Chad Richison
Paycom SoftwareAbout Chad Richison
Chad Richison, 54, is the founder of Paycom Software, Inc., serving as Chief Executive Officer, President, and Chairman of the Board; he has been a director since 1998 and Chairman since 2016 . In 2024, Paycom delivered 11% organic revenue growth to $1.883B, net income of $502M (26.7% margin), and adjusted EBITDA of $775M (41.2% margin), reflecting focused execution and automation-led efficiency gains . His 2020 CEO Performance Award was fully forfeited in 2024 when his role temporarily shifted to Co-CEO, resolving a major stockholder concern; two tranches of 2022 PSUs tied to relative TSR paid 0% given 9th and 6th percentile results versus the S&P 500 Software & Services Index . For 2025, the Compensation Committee reset CEO pay design with a market-aligned mix emphasizing at-risk equity: $865,280 base salary, 100% target bonus, $9M PSUs, and $9M RSUs (nearly 96% at-risk) .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Paycom Software, Inc. | Chief Executive Officer, President, Chairman | 1998–present | Founder; scaled SaaS HCM platform and automation vision; led innovation (e.g., Beti, GONE) and high-touch client service |
| National payroll & HR company; regional payroll company | Sales roles | Pre-1998 | Identified inefficiencies in payroll/HR workflows that informed Paycom’s cloud-first model |
External Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| National Duals Invitational LLC | Sole manager; trustee of member trust | 2025 event planned | Paycom subsidiary authorized up to $1.0M sponsorship for title rights and marketing benefits, creating related-party optics |
Fixed Compensation
Multi-year CEO cash and perquisite profile shows restrained cash pay with material, disclosed perquisites.
| Year | Base Salary ($) | Target Bonus (%) | Actual Bonus Paid ($) | All Other Compensation ($) | Perquisites Breakdown (2024) |
|---|---|---|---|---|---|
| 2024 | 832,000 | 100% of base | 1,504,882 | 1,127,389 | Private aircraft personal use $525,813; personal/home security $568,207; vehicle depreciation $6,155; club dues $9,000; 401(k) $12,075; supplemental medical plan retainer |
| 2023 | 817,068 | 100% of base | 765,700 | 1,535,838 | See 2023 perqs in “All Other Compensation” |
| 2022 | 785,953 | 100% of base | 1,538,816 | 813,649 | See 2022 perqs in “All Other Compensation” |
Notes:
- No stock awards were granted to Richison in 2021–2024; the 2020 CEO Performance Award was forfeited in early 2024 .
- 2025 CEO cash components approved: $865,280 base; 100% bonus target .
Performance Compensation
2024 pay-for-performance outcomes centered on revenue growth with an EBITDA safeguard; 2025 reinstates significant at-risk equity for the CEO.
| Program | Metric | Weighting | Target | Actual | Payout / Vesting |
|---|---|---|---|---|---|
| 2024 Annual Incentive (CEO) | Revenue | 100% | $1,870.0MM | $1,883.2MM | 188.1% of target; CEO bonus = $1,504,882 |
| 2024 Annual Incentive Modifier | Adjusted EBITDA | Downward-only modifier | $725.0MM | $775.4MM | No deduction (exceeded target) |
| 2024 PSUs (CEO) | N/A | N/A | — | — | CEO received no equity awards in 2024 |
| 2022 PSUs (Relative TSR) | TSR vs S&P 500 Software & Services | 2-year 25%; 3-year 75% | Threshold 30th pctile; Target 60th; Max 90th | 9th pctile (2-year); 6th pctile (3-year) | 0% payout; full forfeiture |
| 2025 Long-Term Incentives (CEO) | PSUs | — | $9,000,000 target value | — | At-risk equity; performance goals pre-set by Committee |
| 2025 Long-Term Incentives (CEO) | RSUs | — | $9,000,000 grant value | — | Time-based vesting; schedule not detailed in proxy |
Design highlights:
- The Committee emphasized shorter performance periods for rigor amid macro volatility; 2024 PSUs for NEOs used one-year revenue goals with payout caps at target for most .
- 2025 CEO package is intended to be market-aligned and heavily at-risk following the 2020 award forfeiture .
Equity Ownership & Alignment
| Item | Detail |
|---|---|
| Total beneficial ownership | 6,077,193 shares; 10.5% of outstanding (57,852,318 shares) |
| Direct/indirect holdings | Includes 3,427,249 shares via Ernest Group, Inc.; plus multiple family trusts (ARR, ALR, IDR, LWR, KGR, SER, CBP, RWP, FPR) and Spouse Trust (12,500 shares); Richison is trustee for the Richison Trusts and sole director of Ernest Group |
| Vested vs unvested | As of Dec 31, 2024, Richison held no outstanding unvested equity awards |
| Options | Company does not currently grant options; no option-related timing policy needed |
| Pledging | No disclosure of shares pledged as collateral in the proxy; insider trading policy requires pre-clearance for hedging transactions |
| Ownership guidelines | CEO must hold ≥6x base salary; all executive officers were in compliance as of March 12, 2025 |
Employment Terms
| Provision | Key Terms |
|---|---|
| Employment agreement | Base salary adjustable; target bonus 100% of base; perquisites include private aircraft access (75 hours personal), personal/home security, company automobile, country club membership; confidentiality, noncompetition, noninterference, IP protection |
| Non-compete / Restricted Period | “Restricted Period” ends 12 months after termination; salary and benefits continuation tied to Restricted Period; scope details not fully enumerated in proxy |
| Severance (without cause / good reason) | Estimated as of Dec 31, 2024: salary continuation $832,000; annual incentive $1,504,882; continuation of benefits $1,149,892 (includes personal security for two years post-termination); total $3,486,774 |
| Change in control | No change-in-control cash payment in Richison’s employment agreement; equity awards generally vest if not assumed; PSUs feature double-trigger vesting in certain cases |
| Clawback | Applies to erroneously awarded incentive compensation upon financial restatement per SEC rules |
| Letter Agreement (Feb 7, 2024) | Acknowledged forfeiture of 2020 CEO Performance Award due to role change; clarified private aircraft and personal security provisions |
| Insider trading policy | Pre-clearance required for hedging or similar transactions; company avoids discretionary trading when in possession of MNPI; 10b5-1 plans referenced in policy framework |
Board Governance (director service, committees, dual-role implications)
- Board service history: Director since 1998; Chairman since 2016; Class III director nominee through 2028 if elected .
- Committee roles: All committees (Audit, Compensation, Nominating & Corporate Governance) are composed entirely of independent directors; Richison does not serve on committees as a management director .
- Dual-role implications: CEO + Chairman structure is offset by a Lead Independent Director (Frederick C. Peters II) who chairs executive sessions and facilitates independent oversight; Board cites benefits of unified leadership while maintaining independent checks .
- Board attendance: Directors attended ≥93% of Board/committee meetings in 2024; executive sessions held regularly .
Related Party Transactions (risk indicators)
- Paycom authorized its subsidiary to pay up to $1.0M to National Duals Invitational LLC (managed by Richison) for title sponsorship and marketing/publicity benefits for the 2025 tournament; reviewed under related-party policy .
- No other >$120k related-party transactions with Richison disclosed for 2024–2025 .
Compensation Committee Analysis (design governance)
- Independent Compensation Committee members (chair J.C. Watts, with Peters and Turney) retained Meridian Compensation Partners as independent consultant; stockholder feedback in 2024 drove reductions to non-CEO NEO equity grant values and rebalancing toward performance-based equity .
- Committee preference for revenue-based metrics across cash and equity to align with growth priorities; ongoing evaluation of longer performance periods as macro conditions improve .
Say-on-Pay & Shareholder Feedback
- 2024 say-on-pay received majority support; investors favored forfeiture of the 2020 CEO award and a consistent mix of performance- and time-based equity; Board engaged 21 holders (62% of institutional shares) and met with 9 (46%), often with two independent directors present .
Investment Implications
- Alignment: Richison’s 10.5% stake and compliance with 6x-salary ownership guideline signal strong alignment; no disclosed pledging reduces forced-sale risk .
- Pay-for-performance reset: The forfeiture of the 2020 CEO award and 2025 reintroduction of significant at-risk PSUs/RSUs mitigate prior say-on-pay concerns and increase performance sensitivity; revenue-centric metrics match growth focus but reduce diversification of KPIs .
- Vesting/selling pressure: CEO had no unvested awards at 2024 year-end; for NEOs, RSUs commonly vest on February 5, often creating tax-withholding sales—monitor 10b5-1 filings and vest calendars; details for 2025 CEO vesting schedule were not disclosed .
- Governance balance: CEO-Chair structure combined with a robust Lead Independent Director and fully independent committees offers oversight, yet classified board and founder control can entrench strategy—investors should watch continued board refreshment and engagement cadence .
- Related-party optics: The $1.0M sponsorship tied to an entity managed by Richison is modest but merits monitoring to ensure fair value and arm’s-length terms under Audit Committee oversight .