DEF 14A of Flywire Corp
Filed Apr 22, 2024 · FY20230001140361-24-021009
Election of Directors
Election of Directors General Our Board of Directors may establish the authorized number of directors from time to time by resolution. Our Board of Directors is currently comprised of seven members who are divided into three classes with staggered three-year terms. A director serves in office until his or her respective successor is duly elected and qualified or until his or her earlier death, resignation or removal. This classification of the Board of Directors into three classes with staggered three-year terms may have the effect of delaying or preventing changes in our control or management. Your proxy cannot be voted for a greater number of persons than the number of nominees named in this proxy statement. Nominees for Election as Class III Directors at the Annual Meeting This year’s nominees for election to the Board of Directors as our Class III directors to serve for a term of three years expiring at the 2027 annual meeting of stockholders, or until their successors have been duly elected and qualified or until their earlier death, resignation or removal, are provided below. All of the nominees listed below are currently directors of the Company. The age of each director as of April 8, 2024 is set forth below. Each of the nominees has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve if elected.
Election of Directors
| Name | Age | Director Since | | Phillip Riese | 74 | 2013 | | Edwin Santos | 64 | 2021 |
Election of Directors
The following is additional information about each of the nominees as of the date of this proxy statement, including their business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused our Nominating and Corporate Governance Committee and our Board of Directors to determine that the nominees should serve as one of our directors.
Election of Directors
| Phillip Riese | Age: 74 | Director since: 2013 Mr. Riese has served as a member and Chair of our Board of Directors since August 2013. In November 1998, Mr. Riese established Riese & Others, offering his personal services as a board member and advisor with a focus on emerging and disruptive companies primarily in financial services, globally. He frequently invests in those companies alongside a variety of venture capital and private equity firms. Prior to forming Riese & Others, Mr. Riese spent 18 years at American Express, ultimately serving as the president of the Consumer Card Group and chairman of American Express Centurion Bank. Before joining American Express, Mr. Riese was a division executive at Chase Bank, after being a partner at M.C. Geffen, a consulting firm in South Africa. Mr. Riese serves as a board member for a number of public and private companies, including Remitly, Betterment LLC and Cross River Bank. Mr. Riese holds a Bachelor’s degree in Commerce from Leeds University in England, a M.B.A. from the University of Cape Town in South Africa and a Master of Science degree from Massachusetts Institute of Technology. | | | We believe Mr. Riese is qualified to serve on our Board of Directors because of his extensive experience in the payments industry and his senior management experience. |
Election of Directors
| Edwin Santos | Age: 64 | Director since: 2021 Mr. Santos has served as a member of our Board of Directors since April 2021. Mr. Santos has had a distinguished career in banking, with experience in risk management, corporate governance, management advisory services, acquisitions, and reengineering efforts. He served for many years in various positions of significant responsibility with FleetBoston Financial Group, and more recently served as Group Executive Vice President and General Auditor for Citizens Financial Group prior to his retirement in 2009. Mr. Santos currently serves as a member of the boards of directors of the Providence Mutual Fire Insurance Company, Washington Trust Bancorp Inc. and Fidelity Institutional Asset Management, a Fidelity Investments company. He is also the former President of the Board of Trustees of Rocky Hill School, and a member of the Bryant University Board of Trustees. Mr. Santos holds a Bachelor’s degree in Business Administration and Accounting from Bryant University. | | | We believe Mr. Santos is qualified to serve on our Board of Directors because of his professional competency and broad experience in the financial services industry. |
Election of Directors
Required Vote and Recommendation of the Board of Directors for Proposal 1 The affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of our Class III directors. The two nominees receiving the most “FOR” votes among votes properly cast in person or by proxy will be elected to the Board of Directors as Class III directors. You may vote “FOR” or “WITHHOLD” on each of the nominees for election as director. Shares represented by signed proxy cards will be voted on Proposal 1 “FOR” the election of Phillip Riese and Edwin Santos to the Board of Directors at the Annual Meeting, unless otherwise marked on the card. A broker non-vote or a properly executed proxy marked “WITHHOLD” with respect to the election of a Class III director will not be voted with respect to such director, although it will be counted for purposes of determining whether there is a quorum.
Election of Directors
| Our Board of Directors unanimously recommends a vote “FOR ALL” The Class III nominees named above. |
Election of Directors
Continuing Directors Not Standing for Election Certain information about those directors whose terms do not expire at the Annual Meeting is furnished below, including their business experience, public company director positions held currently or at any time during the last five years, involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes or skills that caused our Nominating and Corporate Governance committee and our Board of Directors to determine that the directors should serve as one of our directors. The age of each director as of April 8, 2024 is set forth below. Incumbent Class I Directors Whose Term Expires in 2025
Election of Directors
| Michael Massaro | Age: 45 | Director since: 2013 Mr. Massaro has served as our Chief Executive Officer and a member of our Board of Directors since December 2013. Prior to being appointed as our Chief Executive Officer, Mr. Massaro served as our Vice President, Sales and Business Development from March 2012 to December 2013. Mr. Massaro has over 20 years of background in global payments, mobile software and hardware, and e-billing at high growth technology companies, including edocs, Inc. (later acquired by Siebel Systems) and Carrier IQ. Mr. Massaro began his career as part of the technical risk services practice at PricewaterhouseCoopers LLP. He earned his Bachelor of Science degree in Management Information Systems from Babson College. | | | Mr. Massaro’s extensive knowledge of our business, as well as his years of experience in the payments industry, including executive leadership in several companies, contributed to our conclusion that he should serve as a member of our Board of Directors. |
Election of Directors
| Diane Offereins | Age: 66 | Director since: 2023 Ms. Offereins has served as a member of our Board of Directors since 2023. Ms. Offereins served as the former Executive Vice President and President, Payment Services at Discover Financial Services, where she was responsible for the growth of the Discover Global Network, consisting of three payment networks - Discover Network, Diners Club International and PULSE from 2009 until her retirement in June 2023. Ms. Offereins previously held several positions within the company, including Executive Vice President, Payment Services and Executive Vice President and Chief Information Officer. Prior to Discover, Ms. Offereins held leadership positions at Bank of America and SouthEast Bank. Ms. Offereins is on the Board of Directors of Brighthouse Financial, Inc., where she chairs the Compensation and Human Capital Committee and serves on the Finance and Risk and Nominating and Corporate Governance Committees. She earned her B.B.A. in Accounting from Loyola University of New Orleans. | | | We believe Ms. Offereins is qualified to serve on our Board of Directors because of her extensive background in payments, financial services and cybersecurity. |
Election of Directors
Incumbent Class II Directors Whose Term Expires in 2026
Election of Directors
| Alex Finkelstein | Age: 48 | Director since: 2011 Mr. Finkelstein has served as a member of our Board of Directors since 2011. Mr. Finkelstein has served as a General Partner at Spark Capital, a venture capital firm, since 2005. Mr. Finkelstein began his career at Cambridge Associates before joining two early-stage venture capital firms. After a few years, he took a break from the venture capital industry to write and sell a number of original television shows to networks including FOX, Discovery, and E!. Mr. Finkelstein later returned to the venture capital industry and joined Spark at its inception. Mr. Finkelstein earned his Bachelor of Arts in Political Science from Middlebury College. | | | We believe Mr. Finkelstein is qualified to serve on our Board of Directors because of his extensive business experience with technology companies, including experience in the formation, development and business strategy of multiple start-up companies. |
Election of Directors
| Matthew Harris | Age: 51 | Director since: 2015 Mr. Harris has served as a member of our Board of Directors since January 2015. Mr. Harris joined Bain Capital Ventures in September 2012 to lead the New York City office, where he currently serves as a Partner. Mr. Harris focuses on business services companies, with a particular interest in financial services. Mr. Harris has served as a member of the board of directors of AvidXchange Holdings, Inc., a provider of accounts payable automation software and payment solutions for middle market businesses and their suppliers, since July 2015. Mr. Harris has also served as a member of the board of directors of BTRS Holdings Inc. (f/k/a Factor Systems, Inc. (dba Billtrust)), a provider of cloud-based software and integrated payment processing solutions, until December 2022. Prior to joining Bain Capital Ventures, Mr. Harris founded Village Ventures, Inc., an early stage venture capital firm focused on the media and financial services sectors, and served as Managing Director from January 2000 to September 2012. Mr. Harris holds a Bachelor of Arts degree from Williams College. | | | We believe Mr. Harris is qualified to serve on our Board of Directors because of his extensive business experience with technology companies, including experience in the formation, development and business strategy of multiple start-up companies in the payments sector. |
Election of Directors
| Gretchen Howard | Age: 50 | Director since: 2023 Ms. Howard has served as a member of our Board of Directors since September 2023. Ms. Howard served as the former Chief Operating Officer of Robinhood Markets, Inc. from January 2019 until January 2024, where among other functions, she oversaw brokerage, cash compliance and operations, human resources and recruiting, customer trust and safety, as well as customer support and business strategy. Prior to her leadership role at Robinhood, Ms. Howard was a Partner with CapitalG, Alphabet Inc.’s growth equity fund from 2014 to 2019. Prior to her time at CapitalG, Ms. Howard held various positions at Google and Fidelity Investments. Ms. Howard is on the Board of Directors of AllTrails, a mobile app connecting people to the outdoors. She is also a member of the Board of Trustees at Williams College and a former board member of the YMCA of San Francisco. She holds a B.A. from Williams College and an M.B.A. from Harvard Business School. | | | We believe Ms. Howard is qualified to serve on our Board of Directors because of her extensive business experience with technology companies, including experience in the formation, development and business strategy of multiple start-up companies in the payments sector. |
Election of Directors
There are no family relationships among any of our directors or executive officers. See “Corporate Governance” below for additional information regarding our Board of Directors. PROPOSAL TWO:
Corporate Governance
| • | Governance and ethics: We are committed to ethical and compliant business practices and good corporate governance for the long-term success of Flywire and our stockholders. We have a Code of Conduct that is actively enforced and mandatory training across a spectrum of important topics, ranging from anti-money laundering to sexual harassment to information security best practices. |
Corporate Governance
| • | making recommendations to our Board of Directors with respect to director compensation; |
Corporate Governance
| • | overseeing our equity incentive plans and employee benefit plans; |
Corporate Governance
| • | the candidate’s commitment to vigorously represent the long-term interests of our stockholders; |
Corporate Governance
People & Compensation Committee Interlocks and Insider Participation None of the members of our People & Compensation Committee during 2023 is serving or has served as an officer or employee of ours. None of our executive officers currently serves, or in the past year has served, as a member of the Board of Directors or People & Compensation Committee of any entity that has one or more executive officers serving on our Board of Directors or People & Compensation Committee. Compensation Risk Our People & Compensation Committee conducted a risk assessment of its compensation policies and practices, including those related to executive compensation programs for NEOs. The risk assessment included an analysis of our executive compensation programs and broader employee incentive compensation plans. Our People & Compensation Committee also considered how these programs compare, from a design perspective, to programs maintained by other companies. Based on this assessment, it was determined that our executive compensation programs are balanced and appropriately incent employees, and any risks arising from the compensation policies and practices are not reasonably likely to have a material adverse effect on Flywire. Meetings of the Board of Directors The Board of Directors held six meetings and acted by written consent three times during our year ended December 31, 2023. No director attended fewer than 75% of the total number of meetings of the Board of Directors and any committees of the Board of Directors of which he or she was a member during our year ended December 31, 2023. Our policy is to invite and encourage each member of our Board of Directors to be present at our annual meetings of stockholders. Four of seven of our then serving members of our Board of Directors attended our 2023 annual meeting of stockholders in their capacity as directors of our company. Board Oversight of Risk Our Board of Directors has responsibility for the oversight of our risk management processes and, either as a whole or through its committees, regularly discusses with management our major risk exposures, their potential impact on our business and the steps we take to manage them. The risk oversight process includes receiving regular reports from board committees and members of senior management to enable our Board of Directors to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations, finance, legal, regulatory, strategic and reputational risk. Our Audit Committee reviews information regarding liquidity and operations, and oversees our management of financial risks. Periodically, our Audit Committee reviews our policies with respect to risk assessment, risk management, loss prevention and regulatory compliance. Oversight by our Audit Committee includes direct communication with our external auditors, and discussions with management regarding significant risk exposures and the actions management has taken to limit, monitor or control such exposures. Our People & Compensation Committee is responsible for assessing whether any of our compensation policies or programs has the potential to encourage excessive risk-taking. Our Nominating and Corporate Governance Committee manages risks associated with the independence of the Board of Directors, corporate disclosure practices, potential conflicts of interest and corporate responsibility, including environmental, social and corporate governance matters. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board of Directors is regularly informed through committee reports about such risks. Matters of significant strategic risk are considered by our Board of Directors as a whole. Director Compensation The following table sets forth information about the compensation of the non-employee members of our Board of Directors who served as a director during our year ended December 31, 2023. Other than as set forth in the table and described more fully below, during our year ended December 31, 2023, we did not pay any fees to, make any equity awards or non-equity awards to, or pay any other compensation to the non-employee members of our Board of Directors. Mr. Massaro, our Chief Executive Officer, receives no compensation for his service as a director, and is not included in the table below. Mr. Riese currently serves as Chair of our Board of Directors.
Corporate Governance
| | Fees Earned or Paid in Cash ($) | Stock Awards ($)(5)(6) | Total ($) | | Yvonne Hao(1) | — | — | — | | Matthew Harris | — | — | — | | Gretchen Howard(2) | 11,587 | 349,984(7) | 361,571 | | Alex Finkelstein | 25,838 | 174,985(8) | 200,823 | | Jo Natauri(3) | — | — | — | | Diane Offereins (4) | 41,000 | 524,990(9)(10) | 565,990 | | Phillip Riese | 83,000 | 174,985(11) | 257,985 | | Edwin Santos | 59,000 | 174,985(12) | 233,985 |
Corporate Governance
| (6) As of December 31, 2023, our non-employee directors held option and RSU awards to acquire the following number of shares of common stock: |
Corporate Governance
| | Number of Shares Underlying Outstanding Awards | | | | Option Awards | RSU Awards | | Matthew Harris | — | — | | Gretchen Howard(2) | 0 | 11,415 | | Alex Finkelstein | 0 | 5,587 | | Diane Offereins(4) | 0 | 19,763 | | Phillip Riese | 438,000 | 5,587 | | Edwin Santos | 0 | 10,448 |
Corporate Governance
| (7) On September 19, 2023, Ms. Howard was granted an initial restricted stock unit award for 11,415 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| (8) On June 4, 2023, Mr. Finkelstein was granted an annual restricted stock unit award for 5,587 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| (9) On January 9, 2023, Ms. Offereins was granted an initial restricted stock unit award for 14,176 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| (10) On June 4, 2023, Ms. Offereins was granted an annual restricted stock unit award for 5,587 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| (11) On June 4, 2023, Mr. Riese was granted an annual restricted stock unit award for 5,587 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| (12) On June 4, 2023, Mr. Santos was granted an annual restricted stock unit award for 5,587 shares of our common stock pursuant to our non-employee director compensation plan. |
Corporate Governance
| | Role | Annual Cash Retainer(1) | Initial Equity Grant(2)(3) | Annual Equity Grant(3)(4) | | Board of Directors | Director | $35,000 | Restricted Stock Unit Award valued at $350,000 | Restricted Stock Unit Award valued at $175,000 | | | Chair | $65,000 | | | | Audit Committee | Chair | $20,000 | | | | | Other | $10,000 | | | | | Member | | | | | People & Compensation Committee | Chair | $12,000 | | | | | Other | $6,000 | | | | | Member | | | | | Nominating and Corporate Governance Committee | Chair | $8,000 | | | | | Other | $4,000 | | | | | Member | | | |
Corporate Governance
| (2) Initial equity grants are automatically granted on the date the director is elected or appointed as a director and are calculated based on the closing price of our common stock on the date of grant. The initial equity grant upon election or appointment as a director shall vest in 3 equal annual installments following the grant date. |
Corporate Governance
| (3) Such award will accelerate and fully vest upon a change in control, or such non-employee director’s earlier death or disability. |
Corporate Governance
| (4) Annual equity grants are automatically granted two days prior to the date of each annual regular meeting of the Company’s stockholders and are calculated based on the closing price of our common stock on the date of grant. The annual equity grant shall vest on the 1-year anniversary of the grant date provided the director provides continuous service as a director, member of the applicable committee or chair, as applicable, through such date. |
Corporate Governance
Mr. Harris has waived the non-employee director RSUs and the cash compensation under our non-employee director compensation program. We also reimburse our non-employee directors for their reasonable out-of-pocket expenses incurred in attending Board of Directors and committee meetings. Stockholder Communications with the Board of Directors Stockholders wishing to communicate with our Board of Directors or with an individual member of our Board of Directors may do so by writing to our Board of Directors or to the particular member of our Board of Directors, care of our Corporate Secretary by mail to our principal executive offices, Attention: Corporate Secretary. The envelope should indicate that it contains a stockholder communication. All such stockholder communications will be forwarded to the director or directors to whom the communications are addressed.
Executive Compensation
| • | Delivered Strong Financial Results. We delivered strong results across key performance metrics. Our total payment volume was over $24.0 billion, an increase of 33% year-over-year. Revenue increased 39% year-over-year to $403.1 million. |
Executive Compensation
| • | Reviewed our Peer Group of Publicly-traded Companies. The People & Compensation Committee of our Board of Directors (People & Compensation Committee) reviewed and updated our peer group of publicly-traded technology companies to evaluate our compensation practices for purposes such as pay levels and compensation program design for our NEOs. |
Executive Compensation
| • | Review of Total Compensation Opportunities. The People & Compensation Committee evaluated the competitive positioning of our NEO’s compensation relative to the market and made adjustments considering both internal and external factors. In terms of market positioning, the People & Compensation Committee reference the 50th - 75th percentile range of market for target total compensation, with compensation weighted more heavily towards equity. |
Executive Compensation
| • | Challenging Annual Incentive Goals. Our NEOs were eligible to earn a cash bonus based on our achievement of annual corporate goals established by our People & Compensation Committee. Based on our strong Fiscal 2023 performance, including revenue of $403.1 million and adjusted EBITDA of $42 million, our NEOs earned bonuses of 130% of their target bonus for the year. |
Executive Compensation
| • | Compensation Mix Weighted Towards Equity. Our NEOs total target direct compensation mix was more weighted towards equity than cash to emphasize alignment with stockholders and long-term performance. In Fiscal 2023, we granted an average of over 80% of our NEOs’ target direct compensation as equity-based compensation in the form of restricted stock units (RSUs). We believe that RSUs, as well as previously issued unvested stock options, support retention and effectively align the interests of our executives with those of our stockholders by directly linking compensation to the value of our common stock. |
Executive Compensation
| • | Pay-for-Performance. We strive to provide a strong relationship between pay and performance. Annual performance-based cash bonuses are tied to achievement of annual corporate financial goals. Long-term incentive awards deliver value based on the performance of our common stock. |
Executive Compensation
| • | Emphasis on Equity Compensation. Total compensation is heavily weighted toward equity incentive compensation. Long-term incentives focus our NEOs on sustainable and long-term stockholder value creation. The value realized by our NEOs depends on the value of our common stock, which we believe aligns our NEOs’ interests with the long-term interests of our stockholders. |
Executive Compensation
| What We Do | | What We Do Not Do | | | | Employ a pay for performance philosophy reflected in program design and target pay levels for NEOs | | Guarantee bonuses to our executive officers | | | Deliver majority of compensation in equity to promote executive retention and reward long-term value creation | | Provide tax gross-ups | | | Cap maximum annual cash incentive bonus payouts | | Permit hedging or short sales of our common stock | | | Maintain and annually review a group of peer companies | | Provide single trigger equity acceleration upon a change in control | | | Fully independent directors on our People & Compensation Committee | | Maintain compensation plans that encourage excessive risk taking | | | Engage an independent compensation consultant to advise our People & Compensation Committee | | Provide significant perquisites or personal benefits | | | Utilize stock ownership guidelines to align our NEOs with long-term stockholder interests | | | | | Administer and enforce a policy to recover erroneously awarded incentive-based compensation | | |
Executive Compensation
Compensation Governance and the Compensation-Setting Process Role of Our People & Compensation Committee Our executive compensation program is designed and administered under the direction and control of our People & Compensation Committee, which is made up solely of independent directors. Our People & Compensation Committee reviews and approves our overall executive compensation program, policies, practices and metrics and sets the compensation of our executive officers, including our NEOs, as well as certain other members of our senior management team. In fulfilling this responsibility, our People & Compensation Committee reviews the performance of each NEO at least once each year. Our CEO, as the manager of the executive team, assesses the executives’ contributions to the corporate goals and makes a recommendation to our People & Compensation Committee with respect to any increase in salary, cash bonus and annual equity awards for each member of the executive team, other than himself. Our People & Compensation Committee meets with our CEO to evaluate, discuss and modify or approve these recommendations. Our People & Compensation Committee also conducts a similar evaluation of our CEO’s contributions when our CEO is not present, and determines any increase in salary, cash bonus and annual equity award for him. Our People & Compensation Committee meets regularly throughout the year to review our executive compensation program with the goal of ensuring it is consistent with our short-term and long-term goals given the dynamic nature of our business and the market in which we compete for executive talent. Our People & Compensation Committee received and reviewed compensation summaries for each NEO at the beginning of Fiscal 2023. The information in these summaries was used by our People & Compensation Committee to assist with analyzing existing compensation and any proposed changes in compensation for each NEO. The summaries included information regarding the accumulated value of unvested equity ownership, how much is unvested, and the amount of potential value earnable under various share price scenarios. The summaries help our People & Compensation Committee to track changes in an NEO’s compensation from year to year and to remain aware of the compensation historically paid to each NEO. In addition to the information and analyses supplied to our People & Compensation Committee as described above and in the peer group segment below, members of our senior management team support our People & Compensation Committee in its work from time to time. Compensation Consultant Our People & Compensation Committee has the authority under its charter to directly retain, review fees for, and terminate advisors and consultants as it deems necessary to assist in the fulfillment of its responsibilities. For purposes of its Fiscal 2023 executive compensation decisions, our People & Compensation Committee engaged ClearBridge Compensation Group LLC (ClearBridge) as its independent compensation consultant (the compensation consultant). ClearBridge has served as the compensation consultant to our People & Compensation Committee since the second half of 2022. Our People & Compensation Committee’s compensation consultant provides information and analyses that serve as the basis for setting executive and director compensation levels and advises our People & Compensation Committee on compensation-related decisions. The compensation consultant advises our People & Compensation Committee on the structure of executive and director compensation programs, including the design of incentive plans, the forms and mix of compensation, allocation of equity compensation, regulatory requirements and other topics relevant to executive and director compensation. Our People & Compensation Committee reviews the independence of its compensation consultant annually and found no conflict of interest with ClearBridge during its 2023 independence review. Our People & Compensation Committee’s compensation consultant did not provide any additional services beyond the compensation-related items highlighted above during Fiscal 2023. Our People & Compensation Committee has adopted protocols governing if and when its compensation consultant’s advice and recommendations can be shared with management, recognizing that, in advising our People & Compensation Committee, it is necessary for the compensation consultant to interact with management to gather information. Our People & Compensation Committee also determines the appropriate forum for receiving recommendations from its compensation consultant. Where appropriate, our People & Compensation Committee invites management to provide context for the recommendations. In other cases, our People & Compensation Committee receives recommendations from its compensation consultant in executive sessions where management is not present. At such times as it deems necessary, our People & Compensation Committee also engages directly with its compensation consultant between formal meetings of the People & Compensation Committee. This approach further protects our People & Compensation Committee’s ability to receive objective advice from its compensation consultant and establishes a forum for independent decisions about executive pay. Peer Group Our People & Compensation Committee reviews market compensation levels at least annually to determine the placement of our executive compensation relative to the competitive market for executive talent. This assessment includes evaluation of base salary, and short- and long-term incentive opportunities against executive compensation reported by a peer group of companies selected by our People & Compensation Committee as comparable to Flywire in size and related industry, among other criteria. Our People & Compensation Committee also considers market compensation information collected from survey sources. The compensation consultant supports our People & Compensation Committee in the selection of the peer group of companies and also provides our People & Compensation Committee with analyses of each peer company’s executive compensation information. In July 2022, our People & Compensation Committee reviewed the changes suggested by its compensation consultant to the group of peer companies which the committee had used in making prior executive compensation decisions. Criteria considered to determine the recommended changes to the peer company group included industry, company size (i.e., revenue and market capitalization), as well as companies with a meaningful portion of business both in the U.S. and abroad, and duration of time in operation as a public company. Based on such factors, it was recommended that AvidXchange, EngageSmart, EVO Payments, Expensify, Payoneer Global, Remitly Global and Lightspeed Commerce be added to the compensation peer group and that Anaplan, BigCommerce, Bill.com, C3.ai, Duck Creek Technologies, Everbridge, Jamf Holding, ON24, SailPoint Technologies, Sprout Social and Upstart Holdings be removed because the company did not meet one or more of the criteria discussed above and was no longer considered to be a meaningful comparison point or the company ceased to be publicly traded. Following this review, our People & Compensation Committee selected the following companies as our peer group for reference purposes when making executive compensation decisions for Fiscal 2023:
Executive Compensation
Annual Cash Incentive Bonus Compensation Our annual cash incentive bonus compensation program promotes our pay for performance philosophy by providing all executives and other management-level corporate employees with direct financial incentives in the form of annual cash awards for achievement of certain corporate financial goals established and approved by our People & Compensation Committee at the start of the year. If we achieve results that are below threshold levels, these NEOs receive no cash incentive bonus, while results that are above threshold levels result in a cash incentive bonus payout based on a pre-determined scale, subject to a maximum amount of 150% in Fiscal 2023 (up from 125% in Fiscal 2022). Target Bonus Opportunities Our People & Compensation Committee sets each NEO’s individual target cash incentive amount based on each NEO’s employment agreement provisions, our CEO’s recommendation (except for his own target), internal pay equity, our People & Compensation Committee’s general understanding of current competitive pay practices and other factors it deems appropriate. After evaluating the competitive positioning of our NEOs’ total target cash compensation in the context of our overall compensation philosophy, in February 2023, our People & Compensation Committee determined not to adjust the target cash bonus amounts for any of the NEOs, other than Mr. Massaro. The target bonus for Mr. Massaro was increased from $260,000 to $450,000 to position his total target cash compensation more competitively in the market. As a result, the Fiscal 2023 target bonus opportunities for our NEOs were:
Executive Compensation
| Name | Fiscal 2023 Target Bonus Opportunity ($) | | Michael Massaro | 450,000 | | Robert Orgel | 225,000 | | Michael Ellis | 225,000 | | Peter Butterfield | 150,000 | | David King | 150,000 |
Executive Compensation
| Corporate Component | Weighting | Threshold 75% payout | Target 100% payout | Maximum 150% payout | | Revenue Less Ancillary Services | 50% | $358,700,000 | $373,000,000 | $391,700,000 | | Adjusted EBITDA | 50% | $31,100,000 | $33,000,000 | $38,820,000 |
Executive Compensation
| Executive | Target Bonus | Percentage of Target Awarded | Actual Bonus Awarded | | Michael Massaro | $450,000 | 130% | $585,000 | | Robert Orgel | $225,000 | 130% | $293,000 | | Michael Ellis | $225,000 | 130% | $293,000 | | Peter Butterfield | $150,000 | 130% | $195,000 | | David King | $150,000 | 130% | $195,000 |
Executive Compensation
2023 Long-Term Incentive Compensation Our People & Compensation Committee is focused on aligning pay with performance in our compensation program, and as such, we continue to evaluate the most effective way to do so. For Fiscal 2023, recognizing the challenges with long-term goal setting given the volatility of the market and with the goal of driving behaviors for long-term success, our People & Compensation Committee determined the most effective way to align executives with stockholders was to award RSUs that are directly aligned with stockholders, with value driven by the share price. The number of shares underlying RSUs granted to our NEOs is based on our People & Compensation Committee’s general understanding of competitive pay practices, our CEO’s recommendation (except with respect to his own awards), consultation with its compensation consultant, and other factors that our People & Compensation Committee deems appropriate. In addition to the annual RSU awards, our People & Compensation Committee may grant additional RSUs for merit, performance, retention or promotional purposes. In March 2023, our People & Compensation Committee granted the following time-based RSUs to our NEOs, which vest with respect to 25% of the shares after one year and the remainder vesting in equal quarterly installments over the following three years, subject to the officer’s continued employment.
Executive Compensation
| Name | Number of Shares Underlying RSU Grant | | Michael Massaro | 284,436 | | Robert Orgel | 150,064 | | Michael Ellis | 101,023 | | Peter Butterfield | 71,599 | | David King | 120,640 |
Gretchen Howard
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | Michael Massaro Chief Executive Officer | 2023 | 450,000 | 7,628,574 | — | 585,000(2) | 9,998(3) | 8,673,572 | | | 2022 | 450,000 | 6,384,148 | — | 226,200 | 9,248 | 7,069,596 | | | 2021 | 450,000 | — | 4,052,400 | 257,600 | 8,798 | 4,768,798 | | Robert Orgel President and Chief Operating Officer | 2023 | 350,000 | 4,024,716 | — | 293,000(2) | 7,721(4) | 4,675,437 | | | 2022 | 350,000 | 3,192,061 | — | 195,750 | 9,248 | 3,747,059 | | | 2021 | 347,917 | — | 3,039,300 | 189,700 | 8,798 | 3,585,715 | | Michael Ellis(5) Former Chief Financial Officer | 2023 | 325,000 | 2,709,437 | — | 293,000(2) | 9,135(6) | 3,336,572 | | | 2022 | 319,792 | 2,280,055 | — | 203,175 | 9,243 | 2,812,265 | | | 2021 | 297,500 | — | 1,317,030 | 162,600 | 8,793 | 1,785,923 | | Peter Butterfield General Counsel and Chief Compliance Officer | 2023 | 300,000 | 1,920,285 | — | 195,000(2) | 9,580(7) | 2,424,865 | | David King Chief Technology Officer | 2023 | 300,000 | 3,235,565 | — | 195,000(2) | 9,187(8) | 3,739,752 | | | 2022 | 294,792 | 3,192,061 | — | 132,525 | 6,878 | 3,626,256 |
Gretchen Howard
| • | in the case of Messrs. Massaro and Orgel, an additional six months of vesting with respect to any outstanding equity awards; and |
Pay Versus Performance
Pay Versus Performance As required by applicable SEC rules, we are providing the following information about the relationship of compensation actually paid to our principal executive officer (PEO) and other NEOs and our, and certain of our peers’, performance. For further information concerning our pay for performance philosophy and how our executive compensation aligns with our performance, refer to “Executive Compensation – Compensation Discussion and Analysis” above. Pay Versus Performance Table
Pay Versus Performance
| Year (a) | Summary Compensation Table Total for PEO(1) (b) | Compensation Actually Paid to PEO(2) (c) | Average Summary Compensation Table Total for Non-PEO NEOs(3) (d) | Average Compensation Actually Paid to Non-PEO NEOs(4) (e) | Value of Initial Fixed $100 Investment Based On: | | | | | | | | | | Total Shareholder Return(5) (f) | Peer Group Total Shareholder Return(6) (g) | Net Income (Loss) (millions)(7) (h) | Revenue Less Ancillary Services (millions)(8) (i) | | 2023 | $8,673,572 | $8,250,862 | $3,544,157 | $3,530,313 | $96 | $140 | ($8.6) | $377.1 | | 2022 | $7,069,596 | ($4,645,074) | $3,131,699 | ($1,254,761) | $102 | $89 | ($39.3) | $257.1 | | 2021 | $4,768,798 | $40,706,656 | $2,685,819 | $21,188,572 | $159 | $126 | ($28.1) | $181.1 |
Pay Versus Performance
| (1) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Massaro (our Chief Executive Officer) for each corresponding year in the Total column of the Summary Compensation Table. Refer to Executive Compensation – Summary Compensation Table. |
Pay Versus Performance
| (2) The dollar amounts reported in column (c) represent the amount of compensation actually paid to Mr. Massaro, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Massaro during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to Mr. Massaro’s total compensation for each year to determine the compensation actually paid: |
Pay Versus Performance
| Year | Reported Summary Compensation Table Total for PEO | Reported Value of Equity Awards((a)) | Equity Award Adjustments((b)) | Compensation Actually Paid to PEO | | 2023 | $8,673,572 | ($7,628,574) | $7,205,864 | $8,250,862 | | 2022 | $7,069,596 | ($6,384,148) | ($5,330,522) | ($4,645,074) | | 2021 | $4,768,798 | ($4,052,400) | $39,990,258 | $40,706,656 |
Pay Versus Performance
| (a) The grant date fair value of equity awards represents the total of the amounts reported in the Stock Awards and Option Awards columns in the Summary Compensation Table for the applicable year. |
Pay Versus Performance
| (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. The valuation methodology used to calculate fair values did not materially differ from those disclosed at the time of grant and include current economic assumptions as of the applicable valuation dates. The amounts deducted or added in calculating the equity award adjustments are as follows: |
Pay Versus Performance
(c)
Pay Versus Performance
| Year | Year End Fair Value of Unvested Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $6,584,693 | ($548,640) | $0 | $1,169,811 | $0 | $0 | $7,205,864 | | 2022 | $6,167,394 | ($5,705,432) | $0 | ($5,792,484) | $0 | $0 | ($5,330,522) | | 2021 | $16,395,788 | $12,685,867 | $3,523,500 | $7,385,103 | $0 | $0 | $39,990,258 |
Pay Versus Performance
| (3) The dollar amounts reported in column (d) represent the average of the amounts reported for our NEOs as a group (excluding Mr. Massaro, who has served as our CEO since 2013) in the Total column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding Mr. Massaro) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Robert Orgel, Michael Ellis, Peter Butterfield and David King, (ii) for 2022, Robert Orgel, Michael Ellis, Sharon Butler and David King; and (iii) for 2021, Robert Orgel and Michael Ellis. |
Pay Versus Performance
| (4) The dollar amounts reported in column (e) represent the average amount of compensation actually paid to the NEOs as a group (excluding Mr. Massaro), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding Mr. Massaro) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to average total compensation for the NEOs as a group (excluding Mr. Massaro) for each year to determine the compensation actually paid, using the same methodology described above in Footnote (2) above: |
Pay Versus Performance
| Year | Average Reported Summary Compensation Table Total for Non-PEO NEOs | Average Reported Value of Equity Awards | Average Equity Award Adjustments(a) | Average Compensation Actually Paid to Non-PEO NEOs | | 2023 | $3,544,157 | ($2,972,501) | $2,958,657 | $3,530,313 | | 2022 | $3,131,699 | ($2,622,054) | ($1,764,405) | ($1,254,761) | | 2021 | $2,685,819 | ($2,178,165) | $20,680,918 | $21,188,572 |
Pay Versus Performance
| (a) The amounts deducted or added in calculating the total average equity award adjustments are as follows: |
Pay Versus Performance
| Year | Year End Fair Value of Unvested Equity Awards Granted in the Year | Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Years | Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year | Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year | Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation | Total Equity Award Adjustments | | 2023 | $2,572,069 | ($176,013) | $0 | $562,601 | $0 | $0 | $2,958,657 | | 2022 | $2,533,030 | ($2,094,399) | $0 | ($2,203,036) | $0 | $0 | ($1,764,405) | | 2021 | $11,095,008 | $6,753,408 | $0 | $2,832,502 | $0 | $0 | $20,680,918 |
Pay Versus Performance
| (5) The dollar amounts reported in column (f) represent our cumulative total shareholder return (TSR). Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the price per share of our common stock at the end and the beginning of the measurement period by the price per share of our common stock at the beginning of the measurement period. For this purpose, the measurement period begins at the initial public offering in May 2021. |
Pay Versus Performance
| (6) The peer group used for purposes of column (g) is the S&P 500 - Information Technology index. |
Pay Versus Performance
| (7) The dollar amounts reported represent the amount of net income (loss) reflected in our audited financial statements for the applicable year. |
Pay Versus Performance
| (8) Our Revenue Less Ancillary Services for the year ended December 31, 2023 was adjusted to $377.1 million based on pre-determined adjustments related to excluding revenue from the StudyLink acquisition and the revenue portion for the Travel business above an internal target was discounted 50%. Our Compensation Committee exercised its discretion to modify our reported Revenue Less Ancillary Services for the year ended December 31, 2022 of $267.1 million to remove the $10.0 million of revenue attributable to CohortGo. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our compensation programs, we have determined that Revenue Less Ancillary Services is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by us to link compensation actually paid to the our NEOs, for the most recently completed fiscal year, to our performance. |
Pay Versus Performance
Financial Performance Measures As described in greater detail in the section “Executive Compensation – Compensation Discussion and Analysis” above, our executive compensation program reflects a pay for performance philosophy. Annual performance-based cash bonuses are tied primarily to achievement of corporate short-term financial goals and, for certain executives, individual performance. Long term incentive awards deliver value based on the performance of our common stock. The most important financial performance measures used by us to link executive compensation actually paid to our NEOs, for the most recently completed fiscal year, to our performance are as follows:
Pay Versus Performance
| • | Revenue Less Ancillary Services; and |
Pay Versus Performance
| • | Adjusted EBITDA |
Pay Versus Performance
Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis” above, our executive compensation program reflects a pay for performance philosophy. While we utilize several performance measures to align executive compensation with our performance, all of those measures are not presented in the Pay versus Performance table. Moreover, we generally seek to incentivize long-term performance, and therefore do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR As demonstrated by the following graph, the amount of compensation actually paid (CAP) to Mr. Massaro and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Massaro) is aligned with our cumulative TSR over the three years presented in the table. The alignment of compensation actually paid with our cumulative TSR over the period presented is because a significant portion of the compensation actually paid to Mr. Massaro and to the other NEOs is comprised of equity awards. As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis” above, in Fiscal 2023, we granted an average of over 80% of our NEOs’ target direct compensation as equity-based compensation in the form of RSUs. Compensation Actually Paid and Net Income (Loss) As demonstrated by the following table, the amount of compensation actually paid (CAP) to Mr. Massaro and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Massaro) is generally aligned with our net income (loss) over the three years presented in the table. Due to the emphasis we place on equity compensation, stock return is the primary driver of CAP for the three years shown in the chart. Equity compensation is sensitive to stock prices. Compensation Actually Paid and Revenue Less Ancillary Services As demonstrated by the following graph, the amount of compensation actually paid to Mr. Massaro and the average amount of compensation actually paid to our NEOs as a group (excluding Mr. Massaro) is not aligned with our Revenue Less Ancillary Services, as modified by our Compensation Committee, over the three years presented in the table. This is largely due to the emphasis we place on equity compensation, which is sensitive to stock price changes. Our Cumulative TSR and Cumulative TSR of the Peer Group As demonstrated by the following graph, our cumulative TSR over the three-year period presented in the table was -4%, while the cumulative TSR of the peer group presented for this purpose, S&P 500 – Information Technology Sector, was 40% over the three years presented in the table. Our cumulative TSR underperformed the S&P 500 – Information Technology Sector during the three years presented in the table. For more information regarding our performance and the peer group of companies that our Compensation Committee considers when determining compensation, refer to Executive Compensation – Compensation Discussion and Analysis.