DEF 14A of Certara, Inc.
Filed Apr 10, 2024 · FY20230001104659-24-045501
DIRECTOR NOMINEES
DIRECTOR NOMINEES The Board has nominated the following as three Class I director candidates: James Cashman III Nancy Killefer David Spaight The director candidates have been nominated for a three-year term to expire at the 2027 annual meeting of the Company’s stockholders and once their successors have been duly elected and qualified. Detailed information about each nominee’s background, skills and qualifications can be found under “Proposal 1 — Election of Directors.”
Are all of the Company’s directors standing for election at the 2024 Annual Meeting?
Are all of the Company’s directors standing for election at the 2024 Annual Meeting? No, only our Class I directors are standing for re-election at this time. Our Class II directors will stand for election in 2025, and our Class III directors will stand for election in 2026.
OUR BOARD OF DIRECTORS
OUR BOARD OF DIRECTORS Our Amended and Restated Certificate of Incorporation provides that, subject to the right of holders of any series of preferred stock, the Board will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving staggered three-year terms, with only one class of directors being elected at each annual meeting of stockholders.
OUR BOARD OF DIRECTORS
| CLASS | DIRECTORS | TERM EXPIRES | | I | J. Cashman | 2024 | | | N. Killefer | 2024 | | | D. Spaight | 2024 | | II | E. Broshy | 2025 | | | C. Collins | 2025 | | | M. Walsh | 2025 | | III | R. Crane | 2026 | | | W. Feehery | 2026 | | | S. McLean | 2026 |
OUR BOARD OF DIRECTORS
Our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws provide that, subject to any rights of holders of preferred stock to elect additional directors under specified circumstances, the number of directors will be fixed from time to time exclusively pursuant to a resolution adopted by the Board. The number of directors currently fixed by the Board is nine. On November 3, 2022, EQT Avatar Parent, L.P. (“EQT”) entered into an agreement to sell its shares of the Company’s common stock to Arsenal Saturn Holdings LP, an affiliate of Arsenal Capital Partners (together with certain of its affiliated investment funds, “Arsenal”). In connection with the EQT/Arsenal transaction, the Company and Arsenal entered into a stockholder agreement (the “Stockholder Agreement”), dated November 3, 2022. Pursuant to the Stockholder Agreement, Arsenal has the right to nominate two directors to our Board until the latest of: (i) from the closing date of the EQT/Arsenal transaction until the two-year anniversary thereof, for so long as Arsenal continues to own 100% of the shares Arsenal purchased in connection with the transaction, (ii) after the two-year anniversary of the closing date of the transaction, for so long as Arsenal beneficially owns at least 12% of the total number of Adjusted Shares Outstanding (as defined in and calculated by the Stockholders Agreement) and (iii) from the closing date of the transaction until the five-year anniversary thereof, for so long as Arsenal continues to own 100% of the shares Arsenal purchased in connection with the transaction, as such number of shares may be adjusted from time to time for any reorganization, recapitalization, stock dividend, stock split, reverse stock split or other similar changes in the Company’s capitalization. Arsenal’s right to nominate two directors to our Board will be reduced to the right to nominate one director to our Board if Arsenal beneficially owns at least 6%, but less than 12%, of the total number of adjusted shares outstanding. Any individual designated by Arsenal to be nominated to our Board (any individual so designated, an “Arsenal Director Nominee”) must be (i) a full-time senior employee of Arsenal Capital Management LP or its affiliates, such as an investment partner, a senior partner or an operating partner, or (ii) another individual that Arsenal reasonably believes is appropriately qualified to serve as a director on the board of a public company, provided that the designation of any individual pursuant to clause (ii) is subject to the consent of the Board (excluding any Arsenal Director Nominees), acting in its sole discretion. See “Certain Relationships and Related Party Transactions — Stockholders Agreement.” Pursuant to the Stockholders Agreement, for so long as Arsenal has the right to nominate any persons to our Board, we must include the Arsenal nominee on the slate that is included in our proxy statements relating to the election of directors of the class to which such persons belong and provide the highest level of support for the election of each such person as we provide to any other individual standing for election as a director, and we must include on the slate that is included in our proxy statement relating to the election of directors only the Arsenal Director Nominee and the other nominees (if any) nominated by the Nominating and Corporate Governance Committee of our Board. In addition, Arsenal will agree with the Company to vote in favor of the Company slate that is included in our proxy statement. As long as the Board is classified, the Arsenal Director Nominees shall be Class I and Class III directors, as designated by Arsenal. In the event that an Arsenal Director Nominee ceases to serve as a director for any reason (other than the failure of our stockholders to elect such individual as a director), Arsenal is entitled to appoint another nominee to fill the resulting vacancy. Following the closing of the EQT/Arsenal transaction, Arsenal designated, and the Company appointed Stephen McLean to continue to serve on the Board as a Class III director, and David Spaight to serve on the Board as a Class I director.
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION The following table describes the components of our non-management directors’ compensation program in effect during the fiscal year ended December 31, 2023, which were established based on peer benchmarking:
DIRECTOR COMPENSATION
| COMPENSATION ELEMENT(1) | COMPENSATION(3) | | Annual Cash Retainer Fee for the Chairman | $125,000 | | Annual Cash Retainer for Each Other Non-Employee Director (pro-rated for any partial year of services) | $50,000 | | Annual Equity Retainer(2) | $200,000 | | ANNUAL CASH RETAINER FEES: | | | Audit Committee (Chair) | $20,000 | | Audit Committee (Member) | $10,000 | | Compensation Committee (Chair) | $15,000 | | Compensation Committee (Member) | $7,500 | | Nominating and Corporate Governance Committee (Chair) | $10,000 | | Nominating and Corporate Governance Committee (Member) | $5,000 |
DIRECTOR COMPENSATION
(1) A director who is also a Company employee receives no compensation for serving as a director. (2) Each non-employee director (other than Messrs. McLean and Spaight) receives an annual grant of RSUs, which, for 2023, was determined by dividing the approved value of the award by the volume-weighted average stock price for the Company (the “VWAP”) for the 60 trading days prior to the date of the annual meeting. The RSUs will vest on the earlier of the one-year anniversary of the date of grant or the date of the Company’s next annual stockholder meeting at which time they are settled in stock or, at the Compensation Committee’s election, in cash. (3) The director compensation plan permits any non-employee director to waive all or a portion of their compensation under such plan from time to time upon notice to the Board. Messrs. McLean and Spaight have elected to waive their compensation under such plan.
Director Compensation Table
Director Compensation Table The table below summarizes the total compensation paid to or earned by each person who is not an employee of us or any of our parents or subsidiaries during the fiscal year ended December 31, 2023. Directors who are employees of the Company receive no compensation for their service as directors and are not identified in the table below.
Director Compensation Table
| Name | Fees Earned or Paid In Cash ($)(1) | Stock Awards ($)(2)(3) | Total ($) | | James Cashman III | 137,500 | 182,010 | 319,510 | | Eran Broshy | 70,000 | 182,010 | 252,010 | | Cynthia Collins | 60,000 | 182,010 | 242.010 | | Rosemary Crane | 57,500 | 182,010 | 239,510 | | Nancy Killefer | 70,000 | 182,010 | 252,010 | | Stephen McLean(4) | — | — | — | | David Spaight(4) | — | — | — | | Matthew Walsh | 70,000 | 182,010 | 252,010 |
Director Compensation Table
(1) These amounts represent retainer, committee, Board, and independent director meeting fees earned during the fiscal year ended December 31, 2023. The amounts reported do not include any reasonable out-of-pocket expenses incurred in attending meetings for which the Company reimburses each non-management director. (2) This column reflects the grant date fair value of 8,663 RSUs granted on May 23, 2023, to Messrs. Cashman, Broshy, Walsh, Ms. Collins, Ms. Crane and Ms. Killefer as calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718. All the grants were determined by dividing $200,000 by the VWAP for the Company for the 60 trading days prior to the date of the grant. The RSUs will vest on the earlier of the one-year anniversary of the date of grant or the date of the Company’s next annual stockholder meeting at which time they are settled in stock or, at the Compensation Committee’s election in cash. The assumptions used by the Company in calculating these amounts are set forth in Note 13 to our financial statements included in our 2023 Form 10-K. The total number of RSUs held by each non-employee director as of December 31, 2023 is 8,663 units. Under the Director Deferral Plan, Mr. Cashman has elected to defer his 2021 annual equity award in the amount of 7,059 RSUs until January 2, 2024. Ms. Crane has elected to defer her 2023 annual equity award in the amount of 8,663 RSUs until January 2, 2025 and her 2022 annual equity award in the amount of 9,324 RSUs until she leaves the Board. Messrs. McLean and Spaight and are employees of an Institutional Stockholders (as defined in the Stockholders Agreement, dated as of November 3, 2022) and do not receive a cash and or a stock retainer to serve as a director of the Company. Our business and affairs are managed under the direction of our Board. Our Board currently consists of nine directors. Our Amended and Restated Certificate of Incorporation provides that, subject to the right of holders of any series of preferred stock, our Board will be divided into three classes of directors, with the classes to be as nearly equal in number as possible, and with the directors serving staggered three-year terms, with only one class of directors being elected at each annual meeting of stockholders. Unless otherwise specified in the proxy, the shares voted pursuant thereto will be cast for each of Mr. Cashman, Ms. Killefer and Mr. Spaight. If, for any reason, at the time of election any of the nominees named should decline or be unable to accept his or her nomination or election, it is intended that such proxy will be voted for a substitute nominee, who would be recommended by our Board. Our Board, however, has no reason to believe that any of the nominees will be unable to serve as a director. Our Amended and Restated Bylaws provide for a plurality voting standard for the election of directors. Under this voting standard, once a quorum has been established, the nominees who receive the highest number of votes are elected as directors up to the maximum number of directors to be elected at the meeting. This means that the three nominees receiving the highest number of votes at the 2024 Annual Meeting will be elected, even if these votes do not constitute a majority of the votes cast. Only votes cast “For” a nominee will be counted in the election of directors. Votes that are “Withheld” with respect to one or more nominees will result in those nominees receiving fewer votes but will not count as a vote against the nominees.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING We provide below biographical information for each director nominee, including key experience, qualifications and skills such director nominee contributes to the Board in light of our current needs and business priorities.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
| The Board unanimously recommends that you vote FOR each of the following Class I candidates: |
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
| JAMES CASHMAN III Age 70 | | | Director Since: Chairman of the Board since December 1, 2021 and a director since May 2018. Board Committees: ▪ Compensation Committee ▪ Nominating and Corporate Governance Committee | Current Public Company Directorships: ▪ None Experience and Career Highlights: Mr. Cashman served as Chairman of the board of directors of ANSYS Inc., an engineering simulation software company, from January 2017 until his retirement in April 2019. Prior to becoming Chairman of ANSYS, he was the Chief Executive Officer and a director of ANSYS from February 2000 to December 2016. Mr. Cashman also previously served on the board of directors of National Instruments Corp., a producer of automated test equipment and virtual instrumentation software. Qualifications: We believe Mr. Cashman contributes to our Board of Directors his expertise in the areas of technical, financial, operations and sales management. |
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
| NANCY KILLEFER Age 70 | | | Director Since: August 2021 Board Committees: ▪ Compensation Committee (Chair) ▪ Nominating and Corporate Governance Committee | Current Public Company Directorships: ▪ Cardinal Health, Inc., a distributor of pharmaceuticals, a global manufacturer and distributor of medical and laboratory products, and a provider of performance and data solutions for healthcare facilities. ▪ Meta Platforms, Inc. (f/k/a Facebook, Inc.), builds technologies that help people connect, find communities and grow businesses. Experience and Career Highlights: Ms. Killefer spent more than 15 years as a Senior Partner at McKinsey & Company. During that time, she was Director of the Washington, DC office and Managing Partner of the Public Sector Practice. Ms. Killefer left McKinsey & Company for three years in 1997 to serve as Assistant Secretary for Management, Chief Financial Officer, and Chief Operating Officer of the United States Department of the Treasury. Qualifications: Ms. Killefer is qualified to serve on our Board of Directors due to her extensive leadership and consulting expertise, and her public-company board experience. |
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
| DAVID SPAIGHT Age 65 | | | Director Since: December 2022 Board Committees: ▪ Compensation Committee | Current Public Company Directorships: None. Experience and Career Highlights: Experience and Career Highlights: Mr. Spaight has served as an Operating Partner at Arsenal Capital, a private equity firm, since 2016. He currently serves as Executive Chairman of the board of directors of two private companies, including CellCarta, a provider of specialized research services in the development of immunology and oncology focused drugs; and OncoHealth, Inc., a provider of oncology utilization management and cancer care support services. Mr. Spaight also served as Executive Chairman of the board of directors of BioIVT, LLP, a provider of biospecimens for drug discovery, and Executive Chairman of Accumen, a provider 3D medical image post-processing and technology enabled solutions to optimize clinical laboratories and imaging departments. He previously served as Chairman and CEO of WIL Research, a global contract research organization (CRO), providing preclinical services to the biopharmaceutical industry; President of MDS Pharma Services, a global CRO providing services from early discovery through late-stage clinical trials; and senior executive roles with Fisher Scientific and PerkinElmer. Mr. Spaight also served as Chairman of the Association of Clinical Research Organizations (ACRO) and was a member of the ACRO Board for four years. Qualifications: Mr. Spaight contributes to our Board of Directors his insight into the life sciences industry, gained from over 35 years in leadership positions including multiple executive chairman roles. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2025 ANNUAL MEETING
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2025 ANNUAL MEETING
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2025 ANNUAL MEETING
| ERAN BROSHY Age 65 | | | Director Since: July 2022 Board Committees: ▪ Audit Committee ▪ Nominating and Corporate Governance Committee (Chair) | Current Public Company Directorships: ▪ Theravance Biopharma, Inc., a biopharmaceutical company primarily focused on the discovery, development and commercialization of respiratory medicines. Experience and Career Highlights: Over the past decade, Mr. Broshy has served as a board director on multiple healthcare boards, and additionally has partnered with select private equity firms (including Providence Equity, Linden, Court Square, Tailwind, and Nordic Capital) to support their healthcare investment efforts. Mr. Broshy previously served for over a decade as the chief executive officer (until 2008) and chairman of the board of directors (until 2010) of inVentiv Health, Inc., a privately held company (and until August 2010, a Nasdaq listed company) that delivers a broad range of clinical and commercialization services to pharmaceutical and life sciences companies globally. Prior to joining inVentiv, Mr. Broshy was a management consultant with The Boston Consulting Group (BCG) for 15 years, including as the partner responsible for BCG’s healthcare practice across the Americas. He also served as president and chief executive officer of Coelacanth Corporation, a privately held biotechnology company. Mr. Broshy currently serves on the board of Theravance Biopharma (Nasdaq: TBPH) and of Thirty Madison, a privately held healthcare company. Within the previous five years Mr. Broshy has also served on the board of directors of Magellan Health and as chairman of the board of directors of Clario (previously ERT) and of DermaRite, both privately held healthcare companies. He currently also serves as a member of the Corporation of the Massachusetts Institute of Technology (“MIT”), as chairman of the American Friends of the Open University of Israel, and on the board of governors of the American Jewish Committee. Qualifications: Mr. Broshy’s contributes his insight in the healthcare industry as well as through his finance and capital markets experience. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2025 ANNUAL MEETING
| CYNTHIA COLLINS Age 65 | | | Director Since: August 2021 Board Committees: ▪ Audit Committee | Current Public Company Directorships: ▪ DermTech, Inc., a molecular diagnostic company. ▪ Poseida Therapeutics, Inc., a cell and gene therapy company. Experience and Career Highlights: Ms. Collins has been Chief Executive Officer for a number of companies in the pharmaceutical and biotechnology industry. Most recently, she was the Chief Executive Officer and a member of the board of directors of Editas Medicine, Inc., a gene-editing biotechnology company. Prior to that, she was the Chief Executive Officer of Human Longevity, Inc., Gen Vee and Sequoia Pharmaceuticals. Ms. Collins has also held senior management positions at GE Healthcare, Beckman Coulter, and Baxter Healthcare. Ms. Collins also serves on the board of Nutcracker Therapeutics, Inc., a privately held company. Qualifications: Ms. Collins is qualified to serve on our Board of Directors due to her extensive experience in the pharmaceutical and biotechnology industry, her leadership and management experience, and her service as a director of other biotechnology companies. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2025 ANNUAL MEETING
| MATTHEW WALSH Age 57 | | | Director Since: August 2020 Board Committees: ▪ Audit Committee (Chair) | Current Public Company Directorships: None. Experience and Career Highlights: Mr. Walsh has served as Executive Vice President and Chief Financial Officer of Organon & Co., a global pharmaceutical business since June 2020. Prior to Organon, he served as Executive Vice President and Chief Financial Officer of Allergan, a publicly traded, global biopharmaceutical company, from 2018 until the sale of the company to Abbvie in 2020. From 2008 to 2018, Mr. Walsh served as Chief Financial Officer of Catalent, a global provider of delivery technologies, development, and manufacturing solutions to the life sciences industry. Before Catalent, from 2006 to 2008, he was President, Chief Financial Officer and Acting Chief Executive Officer at Escala Group, Inc. Qualifications: Mr. Walsh contributes deep experience in the pharmaceutical industry, as well as financial and accounting expertise, to our Board of Directors. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2026 ANNUAL MEETING
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2026 ANNUAL MEETING
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2026 ANNUAL MEETING
| ROSEMARY CRANE Age 64 | | | Director Since: 2022 Board Committees: ▪ Compensation Committee | Current Public Company Directorships: ▪ Tarsus Pharmaceuticals, Inc., a biopharmaceuticals company. ▪ Teva Pharmaceutical Industries Limited, a provider of generics and biopharmaceuticals Experience and Career Highlights: Ms. Crane served as President and Chief Executive Officer of MELA Sciences, Inc. from 2013 to 2014. She was Head of Commercialization and a partner at Appletree Partners from 2011 to 2013. From 2008 to 2011, she served as President and Chief Executive Officer of Epocrates Inc. Ms. Crane served in various senior executive positions at Johnson & Johnson from 2002 to 2008, including as Group Chairman, OTC & Nutritional Group from 2006 to 2008, as Group Chairman, Consumer, Specialty Pharmaceuticals and Nutritionals from 2004 to 2006, and as Executive Vice President of Global Marketing for the Pharmaceutical Group from 2002 to 2004. Prior to that, she held various positions at Bristol-Myers Squibb from 1982 to 2002, including as President of U.S. Primary Care and as President of Global Marketing and Consumer Products. Ms. Crane has served on the board of directors of Catalent Pharma Solutions, Inc. from 2018 to January 2024. From 2015 to 2019, she served as Vice Chairman of the Board of Zealand Pharma A/S and from 2017 to March 2019, she served on the board of directors of Edge Therapeutics. Ms. Crane received an M.B.A. from Kent State University and a B.A. in communications and English from the State University of New York. Qualifications: Ms. Crane is qualified to serve on our Board of Directors due to her extensive experience in the pharmaceutical industry and her public-company board experience. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2026 ANNUAL MEETING
| WILLIAM FEEHERY, PH.D. Age 54 | | | Director Since: 2019 Board Committees: None | Current Public Company Directorships: ▪ West Pharmaceutical Services, Inc., a leading global manufacturer in the design and production of technologically advanced, high-quality, integrated containment and delivery systems for injectable drugs and healthcare products. Experience and Career Highlights: Dr. Feehery has served as Chief Executive Officer of Certara since June 2019. He joined Certara from DuPont, where he served since 2013 as President of Industrial Biosciences, a global biotechnology business that experienced significant growth and profitability under his leadership. He started at DuPont in 2002 and served in a number of operating roles in high-growth businesses, and he also has previous experience in venture capital and as a consultant for the Boston Consulting Group. He holds both a Ph.D. in chemical engineering and an MBA from MIT, was a Churchill Scholar at Cambridge University and received his BSE in chemical engineering from the University of Pennsylvania. His doctorate, awarded while he was the recipient of a National Science Foundation Fellowship, involved developing software and mathematical methods for modeling dynamic systems. Dr. Feehery also serves as a trustee of the Winston Churchill Foundation of the United States. Qualifications: Dr. Feehery brings to our Board of Directors extensive experience managing global technology businesses, which together with his experience leading the Company as our Chief Executive Officer, makes him well qualified to serve as one of our Directors. |
CONTINUING DIRECTORS IN OFFICE FOR A TERM EXPIRING AT THE 2026 ANNUAL MEETING
| STEPHEN MCLEAN Age 66 | | | Director Since: 2013 Board Committees: ▪ Nominating and Corporate Governance Committee | Current Public Company Directorships: None Experience and Career Highlights: Mr. McLean has served as a Partner at Arsenal Capital Partners, a private equity firm, since 2010. He currently serves on the board of directors of a number of private companies, including WCG Clinical, a clinical services organization to the pharmaceutical industry; CellCarta, a provider of specialized research services in the development of immunology and oncology focused drugs; Accumen, Inc., a provider of technology-enabled solutions to optimize hospital clinical laboratories and imaging departments. Mr. McLean previously served as director of BioIVT, a provider of biospecimens for drug discovery; Lumanity, a provider of services to generate and communicate the value and effectiveness of drugs; TractManager Inc., a provider of contract and spend optimization solutions for hospitals and payers, and MaxHealth a value based provider of medical services in Florida. Prior to Arsenal, Mr. McLean was a co-founder of Merrill Lynch Capital Partners (and successor private equity funds) in 1984. He also has been a co-founder of several private life science and medical information technology companies. Mr. McLean is a co-founder and Chairman of the International Biomedical Research Alliance, a non-profit organization dedicated to training biomedical researchers in collaboration with the National Institutes of Health, Oxford and Cambridge Universities. Qualifications: Mr. McLean contributes to our Board of Directors his insight into the healthcare industry, gained from founding, investing in, and serving as a director of multiple healthcare companies as well as his knowledge of finance. |
EXECUTIVE COMPENSATION OBJECTIVES AND PHILOSOPHY
| COMPONENT | RATIONALE | | Base Salary | Provides a fixed and predictable level of compensation to our NEOs. | | Annual Incentive Bonuses | Provides a variable level of cash compensation, in addition to base salary, which is tied directly to annual financial goals, for both the overall business and specific business units, and individual performance. | | Long-term Equity Compensation | Provides long-term stock unit awards that provide time-based and/or performance-based vesting | | Benefits and Perquisites | Ensures both broad-based employee benefits, intended to attract and retain employees, as well as provide retirement, health and welfare security, with limited perquisites. | | Severance and other benefits payable upon qualifying terminations of employment or a change of control | Encourages the continued attention and dedication of our NEOs and provides reasonable individual security to enable our NEOs to focus on our best interests, particularly when considering strategic alternatives. |
Role of the Compensation Consultant
Role of the Compensation Consultant Korn Ferry provides guidance with respect to the ongoing review of our executive compensation programs, including peer group development, benchmarking executive compensation and incentive (short and long-term) design. In connection with this appointment, the Compensation Committee assessed Korn Ferry’s independence and determined that Korn Ferry is independent and that there are no conflicts of interest raised by the work performed by them. Korn Ferry assisted the Compensation Committee in developing a peer group of the following 15 companies, which were selected using relevant financial metrics, including average market capitalization, revenue, market capitalization to revenue ratio, EBITDA, as well as other factors, such as number of employees, industry, and business segment. Our peer group consists of the following:
Role of the Compensation Consultant
| ▪ AbCellera Biologics Inc. ▪ Accolade, Inc. ▪ Alkermes plc ▪ Altair Engineering Inc. ▪ Computer Programs and Systems, Inc. ▪ Health Catalyst, Inc. ▪ HealthEquity, Inc. ▪ Medpace Holdings, Inc. | ▪ Model N, Inc. ▪ NextGen Healthcare, Inc. ▪ Omnicell, Inc. ▪ Qualys, Inc. ▪ Repligen Corporation ▪ Schrödinger, Inc. ▪ SPS Commerce, Inc. |
Role of the Compensation Consultant
Our peer group was selected to represent companies in the software, life sciences tools and services, and health care technology industries that are within an appropriate size range as compared to us, with relatively comparable financial and employee metrics.
Annual Incentive Bonus Plan
Annual Incentive Bonus Plan The Annual Incentive Bonus Plan (“AIB Plan”) is designed to motivate our NEOs to achieve short-term performance goals and tie a portion of their annual compensation to the performance of the Company for that year. Each NEO is eligible for an annual bonus award under our annual cash-based AIB Plan. For fiscal year 2023, all our NEOs participated in the AIB Plan. The AIB Plan awards are determined using two principal factors: (i) an individual’s target bonus percentage, which is expressed as a percentage of his or her base salary (“Individual Target”); and (ii) a multiplying factor based on the achievement of certain corporate and divisional goals established by our Compensation Committee at the beginning of each year (“Multiplier”). As expressed formulaically, the bonus amount for each senior executive is determined as follows: Individual Target X Multiplier (which is based on and correlates to the achievement of divisional or corporate goals). The Compensation Committee may then make further adjustments, considering individual performance and any other factors it deems relevant but that are not otherwise captured in the formula. The Individual Target for each NEO is established within each NEOs’ employment agreement and may be adjusted from time to time by the Compensation Committee in connection with such NEO’s promotion or performance. In setting the applicable Individual Target, the Compensation Committee reviews the past performance of each NEO and contributions made to the Company, the annual benchmarking provided by our independent compensation consultant, and the relationship of pay levels to other senior executives at the Company. It then determines a target bonus deemed appropriate to increase focus on performance-based pay, ensure retention, and motivate performance against the Company’s strategic initiatives. As indicated below, certain Individual Targets were either added or increased in 2023 from 2022 to better align with peer company compensation. The Individual Targets under the 2023 and 2022 AIB Plan for our NEOs were as follows:
Annual Incentive Bonus Plan
| Name | 2023 Target Bonus (Expressed as a Percentage of Base Salary) | 2022 Target Bonus (Expressed as a Percentage of Base Salary) | | William F. Feehery | 100 | 75 | | John E. Gallagher III(1) | 50 | — | | Leif E. Pedersen | 55 | 50 | | Patrick F. Smith | 55 | 50 | | Robert P. Aspbury | 55 | 50 | | Former Executive | | | | M. Andrew Schemick(2) | — | — |
Annual Incentive Bonus Plan
(1) Mr. Gallagher was not employed by the Company in 2022. (2) Mr. Schemick resigned as an officer on March 31, 2023 and terminated employment with the Company on June 30, 2023. For 2023, the Compensation Committee selected a combination of adjusted EBITDA and revenue as the key financial metrics for determining the Multiplier portion of the AIB Plan calculation, with adjusted EBITDA achievement contributing 80% relative weight to the Multiplier, and revenue achievement contributing 20% relative weight to the Multiplier. The financial achievement metrics are determined for the overall company, and also determined for each business unit, with each NEO’s Multiplier calculated on some combination of overall Company and/or business unit performance. For Dr. Feehery and Mr. Gallagher, 20% of their Multiplier under the AIB Plan was tied to the achievement of Company-wide financial metrics and 80% was tied to the average financial metrics achievement of each of the divisions within the Company (the “Blended Rate”). For Mr. Pedersen, Dr. Smith and Dr. Aspbury, 20% of their Multiplier was based on Company-wide adjusted financial metrics achievement, and 80% was based on the financial metrics achievement of the respective business unit each such individual leads (the “Division Rate”). These allocations were selected to ensure that Dr. Feehery’s and Mr. Gallagher’s focus was equally distributed across the corporate functions and business units, and the other NEOs were primarily focused on the business units that they lead, while still having an important stake in the overall success of Company. We believe that this encourages collaboration across the business units, as well as building our business in the interest of “one Certara” at the enterprise level. The amounts paid to the NEO participants under the AIB Plan were calculated by multiplying each NEO participant’s Individual Target by the Multiplier tied to either the Blended Rate or Division Rate. For achievement above a threshold level of the adjusted EBITDA and revenue goals, the Multiplier was based on a pre-determined scale (with a range of 50% to 200%), which may be adjusted by the Compensation Committee outside the pre-determined scale to reflect overall individual and Company performance. The Multiplier under the AIB Plan for our NEOs was as follows:
Annual Incentive Bonus Plan
| Named Executive Officer | 2023 Multiplier | | William F. Feehery | 64% | | John E. Gallagher III | 64% | | Leif E. Pedersen | 69% | | Patrick F. Smith | 75% | | Robert P. Aspbury | 101% | | Former Executive | | | M. Andrew Schemick | — |
Annual Incentive Bonus Plan
The following table illustrates the calculation of the bonuses payable to our NEOs under the 2023 AIB Plan:
Annual Incentive Bonus Plan
| Name | 2023 Base Salary ($) | 2023 Target Bonus (%) | Target Bonus Amount ($) | Multiplying Factor (as Adjusted by Compensation Committee) | Total Bonus Paid ($) | | William F. Feehery | 795,675 | 100 | 795,675 | 64% | 509,232 | | John E. Gallagher III | 575,000 | 50 | 287,500 | 64% | 184,000 | | Leif E. Pedersen | 427,193 | 55 | 234,956 | 69% | 162,120 | | Patrick F. Smith | 400,155 | 55 | 220,085 | 75% | 165,064 | | Robert P. Aspbury | 337,649 | 55 | 185,707 | 101% | 187,564 | | Former Executive | | | | | | | M. Andrew Schemick(1) | — | — | — | — | — |
Annual Incentive Bonus Plan
Mr. Schemick was not eligible to participate in the AIB Plan for 2023 as he terminated his employment prior to the bonus payout.
Long-Term Equity Incentive Awards
Long-Term Equity Incentive Awards We believe that successful performance over the long term is aided by the use of equity-based awards, which create an ownership culture among our employees and provides an incentive to contribute to the continued growth and development of our business. Equity-based awards also allow for a portion of our executive compensation to be “at-risk” and directly tied to the performance of our business. The Compensation Committee has adopted a long-term equity structure that annually awards NEOs market-based equity opportunity in the form of time-based RSUs and PSUs. All RSUs and PSUs are settled in shares of common stock. For 2023, 40% of the LTI value granted to NEOs was issued in RSUs, and 60% was issued in PSUs. Fiscal 2023 Grants On April 1, 2023, we granted RSUs and PSUs to each of our NEOs as follows:
Long-Term Equity Incentive Awards
| Name | 2023 Long-Term Incentive Value(1) | Long-Term Incentive as a Percentage of Base Salary | RSUs | PSUs | | William F. Feehery | $6,485,296 | 815% | 99,659 | 149,488 | | John E. Gallagher III | $3,173,290 | 552% | 67,224 | 56,848 | | Leif E. Pedersen | $1,532,907 | 359% | 23,556 | 35,334 | | Patrick F. Smith | $1,840,557 | 460% | 40,010 | 35,334 | | Robert P. Aspbury | $1,532,907 | 454% | 23,556 | 35,334 | | Former Executive | | | | | | M. Andrew Schemick(2) | — | — | — | — |
Long-Term Equity Incentive Awards
(1) The grant date value shown in this column is based on the number of RSUs and PSUs granted multiplied by the closing stock price on the grant date (April 1, 2023). The number of RSUs and PSUs granted on the grant date was determined based on the following dollar values, divided by $22.0753, which is the VWAP for the 60 trading days prior to and including March 29, 2023, which is the date the Compensation Committee authorized the grants: William F. Feehery: $5,500,000; John E. Gallagher III: $2,100,000; Leif E. Pedersen: $1,300,000; Patrick F. Smith: $1,300,000; and Robert P. Asbury: $1,300,000. (2) Mr. Schemick resigned from the Company in June 2023, resulting in the forfeiture of any awards he was granted. The amount of the equity-based awards granted to each NEO was determined by taking into consideration each NEO’s total direct compensation and alignment to our philosophy of at or above market median total for compensation and equity. For specific vesting terms of our equity awards and a description of equity awards made prior to fiscal year 2023, see “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table.” Vesting of Restricted Stock and Restricted Stock Units and During Fiscal Year 2023 As discussed below under “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Pre-IPO Class B Units and Converted Restricted Stock,” prior to our December 2020 IPO (the “IPO”), long-term equity incentive awards were granted to our NEOs under the Company’s prior (2017) equity incentive plan in the form of Class B Profits Interest Units (“Class B Units”), which were 50% time-vesting and 50% performance-vesting. In connection with the IPO, all outstanding Class B Units were converted into shares of restricted stock granted under 2020 Incentive Plan, with the unvested Class B Units being converted into time-based restricted common stock. For all recipients of Class B Units that were converted into time-based restricted common stock that remains unvested, the vesting period is five years (20% per year, with annual cliff vesting) from the date of the original grant. Because the performance vesting portion of the Class B Units was primarily based on the cash-on-cash return on investment of the prior controlling partner of the Company, the timing of which was outside the control of management, the Board and Compensation Committee at the time felt that it was more equitable and incentivizing to tie all post-IPO vesting to continued employment with the Company. As discussed below under “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Post-IPO Awards,” our NEOs were awarded PSUs and RSUs in 2021, 2022, and 2023 under our 2020 Incentive Plan. One-third of the RSUs granted to our NEOs on April 1, 2021, vested on April 1, 2022. One-third of the RSUs granted to our NEOs on April 1, 2021 and 2022, respectively, vested on April 1, 2023. The PSUs granted in 2021, 2022, and 2023 will not be distributed until after the end of the applicable Performance Period (three fiscal years for each plan), but, as of January 1, 2023, each NEO who received a PSU grant in 2021 and 2022 is entitled to two-third of t 2021 “Earned PSUs” (as such term is defined in the PSU Award Agreements), and one-third of the 2022 Earned PSUs, as determined after the end of the respective Performance Period.
Benefits and Perquisites
Benefits and Perquisites While our compensation philosophy focuses on performance-based forms of compensation while providing only minimal executive benefits and perquisites, we provide to all our employees, including our NEOs, broad-based, non-cash compensation, such as employee benefits that are intended to attract and retain employees while providing them with retirement and health and welfare security, which include: ▪ U.S. 401(k) Plan. We maintain a tax-qualified defined contribution 401(k) savings plan (the “401(k) Plan”), in which all our U.S.-based employees, including our U.S.-based NEOs, are eligible to participate. The 401(k) Plan allows participants to contribute up to 100% of their compensation on a pre-tax basis into individual retirement accounts, subject to the maximum annual limits set by the Internal Revenue Service. The 401(k) Plan also allows the Company to make employer matching contributions. The Company has historically made employer matching contributions of up to 50% of our employees’ deferral, limited to the first 6% of each employee’s compensation, except for one division for which we matched 100% of our employees’ deferral up to 6% of compensation. Participants’ contributions to the 401(k) Plan are immediately fully vested. Participants vest in the matching contributions we make to their accounts after four years of service at a rate of 25% per year, except for one division in which they fully vest after three years of service. ▪ U.K. Pension Plan. The Company also operates a Group Personal Pension Plan covering all U.K. employees, including our UK-based NEO, Dr. Aspbury. Employees are auto-enrolled in the plan who are at least 22 years of age and paid more than £10,000 a year, up to the State Pension Age. However, all employees who are between the ages of 16 and 75 can elect to join the plan. The Company contributes an additional 8% of salary for those employees who have registered for the Group Personal Pension Plan, which exceeds their duties under U.K. auto enrolment legislation. ▪ Health and Welfare Benefits. Our U.S.-based employees, including our U.S.-based NEOs, are generally eligible to participate in our health and welfare benefit plans, which offer medical, dental, vision, life, and disability insurance coverage, dependent care flexible spending accounts, and health savings and health reimbursement accounts. We also offer a voluntary legal plan and voluntary disability coverage. ▪ Other Benefits and Perquisites. There are no additional benefits or perquisites offered at this time other than those specifically mentioned in this Compensation Discussion & Analysis. For example, we do not currently sponsor any retiree medical or pension benefit plans, club memberships, automobile allowances, use of corporate aircraft for personal travel, or any other personal benefits. Severance and Change of Control Benefits. We do not have a formal severance policy. However, we do provide severance benefits to our NEOs through their employment agreements in order to offer competitive total compensation packages and be competitive in our executive attraction and retention efforts. Our NEOs’ employment agreements provide for severance payments and benefits upon a qualifying termination of employment (“Qualifying Termination”), which is a termination by the Company without cause or a resignation by the executive for good reason. See “Executive Compensation Tables — Termination and Severance — Potential Payments to NEOs Upon Termination of Employment or Change of Control,” which describes the payments to which each of the NEOs may be entitled under their respective employment agreements. In addition, our equity awards provide for accelerated vesting upon certain termination events and as more fully described below under “Executive Compensation Tables — Termination and Severance — Potential Payments to NEOs Upon Termination of Employment or Change of Control.”
Tax, Accounting, and Regulatory Considerations
Tax, Accounting, and Regulatory Considerations Under the Tax Cuts and Jobs Act, companies may not deduct “performance-based” compensation in excess of $1 million to NEOs under Section 162(m) of the Internal Revenue Code (the “Code”). We consider any tax implications when making decisions about executive compensation, and we may provide compensation that is not fully deductible if it is believed to be in the best long-term interests of our stockholders. We also consider the impact of other regulatory provisions in making executive compensation decisions, including Section 409A of the Code regarding non-qualified deferred compensation, and Section 280G of the Code regarding compensation pursuant to a change in control. Additionally, we follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock :Compensation (“Topic 718”) for our stock-based compensation awards. Topic 718 requires that the cost to be recognized for equity awards made to our employees and Board members is based on the grant date “fair value” of such awards, even though the recipient might never actually realize any value from their awards. We consider the impact of Topic 718 when granting stock-based awards to ensure that the expense resulting from its application is reasonable.
SUMMARY COMPENSATION TABLE
SUMMARY COMPENSATION TABLE The following table provides summary information concerning compensation paid or accrued by us to or on behalf of our CEO, CFO, and each of our three other most highly compensated executive officers who served in such capacities at fiscal year-end, collectively known as our NEOs, for services rendered to us during each of the last three years. Effective March 31, 2023, Mr. Schemick stepped down from his role as CFO of the Company and ceased to be an executive officer. Mr. Schemick’s 2023 fiscal year compensation is included herein because he was employed by the Company as its CFO for a portion of the year.Mr. Gallagher joined the Company on April 1, 2023 as our CFO.
SUMMARY COMPENSATION TABLE
| Name and Principal Position | Year(1) | Salary ($)(2) | Bonus ($)(3) | Equity Awards ($)(4)(5) | Non-Equity Incentive Plan Compensation ($)(6) | All Other Compensation ($)(7) | Total ($) | | William F. Feehery Chief Executive Officer | 2023 | 795,675 | — | 6,485,296 | 509,232 | 19,825 | 7,810,028 | | | 2022 | 795,675 | — | 4,883,430 | 543,048 | 12,172 | 6,234,325 | | | 2021 | 772,500 | — | 4,999,995 | 463,500 | 8,700 | 6,244,695 | | John E. Gallagher III SVP and CFO | 2023 | 431,250 | 435,750 | 3,173,290 | 184,000 | 17,854 | 4,242,144 | | Leif E. Pedersen President, Chief Commercial Officer | 2023 | 427,193 | — | 1,532,907 | 162,120 | 19,800 | 2,142,020 | | | 2022 | 406,850 | — | 1,154,286 | 209,528 | 9,150 | 1,779,814 | | | 2021 | 395,000 | — | 1,300,062 | 31,600 | 7,511 | 1,734,173 | | Patrick F. Smith President, Certara Drug Development Solutions | 2023 | 400,155 | — | 1,840,557 | 165,064 | 16,803 | 2,422,579 | | | 2022 | 381,100 | — | 1,154,286 | 231,328 | 9,150 | 1,775,864 | | Robert P. Aspbury President, Certara Scientific Software | 2023 | 337,649 | — | 1,532,907 | 187,564 | 27,012 | 2,085,132 | | | 2022 | 305,496 | — | 1,154,286 | 185,382 | 27,209 | 1,672,373 | | | 2021 | 314,925 | 32,865 | 1,312,005 | 70,066 | 25,194 | 1,855,055 | | Former Executive | | | | | | | | | M. Andrew Schemick Former CFO | 2023 | 157,625 | — | — | — | 11,883 | 169,508 | | | 2022 | 418,000 | — | 1,775,817 | 190,190 | 9,150 | 2,393,157 | | | 2021 | 400,000 | — | 1,900,025 | 160,000 | 8,700 | 2,468,725 |
SUMMARY COMPENSATION TABLE
(1) Dr. Smith was not an NEO in 2021. Mr. Gallagher was not an NEO in 2022 or 2021. Mr. Schemick stepped down as CFO on March 31, 2023. (2) Mr. Gallagher’s employment commenced on April 1, 2023 and his 2023 salary amount reflects the prorated portion of his annual salary of $575,000. Mr. Schemick stepped down as our CFO on March 31, 2023, and his salary amount reflects the change in his position and resignation. Dr. Aspbury’s 2023 compensation was paid in British pound sterling (GBP). His 2023 salary listed above was derived from converting his monthly salary into U.S. dollars based on the monthly exchange rates during 2023. The monthly exchange rate used for the conversation was 1 U.S. dollar to the following number of GBPs for each of the months from January to December of 2023, respectively: 1.2138; 1.2073; 1.2128; 1.2441, 1.2435; 1.2634; 1.2716; 1.2687; 1.2387; 1.2186; 1.2428; and 1.2703. Dr. Aspbury’s 2022 compensation was paid in British pound sterling (GBP). His 2022 Salary listed above was derived from converting his monthly salary into U.S. dollars based on the monthly exchange rates during 2022. The monthly exchange rate used for the conversation was 1 U.S. dollar to the following number of GBPs for each of the months from January to December of 2022, respectively: 1.3383;1.3391; 1.3230; 1.2957; 1.2441; 1.2350; 1.1996; 1.1982; 1.1340; 1.1282; 1.1753; and 1.2171. Dr. Aspbury’s 2021 compensation was paid in British pound sterling (GBP). His 2021 salary listed above was derived from converting his monthly salary into U.S. dollars based on the monthly exchange rates during 2021. The monthly exchange rate used for the conversation was 1 U.S. dollar to the following number of GBPs for each of the months from January to December of 2021, respectively: 1.3716; 1.3937; 1.3778; 1.3922; 1.4176; 1.3850; 1.3912; 1.3770; 1.3455; 1.3694; 1.3354; and 1.3497. (3) The amounts reported in this column reflects (i) a $200,000 signing bonus paid to Mr. Gallagher upon his joining the Company and a payment of $235,750 which represents an unpaid annual bonus from his previous employer, all or a portion of which may be recouped by the Company based on any future recovery of such unpaid bonus by Mr. Gallagher from his former employer , and (ii) a signing bonus to Dr. Aspbury upon his joining the Company on April 15, 2019, paid in three equal annual installments. (4) The amounts reported in this column for 2023 reflect the aggregate grant date fair value of RSUs and PSUs granted on April 1, 2023. Mr. Gallagher received an additional award of 29,326 RSUs that vest 50% each year over two years. See Note 2 (“Summary of Significant Accounting Policies — (r) Equity Based Compensation”) and Note 13 (“Equity-Based Compensation”) to our audited consolidated financial statements in our 2023 Annual Report for a discussion of the valuation of our equity-based awards. The amounts reported in this column for 2022 reflect the aggregate grant date fair value of RSUs and PSUs granted on April 1, 2022. See Note 2 (“Summary of Significant Accounting Policies — (s) Equity Based Compensation”) and Note 13 (“Equity-Based Compensation”) to our audited consolidated financial statements in our 2022 Annual Report for a discussion of the valuation of our equity-based awards. The amounts reported in this column for 2021 reflect the aggregate grant date fair value of RSUs and PSUs granted on April 1, 2021 (except for Dr. Aspbury, who was awarded 18,315 units on April 1, 2021, and 5,495 units on July 1, 2021. See Note 2 (“Summary of Significant Accounting Policies — (s) Equity Based compensation”) and Note 13 (“Equity-Based Compensation”) to our audited consolidated financial statements in our 2021 Annual Report for a discussion of the valuation of our equity-based awards. (5) The value of the 2023 awards at the grant date (which include 40% RSUs and 60% PSUs) assuming the highest level of performance conditions will be achieved is as follows for: (i) Dr. Feehery: $4,616,694; (ii) Mr. Gallagher: $2,299,054; (iii) Mr. Pedersen: $1,025,758; (iv) Dr. Smith: $1,025,758; (v) Dr. Aspbury: $1,025,758. Mr. Schemick resigned from the Company and his RSU and PSU awards for forfeited. The value of the 2022 awards at the grant date (which include 50% RSUs and 50% PSUs) assuming the highest level of performance conditions will be achieved is as follows: (i) for Dr. Feehery: $5,738,030; (ii) for Mr. Schemick: $2,086,585; (iii) for Mr. Pedersen: $1,356,285; (iv) for Dr. Smith: $1,356,285; and (v) for Dr. Aspbury: $1,356,285. In March 2023, the Committee amended the Plan and the maximum payout will now be 100%. The value of the 2021 awards at the grant date (which include 50% RSUs and 50% PSUs) assuming the highest level of performance conditions will be achieved is as follows: (i) for Dr. Feehery: $7,541,201; (ii) for Mr. Schemick: $2,865,698; (iii) for Mr. Pedersen: $1,960,754; and (iv) for Dr. Aspbury: $1,964,380. Amounts shown reflect annual payments under our AIB Plan earned with respect to the fiscal year covered based on the achievement of financial and strategic performance objectives that were established by our Compensation Committee at the beginning of such fiscal year. See “Compensation Discussion & Analysis — Annual Bonus Opportunities — Annual Bonus Plan” above. The table below shows the components of this column:
SUMMARY COMPENSATION TABLE
| Name | Life Insurance Premiums | 401(k) Plan Match | Executive Disability Premiums | Other | Total | | W. Feehery | $3,022 | $9,900 | $6,903 | — | $19,825 | | J. Gallagher | — | $8,927 | $3,832 | — | $17,854 | | L. Pedersen | — | $9,900 | $5,251 | — | $19,800 | | P. Smith | — | $9,900 | $6,903 | — | $16,803 | | R. Aspbury | — | — | — | $27,012(a) | $27,012 | | Former Executive | | | | | | | M. Schemick | — | $8,841 | $3,042 | — | $11,883 |
SUMMARY COMPENSATION TABLE
(a) Reflects the amount the Company paid towards Dr. Aspbury’s pension in the U.K.
Grants of Plan-Based Awards
Grants of Plan-Based Awards The following table presents information regarding awards granted during fiscal year ended December 31, 2023, to each NEO under the Company’s plans, including possible and future payouts under non-equity incentive plan awards and equity incentive plan awards of RSUs and PSUs.
Grants of Plan-Based Awards
| Name | Approval Date | Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Equity Incentive Plan Awards Payouts Under Equity Incentive Plan Awards | | | Grant Date Fair Value of Stock and Option Awards(1) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | W. Feehery(2) | | | 397,838 | 795,675 | 1,591,350 | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | 74,744 | 149,488 | 298,976 | $4,082,517 | | (4) | 3/29/2023 | 4/1/2023 | | | | | 99,659 | | $2,402,778 | | J. Gallagher III(2) | | | 143,750 | 287,500 | 575,000 | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | 28,424 | 56,848 | 113,696 | $1,552,519 | | (4) | 3/29/2023 | 4/1/2023 | | | | | 37,898 | | $913,721 | | (5) | 3/29/2023 | 4/1/2023 | | | | | 29,326 | | $707,050 | | L. Pedersen(2) | | | 117,487 | 234,956 | 496,912 | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | 17,667 | 35,334 | 70,668 | $964,972 | | (4) | 3/29/2023 | 4/1/2023 | | | | | 23,556 | | $567,935 | | P. Smith(2) | | | 110,043 | 220,085 | 440,171 | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | 17,667 | 35,334 | 70,668 | $964,972 | | (4) | 3/29/2023 | 4/1/2023 | | | | | 23,556 | | $567,935 | | (5) | 10/5/2023 | 10/5/2023 | | | | | 21,454 | | $307,650 | | R. Aspbury(2) | | | 92,853 | 185,707 | 371,414 | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | 17,667 | 35,334 | 70,668 | $964,972 | | (4) | 3/29/2023 | 4/1/2023 | | | | | 23,556 | | $567,935 | | Former Executive | | | | | | | | | | | M. Schemick(6)(2) | | | — | — | — | | | | | | (3) | 3/29/2023 | 4/1/2023 | | | | — | — | — | $— | | (4) | 3/29/2023 | 4/1/2023 | | | | | — | | $— |
Grants of Plan-Based Awards
This column reflects the aggregate grant date fair value of the RSU awards and PSU awards, as applicable, granted to each NEO in the 2023 fiscal year without any reduction for risk of forfeiture as calculated in accordance with Topic 718 as of the date of grant. The grant date fair value of the PSUs is shown at target performance. (2) This row reflects the possible payouts with respect to grants of annual incentive awards under the Company’s AIB Plan for performance in the fiscal year ended December 31, 2023. Each of the NEOs is assigned a target bonus, which is a percentage of the NEO’s base salary as of the end of the fiscal year. The amounts of annual incentive bonus awards actually paid in April 2024 for performance in the 2023 fiscal year are disclosed in the Non-Equity Incentive Plan Compensation column and related footnote thereto of the Summary Compensation Table above. For more information regarding the terms of these annual incentive bonus awards, please see “Compensation Discussion & Analysis — Elements of Our Compensation Program — Annual Bonus Opportunities.” (3) This row reflects the threshold, target, and maximum number of PSUs awarded in 2023. Each PSU award was granted with a target number of units and an actual payment based upon the achievement of performance targets. The PSU grants were made under the 2020 Incentive Plan. The PSUs are determined based on average performance metrics for fiscal years 2023, 2024 and 2025 and will be distributed in early 2026. See “Compensation Discussion & Analysis — Elements of Our Compensation Program — Long-Term Equity Awards — Fiscal 2023 Grants.” (4) This row reflects the number of RSUs awarded in 2023. The RSU grants were made under the 2020 Incentive Plan, vest in three equal installments on April 1, 2024, 2025, and 2026, subject to continued employment requirements, employment agreements, and award terms, as applicable. See “Compensation Discussion & Analysis — Elements of Our Compensation Program — Long-Term Equity Awards — Fiscal 2023 Grants.” (5) Mr. Gallagher received an additional grant of RSUs on April 1, 2023, and Dr. Smith received an additional grant of RSUs on October 5, 2023. (6) Mr. Schemick resigned from the Company in June 2023, resulting in the forfeiture of any awards he was granted.
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
NARRATIVE DISCLOSURE TO SUMMARY COMPENSATION TABLE AND GRANTS OF PLAN-BASED AWARDS TABLE
OUTSTANDING EQUITY AWARDS AT 2023 YEAR END
OUTSTANDING EQUITY AWARDS AT 2023 YEAR END
Outstanding Equity Awards at December 29, 2023
Outstanding Equity Awards at December 29, 2023 The following table provides information regarding outstanding awards made to our NEOs as of 2023 fiscal year end.
Outstanding Equity Awards at December 29, 2023
| | | | Stock Awards | | | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity 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 ($)(1) | | William F. Feehery | 30,400(2) | 534,736 | 203,344(3) | 3,571,544 | | William F. Feehery | | | 350,803(4) | 6,170,625 | | John E. Gallagher III | — | — | 67,224(5) | 1,182,470 | | John E. Gallagher III | | | 56,848(6) | 999,956 | | Leif E. Pederson | 102,448(7) | 1,802,060 | 48,786(8) | 858,146 | | Leif E. Pederson | | | 85,083(9) | 1,496,610 | | Patrick F. Smith | 11,037(10) | 194,141 | 45,733(11) | 804,443 | | Patrick F. Smith | | | 61,273(12) | 1,077,792 | | Robert P. Aspbury | 105,767(13) | 1,860,442 | 48,786(14) | 858,146 | | Robert P, Aspbury | | | 85,083(15) | 1,496,610 | | Former Executive | | | | | | M. Andrew Schemick(19) | 117,259(16) | 2,062,586 | 44,546(17) | 783,564 | | M. Andrew Schemick(19) | | | 83,614(18) | 1,470,770 |
Outstanding Equity Awards at December 29, 2023
(1) Calculated using the closing market price of common stock on the Nasdaq on December 28, 2023, of $17.59 per share. (2) With respect to Dr. Feehery, the amount in this column consists of 30,400 shares of restricted stock (from an original award of 182,368 shares). The restricted stock was granted on August 31, 2020, and vests monthly (3,800 shares) on the last day of each month. This award vests at 25% after the first year, and then at 1.04% per month for the next three years. (3) With respect to Dr. Feehery, the number in this column consists of (i) 99,659 RSUs granted on April 1, 2023; (ii) 73,160 RSUs (from an initial award of 109,740 RSUs that were granted on April 1, 2022); and (iii) 30,525 RSUs (from an initial award of 91,575 RSUs that were granted on April 1, 2021). On April 1, 2024, the remaining one-third of the April 1, 2021 RSU award is scheduled to vest and settle. On April 1, 2024, and April 1, 2025, the remaining two-thirds of the April 1, 2022 RSU award are scheduled to vest and settle. The April 1, 2023, RSU award will vest over three years, one year after the grant date. The number in this column consists of (i) 149,488 target PSUs granted on April 1, 2023; (ii) 109,740 target PSUs granted on April 1, 2022; and (iii) 91,575 target PSUs issued on April 1, 2021. The target PSUs depend on the achievement of certain performance metrics that were set beforehand. If the performance metrics for the grants on April 1, 2023, April 1, 2022, and April 1, 2021 are achieved, the target PSUs are expected to be paid out in 2024, 2025, and 2026, respectively. Each payout is subject to the conditions of the award and the requirement of continuous employment. (5) With respect to Mr. Gallagher, the number in this column consists of (i) 29,326 RSUs and (ii) 37,898 RSUs, both granted on April 1, 2023. The April 1, 2023, grants of (i) 29,326 RSUs will vest 50% over two years, one year after the grant date, and (ii) 37,898 RSUs will vest over three years, one year after the grant date. (6) The number in this column consists of 56,848 target PSUs granted on April 1, 2023. If the performance measures for the April 1, 2023, grant are met, the target PSUs are expected to be paid out in 2026. Each vesting is subject to the terms of the award and the requirements for continuing employment. (7) With respect to Mr. Pedersen, the number in this column consists of 102,448 shares of restricted stock (from an initial award of 256,118 shares). The restricted stock was granted on September 9, 2020, and 51,224 shares will vest annually on each of September 9, 2024 and 2025. The award vests over a period of five equal payments. (8) With respect to Mr. Pederson, the number in this column consists of (i) 23,556 RSUs granted on April 1, 2023; (ii) 17,293 RSUs (from an initial award of 25,939 RSUs that were granted on April 1, 2022); and (iii) 7,937 RSUs (from an initial award of 23,810 RSUs that were granted on April 1, 2021). On April 1, 2024, the remaining one-third of the April 1, 2021, RSU award is scheduled to vest and settle. On April 1, 2024 and April 1, 2025, the remaining two-thirds of the April 1, 2022 RSU award are scheduled to vest and settle. The April 1, 2023, RSU award will vest over three years, one year after the grant date. (9) The number in this column consists of (i) 35,334 target PSUs granted on April 1, 2023; (ii) 25,939 target PSUs granted on April 1, 2022; and 23,810 target PSUs issued on April 1, 2021. The target PSUs depend on the achievement of certain performance metrics that were set beforehand. If the performance metrics for the grants on April 1, 2023, April 1, 2022, and April 1, 2021 are achieved, the target PSUs are expected to be paid out in 2024, 2025, and 2026, respectively. Each payout is subject to the conditions of the award and the requirement of continuous employment. (10) With respect to Dr. Smith, the number in this column consists of 11,037 shares of restricted stock (from an initial award of 44,147 shares of restricted stock). The restricted stock was granted on April 16, 2019, and 11,037 shares will vest annually on April 16, 2024. The award vests over a period of five equal payments. (11) With respect to Dr. Smith, the number in this column consists of (i) 21,454 RSUs granted on October 5, 2023; (ii) 23,556 RSUs granted on April 1, 2023; (iii) 17,293 RSUs (from an initial award of 25,939 RSUs that were granted on April 1, 2022); and (iii) 4,884 RSUs (from an initial award of 14,652 RSUs that were granted on April 1, 2021). On April 1, 2024, the remaining one-third of the April 1, 2021 RSU award is scheduled to vest and settle. On April 1, 2024, and April 1, 2025, the remaining two-thirds of the April 1, 2022 RSU award are scheduled to vest and settle. The April 1, 2023, RSU award will vest over three years, one year after the grant date. (12) The number in this column consists of (i) 35,334 target PSUs granted on April 1, 2023, and (ii) 25,939 target PSUs granted on April 1, 2022. The target PSUs depend on the achievement of certain performance metrics that were set beforehand. If the performance metrics for the grants on April 1, 2022, and April 1, 2021 are achieved, the target PSUs are expected to be paid out in 2024, 2025, and 2026, respectively. Each payout is subject to the conditions of the award and the requirement of continuous employment. (13) With respect to Dr. Aspbury, the number in this column consists of (i) 22,074 shares of restricted stock (from an initial award of 88,294 shares granted on April 15, 2019); (ii) 62,138 shares of restricted stock (from an initial award of 155,324 granted on August 31, 2020), and (iii) 21,555 shares of restricted stock (from an original award of 86,210 shares granted on November 8, 2019). The restricted stock vests as follows: (i) 22,074 shares will vest annually on April 15, 2024; (ii) 31,069 shares will vest annually on each of August 31, 2024 and 2025; and (iii) 21,555 shares will vest annually on November 8, 2024. The awards vest over a period of five equal payments. With respect to Dr. Aspbury, the number in this column consists of (i) 23,556 RSUs granted on April 1, 2023; (ii) 17,293 RSUs (from an initial award of 25,939 RSUs that were granted on April 1, 2022); (iii); 6,105 RSUs granted on April 1, 2021 (from an original award of 18,315 RSUs); and 1,832 RSUs granted on July 1, 2021 (from an initial award of 5,495 RSUs). On April 1, 2024, the remaining one-third of the April 1, 2021 RSU award is scheduled to vest and settle. On July 1, 2024, the remaining one-third of the July 1, 2021 RSU award is scheduled to vest and settle. On April 1, 2024, and April 1, 2025, the remaining two-thirds of the April 1, 2022 RSU award are scheduled to vest and settle. The April 1, 2023, RSU award will vest over three years, one year after the grant date. (15) The number in this column consists of (i) 35,334 target PSUs granted on April 1, 2023; (ii) 25,939 target PSUs granted on April 1, 2022; and (iii) 18,315 target PSUs granted on April 1, 2021 and (iv) 6,105 target PSUs granted on July 1, 2021. The target PSUs depend on the achievement of certain performance metrics that were set beforehand. If the performance metrics for the grants on April 1, 2023, April 1, 2022, and April 1, 2021 are achieved, the target PSUs are expected to be paid out in 2024, 2025, and 2026, respectively. Each payout is subject to the conditions of the award and the requirement of continuous employment. (16) With respect to Mr. Schemick, the number in this column consists of 117,259 shares of restricted stock (from an initial award of 195,431 shares). The restricted stock was granted on August 31, 2020, and 39,086 shares were scheduled to vest on August 31, 2024, and 39,087 shares were to vest on August 31, 2025. The award vests over a period of five equal payments. (17)
Outstanding Equity Awards at December 29, 2023
With respect to Mr. Schemick, the number in this column consists of (i) 6.342 RSUs granted on April 1, 2023; (ii) 26,604 RSUs granted on April 1, 2021 (from an initial award of 34,799 RSUs); and (iii) 11,600 RSUs granted on April 1, 2021 (from an initial award of 34,799). The remaining one-third of the April 1, 2021 RSU award is scheduled to vest and settle on April 1, 2024. On April 1, 2024, and April 1, 2025, the remaining two-thirds of the April 1, 2022 RSU award are scheduled to vest and settle. The April 1, 2023, RSU award will vest over three years, one year after the grant date. (18) The number in this column consists of (i) 6,342 target PSUs issued on April 1, 2023; (ii) 39,906 target PSUs issued on April 1, 2022;(iii)and 34,799 target PSUs issued on April 1, 2021. The target PSUs depend on the achievement of certain performance metrics that were set beforehand. If the performance metrics for the grants on April 1, 2023, April 1, 2022, and April 1, 2021 are achieved, the target PSUs are expected to be paid out in 2024, 2025, and 2026, respectively. Each payout is subject to the conditions of the award and the requirement of continuous employment. (19) Under the SEC rules, we are required to include Mr. Schemick’s outstanding awards at December 31, 2023. Mr. Schemick resigned as an employee of Certara in June 2023. Under the terms of the 2020 Incentive Plan, (i) 117,259 shares of restricted stock, (ii) 44,546 RSUs and (iii) 47,717 PSUs were cancelled.
OPTION EXERCISES AND STOCK VESTED
OPTION EXERCISES AND STOCK VESTED The following table provides information regarding the amounts received by our NEOs upon exercise of options or similar instruments or the vesting of stock or similar instruments during our most recent fiscal year.
OPTION EXERCISES AND STOCK VESTED
| | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | William F. Feehery(2) | 285,149 | 6,074,015 | | John E. Gallagher III | — | — | | Leif E. Pedersen(3) | 67,807 | 1,157,931 | | Patrick F. Smith(4) | 24,567 | 592,090 | | Robert P. Aspbury(5) | 91,280 | 1,691,835 | | Former Executive | | | | M. Michael Schemick(6) | 24,902 | 600,387 |
OPTION EXERCISES AND STOCK VESTED
Calculated using the closing market price of common stock on the Nasdaq on the vesting date (or the prior date closing if the vesting falls on a weekend or holiday). (2) Included in the total are 218,044 shares of restricted stock that vested during the year and 30,525 RSUs that vested on March 31, 2023. For fiscal year 2023, the restricted stock for Dr. Feehery had the following vesting dates and stock prices: January 3 ($16.24); January 31 ($19.40); February 3 ($19.54); February 28 ($18.12); March 3 ($21.73); March 31 ($24.11); April 3 ($23.57); April 28 ($24.17); May 3 ($23.30); May 31 ($20.78); June 2 ($21.70); June 30 ($18.21); July 31 ($19.47); August 31 ($16.16); September 29 ($14.54); October 31 ($12.19); November 30 ($14.41); and December 29 ($17.59). The stock price was $24.11 when the RSUs vested on March 31, 2023. (3) Included in the total are 51,224 shares of restricted stock and 16,583 RSUs that vested during the year. For fiscal year 2023, the stock price was $14.80 when the restricted stock vested on September 8, 2023 and the stock price was $24.11 when the RSUs vested on March 31, 2023. (4) Included in the total are 11,037 shares of restricted stock and 13,530 RSUs that vested during the year. For fiscal year 2023, the stock price was $24.09 when the restricted stock vested on April 14, 2023 and the stock price was $24.11 when the RSUs vested on March 31, 2023. (5) Included in the total are (i) 74,697 shares of restricted stock that vested during the year, (ii) 16,583 RSUs that vested on March 31, 2023, and (iii) 1,832 RSUs that vested on July 1, 2023. For fiscal year 2023, the restricted stock for Dr. Aspbury had the following vesting dates and stock prices: April 14 ($24.09), August 31 ($16.16) and November 8 ($12.48). The stock price was $24.11 and $18.21 when the RSUs vested on March 31, 2023 and June 30, 2023, respectively. (6) The stock price was $24.11 when the RSUs vested on March 31, 2023. Mr. Schemick resigned from the Company effective June 30, 2023, and the remainder of his restricted stock and RSUs were cancelled.
CEO PAY RATIO
CEO PAY RATIO We are providing the ratio of the total annual compensation of our CEO to the total annual compensation of our median compensated employee (“median employee”). Item 402 of Regulation S-K generally requires us to identify the “median employee” only once every three years, and Certara last identified its median employee for fiscal 2022. As permitted by the SEC’s pay ratio rules, we used the same median employee to calculate our fiscal 2023 pay ratio that we used to calculate our fiscal 2022 pay ratio, as we believe that there have been no changes in our employee population or employee compensation arrangements that would result in a significant change to our pay ratio disclosure. Our determination of which employee was the median employee for compensation purposes was based on compensation data for all employees (other than our CEO) as of October 1, 2022 (the “Determination Date”), which was in the last three months of our 2022 fiscal year. Our employee population as of the Determination Date consisted of 1,175 individuals in the United States and in international locations (including our consolidated subsidiaries) who were employed by us on a full-time, part-time, or seasonal basis, including employees on a leave of absence. Contractors and other non-employees were not included in our employee population. To identify the median-paid employee among our employees (other than the CEO), we used total cash compensation, based on our payroll data, which includes regular base pay, overtime pay, retroactive pay, and any cash bonuses and commissions, for the trailing twelve-month period preceding October 1, 2022 (“Determination Period”). We annualized the cash compensation for those employees who were hired during that Determination Period. For employees who qualify and participate in our annual bonus program but did not receive a bonus in 2022 for their 2021 contributions due to starting employment in the fourth quarter of 2021, we assumed and included an estimated annual bonus using bonus target amounts aligned with applicable job position/title. The compensation data did not include the value of any equity grants. For employees paid other than in U.S. dollars, we converted their compensation to U.S. dollars using the average monthly foreign exchange rate in effect for each month during the Determination Period. We did not make any cost-of-living adjustments for employees outside of the United States. After identifying the median employee as of the Determination Date, we calculated annual total compensation for such employee using the same methodology we use to determine Dr. Feehery’s annual total compensation in the Summary Compensation Table for fiscal year 2022. We did not include the compensation provided under non-discriminatory benefit plans for either the median employee or Dr. Feehery. The results of our calculations are as follows: Our median employee’s annual compensation is $145,240. ▪ Dr. Feehery’s annual total compensation is $6,234,325. ▪ The ratio of Dr. Feehery’s total annual compensation to that of our median employee’s total annual compensation for fiscal 2022 is 43:1. For additional information about the compensation of our CEO, see the “Compensation Discussion and Analysis” section elsewhere in this Proxy Statement. We believe this ratio is a reasonable estimate, calculated in a manner consistent with SEC rules, based on our payroll and employment records and the methodology described above. In selecting the median employee, reporting companies are permitted to use reasonable estimates, assumptions, and methodologies based on their own facts and circumstances. As such, the pay ratio reported by other companies may not be comparable to the pay ratios reported above, as other companies may have different employment and compensation practices and may utilize different estimates, assumptions, and methodologies in calculating their own pay ratios.
Potential Payments to NEOs Upon Termination of Employment or Change of Control
Potential Payments to NEOs Upon Termination of Employment or Change of Control The information below describes and estimates certain compensation that would become payable under plans and arrangements if each NEO’s employment had terminated on December 31, 2023, given the NEO’s compensation as of, and based on the terms of such NEO’s employment agreement and arrangements in effect on, such date. A description of the provisions governing such payments under our agreements and any material conditions or obligations applicable to the receipt of payments are described below. The figures in the table do not include payments and benefits to the extent they are provided generally to all salaried employees upon termination of employment and do not discriminate in scope, terms, or operation in favor of the NEOs.
William F. Feehery
| | Termination Scenario | | | | Potential Payments | By Employee For Good Reason | By Company Without Cause | Change In Control | | Cash Payments | $795,675(1) | $795,675(1) | $795,675(1) | | Accelerated Equity Awards: | | | | | Pre-IPO | — | — | $534,736(2) | | April 1, 2021 RSU Grant | — | — | $1,610,804(3) | | April 1, 2021 PSU Grant | — | — | $1,051,855(4) | | April 1, 2022 RSU Grant | — | — | $1,286,884(5) | | April 1, 2022 PSU Grant | — | — | $1,171,129(6) | | April 1, 2023 RSU Grant | — | — | $1,753,002(7) | | April 1, 2023 PSU Grant | — | — | $1,752,996(8) | | Continuing Perquisites | — | — | $20,092(9) | | Total | $795,675 | $795,675 | $9,967,026 |
John E. Gallagher III
| | Termination Scenario | | | | Potential Payments | By Employee For Good Reason | By Company Without Cause | Change In Control | | Cash Payments | $287,500(1) | $287,500(1) | $287,500(1) | | Accelerated Equity Awards: | | | | | April 1, 2023 RSU Grant | — | — | $1,182,470(2) | | April 1, 2023 PSU Grant | — | — | $666,671(3) | | Continuing Perquisites | — | — | — | | Total | $287,500 | $287,500 | $2,136,641 |
Leif E. Pedersen
| | Termination Scenario | | | | Potential Payments | By Employee For Good Reason | By Company Without Cause | Change In Control | | Cash Payments | $213,597(1) | $213,597(1) | $213,597(1) | | Accelerated Equity Awards: | | | | | Pre-IPO | — | — | $1,802,060(2) | | April 1, 2021 RSU Grant | — | — | $139,612(3) | | April 1, 2021 PSU Grant | — | — | $273,628(4) | | April 1, 2022 RSU Grant | — | — | $304,184(5) | | April 1, 2022 PSU Grant | — | — | $276.802(6) | | April 1, 2023 RSU Grant | — | — | $414,350(7) | | April 1, 2023 PSU Grant | — | — | $414,350(8) | | Continuing Perquisites | — | — | — | | Total | $213,597 | $213,597 | $3,835,790 |
Patrick F. Smith
| | Termination Scenario | | | | Potential Payments | By Employee For Good Reason | By Company Without Cause | Change In Control | | Cash Payments | $200,078(1) | $200,078(1) | $200,078(1) | | Accelerated Equity Awards: | | | | | Pre-IPO | — | — | $194,141(2) | | April 1, 2021 RSU Grant | — | — | $85,910(3) | | April 1, 2022 RSU Grant | — | — | $304,184(4) | | April 1, 2022 PSU Grant | — | — | $276,802(5) | | April 1, 2023 RSU Grant | — | — | $414,350(6) | | April 1, 2023 PSU Grant | — | — | $414,350(7) | | October 5, 2023 RSU Grant | | | $377,376(8) | | Continuing Perquisites | — | — | — | | Total | $200,078 | $200,078 | $2,267,190 |
Robert P. Aspbury
| | Termination Scenario | | | | Potential Payments | By Employee For Good Reason | By Company Without Cause | Change In Control | | Cash Payments | —(1) | —(1) | —(1) | | Accelerated Equity Awards: | | | | | Pre-IPO | — | — | $1,860,442(2) | | April 1, 2021 RSU Grant | — | — | $139,612(3) | | April 1, 2021 PSU Grant | — | — | $273,628(4) | | April 1, 2022 RSU Grant | — | — | $304,184(5) | | April 1, 2022 PSU Grant | — | — | $276,802(6) | | April 1, 2023 RSU Grant | — | — | $414,350(7) | | April 1, 2023 PSU Grant | — | — | $414,350(8) | | Continuing Perquisites | — | — | — | | Total | | | $3,683,367 |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE
| Year(1) | Summary Compensation Table Total for CEO | Compensation Actually Paid to CEO(2) | Average Summary Compensation Table Total for Non-CEO Named Executive Officers | Average Compensation Actually Paid to Non-CEO Named Executive Officer(2) | Value of Initial Fixed $100 Investment Based On: | | Net Income | Adjusted EBITDA(3) | | | | | | | Total Share-holder Return | Peer Group Total Share-holder Return | | | | 2023 | $7,810,028 | $4,396,333 | $2,212,277 | $1,415,136 | $46.19 | $79.94 | $(55,357,000) | $123,108,000 | | 2022 | $6,234,325 | $(4,571,474) | $1,905,302 | $(1,519,004) | $42.21 | $82.12 | $14,731,000 | $120,174,000 | | 2021 | $6,244,695 | $2,332,290 | $2,028,857 | $798,169 | $74.63 | $116.62 | $(13,266,000) | $103,713,000 | | 2020 | $3,626,241 | $71,886,945 | $1,837,169 | $12,730,099 | $88.55 | $104.12 | $(49,397,000) | $87,877,000 |
PAY VERSUS PERFORMANCE
(1) Certara is providing this disclosure pursuant to 17 CFR 229.402(v) for the last four fiscal years, instead of five years, and will provide disclosure for an additional year in the next annual filing in which this disclosure is required. Company’s CEO and principal executive officer for each of the years presented was William F. Feehery. . (2) As required by 17 CFR 229.402(v)(3), the following tables disclose each of the amounts deducted and added to columns (c) (Compensation Actually Paid to CEO) and (e) (Average Compensation Actually Paid to Non-CEO Named Executive Officers): Fiscal Year 2020:
PAY VERSUS PERFORMANCE
| Description | CEO | Non-PEOs NEOS* | | Compensation as reported in the summary compensation table | $3,626,241 | $1,837,169 | | Minus | | | | Grant date fair value from summary compensation table | $(2,238,677) | $(1,385,758) | | Plus | | | | Year-end fair value of any equity awards granted during the respective year that remain outstanding and unvested at the end of the year | $6,149,449 | $7,613,117 | | Year-over-year change in fair value as of the respective year-end for equity awards granted in a prior year that remain outstanding and vested at the end of that year | $26,321,151 | $2,959,297 | | Fair value as of the vesting date for any equity awards granted and vested within the respective year | $33,834,317 | $1,706,275 | | Change in fair value from the prior year-end to the vesting date for equity awards granted in a prior year that vested during the respective year | $4,194,464 | — | | Reduction for the fair value as of the end of the prior year for any equity awards granted during that prior year that failed to vesting during the respective year | — | — | | Value of any dividends or other earnings paid on equity awards prior to vesting date that are not otherwise included in the fair value of the award or other reported compensation amounts | — | — | | Total | $71,886,945 | $12,730,099 |
PAY VERSUS PERFORMANCE
NEOs for fiscal year 2020 are Messrs. M. Andrew Schemick and Leif Pedersen.
PAY VERSUS PERFORMANCE
| Description | CEO | Non-PEO NEOS* | | Compensation as reported in the summary compensation table | $6,244,695 | $2,028,857 | | Minus | | | | Grant date fair value from summary compensation table | $(4,999,995) | $(1,502,429) | | Plus | | | | Year-end fair value of any equity awards granted during the respective year that remain outstanding and unvested at the end of the year | $5,074,995 | $1,524,608 | | Year-over-year change in fair value as of the respective year-end for equity awards granted in a prior year that remain outstanding and vested at the end of that year | $(3,386,287) | $(1,269,890) | | Fair value as of the vesting date for any equity awards granted and vested within the respective year | $(601,118) | $17,022 | | Change in fair value from the prior year-end to the vesting date for equity awards granted in a prior year that vested during the respective year | — | — | | Reduction for the fair value as of the end of the prior year for any equity awards granted during that prior year that failed to vesting during the respective year | — | — | | Value of any dividends or other earnings paid on equity awards prior to vesting date that are not otherwise included in the fair value of the award or other reported compensation amounts | — | — | | Total | $2,332,290 | $798,169 |
PAY VERSUS PERFORMANCE
NEOs for fiscal year 2021 are Messrs. M. Andrew Schemick, Leif E. Pedersen, Robert P. Aspbury, Justin Edge and Craig Rayner.
PAY VERSUS PERFORMANCE
| Description | CEO | Non-PEO NEOS* | | Compensation as reported in the summary compensation table | $6,234,325 | $1,905,302 | | Minus | | | | Grant date fair value from summary compensation table | $(4,883,430) | $(1,309,669) | | Plus | | | | Year-end fair value of any equity awards granted during the respective year that remain outstanding and unvested at the end of the year | $2,424,943 | $647,159 | | Year-over-year change in fair value as of the respective year-end for equity awards granted in a prior year that remain outstanding and vested at the end of that year | $(4,773,902) | $(1,875,780) | | Fair value as of the vesting date for any equity awards granted and vested within the respective year | $(3,573,410) | $(886,016) | | Change in fair value from the prior year-end to the vesting date for equity awards granted in a prior year that vested during the respective year | — | — | | Reduction for the fair value as of the end of the prior year for any equity awards granted during that prior year that failed to vesting during the respective year | — | — | | Value of any dividends or other earnings paid on equity awards prior to vesting date that are not otherwise included in the fair value of the award or other reported compensation amounts | — | — | | Total | $(4,571,474) | $(1,519,004) |
PAY VERSUS PERFORMANCE
NEOs for fiscal year 2022 are Messrs. M. Andrew Schemick, Leif E. Pedersen, Patrick F. Smith, and Robert P. Aspbury.
PAY VERSUS PERFORMANCE
| Description | CEO | Non-PEO NEOS* | | Compensation as reported in the summary compensation table | $7,810,028 | $2,212,277 | | Minus | | | | Grant date fair value from summary compensation table | $(6,485,296) | $(1,615,932) | | Plus | | | | Year-end fair value of any equity awards granted during the respective year that remain outstanding and unvested at the end of the year | $1,978,207 | $2,989,888 | | Year-over-year change in fair value as of the respective year-end for equity awards granted in a prior year that remain outstanding and vested at the end of that year | $143,583 | $393,672 | | Fair value as of the vesting date for any equity awards granted and vested within the respective year | — | — | | Change in fair value from the prior year-end to the vesting date for equity awards granted in a prior year that vested during the respective year | $949,812 | $277,960 | | Reduction for the fair value as of the end of the prior year for any equity awards granted during that prior year that failed to be vesting during the respective year | — | $(2,842,728) | | Value of any dividends or other earnings paid on equity awards prior to vesting date that are not otherwise included in the fair value of the award or other reported compensation amounts | — | — | | Total | $4,396,333 | $1,415,136 |
PAY VERSUS PERFORMANCE
* NEOs for fiscal year 2023 are Messrs. John Gallagher III, Leif E. Pedersen, Patrick F. Smith, Robert P. Aspbury, and M. Andrew Schemick. (3) Management uses various financial metrics, including total revenues, income from operations, net income, and certain metrics that are not required by, or presented in accordance with, GAAP, such as adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share, to measure and assess the performance of our business, to evaluate the effectiveness of our business strategies, to make budgeting decisions, to make certain compensation decisions, and to compare our performance against that of other peer companies using similar measures. We believe that presentation of the GAAP and the non-GAAP metrics in this filing will aid investors in understanding our business. Management measures operating performance based on adjusted EBITDA defined for a particular period as net income (loss) excluding interest expense, provision (benefit) for income taxes, depreciation and amortization expense, intangible asset amortization, equity-based compensation expense, goodwill impairment expense, acquisition and integration expense, and other items not indicative of our ongoing operating performance. Management also measures operating performance based on adjusted net income defined for a particular period as net income (loss) excluding, equity-based compensation expense, amortization of acquisition-related intangible assets, acquisition and integration expense, and other items not indicative of our ongoing operating performance. Further, management measures operating performance based on adjusted diluted earnings per share defined for a particular period as adjusted net income divided by the weighted-average diluted common shares outstanding. We believe adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share are helpful to investors, analysts, and other interested parties because they can assist in providing a more consistent and comparable overview of our operations across our historical periods. In addition, these measures are frequently used by analysts, investors, and other interested parties to evaluate and assess performance. Adjusted EBITDA, adjusted net income, and adjusted diluted earnings per share are non-GAAP measures and are presented for supplemental purposes only and should not be considered as an alternative or substitute to financial information presented in accordance with GAAP. Adjusted EBITDA, adjusted net income and adjusted diluted earnings per share have certain limitations in that they do not include the impact of certain expenses that are reflected in our consolidated statements of operations and comprehensive income (loss) that are necessary to run our business. Other companies, including other companies in our industry, may not use these measures and may calculate both differently than as presented, limiting the usefulness as a comparative measure. The compensation paid to our principal executive officer, Dr. Feehery and NEOs set forth in the table above include the value of equity granted prior to the IPO (under our Equity Incentive Plan) and after the IPO (under our 2020 Incentive Plan). For a description of the type of equity granted under our 2017 Incentive Plan, see “— Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table; Pre-IPO Class B Units and Converted Restricted Stock.” For a description of the type of equity granted our 2020 Incentive Plan, see “Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table; Post-IPO Equity Awards.” Prior to the IPO, the Class B Units were valued by EQT on a quarterly basis based on EQT’s internal analysis, leveraging commonly recognized valuation methodologies, but also periodically determined by an independent valuation advisor. For purposes of determining compensation actually paid, we calculated the value of the applicable Class B Units at the end of 2019 based on the fair value attributed to them on that date. We then determined the value of the common stock at the time periods required for the number of shares for which the applicable number of Class B Units were exchanged using the conversion formula used in the exchange of Class B Units for common shares at the time of the IPO. The vast majority of “compensation actually paid” for our CEO and NEOs in 2020 is based on the material increase in value from the equity awards pre-IPO v. post-IPO, and, for our CEO, the accelerated vesting of his performance-based profits interest units (“PIUs”) at the time of the IPO. Accordingly, the value of compensation actually paid for 2020 is atypical and a direct result of (i) the fact that the pre-IPO was illiquid and therefore represents the accumulated increase of value in the equity over more than one year, (ii) for our CEO, the accelerated vesting of certain PIUs at the time of the IPO, and (iii) the increase in market value of the Company as a result of the IPO process.
Relationship Between Compensation Actually Paid and Cumulative Stockholder Return
Relationship Between Compensation Actually Paid and Cumulative Stockholder Return CEO and NEOs CAP in millions; Company TSR and Peer TSR un US Dollar per share on return of $100.
Relationship Between Compensation Actually Paid and Net Income
Relationship Between Compensation Actually Paid and Net Income CEO and NEOs CAP in millions; Net Income in millions
Relationship Between Compensation Actually Paid and Adjusted EBITDA
Relationship Between Compensation Actually Paid and Adjusted EBITDA CEO and NEOs CAP in millions; Adjusted EBITDA in millions.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
INDEMNIFICATION OF DIRECTORS AND OFFICERS We have entered into an indemnification agreement with each of our directors and executive officers. The indemnification agreements, together with our amended and restated bylaws, provide that we will jointly and severally indemnify each indemnitee to the fullest extent permitted by the Delaware Corporation General Law from and against all loss and liability suffered and expenses, judgments, fines, and amounts paid in settlement actually and reasonably incurred by or on behalf of the indemnitee in connection with any threatened, pending, or completed action, suit, or proceeding. Additionally, we agree to advance to the indemnitee all out-of-pocket costs of any type or nature whatsoever incurred in connection therewith.
SUBMISSION OF STOCKHOLDER PROPOSALS AND BOARD NOMINEES FOR 2025
SUBMISSION OF STOCKHOLDER PROPOSALS AND BOARD NOMINEES FOR 2025 If you would like to include a proposal for stockholder consideration in our 2025 proxy statement or bring business before our annual meeting of stockholders in 2025, you must send notice to General Counsel, 100 Overlook Center, Suite 101, Princeton, NJ 08540, by registered, certified, or express mail in accordance with the time period set forth in our Company bylaws, and provide the required information and follow the other procedural requirements described below.