The Board of Directors knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
If you are a stockholder of record, you may vote at the Annual Meeting or vote by proxy. Whether or not you plan to participate in the Annual Meeting, we urge you to vote by proxy over the Internet, by telephone, or by mail as instructed below to ensure your vote is counted. You may still attend the Annual Meeting via the Internet and vote during the Annual Meeting even if you have already voted by proxy.
You may attend the Annual Meeting via the Internet and vote during the Annual Meeting. The Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/APPN2018APPN2024 and entering your 16 digit16-digit control number which is included in the notice that will be mailed to you. Please haveHave your notice in hand when you access the website and then follow the instructions.
To vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. Your telephone vote must be received by 11:59 p.m. Eastern timeTime on June 6, 2018,5, 2024, the day before the Annual Meeting, to be counted. Please haveHave your notice in hand when you call.
On each matter to be voted upon, you have one vote for each share of Class A common stock you own as of April 9, 20188, 2024 and ten votes for each share of Class B common stock you own as of April 9, 2018.8, 2024.
If you are a stockholder of record and do not vote by completing your proxy card, by telephone, or through the internetInternet either before or during the Annual Meeting, your shares will not be voted.
What if I return a proxy card or otherwise vote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of the nominees for director (Proposal No. 1) and, “For” the ratification of the appointment of BDO as independent registered public accounting firm of the Company for the year ending December 31, 20182024 (Proposal No. 2), and “For” the advisory approval of named executive officer compensation (Proposal No. 3). If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks, and other agents for the cost of forwarding proxy materials to beneficial owners.
If you receive more than one Notice, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the Notices to ensure that all of your shares are voted.
Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
If you are interested in submitting a proposal for potential inclusion in the proxy statement for our 20192025 Annual Meeting of Stockholders, you must follow the procedures outlined in Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"“Exchange Act”). To be eligible for inclusion in the proxy statement, we must receive your stockholder proposal at the address noted below no later than December 28, 2018.26, 2024. However, if the 20192025 Annual Meeting of Stockholders is held before May 8, 20197, 2025 or after July 7, 2019,6, 2025, then we must receive your stockholder proposal at the address noted below a reasonable time before we begin to print and mail our proxy materials for the 20192025 Annual Meeting of Stockholders.
As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed to be “non-routine,” the broker or nominee cannot vote the shares. These unvoted shares are counted as “broker non-votes.”
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a Current Report on Form 8-K.
Our Board of Directors seeks to assemble a Board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise, and high-level management experience necessary to oversee and direct the Company’s business and that is committed to rigorously represent the long-term interests of the Company’s stockholders. To that end, the Nominating and Corporate Governance Committee has identified, evaluated, and evaluatedrecommended nominees in the broader context of the Board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit personal integrity and ethics, collegiality, sound business judgment, and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board, including gender, racial, and recommended those nominees to the Board of Directors.ethnic diversity. The brief biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes, or skills of each nominee that led the Nominating and Corporate Governance Committee and our Board of Directors to believe that the nominee should continue to serve on the Board. At the recommendation of the Nominating and Corporate Governance Committee, the Board of Directors has nominated the following seven persons to serve as directors for the term beginning at the Annual Meeting.Meeting:
from Dartmouth College. Our Board of Directors believes that Mr. Calkins’ business expertise and his daily insight into corporate matters as our Chief Executive Officer, as well as his experience as a member of the board of directors of a public company, qualify him to serve on our Board of Directors.Directors.
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
overseeing•Overseeing periodic evaluations of our Board of Directors’Directors’ performance including committees of the Board of Directors.Directors.
The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including having the highest personal integrity and ethics, the ability to read and understand basic financial statements, and being over 21 years of age. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, having the ability to exercise sound business judgment, and having the commitment to rigorously represent the long-term interests of the Company’s stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company, and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity (including gender, racial, and ethnic diversity), age, skills, and such other factors as it deems appropriate, given the current needs of the Board and the Company, to maintain a balance of knowledge, experience, and capability.
In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of
participation, quality of performance, and any other relationships and
transactions that might impair the directors’ independence. The Committee also takes into account the results of the Board’s self-evaluation, conducted annually on a group and individual basis.
In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, the determination of which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations, and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: Appian Corporation, 11955 Democracy7950 Jones Branch Drive, Suite 1700, Reston,McLean, Virginia 20190,22102, Attention: Secretary. The written recommendation must be received by the Nominating and Corporate Governance Committee no later than the close of business on the 90th day and no earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting of stockholders. Submissions must include the name and address of the stockholder on whose behalf the submission is made, the number of Company shares that are owned beneficially by such stockholder as of the date of the submission, the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information for the proposed nominee, and a description of the proposed nominee’s qualifications as a director. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
BOARD DIVERSITY MATRIX (AS OF APRIL 25, 2024)
In the matrix below, we have provided the statistical information required by Nasdaq Rule 5605(f) and 5606 (the “Nasdaq Board Diversity Rules”) as of April 25, 2024. As of this date, we were in compliance with Nasdaq Rule 5605(f) regarding Board diversity, and we will remain in compliance with such rule following our Annual Meeting giving effect to the directors standing for election at the meeting.
| | | | | | | | | | | | | | | | | |
Total Number of Directors and Director Nominees | 8 | | | | |
| Female | | Male | | Did Not Disclose Gender |
Part I: Gender Identity | | | | | |
Directors | 2 | | 3 | | 3 |
Part II: Demographic Background | | | | | |
Asian | — | | — | | — |
White | 2 | | 3 | | — |
Did Not Disclose Demographic Background | — | | — | | 3 |
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Company’s Board has adopted a formal process by which stockholders may communicate with the Board or any of its directors. Stockholders who wish to communicate with the Board or an individual director may do so by sending written communications addressed to the Board or to such director c/o Appian Corporation, 11955 Democracy7950 Jones Branch Drive, Suite 1700, Reston,McLean, Virginia 20190, Attn:22102, Attention: Secretary. Written communications may be submitted anonymously or confidentially and may, at the discretion of the person submitting the communication, indicate whether the person is a stockholder or other interested party.
Each stockholder communication will be reviewed by the Company’s Secretary to determine whether it is appropriate for presentation to the Board or such director. The purpose of this screening is to allow the Board to avoid having to consider irrelevant or inappropriate communications (such as advertisements, solicitations, and hostile communications). The screening procedures have been approved by a majority of the independent directors. Communications determined by the Secretary to be appropriate for presentation to the Board or such director will be submitted to the Board or such director on a periodic basis. Communications determined by the Secretary to be inappropriate for presentation will still be made available to any non-management director upon such director’s request.
All communications made pursuant to the Company’s Accounting and Auditing Whistleblower Policy (the "Whistleblower Policy"“Whistleblower Policy”) that relate to accounting or auditing matters involving the Company will be promptly and directly forwarded to the Audit Committee. Complaints covered by the Whistleblower Policy may be reported directly to our General Counsel via e-mail sent to compliance@appian.com or directly to the members of the Audit Committee via e-mail sent to auditcommittee@appian.com.
CODE OF ETHICS
The Company has adopted a Code of Conduct that applies to all directors, executives, employees, and independent contractors of the Company and its subsidiaries. The Code of Conduct is available on the Company’s website at www.appian.com.investors.appian.com. If the Company makes any substantive amendments to the Code of Conduct or grants any waiver from a provision of the Code of Conduct to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
INSIDER TRADING POLICY
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
The materialWe have adopted an insider trading policy that prohibits speculative or short-term trading. Specifically, no employee, director, or consultant may engage in this report is not “soliciting material,” is not deemed “filed”short sales, transactions in put or call options, hedging transactions, margin accounts, or other inherently speculative transactions with the Commission and is notrespect to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
The principal purpose of the Audit Committee is to assist the Board of Directors in its general oversight of our accounting practices, system of internal controls, audit processes and financial reporting processes. The Audit Committee is responsible for appointing and retaining our independent auditor and approving the audit and non-audit services to be provided by the independent auditor. The Audit Committee’s function is more fully described in its charter.
Our management is responsible for preparing our financial statements and ensuring they are complete and accurate and prepared in accordance with generally accepted accounting principles. BDO, our independent registered public accounting firm for 2017, was responsible for performing an independent audit of our consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles and as to the effectiveness of our internal control over financial reporting.
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2017with management of the Company and with BDO. These audited financial statements are included in our Annual Report on Form 10-K for the year ended December 31, 2017 (the “2017 Annual Report”).
The Audit Committee also has discussed with BDO the matters required to be discussed by Auditing Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board (“PCAOB”).
The Audit Committee has also received the written disclosures and the letter from BDO required by applicable requirements of the PCAOB regarding BDO’s communications with the Audit Committee concerning independence and has discussed with BDO its independence from the Company.
Based on the foregoing, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in the 2017 Annual Report.
THE AUDIT COMMITTEE
A.G.W. “Jack” Biddle, III
Michael G. Devine
Michael J. Mulligan
stock.
PROPOSAL NO. 2
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board of Directors has selected BDO as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 20182024 and has further directed that management to submit the selection of its independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. BDO has audited the Company’s financial statements since 2013. Representatives ofBDO are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the selection of BDO as the Company’s independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of BDO to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) present or represented by proxy at the Annual Meeting and entitled to vote on the matterproposal at the Annual Meeting will be required to ratify the selection of BDO. Abstentions have the same effect as an “Against” vote. Broker non-votes are not expected to result from this proposal.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table represents aggregate fees billed to the Company for the fiscal years ended December 31, 20162023 and December 31, 2017,2022 by BDO, the Company’s principal accountant.accountant:
|
| | | |
| Year Ended December 31, |
| 2017 | | 2016 |
| (in thousands) |
Audit Fees (1) | $1,162,954 | | $268,959 |
Audit-Related Fees (2) | 11,152
| | 20,260
|
Total Fees | $1,174,106 | | $289,219 |
| | | | | | | | | | | |
| Year Ended December 31, |
| 2023 | | 2022 |
Audit fees(1) | $ | 2,446,929 | | | $ | 2,242,061 | |
Audit-related fees(2) | 32,450 | | | 22,880 | |
Total fees | $ | 2,479,379 | | | $ | 2,264,941 | |
| |
(1) | "Audit Fees" includes fees billed for the fiscal year shown for professional services for the audit of our annual financial statements and, in 2017, the review of quarterly financial statements included in our quarterly reports on Form 10-Q, the consents issued for our registration statements, and the statements included in our filings with the SEC for our initial public offering. |
| |
(2) | "Audit-Related Fees" includes fees billed for professional services provided to us in connection with the annual audit of our employee benefit plan. |
(1)“Audit fees” includes fees billed for the fiscal year shown for professional services for the audit of our annual financial statements, the audit of the effectiveness of our internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, the review of quarterly financial statements included in our quarterly reports on Form 10-Q, and statutory audits required internationally.
(2)“Audit-related fees” includes fees billed for professional services provided to us in connection with the annual audit of our employee benefit plan.
All fees described above were pre-approved by the Audit Committee.
In connectionCommittee in accordance with the audit of the 2017 financial statements, the Company entered into an engagement agreement with BDO that sets forth the terms by which BDO will perform audit services for the Company. That agreement is subject to alternative dispute resolution procedures.pre-approval policy described below.
PRE-APPROVAL POLICIES AND PROCEDURES.PROCEDURES
The Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm, BDO. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services up to specified amounts. Pre-approval may also be given as part of the Audit Committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL NO. 2.
PROPOSAL NO. 3
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
We are providing our stockholders with the opportunity to vote to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with SEC rules and as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) and Section 14A of the Exchange Act. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the opportunity to express their views on our named executive officers’ compensation as disclosed in this Proxy Statement under the heading “Compensation Discussion and Analysis.” The Board determined our stockholders should vote on a say-on-pay proposal every year, consistent with the preference expressed by our stockholders at the 2020 Annual Meeting.
In considering their vote, we urge our stockholders to review carefully our compensation policies and decisions regarding our named executive officers in this Proxy Statement. As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation program is designed to attract, motivate, and retain the named executive officers who are critical to our success and to align their interests with the long-term interests of our stockholders. Under this program, the named executive officers are rewarded for the achievement of both corporate and individual performance goals, which are intended to result in increased stockholder value.
Accordingly, the Board is asking our stockholders to indicate their support for the compensation of our named executive officers as described in this Proxy Statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and the related narrative disclosure, is hereby APPROVED.”
Because the vote on this proposal is advisory, the result will not be binding on the Board, the Compensation Committee, or us. Nevertheless, the views expressed by our stockholders, whether through this say-on-pay vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Advisory approval of Proposal 3 requires the approval of the holders of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) present or represented by proxy at the Annual Meeting and entitled to vote on the proposal at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 3.
INFORMATION ABOUT OUR EXECUTIVE OFFICERS
The following table sets forth our executive officers and their respective ages and positions with us as of the Record Date.record date:
| | | | | | | | | | | | | | |
Name | | Age | | | |
NAME | | AGE | | POSITION HELD WITH THE COMPANYPosition Held Within the Company |
Matthew Calkins | | 51 | | 45 | Chief Executive Officer, President, Founder and Chairman of the Board |
Robert C. Kramer | | 49 | | 43 | General Manager, Founder and Director |
Mark LynchMatheos | | 43 | | 55 | Chief Financial Officer |
Edward Hughes | | 66 | | Senior Vice President, Worldwide Sales |
Christopher Winters | | 51 | | 45 | General Counsel and Secretary |
Pavel Zamudio-Ramirez | | 57 | | Chief Customer Officer |
Messrs. Calkins and Kramer are members of our Board of Directors, and their biographies are set forth above under “Proposal No. 1.”
Mark LynchMatheos has served as our Chief Financial Officer since April 2022. Prior to that, he served as our Chief Accounting Officer since December 2021, as the Company’s Senior Vice President, Global Corporate Controller from January 2021, Vice President, Corporate Controller from April 2017, and Vice President, Assistant Controller from October 2008.2016. Mr. LynchMatheos holds a B.S. degree in Accounting and Information Systems from Pennsylvania State UniversityVirginia Tech and an M.B.A.is a Certified Public Accountant in Finance from George Washington University.Virginia.
Edward Hughes has served as our Senior Vice President, Worldwide Sales since September 2009. Mr. Hughes holds a B.A. in Philosophy from Catholic University and a J.D. from Potomac Law School.
Christopher Winters has served as our General Counsel since September 2015 and our corporate Secretary since November 2015. From June 2013 to August 2015, Mr. Winters was General Counsel at Applied Predictive Technologies, Inc., a software-as-a-service company focused on predictive analytics. From January 2008 to May 2013, Mr. Winters held positions in the legal department of CoStar Group Inc., a provider of commercial real estate information, analytics, and online marketplaces. Mr. Winters holds a B.A in History from Northern Illinois University and a J.D. from Harvard University.
Pavel Zamudio-Ramirez has served as our Chief Customer Officer since January 2021 and prior to that was Senior Vice President for Customer Success beginning in March 2020. From January 2018 to March 2020, he was an entrepreneur serving organizations in the integration of strategy, innovation, and collaboration practices. From 2012 to December 2017, Mr. Zamudio-Ramirez was Executive Vice President of Innovation and Transformation Services at Salesforce, a software company providing customer relationship management (“CRM”) services. Mr. Zamudio-Ramirez previously worked at the Monitor Group, a global strategy consulting company, for 16 years where he was a senior partner responsible for the West Coast business unit. Mr. Zamudio-Ramirez holds two M.A. degrees in Engineering and Management from the Massachusetts Institute of Technology.
Family Relationships
There are no family relationships among any of our executive officers or directors.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect to the beneficial ownership of our capital stock as of March 31, 2018,2024, for:
each
•Each person, or group of affiliated persons, who is known by us to beneficially own more than 5% of our Class A common stock or Class B common stock;
each•Each of our named executive officers;
each•Each of our directors;directors and director nominees; and
all•All of our executive officers, directors, and directorsdirector nominees as a group.
The percentage ownership information shown in the table is based upon 18,891,315a total of 72,235,420 shares of Class A common stock and 42,318,846 shares of Class B common stock outstanding as of March 31, 2018.2024, assuming the conversion of 31,196,796 shares of Class B common stock into 31,196,796 shares of Class A common stock.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. In addition, the rules include shares of common stock issuable pursuant to the vesting of restricted stock units (“RSUs”) and the exercise of stock options or warrants that are either immediately exercisable or exercisable, in each case, on or before May 30, 2018,2024, which is 60 days after March 31, 2018.2024. These shares are deemed to be outstanding and beneficially owned by the person holding those options or warrants for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. The information contained in the following table is not necessarily indicative of beneficial ownership for any other purpose, and the inclusion of any shares in the table does not constitute an admission of beneficial ownership of those shares. The number of shares in the table below beneficially owned by each person or entity reflects all shares of Class A and Class B common stock held by such person or entity as of March 31, 2024. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Except as otherwise noted below, the address for persons listed in the table is c/o Appian Corporation, 11955 Democracy7950 Jones Branch Drive, Suite 1700, Reston,McLean, Virginia 20190.22102.
|
| | | | | | | |
| | Beneficial Ownership |
Name of Beneficial Owner | | Shares | | Percentage |
Principal Stockholders: | | | | | |
Entities affiliated with Novak Biddle Venture Partners (1) | | | 7,748,217 |
| | 12.7 | % |
Entities affiliated with Abdiel Capital Management, LLC (2) | | | 5,409,464 |
| | 8.8 |
|
| | | | | |
Executive Officers and Directors: | | | | | |
Matthew Calkins (3) | | | 28,449,632 |
| | 46.5 |
|
Chris Winters (4) | | | 56,020 |
| | * |
|
Edward Hughes (5) | | | 325,406 |
| | * |
|
A.G.W. “Jack” Biddle, III (1)(6) | | | 7,830,768 |
| | 12.8 |
|
Prashanth “PV” Boccassam (7) | | | 25,658 |
| | * |
|
Michael G. Devine (8) | | | 57,681 |
| | * |
|
Barbara “Bobbie” Kilberg | | | –
|
| | –
|
|
Robert C. Kramer (9) | | | 2,648,118 |
| | 4.3 |
|
Michael J. Mulligan (10) | | | 125,679 |
| | * |
|
All current directors and executive officers as a group (9 persons) (11) | | | 39,602,962 |
| | 64.0 |
|
* Represents beneficial ownership of less than 1%.
| |
(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. |
| |
(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. |
| |
(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. |
| |
(4) | Consists of 56,020 shares of Class B common stock issuable upon the exercise of options. |
| |
(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. |
| |
(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. |
| |
(7) | Consists of 25,658 shares of Class A common stock held directly by Mr. Boccassam. |
| |
(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. |
| |
(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. |
| |
(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. |
| |
(11) | Includes 655,129 shares of Class B common stock issuable upon the exercise of options. |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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, 2017,2023, all Section 16(a) filing requirements applicable to itsour officers, directors, and greater than ten percent beneficial owners were complied with.
| | | | | | | | | | | |
| Beneficial Ownership |
Name of Beneficial Owner | Shares | | Percentage |
Principal Stockholders: | | | |
Entities affiliated with Abdiel Capital Advisors, LP(1) | 5,890,304 | | | 8.2% |
BlackRock, Inc.(2) | 3,174,598 | | | 4.4% |
The Vanguard Group, Inc.(3) | 4,689,254 | | | 6.5% |
Directors, Director Nominees, and Named Executive Officers: | | | |
A.G.W. “Jack” Biddle, III(4) | 144,619 | | | * |
Matthew Calkins(5) | 29,048,442 | | | 40.2% |
Shirley A. Edwards | 3,833 | | | * |
Christopher Jones | 7,983 | | | * |
Barbara “Bobbie” Kilberg(6) | 73,941 | | | * |
Robert C. Kramer(7) | 2,383,980 | | | 3.3% |
Mark Lynch(8) | 50,033 | | | * |
William D. McCarthy | 5,957 | | | * |
Michael J. Mulligan(10) | 31,621 | | | * |
Mark Matheos(10) | 7,757 | | | * |
Christopher Winters(11) | 19,978 | | | * |
Pavel Zamudio-Ramirez(12) | 17,863 | | | * |
All current directors, director nominees, executive officers, and named executive officers as a group (12 persons) | 31,796,007 | | | 44.0% |
*Represents beneficial ownership of less than 1%.
(1)This information has been obtained from a Form 4 filed on February 23, 2024, by Abdiel Capital Advisors, LP, Abdiel Qualified Master Fund, LP ("AQMF"), Abdiel Capital, LP ("ACLP") and Abdiel Partners, LLC ("APLLC"). Abdiel Capital Advisors, LP serves as the investment manager of AQMF, ACLP and APLLC. Abdiel Capital Management, LLC is the general partner 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 and the managing member of APLLC. By virtue of the foregoing relationships, Mr. Moran and Abdiel Capital Advisers, LP may be deemed to beneficially own the securities held by AQMF, ACLP, and APLLC, and Abdiel Capital Management LLC may be deemed to beneficially own the securities held by AQMF and ACLP. Each Reporting Person disclaims beneficial ownership of such securities, except to the extent of its or his pecuniary interest therein. The principal business address of these persons and entities is 90 Park Avenue, 29th Floor, New York, New York 10016.
(2)This information has been obtained from a Schedule 13G/A filed on January 26, 2024, by BlackRock, Inc. The principal business address of BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055.
(3)This information has been obtained from a Schedule 13G/A filed on February 13, 2024, by The Vanguard Group. The principal business address of The Vanguard Group is 100 Vanguard Blvd., Malvern, PA 19355.
(4)Consists of 15,682 shares of Class A common stock held directly by Mr. Biddle, 82,500 shares of Class A common stock held by Jack Biddle, Inc., for which Mr. Biddle is the president, and 46,437 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.
(5)Consists of 388,379 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. Mr. Calkins, Wallingford, LLC, and Calkins Family LLC have pledged 388,379 shares of Class A common stock, 2,883,333 shares of Class B common stock, and 1,600,000 shares of Class B common stock, respectively, as security for loans.
(6)Consists of 4,598 shares of Class A common stock held directly; 1,246 shares of Class A common stock 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 of Class A common stock held by the Kilberg Family Trust U/A dated October 13, 2021, of which Barbara Kilberg is the trustee; 1,651 shares of Class A common stock 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.
(7)Consists of 461,382 shares of Class A common stock held directly by Mr. Kramer and 9,120 and 1,913,478 shares of Class A and Class B common stock, respectively, held by The Robert C. Kramer Revocable Trust, for which Mr. Kramer serves as sole trustee and beneficiary.
(8)Consists of 40,503 shares of Class A common stock held directly by Mr. Lynch and 9,530 shares of Class B common stock issuable upon the exercise of options;
(9)Consists of 27,494 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.
(10)Consists of 620 shares of Class A common stock held directly by Mr. Matheos and 7,137 RSUs vesting within 60 days of March 31, 2024.
(11)Consists of 19,878 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.
(12)Consists of 12,976 shares of Class A common stock held directly by Mr. Zamudio-Ramirez and 4,887 RSUs vesting within 60 days of March 31, 2024.
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,who were serving as executive officers as of December 31, 2023, whom we refer to below collectively as our named“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 2023, and an analysis of these policies and decisions.
Our Named Executive Officers for 2023 are:
| | | | | | | | |
Name | | Title |
Matthew Calkins | | Chief Executive Officer, President, Founder, and Chairman of the Board |
Mark Matheos | | Chief Financial Officer |
Christopher Jones | | Former Chief Revenue Officer |
Christopher Winters | | General Counsel and Secretary |
Pavel Zamudio-Ramirez | | Chief Customer Officer |
Executive Summary
Our Company
We are a software company that automates business processes and operationalizes artificial intelligence with low-code design, providing rapid time to value for our customers. We empower our customers to transform the way they work by using our platform to combine people, technologies, and data in end-to-end processes that can maximize our customers' resources and dramatically improve business results.
We sell our software almost exclusively through subscriptions. As of December 31, 2023, we had approximately 1,000 customers.
Business Highlights
For our fiscal year ended December 31, 2023, we continued to build on a strong foundation of business results that provide context for our stockholders reviewing our executive compensation program. Our fiscal 2023 highlights include the following:
•Total revenue was $545.4 million;
•Subscriptions revenue was $412.3 million, an increase of 21% over 2022;
•Cloud subscription revenue retention rate was 119% as of December 31, 2023;
•GAAP net loss was $111.4 million in 2023 compared to a loss of $150.9 million in 2022; and
•Adjusted EBITDA loss* was $44.8 million in 2023 compared to adjusted EBITDA loss of $76.0 million in 2022.
* Adjusted EBITDA is a non-GAAP financial measure, which represents GAAP net loss before (1) other non-operating expenses (income), net, (2) interest expense, (3) income tax expense, (4) depreciation expense and amortization of intangible assets, (5) stock-based compensation expense, (6) certain non-ordinary litigation-related expenses consisting of legal and other professional fees associated with the Pegasystems cases, (7) amortization of the judgment preservation insurance policy, or JPI, and (8) severance costs related to an involuntary reduction in our workforce in 2023. A reconciliation from GAAP net loss to adjusted EBITDA is set forth in 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 exceptional individuals across the Company. We seek to reward those who take on additional responsibility, are innovative, and are making an impact in a way that incorporates our core values of Respect, Ambition, Work to Impact, and Constructive Dissent & Resolution. These principles and people are the pillars of our organization. Our objective is to signal to these individuals they have a future at the Company and are valued.
Our executive compensation program fits within this philosophy and aims to achieve these objectives. In addition, we also believe that, 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. 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:
| | | | | | | | |
What We Do | | What We Don't Do |
PConduct annual executive compensation review | | ONo “single trigger” change in control payments |
PPlace a significant amount of targeted compensation at risk | | ONo stock option repricing |
PTie performance bonus opportunities to corporate objectives | | ONo automatic acceleration of vesting under equity plans |
PDesign our compensation programs to discourage excessive risk-taking | | ONo executive 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 |
PMaintain a “clawback” policy which mandates recoupment of executive officers’ incentive-based compensation in the event of an accounting restatement. | | ONo significant perquisites |
| | ONo Section 280G tax gross-ups |
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. 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 an NEO’s promotion or other changes in responsibility and may be adjusted after considering the above factors.
Short-Term Cash Incentive Payments
We believe short-term cash incentives are an important and effective way to align NEO pay with Company performance because short-term cash incentives are actually earned only when our NEOs help us achieve certain business objectives. We measure short-term cash incentive award achievement on a quarterly and annual basis, which also helps us more closely equate executive pay with real-time performance. The NEOs participate in the following bonus plans designed to achieve these objectives.
Senior Executive Cash Incentive Bonus Plan
Each NEO, other than Mr. Jones, who participated in the Senior Executive Sales Bonus 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 of Directors (the “Board”). The target amount for each NEO is determined by the Compensation Committee each year, generally at the 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.
Customer Success Bonus Plan
As the Chief Customer Officer, Mr. Zamudio-Ramirez is eligible to participate in the Customer Success Bonus Plan (the “CS Bonus Plan”) in addition to the Bonus Plan. The CS Bonus Plan is designed to reward our Customer Success organization employees for achieving certain goals associated with services profits, based quarterly with the opportunity for an end-of-year catch-up potential if quarterly performance exceeds 100% in any quarter, not to exceed 100% of the quarterly potential and 100% of the target bonus potential for the full year.
Senior Executive Sales Bonus Plan
As the Chief Revenue Officer, Mr. Jones was eligible to participate in a Senior Executive Sales Bonus Plan. Under the plan, Mr. Jones was eligible to receive a bonus based on Net New ACV achievement compared to budget. The Company’s overall sales targets are approved by the Board, and Mr. Jones’ bonus was based on his achievement relative to those targets.
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 set stock-based awards every year. In granting stock-based awards for a particular year, the Compensation Committee will consider the individual’s position and responsibilities, the vesting schedule and value of previously granted stock-based awards, the timing since the last grant, and the number of shares available in our equity plans, among other factors. 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 that 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 our Chief Executive Officer in Determining Executive Compensation
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 CEO, 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.
Our CEO does not make recommendations as to his own compensation. In the case of the CEO, his individual performance evaluation is conducted solely by the Compensation Committee, which determines his compensation changes and awards.
Say-on-Pay; Stockholder Engagement
At our 2023 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 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.
2023 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 considers the performance of the Company, internal pay equity and market rates, among other factors. The Compensation Committee did not change the base salaries for 2017.any of the NEOs in 2023.
|
| | | | | | | |
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 |
| |
(1) | 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 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. |
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(2) | This column reflects the full grant date fair value 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 Awards at Fiscal Year End" table below for information on stock option awards granted to our named executive officers that remained outstanding as of December 31, 2017. |
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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. |
| |
(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. |
| |
(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. |
| |
(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. |
| |
(7) | Includes commissions of $138,868. |
| |
(8) | Includes commissions of $121,588. |
| |
(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. |
Outstanding Equity Awards at Fiscal Year End
The following table sets forthis a summary of each NEO's base salary levels for fiscal years 2023 and 2022 (all amounts presented are in whole dollars):
| | | | | | | | | | | | | | |
Name | | 2023 | | 2022 |
Matthew Calkins | | $ 1,000,000 | | $ 1,000,000 (1) |
Mark Matheos | | $ 750,000 | | $ 750,000 (2) |
Christopher Jones | | $ 500,000 | | $ 500,000 |
Christopher Winters | | $ 600,000 | | $ 600,000 (2) |
Pavel Zamudio-Ramirez | | $ 800,000 | | $ 800,000 (2) |
(1)Effective May 3, 2022.
(2)Effective April 1, 2022.
Senior Executive Cash Incentive Bonus Plan
For 2023, the Compensation Committee set corporate performance goals under the Bonus Plan that were based on the following criteria: (1) new logos in 2023, (2) net new annual contract value bookings (“ACV”) above 2022 actual ACV, and (3) executive alignment with corporate culture and strategy, paid on the average rate earned by all executives under this goal, subject to the percentage payable under the Bonus Plan not exceeding the percentage of the bonus payable to non-NEO eligible employees.
The payout levels were set with a goal of having the Company achieve superior revenue and customer growth rates in 2023, as well as to create the basis for growth in future periods through the renewal and expansion of subscription agreements with existing customers, as well as the executives’ ability to align their departments to achieve long term corporate goals. Generally, the payout levels are set such that the relative difficulty of achieving the full amount is consistent from year to year.
The corporate performance goals for 2023 were calculated following the end of the year in accordance with the Company’s financial statements and disclosures and evaluation of the executive’s alignment with corporate culture and strategy by an executive committee. Each NEO earned the following amounts under the Bonus Plan for 2023: $150,000 for Mr. Calkins, $125,000 for Mr. Matheos, $50,000 for Mr. Winters, and $117,500 for Mr. Zamudio-Ramirez. Half of such amounts was based solely on achievement of the corporate performance goals related to new logos and ACV, with no discretionary bonus element, and the other half was based on the discretion of the executive committee.
Customer Success Bonus Plan
For 2023, the target bonus opportunity for Mr. Zamudio-Ramirez was set at $62,500 per quarter. The quarterly bonus opportunities were measured and paid on a quarterly basis based on actual gross profit of the Customer Success organization. Quarterly bonuses were set to be earned ratably beginning with achievement of 75% of the quarterly target and earned fully at 100% of the quarterly target. Mr. Zamudio-Ramirez earned a bonus of $147,760 under the CS Bonus Plan for 2023.
Senior Executive Sales Bonus Plan
Under our Senior Executive Sales Bonus Plan for 2023, Mr. Jones received a bonus of $370,054.
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 2023, the Compensation Committee evaluated and approved the following equity awards under the 2017 Plan: 20,325 RSUs for Mr. Jones, 24,086 RSUs for Mr. Matheos, and 9,330 RSUs for Mr. Winters. Each of these awards vest over a combination of a one-year and four-year period. For additional details regarding our 2023 long-term equity incentive compensation, see “Grants of Plan-Based Awards in 2023” on page 28 below. No other NEOs received any equity awards in 2023.
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 the Company. The terms of the standard employment agreement state that 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 a change-of-control of the Company.
We previously entered into employment agreements with Messrs. Jones, 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 2023.
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
2023, 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, and 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 or 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
Clawback Policy
We seek to recover to the extent practicable performance-based compensation from our executive officers. Our Board adopted the Appian Corporation Compensation Recoupment Policy (the “Clawback Policy”) in accordance with Rule 10D-1 and the Nasdaq listing standards and it was effective as of October 2, 2023. Under the Clawback Policy, our Compensation Committee will, to the extent permitted by law, recoup any incentive compensation (cash and equity) received by the Company’s executive officers in the event of a restatement of financial-based measures (regardless of whether detrimental conduct has occurred). In the case of a restatement of financial-based measures, the Board will reasonably promptly recover the amount by which the incentive compensation received exceeds the amount that would have been received if the error had not been made within the three years preceding the date on which the Board determines that the financial measure contains a material error.
Insider Trading Policy
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.
Equity Grant Practices
We generally grant RSUs to newly hired employees shortly after the employee’s start date and on an annual basis, in each case 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 that 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 fiscal years 2023, 2022, and 2021, compensation awarded to, paid to, or earned by the Company’s Named Executive Officers as of December 31, 2023, 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 | | 2023 | | 1,000,000 | | | — | | | — | | | 150,000 | | | 13,566 | | | 1,163,566 | |
| 2022 | | 915,625 | | | — | | | 18,823,638 | | | 99,000 | | | 12,380 | | | 19,850,643 | |
| 2021 | | 708,333 | | | — | | | — | | | 261,810 | | | 11,705 | | | 981,848 | |
Christopher Jones(6) Former Chief Revenue Officer | | 2023 | | 500,000 | | | 1,045,112 | | | — | | | 775,054 | | | 12,796 | | | 2,332,962 | |
Mark Matheos Chief Financial Officer | | 2023 | | 750,000 | | | 855,053 | | | — | | | 455,000 | | | 14,577 | | | 2,074,630 | |
| 2022 | | 676,753 | | | 766,593 | | | — | | | 82,500 | | | 13,320 | | 1,539,166 | |
| 2021 | | 265,000 | | | 400,038 | | | — | | | 43,635 | | | 12,670 | | | 721,343 | |
Christopher Winters General Counsel and Secretary | | 2023 | | 450,000 (7) | | 368,162 | | | — | | | 212,000 | | | 14,228 | | | 1,044,390 | |
| 2022 | | 550,000 | | | 413,115 | | | — | | | 1,030,668 | | | 13,476 | | | 2,007,260 | |
| 2021 | | 400,000 | | | — | | | — | | | 87,270 | | | 10,847 | | | 498,117 | |
Pavel Zamudio-Ramirez(6) Chief Customer Officer | | 2023 | | 800,000 | | | — | | | — | | | 117,500 | | | 164,978 (8) | | 1,082,478 | |
| 2022 | | 775,000 | | | — | | | — | | | 309,101 | | | 16,206 (8) | | 1,100,307 | |
(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 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 10 to our Annual Report on Form 10-K for the year ended December 31, 2023 for information about outstanding equityregarding the value determination 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 December 31, 2023” table below for information on RSU awards granted to our named executive officersNamed Executive Officers that remained outstanding as of December 31, 2017.2023.
(2)This column reflects the full grant date fair value of stock 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 10 to our Annual Report on Form 10-K for the year ended December 31, 2023. 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, 2023” table below for information on stock option awards granted to our Named Executive Officers that remained outstanding as of December 31, 2023. |
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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 2023 represent amounts earned by our NEOs under the bonus plans discussed above under “2023 Executive Compensation Program” starting on page 22, and retention bonus payments as follows: $330,000 for Mr. Matheos, $405,000 for Mr. Jones, and $162,000 for Mr. Winters. Totals for 2022 and 2021 represent amounts earned by our NEOs, other than Mr. Winters for 2022, during those years pursuant to our Bonus Plan. The 2022 total for Mr. Winters includes $30,668 earned under the Bonus Plan and a one-time performance bonus of $1,000,000.
19(4)The amounts reported in this column include matching contributions to our 401(k) 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 but does not receive any additional compensation in his capacity as a director.
(6)Because Mr. Jones was not a Named Executive Officer in 2022 or 2021 and Mr. Zamudio-Ramirez was not a Named Executive Officer in 2021, 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.
(7)Mr. Winters worked on a reduced schedule for a portion of 2023 and agreed to reduce his salary accordingly.
(8)Includes ESPP match of $2,250, which is a benefit available to all employees who participate in their respective employment agreements. Each of our named executive officers is an at-will employee.the ESPP.
GRANTS OF PLAN-BASED AWARDS IN 2023
The following table sets forthshows certain information regarding grants of plan-based awards to the base salariesNamed Executive Officers for 2017 and the fiscal year ended December 31, 2023. Messrs. Calkins and Zamudio-Ramirez did not receive any plan-based awards in 2023. The dollar values of payments under the Bonus Plan are included in the “Non-Equity Incentive Plan Compensation” column of the “Summary Compensation Table” above. For more information about our Bonus Plan, see “Compensation Discussion and Analysis - 2023 Executive Compensation Program - Senior Executive Cash incentive Bonus Plan.”
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Name | | Grant Date | | All Other Stock Awards: Number of RSUs(1) | | All Other Option Awards: Number of Securities Underlying Options | | Per Share Exercise or Base Price of Option Awards ($) | | Grant Date Fair Value of Stock and Option Awards ($)(2) |
Christopher Jones | | 8/1/2023 | | 20,325(3) | | — | | | — | | | 1,045,112 | |
Mark Matheos | | 5/8/2023 | | 24,086(4) | | — | | | — | | | 855,053 | |
Christopher Winters | | 10/31/2023 | | 9,330 (5) | | — | | | — | | | 368,162 | |
(1)The RSU awards were granted pursuant to our 2017 bonus targetPlan. Each RSU represents a contingent right to receive one share of our named executive officers:Class A Common Stock (or its cash equivalent, at our discretion).
(2)See Footnotes 1 and 2 to the “Summary Compensation Table,” above, as applicable.
(3)7,877 of the RSUs vested immediately, and 12,448 of the RSUs vest in four equal annual installments of 25% each anniversary of August 5, 2023, provided the NEO has provided continuous service to us through each vesting date.
(4)9,718 of the RSUs vested immediately, and 14,368of the RSUs vest in four equal annual installments of 25% each anniversary of May 8, 2023, provided the NEO has provided continuous service to us through each vesting date.
(5)2,966 of the RSUs vest on November 5, 2024, and 6,364 of the RSUs vest in four equal annual installments of 25% each anniversary of November 5, 2023, provided the NEO has provided continuous service to us through each vesting date.
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Named Executive Officer | | Base Salary ($) | | 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. |
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2023
The following table sets forth the current base salariesshows, for 2018 and the fiscal year 2018 bonus targetended December 31, 2023, 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, 2023, based on the closing price per share of our named executive officers:Class A common stock as reported on The Nasdaq Global Select Market of $37.66 on December 29, 2023.
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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 | | 100 | | | — | | | $ | 12.00 | | | 4/25/2027 | | — | | | $ | — | |
| 6/8/2022 | | — | | | 700,000(6) | | $ | 50.63 | | | 6/7/2032 | | — | | | $ | — | |
Christopher Jones | | — | | | — | | | — | | | $ | — | | | — | | | 12,448(7) | | $ | 468,792 | |
| — | | | — | | | — | | | $ | — | | | — | | | 9,438(8) | | $ | 355,435 | |
Mark Matheos | | — | | | — | | | — | | | $ | — | | | — | | | 1,131(9) | | $ | 42,593 | |
| — | | | — | | | — | | | $ | — | | | — | | | 1,882(10) | | $ | 70,876 | |
| — | | | — | | | — | | | $ | — | | | — | | | 14,368(11) | | $ | 541,099 | |
| — | | | — | | | — | | | $ | — | | | — | | | 7,812(12) | | $ | 294,200 | |
Christopher Winters | | 4/25/2017 | | 100 | | | — | | | $ | 12.00 | | | 4/25/2027 | | 2,261(9) | | $ | 85,149 | |
| — | | | — | | | — | | | $ | — | | | — | | | 3,702(13) | | $ | 139,417 | |
| — | | | — | | | — | | | $ | — | | | — | | | 9,330(14) | | $ | 351,368 | |
Pavel Zamudio- Ramirez | | — | | | — | | | — | | | $ | — | | | — | | | 2,068(15) | | $ | 77,881 | |
| — | | | — | | | — | | | $ | — | | | — | | | 1,176(10) | | $ | 44,288 | |
| — | | | — | | | — | | | $ | — | | | — | | | 8,598(16) | | $ | 323,801 | |
(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 Stock Option 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 A common stock reflected in this column had not satisfied the option vesting requirements as of December 31, 2023.
(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.
(5)The shares of Class A common stock reflected in this column had not satisfied the RSU vesting requirements as of December 31, 2023.
(6)The option will vest in four installments of 25% each if (a) the average closing price per share of the Company's Class A common stock for a 365 calendar day period equals each of $175, $200, $225, and $250, respectively (the "Vesting Price Threshold") or (b) if the Company engages in a corporate transaction in which the Company's Class A common stock is valued at or above a Vesting Price Threshold, in each case prior to June 7, 2030.
(7)The RSUs were granted on August 1, 2023and vest in four equal annual installments on each of August 5, 2024, August 5, 2025, August 5, 2026, and August 5, 2027, subject to the NEO’s continued service through each vesting date.
(8)The RSUs were granted on August 2, 2022 and vest in three equal annual installments on each of August 5, 2024, August 5, 2025, and August 5, 2026, subject to the NEO’s continued service through each vesting date.
(9)The RSUs were granted on October 29, 2019 and vest on November 5, 2024, subject to the NEO’s continued service through the vesting date.
(10)The RSUs were granted on May 4, 2021 and vest in two equal annual installments on each of May 5, 2024 and May 5, 2025, subject to the NEO's continued service through each vesting date.
(11)The RSUs were granted on May 8, 2023 and vest in four equal annual installments on each of May 5, 2024, May 5, 2025, May 5, 2026 and May 5, 2027, subject to the NEO's continued service through the vesting date.
(12)The RSUs were granted on May 3, 2022 and vest in three equal annual installments on each of May 5, 2024, May 5, 2025, and May 5, 2026, subject to the NEO’s continued service through each vesting date.
(13)The RSUs were granted on August 2, 2022 and vest in three equal annual installments on each of November 5, 2024, November 5, 2025, and November 5, 2026, subject to the NEO’s continued service through the vesting date.
(14)The RSUs were granted on October 31, 2023. 4,557 of the RSUs vest on November 5, 2024, and 1,591 of the RSUs vest on each of November 5, 2025, November 5, 2026, and November 5, 2027, subject to the NEO's continued service through each vesting date.
(15)The RSUs were granted on November 2, 2021 and vest in two equal annual installments on each of November 5, 2024, and November 5, 2025, subject to the NEO’s continued service through each vesting date.
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Named Executive Officer | | Base Salary ($) | | Fiscal Year 2018 Bonus Target ($) |
Matthew Calkins | | 400,000 | | 250,000 |
Edward Hughes | | 315,000 | | – (1) |
Christopher Winters | | 285,000 | | 50,000 |
(16)The RSUs were granted on May 5, 2020 and vest in two equal annual installments on each of May 5, 2024 and May 5, 2025, subject to the NEO’s continued service through each vesting date. | |
(1) | Mr. Hughes participates in our Sales Commission Plan and does not participate in our 2018 Bonus Plan. |
Potential Payments Upon Termination
OPTION EXERCISES AND STOCK VESTED IN 2023
The following table presents, for Messrs. Jones, Matheos, Winters and Zamudio-Ramirez, on an aggregate basis, the number of shares of our common stock acquired upon the vesting and settlement of RSUs during the fiscal year ended December 31, 2023, along with the aggregate value realized on the vesting and settlement of RSUs. Mr. Calkins did not receive an RSU grant for fiscal year 2023 and none of our Named Executive Officers exercised any stock options in 2023.
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| | Option Awards | | Stock Awards (RSUs) |
Name | | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting(1) ($) |
Christopher Jones | | — | | | — | | | 18,985 | | | 940,707 | |
Mark Matheos | | — | | | — | | | 18,793 | | | 706,662 | |
Christopher Winters | | — | | | — | | | 6,680 | | | 266,532 | |
Pavel Zamudio-Ramirez | | — | | | — | | | 5,921 | | | 207,219 | |
(1)The aggregate value realized upon the vesting of an RSU represents the aggregate market price of the shares of our Class A common stock on the vesting date.
EMPLOYMENT AGREEMENTS
Messrs. Calkins and Zamudio-Ramirez are 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 or her 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 as described below, our named executive officers are not entitled to any additional severance benefits upon a termination of employment.
Edward Hughes.
Christopher Jones.Pursuant to his employment agreement and as defined below, if Mr. Hughes’sJones’ employment iswith us was terminated by us without cause he is entitled to 12 months’ severance.
Christopher Winters. Pursuant to his employment agreement, if Mr. Winters’ employment with us is terminated by us without cause“cause” or if Mr. Winters resignsJones resigned his employment with us for good reason,Good Reason, in each case within 30 days prior to or one year following a changeChange in Control of controlthe Company, Mr. Jones was entitled to receive (i) six months of base salary, (ii) full acceleration of vesting with respect to all then-unvested equity awards granted to Mr. Jones pursuant to our company,equity incentive plans, and (iii) payment of premiums for continued health benefits under COBRA for up to six months. Mr. Jones’ severance payments and benefits under his employment agreement was 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. Mr. Jones terminated his employment with us effective as of April 1, 2024, without triggering any provisions of his employment agreement.
Mark Matheos. Pursuant to his employment agreement and as defined below, if Mr. Matheos’ employment with us is terminated by us without “cause” or 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 the Company, Mr. Matheos is entitled to receive: (i) six months of base 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 Winters. 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, in each case within 30 days prior to or one year following a Change in Control of the Company, Mr. Winters is entitled to receive (i) six months’ severance,months of base 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 in the form of either stock options and/or RSUs 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 Stock Option Plan”). The 2017 Plan and 2007 Stock Option 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 Stock Option Plan, if a participant is terminated for cause, any unexercised and exercisable stock 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 stock 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 stock 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, 2023, filed with the SEC on February 15, 2024.
SUMMARY OF ESTIMATED AMOUNTS PAYABLE UPON A TERMINATION OR CHANGE IN CONTROL
The following table summarizes the estimated payments to be made to Messrs. Jones, 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, 2023 under the terms of the current employment agreements, based on the NEOs compensation structure as of December 31, 2023, 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 29, 2023, or $37.66. 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 |
Christopher Jones | | | | | | |
Severance Payment | | $ | 250,000 | | | $ | — | | | $ | — | |
Acceleration of Equity | | 824,227 | | | — | | | — | |
Insurance Benefits | | 11,683 | | | — | | | — | |
Total: | | $ | 1,085,910 | | | $ | — | | | $ | — | |
Mark Matheos | | | | | | |
Severance Payment | | $ | 375,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 948,768 | | | — | | | — | |
Insurance Benefits | | 9,620 | | | — | | | — | |
Total: | | $ | 1,333,388 | | | $ | — | | | $ | — | |
Christopher Winters | | | | | | |
Severance Payment | | $ | 300,000 | | | $ | — | | | $ | — | |
Acceleration of Equity Awards | | 575,934 | | | — | | | — | |
Insurance Benefits | | 11,372 | | | — | | | — | |
Total: | | $ | 887,306 | | | $ | — | | | $ | — | |
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 CEO, to the median of the annual total compensation of our other employees. We identified the employee with annual total compensation at the median of the compensation of all of our employees (the “Median Employee”) by considering our employee population as of December 31, 2023 (the “Employee Population Determination Date”). We considered all individuals, excluding our CEO, who were employed by us (including our consolidated subsidiaries) on the Employee Population Determination Date, whether employed in the U.S. or outside the U.S., or on a full-time or part-time, including employees on a leave of absence. Contractors, interns, and other non-employees were not included in our employee population. The total number of our U.S. and non-U.S. employees considered for the calculation was 2,263.
To identify the Median Employee from the employee population described above, we determined each employee's compensation as the sum of the following components:
2018 Bonus Plan•Base pay - For hourly employees, base pay is calculated as the hourly rate in effect on December 31, 2023 multiplied by a reasonable estimate of hours worked during the year. For salaried employees, base pay is calculated as annual base salary in effect on December 31, 2023 regardless of the employee's hire date.
Messrs. Calkins•Cash bonuses and Winters are eligiblecommissions - For purposes of the calculation, our CEO's bonus was calculated as a cash bonus earned in 2023. For all other employees, cash bonuses and commissions reflect actual bonuses or commissions paid in 2023.
•Equity compensation - For all employees, equity compensation is calculated as the aggregate grant date fair value (as determined in accordance with footnote 1 of the 2023 Summary Compensation Table) of any equity awards granted in fiscal year 2023.
•Group term and basic life insurance premiums
•ESPP employer matches
•Health Savings Account employer matches
•401(k) employer matching contributions or employer retirement contributions to participateother government sponsored retirement plans.
For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using exchange rates in effect as of December 31, 2023, as provided in our 2018 Senior Executive Cash Incentive Bonus Plan,system of record for compensation information. We did not make any cost-of-living adjustments for employees outside of the United States. We believe our methodology provides 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 based upon our reasonable judgment and assumptions. The SEC rules do not specify a single methodology for identification of the Median Employee or 2018 Bonus Plan. calculation of the pay ratio, and other companies may use assumptions and methodologies that are different from those used by the Company in calculating their pay ratio. Accordingly, the pay ratio disclosed by other companies may not be comparable to our pay ratio as disclosed above.
For our last completed fiscal year, which ended December 31, 2023:
•The 2018 Bonus Plan is designedmedian of the annual total compensation of all of our employees (other than Mr. Calkins), including employees of our consolidated subsidiaries, was approximately $154,448.
•Mr. Calkins' annual total compensation for 2023, as reported in the Summary Compensation Table included in this Proxy Statement, was $1,163,566.
•Based on the above, for fiscal year 2023, the ratio of Mr. Calkins' annual total compensation to motivatethe median of the annual total compensation of all employees was approximately 7.53 to 1.
PAY VERSUS PERFORMANCE
As required by Section 953(a) of the Dodd-Frank Act and reward executivesItem 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company.
Pay Versus Performance Table
The following table shows the total compensation for our NEOs for the attainment of company-wide and individual performance goals. Messrs. Calkins and Winters are eligible to receive more than 100% of their target bonuses if our performance exceeds the targetspast four fiscal years as set forth in the 2018 Bonus Plan.
Sales Commission Plan
We establish sales commission plans to encourage and reward contributionsSummary Compensation Table, the compensation actually paid to our long-term revenue growth. Mr. Hughes was,CEO and, continueson an average basis, to our other NEOs (in each case as defined by Item 402(v) of Regulation S-K), our total shareholder return (“TSR”), the TSRs of the NASDAQ Computer Index (our peer group) over the same period, and Net Income. All amounts other than per share amounts are presented in whole dollars.
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Year | | Summary Compensation Table Total for PEO ($) | | Compensation Actually Paid to PEO ($) | | Average Summary Compensation Table Total for Non-PEO NEOs ($) | | Average Compensation Actually Paid to Non-PEO NEOs ($) | | Value of Initial Fixed $100 Investment Based on: | Net Income ($) |
Total Return ($) | | Peer Return ($) | |
2023 | | 1,163,566 | | | 4,806,301 | | | 1,633,615 | | | 1,718,804 | | | 98.56 | | | 221.06 | | | (111,440,577) | |
2022 | | 19,850,643 | | | 11,929,759 | | | 1,096,056 | | | 566,043 | | | 85.21 | | | 132.79 | | | (150,920,305) | |
2021 | | 981,848 | | | 32,179,193 | | | 1,177,418 | | | (1,516,719) | | | 170.66 | | | 206.76 | | | (88,640,479) | |
2020 | | 808,958 | | | 79,277,397 | | | 796,830 | | | 4,228,758 | | | 424.21 | | | 149.98 | | | (33,476,840) | |
The following table is a reconciliation of amounts presented in the Summary Compensation Table and Compensation Actually Paid in the preceding table. SEC rules require certain adjustments to be eligiblemade to receivethe Summary Compensation Table totals to determine compensation actually paid. Compensation actually paid does not necessarily represent cash or equity value transferred to the PEO or applicable NEO without restriction but rather is a value calculated under our sales commission plans. Under our sales commission planapplicable SEC rules. In general, compensation actually paid is calculated as Summary Compensation Table total compensation adjusted to reflect the fair market value of equity awards as of December 31 of the applicable year or, if earlier, the vesting date. All amounts presented are in whole dollars.
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Year | | Executives | | Summary Compensation Table Total ($) | | (-) Stock Awards ($) | | (+ / -) Year-End Equity Value ($) | | (+ / -) Change of Value of Prior Equity Awards ($) | | (+ / -) Change in Value of Vested Equity Awards ($) | | Compensation Actually Paid ($) |
2023 | | CEO | | 1,163,566 | | | — | | | — | | | 3,642,735 | | | — | | | 4,806,301 | |
| Other NEOs | | 1,633,615 | | | (379,575) | | | 340,315 | | | 48,537 | | | 75,912 | | | 1,718,804 | |
2022 | | CEO | | 19,850,643 | | | (18,823,638) | | | 10,903,054 | | | — | | | (300) | | | 11,929,759 | |
| Other NEOs | | 1,096,056 | | | (196,618) | | | 124,357 | | | (221,411) | | | (236,341) | | | 566,043 | |
2021 | | CEO | | 981,848 | | | — | | | — | | | (1,951) | | | 31,199,296 | | | 32,179,193 | |
| Other NEOs | | 1,177,418 | | | (461,751) | | | 244,244 | | | (1,508,089) | | | (968,541) | | | (1,516,719) | |
2020 | | CEO | | 808,958 | | | — | | | — | | | 78,468,355 | | | 84 | | | 79,277,397 | |
| Other NEOs | | 796,830 | | | (294,745) | | | 836,255 | | | 2,167,440 | | | 722,978 | | | 4,228,758 | |
Relationship Between Compensation Actually Paid and Performance Measures
The Company did not use any financial performance metrics to link compensation actually paid for 2017,the NEOs in 2023, except the portion of Mr. Hughes’ target commission was $175,000. Mr. Hughes received commissionsZamudio-Ramirez’s bonus tied to gross profit 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.the Customer Success organization. Therefore, the Company has not included a Company-Selected Measure in the Pay versus Performance disclosure.
*Our peer group consists exclusively of the Nasdaq Computer Index.
2023 Performance Measures
The following table is a list of the three most important performance measures (all non-financial) that are used by the Company to link compensation actually paid to company performance for the most recently completed fiscal year:
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Alignment with corporate culture and strategy | | |
Annual contract value of bookings | | |
New customers | | |
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 2023, 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-pocketout-of-
pocket expenses incurred by non-employee directors in attending meetings of our Board of Directors or any committee thereof. Additionally, Mr. McCarthy was paid $1,193,438 in 2023 for his services to us as Acting Chief Operating Officer.
2017
2023 Director Compensation Table
The following table shows for the fiscal year ended December 31, 20172023 certain information with respect to the compensation of all non-employee directors of the Company. Matthew Calkins, our Chief Executive Officer, isCEO, and Robert Kramer, our General Manager, are executive officers and also a membermembers of our Board, of Directors, but didthey do not receive any additional compensation for their service as a director.directors. Mr. Calkins’sCalkins’ compensation as a named executive officerNamed Executive Officer is set forth above under “—2017“2023 Summary Compensation Table.”
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Name | | Fees Earned or Paid in Cash ($) | | Stock Awards(1) ($) | | Consulting fees ($) | | Total ($) |
A.G.W. “Jack” Biddle, III | | 125,063 | | | 124,937 | | | — | | | 250,000 | |
Prashanth “PV” Boccassam | | 62,531 | | | 62,469 | | | — | | | 125,000 | |
Shirley A. Edwards | | 125,063 | | | 124,937 | | | — | | | 250,000 | |
Barbara “Bobbie” Kilberg | | 125,063 | | | 124,937 | | | — | | | 250,000 | |
Mark Lynch | | 125,063 | | | 124,937 | | | — | | | 250,000 | |
William McCarthy | | 125,063 | | | 124,937 | | | 1,193,438(2) | | 1,443,438 | |
Michael J. Mulligan | | 125,063 | | | 124,937 | | | — | | | 250,000 | |
(1)The value disclosed is the aggregate grant date fair value of 3,004 shares of Class A common stock granted to each of our non-employee directors, other than Mr. Kramer is an executive officerBoccassam, who received 1,663 shares of Class A common stock for his partial year of service, computed in accordance with FASB ASC Topic 718. The number of shares of Class A common stock granted to each director was set using the closing price of our common stock as of the Company but does not receive any additional compensationgrant date.
(2)Amount reflects consulting fees paid to Mr. McCarthy in 2023.
The table below shows the aggregate number of option and RSU awards outstanding as of December 31, 2023, for service as a director andeach of our directors who is not a named executive officer for 2017.Named Executive Officer:
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Name
| | Fees Earned or Paid in Cash ($)
| | Stock Awards ($) (1)
| | Option Awards ($) (2)
| | Total ($)
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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 |
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(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. |
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(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: |
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Name | | Option awards(1), (2) | | Unvested RSU awards |
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Name | | Option Awards (#) (a) (b) |
Michael G. Devine | | 90,000 (c) |
Barbara “Bobbie” Kilberg | | 65,200(3) | | 90,000 (d)— | |
Michael J. MulliganMark Lynch | | 9,530 | | 120,602 (e) | 7,307(4) |
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(a) | All of the option awards listed in the table were granted under the 2007 Plan. |
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(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. |
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(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. |
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(d) | None of the shares of Class B common stock reflected in this column were fully vested as of December 31, 2017. One 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.
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(e) | The shares of Class B common stock reflected here are fully vested. |
(1)All of the stock option awards listed in the table were granted under the 2007 Stock Option Plan. SECURITIES(2)Fully vested.
(3)The stock option awards 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 stock option awards listed in the table, both vested and unvested, following our initial public offering.
(4)Mr. Lynch received RSUs during his employment by the Company as Chief Financial Officer, and such RSUs will vest subject to his continued service to the Company as a Director through each vesting date as follows: 1,392 of the RSUs vested on January 5, 2024, 4,522 of the RSUs will vest on November 5, 2024, and 1,393 of the RSUs will vest on January 5, 2025.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table shows information regarding our equity compensation plans as of December 31, 2017.2023:
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Plan Category | | (a) Number of securities to be issued upon exercise of outstanding options, warrants, and rights | | (b) Weighted-average exercise price of outstanding options, warrants, and rights(1) | | (c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(2) |
Equity compensation plans approved by security holders | | 3,677,413(3) | | $ | 20.73 | | | 3,381,312 |
Equity compensation plans not approved by security holders | | — | | — | | | — |
Total | | 3,677,413 | | $ | 20.73 | | | 3,381,312 |
(1)The weighted average exercise price does not reflect the shares that will be issued in connection with the settlement of RSUs, which have no exercise price.
(2)Consists of shares available for future issuance under our 2017 Plan and the Appian Corporation Employee Stock Purchase Plan (“ESPP”). The number of shares available for future issuance under our ESPP is based on 1,000,000 shares we registered on Form S-8 and 134,821 shares purchased under the ESPP through December 31, 2023. Because the number of shares that may be purchased under the ESPP depends on each employee’s voluntary election to participate, contribution elections, and the fair market value of our Class A common stock at various future dates, the actual number of shares that may be purchased under the plan cannot be determined in advance.
(3)Of these shares, 2,599,349 were underlying then outstanding stock options and 1,078,064 were underlying then outstanding RSUs.
Our amended and restated certificate of incorporation contains provisions limiting the liability of directors, and our amended and restated bylaws provide that we will indemnify each of our directors to the fullest extent permitted under Delaware law. Our amended and restated certificate of incorporation and amended and restated bylaws also provide our Board of Directors with discretion to indemnify our officers and employees when determined appropriate by the Board of Directors. In addition, we have entered into indemnification agreements with each of our directors and executive officers. These agreements provide for the indemnification of such persons for all reasonable expenses and liabilities incurred in connection with any action or proceeding brought against them by reason of the fact that they are or were serving in such capacity. We have also obtained director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their services to us.