Brian Shepherd
CSG SYSTEMS INTERNATIONALAbout Brian Shepherd
Brian A. Shepherd, 57, has served as President and Chief Executive Officer of CSG since January 2021 and as a director since the same date; he previously led multiple businesses at CSG after joining in 2016. He holds an MBA from Harvard Business School and a BA in Economics from Wabash College, and has over 30 years of enterprise SaaS and cloud technology leadership experience . Under his tenure, CSG reported record 2024 revenue of $1.197 billion and increased operating income margin; 2024 say‑on‑pay approval was 97.5% . Performance alignment is evidenced by 2022 three‑year rTSR PSUs vesting at 100% but capped due to negative absolute TSR, and 2023 two‑year financial PSUs paying 129.4% of target on strong non‑GAAP EPS performance offset by below‑target revenue .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| CSG | President & Chief Executive Officer; Director | Jan 2021–present | Leads multi‑year strategy to grow revenue, profitability, and FCF; executed numerous software/analytics/payments acquisitions . |
| CSG | EVP & Group President | Jul 2017–Jan 2021 | Accelerated growth and strategic development; led P&L, GTM, services, strategy, corp dev, marketing . |
| CSG | EVP & President, Global Broadband, Cable & Satellite | 2016–2017 | Drove growth in core communications verticals . |
| TeleTech, Amdocs, DST Innovis, McKinsey & Company | Various executive and consulting roles | — | Senior roles across CX/telecom software and strategy consulting; executed 20+ acquisitions across software, payments, analytics, consulting . |
External Roles
| Organization | Role | Years | Notes |
|---|---|---|---|
| — | — | — | No current public company directorships disclosed beyond CSG . |
Fixed Compensation
| Metric | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|
| Base Salary ($) | 700,000 | 725,385 | 754,519 (annual rate $755,000 effective 1/1/24) |
| Target Bonus (%) | 150% | 150% | 150% |
| Actual Annual Bonus Paid ($) | 551,250 | 1,250,490 | 682,898 |
| All Other Compensation ($) | 278,616 | 320,042 | 409,406 (includes $381,284 accrued dividends; $18,975 401(k) match; $9,147 perqs) |
Performance Compensation
2024 Annual Bonus Design and Outcome
| Metric | Threshold (30%) | Target (100%) | Max (200%) | Actual 2024 | Payout impact |
|---|---|---|---|---|---|
| Revenue less Transaction Fees ($mm) | 1,093.0 | 1,137.0 | 1,177.0 | 1,099.4 | Contributed to 60.3% company score |
| Non‑GAAP Adjusted Operating Margin (%) | 17.00 | 17.25 | 18.15 | 18.15 | Contributed to 60.3% company score |
| People & Culture Modifier | — | — | — | 0.0% modifier | No change |
| Result | — | — | — | Company score 60.3% | CEO individual performance factor 100% |
2023 Two‑Year Performance PSUs (performance period ended 12/31/2024)
| Measure | Weight | Target | Actual | Achievement | Weighted result |
|---|---|---|---|---|---|
| Non‑GAAP EPS | 37.5% | $3.85 | $4.72 | 200.0% | 100.0% |
| Revenue ($mm) | 37.5% | 1,300.0 | 1,197.2 | 58.8% | 29.4% |
| Total | — | — | — | — | 129.4% overall |
2022 Three‑Year rTSR PSUs (performance period ended 12/31/2024)
| Measure | Weight | Target Percentile | Actual Percentile | Payout |
|---|---|---|---|---|
| 3‑Year Relative TSR vs Russell 2000 | 25.0% | 50th | 54th | 100% (capped due to negative absolute TSR) |
2024 LTI Design
- Mix: Performance‑based RSAs on two‑year Non‑GAAP EPS, two‑year Total Revenue, two‑year Average Annual YoY Organic Revenue Growth, and three‑year rTSR vs Russell 2000; plus time‑based RSAs vesting 33.3% annually over three years .
- Dividends on unvested RSAs accrue and pay only upon vesting .
CEO Five‑Year Stock‑Price Performance Award (granted Dec 10, 2024)
| Tranche | Stock Price Threshold | Cumulative % of Target Shares Eligible | Service Vesting Date | % Growth vs $53.71 Grant Price |
|---|---|---|---|---|
| 1 | $70 | 50% | Dec 10, 2027 | 30% |
| 2 | $75 | 100% | Dec 10, 2028 | 40% |
| 3 | $80 | 150% | Dec 10, 2029 | 49% |
| 4 | $85 | 200% | Dec 10, 2029 | 58% |
- Grant date value $4.0M with up to 200% overachievement; vesting requires both 90‑day average stock price thresholds and time‑based service; unvested amounts forfeit after 12/10/2029; CIC double‑trigger can allow vesting to the extent thresholds met .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 520,948 shares; 1.81% of outstanding as of Feb 28, 2025 (28,773,311 shares outstanding) . |
| Unvested restricted shares (counted separately) | 269,390 shares as of Feb 28, 2025 . |
| Outstanding unvested/time‑based awards (selected) | 8,127 (3/10/21), 12,413 (3/10/22), 28,506 (3/10/23), 51,934 (3/10/24) time‑based RSAs . |
| Outstanding performance/market‑based unearned awards (selected) | 27,928 (2022 TSR), 96,208 (2023 2‑yr financial), 32,068 (2023 TSR), 116,852 (2024 2‑yr financial), 38,950 (2024 TSR), 148,950 (CEO performance award max) . |
| Director/Officer ownership policy | CEO required to hold 6x base salary; compliance status 100% as of 12/31/24; no sales permitted until guideline met (limited exceptions) . |
| Hedging/pledging | Prohibited for all employees/directors under Insider Trading Policy (no hedging, no pledging) . |
| Anti‑hedging/pledging enforcement | Clawback policy (Nov 2023) enables recovery of incentive pay after restatements; also applies to certain severance payments . |
Employment Terms
| Topic | Key terms |
|---|---|
| Employment/tenure | Appointed President, CEO and Director in Jan 2021; joined CSG in 2016 . |
| Annual bonus formula | Base Salary × Target % × (Company performance + People & Culture modifier) × Individual factor; 2024 company score 60.3%, modifier 0.0%, individual factor 100% . |
| Severance (no CIC) | CEO: 200% of base salary + 100% target bonus paid over 12 months; pro‑rata vesting of unvested RSAs and PSUs (PSUs based on actual performance); 18 months COBRA cash . |
| Severance (within 18 months post‑CIC; double‑trigger) | CEO: 300% of base salary + 300% target bonus lump sum; full vesting of unvested time‑based and PSUs at target (TSR PSUs measured as of CIC date); 18 months COBRA cash; subject to 280G cutback . |
| Pro‑rata bonus at termination | If termination on/after June 1, lump‑sum pro‑rated annual bonus based on actual performance (non‑CIC) or pro‑rated target (post‑CIC) . |
| Clawback | Recoupment for material restatements (cash, time‑based and performance equity), and severance recoupment under severance policy . |
| Other perquisites/benefits | Broad‑based benefits; 401(k) with company match; limited perqs (e.g., recognition trip) reflected in “All Other Compensation” . |
Board Governance
- Board service: Director since January 2021; only non‑independent director; does not serve on any Board committee; employee directors receive no additional director compensation .
- Leadership structure: Independent Chair (Ronald Cooper through 2025 AGM; Board selected independent director Marwan Fawaz as Chair‑Elect, subject to re‑election); Board and all committees (Audit, Compensation, SSG, Cybersecurity) otherwise independent .
- Attendance: Board held 9 meetings in 2024; each director attended at least 75% of Board/committee meetings; all current directors attended the 2024 AGM .
Director Compensation (as applicable to dual role)
- Employee directors (including the CEO) receive no cash retainers or equity grants under the non‑employee director program; non‑employee director program: $75,000 cash retainer (+ chair/committee fees) and ~$200,000 annual restricted stock (one‑year vest) .
Compensation Structure Analysis
- Pay mix and governance: Majority of CEO target pay is long‑term and/or performance‑based; independent compensation consultant (Semler Brossy) engaged by independent Compensation Committee; no income tax gross‑ups; no option repricing; no single‑trigger CIC vesting .
- Peer benchmarking: 2024 peer group of 16 application/software and data processing companies (e.g., ACIW, MANH, PEG A, VERI, WEX, TTEC); Committee targets competitiveness near median, with annual review of composition .
- Say‑on‑pay: 97.5% approval in 2024 indicates strong shareholder support for pay program .
- Special CEO performance award: Five‑year, stock‑price‑based award aligns payout with sustained stock appreciation above all‑time highs; requires 30–58% appreciation thresholds and service conditions through 2029 .
Risk Indicators & Red Flags
- Hedging/pledging prohibited; robust clawback adopted (2023) .
- Related party transactions: None in 2024 requiring disclosure under Item 404 .
- Form 16 compliance: Two executives (not the CEO) had late Form 4s in 2024; subsequently filed .
- Governance mitigants: Independent Chair, majority‑independent Board/committees, regular executive sessions, strong ownership guidelines for CEO and directors .
Equity Vesting & Potential Selling Pressure
| Category | Key upcoming vesting/supply considerations |
|---|---|
| Time‑based RSAs | 2024 grants vest 33.3% annually on March 10, 2025/2026/2027; similar schedules for 2023/2022/2021 grants . |
| Performance RSAs | 2024 two‑year financial PSUs measured through 12/31/2025; 2024 rTSR PSUs measured through 12/31/2026; 2023 financial PSUs certified and paid at 129.4%; 2022 rTSR PSUs at 100% (capped) . |
| CEO 5‑yr price award | Tranches eligible to settle after price and service conditions on 12/10/2027–12/10/2029; potential for concentrated vesting if thresholds are achieved, though anti‑hedging/pledging and ownership guidelines constrain dispositions until guidelines are met . |
Investment Implications
- Alignment: High equity orientation, stringent ownership policy (6x salary, in compliance) and a five‑year stock‑price award create strong alignment with long‑term TSR; 2024 say‑on‑pay support underscores investor acceptance .
- Payout sensitivity: Annual bonus and two‑year PSUs tied to revenue, non‑GAAP EPS, and operating margin introduce sensitivity to top‑line execution and profitability; 2023 PSU results (129.4%) show outsized EPS over‑delivery vs revenue under‑delivery—watch for sustainability of EPS quality vs organic growth targets added in 2024 .
- Supply overhang: Multi‑year vesting from time‑based RSAs and potential 2027–2029 CEO award tranches could add episodic selling pressure upon vesting; mitigants include anti‑hedging/pledging rules and ownership‑guideline retention requirements .
- Transaction dynamics: CIC double‑trigger severance at 3x salary+bonus for CEO and target‑level equity acceleration raise deal‑protection considerations, but are within market norms for size/sector; no excise tax gross‑ups .