DEF 14A of Paymentus Holdings, Inc.
Filed Apr 24, 2024 · FY20230001193125-24-110125
Proposal No. 1—Election of directors
Proposal No. 1—Election of directors Each director is elected by a plurality of the votes cast. A plurality means that the nominees with the largest number of FOR votes are elected as directors. You may (1) vote “FOR ALL” director nominees named herein, (2) “WITHHOLD ALL” votes for all such director nominees or (3) vote “FOR ALL EXCEPT,” which is a vote for all director nominees other than any nominees with respect to whom your vote is specifically withheld by indicating such in the space provided on the proxy. Because the outcome of this proposal will be determined by a plurality vote, any shares not voted FOR a particular nominee, whether as a result of choosing to WITHHOLD authority to vote or a broker non-vote, will have no effect on the outcome of the election.
Nominees for Director—Class III
Nominees for Director—Class III Dushyant Sharma, our founder, has served as president, chief executive officer and a member of our board of directors since our inception, and has also served as our chairman since December 2013. Before founding Paymentus, Mr. Sharma cofounded Derivion Corporation, a SaaS-based electronic billing company, in 1998. Derivion was acquired in 2001 by Metavante Corporation, a banking and payment technologies provider. Mr. Sharma continued employment with Metavante from May 2001 to November 2004. Mr. Sharma holds a Bachelor of Engineering in Computer Science and Engineering from Marathwada University in India. We believe Mr. Sharma’s extensive background in billing and payment technologies, as well as his experience serving as our chief executive officer, qualify him to serve on our board of directors. Jason Klein has served as a member of our board of directors since September 2011. Mr. Klein is a Senior Advisor at Accel-KKR, or AKKR, a private equity firm, and Co-CEO of Red Iron Group, an investment firm. He was previously a Managing Director at AKKR and joined the firm during its inaugural fund in May 2005. He has served on the boards of many companies and currently serves on the boards of several of AKKR’s and Red Iron Group’s private portfolio companies. Mr. Klein holds an M.B.A. in Finance and Strategic Management from the Wharton School at the University of Pennsylvania and a B.S. in Finance and Accounting from The Pennsylvania State University. Mr. Klein is a Certified Public Accountant (inactive) and holds the Chartered Financial Analyst designation. We believe Mr. Klein’s experience in the areas of corporate strategy, finance, business transactions and software investments, as well as his extensive experience serving on other boards of directors, qualify him to serve on our board of directors. Arun Oberoi has served as a member of our board of directors since April 2023. Mr. Oberoi is the former executive vice president, global sales and services, of Red Hat, a provider of enterprise open source software solutions, where he served from 2012 to 2021. Prior to Red Hat, Mr. Oberoi was chief executive officer of Viridity Software from 2010 to 2012 and chief executive officer of Aveksa from 2008 to 2010. He served as an executive vice president of global sales and technical services of Micromuse (acquired by IBM in 2006) from 2004 to 2008. Prior to joining Micromuse, Mr. Oberoi held a series of senior executive positions at Hewlett-Packard, including vice president and general manager, worldwide corporate accounts and industries and as vice president and general manager, worldwide software sales and marketing. Mr. Oberoi serves on the board of directors and the audit committee of Schrodinger, Inc., a Nasdaq-listed software company enabling the discovery of therapeutics and materials. He also serves on the boards of Deeplite, an AI optimization software company, and Proofpoint, a cybersecurity software company which is a portfolio company of Thoma Bravo, L.P., as well as serving as a member and chairman of the supervisory board of SUSE S.A., an open source hybrid cloud infrastructure software company and a portfolio company of EQT Partners. Mr. Oberoi received his bachelor’s degree from Delhi University and has an M.B.A. from the Kellogg School of Management at Northwestern University. We believe Mr. Oberoi’s extensive experience serving in corporate senior executive positions of technology and software companies, as well as his board experience with publicly traded and private companies, qualify him to serve on our board of directors.
Continuing Directors—Class I
Continuing Directors—Class I William Ingram has served as a member of our board of directors since February 2021. Mr. Ingram served from December 2015 to March 2020 as the chief financial officer and treasurer of Avalara, Inc., a provider of software for automated tax compliance that was listed on the NYSE. Prior to joining Avalara, Mr. Ingram served as interim chief financial officer of Khan Academy, a provider of online learning resources, from April 2015 to December 2015. Mr. Ingram also held various executive roles at Leap Wireless International, Inc., the parent company of Cricket Wireless, a wireless telecommunications provider, including executive vice president and chief of strategy, from August 2007 to March 2014, and with the acquiring company, AT&T, from March 2014 to January 2015. Mr. Ingram currently serves on the board of directors and as chair of the audit committee and member of the human capital and compensation committee of CCC Intelligent Solutions Holdings Inc., a Nasdaq-listed provider of technologies and applications for the property and casualty insurance industry. He served on the board of directors of Avalara from January 2020 until its acquisition in October 2022. Mr. Ingram holds a B.A. in Economics from Stanford University and an M.B.A. from Harvard Business School. We believe Mr. Ingram’s experience in the areas of corporate strategy, finance and business transactions, as well as his experience working with other public technology and software companies, qualify him to serve on our board of directors. Robert Palumbo has served as a member of our board of directors since September 2011 and as our lead independent director since May 2021. Mr. Palumbo has served as managing director and founding partner of AKKR since November 2004, and currently serves on the boards of several of AKKR’s private portfolio companies. Mr. Palumbo holds an A.B. from Princeton University. We believe Mr. Palumbo’s experience in the areas of corporate strategy, finance, investment banking, business transactions and software investments, as well as his experience working with other technology and software companies, qualify him to serve on our board of directors.
Continuing Directors—Class II
Continuing Directors—Class II Jody Davids has served as a member of our board of directors since April 2022. Ms. Davids currently serves as a director of Premier, Inc., a Nasdaq-listed, technology-driven healthcare improvement company, and as a member of its audit and compliance committee and its nominating and governance committee. She previously served as senior vice president and global chief information officer of PepsiCo, Inc., a NYSE-listed company that has a global portfolio of food and beverage brands, from April 2016 to October 2019. Prior to that role, she served as chief information officer of Agrium, Inc., a NYSE-listed and Toronto Stock Exchange-listed company that is a global producer and marketer of nutrients for agricultural and industrial markets, from April 2014 to April 2016. Ms. Davids served in various executive and consulting roles with Agrium, Best Buy, Inc., a NYSE-listed company, and Cardinal Health, Inc., a NYSE-listed company, from 2000 to 2014. She serves as a director and member of the audit, technology and markets committees of Midcontinent Independent System Operator (MISO) and as a board member of Movista, Inc. Ms. Davids holds a B.A. in Human Resources Management and Business and an M.B.A. from San Jose State University. We believe that Ms. Davids’ strong background in information technology and cybersecurity risk management and her leadership experience serving in corporate senior executive positions of other publicly traded companies, qualify her to serve on our board of directors. Adam Malinowski has served as a member of our board of directors since April 2019. Mr. Malinowski has served as an investment professional at AKKR since August 2010, and currently serves on the boards of several of AKKR’s private portfolio companies. Mr. Malinowski holds a B.S. in Business Administration and a B.A. in Economics from the University of California, Berkeley. We believe Mr. Malinowski’s experience in the areas of corporate strategy, finance, business transactions and software investments qualifies him to serve on our board of directors. Gary Trainor has served as a member of our board of directors since September 2011, and served as our executive chairman from September 2011 to September 2013. Mr. Trainor has served as executive chairman of PeopleGuru, an HCM software and services company, since April 2022, EasyWorkforce, a workforce management software company, since September 2020, Mindmarker Corporation, a learning software platform company, since August 2020, and Flores & Associates, a national benefits administrator, since April 2020, as well as chief executive officer of CFH Strategic Investment I, LLC, a family office, since March 2018. Mr. Trainor previously served as chief executive officer of Viventium Software from December 2014 to March 2018 and Infinisource (now iSolved Benefit Services) from September 2011 to January 2014, both SaaS-based human capital management software providers. Earlier in his career, Mr. Trainor served as division president at First Data and ADP. Mr. Trainor holds an M.B.A. from Fairleigh Dickinson University and a B.A. in Business Administration from Rutgers University. We believe Mr. Trainor’s extensive industry and management experience, including at other SaaS companies, qualifies him to serve on our board of directors.
Compensation Committee
| • | determining non-employee director compensation. |
Considerations in Evaluating Director Nominees
Considerations in Evaluating Director Nominees Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating potential director nominees, subject to the director nomination rights in our stockholders agreement. In its evaluation of director candidates, including the current directors eligible for re-election, our nominating and corporate governance committee will consider the current size and composition of our board of directors, the needs of our board of directors and the respective committees of our board of directors, the qualifications and characteristics set forth in the stockholders agreement and other director qualifications. While our board has not established minimum qualifications for board members, some of the factors that our nominating and corporate governance committee considers in assessing director nominee qualifications include, without limitation, issues of character, professional ethics and integrity, judgment, business experience and diversity, and with respect to diversity, such factors as race, ethnicity, gender, differences in professional background, age and geography, as well as other individual qualities and attributes that contribute to the total mix of viewpoints and experience represented on our board. Although our board of directors does not maintain a specific policy with respect to board diversity, our board of directors believes that the board should be a diverse body, and the nominating and corporate governance committee considers a broad range of perspectives, backgrounds and experiences. If our nominating and corporate governance committee determines that an additional or replacement director is required, then the committee may take such measures as it considers appropriate in connection with its evaluation of a director candidate, including candidate interviews, inquiry of the person or persons making the recommendation or nomination, engagement of an outside search firm to gather additional information, or reliance on the knowledge of the members of the committee, board or management. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection. Our nominating and corporate governance committee has discretion to decide which individuals to recommend for nomination as directors, and our board of directors has the final authority in determining the selection of director candidates for nomination to our board.
Director Compensation
Director Compensation The compensation paid to Mr. Sharma in 2023 in respect of his employment is included under “Summary Compensation Table for Fiscal 2023” in the section titled “Executive Compensation.” No compensation was paid or provided to Messrs. Klein, Malinowski, Palumbo and Trainor in 2023. In February 2021, our compensation committee retained Compensia, an independent third-party compensation consultant, to provide our board of directors and its compensation committee with an analysis of publicly available market data and assistance in determining compensation to be provided to our non-employee directors following our initial public offering. Based on the discussions with and assistance from Compensia, in connection with our initial public offering in May 2021, we adopted an outside director compensation policy for our non-employee directors. Our board of directors or any committee of our board of directors that has been designated appropriate authority to administer our outside director compensation policy may amend, alter, suspend or terminate such policy at any time and for any reason. Our board, upon the recommendation of the compensation committee, approved and adopted a revised outside director compensation policy, effective February 13, 2023. The revised outside director compensation policy added a provision for cash compensation for service on short term, ad hoc board committees, and removed the initial award of restricted stock units for new non-employee directors.
Director Compensation Limits
Director Compensation Limits Our outside director compensation policy provides that in any fiscal year, a non-employee director may be paid cash compensation and granted equity awards with an aggregate value of no more than $550,000 (with the value of equity awards based on the grant date fair value determined in accordance with U.S. Generally Accepted Accounting Principles, or GAAP, for purposes of this limit). Equity awards granted or other compensation provided to a non-employee director for his or her services as an employee or consultant (other than a non-employee director) do not count toward this annual limit. This maximum limit provision does not reflect the intended size of any potential grants or a commitment to make grants to our non-employee directors in the future.
Director Compensation for Fiscal 2023
Director Compensation for Fiscal 2023 The following table sets forth information regarding the total compensation awarded to, earned by or paid to our non-employee directors for their service on our board of directors for the fiscal year ended December 31, 2023. Directors who are also our employees receive no additional compensation for their service as directors. During 2023, Mr. Sharma was an employee and executive officer of the company and therefore did not receive compensation as a director. See the section titled “Executive Compensation” for additional information regarding Mr. Sharma’s compensation.
Director Compensation for Fiscal 2023
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(6) | Total ($) | | William Ingram(1)(4) | 54,000 | 169,991 | 223,991 | | Jody Davids(2)(4) | 40,000 | 169,991 | 209,991 | | Arun Oberoi(3)(4) | 20,333 | 188,616 | 208,949 | | Jason Klein(5) | — | — | — | | Adam Malinowski(5) | — | — | — | | Robert Palumbo(5) | — | — | — | | Gary Trainor(5) | — | — | — |
Director Compensation for Fiscal 2023
| (1) The amount reported in the “Fees Earned or Paid in Cash” column for Mr. Ingram represents a $30,000 retainer for board service and a $24,000 retainer for committee service. |
Director Compensation for Fiscal 2023
| (2) The amount reported in the “Fees Earned or Paid in Cash” column for Ms. Davids represents a $30,000 retainer for board service and a $10,000 retainer for committee service. |
Director Compensation for Fiscal 2023
| (3) Mr. Oberoi was appointed to our board of directors in April 2023. The amount reported in the “Fees Earned or Paid in Cash” column represents a $20,333 retainer for board service, which reflects a prorated amount for his partial year of service on the board of directors in 2023. |
Director Compensation for Fiscal 2023
| (4) Under our outside director compensation policy, Ms. Davids and Messrs. Ingram and Oberoi received an Annual Award of restricted stock units with a grant date fair value of $169,991. The grant date fair value for the Annual Awards is based on the closing price for our common stock on the award date, June 5, 2023. Mr. Oberoi also received an award of restricted stock units with a grant date fair value of $18,624, which reflects a prorated Annual Award for his partial year of service from his start date to the 2023 annual meeting of stockholders. The grant date fair value for Mr. Oberoi’s prorated Annual Award is based on the closing price for our common stock on the award date, April 27, 2023. Grant date fair value for of our restricted stock unit awards was computed in accordance with FASB Accounting Standards Codification, or ASC, Topic 718. |
Director Compensation for Fiscal 2023
| (5) Messrs. Klein, Malinowski, Palumbo and Trainor did not receive director compensation in 2023. |
Director Compensation for Fiscal 2023
| (6) We provide information regarding the assumptions used to calculate the value of all restricted stock units granted to our directors in Note 11—Stock-Based Compensation to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Director Compensation for Fiscal 2023
The following table lists all outstanding equity awards held by non-employee directors as of December 31, 2023:
Director Compensation for Fiscal 2023
| Name | Number of Shares Underlying Outstanding Options | Number of Outstanding Restricted Stock Units | | Jody Davids | — | 29,994 | | William Ingram | 26,195 | 17,689 | | Arun Oberoi | — | 19,977 |
Director Compensation for Fiscal 2023
PROPOSAL NO. 1:
ELECTION OF CLASS III DIRECTORS
ELECTION OF CLASS III DIRECTORS Our board of directors currently consists of eight directors and is divided into three classes with staggered three-year terms. At the annual meeting, three Class III directors will be elected for a three-year term to succeed the same class whose term is then expiring. Each director’s term continues until the expiration of the term for which such director was elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal.
Summary Compensation Table for Fiscal 2023
Summary Compensation Table for Fiscal 2023 The following table sets forth information regarding the compensation reportable for our named executive officers for fiscal 2023 and 2022 where applicable.
Summary Compensation Table for Fiscal 2023
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Dushyant Sharma | 2023 | 350,000 | 757,350 | — | — | 13,838 | 1,121,188 | | Chairman, President and Chief Executive Officer | 2022 | 350,000 | — | — | 257,000 | 13,898 | 607,690 | | Sanjay Kalra(5) | 2023 | 399,446 | — | 4,000,005 | 467,500 | 546 | 4,867,497 | | Senior Vice President and Chief Financial | | | | | | | | | Andrew Gerber(5) | 2023 | 338,480 | — | 559,500 | 235,651 | 9,752 | 1,143,383 | | General Counsel and Secretary | 2022 | 318,229 | 120,000 | 2,000,020 | 76,000 | 7,330 | 2,515,485 |
Summary Compensation Table for Fiscal 2023
| (1) Amounts earned in 2022 were paid in 2023, and amounts earned in 2023 were paid in 2024. For 2023 bonus payments, see the section titled “—2023 Discretionary Bonus” below. |
Summary Compensation Table for Fiscal 2023
| (2) In accordance with SEC rules, the amounts represent the aggregate grant date fair value of restricted stock units granted during 2022 and 2023 computed in accordance with ASC Topic 718, rather than the amounts paid or realized by the named executive officer. We provide information regarding the assumptions used to calculate the value of all restricted stock units granted to our named executive officers in Note 11—Stock-Based Compensation to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. |
Summary Compensation Table for Fiscal 2023
| (3) The amounts represent bonuses earned and payable upon the achievement of corporate objectives. The amounts earned in 2022 were paid in 2023, and the amounts earned in 2023 were paid in 2024. See the section titled “—Non-equity Incentive Plan Compensation.” |
Summary Compensation Table for Fiscal 2023
| (4) The amounts represent the value of group term life insurance premiums and 401(k) matching contributions paid by us. |
Summary Compensation Table for Fiscal 2023
| (5) Mr. Kalra and Mr. Gerber joined us March 6, 2023 and January 10, 2022, respectively. |
Potential Payments upon Termination or Change in Control
Potential Payments upon Termination or Change in Control
Outstanding Equity Awards at Fiscal 2023 Year-End
Outstanding Equity Awards at Fiscal 2023 Year-End The following table sets forth information regarding outstanding equity awards held by our named executive officers as of December 31, 2023.
Outstanding Equity Awards at Fiscal 2023 Year-End
| | Option Awards | | | | Stock Awards | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares of Units of Stock That Have Not Vested ($) | | Dushyant Sharma | 3,249,789(1) | 55,081 | 8.66 | 4/8/2029 | — | — | | Sanjay Kalra | — | — | — | — | 475,060(2) | 8,489,322 | | Andrew Gerber | — | — | — | — | 96,679(3) | 1,727,654 |
Outstanding Equity Awards at Fiscal 2023 Year-End
| (1) Mr. Sharma’s stock options are scheduled to vest over five years, with 20% vesting on January 25, 2020 and 1.6667% vesting thereafter on each monthly anniversary thereof, subject to continued employment with us through the applicable vesting date. |
Outstanding Equity Awards at Fiscal 2023 Year-End
| (2) Mr. Kalra’s restricted stock units are scheduled to vest over four years, with 1/4th vesting on March 6, 2024 and 1/16th vesting on a quarterly basis on each Quarterly Vesting Date beginning on August 15, 2024, subject to continued service through the applicable vesting date. Quarterly Vesting Dates with respect to any calendar year means February 15, May 15, August 15 and November 15. |
Outstanding Equity Awards at Fiscal 2023 Year-End
| (3) Mr. Gerber has two awards of restricted stock units. The first award, with 46,679 units that have not vested, is scheduled to vest over five years, with 1/5th vesting on February 3, 2023 and 1/20th vesting on a quarterly basis thereafter on each Quarterly Vesting Date beginning on May 15, 2023, subject to continued employment with us through the applicable vesting date. The second award, with 50,000 units that have not yet vested, is scheduled to vest over four years, with 1/4th vesting on June 20, 2024 and 1/16th vesting on a quarterly basis on each Quarterly Vesting Date beginning on November 15, 2024, subject to continued employment with us through the applicable vesting date. |