Michael Burkland
Five9About Michael Burkland
Michael Burkland (age 62) is Chairman and Chief Executive Officer of Five9, Inc., serving on the board since 2008, as Chairman since 2014, as CEO from 2008–2017 and again since November 2022; he holds B.A. and M.B.A. degrees from the University of California, Berkeley . In 2024, Five9 revenue grew 14% to $1,041.9 million, adjusted EBITDA rose to $196.0 million, operating cash flow increased to $143.2 million, and net loss narrowed to $(12.8) million; however, Five9’s 2024 relative TSR ranked ~1.5th percentile versus the S&P Software & Services Select Index, resulting in 0% payout for that year’s PRSU tranche . Five9’s pay design ties annual bonuses to revenue and adjusted EBITDA (2024 payout ~98% of target for the CEO) and long-term PRSUs to relative TSR over overlapping 1/2/3‑year periods, aligning compensation to growth, profitability and shareholder returns .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Five9, Inc. | CEO | 2008–2017; 2022–present | Scaled cloud contact center platform; current dual role as Chair/CEO integrates strategy and execution . |
| Five9, Inc. | President | 2012–2017 | Led operations during growth phase pre/post-IPO-era . |
| Interim CEO Network | Interim CEO / Strategic Advisory | 2002–2007 | Turnaround and advisory leadership at venture-backed tech firms . |
| Omniva Policy Systems | CEO | 2000–2001 | Built go-to-market in enterprise policy/email security . |
| Eventus Software | CEO | 1994–1998 | Led web content management software; sale to Segue Software (1998) . |
| Oracle; Patrol Software; BMC Software | Various roles | Early career | Enterprise software operating experience . |
External Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| OneStream, Inc. | Director | 2019–present | Governance at enterprise finance management software firm . |
| Vocera Communications, Inc. | Director | 2016–2022 | Board service through sale to Stryker (2022) . |
Fixed Compensation
| Year | Base salary ($) | Notes |
|---|---|---|
| 2022 | 55,398 | Commenced CEO role Nov 28, 2022 under new offer letter . |
| 2023 | 585,000 | No change vs. offer letter . |
| 2024 | 585,000 | No increase in 2024 . |
- Perquisites and benefits: Company-paid healthcare for CEO (self, spouse, dependents) during and following service, consistent with prior Chairman agreement; otherwise limited perquisites and standard plans (401(k) match up to $500/quarter) .
Performance Compensation
Annual Bonus (2024 program)
| Metric | Weight | Target | Actual | Payout factor |
|---|---|---|---|---|
| Revenue ($mm) | 75% | 1,057.5 | 1,032.9 | 97.9% |
| Adjusted EBITDA ($mm) | 25% | 184.9 | 195.4 | 97.9% |
| CEO bonus outcome | — | $585,000 (100% of salary) | $572,715 (draw + year-end true-up) | 98% of target |
- 2024 structural changes: moved to annual performance period (from semi-annual) and removed individual goals for NEOs; mid-year draw feature applied in 2024 only .
- 2025 update: mix shifted to 70% revenue / 30% levered free cash flow (LFCF) to emphasize cash efficiency; no mid-year draw .
Long-Term Equity (key CEO grants and structure)
| Grant | Date | Vehicles | Target units | Grant date fair value ($) | Vesting / performance |
|---|---|---|---|---|---|
| New-hire equity | 12/12/2022 | RSU; PRSU (RTSR) | RSU: per table 74,967 units outstanding at 12/31/24; PRSU target 149,933 | RSU $14.0m target; PRSU $14.0m target (per offer letter) | RSUs vest quarterly over 3 years; PRSUs earn 0–200% vs S&P Software & Services Select Index over one-year periods FY23–FY25; above-target for 2023/2024 limited to 100% until final reconciliation in 2025 . |
| Annual refresh | 2/26/2024 (approved 2/14/2024) | RSU; PRSU (RTSR) | RSU 87,648; PRSU 87,648 (target) | RSU $5,555,130; PRSU $5,279,916 | RSUs vest quarterly over 4 years; PRSUs earn 0–200% over overlapping 1/2/3‑yr periods (2024, 2024–2025, 2024–2026) . |
PRSU performance outcomes:
- 2023 measurement (for 2023 PRSUs): RTSR ~50.5th percentile; CEO earned 69,343 units vs 74,966 target (92.5%) .
- 2024 measurement (for 2024 PRSUs; and for earlier PRSUs’ 2024 tranche): TSR −47.25% with RTSR ~1.5th percentile; payout 0% for the 2024 tranche .
2024 realized equity vesting (supply indicator):
- Shares acquired on vesting in 2024: 160,743 (value realized $8,247,851) for CEO; this reflects gross vesting, not sales .
Equity Ownership & Alignment
Beneficial ownership and near-term vesting
| Holder | Common shares (#) | Options exercisable within 60 days (#) | RSUs vesting within 60 days (#) | Total beneficial (#) | % of SO |
|---|---|---|---|---|---|
| Michael Burkland | 239,364 | 235,395 | — | 474,759 | <1% |
- CEO common shares include 44,475 held directly and 194,889 in a trust .
- Ownership guidelines: CEO must hold the lesser of 300% of salary or 160,000 shares; as of 12/31/2024, all NEOs met guidelines except a few named individuals (CEO is in compliance) .
Outstanding awards detail (CEO, 12/31/2024)
- Options: 54,375 @ $8.13 (exp. 3/9/2026) and 181,020 @ $16.25 (exp. 2/23/2027) are exercisable .
- Unvested RSUs: 71,214 from 2024 grant subject to four-year quarterly vesting; 74,967 from 2022 grant vesting quarterly over three years (remaining as of year-end) .
- Unvested PRSUs: 87,648 target from 2024 grant across overlapping performance periods; 149,933 target from 2022 grant across one-year periods (subject to measurement and payout constraints) .
Indicative in-the-money value of exercisable options (12/31/2024 closing price $40.64):
- 54,375 × ($40.64 − $8.13) and 181,020 × ($40.64 − $16.25); inputs from option table and market price disclosure .
Alignment and restrictions:
- Hedging and pledging are prohibited; no directors/officers may short, hedge, or pledge Five9 securities .
- Clawback policy compliant with SEC/Nasdaq rules; recoups excess incentive compensation after restatements .
- No tax gross-ups on severance/perquisites; no option repricing; option granting practices avoid blackout windows .
Employment Terms
- Offer letter (Oct 10, 2022): Base salary $585,000; target bonus 100% of salary; $14.0m RSU and $14.0m PRSU new-hire grants; Tier 1 participant in Key Employee Severance Plan; company-paid healthcare during and following service .
- Severance Plan (extended to April 4, 2027): Double-trigger CIC; no gross-ups; reductions if 280G optimization beneficial .
Severance economics (as of 12/31/2024)
| Scenario | Cash severance (base) | Cash severance (bonus) | Equity accel. value | Health premiums | Total |
|---|---|---|---|---|---|
| Termination without cause (non‑CIC) | $585,000 | — | — | $35,832 | $620,832 |
| Qualifying termination in connection with CIC | $877,500 | $877,500 | $15,596,088 | $53,748 | $17,404,836 |
Board Governance
- Board service history: Director since 2008; Chairman/Executive Chairman since 2014; current Class III director, term ending at 2026 annual meeting .
- Dual role: The board combines Chair/CEO roles and designates a Lead Independent Director (David Welsh) to preside over independent sessions and act as liaison; the structure is reviewed periodically .
- Independence: The board determined a majority of directors are independent under Nasdaq rules; CEO/Chair is not listed as independent .
- Committees: Audit, Compensation, and Nominating & Governance committees comprised of independent directors; committee memberships and financial experts identified .
- Director compensation: As an employee director, the CEO does not receive additional board compensation .
Governance considerations:
- Family relationship: CEO is the brother of former President Daniel Burkland; CEO is recused from compensation deliberations for his brother .
Compensation Committee & Peer Group
- Comp Committee: Independent; advised by Compensia; no interlocks/insider participation; conducts annual risk review and program assessment .
- Peer group: Updated in 2023 and 2024 to reflect scale and market cap; examples include AppFolio, Box, Dynatrace, Freshworks, Paylocity, Qualys, RingCentral, Smartsheet, Sprinklr, Q2 Holdings, etc. .
Say‑on‑Pay & Shareholder Feedback
- 2024 say‑on‑pay support: ~72% approval, up ~15 percentage points from 2023 after program changes (greater performance emphasis, annual bonus period, multi-period PRSUs) .
Multi‑Year CEO Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Salary ($) | 55,398 | 585,000 | 585,000 |
| Stock awards ($) | 38,025,826 | — | 10,835,046 |
| Non‑equity incentive plan comp ($) | 13,732 | 610,211 | 572,715 |
| Total compensation ($) | 38,225,785 | 1,195,211 | 11,997,464 |
Performance Snapshot (Company)
| Metric | 2023 | 2024 |
|---|---|---|
| Revenue ($mm) | 910.5 | 1,041.9 |
| Adjusted EBITDA ($mm) | 166.3 | 196.0 |
| Net loss ($mm) | (81.8) | (12.8) |
| 2024 Relative TSR percentile (PRSU 1‑yr tranche) | — | ~1.5th percentile (payout 0%) |
Risk Indicators & Red/Green Flags
- Red flags / risks:
- Dual Chair/CEO structure; mitigated by Lead Independent Director and regular independent sessions .
- 2024 TSR underperformance drove 0% PRSU payout for that tranche, signaling potential alignment but also execution/market risk .
- Family relationship with former President; governance mitigations in comp decision-making noted .
- CFO retirement/transition disclosed for early 2025 (continuity plan in place) .
- Green flags / mitigants:
- Strong pay-governance: no tax gross-ups; clawback policy; anti-hedging/pledging; stock ownership guidelines; independent comp advisor .
- Double‑trigger CIC protection and program linking bonuses to revenue/EBITDA and PRSUs to multi‑period RTSR .
Investment Implications
- Pay-for-performance is operative: CEO’s 2024 cash bonus paid at ~98% on mixed revenue/EBITDA results, while 2024 PRSU tranche paid 0% on weak relative TSR—indicating downside sensitivity in equity and alignment to shareholder returns .
- 2025 cash plan adds 30% LFCF weighting, a positive signal for cash discipline; watch for sustained cash generation to support multiple expansion .
- Supply/vesting: CEO realized vesting of 160,743 shares in 2024 and holds sizable unvested RSUs/PRSUs, suggesting periodic settlement-driven flow but mitigated by ownership guidelines and anti‑hedge/pledge rules; monitor Section 16 filings around quarterly vesting dates .
- Retention/CIC risk: Double-trigger CIC with full equity acceleration could be meaningful in a sale scenario (illustrative total ~$17.4m at 12/31/24 values), but non‑CIC severance is modest; Tier 1 status supports stability through strategic cycles .
- Governance: Dual role persists with lead independent oversight; board independence and committee structure are in place; related‑party safeguards noted given family relationship .