Paycom headquarters in Oklahoma City. (AP / Sue Ogrocki)
Not Elon Musk, not Tim Cook: America’s highest-paid CEO is someone whose name you’ve probably never heard.
This is Chad Richison, founder and CEO of payroll processor Paycom Software. In 2020, he received compensation valued at $ 211 million from Paycom, the company revealed in its annual statement filed with the Securities and Exchange Commission last week.
A restricted stock award could end up adding more than $ 2 billion to Richison’s fortune over the next decade. Paycom said that value is based on stock performance and Richison will not receive the award unless the company’s share price doubles, according to a report in The Wall Street Journal.
The CEO’s compensation in 2020 was valued at about $ 702 million, based on the value of the shares underlying the stock awards, according to an independent calculation by ISS ESG, a branch of the institutional advisory firm Institutional. Shareholder Services.
The package includes salary, bonuses, stock awards, and multi-year options, but it may underestimate the bottom line value of stock compensation in companies with rising stock prices.
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Terms of payment
The bulk of Richison’s pay package consists of 1.61 million restricted shares that were awarded to him in November, roughly 2.7% of the company’s outstanding shares.
Half of those shares become fully yours only if the price reaches $ 1,000 within six years, and remains there for 20 consecutive business days. The other half consolidates if Paycom’s share price reaches $ 1,750 for 20 consecutive business days by the end of 2030. Paycom’s shares closed Monday at around $ 378.
“This award is entirely dependent on Mr. Richison achieving aggressive performance goals, which will create tremendous value for our shareholders,” said Jason Clark, chairman of the Paycom board compensation committee. The company said it won’t make additional capital grants to Richison until 2026.
The highest paid
The compensation package makes Richison the highest-paid CEO of the S&P 500 (an index that groups the 500 largest companies in the country), according to research firm MyLogIQ. It is one of the top five stock awards to a CEO since at least 2010, the firm noted.
The largest CEO package remains a 2018 stock award Tesla bestowed on Musk, valued at $ 2.3 billion. The second was for Cook, who received compensation valued at $ 378 million from Apple in 2011; followed by a package worth $ 280.6 million in 2019 that Alphabet’s Sundar Pichai received from Google’s parent company.
CEO and maximum shareholder of the company
Richison, 50, founded the software company in 1998 and has run it ever since. It is the largest shareholder in Paycom. An increase in the share price placed Richison on the list of billionaires maintained by Forbes magazine. Late last year, he signed the Giving Pledge created by Bill Gates and Warren Buffett, publicly promising to donate half of his wealth.
In 2015, Richison created the Green Shoe Foundation, a non-profit organization that provides therapists to help adults reconcile childhood trauma. His family foundation has donated to other causes.
The executive took Paycom public in 2014 and had a 14.2% stake in mid-March, including through trusts established for his children.
Paycom offers online payroll and human resources services, competing with companies such as Automatic Data Processing and Workday, which advertise a service aimed at simplifying the lives of employees and managers. Paycom’s market value has risen from $ 2 billion five years ago to $ 22.7 billion based on Monday’s closing share price.