Paycom Software, Inc. 10-Q

Item 5. Other Information 2023 Executive LTIP Awards On May 2, 2023, the Compensation Committee of the Board of Directors granted awards of performance-based restricted stock units (“PSUs”), time-based restricted stock units (“RSUs”) and shares of restricted stock to our executive officers, in the amounts set forth in the table below: Name PSUs RSUs Restricted Stock Craig E. Boelte 14,907 3,313 40,000 Holly Faurot 9,317 2,070 40,000 Bradley S. Smith 9,317 2,070 40,000 Christopher G. Thomas 5,590 1,242 22,000 32 PSU Awards Each award of PSUs (each, a “2023 PSU Award” and, collectively, the “2023 PSU Awards”) was granted pursuant to the terms of the Paycom Software, Inc. 2023 Long-Term Incentive Plan (the “2023 LTIP”) and a Restricted Stock Unit Award Agreement - Performance-Based Vesting (each, a “PSU Award Agreement”). Each PSU represents a notional share of the Company’s common stock, par value $0.01 per share (“Common Stock”). The 2023 PSU Awards will vest based on the Company’s performance over a one-year performance period commencing on January 1, 2023 and ending on December 31, 2023 (the “Performance Period”). The number of PSUs that will vest and be converted into shares of Common Stock will be based on the achievement of performance goals summarized in the table below: Name Performance Goal(s) Weight Performance Level/Payout % (1) Craig E. Boelte Revenue 50% Below target = 0% At or above target = 100% Adjusted EBITDA 30% Below target = 0% At or above target = 100% VWAP Value (2) 20% Below threshold = 0% Equal to or greater than threshold but less than intermediate target = 50% Equal to or greater than intermediate target but less than target = 75% Equal to or greater than target = 100% Holly Faurot Revenue 100% Below threshold = 0% Equal to or greater than threshold but less than intermediate target = 50% Equal to or greater than intermediate target but less than target = 75% Equal to or greater than target = 100% Bradley S. Smith Annual Revenue Retention Rate 100% Below target = 0% At or above target = 100% Christopher G. Thomas Annual Revenue Retention Rate 100% Below target = 0% At or above target = 100% (1) There will be no interpolation for achievement between performance levels. (2) For purposes of Mr. Boelte’s 2023 PSU Award, “VWAP Value” means, as of the last day of the Performance Period, the arithmetic average of the daily volume weighted average price of the Common Stock on each of the twenty (20) consecutive trading days immediately preceding such date. The 2023 PSU Awards will be eligible to vest following the end of the Performance Period, but no later than February 29, 2024, provided that the executive officer is employed by, or providing services to, the Company or a subsidiary on the vesting date. Furthermore, the 2023 PSU Awards will (i) become fully vested upon the executive officer’s death or Total and Permanent Disability (as defined in the 2023 LTIP), (ii) remain eligible for vesting following Retirement (as defined in the 2023 LTIP) based on actual performance, and pro-rated for the number of days employed during the Performance Period, (iii) remain eligible for vesting following a termination of employment by the Company without Cause (as defined in the applicable PSU Award Agreement) or by the executive officer for Good Reason (as defined in the applicable PSU Award Agreement) based on actual performance, and pro-rated for the number of days employed during the Performance Period, and (iv) become fully vested upon a termination of employment by the Company without Cause or by the executive officer for Good Reason in connection with or following a Change in Control (as defined in the 2023 LTIP) of the Company, in each case as provided in the respective PSU Award Agreement. The foregoing description of the 2023 PSU Awards does not purport to be complete and is qualified in its entirety by reference to the full text of the PSU Award Agreements for Mr. Boelte, Mrs. Faurot and Messrs. Smith and Thomas, copies of which are filed as Exhibits 10.2, 10.3 and 10.4, respectively, to this Form 10-Q and are incorporated herein by reference. 33 Time-Based RSU Awards Each award of RSUs (each, a “2023 RSU Award” and, collectively, the “2023 RSU Awards”) was granted pursuant to the terms of the 2023 LTIP and a Restricted Stock Unit Award Agreement - Time-Based Vesting (Executive) (each, an “RSU Award Agreement”). Each RSU represents a notional share of Common Stock. The 2023 RSU Awards will vest in three substantially equal tranches on February 5, 2024, February 5, 2025, and February 5, 2026, provided that the executive officer is employed by, or providing services to, the Company or a subsidiary on the applicable vesting date. In addition, the 2023 RSU Awards will become fully vested upon the executive officer’s death or Total and Permanent Disability. The foregoing description of the 2023 RSU Awards does not purport to be complete and is qualified in its entirety by reference to the full text of the RSU Award Agreement, a copy of which is filed as Exhibit 10.5 to this Form 10-Q and is incorporated herein by reference. Restricted Stock Awards Each award of shares of restricted stock (each, a “2023 RSA” and, collectively, the “2023 RSAs”) was granted pursuant to the terms of the 2023 LTIP and a Restricted Stock Award Agreement - Time-Based Vesting (Executive) (each, a “Restricted Stock Award Agreement”). The shares underlying the 2023 RSAs will vest in four tranches as set forth in the table below, provided that the executive officer is employed by, or providing services to, the Company or a subsidiary on the applicable vesting date. In addition, the 2023 RSAs will become fully vested upon the executive officer’s death or Total and Permanent Disability. Number of shares scheduled to vest on: Name February 5, 2024 February 5, 2025 February 5, 2026 February 5, 2027 Total Craig E. Boelte 7,000 7,000 7,000 19,000 40,000 Holly Faurot 7,000 7,000 7,000 19,000 40,000 Bradley S. Smith 7,000 7,000 7,000 19,000 40,000 Christopher G. Thomas 4,000 4,000 4,000 10,000 22,000 The foregoing description of the 2023 RSAs does not purport to be complete and is qualified in its entirety by reference to the full text of the Restricted Stock Award Agreement, a copy of which is filed as Exhibit 10.6 to this Form 10-Q and is incorporated herein by reference. 34 Item 6. Exhibits The following exhibits are incorporated herein by reference or are filed with this Quarterly Report on Form 10-Q, in each case as indicated therein (numbered in accordance with Item 601 of Regulation S-K): Exhibit No. Description 3.1 Amended and Restated Certificate of Incorporation of Paycom Software, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A dated March 31, 2014, filed with the SEC on March 31, 2014). 3.2 Amended and Restated Bylaws of Paycom Software, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K dated April 21, 2023, filed with the SEC on April 24, 2023). 4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.1 to the Company’s Amendment No. 1 to the Registration Statement on Form S-1/A dated March 31, 2014, filed with the SEC on March 31, 2014). 10.1+ Severance and Release Agreement, dated March 31, 2023, by and among Paycom Software, Inc., Paycom Payroll, LLC and Justin Long (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K dated March 28, 2023, filed with the SEC on April 3, 2023). 10.2*+ Form of Restricted Stock Unit Award Agreement - Performance-Based Vesting (Boelte). 10.3*+ Form of Restricted Stock Unit Award Agreement - Performance-Based Vesting (Faurot). 10.4*+ Form of Restricted Stock Unit Award Agreement - Performance-Based Vesting (Smith/Thomas). 10.5*+ Form of Restricted Stock Unit Award Agreement - Time-Based Vesting (Executive). 10.6*+ Form of Restricted Stock Award Agreement - Time-Based Vesting (Executive). 31.1* Certification of the Chief Executive Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2* Certification of the Chief Financial Officer of the Company, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1** Certification of the Chief Executive Officer and Chief Financial Officer of the Company, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101.INS Inline XBRL Instance Document – the XBRL Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. 101.SCH* Inline XBRL Taxonomy Extension Schema Document. 101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* Inline XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase Document. 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). + Management contract or compensatory plan or arrangement. * Filed herewith. ** The certifications attached as Exhibit 32.1 are not deemed “filed” with the SEC and are not to be incorporated by reference into any filing of Paycom Software, Inc. under the Securities Act whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing. 35 SIGNAT URES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. PAYCOM SOFTWARE, INC. Date: May 4, 2023 By: /s/ Chad Richison Chad Richison President and Chief Executive Officer (Principal Executive Officer) Date: May 4, 2023 By: /s/ Craig E. Boelte Craig E. Boelte Chief Financial Officer (Principal Accounting Officer and Principal Financial Officer) 36