DEF 14A of Grid Dynamics Holdings, Inc., Nov 12, 2024

DEF 14A of Grid Dynamics Holdings, Inc.

Filed Nov 12, 2024 · FY20230001104659-24-116570

Open on EDGAR

  1. Director Nominees

    Director Nominees Lloyd Carney. Mr. Carney, a director since June 2018, has spent more than 25 years in the technology industry. He started at Wellfleet and Nortel Networks in 1997 and in 2002 he rose to become division president. In 2003, he joined Juniper Networks as Chief Operating Officer where he oversaw the engineering, product management and manufacturing divisions. Thereafter, in 2004, he was named Chief Executive Officer of Micromuse, an enterprise and telecom network management company. Mr. Carney led the sale of Micromuse to IBM for $865 million, staying at IBM for a year after the sale to ensure a smooth transition. In 2008, he became the Chief Executive Officer of Xsigo Systems, a provider of network visualization systems, which was sold to Oracle Corporation in 2012. Mr. Carney then accepted the role of Chief Executive Officer and director of Brocade Communications Systems, Inc., a networking solutions company, in early 2013. His tenure culminated in the sale of Brocade to Broadcom Ltd. for $5.5 billion in late 2017. Mr. Carney is currently a member of the board of directors and chairs the audit committee of Visa, a leading credit card company. He is also a member of the board of directors of Vertex Pharmaceuticals, a biotechnology company. From 2018 to 2021, he served as the chairman of Nuance Communications, a leading conversational AI solution provider. From 2005 to 2014, he was a member of the board of Cypress Semiconductor Corporation, where he served on the audit and compensation committees. He was also a member of the board of Technicolor (SA), a technology company in the media and entertainment sector from 2010 until 2015, where he chaired its technology committee. In addition, since 2007 he has served as Chief Executive Officer of Carney Global Ventures, LLC, a global investment vehicle. Mr. Carney holds a B.S. degree in Electrical Engineering Technology from Wentworth Institute of Technology, as well as a M.S. degree in Applied Business Management from Lesley College. We believe Mr. Carney is qualified to serve on our board of directors due to his extensive operational and management experience in the technology industry as well as the broad scope of experience he brings to bear. Michael Southworth. Mr. Southworth is currently the CEO of Babel Street, an AI-enabled open-source analytics company, where he has served since March 2022. Previously, he was President of Transflo, a leading provider of digital transformation solutions for the transportation market, from October 2020 to January 2022, and General Manager of the Intelligent Self-Service business at Verint Systems, Inc., a leading provider of customer engagement solutions, from February 2016 until September 2020. From June 2014 to February 2016, Mr. Southworth was Chief Executive Officer of Contact Solutions, a company acquired by Verint in February 2016 and led Contact Solution’s business transformation, including strategy planning, risk mitigation, executive recruitment and change management. For over two decades, Mr. Southworth has directed companies from the start-up phase through major periods of growth, leading numerous equity and debt financings and over $5.0 billion in mergers and acquisitions. Prior to Contact Solutions, Mr. Southworth was Senior Vice President of Global Wireless Solutions at Corning. In addition, he held senior financial roles at a number of technology companies including MobileAccess Networks, Telemus Solutions, Lucent Technologies, Chromatis Networks, and the X-Stream Network. Mr. Southworth began his career in the Silicon Valley office of PricewaterhouseCoopers where he managed IPOs and advised clients on tax and accounting matters. Mr. Southworth holds a Bachelor of Science from the University of California at Berkeley. He is a Certified Public Accountant in the State of California and currently serves on the Board of Directors of Quality of Life Plus. Mr. Southworth previously served on the Board of Directors of Finjan Holding, Inc. We believe Mr. Southworth is qualified to serve on our board of directors due to his extensive operational and management experience with multinational technology growth companies and expertise in equity and debt financing. Yueou Wang. Mr. Wang has served as a non-employee director of Grid Dynamics’ board of directors since 2017. Mr. Wang has served as Chief Executive Officer and Executive Director of ASL, the former parent company of Grid Dynamics, since September 2016 and September 2015, respectively. Mr. Wang joined ASL in 2011 as Financial Controller, Chief Financial Officer and Joint Company Secretary. Mr. Wang is currently a director of certain ASL subsidiaries and an associate of ASL (i.e., the directorship of i-Sprint). He was a director of Teamsun from December 2017 until February 2020. Previously, Mr. Wang was the Chief Financial Officer and a board secretary of Guangzhou Headway Technology Co., Ltd., and a regional finance manager (China) of Wistron Information Technology & Services Corporation. Mr. Wang holds a Bachelor’s degree in International Accounting from Jinan University, a Master’s degree in Business Administration from University of Wales, United Kingdom and an Executive Master’s degree in Business Administration from Research Institute of Tsinghua University. We believe Mr. Wang’s financial management expertise, including his expertise in the IT industry, provides him with the necessary skills to serve as a member of the board of directors and enables him to contribute valuable insight regarding financial and strategic business issues.

  2. Continuing Directors

    Continuing Directors Leonard Livschitz. Mr. Livschitz has served as a director of Grid Dynamics’ board of directors since 2006 and the Chief Executive Officer of Grid Dynamics since 2014. Prior to joining Grid Dynamics as Chief Executive Officer, Mr. Livschitz co-founded the LED solutions company Luxera, serving as director from 2010 to 2014 and as President and Chief Executive Officer from 2010 to 2014. Prior to that, he served as Vice President of Sales and Marketing for Ledengin. Mr. Livschitz has over 25 years of experience in the high tech industry. He has held executive and management roles in sales, marketing, business development, and research and development with Philips Lumileds Lighting, Ledengin, Visteon Lighting and Ford Motor Company. Mr. Livschitz holds a Masters of Science degree in Systems and Control Engineering from Case Western Reserve University and a Masters of Science in Mechanical Engineering from Kharkov State Polytechnic University, Ukraine. We believe Mr. Livschitz’s extensive experience in and knowledge of the high tech industry, as well as his experience with executive and management roles and responsibilities at Grid Dynamics, provide him with the necessary skills to serve as a member of the board of directors. Marina Levinson. Ms. Levinson is the founder and CEO of CIO Advisory Group LLC, which was founded in September 2011 and provides technology advice to venture capital and private equity firms and their portfolio companies. Since April 2014, she has also been a partner at venture capital firm BGV. Previously, Ms. Levinson was a member of the board of directors of Personal Capital from October 2018 until August 2020 when Personal Capital was acquired by Empower Retirement. She also served on the board of Ellie Mae where she was the chair of the technology and cybersecurity committee and a member of the compensation committee from August 2014 until April 2019 when Ellie Mae was acquired by Thoma Bravo. She was also on the board of Carbonite where she was the chair of the nominating and corporate governance committee and a member of the information security risk committee from May 2017 until January 2020 when Carbonite was acquired by OpenText. From 2005 to 2011, Ms. Levinson served as senior vice president and chief information officer for NetApp, Inc. From 1999 to 2005, she served as vice president and chief information officer of Palm, Inc., having earlier served as senior director of global integration at 3Com. Ms. Levinson holds a B.S. in Computer Science from St. Petersburg Institute of Precision Mechanics and Optics. We believe Ms. Levinson is qualified to serve on our board of directors due to her extensive operational and management experience in the technology industry as well as her public company governance experience. Shuo Zhang. Ms. Zhang has served as a non-employee director of Grid Dynamics’ board of directors since 2017. Ms. Zhang currently serves on the boards of directors at several public and private companies, including S.O.I.TEC Silicon on Insulator Technologies SA, Telink Semiconductor and PDF Solutions. She is also actively involved with private venture capital firms in the Silicon Valley and currently serves a China Advisory Partner for Benhamou Global Ventures (“BGV”). From December 2007 to September 2015, Ms. Zhang served in various senior management capacities at Cypress Semiconductor, including corporate development, general management and worldwide mobile sales. Prior to Cypress, Ms. Zhang served in many different product, marketing and sales management roles in Silicon Light Machines, Agilent Technologies, Altera Corporation, and LSI Corporation. Ms. Zhang holds a Bachelor’s Degree in electrical engineering from Zhejiang University and a Master of Science in material science and mechanics from Penn State University. We believe Ms. Zhang is qualified to serve on our board of directors due to her experience in general management, marketing, sales and strategic business development. Eric Benhamou. Mr. Benhamou, a director since inception, co-founded Bridge Communications, a specialist in computer network technologies in 1981. Bridge Communications later merged with 3Com Corporation, a networking equipment vendor, in 1987. Thereafter, he became Chief Executive Officer of 3Com, serving there from 1990 to 2000, and as chairman until 2010. As 3Com’s Chief Executive Officer, he led the company in acquiring US Robotics, the owner of Palm, Inc. the maker of the groundbreaking Palm Pilot. Palm, Inc. was thereafter spun off in 2000, and Mr. Benhamou served as its Chief Executive Officer until 2003. In 2003, Mr. Benhamou founded BGV, a venture capital firm focused on technology companies, specializing in cloud software, artificial intelligence cyber security, and mobile applications. Mr. Benhamou has been a member of the board of directors of Silicon Valley Bank since 2004. He was a member of the board of directors of Finjan Holdings, a cybersecurity firm, from 2013 until July 2020. He served on the board of Cypress Semiconductor as chairman for over a decade, until 2017. He served as a member of the board of directors of Enterprise 4.0 Technology Acquisition Corp, a special purpose acquisition company, from May 2021 until March 2023. He also serves on the board of several privately held technology companies, including Evinced, an AI-powered digital accessibility company, and Blendid, maker of AI-robotics smoothie preparation kiosks, Totango, a provider of customer success software, Virtana (formerly Virtual Instruments), an IT infrastructure performance management platform, and 6dbytes, a food robotics company. He holds an M.S. from Stanford University’s School of Engineering and a Diplôme d’Ingénieur and a Doctorate from Ecole Nationale Supérieure d’Arts et Métiers, Paris. Mr. Benhamou taught entrepreneurship in various business schools around the world for over 10 years, principally at INSEAD, Stanford University and IDC’s Herzliya’s Arison School of Business, where he was a visiting professor. He also served on the Advisory Board of Stanford’s School of Engineering and the Board of Governors of Ben Gurion University of the Negev in Israel. We believe Mr. Benhamou is qualified to serve on our board of directors due to his extensive operational and management experience in the technology industry as well as his public company governance experience and his venture capital background. Patrick Nicolet. Mr. Nicolet is the Managing Partner of Line Break Capital Ltd, a technology brokering company specialized in distributed computing that he founded in January 2021. Prior to that, he spent over twenty years in various roles at Capgemini SE, a consulting, technology services and digital transformation company, including seven as a Group Executive Board member. He also serves on the boards of directors of several private companies. Mr. Nicolet received his Bachelor of Laws (LLB) from the Université de Lausanne in Switzerland in 1984 and previously served in the Swiss Air Force where he obtained the Grade of Major. We believe Mr. Nicolet’s decades of operational and management experience in the technology industry, particularly in consulting and digital transformation, provides him with the necessary skills to serve as a member of the board of directors.

  3. Continuing Directors

    Weihang Wang. Mr. Wang has served as a non-employee director of Grid Dynamics’ board of directors since 2017. Mr. Wang has been a Director of ASL, the former parent company of Grid Dynamics, since 2009 and was re-designated from a Non-Executive Director to an Executive Director in May 2014. Mr. Wang has also served as the chairman and a director of Teamsun, ASL’s ultimate holding company listed on the Shanghai Stock Exchange, since 2014, and currently is also the sole director of Hong Kong Teamsun. Hong Kong Teamsun is a wholly owned subsidiary of Teamsun. Mr. Wang previously also served as the chief executive officer of Teamsun from 2014 to July 2019. Prior to his re-designation as the chairman and chief executive officer of Teamsun in 2014, Mr. Wang was the general manager of Teamsun, and the vice-chairman and general manager of Teamsun’s first board of directors. Mr. Wang holds an Executive Master’s Degree in Business Administration from Tsinghua University in the PRC and a Master’s Degree in Semi-Conductor Materials and Microelectronic Technology from the Information and Electronic Engineering Department of Zhejiang University in the PRC. Mr. Wang was awarded as China Software Industry Outstanding Entrepreneur Laureate and China Software Industry Prestige Award Laureate by China Software Industry Association in 2009. He was also awarded the “Innovation Outstanding Personality of Chinese Brand Award” in 2011. We believe Mr. Wang’s leadership roles in the IT industry and background in technology and engineering enable Mr. Wang to provide valuable insight to the board of directors regarding business strategy and industry trends.

  4. Considerations in Evaluating Director Nominees

    Considerations in Evaluating Director Nominees Our nominating and corporate governance committee uses a variety of methods for identifying and evaluating director potential director candidates. In its evaluation of director candidates, including the current directors eligible for re-election, our nominating and corporate governance committee will consider the current size and composition of our board of directors and the needs of our board of directors and the respective committees of our board of directors. Some of the qualifications that our nominating and corporate governance committee considers include, without limitation, character, integrity, judgment, diversity of experience, independence, area of expertise, corporate experience, length of service, potential conflicts of interest and other commitments. In making determinations regarding nominations of directors, our nominating and corporate governance committee requires the following minimum qualifications to be satisfied by any nominee for a position on the board of directors: (i) the highest personal and professional ethics and integrity, (ii) proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment, (iii) skills that are complementary to those of the existing board of directors, (iv) the ability to assist and support management and make significant contributions to the Company’s success, and (v) an understanding of the fiduciary responsibilities that is required of a member of the board of directors and the commitment of time and energy necessary to diligently carry out those responsibilities. Any search firm retained by our nominating and corporate governance committee to find director candidates would be instructed to take into account all of the considerations used by our nominating and corporate governance committee. After completing its review and evaluation of director candidates, our nominating and corporate governance committee recommends to our full board of directors the director nominees for selection.

  5. Non-Employee Director Compensation

    Non-Employee Director Compensation Our board of directors has adopted an Outside Director Compensation Policy (the “Policy”), pursuant to which, (i) each outside director will be paid an annual cash retainer of $40,000, an initial grant of restricted stock units with a grant date fair market value of $75,000, and an annual grant of restricted stock units with a grant date fair market value of $75,000, (ii) the non-executive chairperson of the board will be paid an additional annual cash fee of $20,000 and granted an additional grant of restricted stock units with a grant date fair market value of $20,000, (iii) the lead outside director will be paid an additional annual cash fee of $20,000 and granted an additional grant of restricted stock units with a grant date fair market value of $20,000, (iv) the chair of the audit, compensation and nominating and corporate governance committees will be paid an additional annual cash fee of $20,000, $15,000 and $15,000, respectively, and (v) members of the audit, compensation and nominating and corporate governance committees that are not serving as the chair of such committee, will be paid of an additional annual cash fee of $15,000, $10,000 and $10,000, respectively. Notwithstanding the foregoing, no outside director may be paid, issued or granted, in any fiscal year of the Company, cash compensation and equity awards with an aggregate value greater than $600,000. The table below shows the total compensation earned by our non-employee directors for the fiscal year ended December 31, 2023.

  6. Non-Employee Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | | Eric Benhamou | 80,000 | 74,991 | 154,991 | | Lloyd Carney | 85,000 | 94,997 | 179,997 | | Marina Levinson | 55,000 | 74,991 | 129,991 | | Patrick Nicolet | 40,000 | 74,991 | 114,991 | | Michael Southworth | 60,000 | 74,991 | 134,991 | | Weihang Wang | 40,000 | 74,991 | 114,991 | | Yueou Wang | 40,000 | 74,991 | 114,991 | | Shuo Zhang | 55,000 | 74,991 | 129,991 |

  7. Non-Employee Director Compensation

    The amounts in this column represent the aggregate grant date fair value of RSU awards granted to the director in the fiscal year computed in accordance with FASB ASC Topic 718. See Note 10 of the notes to our consolidated financial statements included elsewhere in our Annual Report for a discussion of our assumptions in determining the grant date fair value of our equity awards.

  8. PROPOSAL NO. 1 ELECTION OF DIRECTORS

    PROPOSAL NO. 1 ELECTION OF DIRECTORS Our board of directors is currently composed of nine members. In accordance with our certificate of incorporation, our board of directors is divided into three classes with staggered three-year terms. One Class is elected each year at the annual meeting of stockholders for a term of three years. At the Annual Meeting, three Class II directors will be elected for a three-year term to succeed the same class whose term is then expiring. Each director’s term continues until the election and qualification of such director’s successor, or such director’s earlier death, resignation or removal.

  9. 2023 Say-on-Pay and Stockholder Engagement

    | What We Heard | What We Did | | Stockholders understood the need for retention awards in light of the of Russia-Ukraine conflict, but expressed a desire that the compensation committee limit its use of such one-time awards | The compensation committee did not provide any such retention awards in 2023 to any of the NEOs and agrees with stockholders that such one-time awards should be limited and used only in exceptional circumstances. | | Stockholders would like to see diverse use of performance metrics in the incentive plans | The compensation committee discusses metric selection regularly. The focus of our annual and long-term incentives is achieving profitable growth and driving long-term stockholder value creation. As such, we use a carefully balanced mix of financial metrics across our incentive plans — with a heavier emphasis on revenue because it is a fundamental indicator of our ability to generate income and sustain growth over time. Recognizing that revenue is used as a metric in both the annual and long-term incentives, the compensation committee balances it with other metrics designed to support the Company’s business strategy and align with stockholder interests as follows. |

  10. 2023 Say-on-Pay and Stockholder Engagement

    | Annual Cash Incentives | | Long-Term Equity Incentives* | | | Metric | Weight | Metric | Weight | | Revenue ($) | 50% | Year-Over-Year Revenue Growth (%) | 50% | | Non-GAAP EBITDA ($) | 50% | Contribution Margin (%) Contribution margin is gross margin for revenue (as adjusted for certain items). | 50% |

  11. 2023 Say-on-Pay and Stockholder Engagement

    * For 2024, performance stock units (“PSUs”) granted under the long-term incentive plan will also include a relative Total Stockholder Return (“rTSR”) modifier and a relative Revenue Compound Annual Growth (“rCAGR”) modifier.

  12. 2023 Say-on-Pay and Stockholder Engagement

    | Stockholders would like to see maximum payout opportunities for long-term incentive awards targeted closer to market practices | For 2024, PSUs granted under the long-term incentive plan are capped at 200% of target, with the potential for adjustment up or down based on rTSR and rCAGR performance. This new structure applies to the CEO and all other NEOs and is consistent with our Peer Group and broader market practices. | | Stockholders prefer to see an emphasis on performance-based equity | In 2023, the compensation committee did not provide any service-based equity awards. Long-term incentives were granted using 100% PSUs. For 2024, the compensation committee continued to prioritize performance-based equity using a mix of 55% PSUs and 45% RSUs. This approach places a significant focus on awards that are earned only if specific performance objectives are achieved, and rTSR and rCAGR outpace the market. It also balances the company’s talent retention objectives while maintaining a direct link to stock price. |

  13. 2023 Say-on-Pay and Stockholder Engagement

    | What We Heard | What We Did | | Stockholders prefer to see longer performance measurement periods for long-term equity incentive awards | Starting with grants in 2024, performance criteria for PSUs will measure year-over-year revenue growth and contribution margin performance over the course of a three-year period. Accordingly, one-third of our NEOs’ PSUs are eligible to vest each year, in an amount ranging from 0% to 200% of target, based on actual results. In addition, PSUs earned will be adjusted based on rTSR and rCAGR results for one-, two- and three-year performance over the performance period. We measure performance annually because we operate in a business environment in which forecasting multi-year performance is extremely difficult. This approach allows us to maintain a clear focus on our critical, shorter-term growth objectives while still driving accountability for executing on our long-term vision of sustainable growth and value creation. In addition, using multi-year vesting requirements and linking our NEOs’ compensation to company stock strongly aligns management’s long-term interests with the those of our stockholders | | Stockholders would like to see more “stockholder-friendly” features in the program | In November 2023, the Company adopted a compensation recovery policy pursuant to which we may seek the recovery of cash performance-based incentive compensation paid by us as well as performance-based equity awards, including the PSUs, in accordance with the compensation recovery rules established by The Nasdaq Stock Market pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. |

  14. 2023 Compensation Highlights

    2023 Compensation Highlights Our compensation committee and Board believe that executive compensation should be linked to our overall financial performance, strategic success and stockholder returns. As such, our executive compensation program is designed to attract highly qualified individuals, retain those individuals in a competitive marketplace for executive talent and motivate performance. We seek to align individual performance with long-term strategic business objectives and stockholder interests in a manner consistent with safe and sound business practices and sustainable financial performance. We believe our executive compensation program as developed and implemented, and as presented in this CD&A, achieves these objectives and is appropriate for a company in our industry and at our stage of growth. Our executive compensation program has three primary elements: base salary, incentives in the form of annual cash bonuses, paid quarterly, under our Corporate Bonus Plan, and long-term equity incentives in the form of restricted stock units awards (“RSUs”) and performance stock units (“PSUs”). Each of these compensation elements serves a specific purpose in our compensation strategy. Base salary is an essential component to any market-competitive compensation program. Incentives in the form of annual cash bonuses, paid quarterly, under our Corporate Bonus Plan, reward the achievement of short-term goals, while long-term equity incentives drive our NEOs to focus on long-term sustainable stockholder value creation. Based on our performance and consistent with the design of our program, our compensation committee and Board made the following executive compensation decisions for fiscal 2023.

  15. 2023 Compensation Highlights

    | Compensation Element | Highlights | | Base Salary | In 2023, there were no changes to our NEOs’ base salaries. | | Cash Incentives | Our NEOs are eligible to receive payments under our Corporate Bonus Plan, which provides that eligible participants, including the NEOs, earn annual cash bonuses, paid quarterly, based on achievement of our financial performance objectives. Performance targets are established based on a combination of pre-determined goals, which included equally weighted revenue and non-GAAP EBITDA targets for 2023. The Company exceeded these performance targets in all four quarters of 2023, achieving 158%, 109%, 117% and 127% of the quarterly performance targets for each of the three months ended March 31, 2023, June 30, 2023, September 30, 2023 and December 31, 2023, respectively. Accordingly, our NEOs received quarterly cash incentive payments that surpassed their target bonus opportunities under our Corporate Bonus Plan. | | Long-Term Equity Incentives | For 2023, the compensation committee did not provide any service-based equity awards. Long-term incentives were granted using 100% PSUs that would vest upon our Board’s certification of the achievement of certain performance metrics. The PSUs generally required the achievement of performance relating to specified levels of revenue growth from fiscal year 2022 to fiscal year 2023, and contribution margin for fiscal year 2023 with each such performance goal weighted at 50% of the award. In February 2024, our compensation committee and Board certified the achievement of certain performance metrics, resulting in 170% of the target number of PSUs vesting on the certification date. |

  16. Best Compensation Practices & Policies

    | What We Do | | What We Don’t Do | | | ✓ | Emphasize variable pay over fixed pay — the majority (86%) of the CEO’s target compensation is “at-risk” and directly tied to our financial results and stock performance | ✘ | No tax gross ups other than for qualified relocation expenses | | ✓ | Maintain anti-hedging and anti-pledging policies | ✘ | No option or stock appreciation rights granted below fair market value | | ✓ | Provide for “double-trigger” equity award vesting and severance benefits upon a change in control | ✘ | No supplemental executive retirement plans except in jurisdictions where statutorily required | | ✓ | Use an independent compensation consultant | ✘ | No significant perquisites | | ✓ | Responsible use of equity awards under our long-term incentive program | | | | ✓ | Pay for performance philosophy and culture | | | | ✓ | Maintain a compensation recovery (clawback) policy | | |

  17. Executive Compensation Decision-Making Process

    Executive Compensation Decision-Making Process The Role of the Compensation Committee. Our Board established a compensation committee to discharge its responsibilities relating to our executive compensation policies and programs. Our compensation committee oversees the executive compensation program for our NEOs. The compensation committee is comprised of independent, non-employee members of the Board and works very closely with its independent consultant and management to examine the effectiveness of our executive compensation program throughout the year. Our compensation committee is responsible for the executive compensation programs for our executive officers and reports to our Board on its discussions, decisions and other actions. Our compensation committee reviews, evaluates and recommends to the Board the compensation of our chief executive officer. Our compensation committee also reviews, approves and administers our incentive compensation plans, equity compensation plans, and such other plans as are designated from time to time by the Board. Details of the compensation committee’s authority and responsibilities are specified in its charter, which may be accessed at our website at https://ir.griddynamics.com/corporate-governance. The Role of Management. Members of our management team attend regular meetings where executive compensation, company and individual performance, and competitive compensation levels and practices are discussed and evaluated; however, they are not present in the board room, nor do they participate in discussions about their own pay. Only our compensation committee members are allowed to vote on decisions regarding NEO compensation. The CEO reviews his recommendations pertaining to the compensation of NEOs with the compensation committee providing input, transparency and oversight. The CEO does not participate in the deliberations of the Board or compensation committee regarding his own compensation. Independent members of the Board make all final determinations regarding CEO compensation. The Role of the Independent Consultant. Our compensation committee engages an independent compensation consultant to provide expertise on competitive pay practices, program design, and an objective assessment of any inherent risks of any programs. Pursuant to authority granted to it under its charter, the compensation committee has hired Pearl Meyer & Partners, LLC (“Pearl Meyer”) as its independent consultant. Pearl Meyer reports directly to the compensation committee and does not provide any additional services to management. The compensation committee has conducted an independence assessment of Pearl Meyer in accordance with SEC rules. The Role of Peer Group Companies. Our compensation committee strives to set a competitive level of total compensation for each NEO as compared with executive officers in similar positions at peer companies. For purposes of setting 2023 compensation levels, in conjunction with the recommendation of Pearl Meyer, the compensation committee took into account publicly-available data for a group of peer companies (the “2023 Compensation Peer Group”) listed below along with industry specific survey data, where appropriate. Selection criteria for determining/reviewing the 2023 Compensation Peer Group, used to establish the competitive market for the NEOs, generally include: Industry: IT consulting and services, systems software and applications software companies • Size: Companies with revenues ranging from $97 to $711 million and market capitalization greater than $117 million The 2023 Compensation Peer group is listed below. Grid Dynamics is positioned near the 50th percentile in revenue and the 25th percentile in market capitalization as of July 2023.

  18. Executive Compensation Decision-Making Process

    | Peer Companies | | Peer Data As of July 2023 ($ in millions) | | | | Agilysys, Inc. American Software, Inc. Benefitfocus, Inc. BlackLine, Inc. ChannelAdvisor Corporation eGain Corporation JFrog Ltd. LivePerson, Inc. LiveRamp Holdings, Inc. Model N, Inc. | PagerDuty, Inc. Progress Software Corporation PROS Holdings, Inc. Qualys, Inc. Rapid7, Inc. TechTarget, Inc. Upland Software, Inc. Workiva Inc. | | | | | | | Percentile | Revenue | Market Cap | | | | 25th | $239 | $744 | | | | Median | $306 | $1,804 | | | | 75th | $533 | $2,755 | | | | Grid | $319 | $693 | | | | % Rank | 53 | 24 |

  19. Cash Incentives

    Cash Incentives Our NEOs are eligible to receive payments under our Corporate Bonus Plan, which provides that eligible participants, including the NEOs, earn incentives in the form of annual cash bonuses, paid quarterly, based on achievement of our financial performance objectives. Performance targets are established based on a combination of our financial performance goals and market data. Actual quarterly payouts depend on the achievement of the pre-established financial performance objectives and can range from 0% to 200% of target award amounts. Bonus amounts earned are paid following the end of each calendar quarter based on the achievement of our financial performance objectives. The target bonus opportunities are expressed as a percentage of annual base salary and were established by the NEO’s level of responsibility and their ability to impact overall results. Target award opportunities for 2023 were as follows:

  20. Cash Incentives

    | Name | 2023 Base Salary | Bonus Target (% of Base Salary) | Bonus at Target | | Leonard Livschitz | $800,000 | 100% | $800,000 | | Anil Doradla | $300,000 | 50% | $150,000 | | Yury Gryzlov(1) | $475,200 | 50% | $237,600 | | Stan Klimoff(2) | $270,000 | 50% | $135,000 |

  21. Cash Incentives

    (1) Mr. Gryzlov’s 2023 base salary is 400,000 Swiss francs, which is shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. His bonus at target is 200,000 Swiss francs and shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. (2) Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023 and was only eligible to receive his bonus for the three months ended March 31, 2023. 2023 Financial Performance Metrics, Weightings and Results. For purposes of the Corporate Bonus Plan in 2023, the compensation committee considered two corporate performance measures, which are weighted equally: quarterly revenue and non-GAAP EBITDA. The compensation committee believed this mix of performance measures was appropriate for our business given the criticality of company growth in 2023, which the committee believes most directly influences long-term stockholder value. At the same time, the compensation committee established target performance levels for these measures that the committee believed to be challenging, but attainable, through the successful execution of our annual operating plan. Revenue growth targets were aligned with industry expectations, with annual target revenue set at a substantially similar level to 2022 actual results. The following table shows, by quarter in 2023, our actual achievement of quarterly revenue and non-GAAP EBITDA, the resulting combined achievement percentage and the resulting quarterly cash bonus payments for each NEO.

  22. Cash Incentives

    | | Actual Achievement of Corporate Performance Measures | | | Actual Payout to NEOs | | | | | | Revenue (in millions) | Non-GAAP EBITDA(1) (as a percentage of revenue) | Total Achievement Relative to Target | Leonard Livschitz | Anil Doradla | Yury Gryzlov(2) | Stan Klimoff(3) | | Three months ended March 31, 2023 | $80.1 | 13.5% | 158% | $316,000 | $59,250 | $93,353 | $26,787 | | Three months ended June 30, 2023 | $77.3 | 15.5% | 109% | $218,000 | $40,875 | $65,101 | $— | | Three months ended September 30, 2023 | $77.4 | 13.9% | 117% | $234,000 | $35,100 | $55,869 | $— | | Three months ended December 31, 2023 | $78.1 | 13.7% | 127% | $254,000 | $47,625 | $75,439 | $— | | Total | | | | $1,022,000 | $182,850 | $289,762 | $26,787 |

  23. Cash Incentives

    We calculate Non-GAAP EBITDA based on net income/(loss) before interest income/expense, provision for income taxes and depreciation and amortization, and further adjusted for the impact of stock-based compensation expense, transaction-related costs (which include, when applicable, professional fees, retention bonuses, and consulting, legal and advisory costs related to our merger and acquisition and capital-raising activities), impairment of goodwill and other income/expenses, net (which includes mainly interest income and expense, foreign currency transaction losses and gains, fair value adjustments and other miscellaneous expenses), and restructuring costs. An interim estimate of this metric is presented to the Board on a quarterly basis to determine the total achievement relative to target presented. (2) The actual payment of Mr. Gryzlov’s bonus is 243,908 Swiss francs, shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. (3) Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023 and was only eligible to receive his bonus for the three months ended March 31, 2023.

  24. Long-Term Equity Incentives

    Long-Term Equity Incentives A significant portion of our NEO’s annual compensation is provided in the form of long-term equity incentives that emphasize long-term stockholder value creation and the retention of a strong executive leadership team. Long-term equity incentives are intended to align the interests of award recipients with those of stockholders, since the awards deliver value only if our stock price appreciates after they are granted. For 2023, the compensation committee did not provide any service-based equity awards. Long-term incentives were granted using 100% PSUs. PSUs awarded in 2023 Effective February 21, 2023, the Board granted PSUs that would vest upon our Board’s certification of the achievement of certain performance metrics. The 2023 target PSUs for each NEO were as follows:

  25. Long-Term Equity Incentives

    | | 2023 Equity Awards: Target PSUs | | | Name | Shares at Target (#) | Grant Date Fair Value ($)(1) | | Leonard Livschitz | 333,250 | $3,989,003 | | Anil Doradla | 32,375 | $387,529 | | Yury Gryzlov | 32,375 | $387,529 | | Stan Klimoff | 32,375 | $387,529 |

  26. Long-Term Equity Incentives

    (1) The amounts in this column represent the aggregate grant date fair value of PSUs granted to the NEO in 2023 computed in accordance with FASB ASC Topic 718. In accordance with SEC rules, the grant date fair value of an award that is subject to a performance condition is based on the probable outcome of the performance conditions. The assumptions used to calculate these amounts are discussed in notes to our audited consolidated financial statements for the year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the NEO upon the vesting of the PSUs or the sale of the common stock underlying such awards. Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023, resulting in the forfeiture of these awards. The PSUs generally required the achievement of performance relating to specified levels of revenue growth from fiscal year 2022 to fiscal year 2023, and contribution margin for fiscal year 2023 with each such performance goal weighted at 50% of the award. Upon maximum performance achievement, 300% of the target number of PSUs awarded could become eligible to vest.

  27. Long-Term Equity Incentives

    | | Performance Range | | | Results | | | Metrics | Threshold (50% Payout) | Target (100% Payout) | Maximum (300% Payout) | Actual | Total Achievement Relative to Target | | Revenue growth (50%) | $279,434,055 | $332,216,044 | $388,102,855 | $304,455,103(1) | 70% | | Gross Margin (50%) | 12% | 22% | 47% | 38% | 270% |

  28. Long-Term Equity Incentives

    (1) The actual revenue shown here and used in the certification of the performance metrics in respect of the PSUs does not include revenue attributed to our acquisition of NextSphere Technologies Inc. As shown in the table above, despite the challenging conditions we faced in 2023, the Company achieved revenue of $304.5 million in 2023 (exclusive of any revenue attributable to our acquisition of NextSphere Technologies Inc.) an achievement that would alone result in the vesting of 70% of the target number of PSUs awarded, and contribution margin of 38%, an achievement that would alone result in the vesting of 270% of the target number of PSUs awarded. In February 2023, our compensation committee and Board certified the achievement of the equally weighted performance metrics, resulting in 170% of the target number of PSUs vesting on the certification date in the amounts as follows:

  29. Long-Term Equity Incentives

    | Name | 2023 Equity Awards: PSUs Shares Vested (#) | | Leonard Livschitz | 566,524 | | Anil Doradla | 55,035 | | Yury Gryzlov | 55,035 | | Stan Klimoff(1) | — |

  30. Long-Term Equity Incentives

    (1) Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023, resulting in the forfeiture of these awards.

  31. Compensation Recovery Policy

    Compensation Recovery Policy In November 2023, the Company adopted a compensation recovery policy pursuant to which we may seek the recovery of cash performance-based incentive compensation paid by us as well as performance-based equity awards, including the PSUs, in accordance with the compensation recovery rules established by The Nasdaq Stock Market pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The compensation recovery policy applies to each individual who is or was ever designated as an “officer” by the Board in accordance with Rule 16a-1(f) promulgated under the Securities Exchange Act of 1934. The compensation recovery policy provides that if (i) we restate our financial statements due to material noncompliance with any financial reporting requirement under the securities laws; (ii) the amount of cash incentive compensation or performance-based equity compensation that was paid or is payable based on achievement of specific financial results paid to a covered individual would have been less if the financial statements had been correct; and (iii) the cash incentive compensation or performance-based equity compensation was received no more than three fiscal years prior to the date a restatement of our financial statements was determined; then Grid Dynamics will require the repayment from the covered individual of the excess cash incentive compensation or performance-based equity compensation such individual received.

  32. Severance and Change in Control Benefits

    Severance and Change in Control Benefits On March 5, 2020, a wholly owned subsidiary of ChaSerg Technology Acquisition Corp., a Delaware corporation (“ChaSerg”), merged with and into Grid Dynamics International, Inc., a California corporation (“GDI”), with GDI surviving the merger. Immediately following such merger, GDI merged with and into another wholly owned subsidiary of ChaSerg (“Merger Sub 2”) with Merger Sub 2 surviving; Merger Sub 2 was then renamed “Grid Dynamics International, LLC” and ChaSerg was then renamed “Grid Dynamics Holdings, Inc.” (the “Business Combination”). We entered into employment agreements with certain of our officers (including our current NEOs), effective as of the consummation of the Business Combination (as amended, the “Employment Agreements”). Each Employment Agreement generally provides, with respect to each officer, the following terms: (i) at-will employment, (ii) the annual base salary, (iii) eligibility to receive annual incentive bonuses at our discretion and related targeted payment, (iv) initial grant of equity awards by the company and eligibility to be granted future equity awards by the company in the discretion of its board of directors, (v) an initial term for the agreement of four years with successive one-year renewal terms unless either party provides timely notice of non-renewal, (vi) severance payments upon a termination without cause (excluding death or disability) or resignation for “good reason” (as defined in the agreement) and (vii) eligibility for enhanced “double-trigger” severance upon such terminations that occur within the three month period prior to or the 12 month period following a “change in control” (as defined in the agreement). Severance payments (including due to a double-trigger termination in connection with a change in control) are generally comprised of: (i) a lump-sum payment equal to 24 months of base salary for Mr. Livschitz, 12 months of base salary for Mr. Doradla, 12 months of base salary for Mr. Gryzlov and 12 months for Mr. Klimoff, (ii) a lump-sum payment equal to 100% with respect to Mr. Livschitz, 50% with respect to Mr. Doradla, 50% with respect to Mr. Gryzlov or 50% with respect to Mr. Klimoff, of the current annual maximum bonus target amount, (iii) reimbursement for the monthly premiums for COBRA continuation coverage (or its equivalent) for a period of 24 months for Mr. Livschitz, 12 months for Mr. Doradla, 12 months for Mr. Gryzlov and 12 months for Mr. Klimoff, and (iv) for severance unrelated to a change in control, one year of accelerated vesting of outstanding unvested equity awards on the termination date. Mr. Klimoff received no severance payments when he voluntarily resigned effective May 19, 2023. In addition, “double-trigger” change in control severance terms provide for full accelerated vesting of outstanding unvested equity awards. Such severance benefits are conditioned on the officer signing and not revoking a separation agreement and release of claims in favor of us within the timeframe set forth in the officer’s agreement.

  33. Summary Compensation Table

    Summary Compensation Table Grid Dynamics’ NEOs for 2023 are Leonard Livschitz, Chief Executive Officer, Anil Doradla, Chief Financial Officer, Yury Gryzlov, Chief Operating Officer and Chief Executive Officer of Grid Dynamics Europe, and Stan Klimoff, former Chief Strategy Officer. The following table presents summary information regarding the total compensation for the years ended December 31, 2023, 2022 and 2021 for Mr. Livschitz, Mr. Gryzlov and Mr. Doradla, and the total compensation for the years ended December 31, 2023 and 2022 for Mr. Klimoff, the years in which he was an NEO:

  34. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Non-Equity Incentive Plan Compensation ($)(1) | Option Awards ($) | Stock Awards ($)(2) | All Other Compensation ($)(3) | Total ($) | | Leonard Livschitz, Chief Executive Officer | 2023 | 800,000 | 1,022,000 | — | 3,989,003 | 11,317 | 5,822,320 | | | 2022 | 733,333 | 1,342,500 | — | 22,579,813 | 6,841 | 24,662,487 | | | 2021 | 600,000 | 1,020,000 | — | 5,202,033 | — | 6,822,033 | | Anil Doradla, Chief Financial Officer | 2023 | 300,000 | 182,850 | — | 387,529 | 3,612 | 873,991 | | | 2022 | 300,000 | 276,375 | — | 2,749,621 | 3,372 | 3,329,368 | | | 2021 | 300,000 | 255,000 | — | 505,374 | — | 1,060,374 | | Yury Gryzlov(4), Chief Operating Officer and Chief Executive Officer of Grid Dynamics Europe | 2023 | 475,200 | 289,762 | — | 387,529 | 210,311 | 1,362,802 | | | 2022 | 369,488 | 357,010 | — | 2,749,621 | 52,982 | 3,529,101 | | | 2021 | 270,000 | 239,500 | — | 505,374 | — | 1,014,874 | | Stan Klimoff(5) Former Vice President of Corporate Development | 2023 | 105,404 | 26,787 | — | 387,529 | 4,560 | 524,280 | | | 2022 | 270,000 | 223,238 | — | 2,749,621 | 10,224 | 3,253,083 |

  35. Summary Compensation Table

    (1) The amounts included in this column reflect payments earned in 2023, 2022 and 2021, as applicable, under the Company’s Corporate Bonus Plan as described below. (2) The amounts in this column represent the aggregate grant date fair value of RSUs awarded and PSUs granted to the NEO in 2023, 2022 and 2021, as applicable, computed in accordance with FASB ASC Topic 718. In accordance with SEC rules, the grant date fair value of an award that is subject to a performance condition is based on the probable outcome of the performance conditions. The assumptions used to calculate these amounts are discussed in notes to Grid Dynamics’ audited consolidated financial statements for the year ended December 31, 2023 included in the Original Filing. These amounts do not reflect the actual economic value that will be realized by the NEO upon the vesting of the PSUs, or the sale of the common stock underlying such awards. The grant date fair market value for the PSUs assuming the maximum payout would have been $11,967,008 for Mr. Livschitz and $1,162,586 for Mr. Doradla, Mr. Gryzlov, and Mr. Klimoff. (3) The amounts included in this column for 2023 for Mr. Gryzlov include (i) certain insurance and education costs paid by the Company on behalf of Mr. Gryzlov’s family pursuant to Mr. Gryzlov’s relocation to Switzerland and (ii) certain housing and transportation costs paid by the Company on behalf of Mr. Gryzlov’s family pursuant to Mr. Gryzlov’s relocation, and the amounts included in this column for 2023 for Mr. Livschitz include ArmadaCare supplemental executive medical premiums paid by the Company on behalf of Mr. Livschitz and his family and supplemental life insurance premiums paid by the Company on behalf of Mr. Livschitz. (4) Mr. Gryzlov’s 2023 base salary is 400,000 Swiss francs, which is shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. Mr. Gryzlov’s 2022 base salary is 400,000 Swiss francs, which is shown here converted into U.S. dollars at the exchange rate of 1.0816 U.S. dollars per Swiss franc on December 31, 2022. The actual payment of Mr. Gryzlov’s 2023 bonus is 243,908 Swiss francs, shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. The actual payment of Mr. Gryzlov’s 2022 bonus includes 89,000 Swiss francs for the three months ended September 30, 2022, shown here converted into U.S. dollars at the exchange rate of 1.0816 U.S. dollars per Swiss franc on December 31, 2022, 84582.96 Swiss francs for the three months ended December 31, 2022, shown here converted into U.S. dollars at the exchange rate of 1.0816 U.S. dollars per Swiss franc on December 31, 2022 and $169,263. Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023 and forfeited any PSUs awarded to him in 2023.

  36. 2023 Grants of Plan-Based Awards

    2023 Grants of Plan-Based Awards The following table summarizes information regarding the incentive awards granted to each of Grid Dynamics’ NEOs in 2023:

  37. 2023 Grants of Plan-Based Awards

    | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards ($) | | Name | Grant Date | Approval Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Leonard Livschitz | — | — | — | 800,000 | 1,600,000 | — | — | — | — | — | | | 2/21/2023 | 2/16/2023 | — | — | — | — | 3,989,003 | 11,967,008 | — | — | | Anil Doradla | — | — | — | 150,000 | 300,000 | — | — | — | — | — | | | 2/21/2023 | 2/16/2023 | — | — | — | — | 387,529 | 1,162,586 | — | — | | Yury Gryzlov | — | — | — | 237,600 | 475,200 | — | — | — | — | — | | | 2/21/2023 | 2/16/2023 | — | — | — | — | 387,529 | 1,162,586 | — | — | | Stan Klimoff(3) | — | — | — | 135,000 | 270,000 | — | — | — | — | — | | | 2/21/2023 | 2/16/2023 | — | — | — | — | 387,529 | 1,162,586 | — | — |

  38. 2023 Grants of Plan-Based Awards

    (1) Amounts in the “Estimated Payouts Under Non-Equity Incentive Plan Awards” columns relate to cash incentive opportunities under our Corporate Bonus Plan based upon the achievement of corporate performance goals over each quarter fiscal year 2023. The actual amounts paid to our named executive officers are set forth in the “2023 Summary Compensation Table” above, and the calculation of the actual amounts paid is discussed more fully in the section titled “Compensation Discussion and Analysis — Quarterly Cash Incentives.” (2) Amounts in the “Estimated Payouts under Equity Incentive Plan Awards” columns relate to the PSUs under our 2020 Equity Incentive Plan. The shares underlying these PSUs vest upon our board’s certification of the achievement of certain performance metrics, with such certification to occur no later than March 1, 2024. The PSUs generally required the achievement of performance relating to specified levels of revenue growth from fiscal year 2022 to fiscal year 2023, and contribution margin for fiscal year 2023 with each such performance goal weighted at 50% of the award. Upon maximum performance achievement, 300% of the target number of PSUs awarded could become eligible to vest. In the event that Grid Dynamics’ change in control occurred during the fiscal year, 100% of the target number of PSUs would become eligible to vest on December 31, 2023, subject to continued service through such date. In February 2024, the compensation committee of our board of directors and our board of directors certified the achievement of certain performance metrics, resulting in 170% of the target number of PSUs vesting on the certification date, resulting in the issuance of the following number of shares to the following individuals: 566,524 shares for Mr. Livschitz, 55,035 shares for Mr. Doradla and 55,035 shares for Mr. Gryzlov, with such target numbers reflected here. The calculation of the payouts is discussed in the section titled “Compensation Discussion and Analysis — Long-Term Equity Incentives.” Mr. Klimoff resigned as our Chief Strategy Officer effective May 19, 2023.

  39. Outstanding Equity Awards at 2023 Year-End

    Outstanding Equity Awards at 2023 Year-End The following table summarizes information concerning the outstanding equity awards, including unexercised options, as of December 31, 2023, for each of Grid Dynamics’ NEOs:

  40. Outstanding Equity Awards at 2023 Year-End

    | | Option Awards | | | | Stock Awards | | | | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) — Exercisable | Number of Securities Underlying Unexercised Options (#) — Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock that Have Not Vested (#)(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares or Units of Stock that Have Not Vested ($)(7) | | Leonard Livschitz | 3/13/2020 | | | | | 83,318(2) | 1,110,629 | | | | | 2/21/2023 | | | | | | | 333,250 | 4,442,223 | | | 5/3/2022 | | | | | 166,662(3) | 2,221,604 | | | | Anil Doradla | 3/13/2020 | 131,250 | 8,750(1) | 8.26 | 3/13/2030 | | | | | | | 3/13/2020 | | | | | 8,102(2) | 108,000 | | | | | 5/4/2020 | | | | | 8,750(4) | 116,638 | | | | | 2/21/2023 | | | | | | | 32,375 | 431,559 | | | 5/3/2022 | | | | | 26,001 | 346,593 | | | | Yury Gryzlov | 11/12/2018 | 252,588 | | 3.54 | 11/12/2028 | | | | | | | 5/22/2019 | 46,518 | | 3.54 | 5/22/2029 | | | | | | | 5/22/2019 | 18,565 | | 3.54 | 5/22/2029 | | | | | | | 3/13/2020 | 131,250 | 8,750(1) | 8.26 | 3/13/2030 | | | | | | | 3/13/2020 | | | | | 8,102(2) | 108,000 | | | | | 5/4/2020 | | | | | 8,750(4) | 116,638 | | | | | 2/21/2023 | | | | | | | 32,375 | 431,559 | | | 5/3/2022 | | | | | 26,001(3) | 346,593 | | |

  41. Outstanding Equity Awards at 2023 Year-End

    (1) Twenty-five percent (25%) of the shares subject to the option vested on March 13, 2021 and the remaining shares vest in 12 equal quarterly installments thereafter, provided the participant’s service has not terminated prior to each such date. (2) Twenty-five percent (25%) of the shares underlying these RSUs vested on March 13, 2021, and the remaining RSUs vest in 12 equal quarterly installments thereafter. (3) Fifty percent (50%) of the shares underlying these RSUs vest on May 3, 2023, and the remaining RSUs vest in 4 equal quarterly installments thereafter. (4) Twenty-five percent (25%) of the shares underlying these RSUs vested on May 4, 2021, and the remaining RSUs vest in 12 equal quarterly installments thereafter. (5) This amount reflects the fair market value of our common stock of $13.33 per share as of December 31, 2023, multiplied by the amount shown in the column for Number of Shares or Units of Stock That Have Not Vested. The shares underlying these PSUs vest upon our board’s certification of the achievement of certain performance metrics, with such certification to occur no later than March 1, 2024. The PSUs generally required the achievement of performance relating to specified levels of revenue growth from fiscal year 2022 to fiscal year 2023, and contribution margin for fiscal year 2023 with each such performance goal weighted at 50% of the award. Upon maximum performance achievement, 300% of the target number of PSUs awarded could become eligible to vest. In the event that Grid Dynamics’ change in control occurred during the fiscal year, 100% of the target number of PSUs would become eligible to vest on December 31, 2023, subject to continued service through such date. In February 2024, the compensation committee of our board of directors and our board of directors certified the achievement of certain performance metrics, resulting in 170% of the target number of PSUs vesting on the certification date, resulting in the issuance of the following number of shares to the following individuals: 566,524 shares for Mr. Livschitz, 55,035 shares for Mr. Doradla and 55,035 shares for Mr. Gryzlov, with such target numbers reflected here. The amounts shown in the table above reflect shares of our common stock issued on February 20, 2024 as if such determination had been made as of December 31, 2023. This amount reflects the fair market value of our common stock of $13.33 per share as of December 31, 2023, multiplied by the amount shown in the column for Equity Incentive Plan Awards: Number of Unearned Shares or Units of Stock That Have Not Vested.

  42. Option Exercises and Stock Vested in 2023

    Option Exercises and Stock Vested in 2023 The following table sets forth the number of shares of common stock acquired during 2023 by our NEOs upon the exercise of stock options or upon the vesting of RSUs, as well as the value realized upon such equity award transactions.

  43. Option Exercises and Stock Vested in 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | | Leonard Livschitz | — | — | 833,236 | 9,355,574 | | Anil Doradla | — | — | 127,874 | 1,448,468 | | Yury Gryzlov | — | — | 127,874 | 1,448,468 | | Stan Klimoff | 105,000 | 299,167 | 68,844 | 779,898 |

  44. Pension Benefits and Nonqualified Deferred Compensation

    Pension Benefits and Nonqualified Deferred Compensation We do not provide a pension plan for our employees, and none of our NEOs participated in a nonqualified deferred compensation plan during fiscal 2023 except in jurisdictions where such plan is statutorily required.

  45. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control Each Employment Agreement with our NEOs generally provides, with respect to each officer, the following terms: (i) at-will employment, (ii) the annual base salary, (iii) eligibility to receive annual incentive bonuses at the Board’s discretion and related targeted payment, (iv) initial grant of equity awards by the company and eligibility to be granted future equity awards by the company in the discretion of its board of directors, (v) an initial term for the agreement of four years with successive one-year renewal terms unless either party provides timely notice of non-renewal, (vi) severance payments upon a termination without cause (excluding death or disability) or resignation for “good reason” (as defined in the agreement) and (vii) eligibility for enhanced “double-trigger” severance upon such terminations that occur within the three month period prior to or the 12 month period following a “change in control” (as defined in the agreement). Severance payments (including due to a double-trigger termination in connection with a change in control) are generally comprised of: (i) a lump-sum payment equal to 24 months of base salary for Mr. Livschitz, 12 months of base salary for Mr. Doradla, 12 months of base salary for Mr. Gryzlov and 12 months for Mr. Klimoff, (ii) a lump-sum payment equal to 100% with respect to Mr. Livschitz, 50% with respect to Mr. Doradla, 50% with respect to Mr. Gryzlov or 50% with respect to Mr. Klimoff, of the current annual maximum bonus target amount, (iii) reimbursement for the monthly premiums for COBRA continuation coverage (or its equivalent) for a period of 24 months for Mr. Livschitz, 12 months for Mr. Doradla, 12 months for Mr. Gryzlov and 12 months for Mr. Klimoff, and (iv) for severance unrelated to a change in control, one year of accelerated vesting of outstanding unvested equity awards on the termination date. Mr. Klimoff received no severance payments when he voluntarily resigned effective May 19, 2023. In addition, “double-trigger” change in control severance terms provide for full accelerated vesting of outstanding unvested equity awards. Such severance benefits are conditioned on the officer signing and not revoking a separation agreement and release of claims in favor of us within the timeframe set forth in the officer’s agreement. If any severance or other benefits provided for in an officer’s Employment Agreement or otherwise payable to such officer constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code (the “Code”) and could be subject to the related excise tax under Section 4999 of the Code, such officer would be entitled to receive either full payment of the benefits or such lesser amount which would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after-tax benefits to the officer.

  46. Potential Payments upon Termination or Change in Control

    | | | Termination without Cause or Resignation for Good Reason Outside of the Change in Control Period | | | | Termination without Cause or Resignation for Good Reason Within the Change in Control Period | | | | | | Named Executive Officer | Salary Severance ($) | Bonus Severance ($) | Value of Continued Health Coverage ($)(1) | Value of Equity Acceleration ($)(2) | Total ($) | Salary Severance ($) | Bonus Severance ($) | Value of Continued Health Coverage ($)(1) | Value of Equity Acceleration ($)(2) | Total ($) | | Leonard Livschitz | 1,600,000 | 800,000 | 88,184 | 3,332,233 | 5,820,417 | 1,600,000 | 800,000 | 88,184 | 3,332,233 | 5,820,417 | | Anil Doradla | 300,000 | 75,000 | 115 | 687,868 | 1,062,983 | 300,000 | 75,000 | 115 | 687,868 | 1,062,983 | | Yury Gryzlov(3) | 475,200 | 118,800 | 13,160 | 687,868 | 1,295,028 | 475,200 | 118,800 | 13,160 | 687,868 | 1,295,028 |

  47. Potential Payments upon Termination or Change in Control

    (1) The amounts reported in these columns represent estimates of the premiums to maintain group health insurance continuation benefits pursuant to COBRA (or its equivalent) for the executive and the executive’s respective eligible dependents for 24 months for Mr. Livschitz and 12 months for each of Mr. Doradla and Mr. Gryzlov. The amounts presented are based on estimates for maintaining group health insurance continuation benefits under our 2024 health insurance plans. (2) The value of the accelerated RSUs in this table are calculated by multiplying the number of shares subject to acceleration by the closing price of our common stock on December 31, 2023, which was $13.33 per share. The value of the accelerated stock options is calculated by multiplying the number of shares subject to acceleration for each stock option by the closing price per share on December 31, 2023, minus the applicable exercise price per share. (3) Mr. Gryzlov’s 2023 base salary is 400,000 Swiss francs, and his salary severance is shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. His bonus at target is 200,000 Swiss francs, and his bonus severance is shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023. The value of his continued health coverage total 11,077 Swiss francs and is shown here converted into U.S. dollars at the exchange rate of 1.1880 U.S. dollars per Swiss franc on December 31, 2023.

  48. CEO Pay Ratio

    CEO Pay Ratio In accordance with the requirements of Section 953(b) of the Dodd-Frank Act and Item 402(u) of Regulation S-K (which we collectively refer to as the “Pay Ratio Rule”), we are providing the following estimated information for 2023: • the median of the annual total compensation of all our employees (other than our Chief Executive Officer) was $46,372; • the annual total compensation of Chief Executive Officer, as reported in the Summary Compensation Table included in this Proxy Statement, was $5,822,320; and • the ratio of these two amounts was 126 to 1.

  49. PAY VERSUS PERFORMANCE DISCLOSURE

    PAY VERSUS PERFORMANCE DISCLOSURE In accordance with rules adopted by the SEC, we provide the following disclosure regarding executive “Compensation Actually Paid” or “CAP” (as calculated in accordance with SEC rules) and certain Company performance for the fiscal years listed below for Leonard Livschitz, our principal executive officer or PEO, and our other named executive officers, or NEOs. The calculations and analysis below do not necessarily reflect the Company’s approach to aligning executive compensation with performance. You should refer to our Compensation Discussion & Analysis (“CD&A”) in this proxy statement for a complete description of how executive compensation relates to Company performance and how the Compensation Committee makes its decisions.

  50. PAY VERSUS PERFORMANCE DISCLOSURE

    | | Summary Compensation Table Total for Leonard Livschitz (PEO) $ | Compensation Actually Paid to Leonard Livschitz (PEO)(1)(2) $ | Average Summary Compensation Table Total for Non-CEO NEOs(3) $ | Average Compensation Actually Paid to Non-CEO NEOs(1)(2)(3) $ | Year-end value of $100 invested on 3/6/2020 in: | | | | | Year | | | | | Total Shareholder Return(4) $ | Peer Group Total Shareholder Return(4) $ | Net Income(5) (in millions) $ | Total Revenue(6) (in millions) $ | | 2023 | 5,822,320 | 10,559,034 | 920,358 | 715,944 | 113.83 | 189.65 | (1.8) | 312.9 | | 2022 | 24,662,487 | (1,512,843) | 3,370,517 | (2,198,770) | 95.82 | 154.38 | (29.2) | 310.5 | | 2021 | 6,822,033 | 61,798,485 | 1,037,624 | 9,962,765 | 324.25 | 237.64 | (7.7) | 211.3 | | 2020 | 16,867,152 | 30,670,144 | 3,445,956 | 5,539,216 | 107.60 | 154.73 | (12.6) | 111.3 |

  51. PAY VERSUS PERFORMANCE DISCLOSURE

    (1) Compensation Actually Paid does not mean that our PEO or non-CEO NEOs were actually paid those amounts in the listed year, but this is a dollar amount derived from the starting point of Summary Compensation Table total compensation under the methodology prescribed under the relevant rules as shown in the adjustment table below. Because of adjustments required by SEC rules, Compensation Actually Paid may be a negative amount. Compensation Actually Paid does not represent amounts actually earned or realized by our PEO and Non-PEO NEOs in the applicable fiscal years.

  52. PAY VERSUS PERFORMANCE DISCLOSURE

    | | 2023 | | 2022 | | 2021 | | 2020 | | | | Leonard Livschitz | Average Non-CEO NEOs | Leonard Livschitz | Average Non-CEO NEOs | Leonard Livschitz | Average Non-CEO NEOs | Leonard Livschitz | Average Non-CEO NEOs | | Total Compensation from Summary Compensation Table | $5,822,320 | $920,358 | $24,662,487 | $3,370,517 | $6,822,033 | $1,037,624 | $16,867,152 | $3,445,956 | | Adjustments for Pension | | | | | | | | | | Adjustment Summary Compensation Table Pension | $— | $— | $— | $— | $— | $— | $— | $— | | Amount added for current year service cost | $— | $— | $— | $— | $— | $— | $— | $— | | Amount added for prior service cost impacting current year | $— | $— | $— | $— | $— | $— | $— | $— | | Total Adjustments for Pension | $— | $— | $— | $— | $— | $— | $— | $— | | Adjustments for Equity Awards | | | | | | | | | | Adjustment for grant date values in the Summary Compensation Table | $(3,989,003) | $(387,529) | $(22,579,813) | $(2,749,621) | $(5,202,033) | $(505,374) | $(13,649,920) | $(2,344,222) | | Year-end fair value of unvested awards granted in the current year | $7,551,765 | $489,078 | $17,051,819 | $2,096,827 | $2,657,236 | $258,149 | $27,419,144 | $4,429,378 | | Year-over-year difference of year-end fair values for unvested awards granted in prior years | $527,446 | $70,023 | $(11,143,047) | $(2,866,245) | $19,022,743 | $4,851,438 | $— | $— | | Fair values at vest date for awards granted and vested in current year | $— | $— | $— | $— | $32,341,913 | $3,141,994 | $— | $— | | Difference in fair values between prior year-end fair values and vest date fair values for awards granted in prior years | $646,506 | $— | $(9,504,290) | $(2,050,249) | $6,156,594 | $1,178,935 | $33,769 | $8,105 | | Forfeitures during current year equal to prior year-end fair value | $— | $(446,752) | $— | $— | $— | $— | $— | $— | | Dividends or dividend equivalents not otherwise included in total compensation | $— | $— | $— | $— | $— | $— | $— | $— | | Total Adjustments for Equity Awards | $4,736,714 | $(204,413) | $(26,175,330) | $(5,569,288) | $54,976,452 | $8,925,141 | $13,802,992 | $2,093,260 | | Compensation Actually Paid (as calculated) | $10,559,034 | $715,944 | $(1,512,843) | $(2,198,770) | $61,798,485 | $9,962,765 | $30,670,144 | $5,539,216 |

  53. PAY VERSUS PERFORMANCE DISCLOSURE

    Assumptions used in the valuation of equity awards for purposes of calculating Compensation Actually Paid were materially the same as at grant date, except for adjusting for expected performance of PSUs at each measurement date. (3) Reflects the average of the total compensation paid to our non-CEO NEOs in each listed year, as shown in our Summary Compensation Table for such listed year. The names of the non-CEO NEOs in each year are listed below: 2023: Anil Doradla; Yury Gryzlov; Stan Klimoff 2022: Anil Doradla; Yury Gryzlov; Stan Klimoff 2021: Anil Doradla; Yury Gryzlov 2020: Victoria Livschitz; Yury Gryzlov (4) Total shareholder return is calculated by assuming that a $100 investment was made at the close of trading on March 6, 2020, the first day of trading for the Company’s stock after the closing of its business combination, and reinvesting all dividends until the last day of each reported fiscal year. Pursuant to SEC guidance, reflects peer group used in the Company’s performance graph as disclosed in our 2023 Form 10-K. The peer group includes Accenture plc, Cognizant Technology Solutions Corp., Endava plc, EPAM Systems Inc., Globant, S.A., and Infosys Ltd. (5) The dollar amounts reported are the Company’s net income reflected in the Company’s audited financial statements. (6) In the Company’s assessment, Total Revenue is the financial performance measure that is the most important financial performance measure (other than total shareholder return and net income) used by the Company in 2023 to link compensation actually paid to performance. The dollar amounts reported are the Company’s total revenue reflected in the Company’s audited financial statements.

  54. Descriptions of the Information Presented in the Pay Versus Performance Table

    Descriptions of the Information Presented in the Pay Versus Performance Table The illustrations below compare CAP (as calculated in accordance with the SEC rules) and the following measures: • the Company’s cumulative TSR and the Peer Group’s cumulative TSR; • the Company’s Net Income; and • the Company’s Total Revenue