DEF 14A of Paycom Software, Inc.
Filed Mar 28, 2023 · FY20220001193125-23-081403
How many votes are required to elect the Class I directors (Proposal 1)?
How many votes are required to elect the Class I directors (Proposal 1)? Pursuant to our Amended and Restated Bylaws, directors are elected by a plurality of the votes of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors. Assuming the presence of a quorum, the two individuals who receive the most votes will be elected as Class I directors. While directors are elected by a plurality vote, our Corporate Governance Guidelines include a majority voting policy for directors. This policy states that in an uncontested election, any director nominee who receives a greater number of “WITHHOLD” votes than votes “FOR” his or her election (a “Majority Withheld Vote”) is required to promptly tender his or her resignation to the Board of Directors following certification of the stockholder vote. The nominating and corporate governance committee (or, alternatively, a committee of the independent directors of the Board of Directors if each member of the nominating and corporate governance committee received a Majority Withheld Vote) must recommend to the Board of Directors whether to accept the resignation offer. The Board of Directors is required to consider and act on the recommendation within 90 days following certification of the stockholder vote and will promptly disclose its decision whether to accept the resignation offer (and, if applicable, the reasons for rejecting the resignation offer) in a press release. If you withhold authority to vote with respect to the election of a director nominee, your shares will not be voted with respect to such director nominee(s) indicated but your shares will be counted for purposes of determining whether there is a quorum. Under our majority voting policy for directors, a “WITHHOLD” vote will have a similar effect as a vote against that director nominee. A complete statement of our majority voting policy is set forth in our Corporate Governance Guidelines available on our website at investors.paycom.com.
Director Skills, Experience and Background
Director Skills, Experience and Background The biographies of the Director Nominees are as follows:
Director Skills, Experience and Background
| Sharen J. Turney |
Director Skills, Experience and Background
| Director Since: 2021 Age: 66 Committees: • Compensation • Nominating and Corporate Governance | Ms. Turney served as the Chief Executive Officer of denim brand Gloria Jeans from November 2018 until November 2019. She served as President and Chief Executive Officer of Victoria’s Secret, a division of L Brands, Inc., from July 2006 until February 2016, and as President and Chief Executive Officer of Victoria’s Secret Direct, from May 2000 until July 2006. Prior to that, Ms. Turney spent 10 years in various executive roles, including President and Chief Executive Officer of Neiman Marcus Direct, the direct commerce division of Neiman Marcus Group. Ms. Turney has also served as an advisor to several retailers and technology companies. Currently, Ms. Turney serves on the board of directors of Bread Financial Holdings, Inc., including on its nominating and governance committee and as chair of its compensation committee, and on the board of directors of Academy Sports and Outdoors, Inc., including on its compensation and nominating and governance committees. Previously, Ms. Turney spent two years on the board of directors of Sweden-based designer sock and underwear brand Happy Socks AB, seven years on the board of directors of M/I Homes, Inc., and two years on the board of directors of FULLBEAUTY Brands. Additionally, Ms. Turney serves as a director of the University of Oklahoma Foundation, including on its investment committee, and served as a Director of Nationwide Children’s Hospital, Inc., including as chairman of the board of its Research Institute. Ms. Turney received her bachelor’s degree from the University of Oklahoma and serves on the Baker Retailing Center Industry Advisory Board at Wharton School at the University of Pennsylvania. Ms. Turney was selected to serve on the Board of Directors based on her business experience, particularly in high growth and ecommerce companies, and her public company leadership experience. |
Director Skills, Experience and Background
| J.C. Watts, Jr. |
Director Skills, Experience and Background
| Director Since: 2016 Age: 65 Committees: • Compensation (Chair) | Mr. Watts is the president and chief executive officer of Watts Partners, a boutique corporate and government affairs consulting firm he co-founded in 2003. Mr. Watts has served on the board of directors of Dillard’s, Inc. (“Dillard’s”), a public company, since August 2009, and previously served on the Dillard’s board of directors and as a member of its audit committee from 2003 to 2008. Mr. Watts also served on the boards of directors of CSX Corporation from March 2011 to May 2014 and ITC Holdings Corp. from August 2011 to February 2014. Mr. Watts was elected to the United States House of Representatives in 1994 and served from January 1995 to January 2003. During his time in Congress, Mr. Watts was chairman of the Republican Conference from January 1999 to January 2003, and also served on the United States House Committees on Armed Services, Financial Services, and Transportation and Infrastructure. Mr. Watts earned his bachelor’s degree in journalism and public relations from the University of Oklahoma in 1981. Mr. Watts was selected to serve on our Board of Directors due to his senior leadership experience in business and as a public servant, his experience serving on other public company boards and his understanding of regulatory issues. |
Director Skills, Experience and Background
| | Senior Leadership | | Financial and Accounting | | Government Relations/Regulatory | | Cybersecurity | | | Public Company Board | | Industry | | Risk Management | | |
Director Skills, Experience and Background
The biographies of the directors currently serving as Class II directors are as follows:
Director Skills, Experience and Background
| Robert J. Levenson |
Director Skills, Experience and Background
| Director Since: 2007 Age: 81 Committees: • Audit • Compensation | Mr. Levenson is a founder and managing member of Lenox Capital Group, LLC, a private venture capital investment company formed in 2000 (“Lenox Capital”), which focuses primarily on early stage software technology and service company investments. From 1981 through 1990, Mr. Levenson held several executive management positions with Automatic Data Processing, Inc. (“ADP”), including Group President—Employer Services, member of the Corporate Executive Committee and member of the board of directors. In late 1990, Mr. Levenson became Chief Operating Officer of Medco Containment Services, Inc. (“Medco”) (later acquired by Merck & Co., Inc.), and was elected to Medco’s board of directors. From 1992 until 2003, Mr. Levenson served on the board of directors of First Data Corporation (“FDC”), and from 1993 until his retirement in 2000, he served as Executive Vice President of FDC. Thereafter, he served as a consultant to FDC and certain of its joint venture affiliates until 2006. Mr. Levenson has served on several boards of directors of public and private companies as well as civic and philanthropic organizations, which have previously included: ADP, FDC, Medco, Central Data Systems, Inc., Comnet, Inc., Polyvision, Broadway & Seymour, Superior TeleCom Inc., Vestcom International, Emisphere Technologies, Inc., Ceridian Corp, and Elite Pharmaceuticals, Inc. He graduated from Kent State University with his bachelor’s degree in business administration. Mr. Levenson was selected to serve on our Board of Directors based on his industry expertise and experience as a member of the boards of directors of other companies. |
Director Skills, Experience and Background
| Frederick C. Peters II |
Director Skills, Experience and Background
| Director Since: 2014 Age: 73 Committees: • Audit (Chair) • Compensation • Nominating and Corporate Governance | He currently serves as Chairman and Chief Executive Officer of Community Financial Institutions Fund (f/k/a Bluestone Financial Institutions Fund). Prior to joining Community Financial Institutions Fund, Mr. Peters served as the Chairman, President and Chief Executive Officer of Bryn Mawr Bank Corporation (“BMTC”) and its principal subsidiary, The Bryn Mawr Trust Company, and served on BMTC’s board of directors from January 2001 to April 2017. Prior to joining BMTC in 2001, Mr. Peters started two community banks: National Bank of the Main Line in 1985 and First Main Line Bank in 1995. Mr. Peters began his banking career at Philadelphia National Bank in 1976 and held lending and executive positions at Hamilton Bank and Industrial Valley Bank prior to starting his first community bank. In addition, Mr. Peters served on the board of directors of the Federal Reserve Bank of Philadelphia from 2009 through 2014. He served as the chairman of the Federal Reserve Bank of Philadelphia’s audit committee from January 1, 2013 through December 31, 2014, while also serving as a member of the Federal Reserve Bank’s Committee of Audit Chairs in Washington, D.C. Mr. Peters has served on numerous non-profit boards including Main Line Health where he served first as chairman of the audit committee and later as chairman of the finance committee. He currently serves on the board of directors of The Bryn Mawr Film Institute and The Foundation for Delaware County. Mr. Peters graduated from Amherst College with his bachelor’s degree in political science. Mr. Peters was selected to serve on our Board of Directors based on his financial and investment expertise and his experience as a member of the board of directors of a public company. |
Director Skills, Experience and Background
| | Senior Leadership | | Financial and Accounting | | Government Relations/Regulatory | | Cybersecurity | | | Public Company Board | | Industry | | Risk Management | | |
Director Skills, Experience and Background
| Felicia Williams |
Director Skills, Experience and Background
| Director Since: 2022 Age: 57 Committees: • Audit | Ms. Williams has over 30 years of audit and corporate financial leadership experience in various industries. Since 2004, Ms. Williams has served in senior leadership roles at Macy’s and currently serves as Senior Vice President, Finance and the Macy’s Fellow for CEO Action for Racial Equality, a business-led coalition that identifies and develops public policies and corporate engagement solutions to address systemic racism. Ms. Williams was an executive officer of Macy’s from 2016 to 2020 in the roles of Interim Chief Financial Officer from June 2020 to November 2020 and Senior Vice President, Controller and Enterprise Risk Officer from June 2016 to June 2020. She served as Senior Vice President, Finance and Risk Management from February 2011 to June 2016 and prior thereto across key corporate finance functions at Macy’s, including treasury, investor relations, risk management, financial services, financial planning and analysis, and internal audit. From 1994 to 2004, Ms. Williams served in various financial positions at the Coca-Cola Hellenic Bottling Company in Athens, Greece and the Coca-Cola Company in Atlanta, Georgia. Before joining Coca-Cola, Williams worked for Bristol- Myers Squibb and Arthur Andersen & Company. Ms. Williams currently serves on the board of directors and as the chairwoman of the audit committee of Anywhere Real Estate Inc. (NYSE: HOUS). Ms. Williams also served on the board of directors of Meridian Bioscience, Inc. from 2018 to 2023, including as the chairwoman of the audit committee. Ms. Williams received her bachelor’s degree from Florida A&M University and is a Certified Public Accountant. Ms. Williams was selected to serve on our Board of Directors based on her public company leadership experience spanning audit, controller and risk management roles as well as her broad based knowledge of the financial and operational issues affecting complex organizations. |
Director Skills, Experience and Background
| | Senior Leadership | | Financial and Accounting | | Government Relations/Regulatory | | Cybersecurity | | | Public Company Board | | Industry | | Risk Management | | |
Director Skills, Experience and Background
The biographies of the directors currently serving as Class III directors are as follows:
Director Skills, Experience and Background
| Jason D. Clark |
Director Skills, Experience and Background
| Director Since: 2014 Age: 52 Committees: • Audit • Nominating and Corporate Governance (Chair) | Mr. Clark has served as President and Chief Executive Officer of CompSource Mutual Insurance Company since March 2009. Mr. Clark is a member of the board of directors of the Oklahoma State Chamber of Commerce, a President of the American Association of State Compensation Insurance Funds (AASCIF) and has previously served in leadership positions for multiple industry and trade associations. Mr. Clark has over 30 years of experience in the insurance industry specializing in workers’ compensation insurance. Mr. Clark earned his bachelor’s degree in business administration from the University of Central Oklahoma. Mr. Clark was selected to serve on our Board of Directors based on his business experience. |
Director Skills, Experience and Background
| Henry C. Duques |
Director Skills, Experience and Background
| Director Since: 2016 Age: 79 Committees: • Audit • Nominating and Corporate Governance | Mr. Duques was the chairman and chief executive officer of First Data Corporation, an electronic commerce and payment services company, from 1992 to 2002 and again from 2005 to 2007. Prior to joining First Data Corporation, he served as president and chief executive officer of the Database Services Group of American Express Travel Related Services Company, Inc., the predecessor of First Data Corporation, from 1987 to 1992. Mr. Duques was with Automatic Data Processing, Inc. from 1973 to 1987, where he served as Group President Financial Services and as a member of the board of directors from 1984 to 1987. Mr. Duques also served on the boards of directors of Unisys Corporation from 1998 to 2014, including as the nonexecutive chairman from 2006 to 2008, SunGard Corp. from 2003 to 2005 and CheckFree Corporation from 2000 to 2004. Mr. Duques earned his bachelor’s degree in business administration from The George Washington University in 1965 and an M.B.A from The George Washington University in 1969 and served on board of trustees of The George Washington University from 1998 to 2008. Mr. Duques was selected to serve on our Board of Directors based on his decades of experience in business operations and management, strategy and public company governance. |
Director Skills, Experience and Background
| | Senior Leadership | | Financial and Accounting | | Government Relations/Regulatory | | Cybersecurity | | | Public Company Board | | Industry | | Risk Management | | |
Director Skills, Experience and Background
| Director Since: 1998 Age: 52 | Chad Richison has served as President and Chief Executive Officer since he founded Paycom in 1998. He has also served as a member of our Board of Directors since 1998 and was appointed Chairman of the Board of Directors in August 2016. Mr. Richison began his career in sales with a national payroll and human resources company and a regional payroll company prior to founding Paycom. He received his bachelor’s degree in mass communications—journalism from the University of Central Oklahoma. Mr. Richison was selected to serve on our Board of Directors based on the leadership skills, strategic guidance and experience he brings as our President and Chief Executive Officer and operational expertise from his prior experience in the industry. |
Director Skills, Experience and Background
| | Senior Leadership | | Financial and Accounting | | Government Relations/Regulatory | | Cybersecurity | | | Public Company Board | | Industry | | Risk Management | | |
Director Skills, Experience and Background
The following chart provides information about each director’s qualifications, experiences and demographics. More detailed information is provided in the director biographies above.
Director Compensation
Director Compensation
Director Compensation in 2022
Director Compensation in 2022 In 2022, the compensation package for non-employee directors consisted of (i) annual compensation for service as a director and as a member or chairperson of any committee(s), payable in cash in four quarterly installments (the “Director Cash Compensation”), and (ii) an award under the Paycom Software, Inc. 2014 Long-Term Incentive Plan (the “2014 LTIP”) of restricted stock with an aggregate fair market value of $225,000 (based on the closing price of the Common Stock on the date of grant, but rounded down to the nearest whole share to avoid the issuance of fractional shares) (the “Director Equity Compensation”). All directors are also entitled to reimbursement for their reasonable out-of-pocket expenditures incurred in connection with their service. The Director Cash Compensation is set forth below.
Director Compensation in 2022
| Recipient(s) | 2022 Annual Cash Compensation ($) | | Non-employee directors | 75,000 | | Lead independent director | 20,000 | | Audit committee chairperson | 25,000 | | Audit committee members (excluding chairperson) | 10,000 | | Compensation committee chairperson | 18,000 | | Compensation committee members (excluding chairperson) | 8,000 | | Nominating and corporate governance committee chairperson | 10,000 | | Nominating and corporate governance committee members (excluding chairperson) | 5,000 |
Director Compensation in 2022
With respect to Director Equity Compensation, the shares of restricted stock were granted on the date of the 2022 annual meeting of stockholders and are scheduled to cliff-vest on the seventh (7th) day following the first (1st) anniversary of the 2022 annual meeting, provided that the non-employee director is providing services to the Company through the applicable vesting date. Any unvested Director Equity Compensation will be forfeited in the event that the non-employee director’s service on the Board of Directors terminates prior to the vesting date, unless (i) such director resigns concurrently with the annual meeting of stockholders immediately prior to the scheduled vesting date, (ii) such annual meeting is held not more than thirty (30) days prior to the scheduled vesting date and (iii) the resigning director continues to serve on the Board of Directors through the date of such annual meeting. In the event that a new non-employee director is appointed to the Board of Directors other than at an annual meeting of stockholders (a “Mid-Term Director”), such Mid-Term Director is entitled to receive (i) the Director Cash Compensation beginning on the first quarterly payment date following his or her appointment and (ii) a partial award of the Director Equity Compensation on the date of his or her appointment, with the aggregate fair market value of such award to be determined based on the timing of such Mid-Term Director’s appointment in relation to the quarterly payment dates for the Director Cash Compensation. On May 9, 2022, Ms. Williams received a partial award of the 2022 Director Equity Compensation. The following table provides information regarding compensation paid to each non-employee director during 2022.
Director Compensation in 2022
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1)(2) ($) | Total ($) | | Current Non-Employee Directors | | | | | Jason D. Clark | 95,000(3) | 224,809 | 319,809 | | Henry C. Duques | 90,000(4) | 224,809 | 314,809 | | Robert J. Levenson | 93,000(5) | 224,809 | 317,809 | | Frederick C. Peters II | 133,000(6) | 224,809 | 357,809 | | Sharen J. Turney | 88,000(7) | 224,809 | 312,809 | | J.C. Watts, Jr. | 93,000(8) | 224,809 | 317,809 | | Felicia Williams(9) | 42,500(10) | 168,662 | 211,162 |
Director Compensation in 2022
| Amounts shown represent the aggregate grant date fair value of Director Equity Compensation, computed in accordance with ASC 718, with the exception that the amounts shown assume no forfeitures. A discussion of the assumptions used in the calculation of these amounts is included in Note 11, “Stockholders’ Equity and Stock-Based Compensation” in the annual consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022 (the “Form 10-K”) filed with the SEC on February 16, 2023. For purposes of the Director Equity Compensation, we did not issue any fractional shares and, as a result, the aggregate grant date fair value of each director’s award is slightly less than $225,000 (or, in the case of Ms. Williams, slightly less than $168,750, which represents a pro-rated amount of the Director Equity Compensation, determined based on the timing of her appointment).(1) |
Director Compensation in 2022
| As of December 31, 2022, each of Ms. Turney and Messrs. Clark, Duques, Levenson, Peters and Watts held 768 unvested shares of restricted stock and Ms. Williams held 602 unvested shares of restricted stock.(2) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Mr. Clark for his service as a director, member of the audit committee and chairperson of the nominating and corporate governance committee.(3) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Mr. Duques for his service as a director and member of the audit and nominating and corporate governance committees.(4) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Mr. Levenson for his service as a director and member of the audit and compensation committees.(5) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Mr. Peters for his service as a director, lead independent director, chairperson of the audit committee and member of the nominating and corporate governance and compensation committees.(6) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Ms. Turney for her service a director and a member of the compensation and nominating and corporate governance committees.(7) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Mr. Watts for his service as a director and chairperson of the compensation committee.(8) |
Director Compensation in 2022
| Ms. Williams was appointed to the Board of Directors in May 2022.(9) |
Director Compensation in 2022
| Represents the aggregate Director Cash Compensation paid to Ms. Williams for her service as a director and member of the audit committee from May 2022 through the end of the year.(10) |
Compensation Philosophy
| • | recognize strong performers by offering cash performance-based incentive compensation and equity awards that reward contributions to our overall success; and |
Overview
| • | the compensation analysis provided by the compensation committee’s compensation consultant; |
Overview
| • | relevant terms of the NEO’s employment agreement, if any; |
Overview
| • | the value of, and expense associated with, proposed and previously awarded equity grants, including the continuing retentive value of past awards; and |
Role of Compensation Consultant
Role of Compensation Consultant In 2022, the compensation committee continued its engagement of Meridian Compensation Partners, LLC (“Meridian”) to provide input, analysis, and advice about our compensation programs for executives and non-employee directors, including compensation philosophy and design, peer group data, competitive positioning and equity compensation practices. The compensation committee selected Meridian as its compensation consultant based on, among other things, Meridian’s reputation and substantial insight and experience with executive compensation programs in our industry. Meridian reports directly to the compensation committee and did not perform work for Paycom in 2022 except under its engagement by the compensation committee. After reviewing and considering the factors set out by the applicable rules and regulations of the SEC and NYSE regarding the independence of compensation advisors, the compensation committee determined that Meridian is independent and its work in 2022 did not raise any conflicts of interest.
Compensation Mix
Compensation Mix We emphasize performance-based, at-risk compensation. In 2022, approximately 49% of our Chief Executive Officer’s total compensation was at risk. If the grant date fair value of Mr. Richison’s 2020 CEO Performance Award is annualized over the five-year period during which he is not eligible for additional equity awards, approximately 96% of his total compensation in 2022 was at risk. On average, approximately 74% of the total compensation for our other NEOs in 2022 was at risk. The overall design of our compensation program is intended to support a strong pay-for-performance culture and encourage longevity, sustained performance and retention of our NEOs, resulting in a dynamic compensation structure that aims to ensure alignment between the interests of our NEOs and the interests of our stockholders. We do not have a pre-established policy or target for the allocation between cash and non-cash compensation nor for the allocation between short-term and long-term incentive compensation for our NEOs. Rather, the compensation committee relies on each committee member’s knowledge and experience, as well as information provided by management and the committee’s compensation consultant, to determine the appropriate level and mix of compensation. Ultimately, our objective is to provide our NEOs with reasonable, competitive base salaries and the opportunity to earn additional compensation through short-term and long-term performance-based incentives, which are designed to incentivize achievement of pre-established performance target levels. Our NEOs receive cash compensation in the form of base salary and bonuses, with bonuses representing a short-term incentive component of our NEO compensation packages. In 2022, we determined and paid bonuses to each of our NEOs pursuant to the Annual Incentive Plan. See “—Cash Compensation—Annual Incentive Plan.” We believe equity awards serve as an important motivational and retentive component of an NEO’s overall compensation package. With the exception of equity awards granted to Mrs. Faurot and Mr. Long prior to their respective appointments as executive officers, all equity awards granted to NEOs in 2020, 2021 and 2022 were exclusively performance-based with vesting conditions tied to our share price or Relative TSR performance. The design of these equity awards, along with the performance criteria for the Annual Incentive Plan bonuses, results in a significant portion of our NEOs’ compensation being linked to our financial, operational and Relative TSR performance. We believe this structure challenges our executives to increase stockholder value and compensates them to the extent that the specified results are achieved.
Peer Group Data
Peer Group Data The compensation committee uses peer group data as a point of reference for designing our compensation programs and setting compensation levels. In November 2021, the compensation committee reviewed comparative executive compensation data from a group of companies identified based on the selection criteria described below. The compensation committee does not use peer group data as a single determinative factor, but rather as an external check to verify that our executive compensation programs are reasonable and competitive. In developing the primary peer group, the compensation committee sought to include U.S.-headquartered companies that, in the compensation committee’s view, are similar to the Company in terms of size, industry focus and level of operational and organizational complexity. In particular, the compensation committee targeted application software companies with comparable Software-as-a-Service business models and business software applications. The peer group companies were also identified based on the following financial criteria:
Peer Group Data
| Selection Criteria | Primary Peer Group Target Financial Criteria | | Revenue (12-month period) | $600 million to $2.5 billion | | Market Capitalization | $800 million to $50 billion |
Peer Group Data
Potential peer group companies were evaluated based on the most recent data available as of November 2021. Companies that did not satisfy all of the selection criteria were nonetheless eligible to be included in the peer group based on alignment across all factors. With the assistance of its independent compensation consultant, the compensation committee ultimately identified the primary peer group set forth below. The primary peer group includes 18 software companies with median revenues of $1.1 billion and median market capitalization of $17.8 billion.
Peer Group Data
| ANSYS, Inc. | Guidewire Software, Inc. | | Aspen Technology, Inc. | HubSpot, Inc.* | | Blackbaud, Inc. | Okta, Inc. | | Ceridian HCM Holding Inc. | Paylocity Holding Corporation | | CoStar Group, Inc. | RingCentral, Inc. | | Coupa Software Incorporated* | Splunk Inc. | | DocuSign, Inc.* | The Trade Desk, Inc. | | Ebix, Inc. | Tyler Technologies, Inc. | | Fair Isaac Corporation | Zendesk, Inc. |
Peer Group Data
| Represents a new addition to the primary peer group, as compared to the prior peer group identified by the compensation committee. The following companies were removed from the peer group because they are no longer public companies: Nuance Communications, Inc.; Proofpoint, Inc.; and RealPage, Inc.* |
Peer Group Data
The Company has a limited number of direct, public company business peers with a similar growth trajectory. As the Company continues to grow, the compensation committee remains committed to providing market-competitive and stockholder-aligned compensation programs that are appropriate for the size and strategy of the business. To assist with this goal, the compensation committee also reviewed data from larger companies in our industry, both in terms of market capitalization and revenue, to help them understand how pay design and structure, as well as quantum of pay opportunity, may change as the Company continues to grow. Although the compensation committee reviewed trends in compensation structure and formulation among members of these reference groups as part of its overall executive compensation evaluation, it did not use these additional reference groups to inform pay level decisions.
Annual Incentive Plan
Annual Incentive Plan Overview. The purpose of the Annual Incentive Plan is to advance our interests and the interests of our stockholders by (i) providing certain employees, including the NEOs, with incentive compensation that is tied to the achievement of pre-established, objective performance goals, (ii) identifying and rewarding superior performance and providing competitive compensation to attract, motivate and retain employees who have outstanding skills and abilities, and who achieve superior performance, and (iii) fostering accountability and teamwork throughout Paycom. The Annual Incentive Plan is intended to provide incentive compensation and is intended to comply with, or be exempt from, the requirements of Section 409A of the Internal Revenue Code, as amended (the “Code”). The Annual Incentive Plan is administered by the compensation committee. For each period selected by the compensation committee for payment of incentive compensation, referred to as a “performance period,” the compensation committee must (i) approve the participants eligible to receive performance-based awards under the Annual Incentive Plan, (ii) notify (or direct management to notify) each such participant in writing concerning his or her selection, (iii) select performance goals that are to be used for each participant and (iv) establish, in terms of an objective formula or standard for each participant, the amount of each award that may be earned if the threshold, target, and maximum achievement levels for each performance goal are achieved. Awards under the Annual Incentive Plan are made based upon achievement of performance goals (consisting of individual performance goals, business unit performance goals, and/or company performance goals) relating to one or more “performance criteria,” such as revenues, revenue budget growth, customer growth, earnings per share, adjusted EBITDA (which we define as net income plus interest expense, taxes, depreciation and amortization, non-cash stock-based compensation expense, certain transaction expenses that are not core to our operations (if any), loss on early repayment of debt, and the change in fair value of our interest rate swap) and annual revenue retention rate, among others. 2022 Performance Criteria. For purposes of the performance period that commenced January 1, 2022 and ended December 31, 2022, the compensation committee determined that each of Mrs. Faurot and Messrs. Richison, Boelte, Smith, Long and Evans would be eligible to receive performance-based awards under the Annual Incentive Plan. The awards granted to Mrs. Faurot and Messrs. Richison and Boelte under the Annual Incentive Plan for the 2022 performance period were determined based on the Company’s achievement of specified revenue goals, but subject to downward adjustment if the Company’s adjusted EBITDA fell below a specified target. The awards granted to Messrs. Smith, Evans and Long under the Annual Incentive Plan for the 2022 performance period were determined based on the Company’s achievement of specified annual revenue retention rate goals. The compensation committee established performance goals based on revenue, adjusted EBITDA and annual revenue retention rate because it believes such metrics correlate to long-term stockholder value creation and are important to our investors. With respect to Mrs. Faurot and Messrs. Richison and Boelte, the table below sets forth (i) the revenue amounts and growth rates that were established as the threshold, target and maximum achievement levels for the 2022 performance period and (ii) the payout percentage at each achievement level (the “Revenue Payout Percentage”). To the extent that our total revenues fell between threshold achievement and target achievement, the Revenue Payout Percentage was to be determined on the basis of straight-line interpolation applied on the change in performance between such achievement levels, increasing 0.7605% for each $1.0 million of revenue growth between $1,183.5 million and $1,315.0 million. To the extent that our total revenues fell between target achievement and maximum achievement, the Revenue Payout Percentage would increase 8.0% for each $1.0 million of revenue growth over $1,315.0 million, up to $1,327.0 million, and 1.0% for each $1.0 million increment of revenue between $1,327.0 million and $1,331.0 million.
Annual Incentive Plan
| Achievement Level | Total Revenues ($MM) | Revenue Growth (2022 vs. 2021) | Revenue Payout Percentage | | Threshold Achievement | 1,183.5 | 12.1% | 0% | | Target Achievement | 1,315.0 | 24.6% | 100% | | Maximum Achievement | 1,331.0 | 26.1% | 200% |
Annual Incentive Plan
The compensation committee establishes rigorous total revenue targets that, even at target achievement level, require significant growth from actual performance in the prior year. For 2021, we achieved total revenues of $1,055.5 million. In establishing total revenue goals for the 2022 performance period, the compensation committee set the goal for threshold achievement above 2021 actual results, requiring at least 12.1% revenue growth in order to achieve any payouts under the Annual Incentive Plan. The total revenue goal established for the target achievement level was informed by the Company’s annual budgeting process and strategic focus on top-line growth, among other factors. Achievement at the target level required growth of 24.6% above the prior year result. In establishing the total revenue goal and Revenue Payout Percentage for the maximum achievement level, the compensation committee took into consideration a significant “stretch” level of performance already required to achieve the target as well as the difficulty in achieving results above the “stretch” target level. The compensation committee believes the Revenue Payout Percentage at each level motivates participants to achieve rigorous annual performance goals aligned with long-term stockholder value creation. For the 2022 performance period, the Revenue Payout Percentage was subject to downward adjustment by 5.0% for every $2.0 million (whole) that the Company’s adjusted EBITDA for the year ended December 31, 2022 fell below $525 million, provided that the Revenue Payout Percentage could not be reduced by more than 75.0%. This adjusted EBITDA target for the year ended December 31, 2022 represented 25.2% growth over adjusted EBITDA for the year ended December 31, 2021. With respect to Messrs. Smith, Evans and Long, the table below sets forth (i) annual revenue retention rates that were established as the threshold, target and maximum achievement levels for the 2022 performance period and (ii) the payout percentage at each achievement level (the “Retention Payout Percentage”).
Annual Incentive Plan
| Achievement Level | Annual Revenue Retention Rate | Retention Payout Percentage | | Threshold Achievement | 90% | 70.0% | | Target Achievement | 93% | 100.0% | | Maximum Achievement | 100% | 170.0% |
Annual Incentive Plan
The Retention Payout Percentage would increase 10.0% for each 1.0% (whole) increase in the annual revenue retention rate above 90%. There was no increase in the Retention Payout Percentage for increases in the annual revenue retention rate in increments of less than 1.0%. The Retention Payout Percentage for Messrs. Smith, Long and Evans was not subject to the adjusted EBITDA downward adjustment described above. In addition to establishing threshold, target and maximum achievement levels, the compensation committee established a target bonus percentage for each participant, which was expressed as a percentage of the participant’s base salary. For the 2022 performance period, the compensation committee maintained the same target bonus opportunities as in fiscal 2021, with target bonuses set at 100% for each of Messrs. Richison, Boelte, Smith and Evans and at 75% for Mrs. Faurot. The compensation committee set Mr. Long’s target bonus at 100%. The amount payable to a participant under the Annual Incentive Plan for 2022 was determined by multiplying (i) the Revenue Payout Percentage or Retention Payout Percentage, as applicable, by (ii) the participant’s target bonus percentage, by (iii) the participant’s base salary. 2022 Annual Incentive Plan Bonuses. Total revenues for the year ended December 31, 2022 were $1,375.2 million, representing 30.3% growth year-over-year. This revenue growth exceeded the maximum achievement level established by the compensation committee for the 2022 performance period and, based on the methodology described above, the Revenue Payout Percentage for Mrs. Faurot and Messrs. Richison and Boelte was 200%. Adjusted EBITDA for the 2022 performance period was $579.7 million and, as such, there was no downward adjustment of the Revenue Payout Percentage. Annual revenue retention rate for the year ended December 31, 2022 was 93%. Accordingly, based on the methodology described above, the Retention Payout Percentage for Messrs. Smith and Long was 100%. The table below sets forth (i) the potential amounts payable to each of the NEOs under the Annual Incentive Plan based on achieving the threshold, target or maximum achievement level for the 2022 performance period and (ii) the actual amount paid to each such NEO for the 2022 performance period. We paid cash bonuses under the Annual Incentive Plan for the 2022 performance period in the first quarter of 2023.
Annual Incentive Plan
| Name | Threshold ($) | Target ($) | Maximum ($) | Actual Amount Paid ($) | Amount Paid as % of Target | | Chad Richison | — | 769,408 | 1,538,816 | 1,538,816 | 200% | | Craig E. Boelte | — | 484,557 | 969,114 | 969,114 | 200% | | Holly Faurot | — | 459,680(1) | 919,360(1) | 919,360(1) | 200% | | Bradley S. Smith | 330,861 | 472,659 | 803,520 | 472,659 | 100% | | Justin Long | 262,500 | 375,000 | 637,500 | 375,000 | 100% | | Jon D. Evans(2) | 321,776 | 459,680 | 781,456 | — | — |
Annual Incentive Plan
| Mrs. Faurot’s bonus target was initially set at 75% of her base salary, or $344,760, with a maximum payout of $689,520. The compensation committee subsequently determined that, in the interest of internal pay equity, it was appropriate to align Mrs. Faurot’s target bonus opportunity with that of the other NEOs. As a result, Mrs. Faurot’s received (i) $689,520, as the maximum payout under her original bonus formulation, plus (ii) an additional bonus payment of $229,840, such that her aggregate bonuses for the 2022 performance period equaled the amount she would have received if her target bonus level had been set at 100% of her base salary instead of 75% of her base salary. The target and maximum amounts are presented as if Mrs. Faurot’s bonus target was initially set at 100% of base salary.(1) |
Annual Incentive Plan
| Due to his departure as Chief Operating Officer in April 2022, Mr. Evans was not eligible to receive a payout under the Annual Incentive Plan for 2022.(2) |
Recoupment for Restatements
Recoupment for Restatements The Annual Incentive Plan provides that in the event of a restatement of our financial statements, the compensation committee may recoup all or any portion of any incentive compensation paid under the Annual Incentive Plan to the extent that the amount of the incentive compensation based on such restated financial statements would have been lower.
Long-Term Incentive Compensation
Long-Term Incentive Compensation
Overview
Overview We believe that equity awards provide our NEOs with a strong link to our performance, create an incentive to achieve long-term performance goals and objectives and more closely align the interests of our NEOs and our stockholders. In 2014, we adopted the Paycom Software, Inc. 2014 Long-Term Incentive Plan (the “2014 LTIP”), which allows us to grant an array of equity-based incentive awards to our NEOs and other employees, contractors and outside directors. The purpose of the 2014 LTIP is to increase the interests of recipients of awards under the 2014 LTIP in our welfare, advance our interests by attracting and retaining qualified employees, outside directors and other persons providing services to us and provide a means through which we may attract able persons as employees, contractors and outside directors.
Equity Awards
Equity Awards Historically, we have granted equity incentive awards to our NEOs under the 2014 LTIP, consisting of restricted stock and, more recently, performance-based restricted stock units (“PSUs”). The compensation committee, in consultation with its independent compensation consultant, determines the type, magnitude and vesting conditions of awards to NEOs based on its evaluation of the following factors, among others:
Equity Awards
| • | recent vesting events; |
Equity Awards
| • | value of equity awards that have previously vested; |
Equity Awards
| • | value of and vesting conditions for unvested equity awards that remain outstanding; |
Equity Awards
| • | general market and economic conditions; |
Equity Awards
| • | our need to motivate and/or re-incentivize NEOs in light of changes in the competitive environment; and |
Equity Awards
| • | trends among our competitors and peers with respect to equity compensation practices. |
Equity Awards
The NEO equity awards that vested during 2022 consisted of time-based restricted stock granted between 2016 and 2020. In 2021, the equity awards granted to the then-serving NEOs (other than Mr. Richison, who is not eligible to receive any additional long-term incentive awards until 2026) consisted exclusively of PSUs that vest based on our Relative TSR as compared to the companies in the S&P Software & Services Index at the time of grant (the “2021 PSU Awards”). As discussed below, in 2022, we again granted similar PSUs to the then-serving NEOs. In February 2023, the compensation committee reviewed and certified the Company’s Relative TSR performance for the two-year performance period ended December 31, 2022. As discussed below, the Company’s TSR rank was at the 36th percentile, resulting in a payout of 60% of target opportunity for the 25% of target 2021 PSU Awards that were eligible to vest.
2022 Equity Awards
2022 Equity Awards Similar to the 2021 PSU program, the 2022 PSU Awards (as defined below) reflected the following preferences of our stockholders:
2022 Equity Awards
| • | Use of Relative TSR performance metric to foster alignment with relative long-term value creation and stockholder experience; |
2022 Equity Awards
| • | Target vesting opportunities require above-median performance at the 60(th) percentile relative to peers; and |
2022 Equity Awards
| • | Payouts are capped at 100% of target if the Company’s absolute TSR over the applicable performance period is negative. |
2022 Equity Awards
On February 7, 2022, the compensation committee approved grants of PSUs to Mrs. Faurot and Messrs. Boelte, Smith and Evans pursuant to the 2014 LTIP (the “2022 PSU Awards”). The target number of PSUs granted was determined by dividing the “Target Grant Value” set forth across each executive officer’s name in the table below by the average daily volume weighted average price (“VWAP”) for the Common Stock during the ten (10) trading days preceding and ending on February 4, 2022 (the “Average VWAP”), with such number rounded up to the nearest whole unit (the “Target Units”).
2022 Equity Awards
| Name(1) | Target Grant Value ($) | Target Units (#) | Maximum Awarded Units (#) | | Craig E. Boelte | 8,400,000 | 24,456 | 66,140 | | Holly Faurot | 2,650,000 | 8,346 | 20,865 | | Bradley S. Smith | 2,650,000 | 8,346 | 20,865 | | Jon D. Evans(2) | 2,650,000 | 8,346 | 20,865 |
2022 Equity Awards
| Consistent with the prior commitment made by the compensation committee in connection with the 2020 CEO Performance Award, Mr. Richison is not eligible to receive any additional long-term incentive awards, including any equity or equity-based compensation awards, through the end of 2025. In February 2022, prior to his appointment as an executive officer, Mr. Long received an award of 1,000 shares of restricted stock, 15% of which vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $484 per share, 15% of which vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $559 per share and 70% of which vest in four annual tranches of 21%, 21%, 25% and 32%, respectively.(1) |
2022 Equity Awards
| Pursuant to the terms of the applicable award agreement, following Mr. Evans’s departure, the unvested PSUs will remain outstanding and eligible for vesting based on the actual achievement of Relative TSR, and pro-rated based on his time of service during the applicable performance period.(2) |
2022 Equity Awards
The 2022 PSU Awards will vest based on the Company’s achieved results over two performance periods as follows:
2022 Equity Awards
| • | Up to 25% of the target PSUs will be eligible to vest no later than February 29, 2024, based on the Company’s Relative TSR performance for the two-year performance period commencing on January 1, 2022 and ending on December 31, 2023; and |
2022 Equity Awards
| • | Up to 75% of the target PSUs will be eligible to vest no later than March 1, 2025, based on the Company’s Relative TSR performance for the three-year performance period commencing on January 1, 2022 and ending on December 31, 2024. |
2022 Equity Awards
The compensation committee determined that it was important to provide an incremental vesting opportunity upon completion of the initial two-year performance period to support retention, in the absence of the annual ratable vesting opportunities for the equity incentives that are customary among our peer companies. Continued employment or service to the Company is required on the applicable vesting date for the earned PSUs, if any, to vest. The number of PSUs that will vest and be converted into shares of Common Stock will depend on the Company’s Relative TSR, expressed as a percentile ranking of the Company’s TSR as compared to a peer group consisting of the 35 publicly traded companies that comprised the S&P 500 Software & Services index at the time of grant. The number of PSUs that may vest will range from 0% to 250% of the target units, as follows:
2022 Equity Awards
| Performance Level | Company’s Rank vs. Peer Group (Percentile) | Payout % of Target Units / Vested PSUs | | Below Threshold | <30th Percentile | 0% of the Target Units | | Threshold | 30th Percentile | 50% of the Target Units | | Between Threshold and Target | 30th to 60th Percentile | 50% - 100% of the Target Units | | Target | 60th Percentile | 100% of the Target Units | | Between Target and Maximum | 60th to 90th Percentile | 100% - 250% of the Target Units | | Maximum | ≥ 90th Percentile | 250% of the Target Units |
2022 Equity Awards
The payout percentage determining the number of PSUs to be vested will be interpolated for Relative TSR performance between the 30th percentile and the 60th percentile and between the 60th percentile and the 90th percentile (based on whole percentages). For the avoidance of doubt, there will be no payout and no vested PSUs if the Relative TSR performance level set forth above is less than the 30th percentile of the peer group, and the maximum payout percentage is 250% of the Target Units (thus, there is no interpolation for performance above the 90th percentile). Further, if the Company’s absolute TSR over the applicable performance period is negative, the payout percentage is capped at 100% of Target Units. For purposes of the 2022 PSU Awards, TSR is determined by dividing (i) the sum of (A) the average VWAP of a share of Common Stock or the common stock of a peer company, as applicable, during the final 60 trading day period of the applicable performance period, less (B) the average VWAP of a share of Common Stock or the common stock of a peer company, as applicable, during the 60 trading day period ending on December 31, 2021, plus (C) the sum of all dividends which are paid by the Company (or the member of the peer group) to its stockholders, assuming such dividends are reinvested in the applicable company through the applicable performance period, by (ii) the average VWAP of a share of Common Stock or the common stock of a peer company, as applicable, during the 60 trading day period ending on December 31, 2021. In addition to the foregoing, the vesting of the PSUs: (i) will accelerate at target performance upon the grantee’s death or Total and Permanent Disability (as defined in the 2014 LTIP); (ii) remain eligible for vesting following Retirement (as defined in the 2014 LTIP) based on actual performance, and pro-rated for the number of days employed during the two-year performance period or three-year performance period, as applicable; (iii) remain eligible for vesting following a termination of employment by the Company without Cause (as defined in the PSU award agreement) or by the grantee for Good Reason (as defined in the PSU award agreement) based on actual performance, and pro-rated for the number of days employed during the two-year performance period or three-year performance period, as applicable; and (iv) will accelerate at the greater of actual performance or target performance upon a termination of employment by the Company without Cause or by the grantee for Good Reason in connection with or following a Change in Control (as defined in the 2014 LTIP) of the Company, in each case as provided in the PSU award agreement.
Vesting of 2021 PSU Awards
Vesting of 2021 PSU Awards In February 2023, the compensation committee reviewed and certified the Company’s TSR performance relative to the S&P 500 Software & Services Index for the first performance period under the 2021 PSU Awards. Up to 25% of the target 2021 PSUs were eligible to vest based on the Company’s two-year Relative TSR during the measurement period that ended on December 31, 2022. The Company’s TSR rank was at the 36th percentile, resulting in a payout of 60% of target opportunity associated with the initial two-year performance period. Unearned PSUs allocated to the two-year performance period were forfeited and there are no additional opportunities to earn these PSUs. Based on the closing stock price on December 30, 2022, the shares earned for the two-year performance period had an aggregate value equal to 46.1% of the initial target value of the first tranche of 2021 PSUs. The remaining 75% of the target 2021 PSU Awards opportunity will be eligible to vest at the end of the three-year performance period ending on December 31, 2023, subject to the achievement of the preset performance criteria.
Vesting of 2021 PSU Awards
| Performance Period | Weighting | Relative TSR Performance Level and Payout | | Relative TSR Measurement | Payout % of Target | | January 1, 2021 to December 31, 2022 | 25% | Threshold: Target: | 30(th) Percentile g 50% of Target Units 60(th) Percentile g 100% of Target Units | 36(th) Percentile rank | 60% | | January 1, 2021 to December 31, 2023 | 75% | | | Performance period in progress | | | | | Maximum: | 90(th) Percentile g 250% of Target Units | | |
Update on 2020 CEO Performance Award
As of the Record Date, no portion of the CEO Performance Award has vested, and its outcome remains uncertain. All of the shares in a tranche will be forfeited if the applicable VWAP Value milestone is not reached within the specified time period. Mr. Richison is not eligible to receive any additional long-term incentive awards, including any equity or equity-based compensation awards, through the end of 2025. All awarded shares that vest must be held by Mr. Richison until the earlier of (i) the fifth anniversary of the date of grant and (ii) one year after the vesting date. Vesting of the awarded shares is subject to Mr. Richison’s continued service as Chief Executive Officer. Upon termination of Mr. Richison’s employment as Chief Executive Officer (i) due to his death or total and permanent disability, (ii) by the Company without cause or (iii) as a result of Mr. Richison’s resignation for good reason, any unvested shares will remain eligible for vesting for a period of one year following such termination of employment (but no later than the sixth anniversary of the date of grant in the case of the awarded shares subject to the $1,000 VWAP Value milestone and the tenth anniversary of the date of grant in the case of the awarded shares subject to the $1,750 VWAP Value milestone), provided, that such unvested shares will not vest if Mr. Richison is in material breach of the non-competition restrictions in his employment agreement. Any unvested shares that do not vest within one year of Mr. Richison’s termination of employment (or within any applicable cure period immediately following such one-year period) will be immediately forfeited.
Change in Control Arrangements
Change in Control Arrangements The change in control provisions in our employment agreements with certain NEOs are designed to reward executives for remaining employed with us during a time when their prospects for employment following a change in control may be uncertain. We choose to provide change in control protections to incentivize executives to remain focused on stockholders’ and clients’ interests during the period leading up to, and through, the change in control, and to maintain a stable executive team during the transition process. We believe such provisions are also helpful in retaining executives who may consider opportunities with other companies and may be helpful in the future for purposes of hiring executives from well-compensated positions in other companies. As disclosed under “Compensation of Executive Officers—Employment Agreements and Arrangements,” the employment agreement with Mr. Boelte provides for payments upon the occurrence of a change in control that is followed by a termination of employment due to a change in his status, reporting, duties or position that represents a demotion or diminution from his prior status, which is also known as a “double- trigger” provision. Mr. Richison’s employment agreement does not provide for any payments upon a change in control. The restricted stock award agreements with each NEO (other than the CEO Performance Award) provide that upon a change in control (as defined in the 2014 LTIP), 100% of the shares of restricted stock not previously vested will vest if the award is not assumed by the surviving entity. With respect to the CEO Performance Award only, upon a change in control, the shares of restricted stock will vest if the milestones have been met, based on the stock price immediately prior to the change in control, and unvested shares of restricted stock that do not vest prior to or in connection with the change in control and are not assumed by the surviving entity or substituted will be forfeited as of the effective time of the change in control. The award agreements governing the 2021 PSU Awards and 2022 PSU Awards provide that, in the event of termination without cause or for good reason in connection with or during the 12-month period following a change in control, the vesting of the PSUs will accelerate to the date of termination of service and will be based on the greater of (i) the target performance level for Relative TSR or (ii) the actual Relative TSR of the Company through the date of the change in control. Further, the 2014 LTIP provides that upon a change in control, we may cancel all awards granted under the 2014 LTIP upon (x) notice and a ten-day period during which the participant is permitted to purchase such shares of Common Stock subject to such awards or (y) payment to the holder of an amount equal to a reasonable estimate of the difference between the fair market value of a share of stock underlying such award and the price per share of such award to be paid by the participant, multiplied by the number of shares subject to the award.
2022, 2021 and 2020
2022, 2021 and 2020 The following table contains information regarding the compensation of our NEOs for the fiscal years ended December 31, 2022, 2021 and 2020.
2022, 2021 and 2020
| | Year | Salary ($) | Stock/ Unit Awards(1) ($) | Non-Equity Incentive Plan Compensation(2) ($) | All Other Compensation ($) | Total ($) | | Chad Richison(3) President and Chief Executive Officer | 2022 | 785,953 | — | 1,538,816 | 813,649(4) | 3,138,418 | | | 2021 | 753,701 | — | 1,479,630 | 725,079 | 2,958,410 | | | 2020 | 724,822 | 209,564,040 | 105,815 | 736,529 | 211,131,206 | | Craig E. Boelte Chief Financial Officer | 2022 | 496,797 | 7,832,696(5) | 969,114 | 38,697(6) | 9,337,303 | | | 2021 | 474,665 | 12,043,630 | 931,840 | 38,161 | 13,488,296 | | | 2020 | 456,478 | 9,484,740 | 66,640 | 36,106 | 10,043,964 | | Holly Faurot Chief Sales Officer | 2022 | 480,576 | 2,470,988(5) | 919,360 | 14,697(7) | 3,885,620 | | | 2021 | 406,735 | 3,153,980 | 663,000 | 13,846 | 4,237,561 | | Bradley S. Smith Chief Information Officer | 2022 | 483,142 | 2,470,988(5) | 472,659 | 14,697(7) | 3,441,485 | | | 2021 | 463,010 | 3,154,297 | 499,928 | 14,161 | 4,131,396 | | | 2020 | 445,269 | 2,474,280 | 437,000 | 13,975 | 3,370,524 | | Justin Long(8) Vice President of Operations | 2022 | 344,263 | 308,576(9) | 437,500 | 14,697(7) | 1,105,036 | | Jon D. Evans(10) Former Chief Operating Officer | 2022 | 227,216 | 2,470,988(5) | 781,456(11) | 2,529,567(12) | 6,009,227 | | | 2021 | 450,296 | 3,154,297 | 486,200 | 14,161 | 4,104,954 | | | 2020 | 433,042 | 2,474,280 | 425,000 | 13,975 | 3,346,297 |
2022, 2021 and 2020
| Amounts shown do not reflect compensation actually received by the NEOs. Rather, the amounts represent the aggregate grant date fair value of restricted stock granted to the NEO in 2020, 2021 and 2022 and PSUs granted to the NEO in 2021 and 2022, as applicable, in each case computed in accordance with ASC 718, with the exception that the amount shown assumes no forfeitures. A discussion of the assumptions used in the calculation of these amounts is included in Note 11, “Stockholders’ Equity and Stock-Based Compensation” in the annual consolidated financial statements included in the Form 10-K filed with the SEC on February 16, 2023.(1) |
2022, 2021 and 2020
| Amounts shown represent bonuses earned by (i) each of Mrs. Faurot and Messrs. Richison and Boelte based on the achievement of performance goals tied to revenue growth and adjusted EBITDA and (ii) Messrs. Smith and Long based on the achievement of performance goals tied to annual revenue retention rate. Bonuses were determined in accordance with the terms of the Annual Incentive Plan. With respect to Mr. Evans only, represents the maximum amount that would have been payable under the Annual Incentive Plan for the 2022 performance period. Mr. Evans did not receive a payout under the Annual Incentive Plan due to his departure from the position of Chief Operating Officer. See “Compensation Discussion and Analysis—Cash Compensation” for additional information.(2) |
2022, 2021 and 2020
| All amounts shown reflect compensation paid to Mr. Richison for his service as our President and Chief Executive Officer. Mr. Richison did not receive additional compensation for his service as a director or Chairman of the Board of Directors.(3) |
2022, 2021 and 2020
| Consists of (i) $637,462 for Mr. Richison’s non-Company use of a corporate aircraft in accordance with the terms of his employment agreement, (ii) $138,594 for personal security detail, (iii) $12,311 (in lieu of lease payments) depreciation of a vehicle purchased by the Company, recognized over the remaining useful life, (iv) $10,586 in country club dues, (v) $10,675 in Company contributions to a 401(k) plan for the benefit of Mr. Richison and (vi) a retainer for a supplemental medical plan. The incremental cost for personal use(4) |
2022, 2021 and 2020
| of corporate aircraft was calculated based on the total personal travel flight hours multiplied by the estimated hourly aircraft operating costs (including variable fuel charges and a pro-rated portion of a monthly management fee). When using the corporate aircraft for business travel, if space allows, we may permit Mr. Richison to bring family members or guests along on the trip. Because we pay for such use of the corporate aircraft based on the flight hours regardless of the passenger load, the aggregate incremental cost to us for the additional passengers is de minimis. See “Compensation Discussion and Analysis—Other Compensation Components and Considerations—Perquisites and Other Personal Benefits” and “—Employment Agreements and Arrangements.” |
2022, 2021 and 2020
| Represents the aggregate grant date fair value of 2022 PSU Awards granted to the NEO on February 7, 2022. The potential maximum value on the grant date of 2022 PSU Awards granted to Mrs. Faurot and Messrs. Boelte, Smith and Evans was $6,177,411, $19,581,739, $6,177,411 and $6,177,411, respectively.(5) |
2022, 2021 and 2020
| Consists of (i) $24,000 in automobile lease payments, (ii) $10,675 in Company contributions to a 401(k) plan and (iii) a retainer for a supplemental medical plan for the benefit of Mr. Boelte.(6) |
2022, 2021 and 2020
| Consists of (i) $10,675 in Company contributions to a 401(k) plan and (ii) a retainer for a supplemental medical plan for the benefit of the NEO.(7) |
2022, 2021 and 2020
| Mr. Long was appointed to fulfill the principal operating officer role effective April 14, 2022. On March 8, 2023, Chris Thomas assumed the role of principal operating officer.(8) |
2022, 2021 and 2020
| Represents shares of restricted stock awarded to Mr. Long in February 2022, prior to his appointment as an executive officer.(9) |
2022, 2021 and 2020
| Mr. Evans departed from the position of Chief Operating Officer on April 14, 2022.(10) |
2022, 2021 and 2020
| In accordance with SEC guidance, the amount presented represents the maximum amount that would have been payable to Mr. Evans under the Annual Incentive Plan for the 2022 performance period. Mr. Evans was not eligible to receive a payout under the Annual Incentive Plan due to his departure from the position of Chief Operating Officer effective April 14, 2022.(11) |
2022, 2021 and 2020
| Consists of (i) $1,808,536 attributable to accelerated vesting of restricted stock, (ii) $709,350 of severance, (iii) $10,675 in Company contributions to a 401(k) plan for the benefit of Mr. Evans and (iv) a retainer for a supplemental medical plan.(12) |
2022 Grants of Plan-Based Awards Table
2022 Grants of Plan-Based Awards Table The following table presents information regarding plan-based awards granted to our NEOs during the year ended December 31, 2022, consisting of equity grants under the 2014 LTIP and cash awards under the Annual Incentive Plan.
2022 Grants of Plan-Based Awards Table
| | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | Grant Date Fair Value of Stock Awards ($)(2) | | Name | Grant Date | Award Type(1) | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | Chad Richison | n/a(3) | AIP | — | 769,408 | 1,538,816 | | | | | | Craig E. Boelte | n/a(3) | AIP | — | 484,557 | 969,114 | | | | | | | 2/7/2022(4) | PSU | | | | 3,307 | 6,614 | 16,535 | 1,667,786 | | | 2/7/2022(5) | PSU | | | | 9,921 | 19,842 | 49,605 | 6,164,909 | | Holly Faurot | n/a(3) | AIP | — | 334,760 | 689,520 | | | | | | | 2/7/2022(4) | PSU | | | | 1,043 | 2,086 | 5,216 | 526,006 | | | 2/7/2022(5) | PSU | | | | 3,130 | 6,260 | 15,649 | 1,944,982 | | Bradley S. Smith | n/a(3) | AIP | 330,861 | 472,659 | 803,520 | | | | | | | 2/7/2022(4) | PSU | | | | 1,043 | 2,086 | 5,216 | 526,006 | | | 2/7/2022(5) | PSU | | | | 3,130 | 6,260 | 15,649 | 1,944,982 | | Justin Long | n/a(3) | AIP | 262,500 | 375,000 | 637,500 | | | | | | | 2/2/2022(6) | RSA | | | | | 150 | | 41,736 | | | 2/2/2022(7) | RSA | | | | | 150 | | 38,948 | | | 2/2/2022(8) | RSA | | | | | 700 | | 227,892 | | Jon D. Evans | n/a(3) | AIP | 321,776 | 459,680 | 781,456 | | | | | | | 2/7/2022(4) | PSU | | | | 1,043 | 2,086 | 5,216 | 526,006 | | | 2/7/2022(5) | PSU | | | | 3,130 | 6,260 | 15,649 | 1,944,982 |
2022 Grants of Plan-Based Awards Table
| Award Type:(1) |
2022 Grants of Plan-Based Awards Table
| AIP | Annual Incentive Plan |
2022 Grants of Plan-Based Awards Table
| PSU | Performance-based restricted stock unit award |
2022 Grants of Plan-Based Awards Table
| RSA | Restricted stock award |
2022 Grants of Plan-Based Awards Table
| Amounts represent the aggregate grant date fair value of 2022 PSU Awards granted to each NEO (other than Messrs. Richison and Long) and, in the case of Mr. Long, restricted stock granted in 2022 prior to his appointment as an executive officer. The number of shares eligible to vest with respect to Mr. Evans’s 2022 PSU Award will be pro-rated for the number of days Mr. Evans was employed during the applicable two-year performance period and three-year performance period. Amounts were computed in accordance with ASC 718, with the exception that the amount shown assumes no forfeitures. A discussion of the assumptions used in the calculation of these amounts is included in Note 11, “Stock-Based Compensation” in the annual consolidated financial statements included in the Form 10-K filed with the SEC on February 16, 2023.(2) |
2022 Grants of Plan-Based Awards Table
| Represents possible payout amounts under the Annual Incentive Plan based on the achievement of the performance goals described above in “Compensation Discussion and Analysis—Cash Compensation—Annual Incentive Plan.” See the “Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table for actual amounts paid to each NEO (other than Mr. Evans) under the Annual Incentive Plan for the 2022 performance period. Mr. Evans was not eligible to receive a payout under the Annual Incentive Plan due to his departure from the position of Chief Operating Officer effective April 14, 2022.(3) |
2022 Grants of Plan-Based Awards Table
| Represents 2022 PSU Awards that will vest and be converted into shares of Common Stock no later than February 29, 2024, with the number of shares determined based on the Company’s Relative TSR for the two-year performance period beginning January 1, 2022 and ending December 31, 2023, as compared to a pre-established peer group. See “Compensation Discussion and Analysis—Long-Term Incentive Compensation—Equity Awards—2021 PSU Awards.” The number of shares eligible to vest with respect to(4) |
2022 Grants of Plan-Based Awards Table
| Mr. Evans’s 2022 PSU Award will be pro-rated for the number of days Mr. Evans was employed during the two-year performance period and three-year performance period. |
2022 Grants of Plan-Based Awards Table
| Represents 2022 PSU Awards that will vest and be converted into shares of Common Stock no later than March 1, 2025, with the number of shares determined based on the Company’s Relative TSR for the three-year performance period beginning January 1, 2022 and ending December 31, 2024, as compared to a pre-established peer group. See “Compensation Discussion and Analysis—Long-Term Incentive Compensation—Equity Awards—2021 PSU Awards.” The number of shares eligible to vest with respect to Mr. Evans’s 2022 PSU Award will be pro-rated for the number of days Mr. Evans was employed during the three-year performance period.(5) |
2022 Grants of Plan-Based Awards Table
| Represents shares of restricted stock that will vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $484 per share.(6) |
2022 Grants of Plan-Based Awards Table
| Represents shares of restricted stock that will vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $559 per share.(7) |
2022 Grants of Plan-Based Awards Table
| Represents shares of restricted stock subject to time-based vesting conditions, 21% of which are scheduled to vest on May 10, 2023, 21% of which are scheduled to vest on May 10, 2024, and 25% of which are scheduled to vest on May 10, 2025 and 32% of which are scheduled to vest on May 10, 2026.(8) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
2022 Outstanding Equity Awards At Fiscal Year-End Table The following table lists all of the outstanding equity awards held by each of the NEOs on December 31, 2022 and provides the value of such equity awards based on the fair market value of our Common Stock as of December 31, 2022.
2022 Outstanding Equity Awards At Fiscal Year-End Table
| | | Stock Awards | | | Name | Grant Date | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) ($) | | Chad Richison | 11/23/2020 | 1,610,000(2) | 499,599,100 | | Craig E. Boelte | 2/10/2021 | 7,796(3) | 2,419,177 | | | 2/7/2022 | 13,228(4) | 4,104,781 | | Holly Faurot | 1/30/2020 | 740(5) | 229,629 | | | 4/2/2021 | 2,042(3) | 633,653 | | | 2/7/2022 | 4,173(4) | 1,294,924 | | Bradley S. Smith | 2/10/2021 | 2,042(3) | 633,653 | | | 2/7/2022 | 4,173(4) | 1,294,924 | | Justin Long | 1/17/2019 | 189(6) | 58,649 | | | 1/30/2020 | 328(5) | 101,782 | | | 2/5/2021 | 652(7) | 202,322 | | | 2/2/2022 | 1,000(8) | 310,310 | | Jon D. Evans | 2/10/2021 | 799(3) | 247,938 | | | 2/7/2022 | 283(4) | 87,818 |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Amounts shown reflect the value of restricted stock or PSUs calculated by multiplying (i) the number of unvested shares of restricted stock or shares deliverable upon vesting and conversion of PSUs at the threshold level of achievement by (ii) the closing price of our Common Stock on the NYSE on December 31, 2022, which was $310.31 per share.(1) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents shares of restricted stock, 50% of which will vest if, within six years of the date of grant, the Company’s VWAP Value equals or exceeds $1,000 per share and 50% of which will vest if, within ten years of the date of grant, the Company’s VWAP Value equals or exceeds $1,750 per share. All of the shares in a tranche will be forfeited if the applicable VWAP Value milestone is not reached within the specified time period.(2) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents PSUs that will vest no later than February 29, 2024, depending upon the Company’s Relative TSR for the three-year performance period beginning January 1, 2021 and ending December 31, 2023, compared to a pre-established peer group. The number of PSUs shown reflects the threshold level of achievement. Furthermore, the number of outstanding PSUs shown for Mr. Evans is pro-rated for the number of days he was employed during the three-year performance period. The number of outstanding PSUs shown for all NEOs does not include shares of Common Stock delivered upon the vesting and conversion of PSUs on February 6, 2023 based on achievement of the Relative TSR performance goal for the two-year performance period beginning January 1, 2021 and ending December 31, 2022, as certified by the compensation committee on such date.(3) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents PSUs that will vest as to 25% of the earned shares no later than February 29, 2024 and as to 75% of the earned shares no later than March 1, 2025, depending upon the Company’s Relative TSR for the two-year performance period beginning January 1, 2022 and ending December 31, 2023 and the three-year performance period beginning January 1, 2022 and ending December 31, 2024, respectively, compared to a pre-established peer group. The number of PSUs shown reflects the threshold level of achievement. Furthermore, the number of outstanding PSUs shown for Mr. Evans is pro-rated for the number of days he was employed during the applicable performance period.(4) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents shares of restricted stock subject to time-based vesting conditions, one-half of which are scheduled to vest on May 10, 2023 and one-half of which are scheduled to vest on May 10, 2024.(5) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents shares of restricted stock subject to time-based vesting conditions, which are scheduled to vest on May 10, 2023.(6) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents (i) 139 shares of restricted stock that will vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $600 per share and (ii) 513 shares of restricted stock subject to time-based vesting conditions, 27% of which are scheduled to vest on May 10, 2023, 32% of which are scheduled to vest on May 10, 2024 and 41% of which are scheduled to vest on May 10, 2025.(7) |
2022 Outstanding Equity Awards At Fiscal Year-End Table
| Represents (i) 700 shares of restricted stock subject to time-based vesting conditions, 21% of which are scheduled to vest on May 10, 2023, 21% of which are scheduled to vest on May 10, 2024, 25% of which are scheduled to vest on May 10, 2025 and 32% of which are scheduled to vest on May 10, 2026, and (ii) 300 shares of restricted stock, 50% of which will vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $484 per share and 50% of which will vest if, within eight years of the date of grant, the Company’s VWAP Value equals or exceeds $559 per share.(8) |
2022 Option Exercises and Stock Vested Table
2022 Option Exercises and Stock Vested Table The following table sets forth a summary of the shares of restricted stock that vested during the year ended December 31, 2022 for each of the NEOs.
2022 Option Exercises and Stock Vested Table
| | Stock Awards(1) | | | Name | Number of Shares Acquired on Vesting | Value Realized on Vesting ($) | | Chad Richison | 21,000 | 5,963,580(2) | | Craig E. Boelte | 9,119 | 2,671,737(3) | | Holly Faurot | 4,800 | 1,391,653(3) | | Bradley S. Smith | 5,880 | 1,707,337(3) | | Justin Long | 492 | 139,718(2) | | Jon D. Evans | 6,142 | 1,957,174(3) |
2022 Option Exercises and Stock Vested Table
| Represents the gross number of shares acquired and value received upon the vesting of shares of restricted stock and PSUs, without reduction for the number of shares withheld to pay applicable withholding taxes.(1) |
2022 Option Exercises and Stock Vested Table
| Amount shown reflects the value of restricted stock calculated by multiplying the number of shares that vested by the closing price of our Common Stock on the NYSE on the date of vesting.(2) |
2022 Option Exercises and Stock Vested Table
| Amount shown reflects (i) the value of restricted stock calculated by multiplying the number of shares that vested by the closing price of our Common Stock on the NYSE on the date of vesting, plus (ii) the value of shares delivered upon vesting and settlement of the first tranche of 2021 PSU Awards (tied to the two-year performance period ended December 31, 2022), calculated by multiplying the number of shares earned by the closing price of our Common Stock on the NYSE on December 31, 2022. See “Compensation Discussion and Analysis—Long-Term Incentive Compensation—Vesting of 2021 PSU Awards”.(3) |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control The table below presents the estimated value of payments and benefits that each NEO would have been entitled to receive if the specified triggering event had occurred on December 31, 2022. Amounts presented for the vesting of equity awards are calculated based on the closing price of our Common Stock on the NYSE on December 30, 2022, which was $310.31 per share.
Potential Payments upon Termination or Change in Control
| Name | Benefit | Death ($) | Disability ($) | Change in Control ($) | Termination Without Cause ($) | Termination by NEO for Good Reason ($) | | Chad Richison | Salary continuation | — | — | — | 800,184(1) | 800,184(1) | | | Annual Incentive Plan bonus | 1,538,816(2) | 1,538,816(2) | 1,538,816(3) | 1,538,816(4) | 1,538,816(4) | | | Continuation of benefits | — | — | — | 286,327(5) | 286,327(5) | | | Vesting of restricted stock | —(7) | —(7) | —(8) | —(9) | —(10) | | | Total | 1,538,816 | 1,538,816 | 1,538,816 | 2,625,327 | 2,625,327 | | Craig E. Boelte | Salary continuation | — | — | — | 503,939(1) | 503,939(1) | | | Annual Incentive Plan bonus | 969,114(2) | 969,114(2) | 969,114(3) | 969,114(4) | 969,114(4) | | | Continuation of benefits | — | — | — | 7,277(6) | 7,277(6) | | | Vesting of 2021 PSUs | 6,451,345(11) | 6,451,345(11) | —(12) | 4,015,047(13) | 4,015,047(13) | | | Vesting of 2022 PSUs | 8,209,561(11) | 8,209,561(11) | —(12) | 2,759,336(14) | 2,759,336(14) | | | Total | 15,630,020 | 15,630,020 | 969,114 | 8,254,713 | 8,254,713 | | Holly Faurot | Annual Incentive Plan bonus | 689,520(2) | 689,520(2) | 689,520(3) | 689,520(4) | 689,520(4) | | | Vesting of restricted stock | 229,629(15) | 229,629(15) | 229,629(16) | —(17) | —(17) | | | Vesting of 2021 PSUs | 1,689,638(11) | 1,689,638(11) | —(12) | 992,592(13) | 992,592(13) | | | Vesting of 2022 PSUs | 2,589,847(11) | 2,589,847(11) | —(12) | 870,457(14) | 870,457(14) | | | Total | 5,198,634 | 5,198,634 | 919,149 | 2,552,569 | 2,552,569 | | Bradley S. Smith | Annual Incentive Plan bonus | 472,659(2) | 472,659(2) | 472,659(3) | 472,659(4) | 472,659(4) | | | Vesting of 2021 PSUs | 1,689,638(11) | 1,689,638(11) | —(12) | 1,051,671(13) | 1,051,671(13) | | | Vesting of 2022 PSUs | 2,589,847(11) | 2,589,847(11) | —(12) | 870,457(14) | 870,457(14) | | | Total | 4,752,144 | 4,752,144 | 472,659 | 2,394,787 | 2,394,787 | | Justin Long | Annual Incentive Plan bonus | 375,000(2) | 375,000(2) | 375,000(3) | 375,000(4) | 375,000(4) | | | Vesting of restricted stock | 673,062(15) | 673,062(15) | 673,062(16) | —(17) | —(17) | | | Total | 1,048,062 | 1,048,062 | 1,048,062 | 375,000 | 375,000 | | Jon D. Evans(18) | Severance benefits | — | — | — | 709,350 | — | | | Accelerated vesting of restricted stock | — | — | — | 1,808,536 | — | | | Vesting of 2021 PSUs | — | — | — | 460,940 | — | | | Vesting of 2022 PSUs | — | — | — | 61,243 | — | | | Total | — | — | — | 3,040,069 | — |
Potential Payments upon Termination or Change in Control
| Represents the aggregate amount payable for continuation of base salary for 12 months following the date of termination of employment, per the terms of the NEO’s employment agreement.(1) |
Potential Payments upon Termination or Change in Control
| The Annual Incentive Plan provides that upon death or disability during a performance period, the compensation committee may, in its sole discretion, pay the participant a pro-rated amount of the incentive compensation that would have been payable to such participant if he or she had remained employed, based on the number of days worked during the performance period. The amount presented reflects the assumption that (i) the termination of service due to death or disability occurred on December 31, 2022 and, as such, the payment would not be subject to such compensation committee discretion, and (ii) the participant would have been entitled to the amount of incentive compensation payable based on actual results for the 2022 performance period. See “Compensation Discussion and Analysis—Cash Compensation—Annual Incentive Plan.”(2) |
Potential Payments upon Termination or Change in Control
| The Annual Incentive Plan provides that in the event of a change in control (as defined in the Annual Incentive Plan), we must make a lump-sum cash payment to each participant equal to a pro-rated amount of the incentive compensation payable to such participant, calculated by multiplying the amount payable for target achievement by the percentage of the performance period completed prior to the change in control. The amount presented reflects the assumption that (i) the change in control occurred on December 31, 2022 and, as such, the payment would not be subject to such pro-ration, and (ii) the participant would have been entitled to the amount of incentive compensation payable based on actual results for the 2022 performance period. See “Compensation Discussion and Analysis—Cash Compensation—Annual Incentive Plan.”(3) |
Potential Payments upon Termination or Change in Control
| The Annual Incentive Plan provides that if a participant’s employment is terminated during a performance period for any reason other than death or disability, the participant will immediately forfeit any right to receive any incentive compensation for such performance period. If the termination of employment occurs after the performance period has ended but prior to the date of actual payment, the participant will be entitled to payment of an amount not to exceed the amount set forth according to the terms of his or her award. The amount presented reflects the assumption that the triggering event occurred on December 31, 2022, which is the end of the performance period, and, as such, the participant would have been entitled to the amount of incentive compensation payable based on actual results for the 2022 performance period. See “Compensation Discussion and Analysis—Cash Compensation—Annual Incentive Plan.”(4) |
Potential Payments upon Termination or Change in Control
| Represents the value of (i) the aggregate amount payable for continuation of health insurance benefits for 12 months following the date of termination of employment ($9,140), plus (ii) the aggregate amount payable for Mr. Richison’s personal security for a period of two years following his termination ($277,187), per the terms of Mr. Richison’s employment agreement.(5) |
Potential Payments upon Termination or Change in Control
| Represents the aggregate amount payable for continuation of health insurance benefits for 12 months following the date of termination of employment, per the terms of Mr. Boelte’s employment agreement.(6) |
Potential Payments upon Termination or Change in Control
| The restricted stock award agreement for the CEO Performance Award provides that upon termination of Mr. Richison’s employment as Chief Executive Officer due to his death or total and permanent disability, any unvested shares will remain eligible for vesting for a period of one year (but no later than the sixth anniversary of the date of grant in the case of the awarded shares subject to the $1,000 VWAP Value milestone and the tenth anniversary of the date of grant in the case of the awarded shares subject to the $1,750 VWAP Value milestone), provided, that such unvested shares will not vest if Mr. Richison is in material breach of the non-competition restrictions in his employment agreement. The amount presented assumes that the VWAP Value milestones would not be met before December 31, 2023 and, as a result, the unvested shares underlying the CEO Performance Award would be forfeited.(7) |
Potential Payments upon Termination or Change in Control
| The amount presented is calculated based on the assumption that the VWAP Value milestones would not be met in connection with the change in control and, as a result, the unvested shares underlying the CEO Performance Award would be forfeited.(8) |
Potential Payments upon Termination or Change in Control
| The amount presented assumes that any applicable VWAP Value milestones would not be met before December 31, 2023 and, as a result, the unvested shares underlying the CEO Performance Award would be forfeited.(9) |
Potential Payments upon Termination or Change in Control
| The restricted stock award agreement for the CEO Performance Award provides that upon termination of Mr. Richison’s employment as Chief Executive Officer as a result of Mr. Richison’s resignation for good reason, any unvested shares will remain eligible for vesting for a period of one year (but no later than the sixth anniversary of the date of grant in the case of the awarded shares subject to the $1,000 VWAP Value milestone and the tenth anniversary of the date of grant in the case of the awarded shares subject to the $1,750 VWAP Value milestone), provided, that such unvested shares will not vest if Mr. Richison is in material breach of the non-competition restrictions in his employment agreement. The amount presented assumes that the VWAP Value milestones would not be met before December 31, 2023 and, as a result, the unvested shares underlying the CEO Performance Award would be forfeited.(10) |
Potential Payments upon Termination or Change in Control
| The PSU award agreements provide that the vesting of the PSUs will accelerate at target performance upon the NEO’s death or total and permanent disability (as defined in the 2014 LTIP).(11) |
Potential Payments upon Termination or Change in Control
| The 2021 PSU award agreements and the 2022 PSU award agreements provide that unvested 2021 PSUs and 2022 PSUs will be forfeited upon a change in control, absent a subsequent termination of service. If the NEO is terminated without cause (as defined in the applicable 2021 PSU award agreements or 2022 PSU award agreement) or the NEO terminates his or her employment for good reason (as defined in the applicable 2021 PSU award agreements or 2022 PSU award agreement) during the 12-month period following the consummation of a change in control but prior to the applicable vesting date, the 2021 PSUs and the 2022 PSUs will vest based on the greater of: (i) the target performance level for Relative TSR (i.e., 100% of the target units), or (ii) the actual Relative TSR of the Company against the peer group through the date of the change in control.(12) |
Potential Payments upon Termination or Change in Control
| The 2021 PSU award agreements provide that in the event the NEO is terminated without cause (as defined in the applicable award agreement) or the NEO terminates his or her employment for good reason (as defined in the applicable award agreement), the unvested 2021 PSUs will remain outstanding and eligible for vesting based on the actual achievement of Relative TSR, and pro-rated based on a fraction, determined by the number of completed days of service from the date of grant through the date of the termination of service over the total number of days in the applicable performance period. Given the assumption that the triggering event occurred on December 31, 2022, the amount presented reflects (i) the value of shares delivered upon vesting of the first tranche of the 2021 PSUs based on actual achievement for the two-year performance period ended December 31, 2022 and (ii) assumed achievement at the target level for the three-year performance period ending December 31, 2023, pro-rated as described in the preceding sentence.(13) |
Potential Payments upon Termination or Change in Control
| The 2022 PSU award agreements provide that in the event the NEO is terminated without cause (as defined in the applicable award agreement) or the NEO terminates his or her employment for good reason (as defined in the applicable award agreement), the unvested 2022 PSUs will remain outstanding and eligible for vesting based on the actual achievement of Relative TSR, and pro-rated based on a fraction, determined by the number of completed days of service from the date of grant through the date of the termination of service over the total number of days in the applicable performance period. The amount presented assumes achievement at the target level for both performance periods, pro-rated as described in the preceding sentence.(14) |
Potential Payments upon Termination or Change in Control
| The applicable restricted stock award agreements provide that unvested shares of restricted stock vest 100% upon the NEO’s death or termination of service as a result of total and permanent disability (as defined in the applicable restricted stock award agreement). The restricted stock award agreements governing the terms of awards granted to Mrs. Faurot and Mr. Long prior to their respective appointments as executive officers, provide that if at any time during the period beginning on the date of termination and ending on the 60(th) day following the third anniversary of the termination, the Company determines that the participant breached certain non-solicitation, non-competition, non-disparagement and confidentiality restrictions in the agreement, all awarded shares of restricted stock (whether or not vested and whether then held by the participant) shall be subject to certain forfeiture and clawback provisions.(15) |
Potential Payments upon Termination or Change in Control
| The amount presented is calculated based on the assumption that the surviving entity does not assume the obligations under the equity award, such that shares underlying awards would vest 100%.(16) |
Potential Payments upon Termination or Change in Control
| All unvested shares of restricted stock would be forfeited on the date of a termination of service without cause or by the NEO for good reason.(17) |
Potential Payments upon Termination or Change in Control
| On April 14, 2022, the Company and Mr. Evans entered into a severance and release agreement pursuant to which, among other things, (i) Mr. Evans was paid cash severance of $709,350, less applicable withholdings and taxes, which amount represented 18 months of Mr. Evans’s base salary and the cost of 12 months of coverage pursuant to COBRA, and (ii) the vesting of 5,663 shares of time-based restricted stock was accelerated, all of which would have otherwise vested by May 10, 2022. The PSU award agreements provide that the in the event the NEO is terminated without cause (as defined in the applicable PSU award agreement) or the NEO terminates his or her employment for good reason (as defined in the applicable award agreement), the unvested PSUs will remain outstanding and eligible for vesting based on the actual achievement of Relative TSR, and pro-rated based on a fraction, determined by the number of completed days of service from the date of grant through the date of the termination of service over the total number of days in the applicable performance period. The amounts presented assume achievement at the target level for both performance periods, pro-rated as described in the preceding sentence.(18) |
2022, 2021 and 2020
| Year | Summary Compensation Table Total for PEO (1) ($) | Compensation Actually Paid to PEO (2) ($) | Average Summary Compensation Table Total for Non-PEO NEOs (3) ($) | Average Compensation Actually Paid to Non-PEO NEOs (2) (3) ($) | Value of Initial Fixed $100 Investment Based on: | | Net Income ($) | Adjusted EBITDA (6) ($) | Revenue ($) | | | | | | | Company TSR (4) ($) | Peer Group TSR (5) ($) | | | | | 2022 | 3,138,418 | (149,491,892) | 4,755,734 | 2,468,497 | 117.20 | 126.96 | 281,389,330 | 579,711,116 | 1,375,217,646 | | 2021 | 2,958,410 | 62,994,260 | 7,891,945 | 3,323,073 | 156.82 | 172.32 | 195,960,264 | 419,286,728 | 1,055,523,820 | | 2020 | 211,131,206 | 352,618,181 | 6,724,389 | 15,808,463 | 170.82 | 135.28 | 143,453,418 | 330,816,302 | 841,434,039 |
2022, 2021 and 2020
| The amounts reported in this column represent “compensation actually paid” to Mr. Richison and the other NEOs (on average), as calculated in accordance with Item 402(v) of Regulation S-K. To determine the “compensation actually paid”, the amounts reported in the “Total” column of the Summary Compensation Table for the applicable year were adjusted as follows:(2) |
2022 Pay Ratio Disclosure
2022 Pay Ratio Disclosure
CEO Pay Ratio
CEO Pay Ratio As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act and Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our median employee and the annual total compensation of our Chief Executive Officer, Mr. Richison. The pay ratio is a reasonable estimate calculated in accordance with applicable SEC disclosure rules. Because of the estimates and adjustments that may be included in each company’s methodology, pay ratio disclosures may involve a degree of imprecision, and the pay ratios reported by other companies are unlikely to be relevant or meaningful for purposes of comparison to our pay ratio disclosure. Using the methodology described below, we determined that the median employee was a full-time, salaried employee. We identified and calculated the elements of the median employee’s compensation using the same methodology reflected in the “Summary Compensation Table for Fiscal Years Ended December 31, 2022, 2021 and 2020” included elsewhere in this proxy statement. The median employee’s annual total compensation was $72,138 in 2022. The annual total compensation of Mr. Richison was $3,138,418 in 2022. Based on this information, the 2022 ratio of annual total compensation of Mr. Richison to the median annual total compensation of all employees was 44 to 1.