(1) | As an employee | Name(1) | | | | Fees Earned or Paid in Cash ($) | | | | Stock Awards (#) | | | | Stock Awards(2)(7) ($) | | | | Total ($) | | | Mark Benjamin | | | | | $ | 92,500 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 342,405 | | | | Janice Chaffin(3) Lead Independent Director | | | | | $ | 107,500 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 357,405 | | | | Amar Hanspal | | | | | $ | 65,000 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 314,905 | | | | Michal Katz | | | | | $ | 68,938 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 318,843 | | | | Paul Lacy | | | | | $ | 112,500 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 362,405 | | | | Corinna Lathan | | | | | $ | 82,500 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 332,405 | | | | Janesh Moorjani(4) | | | | | $ | 17,646 | | | | | | | 4,037 | | | | | | $ | 548,830 | | | | | | $ | 566,476 | | | | Robert Schechter(3) | | | | | $ | 152,500 | | | | | | | 2,282 | | | | | | $ | 299,992 | | | | | | $ | 452,492 | | | | Klaus Hoehn(5) | | | | | $ | 35,000 | | | | | | | — | | | | | | | — | | | | | | $ | 35,000 | | | | Blake Moret(6) | | | | | $ | 64,932 | | | | | | | 1,901 | | | | | | $ | 249,905 | | | | | | $ | 314,837 | | |
(1)
As employees of PTC, Mr. Heppelmann, our Chairman of the Board and Chief Executive Officer, and Neil Barua, our CEO-Elect, receive no compensation for their service as a director, and accordingly, are not shown in the Director Compensation Table. | | | | 2024 PROXY STATEMENT | | | | | | 21 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
(2)
Grant date fair value of restricted stock units granted on February 16, 2023, and, for Mr. Moorjani, June 7, 2023. The grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our common stock on the NASDAQ Stock Market on the grant date, $131.46 per share, and, for Mr. Moorjani, $135.96 per share. (3)
Mr. Schechter served as Chairman of the Board from October 2022 through July 2023. Ms. Chaffin was appointed Lead Independent Director in late July 2023 and continues to serve as such. (4)
Mr. Moorjani joined the Board on June 7, 2023. His Stock Awards reflect a pro-rated annual equity grant of 1,279 RSUs and a new director grant of 2,758 RSUs. His new director grant vests in two equal installments on June 15, 2024 and June 15, 2025. (5)
Mr. Hoehn’s term ended at the February 16, 2023 Annual Meeting of Stockholders. (6)
Mr. Moret resigned from the Board effective as of August 1, 2023 pursuant to the terms of the Share Purchase Agreement between PTC Inc. and Rockwell Automation Inc. dated as of June 11, 2018, as amended on May 11, 2021, after Rockwell Automation’s ownership of PTC shares fell below 5% of PTC’s outstanding shares. Mr. Moret forfeited the stock awards for 2023 shown in the table on August 1, 2023. (7)
The number of outstanding RSUs held by each non-employee director as of September 30, 2023 is shown in the table below. No director held options. | Name | | | | Restricted Stock Units (#) | | | Mark Benjamin | | | | | | 1,901 | | | | Janice Chaffin | | | | | | 1,901 | | | | Amar Hanspal | | | | | | 3,657 | | | | Michal Katz | | | | | | 3,462 | | | | Paul Lacy | | | | | | 1,901 | | | | Corinna Lathan | | | | | | 1,901 | | | | Janesh Moorjani | | | | | | 4,037 | | | | Robert Schechter | | | | | | 2,282 | | | | Klaus Hoehn | | | | | | — | | | | Blake Moret | | | | | | — | | |
Communications with the Board Stockholders may send communications to the Board of Directors at: | 22 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
EXECUTIVE COMPENSATION Information about Our Executive Officers | JAMES HEPPELMANN | | | Chairman of the Board, Chief Executive Officer | | | Age 59 | |
| | | | Career Highlights PTC Inc. •
Chairman and Chief Executive Officer (July 2023-Present) •
Chief Executive Officer (February 2023-July 2023) •
President and Chief Executive Officer receives no(October 2010-February 2023) | | | | |
| NEIL BARUA | | | CEO-Elect | | | | |
| | | | Information about Neil Barua is provided in “Director Nominees.” | |
| KRISTIAN TALVITIE | | | Executive Vice President, Chief Financial Officer | | | Age 53 | |
| | | | Career Highlights PTC Inc. •
Chief Financial Officer (May 2019-Present) •
Corporate Vice President, Finance (July 2013-July 2016) •
Senior Vice President, Financial Planning and Analysis and Investor Relations (November 2010-July 2013) | | | Syncsort Incorporated., a private software company specializing in Big Data, high speed sorting products, and data integration software and services •
Chief Financial Officer (October 2018-May 2019) Sovos Compliance, LLC, a private SaaS software company specializing in tax compliance software •
Chief Financial Officer (July 2016-October 2018) | |
| MICHAEL DITULLIO | | | President and Chief Operating Officer | | | Age 56 | |
| | | | Career Highlights PTC Inc. •
President and Chief Operating Officer (February 2023-Present) •
President, Digital Thread Business (May 2022-February 2023) | | | •
President, Velocity Business (January 2021-May 2022) •
Served in various positions in our Sales organization, including as Executive Vice President, Global Sales (November 2015-January 2021) •
Joined PTC in 1999 | |
| CATHERINE KNIKER | | | Executive Vice President, Chief Strategy and Marketing Officer | | | Age 57 | |
| | | | Career Highlights PTC Inc. •
Executive Vice President, Chief Strategy and Marketing Officer (February 2023-Present) •
Executive Vice President, Chief Strategy and Sustainability Officer (May 2022-February 2023) •
Executive Vice President, Chief Strategy Officer (April 2021-May 2022) | | | •
DVP, Global Head of Corporate Development (January 2020-April 2021) •
Served in various positions, including Divisional Vice President, Head of Global Strategic Alliances (October 2018-January 2020) and Chief Revenue Officer, IoT and AR (September 2016-October 2018) •
Joined PTC in 2016 | |
| | | | 2024 PROXY STATEMENT | | | | | | 23 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
| AARON VON STAATS | | | Executive Vice President, General Counsel and Secretary | | | Age 58 | |
| | | | Career Highlights PTC Inc. •
General Counsel and Secretary (2003-Present) | | | •
Served in other roles in the Company’s Legal group •
Previously in private practice with a Boston-based law firm •
Joined PTC in 1997 | |
| 24 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
| | | PROPOSAL 2 | | | Advisory Vote on the Compensation of Our Named Executive Officers This advisory vote on the compensation for his serviceof our Chief Executive Officer and our other executive officers named in the Summary Compensation Table (our “named executive officers”) gives shareholders the opportunity to express their views on our named executive officers’ compensation as a directordisclosed pursuant to Item 402 of Regulation S-K in Compensation Discussion and accordingly,Analysis and Executive Compensation. This “say-on-pay” vote is not shown inintended to address any specific item of compensation, but rather the Director Compensation table. | (2) | The number of outstanding RSUs held by each director as of September 30, 2017 is shown in the table below. No director held options. |
Name | | Restricted Stock Units | Janice Chaffin | | 4,484 | Phillip Fernandez | | 10,087 | Donald Grierson | | 4,484 | Klaus Hoehn | | 4,484 | Paul Lacy | | 4,484 | Corinna Lathan | | 9,560 | Robert Schechter | | 5,381 | Renato Zambonini | | 0 |
(3) | Grant date fair value of restricted stock units granted on March 1, 2017, calculated by multiplying the number of RSUs granted by the closing priceoverall compensation of our common stock on the NASDAQ Stock Market on the grant date, $55.75 per share.
| (4)named executive officers. | Ms. Lathan joined the Board on August 15, 2017 and received a one-time new director equity award of 7,023 RSUs, which award vests in two equal installments on the first and second anniversaries of her service as director, and a pro-rated annual equity award of 2,537 RSUs.The grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our common stock on the NASDAQ Stock Market on the grant date, $53.39 per share.
| (5) | Mr. Zambonini died in July 2017. The fees shown are board and committee fees for his service for the period prior to his death and a one-time cash payment in lieu of equity for service for the year prior to his death. The stock awards shown were forfeited upon his death. |
Table of Contents
Proposal 2
Advisory Vote on the Compensation of our Named Executive Officers
This advisory vote on the compensation of our Chief Executive Officer and our other executive officers named in the Summary Compensation Table (our “named executive officers”) gives stockholders the opportunity to express their views on our named executive officers’ compensation for 2017. This “say-on-pay” vote is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers. Additional information about their compensation is discussed in COMPENSATION DISCUSSION AND ANALYSIS and in EXECUTIVE COMPENSATION.
| | | The Board of Directors recommends that youa voteFORthe approval of the compensation of our named executive officers as disclosed in COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis and the tables and related disclosures contained in EXECUTIVE COMPENSATION.Executive Compensation. | |
Why You Should Approve theSummary of Our Compensation of our Named Executive OfficersPractices
Our compensation programs are designed to pay for performance.A significant portion of the compensation of our named executive officers is comprised of performance-based pay. For 2017, 51% of our CEO’s target compensation was performance-based and 49% of our other named executive officers’ target compensation was performance-based.The executives may also earn amounts above their target compensation under their performance-based equity, up to a cap, for performance above target performance. Conversely, if the performance measures are not achieved, those performance-based amounts are not earned or paid, as was the case in 2015 when the executives did not earn and were not paid any portion of their annual cash bonus or performance-based equity, and in 2016 when the executives did not earn any of their annual upside equity. | | 2017 TARGET COMPENSATION
| | 2024 PROXY STATEMENT | | | | | | 25 | |
Our compensation programs provide a strong correlation between pay and performance as demonstrated by our performance against our strategic goals, stock price growth and achievement against our short-term and long-term incentive plan targets in 2017. We exceeded our short-term incentive plan targets due primarily to the strength of our IoT business in the year. We also outpaced our peers in stock price performance as demonstrated by finishing at the 76th percentile in relative Total Shareholder Return (TSR) under our long-term equity incentive plan. Finally, we partially achieved the upside annual equity measures, representing a significant stretch beyond our planned growth targets in our IoT business.
24 | PTC Inc. 2018 Proxy Statement |
Table of Contents
| PROPOSAL 2 | | | | | | | | | | | | | | | | | | | | | | | | |
The table below shows the performance measures for the 2017 cash bonus plan, the upside annual equity and the long-term performance-based equity, and achievement under those performance measures.
2017 PERFORMANCE-BASED COMPENSATION
Component2023 Highlights | | Performance Measure | Proxy Summary | | Target | Upside TargetCorporate Governance | | % Achieved | Executive Compensation | % Earned | | | Software Subscription ACV(1) Auditor Matters | | | PTC Stock Ownership | | | | Transactions with Related Persons | | | Annual Meeting Information | | | | | | | Annual Cash Bonus
| | New IoT and Connected
Applications Bookings(1)
| | | | 110.6%
| | 100%(3)
| | | Non-GAAP
Operating Expense(2)
| | | | | | | | | | | | | | | | | Component | | Performance Measure | | | Target | | | | % Earned | Annual
Upside Equity
| | New IoT and Connected
Applications Bookings(1)
| | | | | 49.2%
| Long-Term
Performance
Equity(5)
| | FY17 Relative Total
Shareholder Return (TSR)
| | | | | 152.5%
|
(1) | Our ACV and Bookings operating measures are described onAppendix A.
| (2) | Non-GAAP Operating Expense is described onAppendix A.
| (3) | Payouts under the annual cash bonus plan were capped at 100%, even if performance exceeded the targets. Weighting among the performance measures and credit for exceeding the targets resulted in aggregate achievement at 110.6%.
| (4) | The base of the range was set at our fiscal plan target of $90 million, with no amounts earned until that threshold was surpassed.
| (5) | One-third of total grant eligible to vest for each of 2017, 2018 and 2019 performance periods. Performance measures for 2018 are FY17- FY18 relative TSR and for 2019 are relative TSR FY17-FY19.
|
Our compensation programs are designed to align our executives’ interests with our stockholders’ interests.In addition to weighting our executives’ compensation to performance-based pay, a substantial portion of their compensation is in the form of equity (RSUs) that vests over three years. Moreover, our executives are subject to substantial stock ownership requirements and to clawback of incentive compensation in certain circumstances. These elements serve to align our executives’ interests with those of our stockholders in the long-term value of PTC.
THREE-YEAR
VESTING OF RSUs
| | SUBSTANTIAL
STOCK OWNERSHIP
REQUIREMENTS
| | CLAWBACK
PROVISIONS
| | ALIGNED INTERESTS
BETWEEN OUR
EXECUTIVES AND
STOCKHOLDERS |
RECENT SAY-ON-PAY APPROVAL Our compensation programs are developed by independent directors advised by an independent consultant.Our Compensation Committee is comprised only of independent directors and retains an independent compensation consultant to advise it on appropriate compensation practices.Effect of Say-on-Pay Vote
This say-on-pay vote, which is required by Section 14A of the Securities Exchange Act of 1934, is advisory only and is not binding on the company, the Compensation Committee, or our Board of Directors. Although the vote is advisory, we, our Compensation Committee, and our Board of Directors value the opinions of our stockholdersshareholders and will consider the outcome of this vote when establishing future compensation for our executive officers. We hold such a vote each year.
www.ptc.com | 2526 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Compensation Discussion and Analysis As discussed
Our Compensation Philosophy | | Our executive compensation programs are designed to attract, motivate, and retain our executives. We emphasize performance-based compensation tied to performance measures we believe will create long-term shareholder value. | | |
We believe that equity incentives that vest over multiple years provide an important motivational and retentive aspect to the executives’ overall compensation and align our executives’ interest in Proposal 2, we are conducting a “say-on-pay” votethe long-term performance of PTC with that asks you to approve the compensation of our named executive officers as described in this section and in the tables and accompanying narrative contained in EXECUTIVE COMPENSATION.The Compensation Committeeshareholders. Accordingly, a substantial portion of our Board of Directors determines the compensation for our executives. We discuss below our executive compensation program and the compensation decisions made for 2017 for our Chief Executive Officer, our Chief Financial Officer, and the three other executive officers and our former executive officer named in the Summary Compensation Table (collectively, our “named executive officers”).
Executive Summary of our Compensation Practices and 2017 Compensation
WE PAY FOR PERFORMANCE
3-YEAR: CEO TOTAL REALIZABLE
COMP. VS TSR CAGR
| | 3-YEAR: OTHER NEO TOTAL REALIZABLE
COMP. VS TSR CAGR
|
WE ARE RESPONSIVE TO STOCKHOLDERS
Over recent years we have made significant changes to our executives’ compensation in responseconsists of performance-based and service-based RSUs that vest over multiple years.
Long-Term Pay and Performance Alignment | | Our performance over the past several years reflects the efficacy and success of aligning executive compensation with our strategic plan. This pay-for-performance approach has resulted in pay and performance alignment and will continue to be the centerpiece of our executive compensation programs. | | |
Our Compensation Design and Practices Our executives’ compensation consists of the elements shown below. We believe these components provide an appropriate mix of fixed compensation and at-risk compensation that promotes short-term and long-term performance and rewards our executives appropriately for their performance. With this mix, we provide a competitive base salary and service-based equity that vests over multiple years while providing our executives the opportunity to earn additional compensation through short-term and long-term performance-based incentives designed to drive company performance and create long-term shareholder value. Because a significant portion of our executives’ target compensation is performance-based, actual compensation earned can differ significantly from target compensation. Our executive compensation design also reflects the Compensation and People Committee’s consideration of prior year say-on-pay votes and comments from stockholders and proxy advisory firms. These changes include:■ | Adopting separate performance measures for our annual cash bonus and our long-term performance-based equity;
| ■ | Introducing multi-year performance periods for our long-term performance-based equity;
| ■ | Adopting a clawback policy; and
| ■ | Eliminating all single-trigger vesting in connection with a change in control.
|
shareholders received as part of our shareholder engagement process or otherwise. We received strong stockholderbelieve our 2023 say-on-pay support for our executives’ compensation for 2016. We considered that vote when making executive compensation decisions for 2017. Based onof over 92% reflects shareholder approval of the strong support we received for 2016, we believe stockholders support how we have structured our executives’ compensation overall and we did not make any substantive changes to thecurrent structure of our executives’ compensation for 2017. compensation. 26 | PTC Inc. 2018 Proxy Statement | | | 2024 PROXY STATEMENT | | | | | | 27 | |
| COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
OUR COMPENSATION PRACTICES PROTECT STOCKHOLDERS
FY2023 Compensation Design (1)
Average for our named executive officers other than Mr. Barua due to the fact he was not an executive officer until July 2023. See “FY2023 Compensation Decisions” for Mr. Barua’s 2023 compensation. | Our long-term performance-based equity awards28 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
How Our Operating Performance RSUs Work Our operating performance RSUs are eligible to vest in three substantially equal installments over three years. Operating performance RSUs will vest only after the performance threshold is achieved and only to the extent the performance target is achieved. Up to 200% of the operating performance RSUs can be earned. Operating performance RSUs not earned for the applicable year are forfeited. The performance measures for the operating performance RSUs are established on the grant date for all performance periods. We use annual performance periods and vesting as we believe it more effectively focuses our executives on delivering consistent performance over the three-year period. The rationale behind the annual measurement period and vesting opportunity is supported by the fact that RSUs not earned for a performance period are forfeited. How Our Relative TSR RSUs Work Our relative TSR RSUs issued in FY2023 and FY2022 each have one three-year performance period. The relative TSR RSUs will vest only after the performance threshold is achieved and only to the extent the relative TSR performance target is achieved. Up to 200% of the relative TSR RSUs can be earned. However, if the stock price as of the last day of three-year performance period is lower than the stock price as of the beginning of the period, then the maximum number of relative TSR RSUs that can be earned is capped at 100%, even if performance exceeds Target. The performance measure for the relative TSR RSUs is established on the grant date. How Our Service RSUs Work Our service RSUs vest in three substantially equal annual installments, provided that the executive remains employed on the applicable vest date. FY2023 Performance-Based Compensation | | The performance measures that cover three yearswe develop and use for our service-based equity awards vest over a period of three yearsoperating performance-based compensation are designed to ensure thatdrive performance against our executives maintain ashort-term and long-term view of stockholder value.business plans and objectives and create value for our shareholders. Our relative TSR RSUs align our executives’ experience with our shareholders’ experience. | | |
| | | | 2024 PROXY STATEMENT | | | | | | 29 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | The amounts | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
ALIGNMENT OF CORPORATE STRATEGY AND FY2023 OPERATING PERFORMANCE-BASED COMPENSATION | COMPENSATION PLAN AND OPERATING PERFORMANCE MEASURE | | | | STRATEGIC GOAL | | | Increase Free Cash Flow | | | | Increase Portfolio of Subscription Contracts | | | Annual Corporate Incentive Plan | | | | Free Cash Flow Growth | | | | | | | Long-Term Operating Performance-Based RSUs | | | | | | | | ARR Growth | |
FY2023 ANNUAL CORPORATE INCENTIVE PLAN DESIGN AND ACHIEVEMENT | Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (Cap 135%) | | | | Achievement | | | | Earned | | | Free Cash Flow(1) | | | | $525 Million | | | | $550 Million | | | | $585 Million | | | | $587 Million | | | | 135% | |
(1)
Free Cash Flow is cash flow from operations net of capital expenditures for the applicable period. The Free Cash Flow growth targets were developed in the context of our financial operating plan and targets for FY2023, with the Target representing an increase of 32% in Free Cash Flow over FY2022. FY2023 Free Cash Flow consisted of $611 million of cash from operations net of $24 million of capital expenditures. LONG-TERM PERFORMANCE-BASED EQUITY Long-term performance-based RSUs are a significant component of our executives’ compensation and focus our executives on long-term value creation. RSUs not earned for a performance period are forfeited. As our operating performance-based RSUs have annual performance periods and vesting opportunities, one-third of such RSUs granted in FY2021, FY2022 and FY2023 were eligible to be earned and vest for FY2023. The ARR and adjusted free cash flow measures below are described and reconciled in Appendix A. FY2023 PERFORMANCE-BASED RSU DESIGN AND ACHIEVEMENT FOR FY2023 | Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | FY2023 ARR Growth over FY2022 | | | | | | 6% | | | | | | | 10% | | | | | | | 16% | | | | | | | 13% | | | | | | | 144% | | |
| Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | FY2025 Relative TSR vs. over FY2022(1)(2) | | | | 25th Percentile | | | | 50th Percentile | | | | 90th Percentile | | | | | | —(3) | | | | | | | —(3) | | |
(1)
The FY2023 relative TSR RSUs use the S&P 500 Software & Services Index, excluding seven services companies included in the Index, plus compensation peer group companies not included in the Index, as the comparison group. (2)
If the weighted average PTC stock price as of September 30, 2022 is higher than the weighted average PTC stock price on September 30, 2025, the maximum number of RSUs that can be earned is 100% of the RSUs even if relative TSR is achieved above the 50th percentile. The stock price value is determined using a 30-day weighted average for the applicable period. (3)
As the relative TSR RSUs have a three-year performance period ending September 30, 2025, no RSUs could be earned for FY2023. | 30 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
PRIOR PERIOD PERFORMANCE-BASED EQUITY ACHIEVEMENT FOR FY2023 FY2022 PERFORMANCE-BASED RSU ACHIEVEMENT FOR FY2023 | Performance Measure | | | | Threshold (25% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | AFCF Growth over FY2022 | | | | | | 10% | | | | | | | 25% | | | | | | | 40% | | | | | | | 34% | | | | | | | 157% | | |
| Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | FY2024 Relative TSR vs. over FY2021(1)(2) | | | | 25th Percentile | | | | 50th Percentile | | | | 90th Percentile | | | | | | —(3) | | | | | | | —(3) | | |
(1)
The FY2022 relative TSR performance-based RSUs use the S&P 500 Software & Services Index, excluding five services companies then included in the Index, plus compensation peer group companies not included in the Index, as the comparison group. (2)
If the weighted average PTC stock price as of September 30, 2021 is higher than the weighted average PTC stock price on September 30, 2024, the maximum number of RSUs that can be earned is 100% of the RSUs even if relative TSR is achieved above the 50th percentile. The stock price value is determined using a 30-day weighted average for the applicable period. (3)
As the relative TSR RSUs have a three-year performance period ending September 30, 2024, no RSUs could be earned for FY2023. FY2021 PERFORMANCE-BASED RSU ACHIEVEMENT FOR FY2023 | Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | AFCF Growth over FY2022 | | | | | | 10% | | | | | | | 25% | | | | | | | 40% | | | | | | | 34% | | | | | | | 157% | | |
| Performance Measure | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (200% Earned) | | | | Achievement | | | | Earned | | | Relative TSR vs. over FY2020(1)(2) | | | | 25th Percentile | | | | 50th Percentile | | | | 90th Percentile | | | | 75th Percentile | | | | | | 150% | | |
(1)
The comparison group of companies for the FY2021 relative TSR RSUs was the S&P 400 Software and Services Index plus any FY2021 compensation peer group companies not included in that Index. (2)
If the PTC weighted average stock price as of September 30, 2020 was higher than the PTC weighted average stock price as of September 30, 2023, the maximum number of RSUs that could be earned for FY2023 was 100% of the Target RSUs for FY2023 even if relative TSR was achieved above the 50th percentile. The weighted average stock price is determined using a 30-day weighted average for the applicable period ending on September 30. CEO PERFORMANCE-BASED RETENTION RSU ACHIEVEMENT FOR FY2023 | Performance Measure | | | | Weight | | | | Threshold (50% Earned) | | | | Target (100% Earned) | | | | Upside (110% Earned) | | | | Achievement | | | | Earned | | | ARR Growth over FY2022 | | | | | | | | 50% | | | | | | 8% | | | | | | | 10% | | | | | | | 14% | | | | | | | 13% | | | | | | | 106% | | | | AFCF Growth over FY2022 | | | | | | | | 50% | | | | | | 10% | | | | | | | 25% | | | | | | | 40% | | | | | | | 34% | | | |
| | | | 2024 PROXY STATEMENT | | | | �� | | 31 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
FY2023 Compensation Decisions The Compensation and People Committee evaluates our executive officers’ compensation each year against the compensation peer group as to each element of each executive’s compensation and as to each executive’s total compensation opportunity to determine whether the executive’s compensation remains competitive. The Committee also reviews internal pay equity among the executives, the length of time each executive has been in the role, and each executive’s performance to determine whether to make any adjustments to an executive’s compensation. | JAMES HEPPELMANN Chairman of the Board and Chief Executive Officer | | | | | | Mr. Heppelmann has been our executives can earn under our annual corporate performance-based incentive plans are capped. Accordingly, amounts earned underChief Executive Officer since 2010, during which time he has transformed the annual plan are predictablecompany into a dynamic force supporting the digital transformations of industrial enterprises. After evaluating Mr. Heppelmann’s compensation and performance above incentive plan targets benefits stockholders. | for 2022, and considering that his total target compensation was at the compensation peer group median, the Committee made no changes to this target compensation for 2023. | We have a compensation clawback policy under which incentive compensation paid to our executive officers that is subsequently determined not to have been earned due to restatement of prior period financial results may be recovered from those officers. | | We design our compensation policies and practices to mitigate risk to the company that could be posed by those policies and practices. | | We do not provide perquisites or supplemental retirement benefits to our executives. | | We require our executives to maintain specified levels of ownership of our stock to ensure that their interests are even more effectively linked to those of our stockholders. (SeeEquity Ownership on page 39.) | | We do not allow our executives to hedge their exposure to ownership of, or interest in, PTC stock; nor do we allow them to engage in speculative transactions with respect to PTC stock or to pledge their PTC stock. | | Our executive agreements: |
■ | do
NEIL BARUA CEO-Elect | | | | | | Mr. Barua joined PTC in January 2023 upon PTC’s acquisition of ServiceMax, where he was the CEO. Upon joining PTC, he was appointed as President of PTC’s Service Lifecycle Management Business and served in that role until his appointment as CEO-Elect in July 2023. His initial annual salary and target annual performance-based bonus were each set at $500,000. He was also granted service-based RSUs designed to incentivize and retain him given the importance of retaining him to drive our SLM business. Those RSUs were valued at $5,000,000 on the date of grant — $2,000,000 of which will vest in January 2025, and the other $3,000,000 of which will vest over three years in in three substantially equal tranches. Upon his promotion to CEO-Elect in July 2023, the Committee established his target compensation in an amount commensurate with the CEO role based on July 2023 market data for peer group CEO compensation. Accordingly, his base salary was increased to $800,000 and his target annual performance-based bonus was increased to $1,200,000, both of which were pro-rated for 2023, and his target annual equity grant for 2024 was set at $10 million. He also received a promotion grant of service-based RSUs valued at $5,000,000 on the date of grant that vests in three substantially equal tranches over three years, which grant was designed to bring his 2023 equity to the level commensurate with the CEO role. The Committee elected to grant service-based RSUs as the grant was made in late July 2023, 10 months into our fiscal 2023, and performance measures for 2024 had not contain tax “gross-ups” on “golden parachute” paymentsyet been established. We note that Mr. Barua’s equity granted in November 2023 for our fiscal 2024 was 50% performance-based and 50% service-based. We also agreed to pay up to $25,000 for his legal fees incurred in connection with a changehis employment arrangements with us. Finally, as Mr. Barua was based in control,California, we asked that he relocate to the Boston area where our worldwide headquarters are located, and we have committedmade a one-time payment to him valued at$200,000 after tax to facilitate his relocation. The Committee believed it was appropriate to compensate Mr. Barua at the CEO role level during the CEO transition period given that we will not include suchMr. Barua shared day-to-day operational responsibility with Mr. Heppelmann, the relatively short period of overlap, and the importance of ensuring a gross-upsuccessful leadership transition from Mr. Heppelmann to Mr. Barua, which transition process has included Mr. Heppelmann and Mr. Barua traveling together to our offices worldwide to meet with our employees, engaging together in any future executive agreements;certain customer engagements, and introducing Mr. Barua to analysts and investors. | |
| 32 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | ■2023 Highlights | contain “double triggers” that require termination in
| | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
| KRISTIAN TALVITIE Executive Vice President, Chief Financial Officer | | | | | | Mr. Talvitie has been our Chief Financial Officer since May 2019. After evaluating Mr. Talvitie’s compensation and performance for 2022 and his pay relative to other executives, the Committee increased his base salary to $515,000, his target annual performance-based bonus to $515,000, and his target annual long-term RSUs to $4,000,000 for 2023. | |
| MICHAEL DITULLIO President and Chief Operating Officer | | | | | | Mr. DiTullio entered FY2023 as the President, Digital Thread Business. After evaluating Mr. DiTullio’s compensation and performance for 2022 and his pay relative to other executives with a similar span of control, the Committee increased his base salary to $515,000, his target annual performance-based bonus to $515,000, and his target annual long-term RSUs to $4,000,000 for 2023. In February 2023, he was promoted to President and Chief Operating Officer. In connection with such promotion, the Committee increased his base salary to $550,000 and target bonus to $550,000, both of which were pro-rated for the year. He also received a changepromotion RSU grant valued at $500,000 on the date of grant that vests in control before vesting of any equity is accelerated;three substantially equal tranches over three years. | |
| AARON VON STAATS Executive Vice President, General Counsel and Secretary | | ■ | provide only limited severance benefits,
| | | Mr. von Staats has served as our General Counsel since 2003. When establishing his compensation for 2023, the Committee evaluated his compensation against the compensation peer group and no equity acceleration,his performance. Given his performance and his compensation relative to his peers in connection with terminations without cause absent a change in control.the compensation peer group, the Committee increased his target annual long-term RSUs to $2,500,000 for 2023 to maintain his total target compensation at approximately the 50th percentile. | |
2017 Compensation
Our compensation programs emphasize performance-based compensation tied to strategic initiatives and increases in stockholder value. As discussed in our Chairman’s letter and the proxy statement summary above, and in our Annual Report to Stockholders that accompanied this proxy statement, 2017 was a successful year for PTC. We executed on our strategic initiatives to increase our growth rate, improve our margins and transition to a subscription licensing model. Our results were supported by our performance-based compensation initiatives and our executives were appropriately compensated for delivering those results.
www.ptc.com | 27 | | | 2024 PROXY STATEMENT | | | | | | 33 | |
COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | | | | | | | | | | | | | | | | |
COMPONENTS OF TARGET COMPENSATION FOR 2017
Our executives’ target compensation for 2017 consisted of the components described below.
2023 Highlights | BASE SALARY
Provide a base level of competitive cash compensation. | | SERVICE-BASED RSUs
Align the executive’s long-term interests with the long-term interests of stockholders and
retain the executive, with performance-based upside to focus the executives on specific
aspirational performance goals for the current fiscal year.
Proxy Summary | ANNUAL INCENTIVE BONUS
Focus the executive on achieving specific performance goals related to PTC’s
business plan for the current fiscal year. | LONG-TERM TSR PERFORMANCE-BASED RSUs
Align the executive’s long-term interests with the long-term interests of | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC and
stockholders by focusing the executive on driving increases in stock price and
delivering stockholder value over a three year period.
| CEO Compensation
Components Stock Ownership | | | Transactions with Related Persons | | Other NEO Compensation
Components | Annual Meeting Information | | | Appendix A | |
2017 ANNUAL BONUS PLAN
Performance Measure | | Weighting | | Target | Upside Target | | % Achieved | | % Earned | Software Subscription ACV(1) | | 1/3 | | | | | | | New IoT and Connected
Applications Bookings(1)
| | 1/3 | | | | 110.6%
| | 100%(3)
| Non-GAAP
Operating Expense(2)
| | 1/3 | | | | | | |
(1) | Our Annualized Contract Value (ACV) and Bookings operating measures are described onAppendix A.
| (2) | Non-GAAP Operating Expense is described onAppendix A. | (3) | Payouts under the annual cash bonus plan were capped at 100%, even if performance exceeded the targets. Weighting among the performance measures and credit for exceeding the targets resulted in aggregate achievement at 110.6% |
2017 ANNUAL UPSIDE PERFORMANCE-BASED EQUITY
Performance Measure | | Threshold | | Target | | % Earned | New IoT and Connected Applications Bookings | | $90 million | | $127.5 million | | 49.2% |
28 | PTC Inc. 2018 Proxy Statement |
How We Set Executive Compensation Table of Contents
| COMPENSATION DISCUSSION AND ANALYSIS | |
2017 LONG-TERM PERFORMANCE-BASED EQUITY
Performance Measure | | | | Three Performance Periods | | | | | (One-Third of Grant Eligible to be Earned per Period) | Relative Total Shareholder Return (TSR) | | FY 2017 | | FY 2017 – 2018 | | FY 2017 – 2019 |
Performance Period | | Below
Threshold | | Threshold | Target | Interim
Upside Target | Upside Target | | % Earned |
| | Below
25thPercentile | | | | 152.53% | FY 2017 | | | | | % Target RSUs to be Earned | | 0% | | |
Compensation Philosophy & Objectives
We believe that our compensation plans should align our executives’ interests with those of our stockholders and reward our executives for their contributions to the long-term success of PTC. We also believe that a substantial portion of our executives’ compensation should be performance-based to create appropriate incentives for achieving performance objectives established by the Committee.
Accordingly, we design our compensation plans and associated performance objectives to:
| | |
Compensation Setting Process
The Compensation and People Committee is comprised entirely of independent directors and establishes and reviews the compensation for our executive officers. The Committee may engage compensation consultants or other advisors to provide information and advice to the Committee. The costs of such engagements are paid by PTC. The Committee also works with management to ensure compensation is aligned with PTC’s business plan and long-term strategy. INDEPENDENT COMPENSATION CONSULTANT
officers annually. Independent Compensation Consultant The Committee engaged Pearl Meyer & Partners, LLC as its independent compensation consultant for 2017.FY2023. The Committee has assessed the independence of Pearl Meyer and determined that Pearl Meyer is independent of PTC and has no relationships that could create a conflict of interest with PTC. As part of its assessment, the Committee considered the fact that Pearl Meyer provides no other services to PTC and consults with PTC’s management only as necessary to provide the services described below.
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS
| | |
Pearl Meyer provides a range of services to the Committee to support the Committee in fulfilling its responsibilities, including providing providing: •
legislative and regulatory updates, •
peer group compensation data, so that the Committee can set compensation for executives, •
advice on the structure and competitiveness of our compensation programs, and •
advice on the consistency of our programs with our executive compensation philosophy. Pearl Meyer attends Committee meetings, reviews compensation data with the Committee, and participates in discussions regarding executive compensation issues. The Committee meets with Pearl Meyer with and without PTC management present. Pearl Meyer does not determine or recommendwas paid $173,149 for services to the amount or form ofCompensation Committee in FY2023. No other compensation established.CONSULTATION WITH MANAGEMENT
was paid to Pearl Meyer for FY2023. Consultation with Management Members of management, including our Chief Executive Officer and President, our Chief FinancialPeople Officer, our Executive Vice President, Strategy (who is responsible for Human Resources), our Corporate Vice President, Human Resources, and our General Counsel, participate in Compensation Committee meetings as requested by the Committee to present and discuss the materials provided, including recommendations to be considered relative toon executive pay, and competitive market practices. Thesepractices and performance measures. Although the members of management primarily assist the Committee in understanding PTC’s business plan and long-term strategic direction, developing the performance targets for our performance-based compensation, and understanding the technical or regulatory considerations as well as the motivational factors of the decisions that are intended to drive executive and company performance. Although the Committee solicits input and perspective from management with respect to executive compensation,provide their views, decisions on executive compensation are made solely by the Committee and, in the case of the Chief Executive Officer’s compensation, without the presence of the Chief Executive Officer. MIX OF COMPENSATION COMPONENTS
Our executives’ compensation consists
Determination of a mix of base salary, annual incentive cash bonus, and performance-based and service-based equity (as shown in the graphic in Executive Summary of 2017 Compensation above). We believe these components provide an appropriate mix of fixed compensation and at-risk compensation that promotes short-term and long-term performance and produces appropriate rewards. With this mix, we provide a competitive base salary and service-based equity while providing our executives the opportunity to earn additional compensation through short-term and long-term performance-based incentives designed to produce a targeted level of performance for PTC.The mix of compensation for our executives is weighted toward at-risk pay (annual performance-based incentives and performance-based equity incentives), resulting in a pay-for-performance orientation for all our executives.
We consider all pay elements and their impact on each executive’s target direct compensation when making determinations regarding the amount of each element. Our decisions also reflect our belief that long-term equity incentives provide an important motivational and retentive aspect to the executive’s overall compensation package.
Our compensation mix for 2017 was designed to provide approximately 51% of target total compensation through performance-based pay for our CEO and approximately 49% for our other executives. Our annual service-based equity awards to these executives also have an at-risk element as they carry risks of forfeiture and market price decline. We also provide an annual upside performance-based equity opportunity targeting above-plan performance in a strategic area of our business.
How We Determine the Total Amount of Compensation
We make decisions regarding the amount and mix of compensation awarded to each of thesefor our executives based on:■ | objective data provided by our external compensation consultant, Pearl Meyer & Partners (we refer to this as
•
Objective data provided by Pearl Meyer & Partners (the “competitive analysis”); •
Analysis of the scope of each executive’s responsibilities; and •
Internal pay equity among the executives. We use the “competitive analysis”); | ■ | analysis of the scope of each executive’s responsibilities; and
| ■ | internal pay equity among the executives.
|
30 | PTC Inc. 2018 Proxy Statement |
Table of Contents
| COMPENSATION DISCUSSION AND ANALYSIS | |
The competitive analysis provides detailed comparative data for our executive positions and assesses each component of compensation, including base salary, annual bonus, long-term incentives and total direct compensation, as well as the mix of compensation between base salary, annual bonus and long-term incentives. Weto assess our executives’ compensation against the compensation paid to executives in similar positions in the peer group to ensure that the compensation we pay is competitive and fair to our executives and to our stockholders.shareholders. We generally target compensation opportunities for our executives with reference toat the median of the market as an initial benchmarkbenchmark. While we use the competitive analysis as a starting point, we also consider the qualitative dimensions of an executive’s role, internal pay equity among our executives, and tenure in the position when setting and adjusting our executives’ targetcompensation as we do not believe an external benchmark should be the only determinant of compensation. This approach enables us to attract and retain the level of qualified executive talent necessary to deliver sustained performance.
| 34 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
COMPETITIVE ANALYSIS (BENCHMARKING) The peer group we used to benchmarkfor the elementsFY2023 competitive analysis consists of executive pay was made up of15 publicly-traded U.S. companies within the software industry,companies, most of which are in the enterprise software space, that have revenues and market capitalizations in a range we believe is appropriate for PTC. In evaluating and selecting companies for inclusion in our peer group, weappropriate. We target companies with revenue within an approximately 0.5x to 2x2.5x multiple of PTC’s revenue and an approximately 0.3x0.5x to 3x4.0x multiple of PTC’s market capitalization. However, we may include companies with revenue and/or market capitalizations outside of these parameters if there is strong product and/or service similarity or if they were in our peer group in the prior year and they continue to meet at least one of the parameters.similarity. We believe this group represents the competition for executive talent in our industry. We review the peer group on an annual basisannually to ensure that the companies in the peer group remain relevant and provide meaningful compensation comparisons. FY2023 COMPENSATION PEER GROUP | | | | | 15 Publicly-traded U.S. software companies | | | | •
Akamai Technologies, Inc. •
ANSYS, Inc. •
Autodesk, Inc. •
Black Knight, Inc. •
Blackbaud, Inc. | | | | •
Cadence Design Systems, Inc. •
Ceridian HCM Holding Inc. •
Crowdstrike Holdings, Inc. •
F5, Inc. •
Fair Isaac Corporation | | | | •
Guidewire Software, Inc. •
Paycom Software, Inc. •
ServiceNow, Inc. •
Splunk Inc. •
WEX, Inc. | | |
The 2017 peer group consisted of the companies listed below. The 20172023 peer group differed from the 20162022 peer group as described below. Other Important Elements of Our Compensation Program Compensation Clawback Policy We maintain an Executive Compensation Recoupment Policy that complies with Rule 10D-1 under the Securities Exchange Act of 1934, as amended, and Nasdaq Rule 5608 that enables us to recover performance-based compensation paid to an executive officer if such compensation is later determined to have been unearned due to a restatement of our financial results for the removalperformance period. The policy also enables us to recover performance-based compensation from other executives upon such a restatement and from our executive officers and other executives upon correction of Informatica Corporationprior period operating or other performance measures. The Executive Compensation Recoupment Policy is available in the Governance section of the Investor Relations page of our website at www.ptc.com. Stock Ownership Requirements Our executives are required to attain and Solera Holdings, Inc. followingmaintain stock ownership levels of our common stock (options and unvested equity are not counted). For our CEO, that amount is 6x his annual salary and for our other executive officers, that amount is 3x their respective acquisitions, and the additions of Pegasystems Inc. and Rackspace Hosting, Inc. to balance those removals and include additional companies of relevant size in comparable industries.2017 PEER GROUP
| | | | | | | | | | Criteria Matched | Company | | | Revenue $M(1) | | | Market Capitalization $M(1) | | Product / Service Similarity | | Revenue $700M – $2,700M | | Market Capitalization $1,400M – $12,450M | PTC | | | $ | 1,179 | | | $ | 4,097 | | | | | | | ACI Worldwide, Inc. | | | $ | 1,039 | | | $ | 2,407 | | ■ | | ■ | | ■ | Akamai Technologies, Inc. | | | $ | 2,239 | | | $ | 9,584 | | ■ | | ■ | | ■ | Ansys, Inc. | | | $ | 951 | | | $ | 7,844 | | ■ | | ■ | | ■ | Autodesk, Inc. | | | $ | 2,370 | | | $ | 13,087 | | ■ | | ■ | | | Cadence Design Systems, Inc. | | | $ | 1,739 | | | $ | 7,437 | | ■ | | ■ | | ■ | Citrix Systems, Inc. | | | $ | 3,340 | | | $ | 13,171 | | ■ | | | | ■ | Fair Isaac Corporation | | | $ | 849 | | | $ | 3,474 | | ■ | | ■ | | ■ | Mentor Graphics Corporation | | | $ | 1,136 | | | $ | 2,293 | | ■ | | ■ | | ■ | Nuance Communications, Inc. | | | $ | 1,947 | | | $ | 4,669 | | ■ | | ■ | | ■ | Open Text Corporation | | | $ | 1,823 | | | $ | 7,117 | | ■ | | ■ | | ■ | Pegasystems Inc. | | | $ | 708 | | | $ | 2,012 | | ■ | | ■ | | ■ | Rackspace Hosting, Inc. | | | $ | 2,039 | | | $ | 3,143 | | ■ | | ■ | | ■ | Red Hat, Inc. | | | $ | 2,052 | | | $ | 14,054 | | | | ■ | | | SS&C Technologies Holdings Inc. | | | $ | 1,119 | | | $ | 6,104 | | ■ | | ■ | | ■ | Synopsys, Inc. | | | $ | 2,317 | | | $ | 7,845 | | ■ | | ■ | | ■ | Verint Systems Inc. | | | $ | 1,106 | | | $ | 2,052 | | ■ | | ■ | | ■ |
annual salaries. All our executives meet their respective stock ownership requirements. (1) | Revenue is trailing four quarters as of February 2016 and market capitalization is as of February 2016, contemporaneous with the period when we began developing compensation programs and the compensation peer group for 2017.
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Survey Data
We also use survey data for additional perspective. For 2017, we used the Radford Global Technology survey.
No Hedging or Pledging of PTC participates in this surveyStock In order to ensure members of our Board of Directors and believes that it represents a good cross-section of the software industry and that the data is appropriate to PTC’s size and industry. The survey represented 44 software companies with median revenue of $1.7 billion.QUALITATIVE ANALYSIS OF EXECUTIVE RESPONSIBILITIES AND INTERNAL PAY EQUITY
While we use the objective market data as a starting point for determining the appropriate compensation for our executives, we recognize that circumstances could warrant a deviation from that data. Accordingly, for certain positions for which there are no comparable external benchmarks, we make judgments based on qualitative dimensions of the role to determine compensation levels. We consider both whether the amount seems appropriate given the responsibilities of the position and internal pay equity among the executives. Accordingly, when determining the compensation for Mr. Cohen and Mr. DiBona, for whom there are no comparable positions in our peer group, we looked to the scope of each executive’s responsibilities relative to their closest peers among our executives and established their compensation relative to the corresponding executives’ compensation. Where benchmark data is available, we also consider internal pay equity among the executives as we do not believe an external benchmark should be the only determinant of compensation.
Analysis of Compensation Decisions for 2017
The target total direct compensation we established for each of the named executive officers is set forth in the table below. The considerations associated with establishing the target compensation for the executivesemployees are discussed below the table.
2017 TARGET COMPENSATION
| | | | | | | | | | | | Target Total Annual Compensation | | Target Long-Term Equity | | | | Name | | Salary | | Target Annual Bonus | | Performance- Based Equity | | Service-Based Equity | | Target Total Direct Compensation | James Heppelmann | | $ | 800,000 | | $ | 1,000,000 | | $ | 3,750,000 | | $ | 3,750,000 | | $ | 9,300,000 | President and CEO | | | | | | | | | | | | | | | | Andrew Miller | | $ | 415,000 | | $ | 350,000 | | $ | 1,142,500 | | $ | 1,142,500 | | $ | 3,050,000 | Executive Vice President, Chief Financial Officer | | | | | | | | | | | | | | | | Craig Hayman | | $ | 625,000 | | $ | 475,000 | | $ | 1,500,000 | | $ | 1,500,000 | | $ | 4,100,000 | Executive Vice President, Chief Operating Officer | | | | | | | | | | | | | | | | Barry Cohen | | $ | 415,000 | | $ | 350,000 | | $ | 1,142,500 | | $ | 1,142,500 | | $ | 3,050,000 | Executive Vice President, Strategy | | | | | | | | | | | | | | | | Anthony DiBona | | $ | 363,000 | | $ | 300,000 | | $ | 818,500 | | $ | 818,500 | | $ | 2,300,000 | Executive Vice President, Renewal Sales | | | | | | | | | | | | | | | | Robert Gremley(1) | | $ | 400,000 | | $ | 350,000 | | $ | 1,000,000 | | $ | 1,000,000 | | $ | 2,750,000 | Senior IoT Advisor | | | | | | | | | | | | | | | |
(1)
| Compensation for Mr. Gremley was established when he served as our Group President, IoT Group. Mr. Gremley became our Senior IoT Advisor in February 2017. |
32 | PTC Inc. 2018 Proxy Statement |
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| COMPENSATION DISCUSSION AND ANALYSIS | |
OVERALL CONSIDERATIONS
We set target compensation opportunities by reference to the median of the peer group benchmark data as an initial benchmark in setting and adjusting our compensation program. This competitive positioning of compensation enables us to attract and retain the experienced and successful executives necessary to drive performance of our business. We also consider internal equity of compensation among our executives. While the Committee attempts to base compensation decisions on the most recent market data available, it also recognizes the importance of flexibility, and may go above or below the market median for any individual or for any specific element of compensation. In addition, the position of each particular executive with respect to the market median may vary based on experience, changes in the market, and the executive’s compensation profile.
For 2017, we continued to use separate performance measures for the annual cash bonus plan and the performance-based equity. We used two operating measures (new software subscription annual contract value and new IoT and Connected Applications bookings) and non-GAAP operating expense as the performance measures for the annual cash bonus plan. We used relative TSR as the performance measure for the performance-based equity. As another component of our performance-based equity program, we made an aspirational performance-based equity award to incentivize the executives to increase new IoT and Connected Applications bookings above plan and above the target under the annual cash bonus plan given the importance of this business to our longer-term growth. This aspirational performance target was a significant stretch goal that, if achieved, would represent 101% growth in new IoT and Connected Applications bookings over 2016. We implemented this upside equity opportunity in 2016 due to the fact that we provide limited upside opportunity in our annual cash bonus plan relative to our peers. We elected to use equity for the upside annual opportunity to further align our executives’ interests with those of our stockholders and motivate executives to focus on important transformative aspects of our business, including our Internet of Things business.
As described below, we also considered whether any additional individual adjustments were warranted based on an executive’s performance or the level of his target total compensation relative to his peers in the compensation peer group. We provide no other benefits or perquisites to our executives.
CONSIDERATIONS FOR MR. HEPPELMANN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
We evaluated Mr. Heppelmann’s 2016 target compensation against our compensation peer group as to individual elements and as to total target compensation and his performance to determine whether any changes beyond those described above should be made to his 2017 target compensation. Given his performance and his compensation relative to his peers, we believed an increase in his compensation was warranted. We did this through a small increase in his annual base salary and, given our preference to align our executive’s compensationaligned with the interests of our stockholders,shareholders, our Trading in Company Securities Policy prohibits the hedging of PTC stock or equity by directors, executives, and employees and transactions in derivative securities whose value is tied to that of PTC stock (including puts, calls, and listed options). The Policy also prohibits the pledging of PTC stock or equity by directors, executives, and employees and short sales of PTC stock. We maintain a 10b5-1 Plan Policy applicable to our Board of Directors and our employees, including our executive officers. The 10b5-1 Plan Policy is available in the Governance section of the Investor Relations page of our website at www.ptc.com. We do not time grants either to take advantage of a depressed stock price or an anticipated increase in his target long-term equity compensation.CONSIDERATIONS FOR MR. MILLER, EXECUTIVE VICE PRESIDENT, CHIEF FINANCIAL OFFICER
stock price and have limited the amount of discretion that can be exercised in connection with the timing of awards. We evaluated Mr. Miller’s performancegenerally make awards only on pre-determined dates to ensure that awards cannot be timed to take advantage of material non-public information. Typically, our annual executive awards are made in November after public release of the previous year’s financial results, annual awards to our Board of Directors are made on the day of the annual shareholders’ meeting, and his 2016 target compensation againstawards to our compensation peer group asemployees are made in November and May. Awards to individual elements and as to total target compensation to determine whether any changes shouldexecutive officers may be made only by the Compensation and People Committee. Other employee awards may be made by either the Committee or by our Chief Executive Officer pursuant to his 2017 target compensation.delegated authority. The Committee generally makes awards only at Committee meetings and generally does not make awards in earningsblackout periods (the prophylactic period encompassing the last three weeks of each fiscal quarter through 24 hours after the earnings for that quarter are announced) unless special circumstances exist, such as a new hire or a contractual commitment. Our analysis showed that his target total cash compensation was atChief Executive Officer may make regular awards only on the 50thpercentile15th of the month (or the next succeeding business day if the 15th is not a business day), other than in the months of January, April, July, and October because the 15th of each of those months falls in our prophylactic earnings blackout period, and otherwise pursuant to specifically delegated authority, and, in both cases, only up to established values set by the Committee. Consideration of Stock-Based Compensation Expense and Dilution We consider the stock-based compensation peer group for his position, whichexpense and dilution (burn rate) associated with equity awards to executives as we believed was belowdevelop our overall equity compensation program. The expense associated with the appropriate level given his success in driving transformationequity awards is equal to the fair value of the equity issued and is amortized over the vesting period of the award. We monitor this expense and dilution to shareholders as we develop our plans and strive to maintain a program that balances the goals of our business. Accordingly, given our preference for performance-based compensation, we increased his target bonus opportunity to bring his target total cash compensation for 2017 toequity program with the 60thpercentile.
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COMPENSATION DISCUSSION AND ANALYSIS | | |
CONSIDERATIONS FOR MR. HAYMAN, EXECUTIVE VICE PRESIDENT, CHIEF OPERATING OFFICER
We evaluated Mr. Hayman’s performanceexpense and his 2016 target compensation against our compensation peer group as to individual elements and as to total target compensation to determine whether any changes should be made to his 2017 target compensation. Because Mr. Hayman joined PTC in 2016 as the President of our Solutions Group business and we negotiated an attractive and competitive compensation package for him at that time, his compensation remained competitive relative to our compensation peer group, even after taking into consideration his promotion to Chief Operating Officer in February 2017.
CONSIDERATIONS FOR MR. COHEN, EXECUTIVE VICE PRESIDENT, CHIEF STRATEGY OFFICER
Mr. Cohen has a unique position for which there is no appropriate match in the peer group or survey data. Mr. Cohen has responsibility for Corporate Strategy, Corporate Development, Corporate Marketing, Academic Programs, and Human Resources. Accordingly, when setting target compensation amounts for Mr. Cohen, we considered his performance and his compensation as compared to our other executives, including consideration of the scope and importance of his responsibilities compared to our other executives. Given the changes we made to our other executives’ compensation and his performance, and our preference for performance-based compensation, we increased his target annual cash bonus for 2017 by the same amount as we did for Mr. Miller to align their compensation opportunities.
CONSIDERATIONS FOR MR. DIBONA, EXECUTIVE VICE PRESIDENT, RENEWAL SALES
Mr. DiBona also has a unique position for which there is no appropriate match in the peer group or survey data. Accordingly, when setting target compensation amounts for Mr. DiBona, we considered his performance and his compensation as compared to our other executives, including consideration of the scope and importance of his responsibilities compared to our other executives. Given the changes we made to our other executives’ compensation and his performance, and our preference for performance-based compensation, we increased his target annual cash bonus for 2017 by the same amount as we did for Mr. Miller and Mr. Cohen.
CONSIDERATIONS FOR MR. GREMLEY, SENIOR IoT ADVISOR
When developing Mr. Gremley’s compensation for 2017, we considered the size and importance of our IoT Group business relative to our overall business, the length of time Mr. Gremley had been in the position and his compensation relative to compensation peers and to our other executives. Given the tenure of Mr. Gremley in that position, we designed his compensation to fall at the 50thpercentile, with most of his compensation to be in equity and performance-based. Upon Mr. Hayman’s promotion to Chief Operating Officer, Mr. Gremley became Senior IoT Advisor for the remainder of the year.
2017 Performance-Based Compensation
The performance measures we develop and use for our performance-based compensation are designed to measure our success against our short-term and long-term business plans and objectives and create value for our stockholders. For 2017, our operating performance measures were designed to support our 2017 corporate goals, and our total stockholder return measure was designed to increase accountability for creating value for our stockholders as recognized by the market.
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| COMPENSATION DISCUSSION AND ANALYSIS | |
ALIGNMENT OF 2017 CORPORATE GOALS TO 2017 PERFORMANCE-BASED COMPENSATION
GOAL | | | | COMPENSATION
| | | | |
| Increase Customer Adoption of
Subscription Licensing
| | | | Annual Cash Bonus Plan
New Subscription ACV
| Drive Growth in loT and loT Solutions | | | | | Annual Cash Bonus Plan
New IoT and Connected Applications Bookings
Annual Upside Equity
New IoT and Connected Applications Bookings above plan
| | | | | | | | Control Expenses
| | | | Annual Cash Bonus Plan
Non-GAAP Operating Expenses
| | | | | | | Increase Stockholder Value
| | | | Long-Term Performance-Based Equity
Relative TSR through 2019
|
2017 ANNUAL CASH BONUS PLAN
We selected new IoT and connected applications bookings as a performance measure under the annual cash bonus plan due to the importance to our long-term growth and margin expansion strategies of growing our IoT business. We selected software subscription annual contract value (ACV) as another of the performance measures under our annual cash bonus plan due to the importance to our long-term growth strategy of growing software subscription revenue, which we believe will provide greater value to the company over time as a recurring revenue stream. Finally, we selected non-GAAP operating expense as the third performance measure due to the importance of controlling expenses to expanding our operating margins.
2017 PERFORMANCE-BASED ANNUAL CASH BONUS PLAN DESIGN
Performance Measure | | Weighting to
Target | | % Earned
Threshold | % Earned
Target(3) | Software Subscription ACV(1)
| | 1/3
| | | New IoT and Connected
Applications Bookings(1)
| | 1/3
| | Non-GAAP Operating Expense(2)
| | 1/3
| | Total Bonus
|
| 100%
|
|
(1) | Our Annualized Contract Value (ACV) and Bookings operating measures are described onAppendix A.
| (2) | Non-GAAP Operating Expense is described onAppendix A.
| (3) | Payouts under the annual cash bonus plan were capped at 100%, even if performance exceeded the targets. Weighting among the performance measures and credit for exceeding the targets resulted in aggregate achievement at 110.6%.
|
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COMPENSATION DISCUSSION AND ANALYSIS | | |
ACHIEVEMENT UNDER 2017 PERFORMANCE-BASED ANNUAL CASH BONUS
Performance Measure | | Threshold | Target | Upside Target | | Total Bonus %
Achieved | Software Subscription ACV
| | | | | New IoT and Connected Applications Bookings
| | | 110.6%(1) | Non-GAAP Operating Expense
| | | |
(1) | Although our annual cash bonus plans usually provide an upside earning opportunity of up to 25% of each executive’s target bonus and we set upside targets for the 2017 cash bonus plan, we modified the 2017 plan to cap the earning opportunity at 100% of each executive’s target bonus. This enabled us to maintain our commitment to increasing earnings per share despite achievement beyond the target performance measures established under the plan. |
Amounts Earned under the 2017 Annual Cash Bonus Plan
The table below shows the amount earned by each named executive officer under the 2017 cash bonus plan.
ANNUAL CASH BONUS PLAN AMOUNTS EARNED FOR 2017
Executive Officer | | Target Annual Bonus | | Total % Earned(1) | | | Total Amount Earned | James Heppelmann | | $ | 1,000,000 | | 100 | % | | $ | 1,000,000 | President and Chief Executive Officer | | | | | | | | | | Andrew Miller | | $ | 350,000 | | 100 | % | | $ | 350,000 | Executive Vice President, Chief Financial Officer | | | | | | | | | | Barry Cohen | | $ | 350,000 | | 100 | % | | $ | 350,000 | Executive Vice President, Strategy | | | | | | | | | | Anthony DiBona | | $ | 300,000 | | 100 | % | | $ | 300,000 | Executive Vice President, Renewal Sales | | | | | | | | | | Craig Hayman | | $ | 475,000 | | 100 | % | | $ | 475,000 | Executive Vice President, Chief Operating Officer | | | | | | | | | | Robert Gremley | | $ | 350,000 | | 100 | % | | $ | 350,000 | Senior IoT Advisor | | | | | | | | | |
(1) | No upside was payable for performance beyond 100%, even though performance exceeded 100%. |
2017 UPSIDE ANNUAL PERFORMANCE-BASED EQUITY
The upside annual performance-based equity award was designed to incentivize our executives to substantially outperform under an element in our annual cash bonus plan. The threshold under the upside annual performance-based equity was the target under the annual cash bonus plan, so no portion of the upside equity could be earned until the target under the annual cash bonus plan was exceeded, after which the upside equity could be earned for achievement above that amount through the upside equity target. Given the importance of growing our IoT business to our long-term growth and margin expansion strategies, we selected new IoT and Connected Applications bookings above the target level under the annual cash bonus plan as the performance measure for the annual upside equity to incentivize our executives to drive adoption of our IoT solutions above plan targets. The threshold amount represented a 42% increase in such bookings over 2016 and the upside target amount represented a 101% increase in such bookings over 2016.
36 | PTC Inc. 2018 Proxy Statement |
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| COMPENSATION DISCUSSION AND ANALYSIS | |
Any upside equity earned would vest in three substantially equal annual installments over three years as long as the executive remains employed by PTC. The executives earned 49.2% of the award for performance representing an increase of 71% in new IoT and Connected applications bookings over 2016; the remaining unearned upside equity was forfeited.
2017 ANNUAL UPSIDE PERFORMANCE-BASED EQUITY
Performance Measure | | | Threshold | | Target | | % Earned | | New IoT and Connected Applications Bookings(1) | | | | 49.2%
| | | | | | | |
(1) | This operating measure is described onAppendix A. |
2017 LONG-TERM PERFORMANCE-BASED EQUITY
Performance Measure
We selected relative total shareholder return (TSR) as the performance measure for the 2017 long-term performance-based equity due to the importance of this measure to our investors and given the uncertaintydilution associated with setting appropriate long-term targets during our business model transformation. Our TSR peer group is comprised of all companies in the S&P 400 Midcap Software & Services Index and any of our selected peers that are not included in this Index. We chose this group because we believe it reflects a balanced view of our relative performance. In order to motivate superior performance, we also provided upside earning potential for significant outperformance of the peer group.
Performance Measurement Periods and Earning Potential
There are three applicable performance periods for each of which up to one-third of the Target RSUs granted, plus up to an additional 100% of such amount (“Upside RSUs”) can be earned. The first performance period is one year, the second spans two years and the third spans three years. Target and Upside RSUs not earned in the first or second years can be earned in the third year.
PERFORMANCE MEASUREMENT PERIODS
Measurement Period 1 | Measurement Period 2 | Measurement Period 3 | FY2017 | FY 2017 – FY 2018 | FY 2017 – FY 2019 |
Performance Targets
RSUs are earned based on the extent to which the relative TSR performance measure is achieved. However, no more than 100% of the Target RSUs can be earned for a period if the stock price for the performance period measurement date is lower than the base 2016 stock price (that is, if absolute TSR is negative), even if relative TSR was achieved above Target during that period. The relative TSR performance measure and earnings potential shown in the 2017 Long-Term Performance-Based Equity Design table below are applicable for each of the three (3) performance measurement periods.
2017 LONG-TERM PERFORMANCE-BASED EQUITY DESIGN
| | Below | | | | | | Interim | | | | | Threshold | | Threshold | | Target | | Upside Target | | Upside Target | Performance Measure
PTC Relative TSR(1) | | Below
25thPercentile | | % Target RSUs to be Earned(2) | | 0% | |
(1) | Companies in the measurement group are PTC compensation peer group companies plus companies in the S&P Mid Cap 400 Software & Services Group. | (2) | RSUs earned are capped at 100% of Target RSUs if the performance period measurement date PTC stock price is lower than the 2016 base stock price. |
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COMPENSATION DISCUSSION AND ANALYSIS | | |
2017 LONG-TERM PERFORMANCE-BASED EQUITY ACHIEVEMENT FOR 2017 MEASUREMENT PERIOD
Performance Measure | | % Equity
Earned | | Achievement | Relative TSR | | 152.53% | | |
2017 LONG-TERM PERFORMANCE-BASED EQUITY EARNED FOR 2017
Executive Officer | | Target Cash Value(1) | Target RSUs(2) | | Total RSUs Earned | | % Earned(3) | James Heppelmann President and Chief Executive Officer | | | $ | 1,249,997 | | | 152.53% | Andrew Miller Executive Vice President, Chief Financial Officer | | | $ | 380,833 | | | 152.53% | Barry Cohen Executive Vice President, Strategy | | | $ | 380,833 | | | 152.53% | Anthony DiBona Executive Vice President, Renewal Sales | | | $ | 272,827 | | | 152.53% | Craig Hayman Executive Vice President, Chief Operating Officer | | | $ | 499,986 | | | 152.53% | Robert Gremley Senior IoT Advisor | | | $ | 333,329 | | | 152.53% |
(1) | Total Target Cash Value for 2017 is one-third of the Total Target Cash Value for the 2017 Performance-Based Equity, determined by multiplying the Target RSUs for the period by the grant date price of a share of PTC stock. | (2) | Number of Target RSUs for 2017 was determined by dividing the Total Target Cash Value of the performance-based equity granted by the closing price of a share of PTC stock on the grant date and rounding down to the nearest whole share, and then dividing that number by three so that one-third of the Target RSUs was allocated to each of the three performance periods. | (3) | Upside was capped in the aggregate at 100% of each executive’s target RSUs, so the maximum that could be earned for the period was 200%. |
Severance and Change in Control Arrangements
AGREEMENTS AND CONDITIONS We maintain severance and change in control arrangements with our executives. The agreements require the executive to execute a non-compete agreement with PTC and to execute a general release of claims as a condition to receiving severance benefits. Each of the agreements has a one-year term and renews automatically for successive one year terms if the Compensation Committee does not terminate the agreement. The agreements are described in more detail underPotential Payments uponUpon Termination or Change in Controlon page 48.38 | PTC Inc. 2018 Proxy Statement |
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| COMPENSATION DISCUSSION AND ANALYSIS | |
ANNUAL REVIEW
The Compensation Committee reviews these agreements each year to determine if these agreements should be maintained, modified or terminated. For 2017, the Committee reviewed current market practices and the terms of the agreements with the Committee’s compensation consultant. Based on this review, the Committee decided that it was appropriate to maintain the agreements.
RATIONALE
The Committee believes that these agreements are important motivationalenable us to motivate and retention tools because,retain our executives in a time of increasedcontinuing consolidation in our industry and increased competition for executive talent, theytalent. They provide a measure of earnings | 36 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
security by offering income protection in the form of severance and continued benefits if the executive’s employment is terminated without cause, economic protection for the executive’s family if the executive becomes disabled or dies, and additional protections in connection with a change in control of PTC. The Committee believes that providing severance to PTC employees, including executives, is an appropriate bridge to subsequent employment if the person’s employment is terminated without cause. This is particularly so for executive-level positions for which the opportunities are typically more limited, and the job search lead time is longer. The agreements also benefit PTC by enabling executives to remain focused on PTC’s business in uncertain times without the distraction of potential job loss.IMPORTANCE IN CONNECTION WITH A POTENTIAL CHANGE IN CONTROL
The Committee believes these agreements are even more important in the context of a change in control as it believes they will motivate and encourage the executives to be receptive to potential strategic transactions that are in the best interest of stockholders,shareholders, even if the executive faces potential job loss. The agreements for our executives have “double triggers” before vesting of any equity is accelerated, so that no equity is accelerated upon a change in control but is accelerated only if the executive is terminated in connection with or after a change in control. The Committee believes this benefits PTC and any potential acquirer because it enables PTC to retain and motivate the executiveexecutives while a potential change in control is pending, provides an acquirer with the ability to retain desired executives using existing equity incentives, and does not provide a one-time benefit to thean executive that could undermine those efforts.Equity Ownership
Each
PERIODIC REVIEW The Committee reviews these agreements each year we examinefor the total equity ownershipexecutive officers to determine if these agreements should be maintained, modified, or terminated. For 2023, the Committee reviewed current market practices and the terms of our executive officers. Because we believethe executives’ agreements with the Committee’s compensation consultant. Based on this review, the Committee decided that it was appropriate to maintain such agreements and to enhance the interestsseverance payable upon termination of employment of certain of our executives without cause for 2024. The revised agreements were executed and became effective in November 2023. The revised executive agreement with Michael DiTullio, our President and Chief Operating Officer, now provides for continued vesting of all equity held by him upon termination of his employment without cause. The Committee implemented this structure to ensure retention of Mr. DiTullio during the CEO succession and thereafter to provide executive continuity and support Mr. Barua, our CEO-Elect who will assume the CEO role in February 2024. The revised executive agreements with Kristian Talvitie, our Chief Financial Officer, and Aaron von Staats, our General Counsel, now provide for acceleration of all equity that would have vested within one year after termination of the executive’s employment without cause, with any performance-based equity accelerating at the target level. The Committee implemented this change in recognition of the fact that annual equity vesting represents a majority of an executive’s annual income and so is appropriately included in the severance payable in the case of a termination without cause. The updated executive agreements with these three executives retained most of the other severance benefits previously provided, but eliminated the right to continued participation in our basic life insurance plan or payment in lieu thereof after termination of employment due to the cost and administrative difficulty of providing this benefit. | | | | 2024 PROXY STATEMENT | | | | | | 37 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Annual Assessment of Risks Associated with Our Compensation Programs | | We assess our compensation plans and programs for employees, including our executives, annually to ensure alignment of the various plans and programs with our business plan and to evaluate the potential risks associated with those plans and programs. For 2023, the Compensation Committee retained Pearl Meyer & Partners, the Compensation Committee’s independent compensation consultant, to assist the Committee in assessing those risks. Based on this assessment, the Compensation Committee concluded that the company’s compensation plans and programs do not create risks that are reasonably likely to have a material adverse effect on PTC. | | |
The Compensation Committee regularly considers the risks associated with our executives’ compensation and performance-based compensation when establishing such compensation. We also consider risk and reward when designing our other employees’ compensation plans and programs. The elements described below with respect to such plans and programs were considered when assessing the risks associated with our compensation programs:
A detailed planning process with Compensation Committee or executive oversight exists for all compensation programs. The proportion of an employee’s performance-based pay increases as the responsibility and potential impact of the employee’s position increases, which structure is in line with market practices. We set performance goals that we believe are morereasonable considering past performance and market conditions. We use different performance measures for our annual incentive plans and our long-term incentive plans. Our executives’ long-term equity awards are split 50/50 between service-based and performance-based long-term equity to balance the risk associated with performance-based equity with retention provided by service-based equity. We use RSUs rather than stock options for equity awards because RSUs retain value even if the stock price declines so that employees are less likely to take unreasonable risks to get, or keep, options “in-the-money”. We generally use service-based vesting over three years for our long-term equity awards to ensure our employees’ interests are aligned with stockholders’ interests if they are stockholders themselves, we maintainthose of our shareholders in the long-term performance of PTC. Payouts under our performance-based plans result in some compensation after achievement of the performance threshold at levels below full target achievement, rather than an “all-or-nothing” approach. Upside earning opportunity in our annual cash compensation plans and our performance-based equity is capped. All functions have a component of their leadership incentive plans tied to overall PTC performance to ensure cross-functional alignment with PTC’s business plan. Our executive stock ownership policy forrequires our executives. The policy requires the CEO and each of the other executives to attainhold a substantial amount of stock (options and maintainunvested equity do not count), which aligns an ownership levelappropriate portion of PTC’s common stock equaltheir personal wealth to 3x and 1x, respectively, their individual annual salary through retentionthe long-term performance of vested equity (other than options). TheExecutive Stock Ownership Policyis available in theCorporate Governancesection of the Investor Relations page of our website atwww.ptc.com.EQUITY OWNERSHIP REQUIREMENTS (AS A MULTIPLE OF BASE SALARY) PTC. Chief Executive Officers | | 3X | | | Other Executive Officers | | 1X | | Compensation Clawback Policy
We maintain an executiveOur compensation recoupmentclawback policy that is intended to enableenables us to recover incentive compensation paid to an executive officer if such compensationit is subsequentlylater determined not to have been unearnedearned due to a restatement of ourprior period financial or operating results, for the performance period as a result of thethus reducing any incentive to engage in misconduct of the executive officer. TheExecutive Compensation Recoupment Policyis available in theCorporate Governancesection of the Investor Relations page of our website atwww.ptc.com.
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COMPENSATION DISCUSSION AND ANALYSIS | | |
Timing of Equity Grants
We do not time grants either to take advantage of a depressed stock price or in anticipation of an increase in stock pricemaintain effective controls and have limited the amount of discretion that can be exercised in connection with the timing of awards. We generally make awards only on pre-determined datesprocedures to ensure that awards cannot be timed to take advantage of material non-public information. Typically, our annual executive awardsamounts are madeearned and paid in November after public release of the previous fiscal year’s financial results, annual awards to our Board of Directors are made on the day of the annual stockholders’ meeting, and awards to our employees are made in November and May.Awards to executive officers may be made only by the Compensation Committee. Other employee awards may be made by either the Compensation Committee or by our Chief Executive Officer pursuant to delegated authority. The Compensation Committee generally makes awards only at Committee meetings and generally does not make awards in trading blackout periods (the prophylactic period encompassing the last three weeks of each fiscal quarter through 24 hours after the earnings for that quarter are announced) unless special circumstances exist, such as a new hire or a contractual commitment. Our Chief Executive Officer may make awards only on the 15thof the month (or the next succeeding business day if the 15this not a business day), other than in the months of January, April, July and October because the 15thof each of those months falls in a blackout period, and only up to established values set by the Compensation Committee.
Tax and Accounting Considerations
TAX CONSIDERATIONS
The Compensation Committee considers the tax (individual and corporate) consequences of our executive compensation plans when designing the plans. Through 2017, Section 162(m) of the Internal Revenue Code limited deduction of compensation paid to the chief executive officer and three other most highly compensated executive officers of PTC (other than the chief financial officer) to $1,000,000 unless the compensation was performance-based. Through 2017, our executives’ annual bonuses and performance-based equity awards were provided under stockholder approved plans and were designed to enable deductibility under Section 162(m) as performance-based compensation. Because base salary and service-based RSUs were not considered performance-based compensation under Section 162(m) and no executives’ salary was greater than $1,000,000, compensation that was not deductible was attributable to vesting of service-based RSUs. We believe that the cost associatedaccordance with these awards in excess of the deductible amount was justified by the incentive and retention value provided by the award.
ACCOUNTING CONSIDERATIONS
We also consider the stock-based compensation expense associated with equity awards to executives as part of the expense associated with our overall equity compensation program. The expense associated with the equity awards is equal to the fair value of the equity issued and is amortized over the vesting period of the award. We monitor this expense as we develop our plans and strive to maintain a program that balances the goals of our equity program with the associated expense of the program. For 2017, stock-based compensation expense as a percentage of our market capitalization was below the 25thpercentile relative to our peer group.
Assessment of Risks Associated with our Compensation Programs
We assess our compensation plans and programs for employees, including our executives, annually to ensure alignment of the various plans and programs with our business plan and to evaluate the potential risks associated with those plans and programs. We have concluded that, although we maintain performance-based incentive plans, our compensation plans and programs do not create risks that are reasonably likely to have a material adverse effect on PTC.
For 2017, we reviewed our compensation plans and programs for any changes from 2016 and assessed the risks associated with those changes. We then reviewed performance against the plans to determine whether the performance was achieved and whether any unexpected risks had materialized for those plans. Our assessment concluded that our plans and programs do not create material risks and are appropriate. The results of this assessment were shared with the Compensation Committee, which concurred with the conclusions reached. As stated above, we did not identify any policies or practices that create risks reasonably likely to have a material adverse effect on PTC.
40 | PTC Inc. 2018 Proxy Statement38 | | | | | | 2024 PROXY STATEMENT | | | | |
| COMPENSATION DISCUSSION AND ANALYSIS | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
The Compensation Committee regularly considers the risks associated with executive compensation and corporate incentive plans when designing such plans. The elements described below with respect to such plans and programs have generally been implemented by or at the direction of the Compensation Committee and were considered by the assessment team and the Committee when assessing the risk associated with our compensation programs:
■ | A detailed planning process with Compensation Committee or executive oversight exists for all compensation programs; | ■ | The proportion of an employee’s performance-based pay increases as the responsibility and potential impact of the employee’s position increases, which structure is in line with market practices; | ■ | All short-term incentive plans and commission plans are cash-based plans, which results in less total compensation being tied solely to stock performance; |
■ | We set performance goals that we believe are reasonable in light of past performance and market conditions; | ■ | We use performance measures that are designed to support our long-term financial goals, rather than changing measures to take advantage of changing market conditions; | ■ | We use different performance measures for our annual incentive plans and our long-term incentive plans; |
■ | Our long-term performance-based equity contains performance measures for each of the three years of the term of the award; | ■ | Our long-term performance-based equity contains a catch-up provision which discourages short-term risk taking based on the duration of the performance measurement period; | ■ | We use restricted stock units rather than stock options for equity awards because restricted stock units retain value even if the stock price declines so that employees are less likely to take unreasonable risks to get, or keep, options “in-the-money”; |
■ | We use service-based vesting over three years for our long-term equity awards to ensure our employees’ interests are aligned with those of our stockholders for the long-term performance of PTC; | ■ | Assuming achievement of at least a minimum level of performance, payouts under our performance-based plans result in some compensation at levels below full target achievement, rather than an “all-or-nothing” approach; | ■ | Upside earning opportunity in our annual cash compensation plans is limited to 25% and, for 2017, we provided no upside earning opportunity to our executives under the cash bonus plan. In addition, our performance based equity plans are also capped at a level commensurate with the industry. |
■ | All organizations have a component of their leadership incentive plans tied to overall PTC performance to ensure cross-functional alignment with PTC’s business plan; | ■ | Our executive stock ownership policy requires our executives to hold certain levels of stock (not options, restricted stock units or restricted stock), which aligns an appropriate portion of their personal wealth to the long-term performance of PTC; | ■ | Our compensation clawback policy enables us to recover incentive compensation paid to an executive officer for 2014 and thereafter if it is subsequently determined not to have been earned due to restatement of prior period financial results due to misconduct of the executive officer, thus reducing any incentive to engage in misconduct to meet financial targets. |
■ | We maintain effective controls and procedures to ensure that amounts are earned and paid in accordance with our plans and programs. |
Compensation Committee Report
The Compensation Committee has reviewed and discussed with management the foregoing Compensation Discussion and Analysis. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.Compensation Committee
Donald Grierson, Chairman
Paul Lacy
Robert Schechter
COMPENSATION COMMITTEE www.ptc.com | 41 | | | 2024 PROXY STATEMENT | | | | | | 39 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
The discussion, tabletables and footnotes below describe the total compensation for 2017 for our named executive officers (our Chief Executive Officer,officers’ compensation and compensation opportunities for 2023 and outstanding equity as of the end of the year. We discuss our Chief Financial Officer,pay for performance compensation philosophy and our four other most highly compensatedhow we set executive officers).Ascompensation in Compensation Discussion and Analysis above. Summary Compensation Table | Name and Principal Position | | | | Year | | | | Salary ($) | | | | Stock Awards ($)(1) | | | | Non-Equity Incentive Plan Compensation ($)(2) | | | | All Other Compensation ($)(3) | | | | Total ($) | | | James Heppelmann Chairman and Chief Executive Officer | | | | | | 2023 | | | | | | $ | 850,000 | | | | | | $ | 13,036,021 | | | | | | $ | 1,721,250 | | | | | | $ | 9,900 | | | | | | $ | 15,617,171 | | | | | | 2022 | | | | | | $ | 880,962 | | | | | | $ | 10,350,834 | | | | | | $ | 1,646,033 | | | | | | $ | 9,287 | | | | | | $ | 12,887,115 | | | | | | 2021 | | | | | | $ | 800,000 | | | | | | $ | 11,127,621 | | | | | | $ | 1,112,000 | | | | | | $ | 8,754 | | | | | | $ | 13,048,375 | | | | Neil Barua(4) CEO-Elect | | | | | | 2023 | | | | | | $ | 431,154 | | | | | | $ | 12,710,200 | | | | | | $ | 672,411 | | | | | | $ | 392,408 | | | | | | $ | 14,206,173 | | | | Kristian Talvitie EVP, Chief Financial Officer | | | | | | 2023 | | | | | | $ | 515,000 | | | | | | $ | 5,214,356 | | | | | | $ | 695,250 | | | | | | $ | 11,400 | | | | | | $ | 6,436,006 | | | | | | 2022 | | | | | | $ | 519,231 | | | | | | $ | 3,363,922 | | | | | | $ | 645,529 | | | | | | $ | 10,708 | | | | | | $ | 4,539,389 | | | | | | 2021 | | | | | | $ | 500,000 | | | | | | $ | 3,616,415 | | | | | | $ | 556,000 | | | | | | $ | 8,700 | | | | | | $ | 4,681,115 | | | | Michael DiTullio President and Chief Operating Officer | | | | | | 2023 | | | | | | $ | 536,539 | | | | | | $ | 5,714,301 | | | | | | $ | 724,118 | | | | | | $ | 9,900 | | | | | | $ | 6,984,857 | | | | | | 2022 | | | | | | $ | 468,750 | | | | | | $ | 3,346,195 | | | | | | $ | 583,484 | | | | | | $ | 12,866 | | | | | | $ | 4,411,295 | | | | | | 2021 | | | | | | $ | 424,231 | | | | | | $ | 3,338,170 | | | | | | $ | 472,600 | | | | | | $ | 9,522 | | | | | | $ | 4,244,523 | | | | Aaron von Staats EVP, General Counsel | | | | | | 2023 | | | | | | $ | 430,000 | | | | | | $ | 3,258,594 | | | | | | $ | 435,375 | | | | | | $ | 9,900 | | | | | | $ | 4,133,869 | | | | | | 2022 | | | | | | $ | 445,500 | | | | | | $ | 2,328,760 | | | | | | $ | 416,360 | | | | | | $ | 9,150 | | | | | | $ | 3,199,769 | | | | | | 2021 | | | | | | $ | 399,231 | | | | | | $ | 1,974,936 | | | | | | $ | 388,500 | | | | | | $ | 9,029 | | | | | | $ | 2,771,696 | | |
(1)
Aggregate grant date fair value of awards. Assumptions made in the valuation of these awards are described in COMPENSATION DISCUSSION AND ANALYSIS aboveNote 12 to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2023. For service-based and reflectedoperating performance-based RSUs, the grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our stock on the Nasdaq Stock Market on the grant date and considers the probability of achievement of any performance measures at the time of grant. For the rTSR performance-based RSUs, the value is determined using a Monte Carlo methodology that considers the probability of achievement of the performance measures at the time of grant. The maximum potential value of the operating and rTSR performance based RSUs is 200% of the target RSUs granted. | Executive Officer | | | | Number of 2023 Target Performance-Based RSUs (#) | | | | Maximum Value of Performance-Based RSUs Based on Closing Price on Grant Date ($) | | | James Heppelmann | | | | | | 38,510 | | | | | | $ | 9,999,507 | | | | Kristian Talvitie | | | | | | 15,404 | | | | | | $ | 3,999,803 | | | | Michael DiTullio | | | | | | 15,404 | | | | | | $ | 3,999,803 | | | | Aaron von Staats | | | | | | 9,626 | | | | | | $ | 2,499,487 | | |
(2)
For all years, these amounts were paid in shares of PTC common stock, with the Summary Compensation Table below, we pay these executive officers a mix of cash and equity compensation. Cash compensation consistsnumber granted determined by dividing the amount earned by the closing price of a base salaryshare of PTC common stock on November 27, 2023, November 15, 2022 and anNovember 12, 2021, respectively. (3)
For Mr. Heppelmann, Mr. Talvitie, Mr. DiTullio, and Mr. von Staats, amounts shown are matching contributions under PTC’s 401(k) Savings Plan, and for Mr. Talvitie, a matching contribution of $1,500 under PTC’s HSA Plan. | 40 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
(4)
Mr. Barua’s compensation for 2023 includes $2.7 million worth of equity granted in replacement of unvested equity in ServiceMax, Inc. upon our acquisition of ServiceMax in January 2023, a remaining non-equity incentive plan bonus (Non-Equity Incentivepayment of $54,000 under the ServiceMax FY2023 Bonus Plan, Compensation). We do not generally pay discretionary cash bonusesa payment of $19,740 on his behalf of legal fees incurred in connection with establishing his employment arrangements with us, a payment of $359,855 to these executives, although wefacilitate his relocation from California to the Boston area at our request, and a $9,900 matching contribution under our 401(k) Savings Plan. Grants of Plan-Based Awards | Name | | | | Grant Date | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | | | | Estimated Possible Payouts Under Equity Incentive Plan Awards | | | | All Other Stock Awards: Number of Securities Underlying Stock or Units (#) | | | | Grant Date Fair Value of Stock Awards(1) ($) | | | Threshold ($) | | | | Target ($) | | | | Maximum ($) | | | | Threshold (#) | | | | Target (#) | | | | Maximum (#) | | | | James Heppelmann Chairman and Chief Executive Officer | | | | | | 11/15/2022(2) | | | | | | $ | 637,500 | | | | | | $ | 1,275,000 | | | | | | $ | 1,721,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2022(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,627 | | | | | | | 19,255 | | | | | | | 38,510 | | | | | | | | | | | | | $ | 4,577,940 | | | | | | 11/16/2022(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,627 | | | | | | | 19,255 | | | | | | | 38,510 | | | | | | | | | | | | | $ | 3,458,198 | | | | | | 11/16/2022(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 38,511 | | | | | | $ | 4,999,883 | | | | Neil Baura CEO-Elect | | | | | | 2/1/2023(2) | | | | | | $ | 165,753 | | | | | | $ | 331,507 | | | | | | $ | 447,534 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 7/27/2023(6) | | | | | | $ | 63,288 | | | | | | $ | 126,575 | | | | | | $ | 170,877 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1/3/2023(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,325 | | | | | | $ | 517,486 | | | | | | 1/3/2023(7) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 18,328 | | | | | | $ | 2,192,945 | | | | | | 1/12/2023(8) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,256 | | | | | | $ | 1,999,909 | | | | | | 1/12/2023(9) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 22,885 | | | | | | $ | 2,999,995 | | | | | | 7/27/2023(10) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 34,413 | | | | | | $ | 4,999,865 | | | | Kristian Talvitie Executive Vice President, Chief Financial Officer | | | | | | 11/15/2022(2) | | | | | | $ | 257,500 | | | | | | $ | 515,000 | | | | | | $ | 695,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2022(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,851 | | | | | | | 7,702 | | | | | | | 15,404 | | | | | | | | | | | | | $ | 1,831,176 | | | | | | 11/16/2022(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,851 | | | | | | | 7,702 | | | | | | | 15,404 | | | | | | | | | | | | | $ | 1,383,279 | | | | | | 11/16/2022(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,404 | | | | | | $ | 1,999,901 | | | | Michael DiTullio President and Chief Operating Officer | | | | | | 11/15/2022(2) | | | | | | $ | 257,500 | | | | | | $ | 515,000 | | | | | | $ | 695,250 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2/23/2023(11) | | | | | | $ | 10,692 | | | | | | $ | 21,384 | | | | | | $ | 28,868 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2022(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,851 | | | | | | | 7,702 | | | | | | | 15,404 | | | | | | | | | | | | | $ | 1,831,176 | | | | | | 11/16/2022(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,851 | | | | | | | 7,702 | | | | | | | 15,404 | | | | | | | | | | | | | $ | 1,383,279 | | | | | | 11/16/2022(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,404 | | | | | | $ | 1,999,901 | | | | | | 2/23/2023(12) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3,841 | | | | | | $ | 499,945 | | | | Aaron von Staats Executive Vice President, General Counsel | | | | | | 11/15/2022(2) | | | | | | $ | 161,250 | | | | | | $ | 322,500 | | | | | | $ | 435,375 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/16/2022(3) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,406 | | | | | | | 4,813 | | | | | | | 9,626 | | | | | | | | | | | | | $ | 1,144,306 | | | | | | 11/16/2022(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2,406 | | | | | | | 4,813 | | | | | | | 9,626 | | | | | | | | | | | | | $ | 864,415 | | | | | | 11/16/2022(5) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,627 | | | | | | $ | 1,249,873 | | |
(1)
For all RSUs other than the rTSR RSUs, the grant date fair value was calculated by multiplying the number of RSUs granted by the closing price of a share of our common stock on the Nasdaq Stock Market on the grant date and applying the likelihood of any performance measures being achieved. For the rTSR RSUs, the grant date fair value was determined using a Monte Carlo valuation. (2)
Awards under our annual incentive plan. Amounts earned were paid Mr. Miller and Mr. Hayman one-time sign-on bonuses in 2015 and 2016, respectively, to compensate them for unvested cash compensation left behind at their prior employers to join PTC. Equity compensation (Stock Awards) consistscommon stock on November 27, 2023, with the number of restricted stock units (RSUs) (50% of which are performance based and 50% of which are service based)shares issued calculated by dividing the amount earned by the closing share price on that aredate. (3)
Performance-based RSUs eligible to vest over three years fromto the date of grant, plus, for Mr. Miller and Mr. Hayman in 2015 and 2016, respectively, awards to compensate them for unvested equity left behind at their prior employers.We do not provide these executives with pensions orextent the ability to defer compensation or any perquisites. Amounts shown in theAll Other Compensationcolumn reflect the matching cash contribution under our 401(k) Savings Plan for those participating in the plan. Those amounts for Mr. Miller and Mr. Hayman also include relocation payments and relocation tax preparation payments, as applicable.
Summary Compensation Table
| | | | | | | | | | | | | | | Non-Equity | | | | | | | | | | | | | | | | | | Stock | | | Incentive Plan | | All Other | | | | | | | | | | | | | | | Awards | | | Compensation | | Compensation | | | | Name and Principal Position | | Year | | Salary ($) | | Bonus ($) | | | ($)(1) | | | ($) | | ($)(2) | | Total ($) | James Heppelmann | | 2017 | | $ | 800,000 | | $ | — | | | $ | 9,126,767 | | | $ | 1,000,000 | | $ | 8,100 | | $ | 10,934,867 | Chief Executive Officer | | 2016 | | $ | 750,000 | | $ | — | | | $ | 6,608,881 | | | $ | 1,115,000 | | $ | 7,950 | | $ | 8,481,877 | | | 2015 | | $ | 750,000 | | $ | — | | | $ | 10,253,701 | | | $ | — | | $ | 7,950 | | $ | 11,011,651 | Andrew Miller(3) | | 2017 | | $ | 415,000 | | $ | — | | | $ | 2,780,614 | | | $ | 350,000 | | $ | 8,100 | | $ | 3,553,714 | Chief Financial Officer | | 2016 | | $ | 415,000 | | $ | — | | | $ | 2,626,270 | | | $ | 334,500 | | $ | 147,935 | | $ | 3,523,705 | | | 2015 | | $ | 263,365 | | $ | 249,000 | (4) | | $ | 3,206,774 | | | $ | — | | $ | 351,301 | | $ | 4,070,441 | Barry Cohen | | 2017 | | $ | 415,000 | | $ | — | | | $ | 2,780,614 | | | $ | 350,000 | | $ | 1,396 | | $ | 3,547,010 | Chief Strategy Officer | | 2016 | | $ | 415,000 | | $ | — | | | $ | 2,626,270 | | | $ | 334,500 | | $ | — | | $ | 3,375,770 | | | 2015 | | $ | 415,000 | | $ | — | | | $ | 3,192,620 | | | $ | — | | $ | — | | $ | 3,607,620 | Anthony DiBona | | 2017 | | $ | 363,000 | | $ | — | | | $ | 1,992,031 | | | $ | 300,000 | | $ | 7,958 | | $ | 2,662,989 | EVP, Renewal Sales | | 2016 | | $ | 363,000 | | $ | — | | | $ | 1,881,497 | | | $ | 278,750 | | $ | 7,950 | | $ | 2,531,197 | | | 2015 | | $ | 363,000 | | $ | — | | | $ | 2,288,038 | | | $ | — | | $ | 7,950 | | $ | 2,658,988 | Craig Hayman(5) | | 2017 | | $ | 625,000 | | $ | — | | | $ | 3,650,610 | | | $ | 475,000 | | $ | 108,694 | | $ | 4,859,304 | Chief Operating Officer | | 2016 | | $ | 625,000 | | $ | 500,000 | (4) | | $ | 7,434,187 | (6) | | $ | 529,625 | | $ | 74,753 | | $ | 9,163,565 | Robert Gremley(7) | | 2017 | | $ | 400,000 | | $ | — | | | $ | 2,433,777 | | | $ | 350,000 | | $ | 8,377 | | $ | 3,192,154 | Senior IoT Advisor | | | | | | | | | | | | | | | | | | | | | | |
(1) | Aggregate grant date fair value of awards plus, for 2015, the value of award modifications made for the year. Assumptions made in the valuation of these awards are described in Note K to our financial statements included in our Annual Report on Form 10-K for the fiscal year ended September 30, 2017. For service-based RSUs, the grant date fair value is equal to the number of RSUs granted multiplied by the closing price of our stock on the Nasdaq Stock Market on the grant date. For the performance-based TSR RSUs, the value was determined using a Monte Carlo methodology that takes into account the probability of achievement of the performance measures at the time of grant. The maximum potential value of the TSR RSUs is 200% of the target value of the TSR RSUs granted. For the 2017 Upside Annual Equity RSUs (described in Compensation Discussion and Analysis and in the Grants of Plan-Based Awards table), the value included in the Stock Awards column for each Named Executive Officer is $0 because the likelihood of achieving the performance goal on the date of grant was not probable. The Upside Annual Equity RSUs were tied to achieving a challenging performance hurdle for 2017, that, if achieved, represented significant performance above our financial plan and that we believed would result in significant stockholder value creation. The maximum potential value of the Upside Annual Equity RSUs was 100% of the Upside Annual Equity RSUs |
42 | PTC Inc. 2018 Proxy Statement |
Table of Contents
granted. Assuming that the achievement of theARR performance measures are met for the 2017 TSR RSUseach of 2023, 2024 and the Upside Annual Equity RSUs had been probable on the grant date, the grant date fair value of the 2017 TSR RSUs and the Upside Annual Equity RSUs would have been as set forth below. For 2017, the2025. Only one-third of the target TSR RSUs that couldgranted are eligible to be earned for 2017 wereeach of 2023, 2024, and 2025. RSUs earned at 152.53%,for a year vest in each of November 2023, 2024, and 2025, as applicable. RSUs not earned in a year are forfeited.
| | | | 2024 PROXY STATEMENT | | | | | | 41 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
(4)
Performance-based RSUs eligible to vest in November 2025 to the extent the three-year relative TSR performance measure is met. RSUs not earned for the three-year performance period are forfeited. (5)
Service-based RSUs that vest over three years. One third of these RSUs vested on November 15, 2023 and the Upside Annual Equityremaining two-thirds will vest in two substantially equal installments on November 15, 2024 and November 15, 2025. (6)
Reflects the increase in the target amount under the annual incentive plan upon his promotion to CEO-Elect. Amount earned was paid in common stock on November 27, 2023, with the number of shares issued calculated by dividing the amount earned by the closing share price on that date. (7)
Service-based RSUs were earned at 49.2%.granted in replacement of unvested ServiceMax equity. These RSUs vested in February and June 2023. (8)
Service-based RSUs that vest on January 12, 2025. (9)
Service-based RSUs that vest over three years. The Upside Annual RSUs earnedwill vest in three substantially equal installments on January 12, 2024, 2025 and 2026. (10)
Service-based RSUs granted upon his appointment as CEO-Elect that vest over three years. The RSUs will vest in three substantially equal installments on August 15, 2024, 2025 and 2026. (11)
Reflects the increase in the target amount under the annual incentive plan upon his promotion to President and Chief Operating Officer. Amount earned was paid in common stock on November 27, 2023, with the number of shares issued calculated by dividing the amount earned by the closing share price on that date. (12)
Service-based RSUs that vest over three years. The RSUs will vest in three substantially equal installments in 2017, 2018,on February 15, 2024, 2025 and 2019. Unearned Upside Annual RSUs were forfeited. | | | | | Maximum Value of TSR | | | | Maximum Value of Upside | | | | Number of Target | | RSUs based on Closing | | Maximum Number of | | Annual RSUs based on | | Named Executive Officer | | TSR RSUs | | Price on Grant Date | | Upside Annual RSUs | | Closing Price on Grant Date | | James Heppelmann | | 79,047 | | $ | 7,499,979 | | 158,094 | | $ | 7,499,979 | | Andrew Miller | | 24,083 | | $ | 2,284,995 | | 24,083 | | $ | 1,142,498 | | Barry Cohen | | 24,083 | | $ | 2,284,995 | | 24,083 | | $ | 1,142,498 | | Anthony DiBona | | 17,253 | | $ | 1,636,965 | | 17,253 | | $ | 818,482 | | Craig Hayman | | 31,618 | | $ | 2,999,916 | | 31,618 | | $ | 1,499,958 | | Robert Gremley | | 21,079 | | $ | 1,999,976 | | 21,079 | | $ | 999,988 |
(2) | Amounts shown are matching contributions under PTC’s 401(k) Savings Plan. For 2017, amounts for Mr. Hayman also include relocation benefits of $56,4320. For 2016, amounts for Mr. Miller and Mr. Hayman include relocation benefits of $136,633 and $73,210, respectively, and, for Mr. Hayman, relocation tax preparation payments of $1,520. For 2015, the amount for Mr. Miller includes relocation benefits of $349,386. | (3) | Mr. Miller joined PTC in February 2015. | (4) | Sign-on bonus paid upon hire and subject to pro-rata forfeiture if he voluntarily terminated his employment in the first year. | (5) | Mr. Hayman joined PTC in November 2015. | (6) | Includes a sign-on equity grant valued at approximately $4,000,000 upon hire, half of which vested in November 2016 and the remaining half of which vested in November 2017. | (7) | Compensation for Mr. Gremley was established when he served as our Executive Vice President, Technology Platforms. Mr. Gremley became Senior IoT Advisor in February 2017. |
Grants of Plan-Based Awards
As discussed in COMPENSATION DISCUSSION AND ANALYSIS above, we tie a substantial portion of our executives’ compensation to PTC’s performance through plan-based awards. For 2017, these awards consisted of:
■ | An annual cash bonus plan (Non-Equity Incentive Plan Awards), | ■ | Performance-based RSUs that vest to the extent earned in each of the three performance periods over three years (Equity Incentive Plan Awards), | ■ | Performance-based RSUs that vest over three years to the extent earned for the 2017 performance period (Equity Incentive Plan Awards), and |
■ | Service-based RSUs that vest over three years (Other Stock Awards). |
We describe our compensation decisions for 2017, including the rationale for these awards and the performance measures, in COMPENSATION DISCUSSION AND ANALYSIS above.
2026. Table of Contents
2016 GRANTS OF PLAN-BASED AWARDS
Name | | Grant Date | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | |
Estimated Possible Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Securities Underlying Stock or Units (#) | | | Grant Date Fair Value of Stock Awards(1) ($) | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | James Heppelmann | | 10/31/2016 | (2) | | $ | 633,000 | | $ | 1,000,000 | | $ | 1,000,000 | | | | | | | | | | | | President and Chief | | 10/31/2016 | (3) | | | | | | | | | | | 39,524 | | 79,047 | | 158,094 | | | | $ | 5,376,777 | Executive Officer | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 158,094 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 79,047 | | $ | 3,749,990 | Andrew Miller | | 10/31/2016 | (2) | | $ | 221,550 | | $ | 350,000 | | $ | 350,000 | | | | | | | | | | | | Executive Vice President, | | 10/31/2016 | (3) | | | | | | | | | | | 12,042 | | 24,083 | | 48,166 | | | | $ | 1,638,116 | Chief Financial Officer | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 24,083 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 24,083 | | $ | 1,142,498 | Craig Hayman | | 10/31/2016 | (2) | | $ | 300,675 | | $ | 475,000 | | $ | 475,000 | | | | | | | | | | | | Executive Vice President, | | 10/31/2016 | (3) | | | | | | | | | | | 15,809 | | 31,618 | | 63,236 | | | | $ | 2,150,652 | Chief Operating Officer | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 31,618 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 31,618 | | $ | 1,499,958 | Barry Cohen | | 10/31/2016 | (2) | | $ | 221,550 | | $ | 350,000 | | $ | 350,000 | | | | | | | | | | | | Executive Vice President, | | 10/31/2016 | (3) | | | | | | | | | | | 12,042 | | 24,083 | | 48,166 | | | | $ | 1,638,116 | Strategy | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 24,083 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 24,083 | | $ | 1,142,498 | Anthony DiBona | | 10/31/2016 | (2) | | $ | 189,900 | | $ | 300,000 | | $ | 300,000 | | | | | | | | | | | | Executive Vice President, | | 10/31/2016 | (3) | | | | | | | | | | | 8,627 | | 17,253 | | 34,506 | | | | $ | 1,173,549 | Renewal Sales | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 17,253 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 17,253 | | $ | 818,482 | Robert Gremley | | 10/31/2016 | (2) | | $ | 221,550 | | $ | 350,000 | | $ | 350,000 | | | | | | | | | | | | Senior IoT Advisor | | 10/31/2016 | (3) | | | | | | | | | | | 10,540 | | 21,079 | | 42,158 | | | | $ | 1,433,789 | | | 10/31/2016 | (4) | | | | | | | | | | | | | | | 21,079 | | | | $ | 0 | | | 10/31/2016 | (5) | | | | | | | | | | | | | | | | | 21,079 | | $ | 999,988 |
(1) | For the service-based awards, the grant date fair value was calculated by multiplying the number of RSUs granted by the closing price of a share of our common stock on the Nasdaq Stock Market on the grant date. The closing price on October 31, 2016 was $47.44. For the performance-based TSR awards, the value at the grant date was determined using a Monte Carlo valuation model. For the aspirational performance-based awards, the value at the grant date was based on the probability of achieving the challenging performance hurdle. | (2) | Awards under our annual cash incentive plan. The performance measures were met at the 110.6% level and 100% of the target bonus was earned and paid. | (3) | Performance-based RSUs eligible to vest over three years to the extent the relative TSR performance measures are met for each of 2017, 2018 and 2019, with any RSUs not earned in 2017 and 2018 eligible to be earned in 2019. Only one-third of the RSUs granted are eligible to be earned for each of 2017 and 2018. For 2017, the performance period was 2017; for 2018, the performance period is 2017 and 2018; and for 2019, the performance period is 2017, 2018 and 2019. The performance measure for 2017 was met at the 152.53% level and 152.53% of the RSUs for 2017 were earned and vested. | (4) | Annual performance-based RSUs eligible to vest over three years to the extent the challenging performance measure for 2017 was earned. Amounts could be earned on a linear basis to the maximum after crossing the threshold. The performance measure was met in part and 49.2% of the RSUs were earned and vest in substantially equal installments on November 15, 2017, 2018 and 2019. | (5) | Service-based RSUs. One third of these RSUs vested on November 15, 2017 and the remaining two-thirds will vest in substantially equal installments on November 15, 2018 and November 15, 2019. |
44 | PTC Inc. 2018 Proxy Statement |
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Outstanding Equity Awards at Fiscal Year-End
The following table shows the equity awards held by each named executive officer as of September 30, 2017.2023. The equity awards in the table are restricted stock units granted in 20152020 through 2017. No options were outstanding.OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
Name | | Stock Awards | | | | | | | | Equity Incentive Plan Awards | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | James Heppelmann | | 21,355 | (4) | | $ | 1,201,859 | | 49,759 | (7) | | $ | 2,800,437 | President and Chief Executive Officer | | 53,004 | (5) | | $ | 2,983,065 | | 60,955 | (8) | | $ | 3,430,547 | | | 79,047 | (6) | | $ | 4,448,765 | | 79,047 | (9) | | $ | 4,448,765 | | | | | | | | | 158,094 | (10) | | $ | 8,897,530 | Andrew Miller | | 9,281 | (4) | | $ | 522,335 | | 21,625 | (7) | | $ | 1,217,055 | Chief Financial Officer | | 21,063 | (5) | | $ | 1,185,426 | | 24,223 | (8) | | $ | 1,363,270 | | | 24,083 | (6) | | $ | 1,355,391 | | 24,083 | (9) | | $ | 1,355,391 | | | | | | | | | 24,083 | (10) | | $ | 1,355,391 | Craig Hayman | | 27,457 | (5) | | $ | 1,545,280 | | 31,576 | (8) | | $ | 1,777,097 | Chief Operating Officer | | 54,914 | (11) | | $ | 3,090,560 | | 31,618 | (9) | | $ | 1,779,461 | | | 31,618 | (6) | | $ | 1,779,461 | | 31,618 | (10) | | $ | 1,779,461 | Barry Cohen | | 8,429 | (4) | | $ | 474,384 | | 19,641 | (7) | | $ | 1,105,395 | Chief Strategy Officer | | 21,063 | (5) | | $ | 1,185,426 | | 24,223 | (8) | | $ | 1,363,270 | | | 23,346 | (6) | | $ | 1,313,913 | | 24,083 | (9) | | $ | 1,355,391 | | | | | | | | | 24,083 | (10) | | $ | 1,355,391 | Anthony DiBona | | 6,041 | (4) | | $ | 339,987 | | 14,077 | (7) | | $ | 792,254 | Executive Vice President, | | 15,090 | (5) | | $ | 849,265 | | 17,354 | (8) | | $ | 976,683 | Renewal Sales | | 17,253 | (6) | | $ | 970,999 | | 17,253 | (9) | | $ | 970,999 | | | | | | | | | 17,253 | (10) | | $ | 970,999 | Robert Gremley | | 5,057 | (4) | | $ | 284,608 | | 11,785 | (7) | | $ | 663,260 | Senior IoT Advisor | | 14,748 | (5) | | $ | 830,017 | | 16,961 | (8) | | $ | 954,565 | | | 21,079 | (6) | | $ | 1,186,326 | | 21,079 | (9) | | $ | 1,186,326 | | | | | | | | | 21,079 | (10) | | $ | 1,186,326 |
See footnotes on following page. 2023. | | | | | Stock Awards | | | | | | | | | | | | | | | | | | | | | Equity Incentive Plan Awards | | | | | | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | | | Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | | James Heppelmann Chairman and Chief Executive Officer | | | | | | 17,603(4) | | | | | | $ | 2,493,993 | | | | | | | 8,801(7) | | | | | | $ | 1,246,926 | | | | | | 27,861(5) | | | | | | $ | 3,947,346 | | | | | | | 8,801(8) | | | | | | $ | 1,246,926 | | | | | | 38,511(6) | | | | | | $ | 5,456,238 | | | | | | | 13,930(9) | | | | | | $ | 1,973,602 | | | | | | | | | | | | | | | | | | | | 20,896(10) | | | | | | $ | 2,960,545 | | | | | | | | | | | | | | | | | | | | 19,255(11) | | | | | | $ | 2,728,048 | | | | | | | | | | | | | | | | | | | | 19,255(12) | | | | | | $ | 2,728,048 | | | | | | | | | | | | | | | | | | | | 133,346(13) | | | | | | $ | 18,892,461 | | | | Neil Barua CEO-Elect | | | | | | 15,256(14) | | | | | | $ | 2,161,470 | | | | | | | | | | | | | | | | | | | | 22,885(15) | | | | | | $ | 3,242,347 | | | | | | | | | | | | | | | | | | | | 34,413(16) | | | | | | $ | 4,875,634 | | | | | | | | | | | | | | | | |
www.ptc.com | 4542 | | | | | | 2024 PROXY STATEMENT | | | | |
EXECUTIVE COMPENSATION | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Footnotes
| | | | | Stock Awards | | | | | | | | | | | | | | | | | | | | | Equity Incentive Plan Awards | | | | | | | Number ofShares or Units of Stock That Have Not Vested (#)(1) | | | | Market Value of Shares or Units of Stock ThatHave Not Vested ($)(2) | | | | Number ofUnearned Shares, Units or Other Rights That Have Not Vested (#)(3) | | | | Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | | Kristian Talvitie Executive Vice President, Chief Financial Officer | | | | | | 5,721(4) | | | | | | $ | 810,551 | | | | | | | 2,860(7) | | | | | | $ | 405,205 | | | | | | 9,054(5) | | | | | | $ | 1,282,771 | | | | | | | 2,860(8) | | | | | | $ | 405,205 | | | | | | 15,404(6) | | | | | | $ | 2,182,439 | | | | | | | 4,527(9) | | | | | | $ | 641,385 | | | | | | | | | | | | | | | | | | | | 6,791(10) | | | | | | $ | 962,149 | | | | | | | | | | | | | | | | | | | | 7,702(11) | | | | | | $ | 1,091,219 | | | | | | | | | | | | | | | | | | | | 7,702(12) | | | | | | $ | 1,091,219 | | | | Michael DiTullio President and Chief Operating Officer | | | | | | 5,280(4) | | | | | | $ | 748,070 | | | | | | | 2,640(7) | | | | | | $ | 374,035 | | | | | | 7,661(5) | | | | | | $ | 1,085,410 | | | | | | | 2,640(8) | | | | | | $ | 374,035 | | | | | | 15,404(6) | | | | | | $ | 2,182,439 | | | | | | | 3,830(9) | | | | | | $ | 542,634 | | | | | | 2,860(17) | | | | | | $ | 405,205 | | | | | | | 5,746(10) | | | | | | $ | 814,093 | | | | | | 3,841(18) | | | | | | $ | 544,193 | | | | | | | 7,702(11) | | | | | | $ | 1,091,219 | | | | | | | | | | | | | | | | | | | | 7,702(12) | | | | | | $ | 1,091,219 | | | | Aaron von Staats Executive Vice President, General Counsel | | | | | | 3,124(4) | | | | | | $ | 442,608 | | | | | | | 1,562(7) | | | | | | $ | 221,304 | | | | | | 6,268(5) | | | | | | $ | 888,050 | | | | | | | 1,562(8) | | | | | | $ | 221,304 | | | | | | 9,627(6) | | | | | | $ | 1,363,953 | | | | | | | 3,134(9) | | | | | | $ | 444,025 | | | | | | | | | | | | | | | | | | | | 4,701(10) | | | | | | $ | 666,038 | | | | | | | | | | | | | | | | | | | | 4,813(11) | | | | | | $ | 681,906 | | | | | | | | | | | | | | | | | | | | 4,813(12) | | | | | | $ | 681,906 | | |
(1)
The unvested restricted stock unit (RSU) awards shown in this column are subject to Outstanding Equity Awards at Fiscal Year End Tableservice-based vesting. (2)
The market value of unvested RSUs was calculated as of September 30, 2023 based on the closing price of a share of our common stock on the NASDAQ Global Select Market on September 29, 2023 of $141.68. (3)
The unvested RSUs shown in this column are subject to performance-based vesting. (4)
FY21 service-based RSUs that vested on November 15, 2023. (5)
FY22 service-based RSUs that vest in two remaining equal installments on November 15, 2023 and 2024. (6)
FY23 service-based RSUs that vest in three substantially equal installments on November 15, 2023, 2024 and 2025. (7)
FY21 performance-based AFCF RSUs that vested on November 15, 2023. (8)
FY21 performance-based rTSR RSUs that vested on November 15, 2023. (9)
FY22 performance-based AFCF RSUs eligible to vest to the extent earned on each of November 15, 2023 and 2024. (10)
FY22 performance-based rTSR RSUs eligible to vest on November 15, 2024 to the extent earned for the three-year relative TSR performance period October 1, 2021 — September 30, 2024. (11)
FY23 performance-based ARR RSUs eligible to vest to the extent earned on each of November 15, 2023, 2024 and 2025. (12)
FY23 performance-based rTSR RSUs eligible to vest on November 15, 2025 to the extent earned for the three-year relative TSR performance period October 1, 2022 — September 30, 2025. (1) | The unvested restricted stock unit (RSU) awards shown in this column are subject to service-based vesting.
| | | 2024 PROXY STATEMENT | | | | | | 43 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | (2)2023 Highlights | The market value of unvested RSUs was calculated as of September 29, 2017 based on the closing price of a share of our common stock on the NASDAQ Global Select Market on September 30, 2017 of $56.28.
| (3) | The unvested RSUs shown in this column are subject to performance-based vesting.
| (4) | Service-based RSUs granted on November 10, 2014 (for Mr. Miller, on February 9, 2015) that vested on November 15, 2017.
| (5)Proxy Summary | Service-based RSUs granted on November 2, 2015 (for Mr. Hayman, on November 23, 2015) that vest in two substantially equal annual installments on November 15, 2017 and 2018.
| (6) | Service-based RSUs granted on October 31, 2016 that vest in three substantially equal annual installments on November 15, 2017, 2018 and 2019.
| (7) | Performance-based TSR RSUs granted on November 10, 2014 (for Mr. Miller, on February 9, 2015) that could be earned only to the extent the established performance criteria were met for the performance period ended September 30, 2017. The amount shown is the Target number of shares; additional shares up to 100% of the Target shares could be earned for performance above Target performance. The performance measure was met at 100% and 100% of the Target RSUs vested on November 15, 2017.
| (8)Corporate Governance | Performance-based TSR RSUs granted on November 2, 2015 (for Mr. Hayman, on November 23, 2015) that may be earned only to the extent the established performance criteria are met for each of the two performance periods ending September 30, 2017 and September 30, 2018. The amount shown is the Target number of shares; additional shares up to 100% of the Target shares may be earned for performance above Target performance. Only one half of the Target shares were eligible to be earned for 2017. The performance measure for the 2017 performance period was met at 184.31% and 184.31% of one half of the Target RSUs vested on November 15, 2017. RSUs were earned and vested on November 15, 2017 as follows: Mr. Heppelmann, 48,485 RSUs; Mr. Miller, 19,411 RSUs; Mr. Cohen, 19,411 RSUs; Mr. DiBona, 13,906 RSUs; Mr. Hayman, 25,303 RSUs, and Mr. Gremley, 13,591 RSUs. Shares not earned for the first or second performance periods can be earned in the third performance period. For additional information about this award, please see “Compensation Discussion and Analysis, 2017 Performance-Based Awards” above.
| (9) | Performance-based-TSR RSUs granted on October 31, 2016 that may be earned only to the extent the established performance criteria are met for each of the three performance periods ending September 30, 2017, September 30, 2018 and September 30, 2019. The amount shown is the Target number of shares; additional shares up to 100% of the Target shares may be earned for performance above Target performance. Only one-third of the Target shares were eligible to be earned for 2017. Shares not earned for the first or second performance periods can be earned in the third performance period. For additional information about this award, please see “Compensation Discussion and Analysis, 2017 Performance-Based Awards” above. The 2017 performance measure was met at the 152.53% level and 152.53% of one-third of the Target RSUs vested on November 15, 2017. RSUs were earned and vested on November 15, 2017 as follows: Mr. Heppelmann, 40,190 RSUs; Mr. Miller, 12,245 RSUs; Mr. Cohen, 12,245 RSUs; Mr. DiBona, 8,772 RSUs; Mr. Hayman, 16,076 RSUs, and Mr. Gremley, 10,718 RSUs.
| (10) | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual performance-based RSUs granted on October 31, 2016 that could be earned only to the extent the challenging performance hurdle for fiscal 2017 was met. The performance measure was met in part and 49.2% of the RSUs became eligible to vest in three substantially equal installments on November 15, 2017, 2018 and 2019. | (11)Meeting Information | Service-based sign-on RSUs granted on November 23, 2015 that vested on November 15, 2017. | | Appendix A | |
46 | PTC Inc. 2018 Proxy Statement |
(13)
Table of Contents
Performance-based RSUs that vested on November 15, 2023. (14)
Service-based RSUs that vest on January 12, 2025. (15)
Service-based RSUs that vest in three substantially equal installments on January 12, 2024, 2025 and 2026. (16)
Service-based RSUs that vest in three substantially equal installments on August 15, 2024, 2025 and 2026. (17)
Service-based retention RSUs that vest in two equal installments on May 15, 2024 and 2025. (18)
Service-based promotion RSUs that vest in three substantially equal installments on February 15, 2024, 2025 and 2026. Option Exercises and Stock Vested
The following table shows the value realized by executive officers upon vesting of restricted stock unitsRSUs during 2017.2023. None of the named executive officers owned or exercised options in 2017.Name | | Stock Awards | | Number of Shares Acquired on Vesting (#)(1) | | Value Realized on Vesting ($)(1) | James Heppelmann, | | | | | | President and Chief Executive Officer | | 156,454 | | $ | 7,436,259 | Andrew Miller, | | | | | | Executive Vice President, | | | | | | Chief Financial Officer | | 43,935 | | $ | 2,088,231 | Craig Hayman, | | | | | | Executive Vice President, | | | | | | Chief Operating Officer | | 91,983 | | $ | 4,371,952 | Barry Cohen, | | | | | | Executive Vice President, | | | | | | Chief Strategy Officer | | 62,685 | | $ | 2,979,352 | Anthony DiBona, | | | | | | Executive Vice President, | | | | | | Renewal Sales | | 44,385 | | $ | 2,109,619 | Robert Gremley, | | | | | | Senior IoT Advisor | | 40,018 | | $ | 1,902,056 |
(1) | The table below shows the dates the RSUs that vested in fiscal 2017 were granted, the dates on which they vested, the per share values on those dates, and the number of shares of each grant that vested for each executive. |
Grant Date | | Grant Date per Share Value | | Vest Date | | Vest Date per Share Value | | James Heppelmann | | Andrew Miller | | Craig Hayman | | Barry Cohen | | | Anthony DiBona | | Robert Gremley | 11/11/2013 | | $ | 32.16 | | 11/15/2016 | | $ | 47.53 | | 49,232 | | — | | — | | 19,434 | | | 13,926 | | 11,660 | 11/10/2014 | | $ | 37.07 | | 11/15/2016 | | $ | 47.53 | | 35,664 | | — | | — | | 14,078 | | | 10,088 | | 8,446 | 2/9/2015 | | $ | 33.67 | | 11/15/2016 | | $ | 47.53 | | — | | 15,499 | | — | | — | | | — | | — | 11/2/2015 | | $ | 36.16 | | 11/15/2016 | | $ | 47.53 | | 71,558 | | 28,436 | | — | | 28,436 | | | 20,371 | | 19,912 | 11/23/2015 | | $ | 36.42 | | 11/15/2016 | | $ | 47.53 | | — | | — | | 91,983 | | — | | | — | | — | 10/31/2016 | | $ | 47.44 | | 10/31/2016 | | $ | 47.44 | | — | | — | | — | | 737 | * | | — | | — | | | | | | | | | | | 156,454 | | 49,935 | | 91,983 | | 62,685 | | | 44,385 | | 40,018 |
* | Vested to satisfy tax withholding obligations. |
2023. | | | | | Stock Awards | | | Name | | | | Number of Shares Acquired on Vesting (#) | | | | Value Realized on Vesting ($) | | | James Heppelmann Chairman of the Board and Chief Executive Officer | | | | | | 284,083 | | | | | | $ | 37,501,797 | | | | Neil Barua CEO-Elect | | | | | | 22,653 | | | | | | $ | 3,184,986 | | | | Kristian Talvitie Executive Vice President, Chief Financial Officer | | | | | | 47,894 | | | | | | $ | 6,322,487 | | | | Michael DiTullio President and Chief Operating Officer | | | | | | 45,647 | | | | | | $ | 6,018,157 | | | | Aaron von Staats Executive Vice President, General Counsel | | | | | | 27,118 | | | | | | $ | 3,579,847 | | |
| Grant Date | | | | Grant Date Share Value ($) | | | | Vest Date | | | | Vest Date Share Value ($) | | | | # of RSUs | | | James Heppelmann | | | | Neil Barua | | | | Kristian Talvitie | | | | Michael DiTullio | | | | Aaron von Staats | | | 11/21/19 | | | | | | 75.08 | | | | | | | 11/15/22 | | | | | | | 132.01 | | | | | | | 71,549 | | | | | | | | | | | | | | 21,268 | | | | | | | 19,438 | | | | | | | 13,803 | | | | 05/18/20 | | | | | | 68.97 | | | | | | | 05/15/23 | | | | | | | 130.78 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 4,833 | | | | | | | | | | | 05/18/20 | | | | | | 68.97 | | | | | | | 11/15/22 | | | | | | | 132.01 | | | | | | | | | | | | | | | | | | | | | 4,358 | | | | | | | | | | | | | | | | | | 09/24/20 | | | | | | 80.28 | | | | | | | 11/15/22 | | | | | | | 132.01 | | | | | | | 144,014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 11/17/20 | | | | | | 99.13 | | | | | | | 11/15/22 | | | | | | | 132.01 | | | | | | | 44,210 | | | | | | | | | | | | | | 14,367 | | | | | | | 13,261 | | | | | | | 7,846 | | | | 11/17/21 | | | | | | 119.64 | | | | | | | 11/15/22 | | | | | | | 132.01 | | | | | | | 24,310 | | | | | | | | | | | | | | 7,901 | | | | | | | 6,685 | | | | | | | 5,469 | | | | 05/31/22 | | | | | | 116.53 | | | | | | | 5/15/23 | | | | | | | 130.78 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1,430 | | | | | | | | | | | 01/03/23 | | | | | | 119.65 | | | | | | | 2/15/23 | | | | | | | 133.39 | | | | | | | | | | | | | | 4,325 | | | | | | | | | | | | | | | | | | | | | | | | | 01/03/23 | | | | | | 119.65 | | | | | | | 6/30/23 | | | | | | | 142.30 | | | | | | | | | | | | | | 18,328 | | | | | | | | | | | | | | | | | | | | | | | |
Table of Contents
Potential Payments uponUpon Termination or Change in Control
We have agreements with our executive officers that provide the benefits described below in connection with certain terminations or a change in control of PTC. We describe our reasons for providing these benefits in COMPENSATION DISCUSSION AND ANALYSISCompensation Discussion and Analysis — Severance and Change in Control Arrangements on page 38.. | 44 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
To receive the payments and benefits described below, the executive must execute a release of claims against PTC. The executive also must continue to comply with the material terms of histhe agreement and the terms of his Non-Disclosure, Non-Competition and Inventionthe executive’s Proprietary Information Agreement with PTC, which remains in effect after histhe termination of the executive’s employment.
SUMMARY OF EXECUTIVE AGREEMENT TERMS REGARDING COMPENSATION ON CHANGE-IN-CONTROL AND CERTAIN TERMINATIONS | Name | | | | Compensation | | | | Event or Circumstances of Termination or Event | | | Termination without Cause or Voluntary Resignation in Specified Circumstances | | | | Termination for Cause or Other Voluntary Resignation | | | | Change in Control | | | | Termination without Cause or Resignation for Good Reason within 2 Years Following a Change in Control | | | | Disability or Death | | | James Heppelmann Chairman of the Board and Chief Executive Officer | | | | Base Salary | | | | 2x | | | | — | | | | — | | | | 3x | | | | — | | | Target Bonus | | | | 2x(1) | | | | — | | | | — | | | | 3x | | | | — | | | Pro-Rated Target Bonus | | | | — | | | | — | | | | 1x Pro-Rated | | | | — | | | | — | | | Accelerated Equity | | | | 100%(2) | | | | — | | | | — | | | | 100% | | | | 100% | | | Benefits Continuation(3) | | | | 2 Years | | | | — | | | | — | | | | 2 Years | | | | — | | | Payment Term | | | | 2 Years | | | | — | | | | Upon Event | | | | Upon Event | | | | Upon Event | | | Gross-Up Payment | | | | — | | | | — | | | | — | | | | — | | | | — | | | Neil Barua CEO-Elect | | | | Base Salary | | | | 2x | | | | — | | | | — | | | | 2x | | | | — | | | Target Bonus | | | | 2x | | | | — | | | | — | | | | 2x | | | | — | | | Pro-Rated Target Bonus | | | | 1x Pro-Rated | | | | — | | | | 1x Pro-Rated | | | | 1x Pro Rated less Amount Paid on CIC | | | | — | | | Accelerated Equity | | | | 1 Year(4) | | | | — | | | | — | | | | 100% | | | | 100% | | | Benefits Continuation(3) | | | | 18 Months | | | | — | | | | — | | | | 2 Years | | | | — | | | Payment Term | | | | Upon Event | | | | — | | | | Upon Event | | | | Upon Event | | | | Upon Event | | | Gross-Up Payment | | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | Compensation | | | | Event or Circumstances of Termination or Event | | | Name | | | | Termination without Cause | | | | Termination for Cause or Voluntary Resignation | | | | Change in Control | | | | Termination without Cause or Resignation for Good Reason within 2 Years Following a Change in Control | | | | Disability or Death | | | All Other Named Executive Officers | | | | Base Salary | | | | 1x | | | | — | | | | — | | | | 1x | | | | — | | | Target Bonus | | | | 1x | | | | — | | | | — | | | | 1x | | | | — | | | Pro-Rated Target Bonus | | | | — | | | | — | | | | 1x Pro-Rated | | | | — | | | | — | | | Accelerated Equity | | | | 1 Year(5) | | | | — | | | | — | | | | 100% | | | | 100% | | | Benefits Continuation(3) | | | | 1 Year | | | | — | | | | — | | | | 1 Year | | | | — | | | Payment Term | | | | Upon Event | | | | | | | | Upon Event | | | | Upon Event | | | | Upon Event | | | Gross-Up Payment | | | | — | | | | — | | | | — | | | | — | | | | — | |
(1)
An aggregate amount equal to two times the average of the annual incentive bonus, if any, paid to the executive for the two fiscal years immediately preceding the fiscal year in which the termination occurs. (2)
For any performance-based equity issued under our annual bonus plan, only a pro-rata portion of such equity based on the percentage of the fiscal year completed at the time of termination will accelerate and vest at the Target level. (3)
Continued participation in PTC’s medical, dental, vision and basic life insurance benefit plans, or payment in lieu thereof if such participation is not permissible until the executive becomes eligible for such benefits under another employer’s plans. Mr. Barua was never eligible for continued participation in our basic life insurance plan. Effective as of November 16, 2023, only Mr. Heppelmann is entitled to continued participation in our basic life insurance plan. Name | | Event or Circumstances of Termination or Event | | 2024 PROXY STATEMENT | | | | | | 45 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | Termination
without Cause | | Termination for
Cause or
Voluntary
ResignationProxy Summary | | Change in
Control | Corporate Governance | Termination
without Cause
or Resignation
for Good Reason
within 3 Years
following
a Change in
Control | | Executive Compensation | Disability
or Death | James Heppelmann | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | | President & Chief Executive OfficerAnnual Meeting Information | | | Appendix A | | | | | | | | | Base Salary | | 2x | | — | | — | | 3x | | | — | Target Bonus | | 2x | | — | | — | | 3x | | | — | Pro-Rated Target Bonus | | — | | — | | 1x Pro-Rated | | — | | | — | Accelerated Equity | | — | | — | | — | | 100% at Target | (1) | | 100% at Target | Benefits Continuation | | 2x | | — | | — | | 2x | | | — | Payment Term | | 2 Years | | | | Upon Event | | Upon Event | | | Upon Event | Gross-Up Payment | | — | | — | | — | | — | | | — | All Other Named Executive Officers(2) | | | | | | | | | | | | Andrew Miller | | | | | | | | | | | | Craig Hayman | | | | | | | | | | | | Barry Cohen | | | | | | | | | | | | Anthony DiBona | | | | | | | | | | | | Base Salary | | 1x | | — | | — | | 1x | | | — | Target Bonus | | 1x | | — | | — | | 1x | | | — | Pro-Rated Target Bonus | | — | | — | | 1x Pro-Rated | | — | | | — | Accelerated Equity | | — | | — | | — | | 100% at Target | (1) | | 100% at Target | Benefits Continuation | | 1x | | — | | — | | 1x | | | — | Payment Term | | Upon Event | | | | Upon Event | | Upon Event | | | Upon Event | Gross-Up Payment | | — | | — | | — | | — | | | — |
(1) | Awards prior to FY2017 at Target; FY2017 awards at greater of Target and estimated achievement at time of change in control. | (2) | Mr. Gremley did not have an Executive Agreement under which such compensation would be paid after becoming our Senior IoT Advisor. |
48 | PTC Inc. 2018 Proxy Statement |
(4)
TableIf such termination or resignation occurs before February 28, 2025, the portions of Contentsall equity awards held by him issued before July 24, 2023 that were scheduled to vest on or before February 28, 2025 will vest in full. (5)
Effective as of November 16, 2023, for the officers other than Mr. DiTullio, the portion of all equity awards that would have vested in the year following the termination date will vest, and for Mr. DiTullio, all equity held by Mr. DiTullio will remain outstanding and continue to vest in accordance with its terms if his employment is terminated without cause. POTENTIAL PAYMENTS ON TERMINATION OR CHANGE IN CONTROL HAD A TERMINATION EVENT OR A CHANGE-IN-CONTROL OCCURRED ON SEPTEMBER 30, 2017Name | | Event or Circumstances of Termination | | Termination without Cause | | Termination for Cause or Voluntary Resignation | | Change in Control | | Termination without Cause or Resignation for Good Reason within 3 Years following a Change in Control(1) | | Disability or Death(1) | James Heppelmann | | | | | | | | | | | | | | | | President & Chief Executive Officer | | | | | | | | | | | | | | | | Base Salary | | $ | 1,600,000 | | $ | — | | $ | — | | $ | 2,400,000 | | $ | — | Target Bonus | | | 2,000,000 | | | — | | | — | | | 3,000,000 | | | — | Pro-Rated Target Bonus | | | — | | | — | | | 1,000,000 | | | — | | | — | Accelerated Equity | | | — | | | — | | | — | | | 30,472,862 | | | 28,210,969 | Benefits Continuation | | | 116,682 | | | — | | | — | | | 116,681 | | | — | Total | | $ | 3,716,682 | | $ | — | | $ | 1,000,000 | | $ | 35,989,543 | | $ | 28,210,969 | Andrew Miller | | | | | | | | | | | | | | | | Executive Vice President, | | | | | | | | | | | | | | | | Chief Financial Officer | | | | | | | | | | | | | | | | Base Salary | | $ | 415,000 | | $ | — | | $ | — | | $ | 415,000 | | $ | — | Target Bonus | | | 350,000 | | | — | | | — | | | 350,000 | | | — | Pro-Rated Target Bonus | | | — | | | — | | | 350,000 | | | — | | | — | Accelerated Equity | | | — | | | — | | | — | | | 9,043,408 | | | 8,354,259 | Benefits Continuation | | | 58,787 | | | — | | | — | | | 58,787 | | | — | Total | | $ | 823,787 | | $ | — | | $ | 350,000 | | $ | 9,867,195 | | $ | 8,354,259 | Barry Cohen | | | | | | | | | | | | | | | | Executive Vice President, | | | | | | | | | | | | | | | | Chief Strategy Officer | | | | | | | | | | | | | | | | Base Salary | | $ | 415,000 | | $ | — | | $ | — | | $ | 415,000 | | $ | — | Target Bonus | | | 350,000 | | | — | | | — | | | 350,000 | | | — | Pro-Rated Target Bonus | | | — | | | — | | | 350,000 | | | — | | | — | Accelerated Equity | | | — | | | — | | | — | | | 8,842,320 | | | 8,153,171 | Benefits Continuation | | | 49,790 | | | — | | | — | | | 49,790 | | | — | Total | | $ | 814,790 | | $ | — | | $ | 350,000 | | $ | 9,657,109 | | $ | 8,153,171 | Anthony DiBona | | | | | | | | | | | | | | | | Executive Vice President, | | | | | | | | | | | | | | | | Renewal Sales | | | | | | | | | | | | | | | | Base Salary | | $ | 363,000 | | $ | — | | $ | — | | $ | 363,000 | | $ | — | Target Bonus | | | 300,000 | | | — | | | — | | | 300,000 | | | — | Pro-Rated Target Bonus | | | — | | | — | | | 300,000 | | | — | | | — | Accelerated Equity | | | — | | | — | | | — | | | 6,364,874 | | | 5,871,186 | Benefits Continuation | | | 63,718 | | | — | | | — | | | 63,718 | | | — | Total | | $ | 726,718 | | $ | — | | $ | 300,000 | | $ | 7,091,592 | | $ | 5,871,186 |
2023 | | | | | Event or Circumstances of Termination | | | Name | | | | Termination without Cause or Voluntary Resignation at the Request of the Board in Connection with CEO Succession | | | | Termination for Cause or Voluntary Resignation | | | | Change in Control | | | | Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control | | | | Disability or Death | | | James Heppelmann President & Chief Executive Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | | | $ | 1,700,000 | | | | | | | — | | | | | | | — | | | | | | $ | 2,550,000 | | | | | | | — | | | | Target Bonus | | | | | $ | 2,758,032 | | | | | | | — | | | | | | | — | | | | | | $ | 3,825,000 | | | | | | | — | | | | Pro-Rated Target Bonus | | | | | | — | | | | | | | — | | | | | | $ | 1,275,000 | | | | | | | — | | | | | | | — | | | | Accelerated Equity(1) | | | | | $ | 43,674,135 | | | | | | | — | | | | | | | — | | | | | | $ | 43,674,135 | | | | | | $ | 43,674,135 | | | | Benefits Continuation | | | | | $ | 123,146 | | | | | | | — | | | | | | | — | | | | | | $ | 123,146 | | | | | | | — | | | | Total | | | | | $ | 48,255,313 | | | | | | $ | 0 | | | | | | $ | 1,275,000 | | | | | | $ | 50,172,281 | | | | | | $ | 43,674,135 | | | | Neil Barua CEO-Elect | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | | | $ | 1,600,000 | | | | | | | — | | | | | | | — | | | | | | $ | 1,600,000 | | | | | | | — | | | | Target Bonus | | | | | $ | 916,164 | | | | | | | — | | | | | | | — | | | | | | $ | 916,164 | | | | | | | — | | | | Pro-Rated Target Bonus | | | | | $ | 458,082 | | | | | | | — | | | | | | $ | 458,082 | | | | | | | — | | | | | | | — | | | | Accelerated Equity(1) | | | | | $ | 4,323,082 | | | | | | | — | | | | | | | — | | | | | | $ | 10,279,451 | | | | | | $ | 10,279,451 | | | | Benefits Continuation | | | | | $ | 66,564 | | | | | | | — | | | | | | | — | | | | | | $ | 79,877 | | | | | | | — | | | | Total | | | | | $ | 7,363,892 | | | | | | $ | 0 | | | | | | $ | 458,082 | | | | | | $ | 12,875,492 | | | | | | $ | 10,279,451 | | |
www.ptc.com | 4946 | | | | | | 2024 PROXY STATEMENT | | | | |
EXECUTIVE COMPENSATION | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Name | | Event or Circumstances of Termination | | Termination without Cause | | Termination for Cause or Voluntary Resignation | | Change in Control | | Termination without Cause or Resignation for Good Reason within 3 Years following a Change in Control(1) | | Disability or Death(1) | Craig Hayman | | | | | | | | | | | | | | | | Executive Vice President, | | | | | | | | | | | | | | | | Chief Operating Officer | | | | | | | | | | | | | | | | Base Salary | | $ | 625,000 | | $ | — | | $ | — | | $ | 625,000 | | $ | — | Target Bonus | | | 475,000 | | | — | | | — | | | 475,000 | | | — | Pro-Rated Target Bonus | | | — | | | — | | | 475,000 | | | — | | | — | Accelerated Equity | | | — | | | — | | | — | | | 12,656,078 | | | 11,751,320 | Benefits Continuation | | | 58,106 | | | — | | | — | | | 58,106 | | | — | Total | | $ | 1,158,106 | | $ | — | | $ | 475,000 | | $ | 13,814,183 | | $ | 11,751,320 |
(1) | | | | | | Event or Circumstances of Termination | | | | | | | Termination without Cause | | | | Termination for Cause or Voluntary Resignation | | | | Change in Control | | | | Termination without Cause or Resignation for Good Reason within 2 Years following a Change in Control | | | | Disability or Death | | | Kristian Talvitie Executive Vice President, Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | | | $ | 515,000 | | | | | | | — | | | | | | | — | | | | | | $ | 515,000 | | | | | | | — | | | | Target Bonus | | | | | $ | 515,000 | | | | | | | — | | | | | | | — | | | | | | $ | 515,000 | | | | | | | — | | | | Pro-Rated Target Bonus | | | | | | — | | | | | | | — | | | | | | $ | 515,000 | | | | | | | — | | | | | | | — | | | | Accelerated Equity | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 8,872,143 | | | | | | $ | 8,872,143 | | | | Benefits Continuation | | | | | $ | 43,307 | | | | | | | — | | | | | | | — | | | | | | $ | 43,307 | | | | | | | — | | | | Total | | | | | $ | 1,073,307 | | | | | | $ | 0 | | | | | | $ | 515,000 | | | | | | $ | 9,945,450 | | | | | | $ | 8,872,143 | | | | Michael DiTullio President, Digital Thread Business | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | | | $ | 550,000 | | | | | | | — | | | | | | | — | | | | | | $ | 550,000 | | | | | | | — | | | | Target Bonus | | | | | $ | 536,384 | | | | | | | — | | | | | | | — | | | | | | $ | 536,384 | | | | | | | — | | | | Pro-Rated Target Bonus | | | | | | — | | | | | | | — | | | | | | $ | 536,384 | | | | | | | — | | | | | | | — | | | | Accelerated Equity | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 9,252,554 | | | | | | $ | 9,252,554 | | | | Benefits Continuation | | | | | $ | 56,796 | | | | | | | — | | | | | | | — | | | | | | $ | 56,796 | | | | | | | — | | | | Total | | | | | $ | 1,143,180 | | | | | | $ | 0 | | | | | | $ | 536,384 | | | | | | $ | 10,395,734 | | | | | | $ | 9,252,554 | | | | Aaron von Staats Executive Vice President, General Counsel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | | | $ | 430,000 | | | | | | | — | | | | | | | — | | | | | | $ | 430,000 | | | | | | | — | | | | Target Bonus | | | | | $ | 323,000 | | | | | | | — | | | | | | | — | | | | | | $ | 323,000 | | | | | | | — | | | | Pro-Rated Target Bonus | | | | | | — | | | | | | | — | | | | | | $ | 323,000 | | | | | | | — | | | | | | | — | | | | Accelerated Equity | | | | | | — | | | | | | | — | | | | | | | — | | | | | | $ | 5,611,095 | | | | | | $ | 5,611,095 | | | | Benefits Continuation | | | | | $ | 46,230 | | | | | | | — | | | | | | | — | | | | | | $ | 46,230 | | | | | | | — | | | | Total | | | | | $ | 799,230 | | | | | | $ | 0 | | | | | | $ | 323,000 | | | | | | $ | 6,410,325 | | | | | | $ | 5,611,095 | | |
(1)
Equity is valued based on a closing stock price of $56.28 on September 29, 2017. |
50 | PTC Inc. 2018 Proxy Statement |
Table of Contents
Proposal 3
Advisory Vote$141.68 on September 29, 2023.
In accordance with SEC rules, we have calculated the ratio between the 2023 compensation of our CEO and the median of 2023 compensation of all our employees excluding our CEO (the “Median Employee Compensation”). Using reasonable estimates and assumptions permitted under the SEC rules, we gathered the total base salary, incentive compensation, and RSU grant date fair value for 2023 for all employees worldwide, other than our CEO, to Confirmidentify the Selection of PricewaterhouseCoopers LLP as our Independent Registered Public Accounting Firm for 2018median employee. We are asking stockholdersthen calculated the 2023 Median Employee Compensation to confirmbe $82,574 based on the Audit Committee’s selection of PricewaterhouseCoopers LLP, a registered public accounting firm, as PTC’s independent registered public accounting firmmethodology used for the fiscalSummary Compensation Table. Our CEO’s 2023 compensation, as disclosed in the Summary Compensation Table, was $15,617,171, resulting in a ratio of 189:1 between our CEO’s 2023 compensation and the 2023 Median Employee Compensation. To put this ratio into context, we note that we have a worldwide employee population, with approximately 65% of our employees located outside the U.S. where the competitive amounts we pay differ by country and region. The competitive compensation rates we pay in those countries significantly impact the pay ratio. We also note that the SEC rules for identifying the median employee and calculating the pay ratio based on that employee’s annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions | | | | 2024 PROXY STATEMENT | | | | | | 47 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
and to make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have a different geographic distribution of employees, different employment and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their pay ratios. Pay versus Performance Disclosure The following table has been prepared in accordance with the SEC’s pay versus performance (“PvP”) rules. The PvP rules create a definition of pay, referred to as Compensation Actually Paid (“CAP”), which is compared to certain performance measures as required by the SEC. In determining CAP for our principal executive officer (our “PEO”) and our named executive officers, we are required to make various adjustments to amounts reported in the Summary Compensation Table for this year ending September 30, 2018.Although stockholder confirmationand in previous years, as the SEC’s valuation methods for this section differ from those required for the Summary Compensation Table. The CAP data reflected in the table below may not reflect amounts actually realized or that will be realized by our named executive officers. A significant portion of the selection CAP amounts shown relates to changes in values of PricewaterhouseCoopers LLP isunvested awards over the course of the reporting year. These unvested awards remain subject to significant risk from forfeiture conditions and possible future changes in value based on changes in our stock price. The Compensation & People Committee does not required by law oruse CAP as the basis for making compensation decisions. Refer to Compensation Discussion and Analysis above to understand how the Committee makes compensation decisions. | Year | | | | Summary Compensation Total for the PEO)(1) ($) | | | | Compensation Actually Paid to the PEO(1) ($) | | | | Average Summary Compensation Table Total for Non-PEO NEOs(2) ($) | | | | Average Compensation Actually Paid to Non-PEO NEOs(2) ($) | | | | Value of Initial Fixed $100 Investment Based on: | | | | Net Income(4) ($) (in Millions) | | | | Free Cash Flow(5) ($) (in Millions) | | | Total Shareholder Return ($) | | | | Peer Group Total Shareholder Return(3) ($) | | | | 2023 | | | | | $ | 15,617,171 | | | | | | $ | 32,849,065 | | | | | | $ | 7,935,291 | | | | | | $ | 9,964,001 | | | | | | $ | 171.28 | | | | | | $ | 145.51 | | | | | | $ | 245.5 | | | | | | $ | 587.0 | | | | 2022 | | | | | $ | 12,887,115 | | | | | | $ | 10,443,199 | | | | | | $ | 3,899,861 | | | | | | $ | 4,250,523 | | | | | | $ | 126.45 | | | | | | $ | 103.12 | | | | | | $ | 313.1 | | | | | | $ | 415.8 | | | | 2021 | | | | | $ | 13,048,375 | | | | | | $ | 43,610,760 | | | | | | $ | 4,349,703 | | | | | | $ | 6,216,716 | | | | | | $ | 144.81 | | | | | | $ | 128.90 | | | | | | $ | 476.9 | | | | | | $ | 344.1 | | |
(1)
Mr. Heppelmann was the PEO for all three years in the table. Amounts deducted from the Summary Compensation Table (“SCT”) total to calculate Compensation Actually Paid (“CAP”) to the PEO for the years 2023, 2022 and 2021, respectively, include ($13,036,021), ($10,350,834), and ($11,127,621) for the grant date fair value of stock awards. Amounts added to (or subtracted from) the SCT for the years 2023, 2022 and 2021, respectively also include: $13,133,317, $10,347,649 and $14,917,434 for the fair value of stock awards that were granted in the year and remain outstanding at the end of the year; $9,348,375, ($2,517,223) and $25,326,040 for the change in fair value of stock awards that were granted in prior years and still outstanding at the end of each respective year; and $7,786,223, $76,493 and $1,446,533 for the change in fair value of stock awards that were granted in prior years and vested during each respective year. (2)
For 2023, Neil Barua, Kristian Talvitie, Michael DiTullio, and Aaron von Staats were the Non-PEO NEOs. For 2022, Kristian Talvitie, Michael DiTullio, Catherine Kniker, Aaron von Staats, and Troy Richardson were the Non-PEO NEOs. For 2021, Kristian Talvitie, Michael DiTullio, Aaron von Staats, Troy Richardson, and Kathleen Mitford were the Non-PEO NEOs. Amounts deducted from the Average SCT total to calculate Average CAP to the Non-PEO NEOs for the years 2023, 2022 and 2021, respectively, include ($6,724,363), ($2,803,755), and ($3,486,115) for the average grant date fair value of stock awards. Amounts added to (or subtracted from) the Average SCT for the years 2023, 2022 and 2021, respectively also include: $6,153,271, $2,935,187 and $3,921,434 for the average fair value of stock awards that were granted in the year and remain outstanding at the end of the year; $936,590, $228,247 and $1,478,895 for the average change in fair value of stock awards that were granted in prior years and still outstanding at the end of each respective year; $862,031, ($9,017) and $359,468 for the average change in fair value of stock awards that were granted in prior years and vested during each respective year; in 2023, $796,247 for the average fair value of stock awards that were granted in and vested during 2023 (related to Neil Barua’s replacement of unvested equity in ServiceMax, Inc. upon our by-laws,acquisition of ServiceMax in January 2023); and this vote is only advisory,in 2021, ($406,668) for the Board believesaverage fair value of stock awards that it is advisablewere granted in prior years and failed to give stockholders an opportunitymeet the applicable vesting conditions in 2021 (related to provide guidance on this selection. If this confirmation is not received, the Board will request thatcancellation of Kathleen Mitford’s outstanding and unvested stock awards upon her resignation from PTC in May 2021). (3)
The peer group used for the Audit Committee reconsider its selection of PricewaterhouseCoopers LLP.Peer Group Total Shareholder Return was the S&P 500 Information Technology Index. | 48 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
(4)
As reported in our Consolidated Statements of Operations for the applicable fiscal reporting year, as provided under Part II Item 8 of our Annual Report on Form 10-K. (5)
We have identified free cash flow as the Company-selected measure to be included in this table, as it represents the most important financial performance measure, not otherwise required to be disclosed in the table, used to link CAP to our executive officers to our performance. See Appendix A for the definition of free cash flow, a non-GAAP financial measure, and its reconciliation to the most directly comparable GAAP measure. Relationship between Compensation Actually Paid Disclosed in the Pay Versus Performance Table and Other Table Elements As between the compensation of our PEO and the Non-PEO NEOs shown in the Summary Compensation Table and Compensation Actually Paid (CAP) calculated and reflected in the Pay versus Performance Table, the equity awards in the Summary Compensation Table reflect the grant date fair value of the equity awards for that year, while the CAPs reflect adjustments to the fair value of unvested and vested equity awards during the years shown in the Pay Versus Performance Table. Accordingly, neither the Summary Compensation Table nor the Pay versus Performance Table reflect the actual amounts that will be received by our PEO and non-PEO NEOs upon vesting of those awards. For all years, PEO and non-PEO NEO CAP directionally aligned with our cumulative total shareholder return, with the increases and decreases in our stock price increasing or decreasing total shareholder return and having the same effect on outstanding RSUs and, therefore, CAP. PEO and non-PEO NEO CAP in those years also aligned due to changes in achievement assumptions and actual achievement under outstanding RSUs from that at the grant date. Free cash flow was an element of our PEO’s and non-PEO NEOs’ performance-based compensation for all years, with adjusted free cash flow being the performance measure under the 2021 and 2022 performance-based RSUs and a measure under our PEO’s 2020 retention performance-based equity, and free cash flow being the performance measure under the 2023 annual corporate incentive plan. As free cash flow increased in 2022 over 2021 and further increased in 2023 over 2022, estimated and actual achievement under those outstanding performance-based RSUs increased, thus increasing the PEO’s and non-PEO NEOs’ CAP in those periods, along with share price increases. Net income declined over the period notwithstanding increases in revenue in 2022 over 2021 and in 2023 over 2022. As none of the outstanding performance based RSUs were tied to net income, net income did not significantly affect the CAP of our PEO or non-PEO NEOs in any period. We consider the list below to be our most important metrics that link compensation paid to our PEO and other Named Executive Officers to our performance, as they are the key metrics that determine the payouts under our annual Corporate Incentive Plan and Performance-Based RSUs. | Free Cash Flow | | | Adjusted Free Cash Flow | | | Annual Run Rate (ARR) | | | Relative TSR | |
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| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
AUDITOR MATTERS | | | | PROPOSAL 3 | | | Advisory Vote to Confirm the Selection of PricewaterhouseCoopers LLP as Our Independent Registered Public Accounting Firm for 2024 | | | We are asking shareholders to confirm the Audit Committee’s selection of PricewaterhouseCoopers LLP, a registered public accounting firm, as PTC’s independent registered public accounting firm for the fiscal year ending September 30, 2024. | | | Although shareholder confirmation of the selection of PricewaterhouseCoopers LLP is not required by law or our by-laws, and this vote is only advisory, the Board believes that it is advisable to give shareholders an opportunity to provide guidance on this selection. If this confirmation is not received, the Board will request that the Audit Committee review and reconsider its selection of PricewaterhouseCoopers LLP. | |
| | | | The Board of Directors recommends that you voteFORthe selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018.2024. | |
Engagement of Independent Auditor and Approval of Professional Services and Fees
The Audit Committee is responsible for the engagementselection of independent auditor each year and has selected PricewaterhouseCoopers LLP (PwC) as our independent registered public accounting firm for the current year. PwC has served in this role since 1992. Representatives of PwC attended all meetings of the Audit Committee in 2023. Independence of PricewaterhouseCoopers LLP In order to ensure continued auditor independence, the Audit Committee periodically considers whether there should be a rotation of our independent auditor. The Audit Committee concluded that many factors contribute to the continued support of PwC’s independence, including: •
Oversight by the Public Company Accounting Oversight Board (PCAOB) through the establishment of audit, quality, ethics, and independence standards in addition to conducting audit inspections; •
PCAOB requirements for audit partner rotation; and •
Limitations imposed by regulation and by the Audit Committee on non-audit services provided by PwC.
| 50 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Under the auditor independence rules, PwC reviews its independence each year and delivers to the Audit Committee a letter addressing matters prescribed under those rules. As part of ensuring audit quality, PwC lead audit partners and quality review partners are required to rotate off engagements every five years and other audit partners every seven years. The Audit Committee regards this required partner rotation as striking an appropriate balance between bringing “fresh eyes” to the audit and maintaining a deep understanding of our operations, in part, through continuity of other audit team members. The Audit Committee regards having an independent auditor with a thorough understanding of our operations and the complex accounting rules applicable to our operations as an important benefit of retaining PwC as the independent auditor. As an additional measure to ensure audit quality, PwC practice leaders use systems and processes to manage current and successor PwC audit partners’ portfolios, including understanding their skills and capacity to maintain audit quality. Policy on Independent Auditor Audit and Non-Audit Services The Audit Committee is responsible for approving in advance, all audit services and permitted non-audit services to be provided by the independent auditor. TheAccordingly, the Audit Committee has adopted a policy for the engagement of the independent auditor that is intended to maintain the independent auditor’s independence from PTC. In adopting the policy, the Audit Committee considered the various services that the independent auditor has historically performed or may be asked to perform in the future.The policy, which is reviewedAudit Committee has established, and re-adopted at least annuallymonitors, limits on the amount of audit and non-audit services that we may obtain from PwC. The policy: •
Approves the performance by the independent auditor of certain types of services (principally audit-related and tax), subject to restrictions in some cases, based on the Audit Committee:■ | Approves the performance by the independent auditor of certain types of services (principally audit-related and tax), subject to restrictions in some cases, based on the Committee’s determination that engaging the auditor for such services would not be likely to impair the independent auditor’s independence from PTC;
| ■ | Requires that management obtain the specific prior approval of the Audit Committee for each engagement of the independent auditor to perform other types of permitted services;
| ■ | Prohibits the performance by the independent auditor of certain types of services due to the likelihood that its independence would be impaired; and
| ■ | Sets an aggregate expenditure limitation on fees for approved services and provides for fee caps on certain categories of approved services that may not be exceeded without the prior approval of the Committee.
|
Committee’s determination that engaging the auditor for such services would not be likely to impair the independent auditor’s independence from PTC. •
Requires that management obtain the specific prior approval of the Audit Committee for each engagement of the independent auditor to perform other types of permitted services. •
Prohibits the performance by the independent auditor of certain types of services due to the likelihood that its independence would be impaired. •
Sets an aggregate expenditure limitation on fees for approved services and provides for fee caps on certain categories of approved services that may not be exceeded without the prior approval of the Audit Committee. Any approval required under the policy must be given by the Audit Committee, by the Chairman of the Audit Committee in office at the time, or by any other Audit Committee member to whom the Audit Committee has delegated that authority. The Audit Committee does not delegate its responsibilities to approve services performed by the independent auditor to any member of management. The standard applied by the Audit Committee in determining whether to grant approval of any engagement of the independent auditor is whether the services to be performed, the compensation to be paid therefor and other related factors are consistent with the independent auditor’s independence under guidelines of the Securities and Exchange Commission, the Public Company Accounting Oversight Board, and applicable professional standards. The Audit Committee considers: •
Whether the work product is likely to be subject to, or implicated in, audit procedures during the audit of PTC’s financial statements; •
Whether the independent auditor would be functioning in the role of management or in an advocacy role; •
Whether performance of the service by the independent auditor would enhance PTC’s ability to manage or control risk or improve audit quality; •
Whether performance of the service by the independent auditor would increase efficiency because of the auditor’s familiarity with PTC’s business, personnel, culture, systems, risk profile and other factors; and www.ptc.com | | | | 2024 PROXY STATEMENT | | | | | | 51 | |
PROPOSAL 3 | | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
The Committee considers:
■ | Whether the work product is likely to be subject to, or implicated in, audit procedures during the audit of PTC’s financial statements;
| ■ | Whether the independent auditor would be functioning in the role of management or in an advocacy role;
| ■ | Whether performance of the service by the independent auditor would enhance PTC’s ability to manage or control risk or improve audit quality;
| ■ | Whether performance of the service by the independent auditor would increase efficiency because of the auditor’s familiarity with PTC’s business, personnel, culture, systems, risk profile and other factors; and
| ■ | Whether the amount of fees involved, or the proportion of the total fees payable for tax and other non-audit services, would tend to reduce the independent auditor’s ability to exercise independent judgment in performing the audit.
|
•
Whether the amount of fees involved, or the proportion of the total fees payable for tax and other non-audit services, would tend to reduce the independent auditor’s ability to exercise independent judgment in performing the audit. PricewaterhouseCoopers LLP Professional Services and Fees
The table below shows the fees we paid for professional services rendered by PricewaterhouseCoopers LLP for 20172023 and 2016.2022. All of the fees disclosed below were pre-approved by the Audit Committee in accordance with theour policy described above.PRICEWATERHOUSECOOPERS LLP SERVICES AND FEES
Type of Professional Service | | Fiscal 2017 | | Fiscal 2016 | Audit Fees | | $ | 2,427,219 | | $ | 3,279,500 | Audit-Related Fees(1) | | $ | 160,848 | | $ | 557,000 | Tax Fees(2) | | $ | 1,478,003 | | $ | 1,570,915 | All Other Fees(3) | | $ | 1,800 | | $ | 1,800 |
(1) | Consists principally of fees for services related to comfort letter procedures in connection with a public debt offering in 2016 and consultations concerning financial accounting and reporting standards.
| (2) | Consists principally of fees related to tax compliance, tax planning and tax advice services, and tax compliance services related to PTC’s expatriate employees (including assistance with individual tax compliance that PTC provides as a benefit to these employees) as follows:
|
| Type of Tax Service | | Fiscal 2017 | | Fiscal 2016 | | Tax compliance and preparation services (comprised of preparation of original and amended tax returns, claims for refunds, and tax payment planning services) | | $ | 288,717 | | $ | 286,502 | | Tax compliance services related to PTC’s expatriate employees | | $ | 530,805 | | $ | 373,541 | | Other tax services, including tax planning and advice services and assistance with tax audits | | $ | 658,482 | | $ | 910,872 | | Total | | $ | 1,478,003 | | $ | 1,570,915 |
(3) | Consists of fees for accounting research software.
|
52 | PTC Inc. 2018 Proxy Statement |
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Report of theon Independent Auditor Audit Committee
The Audit Committee:
■ | Reviewed and discussed the audited financial statements for 2017 with management and with PricewaterhouseCoopers LLP;
| ■ | Discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, issued by the Public Company Accounting Oversight Board;
| ■ | Discussed with PricewaterhouseCoopers LLP its independence from PTC and its management, including the matters in the letter and written disclosures received from PricewaterhouseCoopers LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence; and
| ■ | Considered whether the independent auditor’s provision of the non-audit related services to PTC that are described above is compatible with maintaining independence.
|
Based on the Committee’s review and discussions with managementNon-Audit Services.
| Type of Professional Service | | | | 2023 ($) | | | | 2022 ($) | | | Audit | | | | | | 3,394,719 | | | | | | | 2,842,754 | | | | Audit-Related | | | | | | 28,800 | | | | | | | 53,258 | | | | Tax(1) | | | | | | 2,878,132 | | | | | | | 2,154,417 | | | | All Other(2) | | | | | | 900 | | | | | | | 900 | | | | Total | | | | | | 6,302,551 | | | | | | | 5,051,329 | | |
(1)
Fees for tax compliance and PricewaterhouseCoopers LLPtax planning and the Committee’s review of the independent auditor’s report to the Committee, the Committee recommended to the Board of Directors that the audited financial statements be included in PTC’s Annual Report on Form 10-Ktax advice services, as follows: | Type of Tax Service | | | | 2023 ($) | | | | 2022 ($) | | | Tax Preparation and Related Compliance Services (preparation of tax returns, claims for refunds, and tax payment planning services) | | | | | | 978,132 | | | | | | | 754,417 | | | | Other Tax Services (tax planning and advice services and assistance with tax auditors) | | | | | | 1,900,000 | | | | | | | 1,400,000 | | | | Total | | | | | | 2,878,132 | | | | | | | 2,154,417 | | |
(2)
Fees for the year ended September 30, 2017 for filing with the Securitiesaccounting research and Exchange Commission.Audit Committee
Paul Lacy, Chairman
Janice Chaffin
Phillip Fernandez
Corinna Lathan
Robert Schechter
compliance software. Attendance at the Annual Meeting
Representatives of PricewaterhouseCoopers LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they so desire and will also be available to respond to appropriate questions from stockholders.shareholders. www.ptc.com | 5352 | | | | | | 2024 PROXY STATEMENT | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
Report of ContentsInformation aboutthe Audit Committee
The Audit Committee: •
Reviewed and discussed the audited financial statements for FY2023 with management and with PricewaterhouseCoopers LLP; •
Discussed with PricewaterhouseCoopers LLP the matters required to be discussed by the applicable requirements of the U.S. Securities and Exchange Commission and the Public Company Accounting Oversight Board; •
Discussed with PricewaterhouseCoopers LLP its independence from PTC Common Stock Ownershipand its management, including the matters in the letter and written disclosures received from PricewaterhouseCoopers LLP as required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Audit Committee concerning independence; and •
Considered whether the independent auditor’s provision of the non-audit related services to PTC that are described above is compatible with maintaining independence. Based on the Audit Committee’s review and discussions with management and PricewaterhouseCoopers LLP and the Audit Committee’s review of the independent auditor’s report, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in PTC’s Annual Report on Form 10-K for the year ended September 30, 2023 filed with the Securities and Exchange Commission. AUDIT COMMITTEE | | | | 2024 PROXY STATEMENT | | | | | | 53 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | 2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP Stockholders thatWho Own at leastLeast 5% of PTC
The following table shows all persons we believe to be beneficial owners of more than 5% of PTC common stock as of November 30, 2017.2023. “Beneficial owners” of PTC common stock are those who have the power to vote or to sell that stock. Our information is based in part on reports filed with the Securities and Exchange Commission (SEC) by the firms listed in the table below. If you wish, you may obtain these reports from the SEC.Stockholder | Number of Shares Beneficially Owned(1) | | | Percentage of Common Stock Outstanding(2) | | BlackRock, Inc.(3) | 9,977,389 | (3) | | 8.59 | % | 55 East 52ndStreet | | | | | | New York, NY 10022 | | | | | | The Vanguard Group(4) | 8,757,707 | (5) | | 7.54 | % | 100 Vanguard Boulevard | | | | | | Malvern, PA 19355 | | | | | |
(1) | Stockholder | | | | Number of Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any stockholder that such stockholder beneficially owns the shares listed. Unless otherwise indicated, each stockholder referred to above has sole voting and investment power over the shares listed. Beneficially Owned(1) (#) | | | | Percentage of Common Stock Outstanding(2) | | (2) | For purposes of determining the percentage of common stock outstanding, the number of shares deemed outstanding consists of the 116,125,277 shares outstanding as of November 30, 2017.
| (3) | As reported on Schedule 13G filed January 25, 2017, BlackRock, Inc. is a parent holding company that has beneficial ownership of the shares reported through its subsidiaries. BlackRock has sole voting power over 9,555,490 of such shares and sole dispositive power over all such shares.
| (4) | As reported on Schedule 13G filed February 13, 2017,
The Vanguard Group is an investment adviser that has sole voting power over 67,591 of such shares, shared voting power over 12,824 of such shares, sole dispositive power over 8,682,898 of such shares and shared dispositive power over 74,809 of such shares. |
54100 Vanguard Boulevard Malvern, PA 19355 | PTC Inc. 2018 Proxy Statement |
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| INFORMATION ABOUT PTC COMMON STOCK OWNERSHIP | | | | 12,246,328(3) | | | | | | | 10.25% | | | | BlackRock, Inc. 55 East 52nd Street New York, NY 10055 | | | | | | 8,972,641(4) | | | | | | | 7.51% | | |
(1)
Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any shareholder that such shareholder beneficially owns the shares listed. (2)
For purposes of determining the percentage of common stock outstanding, the number of shares deemed outstanding consists of the 119,436,935 shares outstanding as of November 30, 2023. (3)
As reported on Schedule 13G filed February 9, 2023, The Vanguard Group is an investment adviser that has shared voting power over 159,797 of such shares, sole dispositive power over 11,800,171 of such shares and shared dispositive power over 446,157 of such shares. (4)
As reported on Schedule 13G filed February 3, 2023, BlackRock, Inc. is a parent holding company that has beneficial ownership of the shares reported through its subsidiaries. BlackRock has sole voting power over 8,146,094 of such shares and sole dispositive power over all 8,972,641 shares. Stock Owned by Directors and Officers
The following table shows the PTC common stock beneficially owned by PTC’s current directors and named executive officers, as well as all current directors and executive officers as a group, as of November 30, 2017.Director or Executive Officer | | Number of Shares Beneficially Owned(1) | | | Percentage of Common Stock Outstanding(2) | | Janice Chaffin | | 37,186 | | | 0.03 | % | Donald Grierson | | 62,300 | | | 0.05 | % | Phillip Fernandez | | 12,575 | | | 0.01 | % | Klaus Hoehn | | 20,527 | | | 0.02 | % | Paul Lacy | | 57,586 | | | 0.05 | % | Corinna Lathan | | — | (3) | | — | | Robert Schechter | | 64,826 | | | 0.06 | % | James Heppelmann | | 662,529 | | | 0.57 | % | Andrew Miller | | 104,464 | | | 0.09 | % | Barry Cohen | | 124,224 | | | 0.11 | % | Anthony DiBona | | 39,458 | | | 0.03 | % | Craig Hayman | | 119,082 | | | 0.10 | % | All directors, nominees for director, and current executive officers as a group (14 persons) | | 1,378,370 | | | 1.19 | % |
2023.
(1) | Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any stockholder that such stockholder beneficially owns the shares listed. Unless otherwise indicated, each stockholder referred to above has sole voting and investment power over the shares listed.
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| | | | | | | | | | | | | | | | | | | | | | | | | | (2)2023 Highlights | | | Proxy Summary | | | Corporate Governance | | | Executive Compensation | | | Auditor Matters | | | PTC Stock Ownership | | | Transactions with Related Persons | | | Annual Meeting Information | | | Appendix A | |
| Director or Officer Name | | | | Number of Shares Beneficially Owned(1) (#) | | | | Percentage of Common Stock Outstanding(2) | | | Mark Benjamin | | | | | | 6,399 | | | | | | | * | | | | Janice Chaffin | | | | | | 54,236 | | | | | | | * | | | | Amar Hanspal | | | | | | 3,776 | | | | | | | * | | | | Michael Katz | | | | | | 1,530 | | | | | | | * | | | | Paul Lacy(3) | | | | | | 58,636 | | | | | | | * | | | | Corinna Lathan | | | | | | 7,703 | | | | | | | * | | | | Janesh Moorjani(4) | | | | | | — | | | | | | | — | | | | Robert Schechter | | | | | | 67,334 | | | | | | | * | | | | James Heppelmann | | | | | | 1,003,357 | | | | | | | * | | | | Neil Barua(5) | | | | | | 22,080 | | | | | | | * | | | | Kristian Talvitie | | | | | | 69,368 | | | | | | | * | | | | Michael DiTullio | | | | | | 64,742 | | | | | | | * | | | | Catherine Kniker | | | | | | 15,194 | | | | | | | * | | | | Aaron von Staats | | | | | | 26,421 | | | | | | | * | | | | All directors, nominees for director, and current executive officers as a group (14 persons) | | | | | | 1,400,776 | | | | | | | 1.17% | | |
*
Less than 1%. (1)
Shares beneficially owned based on information available to us and applicable regulations. This does not constitute an admission by any shareholder that such shareholder beneficially owns the shares listed. Unless otherwise indicated, each shareholder has sole voting and investment power over the shares listed. (2)
For purposes of determining the percentage of common stock outstanding held by any person, the number of shares deemed outstanding consists of the 116,125,277 shares outstanding as of November 30, 2017, and any shares subject to RSUs held by the person that vest on or before January 30, 2018. |