DEF 14A of Paychex Inc
Filed Aug 29, 2025 · FY20250001193125-25-191789
HOW TO VOTE
| Page | | | 1 | PROXY STATEMENT SUMMARY | | 5 | PROPOSAL 1: ELECTION OF DIRECTORS FOR A ONE-YEAR TERM | | 12 | DIRECTOR COMPENSATION FOR THE FISCAL YEAR ENDED MAY 31, 2025 | | 16 | BENEFICIAL OWNERSHIP OF PAYCHEX COMMON STOCK | | 17 | Delinquent Section 16(a) Reports | | 18 | CORPORATE GOVERNANCE | | 18 | Role of the Board | | 18 | Corporate Responsibility | | 19 | Board Leadership Structure | | 20 | Nomination Process | | 21 | Board Oversight of Risk | | 22 | Board Meetings and Committees | | 25 | Policy on Transactions with Related Persons | | 25 | Transactions with Related Persons | | 26 | Insider Trading Policy | | 26 | Stockholder Engagement During Fiscal 2025 | | 27 | Communications with the Board of Directors | | 27 | CODE OF BUSINESS ETHICS AND CONDUCT | | 28 | PROPOSAL 2: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
| What am I voting on? | Voting Recommendation | | Stockholders are being asked to elect ten director nominees for a one-year term. This section includes information about the Board and each director nominee. | The Board recommends a vote FOR each of the ten director nominees. |
ELECTION OF DIRECTORS FOR A ONE-YEAR TERM
The Board is elected by the stockholders to oversee the overall success of the Company, review its operational and financial capabilities, and periodically assess its long-term strategic objectives. The Board serves as the ultimate decision-making body of the Company, except for those matters reserved for stockholders. The Board selects and oversees the members of senior management who are charged by the Board with conducting the day-to-day business of the Company. The Board acts as an advisor to senior management and ultimately monitors management’s performance.
Election Process
Election Process The Company’s Amended and Restated By-Laws (“By-Laws”) provide for the annual election of directors. The By-Laws provide that each director is elected by a majority of the votes cast for the director at any meeting held for the election of directors at which a quorum is present, and the director is running unopposed. If a nominee that is an incumbent director does not receive a majority of the votes cast in an uncontested election, such director must offer his or her resignation to the Board. The Nominating and Governance (“N&G”) Committee considers such offer and will make a recommendation to the Board on whether to accept or reject the resignation. The Board then considers the N&G Committee’s recommendation and will determine whether to accept such offer. The Board will disclose its decision and the rationale behind it within 90 days of the certification of the election results.
2025 Nominees for Director
2025 Nominees for Director There are ten nominees for election as director, as listed on the following pages. Each of the nominees is a current member of the Board. As previously disclosed by the Company, Mr. Golisano stepped down from the Board and the Board determined to reduce its size from 11 to 10 directors effective July 9, 2025. The ten persons listed have been nominated for election to the Board by the N&G Committee. The nominees, except for Messrs. Gibson and Mucci, are independent under The Nasdaq Stock Market LLC (“Nasdaq”) director independence standards. If elected, each nominee will hold office until his or her successor is elected and qualified or until his or her earlier resignation or removal. We believe that all the nominees will be available to serve as a director. However, if any nominee should become unable to serve, the named proxy holders may exercise discretionary authority to vote for substitute nominees proposed by the Board. The Board believes that the combination of the distinct and complementary qualifications, skills, viewpoints, backgrounds, and experience of the 2025 director nominees will continue to contribute to an effective and well-functioning Board. Due in part to stockholder feedback, board refreshment continues to be an important consideration of our Board. For more information on our nomination process, refer to the Corporate Governance section of this proxy statement.
2025 Nominees for Director
| The Board recommends the election of each of the director nominees identified on the following pages. Unless otherwise directed, the named proxy holders will vote the proxy FOR the election of each of these director nominees. |
Summary of Director Nominees
Summary of Director Nominees The Company seeks to maintain a Board comprised of a mix of perspectives, experiences, skills, and backgrounds to reflect the multi-faceted nature of the business environment in which the Company operates. For purposes of Board composition, the Board, guided by the N&G Committee, considers, among other factors that the Board determines relevant, a nominee’s demonstrated business judgment, leadership abilities, integrity, prior experience, education, training, and relationships. The N&G Committee regularly evaluates Board composition, and as a Company, we are dedicated to ongoing Board refreshment so that the Board’s collective skills and viewpoints remain aligned with the evolving demands of our business landscape. Our director nominees are accomplished professionals, with diverse areas of expertise, who are well-equipped to oversee the success of the business and effectively represent the interests of stockholders. Our director nominees:
Summary of Director Nominees
| • | are seasoned leaders who possess high personal and professional ethics and share the values of the Company; |
Summary of Director Nominees
| • | are highly accomplished in their fields and have served as directors and officers in a diverse range of companies, including technology, financial services, and payment companies, among others; |
Summary of Director Nominees
| • | strengthen our Board’s oversight capabilities by having varied lengths of tenure that provide historical and new perspectives about our Company; and |
Summary of Director Nominees
| • | bring extensive and varied experience in strategic planning, business development, international business, mergers and acquisitions, and go-to-market strategies, among others. |
Summary of Director Nominees
The Board has identified qualifications, attributes, skills, and experience that are important to be represented on the Board as a whole, in light of the multi-faceted nature of the business environment in which the Company operates. The Board believes that the varied and complementary qualifications, attributes, skills, and experience of the director nominees collectively contribute to a well-functioning and effective Board. Below is a summary to highlight some but not all the important skills our director nominees bring to the Board.
Summary of Director Nominees
| | Skills | | | | | | | | | | | | | Capital Markets Literacy | | 🌑 | | | 🌑 | | | 🌑 | 🌑 | 🌑 | | | Industry Knowledge | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | | | 🌑 | 🌑 | 🌑 | | | Financial Literacy | 🌑 | 🌑 | 🌑 | | 🌑 | | 🌑 | | 🌑 | 🌑 | | | Global Experience | 🌑 | | 🌑 | 🌑 | 🌑 | 🌑 | | 🌑 | 🌑 | 🌑 | | | Leadership Experience | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | | | Product Marketing | | 🌑 | | 🌑 | | | 🌑 | 🌑 | | 🌑 | | | Risk Management | 🌑 | 🌑 | 🌑 | | | 🌑 | 🌑 | 🌑 | 🌑 | | | | Technology Experience | | | | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 | 🌑 |
Director Nominee Biographies
Director Nominee Biographies The following is summary information about each of our ten director nominees. The Board recommends that our shareholders elect all ten director nominees listed below at the Annual Meeting. Each nominee is elected annually by a majority of votes cast in uncontested elections.
Director Nominee Biographies
| Martin Mucci CHAIRMAN OF THE BOARD Director since 2010 Age: 65 Board Committees: • Executive (Chair) | Career Highlights: • Paychex, Inc. • Chairman of the Board and CEO, December 2021 – October 2022 • President and CEO, September 2010 – December 2021 • Senior Vice President (“SVP”), Operations, October 2002 – September 2010 • Frontier Communications of Rochester (a telecommunications company), January 1998 – December 2001 • President, Telephone Operations • President and CEO of Frontier Telephone of Rochester Other Current Public Company Directorships: • Cintas Corporation (a uniform rental and facility services company), since April 2023 • Board Member, Audit and Nominating and Governance committees Former Public Company Directorships: • NCR Corporation (a software, consulting and technology company), April 2021 – October 2023 • Cbeyond (a telecommunications company focused on small businesses), February 2009 – July 2014 Other Professional Experience and Community Involvement: • Royal Oak Realty Trust, Board Member and Audit Committee, since May 2025 • St. John Fisher University, Trustee Emeritus, since 2014 • Madison Dearborn Partners (a private equity firm), Business and Government Software and Services Advisory Team, Member, since 2013 Key Experience and Qualifications: The Board has concluded that Mr. Mucci is qualified to lead the Board due to his experience providing day-to-day leadership as the former President and CEO of Paychex, giving him extensive knowledge of the Company, its operations, challenges, and opportunities. In addition, Mr. Mucci’s educational background and senior leadership experience provide him with strong financial literacy. |
Director Nominee Biographies
| Thomas F. Bonadio INDEPENDENT Director since 2017 Age: 76 Board Committees: • Audit (Chair) • Corporate Development Advisory • Investment | Career Highlights: • The Bonadio Group (accounting firm) • Founder and Chairman of the Board of Directors, since September 1978 • Impact Capital, (a venture capital firm), since June 2017 Former Public Company Directorships: • CurAegis Technologies, Inc. (a health and wellness company), November 2010 – March 2021 Other Professional Experience and Community Involvement: • Viridi (an energy storage company), Board Member, since March 2018 • Royal Oak (a private real estate investment trust), Board Member and Audit Committee Chair, since June 2014 • Conceptus, Inc. (a medical device company), Board Member and Audit Committee Chair, June 2003 to June 2013 Key Experience and Qualifications: The Board has concluded that Mr. Bonadio is qualified to serve as a director of the Company due to his strong background in finance and business, his entrepreneurial experience, and his knowledge of the Certified Public Accountant community. Mr. Bonadio is a successful entrepreneur whose experience building his own business is representative of many clients Paychex serves today. He also brings a high degree of financial literacy obtained from his years in the financial services industry, and his ability to assess financial performance of other companies through the review and understanding of financial statements. This financial expertise is a great benefit to the Board and its committees. |
Director Nominee Biographies
| Joseph G. Doody INDEPENDENT Director since 2010 Age: 73 Board Committees: • Compensation & Leadership (Chair) • Investment • Nominating and Governance | Career Highlights: • Staples, Inc., (an office products company) • Vice Chairman February 2014 until his retirement in September 2017 • President, North American Delivery, from March 2002 to February 2014. • Various positions, November 1998 to March 2002 Other Current Public Company Directorships: • Casella Waste Systems, Inc. (a waste management company), since 2004 Former Public Company Directorships: • Virtusa Corporation (a global technology company), February 2017 – February 2021 Other Professional Experience and Community Involvement: • Foundation Board at The College at Brockport • Chair 2013 – 2017, Emeritus since 2019 Key Experience and Qualifications: The Board has concluded that Mr. Doody is qualified to serve as a director of the Company due to his significant leadership and international experience. His long tenure in management of a large division of a multinational company enables him to provide our Board with important operational expertise. In addition, his deep knowledge of small- to medium-sized businesses brings a thorough understanding of the risks and opportunities affecting the Company’s clients and potential clients. Mr. Doody also has extensive experience in strategic planning and business development, which allows him to provide valuable input into the Company’s plans for market growth. |
Director Nominee Biographies
| John B. Gibson PRESIDENT AND CHIEF EXECUTIVE OFFICER Director since 2022 Age: 59 Board Committees: • Corporate Development Advisory • Executive | Career Highlights: • Paychex, Inc. • President and CEO, since October 2022 • President and Chief Operating Officer (“COO”), December 2021 – October 2022 • Senior Vice President of Service, May 2013 – December 2021 • Convergys (now Concentrix) (a global technology company) • President, HR Management division, June 2004 – June 2010 • Ameritech Corporation (now AT&T) (a telecommunications company) • Vice President, Sales and Service, April 1989 – November 1999 Key Experience and Qualifications: The Board has concluded that Mr. Gibson is qualified to serve as a director of the Company due to his leadership and experience. Mr. Gibson has been a key leader in the Company’s digital expansion, its service transformation, and the expansion of its professional employer organization and HR advisory services. His deep understanding of the Company’s market and focus on driving innovative technology and HR advisory solutions for the Company’s approximately 800,000 clients make him a valuable addition to the Board. |
Director Nominee Biographies
| Pamela A. Joseph INDEPENDENT Director since 2018 (previously served from 2005 – 2017) Age: 66 Board Committees: • Compensation & Leadership • Corporate Development Advisory • Executive(1) • Nominating and Governance (Chair) | Career Highlights: • Xplor Technologies (a SaaS company) • Chief Executive Officer, since October 2022 • Executive Chair, since 2018 • Advent International (a private equity firm) • Operating Partner, since 2018 • Total System Services, Inc., (a financial services company) • President, COO, and Board Member, May 2016 – September 2017 • U.S. Bancorp Payment Services (a financial services company) • Vice Chair, December 2004 – June 2015. • Chair, Elavon (formerly NOVA Information Systems, Inc.), a wholly owned subsidiary of U.S. Bancorp, December 2004 – June 2015. Other Current Public Company Directorships: • TransUnion (a global information and insights company) • Board Chair, since 2019 • Audit Chair, July 2015 – July 2019 • Board Member, since 2015 • Adyen N.V. (a Netherlands-based payments platform business) • Board Member, Audit Committee, since May 2019 Key Experience and Qualifications: The Board has concluded that Ms. Joseph is qualified to serve as a director of the Company due to her extensive executive experience in the financial services and payment industries. Her wealth of technology experience brings insight to the Board and its committees. In addition, her experience with major acquisitions, board experience, and international expansion allows her to provide valuable input to the Company’s growth plans. |
Director Nominee Biographies
| (1) The Board appointed Ms. Joseph as a member of the Executive Committee effective July 9, 2025. |
Director Nominee Biographies
| Theresa M. Payton INDEPENDENT Director since 2023 Age: 58 Board Committees: • Audit | Career Highlights: • Fortalice Solutions, LLC (a security consulting company) • Founder, President, and Chief Executive Officer, since September 2008 • Dark Cubed (a cybersecurity solutions company) • Co-founder, Board member, January 2014 – September 2022 • Executive Office of the President at the White House • Chief Information Officer, May 2006 – September 2008 • Bank of America (a financial institution) • Senior Vice President, September 2004 – April 2006 • Wachovia (a financial institution) • Senior Vice President, July 1995 – September 2004 Other Professional Experience and Community Involvement: • Transformation Innovation Advisory Board of UniCredit S.p.A., January 2019 – August 2022. • Public Sector Advisory Board, Member, CyberArk (a publicly traded cybersecurity company), January 2019 – December 2021 Key Experience and Qualifications: The Board has concluded that Ms. Payton is qualified to serve as a director of the Company due to her significant technology and cybersecurity expertise and experience as an entrepreneur. Her business acumen, intense focus on the needs of clients, and her ability to provide sound governance insights on digital and security risks make her a valuable contributor to the Board. |
Director Nominee Biographies
| Kevin A. Price INDEPENDENT Director since 2021 Age: 65 Board Committees: • Audit • Nominating and Governance | Career Highlights: • KAP Holdings, LLC (an equipment wholesale company) • Founder and President, since 2006 • PartScription TM (an ecommerce company) • Founder and President, July 2010 – June 2025 • Sears Holdings Corporation (a retail company) • Vice President of the Customer Care Network, August 2000 – August 2006 • Ameritech Corporation (a telecommunications company) • Vice President, Planning and Administration, June 1999 – July 2000 • Vice President, Sales and Operations, July 1996 – June 1999 • AC Nielsen (a market research company) , September 1991 – June 1998 Other Professional Experience and Community Involvement: • Link Unlimited, Member Emeritus, Board of Directors, since August 1996 • College of Business and Public Administration, Advisory Council Member, Drake University, 2017 – 2020 • Brennan School of Business, Dominican University, Advisory Board Member, 2005 – 2018 • Oak Park River Forest Infant Welfare Society, since 2023 Key Experience and Qualifications: The Board has concluded that Mr. Price is qualified to serve as a director of the Company due to his extensive experience as an entrepreneur and significant executive leadership and e-commerce experience. Mr. Price is a strategic leader who has provided agile leadership to help drive business success. His experience is a great benefit to the Board and its committees. |
Director Nominee Biographies
| Joseph M. Tucci INDEPENDENT Lead Independent Director Director since 2000 Age: 78 Board Committees: • Compensation & Leadership • Executive • Nominating and Governance | Career Highlights: • Bridge Growth Partners, LLC (a private equity firm) • Co-founder and Chairman of the Board of Directors, since 2013. • EMC Corporation (“EMC”) (a provider of data-storage systems) • Chairman of the Board of Directors, January 2006 – September 2016 • Chief Executive Officer, January 2001 – September 2016 • VMWare, Inc. (a cloud infrastructure company) • Chairman of the Board of Directors, April 2007 – September 2016 Other Current Public Company Directorships: • Motorola Solutions, Inc. (a public safety and enterprise security company), since May 2017 Former Public Company Directorships: • GTY Technology Holdings, Inc. (a technology company), September 2016 – July 2022 Other Professional Experience and Community Involvement: • Syniti, (an enterprise data management solutions company), Board Member, August 2017 – November 2024 Key Experience and Qualifications: The Board has concluded that Mr. Tucci is qualified to serve as a director of the Company due to his extensive executive leadership experience as CEO of EMC. Mr. Tucci has spent over 40 years in the technology industry in senior roles at large, complex, and global technology companies. His experience leading EMC through a period of dramatic revitalization, growth and market share gains, and new product introductions enables him to share knowledge of the challenges a company faces due to rapid changes in the marketplace. |
Director Nominee Biographies
| Joseph M. Velli INDEPENDENT Director since 2007 Age: 67 Board Committees: • Compensation & Leadership • Corporate Development Advisory (Chair) • Executive • Investment (Chair) | Career Highlights: • ConvergEx Group, LLC (a provider of brokerage, software products, and technology services) • Chairman of the Board and Chief Executive Officer, October 2006 - December 2013 • Director, October 2006 - May 2014 • The Bank of New York (a financial institution) • Senior Executive Vice President and as a member of the Senior Policy Committee, February 1984 until October 2006 Other Current Public Company Directorships: • Cognizant Technology Solutions Corp. (a consulting and outsourcing company), since December 2017 • Computershare Ltd. (Australian Stock Exchange) (a financial services company), since October 2014 Former Public Company Directorships: • AssetMark Financial Holdings (a financial services company), May 2020 – September 2024 Other Professional Experience and Community Involvement: • William Paterson University, Board of Trustees, Member, since June 2017 • Lovell Minnick Partners (a venture capital and private equity firm), Advisory Council, Member, since October 2016 Key Experience and Qualifications: The Board has concluded that Mr. Velli is qualified to serve as a director of the Company due to his extensive experience with securities servicing, financial technology, capital markets, business to business, sales and marketing, and mergers and acquisitions matters, as well as his public board experience. He plays a key role in the Board’s discussions of the Company’s investments and liquidity. Mr. Velli has extensive experience with acquisitions and business services, providing valuable insights on potential growth opportunities for the Company. |
Director Nominee Biographies
| Kara Wilson INDEPENDENT Director since 2017 Age: 55 Board Committees: • Audit • Corporate Development Advisory | Career Highlights: • KKR & Co. Inc. (a global investment firm) • Senior Advisor, since October 2019 • Rubrik, Inc. (a cloud data management company) • Chief Marketing Officer, June 2017 – May 2019 • FireEye (a cyber security company) • Executive Vice President, October 2016 – June 2017 • Chief Marketing Officer, August 2013 – June 2017 Other Current Public Company Directorships: • OneStream. (a technology company), since July 2020 (initial public offering, July 2024) Former Public Company Directorships: • KnowBe4 (a technology services company), January 2020 – February 2023 Other Professional Experience and Community Involvement: • SkyHive Board Member, since February 2021 • ReliaQuest Board Member, since January 2021 • OutSystems Board Member, since April 2020 • Alludo Board Member, since January 2018 Key Experience and Qualifications: The Board has concluded that Ms. Wilson is qualified to serve as a director of the Company due to her extensive experience in driving go-to-market strategies for enterprise technology companies. The Board can benefit from Ms. Wilson’s marketing experience to help Paychex with the development and execution of go-to-market strategies to effectively differentiate the Company in a highly competitive and constantly evolving industry. Ms. Wilson has experience at global companies and can provide insight on any expansion of the Company’s global presence. |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION
FOR THE FISCAL YEAR ENDED MAY 31, 2025
| Name (a) | Fees Earned or Paid in Cash (b) | Stock Awards (c) | Stock Options (d) | Other Compensation (e) | Total | | Martin Mucci | $195,000 | $108,980 | $108,992 | $0 | $412,972 | | Thomas F. Bonadio | $136,250 | $92,560 | $92,488 | $0 | $321,298 | | Joseph G. Doody | $128,750 | $92,560 | $92,488 | $0 | $313,798 | | David Flaschen(1) | $85,625 | $0 | $0 | $14,999 | $100,624 | | B. Thomas Golisano(2) | $298,750 | $0 | $0 | $0 | $298,750 | | Pamela A. Joseph | $141,875 | $92,560 | $92,488 | $0 | $326,923 | | Theresa M. Payton | $107,500 | $92,560 | $92,488 | $0 | $292,548 | | Kevin A. Price | $117,500 | $92,560 | $92,488 | $0 | $302,548 | | Joseph M. Tucci | $183,750 | $92,560 | $92,488 | $0 | $368,798 | | Joseph M. Velli | $132,500 | $92,560 | $92,488 | $0 | $317,548 | | Kara Wilson | $115,000 | $92,560 | $92,488 | $0 | $300,048 |
Primary Responsibilities
| • | Design and administer the Company’s executive and director compensation programs to ensure furtherance of the Company’s overall compensation objectives; |
Primary Responsibilities
| • | Evaluate and determine compensation for the CEO and senior executive officers and recommend director compensation to the Board; |
How Pay is Tied to Company Performance
| • | In fiscal 2025, the C&L Committee enhanced the performance focus of our long-term incentive program by increasing the portion of performance-based equity awarded to certain executive officers, including our CEO and CFO, from 50% to 60% of the total equity award at target. The C&L Committee also extended the performance period from two to three years and adopted a relative total shareholder return modifier to further align payouts with shareholder outcomes. |
How Pay is Tied to Company Performance
| • | Target compensation for the annual incentive program and annual grants of performance-based stock awards is generally established at the beginning of the performance period by the C&L Committee. NEOs have an opportunity to earn actual compensation that varies from target based on achievement against pre-established performance metrics; |
How Pay is Tied to Company Performance
| • | Fiscal 2025 performance metrics consisted of new business revenue and service revenue (our measures of business growth) and operating income, net of certain items(1) (our measure of profitability) for our annual incentive program and service revenue, operating income, net of certain items(1), and total shareholder return (“TSR”) for our fiscal 2025 performance-based equity awards; and |
How Pay is Tied to Company Performance
| • | The financial measures used as performance targets are linked directly to our annual and long-term strategic business plans that are reviewed and approved by the Board. |
Summary of Fiscal 2025 Elements of Compensation
| Compensation Elements | Salary | Annual Incentive Program | Stock Options | Time-Based RSU Awards | Performance-Based RSU Awards | | | Fixed | Variable, At-Risk | | | | | Recipients | All NEOs | | | | | | When Granted | Reviewed annually | Annually | | | | | Form of Delivery | Cash | | Equity | | | | Type of Performance | Short-Term | | Long-Term | | | | Performance Period | Ongoing | 1-year | Vest ratably over 3 years | | 3-year performance period | | How Payout is Determined | C&L Committee Judgment | Quantitative based on achievement against targets; small portion qualitative | Based on stock price on exercise/vest date | | Quantitative based on achievement against targets; and a 25% rTSR modifier(1) | | Performance Metrics | N/A | Service revenue; operating income, net of certain items; and annualized new business revenue | N/A | N/A | Service revenue; operating income, net of certain items, and rTSR |
Summary of Fiscal 2025 Elements of Compensation
| (1) Performance-based RSU awards are subject to a relative TSR metric, which modifies the final payout downward or upward by up to 25% based on the Company’s three-year TSR performance versus the S&P 500’s three-year TSR performance. |
Highlights of Executive Compensation Practices
Compensation amounts realized in fiscal 2025 related to performance-based compensation programs for fiscal 2025 included payouts under the annual incentive program and were earned at 70.9% of target for our CEO, Mr. Gibson, and 63.0% of target on average for our other NEOs (excluding Mr. Ante, who joined the Company in April 2025). For NEOs other than Mr. Ante, achievement was measured against financial targets established at the beginning of fiscal 2025. Refer to the section entitled “Elements of Compensation” and the subsections of “Annual Incentive Program” and “Equity-Based Compensation” within this CD&A for a more detailed discussion of variable compensation, performance targets established, and actual results against those targets.
SVP of Paycor
| • | A one-time special incentive equity grant of performance-based RSUs with a total grant-date fair value of approximately $3.2 million at target that are eligible to vest based upon achievement of average annual synergy attainment targets over a three-year performance period (and subject to continued employment), in connection with the acquisition of Paycor. |
Annual Incentive Program
Annual Incentive Program The annual incentive program was established to motivate NEOs to meet the financial goals set by the Company as presented to its stockholders, while maintaining alignment with stockholders’ interests. Upon achievement of the minimum eligible performance, payouts under our annual incentive program are determined based upon the satisfaction of certain quantitative and qualitative components. Predetermined performance targets are established at the beginning of each fiscal year (by the C&L Committee with consultation of management) and are typically based on the Board-approved fiscal year financial plan. The performance targets are intended to provide a balance between growing revenue and managing expenses. For extraordinary circumstances, the C&L Committee reserves the right to apply discretion and make adjustments (no such adjustments outside of the pre-approved terms of the plan were made for fiscal 2025). The qualitative component consists of individual-specific goals established at the beginning of the fiscal year based on functions and responsibilities unique to the individual. The CEO can potentially receive up to 20% of base salary and all other NEOs can potentially receive up to 10% of base salary, in each case for achieving their personal goals. The assessment of qualitative goals is subjective, based on the discretion of the C&L Committee. For fiscal 2025, the C&L Committee evaluated each NEO and determined the specific percentage of the qualitative portion to award each NEO as presented on the following page. Each NEO has an opportunity to earn a percentage of their annualized base salary based on achievement of goals at threshold, target, and maximum. The various percentages of base salary that each NEO is eligible to earn for achievement of the performance measures in the aggregate are as follows:
Annual Incentive Program
| | Quantitative Component (% of base salary) | | | Qualitative Component (maximum % of base salary) | | Position | Threshold | Target | Maximum | | | CEO (Mr. Gibson) | 55.0% | 130.0% | 205.0% | 20.0% | | SVP-Sales (Mr. Bottini) | 47.5% | 105.0% | 157.5% | 10.0% | | SVP-Other (Messrs. Schrader and Gioja) | 40.0% | 90.0% | 140.0% | 10.0% |
Annual Incentive Program
Thresholds are set as the floor with any achievement below threshold resulting in no payout for the respective performance metric. Maximums are set as a ceiling on the amount of payout a NEO can receive for each performance metric. The performance metrics for the fiscal 2025 annual incentive program for the NEOs (excluding Mr. Ante, who joined the Company in April 2025) were established as follows:
Annual Incentive Program
| | Fiscal 2025 Year-over-Year Growth Rates | | | % of Plan Dollars | | | Achievement as a % of Target | | | Bonus Objectives(1) | Threshold | Target | Maximum | Threshold | Target | Maximum | | | | Service revenue | 1.2% | 5.5% | 7.6% | 96.0% | 100.0% | 102.0% | 100.0 | | | Operating income, net of certain items(2) | 2.4% | 6.6% | 8.8% | 96.0% | 100.0% | 102.0% | 99.3 | | | Annualized new business revenue(3) | 2.0% | 4.0% | 7.2% | 98.1% | 100.0% | 103.1% | 0.0 | %(4) |
Annual Incentive Program
| (1) The annual incentive program allows for certain adjustments to metrics as reported in our consolidated financial statements. The acquisition component of service revenue is included up to a maximum of 2% of service revenue at target. |
Annual Incentive Program
| (2) Operating income, net of certain items, is a non-GAAP measure. Refer to “Paychex, Inc. Non-GAAP Financial Measures” in Appendix A for a discussion of this non-GAAP measure and a reconciliation to the most comparable GAAP measure of operating income. |
Annual Incentive Program
| (3) Annualized new business revenue is the approximate amount of revenue to be earned over the first 12-month period, from the sale in the current fiscal year, of certain management solutions; and professional employer organization and insurance solutions to new clients and new product sales to existing clients. This measure is not directly calculated from our audited financial statements, as reported service revenue also includes recurring revenue from pre-existing clients. This metric is set to provide incentive for executives to strive to exceed the target, given the relationship to recurring revenue. |
Annual Incentive Program
| (4) Achievement for annualized new business revenue was below threshold attainment for fiscal 2025. Therefore, there was no payout related to this metric under the annual incentive program. |
Annual Incentive Program
Each metric is assigned a different weighting on an individual basis, depending on the position and role of the particular NEO. Each performance objective, along with the target percentage of base salary that can be earned for that metric, and the actual payout percentage is set forth below for our NEOs (excluding Mr. Ante, who joined the Company in April 2025), in accordance with calculations per the program:
Annual Incentive Program
| | Mr. Gibson | | Mr. Bottini | | Messrs. Schrader and Gioja | | | Bonus Objectives | % of Base Salary at Target | % of Base Salary Achieved(1) | % of Base Salary at Target | % of Base Salary Achieved(1) | % of Base Salary at Target | % of Base Salary Achieved(1) | | Service revenue | 37.5% | 37.5% | 25.0% | 25.0% | 30.0% | 30.0% | | Operating income, net of certain items(2) | 55.0% | 48.9% | 25.0% | 22.6% | 35.0% | 31.5% | | Annualized new business revenue(3) | 37.5% | —% | 55.0% | —% | 25.0% | —% | | Total quantitative annual incentive | 130.0% | 86.4% | 105.0% | 47.6% | 90.0% | 61.5% | | Qualitative(4) | 20.0% | 20.0% | 10.0% | 8.0% | 10.0% | 10.0% | | Total | 150.0% | 106.4% | 115.0% | 55.6% | 100.0% | 71.5% |
Annual Incentive Program
| (1) If the actual achievement under a given performance metric is between two thresholds (e.g., between threshold and target or between target and maximum), then the percentage of base salary achieved would be calculated based on a straight-line interpolation of the achievement level above threshold or target, as appropriate, for such performance metric. |
Annual Incentive Program
| (2) Operating income, net of certain items, is a non-GAAP measure. Refer to “Paychex, Inc. Non-GAAP Financial Measures” in Appendix A of this proxy statement for a discussion of this non-GAAP measure and a reconciliation to the most comparable GAAP measure of operating income. |
Annual Incentive Program
| (3) Annualized new business revenue is the approximate amount of revenue to be earned over the first 12-month period, from the sale in the current fiscal year, of certain management solutions; and professional employer organization and insurance solutions to new clients and new product sales to existing clients. This measure is not directly calculated from our audited financial statements, as reported service revenue also includes recurring revenue from pre-existing clients. This metric is set to provide incentive for executives to strive to exceed the target, given the relationship to recurring revenue. |
Annual Incentive Program
| (4) The NEOs have an opportunity to earn a percentage of base salary based on individual-specific qualitative goals related to the functions and responsibilities unique to the individual. The C&L Committee may determine, at its sole discretion, whether satisfactory achievement has occurred, regardless of achievement against the pre-established individual goals. |
Annual Incentive Program
The actual achievement translated to the incentive payments for our NEOs (excluding Mr. Ante, who joined the Company in April 2025) is as follows:
Annual Incentive Program
| | Annualized Base Salary(1) | Minimum Potential Payout(2) | Target Potential Payout(2) | Maximum Potential Payout(2) | % of Base Salary Achieved | Actual Incentive Compensation Earned(3) | | John B. Gibson | $900,000 | — | $1,350,000 | $2,025,000 | 106.4% | $957,375 | | Robert L. Schrader | $500,000 | — | $500,000 | $750,000 | 71.5% | $357,500 | | Mark A. Bottini | $530,000 | — | $609,500 | $887,750 | 55.6% | $294,647 | | Michael E. Gioja | $550,000 | — | $550,000 | $825,000 | 71.5% | $393,250 |
Annual Incentive Program
| (1) This represents the NEO’s annualized base salary as of May 31, 2025. It may differ from base salary paid for fiscal 2025 reflected in the Fiscal 2025 Summary Compensation Table of this proxy statement, due to timing of salary increases, start dates, etc. |
Annual Incentive Program
| (2) These columns represent the range of payout that each NEO has the opportunity to earn. The minimum potential payout indicates that no payout is earned if achievement is below threshold. The maximum potential payout is based on the percentage of base salary that each NEO can earn for maximum achievement. |
Annual Incentive Program
| (3) Actual incentive compensation earned is calculated as annualized base salary multiplied by the percentage of base salary achieved and is provided in the Fiscal 2025 Summary Compensation Table of this proxy statement. |
Equity-Based Compensation
Equity-Based Compensation To align our NEOs’ interests with the long-term interests of our stockholders, we grant equity awards under the 2002 Plan. Annually, the C&L Committee reviews the NEO compensation of our Peer Group to determine the desired pay range for our officers. See the “Compensation Decision Process” section later in this CD&A for further information on the Committee’s process for determining total compensation, including equity awards. This review, along with each officer’s individual performance and potential, determine the total compensation. The quantity of equity awards is based on an estimated total value as determined by the C&L Committee in conjunction with its total compensation review and evaluation. In July 2024, the C&L Committee made an annual equity grant to our NEOs (excluding Mr. Ante who joined the Company in April 2025) that was a blend of stock options, time-based RSUs and performance-based RSUs. The award value was split as follows:
Annual Equity Award Value Allocations
Annual Equity Award Value Allocations
Annual Equity Award Value Allocations
| Messrs. Gibson and Schrader: | Messrs. Bottini and Gioja: | | | |
Annual Equity Award Value Allocations
This annual distribution provides for a significant portion of the total equity-based compensation value to be performance-based (60% for Messrs. Gibson and Schrader and 50% for Messrs. Bottini and Gioja), consistent with the C&L Committee’s total compensation determination. For our July 2024 annual grants, the C&L Committee determined the estimated total target value to be approximately: $7,000,000 for Mr. Gibson; $2,000,000 for Mr. Schrader; $1,800,000 for Mr. Bottini; and $1,900,000 for Mr. Gioja. The estimated total target value of Messrs. Gibson’s and Schrader’s equity-based compensation was increased in fiscal 2025 to adjust the compensation closer to market based on an analysis against our Peer Group. See further discussion under the “Peer Group” section within this CD&A. The following equity-based compensation was granted in July 2024 for our NEOs (excluding Mr. Ante, who joined the Company in April 2025):
Annual Equity Award Value Allocations
| NEO | Performance-Based RSU Awards (at Target)(1) | Stock Option Awards(2) | Time-Based RSU Awards(3) | | John B. Gibson | 34,531 | 64,126 | 8,633 | | Robert L. Schrader | 9,866 | 18,322 | 2,466 | | Mark A. Bottini | 7,399 | 19,787 | 2,960 | | Michael E. Gioja | 7,811 | 20,887 | 3,124 |
Annual Equity Award Value Allocations
| (1) Performance-based RSU awards are subject to a three-year performance period. |
Annual Equity Award Value Allocations
| (2) Stock option awards vest one-third per year over three years and have a term of 10 years. |
Annual Equity Award Value Allocations
| (3) Time-based RSU awards vest one-third per year over three years. |
Mr. Ante’s PSUs
Mr. Ante’s PSUs In May 2025, the C&L Committee approved a performance-based RSU award to Mr. Ante (who joined the Company in April 2025), with a grant-date fair value of approximately $3,200,000. This grant consisted of 23,024 performance-based RSUs (at target), which may be earned based on the Company’s average annual synergy attainment over a three-year performance period, in connection with the acquisition of Paycor. Annual synergy targets for each year were established at the start of the performance period as part of the Company’s strategic planning process. At the end of the performance period, the average synergy attainment is measured against pre-established threshold, target, and maximum performance levels set by the C&L Committee. Payout may range from 0% to 150% of the target.
2024-2027 Performance Stock Awards
2024-2027 Performance Stock Awards Our performance stock awards are designed to provide variable compensation that is focused on longer-term results. The performance-based RSUs granted in fiscal 2025 (other than those granted to Mr. Ante, who joined the Company in April 2025) have a three-year performance period (which we extended to be longer than the two-year performance period used in previous years), and may be earned based on the sustained year-over-year growth in service revenue and operating income (equally weighted), net of certain items compared to performance targets, subject to a downward or upward adjustment of 25% based on relative TSR. Payout may range from 0% to 200% of target. The C&L Committee establishes performance targets intended to be appropriately challenging at all levels, including the threshold level, but attainable with increasing difficulty for each level beyond threshold. The threshold level was expected to be appropriately challenging but achievable under normal circumstances. The target level would be achieved if the Company performed as expected under our strategic plan for the three-year period. The maximum level would be achievable only with exceptional performance. Operating income, net of certain items, is a non-GAAP measure. Refer to “Paychex, Inc. Non-GAAP Financial Measures” in Appendix A of this proxy statement for a discussion of this non-GAAP measure and a reconciliation to the most comparable GAAP measure of operating income. The goals are set by the C&L Committee upfront for the entire performance period. The threshold, target, and maximum growth rates for service revenue and operating income, net of certain items for each of the three years in the performance period are determined as percentage increases over the actual results from the prior year. As a result, payouts for the second and third year of the performance period require sustained growth over the three-year period. Because growth rates are calculated separately for each year in the performance period and are not aggregated over the three-year performance period, the plan allows for a long-term growth goal while recalibrating to actual performance on an annual basis. The relative TSR metric modifies the final payout downward or upward by up to 25% based on the Company’s three-year TSR performance versus the S&P 500. The S&P 500 consists of a broad group of companies that represents investors’ alternative capital investment opportunities, thereby aligning the performance-based RSU payout opportunity to the long-term investment experience of our stockholders. If relative TSR performance is at or below the 25th percentile, the final payout is reduced by 25%. If the relative TSR performance is at or above the 75th percentile, the payout is increased by 25%. Payouts are linearly interpolated for relative TSR performance between the 25th and 75th percentiles, with no adjustment applied at the 50th percentile. The relative TSR modifier may not result in a payout in excess of 200% of the target shares.
2023-2025 Performance Stock Awards
2023-2025 Performance Stock Awards The two-year performance period for performance-based stock awards granted in July 2023 and October 2023 ended on May 31, 2025. For these awards, full vesting is generally provided after an additional one-year service period (i.e., total of three years). The shares earned were based on achievement against pre-established targets for the performance period as follows:
2023-2025 Performance Stock Awards
| Performance Goal ($ In Millions) | Two-Year Performance Targets Established | | | Actual Achievement | | | | Threshold | Target | Maximum | ($) | % of Target | | Service revenue(1) | $10,210 | $10,747 | $11,070 | $10,542 | 98% | | Operating income, net of certain items(2) | $4,102 | $4,318 | $4,447 | $4,228 | 98% | | Percent of plan | 95% | 100% | 103% | | | | Payout as a percent of target | 60% | 100% | 150% | | 84% |
2023-2025 Performance Stock Awards
| (1) Service revenue as calculated under the performance share agreement allows for 2% of total service revenue to be delivered from acquisitions during the performance period. Refer to Appendix B for a description of this non-GAAP measure and a reconciliation of service revenue as calculated for the performance period to service revenue reported in our consolidated financial statements. |
2023-2025 Performance Stock Awards
| (2) Operating income, net of certain items, is a non-GAAP measure. Refer to “Paychex, Inc. Non-GAAP Financial Measures” in Appendix A of this proxy statement for a discussion of this non-GAAP measure and a reconciliation to the most comparable GAAP measure of operating income. In addition, this measure as calculated under the performance share agreement excludes the impact of business acquisitions and other unusual items during the performance period. Refer to Appendix B for a description of this non-GAAP measure and a reconciliation of the amount for the performance period to the most comparable GAAP measure of operating income. |
Policies and Practices Related to the Grant of Certain Equity Awards
Policies and Practices Related to the Grant of Certain Equity Awards Our equity awards, including stock options, are granted in accordance with a predetermined schedule, which coincides with regularly scheduled C&L Committee meetings that are scheduled more than one year in advance. Annual grants of equity awards, including stock options, to our NEOs and members of the Board are approved during the regularly scheduled meeting of the C&L Committee in July after the release of our fiscal year-end earnings and upcoming fiscal year financial guidance. Our trading black-out period normally lifts on the second business day following such release of information. The C&L Committee may also grant equity awards to individuals upon hire or promotion to executive officer positions or appointment to the Board. These equity awards are not granted during any trading black-out periods. Recipients are notified shortly after C&L Committee approval of their grant, noting the number of stock options, shares of time-based stock, target performance-based stock awards and goals, the vesting schedule, and exercise price. Any sales restrictions or other terms of the award are also communicated at that time. The C&L Committee does not grant equity awards in anticipation of the release of material nonpublic information. Similarly, we do not time the release of material nonpublic information based on equity award grant dates.
and Other Forfeiture Provisions
Should any of these activities occur, we may cancel all or any outstanding portion of the equity awards subject to this provision and recover the gross value of any vested time-based stock awards and vested performance-based stock awards, including all dividends and dividend equivalents. In the case of stock options, we may suspend the NEO’s right to exercise the option and/or may declare the option forfeited. In addition, we may seek to recover all profits from certain prior exercises as liquidated damages and pursue other available legal remedies.
Change in Control Plan
Change in Control Plan Executives of the Company are covered by a Change in Control Plan. Upon involuntary termination by the Company without cause or a voluntary termination by the participant for good reason, within 12-months following a change in control, the executive becomes entitled to certain severance benefits. Such severance benefits are conditioned upon the execution of a general release in favor of the Company. We do not provide any “single trigger” payments or benefits, nor do we provide any 280G excise tax gross-up payments. Refer to the “Potential Payments upon Termination or Change in Control” discussion within the Named Executive Officer Compensation section of this proxy statement for further information.
Role of the Compensation Consultant
Role of the Compensation Consultant As outlined in its charter, the C&L Committee has the authority to retain consultants and advisers, at the Company’s expense, to assist in the discharge of the committee’s duties. The C&L Committee can retain and dismiss such consultants and advisers at any time. The consultants report directly to the committee and have direct access to the committee through the C&L Committee’s Chair. The C&L Committee requires that any consultant it retains cannot be utilized by management for other purposes. Although management, particularly the VP, Chief Human Resources Officer (“CHRO”), may work closely with the consultant, the consultant is ultimately accountable to the C&L Committee on matters related to executive compensation. The C&L Committee retains the services of Frederic W. Cook & Co., Inc. (“FW Cook”) as its independent compensation consultant. FW Cook has not provided any other services to the Company prior to or subsequent to being retained as the compensation consultant to the C&L Committee. The C&L Committee was solely responsible for the decision to retain FW Cook as its consultant. FW Cook advises the C&L Committee on matters of NEO compensation, assists with analysis and research, and provides updates on evolving best practices in compensation. While FW Cook may express an opinion on compensation matters, the C&L Committee is solely responsible for setting the type and amount of compensation for NEOs. The C&L Committee recognizes that it is essential to receive objective advice from its compensation consultant. The C&L Committee closely examines the procedures and safeguards that FW Cook takes to ensure that the compensation consulting services are objective. The C&L Committee has assessed the independence of FW Cook pursuant to SEC rules and concluded that FW Cook’s work for the C&L Committee does not raise any conflict of interest.
Role of Compensation & Leadership Committee and Management
| • | reviews the companies in our Peer Group for any changes; |
Role of Compensation & Leadership Committee and Management
| • | establishes and approves the performance targets and payouts under incentive-based programs and awards; and |
Role of Compensation & Leadership Committee and Management
| • | grants equity awards under our 2002 Plan. |
Role of Compensation & Leadership Committee and Management
| • | compensation consultant reports and analyses; |
Role of Compensation & Leadership Committee and Management
| • | comparative market data as it pertains to executive officers at Peer Group companies for all relevant compensation elements; and |
Role of Compensation & Leadership Committee and Management
The C&L Committee strives for our NEOs’ compensation to be in line with our Peer Group. The information provided by the compensation consultant indicates whether our compensation package, if target performance is achieved, is comparable to the median compensation of our Peer Group, given current competitive practices, overall best practices, and other compensation and benefit trends. Management reports are used to evaluate compensation recommendations and the impact to total compensation for each individual. They are also used to view a complete picture of the trend of compensation to executive officers, both as a team and as individuals. This facilitates discussion that more accurately details individual officer compensation, noting differences that reflect officer tenure, performance, and position in the management structure. The C&L Committee uses these management updates along with peer information, where available, as tools to evaluate executive compensation. This information is reviewed in a subjective manner. There is no implied direct or formulaic linkage between peer information and the C&L Committee’s compensation decisions. Our CEO and our CHRO provide recommendations to the C&L Committee on design elements for compensation. These individuals, and from time-to-time invited guests including other officers, will attend the meetings of the C&L Committee to present and respond to questions on current or proposed plan design. Annually, our CEO reviews achievement of the recently completed fiscal year’s plan and presents recommendations regarding salary for each of the NEOs (other than himself), the upcoming fiscal year’s annual incentive program structure, and equity awards. Management is excluded from executive sessions of the C&L Committee where final decisions on compensation are made, particularly those on our CEO’s performance and compensation. Executive sessions occur at each meeting of the C&L Committee.
Peer Group
Peer Group In addition to many other factors that affect compensation decisions, the C&L Committee takes into account the compensation practices of our Peer Group, where available, in formulating our compensation program. Peer Group review is not the sole determining factor in the C&L Committee’s decisions on compensation, and the C&L Committee reserves the discretion to adjust compensation based on other factors as previously discussed. The Peer Group companies were selected based upon the following criteria: comparable business model, company size including revenues, earnings, and market capitalization, executive talent sources, competition for investor capital, companies considered by our investors to be our peers, and overall reasonableness. The Peer Group is comprised of the following industries or segments: a direct competitor in the HCM industry, financial transaction management companies, and business services and outsourcing companies. Our Peer Group used for evaluating executive compensation for fiscal 2025 consisted of the following companies:
Peer Group
| Peer Group | | | Automatic Data Processing, Inc. | Global Payments, Inc. | | Broadridge Financial Solutions, Inc. | Intuit, Inc. | | Corpay, Inc. | Jack Henry & Associates, Inc. | | Equifax, Inc. | Moody’s Corporation | | Euronet Worldwide, Inc. | SS&C Technologies Holdings, Inc. | | Fair Isaac Corporation | TransUnion | | Fiserv, Inc. | Verisk Analytics, Inc. | | Gartner, Inc. | WEX, Inc. |
Paychex, Inc. vs. Peer Group
Paychex, Inc. vs. Peer Group
Paychex, Inc. vs. Peer Group
| (1) Based on the completed fiscal year 2024 results of Paychex and each Peer-Group company. |
Paychex, Inc. vs. Peer Group
The C&L Committee annually reviews and approves the selection of Peer Group companies, adjusting the group from year to year based upon our business and changes in the Peer Group companies’ business or the comparability of their metrics. The Peer Group may also be adjusted in the event of mergers, acquisitions, or other significant economic changes. The Peer Group used to determine fiscal 2025 compensation was not adjusted from the prior year.
Fiscal 2025 Summary Compensation Table
Fiscal 2025 Summary Compensation Table The table below presents the total compensation for each of the NEOs.
Fiscal 2025 Summary Compensation Table
| Name and Principal Position (a) | Fiscal Year (b) | Salary (c) | Stock Awards (d) | Option Awards (e) | Non-Equity Incentive Plan Compensation (f) | All Other Compensation (g) | Total (h) | | John B. Gibson President and CEO | 2025 | $900,000 | $5,183,393 | $1,749,999 | $957,375 | $16,644 | $8,807,411 | | | 2024 | $922,211 | $4,024,955 | $1,725,007 | $844,875 | $17,807 | $7,534,855 | | | 2023 | $730,673 | $3,299,902 | $1,200,009 | $1,429,782 | $19,814 | $6,680,180 | | Robert L. Schrader SVP and CFO | 2025 | $493,654 | $1,480,900 | $500,007 | $357,500 | $14,646 | $2,846,707 | | | 2024 | $414,904 | $839,933 | $359,984 | $250,289 | $15,123 | $1,880,233 | | Adam Ante SVP of Paycor | 2025 | $56,827 | $3,196,882 | $— | $— | $— | $3,253,709 | | Mark A. Bottini SVP of Sales | 2025 | $530,000 | $1,245,685 | $539,987 | $294,647 | $16,560 | $2,626,879 | | | 2024 | $550,385 | $1,260,011 | $539,996 | $256,553 | $15,960 | $2,622,905 | | | 2023 | $526,692 | $1,120,057 | $479,997 | $836,424 | $15,038 | $2,978,208 | | Michael E. Gioja SVP of IT & PD | 2025 | $550,000 | $1,314,949 | $570,006 | $393,250 | $18,106 | $2,846,311 | | | 2024 | $571,154 | $1,330,021 | $570,001 | $353,375 | $11,500 | $2,836,051 | | | 2023 | $546,692 | $1,190,034 | $510,005 | $722,284 | $17,363 | $2,986,378 |
Grants of Plan-Based Awards for Fiscal 2025
Grants of Plan-Based Awards for Fiscal 2025 The table below presents estimated possible payouts under the Company’s annual incentive program for fiscal 2025 based on achievement of performance objectives at various levels for the Company and individual NEOs. It also summarizes equity awards granted during fiscal 2025 to each of the NEOs. This information does not set forth the actual payout awarded to the NEOs for fiscal 2025.
Grants of Plan-Based Awards for Fiscal 2025
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) (i) | All Other Option Awards: Number of Securities Underlying Options (#) (j) | Exercise or Base Price of Option Awards ($/Sh) (k) | Grant- Date Fair Value of Stock and Option Awards ($) (l) | | Name and Grant Type (a) | Grant Date (b) | Threshold ($) (c) | Target ($) (d) | Maximum ($) (e) | Threshold (#) (f) | Target (#) (g) | Maximum (#) (h) | | | | | | John B. Gibson | | | | | | | | | | | | | Annual Incentive Program | 7/15/2024 | $675,000 | $1,350,000 | $2,025,000 | | | | | | | | | Time-Based RSUs | 7/15/2024 | | | | | | | 8,633 | | | $1,050,032 | | Performance-Based RSUs | 7/15/2024 | | | | 17,266 | 34,531 | 69,062 | | | | $4,133,361 | | Stock Options | 7/15/2024 | | | | | | | | 64,126 | $121.63 | $1,749,999 | | Robert L. Schrader | | | | | | | | | | | | | Annual Incentive Program | 7/15/2024 | $250,000 | $500,000 | $750,000 | | | | | | | | | Time-Based RSUs | 7/15/2024 | | | | | | | 2,466 | | | $299,940 | | Performance-Based RSUs | 7/15/2024 | | | | 4,933 | 9,866 | 19,732 | | | | $1,180,960 | | Stock Options | 7/15/2024 | | | | | | | | 18,322 | $121.63 | $500,007 | | Adam Ante | | | | | | | | | | | | | Performance-Based RSUs | 5/14/2025 | | | | 11,512 | 23,024 | 34,536 | | | | $3,196,882 | | Mark A. Bottini | | | | | | | | | | | | | Annual Incentive Program | 7/15/2024 | $304,750 | $609,500 | $887,750 | | | | | | | | | Time-Based RSUs | 7/15/2024 | | | | | | | 2,960 | | | $360,025 | | Performance-Based RSUs | 7/15/2024 | | | | 3,700 | 7,399 | 14,798 | | | | $885,660 | | Stock Options | 7/15/2024 | | | | | | | | 19,787 | $121.63 | $539,987 | | Michael E. Gioja | | | | | | | | | | | | | Annual Incentive Program | 7/15/2024 | $275,000 | $550,000 | $825,000 | | | | | | | | | Time-Based RSUs | 7/15/2024 | | | | | | | 3,124 | | | $379,972 | | Performance-Based RSUs | 7/15/2024 | | | | 3,906 | 7,811 | 15,622 | | | | $934,977 | | Stock Options | 7/15/2024 | | | | | | | | 20,887 | $121.63 | $570,006 |
Option Exercises and Stock Vested in Fiscal 2025
Option Exercises and Stock Vested in Fiscal 2025 The following table provides information about the value realized by the NEOs upon the exercise of stock options and the lapsing of the restrictions on stock awards during fiscal 2025. Certain columns in this table and the presentation of information on an award-by-award basis are not required by the rules relating to executive compensation disclosures and are not a substitute for the information required by Item 402 of SEC Regulation S-K, but rather are intended to provide additional information that stockholders may find useful.
Option Exercises and Stock Vested in Fiscal 2025
| | Option Awards | | | Stock Awards | | | | Name (a) | Date of Grant (b) | Number of Shares Acquired on Exercise (#) (c) | Value Realized on Exercise ($) (d) | Date of Grant | Number of Shares Acquired on Vesting (#) (f) | Value Realized on Vesting ($) (g) | | John B. Gibson | — | — | — | 7/15/2021 | 12,273 | $1,492,765 | | | | | | 1/15/2022 | 467 | $67,374 | | | | | | 7/15/2022 | 1,159 | $140,969 | | | | | | 10/15/2022 | 1,221 | $173,748 | | | | | | 7/15/2023 | 3,171 | $385,689 | | Robert L. Schrader | 7/10/2019 | 13,015 | $740,449 | 7/15/2021 | 4,208 | $511,819 | | | | | | 7/15/2022 | 406 | $49,382 | | | | | | 7/15/2023 | 441 | $53,639 | | | | | | 10/15/2023 | 226 | $32,160 | | Adam Ante | — | — | — | — | — | — | | Mark A. Bottini | 7/8/2015 | 46,875 | $4,431,872 | 7/15/2021 | 10,099 | $1,228,341 | | | | | | 7/15/2022 | 1,198 | $152,073 | | | | | | 7/15/2023 | 1,071 | $131,876 | | Michael E. Gioja | 7/12/2017 | 41,159 | $3,368,711 | 7/15/2021 | 10,706 | $1,302,171 | | | 7/11/2018 | 31,653 | $2,692,034 | 7/15/2022 | 1,323 | $168,825 | | | | | | 7/15/2023 | 1,145 | $141,269 |
Outstanding Equity Awards as of May 31, 2025
Outstanding Equity Awards as of May 31, 2025 The following table presents the equity awards made to NEOs which were outstanding as of May 31, 2025.
Outstanding Equity Awards as of May 31, 2025
| | Option Awards | | | | | | Stock Awards | | | | | Name (a) | Option Grant Date (b) | Number of Securities Underlying Unexercised Options (Exercisable) (#) (c) | Number of Securities Underlying Unexercised Options (Unexercisable) (#) (d) | Option Exercise Price ($) (e) | Option Expiration Date (f) | Total Potential Current Value of Outstanding Options ($) (g) | Number of Shares or Units of Stock That Have Not Vested (#) (h) | Market Value of Shares or Units of Stock That Have Not Vested ($) (i) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (k) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (l) | | John B. Gibson | 7/15/2024 | — | 64,126 | $121.63 | 7/14/2034 | | | | | | | | 7/15/2023 | 21,194 | 42,389 | $120.86 | 7/14/2033 | | | | | | | | 10/15/2022 | 13,656 | 6,829 | $109.19 | 10/14/2032 | | | | | | | | 7/15/2022 | 14,636 | 7,318 | $115.00 | 7/14/2032 | | | | | | | | 1/15/2022 | 2,972 | — | $125.00 | 1/15/2032 | | | | | | | | 7/15/2021 | 26,547 | — | $112.67 | 7/14/2031 | | | | | | | | 7/15/2020 | 39,823 | — | $73.53 | 7/15/2030 | | | | | | | | 7/10/2019 | 34,165 | — | $85.46 | 7/10/2029 | | | | | | | | 7/11/2018 | 31,653 | — | $69.54 | 7/10/2028 | $16,553,806 | | | | | | | | | | | | | 63,806 | $10,075,605 | 34,531 | $5,452,790 | | Robert L. Schrader | 7/15/2024 | — | 18,322 | $121.63 | 7/14/2034 | | | | | | | | 10/15/2023 | 1,412 | 2,825 | $117.98 | 10/14/2033 | | | | | | | | 7/15/2023 | 2,948 | 5,898 | $120.86 | 7/14/2033 | | | | | | | | 7/15/2022 | 5,122 | 2,562 | $115.00 | 7/14/2032 | | | | | | | | 7/15/2021 | 9,102 | — | $112.67 | 7/14/2031 | | | | | | | | 7/15/2020 | 16,519 | — | $73.53 | 7/15/2030 | $3,297,018 | | | | | | | | | | | | | 12,091 | $1,909,290 | 9,866 | $1,557,940 | | Adam Ante | | | | | | | 67,254 | $10,620,079 | 23,024 | $3,635,720 | | Mark A. Bottini | 7/15/2024 | — | 19,787 | $121.63 | 7/14/2034 | | | | | | | | 7/15/2023 | 6,634 | 13,270 | $120.86 | 7/14/2033 | | | | | | | | 7/15/2022 | 11,708 | 5,855 | $115.00 | 7/14/2032 | | | | | | | | 7/15/2021 | 22,755 | — | $112.67 | 7/14/2031 | | | | | | | | 7/15/2020 | 39,823 | — | $73.53 | 7/14/2030 | | | | | | | | 7/10/2019 | 34,165 | — | $85.46 | 7/10/2029 | | | | | | | | 7/11/2018 | 31,653 | — | $69.54 | 7/10/2028 | | | | | | | | 7/12/2017 | 41,159 | — | $57.24 | 7/11/2027 | | | | | | | | 7/6/2016 | 43,760 | — | $60.84 | 7/5/2026 | | | | | | | | 7/6/2016 | 113,318 | — | $60.84 | 7/5/2026 | $31,262,113 | | | | | | | | | | | | | 19,942 | $3,149,041 | 7,399 | $1,168,376 | | Michael E. Gioja | 7/15/2024 | — | 20,887 | $121.63 | 7/14/2034 | | | | | | | | 7/15/2023 | 7,003 | 14,007 | $120.86 | 7/14/2033 | | | | | | | | 7/15/2022 | 6,220 | 6,221 | $115.00 | 7/14/2032 | | | | | | | | 7/15/2021 | 8,091 | — | $112.67 | 7/14/2031 | | | | | | | | 7/15/2020 | 39,823 | — | $73.53 | 7/14/2030 | | | | | | | | 7/10/2019 | 34,165 | — | $85.46 | 7/10/2029 | $8,271,600 | | | | | | | | | | | | | 21,032 | $3,321,163 | 7,811 | $1,233,435 |
Potential Payments Upon Termination or Change in Control Fiscal 2025
Potential Payments Upon Termination or Change in Control Fiscal 2025
Potential Benefits Upon Separation from Company
| | | Potential Payments Upon Separation | | | | | | Annual Compensation per the Summary Compensation Table(1) | Voluntary Resignation/ Termination | Death or Disability | Retirement | Termination Other Than For Cause/ Resignation For Good Reason within One Year of Change of Control | | John B. Gibson | | | | | | | Base Salary(2) | | $— | $— | $— | $1,800,000 | | Annual Incentive(3) | | — | 957,375 | 957,375 | 2,700,000 | | Stock Options(4) | | — | 4,543,728 | — | 4,543,728 | | Time-Based Stock Awards(5) | | — | 10,075,605 | — | 10,075,605 | | Performance-Based Stock Awards(6) | | — | 5,452,790 | — | 5,452,790 | | Benefits(7) | | — | — | — | 67,538 | | Total | $8,807,411 | $— | $21,029,498 | $957,375 | $24,639,661 | | Robert L. Schrader | | | | | | | Base Salary(2) | | $— | $— | $— | $750,000 | | Annual Incentive(3) | | — | 357,500 | — | 750,000 | | Stock Options(4) | | — | 1,105,981 | — | 1,105,981 | | Time-Based Stock Awards(5) | | — | 1,909,290 | — | 1,909,290 | | Performance-Based Stock Awards(6) | | — | 1,557,940 | — | 1,557,940 | | Benefits(7) | | — | — | — | 34,797 | | Total | $2,846,707 | $— | $4,930,711 | $— | $6,108,008 | | Adam Ante | | | | | | | Base Salary(8) | | $— | $— | $— | $500,000 | | Annual Incentive(8)(9) | | — | — | — | 250,000 | | Stock Options | | — | — | — | — | | Time-Based Stock Awards(8) | | — | — | — | 10,620,079 | | Performance-Based Stock Awards(6) | | — | 3,635,720 | — | 3,635,720 | | Benefits(8) | | — | — | — | 23,567 | | Total | $3,253,709 | $— | $3,635,720 | $— | $15,029,366 | | Mark A. Bottini | | | | | | | Base Salary(2) | | $— | $— | $— | $795,000 | | Annual Incentive(3) | | — | 294,647 | 294,647 | 914,250 | | Stock Options(4) | | — | 1,460,764 | 742,892 | 1,460,764 | | Time-Based Stock Awards(5) | | — | 3,149,041 | 2,681,628 | 3,149,041 | | Performance-Based Stock Awards(6) | | — | 1,168,376 | — | 1,168,376 | | Benefits(7) | | — | — | — | 59,839 | | Total | $2,626,879 | $— | $6,072,828 | $3,719,167 | $7,547,270 |
Potential Benefits Upon Separation from Company
| | | Potential Payments Upon Separation | | | | | | Annual Compensation per the Summary Compensation Table(1) | Voluntary Resignation/ Termination | Death or Disability | Retirement | Termination Other Than For Cause/ Resignation For Good Reason within One Year of Change of Control | | Michael E. Gioja | | | | | | | Base Salary(2) | | $— | $— | $— | $825,000 | | Annual Incentive(3) | | — | 393,250 | 393,250 | 825,000 | | Stock Options(4) | | — | 1,543,683 | 785,902 | 1,543,683 | | Time-Based Stock Awards(5) | | — | 3,321,163 | 2,827,852 | 3,321,163 | | Performance-Based Stock Awards(6) | | — | 1,233,435 | — | 1,233,435 | | Benefits(7) | | — | — | — | 33,517 | | Total | $2,846,311 | $— | $6,491,531 | $4,007,004 | $7,781,797 |
Non-qualified Deferred Compensation Fiscal 2025
Non-qualified Deferred Compensation Fiscal 2025 We offer a non-qualified and unfunded deferred compensation plan to our NEOs. Eligible employees can defer up to 50% of their base salary and annual incentive program award. The Company does not contribute to this plan. Gains and losses are credited based on the participant’s selection of a variety of designated investment choices. The NEO has sole control as to which of the designated funds to invest in and earns the resulting return on such investment. We do not match any participant deferral or guarantee a certain rate of return. Distributions are paid at one of the following dates selected by the participant: the participant’s termination date; the date the participant retires from any active employment; or a designated specific date. Payments can be made either in a lump sum or in annual installments over a period not to exceed ten years. The following table summarizes the activity under the plan:
Non-qualified Deferred Compensation Fiscal 2025
| | Fiscal 2025 | | | | | Name (a) | Executive Contributions ($) (b) | Aggregate Earnings/ (Losses), Net ($) (c) | Aggregate Withdrawals/ Distributions ($) (d) | Aggregate Balance as of May 31, 2025 ($) (e) | | John B. Gibson | $422,437 | $245,793 | $(1,280) | $4,512,218 | | Mark A. Bottini | $38,483 | $60,794 | $— | $744,094 |
Non-qualified Deferred Compensation Fiscal 2025
Messrs. Schrader, Ante, and Gioja are currently not participating in this plan.
CEO Pay Ratio
CEO Pay Ratio Pursuant to Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(u) of Regulation S-K, we are required to provide the ratio of the annual total compensation of Mr. Gibson, our CEO, to the annual total compensation of our median employee. To identify our median employee for fiscal 2025, we took the following steps:
CEO Pay Ratio
| • | We identified our global employee population of approximately 15,400 employees, excluding our CEO, who were employed by us on March 1, 2025. Approximately 88% of our employees are located in the U.S. and 12% are located in jurisdictions outside the U.S. We included all employees, whether employed on a full-time, part-time, or seasonal basis; |
CEO Pay Ratio
| • | As permitted by the SEC’s “de minimis” exemption, we adjusted our global employee population to exclude all employees from certain jurisdiction outside of the U.S. (238 in Germany and 228 in Denmark); |
CEO Pay Ratio
| • | We identified the median employee by examining the previous 12-month period of W-2 wages for our adjusted global employee population, excluding our CEO, who were employed by us on March 1, 2025; and |
CEO Pay Ratio
| • | We did not make any assumptions, adjustments, or estimates with respect to W-2 wages, however we did annualize the compensation for any full-time or part-time employees that were not employed by us for the entire 12-month period. |
CEO Pay Ratio
In April 2025, we completed the acquisition of Paycor, a leading provider of HR, payroll, and talent software. As a result of this acquisition, approximately 2,700 employees from Paycor became our employees. As permitted by the transition periods exception within the SEC rules, we have elected to omit these employees from our pay ratio calculation for fiscal 2025. We anticipate that these employees will be included in the total employee count in future calculations. We calculated total annual compensation for fiscal 2025 for the median employee using the same methodology we used for our CEO as set forth in the 2025 Summary Compensation Table in this proxy statement. The table below sets forth comparative information regarding: (A) the total annual compensation of our CEO for fiscal 2025; (B) the median of the total annual compensation of all other employees of the Company, excluding employees of certain non-U.S. jurisdictions and our CEO, for fiscal 2025; and (C) the ratio of the CEO total annual compensation to the median of the total annual compensation of all other employees, excluding employees of certain non-U.S. jurisdictions and our CEO:
CEO Pay Ratio
| Mr. Gibson, our CEO, total annual compensation (A) | $8,807,411 | | Median employee total annual compensation, excluding employees of certain non-U.S. jurisdictions and our CEO (B) | $70,003 | | Ratio of CEO to median employee compensation (C) | 126:1 |
Pay Versus Performance
Pay Versus Performance In accordance with rules adopted by the SEC, we provide the following disclosure regarding executive compensation for our principal executive officers (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below.
Pay Versus Performance
| | Summary Compensation Table Total for PEO | | Compensation Actually Paid to PEO | | Average Summary Compensation Table Total for Non-PEO NEOs (2) (d) | Average Compensation Actually Paid to Non-PEO NEOs (2)(3) (e) | Value of Initial Fixed $100 Investment Based On: | | Net Income (in millions) (h) | Operating Income, Net of Certain Items (5) (in millions) (i) | | Fiscal Year (a) | Gibson (1) (b) | Mucci (1) (b) | Gibson (1)(3) (c) | Mucci (1)(3) (c) | | | Total Shareholder Return (f) | Peer Group Total Shareholder Return (4) (g) | | | | 2025 | $8,807,411 | $— | $16,426,552 | $— | $2,893,402 | $6,848,997 | $251.16 | $186.69 | $1,657 | $2,189 | | 2024 | $7,534,855 | $— | $8,462,562 | $— | $2,498,637 | $2,602,402 | $185.79 | $153.68 | $1,690 | $2,054 | | 2023 | $6,680,180 | $14,442,172 | $5,660,044 | $(3,614,572) | $2,691,157 | $1,782,985 | $157.41 | $121.82 | $1,557 | $1,933 | | 2022 | $— | $11,025,026 | $— | $23,305,787 | $3,257,026 | $5,846,642 | $180.70 | $118.53 | $1,393 | $1,782 | | 2021 | $— | $9,627,247 | $— | $21,142,733 | $2,605,572 | $4,992,766 | $144.16 | $127.00 | $1,098 | $1,434 |
Pay Versus Performance
| (1) John B. Gibson was our PEO in fiscal 2025 and 2024 and during fiscal 2023 following October 13, 2022. Martin Mucc i was our PEO during fiscal 2023 through October 13, 2022, and in fiscal 2022 and 2021. The amounts deducted and added in calculating Compensation Actually Paid (“CAP”) for Mr. Gibson for fiscal 2025 are as follows: |
Pay Versus Performance
| | 2025 | | Summary Compensation Table Total | $8,807,411 | | Deduction of stock awards and option awards reported in the Summary Compensation Table | (6,933,392) | | Fiscal year-end value of equity awards granted during the fiscal year that remained unvested as of the last day of the fiscal year | 10,862,812 | | Change in fair value from the last day of the prior fiscal year to the last day of the fiscal year of unvested equity awards that were granted in a prior year | 3,245,013 | | Change in fair value from the last day of the prior fiscal year to the vesting date during the fiscal year of awards granted in a prior year that vested during the most recent fiscal year | 271,219 | | Value of dividends or other earnings paid on equity awards not otherwise included | 173,489 | | Compensation Actually Paid | $16,426,552 |
Pay Versus Performance
| (2) The individuals comprising the Non-PEO NEOs for each year are as follows: |
Pay Versus Performance
| 2021-2022 | 2023 | 2024 | 2025 | | Efrain Rivera | Efrain Rivera | Robert L. Schrader | Robert L. Schrader | | John B. Gibson | Mark A. Bottini | Efrain Rivera | Adam Ante | | Mark A. Bottini | Michael E. Gioja | Mark A. Bottini | Mark A. Bottini | | Michael E. Gioja | Stephanie L. Schaeffer | Michael E. Gioja | Michael E. Gioja | | | | Elizabeth Roaldsen | |
Pay Versus Performance
The amounts deducted and added in calculating the average CAP for these NEOs for fiscal 2025 a re as follows:
Pay Versus Performance
| | 2025 | | Summary Compensation Table Total | $2,893,402 | | Deduction of stock awards and option awards reported in the Summary Compensation Table | (2,212,104) | | Fiscal year-end value of equity awards granted during the fiscal year that remained unvested as of the last day of the fiscal year | 5,273,447 | | Change in fair value from the last day of the prior fiscal year to the last day of the fiscal year of unvested equity awards that were granted in a prior year | 785,403 | | Change in fair value from the last day of the prior fiscal year to the vesting date during the fiscal year of awards granted in a prior year that vested during the most recent fiscal year | 55,252 | | Value of dividends or other earnings paid on equity awards not otherwise included | 53,597 | | Compensation Actually Paid | $6,848,997 |
Pay Versus Performance
| (3) The amounts shown for CAP have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect the actual compensation realized or received by our NEOs. |
Pay Versus Performance
| (4) The Peer Group TSR set forth in this table utilizes the Company’s peer group used for executive compensation market comparative purposes which was also utilized in the stock performance graph required by Item 201(e) of Regulation S-K included in our Form 10-K. |
Pay Versus Performance
| (5) Operating income, net of certain items is a non-GAAP measure. Refer to “Paychex, Inc. Non-GAAP Financial Measures” in Appendix A of this proxy statement for a discussion of this non-GAAP measure and a reconciliation to the most comparable GAAP measure of operating income. |
Pay Versus Performance Relationships
Pay Versus Performance Relationships The following chart sets forth the relationship between CAP to our PEOs, the average of CAP to our Non-PEO NEOs, and the Company’s cumulative TSR over the five most recently completed fiscal years. In addition, the following chart compares the Company’s cumulative TSR over the five most recently completed fiscal years to that of the Company’s fiscal 2025 Peer Group. Paychex, Inc. 2025 Proxy State ment Non-PEO NEOs, and the Company’s consolidated Net Income during the five most recently completed fiscal years. The following chart sets forth the relationship between CAP to our PEOs, the average of CAP to our Non-PEO NEOs, and the Company’s Operating Income, Net of Certain Items during the five most recently completed fiscal years.