Adjustments to our Named Executive Officers’ compensation are made in connection with our Compensation Committee’s annual review, which generally occurs in the first quarter of our fiscal year. For fiscal 2023, adjustments to cash compensation were effective as of July 1, 2022.
Compensation Decision-Making Process Determination of Compensation
In setting the compensation of our Named Executive Officers, our Compensation Committee uses a balanced approach rather than rigid percentiles or benchmarks to establish pay levels for each compensation element. Our Compensation Committee considers the market range of each executive role with opportunities for above median compensation driven by both Company performance and considerations specific to each Named Executive Officer. For fiscal 2023, our Compensation Committee considered the following factors in determining the compensation of our Named Executive Officers:
market data, including practices among companies in our compensation peer group;
each executive officer’s scope of responsibilities;
each executive officer’s tenure, skills, experience, and performance;
internal pay equity across the executive management team;
our overall performance, taking into consideration performance versus internal plans and industry peers;
the recommendations of our Chief Executive Officer (except with respect to his own compensation); and
general market conditions.
Our Compensation Committee does not assign relative weights or rankings to any of these factors and does not solely use any quantitative formula, target percentile or multiple for establishing compensation among the executive officers or in relation to the competitive market data.
Role of the Compensation Committee
The Compensation Committee is responsible for overseeing our executive compensation program and all related policies and practices. The Compensation Committee operates pursuant to a formal written charter approved by our Board, which is available on our website at https://investor.bill.com.
At least annually, the Compensation Committee reviews our executive compensation program and determines (and with respect to the CEO, formulates recommendations for consideration by our Board) the various elements of our Named Executive Officers’ compensation, with input from our Board, as well as any employment arrangements with our Named Executive Officers. The Compensation Committee is responsible for taking action with respect to compensation that will attract and retain talented executives and support our long-term stockholder value creation with an effective pay-for-performance approach.
The Compensation Committee meets regularly during the fiscal year both with and without the presence of our Chief Executive Officer and other Named Executive Officers. The Compensation Committee also discusses compensation issues with our Chief Executive Officer (except with respect to his own compensation) and other members of the Board between its formal meetings.
Base Salary
| | Base salary is the primary fixed component of our executive compensation program. Base salaries for our executive officers are generally reviewed annually in Julyprovide a fixed level of each year. In light of uncertainty of the impact of COVID-19 on our business, we delayed increases in base salary for our executive officers for fiscal 2021 from July 2020 to January 2021. As a result, changes in base salary during fiscal 2021 were effective as of January 1, 2021. Changes in base salary applicable to fiscal 2022 were effective as of July 1,2021, in accordance with our current practice of reviewing and adjusting compensation at the beginning of the fiscal year, for Messrs. Lacerte, Rettig, and Clayton, and Ms. Chung. Base salaries for other executives were determined in connection with the commencement of their employment. In fiscal 2021 and 2022, the base compensation for our Named Executive Officers was as follows:
René Lacerte | | | $460,000 | | | $500,000 | | | 8.7% | John Rettig | | | $390,000 | | | $410,000 | | | 5.1% | Bora Chung | | | $350,000 | | | $370,000 | | | 5.7% | Tom Clayton | | | $375,000 | | | $390,000 | | | 4.0% | Mark Lenhard(1) | | | n/a | | | $350,000 | | | n/a | Blake Murray(1) | | | n/a | | | $360,000 | | | n/a |
(1)
| The employment of Mr. Lenhard started during fiscal 2022 and the employment of Mr. Murray started in June 2021 upon the closing of the Divvy acquisition. Their initial salary rates were approved in connection with their initial appointment. |
Base salary adjustments were made with referencetied to competitive market datapractice among peers and additional considerations described above under “Compensation Decision Making Process”, includingcomparable software companies.
| | | Designed to attract and retain highly talented executives by providing a stable level of fixed compensation in an amount that is competitive in the scopemarket. | | | | | | | | | | |
| Annual Cash Incentive | | | Annual cash incentives for executives require achievement of role and individual performanceannual goals tied to Core Revenue (a key measure of the growth of our Named Executive Officers. Base salary adjustments were generally intended to increase alignment with the 50th percentile of market for each Named Executive Officer, reflecting our strongbusiness) and EBITDA Less Float (to encourage efficient performance and changes in our overall compensation framework through our transition from a private to publicly-traded company.execution across the Company), weighted equally. | | | Cash Bonus Compensation
We use performance-based annual cash bonus opportunitiesDesigned to motivate our executive officers, including our Named Executive Officers,executives to achieve ourshort-term financial objectives while making progress towards longer-term value creation.
| |
| | | | | | | | |
| Long-Term Equity
Incentive (RSUs) | | | For fiscal 2023, 70% of the target long-term incentive value awarded as part of the annual financial, operational, and strategic business objectives. Undercompensation cycle was in the Fiscal 2022 Bonus Program, our Named Executive Officers were eligible to earn annual cash bonuses based on our achievementform of corporate financial goals, as described in detail below.RSUs.
Target Annual Cash Bonus Opportunities
For purposes of the Fiscal 2022 Bonus Program, our Compensation Committee determined the target annual cash bonus opportunities of our Named Executive Officers expressed as a percentage of their annual base salary. On July 1, 2021, the Compensation Committee set the target annual cash bonus opportunities for Mr. Lacerte, Mr. Rettig, Ms. Chung, and Mr. Clayton for purposes of the Fiscal 2022 Bonus Program. Mr. Murray’s target bonusfiscal 2024, this amount was established at 10% of his base salary in connection with his appointment as Chief Executive Officer of Divvy in July 2021. Mr. Murray’s target bonus was increased from 10%reduced to 50% of base salary in February 2022, in connection with his appointment as our Chief Revenue Officer. The target bonus opportunity for Mr. Lenhard was established in connection with his initial offer of employment during fiscal 2022. The target annual cash bonus opportunities of our Named Executive Officers for fiscal 2021 and 2022 were as follows: René Lacerte | | | 100% | | | 100% | John Rettig | | | 75% | | | 80% | Bora Chung | | | 55% | | | 60% | Thomas Clayton | | | 100% | | | 100% | Mark Lenhard | | | n/a | | | 50% | Blake Murray | | | n/a | | | 50% |
50-60%.
Annual RSU grants generally vest quarterly over four years. | | |
TABLE OF CONTENTS
The actual fiscal 2022 cash bonus for each executive was determined based on the executive’s base salary as of fiscal year end (which was unchanged during the fiscal year).
Fiscal 2022 Bonus Program Performance Measurement
For purposes of the Fiscal 2022 Bonus Program, the Compensation Committee selected Core Revenue (as described above) as the primary corporate performance measure for purposes of determining the bonus for our Named Executive Officers. The Compensation Committee believed that this measure was the most appropriate performance metric to use because, in its view, it is the best indicator for fiscal 2022 of our successful execution of our annual operating plan and tracked to the key revenue metrics that we report to the public each quarter on our business progress.
The bonus for each Named Executive Officer is based on our level of achievement, relative to pre-established threshold, target and maximum levels of Core Revenue, approved by the Compensation Committee in July 2021.
Fiscal 2022 Core Revenue (in millions) | | | $507.15 | | | $563.50 | | | $619.85 | Percent of Target Performance | | | 90% | | | 100% | | | 110% | Payout Percent of Target | | | 50% | | | 100% | | | 150% |
Following the Compensation Committee’s evaluation of corporate financial performance, each Named Executive Officer’s payout may be adjusted up or down by a maximum of 20% based on an evaluation of each executive’s individual performance during the year.
Fiscal 2022 Bonus Program Payouts
In July 2022, the Compensation Committee determined that our actual fiscal 2022 Core Revenue was $633.4 million, which exceeded the level of performance required for a maximum payout on the corporate performance component of the Fiscal 2022 Bonus Program. Our Compensation Committee evaluated our achievement in the context of our broader performance, including the impact of acquisitions on our results for the year. Based on this review, and taking into consideration our results for the year, our Compensation Committee approved a corporate performance factor equal to payment at 145% of target (adjusted down from the calculated achievement of 150%).
An individual performance modifier was also applied to each of the following Named Executive Officers: Mr. Lacerte’s bonus was increased by 10%, Mr. Rettig’s bonus was increased by 20%, and Ms. Chung’s bonus was increased by 15%. These individual performance adjustments were approved in the context of each executive’s contributions to our strong results during the year, including successful integration of two significant acquisitions as well as strong performance during a significant downturn in overall economic activity.
Taking into consideration our corporate results and individual performance of our Named Executive Officers, the Compensation Committee approved the following cash bonuses for our Named Executive Officers:
René Lacerte | | | $500,000 | | | $797,500 | | | 159.5% | John Rettig | | | $328,000 | | | $570,720 | | | 174.0% | Bora Chung | | | $222,000 | | | $370,185 | | | 166.75% | Thomas Clayton(1) | | | $390,000 | | | $0 | | | 0% | Mark Lenhard(2) | | | $144,795 | | | $0 | | | 0% | Blake Murray(3) | | | $86,301 | | | $125,137 | | | 145.0% |
(1)
| Mr. Clayton did not earn an annual incentive payment for fiscal 2022 due to his departure prior to the end of fiscal 2022. |
(2)
| Mr. Lenhard’s target bonus was pro-rated from his start date during fiscal 2022. He did not earn an annual incentive payment for fiscal 2022 due to his anticipated departure. |
(3)
| Mr. Murray’s target bonus was pro-rated to reflect the mid-year change in target bonus opportunity from 10% to 50% in his new role as Chief Revenue Officer. |
Other Cash Bonus Payments
Following the completion of our acquisition of Divvy in June 2021, Mr. Murray was paid a bonus of $36,000 in recognition of his leadership through the acquisition.
TABLE OF CONTENTS
Following the completion of our acquisition of Invoice2go in September 2021, Mr. Lenhard was paid a bonus of $225,000 in recognition of his leadership through the acquisition.
Equity Compensation
We grant long-term incentive equity awards with multi-year vesting requirements to incentivize and reward our Named Executive Officers for long-term corporate performance based on the value of our common stock and, thereby,Designed to align the interests of our Named Executive Officersexecutives and stockholders by motivating executives to create sustainable long-term stockholder value, and serves as an important retention vehicle.
| |
| | | | | | | | |
| Long-Term Equity
Incentive (PSUs) | | | For fiscal 2023, 30% of target long-term incentive value awarded as part of the annual compensation cycle was in the form of PSUs.
For fiscal 2023, PSUs included a Core Revenue target metric measured over one year plus an overall three-year time-based vesting schedule (from the grant date), capped at target-level achievement unless a Non-GAAP Net Income threshold value was achieved.
For fiscal 2024, 40-50% of target long-term incentive value awarded was in the form of PSUs.
For fiscal 2024, (i) a portion of PSUs were again based on Core Revenue target metric measured over one year plus an overall three-year time based vesting schedule (from the grant date), with thosesuch portion capped at target-level achievement unless a Non-GAAP Net Income threshold value was achieved, and (ii) a portion were based on a TSR metric measured over a three-year period, and vesting upon the completion of such period. | | | Designed to align the interests of our stockholders. Time vesting RSUsexecutives and stockholders by motivating executives to drive achievement of certain financial goals and create sustainable long-term stockholder value.
| |
| | | | | | | | |
| Benefits | | | We offer competitive health and welfare benefits, as well as participation in an employee stock options have historically represented the majoritypurchase plan and other employee benefit plans. | | | Designed to align with competitive norms for comparable companies. | |