PAYCOM SOFTWARE INC (PAYC)
Sector: Industrials
2026 Annual Meeting Analysis
PAYCOM SOFTWARE INC · Meeting: May 4, 2026
Directors FOR
0
Directors AGAINST
2
Say on Pay
AGAINST
Auditor
FOR
Director Elections
Election of Two Class I Directors
Against Analysis
Ms. Turney has served since 2021 and her full tenure overlaps with Paycom's severe stock underperformance — the stock is down roughly 56% over three years while the technology sector ETF (XLK) gained 84%, a gap of 140 percentage points that far exceeds the 30-point trigger threshold for companies with negative absolute returns; the 5-year picture is equally poor (-66.5% vs XLK's strong gain), so the longer-term mitigant does not apply and a vote against is warranted.
Mr. Watts has served since 2016 and his long tenure fully covers the period during which Paycom's stock fell roughly 56% over three years while the technology sector ETF (XLK) gained 84%, a gap of 140 percentage points that far exceeds the 30-point trigger threshold; with the 5-year return also deeply negative against the same benchmark, the longer-term mitigant does not apply and a vote against is warranted.
For Analysis
Both Class I director nominees — Sharen J. Turney and J.C. Watts, Jr. — are voted AGAINST because Paycom's stock has severely underperformed the technology sector benchmark (XLK) over both the 3-year and 5-year periods during which both directors served; the underperformance gap of approximately 140 percentage points over three years against a benchmark that itself rose strongly more than satisfies the policy trigger, and the 5-year check provides no relief given equally poor long-term performance.
Say on Pay
✗ AGAINSTCEO
Chad Richison
Total Comp
$22,837,152
Prior Support
91.4%%
CEO Chad Richison received total compensation of approximately $22.8 million in 2025, including a maximum annual bonus payout (200% of target) driven solely by one-year revenue results, while Paycom's stock fell 43% in the past year and 56% over the past three years — a period during which the technology sector ETF (XLK) gained 84%; this is a clear case of incentive pay not aligning with shareholder experience, as above-benchmark variable pay was awarded while stockholders suffered severe losses. The performance stock awards also used only a single one-year revenue target rather than multi-year metrics tied to total shareholder return or return on capital, meaning there is no meaningful long-term performance hurdle anchoring the equity program. Although prior say-on-pay support was strong at 91.4% (so no prior-vote-response trigger fires), the fundamental pay-for-performance disconnect — maximum cash bonuses and large equity grants during a period of deep stock underperformance — warrants a vote against.
Auditor Ratification
✓ FORAuditor
Grant Thornton LLP
Tenure
17 yrs
Audit Fees
$1,284,000
Non-Audit Fees
$369,000
Grant Thornton has served as Paycom's auditor since 2009 (approximately 17 years), which is below the 25-year tenure threshold that would trigger concern; non-audit fees (audit-related fees of $250,000 plus tax fees of $119,000 totaling $369,000) represent about 29% of audit fees of $1,284,000, well below the 50% threshold; no material restatements were disclosed, and Grant Thornton is a large national firm appropriate for a company of Paycom's size.
Overall Assessment
The 2026 Paycom annual meeting presents three standard proposals; both director nominees are voted against due to severe and sustained stock underperformance relative to the technology sector during their tenures, and the say-on-pay proposal is voted against because maximum annual bonuses were paid while shareholders experienced a 56% stock decline over three years, reflecting a fundamental pay-for-performance misalignment. The auditor ratification is supported as Grant Thornton's tenure, fee structure, and firm size all pass the applicable policy tests.