Form DEF 14A PROS Holdings, Inc. For: Dec 31

April 2, 2021 9:03 AM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
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¨Soliciting Material Pursuant to §240.14a-12
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PROS HOLDINGS, INC.
(Name of Registrant as Specified In Its Charter)








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PROS | 2021 Proxy Statement | Page 1




Attending the Annual Meeting


Due to the COVID-19 pandemic, our 2021 annual meeting of stockholders (Annual Meeting) will be held in a virtual format to provide a safe experience for our stockholders and employees.

To participate in the annual meeting, please follow the instructions posted at:
www.virtualshareholdermeeting.com/PRO2021. Online access to the meeting platform will begin at 9:25 a.m. Central Daylight Time on May 12, 2021. The meeting will begin promptly at 9:30 a.m. Central Daylight Time on May 12, 2021.

If you wish to submit a question, you may do so in two ways. If you want to ask a question before the meeting, then beginning on April 14, 2021 and ending at 11:59 p.m. Eastern Time on April 28, 2021, you may log into www.proxyvote.com and enter your 16-digit control number. Questions pertinent to meeting matters which are submitted in advance will be answered during the Annual Meeting, subject to time constraints. Alternatively, if you want to submit your question during the meeting, log into the virtual meeting platform at www.virtualshareholdermeeting.com/PRO2021, type your question into the “Ask a Question” field, and click “Submit.” Any questions pertinent to meeting matters that are submitted during the meeting will be posted online and answered at ir.pros.com as soon as practical after the Annual Meeting and will remain available until one week after posting. You do not need to attend the Annual Meeting to vote.

Even if you plan to attend the Annual Meeting, we encourage you to vote your shares in advance either online or as detailed under "Voting Instructions" in this Proxy Statement.






In this Proxy Statement, the terms “PROS,” the "Company," “we,” "us" and “our” refer to
PROS Holdings, Inc. together with its consolidated subsidiaries.

These materials were first sent or made available to stockholders on April 2, 2021.

PROS | 2021 Proxy Statement | Page 2



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PROS Holdings, Inc.


Notice of 2021 Annual Meeting of Stockholders

Virtual Meeting Site:

www.virtualshareholdermeeting.com/PRO2021


May 12, 2021

9:30 am Central Daylight Time


The Notice of Meeting, Proxy Statement and Annual Report on Form 10-K
are available free of charge at proxyvote.com and at ir.pros.com.



Items of Business

1Elect two Class II directors (Raja Hammoud and William Russell) to the board of directors of PROS Holdings, Inc. (Board of Directors or Board) to serve a three-year term until the annual meeting of our stockholders to be held in the year 2024 (2024 Annual Meeting);
2Advisory vote on named executive officer compensation;
3Approval of amendments to our Amended and Restated 2017 Equity Incentive Plan to, among other items, increase the number of shares authorized for issuance by 3.1 million shares;
4Approval of an amendment to our 2013 Employee Stock Purchase Plan to increase the number of shares authorized for employee purchase by 500,000 shares;
5Ratification of appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2021; and
6Transaction of other business that may properly come before the Annual Meeting.

Record Date
Close of business on March 25, 2021 (Record Date).
By Order of the Board of Directors,
/s/ Damian Olthoff
_____________________________
Damian Olthoff
General Counsel and Secretary
Houston, Texas
April 2, 2021

Your vote is important. Please vote.
PROS | 2021 Proxy Statement | Page 3


TABLE OF CONTENTS
 Page
PROS | 2021 Proxy Statement | Page 4


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Our Values and ESG*
At PROS, our mission is to help people and companies outperform, and our culture is at the heart of us delivering on our mission. Centered on our core values of: We are Owners; We are Innovators; and We Care, our culture is built on our multi-decade commitment to innovating, leveraging the cutting edge of data science and putting our customers first. Consistent with these core values, we publicly disclose information about our business across a number of important topics, including environmental, social and governance (ESG) issues discussed in this proxy statement.

We are Owners

PROS was built on an unwavering commitment to the growth and success of our people and our customers. We are intensely focused on helping our customers compete and win in the digital economy by optimizing their shopping and selling experiences. Delivering on this promise, however, requires more than best-of-breed, innovative technology, deep expertise in AI and machine learning and years of proven experience, all of which we pride ourselves in. Our customers and people count on us to also maintain a thriving business, one that embraces the value of diversity, supports our local communities and respects each individual for their unique talents and gifts. This focus speaks to the "heart" of our company, our rich and deeply rooted culture centered around caring for the people, the businesses and the communities we serve.

We are Innovators

We believe that diversity and inclusion are key to driving true innovation. We are committed to continuing to hire and promote inclusively, increasing diverse representation and continuing to foster an inclusive culture that gives every employee the opportunity to realize their full potential. As part of this commitment, we sponsor employee resource groups (ERGs), which are formed and led by employees and organized around common life experiences and backgrounds. Our ERGs serve to champion our diversity initiatives and facilitate a workplace culture of equality and inclusion. Currently, the following employee resource groups are active at PROS:

Blaze - dedicated to the professional development of women at PROS and in the community.
Empower - created to attract, develop and retain African-American talent at PROS.
UNIDOS - committed to serve as a resource for representation, advancement and inclusion of Hispanics at PROS.
PRIDE@PROS - focused on positively influencing and ensuring the development of its LGBTQIA+ members.
YoPROS - connecting young professionals across PROS to foster growth and development of leadership skills.


2020 tested us in a number of ways as we pivoted to virtual work in March 2020. During this time, to help our team come together in light of social justice movements in the United States, we spent dedicated time as a company sharing and learning about various minority groups’ historical experiences, understanding continuing challenges facing these communities, how they may impact our current and prospective employees, and how we can each take steps to combat unconscious bias.
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2020 figures based on 830 employees in the U.S. as of 12/31/202020 figures based on 1,235 global employees as of 12/31/20
Underrepresented Minorities include African-American, Hispanic and Multicultural
*Company goals are aspirational and and may change. Statements regarding the Company are not guarantees or promises that they will be met. Content available at websites and in documents referenced in this section are not incorporated herein and are not part of this Proxy Statement.
PROS | 2021 Proxy Statement | Page 6


We Care


About our Employees

We believe that an important part of our employee experience at PROS is our work environment and are committed to employee well-being and development. During the pandemic, we have continued to prioritize the safety, well-being and development of our employees, with various health and wellness programs and flexible work arrangements. In 2020, employee wellness became an even greater priority as we managed through the COVID-19 pandemic and shifted to a remote work environment. This shift drove awareness of the importance of employee mental health and well-being while working from home. In response, we introduced numerous wellness programs and events to support our people. For example, we instituted "Work Well Wednesdays" to limit scheduled internal meetings to help combat video conferencing fatigue and allow for focused, uninterrupted work. We also added periodic company-wide "recharge days" as an extra paid day off for our teams.

We also surveyed our employees regarding their preferences for work location both during and after the pandemic. Based on employee feedback, we announced our new “virtual first” approach to provide a seamless employee experience for both full-time remote work as well as a hybrid of in-office and remote work, so our employees may maintain productivity regardless of their physical location.

Our commitment to caring about our employees can also be seen in our most recent U.S. employee engagement survey, which was conducted during the pandemic. Based on these responses, we were certified in the U.S. by Great Places to Work in November 2020, with 94% of our U.S.-based team members recommending PROS in 2020 as a great place to work.


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About our Communities

Employees participating together in community outreach projects creates a culture that embraces inclusion and belonging, fosters a collaborative sense of purpose that creates a positive societal impact and further brings our corporate values to life. Our employees volunteer their time to numerous social programs that are aimed at addressing a range of issues in the areas of homelessness, education, empowerment, crisis response and conservation. Employee volunteering is a big part of our culture, and we support our employees’ community outreach interests by offering two paid holidays a year for employees to spend contributing to the causes that matter most to them. In addition, we also sponsor our ERGs to support specific initiatives and community outreach projects and events, such as Girls Who Code, Grace Hopper, MS150, SEARCH homeless outreach, Houston Food Bank and Dress for Success. While the pandemic has limited the number of in-person opportunities available to give back, we adapted by creating an internal hub to help our employees find purpose-driven virtual volunteer opportunities to give back to their local communities.

About our World

We believe success is not just measured in dollars and cents; it is also measured in the impact we have on our communities. PROS continues to initiate sustainable activities that make a positive impact on the people and the environment around us. Our efforts include recycling common goods in our offices, including paper, plastic and other office consumables such as batteries and toner. Employees are also encouraged to reduce their bottled water consumption. While we have largely been a remote workforce during the COVID-19 pandemic, our new corporate headquarters reflects our commitment to sustainability and employee well-being. The LEED-certified building, featuring water-saving fixtures, LED lighting, adjustable sit/stand desks, collaborative work spaces and extensive outdoor areas, is part of our ongoing efforts to provide a great employee and customer experience that is environmentally conscious. Our massively scalable platform processes more than a trillion transactions for our customers every year. Recognizing that our platform requires significant compute, storage and network resources, it is important to us to partner with cloud providers who prioritize sustainable data center operations, including operational, equipment and infrastructure efficiency to reduce energy consumption. Our largest data center vendor has a stated goal of utilizing 100% renewable energy in its data centers by 2025.

In 2020, we published our inaugural Corporate Social Responsibility Report (available at: https://ir.pros.com/Social-Responsibility).

PROS | 2021 Proxy Statement | Page 7



Proxy Statement Summary
This summary highlights selected information for PROS Holdings, Inc. (together with its consolidated subsidiaries, PROS, the Company, we, us or our) in this Proxy Statement. You should read this entire Proxy Statement carefully before voting.
2021 Annual Meeting of Stockholders
Virtual Meeting Site:
virtualshareholdermeeting.com/PRO2021
Date:May 12, 2021
Time:9:30 am Central Daylight Time

The Record Date for the Annual Meeting is March 25, 2021. Only stockholders of record at the close of business on this date are entitled to vote at the Annual Meeting.

Proposal

Recommendation of the Board
1Election of Class II Directors
FOR
each of the nominees
2Advisory Vote To Approve Executive Compensation; FOR

3Approval of amendments to our Amended and Restated 2017 Equity Incentive Plan to, among other items, increase the number of shares authorized for issuance by 3.1 million shares;FOR

4Approval of an amendment to our 2013 Employee Stock Purchase Plan to increase the number of shares authorized for employee purchase by 500,000 shares; andFOR

5Ratification of appointment of Independent Registered Public Accounting Firm.FOR

How to Vote

Please vote your shares promptly to ensure the presence of a quorum at the meeting. You may vote online prior to the meeting by visiting proxyvote.com and entering the control number found in your Notice of Internet Availability of Proxy Materials, or, if you requested printed copies of the proxy materials, by phone or by mail. You may also vote during the Annual Meeting by visiting www.virtualshareholdermeeting.com/PRO2021, entering the control number, and following the instructions. For more detailed information, see the section entitled Voting Instructions.

Materials to Review

We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials (Notice) instead of a paper copy of this proxy statement (Proxy Statement) and our Annual Report to Stockholders for the Year Ended December 31, 2020 (2020 Annual Report). The Notice contains instructions on how to access those documents over the Internet. The Notice also contains instructions on how to request a paper copy of our proxy materials, including this Proxy Statement, our 2020 Annual Report and a form of proxy card or voting instruction card.
PROS | 2021 Proxy Statement | Page 8



2020 Business Highlights

In 2020, we continued to deliver on our mission of helping people and companies outperform as we optimized shopping and selling experiences. The COVID-19 pandemic had an unprecedented impact on the economy, our business and our lives in 2020. The global economy was significantly and negatively impacted by the pandemic, and the pandemic had a significant impact on our financial results, slowing our growth rates. During these difficult times, we supported our customers through the challenges they faced and rapidly delivered innovations to help them adapt. By continuing to execute on our strategy, we:

Delivered continued growth in our cloud business, with subscription revenue increasing by 17% year-over-year despite the impact of the pandemic on our business and our customers.

Completed a record number of customer go lives in 2020, most of which were completed 100% virtually.

Unveiled numerous innovations at our record-breaking annual customer event, Outperform, held virtually.

Reimagined the PROS product experience, with over 600 product features and over 200 releases in 2020.

Achieved a 2020-2021 Great Place to Work-Certified™ company designation while in a virtual work environment.

Raised additional capital to provide additional liquidity and financial flexibility through the completion of the private offering of $150.0 million in aggregate principal amount at maturity of convertible senior notes due 2027.

Ranked as the top small-to-mid cap company in RBC Capital Markets’ ESG Software Scorecard in recognition of the quantity and quality of our ESG disclosures and practices.

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Recurring Revenue is subscription revenue plus maintenance revenue.

None of these accomplishments would have been possible without our team and culture, defined by our key values of:
We are Owners;
We are Innovators; and
We Care (for each other, our customers and our communities).


PROS | 2021 Proxy Statement | Page 9



EXECUTIVE COMPENSATION PROGRAM
Our executive compensation program is designed with sound compensation policies and practices that align the compensation of our named executive officers (NEOs) with our stockholders’ interests. Our Compensation and Leadership Development (CLD) Committee believes that a well-functioning executive compensation program should reward executives for out-performance and incentives should pay out at reduced levels or zero when performance is not achieved. The overall design of our compensation program and its three primary components (base salary, cash incentive and long-term equity awards) remained consistent year-over-year.
Our CLD Committee set 2020 compensation targets prior to the COVID-19 pandemic, and no pandemic-related adjustments nor discretion were applied, which resulted in a significant reduction in actual pay in 2020 vs. 2019.

CEO Pay and Company Performance    

In 2020, our CLD Committee again sought to motivate our NEOs through predominantly “performance-based” compensation, including annual cash incentives tied to pre-established performance targets and performance-based restricted stock unit (PRSU) equity awards where attainment varies based on performance against certain long-term Company performance goals. PRSU attainment is formulaic and measured over multiple years against unchanged goals. Including restricted stock unit (RSU) equity awards, which increase or decrease in value based on share price movement, more than 90% of our CEO’s 2020 total target compensation is considered at risk. Half of our CEO's target equity grant value was delivered in PRSUs and half in time-based RSUs. Performance goals that determine annual cash incentive attainment were also again set aggressively in 2020 and were established before COVID-19 was declared a pandemic.
The financial impact of the pandemic adversely affected our CEO's compensation, and our compensation program was effective and operated as designed.
Our CEO compensation declined in 2020 in response to below target Company performance in 2020 primarily attributable to the unprecedented challenges of the pandemic. Our CEO's total 2020 compensation declined 14% from 2019 as reported in the Summary Compensation Table:
2020 Cash Incentive    Our CEO's earned bonus for 2020 declined 88% year-over-year and was paid per the formula, at 24% of target due to (a) total revenue growth performance below the minimum target set prior to the pandemic, and (b) recurring revenue gross margin performance just above the minimum threshold.
2019 Equity Incentive    Our CEO's equity incentive from PRSUs awarded in 2019 (2019 PRSUs) were earned per the formula, at 79% of target due to total recurring revenue performance below target in 2020.
2020 Equity Incentive    Our CEO's equity incentive from PRSUs awarded in 2020 (2020 PRSUs) are earned based on total recurring revenue targets for 2021 and are unlikely to be earned at even the minimum threshold.
The following chart tracks PROS growth in subscription and recurring revenue over the past four years as well as PROS stock price performance versus the Russell 2000 Index over that timeframe:
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For a detailed discussion of our executive compensation program,
PROS | 2021 Proxy Statement | Page 10


CORPORATE GOVERNANCE
Our Board and corporate governance structure is designed to assure that the long-term interests of our stockholders are being served. To satisfy the Board’s duties, directors are expected to take a proactive approach to overseeing our CEO and other senior management to ensure that PROS is committed to business success while maintaining high ethical standards.

Board and Committee Oversight in 2020
2020 Focus AreasTypical Board Meeting Process
ü
StrategyBefore the meetingPrep meetings with management, auditors and outside advisors
üBusiness Performance
üCapital Structure & LiquidityDay 1Board committee meetings and full Board meeting (including reports from each committee chair)
üImpact of COVID-19
üEnterprise Risk ManagementDay 2Full Board meeting, followed by an executive session
üTalent and leadership, including hiring of COO
üCybersecurityAfter the meetingManagement follow up sessions to discuss and respond to Board requests
üOversight of ESG efforts
üDiversity and Inclusion
Audit Committee
2020 Focus Areas & Select Activities
üReviewing management's proposed public disclosures and investor communications and recommending enhancements
üOverseeing the detailed audit plan and auditor budget
üMonitoring critical accounting matters
üReviewing annual internal controls report with internal and external auditors
üReviewing with management the annual risk assessment
Compensation and Leadership Development (CLD) Committee
2020 Focus Areas & Select Activities
üMonitoring COVID-19 impact on existing programs
üUpdating peer group and developing NEO compensation program for 2021
üReviewing acquisition, retention and succession plans for critical talent
üMeeting with stockholders on executive compensation practices
üMonitoring equity plan usage and preparing proposals for stockholder approval to increase shares available
üAdministering the Company's equity plans
Nominating and Corporate Governance (NCG) Committee
2020 Focus Areas & Select Activities
üIdentifying and recruiting three new directors
üReviewing Code of Conduct, Governance Guidelines and Bylaws
üOverseeing leadership development
üExercising independence in executive compensation decisions
Diverse Board Representation
44%33%66%
Women<3 years tenureWomen and/or from underrepresented communities

PROS | 2021 Proxy Statement | Page 11



Composition of the Board of Directors

The Board is led by our independent non-executive chairman, Mr. Russell. The Board’s current preferred governance structure is to have an independent director serve as chairman. We believe the current structure provides strong leadership for our Board, while also positioning our Chief Executive Officer (CEO) as the leader of the Company. We believe that our current structure helps ensure independent oversight over the Company, while allowing our CEO to focus on management of the Company.

The Board has determined that the following directors have no relationships with us that would interfere with the exercise of independent judgment in carrying out his or her responsibilities as a director, and as such are "independent" under NYSE listing standards and federal securities laws as of December 31, 2020: Messrs. Dominguez, Petersen, Russell, and Williams and Mses. Hammoud, Herscher, Lesjak and Woestemeyer. All board committees are comprised entirely of independent directors.

The Board has standing Audit, CLD and NCG Committees. Each Committee has a written charter, which can be found under the Investor Relations section of our website at ir.pros.com. Our Board has determined that each member of the Audit Committee qualifies as "financially literate" within the rules of the NYSE and that three members of the Audit Committee, Messrs. Williams and Petersen and Ms. Lesjak, qualify as an Audit Committee financial expert within the meaning of the SEC regulations. Each member of our CLD Committee is a non-employee director, as defined in Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (Exchange Act), and an outside director, as defined pursuant to Section 162(m) of the Internal Revenue Code (Code). The following table provides additional information regarding our director nominees:
NameAgeDirector SinceClassIndependentACCCNCOther Public Company Boards
Raja Hammoud492020IIYesM-
William Russell692008IIYesMCAccesso Technology Group
PROS | 2021 Proxy Statement | Page 12



Corporate Governance Practices

Our corporate governance practices are designed to assure that the long-term interests of stockholders are being served.
Independent Oversight
All non-employee directors are independent.
All Board committees are comprised entirely of independent directors.
Our Board holds regular executive sessions of independent directors.
Our Board has an independent non-executive Chairman.
Stock Ownership Guidelines
We maintain strong ownership guidelines for our directors and NEOs. See Compensation Discussion and Analysis - Governance and Other Considerations below.
Accountability
We have a clawback policy that applies to all cash and equity awards.
We maintain anti-hedging, anti-short and anti-pledging policies.
Our director resignation policy requires director nominees who do not receive at least 50% of the stockholder votes “for” re-election to tender their resignation.
Directors may not serve on more than four other public company boards; directors who serve as CEOs should not serve on more than two other public company boards.
Shareholder Communication
We proactively engage with stockholders throughout each year, including at earnings conference calls, investor road shows and investor days, as well as at individual stockholder meetings. We also welcome stockholders to attend our annual OutPerform event for customers and prospects.
Annually, we conduct a “Say-on-Pay” advisory vote on our executive compensation program.
Board Refreshment
Our Board periodically considers opportunities for board refreshment, with 3 new directors added in 2020.
Self-Evaluations
Our Board and committees conduct annual performance self-evaluations, led by our non-executive Chairman.
Diversity
44% of our Board of Directors are women; and 22% are from underrepresented communities.
Education
Our directors regularly attend continuing education events related to board governance best practices, including conferences and webinars provided by the NYSE, NACD and Equilar, among others. For example, many of our independent directors have attended the NACD Global Board Leaders' Summit in recent years.
Succession Planning
We conduct an annual review of executive succession planning.

PROS | 2021 Proxy Statement | Page 13



Risk Management and ESG Oversight
The Board oversees our risk management process and ESG programs, including ongoing engagement with senior executives on key matters including cybersecurity, diversity, sustainability and governance practices. Management reviews the process, including identification of key risks and steps taken to address them, with the full Board at least on an annual basis. The Audit Committee, the CLD Committee and the NCG Committee assist the Board in discharging its oversight duties. The Audit Committee considers risks related to the subject matters enumerated in its charter, including risks relating to internal controls, disclosure and financial reporting. The CLD Committee reviews risks related to the subject matters enumerated in its charter, including risks associated with our compensation programs. Similarly, the NCG Committee considers risks related to the subject matters for which it is responsible as identified in its charter, including risks associated with corporate governance. Accordingly, while each of the three committees contributes to the risk management oversight function by assisting the Board in the manner outlined above, the Board remains responsible for the oversight of our risk management and ESG programs.

Board Governance

Our non-executive chairman, among other responsibilities, oversees the planning of the annual Board calendar, and, with our CEO, in consultation with the other directors, schedules and sets the agenda for meetings of the Board and leads the discussion at such meetings, serves as a liaison between the CEO and the independent directors, leads executive sessions of our Board, and performs such additional duties and responsibilities as requested by the Board from time to time. Executive sessions of the independent directors of the Board are scheduled during each regularly scheduled in-person Board meeting. Our non-executive chairman provides feedback to our CEO, as needed, promptly after the executive session.

Accountability

Code of Business Conduct and Ethics. Our Board has adopted a Code of Business Conduct and Ethics that applies to all of our directors and employees. Our Code of Business Conduct and Ethics is available under the "Investor Relations" section of our website at ir.pros.com.

Director Resignation Policy. Our Board has adopted a director resignation policy. Under this policy in an uncontested election of directors, any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” such election must promptly tender his or her resignation to the NCG Committee. The NCG Committee will promptly consider all relevant factors including, without limitation, (a) the stated reasons why votes were withheld from such director; (b) any alternatives for curing the underlying cause of the withheld votes; (c) the tenure and qualifications of the director; (d) the director’s past and expected future contributions to the Company; (e) our Corporate Governance Guidelines; and (f) the overall composition of the Board, including whether accepting the resignation would cause the Company to fail to meet any applicable SEC or NYSE requirement. The NCG Committee will recommend to the qualified independent directors the action to be taken with respect to such offered resignation, and the qualified independent directors will act on the NCG Committee’s recommendation no later than 90 days following the date of the stockholders’ meeting in which the election occurred. If a majority of the members of the NCG Committee received a greater number of votes “withheld” from their election than votes “for” their election at the same election, then the remaining qualified independent directors on the Board will consider the matter directly or may appoint a committee of the Board amongst themselves solely for the purpose of considering the tendered resignations and making the recommendation to the Board whether to accept or reject them.

Stock Ownership Guidelines. Our Board has adopted stock ownership guidelines for our NEOs and directors that are designed to align our NEOs’ and directors' interests with our stockholders’ interests by promoting long-term share ownership, which reduces the incentive for excessive short-term risk taking and further increases our NEOs’ and directors' alignment with stockholder interests. These guidelines require our CEO to hold shares of our stock worth at least six times his annual salary, other NEOs to hold shares of our stock worth at least two times their annual salary, and each non-employee director to hold shares of our stock worth at least five times the director's annual retainer. New directors are expected to achieve their ownership threshold within six years after joining our Board. New NEOs are expected to achieve their ownership threshold within five years from the date of hire or promotion. As of December 31, 2020, each of our NEOs and directors were in compliance with the applicable guidelines.

Prohibition Against Hedging, Short-Sale, Pledging and Repricing Underwater Stock Options. We have implemented both anti-hedging and anti-pledging policies, as well as a prohibition on participating in short sales of our stock, to ensure that our executives’ stock remains at-risk. Our Insider Trading Policy, which applies to all employees, including officers and non-employee directors, specifically prohibits short sales of our securities, transactions in puts, calls or other derivative securities involving our stock, hedging or monetization transactions (including but not limited to zero-cost collars, prepaid variable forwards and equity swaps), and holding our securities in a margin account or pledging our securities as collateral for a loan. Our Amended and Restated 2017 Equity Incentive Plan (2017 Plan) also prohibits repricing, repurchase or exchange of underwater stock options without stockholder approval.

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Compensation Committee Interlocks and Insider Participation. No member of our CLD Committee and none of our executive officers has any relationships that would constitute an interlocking relationship with executive officers and directors of any other entity.

Communication with Our Board

Stockholders or interested parties who wish to communicate with members of our Board may send correspondence to them in care of our Corporate Secretary at 3200 Kirby Drive, Suite 600, Houston, Texas 77098. Such communication will be forwarded to the intended recipient(s). We currently do not intend to have our Corporate Secretary screen this correspondence, but we may change this policy if directed by our Board due to the nature or volume of the correspondence. Communications that are intended specifically for the non-executive chairman of the Board may also be sent to the street address noted above, to the attention of the non-executive chairman of the Board.

Role of the Board of Directors

Our Board oversees our CEO and other senior management to assure that the long-term interests of stockholders are being served. Our Board currently consists of nine members, divided into three classes, with each class serving for a staggered three-year term. The term of office of one class of directors expires each year in rotation so that one class is elected at each annual meeting for a full three-year term. Our Board believes that our classified board structure aligns the Board with the Company’s long-term interests and allows for stable and informed oversight, providing institutional perspective both to management and other directors. Our Board conducts annual director evaluations and periodic Board refreshment. In 2020, for example, three new directors were added to our Board. Our Board has adopted formal Corporate Governance Guidelines to ensure that it has the practices in place to review and evaluate our business operations as needed, to make decisions independent of our management, and to align the interests of directors and management with the interests of our stockholders. Our key governance documents, including our Corporate Governance Guidelines, are available under the "Investor Relations" section of our website at ir.pros.com.

In 2020, our Board met 6 times and acted via unanimous written consent 6 times, the Audit Committee met 9 times and did not act via unanimous written consent, the CLD Committee met 6 times and acted via unanimous written consent 4 times, and the NCG Committee met 3 times and acted via unanimous written consent 3 times. Each current director who served as a director in 2020 attended at least 75% of the meetings of our Board and the Committees on which he or she served during 2020. The Board encourages all directors to attend annual meetings of the stockholders. All incumbent directors attended the 2020 meeting of the stockholders which was held virtually.

Audit Committee
The Audit Committee assists the Board in oversight and monitoring of:

our accounting and financial reporting processes and the audits of our financial statements:
our independent auditors, including their qualifications, engagement, performance and independence;
the results of the annual audit and the independent auditor’s review of our annual and quarterly financial statements and reports, including discussions with independent auditors without management present;
press releases regarding our financial results and any other financial information and earnings guidance provided;
matters that have a significant impact on our financial statements;
the scope, adequacy and effectiveness of our internal control over financial reporting and disclosure controls;
our internal auditors;
procedures for complaints for employees to submit concerns anonymously about questionable accounting, internal control or auditing matters; and
all material related-party transactions that require disclosure.

Compensation and Leadership Development Committee
The CLD Committee discharges the responsibilities of our Board relating to the compensation and benefits for our executive officers and directors, including:

reviewing and approving the compensation arrangements for our executive officers and directors;
reviewing and approving corporate performance goals and objectives relevant to such compensation;
administering our equity incentive plans;
reviewing our compensation discussion and analysis and CLD Committee report required by the rules of the SEC;
engaging with a third-party independent advisor to assist in evaluating our executive compensation program;
providing oversight on the overall leadership development program throughout the Company; and
overseeing succession planning for executive officers jointly with the NCG Committee.
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Nominating and Corporate Governance Committee
The NCG Committee assists the Board in:

identifying qualified candidates to become directors and considering the nomination of our incumbent directors for reelection;
evaluating stockholder nominations of candidates for election to our Board;
reviewing our general policy relating to selection of director candidates and members of committees of our Board, including an assessment of the performance of our Board;
reviewing and making recommendations to our Board regarding corporate governance principles and policies; and
overseeing succession planning for executive officers jointly with the CLD Committee.

The NCG Committee has the responsibility for establishing the criteria for recommending which directors should stand for reelection to our Board and the selection of new directors to serve on our Board. Although the NCG Committee has not formulated any specific minimum qualifications for director candidates, it has determined desirable characteristics including, but are not limited to, business experience, mature judgment, leadership, personal and professional ethics, diversity, and integrity. We do not have a formal policy with respect to consideration of diversity in identifying director nominees; however, in the process of selecting a director nominee, the NCG Committee assesses backgrounds, diversity and expected contributions of the individuals to the Board.

PROS | 2021 Proxy Statement | Page 16


OUR BOARD OF DIRECTORS
Our Board consists of a diverse group of highly qualified leaders in their respective fields. Most of our directors have senior leadership experience at major domestic and multinational technology companies. In these positions, they have gained significant and diverse experience, including strategy, finance, sales and marketing, risk management, public company financial reporting, compliance and leadership development. They also have public company experience serving as executive officers, or on boards of directors and board committees, and have an understanding of corporate governance practices and trends. The Board believes the experience, expertise and other attributes of our directors provide PROS with a diverse range of perspectives to provide oversight and represent the best interests of our stockholders. Among our nominees for election to the Board and continuing directors, three self-identify as women and two self-identify as individuals from underrepresented communities (meaning, an individual who self-identifies as Black, Hispanic, Latino, Asian, Pacific Islander or Native American).


Directors and Director Nominees

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William Russell
Andres D. Reiner
(Nominee)President and
Non-Executive Chairman of the BoardChief Executive Officer
NCG Committee Chairman
CLD Committee
Mr. Russell, 69, serves on the board of directors at Accesso Technology Group PLC (OTCMKTS:LOQPF).
Mr. Russell previously served in a variety of roles on both public and private technology company boards and previously served on the boards of SABA Software, Inc. (from January 2010 to March 2015), webMethods and Cognos. Mr. Russell held a number of senior-level roles in his more than 20 years at Hewlett-Packard, including Vice President and General Manager of the multi-billion-dollar Enterprise Systems Group. Mr. Russell holds a Bachelor of Science in Computer Science from Edinburgh University and has completed several executive development programs from institutions including Harvard Business School and INSEAD.
As a result of leading Hewlett-Packard’s substantial software business and his public company board experience, Mr. Russell brings to the Board his broad knowledge of large-scale software operations, including sales, marketing, development, finance, strategic planning and leadership, and corporate governance.
Mr. Reiner, 50, serves as our President and Chief Executive Officer, a position he has held since November 2010.
From 1999 to 2010, Mr. Reiner held a series of positions with successively increasing responsibility, including Senior Vice President of Product Development and Executive Vice President of Product and Marketing. Prior to becoming our President and Chief Executive Officer, he was responsible for global marketing and alliances, product management, science research, and development of our next generation software products. Mr. Reiner was also instrumental in our transition to a cloud business. Mr. Reiner has served on the board of directors of Paylocity Holding Corporation (NASD: PCTY) since September 2014 and serves on their compensation and nominating and governance committees.
Mr. Reiner holds a Bachelor of Science in Computer Science with a minor in Mathematics from the University of Houston.
As a result of his more than 20 years of experience with PROS, Mr. Reiner has familiarity with all of our key day-to-day operations, in-depth experience in and knowledge of the development of our products, services and the markets in which we compete, and has leadership, management and operating experience.
PROS | 2021 Proxy Statement | Page 17



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Carlos Dominguez
Raja Hammoud
Audit Committee(Nominee)
CLD Committee
Mr. Dominguez, 62, has served as Vice-Chairman and Chief Evangelist of Sprinklr, Inc., a privately held SaaS company, since June 2020.

He served as President of Sprinklr from 2015 to 2020 and as Chief Operating Officer from 2015 to 2018. He serves on the board of directors of The Hartford Financial Services Group, Inc. (NYSE: HIG) and serves on the Compensation & Management Development, Nominating & Corporate Governance committees of Hartford's board. He also served on the board of directors of Medidata Solutions, Inc. (NASD: MDSO) from 2009 until its acquisition by Dassault Systemes in 2019. From 1992 to 2015, Mr. Dominguez held a variety of roles at Cisco Systems, Inc., including SVP, Worldwide Service Provider Operations (2004 to 2008) and SVP, Office of the Chairman and CEO (2008 to 2015).

Mr. Dominguez brings to the Board his extensive business and leadership experience in technology and software companies, including experience in sales, marketing, strategy, governance, compensation planning and mergers and acquisitions.
Ms. Hammoud, 49, has served as Executive Vice President of Products at Coupa Software Incorporated (NASD: COUP) since 2019.

She served as Senior Vice President of Products at Coupa from 2017 to 2019 and as Vice President of Product Marketing and Management from 2014 to 2017. Prior to joining Coupa, Ms. Hammoud directed product marketing for Adobe System’s (NASD: ADBE) business process management business and held a product development management role at webMethods. Ms. Hammoud earned a B.S. in Computer Science with high distinction from the American University of Beirut, Lebanon.

Ms. Hammoud brings to the Board her extensive technology industry experience, including her experience in product marketing, software development and product portfolio strategy.
PROS | 2021 Proxy Statement | Page 18


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Catherine LesjakGreg B. Petersen
Audit CommitteeCLD Committee Chairman
Audit Committee
Ms. Lesjak, 62, retired from HP, Inc. (NYSE: HPQ), formerly Hewlett-Packard Company (HP) in March 2019, serving as HP's interim Chief Operating Officer from 2018 to 2019, after having served as Chief Financial Officer from 2007 to 2018.

In addition, Ms. Lesjak served as interim Chief Executive Officer of HP from August 2010 through October 2010. During her 32-year careeer at HP, Ms. Lesjak held a broad range of financial leadership roles, including Senior Vice President and Treasurer and other financial operations and controller roles. Ms. Lesjak has a bachelor’s degree in biology from Stanford University and a master of business administration degree in finance from the University of California, Berkeley.

Ms. Lesjak serves on the board of directors of SunPower (NASD: SPWR) where she serves on the Audit committee and General Electric Company (NYSE: GE) where she serves on the Audit and Governance & Public Affairs committees.

An audit committee financial expert, Ms. Lesjak brings to the Board extensive experience as the chief financial officer of a major corporation, with significant presence in both the business-to-consumer and business-to-business markets, including extensive experience in strategic business planning and execution, financial oversight, corporate development and public company governance.
Mr. Petersen, 58, has served as president of Brookview Capital Advisors since 2016. He currently serves on the board of directors of the following public companies: Mohawk Group Holdings, Inc. (NASD: MWK) and Plus Therapeutics, Inc. (NASD: PSTV).

Mr. Petersen previously served on the board of directors of Diligent Corporation (2013 to 2016) and Piksel, Inc. (2012 to 2017). Mr. Petersen served as the chairman of the audit committee at Diligent and Piksel, and as an advisory board member at Synthesio. From 2014 to 2015, he served as Executive Vice Chairman at Diligent Corporation. Mr. Petersen previously served as Chief Financial Officer for CBG Holdings, Lombardi Software, Inc. (which was sold to IBM in 2010), and Activant Solutions, Inc. Mr. Petersen previously served in executive roles with Trilogy Software and RailTex. Mr. Petersen began his career with American Airlines, Inc. (NASD:AAL), including serving as managing director of corporate development where he led a project to create Sabre Holdings, Inc. (NASD:SABR) and complete its IPO. Mr. Petersen holds a Bachelor of Arts in Economics from Boston College and a Master of Business Administration from the Fuqua School of Business at Duke University.

An audit committee financial expert, Mr. Petersen brings to the Board his business and leadership experience in software companies, merger and acquisition experience, and extensive financial planning, accounting, governance, compensation planning and risk management knowledge.


PROS | 2021 Proxy Statement | Page 19


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Timothy V. Williams
Mariette M. Woestemeyer
Audit Committee ChairmanCo-Founder
NCG Committee
Mr. Williams, 72, has served on the board of directors and as chairman of the Audit committee of ChannelAdvisor Corporation (NYSE: ECOM) since 2012. He also serves on the board of directors of PointclickCare Corp., a privately held company.
Mr. Williams previously served on the board of directors and as chairman of the audit committee of Halogen Software, Inc. (TSE: HGN) (April 2011 to May 2017). Mr. Williams served as Senior Vice President and Chief Financial Officer of Blackbaud, Inc. (NASD: BLKB), a provider of software and services to non-profit organizations, from January 2001 until his retirement in November 2011. Mr. Williams previously served as Executive Vice President and Chief Financial Officer of both Mynd Corporation (now a subsidiary of Computer Sciences Corporation), and Holiday Inn Worldwide, a subsidiary of Bass PLC. Mr. Williams holds a Bachelor of Arts in business from the University of Northern Iowa.
An audit committee financial expert, Mr. Williams has extensive financial, business, management and public software company expertise. Through his experience as a chief financial officer, including with three other software and services firms, Mr. Williams brings to the Board extensive knowledge of accounting, risk management, general management of software companies and public company reporting requirements and processes.
Mrs. Woestemeyer, 69, co-founded PROS in 1985 with her husband, Ronald F. Woestemeyer. She has served as a director of PROS since 1985.

Mrs. Woestemeyer was previously the Chief Financial Officer of Metro Networks, a broadcasting company, from 1983 to 1985 and held various financial roles with Continental Airlines and its predecessor, Texas International Airlines, prior to 1983. Mrs. Woestemeyer holds a Bachelor of Business Administration and a Master of Business Administration from the University of Houston.

As co-founder of PROS, Mrs. Woestemeyer brings to the Board continuity and history of current and past management and direct relevant industry experience. Mrs. Woestemeyer also has familiarity with all of our key operations as a result of serving as a director since our founding. Mrs. Woestemeyer also has experience as our Chief Financial Officer for many years and related operational expertise.

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Ms. Herscher, 60, is a seasoned technology public company board director, executive and entrepreneur, with more than 15 years of experience as a high-tech CEO in Silicon Valley and more than 10 years of experience serving on public company boards of directors. Ms. Herscher currently serves on the boards of Faurecia SA (EPA:EO), Verint (NASD:VRNT), and Lumentum Holdings, Inc. (NASD:LITE).

Ms. Herscher previously served as CEO for FirstRain, a privately held company in the unstructured data analytics space, from December 2004 to November 2015. Prior to leading FirstRain, she was CEO of Simplex Solutions and served in C-level and senior executive positions for a number of software and technology firms, including Cadence Design Systems, Inc.

Ms. Herscher has served on the Board since 2018 and brings her extensive business and leadership experience in software companies, including experience in software sales, marketing, strategy, governance, compensation planning and mergers and acquisitions.
Penelope Herscher(1)
CLD Committee
NCG Committee

(1)Ms. Herscher, a Class II director, has not been nominated for reelection and her term of service will end effective as of
the Annual Meeting.


    
PROS | 2021 Proxy Statement | Page 20


The following table provides a summary view of the experience, expertise and other attributes of our continuing directors and director nominees as well as term of office information:
Board Experience, Expertise or AttributeCarlos DominguezRaja HammoudCatherine LesjakGreg B. PetersenAndres D. ReinerWilliam RussellTimothy V. Williams Mariette M. Woestemeyer
(Nominee)(Nominee)
Accountingxxxx
Business Operationsxxxxxxxx
Cloud Software
x
xxxxxx
Financexxxxx
Internationalxxxxxx
Leadershipxxxxxxxx
M&Axxxxxxx
Public Company/Governancexxxxxx
Risk Managementxxxx
Sales & Marketingxxx
Software Product Developmentxx
Travel Industryxxx
Race/Ethnicity
Hispanic/Latin Americanxx
Asianx
Middle Eastern/North Africanx
Caucasian/Whitexxxx
Prefer not to disclosex
Other Public Boards
At March 25, 2021122111
Term of Service on PROS Board
Director Since20202020202020072010200820071985
Current Term Expires20222021202220232022202120232023
Class of DirectorIIIIIIIIIIIIIIII


PROS | 2021 Proxy Statement | Page 21


PROPOSAL ONE
ELECTION OF DIRECTORS
What am I voting on?
Stockholders are being asked to elect two Class II director nominees to the Board for a three-year term.
Voting Recommendation:
The Board recommends voting “FOR” the election of each of the two Class II director nominees.
Two (2) directors are to be elected at the Annual Meeting. Our Board, upon the recommendation of the NCG Committee, has nominated Raja Hammoud and William Russell as Class II directors, each to hold office until the 2024 Annual Meeting and until their successor has been duly elected and qualified or until the earlier of their death, resignation or removal.
The Board is also composed of three Class III directors, whose terms expire upon the election and qualification of directors at the 2022 Annual Meeting, and three Class I directors, whose terms expire upon the election and qualification of directors at the 2023 Annual Meeting.
The Board knows of no reason why any of the nominees would be unable or unwilling to serve, but if any nominee should for any reason be unable or unwilling to serve, the proxies will be voted for the election of such other person for the office of director as the Board may recommend in the place of such nominee. Unless otherwise instructed, the proxy holders will vote the proxies received by them for the nominees named above.
Vote Required
In accordance with Delaware law, abstentions will be counted for purposes of determining both whether a quorum is present at the Annual Meeting and the total number of shares represented and voting on this proposal. While broker non-votes will be counted for purposes of determining the presence or absence of a quorum, broker non-votes will not be counted for purposes of determining the number of shares represented and voting with respect to the particular proposal on which the broker has expressly not voted and, accordingly, will not affect the approval of this proposal.
Directors are elected by a plurality vote of the votes cast by holders of our Common Stock entitled to vote at the Annual Meeting. Abstentions and broker non-votes will not have any effect on this proposal. Accordingly, the two nominees who receive the highest number of properly executed “FOR” votes from the holders of Common Stock will be elected as directors.
The number of “withhold” votes with respect to a nominee will affect whether our Director Resignation Policy will apply to that individual. In accordance with our Director Resignation Policy, any nominee for director who receives a greater number of votes “withheld” from his or her election than votes “for” such election is required to offer his or her resignation following certification of the stockholder vote. Our NCG Committee of our Board would then consider whether to accept the resignation and make a recommendation to our independent directors as to the action to be taken with respect to the offer. For more information about this policy, see Corporate Governance - Accountability - Director Resignation Policy.
The NYSE broker discretionary rules prohibit banks, brokers and other intermediaries from voting shares held in their clients’ accounts on elections of directors unless the client has provided voting instructions. Therefore, if you hold your shares in street name, it is important that you cast your vote if you want it to count in the election of directors.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE ELECTION OF EACH OF THE TWO CLASS II DIRECTOR NOMINEES.

PROS | 2021 Proxy Statement | Page 22


DIRECTOR COMPENSATION

The CLD Committee periodically reviews non-employee director compensation taking into account various factors, including director responsibilities, peer group data and market practices. In the spring of 2020, Frederic W. Cook & Co., Inc. (FW Cook) provided an independent analysis, including peer group data, which was taken into consideration by the CLD Committee. For 2020, the CLD Committee approved a compensation structure for non-employee directors unchanged from 2019 and consisting of an equity award, annual cash retainer, and for certain leadership roles, a supplemental cash retainer. All cash retainers are paid quarterly in arrears. In 2020, each non-employee member of our Board serving as of the 2020 Annual Meeting received a target RSU award of $165,000, which will vest in full on April 29, 2021. Directors who joined the Board after the 2020 Annual Meeting received a pro rata award of RSUs which also vest in full on April 29, 2021. Each non-employee member of our Board received an annual cash retainer of $35,000 in 2020, pro rated for directors who joined the Board mid-year. The non-executive chairman of our Board received a supplemental cash retainer of $60,000 in 2020. In addition, each non-employee director serving as a chair or member of a standing committee of our Board received the following supplemental cash retainer(s):
Committee RoleAudit CommitteeCLD CommitteeNCG Committee
Member$15,000 $15,000 $7,500 
Chair$30,000 $20,000 $10,000 
We also reimburse our directors for reasonable out-of-pocket expenses incurred in connection with (i) their attendance at our Board and committee meetings and other Company meetings, and (ii) director continuing education programs, including participation in the NACD, of which the Company is a member.

2020 Director Compensation Table

The following table sets forth the compensation paid to our non-employee directors for service on our Board during 2020. Compensation for Andres D. Reiner our President and CEO is set forth in the Summary Compensation table. Mr. Reiner does not receive any compensation for his services as a director.
NameFees Earned
or Paid in Cash
($)
Restricted
Stock Units
($) (1)
Total
($)
Carlos Dominguez (2)$33,654 $164,969 $198,623 
Raja Hammoud (3)$28,434 $153,574 $182,008 
Penelope Herscher$57,500 $164,969 $222,469 
Catherine Lesjak (4)$20,516 $120,690 $141,206 
Greg B. Petersen$70,000 $164,969 $234,969 
Leslie Rechan (5)$21,010 $— $21,010 
William Russell$120,000 $164,969 $284,969 
Timothy V. Williams$72,500 $164,969 $237,469 
Mariette M. Woestemeyer$35,000 $164,969 $199,969 
Ronald F. Woestemeyer (6)$11,538 $— $11,538 
(1)Represents the aggregate grant date fair value of equity awards granted in 2020 calculated in accordance with GAAP. For additional information about valuation assumptions for equity awards, refer to Note 14 of our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020. The April 29, 2020 grant of RSUs awarded to all non-employee directors serving as of conclusion of the 2020 Annual Meeting vest in full on the earlier of April 29, 2021 and the 2021 Annual Meeting and had a grant date fair value of $34.29. The June 8, 2020 grant of RSUs awarded to Ms. Hammoud vest in full on the earlier of April 29, 2021 and the 2021 Annual Meeting and had a grant date fair value of $44.80. The August 4, 2020 grant of RSUs awarded to Ms. Lesjak vest in full on the earlier of April 29, 2021 and the 2021 Annual Meeting and had a grant date fair value of $33.75.
(2)Mr. Dominguez joined the Board on April 29, 2020.
(3)Ms. Hammoud joined the Board on June 6, 2020.
(4)Ms. Lesjak joined the Board on August 3, 2020.
(5)Mr. Rechan resigned from the Board effective May 13, 2020 in conjunction with his appointment as a Chief Operating Officer of the Company.
(6)Mr. Ronald F. Woestemeyer retired from the Board effective April 29, 2020.

For information on the stock holdings of each director, see Security Ownership.


PROS | 2021 Proxy Statement | Page 23


EXECUTIVE OFFICERS

The following section sets forth our current NEOs and other significant employees of the Company, other than Mr. A. Reiner, their ages (immediately prior to the Annual Meeting), and the Company positions currently held by each such person:
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Mr. Schulz, 54, oversees our accounting, financial planning and analysis, legal, treasury, facilities, investor relations, internal audit, tax and corporate development functions.
Mr. Schulz joined PROS in his current position in March 2015. Prior to joining us, Mr. Schulz served as Chief Financial Officer for Digital River, Inc., a global provider of cloud-based commerce, payments and marketing services, from July 2011 to February 2015. Mr. Schulz previously served in various roles, including as Senior Vice President, Chief Financial Officer and Chief Accounting Officer, with Lawson Software, an enterprise resource planning software company, from October 2005 to July 2011; in various finance and accounting roles at BMC Software, from 1993 to 2005, including as Vice President and Corporate Controller; and as an Audit Manager in the Enterprise Group with Arthur Andersen LLP. Mr. Schulz was instrumental in our transition to a cloud business.
Mr. Schulz holds a B.B.A. in Accounting from Lamar University.
Stefan B. Schulz
Executive Vice President
and Chief Financial Officer
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Mr. Rechan, 59, oversees our operations, including our sales, marketing, customer success, revenue operations and professional services functions.
Mr. Rechan joined PROS as Chief Operating Officer in May 2020 after having served as a non-employee director on our Board since 2015. From 2017 to May 2020, Mr. Rechan served as President and CEO and a director of Solace Corp., a cloud-based smart data movement solutions company. From 2015 to 2017, Mr. Rechan served as President and CEO and a director of Halogen Software (TSX: HGN). From 2011 to 2014, Mr. Rechan served as General Manager, IBM Business Analytics Division. Prior to that, Mr. Rechan held various leadership positions at IBM across field sales, systems engineering, services, solutions, development and general management in North America, Europe and Asia Pacific. Mr. Rechan also served in executive roles at Cognos Inc., Oracle Corporation, Seibel Systems, Inc., Cadence Design Systems Inc. and Onyx Software Corp. Mr. Rechan serves on the board of directors of MicroStrategy Incorporated (NASD: MSTR).
Mr. Rechan holds a B.S. in Electrical Engineering and a B. A. in Organizational Behavior from Brown University and a M.A. in Management from Northwestern University.
Leslie Rechan
Chief Operating Officer
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Mr. R. Reiner, 59, oversees our product management, product development and science and cloud operations.
Mr. R. Reiner joined PROS as Chief Technology Officer in 2016. He was appointed Executive Vice President in November 2019. Prior to joining us, Mr. R. Reiner co-founded and served as Chief Technology Officer for ITinvolve from 2011 to 2015. During his extensive software career, Mr. R. Reiner also has served in various technology leadership roles at leading software companies, including Attachmate and BMC Software.
Mr. R. Reiner holds a B.S. in Computer Science from the University of Houston.
Roberto Reiner
Executive Vice President
and Chief Technology Officer

Other Significant Employees
NameAgePosition
Nikki Brewer40Chief People Officer
Scott Cook53Chief Accounting Officer
Katrina Klier53Chief Marketing Officer
Sherry Lautenbach50Sr. VP, Global B2B Sales
Damian Olthoff46General Counsel and Secretary
Martin Simoncic39Chief Customer Officer
Benson Yuen60President, Travel
Craig Zawada50Chief Innovation Officer
PROS | 2021 Proxy Statement | Page 24


COMPENSATION AND LEADERSHIP DEVELOPMENT
COMMITTEE REPORT
The Compensation and Leadership Development Committee of the Board of Directors of PROS has reviewed and discussed the following Compensation Discussion and Analysis with management and FW Cook. Based on this review and discussion, we recommended to the Board, and the Board has agreed, that the following Compensation Discussion and Analysis be included in this Proxy Statement.
MEMBERS OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE
Greg B. Petersen (Chairman) | Raja Hammoud | Penelope Herscher | William Russell

COMPENSATION DISCUSSION AND ANALYSIS

PROS provides AI solutions that power commerce in the digital economy. Our solutions bring intelligence to commerce by providing companies with predictive and prescriptive guidance that enables them to dynamically price, configure and sell their products and services across all channels with speed, precision and consistency. 2020 was an unprecedented year for the Company and our customers, partners and employees as the global economy was significantly and negatively impacted by the COVID-19 pandemic, including as a result of governmental authorities implementing measures to contain the virus. Compliance with these measures by us and by our customers impacted our business. In particular, in the travel industry, our airline customers experienced historic declines in demand for travel globally.

In 2020, despite the headwinds from the impact of the pandemic, we continued to execute our strategy, growing subscription revenue 17% over 2019, continuing our cloud transition and raising additional capital. Our results reflected further success in executing on our cloud transition, even in the face of unprecedented economic challenges due to COVID-19. In addition, our Recurring Revenue Gross Margin, while less than in 2019, was 73% for 2020, within our target range set at the beginning of 2020 before COVID-19 was declared a pandemic. We believe this is a significant accomplishment given the economic conditions brought on by the pandemic and is evidence of our prudent management of expenses during the uncertainty and extended impact of the pandemic. We successfully raised capital for additional liquidity and financial flexibility, executing during favorable market conditions to complete in September 2020 a private offering of $150.0 million in aggregate principal amount at maturity of convertible senior notes due 2027.
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This Compensation Discussion and Analysis describes our executive compensation program and the compensation paid to our NEOs:
Andres D. ReinerChief Executive Officer, President and Director
Stefan B. SchulzExecutive Vice President and Chief Financial Officer
Leslie RechanChief Operating Officer
Roberto ReinerExecutive Vice President and Chief Technology Officer
Thomas F. DzierskFormer Executive Vice President, Worldwide Sales




PROS | 2021 Proxy Statement | Page 25



Our Compensation Philosophy
Our executive compensation program is designed to provide competitive pay enabling the Company to attract and retain high-caliber talent, to link pay to Company performance and to align the interests of our executives with those of our stockholders.
Competitive Pay
RationaleImpact in 2020
To attract and retain high-caliber talent by setting compensation competitive with that being offered to individuals holding comparable positions at other public companies with which we compete for business and talent. The Company does not target a specific percentile and reviews market data to check that compensation is generally in a market range and reflects the individual’s experience, performance and contribution.At the time the CLD Committee made its 2020 executive compensation decisions, our CEO's strong 2019 performance was taken into consideration and his 2020 total compensation was targeted within a reasonable range of the median of our 2020 peer group. See the next section for a discussion of his actual compensation in 2020.
Pay for Performance
RationaleImpact in 2020
Provide a compensation package that is weighted heavily towards performance-based pay to motivate high performance among our NEOs, with compensation levels reflecting the achievement of short- and long-term performance objectivesCompany underperformance against pre-established targets resulted in CEO bonus paid at 24% of target for 2020. 79% of the 2019 PRSUs were earned, and the 2020 PRSUs are unlikely to be earned based on performance to date. Each award is measured over a two-year performance period.
Align the interests of our executives and stockholders
RationaleImpact in 2020
Directly link rewards to the achievement of measurable financial objectives that build long-term stockholder valueCEO bonus plan is based on growth targets established at beginning of period without discretion or adjustment. One-half of the CEO's annual equity grant value is performance-based equity awards.

Executive Compensation Operating as Designed

Our CLD Committee believes that a well-functioning executive compensation program should reward executives for out-performance. Conversely, when performance is not achieved the program's incentive elements pay out at reduced levels, and in some cases at zero.

In early February 2020, prior to the declaration of COVID-19 as a pandemic, the CLD Committee approved aggressive NEO bonus performance goals for 2020 which required 18% total revenue growth and recurring revenue gross margin of 75% for at target bonus payouts. The global economic impact of the pandemic adversely impacted our revenue in 2020, resulting in no achievement of incentives based on total revenue growth and achievement of below target recurring revenue gross margin. Thus, our NEO bonus payout for 2020 was 24% of target and no pandemic-related adjustments nor discretion were applied. Our CEO's bonus was significantly lower than in 2019, resulting in a 14% decrease in his total compensation.

In addition, the financial impact of the pandemic has and may continue to affect our NEOs' equity incentives:
The impact of COVID-19 on our recurring revenue in 2020 resulted in 79% of target 2019 PRSUs being earned.
Based on the impact on subscription bookings during 2020, our 2020 PRSUs, which are measured over a two-year performance period, are unlikely to vest at all.
Approximately $2.1 million of our CEO's 2020 reported total compensation is attributable to the grant date fair value of his 2020 PRSUs, which are likely to deliver $0, and no adjustments are contemplated at this time.

PROS | 2021 Proxy Statement | Page 26



Executive Compensation Practices

Our executive compensation practices are designed to assure that our executive compensation is competitive, rewards performance and aligns the interests of our executives with our stockholders, as highlighted in the following table:
Pay for PerformanceWe emphasize pay-for-performance where compensation is contingent upon the performance of our business and our stock price.
We utilize performance-based pay through equity and cash incentive awards that require achievement of pre-established goals with no discretion.
Stock Ownership GuidelinesWe maintain robust ownership guidelines for our directors and NEOs.
We expect our CEO to hold stock equal to six times his base salary.
We expect each other NEO to hold stock equal to two times their base salary.
We expect our directors to hold stock equal to five times their annual cash retainer.
Accountability
We have a clawback policy that applies to all cash and equity awards.
We maintain anti-hedging, anti-short and anti-pledging policies.
Although we have not recently utilized stock options or SARs, we do not discount from fair market value in setting the exercise price of stock options and SARs.
Our NEO employment agreements have “double trigger” change in control provisions.
No Excessive PerquisitesWe do not provide significant perquisites to our NEOs.
RepricingWe do not reprice underwater stock options or SARs without stockholder approval.
Minimum Equity Vesting RequirementsWe do not grant equity with vesting terms of less than one year after grant, except for up to 5% of the stock plan authorized shares.
Compensation Risk OversightOur CLD Committee oversees risks associated with compensation policies and practices.
Independent ConsultantThe CLD Committee has directly retained an independent compensation consultant that performs no services for PROS other than for the CLD Committee.

Role of Our Compensation and Leadership Development Committee

Our CLD Committee, which is comprised entirely of independent directors, is responsible for establishing, administering and interpreting our policies governing the compensation and benefits for our NEOs, as well as granting any share-based awards to our NEOs. Our CLD Committee establishes executive compensation programs that it believes, based on the members’ experience, is the most appropriate to achieve the goals described above. Our CLD Committee continues to evaluate our executive compensation programs on a quantitative and qualitative basis on at least a yearly basis or more frequently if circumstances dictate. Our CLD Committee expects to make new awards and adjustments to our executive compensation programs as appropriate. Our CLD Committee has taken the following steps to ensure that our executive compensation and benefit policies are consistent with both our compensation philosophy and our Corporate Governance Guidelines:
PROS | 2021 Proxy Statement | Page 27


solicited recommendations from an independent executive compensation consultant to evaluate our executive compensation practices and assisted in developing and implementing the executive compensation programs;
established a practice, in accordance with the rules of the NYSE, of reviewing the performance and determining the compensation earned, paid or awarded to our CEO;
established a policy, in accordance with the rules of the NYSE, to review on an annual basis the performance of our other executive officers with assistance from our CEO and determined what we believe to be appropriate total compensation for these executive officers; and
our CLD Committee members attended continuing education related to compensation best practices provided by NYSE, NACD and Equilar, among others.
Our CLD Committee considers a broad range of facts and circumstances in setting executive compensation. Among the factors considered for our executives generally in 2020, and for the NEOs in particular, are market data and recommendations from the Committee's independent compensation advisor, FW Cook, advice from our CEO, general economic and market conditions, our financial condition and operating results, our operating plan, our geographic location and the objectives of our executive compensation policies described above. The weight given to each factor differs from year to year and may differ among individual NEOs in any given year.


Role of Our Independent Compensation Consultant

The CLD Committee retained FW Cook to advise the CLD Committee on executive compensation matters for 2020 due to the breadth and depth of FW Cook’s experience with executive compensation matters and their expertise in the software industry. During 2020, FW Cook advised the CLD Committee on a variety of subjects such as compensation plan design and trends, pay for performance analytics, benchmarking norms, executive compensation best practices and other related matters. FW Cook reports directly to the CLD Committee, participates in meetings as requested and communicates with the CLD Committee Chair between meetings as necessary. FW Cook has served as the CLD Committee's independent compensation consultant since 2017.

Prior to engaging FW Cook, the CLD Committee reviewed FW Cook's qualifications, as well as their independence and any potential conflicts of interest. The CLD Committee has the sole authority to modify or approve the compensation for FW Cook, determine the nature and scope of their services, evaluate their performance, terminate their engagement and hire replacement or additional consultants at any time. FW Cook did not perform any services for us in 2020 other than as serving as advisors to the CLD Committee.

Role of the Chief Executive Officer

In early 2020, Mr. A. Reiner reviewed the performance and compensation of the NEOs, other than himself, and made recommendations as to their compensation to the CLD Committee. In making its decisions regarding executive compensation, the CLD Committee meets outside the presence of executive officers when making final decisions about each executive officer. The CEO is periodically present during portions of these deliberations that relate to the compensation for other executive officers but does not participate in discussions regarding his own pay. In addition, the CLD Committee has delegated to the CEO the authority to make share-based awards to employees below the VP level within certain limitations on aggregate grants and specific award terms.

Role of Stockholders

Each year, our CLD Committee takes into account the result of our stockholders' advisory vote on the compensation paid to our NEOs (say-on-pay). More than 64% of the total votes cast were voted in favor of our say-on-pay proposal in 2020, which was consistent with the support received in 2019. Say-on-pay is a key indicator of stockholder sentiment and is taken into account by the CLD Committee in its policy and decision-making processes. We also keep an open dialogue with our institutional investors and stockholders throughout the year. We reach out to discuss business topics, seek feedback on our performance and address other matters of importance to our stockholders, including executive compensation. We actively engaged with the stockholders that represent a significant majority of our shares outstanding in 2019, before 2020 executive compensation decisions, and again in 2020, after the 2020 stockholder vote and before 2021 executive compensation decisions. In 2020, this included the Company’s management team and the CLD Committee Chairman communicating in writing with stockholders that represent over 80% of our shares outstanding and having 11 live, interactive discussions with stockholders that represent over 55% of our shares outstanding. As a result of this ongoing outreach, the CLD Committee further reevaluated our executive compensation program and took into account stockholder sentiment as it set 2021 NEO pay. The following table sets forth common themes we have heard from our stockholder engagement on executive compensation over the past several years and the CLD's ongoing response to this engagement:
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What We HeardWhat We Did
(with advice and data from our leading independent compensation consultants)
üA focus on CEO pay level. ü
Reviewed and updated our peer group prior to January 2020 and January 2021 executive compensation decisions to ensure an accurate size-appropriate comparison of peer executive compensation practices and pay levels.
ü
Responded to changes in our relative market cap and revenue size in 2020 by removing a company from our peer group that had a faster growing market cap than ours and adding four companies with smaller market cap and similar revenue as ours.
ü
Set CEO 2020 target compensation near the expected median of our updated peer group. CEO 2020 actual total compensation as reported in the Summary Compensation table is 14% lower than in 2019.
üAligning NEO pay with Stockholder interests.ü
Continued to set majority of pay based on performance through our bonus plan and equity grants tied to our performance.
ü
Continued to set aggressive goals for cash incentive attainment at the beginning of each year tied to our strategic plan. For example, in 2020, our primary growth-oriented performance metric was Total Revenue, and this goal required 17% annual growth to earn a target award.
üPaying for PerformanceüDid not use discretion or any pandemic-related adjustments for 2020 pay. NEO bonuses were paid at 24% of target, as calculated based on achievement against the pre-pandemic established total revenue and recurring revenue gross margin goals.
ü2018 MSUs were earned at 200% of target based on 3-year total stockholder return (TSR) outperforming the Russell 2000 Index (measured from end of 2017 to end of 2020); 2019 PRSUs were earned at 79% of target based on actual results against the 2020 recurring revenue goal, with the below-target achievement primarily due to the impact of COVID-19 on 2020.
ü
No COVID-19 related adjustments or discretionary actions were taken despite the fact that the pandemic was outside of management’s control.
ü
Reinstated ARR and Free Cash Flow as metrics for 2021 NEO bonus plan in response to stockholder input to include both a top-line and profitability improvement metric.
        

Role of Peer Companies

To assist the CLD Committee in its deliberations on executive compensation, each year they review our peer group with our compensation consultant for appropriateness based on a variety of factors, including: similarities in market capitalization and revenue, relevant industry, the labor market for top management talent, our status as a publicly traded, U.S.-based firm and various other characteristics. Additionally, starting in 2017 and continuing through 2020, the CLD Committee specifically began to transition away from peers with a founder CEO because they tend to be paid in a differentiated manner from typical market practice (exceptions have been made in certain instances where business size and fit are strong and the pay program/mix is market normative). The CLD Committee reviewed the peer group constituents in mid-2019 for informing 2020 NEO pay. As a result of this review, two acquired companies (Callidus Software and Imperva) and two others that fell outside of the desired market cap and/or revenue size range (Model N and RingCentral) were removed. This left 14 continuing peer companies, and three new SaaS peers that were in a similar market cap and revenue size range and exhibited a similar growth profile relative to PROS at the time they were selected were added. The resulting 2020 Peer Group of 17 companies had a median revenue that was slightly above PROS revenue at the time, balanced by a median market cap that was slightly below PROS market cap at the time. A complete list of the 2020 Peer Group is set forth in the following table:

2020 Peer Group (Count = 17)
Aspen TechBenefitfocusBottomline TechCornerstoneCoupa Software
Ellie MaeEverbridge*Five9Instructure*Monotype Imaging
PaylocityQ2 HoldingsQuotient TechRapid7*SPS Commerce
Workiva8x8*Added for 2020 peer group
Market Cap range of 2020 Peer Group as of July 29, 2019 (time of peer group construction): 0.3x - 3.2x of PROS market cap
Latest TTM Revenue range of 2020 Peer group as of July 29, 2019: 0.7x - 2.5x of PROS revenue at the time
    
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In August 2020, the CLD Committee reviewed the peer group for purposes of informing executive compensation decisions for 2021 and made several changes to the group with a focus on aligning the group's overall market cap and revenue closer to PROS market cap and revenue at the time, which were impacted by the COVID-19 pandemic more than most of the peer companies due to the travel industry being particularly affected. The following three companies were removed from the peer group because they were acquired: Ellie Mae, Instructure and Monotype Imaging. Additional changes to the peer group for 2021 were made to reduce the peer median revenue and market capitalization to be responsive to PROS smaller size relative to peers as a result of COVID-19 impacts. Coupa Software was removed because its market capitalization grew larger than the CLD Committee’s targeted market cap range, and four new peers were added for the 2021 peer group, all of which had a smaller market cap than PROS and similar revenue as PROS at the time: Model N, OneSpan, QAD and Upland Software. With these changes, the CLD Committee examined the compensation practices of these companies. We believe that all companies in the 2021 peer group are in a comparable and appropriate size range, are similar in terms of their scope and complexity and are representative of widely-accepted peer group development best practices. A complete list of the 2021 Peer Group is set forth in the following table:

2021 Peer Group (Count = 17)
Aspen TechBenefitfocusBottomline TechCornerstoneUpland Software*
QAD*EverbridgeFive9Model N*OneSpan*
PaylocityQ2 HoldingsQuotient TechRapid7SPS Commerce
Workiva8x8*Added for 2021 peer group
Market Cap range of 2021 Peer Group as of July 31, 2020 (time of peer group construction): 0.3x - 5.5x
Latest TTM Revenue range of 2020 Peer group as of July 31, 2020: 0.6x - 2.3x

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2020 CEO Compensation Program Overview

Growth in TSR has far outpaced growth in our CEO’s target pay. From the beginning of 2018 through 2020, PROS cumulative TSR was greater than 90%, but our CEO's total target pay increased 29% over that three-year period, including no change in his base salary and target cash incentive for two of the three years.

Our CEO's total compensation has been near the median of our peer group. In recognition of our strong one-year TSR in 2019 (95%) and our CEO's leadership as well as peer company data and other relevant factors, the CLD Committee increased our CEO's base salary by 2.9% for 2020 as compared to 2019 and his overall target compensation for 2020 by 11% as compared to his 2019 target total compensation.

Actual CEO pay decreased for 2020, driven by our underperformance attributable to the impact of COVID-19. As reported in the Summary Compensation table, our CEO's total compensation for 2020 declined 14% as compared to 2019, primarily due to the cash incentive (bonus) declining year-over-year.

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(1)    Growth numbers are cumulative over time. Target equity compensation for RSUs and market stock units (MSUs) represents total target equity compensation determined by the CLD Committee divided by the closing price of the Company's Common Stock reported by the New York Stock Exchange (NYSE) on the grant date, and for 2018 MSUs differ from the accounting grant date fair value included in the Grants of Plan-Based Awards table below; and for performance-based RSUs (PRSUs) represents the accounting grant date fair value.


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The Company’s 2020 CEO compensation program reflects our ongoing emphasis on pay for performance with approximately 50% of total compensation directly performance-based (including annual cash incentive and performance-based equity) and >90% at risk (including time-based RSUs). The 2020 CEO equity award structure of 50% performance-based equity and 50% time-based equity was consistent with the CLD Committee's historic practices utilized each year for our CEO since 2012.
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Components of 2020 Executive Compensation

Our CLD Committee chose to make the changes set forth below to our NEO compensation for 2020 after reviewing each leader’s tenure and compensation history with us, the Company’s and each leader’s prior year performance, the compensation practices from our 2020 peer group, each leader’s compensation relative to our updated peer group and feedback from stockholder engagement. Investors should keep in mind that the CLD Committee target compensation decisions for 2020 were considered and made prior to the COVID-19 global pandemic. Actual compensation received, particularly with respect to cash incentive compensation, was well below target due to the impact of COVID-19 on the Company's business and the lack of any related formulaic or discretionary adjustments. Please see the tables under Executive Compensation below.

Base Salaries

We use base salaries primarily to compensate and retain our NEOs for their services. Base salaries for our NEOs are reviewed on an annual basis and represent the minimum payment for a satisfactory level of individual performance as long as the executive remains employed with us. Base salary is set at the CLD Committee’s discretion after taking into account the competitive landscape, including the compensation practices of the companies in our selected peer group, our business strategy, our performance goals and certain individual factors, such as position, salary history, individual performance and contribution, length of service with the Company and placement within the general base salary range offered to our NEOs.

Base Salary changes for 2020

In recognition of Mr. A. Reiner's years of successful leadership, the CLD Committee approved for 2020 an increase to Mr. A. Reiner's base salary, the first such increase in four years.

In recognition of Mr. Schulz's continued impact on our successful operational and financial progress and the resulting growth in stockholder return in 2019, the CLD Committee increased Mr. Schulz's base salary for 2020.

Mr. R. Reiner - In recognition of Mr. R. Reiner's product development leadership and overall Company performance with increasing customer adoption in 2019, the CLD Committee increased Mr. R. Reiner's base salary for 2020.
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The following table sets forth the annual base salaries for the past two years for each of our NEOs:

Annual Base Salaries
Named Executive Officer20192020% Increase
Andres D. Reiner
$525,000 $540,000 2.9%
Stefan B. Schulz$392,000 $405,000 3.3%
Leslie Rechan$— 425,000 (1)
Roberto Reiner$338,000 $350,000 3.6%
Thomas F. Dziersk$383,000 $383,000 (2)
(1)Mr. Rechan's actual salary was prorated for 2020 based on his May 2020 start date as an employee of the Company. See Summary Compensation table below.
(2)In connection with his retirement from the Company which was announced in May 2020, the Company and Mr. Dziersk entered into an amended and restated employment agreement providing that for the transition period from July through October 2020 Mr. Dziersk's base salary would be reduced from an annual rate of $383,000 to $192,000.
Cash Incentives

For 2020, we utilized a cash incentive plan for our NEOs under which cash incentive payments could be earned based on our performance against our corporate objectives for the year. This program is intended to reward our NEOs upon the achievement of financial performance goals. Each component of the cash incentive plan had minimum threshold, target and maximum levels and operated independently of the other components. Actual results between the minimum threshold, target and the maximum goal levels are interpolated. We use our cash incentive plan to align our NEOs' performance with our financial results and to motivate our NEOs to successfully implement our cloud strategy and execute our corresponding financial plan by achieving annual goals that were set at the beginning of the year and remained unchanged through the end of the year.

NEO Cash Incentive Plan for 2020. The NEO cash incentive plan for 2020 (2020 NEO Plan) was approved, including establishing the performance goals and setting the targets, by the CLD Committee in early February 2020, before COVID-19 was declared a pandemic. Similar to the 2019 NEO Plan, the 2020 NEO Plan contained two performance-based measures: Total Revenue and non-GAAP Recurring Revenue Gross Margin. Non-GAAP Recurring Revenue Gross Margin measures the efficiency of our business as it takes into account the costs required to drive our recurring revenue. It is defined as (a) total recurring revenue (comprised of subscription plus maintenance and support revenue), less recurring cost of revenue excluding share-based compensation, amortization of acquisition-related intangibles, acquisition-related expenses and non-cash rent expense on our preoccupied new headquarters and other items approved by the Audit Committee for exclusion from external non-GAAP financial reporting, divided by (b) total recurring revenue, expressed as a percentage.

Going into 2020, the CLD Committee continued to believe that Total Revenue was a valuable indicator of growth for the Company and that Recurring Revenue Gross Margin is the best indicator to measure the health and sustainability of our cloud business. The two measures are distinct and complementary as one measures the overall revenue of the Company and the other is a profitability metric for our business. The weighting of the 2020 NEO Plan components is set forth in the following table:

ComponentWeighting
Total Revenue60%
Recurring Revenue Gross Margin40%

Each NEO's target payout was established as a percentage of base salary as set forth in the payout table below, with the minimum threshold payout being 50% of such target amount and the maximum payout being 200% of such target amount. Actual payouts under the 2020 NEO Plan were based on Company performance compared to aggressive goals for each component’s target. In February 2020, the CLD Committee set the 2020 NEO Plan target performance goals as indicated in the table below. These targets were set prior to the declaration of COVID-19 as a pandemic, which has significantly and negatively impacted the global economy and travel-related industries served by our solutions. As a result, our total revenue minimum threshold level was not achieved. No discretion nor adjustments were made to the 2020 NEO Plan.

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As detailed below, the 2020 NEO Plan payout was 24.2% of target solely due to Recurring Revenue Gross Margin being achieved just above the pre-established threshold performance level. The minimum threshold, target, and maximum goals for each component are set forth in the following table (linear interpolation applies between performance levels):
GoalsPerformance Achieved
ComponentThresholdTargetMaximum
Total Revenue (in millions)$285$295$305$252
Recurring Revenue Gross Margin73%75%77%73.4%
   Payout at Level50%100%200%24.2%

The payout for 2020 performance as a percentage of the base salary of each NEO reflects actual results against the performance schedule described above and are set forth in the following table:
Named Executive OfficerTarget PayoutActual Payout
As a % of Base(1)
Incentive PaidAs a % of Target
Andres D. Reiner110 %$143,74824.2 %
Stefan B. Schulz80 %$78,40824.2 %
Leslie Rechan (2)90 %$58,92824.2 %
Roberto Reiner70 %$59,29024.2 %
Thomas F. Dziersk (3)100 %— — 
(1) No changes were made to target payout amounts as a percentage of base salary in 2020; they are the same as applied in 2019.
(2) Mr. Rechan's prorated bonus target payout for 2020 was $243,504.
(3) Mr. Dziersk retired from the Company effective October 31, 2020 and was ineligible for any 2020 incentive payout.


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Equity Awards

The CLD Committee believes that equity compensation plans are an essential tool to align the long-term interests of our NEOs and employees with those of our stockholders. For our NEOs, the CLD Committee awards a mix of performance-based equity awards and time-based equity awards. While the disclosure rules of the SEC require us to disclose in the Summary Compensation table below the grant-date fair value of equity awards granted to our NEOs, the actual value received by an NEO depends on multiple factors, including the number of shares actually received via vesting and the share price upon ultimate sale. As such, even time-based RSUs include an implied performance element in that the ultimate value received is directly tied to the Company's stock performance over time. The CLD Committee determines the size of awards following review of competitive market data from our peer group, as well as subjective factors such as relative job scope, individual performance, tenure and experience, expected future contributions to the growth and development of the Company, Company performance, historical equity compensation awarded to a NEO and the unvested equity position held by each NEO.

2020 Equity Awards

For 2020, each NEO, except Mr. Rechan who joined the Company as an executive mid-year, received a mix of performance-based and time-based RSUs based upon a target award value as set forth in the table below. Mr. Rechan received a sign-on time-based RSU award which represented a combination of his annual long-term incentive grant for 2020 and a meaningful "make whole" award for unvested equity forfeited in connection with his leaving his prior employer and CEO role to join PROS as Chief Operating Officer.
Named Executive OfficerTarget Award
Mix of Equity Award Types(1)
Share PriceUnits Granted
Value (000s)Performance-BasedTime-Basedon 1/13/20PRSUsRSUs
Andres D. Reiner$5,25050%50%$66.4439,500 39,500 
Stefan B. Schulz$2,50040%60%$66.4415,100 22,600 
Leslie Rechan (2)$4,000100%N/A— 132,406 
Roberto Reiner$1,80040%60%$66.4410,800 16,300 
Thomas F. Dziersk (3)$1,40040%60%$66.448,400 12,600 
(1)The calculation of the number of respective units to grant was determined by the CLD Committee based upon the closing stock price of our Common Stock on the date of grant of the RSUs (January 13, 2020), rounding to the nearest hundred RSUs. However, the PRSUs were granted on February 7, 2020. The grant of PRSUs was delayed because management and the Board established the financial plan for 2020 in early February, and the performance targets were thus not set until February 2020. However, the number of PRSUs to be awarded had been established using the target award values and stock price in January 2020. Regardless of the movement of the stock price between January 13, 2020 and February 7, 2020, the number of PRSUs to be awarded was set on January 13, 2020. The SEC requires us to present in the Summary Compensation table below the grant date fair value of equity awards calculated based on the stock price on the date of grant. Because our stock declined in value between January 13, 2020 and February 7, 2020, the date of granting the PRSUs, the value shown in the Summary Compensation table shows as a lower amount than the total target equity value set by the CLD Committee and shown in the table above. It also could appear that our CEO's 2020 equity awards were not based on a 50/50 performance-based to time-based ratio. But, this table illustrates that the intent of the CLD Committee was to award our CEO on a 50/50 ratio.
(2)Mr. Rechan's award included his initial "sign-on" and "make whole" award with a combined total target value of $4,000,000 and was granted on May 13, 2020 using the closing share price on such date of $30.21 to calculate the number of RSUs.
(3)Mr. Dziersk retired from the Company effective October 31, 2020, and the equity awards granted in 2020 were forfeited unvested upon his departure from the Company.

Performance-based RSUs. In 2020, the CLD Committee granted PRSUs for the performance-based equity component. Similar to the PRSUs granted in 2019, the 2020 PRSUs are earned based on achievement of a long-term recurring revenue goal measured over a two-year performance period. The CLD Committee believes that measuring recurring revenue over a multi-year period incents our NEOs to build long-term customer relationships. This measure is distinct from total revenue utilized in the 2020 NEO Plan which measures all revenue in the year, including services revenue which is not recurring. The percentage of target units earned, up to a maximum of 200% of target, depends upon the achievement against the performance goal. If we fail to achieve the performance level at goal, the percentage at which the 2020 PRSUs convert into earned RSUs will be reduced from 100%, through linear interpolation between a 50% threshold and 100% achievement, with zero units earned for performance below threshold. Vesting of the earned PRSUs, which are payable in shares of our Common Stock, is then contingent on an additional one-year continued employment condition.

Time-based RSUs. RSUs granted in 2020 to our NEOs vest in four equal annual installments on the four anniversaries of the grant date, assuming continued employment over the vesting period, and settle in shares of our Common Stock upon vesting.
See 2020 award detail included in the Grants of Plan-Based Awards table.


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Earning of Prior Year Performance-Based Equity Awards

As stated above, performance-based equity is a key component of our executive compensation program. Once a performance period has completed, our CLD Committee certifies the performance and number of units that are earned. The following sections set forth information regarding the actual results of performance-based equity awards with performance periods that have recently completed.

2018 Market Stock Units

In January 2018, Messrs. A. Reiner and Schulz were awarded market stock units (MSUs) as the performance-based equity component of their 2018 compensation. Messrs. Rechan and R. Reiner did not participate in, and Mr. Dziersk did not earn due to his retirement, such awards. The number of units (payable in shares of our Common Stock) actually earned was based on our TSR for a three-year period from January 1, 2018 through December 31, 2020 as compared to the Russell 2000 Index. The performance multiplier determining the number of units earned was equal to the sum of 100% plus the product of 2.5 multiplied by the difference (whether positive or negative) equal to our TSR minus the return of the Russell 2000 Index, capped at 200%. In January 2021, following completion of the three-year performance period, the CLD Committee certified the performance multiplier and number of earned units for each executive based on the award agreement formula (no discretion nor adjustment applied) as set forth in the table below:

2018 MSUs for Performance Period January 2018 - December 2020*
Named Executive OfficerMSUs granted at targetPerformance MultiplierUnits Earned
Andres D. Reiner82,948200%165,896
Stefan B. Schulz27,778200%55,556
*As calculated per the MSU award agreements, PROS stock (TSR = 89%) outperformed the Russell 2000 Index (29% return), resulting in 251% calculated out-performance, capped at 200%.

2019 PRSUs

In January 2019, Messrs. A. Reiner and Schulz were awarded PRSUs as the performance-based equity component of their 2019 compensation. Messrs. Rechan and R. Reiner did not participate in, and Mr. Dziersk did not earn due to his retirement, such awards. The number of units (payable in shares of our Common Stock) actually earned was based on our performance against a Total Recurring Revenue goal for a two-year performance period ended December 31, 2020. If performance was below the minimum goal, no units were earned. If performance was equal to the minimum goal, 50% of the awarded (at target) units were earned; If performance was equal to or above the target goal, 100% of the awarded units were earned; and if performance was equal to the maximum goal, 200% of the awarded units were earned. Linear interpolation was used to determine the number of earned units if the percentage attainment of the performance goal fell between the minimum, target or maximum goals. In February 2021, the number of earned units was certified for each executive based on the award agreement formula (no discretion nor adjustment applied) as set forth in the table below. The earned units are subject to an additional one-year vesting period and will vest on January 15, 2022, assuming continued employment.

Named Executive OfficerTotal Recurring Revenue ($M)PRSUs
MinimumTargetMaximumActual vs. Target#Granted at TargetUnits Earned
Goals$206.5$221.4$236.8
Actual$215.279.1%
Andres D. Reiner79.1%70,34855,645
Stefan B. Schulz79.1%24,20619,146


Other Compensation

Our NEOs are eligible to participate in our health and welfare programs, 401(k) plan, Employee Stock Purchase Plan and other benefit programs on the same basis as other U.S. employees. We also offer our NEOs reimbursement for the costs of an annual executive, comprehensive physical. In 2020, Messrs. A. Reiner and R. Reiner utilized this benefit.

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Severance Compensation and Termination Protection

We generally provide our NEOs with severance packages if they are terminated without cause (as defined in their employment agreements) or for good reason (as defined in their employment agreements) in order to attract and retain them. The amount of severance benefits is described below, and in more detail elsewhere in the section titled “Potential Payments Upon Termination or Change of Control." The CLD Committee reviews the potential payouts to ensure their market-competitiveness in order to incentivize our NEOs to maintain focus on both daily and long-term efforts.

Our severance compensation provisions are designed to meet the following objectives:

Change in Control: As part of our normal course of business, we may engage in discussions with other companies about possible collaborations and/or other ways in which the companies may work together to further our respective long-term objectives.  In certain scenarios, the potential for merger or being acquired may be in the best interests of our stockholders.  We provide a component of severance compensation if a NEO is terminated as a result of a change of control transaction to promote the ability of our NEOs to act in the best interests of our stockholders even though they could be terminated as a result of the transaction.

Termination Without Cause or For Good Reason: If we terminate the employment of one of our NEOs “without cause” or one of our NEOs resigns for “good reason,” each as defined in the applicable agreement, we are obligated to make certain payments based on the NEO's then-effective base salary.  We believe this is appropriate because the terminated NEO is bound by confidentiality and non-competition provisions continuing after termination. We also believe it is beneficial to have a mutually-agreed severance package in place prior to any termination event to avoid disruptive conflicts and provide us with more flexibility to make a change in management if such a change is in our and our stockholders’ best interests.


Employment Agreements

Andres D. Reiner. In December 2018, we entered into a second amended and restated employment agreement with Mr. A. Reiner, our President and CEO. This agreement will automatically renew for additional three-year terms unless the Company decides not to renew. The base salary payable to Mr. A. Reiner is subject to periodic review by our CLD Committee. In the event Mr. A. Reiner’s employment with us is terminated by him for good reason, by us without cause or we decide not to renew his agreement, he will receive (i) his full base salary each month for the following 12 months, (ii) any unpaid bonus earned prior to the termination relating to periods preceding the date of termination, (iii) the payment of a bonus at 100% of performance targets, including discretionary components, within the bonus plan in effect as if employed by us for 12 months, (iv) an amount equal to 12 times the monthly cost of Mr. A. Reiner's health benefits, (v) the acceleration of vesting of all equity awards with respect to such shares that would have vested following his termination date, and (vi) the acceleration of vesting of all market stock awards where the number of units vesting is determined as if the performance period ended on his termination date. If Mr. A. Reiner’s employment is terminated by us without cause, if he resigns for good reason, or we decide not to renew his agreement within six months prior to, or any time after, a change of control of the Company, he will receive (i) an amount equal to 150% of his annual salary, (ii) any unpaid bonus earned prior to the termination relating to periods preceding the date of termination, (iii) the payment of an aggregate bonus equal to 100% of performance targets, including any discretionary components, within the bonus plan in effect as if employed by us for eighteen months, (iv) an amount equal to 18 times the monthly cost of Mr. A. Reiner's health benefits, and (v) the acceleration of vesting of all equity awards with respect to shares that would have vested following the termination date. If Mr. A. Reiner's employment with us terminates due to his death or disability, his employment will automatically terminate and he will be entitled to accelerated vesting of (i) all equity awards with respect to all shares that would have vested after the termination date, and (ii) all MSUs at 100% of the target number granted. In addition, if the surviving or acquiring entity (or its parent entity) elects not to assume, continue or substitute for the equity awards or options due under the either the 2007 Equity Incentive Plan (2007 Plan) or 2017 Plan, all outstanding equity awards and options under each plan will vest in full and become fully exercisable. Mr. Reiner is subject to non-competition and non-solicitation restrictions during the term of his employment and for the 12-month period following the termination of his employment.

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Stefan B. Schulz and Leslie Rechan. In December 2018, we entered into an amended and restated employment agreement with Mr. Schulz, our Executive Vice President and Chief Financial Officer. In May 2020, we entered into an employment agreement with Mr. Rechan, our Chief Operating Officer. The agreements with these two officers utilize a similar form and provide that the agreements are for a three-year term and automatically renew for three-year terms unless the Company decides not to renew. The base salary payable to the officer is subject to periodic review by our CLD Committee. In the event the officer's employment with us is terminated by him for good reason, by us without cause, or we decide not to renew his agreement, he will receive (i) his full base salary each month for the following 12 months, (ii) any unpaid bonus earned prior to the termination relating to periods preceding the date of termination, (iii) the payment of a bonus at 100% of performance targets, including discretionary components, within the bonus plan in effect as if employed by us for 12 months, (iv) an amount equal to 12 times the monthly cost of the officer's health benefits, (v) the acceleration of vesting of all equity awards with respect to such shares that would have vested following the date of termination and prior to the first anniversary of his termination date, and (vi) the acceleration of vesting of all market stock awards, in the case of Mr. Schulz, or performance stock awards, in the case of Mr. Rechan, scheduled to vest prior to the first anniversary of his termination date, where the applicable performance period is deemed to have ended on his termination date.  Alternatively, if the officer's employment is terminated by us without cause, if he resigns for good reason or we decide not to renew his agreement, in any of these cases, within six months prior to, or any time after, a change of control of the Company, he will receive (i) an amount equal to 150% of his annual salary, (ii) any unpaid bonus earned prior to the termination relating to periods preceding the date of termination, (iii) the payment of an aggregate bonus equal to 100% of performance targets, including discretionary components, within the bonus plan in effect as if employed by us for 18 months, (iv) an amount equal to 18 times the monthly cost of the officer's health benefits, and (v) the acceleration of vesting of all equity awards with respect to such shares that would have vested following the date of termination. In addition, if the surviving or acquiring entity (or its parent entity) elects not to assume, continue or substitute for the equity awards or options due under the 2007 Plan or 2017 Plan, all outstanding equity awards and options under each plan will vest in full and become fully exercisable. If the officer's employment with us terminates due to his death or disability, his employment will automatically terminate and he will be entitled to accelerated vesting of (i) all equity awards with respect to all shares that would have vested after the termination date, and (ii) all MSUs, in the case of Mr. Schulz, and all performance stock awards, in the case of Mr. Rechan, at 100% of the target number granted. Mr. Schulz and Mr. Rechan are subject to non-competition and non-solicitation restrictions during the term of his employment and for the 12-month period following the termination of his employment.

Roberto Reiner. In November 2019, we entered into an amended and restated employment agreement with Mr. R. Reiner, our Executive Vice President and Chief Technology Officer. This agreement is for a three-year term and automatically renews for three-year terms unless the Company decides not to renew. The base salary payable to Mr. R. Reiner is subject to periodic review by our CLD Committee. In the event Mr. R. Reiner's employment with us is terminated by him for good reason, by us without cause, or we decide not to renew his agreement, Mr. R. Reiner will receive (i) his full base salary each month for the following 12 months, and (ii) an amount equal to 12 times the monthly cost of his health benefits.  Alternatively, if Mr. R. Reiner's employment is terminated by us without cause, if he resigns for good reason, or we decide not to renew his agreement within six months prior to, or any time after, a change of control of the Company, he will receive (i) an amount equal to 150% of his annual salary, (ii) any unpaid bonus earned prior to the termination relating to periods preceding the date of termination, (iii) an amount equal to 18 times the monthly cost of his health benefits, and (iv) the acceleration of vesting of all equity awards with respect to such shares that would have vested following the date of termination. In addition, if the surviving or acquiring entity (or its parent entity) elects not to assume, continue or substitute for the equity awards or options due under the 2017 Plan, all outstanding equity awards and options under the 2017 Plan will vest in full and become fully exercisable. Mr. R. Reiner is subject to non-competition and non-solicitation restrictions during the term of his employment and for the 12-month period following the termination of his employment.

Thomas F. Dziersk. In June 2020 in connection with his planned retirement from the Company, we entered into an amended and restated employment agreement with Mr. Dziersk, our former Executive Vice President, Worldwide Sales, providing that Mr. Dziersk's employment would terminate as of October 31, 2020. This agreement also provided that Mr. Dziersk's base salary was reduced from the previous annualized rate of $383,000 to $192,000 for the transition employment period July 1 through October 31, 2020 and that Mr. Dziersk would not be eligible for any incentive compensation payouts for 2020. Mr. Dziersk continued to vest in outstanding equity awards through his employment termination date of October 31, 2020. Mr. Dziersk is subject to non-competition and non-solicitation restrictions for the 12-month period following the termination of his employment.

“Cause” is defined in these employment agreements as (a) the unauthorized use or disclosure of the confidential information or trade secrets of the Company by the officer which causes a material harm to the Company, (b) the officer’s conviction of, or a plea of guilty or no contest to, a felony or any other crime involving dishonesty or moral turpitude under the laws of the United States; (c) any intentional wrongdoing by the officer, whether by omission or commission, which adversely affects the business or affairs of the Company; (d) continued failure to perform assigned duties or comply with any Company policy after notice and a cure period; (e) any material breach by the officer of his employment agreement or any other agreement between the officer and the Company after notice and a cure period; and (f) any failure to cooperate in good faith with the Company in any governmental investigation or formal proceeding.

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Each of our NEOs can resign for “good reason” and be entitled to certain severance payments as detailed above in the table titled “Potential Payments Upon Termination of Employment or Change of Control.” “Good reason” is defined in their employment agreements as (i) a material diminution in their authority, duties or responsibilities or the assignment of duties to them that are not materially commensurate with their position with the Company, other than, in the case of the employment agreement with Mr. R. Reiner, where he is asked to assume substantially similar duties and responsibilities in a larger entity after any change of control; (ii) a material reduction in their base salaries, or in the case of Mr. Rechan his target bonus opportunity, other than reductions which are part of a general reduction affecting all employees; (iii) the relocation of their principal place of service to their employer to more than 25 miles from their present location; (iv) any failure by the Company to continue to provide them with the opportunity to participate, on terms no less favorable than those in effect for the benefit of any employee holding a comparable position with the Company, in any material benefit or compensation plans and programs, which results in a material detriment to them; (v) any material breach by the Company of any provision of their employment agreement; or (vi) any failure by any successor corporation to assume the Company’s obligations under the NEO's employment agreement.



Governance and Other Considerations

Tax and Accounting Considerations

Limits on Deductibility of Compensation. Section 162(m) of the Code generally prevents us from deducting as a business expense that portion of compensation paid to certain of our executive officers that exceeds $1,000,000. Historically, there was an exception to this $1,000,000 deduction limit for compensation that qualified as “performance-based compensation” under Section 162(m).  Under federal tax legislation enacted on December 22, 2017, referred to as the Tax Cuts and Jobs Act, the performance-based exemption was repealed for taxable years on or after January 1, 2018, and the persons treated as covered employees subject to the deduction limit have been expanded to include our CFO and mandated that once an individual is treated as a covered employee for a given year, that individual will be treated as a covered employee for all subsequent years. Accordingly, any compensation paid to our covered executive officers in excess of $1 million in any one year will not be deductible. The CLD Committee believes that its primary responsibility is to provide a compensation program to meet our stated business objectives, and accordingly the Company reserves the right to pay compensation that is not tax-deductible if it determines that such a payment is in the best interests of the Company and our stockholders.

Clawback Policy. Our “clawback” policy permits our Board to consider and make a decision in its sole discretion to recover, under applicable law, any incentive bonuses awarded to NEOs whose fraud or intentional misconduct significantly contributed to a restatement of financial results that led to the awarding of incentive bonuses. This “clawback” policy is designed to further link our executive compensation and our long-term performance. Additionally, the 2017 Plan provides for recovery of certain equity awards and profits from securities sales in similar circumstances.

Prohibition Against Hedging, Pledging, and Short-Sales. We have implemented both anti-hedging and anti-pledging policies, as well as a prohibition on participating in short sales of our stock, to ensure that our executives’ stock remains at-risk. Our Insider Trading Policy, which applies to all employees, including officers, and non-employee directors, specifically prohibits short sales of our securities, transactions in puts, calls or other derivative securities involving our stock, hedging or monetization transactions (including but not limited to zero-cost collars, prepaid variable forwards, and equity swaps), and holding our securities in a margin account or pledging our securities as collateral for a loan.

Stock Ownership Guidelines. As part of our overall corporate governance and compensation practices, our Board adopted stock ownership guidelines for our NEOs and directors. These guidelines are designed to align our NEOs’ and directors' interests with our stockholders’ long-term interests by promoting long-term share ownership, which reduces the incentive for excessive short-term risk taking and further increases our NEOs’ and directors’ alignment with stockholder interests. These guidelines require our Chief Executive Officer to hold shares of our stock worth six times his annual salary and each other NEO is required to hold shares of our stock worth two times their annual salary. The guidelines also state that each non-employee director is required to hold shares of our stock worth five times the annual cash retainer for directors. Share units or unexercised options held by a NEO or director under any of our equity incentive plans are included, at 100% of their intrinsic value, in calculating the value of ownership to determine whether this minimum ownership requirement has been met. Shares held by a NEO or director under either of our equity incentive plans will continue to be included in calculating the value of ownership to determine whether this minimum ownership requirement has been met. Our NEOs must attain this ownership threshold within five years after being appointed as a NEO. Our directors must attain this ownership threshold within six years after joining our Board. As of December 31, 2020, each of our NEOs and directors were in compliance with the applicable guidelines.
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EXECUTIVE COMPENSATION

Summary Compensation Table

The following table presents the compensation paid to or earned by our NEOs during 2020, 2019 and 2018:
Name and
Principal Position
YearSalaryBonus
Stock
 Awards (1)
 Non-Equity 
Incentive Plan Compensation
All Other
Compensation
Total
Andres D. Reiner2020$540,000 $— $4,766,465 (2)$143,748 $12,799 (3)$5,463,781 
President and Chief2019$525,000 $— $4,650,003 (4)$1,155,000 $8,567 $6,338,570 
Executive Officer2018$525,000 $— $5,408,210 (5)$799,838 $1,785 $6,734,832 
Stefan B. Schulz2020$405,000 $— $2,320,417 (6)$78,408 $11,400 (3)$2,815,225 
Executive Vice President 2019$392,000 $— $2,000,021 (7)$627,200 $8,548 $3,027,769 
and Chief Financial Officer2018$380,000 $— $2,186,406 (8)$421,040 $5,660 $2,993,106 
Leslie Rechan2020$298,952 (9)$100,000 (10)$3,999,985 (11)$58,928 $— $4,357,865 
Chief Operating Officer
Roberto Reiner2020$350,000 $— $1,668,656 (12)$59,290 $11,886 (3)$2,088,446 
Executive Vice President2019$338,000 $— $1,800,002 (13)$444,808 $8,400 $2,253,210 
 and Chief Technology Officer
Thomas F. Dziersk2020$247,500 (14)$— $1,292,676 (15)$— $8,530 $1,548,706 
former EVP,2019$383,000 $— $1,600,017 (16)$766,000 $6,479 $2,755,496 
Worldwide Sales2018$375,000 $— $485,863 (17)$519,375 $— $1,380,238 
(1)Represents the aggregate grant date fair value of equity awards granted in the specified fiscal year as calculated in accordance with GAAP. For additional information about equity award valuation assumptions, refer to Note 14 of our financial statements in our Form 10-K for the year ended December 31, 2020.
(2)Represents 39,500 RSUs awarded to Mr. A. Reiner on January 13, 2020 and 39,500 PRSUs awarded to Mr. A. Reiner on February 7, 2020. The 2020 RSUs vest annually in one-fourth installments on January 13th of each year and have a grant date fair value of $66.44 per unit. The 2020 PRSUs will vest on January 13, 2023, and have a grant date fair value of $54.23 per unit. The number of PRSUs and target award value for the 2020 PRSUs was established by the CLD Committee on January 13, 2020 but were granted on February 7, 2020 when the performance targets were finalized. For additional information on the 2020 RSUs and 2020 PRSUs, see Grants of Plan-Based Awards.
(3)Includes 401(k) Company match for Messrs. A. Reiner and Schulz of $11,400 and for Mr. R. Reiner of $10,500.
(4)Represents 70,348 RSUs and 70,348 PRSUs awarded to Mr. A. Reiner on January 15, 2019. The 2019 RSUs vest annually in one-fourth installments on January 15th of each year and have a grant date fair value of $33.05 per unit. The 2019 PRSUs will vest on January 15, 2022, and have a grant date fair value of $33.05 per unit.
(5)Represents 82,948 RSUs awarded to Mr. A. Reiner on January 8, 2018 and 82,948 MSUs awarded on January 12, 2018. The 2018 RSUs vest annually in one-fourth installments on January 10th of each year and have a grant date fair value of $27.02 per unit. The 2018 MSUs will vest on January 10, 2021, and have a grant date fair value of $38.18 per unit.
(6)Represents 22,600 RSUs awarded to Mr. Schulz on January 13, 2020 and 15,100 PRSUs awarded to Mr. Schulz on February 7, 2020. The 2020 RSUs vest annually in one-fourth installments on January 13th of each year and have a grant date fair value of $66.44 per unit. The 2020 PRSUs will vest on January 13, 2023, and have a grant date fair value of $54.23 per unit. The number of PRSUs and target award value for the 2020 PRSUs was established by the CLD Committee on January 13, 2020 but were granted on February 7, 2020 when the performance targets were finalized. For additional information on the 2020 RSUs and 2020 PRSUs, see Grants of Plan-Based Awards.
(7)Represents 36,309 RSUs and 24,206 PRSUs awarded to Mr. Schulz on January 15, 2019. The 2019 RSUs vest annually in one-fourth installments on January 15th of each year and have a grant date fair value of $33.05 per unit. The 2019 PRSUs will vest on January 15, 2022, and have a grant date fair value of $33.05 per unit.
(8)Represents 41,667 RSUs awarded to Mr. Schulz on January 8, 2018 and 27,778 MSUs awarded on January 12, 2018. The 2018 RSUs vest annually in one-fourth installments on January 10th of each year and have a grant date fair value of $27.02 per unit. The 2018 MSUs will vest on January 10, 2021, and have a grant date fair value of $38.18 per unit.
(9)Mr. Rechan's base salary was prorated based on his start date as Chief Operating Officer of May 13, 2020.
(10)Mr. Rechan was provided as part of his offer package $100,000 reimbursement for relocation expenses to move to the United States.
(11)Represents 132,406 RSUs awarded to Mr. Rechan on May 13, 2020. The RSUs vest annually in one-fourth installments on May 13th of each year and have a grant date fair value of $30.21 per unit.
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(12)Represents 16,300 RSUs awarded to Mr. R. Reiner on January 13, 2020 and 10,800 PRSUs awarded to Mr. R. Reiner on February 7, 2020. The 2020 RSUs vest annually in one-fourth installments on January 13th of each year and have a grant date fair value of $66.44 per unit. The 2020 PRSUs will vest on January 13, 2023, and have a grant date fair value of $54.23 per unit. The number of PRSUs and target award value for the 2020 PRSUs was established by the CLD Committee on January 13, 2020 but were granted on February 7, 2020 when the performance targets were finalized. For additional information on the 2020 RSUs and 2020 PRSUs, see Grants of Plan-Based Awards.            
(13)Represents 54,463 RSUs awarded to Mr. R. Reiner on January 15, 2019. The 2019 RSUs vest annually in one-fourth installments on January 15th of each year and have a grant date fair value of $33.05 per unit.
(14)In connection with Mr. Dziersk's announced retirement, his base salary was reduced for the transition employment period July 1 through October 31, 2020 from the annualized salary of $383,000 to $192,000.
(15)Represents 12,600 RSUs awarded to Mr. Dziersk on January 13, 2020 and 8,400 PRSUs awarded to Mr. Dziersk on February 7, 2020. The 2020 RSUs vest annually in one-fourth installments on January 13th of each year and have a grant date fair value of $66.44 per unit. The PRSUs have a grant date fair value of $54.23 per unit. Mr. Dziersk has forfeited all these awards in connection with his retirement from the Company.
(16)Represents 29,047 RSUs and 19,365 PRSUs awarded to Mr. Dziersk on January 15, 2019. The 2019 RSUs vest annually in one-fourth installments on January 15th of each year and have a grant date fair value of $33.05 per unit. The 2019 PRSUs will vest on January 15, 2022, and have a grant date fair value of $33.05 per unit.
(17)Represents 9,259 RSUs awarded to Mr. Dziersk on January 8, 2018 and 6,173 MSUs awarded on January 12, 2018. The 2018 RSUs vest annually in one-fourth installments on January 10th of each year and have a grant date fair value of $27.02 per unit. The 2018 MSUs have a grant date fair value of $38.18 per unit and have been forfeited by Mr. Dziersk in connection with his retirement from the Company.

Grants of Plan-Based Awards

The following table shows all plan-based awards granted to our NEOs during 2020:
Estimated Future Payouts
Under Non-Equity Incentive Plan Awards
Estimated Future Payouts Under Equity Incentive Plan AwardsAll Other Stock Awards:
Number of Shares of Stock or Units (#)
FMV on Grant Date
($/Sh)
Grant Date Fair Value of Stock and Option Awards
($)
Named Executive OfficerType of AwardGrant DateThreshold
($)
Target
($)
Maximum
($)
Target
(#)
Maximum
(#)
Andres D. ReinerRSU1/13/202039,500 $66.44 $2,624,380 
PRSU(1)
2/7/202039,500 79,000 $54.23 $2,142,085 
Cash incentive(3)
$118,800 $594,000 $1,188,000 
Stefan B. SchulzRSU1/13/202022,600 $66.44 $1,501,544 
PRSU(1)
2/7/202015,100 30,200 $54.23 $818,873 
Cash incentive(3)
$64,800 $324,000 $648,000 
Leslie Rechan
RSU(2)
5/13/2020132,406 $30.21 $3,999,985 
Cash incentive(3)(4)
$48,701 $243,504 $487,008 
Roberto ReinerRSU1/13/202016,300 $66.44 $1,082,972 
PRSU(1)
2/7/202010,800 21,600 $54.23 $585,684 
Cash incentive(3)
$49,000 $245,000 $490,000 
Thomas F. Dziersk
RSU(5)
1/13/202012,600 $66.44 $837,144 
PRSU(1)(5)
2/7/20208,400 16,800 $54.23 $455,532 
Cash incentive(3)(5)
$76,600 $383,000 $766,000 
(1)The number of PRSUs awarded to each of Messrs. A. Reiner, Schulz, R. Reiner and Dziersk were determined by the CLD Committee on January 13, 2020 in conjunction with the grant of RSUs on that day to align the target award value split between RSUs and PRSUs in the following respective splits: Mr. A. Reiner - 50/50 and Messrs. Schulz, R. Reiner and Dziersk - 60/40 each. However, the PRSUs were granted on February 7, 2020 when the long-term performance targets were established by the CLD Committee. Because the PRSUs have a grant date of February 7, 2020, the fair market value required to be shown in the table above and other tables herein is the closing stock price on February 7, 2020 which was lower than on January 13, 2020. The 2020 PRSUs are subject to both a performance condition and a time-based vesting condition. The number of PRSUs that may be earned, up to 200% of target award, is based upon achievement by the Company against total recurring revenue targets over a performance period ending December 31, 2021.  Such earned PRSUs then vest on January 13, 2023. Grant Date Fair Value was calculated using at target number of PRSUs with the fair value of $54.23 per unit determined on grant date.
(2)Mr. Rechan's award included his initial "sign-on" and "make whole" award with a combined total target value of $4,000,000 and was granted on May 13, 2020 using the closing share price on such date of $30.21 to calculate the number of RSUs.
(3)The 2020 cash incentive plan consisted of two independent measures each with their own respective thresholds. The measure for Total Revenue had a threshold of 30% of target while Non-GAAP Recurring Revenue Gross Margin had a threshold of 20%.
(4)Mr. Rechan's target cash incentive was prorated to reflect his start date of May 13, 2020.
(5)In connection with his retirement from the Company, Mr. Dziersk has forfeited all of these awards.


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Outstanding Equity Awards at Fiscal Year End

The following table presents the number of options to purchase shares of our Common Stock, SARs, RSUs and MSUs held by our NEOs as of December 31, 2020 and the value of such awards based on the closing stock price of $50.77 as of such date:
 Stock Awards
Named Executive OfficerEquity incentive
plan awards:
number of
unearned shares,
units or other
rights that have
not vested
(#)
Equity incentive
plan awards:
market or payout
value of unearned shares, 
units or other
rights that have
not vested ($)
Andres D. Reiner21,000 (1)$1,066,170 
41,474 (2)$2,105,635 
82,948 (3)$4,211,270 
52,761 (4)$2,678,676 
70,348 (5)$3,571,568 
39,500 (6)$2,005,415 
39,500 (7)$2,005,415 
Stefan B. Schulz9,800 (1)$497,546 
20,834 (2)$1,057,742 
27,778 (3)$1,410,289 
27,232 (4)$1,382,569 
24,206 (5)$1,228,939 
22,600 (6)$1,147,402 
15,100 (7)$766,627 
Leslie Rechan132,406 (8)$6,722,253 
Roberto Reiner16,325 (1)$828,820 
27,006 (2)$1,371,095 
40,848 (4)$2,073,853 
16,300 (6)$827,551 
10,800 (7)$548,316 
Thomas F. Dziersk— — 
(1)Represents 2017 RSUs awarded to Messrs. A. Reiner, Schulz, and R. Reiner on January 20, 2017. These 2017 RSUs continue to vest annually in one-fourth installments on January 1st of each year through 2021.
(2)Represents 2018 RSUs awarded to Messrs. A. Reiner, Schulz and R. Reiner on January 8, 2018. These 2018 RSUs continue to vest annually in one-fourth installments on January 10th of each year through 2022.
(3)Represents 2018 MSUs awarded to Messrs. A. Reiner and Schulz on January 12, 2018. These 2018 MSUs vest on January 10, 2021. The amounts shown above reflect the number of 2018 MSUs that would be earned if the performance goals related to these awards were met at the target level at the end of the performance period. If the minimum performance threshold is not met, there will be no payout. The number of shares that will actually be earned will depend on our TSR for the period from January 1, 2018 through December 31, 2020 as compared to the Russell 2000 Index.
(4)Represents 2019 RSUs awarded to Messrs. A. Reiner, Schulz, Dziersk and R. Reiner on January 15, 2019. These 2019 RSUs vest annually in one-fourth installments on January 15th of each year through 2023.
(5)Represents 2019 PRSUs awarded to Messrs. A. Reiner and Schulz on January 15, 2019. These 2019 PRSUs are subject to both a performance condition and a time-based vesting condition. The number of 2019 PRSUs which may be earned, up to 200% of target award, is based upon achievement by the Company against total recurring revenue targets over a performance period ending December 31, 2020. Such earned 2019 PRSUs then vest on January 15, 2022.
(6)Represents 2020 RSUs awarded to Messrs. A. Reiner, Schulz, and R. Reiner on January 13, 2020. These 2020 RSUs vest annually in one-fourth installments on January 13th of each year through 2024.
(7)Represents 2020 PRSUs awarded to Messrs. A. Reiner, Schulz, and R. Reiner on February 7, 2020. These 2020 PRSUs are subject to both a performance condition and a time-based vesting condition. The number of 2020 PRSUs which may be earned, up to 200% of target award, is based upon achievement by the Company against total recurring revenue targets over a performance period ending December 31, 2021.  Such earned 2020 PRSUs then vest on January 13, 2023.
(8)Represents RSUs awarded to Mr. Rechan in connection with his employment with the Company as Chief Operating Officer on May 13, 2020. These RSUs vest annually in one-fourth installments on May 13th of each year through 2024.


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Option Exercises and Equity Awards Vested

The following table presents information on the exercises of stock options and vesting of PRSUs, RSUs and MSUs for our NEOs during the year ended December 31, 2020:
 Option AwardsStock Awards
Named Executive OfficerNumber of shares acquired on exercise
(#)
Value realized on exercise
($)
Number of shares acquired on RSU vesting
(#)
Number of shares acquired on PRSU and MSU vesting
(#)
Value realized on vesting
($)
Andres D. Reiner— — 81,824 168,000 $12,743,147 
Stefan B. Schulz— — 44,919 52,200 $5,069,877 
Leslie Rechan— — — — — 
Roberto Reiner— — 73,443 — $4,217,087 
Thomas F. Dziersk— — 24,452 70,492 $3,590,211 

Potential Payments Upon Termination of Employment or Change of Control
The following table represents amounts payable at, following, or in connection with the events described below, assuming that such events occurred on December 31, 2020 for each of the NEOs other than Mr. Dziersk who was not employed by the Company at December 31, 2020:
Named Executive OfficerSeveranceAnnual Bonus PaymentEquity GrantsWelfare BenefitsTotal Payment
Andres D. Reiner
Death or Disability (1)
— — $19,103,533 — $19,103,533 
Termination (2)$1,134,000 $143,748 $19,103,533 $22,434 $20,403,715 
Termination on Change of Control (3)$1,701,000 $143,748 $21,108,961 $33,652 $22,987,361 
Vesting on Change of Control (4)— — $13,253,065 — $13,253,065 
Stefan B. Schulz
Death or Disability (1)
— — $7,877,879 — $7,877,879 
Termination (2)$729,000 $78,408 $5,566,744 $19,748 $6,393,900 
Termination on Change of Control (3)$1,093,500 $78,408 $8,644,554 $29,623 $9,846,085 
Vesting on Change of Control (4)— — $4,559,296 — $4,559,296 
Leslie Rechan
Death or Disability (1)— — $6,722,253 — $6,722,253 
Termination (2)$807,500 58,928 1,680,563 $22,434 $2,569,425 
Termination on Change of Control (3)$1,211,250 $58,928 $6,722,253 $33,652 $8,026,083 
Vesting on Change of Control (4)— — — — — 
Roberto Reiner
Death or Disability (1)
— — $4,272,499 — $4,272,499 
Termination (2)$350,000 — — $14,140 $364,140 
Termination on Change of Control (3)$525,000 $59,290 $5,649,635 $21,210 $6,255,135 
Vesting on Change of Control (4)— — $— — $— 
(1)Death or Disability - in the event of a termination of the executive officer’s employment due to death or disability certain equity awards will vest.  For an explanation of these benefits by executive, see Employment Agreements above.
(2)Termination - in the event of an involuntary termination of the executive officer’s employment by the Company without Cause or a termination of employment by the executive officer for Good Reason, certain severance, bonus, equity vesting and other benefits are due to the executive officer. For an explanation of these benefits by executive and the definitions of Cause and Good Reason, see Employment Agreements above.
(3)Termination on Change of Control - in the event of an involuntary termination of the executive officer’s employment by the Company without Cause or a termination of employment by the executive officer for Good Reason, in either event during the six-month period prior to a Change of Control or after a Change of Control, certain severance, bonus, equity vesting and other benefits are due the executive officer.  For an explanation of these benefits by executive, see Employment Agreements above.
(4)Vesting on Change of Control - in the event of a Change of Control, certain performance-based equity awards accelerate their vesting by their terms because the respective performance period is deemed to have ended as of the date of the Change of Control.  For PRSUs, if a Change of Control occurs prior to the one-year anniversary of the beginning of a performance period, the award vests at 100% of the target award amount and the earned shares are delivered, or paid out, to the executives as of the Change of Control.  For MSUs, a Change of Control triggers a measurement of performance as of the Change of Control.  Earned MSUs based on this measurement are paid out to the executives as of the Change of Control pro rata based on the length of the performance period concluded prior to the Change of Control. The remaining earned MSUs vest at the end of the original performance period.

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CEO Pay Ratio

Under Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, the Company is required to provide the ratio of the annual total compensation of our Chief Executive Officer to the annual total compensation of the median employee of the Company (Pay Ratio Disclosure). For 2020, the median annual total compensation of all employees of the Company and its subsidiaries other than our CEO, was $105,741. Our CEO's total annual compensation for 2020 for purposes of the Pay Ratio Disclosure was $5.46 million. The ratio of the total annual compensation of our CEO to the median of all other employees was 52:1. As SEC rules permit different methodologies, exemptions, estimates and assumptions for identifying the median employee and calculating pay ratio, our Pay Ratio Disclosure may not be comparable to the pay ratio reported by other companies.

We identified the median employee by examining the 2020 total cash compensation for all individuals, excluding our CEO, who were employed by us during the 2020 calendar year (whether employed on a full-time, part-time, or seasonal basis). For such employees, we did not make any assumptions, adjustments, or estimates with respect to total cash compensation, and we did not annualize the compensation for any full-time employees that were not employed by us for all of 2020. We used the relevant exchange rate on December 31, 2020. After identifying the median employee criteria, we calculated annual total compensation for such employee and compared it to the CEO’s total compensation as set forth in the Summary Compensation table above.


Equity Compensation Plan Information

The following table sets forth information as of December 31, 2020 with respect to compensation plans under which our equity securities are authorized for issuance. For additional information on our equity compensation plans, see Note 14 of the Notes to the Consolidated Financial Statements in our 2020 Annual Report.
IIIIII
Plan CategoryNumber of
securities to be
issued upon
exercise of
outstanding options and rights (2)
Weighted-average
exercise price of
outstanding
options and rights ($) (3)
Number of
securities
remaining available for future issuance
under plans
(excluding securities listed in Column (I)) (4)
All compensation plans previously approved by security holders (1)2,375,922 11.42 1,820,694 
All compensation plans not previously approved by security holders0N/A0
Total2,375,922 11.42 1,820,694 

(1) Includes awards from the 2007 Plan and the 2017 Plan. No further grants will be made from the 2007 Plan.         
(2) Includes 1,801,762 RSUs, 221,452 MSUs (at maximum attainment of 200%), 324,708 PRSUs (at 200%), and 28,000 SARs.         
(3) Includes the weighted average as it pertains to outstanding SARs only.        
(4) Includes unissued award pools from the 2017 Plan and the 2013 Employee Stock Purchase Plan.

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PROPOSAL TWO
NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION

What am I voting on?

As required pursuant to Section 14A of the Exchange Act, we are providing our stockholders with the opportunity to vote to approve, on an advisory or non-binding basis, the compensation of our NEOs as disclosed in this Proxy Statement in accordance with SEC rules. We currently conduct this advisory vote on an annual basis and expect to conduct the next advisory vote at our Annual Meeting to be held in 2022.

As described in the Executive Compensation Program and Compensation Discussion and Analysis sections of this Proxy Statement, our executive compensation program is designed to attract, retain, and motivate talented individuals with the executive experience and leadership skills necessary for us to manage our business and meet our long-term objectives. We seek to provide executive compensation that is competitive with companies that are similar to us. We also seek to provide near-term and long-term financial incentives that reward well-performing executives when strategic corporate objectives designed to increase long-term stockholder value are achieved. We believe that executive compensation should include base salary, cash incentives and equity awards. We also believe that our executive officers’ base salaries should be set at levels relative to comparable companies, and cash and equity incentives should generally be set at levels that give executives the opportunity to achieve above-average total compensation reflecting above-average Company performance. In particular, our executive compensation philosophy is to promote long-term value creation for our stockholders by rewarding improvement in selected financial metrics and by using equity incentives. Please see our Compensation Discussion and Analysis and related compensation tables for detailed information about our executive compensation programs, including information about the fiscal year 2020 compensation of our NEOs.

For the reasons discussed above, the Board unanimously recommends that stockholders vote in favor of the following resolution:

Resolved, that the stockholders approve, on an advisory basis, the compensation paid to the Company's NEOs, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

This vote is advisory and therefore not binding. However, the CLD Committee values the opinions of our stockholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, we will consider those stockholders’ concerns, and the CLD Committee will evaluate whether any actions are necessary to address those concerns.

Note that because the advisory vote on executive compensation occurs well after the beginning of the compensation year, in most cases it may not be feasible to change any executive compensation program in consideration of any one year’s advisory vote on executive compensation.

Vote Required

The affirmative vote of a majority of the outstanding shares of our Common Stock entitled to vote and present in person or represented by proxy at the Annual Meeting is required for advisory approval of this proposal. A properly executed proxy marked “ABSTAIN” with respect to this matter is considered entitled to vote, and thus will have the effect of a vote against this matter.

In accordance with Delaware law, abstentions will be counted for purposes of determining both whether a quorum is present at the Annual Meeting and the total number of shares represented and voting on this proposal. While broker non-votes will be counted for purposes of determining the presence or absence of a quorum, broker non-votes will not be counted for purposes of determining the number of shares represented and voting with respect to the particular proposal on which the broker has expressly not voted and, accordingly, will not affect the approval of this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE APPROVAL OF THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT.
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PROPOSAL THREE
APPROVAL OF AMENDMENTS TO THE AMENDED AND RESTATED 2017 EQUITY INCENTIVE PLAN TO, AMONG OTHER ITEMS, INCREASE PLAN SHARES AUTHORIZED FOR ISSUANCE
What am I voting on?

We are seeking stockholder approval of the following amendments to our Amended and Restated 2017 Equity Incentive Plan (2017 Plan):

Increased Shares Authorized for Issuance. An increase of 3,100,000 shares, for an aggregate maximum number of shares of Common Stock of the Company (the Shares) reserved for issuance of new grants under the 2017 Plan of 3,869,902 Shares as of March 1, 2021, assuming the amendments are approved at the Annual Meeting. Our continuing ability to offer equity incentive awards under the 2017 Plan is critical to our ability to attract, motivate and retain qualified personnel, particularly as we grow and in light of the highly competitive market for employee talent in which we operate.

Extension of Plan Term. An extension of the term of the 2017 Plan for an additional two years (currently scheduled to expire in May 2029) to May 12, 2031.

Other Amendments. The other amendments to the 2017 Plan establish a total compensation limit on non-employee director awards, exclude from the minimum vesting requirement any Shares delivered in lieu of fully vested cash-based awards, provide additional flexibility and discretion to the CLD Committee in establishing and settling performance awards and clarify the administration of certain change in control provisions.

The Board has determined that it is in the best interests of the Company and its stockholders to approve this proposal. The Board has approved the amendments to the 2017 Plan to increase the available shares thereunder, extend the term of the 2017 Plan and revise certain other provisions of the 2017 Plan, subject to stockholder approval, and recommends that stockholders vote in favor of this proposal at the Annual Meeting. Stockholder approval of this proposal requires the affirmative vote of a majority of the outstanding Shares that are present in person or by proxy and entitled to vote on the proposal at the Annual Meeting.

If stockholders approve this proposal, the amendments to the 2017 Plan will become effective as of the date of stockholder approval. If stockholders do not approve this proposal, the amendments to the 2017 Plan described in this proposal will not take effect and our 2017 Plan will continue to be administered in its current form. Our executive officers and directors have an interest in this proposal by virtue of their being eligible to receive equity awards under the 2017 Plan. The remainder of this discussion, when referring to the 2017 Plan, refers to the 2017 Plan as if this proposal is approved by our stockholders, unless otherwise specified or the context otherwise references the 2017 Plan prior to the amendments.
Increasing the Number of Shares Authorized for Issuance under the 2017 Plan
Background
The 2017 Plan was initially adopted by the Board in March 2017, and our stockholders approved it in May 2017. As described in more detail below, the initial share reserve under the 2017 Plan was 2,500,000 Shares. At the 2019 Annual Meeting, our stockholders, upon recommendation of the Board, approved amendments to the 2017 Plan and a share increase to reserve an additional 2,050,000 Shares. As discussed in our 2019 proxy, when we sought stockholder approval of the amendments to the 2017 Plan at the 2019 Annual Meeting, we believed that the Shares reserved for issuance under it following stockholder approval (along with Shares becoming available for future grant due to forfeitures and cancellations) would be sufficient to enable us to continue to grant equity awards under the 2017 Plan for approximately two to three years. This estimate was based on a forecast that took into account our anticipated rate of growth in hiring, an estimated range of our stock price over time and our historical forfeiture rates.
Shares Available for Future Awards
As of March 1, 2021, 769,902 Shares remained available for grant under the 2017 Plan. The Board believes that additional Shares are necessary to meet the Company’s anticipated equity compensation needs. The proposed Share increase is expected to last approximately two to three years. This estimate is based on a forecast that takes into account our anticipated rate of growth in hiring, an estimated range of our stock price over time and our historical forfeiture rates.
If the amendments are approved, the total number of Shares that will be available for future awards under the 2017 Plan will be equal to 3,100,000, plus the 769,902 shares that remained available for grants as of March 1, 2021, less shares subject to awards made after March 1, 2021, and subject to adjustment as provided in the 2017 Plan and as described below.
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Reasons for Voting for the Proposal
Long-Term Equity Is a Key Component of Our Compensation Objective

As discussed in the Compensation Discussion and Analysis section, our overall compensation objective is to compensate our personnel in a manner that attracts and retains the highly talented employees necessary to manage and staff a high-growth business in an innovative and competitive industry. Our employees are our most valuable asset, and we strive to provide them with compensation packages that are competitive, that reward personal and company performance and that help meet our retention needs. Equity awards, whose value depends on our stock performance and which require continued service over time before any value can be realized, help achieve these objectives and are a key element of our compensation program. Equity awards also incentivize our employees to manage our business as owners, aligning their interests with those of our stockholders. We believe we must continue to use equity compensation on a broad basis to help attract, retain and motivate employees to continue to grow our business, develop new products and ultimately increase stockholder value. As of March 1, 2021, 1,216 of our employees held outstanding equity awards.

The 2017 Plan Requires Additional Shares to Meet Our Forecasted Needs

As described above, the 2017 Plan has 769,902 Shares available for grant as of March 1, 2021. We believe additional Shares should be reserved for issuance under our 2017 Plan to meet our estimated near-term equity compensation needs.

We operate in a highly competitive industry and geography for employee talent and do not expect required rates of compensation to decline. One alternative to using equity awards would be to significantly increase cash compensation. We do not believe this would be practical or advisable. As a high-growth company, we believe that a combination of equity and cash compensation is better for attracting, retaining and motivating employees. Any significant increase in cash compensation in lieu of equity awards would reduce the cash otherwise available for operations and investment in our business. Furthermore, we do not believe a more cash-oriented program would have the same long-term retention value or serve to align employees’ interests to those of our stockholders as well as a program that includes equity.

We Manage Our Equity Incentive Program Thoughtfully

We manage our long-term stockholder dilution by limiting the number of equity awards granted annually and limiting what we grant to what we believe is an appropriate amount of equity necessary to attract, reward and retain employees. Our three-year average burn rate, which we define as the number of Shares subject to equity awards granted in a fiscal year divided by the weighted average Shares outstanding for that fiscal year, was 3.0% for fiscal years 2018 through 2020 (see table below for detailed calculation of our three-year average burn rate).

Equity Awards Outstanding

As of March 1, 2021, equity awards outstanding under our equity plans were: no SARs, no stock options, no unvested restricted shares, 2,042,937 RSUs and 265,732 performance-based or market-based RSUs (at target).

As of March 1, 2021, we had 44,247,277 Shares outstanding. Accordingly, our approximately 2,308,669 outstanding awards (not including awards under our ESPP) plus 769,902 Shares available for future grant under our 2017 Plan (not including under our ESPP) as of March 1, 2021 represented 6.5% of our Common Stock outstanding (commonly referred to as the “overhang”). No stock options or SARs were outstanding as of March 1, 2021.

As of March 1, 2021
RSUs outstanding2,042,937 
Performance-based RSUs outstanding, at target (1)265,732 
Total shares available for grant under the 2017 Plan769,902 
Total3,078,571 
Shares Outstanding44,247,277 
Total potential dilution (2)6.5 %
(1)Includes 125,541 MSUs at target and 140,191 PRSUs (2019 PRSUs at actual and 2020 PRSUs at target).
(2)Calculated by dividing "Total" (the sum of outstanding RSUs, performance-based RSUs (at target) and shares available for grant under the 2017 Plan) by the sum of Total and Shares Outstanding.

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The 2017 Plan Incorporates Good Compensation and Governance Practices.

Fixed plan term. The 2017 Plan has a fixed term of ten years.

No evergreen authorization. The 2017 Plan does not have an evergreen provision, which would have permitted an annual increase in the number of shares authorized for issuance without further stockholder approval.

No liberal share recycling on options and stock appreciation rights. The 2017 Plan generally provides for gross share counting. The number of shares remaining available for grant under the 2017 Plan is reduced by the gross number of shares subject to options and stock appreciation rights settled on a net basis, and any shares withheld for taxes in connection with the exercise or settlement of options and stock appreciation rights will not again be available for the future grant of awards. Shares withheld or reacquired by the Company for taxes up to the minimum statutory withholding rate in connection with the vesting or settlement of full value awards will not reduce the number of shares remaining available for the future grant of awards.

Individual award limits. The 2017 Plan limits the maximum number of shares for which share-denominated awards may be granted to any employee in any fiscal year and the maximum dollar amount that an employee may earn for each fiscal year contained in a performance period under a cash-denominated award.

Non-employee director award limit. The number of shares for which awards may be granted to any non-employee member of our Board plus the total amount of cash paid to such director in a fiscal year is limited.

No discounted options or stock appreciation rights. Options and stock appreciation rights must have an exercise price or base price at or above the fair market value per share of our common stock on the date of grant.

Prohibition of option repricing. The 2017 Plan prohibits the repricing of stock options and stock appreciation rights without the approval of our stockholders.

Minimum vesting. The 2017 Plan requires each stock-based award to have a minimum vesting period of one year, except for 5% of the aggregate number of shares authorized for issuance under the 2017 Plan.

Performance-based awards. Performance share and performance unit awards require the achievement of pre-established goals. The 2017 Plan establishes a list of measures of business and financial performance from which the CLD Committee may construct predetermined performance goals that must be met for an award to vest, although the CLD Committee may choose yp construct performance goals using alternative metrics.

No liberal change-in-control definition. The 2017 Plan does not contain a “liberal” change in control definition (e.g., mergers require actual consummation).

No automatic vesting upon a change in control. With the exception of awards held by non-employee directors, the 2017 Plan does not provide for automatic acceleration of awards vesting upon a change in control. The 2017 Plan allows for an acquiring corporation to assume, continue or substitute new awards for outstanding awards, and, if such awards are assumed, continued or replaced, their vesting will generally not accelerate in connection with the change in control, unless the award holder is involuntarily terminated without cause within 18 months following the change in control. The vesting of awards that are not assumed, continued or replaced will be accelerated. The vesting of awards held by non-employee directors will accelerate in full upon a change in control.

No tax gross-ups. The 2017 Plan does not provide for any tax gross-ups.

Limitation on dividends and dividend equivalents. Dividend equivalents may not be granted in connection with options or stock appreciation rights. Any dividends or dividend equivalents payable in connection with a full value award will be subject to the same restrictions as the underlying award and will not be paid until and unless such award vests.
Summary of the 2017 Plan
The following is a summary of the operation and principal features of the 2017 Plan. The summary is qualified in its entirety by reference to the complete text of the 2017 Plan, as amended, as set forth in Appendix A.

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Purpose

Competition for talent in the software industry is intense and our Board believes equity plays an important role in the success of the Company by encouraging and enabling the employees, officers, non-employee directors and other key persons of the Company and its subsidiaries upon whose judgment, initiative and efforts the Company largely depends for the successful conduct of its business to acquire a proprietary interest in the Company. Our Board anticipates that providing such persons with a direct stake in the Company will assure a closer identification of the interests of such individuals with those of the Company and its stockholders, thereby stimulating their efforts on the Company's behalf and strengthening their desire to remain with the Company. Further, our Board believes that the use of equity-based incentive awards supports the Company's goal of aligning our employees' compensation with long-term stockholder value, and serves as a retention tool for talent in a highly competitive environment.

In approving the initial adoption of the 2017 Plan, our stockholders authorized us to issue up to 2,500,000 Shares under the 2017 Plan. At the 2019 Annual Meeting, our stockholders authorized us to issue an additional 2,050,000 Shares under the 2017 Plan. As of March 1, 2021, a total of 769,902 Shares remained available for the future grant of awards under the 2017 Plan. As described above, if the amendments are approved, the total number of shares that will be available for future awards under the 2017 Plan will be equal to 3,100,000, plus the 769,902 shares that remained available for grants as of March 1, 2021, less shares subject to awards made after March 1, 2021, subject to adjustment as provided in the 2017 Plan and as described below.

Dilution, Burn Rate and Equity Overhang

We recognize that equity awards dilute existing stockholders. Our CLD Committee regularly reviews our equity compensation program to ensure that we balance our employee compensation objectives with our stockholders’ interest in limiting dilution from equity awards.

Our CLD Committee also regularly reviews our burn rate and potential dilution from equity compensation. Our equity award burn rate averaged 3.0% of weighted average common shares outstanding over the last three fiscal years, calculated as follows:

Detailed Three-Year Average Burn Rate Calculation

2018201920203-Year Average
RSUs granted829,000 816,000 976,000 873,667 
Performance-based awards vested 124,000 520,000 300,000 314,667 
Total953,000 1,336,000 1,276,000 1,188,333 
Weighted Average # of Shares Outstanding34,465,000 40,232,000 43,301,000 39,332,667 
Gross Burn Rate (1)2.8%3.3%2.9%3.0%
(1) Calculated by dividing the Total (sum of RSUs granted and performance-based awards earned in each year) by the weighted average Shares outstanding.

Share Counting

Each share made subject to an award will reduce the number of shares remaining available for grant under the 2017 Plan by one share. If any award granted under the 2017 Plan expires or otherwise terminates for any reason without having been exercised or settled in full, or if shares subject to forfeiture or repurchase are forfeited or repurchased by the Company for not more than the participant’s purchase price, any such shares reacquired or subject to a terminated award will again become available for issuance under the 2017 Plan. Shares will not be treated as having been issued under the 2017 Plan and will therefore not reduce the number of shares available for issuance to the extent an award is settled in cash. Shares that are withheld or that are tendered in payment of the exercise price of an option will not be made available for new awards under the 2017 Plan. However, shares withheld or reacquired by the Company in satisfaction of a tax withholding obligation determined by the minimum statutory withholding rate in connection with the vesting or settlement of any full value award (but not options or stock appreciation rights) will not reduce the number of shares remaining available for the future grant of awards. Shares withheld for taxes in excess of the minimum statutory withholding rate will not again be available for grant under the 2017 Plan. Upon the exercise of a stock appreciation right or net exercise of an option, the number of shares available under the 2017 Plan will be reduced by the gross number of shares for which the award is exercised.

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Adjustments for Capital Structure Changes

Appropriate and proportionate adjustments will be made to the number of shares authorized under the 2017 Plan, to the numerical limits on certain types of awards described below, and to outstanding awards in the event of any change in our common stock through merger, consolidation, reorganization, reincorporation, recapitalization, reclassification, stock dividend, stock split, reverse stock split, split-up, split-off, spin-off, combination of shares, exchange of shares or similar change in our capital structure, or if we make a distribution to our stockholders in a form other than common stock (excluding regular, periodic cash dividends) that has a material effect on the fair market value of our common stock. In such circumstances, the CLD Committee also has the discretion under the 2017 Plan to adjust other terms of outstanding awards as it deems appropriate.

Non-employee Director Award Limits

A non-employee director may not be granted awards under the 2017 Plan in any calendar year having an aggregate grant date fair value exceeding, including the total cash compensation paid to such director for services rendered for such calendar year, $600,000.

Other Award Limits

The 2017 Plan establishes limits on the maximum aggregate number of shares or dollar value for which awards may be granted to an employee in any fiscal year, as follows:
No more than 1,250,000 Shares under stock-based awards.
No more than $2,000,000 in each full fiscal year contained in the performance period under cash-based awards.

In addition, to comply with applicable tax rules, the 2017 Plan also limits to 7,650,000 the number of shares that may be issued upon the exercise of incentive stock options granted under the 2017 Plan.

Administration

The 2017 Plan generally will be administered by the CLD Committee of the Board, although the Board retains the right to appoint another of its committees to administer the 2017 Plan or to administer the 2017 Plan directly. For purposes of this summary, the term “Committee” will refer to either such duly appointed committee or the Board. Subject to the provisions of the 2017 Plan, the Committee determines in its discretion the persons to whom and the times at which awards are granted, the types and sizes of awards, and all of their terms and conditions. The Committee may, subject to certain limitations on the exercise of its discretion provided by the 2017 Plan, amend, cancel or renew any award, waive any restrictions or conditions applicable to any award, and accelerate, continue, extend or defer the vesting of any award.

The 2017 Plan provides, subject to certain limitations, for indemnification by the Company of any director, officer or employee against all reasonable expenses, including attorneys’ fees, incurred in connection with any legal action arising from such person’s action or failure to act in administering the 2017 Plan. All awards granted under the 2017 Plan will be evidenced by a written or digitally signed agreement between the Company and the participant specifying the terms and conditions of the award, consistent with the requirements of the 2017 Plan. The Committee will interpret the 2017 Plan and awards granted thereunder, and all determinations of the Committee generally will be final and binding on all persons having an interest in the 2017 Plan or any award.

Prohibition of Option and SAR Repricing

The 2017 Plan expressly provides that, without the approval of a majority of the votes cast in person or by proxy at a meeting of our stockholders, the Committee may not provide for any of the following with respect to options or stock appreciation rights: (1) the cancellation of outstanding options or stock appreciation rights with exercise prices per share greater than the then fair market value of the Company’s common stock in exchange for new options or stock appreciation rights having a lower exercise price, other awards or payments in cash (except in the event of a change in control), or (2) the amendment of outstanding options or stock appreciation rights to reduce the exercise price.

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Minimum Vesting

No more than 5% of the aggregate number of shares authorized under the 2017 Plan may be issued pursuant to stock-based awards that vest earlier than one year following the date of grant. This minimum vesting requirement will not prohibit the Committee from accelerating vesting, including in connection with a participant’s death or disability or in connection with a change in control of the Company. Also, the minimum vesting requirement will not apply to awards granted by another company that we assume or substitute for in connection with our acquisition of such company, shares of stock delivered in lieu of fully vested cash-based awards, or to awards granted to our non-employee directors that vest on the earlier of the one year anniversary of the date of grant or the next annual meeting of the stockholders which is at least 50 weeks after the immediately preceding year’s annual meeting.

Eligibility

Awards may be granted to employees, directors and consultants of the Company or any present or future parent or subsidiary corporation or other affiliated entity of the Company. Incentive stock options may be granted only to employees who, as of the time of grant, are employees of the Company or any parent or subsidiary corporation of the Company. As of March 1, 2021, we had approximately 1,237 employees and 8 non-employee directors who would be eligible under the 2017 Plan. While the 2017 Plan permits awards to non-employee consultants to the Company, to date we have issued zero awards under the 2017 Plan to consultants.

Stock Options

The Committee may grant nonstatutory stock options, incentive stock options within the meaning of Section 422 of the Code, or any combination of these. The exercise price of each option may not be less than the fair market value of a share of our common stock on the date of grant. However, any incentive stock option granted to a person who at the time of grant owns stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company (10% Stockholder) must have an exercise price equal to at least 110% of the fair market value of a share of common stock on the date of grant.

The 2017 Plan provides that the option exercise price may be paid in cash, by check, or cash equivalent; by means of a broker-assisted cashless exercise; by means of a net-exercise procedure; to the extent legally permitted, by tender to the Company of shares of common stock owned by the participant having a fair market value not less than the exercise price; by such other lawful consideration as approved by the Committee; or by any combination of these. Nevertheless, the Committee may restrict the forms of payment permitted in connection with any option grant. No option may be exercised unless the participant has made adequate provision for federal, state, local and foreign taxes, if any, relating to the exercise of the option, including, if permitted or required by the Company, through the participant’s surrender of a portion of the option shares to the Company.

Options will become vested and exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Committee, subject to the minimum vesting requirements described above. The maximum term of any option granted under the 2017 Plan is ten years, provided that an incentive stock option granted to a 10% stockholder must have a term not exceeding five years. Unless otherwise permitted by the Committee, an option generally will remain exercisable for three months following the participant’s termination of service, provided that if service terminates as a result of the participant’s death or disability, the option generally will remain exercisable for 12 months, but in any event the option must be exercised no later than its expiration date.

Options are nontransferable by the participant other than by will or by the laws of descent and distribution, and are exercisable during the participant’s lifetime only by the participant. However, an option may be assigned or transferred to certain family members or trusts for their benefit to the extent permitted by the Committee and, in the case of an incentive stock option, only to the extent that the transfer will not terminate its tax qualification. No option may be transferred to a third party financial institution for value.

Stock Appreciation Rights

The Committee may grant stock appreciation rights either in tandem with a related option (Tandem SAR) or independently of any option (Freestanding SAR). A Tandem SAR requires the option holder to elect between the exercise of the underlying option for shares of common stock or the surrender of the option and the exercise of the related stock appreciation right. A Tandem SAR is exercisable only at the time and only to the extent that the related stock option is exercisable, while a Freestanding SAR is exercisable at such times or upon such events and subject to such terms, conditions, performance criteria or restrictions as specified by the Committee. The exercise price of each stock appreciation right may not be less than the fair market value of a share of our common stock on the date of grant.

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Upon the exercise of any stock appreciation right, the participant is entitled to receive an amount equal to the excess of the fair market value of the underlying shares of common stock as to which the right is exercised over the aggregate exercise price for such shares. Payment of this amount upon the exercise of a Tandem SAR may be made only in shares of common stock whose fair market value on the exercise date equals the payment amount. At the Committee’s discretion, payment of this amount upon the exercise of a Freestanding SAR may be made in cash or shares of common stock. The maximum term of any stock appreciation right granted under the 2017 Plan is ten years.

Stock appreciation rights are generally nontransferable by the participant other than by will or by the laws of descent and distribution, and are generally exercisable during the participant’s lifetime only by the participant. If permitted by the Committee, a Tandem SAR related to a nonstatutory stock option and a Freestanding SAR may be assigned or transferred to certain family members or trusts for their benefit to the extent permitted by the Committee. Other terms of stock appreciation rights are generally similar to the terms of comparable stock options.

Restricted Stock Awards

The Committee may grant restricted stock awards under the 2017 Plan either in the form of a restricted stock purchase right, giving a participant an immediate right to purchase common stock, or in the form of a restricted stock bonus, in which stock is issued in consideration for services to the Company rendered by the participant. The Committee determines the purchase price payable under restricted stock purchase awards, which may be less than the then current fair market value of our common stock. Restricted stock awards may be subject to vesting conditions based on such service or performance criteria as the Committee specifies, including the attainment of one or more performance goals similar to those described below in connection with performance awards. Shares acquired pursuant to a restricted stock award may not be transferred by the participant until vested. Unless otherwise provided by the Committee, a participant will forfeit any shares of restricted stock as to which the vesting restrictions have not lapsed prior to the participant’s termination of service. Participants holding restricted stock will have the right to vote the shares and to receive any dividends or other distributions paid in cash or shares, subject to the same vesting conditions as the original award.

Restricted Stock Units

The Committee may grant restricted stock units under the 2017 Plan, which represent rights to receive shares of our common stock at a future date determined in accordance with the participant’s award agreement. No monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award, the consideration for which is furnished in the form of the participant’s services to the Company. The Committee may grant restricted stock unit awards subject to the attainment of one or more performance goals similar to those described below in connection with performance awards, or may make the awards subject to vesting conditions similar to those applicable to restricted stock awards. Restricted stock units may not be transferred by the participant. Unless otherwise provided by the Committee, a participant will forfeit any restricted stock units which have not vested prior to the participant’s termination of service. Participants have no voting rights or rights to receive cash dividends with respect to restricted stock unit awards until shares of common stock are issued in settlement of such awards. However, the Committee may grant restricted stock units that entitle their holders to dividend equivalent rights, which are rights to receive cash or additional restricted stock units whose value is equal to any cash dividends the Company pays. Dividend equivalent rights will be subject to the same vesting conditions and settlement terms as the original award.

Performance Awards

The Committee may grant performance awards subject to such conditions and the attainment of such performance goals over such periods as the Committee determines in writing and sets forth in a written agreement between the Company and the participant. These awards may be designated as performance shares or performance units, which consist of unfunded bookkeeping entries generally having initial values equal to the fair market value determined on the grant date of a share of common stock in the case of performance shares and a monetary value established by the Committee at the time of grant in the case of performance units. Performance awards will specify a predetermined amount of performance shares or performance units that may be earned by the participant to the extent that one or more performance goals are attained within a predetermined performance period. To the extent earned, performance awards may be settled in cash, shares of common stock (including shares of restricted stock that are subject to additional vesting) or any combination of these.

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Performance goals may be based on the attainment of specified target levels with respect to one or more measures of business, or financial (or other measure or metric, determined in the subjective discretion of the Committee) performance of the Company and each subsidiary corporation consolidated with the Company for financial reporting purposes, or such division or business unit of the Company as may be selected by the Committee. The Committee, in its discretion, may base performance goals on one or more of the following such measures (or any other metric or goal the Committee may determine, including subjective performance criteria): bookings, revenue; sales; expenses; operating income; gross margin; operating margin; earnings before any one or more of: stock-based compensation expense, interest, taxes, depreciation and amortization; pre-tax profit; adjusted pre-tax profit; net operating income; net income; economic value added; free cash flow; operating cash flow; balance of cash, cash equivalents and marketable securities; stock price; earnings per share; return on stockholder equity; return on capital; return on assets; return on investment; total stockholder return, employee satisfaction; employee retention; market share; customer satisfaction; product development; research and development expense; completion of an identified special project and completion of a joint venture or other corporate transaction.

The target levels with respect to these performance measures may be expressed on an absolute basis or relative to an index, budget or other standard specified by the Committee. The degree of attainment of performance measures will be calculated in accordance with the Company’s financial statements, generally accepted accounting principles, if applicable, or other methodology established by the Committee, but prior to the accrual or payment of any performance award for the same performance period, and, according to criteria established by the Committee, excluding the effect (whether positive or negative) of any event the Committee determines is appropriate to exclude, including changes in accounting standards or any unusual or infrequently occurring event or transaction.

Following completion of the applicable performance period, the Committee will certify in writing the extent to which the applicable performance goals have been attained and the resulting value to be paid to the participant. The Committee retains the discretion to increase or reduce the amount that would otherwise be payable on the basis of the performance goals attained. The Committee may make positive or negative adjustments to performance award payments to reflect the participant’s individual job performance or other factors determined by the Committee. In its discretion, the Committee may provide for a participant awarded performance shares to receive dividend equivalent rights with respect to cash dividends paid on the Company’s common stock to the extent that the performance shares become vested. The Committee may provide for performance award payments in lump sums or installments.

Unless otherwise provided by the Committee, if a participant’s service terminates due to the participant’s death or disability prior to completion of the applicable performance period, the final award value will be determined at the end of the performance period on the basis of the performance goals attained during the entire performance period but will be prorated for the number of days of the participant’s service during the performance period. The Committee may provide similar treatment for a participant whose service is involuntarily terminated. If a participant’s service terminates prior to completion of the applicable performance period for any other reason, the 2017 Plan provides that the performance award will be forfeited, unless otherwise determined by the Committee. No performance award may be sold or transferred other than by will or the laws of descent and distribution prior to the end of the applicable performance period.

Cash-Based Awards and Other Stock-Based Awards

The Committee may grant cash-based awards or other stock-based awards in such amounts and subject to such terms and conditions as the Committee determines. Cash-based awards will specify a monetary payment or range of payments, while other stock-based awards will specify a number of shares or units based on shares or other equity-related awards. Such awards may be subject to vesting conditions based on continued performance of service or subject to the attainment of one or more performance goals similar to those described above in connection with performance awards. Settlement of awards may be in cash or shares of common stock, as determined by the Committee. A participant will have no voting rights with respect to any such award unless and until shares are issued pursuant to the award. The Committee may grant dividend equivalent rights with respect to other stock-based awards that will be subject to the same vesting conditions and settlement terms as the original award. The effect on such awards of the participant’s termination of service will be determined by the Committee and set forth in the participant’s award agreement.

Change in Control

The 2017 Plan provides that a “Change in Control” occurs upon (a) a person or entity (with certain exceptions described in the 2017 Plan) becoming the direct or indirect beneficial owner of more than 50% of the Company’s voting stock; (b) stockholder approval of a liquidation or dissolution of the Company; or (c) the occurrence of any of the following events upon which the stockholders of the Company immediately before the event do not retain immediately after the event direct or indirect beneficial ownership of more than 50% of the voting securities of the Company, its successor or the entity to which the assets of the company were transferred: (i) a sale or exchange by the stockholders in a single transaction or series of related transactions of more than 50% of the Company’s voting stock; (ii) a merger or consolidation in which the Company is a party; or (iii) the sale, exchange or transfer of all or substantially all of the assets of the Company (other than a sale, exchange or transfer to one or more subsidiaries of the Company).

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If a Change in Control occurs, the surviving, continuing, successor or purchasing entity or its parent may, without the consent of any participant, either assume or continue outstanding awards or substitute substantially equivalent awards for its stock. If so determined by the Committee, stock-based awards will be deemed assumed if, for each share subject to the award prior to the Change in Control, its holder is given the right to receive the same amount of consideration that a stockholder would receive as a result of the Change in Control. The vesting of any awards that are not assumed, continued or replaced in connection with a Change in Control will be accelerated in full, and, if not exercised prior to the Change in Control, will terminate effective as of the time of the Change in Control. The vesting of any awards that are assumed, continue or replaced will be accelerated in full if, within 18 months following the Change in Control, the holder’s employment is terminated without cause or the holder resigns following reduction in base salary of 15% or more.

Subject to the restrictions of Section 409A of the Code, the Committee may provide for the acceleration of vesting or settlement of any or all outstanding awards upon such other terms and to such extent as it determines. The vesting of all awards held by non-employee directors will be accelerated in full upon a Change in Control.

The 2017 Plan also authorizes the Committee, in its discretion and without the consent of any participant, to cancel each or any award denominated in shares of stock upon a Change in Control in exchange for a payment to the participant with respect each vested share (and each unvested share if so determined by the Committee) subject to the canceled award of an amount equal to the excess of the consideration to be paid per share of common stock in the Change in Control transaction over the exercise or purchase price per share, if any, under the award.

Awards Subject to Section 409A of the Code

Certain awards granted under the 2017 Plan may be deemed to constitute “deferred compensation” within the meaning of Section 409A of the Code, providing rules regarding the taxation of nonqualified deferred compensation plans, and the regulations and other administrative guidance issued pursuant to Section 409A. Any such awards will be required to comply with the requirements of Section 409A. Notwithstanding any provision of the 2017 Plan to the contrary, the Committee is authorized, in its sole discretion and without the consent of any participant, to amend the 2017 Plan or any award agreement as it deems necessary or advisable to comply with Section 409A.

Amendment, Suspension or Termination

The 2017 Plan will continue in effect until its termination by the Committee, provided that no awards may be granted under the 2017 Plan following the tenth anniversary of the 2017 Plan’s effective date, which is May 12, 2031. The Committee may amend, suspend or terminate the 2017 Plan at any time, provided that no amendment may be made without stockholder approval that would increase the maximum aggregate number of shares of stock authorized for issuance under the 2017 Plan, change the class of persons eligible to receive incentive stock options or require stockholder approval under any applicable law or the rules of any stock exchange on which the Company’s shares are then listed. No amendment, suspension or termination of the 2017 Plan may affect any outstanding award unless expressly provided by the Committee, and, in any event, may not have a materially adverse effect on an outstanding award without the consent of the participant unless necessary to comply with any applicable law, regulation or rule, including, but not limited to, Section 409A of the Code.

Tax Aspects Under the Code

The following summary is intended only as a general guide to the U.S. federal income tax consequences of participation in the 2017 Plan and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.

Incentive Stock Options

A participant recognizes no taxable income for regular income tax purposes as a result of the grant or exercise of an incentive stock option qualifying under Section 422 of the Code. Participants who neither dispose of their shares within two years following the date the option was granted nor within one year following the exercise of the option will normally recognize a capital gain or loss upon the sale of the shares equal to the difference, if any, between the sale price and the purchase price of the shares. If a participant satisfies such holding periods upon a sale of the shares, we will not be entitled to any deduction for federal income tax purposes. If a participant disposes of shares within two years after the date of grant or within one year after the date of exercise (a “disqualifying disposition”), the difference between the fair market value of the shares on the option exercise date and the exercise price (not to exceed the gain realized on the sale if the disposition is a transaction with respect to which a loss, if sustained, would be recognized) will be taxed as ordinary income at the time of disposition. Any gain in excess of that amount will be a capital gain. If a loss is recognized, there will be no ordinary income, and such loss will be a capital loss. Any ordinary income recognized by the participant upon the disqualifying disposition of the shares generally should be deductible by us for federal income tax purposes, except to the extent such deduction is limited by applicable provisions of the Code.

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In general, the difference between the option exercise price and the fair market value of the shares on the date of exercise of an incentive stock option is treated as an adjustment in computing the participant’s alternative minimum taxable income and may be subject to an alternative minimum tax which is paid if such tax exceeds the regular tax for the year. Special rules may apply with respect to certain subsequent sales of the shares in a disqualifying disposition, certain basis adjustments for purposes of computing the alternative minimum taxable income on a subsequent sale of the shares and certain tax credits which may arise with respect to participants subject to the alternative minimum tax.

Nonstatutory Stock Options

Options not designated or qualifying as incentive stock options are nonstatutory stock options having no special tax status. A participant generally recognizes no taxable income upon receipt of such an option. Upon exercising a nonstatutory stock option, the participant normally recognizes ordinary income equal to the difference between the exercise price paid and the fair market value of the shares on the date when the option is exercised. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of stock acquired by the exercise of a nonstatutory stock option, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the exercise date, will be taxed as capital gain or loss. We generally should be entitled to a tax deduction equal to the amount of ordinary income recognized by the participant as a result of the exercise of a nonstatutory stock option, except to the extent such deduction is limited by applicable provisions of the Code.

Stock Appreciation Rights

A Participant recognizes no taxable income upon the receipt of a stock appreciation right. Upon the exercise of a stock appreciation right, the participant generally will recognize ordinary income in an amount equal to the excess of the fair market value of the underlying shares of common stock on the exercise date over the exercise price. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant in connection with the exercise of the stock appreciation right, except to the extent such deduction is limited by applicable provisions of the Code.

Restricted Stock

A participant acquiring restricted stock generally will recognize ordinary income equal to the excess of the fair market value of the shares on the “determination date” over the price paid, if any, for such shares. The “determination date” is the date on which the participant acquires the shares unless the shares are subject to a substantial risk of forfeiture and are not transferable, in which case the determination date is the earlier of (i) the date on which the shares become transferable or (ii) the date on which the shares are no longer subject to a substantial risk of forfeiture (e.g., when they become vested). If the determination date follows the date on which the participant acquires the shares, the participant may elect, pursuant to Section 83(b) of the Code, to designate the date of acquisition as the determination date by filing an election with the Internal Revenue Service no later than 30 days after the date on which the shares are acquired. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. Upon the sale of shares acquired pursuant to a restricted stock award, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date, will be taxed as capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

Restricted Stock Unit, Performance, Cash-Based and Other Stock-Based Awards

A participant generally will recognize no income upon the receipt of a restricted stock unit, performance share, performance unit, cash-based or other stock-based award. Upon the settlement of such awards, participants normally will recognize ordinary income in the year of settlement in an amount equal to the cash received and the fair market value of any substantially vested shares of stock received. If the participant is an employee, such ordinary income generally is subject to withholding of income and employment taxes. If the participant receives shares of restricted stock, the participant generally will be taxed in the same manner as described above under “Restricted Stock.” Upon the sale of any shares received, any gain or loss, based on the difference between the sale price and the fair market value of the shares on the determination date (as defined above under “Restricted Stock”), will be taxed as capital gain or loss. We generally should be entitled to a deduction equal to the amount of ordinary income recognized by the participant on the determination date, except to the extent such deduction is limited by applicable provisions of the Code.

Number of Awards Granted to Employees and Directors

The number of awards that an employee or director may receive under the 2017 Plan is in the discretion of the Committee and therefore cannot be determined in advance.

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The following table sets forth, with respect to the individuals and groups named below: (i) the aggregate number of Shares subject to awards of restricted stock units granted under the 2017 Plan during the fiscal year ended December 31, 2020, and (ii) the dollar value of such units based on $47.97 per share, the closing price of a Share on the NYSE on March 1, 2021. No stock options nor Restricted Stock have been issued under the 2017 Plan, and no SARs were granted in 2020.

Identity of Individual or GroupNumber of Shares Subject to Stock Awards (#)Dollar Value of Shares subject to Stock Awards ($)
Andres D. Reiner
118,500(1)
5,684,445 
Stefan B. Schulz
52,800(2)
2,532,816 
Leslie Rechan132,406 6,351,516 
Roberto Reiner
37,900(3)
1,818,063 
Thomas D. Dziersk
29,400(4)
— 
All current executive officers as a group 341,606 16,386,840 
All current non-employee directors as a group 35,870 1,720,684 
All other employees (including all current officers who are not executive officers) as a group712,164 34,162,507 
(1) Includes 79,000 2020 PRSUs at maximum attainment.
(2) Includes 30,200 2020 PRSUs at maximum attainment.
(3) Includes 21,600 2020 PRSUs at maximum attainment.
(4) Includes 16,800 2020 PRSUs at maximum attainment. In connection with his retirement from the Company, Mr. Dziersk has forfeited all of these awards.


Vote Required

Approval of this proposal requires the affirmative vote of a majority of the shares present or represented by proxy and entitled to vote on this proposal. If you hold your shares in your own name and abstain from voting on this matter, your abstention will have the same effect as a negative vote. If you hold your shares through a broker and you do not instruct the broker on how to vote on this proposal, your broker will not have authority to vote your shares. Broker non-votes will have no effect on the outcome of this vote. Abstentions and broker non-votes will each be counted as present for purposes of determining the presence of a quorum.

THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE APPROVAL OF THE PROPOSED AMENDMENTS TO THE 2017 EQUITY INCENTIVE PLAN.
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PROPOSAL FOUR
APPROVAL OF AMENDMENT TO THE 2013 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE PLAN SHARES AUTHORIZED FOR ISSUANCE
What am I voting on?
Our 2013 Employee Stock Purchase Plan (ESPP), is a benefit that we make broadly available to our employees and employees of our participating subsidiary corporations that allows them to purchase shares of Company Common Stock (Shares) at a discount. The ESPP helps us attract, retain and reward highly qualified employees and promotes employee stock ownership, which aligns employees' interests with those of our stockholders. We are asking our stockholders to approve amending the ESPP to increase by 500,000 Shares the number of Shares reserved for issuance under the ESPP. The Board has approved amending the ESPP to increase the share pool by 500,000 Shares, subject to stockholder approval at the Annual Meeting. Stockholder approval of the ESPP requires the affirmative vote of a majority of the outstanding Shares present in person or by proxy at the Annual Meeting and entitled to vote on the proposal.
If stockholders approve this proposal, the total number of Shares authorized and reserved for issuance under the ESPP will be 1,000,000 Shares. However, if this proposal is rejected by stockholders, the total number of Shares authorized and reserved for issuance under the ESPP will remain at 500,000, of which approximately 32,824 remain available for issuance as of March 1, 2021. Based on our current forecasts and estimated participation rates, if the increase is not approved, it is anticipated that the ESPP will not have enough shares available for the June 30, 2021 purchase.
We believe that the ESPP is an essential tool that helps us compete for talent in the labor markets in which we operate. We also believe the ESPP is a crucial element in rewarding and encouraging current employees that promotes stock ownership by employees, which aligns their interests with those of our stockholders. Without stockholder approval of this proposal, we believe our ability to attract and retain talent would be hampered, and our recruiting, retention and incentive efforts would become more difficult.
Our executive officers currently are permitted to participate in the ESPP and therefore have an interest in this proposal; however none of our executive officers participated in 2020 or is currently participating. The remainder of this discussion, when referring to the ESPP, refers to the amended ESPP as if this proposal is approved by our stockholders, unless otherwise specified or the context otherwise references the ESPP prior to amendment.
Increasing the Number of Shares Authorized for Issuance under the ESPP

Background

The ESPP was initially adopted by the Board in April, 2013 and approved by our stockholders in June 2013. The ESPP was implemented and made available to employees beginning with the six-month offering period starting in January 2014. In November 2015, the CLD Committee increased the discount from 5% to 15%, applicable to purchases made starting January 2016 and thereafter.

Under the ESPP, a participant may authorize participant contributions, generally in the form of payroll deductions, which, unless changed by the CLD Committee, may not exceed $5,000 during the offering period. Payroll deductions are applied on the last day of a purchase period (the "purchase date") to purchase a whole number of Shares on behalf of a participant, which shall not exceed 500 Shares. The purchase price is 85% of the fair market value of a Share on the first day of the offering period or on the purchase date, whichever date results in a lower price.

Reasons for Voting for the Proposal

We believe that the number of Shares remaining available for issuance under the ESPP will not be sufficient for the expected levels of ongoing participation in the ESPP. Therefore, increasing the number of Shares available under the ESPP would be appropriate to help the Company meet the goals of its compensation strategy. The Board believes that the interests of the Company and its stockholders will be advanced if the Company can continue to offer employees the opportunity to acquire or increase their ownership in the Company.

In considering its recommendation to seek stockholder approval for the addition to the ESPP of 500,000 Shares, the Board considered the historical number of Shares purchased under the ESPP in the past three years, which were 65,457, 75,304, and 75,546, in 2020, 2019 and 2018, respectively. The Board also considered the Company's expectation that the additional Shares should last until approximately December 31, 2025. In the event that more Shares are required for the ESPP in the future, the prior approval of our stockholders will be required.

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Summary of the ESPP

This section provides a summary of the principal features of the ESPP and its operation. This summary is qualified in its entirety by reference to the complete text of the ESPP as set forth in Appendix B.

General

The purpose of the ESPP is to advance the interests of the Company and its stockholders by providing an incentive to attract, retain and reward eligible employees and by motivating such employees to contribute to the growth and profitability of the Company and its participating subsidiary corporations, in each case, by providing eligible employees with the opportunity to acquire a proprietary interest in the Company through the purchase of Shares.

The ESPP is intended to qualify as an employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended (Section 423). Under an employee stock purchase plan that qualifies under Section 423, no U.S. taxable income will be recognized by a participant, and no deductions will be allowable to the Company, upon either the grant or the exercise of the purchase rights. U.S. taxable income will not be recognized until there is a sale or other disposition of the Shares acquired under the ESPP or in the event the participant should die while still owning the purchased Shares. The ESPP also authorizes the grant of rights to purchase Shares that do not qualify under Section 423 pursuant to rules, procedures or sub-plans adopted by the CLD Committee to achieve tax, securities law or other compliance objectives in particular locations outside of the United States (Non-Section 423 Plan).

Each participant in the ESPP is granted at the beginning of each offering under the plan the right to purchase (Purchase Right) through accumulated payroll deductions up to a number of shares of the Common Stock of the Company determined on the first day of the offering. The Purchase Right is automatically exercised on the last day of the offering unless the participant has withdrawn from participation in the ESPP prior to such date.

Eligibility to Participate

Most employees of the Company and its participating subsidiary corporations whose customary employment is for at least twenty hours per week are eligible to participate in the ESPP. In addition, an employee is not eligible if he or she would own or hold outstanding options to purchase five percent or more of the total combined voting power or value of all classes of stock of the Company or of any parent or subsidiary corporation of the Company. As of March 1, 2021, approximately 1,066 employees were eligible to participate in the ESPP.

Number of Shares and Market Price of Shares Available Under the ESPP

A total of 500,000 Shares were initially authorized and reserved for issuance under the ESPP. Because approximately 32,824 Shares remained available for issuance as of March 1, 2021, if stockholders approved the proposed 2021 increase of 500,000 Shares, approximately 532,824 Shares would be available for issuance under the ESPP, subject to appropriate adjustment in the event of any stock dividend, stock split, reverse stock split, recapitalization, combination, reclassification, or similar change in our capital structure, or in the event of any merger, sale of assets or other reorganization of the Company. If any Purchase Right expires or terminates, the shares subject to the unexercised portion of the Purchase Right will again be available for issuance under the ESPP.

As of March 1, 2021, the closing price of our Common Stock on the NYSE was $47.97 per Share.

Administration

Our CLD Committee administers the ESPP and has full and exclusive authority to interpret the terms of the ESPP and determine employee eligibility to participate subject to the conditions of our ESPP. The ESPP provides, subject to certain limitations, for indemnification by the Company of any director, officer or employee against all reasonable expenses, including attorneys' fees, incurred in connection with any legal action arising from such person's action or failure to act in administering the plan.

Offering Periods and Contributions

Eligible employees voluntarily elect whether or not to enroll in the ESPP. The ESPP provides for consecutive six-month offering periods. The offering periods generally start on the first trading days of January and July of each year. The CLD Committee may, in its discretion, modify the terms of future offering periods, provided that no offering period may exceed 27 months.

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The ESPP permits participants to purchase Common Stock through payroll deductions of up to 10% of their eligible compensation, which includes a participant's base straight time gross earnings, commissions, and overtime, but exclusive of payments for incentive compensation, bonuses and other compensation. Generally, a participant may purchase during an offering period up to the lesser of 500 shares or a number of shares equal to $5,000 divided by the fair market value of a share of Common Stock at the beginning of the offering period. The CLD Committee may change this limit for any future offering period, but the maximum amount of stock for all offerings beginning in a calendar year a participant may purchase cannot have a fair market value (measured as of the first day of the offering period) that would exceed $25,000.

Purchase of Shares

Amounts deducted and accumulated by the participant are used to purchase Shares at the end of each six-month offering period. Per the CLD Committee resolution of November 2014, the purchase price of the Shares generally will be 85% of the lower of the fair market value of our Common Stock (i) on the first trading day of each offering period or (ii) on the purchase date, but in no event less than the amount permitted by Section 423 of the Code. Participants may end their participation at any time during an offering period, and will be paid their accrued payroll deductions that have not yet been used to purchase shares of Common Stock. Participation ends automatically upon termination of employment.

Non-transferability

A participant may not transfer rights granted under the ESPP other than as provided in the ESPP.

Adjustments; Certain Transactions

In the event of our merger, sale of substantially all of our assets or other change in control, as defined in the ESPP, a successor corporation may assume or substitute replacement rights for each outstanding Purchase Right. If the successor corporation refuses to assume or substitute for the outstanding Purchase Rights, the offering period then in progress will be shortened, and a new purchase date will be set. Each participant will be notified that the purchase date has been changed and that the participant's Purchase Right will be exercised automatically on the new purchase date unless prior to such date the participant has withdrawn from the offering period.

Amendment and termination

Our ESPP will continue indefinitely until we terminate it. The CLD Committee has the authority to amend, suspend or terminate our ESPP, except that (a) subject to certain exceptions described in the ESPP, no such action may adversely affect any outstanding rights to purchase stock under our ESPP; and (b) the approval of the Company's stockholders is required for any amendment increasing the number of shares authorized for issuance under our ESPP.

Number of Shares Purchased by Certain Individuals and Groups

Our Participation in the ESPP is voluntary and dependent on each eligible employee's election to participate and his or her determination as to the level of payroll deductions. Further, the number of Shares that may be purchased under the ESPP is determined, in part, by the price of our Common Stock on the first and last day of each offering period. Accordingly, the actual number of Shares that may be purchased by any eligible individual is not determinable.

For illustrative purposes only, the following table sets forth (i) the number of Shares that were purchased during 2020 under the ESPP, and (ii) the weighted average per Share purchase price paid for such Shares, for all NEOs, all current executive officers as a group, all non-employee directors as a group and all other employees who participated in the ESPP as a group.
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Identity of Individual or GroupNumber of Shares Purchased (#)Weighted Average Purchase Price Per Share ($)
Andres D. Reiner— — 
Stefan B. Schulz— — 
Leslie Rechan— — 
Roberto Reiner— — 
Thomas D. Dziersk— — 
All current executive officers as a group — — 
All non-employee directors as a group (1)— — 
All other employees (including all current officers who are not executive officers) as a group65,457 43.15 
(1) Non-employee directors are not eligible to participate in the ESPP.
In January 2021, 41,970 Shares were purchased under the ESPP at a purchase price of $38.03 per Share.
Summary of U.S. Federal Income Tax Consequences

The following summary is intended only as a general guide as to the United States federal income tax consequences of participation in the ESPP under current law and does not attempt to describe all possible federal or other tax consequences of such participation or tax consequences based on particular circumstances.

Generally, there are no tax consequences to an employee of either becoming a participant in the ESPP or purchasing shares under the ESPP. The tax consequences of a disposition of shares vary depending on the period such stock is held before its disposition. If a participant disposes of shares within two years after the start of the applicable offering period or within one year after the purchase date on which the shares are acquired (Disqualifying Disposition), the participant recognizes ordinary income in the year of disposition in an amount equal to the difference between the fair market value of the shares on the purchase date and the purchase price. Such income may be subject to withholding of tax. Any additional gain or resulting loss recognized by the participant from the disposition of the shares is a capital gain or loss. If the participant disposes of shares at least two years after the start of the applicable offering period and at least one year after the purchase date on which the shares are acquired, the participant recognizes ordinary income in the year of disposition in an amount equal to the lesser of (i) the difference between the fair market value of the shares on the date of disposition and the purchase price or (ii) the difference between the fair market value of the shares on at the start of the offering period and purchase price (determined as if the Purchase Right were exercised on the first day of the offering period). Any additional gain recognized by the participant on the disposition of the shares is a capital gain. If the fair market value of the shares on the date of disposition is less than the purchase price, there is no ordinary income, and the loss recognized is a capital loss. If the participant owns the shares at the time of the participant's death, the lesser of (i) the difference between the fair market value of the shares on the date of death and the purchase price or (ii) the difference between the fair market value of the shares at the start of the offering period and purchase price (determined as if the Purchase Right were exercised on the first day of the offering period) is recognized as ordinary income in the year of the participant's death.

If the exercise of a Purchase Right does not constitute an exercise pursuant to an “employee stock purchase plan” under section 423 of the Code, the exercise of the Purchase Right will be treated as the exercise of a nonstatutory stock option. The participant would therefore recognize ordinary income on the purchase date equal to the excess of the fair market value of the shares acquired over the purchase price. Such income is subject to withholding of income and employment taxes. Any gain or loss recognized on a subsequent sale of the shares, as measured by the difference between the sale proceeds and the sum of (i) the purchase price for such shares and (ii) the amount of ordinary income recognized on the exercise of the Purchase Right, will be treated as a capital gain or loss, as the case may be.

If the participant disposes of the shares in a Disqualifying Disposition we should be entitled to a deduction equal to the amount of ordinary income recognized by the participant as a result of the disposition, except to the extent such deduction is limited by applicable provisions of the Code or the regulations thereunder. In all other cases, we are not allowed a deduction.

Vote Required and Board of Directors' Recommendation
The affirmative vote of a majority of the outstanding shares of our Common Stock entitled to vote and present in person or represented by proxy at the Annual Meeting is required for advisory approval of this proposal. A properly executed proxy marked “ABSTAIN” with respect to this matter is considered entitled to vote, and thus will have the effect of a vote against this matter.

In accordance with Delaware law, abstentions will be counted for purposes of determining both whether a quorum is present at the Annual Meeting and the total number of shares represented and voting on this proposal. While broker non-votes will be counted for purposes of determining the presence or absence of a quorum, broker non-votes will not be counted for purposes of
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determining the number of shares represented and voting with respect to the particular proposal on which the broker has expressly not voted and, accordingly, will not affect the approval of this proposal.
THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” THE APPROVAL OF THE AMENDMENT TO THE 2013 EMPLOYEE STOCK PURCHASE PLAN TO INCREASE PLAN SHARES AUTHORIZED FOR ISSUANCE.
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SECURITY OWNERSHIP
The following tables set forth information regarding beneficial ownership of our Common Stock for each person known to own beneficially more than 5% of our outstanding Common Stock, each of our NEOS, each director and director nominee, and our NEOs, directors and director nominee as a group, each as of the Record Date unless otherwise noted below. Applicable percentage of ownership is based on 44,252,765 shares of our Common Stock outstanding as of the Record Date.
Principal Shareholders and AddressCommon Stock and Nature of Beneficial OwnershipPercentage
Brown Capital Management, LLC, 1201 N. Calvert Street, Baltimore, MD 21202
6,541,717(1)
14.8 %
The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355
3,701,299(2)
8.4 %
BlackRock, Inc., 55 East 52nd Street, New York, NY 10055
3,535,630(3)
8.0 %
Ronald F. and Mariette M. Woestemeyer, 3200 Kirby Drive, Ste 600, Houston, TX 77098
2,864,946(4)
6.5 %
Conestoga Capital Advisors, LLC, 550 E. Swedesford Rd. Suite 120, Wayne, PA 19087
2,526,766(5)
5.7 %
Alger Associates, Inc., 360 Park Avenue South, New York, NY 10010
2,385,942(6)
5.4 %
Tremblant Capital Group, 767 Fifth Avenue, New York, NY 10153
2,219,411(7)
5.0 %
(1)Based solely upon a Schedule 13G/A filed by Brown Capital Management, LLC (Brown) with the SEC on February 12, 2021 reporting that Brown beneficially owned 6,541,717 shares of our Common Stock as of December 31, 2020, with sole voting power with respect to 4,016,507 shares of our Common Stock and sole dispositive power with respect to 6,541,717 shares of our Common Stock.
(2)Based solely upon a Schedule 13G filed by The Vanguard Group (Vanguard) with the SEC on February 10, 2021 reporting that Vanguard owned 3,701,299 shares of our Common Stock as of December 31, 2020, with shared voting power with respect to 90,597 shares of our Common Stock, sole dispositive power with respect to 3,578,056 shares of our Common Stock and shared dispositive power with respect to 123,243 shares of our Common Stock.
(3)Based solely upon a Schedule 13G/A filed by BlackRock, Inc. (BlackRock) with the SEC on January 29, 2021 reporting that BlackRock beneficially owned 3,535,630 shares of our Common Stock as of December 31, 2020, with sole voting power with respect to 3,381,550 shares of our Common Stock and sole dispositive power with respect to 3,535,630 shares of our Common Stock.
(4)Includes 2,851,835 shares held by various trusts for the benefit of certain family members and 4,811 shares from RSUs which are scheduled to vest on April 29, 2021.
(5)Based solely upon a Schedule 13G/A filed by Conestoga Capital Advisors, LLC (Conestoga) with the SEC on January 6, 2021 reporting that Conestoga owned 2,526,766 shares of our Common Stock as of December 31, 2020, with solve voting power with respect to 2,394,991 shares of our Common Stock and sole dispositive power with respect to 2,526,766 shares of our Common Stock.
(6)Based solely upon a Schedule 13G filed by Alger Associates, Inc. (Alger) with the SEC on February 16, 2021 reporting that Alger and associated funds owned 2,385,942 shares of our Common Stock as of December 31, 2020, with sole voting and dispositive power with respect to all such shares of our Common Stock.
(7)Based solely upon a Schedule 13G filed by Tremblant Capital Group (Tremblant) with the SEC on February 16, 2021 reporting that Tremblant beneficially owned 2,219,411 shares of our Common Stock as of December 31, 2020, with sole voting and dispositive power as to all such shares of our Common Stock.
Name of Beneficial Owner
Common Stock Beneficially Owned(1)
Percentage
Named Executive Officers
Andres D. Reiner921,032 2.1 %
Stefan B. Schulz291,136 *
Leslie Rechan
67,789(2)
*
Roberto Reiner106,279 *
Non-Employee Directors and Director Nominees
Carlos Dominguez
4,811(3)
*
Raja Hammoud
3,428(4)
*
Penelope Herscher
14,389(3)
*
Catherine A. Lesjak
3,576(5)
*
Greg B. Petersen
112,246(3)
*
William Russell
138,022(3)
*
Timothy V. Williams
116,198(3)
*
Mariette M. Woestemeyer
2,864,946(3)
6.5 %
All NEOs, directors and director nominees as a group4,643,852 10.5 %
* Represents less than 1% of the outstanding shares of our Common Stock