Toby Williams

About Toby Williams

Toby J. Williams, 52, is President, Chief Executive Officer, and Director of Paylocity (PCTY). He became Co-CEO in March 2022 and was appointed sole CEO on August 5, 2024 after serving as CFO from September 2017 to March 2022. Williams holds a B.A. in Business Administration and Political Science (Houghton College) and an MBA and J.D. (The Ohio State University). Under his leadership in fiscal 2025 (year ended June 30, 2025), Paylocity delivered 14% YoY total revenue growth to $1.6B, net income of $227.1M, adjusted EBITDA of $583.0M (36.5% margin), free cash flow of $342.8M, revenue retention >92%, and a client base of 41,650; Paylocity’s cumulative TSR proxy metric (base June 30, 2020) stood at 124.20 as of June 30, 2025 .

Past Roles

External Roles

Fixed Compensation

Notes:

• FY25 CEO base salary approved at $689,472; salary earned reflects timing within the fiscal year .

Performance Compensation

Annual Cash Bonus Plan (FY 2025)

CEO FY25 bonus mechanics and outcome:

• Target opportunity: 100% of base salary = $689,472 .
• Payout: 138% of salary = $951,471 (paid FY26) .

Equity Awards (Granted August 15, 2024 unless noted)

Equity value recognition trend (selected):

• Shares vested FY25: 36,539; value realized on vesting $6,793,109; no option exercises reported for Williams in FY25 .

Equity Ownership & Alignment

• Beneficial ownership: 82,289 shares (includes 13,142 RSUs vesting within 60 days of Sep 30, 2025) = 0.2% of shares outstanding .
• Outstanding unvested/unearthed awards at 6/30/2025 (selected lines):
  • Unvested RSUs across multiple grants (e.g., 40,088; 16,589; 9,400; 3,286; 2,638) per schedule details below .
  • Earned-but-unvested PSUs from FY25 performance (42,332 reflects earned amount) .
  • MSUs outstanding: prior-year and FY24 grants (e.g., 29,491 target 2023 MSUs; 16,775 target 2024 MSUs) .
• Vesting schedules:
  • RSUs: quarterly installments in 16 tranches beginning Nov 15, 2022; Nov 15, 2023; and Nov 15, 2024 (6.25% per quarter) .
  • FY25 PSUs: 50% on Aug 15, 2025; 25% on Aug 15, 2026; 25% on Aug 15, 2026 (proxy text; final two installments over years 2–3) .
  • FY24 MSUs: performance dates 11/30/2026, 2/28/2027, 5/31/2027, 8/31/2027 (25% each) .
• Ownership guidelines: CEO required to hold 6x base salary (increased July 2025 from 4x); executives currently compliant subject to phase-in .
• Hedging/pledging: Company prohibits pledging, hedging, short sales, and derivatives on company stock .
• Options: Company ceased option grants after FY2016; no outstanding options as of Sept 9, 2025 (reduces option-related selling pressure) .

Insider selling pressure assessment:

• Expected supply primarily from quarterly RSU vesting (Feb/May/Aug/Nov) and August anniversary PSU vesting; MSU tranches tied to four TSR measurement dates starting late 2026, which may trigger settlement depending on performance .
• FY25 shows significant RSU/MSU vesting value realization, but no option exercises by Williams; sales behavior beyond vesting is not disclosed in the proxy .

Employment Terms

Board Governance (Director Service, Roles, Independence)

• Board service: Director since 2022; not independent (as CEO) .
• Committee roles: None; all standing committees (Audit, Compensation, Nominating & Governance) comprise independent directors .
• Leadership structure: Chair and CEO roles separated; Executive Chairman (Beauchamp) and Lead Independent Director (Waters) oversee governance; regular executive sessions without management at least twice per year (typically each regular meeting) .
• Attendance: Board held 4 meetings in FY25; each director attended at least 75% of meetings/committees .
• Director compensation: Employee-directors (including Williams) do not receive director fees; non-employee directors received $35k cash retainers (FY25) plus ~$200k annual RSUs; increases approved for FY26 .

Dual-role implications:

• Williams serves as CEO and Director; not on key committees and with separated Chair and a Lead Independent Director structure to mitigate concentration of power and preserve independent oversight .

Compensation Structure Analysis

• Mix and alignment: CEO compensation is heavily equity-based (RSUs, PSUs, MSUs) with annual cash payout driven 60% by revenue and 40% by Adjusted EBITDA; FY25 payout was 138% vs target, reflecting above-target revenue and max EBITDA delivery .
• Shift toward performance equity: In FY25, the company introduced PSUs tied to revenue with 50/25/25 vesting and continues MSUs tied to relative TSR with 0–200% payout range (capped at target if absolute TSR negative), improving pay-for-performance sensitivity .
• Ownership discipline: CEO ownership guideline increased to 6x salary; hedging/pledging prohibited; clawback policy in place .
• Peer benchmarking: Committee, with Compensia, refreshed peers (added Informatica, Manhattan Associates, Paycor HCM, PTC; removed Alteryx, Splunk, Zscaler) and uses broad tech/SaaS comparables for context rather than strict benchmarking .
• Say-on-pay: 95.5% approval at 2025 meeting, indicating broad shareholder support for the program .

Director Compensation (for Williams as Director)

• No separate director compensation; his compensation is reported under NEO tables as CEO .

Say-on-Pay & Shareholder Feedback

• 2025 advisory vote: 95.5% FOR (48,411,725 for; 2,240,828 against; 21,642 abstain). Committee concluded no significant changes required due to strong support; annual say-on-pay frequency maintained .

Compensation Peer Group (FY 2025)

Risk Indicators & Red Flags

• CIC equity: Single-trigger acceleration for time-based awards (immediate) and performance awards based on achieved performance through CIC—less investor-friendly than double-trigger structures; implies meaningful acceleration value ($31.0M at 6/30/2025) .
• Tax gross-ups: Company policy disallows CIC excise-tax gross-ups; however, perquisites include limited gross-ups (e.g., CEO commuting gross-up $28,921 in FY25); overall perquisites not material but worth monitoring .
• Equity plan governance: Repricing prohibited without shareholder approval; no liberal share recycling for options/SARs under amended plan; cap on director compensation; awards subject to clawback .
• Related-party transactions: None disclosed involving Williams; RPTs disclosed with entities associated with other insiders were audit-committee approved .

Performance & Track Record

• FY25 operating performance highlights: Revenue $1.6B (+14% YoY), adjusted EBITDA $583.0M; net income $227.1M; >92% revenue retention; client base +7% to 41,650; product milestones include AI Assistant, recruiting enhancements, Benefits Decision Support, and Paylocity for Finance recognized as a Visionary in Gartner AP Automation .
• Pay-versus-Performance context (proxy measure): Company TSR index value 124.20 at FY25 end (base FY20), with PEO compensation “actually paid” reflecting stock price/award fair value dynamics .
• Equity dilution practices: Three-year average equity burn rate 1.7%; overhang 5.7% as of Oct 7, 2025 (6.5% pro forma with additional shares) .

Employment Contracts, Severance, and Change-of-Control Economics

Vesting Schedules and Insider Selling Pressure (Next 12–24 months)

• Quarterly RSU vesting (Nov/Feb/May/Aug) from multiple grant cohorts (2022/2023/2024) continues to create recurring supply; FY25 PSUs vest across three years beginning Aug 2025 (50/25/25), and FY24 MSUs have four potential settlement dates through Aug 2027 dependent on relative TSR .
• No options overhang; option program largely retired since FY2016, reducing forced exercise-related selling .

Expertise & Qualifications

• Degrees: B.A. Houghton College; MBA and J.D. The Ohio State University .
• Domain: Deep HCM/payroll and SaaS experience (Paychex; Ellucian; Paylocity) plus corporate development, banking, and legal background .

Equity Ownership Detail (CEO)

Related Party Transactions

• No transactions disclosed involving Williams; RPTs involving other insiders (e.g., Payescape with a director’s affiliated entity; BlackRock as vendor/shareholder) approved by Audit Committee .

Say-on-Pay History

Board Service History and Committee Roles (Williams)

• Director since 2022; no committee assignments; not independent (as management). Board uses separate Executive Chairman and a Lead Independent Director (Waters) to ensure independent oversight; executive sessions without management held regularly .

Investment Implications

• Pay-for-performance alignment has strengthened via PSUs and MSUs (revenue and relative TSR), with high shareholder support (95.5% say-on-pay) and stringent ownership, hedging, pledging, and clawback policies—positive for alignment and risk mitigation .
• Watch for equity supply from quarterly RSU and annual PSU vesting cycles and potential MSU tranches starting late 2026; absence of options reduces forced selling, but sizeable vesting value realization remains a potential technical overhang .
• Governance risk: Single-trigger CIC equity acceleration represents a less shareholder-friendly feature versus double-trigger; monitor for any amendments in future contracts and any increases in guaranteed elements or discretionary awards if performance softens .
• Track record under Williams includes durable growth (14% FY25 revenue, robust FCF, >92% revenue retention) and product innovation (AI/finance expansion), supporting execution credibility; continued delivery against revenue/EBITDA targets will drive PSU payouts and MSU realizations and can serve as trading catalysts around earnings and guidance updates .