DEF 14A of Varonis Systems Inc
Filed Apr 22, 2025 · FY20240001140361-25-014911
Board Nominees
Board Nominees You are being asked to vote on the following four nominees for directors to serve in Class II, with a term expiring at the 2028 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”.
Board Nominees
| Name | Age | Director Since | Independent | Committee Memberships | | | | | | | | | AC | CC | NCGC | TC | | Carlos Aued | 66 | 2022 | Yes | | | | | | Kevin Comolli | 65 | 2004 | Yes | | | | | | John J. Gavin, Jr. | 69 | 2013 | Yes | | | | | | Fred van den Bosch | 78 | 2013 | Yes | | | | |
Board Nominees
| AC: Audit Committee | | - Committee Chairperson | | CC: Compensation Committee | | | | NCGC: Nominating and Corporate Governance Committee | | | | TC: Technology Committee | | |
CORPORATE GOVERNANCE HIGHLIGHTS
CORPORATE GOVERNANCE HIGHLIGHTS
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 2024 • Focus on board refreshment, with 60% of the Company’s independent directors having served ten 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 |
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.
Board Skills and Experience
| PROPOSALS REQUIRING YOUR VOTE |
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 II directors, at the Annual Meeting; for Class III directors, at the 2026 Annual Meeting of Shareholders; and for Class I directors, at the 2027 Annual Meeting of Shareholders. The Board of Directors presently has 11 members. As stated above, the term of each of the four Class II directors expire at the Annual Meeting. If elected at the Annual Meeting, each of the director nominees will serve until the 2028 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 four 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.
PROPOSAL NO. 1: ELECTION OF DIRECTORS
| CLASS II DIRECTOR NOMINEES |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
| CARLOS AUED | Age: 66 | | 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. | |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
| KEVIN COMOLLI | Age: 65 | | 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. | |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
| JOHN J. GAVIN, JR. | Age: 69 | | 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. | |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
| FRED VAN DEN BOSCH | Age: 78 | | 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. | |
PROPOSAL NO. 1: ELECTION OF DIRECTORS
FOR THE ELECTION OF EACH NOMINEE LISTED ABOVE AS A CLASS II DIRECTOR,
Class III Directors Whose Term Expires in 2026
Class III Directors Whose Term Expires in 2026
Class III Directors Whose Term Expires in 2026
| YAKOV FAITELSON | Age: 49 | | 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. | |
Class III Directors Whose Term Expires in 2026
| THOMAS F. MENDOZA | Age: 74 | | 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. | |
Class III Directors Whose Term Expires in 2026
| AVROHOM J. KESS | Age: 56 | | 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. | |
Class III Directors Whose Term Expires in 2026
| OHAD KORKUS | Age: 46 | | 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. | |
Class I Directors Whose Term Expires in 2027
Class I Directors Whose Term Expires in 2027
Class I Directors Whose Term Expires in 2027
| GILI IOHAN | Age: 49 | | 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 Cato Networks Ltd, 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. | |
Class I Directors Whose Term Expires in 2027
| RACHEL PRISHKOLNIK | Age: 57 | | Position, Principal Occupation and Professional Experience: Legal Counsel, SolarEdge Technologies, Inc. Ms. Prishkolnik has served as a director since May 2021. Ms. Prishkolnik was 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. On December 27, 2024, Ms. Prishkolnik announced that she will be retiring from SolarEdge and will assist with the transition until the end of August 2025. 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. | |
Class I Directors Whose Term Expires in 2027
| OFER SEGEV | Age: 65 | | 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. | |
Protecting Data, Delivering Automated Outcomes
| • | reviewing our director compensation program and recommending changes in director compensation to the Board of Directors, to the extent appropriate; |
Compensation Philosophy and Objectives
| ✔ | increase long-term shareholder value. |
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 |
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 2024, 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 2024, 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.
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 2024, 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 2024, based in part on the advice of Compensia, the Compensation Committee removed Coupa Software from the peer group used in 2023 due to their acquisition. The Compensation Committee added the following companies to the peer group for 2024: MongoDB, Paylocity Holdings and SentinelOne. For 2024, our peer group consisted of the following companies:
The Role of Peer Companies and Competitive Positioning
| Alteryx, Inc. | LiveRamp Holdings | Q2 Holdings | Tenable Holdings, Inc. | | BlackLine, Inc. | MongoDB | Qualys | Upwork | | Elastic N.V. | Okta | Rapid7 | Verint Systems | | Everbridge | PagerDuty Inc. | SentinelOne | Workiva | | Five9, Inc. | Paylocity Holdings | Smartsheet Inc. | |
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 2024. 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.
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 in part, on challenging performance goals tied to (i) the completion of the SaaS transition, which is defined as 75% of total company ARR coming from SaaS, and (ii) Free Cash Flow. The completion of the SaaS transition target has a three-year performance period, and the earned PSUs will vest at the end of such period. The Free Cash Flow target has a one-year performance period, and the earned PSUs will vest ratably over three years for all NEOs other than our CEO. 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 in part, by external competitive market data. | | | | ✔ | RSUs generally have four-year ratable vesting and drive our goal of retaining top-tier talent. |
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. |
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. In 2024, Mr. Gottlieb received a portion 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 2024, the PSU component of the Long-Term Equity Incentive awards was tied to two performance metrics. The Compensation Committee chose completion of the SaaS transition and Free Cash Flow in order to further promote shareholder alignment. The completion of the SaaS transition measures the pace of the transition’s completion, which is the company’s key strategic priority, and free cash flow is an important component of how management measures the business. The completion of the SaaS transition has a three-year performance period, and PSUs subject to that target can only be earned after the period is complete.
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 2024 Cash Incentive Plan, under which bonuses are earned in the form of quarterly bonus awards. For 2024, 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 (which have not been changed since 2018). Thus, effective as of January 1, 2024, the target cash incentive award opportunity for each of these NEOs was as follows:
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%) |
Annual Cash Incentive Compensation
Each of Messrs. Faitelson’s and Melamed’s annual cash incentive compensation for 2024 was earned for the applicable quarterly period based on the weighting of factors as follows:
Annual Cash Incentive Compensation
| • | 50% based on the quarterly achievement of Company ARR targets; and |
Annual Cash Incentive Compensation
| • | 50% based on the quarterly achievement of Company TTM Margin targets. |
Annual Cash Incentive Compensation
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 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 2024 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 125% 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 150% 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 200% 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 increased the capped payout opportunity in the 2024 Cash Incentive Plan based, in part, on the advice of Compensia and to be more in line with market practice. The Compensation Committee chose to use ARR and TTM Margin as the corporate performance metrics under the 2024 Cash Incentive Plan, as both metrics are leading indicators of the Company’s progress during this SaaS 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 2024 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.
Annual Cash Incentive Compensation
| Period | Corporate Performance Metric ($ in thousands) | | | | | | | | “Threshold” Payout | | “Target” Payout | | “Stretch” Payout | | | ($m) | ARR | TTM Margin | ARR | TTM Margin | ARR | TTM Margin | | Q1 2024 | $556,000 | $70,214 | $557,900 | $71,214 | $558,000 | $72,214 | | Q2 2024 | $575,500 | $73,957 | $577,000 | $75,457 | $578,500 | $76,957 | | Q3 2024 | $596,500 | $78,393 | $598,500 | $80,393 | $600,500 | $82,393 | | Q4 2024 | $621,000 | $89,769 | $625,000 | $93,769 | $629,000 | $97,769 |
Annual Cash Incentive Compensation
Determination of 2024 Cash Incentive Award Payouts For fiscal 2024, based on corporate performance, Mr. Faitelson was awarded cash quarterly bonuses in the aggregate amount of $880,000, and Mr. Melamed was awarded cash quarterly bonuses in the aggregate amount of $500,000. Each of Messrs. Faitelson and Melamed thus achieved 200.0% of their target bonus opportunities. These bonus amounts included, for Mr. Faitelson, aggregate amounts of $440,000 allocated to ARR (weighted at 50% of total bonus payout) and $440,000 allocated to TTM Margin (weighted at 50% of total bonus payout), and for Mr. Melamed, aggregate amounts of $250,000 allocated to ARR (weighted at 50% of total bonus payout) and $250,000 allocated to TTM Margin (weighted at 50% of total bonus payout). The following table illustrates in summary format the operation of the 2024 Cash Incentive Plan, including the amounts actually awarded:
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 | $557.9 | $560.3 | 50% | $440,000 | | | | | Q2 | $577.0 | $584.2 | | | | | | | Q3 | $598.5 | $610.0 | | | | | | | Q4 | $625.0 | $641.9 | | | | Guy Melamed | 62.5% | $250,000 | Q1 | $557.9 | $560.3 | 50% | $250,000 | | | | | Q2 | $577.0 | $584.2 | | | | | | | Q3 | $598.5 | $610.0 | | | | | | | Q4 | $625.0 | $641.9 | | |
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 | $71.2 | $76.9 | 50% | $440,000 | | | | | Q2 | $75.5 | $87.0 | | | | | | | Q3 | $80.4 | $91.3 | | | | | | | Q4 | $93.8 | $106.0 | | | | Guy Melamed | 62.5% | $250,000 | Q1 | $71.2 | $76.9 | 50% | $250,000 | | | | | Q2 | $75.5 | $87.0 | | | | | | | Q3 | $80.4 | $91.3 | | | | | | | Q4 | $93.8 | $106.0 | | |
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 2024 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 2024, 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 2023 for Mr. O’Boyle. Effective as of January 1, 2024, the annual target sales commission opportunity for Mr. O’Boyle was $350,000.
Annual Cash Incentive Compensation
| Named Executive Officer | Target Commission Bonus Amount (% of salary) | | James O’Boyle | $350,000 (100%) |
Annual Cash Incentive Compensation
Pursuant to his 2024 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 2024, he was entitled to receive 0.1% 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 2024 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 2024, 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 2024 Sales Compensation Plan is $544.5 million. Determination of 2024 Sales Compensation Plan Bonus Payout Mr. O’Boyle received in 2024 an aggregate amount of commissions equal to $272,155, which represented the sum of (i) $138,823 resulting from collected net credited sales value under the 2024 Sales Compensation Plan; and (ii) $133,332 resulting from collected net revenues under his Sales Compensation Plans from 2023, 2022, and 2021. Assuming 100% collection of 2024 net revenues, Mr. O’Boyle would receive an additional amount equal to $140,046 as a commission bonus pursuant to the 2024 Sales Compensation Plan (which would be aggregated with the $138,823 already earned under the 2024 Sales Compensation Plan toward the target commission opportunity of $350,000 set for Mr. O’Boyle in 2024). 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. In 2024, 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.
2025 Cash Incentive Plan
2025 Cash Incentive Plan In addition, during its annual executive compensation review in February 2025 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 2025 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 2025 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 2025 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.
Long-Term Equity Incentive Awards
Long-Term Equity Incentive Awards In 2024, the Compensation Committee granted stock-based awards under our 2023 Omnibus Equity Incentive Plan (the “2023 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 2024, the long-term incentive awards to our NEOs are comprised of PSUs as well as time-vesting RSUs. In 2024, 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 2024.
Long-Term Equity Incentive Awards
| Element | Purpose | Key Features | | | Performance-vesting RSUs (PSUs) | Incentivize continued focus on long-term performance. | • | PSUs for NEOs in 2024 are earned based on the achievement of two performance targets (the “PSU targets”), with 50% weighted to the completion of the SaaS transition and 50% weighted to Free Cash Flow during fiscal year 2024. | | | | • | With respect to the NEOs other than the CEO, the SaaS transition target has a three-year performance period, and the earned PSUs will vest at the end of such period on February 26, 2027. The Free Cash Flow target has a one-year performance period, and the earned PSUs will vest ratably, beginning on February 28, 2025, over three years for all NEOs other than our CEO. | | | | • | With respect to our CEO, there is no release of earned PSUs until the three-year time vesting period is completed on February 26, 2027. | | Time-vesting RSUs (RSUs) | Promote retention of key talent in competitive industry. | • | Vest in four equal annual installments. |
Long-Term Equity Incentive Awards
PSU Grants The 2024 PSUs awarded to our NEOs are earned based on the achievement of completion of the SaaS transition and Free Cash Flow targets in fiscal 2024, as described below. Historically, we have had a one-year performance period design for all performance targets that is consistent with other companies in the technology sector. The Company is currently undergoing a multi-year SaaS transition and in connection with this transition, the Compensation Committee was able to establish rigorous targets. While this transition is complex, it is in the best interests of the Company and its investors to complete the transition in a timely manner in order to capture the expected benefits of becoming a SaaS company. The Compensation Committee relied upon its experience and collective business judgment in establishing goals and believes they are set at levels that require strong performance for target payout and exceptional performance for maximum payout. Structuring the 2024 PSUs in this manner helps to ensure a continued focus on longer-term performance by directly tying long-term compensation to the achievement of business goals. Subject to the achievement of the PSU targets, the SaaS transition target has a three-year performance period, and the earned PSUs will vest at the end of such period on February 26, 2027 with respect to the NEOs. We do not disclose forward-looking targets for our PSUs as the disclosure could result in competitive harm and be detrimental to our operating performance. However, at the completion of the performance period, we retrospectively disclose the performance goals, actual performance, and payouts for all previously granted PSUs. The Free Cash Flow target has a one-year performance period, and the earned PSUs will vest ratably, beginning on February 28, 2025, over three years for all NEOs other than our CEO. The earned PSUs of our CEO will not be released until the three-year time vesting period is completed on February 26, 2027 and is subject to Mr. Faitelson’s continued employment at the end of such period. If Mr. Faitelson’s employment terminates prior to this date, he will not receive the earned 2024 PSUs, as they will not be vested. The minimum payout opportunity is 0% of target shares, while the maximum payout opportunity was capped at 300% of target shares. We believe that our grant terms, which required our NEOs to meet challenging performance targets for the year ending December 31, 2024, 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 the SaaS transition timeline which is defined to be complete when 75% of total company ARR is SaaS, and Free Cash Flow, which is calculated as cash flow from operations minus capital expenditures, as performance measures for the 2024 PSUs. The completion of the SaaS transition, which is the company’s key strategic priority, and free cash flow are important components of how management measures the business. Additionally, the vesting period until February 26, 2027 for our CEO is intended to promote his retention at our Company as a critical executive in a competitive industry. The following shows the 2024 PSU awards granted to our named executive officers:
Long-Term Equity Incentive Awards
| Named Executive Officer | Number of 2024 PSUs Granted | | Yakov Faitelson | 134,159 | | Guy Melamed | 58,605 | | David Bass | 48,059 | | James O’Boyle | 38,236 | | Dov Gottlieb | 10,320 |
Long-Term Equity Incentive Awards
The 2024 PSU performance targets for Free Cash Flow were as follows:
Long-Term Equity Incentive Awards
| Free Cash Flow Target* | 2024 PSU Payout Opportunity | | Less than $72.5 million | 0% of PSUs will be earned | | $72.5 million | 50% of PSUs will be earned | | $75.0 million | 100% of PSUs will be earned | | $80.0 million | 200% of PSUs will be earned | | $85.0 million and above | 300% of PSUs will be earned |
Long-Term Equity Incentive Awards
| * For PSUs earned for actual results that are between thresholds, linear interpolation is used to determine the earned percentage. |
Long-Term Equity Incentive Awards
Determination of 2024 PSU Payout The PSUs are 50% weighted to SaaS transition timeline and 50% weighted to Free Cash Flow. The Company’s Free Cash Flow performance in 2024 was $108.5 million, and as such, the earned 2024 PSU payout percentage was 300% for the Free Cash Flow target, subject to the vesting requirements. We do not disclose forward-looking targets for our PSUs as the disclosure could result in competitive harm and be detrimental to our operating performance. However, at the completion of the performance period, we retrospectively disclose the performance goals, actual performance, and payouts for all previously granted PSUs. The PSUs associated with SaaS transition target will not be determined until February 26, 2027. As a result, the 2024 PSUs earned by each NEO in 2024 are set forth below.
Long-Term Equity Incentive Awards
| | Free Cash Flow Metric | | | | Named Executive Officer | Actual | Payout % | Number of PSUs Earned | | Yakov Faitelson | $108.5 | 300% | 201,239 | | Guy Melamed | $108.5 | 300% | 87,909 | | David Bass | $108.5 | 300% | 72,090 | | James O’Boyle | $108.5 | 300% | 57,354 | | Dov Gottlieb | $108.5 | 300% | 15,480 |
Long-Term Equity Incentive Awards
2025 PSUs In addition, during its annual executive compensation review in February 2025 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 2025 PSUs for NEOs should be tied to two performance metrics – net new SaaS target (weighted at 50%) and Free Cash Flow (weighted at 50%). The net new SaaS target is calculated as SaaS recurring revenue as of December 31, 2025 minus SaaS recurring revenue as of December 31, 2024. The net new SaaS target measures the Company’s ability to sell its SaaS platform to new customers and to convert its existing self-hosted customers to its SaaS platform. 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. The Compensation Committee believes the net new SaaS target to be appropriate in order to continue to motivate the Company to complete the transition to a SaaS delivery model quickly. RSU Grants (CEO and Other NEOs) In February 2024, the Compensation Committee approved a regular annual grant of time-based RSU awards under the 2024 Plan to our NEOs (the “2024 RSU Awards”). One quarter of the 2024 RSU Awards will vest annually upon the last calendar day of the month of February, beginning on February 28, 2025, subject to the executive officer’s continued service with us on each applicable vesting date. The 2024 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 2024 RSU Awards granted to our named executive officers:
Long-Term Equity Incentive Awards
| Named Executive Officer | Number of RSUs | | Yakov Faitelson | 134,159 | | Guy Melamed | 58,605 | | David Bass | 75,478 | | James O’Boyle | 38,236 | | Dov Gottlieb | 30,960 |
Long-Term Equity Incentive Awards
CEO Vesting In consideration of Mr. Faitelson’s long tenure with the Company, and the importance of his continued involvement with the strategic growth of the Company, the Committee, taking into account the advice of its independent compensation consultant, approved that Mr. Faitelson’s future equity award agreements should provide that, in the event of his retirement (defined to mean a voluntary resignation when is at least 55 and has at least 10 years of service), his outstanding awards will continue to vest, as if his service never terminated, so long as Mr. Faitelson (i) remains in compliance with his continuing obligations to the Company and its affiliates, and (ii) provides such cooperation as the Company may reasonably request relating to the transfer of his responsibilities (“Retirement Provision”). The Committee included the Retirement Provision in Mr. Faitelson’s 2025 RSU and PSU awards and expects that this Retirement Provision to be included in all of his future grants of equity.
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 NEOs, 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 when relinquishing his equity partnership interest in a leading global law firm 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 2024 Fiscal Year End.”
Summary Compensation Table
Summary Compensation Table
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 | 2024 | 560,000 | – | 13,000,007 | 880,000 | 62,281(4) | 14,502,288 | | Chief Executive Officer and President | 2023 | 560,000 | – | 13,000,055 | 528,000 | 24,924 | 14,112,979 | | | 2022 | 560,000 | – | 8,787,553 | 241,331 | 29,471 | 9,618,355 | | Guy Melamed | 2024 | 400,000 | – | 5,678,825 | 500,000 | 52,495(4)(5) | 6,631,320 | | Chief Financial Officer and Chief Operating Officer | 2023 | 400,000 | – | 4,678,760 | 300,000 | 167,732 | 5,546,492 | | | 2022 | 400,000 | – | 4,678,776 | 137,120 | 24,656 | 5,240,552 | | David Bass | | | | | | | | | Executive Vice President of Engineering and Chief Technology Officer | 2024 | 332,965 | – | 5,985,368 | – | 57,053(5) | 6,375,386 | | | 2023 | 334,684 | – | 5,485,319 | – | 54,053 | 5,874,056 | | | 2022 | 367,357 | – | 5,485,358 | – | 58,491 | 5,911,206 | | James O’Boyle | 2024 | 350,000 | – | 3,705,068 | 272,155 | 30,033(4) | 4,357,256 | | Vice Chairman – Sales | 2023 | 350,000 | – | 3,705,032 | 280,897 | 27,529 | 4,363,458 | | | 2022 | 350,000 | – | 3,705,037 | 318,832 | 26,053 | 4,399,922 | | Dov Gottlieb | 2024 | 500,000 | 200,000(6) | 2,000,016 | – | 13,800(4) | 2,713,816 | | Vice President, General Counsel and Corporate Secretary | 2023 | 500,000 | 200,000 | 2,700,005 | – | 13,200 | 3,413,205 | | | 2022 | 500,000 | 150,000 | 2,700,013 | – | 12,200 | 3,362,213 |
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 2024 is $1.00 = NIS 3.6995, which was the average exchange rate for fiscal 2024. |
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, 2024. The grant date value of the 2024 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 2024 PSUs for our NEOs assuming performance at the maximum payout level is as follows: Mr. Faitelson $19,500,011; Mr. Melamed $8,518,237; Mr. Bass $6,985,376; Mr. O’Boyle $5,557,603, and Mr. Gottlieb $1,500,012. For information on the actual payout to our NEOs under the 2024 PSUs, see “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards—2024 Executive Compensation Elements—PSU Grants.” |
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—2024 Executive Compensation Elements—Annual Cash Incentive Compensation.” |
Summary Compensation Table
| (4) Amounts reported for 2024 include Company matching contributions to the 401(k) savings plan as follows: Mr. Faitelson $13,800; Mr. O’Boyle $13,800; and Mr. Gottlieb $13,800. Amounts reported also include car allowances as follows: Mr. Faitelson $22,093; Mr. Melamed $22,219; and Mr. O’Boyle $7,272. Amounts reported also include $6,612 in fuel reimbursement for Mr. Bass. Amounts reported also include $8,961 in payments with respect to travel expenses for Mr. O’Boyle and his spouse associated with attendance at our annual sales achievement event. |
Summary Compensation Table
| (5) For 2024, includes disability insurance benefits, contributions to pension and severance funds and recreation pay as required under Israeli law. |
Summary Compensation Table
| (6) Represents Mr. Gottlieb’s annual cash bonus as described in the section entitled “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Annual Cash Incentive Compensation.” |
Grants of Plan-Based Awards for Fiscal 2024
Grants of Plan-Based Awards for Fiscal 2024 The following table provides information regarding: (i) annual non-equity incentive plan awards under the Company’s 2024 Cash Incentive Plan and 2024 Sales Compensation Plan; and (ii) RSU and PSU awards under the 2023 Plan.
Grants of Plan-Based Awards for Fiscal 2024
| Name | Grant Date | Compensation Committee Approval Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards (2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | Grant Date Fair Value of Stock Awards ($)(4) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | Yakov Faitelson | | | 396,000 | 440,000 | 880,000 | — | — | — | — | — | | RSUs | 2/7/24 | 2/1/24 | — | — | — | — | — | — | 134,159 | 6,500,004 | | PSUs | 2/7/24 | 2/1/24 | — | — | — | 33,540 | 134,159 | 402,477 | — | 6,500,004 | | Guy Melamed | | | 225,000 | 250,000 | 500,000 | — | — | — | — | — | | RSUs | 2/7/24 | 2/1/24 | — | — | — | — | — | — | 58,605 | 2,839,412 | | PSUs | 2/7/24 | 2/1/24 | — | — | — | 14,651 | 58,605 | 175,815 | — | 2,839,412 | | David Bass | | | — | — | — | — | — | — | — | — | | RSUs | 2/7/24 | 2/1/24 | — | — | — | — | — | — | 75,478 | 3,656,909 | | PSUs | 2/7/24 | 2/1/24 | — | — | — | 12,015 | 48,059 | 144,177 | — | 2,328,459 | | James O’Boyle | | | — | 350,000 | — | — | — | — | — | — | | RSUs | 2/7/24 | 2/1/24 | — | — | — | — | — | — | 38,236 | 1,852,534 | | PSUs | 2/7/24 | 2/1/24 | — | — | — | 9,559 | 38,236 | 114,708 | — | 1,852,534 | | Dov Gottlieb | | | — | — | — | — | — | — | — | — | | RSUs | 2/7/24 | 2/1/24 | — | — | — | — | — | — | 30,960 | 1,500,012 | | PSUs | 2/7/24 | 2/1/24 | — | — | — | 2,580 | 10,320 | 30,960 | — | 500,004 |
Grants of Plan-Based Awards for Fiscal 2024
| (1) Represents the threshold, target and and/or maximum cash payout opportunities for fiscal 2024 under our 2024 Cash Incentive Plan and 2024 Sales Compensation Plan. Pursuant to his 2024 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 2024, he was entitled to receive 0.1% of any such excess. As a result, there was no threshold or maximum payout. For more information regarding our 2024 Cash Incentive Plan and 2024 Sales Compensation Plan, see “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Annual Cash Incentive Compensation.” |
Grants of Plan-Based Awards for Fiscal 2024
| (2) Represents shares of our common stock underlying the 2024 PSUs granted under our 2023 Plan to our NEOs. 50% of such PSU award was earned based on the Company’s achievement of the free cash flow metric during the performance period beginning on January 1, 2024 and ending on December 31, 2024 (the “one-year performance period”). The other 50% of such PSU award will be earned, if at all, based on the Company’s achievement of the SAAS out of ARR goal during the performance period beginning on January 1, 2024 and ending on December 31, 2026 (the “three-year performance period”). Mr. Faitelson’s PSUs, that were earned for the one-year performance period, will vest on February 28, 2027, subject to Mr. Faitelson’s continued employment on such date. The PSUs for all other NEOs that were earned, for the one-year performance period will vest subject to ratable time-based vesting over three years following the one-year performance period, subject to their continued employment on each vesting date. The PSUs that are earned, if any, for the three-year performance period will vest on February 28, 2027, subject to the NEO’s continued employment such date. See “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Long-Term Equity Incentive Awards.” |
Grants of Plan-Based Awards for Fiscal 2024
| (3) Represents shares of our common stock underlying RSUs granted under our 2023 Plan, subject to ratable time-based vesting over four years upon the last calendar day of the month of February beginning on February 28, 2025, subject to the individual’s continued employment at the applicable vesting date with respect to the NEOs. |
Grants of Plan-Based Awards for Fiscal 2024
| (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, 2024. |
Outstanding Equity Awards at Fiscal Year End 2024
Outstanding Equity Awards at Fiscal Year End 2024 The following table shows information regarding outstanding equity awards held by each named executive officer as of our fiscal year end, December 31, 2024.
Outstanding Equity Awards at Fiscal Year End 2024
| Name | Grant Date | Stock Awards | | | | | | | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Unearned Shares That Have Not Vested ($)(1) | | Yakov Faitelson | 2/11/2021 | 16,872(2) | 749,623 | – | – | | | 2/10/2022 | 53,858(3) | 2,392,911 | – | – | | | 2/10/2022 | 41,670(4) | 1,851,398 | – | – | | | 2/8/2023 | 170,694(5) | 7,583,934 | – | – | | | 2/8/2023 | 682,776(6) | 30,335,738 | – | – | | | 2/7/2024 | 134,159(7) | 5,960,684 | – | – | | | 2/7/2024 | 201,239(8) | 8,941,027 | 201,239(9) | 8,941,027 | | Guy Melamed | 2/11/2021 | 8,982(2) | 399,070 | – | – | | | 2/10/2022 | 28,676(3) | 1,274,074 | – | – | | | 2/10/2022 | 7,396(10) | 328,604 | – | – | | | 3/2/2023 | 64,057(5) | 2,846,053 | – | – | | | 3/2/2023 | 170,820(11) | 7,589,533 | – | – | | | 2/7/2024 | 58,605(7) | 2,603,820 | – | – | | | 2/7/2024 | 87,909(12) | 3,905,730 | 87,909(13) | 3,905,730 | | David Bass | 2/11/2021 | 14,043(2) | 623,930 | – | – | | | 2/10/2022 | 44,826(3) | 1,991,619 | – | – | | | 2/10/2022 | 5,781(10) | 256,850 | – | – | | | 2/8/2023 | 96,031(5) | 4,266,657 | – | – | | | 2/8/2023 | 128,043(11) | 5,688,950 | – | – | | | 2/7/2024 | 75,478(7) | 3,353,488 | – | – | | | 2/7/2024 | 72,090(12) | 3,202,892 | 72,090(13) | 3,202,892 | | James O’Boyle | 2/11/2021 | 7,113(2) | 316,031 | – | – | | | 2/10/2022 | 22,708(3) | 1,008,916 | – | – | | | 2/10/2022 | 5,857(10) | 260,227 | – | – | | | 2/8/2023 | 48,648(5) | 2,161,431 | – | – | | | 2/8/2023 | 129,729(11) | 5,763,859 | – | – | | | 2/7/2024 | 38,236(7) | 1,698,825 | – | – | | | 2/7/2024 | 57,354(12) | 2,548,238 | 57,354(13) | 2,548,238 | | Dov Gottlieb | 5/6/2021 | 23,860(14) | 1,060,100 | – | – | | | 5/5/2022 | 36,290(15) | 1,612,365 | – | – | | | 2/8/2023 | 70,903(5) | 3,150,220 | – | – | | | 2/7/2024 | 30,960(7) | 1,375,553 | – | – | | | 2/7/2024 | 15,480(12) | 687,776 | 15,480(13) | 687,776 |
Outstanding Equity Awards at Fiscal Year End 2024
| (1) The market value is based on the closing price of our common stock on December 31, 2024, which was $44.43 per share. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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, 2022, subject to the grantee continuing to be employed by us through each such date. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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, 2023, subject to the grantee continuing to be employed by us through each such date. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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 29, 2024, subject to the grantee continuing to be employed by us through each such date. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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. |
Outstanding Equity Awards at Fiscal Year End 2024
| (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 28, 2025, subject to the grantee continuing to be employed by us through each such date. |
Outstanding Equity Awards at Fiscal Year End 2024
| (8) Represents the number of PSUs that were earned based on the Company’s achievement of the free cash flow metric for the performance period beginning on January 1, 2024 and ending on December 31, 2024. All such shares are eligible to time-vest on February 28, 2027, subject to Mr. Faitelson’s continued employment through such date. See “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Long-Term Equity Incentive Awards.” |
Outstanding Equity Awards at Fiscal Year End 2024
| (9) Represents PSUs that will be earned, if at all, based on the Company’s achievement of the SAAS out of ARR metric for the performance period beginning on January 1, 2024 and ending on December 31, 2026. The amount shown in the table reflects the maximum number of PSUs that may be earned. The earned PSUs, if any, will be eligible to time-vest on February 28, 2027, subject to Mr. Faitelson’s continued employment through such date. The actual number of PSUs that will be earned based on the Company’s achievement of the SAAS out of ARR metric is not yet determinable. See “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Long-Term Equity Incentive Awards.” |
Outstanding Equity Awards at Fiscal Year End 2024
| (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. |
Outstanding Equity Awards at Fiscal Year End 2024
| (11) 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, 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. |
Outstanding Equity Awards at Fiscal Year End 2024
| (12) Represents the number of PSUs that were earned based on the Company’s achievement of the free cash flow metric for the performance period beginning on January 1, 2024 and ending on December 31, 2024. 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, 2025, subject to the grantee’s continued employment through such date. See “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Long-Term Equity Incentive Awards.” |
Outstanding Equity Awards at Fiscal Year End 2024
| (13) Represents PSUs that will be earned, if at all, based on the Company’s achievement of the SAAS out of ARR metric for the performance period beginning on January 1, 2024 and ending on December 31, 2026. The amount shown in the table reflects the maximum number of PSUs that may be earned. The earned PSUs, if any, will be eligible to time-vest on February 28, 2027, subject to the grantee’s continued employment through such date. The actual number of PSUs that will be earned based on the Company’s achievement of the SAAS out of ARR metric is not yet determinable. See “Compensation Discussion and Analysis—2024 Executive Compensation Elements—Long-Term Equity Incentive Awards.” |
Outstanding Equity Awards at Fiscal Year End 2024
| (14) 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. |
Outstanding Equity Awards at Fiscal Year End 2024
| (15) 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. |
Option Exercises and Stock Vested for Fiscal 2024
Option Exercises and Stock Vested for Fiscal 2024
Option Exercises and Stock Vested for Fiscal 2024
| | 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 | 420,000 | 15,792,445 | 310,513 | 15,774,060 | | Guy Melamed | – | – | 215,949 | 10,970,209 | | David Bass | – | – | 213,176 | 10,829,341 | | James O’Boyle | – | – | 158,154 | 8,034,223 | | Dov Gottlieb | – | – | 65,641 | 3,005,236 |
Option Exercises and Stock Vested for Fiscal 2024
| (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. |
Option Exercises and Stock Vested for Fiscal 2024
| (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. |
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 2024.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF 2024 FISCAL YEAR END
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL AS OF 2024 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, 2024. 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 2024 Plan, 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 2024 base salary, 2024 bonus and outstanding equity awards as of December 31, 2024, see “Compensation Discussion and Analysis” as well as “Executive Compensation—Outstanding Equity Awards at Fiscal Year End 2024.”
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
Cash Benefits and Payments upon Termination as of 2024 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) ($) | | Yakov Faitelson | 1,500,000 | 2,940,000 | | Guy Melamed | 650,000 | 1,550,000 | | David Bass | 168,668 | 332,965 | | James O’Boyle | 700,000 | 1,750,000 | | Dov Gottlieb | 700,000 | 1,600,000 |
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
| (1) Includes (i) a cash payment equal to 150% of the sum of base salary and target bonus for the year of termination for Mr. Faitelson, 100% of the sum of base salary and target bonus for the year of termination for Messrs. Melamed, O’ Boyle and Gottlieb, and 50% of the sum of base salary for the year of termination for Mr. Bass, and (ii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, a payment of any earned but unpaid bonus or commission in respect of the year prior to the year of termination, at the time such bonuses or commissions would otherwise be paid (which is zero when termination is assumed as of December 31, 2024): |
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
| Name | Cash Payment Relating to Base Salary and/or Target Bonus/Commission for Year of Termination ($) | Earned but Unpaid Bonus/Commission for Year Prior to Year of Termination ($) | | Yakov Faitelson | 1,500,000 | – | | Guy Melamed | 650,000 | – | | David Bass | 168,668 | – | | James O’Boyle | 700,000 | – | | Dov Gottlieb | 700,000 | – |
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
| (2) Includes (i) a cash payment equal to 250% of the sum of base salary and target bonus for the year of termination for Mr. Faitelson, 200% of the sum of base salary and target bonus for the year of termination for Messrs. Melamed, O’Boyle and Gottlieb, and 100% of the base salary for the year of termination for Mr. Bass, (ii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, an additional cash payment equal to the amount of target bonus or commission for the performance period including the date of termination, prorated based on the number of days employed by the Company during the performance period, and (iii) with respect to Messrs. Faitelson, Melamed, O’Boyle and Gottlieb, a payment of any earned but unpaid bonus or commission in respect of the year prior to the year of termination, at the time such bonuses or commissions would otherwise be paid (which is zero when termination is assumed as of December 31, 2024). |
Cash Benefits and Payments upon Termination as of 2024 Fiscal Year End
| Name | Cash Payment Relating to Base Salary and/or Target Bonus/Commission for Year of Termination ($) | 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 | 332,965 | – | – | | James O’Boyle | 1,400,000 | 350,000 | – | | Dov Gottlieb | 1,400,000 | 200,000 | – |
Cash Benefits and Payments upon Termination as of 2024 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.” |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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 | 872,912 | 38,783,470 | 1,368,347 | 60,795,657 | – | – | | Guy Melamed | 159,333 | 7,079,143 | 455,747 | 20,248,839 | – | – | | David Bass | – | – | – | – | 460,321 | 20,452,062 | | James O’Boyle | 117,042 | 5,200,272 | 328,763 | 14,606,940 | – | – | | Dov Gottlieb | 66,323(4) | 2,946,727 | 182,653 | 8,115,272 | – | – |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| * Based on $44.43, the closing price of our common stock on December 31, 2024. |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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). |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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). |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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). |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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. |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| DIRECTOR COMPENSATION |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
The Compensation Committee, with input from its independent compensation consultant Compensia, periodically 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.
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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. |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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:
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| • | $30,000 per year for service as a Board member; |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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; |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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; |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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; |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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 |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| • | $19,000 per year for services as Lead Director. |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
In addition, each non-employee director is entitled to receive an award of RSUs under the 2023 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 2024, each non-employee director received an award of RSUs under the 2023 Plan in the amount of $190,000 (which, in 2024, resulted in a grant of 4,163 RSUs). Each such RSU will vest on May 30, 2025, subject to the director’s continued service on the Board. The following table sets forth information regarding compensation earned by or paid to our non-employee directors during 2024:
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| Director | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | | Carlos Aued | 30,000 | 189,999 | 219,999 | | Kevin Comolli | 42,000 | 189,999 | 231,999 | | John J. Gavin, Jr. | 76,000 | 189,999 | 265,999 | | Gili Iohan | 42,500 | 189,999 | 232,499 | | Avrohom J. Kess | 40,500 | 189,999 | 230,499 | | Ohad Korkus | 37,500 | 189,999 | 227,499 | | Thomas F. Mendoza | 30,000 | 189,999 | 219,999 | | Rachel Prishkolnik | 35,000 | 189,999 | 224,999 | | Ofer Segev | 37,500 | 189,999 | 227,499 | | Fred van den Bosch | 41,000 | 189,999 | 230,999 |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| (1) Represents the grant date fair value of the RSU awards granted on May 8, 2024, based on a price per share of the Company at the closing of the trading day of $45.64. |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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, 2024:
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| Director | Unexercised Options Outstanding (#) | Unvested Restricted Stock Units Outstanding (#) | | Carlos Aued | – | 4,163 | | Kevin Comolli | – | 4,163 | | John J. Gavin, Jr. | – | 4,163 | | Gili Iohan | – | 4,163 | | Avrohom J. Kess | – | 4,163 | | Ohad Korkus | – | 4,163 | | Thomas F. Mendoza | – | 4,163 | | Rachel Prishkolnik | – | 4,163 | | Ofer Segev | – | 4,163 | | Fred van den Bosch | – | 4,163 |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| CHIEF EXECUTIVE OFFICER PAY RATIO |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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 2024 was $155,704. Thus, the ratio of our CEO’s annual total compensation for 2024 to the median employee’s annual total compensation for 2024 was approximately 93 to 1 (based on our CEO’s annual total compensation for 2024 as reported in the “Executive Compensation-Summary Compensation Table” of $14,502,288). Methodology For purposes of identifying our median compensated employee, we used our global employee population as of December 31, 2024, which is the last day of our fiscal year. We excluded 6 employees in Luxembourg and Belgium under the de minimis exemption from our calculations. We calculated the annual total cash compensation (salary, wages, overtime and bonus) from our payroll records for all employees of the Company (excluding our Chief Executive Officer) during fiscal year 2024. We believe that annual total cash compensation is a consistently applied compensation measure at Varonis and most appropriate for determining the median employee. In making this determination, we annualized the compensation for those employees who were hired during fiscal year 2024, as permitted under SEC rules. We did not make any cost-of-living adjustments in identifying the median employee. After identifying the median employee, we calculated the annual total compensation for such employee using the same methodology we used for Mr. Faitelson's annual total compensation in the Summary Compensation Table for fiscal year 2024.
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 Fiscal Year End
| PAY VERSUS PERFORMANCE |
Acceleration of Outstanding Equity Awards upon Termination and/or Change in Control as of 2024 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.
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.
Pay Versus Performance Table and Related Disclosure
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year(1) | Summary Compensation Table Total for CEO ($) | 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) | | 2024 | 14,502,288 | 20,277,376 | 5,019,444 | 7,007,804 | 171.52 | 301.44 | (95,765) | 641,900 | | 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 | (2,636,005) | 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 | 29,985,684 | 4,751,691 | 14,611,961 | 210.54 | 149.98 | (94,010) | 287,300 |
Pay Versus Performance Table and Related Disclosure
| (1) The CEO and other NEOs included in the above compensation columns reflect the following: |
Pay Versus Performance Table and Related Disclosure
| Year | CEO | Other NEOs | | 2024 | Yakov Faitelson | Guy Melamed, David Bass, James O’Boyle, Dov Gottlieb | | 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 |
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: |
Pay Versus Performance Table and Related Disclosure
| | 2024 | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported on Summary Compensation Table | 14,502,288 | 14,112,979 | 9,618,354 | 10,372,443 | 6,201,417 | | Fair value of equity awards reported in Summary Compensation Table | (13,000,007) | (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 | 17,882,053 | 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 | (820,990) | 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 | 1,714,032 | 828,624 | (1,337,108) | 1,891,307 | 245,726 | | Compensation Actually Paid | 20,277,376 | 50,973,771 | (8,866,124) | 12,724,377 | 29,985,684 |
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: |
Pay Versus Performance Table and Related Disclosure
| | 2024 | 2023 | 2022 | 2021 | 2020 | | Total Compensation as reported on Summary Compensation Table | 5,019,444 | 4,799,302 | 4,728,473 | 5,273,748 | 4,751,691 | | Fair value of equity awards reported in Summary Compensation Table | (4,342,319) | (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 | 5,706,156 | 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 | (194,175) | 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 | 818,698 | 369,091 | (741,566) | 939,152 | 247,963 | | Compensation Actually Paid | 7,007,804 | 15,463,566 | (2,636,005) | 6,100,570 | 14,611,961 |
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 for PSUs outstanding in fiscal year 2024. |
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. |
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. |
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.