| TABLE OF CONTENTS
| | | | Proxy and Voting Information | | | Stock Ownership of Certain Stockholders | 2 | | Election of Directors (Proposal 1) | 4 | | Corporate Governance | 9 | | Certain Relationships and Related Transactions | 14 | Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports | 15 | | Audit Committee Report | 15 | Executive Officers and Significant Employees | 16 | | Human Capital & Compensation Committee Report | 17 | | Compensation Discussion and Analysis | 17 | | Compensation and Risk | 27 | | Executive Compensation | 28 | | Equity Compensation Plan Information | 32 | | Pay Ratio Disclosure | | | Pay Versus Performance | | | Advisory Vote on Executive Compensation (Proposal 2) | 32 | | Advisory Vote on Frequency of an Advisory Vote on Executive Compensation (Proposal 3) | 33 | Approve the Amendment and Restatement of the Company’s Annual Incentive Plan (Proposal 4) | 34 | Ratification of Selection of the Company’s Independent Registered Public Accounting Firm (Proposal 5) 4) | 39 | | Stockholder Proposals and Nominations | 40 | | Cost of Solicitation and Proxies | 41 | | Financial Statements | 41 | | Householding | | | Other Matters | 42 |
JACK HENRY & ASSOCIATES, INC. 663 Highway 60, P.O. Box 807 Monett, Missouri 65708
PROXY STATEMENT FOR THE 20172023 ANNUAL MEETING OF STOCKHOLDERS To Be Held Thursday,Tuesday, November 9, 201714, 2023
This Proxy Statementproxy statement (the “Proxy Statement”) and the enclosed proxy card (the Proxy)“Proxy Card”) are furnished to the stockholders of Jack Henry & Associates, Inc., a Delaware corporation (the Company)“Company”), in connection with the solicitation of Proxiesproxies by the Company’s Board of Directors (the “Board”) for use at the 20172023 Annual Meeting of Stockholders, and any adjournment or postponement thereof (the Annual Meeting)“Annual Meeting”), to be held in the Company’s Executive Conference Center, lower level (Building J-7) at the Company headquarters,Company’s Headquarters, 663 Highway 60, Monett, Missouri, at 11:00 a.m. local time,, Central Time, on Thursday,Tuesday, November 9, 2017.14, 2023. The mailing of this Proxy Statement, the Proxy Card, the Notice of 2023 Annual Meeting of Stockholders (the “Notice”), and the accompanying 20172023 Annual Report to Stockholders (the “2023 Annual Report”) is expected to commence on or about October 3, 2017.5, 2023.
The Board of Directors does not intend to bring any matters before the Annual Meeting except those indicated in the Notice and does not know of any matter which anyone else proposes to present for action at the Annual Meeting. If any other matters properly come before the Annual Meeting, however, the persons named in the accompanying form of Proxy Card, or their duly constituted substitutes, acting at the Annual Meeting, will be deemed authorized to vote or otherwise to act thereon in accordance with their judgment on such matters.
If the enclosed Proxy Card is properly executed and returned prior to voting at the Annual Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon.
In this Proxy Statement, all references to the “Company”, “Jack Henry”, “we”, “us”, and “our”, refer to Jack Henry & Associates, Inc.
PROXY AND VOTING INFORMATION
Proxies
If the enclosed Proxy Card is properly executed and returned prior to voting at the Annual Meeting, the shares represented thereby will be voted in accordance with the instructions marked thereon.
All shares represented by proxy and all proxies solicited hereunder will be voted in accordance with the specifications made by the stockholders executing such proxies. If a stockholder does not specify how a proxy is to be voted, the shares represented thereby will be voted: (1) FOR the election as directors of the nine (9) persons nominated by the Board; (2) FOR approval of the compensation of our named executive officers; (3) FOR holding the advisory approval of our named executive compensation on an annual basis; (4) FOR ratification of the selection of the Company’s independent registered public accounting firm; and (5) upon other matters that may properly come before the Annual Meeting, in accordance with the discretion of the persons to whom the proxy is granted.
Any stockholder executing a Proxy Card retains the power to revoke it at any time prior to the voting of the Proxy.proxy. It may be revoked by a stockholder personally appearing at the Annual Meeting and casting a contrary vote, by filing an instrument of revocation with the Secretary of the Company, or by the presentation at the Annual Meeting of a duly executed later dated Proxy.later-dated Proxy Card.
VOTING
At the 2017 Annual Meeting, Stockholders will consider and vote upon:Entitled to Vote
| | (1) | The election of nine (9) directors to serve until the 2018 Annual Meeting of Stockholders; |
| | (2) | Approval, on an advisory basis, the compensation of our named executive officers; |
| | (3) | To approve, on an advisory basis, the frequency of the advisory approval of our named executive officer compensation; |
| | (4) | To approve the amendment and restatement of the Company’s Annual Incentive Plan; |
| | (5) | To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2018; and |
| | (6) | To transact such other business as may properly come before the Annual Meeting and any adjournments thereof. |
Only stockholders of record at the close of business on September 19, 2017,18, 2023, the record date set by the Board for the Annual Meeting, are entitled to notice of and to vote at such meeting.
The Company’s authorized capital stock currently consists of 250,000,000 shares of common stock, par value $.01 per share (the Common Stock)“Common Stock”), and 500,000 shares of preferred stock, par value $1.00 per share (the Preferred Stock)“Preferred Stock”). As of September 19, 2017,18, 2023, there were 77,226,33272,800,754 shares of Common Stock outstanding and no shares of Preferred Stock outstanding. At such date, our executive officers and directors were entitled to vote, or to direct the voting of, shares of Common Stock representing 0.8%less than 1% of the shares entitled to vote at the 20172023 Annual Meeting. Unless otherwise specified, all share numbers and other share data have been adjusted to reflect all prior stock splits.
All shares represented by Proxy and all Proxies solicited hereunder will be voted in accordance with the specifications made by the stockholders executing such Proxies. If a stockholder does not specify how a Proxy is to be voted, the shares represented thereby will be voted: (1) FOR the election as directors of the nine (9) persons nominated by the Board of Directors; (2) FOR approval of the compensation of our named executive officers; (3) FOR holding the advisory approval of our named executive compensation on annual basis; (4) FOR approval of the amendment and restatement of the Company’s Annual Incentive Plan; (5) FOR ratification of the selection of the Company’s independent registered public accounting firm; and (6) upon other matters that may properly come before the Annual Meeting, in accordance with the discretion of the persons to whom the Proxy is granted.
Each share of our Common Stock outstanding on the record date will be entitled to one vote on each matter.
Matters to be Voted on at the Annual Meeting
At the 2023 Annual Meeting, stockholders will consider and vote upon the following matters:
| | | | | | | | | | Proposal | Board Recommendation | Page | (1)The election of nine (9) directors to serve until the 2024 Annual Meeting of Stockholders; | FOReach nominee | | (2)Approval, on an advisory basis, of the compensation of our named executive officers; | FOR | | (3)Approval, on an advisory basis, of the frequency of the advisory approval of our named executive officer compensation; and | 1 YEAR | | (4)To ratify the selection of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2024. | FOR | |
In addition, the stockholders will consider and vote upon such other business as may properly come before the Annual Meeting and any adjournments thereof.
Only stockholders of record at the close of business on September 18, 2023, the record date for the Annual Meeting, are entitled to notice of and to vote at such meeting. A list of these stockholders will be available during the ten days prior to the meeting at the Company’s headquarters at 663 Highway 60, Monett, Missouri.
Required Vote
In an uncontested election, a Directordirector nominee must be elected by a majority of the votes cast, in person or by proxy, regarding the election of that Directordirector nominee. A “majority of the votes cast” for the purposes of Directordirector elections means that the number of votes cast “For” a Directordirector nominee’s election exceeds the number of votes cast as “Withhold” for that particular Directordirector nominee. If an incumbent Directordirector is not re-elected in an uncontested election and no successor is elected at the same meeting, the Company’s Corporate Governance Guidelines require that such Directordirector must offer to tender his or her resignation to the Board.
In a contested election, which occurs when the number of Directordirector nominees exceeds the number of open seats on the Board, Directordirector nominees will be elected by a plurality of the shares represented in person or by proxy at the meeting. A “plurality” means that the open seats on the Board will be filled by those Directordirector nominees who received the most affirmative votes, regardless of whether those Directordirector nominees received a majority of the votes cast with respect to their election.
At the Annual Meeting, the election of Directorsdirectors is considered to be uncontested because we have not been notified of any other nominees as required by our Restated and Amended Bylaws.Bylaws (the “Bylaws”). To be elected, each Directordirector nominee must receive a majority of votes cast regarding that nominee.
The option of one year, two years, or three years, if any, that receives the approval of a plurality of the votes cast by the stockholders present in person or by proxy at the Annual Meeting and entitled to vote will be the frequency of the vote on the compensation of our named executive officers that has been approved by stockholders on an advisory basis.
The approval of all other matters to be voted on at the Annual Meeting (other than the advisory vote on the frequency of the advisory approval of executive compensation) will require the affirmative vote of a majority of the shares of Common Stock present at the Annual Meeting in person or by proxy and entitled to vote. The advisory vote to approve on an advisory basis, the frequency of the advisory approval of our named executive compensation will be determined based on the option that receives the plurality of the votes cast.
Abstentions and broker non-votes will have no effect on the election of Directorsdirectors or the advisory vote on the frequency of the advisory approval of our named executive officer compensation. For the purpose of determining whether the stockholders have approved other matters, abstentions are treated as shares present or represented and voting, so abstaining has the same effect as a negative vote. Shares held by brokers that do not have discretionary authority to vote on a particular matter and that have not received voting instructions from their customersclients are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved that matter, but they are counted as present for the purpose of determining the existence of a quorum at the annual meeting.Annual Meeting. Please note that banks and brokers that have not received voting instructions from their clients cannot vote on their clients’ behalf on “non-routine” proposals. The election of directors and the advisory votes on the compensation of our named executive officers and the frequency of the advisory approval of our named executive officer compensation are considered to be “non-routine” proposals.
How to Vote
Stockholders may submit their votes in the following ways:
1.At the Annual Meeting. Stockholders of record may vote in person at the Annual Meeting; or
2. By Proxy. There are three ways to vote by proxy:
•by internet, following the instructions on the enclosed Proxy Card; •by mail, using the enclosed Proxy Card and return envelope; or •by telephone, using the telephone number and instructions on the enclosed Proxy Card.
Even if a stockholder expects to attend the Annual Meeting, it is advisable to vote by proxy to ensure such stockholder’s vote is represented.
If a stockholder’s shares are held in the name of a bank, broker, or other nominee, that nominee will provide separate instructions on how to vote. Those stockholders may vote at the Annual Meeting if they obtain and bring to the Annual Meeting a legal proxy from the bank, broker, or other nominee holding the shares.
If you are a participant in the Company’s 401(k) Retirement Savings Plan (the “Retirement Plan”) and you own shares of our Common Stock through the Retirement Plan, you may vote by proxy or you may receive separate instructions on how to direct the Retirement Plan trustee how to vote those shares on your behalf. If you do not vote by proxy or otherwise provide voting instructions for these shares, then, as permitted by the terms of the Retirement Plan, the Retirement Plan administrator will instruct the trustee to vote your Retirement Plan shares “FOR” all the director nominees named in this Proxy Statement, “1 YEAR” on the frequency of the advisory approval of our named executive officer compensation, and “FOR” all other proposals.
Participation in the Annual Meeting
Stockholders and guests may attend the Annual Meeting in person. The Company will hold a question and answer session with management immediately following the conclusion of the business to be conducted at the Annual Meeting. To help ensure that the Annual Meeting is productive and efficient, and in fairness to all stockholders in attendance, the Company requests that meeting participants limit participation to one question or comment and that remarks are respectful of fellow stockholders and meeting participants. Questions may be ruled as out of order if they are, among other things: irrelevant to
our business; related to legal matters, ongoing negotiations or potential transactions, or other matters upon which the Company does not comment on; disorderly; repetitious of statements already made; or in furtherance of the speaker’s own personal, political, or business interests. The Company reserves the right to eject participants or cut off speaking privileges for failure to comply with reasonable requests or the rules of conduct for the meeting.
STOCK OWNERSHIP OF CERTAIN STOCKHOLDERSBENEFICIAL OWNERS
The following table sets forth information as of September 19, 2017, concerning the equitybeneficial ownership of shares of the Company’s Common Stock of (a) those individuals who are known to be the beneficial owners, as defined in Rule 13d-3 of the Securities Exchange Act of 1934 (the “Exchange Act”), of 5% or more of the Company’s Common Stock, (b) the directors,each director and director nominee, (c) the executive officers named in the Summary Compensation Table and (d) all of our current directors and executive officers as a group:group. The mailing address of each director, director nominee, and executive officer shown in the table below is c/o Jack Henry & Associates, Inc., 663 Highway 60, Monett, Missouri 65708.
| | | | | | | | | | | | | | | | | | | Beneficial Owner | Number of Shares Beneficially Owned (1) | Percentage of Shares Outstanding (1) | | The Vanguard Group | 8,983,978 | | (2) | 12.3% | | BlackRock Inc. | 7,764,602 | | (3) | 10.7% | | APG Asset Management US Inc. | 4,000,715 | | (4) | 5.5% | | David B. Foss | 137,990 | | (5) | * | | Wesley A. Brown | 91,638 | | (6) | * | | Kevin D. Williams | 52,660 | | | * | | Matthew C. Flanigan | 45,397 | | (6) | * | | Thomas A. Wimsett | 37,933 | | (6) | * | | Jacque R. Fiegel | 20,241 | | (6) | * | | Laura G. Kelly | 17,177 | | (6)(7) | * | | Thomas H. Wilson, Jr. | 14,320 | | (6)(8) | * | | Gregory R. Adelson | 11,865 | | (9) | * | | Craig K. Morgan | 11,035 | | (10) | * | | Shruti S. Miyashiro | 10,719 | | (6)(11) | * | | Stacey E. Zengel | 5,877 | | (12) | * | | Curtis A. Campbell | 2,452 | | (6) | * | | Mimi L. Carsley | 1,415 | | | * | | All current directors and executive officers as a group (14 persons) | 421,502 | | (13) | * | | * Less than 1% | | | | |
(1)Except as otherwise noted in the footnotes, information is set forth as of September 18, 2023. The persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, except as noted below. With respect to shares held in the Company’s Retirement Plan, a participant has the right to direct the disposition of shares allocated to their account and a participant is allowed to vote the shares held in their individual account. (2)According to a Schedule 13G/A filed February 9, 2023, The Vanguard Group has shared dispositive power with respect to 307,477 shares, sole dispositive power with respect to 8,676,501 shares, shared voting power with respect to 110,109 shares, and sole voting power with respect to 0 shares. The address for The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355. (3)According to a Schedule 13G/A filed February 7, 2023, BlackRock Inc. has sole voting power with respect to 7,030,712 shares and sole dispositive power with respect to 7,764,602 shares. The address for BlackRock Inc. is 55 East 52nd St., New York, NY 10055. (4)According to a Schedule 13G filed January 12, 2023, APG Asset Management US Inc. (“APG US”) has shared voting power and shared dispositive power with respect to 4,000,715 shares. As reported on such Schedule 13G, APG Asset Management, N.V. (“APG NL”) is wholly-owned by APG Groep, N.C. (“APG Groep”) and is the investment manager with respect to the securities to which the Schedule 13G relates. Pursuant to an Investment Management Agreement, APG NL has delegated its investment and voting power with respect to such securities to APG US, which is its wholly-owned subsidiary. Stichting
Pensioenfonds ABP is the majority owner of APG Groep. The address for APG US is 666 3rd Ave., 2nd Floor, New York, NY 10017.
(5)Includes 11,685 shares that are currently acquirable by exercise of outstanding stock options and 4,810 shares held in the Retirement Plan for Mr. Foss’ account. (6)Includes 983 restricted stock units for each non-employee director that will vest on the earlier of (i) the day before the Company's 2023 Annual Meeting or (2) November 18, 2023. (7)Ms. Kelly has elected to defer receipt of 1,195 restricted stock units, which have fully vested and will become payable, in cash or common stock at the Company’s option, either upon Ms. Kelly’s termination of service as a director of the Company or on specified future dates, pursuant to Ms. Kelly’s deferral elections. Each restricted stock unit is the economic equivalent of one share of common stock. These deferred restricted stock units have been excluded from the amounts set forth in this table. (8)Mr. Wilson has elected to defer receipt of 9,982 restricted stock units, which have fully vested and will become payable, in cash or common stock at the Company’s option, upon Mr. Wilson’s termination of service as a director of the Company pursuant to Mr. Wilson’s deferral elections. Each restricted stock unit is the economic equivalent of one share of common stock. These deferred restricted stock units have been excluded from the amounts set forth in this table. (9)Mr. Adelson has elected to defer receipt of 3,561 performance shares, which have fully vested and will become payable, in cash or common stock, at the Company’s option, upon Mr. Adelson’s termination of service with the Company pursuant to Mr. Adelson’s deferral elections. Each performance share is the economic equivalent of one share of common stock. These deferred performance shares have been excluded from the amounts set forth in this table. (10)Includes 1,112 shares held in the Retirement Plan for Mr. Morgan’s account. (11)Ms. Miyashiro has elected to defer receipt of 543 restricted stock units, which have fully vested and will become payable, in cash or common stock, at the Company’s option, either upon Ms. Miyashiro’s termination of service as a director of the Company or on specified future dates, pursuant to Ms. Miyashiro’s deferral elections. Each restricted stock unit is the economic equivalent of one share of common stock. These deferred restricted stock units have been excluded from the amounts set forth in this table. (12)Includes 141 shares held in the Retirement Plan for Mr. Zengel’s account. (13)Includes 13,443 shares beneficially owned by other executive officers. Mr. Williams served as Chief Financial Officer and an executive officer until he stepped down effective September 1, 2022 and is not included in the group total.
| | | | | | | | | Title of Class | | Beneficial Owner | | Number of Shares Beneficially Owned (1) | | Percentage of Shares Outstanding (1) | | $.01 par value | | BlackRock Inc. | | 8,380,517 | | 10.8% | | Common Stock | | 55 East 52nd St. | | (2) | | | | | | New York, NY 10055 | | | | | | | | | | | | | | | | The Vanguard Group | | 6,825,852 | | 8.7% | | | | 100 Vanguard Blvd. | | (3) | | | | | | Malvern, PA 19355 | | | | | | | | | | | | | | | | Capital World Investors | | 3,945,000 | | 5.0% | | | | 333 South Hope St. | | (4) | | | | | | Los Angeles, CA 90071 | | | | | | | | | | | | | | | | Janus Capital Management | | 3,940,135 | | 5.0% | | | | 151 Detroit St. | | (5) | | | | | | Denver, CO 80206 | | | | | | | | | | | | | | | | John F. Prim | | 234,097 | | * | | | | | | (6) | | | | | | | | | | | | | | Wesley A. Brown | | 100,278 | | * | | | | | | (7) | | | | | | | | | | | | | | Kevin D. Williams | | 74,183 | | * | | | | | | (8) | | | | | | | | | | | | | | David B. Foss | | 58,516 | | * | | | | | | (9) | | | | | | | | | | | | | | Matthew C. Flanigan | | 48,359 | | * | | | | | | (10) | | | | | | | | | | | | | | Thomas A. Wimsett | | 20,570 | | * | | | | | | (11) | | | | | | | | | | | | | | Mark S. Forbis | | 19,582 | | * | | | | | | (12) | | | | | | | | | | | | | | Thomas H. Wilson, Jr. | | 16,670 | | * | | | | | | (13) | | | | | | | | | | | | | | Jacque R. Fiegel | | 13,778 | | * | | | | | | (13) | | | | | | | | | | | | | | Laura G. Kelly | | 10,409 | | * | | | | | | (13) | | | | | | | | | | | | | | Shruti S. Miyashiro | | 4,799 | | * | | | | | | (13) | | | | | | | | | | | | | | All directors and executive officers as a group (12 persons) | | 603,245 | | * | | | | | (14) | | |
* Less than 1%
| | (1) | Information is set forth as of September 19, 2017. The persons named in the table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, except as noted below. With respect to shares held in the Company’s 401(k) Plan (the “Retirement Plan”), a participant has the right to direct the disposition of shares allocated to his account and the plan trustee has sole voting power of all shares held by it as part of the plan assets. With respect to restricted shares, the executive officers have sole voting power but have no investment or dispositive power until the restrictions lapse. |
| | (2) | According to a Schedule 13G/A filed June 8, 2017, BlackRock Inc. has sole voting power with respect to 7,809,445 shares and sole dispositive power with respect to 8,380,517 shares. |
| | (3) | According to a Schedule 13G/A filed February 10, 2017, The Vanguard Group has shared dispositive power with respect to 49,971 shares, sole dispositive power with respect to 6,775,881 shares, shared voting power with respect to 8,484 shares and sole voting power with respect to 48,207 shares. |
| | (4) | According to a Schedule 13G filed February 13, 2017, Capital World Investors has sole voting and dispositive power with respect to 3,945,000 shares. |
| | (5) | According to a Schedule 13G/A filed January 26, 2017, Janus Capital Management has shared voting and dispositive power with respect to 656,907 shares, and sole voting and dispositive power with respect to 3,283,228 shares. |
| | (6) | Includes 11,458 restricted shares that will vest on July 1, 2018. |
| | (7) | Includes 20,000 shares that are currently acquirable by exercise of outstanding stock options and 1,594 restricted stock units that will vest on November 8, 2017. |
| | (8) | Includes 10,869 shares held in the Retirement Plan for Mr. Williams’s account. |
| | (9) | Includes 4,439 shares held in the Retirement Plan for Mr. Foss’s account and 5,729 restricted shares that will vest on July 1, 2019. |
| | (10) | Includes 20,000 shares that are currently acquirable by exercise of outstanding stock options and 1,594 restricted stock units which will vest on November 8, 2017. |
| | (11) | Includes 1,594 restricted stock units which will vest on November 8, 2017. |
| | (12) | Includes 15,286 shares held in the Retirement Plan for Mr. Forbis’s account. |
| | (13) | Includes 1,594 restricted stock units which will vest on November 8, 2017. |
| | (14) | Includes 40,000 shares that are currently acquirable under outstanding stock options, includes 31,324 shares held in the Retirement Plan for the accounts of executive officers, 17,187 restricted shares held by executive officers and 11,158 restricted stock units held by directors which will vest on November 8, 2017. |
PROPOSAL 1 ELECTION OF DIRECTORS
Procedure
At the meeting,Annual Meeting, the stockholders will elect nine (9) directors to hold office for one-year terms ending at the 20182024 Annual Meeting of Stockholders or until their successors are elected and qualified. The Board of Directors has nominated the Company’s nine (9) current directors for re-election at the Annual Meeting.
The stockholders are entitled to one vote per share on each matter submitted to vote at any meeting of the Stockholders.stockholders. Unless contrary instructions are given, the persons named in the enclosed Proxy Card or their substitutes will vote “FOR” the election of the nominees named below.
Each of the nominees has consented to serve as director. However, if any nominee at the time of election is unable to serve or is otherwise unavailable for election, and as a result other nominees are designated by the Board, of Directors, the persons named in the enclosed Proxy Card or their substitutes intend to vote for the election of such designated nominees.
Director Qualifications and Selection
Under the Company’s Corporate Governance Guidelines, the Governance Committee is charged with the responsibility for determining the appropriate skills and characteristics required of Board members and are to consider such factors as experience, strength of character, maturity of judgment, technical skills, diversity, and age in assessing the needs of the Board. The Corporate Governance Guidelines specify that a majority of the members shall qualify as independent under applicable NASDAQNasdaq Global Select Market (“Nasdaq”) listing standards. While the term “diversity” is not specifically defined in the Corporate Governance Guidelines and there is no formal policy regarding application of the term, it has been the practice of the Governance Committee to apply the term broadly, resulting in Board composition over the years that has reflected diversity in race, sexgender, and age, as well as diversity in business experience and in representation of the markets served by the Company.
While the Company has a nomination policy by which stockholders may recommend to the Governance Committee certain prospective directors for consideration (See “Corporate Governance–Governance—Stockholder Recommended Director Candidates,” below), to date no such recommendation has ever been received. If such a recommendation is received in the future, it will be evaluated in the same manner as any other recommendation to the Governance Committee. The Governance Committee nomination process varies depending upon the particular expertise and skill set sought by the Governance Committee. The process can be informal, consisting of solicitation of suggestions of possible candidates from other Board members and management, contacting candidates to determine interest level, and in-person interviews to determine “fit.” The Governance Committee has also used a more formal process utilizing a recruiting firm to identify candidates, screening of recommendations, followed by telephone and in-person interviews, background checks, and Governance Committee evaluation and nomination. The Governance Committee will in the futureexpects to continue to use a mix of both formal and informal processes to identify appropriate candidates for the Board.
The Company’s Board has also adopted a “Proxy Access for Director Nominations” bylaw.bylaw as part of the Company’s Bylaws. The proxy access bylaw permits a stockholder, or certain groups of stockholders, meeting the requirements contained in the proxy access bylaw to nominate and include in the Company’s proxy materials Directordirector nominees constituting up to two individuals or 20% of the Board (whichever is greater). See “Stockholder Nominated Director Candidates” on page 1015 for more information.
Nominees for Election
The nominees for election as directors of the Company, as well as certain information about them, are as follows:
| | | | | | | | | | Name | Position with Company | Director Since | John F. PrimDavid B. Foss | Board Chair and Chief Executive ChairmanOfficer | 20072017 | | Matthew C. Flanigan | Vice ChairmanChair and Lead Director | 2007 | | Thomas H. Wilson, Jr. | Director | 2012 | | Jacque R. Fiegel | Director | 2012 | | Thomas A. Wimsett | Director | 2012 | | Laura G. Kelly | Director | 2013 | | Shruti S. Miyashiro | Director | 2015 | | Wesley A. Brown | Director | 2015 | David B. FossCurtis A. Campbell | President, Chief Executive Officer and Director | 20172021 |
Board Snapshot
Board Skills Matrix
We believe that all of the Company’s directors possess required common attributes such as good judgment, intelligence, strategic perspective, financial literacy, and business experience. They each exhibit a strong commitment of time and attention to their roles as directors. We also have sought certain specific skills and backgrounds in our directors to provide an array of expertise in the Board. The chart below summarizes certain specific qualifications, attributes, and skills for each
director. A check mark indicates a specific area of focus or expertise of a director on which the Board relies, but a lack of a check mark does not mean that an individual does not possess that skill.
Board Skills Matrix
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Expertise | Board of Directors | PrimFoss | Flanigan | Wilson | Fiegel | Wimsett | Kelly | Miyashiro | Brown | FossCampbell | | Leadership | ✓• | ✓• | ✓• | • | • | • | • | | ✓• | | Finance | ✓• | ✓• | ✓• | | • | • | | ✓• | ✓ | Banking BusinessFinancial Services Industry | • | • | | ✓• | ✓• | • | • | ✓• | | Credit Union BusinessRegulatory Compliance | • | • | | • | • | | ✓• | | • | PaymentsOther Public Company Board or Governance | • | • | • | | ✓ | ✓• | • | | • | ComplianceTechnology and Innovation | • | | • | ✓ | | ✓• | ✓• | | • | GovernanceStrategy and Mergers and Acquisitions | • | ✓• | • | | • | ✓• | • | ✓• | | RegulatoryRisk Management and Cybersecurity | • | | • | ✓ | ✓• | | ✓ | | | Technology | ✓ | | ✓ | | | | | | ✓• |
Attribute and Skills Definitions
| | | | | | | | | | Attribute or Skill | | Definition | | Leadership | |
Experience in senior leadership roles at a large organization | | Finance | | Experience or expertise in corporate finance, financial accounting, or financial management | | Financial Services Industry | | Experience in the financial services industry, including banks, credit unions, or payments | | Regulatory Compliance | | Experience in overseeing compliance programs or engagement with government or regulatory bodies | | Other Public Company Board or Governance | | Experience on another public company board or significant corporate governance experience | | Technology and Innovation | | Experience managing technological change or driving technological innovation within an organization | | Strategy and Mergers and Acquisitions | | Experience in strategic planning, business development, or mergers and acquisitions | | Risk Management and Cybersecurity | | Experience in risk management, cybersecurity, information security, or data privacy |
Board Diversity Matrix
The matrix below summarizes the self-identified gender and ethnic diverse attributes on our Board.
| | | | | | | | | | | | | | | | Board Diversity Matrix (As of September 18, 2023) | | Total Number of Directors | 9 | | Female | Male | Non-Binary | Did Not Disclose Gender | | Directors | 3 | 6 | - | - | | Number of Directors who identify in any of the categories below | | African American or Black | - | 1 | - | - | | Alaskan Native or Native American | - | - | - | - | | Asian | 1 | - | - | - | | Hispanic or Latinx | - | - | - | - | | Native Hawaiian or Pacific Islander | - | - | - | - | | White | 2 | 5 | - | - | | Two or More Races or Ethnicities | - | - | - | - | | LGBTQ+ | - | | Undisclosed | - |
Nominee Information
The following information relating to the Company’s directors, all of whom are United States citizens,director nominees details their principal occupations, business experience, and positions during the past five years, as well as the specific experiences, qualifications, attributes, and skills that led to the conclusion that they should serve as directors of the Company:
John F. Prim,David B. Foss, age 62, Board Chair and Chief Executive Chairman.Officer. Mr. PrimFoss was appointed Executive Chairman of thenamed Board Chair on July 1, 20162021 and was previously appointed Chairman of the Board in 2012. Mr. Primhas served as Chief Executive Officer from 2004 to June 30,of the Company since July 1, 2016. He also served as President from 2003 to 2004 and as Chief Operating Officer from 2001 to 2003. Mr. Prim joinedof the Company in 1995 as partfrom 2014 until January 2022. Mr. Foss’s prior positions with the Company include: President of the acquisitionCompany’s ProfitStars Division from 2009 to 2014; General Manager of the Liberty division of Broadway & Seymour, Inc. He previously served asProfitStars from 2006 to 2009; General Manager of the Company’s E-ServicesAcquisition and OutLink Services Divisions. Mr. Prim has beenBusiness Integration unit from 2004 to 2006, during which time the Company completed 10 acquisitions; General Manager of the Complementary Solutions Group from 2000 to 2004; and President of the Open Systems Group from 1999 to 2004. He is also currently serving as a director since 2007.of CNO Financial Group, Inc. (NYSE: CNO). Before joining the Company in 1999, Mr. Prim has spent his whole career in our industry, starting asFoss held a sales representative for Burroughs Corporation selling products and services to banks and thrifts before joining Broadway & Seymour’s community banking unit in 1985, where he served in a numbervariety of positions in the financial services industry including National Sales Manager.senior operations management, sales management, and supervisory roles at BancTec, Advanced Computer Systems, and NCR. His broad experiencelong tenure in the industry in both operations and sales, as well as his extensive successfulvariety of leadership roles provide significant experience in various management roles at Jack Henry & Associates, led to his appointment as CEO in 2004, and these same factors informed the decision to appoint him to the Board in 2007, name him Chairman in 2012Company and then Executive Chairman in 2016. Mr. Prim earned a Master’s in Business Administration degree in 1985 from Queens University in Charlotte, N.C.its products, employees, and customers.
Matthew C. Flanigan, age 55,61, Vice ChairmanChair and Lead Director. Mr. Flanigan a director of the Company since his appointment in 2007, is former Executive Vice President, Chief Financial Officer and a directornine-year Board Member of Leggett & Platt, Incorporated.Incorporated (NYSE: LEG), having retired from those positions in 2019. Headquartered in Carthage, Missouri, Leggett & Platt is a leading manufacturer of engineered components and products found in many homes, offices, automobiles, and airplanes. Mr. Flanigan was appointed Senior Vice President in 2005 and became Chief Financial Officer in 2003.2003, was appointed Executive Vice President in 2009, and elected to Leggett & Platt’s Board of Directors in 2010. From 1999 until 2003, he served as President of the Office Furniture and Plastics Components Groups of Leggett & Platt.Leggett. Prior to joining Leggett & Platt in 1997, Mr. Flanigan was employed in the banking industry for 13 years, the last 10 of which as executive managerFirst Vice President and Manager for Societe Generale S.A. in Dallas, the largest non-U.S. lending institution in the Southwestern United States at that time. Mr. Flanigan currently serves as a director of Performance Food Group Company (NYSE: PFGC), one of the nation’s largest food distribution businesses and a Fortune 100 company. He previously served as a director of Fast Radius, Inc. (Nasdaq: FSRD), a cloud manufacturing and digital supply chain company. Mr. Flanigan brings to our Board expertise in
banking and in finance, risk, and compliance functions as well as a unique perspective coming from his widebroad experience at a large, global S&P 500 manufacturer.manufacturer as both an executive and Board Member, and having served on several public company boards. Mr. Flanigan was appointed “Lead Director” by the independent directors in 2012.
Thomas H. Wilson, Jr., age 56,62, Director. Mr. Wilson a director of the Company since his appointment in 2012, is a Managing Partner at DecisionPoint Advisors, LLC in Charlotte, N.C., a specialized merger and acquisition advisory firm for mid-market technology companies.companies and currently serves as a director of NN, Inc. (Nasdaq: NNBR), a diversified industrial company. Prior to joining DecisionPoint in 2008, he served as Chairman and CEO of NuTech Solutions from 2004 to 2008, a business intelligence software company that was acquired by Neteeza. From 1997 to 2004, Mr. Wilson was President of Osprey, a consulting and systems integration firm. Prior to his work at Osprey, Mr. Wilson was employed by IBM for 14 years in a variety of management and sales positions. Mr. Wilson earned a Master’s in Business Administration from Duke University and has served on the Boardsboards of various non-profit and community organizations, including North Carolina Innovative Development for Economic Advancement (NC IDEA), Junior Achievement, and the Charlotte United Way.Way, and the National Association of Corporate Directors Carolinas Chapter. Mr. Wilson brings to the Board extensive management and sales experience in technology companies, as well as expertise in technology-oriented investment banking and mergers and acquisitions.
Jacque R. Fiegel, age 63,69, Director. Ms. Fiegel a director of the Company since her appointment in 2012, is Chairman, Central Oklahoma Area of Prosperity Bank in Oklahoma City, Oklahoma. Ms. Fiegel serves on the Management Committee and Strategic Technology Oversight Committee at Prosperity. Prior to its acquisition by Prosperity Bank, she served at Coppermark Bank as Senior Executive Vice President, Chief Operating Officer, and director, as well as director and treasurer of affiliates Coppermark Bancshares, Inc. and Coppermark Card Services, Inc. She began her career at the bank in 1976 as a teller. Ms. Fiegel is a former member of the Oklahoma City Branch Board of the Federal Reserve Bank of Kansas City, a former director of the Oklahoma Bankers Association, sheand was previously a director and past President of the Economic Club of Oklahoma, as well as a number of civic organizations in Oklahoma City. Ms. Fiegel was named in 2008 one of the US Banker “25 Most Powerful Women in Banking” and to the “25 Women to Watch” lists in both 2009 and 2010. Ms. Fiegel brings to the Board a broad experience with and understanding of bank technology, banking operations, financial management, and the overall banking business.
Thomas A. Wimsett, age 53,59, Director. Mr. Wimsett a director of the Company since his appointment in 2012, is the Founder and Chairman of Merchant’s PACT, a fintech, payments program management, and consulting firm he formed in 2012. He also has served as Executive Chairman of ControlScan, Inc., a payment card compliance, network, and managed security services firm, since 2014.from 2014 through 2020. He is a 3035+ year veteran of the payments industry, most recently as athe founder in 2003 and theformer Chairman and Chief Executive Officer of Iron Triangle Payment Systems, (renamed NPC in 2006), a leading merchant payment processor, which was acquired by Fifth Third Processing SolutionsVantiv (now Vantiv)Fidelity National Information Services, Inc.) in late 2010. Prior managerial and executive positions in the payments industry include President and CEO of National Processing Company (NYSE: NAP) from 1999 to 2002. He formerly served as Chairman and director of Town & Country Bank and Trust Company in Bardstown, Kentucky. Mr. Wimsett brings deep knowledge and experience in the payments industry to the Board, including service for more than 10 years as a director or advisory board member of the Electronic Transaction Association, an international trade association, and prior roles as a director of MasterCard’s US Board and on advisory boards for both Discover Card and Visa.
Laura G. Kelly, age 60, Director.66, Director. Ms. Kelly is a former Managing Director of CoreLogic, Inc., where she served as President of Columbia Institute, an industry education affiliate. She currently serves as a director of the Company since her appointment in 2013, is Managing Director, CoreLogic Valuation Solutions Group, where she is President of the largest valuation services division in the U.S., with nearly $600 million in annual revenue. Prior to joining CoreLogic,for RE/MAX Holdings, Inc. (NYSE: RMAX) and director for USAA’s Savings Bank. Ms. Kelly also served Dun & Bradstreet Corporation as Chief Product and Content Officer from 2013 to 2015, and American Express Company, where she was Senior Vice President and General Manager for the Americas from 2012 to 2013 and Senior Vice President,in Global Product & Marketing, Global Payment OptionsPayments from 2011 to 2012.2013. From 2005 to 2011, Ms. Kelly was employed by MasterCard Worldwide, Inc. as Executive Vice President Global Prepaid Product Solutions from 2007 to 2011 and as Group Head with Global Debit StrategyProduct responsibilities in Prepaid and Business Administration.Debit. Prior to MasterCard, LauraMs. Kelly held various executive leadership positions with Southwest Business Corporation, The Concours Groupwithin the insurance and USAA.financial services sector. Early in her career, Ms. Kelly served her country as an active duty and reserve officer in the United States Air Force. Ms. Kelly brings to the Board extensive management experience in data analytics,innovation, payments, and financial services technology. Her background includes a focus on risk managementdigital transformation, leading large scale organizations, and experience developing international payments products and services. Ms. Kelly is a certified public accountant, a certified property and casualty underwriter, an associate in risk management and earned a Master’s in Business Administration from Auburn University.
Shruti S. Miyashiro, age 46,52, Director. Ms. Miyashiro a director of the Company since her appointment in 2015, is President and Chief Executive Officer of Orange County’sDigital Federal Credit Union, which she has led since 2007. Orange County’s Credit Union is based in Santa Ana, California with $1.5 billion in assets, 10 branchesAugust 2022. Ms. Miyashiro also served as President and over 100,000 members. Prior to her appointment as CEO of Orange County’s Credit Union, Ms. Miyashiro held other senior positions in financial services organizations, including President and CEO of Pasadena Federal Credit Unionwhich she led from 2004 to 2007 and President and CEO of Orange County Group, Inc. from 2002 to 2004.through July 2022. Ms. Miyashiro has served in numerous leadership positions, inincluding as a past Board Director of the credit union industry, including state and national committees for the California Credit Union League and the Credit Union National Association, as well as theFederal Home Loan Bank of San Francisco, past Board of DirectorsDirector of CO-OP Financial Services, a large credit union services organization which serves institutions nationwide. Ms. Miyashiro serves onnationwide, past appointee to the Advisory Committee for the California Department of Financial Protection and Oversight, as well as numerous state and on the board of the Filene Research Institute.national committees for credit unions. Ms. Miyashiro brings to the Board the perspective and experience of one of the largest credit unions in the nation and a large credit unioncurrent Company customer, as well as that of a past customer from her time at Orange County’s Credit Union, useswhich used the Company’s Episys core software system and many of ourits complementary products and services.services during her tenure. Ms. Miyashiro earned a Master’s in Business Administration from the University of Redlands.
Wesley A. Brown, age 63,69, Director. Mr. Brown was elected director of the Company in November 2015, having previously served as a Director from 2005 to 2014, when he resigned due to changes in the terms and requirements of his employment by the national accounting and consulting firm KPMG, LLP. Mr. Brown currently serves as President of Bent St. Vrain & Company, LLC, a Denver-based bank consulting firm that he formed in 2016,2015, and as director of FirstBank Holding Company, a $17$28 billion asset bank holding company based in Lakewood, CO. Mr. Brown served KPMG, LLP as Managing Director in its Corporate Finance subsidiary from June 2014 to his retirement in October 2015. From 2004 to 2014, Mr. Brown was a co-founder and Managing Director of St. Charles Capital, LLC in Denver, Colorado, where he also served as its first President and Compliance Officer. Mr. Brown has specialized in merger transactions and financings for financial institutions, completing over 125 transactions totaling in excess of $3.5 billion over his career. His connections with and to the community banking industry in the Rocky Mountain Region are extensive, as he has personally worked on approximately half of all Colorado bank and thrift merger transactions since 1993.from 1993 through 2015. Prior to founding St. Charles Capital, he served as Managing Director of McDonald Investments, Inc. (2001-2004) and Executive Vice President of The Wallach Company (1991-2003)(1991-2000). Mr. Brown previously served as a Director from 2005 to 2014, when he resigned due to changes in the terms and requirements of his employment by the national accounting and consulting firm KPMG. In addition to experience with finance and compliance, Mr. Brown brings a deep knowledge of the banking industry to the Board as well as unique insight to the Company’s mergers and acquisitions. Mr. Brown earned a Master’s in Business Administration with Honors from the University of Chicago.
David B. Foss,Curtis A. Campbell, age 55,51, Director. Mr. Campbell is the former CEO of TaxAct, a provider of technology-enabled tax focused financial solutions. He previously served as President of Software at Blucora, Inc. (Nasdaq: BCOR) where he ran TaxAct from 2018 until it was sold by Blucora in 2022. He continued to lead TaxAct after the sale until 2023. Prior to TaxAct, Mr. Campbell served Capital One Financial Corporation (NYSE: COF), a diversified financial services holding company, as a Managing Vice President of Consumer Auto from 2017 to 2018 and Chief Executive Officer. Mr. FossIntuit Inc. (Nasdaq: INTU), a financial technology company serving consumers and small businesses, where he was appointedVice President of Product Management, Strategy, Analytics and Innovation from 2014 to the Board on July 1, 2017. Mr. Foss was named PresidentCampbell brings extensive experience with infrastructure and Chief Executive Officer of the Companycloud computing as well as digital development and a keen focus on July 1, 2016, having previously been appointed President in 2014. Mr. Foss’s prior positions with the Company include President of the Company’s ProfitStars Divisioncustomer experience from 2009 to 2014 and General Manager of ProfitStars from 2006 to 2009. He led the Company’s Acquisition and Business Integration unit from 2004 to 2006, during which time the Company completed 10 acquisitions. Mr. Foss’s prior positions with the Company include General Manager of the Complementary Solutions Group from 2000 to 2004 and President of the Open Systems Group from 1999 to 2004. Before joining the Company in 1999, Mr. Foss held a variety of positions in the financial services industry including senior operations management, sales management, and supervisoryhis leadership roles at BancTec, Advanced Computer Systems and NCR. His long tenureseveral technology companies. Mr. Campbell earned a Master’s in International Business from the industry and varietyUniversity of leadership roles provide significant experience as to the Company and its products, employees and customers.South Carolina.
Director Independence
SevenEight of the nine nominated directors are independent. Non-employee directors Flanigan, Wilson, Fiegel, Wimsett, Kelly, Miyashiro, Brown, and BrownCampbell qualify as “independent” in accordance with the published listing requirements of NASDAQ. Mr. Prim andNasdaq. Mr. Foss dodoes not qualify as independent because they are employeesMr. Foss is currently an employee of the Company. The NASDAQNasdaq rules have both objective and subjective tests for determining who is an “independent director.” The objective tests state, for example, that a director is not considered independent if he or she is an employee of the company, has been an employee within the prior three years, or is a partner in or executive officer of an entity to which the company made, or from which the company received, payments in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenue for that year. The subjective test states that an independent director must be a person who lacks a relationship that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
The Board of Directors relies upon evaluation of director independence by the Board’s Governance Committee. In assessing independence under the subjective test, the Governance Committee tooktakes into account the standards in the objective tests and reviewedreviews additional information provided by the directors with regard to each individual’s business and personal activities as they may relate to the Company and its management. Based on all of the foregoing, as required by NASDAQNasdaq rules, the Governance
Committee made a subjective determination as to each of Mses. Fiegel, Kelly, and Miyashiro and Messrs. Flanigan, Wilson, Wimsett, Brown, and BrownCampbell that no relationship exists, which, in the opinion of the Governance Committee, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Governance Committee has not established categorical standards or guidelines to make these subjective determinations but considers all relevant facts and circumstances.
In making its independence determinations, the Governance Committee considered transactions occurring since the beginning of its 20142021 fiscal year between the Company and entities associated with the independent directors or members of their immediate family. While aThe Governance Committee considered the customer relationship does existrelationships between the Company and each of (1) the credit union currently associated and the credit union previously associated with Ms. Miyashiro, (2) the bank associated with Ms. Fiegel, and (3) the bank associated with Mr. Brown. For each of these customer relationships, the Governance Committee has determined that because of the amount involved in relation to the total revenues of the Company and the credit union, the relationship does not impair the independence of this director. The Governance Committee has also determined that thethese transactions with the credit union were on terms no less favorable to the Company than arrangements with other unaffiliated customers.customers and that because of the amounts involved in relation to the total revenues of the Company and the applicable credit union or bank, the relationships did not impair the independence of Ms. Miyashiro, Ms. Fiegel, or Mr. Brown. In all cases and in all years reviewed, the amounts received by the Company from each of these institutions were less than 1% of the institution wereCompany’s total revenue for the year. The Governance Committee also considered that Mr. Wimsett is Chairman, Managing Partner, and majority owner of Merchant’s PACT, which has a referral agreement with the Company pursuant to which the Company is paid a fee for referring customers to Merchant’s PACT. Because the amounts produced under this relationship have been well below amounts set in the Company’s Related Party Transactions Policy and constitute far less than 1% of the Company’s total revenue for the year.year, the Governance Committee has determined the relationship does not impair the independence of Mr. Wimsett. See “Certain Relationships and Related Transactions”, below. below for further information.
In addition to the Board-level standards for director independence, the directors who serve on the Audit Committee each satisfy standards established by the Securities and Exchange Commission (the “SEC”)SEC providing that to qualify as “independent” for the purposes of membership, members of audit committees may not accept directly or indirectly any consulting, advisory, or other compensatory fee from the Company other than their director compensation.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS.BOARD. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE ELECTION OF EACH NOMINEE UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY CARD A VOTE OF “WITHHOLD” WITH RESPECT TO A NOMINEE.
CORPORATE GOVERNANCE
The Company and its businesses are managed under the direction of the Board of Directors.Board. The Board generally meets a minimum of fourfive times during the year but has complete access to management throughout the year.
Corporate Governance Guidelines
The Board of Directors has adopted Corporate Governance Guidelines which addressinclude, among others, the following subjects:subjects (the following description is a summary as of September 18, 2023 and is qualified in its entirety by the Corporate Governance Guidelines, which may be updated or amended from time to time):
| | | | | | | | | –Director Independence | | •The majority of the Board should be independent under relevant NASDAQNasdaq standards. |
| | – | •Independent directors should not be compensated by the Company other than in the form of Director’sdirector’s fees (including any equity awards). |
| | – | •Membership on the Audit, Human Capital & Compensation, and Governance Committees should be limited to independent directors. |
| | –Stockholders Rights | | •The Board should conduct an annual self-evaluation to determine whether it and its committees are functioning properly. |
| | – | Non-management directors may meet in executive session from time to time withwill not adopt a stockholder rights plan or reprice stock options without members of management. |
| | – | The Chief Executive Officer shall provide an annual report to the Governance Committee on succession planning. |
| | – | The Governance Committee is responsible for determining skills and characteristics of Board candidates, and should consider factors such as independence, experience, strength of character, judgment, technical skills, diversity and age. |
| | – | The Board and its committees shall have the right at any time to retain independent counsel. |
| | – | Board members should not sit on more than 3 other boards of public companies. |
| | – | The Board should have at least 4 regularly scheduled meetings a year and members are invited to attend an annual review of business strategy conducted with senior management. |
| | – | Board members are expected to attend all Annual Meetings of the Stockholders. |
| | – | stockholder vote. •Stockholders may communicate with the Board by submitting written comments to the Secretary for the Company, who will screen out inappropriate communications and forward appropriate comments to the directors. |
| | –Meeting Requirements | | •Non-management directors may meet in executive session from time to time with or without members of management. •The Board should have at least four regularly scheduled meetings a year and members are invited to attend an annual review of business strategy conducted with senior management. •Board members are expected, absent unusual circumstances, to attend all Annual Meetings of the Stockholders. | | Board Composition | | •The Governance Committee is responsible for determining skills and characteristics of Board candidates, and should consider factors such as independence, experience, strength of character, mature judgment, technical skills, diversity, and age. •Board members should not sit on more than three other boards of public companies. •Directors may not stand for re-election after age 70 and any director first elected after May 14, 2021 may not stand for re-election after a total of 12 years of service. | | Stock Requirements and Restrictions | | •Directors, executive officers, and general managersany other Section 16 officers of the Company should own minimum amounts of Company stock in relation to their base compensation and should retain and hold 75% of all shares granted, net of taxes, until the ownership requirements are met. |
| | – | When the Chairman is a member of management, the independent directors shall appoint a Lead Director to coordinate the activities of the independent directors, help to set the agenda and schedule for Board meetings, and chair Board and stockholder meetings in the absence of the Chairman. |
| | – | •All directors, executives, and employees are prohibited from engaging in hedging transactions, short sales, pledges, and trading in any publicly traded options involving the Company’s stock. |
| | – | Directors may not stand for re-election after age 70. |
| | – | •Executives are subject to a Recoupment Policy providing for clawback of incentive compensation in the event of a restatement of financial statements due to material non-compliance with reporting requirements. | | Board Operations | | •The Board should conduct an annual self-evaluation to determine whether it and its committees are functioning properly and an annual performance evaluation for each individual director. •The Chief Executive Officer shall provide an annual report to the Governance Committee on succession planning. •The Board and its committees shall have the right at any time to retain independent counsel. •When the Chair is a member of management, the independent directors shall appoint a Lead Director to coordinate activities of the independent directors, help set the agenda and schedule for Board meetings, and chair Board and stockholder meetings in the absence of the Chair. |
Stockholder Recommended Director Candidates
The Board of Directors has also adopted a Nomination Policy with respect to the consideration of director candidates recommended by stockholders. A candidate submission from a stockholder will be considered at any time if the following information is submitted to the Secretary of the Company:Company (the following description is qualified in its entirety by the Nomination Policy):
•The recommending stockholder’s name and address, together with the number of shares held, length of period held, and proof of ownershipownership; •Name, age, and address of candidatecandidate; •Detailed resume of candidate, including education, occupation, employment, and commitmentscommitments; •Any information required to be disclosed in the solicitation of proxies for election of a director under the Exchange Act; •Description of arrangements or understandings between the recommending stockholder and the candidatecandidate; •Statement describing the candidate’s reasons for seeking election to the Board and documenting candidate’s satisfaction of qualifications described in the Corporate Governance GuidelinesGuidelines; •A signed statement from the candidate, confirming willingness to serveserve; and •If the recommending stockholder has been a beneficial holder of more than 5% of the Company’s stock for more than a year, then it must consent to additional public disclosures by the Company with regard to the nominationnomination.
The Secretary of the Company will promptly forward complying nominee recommendation submissions to the ChairmanChair of the Governance Committee. The Governance Committee may consider nominees submitted from a variety of sources including but not limited to stockholder recommendations. If a vacancy arises or the Board decides to expand its membership, the Governance Committee will evaluate potential candidates from all sources and will rank them by order of preferenceif more than one is identified as properly qualified. A recommendation will be made to the Board by the Governance Committee based upon qualifications, interviews, background checks, and the Company’s needs.
Stockholder Nominated Director Candidates
The Company’s Board has adopted a “Proxy Access for Director Nominations” bylaw.bylaw as part of the Company’s Bylaws. The proxy access bylaw permits a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding common stock continuously for at least three years to nominate and include in the Company’s proxy materials Directordirector nominees constituting up to two individuals or 20% of the Board (whichever is greater), provided that the stockholder(s) and the nominee(s) satisfy the requirements specified in Article II, Section 2.12 of our bylaws.Bylaws. See “Stockholder Proposals and Nominations” on page 4061 for more information.
Majority Election Policy
The Company’s By-LawsBylaws and Corporate Governance Guidelines require that a director nominee only be elected if he or she receives a majority vote of the votes cast with respect to his or her election in an uncontested election. Thus, for a nominee to be elected, the number of votes cast “For” must exceed the number of votes cast as “Withheld”“Withhold” for the nominee. If a nominee who is currently serving as a director is not re-elected with a majority of the votes cast, then under the Corporate Governance Guidelines, he or she is required to submit a resignation to the Board. In this event, the Governance Committee will consider the tendered resignation and will make a recommendation to the Board as to whether to accept or reject the resignation. The Board must act on the tendered resignation within 90 days from the date of certification of the election results and must also promptly disclose its decision and explain its rationale.
Board Leadership Structure
The Board of Directors does not have a fixed policy regarding the separation of the offices of Chairman of the Board Chair and Chief Executive Officer. These offices have beenwere held by different persons from 2004-2012,2004 to 2012 but were combined in one person (Mr.(John F. Prim) from 2012 to June 30, 2016. Pursuant to the Company’s previously announced succession plan, on July 1,In 2016, these two offices were again separated when Mr. Prim was appointed Executive ChairmanChair and Mr. Foss was appointed President and Chief Executive Officer. In 2021, these two offices were again combined when Mr. Foss was
appointed as Board Chair. The members of the Board believe that the Company has been well served in the past by both combined Chairman/Chair/CEOs and by separate persons in these offices and believes that the Board should maintain the flexibility to combine or separate these offices in the future if deemed to be in the best interests of the Company.
The Board has adopted a governance guideline providing for aan independent “Lead Director.” Under the guideline, when the ChairmanChair is a member of Company management, the independent directors will annually appoint from among themselves a Lead Director. The Lead Director will coordinate the activities of the independent directors, coordinate with the ChairmanChair to set the agenda and schedule for Board meetings, advise on materials distributed to directors, Chairchair meetings of the Board and stockholders in the absence of the Chairman,Chair, call and chair executive sessions of the independent directors, and perform other duties assigned from time to time by the Board. Mr. Flanigan has served as the Lead Director since 2012.
The Board is committed to strong, independent Board leadership and believes that objective oversight is critical to effective governance. SevenEight of our nine director nominees are independent, as are all members of the Audit, Compensation and Governance Committeeseach of the Board. Fourcommittees of the five members of the Risk and Compliance Committee are independent.Board. The independent directors regularly meet in executive session without management directors.Mr. Foss, the sole non-independent director.
Communication with the Board
ShareholdersStockholders and all other interested parties wishing to contact our Board of Directors may write to: Board of Directors of Jack Henry & Associates, Inc., Attn: Corporate Secretary, PO Box 807, 663 West Highway 60, Monett, MO 65708. The CorporateCompany’s Secretary distributes this correspondence to the appropriate member(s) of the Board.
Risk Oversight
Pursuant to the Company’s Corporate Governance Guidelines, the Board performs its risk oversight function primarily through its Risk and Compliance, Audit, and Human Capital & Compensation Committees. The Risk and Compliance Committee has primary responsibility for overseeing, monitoring, and addressing the Company’s enterprise and operational risks. The Risk and Compliance Committee is charged with overseeing the Company’s risk management program that measures, prioritizes, monitors, and responds to risks. This oversight includes ensuring the adequacy of management’s design and implementation of information security measures. The Risk and Compliance Committee receives reports from the Company’s Chief Information Security Officer, as well as other members of management. The Audit Committee oversees risks relating to financial statements and reporting, credit, and liquidity risks. The Human Capital & Compensation Committee is charged with oversight of risks in compensation, employee benefits, and other employment related policies and practices. The Audit Committee and the Human Capital & Compensation Committee provide periodic reports regarding their risk assessments to the Risk and Compliance Committee. The Board receives regular reports from both the Risk and Compliance Committee of the consolidated risk assessments of these committees as well as management,and from management. The Board assesses major risks and reviews with management options for risk mitigation. As such, the Board is informed and engaged when new risks arise.
Corporate Responsibility and Sustainability
The Company has long incorporated a commitment to corporate social responsibility into the way it does business and is committed to both doing the right thing and increasing stockholder value through increased focus and disclosure on these issues. The Board has overall oversight responsibility for matters related to environmental, social, and governance issues, with individual Board committees responsible for certain subcomponents. The executive leadership team is held accountable for execution through their lines of business. The Company published its most recent sustainability report in April 2023. The sustainability report is posted on our investor relations web site at http://ir.jackhenry.com under the “Sustainability” tab.
Code of Conduct
The members of the Board, as well as the executive officers and all other employees, contractors, vendors, and business partners of the Company are subject to and responsible for compliance with the Jack Henry & Associates Code of Conduct. The Code of Conduct
contains policies and practices for the ethical and lawful conduct of our business, as well as procedures for confidential investigation of complaints and discipline of wrongdoers.
Governance Materials Available
The Company has posted its significant corporate governance documents on its website at http:https://jkhy.client.shareholder.com/corporate-governance.cfm.ir.jackhenry.com/corporate-governance/overview. There you will find, among other things, copies of the current Corporate Governance Guidelines, the Jack Henry Code of Conduct, the Human Rights Commitment and Policy Statement, the Human Capital & Compensation Committee Charter, the Governance Committee Charter (with attached Nomination Policy), Audit Committee Charter, and the Risk and Compliance Committee Charter, as well as the Company’s Certificate of Incorporation and By-Laws.Bylaws. Other investor relations materials are also posted at http://jkhy.client.shareholder.com/,ir.jackhenry.com, including SEC reports, financial statements, and news releases.
The Board of Directors and Its Committees
The Board of Directors held four regular meetings and fivetwo special meetings during the last fiscal year. Each director attended at least 75% of all meetings of the Board and all committees on which they served. The independent directors met in four executive sessions without management present during the last fiscal year. In accordance with our Corporate Governance Guidelines, all of the directors attended the Annual Meeting of the Stockholders held on November 10, 2016.15, 2022.
The Governance Committee of the Board has determined that seveneight of the Board’s nine members, Flanigan, Wilson, Fiegel, Wimsett, Kelly, Miyashiro, Brown, and BrownCampbell are independent directors under applicable NASDAQNasdaq standards.
The Board has adopted Stock Ownershipstock ownership guidelines within the Corporate Governance Guidelines establishing stock ownership goals applicable to directors as well as senior management of the Company. Each non-employee director of the Company is expected to own Company shares having a value of at least fourfive times the annual director base compensation.cash retainer. Under the terms of the guidelines, new directors should be in compliance with this standard within five years after joining the Board. For this purpose, in addition to shares held outright, directors may include shares held in the person’s retirement accounts and deferral accounts, all shares held in trust for the person’s immediate family members, as well as the “in-the-money” value of any vested stock options and all restricted stock.stock units. As measured on June 30, 2017,2023, all directors on such date were in compliance with these guidelines.ownership guidelines or within the five-year compliance window.
The Board of Directors has the following four standing committees, each of which operates under a written charter adopted by the Board:
| | | | | | | | | | Audit Committee | | | Thomas H. Wilson, Jr. (Chair) | | The Audit Committee selects and oversees the independent auditor, reviews the scope and results of the annual audit, including critical audit matters, reviews critical accounting policies, reviews internal controls over financial reporting, pre-approves retention of the independent registered public accounting firm for any services, oversees our internal audit function, reviews and approves all material related party transactions, reviews regulatory examination results and addresses financial reporting risks. All members of the Audit Committee are independent. The Board has determined that Mr. Flanigan, Mr. Wilson, and Mr. Wimsett are each an “audit committee financial expert” as defined by the SEC because of their extensive accounting and financial experience. Please see the Audit Committee Report in this Proxy Statement for information about our 2023 fiscal year audit. | | Matthew C. Flanigan | | | Thomas A. Wimsett | | | Wesley A. Brown | | Meetings in FY2023: 14 | |
| | | | | | | | | Chair: | WilsonHuman Capital & Compensation Committee | Members:Shruti S. Miyashiro (Chair) | Flanigan, Wimsett, Brown | The Human Capital & Compensation Committee establishes and reviews the compensation, perquisites, and benefits of the Company’s executive officers, evaluates the performance of senior executive officers, makes recommendations to the Board on director compensation, considers incentive compensation plans for our employees, and carries out duties assigned to the Human Capital & Compensation Committee under our equity compensation plans and employee stock purchase plan. Under its charter, the Human Capital & Compensation Committee has the authority to delegate certain responsibilities to subcommittees, but it may not delegate any matter relating to senior executive compensation. To date, the Human Capital & Compensation Committee has not delegated any of its responsibilities. All members of the Human Capital & Compensation Committee are independent. Please see the Human Capital & Compensation Committee Report and the Compensation Discussion and Analysis in this Proxy Statement for further information about the Compensation Committee’s process and decisions in fiscal 2023. | | Matthew C. Flanigan | | | Thomas H. Wilson, Jr. | | | Wesley A. Brown | | Meetings in FY 2017: FY2023: 10 | 22 |
The Audit Committee selects and oversees the independent auditor, reviews the scope and results of the annual audit, reviews critical accounting policies, reviews internal controls over financial reporting, pre-approves retention of the independent registered public accounting firm for any services, oversees our internal audit function, reviews and approves all material related party transactions, reviews regulatory examination results and addresses financial reporting risks. All members of the Audit Committee are independent. The Board has determined that Matthew Flanigan is an “audit committee financial expert” as defined by the SEC because of his extensive accounting and financial experience. Please see the Audit Committee Report in this proxy statement for information about our 2017 fiscal year audit.
Compensation Committee
| | | | | | | | | Chair:Governance Committee | Flanigan | Members:Laura G. Kelly (Chair) | Wilson, Miyashiro, Brown | The Governance Committee identifies, evaluates, and recruits qualified individuals to stand for election to the Board, recommends corporate governance policy changes, reviews executive succession planning, and evaluates Board performance. The Governance Committee will consider candidates recommended by stockholders, provided such recommendations are made in accordance with the procedures set forth in the “Governance Committee Nomination Policy” attached to its charter, discussed in greater detail in “Stockholder Recommended Director Candidates,” above. All members of the Governance Committee are independent. | | Matthew C. Flanigan | | | Jacque R. Fiegel | | | Curtis A. Campbell | | Meetings in FY2017: FY2023: 4 | 11 |
The Compensation Committee establishes and reviews the compensation, perquisites and benefits of the Executive Officers, evaluates the performance of senior executive officers, makes recommendations to the Board on director compensation, considers incentive compensation plans for our employees and carries out duties assigned to the Compensation Committee under our equity
compensation plans and employee stock purchase plan. Under its charter, the Compensation Committee has the authority to delegate certain responsibilities to subcommittees, but it may not delegate any matter relating to senior executive compensation. To date, the Compensation Committee has not delegated any of its responsibilities. All members of the Compensation Committee are independent. Please see the Compensation Committee Report and the Compensation Discussion and Analysis in this proxy statement for further information about the Compensation Committee’s process and decisions in fiscal 2017.
Governance Committee
| | | | | | | | | Chair: | KellyRisk and Compliance Committee | Members:Thomas A. Wimsett (Chair) | Fiegel, Flanigan | The Risk and Compliance Committee reviews the Company’s compliance practices, reviews enterprise risks, oversees the Company’s risk assessment and management programs, reviews risk preparedness and mitigation, monitors regulatory compliance and oversees response to regulatory requirements. All members of the Risk and Compliance Committee are independent. Please see “Risk Oversight” above for further information about the Risk and Compliance Committee’s risk management responsibilities. | Meetings in FY2017: | 4 |
The Governance Committee identifies, evaluates and recruits qualified individuals to stand for election to the Board, recommends corporate governance policy changes, reviews executive succession planning and evaluates Board performance. The Governance Committee will consider candidates recommended by stockholders, provided such recommendations are made in accordance with the procedures set forth in the “Governance Committee Nomination Policy” attached to its charter, discussed in greater detail in “Stockholder Recommended Director Candidates,” above. All members of the Governance Committee are independent.
Risk and Compliance Committee
| | Jacque R. Fiegel | | Chair:Laura G. Kelly | Fiegel | Members:Shruti S. Miyashiro | Wimsett, Prim, Kelly, Miyashiro | | Curtis A. Campbell | | Meetings in FY2017: FY2023: 8 | 12 |
The Risk and Compliance Committee reviews the Company’s compliance practices, reviews enterprise risks, oversees the Company’s risk assessment and management programs, reviews risk preparedness and mitigation, monitors regulatory compliance and oversees response to regulatory requirements. The Risk and Compliance Committee has four members who are independent and one (Mr. Prim) non-independent executive member. Please see “Risk Oversight” above for further information about the Committee’s risk management responsibilities.
Compensation Committee Interlocks and Insider Participation
During our 20172023 fiscal year, Ms. Miyashiro and Messrs. Flanigan, Wilson, Brown and Ms. MiyashiroBrown served on the Human Capital & Compensation Committee. None of the members of the Human Capital & Compensation Committee is currently or was formerly an officer or employee of the Company. Ms. Miyashiro is President and CEO of Digital Federal Credit Union and was previously President and CEO of Orange County’s Credit Union, both of which is a customerare customers of the Company as described below in “Certain Relationships and Related Transactions.” There are no other Human Capital & Compensation Committee interlocks and no insider participation in compensation decisions that are required to be reported under the SEC’s rules and regulations.
Director Compensation
The Human Capital & Compensation Committee reviews annually the compensation for non-employee directors, as well as comparative compensation data for peer companies provided by its independent advisor. If the Human Capital & Compensation Committee determines that a change to non-employee director compensation is advisable, it provides a recommendation to the Board and the Board considers this recommendation for approval. The following table sets forth compensation paid to our independentnon-employee directors in fiscal year 2017. The compensation paid to Mr. Prim as an employee is detailed below at “Executive Compensation.”
| | | | | | | |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($) (1) | Options Awards ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) |
Total ($) | | Matthew C. Flanigan | 128,500 | 133,115 | - | - | - | 261,615 | | Thomas H. Wilson | 114,500 | 133,115 (2) | - | - | - | 247,615 | | Thomas A. Wimsett | 101,000 | 133,115 | - | - | - | 234,115 | | Wesley A. Brown | 98,500 | 133,115 | - | - | - | 231,615 | | Jacque R. Fiegel | 92,000 | 133,115 | - | - | - | 225,115 | | Laura G. Kelly | 92,000 | 133,115 (2) | - | - | - | 225,115 | | Shruti S. Miyashiro | 88,500 | 133,115 | - | - | - | 221,615 |
| | (1) | These amounts reflect the aggregate grant date fair value of shares of restricted stock units granted in the fiscal year ended June 30, 2017, in accordance with FASB ASC Topic 718. For assumptions used in determining the fair value of restricted stock units granted, see Note 9 to the Company’s 2017 Consolidated Financial Statements. |
| | (2) | Includes amounts deferred pursuant to the Company’s Non-Employee Director deferred Compensation Plan. |
2023. A director who is employed by the Company does not receive any separate compensation for service on the Board. The compensation paid to Mr. Foss as an employee is detailed below at “Executive Compensation.”
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash | Stock Awards | Options Awards | Non-Equity Incentive Plan Compensation
| All Other Compensation |
Total | | | ($) | ($) (1) (2) | ($) | ($) | ($) | ($) | | Matthew C. Flanigan | | 139,500 | 178,021 | | | | - | - | - | 317,521 | | Thomas H. Wilson, Jr. | | 112,000 | 178,021 | | | | - | - | - | 290,021 | | Jacque R. Fiegel | | 80,000 | | 178,021 | | | | - | - | - | 258,021 | | Thomas A. Wimsett | | 109,000 | | 178,021 | | | | - | - | - | 287,021 | | Laura G. Kelly | | 89,375 | | 178,021 | | | | - | - | - | 267,396 | | Shruti S. Miyashiro | | 107,375 | | 178,021 | | | | - | - | - | 285,396 | | Wesley A. Brown | | 93,000 | | 178,021 | | | | - | - | - | 271,021 | | Curtis. A. Campbell | | 80,000 | | 178,021 | | | (3) | - | - | - | 258,021 |
(1) These amounts reflect the aggregate grant date fair value of restricted stock units granted in the fiscal year ended June 30, 2023, in accordance with FASB ASC Topic 718. For assumptions used in determining the fair value of restricted stock units granted, see Note 10 to the Company’s 2023 consolidated financial statements in our Annual Report on Form 10-K ifor the year ended June 30, 2023. (2) As of June 30, 2023, each director listed held an aggregate of 983 unvested restricted stock units. (3) Includes amounts deferred pursuant to the Company’s Non-Employee Director Deferred Compensation Plan.
In prior years, the annual director cash retainer, the annual lead director retainer, and the annual committee chair retainers were paid following the Annual Meeting of Stockholders, in advance for services to be rendered through the following Annual Meeting of Stockholders. Meeting fees (in-person or remote) for Board and committee meetings were paid on a monthly basis in arrears. In August 2022, the Board approved changes to non-employee director cash compensation practices. Meeting fees were eliminated and the annual director cash retainer, the annual lead director retainer, and committee member retainers were all paid quarterly in arrears for the fiscal year 2023, running from July 1, 2022 through June 30, 2023. Because cash retainer amounts received in November 2021 were paid for the period running from the 2021 Annual Meeting of Directors. Stockholders through the 2022 Annual Meeting of Stockholders, the new quarterly cash retainer payments were reduced to account for the amounts already received for the period from July 1, 2022 through the 2022 Annual Meeting of Stockholders on November 15, 2022.
In the fiscal year ended June 30, 2017,2023, each non-employee director received an annual director cash retainer compensation of $40,000$70,000 per year, plus $3,500 for attending each in-person Board meeting and $1,500 for each telephone Board meeting. The annual retainer is paid following the Annual Meeting of the Stockholders with respect to the period running from the Annual Meetingquarterly in November to the next Annual Meeting.arrears. Each non-employee director wasis also reimbursed for out-of- pocketout-of-pocket expenses incurred in attending all Board and committee meetings.
The Lead Director (currently Mr. Flanigan)If there is a non-executive Board Chair, such individual is compensated with an additional annual retainer. The current Board Chair, Mr. Foss, is an employee of the Company and does not receive compensation for his service on the Board. For fiscal 2023, the Lead Director (Mr. Flanigan) was compensated with an additional lead director annual retainer amount of $15,000. $50,000, paid quarterly in arrears.
In the fiscal year ended June 30, 2023, the members of the Audit Committee each received an annual committee retainer of $20,000, the members of the Human Capital & Compensation Committee and the members Risk and Compliance Committee
each received an annual committee retainer of $15,000, and the members of the Governance Committee each received an annual committee retainer of $10,000, all paid quarterly in arrears. In addition to the annual committee retainer, the chair of each committee receives an annual committee chair retainer. In the year ended June 30, 2023, the chair of the Audit Committee, the chair of the Human Capital & Compensation Committee, and the chair of the Risk and Compliance Committee each received an annual committee chair retainer of $25,000, and the chair of the Governance Committee received an annual committee chair retainer of $15,000, all paid quarterly in arrears.
Equity compensation is paid annually to the non-employee directors in the form of restricted stock units. These restricted stock units are issued under the Company’s 2015 Equity Incentive Plan. For fiscal 2017,2023, the annual grant amount paid to each non-employee director was 1,594targeted at $180,000. This consisted of 983 restricted stock units, granted on the third business day following the date of the 20162022 Annual Meeting. The fiscal 2023 restricted stock units granted to the non-employee directors will vest on the earlier of (i) the day before the Company’s 2023 Annual Meeting and the restrictions will lapse onor (2) November 9, 2017.18, 2023.
In the year ended June 30, 2017, the chair of the Audit Committee received an annual retainer of $15,000 and the chairpersons of the Compensation, Governance and Risk and Compliance committees each received an annual retainer of $10,000. In-person meeting fees of the committees, paid to all attending committee members, were $2,000 per meeting for the Audit Committee and $1,500 per meeting for all other Board committees. The telephone meeting fee paid to all attending committee members for all committees was $1,000 per meeting. In addition, Board members may be paid a “Board Service Fee” of $1,000 per day for service to the Company in support of Board or committee functions on days when there is no scheduled meeting.
In fiscal 2017,2023, the directors listed above were not eligible to participate in any non-equity incentive compensation plan compensation from the Company or any pension plan of the Company. IndependentNon-employee directors are eligible for and may elect to participate in the Company’s Non-Employee Director Deferred Compensation Plan. In fiscal 2017,2023, only the restricted stock unit awards to independentnon-employee directors were eligible for deferral and only twoone of the independentnon-employee directors elected deferral of all or part of their awards.award. Deferred amounts are maintained by the Company in bookkeeping accounts. Stock awards that are deferred are deemed invested in the Company’s common stock, and deemed dividends paid on deferred equity awards are also deemed to be invested in our common stock.a Federal Rate fund. The deferred amounts are unsecured obligations of the Company. Restricted stock units that are deferred under the Company’s Non-Employee Director Deferred Compensation Plan may be settled in stock or, at the option of the Human Capital & Compensation Committee, in cash. Earnings on deferred amounts are not included in the above table because plan earnings were not preferred or above market.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Party Transactions
Director Shruti S. Miyashiro iswas President and Chief Executive Officer of Orange County’s Credit Union of Santa Ana, CA.California until July 21, 2022. Orange County’s Credit Union is a customer of the Company and during the year ended June 30, 2017,2023, it paid $595,397$615,858 to the Company, primarily for software maintenance, electronic payment solutions, and implementation services. During the first quarter of fiscal 2023, which was the only fiscal 2023 quarter during which Ms. Miyashrio was associated with Orange County’s Credit Union, cash receipts from the credit union were $68,591. On August 1, 2022, Ms. Miyashiro became the President and Chief Executive Officer of Digital Federal Credit Union (“DFCU”). At the time of her appointment, DFCU was not a customer of the Company. On August 31, 2022, the Company completed its acquisition of Payrailz, LLC (“Payrailz”). DFCU was a customer of Payrailz at the time of the acquisition and became a customer of the Company. During the year ended June 30, 2023, cash receipts from DFCU were $357,268 for Payrailz complementary solutions. Prior to Ms. Miyashiro joining DFCU, the credit union had prepaid Payrailz for services. This prepaid account balance was $2,500,000 when the Company acquired Payrailz, which the Company held as deferred revenue. During fiscal 2023, DFCU’s prepaid account was reduced by $886,793 for services provided by the Company. The aggregate amount (from cash receipts and reduction of prepaid accounts) of the transactions between the Company and DFCU during fiscal 2023 was $1,244,061. At June 30, 2023, $1,613,207 remained in DCFU’s prepaid account. The Audit Committee has reviewed the transactions with theboth of these credit unionunions and has concluded that they were on terms no less favorable to the Company than arrangements with other unaffiliated customers.
Director Jacque R. Fiegel is Chairman, Central Oklahoma Area, Prosperity Bank, which is a customer of the Company. Total fiscal 2023 cash receipts from Prosperity Bank were $368,567, primarily for electronic payment solutions. The Audit Committee has reviewed the transactions with the bank and has concluded that they were on terms no less favorable to the Company than arrangements with other unaffiliated customers.
Director Wesley A. Brown is a director of FirstBank Holding of Lakewood, Colorado, which is a customer of the Company. Total fiscal 2023 cash receipts from this customer were $337,216, primarily for online financial management. The Audit
Committee has reviewed the transactions with the bank and has concluded that they were on terms no less favorable to the Company than arrangements with other unaffiliated customers.
Director Thomas A. Wimsett is Chairman, Managing Partner, and majority owner of Merchant’s PACT, formerly known as Wimsett & Co. On July 1, 2016, a “Referral Partner Agreement” was entered into between Merchant’s PACT and the Company under which the Company may refer certain customers to Merchant’s PACT for credit and debit card consulting services with a portion of the consulting fees paid to the Company for the referrals. On July 15, 2019, Merchant’s PACT and the Company entered into an “Amended and Restated Referral Partner Agreement” which expanded the scope of the services and responsibilities of Merchant’s PACT stated in the 2016 Referral Partner Agreement. In addition to the credit and debit card consulting services, Merchant’s PACT may also engage and negotiate with certain merchant processing companies on revenue share, pricing, and terms on behalf of financial institution customers and their merchants. Under the terms of the amended agreement, all payments are made from Merchant’s PACT to the Company and Merchant’s PACT will not receive any payments from the Company. Merchant’s PACT paid the Company $44,870 in referral fees in fiscal 2023.
The Audit Committee reviewed the relationship with Ms. Fiegel and determined that because Ms. Fiegel is an employee and not an executive officer of Prosperity Bank, and the total amounts paid to the Company do not exceed the greater of $1,000,000 or two percent of that customer’s total annual revenue, this relationship falls under the standing pre-approval granted in the Related Party Transaction Policy. The Audit Committee also reviewed the relationships with each of Mr. Brown and Mr. Wimsett and determined that they each did not qualify as a “Related Party Transaction” under the policy because, for Mr. Brown, he is solely a director of FirstBank Holding and the aggregate amount involved did not exceed the greater of $1,000,000 or two percent of that customer’s total annual revenue and because, for Mr. Wimsett, total payments from Merchant’s PACT to the Company in fiscal 2023 did not exceed $100,000. The Audit Committee reviewed the relationships with Ms. Miyashiro relating to Orange County’s Credit Union and DFCU in accordance with the Company’s Related Party Transaction Policy and approved the related transactions.
The Governance Committee also considered each of the transactions described in this section and concluded that Ms. Miyashiro, is anMs. Fiegel, and Mr. Brown to be independent directordirectors despite the customer relationship.relationships. The Governance Committee also determined Mr. Wimsett to be independent despite the relationship between the Company and Merchant’s PACT.
Related Party Transaction Policy
The Board of Directors has adopted a written policy that requires all related party transactions to be reviewed and approved by the Audit Committee of the Board. The Audit Committee is charged with determining whether a related party transaction is in the best interests of, or not inconsistent with the interests of, the Company and its stockholders. In making this determination, the Audit Committee will take into accountconsider such factors as whether the related party transaction is on terms no less favorable to the Company than terms generally available to unaffiliated third parties and the extent of the related party’s interest in the transaction. No director may participate in any discussion, approval, or ratification of any transaction in which he or she has an interest, except for the purpose of providing information concerning the transaction. For transactions in which the aggregate amount is expected to be less than $200,000, the ChairmanChair of the Audit Committee has been delegated the authority to pre-approve related party transactions, subject to later review by the full committee. At least annually, ongoing related party transactions will be reviewed to assess continued compliance with the policy.
For purposes of the Related Party Transaction Policy, a related party transaction is a transaction or relationship in which the aggregate amount involved will be or may exceed $100,000 in any calendar year, involves the Company as a participant, and in which any related party has or will have a direct or indirect interest (other than solely as a result of being a director or less than 10% beneficial owner of the other entity). A related party is any executive officer, director, or more than 5% beneficial owner of the Company or any immediate family member of such persons.
The policy also contains standing pre-approvals of certain transactions that are not believed to pose any material risk to the Company even if the aggregate amount exceeds $100,000 in a calendar year, including: employment arrangements with executive officers, director compensation, transactions involving competitive bids, certain banking-related services, and certain Company charitable contributions.contributions, transactions where all stockholders receive proportional benefits, certain regulated transactions, and satisfaction of indemnification obligations. Standing approval is also provided for transactions with another
company where the related party’s only relationship is as an employee (other than an executive officer), director, or beneficial owner of less than 10% of that entity’s shares, if the aggregate amount does not exceed the greater of $1,000,000 or 2% of that entity’s annual revenues.
DELINQUENT SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
The Company is required to identify any director, officer, or greater than ten percent10% beneficial owner who failed to timely file with the SEC a report required under Section 16(a) of the Securities Exchange Act of 1934 relating to ownership and changes in ownership of the Company’s Common Stock. The required reports consist of initial statements on Form 3, statements of changes on Form 4, and annual statements on Form 5. To the Company’s knowledge, based solely on its review of the copies of such forms received by it, the Company believes that during the fiscal year ended June 30, 20172023 all required Section 16(a) filings were filed timely.
AUDIT COMMITTEE REPORT
The Audit Committee of the Company’s Board of Directors is currently composed of four independent directors. The Board has determined that Audit Committee membermembers Matthew C. Flanigan, is anThomas H. Wilson, Jr., and Thomas A. Wimsett are “audit committee financial expert”experts” under relevant SEC standards because of histheir extensive accounting and financial experience. The Board of Directors and the Audit Committee believe that the Audit Committee’s current members satisfy all NASDAQNasdaq and Securities and Exchange CommissionSEC rules that govern audit committee composition.
The Audit Committee operates under a written Charter adopted by the Board of Directors.Board. The Charter requires the Audit Committee to oversee and retain the independent registered public accounting firm, pre-approve the services and fees of the independent registered public accounting firm, regularly consider critical accounting policies of the Company, review and approve material related party transactions, receive reports from the Company’s Compliance Officer,Chief Audit Executive and General Counsel, and establish procedures for receipt and handling of complaints and anonymous submissions regarding accounting or auditing matters. The Charter also contains the commitment of the Board of Directors to provide funding and support for the operation of the Audit Committee, including funding for independent counsel for the Committee if the need arises.
The role of the Audit Committee is to assist the Board of Directors in its oversight of the Company’s financial reporting process. Management has the primary duty for the financial statements and the reporting process, including the systems of internal controls. The independent registered public accounting firm is responsible for auditing the Company’s financial statements and expressing an opinion as to their conformity to accounting principles generally accepted in the United States.
In the performance of its oversight function, the Audit Committee has reviewed and discussed with management and the independent registered public accounting firm the Company’s audited financial statements. The Audit Committee also has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard 16the applicable requirement of the Public Company Accounting Oversight Board (“PCAOB”). and the SEC. In addition, the Audit Committee has received from the independent registered public accounting firm the written disclosures and letter required by applicable requirements of the PCAOB regarding the independent registered public accounting firm’s communications with the Audit Committee concerning independence and has discussed with the independent registered accounting firm its independence.
The Audit Committee discussed with the Company’s independent registered public accounting firm the overall scope and plans for their respective audits.audit. The Audit Committee meets with the internal auditors and the independent registered public
accounting firm, with and without management present, to discuss the results of their examinations, their evaluations of the Company’s internal controls and the overall quality of the Company’s financial reporting. These meetings without management present are held at least once each year, and one such meeting was held in the fiscal year just ended.
In reliance on the reviews and discussionsdiscussion referred to above, the Audit Committee recommended to the Board, of Directors, and the Board has approved, that the Company’s audited financial statements be included in the Company’s 20172023 Annual Report to Stockholders and Annual Report on Form 10-K for the year ended June 30, 20172023 for filing with the Securities and Exchange Commission.SEC.
Audit Committee Thomas H. Wilson, Jr., Chair Matthew C. Flanigan Thomas A. Wimsett Wesley A. Brown
| | | | Audit Committee | | Thomas H. Wilson, Jr., Chair | | Matthew C. Flanigan | | Thomas A. Wimsett | | Wesley A. Brown |
EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The executive officers and significant employees of the Company, as well as certain biographical information about them,for non-director executive officers, are as follows:
| | | | | | | | | | Name | Position with Company | Officer/Significant EmployeeOfficer Since | John F. Prim | Executive Chairman of the Board | 2001 | | David B. Foss | President, Chief Executive Officer and DirectorBoard Chair | 2014 | Kevin D. WilliamsGregory R. Adelson | President and Chief Operating Officer | 2018 | | Mimi L. Carsley | Chief Financial Officer and Treasurer | 2001 | Mark S. Forbis | Vice President and Chief Technology Officer | 20062022 | | Craig K. Morgan | General Counsel and Secretary | 20172016 | | Stacey E. Zengel | Senior Vice President and President of Jack Henry Bank Solutions | 2018 | | Renee A. Swearingen | Senior Vice President, Chief Accounting Officer and Assistant Treasurer | 2022 |
The following information is provided regarding the executive officersGregory R. Adelson, age 59, President and significant employees not already described herein, all of whom are United States citizens:
Kevin D. Williams, age 58, Chief Financial Officer and Treasurer. In 2001, Operating Officer. Mr. Williams was appointed by the Board to serveAdelson has served as Chief FinancialOperating Officer since November 2019 and Treasureradded President to his role in January 2022. Mr. Adelson is responsible for the strategic direction and general leadership of approximately 6,400 associates encompassing all business operating units, sales and service teams, and the technology and infrastructure strategy for the Company. Mr. Adelson joined the Company in 2011 as Group President of iPay Solutions, the Company’s online bill pay business unit. He was later promoted to General Manager of JHA Payment Solutions in 2014 and became an executive officer of the Company having previously served as Controller of the Company since joining the Company in 1998.2018. Prior to joining the Company, Mr. Williams was a practicing CPA as a Senior Manager for the Baird Kurtz & Dobson public accounting firm. Mr. William’sAdelson had several executive management responsibilities extend beyond financeroles with payment processing companies, including Chief Operating Officer at National Processing Company and accounting to include investor relations, internal audit and travel.President at ChoicePay.
Mark S. Forbis,Mimi L. Carsley, age 54, Vice PresidentChief Financial Officer and Treasurer. Ms. Carsley was appointed Chief Technology Officer. Mr. Forbis has served as Vice PresidentFinancial Officer and Chief Technology Officer since 2006 and as General Manager of Technology Services since 2002. Mr. Forbis joined the CompanyTreasurer in 1988 and has served in a number of positions, including Manager of Imaging from 1994 to his appointment as a General Manager in 2002.September 2022. Prior to joining the Company, Mr. Forbis hadMs. Carsley served in various roles for Blucora, Inc. (Nasdaq: BCOR), a provider of technology-enabled tax focused financial solutions, including as Treasurer and Senior Vice President of FP&A and Procurement from 2020 to 2022, as Interim Chief Financial Officer in 2020, and as a Financial Consultant contractor from 2018 to 2020. Ms. Carsley also served as Treasurer and Executive Vice President of Corporate Development at LPL Financial Holdings, Inc. (Nasdaq: LPLA), a provider of investment and business solutions for independent financial advisors, from 2015 to 2017. Prior to this, Ms. Carsley spent more than a decade at Microsoft Corporation (Nasdaq: MSFT) in several jobsroles, culminating in bank data processing, including supervisorythe position of Senior Director Strategy, Entertainment and management positions with BankTech, Inc. and Systematics, Inc. As Chief Technology Officer and General Manager of Technology Services, Mr. Forbis leads a team of over 900 employees in research, design, programming, development, procurement, engineering, security, facilities, communications and networking.Devices Division.
Craig K. Morgan, age 41,47, General Counsel and Secretary. Mr. Morgan was named General Counsel and Secretary in November 2016. He oversees the legal and corporate responsibility functions of the Company. Mr. Morgan had previously served as Managing Corporate Counsel and has served in multiple roles in the Legal Department since joining the Company in 2004. Prior to joining the Company, Mr. Morgan worked in research and development in the biotechnology industry.
Stacey E. Zengel, age 61, Senior Vice President and President of Jack Henry Bank Solutions. Mr. Zengel was appointed Senior Vice President in 2018 and has served as President of Jack Henry Bank Solutions since 2016. Since joining the Company in 1999, Mr. Zengel has served in three senior leadership positions: in 2004 leading Jack Henry’s imaging area as financial institutions rapidly adopted imaging, in 2012 leading our outsourcing (private cloud) business that we call OutLink, and currently, as our Senior Vice President and President of Jack Henry Bank Solutions responsible for our banking customer base. Prior to joining the Company, Mr. Zengel worked for BancTec in the financial services industry and spent nine years working for a software provider in the vertical market home health care industry.
Renee A. Swearingen, age 55, Senior Vice President, Chief Accounting Officer, and Assistant Treasurer. Ms. Swearingen was appointed Senior Vice President and Chief Accounting Officer in May 2022. She oversees the accounting, finance, tax, external reporting, procurement, and facilities functions of the Company. She joined the Company in 1996 and served in various roles within the Company’s financial function including as Controller of the Company from 2001 to 2022 and as the Vice President of Finance and Procurement for the Company from 2021 to 2022. Prior to joining the Company, Ms. Swearingen was a practicing CPA at FORVIS, a large public accounting firm.
HUMAN CAPITAL & COMPENSATION COMMITTEE REPORT
The Human Capital & Compensation Committee of the Company has reviewed and discussed the following Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with management and, based on such review and discussions, the Human Capital & Compensation Committee recommended to the Board that the following Compensation Discussion and Analysis be included in this Proxy Statement.
Human Capital & Compensation Committee Shruti S. Miyashiro, Chair Matthew C. Flanigan Thomas H. Wilson, Jr. Wesley A. Brown
| | | | Compensation Committee | | Matthew C. Flanigan, Chair | | Thomas H. Wilson, Jr. | | Shruti S. Miyashiro | | Wesley A. Brown |
COMPENSATION DISCUSSION AND ANALYSIS
You will have the opportunity to cast an advisory vote on Jack Henry’s executive compensation at this year’s Annual Meeting (our “say on pay” vote), included as Proposal 2 in this proxy statement (page 32)57). We encourage you to review this section prior to casting your “say on pay” advisory vote.
At the Company’s Annual Meeting of Stockholders held in November 2016, over 99%2022, nearly 93% of the votes cast on say-on-pay at that meeting were voted in favor of the proposal. The Human Capital & Compensation Committee (the “HC&C Committee”) believes this vote strongly affirms the stockholders’ support of the Company’s approach to executive compensation, and the HC&C Committee did not significantly change its basic approach to compensation of the named executive officers (“Named ExecutivesExecutives”) in fiscal 2017.2023. The CompensationHC&C Committee believes that stockholder input on executive compensation is crucial and will continue to consider the outcome of the Company’s say-on-pay votes when making future compensation decisions for the Named Executives.
This Compensation Discussion and Analysis is designed to provide information regarding the philosophy and objectives underlying our compensation policies, the processes we follow in setting compensation, the components we utilize in compensating our top executives, and the resulting compensation outcomes. This discussion is focused on the following “Named Executives” as of June 30, 2017: Executive Chairman of the Board Jack Prim, President and Chief Executive Officer 2023. | | | | | | | Named Executive | Title | | David B. Foss | Chief Executive Officer | | Gregory R. Adelson | President and Chief Operating Officer | | Mimi L. Carsley | Chief Financial Officer and Treasurer | | Craig K. Morgan | General Counsel and Secretary | | Stacey E. Zengel | Senior Vice President and President of Jack Henry Bank Solutions | | Kevin D. Williams* | Former Chief Financial Officer and Treasurer |
*Mr. Williams served as Chief Financial Officer and Treasurer Kevin Williams, and Chief Technology Officer Mark Forbis. After the beginning of fiscal year 2018, the Board determined that General Counsel and Secretary Craig Morgan wasas an Executive Officer. As a result,executive officer until he is not included in the Compensation Discussion and Analysis for fiscal year 2017. stepped down from those positions effective September 1, 2022.
Specific information about the compensation of the Named Executives is set forth in the Summary Compensation Table and other compensation tables beginning on page 28,42, which should be read in conjunction with this discussion.
Executive Summary
Fiscal 2017 was another successful year forJack Henry’s executive compensation programs are designed to align the interests of the Jack Henry andexecutives with those of our stockholders. Total shareholder return was 82% for the three-year period ending on June 30, 2017 and 21% for the one-year period ending on the same date, using the average closing price of the last ten calendar days of the fiscal year. We increased annual operating income in fiscal year 2017This is accomplished by 8.2% (excluding the operations and gain from the sale of a business unit) from fiscal year 2016. The compensation decisions made by the Committee recognized these absolute and relative outcomes, and reflect a clear expression ofemphasizing the principle of pay for performance which is atthrough the centerachievement of ourshort- and long-term performance goals and rewarding the creation of long-term stockholder value while encouraging a culture of stock ownership. The decisions regardingmade by the HC&C Committee in establishing financial, business, and personal targets for executive compensation. In broad terms,officer compensation reflect a clear expression of these principles. The following chart provides an overview of the fiscal year 2017 executive2023 compensation program implemented this paycomponents for performance principle with the following elements of compensation:our Named Executives:
Fiscal 2023 Compensation Components | | | | | | | | | | | | | | | | Component | | Metrics | Performance/ Vesting Period | More Information | Base PaySalary | | Fixed and recurring cash compensation | • Base pay is set at market competitive levels to attract and retain highly qualified and effective executives.
• Fiscal 2017 base pay was increased from 0% to 20% in response to competitive market data and evaluation of individual performance.
| | Page 31 | | | | Annual Incentive Cash Bonus | | Variable cash compensation tied 75% to annual adjusted operating income versus budget target and 25% to obtainment of individual performance goals (“IPG”)goals. | One year | Page 31 | • Fiscal 2017 operating income grew 1.7% (8.1% excluding the gain from sale of a business unit) and finished the year at 101.2% of the annual budget set at the beginning of the year.
• Fiscal 2017 bonus payments were 87.9% to 102.7% of targets as determined by the above budget operating income and individual performances.
• Annual cash bonus targets were set at market competitive levels and were expressed as percentages of base pay as follows for the named executive officers:
–100% of base pay for Mr. Foss
–70% of base pay for Mr. Williams
–50% of base pay for Mr. Forbis
| | Long-Term Incentive Compensation | Performance share awards (60%) | Performance shares that vest based on Jack HenryHenry’s (1) relative total shareholder return (“TSR”against the S&P 1500 Software & Services Index plus our Compensation Peer Group (60%)1 performance versus peers, (2) three-year compound annual growth rate for organic revenue (20%), and (3) three-year non-GAAP operating margin expansion (20%). | Three years | Page 35 | • Three-year TSR was strongRestricted stock unit awards (40%)
| Time-based restricted stock units vest in equal annual installments based on an absolute basis at 82%.• For the fiscal 2015 grant with three year performance period ending on June 30, 2017, Jack Henry’s relative TSR outcome at the 65th percentile was slightly above the 63rd percentile target, resulting in 105% of the target shares vesting.
• Annual grants are made at market competitive levels, and the target grant values for the fiscal 2017 performance shares (three-year measurement period ending June 30, 2019) were set at the following multiple of base pay:
–3.0 times for Mr. Foss
–2.1 times for Mr. Williams
–1.3 times for Mr. Forbis
continued service. |
Three years | Page 37 |
(1) TSR = (Change in Stock Price + Dividends) ÷ Beginning Stock Price; assumes reinvestment of dividends.
In the aggregate, the relative portions of these three primary elementsthe above compensation components that made up the pay mix for Mr. Foss, our Chief Executive Officer, and each of the fourother Named Executives in fiscal year 2017 are represented graphically in the following chart:as follows:
*Mr. Williams, who served as Chief Financial Officer and Treasurer and as an executive officer until September 1, 2022, is excluded from this table.
The fiscal 20172023 pay mix established by the CompensationHC&C Committee in July of 2016 clearly focused on performance-based and at-risk pay while balancing the need for retention, and particularly emphasized long-term performance by the Company. The pay mix was intended to ensure that the Named Executives remained highly focused on the long-term success of the Company.
Total Shareholder Return and Results of Fiscal 2021 Performance Share Awards
Total shareholder return (“TSR”) is calculated as (i) the sum of change in stock price plus dividends over the measurement period, divided by (ii) the beginning stock price. This calculation assumes reinvestment of dividends.
Our TSR performance has a meaningful and direct impact on the compensation earned by our Named Executives. In fiscal 2021, the HC&C Committee made two separate performance share grants to our Named Executives, each of which vested at the end of three years based on TSR over the three-year period in comparison to: (1) the fiscal 2021 Compensation Peer Group for the first grant, and (2) the companies in the S&P Composite 1500 Information Technology Index (the “S&P 1500 IT Index”) for the second grant. The Company produced a TSR of -7.27% over the three-year period ending June 30, 2023, using average closing price of the last 30 calendar days of the fiscal year. This TSR resulted in an achievement of the 31.25th percentile against the fiscal 2021 Compensation Peer Group, which correlated to a final payout of 51.25% of the Named Executive’s target shares. The Company’s TSR of -7.27% also resulted in an achievement of the 19.66th percentile against the S&P 1500 IT Index, which is below the 25th percentile threshold established by the HC&C Committee and resulted in a final payout of 0% of the Named Executive’s target shares. This result is in keeping with the Company’s desire to focus on performance-based and at-risk pay.
Compensation Philosophy and Objectives
Jack Henry’s compensation philosophy is to offer compensation programs to our executives that:
•Attract and retain highly qualified and motivated executives; •Encourage esprit de corps and reward outstanding performance; •Focus executives on achieving consistent earnings growth; •Encourage continuation of the Company’s entrepreneurial spirit; and •Reward the creation of stockholder value.
In meeting these objectives, the CompensationHC&C Committee strives for the interests of management and stockholders to be the same – the maximization of stockholder value.same. To this end, the key financial performance measures areinclude adjusted operating income, organic revenue growth, operating margin expansion, and total shareholder return. BothTSR. These measures emphasize a focus on revenue growth, operating efficiencies to yield strong margins, and returns to shareholdersstockholders in excess of our peers.
The compensation programs specific to our Named Executives are administered by the Company’s Compensation Committee. The current members of the Compensation Committee are all non-employee directors who are independent under the NASDAQ rules. The Compensation Committee operates under a written charter, and has the specific charter responsibility to approve the compensation of the Named Executives and the Company’s Chief Operating Officer, Controller, Senior Vice Presidents and other officers who perform policy-making functions for the Company. At this time, the Company does not have any officer with the title of Chief Operating Officer or Senior Vice President.
The CompensationHC&C Committee designs and maintains compensation programs consistent with our executive compensation philosophy to achieve the following objectives:
•To attract, retain, and motivate highly qualified executives by offering compensation programs that are competitive with programs offered by similar companies, including those in our Compensation Peer Group. •To link performance and executive pay by tying annual cash bonus amounts to achievement of key objectives under the Company’s annual business plans, as well as specific individual performance goals. •To reward competitive performance in comparison with peers in our industry. •To reward the creation of long-term stockholder value through long-term incentive compensation awards and encourage significant stock ownership by topsenior management to further align executive interests to those of our stockholders.
In pursuit of these objectives, the CompensationHC&C Committee believes that the compensation packages provided to the Named Executives should include both cash and equity-based compensation, with an emphasis on at-risk and performance-based pay: | | | | | | | Compensation Element | Purpose | | Base salary | •Represent competitive practices at or near the 50th percentile •Attract and retain highly qualified executives
|
Annual incentive cash incentive bonus | •Support pay-for-performance orientation •Focus executives on executing the annual operating plan and key financial andnonfinancial non-financial measures of success as established by the Board |
Long-term incentive compensation | •Align interests of executives and stockholders •Support a stock ownership culture •Drive long-term value creation •Encourage retention of executives | | Broad-based benefits | •Attract and retain highly qualified executives •Reflect the broad practicesNamed Executives at Jack Henry participate in the same benefit programs available to our full-time employees | | Termination provisions | •Align management and shareholderstockholder interests to review all possibleattractive business alternatives |
Process for Establishing Compensation
The CompensationHC&C Committee has overall responsibility for making decisions regarding the compensation of the Named Executives. In conducting annual performance reviews and determining appropriate compensation levels for the Named Executives, the CompensationHC&C Committee meets and deliberates outside the presence of the Named Executives and other members of the executive management team. With respect to the compensation levels for otherthe Named Executives other than the CompensationChief Executive Officer, the HC&C Committee considers input and recommendations from the Executive Chairman and the Chief Executive Officer. Performance reviews of the Named Executives are based on objective and subjective evaluations of individual performance as well as their performance in the preceding fiscal year in achieving Company performance objectives. While our Executive Chairman and Chief Executive Officer makemakes recommendations concerning salary adjustments, cash bonus programs, and award amounts for the other Named Executives, the CompensationHC&C Committee exercises its discretion and sole authority to set the compensation of each of the Named Executives.
In designing compensation programs and determining compensation levels for the Named Executives for fiscal year 2017 (ending June 30, 2017), as well as for fiscal year 2018,2023, the CompensationHC&C Committee was assisted by an independent compensation consultant firm. The CompensationHC&C Committee engaged Willis Towers WatsonMeridian Compensation Partners, LLC (“WTW”Meridian”), a global human resourcesan independent executive compensation and corporate governance consulting firm, to serve as its independent advisor and compensation consultant with respect to compensation programs for fiscal 2017 and fiscal 2018.2023. The ChairmanChair of the CompensationHC&C Committee worked directly with WTWMeridian to determine the scope of the work needed to assist the HC&C Committee in its decision-making processes. The engagement of the consulting firm included provision of benchmark comparative data for the Named Executives with respect to base salaries, annual cash bonuses, and long term incentives, in addition to incentive plan design and comparative data regarding severance. WTWgovernance-related matters affecting executive compensation. Meridian was also engaged to provide analysis and advice to the CompensationHC&C Committee with respect to the compensation of the Company’s independent directors. WTW did not provideThe HC&C Committee Chair approves any other consultation or services to the Company oradditional work performed by Meridian on behalf of management. The CompensationHC&C Committee has assessed the independence of WTWMeridian and determined that no conflict of interest
exists under the rules established by the SEC.SEC and Nasdaq. The CompensationHC&C Committee reviews the independence of its advisors annually.
In making compensation decisions, the CompensationHC&C Committee compared each element of total direct compensation against a peer group of publicly traded companies in the software, payments, and data processing industries against which the CompensationHC&C Committee believes we compete in the market for executive talent. We collectively refer to this group as the “Compensation Peer Group.” In selecting companies for the Compensation Peer Group, the CompensationHC&C Committee has considered multiple criteria, including industry, annual revenue, and market capitalization. The currentFor fiscal 2023, the Compensation Peer Group iswas comprised of the following 18 companies:
| | | | | | | | | | | | | | | | ACI Worldwide, Inc. | | Black Knight, Inc. | | Block, Inc. (formerly Square, Inc.) | | Bottomline Technologies, Inc.* | | Broadridge Financial Solutions, Inc. | | Euronet Worldwide, Inc. | | ExlService Holdings, Inc. | | Fair Isaac Corporation | | Fidelity National Information Services, Inc. | | Fiserv, Inc. | | FLEETCOR Technologies, Inc. | | Genpact Limited | | Global Payments, Inc. | | NCR Corporation | | SS&C Technologies Holdings, Inc. | | Tyler Technologies, Inc. | | Verint Systems Inc. | | WEX, Inc. | | | | ACI Worldwide, Inc. | Bottomline Technologies, Inc. | Broadridge Financial Solutions | Cardtronics | Convergys | Corelogic | DST Systems, Inc. | Euronet Worldwide, Inc. | Fair Isaac Corporation | Fidelity National Information Services, Inc. | Fiserv, Inc. | Global Payments, Inc. | Moneygram International | SS&C Technologies Holdings | Total Systems Services, Inc. | Tyler Technologies, Inc. | Verifone Systems | WEX |
*Bottomline Technologies, Inc. was included as part of the fiscal 2023 Compensation Peer Group for benchmarking, but was acquired before the start of fiscal 2023.
The Compensation Peer Group is reviewed annually and, as appropriate, updated by the Compensation Committee. In June 2017 the CompensationHC&C Committee reviewed the Compensation Peer Group with WTW to make sure that members of the group are consistent with the Company’s industry and financial scope and comparable in terms of size and labor pool. For comparison purposes, Jack Henry’sthe Company’s annual revenuesrevenue, net income, and market capitalization were moderately belowwithin a reasonable range of the median revenues of the members of the Compensation Peer Group, but Jack Henry’s market capitalization was moderately above the median of the group. As a result of the proposed acquisition of Moneygram International by Ant Financial, the Committee decided to replace Moneygram International with Square, Inc. The Committee decided to make no other changes to the Company’s Compensation Peer Group for fiscal year 2018.Group.
To benchmark each element of total compensation for our Named Executives, WTWMeridian provided data from two key sources: (1) public filings for the companies in our Compensation Peer Group and (2) an executive compensation survey reflective of our industry and the general industry and (2) public filings for the companies in our Compensation Peer Group.industry. In reviewing compensation survey data, the CompensationHC&C Committee considered data for software companies with annual revenues similar to the Company. Sources of
In setting fiscal 2023 compensation, the HC&C Committee reviewed competitive market data for compensation surveys and analysis include surveys for ourthe Compensation Peer Group at the 25th, 50th, and the software industry, in addition to proxy statements and other public filings by companies in our Compensation Peer Group.
In setting fiscal 2017 compensation, the Compensation Committee considered benchmarks75th percentiles for totalbase salary, target bonus, target cash compensation, (i.e., base salarylong-term incentive compensation, and annual cash incentives) and approved target bonus levels for the Named Executives which combined with the salaries approach the 50th percentile of the Compensation Peer Group.total compensation. In targetingsetting total cash compensation and long-term incentive compensation, at or near the 50th percentile, the CompensationHC&C Committee recognized that there are certain limitations in the market data available for the Compensation Peer Group. Thus, in addition to considering levels of compensation suggested by market data, the CompensationHC&C Committee also considered other relevant factors including performance against pre-identified objectives under business plans for the preceding fiscal year, individual performance reviews, change in job duties, geographic location, and internal equity for compensation levels among our executives.
The allocation between cash, non-cash, short-term, and long-term incentive compensation is measured against the practices of our Compensation Peer Group and reflects the CompensationHC&C Committee’s determination of the appropriate compensation mix among base pay, target annual cash incentives, and long-term equity incentives to encourage retention and performance. Actual cash and equity incentive awards are determined by the performance of the Company and the individual, depending on the type of award, compared to established goals. For the fiscal year ending June 30, 2017, the elements of the compensation mix included:
Base salary, designed to attract and retain executives;
Annual cash incentive bonus compensation, designed to focus on business, financial and individual objectives established by the Board for the year;
Long-term incentive compensation consisting of performance shares which are earned by achieving levels of total shareholder return compared to our Compensation Peer Group, designed to focus executives on the long-term success of the Company as reflected in the market price of the Company’s stock; and
Broad-based employee benefits programs.
Base Salary
OnAlthough we believe a significant portion of executive compensation should be based on “at-risk” compensation to align pay and performance, the HC&C Committee also believes that competitive base salaries are necessary to attract and retain a highly qualified and effective executive team. In July 1, 2016,2022, the Compensation Committee increased the base compensation for Mr. Foss by $100,000, or 20%, in connection with his assuming the role of Chief Executive Officer. The CompensationHC&C Committee considered competitive data provided by WTW in adjusting Mr. Foss’s base compensation. In August of 2016, the Compensation Committee considered competitive data provided by WTW.Meridian. Based on this data as well as individual and corporate performance and changes in executive duties, the HC&C Committee made no change to the fiscal 2017 base salary of the Executive Chairman, and increased the base salaries of the Chief Financial Officer by 4.7% andNamed Executives in the Chief Technology Officer by 4.8%, effective October 1, 2016.following amounts.
Consistent with the planned transition of leadership responsibilities to President and CEO Foss, on April 1, 2017, Executive Chairman Prim’s annual base salary was reduced from $620,000 to $310,000. | | | | | | | | | | | | | Named Executive | Fiscal 2022 Base Salary ($) | Fiscal 2023 Base Salary ($) | Increase | | David B. Foss | 840,000 | 865,000 | 3.0 | % | | Gregory R. Adelson | 501,406 | 575,000 | 14.7 | % | | Mimi L. Carsley | — | | 475,000 | N/A | | Craig K. Morgan | 373,669 | 430,000 | 15.1 | % | | Stacey E. Zengel | 371,750 | 383,000 | 3.0 | % | | Kevin D. Williams | 520,031 | 520,031 | — | % |
The entire base salary structure for our executives remained relatively flat in fiscal 2017, with the CEO salary less than 1.4 times the second highest paid executive officer (CFO) and 1.9 times the third highest (CTO).
Although the Compensation Committee believes that competitive base salaries are necessary to attract and retain a highly qualified and effective executive team, it also believes that a significant portion of executive compensation should be based on pay-for-performance.
Annual Incentive Cash Bonuses
Annual Incentive Plan
It is our practice to provide our Named Executives with the opportunity to earn annual incentive cash bonus compensation through programs that reward attainment of key objectives under corporate annual business plans. The objectives that underlie our annual incentive compensation programs may vary between fiscal years and between the Named Executives, but generally include objectives that reward attainment by the Company of targeted earningsadjusted operating income as well as individual performance goals. In setting the fiscal 20172023 bonus amounts a Named Executive is eligible to earn for achieving specified objectives, the CompensationHC&C Committee considered published survey data and targeted bonus and target total cash compensation levels at or near the 50th 50th percentile of the Compensation Peer Group and published survey data.Group. Bonus opportunities for achieving objectives are generally established as a percentage of an executive’s base salary and the percentages increase with job scope and complexity. Executives have the opportunity to earn reduced bonus amounts if a minimum level (threshold) of performance against an objective is achieved and can also earn increased bonus amounts for performance in excess of the level of targeted performance.performance (subject to a maximum of 200% of the established target amount).
The decision as to whether to offer an annual incentive cash bonus program to our Named Executives for any fiscal year, the type and funding of any program offered, and the objectives that underlie any program, are subject to the discretion of the CompensationHC&C Committee and its assessment of general and industry specific conditions existing during the applicable period. In determining the amount of bonus that a Named Executive is eligible to earn under aan incentive cash bonus program, the CompensationHC&C Committee may also exercise negative discretion to reduce an award based on its assessment of the executive’s contribution and accountability for the objectives that are the subject of the bonus, the internal equity of the executive’s bonus opportunity as compared to bonus opportunities for our other executives, and any other factors the CompensationHC&C Committee considers relevant. Our Executive Chairman did not participate in our annual incentive cash bonus plan in fiscal 2017.
To provide an appropriate structure for cash bonus incentives, the Company’s stockholders previously approved the 20122017 Annual Incentive Plan. Cash bonus incentives for fiscal year 20172023 were structured under the 20122017 Annual Incentive Plan.
The fiscal 20172023 incentive cash bonus plan established for the Named Executives was similar to the 2016 plan in that it was based 75% upon achievement of the Company’s annual adjusted budget operating income target. The fiscal 2017target and 25% upon the participating Named Executive’s achievement of individual performance goals set for such officer by the HC&C Committee. However, the 2023 annual incentive plan provided that no part of the incentive cash bonus was payable unless the Company’s performance on the adjusted operating income measurement was at or above the minimum threshold for achievement.
The adjusted operating income performance target for the Named Executives in fiscal 2023, which achievement composes 75% of the targeted annual incentive cash bonus, was established from the annual budget of the Company as approved by the Board and excluded from considerationof $489.0 million of operating income contributionsand adjusted by removing $30.5 million of anticipated operating income from operating units that might be acquireddeconversion fees during the fiscal year and adding back $26.5 million of anticipated amounts to be accrued as well as gains from dispositiontarget corporate bonuses that are dependent on achievement of certain operating units.income performance levels in the fiscal year. The annual budget was developed by management with input from the Board of Directors in a thorough process that builds upon departmental forecasts and considers historical performance, industry dynamics, and macro-economic trends.
This resulted in an adjusted operating income performance target of $485.0 million in fiscal 2023. The other 25%adjusted operating income component of each ofthe annual bonus for the participating Named Executive’sExecutives ranged from a threshold of 90% of budgeted adjusted operating income, below which no bonus was payable, to a target amount at 100% and to a maximum at 110%. Bonus payouts for adjusted operating income achievement ranged from 50% of target at threshold performance to 200% of targeted bonus at maximum performance, with additional breakpoints between threshold and target and between target and maximum.
The adjusted operating income results used for the performance target were calculated by adjusting the actual operating income results for fiscal 2023 of $480.7 million to remove operating income from deconversion fees during the fiscal year of $27.5 million and to add back amounts for accrued corporate bonuses at June 30, 2023 of $24.3 million, which were dependent upon achievement of certain operating income performance levels in the fiscal year. This outcome of $477.5 million of adjusted operating income in fiscal 2023, or 98.5% of target, resulted in a 94% payout of target for the Named Executives. During fiscal 2023, the Company faced operational headwinds, but made a decision to not pursue workforce layoffs to combat higher expenses. In July 2023, management requested that bonus payouts for the Named Executives be reduced to decrease the expense impact of not conducting layoffs. The HC&C Committee used its negative discretion permitted under the 2017 Annual Incentive Plan to decrease the payout for the Named Executives from 94% to 75% to support the Company’s decision to maintain full employment and to better reflect the fiscal year performance.
| | | | | | | | | | | | | | | | | | | | | | Adjusted Operating Income Performance Bonus Payout Range | | | Maximum | 110% or higher | | | | 200% | Maximum | | Target | 100% | | | | 100% | Target | | Threshold | 90% | | | | 50% | Threshold | | Adjusted operating income performance against budget | | No bonus payout for under 90% achievement | | Range of adjusted operating income performance bonus payout against target (75% of targeted annual incentive cash bonus) | | |
The individual performance goals, which compose 25% of the targeted annual incentive cash bonus, in fiscal 2017 was determined by achievement of individual performance goals set for the officers by the Compensation Committee. These goals varied from individual to individual and included both objective and subjective measures of performance. The individual performance goals were intended to align the individual officers with the Company’s business strategies and objectives in each officer’s sphere of duties and control. Examples include achievement of specified customer and employee satisfaction ratings, implementation of programs and systems, process and control improvements, completion of development projects, and meeting specified financial goals. These individual goals are keys to financial and business success for Jack Henrythe Company and thus contribute to producing income and shareholderstockholder returns over the long-term. Grading of performance on the individual performance goals was in some cases “achieved” or “not achieved” and in other cases based on a sliding scale, such as from fail to below target, at target and above target, and thus some potential individual performance bonus amounts varied from zero to target and above target.
The 2017 plan, like After determining the 2016 plan, calledindividual performance goal achievement percentage for bonuses of 100% of base compensation foreach Named Executive, the Chief Executive Officer, 70% of base compensation forHC&C Committee used its negative discretion to reduce the Chief Financial Officer, and 50% of base compensation for the Chief Technology Officer at pre-determinedindividual performance targets. The operating income componentgoal payout to 75% of the annual bonus foramount achieved to support the participating Named Executives ranged from a threshold of 90% of budgeted operating incomeCompany’s fiscal 2023 decision to a target at 100%maintain full employment and to a maximum at 110%. Bonusbetter reflect the fiscal year performance.
Potential bonus payouts for operating income achievement ranged from 50% of target at threshold performancerelated to as much as 200% of targeted bonus at maximum performance. Bonus payouts for achieving individual performance goals variedgenerally range from 0 to 100% and, in a fewsome instances, could range to a maximum of 125%150% as to specific scalable goals. The overall bonus percentages and ranges were
determined primarily by reference to comparative compensation data provided to the CompensationHC&C Committee by its independent advisor. The maximum bonus was intended to be payable only upon truly superior performance. The CompensationHC&C Committee intended for this bonus plan to provide a strong incentive for management to meet and exceed budgetary income and individual performance goals in fiscal 2017.2023.
The Company performed well in fiscal 2017, producing operating income of $367.7 million, approximately 101.2% of budgeted operating income of $363.5 million. The resulting payout was 104% of target of the portion of the participating Named Executives’ bonus determined by operating income. The full fiscal 20172023 incentive bonuses granted,paid, including amounts grantedpaid for achievement of individual performance goals, were as follows:
| | | | | | | | | | | | | | | | | | | | | | Named Executive | Target Annual Incentive (as % of base) | Performance on Incentive Measures | | Annual Incentive Payout - FY2023 | | Adjusted Operating Income Performance (75% of Bonus) (1) | Individual Performance Goals Performance (25% of Bonus) (2) | | % of Target | Amount ($) | | David B. Foss | 150% | 75.0% | 80.8% | | 76.5% | 991,979 | | Gregory R. Adelson | 100% | 75.0% | 57.2% | | 70.5% | 405,645 | | Mini L. Carsley | 100% | 75.0% | 75.2% | | 75.1% | 356,517 | | Craig K. Morgan | 90% | 75.0% | 75.0% | | 75.0% | 290,250 | | Stacey E. Zengel | 50% | 75.0% | 63.7% | | 72.2% | 138,239 |
| | | | | | | | | | | Named Executive | Target Annual | Performance on Incentive Measures | Annual Incentive Payout - | | | Incentive | | Individual | FY2017 | | | (as % of base) | Operating Income | Performance Goals | | | | | | | | | Performance | Performance | | | | | | | | | (75% of Bonus) | (25% of Bonus) | % of Target | Amount ($) | David B Foss, President and CEO | 100% | 104% | 87.3% | 99.8% | 598,973 | | Kevin D. Williams, CFO | 70% | 104% | 98.7% | 102.7% | 323,426 | | Mark S. Forbis, CTO | 50% | 104% | 39.5% | 87.9% | 142,797 |
Although bonuses have been earned(1)Adjusted operating income performance achievement of 94% was reduced to 75% by the HC&C Committee.
(2)Individual performance goal performance percentages were reduced by the HC&C Committee to 75% of achievement. Prior to the reduction, the individual performance goals performance achievement for Mr. Foss, Mr. Adelson, Ms. Carsley, Mr. Morgan, and Mr. Zengel were 107.8%, 76.3%, 100.3%, 100%, and 85%, respectively.
Mr. Williams did not participate in eachthe regular 2023 annual incentive plan. Due to his pending retirement, the HC&C Committee established a special short-term bonus incentive for Mr. Williams that was solely dependent upon his completion of one individual performance goal prior to his retirement, which involved working with Ms. Carsley, his successor as the Company’s Chief Financial Officer and Treasurer, to complete a successful transition of all duties. The HC&C Committee determined that Mr. Williams satisfactorily completed his individual performance goal by the deadline, resulting in a bonus payout of $120,000, representing 100% of the last five fiscal years, the Compensation Committee notes that the plan is not structured to require the payment ofspecial bonus in every year and performance targets are not set at levels which are easy to achieve. Bonuses actually paid over the last five years have generally been modestly above target levels in three of those years, but two of the three executives received bonuses below target in fiscal year 2017 and were well below targets set for fiscal year 2015, when operating income results were negatively impacted by restatement of financial results. target.
The CompensationHC&C Committee continues to believe that annual cash bonus opportunities are highly effective motivators for management employees and are instrumental in obtaining excellent performance in comparison with the Company’s competitors in both strong and weak economic environments.
The Committee believes that the costs to the Company of potentially large incentive bonuses are fully justified by the potential benefits and return to our stockholders. The CompensationHC&C Committee will in future years continue to thoroughly review the effects of the bonus plan on results achieved and will make any changes to the bonus plan deemed necessary.
In addition to the cash bonus opportunities under our formal pay-for-performance cash bonus programs, the Compensation Committee may choose to reward extraordinary performance and achievements by awarding discretionary bonuses to the Named Executives and other employees from time to time that are not part of the annual incentive plan or any other plan. With respect to the Named Executives, no discretionary bonuses were awarded based on Company performance or the executives’ performance during fiscal 2017.
Discretionary Bonus
In early fiscal 2017, Chief Technology Officer Mark Forbis was tasked with substantial additional responsibility upon the retirement of the general manager of the Corporate Services Department. He assumed a leadership role for that department to ensure a seamless leadership transition for the Company. These duties were additive to Mr. Forbis’s responsibilities that had been established for the year. After the conclusion of fiscal 2017, in recognition of Mr. Forbis’s extraordinary performance in accomplishing the additional tasks, the Compensation Committee made a determination to award Mr. Forbis a discretionary bonus of $75,000.
Long-Term Incentive Compensation
We believe that equity awards have been instrumental in building Jack Henry & Associates, inthe Company, retaining talent, and in encouraging management to take thea long-term view with regard to strategic decisions they face. Equity awards also help focus executive and employee attention on managing the Company from the perspective of an owner with an equity stake in the business. Since
the adoption of the Company’s Restricted Stock Plan in 2005 and continuing under the Company’s 2015 Equity Incentive Plan, the CompensationThe HC&C Committee has had the authority to grant restricted stock awards of various types and to determine the terms of the restrictions on granted shares. Starting in fiscal 2013,2020, the long-term incentive awards have consisted of a mix of performance shares and time-based restricted stock units. In fiscal 2023, the HC&C Committee allocated the long-term incentive award value at approximately 60% performance shares and 40% time-based restricted stock units. The HC&C Committee determined this mix was appropriate to ensure our Named Executives are aligned with stockholders through stock ownership and also to encourage retention.
The fiscal 2023 total grant amounts for long-term incentive compensation was grantedwere determined with reference to the Named Executives in the formcomparable aggregate grants of performance shares.
Grants may be made annually in the future, but future grants will continue to be discretionary and amounts may fluctuate based uponlong-term incentive compensation by other members of the Compensation Committee’s evaluationPeer Group and published survey data and were roughly targeted at the 50th percentile of the Compensation Peer Group. The aggregate target value was then divided with approximately 60% applied to performance from yearshare awards and approximately 40% applied to year. time-based restricted stock unit awards.
In determining the level of award for a Named Executive, the CompensationHC&C Committee also considers relevant factors such as achievement of previously identified objectives, the executive’s performance, comparative data from the Compensation Peer Group and other sources, the current equity ownership and equity awards held by the individual executive, and the internal equity of the level of award granted to the executive compared to awards granted to other executives. In reviewing the award levels for our Named Executives, the CompensationHC&C Committee believes it is appropriate to consider the Company’s performance against key objectives under its corporate business plan for the preceding fiscal year, including objectives related to revenue and earnings targets, and whether the Company’s performance during the preceding fiscal year benefited stockholders as measured by the market price of the Company’s Common Stock. In administering the equity compensation programs, the CompensationHC&C Committee monitors the level of dilution that can result from equity awards to executives and other employees and considers the dilutive effect of the Company’s aggregate equity awards during any fiscal year.
The specificPerformance Shares
A portion of the grants to the Named Executives for fiscal 20172023 were structured as performance shares that vest only on the achievement of Company performance goals and thus strongly reflect the principle of pay-for-performance. A grant of performance shares is a contractual right to receive stock and/or cash in the future whenif vesting conditions are met. TheIn fiscal 2023, the HC&C Committee decided to utilize three separate measures of comparative performance to determine the vesting amount of performance shares. These three specific grants of performance shares in fiscal 20172023 to the Named Executives vest at the end of three yearsa three-year performance period based on the following: (1) the total shareholder return over the three-year period in comparison to the companies in the S&P 1500 Software & Services Index (the “S&P 1500 S&S”) plus any members of the Compensation Peer Group not otherwise included in the S&P 1500 S&S (“TSR Peer Group”) (comprising approximately 60% of the total performance shares grant value), (2) the Company’s compound organic annual revenue growth rate (“CAGR”) for revenue over the three-year period. period against a target organic revenue CAGR, where organic revenue growth removes the impact of deconversion fees and acquisitions and divestitures during the performance period (comprising approximately 20% of the total performance shares grant value), and (3) the expansion of the Company’s non-GAAP operating margin over the three-year period against a target non-GAAP operating margin expansion, where non-GAAP operating margin removes the impact of deconversion fees and acquisitions and divestitures during the performance period (comprising approximately 20% of the total performance shares grant value).
For thisthe purpose total shareholder return (“TSR”)of the TSR grants, TSR was defined as ending stock price minus beginning stock price (adjusted for splits and similar changes) plus dividends per share paid over the performance period, all divided by the beginning stock price. A target amount of stock was set for each Named Executive that may be earned if TSR at the end of the three-year period is at the 63rd50th percentile in comparison to the CompensationTSR Peer Group. Vesting ranges from 35%25% of thetarget performance shares at the 25th 25th percentile to the maximum amount of the grant (175%(200% of target) at or above the 75th 80th percentile relative to the CompensationTSR Peer Group. No shares will vest if performance is below the 25th 25th percentile threshold. By setting
For purposes of the target amount atthree-year organic revenue CAGR grants, the 63rd percentile,following principles apply: •non-GAAP revenue is calculated by adjusting GAAP revenue for deconversion fee revenue for the Committee continuedrelevant periods; •three-year organic revenue growth is calculated by (a) the quotient equal to convey that long-term superiorthe Company’s non-GAAP revenue for the final fiscal year of the performance is expectedperiod and remainsdividing it by the Company’s non-GAAP revenue for the fiscal year ending immediately prior to the beginning of the performance period, (b) raised to an exponent of one-third, and (c) subtracting one; and •an acquisition or divestiture by the Company during the performance period will result in an adjustment to the goal and/or results by the HC&C Committee to ensure the grant results are not benefited nor penalized by the acquisition or divestiture.
The HC&C Committee set a threshold, target, and maximum three-year organic revenue CAGR percentage goal based on the annual budget of this incentive program.the Company and available forecasts and with the purpose of setting meaningful and challenging targets, with vesting for performance shares ranging from 50% of target at threshold performance, 100% of target at target performance, and 200% of target at maximum performance and above. For the fiscal 2023 three-year organic revenue CAGR grants, threshold was set at 7%, target was set at 8%, and maximum was set at 9.5%. No performance shares vest for achievement below threshold.
The
For purposes of the three-year non-GAAP operating margin expansion grants, the following principles apply: •non-GAAP revenue is calculated by adjusting GAAP revenue for deconversion fee revenue for the relevant periods; •non-GAAP operating income is calculated by adjusting GAAP operating income for operating income from deconversion fees and operating income/loss from acquisitions, divestitures, and asset write-offs for the relevant periods; •three-year non-GAAP operating margin expansion is calculated by (a) an amount equal to non-GAAP operating income for the final fiscal 2017year of the performance share grantsperiod divided by non-GAAP revenue for the final fiscal year of the performance period, less (b) an amount equal to non-GAAP operating income for the fiscal year ending immediately prior to the Named Executives were approvedbeginning of the performance period divided by non-GAAP revenue for the fiscal year ending immediately prior to the beginning of the performance period; and •an acquisition or divestiture by the Company during the performance period will result in an adjustment to the goal and/or results by the HC&C Committee to ensure the grant results are not benefited nor penalized by the acquisition or divestiture.
The HC&C Committee set a threshold, target, dollar amountsand maximum three-year non-GAAP operating margin expansion percentage goal based on the annual budget of the Company and available forecasts and with grant date accounting values roughlythe purpose of setting meaningful and challenging targets, with vesting for performance shares ranging from 50% of target at threshold performance, 100% of target at target performance, and 200% of target at maximum performance and above. For the fiscal 2023 three-year non-GAAP operating margin expansion grants, threshold was set at 3.0 times base salary of Mr. Foss, 2.1 times base salary of Mr. Williams,0.1%, target was set at 0.5%, and 1.3 times base salary of Mr. Forbis. Our Executive Chairman did not receive a grant of maximum was set at 1.0%. No
performance shares in fiscal 2017. vest for achievement below threshold.
The fiscal 2017 grant amounts were determined with reference to comparable grants of long-term incentive compensation by other members of the Compensation Peer Group and published survey data, and were roughly targeted at the 50th percentile of the Compensation Peer Group. The fiscal 2017 grant amounts were generally consistent with FY2016 target levels. The 20172023 awards were structured to provide incentives for long-term performance and retention and to meet goals for specific accounting treatment.retention. Retention is encouraged by grant terms which immediately forfeit all awards that have not vested or are still restricted in the event that the grantee’s employment with the Company is terminated for any reason other than in the event of death, incapacity, retirement, or in connection with any change in control.
In conjunction with the transition of Mr. Foss to the Chief Executive Officer role, the Compensation Committee made a determination to award Mr. Foss 1) a special promotional equity grant on July 1, 2016 of stock options valued at $500,000 using a Black Scholes calculation and 2) a retention grant of $500,000 in restricted stock shares, both of which will vest on July 1, 2019.
As part of the transition of Mr. Prim to the Executive Chairman role, the Compensation Committee made a determination to award Mr. Prim a special retention grant of restricted stock in the amount of $1,000,000 that will vest on July 1, 2018.
The use of performance shares allows for flexibility in addressing the orderly retirement of grantees. The 2023 performance sharesshare awards contain terms which allow for the pro-rata vesting of awards upon retirement based on full months of service following the date of grant. For this purpose, retirement is defined as termination with the stated purpose of retirement, after 30 years of service
tofor which the grantee has provided the Company after the age of 57at least six months’ prior notice and 15 years of service,occurs (1) on or after the age of 6255 and 5following a minimum number of years of service.employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. With respect to a retirement during the term, at the end of the three-year term of the grant, the award will be calculated, and a pro-rata portion will be settled to the grantee based on completed full months of service. For example, if an eligible grantee retires 18 months after the grant date, he or she would be credited with 18 months of service and would be entitled to one-half of any amount that vests on performance measured at the end of the three-year grant. Death or incapacity of a grantee is addressed in the same manner, with pro-rata vesting based on completed months of service. Upon a change in control of the Company and a qualified termination of the grantee, the target number of performance shares vest and will be settled, regardless of the performance measures achieved.
The Compensation Committee notes thatRestricted Stock Units
In fiscal 2023, the Company produced an admirable total shareholder return of 82% over the three year period ending June 30, 2017. As to performance shares issuedlong-term incentive compensation included restricted stock unit grants to the Named Executives inExecutives. The fiscal 2015 that vested based2023 restricted stock unit awards were structured to provide incentives for long-term performance and retention. The shares vest one-third on three year TSR performance, the Company’s performance in comparison with the Compensation Peer Group over those three years was at the 65th percentile, slightly above the 63rd percentile target, and thus 105%each of the Named Executive’s target shares vested. This resultsubsequent anniversaries. Retention is in keeping with the Company’s pay for performance principle.
Deferred Compensation Plan
Under the Company’s non-qualified Deferred Compensation Plan adopted in September of 2014, our Named Executives may voluntarily defer a portion of their compensation to one or more future years. While the plan allows the Company to offer deferral ofencouraged by grant terms which immediately forfeit all types of compensation, including salary, bonus and equity grants, to date the Company has only offered a program to defer receipt of equity compensation upon vesting of performance shares. Amounts deferred are deemed invested in investments selected by the participant from a limited number of choices. The Deferred Compensation Plan is intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. None of the Named Executives participatedawards that have not vested in the Deferred Compensation Plan in fiscal 2017.
Termination Benefits Agreements
Each ofevent that the Named Executives has entered into a Termination Benefits Agreementgrantee’s employment with the Company that is discussed in this Proxy Statement under the caption “Agreements with Executive Officers and Potential Payments upon Termination or Change in Control.” These agreements reflect the concern of the Board of Directors thatterminated for any future threatened or actual change in control such as an acquisition or merger could cause disruption and harm to the Companyreason, other than in the event of the resulting loss of any of its key executives. The Termination Benefits Agreements are intended to provide a measure of incentive and security to the executives through the resolution of the threatretirement or throughin connection with a change in control.
The Compensation Committee believesfiscal 2023 restricted stock unit awards contain terms which allow for continued vesting in accordance with the vesting schedule of all unvested awards upon retirement. For this purpose, retirement is defined as termination with the express reason of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that such agreements should not include provisions that would obligate an acquirerthe grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. The grantee must also remain actively employed as a full-time employee for six months following the date of the Companyaward to make large cash payouts to our Named Executives simply becausequalify for such continued vesting. Further, the grantee must abide by certain restrictive covenants, including non-competition, non-solicit, and non-disparagement covenants. Any breach of such restrictive covenants will result in a changeforfeiture of control has occurred. Because of this concern, the occurrence of a change of control event alone will not trigger any cash payment obligations to our Named Executives under their respective Termination Benefits Agreements. Payment obligations only arise in the event the Named Executive’s employment is terminated or is deemed to be terminated without “Cause” (as defined in the agreements) within the period commencing 90 days prior to and for two years followingall remaining non-settled awards. Upon a change in control for the Named Executives. The Company does not provide, nor has it ever provided, excise tax gross-up payments to any employee in the event of a change in control and termination.
Payment obligations under the Termination Benefits Agreements with the Named Executives are two times the current annual base salary plus target bonus, payable 50% in twelve equal monthly installments and 50% in a lump sum at the end of the monthly installments. Health and other benefits are also continued for 18 months for the Named Executives, and all stock options, performance shares and restricted stock awards become fully vested. The benefits provided were determined primarily by reference to comparative data provided to the Compensation Committee by its independent advisor and, at least in relation to base salary, are consistent with the prior agreements which they replaced. The benefits are believed by the Compensation Committee to be sufficient to provide the desired incentive and security to retain crucial personnel in a time of disruption.
The Termination Benefits Agreements have no set term and will continue until terminated by agreement of both the parties. The agreements specify that they do not confer on the executives any right to continued employment and shall not interfere with the right of the Company to terminateand a qualified termination of the executives at any time.
grantee, all unvested restricted
stock units vest in full and will be settled.
Broad-Based Benefits Programs
The Company offers certain broad-based benefits programs including benefits such as health, dental, disability and life insurance, health care savings accounts, employee stock purchase plan, paid vacation time, and companyCompany matching contributions to a 401(k) EmployeeRetirement Savings Plan. Benefits are provided to all employees in accordance with practices within the marketplace and are a necessary element of compensation in attracting and retaining employees. There are no additional benefits programsWe do not offer pensions or supplemental executive retirements plans for our Named Executives.
Termination Benefits Agreements and Executive Severance Plan
On June 30, 2023, each of the Named Executives, other than Mr. Williams, was a participant in the Executive Severance Plan (the “Severance Plan”) that is discussed in this Proxy Statement under the caption “Agreements with Executive Officers and Potential Payments upon Termination or Change in Control” on page 47. The Severance Plan provides that each Named Executive who experiences a qualifying termination not in connection with a change in control receives severance payments. The amount of such severance payments for the Chief Executive Officer is equal to two times the Chief Executive Officer’s annual base salary, paid ratably over two years, and, for the other Named Executives, one and a half times the Named Executive’s annual base salary, paid ratably over one and a half years. The Named Executives also receive a prorated amount of the annual bonus the Named Executive would have received for the current performance year had the Named Executive remained employed through the end of such performance year, paid in a single lump sum at the same time as annual bonus payments are made to active annual bonus participants for such performance year. The Named Executives would also receive an amount equal to the cost of health benefit continuation premiums for 18 months, paid in a lump sum. The treatment of equity awards held by the terminated Named Executive would not be impacted by the Severance Plan, but would be controlled by the terms set out in those individual awards.
The Severance Plan also provides that each Named Executive who experiences a qualifying termination in connection with a change in control receives severance payments. The amount of such severance payments for the Chief Executive Officer is equal to two times the annual base salary and two times the target annual bonus, and, for other Named Executives, one and a half times the annual base salary and one and a half the target annual bonus, also paid in a lump sum. The Named Executives will also receive a lump sum prorated amount of target annual bonus and an amount equal to the cost of health benefit continuation premiums for 18 months. Equity awards held by the terminated Named Executive, other than those awards that already contain provisions governing the treatment of the awards in the event of a change in control termination (which will be controlled by the terms of such awards), will fully vest upon a qualifying termination in connection with a change in control, with any performance-based awards vesting as if target-level achievement were met. All Severance Plan payments are conditional upon the terminated executive’s execution and nonrevocation of a release of claims against the Company and adherence to certain restrictive covenants set forth in the Severance Plan.
The benefits provided were determined primarily by reference to comparative data provided to the HC&C Committee by its independent advisor. The benefits are believed by the HC&C Committee to be sufficient to provide the desired incentive and security to retain crucial personnel in a time of disruption and to help attract and retain top executive talent. The change in control benefits provided in the Severance Plan reflect the concern of the Board that any future threatened or actual change in control, such as an acquisition or merger, could cause disruption and harm to the Company in the event of the resulting loss of any of its key executives.
No severance payments are eligible to be paid under the Severance Plan unless a Named Executive’s employment is terminated by the Company without “Cause” or by the Named Executive for “Good Reason” (both as defined in the Severance Plan). The HC&C Committee believes that agreements such as the Severance Plan should not include provisions that would obligate an acquirer of the Company to make large cash payouts to our Named Executives simply because a change in control has occurred. Because of this concern, the occurrence of a change in control event alone will not trigger any cash payment obligations to our Named Executives under the Severance Plan. Change in control severance payment obligations only arise if the Named Executive’s employment is terminated by the Company without “Cause” or by the Named Executive for “Good Reason” within the period commencing 90 days prior to and for two years following a change in control
(i.e., “double trigger”). The Company does not provide, nor has it ever provided, excise tax gross-up payments to any employee in the event of a change in control and termination.
The Severance Plan has no set term and will continue until terminated by the HC&C Committee. However, unless a Severance Plan participant consents, generally, the Severance Plan may not be terminated or amended in a manner that is materially adverse to a participant without 12-months’ notice to each participant. As set forth in the Severance Plan, certain exceptions apply where an amendment or termination is in connection with a change in control. The Severance Plan specifies that it does not confer on the executives any right to continued employment and shall not interfere with the right of the Company to terminate the executives at any time.
Deferred Compensation Plan
Under the Company’s non-qualified Deferred Compensation Plan adopted in 2014, our Named Executives may voluntarily defer a portion of their compensation to one or more future years. While the plan allows the Company to offer deferral of all types of compensation, including salary, bonus, and equity grants, to date the Company has only offered a program to defer receipt of equity compensation upon vesting of performance shares and restricted stock units. Amounts deferred are deemed invested in investments selected by the participant from a limited number of choices. The Deferred Compensation Plan is intended to promote retention by providing a long-term savings opportunity on a tax-efficient basis. Performance shares or restricted stock units that are deferred under the Company’s Deferred Compensation Plan may be settled in stock or, at the option of the HC&C Committee, in cash. No Named Executives participated in the Deferred Compensation Plan with respect to performance share awards or restricted stock unit awards granted in fiscal 2023.
Perquisites
Perquisites represent a minor component of executive compensation. When appropriate, we provide perquisites that we believe are reasonable and competitive. The Company has entered into an aircraft time-sharing agreement with each Named Executive, which permits the Named Executives to lease the Company’s corporate-owned aircraft for personal use on a non-exclusive, time-sharing basis. Pursuant to the time-sharing agreement, the Named Executive would reimburse the Company an amount equal to (a) twice the cost of fuel plus (b) other actual expenses for his or her personal use of the Company’s corporate-owned aircraft, which amount approximates the Company’s incremental costs for the flight. No time-sharing arrangements were used in fiscal 2023 and there were no amounts reimbursed.
Stock Ownership Guidelines
The Board of Directors has established stock ownership guidelines for the Named Executives, other members of management, and the non-employee directors of the Company. These guidelines provide forrequire each covered individual to hold a number of shares of the Company’s Common Stock with an aggregate market value that equates to a specified multiple of the employee’s base salary or, in the case of directors, of their annual cashbase retainer. The stock ownership guidelines are four times base salary for the Executive Chairman and the Chief Executive Officer, three times base salary forNamed Executives are as follows: | | | | | | | | | | Named Executive | Title | Ownership Requirement as a Multiplier of Base Salary | | David B. Foss | Board Chair and Chief Executive Officer | 6x | | Gregory R. Adelson | President and Chief Operating Officer | 3x | | Mimi L. Carsley | Chief Financial Officer and Treasurer | 3x | | Craig K. Morgan | General Counsel and Secretary | 1x | | Stacey E. Zengel | Senior Vice President and President of Jack Henry Banking Solutions | 1x | | Kevin D. Williams* | Former Chief Financial Officer and Treasurer | N/A |
*Mr. Williams stepped down as Chief Financial Officer one time base salary forand Treasurer and as an executive officer effective September 1, 2022. Mr. Williams was not subject to the Vice Presidents and General Managers, and four times the annual base retainer for directors. stock ownership guidelines on June 30, 2023.
The value of each person’s share holdings for purposes of the guidelines includes all unrestricted and restrictedCompany shares held,owned outright, as well as all Company shares held in the person’s retirement accounts and deferral accounts, all shares held in trust for the person’s immediate
family members, and the in-the-money value of all Company stock options held. Unvested restricted stock unitsunits. Stock options and performance shares are not counted for purposes of measuring compliance with the stock ownership guidelines. Even though all of the Named Executives now hold a number of shares at or above the number of shares specified under the guidelines, the CompensationThe HC&C Committee recognizes that executive officers or employees who were recently promoted to executive officer positions and newly elected directors may require some period of time to achieve the guideline amounts. The guidelines, therefore, contemplate a five-year transition period for acquiring a number of shares with the specified market value. The guidelines also require that until the applicable ownership level is achieved, the individual should retain and hold 75% of all shares received from vesting of restricted stock units and performance shares or exercise of options, net of shares sold to pay taxes. The CompensationHC&C Committee will continue to monitor the compliance of each executive and director with the guidelines. As measured on June 30, 2023, all covered individuals on such date were in compliance with these these guidelines or within the five-year compliance window.
Executive Compensation Recoupment Policy
The Board of Directors has adopted a formal policy for the recoupment of incentive compensation paid to executive officers after the policy’s effective date in the event the Company is required to restate its financial statements due to material non- compliancenon-compliance with financial reporting requirements. The recoupment policy is administered by the CompensationHC&C Committee.
Tax Deductibility and Executive Compensation
Section 162(m) of the Internal Revenue Code generally limits the corporate deduction for compensation paid to the Chief Executive Officer and other Named Executives to $1 million per individual, unless certain requirements are met which establish that compensation as performance-based. The Compensation Committee has considered the impact of this tax code provision and attempts, to the extent practical, to implement compensation policies and practices that maximize the potential income tax deductions available to the Company by qualifying such policies and practices as performance-based compensation exempt from the deduction limits of Section 162(m).
The Compensation Committee will continue to review and modify our compensation practices and programs as necessary to ensure our ability to attract and retain key executives while taking into account the deductibility of compensation payments.
COMPENSATION AND RISK
Under its charter, the CompensationHC&C Committee is charged with review of risks related to the Company’s compensation policies and practices. In 2017,fiscal 2023, the CompensationHC&C Committee directed the Company’s Human Resources Department to conduct a compensation risk assessment and to report the results to the HC&C Committee. The assessment reviewed design features, characteristics, and performance metrics used in compensating all employees of the Company, including salaries, sales incentives, incentive bonus plans, and long-term equity incentive compensation awards. The CompensationHC&C Committee reviewed and discussed the report and concluded that the Company’s compensation programs, policies, and practices do not create risks that are reasonably likely to have a material adverse effect on the Company. This conclusion was based on a number of factors, including:
The compensation levels and practices are judged to be uncomplicated and fair.
•Compensation of our employees is generally competitive with relevant labor markets. •Benefits are offered to all eligible employees on a non-discriminatory basesbasis and no material perquisites are offered solely to executives or management. •Incentive bonuses are determined largely on total Company financial performance and are capped at reasonable levels. •Long-term equity incentive awards to executives generally vest upon achievement of objective performance standards over a number of years, and thus do not encourage taking excessive risk for short-term focus.gains. •Compensation of executive and senior managers is balanced betweena combination of salary, benefits, annual cash incentive bonuses, and long-term equity incentive awards, resulting in appropriate balancing of short and long-term interests and goals. •Executives and senior managers are subject to stock ownership guidelines, which align their interests with those
of the stockholders. •The Company has adopted a recoupment policy providing for the clawback of executive compensation in the event of financial restatements.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information with regard to the compensation paid to our(1) Mr. Foss (our Chief Executive Officer, ourOfficer), (2) Ms. Carsley (our Chief Financial Officer during most of fiscal 2023), (3) Messrs. Adelson, Morgan, and theZengel (the Company’s three other two most highly compensated executive officers that were serving as executive officers as of the end of fiscal 2023), and (4) Mr. Williams (our Chief Financial Officer during part of fiscal 2023) (collectively, our “Named Executives”) during the fiscal years ended June 30, 2017, 20162023, 2022, and 2015.2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | | ($) | ($) | ($) (1) | ($) | ($) (2) | ($) (3) | ($) | David B. Foss Chief Executive Officer | 2023 | 858,750 | - | 8,571,735 | - | 991,979 | 16,562 | 10,439,026 | | 2022 | 840,000 | - | 7,557,777 | - | 1,345,365 | 15,250 | 9,758,392 | | 2021 | 840,000 | - | 6,447,156 | - | 1,391,250 | 14,250 | 8,692,656 | Gregory R. Adelson President and Chief Operating Officer | 2023 | 556,602 | - | 1,478,556 | - | 405,645 | 10,812 | 2,451,615 | | 2022 | 480,721 | - | 1,203,071 | - | 481,879 | 14,173 | 2,179,844 | | 2021 | 437,750 | - | 1,005,384 | - | 450,500 | 101,128 | 1,994,762 | Mimi L. Carsley (4) Chief Financial Officer and Treasurer | 2023 | 475,000 | - | 1,479,246 | - | 356,517 | - | 2,310,763 | | | Craig K. Morgan General Counsel and Secretary | 2023 | 415,917 | - | 982,948 | - | 290,250 | 18,278 | 1,707,393 | | 2022 | 370,076 | - | 522,806 | - | 319,562 | 14,761 | 1,227,205 | | 2021 | 349,128 | - | 445,496 | - | 377,980 | 13,299 | 1,185,903 | Stacey E. Zengel (4)
Senior Vice President and President of Jack Henry Bank Solutions | 2023 | 380,187 | - | 394,028 | - | 138,239 | 10,812 | 923,266 | | 2022 | 368,175 | - | 374,555 | - | 207,390 | 14,857 | 964,977 | Kevin D. Williams Former Chief Financial Officer and Treasurer | 2023 | 166,400 | - | - | - | 120,000 | - | 286,400 | | 2022 | 515,030 | - | 1,892,377 | - | 559,683 | 14,083 | 2,981,173 | | 2021 | 500,030 | - | 1,115,960 | - | 530,032 | 13,998 | 2,160,020 |
(1)Reflects grants of performance shares and restricted stock units on August 3, 2020, August 4, 2021, and August 4, 2022 under the Company’s Equity Incentive Plan to the Named Executives. The 2023 amount for Ms. Carsley includes a one-time grant of restricted stock units on July 17, 2022 in connection with her joining the Company. Information about the assumptions used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2023. (2)Reflects amounts paid to the Named Executives following the end of the fiscal year based upon achievement of performance goals under the Company’s Annual Incentive Plans. These amounts were earned and accrued in the fiscal year listed and paid in the following fiscal year. (3)Reflects matching contributions to the individual’s accounts pursuant to the Company’s 401(k) Retirement Plan. The 2021 amount for Mr. Adelson reflects a one-time $84,740 incremental cost to the Company relating to relocation expenses in connection with a relocation expenses agreement between Mr. Adelson and the Company and approved by the HC&C Committee. (4)Ms. Carsley was not a Named Executive during fiscal 2021 or fiscal 2022. Mr. Zengel was not a Named Executive during fiscal 2021.
| | | | | | | | | | | Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | | ($) | ($) | ($) (1) (2) | ($) (3) | ($) (4) | ($) (5) | ($) | | John F. Prim (6) | 2017 | 542,500 | - | 999,940 | - | - | 5,000 | 1,547,440 | | Executive Chairman of the Board | 2016 | 620,000 | - | 2,700,027 | - | 692,230 | 5,000 | 4,017,257 | | | 2015 | 606,934 | - | 2,700,001 | - | 488,444 | 5,000 | 3,800,379 | | David B. Foss (6) | 2017 | 600,000 | - | 2,299,997 | 499,989 | 598,973 | 5,000 | 4,003,959 | | President and Chief Executive Officer | 2016 | 493,881 | - | 1,050,002 | - | 442,155 | 5,000 | 1,991,038 | | | 2015 | 461,891 | - | 949,999 | - | 294,500 | 5,000 | 1,711,390 | | Kevin D. Williams | 2017 | 445,017 | - | 899,976 | - | 323,426 | 5,000 | 1,673,419 | | Treasurer and | 2016 | 430,070 | - | 749,991 | - | 335,293 | 5,000 | 1,520,354 | | Chief Financial Officer | 2015 | 424,853 | - | 749,986 | - | 215,077 | 5,000 | 1,394,916 | | Mark S. Forbis | 2017 | 321,229 | 75,000 | 399,998 | - | 142,797 | 5,000 | 944,024 | | Vice President and Chief | 2016 | 307,439 | - | 350,026 | - | 171,228 | 5,000 | 833,693 | | Technology Officer | 2015 | 294,311 | - | 304,927 | - | 116,250 | 5,000 | 720,488 |
| | (1) | Reflects grants of performance shares on September 10, 2014, September 10, 2015 and September 10, 2016 under the Company’s Equity Incentive Plan to the Named Executives. Information about the assumptions used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 9 to our consolidated financial statements for the year ended June 30, 2017. |
| | (2) | The 2017 amounts for Messrs. Prim and Foss reflect a grant of restricted stock awards on July 1, 2016 under the Company’s Equity Incentive Plan. Additional details regarding these grants are set forth in the Form 8-K/A filed July 1, 2016. Information about the assumptions used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 9 to our consolidated financial statements for the year ended June 30, 2017. |
| | (3) | Reflects option grant to Mr. Foss on July 1, 2016 under the Company’s Equity Incentive Plan. Additional details regarding this grant are set forth in the Form 8-K/A filed July 1, 2016. Information about the assumptions used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 9 to our consolidated financial statements for the year ended June 30, 2017. |
| | (4) | Reflects amounts paid to the Named Executives following the end of the fiscal year based upon achievement of performance goals under the Company’s Annual Incentive Plans. These amounts were earned and accrued in the fiscal year listed and paid in the following fiscal year. |
| | (5) | Reflects matching contributions to the individual’s accounts pursuant to the Company’s 401(k) retirement plan. |
| | (6) | On July 1, 2016, Mr. Prim resigned as Chief Executive Officer and Mr. Foss was appointed Chief Executive Officer. |
Grants of Plan-Based Awards Table
The following table presents information on awards granted to the Named Executives during the fiscal year ended June 30, 20172023 under our 20122017 Annual Incentive Plan with respect to performance targets set for fiscal 20172023 and our 2015 Equity Incentive Plan with respect to grants of performance shares and restricted stock units made during fiscal year 2017.2023.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | Grant Date | Estimated Future Payouts Under Non- Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of Shares of Stock or Units | Grant Date Fair Value of Stock and Option Awards | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (#)(3) | ($)(4) | | David B. Foss | 8/4/2022 | 486,563 | 1,297,500 | 2,311,172 | - | - | - | - | - | | 8/4/2022 | - | - | - | 3,244 | 12,975 | 25,950 | - | 3,882,769 | | 8/4/2022 | - | - | - | 2,163 | 4,325 | 8,650 | - | 873,564 | | 8/4/2022 | - | - | - | 2,163 | 4,325 | 8,650 | - | 873,564 | | 8/4/2022 | - | - | - | - | - | - | 14,417 | 3,000,034 | | Gregory R. Adelson | 8/4/2022 | 215,625 | 575,000 | 1,029,609 | - | - | - | - | - | | 8/4/2022 | - | - | - | 560 | 2,238 | 4,476 | - | 669,722 | | 8/4/2022 | - | - | - | 373 | 746 | 1,492 | - | 150,677 | | 8/4/2022 | - | - | - | 373 | 746 | 1,492 | - | 150,677 | | 8/4/2022 | - | - | - | - | - | - | 2,487 | 517,520 | | Mimi L. Carsley | 8/4/2022 | 178,125 | 475,000 | 835,703 | - | - | - | - | - | | 8/4/2022 | - | - | - | 411 | 1,643 | 3,286 | - | 491,668 | | 8/4/2022 | - | - | - | 274 | 548 | 1,096 | - | 110,685 | | 8/4/2022 | - | - | - | 274 | 548 | 1,096 | - | 110,685 | | 8/4/2022 | - | - | - | - | - | - | 1,826 | 379,972 | | 7/17/2022 | - | - | - | - | - | - | 2,105 | 399,908 | | Craig K. Morgan | 8/4/2022 | 145,125 | 387,000 | 677,250 | - | - | - | - | - | | 8/4/2022 | - | - | - | 372 | 1,488 | 2,976 | - | 445,284 | | 8/4/2022 | - | - | - | 248 | 496 | 992 | - | 100,182 | | 8/4/2022 | - | - | - | 248 | 496 | 992 | - | 100,182 | | 8/4/2022 | - | - | - | - | - | - | 1,653 | 343,973 | | Stacey E. Zengel | 8/4/2022 | 71,813 | 191,500 | 342,905 | - | - | - | - | - | | 8/4/2022 | - | - | - | 149 | 596 | 1,192 | - | 178,353 | | 8/4/2022 | - | - | - | 100 | 199 | 398 | - | 40,194 | | 8/4/2022 | - | - | - | 100 | 199 | 398 | - | 40,194 | | 8/4/2022 | - | - | - | - | - | - | 663 | 137,964 | | Kevin D. Williams | 8/4/2022 | - | 120,000 | - | - | - | - | - | - | |
(1)Represents the range of possible payouts for fiscal 2023 to our Named Executives under the Annual Incentive Plan, and for Mr. Williams under his fiscal 2023 special bonus incentive. (2)Performance shares granted on August 4, 2022 under the Company’s 2015 Equity Incentive Plan. (3)Restricted stock units granted on August 4, 2022, and, for Ms. Carsley in connection with her joining the Company, on July 17, 2022, under the Company’s 2015 Equity Incentive Plan. (4)The amounts in the table represent the grant date fair value of the awards. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2023.
| | | | | | | | | | | | | | Name | Grant Date | Estimated Payouts Under Non- Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards (1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) (2) | | Threshold | Target | Maximum | Threshold | Target | Maximum | | ($) | ($) | ($) | (#) | (#) | (#) | | John F. Prim | 7/01/2016 | - | - | | | | | 11,458 | - | | 999,940 | | David B. Foss | 7/01/2016 | - | - | | | | | 5,729 | - | | 499,970 | | David B. Foss | 7/01/2016 | - | - | | | | | - | 31,685 | 87.27 | 499,989 | | David B. Foss | 9/10/2016 | 300,000 | 600,000 | 1,200,000 | 8,482 | 24,233 | 42,408 | - | - | | 1,800,027 | | Kevin D. Williams |
9/10/2016 |
157,500 |
315,000 |
630,000 |
4,241 |
12,116 |
21,203 |
- |
- | |
899,976 | | Mark S. Forbis | 9/10/2016 | 81,250 | 162,500 | 325,000 | 1,885 | 5,385 | 9,424 | - | - | | 399,998 |
| | (1) | Performance Plan Restricted Stock Units granted on September 10, 2016 under the Company’s Restricted Stock Plan. |
| | (2) | The amounts in the table represent the grant date fair value of the Awards. Information about the assumptions used to determine the grant date fair value of the awards is set forth in our Annual Report on Form 10-K in Note 9 to our consolidated financial statements for the year ended June 30, 2017. |
Additional Information Regarding Summary Compensation and Grants of Plan-Based Awards
The annual base salaries of the Named Executives were evaluated in fiscal 20172023 in relation to competitive data, changes in job duties, and individual and corporate performance. The annual base salary of Mr. PrimFoss increased 3.0% to $865,000, Ms. Carsley’s salary was reduced from $620,000set at 475,000, Mr. Adelson’s salary increased 14.7% to $310,000 on April 1, 2017 in connection with the transition of duties$575,000, Mr. Morgan’s salary increased 15.1% to $430,000, Mr. Foss. The annual baseZengel’s salary ofincreased 3.0% to $383,000. Mr. Foss was increased 20% on July 1, 2016 to $600,000 in connection with his appointment as Chief Executive Officer. The baseWilliams’ salary of Mr. Williams was increased 4.7% to $450,000 and Mr. Forbis was increased 4.8% to $325,000 on October 1, 2016.remained constant at $520,031.
For the year ended June 30, 2017,2023, the Named Executives (other than Mr. Prim) had the opportunity to earn cash incentive bonuses under the Company’s annual incentive cash bonus plan. As set forth in greater detail in “Compensation Discussion and Analysis – Analysis—Annual Incentive Cash Bonuses” above, the performance goals for the participating Named Executives were based on achieving adjusted operating income targets established in the Company’s annual budget and the achievement of individual performance goals (“IPGs”). The incentive plan set performance targets, thresholds for minimum performance, maximums for superior performance, and required that for any bonus to be paid, the minimum threshold of adjusted operating income had to be achieved. For the year ended June 30, 2017,2023, actual adjusted operating income was 101.2%98.5% of budgeted adjusted operating income, and with calculatedincome. The HC&C Committee used negative discretion to reduce the resulting 94% payout to a 75% payout. The HC&C Committee also used negative discretion to reduce the payout to the Named Executives related to IPG performances, theachievement to 75% of actual performance. The resulting payouts to the Named Executives were 99.8%76.5% of target for Mr. Foss, 102.7%70.5% for Mr. Adelson, 75.1% for Ms. Carsley, 75.0% for Mr. Morgan, and 72.2% for Mr. Zengel. Mr. Williams did not participate under the Company’s annual incentive cash bonus plan in fiscal 2023. Instead, the HC&C Committee established a special short-term bonus incentive for Mr. Williams and 87.9%that was solely dependent upon his completion of one individual performance goal prior to his retirement. Mr. Williams satisfied the performance goal for Mr. Forbis.his special short-term bonus incentive.
On September 10, 2016,August 4, 2022, the Company entered into performance share agreements with each of the Named Executives (other than Mr. Prim)Williams), inwith the following threshold, target, and maximum share amounts:
| | | | | | Name | 2017 Performance Share Threshold Grant | 2017 Performance Share Target Grant | 2017 Performance Share Maximum Grant | | David B. Foss | 8,482 | 24,233 | 42,408 | | Kevin D. Williams | 4,241 | 12,116 | 21,203 | | Mark S. Forbis | 1,885 | 5,385 | 9,424 |
amounts listed in the above table. The performance share agreements entered into with each of the above Named Executives in fiscal year 20172023 are identical except for the number of shares. All agreements settleEach grant is comprised of three years followingseparate grants of performance shares that vest at the grant dateend of a three-year performance period based uponon the performance offollowing: (1) the CompanyTSR over the three-year period in comparison to the companies in the S&P 1500 S&S plus any members of the Compensation Peer Group not otherwise included in producingthe S&P 1500 S&S (comprising approximately 60% of the total shareholder returnperformance shares grant value), (2) the Company’s organic revenue CAGR over the three year period.three-year period against a target organic revenue CAGR, where organic revenue growth removes the impact of deconversion fees and acquisitions and divestitures during the performance period (comprising approximately 20% of the total performance shares grant value), and (3) the expansion of the Company’s non-GAAP operating margin over the three-year period against a target non-GAAP operating margin, where non-GAAP operating margin removes the impact of deconversion fees and acquisitions and divestitures during the performance period (comprising approximately 20% of the total performance shares grant value). See “Compensation Discussion and Analysis—Long Term Incentive Compensation—Performance Shares,” on page 35 for more information about the fiscal 2023 performance share grants.
On August 4, 2022, the Company granted time-based restricted stock units to each of the Named Executives. The grants were identical for each of the Named Executives except for the number of restricted stock units. Each restricted stock unit is the economic equivalent of one share of Common Stock. Amounts may be settled in Common Stock of the Company or cash or any combination thereof. Comparative performanceThe restricted stock units vest in total shareholder return at less thanthree equal annual installments beginning on the 25th percentile will result in no settlement. The target award is earned with total shareholder return at approximatelyfirst anniversary of the 63rd percentile in comparison to the Compensation Peer Group and the maximum amount is earned with performance at the 75th percentile or higher.
In conjunctiongrant date based on continued service with the transition of Mr. Foss to the Chief Executive Officer role, the Compensation Committee made a determination to award Mr. Foss 1) a special promotional equity grant on July 1, 2016 of stock options valued at $500,000 using a Black Scholes calculation and 2) a retention grant of $500,000 in restricted stock shares, both of which will vest on July 1, 2019.Company.
As part of the transition of Mr. Prim to the Executive Chairman role, the Compensation Committee made a determination to award Mr. Prim a special retention grant of restricted stock in the amount of $1,000,000 that will vest on July 1, 2018.
Outstanding Equity Awards at Fiscal Year End Table
The following table provides information regarding outstanding stock options, shares of restricted stock, restricted stock units, and performance shares held by the Named Executives as of June 30, 2017.2023.
| | | | | | | | | | | Option Awards | Stock Awards | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Number of Shares or Units of Stock That Have Not Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested ($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) (4) | | John F. Prim | 09/10/2014 | - | - | - | - | - | 50,905 | 5,287,502 | | | 09/10/2015 | - | - | - | - | - | 35,522 | 3,689,670 | | | 07/01/2016 | - | - | - | 11,458 | 1,190,142 | - | - | | David B. Foss | 09/10/2014 | - | - | - | - | - | 17,911 | 1,860,416 | | | 09/10/2015 | - | - | - | - | - | 13,814 | 1,434,860 | | | 07/01/2016 | - | 31,685 (5) | - | 5,729 | 595,071 | - | - | | | 09/10/2016 | - | - | - | - | - | 24,233 | 2,517,082 | | Kevin D. Williams | 09/10/2014 | - | - | - | - | - | 14,140 | 1,468,722 | | | 09/10/2015 | - | - | - | - | - | 9,867 | 1,024,885 | | | 09/10/2016 | - | - | - | - | - | 12,116 | 1,258,489 | | Mark S. Forbis | 09/10/2014 | - | - | - | - | - | 5,749 | 597,149 | | | 09/10/2015 | - | - | - | - | - | 4,605 | 478,321 | | | 09/10/2016 | - | - | - | - | - | 5,385 | 559,340 |
| | (1) | With respect to the restricted stock grants made to Messrs. Prim and Foss in fiscal 2017, the restrictions on the shares lapse two years and three years, respectively, after the date of the grant. |
| | (2) | Amounts calculated by multiplying the closing market price of our common stock on June 30, 2017 ($103.87 per share) by the number of unvested shares of restricted stock. |
| | (3) | The performance shares vest three years from the date of grant based on achievement of total shareholder returns in comparison with other members of the Compensation Peer Group. No performance shares vest if total shareholder return over the three year period is below the 25th percentile and 175% vests with performance at or above the 75th percentile. Share amounts disclosed reflect the target number of shares that could vest upon performance at target.
|
| | (4) | Amounts calculated by multiplying the closing market price of our common stock on June 30, 2017 ($103.87 per share) by the target number of shares issuable under the performance share agreements. |
| | (5) | The option exercise price is $87.27, vests and becomes exercisable on July 1, 2019 and the option expiration date is July 1, 2026. |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Number of Shares or Units of Stock That Have Not
Vested (#) (1) | Market Value of Shares or Units of Stock That Have Not Vested
($) (2) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) (3) | Equity Incentive Plan Awards: Market Value of Unearned Shares, Units or Other Rights That Have Not Vested
($) (2) | | David B. Foss | 7/1/2016 | 11,685 (4) | - | - | | - | - | - | - | | 1/1/2020 | - | - | - | | 13,730 | 2,297,441 | - | - | | 8/3/2020 | - | - | - | | - | - | 9,989 | 1,671,459 | | 8/3/2020 | - | - | - | | - | - | 9,249 | 1,547,635 | | 8/3/2020 | - | - | - | | 4,860 | 813,224 | - | - | | 8/4/2021 | - | - | - | | - | - | 23,331 | 3,903,976 | | 8/4/2021 | - | - | - | | 10,369 | 1,735,045 | - | - | | 8/4/2022 | - | - | - | | - | - | 21,625 | 3,618,511 | | 8/4/2022 | - | - | - | | 14,417 | 2,412,397 | - | - | | Gregory R. Adelson | 8/3/2020 | - | - | - | | - | - | 1,558 | 260,700 | | 8/3/2020 | - | - | - | | - | - | 1,442 | 241,290 | | 8/3/2020 | - | - | - | | 758 | 126,836 | - | - | | 8/4/2021 | - | - | - | | - | - | 3,714 | 621,464 | | 8/4/2021 | - | - | - | | 1,650 | 276,095 | - | - | | 8/4/2022 | - | - | - | | - | - | 3,730 | 624,141 | | 8/4/2022 | - | - | - | | 2,487 | 416,150 | - | - | | Mimi L. Carsley | 7/17/2022 | - | - | - | | 2,105 | 352,230 | - | - | | 8/4/2022 | - | - | - | | - | - | 2,739 | 458,317 | | 8/4/2022 | - | - | - | | 1,826 | 305,545 | - | - | | Craig K. Morgan | 8/3/2020 | - | - | - | | - | - | 690 | 115,458 | | 8/3/2020 | - | - | - | | - | - | 639 | 106,924 | | 8/3/2020 | - | - | - | | 336 | 56,223 | - | - | | 8/4/2021 | - | - | - | | - | - | 1,614 | 270,071 | | 8/4/2021 | - | - | - | | 717 | 119,976 | - | - | | 8/4/2022 | - | - | - | | - | - | 2,480 | 414,978 | | 8/4/2022 | - | - | - | | 1,653 | 276,596 | | | | Stacey. E. Zengel | 8/3/2020 | - | - | - | | - | - | 494 | 82,661 | | 8/3/2020 | - | - | - | | - | - | 458 | 76,637 | | 8/3/2020 | - | - | - | | 240 | 40,159 | - | - | | 8/4/2021 | - | - | - | | - | - | 1,156 | 193,433 | | 8/4/2021 | - | - | - | | 514 | 86,008 | - | - | | 8/4/2022 | - | - | - | | - | - | 994 | 166,326 | | 8/4/2022 | - | - | - | | 663 | 110,940 | - | - | | Kevin. D. Williams | 8/3/2020 | - | - | - | | - | - | 1,296 | 216,860 | | 8/3/2020 | - | - | - | | - | - | 1,201 | 200,963 | | 8/4/2021 | - | - | - | | - | - | 2,434 | 407,281 | | 8/4/2021 | - | - | - | | 2,596 | 434,389 | - | - |
(1)Represents time-based restricted stock units granted to each Named Executive except Ms. Carsley on August 3, 2020 and August 4, 2021, granted to each Named Executive except Mr. Williams on August 4, 2022, granted to Mr. Foss on January 1, 2020, and granted to Ms. Carsley on July 17, 2022. Restricted stock units typically vest in three equal annual installments, beginning on the first anniversary of the respective grant date based on continued service with the Company. The restricted stock units granted to Mr. Foss on January 1, 2020 vest as follows: 10% on the first anniversary of the grant date, 20% on each of the second and third anniversaries of the grant date, and 50% on the fourth anniversary of the grant date, each based on continued service with the Company. (2)Amounts calculated by multiplying the closing market price of our common stock on June 30, 2023 ($167.33 per share) by the number of shares issuable under the restricted stock unit and performance share agreements. (3)Represents performance shares. For awards made in calendar year 2020, performance shares vest based on achievement of TSR in comparison with other members of the Compensation Peer Group or S&P 1500 IT Index, as applicable, following a three-year performance period. For each comparison group, no performance shares vest if TSR over the three-year period is
below the 25th percentile and 175% vests with performance at or above the 75th percentile. For awards made in calendar years 2021 and 2022, performance shares vest based on (1) TSR against the TSR Peer Group over a three-year performance period (where no performance shares vest if TSR over the three-year period is below the 25th percentile and 200% vest with performance at or above the 80th percentile), (2) the Company’s organic revenue CAGR over the three-year period against a target organic revenue CAGR (where no performance shares vest if three-year CAGR revenue is below 6.5% for fiscal 2022 awards and 7% for fiscal 2023 awards and 200% vest with performance at or above 9.0% for fiscal 2022 awards and 9.5% for fiscal 2023 awards), and (3) the expansion of the Company’s non-GAAP operating margin over the three-year period against a target non-GAAP operating margin (where no performance shares vest if three-year non-GAAP operating margin is below 1.0% for fiscal 2022 awards and 0.1% for fiscal 2023 awards and 200% vest with performance at or above 2.1% for fiscal 2022 awards and 1.0% for fiscal 2023 awards). Share amounts disclosed reflect the target number of shares that could vest upon performance at target. (4)The option exercise price is $87.27. The option vested and became exercisable on July 1, 2019. The option expiration date is July 1, 2026.
Option Exercises and Stock Vested Table
The following table provides information on stock option exercises by the Named Executives and stock awards (restricted stock units and performance shares) that vested during fiscal year 2017.2023. | | | | | | | | | | | | | | | | | | | Option Awards | | Stock Awards | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting ($) | Value Realized on Vesting ($) | | David B. Foss (1) (2) (3) (4) | - | - | | 45,320 | 8,604,284 | | Gregory R. Adelson (1) (2) (3) (5) | - | - | | 6,912 | 1,292,825 | | Mimi L. Carsley | - | - | | - | - | | Craig K. Morgan (1) (2) (3) (6) | - | - | | 4,991 | 895,864 | | Stacey E. Zengel (1) (2) (3) | - | - | | 2,513 | 479,328 | | Kevin D. Williams (1) (2) (3) | - | - | | 9,406 | 1,800,114 |
| | | | | | | Option Awards | Stock Awards |
Name | Number of Shares Acquired on Exercise (#) |
Value Realized on Exercise ($) |
Number of Shares Acquired on Vesting (#) |
Value Realized on Vesting ($)(1) | | John F. Prim | - | - | 59,116 | 5,094,617 | | David B. Foss | - | - | 8,535 | 735,546 | | Kevin D. Williams | - | - | 21,899 | 1,887,256 | | Mark S. Forbis | - | - | 5,626 | 484,849 |
(1)Value of the shares acquired on September 10, 2016,August 3, 2022, at the closing market price of such shares on September 9, 2016.August 2, 2022.
(2)Value of the shares acquired on August 4, 2022, at the closing market price of such shares on August 3, 2022.
(3)Value of the shares acquired on October 4, 2022, at the closing market price of such shares on October 3, 2022. (4)Value of the shares acquired on January 1, 2023, at the closing market price of such shares on December 30, 2022. (5)Value of the shares acquired on November 15, 2022, at the closing market price of such shares on November 14, 2022. (6)Value of the shares acquired on February 17, 2023, at the closing market price of such shares on February 16, 2023.
Nonqualified Deferred Compensation
The following table sets forth the contributions made by our Named Executives and the earnings accrued on all such contributions under the Company’s non-qualified Deferred Compensation Plan during the fiscal 2023.
| | | | | | | | | | | | | | | | | | | Name | Executive Contributions in Last Fiscal Year | Registrant Contributions in Last Fiscal Year | Aggregate Earnings (Losses) in Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End | | ($) | ($) | ($) (1) | ($) | ($) (2) | | David B. Foss | - | - | - | - | - | | Gregory R. Adelson | - | - | (37,562) | - | 617,633 | | Mimi L. Carsley | - | - | - | - | - | | Craig K. Morgan | - | - | - | - | - | | Stacey E. Zengel | - | - | - | - | - | | Kevin D. Williams | - | - | - | - | - |
(1)These amounts were not included in the Summary Compensation Table because plan earnings were not preferential or above market. (2)The executive contributions included in this column for Mr. Adelson relate to an award of performance shares that was granted to Mr. Adelson before he was a Named Executive and therefore were not previously reported in the Summary Compensation Table. Under the Company’s non-qualified Deferred Compensation Plan adopted in 2014, our Named Executives may voluntarily defer a portion of their compensation to one or more future years. While the plan allows the Company to offer deferral of all types of compensation, including salary, bonus and equity grants, to date the Company has only offered a program to defer receipt of equity compensation upon vesting of performance shares and restricted stock units. Dividends payable on the deferred shares are invested in the Jack Henry federal rate fund. Aggregate earnings (losses) represents stock price appreciation (or depreciation) on deferred shares, dividends, and interest paid on prior dividends. Performance shares and restricted stock units that are deferred under the Company’s Deferred Compensation Plan may be settled in stock or, at the option of the HC&C Committee, in cash.
Agreements with Executive Officers and Potential Payments upon Termination or Change in Control
The Named Executives would each receive certain payments and benefits in the event of certain types of termination of employment. In addition to the items discussed below, the Named Executives may be entitled to benefits that are generally available to all salaried Company employees, including distributions under the 401(k) plan, certain disability benefits, and accrued vacation. Because these payments or benefits do not discriminate in scope, terms, or operation in favor of the Named Executive, such payments and benefits are not included below. The following descriptions are qualified in their entirety by reference to the relevant agreements.
The Company has no employment contracts with any of its executive officers.
The Company has entered intoChange in Control Termination Benefits Agreements with
As of June 30, 2023, each of Messrs. Prim, Foss,the Named Executives, other than Mr. Williams, and Forbis.was a participant in the Severance Plan. Under these agreements,the Severance Plan, change in control is definedhas the meaning given it under the Company’s 2015 Equity Incentive Plan, which defines change in control as (i) an acquisition of 20% or more of the stock of the Company, termination of service of(ii) when individuals who make up the Board, or individuals who join the Board who were approved in advance by at lease a majority of the incumbent Board, cease to constitute at least a majority of the Board, (iii) consummation of a transaction where persons who were stockholders immediately prior to the transaction own 50% or less of the voting power after the transaction, (iv) consummation of a transaction where less than a majority of members of the resulting Board following the transaction were members of the Board during any two year period for reasons other than death, disabilitywho approved the transaction, or retirement,(v) approval by the stockholders of a liquidation of the Company or sale of 50%all or more of its assets, or approval by the stockholders of a merger or consolidation if the Company stockholders own less than 50%substantially all of the combined voting power of the resulting corporation.Company’s assets. The Termination Benefits Agreements provideSeverance Plan provides a lump sum cash payment severance benefit for the Chief Executive Officer equal to 200% of the executive’sChief Executive Officer’s annual salary plusand target bonus then in effect, with half payable in 12 monthly installmentsannual incentive bonus. The Severance Plan provides a lump sum cash payment severance benefit for the Named Executives other than the Chief Executive Officer equal to 150% of the Named Executive’s annual salary and halftarget annual incentive bonus. These cash benefits are paid in a lump sum atpayment within 60 days following the end of such 12 months.executive’s termination. In addition, all outstanding stock options and performance shares will fully vest, all restrictions on restricted stock will lapse and the terminated executiveNamed Executives will receive a lump sum prorated amount of target annual bonus for the current fiscal year and welfare benefit consisting of payments equal to COBRAthe cost of health insurancebenefit continuation premiums and continuation of coverage under the Company’s life insurance, disability, and dental plans for 18 months or until the executive becomes eligible for comparable benefits under a subsequent employer’s arrangements.months. The termination benefits under the Severance Plan will be paid only upon anya termination of the executiveNamed Executive by the Company without “Cause” or by the Named Executive for “Good Reason” (both as defined in the Severance Plan) during the 90 days prior to and the two years following any change in control unless(i.e., “double trigger”).
In order for a Named Executive to receive severance benefits under the termination occurs by reasonSeverance Plan, the Named Executive must execute and not revoke an effective release of claims and comply with a two-year post-employment non-competition covenant, a two-year post-employment customer and employee non-solicitation covenant, and a continuous non-disparagement covenant, as well as any other confidentiality agreements or other agreements between the executive’s death, disability, or ifNamed Executive and the termination is for cause. The termination benefits will also be paid if the executive terminates his employment afterCompany.
Upon a change in control, all unvested restricted stock units related to awards granted in fiscal 2022 or later that are not assumed, substituted, or replaced by the successor or surviving entity (or a parent or subsidiary thereof) in connection with
the change in control will become vested immediately prior to the change in control. Any unvested restricted stock units related to awards granted in fiscal 2022 or later that are assumed, substituted, or replaced by the successor or surviving entity (or a parent or subsidiary thereof) in connection with a change in control will remain outstanding and upon a qualified termination of the grantee 90 days prior to or 2 years after the change in control all such unvested restricted stock units will vest. Any unvested restricted stock units related to awards granted prior to fiscal 2022 will vest upon a qualified termination of the grantee 90 days prior to or 2 years after the change in control.
Upon a change in control, all performance shares automatically convert into time-based awards. The number of such converted shares for good reason,TSR-based awards shall equal the greater of the number of target shares for such asaward or the number of shares that would have vested based on actual TSR achievement if the change in control date were the measuring date for TSR measurement. The number of such converted shares for grants other than TSR-based awards shall equal the number of target shares for such award. If the surviving entity does not assume this award, or substitute or replace it with an award with substantially identical economic terms, then all shares shall vest in full. If the surviving entity does assume, substitute, or replace this award in connection with a material diminutionchange in authority, dutiescontrol, all such shares shall vest in full upon a qualified termination of the grantee 90 days prior to or responsibilities, a forced move, or a material diminution2 years after the change in annual salary. The Termination Benefits Agreements have no set term and will continue until terminated by agreement of both the parties.control.
The table below reflects the cash severance benefit payments and estimated welfare benefit payments that would be paid under the Termination Benefits AgreementsSeverance Plan, as if the triggering events occurred on June 30, 2017,2023, the last day of the last completed fiscal year. The table also shows the value as of June 30, 20172023, of all issued restricted stock units and performance shares and outstanding stock options with respect to which restrictions would lapse upon a change in control and termination. The below table assumes the performance shares vested at target rather than actual TSR achievement.
| | | | | | | | | | | | | | | | Name | Cash Payment Severance Benefit ($) | Welfare Benefit ($) | Equity Incentive Vesting ($) | Total ($) | | David B. Foss | 5,622,500 | 33,638 | 17,999,688 | 23,655,826 | | Gregory R. Adelson | 2,300,000 | 44,918 | 2,566,675 | 4,911,593 | | Mimi L. Carsley | 1,900,000 | 31,496 | 1,116,091 | 3,047,587 | | Craig K. Morgan | 1,612,500 | 42,063 | 1,360,226 | 3,014,788 | | Stacey E. Zengel | 1,053,250 | 44,918 | 756,164 | 1,854,332 |
Under the 2017 Annual Incentive Plan, the HC&C Committee, in its sole discretion, has the option to accelerate time periods for purposes of vesting in, or receiving payment with respect to, an incentive award in connection with a change in control. The 2017 Annual Incentive Plan defines change in control to include (i) an acquisition of more than 50% of the common stock or the voting power of the Company, (ii) certain changes to the composition of the Board resulting in incumbent directors no longer constituting a majority of the Board, (iii) certain mergers or sales of all or substantially all of the Company’s assets and (iv) stockholder approval of complete liquidation or dissolution of the Company.
Death, Disability, Retirement, Termination without Cause and Resignation for Good Reason
The Company entered into a Retention Agreement with Mr. Foss on January 1, 2020 (the “Retention Agreement”). In connection with the Retention Agreement, the Company granted Mr. Foss a time-based restricted stock unit award. These restricted stock units vest as follows: 10% on the first anniversary of the grant date, 20% on each of the second and third anniversaries of the grant date, and 50% on the fourth anniversary of the grant date, each based on continued service with the Company. Under this agreement, any of these unvested restricted stock units will fully vest in the event of Mr. Foss’ death or disability or if Mr. Foss’ employment with the Company ends due to termination by the Company without cause or due to Mr. Foss’ resignation with good reason. If Mr. Foss’ employment with the Company ends due to termination by the Company with cause or due to his resignation without good reason, no unvested restricted stock units will vest and all such remaining unvested restricted stock units will be forfeited.
The following table summarizes the benefits due to Mr. Foss upon his death, disability, termination without cause or resignation with good reason under the restricted stock unit awards granted under the Retention Agreement (in each case assuming his death, disability, termination without cause, or resignation with good reason occurred on June 30, 2023).
| | | | |
Name | Cash Payment |
Welfare Benefit ($) | LTIP Restricted | | Severance Benefit ($) | Stock Vesting ($) | | John F. Prim | 1,240,000 | 26,207 | 10,167,315 | | David B. Foss | 2,160,000 | 46,589 | 6,933,400 | | Kevin D. Williams | 1,530,000 | 49,559 | 3,752,096 | | Mark S. Forbis | 975,000 | 25,021 | 1,634,810 |
| | | | | | | Name | Restricted Stock Unit Vesting (1) ($) | | David B. Foss | 2,297,441 |
(1)These calculations represent the value of unvested restricted stock unit awards at June 30, 2023 based on the closing share price at that date that would become vested upon Mr. Foss’ death, disability, termination without cause, or resignation with good reason.
The Severance Plan provides that each Named Executive who is terminated by the Company without “Cause” or who terminates their employment for “Good Reason” (both as defined in the Severance Plan) not in connection with a change in control, shall receive severance payments equal to two times the sum of current annual base salary for the Chief Executive Officer, paid ratably over two years, and one and a half times the annual base salary for other Named Executives, paid ratably over one and a half years. The Named Executives also receive a prorated amount of the annual bonus the Named Executive would have received for the current performance year had the Named Executive remained employed through the end of such performance year, paid in a single lump sum at the same time as annual bonus payments are made to active annual bonus participants for such performance year. In addition, the Named Executives receive a lump sum welfare benefit equal to the cost of health benefit continuation premiums for 18 months.
In order for a Named Executive to receive severance benefits under the Severance Plan, the Named Executive must execute and not revoke an effective release of claims and comply with a two-year post-employment non-competition covenant, a two-year post-employment customer and employee non-solicitation covenant, and a continuous non-disparagement covenant, as well as any other confidentiality agreements or other agreements between the Named Executive and the Company.
The table below reflects the cash severance benefit payments and estimated welfare benefit payments that would be paid under the Severance Plan, as if the triggering events occurred on June 30, 2023, the last day of the last completed fiscal year, and as if the Severance Plan were in effect on that day.
| | | | | | | | | | | | | Name | Cash Payment Severance Benefit ($) | Welfare Benefit ($) | Total ($) | | David B. Foss | 3,027,500 | 33,638 | 3,061,138 | | Gregory R. Adelson | 1,437,500 | 44,918 | 1,482,418 | | Mimi L. Carsley | 1,187,500 | 31,496 | 1,218,996 | | Craig K. Morgan | 1,032,000 | 42,063 | 1,074,063 | | Stacey E. Zengel | 766,000 | 44,918 | 810,918 |
Performance shares contain terms which allow for the pro-rata vesting of awards upon a Named Executive’s death, disability, or retirement based on full months of service following the grant date. Retirement is defined in the performance share awards as termination with the stated purpose of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. With respect to a Named Executive’s death, disability, or retirement during the term, at the end of the three-year term of the grant, the award will be calculated and a pro-rata portion will be settled to the grantee based on completed full months of service. For example, if an eligible grantee dies, becomes disabled, or retires 18 months after the start of the fiscal year for which the award was granted, he or she would be credited with 18 months of service and would be entitled to one-half of any amount that vests on performance measured at the end of the three-year grant.
The following table summarizes the severance benefits due to the Named Executives upon their death, disability, or retirement under their applicable performance share award agreements (in each case assuming their death, disability or retirement occurred on June 30, 2023). As of June 30, 2023, only Mr. Foss and Mr. Zengel were eligible for retirement under the performance share award definition.
| | | | | | | Name | Performance Share Vesting (1) ($) | | David B. Foss | 7,027,916 | | Gregory R. Adelson | 1,124,346 | | Mimi L. Carsley | 152,772 | | Craig K. Morgan | 540,755 | | Stacey E. Zengel | 343,696 |
(1)These calculations represent the value of unvested performance share awards at June 30, 2023 based on the closing share price at that date that would become vested upon their death, disability, or retirement (if eligible) and assumes the TSR and other performance metrics were at target.
Mr. Williams stepped down as Chief Financial Officer and Treasurer and as an executive officer effective September 1, 2022. He retired from the Company on October 4, 2022. Mr. Williams’ departure qualified for the definition of retirement under his performance share awards. He was credited with 27 months of service for the performance share award granted on August 3, 2020 (the “FY21 PSU”). As set forth in Compensation Discussion and Analysis on page 28 above, the FY21 PSU was composed of two separate performance share grants, each of which vested on June 30, 2023 based on the Company’s TSR in comparison with the S&P 1500 IT Index and the 2021 Compensation Peer Group. The performance share grant compared against the S&P IT Index resulted in a 0% payout against a Named Executive’s target shares vesting. The performance share grant compared against the 2021 Compensation Peer Group resulted in a 51.25% payout against a Named Executive’s target shares vesting. Mr. Williams received 665 shares of Company common stock for settlement of the FY21 PSU in August 2023, which represented the 27/36 ratio for which he qualified based on his months of service.
Mr. Williams will be credited with 15 months of service for the performance share award granted on August 4, 2021 (the “FY22 PSU”), which will be issued, based on achievement, in 2024. The following table summarizes the benefits due to Mr. Williams under the FY22 PSU.
| | | | | | | Name | Performance Share Vesting (1) ($) | | Kevin D. Williams | 407,281 |
(1)This calculation represents the value of Mr. Williams’ FY22 PSUs based on the closing share price at June 30, 2023 that vested upon his retirement and assumes the TSR and other performance metrics will be at target.
Restricted stock units awarded in fiscal 2021 contain terms which allow for the pro-rata vesting of the current-year’s one-third unvested award upon a Named Executive’s retirement, provided that if grantee’s retirement results in grantee being employed for less than 75% of the current award year that no vesting will occur. For this purpose, retirement is defined as termination with the express reason of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. Any unvested restricted stock units not scheduled for vesting in the current award year are forfeited.
Restricted stock units awarded in fiscal 2022 and later contain terms which allow for continued vesting in accordance with the vesting schedule of all unvested awards upon a Named Executive’s retirement. For this purpose, retirement is defined as termination with the express reason of retirement, for which the grantee has provided the Company at least six months’ prior notice and occurs (1) on or after the age of 55 and following a minimum number of years of employment with the Company such that the grantee’s age plus the number of full years of employment with the Company equals or exceeds 72, or (2) on or after age 65. The grantee must also remain actively employed as a full-time employee for six months following the date of the award to qualify for such continued vesting. Further, the grantee must abide by certain restrictive covenants, including non-competition, non-solicit, and non-disparagement covenants. Any breach of such restricted covenants will result in a forfeiture of all remaining non-settled awards.
The following table summarizes the severance benefits due to the Named Executives upon their retirement under their applicable restricted stock unit award agreements (in each case assuming their retirement occurred on June 30, 2023). As of June 30, 2023, only Mr. Foss and Mr. Zengel were eligible for retirement.
| | | | | | | Name | Restricted Stock Unit Vesting (1) ($) | | David B. Foss | 4,884,913 | | Stacey E. Zengel | 233,366 |
(1)These calculations represent the value of unvested restricted stock unit awards at June 30, 2023 based on the closing share price at that date that would become vested upon retirement (if eligible) or would continue to vest following retirement assuming ongoing compliance with restrictive covenants.
Mr. Williams stepped down as Chief Financial Officer and Treasurer and as an executive officer effective September 1, 2022. He retired from the Company on October 4, 2022. On the date of his retirement, Mr. Williams did not qualify for the definition of retirement for the outstanding restricted unit awards granted in fiscal 2021 (resulting in a forfeiture of all non-settled restricted stock units under that award), but he did qualify for the definition of retirement for the restricted stock units granted in fiscal 2022 (the “FY22 RSU”). Mr. Williams will receive continued vesting for the FY22 RSU in accordance with the vesting schedule of all unvested restricted stock units. He is subject to certain restrictive covenants under the FY22 RSU and any breach of these restricted covenants will result in a forfeiture of all remaining non-settled awards.
The following table summarizes the benefits due to Mr. Williams under the FY22 RSU.
| | | | | | | Name | Restricted Stock Unit Vesting (1) ($) | | Kevin D. Williams | 434,389 |
(1)These calculations represent the value of Mr. Williams’ FY22 RSU at June 30, 2023 based on the closing share price at that date that will continue to vest following Mr. Williams’ retirement assuming ongoing compliance with restrictive covenants.
Under Mr. Foss’ stock option agreement, upon his disability or death, Mr. Foss (or his estate) would have up to one year to exercise any vested options, but in no event beyond the expiration date. Upon resignation or termination not for cause, Mr. Foss would have up to 90 days to exercise any vested options, but in no event beyond the expiration date.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of June 30, 20172023 with respect to the Company’s equity compensation plans under which our Common Stock is authorized for issuance:
| | | | | | | | | | | | | | | | | | | | | | | | | Equity Compensation Plans approved by security holders: | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities in the first column of this table) | | 2005 Restricted Stock Plan | 6,935 | | | (2) | — | — | | 2015 Equity Incentive Plan | 433,377 | | | (3) | $87.27 | 2,234,622 | | | 2006 Employee Stock Purchase Plan | — | | (4) | — | 986,118 | |
(1)The weighted average exercise price does not take into account deferred shares that have been allocated to participants’ bookkeeping accounts under the 2005 Restricted Stock Plan or the 2015 Equity Incentive Plan or the shares issuable upon vesting of outstanding awards of restricted stock units or performance shares, which have no exercise price.
| | | | |
Equity Compensation Plans approved by security holders: | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights (1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities in the first column of this table) | | 2005 Restricted Stock Plan | 439,242 (2) | 0 | 0 | | 2005 Non-Qualified Stock Option Plan (Non-employee Directors) | 40,000 | $20.55 | 0 | | 2015 Equity Incentive Plan | 227,786 (3) | $87.27 | 2,744,739 |
| | (1) | The weighted average exercise price does not take into account the shares issuable upon vesting of outstanding awards of restricted stock units or performance shares, which have no exercise price. |
| | (2) | This number includes the following: 4,664 shares subject to outstanding time-vesting restricted stock unit awards and 434,578 shares subject to outstanding performance-vesting restricted stock unit awards. The share number for time-vesting restricted stock units and performance-vesting restricted stock unit awards represents the maximum amount of shares that may be awarded if the Company meets its best case performance targets. All awards were granted under the 2005 Restricted Stock Plan. |
| | (3) | This number includes the following: 31,685 shares subject to outstanding stock options, 47,766 shares subject to outstanding time-vesting restricted stock unit awards and 148,335 shares subject to outstanding performance-vesting restricted stock unit awards. The share number for time-vesting restricted stock units and performance-vesting restricted stock units awards represents the maximum amount of shares that may be awarded if the Company meets its best-case performance targets. All awards were granted under the 2015 Equity Incentive Plan. |
(2)This number includes the following: 2,239 shares related to time-vested restricted stock unit awards that are deferred and have been allocated to participants’ bookkeeping accounts under the 2005 Restricted Stock Plan. Also included are 4,696 shares related to performance-vested unit awards that are deferred and have been allocated to participants’ bookkeeping accounts under the 2005 Restricted Stock Plan. All awards were granted under the 2005 Restricted Stock Plan.
(3)This number includes the following: 11,685 outstanding stock options, 174,116 outstanding time-vested restricted stock unit awards that include 9,522 vested and deferred shares that have been allocated to participants’ bookkeeping accounts under the 2015 Equity Incentive Plan, and 247,576 outstanding performance-vested unit awards that include 4,144 vested and deferred shares that have been allocated to participants’ bookkeeping accounts under the 2015 Equity Incentive Plan. The share number for outstanding time-vested restricted stock units and outstanding performance-vested unit awards represents the maximum number of shares that may be awarded if the Company meets its best-case performance targets. All awards were granted under the 2015 Equity Incentive Plan.
(4)The maximum number of shares subject to purchase rights under the 2006 Employee Stock Purchase Plan (“ESPP”) is a function of stock price and total employee contributions. As such, we cannot reasonably determine the number of shares subject to purchase rights as of June 30, 2023, and so this number does not include shares issuable pursuant to rights outstanding under the ESPP.
PAY RATIO DISCLOSURE
Our compensation and benefits philosophy and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. Compensation rates are benchmarked based on job level and responsibilities and are set to be market-competitive in the location in which the jobs are performed. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop, and contribute. We employ approximately 7,100 people in the U.S. at 27 Company locations with a majority of our employees working from remote locations.
Under rules adopted pursuant to the Dodd-Frank Act of 2010, Jack Henry is required to calculate and disclose the total compensation paid to its median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to David Foss, our Chief Executive Officer, during the fiscal year ended June 30, 2023.
To determine the median employee, we identified our employee population as of June 30, 2023. This population consisted of 7,114 employees. We are required to identify the median employee using a “consistently applied compensation measure” (“CACM”). We chose a CACM of calculating the actual base salary earnings (or base wages for hourly employees, which is exclusive of overtime wages) and annual bonus during the fiscal year across the employee population, excluding our Chief Executive Officer. We believe actual base salary earnings (or base wages for hourly employees, which is exclusive of overtime wages) and annual bonus is a reasonable basis on which to identify the median employee because those employees who receive commissions, equity awards, or overtime pay represent a relatively small portion of our employee population. After identifying our median employee based on actual base salary earnings and annual bonus, we then calculated the annual total compensation for this employee using the same methodology we use for our Named Executives as set forth in the fiscal 2023 Summary Compensation Table included in this Proxy Statement. Based on this calculation, this median employee’s annual total compensation for fiscal 2023 was $84,531. The annual total compensation of the Chief Executive Officer for fiscal 2023 (as set forth in the Summary Compensation Table on page 42) was $10,439,026 resulting in a pay ratio of 123 to one.
PAY VERSUS PERFORMANCE
The below disclosure provides information regarding the Company’s performance and the “compensation actually paid” (“CAP”) to our principle executive officer (“PEO”) and our other non-PEO Named Executives (collectively, the “Other NEOs”) in accordance with the SEC’s pay versus performance rules in Item 402(v) of Regulation S-K. For a discussion of the Company’s philosophy and objectives for executive compensation, please review the Compensation Discussion and Analysis beginning on page 26.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | Year | Summary Compensation Table Total for PEO
($) (1) | Compensation Actually Paid to PEO
($) (2) | Average Summary Compensation Table Total for Non-PEO Named Executives Officers
($) (3) | Average Compensation Actually Paid to Non-PEO Named Executives Officers
($) (4) | Value of Initial Fixed $100 Investment on June 30, 2020 Based on | Net Income
(in thousands)
($) | Adjusted Operating Income
(in thousands)
($) (6) | Total Shareholder Return
($) (5) | Peer Group Total Shareholder Return
($) (5) | | 2023 | 10,439,026 | 4,308,412 | 1,535,887 | 553,341 | 94.07 | 144.74 | 366,646 | 477,503 | | 2022 | 9,758,392 | 15,054,940 | 1,679,606 | 2,269,083 | 100.03 | 111.53 | 362,916 | 454,111 | | 2021 | 8,692,656 | (392,735) | 1,595,708 | 342,431 | 89.86 | 133.46 | 311,469 | 407,286 |
(1)Mr. Foss was the Company’s PEO for fiscal years 2021, 2022, and 2023. (2)The below table provides the adjustments required by SEC rules to calculate CAP amounts from the Summary Compensation Table (“SCT”) Total of our PEO. SCT Total and CAP amounts do not reflect the actual amount of
compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v) of Regulation S-K.
Calculation of Compensation Actually Paid to PEO
| | | | | | | | | | | | | 2023 | 2022 | 2021 | | Summary Compensation Table Total | $10,439,026 | $9,758,392 | $8,692,656 | | (Deduct): Amount reported for stock and option awards in SCT Total for the covered fiscal year | (8,571,735) | (7,557,777) | (6,447,156) | | Add: Fair value at fiscal year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 5,964,481 | 8,685,477 | 4,389,636 | | Add (Deduct): Year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | (1,294,656) | 1,941,564 | (3,169,451) | | Add (Deduct): Change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | (2,228,704) | 2,227,284 | (3,858,419) | | (Deduct): Fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | — | — | — | | CAP Amounts (as calculated) | $4,308,412 | $15,054,940 | $(392,735) |
The fair value of the equity awards was calculated in the same manner as the Company uses to calculate the grant date fair value of the awards, but with updated assumption values as of the measurement date. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2023. (3)The dollar amounts reported are the average amounts of total compensation reported for the Other NEOs for each corresponding year in the “Total” column of the SCT. For each of fiscal 2023, 2022, and 2021, the Other NEOs were as follows: •Fiscal 2023: Gregory R. Adelson, Mimi L. Carsley, Craig K. Morgan, Stacey E. Zengel, and Kevin D. Williams •Fiscal 2022: Kevin D. Williams, Gregory R. Adelson, Craig K. Morgan, Stacey E. Zengel, and Teddy I. Bilke •Fiscal 2021: Kevin D. Williams, Gregory R. Adelson, Craig K. Morgan, and Teddy I. Bilke (4)The below table provides the adjustments required by SEC rules to calculate the average CAP amount from the SCT Total of our Other NEOs. SCT Total and CAP amounts do not reflect the actual amount of compensation earned by or paid to our executives during the applicable years, but rather are amounts determined in accordance with Item 402(v) of Regulation S-K.
Calculation of Average Compensation Actually Paid to Other NEOs
| | | | | | | | | | | | | 2023 | 2022 | 2021 | | Average Summary Compensation Table Total | 1,535,887 | 1,679,606 | 1,595,708 | | (Deduct): Average amount reported for stock and option awards in SCT Total for the covered fiscal year | (866,956) | (892,433) | (745,656) | | Add: Average fair value at fiscal year end of awards granted during the covered fiscal year that were outstanding and unvested at the covered fiscal year end | 617,691 | 1,025,592 | 507,689 | | Add (Deduct): Average year-over-year change in fair value at covered fiscal year end of awards granted in any prior fiscal year that were outstanding and unvested at the covered fiscal year end | (291,438) | 174,528 | (406,496) | | Add (Deduct): Average change as of the vesting date (from the end of the prior fiscal year) in fair value of awards granted in any prior fiscal year for which vesting conditions were satisfied during the covered fiscal year | (208,992) | 281,790 | (608,813) | | (Deduct): Average fair value at end of prior fiscal year of awards granted in any prior fiscal year that failed to meet the applicable vesting conditions during the covered fiscal year | (232,852) | — | — | | Average CAP Amounts (as calculated) | 553,341 | 2,269,083 | 342,431 |
The fair value of the equity awards was calculated in the same manner as the Company uses to calculate the grant date fair value of the awards, but with updated assumption values as of the measurement date. Information about the assumptions used to determine the grant date fair value of the equity awards is set forth in our Annual Report on Form 10-K in Note 10 to our consolidated financial statements for the year ended June 30, 2023. (5)Total Shareholder Return (“TSR”) represents the cumulative TSR for the measurement period beginning on June 30, 2020 of each fiscal year 2021, 2022, and 2023, respectively, assuming the value of the investment including reinvestment of dividends was $100. The TSR Peer Group consists of the S&P 1500 Software and Services Index, which is used for our Stock Performance presentation set forth in our Annual Report on Form 10-K for the year ended June 30, 2023. (6)Our Company-Selected Measure is adjusted operating income (see page 32 in the Compensation Discussion and Analysis for a discussion of this metric in executive compensation design). Adjusted operating income is a non-GAAP financial measure that excludes or has otherwise been adjusted for the impact of deconversion fees and corporate bonuses that are dependent on achievement of certain operating income performance levels in the fiscal year.
Financial Performance Measures
In the Company’s assessment, the following represent the most important performance measures used to link CAP for our Named Executives to Company performance for fiscal 2023:
•adjusted operating income •relative total shareholder return •organic revenue CAGR •non-GAAP operating margin expansion
See “Compensation Discussion and Analysis” beginning on page 26 for a discussion of how the Company calculates these performance measures.
Relationship Between Compensation Actually Paid and Performance
The below graphs show the relationship of “compensation actually paid” to our PEO and Other NEOs to (a) the TSR of both the Company and the S&P 1500 Software and Services Index, (b) the Company’s net income, and (c) the Company’s adjusted operating income.
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION
As required by Section 14A of the Securities Exchange Act, we include in this proxy statement this proposal for a non- binding stockholder vote on compensation of the officers named in the Summary Compensation Table on page 28.our Named Executives. We currently conduct annual advisory votes on executive compensation, and we expect to conduct the next advisory vote at our 2017 Annual Meeting of Stockholders.compensation. With this year’s “say on pay” proposal you can elect to endorse or not endorse our executive compensation programs and policies and the compensation we paid our Named Executives in fiscal 2017.2023.
The say on pay vote is advisory and not binding on the Company, the Human Capital & Compensation Committee, or the Board of Directors.Board. However, the Human Capital & Compensation Committee and the Board of Directors value the opinions of our stockholders and will consider the outcome of the vote when making future decisions regarding executive compensation.
As described in the Compensation Discussion and Analysis, the Human Capital & Compensation Committee has designed the executive compensation program to focus the executives on achieving consistent earnings growth, encourage continuation of the Company’s entrepreneurial spirit, attract and retain highly qualified and motivated executives, reward the creation of stockholder value, encourage esprit de corps, and reward outstanding performance. In designing the overall executive compensation program, the Company’s Human Capital & Compensation Committee strives for the interests of management and stockholders to be the same – same—the maximization of stockholder value.
Our executive compensation package for our Named Executives includes both cash and equity-based compensation, with an emphasis on at-risk and performance-based pay. The Human Capital & Compensation Committee each year reviews and updates our executive compensation program to ensure they achieveit achieves the desired goals.
The Board of Directors believes that the compensation of the Named Executives is appropriate and effective in achieving the Company’s objectives. Accordingly, the Board of Directors recommends that you vote to approve, on an advisory basis, the following resolution:
“RESOLVED, that the compensation paid to the Named Executives, as disclosed in the Company’s Proxy Statement for the 20172023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure, is hereby approved.”
Approval of the advisory vote on executive compensation requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy and entitled to vote. For purposes of determining the vote regarding this proposal, abstentions will have the same impact as a no vote. Unless you specify otherwise in your proxy, the persons you have appointed will vote your shares “For” approval of the above-described resolution.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVES. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVES UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A VOTE OF “AGAINST” OR “ABSTAIN”.
PROPOSAL 3 ADVISORY VOTE ON THE FREQUENCY OF AN ADVISORY VOTE ON EXECUTIVE COMPENSATION
The Dodd-Frank Act also enables our stockholdersIn addition to indicatethe advisory vote to approve executive compensation, we are seeking a non-binding stockholder vote on how frequently we should seek an advisory vote on the compensation of our executives named in the Summary Compensation Table. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on executive officer compensation once every one, two, or three years. When this advisory vote was last held in 2017, stockholders indicated a preference to hold the advisory vote to approve executive compensation on an annual basis, and the Board implemented this standard.
After careful consideration, theThe Board of Directors has determinedcontinues to believe that an advisory vote on executive compensation that occurs every year (annual) is the most appropriate alternativeoption for the Company, and therefore, the Board of Directors recommends that you vote for a one-year interval for the advisory vote on executive compensation.
Stockholders who have concerns about executive compensation during the interval between “say-on-pay” votes are welcome to bring their specific concerns to the attention of the Board of Directors at any time, by mail, telephone or email. Information on how to contact the Board of Directors can be found on page 11 of this Proxy Statement under the heading “Communication with the Board.”
The proxy cardProxy Card provides stockholders with the opportunity to choose among four advisory options (holding the vote every one, two or three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the Board of Directors’ recommendation. You may cast your advisory vote by choosing the option of one year, two years, three years, or abstaining from voting in response to the resolution set forth below:
“RESOLVED, that the option of one year, two years, or three years that receives the vote of the holders of a plurality of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter for this resolution will be determined to be the stockholders’ preferred frequency with which the Company is to hold an advisory vote by stockholders to approve the compensation paid to the Company’s Named Executives, as disclosed in the Company’s proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables, and narrative disclosure.”
The option of one year, two years, or three years, if any, that receives the approval by the affirmative vote of the holders of a plurality of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter will be the frequency of the vote on the compensation of our Named Executives that has been approved
by stockholders on an advisory basis. Although this advisory vote on the frequency of the “say-on-pay” vote is non-binding, the Board of Directors and the Human Capital & Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE ON PROPOSAL 3 TO HOLD FUTURE SAY ON PAY VOTES EVERY YEAR ON AN ADVISORY, NON-BINDING BASIS. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR HOLDING THE VOTE EVERY YEAR UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A VOTE IN FAVOR OF HOLDING THE VOTE EVERY TWO YEARS OR EVERY THREE YEARS OR “ABSTAIN”.“ABSTAIN.”
PROPOSAL 4 APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S ANNUAL INCENTIVE PLAN
Introduction
Subject to stockholder approval at the 2017 Annual Meeting, the Company’s Board of Directors, on the recommendation of the Compensation Committee, has unanimously approved the amendment and restatement of the Jack Henry & Associates, Inc. Annual Incentive Plan (the “Plan”) and the Performance Criteria set out in the Plan. A copy of the Plan is included in this proxy statement as Exhibit A. The reason for seeking stockholder approval of the Plan is to satisfy requirements of the Internal Revenue Code of 1986, as amended (the “Code”), which require stockholder approval in order for the awards under the Plan to satisfy conditions of Code Section 162(m) applicable to performance-based compensation (referred to as “Code Section 162(m) Awards”). Although there can be no assurance that all Code Section 162(m) Awards will satisfy all of the necessary requirements, it is the intent of the Company that the Plan and any Code Section 162(m) Awards granted under the Plan satisfy the applicable requirements of Code Section 162(m). The Plan does not preclude a participant who is a covered employee within the meaning of Code Section 162(m) from receiving an award that is not a Code Section 162(m) Award. The Plan replaces the Company’s 2012 Annual Incentive Plan which was approved at the 2012 annual meeting of stockholders.
The Plan was effective as of September 1, 2017 (referred to as the “Effective Date”). However, no award under the Plan which is intended to be a Code Section 162(m) Award will be payable to a covered employee within the meaning of Code Section 162(m) until the Plan has been approved by the stockholders.
Material Terms of the Performance Goals
Under Code Section 162(m), the material terms of the performance goals under the Plan and applicable to Code Section 162(m) Awards that must be approved are (1) the class of employees eligible to receive compensation upon achievement of performance goals applicable to the Code Section 162(m) Awards under the Plan; (2) the business criteria on which such performance goals may be based; and (3) the maximum amount that may be paid to any employee upon achievement of the performance goals applicable to an award under the Plan. Each of these is addressed below.
Eligible Class
All present and future employees, including executive officers, of the Company or any of its affiliates will be eligible to receive awards under the Plan. The Compensation Committee will from time to time select which employees will participate in the Plan. Status as an employee eligible to receive awards under the Plan will not be construed as a commitment that any award will be made under the Plan to such eligible employee. Nothing contained in the Plan or in any award confers upon any participant any right to continue in the employ or other service of the Company or its affiliates or limit in any way the right of the Company or its affiliates to change such person’s compensation or other benefits. As of September 1, 2017, approximately 325 employees were participants in the Plan. Included within the group of individuals eligible to receive awards under the Plan are all of the Named Executives listed in the Summary Compensation Table of this proxy statement.
Performance Criteria
By approving the Plan, stockholders are also approving the material terms of the performance criteria, upon which the Compensation Committee may issue Code Section 162(m) Awards that qualify as “performance-based” compensation for purposes of Code Section 162(m) (the “Performance Criteria”). The Compensation Committee selects Performance Criteria (to be determined either in the aggregate or on a per-share basis, pre-tax or post-tax basis, individually, or in any combination and either on a consolidated basis, or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combination thereof) from any of the following criteria set forth below. These Performance Criteria may be expressed as whole dollar amount(s), percentage(s) or growth rate(s) relating to any of the following:
| | (i) | Sales goals, including gross sales or net sales; |
| | (ii) | Income measures, including operating income, gross income, net income, pretax income, or pretax income before allocation of corporate overhead and bonuses; |
| | (iii) | Budget related goals; |
| | (v) | Cash flow returns, including cash flow from operations and cash flow returns on invested capital, |
| | (vi) | Earnings goals, including earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; |
| | (viii) | Capital expenditures; |
| | (ix) | Credit quality or debt ratings; |
| | (x) | Return measures, including return on assets, average assets, net assets, investment capital, gross margin return, returns on equity or sales, shareholder return, total shareholder return, and shareholder return on equity; |
| | (xi) | Productivity measures, including economic value-added models or equivalent metrics; |
| | (xii) | Customer-related goals, including customer acquisition, expansion, retention, or satisfaction goals (whether measured internally, or by independent or other customer surveys); |
| | (xiii) | Employee related goals, including employee satisfaction (as measured by employee surveys), recruiting, turnover and retention; |
| | (xiv) | Achievement of acquisitions or divestitures (in whole or in part); |
| | (xv) | Production volume levels; |
| | (xvi) | Preservation of Company or shareholder value during adverse business conditions; |
| | (xvii) | Internal control achievement or improvement; |
| | (xviii) | Insurance renewal goals (premium savings, coverage improvement or bid improvement); |
| | (xix) | Payroll as a percentage of sales; |
| | (xx) | Expense management or reduction; |
| | (xxi) | Completion or attainment of measurable objectives with respect to research, development, commercialization, products, projects, or strategic and operational initiatives; |
| | (xxii) | Product implementation or installation, including new product, updated product or existing product implementation or installation; or |
Maximum Payments
The aggregate maximum amount payable under the Plan to any participant in any Plan year will be the lesser of 300% of the participant’s base salary or $2,000,000.
GENERAL DESCRIPTION OF THE PLAN
Set forth below is a summary of the material terms of the Plan. This summary is not intended to be complete and is qualified in its entirety by the detailed provisions of the Plan attached to this proxy statement as Exhibit A. Capitalized terms have the meanings assigned to them in the Plan.
Purpose of the Plan
The purpose of the Plan is to provide an annual performance based incentive for employees who are in a position to contribute materially to the success of the Company and its affiliates. The Compensation Committee and the Board believe that the Company will significantly benefit from having the Company’s employees receive cash bonus awards under the Plan. The Company’s success depends, in large measure, on its ability to attract and reward talented employees with outstanding abilities and experience. To achieve this objective, the Board adopted the Plan as a tool to attract, retain and motivate key employees to use their best efforts in performing their respective duties and obligations at the Company.
Awards and Performance Criteria
An award under the Plan entitles a participant to receive an amount in cash depending upon the level of performance goal achievement as set forth in the Plan award. For all awards other than Code Section 162(m) Awards, the Compensation Committee may select Performance Criteria based on any other performance metric it so chooses. The Performance Criteria from which the Compensation Committee may select for Code Section 162(m) Awards are listed above.
The Compensation Committee will establish the performance goals (i.e., one or more levels of performance as to each Performance Criteria selected by the Compensation Committee) for the Company and the participants, as applicable, with respect to each specified performance period. Generally, all performance periods will be the Company’s fiscal year. The Compensation Committee will also determine the extent to which each applicable Performance Criteria will be weighted in determining awards. The Compensation Committee may vary the Performance Criteria, performance goals and weightings from participant to participant, award to award and performance period to performance period. Except as the Compensation Committee otherwise determines and subject to the provisions of the Plan, with respect to all Code Section 162(m) Awards, all Performance Criteria and performance goals will be established not later than 90 days after the commencement of the applicable performance period (or, in the case of a performance period of less than 12 months’ duration, not later than by the end of the first 25% of such period).
The Compensation Committee will establish for each participant the amount payable at specified levels of performance, based on the performance goal for each applicable Performance Criteria and the weighting established for such criteria. All such determinations regarding the achievement of any performance goals will be made by the Compensation Committee; provided, however, with respect to any Code Section 162(m) Award, the Compensation Committee may not increase during a performance period the amount of such award that would otherwise be payable upon achievement of the performance goal or goals.
Awards will be paid, in a lump sum cash payment, as soon as practicable during the first fiscal year that begins after the close of the performance period for which they are earned, but in no event later than the 75th day after the end of such fiscal year;
provided, however, that no Code Section 162(m) Awards will be paid except to the extent that the Compensation Committee has certified in writing that the performance goals have been met.
An award will not be assignable or transferable by the participant except by will or by the laws of descent and distribution. The Compensation Committee will have the right to allow participants to elect to defer the payment of awards subject to such terms and conditions as the Compensation Committee may determine; provided, however, that the participants’ election to defer the payment of awards complies with Code Section 409A and Treasury Regulations, Rulings and Notices of the IRS, including, but not limited to, the requirement that the election to defer such payment is made before the first day of the taxable year during which the participants’ services are performed or such other date as is permitted under Code Section 409A.
Administration
The Plan generally will be administered by the Compensation Committee comprised of not less than two members who each qualifies as an “outside director” within the meaning of Code Section 162(m) and the regulations thereunder. The Compensation Committee will have general authority to impose any limitation or condition upon an award the Compensation Committee deems appropriate to achieve the objectives of the award and the Plan.
The Compensation Committee will have the power and complete discretion to determine (i) which employees will receive an award and the nature of the award, (ii) the amount of each award, (iii) the time or times when an award will be granted, (iv) the terms and conditions applicable to awards, and (v) any additional requirements relating to awards that the Compensation Committee deems appropriate.
The Compensation Committee will be entitled to make non-uniform and selective determinations and to establish non- uniform and selective Performance Criteria, performance goals and the weightings thereof.
The Compensation Committee may adopt rules and regulations for carrying out the Plan. The interpretation and construction of any provision of the Plan by the Compensation Committee will be final and conclusive.
Change in Control
In the event of a Change in Control (as defined in the Plan), in addition to any action required or authorized by an award, the Compensation Committee may, in its sole discretion, take any of the following actions as a result, or in anticipation, of any such event to assure fair and equitable treatment of participants: (a) accelerate time periods for purposes of vesting in, or, except in the case of deferred payments of awards, receiving any payment with regard to, any outstanding award; (b) make adjustments or modifications to outstanding awards as the Compensation Committee deems appropriate to maintain and protect the rights and interests of participants following such Change in Control; or (c) terminate the Plan. Any such action approved by the Compensation Committee will be conclusive and binding on the Company and all participants.
Termination and Amendment
If not sooner terminated by the Board, no Code Section 162(m) Award can be granted under the Plan after the Company’s first stockholder meeting in 2022. The Board may terminate the Plan or may amend the Plan in such respects as it will deem advisable; provided that, if and to the extent required by the Code, no change will be made that changes the Performance Criteria, or increases the maximum potential benefits for participants under the Plan, unless such change is authorized by the stockholders of the Company. The Board may unilaterally amend the Plan and awards as it deems appropriate to cause awards to meet the requirements of Code Section 162(m) and regulations thereunder. Except as provided in the preceding sentence, a termination or amendment of the Plan will not, without the consent of the participant, adversely affect, in any material respect, a participant’s rights under an award previously granted to such participant.
Summary of U.S. Federal Income Tax Consequences and Deductibility of Executive Compensation
The material terms of the performance goals under the Code Section 162(m) Awards. Under Code Section 162(m), the Compensation Committee must be comprised solely of two or more outside directors. A participant will realize ordinary income
upon payment of an award under the Plan. Generally, whenever a participant realizes ordinary income under the Plan, a corresponding deduction is available to the Company provided the Company complies with certain reporting requirements. Under Code Section 162(m), the Company’s tax deduction may be limited to the extent total compensation paid to the Chief Executive Officer, or any of the three most highly compensated executive officers (other than the Chief Financial Officer) exceeds $1 million in any one tax year. The deduction limit does not apply to payments that qualify as “performance-based compensation” provided certain requirements are met, including those requirements (described above) that the Company stockholders approve.
Our objective is to maximize the deductibility of compensation under Code Section 162(m) to the extent doing so is reasonable and consistent with the Company’s strategies and goals. The Company believes, however, that stockholder interests are best served by not restricting the Compensation Committee’s discretion and flexibility in structuring compensation programs, even though those programs may result in certain non-deductible compensation expenses. Accordingly, the Compensation Committee may from time to time approve compensation that is not deductible under Code Section 162(m). Moreover, because of the uncertainties associated with the application and interpretation of Code Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Code Section 162(m) will in fact be deductible.
New Plan Benefits
The Compensation Committee announced potential fiscal 2018 awards under the Plan on July 26, 2017 to Messrs. Foss, Williams and Forbis and on September 6, 2017 to Mr. Morgan, subject to stockholder approval of the new Plan and its Performance Criteria. The following table sets forth information regarding potential new plan benefits that may be received pursuant to the Plan for those awards.
| | | | | Name and Position | Dollar Value (1)
|
| David B. Foss, President and Chief Executive Officer and | $0 - $1,400,000 |
| Kevin D. Williams, Chief Financial Officer and Treasurer | $0 - $744,000 |
| Mark S. Forbis, Vice President and Chief Technology Officer | $0 - $360,000 |
| Craig K. Morgan, General Counsel and Secretary | $0 - $177,000 |
| All Executive Officers as a Group | $0 - $2,681,000 |
| Non-Executive Director Group |
| $0 |
| Non-Executive Officer Employee Group(2)
| $0 - $5,500,000 |
|
| | (1) | Represents the range of the potential awards to the listed Named Executives based on meeting the applicable performance goals as specified in the Plan. The potential bonuses range from $0 if performance is below threshold to the maximum amounts shown if performance goals are achieved at or above set maxima. Awards for future periods may be different from the amounts indicated, and the dollar value of future awards is not currently determinable. |
| | (2) | Amounts approximated from prior year eligible employees and awards. |
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE JACK HENRY & ASSOCIATES, INC. ANNUAL INCENTIVE PLAN. PROXIES RECEIVED BYTHE BOARD OF DIRECTORS WILL BE VOTED FOR THE APPROVAL OFTHE AMENDMENT AND RESTATEMENT OF THE PLAN UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A VOTE OF “AGAINST” OR “ABSTAIN”.
PROPOSAL 5
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PricewaterhouseCoopers LLP, an independent registered public accounting firm, performed an audit of our consolidated financial statements for the fiscal year ended June 30, 20172023 and the effectiveness of our internal control over financial reporting as of June 30, 2017.2023. The Audit Committee has selected PricewaterhouseCoopers LLP to serve as our independent registered public accounting firm for the current fiscal year, and the committeeAudit Committee is presenting this selection to stockholders for ratification. Representatives of PricewaterhouseCoopers, LLP are expected to be present at the Annual Meeting with the opportunity to make a statement if they desire to do so and to be available to respond to appropriate questions.
If prior to the Annual Meeting PricewaterhouseCoopers, LLP declines to act as our independent registered public accountant or the Audit Committee decides not to use PricewaterhouseCoopers LLP as our independent registered public accountant, the Audit Committee will appoint another independent registered public accounting firm. The Audit Committee will present any new independent registered public accounting firm for the stockholders to ratify at the Annual Meeting. If the stockholders do not ratify the engagement of PricewaterhouseCoopers LLP at the Annual Meeting, then the Audit Committee will reconsider its selection of PricewaterhouseCoopers LLP. Even if the appointment of PricewaterhouseCoopers LLP is ratified, the Audit Committee in its discretion may direct the appointment of a different independent auditor at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2018,2024, a majority of the shares present and entitled to vote must vote to approve. For purposes of determining the vote regarding this proposal, abstentions will have the same impact as a no vote. Unless you specify otherwise in your proxy, the persons you have appointed will vote your shares “For” ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending June 30, 2018.2024.
Audit and Non-Audit Fees
The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP and Deloitte & Touché LLP for the auditsaudit of the Company’s annual consolidated financial statements for the fiscal years ended June 30, 20172023 and 2016,2022, and reviews of the financial statements included in the Company’s Forms 10-Q for those fiscal years, the audit of the Company’s assessment and effectiveness of internal control over financial reporting under Section 404 of the Sarbanes-Oxley Act of 2002, and fees for other services rendered during those periods.
| | | | | | | | | | 2023 | 2022 | | Audit Fees | 2,189,750 | 2,039,723 | | Audit-Related Fees (1) | 1,825,400 | 2,009,950 | | Tax Fees (2) | 2,200 | 20,500 | | All Other Fees | 900 | 2,900 | | Total Fees | $4,018,250 | $4,073,073 |
| | | | | | | | | | | | | | | | | | | 2017 | | 2016 | | | PwC Fees |
| | Deloitte & Touche |
| | PwC Fees | | Total Fees |
| | Audit Fees |
| $1,541,770 |
| |
| $71,500 |
| |
| $1,551,639 |
| |
| $1,623,139 |
| | Audit Related fees (1) | 1,110,065 |
| | 770,264 |
| | 589,205 |
| | 1,359,469 |
| | Tax fees (2) | 17,835 |
| | - |
| | - |
| | - |
| | All Other fees | - |
| | - |
| | - |
| | - |
|
Total All Fees |
$2,669,670 |
| |
$841,764 |
| |
$2,140,844 |
| |
$2,982,608 |
|
| | (1) | Performed in accordance with SSAE 16 and SOC 1 & 2 and the review of other SEC filings. SSAE 16 and SOC 1 & 2 reviews are conducted to evaluate the effectiveness of operational controls in various regulated business operations of the Company, including our data processing service bureaus. |
| | (2) | Tax fees for 2017 and 2016 relate to U.S. federal, state and local tax planning and compliance, and included the completion of Form 5500 for one employee benefit plan. |
(2)Tax fees for fiscal 2023 and fiscal 2022 relate to U.S. federal, state and local tax planning and compliance.
In making its decision to continue to retain PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the next fiscal year, the Audit Committee has considered the above information to ensure that the provision of non-audit services will not negatively impact the maintenance of the firm’s independence.
The Audit Committee has in its Charter expressed its policy governing the engagement of the Company’s independent registered public accounting firm for audit and non-audit services. Under the terms of the Charter, the Audit Committee is required to pre-approve all audit, audit relatedaudit-related, and non-audit services performed by the Company’s independent registered public accounting firm. All non-audit services for fiscal 20172023 were pre-approved by the Audit Committee.
At the beginning of each fiscal year, the Audit Committee reviews with management and the independent registered public accounting firm the types of services that are likely to be required throughout the year. Those services are comprised of four categories: audit services, audit-related services, tax services, and all other permissible services. The independent registered public accounting firm provides documentation for each proposed specific service to be provided. At that time, the Audit Committee pre-approves a list of specific services that may be provided within each of these categories and sets fee limits for each specific service or project. Management is then authorized to engage the independent registered public accounting firm to perform the pre-approved services as needed throughout the year, subject to providing the Audit Committee with regular updates. The Audit Committee reviews all billings submitted by the independent registered public accounting firm on a regular basis to ensure that their services do not exceed pre-defined limits. The Audit Committee or its ChairmanChair reviews and approves in advance, on a case-by-case basis, all other projects, services and fees to be performed by or paid to the independent registered public accounting firm. The Audit Committee also approves in advance any fees for pre- approvedpre-approved services that exceed the pre-established limits, as described above.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” RATIFICATION OF THE SELECTION OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED ACCOUNTING FIRM. PROXIES RECEIVED BY THE BOARD OF DIRECTORS WILL BE VOTED FOR THE RATIFICATION UNLESS STOCKHOLDERS SPECIFY IN THEIR PROXY A VOTE OF “AGAINST” OR “ABSTAIN”.
STOCKHOLDER PROPOSALS AND NOMINATIONS
Stockholders who intend to present proposals for inclusion in the proxy statement and form of proxy for the 20182024 Annual Meeting of Stockholders must submit their proposals to the Company’s Secretary on or before June 5, 2018.7, 2024. A stockholder who wishes to present a proposal at the 20182024 Annual Meeting, but who does not request inclusion in the proxy statement, must submit the proposal to the Company’s Secretary by August 10, 2018.16, 2024. The Company’s bylawsBylaws specify requirements for the content of the notice that stockholders must provide.
In addition, any stockholder who intends to nominate a candidate for election to the Board at the Company’s 20182024 Annual Meeting pursuant to the advance notice provisions of the bylaws,Bylaws, must give notice to the Company’s Secretary on or before June 5, 2018.August 16, 2024. Notice of proxy access director nominees by stockholders who meet the eligibility requirements in the Company’s bylawsBylaws must be received by the Company’s Secretary no earlier than the close of business on May 6, 20188, 2024 and no later than the close of business on June 5, 2018.7, 2024. In each case, the notice must include information specified in the Company’s bylaws,Bylaws, including information concerning the nominee and information about the stockholder’s ownership of, and agreements related to, the Company’s common stock.
In addition to satisfying the foregoing advance notice requirements under our Bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide notice that sets forth the information required by Rule 14a-19 under the Exchange Act no later than September 16, 2024.
The Company will not entertain any proposals or nominations at the 20182023 Annual Meeting that do not meet the requirements set forth in the Company’s bylaws.Bylaws. If the stockholder does not also comply with the requirements of Rule 14a-4(c)(2) under the Securities Exchange Act, of 1934, as amended, the Company may exercise discretionary voting authority under proxies that it solicits to vote in accordance with the Company’s best judgment on any such stockholder proposal or nomination. The bylawsBylaws are posted on our web site at www.jackhenry.comunder the “Investors” tab.https://ir.jackhenry.com/corporate-governance/overview. To make a submission or to request a copy of our bylaws,Bylaws, stockholders should contact the Company’s Secretary. We strongly encourage stockholders to seek advice from knowledgeable counsel before submitting a proposal or a nomination.
COST OF SOLICITATION AND PROXIES
Proxy solicitation is being made by mail, although it may also be made by telephone or in person by officers, directors, and employees of the Company not specifically engaged or compensated for that purpose. The Company will bear the entire cost of the Annual Meeting, including the cost of preparing, assembling, printing, and mailing thethis Proxy Statement, the Proxy Card, and any additional materials furnished to stockholders. Copies of the solicitation materials will be furnished to brokerage houses, fiduciaries, and custodians for forwarding to the beneficial owners of shares held of record by them and, upon their request, such persons will be reimbursed for their reasonable expenses incurred in completing the mailing to such beneficial owners.
FINANCIAL STATEMENTS
Consolidated financial statements of the Company are contained in the 20172023 Annual Report to Stockholders which accompanies this Proxy Statement.
HOUSEHOLDING
If you and other residents at your mailing address own shares in street name, your broker, bank, or other nominee may have sent you a notice that your household will receive only one annual report and Proxy Statementproxy statement for each company in which you
hold shares through that broker, bank, or nominee. This practice is called “householding.” If you did not respond that you did not want to participate in householding, you are deemed to have consented to that process. If these procedures apply to you, your broker, bank, or other nominee will have sent one copy of our 2023 Annual Report to Stockholders and Proxy Statement to your address. You may revoke your consent to householding at any time by contacting your broker, bank, or other nominee. If you did not receive an individual copy of our 2023 Annual Report to Stockholders and Proxy Statement, we will send copies to you if you contact us at 663 Highway 60, Post Office Box 807, Monett, Missouri, 65708, (417) 235- 6652,235-6652, Attention: Investor Relations. If you and other residents at your address have been receiving multiple copies of our 2023 Annual Report to Stockholders and Proxy Statement and desire to receive only a single copy of these materials, you may contact your broker, bank, or other nominee or contact us at the above address or telephone number.
OTHER MATTERS
The Board of Directors knows of no matters that are expected to be presented for consideration at the 20172023 Annual Meeting which are not described herein. However, if other matters properly come before the meeting, it is intended that the persons named in the accompanying Proxy Card will vote thereon in accordance with their best judgment.
By Order of the Board of Directors
/s/ Craig K. Morgan
Craig K. Morgan, Secretary Secretary
Monett, Missouri October 3, 20175, 2023
A copy of the Company’s 2023 Annual Report to Stockholders is included herewith. The Company will furnish without charge a copy of its Annual Report on Form 10-K, excluding exhibits, as filed with the Securities and Exchange CommissionSEC upon written request directed to Kevin D. Williams,Mimi L. Carsley, Chief Financial Officer, Jack Henry & Associates, Inc., 663 Highway 60, Post Office Box 807, Monett, Missouri, 65708. The Form 10-K is also available at our investor relations website, www.jackhenry.com/ir/.http://ir.jackhenry.com/financials/quarterly-results. The Company will provide a copy of any exhibit to the Form 10-K to any such person upon written request and the payment of the Company’s reasonable expenses in furnishing such exhibits.
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on November 9, 2017:14, 2023: The Proxy Statement, proxy cardProxy Card, and the 20172023 Annual Report to Stockholders are available atwww.edocumentview.com/JKHY.
www.envisionreports.com/JKHY.
ANNEX A
JACK HENRY & ASSOCIATES, INC.
2017 ANNUAL INCENTIVE PLAN
1.Purpose. The purpose of the Jack Henry & Associates, Inc. 2017 Annual Incentive Plan (the “Plan”) is to provide an annual performance-based incentive for eligible Participants who are in a position to contribute materially to the success of the Company and its Affiliates. This Plan is intended to be a performance-based compensation plan for purposes of Section 162(m) of the Code.
“Affiliate” means any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding stock of the Company, or in which the Company or any such corporation or other entity owns, directly or indirectly, 50% or more of the outstanding capital stock (determined by aggregate voting rights) or other voting interests.
“Award” means an award made pursuant to the Plan. All Award payments shall be in cash.
“Board” means the Board of Directors of the Company.
“Change in Control” means, unless otherwise defined in an employment agreement or at will offer letter between the Participant and the Company or any of its Affiliates in effect, in which case such definition shall control, the first to occur of any of the following events:
 | | | (1) | The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a "Person")) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50% of either (i) the then-outstanding shares of Common Stock (the "Outstanding Company Common Stock") or (ii) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the "Outstanding Company Voting Securities"); provided, however, that for purposes of this subsection (1), the following acquisitions shall not constitute a Change in Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company,
(iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (iv) any acquisition by any corporation pursuant to a transaction which complies with clauses (i), (ii) and (iii) of subsection
(3) of this definition; or
| (2) | Individuals who, as of the Effective Date, constitute the Board (the "Incumbent Board") cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Effective Date whose election, or nomination for election by the Company's shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or |
| | | (3) | Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company (a "Business Combination"), in each case, unless, following such Business Combination, (i) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 50% of, respectively, the then- outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Business Combination (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company's assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be, (ii) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, more than 50% of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination, or the combined voting power of the then-outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Business Combination and (iii) at least a majority of the members of the board of directors of the corporation resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or | (4) | Approval by the shareholders of the Company of a complete liquidation or dissolution of the Company. |
“Code” means the Internal Revenue Code of 1986, as amended.
“Code Section 162(m) Award” means an Award intended to qualify as “performance-based compensation” as described in Code Section 162(m)(4)(C).
“Committee” means the committee appointed by the Board as defined in Section 5 below. “Company” means Jack Henry & Associates, Inc.
“Covered Employee” means a covered employee within the meaning of Code Section 162(m)(3).
“Effective Date” means the effective date of the Plan as defined in Section 12 below.
“Employee” means an employee of the Company or any of its Affiliates whether now existing or hereafter created or acquired.
“Exchange Act” means Securities Exchange Act of 1934, as amended.
“Participant” means an Employee selected from time to time by the Committee to participate in the Plan.
“Performance Criteria” means an objectively determinable measure of performance (including a measure expressed as whole dollar amount(s), percentage(s) or growth rate(s)) relating to any of the following (determined either in the aggregate or on a per-share basis, individually, or in any combination, and either on a consolidated basis, pre-tax or post tax, or, as the context permits, on a divisional, subsidiary, line of business, project or geographical basis or in combination thereof):
| | (i) | Sales goals, including gross sales or net sales; |
| | (ii) | Income measures, including operating income, gross income, net income, pretax income, or pretax income before allocation of corporate overhead and bonuses; |
| | (iii) | Budget related goals; |
| | (v) | Cash flow returns, including cash flow from operations and cash flow returns on invested capital; |
| | (vi) | Earnings goals, including earnings before interest and taxes; earnings before interest, taxes, depreciation and amortization; |
| | (viii) | Capital expenditures; |
| | (ix) | Credit quality or debt ratings; |
| | (x) | Return measures, including return on assets, average assets, net assets, investment capital, gross margin return, returns on equity or sales, shareholder return, total shareholder return, and shareholder return on equity; |
| | (xi) | Productivity measures, including economic value-added models or equivalent metrics; |
| | (xii) | Customer-related goals, including customer acquisition, expansion, retention, or satisfaction goals (whether measured internally, or by independent or other customer surveys); |
| | (xiii) | Employee related goals, including employee satisfaction (as measured by employee surveys), recruiting, turnover and retention; |
| | (xix) | Achievement of acquisitions or divestitures (in whole or in part); |
| | (xx) | Production volume levels; |
| | (xxi) | Preservation of Company or shareholder value during adverse business conditions; |
| | (xxii) | Internal control achievement or improvement; |
| | (xxiii) | Insurance renewal goals (premium savings, coverage improvement or bid improvement); |
| | (xxix) | Payroll as a percentage of sales; |
| | (xxx) | Expense management or reduction; |
| | (xxxi) | Completion or attainment of measurable objectives with respect to research, development, commercialization, products, projects, or strategic and operational initiatives; |
| | (xxxii) | Product implementation or installation, including new product, updated product or existing product implementation or installation; or |
For any Awards other than Code Section 162(m) Awards, the Compensation Committee may base or measure performance on any of the above business or performance criteria or any other performance metric it so chooses.
The foregoing criteria shall have any reasonable definitions that the Committee may specify, which may include or exclude any or all of the following items as the Committee may specify: infrequently occurring, unusual or non-recurring items; effects of accounting changes; effects of financing activities; expenses for restructuring or productivity initiatives; other non-operating items; spending for acquisitions; effects of divestitures; effects of litigation activities and settlements, or any reorganization or change in the corporate structure or capital structure of the Company.
“Performance Goal” means one or more levels of performance as to each Performance Criteria, as established by the Committee that will result in the performance percentage that is established by the Committee for each such level of performance.
“Performance Period” means the period over which performance with respect to an Award is to be measured. Unless otherwise specified with respect to an Award, the Performance Period will always be a Plan Year.
“Plan Year” means the fiscal year of the Company.
| | 3. | Eligibility. All present and future Employees shall be eligible to receive Awards under the Plan.
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(a)The Committee shall determine, in respect of each Award, the Performance Goals for each Performance Criteria, the maximum bonus payable and such other terms and conditions applicable to the Award, as determined by the Committee, not inconsistent with the terms of the Plan. Anything else in this Plan to the contrary notwithstanding, the aggregate maximum amount payable under the Plan to any Participant in any Plan Year shall be the lesser of 300% of the Participant’s Base Salary or $2,000,000. In the event of any conflict between an Award and the Plan, the terms of the Plan shall govern.
(b)The Committee shall establish the Performance Goals for the Company and the Participants, as applicable, each Performance Period. The Committee shall also determine the extent to which each applicable Performance Criteria shall be weighted in determining Awards. The Committee may vary the Performance Criteria, Performance Goals and weightings from Participant to Participant, Award to Award and Performance Period to Performance Period.
(c)The Committee shall establish for each Participant the amount(s) payable at specified levels of performance, based on the Performance Goal for each applicable Performance Criteria and the weighting established for such criteria.
(d)Except as the Committee otherwise determines and subject to the provisions of the Plan, with respect to all Code Section 162(m) Awards, the foregoing determinations shall be established not later than 90 days after the commencement of the Performance Period (or, in the case of a Performance Period of less than 12 months’ duration, not later than by the end of the first 25% of such period).
(e)Following the end of each Performance Period, the Committee shall determine whether, and the extent to which, the Performance Goals were satisfied. All such determinations regarding the achievement of any Performance Goals shall be made by the Committee. Although the Committee may exercise negative discretion and reduce the amount otherwise payable upon achievement of the Performance Goal or Goals, the Committee may not increase during a Plan Year the amount of any Code Section 162(m) Award that would otherwise be payable upon achievement of the Performance Goal or Goals.
(f)Awards shall be paid, in a lump sum cash payment, as soon as practicable during the first fiscal year that begins after the close of the Performance Period for which they are earned, but in no event later than the 75th day after the
end of such fiscal year; provided, however, that no Code Section 162(m) Awards shall be paid except to the extent that the Committee has certified in writing that the Performance Goals have been met. Notwithstanding the foregoing provisions of this Section 4(f), the Committee shall have the right to allow Participants to elect to defer the payment of Awards subject to such terms and conditions as the Committee may determine; provided, however, that the Participants’ election to defer the payment of Awards must be pursuant to a Company-adopted nonqualified deferred compensation plan or agreement and must comply in all respects with Code Section 409A and Treasury Regulations, Rulings and Notices of the Internal Revenue Service.
(g)Whenever payments under the Plan are to be made, the Company and/or the Affiliate will withhold therefrom an amount sufficient to satisfy any applicable governmental withholding tax requirements related thereto.
(h)Nothing contained in the Plan will be deemed in any way to limit or restrict the Company, any of its Affiliates, or the Committee from making any award or payment to any person under any other plan, arrangement or understanding, whether now existing or hereafter in effect.
5.Administration. The Plan generally shall be administered by a committee (the “Committee”), which shall be the Compensation Committee of the Board or another committee appointed by the Board from among its members. Unless the Board determines otherwise, the Committee shall be comprised solely of not less than two members who each shall qualify as an “outside director” within the meaning of Code Section 162(m) and the regulations thereunder. The Committee shall have general authority to impose any limitation or condition upon an Award the Committee deems appropriate to achieve the objectives of the Award and the Plan and, in addition, and without limitation and in addition to powers set forth elsewhere in the Plan, shall have the following specific authority:
(a)The Committee shall have the power and complete discretion to determine (i) which Employees shall receive an Award and the nature of the Award, (ii) the amount of each Award, (iii) the time or times when an Award shall be granted, (iv) whether a disability exists, (v) the terms and conditions applicable to Awards, and (vi) any additional requirements relating to Awards that the Committee deems appropriate.
(b)The Committee may adopt rules and regulations for carrying out the Plan. The interpretation and construction of any provision of the Plan by the Committee shall be final and conclusive. The Committee may consult with counsel, who may be counsel to the Company, and shall not incur any liability for any action taken in good faith in reliance upon the advice of counsel.
(c)As to any Code Section 162(m) Awards, it is the intent of the Company that this Plan and any Code Section 162(m) Awards hereunder satisfy, and be interpreted in a manner that satisfy, the applicable requirements of the “performance-based compensation exemption” under Code Section 162(m). If any provision of this Plan or if any Code Section 162(m) Award would otherwise conflict with the intent expressed in this Section 5(c), that provision to the extent possible shall be interpreted so as to avoid such conflict. To the extent of any remaining irreconcilable conflict with such intent, such provision shall be deemed void as applicable to Covered Employees. To the extent that, even with such conflicting provision deemed void, the Award will not qualify as exempt under Code Section 162(m), such Award shall nevertheless continue in effect as an Award that is unable to qualify for the “performance-based compensation exemption” under Code Section 162(m). Nothing herein shall be interpreted to preclude a Participant who is or may be a Covered Employee from receiving an Award that is not a Code Section 162(m) Award.
(d)The Committee’s determinations under the Plan need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated. Without limiting the generality of the foregoing, the Committee shall be entitled, among other things, to make nonuniform and selective determinations and to establish nonuniform and selective Performance Criteria, Performance Goals and the weightings thereof.
6.Change in Control. In the event of a Change in Control of the Company, in addition to any action required or authorized by the terms of an Award, the Committee may, in its sole discretion, take any of the following actions as a result, or in anticipation, of any such event to assure fair and equitable treatment of Participants: (a) accelerate time periods for purposes of vesting in, or, except in the case of deferred payments of Awards, receiving any payment with regard to, any outstanding
Award; (b) make adjustments or modifications to outstanding Awards as the Committee deems appropriate to maintain and protect the rights and interests of Participants following such Change in Control; or (c) terminate the Plan. Any such action approved by the Committee shall be conclusive and binding on the Company and all Participants.
7.Nontransferability of Awards. An Award shall not be assignable or transferable by the Participant except by will or by the laws of descent and distribution.
8.Termination, Modification, Change. If not sooner terminated by the Board as provided in Section 6 above or otherwise, no Code Section 162(m) Award may be made pursuant to this Plan after the first shareholder meeting that occurs in 2022. The Board may terminate the Plan or may amend the Plan in such respects as it shall deem advisable; provided that, if and to the extent required by the Code, no change shall be made that changes the Performance Criteria, or materially increases the maximum potential benefits for Participants under the Plan, unless such change is authorized by the shareholders of the Company. Notwithstanding the foregoing, the Board may unilaterally amend the Plan and Awards as it deems appropriate to cause Awards to meet the requirements of Code Section 162(m), and regulations thereunder. Except as provided in the preceding sentence, a termination or amendment of the Plan shall not, without the consent of the Participant, adversely affect in any material respect a Participant’s rights under an Award previously granted to him.
9.Unfunded Plan. The Plan shall be unfunded. No provision of the Plan or any Award will require the Company or any of its Affiliates, for the purpose of satisfying any obligations under the Plan, to purchase assets or place any assets in a trust or other entity to which contributions are made or otherwise to segregate any assets, nor will the Company or any of its Affiliates maintain separate bank accounts, books, records or other evidence of the existence of a segregated or separately maintained or administered fund for such purposes. Participants will have no rights under the Plan other than as unsecured general creditors of the Company and its Affiliates, except that insofar as they may have become entitled to payment of additional compensation by performance of services, they will have the same rights as other employees under generally applicable law.
10.Liability of Company. Any liability of the Company or an Affiliate to any Participant with respect to an Award shall be based solely upon the parties’ contractual obligations as set forth in the Plan and the Award. Neither the Company nor an Affiliate, nor any member of the Board or of the Committee, nor any other person participating in any determination of any question under the Plan, or in the interpretation, administration or application of the Plan, shall have any liability to any party for any action taken or not taken in good faith under the Plan. Status as an eligible Employee shall not be construed as a commitment that any Award will be made under this Plan to such eligible Employee or to eligible Employees generally. Nothing contained in this Plan or in any Award (or in any other documents related to this Plan or to any Award) shall confer upon any Employee or Participant any right to continue in the employ or other service of the Company or an Affiliate or constitute any contract or limit in any way the right of the Company or an Affiliate to change such person’s compensation or other benefits.
11.Interpretation. If any term or provision contained herein will to any extent be invalid or unenforceable, such term or provision will be reformed so that it is valid, and such invalidity or unenforceability will not affect any other provision or part hereof. The Plan, each Award and all actions taken hereunder or thereunder shall be governed by, and construed in accordance with, the laws of the State of Delaware without regard to the conflict of law principles thereof.
12.Effective Date of the Plan. The Plan shall be effective as of September 1, 2017 (the “Effective Date”) and shall be submitted to the shareholders of the Company for approval. No Award shall be payable to a Covered Employee until the Plan has been approved by the shareholders.
[PROXY CARD]
Jack Henry &
Associates, Inc.
IMPORTANT ANNUAL MEETING INFORMATION
Electronic Voting Instructions
Available 24 hours a day, 7 days a week!
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
Proxies submitted by the Internet or telephone must be received by 1:00 a.m., Central Time, on November 9, 2017.
Vote by Internet
•Go to www.envisionreports.com/JKHY
•Or scan the QR code with your smartphone
•Follow the steps outlined on the secure website
Vote by telephone
•Call toll free 1-800-652-VOTE (8683) within the USA, US territories &
Canada on a touch tone telephone
•Follow the instructions provided by the recorded message
Using a black ink pen, mark your votes with an X as shown in
this example. Please do not write outside the designated areas. x
Annual Meeting Proxy Card
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
A Proposals - The Board of Directors recommends a vote FOR Proposals 1, 2, 4, and 5 and for "1 Year" on Proposal 3.
| | | | | | | | | | | | | | | | | | 1. Election of Directors | For | Withhold | | | For | Withhold | | | For | Withhold | 01 - M. Flanigan | | | | | | 02 - J. Prim | | | | | | 03 - T. Wilson | | | | | | | | | | | | | | | | | | | | | | 04 - J. Fiegel | | | | | | 05 - T. Wimsett | | | | | | 06 - L. Kelly | | | | | | | | | | | | | | | | | | | | | | 07 - S. Miyashiro | | | | | | 08 - W. Brown | | | | | | 09- D. Foss | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | For | Against | Abstain | | | 1 Year | 2 Years | 3 Years | Abstain | 2. To approve, on an advisory basis, the compensation of our named executive officers. | | | | | | | | | | | 3. To approve, on an advisory basis, the frequency of the advisory approval of our named executive | | | | | | | | | | | | | | | | | | | | | | | | officer compensation. | | | | | | | | | | | | | | | | | | | | | | | | | | | | For | Against | Abstain | 4. To approve the amendment and restatement of the Company's Annual Incentive Plan. | | | | | | | | | | | 5. To ratify the selection of the Company's independent registered public accounting firm. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Note: Such other business as may properly come before the meeting or any adjournment thereof.
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B Non-Voting Items
Change of Address - Please print new address below.
C Authorized Signatures - This section must be completed for your vote to be counted. - Date and Sign Below
Please sign exactly as name appears below. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
| | | | | | Date (mm/dd/yyyy) - Please print date below. | | Signature 1 - Please keep signature within the box. | | Signature 2 - Please keep signature within the box. | / / | | | | |
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IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
Proxy - Jack Henry & Associates, Inc.
This proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints David B. Foss and Kevin D. Williams as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated below, all the shares of common stock of Jack Henry & Associates, Inc. held of record by the undersigned on September 19, 2017, at the annual meeting of shareholders to be held on November 9, 2017 or any adjournment thereof.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder. If no direction is made, this proxy will be voted FOR Proposals 1, 2, 4, and 5 and for "1 Year" on Proposal 3. In their discretion, the Proxies are authorized to vote upon such other matters as may properly come before the meeting.
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
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