DEF 14A of Varonis Systems Inc, Apr 19, 2024

DEF 14A of Varonis Systems Inc

Filed Apr 19, 2024 · FY20230001140361-24-020656

Open on EDGAR

  1. Board Nominees

    Board Nominees You are being asked to vote on the following three nominees for directors to serve in Class I, with a term expiring at the 2027 Annual Meeting of Shareholders. Information about each director’s experiences, qualifications, attributes and skills can be found in the section below titled “Proposal No. 1: Election of Directors”.

  2. Board Nominees

    | Name | Age | Director Since | Independent | Committee Memberships | | | | | | | | | AC | CC | NCGC | TC | | Gili Iohan | 48 | 2017 | Yes | | | | | | Rachel Prishkolnik | 56 | 2021 | Yes | | | | | | Ofer Segev | 64 | 2015 | Yes | | | | |

  3. Board Nominees

    | AC: Audit Committee | | - Committee Chairperson | | CC: Compensation Committee | | | | NCGC: Nominating and Corporate Governance Committee | | | | TC: Technology Committee | | |

  4. CORPORATE GOVERNANCE HIGHLIGHTS

    CORPORATE GOVERNANCE HIGHLIGHTS

  5. CORPORATE GOVERNANCE HIGHLIGHTS

    | • 10 of our 11 Directors are independent • Independent Lead Director • Our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee consist solely of independent directors • Approximately 55% of directors are gender and/or ethnically diverse, including two female directors • Robust risk oversight by Board and committees • Executive sessions of independent directors | • At least 75% average Board and committee meeting attendance for each director in 2023 • Focus on board refreshment, with 60% of the Company’s independent directors having served nine years or fewer, and more than 25% of the Company’s directors having joined since 2021 • Annual Board and Board committee self-evaluations • No shareholder rights plan or “poison pill” • Single class of shares so that all shareholders have an equal vote | • Comprehensive code of ethics and business conduct and corporate governance guidelines (“Corporate Governance Guidelines”) • Compensation “claw-back” policy • Stock ownership guidelines for directors and executive officers • Policy prohibiting hedging and pledging of shares owned by directors, executive officers and employees |

  6. Board Skills and Experience

    Board Skills and Experience Our Board takes a holistic approach to building its composition with directors who collectively add significant value to the Company’s strategic decisions and who enable the Board as a whole to provide oversight of management and accountability to our shareholders. The Board and the Nominating and Corporate Governance Committee believe the skills, qualities, attributes, experience and diversity of backgrounds of our directors provide us with a diverse range of perspectives to effectively address our evolving needs and represent the best interests of our shareholders.

  7. Board Diversity Matrix

    Board Diversity Matrix The Nominating and Corporate Governance Committee and the Board seek candidates with a broad diversity of knowledge, experience and demonstrated expertise in areas of importance to our Company. In addition, although the Company has no formal policy with respect to the consideration of traditional diversity factors such as race and gender in the nominating process, the Company is disclosing its Board Diversity Matrix in compliance with Nasdaq Rule 5606(a) – as well as certain additional diversity categories listed below the matrix – to reflect the diverse attributes that the Company values on its Board.

  8. Board Diversity Matrix

    | Board Diversity Matrix (as of April 19, 2024) | | | | | | Total Number of Directors | 11 | | | | | | Female | Male | Non- Binary | Did Not Disclose Gender | | Part I: Gender Identity | | | | | | Directors | 2 | 9 | – | – | | Part II: Demographic Background | | | | | | African American or Black | – | – | – | – | | Alaskan Native or Native American | – | – | – | – | | Asian | – | – | – | – | | Hispanic or Latinx | – | 1 | – | – | | Native Hawaiian or Pacific Islander | – | – | – | – | | White | 2 | 8 | – | – | | Two or More Races or Ethnicities | – | – | – | – | | LGBTQ+ | – | | | | | Did Not Disclose Demographic Background | – | | | |

  9. Board Diversity Matrix

    Directors who identify as Middle Eastern: 4

  10. Board Diversity Matrix

    | PROPOSALS REQUIRING YOUR VOTE |

  11. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    PROPOSAL NO. 1: ELECTION OF DIRECTORS Pursuant to our Amended and Restated Certificate of Incorporation, the Board of Directors is divided into three classes. We refer to these classes as Class I, Class II and Class III, with members of each class holding office for staggered three-year terms. The terms of our directors will expire upon the election and qualification of successor directors (which may be incumbent directors) as follows: for Class I directors, at the Annual Meeting; for Class II directors, at the 2025 Annual Meeting of Shareholders; and for Class III directors, at the 2026 Annual Meeting of Shareholders. The Board of Directors presently has 11 members. As stated above, the term of each of the three Class I directors expires at the Annual Meeting. If elected at the Annual Meeting, each of the director nominees will serve until the 2027 Annual Meeting of Shareholders and until a successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. Directors are elected by a plurality of the votes cast by the holders of shares entitled to vote on the election of directors. Accordingly, the three nominees receiving the highest number of affirmative “for” votes will be elected. Each person nominated for election has consented to being named in this Proxy Statement and to serve if elected. The nominees are not being nominated pursuant to any arrangement or understanding with any person. Shares represented by executed proxies will be voted, if authority to do so is not withheld, “for” the election of the nominees named below. If any nominee becomes unavailable for election as a result of any presently unforeseen reason, the persons named as proxies will have the right to use their discretion to vote shares pursuant to such proxy for a substitute. Our Board of Directors has no reason to believe that any substitute nominee or nominees will be required, and all of the nominees have indicated that they will be willing and able to serve as directors. The following is a brief biography of each nominee and each director whose term will continue after the Annual Meeting.

  12. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | CLASS I DIRECTOR NOMINEES |

  13. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | GILI IOHAN | Age: 48 | | Position, Principal Occupation and Professional Experience: Partner, Ion Crossover Partners. Ms. Iohan has served as a director since April 2017. Ms. Iohan is a partner at Ion Crossover Partners, an investment firm. Ms. Iohan served as the Company’s first Chief Financial Officer from 2005 until March 2017. During her twelve-year tenure, she was responsible for the Company’s finance, accounting, back-office operations and human resources. Prior to joining us, Ms. Iohan was a partner at NextAge Co. Ltd. for six years, a firm specializing in providing customized budgeting and controllership environments, strategic business planning and structuring, financial and accounting issue resolution for businesses of all sizes. While at NextAge Co. Ltd., Ms. Iohan served as a Chief Financial Officer and Strategic Financial Consultant for several companies, including SolarEdge. Previously, Ms. Iohan served as a Senior Financial Manager at M-Systems Inc. and held a position at KPMG LLP. | | | Other Current and Past Directorships: Ms. Iohan serves as a director at Fiverr International Ltd (NYSE: FVRR), and Monday.com (Nasdaq: MNDY) and served as a director at SimilarWeb (NYSE: SMWB) until March 2024. | | | Director Qualifications: Our Board of Directors believes that Ms. Iohan possesses specific attributes that qualify her to serve as a director, including her long history at our Company, her experience as a Chief Financial Officer of several global software and technology companies, her experience serving as a director on other public company boards, and her human capital management experience. | |

  14. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | RACHEL PRISHKOLNIK | Age: 56 | | Position, Principal Occupation and Professional Experience: VP General Counsel & Corporate Secretary, SolarEdge Technologies, Inc. Ms. Prishkolnik has served as a director since May 2021. Ms. Prishkolnik has been Vice President, General Counsel and Corporate Secretary of SolarEdge Technologies, Inc. (“SolarEdge”), a global leader in smart energy technology publicly traded on the Nasdaq Global Select Market, since 2010. Prior to joining SolarEdge, Ms. Prishkolnik served as the Vice President, General Counsel & Corporate Secretary of Gilat Satellite Networks Ltd. (“Gilat”). At Gilat she held various positions beginning as Legal Counsel in 2001 and becoming Corporate Secretary in 2004 and Vice President, General Counsel in 2007. Prior to Gilat, she worked at the law firm of Jeffer, Mangels, Butler & Marmaro LLP in Los Angeles. Ms. Prishkolnik holds an LLB law degree from the Faculty of Law at the Tel Aviv University and a B.A. from Wesleyan University in Connecticut. She is licensed to practice law and is a member of the Israeli Bar. | | | Other Current and Past Directorships: None. | | | Director Qualifications: Our Board of Directors believes that Ms. Prishkolnik possesses specific attributes that qualify her to serve as a director, including her experience as a General Counsel of a publicly traded company with experience navigating complex legal, regulatory and corporate governance matters. | |

  15. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    | OFER SEGEV | Age: 64 | | Position, Principal Occupation and Professional Experience: Chief Financial Officer, Windward Ltd. Mr. Segev has served as a director since 2015. Since 2019, he has served as Chief Financial Officer at Windward Ltd, a predictive intelligence company serving the global maritime industry, and has served as a director of the company since December 2021. From February 2017 to October 2019, Mr. Segev served as the Chief Financial Officer and Chief Operating Officer at AlgoSec, Inc., a network security policy management solutions provider. Prior to joining AlgoSec, from November 2014 to April 2015, he served as the Vice President of Finance and Chief Financial Officer of AudioCodes Limited, a communications company publicly traded on the Nasdaq Global Select Market. Prior to AudioCodes, Mr. Segev served at different times as the Chief Executive Officer and Chief Financial Officer of Ness Technologies, Inc., a provider of IT services whose shares were formerly traded on the Nasdaq Global Select Market. Mr. Segev has also been the Chief Executive Officer and Chief Financial Officer of various other companies, including Attunity, and was a partner at Ernst & Young. | | | Other Current and Past Directorships: Mr. Segev serves as a director at Windward Ltd. (LON: WNWD) and previously served as a director at Ness Technologies Srl from 2012 to 2014. | | | Director Qualifications: Our Board of Directors believes that Mr. Segev possesses specific attributes that qualify him to serve as a director, including his more than 25 years of management and financial experience in the global high-tech and service sectors which he gained by serving as Chief Executive Officer and Chief Financial Officer of several companies, including publicly traded companies and his experience serving as a director on other public company boards. | |

  16. PROPOSAL NO. 1: ELECTION OF DIRECTORS

    FOR THE ELECTION OF EACH NOMINEE LISTED ABOVE AS A CLASS I DIRECTOR,

  17. Class II Directors Whose Term Expires in 2025

    Class II Directors Whose Term Expires in 2025

  18. Class II Directors Whose Term Expires in 2025

    | CARLOS AUED | Age: 65 | | Position, Principal Occupation and Professional Experience: Director, Varonis Systems, Inc. Mr. Aued has served as a director of the Company since January 2022. Mr. Aued served as Leader of Systems Architect/Systems Engineers in a number of verticals, including healthcare, retail, financial, education and public sector over the last 25 years at Cisco Systems, Inc until his retirement in December 2021. Prior to that, Mr. Aued held pre-sales technology leadership positions with a number of companies including Micom, Unisys and BayNetworks. | | | Other Current and Past Directorships: None. | | | Director Qualifications: Our Board of Directors believes that Mr. Aued possesses specific attributes that qualify him to serve as a director, including his experience in leadership roles at a large corporation and expertise in the areas of technology and sales. | |

  19. Class II Directors Whose Term Expires in 2025

    | KEVIN COMOLLI | Age: 64 | | Position, Principal Occupation and Professional Experience: Partner, Accel. Mr. Comolli has served as a director of the Company since 2004. Mr. Comolli has been a partner at Accel, a global venture capital and growth equity firm, since 2000. | | | Other Current and Past Directorships: Mr. Comolli has experience serving as a director of more than ten private software companies. | | | Director Qualifications: Our Board of Directors believes that Mr. Comolli possesses specific attributes that qualify him to serve as a director, including his experience in the software and technology industry as an investment professional, his experience as a senior leader involved with global emerging software, technology and cloud computing companies, and as a member of the boards of other companies in the industry. | |

  20. Class II Directors Whose Term Expires in 2025

    | JOHN J. GAVIN, JR. | Age: 68 | | Position, Principal Occupation and Professional Experience: Director, Varonis Systems, Inc. Mr. Gavin has served as a director of the Company since 2013. Mr. Gavin is an industry veteran with more than 40 years of financial and operational management experience. He most recently served as the Executive Vice President and Chief Financial Officer for BladeLogic, a leading data center automation software provider, from 2007 to 2008. Prior to joining BladeLogic, Mr. Gavin served as the Chief Financial Officer for several companies, including Data General Corporation, Cambridge Technology Partners (CTP) and NaviSite, Inc. Mr. Gavin also worked in various positions in the audit practice of Price Waterhouse from 1978 to 1988. | | | Other Current and Past Directorships: Mr. Gavin served as a director of Cimpress plc (Nasdaq: CMPR) from 2006 to 2021. Mr. Gavin also served as a director of BroadSoft, Inc. from 2010 to 2018, Qlik Technologies Inc. from 2010 to 2016, and Ascential Software from 2001 to 2004. | | | Director Qualifications: Our Board of Directors believes that Mr. Gavin possesses specific attributes that qualify him to serve as a director, including his experience as a chief financial officer of multiple public companies, as a member of the board, audit, compensation and nominating & governance committees of other publicly traded companies in the software and technology industry, and for his financial, risk oversight and compliance expertise and his expertise with international direct sales organizations in the software industry. | |

  21. Class II Directors Whose Term Expires in 2025

    | FRED VAN DEN BOSCH | Age: 77 | | Position, Principal Occupation and Professional Experience: Director, Varonis Systems, Inc. Mr. van den Bosch has served a director of the Company since 2013. He has been a business consultant and private investor since 2015. Mr. van den Bosch has been involved in the architecture and design of hardware and software systems for multiple technology companies. His background spans many technical disciplines including operating systems, storage management, high performance computing, enterprise software-as-a-service, application performance monitoring, and software engineering. Previously, he served as Chief Executive Officer of Librato, Inc. Before that, he served as Chief Executive Officer of PANTA Systems, Inc., as Executive Vice President Engineering and Chief Technology Officer at VERITAS Software, Inc., and in various engineering and management positions at the Computer Systems Division of Philips Electronics. Mr. van den Bosch also serves as an advisor to Tabnine Ltd., OSNexus, Inc., and Thehintbox!, Inc. | | | Other Current and Past Directorships: Mr. van den Bosch serves as a director of Chunk Food Inc., MounTavor Inc., Kaholo Ltd., Today Boost Ltd. and Trailze Ltd., all of which are private companies. Mr. van den Bosch previously served as a director of VERITAS Software, Inc., Librato Inc., Neebula Systems Ltd., and numerous other private companies. | | | Director Qualifications: Our Board of Directors believes that Mr. van den Bosch possesses specific attributes that qualify him to serve as a director, including his many years of operational experience from holding various executive positions at software and technology companies, including chief executive officer and chief technology officer, and his patent and licensing expertise. | |

  22. Class III Directors Whose Term Expires in 2026

    Class III Directors Whose Term Expires in 2026

  23. Class III Directors Whose Term Expires in 2026

    | YAKOV FAITELSON | Age: 48 | | Position, Principal Occupation and Professional Experience: Chief Executive Officer, President, Co-founder and Chairman, Varonis Systems, Inc. Mr. Faitelson is our co-founder and has served as our Chief Executive Officer, President and Chairman of the Board of Directors since 2004. Together with Mr. Korkus, Mr. Faitelson conceived and developed the MetaData Framework technology that now serves as the foundation for the Varonis Data Security Platform. With extensive cross-functional experience in storage, networking, operating systems and application software, Mr. Faitelson leads the management, strategic direction and execution of the Company’s vision. Prior to becoming our Chief Executive Officer, President and Chairman, Mr. Faitelson held leadership positions in the global professional services and systems integration divisions of NetVision, Inc. and NetApp, Inc. | | | Other Current and Past Directorships: None. | | | Director Qualifications: Our Board of Directors believes that Mr. Faitelson possesses specific attributes that qualify him to serve as a director, including his long history as our co-founder and Chief Executive Officer and the associated knowledge and perspective he brings, his deep understanding of the software and technology industry, and his operational experience from holding various leadership positions at technology companies. | |

  24. Class III Directors Whose Term Expires in 2026

    | THOMAS F. MENDOZA | Age: 73 | | Position, Principal Occupation and Professional Experience: Director, Varonis Systems, Inc. Mr. Mendoza has served as a director since 2015. Mr. Mendoza was the Vice Chairman of NetApp, Inc., a storage and data management solutions provider, from March 2008 to August 2019, and was President of NetApp, Inc. from October 2000 to March 2008. Prior to 2000, he held a number of senior positions at NetApp, Inc., including Senior Vice President, Worldwide Sales and Marketing, Senior Vice President, Worldwide Sales, and Vice President, North American Sales. | | | Other Current and Past Directorships: Mr. Mendoza previously served as a director of UiPath (NYSE: PATH) from 2017 to 2021 and ServiceSource International, Inc (Nasdaq: SREV) from 2011 to 2019, as well as a director of many private technology companies. | | | Director Qualifications: Our Board of Directors believes that Mr. Mendoza possesses specific attributes that qualify him to serve as a director, including his operational experience from holding various leadership positions at multiple global companies, his sales and marketing experience in the software and technology industry, and his experience serving as a director on other public company boards. | |

  25. Class III Directors Whose Term Expires in 2026

    | AVROHOM J. KESS | Age: 55 | | Position, Principal Occupation and Professional Experience: Vice Chairman and Chief Legal Officer, The Travelers Companies, Inc. Mr. Kess has served as a director since January 2022. Mr. Kess has been Vice Chairman and Chief Legal Officer of The Travelers Companies, Inc. since December 2016. Prior to that, Mr. Kess was a partner, member of the Corporate Department and Head of the Public Company Advisory Practice at the law firm of Simpson Thacher & Bartlett LLP, which he joined in 1995. | | | Other Current and Past Directorships: None. | | | Director Qualifications: Our Board of Directors believes that Mr. Kess possesses specific attributes that qualify him to serve as a director, including his significant experience and expertise in the areas of law, risk management oversight, corporate transactional matters, executive compensation policies, practices and disclosures and corporate governance, including environmental, social and governance matters and disclosure. | |

  26. Class III Directors Whose Term Expires in 2026

    | OHAD KORKUS | Age: 45 | | Position, Principal Occupation and Professional Experience: Director and Co-founder, Varonis Systems, Inc. Mr. Korkus is our co-founder and has served as a director since 2007. He also served as the Company’s Chief Technology Officer from 2007 until February 2018. Mr. Korkus has created several patents for permissions visualization, simulation and data analysis, and, together with Mr. Faitelson, conceived and developed the MetaData Framework technology that now serves as the foundation for the Varonis Data Security Platform. Prior to joining us, Mr. Korkus was responsible for architecture, design and development of solutions at NetVision, Inc. and NetApp, Inc. | | | Other Current and Past Directorships: None. | | | Director Qualifications: Our Board of Directors believes that Mr. Korkus possesses specific attributes that qualify him to serve as a director, including his long history as our co-founder and Chief Technology Officer at our Company and his significant experience across multiple technical disciplines, including engineering, storage, networking, operating systems and software development. | |

  27. PROPOSAL NO. 5: APPROVAL OF THE AMENDED AND RESTATED VARONIS SYSTEMS, INC. 2023 OMNIBUS EQUITY INCENTIVE PLAN

    PROPOSAL NO. 5: APPROVAL OF THE AMENDED AND RESTATED VARONIS SYSTEMS, INC. 2023 OMNIBUS EQUITY INCENTIVE PLAN

  28. OVERVIEW

    OVERVIEW We are asking shareholders to approve the Amended and Restated Varonis Systems, Inc. 2023 Omnibus Equity Incentive Plan (the “2023 Plan” and, as restated, the “Restated 2023 Plan”) to increase the number of shares of Company common stock available for issuance under the 2023 Plan by 4,400,000. The Restated 2023 Plan was adopted by our Board on April 18, 2024, subject to approval by our shareholders at the Annual Meeting. If approved by the Company’s shareholders the Restated 2023 Plan will become effective on June 3, 2024 (the “Effective Date”). After the proposed increase, up to a total of 6,796,671 shares will be available for new equity award grants under the Restated 2023 Plan after June 3, 2024. Awards granted between April 3, 2024 and the Effective Date are expected to be minimal. However, for the avoidance of doubt, if our shareholders approve the Restated 2023 Plan, grants made from the 2023 Plan between April 3, 2024 and the Effective Date will be deducted from the shares already available under the Restated 2023 Plan. Other than the increase in the number of shares of Common Stock reserved for issuance described above, we are not proposing to make any other material changes to the 2023 Plan. The Restated 2023 Plan will continue to provide incentive compensation through the grant of incentive stock options, non-qualified stock options, restricted shares, restricted stock units, performance shares, stock appreciation rights and other stock-based and cash awards. As of April 3, 2024, 2,396,671 shares of Common Stock remained available for future grants of awards under the 2023 Plan. The closing price of a share of Common Stock on the New York Stock Exchange on April 3, 2024 was $46.47. We believe the ability to grant awards under the Restated 2023 Plan is necessary to enable us to attract, motivate and retain directors and key employees, and to provide incentives for such individuals through Common Stock ownership and other rights that promote and recognize the financial success and growth of our Company. Based upon recent equity award requirements, we believe that the proposed increase of 4,400,000 shares of Common Stock to be reserved for issuance under the Restated 2023 Plan will be sufficient for equity awards for at least one year. However, the number of shares of Common Stock required for future grants is not currently known and is dependent upon several factors that cannot be predicted, including but not limited to the price of the Company’s Common Stock on future grant dates. See “Summary of the 2023 Plan-Key Equity Plan Data” for more details. If shareholders do not approve the Restated 2023 Plan, the 2023 Plan will continue in its current form, such that the pool of shares of Common Stock available thereunder will become depleted and be insufficient for equity awards made following our annual grants in 2024. As a result, in future years, we may not be able to continue to offer equity packages to our current employees and new employees, and thus may be less competitive than other companies that offer equity. We believe that this could impede our plans for growth and impair our ability to operate our business. In addition, if we are unable to grant competitive equity awards, we may be required to offer additional cash-based incentives to replace equity as a means of competing for talent, which we believe could adversely affect our reported earnings and financial results. We also believe that equity grants are a more effective compensation vehicle than cash awards because they better align the financial interests of employees with the interests of shareholders, and promote actions that result in long-term value creation. If this Proposal No. 5 receives the requisite shareholder approval, the Company intends to register the additional shares of Common Stock available for issuance under the Restated 2023 Plan on a registration statement on Form S-8 under the Securities Act as soon as reasonably practicable following receipt of approval.

  29. Plan Governance Highlights

    | • | Dividends and dividend equivalent rights, if any, on all awards will be subject to the same vesting requirements as the underlying award and will only be paid at the time those vesting requirements are satisfied. |

  30. Plan Governance Highlights

    | • | No “liberal share recycling” of shares withheld upon exercise of stock options. |

  31. Plan Governance Highlights

    | • | No “liberal” change in control definition. |

  32. Administration of the Restated 2023 Plan

    Administration of the Restated 2023 Plan The Restated 2023 Plan will be administered by the Compensation Committee. Subject to the terms of our Restated 2023 Plan, the committee (or its designee) may select, from those eligible participants, the persons who will receive awards, the types of awards to be granted, any purchase price to be paid for shares covered by the awards, and the vesting (including acceleration of vesting), forfeiture and other terms and conditions of the awards, and will have the authority to make all other determinations necessary or advisable for the administration of the Restated 2023 Plan. The Compensation Committee will also have the ability to construe and interpret the terms and provisions of the Restated 2023 Plan (and any related award agreement) and to prescribe, amend and rescind rules relating to sub-plans established for the purpose of satisfying applicable foreign laws or for qualifying for favorable tax treatment under applicable foreign laws.

  33. Available Shares

    Available Shares Subject to adjustment as provided in the Restated 2023 Plan, as of the effective date of the Restated 2023 Plan, a total of 6,796,671 shares of Common Stock will be authorized for issuance for awards granted under the Restated 2023 Plan (which total includes shares of Common Stock underlying awards that are currently outstanding or are no longer available for issuance under the Restated 2023 Plan). Shares of Common Stock underlying awards under the 2013 Plan that on or after Effective Date are forfeited, cancelled, exchanged or surrendered or otherwise terminate, expire or are settled without a distribution of shares of Common Stock, will be added to the number of available share issuable under the Restated 2023 Plan. If any shares of Common Stock subject to an award are forfeited, cancelled, exchanged or surrendered or if an award otherwise terminates, expires or is settled without a distribution of shares of Common Stock, such shares will again be available for future grants. Shares tendered or withheld to pay any tax withholding liability in respect of full value awards will likewise become available for further grants. Shares tendered or withheld to pay any exercise price or tax withholding liability in respect of stock options will not be available for future grants. No more than 6,796,671 shares of Common Stock will be issued pursuant to the exercise of incentive stock options.

  34. Minimum Vesting

    Minimum Vesting Equity awards under the Restated 2023 Plan will be subject to a minimum one-year vesting period, with certain limited exceptions, including (i) for substitute awards granted in connection with mergers or acquisitions, (ii) awards granted to non-employee directors vesting on the earlier of the one-year anniversary of the date of grant and the next annual meeting of shareholders held at least 50 weeks after the immediately preceding year’s annual meeting, (iii) accelerated exercisability or vesting in cases of employment termination, death or disability, or a termination of a participant’s service other than for cause and (iv) at the Compensation Committee’s discretion, up to 5% of the shares of Common Stock authorized for issuance under the Restated 2023 Plan.

  35. Options

    Options A stock option is the right to purchase shares of our Common Stock at a fixed exercise price for a fixed period of time. Non-qualified stock options and “incentive stock options” or “ISOs” (within the meaning of Section 422 of the Code) may be issued under the Restated 2023 Plan. The terms and conditions of any options granted to a participant will be set forth in an award agreement and determined by the Compensation Committee. The exercise price of any stock option must be at least equal to the fair market value of our common stock on the date the option is granted, and the maximum term is ten years.

  36. Restricted Stock

    Restricted Stock Restricted stock awards are awards of shares of our Common Stock that vest in accordance with terms and conditions established by the Compensation Committee. Unless the Compensation Committee determines otherwise, shares that do not vest typically will be subject to forfeiture to the extent the vesting schedule and/or specified performance or other criteria have not been satisfied.

  37. Restricted Stock Units and Performance Shares

    Restricted Stock Units and Performance Shares Restricted stock units and performance shares represent a right to receive cash or shares of our Common Stock that vest in accordance with terms and conditions established by the Compensation Committee, including, in the case of performance shares, achievement of performance goals. Unless the Compensation Committee determines otherwise, shares that do not vest typically will be subject to forfeiture to the extent the vesting schedule and/or specified performance or other criteria have not been satisfied. The Compensation Committee may set performance vesting criteria based upon the achievement of company-wide, divisional, business unit or individual goals or any other basis determined by the administrator, in its discretion.

  38. Change in Control

    Change in Control In the event of a Change in Control (as defined in the Restated 2023 Plan), an award will remain outstanding following the Change in Control to the extent it is assumed by a successor or is replaced with awards that are of substantially comparable value and remains subject to the same terms and conditions, provided, however, that any performance conditions determined by the Compensation Committee to be impracticable to maintain following the Change in Control will be deemed satisfied at the greater of target and actual performance as of the Change in Control. If a participant’s employment is terminated without Cause (as defined in the Restated 2023 Plan) within 12 months of Change in Control or awards are not continued or assumed by the successor, then any unvested awards will be deemed fully vested and any outstanding performance conditions will be deemed achieved at the greater of target and actual performance.

  39. Incentive Stock Options

    Incentive Stock Options The grant of an incentive stock option will not result in any immediate tax consequences to the Company or the participant. In addition, a participant will not recognize taxable income, and we will not be entitled to any deduction, upon the exercise of an incentive stock option while the participant is an employee or within three months following termination of employment (longer in the case of death). In such event, the excess of the fair market value of the shares acquired over the option price will be includible in the participant’s alternative minimum taxable income for the year of exercise for purposes of the alternative minimum tax. If the participant does not dispose of the shares acquired within one year after their receipt (and within two years after the option was granted), gain or loss recognized on the subsequent disposition of the shares will be treated as long-term capital gain or loss. Capital losses of individuals are deductible only against capital gains and a limited amount of taxable ordinary income. In the event of an earlier disposition, the participant will recognize taxable ordinary income in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the date of exercise over the option price; or (ii) if the disposition is a taxable sale or exchange, the amount of any gain realized. Any additional gain to the participant will be treated as capital gain, long-term or short-term, depending on how long the shares have been held. Upon such a disqualifying disposition, we will be entitled to a deduction in the same amount and at the same time as the participant recognizes such taxable ordinary income, subject to the limitations of Section 162(m) of the Code.

  40. Non-Qualified Stock Options

    Non-Qualified Stock Options The grant of a non-qualified stock option will not result in any immediate tax consequences to the Company or the participant. Upon the exercise of a non-qualified stock option, the participant will recognize taxable ordinary income, and we will be entitled to a deduction, subject to the limitations of Section 162(m) of the Code, equal to the difference between the option price and the fair market value of the shares acquired at the time of exercise. Any gain or loss upon a subsequent sale or exchange of the shares will be capital gain or loss, long-term or short-term, depending on how long the shares have been held.

  41. Restricted Stock

    Restricted Stock A participant normally will not recognize taxable income upon an award of restricted stock, and we will not be entitled to a deduction, until the termination of the restrictions. Upon such termination, the participant will recognize taxable ordinary income in an amount equal to the fair market value of the shares at that time, plus the amount of the dividends thereon to which the participant then becomes entitled. However, a participant may elect to recognize taxable ordinary income in the year the restricted stock is awarded in an amount equal to its fair market value at that time, determined without regard to the restrictions. We will be entitled to a deduction in the same amount and at the same time as the participant realizes income, subject to the limitations of Section 162(m) of the Code.

  42. Restricted Stock Units/Performance Shares

    Restricted Stock Units/Performance Shares Any cash and the fair market value of any shares received in connection with the grant of a restricted stock unit under the Restated 2023 Plan will constitute taxable ordinary income to the participant in the year in which paid, and the Company will be entitled to a deduction in the same amount, subject to the limitations of Section 162(m) of the Code.

  43. Burn Rate

    | | Year Ended December 31, | | | 3-Year Average | | | 2023 | 2022 | 2021 | | | Stock options granted (a) | 0 | 0 | 0 | | | Full Value Shares granted (b) | 3,832,156 | 4,789,227 | 3,542,175 | | | Total equity awards (a+b) | 3,832,156 | 4,789,227 | 3,542,175 | | | Weighted average shares of Common Stock outstanding (c) | 109,141,894 | 109,281,368 | 105,305,957 | | | Burn rate ((a+b)/c) | 3.51% | 4.38% | 3.36% | 3.75% |

  44. Awards Granted under the Existing 2023 Plan

    | Name | Stock Options | RSUs | PSUs | | Named Executive Officers | | | | | Yakov Faitelson | — | 134,159 | 402,477 | | Guy Melamed | — | 58,605 | 175,815 | | David Bass | — | 75,478 | 144,177 | | James O’Boyle | — | 38,236 | 114,708 | | Dov Gottlieb | — | 30,960 | 30,960 | | Director Nominees | | | | | Thomas Mendoza | — | — | — | | Avrohom Kess | — | — | — | | Ohad Korkus | — | — | — | | Gili Iohan | — | — | — | | Ofer Segev | — | — | — | | Rachel Prishkolnik | — | — | — | | Carlos Aued | — | — | — | | John Gavin, Jr. | — | — | — | | Fred Van Den Bosch | — | — | — | | All Current Executive Officers as a Group | — | 337,438 | 868,137 | | All Current Non-Executive Officer Directors as a Group | — | — | — | | Other Persons | | | | | Each associate of the current executive officers, non-executive officer directors and director nominees | — | — | — | | Each other person who received or is to receive 5% of awards under the 2023 Plan | — | — | — | | All Non-Executive Officer Employees as a Group | — | 1,633,485 | 691,760 |

  45. Engagement with Shareholders

    | ➢ | In 2021 and 2022, made changes to the Annual Cash Incentive Compensation program and the Long-Term Equity Incentive program for our NEOs, as described below; and |

  46. Engagement with Shareholders

    | ➢ | In 2024, we provided all our executive officers with PSUs with a 3-year target to align management’s incentives with those of shareholders with respect to the pace of the SaaS transition’s completion. |

  47. Engagement with Shareholders

    | • | disclosures related to bonus structure and targets; and |

  48. Other Policies and Practices

    | ✔ | Executive and Director Stock Ownership Guidelines and Retention Requirements: Our stock ownership guidelines further align the interests of our executive officers and directors with those of our shareholders. The guidelines require our executive officers and directors to hold common stock (including stock underlying unvested time-vesting restricted stock units (“RSUs”) and common stock held in trust or by certain family members, but excluding vested options and unvested or unearned performance-vesting restricted stock units (“PSUs”)), with a value expressed as a multiple of the individual’s annual salary or cash retainer, as applicable. |

  49. Other Policies and Practices

    Each of these individuals is required to meet these ownership levels within five years of the date such individual was initially designated an executive officer or appointed as a director of the Company, respectively (provided that executive officers or directors as of the date of the guidelines’ adoption must achieve their applicable levels of ownership on an accelerated basis, within two years after adoption). Until the required ownership level is reached, executive officers must retain 100% of the shares issued, net of applicable tax withholding, including those received upon the vesting or settlement of equity awards or the exercise of stock options. We review our ownership guidelines periodically to ensure they align with peer group norms and corporate governance best practices and remain appropriate in light of our annual equity award levels. As of December 31, 2023, all of our executive officers and directors had timely met their applicable stock ownership requirement.

  50. Other Policies and Practices

    | ✔ | Equity Grant Timing Practices: The Compensation Committee typically makes annual awards of equity to executive officers at its meeting held in February, which is set in advance as part of the Board’s annual calendar of scheduled meetings. These grants are made after results for the preceding fiscal year become available and after review and evaluation of each executive officer’s performance, enabling the Compensation Committee to consider both the prior year’s performance and expectations for the succeeding year in making grant decisions. The grants occur on pre-established dates pursuant to our equity grant practice, on the second business day after the public release of our fiscal year-end earnings, and the number of shares underlying each such grant is determined by dividing the dollar amount of the grant by the closing market price of our stock on such grant date. However, the Compensation Committee has in the past, and may in the future, make limited grants of equity on other dates in order to retain key employees, to compensate an employee in connection with a promotion or to compensate newly hired executives for equity or other benefits lost upon termination of their previous employment or otherwise to induce them to join our Company. Annual awards for non-employee directors are made at a Compensation Committee meeting held after the end of the first fiscal quarter, and initial awards are granted on the date the new director is appointed or elected to the Board of Directors. We monitor and periodically review our equity grant policies to ensure compliance with plan rules and applicable laws. |

  51. Fiscal Year 2023 Activity

    Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power of that security, or has the right to acquire beneficial ownership of that security within 60 days. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons named in the table below have or will have sole voting and investment power with respect to all shares of common stock shown that they beneficially own, subject to community property laws where applicable. Our calculation of the percentage of beneficial ownership is based on 111,589,110 shares of our common stock outstanding as of April 8, 2024. Shares of common stock underlying stock options exercisable within 60 days of April 8, 2024 or RSUs vesting within 60 days of April 8, 2024 are deemed to be outstanding for computing the percentage ownership of the person holding these options and the percentage ownership of any group of which the holder is a member, but are not deemed outstanding for computing the percentage of any other person. The table is based upon information supplied by officers, directors and principal shareholders, Schedules 13G filed with the SEC and other SEC filings under Section 16 of the Exchange Act. Except as otherwise indicated in the table below, addresses of named beneficial owners are c/o Varonis Systems, Inc., 1250 Broadway, 28th Floor, New York, NY 10001.

  52. Fiscal Year 2023 Activity

    | (1) For directors and executive officers, shares are deemed to be beneficially owned due to the individual’s right to acquire the shares upon the exercise of outstanding stock options or vesting of RSUs within 60 days from April 8, 2024 or upon termination of service other than for death, disability of involuntary termination. |

  53. Fiscal Year 2023 Activity

    | (6) Consists of (i) 13,575 shares owned directly by Mr. Gottlieb and (ii) 42,006 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  54. Fiscal Year 2023 Activity

    | (7) Consists of (i) 6,410 shares owned directly by Mr. Aued; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  55. Fiscal Year 2023 Activity

    | (10) Consists of (i) 10,991 shares owned directly by Ms. Iohan; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  56. Fiscal Year 2023 Activity

    | (11) Consists of (i) 14,990 shares owned directly by Mr. Kess; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  57. Fiscal Year 2023 Activity

    | (12) Consists of (i) 103,310 shares owned directly by Mr. Korkus; (ii) 2,811 shares subject to stock options exercisable within 60 days of April 8, 2024; and (iii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  58. Fiscal Year 2023 Activity

    | (14) Consists of (i) 9,101 shares owned directly by Ms. Prishkolnik; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  59. Fiscal Year 2023 Activity

    | (15) Consists of (i) 67,410 shares owned directly by Mr. Segev; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  60. Fiscal Year 2023 Activity

    | (16) Consists of (i) 121,053 shares owned directly by Mr. van den Bosch; and (ii) 8,272 shares subject to RSUs exercisable within 60 days of April 8, 2024. |

  61. Overview

    | • | reviewing our director compensation program and recommending changes in director compensation to the Board of Directors, to the extent appropriate; |

  62. Overview

    | • | administering our equity compensation plans and programs. |

  63. Compensation Philosophy and Objectives

    | ✔ | increase long-term shareholder value. |

  64. Compensation Philosophy and Objectives

    | What we do | What we don’t do | | ✔ Pay a significant portion of executive compensation in the form of long-term incentive-based awards ✔ Include PSUs as a material component of long-term incentive- based awards ✔ Cap the maximum payout under our cash incentive plan and PSUs ✔ Promote long-term focus through multi-year vesting ✔ Set challenging targets and performance metrics for our cash incentive plan and our performance-vesting long-term equity incentive awards to align the interests of management with the Company’s performance ✔ Maintain a formal claw-back policy for incentive based compensation ✔ Subject executives and directors to robust stock ownership guidelines ✔ Conduct an annual risk assessment of our compensation programs ✔ Engage an independent consultant to provide support and advice to the Compensation Committee | ✘ Create a compensation program that will encourage excessive risk-taking ✘ Use the same performance metrics for cash incentive plans and PSUs ✘ Allow our executive officers, directors or employees to hedge, short sell, effect transactions in derivatives or pledge our stock ✘ Provide tax gross-ups in connection with severance, such as in a change in control ✘ Re-price underwater stock options ✘ Pay guaranteed bonuses ✘ Pay dividends or dividend equivalents on unearned PSUs or unvested RSUs ✘ Guarantee equity incentive awards for our named executive officers ✘ Provide excessive or unusual perquisites |

  65. The Role of the Compensation Consultant

    The Role of the Compensation Consultant The Compensation Committee has engaged Compensia, Inc. (“Compensia”), a national compensation consulting firm, to provide research and analysis and to make recommendations as to the form and level of executive compensation. The Compensation Committee also sought input from Compensia on executive compensation matters for 2023, including the design and competitive positioning of our executive compensation program, our peer group, appropriate compensation levels and evolving compensation trends. The Compensation Committee considered the independence of Compensia as consultant to the Compensation Committee. In connection with this process, the Compensation Committee reviewed, among other items, documents from Compensia addressing the firm’s independence. In 2023, the Compensation Committee evaluated the work performed by Compensia and each of its senior advisors, and concluded that the engagement did not raise any conflict of interest.

  66. The Role of Peer Companies and Competitive Positioning

    The Role of Peer Companies and Competitive Positioning As part of its review of executive compensation for 2023, the Compensation Committee reviewed the executive compensation arrangements at peer group companies. Our peer group includes comparable software companies that were selected based on specific financial criteria, including, but not limited to, revenue and market capitalization. For 2023, based in part on the advice of Compensia, the Compensation Committee removed the following companies from the peer group used in 2022: Anaplan Inc., Appian Corporation, Paylocity, and Sailpoint Technologies Holdings. Based in part on the advice of Compensia, these companies were removed either due to acquisitions, a change in revenue and/or market capitalization, or a change in business focus. The Compensation Committee added the following companies to the peer group for 2023: Coupa Software, Okta, Verint Systems, Upwork, and Workiva. For 2023, our peer group consisted of the following companies:

  67. The Role of Peer Companies and Competitive Positioning

    | Alteryx, Inc. | Everbridge | PagerDuty Inc. | Smartsheet Inc. | | BlackLine, Inc. | Five9, Inc. | Q2 Holdings | Tenable Holdings, Inc. | | Coupa Software | LiveRamp Holdings | Qualys | Upwork | | Elastic N.V. | Okta | Rapid7 | Verint Systems | | | | | Workiva |

  68. The Role of Peer Companies and Competitive Positioning

    In the course of its deliberations, the Compensation Committee reviewed executive compensation data compiled from the peer group companies, as contained in a report prepared by Compensia, in order to evaluate and confirm whether our executive compensation was within a reasonably competitive range and to set executive compensation for 2023. The Compensation Committee, however, did not set executive compensation or each element of compensation at a specific target percentile within the peer group. The Compensation Committee focuses on providing compensation that is fair for the services rendered and reflects an executive’s experience, performance and scope of responsibilities, closely linking executive compensation with the achievement of Company performance goals under the annual cash incentive program and long-term equity compensation program and promoting a culture of aligning executive interests with those of the Company and its shareholders.

  69. Mix of Pay

    | Element | Purpose | Key Features | | | Base Salary | Provide competitive baseline compensation and a level of cash income predictability and stability. | ✔ | Fixed cash compensation. | | | | ✔ | Amounts informed by external competitive market levels, accounting for factors such as scope of the position, individual performance and corporate performance. | | | | ✔ | Target reasonably competitive range among our compensation peer group. | | Annual Cash Incentive Award | Reward the achievement of corporate performance during the year that drives the growth of the Company. | ✔ | Variable cash compensation governed by terms of plans. | | | | ✔ | Performance metrics under cash incentive plan for Messrs. Faitelson and Melamed are Annual Recurring Revenue (“ARR”) and Trailing-Twelve-Month Margin (“TTM Margin”). | | | | ✔ | Performance metric under sales compensation plan for Mr. O’Boyle is earned net revenues. | | | | ✔ | Target bonus opportunity informed by external competitive market data (to attain reasonably competitive range among compensation peer group). | | | | ✔ | Actual value based on Company financial performance. | | Long-Term Equity Incentives | Align with the long-term interests of Varonis, our shareholders and our executives, while rewarding long-term sustainable value creation and driving retention. | ✔ | Variable equity-based compensation governed by award agreements. | | | | ✔ | Size of awards informed by external competitive market data. | | | | ✔ | PSU metrics are based on challenging performance goals tied to SaaS mix and Free Cash Flow. Earned PSUs for our NEOs who receive PSUs (other than our CEO) will vest ratably over three years, assuming their continued employment with the Company. With respect to our CEO, there is no release of earned PSUs until the three-year time vesting period is completed and he must remain employed with the Company at such time. | | | | ✔ | Target PSU opportunity amount is informed by external competitive market data. | | | | ✔ | RSUs generally have four-year ratable vesting and drive our goal of retaining top-tier talent. |

  70. Mix of Pay

    | * “Equity-based” compensation reflects grant date fair values of the RSUs and PSUs. “At risk” compensation includes non-equity incentive compensation and long-term equity awards. |

  71. Mix of Pay

    Our equity pay practices have also evolved over time to more closely align with our performance goals and more directly tie executive pay to key drivers of our business and our long-term strategy. In 2019, our CEO began to receive 50% of his long-term incentive award compensation in the form of PSUs. In 2021, our other NEOs at that time began to receive PSUs as a portion of their long-term incentive award compensation. For Messrs. Melamed and O’Boyle, this portion represented 50% of their long-term incentive award compensation, and for Mr. Bass, this portion represented 33%. In 2024, Mr. Gottlieb received 25% of his long-term equity incentive award in the form of PSUs. In addition, for 2021, we eliminated the 10% individual performance component that was a discretionary part of the Annual Cash Incentive Compensation Program. For 2023, the PSU component of the Long-Term Equity Incentive awards was tied to two performance metrics. The Compensation Committee chose SaaS mix and Free Cash Flow in order to further promote shareholder alignment. SaaS mix is a key financial metric to measure the Company’s progress and ability to transition to selling a SaaS platform to its new customers and upsell SaaS to existing customers, and free cash flow is an important component of how management measures the business.

  72. Annual Cash Incentive Compensation

    Annual Cash Incentive Compensation The purpose of the annual cash incentive program is to incentivize and reward Messrs. Faitelson and Melamed for the attainment of corporate financial goals on a quarterly basis. Although our quarterly results reflect seasonality in the sale of our products and services, with demand typically lowest in the first quarter and strongest in the fourth quarter, the dollar amount opportunity each quarter is equally weighted and difficult to attain, ensuring that management is properly motivated by challenging performance targets. Mr. Faitelson and Mr. Melamed Bonus Amounts and Performance Metrics While we established sales commission plans for certain of our employees and executive officers to encourage and reward contributions to our long-term top-line growth, for our most senior executive officers, including our Chief Executive Officer and our Chief Financial Officer and Chief Operating Officer, our Compensation Committee believes that because these officers possess relatively greater responsibility and stewardship for the overall performance of our Company, they should instead participate in a cash incentive plan using multiple performance metrics. Accordingly, Messrs. Faitelson and Melamed participated in our 2023 Cash Incentive Plan, under which bonuses are earned in the form of quarterly bonus awards. For 2023, the Compensation Committee, based on a review of factors including the scope of job responsibilities, tenure, individual execution of Company strategies and contributions to Company success, Company-wide performance and comparability to market compensation (by reference to the report prepared by Compensia), maintained the target bonus opportunities for Messrs. Faitelson and Melamed from 2021, which have not been changed since 2018. Thus, effective as of January 1, 2023, the target cash incentive award opportunity for each of these NEOs was as follows:

  73. Annual Cash Incentive Compensation

    | Named Executive Officer | Target Cash Incentive Award Amount (% of salary) | | Yakov Faitelson | $440,000 (78.6%) | | Guy Melamed | $250,000 (62.5%) |

  74. Annual Cash Incentive Compensation

    Each of Messrs. Faitelson’s and Melamed’s annual cash incentive compensation for 2023 was earned for the applicable quarterly period based on the weighting of factors as follows:

  75. Annual Cash Incentive Compensation

    | • | 50% based on the quarterly achievement of Company ARR targets; and |

  76. Annual Cash Incentive Compensation

    | • | 50% based on the quarterly achievement of Company TTM Margin targets. |

  77. Annual Cash Incentive Compensation

    The Compensation Committee set the quarterly target amounts under the 2023 Cash Incentive Plan for each performance metric at the beginning of the fiscal year. No quarterly payouts could be made unless we achieved a certain pre-established threshold level of corporate performance in respect of either the ARR or TTM Margin target for the applicable quarterly period. The 2023 Cash Incentive Plan also provided for (i) a payout at 90% of the target bonus opportunity amount for the applicable quarterly period if either of our ARR or TTM Margin performance equaled or exceeded the “threshold” amounts for such period, (ii) a payout at 100% of the target bonus opportunity amount for the applicable quarterly period if we attained both of the ARR targets and TTM Margin targets for such period, (iii) a payout capped at 115% of the target bonus opportunity amount for the applicable quarterly period if either of our ARR or TTM Margin performance equaled or exceeded the “stretch” amounts for such period, and (iv) a payout capped at 120% of the target bonus opportunity amount for the applicable quarterly period if both of our ARR and TTM Margin performance equaled or exceeded the “stretch” amounts for such period. The Compensation Committee chose to use ARR and TTM Margin as the corporate performance metrics under the 2023 Cash Incentive Plan, as both metrics are leading indicators of the Company’s progress during this transition period. ARR is a key financial measure for subscription-based businesses and aligns with how our customers are increasingly purchasing our solutions through subscriptions and in the cloud, and TTM Margin is a key financial measure that that demonstrates the Company’s ability to maintain its cost structure and show operating leverage improvements during the SaaS transition. TTM Margin was calculated as ARR at the end of the period minus the Company’s Non-GAAP expenses (COGS and operating expenses) reported for the prior 12-month period ending on that date. Additionally, these measures work to promote the alignment of shareholder interests with those of our executive officers, because they represent key financial measures used by us and analysts reporting on our financial results and may significantly impact our stock price. The cap on total payouts of the ARR and TTM Margin components were set to manage potential incentive compensation costs and avoid incentivizing undue risk in our executive compensation program, while still maintaining appropriate incentives for these named executive officers. The relevant performance targets under the 2023 Cash Incentive Plan, which are disclosed below, are pre-established and automatically adjusted for each quarterly period. Quarterly payouts earned for corporate performance between these performance targets were determined through linear interpolation.

  78. Annual Cash Incentive Compensation

    | Period | Corporate Performance Metric | | | | | | | | “Threshold” Payout | | “Target” Payout | | “Stretch” Payout | | | ($m) | ARR | TTM Margin | ARR | TTM Margin | ARR | TTM Margin | | Q1 2023 | $474.000 | $20.313 | $474.900 | $21.213 | $475.800 | $22.113 | | Q2 2023 | $484.800 | $21.875 | $486.900 | $23.975 | $489.000 | $26.075 | | Q3 2023 | $498.600 | $24.610 | $501.800 | $27.810 | $505.000 | $31.010 | | Q4 2023 | $518.000 | $32.245 | $523.000 | $37.245 | $528.000 | $42.245 |

  79. Annual Cash Incentive Compensation

    Determination of 2023 Cash Incentive Award Payouts For fiscal 2023, based on corporate performance, Mr. Faitelson was awarded cash quarterly bonuses in the aggregate amount of $528,000, and Mr. Melamed was awarded cash quarterly bonuses in the aggregate amount of $300,000. Each of Messrs. Faitelson and Melamed thus achieved 120.0% of their target bonus opportunities. These bonus amounts included, for Mr. Faitelson, aggregate amounts of $264,000 allocated to ARR (weighted at 50% of total bonus payout) and $264,000 allocated to TTM Margin (weighted at 50% of total bonus payout), and for Mr. Melamed, aggregate amounts of $150,000 allocated to ARR (weighted at 50% of total bonus payout) and $150,000 allocated to TTM Margin (weighted at 50% of total bonus payout). The following table illustrates in summary format the operation of the 2023 Cash Incentive Plan, including the amounts actually awarded:

  80. Annual Cash Incentive Compensation

    | | | | | ARR Metric | | | | | Named Executive Officer | Percentage of Base Salary Allocated to Target Bonus Opportunity | Target Bonus Opportunity | Period | Corporate Performance | | Allocation Within Executive’s Bonus | | | | | | | Target | Actual | Weight | Actual Bonus Payout | | | | | | (in millions) | | | | | Yakov Faitelson | 78.6% | $440,000 | Q1 | $474.9 | $478.1 | 50% | $264,000 | | | | | Q2 | $486.9 | $497.0 | | | | | | | Q3 | $501.8 | $517.5 | | | | | | | Q4 | $523.0 | $543.0 | | | | Guy Melamed | 62.5% | $250,000 | Q1 | $474.9 | $478.1 | 50% | $150,000 | | | | | Q2 | $486.9 | $497.0 | | | | | | | Q3 | $501.8 | $517.5 | | | | | | | Q4 | $523.0 | $543.0 | | |

  81. Annual Cash Incentive Compensation

    | | | | | TTM Margin Metric | | | | | Named Executive Officer | Percentage of Base Salary Allocated to Target Bonus Opportunity | Target Bonus Opportunity | Period | Corporate Performance | | Allocation Within Executive’s Bonus | | | | | | | Target | Actual | Weight | Actual Bonus Payout | | | | | | (in millions) | | | | | Yakov Faitelson | 78.6% | $440,000 | Q1 | $21.2 | $26.5 | 50% | $264,000 | | | | | Q2 | $24.0 | $40.7 | | | | | | | Q3 | $27.8 | $57.3 | | | | | | | Q4 | $37.2 | $72.6 | | | | Guy Melamed | 62.5% | $250,000 | Q1 | $21.2 | $26.5 | 50% | $150,000 | | | | | Q2 | $24.0 | $40.7 | | | | | | | Q3 | $27.8 | $57.3 | | | | | | | Q4 | $37.2 | $72.6 | | |

  82. Annual Cash Incentive Compensation

    Mr. O’Boyle Bonus Amounts and Performance Metrics As our Vice Chairman – Sales, Mr. O’Boyle participated in his own individual 2023 Sales Compensation Plan. Under this plan, Mr. O’Boyle was entitled to annual sales commissions based on the revenues which we generated from the sale of our products and services worldwide. For 2023, the Compensation Committee, advised by Compensia and based on a review of factors including the scope of job responsibilities, tenure, individual execution of Company strategies and contributions to Company success, Company-wide performance, and comparability to market compensation, maintained the annualized target commission opportunity as a percentage of salary from 2022 for Mr. O’Boyle. Effective as of January 1, 2023, the annual target sales commission opportunity for Mr. O’Boyle was $350,000.

  83. Annual Cash Incentive Compensation

    | Named Executive Officer | Target Commission Bonus Amount (% of salary) | | James O’Boyle | $350,000 (100%) |

  84. Annual Cash Incentive Compensation

    Pursuant to his 2023 Sales Compensation Plan, Mr. O’Boyle had the opportunity to earn an annualized target commission for the year if the annualized earned net revenues target was met, or a pro rata portion of the target compensation if the annualized earned net revenues criteria, as applicable, fell below such target. For any amount in excess of 100% of the annualized earned net revenues target for 2023, he was entitled to receive 1.5% of any such excess. “Earned net revenues” refer to credited sales value that was actually collected by us. Thus, Mr. O’Boyle, who participated in the 2023 Sales Compensation Plan, only became entitled to receive his commission bonus payment after we collected the net revenues relating to such payments for those prior years. For 2023, Mr. O’Boyle was eligible to receive a portion of his commission upon the execution of a sale and the remainder upon collection of outstanding fees owed for that sale. The earned net revenues target under the 2023 Sales Compensation Plan is $498.5 million. Determination of 2023 Sales Compensation Plan Bonus Payout Mr. O’Boyle received in 2023 an aggregate amount of commissions equal to $280,897, which represented the sum of (i) $135,750 resulting from collected net credited sales value under the 2023 Sales Compensation Plan; and (ii) $145,147 resulting from collected net revenues under his Sales Compensation Plans from 2022 and 2021. Assuming 100% collection of 2023 net revenues, Mr. O’Boyle would receive an additional amount equal to $126,999 as a commission bonus pursuant to the 2023 Sales Compensation Plan (which would be aggregated with the $135,750 already earned under the 2023 Sales Compensation Plan toward the target commission opportunity of $350,000 set for Mr. O’Boyle in 2023). Mr. Gottlieb Bonus Amounts and Performance Metrics Mr. Gottlieb is entitled to receive an annual discretionary bonus, subject to the Company’s and his performance each year, of up to $200,000, in accordance with the employment agreement that the Company entered into with him on March 12, 2021 (the “Agreement”). The bonus was provided in connection with Mr. Gottlieb relinquishing his equity partnership interest in a leading global law firm to join the Company and compensating Mr. Gottlieb for the significant decrease in cash compensation that he receives at the Company going forward as compared to what he would have expected to receive as an equity partner at his prior firm. In 2023, after considering the results of the Company’s performance and Mr. Gottlieb’s contribution to the strategic direction and commercial results, the Compensation Committee determined that Mr. Gottlieb should receive an annual cash bonus of $200,000.

  85. 2024 Cash Incentive Plan

    2024 Cash Incentive Plan In addition, during its annual executive compensation review in February 2024 and considering the Company’s transition to a SaaS business model that began in the fourth quarter of 2022, the Compensation Committee determined that the 2024 Cash Incentive Plan, applicable to Messrs. Faitelson and Melamed, should be tied to two performance metrics – ARR (weighted at 50%) and TTM Margin (weighted at 50%). The Compensation Committee set the quarterly target amounts under the 2024 Cash Incentive Plan for each performance metric at the beginning of the fiscal year. No quarterly payouts will be made unless we achieve a certain pre-established threshold level of corporate performance in respect of either the ARR or TTM Margin target for the applicable quarterly period. The 2024 Cash Incentive Plan also provides for (i) a payout at 90% of the target bonus opportunity amount for the applicable quarterly period if either of our ARR or TTM Margin performance equals or exceeds the “threshold” amounts for such period, (ii) a payout at 125% of the target bonus opportunity amount for the applicable quarterly period if we attain both of the ARR targets and TTM Margin targets for such period, (iii) a payout capped at 150% of the target bonus opportunity amount for the applicable quarterly period if either of our ARR or TTM Margin performance equals or exceeds the “stretch” amounts for such period, and (iv) a payout capped at 200% of the target bonus opportunity amount for the applicable quarterly period if both of our ARR and TTM Margin performance equals or exceeds the “stretch” amounts for such period. The Compensation Committee believes these key performance indicators to be appropriate, as they demonstrate to investors the growth of our business and our ability to maintain our cost structure during this transition period. The Compensation Committee increased the capped payout opportunity in the 2024 Cash Incentive Plan based on part on the advice of Compensia and to be more in line with market practice.

  86. Long-Term Equity Incentive Awards

    Long-Term Equity Incentive Awards In 2023, the Compensation Committee granted stock-based awards under our 2013 Omnibus Equity Incentive Plan (the “2013 Plan”) to our named executive officers in order to provide long-term incentive compensation opportunities which align the long-term interests of management with those of the Company and its shareholders. The Compensation Committee believes that stock-based awards incentivize our named executive officers to optimize our long-term business performance and shareholder value. Stock-based awards to our named executive officers are approved on an annual basis in amounts determined by the Compensation Committee. In 2023, the long-term incentive awards to our NEOs, other than Mr. Gottlieb, are comprised of PSUs as well as time-vesting RSUs. Mr. Gottlieb only received RSUs as part of his compensation package to induce him to join the Company. In 2024, Mr. Gottlieb received 25% of his long-term equity incentive award in the form of PSUs. In 2023, in considering the appropriate size of the equity award for our CEO, our compensation committee and Board of Directors considered the data provided by Compensia, the Compensation Committee’s independent compensation consultant, our CEO’s tenure, the multiple integral roles that he currently performs at the Company, the importance of his role and performance to the complex transition of the Company to a SaaS technology company, the close alignment of the targets to the transition and the need to ensure adequate retention incentives and alignment with the interests of the Company’s shareholders. Below is a summary of the long-term incentive awards to our named executive officers in fiscal 2023.

  87. Long-Term Equity Incentive Awards

    | Element | Purpose | Key Features | | | Performance-vesting RSUs (PSUs) | Incentivize continued focus on long-term performance. | • | PSUs for NEOs in 2023 are earned based on the achievement of two performance targets (the “PSU targets”), with 50% weighted to SaaS mix and 50% weighted to Free Cash Flow during fiscal year 2023. | | | | • | Subject to the achievement of the PSU targets, all earned PSUs by our CEO shall vest on February 28, 2026, subject to his continued employment with the Company. | | | | • | Subject to the achievement of the PSU targets, all earned PSUs by our NEOs other than the CEO are subject to three-year annual vesting, beginning on February 29, 2024. | | Time-vesting RSUs (RSUs) | Promote retention of key talent in competitive industry. | • | Vest in four equal annual installments. |

  88. Long-Term Equity Incentive Awards

    PSU Grants The 2023 PSUs awarded to our NEOs are earned based on the achievement of SaaS mix and Free Cash Flow targets in fiscal 2023, as described below. The one-year performance period design of the 2023 PSUs is consistent with other companies in the technology sector, where the rapid expansion and evolution of many companies, including our Company as illustrated by the completion of our subscription transition in just over one year, makes performance more difficult to estimate over a longer period. Structuring the 2023 PSUs in this manner ensures a continued focus on long-term performance while directly tying long-term compensation to the achievement of business goals. Subject to the achievement of the PSU targets, all earned 2023 PSUs by our NEOs other than the CEO are subject to three-year annual vesting, beginning on February 29, 2024. The 2023 PSUs granted to our CEO only vest on February 28, 2026, subject to Mr. Faitelson’s achievement of the PSU targets and continued employment at the end of such period. If Mr. Faitelson’s employment terminates prior to this date, he will not receive the earned 2023 PSUs, as they will not be vested. The maximum payout opportunity was capped at 300% of target shares, which can only be earned if the Company achieves SaaS mix and Free Cash Flow targets that the Compensation Committee believes to be appropriately challenging. We believe that our grant terms, which required our NEOs to meet challenging performance targets for the year ending December 31, 2023, optimized their “at-risk” compensation and encouraged them to lead our Company in line with a longer-term strategic business plan carefully set out at the inception of the grant period. We used (“SaaS mix”), which is defined as new SaaS ARR booked divided by new business ARR plus upsell ARR, and Free Cash Flow, which is calculated as cash flow from operations minus capital expenditures, as performance measures for the 2023 PSUs. SaaS mix is a key financial metric to measure the Company’s ability to transition to selling a SaaS platform to its new customers and upsell SaaS to existing customers, and free cash flow is an important component of how management measures the business. Additionally, the vesting period until February 29, 2026 for our CEO is intended to promote his retention at our Company as a critical executive in a competitive industry. The following shows the 2023 PSU awards granted to our named executive officers:

  89. Long-Term Equity Incentive Awards

    | Named Executive Officer | Number of 2023 PSUs Granted | | Yakov Faitelson | 227,592 | | Guy Melamed | 85,410 | | David Bass | 64,021 | | James O’Boyle | 64,864 |

  90. Long-Term Equity Incentive Awards

    The 2023 PSU performance targets for SaaS mix and Free Cash Flow were as follows:

  91. Long-Term Equity Incentive Awards

    | SaaS mix Target* | 2023 PSU Payout Opportunity | | Less than 15% | 0% of PSUs will be earned | | 15% | 50% of PSUs will be earned | | 20% | 100% of PSUs will be earned | | 30% | 200% of PSUs will be earned | | 40% | 300% of PSUs will be earned |

  92. Long-Term Equity Incentive Awards

    | Free Cash Flow Target* | 2023 PSU Payout Opportunity | | Less than $22.5 million | 0% of PSUs will be earned | | $22.5 million | 50% of PSUs will be earned | | $25.0 million | 100% of PSUs will be earned | | $27.5 million | 200% of PSUs will be earned | | $30.0 million and above | 300% of PSUs will be earned |

  93. Long-Term Equity Incentive Awards

    | * For PSUs earned for actual results that are between thresholds, linear interpolation is used to determine the earned percentage. |

  94. Long-Term Equity Incentive Awards

    Determination of 2023 PSU Payout As a result of the Company’s quick start to its SaaS transition, we ended the year with 23% of total company ARR coming from SaaS, which allowed us to reduce the overall expected timeline of the transition to be 4 years, down from 5 years. The Company’s SaaS mix and Free Cash Flow performance in 2023 was 57% and $54.3 million, respectively, and the PSUs are 50% weighted to SaaS mix and 50% weighted to Free Cash Flow. As such, the earned 2023 PSU payout percentage was 300.0%, subject to the vesting requirements. As a result, the 2023 PSUs earned by each NEO in 2023 are set forth below.

  95. Long-Term Equity Incentive Awards

    | | | SAAS Mix Metric | | | | Free Cash Flow Metric | | | | | | Named Executive Officer | 2023 PSUs Granted | Weight | Actual | Payout % | Number of PSUs Earned | Weight | Actual | Payout % | Number of PSUs Earned | Total PSUs Earned | | Yakov Faitelson | 227,592 | 50% | 57% | 300% | 341,388 | 50% | $54.3 | 300% | 341,388 | 682,776 | | Guy Melamed | 85,410 | 50% | 57% | 300% | 128,115 | 50% | $54.3 | 300% | 128,115 | 256,230 | | David Bass | 64,021 | 50% | 57% | 300% | 96,031 | 50% | $54.3 | 300% | 96,032 | 192,063 | | James O'Boyle | 64,864 | 50% | 57% | 300% | 97,296 | 50% | $54.3 | 300% | 97,296 | 194,592 |

  96. Long-Term Equity Incentive Awards

    2024 PSUs In addition, during its annual executive compensation review in February 2024 and considering the Company’s transition to a SaaS business model that began in the fourth quarter of 2022, the Compensation Committee determined that (i) the 2024 PSUs for NEOs should be tied to two performance metrics –SaaS as a percentage of total company ARR (weighted at 50%) and Free Cash Flow (weighted at 50%) and (ii) Mr. Gottlieb should receive a portion of his long-term incentive plan in the form of PSUs to better align his incentives with the interests of shareholders. Free Cash Flow is calculated as net cash provided by or used in operating activities less purchases of property and equipment and is an important measure of liquidity, which demonstrates our ability to maintain our cost structure during this transition period. SaaS as a percentage of total company ARR measures the pace of the transition’s completion. This performance measure has a 3-year performance period to align management’s incentives with those of shareholders with respect to the pace of the SaaS transition’s completion. The Compensation Committee believes SaaS as a percentage of total company ARR to be appropriate in order to motivate the company to complete the transition to a SaaS delivery model quickly. RSU Grants (CEO and Other NEOs) In February 2023, the Compensation Committee approved a regular annual grant of time-based RSU awards under the 2023 Plan to Messrs. Faitelson, O’Boyle, Bass and Gottlieb. Mr. Melamed received his annual RSU award on March 2, 2023 in connection with entering into a new employment agreement (collectively, the “2023 RSU Awards”). One quarter of the 2023 RSU Awards will vest annually upon the last calendar day of the month of February, beginning on February 29, 2024, subject to the executive officer’s continued service with us on each applicable vesting date. The 2023 RSU Awards will be settled in shares of the Company’s common stock within 30 days of each applicable vesting date, subject to the terms and conditions set forth in the applicable RSU award agreement. In determining the size of the awards granted to each named executive officer, the Compensation Committee intended to reward and motivate our named executive officers to drive the financial performance of the Company. The Compensation Committee targeted award sizes that would be within a reasonably competitive range of market practice among the Company’s peers. The following shows the 2023 RSU Awards granted to our named executive officers:

  97. Long-Term Equity Incentive Awards

    | Named Executive Officer | Number of RSUs | | Yakov Faitelson | 227,592 | | Guy Melamed | 85,410 | | David Bass | 128,042 | | James O’Boyle | 64,864 | | Dov Gottlieb | 94,538 |

  98. Long-Term Equity Incentive Awards

    RSU Grants (Dov Gottlieb) The Company entered into an employment agreement with Mr. Gottlieb on March 12, 2021 in connection with him joining the Company. The Company entered into the Agreement in connection with him relinquishing his equity partnership interest in a leading global law firm to join the Company. The equity awards provided for in the Agreement compensated Mr. Gottlieb for both forgone compensation for time he worked at his prior firm and the expected significant decrease in cash compensation going forward as compared to what he would have received as an equity partner at his prior firm. In addition, the equity award compensated Mr. Gottlieb for the lost value associated with the relinquishment of his equity partnership interest in his prior firm to join the Company. Accordingly, the Agreement provided Mr. Gottlieb with guaranteed RSU awards in each of 2021, 2022 and 2023. In its business judgment, the Compensation Committee believed that this one-time Agreement was in the best interests of the Company and its shareholders and necessary and appropriate in light of, among other factors: (i) Mr. Gottlieb’s relinquishment of his equity partnership interest, and (ii) his agreeing to substantially lower cash compensation. Mr. Gottlieb received his final RSU award pursuant to his Agreement in 2023 and is not entitled to any further guaranteed compensation.

  99. Other Elements of Compensation

    Other Elements of Compensation Perquisites and Other Benefits We do not provide perquisites or other personal benefits to our named executive officers. Our compensation program for our named executive officers includes employee health and welfare benefits, including participation in the Company’s life, health and disability insurance and similar benefit programs (including our 401(k) plan) on the same general terms as other participants in these programs. We make matching contributions to our 401(k) plan for Messrs. Faitelson, Melamed, Gottlieb and O’Boyle. We also provide a car allowance to certain of our employees, including, among our named executive officers, Messrs. Faitelson, Melamed and O’Boyle. In addition, with respect to Israeli employees, we provide recreation pay as well as contributions to an education fund and to a government-mandated pension fund. Israeli law generally requires severance pay equal to one month’s salary for each year of employment upon the termination of an employee’s employment due to retirement, death, or termination without cause (and other circumstances as defined under Israeli law). We make monthly contributions on behalf of our Israeli employees to a pension plan. Pension plan funds provide a combination of 6.5% of the monthly salary to the pension component (generally including disability insurance), 8.3% of the monthly salary to the severance component and employee contributions of 6% of his or her salary to the pension component. Our full-time Israeli employees are entitled to participate in an education fund plan, pursuant to which each employee who participates in the plan contributes an amount equal to 2.5% of his or her salary to the education fund and we contribute 7.5% of his or her salary, up to the maximum amount exempted from tax. Change in Control and Severance Each of Messrs. Faitelson, Melamed, O’Boyle and Gottlieb participates in the Varonis Systems Severance Plan (the “Severance Plan”). The Severance Plan took effect in February 2023. The Severance Plan supersedes the severance provisions previously applicable to our participating named executive officers, standardizing their severance payments and benefits and preserving several preexisting provisions. Pursuant to the Severance Plan, in the event that a participant’s employment is terminated by the Company without “cause” other than due to death or disability or a participant resigns for “good reason” in each case, not in connection with a “change in control” (all as defined in the Severance Plan) and subject to the effectiveness of a release, the participant is entitled to the following: (i) cash severance equal to a percentage (ranging from 50% to 150%) of the sum of his/her base salary and his/her target bonus or commission for the year of termination; (ii) payment of any earned but unpaid bonus or commission in respect of the year prior to the year of termination, at the time such bonuses or commissions would otherwise be paid; and (iii) accelerated vesting of a portion of each equity award held, prorated based on the number of days employed by the Company since the last vesting date (with any performance-vesting awards to be deemed vested at the greater of target and actual level of performance determined at the time of such termination). Additionally, pursuant to the Severance Plan, in the event that a participant’s employment is terminated by the Company without “cause” other than due to death or disability, or a participant resigns for “good reason,” in each case within six months prior to and 24 months following a “change in control” (all as defined in the Severance Plan) and subject to the effectiveness of a release, the participant is entitled to the following: (i) cash severance equal to a percentage (ranging from 100% to 250%) of the sum of his/her base salary and his/her target bonus or commission for the year of termination; (ii) an additional cash payment equal to the amount of target bonus or commission for the performance period including the date of termination, prorated based on the number of days employed by the Company during the performance period; (iii) payment of any earned but unpaid bonus in respect of the year prior to the year of termination at the time such bonuses or commissions would otherwise be paid; and (iv) accelerated vesting of all equity awards held (with any performance-vesting awards to be deemed vested at the greater of target and actual level of performance determined at the time of such termination). In the case of Mr. Gottlieb, pursuant to his employment agreement that he entered into in order to induce him to join the Company, wherever termination is by us without “cause,” he is also entitled to acceleration of all unvested portions of his initial grant of 95,440 RSUs granted in May 2021. Each named executive officer participating in the Severance Plan executed a restrictive covenant agreement containing standard twelve-month post-termination non-competition and non-solicitation covenants. The Severance Plan provides that, in the event a participating named executive officer breaches any of the restrictive covenants, the executive forfeits any unpaid, and must repay any paid, severance benefits. Mr. Bass has elected not to participate in the Severance Plan, and the terms of any payments received by him upon a termination or change in control are instead governed by his employment agreement and his outstanding equity awards. In the event that he is terminated by the Company without “cause” or he resigns for “good reason” (all as defined in his employment agreement), and provided that he signs and does not revoke a general release of claims, Mr. Bass will be entitled to a cash payment equal to one-half times his base salary. In the event that he is terminated by the Company without “cause” or he resigns for “good reason” within the one-year period following a “change in control” (as defined in his employment agreement), and provided that he signs and does not revoke a general release of claims, Mr. Bass will be entitled to a cash payment equal to one time his base salary. The employment agreement with Mr. Bass also provides that upon a “change in control” (as defined in the 2013 Plan and related agreements), Mr. Bass will be entitled to immediate vesting of all of his outstanding equity-based awards provided he remains in continuous service of the Company or any affiliate or subsidiary as of the effective date of the “change in control.” For all named executive officers, if the executive’s employment is terminated by us for “cause,” due to death or “disability” or due to the executive’s resignation without “good reason” (each as defined in the Severance Plan for Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, and in Mr. Bass’s employment agreement for him), the executive will not be entitled to any further compensation or benefits other than any accrued but unpaid base salary (and/or unused vacation or paid time off, as applicable) and other accrued benefits of payments such as statutory severance entitlements, through the date of termination. The Company does not provide “gross-up” payments or tax reimbursements, in each case, with respect to “excess parachute payments” under Section 280G of the Internal Revenue Code (“Section 280G”) pursuant to any agreements with the named executive officers. For those named executive officers participating in the Severance Plan, the Severance Plan includes a “best-net” cutback provision in the event any payments or benefits made to participants are treated as “parachute payments,” subject to the adverse tax consequence under Section 280G of the Internal Revenue Code. For more information, see “Executive Compensation—Potential Payments upon Termination or Change in Control as of 2023 Fiscal Year End.”

  100. Summary Compensation Table

    Summary Compensation Table

  101. Summary Compensation Table

    | Name and Position(1) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | | Yakov Faitelson | 2023 | 560,000 | – | 13,000,055 | 528,000 | 24,924(4) | 14,112,979 | | Chief Executive Officer and President | 2022 | 560,000 | – | 8,787,553 | 241,331 | 29,471 | 9,618,355 | | | 2021 | 560,000 | – | 9,250,316 | 528,000 | 34,127 | 10,372,443 | | Guy Melamed | 2023 | 400,000 | – | 4,678,760 | 300,000 | 167,732(4)(5) | 5,546,492 | | Chief Financial Officer and Chief Operating Officer | 2022 | 400,000 | – | 4,678,776 | 137,120 | 24,656 | 5,240,552 | | | 2021 | 400,000 | – | 4,925,114 | 300,000 | 19,776 | 5,644,890 | | David Bass | | | | | | | | | Executive Vice President of Engineering and Chief Technology Officer | 2023 | 334,684 | – | 5,485,319 | – | 54,053(5) | 5,874,056 | | | 2022 | 367,357 | – | 5,485,358 | – | 58,491 | 5,911,206 | | | 2021 | 381,271 | – | 5,774,201 | – | 58,257 | 6,213,729 | | James O’Boyle | 2023 | 350,000 | – | 3,705,032 | 280,897 | 27,529(4) | 4,363,458 | | Vice Chairman – Sales | 2022 | 350,000 | – | 3,705,037 | 318,832 | 26,053 | 4,399,922 | | | 2021 | 350,000 | – | 3,900,042 | 304,082 | 20,794 | 4,574,918 | | Dov Gottlieb | 2023 | 500,000 | 200,000(6) | 2,700,005 | – | 13,200(4) | 3,413,205 | | Vice President, General Counsel and Corporate Secretary | 2022 | 500,000 | 150,000 | 2,700,013 | – | 12,200 | 3,362,213 |

  102. Summary Compensation Table

    | (1) Certain amounts payable to Israeli employees were paid in New Israeli Shekels. The exchange rate used for the purpose of the Summary Compensation Table as related to fiscal year 2023 is $1.00 = NIS 3.6805, which was the average exchange rate for fiscal 2023. |

  103. Summary Compensation Table

    | (2) Represents the grant date fair value of each award computed in accordance with FASB ASC Topic 718 (“Topic 718”). For a summary of the assumptions made in the valuation of the awards, please see Note 2.k, “Accounting for Stock-Based Compensation,” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. The grant date value of the 2023 PSUs as reported assumed performance at the target payout level. Pursuant to SEC rules (which require us to report the maximum grant date fair value if not already represented in the Summary Compensation Table), the grant date fair value of the 2023 PSUs for our NEOs assuming performance at the maximum payout level is as follows: Mr. Faitelson $19,500,083; Mr. Melamed $7,018,140; Mr. Bass $5,485,319; and Mr. O’Boyle $5,557,548. For information on the actual payout to our NEOs under the 2023 PSUs, see “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards—2023 Executive Compensation Elements—PSU Grants.” |

  104. Summary Compensation Table

    | (3) Represents performance-based (i) annual bonuses earned by Messrs. Faitelson and Melamed in respect of Company and individual performance in the applicable fiscal year and (ii) annual sales commissions paid to Mr. O’Boyle in the applicable fiscal year. The material terms of the non-equity incentive plan compensation paid to named executive officers in our last completed fiscal year are described in the section entitled “Compensation Discussion and Analysis—2023 Executive Compensation Elements—Annual Cash Incentive Compensation.” |

  105. Summary Compensation Table

    | (4) Amounts reported for 2023 include Company matching contributions to the 401(k) savings plan as follows: Mr. Faitelson $13,200; Mr. Melamed $5,270; Mr. O’Boyle $13,200; and Mr. Gottlieb $13,200. Amounts reported also include car allowances as follows: Mr. Faitelson $11,724; Mr. Melamed $20,079; and Mr. O’Boyle $7,646. Amounts also include $6,683 in payments with respect to travel expenses for Mr. O’Boyle and his spouse associated with attendance at our annual sales achievement event and $92,304 in redemption of accrued vacation days for Mr. Melamed. |

  106. Summary Compensation Table

    | (5) For 2023, includes disability insurance benefits, contributions to pension and severance funds and recreation pay as required under Israeli law. |

  107. Summary Compensation Table

    | (6) Represents Mr. Gottlieb’s annual cash bonus as described in the section entitled “Compensation Discussion and Analysis—2023 Executive Compensation Elements—Annual Cash Incentive Compensation.” |

  108. Grants of Plan-Based Awards for Fiscal 2023

    Grants of Plan-Based Awards for Fiscal 2023 The following table provides information regarding: (i) annual non-equity incentive plan awards under the Company’s 2023 Cash Incentive Plan and 2023 Sales Compensation Plan; and (ii) RSU and PSU awards under the 2013 Plan.

  109. Grants of Plan-Based Awards for Fiscal 2023

    | Name | Grant Date | Compensation Committee Approval Date | 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 (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Yakov Faitelson | | | 396,000 | 440,000 | 528,000 | — | — | — | — | — | | RSUs | 2/8/23 | 2/2/23 | — | — | — | — | — | — | 227,592 | 6,500,028 | | PSUs | 2/8/23 | 2/2/23 | — | — | — | 113,796 | 227,592 | 682,776 | — | 6,500,028 | | Guy Melamed | | | 225,000 | 250,000 | 300,000 | — | — | — | — | — | | RSUs | 3/2/23 | 3/2/23 | — | — | — | — | — | — | 85,410 | 2,339,380 | | PSUs | 3/2/23 | 3/2/23 | — | — | — | 42,705 | 85,410 | 256,230 | — | 2,339,380 | | David Bass | | | — | — | — | — | — | — | — | — | | RSUs | 2/8/23 | 2/2/23 | — | — | — | — | — | — | 128,042 | 3,656,880 | | PSUs | 2/8/23 | 2/2/23 | — | — | — | 32,010 | 64,021 | 192,063 | — | 1,828,440 | | James O’Boyle | | | — | 350,000 | — | — | — | — | — | — | | RSUs | 2/8/23 | 2/2/23 | — | — | — | — | — | — | 64,864 | 1,852,516 | | PSUs | 2/8/23 | 2/2/23 | — | — | — | 32,432 | 64,864 | 194,592 | — | 1,852,516 | | Dov Gottlieb | | | — | — | — | — | — | — | — | — | | RSUs | 2/8/23 | 2/2/23 | — | — | — | — | — | — | 94,538 | 2,700,005 |

  110. Grants of Plan-Based Awards for Fiscal 2023

    | (1) Represents the threshold, target and and/or maximum cash payout opportunities for fiscal 2023 under our 2023 Cash Incentive Plan and 2023 Sales Compensation Plan. Pursuant to his 2023 Sales Compensation Plan, Mr. O’Boyle had the opportunity to earn an annualized target commission for the year if the annualized earned net revenues target was met, or a pro rata portion of his target compensation if the annualized earned net revenues fell below such target. For any amount in excess of 100% of the annualized earned net revenues target for 2023, he was entitled to receive 1.5% of any such excess. As a result, there was no threshold or maximum payout. For more information regarding our 2023 Cash Incentive Plan and 2023 Sales Compensation Plan, see “Compensation Discussion and Analysis—2023 Executive Compensation Elements—Annual Cash Incentive Compensation.” |

  111. Grants of Plan-Based Awards for Fiscal 2023

    | (2) Represents shares of our common stock underlying the 2023 PSUs granted under our 2013 Plan to our NEOs. Mr. Faitelson’s PSUs, to the extent earned after the one-year performance period, will vest on February 28, 2026, subject to Mr. Faitelson’s continued employment at the end of such period. The PSUs for all other NEOs, to the extent earned, will vest subject to ratable time-based vesting over three years following the one-year performance period. |

  112. Grants of Plan-Based Awards for Fiscal 2023

    | (3) Represents shares of our common stock underlying RSUs granted under our 2013 Plan, subject to ratable time-based vesting over four years upon the last calendar day of the month of February beginning on February 29, 2024, subject to the individual’s continued employment at the applicable vesting date with respect to the NEOs. |

  113. Grants of Plan-Based Awards for Fiscal 2023

    | (4) Represents the grant date fair value of RSU and PSU awards computed in accordance with Topic 718. For a summary of the assumptions made in the valuation of these awards, please see Note 2.k, “Accounting for Stock-Based Compensation,” of the Notes to Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. |

  114. Outstanding Equity Awards at Fiscal Year End 2023

    Outstanding Equity Awards at Fiscal Year End 2023 The following table shows information regarding outstanding equity awards held by each named executive officer as of our fiscal year end, December 31, 2023.

  115. Outstanding Equity Awards at Fiscal Year End 2023

    | Name | Grant Date | Option Awards | | | | Stock Awards | | | | | | | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested ($) | | Yakov Faitelson | 8/7/2014 | 255,000 | – | 7.00 | 8/4/2024 | – | – | – | – | | | 2/20/2015 | 105,000 | – | 9.96 | 2/17/2025 | – | – | – | – | | | 2/17/2016 | 60,000 | – | 5.62 | 2/14/2026 | – | – | – | – | | | 2/13/2020 | – | – | – | – | 21,243(2) | 961,883 | – | – | | | 2/11/2021 | – | – | – | – | 33,744(3) | 1,527,928 | – | – | | | 2/11/2021 | – | – | – | – | 188,570(4) | 8,538,450 | – | – | | | 2/10/2022 | – | – | – | – | 80,788(5) | 3,658,081 | – | – | | | 2/10/2022 | – | – | – | – | 41,670(6) | 1,886,818 | – | – | | | 2/8/2023 | – | – | – | – | 227,592(7) | 10,305,366 | – | – | | | 2/8/2023 | – | – | – | – | – | – | 227,592(8) | 10,305,366 | | Guy Melamed | 2/13/2020 | – | – | – | – | 45,000(2) | 2,037,600 | – | – | | | 2/11/2021 | – | – | – | – | 17,967(3) | 813,546 | – | – | | | 2/11/2021 | – | – | – | – | 33,467(9) | 1,515,386 | – | – | | | 2/10/2022 | – | – | – | – | 43,014(5) | 1,947,674 | – | – | | | 2/10/2022 | – | – | – | – | 14,792(10) | 669,782 | – | – | | | 3/2/2023 | – | – | – | – | 85,410(7) | 3,867,365 | – | – | | | 3/2/2023 | – | – | – | – | – | – | 85,410 (11) | 3,867,365 | | David Bass | 2/13/2020 | – | – | – | – | 48,750(2) | 2,207,400 | – | – | | | 2/11/2021 | – | – | – | – | 28,086(3) | 1,271,734 | – | – | | | 2/11/2021 | – | – | – | – | 26,158(9) | 1,184,434 | – | – | | | 2/10/2022 | – | – | – | – | 67,239(5) | 3,044,582 | – | – | | | 2/10/2022 | – | – | – | – | 11,562(10) | 523,527 | – | – | | | 2/8/2023 | – | – | – | – | 128,042(7) | 5,797,742 | – | – | | | 2/8/2023 | – | – | – | – | – | – | 64,021(11) | 2,898,871 | | James O’Boyle | 2/13/2020 | – | – | – | – | 26,250(2) | 1,188,600 | – | – | | | 2/11/2021 | – | – | – | – | 14,226(3) | 644,153 | – | – | | | 2/11/2021 | – | – | – | – | 26,502(9) | 1,200,011 | – | – | | | 2/10/2022 | – | – | – | – | 34,062(5) | 1,542,327 | – | – | | | 2/10/2022 | – | – | – | – | 11,713(10) | 530,365 | – | – | | | 2/8/2023 | – | – | – | – | 64,864(7) | 2,937,042 | – | – | | | 2/8/2023 | – | – | – | – | – | – | 64,864(11) | 2,937,042 | | Dov Gottlieb | 5/6/2021 | – | – | – | – | 47,720(12) | 2,160,762 | – | – | | | 5/5/2022 | – | – | – | – | 54,436(13) | 2,464,862 | – | – | | | 2/8/2023 | – | – | – | – | 94,538(7) | 4,280,681 | – | – |

  116. Outstanding Equity Awards at Fiscal Year End 2023

    | (1) Represented unvested shares subject to time-vesting requirements. The market value is based on the closing price of our common stock on December 29, 2023, which was $45.28 per share. |

  117. Outstanding Equity Awards at Fiscal Year End 2023

    | (2) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of February beginning on February 28, 2021, subject to the grantee continuing to be employed by us through each such date. |

  118. Outstanding Equity Awards at Fiscal Year End 2023

    | (3) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of February beginning on February 28, 2022, subject to the grantee continuing to be employed by us through each such date. |

  119. Outstanding Equity Awards at Fiscal Year End 2023

    | (4) Represents the number of PSUs that were earned on February 10, 2022 based on the achievement performance level in 2021. All such shares are eligible to time-vest on February 29, 2024, subject to Mr. Faitelson’s continued employment through such date. |

  120. Outstanding Equity Awards at Fiscal Year End 2023

    | (5) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of February beginning on February 28, 2023, subject to the grantee continuing to be employed by us through each such date. |

  121. Outstanding Equity Awards at Fiscal Year End 2023

    | (6) Represents the number of PSUs that were earned on February 9, 2023 based on the achievement performance level in 2022. All such shares are eligible to time-vest on February 28, 2025, subject to Mr. Faitelson’s continued employment through such date. |

  122. Outstanding Equity Awards at Fiscal Year End 2023

    | (7) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of February beginning on February 29, 2024, subject to the grantee continuing to be employed by us through each such date. |

  123. Outstanding Equity Awards at Fiscal Year End 2023

    | (8) Represents the number of PSUs that were earned on February 8, 2024 based on the achievement performance level in 2023. All such shares are eligible to time-vest on February 27, 2026, subject to Mr. Faitelson’s continued employment through such date. |

  124. Outstanding Equity Awards at Fiscal Year End 2023

    | (9) Represents the number of PSUs that were earned on February 10, 2022 based on the achievement performance level in 2021. All such shares are eligible to time-vest, and an equal number of shares of common stock will be deliverable to the grantee, in three equal annual installments upon the last calendar day of the month of February beginning on February 28, 2022, subject to the grantee’s continued employment through such date. |

  125. Outstanding Equity Awards at Fiscal Year End 2023

    | (10) Represents the number of PSUs that were earned on February 9, 2023 based on the achievement performance level in 2022. All such shares are eligible to time-vest, and an equal number of shares of common stock will be deliverable to the grantee, in three equal annual installments upon the last calendar day of the month of February beginning on February 28, 2023, subject to the grantee’s continued employment through such date. |

  126. Outstanding Equity Awards at Fiscal Year End 2023

    | (11) Represents the number of PSUs that were earned on February 8, 2024 based on the achievement performance level in 2022. All such shares are eligible to time-vest, and an equal number of shares of common stock will be deliverable to the grantee, in three equal annual installments upon the last calendar day of the month of February beginning on February 29, 2024, subject to the grantee’s continued employment through such date. |

  127. Outstanding Equity Awards at Fiscal Year End 2023

    | (12) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of May beginning on May 31, 2022 subject to the grantee continuing to be employed by us through each such date. |

  128. Outstanding Equity Awards at Fiscal Year End 2023

    | (13) The shares subject to the RSU award vest, and an equal number of shares of our common stock are deliverable to the grantee, in four equal annual installments upon the last calendar day of the month of May beginning on May 31, 2023 subject to the grantee continuing to be employed by us through each such date. |

  129. Option Exercises and Stock Vested for Fiscal 2023

    Option Exercises and Stock Vested for Fiscal 2023

  130. Option Exercises and Stock Vested for Fiscal 2023

    | | Option Awards | | Stock Awards | | | Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(2) | | Yakov Faitelson | – | – | 263,893 | 7,146,222 | | Guy Melamed | – | – | 165,433 | 4,479,926 | | David Bass | – | – | 173,395 | 4,695,537 | | James O’Boyle | – | – | 99,579 | 2,696,599 | | Dov Gottlieb | – | – | 42,634 | 1,120,422 |

  131. Option Exercises and Stock Vested for Fiscal 2023

    | (1) The value realized on exercise of stock option awards is based on the difference between the closing market price of our common stock on the date of exercise of the option award and the exercise price of the option. |

  132. Option Exercises and Stock Vested for Fiscal 2023

    | (2) The value realized on vesting of stock awards granted is based on the closing market price of our common stock on the date of vesting of the stock award. |

  133. Non-Qualified Deferred Compensation

    Non-Qualified Deferred Compensation We did not maintain a non-qualified deferred compensation plan for any of our named executive officers in fiscal year 2023.

  134. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF 2023 FISCAL YEAR END

    POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF 2023 FISCAL YEAR END As required by SEC rules, this section reflects the amount of compensation that would have been payable to each of our named executive officers in the event of termination of such executive’s employment, assuming the termination occurred effective as of December 31, 2023. For Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, these payments are governed by the terms of the Severance Plan. For Mr. Bass, these payments are governed by his employment agreement and his outstanding equity awards under the 2023 Plan and the 2013 Plan, where, in each case as applicable, the terms “cause,” “change in control” and “good reason” are defined. For more information on the terms of these payments, see “Compensation Discussion and Analysis—Change in Control and Severance.” For more information on 2023 base salary, 2023 bonus and outstanding equity awards as of December 31, 2023, see “Compensation Discussion and Analysis” as well as “Executive Compensation—Outstanding Equity Awards at Fiscal Year End 2023.”

  135. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

  136. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | Name | Involuntary Termination Without Cause or Voluntary Termination for Good Reason, Not in Connection with a Change in Control(1) ($) | Involuntary Termination Without Cause or Voluntary Termination for Good Reason, in Connection with a Change in Control(2)(3) ($) | | Yakov Faitelson | 1,500,000 | 2,940,000 | | Guy Melamed | 650,000 | 1,550,000 | | David Bass | 167,342 | 334,684 | | James O’Boyle | 700,000 | 1,750,000 | | Dov Gottlieb | 700,000 | 1,600,000 |

  137. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | (1) Includes (i) a cash payment equal to 150% of the sum of base salary and target bonus for the year of termination for Mr. Faitelson, 100% of the sum of base salary and target bonus for the year of termination for Messrs. Melamed, O’ Boyle and Gottlieb, and one-half times the sum of base salary for the year of termination for Mr. Bass, and (ii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, a payment of any earned but unpaid bonus or commission in respect of the year prior to the year of termination, at the time such bonuses or commissions would otherwise be paid (which is zero when termination is assumed as of December 31, 2023): |

  138. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | Name | Cash Payment Relating to Base Salary and/or Target Bonus/Commission for Year of Termination ($) | Earned but Unpaid Bonus/Commission for Year Prior to Year of Termination ($) | | Yakov Faitelson | 1,500,000 | – | | Guy Melamed | 650,000 | – | | David Bass | 167,342 | – | | James O’Boyle | 700,000 | – | | Dov Gottlieb | 700,000 | – |

  139. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | (2) Includes (i) a cash payment equal to 250% of the sum of base salary and target bonus for the year of termination for Mr. Faitelson, 150% of the sum of base salary and target bonus for the year of termination for Messrs. Melamed, O’Boyle and Gottlieb, and one time base salary for the year of termination for Mr. Bass, (ii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, an additional cash payment equal to the amount of target bonus or commission for the performance period including the date of termination, prorated based on the number of days employed by the Company during the performance period, and (iii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, a payment of any earned but unpaid bonus or commission in respect of the year prior to the year of termination, at the time such bonuses or commissions would otherwise be paid (which is zero when termination is assumed as of December 31, 2023). |

  140. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | Name | Cash Payment Relating to Base Salary and/or Target Bonus/Commission for Year of Termination ($) | Additional Cash Payment of Pro Rata Target Bonus/Commission for Year of Termination ($) | Earned but Unpaid Bonus/Commission for Year Prior to Year of Termination ($) | | Yakov Faitelson | 2,500,000 | 440,000 | – | | Guy Melamed | 1,300,000 | 250,000 | – | | David Bass | 334,684 | – | – | | James O’Boyle | 1,400,000 | 350,000 | – | | Dov Gottlieb | 1,400,000 | 200,000 | – |

  141. Cash Benefits and Payments upon Termination as of 2023 Fiscal Year End

    | (3) Benefit is provided in the case of an involuntary termination without “cause” or voluntary termination for “good reason” (i) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, within six months prior to and 24 months following a “change in control,” and (ii) with respect to Mr. Bass, within the one-year period following a “change in control.” |

  142. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

  143. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason, Not in Connection with a Change in Control(1) | | Involuntary Termination Without Cause or Voluntary Termination for Good Reason, in Connection with a Change in Control(2) | | | Change in Control Without Termination(3) | | Name | Number (#) | Value ($)* | Number (#) | Value ($)* | Number (#) | Value* ($) | | Yakov Faitelson | 236,424 | 10,705,270 | 821,199 | 37,183,891 | – | – | | Guy Melamed | 109,268 | 4,947,672 | 325,060 | 14,718,717 | – | – | | David Bass | – | – | – | – | 373,857 | 16,928,245 | | James O’Boyle | 77,527 | 3,510,433 | 242,481 | 10,979,540 | – | – | | Dov Gottlieb | 81,116(4) | 3,672,917 | 196,694 | 8,906,304 | – | – |

  144. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | * Based on $45.28, the closing price of our common stock on the last business day of our 2023 fiscal year. |

  145. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | (1) Includes accelerated vesting of a portion of each equity award held by the named executive officer, prorated based on the number of days he was employed by the Company since the last vesting date (with any performance-vesting awards deemed vested at the greater of target and actual level of performance determined at the time of such termination). |

  146. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | (2) Includes accelerated vesting of all equity awards held by the named executive officer (with any performance-vesting awards deemed vested at the greater of target and actual level of performance determined at the time of such termination). |

  147. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | (3) Includes accelerated vesting of all equity awards held by the named executive officer (with performance-vesting awards deemed vested at target). |

  148. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | (4) Pursuant to Mr. Gottlieb’s employment agreement that he entered into when he joined the Company, wherever termination is by us without “cause,” he is also entitled to acceleration of the remaining unvested portions of his initial grant of 95,440 RSUs granted in May 2021. |

  149. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | DIRECTOR COMPENSATION |

  150. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    The Compensation Committee, with input from its independent compensation consultant Compensia, annually reviews and evaluates director compensation and makes recommendations to the Board. Our Board reviews director compensation periodically to ensure that the director compensation package remains competitive such that we are able to recruit and retain qualified directors. Certain highlights of Board compensation are included below.

  151. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | Restricted stock units | On average, our non-employee directors currently receive more than 80% of their annual compensation from us in the form of RSUs (based on the grant date fair value of approximately $190,000 for annual grants). | | Director stock ownership guidelines | Each of our directors is required to beneficially own shares of our common stock with the equivalent value, as of the acquisition date, of at least five times his or her aggregate annual cash retainer, by the date of the fifth anniversary of his or her appointment (provided that directors as of the date of the guidelines’ adoption must achieve their applicable levels of ownership on an accelerated basis, within two years after adoption). For more information, see “Information Regarding the Board of Directors and Corporate Governance—Other Policies and Practices.” | | Compensation review | The Compensation Committee reviews the appropriateness of our director compensation. |

  152. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    We have a policy of reimbursing our directors for their reasonable out-of-pocket expenses incurred in attending Board and Board committee meetings. None of our employee directors receives additional compensation for his or her service on the Board. Non-employee directors receive the following cash compensation for Board and Board committee services, as applicable, paid on a quarterly basis:

  153. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $30,000 per year for service as a Board member; |

  154. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $20,000 per year for service as the chairperson of the Audit Committee and $7,500 per year for service as a member (other than as chair) of the Audit Committee; |

  155. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $10,500 per year for service as the chairperson of the Compensation Committee and $5,000 per year for service as a member (other than as chair) of the Compensation Committee; |

  156. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $7,500 per year for service as the chairperson of the Nominating and Corporate Governance Committee and $3,500 per year for service as a member (other than as chair) of the Nominating and Corporate Governance Committee; |

  157. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $7,500 per year for service as the chairperson of the Technology Committee and $3,500 per year for service as a member (other than as chair) of the Technology Committee; and |

  158. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | • | $19,000 per year for services as Lead Director. |

  159. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    In addition, each non-employee director is entitled to receive an award of RSUs under the 2013 Plan in the amount of $190,000 each year at the Compensation Committee meeting held after the end of the first quarter. Accordingly, in May 2023, each non-employee director received an award of RSUs under the 2013 Plan in the amount of $190,000 (which, in 2023, resulted in a grant of 8,272 RSUs). Each such RSU will vest on May 31, 2024, subject to the director’s continued service on the Board. The following table sets forth information regarding compensation earned by or paid to our non-employee directors during 2023:

  160. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | Director | Fees Earned or Paid in Cash ($) | Stock Awards (1) ($) | Total ($) | | Carlos Aued | 30,000 | 190,008 | 220,008 | | Kevin Comolli | 44,750 | 190,008 | 234,758 | | John J. Gavin, Jr. | 76,000 | 190,008 | 266,008 | | Gili Iohan | 42,500 | 190,008 | 232,508 | | Avrohom J. Kess | 37,750 | 190,008 | 227,758 | | Ohad Korkus | 37,500 | 190,008 | 227,508 | | Thomas F. Mendoza | 30,000 | 190,008 | 220,008 | | Rachel Prishkolnik | 35,000 | 190,008 | 225,008 | | Ofer Segev | 37,500 | 190,008 | 227,508 | | Fred van den Bosch | 41,000 | 190,008 | 231,008 |

  161. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | (1) Represents the grant date fair value of the RSU awards granted on May 3, 2023, based on a price per share of the Company at the closing of the trading day of $22.97. |

  162. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    The following table shows the aggregate number of outstanding stock options and RSU awards held by each of our non-employee directors as of December 31, 2023:

  163. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | Director | Unexercised Options Outstanding (#) | Unvested Restricted Stock Units Outstanding (#) | | Carlos Aued | – | 8,272 | | Kevin Comolli | – | 8,272 | | John J. Gavin, Jr. | – | 8,272 | | Gili Iohan | – | 8,272 | | Avrohom J. Kess | – | 8,272 | | Ohad Korkus | 2,811 | 8,272 | | Thomas F. Mendoza | – | 8,272 | | Rachel Prishkolnik | – | 8,272 | | Ofer Segev | – | 8,272 | | Fred van den Bosch | – | 8,272 |

  164. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | CHIEF EXECUTIVE OFFICER PAY RATIO |

  165. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    Pursuant to Item 402(u) of Regulation S-K and the Dodd-Frank Act, we are required to disclose in this proxy statement the ratio of the annual total compensation of our CEO to that of our median employee. Pay Ratio Based on SEC rules for this disclosure and applying the methodology described below, the median employee’s annual total compensation for 2023 was $186,511. Thus, the ratio of our CEO’s annual total compensation for 2023 to the median employee’s annual total compensation for 2023 was approximately 76 to 1 (based on our CEO’s annual total compensation for 2023 as reported in the “Executive Compensation-Summary Compensation Table” of $14,112,979). The ratio of annual total compensation excluding equity awards for 2023 was approximately 9 to 1. Methodology Pursuant to SEC rules, we used the same median employee we used to calculate the pay ratio under SEC rules in fiscal 2021, who we previously identified as of December 31, 2021. In fiscal year 2023, compared to fiscal years 2022 and 2021, there was no significant change to the Company’s employee population or compensation arrangements, and the median employee’s circumstances did not change so as to impact significantly the pay ratio. We believe that annual total cash compensation is a consistently applied compensation measure at Varonis and most appropriate for determining the median employee. We calculated the annual total compensation for such employee (salary, wages, overtime, commissions and bonus) using the same methodology we used for Mr. Faitelson’s annual total compensation in the Summary Compensation Table for fiscal year 2023.

  166. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    | PAY VERSUS PERFORMANCE |

  167. Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2023 Fiscal Year End

    As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” and certain financial performance of the Company. The Compensation Committee does not in practice use “compensation actually paid” as the basis for making compensation decisions. For further information concerning our compensation philosophy and how we align executive compensation with our performance, see “Compensation Discussion and Analysis.” The below disclosure is provided only to comply with applicable SEC rules.

  168. Pay Versus Performance Table and Related Disclosure

    Pay Versus Performance Table and Related Disclosure The following table sets forth information regarding compensation for our principal executive officer and average compensation related to our other named executive officers versus our Company performance for the past four years.

  169. Pay Versus Performance Table and Related Disclosure

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | (in thousands) | | | Year(1) | Summary Compensation Table Total for CEO ($) | Compensation Actually Paid to CEO ($)(2)(3) | Average Summary Compensation Table Total for Other NEOs ($) | Average Compensation Actually Paid to Other NEOs ($)(3)(4) | Total Shareholder Return ($)(5) | Peer Group Total Shareholder Return ($)(5) | Net Loss ($) | Annual Recurring Revenues ($)(6) | | 2023 | 14,112,979 | 50,973,771 | 4,799,302 | 15,463,566 | 174.80 | 221.06 | (100,916) | 543,000 | | 2022 | 9,618,354 | (8,866,124) | 4,728,473 | (2,636,006) | 92.42 | 132.79 | (124,518) | 465,100 | | 2021 | 10,372,443 | 12,724,377 | 5,273,748 | 6,100,570 | 188.32 | 206.76 | (116,861) | 387,100 | | 2020 | 6,201,417 | 29,985,683 | 4,751,691 | 14,611,961 | 210.54 | 149.98 | (94,010) | 287,300 |

  170. Pay Versus Performance Table and Related Disclosure

    | (1) The CEO and other NEOs included in the above compensation columns reflect the following: |

  171. Pay Versus Performance Table and Related Disclosure

    | Year | CEO | Other NEOs | | 2023 | Yakov Faitelson | Guy Melamed, David Bass, James O’Boyle, Dov Gottlieb | | 2022 | Yakov Faitelson | Guy Melamed, David Bass, James O’Boyle, Dov Gottlieb | | 2021 | Yakov Faitelson | Guy Melamed, David Bass, James O’Boyle, Gilad Raz | | 2020 | Yakov Faitelson | Guy Melamed, David Bass, James O’Boyle, Gilad Raz |

  172. Pay Versus Performance Table and Related Disclosure

    | (2) The following table details the amounts deducted and added to the Summary Compensation Table figure to calculate compensation actually paid in accordance with Item 402(v) for our CEO: |

  173. Pay Versus Performance Table and Related Disclosure

    | | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported on Summary Compensation Table | 14,112,979 | 9,618,354 | 10,372,443 | 6,201,417 | | Fair value of equity awards reported in Summary Compensation Table | (13,000,055) | (8,787,553) | (9,250,316) | (5,290,849) | | Fair value at year-end of equity compensation granted in current year and unvested at year-end | 41,221,463 | 3,576,325 | 12,490,656 | 14,069,193 | | Change in fair value from end of prior fiscal to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | 7,810,760 | (11,936,142) | (2,779,713) | 14,760,197 | | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | 828,624 | (1,337,108) | 1,891,307 | 245,726 | | Compensation Actually Paid | 50,973,771 | (8,866,124) | 12,724,377 | 29,985,683 |

  174. Pay Versus Performance Table and Related Disclosure

    | (3) The following table details the amounts deducted and added to the Summary Compensation Table figure to calculate compensation actually paid in accordance with Item 402(v) for all other NEOs: |

  175. Pay Versus Performance Table and Related Disclosure

    | | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported on Summary Compensation Table | 4,799,302 | 4,728,473 | 5,273,748 | 4,751,691 | | Fair value of equity awards reported in Summary Compensation Table | (4,142,279) | (4,142,296) | (4,714,847) | (4,252,855) | | Fair value at year-end of equity compensation granted in current year and unvested at year-end | 11,498,166 | 1,927,757 | 5,832,637 | 7,587,632 | | Change in fair value from end of prior fiscal to end of current fiscal year for awards made in prior fiscal years that were unvested at end of current fiscal year | 2,939,286 | (4,408,373) | (1,230,120) | 6,277,530 | | Change in fair value from end of prior fiscal year to vesting date for awards made in prior fiscal years that vested during current fiscal year | 369,091 | (741,566) | 939,152 | 247,963 | | Compensation Actually Paid | 15,463,566 | (2,636,006) | 6,100,570 | 14,611,961 |

  176. Pay Versus Performance Table and Related Disclosure

    | (4) The assumptions used to value equity for the purposes of compensation actually paid were developed consistently with those used to value equity awards at the grant date under ASC 718. For each respective measurement date, RSUs were valued at the then-current stock price. PSUs were valued at the then-current stock price multiplied by the applicable performance factor actually earned, which was 300% for PSUs outstanding in FY2023. |

  177. Pay Versus Performance Table and Related Disclosure

    | (5) Peer Group TSR reflects the Company’s peer group (NASDAQ Computer Index) used for purposes of Item 201(e)(ii) of Regulation S-K in our latest Annual Report on Form 10-K filed with the SEC. Each year reflects what the cumulative value of $100 would be as of the end of the applicable fiscal year, including the reinvestment of dividends, if such amount were first invested on December 31, 2019. |

  178. Pay Versus Performance Table and Related Disclosure

    | (6) We chose annual recurring revenues as our company selected measure because it is the key variable component of our executive compensation program. Annual recurring revenues is a key performance indicator defined as the annualized value of active term-based subscription license contracts, maintenance contracts and SaaS contracts in effect at the end of that period. Subscription license contracts, maintenance contracts and SaaS contracts are annualized by dividing the total contract value by the number of days in the term and multiplying the result by 365. The annualized value of contracts is a legal and contractual determination made by assessing the contractual terms with our customers. The annualized value of maintenance contracts is not determined by reference to historical revenues, deferred revenues or any other GAAP financial measure over any period. Annual recurring revenues is not a forecast of future revenues and can be impacted by contract start and end dates and renewal rates. |

  179. Pay Versus Performance Table and Related Disclosure

    The following graphs address the relationship between “compensation actually paid” (“CAP”) as described in the Pay Versus Performance Table and the Company performance measures in the table.