1. | To elect eightTo elect nine directors to serve until the Annual Meeting of Stockholders to be held in 2023; To hold an advisory vote on the fiscal 2021 compensation of our named executive officers (say-on-pay vote); To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for our current fiscal year; and To transact any other business as may properly come before the Annual Meeting and any adjournment or postponement of that meeting. Q: How do I attend the meeting?
A:
| Due to the continued public health concerns about in-person gatherings related to the COVID-19 pandemic, this year’s Annual Meeting will be conducted as a virtual meeting of stockholders. We will host the Annual Meeting of Stockholders to be held in 2020; |
| | 2. | To hold an advisory vote on the compensation of our named executive officers (say-on-pay vote); |
| | 3. | To ratify the selection of Deloitte & ToucheLLP as our independent registered public accounting firm for the fiscal year ending November 30, 2019; and
|
| | 4. | To transact any other business as may properly come before the Annual Meeting and any adjournment or postponement of that meeting. |
Q: Who can attend the meeting?
| | A: | live online via webcast. All stockholders as of the close of business on March 20, 2019,16, 2022, the record date, or their duly appointed proxies, may attend the meeting. If you plan to attend the meeting, please note that you will need to bring your proxy card or voting instruction card and valid picture identification, such as a driver’s license or passport. Cameras, recording devices and other electronic devices will not be permitted at the meeting and all mobile phones must be silenced during the meeting. |
Please also note that if you holdYou will be able to attend the Annual Meeting online, vote your shares throughonline during the Annual Meeting and submit your questions online before and during the Annual Meeting by visiting www.virtualshareholdermeeting.com/PRGS2022. There will not be a broker or other nominee,physical meeting location and you will not be able to attend the Annual Meeting in person. The webcast will start at 10:00 a.m. Eastern Time, on May 12, 2022. You will need the 16-digit control number included on your Notice of Internet Availability of Proxy Materials, proxy card or voting instruction form in order to bringbe able to enter the Annual Meeting online. Information contained on this website is not incorporated by reference into this proxy statement or any other report we file with the Securities and Exchange Commission (the “SEC”).
Online access to the audio webcast will open at 9:45 a.m. Eastern Time to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting prior to the start time. If you encounter any difficulties accessing the virtual Annual Meeting during the check-in or meeting time, please call the technical support number that will be posted on the virtual Annual Meeting website. We will have technicians available to assist you. Q: Why is the Annual Meeting a copyvirtual, online meeting?
A:
| Due to the continued public health concerns about in-person gatherings related to the COVID-19 pandemic, the Board of Directors has determined that this year we will hold a virtual Annual Meeting conducted via live webcast in order to |
12 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS support the health and well-being of our stockholders, employees and directors. We believe that hosting a brokerage statement reflecting your stock ownership asvirtual meeting will facilitate stockholder attendance and participation at the Annual Meeting by enabling stockholders to participate remotely from any location around the world. There will not be a physical meeting location. Our virtual Annual Meeting will be governed by our rules of conduct and procedures, which will be posted at www.virtualshareholdermeeting.com/PRGS2022 on the date of the record date.
Annual Meeting. We have designed the format of the virtual Annual Meeting so that stockholders have the same rights and opportunities to vote and participate as they would have at a physical meeting. Stockholders will be able to submit questions online before and during the meeting, providing our stockholders with the opportunity for meaningful engagement with the Company.
Q: Who is entitled to vote atduring the meeting?
| | A:
| Only stockholders of record at the close of business on March 20, 2019,16, 2022, the record date for the meeting, are entitled to receive notice of and to participate in the Annual Meeting. If you were a stockholder of record on that date, you will be entitled to vote all shares that you held on that date atduring the meeting, or any postponements or adjournments of the meeting. There were 43,766,260 shares of our common stock outstanding on the record date. |
If you hold your shares through a broker, bank or other nominee rather than directly in your own name, you have the meeting,right to direct your broker, bank or any postponementsnominee on how to vote and are also invited to attend the Annual Meeting online. However, since you are not the stockholder of record, you may not vote these shares online at the Annual Meeting unless you request and obtain a proxy from your broker, bank or adjournments ofnominee. Your broker, bank or nominee will provide a voting instruction card for you to use in directing the meeting. There were 44,493,152 shares of our common stock outstanding on the record date.
broker, bank or nominee regarding how to vote your shares.
Q: What are the voting rights of the holders of our common stock?
| | A:
| Each share of our common stock outstanding on the record date will be entitled to one vote on each matter considered atduring the meeting. |
Q: What is the difference between holding shares as a stockholder of record and holding shares as a beneficial owner?
| | Q: | What is the difference between holding shares as a stockholder of record and holding shares as a beneficial owner? |
| | A:
| If your shares are registered directly in your name with our transfer agent, American Stock Transfer & Trust Company, you are considered the stockholder of record with respect to those shares, and these proxy materials are being sent directly to you by us. As the stockholder of record, you have the right to grant your voting proxy directly to us by completing, signing, dating and returning a proxy card, or to vote in persononline at the Annual Meeting. |
Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the beneficial owner of your shares. We have sent these proxy materials to your broker or bank. As the beneficial owner, you have the right to direct your broker, bank or nominee on how to vote and you are also invited to attend the Annual Meeting.Meeting online. However, since you are not the stockholder of record, you may not vote these shares in persononline at the Annual Meeting unless you request and obtain a proxy from your broker, bank or nominee. Your broker, bank or nominee will provide a voting instruction card for you to use in directing the broker, bank or nominee regarding how to vote your shares. TABLE OF CONTENTS Q: May I see a list of stockholders entitled to notice of the Annual Meeting?
A.
| A list of our stockholders who are entitled to notice of the Annual Meeting will be available to stockholders during the meeting at www.virtualshareholdermeeting.com/PRGS2022. |
Q: How do I submit a question at the virtual Annual Meeting?
A:
| Before the Annual Meeting, you can submit questions at www.virtualshareholdermeeting.com/PRGS2022. During the Annual Meeting, you can view our agenda and rules of conduct and procedures and submit questions at www.virtualshareholdermeeting.com/PRGS2022. Stockholders must have their 16-digit control number to submit questions. |
We intend to answer all questions submitted during the Annual Meeting that are pertinent to the Company and the items being voted on by stockholders, as time permits and in accordance with our rules of conduct and procedures. If we are unable to respond to a stockholder’s properly submitted question due to time constraints, we will either post the response on the investor relations section of our website following the Annual Meeting, or respond directly to that stockholder using the contact information provided. Questions and answers will be grouped by topic, and substantially similar questions will be answered only once. To promote fairness, efficiently use the Company’s resources, and address all stockholder questions, we will respond to no more than two questions from any single stockholder. All questions received from stockholders during the virtual Annual Meeting will be posted on the Company’s investor relations website at http://investors.progress.com/ as soon as practicable following the Annual Meeting. Q: What is a quorum?
| | A:
| A quorum is the minimum number of our shares of common stock that must be represented at a duly called meeting in person or by proxy to legally conduct business atduring the meeting. For the Annual Meeting, the presence, in persononline or by proxy, of the holders of at least 22,246,57721,883,131 shares, which is a simple majority of the 44,493,15243,766,260 shares outstanding as of the record date, will be considered a quorum allowing votes to be taken and counted for the matters before the stockholders. |
If you are a stockholder of record, you must deliver your vote by internet, phone or mail or attend the Annual Meeting in persononline and vote to be counted in the determination of a quorum. Abstentions and broker “non-votes”"broker non-votes” will be counted as present or represented at the Annual Meeting for purposes of determining the presence or absence of a quorum. A broker “non-vote”"broker non-vote” occurs when a broker or other nominee who holds shares for a beneficial owner withholds its vote on a particular proposal with respect to whichbecause it doeshas not have discretionaryreceived voting power or instructions from the beneficial owner.
owner and does not have the authority to vote on that matter without instructions. Brokers and other nominees have the discretion to vote on specified routine, or “discretionary” matters, but not on non-routine, or “non-discretionary” matters.
Q: What is the difference between a routine matter and a non-routine matter?
| | A:
| Brokers cannot vote on their customers’ behalf on “non-routine”non-routine, or “non-discretionary” proposals such as Proposal One, the election of directors, and, Proposal Two, the advisory vote on the fiscal 2021 compensation of our named executive officers (say-on-pay vote). Because brokers require their customers’ direction to vote on such non-routine matters, it is critical that stockholders provide their brokers with voting instructions. Proposal Three, the ratification of the appointment of our independent registered public accounting firm, will beis a “routine”routine or “discretionary” matter for which your broker does not need your voting instruction to vote your shares. |
14 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Q: How do I vote?
| | A:
| If you are a stockholder of record, you have the option of submitting your proxy card by internet, phone, or mail or attending the meeting and delivering the proxy card. The designated proxy will vote per your instructions. You may also attend the meeting and personally vote by ballot.online. |
1. Internet: You may vote your shares from any location in the world by going to www.proxyvote.com and following the Internet voting instructions on the Notice of Internet Availability of Proxy Materials or the proxy card. Proxies submitted via the Internet must be received by 11:59 p.m. Eastern Time on May 11, 2022. 2. Telephone: You may vote your shares by calling 1-800-690-6903 - free within the United States, U.S. territories and Canada and following the instructions provided by the recorded message. Proxies submitted via telephone must be received by 11:59 p.m. Eastern Time, on May 11, 2022. 3. Mail: You may vote by completing and signing the proxy card and promptly mailing it in the enclosed postage-prepaid envelope provided for that purpose. You do not need to put a stamp on the enclosed envelope if you mail it in the United States. The shares you own will be voted according to your instructions on the proxy card. If you return the proxy card, but do not give any instructions on a particular matter described in this proxy statement, the shares you own will be voted in accordance with the recommendations of our Board of Directors. The Board of Directors recommends that you vote FOR each director nominee and FOR Proposals 2 and 3. 4. During the Meeting: You may vote online during the virtual Annual Meeting at www.virtualshareholdermeeting.com/PRGS2022. You will need your 16-digit control number included on your Notice of Internet Availability of Proxy Materials or proxy card in order to be able to vote during the virtual Annual Meeting. If you are a beneficial owner of shares, you may direct your broker, bank or nominee as to how to vote atyour shares using the meeting, you will need to obtain a signed proxy from thevoting instruction card provided by such broker, bank or nominee that holds your shares. If you have the broker’s proxy, you may vote by ballot or you may complete and deliver another proxy card in person at the meeting.nominee. When you vote, you are giving your “proxy” to the individuals we have designated to vote your shares atduring the meeting as you direct. If you do not make specific choices, they will vote your shares to: elect the eightnine individuals nominated by our Board of Directors; approve the advisory vote on the fiscal 2021 compensation of our named executive officers (say-on-pay vote); and approve the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for theour current fiscal year ending November 30, 2019.year. If any matter not listed in the Notice of Meeting is properly presented atduring the meeting, the proxies will vote your shares in accordance with their best judgment. As of the date of this proxy statement, we
knew know of no matters that neededneed to be acted on atduring the meeting other than as discussed in this proxy statement.
Q: How does the Board of Directors recommend that I vote?
A: The Board recommends that you vote your shares as follows:
A:
| The Board recommends that you vote your shares as follows: |
FORProposal One — elect the eightnine nominees to the Board of Directors. FORProposal Two — approve the advisory vote on the fiscal 2021 compensation of our named executive officers (say-on-pay vote). FOR Proposal Three— approve the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for theour current fiscal year ending November 30, 2019.year. TABLE OF CONTENTS Q: Can I change or revoke my vote?
| | A:
| You may revoke your vote at any time before the proxy is exercised by filing with our Secretary a written notice of revocation or by signing and duly delivering a proxy bearing a later date. At the meeting, youYou may also revoke or change your vote by submitting a proxy toattending the inspector of elections orAnnual Meeting online and voting by ballot.electronically during the Annual Meeting as instructed above. Your attendance atduring the meeting will not by itself revoke your vote. |
Q: How many votes are required to elect directors (Proposal One)?
| | A:
| The nine nominees who receivereceiving the mosthighest number of affirmative votes will be elected (also known as a “plurality” of the votes cast) will be elected.. You may vote either FOR the nominee or WITHHOLD your vote from the nominee. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the director.directors absent instructions from beneficial owners. As a result, any uninstructed shares not voted by a customer will be treated as a broker non-vote. These brokerbroker-non votes. Broker non-votes will have no effect on the results of this vote. |
In an uncontested election, if a nominee receives a greater number of votes “withheld” from his or her election than votes “for” such election, that nominee willis required to submit his or her offer of resignation for consideration by our Nominating and Corporate Governance Committee in accordance with our majority voting policy discussed in more detail on page 1338 of this proxy statement.
Q: How many votes are required to adopt the other proposals (Proposals Two and Three)?
| | A:
| The other proposals will be approved if these proposals receive the affirmative vote of a majority of the shares present or represented and entitled to vote on these proposals. Abstentions will have the same effect as a vote "against" each of Proposals Two and Three. BrokerageAbsent instructions from beneficial owners, brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name on Proposal Two.Two (Advisory Vote on Fiscal 2021 Compensation of our Named Executive Officers). As a result, any uninstructed shares not voted by a customeron these Proposals will be treated as a broker non-vote. Those broker non-votes will have no effect on the results of the vote with respect to this Proposal.these Proposals. |
Brokerage firms do have authority to vote customers’ unvoteduninstructed shares held by the firms in street name on Proposal Three (Ratification of the Selection of Independent Registered Public Accounting Firm). If a broker does not exercise this authority, such broker non-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to appoint Deloitte & Touche LLP as our independent registered public accounting firm. However, if our stockholders do not ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for our current fiscal year, ending November 30, 2019, the Audit Committee of our Board will consider the results of this vote when selecting auditors in the future.
Q: Who will pay for the cost of this proxy solicitation?
A:
| | A: | We will pay the cost of preparing, mailing and soliciting proxies, including preparation, assembly, printing and mailing of this proxy statement and any additional information furnished to stockholders. We may reimburse banks, brokerage houses, fiduciaries and custodians for their out-of-pocket expenses for forwarding solicitation materials to beneficial owners. |
16 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Q: What is “householding” of proxy materials?
| | A:
| In some cases, stockholders holding their shares in a brokerage or bank account who share the same surname and address and have not given contrary instructions received only one copy of the proxy materials. This practice is designed to reduce duplicate mailings and save printing and postage costs. If you would like to have a separate copy of our Annual Reportannual report and/or proxy statement mailed to you or to receive separate copies of future mailings, please contact Broadridge Financial Solutions, Inc. by mail at Broadridge Financial Solutions, Inc., Householding Department, 51 Mercedes Way, Edgewood, New York 11717 or by phone at (866) 540-7095. Such additional copies will be delivered promptly upon receipt of such request. |
In other cases, stockholders receiving multiple copies at the same address may wish to receive only one. If you now receive more than one copy, and would like to receive only one copy, please submit your request to Broadridge Financial Solutions, Inc. at the address or phone number listed above.
Q: Who will count the votes and where can I find the voting results?results?
A:
| | A: | Broadridge Financial Solutions, Inc. will tabulate the voting results. We will announce the voting results at the Annual Meeting, and we will publish the results by filing a Current Report on Form 8-K with the Securities and Exchange Commission (the “SEC”)SEC within four business days of the Annual Meeting.
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TABLE OF CONTENTS
CORPORATE GOVERNANCE
Our Corporate Governance Framework
| | Our Corporate Governance Framework | We believe we have in place corporate governance proceduresWe believe we have in place corporate governance processes and practices that are designed to promote and enhance the long-term interests of our stockholders, solidify board oversight, strengthen management accountability, and foster responsible decision-making. We regularly monitor developments in corporate governance and review our processes and practices that are designed to promote and enhance the long-term interests of stockholders, solidify board oversight processes, strengthen management accountability and foster responsible decision making. We regularly monitor developments in corporate governance and review our processes and procedures in light of such developments.
Our Board of Directors has adopted Corporate Governance Guidelines that address the following matters:
• director qualifications;
• director voting policy;
• executive sessions and leadership roles;
• conflicts of interest;
• Board Committees;
• director access to officers and employees;
• director orientation and continuing education;
• director and executive officer stock ownership;
• stockholder communications with the Board; and
• performance evaluation of the Board and its committees.
|
Our Board of Directors has adopted Corporate Governance Guidelines and other corporate governance documents and policies that address the following matters: director qualifications; director voting policy; executive sessions and leadership roles; conflicts of interest; Board committees; director access to officers and employees; director onboarding and continuing education; director and executive officer stock ownership; stockholder communications with the Board; and performance evaluation of the Board and its committees. Our Corporate Governance Documents
| | | Our Corporate Governance Documents | | | • Certificate of Incorporation
• Amended and Restated Bylaws
• Audit Committee Charter
• Nominating and Corporate Governance Committee Charter
• Compensation Committee Charter
| • Code of Conduct and Business Ethics
• Finance Code of Ethics
• Corporate Governance Guidelines
• Stock Option Grant Policy
|
Certificate of Incorporation
Amended and Restated Bylaws
Audit Committee Charter
Nominating and Corporate Governance Committee Charter Compensation Committee Charter Code of Conduct and Business Ethics Finance Code of Ethics Corporate Governance Guidelines Stock Option Grant Policy Our certificate of incorporation and our bylaws are filed with the SEC and are available electronically at www.sec.gov. The other documents listed above can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.
| | Our Corporate Governance Practices18 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Our Corporate Governance Practices
Our Board is Independent 78 of 89 nominees are independent– If the director nominees are elected at the Annual Meeting, the Board will continue to be composed of one employee director (Mr. Gupta, our CEO) and seveneight independent, non-employee directors (Messrs. Egan, Dacier, Gawlick, Kane and Krall, Dr. Gawlick and Mses. King, Tucci and Tucci)Vitale).
Regular executive sessions of independent directors – Our independent directors meet in executive session without the Chief Executive Officer at every regularly scheduled Board meeting to discuss, among other matters, the performance of the Chief Executive Officer. Committees are independent – Each of the Board’s committees areis strictly comprised of independent directors. Independent compensation consultant – The compensation consultant retained by and reports directly to the Compensation CommitteeCommittee. The compensation consultant is independent of the Company and management.
We Have Strong Board Refreshment We believe it is important to maintain a mix of longer-tenured, experienced directors, who can help to preserve continuity and institutional knowledge, and new directors, who can provide fresh perspectives. In furtherance of this objective, the Board elected Messrs.Mr. Dacier and Dr. Gawlick in June 2017, and Mses. King and Tucci in February 2018. While we2018 and Ms. Vitale in October 2019. We do not impose director tenure limits, although our Corporate Governance Guidelines do impose a mandatory retirement age of eighty-five. We believe our current Board composition strikes an appropriate balance between directors with deep historical knowledge of the Company and those with a fresh viewpoint.
We Have an Independent Chairman of the Board We currently have an independent Chairman of the Board (Mr. Egan). We believe the current Board leadership structure serves us and our stockholders well by having a strong independent Chairman of the Board to provide independent leadership of the Board and because it allows our CEO to focus primarily on the Company’s business strategy, operations and corporate vision. This leadership structure, coupled with a strong emphasis on Board independence, provides effective independent oversight of management. Board
members have complete access to and are encouraged to utilize members of our senior management regularly, and they have the authority to retain independent advisors as they deem necessary. The Board believes this leadership structure affords our company an effective combination of internal and external experience, continuity, and independence. Key responsibilities of the independent Chairman of the Board include: calling meetings of the Board and independent directors; setting the agenda for Board meetings in consultation with the CEO and our Secretary; chairing executive sessions of the independent directors; engaging with stockholders; acting as an advisor to Mr. Gupta on strategic aspects of the CEO role with regular consultations on major developments and decisions likely to interest the Board; and performing other duties specified in the Corporate Governance Guidelines or assigned by the Board. | | o | calling meetings of the Board and independent directors;2022 Proxy Statement 19 |
TABLE OF CONTENTS | | o | setting the agenda for Board meetings in consultation with the CEO and our Secretary; |
| | o | chairing executive sessions of the independent directors; |
| | o | leading the full Board in the annual CEO performance evaluation; |
| | o | engaging with stockholders; |
| | o | acting as an advisor to Mr. Gupta on strategic aspects of the CEO role with regular consultations on major developments and decisions likely to interest the Board; and |
| | o | performing other duties specified in the Corporate Governance Guidelines or assigned by the Board. |
Our Corporate Governance Guidelines do not require the separation of the roles of Chairman of the Board and Chief Executive Officer, as our Board believes that it is important that the Board retain flexibility to determine whether these roles should be separate or combined based upon the Board’s assessment of the Company’s needs and Progress’s leadership at a given point in time. We believe that an effective board leadership structure is highly dependent on the experience, skills and personal interaction between those in leadership roles. In prior years, we have had, alternately, an independent Chairman of the Board and a non-independent Chairman of the Board with a Lead Independent Director. Our policy is to have a Lead Independent Director if the Chairman of the Board is not independent.
We Value Diversity The Board and the Nominating and Corporate Governance Committee value diversity of backgrounds, experience, perspectives and leadership in different fields when identifying nominees. We believe that we have assembled a diverse set of directors with the varied backgrounds, experiences and perspectives critical to our long-term success. Presently, 50%more than half of our Board members are diverse in gender, ethnicity or nationality. To help us maintain broad diversity and to continually assess the effectiveness of this diversity policy, our Board of Directors conducts regular self-evaluations. The survey questions include an assessment of whether the composition of the Board is appropriately diverse and possesses the skills and experience consistent with achieving our short and long-term corporate goals.
We are Committed to Corporate Responsibility
We work to conduct our business in ways that will have a positive impact on our stakeholders, our company and our society. As an organization, we believe it is incumbent upon us to consider the social and environmental impact of our business activities and create social and corporate value to the communities we serve. Our customers, partners, stockholders, employees and the environment depend on this, and it is woven into the fabric of who we are. Important areas of focus for us are issues related to community engagement, diversity and inclusion, human capital development and environmental sustainability.
Community Engagement – We engage in the global community and support our employees that do so as well. Our community engagement endeavors have historically been driven by the passions of our employees, who have dedicated their time and fundraising efforts towards causes as diverse as our global employee population, with meaningful support from the Company.
In 2018, we undertook efforts to further formalize and focus our charitable giving program, which we view as a critical part of an effective and strategic corporate social responsibility program. Philanthropy and lending a helping hand are values we share across the Company and something we, as an organization, wish to harness in order to create an even greater impact in our communities. In 2018 and early 2019, we worked to identify areas of philanthropic focus that align closely with who we are and what we do, such as support of education in science, technology, engineering and math (STEM), in order to maximize the impact of our charitable giving.
Additionally, we have a program to match our employees’ charitable donations, including supporting communities impacted by disasters through corporate donations to relief organizations. We also provide our employees with paid time off to volunteer with community organizations and encourage our employees to lead philanthropic initiatives that matter to them.
Inclusion and Diversity – Progress is an inclusive workplace where opportunities to succeed are available to everyone. As a multicultural company serving a global community, we encourage a wide range of views and celebrate our diverse backgrounds. Our unique combination of perspectives inspires innovation, connects us to our customers and positively affects our communities. We seek employees with diverse backgrounds and viewpoints and are committed to creating a culture of innovation and inspiration where employees feel a strong sense of community and collective pride in our success.
In 2018, we launched an inclusion and diversity initiative focused on fostering a more inclusive environment and diverse workforce by strengthening five key organizational areas: culture and belonging, talent acquisition, leveraging talent, management and leadership and career development. Additionally, in early 2019, we formed an I&D Advisory Committee made up of a diverse group of Progress employees from across the globe tasked with helping us to support the formation and implementation of I&D initiatives.
Human Capital Development – Another way we advance our commitment to Corporate Responsibility is in our commitment to our employees, who are key to our success. As noted above, we are investing in programs to ensure that we maintain a diverse and inclusive environment. Furthermore, we invest significant resources to developing the talent we need to strengthen our company while at the same time deepening our employees’ skill sets and furthering their careers with us. Through our communication and engagement efforts, our employees better understand how their work contributes to the overall strategy of the company. We also gain valuable feedback on those programs designed to enhance their employee experience. We also focus our human capital management efforts on rewarding performance that balances risk and reward, empowering professional growth and development, and investing in health, emotional and financial wellness. We provide compensation, benefits, and resources to employees that reflect our commitment to being a great place to work.
In 2018, our Human Capital Department launched an extensive management training and development program focused on deepening our employees' skill sets.
Environmental Sustainability – Progress’s products help companies run more efficiently. Each of our solutions is created with these principles of action in mind:
| | o | Sustainable use of natural resources |
| | o | Safe and healthy work environment |
Our sustainability initiatives include recycling programs and energy and resource conservation programs. Our corporate headquarters in Bedford, Massachusetts has received LEED Gold certification. In 2018, we installed electric vehicle charging stations at our headquarters.
Stockholder Rights Each of our directors stands for election every year. We do not have a classified or staggered board. We have adopted a majority voting policy for directors, as described below under “Our Majority Voting Policy.” Holders of 40% of outstanding shares can call a special meeting (lowered from 80% in March 2019). We have no stockholders rights plan (“poison(sometimes referred to as a “poison pill”) in place.
We hold say-on-pay votes annually.
Stock Governance
We have robust stock ownership requirements for our directors and officers.
Hedging and pledging of stock by our directors and officers is prohibited. Strong Stockholder Support on Say-On-Pay 99%We received approximately 96% say-on-pay support at our 20182021 Annual Meeting.Meeting. We believe the vote indicates strong support for our overall executive compensation program, including enhancements made in recent years.
We Proactively Engage with our Stockholders We actively seek to engage with our stockholders as part of our corporate governance cycle. During the past two years, independent members of our Board andyear, members of senior management spoke to, or sought to engage with, a large cross-section of our stockholders.
Our Majority Voting Policy Our Corporate Governance Guidelines set forth our majority voting policy for directors, which provides that any nominee for election to the Board in an uncontested election who receives a greater number of votes “withheld” from his or her election than votes “for” such election is required to submit his or her offer of resignation for consideration by the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is to consider all relevant facts and circumstances and recommend to the Board the action to be taken with respect to that offer of resignation. The Board will then act on the Nominating and Corporate Governance Committee’s recommendation. Promptly following the Board’s decision, the Company will disclose that decision and an explanation of such decision in a filing with the SEC or a press release. 20 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS If the Board accepts a director’s resignation, then the Board may fill any resulting vacancy or may decrease the size of the Board, in each case pursuant to our Bylaws.bylaws. If a director’s resignation is not accepted by the Board, such director will continue to serve until the next Annual Meeting of Stockholders or special meeting in lieu of such Annual Meeting or until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal. Through this policy, the Board seeks to be accountable to all stockholders and respects the rights of stockholders to express their views through their votes for directors. At the same time, the policy allows the Board sufficient flexibility to make sound evaluations based on the relevant circumstances and to act in the best interest of the Company and its stockholders in the event of a greater than or equal to 50% “withhold” vote against a specific director.
Our Board Evaluates Its Effectiveness The Board conducts self-evaluations on a regular basisan annual or periodic self-evaluation to determine whether it is functioning effectively and whether any changes are necessary to improve its performance. This process is developed and overseen by the Nominating and Corporate Governance Committee and conducted with the help of our external counsel. Among other things, members assess (via discussions with the Chairman of the Board and/
or the Chair of the Nominating and Corporate Governance Committee, written questionnaires, or a combination of the two methods) the effectiveness of the Board and its committees directorare functioning properly. The Nominating and Governance Committee leads the evaluations and is responsible for reporting the results to the Board and management executives. Directors may be required to submit responses through a survey or other means and assess the effectiveness of the Board. The Nominating and Governance Committee also evaluates and reports to the Board on the performance of individual directors, whose performance is reviewed annually in connection with standing for reelection.
In addition, each committee conducts a self-assessment of its performance and Board dynamics. The results of these self-evaluations, and action items, if any,its members’ effectiveness through evaluations on a periodic basis, which are reported to the Nominating and discussed byGovernance Committee. The evaluation assesses the Board.
committee’s performance relative to what is set forth in the committee’s charter.
Our Board of Directors Has a Significant Role in Risk Oversight Our Board of Directors believes that its oversight responsibility with respect to the various risks confronting our company is one of its most important areas of responsibility and provides further checks and balances on our leadership structure. Our Board of Directors views its oversight of risk as an ongoing process that occurs throughout the year while evaluating the strategic direction and actions of our company. A fundamental aspect of risk management is not only understanding the risks a company faces and what steps management is taking to manage those risks, but also determining what level of risk is appropriate for the company.Company. We believe that having an independent Chairman of the Board enhances our Board’s ability to oversee our risks. In carrying out this critical function, our Board is involved in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management directly by our Board and through its committees. Each committee’s specific area of responsibility as it relates to risk management is as follows: | | | | | | | | Audit Committee | | Compensation Committee | | Nominating and Corporate Governance Committee | | Mergers and Acquisitions Committee | | | | | | | | Primarily responsible for overseeing risk management as it relates to our financial• Financial condition, financial statements and financial reporting process internal
• Internal controls and accounting matters as well as cybersecurity matters. The Audit Committee also assists our Board of Directors in fulfilling its oversight responsibilities with respect to conflict
• Cybersecurity matters
• Conflict of interest issues that may arise.and compliance with legal and ethical standards | | Responsible for overseeing our overall | • Overall compensation practices, policies and programs and assessing the risks arising from those policies and programs.
• Inclusion & Diversity initiatives | | Considers risks related to our corporate | • Corporate governance practices and leadership
• Leadership structure of the Board including evaluating
• Director and considering evolving corporate governance best practicesmanagement succession planning | | | • Review of overall company
strategy
• Acquisitions and director and management succession planning.other
strategic transactions | | Considers risks related to our consideration of acquisitions and other strategic transactions. |
Our Board of Directors receives reports from members of senior management on the functional areas for which they are responsible. These reports may include information concerning operational, financial, sales, competitive, legal and
regulatory, strategic and other risks, as well as any related management and mitigation. In addition, Since March 2020, the Board plays an activehas also been heavily focused on the oversight and risk mitigation role through its regular review of risks related to the Company’s strategic direction.COVID-19 pandemic. Management has updated the Board of Directors regularly on the impacts of COVID-19 on our business and workforce. We implemented several measures designed to protect the health and well-being of our employees and the TABLE OF CONTENTS communities in which we operate. Such measures include having the vast majority of our employees work from home, implementing new safety measures for those employees performing critical on-site work, and providing additional benefits to support employees, such as flexible work hours, work-from-home-reimbursements and caregiving support. A key area of focus for us was enhancingis our risk mitigation practices around cybersecurity risk. risk. Cybersecurity protection is vital to our organization and our stakeholders, and we are committed to ensuring that our products, data and systems are secure from potential breach. In 2018, we formed aOur cybersecurity governance team composed of key members of managementprovides periodic updates to the Board and IT, data and product security personnel. Management providesquarterly updates to the Audit Committee on cybersecurity matters, including information about cybersecurity governance processes, the status of projects to strengthen internal cybersecurity and security features of the products and services we provide our customers.
Our cybersecurity program includes external audits of our internal and product security practices under top information security standards, including System and Organization Controls (SOC) 2, Health Insurance Portability and Accountability Act of 1996 and Payment Card Industry Data Security Standard. We have implemented a comprehensive cybersecurity training program for all employees, and we have taken steps to mitigate the impact of potential cybersecurity risks, including by procuring a separate cyber insurance policy as part of our comprehensive corporate insurance program.
Our Code of Conduct and Business Ethics Our Board of Directors has adopted a Code of Conduct and Business Ethics that applies to all officers, directors and employees. Copies of the Code of Conduct and Business Ethics can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.
How to Communicate with Our Board Our Board of Directors welcomes communications from stockholders. Any stockholder may communicate either with our Board of Directors as a whole, or with any individual director, by sending a written communication addressed to the Board of Directors or to such director at our offices located at 14 Oak Park Drive, Bedford, Massachusetts 01730, or by submitting an email communication to BOD@progress.com.BOD@progress.com. All communications sent to our Board of Directors will be forwarded to the Board of Directors or to the individual director to whom such communication was addressed. 22 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Corporate Social Responsibility
We strive to conduct our business in ways that will have a positive impact on our stockholders, employees, customers, partners and other stakeholders. As an organization, we believe it is incumbent upon us to consider the social and environmental impact of our business activities and create social and corporate value for the benefit of the communities we serve. Important areas of focus for us are issues related to community engagement, inclusion and diversity, employee development and environmental sustainability. Community Engagement – We engage in the global community and encourage our employees to do so as well. In fiscal 2020, we donated generously to organizations that support children in need, education in science, technology, engineering and math (STEM), and to groups helping communities cope with COVID-19. In fiscal 2020, we also placed special emphasis on contributing to charities in support of eradicating racial and social injustice, domestic violence, and child endangerment. Our initiatives are global in nature and we have received recognition as a valuable partner for our efforts in the United States, Bulgaria and India. In fiscal 2021, we expanded the Progress Women in STEM scholarship series beyond the United States and Bulgaria with the addition of the Progress Software Akanksha Scholarship for Women in STEM in India.
Our employees also gave generously of their time and talents in 2021 to support the causes most important to them. We encourage employees to volunteer through paid volunteer time and team volunteer events. In recognition of service, on an employee's third anniversary, Progress donates funds to a charity of the employee's choice on the employee's behalf. Inclusion and Diversity – Progress strives to be an inclusive, multicultural company serving a global community, where opportunities to succeed are available to everyone. We encourage a wide range of views and celebrate our diverse backgrounds. Our unique combination of perspectives inspires innovation, connects us to our customers and positively affects our communities. We seek employees with diverse backgrounds and viewpoints and are committed to creating a culture of innovation and inspiration where employees feel a strong sense of community and collective pride in our success.
We have launched an inclusion and diversity ("I&D") undertaking focused on fostering a more inclusive environment and diverse workforce by strengthening five key organizational areas: culture and belonging, talent acquisition, leveraging talent, management and leadership and career development.
We have advanced our I&D efforts by seeking ways to further embed our inclusion and diversity philosophy into our culture, processes and employee experience. We formed an I&D Advisory Committee made up of a diverse group of Progress employees from across the globe tasked with helping us to support the formation and implementation of I&D initiatives. Among its many accomplishments to date, the I&D Advisory Committee helped to establish a governance framework for Progress employee resource groups ("ERGs"), supported the formation of our first four ERGs: Progress for Her, Blacks@Progress, Plus (LGTBQ+) and Military Veterans@Progress, and contributed to the strengthening of our career and hiring processes. In fiscal 2021, we welcomed two new ERGs: ASPIRE, which serves to connect Asian-Pacific Islanders to learn, grow and make a difference, and Unidos en Progress, which celebrates Hispanics and Latinx employees and the various cultures they represent. Employee Development – Another way we advance our commitment to Corporate Social Responsibility is in our commitment to our employees, who are key to our success. As noted above, we are investing in programs to ensure that we maintain a diverse and inclusive environment. Furthermore, we invest significant resources to develop our in-house talent and deepen our employees’ skill sets, both to strengthen our company and help further our employees' career goals. We focus our efforts on recognizing employees, empowering professional growth and development, and investing in health, emotional and financial wellness. We provide compensation, benefits, and resources to employees that reflect our commitment to being a great place to work. In early 2020 we were recognized for this commitment at our Sofia, Bulgaria office, which was the proud recipient of several Employer Branding Awards, including Employer of the Year.
In 2019, as part of our career conversations program, we trained managers across the globe how to support their employees’ career development through robust, ongoing career conversations. In 2020, we provided career conversations training for employees as well so that they can successfully leverage the many tools in place to support them. We also launched a new all-company management development program for managers, LEAD | Global Management Development, which attracted more than 70% of all managers for its inaugural run. Environmental Sustainability – Progress works to implement sustainable practices that minimize harm and maximize benefit to the environment, to develop a comprehensive approach to environmental sustainability and to implement strategies and methods that improve the quality of human life.
TABLE OF CONTENTS Our sustainability initiatives include recycling programs and energy and resource conservation programs. Our corporate headquarters in Bedford, Massachusetts has received LEED Gold certification. During fiscal 2018 and 2019, we installed electric vehicle charging stations at each of our Bedford, Sofia and Rotterdam locations. More recently, we invested in certified sustainable and healthy office spaces in Hyderabad, India, Rotterdam, The Netherlands and Burlington, MA while retaining ENERGY STAR® certification of our global headquarters. In March 2022, we published our third annual Corporate Social Responsibility Report, which highlights our corporate social responsibility efforts during fiscal year 2021. 24 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Nominees
EightNine individuals have been nominated for election at the Annual Meeting to hold office until the 20192023 Annual Meeting. The nominees were evaluated and recommended by the Nominating and Corporate Governance Committee in accordance with its charter and our Corporate Governance Guidelines. For additional information about the nominees and their qualifications, please see the sections of this proxy statement entitled “Director Nomination Process - Key Board Qualifications, Expertise and Attributes” and “Nominees for Directors.”
Our Board of Directors recommends a vote FOR the election to the Board of each of the following nominees: | | | | | | Nominee | Age | Director Since | Occupation | | John R. Egan, Chairman of the Board | 61 | 2011 | Managing Partner, Carruth Management, LLC
| | Paul T. Dacier | 61 | 2017 | General Counsel, Indigo Agriculture, Inc. | | Rainer Gawlick | 51 | 2017 | Public/Private Company Board Member; Advisor, Think Cell and Vector Capital | | Yogesh Gupta | 58 | 2016 | President and CEO, Progress Software Corporation | | Charles F. Kane | 61 | 2006 | Adjunct Professor of International Finance, MIT Sloan Graduate Business School of Management | | Samskriti Y. King | 45 | 2018 | CEO, Veracode Software | | David A. Krall | 58 | 2008 | Strategic Advisor, Roku, Inc. | | Angela T. Tucci | 52 | 2018 | CEO, Apto, Inc. |
| | John R. Egan,
Chairman of the Board | | | 64 | | | 2011 | | | Managing Partner, Carruth Management, LLC | | | | Paul T. Dacier | | | 64 | | | 2017 | | | General Counsel, Indigo Agriculture, Inc. | | | | Rainer Gawlick | | | 54 | | | 2017 | | | Public/Private Company Board Member; Advisor, think-cell | | | | Yogesh Gupta | | | 61 | | | 2016 | | | President and CEO, Progress Software Corporation | | | | Charles F. Kane | | | 64 | | | 2006 | | | Adjunct Professor of International Finance, MIT Sloan Graduate Business School of Management | | | | Samskriti Y. King | | | 48 | | | 2018 | | | CEO, Veracode, Inc. | | | | David A. Krall | | | 61 | | | 2008 | | | Strategic Advisor, Roku, Inc. | | | | Angela T. Tucci | | | 55 | | | 2018 | | | Chief Operating Officer, Uplight, Inc. | | | | Vivian Vitale | | | 68 | | | 2019 | | | Principal, Vivian Vitale Consulting, LLC | |
Each director elected at the Annual Meeting will hold office until the next Annual Meeting of Stockholders or special meeting in lieu of such Annual Meeting or until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal. There are no family relationships among any of our executive officers or directors. Each of the director nominees named in this proxy statement has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve. If, before the Annual Meeting, one or more nominees named in this proxy statement should become unable to serve or for good
cause will not serve, the persons named in the enclosed proxy will vote the shares represented by any proxy received by our Board of Directors for such other person or persons as may thereafter be nominated for director by the Nominating and Corporate Governance Committee and our Board of Directors. The Board of Directors and Nominating and Corporate Governance Committee believe the eightnine Board nominees possess the skills, experience and diversity to effectively monitor performance, provide oversight, and advise management on the Company’s long-term strategy. TABLE OF CONTENTS Director Nomination Process
Board Membership Criteria Our Board of Directors has delegated the search for, and recommendation of, director nominees to the Nominating and Corporate Governance Committee. When considering a potential candidate for membership on our Board of Directors, the Nominating and Corporate Governance Committee will consider any criteria it deems appropriate, including, among other things, the background, experience and qualifications of any candidate as well as such candidate’s past or anticipated contributions to our Board of Directors and its committees. At a minimum, each nominee is expected to have: | | Highest personal and
professional integrity | | | | | | Demonstrated exceptional
ability and judgment | | | | | | Effectiveness, with the other directors, in collectively serving
the long-term interests of our
stockholders | |
In addition, the Nominating and Corporate Governance Committee has established the following minimum requirements: at least five years of business experience; no identified conflicts of interest as a prospective director of our company; no convictions in a criminal proceeding (aside from traffic violations) during the five years prior to the date of selection; and willingness to comply with our Code of Conduct and Business Ethics. The Board of Directors retains the right to modify these minimum qualifications from time to time, and exceptional candidates who do not meet these criteria may still be considered. In addition to any other standards the Nominating and Corporate Governance Committee may deem appropriate from time to time for the overall structure and composition of our Board of Directors, the Nominating and Corporate Governance Committee also considers numerous other qualities, skills and characteristics when evaluating director nominees such as: direct experience in the software industry or in the markets in which we operate; an understanding of, and experience in, accounting, legal, finance, product, sales and/or marketing matters; experience on other public or private company boards; leadership experience with public companies or other major organizations; M&A experience; and diversity of the Board, considering the business and professional experience, educational background, reputation, and industry expertise across various market segments and technologies relevant to our business, as well as other relevant attributes of the candidates. The Nominating and Corporate Governance Committee does not assign specific weights to criteria and no criterion is necessarily applicable to all prospective nominees. 26 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Director Nomination Process
Board Membership Criteria
Our Board of Directors has delegated the search for, and recommendation of, director nominees to the Nominating and Corporate Governance Committee. When considering a potential candidate for membership on our Board of Directors, the Nominating and Corporate Governance Committee will consider any criteria it deems appropriate, including, among other things, the background, experience and qualifications of any candidate as well as such candidate’s past or anticipated contributions to our Board of Directors and its Committees. At a minimum, each nominee is expected to have:
| | | | | | Highest personal and professional integrity | | Demonstrated exceptional ability and judgment | | Effectiveness, with the other directors, in collectively serving the long-term interests of our stockholders |
In addition, the Nominating and Corporate Governance Committee has established the following minimum requirements:
at least five years of business experience;
no identified conflicts of interest as a prospective director of our company;
no convictions in a criminal proceeding (aside from traffic violations) during the five years prior to the date of selection; and
willingness to comply with our Code of Conduct and Business Ethics.
The Board of Directors retains the right to modify these minimum qualifications from time to time, and exceptional candidates who do not meet these criteria may still be considered.
In addition to any other standards the Nominating and Corporate Governance Committee may deem appropriate from time to time for the overall structure and composition of our Board of Directors, the Nominating and Corporate Governance Committee also considers numerous other qualities, skills and characteristics when evaluating director nominees such as:
direct experience in the software industry or in the markets in which we operate;
an understanding of, and experience in, accounting, legal, finance, product, sales and/or marketing matters;
experience on other public or private company boards;
leadership experience with public companies or other major organizations; and
diversity of the Board, considering the business and professional experience, educational background, reputation, and industry expertise across various market segments and technologies relevant to our business, as well as other relevant attributes of the candidates.
The Nominating and Corporate Governance Committee does not assign specific weights to criteria and no criterion is necessarily applicable to all prospective nominees.
In February 2018, we added two new directors to our Board: Samskriti Y. King and Angela T. Tucci. The Board, through its Nominating and Corporate Governance Committee, and with the assistance of an independent executive search firm, selected Ms. King and Ms. Tucci from a large pool of highly qualified individuals, including candidates suggested by our stockholders. The search process, which was initiated and publicly announced in October 2017, emphasized diverse individuals with experience as senior executives in the enterprise infrastructure software industry. Among the many factors considered by the Board when assessing Ms. King’s and Ms. Tucci’s respective experience, qualification, attributes and skills were the unique and diverse perspectives that, as female directors, they could each bring to the Board.
Director Nomination Process Generally, the Nominating and Corporate Governance Committee identifies candidates for director nominees in consultation with the other directors and management, using search firms or other advisors, through recommendations submitted by stockholders or through other methods that the Nominating and Corporate Governance Committee deems to be helpful to identify candidates. In the case of incumbent directors, the Nominating and Corporate Governance Committee reviews each incumbent director’s overall past service to us, including the number of meetings attended, level of participation, quality of performance, and whether the director continues to meet applicable independence standards. In the case of a new director candidate, the Nominating and Corporate Governance Committee confirms that the candidate meets the minimum qualifications for a director nominee established by the
Nominating and Corporate Governance Committee. The candidate will also be interviewed by the Nominating and Corporate Governance Committee and other Board members. The Nominating and Corporate Governance Committee then meets to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and considering the overall composition and needs of our Board of Directors. The same procedures apply to all candidates for director nomination, including candidates submitted by stockholders. Based on the results of the evaluation process, the Nominating and Corporate Governance Committee recommends candidates for our Board of Directors’ approval as director nominees for election to our Board of Directors. The Nominating and Corporate Governance Committee also recommends candidates to our Board of Directors for appointment to its Committees.
committees.
Stockholder Recommendations The Nominating and Corporate Governance Committee will consider director nominee candidates who are recommended by stockholders of our company. Recommendations sent by stockholders must provide the following information: the name and address of record of the stockholder; a representation that the stockholder is a record holder of our common stock, or if the stockholder is not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”); the name, age, business and residential address, educational background, current principal occupation or employment, and principal occupation or employment for the preceding five full fiscal years of the proposed director candidate; a description of the qualifications and background of the proposed director candidate which addresses the minimum qualifications described above; a description of all arrangements or understandings between the stockholder and the proposed director candidate; and any other information regarding the proposed director candidate that is required to be included in a proxy statement filed under SEC rules. The submission must be accompanied by a written consent of the individual to be named in our proxy statement as standing for election if nominated by our Board of Directors and to serve if elected by the stockholders. Stockholder recommendations of candidates for election as directors at an Annual Meeting of Stockholders must be given at least 120 days priortimely submitted to the anniversary date ofCompany in accordance with the mailing of our proxy statement forrequirements set forth in the previous year’s Annual Meeting.Company's bylaws. TABLE OF CONTENTS Key Board Qualifications, Expertise and Attributes
The table and graphs below summarize the director nominees’ experience and the qualifications, skills and attributes most relevant to nominate candidates to serve on the Board. Director biographies in the section below entitled “Nominees for Directors” describe each director’s background and relevant experience in more detail. | | | | Number of nominees
with relevant experience | | | | | | | Leadership
Our business is complex challenging and ever-evolving. CEOs and individuals with experience leading large business units have proven track records in developing and executing a vision and making executive-level decisions. | 8 | | 9 of 89 | | | | | | | | Finance and Accounting
Individuals with financial expertise are able to identify and understand the issues associated with our complex,relevant financial considerations applicable to us as a global business.
public company.
| | | 6 of 89 | | | | | | | | Technology/Software Industry
Progress offers the leading platform for developing and deploying mission-critical business applications. Those with relevant technology/software experience are better able to understand the opportunities and challenges facing our business. | 8 | | 9 of 89 | | | | | | | | Go-to-Market/Sales
Our business depends on successfully creating awareness of our products and entering new markets as well as executing our sales strategy. | | | 5 of 89 | | | | | | | | Strategy
Successful developmentDevelopment and execution of oura strong corporate strategy is critical to sustaining and growing our success.business.
| 8 | | 9 of 89 | | | | | | | | Product Development
Our business depends on the success of our product development effortsability to successfully develop our products and expand our offerings. Experience in this areaproduct development enhances understanding of the challenges we face and facilitates strategic planning in this area.
| | | 3 of 89 | | | | | | \ | Public Company Board Service and Governance
Individuals having experience serving on public company boards better understand the roles and responsibilities of directors and corporate governance best practices. | 5 | | 6 of 89 | | | | | | | | | Global BusinessM&A
We are a global company. GlobalA key element of our corporate strategy includes the acquisition of businesses that offer complementary products, services and technologies, augment our revenues and cash flows, and meet our strict financial criteria. M&A experience enhances understanding of the complexities, issues and issuesrisks involved with running a global business.any such acquisitions and their integration.
| 8 | | 7 of 89 | |
28 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS
TABLE OF CONTENTS
 | | | | | | | | | | | |  John R. EganChairman of the Board• Director since September 2011
• Chairman of the Board since December 2012
• Age: 64
• Independent
• Current Board Committees: Nominating and Corporate Governance
| | | | | | Biography
Mr. Egan is managing partner of Carruth Management, LLC, a Boston-based venture capital fund he founded in October 1998 that specializes in technology and early stage investments. From October 1986 until September 1998, Mr. Egan served in several executive positions with EMC Corporation, a publicly held global leader in information technology, including Executive Vice President, Products and Offerings, Executive Vice President, Sales and Marketing, Executive Vice President, Operations and Executive Vice President, International Sales.
Other Current Public Company Boards
• Verint Systems, Inc. (Nasdaq: VRNT), a provider of systems to the internet security market
• NetScout Systems, Inc. (Nasdaq: NTCT), a network performance management company, where he serves as Lead Director
• Agile Growth Corp. (Nasdaq: AGGRU), a special purpose company for the purpose of effecting an acquisition with one or more technology businesses
Other Current Boards Trilio Data, Inc.
• Trilio Data, Inc.
Prior Public Company Boards in Last 5 Years
• EMC Corporation
• VMware, Inc. | | | | | |
30 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS 
| | | | | | | | | | | |  Paul T. Dacier• Director since June 2017
• Age: 64
• Independent
• Current Board Committees: Nominating and Corporate Governance (Chair)
| | | | | | Biography
Mr. Dacier is currently the General Counsel of Indigo Agriculture, Inc., a Boston-based agricultural technology start-up company that specializes in products designed to maximize crop health and productivity, which he joined in March 2017. Previously, Mr. Dacier was the Chief Legal Officer of EMC Corporation from 1990 until September 2016, when EMC was acquired by Dell Technologies. Mr. Dacier was responsible for the worldwide legal affairs of EMC and its subsidiaries and oversaw the company's internal audit, real estate and facilities organizations, sustainability and government affairs departments.
Other Current Public Company Boards
• AerCap Holdings NV (NYSE: AER), the world's largest independent commercial aircraft leasing company
Other Current Boards
• MagGrow
• Massachusetts Judicial Nominating Commission
• Dean's Advisory Board, Boston College Law School
• Social Law Library
• New England Legal Foundation
Prior Public Company Boards in Last 5 Years
• GTY Technology Holdings, Inc. | |
| | | | | | | | | | | |  Rainer Gawlick• Director since June 2017
• Age: 54
• Independent
• Current Board Committees: Audit; Mergers and Acquisitions/Strategy
| | | | | | Biography
Dr. Gawlick is a public and private company board member and formerly served as President of Perfecto Mobile, Ltd., a leader in mobile testing, from July 2015 until September 2016, and as Executive Vice President of Global Sales at lntralinks, Inc., a computer software company providing virtual data rooms and other content management services, from April 2012 until July 2015. From August 2008 to April 2012, Dr. Gawlick served as Chief Marketing Officer of Sophos Ltd., a computer security company providing endpoint, network and data protection software. From April 2005 to August 2008, Dr. Gawlick served as Vice President of Worldwide Marketing and Strategy at SolidWorks Corp., a CAD software company. He has also held a variety of executive positions in other technology businesses and was a consultant with McKinsey & Company. Dr. Gawlick holds a Ph.D. in Computer Science from the Massachusetts Institute of Technology.
Other Current Public Company Boards
• Proto Labs, Inc. (NYSE: PRLB), a leading online and technology-enabled quick-turn manufacturer of custom parts for prototyping and short-run production
Other Current Boards
• ChyronHego Corp.
• CloudSense
• Single Digits, Inc.
• Oktopost
• Sectigo
• PhotoShelter
• MassHire State Workforce Board
Prior Public Company Boards in Last 5 Years
None | |
TABLE OF CONTENTS | | | | | | | | | | | |  Yogesh GuptaPresident and Chief Executive Officer• Director since October 2016
• Age: 61
| | | | | | Biography
Mr. Gupta became our President and Chief Executive Officer in October 2016. Prior to that time, Mr. Gupta served as an advisor to various venture capital and private equity firms from October 2015 until September 2016. Prior to that time, Mr. Gupta was President and Chief Executive Officer at Kaseya, Inc., a provider of IT management software solutions, from June 2013 until July 2015, at which time, Mr. Gupta became Chairman of the Board of Directors of Kaseya, a position he held until October 2015. From July 2012 until June 2013, Mr. Gupta served as an advisor to various venture capital and private equity firms in several mergers and acquisitions opportunities. Mr. Gupta was previously President and Chief Executive Officer of FatWire Software from July 2007 until February 2012, prior to the acquisition of FatWire Software by Oracle Corporation. Prior roles held by Mr. Gupta include Chief Technology Officer at CA, Inc., with which Mr. Gupta held various senior positions.
Other Current Public Company Boards
None
Other Current Boards
• ServiceAide, Inc.
• Board of Trustees, Beth Israel Lahey Health
• Board of Trustees, Mass Technology Leadership Council, Co-Chair
Prior Public Company Boards in Last 5 Years
None | | | | | |
| | | | | | | | | | | |  Charles F. Kane• Director since November 2006
• Age: 64
• Independent
• Current Board Committees: Audit (Chair); Mergers and Acquisitions/Strategy
| | | | | | Biography
Mr. Kane is currently an adjunct professor of International Finance at the MIT Sloan Graduate Business School of Management. Since November 2006, Mr. Kane has also been a Director and Strategic Advisor of One Laptop Per Child, a non-profit organization that provides computing and internet access for students in the developing world, for which he served as President and Chief Operating Officer from 2008 until 2009. Mr. Kane served as Executive Vice President and Chief Administrative Officer of Global BPO Services Corp., a special purpose acquisition corporation, from July 2007 until March 2008, and as Chief Financial Officer of Global BPO from August 2007 until March 2008. Prior to joining Global BPO, he served as Chief Financial Officer of RSA Security Inc., a provider of e-security solutions, from May 2006 until RSA was acquired by EMC Corporation in October 2006. From July 2003 until May 2006, he served as Chief Financial Officer of Aspen Technology, Inc. (NYSE: AZPN), a publicly traded provider of supply chain management software and professional services.
Other Current Public Company Boards
• Alkami Technology, Inc. (Nasdaq: ALKT), a digital banking platform that enables banks and credit unions to grow confidently and compete with Megabanks and Fintechs
Other Current Boards
• Acoustic Software
• Symbotic Robotics
• Workhuman
Prior Public Company Boards in Last 5 Years
• Carbonite, Inc.
• Demandware, Inc.
• Realpage, Inc. | | | | | |
32 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS | | | | | | | | | | | |  Samskriti (Sam)Y. King• Director since February 2018
• Age: 48
• Independent
• Current Board Committees: Audit; Mergers and Acquisitions/Strategy (Chair)
| | | | | | Biography
Ms. King is currently Chief Executive Officer of Veracode, Inc., a leading provider of application security testing, a role she assumed in January 2019 following Veracode's acquisition by Thoma Bravo. Previously, from July 2017 to January 2019, Ms. King served as Senior Vice President and General Manager of Veracode. From August 2015 until July 2017, Ms. King was the Chief Strategy Officer of Veracode. Prior to that time, from April 2012 until July 2015, Ms. King was Executive Vice President, Product Strategy and Corporate Development GM, Mobile at Veracode. Ms. King joined Veracode in November 2006 and also served as Veracode's Senior Vice President, Product Marketing and Vice President, Service Delivery.
Other Current Public Company Boards
None
Other Current Boards
• Veracode
• ZeroFox
• MassTLC
• Mass High Tech Council, Inc.
Prior Public Company Boards in Last 5 Years
None | | | | | |
| | | | | | | | | | | |  David A. Krall• Director since February 2008
• Age: 61
• Independent
• Current Board Committees: Compensation (Chair)
| | | | | | Biography
Mr. Krall has served as a strategic advisor to Roku, Inc. (Nasdaq: ROKU), a leading manufacturer of media players for streaming entertainment, since January 2011. From February 2010 to December 2010, he served as President and Chief Operating Officer of Roku, where he was responsible for managing all functional areas of the company. Prior to that, Mr. Krall spent two years as President and Chief Executive Officer of QSecure, Inc., a privately held developer of secure credit cards based on micro-electro-mechanical system technology. From 1995 to July 2007, he held a variety of positions of increasing responsibility and scope at Avid Technology, Inc. (Nasdaq: AVID), a publicly traded leading provider of digital media creation tools for the media and entertainment industry. His tenure at Avid included serving seven years as the company's President and Chief Executive Officer.
Other Current Public Company Boards
• Harmonic Inc. (Nasdaq: HLIT), a leader in video delivery and cable access virtualization
Other Current Boards
• Universal Audio, Inc.
• Earth Observant, Inc.
• Audinate Pty Ltd.
• Rombauer Vineyards
Prior Public Company Boards in Last 5 Years
• Quantum Corp. | | | | | |
TABLE OF CONTENTS | | | | | | | | | | | |  Angela T. Tucci• Director since February 2018
• Age: 55
• Independent
• Current Board Committees: Compensation; Mergers and Acquisitions/Strategy
| | | | | | Biography
Ms. Tucci is currently Chief Operating Officer of Uplight, Inc., a provider of end-to-end technology solutions dedicated to serving the energy ecosystem, a position she has held since January 2020. Since December 2019, she has also served as an advisor to TPG Celegene Aggregation GP, Inc. in connection with its investment in CollabNet/Version One. Previously, Ms. Tucci was Chief Executive Officer of Apto, Inc., from August 2017 to September 2019. Prior to that time, Ms. Tucci was General Manager, Agile Management Business Unit of CA, Inc. from September 2015 until July 2017. Prior to that, Ms. Tucci was Chief Revenue Officer, Office of the CEO of Rally Software Development Corp. from December 2014 until August 2015, when Rally was acquired by CA. Ms. Tucci joined Rally in December 2013 as Chief Marketing Officer. From January 2011 until August 2013, Ms. Tucci was Chief Strategy Officer of Symantec Corporation.
Other Current Public Company Boards
None
Other Current Boards
• Anita Borg Institute, Chairperson
• Digital.Ai Software Inc.
Prior Public Company Boards in Last 5 Years
None | | | | | |
| | | | | | | | | | | |  Vivian Vitale• Director since October 2019
• Age: 68
• Independent
• Current Board Committees: Compensation; Nominating and Corporate Governance
| | | | | | Biography
Ms. Vitale owns and operates Vivian Vitale Consulting, LLC, a consulting practice assisting organizations in the development of human resources and people management practices, a role she has held since April 2018. From April 2012 until March 2018, she held multiple positions of increasing responsibility at Veracode, Inc., a provider of application security testing. Her tenure at Veracode included serving as Executive Vice President of Human Resources, continuing in her role through Veracode, Inc.’s acquisition by CA Technologies in March 2017. Prior to 2012, Ms. Vitale served as Senior Vice President at Care.com, Inc., an online provider of support services to families. Previously, Ms. Vitale has also held senior leadership roles at RSA Security, Unica Corporation and IBM. Ms. Vitale holds a bachelor’s degree in communications from the University of Connecticut and a master’s degree in corporate and political communication from Fairfield University.
Other Current Public Company Boards
• NetScout Systems, Inc. (Nasdaq: NTCT), a network performance management company
Other Current Boards
• Vera3
• Surprise HR Inc.
• Quantuvos
Prior Public Company Boards in Last 5 Years
None | | | | | |
34 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS THE BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
Board of Directors
Director Independence Having an independent Board is a core component of our governance philosophy. Our Corporate Governance Guidelines provide that, as a matter of policy and consistent with applicable laws, rules and regulations, a majority of the Board should be independent. Based on the review and recommendation of our Nominating and Corporate Governance Committee, our Board has determined that all current directors except Yogesh Gupta (our current President and Chief Executive Officer) are independent within the meaning of the director independence standards of NASDAQthe Nasdaq Stock Market, LLC ("Nasdaq") and the applicable rules of the SEC. In making this determination, we solicited information from each of the directors regarding whether that director, or any member of his or her immediate family, had a direct or indirect material interest in any transactions involving our company, was involved in a debt relationship with our company or received personal benefits outside the scope of the director’s normal compensation. We considered the responses of the directors, and independently considered the commercial agreements, acquisitions and other material transactions entered by us during 2018,2021, and determined that none of our non-employee directors had a material interest in those transactions. Our Board similarly determined that former director Michael Mark, who did not stand for re-election at the 2018 Annual Meeting, was independent within the meaning of the director independence standards of NASDAQ and the applicable rules of the SEC. There are no family relationships between any director, executive officer, or director nominee.
Director Attendance Our Board of Directors met nineeight times during the fiscal year ended November 30, 2018.2021. During 2018,fiscal 2021, each director nominee attended at least 75% of the aggregate of the total number of meetings of our Board of Directors and the total number of meetings of all committees of our Board of Directors on which he or she served from and after his or her election to the Board. Mses. King and Tucci were appointed to the Board in February 2018. In January 2018, the Board of Directors adopted a policy requiring members of our Board of Directors to attend the Annual Meeting of Stockholders. All but one of the members of our Board of Directors virtually attended the 20182021 Annual Meeting of Stockholders.
TABLE OF CONTENTS
Committees of the Board of Directors
Our Board of Directors has standing Audit, Compensation, Nominating and Corporate Governance and Mergers and AcquisitionsAcquisitions/Strategy Committees. | | John R. Egan | | | | | | | | | Member | | | | | | | Paul T. Dacier | | | | | | | | | Chair | | | | | | | Rainer Gawlick | | | Member | | | | | | | | | Member | | | | Yogesh Gupta | | | | | | | | | | | | | | | | Charles F. Kane | | | Chair | | | | | | | | | Member | | | | Samskriti (Sam) Y. King | | | Member | | | | | | | | | Chair | | | | David A. Krall | | | | | | Chair | | | | | | | | | | Angela T. Tucci | | | | | | Member | | | | | | Member | | | | Vivian Vitale | | | | | | Member | | | Member | | | | | | | Number of meetings in fiscal year 2021 | | | 9 | | | 5 | | | 2 | | | 5 | |
Audit Committee
| | | | | | | Director | Audit | Compensation | Nominating and Corporate Governance | Mergers and Acquisitions | | John R. Egan | | | Member | Member | | Paul T. Dacier | | | Chair | | | Rainer Gawlick | Member | Member | | | | Yogesh Gupta | | | | | | Charles F. Kane | Chair | | | Member | | Samskriti (Sam) Y. King | Member | | | Chair | | David A. Krall | | Chair | | | | Angela T. Tucci | | Member | | | | Number of meetings in fiscal year 2018 | 8 | 6 | 3 | 1 |
Audit Committee
The Audit Committee of our Board of Directors during 20182021 consisted of Messrs. Egan (until March 2018),Dr. Gawlick, Mr. Kane and Michael L. Mark (until March 2018) and Ms. King, (beginning in March 2018), with Mr. Kane serving as Chair. Mr. Mark did not stand for re-election to our Board at the 2018 Annual Meeting. The Audit Committee met eightnine times during 2018.2021. Our Board of Directors has determined that each member of the Audit Committee meets the independence requirements promulgated by NASDAQNasdaq and the SEC, including Rule 10A-3(b)(1) under the Exchange Act. In addition, our Board of Directors has determined that each member of the Audit Committee is financially literate, and that Mr. Kane qualifies as an “audit committee financial expert” under the rules of the SEC. The Audit Committee operates under a written charter adopted by our Board of Directors, a copy of which can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.
The Audit Committee assists our Board of Directors in fulfilling its oversight responsibilities for accounting and financial reporting compliance. The Audit Committee meets with management and with our independent registered public accounting firm to discuss our financial reporting policies and procedures, our internal control over financial reporting, the results of the independent registered public accounting firm’s examinations, our critical accounting policies and the overall quality of our financial reporting, and the Audit Committee reports on these matters to our Board of Directors. The Audit Committee meets with the independent registered public accounting firm with and without our management present. The Audit Committee also oversees cybersecurity risk.
36 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS | | | Audit Committee | In accordance with its charter, the Audit Committee:Committee, among other things: | | | | • Appoints, compensates, retains and oversees the independent registered public accounting firm • Reviews withwork performed by our independent registered public accounting firm the scope of the audit for the year and the resultspurpose of thepreparing or issuing an audit when completedreport or related work
• Reviews the independent registered public accounting firm’s fees for services performed
• Reviews with the independent registered public accounting firm, the Company’s internal audit and financial management, and the integrity of the Company’s internal and external financial reporting processes and the adequacy and effectiveness of the Company’s internal controls over financial reporting
• Reviews with management various matters related to our internal controls • Oversees cybersecurity and other risks relevant to our information technology environmentlegal, compliance and regulatory matters
| | | • Reviews with management and the independent registered public accounting firm the annual audited financial statements and the quarterly financial statements, prior to the filing of reports containing those financial statements with the SEC
• Reviews with management policies with respect to our major financial risksrisk assessment and risk management, including appropriate guidelines and policies to govern the process, as well as the steps management has taken to monitor and control those risks
• Is responsible for producing the Audit Committee Report included in this proxy statement | |
Compensation Committee
The Compensation Committee of our Board of Directors during 20182021 consisted of Messrs. Gawlick, Kane (until March 2018) andMr. Krall and Ms.Mses. Vitale and Tucci, (beginning in March 2018), with Mr. Krall serving as Chair. The Compensation Committee met sixfive times during 2018.2021. Our Board of Directors has determined that each member of the Compensation Committee meets the independence requirements promulgated by NASDAQ.Nasdaq. Our Compensation Committee operates under a written charter adopted by our Board of Directors, a copy of which can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.
| | | Compensation Committee | In accordance with its charter, the Compensation Committee:Committee, among other things: | | | | • Oversees our overall executive compensation structure and benefits, policies and programs
• Administers our equity-based plans
• Reviews and makes recommendations to our Board of Directors regarding the performance of our Chief Executive Officer
• Reviews, and recommends to our Board of Directors for its approval, the compensation of our Chief Executive Officer
| • ReviewsConsults with our Chief Executive Officer to review and determines thedetermine compensation of all direct reports of our other executive officers
• Assists in developing and reviewing succession plans for our senior management, including the Chief Executive Officer | | | • ReviewsReview our policies, programs and makes recommendationsinitiatives for inclusion and diversity, and provide guidance to our Board of Directors regardingand management on these matters
• Reviews our processes and procedures for the compensationconsideration and determination of our directorsdirector and executive compensation
• Is responsible for producing the Compensation Committee Report included in this proxy statements responsible for producing the Audit Committee Report included in this proxy statement | |
TABLE OF CONTENTS
Nominating and Corporate Governance Committee The Nominating and Corporate Governance Committee of our Board of Directors during 20182021 consisted of Messrs. Egan (beginning in March 2018),and Dacier, Kane (until March 2018), Krall (until March 2018) and Mark (until May 2018) with Mr. Dacier serving as Chair. Mr. Mark did not stand for re-electionIn January 2021, Ms. Vitale was appointed to our Board at the 2018 Annual Meeting.Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee met three timestwice during 2018.2021. The Board of Directors has determined that each member of the Nominating and Corporate Governance Committee meets the independence requirements promulgated by NASDAQ.Nasdaq. The Nominating and Corporate Governance Committee operates under a written charter adopted by our Board of Directors, a copy of which can be found on our website at www.progress.com under the heading “Corporate Governance” located on the “Investor Relations” page.
| | | Nominating and Corporate Governance Committee | | | | In accordance with its charter, the Nominating and Corporate Governance Committee: | | | | • Is responsible for identifying qualified candidates for election to our Board of Directors and recommending nominees for election as directors at the Annual Meeting
• Assists in determining the composition of our Board of Directors and its committees | | | • Assists in developing and monitoring a process to assess the effectiveness of our Board of Directors | • Assists in developing and reviewing succession plans for our senior management, including the Chief Executive Officer
• Assists in developing and implementing our Corporate Governance Guidelines | |
Mergers and AcquisitionsAcquisitions/Strategy Committee
The Mergers and AcquisitionsAcquisitions/Strategy Committee of our Board of Directors was formed in September 2018 for purposes of assistingassists management in the review of acquisition transactions to be brought before the Board and the review of our corporate strategy, and, during 2018fiscal 2021, consisted of Messrs. EganMr. Kane, Dr. Gawlick, and KaneMses. King and Ms. King,Tucci, with Ms. King serving as Chair. The Mergers and AcquisitionsAcquisitions/Strategy Committee met oncefive times during 2018.2021.
Director Compensation
DIRECTOR COMPENSATION
Director Compensation Plan—Fiscal 2018
2021We pay our non-employee directors a mix of cash and equity compensation. Employee directors receive no compensation for their service as directors. In accordance with the 20182021 Director Compensation Plan adopted by the Board, for 2018,2021, our non-employee directors were paid an annual retainer of $250,000.$275,000. This annual retainer under the 2021 Director Compensation Plan was paid $50,000 in cash and $200,000$225,000 in equity, in the form of deferred stock units (“DSUs”). The independentIndependent Chairman of the Board was paidentitled to an additional cash retainer of $50,000. The annual retainers were paid in cash in June 2018.$75,000. Prior to adopting the 20182021 Director Compensation Plan, the Compensation Committee received market data from itsPay Governance, the Compensation Committee’s independent compensation consultant, and considered whether any changes in director compensation were required.should be proposed. Based on the market data, the Compensation Committee recommended, and the Board approved, an increase in the non-employee director equity retainer to from $200,000 to $225,000 in the form of deferred stock units (“DSUs”), and the Independent Chairman of the Board, cash retainer was increased from $50,000 to $75,000. These changes to the director compensation program were determined to be appropriate in light of the increasing complexity and additional oversight necessitated by significant growth through both M&A activity. The Board and Compensation Committee also considered that no changes to director compensation.compensation had occurred since 2016. The changes were approved in March 2021 and effective on a full-year basis. 38 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS The cash retainer was paid in June 2021 and the equity retainer was issued in June 2021. The number of DSUs granted was determined by dividing the equity retainer by the grant dategrant-date closing price of our common stock as reported by NASDAQ. Upon issuance, theNasdaq. The DSUs vest in a single installment on the date of the Annual Meeting, subject to continued service on our Board of Directors.Directors through such date. DSUs do not convert to shares of common stock until a director terminates service on the Board of Directors or upon a change in control, whichever occurs first. With respect to service on the committees of our Board of Directors, the following fees were paid: Audit Committee - $25,000 for the Chair and $20,000 for the other members;
Compensation Committee - $25,000 for the Chair and $15,000 for the other members;
Nominating and Corporate Governance Committee - $12,500 for the Chair and $10,000 for the other members; and
Mergers and AcquisitionsAcquisitions/Strategy Committee - $12,500$25,000 for the Chair and $10,000$15,000 for the other members
members.
The fees paid for service on the Audit, Compensation and Nominating and Corporate Governance Committeescommittees were paid in cash in June 2018.2021. InPrior to March 2017, our Board of Directors adopted revised stock retention guidelines for non-employee directors. These guidelines provide for all non-employee directors to hold an amount of our common stock,
restricted shares, stock options and/or deferred stock units having a value equal to at least five times the annual cash retainer. Directors have five years to attain this ownership threshold.
Each2019, newly elected director receivesdirectors were also entitled to receive an initial director appointment grant of $300,000 of deferred stock units at the first April or October grant date followingDSUs in connection with his or her electionappointment to our Board of Directors. These deferred stock units vest over a 60-month period, beginning on the first day of the month following the month the director joins our Board of Directors, with full acceleration of vesting upon a change of control. In March 2019, the Board of Directors eliminated thethis initial director appointment grant for future appointees to the Board.Board to remain in line with market practice.
Director Compensation Table—Fiscal 2018
2021The following table sets forth a summary of the compensation earned bypaid or paidgranted to our non-employee directors for service on our Board in 2018. Michael Mark was a director for a portion of 2018 but did not stand for re-election at the 2018 Annual Meeting and was not paid any compensation during the year.2021. | | | | | | | | | | | | Name | Fees Earned or Paid in Cash ($)(1) |
| Stock Awards (2)(3) ($) |
| Option Awards ($) | Total ($) |
| | Paul T. Dacier | 100,000 |
| 297,857 |
| | | — | 397,857 |
| | John R. Egan | 110,000 |
| 197,837 |
| | | — | 307,837 |
| | Rainer Gawlick | 122,500 |
| 297,857 |
| | | — | 420,357 |
| | Charles F. Kane | 75,000 |
| 197,837 |
| | | — | 272,837 |
| | Samskriti Y. King | 70,000 |
| 487,218 |
| | | — | 557,218 |
| | David A. Krall | 75,000 |
| 197,837 |
| | | — | 272,837 |
| Michael L. Mark (4) | — |
| — |
| | | — | — |
| | Angela T. Tucci | 65,000 |
| 487,218 |
| | | — | 552,218 |
|
_____________
| | Paul T. Dacier | | | 62,500 | | | 225,033 | | | 287,533 | | | | John R. Egan | | | 135,000 | | | 225,033 | | | 360,033 | | | | Rainer Gawlick | | | 85,000 | | | 225,033 | | | 310,033 | | | | Charles F. Kane | | | 90,000 | | | 225,033 | | | 315,033 | | | | Samskriti Y. King | | | 95,000 | | | 225,033 | | | 320,033 | | | | David A. Krall | | | 75,000 | | | 225,033 | | | 300,033 | | | | Angela T. Tucci | | | 80,000 | | | 225,033 | | | 305,033 | | | | Vivian Vitale | | | 75,000 | | | 225,033 | | | 300,033 | |
| | | (1) | Includes, in the case of each of Messrs. Dacier and Gawlick, payment of one-half of the annual cash retainer for the period from December 2017 to June 2018. |
| | (2)
| The number of outstanding unvested DSUs held by each director as of November 30, 20182021 is shown in the table below. No director held stock options. |
| | Mr. Dacier | | | 5,962 | | | | Mr. Egan | | | 4,828 | | | | Dr. Gawlick | | | 5,962 | | | | Mr. Kane | | | 4,828 | | | | Ms. King | | | 7,123 | |
TABLE OF CONTENTS | | | Name | Unvested DSUs Outstanding at November 30, 2018 |
| Mr. Dacier | 12,118 |
| Mr. Egan | 5,152 |
| Mr. Gawlick | 12,118 |
| Mr. Kane | 5,152 |
| Ms. King | 12,277 |
| Mr. Krall | 5,152 |
| Mr. Mark | — |
| Ms. Tucci | 12,277 |
|
(3) | Mr. Krall | | | 4,828 | | | | Ms. Tucci | | | 7,123 | | | | Ms. Vitale | | | 4,828 | |
(2)
| Represents the fair value of the awards less the present value of expected dividends, measured at the grant date. The number of units granted to each Director was determined by dividing the grant date value of the award, $200,000,$225,000, by $38.82,$46.61, the closing price of our common stock on June 29, 2018. In the case of Messrs. Dacier and Gawlick, also includes 2,688 units granted on April 2, 2018, as the second half of the annual equity retainer for each such director’s service on our Board in fiscal 2018, determined by dividing the grant date value of the award, $100,000, by $37.21, the closing stock price of our common stock on April 2, 2018. In the case of Mses. King and Tucci, also includes 8,063 units granted on April 2, 2018, in connection with each such director’s initial appointment to our Board, determined by dividing the grant date value of the award, $300,000, by $37.21, the closing stock price of our common stock on April 2, 2018.28, 2021. |
| | (4) | Mr. Mark was a director for a portion of 2018 but did not stand for re-election at the 2018 Annual Meeting. |
Stock Ownership Guidelines
Non-employee members of our Board and senior executive officers are required to own shares of Progress common stock. The Board of Directors sets and periodically reviews and makes changes to these ownership requirements. In March 2017, our Board of Directors adopted revised stock ownershipretention guidelines for non-employee directors and in January 2018, our Board of Directors adopted revised stock ownership guidelines for our senior executive officers.directors. These guidelines are summarized inprovide for all non-employee directors to hold an amount of our common stock, restricted shares, stock options and/or DSUs having a value equal to at least five times the table below: | | | | | | CEO | | All Other Executive Officers | | annual cash retainer. Directors | 3x Annual Base Salary Required | | 1x Annual Base Salary Required | | 5x Annual Cash Retainer ($50,000) Required |
Directors and executive officers have five years to attain this ownership threshold. As of the date of this proxy statement, all non-employee directors are in compliance with the stock ownership guidelines.
Certain Relationships and Related Persons Transactions
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Review, Approval or Ratification of Transactions with Related Persons
Pursuant to the Audit Committee’s Charter,charter, which can be found at www.progress.com under the Corporate Governance pageheading "Corporate Governance" located on the “Investor Relations” page, the Audit Committee is responsible for the review and approval of related person transactions. A related person is a director, executive officer, nominee for director or certain stockholders of our company since the beginning of the last fiscal year and their respective immediate family members. A related person transaction is a transaction involving: (1) our company and any related person when the amount involved exceeds $120,000, and (2) the related person has a material direct or indirect interest. We identify transactions for review and approval throughin accordance with the policies and procedures set forth in our Code of Conduct and Business Ethics, which can be found at www.progress.com under the Corporate Governance pageheading "Corporate Governance" located on the “Investor Relations” page. The Code of Conduct and Business Ethics requires our employees, including our executive officers, to disclose any potential or actual conflicts of interest to his or her manager, our human capital department or our Chief Compliance Officer. This disclosure also applies to potential conflicts involving immediate family members of employees. We require our directors to complete a questionnaire intended to identify any transactions or potential transactions that must be reported per SEC rules and regulations. This questionnaire also requires our directors to promptly notify us of any changes during the year.
Transactions with Related Persons
During fiscal 2018,2021, neither the Company nor its subsidiaries engaged in any transactions or series of similar transactions in which the amount involved exceeded $120,000 and in which any of our directors or executive officers, any holder of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons had a direct or indirect material interest, nor are any such transactions currently proposed. 40 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS
PROPOSAL TWO: ADVISORY VOTE ON
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
We are asking our stockholders to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement. We urge you to read the “Compensation Discussion and Analysis” and “Executive Compensation” sections section of this proxy statement, which describedescribes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the “Summary Compensation Table” and related compensation tables and narrative, which provide detailed information on the 20182021 compensation of our named executive officers. We believe our executive compensation programs demonstrate our pay for performancepay-for-performance philosophy, which creates alignment with our stockholders and drives the creation of sustainable long-term stockholder value.
Required Vote and Board Recommendation
We are asking our stockholders to indicate their support for the compensation of our named executive officers, as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our stockholders to vote “FOR” the following resolution at our Annual Meeting: | | “RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the “Compensation Discussion and Analysis,” the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s proxy statement for the 2019 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the SEC, including the “Compensation Discussion and Analysis,” the “Summary Compensation Table” and the other related tables and narrative disclosure.” | |
This say-on-pay vote is advisory only and not binding on the Company, the Compensation Committee or our Board of Directors. Although the vote is advisory, our Board of Directors and our Compensation Committee value the opinions of our stockholders and expect to take the outcome of this vote into account when considering future compensation arrangements for our executive officers. | | Our Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers.
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Our Board of Directors recommends that you vote FOR the approval of the compensation of our named executive officers.
PROPOSAL THREE: RATIFICATION OF THE SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Proposal Three is to ratify the selection by the Audit Committee of Deloitte & Touche LLP as our independent registered public accounting firm for the current fiscal year ending November 30, 2019.2022. Deloitte & Touche LLP was the independent registered public accounting firm for our company for the fiscal year ended November 30, 2018.2021. Based on the Audit Committee’s assessment of Deloitte & Touche’s qualifications and performance, our Board believes Deloitte & Touche’s retention for fiscal year 20192022 is in the best interests of the Company. Although ratification by stockholders is not required by law or by our bylaws, the Audit Committee believes that submission of its selection to stockholders is a matter of good corporate governance. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time if the Audit Committee believes that such a change would be in the best interests of our company and its stockholders. If our stockholders do not ratify the selection of Deloitte & Touche LLP, the Audit Committee will take that fact into consideration, together with such other factors it deems relevant, in determining its next selection of an independent registered public accounting firm. We have been advised that a representative of Deloitte & Touche LLP will be present atattend the virtual Annual Meeting. This representative will have the opportunity to make a statement if he or she desires and will be available to respond to appropriate questions presented atduring the meeting.
Independent Registered Public Accounting Firm Fees
Aggregate fees billed to us for services performed for the fiscal years ended November 30, 20182021 and November 30, 20172020 by our independent registered public accounting firm, Deloitte & Touche LLP, were as follows: | | | | | | | | | | 2018 | | | 2,017 |
| Audit Fees (1) | $ | 1,961,844 |
| $ | 2,256,107 |
| Tax Fees (2) | | 64,858 |
| | 9,625 |
| Audit-Related Fees (3) | 319,050 | | | 140,000 |
| | All Other Fees | — | | — | |
__________
| | Audit Fees(1) | | | $2,384,021 | | | $2,414,266 | | | | Audit-Related Fees(2) | | | 225,000 | | | 270,000 | | | | Tax Fees(3) | | | 5,932 | | | 2,615 | | | | All Other Fees | | | __ | | | __ | | | | Total Fees | | | $2,614,953 | | | $2,686,881 | |
| | (1)
| Represents fees billed for each of the last two fiscal years for professional services rendered for the audit of our annual financial statements included in Form 10-K and reviews of financial statements included in our interim filings on Form 10-Q, as well as statutory audit fees related to our wholly-owned foreign subsidiaries. In accordance with the policy on Audit Committee pre-approval, 100% of audit services provided by the independent registered public accounting firm are pre-approved. |
(2)
| Represents, for 2021, fees billed for audit services in connection with the acquisition of Kemp, and for 2020, fees billed for audit services in connection with the acquisition of Chef Software Inc. (“Chef”) and fees billed for audit services in connection with the implementation of Accounting Standards Update No. 2016-02, Leases (Topic 842)(“ASC 842”). |
(2)(3)
| Includes fees primarily for tax services. In accordance with the policy on Audit Committee pre-approval, 100% of tax services provided by the independent registered public accounting firm are pre-approved. |
| | (3) | Represents for 2018 fees billed for audit services in connection with the implementation of Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"), and for 2017, fees billed for audit services in connection with the acquisitions of DataRPM Corporation and Kinvey, Inc., both of which were completed during fiscal 2017. In accordance with the policy on Audit Committee pre-approval, 100% of audit-related services provided by the independent registered public accounting firm are pre-approved.42 PROGRESS SOFTWARE CORPORATION
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TABLE OF CONTENTS Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm
The Audit Committee is responsible for appointing, setting compensation, and overseeing the work of our independent registered public accounting firm. The Audit Committee has established a policy regarding pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. Requests for specific services by the independent registered public accounting firm which comply with the auditor services policy are reviewed by our Finance, Tax, and Internal Audit departments. Requests approved by the groupinternally are aggregated and submitted to the Audit Committee in one of the following ways: Request for approval of services at a meeting of the Audit Committee; or Request for approval of services by the Chairman of the Audit Committee and then the approval by the full committee at the next meeting of the Audit Committee. The request may be made with respect to either specific services or a type of service for predictable or recurring services. | | Our Board of Directors recommends that you vote FOR the ratification of the selection of independent registered public accounting firm for fiscal year 2022.
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Our Board of Directors recommends that you vote FOR the ratification of the selection of independent registered public accounting firm for fiscal year 2019.
AUDIT COMMITTEE REPORT
Management is responsible for establishing and maintaining adequate internal control over financial reporting to ensure the integrity of the Company’s financial statements. The Company’s independent registered public accounting firm, Deloitte & Touche LLP, is responsible for performing an audit of the effectiveness of the Company’s internal control over financial reporting in conjunction with an audit of the consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”) and issuing opinions on the financial statements and the effectiveness of internal control over financial reporting. The Audit Committee assisted the Board in its oversight of the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the qualifications and independence of the independent registered public accounting firm, risks relating to data privacy and cybersecurity and the steps management has taken to monitor and control such exposures, and the performance of the independent registered public accounting firm. In addition, the Audit Committee focused on audit-related risks associated with M&A activities, including financial integration. The full text of the Audit Committee’s charter is available on the Company’s governance page. The Audit Committee reviews the charter annually, and also evaluates the performance of the Company’s independent registered public accounting firm, including the senior audit engagement team, and determines whether to reengage the current accounting firm or consider other accounting firms. As part of that process, the Audit Committee has met and held discussions with management and Deloitte & Touche LLP regarding the internal control over financial reporting and the financial audit process of the Company. The Audit Committee has received the written disclosures and the letter from Deloitte & Touche LLP required by applicable requirements of the PCAOB regarding Deloitte & Touche LLP’s communications with the audit committeeAudit Committee concerning independence, and has discussed with Deloitte & Touche LLP the independent accountant’s independence. The Audit Committee reviewed and discussed the Company’s audited consolidated financial statements for the fiscal year ended November 30, 20182021 with management and Deloitte & Touche LLP. Management has represented to the Audit Committee that the financial statements were prepared in accordance with accounting principles generally accepted in the United States. The Audit Committee discussed with Deloitte & Touche LLP the overall scope and plans for its audit. The Audit Committee also discussed with Deloitte & Touche LLP the matters set forth in Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol. 1, AU Section 380), as adoptedrequired to be discussed by the applicable requirements of the PCAOB in Rule 3200T.and the Securities and Exchange Commission. The Audit Committee met with Deloitte & Touche LLP, with and without management present, to discuss the results of its examinations, its evaluations of ourthe Company's internal controls, and the overall quality of ourthe Company's financial reporting. The Audit Committee reviewed with Deloitte & Touche LLP, who is responsible for expressing an opinion on the conformity of ourthe Company's audited consolidated financial statements with generally accepted accounting principles, its judgments as to the quality of ourthe Company's accounting principles, and such other matters as are required to be discussed with the Audit Committee under generally accepted auditing standards. In addition, the Audit Committee discussed and was responsible for selecting the lead audit engagement partner, which partner is rotated at least every five years. Based on the above-mentioned reviews and discussions with management and Deloitte & Touche LLP, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in its Annual Report on Form 10-K for the fiscal year ended November 30, 20182021 for filing with the Securities and Exchange Commission.
44 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS No portion of this Audit Committee Report shall be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), through any general statement incorporating by reference in its entirety the proxy statement in which this report appears, except to the extent that the Company specifically incorporates this report or a portion of it by reference. In addition, this report shall not be deemed filed under either the Securities Act or the Exchange Act. Respectfully submitted by the Audit Committee,
Charles F. Kane, Chairman
Rainer Gawlick
Samskriti Y. King
OUR EXECUTIVE OFFICERS
TABLE OF CONTENTS The following table sets forth certain information regarding our current executive officers and key employees. On March 5, 2022, Gary Quinn, Executive Vice President, Field Organization—Enterprise Application Experience Business informed us that he is resigning from our company effective April 8, 2022. | | | | | | | Name | Age | Position | John Ainsworth | 54 | Senior | 57 | | | Executive Vice President, Products - CoreEnterprise Application Experience Business | | Stephen Faberman | 49 | | 52 | | | Executive Vice President, Chief Legal Officer | | Anthony Folger | | | 50 | | | Executive Vice President Chief Financial Officer | | Yogesh Gupta* | 58 | | 61 | | | President and Chief Executive Officer | Paul Jalbert | 61 | Chief Financial Officer | Loren Jarrett | 44 | Chief Marketing Officer | Tony MurphyLoren Jarrett
| 48 | | Chief Information Officer and
Chief Information Security Officer47
| Gary Quinn | 58 | Senior Vice President, Core Field Organization | Faris Sweis | 43 | SeniorExecutive Vice President, General Manager - DevToolsDeveloper Tools Business | | Dimitre TaslakovKatie Kulikoski | 43 | | 45 | | | Executive Vice President, Chief TalentPeople Officer | | Dmitri TcherevikJennifer Ortiz | 50 | | 46 | | | Executive Vice President, Corporate Marketing | | Ian Pitt | | | 55 | | | Executive Vice President, Chief TechnologyInformation Officer | | Gary Quinn | | | 61 | | | Executive Vice President, Field Organization – Enterprise Application Experience Business | | Jeremy Segal | | | 51 | | | Executive Vice President, Corporate Development | | Sundar Subramanian | | | 43 | | | Executive Vice President, General Manager - DevOps Business | |
*
| Additional information about Mr. Gupta is provided in “Director Nominees” above. |
Executive Officers
* Additional information about Mr. Gupta is provided in “Director Nominees,” above.
Mr. Ainsworth became Senior Vice President, Products-Core in January 2017.2017 and was elevated to Executive Vice President in November 2021. Mr. Ainsworth is responsible for the product management, product marketing, technical support and engineering functions for Progress OpenEdge, Progress Corticon, Progress DataDirect Connect, Progress DataDirect Hybrid Data Pipeline, Sitefinity, MOVEit, WhatsUp Gold, Kemp Loadmaster and Sitefinity.Kemp Flowmon. Prior to joining our company, Mr. Ainsworth was Senior Vice President, Engineering Services at CA Technologies, Inc., a position he assumed in April 2016. Prior to that time, Mr. Ainsworth held various senior positions within CA Technologies, Inc., which he joined through acquisition in 1994. Mr. Faberman became Chief Legal Officer in December 2015.2015 and was elevated to Executive Vice President in November 2021. As Chief Legal Officer, Mr. Faberman is responsible for our legal and compliance, risk management, license compliance, and corporate developmentfacilities functions. Prior to becoming Chief Legal Officer, Mr. Faberman was Senior Vice President, General Counsel. Mr. Faberman became General Counsel in December 2012 and a Senior Vice President in January 2014. Prior to that time, from October 2012 to December 2012, Mr. Faberman was Vice President, Acting General Counsel, and from January 2012 to October 2012, Mr. Faberman was Vice President, Deputy General Counsel. Prior roles included Senior Vice President, Corporate Counsel at Heritage Property Investment Trust, Inc. from October 2003 until October 2006, and Partner, Bingham McCutcheon LLP until October 2003. Mr. JalbertFolger joined the Company and became Chief Financial Officer in March 2017.January 2020 and was elevated to Executive Vice President in November 2021. As CFO, Mr. JalbertFolger is responsible for our finance and accounting, financial planning, treasury, tax and investor relations functions. Prior to becoming CFO,joining our company, Mr. JalbertFolger was ViceChief Financial Officer and Treasurer of Carbonite, Inc., from January 2013 until Carbonite was acquired by OpenText Corporation in late December 2019. Prior to that time, from June 2006 to December 2012, Mr. Folger held senior leadership positions at Acronis AG, including Chief Financial Officer from October 2008 to December 2012. 46 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Mr. Gupta became President and Chief AccountingExecutive Officer in October 2016. Prior to that time, Mr. Gupta served as an advisor to various venture capital and private equity firms from October 2015 until September 2016. Prior to that time, Mr. Gupta was President and Chief Executive Officer at Kaseya, Inc., from June 2013 until July 2015, at which time, Mr. Gupta became Chairman of the Board of Directors, a position he assumed upon joiningheld until October 2015. From July 2012 until June 2013, Mr. Gupta served as an advisor to various venture capital and private equity firms in several mergers and acquisitions opportunities. Mr. Gupta was previously President and Chief Executive Officer of FatWire Software from July 2007 until February 2012, prior to the Company in August 2012.acquisition of FatWire Software by Oracle Corporation. Prior roles included Corporate ControllerChief Technology Officer at publicly traded companies Keane and Genuity, as well as otherCA Technologies, with which Mr. Gupta held various senior financial positions at Verizon (formerly GTE).positions. Ms. Jarrett became Chief Marketing OfficerSenior Vice President and General Manager, Developer Tools Business in January 2017.June 2019 and was elevated to Executive Vice President in November 2021. As Chief Marketing Officer,General Manager, Ms. Jarrett is responsible for ourthe sales, product management, product marketing, strategy, corporate marketing, demand generation, and field marketing,
functions. technical support and engineering for our DevTools business. Prior to this role, Ms. Jarrett was our Chief Marketing Officer, a position she held from January 2017 to June 2019. Prior to that time, Ms. Jarrett was Chief Marketing Officer at Acquia, from 2015 until December 2016. Previously, Ms. Jarrett was Chief Marketing Officer at Kaseya, Inc. from 2013 until 2015, and Vice President, Corporate Charge Card and Loyalty Products at American Express, in 2013. Prior to that time, Ms. Jarrett was Vice President, Product Management and Strategy at Oracle Corporation from 2011 until 2012, and Senior Vice President of Marketing and Product Management at FatWire from 2007 until its acquisition by Oracle in 2011.
Mr. MurphyMs. Kulikoski became Chief InformationPeople Officer in June 2017November 2019 and was elevated to Executive Vice President in November 2021. As Chief Information SecurityPeople Officer, Ms. Kulikoski is responsible for all aspects of the company's global human resources functions, including culture development, talent acquisition, retention, change management and process effectiveness. Prior to joining our Company, from May 2014 to September 2019, Ms. Kulikoski held a variety of positions of increasing responsibility and scope at Brightcove, Inc. Her tenure at Brightcove included serving as Chief People Officer from November 2018 to September 2019. Prior to May 2014, Ms. Kulikoski held leadership positions at Optaros, CIDC and ConnectEdu.
Ms. Ortiz became Executive Vice President, Corporate Marketing in September 2018. As our Chief Information Officer and Chief Information Security Officer, Mr. MurphyNovember 2021. Prior to that time, beginning in October 2019, she was Vice President of Corporate Marketing in October 2019. In her current role, Ms. Ortiz is responsible for the development and implementationexecution of our overall technologycorporate marketing programs. Prior to becoming Vice President of Corporate Marketing, Ms. Ortiz held a variety of positions of increasing responsibility and scope at Progress during her fifteen-year tenure with the company. Mr. Pitt became Chief Information Officer in August 2021 and was elevated to Executive Vice President in November 2021. As our Chief Information Officer, Mr. Pitt is responsible for driving the vision, strategy, and operations of Progress’ global IT organization. Mr. Pitt is also responsible for allthe security of our internal systemsnetworks, infrastructure, business applications and business processes and for monitoring and preventing security related incidents.products. Prior to joining our company, Mr. MurphyPitt was Vice President of Global IT at Stratus Technologies,Chief Information Officer from January 2013July 2016 until May 2017. Previously, Mr. Murphy was Director of2021 at LogMeIn Inc. Prior roles included Chief Information Officer and senior technology and IT roles at Thunderbird/Smart Communications, IntraLinks Inc., Tata Consultancy Services and Business Systems at Acme Packet,Chordiant Software Inc. from May 2011 until its acquisition by Oracle Corporation in 2013. Mr. Quinn became Senior Vice President, Core Field Organization in August 2017.2017, and was elevated to Executive Vice President in November 2021. Mr. Quinn is responsible for global field operations for Progress OpenEdge, Progress Corticon, Progress DataDirect Connect, Progress DataDirect Hybrid Data Pipeline, Sitefinity, MOVEit and Sitefinity.WhatsUp Gold, Kemp Loadmaster and Kemp Flowmon. Prior to joining our company, Mr. Quinn was President and Chief Executive Officer of FalconStor Software, Inc. Mr. Quinn joined FalconStor Software in April 2012 as vice president of sales and marketing for North America, and he was named executive vice president and chief operating officer (COO) in April 2013, interim CEO in June 2013 and CEO in July 2013. Prior roles included Executive Vice President of Global Partners and International Sales at CA Technologies until 2006 and Commissioner of Information Technology (CIO) at Suffolk County Department of Information Technology (DoIT) from 2008 until 2012. Mr. SweisSegal became Senior Vice President, Corporate Development in May 2020 and was elevated to Executive Vice President in November 2021. In this role, Mr. Segal is responsible for leading our inorganic growth strategy to deliver sustained shareholder value through accretive acquisitions. Prior to joining our company, Mr. Segal was Global Head of Corporate Development at LogMeIn, a position he assumed in September 2019. Prior to that time, Mr. Segal was Vice President, Corporate Development at LogMeIn beginning in March 2016. Prior to that time, Mr. Segal was Vice President, Corporate Development at Akamai Technologies, which he joined in April 2000. TABLE OF CONTENTS Mr. Subramanian became Senior Vice President and General Manager, Chef in October 2020 upon completion of DevToolsour acquisition of Chef and was elevated to Executive Vice President in January 2017.November 2021. As General Manager, Mr. SweisSubramanian is responsible for the sales, product management, product marketing, field marketing, technical support and engineering for our DevTools product. Prior to this role, Mr. Sweis was our Chief Transformation Officer, a position he assumed in May 2016. Mr. Sweis also became our Acting Chief Product Development Officer in August 2016. Prior to being named our Chief Transformation Officer, Mr. Sweis was Vice President, Development, a position he assumed upon acquisition of Telerik in December 2014.the Chef product lines. Prior to that time, upon joining our company in August 2019, Mr. SweisSubramanian was Chief Technology Officer at Telerik. Mr. Taslakov became Chief Talent Officer in December 2014 upon our acquisition of Telerik. As Chief Talent Officer, Mr. Taslakov is responsible for talentdriving all facets of the company’s early-stage products including the Kinvey, Kinvey Health Cloud, DataRPM, NativeChat and performance management, recruiting, compensation and benefits and facilities functions. Prior to the acquisition of Telerik, Mr. Taslakov was Chief Talent Officer of Telerik, a position he assumed in January 2014. Prior to that time, from November 2012 until December 2013, he was Telerik’s Chief Revenue Officer. Prior to November 2012, Mr. Taslakov was Vice President of Business Development at Telerik.
Mr. Tcherevik became Chief Technology Officer in April 2017. As Chief Technology Officer, Mr. Tcherevik is responsible for leading our technology strategy for cognitive applications across ourNativeScript product portfolio as well as our future technology efforts.lines. Prior to joining our company,Progress, Mr. TcherevikSubramanian was Chiefan Executive Officer of MightyMeeting,Director at athenahealth, Inc., which he founded in 2010. Prior roles included Chief Technology Officer at FatWire Inc. from 2007 until 2010August 2016 to July 2019, and Vice President, Office of the Chief Technology OfficerProducts at CA Technologies until 2004.Citrus Payment Solutions Pvt. Ltd., from September 2015 to August 2016. Previously, he served as Vice President, SaaS at Kaseya, Inc., from January 2014 to August 2015.
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TABLE OF CONTENTS
COMPENSATION DISCUSSION AND ANALYSIS Introduction
This “Compensation Discussion and Analysis” section describes the elements of our compensation programs for our executive officers. This section also provides an overview of our executive compensation philosophy and analyzes how and why the Compensation Committee of our Board of Directors arrives at specific compensation decisions and policies. We describe below our compensation philosophy, policies, and practices relating to the fiscal year ended November 30, 20182021, with respect to the following “named executive officers” (“NEOs”), whose compensation is set forth in the “Summary Compensation Table” and other compensation tables contained in this proxy statement: Yogesh Gupta, our President and Chief Executive Officer; Paul Jalbert,Anthony Folger, our Executive Vice President, Chief Financial Officer;
John Ainsworth,Stephen Faberman, our SeniorExecutive Vice President, Core Products;Chief Legal Officer;
Loren Jarrett, our Chief Marketing Officer;Executive Vice President and General Manager, Developer Tools Business; and Gary Quinn, our SeniorExecutive Vice President, Core Field Organization; andOrganization—Enterprise Application Experience Business. Dmitri Tcherevik,On March 5, 2022, Mr. Quinn informed us that he is resigning effective April 8, 2022. Because Mr. Quinn was one of our Chief Technology Officer.
Mr. Ainsworth and Ms. Jarrett had the same total compensation according to SEC reporting rules, and as a result, we are reporting six named executive officers for 2018.the entire 2021 fiscal year, the terms of Mr. Quinn’s compensation are discussed in this “Compensation Discussion and Analysis” section.
We present our Compensation Discussion and Analysis in the following sections: | | | 1. | | | | 1.Executive Summary.. In this section, we discuss our 2018strategy, our fiscal 2021 corporate performance and certain governance aspects of our executive compensation program.program.
| | | | | | | 2. | | | | 2.Executive Compensation Program.. In this section, we describe our executive compensation philosophy and process and the material elements of our executive compensation program.
| | | | | | | 3. | | | | 3.20182021 Executive Compensation Decisions.. In this section, we provide an overview of our CompensationCommittee’s executive compensation decisions for 2018fiscal 2021 and certain actions taken before or after 2018,fiscal 2021, when doing so enhances the understanding of our executive compensation program.
| | | | | | | 4. | | | | 4.Other Executive Compensation Matters.. In this section, we describe our other compensation policies and review the accounting and tax treatment of compensation.
| | | | |
TABLE OF CONTENTS
Business Overview We offerDedicated to propelling business forward in a technology-driven world, Progress helps businesses drive faster cycles of innovation, fuel momentum and accelerate their path to success. As the leading platform for developing and deploying strategic business applications, enabling customers and partners to deliver modern, high-impact digital experiences with a fractiontrusted provider of the effort, timebest products to develop, deploy and costmanage high-impact applications, we enable customers to develop the applications and experiences they need, deploy where and how they want and manage it all safely and securely. Hundreds of other solutions. We provide powerful tools for easily building adaptive user experiences across any typethousands of device or touchpoint, award-winning machine learning that enables cognitive capabilities to be a part of any application, the flexibility of a serverless cloud to deploy modern apps, business rules, web content managemententerprises, including 1,700 software companies and leading data connectivity technology. Over 1,700 independent software vendors, 100,000 enterprise customers, and 23.5 million developers, relydepend on Progressus to powerachieve their applications.goals—with confidence.
Our Strategy Our fiscal 2018 wasstrategy is centered around the second year infollowing key tenets: Trusted Provider of the transformation we began shortly after Mr. Gupta becameBest Products to Develop, Deploy and Manage High-Impact Business Applications. A key element of our Chief Executive Officer in October 2016. In early fiscal 2017, we announced astrategy is centered on providing the platform and tools enterprises need to build modern, strategic business applications. We offer these products and tools to both new strategy that would leverage our application development platform capabilities and enable our customers and partners to build next generation applications (which we refer to as "Cognitive Applications") that drive their businesses.well as our existing partner and customer ecosystems. This new strategy builds on our inherent DNA and vast experience in application development establishedthat we've acquired over 35the past 40 years. In addition Focus on Customer and Partner Retention to utilizing our existing solutionsDrive Recurring Revenue and capabilities for this strategy, in fiscal 2017, we acquired Kinvey, Inc. and DataRPM, each bringing critical solutions to our application development platform. This product strategy provides a future technology path for existing customers as well as enables us to win new customers, which will enhance our prospects for future revenue growth. At the same time, we also announced a major restructuring of our operations. We concluded that because our existing core products competed in mature market segments with limited growth opportunities, we needed to moderate our view of their growth prospects. In response, we shifted our organizationProfitability. Our organizational philosophy and operating principles for these product lines,focus primarily on customer and partner retention and success, and a streamlined operating approach to more efficiently drive predictable and stable recurring revenue and high levels of profitability.
Total Growth Strategy Driven by Accretive M&A. We are pursuing a total growth strategy driven by accretive acquisitions of businesses within the software infrastructure space, with products that appeal to both IT organizations and individual developers. These acquisitions must meet strict financial and other criteria, with the goal of servingdriving significant stockholder returns by providing scale and increased cash flows. In April 2019, we acquired Ipswitch, Inc. and in October 2020, we acquired Chef, both of which met our core customer base more profitablystrict financial criteria. In November 2021, we acquired Kemp Technologies Inc. (“Kemp Technologies”), which we expect to meet our strict financial criteria and with a focus on retention rather than the pursuit of new customers. We committed to maintaining 35% operating income margins as part of this operating strategy.will provide such scale and increased cash flows. We also adopted a newMulti-Faceted Capital Allocation Strategy. Our capital allocation strategy, inpolicy emphasizes accretive M&A, which we targetallows us to expand our business and drive significant stockholder returns, and utilizes dividends and share repurchases to return approximately 75-80%capital to stockholders. We intend to repurchase our shares in sufficient quantities to offset dilution from our equity plans. Lastly, we return a significant portion of our annual cash flows from operations to stockholders in the form of share repurchasesdividends.
COVID-19 Impact
Our fiscal 2021, which began on December 1, 2020, and through dividends.ended on November 30, 2021, was again influenced by the ongoing COVID-19 pandemic. As we approached our fiscal 2021 budget and strategic planning process, we anticipated that the global slowdown of economic and business activity caused by the pandemic would begin to slowly recede. We have also adopted a disciplinedassessed our business and planned for how it could be impacted by the pandemic in fiscal 2021. We considered the following factors: Our financial and operating performance improved in the second half of fiscal 2020 as our customers and partners began to see increased demand for their products. Our continuing focus on customer and partner retention and our streamlined operating approach with strict financial criteria to future acquisitions. By adopting strict financial criteria for future acquisitions, these acquisitions will enableenabled us to drive significant stockholder returns by providing scale and increased cash flows.
Our Strategic Plan is Delivering Results…and Enhancing Stockholder Valueachieve recurring revenue as a percentage of our total revenue of more than 80% while maintaining operating margins greater than 40%.
In fiscal 2018,2020, our employees successfully transitioned to working almost exclusively remotely, which gave us the confidence that our resilient employees could continue to work remotely, if necessary, while delivering the support our customers and partners require. 50 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Because our products power mission-critical applications across a variety of industries and the cost, effort and time required to replace our solutions would be prohibitive in most cases, we remained solidly on course withdid not experience meaningful churn in our installed base of customers as we maintained our retention rates well over 90%. Economic conditions and uncertainty did not significantly impact the executiontiming of our strategic plan. maintenance contract renewals and customer collections. To ensure the health and well-being of our employees, we planned to continue to allow employees to work remotely although we expected worldwide travel, events, and utilization of our offices to increase although not to pre-pandemic levels. The disruption caused by the COVID-19 variants and the inconsistent responses of countries in which we do business created uncertainty that the business recovery would occur globally, if at all. Our ability to acquire new customers and expand existing customer installations could still be disrupted by the pandemic and government responses to changing local conditions. As a result of these considerations, we devised a highly disciplined fiscal 2021 budget and operating plan that balanced our expectations that we would see higher demand for 2018, asour products and services, enabling us to modestly grow revenue and free cash flow, but still considered potential COVID-19 headwinds. We similarly managed our operating expenses to ensure that we maintained our profitability and operating margin despite the risk of reduced revenue and free cash flow. The resulting operating plan was reflected in our financial guidance to stockholders for 2017, reflectedfiscal 2021. Fiscal 2021 Performance
As outlined below, our continuedfinancial and operating performance in fiscal 2021 exceeded our expectations with respect to every financial metric. We benefited from exceptionally strong demand for our core products and services throughout fiscal 2021, especially during the first half of fiscal 2021 as businesses emerged from the COVID-19 economic shutdown. This demand was across all our focus on managingproducts and solutions and spanned all geographies. Our employees, most of whom continued to work remotely, worked tirelessly, enabling us to execute exceptionally well against our businessstrategic plan. Of note, in fiscal 2021, we completed another sizable acquisition meeting our disciplined acquisition criteria—our third in as efficiently as possible. We also made key investmentsmany years. In November 2021, we acquired Kemp Technologies, an application experience company that helps enterprises deliver, optimize and secure applications and networks across any cloud or hybrid environment. This acquisition, together with our acquisitions of Ipswitch and Chef Software, advances our total growth strategy of doubling our size in furtherance of our Cognitive Applications product strategy while maintaining our 35% operating margin commitment.five years. Highlights of our recentfiscal 2021 operational and financial results include: Reduction in annual expensesExceeded revenue guidance on both a GAAP and non-GAAP basis for each fiscal quarter of, and full year, fiscal 2021;
Exceeded top end of earnings per share guidance on both a GAAP and non-GAAP basis for each fiscal quarter of, and full year, fiscal 2021; Annualized recurring revenue (“ARR”) of $486 million as of the end of fiscal 2021, increased 12% year-over-year; Net dollar retention rate (current period ARR divided by almost $40 million overprior period ARR) above 100% as of the past two years;end of fiscal 2021, illustrating our predictable and durable revenue performance; 400Successful integration of Chef, our late 2020 acquisition, with revenue and synergies at or above our financial expectations;
100 bps operating margin expansion in fiscal 2018;2021; Key product releases, in our core product lines, including OpenEdge,DataDirect Sitefinity, MOVEit and Kendo UI;WhatsUp Gold; 90%+ renewal rates in fiscal 20182021 for OpenEdge, our flagship product;product, as well as for our business as a whole; TABLE OF CONTENTS Achieved record cash flows of nearly $179 million in cash from operations generated in fiscal 2018;2021; Issued $360 million convertible secured notes, due 2026, in a private placement, the proceeds of which were utilized to fund the purchase price for the Kemp acquisition in November 2021; and Nearly $150Over $65 million of capital returned to stockholders in fiscal 2018,2021, including more than $25$30 million in dividends.
The table below summarizes our 20182021 financial results as compared to fiscal 2017:2020: | | | | | | | | (In millions, except percentages and per share amounts) | Fiscal 2018 Actual | Fiscal 2017 Actual | | GAAP | | | | | | Revenue | $397.2 | $397.6 | | | Income (loss) from operations | $86.0 | $70.6 | | | Diluted earnings (loss) per share | $1.38 | $0.77 | | | Operating Margin | 22% | 18% | | | Cash from operations | $121.4 | $105.7 | | Non-GAAP | | | | | | Revenue | $397.7 | $398.6 | | | Operating income | $152.2 | $144.5 | | | Diluted earnings per share | $2.49 | $1.91 | | | Operating Margin | 38% | 36% | | | Adjusted free cash flow | $120.2 | $121.5 |
| | GAAP | | | | | | | | | | | | | | | | | | | Revenue | | | $531.3 | | | $442.1 | | | 20% | | | | | | | Income from operations | | | $116.1 | | | $107.7 | | | 8% | | | | | | | Operating Margin | | | 22% | | | 24% | | | (200) bps | | | | | | | Diluted earnings per share | | | $1.76 | | | $1.76 | | | —% | | | | | | | Cash from operations | | | $178.5 | | | $144.8 | | | 23% | | | | Non-GAAP | | | | | | | | | | | | | | | | | | | Revenue | | | $557.3 | | | $456.2 | | | 22% | | | | | | | Income from operations | | | $229.2 | | | $182.8 | | | 25% | | | | | | | Operating Margin | | | 41% | | | 40% | | | 100 bps | | | | | | | Diluted earnings per share | | | $3.87 | | | $3.09 | | | 25% | | | | | | | Adjusted free cash flow | | | $179.4 | | | $142.5 | | | 26% | |
A reconciliation between the GAAP results and non-GAAP measures is located in Appendix A at the end of this proxyProxy statement. Despite the challenges posed by the COVID-19 pandemic, our fiscal 2021 results reflected pent-up customer demand, strong business performance, effective execution, and our relentless commitment to ensuring customer success by delivering high quality product offerings and support. Our fiscal 2021 financial and strategic highlights and their impact on executive compensation are summarized below. GAAP Results vs. Non-GAAP Measures
As disclosed in our press releases regarding annual and quarterly earnings and other communications, we provide financial information using methods in addition to those prescribed by generally accepted accounting principles in the United States (“GAAP”), such as non-GAAP revenue, non-GAAP
operating income, non-GAAP earnings per share and adjusted free cash flow. We believe these non-GAAP financial measures enhance the reader’s overall understanding of our current financial performance and our prospects for the future by providing more transparency for certain financial measures and providing a level of disclosure that helps investors understand how we plan and measure our business. We believe that providing these non-GAAP measures affords investors a view of our operating results that may be more easily compared to our peer companies and enables investors to consider our operating results on both a GAAP and non-GAAP basis during and following the integration period of our acquisitions. Presenting the GAAP measures on their own may not be indicative of our core operating results. Furthermore, management believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provideprovides useful information to management and investors regarding present and future business trends relating to our financial condition and results of operations. 52 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS Non-GAAP revenue, non-GAAP costs of sales and operating expenses, non-GAAP income from operations and operating margin, non-GAAP net income, and non-GAAP diluted earnings per share exclude the effect of purchase accounting on the fair value of acquired deferred revenue, amortization of acquired intangible assets, impairment of acquired intangible assets, stock-based compensation expense, restructuring charges, acquisition-related expenses, certain identified non-operating gains and losses, and the related tax effects of the preceding items. Adjusted free cash flow is equal to cash flows from operating activities less purchases of property and equipment and capitalized software development costs, plus restructuring payments. This non-GAAP information is not in accordance with, or an alternative to, GAAP information and should be considered in conjunction with our GAAP results as the items excluded from the non-GAAP information often have a material impact on our financial results. We provide a reconciliation of non-GAAP adjustments to our GAAP financial results in our earnings releases, and we make this information available on our website at www.progress.com within the “Investor Relations” section. 2018 ExecutiveAdditional Performance Metrics
As disclosed in our press releases regarding annual and quarterly earnings and other communications, we provide other operating metrics that are not calculated in accordance with GAAP. Annual Recurring Revenue (ARR) We provide an ARR performance metric to help investors better understand and assess the performance of our business because our mix of revenue generated from recurring sources has increased in recent years. ARR represents the annualized contract value for all active and contractually binding term-based contracts at the end of a period. ARR includes maintenance, software upgrade rights, public cloud, and on-premises subscription-based transactions and managed services. ARR mitigates fluctuations due to seasonality, contract term and the sales mix of subscriptions for term-based licenses and SaaS. ARR is not calculated in accordance with GAAP. ARR does not have any standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies. ARR should be viewed independently of revenue and deferred revenue and is not intended to be combined with or to replace either of those items. ARR is not a forecast and the active contracts at the end of a reporting period used in calculating ARR may or may not be extended or renewed by our customers. We define ARR as the annual recurring revenue of term-based contracts from all customers at a point in time. We calculate ARR by taking monthly recurring revenue (“MRR”) and multiplying it by 12. MRR for each month is calculated by aggregating, for all customers during that month, monthly revenue from committed contractual amounts, additional usage, and monthly subscriptions. The calculation is done at constant currency using the current year budgeted exchange rates for all periods presented. Net Dollar Retention Rate We calculate net dollar retention rate as of a period end by starting with the ARR from the cohort of all customers as of 12 months prior to such period end (“Prior Period ARR”). We then calculate the ARR from these same customers as of the current period end (“Current Period ARR”). Current Period ARR includes any expansion and is net of contraction or attrition over the last 12 months but excludes ARR from new customers in the current period. We then divide the total Current Period ARR by the total Prior Period ARR to arrive at the net dollar retention rate. Net dollar retention rate is not calculated in accordance with GAAP. TABLE OF CONTENTS 2021 Compensation Program DesignHighlights
The Compensation Committee’s philosophy is to tie executive pay to company performance, thereby creating alignment with our stockholders and driving the creation of sustainable long-term stockholder value. Our executiveDespite the challenges of the COVID-19 pandemic that persisted during fiscal year 2021, our compensation programs for 2018continued to reflect this philosophy, and compensation earned reflected our commitment to the multi-pronged strategy we launched in 2017. As noted above, this strategy consists of three primary objectives: aligning our resources to drive profitability, protecting and strengthening our core business and executing on our holistic capital allocation approach. achievements. Our fiscal 20182021 budget and operating plan prioritized enhancing customer retention and reflected our expectations for strong recurring revenue and high renewal rates but limited revenue growth beyond the inclusion of Chef for our core products andthe entire fiscal year. Consistent with past years, we also prioritized enhancing customer retention. At the same time, our operating plan also provided for us to make the investments necessary in furtherance of our Cognitive Applications product strategy, which will provide a technology path to our existing customers and partners and enable us to win new customers. The overarching priority of our fiscal 2018 plan was that we operate our business as efficiently as possible in order to strengthen Progress for the benefit of stockholders. In addition, our stockholders.
fiscal 2021 plan reflected our focus on growing our business largely through accretive acquisitions.
As was the case in fiscal 2017,2020, the Compensation Committee utilized a combination of short and long-term compensation programs to advance our strategy. 54 PROGRESS SOFTWARE CORPORATION |
TABLE OF CONTENTS FISCAL 2021 COMPENSATION STRUCTURE
FISCAL 2018 COMPENSATION STRUCTURE
Our executives’ target compensation for fiscal 20182021 consisted of the components described below:
*Reflects averageOur fiscal 2021 compensation structure at the start of fiscal 2021 as shown in the table above was consistent with our fiscal 2020 compensation structure. As described below, the Compensation Committee modified the fiscal 2021 long-term performance-based restricted stock units (“PSUs”) applicable to the Named Executive Officers by adjusting the weighting of the performance measures. The Compensation Committee reviewed our fiscal 2021 compensation structure in November 2020 and January 2021 in consultation with Pay Governance, our external compensation consultant. Consistent with prior years, our annual incentive bonus plan was designed to achieve financial goals related to our business plan for fiscal 2021 and in line with our financial guidance to stockholders.
TABLE OF CONTENTS For fiscal 2021, payouts under our Corporate Bonus Plan were made at maximum performance (150% of target), based on our very strong results against plan. The construct, underlying metrics and resulting performance and payout outcome under the Corporate Bonus Plan are described further in the section below entitled “Cash Incentive Compensation”. The three-year performance period for PSUs awarded under our 2019 Long-Term Incentive Plan (“LTIP”) ended on November 30, 2021. Based on our relative total shareholder return (“TSR”) during that period, we achieved a final payout of 77% for the TSR metric, and 200%, or maximum, level of performance for the cumulative total operating income metric. As a result, 139% of the awarded PSUs were earned, as described further in the section entitled “2021 Executive Compensation Decisions – Equity Compensation – LTIP PSUs” below. Alignment of CEO Realizable Pay Value and Performance
The Compensation Committee reviews realizable pay value analyses for the executive officers to inform design and award levels for long-term incentive (“LTI”) awards. We believe our overall executive compensation program has been effective at driving the achievement of our target financial and strategic results,
appropriately aligning executive pay and corporate performance and enabling us to attract and retain top executives within our industry. When results do not meet our expectations, our named executive officers receive compensation that is below our target levels and may be below market in comparison to our peer group. The table below shows the target and realizable pay for our CEO, Mr. Gupta, for fiscal years 20162019 through 2018.2021. The realizable pay values shown below are as of our 2021 fiscal year-end, November 30, 2021. Realizable pay calculations show the potential value of pay as of a specific date; however, the actual pay realized will vary due to performance, vesting provisions and changes in stock price.
| | | | | | | Total Target Compensation ($)(1) | Total Realizable Compensation ($)(2) | Realizable Pay as a Percentage of Target Pay | 2016 (3) | 1,673,039 | 561,066 | 34% | | 2017 | 3,225,000 | 2,160,611 | 67% | | 2018 | 4,800,000 | 2,323,977 | 48% | Average 2016-2018 (3) | 3,232,680 | 1,681,884 | 52% |
_____________
| | 2019 | | | 4,800,000 | | | 7,611,367 | | | 159% | | | | 2020 | | | 5,000,000 | | | 4,828,305 | | | 97% | | | | 2021 | | | 5,650,000 | | | 8,108,935 | | | 144% | | | | Average 2019-2021 | | | 5,150,000 | | | 6,849,536 | | | 133% | |
| | (1)
| Total Target Compensation is defined as the sum of (a) annual base salary, (b) target bonus, (c) the value of stock options awarded, equal to the number of options granted multiplied by the Black-Scholes value of our stocksuch options on the grant date, (d) the value of restricted stock unitsRSUs awarded, equal to the number of RSUs granted multiplied by the closing price of our stock on the grant date, and (e) the value of the PSUs awarded under the Long Term Incentive Plan,our LTIP, equal to the number of PSUs granted assuming 100% performance multiplied by the closing price of our stock on the grant date. |
| | (2)
| Total Realizable Compensation is defined as the sum of (a) annual base salary, (b) actual corporate bonus plan award paid, (c) the “in-the-money” value of stock options (d)as of November 30, 2021 (the last trading day of our fiscal year 2021), the value of restricted stock unitsRSUs awarded, equal to the number of RSUs granted multiplied by the closing price of our stock on November 30, 2018,2021, which was $35.16,$48.45 and (e) the value of PSUs awarded, determined by measuring the performance thus far in the performance period and determining the resulting level of assumed payout as of the most recent fiscal year end. We excluded the value of the PSUs awarded under the Long Term Incentive Plan in each of fiscal 2016 and fiscal 2017 because, as of the end of our fiscal year ended November 30, 2018, none of those PSUs would vest. With respect to the 20182019 LTIP PSUs, the amounts in this column reflect that based on our relative TSR during the three-year performance period, we performed at a final payout of 77% performance for the TSR metric and 200%, or maximum, level of performance for the cumulative total operating income metric and, as a result, 139% of the awarded PSUs were earned. With respect to each of the 2020 and 2021 LTIP PSUs, we have assumed achievement of both the total shareholder return and the operating income metrics based on company performance thus far in the performance period we have assumed achievementand determined the resulting level of that portionpayout as of the PSUs tied to cumulative operating income at target levels.November 30, 2021. As a result of our financial performance in fiscal years 2016, 20172019, 2020, and 2018,2021, Mr. Gupta earned 15%105%, 115%94%, and 62%150% of his annual bonus, respectively. |
(3) Amounts shown for 2016 do not includeIn January 2021, the $2,500,000 one-time special new hire RSU award granted to Mr. Gupta in October 2016.
Following fiscal 2016, the amount and mix of Mr. Gupta’s compensation has largely remained unchanged, including his base salary and annual target bonus. In 2018, weCommittee evaluated Mr. Gupta's 2017 fiscal 2021 target annual equity compensation against our compensation peer group and determined that, basedgroup. Based on market data,this review, the Committee recommended to the independent directors of the Board of Directors an increase of $650,000 to Mr. Gupta's targetGupta’s annual equity compensation was in the 25th percentile of market data. Accordingly,award for fiscal 2018,2021. The independent directors of the Board approved this recommendation and, accordingly, for fiscal 2021, the value of Mr. Gupta’s annual equity award was increased by $650,000 to a value of $3,650,000 in order to bring his target equity compensation in line with the 50th percentile of market data,$4,500,000, with 50% of the award in the form of LTIP PSUs, 30% in the form of time-based RSUs and 20% in the form of stock options. For 2019, 2020, and 2021, the amount and mix of Mr. Gupta’s cash compensation remained unchanged as his cash compensation was in line with the compensation peer group.
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TABLE OF CONTENTS Response to 20182021 Say-on-Pay Vote and the Evolution of our Executive
Compensation ProgramPrograms
We value the input of our stockholders on our compensation programs. We hold an advisory vote on executive compensation on an annual basis. We also regularly seek feedback from our stockholders to better understand their opinions on governance issues, including compensation. The Compensation Committee carefully considers stockholder feedback and the outcome of each vote when reviewing our executive compensation programs each year. At our 20182021 annual stockholders meeting, approximately 99%96% of the votes cast approved, on an advisory basis, our executive compensation for fiscal year 2017.2020. As shown in the table below, for each of the past threefive years, we received at least 98%96% support with respect to the advisory vote on executive compensation. Over the past several years we have made significant changes to our executives’ compensation in response to prior say-on-pay votes and feedback from stockholders as shown in the table below.
The Compensation Committee will continue to consider the outcome of our say-on-pay votes and our stockholderstockholders' views when making future compensation decisions for our executives.
Recent Executive Compensation Developments
Compensation Governance
| | | What We Do: | | | What We Don’t Do: | | | | ü√ 70% of annual equity award is performance-based
| X No perquisites | ü√ Grant performance-based equity awards with performance measures that span three years
| X No guaranteed salary increases or non-performance-based bonuses
| ü√ Utilize different measures for performance equity awards and cash incentives
| X No excise tax gross-ups
| ü√ Maintain stock ownership guidelines to ensure our directors’directors' and executives’ interests are aligned with those of our stockholders
| X No pledging or hedging of company stock by directors and executive officers
| ü√ Maintain compensation recovery (or “clawback”) policy
| | ü√ Cap the amounts our executives can earn under our annual incentive plans
| | ü√ Compensation Committee retains independent compensation consultant
| | | X No perquisites
X No guaranteed salary increases or non-performance-based bonuses
X No pledging or hedging of company stock by directors or executive officers
X No excise tax gross-ups | |
| | Executive Compensation Program2022 Proxy Statement 57 |
TABLE OF CONTENTS Executive Compensation Program Philosophy and Objectives Our philosophy is to reward executive officers based upon corporate performance, as well as to provide long-term incentives for the achievement of financial and strategic goals. We use a combination of cash compensation, composed of base salary and an annual cash bonus program, long-term equity incentive compensation programs, and a broad-based benefits program to create a competitive compensation package for our executive management team. We tie the payment of cash and long-term equity incentive compensation to executive officers exclusively to the achievement of financial objectives.
The Compensation Committee uses the following principles to guide its decisions regarding the compensation of our executive officers: | | | | | | Pay for Performance: | | | Total compensation should reflect a “pay for performance”“pay-for-performance” philosophy in which more than 50% of each executive officer’s compensation is tied to the achievement of company financial objectives. Cash compensation for our executive officers is weighted toward short-term incentive bonus awards tied to company financial objectives that are difficult to attain and require achievement closely linked to our annual operating plan and budget and publicly-announcedpublicly announced expectations. Long-term incentive awards, namely PSUs and stock options, also ensure pay and performance alignment over the long term. | | | | | Alignment with Stockholders’ Interests: | | | Total compensation levels should include long-term performance-based equity awards to align executive officer and stockholder interests. | | | | | Internal Parity: | | | To the extent practicable, base salaries and short- and long-term incentive targets for similarly-situatedsimilarly situated executive officers should be comparable to avoid divisiveness and encourage teamwork, collaboration, and a cooperative working environment. | | | | | External Competitiveness: | | | Total compensation should be competitive with peer companies so that we can attract and retain high performing key executive talent. To achieve this goal within market ranges, our Compensation Committee annually reviews the compensation practices of other companies in our peer group, as discussed in the “Peer GroupGroup"” section below. | |
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TABLE OF CONTENTS Compensation Review Process
Compensation Committee Calendar
Role of Compensation Committee Toward the end of each fiscal year, the Compensation Committee begins the process of reviewing executive officer compensation for the next fiscal year. The Compensation Committee is provided with reports from its independent compensation consultant comparing our executive compensation and equity granting practices relative to the market and to our peer group. The Compensation Committee reviews recommendations from management on the current fiscal year annual and long-term incentive compensation programs. The Compensation Committee then reviews and approves any changes to executive officers’ total target cash compensation which includes base salary and target incentive compensation, and long-term equity incentive compensation. The Compensation Committee reviews all recommendations considering our compensation philosophy and seeks input from its independent compensation consultant prior to making any final decisions.
Role of Chief Executive Officer Our Chief Executive Officer makes recommendations to the Compensation Committee with respect to compensation for his direct reports (including our other named executive officers). In making these recommendations, the factors considered include market data, tenure, individual performance, responsibilities, and experience levels of the executives, as well as the compensation of the executives relative to one another. These initial CEO recommendations are discussed with the Chairman of the Compensation Committee or presented at Compensation Committee meetings. The Total Rewards group within our Human CapitalPeople (Human Resources) Department and individuals within our Finance and Legal Departments support the Compensation Committee in the performance of its responsibilities. During 2018,fiscal 2021, our Chief Financial Officer, Chief Legal Officer and Chief TalentPeople Officer regularly attended the Compensation Committee meetings to provide perspectives on the competitive landscape, the needs of the business, information about our financial performance and relevant legal and regulatory developments. The Compensation Committee meets in executive session (without management) with its independent compensation consultant to deliberate on executive compensation matters. None of our executive officers participate in the Compensation Committee’s deliberations or decisions regarding their own compensation. TABLE OF CONTENTS Role of Compensation Consultant Our Compensation Committee again retained Pay Governance to advise it on matters related to executive compensation for 2018.fiscal 2021. Other than providing limited guidance regarding our broad-based equity plan design for all employees, which was approved by the Compensation Committee, Pay Governance did not provide any services for management in 2018.fiscal 2021. Pay Governance consulted with our management when requested by the Compensation Committee and only as necessary to obtain relevant compensation and performance data for the executives as well as essential business information so that it could effectively support the Compensation Committee with appropriate competitive market information and relevant analyses. During 2018,fiscal 2021, Pay Governance provided a range of services to the Compensation Committee to support the Compensation Committee’s agenda and obligations under its charter, including providing advice relating to the impact of regulatory updates, industry trends and peer group compensation data, so that the Compensation Committee could set compensation for executives and non-employee directors in accordance with our policies and the Compensation Committee’s charter, advice on the structure and competitiveness of our compensation programs, and advice on the consistency of our programs with our executive compensation philosophy. philosophy and advice on director compensation. Representatives of Pay Governance also attended Compensation Committee meetings and provided advice to the Compensation Committee upon its request. meetings. The Compensation Committee assessed the independence of Pay Governance and determined that Pay Governance is independent of our company and has no relationships that could create a conflict of interest with us. As part of its assessment, the
Compensation Committee considered the fact that Pay Governance did not provide any other services to us and consults with our management only as necessary to provide the services described above. Peer Group To assist the Compensation Committee in making decisions on total compensation for executives and company-wide equity grants, the Compensation Committee utilizes peer and industry group data and analyses. Each year, as necessary, the Compensation Committee reviews with its independent compensation consultant the list of peer companies as points of comparison to ensure that comparisons are meaningful. For 2018,fiscal 2021, Pay Governance provided recommendations on the composition of our peer group. Based on the facts described in the table below and management’s input, for 2018,fiscal 2021, Pay Governance recommended, and the Compensation Committee approved, the following peer group:
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TABLE OF CONTENTS General Description | | | Criteria Considered | | | Peer Group List | | | | | | Software and high technology companies which operate in similar or related businesses and with which Progress competes for talent | | | Publicly-tradedPublicly traded and based in U.S.
Revenues-0.5x to 2.5x of Progress
Market Cap-0.2x to 3.0x of Progress
Other (e.g., recent financial performance, business model, proxy advisor peers) | Appian Corporation*
| | Aspen Technology, Inc.
Avid Technology, Inc.
Appian Corporation
Blackbaud, Inc.*
Bottomline Technologies (de), Inc.
BroadSoft, Inc.*
CommVault Systems, Inc.
Gigamon
Cornerstone OnDemand, Inc.*
Everbridge, Inc.
HubSpot Inc.
Manhattan Associates, Inc.
MicroStrategy, Inc.Incorporated
MongoDB, Inc.*
OneSpan Inc.
Pegasystems, Inc.
PTC
QAD Inc.*
Rapid7, Inc.
SailPoint Technologies Holdings, Inc.*
Synchronoss Technologies, Inc. Tableau Software, Inc.
The Ultimate Software Group, Inc.
TiVo Corporation
VASCO Data Security International, Inc.
SPS Commerce, Inc.*
Talend S.A.*
*Added for 20182021 | |
For 2018,fiscal 2021, the Compensation Committee replaced fourremoved three peer companies utilized in 2017 with five2020 and added three new additionspeer companies as shown in the table above. Three of the replacedThe three companies (Epiq Systems,removed (Carbonite, Inc., Interactive Intelligence Group,LogMeIn, Inc. and Jive Software, Inc.)TiVo Corporation) were recently acquired. The Compensation Committee replaced Splunk, Inc. because its market cap had exceeded our criteria.acquired during 2020. Pay Governance then prepared a compensation analysis based on survey data and data gathered from publicly available information for our peer group companies.
Pay Governance separately analyzed and advised the Compensation Committee regarding the pay practices of companies engaged in a total growth strategy like ours.
Survey Data The executive compensation analysis prepared by Pay Governance also included data from Radford’s 20172020 Global Technology Survey for companies with revenues between $200 million and $500 million.similar to us. The Compensation Committee used this data to compare the current compensation of our named and other executive officers to the peer group and to determine the relative market value for each position, based on direct, quantitative comparisons of pay levels. The survey data was used when there was a lack of public peer data for an executive’s position and to obtain a general market understanding of current compensation practices. TABLE OF CONTENTS Competitive Positioning The fiscal 2018Fiscal 2021 target total direct compensation for our named executive officers was set by the Compensation Committee based predominantly on competitive pay practices, as reflected in the peer group and survey data. The Compensation Committee reviews market data at the 25th, 50th, and 75th percentile and, for 2018,2021, sought to target total direct compensation for the named executive officers as a group at the 50th percentile of our peer group in setting our executive compensation programs. Additional adjustments were considered based on individual importance to our company, anticipated future contributions, internal pay equity, and historical pay levels, as well as the level of an executive officer’s unvested equity awards and incentives.
In determining equity awards related to the recruitment or promotion of executive officers, the Compensation Committee seeks to align the interests of these executives with our stockholders and reviews and considers: market data, forfeited awards at prior employers, importance of role, candidate experience, transitional state of the Company and internal positioning. New hire and promotional equity awards are generally one-time in nature and future awards to these executive officers are aligned with our annual equity award structure.
On occasion, the Compensation Committee makes additional grants of equity awards for the purpose of encouraging certain executives and other individuals to remain with our company. In situations where management determines that additional grants of equity awards are necessary or appropriate for our continued success, recommendations are made by the Chief Executive Officer to the Compensation Committee. Retention awards include vesting provisions that are designed to encourage recipients to maintain their employment with us and these provisions may differ from our standard vesting schedules. For example, in October 2018, the Compensation Committee granted special, one-time restricted stock unit awards to Messrs. Ainsworth, Quinn and Tcherevik and Ms. Jarrett as part of a larger retention award to certain key employees.
Components of Executive Officer Compensation Compensation for our named executive officers currently consists of three primary components that are designed to reward performance in a simple and straightforward manner: base salaries, annual cash
bonuses, and long-term equity awards. The purpose and key characteristics of each of these components, in addition to other compensation elements described below, and how each element accomplishes the goals and objectives of our overall program are summarized below. | | | | Compensation Element | Objective | Key Features | | | | • Cash Compensation | | | To attract, motivate and reward executives whose knowledge, skills, and performance are critical to our success | | | | | | | | | • Base Salary | | | To secure and retain services of key executive talent by providing a fixed level of cash compensation for performing essential elements of position | | | Adjustments may be made to reflect market conditions for a position, changes in the status or duties associated with a position, individual performance, or internal pay equity | | | | | | • Annual Cash Bonus | | | To encourage and reward annual corporate performance that enhances short and long-term stockholder value | | | Cash bonuses are based on percentage of base salary, with actual awards based exclusively on attainment of objective corporate financial goals | | | | | | • Equity Compensation | | | To align executives’ interests with those of stockholders | | | | | | | | | • PSUs under the Long-Term Incentive Plan (“LTIP”) | | | To align interests of management with those of our stockholders with the goal of creating long-term growth and value | | | Three-year performance period
Performance metrics utilized are:
• 50%75% operating income (subject to 35% annual operating margin threshold)
• 50%25% relative total shareholder return (“TSR”)TSR in comparison to NASDAQthe S&P Software and Services Select Industry Index
| | | | | | • Restricted Stock Units (RSUs) | | | To retain executive talent | | | Service-based vesting over three-year period | | | | | | • Stock Options | | | To align interests of management with those of our stockholders with the goal of creating long-term growth and value | | | Service-based vesting over four-year period
Exercise price equal to fair market value on date of grant | | | | | | • Other Compensation | | | To provide benefits that promote employee health and welfare, which assists in attracting and retaining our executive officers | | | Indirect compensation element consisting of programs such as medical, dental, and vision insurance, a 401(k) plan with up to a 3% matching contribution, an employee stock purchase plan program, and other plans and programs generally made available to employees | |
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TABLE OF CONTENTS | | | | | | | • Severance and Change in Control Benefits | | | To serve our retention and motivational objectives helping our named executive officers maintain continued focus, dedication to their responsibilities and objectivity to maximize stockholder value, including in the event of a transaction that could result in a change in control of our company; particularly important in a time of increased consolidation in our industry and increased competition for executive talent | | | Provides protection in the event of an involuntary termination of employment under specified circumstances, including following a change in control of our company as described below under “Potential Payments Upon Termination or Change in Control” and “Executive Compensation-Severance and Change in Control Agreements” and "”Estimate of Severance and Change in Control Benefits." | |
2021 Executive Compensation Decisions | | 2018 Executive Compensation Decisions |
20182021 Program Design
Consistent with its pay-for-performance philosophy, the Compensation Committee emphasized alignment with our long-term business goals in designing our executive compensation programs for 2018.fiscal 2021. Our executive compensation programs for 2018fiscal 2021 were designed to reflect our continued commitment to the new strategic and operating plantotal growth strategy we launched in 2017.2018. As noted above, our strategy consists of threethe following primary objectives--aligning our resourcesobjectives— Be the trusted provider of the best products to develop, deploy and manage high-impact business applications. Focus on customer and partner retention to drive profitability, protectingrecurring revenue and strengtheningincreased profitability. Execute our core business and executing ontotal growth strategy driven by targeting accretive M&A. Execute our holisticmulti-faceted capital allocation approach. strategy. Our fiscal 20182021 budget and operating plan prioritized enhancing customer retention and reflected our expectations for strong recurring revenue and high renewal rates but limited revenue growth forfrom our core products andbeyond the inclusion of Chef for the entire fiscal year. Consistent with past years, we also prioritized enhancing customer retention. At the same time, our operating plan also provided for us to make the investments necessary in furtherance of our Cognitive Applications product strategy, which will provide a technology path to our existing customers and partners and enable us to win new customers. The overarching priority of our fiscal 2018 plan was that we operate our business as efficiently as possible to strengthen Progress for the benefit of our stockholders. Unlike In addition, our fiscal 2017 compensation programs, which2021 plan reflected that most of our executive management team, includingfocus on growing our named executive officers, had either joined in, or assumed new roles during, fiscal 2017, the fiscal 2018 compensation programs did not include any signing bonuses or new hire awards for the executive management team.business largely through accretive acquisitions.
TABLE OF CONTENTS The chart below summarizes the key attributes of each pay element for fiscal 2018.2021. | | | Element | Key Attributes | | | Base salary | | | Aligns with scope and complexity of role and prevailing market conditions; salary levels are generally at market median
For fiscal 2018, the Compensation Committee did not make any changes to the base salaries of any of the named executive officers. | | | Annual Cash Bonus | 100% financial/formulaic
FY18 metrics
• Total non-GAAP revenue (40%)
• Total non-GAAP operating income (40%)
• Total adjusted free cash flow (20%)
Thresholds set at 99% of total revenue target, 94% of operating income target and 96% of adjusted free cash flow target under our annual budget
Additionally, in order to fund the revenue metric for 2018 should performance under such metric be achieved, the Company must also achieve 100% of the fiscal 2018 total annual bookings target for the Cognitive Applications product lines
Payouts under the annual cash bonuses capped at 150% of target amounts
For fiscal 2018, the Compensation Committee did not make any changes to the annual cash bonus targets of any of the named executive officers
| | | Restricted Stock Units | Vests over three years to support retention
30% of annual equity award
| | | Stock options | Vests over four years to support retention and align with our stockholders’ interests
20% of annual equity award
| | | LTIP PSUs | Three-year performance period
Performance metrics utilized are 50% operating income (subject to 35% annual operating margin threshold) and 50% relative TSR in comparison to NASDAQ Software Index
50% of annual equity award
For fiscal 2018,2021, the Compensation Committee increased the target equity awards for Messrs. Guptabase salaries of each of Mr. Quinn and JalbertMs Jarrett to reflect the 50th percentile of comparable executives within our peer group. Equity awards for other named executive officers were identical to fiscal 2017 annual equity awards.
|
Pay Mix
In setting the mix among the different elements of executive compensation, we do not target specific allocations, but generally weight target compensation more heavily toward performance-based compensation, both cash and equity. The percentage of performance-based compensation for our executive officers and other employees increases with job responsibility, reflecting our view of internal pay equity and the ability of a given employee to contribute to our results. We also generally align our compensation mix with the practices of our peer group when possible and to the extent consistent with our compensation strategy and business plan.
As shown in the tables below, the total direct compensation mix for Mr. Gupta and our other named executive officers in fiscal 2018 was consistent with our peer group.
* “Other NEOs” reflects average of NEO salaries, excluding CFO
These allocations reflect our belief that a significant portion of our named executive officers’ compensation should be performance-based and therefore “at risk” based on company performance, as well as subject to service requirements. Since our cash incentive opportunities and equity incentive awards have both upside opportunities and downside risks and our actual performance can deviate from the target goals, the amount of compensation earned will differ from the target allocations.
In October 2018, upon the recommendation of Mr. Gupta, the Compensation Committee issued special one-time equity awards consisting of time-based restricted stock units with a value of $200,000 to each of Messrs. Ainsworth, Quinn and Tcherevik and Ms. Jarrett. These one-time awards, which are more fully described below, are not included in the Pay Mix discussion above.
Individual Considerations
Below is a summary of the fiscal 2018 compensation decisions and, where applicable, changes for each named executive officer from fiscal 2017.
Yogesh Gupta, Chief Executive Officer (1)
| | | | | | | | 2017 Target Pay ($) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 1,150,000 | | 1,150,000 | (6) | | Base Salary | 575,000 | | 575,000 | | | Target Bonus | 575,000 | (2) | 575,000 | (7) | | Target Annual Equity Compensation | 2,075,000 | | 3,650,000 | (8) | | Target Annual RSUs | -- | (3) | 1,095,000 | (9) | | Target Annual Stock Options | 875,000 | (4) | 730,000 | (10) | | Target LTIP PSUs | 1,200,000 | (5) | 1,825,000 | (11) | | Total Target Compensation | 3,225,000 | | 4,800,000 | |
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| | (1) | Mr. Gupta became our Chief Executive Officer in October 2016. We entered into an employment agreement with Mr. Gupta setting forth the terms of his compensation described above. |
| | (2) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Gupta earned 115% of his bonus for fiscal 2017. |
| | (3) | Mr. Gupta did not receive an award of time-based RSUs in fiscal 2017 because he received time-based RSUs in October 2016 as part of his new hire award in connection with his becoming Chief Executive Officer. |
(4) Mr. Gupta was awarded $875,000 of stock options in February 2017 as part of his new hire award. These options vest in equal installments every six months over four years beginning on October 1, 2017, subject to continued employment.
| | (5) | Represents PSUs issued to our executive officers under our Long-Term Incentive Plan that are subject to three-year relative total shareholder return performance measures. |
| | (6) | We evaluated Mr. Gupta’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Gupta’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018. |
| internal pay equity | | (7) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Gupta earned 62% of his bonus for fiscal 2018. |
| | (8) | We evaluated Mr. Gupta’s fiscal 2017 target annual equity compensation against our compensation peer group to determine whether any changes should be made. Based on the market data, Mr. Gupta’s target annual equity compensation was in the 25th percentile of market data and accordingly, we determined that Mr. Gupta’s target annual equity compensation should be increased to $3,650,000, with 50% of such award being in the form of LTIP PSUs, 30% being in the form of time-based RSUs and 20% being in the form of stock options.
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| | (9) | RSUs vest in equal installments every six months over three years beginning on October 1, 2018. |
(10) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(11) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
Paul Jalbert, Chief Financial Officer (1)
| | | | | | | | 2017 Target Pay ($)(2) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 600,000 | | 600,000 | (9) | | Base Salary | 375,000 | | 375,000 | | | Target Bonus | 225,000 | (3) | 225,000 | (10) | | Target Annual Equity Compensation | 1,000,000 | (4) | 1,330,000 | (11) | | Target Annual RSUs | 300,000 | (5) | 399,000 | (12) | | Target Annual Stock Options | 200,000 | (6) | 266,000 | (13) | | Target LTIP PSUs | 500,000 | (7) | 665,000 | (14) | | Total Target Annual Compensation | 1,600,000 | | 1,930,000 | | | Special Promotion Award | 1,000,000 | (8) | -- | | | Total Target Compensation | 2,600,000 | | 1,930,000 | |
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| | (1) | Mr. Jalbert was promoted to Chief Financial Officer in March 2017. Prior to that time, he served as our Vice President, Chief Accounting Officer. In connection with Mr. Jalbert’s promotion, we entered into an employment agreement with Mr. Jalbert setting forth the terms of his compensation described above. |
| | (2) | Mr. Jalbert’s base salary prior to his promotion was $270,504 and his target bonus was $108,202. |
| | (3) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on the performance under the Corporate Bonus Plan, Mr. Jalbert earned 115% of his fiscal 2017 target bonus. |
| | (4) | As part of his promotion to Chief Financial Officer, Mr. Jalbert received an annual equity award of $1,000,000 consisting of 50% PSUs under our Long-Term Incentive Plan, 30% time-based RSUs and 20% stock options. |
| | (5) | RSUs vest in equal installments every six months over three years beginning on October 1, 2017. |
| | (6) | Stock options vest in equal installments every six months over four years beginning on October 1, 2017. |
| | (7) | PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return performance measures. |
| | (8) | Represents a one-time award of RSUs granted in connection with Mr. Jalbert's becoming our Chief Financial Officer. These RSUs are subject to three-year cliff vesting, subject to continued employment. The vesting of all or part of this award may be accelerated in the event of a change in control or involuntary termination. |
(9) We evaluated Mr. Jalbert’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Jalbert’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018.
(10) Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Jalbert earned 62% of his bonus for fiscal 2018.
(11) We evaluated Mr. Jalbert’s fiscal 2017 target annual equity compensation against our compensation peer group to determine whether any changes should be made. Based on the market data, Mr. Jalbert’s target annual equity compensation was in the 25th percentile of market data and accordingly, we determined that Mr. Jalbert's target annual equity compensation should be increased to $1,330,000, with 50% of such award being in the form of LTIP PSUs, 30% being in the form of time-based RSUs and 20% being in the form of stock options
(12) RSUs vest in equal installments every six months over three years beginning on October 1, 2018.
(13) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(14) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
John Ainsworth, Senior Vice President, Core Products (1)
| | | | | | | | 2017 Target Pay ($) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 502,500 | | 502,500 | (8) | | Base Salary | 335,000 | | 335,000 | | | Target Bonus | 167,500 | (2) | 167,500 | (9) | | Target Annual Equity Compensation | 700,000 | (3) | 700,000 | (10) | | Target Annual RSUs | 210,000 | (4) | 210,000 | (11) | | Target Annual Stock Options | 140,000 | (5) | 140,000 | (12) | | Target LTIP PSUs | 350,000 | (6) | 350,000 | (13) | | Total Target Annual Compensation | 1,202,500 | | 1,202,500 | | | Cash Signing Bonus | 150,000 | | -- | | | Special New Hire Award | 300,000 | (7) | -- | | | Special RSU Award | -- | | 200,000 | (14) | | Total Target Compensation | 1,652,500 | | 1,402,500 | |
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| | (1) | Mr. Ainsworth became our Senior Vice President, Core Products in January 2017. We entered into an offer letter with Mr. Ainsworth setting forth the terms of his compensation described above. |
| | (2) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on the performance under the Corporate Bonus Plan, Mr. Ainsworth earned 115% of his fiscal 2017 target bonus prorated to reflect his employment commencement date. |
| | (3) | Mr. Ainsworth received an annual equity award of $700,000 consisting of 50% PSUs under our Long-Term Incentive Plan, 30% time-based RSUs and 20% stock options. |
| | (4) | RSUs vest in equal installments every six months over three years beginning on October 1, 2017. |
| | (5) | Stock options vest in equal installments every six months over four years beginning on October 1, 2017. |
| | (6) | PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return performance measures. |
| | (7) | Represents a one-time award of RSUs granted in connection with Mr. Ainsworth joining our company. These RSUs vest in equal installments every six months over three years beginning on October 1, 2017. |
(8) We evaluated Mr. Ainsworth’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Ainsworth’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018.
(9) Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Ainsworth earned 62% of his bonus for fiscal 2018.
(10) We evaluated Mr. Ainsworth’s fiscal 2017 target annual equity compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Ainsworth’s target annual equity compensation was in line with the market data and made no changes for fiscal 2018.
(11) RSUs vest in equal installments every six months over three years beginning on October 1, 2018.
(12) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(13) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
(14) Mr. Ainsworth received a special, one-time award of RSUs in October 2018, one-third of which vest beginning October 1, 2019 and the remainder of which vest in four equal semiannual installments beginning April 1, 2020.
Loren Jarrett, Chief Marketing Officer (1)
| | | | | | | | 2017 Target Pay ($) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 502,500 | | 502,500 | (8) | | Base Salary | 335,000 | | 335,000 | | | Target Bonus | 167,500 | (2) | 167,500 | (9) | | Target Annual Equity Compensation | 700,000 | (3) | 700,000 | (10) | | Target Annual RSUs | 210,000 | (4) | 210,000 | (11) | | Target Annual Stock Options | 140,000 | (5) | 140,000 | (12) | | Target LTIP PSUs | 350,000 | (6) | 350,000 | (13) | | Total Target Annual Compensation | 1,202,500 | | 1,202,500 | | | Cash Signing Bonus | 125,000 | | -- | | | Special New Hire Award | 300,000 | (7) | -- | | | Special RSU Award | -- | | 200,000 | (14) | | Total Target Compensation | 1,627,500 | | 1,402,500 | |
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| | (1) | Ms. Jarrett became our Chief Marketing Officer in January 2017. We entered into an offer letter with Ms. Jarrett setting forth the terms of her compensation described above. |
| | (2) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on the performance under the Corporate Bonus Plan, Ms. Jarrett earned 115% of her fiscal 2017 target bonus prorated to reflect her employment commencement date. |
| | (3) | Ms. Jarrett received an annual equity award of $700,000 consisting of 50% PSUs under our Long-Term Incentive Plan, 30% time-based RSUs and 20% stock options. |
| | (4) | RSUs vest in equal installments every six months over three years beginning on October 1, 2017. |
| | (5) | Stock options vest in equal installments every six months over four years beginning on October 1, 2017. |
| | (6) | PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return performance measures. |
| | (7) | Represents a one-time award of RSUs granted upon Ms. Jarrett joining our company. These RSUs vest in equal installments every six months over three years beginning on October 1, 2017. |
(8) We evaluated Ms. Jarrett’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Ms. Jarrett’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018.
(9) Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Ms. Jarrett earned 62% of her bonus for fiscal 2018.
(10) We evaluated Ms. Jarrett’s fiscal 2017 target annual equity compensation against our compensation peer group to determine whether any changes should be made. We determined that Ms. Jarrett’s target annual equity compensation was in line with the market data and made no changes for fiscal 2018.
(11) RSUs vest in equal installments every six months over three years beginning on October 1, 2018.
(12) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(13) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
(14) Ms. Jarrett received a special, one-time award of RSUs in October 2018, one-third of which vest beginning October 1, 2019 and the remainder of which vest in four equal semiannual installments beginning April 1, 2020.
Gary Quinn, Senior Vice President, Core Field Organization (1)
| | | | | | | | 2017 Target Pay ($) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 568,750 | | 568,750 | (7) | | Base Salary | 325,000 | | 325,000 | | | Target Bonus | 243,750 | (2) | 243,750 | (8) | | Target Annual Equity Compensation | 1,000,000 | (3) | 700,000 | (9) | | Target Annual RSUs | 300,000 | (4) | 210,000 | (10) | | Target Annual Stock Options | 200,000 | (5) | 140,000 | (11) | | Target LTIP PSUs | 500,000 | (6) | 350,000 | (12) | | Total Target Annual Compensation | 1,568,750 | | 1,268,750 | | | Special RSU Award | -- | | 200,000 | (13) | | Total Target Compensation | 1,568,750 | | 1,468,750 | |
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| | (1) | Mr. Quinn became our Senior Vice President, Core Field Organization in August 2017. We entered into an offer letter with Mr. Quinn setting forth the terms of his compensation described above. |
(2) Mr. Quinn’s target bonus of $243,750 is composed of two parts. Two-thirds of this target is tied to achievement of target performance under the Corporate Bonus Plan and one-third of this target is tied to the achievement of financial objectives with respect to the product lines that make up our Core products, including OpenEdge, DCI, Sitefinity and Corticon (the "Core A Products"). Based on company performance, in fiscal 2017, Mr. Quinn earned 115% of the portion of his fiscal 2017 target bonus that is tied to the Corporate Bonus Plan, and 96% of the portion of his 2017 target bonus that is tied to the financial objectives with respect to the Core A Products, each prorated to reflect his employment commencement date.
| | (3) | Mr. Quinn received a combined annual/new hire equity award of $1,000,000 consisting of 50% PSUs under our Long-Term Incentive Plan, 30% time-based RSUs and 20% stock options, which amount is the equivalent of a $700,000 annual equity award and a $300,000 new hire equity award. |
| | (4) | RSUs vest in equal installments every six months over three years beginning on April 1, 2018. |
(5) Stock options vest in equal installments every six months over four years beginning on April 1, 2018.
| | (6) | PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-yearrelative total shareholder return performance measures.
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(7) We evaluated Mr. Quinn’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Quinn’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018.
(8) Mr. Quinn’s target bonus of $243,750 is composed of two parts. Two-thirds of this target is tied to achievement of target performance under the Corporate Bonus Plan and one-third of this target is tied to the achievement of financial objectives with respect to the Core A Products. Based on company performance, in fiscal 2018, Mr. Quinn earned 62% of the portion of his fiscal 2018 target bonus that is tied
to the Corporate Bonus Plan, and 100% of the portion of his 2017 target bonus that is tied to the Core A Products financial objectives.
(9) We evaluated Mr. Quinn’s fiscal 2017 target annual equity compensation (which does not include the $300,000 new hire equity award component) against our compensation peer group to determine whether any changes should be made. We determined that Mr. Quinn’s target annual equity compensation was in line with the market data and made no changes for fiscal 2018.
(10) RSUs vest in equal installments every six months over three years beginning on October 1, 2018.
(11) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(12) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
(13) Mr. Quinn received a special, one-time award of RSUs in October 2018, one-third of which vest beginning October 1, 2019 and the remainder of which vest in four equal semiannual installments beginning April 1, 2020.
Dmitri Tcherevik, Chief Technology Officer (1)
| | | | | | | | 2017 Target Pay ($) | | 2018 Target Pay ($) | | | Target Annual Cash Compensation | 502,500 | | 502,500 | (7) | | Base Salary | 335,000 | | 335,000 | | | Target Bonus | 167,500 | (2) | 167,500 | (8) | | Target Annual Equity Compensation | 1,000,000 | (3) | 700,000 | (9) | | Target Annual RSUs | 300,000 | (4) | 210,000 | (10) | | Target Annual Stock Options | 200,000 | (5) | 140,000 | (11) | | Target LTIP PSUs | 500,000 | (6) | 350,000 | (12) | | Total Target Annual Compensation | 1,502,500 | | 1,202,500 | | | Special RSU Award | -- | | 200,000 | (13) | | Total Target Compensation | 1,502,500 | | 1,402,500 | |
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| | (1) | Mr. Tcherevik became our Chief Technology Officer in April 2017. We entered into an offer letter with Mr. Tcherevik setting forth the terms of his compensation described above. |
| | (2) | Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on the performance under the Corporate Bonus Plan, Mr. Tcherevik earned 115% of his fiscal 2017 target bonus prorated to reflect his employment commencement date. |
| | (3) | Mr. Tcherevik received a combined annual/new hire equity award of $1,000,000 consisting of 50% PSUs under our Long-Term Incentive Plan, 30% time-based RSUs and 20% stock options, which amount is the equivalent of a $700,000 annual equity award and a $300,000 new hire equity award. |
| | (4) | RSUs vest in equal installments every six months over three years beginning on April 1, 2018. |
(5) Stock options vest in equal installments every six months over four years beginning on April 1, 2018.
| | (6) | PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return performance measures. |
(7) We evaluated Mr. Tcherevik’s fiscal 2017 target annual cash compensation against our compensation peer group to determine whether any changes should be made. We determined that Mr. Tcherevik’s target annual cash compensation was in line with the market data and made no changes for fiscal 2018.
(8) Represents cash payable upon achievement of target performance under our Corporate Bonus Plan. Based on company performance, Mr. Tcherevik earned 62% of his bonus for fiscal 2018.
(9) We evaluated Mr. Tcherevik’s fiscal 2017 target annual equity compensation (which does not include the $300,000 new hire equity award component) against our compensation peer group to determine whether any changes should be made. We determined that Mr. Tcherevik’s target annual equity compensation was in line with the market data and made no changes for fiscal 2018.
(10) RSUs vest in equal installments every six months over three years beginning on October 1, 2018.
(11) Stock options vest in equal installments every six months over four years beginning on October 1, 2018.
(12) PSUs issued to our executive officers under our Long-Term Incentive Plan are subject to three-year relative total shareholder return and operating income performance measures as further described in this proxy statement.
(13) Mr. Tcherevik received a special, one-time award of RSUs in October 2018, one-third of which vest beginning October 1, 2019 and the remainder of which vest in four equal semiannual installments beginning April 1, 2020.
Cash Incentive Compensation
Annual Cash Bonus | | | It is our philosophy to base a significant portion of each executive officer’s total compensation opportunity on performance incentives. Our annual bonus plan is intended to motivate eligible participants toward overall business results, to tie their goals and interests to those of the Company and its stockholders, and to enable the Company to attract and retain highly qualified executives. Our bonus plan is administered by our Compensation Committee.
The Compensation Committee set the target annual cash incentive opportunity for 2018 (expressed as a percentage of base salary earned during the year) for each named executive officer in January 2018. In setting the target levels, the Compensation Committee considered each named executive officer’s 2018 target total cash opportunity against the peer group data provided by our independent compensation consultant, internal pay equity and the roles and responsibilities of the named executive officers. The Compensation Committee set each named executive officer’s cash bonus target at the same percentage as his or her respective target opportunity in 2017. The Compensation Committee believes that the target annual cash
100% financial/formulaic
bonus opportunity should make up a larger portion of an executive officer’s total target cash compensation as the executive’s level of responsibility increases.Fiscal 2021 metrics
2018 Plan Design
In January 2018, the Compensation Committee approved the 2018 Corporate Bonus Plan. Our named executive officers participated in the Corporate Bonus Plan.• Total non-GAAP revenue (40%)
For 2018, the Compensation Committee adopted three plan metrics for the Corporate Bonus Plan, all of which would be utilized to determine funding and payout under the cash bonus plans. These three plan metrics were non-GAAP corporate revenue,• Total non-GAAP operating income and adjusted free cash flow. These three plan metrics were the same metrics utilized by the Compensation Committee in fiscal 2017. New to the plan design for 2018 was the requirement that, in order to fund the revenue metric should performance under such metric be achieved, we must also achieve 100% of the fiscal year 2018 total annual bookings target for our Cognitive Applications products, consisting primarily of Kinvey and DataRPM.(40%)
As was the case in fiscal 2017, non-GAAP corporate revenue was weighted at 40%, non-GAAP operating income was weighted at 40%, and the• Total adjusted free cash flow metric was weighted(20%)
Thresholds set at 20%. Each metric was measured separately and was not impacted by performance with respect to the other metrics. The performance measures selected for our cash bonus plan were designed to support our goals98% of expanding our non-GAAP operating income, while at the same time preserving our strong cash flow, which would result in increased stockholder returns. Our revenue targets reflected our continued expectations of the growth prospects of our core products. The inclusion of the requirement that we meet our fiscal 2018 total annual bookings target for our Cognitive Applications products in order to achieve the revenue metric reflected the importance of these products to our overall strategy. For further detail about our use of non-GAAP measures, refer to the paragraph entitled, “GAAP Results vs. non-GAAP Measures” above. For 2018, the Compensation Committee set the thresholds for purposes of earning any award under the Corporate Bonus Plan at 99% of the total revenue target, 94%92% of the operating income target and 96%97% of the adjusted free cash flow target under our annual budget
Payouts under the annual cash bonuses capped at 150% of target amounts
For fiscal 2018 annual budget. Although2021, the Compensation Committee retaineddid not make any changes to the funding percentage for threshold-level achievement atannual cash bonus targets of any of the named executive officers. | |
