PROPOSAL 1—ELECTION OF CLASS I DIRECTORS

We have three classes of directors, currently consisting of three Class I directors, two Class II directors and three Class III directors. At each annual meeting, directors are elected for a full term of three years to succeed those whose terms are expiring. The terms of the three classes are staggered in a manner so that only one class is elected by stockholders annually. Mr. Kenneth J. D’Amato, Mr. Robert A. Eberle and Mr. Jeffrey C. Leathe are currently serving as Class I directors. The Class I directors elected this year will serve as members of our Board of Directors until the 2023 annual meeting of stockholders and until their respective successors are elected and qualified. Proxies cannot be voted cumulatively.

The Board has nominated Mr. D’Amato, Mr. Eberle and Mr. Leathe for re-election as directors. The persons named in the enclosed proxy will vote to re-elect Mr. D’Amato, Mr. Eberle and Mr. Leathe as Class I directors unless the proxy is marked otherwise. Mr. D’Amato, Mr. Eberle and Mr. Leathe have indicated their willingness to serve on our Board of Directors, if elected; however, if any nominee should be unable to serve, the person acting under the proxy may vote the proxy for a substitute nominee designated by our Board of Directors. Our Board of Directors has no reason to believe that Mr. D’Amato, Mr. Eberle and Mr. Leathe would be unable to serve if elected.

The Board recommends a vote “FOR” each of the persons nominated by the Board.

Set forth below is information about our Class I director nominees and directors whose terms will continue after the annual meeting. The information presented includes their years of service as a director as well as information each director has given us about his or her age, all positions he or she holds at the company, principal occupation and business experience for at least the last five years and names of other publicly-held companies of which he or she currently serves as a director. In addition to the information presented below in respect of each director’s specific experience, qualifications and skills that lead the Board to the conclusion that he or she should serve as a director, we also believe that each director has a reputation for integrity, honesty and high ethical standards.

 

		Principal Occupation, Age, Other Business Experience During the Past Five Years and Other Directorships
Class I directors (terms expiring in 2023, if elected)
		Kenneth J. D’Amato		Bottomline Committees: Lead Independent Director Chair, Nominations & Corporate Governance Committee Member, Audit Committee   Other Directorships: Manulife Investment Management Blue Hills Bank (Nasdaq:BHBK) (prior) Samuels Jewelers (Nasdaq:SMJW) (prior) Hord Crystal Corporation (prior)

Mr. D’Amato, 59, has served as a director since 2014 and Lead Independent Director since 2015. Mr. D’Amato currently serves as Chair of our Nominations and Corporate Governance Committee and as a member of our Audit Committee. Mr. D’Amato brings to the Board a broad range of executive experience in asset management, capital markets, and shareholder advocacy.

Mr. D’Amato has been employed with Manulife Asset Management since 2010 and currently serves as Chief Administrative Officer and Senior Managing Director. Previously, Mr. D’Amato served as Chief Operating

 

7

Officer at Evergreen Investment Management Company from 1999 to 2009. From 1998 to 1999, Mr. D’Amato served as Investment Manager at DDJ Capital Management and from 1989 to 1998 held several positions at Hord Crystal Corporation, including President, Chief Executive Officer and Board Member.

Mr. D’Amato’s qualifications to serve on our Board include his background as an executive officer in the asset management industry for several firms, his knowledge of capital markets and investment strategies and his general business acumen. Further, given his current position as an officer in an investment firm, we believe Mr. D’Amato brings a particularly focused shareholder perspective to our Board making him well suited to serve as lead director.

 

		Robert A. Eberle		Bottomline Committees: None   Other Directorships: PointClickCare   Non-Profit Directorships: End 68 Hours of Hunger Exeter Health Resources

Mr. Eberle, 59, has served as a director since 2000 and has served as our Chief Executive Officer since November 2006. Under Mr. Eberle’s leadership, Bottomline has become a leading provider of business payment solutions delivered across multiple geographies and markets.

Mr. Eberle previously served as our Chief Operating Officer from April 2001 to November 2006 and as our Chief Financial Officer from September 1998 to August 2004. He also held the title of President. Prior to his tenure at Bottomline, Mr. Eberle served as Executive Vice President of Telxon Corporation, a mobile computing and wireless data company. In addition, Mr. Eberle has served on the boards of a number of technology companies.

Mr. Eberle’s qualifications to serve on our Board include his more than two decades of experience in the technology industry, including his current role as our Chief Executive Officer, and his proven performance as our Chief Executive Officer since 2006.

 

		Jeffrey C. Leathe		Bottomline Committees: Chair, Audit Committee Member, Leadership Development & Compensation Committee   Other Directorships: PureHoney Technologies Exeter Trust Company

Mr. Leathe, 64, has served as a director since 2005. Mr. Leathe currently serves as Chair of our Audit Committee and as a member of our Leadership Development and Compensation Committee. Mr. Leathe brings more than 30 years of experience in public company financial, strategic and operational leadership.

From 2016 to present, Mr. Leathe has been Chairman of PureHoney Technologies, Inc., a contract research firm involved in drug discovery. From June 2011 to October 2016, Mr. Leathe served as Chairman and Chief Executive Officer of Lantos Technologies, Inc., a medical imaging company. From December 2009 through February 2011, Mr. Leathe served as Chairman and Chief Executive Officer of Biocius Life Sciences, Inc. and

 

8

from May 2007 to December 2009 served as Senior Vice President and Chief Financial Officer of Biotrove, Inc., companies involved in drug discovery research and clinical diagnostic testing. Since November 2004, Mr. Leathe has served as Principal of Leathe & Associates, LLC, a private financial planning and investment advisory firm, and is a registered investment advisor. From 1990 to 2003, Mr. Leathe served as Executive Vice President, Chief Financial Officer and Treasurer of Apogent Technologies, a publicly-held manufacturer of healthcare and life sciences research products. Mr. Leathe is also a certified public accountant.

Mr. Leathe’s qualifications to serve on our Board include his business experience as a senior executive officer and 13 years as an executive officer of a public company, including his experience as a principal financial officer of a public company and as a certified public accountant.

Class II directors (terms

expiring in 2021)

 

		Peter Gibson		Bottomline Committees: Member, Leadership Development & Compensation Committee Member, Nominations & Corporate Governance Committee   Non-Profit Directorships: Long Island University

Mr. Gibson, 60, has served as a director since May 2016. Mr. Gibson currently serves as a member of our Leadership Development and Compensation Committee and our Nominations and Corporate Governance Committee. Mr. Gibson has extensive experience with data science and data analytics in high-growth technology firms.

Since 2020, Mr. Gibson has served as the Managing Partner of Gibson Advisory Group, a venture company that invests in innovative technology startups. From 2011 to 2018, Mr. Gibson served as Co-Chief Executive Officer at Knowledgent Group, a data science and analytics consultancy firm focused on financial services, life sciences and healthcare, which was acquired by Accenture in January 2019. From 2007 to 2009, Mr. Gibson served as a Vice President at EMC Corporation and from 1999 to 2009 Mr. Gibson served as Co-President of BusinessEdge Solutions, an IT consulting firm co-founded by Mr. Gibson and subsequently acquired by EMC Corporation, which focused predominantly on the financial services, telecommunications and life sciences industries.

Mr. Gibson’s qualifications to serve on our Board include his experience with data science and data analytics, which are increasingly important focus areas for innovative technology offerings, his experience growing and selling technology firms, his general business acumen and executive experience and his current and prior experience in the technology industry.

 

9

		Joseph L. Mullen		Bottomline Committees: Chairman, Board of Directors   Other Directorships: Snappii Corporation Stackry, LLC

Mr. Mullen, 68, has served as a director since 1996. Mr. Mullen has served as our Chairman since May 2007, and served as our Vice Chairman from November 2006 to May 2007. Mr. Mullen has deep expertise in payments and payment methodologies, strategic planning, sales and business leadership.

Mr. Mullen served as our Chief Executive Officer from August 2002 to November 2006, as our President from September 2000 to August 2004, and as our Chief Operating Officer from September 2000 to April 2001. From 1977 to 1989, Mr. Mullen held a variety of positions at IBM Corporation. Mr. Mullen has served as Chair of the Greater Seacoast United Way and on the Board of The Entrepreneur Fund of New Hampshire, part of the New Hampshire Charitable Foundation, which manages more than 2,000 funds responsible for awarding $40 million in grants and scholarships annually.

Mr. Mullen’s qualifications to serve on our Board include his experience in the technology industry, particularly his expertise around payments and payment methodologies. Further, given Mr. Mullen’s prior executive experience within Bottomline, he has a deep understanding of our company and our operations.

Class III directors (terms

expiring in 2022)

 

		Jennifer M. Gray		Bottomline Committees: Chair, Leadership Development & Compensation Committee Member Nominations & Corporate Governance Committee   Other Directorships: Piscataqua Savings Bank   Non-Profit Directorships: Sabbathday Lake Association AlphaLoft ProPortsmouth

Ms. Gray, 45, has served as a director since 2012. Ms. Gray currently serves as Chair of our Leadership Development and Compensation Committee and as a member of our Nominations and Corporate Governance Committee. Ms. Gray has been recognized as a 2019 New Hampshire Innovator. She brings to the Board a deep knowledge of technology talent recruitment and retention strategies.

Since 2008, Ms. Gray has served as the Founder and Chief Executive Officer of Market Street Talent, Inc., an information technology staffing and consulting company. Ms. Gray is an adept technology and business professional working with leading technology organizations on their IT staffing initiatives. Ms. Gray is an activist for promoting women in technology and is the Chair of an annual Women in Technology event produced and sponsored by Market Street Talent since 2014.

Ms. Gray’s qualifications to serve on our Board include her background as an entrepreneur and technology executive, her demonstrated ability to create innovative and successful companies and her extensive experience with technology talent recruitment and retention.

 

10

		Paul H. Hough		Bottomline Committees: Member, Audit Committee Member, Nominations & Corporate Governance Committee   Other Directorships: Gerson Lehrman Group (Council Member)

Mr. Hough, 61, has served as a director since April 2017. Mr. Hough currently serves as a member of our Audit Committee and our Nominations and Corporate Governance Committee. He has extensive experience in the payments industry and financial and operational leadership expertise for financial management, financial strategy and long-range planning.

Mr. Hough served as Executive Vice President, Deputy Chief Financial Officer at American Express from 2014 to August 2018. Between 2009 and 2014, Mr. Hough served as Executive Vice President, Group Financial Officer, Global Consumer, Small Business, Merchant and Network Businesses and between 2007 and 2009, Mr. Hough served as Executive Vice President, Chief Financial Officer, Business to Business Group at American Express. Prior to 2007, Mr. Hough held several financial and general management positions at American Express.

Mr. Hough’s qualifications to serve on our Board include his experience in the payments industry, his extensive financial experience and his 34-year career at American Express in a number of senior leadership roles.

 

		Benjamin E. Robinson III		Bottomline Committees: Member, Audit Committee   Non-Profit Directorships: Chambers-McCain Foundation William Penn Charter School Federal Reserve Board of Governors Consumer Advisory Council (prior) Pfeiffer University (prior) Centralina Counsel of Governments (prior) Roger Williams University (prior)

Mr. Robinson, 56, has served as a director since May 2016. Mr. Robinson currently serves as a member of our Audit Committee. Mr. Robinson brings a wealth of experience with large, global multi-national companies in the financial services industry.

Since 2016, Mr. Robinson has served as College Chair for the College of Business for Johnson & Wales University, Charlotte. Mr. Robinson served as Senior Vice President, Chief Administration Officer from 2013 to 2015, and as Chief Strategist from 2011 to 2012, at Prudential Annuities. From 2010 to 2011, he served as Chief Strategist at Prudential Group Insurance. From 2002 to 2010, Mr. Robinson held various positions at Bank of America including as Global Planning and Services Executive, Senior Vice President, Debit Strategy Executive, Senior Vice President, Chief Privacy Executive and Senior Vice President, Strategy Management Executive. From 1997 to 2002, Mr. Robinson held a number of executive positions at Mastercard, including President and Chief Executive Officer, Mastercard Cardholder Solutions, Chief Privacy Officer and Vice President of Public

 

11

Affairs. Mr. Robinson is currently a member of the Executive Leadership Council and the Society of International Business Fellows. Earlier in his career, Mr. Robinson was a Congressional Advisor to the U.S. House of Representatives Committee on Banking, Finance and Urban Affairs. Mr. Robinson was appointed by Federal Reserve Board Chairman Alan Greenspan to serve as a member of the Federal Reserve Board, Consumer Advisory Council from 2003 to 2005, and Ebony Magazine named him one of America’s Future Leaders.

Mr. Robinson’s qualifications to serve on our Board include his significant senior leadership experience at large, global multi-national companies, his senior executive experience and his significant accomplishments and recognition in the financial services industry.

Director Compensation

Compensation for our directors is reviewed from time to time by our Chairman, our Board and its committees. Any determinations with respect to Board compensation are made by our Board of Directors.

Mr. Eberle was our sole management director during fiscal 2020 and as a management director he received no compensation for his services as a director.

Each of our non-employee directors receives a restricted stock award of 5,000 shares of our common stock upon his or her initial election to the Board and on or around the date of each annual meeting of stockholders thereafter, provided that he or she is serving as a director of Bottomline at that time. Each of these awards vests in full on the first anniversary of its respective grant date. During fiscal 2020, each of our directors other than Mr. Eberle received a restricted stock award for 5,000 shares of our common stock.

Restricted stock awards to our directors vest in full upon a change in control. Pursuant to the restricted stock agreement, a change in control is deemed to have occurred if:

 

•

we are acquired through a merger or consolidation which results in the company’s voting shares before the transaction retaining less than 50% of the voting power of the company or the acquiring entity after the transaction;

 

•

we are liquidated; or

 

•

all or substantially all of our assets are sold.

We reimburse our directors for expenses incurred to attend Board of Directors and committee meetings and other business related travel. In addition, directors who were formerly executive officers of the company are eligible for company-provided medical and dental insurance should they so elect. We provided this benefit to Mr. Mullen in fiscal 2020.

Each of our non-employee directors also receives annual fees as follows:

 

•

Each non-employee director other than Mr. Mullen receives an annual fee of $25,000 payable on the date of our annual meeting of stockholders.

 

•

Each non-employee director who serves as a member of the audit committee, other than the chairperson of such committee, receives an annual fee of $5,000.

 

•

Each non-employee director who serves as a member of the leadership development and compensation committee or the nominations and corporate governance committee, other than the chairperson of such committee, receives an annual fee of $2,500.

 

•

The chairperson of the audit committee receives an annual fee of $20,000.

 

•

The chairperson of the leadership development and compensation committee and the chairperson of the nominations and corporate governance committee each receives an annual fee of $5,000.

 

•

Our lead director receives an annual fee of $15,000.

 

12

Joseph Mullen Letter Agreement

On November 21, 2019, we entered into a letter agreement with Mr. Mullen (the “2019 Letter Agreement”). The 2019 Letter Agreement extends the term of Mr. Mullen’s prior letter agreement with us for an additional three years, through November 17, 2023.

Under the 2019 Letter Agreement, Mr. Mullen will serve as chairman of the Board of Directors during any periods he is appointed to such position by the Board, for a fee of $115,000 per year. Under the terms of the 2019 Letter Agreement, Mr. Mullen is also eligible to receive a restricted stock award of 5,000 shares of our common stock (or such other equity award as shall be made to our other non-employee directors) each year on the date of our annual meeting of stockholders (provided that he is serving as a director of Bottomline at that time), and these shares will vest on the first anniversary of the grant date.

If the 2019 Letter Agreement is terminated by us without cause, Mr. Mullen will be entitled to be paid a lump sum equal to the full amount due to him with respect to the remaining term of the agreement. Should Mr. Mullen’s engagement with us be terminated as a result of death or disability, as a result of involuntary termination or without cause, Mr. Mullen’s restricted stock will fully vest. In addition, in the event that, prior to November 17, 2023, a change in control of Bottomline occurs, Mr. Mullen’s restricted stock will fully vest. Mr. Mullen is also eligible to be reimbursed by us for reasonable business expenses and, until he reaches age 75, to participate in our standard U.S. health insurance plan.

The following table sets forth information concerning the compensation earned by our non-employee directors for fiscal 2020.

Fiscal 2020 Non-Employee Director Compensation

 

Name		Fees Earned or Paid   in Cash ($)								Stock Awards   ($) (1)				All Other     Compensation ($)								Total ($)
Kenneth J. D’Amato			50,000								237,150												287,150
Peter Gibson			30,000								237,150												267,150
Jennifer M. Gray			32,500								237,150												269,650
Paul H. Hough			32,500								237,150												269,650
Jeffrey C. Leathe			47,500								237,150												284,650
Joseph L. Mullen			115,000				(2)				237,150				21,063				(3)				373,213
Benjamin E. Robinson III			30,000								237,150												267,150

 

 

(1)

As of June 30, 2020, each of our non-employee directors held 5,000 shares of unvested common stock that were granted on December 4, 2019 and that will vest on the first anniversary of the grant date. The amounts reported in this column are computed based on the closing price of our common stock on the date the awards were granted (the grant date fair value) which was $47.43.

 

(2)	Consists of cash compensation paid to Mr. Mullen in his role as Chairman pursuant to the 2019 Letter Agreement.

 

(3)	Represents medical and dental insurance premiums paid by the company on behalf of Mr. Mullen.

Executive Compensation

Compensation Discussion and Analysis

Executive Summary

Oversight, review and approval of all executive compensation is discharged by the leadership development and compensation committee of our Board of Directors. There are three main elements of compensation for each of our executives: base salary, cash bonuses and awards of restricted stock. Each of these main elements of compensation are discussed in more detail below. The leadership development and compensation committee meets throughout the year and reviews overall executive compensation and overall business performance and retains the authority to adjust compensation levels or structures at any time, based on performance.

 

13

The leadership development and compensation committee oversees, reviews and approves all compensation decisions relating to our named executive officers. In the discussion that follows, “executives” or “executive officers” refers to our fiscal 2020 named executive officers, Messrs. Eberle, Booth, DeLuca, Kelly and Savory.

Objectives and Philosophy of Our Executive Compensation Program

The primary objectives of the leadership development and compensation committee with respect to executive compensation are to:

 

•

enable us to attract, retain and motivate the best possible executive talent by ensuring that our compensation packages are competitive with those offered by similarly situated companies;

 

•

align our executive compensation with our corporate strategies and business objectives;

 

•

promote the achievement of key strategic and financial performance measures; and

 

•

align executives’ incentives with the creation of stockholder value.

To achieve these objectives, the leadership development and compensation committee evaluates our executive compensation program with the goal of setting compensation at levels the committee believes are competitive with those of other companies of a comparable size within our industry. In addition, a portion of each executive’s compensation is tied to corporate performance, including financial performance and the achievement of strategic and operational goals such as the establishment and maintenance of key strategic and customer relationships, product development initiatives and senior management team development and retention. Executives are also evaluated on their professional growth and individual contributions to the company’s success. We provide a significant portion of our executive compensation in the form of restricted stock awards that vest over time, typically four years, which we believe promotes the retention of our executives and aligns their interests with those of our stockholders since this form of compensation allows our executives to participate in the long-term success of our company as reflected in stock price appreciation.

In making compensation decisions, the leadership development and compensation committee compares our executive compensation against that of a peer group of publicly traded companies. This peer group, which is reviewed and updated each fiscal year, consists of technology companies that we believe are generally comparable to our company. The companies included in this peer group for fiscal 2020 were: ACI Worldwide, Anaplan, Aspen Technology, Blackbaud, Cogent Communications, CommVault Systems, Cornerstone OnDemand, Coupa, Elastic, Fair Isaac Corporation, FIS, Fiserv, Guidewire Software, Mimecast, NCR, Okta, Pegasystems, Progress Software, Q2 Holdings, ServiceNow, Splunk, SS&C Technologies, Tableau Software, Tyler Technologies, Zoom Video Communications and Zuora. This analysis for the past several fiscal years, including the analysis completed for fiscal 2020, has shown that the overall compensation packages of our executives have been competitive with those of the peer group that we analyzed.

In addition, for purposes of assessing our Chief Executive Officer’s compensation, the leadership development and compensation committee periodically reviews the compensation packages of recently hired chief executive officers at publicly traded companies. For fiscal 2020, the companies the committee considered for this analysis were: Equifax, Five9, GoDaddy, BenefitFocus, TrueBlue and CommVault Systems. The leadership development and compensation committee believes this is a useful analysis because it provides a view into current market conditions with respect to chief executive officer compensation. This analysis has generally shown our Chief Executive Officer’s compensation package to be competitive with those of the companies that we analyzed.

 

14

Compensation Challenges

We face challenges in hiring and retaining our executives and other key employees due to several factors. These challenges are similar to those faced by other high-growth technology companies and make recruiting and retaining our executives and other key employees difficult. Our leadership development and compensation committee philosophy is designed to address these challenges, which include:

Our environment - We are a growing, acquisitive company and we have experienced rapid changes in our geographical areas of operation and our product set. Not all executives are suited to manage or succeed in such an environment. This amplifies the value of our existing executive officers and makes recruiting new executives difficult.

Competitive industry - We operate in a very competitive industry. The competition for qualified executive talent is intense. Our executives and other key employees are regularly perceived as very attractive candidates for employment with other companies and we believe our executives and other key employees are frequently targeted for employment opportunities by fintech companies, financial institutions and other technology companies. In many cases, other companies are able and willing to offer significantly higher compensation packages than we currently provide. This creates additional retention challenges for us.

Fast moving and demanding employer - We place extraordinary demands of time and attention on our executive officers and other key employees. Accordingly, the ability to attract and retain executive talent that can be successful in a complex, fast moving and demanding environment is critical.

“Say on Pay” Feedback from Stockholders

Votes representing 93% of the votes cast by our stockholders at our 2019 annual meeting of stockholders approved, in a non-binding advisory vote, our executive compensation program described and disclosed in our 2019 proxy statement. We have considered the results of this annual “say on pay” vote, and believe it reflects our stockholders’ assessment that our compensation programs are successfully achieving their objectives.

Components of our Executive Compensation Program

The primary elements of our executive compensation program are:

 

•

base salary;

 

•

cash bonuses;

 

•

restricted stock awards;

 

•

insurance, retirement and other employee benefits; and

 

•

severance and change in control benefits.

None of our executive officers receive, nor do we have any present plan to provide, payment for personal aircraft, financial planning, supplemental retirement plans, retirement benefits or deferred compensation arrangements (other than those available to substantially all our employees, such as under our 401(k) plan or equivalent plans), country club dues, security services, estate or tax planning or split dollar life insurance policies.

We do not have any formal or informal policy or target for allocating compensation between long-term and short-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, the leadership development and compensation committee determines what it believes to be the appropriate level and mix of the various compensation components based on recommendations from our chief executive officer, company performance against stated objectives, individual performance and overall comparisons to the comparable company analyses described above.

Base Salary

Base salary is used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executives. When establishing base salaries, the leadership development and

 

15

compensation committee considers the survey data of compensation levels in the peer group, as well as a variety of other factors such as the executive’s scope of responsibility, individual performance, prior employment experience and salary history, relative pay adjustments within the company and our overall financial performance. Base salaries are reviewed at least annually by our leadership development and compensation committee and may be adjusted from time to time based upon market conditions, individual responsibilities and company and individual performance.

Our executive officers have periodically declined to accept base salary increases in past years, or declined to accept salary increases above the percentage increase provided to our employee base generally, in order to make additional funds available to our other employees. The base salaries of our named executive officers for the fiscal years ended June 30, 2020, 2019 and 2018 are set forth in the Summary Compensation Table below. None of our executive officers received a base salary increase in fiscal 2020.

The last time the leadership development and compensation committee approved base salary increases for our executive officers was November 2018. We do not anticipate any increase in executive officer base salaries for the duration of the COVID-19 crisis.

Cash Bonuses

Cash bonuses are used to compensate and align our executives toward certain financial, strategic and operational goals. The leadership development and compensation committee approves payment of quarterly cash bonuses as part of the overall compensation packages of our executive officers and retains the authority to review and adjust the overall bonus at year-end. Mr. Eberle’s cash bonus opportunity is based on a percentage of his base compensation, which for fiscal 2020 was 120% of his base compensation.

Our executive officers had annual bonus opportunities for fiscal 2020 as follows:

 

Name		2020 Annual Bonus Opportunity
Robert A. Eberle		$	477,360
Richard D. Booth		$	200,000
Nigel K. Savory (1)		$	170,100
Norman J. DeLuca		$	200,000
John F. Kelly		$	135,000

 

 

 

(1)

Mr. Savory’s bonus opportunity is in British Pounds Sterling which, for this presentation, was converted to U.S. dollars at the average exchange rate of 1.260.

In September 2019, the leadership development and compensation committee reviewed the cash bonus framework for Mr. Eberle and approved a revised methodology to better align cash bonus eligibility with our most important financial and operational goals. Under this framework, 67% of Mr. Eberle’s total cash bonus opportunity is based upon reported consolidated subscription revenue growth (measured as a percentage) with growth at or above 20% necessary in order to qualify for 100% of the bonus opportunity and with the ability to receive graduated partial bonus payments for subscription revenue growth results between 10% and 20%. No bonus would be earned under the framework for subscription revenue growth below 10%. The remaining 33% of Mr. Eberle’s total annual cash bonus opportunity is determined by the leadership development and compensation committee based on our performance against key management objectives, including product development initiatives, growth in annual recurring revenue orders, execution against major customer deliverables, establishing and maintaining strategic customer and partner relationships, recruitment, development and retention of key employee talent and progress against other key strategic initiatives that may be identified from time to time. This bonus methodology will remain in effect until it is modified by the leadership development and compensation committee.    

The leadership development and compensation committee may determine that a bonus above or below the amount determined under the framework is appropriate in any given period, in the context of the company’s

 

16

overall performance and in consideration of other factors such as acquisitions, industry developments and overall economic conditions. Achievement against the key management objectives are reviewed and determined by the leadership development and compensation committee quarterly and this assessment is subjective.

At the end of each quarter, management prepares a summary of our performance for the quarter, including performance against the subscription revenue growth target and designated key management objectives, which accompanies Mr. Eberle’s recommendation to the leadership development and compensation committee in respect of bonuses for other executives, if any, proposed for that quarter. The leadership development and compensation committee uses the framework discussed above to evaluate Mr. Eberle’s quarterly cash bonuses.

For fiscal 2020, Bottomline achieved a 16% subscription revenue growth rate on a constant currency basis and demonstrated a high level of achievement against the key management objectives. Mr. Eberle’s total bonus payment earned under the framework based on the business results achieved for fiscal 2020 was $397,800. However, during fiscal 2020, as in many other instances in the past, Mr. Eberle recommended and the committee approved quarterly bonus amounts that were less in the aggregate than the amounts Mr. Eberle had earned under the framework. Mr. Eberle did so in order to allocate funds more broadly to our employee base and to other corporate initiatives. As a result, Mr. Eberle’s bonus paid under the framework for fiscal 2020 was $280,000, an aggregate amount below that which he had earned. At the end of fiscal 2020, the leadership development and compensation committee reviewed the total fiscal 2020 bonus amount paid to Mr. Eberle under the framework and, in light of his contribution and performance during fiscal 2020, awarded him a discretionary cash bonus of $100,000. Notwithstanding the discretionary payment awarded to Mr. Eberle, his total bonus payments for fiscal 2020 remained below the bonus amount he earned under the framework.

The quarterly bonuses for all other executive officers are recommended to the leadership development and compensation committee by Mr. Eberle based first on overall corporate performance and next based on Mr. Eberle’s assessment of their individual performance. Although the fiscal 2020 bonus framework discussed above does not apply specifically to the other executive officers, the company’s achievement of subscription revenue growth and the key management objectives are typically the key factors that affect Mr. Eberle’s assessment and his ultimate recommendation to the leadership development and compensation committee concerning bonus amounts that should be considered for approval. The final determination of bonus amounts that should be paid to any executive officer is made by the leadership development and compensation committee.

 

Name		2016 Cash Bonus (1)				2017 Cash Bonus (1)				2018 Cash Bonus (1)				2019 Cash Bonus (1)				2020 Cash Bonus (1)
Robert A. Eberle		$	5,000			$	168,000			$	397,300			$	90,000			$	380,000
Richard D. Booth		$	30,000			$	83,000			$	170,000			$	53,000			$	112,500
Nigel K. Savory (2)		$	65,570			$	70,723			$	154,568			$	96,080			$	183,771
Norman J. DeLuca		$	30,000			$	83,000			$	370,000			$	53,000			$	157,500
John F. Kelly		$	17,500			$	61,500			$	103,500			$	36,000			$	83,000

 

 

 

(1)	As has occurred in the past, our executives declined certain cash bonus amounts that they would have otherwise earned under our compensation framework in order to make additional funds available to other employees.

(2)

Mr. Savory was paid in British Pounds Sterling, which for purposes of this presentation were converted to U.S. Dollars at the average exchange rate for the twelve months ended June 30, 2016, 2017, 2018, 2019 and 2020 of 1.483, 1.268, 1.347, 1.294 and 1.260, respectively, U.S. Dollars per British Pound Sterling.

Restricted Stock

Restricted stock awards are designed to provide long-term compensation incentives to our executives. To further provide alignment, the leadership development and compensation committee determined that beginning in fiscal 2021 all restricted stock awards granted to any employee, including any executive officer, be subject to a performance condition aligned to our achievement of subscription revenue growth rates for 35% of the total shares underlying each award. Our leadership development and compensation committee believes that consistent

 

17

levels of annual restricted stock awards are the optimum vehicle to promote, create and reward long term stockholder value creation. The committee believes that a management team that knows that it has the opportunity to earn restricted stock awards and has an expectation that, with performance and achievement of business objectives, there will be an opportunity for annual stock awards is optimally aligned with stockholders and, importantly, reflects a compensation philosophy that is designed to create value not just for the short term but with an essential emphasis on the longer term.

We typically make an initial award of restricted stock when a new executive is hired, after which annual awards are granted as part of the overall executive compensation program. Restricted stock awards to our executives are approved by the leadership development and compensation committee. Since awards of restricted stock are issued at no cost to the executive, they have a built-in value at the time the awards are made. Accordingly, we generally grant fewer shares of restricted stock than the number of stock options or other types of equity awards that might have been issued for a similar purpose, which helps to reduce dilution to our stockholders. To maximize the long-term incentives for our executives and to minimize the dilutive effect on existing stockholders, we consider it likely that future equity awards to our executives will continue to be in the form of restricted stock rather than stock options.

Through fiscal 2020, substantially all restricted stock awards to our executives have had a four year vesting term, with 25% of the shares vesting after the first year and 6.25% of the shares vesting at the end of each quarter thereafter. For all awards of restricted stock granted to our Chief Executive Officer under our 2019 stock incentive plan, the award is required to have a vesting schedule of more than three years and is further subject to a one year holding period after the vesting date before any sale or transfer of shares that have vested may take place, other than the sale of shares to cover minimum statutory tax obligations in respect of the vesting of such shares. Additionally, any award granted to any individual on or after November 16, 2016 will provide that no part of such award will vest or become exercisable prior to the first anniversary of the date such award is made or granted, except that an award may provide that it may immediately vest (or become immediately exercisable) in whole or in part upon the recipient’s death, disability, termination from the company other than for cause or upon the occurrence of a change in control event. Except in the case of death or disability and certain severance and change in control situations, vesting typically ceases on the date of termination of employment. Other than the ability to sell or transfer the shares prior to vesting, restricted stock awards generally entitle the recipient to full rights as a stockholder at the time of the award. Consistent with company policy, holders of unvested restricted shares are not entitled to receive dividends on these shares.

Restricted stock awards to our executives are evaluated annually by the leadership development and compensation committee in conjunction with the review of individual performance of our executives and the financial and operational performance of the company. This review typically occurs during our fourth fiscal quarter each year for purposes of establishing the award level for the immediately following fiscal year.

Performance Stock Awards

Upon issuance in July 2019, the leadership development and compensation committee designated that 30% of Mr. Eberle’s annual restricted stock award for fiscal 2020, in addition to the time-based vesting conditions described above, be further subject to a performance measure tied to the achievement of subscription revenue growth rates. In November 2019, the leadership development and compensation committee determined that it was advisable to modify Mr. Eberle’s fiscal 2020 stock award to provide for an increase to 35% of the number of shares of that award which are subject to the performance measure described above. Mr Eberle agreed with this modification. The leadership development and compensation committee also communicated their expectation that future stock awards to Mr. Eberle would similarly include a performance measure that would need to be met in order for the award to vest and that performance measures would apply to at least 35% of the total amount of the award. The performance criteria therefore apply to 38,500 shares of restricted stock awarded to Mr. Eberle during 2020. The performance criteria apply for the duration of the four year service requirement and will be assessed at each vesting date to determine whether the performance criteria have been achieved and, if yes, to what extent. Aligning the performance criteria to the achievement of subscription revenue growth rates was considered appropriate given the importance of this key financial metric to the company and its shareholders.

 

18

In May 2020, the leadership development and compensation committee reviewed the alignment of our equity incentive program with overall shareholder perspectives and concluded that, beginning in fiscal 2021, all restricted stock awards granted to any employee, including any executive officer, be subject to a performance condition aligned to our achievement of subscription revenue growth rates for 35% of the total shares underlying each award.

Leadership Development and Compensation Committee Equity Incentive Policy Statement

The objective of our equity incentive plans is to directly align management incentives with the creation of long-term shareholder value. Our equity compensation program has been consistently applied and has been a key driver of the performance of the company and the retention success we have had with our executives and other key employees.

The leadership development and compensation committee has previously provided Mr. Eberle with a non-binding letter setting forth the committee’s philosophy on equity compensation, reviewing the results of Bottomline’s business since Mr. Eberle became Chief Executive Officer and outlining the committee’s intention and expectation for future equity awards to Mr. Eberle. The leadership development and compensation committee has adopted an Equity Incentive Policy Statement which applies the general principles set forth in Mr. Eberle’s letter to all of our executives. Neither the Equity Incentive Policy Statement nor the letter to Mr. Eberle create any binding contractual obligation or a specific award of stock to any individual, but instead set forth the fundamental objectives and philosophy underlying Bottomline’s equity compensation program.

Underpinning the Equity Incentive Policy Statement and the letter to Mr. Eberle is the principle that annual restricted stock awards should be determined based upon the number of shares granted, rather than the value of those shares. The committee believes that this results in annual awards that are predictable and that provide a consistent motivation and retention tool that is linked directly to our stock price performance. In past years, the number of shares granted to our executives has been relatively consistent; when the market price of our stock was lower, executives did not receive more shares and, similarly, as the success of the company has been reflected in an appreciated stock price, they have not received fewer shares. The committee views this as fair because executives know that if they can increase the value of the company the value of the stock grants they have received to date and will receive in the future is similarly increased. It directly aligns management incentive with the creation of shareholder value.

We believe our equity incentive compensation program has been a key factor not only in recruiting management talent to Bottomline, but also in retaining our current executives and other key employees. Accordingly, it is the intention and expectation of the leadership development and compensation committee to provide the company’s executive officers with the opportunity for annual awards of restricted stock that are generally consistent with awards made to them in recent fiscal years. The leadership development and compensation committee is not obligated to make any such awards, and may modify the size of any such awards in its discretion. Factors that the committee may consider in the exercise of that discretion include, but are not limited to, the following:

 

•

the company’s performance;

 

•

the executive’s individual performance;

 

•

the total compensation being paid to the executive;

 

•

the executive’s anticipated contributions to Bottomline’s future performance;

 

•

the executive’s scope of responsibility;

 

•

the executive’s current position with Bottomline;

 

•

the number and size of equity awards granted to comparable executive officers by peer group companies; and

 

•

in the case of executives other than Mr. Eberle, Mr. Eberle’s recommendations concerning individual performance, role changes and other factors.

 

19

In June 2019, the leadership development and compensation committee approved annual awards of restricted stock to Messrs. Booth, Savory, Deluca and Kelly in the amount of 35,000 shares, 48,000 shares, 30,000 shares and 15,000 shares, respectively, each in recognition of the executive’s performance in their roles and overall business performance of the company, and authorized that each award be granted in July 2019. In July 2019, the leadership development and compensation committee approved an annual award of restricted stock to Mr. Eberle in amount of 110,000 shares, 30% of which were initially subject to performance criteria, with such award modified as discussed above to ultimately reflect a performance condition in respect of 35% of the total shares granted.

For fiscal 2020, the following restricted stock awards were granted:

 

Name		2020 Shares         Granted
Robert A. Eberle			110,000
Richard D. Booth			35,000
Nigel K. Savory			48,000
Norman J. DeLuca			30,000
John F. Kelly			15,000

 

 

Equity Pool Policy

The leadership development and compensation committee has approved a formal equity pool policy providing that the annual equity pool be adjusted upwards or downwards depending upon Bottomline’s stock price (based on a 30-day trailing average as of July 1 of each year) and non-GAAP net income and revenues for the preceding fiscal year. The percentage change in each metric is multiplied by one-third (thus weighting each equally), and the sum of the resulting net percentage divided by two. The equity pool for the prior fiscal year is then adjusted upwards or downwards by a percentage equal to that amount, to determine the equity pool for the current year. This methodology was in place through fiscal 2020.

In August 2020, the leadership development and compensation committee reviewed the equity pool policy and elected to change the calculation to remove the input measure of non-GAAP net income and replace it with the company’s adjusted EBITDA results. The committee believes that adjusted EBITDA is a financial metric more regularly used by our shareholders in assessing our performance and, as such, this change better aligns the equity pool policy with the perspective of shareholders. The leadership development and compensation committee has approved this policy through fiscal 2023, but retains the discretion to adjust the equity pool in any given year based on their on-going review and oversight.

Other Equity Matters

Prohibition on Short Sales, Hedging Transactions and Derivative Transactions

Our insider trading policy prohibits all employees, executives and directors from engaging in speculative transactions in our securities, including short sales or hedging transactions (such as purchases or sales of puts, calls, options or other derivative securities) that are designed to hedge or offset a decrease in value of our securities.

Pledging of Company Stock

During fiscal 2020, none of our executives or directors pledged company shares.

Holding Period for Equity Awards

Any equity award made or granted after November 16, 2016 to our Chief Executive Officer is subject to a one year holding period before any sale or transfer of shares that have vested may take place, other than the sale of shares to cover minimum statutory tax obligations in respect of the vesting of such shares, but otherwise we do not have any equity ownership guidelines for our executives.

 

20

Share Recycling

Our 2019 Stock Incentive Plan does not contain an evergreen provision or permit liberal share recycling. As such, (i) any shares of our common stock delivered to satisfy payment of the exercise price of an award or any applicable tax withholding obligation (including shares retained from the award creating the tax obligation) will not be added back to the number of shares available for the future grant of awards under the plan, (ii) shares of our common stock repurchased by us on the open market using the proceeds from the exercise of an award will not increase the number of shares available for future grant of awards under the plan, and (iii) the full number of shares subject to a stock appreciation right multiplied by the percentage of the stock appreciation right actually exercised will count against the number of shares available for grant, regardless of the number of shares actually issued to settle the stock appreciation right upon exercise.

Benefits and Other Compensation

We maintain broad-based benefits that are provided to all of our employees, including health and dental insurance, life and disability insurance, an employee stock purchase plan and a 401(k) plan. Executives are eligible to participate in all of our employee benefit plans, in each case on the same terms as our other employees.

During fiscal 2020, we provided supplemental executive long-term disability insurance to Mr. Eberle and Mr. Savory. In addition, we paid the premiums for private medical insurance and provided an automobile allowance to Mr. Savory. We anticipate that we will continue to provide these benefits in fiscal 2021.

From time to time, we make tickets to cultural and sporting events available to our executives and other employees for business purposes. If not utilized for business purposes, these tickets are generally made available for the personal use of our employees, including our executives.

Severance and Change in Control Benefits

Pursuant to employment and retention agreements we have entered into with our executives, the terms of our stock incentive plans and certain resolutions of our Board of Directors in connection with our equity programs, our executives are entitled to certain benefits in the event of a change in control of our company or the termination of their employment under specified circumstances, including termination following a change in control. We have provided more detailed information about these benefits, along with estimates of their value under certain circumstances, under the caption “Employment and Other Agreements and Potential Payments Upon Termination or Change in Control” below.

We believe these benefits help us compete for and retain executive talent and are generally in line with severance packages offered to executives by the companies in our peer group. We also believe that these benefits would serve to minimize the distraction caused by any change in control scenario and reduce the risk that key talent would leave the company before any such transaction closes, which could reduce the value of the company if such transaction failed to close.

 

21

Summary Compensation

The following table sets forth certain information concerning the compensation for our named executive officers. None of our executive officers received a base salary increase in fiscal 2020.

Summary Compensation Table

 

Name and Principal Position		Fiscal Year				Salary ($)				Bonus ($) (1)				Stock Awards ($) (2)				Non-Equity Incentive Plan Compensation ($) (3)				All Other Compensation ($) (4)				Total ($)
Robert A. Eberle,			2020			$	397,800			$	100,000			$	4,855,400			$	280,000			$	37,358			$	5,570,558
Chief Executive Officer			2019			$	391,950			$	—			$	7,846,800			$	90,000			$	44,633			$	8,373,383
			2018			$	384,167			$	239,000			$	5,890,600			$	158,300			$	31,380			$	6,703,447
Richard D. Booth			2020			$	295,800			$	—			$	1,544,900			$	112,500			$	11,922			$	1,965,122
Chief Financial Officer			2019			$	291,450			$	—			$	1,829,100			$	53,000			$	35,497			$	2,209,047
and Treasurer			2018			$	287,083			$	—			$	1,169,878			$	170,000			$	24,990			$	1,651,951
Nigel K. Savory			2020			$	276,066			$	—			$	2,118,720			$	183,771			$	36,692			$	2,615,249
Managing Director,			2019			$	269,831			$	—			$	4,859,980			$	96,080			$	35,577			$	5,261,468
Europe (5)			2018			$	270,074			$	—			$	1,366,080			$	154,568			$	32,442			$	1,823,164
Norman J. DeLuca			2020			$	290,700			$	—			$	1,324,200			$	157,500			$	9,857			$	1,782,257
Managing Director,			2019			$	286,425			$	—			$	1,881,360			$	53,000			$	5,114			$	2,225,899
Banking Solutions			2018			$	282,083			$	200,000			$	853,800			$	170,000			$	8,197			$	1,514,080
John F. Kelly			2020			$	290,700			$	—			$	662,100			$	83,000			$	9,165			$	1,044,965
General Manager,			2019			$	286,425			$	—			$	522,600			$	36,000			$	4,914			$	849,939
Legal Solutions			2018			$	282,083			$	—			$	2,266,900			$	103,500			$	7,847			$	2,660,330

 

 

 

(1)	Represents discretionary cash bonus awards approved by the leadership development and compensation committee.

(2)

The amounts reported in this column are computed based on the closing price of our common stock on the date the awards were granted (the grant date fair value) which for fiscal 2020 was $44.14 based on the award date. These values do not reflect the values that our named executive officers will realize on the award vesting dates, which value will ultimately be dependent on our stock price on the vesting date.

(3)	The amounts in this column reflect cash bonus awards paid to our named executive officers under our cash bonus program. See “Compensation Discussion and Analysis-Components of our Executive Compensation Program-Cash Bonuses” above for a description of this program.

(4)

These amounts consist of: our matching contributions to each executive’s retirement savings plan account; the purchase discount from the market price of our common stock at the date of purchase under our employee stock purchase plan; the portion of premiums paid by us for supplemental executive long-term disability insurance for Mr. Eberle and Mr. Savory; and automobile allowances and private medical insurance premiums paid by us on Mr. Savory’s behalf.

(5)	Mr. Savory was paid in British Pounds Sterling, which for purposes of this presentation were converted to U.S. Dollars at the average exchange rate for the twelve months ended June 30, 2020, 2019 and 2018 of 1.260, 1.294 and 1.347, respectively, U.S. Dollars per British Pound Sterling.

 

22

Grants of Plan-Based Awards

The following table sets forth information concerning each grant of an award made to a named executive officer during fiscal 2020 under any plan, contract, authorization or arrangement pursuant to which cash, securities, similar instruments or other property may be received. Non-equity incentive plan awards were made pursuant to our cash bonus program described in our Compensation Discussion and Analysis under the caption “Cash Bonuses”.

Fiscal 2020 Grants of Plan-Based Awards

 

												Estimated Possible Payouts Under Non-Equity Incentive Plan Awards  (1)
Name		Grant Date					Date of Leadership Development and Compensation Committee Action (2)					Threshold     ($) (3)					Target     ($) (4)					Maximum     ($) (5)					All Other Stock Awards: Number of Shares of Stock or Units (#) (6)					Grant Date Fair Value of Stock Awards ($) (7)
Robert A. Eberle				7/26/2019					7/25/2019																				110,000					4,855,400
														95,472					358,020					477,360
Richard D. Booth				7/26/2019					6/20/2019																				35,000					1,544,900
														40,000					150,000					200,000
Nigel K. Savory				7/26/2019					6/20/2019																				48,000					2,118,720
														34,020					127,575					170,100
Norman J. DeLuca				7/26/2019					6/20/2019																				30,000					1,324,200
														40,000					150,000					200,000
John F. Kelly				7/26/2019					6/20/2019																				15,000					662,100
														27,000					101,250					135,000

 

 

 

(1)

Amounts in these columns show estimates of possible threshold, target and maximum cash award amounts under our cash bonus program for fiscal 2020. Actual amounts paid are disclosed and reported in the Summary Compensation Table under the caption Non-Equity Incentive Plan Compensation. Actual amounts paid may vary substantially from the figures shown in this table due to the factors discussed in Compensation Discussion and Analysis under the caption “Cash Bonuses”.

(2)

Annual restricted stock awards to our named executive officers are typically approved by the leadership development and compensation committee prior to the commencement of the next fiscal year, with an effective grant date of not earlier than July 1, the first date of our fiscal year. If an executive is not employed by us on July 1, they will not receive the award.

(3)	Reflects an estimate of the minimum amount that would have been earned if the minimum targets for all of the quarterly and annual metrics were achieved and a portion of the designated key management objectives were met.

(4)	Reflects an estimate of the amount that would have been earned if the targeted quarterly and annual metrics were achieved and a majority of the designated key management objectives were met.

(5)	Reflects an estimate of the maximum amount that would have been earned if the maximum targets for all of the quarterly and annual metrics were achieved and the designated key management objectives were met in full.

(6)

Reflects awards of restricted stock. These shares vest as to 25% of the shares on the first anniversary of the date of grant and 6.25% of the shares each quarter thereafter, with the exception of the shares granted to Mr. Eberle under the 2009 stock incentive plan on or after November 17, 2016 which vest as to approximately 23.5% of the shares on the first anniversary of the date of grant and approximately 5.9% of the shares each quarter thereafter, pursuant to time-based and performance-based conditions as applicable. In addition, as described below under “Employment and Other Agreements and Potential Payments Upon Termination or Change in Control”, the vesting of the shares granted to our named executive officers may be accelerated following employment termination or a change in control under certain circumstances.

(7)

Calculated by multiplying the number of shares of stock by the closing price per share of our common stock on the grant date, which was $44.14 for awards granted on July 26, 2019. These values do not reflect the values that our named executive officers will realize on the award vesting dates, which value will ultimately be dependent on our stock price on the vesting date.

 

23

Equity Awards and Holdings

The following table sets forth information concerning unvested restricted stock awards for each of the named executive officers as of June 30, 2020.

Fiscal 2020 Outstanding Equity Awards at Fiscal Year-End

 

		Stock Awards
Name		Stock Award Grant Date				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)
Robert A. Eberle
			7/26/2019				110,000				5,584,700
			5/31/2019				45,882				2,329,429
			7/2/2018				58,823				2,986,444
			5/17/2018				31,764				1,612,658
			7/21/2017				38,823				1,971,044
			7/1/2016				12,941				657,015
Richard D. Booth
			7/26/2019				35,000				1,776,950
			7/2/2018				19,687				999,509
			11/30/2017				8,749				444,187
			7/21/2017				3,125				158,656
			7/1/2016				1,250				63,463
Nigel K. Savory
			7/26/2019				48,000				2,436,960
			2/14/2019				34,375				1,745,219
			7/2/2018				27,000				1,370,790
			7/21/2017				15,000				761,550
			7/1/2016				4,062				206,228
Norman J. DeLuca
			7/26/2019				30,000				1,523,100
			7/2/2018				20,250				1,028,093
			7/21/2017				9,375				475,969
			7/1/2016				2,875				145,964
John F. Kelly
			7/26/2019				15,000				761,550
			7/2/2018				5,625				285,581
			5/17/2018				20,000				1,015,400
			7/21/2017				4,687				237,959
			7/1/2016				562				28,533

 

 

 

(1)

These shares vest as to 25% of the shares on the first anniversary of the date of grant and 6.25% of the shares each quarter thereafter, with the exception of the shares granted to Mr. Eberle under the 2009 stock incentive plan on or after November 17, 2016 which vest as to approximately 23.5% of the shares on the first anniversary of the date of

 

24

grant and approximately 5.9% of the shares each quarter thereafter, pursuant to time-based and performance-based conditions as applicable. In addition, as described below under “Employment and Other Agreements and Potential Payments Upon Termination or Change in Control”, the vesting of the shares granted to our named executive officers may be accelerated following employment termination or a change in control under certain circumstances.

(2)	Calculated by multiplying the number of unvested shares by $50.77, the closing price per share of our common stock on the Nasdaq Global Select Market on June 30, 2020.

Stock Vested in Fiscal 2020

The following table sets forth information regarding vesting of restricted stock held by the named executive officers during the fiscal year ended June 30, 2020.

Amounts shown under the column “Value Realized on Vesting” represents the number of shares of restricted stock that vested multiplied by the market value of the underlying shares on the vesting date which for fiscal 2020 ranged from $34.21 to $54.00.

Fiscal 2020 Stock Vested

 

		Stock Awards
Name		Number of Shares Acquired on Vesting (#)				Value Realized on Vesting ($)
Robert A. Eberle			128,052				5,708,637
Richard D. Booth			35,000				1,499,220
Nigel K. Savory			70,500				3,146,660
Norman J. DeLuca			37,000				1,584,688
John F. Kelly			20,937				951,413

Employment and Other Agreements and Potential Payments upon Termination or Change in Control

We are party to employment agreements or similar arrangements with Mr. Eberle, Mr. Booth, Mr. DeLuca, Mr. Kelly and Mr. Savory. The following description is only a summary of these agreements and is qualified by reference to the full agreements.

In addition to the change in control provisions in such individual employment agreements, our stock incentive plans contain provisions that are applicable to all plan participants regarding the consequences of a Change in Control Event (as defined in the applicable plan). Generally, the plans provide that the vesting schedule of any unvested stock option, restricted stock award, or restricted stock unit award would be accelerated in part such that what would have otherwise become vested on any date within one year after the date of the Change in Control Event would immediately become vested. Additionally, each option, restricted stock or restricted stock unit award would immediately become free from all conditions or restrictions if, on or prior to the second anniversary of the date of the consummation of the Change in Control Event, the plan participant’s employment with the company or the acquiring or succeeding corporation is terminated for Good Reason (as defined in the applicable plan) by the participant or is terminated without Cause (as defined in the applicable plan) by the company or the acquiring or succeeding corporation. Awards that vest in whole or in part based on specified performance conditions will be deemed satisfied at the target level upon the consummation of the Change in Control Event. Awards continue to be subject to their original service-based vesting requirements (if any) and be accelerated, as applicable, as described in the preceding two sentences of this paragraph. The foregoing description is only a summary and is qualified by reference to the applicable plan.

Robert A. Eberle Employment Agreement

We entered into an employment agreement with Mr. Eberle as of September 30, 1998, which was amended as of December 23, 2008. The employment agreement automatically renews for successive three year renewal periods unless the agreement is not renewed by either us or Mr. Eberle pursuant to written notice, or is sooner terminated in accordance with its terms. Further, the employment agreement automatically renews for a

 

25

three year period in the event we experience a change in control. The current renewal period under the employment agreement extends through November 21, 2020.

Under the employment agreement, a “change in control” of Bottomline would be deemed to have occurred if:

 

•

any person becomes the beneficial owner of more than 50% of the voting power of our outstanding securities;

 

•

our stockholders approve a merger or consolidation of Bottomline, subject to certain limited exceptions; or

 

•

our stockholders approve a plan of liquidation or a sale of all or substantially all of our assets.

In the event of a change in control, Mr. Eberle’s restricted stock will vest in full.

If Mr. Eberle’s employment is terminated by Mr. Eberle as a result of an involuntary termination (as defined below) or by us without cause (as defined below), in either case prior to a potential change in control, or if we do not renew Mr. Eberle’s agreement as provided above, all shares of Mr. Eberle’s restricted stock will vest in full, and he will be entitled to receive continuation of benefits for a period of 24 months and a lump sum payment equal to two times the sum of his then current annual salary plus two times the maximum amount of bonus he was eligible to earn for the then current fiscal year. Mr. Eberle will not be entitled to any of the foregoing payments or benefits if he breaches material obligations under his employment agreement or any other agreement with Bottomline including those that impose confidentiality, proprietary information, assignment of inventions, non-competition or similar obligations on him.

An involuntary termination would occur if Mr. Eberle’s duties were changed in a manner such that it resulted in a material diminution in his authority, duties or responsibilities, including his level of budget authority; his base compensation was materially reduced (other than in connection with a company-wide reduction in salaries); he no longer reported directly to the Board of Directors; his place of work was relocated by more than 50 miles; or Bottomline breached a material provision of his employment agreement.

“Cause” means, prior to a change in control of Bottomline, the discharge of Mr. Eberle resulting from:

 

•

a felony conviction;

 

•

willful and persistent failure to attend to material duties or obligations;

 

•

the breach of confidentiality, non-competition or similar material obligations by Mr. Eberle; or

 

•

an act or omission which would constitute a crime involving Bottomline’s property.

The second and third items specified above would not constitute cause after a change in control of Bottomline.

If Mr. Eberle’s employment is terminated upon or after a potential change in control, or after a change in control, either by Mr. Eberle as a result of an involuntary termination or by us without cause, all shares of his restricted stock will vest in full, and Mr. Eberle will be entitled to receive continuation of benefits for a period of 24 months and a lump sum payment equal to three times the sum of Mr. Eberle’s then annual salary plus up to three times the maximum amount of any bonus Mr. Eberle was eligible to earn for the then current fiscal year. Mr. Eberle will not be entitled to any of the foregoing payments or benefits if he breaches material obligations under his employment agreement or any other agreement with Bottomline including those that impose confidentiality, proprietary information, assignment of inventions, non-competition or similar obligations on him.

A “potential change in control” of Bottomline would be deemed to have occurred if:

 

•

we enter into an agreement that would cause a change in control;

 

•

any person publicly announces an intention to take any action which, if consummated, would constitute a change in control; or

 

26

•

our Board of Directors adopts a resolution to the effect that, for purposes of the employment agreement, a potential change in control has occurred.

The employment agreement also provides that, in the event of a change in control, we would pay any excise tax for which Mr. Eberle would be liable under Section 4999 of the Internal Revenue Code of 1986 (the “Code”), as a result of having received the severance benefits, as well as the amount necessary to pay all additional taxes imposed on Mr. Eberle as a result of our payment of the excise tax.

In addition, following termination of employment by us other than for cause, restricted stock held by Mr. Eberle would automatically vest in full. In the event of Mr. Eberle’s termination for death or disability, he or his estate, as applicable, would be entitled to the vesting acceleration described above, as well as the maximum bonus he was eligible to earn in the then current fiscal year.

Richard D. Booth Employment Agreement

Effective March 31, 2015, we entered into an employment agreement with Mr. Booth in connection with the commencement of his employment with the company in April 2015. Under the terms of the employment agreement, if Mr. Booth’s employment is terminated by the company without cause or by Mr. Booth for good reason, each as defined below, and subject to Mr. Booth’s execution of a general release of potential claims against the company, (i) the company has agreed to pay Mr. Booth a lump sum amount equal to 12 months of Mr. Booth’s then-current base salary and an amount equal to Mr. Booth’s target bonus then in effect and (ii) any restricted stock or other equity awards that would have vested during the 12 months following the termination date will automatically vest. In addition, if Mr. Booth’s employment is terminated by the company within 12 months following a change in control as defined below, any restricted stock or other equity awards will vest in full.

Under the terms of the employment agreement, Mr. Booth is also subject to specified confidentiality, non-competition and non-solicitation obligations.

Under the employment agreement, a “change in control” of Bottomline would occur if:

 

•

any person becomes the beneficial owner of more than 50% of the voting power of our outstanding securities;

 

•

our stockholders approve a merger or consolidation of Bottomline, subject to certain limited exceptions; or

 

•

our stockholders approve a plan of liquidation or a sale of all or substantially all of our assets.

A voluntary termination for “good reason” would occur if Mr. Booth’s duties were changed in a manner such that it resulted in a material diminution in his authority, duties or responsibilities, his base compensation was materially reduced (other than in connection with a company-wide reduction in salaries); he no longer reported directly to the Chief Executive Officer; his place of work was relocated by more than 50 miles; or Bottomline breached a material provision of his employment agreement.

“Cause” means, prior to a change in control of Bottomline, the discharge of Mr. Booth resulting from:

 

•

a felony conviction;

 

•

willful and persistent failure to attend to material duties or obligations;

 

•

the breach of confidentiality, non-competition or similar material obligations by Mr. Booth; or

 

•

an act or omission which would constitute a crime involving Bottomline’s property.

Nigel K. Savory Service Agreement

We are party to a service agreement with Mr. Savory dated as of November 22, 1999, which was amended on February 18, 2011.

Mr. Savory’s service agreement remains in effect, absent our termination of Mr. Savory for cause or due to incapacity, until terminated by at least six months’ written notice by us or by at least 12 months’ written notice

 

27

by Mr. Savory. We also have the right to terminate the agreement on less than six months’ written notice, but in lieu of notice, we are required to pay Mr. Savory his salary and other contractual benefits under the service agreement for the duration of the period for which notice was not given. In addition, if in connection with our termination of his employment Mr. Savory executes a satisfactory compromise agreement with us, he will be entitled to a severance payment equivalent to six months’ base salary and car allowance plus a sum equivalent to six months’ bonus entitlement calculated on a pro rata basis according to the level of bonuses actually paid to him over the preceding period of 12 months. If we terminate the service agreement for cause or due to Mr. Savory’s incapacity, we are not required to pay Mr. Savory any compensation other than accrued compensation, although Mr. Savory will be entitled to the equity acceleration described below in the event of his termination due to incapacity.

For purposes of Mr. Savory’s service agreement (other than the provisions relating to equity acceleration discussed below), “cause” means the discharge of Mr. Savory resulting from, among other things:

 

•

material breach of the terms of the agreement;

 

•

serious misconduct or willful neglect in the discharge of his duties under the agreement;

 

•

conviction of a criminal offense which in our reasonable opinion materially or adversely affects Mr. Savory’s ability to continue as an employee or officer of the company;

 

•

acts of fraud or material dishonesty; or

 

•

deliberate discrimination or harassment on grounds on race, religion, creed, sex or disability.

If we terminate Mr. Savory’s employment without cause prior to a change in control, all shares of his restricted stock will vest in full. If a change in control occurs during the term of the service agreement and Mr. Savory’s employment is terminated by us other than for cause or by Mr. Savory for good reason within 12 months following the effective date of the change in control, all shares of his restricted stock will vest in full.

For purposes of the equity acceleration provisions of Mr. Savory’s service agreement, the terms “cause” and “change in control” have substantially the same meaning as in Mr. Eberle’s employment agreement, as described above, and “good reason” has the following meaning:

 

•

a significant change in Mr. Savory’s duties;

 

•

a reduction in his base compensation;

 

•

a relocation of his place of work by more than 50 miles; or

 

•

a breach by Bottomline of any material provision of the service agreement.

Pursuant to the service agreement, Mr. Savory has agreed not to compete with Bottomline for a period of 12 months after the termination of his employment in any business within the United Kingdom which is competitive with our business and with which Mr. Savory had been involved during the 12 months immediately preceding termination. In addition, Mr. Savory has agreed that during this 12-month period, he will not solicit our customers, potential customers or employees with whom he had dealings during the 12 months immediately preceding termination.

Norman DeLuca Employment Agreement

We entered into an employment agreement with Mr. Deluca dated October 10, 2011 in connection with his employment with the company. Under the terms of the employment agreement, any restricted stock granted to Mr. Deluca by the company will automatically vest upon a “change in control” as defined below.

Under the employment agreement, a “change in control” of Bottomline would be deemed to have occurred if:

 

•

any person becomes the beneficial owner of more than 50% of the voting power of our outstanding securities;

 

28

•

our stockholders approve a merger or consolidation of Bottomline, subject to certain limited exceptions; or

 

•

our stockholders approve a plan of liquidation or a sale of all or substantially all of our assets.

John F. Kelly Executive Retention Agreement

We entered into an executive retention agreement with Mr. Kelly dated August 5, 2016. Under the terms of the retention agreement, if Mr. Kelly’s employment is terminated by the company without “cause” or by Mr. Kelly for “good reason” within 12 months following a “change in control” (each term as defined in the agreement), then (i) Mr. Kelly will be entitled to payment of an amount equal to the sum of any accrued but unpaid base salary through the date of termination, an amount equal to his base salary for the six months prior to the date of termination (“Salary Severance”), 50% of his annual bonus opportunity for the most recently completed fiscal year, a pro-rated portion of his annual bonus opportunity for the current fiscal year, the amount of any compensation previously deferred by Mr. Kelly (together with any accrued interest or earnings thereon), an amount equal to 50% of the commissions paid to Mr. Kelly over the previous 12 month period and any accrued but unpaid vacation pay (collectively, the “Accrued Obligations”) and (ii) all shares of restricted stock will vest and all outstanding stock options will become exercisable in full until the earlier of the second anniversary of the date of termination or the expiration of the original term of the stock option, subject to any contrary treatment provided in connection with the change of control that is consistent with the underlying plan that covers the stock options. Additionally, for 12 months after the date of termination Mr. Kelly will continue to receive standard employment benefits for himself and his family at least equal to those that would have been provided to Mr. Kelly if his employment had not been terminated.

In addition, if Mr. Kelly’s employment is terminated by reason of his death or disability within 12 months following a “change in control” (as defined in the agreement), then Mr. Kelly (or his estate, as applicable) will be entitled to payment of an amount equal to the Accrued Obligations other than the Salary Severance. If Mr. Kelly voluntarily terminates his employment within 12 months following a “change in control”, excluding a termination for “good reason”, or if his employment is terminated by us for “cause” within 12 months following a “change in control” (each term as defined in the agreement), then Mr. Kelly will be entitled to payment of an amount equal to the sum of his annual base salary through the date of termination and the amount of any compensation previously deferred by Mr. Kelly.

 

29

The table below shows estimates of the benefits potentially payable to each of our named executive officers if his employment terminated under certain circumstances or as a result of a change in control event. The amounts below are calculated on the assumption that the employment termination or change in control took place on June 30, 2020, the last business day of fiscal 2020.

 

Name		Base Salary ($)				Bonus ($)(2)				Accelerated Vesting of Restricted Stock ($)(3)				Benefits ($)				Total ($)
Robert A. Eberle
–change in control			—				—				15,141,290				—				15,141,290
–involuntary termination or termination without cause prior to a potential change in control, or non-renewal of employment agreement by company (1)(4)			795,600				954,720				15,141,290				71,517				16,963,127
–involuntary termination or termination without cause upon or after a potential change in control or change in control (4)			1,193,400				1,432,080				15,141,290				71,517				17,838,287
–termination as a result of death or disability			—				477,360				15,141,290				—				15,618,650
Richard D. Booth
–involuntary termination without cause or by Mr. Booth with good reason (1)			295,800				200,000				1,776,899				—				2,272,699
–involuntary termination within 12 months of a change in control			295,800				200,000				3,442,765				—				3,938,565
Nigel K. Savory
–termination without cause prior to a change in control or termination without cause or for good reason within 12 months following a change in control (5) (6)			276,066				91,886				6,520,747				25,150				6,913,849
–termination for incapacity (6)			—				—				6,520,747								6,520,747
Norman J. DeLuca
–change in control			—				—				3,173,126				—				3,173,126
John F. Kelly
–termination without cause or for good reason within 12 months following a change in control			145,350				67,500				2,329,023				20,193				2,562,066
–death or disability within 12 months following a change in control			—				67,500				—				—				67,500

 

(1)	Assumes no change in control takes place.

(2)	This amount would be reduced by any bonus amounts previously paid to the named executive officer for fiscal 2020.

(3)	Calculated by multiplying the number of shares subject to accelerated vesting by $50.77, the closing price per share of our common stock on the Nasdaq Global Select Market on June 30, 2020.

(4)	For purposes of calculating Mr. Eberle’s bonus in a termination without cause scenario, we have assumed his earned bonus equals his maximum bonus opportunity.

(5)	Assumes that we make a severance payment in lieu of six months’ notice and that Mr. Savory enters into a compromise agreement with us in connection with the termination of his employment.

(6)	Mr. Savory is paid in British Pounds Sterling. For purposes of this presentation, salary, target bonus and benefits were converted to U.S. Dollars at the average exchange rate for the twelve months ended June 30, 2020 of 1.26 U.S. Dollars per British Pound Sterling.

 

30

Pay Ratio Disclosure

We are providing the following information about the relationship of the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of our other employees.

A significant portion of the total compensation to our Chief Executive Officer is comprised of awards of restricted stock which vest over a period of four years or more and which serve to provide a long-term compensation incentive. The value reported as compensation for awards of restricted stock is based on the fair value of our common stock on the date the awards were granted. There is no assurance that our Chief Executive Officer will actually realize that value with respect to shares granted, since the underlying awards vest over a long period of time.

Our leadership development and compensation committee has determined that restricted stock awards are the most appropriate vehicle to promote, create and reward long-term stockholder value creation. Approximately 87% of the total annual compensation reported for our Chief Executive Officer for fiscal 2020 relates to awards of restricted stock that have not yet vested. These awards were valued based on the closing price of our common stock on the date the awards were issued to our Chief Executive Officer. For fiscal 2020, the annual total compensation of our median employee (other than our Chief Executive Officer) was $107,064. Based on this information, we estimated a ratio of 52 to 1 for the annual total compensation of our Chief Executive Officer to the median of the annual total compensation of all other employees for fiscal 2020.

The pay ratio reported above is a reasonable estimate prepared under applicable SEC rules. The pay ratio reported by other companies may not be comparable to the pay ratio we calculated, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.

Methodology

In determining our pay ratio for fiscal 2020, we referred to the same employee who was identified as our median employee for fiscal 2018 and fiscal 2019 as we concluded that there have been no changes to our employee population or employee compensation arrangements in fiscal 2020 that we believe would significantly affect our pay ratio disclosure and thus require identification of a new median employee.

We selected June 30, 2018 as the determination date for identifying our median employee. All individuals employed by us as of that date, whether on a full-time, part-time or seasonal basis, were included in our employee population unless they were excluded under the de minimis exemption discussed below.

At June 30, 2018 we employed 1,750 individuals. The de minimis exemption allows us to exclude up to 5% of our total employees who are non-U.S. employees. Accordingly, in identifying the median employee, we excluded 85 employees (representing 4.9% of our total employees) who were employed in the following countries:

 

Excluded Jurisdiction		Employees				Excluded Jurisdiction				Employees
Belgium		1				Ireland				1
Canada		20				Kosovo				13
China		3				Malaysia				2
France		5				Netherlands				2
Germany		3				Singapore				26
Indonesia		6				Thailand				3

We determined the median employee from the remaining workforce of 1,665 employees (excluding our Chief Executive Officer) based on total compensation using the same methodology we used to calculate the total compensation reported for our named executive officers in the “Summary Compensation Table” included elsewhere in this proxy statement.

 

31

The average U.S. dollar exchange rate for the fiscal year ending June 30, 2018 was applied to any compensation denominated in a foreign currency.

Tax Considerations

Prior to the enactment of the U.S. Tax Cuts and Jobs Act (the “Tax Act”), Section 162(m) of the Code and guidance issued thereunder generally disallowed a tax deduction to public companies for certain compensation in excess of $1 million paid to the company’s Chief Executive Officer and the three most highly compensated executive officers other than the Chief Executive Officer and the Chief Financial Officer. Certain compensation, including qualified performance-based compensation, was not subject to the deduction limit if certain requirements were met.

Effective as of fiscal 2019, the Tax Act eliminated the qualified performance-based compensation exception in excess of $1 million under Section 162(m) of the Code, subject to transition relief for certain binding contracts in effect on November 2, 2017, provided they are not materially modified. The Tax Act also expanded the definition of covered employees to include the Chief Financial Officer plus any individual who has previously been a covered employee in a tax year after December 31, 2016, even after the individual no longer holds the position.

The leadership development and compensation committee reviews the potential effect of Section 162(m) periodically and uses its judgment to authorize compensation payments that may be subject to the limit when the leadership development and compensation committee believes such payments are appropriate and in the best interests of the company and its stockholders, after taking into consideration changing business conditions and the performance of its executive officers.

Leadership Development and Compensation Committee Report

The leadership development and compensation committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with Bottomline’s management. Based on this review and discussion, the leadership development and compensation committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.

By the Leadership Development and Compensation Committee of the Board of Directors of Bottomline Technologies (de), Inc.

Jennifer M. Gray, Chair

Peter Gibson

Jeffrey C. Leathe

Leadership Development and Compensation Committee Interlocks and Insider Participation

During fiscal 2020, Ms. Gray and Messrs. Gibson and Leathe each served as members of the leadership development and compensation committee of our Board of Directors. During fiscal 2020, no executive officer of Bottomline served as a director or member of the compensation committee (or other committee serving an equivalent function) of any other entity whose executive officer served as a director or member of our leadership development and compensation committee.

 

32

Equity Compensation Plan Information

The following table provides information about the securities authorized for issuance under our equity compensation plans as of June 30, 2020:

 

		(a)				(b)				(c)
Plan Category		Number of securities to be issued upon exercise of outstanding options, warrants and rights				Weighted-average exercise price of outstanding options, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)).
Equity compensation plans approved by security holders (1)			—			$	—				6,007,984	(2)
Equity compensation plans not approved by security holders (3)			1,120				6.89				35,185
Total			1,120			$	6.89				6,043,169

 

 

 

(1)

Consists of the following equity compensation plans: the 2000 Employee Stock Purchase Plan, as amended (the “2000 ESPP”), the 2019 Stock Incentive Plan and the 2018 Israeli Special Purpose Stock Plan. Shares of common stock are available for future issuance only under the 2000 ESPP, the 2019 Stock Incentive Plan and the 2018 Israeli Special Purpose Stock Plan.

(2)	Consists of 1,694,423 shares issuable under the 2000 ESPP in connection with current and future offering periods under such plan, 4,287,641 shares currently issuable under the 2019 Stock Incentive Plan and 25,920 shares currently issuable under the 2018 Israeli Special Purpose Stock Plan.

(3)

The amount reported consists of outstanding stock options issued by Andera, Inc. under the Andera, Inc. 2010 Stock Option/Stock Issuance Plan (the “Andera Plan”) and assumed by the company, on an as-converted basis (the “Assumed Awards”). Each Assumed Award continues to have the same terms and conditions in effect prior to the acquisition of Andera, except that the number of shares to be received upon exercise of such option and the exercise price of such options were adjusted in accordance with the transaction terms. Please see the Registration Statement on Form S-8 filed by the company with the SEC on May 12, 2014 and “Andera Plan” below for additional information regarding the Andera Plan.

Andera Plan

A brief summary of the Andera Plan is outlined below. The following summary is not a complete description of all the provisions of the Andera Plan and is qualified in its entirety by reference to the Andera Plan, a copy of which is attached as Exhibit 99.1 of the Registration Statement on Form S-8 filed by the company with the SEC on May 12, 2014.

Key Provisions.

 

•

Eligible Participants: Employees, directors, consultants and advisors of the company or a subsidiary of the company hired after April 3, 2014 (the “Acquisition Date”) or individuals employed by Andera prior to the Acquisition Date in compliance with applicable law, including the rules and regulations of Nasdaq (or any stock exchange or quotation system on which the company’s shares are then listed or quoted).

 

•

Shares Originally Authorized Under the Plan, Shares Assumed, and Grant History: As of the Acquisition Date, Andera shareholders had authorized a total of 199,293 shares under the Andera Plan. The company assumed a total of 107,336 shares on an as-converted basis consisting of:

 

º

Unvested options to purchase 28,462 shares of Andera common stock that were outstanding immediately prior to the Acquisition Date and that were assumed by the company and converted into options to purchase the company’s common stock subject to the same vesting and other

 

33

conditions that applied to the Andera options immediately prior to the acquisition. All options were granted at fair market value on the date of grant pursuant to the terms of the Andera Plan.

 

º

69,392 shares of unvested Andera common stock that were outstanding immediately prior to the Acquisition Date and that were assumed by the company and converted into the company’s common stock subject to the same vesting and other conditions that applied to the Andera restricted common stock immediately prior to the acquisition.

 

º

9,482 shares available for future issuance under the Andera Plan.

Administration. The Andera Plan is administered by the Board of Directors. The Board of Directors will select the employees of the company and other persons who shall receive awards in compliance with applicable law, including the rules and regulations of the Nasdaq (or any stock exchange or quotation system on which the company’s shares are then listed or quoted), determine the number of shares covered thereby, and establish the terms, conditions and other provisions of the grants. The Board of Directors may interpret the Andera Plan and establish, amend and rescind any rules relating to the Andera Plan.

Certain Relationships and Related Transactions

Jason Mullen and Bob Mullen, a son and brother, respectively, of Joseph L. Mullen are employed by the company. Joseph L. Mullen is a member of our Board of Directors. The compensation packages for Jason Mullen and Bob Mullen are comparable to the compensation of Bottomline employees holding similar positions, and they are entitled to participate in other employment benefits that are standard for all of Bottomline’s employees. The total compensation earned during fiscal 2020, including base salary, commissions, bonus and equity compensation (based on grant date stock values), did not exceed $390,000 for either of these individuals.

Policies and Procedures for Related Person Transactions

Our Board of Directors has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which Bottomline is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders (or their immediate family members), each of whom we refer to as a “related person,” has a direct or indirect material interest.

If a related person proposes to enter into such a transaction, arrangement or relationship, the related person must report the proposed transaction to our chief financial officer. The policy calls for the proposed transaction to be reviewed and, if deemed appropriate, approved by the audit committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the audit committee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chairman of the audit committee to review and, if deemed appropriate, approve proposed related person transactions that may arise between audit committee meetings, subject to ratification by the full audit committee at its next meeting. Any related person transactions that are ongoing in nature are reviewed annually by the audit committee.

A related person transaction reviewed under our policy will be considered approved or ratified if it is authorized by the audit committee after full disclosure of the related person’s interest in the transaction. The audit committee will review and consider such information regarding the transaction as it deems appropriate under the circumstances.

The audit committee may approve or ratify the transaction only if it determines that, under all of the circumstances, it is in Bottomline’s best interests. Further, the audit committee may impose any conditions on the transaction that it deems appropriate.

 

34

In addition to the transactions that are excluded by the instructions to the SEC’s related person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:

 

•

interests arising solely from the related person’s position as an executive officer of another entity (whether or not the person is also a director of such entity) that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10% equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction and do not receive any special benefits as a result of the transaction, and (c) the amount involved in the transaction equals less than the greater of $200,000 or 25% of the annual consolidated gross revenues of the other entity that is a party to the transaction; and

 

•

a transaction that is specifically contemplated by provisions of Bottomline’s charter or bylaws.

The policy also provides that transactions involving compensation of executive officers shall be reviewed and approved by the leadership development and compensation committee in the manner specified in its charter.

Our employment of a son and a brother of Mr. Mullen, which is described above, was disclosed to our audit committee as part of our annual update with respect to related person transactions.

Corporate Social Responsibility and Sustainability

We believe that our commitment to responsible corporate citizenship is reflected through our employees, our corporate culture and, ultimately, through our actions. We believe that giving back to and enriching the communities in which we live and work is important to our own long term success. We organize numerous employee volunteer efforts and campaigns to support the communities in which we operate. We have been fortunate to receive civic and community recognition such as the Granite State Award in recognition of our strong record of community support. We are a “Best Company to Work For” hall of fame member and are consistently recognized for numerous charitable and volunteer programs that positively impact our communities.

On an annual basis we prepare and our Board of Directors reviews a Corporate Social Responsibility and Sustainability Report summarizing our progress toward and commitment to these principles. This report is shared with customers and prospective customers, employees and prospective employees and partners and posted on our website.

Philanthropy and Charitable Giving

Being an active participant in our community is a fundamental responsibility. Giving back to the communities where our employees work and live and to making the world a better place is a theme that runs throughout our business. This commitment is exemplified by the number of employees involved in charitable organizations around the world as well as the support we have provided to charitable organizations over the years. Over the last five years, we have donated over $2.5 million to charities in a variety of areas across a broad spectrum of need. Over 1,000 individual charities that we supported were selected by our employees through our Employee Choice Giving Program. This helps ensure that funds are directed to charities that are local to where we live and work. Annually, our employee volunteers organize a “Race-for-a-Cause” through which we select a local charity, or group of charities, as the recipients of all proceeds raised, which in fiscal 2020 exceeded $75,000.

Sustainability

Sustainability is exemplified through our products, customer interactions and employee engagement. The core of our business is to help organizations transition from paper checks to electronic payments, which in and of itself has a significant environmental impact. Launched in 2009, the Bottomline Technologies Think Green Award program is designed to spotlight customer organizations that reduce paper in their payment, invoice and

 

35

transactional document processes. Our physical office locations offer both single-stream recycling and electronic recycling, and we continue to improve our environmental footprint by recycling materials during construction and renovation of our properties. During remodeling initiatives, our environmental commitment is to ensure that the maximum amount of material possible from demolition is diverted from landfills and is instead sorted and recycled or donated to non-profit organizations. We use sensored lighting, regulated HVAC systems, energy saving appliances, windows and doors, as well as furnishings and carpet made with recycled materials and on-site water purification systems to reduce the number of plastic bottles used.

Our cloud computing products have a significant positive impact on the environmental footprint as compared to traditional hardware and software delivery models. We partner with entities, such as for our data center operations, that operate with high energy efficiency standards and with a long-term goal of using 100% clean and renewable energy. Our data centers deploy green technologies such as adaptive control systems to reduce power consumption and increase cooling capacity, ASHRAE thermal guidelines to optimize interior temperatures, cold-hot aisle containment measures, energy-efficient lighting systems and variable frequency drives that save energy by reducing power draw to match lower system loads.

Corporate Governance

Our Board of Directors shares our core values and believes that strong corporate governance practices are important to ensure that Bottomline is managed for the benefit of its stockholders over the long term. This section describes key corporate governance practices that we have adopted. Complete copies of the committee charters and code of conduct described below are available on our website at www.bottomline.com. Alternatively, you can request a copy of any of these documents by writing to Bottomline Technologies (de), Inc., 325 Corporate Drive, Portsmouth, New Hampshire 03801, Attention: Corporate Secretary.

Board Leadership Structure

We have separated the roles of chief executive officer and chairman of our Board of Directors in recognition of the differences between these two positions. Our chief executive officer is responsible for setting the strategic direction of our business and overseeing the day to day operation of the company. The chairman of the Board provides guidance to our chief executive officer, sets the agenda for Board meetings and presides over meetings of the Board as the Board fulfills its fundamental role of providing advice to, and oversight of, management. We also have a lead director who serves as the chairman of our nominations and corporate governance committee. In this role, the lead director provides oversight and long-term planning for board composition and governance related initiatives. We believe that the presence of a lead director helps ensure a focused shareholder perspective within our Board.

Risk Oversight

We, like all businesses, face a number of risks that include economic risks, operational risks and legal risks. Our management team is responsible for addressing and responding to the day to day risks we face, while our Board of Directors as a whole has responsibility for the oversight of risk management.

The Board believes that open communications between management and the Board of Directors is essential for effective risk management and oversight. The chairman of our Board meets regularly with our chief executive officer to discuss corporate strategy and the risks facing our company. The Board periodically holds strategic planning sessions with members of the senior management team to discuss strategies, challenges, risks and opportunities of the company.

While our full Board is ultimately responsible for risk oversight, our three standing Board committees assist the Board in fulfilling its responsibilities in certain areas of risk, as follows:

 

•

Our audit committee provides the principal oversight in respect of financial reporting and internal financial controls

 

36

•

Our leadership development and compensation committee provides the principal oversight in respect of our executive compensation policies and programs and the development of the company’s senior leadership

 

•

Our nominations and corporate governance committee provides the principal oversight in respect of our Board organization, membership and structure, succession planning for our directors and chief executive officer and corporate governance

Our Board is regularly informed by the respective committee chairmen of any particular risks evaluated at the committee level.

Compensation Risk

We believe that risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on our company, as we believe we have allocated compensation among base salary and short- and long-term compensation opportunities in a manner that does not encourage excessive risk taking. We have reached this conclusion based on the following factors:

 

•

Base salaries, including those of our executive officers, are fixed and based on the respective responsibility of the individual. Base salaries are designed to provide a steady income, regardless of our stock price performance, so that our employees and executives do not feel pressured to focus exclusively on stock price performance to the detriment of other important business metrics.

 

•

Short-term compensation opportunities, which are predominantly cash bonuses, including cash bonuses to our executive officers, are first based on company-wide objectives rather than on the objectives of a specific operating geography or operating segment. We believe this encourages decision making that is in the best interest of our company and stockholders as a whole. Further, we believe that considering the operating performance of the company as a whole is a balanced approach for assessing performance. For example, using company-wide metrics encourages decision making that considers more than just revenue targets, thus ensuring that our focus is not purely on sales levels without regard to cost structure.

 

•

Long-term compensation opportunities are predominantly equity-based awards such as restricted stock, that generally vest over four years. We believe that this encourages our employees, including our executive officers, to make decisions that are in the best long-term interests of our company as a whole since the ultimate value of these awards is realized through a sustained stock price and stock price appreciation over the long-term.

Board Determination of Independence

Our Board of Directors has determined that all of our current directors other than Mr. Eberle are independent under applicable Nasdaq and SEC rules. In making this assessment our Board has determined that none of our current directors has a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Meetings

Our Board of Directors held eight meetings, including by telephone and video conference, during fiscal 2020. The leadership development and compensation committee of our Board of Directors held five meetings, including by telephone and video conference, during fiscal 2020. The audit committee of our Board of Directors held twelve meetings, including by telephone and video conference, during fiscal 2020. The nominations and corporate governance committee of our Board of Directors held four meetings during fiscal 2020. Our directors regularly meet without management present during our Board meetings.

During fiscal 2020, all of our directors attended at least 75% of the aggregate of the meetings of the Board of Directors and meetings of the committees on which they served, if any, during the period that they served on our Board of Directors or any such committees. We encourage our directors to attend our annual meeting of stockholders. All members of our Board of Directors attended our 2019 annual meeting of stockholders.

 

37

Board Committees

Our Board of Directors has established three standing committees-audit, leadership development and compensation, and nominations and corporate governance-each of which operates under a charter that has been approved by our Board. Current copies of each committee’s charter are posted under the Corporate Governance heading in the Investor section of our website, www.bottomline.com.

Our Board of Directors has determined that all of the members of each of the Board’s three standing committees are independent as defined under the rules of the SEC and the Nasdaq Stock Market, including, in the case of all members of the audit committee, the independence requirements under Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and in the case of all members of the leadership development and compensation committee, the independence requirements under Rule 10C-1 of the Exchange Act.

All of our standing Board committees, as well as the full Board, have the authority to retain independent advisors without management approval.

Audit Committee

The audit committee’s responsibilities include:

 

•

appointing, approving the compensation of, and assessing the independence of our registered public accounting firm;

 

•

overseeing the work of our registered public accounting firm, including through the receipt and consideration of certain reports from the registered public accounting firm;

 

•

reviewing and discussing with management and our registered public accounting firm our annual and quarterly financial statements and related disclosures;

 

•

monitoring our internal control over financial reporting, disclosure controls and procedures and code of business conduct and ethics;

 

•

overseeing procedures for the receipt and retention of accounting related complaints and concerns;

 

•

meeting independently with our registered public accounting firm and management;

 

•

overseeing our compliance with the Federal Financial Institutions Examination Council (FFIEC); and

 

•

preparing the audit committee report required by SEC rules which is included in this proxy statement.

Further, during 2020, the audit committee was involved in reviewing our quarterly and annual financial statement disclosures related to the impact of COVID-19 on our company.

Our Board of Directors has determined that Mr. Leathe is an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K.

Leadership Development and Compensation Committee

The leadership development and compensation committee’s responsibilities include:

 

•

annually reviewing and approving corporate goals and objectives relevant to chief executive officer compensation;

 

•

overseeing the performance of our chief executive officer and our other executive officers;

 

•

determining the chief executive officer’s compensation;

 

•

reviewing and approving the compensation of our other executive officers;

 

38

•

overseeing and administering our incentive compensation and equity-based plans;

 

•

reviewing and making recommendations to the Board with respect to director compensation; and

 

•

reviewing and monitoring the development of executive officers and the broader senior leadership team.

The leadership development and compensation committee may delegate its authority to management to grant awards pursuant to its equity-based plans. The leadership development and compensation committee has delegated to Mr. Mullen and Mr. Eberle, acting jointly, the authority to make grants of restricted stock and stock options from the authorized pool under our 2019 Stock Incentive Plan and our 2018 Israeli Special Purpose Stock Plan other than, in each case, awards to executive officers whose awards must always be authorized by the leadership development and compensation committee. The leadership development and compensation committee also retains the authority to make additional equity awards in its discretion.

Nominations and Corporate Governance Committee

The nominations and corporate governance committee’s responsibilities include:

 

•

identifying individuals qualified to become Board members;

 

•

recommending to the Board the persons to be nominated for election as directors and to each of the Board’s committees;

 

•

developing and recommending to the Board corporate governance principles; and

 

•

overseeing the evaluation of the Board.

Director Candidates and Board Diversity

The process followed by the nominations and corporate governance committee to identify and evaluate director candidates includes requests to Board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the committee and the Board. In considering whether to recommend any particular candidate for inclusion in the Board’s slate of recommended director nominees, the nominations and corporate governance committee will apply the criteria included in the committee’s charter. These general criteria include that all nominees should have a reputation for integrity, honesty and adherence to high ethical standards. Criteria also include the nominee’s demonstrated business acumen, experience, commitment to our business and industry, and the ability to act in the best interests of all stockholders; including being willing and able to contribute positively to the decision making process. Nominees should not have, or appear to have, any conflicts of interest that would impair their ability to represent the interests of our stockholders. Ultimately, the nominations and corporate governance committee seeks nominees with a broad range of experience, professions, skills and backgrounds. The committee does not assign specific weights to any particular criteria and no particular criterion is necessarily applicable to all prospective nominees. While the committee does not have a formal policy in respect of diversity, the committee considers the value of diversity in respect of the Board’s overall composition.

Stockholders may recommend individuals to the nominations and corporate governance committee for consideration as potential director candidates by submitting their names, together with appropriate biographical information and background materials and a statement as to whether the stockholder or group of stockholders making the recommendation has beneficially owned more than 5% of our common stock for at least a year as of the date such recommendation is made, to our Nominations and Corporate Governance Committee, c/o Corporate Secretary, Bottomline Technologies (de), Inc., 325 Corporate Drive, Portsmouth, New Hampshire 03801. Assuming that appropriate biographical and background material has been provided on a timely basis, the committee will evaluate stockholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others.

 

39

Stockholders also have the right under our bylaws to directly nominate director candidates, without any action or recommendation on the part of the committee or the Board, by following the procedures set forth under “Stockholder Proposals for 2021 Annual Meeting.”

Communicating with the Directors

The Board will give appropriate attention to written communications that are submitted by stockholders and will respond if and as appropriate. The chairman of the Board is primarily responsible for monitoring communications from stockholders and for providing copies or summaries to the other directors as he considers appropriate.

Communications are forwarded to all directors if they relate to important substantive matters and include suggestions or comments that the chairman of the Board considers to be important for the directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances and matters as to which we tend to receive repetitive or duplicative communications.

Stockholders who wish to send communications on any topic to the Board should address such communications to our Board of Directors c/o Corporate Secretary, Bottomline Technologies (de), Inc., 325 Corporate Drive, Portsmouth, New Hampshire 03801.

Code of Ethics

We have adopted a written code of ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy of the code under the Governance heading in the Investor section of our website, which is located at www.bottomline.com. In addition, we intend to post on our website all disclosures that are required by law or Nasdaq Stock Market listing standards concerning any amendments to, or waivers from, any provision of the code.

Delinquent Section 16(a) Reports

Based solely on our review of copies of reports filed by reporting persons pursuant to Section 16(a) of the Exchange Act, or written representations from reporting persons that no Form 5 filing was required for such persons, we believe that all filings required to be made by our reporting persons were timely made in accordance with the requirements of Section 16(a) of the Exchange Act, with the exception of one Form 4, which was filed late on April 7, 2020 on behalf of Mr. Deluca to report the sale of 4,799 shares of common stock.

Report of the Audit Committee of the Board of Directors

The audit committee oversees Bottomline’s financial reporting process on behalf of the Board of Directors. Management has responsibility for the preparation of Bottomline’s financial statements, for maintaining effective internal control over financial reporting, for assessing the effectiveness of internal control over financial reporting, and for maintaining an appropriate reporting process, including adequate systems of internal controls. In fulfilling its oversight responsibilities, the committee reviewed and discussed Bottomline’s audited financial statements and schedule for the fiscal year ended June 30, 2020 with management, including the quality, not just the acceptability, of the accounting principles, the reasonableness of significant judgments, and the clarity of disclosures contained in the financial statements and schedule.

The committee reviewed with Bottomline’s independent registered public accounting firm, Ernst & Young LLP, which is responsible for expressing an opinion as to the conformity of Bottomline’s audited financial statements and schedule with generally accepted accounting principles, the judgments of Ernst & Young LLP as to the quality, not just the acceptability, of Bottomline’s accounting principles and discussed with Ernst & Young LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board and the SEC. In addition, the committee has received the written disclosures and the letter from

 

40

Ernst & Young LLP required by applicable requirements of the Public Company Accounting Oversight Board regarding Ernst & Young LLP’s communications with the audit committee concerning independence and has discussed with Ernst & Young LLP its independence from management and Bottomline, including the compatibility of any non-audit services with its independence. The Audit Committee has concluded that the provision of audit and non-audit services by Ernst &Young LLP to Bottomline and its affiliates is compatible with Ernst & Young LLP’s independence.

The committee also reviewed management’s report on its assessment of the effectiveness of Bottomline’s internal control over financial reporting and the independent registered public accounting firm’s report on the effectiveness of Bottomline’s internal control over financial reporting.

The committee discussed with Ernst & Young LLP the overall scope and plans for its audits. The committee meets with Ernst & Young LLP, with and without management present, to discuss the results of its examinations, its evaluations of Bottomline’s internal control over financial reporting, and the overall quality of Bottomline’s financial reporting. The committee held 12 meetings, including by telephone conference, during the fiscal year ended June 30, 2020.

Based on the reviews and discussions referred to above, the committee recommended to the Board of Directors that the audited financial statements and schedule be included in Bottomline’s annual report on Form 10-K for the fiscal year ended June 30, 2020 for filing with the SEC. The committee and the Board of Directors have also recommended, subject to stockholder ratification, the selection of Ernst & Young LLP as Bottomline’s registered independent public accounting firm for the fiscal year ending June 30, 2021.

By the Audit Committee of the Board of Directors of Bottomline Technologies (de), Inc.

Jeffrey C. Leathe, Chairman

Kenneth J. D’Amato

Paul H. Hough

Benjamin E. Robinson III

Principal Accounting Fees and Services

The following table discloses the fees that Ernst & Young LLP billed us for professional services rendered in each of the last two fiscal years.

 

Type of Fee		Fiscal Year Ended June 30, 2020				Fiscal Year Ended June 30, 2019
Audit Fees (1)		$	1,302,380			$	1,345,676
Audit-Related Fees (2)		$	115,000			$	255,000
Tax Fees (3)		$	9,096			$	5,000
All Other Fees (4)		$	7,200			$	30,909

 

 

 

(1)

Represents fees for professional services rendered in connection with the audit of our financial statements and the audit of internal controls for the fiscal year indicated, audit procedures associated with businesses that we acquired, reviews of the financial statements included in each of our quarterly reports on Form 10-Q during the fiscal year indicated, and services performed in connection with certain registration statements we filed.

(2)	Represents accounting and financial reporting consultations. For fiscal 2020 and fiscal 2019 these fees related primarily to services associated with our adoptions of the new lease standard and revenue recognition standard, respectively.

(3)	Represents fees for tax consulting services.

(4)	For the fiscal years ended June 30, 2020 and June 30, 2019, fees represent consulting services related to structuring alternatives for certain of our debt arrangements and an annual fee for access to an accounting and financial reporting research tool.

 

41

Pre-Approval Policies and Procedures

The audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our registered public accounting firm. This policy generally provides that we will not engage our registered public accounting firm to render either audit or non-audit services unless the service is approved in advance by the audit committee or the engagement is entered into pursuant to one of the pre-approval procedures described below.

From time to time, the audit committee may pre-approve specified types of services that are expected to be provided to us by our registered public accounting firm. Any such pre-approval is detailed as to the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.

The audit committee has also delegated to the chairman of the audit committee the authority to approve any audit or non-audit services to be provided to us by our registered public accounting firm. Any approval of services by the chairman of the audit committee pursuant to this delegated authority is reported to the full audit committee at its next quarterly meeting.

All of the services shown in the table above were approved by the audit committee in accordance with these pre-approval policies and procedures. The audit committee, in assessing the on-going independence of Ernst & Young LLP, also considers the relationship of non-audit fees to audit fees.

 

42