SCHEDULE: Paycom Insider Richison's Ownership & Trading Plan Update

An amendment to Schedule 13D details changes in beneficial ownership for Chad Richison and Ernest Group, including new RSU awards and a 10b5-1 sales plan for up to 480,000 shares.

Summary

• Chad Richison and Ernest Group, Inc. updated their beneficial ownership of Paycom Software, Inc. common stock.
• Chad Richison beneficially owns 5,880,679 shares, representing 10.5% of the class, including 14,382 shares from restricted stock units vesting within sixty days.
• Ernest Group, Inc. beneficially owns 3,217,249 shares, representing 5.7% of the class.
• Mr. Richison received 43,148 time-based restricted stock units (RSUs) on February 21, 2025, vesting in three equal tranches on February 5, 2026, 2027, and 2028, contingent on continued employment.
• Mr. Richison also received 43,148 performance-based restricted stock units (PSUs) on February 21, 2025, vesting based on Paycom's total revenue performance targets for the 2025 calendar year.
• Ernest Group entered into a Rule 10b5-1 Sales Plan on December 15, 2025, to sell up to 480,000 shares of common stock.
• The sales under the 10b5-1 plan are scheduled to occur between March 16, 2026 (or the third trading day following the 2025 10-K disclosure, whichever is later) and September 16, 2026.

Sentiment

Score: 6

Explanation: The filing presents a neutral to slightly positive outlook. The grant of significant RSU/PSU awards to the CEO aligns his interests with long-term company performance, which is positive. However, the establishment of a 10b5-1 plan for a substantial share sale by an insider entity could be viewed with slight caution, though it's a common practice for diversification and liquidity.

Positives

• The grant of 86,296 restricted stock units (RSUs/PSUs) to Chad Richison aligns executive incentives with long-term company performance and shareholder value.
• The establishment of a Rule 10b5-1 plan provides an orderly and pre-arranged method for share disposition, which can reduce market impact compared to unplanned sales.

Negatives

• The planned sale of up to 480,000 shares by Ernest Group, an entity associated with CEO Chad Richison, could be perceived as a reduction in insider ownership, potentially signaling a desire for diversification or a lack of confidence.

Risks

• The sale of up to 480,000 shares by Ernest Group under the 10b5-1 plan could exert downward pressure on the stock price during the sales period (March 16, 2026, to September 16, 2026).
• The vesting of performance-based restricted stock units is contingent on the Issuer's achievement of certain total revenue performance targets, introducing uncertainty regarding the ultimate number of shares Mr. Richison will receive.

Future Outlook

Chad Richison's time-based restricted stock units are set to vest in three equal tranches on February 5, 2026, 2027, and 2028, contingent on his continued employment. Performance-based restricted stock units will vest based on Paycom's total revenue performance targets for the 2025 calendar year. Ernest Group plans to sell up to 480,000 shares of common stock between March 2026 and September 2026 under a pre-arranged 10b5-1 plan.

Industry Context

This filing reflects standard executive compensation practices involving long-term incentive plans (RSUs/PSUs) and the use of Rule 10b5-1 trading plans for orderly insider stock sales, common across the technology and human capital management (HCM) software industry.

Related Party Transactions

• Chad Richison, CEO, received significant time-based and performance-based restricted stock unit awards from Paycom Software, Inc. under the 2023 Long-Term Incentive Plan.
• Ernest Group, Inc., an entity associated with Chad Richison, entered into a Rule 10b5-1 Sales Plan with J.P. Morgan Securities LLC to sell up to 480,000 shares of Paycom common stock.

Stakeholder Impact

• Shareholders: Potential for slight dilution from RSU/PSU vesting and potential downward pressure on stock price from the 10b5-1 sales plan. Alignment of CEO incentives with long-term performance.
• Employees: Continued employment is a condition for RSU vesting for the CEO, indicating stability at the top.

Next Steps

• Vesting of time-based restricted stock units for Chad Richison on February 5, 2026, 2027, and 2028.
• Evaluation of Paycom's total revenue performance for 2025 to determine vesting of performance-based restricted stock units.
• Sales of up to 480,000 shares by Ernest Group under the 10b5-1 plan between March 16, 2026, and September 16, 2026.

Key Dates

Recommendation

The filing indicates standard executive compensation practices with significant RSU/PSU grants, which generally align management's interests with long-term shareholder value. However, the establishment of a 10b5-1 plan for a substantial share sale by an insider entity, while a common practice for diversification, introduces a potential overhang on the stock. Given these balanced factors, a 'hold' recommendation is appropriate, suggesting investors maintain their current positions while monitoring the execution of the sales plan and the company's performance against PSU targets.

Keywords

Paycom Software, PAYC, Schedule 13D, Beneficial Ownership, Chad Richison, Ernest Group, Restricted Stock Units, Performance Stock Units, 10b5-1 Plan, Insider Trading Plan, Executive Compensation, Share Sale