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(1) | Includes 6,423,308 shares of Class B common stock held by Novak Biddle Venture Partners V, L.P. and 1,324,906 shares of Class B common stock held by Novak Biddle Company V, LLC. Novak Biddle Company V, LLC is the general partner of Novak Biddle Venture Partners V, L.P. AGW Biddle III, one of our directors, and E. Rogers Novak, Jr. are the managing members of Novak Biddle Company V, LLC and share voting and investment power over the shares held by Novak Biddle Venture Partners V, L.P. The principal business address of Novak Biddle Venture Partners V, L.P. is 7501 Wisconsin Avenue, East Tower, Suite 1380, Bethesda, MD 20814. |
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(2) | Consists of 5,216,187 shares of Class A common stock held by Abdiel Qualified Master Fund, LP, or AQMF, and 193,277 shares of Class A common stock held by Abdiel Capital, LP, or ACLP. This information has been obtained from a Schedule 13D/A filed on March 27, 2018 by Abdiel Capital Management, LLC, AQMF, ACLP, Abdiel Capital Advisors, LP and Colin T. Moran. Abdiel Capital Management, LLC is the general partner of AQMF and ACLP, and Abdiel Capital Advisors, LP serves as the investment manager of AQMF and ACLP. Colin T. Moran is the managing member of Abdiel Capital Management, LLC and Abdiel Capital Partners, LLC, which is the general partner of Abdiel Capital Advisors, LP. By virtue of the foregoing relationships, each of the reporting persons may be deemed to beneficially own the securities held by AQMF and ACLP. The principal business address of these persons and entities is 401 Park Avenue, Suite 930, New York, New York 10022. |
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(3) | Consists of (i) 7,174,902 shares of Class B common stock held by Wallingford, LLC, for which Mr. Calkins serves as the managing member, (ii) 21,274,710 shares of Class B common stock held by Calkins Family LLC, for which Mr. Calkins serves as the managing member, and (iii) 20 shares of Class B common stock issuable upon the exercise of options. Wallingford, LLC has pledged 2,204,586 shares of Class B common stock as security for a loan. |
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(4) | Consists of 56,020 shares of Class B common stock issuable upon the exercise of options. |
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(5) | Consists of 112,359 shares of Class A common stock held directly by Mr. Hughes and 213,047 shares of Class B common stock issuable upon the exercise of options. |
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(6) | Includes 3,220 shares of Class A common stock held directly by Mr. Biddle, 2,792 shares of Class A common stock and 54,801 shares of Class B common stock held by Jack Biddle, Inc., for which Mr. Biddle is the president, and 7,247 shares of Class B common stock held by each of Southgate Partner I, Southgate Partner II and Southgate Partners III, for which entities Mr. Biddle serves as the trustee. |
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(7) | Consists of 25,658 shares of Class A common stock held directly by Mr. Boccassam. |
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(8) | Consists of 3,681 shares of Class A common stock held directly by Mr. Devine and 54,000 shares of Class B common stock issuable upon the exercise of options. |
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(9) | Consists of 4,000 shares of Class A common stock held by Mr. Kramer directly, 2,537,598 shares of Class B common stock held by The Robert C. Kramer Revocable Trust, for which Mr. Kramer serves as sole trustee and beneficiary, and 106,520 shares of Class B common stock issuable upon the exercise of options. |
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(10) | Consists of 3,681 shares of Class A common stock held directly by Mr. Mulligan, 1,396 shares of Class A common stock held by Sea Level Investments, of which Mr. Mulligan is the president, and 120,602 shares of Class B common stock issuable upon the exercise of options. |
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(11) | Includes 655,129 shares of Class B common stock issuable upon the exercise of options. |
(1)Consists of shares of Class A common stock held by Baillie Gifford & Co, a Scottish partnership, and/or one or more of its investment adviser subsidiaries, which may include Baillie Gifford Overseas Limited, on behalf of investment advisory clients, which may include investment companies registered under the Investment Company Act, employee benefit plans, pension funds, or other institutional clients. This information has been obtained from a Schedule 13G/A filed on January 17, 2022, by Baillie Gifford & Co. The principal business address of Baillie Gifford & Co is Calton Square, 1 Greenside Row, Edinburgh EH1 3AN, Scotland, United Kingdom. (2)This information has been obtained from a Form 4 filed on March 22, 2022, by Abdiel Capital Management, LLC. The shares reported represent the aggregated holdings of Abdiel Qualified Master Fund, LP ("AQMF") and Abdiel Capital, LP ("ACLP"). Abdiel Capital Management, LLC is the general partner of AQMF and ACLP, and Abdiel Capital Advisors, LP serves as the investment manager of AQMF and ACLP. Colin T. Moran is the managing member of Abdiel Capital Management, LLC and Abdiel Capital Partners, LLC, which is the general partner of Abdiel Capital Advisors, LP. By virtue of the foregoing relationships, each of the reporting persons may be deemed to beneficially own the securities held by AQMF and ACLP. The principal business address of these persons and entities is 90 Park Avenue, 29th Floor, New York, New York 10016.
(3)This information has been obtained from a Schedule 13G/A filed on February 9, 2022, by The Vanguard Group. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(4)Consists of 682,150 shares of Class A common stock held directly by Mr. Calkins, 6,941,070 shares of Class B common stock held by Wallingford, LLC, for which Mr. Calkins serves as the managing member, 20,274,710 shares of Class B common stock held by Calkins Family LLC, for which Mr. Calkins serves as the managing member, and 1,444,283 shares of Class B common stock issuable upon the exercise of options. Wallingford, LLC and Calkins Family LLC have pledged 2,683,333 shares of Class B common stock and 1,600,000 shares of Class B common stock, respectively, as security for loans.
(5)Consists of 25,674 shares of Class A common stock held directly by Mr. Lynch and 19,530 shares of Class B common stock issuable upon the exercise of options.
(6)Consists of 154,507 shares of Class A common stock held directly by Mr. Kramer, 9,120 shares of Class A common stock and 2,213,478 shares of Class B common stock each held by The Robert C. Kramer Revocable Trust, for which Mr. Kramer serves as sole trustee and beneficiary, and 20 shares of Class B common stock issuable upon the exercise of options.
(7)Consists of 8,936 restricted stock units (“RSUs”) vesting within 60 days of March 31, 2022.
(8)Consists of 11,596 shares of Class A common stock held directly by Mr. Matheos, 4,020 shares of Class B common stock issuable upon the exercise of options, and 961 RSUs vesting within 60 days of March 31, 2022.
(9)Consists of 37,193 shares of Class A common stock held directly by Mr. Winters and 100 shares of Class B common stock issuable upon the exercise of options.
(10)Consists of 9,912 shares of Class A common stock held directly by Mr. Biddle, 86,000 shares of Class A common stock held by Jack Biddle, Inc., for which Mr. Biddle is the president, and 48,837 shares of Class A common stock held by three family trusts established for the benefit of Mr. Biddle's children, for which Mr. Biddle serves as the trustee.
(11)Consists of 23,614 shares of Class A common stock and 529 shares of Class B common stock held directly by Mr. Boccassam.
(12)Consists of 3,922 shares of Class A common stock held directly by Mr. Devine.
(13)Consists of 1,246 shares held by the Barbara Greene Kilberg Living Trust U/A dated July 1, 1998, of which William and Barbara Kilberg are the co-trustees, 1,246 shares held by the Kilberg Family Trust U/A dated October 13, 2021, of which Barbara Kilberg is the trustee, 479 shares held by William & Barbara Kilberg Trustees of the William Kilberg Trust dated July 1, 1998 and Barbara & William Kilberg Trustees of the Barbara Kilberg Trust dated July 1, 1998, Tenants in Common, which are pledged as security for a line of credit, and 65,200 shares of Class B common stock issuable upon the exercise of options.
(14)Consists of 700 shares of Class A common stock held directly by Mr. McCarthy.
(15)Consists of 21,724 shares of Class A common stock held directly by Mr. Mulligan and 3,070 and 1,057 shares of Class A and Class B common stock, respectively, held by Sea Level Investments, of which Mr. Mulligan is the president.
DELINQUENT SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEREPORTS
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities,Class A common stock to file with the SEC initial reports of ownership and reports of changes in ownership of our Class A common stock and other equity securities.stock. Officers, directors, and greater than ten percent stockholders are required by SEC regulationregulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required during the fiscal year ended December 31, 2017,2021, all Section 16(a) filing requirements applicable to itsour officers, directors, and greater than ten percent beneficial owners were complied with.
EXECUTIVE AND DIRECTOR COMPENSATION
We became a public company in May 2017, and we are currently an emerging growth company. As an emerging growth company, we are subject to the scaled reporting rules applicable to emerging growth companies. The following section describes, under the scaled reporting rules applicable to emerging growth companies, the compensation we paid to our named executive officers for 2017.
EXECUTIVE COMPENSATION DISCUSSION AND ANALYSIS
2017 Summary Compensation Table
Named Executive Officers
The following table sets forth information regardingCompensation Discussion and Analysis is a discussion of certain aspects of our compensation earned with respectprograms and practices as they relate to the years ended December 31, 2016 and 2017 by our principal executive officer, principal financial officer, and the next twothree other most highly compensated executive officers in 2017,as of December 31, 2021, whom we refer to below collectively as our “named executive officers” or “NEOs.”
Set forth below is also a description of the philosophy and objectives underlying our executive compensation policies, the most important executive compensation decisions during 2021, and an analysis of these policies and decisions.
Our named executive officers for 2017.2021 are:
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Name and Principal Position | Year | Salary ($) | Stock Awards ($) (1) | Option Awards ($) (2) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) (3) | Total ($) |
Matthew Calkins, Chief Executive Officer (6) | 2017
| 400,000 | – | 505 | 210,842 (5) | – | 611,347 |
2016
| 400,000 | – | 8,317,764 | 143,750 (4) | – | 8,861,514 |
Edward Hughes, Senior Vice President, Worldwide Sales | 2017
| 453,868 (7) | 1,113,500 | 505 | – | – | 1,567,873 |
2016
| 436,588 (8) | – | – | – | – | 436,588 |
Chris Winters, General Counsel and Secretary (9) | 2017 | 285,000 | 1,113,500 | 505 | 42,168 (5) | 9,000 | 1,450,173 |
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(1)Name | This column reflects the full grant date fair value of restricted stock units, or RSUs, granted during the year measured pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718), the basis for computing stock-based compensation in our consolidated financial statements. For the RSU awards, the grant date fair value is calculated using the closing price of our Class A common stock on the date of grant. See Note 7 to our Annual Report on Form 10-K for information regarding the value determination | Title |
Matthew Calkins | | Chief Executive Officer, President, Founder and Chairman of the RSU awards. There is no assurance that the grant date fair values will ever be realized by any named executive officer. See the "Outstanding Equity Awards at Fiscal Year End" table below for information on RSU awards granted to our named executive officers that remained outstanding as of December 31, 2017.Board |
Mark Lynch | | Former Chief Financial Officer |
Mark Matheos | | Chief Financial Officer(1) |
Eric Cross | | Chief Revenue Officer |
Christopher Winters | | General Counsel and Secretary |
(1) Mr. Matheos served as Senior Vice President, Global Corporate Controller until December 30, 2021 and was promoted to Chief Accounting Officer on December 31, 2021 and to Chief Financial Officer on April 1, 2022. Prior to his promotion to Chief Accounting Officer, Mr. Matheos was not an executive officer.
Executive Summary
Our Company
We provide a low-code automation platform that accelerates the creation of high-impact business applications and workflows, enabling our customers to automate the most important aspects of their business. Global organizations use applications built on our platform to improve customer experience, achieve operational excellence, and simplify global risk management and compliance.
We sell our software almost exclusively through subscriptions. As of December 31, 2021, we had 816 customers in a wide variety of industries, of which 635 customers were commercial and 181 customers were government or non-commercial entities.
Business Highlights
For our fiscal year ended December 31, 2021, we experienced strong revenue growth and significantly improved business results that provide context for our stockholders reviewing our executive compensation program. Our fiscal 2021 highlights include the following:
•Total revenue was $369.3 million.
•Subscriptions revenue was $263.7 million, an increase of 33% over 2020.
•Cloud subscription revenue retention rate was 116% as of December 31, 2021.
•GAAP operating loss was $83.9 million in 2021 compared to a loss of $37.9 million in 2020.
•Non-GAAP operating loss* was $43.7 million in 2021 compared to a loss of $22.6 million in 2020.
•Total number of subscription customers at December 31, 2021 was 783, an increase of 20% year-over-year.
*Non-GAAP operating loss is a non-GAAP financial measure, which represents GAAP operating loss, excluding stock-based compensation expense and certain litigation expenses. A reconciliation from GAAP operating loss to non-GAAP operating loss is set forth on Appendix A to this Proxy Statement.
Executive Compensation Philosophy and Practices
Philosophy and Objectives
Our compensation philosophy is driven by our objective to attract and retain outstanding individuals across the Company. We seek to reward those who take on additional responsibility, are innovative, and are making an exceptional impact on the Company’s business, employees, customers, partners, or culture. These principles and people are the pillars of our organization. Our objective is to signal to these individuals they have a future with the Company and are valued.
Our executive compensation program fits within this philosophy and aims to achieve these objectives. In addition, we also believe as a public company, certain elements of our executive compensation programs should align employee interests with those of our stockholders.
Practices and Policies
The Compensation Committee uses its judgment to establish a total compensation program for each named executive officer that is a mix of current, short-term, and long-term incentive compensation as well as cash and non-cash compensation it believes are appropriate to achieve the goals of our executive compensation program and our corporate objectives. We do not have formal policies for allocating compensation among base salary, annual performance bonuses, and equity awards or among cash and non-cash compensation. Furthermore, we do not have formal practices regarding grants of equity awards to our NEOs. Except with respect to his own compensation, our Chairman and CEO Matt Calkins advises the Compensation Committee with respect to the compensation of our NEOs.
The following is a summary of our guiding principles and practices with respect to executive compensation:
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(2)What We Do | This column reflects the full grant date fair value | What We Don't Do |
PConduct annual executive compensation review | | ONo “single trigger” change in control payments |
PPlace a significant amount of options granted during the year measured pursuant to ASC 718. In accordance with ASU 2016-9, we account for forfeitures as they occur, rather than estimate expected forfeitures. For stock options, we calculate the grant date fair value using the Black-Scholes model, using the assumptions described in Note 7 to our Annual Report on Form 10-K. There is no assurance that the grant date fair values will ever be realized by any named executive officer. See the "Outstanding Equity Awardstargeted compensation at Fiscal Year End" table below for information onrisk | | ONo stock option awards grantedrepricing |
PTie performance bonus opportunities to corporate objectives | | ONo automatic acceleration of vesting under equity plans |
PDesign our namedcompensation programs to discourage excessive risk-taking | | ONo executive officers that remained outstanding as of December 31, 2017.retirement plans |
PPlace a cap on performance bonuses | | ONo special welfare or health benefits |
PConduct a say-on-pay vote on an annual basis | | ONo guaranteed salary increases or bonuses |
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(3) | The amounts reported in this column represent matching contributions to our 401(k) savings plan or Roth IRA, which we provide to all eligible employees.ONo significant perquisites |
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(4) | This amount represents compensation earned with respect to the year ended December 31, 2016 and paid in 2017. This compensation was awarded pursuant to our 2016 Senior Executive Cash Incentive Bonus Plan (the “2016 Bonus Plan”). Bonuses paid under the 2016 Bonus Plan were measured as of December 31, 2016 and were paid in February 2017. The 2016 Bonus Plan was designed to motivate and reward executives for the attainment of company-wide financial and individual performance goals. Mr. Calkins was eligible to receive more than 100% of his target bonus if our performance exceeded the targets set forth in the 2016 Bonus Plan.ONo Section 280G tax gross-ups |
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(5) | This amount represents compensation earned with respect to the year ended December 31, 2017 and paid in 2018. See “ – Employment Arrangements – Bonus and Sales Commission Plans – 2017 Bonus Plan” below for a description of the material terms pursuant to which this compensation was awarded. |
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(6) | Mr. Calkins is also a member of our Board of Directors but did not receive any additional compensation in his capacity as a director. |
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(7) | Includes commissions of $138,868. |
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(8) | Includes commissions of $121,588. |
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(9) | Because Mr. Winters was not a named executive officer in 2016, SEC rules do not require his compensation for that year to be reported. |
Elements of Executive Compensation
Our compensation program generally consists of, and is intended to strike a balance among, three principal elements for each NEO: base salary, short-term cash incentive payments, and stock-based compensation for Mr. Calkins, Mr. Lynch, Mr. Matheos, and Mr. Winters, and base salary, bonus/sales commissions, and stock-based compensation for Mr. Cross. Set forth below is a description of these elements, their principal features, and why we pay them.
Base Salary
Base salary is one component of each NEO’s cash compensation. We establish base salary after considering a number of factors, including the scope of each NEO’s responsibilities, the performance of the NEO, and current economic and competitive market conditions. Base salaries are used to attract, motivate, and retain outstanding employees with a set amount and consistent payments. Base salaries for our NEOs are reviewed annually by the Compensation Committee and at the time of a promotion or other changes in responsibility of a NEO and may be adjusted after considering the above factors.
Short-Term Cash Incentive Payments
Outstanding Equity Awards
Each NEO, other than Mr. Cross, who participates in the Sales Commission Plan, is entitled to participate in the Senior Executive Cash Incentive Bonus Plan (the “Bonus Plan”), a performance-based target incentive payment program. Under the Bonus Plan, the NEO is eligible to receive a cash incentive payment based on the attainment of one or more corporate performance goals approved by the Board. The target amount for each NEO is determined by the Compensation Committee each year, generally at Fiscal Year Endthe beginning of such year. The Bonus Plan is intended to provide an incentive for superior work and to motivate eligible executives toward even higher achievement and business results, to tie their goals and interests to those of the Company and its stockholders, and to attract and retain highly qualified executives.
Sales Commission Plans
We establish sales commission plans to encourage and reward contributions to our long-term revenue growth for our sales employees. As the Chief Revenue Officer, Mr. Cross was eligible to receive compensation under our sales commission plan for 2021. Sales commission plans are set for each calendar year, and Mr. Cross was eligible to earn commissions based on the results of the worldwide sales team. The revenue targets are determined by our Board of Directors in consultation with our CEO and CFO.
Stock-Based Compensation
Another component of an NEO’s total compensation is stock-based compensation, in order to closely tie total compensation to long-term stockholder value. Accordingly, NEOs receive stock-based awards at the time of hire and are also eligible for stock-based awards on a periodic basis. Because our compensation program is designed to reward long-term performance and operate over a period of years, NEOs may not necessarily receive stock-based awards every year. Annual total compensation as reported in the Summary Compensation Table below includes the entire fair value as of the grant date of a stock award granted in that year, without regard to the fact the grant vests over a number of years, and as such, a named executive officer’s total compensation as reported will be higher in years in which he received a grant compared to years in which he did not receive a grant.
How We Determine Executive Compensation
Role of our Compensation Committee
The Compensation Committee reviews each NEO’s compensation at least once a year and makes a final determination regarding any adjustments to the current compensation structure and levels after considering a number of factors. The Compensation Committee generally considers the scope of an officer’s responsibilities and performance, as well as the Company’s performance and current market conditions. The Compensation Committee also considers recommendations made by our CEO with regard to equity grants to the other NEOs based on the performance of each NEO over the past year. We do not use a peer group or consider competitive market pay data at this time and have no present intention to consider peer group compensation in the near term. We may change this practice in the future.
Role of Compensation Committee Consultants
Under its charter, the Compensation Committee has the authority to select, retain, and terminate compensation consultants. The Compensation Committee did not retain any compensation consultants in 2021 and has not retained one for 2022 at this time.
Role of Chief Executive Officer
Our CEO makes recommendations to the Compensation Committee regarding the setting of performance objectives for the Company. The CEO may also set specific goals for particular departments of the Company such as our Customer Success organization. Each NEO is required to operate his function with the purposes of meeting the overall performance objectives of the Company and to maximize the productivity of his own functional area of responsibility. While our Compensation Committee solicits the recommendations of our Chief Executive Officer, the Compensation Committee uses these recommendations as only one factor in making compensation decisions. No NEO participates in portions of any meetings during which decisions are made regarding his own compensation. The final salary adjustments and incentive awards to NEOs are approved solely by the Compensation Committee.
Say-on-Pay; Stockholder Engagement
At our 2021 Annual Meeting of Stockholders, our stockholders approved the advisory resolution on executive compensation with over 95% of votes cast voting in favor of the resolution. We considered the results of this vote and view this vote as confirmation that our stockholders support our executive compensation policies and decisions.
We value our stockholders' feedback and actively engage with our stockholders, including through our quarterly earnings calls, investor conferences, and outreach through our Investor Relations department. We continued our engagement throughout 2021 during the global pandemic through virtual conferences, meetings, e-mails, and calls with institutional and retail investors.
2021 Executive Compensation Program
Base Salary
The Compensation Committee is responsible for reviewing and setting the base salaries of the NEOs. Base salaries are reviewed on a periodic basis by the Compensation Committee for all executive officers, including the NEOs. The Compensation Committee reviewed the base salary for Mr. Calkins in February 2021 and determined it would be appropriate to increase his base salary effective March 1, 2021 to $750,000. The base salaries for the other NEOs (other than Mr. Matheos, who became an executive officer on December 31, 2021, and Mr. Cross, who joined the Company in May 2020) were reviewed in December 2020 and set at the following levels, effective January 1, 2021: $600,000 for Mr. Lynch and $400,000 for Mr. Winters. In March 2022, the Compensation Committee assessed the base salaries of the NEOs and determined it would be appropriate to increase the base salaries of Messrs. Cross and Winters to the following levels, effective April 1, 2022: $500,000 for Mr. Cross and $600,000 for Mr. Winters. Mr. Matheos’ base salary was increased from $265,000 to $450,000 upon his promotion to Chief Accounting Officer on December 31, 2021 and to $750,000 upon his promotion to Chief Financial Officer on April 1, 2022. The Compensation Committee considered the performance of the Company and the responsibilities and contributions of each officer to the success of the Company to determine these increases were appropriate and warranted.
The following table setsis a summary of each NEO's base salary for fiscal years 2021 and 2020 (all amounts presented are in whole dollars):
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Name | | 2021 | | 2020 |
Matthew Calkins | | $ 750,000(1) | | $ | 500,000 | |
Mark Lynch | | $ | 600,000 | | | $ | 400,000 | |
Eric Cross | | $ | 400,000 | | | $ | 400,000 | |
Mark Matheos | | $ 450,000(2) | | (3) | |
Christopher Winters | | $ | 400,000 | | | $ | 350,000 | |
(1)Effective March 1, 2021. In 2021, Mr. Calkins was paid $708,333 in base salary.
(2)Effective December 31, 2021. In 2021, Mr. Matheos was paid $265,000 in base salary.
(3)Mr. Matheos was not a Named Executive Officer in 2020.
Senior Executive Cash Incentive Bonus Plan
For 2021, the Compensation Committee set corporate performance goals under the Bonus Plan that were based on the following objective criteria: (1) a minimum level of annual contract value bookings (“ACV Threshold”), or if the ACV Threshold is not met, a minimum level of quarterly contract value bookings (the “Quarterly ACV Targets”) and (2) a net revenue retention rate (“NRR”) for the year; provided, no payments are payable under (2) unless a payment is made under (1). If the payment under (1) is less than the maximum amount, the payment under (2) is subject to certain maximum amounts as set forth below.
The minimum levels were set with a goal of having Appian achieve superior revenue and customer growth rates in 2021 as well as to create the basis for growth in future periods through the renewal and expansion of subscription agreements with existing customers. Generally, the minimum levels are set such that the relative difficulty of achieving the minimum levels is consistent from year to year.
The amount each applicable NEO was eligible for under the Bonus Plan for 2021 was based on the following:
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NEO | | ACV Threshold and Quarterly ACV Targets (“ACV Target”) | | Net Revenue Retention Rate ("NRR") |
Matthew Calkins | | $225,000 if ACV Threshold is met; if not met, then $56,250 for each quarter that a Quarterly ACV Target is reached, provided the Quarterly ACV Target for Q4 is reached. | | $75,000 multiplied by the amount the NRR exceeds the NRR minimum divided by 7%, not to exceed $18,750 if the amount paid under the ACV Target is $56,250, not to exceed $37,500 if the amount paid under the ACV Target is $112,500, and not to exceed $56,250 if the amount paid under the ACV Target is $168,750. |
Mark Lynch | | $150,000 if ACV Threshold is met; if not met, then $37,500 for each quarter that a Quarterly ACV Target is reached, provided the Quarterly ACV Target for Q4 is reached. | | $50,000 multiplied by the amount the NRR exceeds the NRR minimum divided by 7%, not to exceed $12,500 if the amount paid under the ACV Target is $37,500, not to exceed $25,000 if the amount paid under the ACV Target is $75,000, and not to exceed $37,500 if the amount paid under the ACV Target is $112,500. |
Mark Matheos | | $37,500 if ACV Threshold is met; if not met, then $9,375 for each quarter that a Quarterly ACV Target is reached, provided the Quarterly ACV Target for Q4 is reached. | | $12,500 multiplied by the amount the NRR exceeds the NRR minimum divided by 7%, not to exceed $3,125 if the amount paid under the ACV Target is $9,375, not to exceed $6,250 if the amount paid under the ACV Target is $18,750, and not to exceed $9,375 if the amount paid under the ACV Target is $28,125. |
Christopher Winters | | $75,000 if ACV Threshold is met; if not met, then $18,750 for each quarter that a Quarterly ACV Target is reached, provided the Quarterly ACV Target for Q4 is reached. | | $25,000 multiplied by the amount the NRR exceeds the NRR minimum divided by 7%, not to exceed $6,250 if the amount paid under the ACV Target is $18,750, not to exceed $12,500 if the amount paid under the ACV Target is $37,500, and not to exceed $18,750 if the amount paid under the ACV Target is $56,250. |
The corporate performance goals for 2021 were calculated following the end of the year in accordance with the Company’s financial statements and disclosures. Each NEO earned the following amounts under the Bonus Plan for 2021: $261,810 for Mr. Calkins, $174,540 for Mr. Lynch, $43,350 for Mr. Matheos, and $87,270 for Mr. Winters. Such amounts were based solely on achievement of the corporate performance goals, with no discretionary bonus element.
Sales Commission Plan
Under our sales commission plan for 2021, Mr. Cross received a bonus of $445,926.
Long-Term Equity Incentive Compensation
Equity awards are granted under our 2017 Equity Incentive Plan (the “2017 Plan”), which was adopted by our Board and approved by our stockholders in 2017. In 2021, the Compensation Committee evaluated and approved equity awards under the 2017 Plan for Mr. Lynch of 5,570 RSUs, Mr. Cross of 5,648 RSUs, and Mr. Matheos of 3,764 RSUs, each of which vest over a four-year period. See “Grants of Plan-Based Awards in 2021.” No other NEOs received any equity awards in 2021.
Other Features of Our Executive Compensation Program
Employment Agreements
Mr. Calkins has entered into the standard employment agreement all of our employees agree to when commencing employment with Appian. The terms of the standard employment agreement state the employee is an “at-will” employee and include provisions regarding non-competition, confidential information, and intellectual property. There are no provisions for additional payments upon termination or change-of-control of the Company.
We previously entered into employment agreements with Messrs. Cross, Lynch, Matheos, and Winters that include additional provisions to our standard employment agreement described above. These employment agreements provide for a severance payment of base salary for a period of six months, the vesting of unvested equity, and the payment of continued employment benefits for six months as discussed in additional detail below. We did not amend any of the employment agreements in 2021. Mr. Matheos’ employment agreement was entered into in April 2022.
Section 401(k) Plan, Health and Other Benefits
We offer certain retirement, health, and other benefits to all employees. Our NEOs are eligible to participate in these benefit plans on the same basis as all other employees.
We provide a 401(k) Retirement Savings Plan (the “401(k) Plan”) to eligible U.S. employees that is intended to qualify under Section 401(k) of the Code as a defined contribution retirement plan. The 401(k) Plan allows participants to make elective deferrals of a portion of their income as a contribution to a Section 401(k) profit sharing plan. Under the 401(k) Plan, the Company may, but is not required to, make matching contributions. For 2021, the Company made semi-monthly matching contributions of $1.00 per $1.00 of the employee’s contribution for such pay period, up to a maximum of 4% of the employee’s gross compensation for such pay period.
Our health and benefit plans include medical, dental, vision, critical illness, accident, hospital indemnity, disability, life, long and short-term disability insurance, health savings and flexible spending accounts. All employees also receive flexible leave with no set maximum number of vacation days and a medical leave program that allows employees to take sick leave when they need it, up to 10 consecutive business days.
Perquisites and Other Personal Benefits
We do not believe it is appropriate at this time to provide special perquisites and benefits and thus our NEOs do not receive any personal benefits or perquisites that are not available on a non-discriminatory basis to all employees.
Tax and Accounting Considerations
Deductibility of Executive Compensation
Section 162(m) of the Code generally places a limit of $1 million on the amount of compensation deductible by a company in any one year with respect to compensation paid to certain of its officers, called covered employees. While we are mindful of the benefit of tax deductibility of compensation, we also value the flexibility of compensating our executive officers in a manner that can best promote our corporate objectives. Therefore, we may approve compensation that may not be fully deductible.
Accounting
Under the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718 (“ASC 718”), the company is required to estimate and record an expense for each award of equity compensation over the vesting period of the award. We record share-based compensation expense on an ongoing basis according to ASC 718.
Other Compensation Policies and Practices
As a public company, if we are required to restate our financial results due to our material noncompliance with any financial reporting requirements under the federal securities laws as a result of misconduct, our CEO and CFO may be legally required to reimburse us for any bonus or other incentive-based or equity-based compensation they receive in accordance with the provisions of Section 304 of the Sarbanes-Oxley Act of 2002.
We maintain an insider trading policy that prohibits employees, directors, and consultants from engaging in short sales, transactions in put or call options, hedging transactions, margin accounts, or other inherently speculative transactions with respect to our stock. We do not have any stock ownership requirements in place for our NEOs or prohibitions on pledging our stock.
We generally grant RSUs to newly hired employees shortly after the employee’s start date and subject to prior approval of the Compensation Committee. All employees are eligible for merit-based equity grants periodically throughout the year, subject to the approval of the Compensation Committee. We do not time the granting of equity awards to coordinate with the release of material non-public information.
Compensation Risk Assessment
As part of its review of the compensation paid to our employees, including our NEOs, the Compensation Committee considers any risks arising from the design and elements of our compensation policies and practices. We have determined the mix and design of the elements of executive compensation do not encourage management to assume excessive risks, and any potential risks are not reasonably likely to have a material adverse effect on our Company as a whole.
SUMMARY COMPENSATION TABLE
The following table shows, for the fiscal years 2021, 2020, and 2019, compensation awarded to, paid to, or earned by the Company’s Chief Executive Officer, Chief Financial Officer, its three other most highly compensated executive officers as of December 31, 2021 (the “Named Executive Officers”), in accordance with SEC rules. All amounts are presented in whole dollars.
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Name and Principal Position | | Year | | Salary | | Stock Awards(1) | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | All Other Compensation(4) | | Total |
Matthew Calkins,(5) Chief Executive Officer | | 2021 | | 708,333 | | | — | | | — | | | 261,810 | | | 11,705 | | | 981,848 | |
| 2020 | | 500,000 | | | — | | | — | | | 297,525 | | | 11,433 | | | 808,958 | |
| 2019 | | 483,333 | | | — | | | 9,497,647 | | | 127,500 | | | 11,592 | | | 10,120,072 | |
Mark Lynch,(6) Former Chief Financial Officer | | 2021 | | 600,000 | | | 846,696 | | | — | | | 174,540 | | | 11,018(7) | | 1,632,254 | |
| 2020 | | 400,000 | | | — | | | — | | | 49,588 | | | 11,769(7) | | 461,357 | |
| 2019 | | 377,500 | | | 1,002,527 | | | — | | | 21,250 | | | 9,135(7) | | 1,410,412 | |
Eric Cross,(6) Chief Revenue Officer | | 2021 | | 400,000 | | | 600,269 | | | — | | | 845,926 | | | 11,761 | | | 1,857,956 | |
| 2020 | | 400,000 | | | 1,473,725 | | | — | | | 247,938 | | | 9,353 | | | 2,131,016 | |
Christopher Winters, General Counsel and Secretary | | 2021 | | 400,000 | | | — | | | — | | | 87,270 | | | 10,847(7) | | 498,117 | |
| 2020 | | 350,000 | | | — | | | — | | | 49,588 | | | 11,544(7) | | 411,132 | |
| 2019 | | 339,167 | | | 501,264 | | | — | | | 21,250 | | | 11,393(7) | | 873,074 | |
Mark Matheos,(6) Chief Financial Officer | | 2021 | | 265,000 | | | 400,038 | | | — | | | 43,635 | | | 12,670(7) | | 721,343 | |
(1)This column reflects the full grant date fair value of RSUs granted during the year measured pursuant to ASC 718, the basis for computing stock-based compensation in our consolidated financial statements. For the RSU awards, the grant date fair value is calculated using the closing price of our Class A common stock on the date of grant. See Notes 2 and 11 to our Annual Report on Form 10-K for the year ended December 31, 2021 for information about outstanding equityregarding the value determination of the RSU awards. There is no assurance the grant date fair values will ever be realized by any Named Executive Officer. See the “Outstanding Equity Awards at December 31, 2021” table below for information on RSU awards granted to our named executive officersNamed Executive Officers that remained outstanding as of December 31, 2017.2021.
(2)This column reflects the full grant date fair value of options granted during the year measured pursuant to ASC 718. In accordance with Accounting Standards Update 2016-09, we account for forfeitures as they occur rather than estimate expected forfeitures. For stock options, we calculate the grant date fair value using the Black-Scholes model using the assumptions described in Note 11 to our Annual Report on Form 10-K for the year ended December 31, 2021. There is no assurance the grant date fair values will ever be realized by any Named Executive Officer. See the “Outstanding Equity Awards at December 31, 2021” table below for information on stock option awards granted to our Named Executive Officers that remained outstanding as of December 31, 2021. |
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| | Option Awards (1) | Stock Awards (2) |
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable (3) | Number of Securities Underlying Unexercised Options (#) Unexercisable (4) | Option Exercise Price ($) (5) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) (6) | Market Value of Shares or Units of Stock That Have Not Vested ($) (7) |
Matthew Calkins | 7/20/2016 | – | 1,828,080 (8) | 9.46 | 7/20/2026 | – | – |
| 4/25/2017 | – | 100 (9) | 12.00 | 4/25/2027 | – | – |
Edward Hughes | 9/8/2009 | 314,066 | – | 0.89 | 9/8/2019 | – | – |
| 1/27/2012 | 10,000 | – | 1.16 | 1/27/2022 | – | – |
| 5/1/2012 | 1,000 | – | 1.16 | 5/1/2022 | – | – |
| 9/5/2013 | 320 | 80 (10) | 1.59 | 9/5/2023 | – | – |
| 4/25/2017 | – | 100 (9) | 12.00 | 4/25/2027 | – | – |
| 10/25/2017 | – | – | – | – | 50,000 (11) | 1,574,000 |
Christopher Winters | 11/17/2015 | 56,000 | 84,000 (12) | 7.03 | 11/17/2025 | – | – |
| 4/25/2017 | – | 100 (9) | 12.00 | 4/25/2027 | – | – |
| 10/25/2017 | – | – | – | – | 50,000 (11) | 1,574,000 |
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(1) | All of the option awards listed in the table were granted under our 2007 Stock Option Plan (the "2007 Plan"). |
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(2) | All of the stock awards listed in the table are RSUs that were granted under our 2017 Equity Incentive Plan (the "2017 Plan"). |
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(3) | The shares of Class B common stock reflected in this column are vested and exercisable. |
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(4) | The shares of Class B common stock reflected in this column had not satisfied the option’s vesting requirement as of December 31, 2017. |
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(5) | All of the option awards listed in the table were granted with a per share exercise price equal to or above the fair market value of our common stock on the date of the grant, as determined in good faith by our Board of Directors. |
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(6) | The shares of Class B common stock reflected in this column had not satisfied the RSU’s vesting requirement as of December 31, 2017. |
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(7) | Represents the market value of the shares of Class A common stock underlying the RSUs as of December 31, 2017, based on the official closing price of our Class A common stock, as reported on the Nasdaq Global Select Market, of $31.48 per share on December 31, 2017. |
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(8) | The shares of Class B common stock listed vest and become exercisable upon the occurrence of (a) a change of control in which the value per share of the Class A common stock is equal or greater than $28.38 and/or (b) the Class A common stock trades at or above $28.38 for a period equal to or greater than ninety (90) calendar days following the closing of our initial public offering. |
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(9) | One-fifth of the shares of Class B common stock listed will vest on April 25, 2018 and the remaining shares of Class B common stock will vest in four equal installments, on April 25, 2019 and each of the next three anniversaries thereof, subject to the recipient’s continued service through each vesting date. |
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(10) | The shares of Class B common stock listed will vest on September 5, 2018, subject to the recipient’s continued service through the vesting date. |
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(11) | One-fifth of the shares of Class A common stock listed will vest on November 5, 2018, and the remaining shares of Class A common stock will vest in four equal annual installments beginning on November 5, 2019, subject to the recipient’s continued service through each vesting date. |
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(12) | One-third of the shares of Class B common stock listed will vest on November 17, 2018 and the remaining shares of Class B common stock will vest in two equal installments, on November 17, 2019 and November 17, 2020, subject to the recipient’s continued service through each vesting date. |
(3)Totals for 2021, 2020, and 2019 represent amounts earned by our NEOs, other than Mr. Cross, during those years pursuant to our Senior Executive Cash Incentive Bonus Plan (the “Bonus Plan”). The 2021 total for Mr. Cross includes $445,926 earned under the Sales Commission Plan and a $400,000 retention bonus. The 2020 total for Mr. Cross represents amounts earned during 2020 pursuant to his specific bonus program.
19(4)The amounts reported in this column include matching contributions to our 401(k) savings plan or Roth IRA, life insurance premiums, and HSA contributions, which we provide to all eligible employees. See “Compensation Discussion and Analysis – Other Features of Our Executive Compensation Program.”
Employment Arrangements
The terms and conditions of employment for each(5)Mr. Calkins is a member of our namedBoard of Directors but does not receive any additional compensation in his capacity as a director.
(6)Because Mr. Lynch was not a Named Executive Officer in 2019 and Mr. Matheos was not a Named Executive Officer in 2020 or 2019, SEC rules do not require their compensation for those respective years to be reported. Mr. Matheos did not serve as Chief Financial Officer in 2021, and his compensation is being reported as an executive officers are set forthofficer other than the principal financial officer for 2021. Additionally, Mr. Cross was hired in their respective employment agreements. Each of our named executive officersMay 2020; therefore, his compensation for 2019 is an at-will employee.not included.
(7)Includes payments for health savings account contributions, which is a benefit available to all employees. These payments totaled $1,000 in 2021, $750 in 2020, and $500 in 2019.
GRANTS OF PLAN-BASED AWARDS IN 2021
The following table sets forthshows certain information regarding grants of plan-based awards to the base salariesNamed Executive Officers for the fiscal year ended December 31, 2021. There are no threshold, target, or maximum amounts set under the Bonus Plan for fiscal year 2021. The dollar value of the actual payments for these awards are included in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” above. For more information about our Bonus Plan, see “Compensation Discussion and Analysis - 2021 Executive Compensation Program - Senior Executive Cash Incentive Bonus Plan.”
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Name | | Grant Date | | All Other Stock Awards: Number of RSUs | | All Other Option Awards: Number of Securities Underlying Options | | Per Share Exercise or Base Price of Option Awards | | Grant Date Fair Value of Stock and Option Awards ($)(3) |
Matthew Calkins | | — | | | — | | | — | | | — | | | — | |
Mark Lynch | | 1/8/2021 | | 5,570(1) | | — | | | — | | | $ | 846,696 | |
Eric Cross | | 5/4/2021 | | 5,648(2) | | — | | | — | | | $ | 600,269 | |
Mark Matheos | | 5/4/2021 | | 3,764(2) | | — | | | — | | | $ | 400,038 | |
Christopher Winters | | — | | | — | | | — | | | — | | | — | |
(1)The RSU award was granted pursuant to our 2017 Plan. Each RSU represents a contingent right to receive one share of our Class A Common Stock (or its cash equivalent, at our discretion). The RSUs vest 25% on each anniversary of January 5, 2021, provided the NEO has provided continuous service to us through each vesting date.
(2)These RSU awards were granted pursuant to our 2017 Plan. Each RSU represents a contingent right to receive one share of our Class A Common Stock (or its cash equivalent, at our discretion). The RSUs vest 25% on each anniversary of May 5, 2021, provided the NEOs have provided continuous service to us through each vesting date.
(3)See Footnotes 1 and 2 to the “Summary Compensation Table,” above, as applicable.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2021
The following table shows, for the fiscal year ended December 31, 2021, certain information regarding outstanding equity awards at fiscal year-end for the Named Executive Officers. The market value of the Stock Awards represents the market value of the shares of Class A common stock underlying the RSUs as of December 31, 2021, based on the closing price per share of our Class A common stock as reported on The Nasdaq Global Select Market of $65.21 on such date.
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| | Option Awards(1) | | Stock Awards (RSUs)(1) |
Name | | Option Grant Date | | Number of Securities Underlying Unexercised Options: Exercisable(2) | | Number of Securities Underlying Unexercised Options: Unexercisable(3) | | Option Exercise Price(4) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested(5) | | Market Value of Shares or Units of Stock That Have Not Vested ($) |
Matthew Calkins | | 7/20/2016 | | 1,444,183 | | | — | | | $ | 9.46 | | | 7/20/2026 | | — | | | $ | — | |
| 4/25/2017 | | 80 | | | 206) | | $ | 12.00 | | | 4/25/2027 | | — | | | $ | — | |
| 5/23/2019 | | 700,000 | | | — | | | $ | 33.98 | | | 5/23/2024 | | — | | | $ | — | |
Mark Lynch | | 7/20/2016 | | 30,000 | | | — | | | $ | 9.46 | | | 7/20/2026 | | 10,000(7) | | $ | 652,100 | |
| 4/25/2017 | | 80 | | | 20(6) | | $ | 12.00 | | | 4/25/2027 | | 152(8) | | $ | 9,912 | |
| — | | | — | | | — | | | $ | — | | | — | | | 13,566(9) | | $ | 884,639 | |
| — | | | — | | | — | | | $ | — | | | — | | | 5,570(10) | | $ | 363,220 | |
Eric Cross | | — | | | — | | | — | | | $ | — | | | — | | | 18,272(11) | | $ | 1,191,517 | |
| — | | | — | | | — | | | $ | — | | | — | | | 5,648(12) | | $ | 368,306 | |
Mark Matheos | | 4/25/2017 | | — | | | 4,020(6) | | $ | 12.00 | | | 4/25/2027 | | 20(7) | | $ | 1,304 | |
| — | | | — | | | — | | | $ | — | | | — | | | 40(13) | | $ | 2,608 | |
| — | | | — | | | — | | | $ | — | | | — | | | 3,393(9) | | $ | 221,258 | |
| — | | | — | | | — | | | $ | — | | | — | | | 3,764(12) | | $ | 245,450 | |
Christopher Winters | | 11/17/2015 | | 1,896 | | | — | | | $ | 7.03 | | | 11/17/2025 | | 10,000(7) | | $ | 652,100 | |
| 4/25/2017 | | 80 | | | 20(6) | | $ | 12.00 | | | 4/25/2027 | | 6,783(9) | | $ | 442,319 | |
(1)All of the option awards and RSU awards listed in this table and granted before our 2017 Plan became effective on May 24, 2017 were granted under the 2007 Plan; all other option awards and RSU awards listed in this table were granted under the 2017 Plan.
(2)The shares of Class B common stock reflected in this column are vested and exercisable.
(3)The shares of Class B common stock reflected in this column had not satisfied the option vesting requirements as of December 31, 2021.
(4)All of the option awards listed in the table were granted with a per share exercise price equal to or above the fair market value of our common stock on the date of the grant as determined in good faith by our Board of Directors.
(5)The shares of Class A common stock reflected in this column had not satisfied the RSU vesting requirements as of December 31, 2021.
(6)The options vested on April 25, 2022.
(7)The RSUs were granted on October 25, 2017, and the fiscal year 2017 bonus targetremaining unvested RSUs vest on November 5, 2022, subject to each recipient’s continued service through that date.
(8)The RSUs were granted on October 19, 2018, and the remaining unvested RSUs vest in two equal annual installments on each of our named executive officers:November 5, 2022 and November 5, 2023, subject to the recipient’s continued service through each vesting date.
(9)The RSUs were granted on October 29, 2019, and the remaining unvested RSUs vest in three equal annual installments on each of November 5, 2022, November 5, 2023 and November 5, 2024, subject to each recipient’s continued service through each vesting date.
(10)The RSUs were granted on January 8, 2021. 1,393 of the RSUs vested on January 5, 2022, and the remaining RSUs will vest in three equal annual installments on each of January 5, 2023, January 5, 2024, and January 5, 2025, subject to the recipient's continued service through each vesting date.
(11)The RSUs were granted on June 4, 2020. 7,524 of the RSUs will vest on each of May 5, 2022 and May 5, 2023, and 3,224 of the RSUs will vest on May 5, 2024, subject to the recipient's continued service through each vesting date.
(12)The RSUs were granted on May 4, 2021 and vest in four equal annual installments on each of May 5, 2022, May 5, 2023, May 5, 2024 and May 5, 2025, subject to each recipient's continued service through each vesting date.
(13)The RSUs were granted on April 27, 2018, and the remaining unvested RSUs vest in two equal annual installments on each of May 5, 2022 and May 5, 2023, subject to the recipient’s continued service through each vesting date.
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Named Executive Officer | | Base Salary ($) | | Fiscal Year 2017 Bonus Target ($) |
Matthew Calkins | | 400,000 | | 250,000 |
Edward Hughes | | 315,000 | | – (1) |
Christopher Winters | | 285,000 | | 50,000 |
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(1) | Mr. Hughes participates in our Sales Commission Plan and did not participate in our 2017 Bonus Plan. |
OPTION EXERCISES AND STOCK VESTED IN 2021
The following table sets forthpresents, for each of the current base salaries for 2018Named Executive Officers, on an aggregate basis, the number of shares of our common stock acquired upon the exercise of stock options and the vesting and settlement of RSUs during the fiscal year 2018 bonus targetended December 31, 2021 and the aggregate value realized on the exercise of stock options and the vesting and settlement of RSUs.
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| | Option Awards | | Stock Awards (RSUs) |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise(1), (2) ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting(1), (3) ($) |
Matthew Calkins | | — | | | — | | | — | | | — | |
Mark Lynch | | — | | | — | | | 14,598 | | | 1,324,477 | |
Eric Cross | | — | | | — | | | 7,524 | | | 769,780 | |
Mark Matheos | | 6,020 | | | 537,157 | | | 1,171 | | | 106,476 | |
Christopher Winters | | 35,000 | | | 5,521,916 | | | 12,261 | | | 1,112,441 | |
(1)These values assume the fair market value of the Class B common stock underlying certain of the RSUs and options, which is not listed or approved for trading on or with any securities exchange or association, is equal to the fair market value of our named executive officers:Class A common stock. Each share of Class B common stock is convertible into one share of Class A common stock at any time at the option of the holder or upon certain transfers of such shares.
(2)The aggregate value realized upon the exercise of an option represents the difference between the aggregate market price of the shares of our Class B common stock, assumed to be equal to our Class A common stock as described in footnote (1) above, on the date of exercise and the aggregate exercise price of the option.
(3)The aggregate value realized upon the vesting of an RSU represents the aggregate market price of the shares of our Class A common stock or Class B common stock (which is assumed to be equal to our Class A common stock as described in footnote (1) above) on the vesting date.
EMPLOYMENT AGREEMENTS
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Named Executive Officer | | Base Salary ($) | | Fiscal Year 2018 Bonus Target ($) |
Matthew Calkins | | 400,000 | | 250,000 |
Edward Hughes | | 315,000 | | – (1) |
Christopher Winters | | 285,000 | | 50,000 |
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(1) | Mr. Hughes participates in our Sales Commission Plan and does not participate in our 2018 Bonus Plan. |
Potential Payments Upon TerminationMr. Calkins is employed under our standard employment agreement available to all employees. Our standard employment agreement does not provide for any payments at, following, or Change in Control
connection with the resignation, severance, retirement, or other termination (including constructive termination) of the employee, a change in his responsibilities, or a change in control of the Company. Each of our NEOs is an at-will employee. Regardless of the manner in which a named executive officer’san NEO’s service terminates, the named executive officerNEO is entitled to receive amounts earned during his term of service, including salary. Except
Eric Cross. Pursuant to his employment agreement and as describeddefined below, if Mr. Cross’ employment with us is terminated by us without cause or if Mr. Cross resigns his employment with us for Good Reason, in each case within one year of a Change in Control of our named executive officers are notcompany, Mr. Cross is entitled to any additionalreceive (i) six months of salary, (ii) full acceleration of vesting with respect to all then-unvested equity awards granted to Mr. Cross pursuant to our equity incentive plans, and (iii) payment of premiums for continued health benefits under COBRA for up to six months. Mr. Cross’ severance payments and benefits uponare conditioned on his complying with his post-termination obligations set forth in his employment agreement and signing a terminationgeneral release of employment.claims in our favor.
Edward Hughes.
Mark Lynch. Pursuant to his employment agreement and as defined below, if Mr. Lynch’s employment with us is terminated by us without cause or if Mr. Lynch resigns his employment with us for Good Reason, in each case within 30 days prior to or one year following a Change in Control of our company, Mr. Lynch is entitled to receive: (i) six months of salary, (ii) full acceleration of vesting with respect to all then-unvested equity awards granted to Mr. Lynch pursuant to our equity incentive plans, and (iii) payment of premiums for continued health benefits under COBRA for up to six months. Mr. Lynch’s severance payments and benefits are conditioned on his complying with the post-termination obligations set forth in his employment agreement and signing a general release of claims in our favor.
Mark Matheos. Pursuant to his employment agreement and as defined below, if Mr. Hughes’sMatheos’ employment with us is terminated by us without cause heor if Mr. Matheos resigns his employment with us for Good Reason, in each case within 30 days prior to or one year following a Change in Control of our company, Mr. Matheos is entitled to 12 months’ severance.receive: (i) six months of salary, (ii) full acceleration of vesting with respect to all then-unvested equity awards granted to Mr. Matheos pursuant to our equity incentive plans, and (iii) payment of premiums for continued health benefits under COBRA for up to six months. Mr. Matheos’ severance payments and benefits are conditioned on his complying with the post-termination obligations set forth in his employment agreement and signing a general release of claims in our favor.
Christopher WintersWinters.. Pursuant to his employment agreement and as defined below, if Mr. Winters’ employment with us is terminated by us without cause or if Mr. Winters resigns his employment with us for good reason,Good Reason, in each case within 30 days
prior to or one year following a change of controlChange in Control of our company, Mr. Winters is entitled to receive (i) six months’ severance,months of salary, (ii) full acceleration of vesting with respect to all then-unvested equity awards granted to Mr. Winters pursuant to our equity incentive plans, and (iii) payment of premiums for continued health benefits under COBRA for up to six months.
Bonus Mr. Winters’ severance payments and Sales Commission Plans
2017 Bonus Plan
In 2017, Messrs. Calkins and Winters were eligible to participate in our 2017 Senior Executive Cash Incentive Bonus Plan, or 2017 Bonus Plan. Bonuses were measured as of December 31, 2017 and were paid in March 2018. The 2017 Bonus Plan was designed to motivate and reward executives for the attainment of company-wide financial and individual performance goals. Messrs. Calkins and Winters were eligible to receive more than 100% of their target bonuses if our performance exceeded the targetsbenefits are conditioned on his complying with his post-termination obligations set forth in his employment agreement and signing a general release of claims in our favor.
“Change in Control” means the 2017 Bonus Plan. Messrs. Calkins and Winters received bonusesoccurrence of $210,842 and $42,168, respectively, pursuant(i) a change of ownership constituting more than 50% of the total voting power of Company stock (other than Mr. Calkins); (ii) a change in the effective control of the Company by replacement of a majority of the Board members during any twelve month period, which replacement is not endorsed by a majority of members of the Board or by vote of Mr. Calkins; or (iii) a change in ownership of a substantial portion of the Company’s assets, subject to certain limitations as set forth in each employment agreement.
“Good Reason” means (i) a material diminution in base compensation or target bonus; (ii) a material diminution in authority, duties, or responsibilities; (iii) a requirement to report to a corporate officer or Company employee other than the CEO; (iv) a material diminution in the employee’s budget; (v) a material change in the geographic location at which the employee must perform services; or (vi) any action or inaction that constitutes a material breach of the agreement by the Company, subject to certain limitations as set forth in each employment agreement.
EQUITY PLAN TERMS
Each of our NEOs holds equity awards under the terms of the 2017 Bonus Plan.
Plan and, for those awards granted prior to our IPO, the 2007 Stock Option Plan (the “2007 Plan”). The 2017 Plan and 2007 Plan do not include provisions for automatic acceleration of vesting upon a change of control of us or other significant corporate transactions. Under the 2017 Plan, the portion of the RSU award that has not vested will be forfeited upon termination of the participant’s employment with us. Under the 2007 Plan, if a participant is terminated for cause, any unexercised and exercisable options may not be exercised after termination. If the participant is terminated because of the death of the participant, the participant’s legal representative may exercise any unexercised and exercisable options for a period of one year after the participant’s death, and if the participant is terminated for any other reason, the participant has 30 days to exercise any unexercised and exercisable options. For a complete description of the terms of the plans, refer to the plan documents filed as exhibits to our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on February 17, 2022.
SUMMARY OF ESTIMATED AMOUNTS PAYABLE UPON A TERMINATION OR CHANGE IN CONTROL
The following table summarizes the estimated payments to be made to Messrs. Cross, Lynch, Matheos, and Winters under the terms of their employment agreements in the event of a termination of employment without cause or for good reason in connection with a change in control, upon resignation, or death. In accordance with SEC regulations, the following table does not include any amount to be provided to a Named Executive Officer under any arrangement that does not discriminate in scope, terms, or operation in favor of the Named Executive Officer and that is available generally to all salaried employees. Also, the following table does not duplicate information already provided in the outstanding equity awards at fiscal year-end table, except to the extent the amount payable to the Named Executive Officer would be enhanced by the termination event. The amounts in the following table are hypothetical and based on SEC regulations. Actual payments will depend on the circumstances and timing of any termination.
In accordance with SEC regulations, for purposes of the quantitative disclosure in the following table, we have assumed the termination took place on December 31, 2021 under the terms of the current employment agreements, based on the NEOs compensation structure as of December 31, 2021, and the price per share of our common stock is the closing price of our Class A common stock as reported on The Nasdaq Global Market on December 31, 2021, or $65.21. All amounts are presented in whole dollars.
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NEO Benefits and Payments upon Termination | | Termination by Company Without Cause or by Employee for Good Reason, each in Connection with a Change in Control | | Voluntary Termination | | Death |
Eric Cross | | | | | | |
Severance Payment | | $ | 200,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 1,559,823 | | | — | | | — | |
Insurance Benefits | | 12,495 | | | — | | | — | |
Total: | | $ | 1,772,318 | | | $ | — | | | $ | — | |
Mark Lynch | | | | | | |
Severance Payment | | $ | 300,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 1,909,870 | | | — | | | — | |
Insurance Benefits | | 8,819 | | | — | | | — | |
Total: | | $ | 2,218,689 | | | $ | — | | | $ | — | |
Mark Matheos | | | | | | |
Severance Payment | | $ | 225,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 732,765 | | | — | | | — | |
Insurance Benefits | | 7,738 | | | — | | | — | |
Total: | | $ | 965,503 | | | $ | — | | | $ | — | |
Christopher Winters | | | | | | |
Severance Payment | | $ | 200,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 1,094,419 | | | — | | | — | |
Insurance Benefits | | 8,523 | | | — | | | — | |
Total: | | $ | 1,302,942 | | | $ | — | | | $ | — | |
CEO PAY RATIO
Under SEC rules, we are required to provide a reasonable estimate of the ratio of the annual total compensation of Mr. Calkins, our Chief Executive Officer, to the median of the annual total compensation of our other employees. During 2021, there have been no changes to our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure. Additionally, there was no change in the circumstances of the employee identified as the median employee in 2020. Therefore, as permitted by SEC rules, we used the same median employee as disclosed in our proxy statement filed in 2021.
For our last completed fiscal year, which ended December 31, 2021:
•The median of the annual total compensation of all of our employees (other than Mr. Calkins), including employees of our consolidated subsidiaries, was approximately $127,200.
2018 Bonus Plan
Messrs. Calkins and Winters are eligible to participate in our 2018 Senior Executive Cash Incentive Bonus Plan, or 2018 Bonus Plan. The 2018 Bonus Plan is designed to motivate and reward executives•Mr. Calkins' annual total compensation for the attainment of company-wide and individual performance goals. Messrs. Calkins and Winters are eligible to receive more than 100% of their target bonuses if our performance exceeds the targets set forth2021, as reported in the 2018 Bonus Plan.Summary Compensation Table included in this Proxy Statement, was $981,848.
Sales Commission Plan•Based on the above, for fiscal year 2021, the ratio of Mr. Calkins' annual total compensation to the median of the annual total compensation of all employees was approximately 7.72 to 1.
We establish sales commission plans to encourage
This pay ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Securities Act of 1933, as amended and reward contributionsbased upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the median employee or calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by us in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our long-term revenue growth. Mr. Hughes was, and continues to be, eligible to receive compensation under our sales commission plans. Under our sales commission plan for 2017, Mr. Hughes’ target commission was $175,000. Mr. Hughes received commissions of $138,868 pursuant to our sales commission plan for 2017. Under our sales commission plan for 2018, Mr. Hughes’ target commission is $200,000.pay ratio as disclosed above.
DIRECTOR COMPENSATION
Non-Employee Director Compensation Arrangements
Our Board of Directors has adopted a director compensation policy for non-employee directors, which provides for the compensation of non-employee directors with cash and equity compensation. UnderFor 2021, under the policy, each non-employee director receives an annual board service retainer of $130,000. The chairperson of each of our Audit Committee and our Compensation Committee receives additional annual committee chair service retainers of $20,000 and $10,000, respectively. Members of our Audit Committee and our Compensation Committee receive additional annual cash retainers of $10,000 for each such committee of which they are a member, in addition to any amounts that such members may receive for service as chairperson.$250,000. The annual retainers set forth above are paid one-half in the form of cash and one-half in the form of fully-vested shares of our Class A common stock to be issued pursuant to our 2017 Plan. The number of shares of Class A common stock is determined by dividing the dollar amount of retainers to be paid in shares by the fair market value per share of our common stock on the date the retainer is payable, rounded down to the nearest whole share. All equity awards under this policy are also subject to the limitations on compensation payable to non-employee directors set forth in our 2017 Plan. The annual retainers are paid or granted, as applicable, in equal quarterly installments in advance on the first day of each fiscal quarter in which the service occurs. Non-employee directors who join our Board of Directors at a time other than the first day of a fiscal quarter are paid and granted a pro-ratedprorated portion of the annual retainer. We also reimburse all reasonable out-of-pocket expenses incurred by non-employee directors in attending meetings of our Board of Directors or any committee thereof.
2021 Director Compensation Table
The following table shows for the fiscal year ended December 31, 20172021 certain information with respect to the compensation of all non-employee directors of the Company. Matthew Calkins, our Chief Executive Officer, isand Robert Kramer, our General Manager, are executive officers and also a membermembers of our Board of Directors,, but didthey do not receive any additional compensation for their service as a director.directors. Mr. Calkins’s compensation as a named executive officerNamed Executive Officer is set forth above under “—2017“2021 Summary Compensation Table.” Mr. Kramer
| | | | | | | | | | | | | | | | | | | | |
Name | | Fees Earned or Paid in Cash ($) | | Stock Awards(1) ($) | | Total ($) |
A.G.W. “Jack” Biddle, III | | 125,328 | | | 124,672 | | | 250,000 | |
Prashanth “PV” Boccassam | | 125,328 | | | 124,672 | | | 250,000 | |
Michael G. Devine | | 125,328 | | | 124,672 | | | 250,000 | |
Barbara “Bobbie” Kilberg | | 125,328 | | | 124,672 | | | 250,000 | |
Michael J. Mulligan | | 125,328 | | | 124,672 | | | 250,000 | |
(1)The value disclosed is an executive officerthe aggregate grant date fair value of 990 shares of Class A common stock granted to each of our non-employee directors, computed in accordance with FASB ASC Topic 718. The number of shares of Class A common stock granted to each director was set using the closing price of our common stock as of the Company but does not receive any additional compensationgrant date.
The table below shows the aggregate number of option awards outstanding as of December 31, 2021, for service as a director andeach of our directors who is not a named executive officer for 2017.Named Executive Officer:
|
| | | | | | | | |
Name
| | Fees Earned or Paid in Cash ($)
| | Stock Awards ($) (1)
| | Option Awards ($) (2)
| | Total ($)
|
A.G.W. “Jack” Biddle, III | | 42,144 | | 42,086 | | – | | 84,230 |
Prashanth “PV” Boccassam | | 42,144 | | 42,086 | | – | | 84,230 |
Michael G. Devine
| | 56,124 | | 48,107 | | – | | 104,231 |
Barbara “Bobbie” Kilberg | | 50,726 | | 42,086 | | – | | 92,812 |
Michael J. Mulligan
| | 56,124 | | 48,107 | | – | | 104,231 |
| |
(1) | The value disclosed is the aggregate grant date fair value of 2,665 shares of Class A common stock granted to each of Messrs. Biddle and Boccassam and Ms. Kilberg and 3,046 shares of Class A common stock granted to each of Messrs. Devine and Mulligan, computed in accordance with FASB ASC Topic 718. The number of shares of Class A common stock granted to each director is set by Appian using the closing price of Appian’s common stock as of the grant date. |
| |
(2) | The table below shows the aggregate number of option awards outstanding as of December 31, 2017 for each of our directors who is not a named executive officer: |
|
| | |
Name | | Option Awards (#) (a) (b) |
Michael G. Devine | | 90,000 (c)awards(1), (2) |
Barbara “Bobbie” Kilberg | | 90,000 (d) |
Michael J. Mulligan | | 120,602 (e) |
| |
(a) | All of the option awards listed in the table were granted under the 2007 Plan. |
| |
(b) | The option awards listed in the table were awarded subject to a condition that prohibited exercise until we conducted a registered public offering of our shares. Such condition was satisfied for all of the option awards listed in the table, both vested and unvested, following our initial public offering. |
| |
(c) | Two-fifths of the shares of Class B common stock reflected in this column were fully vested as of December 31, 2017. An additional one-fifth of the shares of Class B common stock vested on March 26, 2018 and one-fifth of the shares of Class B common stock will vest on each of March 26, 2019 and 2020, subject to the recipient’s continued service through each vesting date. |
| |
(d) | None of the shares of Class B common stock reflected in this column were fully vested as of December 31, 2017. 65,200One fifth of the shares of Class B common stock listed vested on January 31, 2018. The remaining shares of Class B common stock will vest in four equal installments, on January 31, 2019 and each of the next three anniversaries thereof, subject to the recipient’s continued service through each vesting date. Ms. Kilberg exercised 4,104 vested options on February 28, 2018 and 13,896 vested options on March 1, 2018.(3)
|
| |
(e) | The shares of Class B common stock reflected here are fully vested. |
The following table shows information regarding our equity compensation plans as of December 31, 2017.2021: