscal 2024, our executive officers, other than Mr. Bhusri, participated in our cash bonus plan that was available to all employees not covered under an existing cash incentive plan. Mr. Bhusri has historically not participated in our cash bonus plan because his large ownership stake in Workday adequately incentivizes him to achieve short-term and long-term performance goals. Because of our emphasis on equity-based compensation, annual bonuses are not intended to constitute a material amount of the total compensation for our NEOs. Our fiscal 2024 cash bonus plan was designed to drive revenue growth, encourage accountability, incentivize execution of short-term priorities tied to long-term strategy, and reward our executives and employees upon the achievement of certain objectives. As depicted below, our cash bonus plan is measured and calculated based on the achievement of pre-set company performance goals and individual performance achievement. For fiscal 2024, company performance was evaluated based on the following goals as set out in our fiscal 2024 cash bonus plan: 80% of the funding of the cash bonus plan was based on a financial performance goal tied to our total fiscal 2024 subscription revenue and 20% of the funding of the cash bonus plan was driven by a non-financial performance goal based on customer satisfaction.
Financial Target: Subscription Revenue
Financial Target: Subscription Revenue Subscription revenue primarily consist of fees that give our customers access to our cloud applications, which include related customer support, and is a strong indicator of the growth of our business. We selected subscription revenue, adjusted for the impact of foreign currency rate fluctuations and certain acquisitions, as applicable (“adjusted subscription revenue”), as our company financial performance goal to promote revenue growth achievement, which will in turn drive our long-term success and enhance stockholder value, and because subscription revenue is a key metric used by investors in evaluating our financial performance. (See Appendix B for a reconciliation of GAAP subscription revenue to adjusted subscription revenue.) For fiscal 2024, the target for 100% attainment of the company financial performance goal was $6.625 billion in adjusted subscription revenue, with a minimum threshold level of $6.470 billion in adjusted subscription revenue. Full-year funding of the financial portion of the bonus plan for attainment above the minimum threshold but below 100% attainment was based on the level of achievement of adjusted subscription revenue falling within banded achievement levels and, pursuant to the terms of our cash bonus plan, attainment is set at the next subsequent payout level. Full-year funding based on the company financial performance goal was capped at 125% of the target funding.
Achievement and Payout
Achievement and Payout First Half Payout Eligible participants, including executives, who participate in the cash bonus plan were eligible for semi-annual payments in fiscal 2024. If Workday’s financial performance as of the end of the company’s second fiscal quarter indicated that the company expected to meet or exceed the target level of financial performance on an annualized basis, 50% of the financial portion of the bonus plan, which is weighted 80% of the total bonus plan funding, would be funded. The portion of the bonus pool related to the non-financial metric is not eligible to be funded for the first half payment and individual performance for the first half payment can be achieved at 0%, 50%, or 100%. Following the conclusion of the company’s second fiscal quarter of fiscal 2024, it was determined that based on the company’s forecasted adjusted subscription revenue as of the end of the second fiscal quarter, the company was on track to meet or exceed the target level of financial performance on an annualized basis. The Compensation Committee determined to set each NEO’s individual performance achievement level at 100%, which, together with the 50% funding of the financial portion of the bonus plan, which is weighted 80% of the total bonus plan funding, resulted in a first half payout of 40% of each NEO’s respective annual target bonus for fiscal 2024.
Achievement and Payout
| 1H Financial Portion Funding | Weighting of Financial Portion to Full Year Funding | 1H Individual Achievement | | % of Full Year Target Bonus Paid at 1H | | 50%x | 80%x | 100% | = | 40% |
Achievement and Payout
Full Year Payout Following the conclusion of fiscal 2024, the Compensation Committee reviewed the level of achievement of each company performance goal against the pre-established targets. In fiscal 2024, Workday’s full year adjusted subscription revenue of $6.609 billion fell within the target band of subscription revenue of $6.608M — $6.625M which resulted in the financial portion of the cash bonus plan being funded at target, or 100%. (See Appendix B for a reconciliation of GAAP subscription revenue to adjusted subscription revenue.) Additionally, we achieved our customer satisfaction goal for fiscal 2024, which resulted in the full funding of that portion of the cash bonus plan. Based on these achievements, the total bonus pool for NEOs and all other eligible employees in fiscal 2024 was funded at 100% of target. For full year fiscal 2024, the Compensation Committee determined that given the collective performance of the NEOs in driving the strong financial and operational results of the company, the cash bonuses paid to the NEOs were determined based on the achievement levels of the company’s performance goals, which resulted in an overall payout of 100% of each NEO’s respective annual targets for fiscal 2024. The following table shows the calculation of the individual cash bonuses paid to each NEO based on the formulas set forth above:
Achievement and Payout
| Named Executive Officer | Fiscal 2024 Annual Cash Bonus Paid(1) | Target Annual Bonus Opportunity (% of Base Salary) | % of Target Bonus Paid | | Carl M. Eschenbach | $1,500,000 | 150% | 100% | | Aneel Bhusri | — | — | — | | Zane Rowe(2) | 224,384 | 50% | 100% | | Sayan Chakraborty | 200,000 | 50% | 100% | | Douglas A. Robinson | 400,000 | 100% | 100% | | Barbara A. Larson(3) | 84,000 | 50% | 100% | | James J. Bozzini | 200,000 | 50% | 100% |
Achievement and Payout
(1) Inclusive of first half payout of the fiscal 2024 cash bonus plan. (2) Mr. Rowe’s amount is prorated based on his start date. Pursuant to the terms of her transition agreement, Ms. Larson was only eligible to receive a cash bonus with respect to the first half of fiscal 2024 with the individual performance factor deemed to be achieved at 100%.
Chief Financial Officer Sign-On Bonus
Chief Financial Officer Sign-On Bonus In addition, to incentivize Mr. Rowe to accept the offer to become our Chief Financial Officer, the Board approved a one-time signing bonus of $2,000,000 (payable in two installments and subject to repayment if Mr. Rowe is terminated by Workday for cause or resigns his employment without good reason within a year of his start date).
Equity-Based Awards
Equity-Based Awards The majority of the target total direct compensation of our executive officers, including our NEOs, is provided through equity awards. By having a significant percentage of our executive officers’ target total direct compensation payable in the form of equity that vests over a number of years and, thus, is subject to higher risk and longer vesting than cash compensation, our executive officers are motivated to take actions that focus on our long-term strategic and financial objectives, aligning their interests with those of our stockholders over the long term. We believe that RSUs with multi-year vesting are the most effective compensation vehicle for Workday at this time for a number of reasons, including that RSUs are a common incentive used by many talent competitors and the multi-year vesting schedule decreases risks associated with short-term decision making. Furthermore, the Compensation Committee and the Board believe that it is critical for Workday to promote strategic agility by allowing the business to pivot in response to changing market dynamics without consideration of the impact to short-term rewards, and RSUs with long-term vesting allow us to continue to incentivize and promote the innovative culture that drives our success. We make annual equity grants to our current executive officers and may make mid-year awards on a case-by-case basis, such as in the event of a promotion. We also make equity grants to newly hired executive officers based on arm’s-length negotiations between us and the executive at the time of his or her hire, and taking into consideration what is reasonable and necessary to incentivize the executive to accept the position and drive alignment with us and our stockholders. The sizes of these annual awards are not determined based on a specific formula, but rather through the exercise of the Compensation Committee’s or Board’s judgment after considering, on an annual basis, the individual performance of each of the executive officers, including financial, operational, customer, strategic, product, and competitive factors; the recommendations of our Chief Executive Officer and Executive Chair (except with respect to their own awards); the appropriate level of compensation for the position given the scope of responsibility; the need to hire or retain an individual in a particular position; the current unvested equity held by such individuals and related vesting schedules; the level of each executive officer’s total target cash compensation (base salary plus target cash bonus opportunity); and the perceived retentive value of the proposed awards. In addition, the Compensation Committee reviews and considers the equity awards granted to the executives at the companies in our compensation peer group, although it does not benchmark to specific percentiles against those companies. Based on its review, the Compensation Committee and the Board agreed that the fiscal 2024 equity grants described below, together with existing equity awards (if any), appropriately incentivized our executives and satisfied our retention goals for the near-term future, as well as motivated our executives to take actions in support of longer-term stockholder interests. As noted above, our equity awards generally take the form of time-based RSU awards with a four-year vesting schedule. The number of RSUs awarded to each NEO is determined by dividing the value of RSUs approved by the Compensation Committee or the Board, as applicable, for each NEO by the trailing 20-day simple moving average stock price of Workday’s Class A common stock prior to the date of grant. The Compensation Committee believes that these RSU awards serve as an effective retention tool for our executive officers, because a substantial portion of unvested awards are generally forfeited if an executive officer voluntarily leaves the company before the awards have vested except as provided in the Executive Severance Policy (as defined below).
Bhusri RSU Award
Bhusri RSU Award With respect to Mr. Bhusri, the Compensation Committee and the Board considered his equity grant for fiscal 2024 independently relative to competitive peer chief executive officer pay. The Board approached Mr. Bhusri’s fiscal 2024 compensation with the desire to recognize his continued importance to Workday’s operations and technology platform and to encourage his continued service. The Board determined that an RSU grant with a target grant value of $30,000,000 was reflective of both his role and contribution as Co-Chief Executive Officer and his on-going leadership of our product and technology functions as Executive Chair. The value of this equity award reflects his impact on Workday and the competitive market for his role. The Board also considered that the equity awards that were granted to Mr. Bhusri in fiscal 2023 and 2022 were on the lower end of peer practices for chief executive officers, and that Mr. Bhusri was not granted any equity awards in fiscal 2021.
Rowe RSU Award
Rowe RSU Award As discussed above, the Compensation Committee gave careful consideration to the compensation structure that was reasonable and necessary to incentivize Mr. Rowe to accept the role of Chief Financial Officer in the context of the considerable value of compensation forfeited by Mr. Rowe upon leaving his prior employer. To this end, the Compensation Committee approved a compensation package for Mr. Rowe which includes the cash compensation elements discussed above, and which allocates a substantial portion of Mr. Rowe’s compensation in the form of equity, to align his interests with our stockholders’ interests. In connection with his appointment, Mr. Rowe was granted two RSU awards with approximate target grant values of $18,000,000 each, with one award vesting over four years and the other vesting over two years. The Compensation Committee approved the award with a two-year vest to incentivize Mr. Rowe to join Workday and considering the near-term vesting of equity awards that were forfeited from Mr. Rowe’s previous employer. Additional details regarding Mr. Rowe’s compensation are also described elsewhere in this “Compensation Discussion and Analysis” section of this Proxy Statement. The RSU awards granted to our NEOs in fiscal 2024 were as follows:
Rowe RSU Award
| Named Executive Officer | Grant Date | Number of Shares Subject to RSU Award(1) | Grant Date Fair Value of RSU Award(2) | | Carl M. Eschenbach(3) | — | — | $— | | Aneel Bhusri | 4/25/2023 | 153,774 | 28,122,189 | | Zane Rowe(4) | 7/5/2023 | 82,568 | 18,379,637 | | | 7/5/2023 | 82,568 | 18,379,637 | | Sayan Chakraborty | 4/20/2023 | 71,761 | 13,709,939 | | Douglas A. Robinson | 4/20/2023 | 71,761 | 13,709,939 | | Barbara A. Larson(5) | 4/20/2023 | 51,258 | 9,792,841 | | James J. Bozzini | 4/20/2023 | 51,258 | 9,792,841 |
Rowe RSU Award
(1) Unless otherwise noted, the RSU awards for our NEOs are subject to vesting based on continued service through the applicable vesting dates, with one-fourth of such awards vesting one year from their vesting start date, after which the awards vest in equal installments over the next 12 quarters. (2) The amounts reported are computed in accordance with ASC Topic 718 based on the closing price of our Class A common stock on the date of grant. These amounts do not reflect the actual economic value that may ultimately be realized by the NEOs. (3) Mr. Eschenbach was not eligible for any stock award grants in fiscal 2024. (4) In connection with Mr. Rowe’s appointment as Chief Financial Officer, he was granted (i) 82,568 RSUs which will vest as to one-fourth of the underlying shares one year from the vesting start date, after which the award vests in equal installments over the next 12 quarters and (ii) 82,568 RSUs which will vest over two years, with one-eighth of the underlying shares vesting three months from the vesting start date, after which the award vests in equal quarterly installments. (5) Pursuant to the terms of her transition agreement, Ms. Larson agreed to forfeit the 51,258 RSUs she was granted in fiscal 2024 on May 24, 2023.
Eschenbach Fiscal 2023 PVU Awards
Eschenbach Fiscal 2023 PVU Awards Per the terms of Mr. Eschenbach’s new hire compensation package in connection with his appointment as Co-Chief Executive Officer in December 2022, Mr. Eschenbach received certain equity awards in fiscal 2023 and was not eligible for, and did not receive, any stock award grants in fiscal 2024. As disclosed in our 2023 proxy, in developing the compensation package for Mr. Eschenbach, the independent members of the Compensation Committee and the Board gave careful consideration to the compensation structure that was reasonable and necessary to incentivize Mr. Eschenbach to assume the role of our Co-Chief Executive Officer. Further, the independent members of the Compensation Committee and the Board believed that Mr. Eschenbach’s compensation should drive achievement of our strategic objectives and be principally tied to sustained, long-term stockholder value creation. Accordingly, the independent members of the Compensation Committee and the Board determined to allocate a substantial portion of Mr. Eschenbach’s compensation in the form of equity, comprised of time-based RSUs, the majority of which vest over four years, and market-based restricted stock units (“PVUs”) that are subject to achievement of three increasing and meaningful stock price targets during a five-year performance period and service-based vesting requirements. The PVU was designed to encourage leadership continuity and to reward sustained, meaningful increases in stockholder value, with vesting only occurring upon achievement of the stock price targets and continued service. The PVU award is divided into three equal tranches (each, a “Tranche”) each of which requires achievement of a stock price target (each a “Price Hurdle”) during such Tranche’s specific performance period as summarized in the table below, as well as Mr. Eschenbach’s continued service on each time-based vesting date of the PVU award (the “Service Requirement’). Mr. Eschenbach satisfies the Service Requirement of the PVU award as to 1/60th of each Tranche’s PVU shares on each of the monthly anniversaries of December 5, 2022, the award’s vesting start date, subject to his continued service on such dates (the “Time-Based Schedule”). In fiscal 2024, the Price Hurdle for Tranche 1 was achieved on the measurement date of June 20, 2023, and the Price Hurdle for Tranche 2 was achieved on the measurement date of January 20, 2024. The portion of the Tranche 1 PVUs and Tranche 2 PVUs that had time-vested as of the applicable measurement date were released at such time, and the remaining portions of the Tranche 1 and Tranche 2 PVUs will continue to vest pursuant to the Time-Based Schedule, subject to Mr. Eschenbach’s continued service on each time-based vesting date. The performance period for Tranche 3 begins on December 28, 2024, and Tranche 3 will not be eligible for achievement until such date, even if the Price Hurdle is achieved on an earlier date. All shares are subject to a one-year holding period once vested and released. The following table provides information regarding the achievement of the PVUs and outstanding PVUs held by Mr. Eschenbach as of January 31, 2024.
Eschenbach Fiscal 2023 PVU Awards
(1) Shares that have been released upon the achievement of the Price Hurdle and the time-based vesting requirement for the applicable tranche. (2) Shares that have been earned upon the achievement of the Price Hurdle but remain subject to the time-based vesting requirement for the applicable tranche and so have not yet been released. (3) The Price Hurdle was achieved for Tranche 2 on the measurement date of January 20, 2024. Pursuant to the terms of the PVU award, 23,618 Tranche 2 PVUs were released on February 5, 2024, after the end of our fiscal 2024. We believe that the achievement of the Price Hurdles and the increase in our stock price since Mr. Eschenbach assumed the role of Co-Chief Executive Officer demonstrates his strong leadership and precise execution of the company’s strategic initiatives. The following table provides information on the strong performance of our stock price as measured against the baseline price of $155.84, which was the trailing simple moving average of our stock price over the 45 consecutive trading days ending on December 20, 2022, the day that Mr. Eschenbach and Workday signed his Employment Agreement, and the alignment of Mr. Eschenbach’s performance equity incentives with stockholders’ interests.
Executive Severance and Change in Control Policy
Executive Severance and Change in Control Policy In November 2023, the Board approved the Workday, Inc. Executive Severance and Change in Control Policy (the “Executive Severance Policy”), which amends and restates the Workday, Inc. Change in Control Policy that was adopted by the Board on April 22, 2021, to align with current market practice by adding severance protection in the event of a termination of an executive by Workday without “cause” outside of a change in control. Under the Executive Severance Policy, an NEO is eligible to receive cash payments and accelerated vesting of certain equity awards in the event of a qualifying termination of the NEO’s employment (i) outside of a change in control of Workday (referred to as a “Non-CIC Qualifying Termination” in the Executive Severance Policy), or (ii) in connection with a change in control of Workday (referred to as a “CIC Qualifying Termination” in the Executive Severance Policy). We do not provide for single trigger acceleration following a change in control and do not provide tax gross-ups for “excess parachute payments.” The Compensation Committee has determined that the Executive Severance Policy is both competitively reasonable and necessary to recruit and retain key executives. We also believe that entering into these arrangements will help our executive officers maintain continued focus and dedication to their responsibilities to help maximize stockholder value if there is a potential transaction that could involve a change in control of the company. The Executive Severance Policy is also intended to facilitate changes in the leadership team by setting terms for the termination of the employment of an NEO in advance, which allows for a smooth transition of responsibilities when it is deemed to be in the best interest of Workday. For additional information about the Executive Severance Policy, please see the section below entitled “Potential Payments Upon Termination or Change in Control.”
Post-Employment Terms in Executive Agreements
Post-Employment Terms in Executive Agreements Eschenbach Agreement In connection with incentivizing Mr. Eschenbach to join us as our Co-Chief Executive Officer in fiscal 2023, his Employment Agreement provides that he is entitled to certain payments and accelerated vesting if his employment is terminated without cause within two years following his start date, other than in connection with a change in control, after which he will be eligible to receive the Non-CIC Qualifying Termination benefits in the Executive Severance Policy. Likewise, Mr. Eschenbach will participate in the Executive Severance Policy, as modified by his employment agreement, pursuant to which he will receive payments in the event that Mr. Eschenbach’s employment is terminated without cause or he resigns for good reason in connection with a change in control. For further information about the benefits that Mr. Eschenbach may be eligible to receive in connection with certain terminations, please see “Potential Payments Upon Termination or Change in Control — Carl M. Eschenbach.” Rowe Agreement In connection with Mr. Rowe’s appointment as our Chief Financial Officer in fiscal 2024, his offer letter provides that he is entitled to certain payments and accelerated vesting if his employment is terminated without cause within two years following his start date, other than in connection with a change in control, after which he will be eligible to receive the Non-CIC Executive Termination benefits in the Executive Severance Policy. Mr. Rowe is also eligible to receive the change in control benefits set forth in the Executive Severance Policy. For further information about the benefits that Mr. Rowe may be eligible to receive in connection with certain terminations, please see “Potential Payments Upon Termination or Change in Control — Zane Rowe.” Larson Agreement Following Ms. Larson’s transition out of her role as Chief Financial Officer, she continued to provide service to Workday as an Executive Vice President through November 1, 2023, after which she transitioned into a consulting role. Pursuant to the terms of her transition agreement, while serving as an Executive Vice President, Ms. Larson’s base salary remained at $420,000 annually and she was eligible to receive a cash bonus with respect to the first half of fiscal 2024 with the individual performance component deemed to be achieved at 100%. Ms. Larson was not eligible to receive a cash bonus with respect to the full fiscal year. As Executive Vice President, her previously granted equity awards continued to vest in accordance with their terms, other than a restricted stock award for 51,258 shares granted in 2023 that Ms. Larson agreed to forfeit. As a consultant, Ms. Larson provides insights and analysis regarding Workday’s financial management and operations. Pursuant to the terms of her transition agreement, the terms of her RSU award agreements, and our 2022 Plan and 2012 Equity Incentive Plan, Ms. Larson will continue to vest into her outstanding RSUs so long as she continues to provide services to Workday. Ms. Larson’s consulting period is expected to end on July 8, 2024, unless earlier terminated. The material terms of post-employment payments to our NEOs are set forth under “Employment Arrangements and Indemnification Agreements” and “Potential Payments Upon Termination or Change in Control” below.
Death and Disability Acceleration Policy
Death and Disability Acceleration Policy Pursuant to company policy, all employees, including our executives, whose employment with Workday terminates due to death or permanent disability generally fully vest in their outstanding time-based equity awards upon termination. The value of our NEOs’ equity awards that would have vested assuming a January 31, 2024, termination of employment due to death or permanent disability is set forth in the section “Potential Payments Upon Termination or Change in Control”.
Equity Awards Grant Policy
Equity Awards Grant Policy The Compensation Committee has adopted a policy governing equity awards that are granted to our executive officers and employees and members of our Board of Directors. This policy provides that equity awards will be granted either by our Board or the Compensation Committee at a meeting or by unanimous written consent, subject to equity award guidelines adopted by our Compensation Committee, and provides that the Chief Executive Officer, Chair of the Board, each of the Co-Presidents, Chief Financial Officer, and Chief People Officer may make awards to non-executive employees within prescribed limits. Generally, new hire awards are granted effective on the 5th day of the month for employees who have commenced employment on or prior to the 15th day of the preceding month. Additionally, promotion and discretionary awards for our executive officers are granted effective on the 5th day of March, June, September, or December, and on the 5th day of any month for non-executive employees. Refresh awards made in connection with Workday’s annual review cycle will be effective on a date occurring in March, April, or May that is designated by the Board or the Compensation Committee prior to the end of the immediately preceding calendar year, in each case unless otherwise approved by our Board or the Compensation Committee. The exercise price of all stock options and SARs must be equal to or greater than the fair market value of our common stock, as defined in the applicable equity incentive plan, on the date of grant.
Policy regarding 10b5-1 Plans for Directors and Executive Officers
Policy regarding 10b5-1 Plans for Directors and Executive Officers Generally, our Policy on Trading in Securities requires our executive officers and members of our Board of Directors to adopt plans in accordance with Exchange Act Rule 10b5-1, including in accordance with the new final 10b5-1 rules adopted by the SEC in 2022, for trades of Workday securities that they beneficially own and further provides that such individuals may not trade in our equity securities during our quarterly restricted periods.
Compensation Policies and Practices as they Relate to Risk Management
Compensation Policies and Practices as they Relate to Risk Management The Compensation Committee has reviewed our executive and employee compensation programs and does not believe that our compensation policies and practices encourage undue or inappropriate risk taking or create risks that are reasonably likely to have a material adverse effect on us. The reasons for the Compensation Committee’s determination include the following: • We structure our compensation program to consist of both fixed and variable components. The fixed (or base salary) component of our compensation programs is designed to provide income independent of our stock price performance so that employees will not focus exclusively on stock price performance to the detriment of other important business metrics. The variable (cash bonus and equity) components of our compensation programs are designed to reward both short-term and long-term company performance, which we believe discourages employees from taking actions that focus only on our short-term success and helps align our employees with our stockholders and on our longer-term objectives. Our RSUs have time-based vesting, generally over a period of four years. • We maintain internal controls over the measurement and calculation of financial information, which are designed to prevent this information from being manipulated by any employee, including our executive officers. • The Compensation Committee approves the employee annual and new hire equity award guidelines as well as the overall annual equity pool. Any recommended equity awards outside these guidelines require approval by the Compensation Committee. We believe that this helps ensure we grant equity compensation appropriately and in a sustainable manner. • A significant portion of the compensation paid to our executive officers and the members of our Board of Directors is in the form of RSUs, to align their interests with the interests of stockholders. • We maintain Stock Ownership Guidelines for our executive officers and the members of the Board to help ensure that they retain specified levels of equity in Workday to align their interests with the interests of stockholders. • As part of our Policy on Trading in Securities, we prohibit hedging transactions involving our securities so that our executive officers and other employees cannot insulate themselves from the effects of poor stock price performance. Our Board has adopted an Executive Officer Recoupment Policy providing that it will require reimbursement or forfeiture of all or a portion of any incentive compensation that was paid to an executive officer based on financial results if a restatement of those results is required. The policy was revised in fiscal 2024 to reflect the new requirements of the Nasdaq Global Select Market.
Accounting Treatment
Accounting Treatment We account for share-based compensation in accordance with the authoritative guidance set forth in ASC Topic 718, which requires companies to measure and recognize compensation expense for share-based awards issued to employees and non-employees, primarily including RSUs and purchases under the Amended and Restated 2012 Employee Stock Purchase Plan (“ESPP”). Compensation expense is generally recognized over the period during which the award recipient is required to perform service in exchange for the award. For RSUs, fair value is based on the closing price of our common stock on the grant date. For shares issued under the ESPP, fair value is estimated using the Black-Scholes option-pricing model. This calculation is performed for accounting purposes and reported in the compensation tables below.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table provides information concerning all plan and non-plan compensation earned by each of our NEOs during the fiscal years ended January 31, 2024, 2023, and 2022.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year | Salary | Bonus(1) | Stock Awards(2) | Non- Equity Incentive Plan Compensation(3) | All Other Compensation | Total | | Carl M. Eschenbach Chief Executive Officer and Director | 2024 | $1,000,000 | $— | $—(4) | $1,500,000 | $21,664(5) | $2,521,664 | | | 2023 | 119,231 | — | 102,563,097(6) | — | 2,981 | 102,685,309 | | Aneel Bhusri Co-Founder and Executive Chair | 2024 | 65,000 | — | 28,122,190 | — | 2,994,375(7) | 31,181,565 | | | 2023 | 65,000 | — | 14,065,845 | — | 3,166,567(8) | 17,297,412 | | | 2022 | 65,000 | — | 15,404,483 | — | 2,961,923 | 18,431,406 | | Zane Rowe Chief Financial Officer | 2024 | 452,308 | 1,000,000 | 36,759,274 | 224,384 | 657(9) | 38,436,623 | | Sayan Chakraborty Co-President | 2024 | 400,000 | — | 13,709,939 | 200,000 | 54,677(10) | 14,364,616 | | Douglas A. Robinson Co-President | 2024 | 400,000 | — | 13,709,939 | 400,000 | 45,364(11) | 14,555,303 | | | 2023 | 375,000 | 332,000 | 12,190,473 | — | 38,705 | 12,936,179 | | | 2022 | 350,000 | 427,000 | 11,699,995 | — | 7,670 | 12,484,665 | | Barbara A. Larson Former Chief Financial Officer | 2024 | 329,708 | — | 9,792,841(12) | 84,000 | 22,991(13) | 10,229,540 | | | 2023 | 420,000 | 187,000 | 9,377,304 | — | 35,097 | 10,020,001 | | James J. Bozzini Former Chief Operating Officer | 2024 | 400,000 | — | 9,792,841 | 200,000 | 15,417(14) | 10,408,258 | | | 2023 | 375,000 | 166,000 | 9,377,304 | — | 9,323 | 9,927,627 | | | 2022 | 350,000 | 209,000 | 9,756,190 | — | 8,700 | 10,323,890 |
SUMMARY COMPENSATION TABLE
(1) For all NEOs (other than Mr. Rowe), reported amounts for fiscal 2023 and 2022 reflect payment of bonuses pursuant to the cash bonus plan prior to the adoption of the Omnibus Bonus Plan. The amount reported under the Bonus column for Mr. Rowe includes the first installment of a signing bonus of $2,000,000 (payable in two equal installments, one upon his start date and the other on the one-year anniversary of his start date), which is subject to repayment if Mr. Rowe is terminated by Workday for cause or resigns his employment without good reason within a year of his start date. (2) Other than with respect to Mr. Eschenbach’s PVUs, the amounts reported are computed in accordance with ASC Topic 718 based on the closing price of our Class A common stock on the date of grant. The amount reported for Mr. Eschenbach’s PVU award is computed in accordance with ASC Topic 718 using the Monte Carlo simulation model. The assumptions used in calculating the grant date fair value are set forth in Note 14 of the notes to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024. Such grant-date fair value does not take into account any forfeitures related to service-based vesting conditions that may occur.These amounts do not reflect the actual economic value that may ultimately be realized by the NEOs. (3) For all NEOs, reported amounts reflect payment of bonuses pursuant to the fiscal 2024 cash bonus plan, which was adopted pursuant to the Omnibus Bonus Plan. As described under “Compensation Discussion and Analysis,” the cash bonus amounts earned are based on the performance of Workday relative to predetermined financial and non-financial goals for fiscal 2024 and the performance of the individual NEO. Mr. Rowe’s amount is prorated based on his start date. (4) Mr. Eschenbach was not eligible for stock awards in fiscal 2024. (5) This amount includes (i) matching contributions under Workday’s 401(k) plan of $10,092, (ii) income tax gross-up of $3,679 in respect of guest attendance at company events and a company gift, (iii) Workday-paid costs for guest attendance at company events and a company gift, (iv) car service, and (v) a wellness program reimbursement. On occasion, guests of Mr. Eschenbach may accompany him on private aircraft during business trips at a de minimis incremental cost to Workday. (6) The amounts reported under the Stock Awards column for Mr. Eschenbach include (i) $328,089 in grant date fair value of RSUs that were granted to Mr. Eschenbach in June 2022 in connection with his service as a non-employee director on our Board of Directors, and (ii) $102,235,008 in grant date fair value of the RSUs and PVUs that were granted to Mr. Eschenbach in December 2022 in connection with his appointment as our Co-Chief Executive Officer. This amount includes (i) matching contributions under Workday’s 401(k) plan of $1,958, (ii) aggregate incremental costs paid by Workday for certain security arrangements provided for Mr. Bhusri and his family that may be considered perquisites under SEC disclosure rules in the amount of $2,804,912, and (iii) personal air travel expenses in the amount of $185,318, which represent the incremental cost to Workday for Mr. Bhusri’s personal use of our corporate aircraft. We determine the incremental cost of the personal use of our corporate aircraft based on the variable operating costs to us, which includes (a) trip-related landing, ramp, and parking fees and expenses; (b) crew travel expenses; (c) supplies and catering; and (d) aircraft fuel and oil expenses. Because the corporate aircraft is used primarily for business travel, this methodology excludes fixed costs that do not change based on usage, such as the salaries of pilots and crew, purchase or lease costs of our corporate aircraft, and costs of maintenance and upkeep. On occasion, guests of Mr. Bhusri may accompany him on private aircraft during business trips at a de minimis incremental cost to Workday. Additional information is set forth in the above section entitled “Elements of Our Executive Compensation Program — Perquisites and Other Personal Benefits.” (8) Includes $18,982 of costs related to Mr. Bhusri’s security arrangement which were not included in our 2023 Proxy Statement as the amount was unknown at the time of filing. (9) This amount includes (i) income tax gross-up in respect of a company gift in the amount of $152, (ii) a company gift, and (iii) a wellness program reimbursement. (10) This amount includes (i) matching contributions under Workday’s 401(k) plan of $10,038, (ii) income tax gross-up in respect of a company gift of $614, and (iii) personal air travel expenses in the amount of $43,237, which represents the incremental cost to Workday for Mr. Chakraborty’s personal use of a private business jet charter. The incremental cost to Workday from his use of a private business jet charter was based on the variable cost amount billed to us by the private business jet charter company, which does not include a fixed management fee because the private business jet charter is used primarily for business travel. Additional information is set forth in the above section entitled “Elements of Our Executive Compensation Program — Perquisites and Other Personal Benefits.” (11) This amount includes (i) matching contributions under Workday’s 401(k) plan of $10,035, (ii) income tax gross-up of $13,590 in respect of Mr. Robinson and guest attendance at company events and a company gift, (iii) Workday-paid costs for Mr. Robinson’s and guest attendance at company events, (iv) a company gift, (v) a company charitable match, and (vi) a wellness program reimbursement. (12) Pursuant to the terms of her transition agreement, Ms. Larson agreed to forfeit the stock award she was granted in fiscal 2024. (13) This amount includes (i) matching contributions under Workday’s 401(k) plan of $8,349, (ii) COBRA payment of $13,092 in connection with our Chief Financial Officer transition, (iii) a company charitable match, and (iv) a wellness program reimbursement. (14) This amount includes (i) matching contributions under Workday’s 401(k) plan of $10,038, (ii) income tax gross-up in respect of company gifts of $690, (iii) company gifts, and (iv) an executive health physical service.
Grants of Plan-Based Awards in Fiscal 2024
Grants of Plan-Based Awards in Fiscal 2024 The following table provides information regarding grants of incentive plan-based awards made to each of our NEOs during fiscal 2024 under our 2022 Equity Incentive Plan.
Grants of Plan-Based Awards in Fiscal 2024
| | | | | | Equity Grants | | | | | Estimated Payouts Under Non- Equity Incentive Plan Awards(1) | | | All Other Stock Awards: Number of Shares of Stock or Units(2) | Grant Date Fair Value of Stock and Option Awards(3) | | Name | Grant Date | Threshold (#) | Target (#) | Maximum (#) | | | | Carl M. Eschenbach | N/A | 840,000 | 1,500,000 | 2,700,000 | — | $— | | Aneel Bhusri | 04/25/2023 | — | — | — | 153,774 | 28,122,189 | | Zane Rowe | N/A | 125,655 | 224,384 | 403,890 | — | — | | | 07/05/2023 | — | — | — | 82,568 | 18,379,637 | | | 07/05/2023 | — | — | — | 82,568(4) | 18,379,637 | | Sayan Chakraborty | N/A | 112,000 | 200,000 | 360,000 | — | — | | | 04/20/2023 | — | — | — | 71,761 | 13,709,939 | | Douglas A. Robinson | N/A | 224,000 | 400,000 | 720,000 | — | — | | | 04/20/2023 | — | — | — | 71,761 | 13,709,939 | | Barbara A. Larson | N/A | 117,600 | 210,000 | 378,000 | — | — | | | 04/20/2023 | — | — | — | 51,258(5) | 9,792,841 | | James J. Bozzini | N/A | 112,000 | 200,000 | 360,000 | — | — | | | 04/20/2023 | — | — | — | 51,258 | 9,792,841 |
Grants of Plan-Based Awards in Fiscal 2024
(1) Represents estimated payouts under our cash bonus plan. For illustrative purposes, the “threshold” payout amount reported in the table above is based on achieving 56% of the total target payout opportunity and the “maximum” amounts shown reflect a 150% individual multiplier. Mr. Rowe’s amounts are prorated based on his start date. Pursuant to the terms of her transition agreement, Ms. Larson was only eligible to receive a cash bonus with respect to the first half of fiscal 2024 with the individual performance factor deemed to be achieved at 100%. (2) Represents RSUs granted under our 2022 Equity Incentive Plan. Unless otherwise noted, each RSU award vested or will vest as to one-fourth of the underlying shares on approximately the one-year anniversary of grant and then quarterly thereafter, subject to continued service with Workday on the applicable vesting dates. The amounts reported are computed in accordance with ASC Topic 718 based on the closing price of our Class A common stock on the date of grant. These amounts do not reflect the actual economic value that may ultimately be realized by the NEOs. Represents RSUs granted to Mr. Rowe in connection with his appointment as our Chief Financial Officer that vested or will vest as to one-eighth of the underlying shares three months from the vesting start date and then quarterly thereafter, subject to continued service with Workday on the applicable vesting dates. (5) Pursuant to the terms of her transition agreement, Ms. Larson agreed to forfeit the 51,258 RSUs she was granted in fiscal 2024.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding outstanding and unvested RSU awards held by our NEOs as of January 31, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | | STOCK AWARDS | | | | | Name | Grant Date | 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 or Units of Stock That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares or Units of Stock That Have Not Vested | | Carl M. Eschenbach | 12/28/2022 | 227,738 | $66,287,700 | | | | | 12/28/2022 | 180,503(3) | 52,539,008 | 101,216(4) | $26,914,347 | | Aneel Bhusri | 04/25/2023 | 153,774 | 44,758,998 | | | | | 04/20/2022 | 35,942 | 10,461,638 | | | | | 04/15/2021 | 18,495 | 5,383,340 | | | | Zane Rowe | 07/05/2023 | 82,568 | 24,033,068 | | | | | 07/05/2023 | 61,926(5) | 18,024,801 | | | | Sayan Chakraborty | 04/20/2023 | 71,761 | 20,887,474 | | | | | 04/20/2022 | 28,753 | 8,369,136 | | | | | 04/15/2021 | 10,480 | 3,050,414 | | | | | 04/15/2020 | 3,553 | 1,034,172 | | | | Douglas A Robinson | 04/20/2023 | 71,761 | 20,887,474 | | | | | 04/20/2022 | 31,149 | 9,066,539 | | | | | 12/15/2021 | 3,581 | 1,042,322 | | | | | 04/15/2021 | 9,248 | 2,691,815 | | | | | 03/15/2021 | 2,450 | 713,122 | | | | | 04/15/2020 | 1,895 | 551,578 | | | | Barbara A. Larson(6) | 04/20/2022 | 23,961 | 6,974,328 | | | | | 12/15/2021 | 3,581 | 1,042,322 | | | | | 04/15/2021 | 3,699 | 1,076,668 | | | | | 04/15/2020 | 1,422 | 413,902 | | | | James J. Bozzini | 04/20/2023 | 51,258 | 14,919,666 | | | | | 04/20/2022 | 23,961 | 6,974,328 | | | | | 04/15/2021 | 11,714 | 3,409,594 | | | | | 04/15/2020 | 4,737 | 1,378,799 | | |
Outstanding Equity Awards at Fiscal Year-End
(1) Unless otherwise noted, each RSU award vested or will vest as to one-fourth of the underlying shares on approximately the one-year anniversary of grant and then quarterly thereafter, subject to continued service with Workday on the applicable vesting dates. (2) The market value of unvested RSUs and unearned PVUs is calculated by multiplying the number of unvested or unearned shares held by the applicable NEO by the closing price of our Class A common stock on January 31, 2024, the last trading day of our fiscal year, which was $291.07. Represents the Tranche 1 and Tranche 2 PVUs granted to Mr. Eschenbach in fiscal 2023 that have achieved their respective share price targets and remain subject to service-based vesting on a monthly basis, fully vesting on December 5, 2027. See “Elements of our Executive Compensation Program — Equity-Based Awards — Eschenbach Fiscal 2023 PVU Awards” for further details. Represents the Tranche 3 PVUs granted to Mr. Eschenbach in fiscal 2023 that remain subject to the achievement of the applicable share price target. The performance period for these PVUs begins on December 28, 2024. The amount reported for the Tranche 3 PVUs based on the fair value on January 31, 2024, computed in accordance with ASC Topic 718 using the Monte Carlo simulation model. See “Elements of our Executive Compensation Program — Equity-Based Awards — Eschenbach Fiscal 2023 PVU Awards” for further details. (5) Represents RSUs granted to Mr. Rowe in connection with his appointment as our Chief Financial Officer that vested or will vest as to one-eighth of the underlying shares three months from the vesting start date and then quarterly thereafter, subject to continued service with Workday on the applicable vesting dates. (6) Ms. Larson stepped down as our Chief Financial Officer effective June 12, 2023, and continues to vest into her outstanding RSUs so long as she continues to provide services to Workday. See “Post-Employment Compensation — Post-Employment Terms in Executive Agreements — Larson Agreement” for further details.
Stock Vested in Fiscal 2024
Stock Vested in Fiscal 2024 The following table summarizes the value realized by our NEOs on stock vested during fiscal 2024.
Stock Vested in Fiscal 2024
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | | Carl M. Eschenbach | 191,340(2) | $45,219,838 | | Aneel Bhusri | 46,012 | 10,039,240 | | Zane Rowe | 20,642 | 4,917,440 | | Sayan Chakraborty | 49,062 | 10,847,771 | | Douglas A. Robinson | 43,933 | 9,677,964 | | Barbara A. Larson | 31,528 | 6,922,113 | | James J. Bozzini | 49,891 | 11,016,261 |
Stock Vested in Fiscal 2024
(1) The value realized on vesting is calculated by multiplying the number of underlying shares at vest by the fair market value of our Class A common stock on the date prior to the applicable vesting dates. (2) Includes 30,365 shares subject to RSUs granted to Mr. Eschenbach in connection with his appointment as our Co-Chief Executive Officer in December 2022, which vested during fiscal 2023 in connection with Mr. Eschenbach’s open market purchase of $2,000,000 of our Class A Common Stock.
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation We do not offer any defined benefit pension plans or nonqualified deferred compensation plans.
CEO Pay Ratio Disclosure
CEO Pay Ratio Disclosure In accordance with SEC rules, we are providing the ratio of the total annual compensation of each individual serving as a Co-Chief Executive Officer during the last completed fiscal year to the total annual compensation of our median compensated employee (“median employee”). The ratios of Messrs. Bhusri’s and Eschenbach’s total annual compensation to that of our median employee’s total annual compensation for fiscal 2024 are 129:1 and 10:1, respectively. We believe these ratios are reasonable estimates, calculated in a manner consistent with SEC rules, based on our payroll and employment records and the methodology described below. As disclosed in the Summary Compensation Table above, the total annual compensation of Messrs. Bhusri and Eschenbach for fiscal 2024 was $31,181,565 and $2,521,664, respectively. The total annual compensation of our median employee for fiscal 2024 was $242,033, calculated in the same manner as the compensation for Messrs. Bhusri and Eschenbach in accordance with SEC rules. The pay ratio for Mr. Eschenbach significantly decreased from the fiscal 2023 pay ratio for two main reasons: first, the fiscal 2023 pay ratio reflected his new hire equity awards, and second, he received only cash compensation during fiscal 2024. As disclosed in the “Compensation Discussion and Analysis” section above, Mr. Eschenbach was not eligible for any equity awards in fiscal 2024. For fiscal 2025, we expect the pay ratio for Mr. Eschenbach to increase as he is eligible for additional equity awards. For additional information about the compensation of our Co-Chief Executive Officers, see the “Compensation Discussion and Analysis” section elsewhere in this Proxy Statement. There have been no significant changes to our employee population or employee compensation programs during fiscal 2024 that would materially affect our pay ratio disclosure. Accordingly, for purposes of calculating the pay ratio set forth above, we are permitted to use the same median employee that we identified for purposes of our 2022 pay ratio. In the process of determining the fiscal 2024 compensation of the median employee identified and disclosed in our 2022 Proxy Statement, we recognized there were anomalous elements in that employee’s fiscal 2024 compensation which we believe did not reasonably reflect the annual compensation of our employees generally. Consequently, as permitted by SEC rules, we have substituted a new median employee with substantially similar compensation to that of the initial median employee (based on compensation measures used to identify the initial median employee), but whose fiscal 2024 compensation did not have such anomalous elements. In selecting the median employee, reporting companies are permitted to use reasonable estimates, assumptions, and methodologies based on their own facts and circumstances. As such, the pay ratio reported by other companies may not be comparable to the pay ratios reported above, as other companies may have different employment and compensation practices and may utilize different estimates, assumptions, and methodologies in calculating their own pay ratios.
Pay Versus Performance
Pay Versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following disclosure regarding executive compensation for our principal executive officers (“PEOs”) and our other NEOs (“Non-PEO NEOs”) and our performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. For further information concerning our pay-for-performance philosophy and how we structure our executive compensation to drive and reward performance, refer to “Executive Compensation — Compensation Discussion and Analysis.” The amounts shown for “Compensation Actually Paid” have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by our NEOs; these amounts reflect the Summary Compensation Table total with certain adjustments as described in the following table and footnotes.
Pay Versus Performance
| Year | Summary Compensation Table Total for PEO ($) (Bhusri)(1) | Compensation Actually Paid to PEO ($) (Bhusri)(4)(5) | Summary Compensation Table Total for PEO ($) (Eschenbach)(2) | Compensation Actually Paid to PEO ($) (Eschenbach)(4)(6) | Average Summary Compensation Table Total for Non-PEO NEOs ($)(3) | Average Compensation Actually Paid to Non-PEO NEOs ($)(4)(7) | Value of Initial Fixed $100 Investment Based On:(8) | | Net Income ($ millions)(9) | Adjusted Subscription Revenue ($ millions)(10) | | | | | | | | | Total Shareholder Return ($) | Peer Group Total Shareholder Return ($) | | | | (a) | (b)(1) | (c)(1) | (b)(2) | (c)(2) | (d) | (e) | (f) | (g) | (h) | (i) | | FY24 | 31,181,565 | 55,478,130 | 2,521,664 | 83,532,656 | 17,598,668 | 26,543,948 | 158 | 179 | 1,381 | 6.61 | | FY23 | 17,297,412 | 9,397,020 | 102,685,309 | 109,947,072 | 10,404,679 | 3,826,484 | 98 | 119 | (367) | 5.58 | | FY22 | 18,431,406 | 19,634,025 | — | — | 9,768,972 | 11,928,801 | 137 | 146 | 29 | 4.55 | | FY21 | 2,693,925 | 5,713,506 | — | — | 10,037,001 | 17,263,222 | 123 | 132 | (282) | 3.79 |
Pay Versus Performance
(1) Aneel Bhusri served as our Co-Chief Executive Officer from August 2020 through January 2024, the end of our fiscal 2024, and currently serves as our Executive Chair. (2) Carl Eschenbach served as our Co-Chief Executive Officer from December 20, 2022 through January 2024 and currently serves as our sole Chief Executive Officer. (3) The individuals comprising the Non-PEO NEOs for each year are listed below:
Pay Versus Performance
| FY24 | FY23 | FY22 | FY21 | | James J. Bozzini | James J. Bozzini | James J. Bozzini | James J. Bozzini | | Sayan Chakraborty | Barbara A. Larson | Douglas A. Robinson | Richard H. Sauer | | Barbara A. Larson | Douglas A. Robinson | Richard H. Sauer | Robynne D. Sisco | | Douglas A. Robinson | Richard H. Sauer | Robynne D. Sisco | | | Zane Rowe | | | |
Pay Versus Performance
Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEOs and the Non-PEO NEOs as required by Item 402(v) of Regulation S-K, as set forth in the tables below. The fair value or change in fair value, as applicable, of equity awards in the “Compensation Actually Paid” columns has been estimated pursuant to the guidance in ASC Topic 718. The fair values of RSU awards that are subject to solely service-based vesting criteria are calculated using the closing price of our Class A common stock on applicable year-end dates, or, in the case of vesting dates, the closing price on the date prior to the applicable vesting dates. (5) Compensation Actually Paid to Mr. Bhusri for fiscal 2024 reflects the following adjustments from Total Compensation reported in the Summary Compensation Table:
Pay Versus Performance
| | FY24 | | Total Reported in Summary Compensation Table (SCT)($) | 31,181,565 | | Less, value of Stock Awards reported in SCT | 28,122,189 | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 44,758,998 | | Plus, Change in Fair Value of Prior Year Awards that are Unvested and Outstanding | 5,968,473 | | Plus, FMV of Awards Granted this Year and that Vested this Year | — | | Plus, Change in Fair Value (from prior year-end) of Prior Year Awards that Vested this year | 1,691,283 | | Less Prior Year Fair Value of Prior Year Awards that Failed to vest this year | — | | Total Adjustments | 52,418,754 | | Compensation Actually Paid | 55,478,130 |
Pay Versus Performance
(6) Compensation Actually Paid to Mr. Eschenbach for fiscal 2024 reflects the following adjustments from Total Compensation reported in the Summary Compensation Table:
Pay Versus Performance
| | FY24 | | Total Reported in Summary Compensation Table (SCT)($) | 2,521,664 | | Less, value of Stock Awards reported in SCT(i) | — | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding(i) | — | | Plus, Change in Fair Value of Prior Year Awards that are Unvested and Outstanding(ii) | 69,264,018 | | Plus, FMV of Awards Granted this Year and that Vested this Year | — | | Plus, Change in Fair Value (from prior year-end) of Prior Year Awards that Vested this year(iii) | 11,746,974 | | Less Prior Year Fair Value of Prior Year Awards that Failed to vest this year | — | | Total Adjustments | 81,010,992 | | Compensation Actually Paid | 83,532,656 |
Pay Versus Performance
(i) Mr. Eschenbach was not eligible for equity awards in fiscal 2024. (ii) Reflects Mr. Eschenbach’s unvested time-based RSUs, unearned portions of the PVU award that remain eligible for achievement and earned portion of the PSU award that remain subject to on-going time based vesting. The change in fair value for the unearned portion of the PVU award is computed in accordance with ASC Topic 718 using the Monte Carlo simulation model, including updated input variables for such model, as of January 31, 2024. The amount does not reflect the actual economic value that may ultimately be realized by Mr. Eschenbach. (iii) Reflects Mr. Eschenbach’s time-based RSUs that vested during fiscal 2024 and earned portions of the PVU award that also became time-vested during fiscal 2024. The amount does not reflect the actual economic value that may ultimately be realized by Mr. Eschenbach. (7) The average Compensation Actually Paid to the Non-PEO NEOs reflects the following adjustments from Total Compensation reported in the Summary Compensation Table:
Pay Versus Performance
| | FY24 | | Total Reported in Summary Compensation Table (SCT)($) | 17,598,668 | | Less, value of Stock Awards reported in SCT | 16,752,967 | | Plus, Year-End value of Awards Granted in Fiscal Year that are Unvested and Outstanding | 19,750,497 | | Plus, Change in Fair Value of Prior Year Awards that are Unvested and Outstanding | 3,600,227 | | Plus, FMV of Awards Granted this Year and that Vested this Year | 983,488 | | Plus, Change in Fair Value (from prior year-end) of Prior Year Awards that Vested this year | 1,364,035 | | Less Prior Year Fair Value of Prior Year Awards that Failed to vest this year | — | | Total Adjustments | 25,698,247 | | Compensation Actually Paid | 26,543,948 |
Pay Versus Performance
The Peer Group TSR set forth in this table utilizes the S&P 1500 Application Software Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2024. The comparison assumes $100 was invested for the period starting January 31, 2020, through the end of the listed year in Workday Class A common stock and in the S&P 1500 Application Software Index, respectively. Historical stock performance is not necessarily indicative of future stock performance. (9) The dollar amounts reported represent the amount of net income reflected in our audited financial statements for the applicable fiscal year. (10) We determined adjusted subscription revenue to be the most important financial performance measure (that is not otherwise required to be disclosed in the table) used to link company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in fiscal 2024. Subscription revenue primarily consist of fees that give our customers access to our cloud applications, which include related customer support. Subscription revenue are recognized over time as services are delivered and consumed concurrently over the contractual term, beginning on the date our service is made available to the customer. adjusted subscription revenue is subscription revenue adjusted for the impact of foreign currency rate fluctuations and certain acquisitions. See Appendix B for a reconciliation of GAAP subscription revenue to adjusted subscription revenue.
Analysis of the Information Presented in the Pay versus Performance Table
Analysis of the Information Presented in the Pay versus Performance Table In accordance with Item 402(v) of Regulation S-K, we are providing the following depictions of the relationships between information presented in the Pay versus Performance table.
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) and Peer Group TSR
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company Total Shareholder Return (“TSR”) and Peer Group TSR The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, our cumulative TSR, and the cumulative TSR of the S&P 1500 Application Software Index over the four most recently completed fiscal years.
Compensation Actually Paid versus Total Shareholder Return
Compensation Actually Paid versus Total Shareholder Return
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income The following chart sets forth the relationship between Compensation Actually Paid to our PEOs, the average of Compensation Actually Paid to our Non-PEO NEOs, and our net income during the four most recently completed fiscal years.
Compensation Actually Paid versus Net Income
Compensation Actually Paid versus Net Income
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted Subscription Revenue
Description of Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Adjusted Subscription Revenue The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our adjusted subscription revenue during the four most recently completed fiscal years.
Compensation Actually Paid versus Adjusted Subscription Revenue
Compensation Actually Paid versus Adjusted Subscription Revenue
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control Our Executive Severance Policy is applicable to our NEOs and certain other participants. Under the Executive Severance Policy, a participant is eligible to receive cash payments and accelerated vesting of certain equity awards in the event of a qualifying termination of the participant’s employment (i) without cause, outside of a change in control of Workday (referred to as a “Non-CIC Qualifying Termination” in the Executive Severance Policy), or (ii) without cause or for good reason, in connection with a change in control of Workday (referred to as a “CIC Qualifying Termination” in the Executive Severance Policy). As described below, Messrs. Eschenbach and Rowe have certain additional benefits pursuant to their employment letters.
Potential Payments Upon Termination or Change in Control
| | Chief Executive Officer | All Other Eligible Executive Officers | | Non-CIC Qualifying Termination(1) | • The payments and acceleration benefits under “All Other Eligible Executive Officers” • An additional lump sum cash payment equal to one times the target annual bonus | • A lump sum cash payment equal to annual base salary • A lump sum cash payment equal to the target annual bonus, subject to certain pro rata adjustments • Acceleration of time-based outstanding equity awards that would have vested within 12 months following the Non-CIC Qualifying Termination, other than equity awards granted within the 12 months prior to the Non-CIC Qualifying Termination • A lump sum cash payment equal to 12 months of COBRA premiums | | CIC Qualifying Termination(1) | • A lump sum cash payment equal to two times annual base salary • A lump sum cash payment equal to two times the target annual bonus • Acceleration of all outstanding time-based outstanding equity awards • A lump sum cash payment equal to 24 months of COBRA premiums | • A lump sum cash payment equal to annual base salary • A lump sum cash payment equal to the target annual bonus • Acceleration of all outstanding time-based outstanding equity awards • A lump sum cash payment equal to 12 months of COBRA premiums |
Potential Payments Upon Termination or Change in Control
(1) Pursuant to the terms of the Executive Severance Policy, a participant is entitled to receive the greater of the benefits under the Executive Severance Policy or the benefits provided for under arrangements entered into by and between the participant and Workday prior to the effective date of the Executive Severance Policy.