8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

Current Report

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 18, 2012

Pegasystems Inc.

(Exact name of registrant as specified in its charter)

Commission File Number:  1-11859

Massachusetts	04-2787865
(State or other jurisdiction of	(IRS Employer
incorporation)	Identification No.)

101 Main Street, Cambridge, Massachusetts 02142

(Address of principal executive offices, including zip code)

617-374-9600

(Registrant's telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[  ]   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[  ]   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[  ]   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory

Arrangements of Certain Officers

(e) On February 18, 2012, the Compensation Committee of the Board of Directors of Pegasystems Inc. (the "Company") approved the 2012 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan (the "Incentive Plan") and the 2012 base salaries and target bonus payments for the executive officers of the Company listed on Exhibit 99.2 to this Current Report on Form 8-K (the "Executive Officers"). The aggregate 2012 target bonus payments for Executive Officers are $875,500 (the "Aggregate Target Bonus Amount").

The Incentive Plan covers the period from January 1, 2012 through December 31, 2012 (the "Incentive Period"). The Incentive Plan is designed to establish a pool of funds to be available for making bonus payments to the Executive Officers if the Company achieves certain performance goals during the Incentive Period.  For purposes of the Incentive Plan, these goals are divided into two categories. The first category is comprised of the corporate financial goals related to revenue, bookings and profitability approved by the Board of Directors in connection with establishing the Company's 2012 annual budget. The second category is comprised of the qualitative strategic goals approved by the Board of Directors as part of the Company's 2012 annual strategic planning. Together, these two categories make up a single performance goal under the Incentive Plan (the "Corporate Performance Target"), with the financial goals being weighted 70% toward achievement of the Corporate Performance Target and the strategic goals being weighted 30% toward achievement of the Corporate Performance Target. The percentage achievement of the Corporate Performance Target (the "Funding Percentage") determines the extent to which the Incentive Plan is funded. The Incentive Plan will be funded with an amount equal to the Aggregate Target Bonus Amount multiplied by the Funding Percentage, except that if the Funding Percentage is less than 70% then the Incentive Plan will not be funded at all. If the Corporate Performance Target is exceeded, the percentage achievement of the Corporate Performance Target for purposes of funding the Incentive Plan is deemed equal to 100% plus an enhanced incentive as determined by the Board in its discretion.

Once the Funding Percentage has been determined, the actual incentive payment for each Executive Officer will be adjusted to reflect the individual's level of contribution to the Company's strategic goals, as determined by the Chief Executive Officer, in his discretion. The Chief Executive Officer and/or the Board reserves the right in his or its sole discretion to either increase or decrease the Funding Percentage and/or individual payout amounts.

For 2012, the Company will permit each Executive Officer to elect to receive a portion of his or her 2012 bonus equal to 50% of his or her target bonus payment in the form of restricted stock units ("RSUs") instead of in cash. For this purpose, RSUs will be valued at their fair value on the grant date. If elected, the equity grant will occur during the open trading period following the public release of the Company's 2011 financial results and will vest 100% on the Incentive Plan payout date in 2013 for all participants. Vesting is conditioned upon threshold funding of the Incentive Plan and, with respect to each Executive Officer, on his or her continued active employment with the Company. If these conditions are not met, the equity grant cannot be exercised by the Executive Officer and will expire.

The Executive Officers are also eligible for additional incentive compensation related to the achievement of certain operational objectives totaling $113,000, and Leon Trefler is also eligible for sales commissions of $240,000.

The foregoing summary description of the Incentive Plan is qualified in its entirety by reference to Exhibit 99.1 to this Current Report on Form 8-K. The 2012 base salaries and target bonus payments for the Executive Officers are attached as Exhibit 99.2 to this Current Report on Form 8-K.

Item 9.01. Financial Statements and Exhibits

99.1 2012 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan

99.2 2012 Executive Officers Base Salaries and Target Bonus Payments

Signature(s)

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Pegasystems Inc.
Date: February 22, 2012	By:	/s/    Shawn Hoyt
		Shawn Hoyt
		General Counsel and Secretary

Exhibit Index

Exhibit No. Description

99.1 2012 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan

99.2 2012 Executive Officers Base Salaries and Target Bonus Payments

EX-99

Exhibit 99.1

[PEGA LOGO] 2012 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan (CICP)
Employee Name: <<Fname>> <<Lname>>	Unit: <<Unit>>

General Purpose & Structure

This Section 16 Officer/FLT Member Corporate Incentive Compensation Plan is designed to provide you with the potential for variable pay based on the achievement of annual financial and strategic business objectives of Pegasystems Inc. ("Pega") and your individual performance. Based on your role, you are eligible for a Target Incentive Opportunity, which is calculated as a percentage of your actual, paid base salary for the year. The Target Incentive Opportunity for each Section 16 Officer/FLT member is determined by the Compensation Committee of the Company's Board of Directors and is approved at the beginning of the plan year.

Corporate goals will be established by Pega's senior management and Board of Directors or the Compensation Committee of the Board of Directors (the "Board").

Corporate Goal Performance & Funding

The CICP must first be funded by Pega before any incentive payments are made. Funding of the CICP is based on Pega's attainment of financial and strategic goals (the "Corporate Goals") established by the Board. Performance against financial goals will be weighted at 70% and progress made on strategic goals will be weighted at 30%.

The CICP will be funded at the full target level if Pega attains 100% of its Corporate Goals (referred to as "Target"). Should attainment of Corporate Goals be below Target but above Threshold (which is defined as above 70% of Target), the incentive funding will be at the same actual percentage as performance against Target. Should the level of attainment of the Corporate Goals fall below Threshold, the CICP will not be funded and no incentive compensation will be paid. If the attainment of Corporate Goals is above Target, Pega will fund an enhanced incentive as determined by the Board in its discretion.

Once the Corporate funding level has been determined, the actual incentive payment will be adjusted to reflect the individual's level of contribution to the Company's strategic goals, as determined by the Chief Executive Officer, in his discretion.

Notwithstanding the above, the Chief Executive Officer and/or the Board reserves the right in his or its sole discretion to either increase or decrease the corporate funding and/or individual payout amounts.

EQUITY SELECTION

CICP participants that are covered by the plan for the full calendar year may elect to receive half of their incentive opportunity in restricted stock units (RSUs). If elected by an employee, the equity amount will be equal in value on the date of grant to 50% of his or her Target Incentive Opportunity, calculated from the employee's January 2012 base salary. If base salary is in a currency other than USD, the conversion will be at the exchange rate on the close of the date of the grant. The number of RSUs granted will be determined by dividing 50% of the employee's Target Incentive Opportunity by the fair value of a RSU on the grant date (rounded down to the nearest whole share). If elected, the equity grant will occur during the open trading period following the release of the 2011 financial results (expected to be March 2012) and will vest 100% on the plan payout date of the following year (expected to be March 2013) for all participants. Vesting is conditioned upon Threshold funding of the plan; if Threshold funding does not occur, the equity grant cannot be exercised and will expire. Vesting is also conditioned upon achieving successful individual performance, as evidenced by a current performance evaluation of "Meets-Steady" or higher. Only employees in the US, UK, Canada, Australia, Germany, the Netherlands, Spain, Hong Kong, Singapore, India, Japan, and France are eligible to participate in the equity selection.

For Example: An employee elects to receive 50% of his or her Target Incentive Opportunity of $10,000 in equity. On the grant date in 2012, the fair value of one RSU is $13. That employee would receive a grant for 384 RSUs, which will vest 100% on the plan payout date in 2013.

Target Incentive Opportunity	$10,000
50% Equity Component	$ 5,000
Fair Value per RSU - Grant Date	$13.00
Number of RSUs Granted	384

IMPORTANT: In order to receive a portion of your payment in RSU's, you must agree to the terms of the plan and make your electronic election no later than February 17, 2012. If no election is received by this date, you will default to a 100% cash election.

Pay Out

Cash payout for this plan shall be made on or before March 15^th for US employees and March 31^st for non-US employees, of the subsequent year.

Pegasystems reserves the right in its sole discretion to either increase or decrease the corporate funding and/or individual payout amounts.

Eligibility

Only active, full time Section 16 Officers/FLT members are potentially eligible for this plan. Those hired after November 1^st of the Plan year will need the Chief Executive Officer's approval to participate.

To receive any payments under this plan or to vest in RSUs granted under this plan, an employee must: A) Be actively employed by Pegasystems at the time of pay out, and B) Have provided an electronic acknowledgement within 30 days of receipt of the plan that they have read, understood, agreed to this plan and requirements for participation, and C) Be an employee in good standing, meaning not on a performance plan, probation or suspension.

Legal Provisions

This annual incentive plan supersedes all other incentive plans for the eligible employees and will remain in effect only for the plan year indicated.

This plan is based on the company's current position and goals, as well as market conditions, and is subject to change. Pegasystems reserves the sole right to modify, revoke, suspend, or terminate this plan at any time.

By electronically signing and accepting this plan, you are affirming that you have read and understand the terms of your plan. It also serves as reaffirmation that you agree to abide by Pegasystems' policies, as well as the terms of your Standards Letter (or employment agreement for applicable employees outside of the United States) with Pegasystems including restrictions on competition and solicitation.

In the event of actual termination of employment for any reason prior to the incentive payment date, any incentive that has not yet been paid or vested will be forfeited. The language in this policy is not intended to create, nor is it construed to create a contract of employment with Pegasystems and any of its employees. All employment at Pegasystems is at will, which means the employee or Pegasystems can terminate the employment at any time for any reason or no reason with or without notice (to the extent permitted by law).

Exceptions to this plan may only be made by the CEO, and only if done so in writing.

Incentive Target Percentage:

At target funding, you are eligible for a Target Incentive Opportunity of 0 to <<Plan_TI>>% calculated on actual, paid base salary for the year.

Please print a copy of this 2012 CICP plan document for your records.

EX-99

EXHIBIT 99.2

Pegasystems Inc.

2012 Executive Officers Base Salaries and Target Bonus Percentages

All Changes Effective Retroactively to January 1, 2012.

Name	Title	Base Salary	Target Bonus*
Alan Trefler	Chief Executive Officer and Chairman	$390,000	90%
Craig Dynes**	Chief Financial Officer and Senior Vice President	$340,000	50%
Douglas Kra**	Senior Vice President, Client Success	$300,000	50%
Michael Pyle**	Senior Vice President, Engineering	$295,000	50%
Leon Trefler**	Senior Vice President, Sales	$285,000	20%

* Percentage of 2012 base salary

**In 2012, Craig Dynes will also be eligible for up to $21,000 in additional incentive compensation for the achievement of operational objectives to be set by our Chief Executive Officer.

**In 2012, Douglas Kra will also be eligible for up to $21,000 in additional incentive compensation for the achievement of operational objectives to be set by our Chief Executive Officer.

**In 2012, Michael Pyle will also be eligible for up to $21,000 in additional incentive compensation for the achievement of operational objectives to be set by our Chief Executive Officer.

**In 2012, Leon Trefler will also be eligible for up to $50,000 in additional incentive compensation for the achievement of operational objectives to be set by our Chief Executive Officer, as well as the potential for an estimated $240,000 in sales commissions.