Paycom’s CEO is the highest paid in the US, but just on paper!
Paycom is considered one of the fastest growing software companies in the world, and according to a few reports from international organizations, their CEO is earning the highest salary among all other CEOs in the US. But it is not true as a report submitted by the Paycom to the Security Exchange Commission reveals that the tremendous increase in the pay of their CEO Chad Richison is just on paper because his earning is bound to a performance-based agreement which will work for ten years.
Reality of Performance-based agreement
Paycom was made public in 2014 by Chad, and he purchased almost 8.5 million stocks at $15 per share and started working as the CEO of the company. After 2019, a tremendous increment was observed in his salary, which was almost four times as compared to other CEOs of the top 10 companies in the US. In 2021, according to a few organizations, his salary was $211.13 million, which is the highest ever in the US. But reality is far beyond these stats as he (Chad Richison) is bound to a ten-year performance-based agreement which has different restrictions on his earnings. Some of them are described in the following:
- He owns 14.2% of the company, but he has to achieve specific targets to access these stocks.
- He has to bring Paycom share value to $1000 within six years to make half of the shares available to him.
- In a decade, if the stock’s value reaches $1750, his remaining stocks will become vested.
- He has restrictions on selling the stocks he owns.
- If he fails to achieve given targets, he will get nothing from the company.
- He will get nothing if he leaves the company or gets fired before the shares become vested.
- If he fails to achieve the targets, he will not be able to take another compensation package from the company.
- He has to take a 160% increment in the company’s stock value, which looks a lot more difficult.
Benefits if the plan succeeds
But he is a genius guy with brilliant performances in the past, and people believe that he can achieve these targets. If he gets success, the estimated value of Paycom will be $100 billion and his share value will be $2.8 billion. These stats look crazy but are bound to a long-term performance-based agreement.