Matthew Flake
Q2 HoldingsAbout Matthew Flake
Matthew P. Flake is Chief Executive Officer (since October 2013 at Q2 Holdings, CEO of Q2 Software since December 2011), Chairman of the Board (since June 2024), and re-assumed the President title effective November 6, 2025; age 53; B.A. in Business from Baylor University . In 2024, Q2 delivered GAAP revenue of $696.5M (+12% YoY), Adjusted EBITDA of $125.3M (up from $76.9M), expanded Adjusted EBITDA margin by ~600 bps, and generated $135.8M operating cash flow, underpinning above-target annual bonus outcomes for NEOs . Historical long-term equity outcomes reflect pay-for-performance: e.g., 2021 CEO MSUs paid 0 on 3-year TSR, while 2023 EBITDA-margin PSUs paid at 200% based on 2024 performance achievement . Stockholders have strongly supported Q2’s compensation program (Say-on-Pay ~90.6% approval in 2024; approved again at the 2025 annual meeting) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Q2 Holdings/Q2 Software | Chief Executive Officer (Q2 Software since Dec 2011; Q2 Holdings since Oct 2013); Chairman since Jun 2024; President Mar 2019–May 2023 and Mar 2008–Aug 2016; VP Sales Jun 2005–Mar 2008 | 2005–present | Deep sales-led perspective and long-tenured leadership guiding strategy and execution |
| S1 Corporation | Regional Sales Director | 2002–May 2005 | Internet-based financial services solutions sales leadership |
| Q‑Up Systems | Regional Sales Manager | Aug 1999–2002 | Digital solutions for community banks/credit unions; frontline GTM experience |
External Roles
- No current public company directorships or external board roles disclosed for Mr. Flake .
Fixed Compensation
| Component | 2024 Value/Terms | Notes |
|---|---|---|
| Base Salary | $520,000 | No FY24 change vs FY23 |
| Target Annual Bonus | 100% of base salary | CEO target unchanged in FY24 |
| Actual 2024 Bonus Paid | $657,800 | 126.5% of target based on plan results |
Performance Compensation
Annual Cash Bonus Plan (2024)
| Metric | Weight | Target | Actual | Payout | Weighted payout |
|---|---|---|---|---|---|
| Non-GAAP Revenue | 50% | $689,000,000 | $696,464,195 | 127.1% | 63.6% |
| Adjusted EBITDA | 50% | $111,000,000 | $125,338,221 | 125.9% | 62.9% |
| Total | 126.5% | 126.5% |
Long-Term Incentives (granted March 7, 2024)
- Mix: 50% PSUs (split equally between Adjusted EBITDA Margin and Relative TSR vs S&P Software & Services Select Index) and 50% RSUs .
- CEO grant values/shares: PSUs $4,750,000 (target 101,778 shrs; split evenly by metric), RSUs $4,750,000 (101,778 shrs) .
- PSU performance curves:
- Adjusted EBITDA Margin (12 months ending 12/31/2025): Threshold 80% (50% payout), Target 100% (100%), Max 120% (200%); up to target vests upon certification; above-target vests ~3rd anniversary; continued employment required .
- Relative TSR (3/7/2024–3/7/2027 vs Index): 25th pct (50%) to 50th (100%) to 90th (200%); vests ~3rd anniversary if earned; continued employment required .
- Prior awards: 2023 Adjusted EBITDA Margin PSUs earned at 200% (2024 achievement 18% margin); half vests ~2nd anniversary, remainder ~3rd .
Equity Ownership & Alignment
Beneficial Ownership and Policies
- Shares beneficially owned by Mr. Flake: 62,586 (<1% of 62,303,843 outstanding as of 3/31/2025) .
- Stock ownership guideline: 5x base salary for CEO; all covered executives in compliance as of 12/31/2024 .
- Hedging/pledging: Prohibited by insider trading policy; comprehensive clawback adopted effective Dec 1, 2023 in compliance with Rule 10D‑1 (replacing prior policy) .
- Director pay: CEO receives no additional compensation for Board/Chair service .
Unvested/Unearned Equity Positions (as of 12/31/2024; FMV based on $100.65/share)
| Award (Grant) | Type | Unvested/Unearned Shares | Market Value |
|---|---|---|---|
| Mar 3, 2021 | RSU (time-based) | 8,756 | $881,291 |
| Mar 10, 2022 | RSU (time-based) | 34,197 | $3,441,928 |
| Mar 2, 2023 | RSU (time-based) | 106,588 | $10,728,082 |
| Mar 7, 2024 | RSU (time-based) | 101,778 | $10,243,956 |
| Mar 2, 2023 | PSU (Adj. EBITDA Margin, earned) | 142,116 | $14,303,976 |
| Mar 10, 2022 | MSU (Relative TSR), unearned target | 53,934 | $5,428,457 |
| Mar 2, 2023 | PSU (Relative TSR), unearned target | 71,059 | $7,152,088 |
| Mar 7, 2024 | PSU (Adj. EBITDA Margin), unearned target | 50,889 | $5,121,978 |
| Mar 7, 2024 | PSU (Relative TSR), unearned target | 50,889 | $5,121,978 |
Vesting/Selling Pressure Indicators
- 2024 exercises/vesting: 184,730 options exercised (value realized $1,162,249) and 87,604 shares vested from stock awards (value realized $4,092,045) — potential tax-withholding/sale activity around vesting .
- Upcoming cadence: Time-based RSUs vest annually each March 3; 2024 PSUs cliff vest ~March 2027 (RTSR) and split ~March 2026/2027 (Adj. EBITDA Margin), subject to performance/certification and service .
Employment Terms
Key CEO Agreement Terms (Amended & Restated Employment Agreement effective Sep 23, 2021)
- At-will; base salary $520,000; target bonus 100% of salary (board approval required) .
- Regular termination without cause (non‑CIC): 200% of base salary + pro‑rata target bonus (paid over 24 months), 12 months acceleration of time-based equity, continued eligibility to vest performance awards for 12 months (subject to performance), and up to 24 months COBRA premiums .
- Change-in-control (60 days before to 24 months after) termination without cause or resignation for good reason: Lump sum 250% of base salary + pro‑rata greater of target or performance‑based bonus to date, immediate acceleration of time-based equity, continued eligibility to vest performance awards for remainder of terms, up to 30 months COBRA premiums; double-trigger equity vesting framework under 2014/2023 plans .
- Death/Disability: Immediate acceleration of time-based equity; continued eligibility for performance awards for remaining terms .
- Non-compete/non-solicit: 2 years post-termination; confidentiality/IP assignment required .
- No excise tax gross-up; 280G best‑net cutback applies .
- Clawback: Recoupment policy compliant with Rule 10D‑1 effective Dec 1, 2023 (superseding March 2021 policy) .
Potential Payment Illustrations (as of 12/31/2024; selected from proxy tables)
| Scenario | Cash Salary | Cash Bonus | COBRA | Accelerated/Deemed‑Earned Shares | Equity Value (FMV basis) | Total |
|---|---|---|---|---|---|---|
| Regular termination (non‑CIC) | $1,040,000 | $520,000 | $54,506 | 167,952 | $16,904,369 | $18,518,875 |
| Death/Disability | — | — | — | 540,810 | $54,432,527 | $54,432,527 |
| CIC (awards assumed; no termination) | — | — | — | 471,156 | $47,421,851 | $47,421,851 |
| CIC (awards not assumed; no termination) | — | — | — | 722,475 | $72,717,109 | $72,717,109 |
| CIC + qualifying termination | $1,300,000 | $520,000 | $68,132 | 722,475 | $72,717,109 | $74,605,241 |
Board Governance
- Board service: Director since 2013; Chairman since June 2024; CEO dual role with a designated Lead Independent Director; board reassesses leadership structure annually .
- Independence: Mr. Flake is not independent due to employment status; other non‑employee directors are independent under NYSE rules .
- Committees: No committee roles disclosed for Mr. Flake (committees are fully independent) .
- Attendance: Each director attended at least 75% of board/committee meetings in 2024 .
- Governance safeguards: Executive sessions, Lead Independent Director, four standing committees (Audit; Compensation; Risk & Compliance; Nominating & Corporate Governance) .
Director/Chair Compensation
- The CEO received no additional compensation for Board/Chair roles (director compensation table excludes CEO) .
Performance & Track Record
- 2024 Business outcomes: GAAP revenue $696.5M (+12% YoY); Adjusted EBITDA $125.3M (vs $76.9M in 2023); EBITDA margin expanded ~600 bps; operating cash flow $135.8M; 25 Tier 1/Enterprise deals signed .
- Pay outcomes linked to performance: 2024 annual bonus paid at 126.5% of target for CEO; 2023 Adjusted EBITDA Margin PSU tranche certified at 200% of target; 2021 MSU tranche for CEO paid 0 based on 3‑year TSR relative underperformance .
- Shareholder support: Say‑on‑Pay approval ~90.6% in 2024; NEO pay approved at 2025 meeting (For 48,778,363; Against 6,876,293; Abstain 13,779; broker non‑votes 3,120,174) .
Compensation Structure Analysis
- Mix and risk: ~95% of CEO target pay “at risk” via bonus and equity; heavy use of multi‑year PSUs (Relative TSR and Adjusted EBITDA Margin) aligns with growth/profitability and stock performance .
- Metric evolution: FY24 cash plan shifted from bookings to non‑GAAP revenue (for executives other than CRO) to better align with controllable top‑line drivers; equal weight on non‑GAAP revenue and Adjusted EBITDA .
- Shareholder alignment: No hedging/pledging; no tax gross‑ups; robust clawback; ownership guidelines increased (CEO 5x salary) with compliance reported .
- Peer benchmarking: Committee reviews and updates peer group annually with Mercer as independent consultant; FY24/FY25 peer changes disclosed; no fixed percentile target for total direct compensation .
Risk Indicators & Red Flags
- Dual role CEO + Chairman (since June 2024) mitigated by Lead Independent Director structure and independent committees .
- Form 4 timeliness: One late Form 4 for annual 3/7/2024 equity grants (administrative error) covering multiple insiders including CEO .
- No evidence of option repricing, related-party self-dealing, tax gross‑ups, or hedging/pledging; related‑party transactions minimal and controlled under policy .
Say‑on‑Pay & Shareholder Feedback
- 2024 Say‑on‑Pay passed with ~90.6% support; ongoing investor outreach; 2025 Say‑on‑Pay approved at annual meeting .
Compensation Peer Group (context)
- FY24 changes: Added Elastic, Guidewire, LiveRamp, Smartsheet, Sprinklr; removed acquired or size/mismatch names .
- FY25 changes: Added Alkami Technology, BILL Holdings, Clearwater Analytics, Intapp, Qualys; removed Alteryx, New Relic .
Investment Implications
- Alignment and retention: CEO pay-for-performance is functioning—short-term overachievement lifted bonus, while prior relative TSR awards paid zero, indicating downside sensitivity; substantial unvested PSUs and RSUs plus 5x salary ownership guideline and no pledging reduce misalignment and support retention although create periodic vest-related supply that may coincide with tax-withholding windows .
- Change‑in‑control leverage: CEO severance/acceleration is robust (250% salary CIC multiple; full time‑based acceleration; continued performance award eligibility), which can preserve management neutrality in strategic reviews but increases transaction cost; double‑trigger equity structure is shareholder-friendly relative to single‑trigger .
- Governance optics: Combined CEO/Chair warrants ongoing monitoring; presence of Lead Independent Director, strong independence on committees, and high Say‑on‑Pay support temper governance risk .
- Execution track record: 2024 revenue growth, EBITDA expansion, and cash generation improved pay outcomes; continued delivery against 2025 EBITDA‑margin PSU targets and 2024–2027 RTSR hurdles will be key signals for value creation under Mr. Flake’s leadership .