DEF 14A of Cerence Inc., Jan 5, 2024

DEF 14A of Cerence Inc.

Filed Jan 5, 2024 · FY20230001193125-24-002905

Open on EDGAR

  1. Board of Directors

    Board of Directors Our Board of Directors has a diverse mix of directors with complementary qualifications, skills, expertise, experience and attributes, which is essential to ensuring effective oversight of our business strategy and corporate governance practices. The members of the Board are:

  2. Board of Directors

    | | Arun Sarin Independent Board Chairman Former CEO, Vodafone Group Plc. | Seasoned global technology and telecommunications executive. | | Sanjay Jha Former CEO GlobalFoundries, Inc., Motorola Mobility Devices and COO Qualcomm | Extensive knowledge and leadership of technology organizations with significant global management experience. | | | Stefan Ortmanns President and CEO | Expert in technologies, services, software and go-to-market strategy for the automotive industry. | | Marcy Klevorn Former CIO, Ford Motor Company and EVP and President, Ford Mobility | Extensive knowledge and leadership of automotive and mobility organizations with significant transformation leadership and corporate governance experience. | | | Thomas Beaudoin Chief Financial Officer | Abundance of executive, finance, and operational experience in global technology companies. | | Kristi Ann Matus Former CFO and COO, Buckle Agency | Finance and accounting expert with extensive enabled services experience. | | | Marianne Budnik Chief Marketing Officer, VAST Data | Seasoned technology marketing executive at high growth companies. | | Alfred Nietzel Former CFO, CDK Global Inc. | Finance and accounting expert with extensive experience in the automotive supplier market. | | | Douglas Davis Former Senior Vice President, Intel Corp. | Extensive knowledge and leadership of technology organizations with strong global strategic planning, research and development and business acquisitions experience in the automotive industry. | | | |

  3. Board of Directors

    All independent directors have extensive professional experience relevant to their service on our Board. The chart below highlights specific areas in which we believe our directors have particularly deep experience relevant to our current profile and strategic needs. In this regard, during 2023, Ms. Klevorn joined our Board bringing extensive experience in the automotive and mobility industries.

  4. Board of Directors

    | Skills and Qualifications | | | | | | | | | Board Diversity We are an organization benefiting from directors with a wide range of diverse experiences and backgrounds. | ✓ | ✓ | | ✓ | ✓ | ✓ | | | Business/Industry Knowledge We are a software, solutions and professional services organization benefiting from experienced directors knowledgeable in the industry, markets and channel in which we operate. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Financial We are a global publicly traded company conducting complex financial transactions requiring oversight of the processes associated with our financial management and the integrity of our financial results. | ✓ | | | ✓ | ✓ | ✓ | ✓ | | Global/Emerging Markets Experience We are a global organization participating in both mature and emerging markets, and benefit from a Board with prior international exposure and experience. | ✓ | ✓ | ✓ | ✓ | ✓ | | ✓ | | Leadership We are a complex, global organization benefiting from experienced oversight of our overall strategy and management, including assessing our strategies and operations. | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | | Technology/Innovation We are a leading provider of cognitive assistants using voice recognition and natural language understanding solutions in highly dynamic and competitive markets and benefit from experience in understanding market trends and disruptive technologies and solutions. | ✓ | ✓ | ✓ | ✓ | ✓ | | |

  5. Inclusion of Director Nominees in Proxy Statement

    Inclusion of Director Nominees in Proxy Statement Our By-laws provide that a shareholder, or group of up to 20 shareholders, that has owned continuously for at least three years an aggregate of at least 3% of the outstanding Common Stock, may nominate and include in the Company’s proxy materials director nominees constituting up to the greater of two or 20% of the number of directors in office as of the deadline for such nomination, provided that the shareholder(s) and nominee(s) satisfy the requirements in the By-laws (a “proxy access nomination”). To be timely, a nomination notice and required information must be delivered to or mailed and received by the Company’s Corporate Secretary at our principal executive offices not less than 120 days nor more than 150 days prior to the anniversary of the date that the definitive proxy statement with respect to the preceding year’s annual meeting was first released to shareholders; provided, however, that in the event the date of the annual meeting is more than 30 days earlier or more than 60 days later than such anniversary date, notice by the shareholder to be timely must be so delivered or received no earlier than the 150th day prior to such annual meeting and not later than the close of business on the later of (1) the 120th day prior to such annual meeting or (2) the 10th day following the date on which we publicly announce the meeting date. Assuming the date of our 2025 Annual Meeting is not so advanced or delayed, shareholders who wish to include a director nominee in our 2025 proxy statement must notify us no earlier than August 8, 2024 and no later than the close of business on September 7, 2024. Such notice must provide the information required by our By-laws. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), no later than December 27, 2024.

  6. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS At the 2024 Annual Meeting, nine directors will be elected to the Board. The Nominating & Governance Committee of the Board of Directors recommended, and the Board of Directors approved, Arun Sarin, Stefan Ortmanns, Thomas Beaudoin, Marianne Budnik, Douglas Davis, Sanjay Jha, Marcy Klevorn, Kristi Ann Matus and Alfred Nietzel, as nominees for election at the 2024 Annual Meeting as directors. Each person elected as a director will be elected for a one-year term expiring at the 2025 Annual Meeting. Directors hold office until their successors have been duly elected and qualified, or until their earlier death, resignation or removal. The names of and certain biographical information about the director nominees are set forth below. The information below also includes the specific experience, qualifications, attributes and skills that led to our Board’s conclusion that the nominees should serve as a director of Cerence. There are no family relationships among any of our directors or executive officers.

  7. Information Regarding the Nominees for Election as Directors

    Information Regarding the Nominees for Election as Directors

  8. Information Regarding the Nominees for Election as Directors

    | Board Nominee | Qualifications | | Arun Sarin Age: 69 Independent Chairman of the Board and Nominating & Governance Committee Chair Board Member since: October 2019 | Mr. Sarin served as Chief Executive Officer of Vodafone Group Plc from 2003 until his retirement in 2008. Mr. Sarin began his career at Pacific Telesis Group in 1984. He progressed through various management positions there and at AirTouch Communications Inc., from which Pacific Telesis spun off in 1994, and was named President and Chief Operating Officer of AirTouch in 1997. After AirTouch merged with Vodafone in 1999, he was appointed Chief Executive Officer of Vodafone’s U.S./Asia-Pacific region. He left Vodafone in 2000 to become Chief Executive Officer of Bluecora (fka InfoSpace, Inc.), and from 2001 until 2003, he served as Chief Executive Officer of Accel-KKR Telecom. Mr. Sarin rejoined Vodafone in 2003 as its group Chief Executive Officer. After his retirement from Vodafone in 2008, he served as a senior advisor to Kohlberg Kravis Roberts & Co. for five years. Mr. Sarin currently serves as a director at The Charles Schwab Corporation and Accenture plc. He previously served as chairman of the board of Trepont Acquisition Corp I, a special purpose acquisition company (“SPAC”) and as a director for Cisco Systems from 2009 to 2020, for Safeway, Inc. from 2009 to 2015 and for Blackhawk Network Holdings, Inc. from 2009 to 2018. Mr. Sarin holds M.B.A. and Master of Science (Engineering) degrees from the University of California-Berkeley and a B.S. from the Indian Institute of Technology in Kharagpur, India. Because of his significant global, managerial and financial experience and background in technology and telecommunications, we believe Mr. Sarin is well qualified to serve as a member of our Board. |

  9. Information Regarding the Nominees for Election as Directors

    | Stefan Ortmanns Age: 60 Board Member since: December 2021 | Dr. Ortmanns was appointed our President and CEO on December 15, 2021. Prior to his appointment as President and CEO, Dr. Ortmanns served as our Executive Vice President, Core Products from October 1, 2019 until December 14, 2021, overseeing research and development operations, product management and strategic partnership management. Prior to his appointment as Executive Vice President, Core Products, he was with Nuance and served as its Executive Vice President and General Manager of the Automotive Division from March 2018 until his appointment as our Executive Vice President. As GM of the Automotive Division of Nuance, Dr. Ortmanns was responsible for hybrid, conversational AI-powered solutions for the digital car and automotive-related services that are used by almost all the world’s leading automotive manufacturers. He joined Nuance in 2003 and previously held other positions at Nuance including SVP of Engineering and Professional Services for the former Mobile Division. Dr. Ortmanns started working in the speech industry in 1993. Before he joined Nuance, he worked at Philips Speech Processing, Bell Labs, Lucent Technologies, and the University of Technology Aachen. He holds degrees in mechanical engineering and computer science and a Ph.D. in computer science. With more than 30 years of technology leadership and extensive experience in the automotive industry, Dr. Ortmanns brings a deep understanding of AI and machine learning applications, particularly in the automotive sector, all of which we believe makes him well qualified to serve as a member of our Board. | | Thomas Beaudoin Age: 70 Board Member since: October 2019 | Mr. Beaudoin has served as our Chief Financial Officer since May 2022. Previously, he served as Chief Transformation Officer at Qualifacts Systems Inc. and Credible Inc. from April 2021 to April 2022, as Executive Vice President Business Transformation of Nuance from 2017 until 2020, where he was responsible for leading efforts to align and fully leverage technologies within Nuance’s key vertical markets and driving growth while improving margins and cost structure. Prior to re-joining Nuance in 2017, Mr. Beaudoin held several executive leadership roles, including CFO of SimpliVity Corp. (now HPE SimpliVity) from 2015 to 2017; Executive Vice President and CFO of Nuance from 2008 to 2015; President and CFO of Polaroid Corporation; Senior Vice President and CFO of Parametric Technology Corporation; and a number of senior finance positions during his 24-year career at Digital Equipment Corporation, then Compaq Computer Corporation (now Hewlett Packard). Mr. Beaudoin holds a B.S.B.A. degree and an M.B.A. from Babson College. With more than 40 years’ experience, Mr. Beaudoin has deep insight and experience in developing financial and operational leadership strategies for global enterprises, all of which we believe makes him well qualified to serve as a member of our Board. | | Marianne Budnik Age: 55 Compensation Committee and Nominating & Governance Committee Member Board Member since: October 2019 | Ms. Budnik has served as Chief Marketing Officer for VAST Data since September 2023. Previously, she served as Chief Marketing Officer at Talon Cyber Security from March 2022 to August 2023 and Crowdstrike Holdings Inc. from 2020 to March 2022. Prior to joining Crowdstrike, Ms. Budnik served as Chief Marketing Officer for CyberArk Software Ltd. from 2017 to 2020. Her prior experience also includes serving as the Chief Marketing Officer for SimpliVity Corporation (acquired by Hewlett Packard Enterprise) from 2014 to 2017, and as Chief Marketing Officer for Acme Packet, Inc. (acquired by Oracle Corporation) and CA Technologies. Ms. Budnik served as a director at Schibsted Media Group from 2014 to 2017. Ms. Budnik currently serves as a director of F5, Inc. Ms. Budnik holds an M.B.A. from Boston University Questrom School of Business, and a bachelor’s degree from Babson College. Ms. Budnik is a seasoned technology marketing executive, experienced in leading transformational marketing initiatives at high growth companies, and driving market disruption with some of the fastest growing B2B start-ups in the technology and telecommunications industries, all of which we believe makes her well qualified to serve as a member of our Board. |

  10. Information Regarding the Nominees for Election as Directors

    | Douglas Davis Age: 62 Nominating & Governance Committee and Strategic Committee Member Board Member since: May 2022 | Mr. Davis served in various positions at Intel Corporation from 1984 until his retirement in 2019, most recently serving as Senior Vice President of Intel’s Automated Driving Group from 2017 to 2019, which included responsibility for forming the company’s automated driving business, establishing Intel as a leading supplier of chip technology for autonomous vehicles, and leading the company’s acquisition of Mobileye. From 2015 until 2017, Mr. Davis served as Senior Vice President and General Manager of Intel’s Internet of Things group. Mr. Davis is currently a director for Oshkosh Corporation and Verra Mobility. Mr. Davis holds a M.B.A. from the Arizona State University W.P. Carey School of Business and a Bachelor’s Degree in Electrical Engineering from New Mexico State University, Mr. Davis is a technology industry veteran who brings to our Board strong global strategic planning experience and business leadership qualities, as well as valuable experience and relationships within the automotive, autonomous driving and IoT industries, which we believe makes him well qualified to serve as a member of our Board. | | Sanjay Jha Age: 60 Strategic Committee Chair and Audit Committee Member Board Member since: October 2019 | Mr. Jha is currently an investor and a board member of several privately held companies. Previously, Mr. Jha was a General Partner at Eclipse Ventures from 2019 to 2020, and was the Chief Executive Officer of GlobalFoundries Inc., at the time the second-largest semiconductor foundry business, from 2014 to 2018. Prior to joining GlobalFoundries, Mr. Jha was Chief Executive Officer for Motorola Mobile Devices from 2008 to 2012, a role he held until the company’s acquisition by Google. Before joining Motorola, Mr. Jha was at Qualcomm for over 14 years, ending his tenure at Qualcomm as the Chief Operating Officer (2006 to 2008) and President of Qualcomm CDMA Technologies (2002 to 2008). Mr. Jha was a member of the board of directors of the Semiconductor Industry Association and also served as Chairman of the Global Semiconductor Alliance. Mr. Jha previously served as a director at Trepont Acquisition Corp I, a SPAC, from 2020 to April 2022 and he is a member of the board of trustees of UC San Diego and the Salk Institute and serves on the board of several private start-ups. Mr. Jha holds a Ph.D. (2001), and D.Sc (Hon) in Electrical and Electronics Engineering from the University of Strathclyde. He was inducted into the US National Academy of Engineering in 2018. Mr. Jha has an extensive background in the semiconductor and mobility industries and significant managerial, international and technological experience, all of which we believe makes him well qualified to serve as a member of our Board. | | Marcy Klevorn Age: 64 Compensation Committee and Nominating & Governance Committee Member Board Member since: June 2023 | Ms. Klevorn is a known and respected automotive and mobility industry leader, having spent 35 years at Ford Motor Company. During her tenure, she held varying executive and leadership roles within the company’s information technology organization, including global Chief Information Officer (CIO) and, previously, CIO of Ford Motor Company in Europe. Ms. Klevorn also served as EVP and President of Ford Mobility, where she oversaw Ford Smart Mobility LLC and its acquisitions and other investments that accelerated the company’s plans to design, build, grow, and invest in emerging mobility services. In this role, she also chaired the board of Ford Autonomous Vehicles LLC. Ms. Klevorn most recently served as the Chief Transformation Officer of Ford Motor Company, where she accelerated Ford’s transformation efforts by refining its corporate governance and fostering adoption of process improvements and agile teams. She also led partnerships with key technology partners and played a critical role in the company’s diversity, equity and inclusion efforts until her departure in 2019. Ms. Klevorn currently sits on the Boards of Directors of Northern Trust Corporation and Humana and on the Provost Advisory Committee at the University of Michigan. She holds a bachelor’s degree in business from the University of Michigan Stephen M. Ross School of Business. Ms. Klevorn has extensive automotive and mobility industry and transformation expertise as well as corporate governance and key leadership skills developed through her decades of experience, all of which we believe makes her well qualified to serve as a member of our Board. |

  11. Information Regarding the Nominees for Election as Directors

    | Kristi Ann Matus Age: 55 Audit Committee Chair Board Member since: September 2019 | Ms. Matus served as the CFO and COO of Buckle Agency LLC from 2020 to July 2022. From 2017 until 2020, Ms. Matus was an executive advisor to Thomas H. Lee Partners. From 2014 to 2016, Ms. Matus served as the Executive Vice President, Chief Financial and Administrative Officer at athenahealth, Inc. From 2012 to 2013, Ms. Matus served as Executive Vice President and Head of Governmental Services at Aetna, Inc. Prior to Aetna, she held several senior leadership roles at United Services Automobile Association, including Executive Vice President and Chief Financial Officer from 2008 to 2012. She began her career at Thrivent where she held various financial and operational roles for over a decade. Ms. Matus currently serves as a director at Ambac Financial Group, Inc., and she has previously served as a director of Alliance Bernstein Holding L.P., Equitable Holdings, Nextech Systems, Tru Optik Data Corp., and Jordan Health Services, Inc. Ms. Matus holds a B.S. degree from University of Wisconsin, Oshkosh. Ms. Matus has extensive management and financial expertise as well as corporate governance and key leadership skills developed through her decades of experience, all of which we believe makes her well qualified to serve as a member of our Board. | | Alfred Nietzel Age: 62 Compensation Committee Chair and Audit Committee Member Board Member since: October 2019 | Mr. Nietzel has been an independent consultant since 2017. From 2014 to 2017, Mr. Nietzel served as the Chief Financial Officer and Executive Vice President at CDK Global, Inc., a leading provider of software and information technology solutions to the automotive retail sector. Prior to CDK Global’s spin-off, Mr. Nietzel was with Automatic Data Processing, Inc. (“ADP”) since 2001 and served as Chief Financial Officer for the Dealer Services Division, Chief Financial Officer for the Employer Services Division and as ADP’s Corporate Controller. Prior to joining ADP, Mr. Nietzel served for 17 years with Proctor & Gamble Inc. in numerous financial management roles in the United States, United Kingdom, and Australia. Mr. Nietzel currently serves as the Chairman of the Board of One Span Inc. and as a director at Baxter Credit Union. Mr. Nietzel holds a B.S. degree from Eastern Illinois University. Mr. Nietzel led and orchestrated the financial and administrative execution of the spin-off creating CDK Global in 2014 and has extensive management and corporate experience and financial expertise, all of which we believe makes him well qualified to serve as a member of our Board. |

  12. Consideration of Director Nominees

    Consideration of Director Nominees The Nominating & Governance Committee will consider properly submitted shareholder nominations for candidates for membership on the Board as well as candidates recommended for consideration by the Nominating & Governance Committee. Any shareholder nominations must comply with the requirements of the By-laws. In addition, shareholder nominations should be submitted within the timeframe as specified under Shareholder Proposals and Director Nominations for the 2025 Annual Meeting above for inclusion in the proxy materials or agenda, as appropriate, and addressed to: Cerence Inc., 25 Mall Road, Suite 416, Burlington, MA 01803, Attention: Corporate Secretary. A shareholder that instead desires to merely recommend a candidate for consideration by the Nominating & Governance Committee shall direct the recommendation in writing to Cerence Inc., 25 Mall Road, Suite 416, Burlington, MA 01803, Attention: Corporate Secretary, and must include the candidate’s name, home and business contact information, detailed biographical data and qualifications, information regarding any relationships between the candidate and the Company within the last three years and evidence of the nominating person’s ownership of Company stock. The Board believes that candidates for director should have certain minimum qualifications, including: (1) the highest personal and professional ethics and integrity; (2) skills that are complementary to those of the existing Board; (3) proven achievement and competence in the nominee’s field; (4) relevant expertise upon which to be able to offer meaningful advice and guidance to management and make significant contributions to the Company’s success; (5) sufficient time to devote to affairs of the Company and contribute to the Company’s goals; (6) demonstrated excellence in their field; (7) the ability to exercise sound business judgment; (8) the ability to meet other requirements as may be required by applicable rules, such as financial literacy or financial expertise with respect to Audit Committee members; and (9) an understanding of the fiduciary responsibilities that are required of a member of the Board and the commitment of time and energy necessary to diligently carry out those responsibilities.

  13. COMPENSATION OF NON-EMPLOYEE DIRECTORS

    COMPENSATION OF NON-EMPLOYEE DIRECTORS Our Compensation Committee is responsible for evaluating and recommending to the Board for approval our non-employee director compensation program. In carrying out this responsibility, the Compensation Committee periodically reviews and evaluates, in consultation with its independent compensation consultant, recent trends in director compensation, related corporate governance best practices, and comparable market data, including data from the peer group that the Compensation Committee uses for executive compensation purposes. The Board retains the ultimate authority to determine the form and amount of director compensation. Our non-employee director compensation program is intended to (i) ensure that our directors are compensated appropriately for their substantial time commitment and responsibilities given the size and complexity of our operations and the Board’s significant oversight and advisory responsibilities, (ii) enable us to attract and retain highly qualified directors, and (iii) be transparent and foster alignment with our shareholders. The elements of our non-employee director compensation for fiscal year 2023 are as follows:

  14. COMPENSATION OF NON-EMPLOYEE DIRECTORS

    | Fiscal Year 2023 Compensation Structure for Directors | | | Regular Retainers | | | Annual Base Retainer (TOTAL—Cash and Equity) | $235,000 | | Cash | $100,000 | | Stock Award* | $135,000 | | Independent Board Chair Retainer | $80,000 | | Committee Chair Retainers | | | Annual Audit Committee Chair Retainer | $15,000 | | Annual Strategic Committee Chair Retainer | $15,000 | | Annual Compensation Committee Chair Retainer | $12,500 | | Annual Nominating and Governance Chair Retainer | $10,000 |

  15. COMPENSATION OF NON-EMPLOYEE DIRECTORS

    | * In fiscal year 2023, we increased the stock award component of the annual retainer from $125,000 to $135,000. |

  16. COMPENSATION OF NON-EMPLOYEE DIRECTORS

    Annual equity grants to non-employee directors vest in full on the one-year anniversary of the date of grant subject to continued service through such date. Each newly appointed director (i.e., directors appointed prior to the annual shareholders’ meeting) is entitled to an annual grant upon appointment to the Board, which vests in full at the conclusion of the current annual vesting period. Non-employee directors are subject to stock ownership guidelines that require non-employee directors to hold equity with a value equal to three times the annual cash retainer for service on the Board and retention of 25% of the net shares received as a result of vesting of RSUs until the ownership guideline is attained. The following table sets forth a summary of the compensation earned by, or paid to, our non-employee directors in fiscal year 2023:

  17. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

  18. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    | Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1)(2) | Total ($) | | Arun Sarin | 190,000 | 159,156 | 349,156 | | Marianne Budnik | 100,000 | 159,156 | 259,156 | | Douglas Davis | 100,000 | 159,156 | 259,156 | | Sanjay Jha | 107,674 | 159,156 | 266,830 | | Marcy Klevorn (3) | 33,333 | 150,781 | 184,114 | | Kristi Ann Matus | 115,000 | 159,156 | 274,156 | | Alfred Nietzel (4) | 107,326 | 159,156 | 266,482 |

  19. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    | (1) Amounts reported in the Stock Awards column represent the grant date fair value of annual RSU awards granted to the non-employee members of the Board of Directors other than Ms. Klevorn during fiscal year 2023, computed in accordance with Financial Accounting Standard Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (“FASB ASC Topic 718”) based on the closing market price of our Common Stock on the grant date of February 9, 2023 (which was $29.37 per share). For Ms. Klevorn, the amount reported in the Stock Awards column represents the grant date fair value of her initial RSU Award, computed in accordance with FASB ASC Topic 718 based on the closing market price of our Common Stock on the grant date of June 1, 2023 (which was $28.53). The number of restricted stock units issued was based on the average closing market price of our Common Stock for the 20 days including and preceding the grant date. The use of an average of the closing market price for our Common Stock for purposes of converting dollar value targets into shares is intended to smooth the impact of short-term stock price volatility, thereby mitigating the risk of a windfall or impairment to the award opportunity. As this average stock price differs from the closing market price on the grant date, the values reflected in this table differ from the target values. |

  20. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    | (2) As of September 30, 2023, our non-employee directors held the following number of unvested restricted stock units: Mr. Sarin, 5,419 restricted stock units; Ms. Budnik, 5,419 restricted stock units; Mr. Davis, 5,419 restricted stock units; Mr. Jha, 5,419 restricted stock units; Ms. Klevorn, 5,285 restricted stock units; Ms. Matus, 5,419 restricted stock units; and Mr. Nietzel, 5,419 restricted stock units. |

  21. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    | (3) Ms. Klevorn was appointed to the Board of Directors on June 1, 2023. |

  22. FISCAL YEAR 2023 DIRECTOR COMPENSATION TABLE

    | (4) Mr. Nietzel was appointed as Chairman of the Compensation Committee effective March 1, 2023. |

  23. Key Fiscal Year 2023 Compensation Actions

    | Compensation Component | Link to Business and Talent Strategies | Fiscal Year 2023 Compensation Actions | | Base Salary | • Competitive base salaries help attract and retain executive talent. | • Base salaries for Dr. Ortmanns and Mr. Beaudoin were increased by 5% effective April 1, 2023 to reflect merit increases and competitive market adjustments. • Base salary for Mr. Arshad was set in connection with his hire based on arms-length negotiations and competitive market data and is reflective of experience, tenure, and responsibilities. | | Short-Term Incentive Plan (STIP) | • Focus executives on achieving annual financial and non-financial results that are key indicators of annual financial and operational performance. | • Annual cash incentive awards were earned slightly below target due to below target achievement of certain of the pre-established performance goals. • For fiscal year 2023, STIP bonuses were earned at 96.44% of target for each NEO that was eligible to receive a bonus. | | Long-Term Equity Incentive Plan (LTIP) Compensation | • Long-term incentive awards (excluding new hire awards) are equity-based and consist of PSUs weighted at least 50% and RSUs weighted no more than 50%. • PSUs are earned based on achievement of revenue and Adjusted EBITDA margin (each weighted 50%) goals, which are key top-line and bottom-line performance indicators. • RSUs provide focus on stock price growth and serve our talent retention objectives. | • As noted in the “Message from the Compensation Committee,” for fiscal year 2023, we awarded Transformation Incentive Awards (“TIA”) to Dr. Ortmanns and Messrs. Beaudoin and Kathpal. • Executives who received a TIA are not eligible for an annual equity award in fiscal year 2024. • The fiscal year 2023 performance tranches for outstanding PSUs were earned as follows: - Fiscal 2021 PSU Award (third and final tranche) – Below threshold performance resulted in zero payout. - Fiscal 2022 PSU Award (second tranche) – Below threshold performance resulted in zero payout. |

  24. Key Fiscal Year 2023 Compensation Actions

    | Compensation Component | Link to Business and Talent Strategies | Fiscal Year 2023 Compensation Actions | | | | - Fiscal 2023 TIA PSU Award / Non-TIA PSU Award (first tranche) – Above target performance resulted in TIA PSUs (held by Dr. Ortmanns and Mr. Beaudoin) and non-TIA PSUs (held by Mr. Arshad) being earned at 144.28% of target; the earned portion of TIAs is subject to a further service-based vesting. • The rigor of the Compensation Committee’s goal setting is evidenced by the fact that two of the three PSU performance tranches above resulted in zero payouts. • Mr. Arshad was not employed at Cerence at the time of the TIA grants and, accordingly, received an annual PSU award as part of his new hire compensation. Mr. Arshad also received a sign-on RSU award with a grant value of $2,000,000, which vests in equal installments in November 2023 and November 2024. |

  25. Our Executive Compensation Philosophy

    | The table below describes the Company’s pay components, along with the role and factors for determining each pay component applicable to our NEOs in fiscal year 2023. | | | | | Pay Component | Fixed vs. Variable | Role | Determination Factors | | Base Salary | Fixed Compensation | • Provides fixed portion of annual cash income | • Competitive market levels and executive’s overall experience, tenure, and responsibilities • Annual increases (if any) also consider performance and contribution | | STIP | Variable Compensation | • Provides variable portion of annual income (a portion of which is settled in RSUs that vest approximately one month following grant date) • Focuses executives on annual objectives that support long-term strategy and value creation | • Target opportunities based on competitive market levels and skills and performance of executive • Actual payouts based on performance against pre-established annual corporate goals and individual contribution levels | | Long-Term Equity Incentive Compensation: • PSUs • RSUs | Variable Compensation | • Incentivizes financial performance to drive value creation • Aligns interests of executives with shareholders • Encourages equity ownership • Promotes retention | • Target awards based on competitive market levels and executive’s level of responsibility, criticality of role, retention considerations, individual performance and ability to contribute to the Company’s long-term success |

  26. Fiscal Year 2023 Compensation Program Changes

    | ○ | The Fiscal Year 2023 TIA is a two-year “front-loaded” grant, covering annual equity grants with respect to both fiscal year 2023 and fiscal year 2024; accordingly, executives who received the Fiscal Year 2023 TIA will not be eligible for any annual equity grants in fiscal year 2024. |

  27. Fiscal Year 2023 Compensation Program Changes

    | ○ | The Fiscal Year 2023 TIA is entirely in the form of equity awards, consisting of PSUs (minimum 50% weighting) and time-based RSUs (maximum 50% weighting). |

  28. Fiscal Year 2023 Compensation Program Changes

    | ○ | PSU performance targets are aligned to top-line and bottom-line metrics, the achievement of which we believe is critical to the success of our transformation and growth; the 4-year annual performance goals are pre-established at the outset and achievement will be formulaically determined. |

  29. Fiscal Year 2023 Compensation Program Changes

    | ○ | RSUs vest in annual installments of 25% over 4 years. |

  30. Fiscal Year 2023 Compensation Program Changes

    | ○ | Vesting for earned PSUs will occur as follows: |

  31. Fiscal Year 2023 Compensation Program Changes

    | ○ | The TIA incorporates governance best practices, including “double-trigger” treatment, which requires both a change of control and a subsequent qualifying termination of employment, restrictive covenants and forfeiture in the event of a termination for cause or resignation. |

  32. Fiscal Year 2023 Compensation Program Changes

    | • | As noted above, TIA PSUs are subject to time-based vesting in addition to performance-based vesting, with the first vesting occurring after completion of the third performance year for the CEO and after the second performance year for the other NEOs. The CEO’s cliff vesting is consistent with best practice; for the other NEOs, this marks an evolution of our PSU program which previously vested on an annual basis. Beginning with annual PSU grants in fiscal year 2025, it is our intention that PSU awards for all NEOs will cliff vest upon completion of the full performance period. |

  33. Fiscal Year 2023 Compensation Snapshot

    | | Fiscal Year 2023 Total Direct Compensation Element | | | | | | | STIP | LTIP | | | | Base Salary | Annual Bonus | Performance- Based Restricted Stock Units | Time-Based Restricted Stock Units | | When Granted | Annually | Annually | Annually But no award in fiscal year 2024 for NEOs who received a TIA | Annually But no award in fiscal year 2024 for NEOs who received a TIA | | Form of Delivery | Cash | Cash / Equity | Equity | Equity | | Type of Performance | Short-Term Emphasis (Fixed) | Short-Term Emphasis (Variable) | Long-Term Emphasis (Variable) | Long-Term Emphasis (Variable) | | Performance Period | — | 1 year | TIA has pre-established 4-year annual goals, measured during each fiscal year Non-TIA has pre-established 3-year annual goals, measured during each fiscal year | — | | Vesting Period | — | 1 year | CEO TIA PSUs – Cliff vesting 50% after year 3 and 50% after year 4 Other NEO TIA PSUs (Messrs. Beaudoin and Kathpal) - 50% after year 2, 25% after year 3 and 25% after year 4 Non-TIA PSUs (Mr. Arshad) – 66.66% after year two and 33.33% after year 3 | TIA RSUs—4-year ratable vesting Non-TIA RSUs – 3 year ratable vesting | | How Payout Is Determined | Compensation Committee Determination | Pre-Established Formula / Individual Performance Modifier | Pre-Established Formula | Value dependent on stock price at each vesting date |

  34. Fiscal Year 2023 Compensation Snapshot

    | | Fiscal Year 2023 Total Direct Compensation Element | | | | | | | STIP | LTIP | | | | Base Salary | Annual Bonus | Performance- Based Restricted Stock Units | Time-Based Restricted Stock Units | | Performance Measures | — | Revenue (30%), Bookings (30%), Adjusted EBITDA (30%) and Strategic Scorecard (10%) | Revenue (50%) and Adjusted EBITDA margin (50%) | — |

  35. Compensation Governance

    | What We Do | What We Don’t Do | | ✓ Pay for performance by providing a significant percentage of target annual compensation in the form of variable, at-risk compensation ✓ Pre-established performance goals that are aligned with creation of shareholder value ✓ Market comparison of executive compensation against a relevant peer group of companies ✓ Use of an independent compensation consultant reporting to the Compensation Committee and providing no other services to the Company ✓ Robust stock ownership guidelines ✓ Mitigate undue risk ✓ Comprehensive Clawback policy ✓ Annual say-on-pay vote | × We do not allow single-trigger acceleration of equity awards upon a change of control × We do not have excise tax gross-ups × We do not allow repricing of underwater stock options × We do not allow hedging or short sales of our securities × We do not allow pledging of our securities |

  36. Compensation Peer Group and Market Data

    Compensation Peer Group and Market Data Developing an appropriate compensation peer group for Cerence is challenging because there are few automotive AI companies that are publicly-traded, stand-alone, U.S.-based and size-appropriate. While the Compensation Committee recognized that there is no “perfect peer group” for a company like Cerence, with the assistance of the compensation consultant they endeavored to identify 12 to 24 similarly-sized, high-growth, publicly-traded technology companies that would collectively provide appropriate market reference points for evaluating the competitiveness of our compensation program. We note that the below peer group was initially approved by the Compensation Committee in March 2021 and used for evaluating fiscal year 2022 compensation levels. In fiscal year 2022, the Compensation Committee considered whether to invest time and resources to update the peer group for purposes of evaluating fiscal year 2023 compensation levels. After deliberation, the Compensation Committee determined not to do so; in particular, in light of the ongoing macro uncertainties in the aftermath of the pandemic, rising interest rates and geopolitical issues impacting the automotive industry and general market volatility, the Compensation Committee concluded that maintaining a stable year-over-year peer group was preferable to making peer group revisions in reaction to uncontrollable macro events with unpredictable time horizons for normalization.

  37. Fiscal Year 2022 and Fiscal Year 2023 Peer Group

    Fiscal Year 2022 and Fiscal Year 2023 Peer Group

  38. Fiscal Year 2022 and Fiscal Year 2023 Peer Group

    | 8x8 | Gentex | SPS Commerce | | Altair Engineering | Guidewire | Upland Software | | Aspen Technology | LivePerson | Varonis Systems | | Blackberry | PROS Holdings | Visteon | | Blackline | Rapid 7 | Yext | | Everbridge | | |

  39. Fiscal Year 2022 and Fiscal Year 2023 Peer Group

    Note: SailPoint Technologies was removed from the Peer Group following its acquisition by Thoma Bravo on August, 16, 2022. For reference, the Company’s positioning as of fiscal year end on key financial metrics relative to the peer group is provided below:

  40. Fiscal Year 2022 and Fiscal Year 2023 Peer Group

    | Revenue (trailing four quarters): Lowest | Market Cap: 22nd percentile | | EBITDA (trailing four quarters): 30th percentile | |

  41. Fiscal Year 2022 and Fiscal Year 2023 Peer Group

    Data Source: S&P CapitalIQ. Market capitalization calculated as of September 30, 2023 As an additional reference, our Compensation Committee also uses data from the Radford Global Technology executive compensation survey (the “Radford Survey”) to evaluate the competitive market when formulating its recommendation for, or approving, the total direct compensation packages for our executive officers. The Radford Survey provides compensation market intelligence and is widely used within the technology industry. The Compensation Committee does not review the specific companies included in the Radford Survey and the data presented to the Compensation Committee is general and not specific to any particular subset of companies. Due to the nature of our business, we also compete for executive talent with companies outside our peer group, including public companies that are larger and more established than we are or that possess greater resources than we do, and with smaller private companies that may be able to offer greater compensation potential. In setting compensation, the Compensation Committee considers each executive’s level and job performance, the executive’s duties and responsibilities at the Company compared to the duties and responsibilities of executive officers in similar positions at the peer group companies and in the survey data, and other circumstances unique to the Company, and evaluates whether the compensation elements and levels provided to our executives are generally appropriate relative to their responsibilities at the Company and compensation elements and levels provided to their counterparts in the peer group or within survey data. The Compensation Committee considers both objective and subjective criteria to evaluate Company and individual performance, which allows it to exercise informed judgment and not rely solely on rigid benchmarks. Accordingly, the Compensation Committee does not formulaically tie compensation decisions to any particular range or percentile level of total compensation paid to executives at the peer group companies or survey data.

  42. Short-Term Incentive Plan

    Short-Term Incentive Plan The Compensation Committee has designed our executive compensation program to provide that a significant level of each executive officer’s compensation opportunity is performance-based. Accordingly, our NEOs are eligible to receive annual performance-based bonuses under our STIP based on the achievement of performance objectives established at the beginning of the fiscal year. The annual performance-based cash incentive that each NEO is eligible to receive is based on the individual’s target bonus, as a percentage of base salary. The Compensation Committee reviews the target annual bonus opportunities each year to ensure they are competitive. The target annual incentive opportunity as a percent of annual base salary for each of our NEOs for fiscal year 2023 was as follows:

  43. Short-Term Incentive Plan

    | | Fiscal Year 2023 Target Annual Cash Incentive as Percent of Base Salary (%) | Fiscal Year 2023 Target Annual Cash Incentive ($) | | Stefan Ortmanns | 100% | 594,342 | | Thomas Beaudoin | 75% | 374,062 | | Iqbal Arshad (1) | 75% | 375,000 | | Prateek Kathpal (2) | 75% | 375,000 |

  44. Short-Term Incentive Plan

    | (1) Mr. Arshad was appointed as our Executive Vice President and Chief Technology Officer on May 9, 2023 and was eligible for a full year target bonus under the STIP for fiscal year 2023. |

  45. Short-Term Incentive Plan

    | (2) Mr. Kathpal resigned as Executive Vice President and Chief Technology Officer as of May 8, 2023 and was not eligible for any bonus under the STIP for fiscal year 2023. |

  46. Short-Term Incentive Plan

    The Compensation Committee undertakes a rigorous review and analysis to establish annual performance goals under the STIP. For fiscal year 2023, the Compensation Committee established the following goals and payout levels under the STIP:

  47. Short-Term Incentive Plan

    | Metric | Weighting | Rationale for Metric | Payout Range | | Revenue | 30% | Top line financial metric and a key metric for our investors | 50% – 200% | | Adjusted EBITDA | 30% | Adjusted EBITDA is reflective of our operating performance and a key metric for our investors | 50% – 200% | | Bookings | 30% | Establishes business pipeline | 50% – 200% | | Strategic Scorecard | 10% | Additional strategic metrics consisting of: Customer Satisfaction (C-Sat); Employee Satisfaction (E-Sat); Organization Transformation (OPEX); Software Refactoring; and New Product Traction (booking on licensed deals) | 50% – 200% | | Individual Contribution | — | Individual contribution is not a specifically weighted metric but is included as a component of the STIP in order to enable the Compensation Committee to differentiate actual payouts based on individual performance as reflected in each executive’s demonstrated leadership and decision making, effective communication, promotion of the Company’s strategic initiatives and values, business unit or functional accountabilities and commitment to excellence and work ethic. The Compensation Committee’s evaluation of an executive’s performance relative to these considerations is inherently subjective and is not based on any mathematical calculation or formula; rather, it relies on the collective business experience and judgment of the Compensation Committee to holistically consider the performance of each executive and such executive’s contribution to the overall success of the Company. | 70% – 130% adjustment factor Regardless of the adjustment factor (if any), the overall STIP payout is capped at 200% | | We define Adjusted EBITDA, which is a non-GAAP measure, as consolidated net income (loss), calculated in accordance with GAAP, excluding our stock-based compensation expense, amortization of intangible assets, restructuring and other costs (net), depreciation, total other income (expenses, net), goodwill impairment, and (benefit from) provision for income taxes. In addition, revenue and Adjusted EBITDA are adjusted for any positive or negative foreign exchange impact, to the extent that the actual impact differs from budgeted assumptions. Bookings is defined as the amount of revenue we expect to earn from an agreement with our customers for products and services. To count as a booking, we expect there to be persuasive evidence of an arrangement, which may be evidenced by a legally binding document or documents, and that the collectability of the amounts payable under the arrangement is reasonably assured. The revenue we may actually recognize from our estimated bookings is subject to multiple factors, including but not limited to the timing of satisfying performance obligations, potential terminations or changes in the scope of programs utilizing our technology and currency fluctuations. There is no comparable GAAP financial measure. | | | |

  48. Short-Term Incentive Plan

    The threshold, target and maximum performance and payout opportunities under the fiscal year 2023 STIP (subject to interpolation between points), along with the actual performance achieved and related payout percentage, are set forth below. When establishing the fiscal year 2023 goals, the Compensation Committee was cognizant of the fact that the revenue and Adjusted EBITDA goals were being set below the fiscal year 2022 actual levels; however, the target levels were consistent with the Company’s fiscal year 2023 guidance and the Committee determined that it would be demotivational to the recently reorganized management team to set the fiscal year 2023 goals at arbitrary performance levels that were disconnected from the guidance and the budget. The Compensation Committee also considered that the STIP is a Company-wide bonus plan and the importance of setting challenging-but-achievable target goals for the Company as a whole, particularly in light of the STIP payout of approximately 39% of target during fiscal year 2022.

  49. Short-Term Incentive Plan

    | | Threshold | Target | Maximum | Actual* | Payout % | | Payout% | 50% | 100% | 200% | | | | Revenue (30%) ($M) | $268 | $284 | $300 | $291.39 | 146.2% | | Adjusted EBITDA (30%) ($M) | $23.4 | $34.1 | $50 | $40.77 | 142% | | Bookings (30%) ($M) | $580 | $725 | $780 | $447.21 | 0% | | Strategic Scorecard** (10%) | Scorecard metrics were assessed holistically by the Compensation Committee and deemed achieved at target level | | | | 100% | | Weighted Average Payout: 96.44% | | | | | |

  50. Short-Term Incentive Plan

    | * Note: Actual performance is adjusted to align with the fiscal year 2023 STIP foreign exchange rate. |

  51. Short-Term Incentive Plan

    | ** Strategic scorecard consisted of the following metrics: Customer Satisfaction (C-Sat); Employee Satisfaction (E-Sat); Organization Transformation (OPEX); Software Refactoring; and New Product Traction (booking on licensed deals). However, specific targets are not disclosed because they involve confidential commercial or financial information, the disclosure of which would result in competitive harm. However, we have set such goals at challenging levels that we believe are difficult to achieve and would require substantial and sustained performance in order to be achieved at target levels. |

  52. Short-Term Incentive Plan

    The Compensation Committee considered the individual performance of the NEOs and determined that an individual modifier of 100% (i.e., no positive or negative adjustment to formulaic payout) for each NEO was appropriate. The annual STIP bonuses earned by our NEOs for fiscal year 2023 are set forth in the table below. For fiscal year 2023, the annual STIP bonuses were paid 75% in the form of RSUs and 25% in the form of cash.

  53. Short-Term Incentive Plan

    | | Target STIP Opportunity ($) | Financial Metric Weighted Payout (%) | Fiscal Year 2023 Earned STIP ($) | | Stefan Ortmanns | 594,342 | 96.44 | 573,183 | | Thomas Beaudoin | 374,062 | 96.44 | 360,745 | | Iqbal Arshad (1) | 375,000 | 96.44 | 361,650 | | Prateek Kathpal (2) | — | — | — |

  54. Short-Term Incentive Plan

    | (1) Mr. Arshad was appointed as Executive Vice President and Chief Technology Officer as of May 9, 2023. As a result of extensive employment negotiations with Mr. Arshad and in order to offer him a competitive compensation package to ensure he accepted the offer (given the other employment opportunities offered to Mr. Arshad as a highly sought-after chief technology officer), Mr. Arshad’s bonus payout was not prorated for fiscal year 2023. |

  55. Short-Term Incentive Plan

    | (2) Mr. Kathpal resigned as Executive Vice President and Chief Technology Officer as of May 8, 2023 and was not eligible for any bonus under the STIP for fiscal year 2023. |

  56. Long-Term Incentive Program

    Long-Term Incentive Program We provide long-term incentive compensation to our executive officers, including the NEOs, under our LTIP in the form of PSUs and RSUs. These awards are designed to align the interests of our executive officers with those of our shareholders, and to improve our long-term profitability and stability through the attraction and retention of superior talent. The Compensation Committee believes the approach of granting a balanced mix of performance-based and time-based equity awards enhances our ability to both drive performance and retain our executive officers by providing equity awards that will be fully earned only if they remain with us for several years. The value of equity awards granted to each NEO is intended to be market competitive and reflective of each executive’s skill set, experience, role, and responsibilities. Each executive officer generally has an annual long-term equity incentive target grant denoted in terms of a dollar value, which is allocated equally between PSUs and RSUs. The dollar value is converted into an equivalent number of RSUs and a target number of PSUs based on the average closing price of the Company’s Common Stock during the 20 trading day period preceding the grant date (closing price on grant date included). The use of an average Common Stock closing price for purposes of converting dollar value targets into shares is intended to smooth the impact of short-term stock price volatility, thereby mitigating the risk of a windfall or impairment to the award opportunity.

  57. Fiscal Year 2023 Transformation Incentive Awards

    Fiscal Year 2023 Transformation Incentive Awards As discussed earlier in the “Letter from the Compensation Committee,” the fiscal year 2023 LTIP consisted of a Transformation Incentive Award for Dr. Ortmanns, Mr. Beaudoin and Mr. Kathpal. The TIA has the following key aspects:

  58. Fiscal Year 2023 Transformation Incentive Awards

    | o | The TIA is a two-year “front-loaded” grant, covering both fiscal year 2023 and fiscal year 2024 annual equity awards; accordingly, executives who receive the TIA will not be eligible for any annual equity grants in fiscal year 2024. |

  59. Fiscal Year 2023 Transformation Incentive Awards

    | o | The TIA is entirely in the form of equity awards, consisting of PSUs (weighted at least 50%) and RSUs (weighted no more than 50%). |

  60. Fiscal Year 2023 Transformation Incentive Awards

    | o | PSU performance targets are aligned to top-line (revenue) and bottom-line (Adjusted EBITDA margin) metrics, the achievement of which we believe is critical to the success of our transformation and growth. |

  61. Fiscal Year 2023 Transformation Incentive Awards

    | ◾ | The PSUs have 4-year performance goals that are pre-established at the outset and achievement will be formulaically determined. |

  62. Fiscal Year 2023 Transformation Incentive Awards

    | o | RSUs vest in annual installments of 25% over 4 years. |

  63. Fiscal Year 2023 Transformation Incentive Awards

    | o | Vesting of earned PSUs will occur as follows: |

  64. Fiscal Year 2023 Transformation Incentive Awards

    | ◾ | CEO: Cliff vesting of 50% after year 3 and 50% after year 4 |

  65. Fiscal Year 2023 Transformation Incentive Awards

    | ◾ | Other NEOs: 50% after year 2, 25% after year 3 and 25% after year 4 |

  66. Fiscal Year 2023 Transformation Incentive Awards

    | o | The TIA incorporates governance best practices, including “double-trigger” treatment, which requires both a change of control and a subsequent qualifying termination of employment, restrictive covenants and forfeiture in the event of a termination for cause or resignation. |

  67. Fiscal Year 2023 Transformation Incentive Awards

    In establishing the transformation incentive program for fiscal year 2023, the Compensation Committee had to balance the potential drawbacks of a larger-than-customary incentive with the urgent need to incentivize, stabilize and retain the management team with a meaningful equity opportunity. In that regard, the Compensation Committee carefully considered the following:

  68. Fiscal Year 2023 Transformation Incentive Awards

    | - | Criticality of the Chief Executive Officer. Dr. Ortmanns is an accomplished voice and automotive technology expert and deeply knowledgeable about our technology; retaining Dr. Ortmanns is critical. |

  69. Fiscal Year 2023 Transformation Incentive Awards

    | - | Criticality of the Management Team. Our CEO must be supported by a stable and high performing management team, whose collaboration, cohesion and teamwork are essential for success. Our key executives can be recruited by traditional and non-traditional talent competitors, and retention of the management team is critical. |

  70. Fiscal Year 2023 Transformation Incentive Awards

    | - | Criticality of Shareholder Alignment. The transformation incentive program must be aligned with our pay-for-performance philosophy, foster both motivation and accountability, and create an ownership mindset. |

  71. Fiscal Year 2023 Transformation Incentive Awards

    Taking into account the foregoing, the Compensation Committee approved the following TIA awards during fiscal year 2023.

  72. Fiscal Year 2023 Transformation Incentive Awards

    | | TIA PSU | | TIA RSU | | | | Target Value ($) | Target Award (#) (2) | Award Value ($) | Award (#) (2) | | Stefan Ortmanns | 6,000,000 | 345,224 | 6,000,000 | 345,224 | | Thomas Beaudoin | 2,500,000 | 143,843 | 2,500,000 | 143,843 | | Prateek Kathpal (1) | 3,500,000 | 201,380 | 2,500,000 | 143,843 |

  73. Fiscal Year 2023 Transformation Incentive Awards

    | (1) Mr. Kathpal resigned as Executive Vice President and Chief Technology Officer as of May 8, 2023 and his TIA was forfeited. (2) As noted above, the target grant values of each NEO’s TIA PSUs and RSUs were converted into share equivalents based on the average closing market price of our Common Stock for the 20 days including and preceding the grant date (which was $17.38). As this average stock price differed from the closing market price on the grant date (which was $19.20), the target grant values specified in this table differ from the FASB ASC Topic 718 values that are reported for purposes of the Summary Compensation Table and Grants of Plan Based Awards Table below in accordance with SEC rules. As discussed above, the TIA reflects a two-year “front-loaded” grant and TIA participants are not eligible for an annual equity award in fiscal year 2024. For reference, the table below presents the TIA on an annualized basis: |

  74. Fiscal Year 2023 Transformation Incentive Awards

    | | TIA PSU—Annualized | | TIA RSU—Annualized | | | | Target Value ($) | Target Award (#) | Award Value ($) | Award (#) | | Stefan Ortmanns | 3,000,000 | 172,612 | 3,000,000 | 172,612 | | Thomas Beaudoin | 1,250,000 | 71,922 | 1,250,000 | 71,922 | | Prateek Kathpal (1) | 1,750,000 | 100,690 | 1,250,000 | 71,922 |

  75. Fiscal Year 2023 Transformation Incentive Awards

    | (1) As noted above, Mr. Kathpal’s TIA was forfeited upon his resignation. |

  76. Mr. Arshad’s Fiscal Year 2023 Awards

    Mr. Arshad’s Fiscal Year 2023 Awards Mr. Arshad’s fiscal year 2023 awards were established in connection with his hiring. Mr. Arshad was a highly sought-after chief technology officer candidate and his compensation package was the result of extensive employment negotiations, as well as extensive discussions by the Board and the Compensation Committee. As summarized in the table below, Mr. Arshad’s fiscal year 2023 equity awards consisted of (i) a sign-on RSU award with a grant value of $2,000,000 vesting in equal installments in November 2023 and November 2024, and (ii) an annual long-term incentive award with a grant value of $3,000,000, split evenly between PSUs and RSUs. To create alignment, Mr. Arshad’s annual PSU and RSU awards are subject to the same vesting conditions, including performance goals, as the rest of the leadership team, except that his annual RSU and PSU awards vest over three years rather than four years as is the case for the TIA RSUs and PSUs.

  77. Mr. Arshad’s Fiscal Year 2023 Awards

    | | PSU | | RSU (inclusive of sign-on award) | | | | Target Value ($) | Target Award (#)(1) | Award Value ($) | Award (#)(1) | | Iqbal Arshad | 1,500,000 | 56,518 | 3,500,000 | 131,875 |

  78. Mr. Arshad’s Fiscal Year 2023 Awards

    | (1) As noted above, the target grant value of the PSUs and RSUs were converted into share equivalents based on the average closing market price of our Common Stock for the 20 days including and preceding the grant date (which was $26.54). As this average stock price differed from the closing market price on the grant date (which was $25.55), the target grant values specified in this table differ from the FASB ASC Topic 718 values that are reported for purposes of the Summary Compensation Table and Grants of Plan Based Awards Table below in accordance with SEC rules. |

  79. LTIP Components, Metrics and Weighting

    LTIP Components, Metrics and Weighting Details on the types of equity awards granted are provided in the table below.

  80. LTIP Components, Metrics and Weighting

    | Equity Award | Rationale and Key Features | | PSUs | • Incentivize NEOs to achieve pre-established annual financial goals over a four-year performance period in the case of TIA PSUs and a three-year performance period in the case of non-TIA PSUs. • Earned shares range from 0% for below threshold performance to 200% of target for maximum performance. • PSU performance is measured annually and earned PSUs are subject to further vesting. • TIA PSUs for the CEO cliff vest 50% after three years and 50% after four years and TIA PSUs for Messrs. Beaudoin and Kathpal vest 50% after year two, 25% after year three and 25% after year four, generally subject to continued employment through the date the Company publicly issues its earnings release in the applicable year. • Mr. Arshad’s non-TIA PSUs vest 66.66% after year two and 33.33% after year three, generally subject to continued employment through the date the Company publicly issues its earnings release. | | RSUs | • Align pay and Company performance as reflected in our stock price. • Encourage retention of our executive officers’ services and promote ownership by our executives in Company stock. • TIA RSUs vest in equal annual installments following the grant date over a period of four years, generally subject to continued employment with the Company through the applicable vesting date. • Non-TIA RSUs vest in equal annual installments following the grant date over a period of three years, generally subject to continued employment with the Company through the applicable vesting date. |

  81. LTIP Components, Metrics and Weighting

    The performance measures and weightings for the fiscal year 2023 PSU awards (both TIA and non-TIA PSUs) are as follows:

  82. LTIP Components, Metrics and Weighting

    | Performance Measures | Weighting | Description | | Revenue Adjusted EBITDA Margin* | 50% 50% | • Annual goals are pre-established at the beginning of the multi-year performance period ○ Achievement is formulaically measured on an annual basis for each completed fiscal year ○ When the performance threshold is met, payouts are interpolated on a straight-line basis for performance levels between threshold and target and between target and maximum • In selecting the metrics, the Compensation Committee considered the impact of overlapping metrics between the STIP and LTIP and noted the following: ○ With respect to the Adjusted EBITDA metric, there is differentiation between the STIP (which measures the metric on an absolute basis) and LTIP (which measures the metric on a profitability ratio basis) ○ With respect to the revenue metric, the STIP metric is based on a one-year performance period but the LTIP metric is based on pre-established multi-year goals (four years in the case of the TIA PSUs and three years in the case of non-TIA PSUs) Notwithstanding some overlap, because delivering on these two metrics is foundational to our transformation’s success, the Compensation Committee determined to hold management accountable for performance through both the STIP and LTIP. • While we do not disclose prospective multi-year revenue and Adjusted EBITDA margin goals because they involve confidential commercial or financial information, the disclosure of which would result in competitive harm, we provide complete and transparent disclosure of the goal levels and performance achievement following completion of each applicable performance year. The Compensation Committee set the multi-year revenue and Adjusted EBITDA margin goals at levels that are challenging to achieve and would require substantial and sustained performance in order to be achieved at target levels. ○ As shown in the discussion that follows, the rigor of the Compensation Committee’s goal setting is evidenced by the fact that two of the three PSU performance tranches that were completed in fiscal year 2023 resulted in zero payouts. | | * We define Adjusted EBITDA margin, which is a non-GAAP financial measure, as the adjusted earnings before interest, taxes, depreciation and amortization as a percentage of revenue, as reported by the Company in its earnings announcement for the applicable performance period. In addition, revenue and Adjusted EBITDA are adjusted for any positive or negative foreign exchange impact, to the extent actual impact differs from budgeted assumptions. | | |

  83. Outstanding PSU Awards

    Outstanding PSU Awards The following tables show the performance metrics, weighting and performance achievement with respect to the third and final tranche of the fiscal year 2021 PSUs, the second tranche of the fiscal year 2022 PSUs and the first tranche of the fiscal year 2023 PSUs. The rigor of our goal setting is evidenced by the fact that two of the three PSU performance tranches resulted in zero payouts during fiscal year 2023 – accordingly, the average payout relating to the fiscal year 2023 performance period was approximately 48%.

  84. Fiscal Year 2021 PSUs: Third Tranche Not Earned During Fiscal Year 2023 Performance Period

    Fiscal Year 2021 PSUs: Third Tranche Not Earned During Fiscal Year 2023 Performance Period

  85. Fiscal Year 2021 PSUs: Third Tranche Not Earned During Fiscal Year 2023 Performance Period

    | | Performance Range | | | Fiscal 2023 Actual* | Earned PSUs (as % of Target) | Weighted Average Payout (as % of Target) | | | Threshold | Target | Maximum | | | | | Revenue (50%) ($ millions) | 423.06 | 445.33 | 476.50 | 291.39 | 0 | 0 | | Adjusted EBITDA (50%) ($ millions) | 144.97 | 152.60 | 167.86 | 40.77 | 0 | |

  86. Fiscal Year 2022 PSUs: Second Tranche Not Earned During the Fiscal Year 2023 Performance Period

    Fiscal Year 2022 PSUs: Second Tranche Not Earned During the Fiscal Year 2023 Performance Period

  87. Fiscal Year 2022 PSUs: Second Tranche Not Earned During the Fiscal Year 2023 Performance Period

    | | Performance Range | | | Fiscal Year 2023 Actual* | Earned PSUs (as % of Target) | Weighted Average Payout (as % of Target) | | | Threshold | Target | Maximum | | | | | Revenue Growth (50%) | 3.80% | 15.30% | 26.80% | -14.12% | 0 | 0 | | Adjusted EBITDA Margin (50%) | 30.60% | 34.00% | 37.40% | 13.99% | 0 | |

  88. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period Note: As discussed above, the earned fiscal year 2023 PSUs are subject to further time-based vesting requirements.

  89. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | | Performance Range | | | Fiscal Year 2023 Actual* | Earned PSUs (as % of Target) | Weighted Average Payout | | | Threshold | Target | Maximum | | | | | Revenue (50%) ($ millions) | 268 | 284 | 300 | 291.39 | 146.2% | 144.28% | | Adjusted EBITDA Margin (50%) | 8.70% | 12.0% | 16.7% | 13.99% | 142.4% | |

  90. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | * Note that actual performance is adjusted to align with the fiscal year 2023 LTIP foreign exchange rate. |

  91. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    The target number of PSUs and aggregate number of earned PSUs for the completed fiscal year 2021-2023 PSU cycle is as follows:

  92. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | | Fiscal 2021-2023 Target PSUs (#) | Fiscal 2021-2023 Earned PSUs (#) | Fiscal 2021-2023 Earned PSUs as % of Target | | Stefan Ortmanns | 8,673 | 4,326 | 49.9% | | Prateek Kathpal (1) | 10,407 | 5,190 | 49.9% |

  93. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | (1) Upon his termination of employment, Mr. Kathpal forfeited 3,469 unvested PSUs granted in fiscal year 2021. The target number of PSUs and number of earned PSUs for each fiscal year of the in-cycle performance periods is summarized in the table below: |

  94. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | | Target | Earned PSUs | | | | | Performance Period | PSUs in Each Tranche | First Tranche | Second Tranche | Third Tranche | Fourth Tranche | | Fiscal 2022—2024 | | | | | | | Stefan Ortmanns | 10,852 | 0 | 0 | Fiscal Year 2024 Performance Period in Progress | Not applicable | | Thomas Beaudoin | 13,354 | 0 | 0 | | | | Prateek Kathpal (1) | 5,426 | 0 | 0 | | |

  95. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | (1) Upon his termination of employment, Mr. Kathpal forfeited 10,853 unvested PSUs granted in fiscal year 2022 |

  96. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | | Target | Earned PSUs | | | | | Performance Period | PSUs in Each Tranche | First Tranche | Second Tranche | Third Tranche | Fourth Tranche | | Fiscal 2023—2026 (TIA PSUs)(1) | | | | | | | Stefan Ortmanns | 86,306 | 124,521 | Fiscal Year 2024 Performance Period in Progress | Fiscal Year 2025 Performance Period Not Started | Fiscal Year 2026 Performance Period Not Started | | Thomas Beaudoin | 35,962 | 51,885 | | | |

  97. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | (1) Mr. Kathpal is not listed in this table as his full TIA, including 201,380 PSUs granted in fiscal year 2023, were forfeited upon his termination of employment. |

  98. Fiscal Year 2023 PSUs: First Tranche Earned During the Fiscal Year 2023 Performance Period

    | | Target | Earned PSUs | | | | | Performance Period | PSUs in Each Tranche | First Tranche | Second Tranche | Third Tranche | Fourth Tranche | | Fiscal 2023—2025 (Non-TIA PSUs) | | | | | | | Iqbal Arshad | 18,840 | 27,182 | Fiscal Year 2024 Performance Period in Progress | Fiscal Year 2025 Performance Period Not Started | Not applicable |

  99. Change of Control and Severance Agreements

    Change of Control and Severance Agreements The Company or one of its subsidiaries has entered into a Change of Control and Severance Agreement and a Change of Control Equity Acceleration Agreement with Dr. Ortmanns and the Company has entered into a Change of Control Severance Agreement with each of our other NEOs (collectively, the “NEO Severance Agreements”). The Compensation Committee believes that these severance benefits: (1) help secure the continued employment and dedication of our NEOs; (2) are protective of the Company, as severance payments are conditioned on a separation and release agreement in favor of the Company and compliance with confidentiality and restrictive covenant agreements; and (3) are important as a recruitment and retention device, as many of the companies with which we compete for executive talent have similar agreements in place for their senior management. Consistent with market practices, the NEO Severance Agreements do not include change of control-related tax gross-ups. As noted earlier in the Proxy Statement, Mr. Kathpal resigned as Executive Vice President & Chief Technology Officer on May 8, 2023. In connection with his departure, Mr. Kathpal entered into a Transitional Services and Advisory Agreement (the “Kathpal Agreement”), pursuant to which he agreed to remain with the Company in an advisory role and provide transitional assistance as requested by the Company from May 9, 2023 to November 30, 2023. We did not pay severance to Mr. Kathpal in connection with his employment termination. For further information regarding the transition arrangements, see the section below entitled “Separation and Transition Arrangements.” Additional information regarding the NEO Severance Agreements, including a quantification of benefits that would have been received by each currently serving NEO, had the executive’s employment terminated on September 30, 2023, is provided under “Fiscal 2023 Potential Payments upon Termination or Change in Control.”

  100. FISCAL YEAR 2023 SUMMARY COMPENSATION TABLE

    | Name and Principal Position | Year | Salary ($) | Bonus ($)(4) | Stock Awards ($)(5) | Non-Equity Incentive Plan Compensation ($)(6) | All Other Compensation ($)(7) | Total ($) | | Dr. Stefan Ortmanns (1) | 2023 | 580,191 | — | 13,256,602 | 573,183 | 28,757 | 14,438,733 | | President and Chief Executive Officer | 2022 | 524,464 | 216,797 | 4,361,086 | 222,856 | 23,492 | 5,348,695 | | | 2021 | 360,472 | 296,136 | 1,023,414 | 389,959 | 11,972 | 2,081,953 | | Thomas Beaudoin | 2023 | 486,875 | — | 5,523,571 | 360,745 | 20,455 | 6,391,646 | | Chief Financial Officer | 2022 | 195,481 | — | 2,484,209 | 56,412 | 88,105 | 2,824,207 | | Iqbal Arshad (2) EVP and Chief Technology Officer | 2023 | 213,462 | — | 4,813,441 | 361,650 | 4,774 | 5,393,327 | | Prateek Kathpal (3) | 2023 | 300,000 | — | 7,840,766 | — | 332,795 | 8,473,561 | | Former EVP and Chief Technology Officer | 2022 | 478,776 | 3,000 | 2,124,670 | 145,463 | 14,862 | 2,766,771 |

  101. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE The following table sets forth grants of plan-based awards to our NEOs during the fiscal year ended September 30, 2023.

  102. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | Name | Grant Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Possible 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 (#) | | | | Stefan Ortmanns | | 297,171 | 594,342 | 1,188,684 | | | | | | | | 12/02/2022 | | | | | | | 345,224 | 6,628,301 | | | 12/02/2022 | | | | 172,612 | 345,224 | 690,448 | | 6,628,301 | | Thomas Beaudoin | | 187,031 | 374,062 | 748,124 | | | | | | | | 12/02/2022 | | | | | | | 143,843 | 2,761,786 | | | 12/02/2022 | | | | 71,922 | 143,843 | 287,686 | | 2,761,786 | | Iqbal Arshad | | 187,500 | 375,000 | 750,000 | | | | | | | | 04/28/2023 | | | | | | | 131,875 | 3,369,406 | | | 04/28/2023 | | | | 28,259 | 56,518 | 113,036 | | 1,444,035 | | Prateek Kathpal | | 187,500 | 375,000 | 750,000 | | | | | | | | 12/02/2022 | | | | | | | 143,843 | 2,761,786 | | | 12/02/2022 | | | | 100,690 | 201,380 | 402,760 | | 3,866,496 | | | 05/08/2023 | | | | — | 44,857 | — | | 1,212,485 |

  103. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | (1) The amounts reported represent the threshold, target and maximum performance-based incentive payments the NEOs could earn pursuant to the STIP for fiscal year 2023, as described in “Compensation Discussion and Analysis– Fiscal Year Named Executive Officer Compensation – Short Term Incentive Plan above. The actual amounts earned pursuant to the STIP for fiscal year 2023 are set forth in the “Non-Equity Incentive Plan Compensation” column in the Fiscal Year 2023 Summary Compensation Table above. Mr. Kathpal did not receive payment under the STIP for fiscal year 2023 due to his resignation from employment. |

  104. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | (2) As discussed in greater detail in the “Letter from the Compensation Committee” and the CD&A, the fiscal year 2023 stock awards to Dr. Ortmanns and Messrs. Beaudoin and Kathpal consisted of Transformation Incentive Awards. The fiscal year 2023 TIA constitutes a two-year “front-loaded” grant and TIA participants are not eligible for a fiscal year 2024 annual equity award. |

  105. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | The | amounts reported represent the threshold, target and maximum number of PSUs granted to NEOs in fiscal year 2023. These awards will vest and be earned only if certain performance goals are achieved as described in “Compensation Discussion and Analysis – Fiscal Year Named Executive Officer Compensation – Long Term Incentive Program” above. The values reported for the PSUs awarded in fiscal year 2023 represent the grant date fair values of such awards assuming the probable outcome of the performance conditions. The value of such awards assuming the maximum achievement of the applicable performance conditions is reported in footnote 5 to the Fiscal Year 2023 Summary Compensation Table above. |

  106. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | (3) For Mr. Arshad, the amount reported includes a new hire award of 75,357 RSUs ($1,925,371). Mr. Kathpal’s TIA award was forfeited in its entirety upon his termination of employment. |

  107. FISCAL YEAR 2023 GRANTS OF PLAN-BASED AWARDS TABLE

    | (4) In accordance with FASB ASC Topic 718, without taking into account forfeitures of equity awards, as required by the SEC rules, for Mr. Kathpal, the amounts reported include the fair value as of the technical modification date of RSUs that remained eligible for continued vesting during his transition period subject to achievement of performance metrics outlined in his Transitional Services and Advisory Agreement. See footnote 5 to the Summary Compensation table above and the section below entitled “Separation and Transition Arrangements” for additional information. |

  108. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END The following table sets forth all outstanding equity awards held by our NEOs as of September 30, 2023. The equity awards were all in the form of RSUs and PSUs. For purposes of valuing the outstanding awards, the amounts below are based on a per-share price of $20.37 for the Cerence Common Stock, the closing market price as reported on Nasdaq on September 29, 2023, the last business day of the fiscal year.

  109. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | Name | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(1) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | | | Stefan Ortmanns | 100,050 | 2,038,019 | (2) | — | — | — | | | 97,159 | 1,979,129 | (3) | — | — | — | | | 86,306 | 1,758,053 | (4) | — | — | — | | | 86,306 | 1,758,053 | (5) | — | — | — | | | | | | 5,426 | 110,528 | (10) | | | 124,521 | 2,536,493 | (11) | 43,153 | 879,027 | (12) | | | | | | 86,306 | 1,758,053 | (13) | | Thomas Beaudoin | 35,961 | 732,526 | (2) | — | — | — | | | 13,355 | 272,041 | (6) | — | — | — | | | 35,961 | 732,526 | (3) | — | — | — | | | 13,354 | 272,021 | (7) | — | — | — | | | 35,961 | 732,526 | (4) | — | — | — | | | 35,960 | 732,505 | (5) | — | — | — | | | 51,885 | 1,056,897 | (14) | 24,658 | 502,283 | (15) | | | | | | 17,980 | 366,253 | (16) | | | | | | 17,980 | 366,253 | (17) | | Iqbal Arshad | 18,840 | 383,771 | (2) | — | — | — | | | 37,679 | 767,521 | (8) | — | — | — | | | 18,839 | 383,750 | (3) | — | — | — | | | 37,678 | 767,501 | (9) | — | — | — | | | 18,839 | 383,750 | (4) | — | — | — | | | 27,182 | 553,697 | (14) | 9,420 | 191,885 | (15) | | | | | | 9,419 | 191,865 | (16) | | Prateek Kathpal (18) | — | — | — | — | — | — |

  110. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (1) Based upon achievement of threshold performance because fiscal year 2022 performance was below threshold. |

  111. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (2) Represents RSUs scheduled to vest October 1, 2023 subject to continued employment through the vesting date. For Dr. Ortmanns, this amount includes: 2,891 RSUs granted in fiscal year 2021, 10,853 RSUs granted in fiscal year 2022, and 86,306 RSUs granted in fiscal year 2023. For Mr. Beaudoin, this represents one fourth of the RSU award granted in fiscal year 2023 and, for Mr. Arshad, this represents one third of the annual RSU award granted in fiscal year 2023. |

  112. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (3) Represents RSUs scheduled to vest October 1, 2024 subject to continued employment through the vesting date. For Dr. Ortmanns, this amount includes 10,853 RSUs granted in fiscal year 2022 and 86,306 RSUs granted in fiscal year 2023. For Mr. Beaudoin, this represents one fourth of the RSU award granted in fiscal year 2023 and, for Mr. Arshad, this represents one third of the annual RSU award granted in fiscal year 2023. |

  113. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (4) Represents RSUs scheduled to vest October 1, 2025 subject to continued employment through the vesting date. For Dr. Ortmanns, and Mr. Beaudoin this represents one fourth of the RSU award granted in fiscal year 2023 and, for Mr. Arshad, this represents one third of the annual RSU award granted in fiscal year 2023. |

  114. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (5) Represents RSUs scheduled to vest October 1, 2026 subject to continued employment through the vesting date. For Dr. Ortmanns and Mr. Beaudoin, this represents one fourth of the RSU award granted in fiscal year 2023. |

  115. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (6) Represents RSUs granted to Mr. Beaudoin as a new hire award that vest May 5, 2024 subject to continued employment through the vesting date. |

  116. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (7) Represents RSUs granted to Mr. Beaudoin as a new hire award that vest May 5, 2025 subject to continued employment through the vesting date. |

  117. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (8) Represents RSUs granted to Mr. Arshad as a new hire award that vest November 15, 2024 subject to continued employment through the vest date. |

  118. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (9) Represents RSUs granted to Mr. Arshad as a new hire award that vest November 15, 2024 subject to continued employment through the vest date. |

  119. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (10) Represents PSUs granted in fiscal year 2022 that vest upon the release of earnings for fiscal year 2024 subject to the achievement of financial measures (revenue growth and Adjusted EBITDA margin) in fiscal year 2024 and continued employment through the vesting date. |

  120. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (11) Represents PSUs granted in fiscal year 2023 and earned based upon achievement of fiscal year 2023 financial metrics (revenue and Adjusted EBITDA margin) scheduled to vest upon the release of earnings for fiscal year 2025 subject to continued employment through the vesting date. |

  121. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (12) Represents PSUs granted in fiscal year that vest upon the release of earnings for fiscal year 2025 subject to the achievement of financial measures (revenue and Adjusted EBITDA margin) in fiscal year 2024 and fiscal year 2025 and continued employment through the vesting date. |

  122. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (13) Represents PSUs granted in fiscal year 2023 that vest upon the release of earnings for fiscal year 2026 subject to the achievement of financial measures (revenue and Adjusted EBITDA margin) in fiscal years 2024, 2025 and 2026 and continued employment through the vesting date. |

  123. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (14) Represents PSUs granted in fiscal year 2023 and earned based upon fiscal year 2023 performance (revenue and Adjusted EBITDA margin) scheduled to vest upon the release of earnings for fiscal year 2024 subject to continued employment through the vesting date. |

  124. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (15) Represents PSUs granted in fiscal year 2022 (for Mr. Beaudoin) and fiscal year 2023 that vest upon the release of earnings for fiscal year 2024 subject to the achievement of financial measures in fiscal year 2024 (revenue growth and Adjusted EBITDA margin) and continued employment through the vesting date. |

  125. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (16) Represents PSUs granted in fiscal year 2023 that vest upon the release of earnings for fiscal year 2025 subject to the achievement of financial measures (revenue and Adjusted EBITDA margin) in fiscal year 2025 and continued employment through the vesting date. |

  126. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (17) Represents PSUs granted in fiscal year 2023 that vest upon the release of earnings for fiscal year 2026 subject to the achievement of financial measures (revenue and Adjusted EBITDA margin) in fiscal year 2026 and continued employment through the vesting date. |

  127. OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END

    | (18) Mr. Kathpal’s RSUs that remained eligible to continue to vest pursuant to the Kathpal Agreement vested on September 29, 2023. Mr. Kathpal forfeited the remainder of his outstanding RSUs and PSUs upon the termination of his employment, representing 113,308 RSUs and 215,702 PSUs. |

  128. FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED TABLE

    FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED TABLE The following table sets forth the stock awards that vested, and the value realized upon vesting, by the NEOs during fiscal year 2023. No options were outstanding or vested during fiscal year 2023.

  129. FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED TABLE

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | | Stefan Ortmanns | 56,760 | 944,768 | | Thomas Beaudoin | 22,906 | 534,517 | | Iqbal Arshad | — | — | | Prateek Kathpal | 83,634 | 1,558,126 |

  130. FISCAL YEAR 2023 OPTION EXERCISES AND STOCK VESTED TABLE

    | (1) Value calculated by multiplying the number of shares vesting by the closing price of a share of the Cerence Common Stock on the vesting date. The value reported includes the vesting of RSUs granted pursuant to the fiscal year 2022 STIP. |

  131. Pension or Non-Qualified Deferred Compensation Plans

    Pension or Non-Qualified Deferred Compensation Plans There were no pension or non-qualified deferred compensation plans in place for any NEOs in fiscal year 2023.

  132. POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

    POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

  133. Estimated Payment and Benefits Upon Termination or Change of Control

    Estimated Payment and Benefits Upon Termination or Change of Control The amount of compensation and benefits payable to each of our NEOs entitled to severance payments and benefits in various termination and change of control situations has been estimated in the tables below. The amounts received by Mr. Kathpal in connection with the termination of his employment are described above under the heading “Separation and Transition Arrangements.” The value of the equity vesting acceleration was calculated for each of the tables below based on the assumption that the change of control and the NEO’s employment termination occurred on September 30, 2023. The per share closing price of the Common Stock on Nasdaq as of September 29, 2023, the last trading day of fiscal year 2023, was $20.37, which was used as the value of a share of the Common Stock for the calculations below. The value of RSU vesting acceleration was calculated by multiplying the number of RSUs subject to vesting acceleration as of September 30, 2023, by the per share closing price of Common Stock as of September 29, 2023.

  134. Stefan Ortmanns

    | Executive Benefits and Payment upon Termination | Termination by Company Without Cause Not in Connection with a Change of Control ($) | Termination by Company without Cause or Resignation for Good Reason within 12 Months Following a Change of Control ($) | Termination Due to Death or Disability ($) | | Compensation: | | | | | Cash Severance | 2,377,368(1) | 2,971,710(2) | — | | Health Care Continuation | — | — | — | | Acceleration of Equity Awards | 6,553,640(3) | 11,659,645(4) | 10,069,747(5) | | Total | 8,931,008 | 14,631,355 | 10,069,747 |

  135. Thomas Beaudoin

    | Executive Benefits and Payment upon Termination | Termination by Company Without Cause Not in Connection with a Change of Control ($) | Termination by Company without Cause or Resignation for Good Reason within 12 Months Following a Change of Control ($) | Termination Due to Death or Disability ($) | | Compensation: | | | | | Cash Severance | 1,246,874(1) | 1,683,280(2) | | | Health Care Continuation | 19,724(3) | 29,586(4) | 19,724(3) | | Acceleration of Equity Awards | 2,061,464(5) | 5,373,382(6) | 4,531,041(7) | | Total | 3,328,062 | 7,086,248 | 4,550,765(8) |

  136. Iqbal Arshad

    | Executive Benefits and Payment upon Termination | Termination by Company Without Cause Not in Connection with a Change of Control ($) | Termination by Company without Cause or Resignation for Good Reason within 12 Months Following a Change of Control ($) | Termination Due to Death or Disability ($) | | Compensation: | | | | | Cash Severance | 1,250,000(1) | 687,500(2) | — | | Health Care Continuation | —(3) | —(3) | —(3) | | Acceleration of Equity Awards | 1,704,989(4) | 4,054,967(5) | 3,239,990(6) | | Total | 2,954,989 | 5,742,467 | 3,239,990(7) |

  137. PAY VERSUS PERFORMANCE DISCLOSURE

    PAY VERSUS PERFORMANCE DISCLOSURE Pursuant to Section 953(a) of the Dodd-Frank Act and Item 402(v) of SEC Regulation S-K, we are providing the following information about the relationship between executive “compensation actually paid” (“CAP”) to the Company’s principal executive officer (“PEO”) and the Company’s non-PEO named executive officers ( “Non-PEO NEOs”) and certain aspects of the financial performance of the Company. The Compensation Committee does not utilize CAP as a basis for making compensation decisions. For further information concerning our compensation philosophy and how we align executive compensation with our performance, please see the Compensation Discussion & Analysis section of this Proxy Statement.

  138. Pay Versus Performance Table

    Pay Versus Performance Table

  139. Pay Versus Performance Table

    | Fiscal Year (1) | Summary Compensation Table Total for Dr. Ortmanns PEO (2) | Summary Compensation Table Total for Mr. Dhawan PEO (2) | Compensation Actually Paid to Dr. Ortmanns PEO (3) | | Compensation Actually Paid to Mr. Dhawan PEO (3) | | Average Summary Compensation Table Total for Non-PEO NEOs (2) | Average Compensation Actually Paid to Non-PEO NEOs (3) | | Value of Initial Fixed $100 Investment Based on: (4) | | Net Income ($mil.) (6) | | Revenue (7) ($mil.) | | | | | | | | | | | | Cerence Total Shareholder Return | Peer Group Total Shareholder Return (5) | | | | | 2023 | $14,438,733 | — | | 15,972,323 | | — | $6,752,845 | | 4,286,095 | $42 | $107 | ($ | 56) | $291 | | 2022 | $5,348,695 | $9,512,933 | ($ | 4,314,610) | ($ | 17,453,566) | $2,775,483 | ($ | 1,854,165) | $32 | $90 | ($ | 311) | $341 | | 2021 | — | $7,465,574 | | — | | 41,323,599 | 1,803,823 | | 10,285,852 | $197 | $144 | | 46 | $385 |

  140. Pay Versus Performance Table

    | (1) Dr. Ortmanns succeeded Sanjay Dhawan as PEO in fiscal year 2022 (on December 15, 2021). Mr. Dhawan served as the PEO for the entirety of fiscal year 2021. Our Non-PEO NEOs for the applicable fiscal years were as follows: |

  141. Pay Versus Performance Table

    | • | Fiscal year 2023: Thomas Beaudoin, Prateek Kathpal, and Iqbal Arshad |

  142. Pay Versus Performance Table

    | • | Fiscal year 2022: Thomas Beaudoin, Mark Gallenberger, Marc Montagner, Prateek Kathpal, and Christophe Couvreur |

  143. Pay Versus Performance Table

    | • | Fiscal year 2021: Mark Gallenberger, Stefan Ortmanns, and Leanne Fitzgerald |

  144. Pay Versus Performance Table

    | (2) Amounts reported in these columns represent (i) the total compensation reported in the Summary Compensation Table (“SCT”) for the applicable year in the case of our PEOs, Dr. Ortmanns and Mr. Dhawan, and (ii) the average of the total compensation reported in the SCT for the applicable year for our Non-PEO NEOs. |

  145. Pay Versus Performance Table

    | (3) Amounts reported in these columns represent (i) CAP for the applicable year in the case of our PEOs, Dr. Ortmanns and Mr. Dhawan and (ii) the average CAP for the applicable year for our Non-PEO NEOs; adjustments were made to the amounts reported in the SCT for the applicable year. A reconciliation of the adjustments made to the SCT amounts to calculate CAP for our PEOs, Dr. Ortmanns and Mr. Dhawan, and for the average of the Non-PEO NEOs in accordance with the requirements of Item 402(v) of Regulation S-K is set forth in the following table: |

  146. Pay Versus Performance Table

    | | Fiscal Year 2023 | | | | Fiscal Year 2022 | | | | | | Fiscal Year 2021 | | | | Dr. Ortmanns PEO | | Average Non-PEO NEOs | | Dr. Ortmanns PEO | | Mr. Dhawan PEO | | Average Non-PEO NEOs | | Mr. Dhawan PEO | Average Non-PEO NEOs | | Summary Compensation Table Total | | 14,438,733 | | 6,752,845 | | 5,348,695 | | 9,512,933 | | 2,775,483 | $7,465,574 | $1,803,823 | | Minus Change in Pension Value Reported in SCT for the Fiscal Year | | 0 | | 0 | | 0 | | 0 | | 0 | $0 | $0 | | Plus Pension Value Service Cost for the Fiscal Year | | 0 | | 0 | | 0 | | 0 | | 0 | $0 | $0 | | Minus Equity Award Value Reported in SCT for the Fiscal Year | | 13,256,602 | | 6,059,259 | | 4,361,086 | | 9,329,311 | | 2,450,148 | $5,806,759 | $955,131 | | Plus Year End Fair Value of Equity Awards Granted During the Covered Year that Remain Outstanding and Unvested as of Last Day of the Fiscal Year | | 14,842,886 | | 3,379,689 | | 854,690 | | 1,881,873 | | 536,461 | $10,606,123 | $1,684,584 | | Plus Year over Year Change in Fair Value as of the Last Day of the Fiscal Year of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years | ($ | 52,694) | ($ | 8,411) | ($ | 6,984,598) | | 0 | ($ | 1,346,670) | $21,363,485 | $6,688,566 | | Plus Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Fiscal Year | | 0 | | 318,036 | | 0 | | 0 | | 0 | $0 | $0 | | Plus Year over Year Change in Fair Value as of the Vesting Date of Equity Awards Granted in Prior Fiscal Years that Vested During the Fiscal Year | | 0 | | 53,567 | | 827,689 | | 348,221 | | 2,084 | $7,695,176 | $1,064,011 | | Minus Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Fiscal Year | | 0 | | 150,371 | | 0 | | 19,867,283 | | 1,371,374 | $0 | $0 | | Plus Value of Dividends or other Earnings Paid on Equity Awards Not Otherwise Reflected in Fair Value or Total Compensation for the Fiscal Year | | 0 | | 0 | | 0 | | 0 | | 0 | $0 | $0 | | Compensation Actually Paid | | 15,972,323 | | 4,286,095 | ($ | 4,314,610) | ($ | 17,453,566) | ($ | 1,854,165) | $41,323,599 | $10,285,852 |

  147. Pay Versus Performance Table

    In the table above, the unvested equity fair values were calculated on each of the required measurement dates using assumptions based on criteria consistent with those used for grant date fair value calculations and in accordance with the methodology used for financial reporting purposes. For unvested awards subject to performance-based vesting conditions, the fair values were based on the probable outcome of such performance-based vesting conditions as of the last day of the year.

  148. Pay Versus Performance Table

    | (4) Total Shareholder Return (“TSR”) is cumulative for the measurement periods beginning on September 30, 2020 and ending on September 30 of each of 2023, 2022 and 2021, respectively. TSR is calculated by dividing the difference between the price of the Company’s common stock at the end and the beginning of the measurement period by the price of the Company’s common stock at the beginning of the measurement period. No dividends were paid by the Company during fiscal years 2021, 2022, or 2023. |

  149. Pay Versus Performance Table

    | (5) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. Our peer group for these purposes is the S&P Software & Services Select Industry Index, which is the industry index used by the Company for purposes of compliance with Item 201(e) of Regulation S-K for all three fiscal years. |

  150. Pay Versus Performance Table

    | (6) Reflects the Company’s net income (loss) reflected in the audited financial statements published in our Annual Report on Form 10-K for the applicable year. |

  151. Pay Versus Performance Table

    | (7) Revenue is the company-selected measure. Values shown reflect revenue as calculated for purposes of our executive compensation program for the applicable reporting fiscal year based on the reporting fiscal year’s STIP foreign exchange rate. |

  152. Pay Versus Performance Table

    Performance Measures Used to Link Company Performance and CAP. The following is a list of performance measures, which in our assessment represent the most important performance measures used by the Company to link compensation actually paid to the named executive officers for fiscal year 2023. Each metric below is used for purposes of determining payouts under either our annual incentive program or vesting of our performance stock units. Please see the CD&A for a further description of these metrics and how they are used in the Company’s executive compensation program.

  153. Pay Versus Performance Table

    | Revenue | | Adjusted EBITDA | | Adjusted EBITDA Margin | | Bookings |

  154. CEO PAY RATIO

    CEO PAY RATIO Our compensation and benefits philosophy and the overall structure of our compensation and benefit programs are broadly similar across the organization to encourage and reward all employees who contribute to our success. We strive to ensure the pay of each of our employees reflects the level of their job impact and responsibilities and is competitive within our peer group. Compensation rates are benchmarked and are generally set to be market-competitive in the country in which the jobs are performed. Our ongoing commitment to pay equity is critical to our success in supporting a diverse workforce with opportunities for all employees to grow, develop and contribute. Under rules adopted pursuant to the Dodd-Frank Act, we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our Chief Executive Officer (the “CEO Pay Ratio”). The paragraphs that follow describe our methodology and the resulting CEO Pay Ratio. We identified the median employee by looking at base salary plus target bonus as of September 30, 2023 for all active employees as of that date. We did not perform adjustments to the compensation paid to part-time employees to calculate what they would have been paid on a full-time basis. In identifying the median employee, we did not exclude workers in non-U.S. countries and did not make any cost-of-living adjustments. Once the median employee was identified, we calculated the median employee’s annual total compensation in accordance with the requirements of the Summary Compensation Table. For fiscal year 2023:

  155. CEO PAY RATIO

    | • | the annual total compensation of the employee identified as our median employee (other than our CEO) was $64,928; and |

  156. CEO PAY RATIO

    | • | Dr. Ortmanns’ annual total compensation as reported in the Fiscal Year 2023 Summary Compensation Table was $14,438,733. |

  157. CEO PAY RATIO

    Therefore, our CEO Pay Ratio is approximately 222:1 (our CEO Pay Ratio would be 120:1 if the LTIP under the Fiscal Year 2023 TIA was annualized and the CEO’s annual total compensation for fiscal year 2023 was $7,810,432). This information is being provided for compliance purposes and is a reasonable estimate calculated in a manner consistent with SEC rules, based on our internal records and the methodology described above. The SEC rules for identifying the median compensated employee allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. Accordingly, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may use different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. Neither the Compensation Committee nor management of the Company used the CEO Pay Ratio measure in making compensation decisions.