Workday Inc

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Our Compensation-Setting Process

Role of the Compensation Committee

Pursuant to its charter and in accordance with the rules of the Nasdaq Global Select Market, the Compensation Committee is responsible for reviewing, evaluating, and approving the compensation arrangements of our executive officers and for establishing and maintaining our executive compensation policies and practices. Our Compensation Committee seeks input and receives recommendations from members of our executive management team when discussing the performance and compensation of other executive officers, and in assessing the financial and accounting implications of our compensation programs and hiring decisions. The Compensation Committee is authorized to engage its own independent advisors to provide advice on matters related to executive compensation and general compensation programs. For additional information on the Compensation Committee, see “Committees of the Board of Directors — Compensation Committee” elsewhere in this Proxy Statement.

During fiscal 2024, our Compensation Committee, with the assistance of its compensation consultant, Semler Brossy, reviewed and determined our executive compensation, including base salaries, bonuses, and equity awards, to help ensure our compensation program continued to align with stockholder interests and Workday’s long-term business and operational goals, and provided appropriate rewards and incentives for our executive officers. The Compensation Committee reviewed the performance of our executive officers, including Mr. Eschenbach, whose fiscal 2024 compensation was primarily determined at the time of his hiring towards the end of fiscal 2023, taking into consideration financial, operational, customer, strategic, product, and competitive factors, as well as the succession planning objectives for our various executive officer positions.

The Compensation Committee also reviewed a study by Semler Brossy regarding the compensation of executives at the companies in our compensation peer group. We do not benchmark the compensation levels of our executive officers to specific percentiles of our peer companies, but we do review and consider the peer group information among various other factors in making compensation decisions. No executive officer participated in the discussions of the Compensation Committee or the independent Board session regarding their own performance and compensation. Following deliberation, the Compensation Committee and independent members of our Board approved the cash compensation to be paid to our NEOs and granted RSU awards to our NEOs, each as described below and in the Summary Compensation Table.

Role of Management

The role of management is to preliminarily design our executive compensation programs, policies, and governance, and to make recommendations to the Compensation Committee regarding these matters. In this respect, management reviews the effectiveness of our compensation programs, including competitiveness and alignment with Workday’s objectives. Management also recommends changes to our compensation programs to best promote achievement of program objectives and reviews and makes recommendations with respect to the adoption and approval of, or amendments to, company-wide incentive compensation plans. Except with respect to their individual compensation, Messrs. Bhusri and Eschenbach made compensation recommendations to the Compensation Committee with respect to base salaries, bonuses, and equity awards for our executive officers, including our NEOs, which were taken into account by the Compensation Committee in making its decisions regarding executive compensation.

Role of the Compensation Consultant

The Compensation Committee retained Semler Brossy to advise on our fiscal 2024 executive compensation programs and practices and our executive compensation decisions, given its expertise in the technology industry, especially with other cloud and enterprise software companies. During fiscal 2024, Semler Brossy provided the following services as requested by the Compensation Committee:

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assisted in the development of the compensation peer group we used to understand market competitive compensation practices;

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assisted in the review and design of Mr. Rowe’s compensation package in connection with his appointment to Chief Financial Officer and advised on the long-term strategy and design of Mr. Bhusri’s future compensation package as Executive Chair;

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reviewed and assessed our compensation practices and the cash and equity compensation levels of our executive officers (including an equity retention analysis), including our NEOs, and also for members of our Board of Directors;

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reviewed and assessed our current compensation programs to determine any changes that may need to be implemented in order to remain competitive with the market, as well as conducting an equity burn rate and overhang analysis;

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assisted in the review and assessment of the design and strategy of our annual and long-term incentives, including the design of our company-wide bonus plan;

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advised on the strategy and implementation of our commitment to reduce stock-based compensation expense;

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reviewed and assessed our current severance and change in control benefits against peer practices and assisted with the design of our Executive Severance and Change in Control Policy that was restated in fiscal 2024; and

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advised on regulatory developments relating to executive compensation and collaborated on the risk assessment relating to employee compensation.

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Other analyses relating to executive compensation for fiscal 2024 were conducted internally by our compensation team and were reviewed by the Compensation Committee. Such analyses included gathering and analyzing relevant data and reviewing and advising on principal aspects of executive compensation. Base salaries, equity awards, severance terms, and bonuses for our executive officers were among the items reviewed by the Compensation Committee based on third-party market data.

During fiscal 2024, the Compensation Committee reviewed the fees provided to Semler Brossy relative to Semler Brossy’s revenues, the services provided by Semler Brossy to the Compensation Committee, any relationships between Semler Brossy and its consultants and our executive officers, any stock ownership of Workday by Semler Brossy, and other factors relating to Semler Brossy’s independence. Based on such review, the Compensation Committee concluded that Semler Brossy is independent within the meaning of the listing standards of the Nasdaq Global Stock Market and that its engagement did not present any conflict of interest. The Compensation Committee has retained Semler Brossy to advise on our executive compensation programs and practices for the fiscal year ending January 31, 2025.

2023 Stockholder Advisory Vote on Executive Compensation

At our annual meeting of stockholders in June 2023, we conducted a stockholder advisory vote on the compensation of our NEOs (commonly known as a “Say-on-Pay” vote). Our stockholders approved the compensation paid to our NEOs for our fiscal year ended January 31, 2023, with 83% of the votes cast in favor of our Say-on-Pay proposal. This represented a slight decline from fiscal 2023, when the Say-on-Pay proposal received the support of approximately 86% of votes cast. As a result, following the 2023 Annual Meeting of Stockholders, we expanded our stockholder outreach efforts and conducted a more targeted engagement aimed at better understanding specific stakeholder concerns.

Stockholders conveyed varying perspectives and priorities with respect to our executive compensation program. Of those we met with, many of our stockholders understood and appreciated our approach to executive compensation and the Compensation Committee’s effort to attract and retain our key executives as we make meaningful leadership changes to lead us into our next phase of growth.

Stockholder support for the compensation paid to our NEOs in fiscal 2023 remained reasonably strong, and following our 2023 Annual Meeting of Stockholders, the Compensation Committee reviewed the results of the Say-on-Pay vote and concluded that our current executive compensation program is effective at attracting and retaining top-tier executives to drive our strategic initiatives. While we did not make material changes to our executive compensation program as a result, we did make a number of changes to respond to stockholder feedback. For example, we adopted our Omnibus Bonus Plan in early fiscal 2024 to increase our disclosure regarding the company performance metrics we use or may use in our cash bonus program. We have also enhanced our disclosure regarding our company performance metrics and achievement of such metrics in this Proxy Statement. In addition, we are focused on reducing the dilutive impact of stock-based compensation and have set a target to reduce our stock-based compensation expense as a percentage of revenue to approximately 15% by fiscal 2027. We value the opinion of our stockholders and will continue to seek feedback and engage in constructive dialogue with stockholders going forward.