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Massachusetts
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04-2787865
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(State or other jurisdiction of
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(IRS Employer
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incorporation)
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Identification No.)
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The Incentive Plan covers the period from January 1, 2015 through December 31, 2015 (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 2015 annual budget. The second category is comprised of the qualitative strategic goals approved by the Board of Directors as part of the Company's 2015 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 2015, the Company will permit each Executive Officer to elect to receive a portion of his or her 2015 bonus equal to 50% of his or her target Incentive Plan payment in the form of restricted stock units ("RSUs") instead of in cash. For this purpose, RSUs will be calculated based upon 85% of their fair market 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 2014 financial results and will vest 100% on the Incentive Plan payout date in 2016 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 bonus compensation related to the achievement of certain operational objectives totaling $136,000. Leon Trefler and Douglas Kra, Senior Vice Presidents of Global Customer Success, are also eligible for sales commissions of $200,000 and $140,000, respectively.
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 2015 base salaries, target Incentive Plan and other bonus payments for the Executive Officers are attached as Exhibit 99.2 to this Current Report on Form 8-K.
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Pegasystems Inc.
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Date: February 03, 2015
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By:
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/s/ Anne T. Warner
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Anne T. Warner
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Vice President, General Counsel and Secretary
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Exhibit No.
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Description
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EX-99.1
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2015 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan
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EX-99.2
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2015 Executive Officers Base Salaries and Target Bonus Payments
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Exhibit 99.1 |
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2015 Section 16 Officer/FLT Member Corporate Incentive Compensation Plan (CICP)
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Employee Name: Fname Lname |
Division: Division |
General Purpose & Structure
This Section 16 Officer/FLT Member Corporate Incentive Compensation Plan ("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 an annual 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.
CICP STOCK INCENTIVE
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 2015 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 annual Target Incentive Opportunity by 85% of the closing price of Pega stock price on the date of grant. The 15% discount to the closing price, which is used to calculate the number of RSUs granted, provides an additional incentive to employees to acquire Pegasystems stock.
If elected, the equity grant will occur during the open trading period following the release of the 2014 financial results (expected to be March 2015) and will vest 100% on the Plan payout date of the following year (expected to be March 2016) for all participants.
Vesting of the RSU equity grant is issued under the 2004 Long Term Incentive Plan, as amended, and conditioned upon achieving the 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, generally as evidenced by a current performance evaluation of "Meets Expectation" or higher. Vesting is also conditioned on being in a CICP eligible role for the entire year. If you elect the CICP Stock Incentive deferral and then switch to a non-eligible CICP role during the year, the equity grant will expire and any CICP payment will be pro-rated based on the time you were in a CICP eligible role and you will be eligible for cash payment subject to the terms of the Plan. Employees in the US, UK, Canada, Australia, Germany, the Netherlands, Spain, Hong Kong, Singapore, India, Japan, Poland, Italy, and Turkey 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 2015, the closing price of Pega common stock is $20 per share. That employee would receive a grant for 294 RSUs, which will be subject to vest 100% on the Plan payout date in 2016.
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Annual Target Incentive Opportunity |
$10,000 |
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50% Deferred Equity Component |
$ 5,000 |
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Grant Date Closing Price of Pega Common Stock |
$20.00 |
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15% Discount for RSU calculation |
$17.00 (85% of the $20 grant date closing stock price) |
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Number of RSUs Granted |
294 ($5,000 divided by $17.00) |
IMPORTANT: In order to receive a portion of your payment in RSUs, you must make your electronic election no later than February 27, 2015.
Pay Out
Cash payout for this Plan shall be made on or before March 15th for US employees and March 31st 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 1st of the Plan year will need the Chief Executive Officer's approval to participate.
A participant whose position changes such that they become eligible for a different incentive Plan or target percentage will go onto the new plan as of the first day of the next month, on a pro-rated basis. Participants on unpaid leave during the year may be eligible for a pro-rated CICP payment based on the time actively worked during the plan year.
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) Be an employee in good standing, which may include, but not be limited to, not being on a performance plan, performance or disciplinary probation, suspension, notice period or severance period.
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.
Unless you notify compensation@pega.com by February 27, 2015, you are affirming that you have read, understand, and accept the terms of your Plan. 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. You 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 an annual Target Incentive Opportunity of 0 to Plan_TI% calculated on actual, paid base salary for the year.
Please print a copy of this 2015 CICP Plan document for your records.
EXHIBIT 99.2
Pegasystems Inc.
2015 Executive Officers Base Salaries and Target Bonus Percentages
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Name |
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Title |
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Base Salary |
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Target Incentive Plan Bonus* |
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Alan Trefler |
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Chief Executive Officer and Chairman |
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$440,000 |
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90% |
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Rafeal Brown** |
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Chief Administrative Officer, Chief Financial Officer and Senior Vice President |
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$390,000 |
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50% |
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Douglas Kra** |
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Senior Vice President, Global Customer Success |
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$330,000 |
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30% |
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Michael Pyle** |
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Senior Vice President, Engineering |
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$335,000 |
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50% |
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Leon Trefler** |
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Senior Vice President, Global Customer Success |
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$330,000 |
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30%
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* |
Percentage of 2015 base salary |
**In 2015, Rafeal Brown will also be eligible for up to $15,000 in additional incentive compensation for the achievement of operational objectives to be set by our Chief Executive Officer.
**In 2015, Douglas Kra 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 target sales commissions of $140,000.
**In 2015, 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 2015, 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 target sales commissions of $200,000.