DEF 14A

DEF 14A 1 d107183ddef14a.htm DEF 14A DEF 14A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant ☒ Filed by a Party other than the Registrant ☐

Check the appropriate box:


☐		Preliminary Proxy Statement

☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒		Definitive Proxy Statement

☐		Definitive Additional Materials

☐		Soliciting Material Pursuant to §240.14a-12

PAYCOM SOFTWARE, INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):


☒	No fee required.

☐	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

	(1)	Title of each class of securities to which transaction applies:
	(2)	Aggregate number of securities to which transaction applies:
	(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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	(5)	Total fee paid:

☐	Fee paid previously with preliminary materials.

☐	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

	(1)	Amount Previously Paid:
	(2)	Form, Schedule or Registration Statement No.:
	(3)	Filing Party:
	(4)	Date Filed:

LOGO

2021 PROXY STATEMENT

LOGO

7501 W. Memorial Road

Oklahoma City, Oklahoma 73142

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders (the “Annual Meeting”) of Paycom Software, Inc. (the “Company”) to be held on May 3, 2021 at 11:00 a.m. Central Time. The Annual Meeting will be held solely by means of remote communication.

In order to attend the Annual Meeting virtually, you must register in advance at www.proxydocs.com/PAYC prior to 5:00 p.m. Eastern Time on Friday, April 30, 2021. You will be required to enter the control number included on the proxy card or voting instruction form previously delivered to you. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you to access the virtual Annual Meeting and vote online during the meeting. You will have the opportunity to submit questions at the time of registration. Enclosed are the Notice of Annual Meeting of Stockholders and Proxy Statement, which describe the business that will be acted upon at the meeting, as well as our 2020 Annual Report, which includes our audited financial statements.

While last year presented many unprecedented challenges, we viewed them as opportunities to help the communities we call home and further prove the value proposition of our software. I am incredibly proud of our team members for their commitment and flexibility throughout 2020. Together, we focused on providing world-class service for our clients, rapidly developing new technologies and increasing the number of new clients added to our platform. We were able to not only continue our growth, but also empower employers across the country to digitally transform their organizations with one solution for all of their HR and payroll needs.

Your vote is important. The Board of Directors appreciates and encourages stockholder participation in the Company’s affairs. Whether or not you can attend the meeting, please read the enclosed Proxy Statement carefully, and then vote your shares by internet, by telephone or by completing, signing, dating and returning the enclosed proxy card promptly in the envelope provided, so that your shares will be represented at the meeting.

On behalf of the Board of Directors, thank you for your cooperation and support.

Sincerely,

LOGO

Chad Richison

President, Chief Executive Officer and

Chairman of the Board of Directors

LOGO

7501 W. Memorial Road

Oklahoma City, Oklahoma 73142

(405) 722-6900

Notice of Annual Meeting of Stockholders

May 3, 2021

11:00 a.m. local time

Annual Meeting to be held live via the internet - please visit www.proxydocs.com/PAYC for more details. You must pre-register to attend the meeting by entering your unique assigned control number from your meeting materials.

NOTICE IS HEREBY GIVEN that the 2021 Annual Meeting of Stockholders (the “Annual Meeting”) of Paycom Software, Inc., a Delaware corporation (the “Company”), will be held virtually on May 3, 2021 at 11:00 a.m. local time, for the following purposes:

(1)	to elect two Class II directors, each to serve until the date of the 2024 annual meeting of stockholders and until his successor has been duly elected and qualified, or his earlier death, resignation or removal;

(2)	to ratify the appointment of Grant Thornton LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021;

(3)	to approve, on an advisory basis, the compensation of the Company’s named executive officers;

(4)	to consider a stockholder proposal requesting that the Board of Directors prepare a diversity report, if properly presented at the Annual Meeting; and

(5)	to transact any other business that may properly come before the Annual Meeting.

Stockholders are referred to the proxy statement accompanying this notice for more detailed information with respect to the matters to be considered at the Annual Meeting. The Board of Directors recommends that you vote “FOR” each director nominee, “FOR” proposals 2 and 3 at the Annual Meeting and makes no recommendation with respect to proposal 4.

The Board of Directors has fixed the close of business on Wednesday, March 17, 2021 as the record date (the “Record Date”) for the Annual Meeting. Only holders of record as of the close of business on the Record Date are entitled to receive notice of, and to vote at, the Annual Meeting or at any postponement(s) or adjournment(s) thereof. A complete list of stockholders entitled to vote at the Annual Meeting will be available for inspection at the principal executive offices of the Company during regular business hours for the 10 calendar days prior to the Annual Meeting. The list will also be available during the Annual Meeting for inspection by stockholders.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING TO BE HELD ON MAY 3, 2021

In addition to delivering paper copies of these proxy materials to you by mail, this notice and the accompanying proxy statement, form of proxy and 2020 Annual Report are available at www.proxydocs.com/PAYC.

YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, we urge you to vote your shares by internet, telephone or mail. For specific instructions on how to vote your shares, see the section entitled “About the Annual Meeting” beginning on page 2 of the proxy statement.

By Order of the Board of Directors,

LOGO

Chad Richison

President, Chief Executive Officer and

Chairman of the Board of Directors

Oklahoma City, Oklahoma

April 1, 2021

Table of Contents


Summary of Proposals			1

About the Annual Meeting			2

Proposal 1: Election of Directors			7

Vote Required			7

Recommendation of the Board of Directors			7

Board of Directors Composition and Independence			8

Director Skills, Experience and Background			9

Corporate Governance			13

Board Leadership Structure			13

Board of Directors Meetings			13

Committees			13

Compensation Committee Interlocks and Insider Participation			15

Risk Oversight			15

Corporate Social Responsibility			15

Director Qualifications			18

Director Nomination Procedures			18

Communications with the Board of Directors			19

Code of Business Conduct and Ethics			19

Hedging Policy			19

Director Compensation			19

Audit Committee Matters			23

Audit Committee Report			23

Fees to Independent Registered Public Accounting Firm			23

Policy on Audit Committee Pre-approval of Audit and Non-audit Services Performed by Independent Registered Public Accounting Firm			24

Proposal 2: Ratification of the Appointment of Our Independent Registered Public Accounting Firm			25

Vote Required			25

Recommendation of the Board of Directors			25

Management			26

Compensation Discussion and Analysis			28

Executive Summary			28

Overview			29

Compensation Philosophy			32

Compensation Review and Determination			32

Cash Compensation			36

Long-Term Incentive Compensation			39

Other Compensation Components and Considerations			42

Compensation Committee Report			45


Compensation of Executive Officers			46

Summary Compensation Table for Fiscal Years Ended December 31, 2020, 2019 and 2018			46

Narrative to the Summary Compensation Table			47

Fiscal Year 2020 Grants of Plan-Based Awards Table			48

Fiscal Year 2020 Outstanding Equity Awards At Fiscal Year-End Table			49

Fiscal Year 2020 Option Exercises and Stock Vested Table			50

Employment Agreements and Arrangements			50

Potential Payments upon Termination or Change in Control			52

Compensation Risk Assessment			54

Fiscal Year 2020 Pay Ratio Disclosure			54

Equity Compensation Plan Table			55

Proposal 3: Advisory Vote to Approve Executive Compensation			56

Vote Required			56

Recommendation of the Board of Directors			56

Proposal 4: Stockholder Proposal Requesting that the Board of Directors Prepare a Diversity Report			57

Supporting Statement			58

Statement of the Board of Directors			58

Vote Required			59

Recommendation of the Board of Directors			59

Certain Relationships and Related Party Transactions			60

Indemnification of Directors			60

Review and Approval or Ratification of Transactions with Related Parties			60

Security Ownership of Certain Beneficial Owners and Management			61

Other Matters			64

Delinquent Section 16(a) Reports			64

Submission of Stockholder Proposals and Nominations			64

Other Business			64

Financial Statements			64

Additional Information			65

LOGO

7501 W. Memorial Road

Oklahoma City, Oklahoma 73142

PROXY STATEMENT

for

the Annual Meeting of Stockholders

to be held on May 3, 2021

Unless the context otherwise requires, (i) references to “Paycom,” “we,” “us,” “our” and the “Company” are to Paycom Software, Inc., a Delaware corporation, and its consolidated subsidiaries, and (ii) references to “stockholders” are to the holders of shares of our common stock, par value $0.01 per share, including unvested shares of restricted stock (“Common Stock”).

The accompanying proxy is solicited by the Board of Directors on behalf of Paycom Software, Inc., a Delaware corporation, to be voted at the Annual Meeting of Stockholders (the “Annual Meeting”) to be held virtually on May 3, 2021, at the time and for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders (the “Notice”) and at any adjournment(s) or postponement(s) of the Annual Meeting. This proxy statement and accompanying form of proxy are dated April 1, 2021 and are expected to be first sent or given to stockholders on or about April 2, 2021.

Our principal executive offices are located at, and our mailing address is, 7501 W. Memorial Road, Oklahoma City, Oklahoma 73142.

Summary of Proposals

Proposal

Voting

Options

Vote Required

Effect of

Abstentions

Effect of

Broker

Non-Votes

Board’s Voting

Recommendation

1. Election of two Class II directors

FOR or

WITHHOLD

as to each

director

nominee

Plurality of the shares

present in person or

represented by proxy

and entitled to vote in

the election of directors*

N/A

effect

FOR the

election of

each director

nominee

2. Ratification of the appointment of Grant Thornton LLP

FOR,

AGAINST or

ABSTAIN

Majority of the shares

present in person or

represented by proxy

and entitled to vote on

the proposal

Same

effect as

vote

AGAINST

N/A

FOR

3. Advisory approval of the
compensation of our named
executive officers

FOR,

AGAINST or

ABSTAIN

Majority of the shares

present in person or

represented by proxy

and entitled to vote on

the proposal

Same

effect as

vote

AGAINST

effect

FOR

4. Advisory approval of stockholder proposal requesting that the Board of Directors prepare a diversity report

FOR,

AGAINST or

ABSTAIN

Majority of the shares

present in person or

represented by proxy

and entitled to vote on

the proposal

Same

effect as

vote

AGAINST

effect

NO
RECOMMENDATION

*	In light of our majority voting policy for directors, a “WITHHOLD” vote will have a similar effect as a vote against that director nominee. See “How many votes are required to elect the Class II directors (Proposal 1)?”


		1

2021 PROXY STATEMENT

About the Annual Meeting

What is a proxy?

A proxy is another person that you legally designate to vote your stock. If you designate someone as your proxy in a written document, that document is also called a “proxy” or a “proxy card.”

What is a proxy statement?

A proxy statement is a document that we are required to give you under certain regulations of the Securities and Exchange Commission (the “SEC”) in connection with the Annual Meeting.

What is the purpose of the Annual Meeting?

At the Annual Meeting, stockholders will act upon the following matters:

(1)	the election of two Class II directors, each to serve until the date of the 2024 annual meeting of stockholders and until his successor has been duly elected and qualified, or his earlier death, resignation or removal;

(2)	the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021;

(3)	the approval, on an advisory basis, of the compensation of our named executive officers;

(4)	the approval, on an advisory basis, of a stockholder proposal requesting that the Board of Directors prepare a diversity report, if properly presented at the Annual Meeting; and

(5)	such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

What should I do if I receive more than one set of voting materials?

You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. Similarly, if you are a stockholder of record and also hold shares in a brokerage account, you will receive a proxy card for shares held in your name and a voting instruction card for shares held in “street name.” Please complete, sign, date and return each proxy card and voting instruction card that you receive to ensure that all of your shares are voted.

What is the record date and what does it mean?

The record date to determine the stockholders entitled to notice of and to vote at the Annual Meeting is the close of business on March 17, 2021 (the “Record Date”). The Record Date is established by the Board of Directors as required by Delaware law. On the Record Date, 60,185,353 shares of Common Stock (including shares of restricted stock) were outstanding.

Who is entitled to vote at the Annual Meeting?

Subject to the voting procedures set forth below, holders of Common Stock at the close of business on the Record Date are entitled to vote at the Annual Meeting.

What are the voting rights of the stockholders?

Each holder of Common Stock is entitled to one vote per share of Common Stock on all matters to be acted upon at the Annual Meeting. Our certificate of incorporation prohibits cumulative voting in the election of directors.

The presence, in person or by proxy, of the holders of a majority of the outstanding shares of Common Stock entitled to vote at the Annual Meeting constitutes a quorum for the transaction of business. If a quorum is not present or represented at the Annual Meeting, the chairman of the Annual Meeting or a majority in voting interest of the stockholders present in person or represented by proxy at the Annual Meeting may adjourn the meeting, without notice other than announcement at the Annual Meeting, until a quorum is present or represented.


		2

2021 PROXY STATEMENT

What is the difference between a stockholder of record and a “street name” holder?

If your shares are registered directly in your name with American Stock Transfer & Trust Company, LLC, our transfer agent, you are considered the stockholder of record with respect to those shares and we have sent the proxy statement and proxy card directly to you.

If your shares are held in a brokerage account or held by a bank or other nominee, the broker, bank or other nominee is considered the record holder of those shares. You are considered the beneficial owner of those shares, and your shares are held in “street name.” The proxy statement and proxy card have been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your nominee regarding how to vote your shares. See “If I hold my shares in “street name,” how do I vote my shares?”

If I am a stockholder of record, how do I vote my shares?

If you are a stockholder of record, you may vote your shares of Common Stock via the internet during the Annual Meeting or you may vote by proxy.

Via the internet prior to the Annual Meeting. You may vote by proxy via the internet prior to the Annual Meeting by following the instructions found on the proxy card.

Via the internet during the Annual Meeting. You may vote during the Annual Meeting by registering in advance at www.proxydocs.com/PAYC, logging in to the meeting website using the link in the email you receive after registering, and following the instructions on the website.

By telephone. You may vote by proxy by calling the toll-free number found on the proxy card.

By mail. You may vote by proxy by completing, signing, dating and promptly returning the enclosed proxy card in the postage-paid envelope. The proxy card is simple to complete, with specific instructions on the card.

By completing and submitting the proxy card or by submitting your instructions via the internet or by telephone, you will direct the designated persons (known as “proxies”) to vote your shares of Common Stock at the Annual Meeting in accordance with your instructions. The Board of Directors has appointed Chad Richison and Craig Boelte to serve as the proxies for the Annual Meeting.

Your proxy card will be valid only if you sign, date and return it prior to the Annual Meeting. If you complete the entire proxy card except one or more of the voting instructions, then, with respect to Proposal 1, Proposal 2 and Proposal 3, the designated proxies will vote your shares in accordance with the recommendation of the Board of Directors with respect to each proposal for which you do not provide any voting instructions or, in the case of Proposal 4, will vote your shares “ABSTAIN”. We do not anticipate that any other matters will come before the Annual Meeting, but if any other matters properly come before the Annual Meeting, then the designated proxies will vote your shares in accordance with applicable law and their judgment.

If I hold my shares in “street name,” how do I vote my shares?

If you hold your shares in “street name,” your broker, bank or other nominee should provide you with a request for voting instructions along with the proxy materials. By completing the voting instruction card, you may direct your nominee how to vote your shares. If you sign but do not fully complete the voting instruction card, then your nominee may be unable to vote your shares with respect to the proposals for which you provide no voting instructions. Alternatively, if you hold your shares in “street name” and want to vote your shares via the internet during the Annual Meeting, you must pre-register for the meeting at www.proxydocs.com/PAYC and contact your nominee directly in order to obtain a proxy issued to you by your nominee holder. Note that a broker letter that identifies you as a stockholder is not the same as a nominee-issued proxy. The availability of online voting may depend on the voting procedures of the organization that holds your shares.

Who counts the votes?

All votes will be tabulated by Mediant Communications, Inc., the inspector of election appointed for the Annual Meeting. Votes for each proposal will be tabulated separately.


		3

2021 PROXY STATEMENT

What if I do not specify how I want my shares voted?

If you are a record holder who returns a signed proxy card that does not specify how you want to vote your shares on one or more proposals, the proxies will vote your shares for each proposal as to which you did not provide any voting instructions, and such shares will be voted in the following manner:

Proposal 1—FOR

the election of each of the Class II director nominees;


Proposal 2—		FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021;

Proposal 3—FOR

the advisory approval of the compensation of our named executive officers; and

Proposal 4—ABSTAIN

with respect to the stockholder proposal requesting that the Board of Directors prepare a diversity report.

If you are a “street name” holder and do not provide voting instructions on one or more proposals, your broker, bank or other nominee may be unable to vote your shares on all of the proposals other than the ratification of the appointment of Grant Thornton LLP (Proposal 2). See “What is a broker non-vote?”

Can I change my vote?

Yes. If you are a record holder, you may revoke your proxy by any of the following means:

•

Give written notice of revocation, addressed to Matthew Paque, General Counsel, at our address above, which notice must be received before 4:00 p.m. local time on April 30, 2021.

•

Complete and submit a new valid proxy bearing a later date prior to 4:00 p.m. local time on April 30, 2021.

•

Attend the Annual Meeting virtually and vote via the internet during the Annual Meeting. Your virtual attendance at the Annual Meeting will not by itself revoke a proxy. You must vote your shares via the internet during the Annual Meeting to revoke your proxy.

If you are a “street name” holder, your broker, bank or other nominee should provide instructions explaining how you may change or revoke your voting instructions.

How many votes are required to elect the Class II directors (Proposal 1)?

While directors are elected by a plurality of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors, our Corporate Governance Guidelines include a majority voting policy for directors. This policy states that in an uncontested election, any director nominee who receives a greater number of votes “WITHHELD” from his election than votes “FOR” such election (a “Majority Withheld Vote”) is required to promptly tender his resignation to the Board of Directors following certification of the stockholder vote. The nominating and corporate governance committee (or, alternatively, a committee of the independent directors of the Board of Directors if each member of the nominating and corporate governance committee received a Majority Withheld Vote) must recommend to the Board of Directors whether to accept the resignation offer. The Board of Directors is required to consider and act on the recommendation within 90 days following certification of the stockholder vote and will promptly disclose its decision whether to accept the resignation offer (and, if applicable, the reasons for rejecting the resignation offer) in a press release.

If you withhold authority to vote with respect to the election of a director nominee, your shares will not be voted with respect to such director nominee(s) indicated but your shares will be counted for purposes of determining whether there is a quorum. Under our majority voting policy for directors, a “WITHHOLD” vote will have a similar effect as a vote against that director nominee.


		4

2021 PROXY STATEMENT

A complete statement of our majority voting policy is set forth in our Corporate Governance Guidelines available on our website at investors.paycom.com.

How many votes are required to approve the other proposals (Proposals 2, 3 and 4)?

Approval of each other proposal will require the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal. If your shares are represented at the Annual Meeting but you “ABSTAIN” from voting on any of these matters, your shares will be counted as present and entitled to vote on a particular proposal for purposes of establishing a quorum, and the abstention will have the same effect as a vote against that proposal.

Your votes with respect to the approval of the compensation of our named executive officers (Proposal 3) and the stockholder proposal requesting that the Board of Directors prepare a diversity report (Proposal 4) are advisory, which means the results of such votes are not binding on us, the Board of Directors and the committees of the Board of Directors.

What is a broker non-vote?

A broker non-vote occurs when a broker holding shares for a beneficial owner does not vote on a particular proposal because the broker does not have discretionary voting power with respect to that item and has not received voting instructions from the beneficial owner. Broker non-votes are included in the number of shares present at the Annual Meeting for purposes of determining a quorum. If you hold your shares in “street name” and you do not instruct your broker how to vote your shares, no votes will be cast on your behalf with respect to any proposal other than the ratification of the appointment of Grant Thornton LLP (Proposal 2).

Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting?

No. Delaware law does not provide stockholders any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual Meeting.

How are proxies being solicited and what are the costs? Who pays the solicitation costs?

Proxies are being solicited by the Board of Directors on behalf of the Company. We have retained The Proxy Advisory Group, LLC to assist in the solicitation of proxies and provide related advice and informational support for a services fee, plus customary disbursements, which are not expected to exceed $30,000 in total. Our officers, directors and employees may also solicit proxies personally or in writing, by telephone, e-mail, or otherwise. These officers and employees will not receive additional compensation but will be reimbursed for out-of-pocket expenses. Brokerage houses and other custodians, nominees and fiduciaries, in connection with shares of the Common Stock registered in their names, will be asked to forward solicitation materials to the beneficial owners of shares of Common Stock. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for their reasonable out-of-pocket expenses for forwarding solicitation materials and collecting voting instructions.

Are there any other matters to be acted upon at the Annual Meeting?

Management does not intend to present any business for a vote at the Annual Meeting other than the matters set forth in the Notice and has no information that others will do so. If other matters requiring a vote of the stockholders properly come before the Annual Meeting, it is the intention of the persons named in the accompanying form of proxy to vote the shares represented by the proxies held by them in accordance with applicable law and their judgment on such matters.

Where can I find voting results?

We plan to publish the voting results in a Current Report on Form 8-K, which we expect to file with the SEC within four business days following the Annual Meeting.


		5

2021 PROXY STATEMENT

Who can help answer my questions?

The information provided above in this “Question and Answer” format is for your convenience only and is merely a summary of certain information contained in this proxy statement. We urge you to carefully read this entire proxy statement, including the documents referred to in this proxy statement. If you have any questions or need additional material, please feel free to contact Investor Relations at (855) 603-1620 or investors@paycom.com.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS

FOR THE ANNUAL MEETING TO BE HELD ON MAY 3, 2021

In addition to delivering paper copies of these proxy materials to you by mail, the Notice, proxy statement, form of proxy and 2020 Annual Report are available at www.proxydocs.com/PAYC.


		6

2021 PROXY STATEMENT

Proposal 1: Election of Directors

Paycom’s business and affairs are managed under the direction of our Board of Directors, which currently consists of seven directors. Pursuant to our amended and restated certificate of incorporation and our amended and restated bylaws, our Board of Directors is divided into three classes, with the members of the classes serving three-year terms that expire in successive years. The terms of office of the current members of our Board of Directors are divided as follows:

•

the term of office for our Class II directors will expire at the Annual Meeting;

•

the term of office for our Class III directors will expire at the annual meeting of stockholders to be held in 2022; and

•

the term of office for our Class I directors will expire at the annual meeting of stockholders to be held in 2023.

Directors hold office until their successors have been elected and qualified or until their earlier death, resignation or removal. The Board of Directors has nominated Robert J. Levenson and Frederick C. Peters II for election as Class II directors (each, a “Director Nominee” and together, the “Director Nominees”), each to serve for a term expiring on the date of the annual meeting of stockholders to be held in 2024 and until his successor has been duly elected and qualified or his earlier death, resignation or removal. Each Director Nominee currently serves on our Board of Directors.

Vote Required

Assuming the presence of a quorum, the affirmative vote of the holders of a plurality of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors is required for the election of the Class II director nominees (i.e., the two individuals who receive the most votes will be elected as Class II directors). Nonetheless, pursuant to our Corporate Governance Guidelines, in an uncontested election, any director nominee who receives a Majority Withheld Vote is required to promptly tender his resignation to the Board of Directors following certification of the stockholder vote. The nominating and corporate governance committee (or, alternatively, a committee of the independent directors of the Board of Directors if each member of the nominating and corporate governance committee received a Majority Withheld Vote) must recommend to the Board of Directors whether to accept the resignation offer. The Board of Directors is required to consider and act on the recommendation within 90 days following certification of the stockholder vote and will promptly disclose its decision whether to accept the resignation offer (and, if applicable, the reasons for rejecting the resignation offer) in a press release. Should any Director Nominee become unable or unwilling to serve, the proxy holders may vote the proxies for the election, in his stead, of any other person the Board of Directors may nominate or designate. Each Director Nominee has expressed his intention to serve the entire term for which election is sought.

Recommendation of the Board of Directors

The Board of Directors recommends that you vote FOR each Director Nominee.


		7

2021 PROXY STATEMENT

Proposal 1: Election of Directors (continued)

Board of Directors Composition and Independence

The following table provides information about each director currently serving on our Board of Directors, including the Director Nominees.

Name

Age

Director

Since

Director Class

(Expiration of

Current Term)

Independent

Committee Memberships

Audit

Compensation

Nominating

and

Corporate

Governance

Chad Richison

1998

Class III (2022)

Jason D. Clark

2014

Class III (2022)

(chairperson)

Henry C. Duques

2016

Class III (2022)

Janet B. Haugen

2018

Class I (2023)

(chairperson)

Robert J. Levenson

2007

Class II (2021)

(chairperson)

Frederick C. Peters II

2014

Class II (2021)

J.C. Watts, Jr.

2016

Class I (2023)

Our Board of Directors relies on the criteria set forth in the New York Stock Exchange (“NYSE”) Listed Company Manual for purposes of evaluating the independence of directors and, based on such criteria, has affirmatively determined that Ms. Haugen and each of Messrs. Clark, Duques, Levenson, Peters and Watts qualifies as “independent.” In making such determinations, the Board of Directors considered transactions and relationships between each non-employee director and the Company, if any, that would require disclosure pursuant to Item 404 of Regulation S-K under the Securities Act of 1933, as amended (the “Securities Act”). The Board of Directors also considered other transactions or relationships that do not rise to the level of requiring disclosure, including the relationship between the Company and entities affiliated with certain directors as a result of such entities’ purchase (at standard rates) and ongoing use of the Company’s human capital management and payroll software. There are no family relationships between any of our directors or executive officers.


		8

2021 PROXY STATEMENT

Proposal 1: Election of Directors (continued)

Director Skills, Experience and Background

The biographies of the Director Nominees are as follows:

ROBERT J. LEVENSON

Robert J. Levenson has served as a member of our Board of Directors since July 2007. Mr. Levenson is a founder and managing member of Lenox Capital Group, LLC, a private venture capital investment company formed in 2000 (“Lenox Capital”), which focuses primarily on early stage software technology and service company investments. From 1981 through 1990, Mr. Levenson held several executive management positions with Automatic Data Processing, Inc. (“ADP”), including Group President—Employer Services, member of the Corporate Executive Committee and member of the board of directors. In late 1990, Mr. Levenson became Chief Operating Officer of Medco Containment Services, Inc. (“Medco”) (later acquired by Merck & Co., Inc.), and was elected to Medco’s board of directors. From 1992 until 2003, Mr. Levenson served on the board of directors of First Data Corporation (“FDC”), and from 1993 until his retirement in 2000, he served as Executive Vice President of FDC. Thereafter, he served as a consultant to FDC and certain of its joint venture affiliates until 2006. Mr. Levenson has served on several boards of directors of public and private companies as well as civic and philanthropic organizations, which have previously included: ADP, FDC, Medco, Central Data Systems, Inc., Comnet, Inc., Polyvision, Broadway & Seymour, Superior TeleCom Inc., Vestcom International, Emisphere Technologies, Inc., Ceridian Corp, and Elite Pharmaceuticals, Inc. He graduated from Kent State University with his bachelor’s degree in business administration. Mr. Levenson was selected to serve on our Board of Directors based on his industry expertise and experience as a member of the boards of directors of other companies.

LOGO

FREDERICK C. PETERS II

Frederick C. Peters II has served as a member of our Board of Directors since March 2014. He currently serves as Chairman and Chief Executive Officer of Community Financial Institutions Fund (f/k/a Bluestone Financial Institutions Fund). Prior to joining Community Financial Institutions Fund, Mr. Peters served as the Chairman, President and Chief Executive Officer of Bryn Mawr Bank Corporation (“BMTC”), a publicly traded company, and its principal subsidiary, The Bryn Mawr Trust Company, and served on BMTC’s board of directors from January 2001 to April 2017. BMTC is listed on the Nasdaq Stock Market. Prior to joining BMTC in 2001, Mr. Peters started two community banks: National Bank of the Main Line in 1985 and First Main Line Bank in 1995. Mr. Peters began his banking career at Philadelphia National Bank in 1976 and held lending and executive positions at Hamilton Bank and Industrial Valley Bank prior to starting his first community bank. In addition, Mr. Peters served on the board of directors of the Federal Reserve Bank of Philadelphia from 2009 through 2014. He served as the chairman of the Federal Reserve Bank of Philadelphia’s audit committee from January 1, 2013 through December 31, 2014, while also serving as a member of the Federal Reserve Bank’s Committee of Audit Chairs in Washington, D.C. Mr. Peters has served on numerous non-profit boards including Main Line Health where he served first as chairman of the audit committee and later as chairman of the finance committee. He currently serves on the board of directors of The Bryn Mawr Film Institute and The Foundation for Delaware County. Mr. Peters graduated from Amherst College with his bachelor’s degree in political science. Mr. Peters was selected to serve on our Board of Directors based on his financial and investment expertise and his experience as a member of the board of directors of a public company.

LOGO


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2021 PROXY STATEMENT

Proposal 1: Election of Directors (continued)

The biographies of the directors currently serving as Class III directors are as follows:

JASON D. CLARK

Jason D. Clark has served as a member of our Board of Directors since August 2014. Mr. Clark has served as President and Chief Executive Officer of CompSource Mutual Insurance Company since March 2009. Mr. Clark is a member of the board of directors of the Oklahoma State Chamber of Commerce, a President of the American Association of State Compensation Insurance Funds (AASCIF) and has previously served in leadership positions for multiple industry and trade associations. Mr. Clark has over 30 years of experience in the insurance industry specializing in workers’ compensation insurance. Mr. Clark earned his bachelor’s degree in business administration from the University of Central Oklahoma. Mr. Clark was selected to serve on our Board of Directors based on his business experience.

LOGO

HENRY C. DUQUES

Henry C. Duques has served as a member of our Board of Directors since November 2016. Mr. Duques was the chairman and chief executive officer of First Data Corporation, an electronic commerce and payment services company, from 1992 to 2002 and again from 2005 to 2007. Prior to joining First Data Corporation, he served as president and chief executive officer of the Database Services Group of American Express Travel Related Services Company, Inc., the predecessor of First Data Corporation, from 1987 to 1992. Mr. Duques was with Automatic Data Processing, Inc. from 1973 to 1987, where he served as Group President Financial Services and as a member of the board of directors from 1984 to 1987. Mr. Duques also served on the boards of directors of Unisys Corporation from 1998 to 2014, including as the nonexecutive chairman from 2006 to 2008, SunGard Corp. from 2003 to 2005 and CheckFree Corporation from 2000 to 2004. Mr. Duques earned his bachelor’s degree in business administration from The George Washington University in 1965 and an M.B.A from The George Washington University in 1969 and served on board of trustees of The George Washington University from 1998 to 2008. Mr. Duques was selected to serve on our Board of Directors based on his decades of experience in business operations and management, strategy and public company governance.

LOGO

CHAD RICHISON

Chad Richison has served as President and Chief Executive Officer since he founded Paycom in 1998. He has also served as a member of our Board of Directors since 1998 and was appointed Chairman of the Board of Directors in August 2016. Mr. Richison began his career in sales with a national payroll and human resources company and a regional payroll company prior to founding Paycom. He received his bachelor’s degree in mass communications—journalism from the University of Central Oklahoma. Mr. Richison was selected to serve on our Board of Directors based on the leadership skills, strategic guidance and experience he brings as our President and Chief Executive Officer and operational expertise from his prior experience in the industry.

LOGO


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2021 PROXY STATEMENT

Proposal 1: Election of Directors (continued)

The biographies of the directors currently serving as Class I directors are as follows:

JANET B. HAUGEN

Janet B. Haugen has served as a member of our Board of Directors since February 2018. Ms. Haugen was the senior vice president and chief financial officer of Unisys Corporation (“Unisys”), a global information technology company, from 2000 to 2016. She also held positions as vice president, controller and acting chief financial officer of Unisys between 1996 and 2000. Prior to joining Unisys, she was an audit partner at Ernst & Young. Ms. Haugen served as a member of the board of directors and chair of the audit committee of SunGard Data Systems Inc. from 2002 to 2005, and has served on the board of directors of Juniper Networks, Inc., a public company, since May 2019, and the board of directors of Bentley Systems, Inc., a public company, since October 2020. She earned her bachelor’s degree in economics from Rutgers University. Ms. Haugen was selected to serve on our Board of Directors based on her public company leadership experience, particularly in the technology industry, and extensive knowledge of financial and economic issues.

LOGO

J.C. WATTS, JR.

J.C. Watts, Jr. has served as a member of our Board of Directors since November 2016. Mr. Watts is the president and chief executive officer of Watts Partners, a boutique corporate and government affairs consulting firm he co-founded in 2003, and is chairman of the Black News Channel. Mr. Watts has served on the board of directors of Dillard’s, Inc. (“Dillard’s”), a public company, since August 2009, and previously served on the Dillard’s board of directors and as a member of its audit committee from 2003 to 2008. Mr. Watts also served on the boards of directors of CSX Corporation from March 2011 to May 2014 and ITC Holdings Corp. from August 2011 to February 2014. Mr. Watts was elected to the United States House of Representatives in 1994 and served from January 1995 to January 2003. During his time in Congress, Mr. Watts was chairman of the Republican Conference from January 1999 to January 2003, and also served on the United States House Committees on Armed Services, Financial Services, and Transportation and Infrastructure. Mr. Watts earned his bachelor’s degree in journalism and public relations from the University of Oklahoma in 1981. Mr. Watts was selected to serve on our Board of Directors due to his senior leadership experience in business and as a public servant, his experience serving on other public company boards and his understanding of regulatory issues.

LOGO


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2021 PROXY STATEMENT

Proposal 1: Election of Directors (continued)

The following chart provides information about each director’s qualifications and experiences. More detailed information is provided in the director biographies above.

LOGO

Leadership

Business and strategic management experience from service in a significant leadership position

•

Public Company Board

Experience as a board member of another publicly traded company

•

Financial

Background and experience in finance, accounting, financial reporting or economics

•

Industry

Experience in the software or technology industries

•

Government Relations/Regulatory

Experience in government or regulatory matters

•

Risk Management

Experience in risk management, strategic planning or compliance

•

Diversity

Gender, racial or ethnic diversity

•


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2021 PROXY STATEMENT

Corporate Governance

Board Leadership Structure

The Chief Executive Officer and Chairman of the Board of Directors are both appointed by the Board of Directors. Our Corporate Governance Guidelines provide that both independent and management directors, including the Chief Executive Officer, are eligible for appointment as Chairman of the Board of Directors. We believe it is important that the Board of Directors retain flexibility to determine whether these roles should be separate or combined based upon all relevant facts and circumstances at a given point in time. Currently, Mr. Richison serves as both Chief Executive Officer and Chairman. At this time, the Board of Directors believes that combining the Chief Executive Officer and Chairman roles promotes decisive leadership, fosters clear accountability and enhances our ability to communicate our strategy clearly and consistently to our stockholders, employees and clients.

Our Corporate Governance Guidelines provide that if the Chairman is not an independent director, the non-management directors are required to appoint a lead independent director to represent and coordinate the activities of the non-management and independent directors and to help ensure the independence of the Board of Directors from the Chief Executive Officer and Chairman. Mr. Peters currently serves as lead independent director. In his role as lead independent director, Mr. Peters’s responsibilities are to (i) preside over regularly scheduled executive sessions of non-management and independent directors, (ii) facilitate communication among the non-management and independent directors, (iii) act as a liaison between the non-management and independent directors and the Chief Executive Officer and (iv) perform such other roles and responsibilities as may be assigned to him by the Board of Directors.

A copy of the Corporate Governance Guidelines is available on our website at investors.paycom.com.

Board of Directors Meetings

During the fiscal year ended December 31, 2020, the Board of Directors held six meetings. Each director attended at least 75% of the aggregate number of meetings held by the Board of Directors and the committees of the Board of Directors for the period for which such director served on the Board of Directors or committee(s), if applicable, during 2020. Each member of the Board of Directors attended the annual meeting of stockholders in 2020. The Board of Directors does not have a policy requiring director attendance at annual meetings of stockholders.

Committees

Our Board of Directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. The composition and primary responsibilities of each committee are described below. Members serve on these committees until their resignation or death or until otherwise determined by our Board of Directors.

Audit Committee

Our audit committee oversees our accounting and financial reporting processes and the audit of our financial statements. In that regard, our audit committee assists board oversight of (i) the integrity of our financial statements, (ii) our compliance with legal and regulatory requirements, (iii) the independent auditor’s qualifications and independence and (iv) the performance of our internal audit function and independent auditors. Among other matters, the audit committee is responsible for (a) the appointment, compensation, retention, oversight and pre-approval of our independent auditors, including oversight of firm and partner rotation, (b) evaluating the qualifications, performance and independence of our independent auditors, (c) reviewing our annual and interim financial statements, (d) discussing press releases, financial information and earnings guidance provided to analysts and rating agencies, (e) discussing policies with respect to risk assessment and risk management, (f) reviewing and ensuring the adequacy of our internal control systems, (g) reviewing and approving related party transactions and (h) annually reviewing the audit committee charter and the committee’s performance.


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2021 PROXY STATEMENT

Corporate Governance (continued)

The current members of our audit committee are Ms. Haugen and Messrs. Clark, Duques, Levenson and Peters, with Ms. Haugen serving as chairperson of the committee. Our Board of Directors has affirmatively determined that each of Ms. Haugen and Messrs. Clark, Duques, Levenson and Peters (i) is independent for purposes of serving on the audit committee under applicable SEC rules and regulations and the NYSE Listed Company Manual and (ii) meets the requirements for financial literacy under the NYSE Listed Company Manual and applicable SEC rules and regulations. Our Board of Directors has designated each of Ms. Haugen and Mr. Peters as an “audit committee financial expert” as defined under the applicable SEC rules and determined that each of them has accounting or related financial management expertise as required under the NYSE Listed Company Manual. The audit committee operates under a written charter that satisfies the applicable SEC rules and regulations and the requirements of the NYSE Listed Company Manual. A copy of the audit committee charter is available on our website at investors.paycom.com. During the fiscal year ended December 31, 2020, the audit committee held five meetings.

Nominating and Corporate Governance Committee

Our nominating and corporate governance committee is responsible for, among other matters, identifying, evaluating and recommending candidates for membership on our Board of Directors, including nominees recommended by stockholders, reviewing and recommending the composition of our committees, overseeing our Code of Business Conduct and Ethics and Corporate Governance Guidelines, reporting and making recommendations to our Board of Directors concerning governance matters and overseeing our policies and programs on issues of social responsibility and environmental sustainability. The nominating and corporate governance committee also annually reviews the nominating and corporate governance committee charter, the performance of the Board of Directors and management, and its own performance.

The current members of the nominating and corporate governance committee are Messrs. Levenson, Peters and Watts, with Mr. Levenson serving as chairperson of the committee. Our Board of Directors has affirmatively determined that each of Messrs. Levenson, Peters and Watts is independent for purposes of serving on the nominating and corporate governance committee under applicable SEC rules and regulations and the NYSE Listed Company Manual. The nominating and corporate governance committee operates under a written charter that satisfies the applicable SEC rules and regulations and the requirements of the NYSE Listed Company Manual. A copy of the nominating and corporate governance committee charter is available on our website at investors.paycom.com. During the fiscal year ended December 31, 2020, the nominating and corporate governance committee held four meetings.

Compensation Committee

Our compensation committee reviews and approves, or recommends that our Board of Directors approve, the compensation of our executive officers. Among other matters, the compensation committee reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives, approves all equity-related awards to our executive officers, approves and administers incentive-based compensation plans and equity-based compensation plans and reviews and makes recommendations with respect to the annual Compensation Discussion and Analysis. The compensation committee also annually reviews the compensation committee charter and the committee’s performance.

The current members of our compensation committee are Ms. Haugen and Messrs. Clark, Duques, Peters and Watts, with Mr. Clark serving as chairperson of the committee. Our Board of Directors has affirmatively determined that each of Ms. Haugen and Messrs. Clark, Duques, Peters and Watts (i) is independent for purposes of serving on the compensation committee under applicable SEC rules and regulations and the NYSE Listed Company Manual and (ii) qualifies as a “non-employee director” for purposes of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The compensation committee operates under a written charter that satisfies the applicable SEC rules and regulations and the requirements of the NYSE Listed Company Manual. A copy of the compensation committee charter is available on our website at investors.paycom.com. During the fiscal year ended December 31, 2020, the compensation committee held 14 meetings.


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2021 PROXY STATEMENT

Corporate Governance (continued)

Compensation Committee Interlocks and Insider Participation

During the fiscal year ended December 31, 2020, each of Ms. Haugen and Messrs. Clark, Duques, Peters and Watts served on the compensation committee. Mr. Clark has served on the compensation committee since August 2016, Mr. Duques has served on the compensation committee since February 2017, Mr. Watts has served on the compensation committee since December 2017 and each of Ms. Haugen and Mr. Peters has served on the compensation committee since April 2019. None of the persons who served on the compensation committee during 2020 is or has been an officer or employee of Paycom and none had any relationship with Paycom or any of its subsidiaries during 2020 that would be required to be disclosed as a transaction with a related person. None of our executive officers currently serves or has in the last completed fiscal year served on the board of directors or compensation or similar committee of another company at any time during which an executive officer of such other company served on our Board of Directors or compensation committee.

Risk Oversight

Our Board of Directors is responsible for, among other things, overseeing the conduct of our business, reviewing and, where appropriate, approving our long-term strategic, financial and organizational goals and plans, and reviewing the performance of our Chief Executive Officer and other members of senior management. Our Board of Directors, as a whole and through its committees, is responsible for the oversight of risk management strategy, and our senior management is responsible for assessing, implementing and managing our risk management processes on a day-to-day basis.

The Board of Directors has delegated primary responsibility for overseeing enterprise risk management to the audit committee, and the audit committee receives appropriate assistance from key members of management, including the Company’s Chief Financial Officer. Members of management report regularly to the audit committee. The audit committee periodically discusses with management our policies with respect to risk assessment and risk management as well as our significant financial risk exposures and the actions management has taken to limit, monitor or control such exposures. The audit committee also receives regular reports and updates from the Company’s Chief Information Officer with respect to cybersecurity risk management. Such reports cover the Company’s information technology security program, including its current status, capabilities, objectives and plans, as well as the evolving cybersecurity threat landscape. Our compensation committee oversees risk related to compensation policies. Both our audit and compensation committees report to the full Board of Directors with respect to these matters, among others.

Corporate Social Responsibility

We believe that we have a responsibility to our people, our community, and our world in which we operate, and that effective management of environmental, social and governance (“ESG”) issues will help drive long-term growth. While our core business consists of being a leading provider of comprehensive, cloud-based human capital management software, our organization is dedicated to providing world-class service for our customers, developing innovative HR and payroll technology, creating a safe and inclusive workplace and minimizing our impact on the environment.

Our executive team and Board recognize the importance of these responsibilities, which is why we assembled highly experienced teams committed to delivering sustainable solutions and value to our stakeholders. The Board has delegated formal oversight for social responsibility and environmental sustainability programs and policies to its nominating and corporate governance committee. The committee also oversees the preparation and publication of the Company’s corporate social responsibility report. Further, our management and members of the Board have engaged stockholders to better understand their views relating to ESG concerns, carefully considering the feedback we receive and acting when appropriate. We believe we are making meaningful progress towards our ESG goals and expect to release additional ESG reporting in future periods.


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2021 PROXY STATEMENT

Corporate Governance (continued)


						OUR PEOPLE

We believe the power of Paycom’s software solution comes from our most important asset, our people, which is why we’ve solidified our core values and strive to uphold them every day.

LEAD

SERVE

LEARN

GRIT

WINNING

We dream, we build we deliver. With revolutionary vision, we lead ourselves and other to greatness.

We serve with passion and purpose. With a helpful spirit, we do what’s right and then add more.

We seek knowledge to fuel our future. Growth is not by chance. It’s the result of a forever quest to improve through livelong leaning.

We embrace the hard stuff. Sleeves rolled up, we attack every challenge head-on.

We fight to win and refuse to lose. Game faces on, we pursue victory with the heart of a champion.

From professional development to personal safety, our people are our top priority. We continuously engage and empower our workforce with a culture that champions positivity, grit and innovation.

Diversity, Inclusion and Belonging

Our commitment to diversity, inclusion and belonging starts with our goal to attract, retain and develop a workforce that is diverse in background, knowledge, skill and experience. As of December 31, 2020, women represented 51% and self-identified racial and ethnic minorities represented 31% of the Company’s workforce, respectively. Approximately 18% of our employees serve in a managerial role, defined as team leader or above. As of December 31, 2020, women held 47% and self-identified racial and ethnic minorities held 20% of the Company’s managerial roles, respectively. We recognize Paycom plays an important part in the lives of our employees and strive to create an inclusive workplace where employees feel heard, valued and appreciated for who they are.

We encourage every one of our team members to form deeper relationships with those around them based on mutual respect, dignity and understanding. To encourage productive conversations within our organization, we launched an employee listening and engagement series called Better Conversations, where we seek to understand and to be understood. These sessions are designed to provide a forum for productive conversations throughout the organization. They provide a safe atmosphere that encourages open dialogue where everyone’s voice will be heard and we all can be our authentic selves.

To help other organizations foster productive conversations of their own, we added a collection of diversity and inclusion courses to our digital learning platform, Paycom Learning, covering key topics like biases and how to overcome them.

Health, Safety and Wellness

We are committed to providing our employees with a safe, engaging environment where they feel empowered to work hard towards common goals. To foster the physical and mental well-being of our workforce, we added well-being advisors to our staff as a benefit to all our employees in 2020. This benefit is in addition to our employee assistance program. We also offer our workforce comprehensive health insurance as well as optional dental and vision coverage. Additionally, we provide our employees several opportunities to focus on physical, mental and financial wellness by maintaining a fully equipped on-site gym, 401(k) matching, an employee stock purchase plan, and paid vacation, holiday, family leave and sick leave, with numerous other benefits offered to our employees. We take care of our employees’ families by offering paid family leave when welcoming new additions, backup childcare, adoption support, fertility support and maternity support programs.


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2021 PROXY STATEMENT

Corporate Governance (continued)

COVID-19 Response

Beginning in February 2020, we took various actions in order to minimize the risk of COVID-19 to our employees, our clients, and the communities in which we operate. In March 2020, we suspended all business-related travel until further notice and began transitioning our employees to work-from-home arrangements. As of December 31, 2020, 96% of our employees were working remotely. Despite having the majority of our workforce working remotely, we continue to maintain our commitment to ensuring our employees’ health, safety and wellness. We continue to follow recommendations from the World Health Organization and the Centers for Disease Control, including practicing social distancing, increased cleaning and sanitizing of workstations, and implementing screening procedures for on-site employees. We have offered our employees remote work resources, online exercise classes and encourage employee feedback through our own feedback tools like Paycom Surveys and Ask Here. We have also engaged our workforce to identify and respond to current and future COVID-19 concerns. We continue to adapt our business continuity plans to address the changing needs of the business while remaining consistent with the criteria set out in the International Organization for Standardization (“ISO”) 22301:2012. We have maintained a certification based on the ISO 22301:2012 standard since January 2019.

In our industry, it is critical that we and our clients are fully informed and understand the implications of new or changing regulations that could affect HR, payroll and employer taxes. At the onset, and throughout the COVID-19 pandemic, we made it a priority to fully inform our clients of new or changing government regulations relevant to managing human capital. These efforts included providing timely communication and updating our products to help our clients navigate the Coronavirus Aid, Relief, and Economic Security Act and the Families First Coronavirus Response Act, among others.


						OUR COMMUNITY

We are passionate about being responsible corporate citizens in the communities where we live and work. With the pandemic creating economic hurdles for many across the nation, 2020 was our most philanthropic year yet. We reached new giving heights through both monetary and in-kind donations, which again included the largest combined employee-employer contribution The Salvation Army Central Oklahoma Command has received in its 120-year history. With extremely cold temperatures this winter, we also donated hundreds of coats to this organization. We provided holiday presents and financial gifts to The Anna’s House Foundation, an Oklahoma-based organization providing immediate, stable and loving homes for children in state custody. Our employees gave their time through virtual opportunities as well.


						OUR WORLD

Environmental Impact

Paycom is committed to minimizing the environmental impact from our operations. We strive to continue developing environmental programs to protect our planet, employees, communities, and future generations by focusing on mitigation, prevention and opportunity. We embed the principles of advancing a circular economy into our ESG practices through green investments and long-term implementation of new technologies. Through focused efforts, we can protect our planet while creating value for our stockholders. Highlights of our environmental sustainability efforts include:

•

a commitment to water efficiency and conservation through our utilization of hands-free faucets and water fill stations to limit water usage;

•

a commitment to green investments through a dedicated four acres of our headquarters property to an employee greenspace; and

•

providing a software product to our business clients that promote and support “go green” initiatives through paper-reducing software tools.


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2021 PROXY STATEMENT

Corporate Governance (continued)

Data Protection and Privacy

Innovation at Paycom is more than developing new products and environmental-friendly initiatives. We are also committed to data security and data privacy through our information security framework based on international standards and cloud-based excellence. We maintain a certification based on the ISO/EIC 27001:2013 criteria, a security standard for Information Security Management Systems published by ISO. We voluntarily obtain third-party security examinations relating to our internal controls over financial reporting in accordance with System and Organization Controls Report, I (“SOC 1”). Our SOC 1 examination is conducted every six months and addresses, among other areas, our physical and environmental safeguards for production data centers and logical security procedures. We also obtain third-party examinations relating to our internal controls over security and privacy in accordance with System and Organization Controls Report, II (“SOC 2”). Our SOC 2 examination is conducted every year and addresses, among other areas, internal controls around security, availability, processing integrity, confidentiality and privacy. Our data protection and privacy systems help us deliver on our promise to protect the confidential information of our clients and their employees.

We believe that strong governance and sustainability oversight is vital and supports the long-term success of Paycom. Our commitment to corporate responsibility means embedding it into all aspects of our people, our communities, and our world. Our Board and its committees devote substantial attention to governance and sustainability matters and seeks to ensure accountability for meeting our ESG standards. Our corporate website has been updated to provide disclosure with respect to certain corporate social responsibility and ESG related matters in an effort to improve investor access to key information about our evolving practices. Please visit www.paycom.com/diversity-inclusion-belonging for more information.

Director Qualifications

Our nominating and corporate governance committee is responsible for, among other things, assisting our Board of Directors in identifying qualified director nominees and recommending nominees to stand for election at each annual meeting of stockholders. The nominating and corporate governance committee’s goal is to assemble a board with a wide range of relevant experience, skills and perspectives. In October 2016, the nominating and corporate governance committee adopted a set of criteria and standards for assessing the necessary skills and characteristics of director candidates (the “Director Qualification Standards”). In accordance with the Director Qualification Standards, the nominating and corporate governance committee will select director candidates on the basis of recognized achievements, knowledge, experience and other factors as deemed appropriate, including but not limited to a candidate’s (i) ability to bring sound and informed business judgment to the deliberations of the Board of Directors, (ii) character, integrity and loyalty to the Company, (iii) independence, (iv) ability to bring diverse points of view to bear on discussions, (v) financial knowledge and experience and (vi) understanding of marketing, technology, law, the impact of government regulations or other specific areas or disciplines. In connection with the adoption of the Director Qualification Standards, the nominating and corporate governance committee expressly reserved the right to deviate from and/or modify the Director Qualification Standards from time to time in its reasonable discretion.

While we do not have a formal diversity policy for board membership, the nominating and corporate governance committee endeavors to consider candidates who represent a mix of backgrounds, diversity of race/ethnicity, gender, age, skills and professional experiences that enhance the quality of the deliberations and decisions of the Board of Directors, in the context of the perceived needs of the structure of the Board of Directors at that point in time. The nominating and corporate governance committee believes that it is important that directors represent diverse viewpoints and individual perspectives. Diversity and inclusion are values ingrained in our culture and essential to our business. The Board of Directors and the nominating and corporate governance committee aim to identify a diverse group of candidates and believe that no single criterion such as gender or minority status is determinative in obtaining diversity on the Board of Directors.

Director Nomination Procedures

With respect to incumbent members of the Board of Directors, the nominating and corporate governance committee will annually evaluate the current members of the Board of Directors whose terms are expiring and who are willing to continue in service against the criteria described above in determining whether to recommend such directors for re-election.


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2021 PROXY STATEMENT

Corporate Governance (continued)

Director candidates may come to the attention of the nominating and corporate governance committee from current directors, stockholders, officers or other sources. The nominating and corporate governance committee reviews all candidates in the same manner regardless of the source of the recommendation. In March 2016, the nominating and corporate governance committee adopted a formal policy regarding stockholder nominees. The nominating and corporate governance committee will consider recommendations for the nomination of directors submitted by stockholders entitled to vote generally in the election of directors. The nominating and corporate governance committee has not established a minimum number of shares of Common Stock that a stockholder must own in order to recommend a director candidate for consideration, or a minimum length of time during which the stockholder must own its shares of Common Stock, but the nominating and corporate governance committee will take into account the size and duration of a recommending stockholder’s ownership interest in Paycom. The nominating and corporate governance committee will also consider the extent to which the stockholder making the recommendation intends to maintain its ownership interest in Paycom. The nominating and corporate governance committee will only consider recommendations of nominees who satisfy the minimum qualifications prescribed by the nominating and corporate governance committee for Board of Directors candidates, including that a director must represent the interests of all stockholders and not serve for the purpose of favoring or advancing the interests of any particular stockholder group or other constituency. The nominating and corporate governance committee will only consider recommendations submitted in compliance with our amended and restated bylaws (as the same may be amended from time to time) and any procedural requirements adopted by the nominating and corporate governance committee and disclosed in this proxy statement.

Communications with the Board of Directors

Any stockholder or other interested party who desires to communicate with the Board of Directors, a committee of the Board of Directors, the non-management/independent directors, the lead independent director or other individual director may do so by writing to such director or group of directors at: Paycom Software, Inc., 7501 W. Memorial Road, Oklahoma City, OK 73142, Attn: Legal Department.

The communication must prominently display the legend “BOARD COMMUNICATION” in order to indicate to the Legal Department that it is a communication for the Board of Directors. Upon receiving such a communication, the Legal Department will promptly forward the communication to the relevant individual or group to which it is addressed. The Board of Directors has requested that certain items that are unrelated to its duties and responsibilities should be excluded, such as spam, junk mail and mass mailings, resumes and other forms of job inquiries, surveys and business solicitations or advertisements.

The Legal Department will not forward any communication determined in its good faith belief to be frivolous, unduly hostile, threatening, illegal or similarly unsuitable. The Legal Department will maintain a list of each communication that was not forwarded because it was determined to be frivolous. Such list is delivered to the Board of the Directors at its quarterly meetings. In addition, each communication subject to this policy that was not forwarded because it was determined by the Legal Department to be frivolous is retained in our files and made available at the request of any member of the Board of Directors to whom such communication was addressed.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics that applies to all of our employees, officers and directors, including our Chief Executive Officer, Chief Financial Officer and other principal executive and senior officers responsible for financial reporting. The Code of Business Conduct and Ethics is available on our website at investors.paycom.com. Our Code of Business Conduct and Ethics is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. The information contained on, or accessible from, our website is not part of this proxy statement by reference or otherwise. We will make any legally required disclosures regarding amendments to, or waivers of, provisions of our code of ethics on our website.

Hedging Policy

Our insider trading policy requires that any employee, executive officer or director wishing to enter into any hedging or similar transaction with respect to our securities must pre-clear such transaction with our Chief Financial Officer at least two weeks prior to, and must provide justification for, the proposed transaction.


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2021 PROXY STATEMENT

Corporate Governance (continued)

Director Compensation

Overview and Philosophy

The Board of Directors believes that each director who is not employed by us (whom we refer to as non-employee directors) should be compensated through a mix of cash and equity-based compensation, which is awarded in the form of restricted stock. The compensation committee, consisting entirely of independent directors, has primary responsibility for reviewing and considering any revisions to director compensation. Periodically, the committee has reviewed director compensation with assistance from its independent compensation consultant, including conducting benchmarking against the Company’s peer group to help assess the appropriateness and competitiveness of our non-employee director compensation program. The Board of Directors reviews the compensation committee’s recommendations, discussing those recommendations among themselves, and determines the amount of director compensation. Historically our philosophy is to align target total non-employee director compensation, including cash and equity, to be in a competitive range of our peer group.

Because Mr. Richison serves as our President and Chief Executive Officer, he did not receive additional compensation for his service as a director in 2020 (including for his service as Chairman of the Board of Directors). See “Compensation of Executive Officers—Summary Compensation Table for Fiscal Years Ended December 31, 2020, 2019 and 2018” for additional information regarding the compensation paid to Mr. Richison during 2020. None of our executive officers had a role in determining or recommending the amount or form of non-employee director compensation, other than Mr. Richison in his capacity as a member of the Board of Directors.

Director Compensation in 2020

In 2020, the compensation package for non-employee directors consisted of (i) annual compensation for service as a director and as a member or chairperson of any committee(s), payable in cash in four quarterly installments (the “Director Cash Compensation”), and (ii) an award under the Paycom Software, Inc. 2014 Long-Term Incentive Plan (the “LTIP”) of restricted stock with an aggregate fair market value equal to $225,000 (based on the closing price of the Common Stock on the date of grant) (the “Director Equity Compensation”). All directors are also entitled to reimbursement for their reasonable out-of-pocket expenditures incurred in connection with their service.

In February 2020, at the request of the compensation committee, the committee’s compensation consultant, Meridian Compensation Partners, LLC (“Meridian”), evaluated the competitiveness of our existing compensation program for non-employee directors. Specifically, Meridian prepared an analysis of our non-employee director compensation program in comparison to the director compensation programs of the primary peer group companies selected by the compensation committee. Meridian determined that our compensation for members and chairpersons of committees was below the 25th percentile of the primary peer group. Following its review of the comparative analysis prepared by Meridian, in March 2020, the Board of Directors approved increased annual cash compensation for members and chairpersons of committees, as summarized in the table below. These changes were intended to align annual cash compensation for committee service with the median of the primary peer group.



Recipient(s)	2019 Annual Cash Compensation ($)		2020 Annual Cash Compensation ($)

Non-employee directors		75,000		75,000

Lead independent director		20,000		20,000

Audit committee chairperson		10,000		25,000

Audit committee members (excluding chairperson)		7,500		10,000

Compensation committee chairperson		5,000		18,000

Compensation committee members (excluding chairperson)		4,000		8,000

Nominating and corporate governance committee chairperson		5,000		10,000

Nominating and corporate governance committee members (excluding chairperson)		4,000		5,000


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2021 PROXY STATEMENT

Corporate Governance (continued)

In the event that a new non-employee director is appointed to the Board of Directors other than at an annual meeting of stockholders (a “Mid-Term Director”), such Mid-Term Director is entitled to receive (i) the Director Cash Compensation beginning on the first quarterly payment date following his or her appointment and (ii) a partial award of the Director Equity Compensation on the date of his or her appointment, with the aggregate fair market value of such award to be determined based on the timing of such Mid-Term Director’s appointment in relation to the quarterly payment dates for the Director Cash Compensation.

With respect to Director Equity Compensation, the shares of restricted stock were granted on the date of the 2020 annual meeting of stockholders and are scheduled to cliff-vest on the seventh (7^th) day following the first (1^st) anniversary of the 2020 annual meeting, provided that the non-employee director is providing services to the Company through the applicable vesting date. Any unvested Director Equity Compensation will be forfeited in the event that the non-employee director’s service on the Board of Directors terminates prior to the vesting date, unless (i) such director resigns concurrently with the annual meeting of stockholders immediately prior to the scheduled vesting date, (ii) such annual meeting is held not more than thirty (30) days prior to the scheduled vesting date and (iii) the resigning director continues to serve on the Board of Directors through the date of such annual meeting.

The following table provides information regarding compensation paid to each non-employee director during 2020.



Name	Fees Earned or Paid in Cash ($)			Stock Awards⁽¹⁾ ($)		Total ($)

Jason D. Clark		99,125	⁽²⁾		224,970		324,095

Henry C. Duques		91,375	⁽³⁾		224,970		316,345

Janet B. Haugen		203,250	⁽⁴⁾		224,970		428,220

Robert J. Levenson		93,125	⁽⁵⁾		224,970		318,095

Frederick C. Peters II		116,125	⁽⁶⁾		224,970		341,095

J.C. Watts, Jr.		86,750	⁽⁷⁾		224,970		311,720

(1)

Amounts shown represent the aggregate grant date fair value of Director Equity Compensation, computed in accordance with ASC 718, with the exception that the amounts shown assume no forfeitures. A discussion of the assumptions used in the calculation of these amounts is included in Note 11, “Stockholders’ Equity and Stock-Based Compensation” in the annual consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”) filed with the SEC on February 18, 2021. For purposes of the Director Equity Compensation, we did not issue any fractional shares and, as a result, the aggregate grant date fair value of each director’s award is slightly less than $225,000.

(2)	Represents the aggregate Director Cash Compensation paid to Mr. Clark for his service as a director, member of the audit committee and chairperson of the compensation committee.

(3)	Represents the aggregate Director Cash Compensation paid to Mr. Duques for his service as a director and member of the compensation and audit committees.

(4)

Represents (i) the aggregate Director Cash Compensation paid to Ms. Haugen for her service as a director, member of the compensation committee and chairperson of the audit committee and (ii) a cash bonus of $100,000 in recognition of the extraordinary effort and additional time she contributed as a member of the Board of Directors in the 2020 fiscal year.

(5)	Represents the aggregate Director Cash Compensation paid to Mr. Levenson for his service as a director, member of the audit committee and chairperson of the nominating and corporate governance committee.

(6)	Represents the aggregate Director Cash Compensation paid to Mr. Peters for his service as a director, lead independent director and member of the nominating and corporate governance, audit and compensation committees.

(7)	Represents the aggregate Director Cash Compensation paid to Mr. Watts for his service a director and a member of the compensation and nominating and corporate governance committees.


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Corporate Governance (continued)

Director Stock Ownership Guidelines

To further align their interests with the long-term interests of stockholders and to promote the Company’s commitment to sound corporate governance, the Board of Directors established minimum stock ownership guidelines for the non-employee directors and executive officers in October 2017. Under these guidelines, each non-employee director is required to own a number of shares of Common Stock (including unvested shares of restricted stock) equal to (i) three times the amount of annual cash compensation payable to each non-employee director for the then-current year, exclusive of any fees payable for service as lead independent director, chair of a committee or service on a committee, divided by (ii) the greater of (x) the closing price of the Common Stock as reported on the NYSE on the trading day immediately preceding the date of calculation and (y) the average closing price of the Common Stock as reported on the NYSE for the 12-month period immediately preceding (and ending on the trading date immediately prior to) the date of calculation. Each non-employee director’s minimum stock ownership requirement is recalculated annually on the date of the annual meeting of stockholders and in connection with any change in the annual cash compensation payable to non-employee directors. Non-employee directors who were serving on the Board of Directors as of October 31, 2017 are required to achieve compliance with these guidelines by October 31, 2022. Non-employee directors elected since October 31, 2017 and future non-employee directors are required to achieve compliance with these guidelines within five years of their election. As of the Record Date, each non-employee director was in compliance with the stock ownership guidelines. A copy of the stock ownership guidelines is available on our website at investors.paycom.com.


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Audit Committee Matters

Audit Committee Report

The following is the report of the audit committee with respect to our audited financial statements for the fiscal year ended December 31, 2020, which includes our consolidated balance sheets as of December 31, 2020 and December 31, 2019, and the related consolidated statements of income, stockholders’ equity and cash flows for each of the years in the three-year period ended December 31, 2020, and the notes thereto. The information contained in this report shall not be deemed to be “soliciting material” or to be “filed with the SEC” or subject to the liabilities of Section 18 of the Exchange Act, nor shall such information be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

Review and Discussions with Management

The audit committee has reviewed and discussed the Company’s audited financial statements with management.

Review and Discussions with Independent Registered Public Accounting Firm

Pursuant to the terms of the audit committee’s charter, the audit committee meets at least once per fiscal quarter or more frequently as it may determine necessary. The audit committee has discussed with Grant Thornton LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC.

The audit committee has also received written disclosures and the letter from Grant Thornton LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Grant Thornton LLP’s communications with the audit committee concerning independence and has discussed with Grant Thornton LLP its independence from the Company. The audit committee has also reviewed and discussed the selection, application and disclosure of the critical accounting policies of the Company with Grant Thornton LLP.

Based on the review and discussions referred to above, the audit committee recommended to the Company’s Board of Directors that the Company’s audited financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Members of the Audit Committee

Jason D. Clark | Henry C. Duques | Janet B. Haugen | Robert J. Levenson | Frederick C. Peters II

Fees to Independent Registered Public Accounting Firm

The following is a summary of the fees billed to us by Grant Thornton LLP for audit services for fiscal 2019 and 2020 as well as for audit-related, tax and other services rendered during the applicable periods (in thousands).



	2020			2019

Audit Fees⁽¹⁾		$	897		$	1,254

Audit-Related Fees⁽²⁾			—			—

Tax Fees⁽³⁾			102			68

All Other Fees⁽⁴⁾			—			—

Total Fees		$	999		$	1,322

(1)

Audit fees consist of fees billed for professional services rendered for the audit of our annual consolidated financial statements, the review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by the independent auditor in connection with statutory and regulatory filings or engagements, including consultations concerning financial reporting in connection with issuances of auditor consents and comfort letters with respect to registration statements filed with the SEC and related securities offerings.


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2021 PROXY STATEMENT

Audit Committee Matters (continued)

(2)	Grant Thornton LLP did not provide any assurance or related services during the relevant periods that are not otherwise disclosed as audit fees.

(3)	Tax fees consist of fees billed for professional services rendered for tax compliance (including the preparation, review and filing of tax returns), tax advice and tax planning. These services include assistance regarding federal, state and local tax compliance.

(4)	Grant Thornton LLP did not provide any “other services” during the relevant periods.

Policy on Audit Committee Pre-approval of Audit and Non-audit Services Performed by Independent Registered Public Accounting Firm

The audit committee has determined that all services performed by Grant Thornton LLP are compatible with maintaining the independence of Grant Thornton LLP. The audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by our independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services. The audit committee has delegated authority to its chairperson, Ms. Haugen, to pre-approve any audit or non-audit services to be provided by Grant Thornton LLP, provided that (i) the fees for such services do not exceed $250,000 in the aggregate, (ii) any matters approved by the chairperson under such delegated authority must be presented to the full audit committee at its next scheduled meeting and (iii) such services must be allowed to be provided by our independent registered public accounting firm under the Sarbanes-Oxley Act of 2002 and SEC rules relating to auditor independence. The independent registered public accounting firm and management are required to periodically report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval process.


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2021 PROXY STATEMENT

Proposal 2: Ratification of the Appointment of

Our Independent Registered Public Accounting Firm

The audit committee has appointed Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021. The audit committee and the Board of Directors recommend that you ratify this appointment.

Arrangements have been made for a representative of Grant Thornton LLP to attend the Annual Meeting. The representative will have the opportunity to make a statement if he or she desires to do so, and he or she will be available to respond to appropriate stockholder questions.

Vote Required

The approval of Proposal 2 will require the affirmative vote, in person or by proxy, of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote on such proposal.

Recommendation of the Board of Directors

The Board of Directors recommends that you vote FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the year ending December 31, 2021.


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2021 PROXY STATEMENT

Management


CHAD RICHISON		Chad Richison, 50, has served as President and Chief Executive Officer since he founded Paycom in 1998. He has also served as a member of our Board of Directors since 1998 and was appointed Chairman of the Board of Directors in August 2016. Mr. Richison began his career in sales with a national payroll and human resources company and a regional payroll company prior to founding Paycom. He received his bachelor’s degree in mass communications—journalism from the University of Central Oklahoma.


CRAIG E. BOELTE		Craig E. Boelte, 57, has served as our Chief Financial Officer since February 2006 and as Treasurer and Secretary since May 2017. Before joining Paycom, Mr. Boelte owned an accounting practice that served Paycom. Prior to that, Mr. Boelte spent nine years at Deloitte & Touche where he served as Senior Tax Manager. Mr. Boelte has over 33 years of experience in the workforce management and HR industry. Mr. Boelte is a member of the Oklahoma Society of CPAs and the American Institute of CPAs. Mr. Boelte received his bachelor’s degree in business administration and master’s degree in accounting from Oklahoma State University.


JEFFREY D. YORK		Jeffrey D. York, 53, has served as our Chief Sales Officer since 2007. Mr. York opened our Dallas location in 2002 prior to joining our corporate executive team. Before joining Paycom, Mr. York was employed by ADP from 1990 to 2002 where he held a variety of sales management positions including Vice President of Sales for the Major Accounts Division. Mr. York earned his M.B.A. from Baylor University and his bachelor’s degree in business administration from Texas Tech University.


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2021 PROXY STATEMENT

Management (continued)

BRADLEY S. SMITH

Bradley S. Smith, 51, has served as our Chief Information Officer since April 2018. Mr. Smith previously held roles as Paycom’s Director of Software Development from January 2012 to April 2018 and Director of Information Technology from May 2005 to January 2012. Before joining Paycom, Mr. Smith served as Senior Technical Consultant at BearingPoint from October 2003 to May 2005 and as Manager of Software Development and Business Intelligence at Fleming Companies, Inc. from May 1995 to October 2003. Mr. Smith has over 30 years of information technology and software development experience. He earned his bachelor’s degree in management information systems from Oklahoma State University.

LOGO


JON D. EVANS		Jon D. Evans, 55, has served as our Chief Operating Officer since April 2018. Prior to his role as Chief Operating Officer, Mr. Evans previously held roles as Paycom’s Senior Executive Vice President of Operations from March 2017 to April 2018, Executive Vice President of Accounting from December 2016 to March 2017 and Director of Accounting from December 2014 to December 2016. Before joining Paycom, Mr. Evans served as the Chief Operating Officer of Chickasaw Nation Industries-Commercial, Inc., a holding company with businesses in multiple industries including business support services, defense logistics and manufacturing, from March 2011 to December 2014. Mr. Evans has over 34 years of senior financial and operations management experience. He earned his bachelor’s degree in business administration from Oklahoma State University.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis

This Compensation Discussion and Analysis provides an overview of the elements and philosophy of our executive compensation program as well as how and why the compensation committee and our Board of Directors make specific compensation decisions and policies with respect to our NEOs (as defined below).

Executive Summary


		Strong executive leadership has enabled our track record. Our experienced executive team, and deep bench of seasoned leaders in our management team, enabled us to deliver strong financial results over the last four years. We have grown total revenue at a 26% compound annual growth rate from January 1, 2017 through December 31, 2020.				2020 TSR 71% VS 18% S&P 500 AND 49% S&P 1500 APPLICATION SOFTWARE INDEX 2017-2020 CUMULATIVE TSR 894% 2020 REVENUE GROWTH 14.1% $841.4 MILLION FULL YEAR REVENUE 2020 ANNUAL REVENUE RETENTION RATE 93% 2020 CLIENT COUNT GROWTH 17%
		We continued to deliver exceptional performance in 2020. Our cumulative total stockholder return (“TSR”) has outperformed both the S&P 500 Index and the S&P 1500 Application Software Index over the past five years. In particular, the price of a share of our Common Stock increased 71% during 2020.
		In 2020, strong leadership also helped mitigate the impacts of COVID-19. Beginning in February 2020, we took swift actions in order to minimize the risk of COVID-19 to our employees, our clients, and the communities in which we operate, and in March 2020, we suspended all business-related travel and began transitioning our employees to work-from-home arrangements. We remained focused on the three controllable activities: (i) providing world-class service to our clients; (ii) rapidly developing new technologies; and (iii) increasing the number of new clients added to our platform. Our leaders and employees addressed the challenges presented in 2020 with confident resolve and flexibility, delivering 14.1% year-over-year revenue growth in 2020 and record new business sales despite the impact of the global pandemic.
		The compensation committee continues to engage with stockholders and seek feedback. Throughout 2020, our directors and executives engaged with many of our stockholders to solicit feedback on a variety of issues, including executive compensation. Common themes from these conversations were that executive compensation should be performance-based, structured to be long-term in nature and closely aligned with total stockholder returns.
		2020 CEO compensation included a stockholder-aligned performance grant to motivate continued growth. Responding to stockholder feedback, we instituted a long-term program with more aggressive goals to motivate performance. We believe Chad Richison’s leadership is a key factor to our ongoing success and that we continue to have tremendous growth potential. A long-term program providing incentive for Mr. Richison to realize that growth potential is in the interests of all stockholders. Mr. Richison will not be eligible for additional equity grants until fiscal year 2026.
		Special CEO performance award would only begin to pay if stockholders realize a 150% increase in share price. The CEO Performance Award (as defined below) is intended to provide incentive for extraordinary long-term performance, is entirely at risk, and correlates directly with stockholder value creation. Mr. Richison will not receive any value from this award unless the Company’s share price grows approximately 150% from the share price on the date of grant, and will not receive full value from this award unless the Company’s share price grows approximately 330% from the share price on the date of grant.


		2021 grants are also aligned with stockholder interests. With stockholder feedback in mind, we granted awards to all NEOs (other than Mr. Richison, who is not eligible to receive an equity award in 2021) as performance-based restricted stock units and implemented a rigorous relative TSR measure as our performance metric.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

Overview

Our Company

For the fourth consecutive year, we were named to Fortune magazine’s 100 Fastest-Growing Companies, based on growth in revenues, earnings per share and stock returns. Our company transforms business as a leading provider of human capital management (“HCM”) technology. Our comprehensive, cloud-based HCM solution is delivered as Software-as-a-Service and allows employers and their HR teams to focus on strategies that drive business forward by empowering employees to manage their own HR data through our Employee Self-Service^® tool.

Our single-database solution and easy to use mobile app enable employees to complete onboarding tasks, update personal information, submit time off requests, access pay stubs and year end forms, access training resources, enroll in benefits and much more. We provide functionality and data analytics that businesses need to manage the complete employment lifecycle, from recruitment to retirement. Our solution requires virtually no customization and is based on a core system of record for all HCM functions, including talent acquisition, time and labor management, payroll, talent management and human resources management applications. Our user-friendly software encourages employee usage that boost our clients’ bottom line through self-management of their HCM activities in the cloud, which reduces the administrative burden on employers and increases employee productivity.

Our Named Executive Officers

This Compensation Discussion and Analysis provides an overview of the material components of our executive compensation program for the following persons:

Chad Richison, President and Chief Executive Officer

Craig E. Boelte, Chief Financial Officer

Jeffrey D. York, Chief Sales Officer

Bradley S. Smith, Chief Information Officer

Jon D. Evans, Chief Operating Officer

In this Compensation Discussion and Analysis and the accompanying compensation tables, we refer to the executive officers listed above as our named executive officers (“NEOs”).

Paycom Response to COVID-19

Beginning in February 2020, we took various actions in order to minimize the risk of COVID-19 to our employees, our clients, and the communities in which we operate. In March 2020, we suspended all business-related travel until further notice and began transitioning our employees to work-from-home arrangements. As of December 31, 2020, 96% of our employees were working remotely. Despite having the majority of our workforce working remotely, we continue to maintain our commitment to ensuring our employees’ health, safety and wellness. We continue to follow recommendations from the World Health Organization and the Centers for Disease Control, including practicing social distancing, increased cleaning and sanitizing of workstations, and implementing screening procedures for on-site employees. We have offered our employees remote work resources, online exercise classes and encourage employee feedback through our own feedback tools like Paycom Surveys and Ask Here. We have also engaged our workforce to identify and respond to current and future COVID-19 concerns. We continue to adapt our business continuity plans to address the changing needs of the business while remaining consistent with the criteria set out in the ISO 22301:2012. We have maintained a certification based on the ISO 22301:2012 standard since January 2019.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

2020 Financial and Business Highlights

We are committed to achieving long-term, sustainable growth and increasing stockholder value. As evidenced by our strong financial results, our momentum and success continued in 2020. We recognize that our talented and experienced management team is critical to our ability to maintain our momentum and to continue to pursue our strategic objectives. They have been instrumental in our ability to further the innovation of our software and drive client adoption while continuing to make our clients successful in today’s rapidly changing business environment. Accordingly, we believe it is important to consider our executive compensation decisions in the context of our financial and operational performance during 2020.

As shown in the graph below, our cumulative total stockholder return outperformed both the S&P 500 Index and the S&P 1500 Application Software Index during the five-year period commencing on December 31, 2015 and ending on December 31, 2020. The following graph assumes that $100 was invested in our Common Stock and in each of the comparative indices at the beginning of the period and assumes the reinvestment of any dividends.

LOGO


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

2020 Say-on-Pay Vote and Stockholder Engagement

At our Annual Meeting of Stockholders held in April 2020, approximately 45% of the votes cast (excluding abstentions and broker non-votes) on our advisory say-on-pay proposal were votes in favor of the proposal. Our annual advisory say-on-pay vote is one of our opportunities to receive feedback from stockholders regarding our executive compensation program, and the compensation committee takes the results of this vote into account when determining the compensation of the Company’s NEOs. The result for 2020 marked a significant decline from our historically high level of stockholder support for our executive compensation program in previous years, including 91% stockholder support in 2019.

We were disappointed to receive low support for our say-on-pay proposal at the 2020 Annual Meeting of Stockholders, particularly given our sustained outperformance on total stockholder return relative to the S&P 500 Index and the S&P 1500 Application Software Index as highlighted in the Executive Summary of this Compensation Discussion and Analysis. Prior to, and following, the 2020 Annual Meeting of Stockholders, we sought feedback from stockholders to better understand their perspectives on executive compensation and discuss what actions we could take to address their concerns about our executive compensation program.

In the fall of 2020, we reached out to representatives of eleven of our largest outside stockholders, representing approximately 47% of shares owned by non-affiliates, and invited them to engage with members of the compensation committee regarding our executive compensation program. As a result of such outreach, members of the compensation committee, including the chairperson, met with six stockholders. Common themes from these conversations were that executive compensation should be performance-based, structured to be long-term in nature and closely aligned with total stockholder returns.

Our compensation committee considered the vote result and the feedback we received as it evaluated the compensation opportunities and programs provided to our NEOs for fiscal year 2020 and fiscal year 2021. As discussed below under “—Long-Term Incentive Compensation—Restricted Stock Awards—February 2021 Awards for NEOs (other than the CEO),” we adopted a new approach to LTIP awards for NEOs (other than the CEO) beginning in February 2021. The LTIP awards granted to Messrs. Boelte, York, Smith and Evans in February 2021 are performance-based and tied to relative total stockholder return. We remain committed to achieving consistently strong stockholder support for our executive compensation program, and we hope our engagement efforts and responsiveness will merit strong support from our stockholders.

Objectives and Components of Compensation

Our compensation committee has determined what it believes to be the appropriate level and mix of the various compensation components for our NEOs. The specific objectives of our executive compensation program are to:

•

reward the achievement of our strategic objectives, including financial growth;

•

drive the continued development of our successful and profitable business;

•

motivate, reward and retain highly qualified executives who are important to our success;

•

recognize strong performers by offering cash performance-based incentive compensation and equity awards that reward contributions to our overall success; and

•

align the interests of our NEOs with those of our stockholders and, in doing so, create value for our stockholders.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

The table below summarizes how the various components of our executive compensation program are designed to achieve these objectives.


Compensation Component		Objectives
Base salary		To compensate NEOs for services rendered during the fiscal year and to recognize their experience, skills, knowledge and responsibilities
Performance-based cash bonuses		To emphasize pay-for-performance and to reward NEOs for the achievement of specified performance criteria
Equity incentive awards		To incentivize and reward NEOs for long-term retention and corporate performance based on our enterprise value, share price or, beginning in 2021, relative total stockholder return and, consequently, to align their interests with those of our stockholders
Retirement benefits		To compensate NEOs for services rendered during the fiscal year and to recognize their experience, skills, knowledge and responsibilities
Perquisites and personal benefits		To compensate NEOs for services rendered during the fiscal year and to recognize their experience, skills, knowledge and responsibilities

Summary of Key 2020 Compensation Actions

The following is a summary of the material compensation decisions made by our compensation committee for 2020:

•

increased NEOs’ salaries;

•

paid cash bonuses to our NEOs pursuant to the Paycom Software, Inc. Annual Incentive Plan (as amended from time to time, the “Annual Incentive Plan”) based on the achievement of pre-established Company goals related to revenue growth, annual revenue retention rate and adjusted EBITDA;

•

granted awards under the LTIP to our NEOs consisting of restricted stock subject to market-based vesting conditions; and

•

granted a special performance award under the LTIP to Mr. Richison, our Chief Executive Officer, consisting of restricted stock subject to market-based vesting conditions tied to the Company’s stock price.

Compensation Philosophy

As we pursue our strategic objectives, we must continuously develop and refine our solution to stay ahead of our clients’ needs and challenges, which requires a talented and experienced management team. Our compensation committee, with input from management and the committee’s compensation consultant, has developed an executive compensation program that we believe is designed to (i) motivate, reward and retain our leaders, (ii) support our strategic objectives, including long-term, sustainable growth and increasing stockholder value, and (iii) encourage strong financial performance on an annual and long-term basis, in each case without encouraging excessive or inappropriate risk taking.

Compensation Review and Determination

Overview

In determining the compensation for each NEO, the compensation committee considered the following factors:

•

our performance in the previous year, based on both financial and non-financial metrics;

•

our growth from the previous year, based on both financial and non-financial metrics;


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

•

retention considerations;

•

our outlook and operating plan for the upcoming year;

•

the compensation analysis provided by the compensation committee’s compensation consultant;

•

the NEO’s role, responsibilities, and skills;

•

the NEO’s compensation for the previous year;

•

relevant terms of the NEO’s employment agreement, if any;

•

an evaluation of the NEO’s individual performance (see “—Role of Executive Officers”);

•

the proposed compensation packages for the other NEOs (internal pay equity);

•

the size of the aggregate equity pool available for awards for the year and the relative allocation of such pool among the NEOs and the other participants;

•

overall equity dilution and burn rates as well as equity overhang levels;

•

the value of, and expense associated with, proposed and previously awarded equity grants, including the continuing retentive value of past awards; and

•

compensation trends and competitive factors in the market for talent in which we compete.

Role of Compensation Committee

Our compensation committee reviews and approves, or recommends that our Board of Directors approve, the compensation of our NEOs. Among other matters, the compensation committee reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other NEOs, evaluates the performance of these officers in light of those goals and objectives, and approves all equity awards to our NEOs.

Role of Compensation Consultant

In 2020, the compensation committee engaged Meridian to provide input, analysis, and advice about our compensation programs for executives and non-employee directors, including compensation philosophy and design, peer group data, competitive positioning and equity compensation practices. The compensation committee selected Meridian as its compensation consultant based on, among other things, Meridian’s reputation and substantial insight and experience with executive compensation programs in our industry. Meridian reports directly to the compensation committee and did not perform work for Paycom in 2020 except under its engagement by the compensation committee. After reviewing and considering the factors set out by the applicable rules and regulations of the SEC and NYSE regarding the independence of compensation advisors, the compensation committee determined that Meridian is independent and its work in 2020 did not raise any conflicts of interest.

Role of Executive Officers

On an annual basis, we evaluate each NEO’s performance for the prior year. Our Chief Executive Officer, Mr. Richison, evaluates each NEO other than himself, with input from others within the Company. The evaluation focuses on the achievement of stated corporate and individual goals and performance criteria and the amount of contributions made to Paycom. This process leads to a recommendation from the Chief Executive Officer to the compensation committee with respect to the cash compensation of each NEO (other than himself) as well as whether or not equity incentive awards should be granted. The compensation committee determines the Chief Executive Officer’s cash compensation (without his input), as well as whether or not equity incentive awards should be granted to him.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

Compensation Mix

The charts below provide the compensation mix for our NEOs in 2020. As shown in these charts, we emphasize performance-based, at-risk compensation. In 2020, approximately 99.4% of our Chief Executive Officer’s total compensation was tied to performance, including approximately 99.3% that was delivered in the form of restricted stock that is designed to vest upon our “total enterprise value” or “VWAP Value” reaching certain predetermined thresholds, which we refer to as “market-based” vesting conditions. For information regarding the determination of “total enterprise value” and “VWAP Value,” see “—Long-Term Incentive Compensation—Restricted Stock Awards.” On average, approximately 90.5% of the total compensation for our other NEOs was tied to performance in 2020, including an average of approximately 83.8% that was delivered in the form of restricted stock that is subject to market-based vesting conditions. The overall design of our compensation program is intended to support a strong pay-for-performance culture and encourage longevity, sustained performance and retention of our NEOs, resulting in a dynamic compensation structure that aims to ensure alignment between the interests of our NEOs and the interests of our stockholders.

We do not have a pre-established policy or target for the allocation between cash and non-cash compensation nor for the allocation between short-term and long-term incentive compensation for our NEOs. Rather, the compensation committee relies on each committee member’s knowledge and experience, as well as information provided by management and the committee’s compensation consultant, to determine the appropriate level and mix of compensation. Ultimately, our objective is to provide our NEOs with reasonable, competitive base salaries and the opportunity to earn additional compensation through short-term and long-term performance-based incentives, which are designed to produce a targeted level of performance.

Our NEOs receive cash compensation in the form of base salary and bonuses, with bonuses representing a short-term incentive component of our NEO compensation packages. In 2020, we determined and paid bonuses to each of our NEOs pursuant to the Annual Incentive Plan. See “—Cash Compensation—Annual Incentive Plan.”

We believe equity awards serve as an important motivational and retentive component of an NEO’s overall compensation package. Due to the market-based vesting conditions for a majority of the NEOs’ equity awards and the performance criteria for the Annual Incentive Plan bonuses, a significant portion of our NEOs’ compensation is linked to our financial and operational performance as well as our enterprise value. We believe this structure challenges our executives to increase stockholder value and compensates them to the extent that the specified results are achieved.

Timing

At least on an annual basis, our compensation committee reviews and evaluates each NEO’s base salary, with input from our Chief Executive Officer (except with respect to his own compensation). Based on historical practices and our performance review cycle for all employees, salary increases, if any, are typically effective as of July 1^st of a given year.


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Compensation Discussion and Analysis (continued)

With respect to cash bonuses, the Annual Incentive Plan requires that the compensation committee set performance goals within the first 90 days of a performance period. Following the end of a performance period and our receipt of the independent auditor’s report with respect to financial statements for the applicable fiscal year, the compensation committee must certify the extent to which the performance goals were achieved as well as the calculation and determination of the incentive compensation to be paid to each participant under the Annual Incentive Plan.

With respect to equity compensation, the compensation committee determines whether and when to grant awards to NEOs based on its evaluation of the various factors discussed under “—Long-Term Incentive Compensation—Restricted Stock Awards” below.

Peer Group Data

The compensation committee uses peer group data as a point of reference for designing our compensation programs and setting compensation levels. In December 2019, the compensation committee reviewed comparative executive compensation data from a group of companies identified based on the selection criteria described below. The compensation committee does not use peer group data as a single determinative factor, but rather as an external check to verify that our executive compensation programs are reasonable and competitive.

In developing the primary peer group, the compensation committee sought to include U.S.-headquartered application software companies of a similar size as the Company that, in the compensation committee’s view, compete with the Company for talent. In particular, the compensation committee targeted software companies with comparable Software-as-a-Service business models and business software applications. The peer group companies were also identified based on the following financial criteria:



Selection Criteria		Primary Peer Group Target Financial Criteria

Revenue (12-month period)		$500 million to $2 billion

Market Capitalization		$1 billion to $20 billion

Potential peer group companies were evaluated based on the most recent data available as of October 31, 2019. Companies that did not satisfy all of the selection criteria were nonetheless eligible to be included in the peer group based on alignment across all factors. With the assistance of its independent compensation consultant, the compensation committee ultimately identified the primary peer group set forth below. The primary peer group includes 19 application software companies with median revenues of $843 million and median market capitalization of $7.9 billion.


ANSYS, Inc.		Okta, Inc.
Aspen Technology, Inc.		Paylocity Holding Corporation
Blackbaud, Inc.⁽¹⁾		Proofpoint, Inc.
Ceridian HCM Holding Inc.		RealPage, Inc.
CoStar Group, Inc.		RingCentral, Inc.
Ebix, Inc.⁽¹⁾		Splunk Inc.
Fair Isaac Corporation		The Trade Desk, Inc.
Guidewire Software, Inc.		Tyler Technologies, Inc.
LogMeIn, Inc.⁽¹⁾		Zendesk, Inc.
Nuance Communications, Inc.⁽¹⁾

(1)

Represents a new addition to the primary peer group, as compared to the prior peer group identified by the compensation committee. The following companies were removed from the peer group: Cornerstone OnDemand, Inc.; DocuSign, Inc.; Dropbox, Inc.; HubSpot, Inc.; and The Ultimate Software Group, Inc.


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2021 PROXY STATEMENT

Compensation Discussion and Analysis (continued)

Developing the Company’s peer group is challeng

SEC Form DEF 14A filed by Paycom Software, Inc.