DEF 14A of Upland Software, Inc., Apr 26, 2024

DEF 14A of Upland Software, Inc.

Filed Apr 26, 2024 · FY20230001505155-24-000028

Open on EDGAR

  1. QUESTIONS

    | Proxy Statement Information on Voting | 1 | | Proposal One: Election of Directors | 4 | | Directors and Corporate Governance | 6 | | Director Compensation | 15 | | Executive Officers | 17 | | Security Ownership of Certain Beneficial Owners and Management | 18 | | Certain Relationships and Related Party Transactions | 20 | | Executive Compensation | 21 | | Compensation Disclosure and Analysis | 21 | | Summary Compensation Table | 29 | | Grants of Plan-Based Awards Table | 30 | | Outstanding Equity Awards at Fiscal Year-End Table | 31 | | Option Exercises and Stock Vesting Table | 32 | | Executive Employment and Other Arrangements | 33 | | Potential Payments upon Termination or Change-in-Control | 33 | | CEO Pay Ratio | 35 | | Pay Versus Performance | 36 | | Audit Committee Report | 41 | | Proposal Two: Ratification of Selection of Independent Registered Public Accounting Firm | 42 | | Proposal Three: Advisory Vote to Approve the Compensation of our Named Executive Officers | 42 | | Proposal Four: Approval of the Upland Software, Inc. 2024 Omnibus Incentive Plan | 44 | | Equity Compensation Plan Information | 44 | | Proposal Five: Approval of the 2024 Tax Benefit Preservation Plan | 53 | | Other Matters | 58 | | Stockholders Sharing the Same Last Name and Address | 59 | | Appendix A: Proposed Upland Software, Inc. 2024 Omnibus Incentive Plan | 60 | | Appendix B: Proposed Tax Benefit Preservation Plan | 72 | | Proxy Card | 110 |

  2. PROPOSAL ONE: ELECTION OF DIRECTORS

    PROPOSAL ONE: ELECTION OF DIRECTORS Our Board is comprised of six directors. In accordance with our Certificate of Incorporation (the “Certificate of Incorporation”) and our Amended and Restated Bylaws (the “Bylaws”), our Board is divided into three classes, the members of each of which serve for staggered three-year terms. Only one class of directors will be elected at each annual meeting of our stockholders, with the other classes continuing for the remainder of their respective three-year terms. Our directors are divided among the three classes as follows: •the Class I directors are Stephen E. Courter and Teresa Miles Walsh, and their terms will expire at our annual meeting of stockholders to be held in 2024; and •the Class II directors are David D. May, Timothy W. Mattox and David Chung, and their terms will expire at our annual meeting of stockholders to be held in 2025; and •the Class III director is John T. (Jack) McDonald, and his term will expire at our annual meeting of stockholders to be held in 2026. This year’s nominees for election to our Board as Class I directors are Stephen E. Courter and Teresa Miles Walsh. The proxies given to the proxy holders will be voted or not voted as directed and, if no direction is given, will be voted “FOR” the nominees. Mr. Courter and Ms. Walsh are independent directors as determined by the Board of Directors. The nominees have been nominated by our Board upon the recommendation of the Nominating and Governance Committee. Certain biographical information about the nominees is set forth below, including the director's business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes, or skills that caused the Nominating and Governance Committee to recommend that the nominees should continue to serve on our Board. There are no family relationships among the nominees and any of our directors or executive officers. Stephen E. Courter has served as a member of our Board since September 2014. Mr. Courter is on the faculty of the McCombs School of Business, University of Texas at Austin, which he joined in August 2007, teaching courses in the Masters in Business Administration program and leading study abroad programs in Thailand, Vietnam, India, and Indonesia. Prior to joining the University of Texas at Austin, Mr. Courter served as Chief Executive Officer and board member of Broadwing Communications from 2006 to 2007. Previously, Mr. Courter served as Chairman and Chief Executive Officer of Neon Communications from 2000 to 2006 and Chief Executive Officer of Enertel, a Dutch telecommunications company based in Rotterdam from 1998 to 2000. Mr. Courter currently serves on the board of directors of Cadiz Inc. (Nasdaq: CDZI), a land and water resource development company, which he joined in 2008. Mr. Courter holds a B.S. in Finance from The Pennsylvania State University and an M.B.A. from The George Washington University. Mr. Courter holds the rank of Major in the U.S. Army Reserves. We believe Mr. Courter is qualified to serve as a member of our Board as a result of his experience in executive-level management positions at technology companies and the knowledge he gained from service on the boards of public and private companies. Teresa Miles Walsh has served as member of our Board since March 2020. She founded Access Media Advisory Limited in the UK ("AMA"), a corporate advisory boutique focused on media sector clients, in 2003 and Access Media Advisory LLC in the US in 2008. She currently serves as chief executive officer of both. Ms. Walsh is also a limited partner and registered representative of Pickwick Capital Partners, LLC, a FINRA regulated broker dealer. From November 2020 to June 2021, Ms. Walsh was an independent member of the board of directors and Chair of the Audit Committee of Forest Road Acquisition Corp (NYSE: FRX. U). From 1989 to 2002, Ms. Walsh held positions at Merrill Lynch including Vice Chair and Managing Director, European Telecommunications, Media and Technology (2002), Head of the European Media Investment Banking Group (1997-2002), and other investment banking roles in media, utilities and structured finance groups of the investment banking division at Merrill Lynch (1989-1997). Ms. Walsh holds a B.A. in Economics, Magna Cum Laude, from Duke University and an M.B.A., with distinction, from the Fuqua School of Business at Duke University. We believe Ms. Walsh is qualified to serve as a member of our Board as a result of her experience in the international business sector and with mergers and acquisition, as well as her executive-level management positions with investment banking entities. The nominees receiving the highest number of affirmative votes of the shares of Common Stock and Series A Preferred Stock (on an as-converted basis) voting together as a single class, present in person or represented by proxy and entitled to vote for them will be elected as Class I directors to serve until the third annual meeting following their election or until their successor, if any, is duly elected and qualified, or until their earlier death, resignation, or removal. Unless you otherwise instruct, proxies will be voted for election of the nominees who are listed above as the Class I director nominees. The Company has no reason to believe that the nominees will be unable to serve, but in the event that the nominees are unwilling or unable to serve as a directors and the Board does not, in that event, choose to reduce the size of the Board, the persons voting the proxy may vote for the election of another person in accordance with their judgment.

  3. Recommendation of the Board

    Recommendation of the Board The Board unanimously recommends that stockholders vote “FOR” the election of Mr. Courter and Ms. Walsh.

  4. DIRECTORS AND CORPORATE GOVERNANCE

    DIRECTORS AND CORPORATE GOVERNANCE

  5. Corporate Governance Highlights

    Corporate Governance Highlights

  6. Corporate Governance Highlights

    | Independence •The Board currently has 6 members, 4 of whom are independent. •There are three standing committees with all members being independent directors. •Directors regularly meet without management present with the Lead Independent Director presiding. | | Board Practices •The Board and its standing committees perform self-evaluations on an annual basis. •Each standing committee operates under a committee charter. •The Board oversees risk management practices. •The Board receives information concerning, and provides input on, succession planning. •The Board has adopted an insider trading policy, a related person policy, corporate governance guidelines, and a code of business conduct and ethics. | | Leadership Structure •The Board leadership structure consists of a Chair, a Lead Independent Director and committee chairs. |

  7. Directors

    Directors The Nominating and Governance Committee of the Board and the Board believe the skills, qualities, attributes, and experience of its directors provide Upland with business acumen and a diverse range of perspectives to engage each other and management to effectively address the evolving needs of Upland and represent the best interests of our stockholders. In the event the nominees for director are elected, following the Annual Meeting, our Board would consist of the following individuals:

  8. Directors

    | Name | Position with Upland | Age as of the Annual Meeting | Director Since | | David Chung | Director | 56 | 2022 | | Stephen E. Courter | Director | 69 | 2014 | | David D. May | Lead Independent Director | 61 | 2016 | | John T. (Jack) McDonald | Director, Chief Executive Officer and Chair | 60 | 2010 | | Timothy W. Mattox | Director | 58 | 2024 | | Teresa Miles Walsh | Director | 60 | 2020 |

  9. Directors

    The following presents biographical information for each of our continuing directors listed above in the table. The biographical information includes the director’s business experience, director positions held currently or at any time during the last five years, information regarding involvement in certain legal or administrative proceedings, if applicable, and the experiences, qualifications, attributes, or skills that caused the Nominating and Governance Committee to recommend that the director should serve on the Board. David Chung has served as a director of the Company since August 2022. Mr. Chung is a Partner and Co-Chief Investment Officer of HGGC, LLC (“HGGC”). Mr. Chung is a member of HGGC’s Management Committee and Fund IV Investment Committee. He is involved in all aspects of HGGC’s investment sourcing, underwriting, execution and portfolio management and realization. Mr. Chung brings 29 years of experience as a private equity, public equity and hybrid public/private investor. Prior to joining HGGC in December 2016, he was an independent investor through Arrowhead Holdings LLC, an Investment Partner at Blum Capital Partners, a Partner at Standard Pacific Capital, and a Director at KKR, where he began his private equity career in 1995. Previously, he was a strategy consultant at McKinsey & Co. and an investment banker at Hambrecht & Quist. Mr. Chung holds a B.A. in Economics from Harvard University and an M.B.A. from Harvard Business School. We believe that Mr. Chung is qualified to serve as a member of our Board as a result of his experience in the private equity industry and experience serving in executive and senior management roles. Stephen E. Courter has served as a member of our Board since September 2014. Mr. Courter is on the faculty of the McCombs School of Business, University of Texas at Austin, which he joined in August 2007, teaching courses in the Masters in Business Administration program and leading study abroad programs in Thailand, Vietnam, India, and Indonesia. Prior to joining the University of Texas at Austin, Mr. Courter served as Chief Executive Officer and board member of Broadwing Communications from 2006 to 2007. Previously, Mr. Courter served as Chair and Chief Executive Officer of Neon Communications from 2000 to 2006 and Chief Executive Officer of Enertel, a Dutch telecommunications company based in Rotterdam from 1998 to 2000. Mr. Courter currently serves on the board of directors of Cadiz Inc. (Nasdaq: CDZI), a land and water resource development company, which he joined in 2008. Mr. Courter holds a B.S. in Finance from The Pennsylvania State University and an M.B.A. from The George Washington University. Mr. Courter holds the rank of Major in the U.S. Army Reserves. We believe Mr. Courter is qualified to serve as a member of our Board as a result of his experience in executive-level management positions at technology companies and the knowledge he gained from service on the boards of public and private companies. David D. May joined our Board in June 2016 and was named Lead Independent Director in October 2017. He is a vice president of Luther King Capital Management, and Senior Advisor to LKCM Headwater Investments, which he joined in August 2013. From January 2005 to August 2013, he was the co-founder and portfolio manager of Third Coast Capital Management, an Austin-based long-short equity hedge fund formed in 2004. From 1998 to 2003, Mr. May was a co-founder and Managing Partner of Ridgecrest Partners, a New York City-based hedge fund founded in 1998. From 1996 to 1998, Mr. May was a Partner at Ardsley Partners, a Connecticut-based hedge fund, where he served as an analyst and a portfolio manager. Prior to this, he was a Vice President at Luther King Capital Management and served as a portfolio manager for a broad range of investment portfolios and co-founded the LKCM Mutual Funds, serving as President of the Fund Group. Mr. May formerly sat on the Board of Perficient Inc. (Nasdaq: PRFT), an information technology consulting firm, where he served on the Audit Committee and was the Chair of the Compensation Committee. He has previously served on the boards of privately held companies and philanthropic organizations. Mr. May holds a B.A. in Business and an M.B.A. from Texas Christian University. He is a CFA charter holder. We believe that Mr. May is qualified to serve as a member of our Board as a result of his experience as a director of publicly traded technology companies and his background in the institutional investment industry. John T. (Jack) McDonald founded the Company and has served as our Chief Executive Officer and Chair of our Board since our founding in July 2010. Prior to founding Upland in 2010, Mr. McDonald was Chief Executive Officer of Perficient, Inc. (Nasdaq: PRFT), an information technology consulting firm, from 1999 to 2009, and chairman from 2001 to 2010. Mr. McDonald started his career as an attorney with Skadden, Arps, Slate, Meagher & Flom LLP in New York, focusing on mergers and acquisitions and corporate finance, from 1987 to 1993. Mr. McDonald served as a director and member of the Compensation Committee of BigCommerce Holdings, Inc. (Nasdaq: BIGC), from August 2019 to July 2022. Mr. McDonald served as chairman of the Greater Austin Chamber of Commerce and as a member of the board of directors of a number of privately held companies and non-profit organizations. Mr. McDonald holds a B.A. in Economics from Fordham University and a J.D. from Fordham Law School. We believe that Mr. McDonald is qualified to serve as a member of our Board because of his experience as our Chief Executive Officer and his background in the technology industry, including previously serving as Chair and Chief Executive Officer of a public technology company. Timothy W. Mattox has served as a member of our Board since January 2024. Mr. Mattox previously served as President and Chief Operating Officer for Upland from July 2014 until March 2021, and most recently as a Strategic Advisor to Upland from March 2021 until his appointment to the Board. Prior to Upland, Mr. Mattox’s career included extensive strategic, operational, new business, and private equity experience in software, hardware, and web/cloud services. From 1998 to 2013, he worked at Dell, Inc. during which he held several leadership positions, including Vice President of Corporate Strategy, followed by Vice President of Worldwide Enterprise Product Management. Preceding Dell, Mr. Mattox worked for Bain & Company as a Manager from 1994 to 1998, and Oracle Corporation as a Senior Product Line Manager from 1989 to 1992. Mr. Mattox has led businesses with revenue of $25 million to $10 billion and has a strong track record of stockholder value creation at the corporate and divisional level. Mr. Mattox holds B.S. and M.S. degrees in electrical engineering and computer science from MIT and an M.B.A. from Stanford’s Graduate School of Business. We believe that Mr. Mattox is qualified to serve as a member of our Board as a result of his significant software executive leadership experience, as well as his previous understanding and history of the Company.

  10. Directors

    Teresa Miles Walsh has served as member of our Board since March 2020. She founded Access Media Advisory Limited in the UK (“AMA”), a corporate advisory boutique focused on media sector clients, in 2003 and Access Media Advisory LLC in the US in 2008. She currently serves as chief executive officer of both. Ms. Walsh is also a limited partner and registered representative of Pickwick Capital Partners, LLC, a FINRA regulated broker dealer. From November 2020 to June 2021, Ms. Walsh was an independent member of the board of directors and Chair of the Audit Committee of Forest Road Acquisition Corp (NYSE: FRX.U). From 1989 to 2002, Ms. Walsh held positions at Merrill Lynch including Vice Chair and Managing Director, European Telecommunications, Media and Technology (2002), Head of the European Media Investment Banking Group (1997-2002) and other investment banking roles in media, utilities and structured finance groups of the investment banking division at Merrill Lynch (1989-1997). Ms. Walsh holds a B.A. in Economics, Magna Cum Laude, from Duke University and an M.B.A., with distinction, from the Fuqua School of Business at Duke University. We believe Ms. Walsh is qualified to serve as a member of our Board as a result of her experience in the international business sector and with mergers and acquisition, as well as her executive-level management positions with investment banking entities.

  11. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  12. Standard Director Compensation Arrangements

    Standard Director Compensation Arrangements Upland’s non-employee director compensation policy is designed to provide appropriate amount and form of compensation to our non-employee directors. The current annual retainer for non-employee Board members is $30,000. The lead independent director receives an additional annual retainer of $20,000. Members of our committees who are non-employee directors receive the following annual cash fees for Board committee service:

  13. Standard Director Compensation Arrangements

    | Committee | Chair Fee | Member Fee | | Audit Committee | $20,000 | $10,000 | | Compensation Committee | $12,000 | $5,000 | | Nominating and Governance Committee | $7,500 | $2,500 |

  14. Standard Director Compensation Arrangements

    The Amended and Restated Upland Software, Inc. Stock Plan (as amended, the “2014 Plan”) provides for the grant of non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance units, and performance shares to employees, directors, and consultants. In 2023, each person who first became a non-employee director received an initial grant of RSUs valued at $125,000, as soon as practical after the date such person became a non-employee director. For continuing non-employee directors who served on our Board for at least the preceding six months, each was granted, following the annual meeting of stockholders for 2023, an annual award of RSUs with a value of approximately $240,000. At the recommendation of our independent compensation consultant and after review with the Board, the Board determined that the annual equity award will be reduced to $175,000 in 2024, which the Company believes aligns the directors with the executives slightly above the 25th percentile and below the 50th percentile, as compared to its peer group. Both the initial awards and annual awards of RSUs vest in equal quarterly installments beginning approximately on the 3-month anniversary of the vesting commencement date, provided the participant continues as a director through such dates. The vesting commencement date for annual awards generally is the 16th day of the month in which the annual meeting occurs. The vesting commencement date for initial awards generally is the 16th day of the month in which the director becomes a non-employee director, or the following month if the director becomes a non-employee director after the 16th day of a month. The number of shares of RSUs awarded is calculated based on the average closing price of the common stock for 30 days prior to the date of grant, as measured by the closing price of the common stock on the NASDAQ Stock Market. Members of our Board are also reimbursed for actual expenses incurred in attending Board meetings, if any. The Compensation Committee, in consultation with our independent compensation consultant, periodically reviews our director compensation practices. The Compensation Committee believes that our director compensation is fair and appropriate in light of the responsibilities and obligations of our directors.

  15. 2023 Director Compensation

    2023 Director Compensation The following table presents information regarding the compensation earned or paid during 2023 to our non-employee directors who served on the Board during the year. Mr. McDonald, our sole employee director, does not receive compensation for his service as a member of the Board.

  16. 2023 Director Compensation

    | Name of Director | Fees Earned or Paid in Cash | Restricted Stock Units(1) | Total | | David Chung | $47,500 | $248,123 | $295,623 | | Stephen E. Courter | $55,000 | $248,123 | $303,123 | | David D. May | $72,000 | $248,123 | $320,123 | | Joe Ross(2) | $32,500 | $248,123 | $280,623 | | Teresa Miles Walsh | $47,500 | $248,123 | $295,623 |

  17. 2023 Director Compensation

    (1) The amounts reported in the column represent the grant date fair value of the annual director grants, computed in accordance with the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) 718, Compensation—Stock Compensation, of the 62,816 RSUs granted on July 31, 2023. (2) Mr. Ross stepped down from the Board in January 2024.

  18. 2023 Director Compensation

    | Name of Director | Unvested Restricted Stock Units (#) | Outstanding Option Awards (#) | | David Chung(1) | 31,408 | — | | Stephen E. Courter(1) | 31,408 | 37,941 | | David D. May(1) | 31,408 | 24,809 | | Joe Ross(1) | 31,408 | 18,414 | | Teresa Miles Walsh(1) | 31,408 | — |

  19. 2023 Director Compensation

    (1) The number of unvested shares of RSUs and the number of shares underlying stock options held by each of the non-employee directors as of December 31, 2023. All stock options held by the directors were fully vested as of December 31, 2023.

  20. Our Compensation Program Benefits Our Stockholders

    | What We Do | What We Do Not Do | | ☑ Rigorous, objective performance goals with aggressive bonus targets | ☒ No “golden parachute” gross-ups | | ☑ Limited perquisites | ☒ No hedging/pledging/short sales of company stock | | ☑ Competitive stock ownership guidelines | ☒ No options/SARs granted below FMV | | ☑ Clawback policy covering performance-based incentive awards | ☒ No repricing of options without stockholder approval | | ☑ Double-trigger and Retention-oriented CIC provisions | ☒ No excessive severance | | ☑ Independent compensation consultant and Board Compensation Committee | ☒ No guaranteed salary increases, bonuses, or long-term incentive awards | | ☑ Annual risk assessment of compensation policies and programs | |

  21. Compensation Components

    Compensation Components Upland establishes total direct compensation for NEOs consisting of the following components: •Base Salary: A market salary at the low end of the competitive range that sufficiently covers a fixed income component on which the employee can rely. The fixed salary is set at a level that provides the ability to attract talent and promote long-term retention while allowing Upland to maintain conservative fixed general and administrative expense levels. •Performance Bonus: The bonus plans are tied to quantitative performance objectives which we believe are directly aligned with stockholders interest. The performance objectives are proposed by management, but are subject to the Compensation Committee’s consideration and ultimately Board approval. Bonus objectives are set to support growth in Adjusted EBITDA resulting from increases in operating revenue and the achievement of scale with respect to operating expenses and the addition of Adjusted EBITDA through new acquisitions during the year. Additionally, the Compensation Committee has the ability to apply positive and negative discretion to modify performance-bonus payments. Reflecting the rigor of our goal setting, in 2023, as in 2022 and 2021, our named executive officers earned less than their target bonus opportunities. Our Compensation Committee did exercise discretion to pay limited discretionary bonuses to two key executives in early 2024 for retention measures and for work performed in 2023, as explained below. In addition, one executive Mr. Yates, who does not participate in the corporate bonus plans, is under a commission based plan as explained below. •Equity Awards: Restricted Stock Units (“RSUs”) and Performance-based Restricted Stock Units (“PSUs”) reward employees for longer service and TSR growth. Equity Award compensation ensures retention of key executives by using longer-term vesting periods and helps maximize our return to stockholders through executive alignment.

  22. Alignment of Pay with Performance

    Alignment of Pay with Performance A significant portion of our executive compensation is at risk as it is subject to either achievement of preset performance goals (Target Performance Bonuses) or tied to our stock price performance (RSUs and PSUs). We believe this creates a pay for performance structure that aligns with long-term shareholder returns while providing competitive total compensation for retaining our executives. The charts below show the ratio of compensation components for 2023 for each NEO based on target performance bonus amounts and equity award values based on the grant date fair value of the awards.

  23. Corporate and M&A Bonus Program and Sales Commission Plan

    Corporate and M&A Bonus Program and Sales Commission Plan Overview and Executive Earning Potential The named executive officers, with the exception of Mr. Yates as described below, are eligible for annual cash bonus awards which are comprised primarily of two components—awards under our Corporate Bonus Plan, which are tied to operating performance, and awards under our M&A Bonus Plan, which are tied to the execution of our acquisition strategy. Other employees of the Company also participate in these two performance incentive plans. Mr. Yates’ cash commissions, as Chief Sales Officer (“CSO”), are tied to sales quota attainment under the Company’s Sales Commission Plan. The bonus and commission opportunities are offered to reward management for implementing and monitoring the objectives of the Company in line with the Company’s financial and operational goals. The form and structure of all bonus and commission opportunities provided to our named executive officers are approved by the Compensation Committee. The Compensation Committee may also adjust the goals following the occurrence of unanticipated changes to our business. The chart below details our NEOs’ combined 2023 target bonus and commission opportunities (in both percentage to base salary and dollar amounts) under the Corporate Bonus Plan, the M&A Bonus Plan, and Sales Commission Plan and the allocation of the 2023 target bonus and commission opportunity between the plans.

  24. Corporate and M&A Bonus Program and Sales Commission Plan

    | Name | Target Bonus Percent of Base Salary | Bonus Percentage Attributable to Corporate Bonus Plan | Bonus Percentage Attributable to M&A Bonus Plan | Commission Percentage Attributable to Sales Commission Plan | | Mr. McDonald | 200% | 25% | 75% | —% | | Mr. Hill | 125% | 50% | 50% | —% | | Mr. Doman | 50% | 50% | 50% | —% | | Mr. Yates | —% | —% | —% | 100% | | Mr. Miller | 50% | 50% | 50% | —% |

  25. Corporate and M&A Bonus Program and Sales Commission Plan

    | | 2023 Bonus and Sales Commission Targets | | | | | Name | Corporate Bonus | M&A Bonus | Sales Commission | Total | | Mr. McDonald | $162,500 | $487,500 | $— | $650,000 | | Mr. Hill | $187,500 | $187,500 | $— | $375,000 | | Mr. Doman | $75,000 | $75,000 | $— | $150,000 | | Mr. Yates | $— | $— | $325,000 | $325,000 | | Mr. Miller | $75,000 | $75,000 | $— | $150,000 |

  26. Corporate and M&A Bonus Program and Sales Commission Plan

    Performance Criteria and Plan Targets In 2023, the performance criteria for the Corporate Bonus Plan consisted of Adjusted EBITDA and Adjusted EBITDA Margin, where the primary threshold was Adjusted EBITDA and the secondary threshold was Adjusted EBITDA margin. For the M&A Bonus Plan, the annualized Adjusted EBITDA attributable to companies acquired during the year was the performance criterion. The Company defines Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, adjusted for depreciation and amortization expense, interest expense, net, other expense (income), net, provision (benefit) for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, purchase accounting adjustments for deferred revenue and impairment of goodwill. The Company defines Adjusted EBITDA margin as Adjusted EBITDA divided by total revenue. If an acquisition is completed during the year, the corresponding amount of incremental additional Adjusted EBITDA generated by such acquisition during the year is added to the Adjusted EBITDA threshold under the Corporate Bonus Plan, so that bonuses are not paid on the same Adjusted EBITDA under both the Corporate Bonus Plan and the M&A Bonus Plan. For 2023, the Company set the Corporate Bonus Plan initial Adjusted EBITDA threshold at $69 million based on our previously disclosed organic growth plan as described in the Company’s 2023 public filings, which includes without limitation, significant investments in sales, marketing, and product development. The Corporate Bonus Plan Adjusted EBITDA threshold was reduced $2.8 million in August 2023 as a result of lower revenue due to accelerated “when not if” Sunset Asset churn (as defined in the Company’s most recent 10-K filing), lower perpetual license and professional services revenue and incremental growth investments in our CLA product group. For the 2023 M&A Bonus Plan, the Company set the target of $18.0 million of annualized Adjusted EBITDA based on the Company’s acquisition targets for the year. With respect to the Corporate Bonus Plan, if the Company exceeds the primary threshold Adjusted EBITDA and then the secondary threshold Adjusted EBITDA margin, then 80% of the amount by which the threshold Adjusted EBITDA has been exceeded is identified as the bonus pool. Thus, the Corporate Bonus Plan is only funded by over performance. With respect to the M&A Bonus Plan, the bonus pool is funded based on the percentage achievement of the target annual Adjusted EBITDA attributable to acquisitions during the performance measurement year. Bonuses are paid following the issuance of the Company’s audited financial statements for the performance year. With respect to our CSO’s sales commission plan, the amount of the team commission earned each quarter is determined by multiplying the quota attainment percentage by the quarterly team commission target. The CSO’s sales commission compensation is subject to a multiplier when the sales team performance exceeds 100% of quota. If sales team quota attainment is between 100% and 109.9%, the multiplier is 100%, and if the sales team quota attainment is greater than 110%, the multiplier is 125%. The following tables show, for the Corporate Bonus Plan, the threshold Adjusted EBITDA goal and, for the M&A Bonus Plan, the target annualized Adjusted EBITDA attributable to companies acquired during the year goal for 2023, actual results, Corporate Bonus Pool generated and the percentage of the bonus opportunity actually earned under the M&A Bonus Plan.

  27. Corporate and M&A Bonus Program and Sales Commission Plan

    | | Corporate Bonus Plan | | | | | Adjusted EBITDA | Adjusted EBITDA | Bonus Pool Generated | | Year | Threshold ($, in millions) | Actual Results ($, in millions) | ($) | | 2023 | 66.2 | 64.4 | — |

  28. Corporate and M&A Bonus Program and Sales Commission Plan

    | | M&A Bonus Plan | | | | | Adjusted EBITDA From Acquisitions | Adjusted EBITDA From Acquisitions | Amount Earned | | Year | Target ($, in millions) | Actual Results ($, in millions) | (as a percentage of Target) (%) | | 2023 | 18.0 | 0.00 | —% |

  29. Corporate and M&A Bonus Program and Sales Commission Plan

    Performance Achievement In 2023, the Company did not achieve its Adjusted EBITDA primary threshold under the Corporate Bonus Plan resulting in no bonuses earned by our named executive officers.1 For the M&A Bonus Plan, the Company did not close any acquisitions in 2023, resulting in no bonuses earned by our named executive officers under the M&A Bonus Plan. Total commissions earned by our CSO under the sales commission plan was $219,788 based on his attained sales performance. The Compensation Committee, in its discretion, issued limited bonus payments to certain NEOs for retention purposes and to recognize their performance in 2023 leading the Company through significant internal restructuring and business realignment. The decision was made taking into consideration (i) no increases in base salary in 2023; (ii) no earned cash incentive awards through the Corporate Bonus Plan; (iii) no earned cash incentive awards through the M&A Bonus Plan; and (iv) smaller equity grants in 2023 as compared to 2022, with a corresponding significant decrease in equity grant values in 2023 (as noted in Grants of Plan-Based Awards Table.) The Company believes the historical payouts under our annual bonus program, and limited discretionary adjustments by our Compensation Committee when pre-established goals are not achieved, evidence the rigor of our annual bonus program. 1 The Adjusted EBITDA margin secondary threshold target did not factor into any 2023 analysis as the Company did not first achieve its Adjusted EBITDA primary threshold targets. Threshold and target levels of performance for each metric were set based on the Company’s publicly announced guidance and, therefore, required strong performance. Set forth below are the target and actual bonuses and sales commissions earned by our named executive officers in 2023.

  30. Corporate and M&A Bonus Program and Sales Commission Plan

    | | Corporate Bonus | | M&A Bonus | | Sales Commission | | Discretionary | Total | | | Name | Target | Actual | Target | Actual | Target | Actual | Actual | Target | Actual | | Mr. McDonald | $162,500 | $— | $487,500 | $— | $— | $— | $250,000 | $650,000 | $250,000 | | Mr. Hill | $187,500 | $— | $187,500 | $— | $— | $— | $75,000 | $375,000 | $75,000 | | Mr. Doman | $75,000 | $— | $75,000 | $— | $— | $— | $— | $150,000 | $— | | Mr. Yates | $— | $— | $— | $— | $325,000 | $219,788 | $— | $325,000 | $219,788 | | Mr. Miller | $75,000 | $— | $75,000 | $— | $— | $— | $— | $150,000 | $— |

  31. Corporate and M&A Bonus Program and Sales Commission Plan

    Equity Awards In 2023, the Company awarded the following number of RSUs and PSUs to our named executive officers as part of our annual equity award program:

  32. Corporate and M&A Bonus Program and Sales Commission Plan

    | Name | RSUs | PSUs | | Mr. McDonald | 100,000 | 100,000 | | Mr. Hill | 100,000 | — | | Mr. Doman | 100,000 | — | | Mr. Yates | 135,000 | — | | Mr. Miller | 100,000 | — |

  33. Corporate and M&A Bonus Program and Sales Commission Plan

    See description of vesting schedules in footnotes to the Outstanding Equity Awards at Fiscal Year-End table. Similar to 2022, Mr. McDonald’s 2023 equity grants shifted from all RSUs to an even split between RSUs and PSUs, which the Compensation Committee believes continues to align a significant part of Mr. McDonald’s compensation with the interests of shareholders. Moreover, the equity grant value for 2023 was significantly lower (i.e. less than one-third (1/3) of the value) than provided in 2022. (See Summary Compensation Table). Other Perquisites and Benefits The Company provided limited perquisites to our NEOs. The aggregate value of perquisites provided to each of our NEOs was less than $1,000 in 2023, with the exception of approximately $15,000 paid for executive administrative assistance provided to Mr. McDonald in 2023. The only perquisites provided to any of our NEOs were parking and the limited executive administrative assistant compensation noted above. The Company has a 401(k) plan (with no employer match) and no deferred compensation plan for executives. Our employment agreements with the NEOs are disclosed in the section titled “Executive Employment and Other Arrangements.”

  34. Peer Selection Methodology, Rationale and Comparison

    Peer Selection Methodology, Rationale and Comparison Upland’s peer group is reviewed annually by NFP using a defined methodology that identifies companies with attributes reasonably and objectively similar to Upland in terms of industry, industry profile, size, and market capitalization to revenue ratio, profit margins and external perception by stockholders. Below is the peer group used in 2023:

  35. Peer Selection Methodology, Rationale and Comparison

    | Peer Group Symbol | Peer Group Name | | EGHT | 8X8, Inc. | | AGYS | Agilsys, Inc. | | BNFT | Benefitfocus, Inc. | | CCSI | Consensus Cloud Solutions, Inc. | | KLTR | Kaltura, Inc. | | LPSN | LivePerson, Inc. | | MODN | Model N, Inc. | | ONTF | ON24, Inc. | | PRO | PROS Holdings, Inc. | | RMNI | Rimini Street, Inc. | | SPSC | SPS Commerce, Inc. | | WK | Workiva Inc. | | YEXT | Yext, Inc. |

  36. How Upland Uses Our Peer Group

    How Upland Uses Our Peer Group The positions of our NEOs are compared to their counterpart positions in our peer group, and the compensation levels for comparable positions in that peer group are examined for guidance in determining: •base salaries; •performance bonuses; and •the amount and mix of long-term equity-based incentive awards. The Compensation Committee establishes base salaries, performance bonuses, and long-term equity-based incentive awards on a case-by-case basis for each named executive officer taking into account, among other things, individual and company performance, role expertise and experience and the competitive market, advancement potential, recruiting needs, internal equity, retention requirements, unrealized equity gains, succession planning and best compensation governance practices. The Compensation Committee does not tie individual compensation to specific target percentiles.

  37. Summary Compensation Table

    Summary Compensation Table The following table provides information regarding the compensation awarded to or earned during our fiscal years ended December 31, 2023, 2022 and 2021 by our named executive officers. Mr. Yates and Mr. Miller became executive officers in July 2023 and January 2023, respectively, and, in accordance with SEC rules, the table below reflects only the amounts earned as an executive officer in 2023. Mr. Doman became an executive officer in August 2022 and the table below reflects only the amounts earned in 2022 and 2023.

  38. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards(1) ($) | Non-Equity Incentive Plan Compensation ($) | All Other Compensation ($) | Total ($) | | John T. (Jack) McDonald | 2023 | 325,000 | 250,000 | 2,325,000(3) | — | 15,546(2) | 2,915,546 | | Chief Executive Officer and Chair | 2022 | 325,000 | — | 7,749,375 | 255,398 | 664 | 8,330,437 | | | 2021 | 325,000 | — | 8,319,184 | 446,404 | — | 9,090,588 | | Michael D. Hill | 2023 | 300,000 | 75,000 | 852,000 | — | — | 1,227,000 | | Chief Financial Officer and Treasurer | 2022 | 275,000 | — | 1,918,425 | 98,438 | — | 2,291,863 | | | 2021 | 270,000 | — | 3,297,375 | 154,524 | — | 3,721,899 | | Daniel Doman | 2023 | 300,000 | — | 852,000 | — | — | 1,152,000 | | Chief Product Officer | 2022 | 291,667 | — | 1,513,550 | 39,375 | — | 1,844,592 | | Oliver Yates | 2023 | 311,458 | — | 1,084,050 | 219,788 | — | 1,615,296 | | Chief Sales Officer | | | | | | | | | Paul Miller | 2023 | 300,000 | — | 852,000 | — | — | 1,152,000 | | Former Chief Operating Officer | | | | | | | |

  39. Summary Compensation Table

    (1) The amounts reported in the “Stock Awards” column do not reflect compensation actually received by the named executive officer but represent the aggregate grant date fair value computed in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”). The valuation assumptions used in determining such amounts are described in “Note 2 – Summary of Significant Accounting Policies” and “Note 13 – Stockholder’s Equity” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on February 22, 2024. (2) Mr. McDonald’s other compensation relates to $664 paid for parking and $14,882 paid for executive administrative assistance in 2023. (3) For Mr. McDonald, the grant date fair value of his 2023 PSU was $1,473,000 (per share fair value of $14.73 using the Monte Carlo simulation model) times the target number of PSUs (100,000)). If maximum performance levels were achieved, the award would vest at 200% of the target number of the PSUs. The grant date fair value of his 2023 RSUs was $852,000.

  40. Grants of Plan-Based Awards Table

    Grants of Plan-Based Awards Table The following table presents, for each of our named executive officers, information concerning each grant of cash or equity awards made during fiscal year 2023. This information supplements the information about these awards set forth in the Summary Compensation Table.

  41. Grants of Plan-Based Awards Table

    | | Estimated Future Payouts Under Non-Equity Incentive Awards (3) | | | | Estimated Future Payouts Under Equity Incentive Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock Awards ($) | | Name | Threshold ($) | Target ($) | Maximum ($) | Grant Date | Threshold (#) | Target (#) | Maximum (#) | | | | John T. (Jack) McDonald | | 650,000 | | | | | | | | | | | | | 2/21/2023(2) | 50,000 | 100,000 | 200,000 | | 1,473,000 | | | | | | 2/21/2023(1) | | | | 100,000 | 852,000 | | Michael D. Hill | | 375,000 | | | | | | | | | | | | | 2/21/2023(1) | | | | 100,000 | 852,000 | | Daniel Doman | | 150,000 | | | | | | | | | | | | | 2/21/2023(1) | | | | 100,000 | 852,000 | | Oliver Yates | | 325,000 | 406,250 | | | | | | | | | | | | 1/09/2023(1) | | | | 135,000 | 1,084,050 | | Paul Miller | | 150,000 | | | | | | | | | | | | | 2/21/2023(1) | | | | 100,000 | 852,000 |

  42. Grants of Plan-Based Awards Table

    (1) The amounts reported reflect shares of common stock underlying RSU awards granted in 2023 under the Upland Software, Inc. 2014 Equity Incentive Plan. The RSU awards vest in twelve equal quarterly installments, provided the named executive officer continues to be a service provider to the Company on the applicable date. The grant date fair value of RSU awards is determined in accordance with ASC 718,Compensation – Stock Compensation, without regard to estimated forfeitures. The valuation assumptions used in determining such amounts are described in “Note 2 – Summary of Significant Accounting Policies” and “Note 13 – Stockholder’s Equity” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on February 22, 2024. These amounts do not correspond to the actual value that will be recognized by the named executive officers. (2) The amount reported reflects the target number shares of common stock underlying the PSU award granted to Mr. McDonald in 2023 under the Upland Software, Inc., 2014 Equity Incentive Plan based on the achievement of threshold, target and maximum performance pursuant to the vesting schedule of Mr. McDonald’s award which is described in note five to the 2023 Outstanding Equity Awards at Fiscal Year-End table. The grant date fair value of PSU awards is determined in accordance with ASC 718,Compensation – Stock Compensation, using the Monte Carlo simulation model as described in “Note 2 – Summary of Significant Accounting Policies” and “Note 13 – Stockholder’s Equity” of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K filed on February 22, 2024. These amounts do not correspond to the actual value that will be recognized by Mr. McDonald. (3) Non-equity incentive awards reported represent the formulaic performance-based incentive cash awards each named executive officer could earn pursuant to our Corporate Bonus Plan, M&A Bonus Plan and Sales Commission Plan as described in the “Corporate and M&A Bonus Program and Sales Commission Plan” section above.

  43. Outstanding Equity Awards At Fiscal Year-End Table

    Outstanding Equity Awards At Fiscal Year-End Table The following table provides information about outstanding equity awards held by each of our named executive officers at December 31, 2023.

  44. Outstanding Equity Awards At Fiscal Year-End Table

    | Name | Number of shares or units of stock that have not vested(1) (#) | Market value of shares or units of stock that have not vested(1) ($) | Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#) | Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) | | John T. (Jack) McDonald | 31,250(2) | 132,188 | | | | | 58,333(3) | 246,749 | | | | | 66,666(4) | 281,997 | | | | | | | 100,000(5) | 423,000 | | Michael D. Hill | 22,500(6) | 95,175 | | | | | 40,833(7) | 172,724 | | | | | 66,666(4) | 281,997 | | | | Daniel Doman | 9,168(8) | 38,781 | | | | | 18,334(9) | 77,553 | | | | | 29,167(10) | 123,376 | | | | | 66,666(4) | 281,997 | | | | Oliver Yates | 90,000(11) | 380,700 | | | | Paul Miller | 8,334(12) | 35,253 | | | | | 29,167(12) | 123,376 | | | | | 66,666(12) | 281,997 | | |

  45. Outstanding Equity Awards At Fiscal Year-End Table

    (1) Market value calculated using the closing price of our common stock as of December 29, 2023 of $4.23. (2) Represents the remaining unvested RSUs of an original award of 93,750 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on March 16, 2022 and ending on December 16, 2024, subject to executive continuing to be a service provider to the Company on each applicable date. (3) Represents the remaining unvested RSUs of an original award of 100,000 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on December 16, 2022 and ending on September 16, 2025, subject to executive continuing to be a service provider to the Company on each applicable date. (4) Represents the remaining unvested RSUs of an original award of 100,000 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on March 16, 2023 and ending on December 16, 2025, subject to executive continuing to be a service provider to the Company on each applicable date. (5) The number of PSUs reported is based on achievement of threshold performance. The market value was calculated using the closing price of our common stock as of December 29, 2023 of $4.23. PSUs are earned based upon the achievement of the absolute total shareholder return (“TSR”) goals set forth below during the period beginning on February 28, 2023 and ending on December 31, 2025 (the “Performance Period”) in accordance with the following schedule, will vest on the Vesting Dates (as defined below):

  46. Outstanding Equity Awards At Fiscal Year-End Table

    | Absolute TSR | Number of Performance Units Vesting as a Percentage of Target Performance Units | Threshold/Target/Maximum | | 20.00% | 200% | Maximum | | 19.25% | 188% | | | 18.50% | 175% | | | 16.75% | 163% | | | 15.00% | 150% | | | 13.75% | 138% | | | 12.50% | 125% | | | 11.25% | 113% | | | 10.00% | 100% | Target | | 8.75% | 87.5% | | | 7.50% | 75% | | | 6.25% | 62.5% | | | 5.00% | 50% | Threshold | | < 5.00% | 0% | |

  47. Outstanding Equity Awards At Fiscal Year-End Table

    Stock price hurdles will be calculated based on the closing price of Upland Common Stock on February 27, 2023 (the “Reference Price”) of $5.89. Each stock price hurdle will be achieved on the first date on which the closing price of a Share for any thirty consecutive trading days immediately preceding such date during the Performance Period equals or exceeds a stock price hurdle calculated by multiplying the corresponding Absolute TSR hurdle listed above by the Reference Price (the “Vesting Date”). Following achievement of any stock price hurdle, the number of Performance Units earned with respect to such stock price hurdle cannot subsequently be earned upon achievement of the same stock price hurdle or forfeited if the price per Share falls below such stock price hurdle. At the end of the Performance Period, a number of Performance Units (if any) will vest based on the closing price per Share on the last day of the Performance Period using linear interpolation. To receive the vesting of the Performance Units described above, Mr. McDonald must continue to be a Service Provider through the Vesting Date. Any Performance Units which have not vested following the completion of the Performance Period shall immediately expire and be forfeited. Notwithstanding the foregoing, in the event of Mr. McDonald’s termination by the Company for any reason other than Cause or if Mr. McDonald leaves for Good Reason, in each case, after a Change in Control that occurs during Mr. McDonald ’s period of continuous service as a Service Provider, then 100% of the Target Performance Units subject to this Agreement, to the extent they have not already vested, shall become fully vested, and any Performance Units in excess of the Target Performance Units shall immediately expire and be forfeited. Further notwithstanding the foregoing, in the event Mr. McDonald leaves for Good Reason or is terminated other than for Cause prior to or on the last day of the Performance Period, the vesting of any unvested Performance Units shall accelerate such that the aggregate amount of Performance Units vested as of such date Mr. McDonald ceases to be a Service Provider is equal to the amount of Target Performance Units that would have been vested as of such date assuming the application of the following vesting schedule: •The PSUs vest in 34 equal monthly installments starting on March 31, 2023 through December 31, 2025. (6) Represents the remaining RSUs of an original award of 67,500 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on March 16, 2022 and ending on December 16, 2024, subject to executive continuing to be a service provider to the Company on each applicable date. (7) Represents the remaining RSUs of an original award of 70,000 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on December 16, 2022 and ending on September 16, 2024, subject to executive continuing to be a service provider to the Company on each applicable date. (8) Represents the remaining unvested RSUs of an original award of 55,000 RSUs that vest pursuant to the following vesting schedule: 33.33% on June 16, 2022 and then eight equal quarterly installments starting on September 16, 2022 and ending on June 16, 2024, subject to executive continuing to be a service provider to the Company on each applicable vesting date. (9) Represents the remaining unvested RSUs of an original award of 55,000 RSUs that vest pursuant to the following vesting schedule: 30% on November 16, 2022 and then eight equal quarterly installments starting on March 16, 2023 and ending on December 16, 2024, subject to executive continuing to be a service provider to the Company on each applicable vesting date. (10) Represents the remaining RSUs of an original award of 50,000 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on December 16, 2022 and ending on September 16, 2025, subject to executive continuing to be a service provider to the Company on each applicable date. (11) Represents the remaining unvested RSUs of an original award of 135,000 RSUs that vest pursuant to the following vesting schedule: twelve equal quarterly installments starting on March 16, 2023 and ending on December 16, 2025, subject to executive continuing to be a service provider to the Company on each applicable date. (12) Upon Mr. Miller stepping down from his position with the Company effective January 31, 2024, these unvested awards were forfeited.

  48. Option Exercises and Stock Vesting Table

    Option Exercises and Stock Vesting Table The following table sets forth certain information with respect to the vesting of restricted stock or RSUs awards held by our named executive officer in fiscal year 2023. There were no outstanding stock options held by our named executive officers in fiscal year 2023.

  49. Option Exercises and Stock Vesting Table

    | | Stock Awards | | | Name | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting (1) ($) | | John T. (Jack) McDonald | 118,397 | 494,899 | | Michael D. Hill | 101,668 | 424,972 | | Daniel Doman | 88,740 | 372,052 | | Oliver Yates | 45,000 | 188,100 | | Paul Miller | 67,609 | 283,113 |

  50. Option Exercises and Stock Vesting Table

    (1) Reflects the closing price of our common stock on the vesting date multiplied by the number of RSUs vested.

  51. Potential Payments upon Termination or Change in Control

    Potential Payments upon Termination or Change in Control The information below describes certain compensation that would have become payable to our named executive officers under existing plans and contractual arrangements assuming a termination of employment and change of control of the Company had occurred on December 31, 2023 and based upon a price of $4.23 per share for our common stock, which was the closing price on NASDAQ on December 29, 2023 (the last trading day of 2023), given the named executive officers’ compensation and service levels as of such date. There can be no assurance that an actual triggering event would produce the same or similar results as those estimated if such event occurs on any other date or at any other price, of if any other assumption used to estimate potential payments and benefits is not correct. Due to the number of factors that affect the nature and amount of any potential payments or benefits, any actual payments and benefits may be different. As of December 31, 2023, we have cash severance arrangements for our named executive officers, partial acceleration of unvested equity awards, acceleration of unvested awards upon death or Disability, as well as “double trigger” vesting acceleration for equity awards of all named executive officers, each as described below. Cash Severance Payments As described above under “Executive Employment and Other Arrangements” the Company entered into an employment agreement with each of our named executive officers. Under these agreements if the named executive officer is terminated for any reason other than “cause” or resigns for “good reason” the Company will be obligated to pay him as severance (i) earned but unpaid bonus, (ii) 100% of his then current monthly base salary for 12 months, and (iii) reimburse him for any health care benefit continuation premiums for a period of 12 months, provided he timely elects continuation of coverage under COBRA or applicable state law; provided further, that such COBRA premium reimbursements shall terminate upon commencement of new employment by an employer that offers health care coverage to its employees. Death or Disability All equity awards contain provisions that accelerate the vesting of outstanding unvested awards upon the death or permanent disability of the holder. These provisions are generally applicable to all of our employees, including executive officers. Acceleration of Equity Awards upon Termination without Cause or Resignation with Good Reason The equity grant agreements with our named executive officers provide that if a named executive officer leaves for good reason or is terminated other than for cause (as each is defined in that named executive officer’s employment agreement) prior to completion of the vesting schedule the named executive shall vest in enough additional units or shares as is necessary so that the total vested units or shares equals the amount that would have vested as of the termination date assuming the vesting over thirty-six equal monthly installments starting on January 1 of the year of grant. This means that our named executive officers may receive no additional vesting, or up to two months of additional vesting, upon a termination without cause or a resignation for good reason. Double Trigger Vesting Acceleration of Equity Awards The equity award agreements provide for “double trigger” vesting acceleration of unvested awards, such that the vesting with respect to 100% of their outstanding and unvested awards will be accelerated in the event of their termination without cause or resignation with good reason in connection with change of control (as each is defined in the applicable equity grant documentation with such named executive officers). Definitions For purposes of each named executive’s equity grant documentation and employment agreement: “Cause” means (i) Executive’s willful failure to perform the duties and obligations of executive’s position with the Company; (ii) any material act of personal dishonesty, fraud or misrepresentation taken by executive which was intended to result in substantial gain or personal enrichment of executive at the expense of the Company; (iii) executive’s violation of a federal or state law or regulation applicable to the Company’s business which violation was or is reasonably likely to be materially injurious to the Company; (iv) executive’s conviction of, or plea of nolo contendere or guilty to, a felony under the laws of the United States or any State, excluding felonies for minor traffic violation and vicarious liability (so long as executive did not know of the felony and did not willfully violate the law); or (v) executive’s material breach of the terms of that executive’s employment agreement or proprietary information agreement. “Good Reason” means, (i) without executive’s consent, a material reduction of executive's duties or responsibilities relative to executive’s duties or responsibilities as in effect immediately prior to such reduction; provided, however, any reduction in executive's duties or responsibilities resulting solely from the Company being acquired by and made a part of a larger entity shall not constitute Good Reason; (ii) without executive’s written consent, a material reduction in the base salary of executive as in effect immediately prior to such reduction, unless such reduction is part of a reduction in expenses generally affecting senior executives of the Company; (iii) without executive's consent, a material reduction by the Company in the kind or level of employee benefits to which executive was entitled immediately prior to such reduction, with the result that executive's overall benefits package is materially reduced, unless such reduction is part of a reduction in benefits generally affecting senior executives of the Company or (iv) without executive’s consent, his relocation to a facility or a location more than twenty-five (25) miles from his present working locations. Good Reason shall not exist unless executive provides (i) notice to the Company within ninety (90) days of the initial existence of the condition triggering Good Reason and (ii) the Company the opportunity of at least thirty (30) days to cure such condition. For purposes of each named executive’s equity documentation: “Change in Control” generally means, (i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (for purposes of this definition, a “Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection, the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; (ii) a change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or (iii) a change in the ownership of

  52. Potential Payments upon Termination or Change in Control

    a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the 12- month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company’s assets: (A) a transfer to an entity that is controlled by the Company’s stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company’s stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). Notwithstanding the foregoing, a transaction will not be deemed a Change in Control unless the transaction qualifies as a change in control event within the meaning of Internal Revenue Code Section 409A. Further and for the avoidance of doubt, a transaction will not constitute a Change in Control if: (i) its sole purpose is to change the state of the Company’s incorporation, or (ii) its sole purpose is to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction.

  53. Potential Payments

    Potential Payments The table below estimates payments and benefits that would have become payable to our named executive officers under the plans and contractual arrangements in effect on December 31, 2023 assuming a termination of employment and change of control of the Company had occurred on December 31, 2023 and based upon a price of $4.23 per share for our common stock, which was the closing price on NASDAQ on December 29, 2023 (the last trading day of 2023), given the named executive officers' compensation and service levels as of such date.

  54. Potential Payments

    | Name | Severance Payments upon Termination without Cause or Resignation for Good Reason(1) ($) | Acceleration of Equity Awards upon Termination without Cause or Resignation for Good Reason in Connection with a Change of Control ($) | Acceleration of Equity Awards upon Termination without Cause or Resignation for Good Reason not in Connection with a Change in Control ($) | Acceleration of Equity Awards upon Death or Disability ($) | | John T. (Jack) McDonald | 1,000,131 | 1,083,933 | — | 1,083,933 | | Michael D. Hill | 693,208 | 549,896 | — | 549,896 | | Daniel Doman | 458,009 | 521,707 | — | 521,707 | | Oliver Yates | 664,926 | 380,700 | — | 380,700 | | Paul Miller (2) | 450,000 | 440,626 | — | 440,626 |

  55. Potential Payments

    (1) Includes earned but unpaid bonus as of December 31, 2023, assuming performance at target levels, continued salary payments for 12 months and reimbursement for health care benefit continuation premiums for 12 months. (2) Mr. Miller stepped down from his position on January 31, 2024, received no severance and his unvested equity awards were forfeited.

  56. CEO Pay Ratio

    CEO Pay Ratio Presented below is the ratio of annual total compensation of our CEO to the annual total compensation of our median employee. The ratio is a reasonable estimate calculated in a manner consistent with Item 402(u) of Regulation S-K under the Exchange Act. SEC rules for identifying the median employee allow companies to apply various methodologies and assumptions and, as a result, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies. As determined in accordance with SEC rules, the 2023 annual total compensation was $2,915,546 for our CEO as reported in the Summary Compensation Table and $73,038 for our median employee, and the ratio of these amounts is $39.92 to $1. As permitted by SEC rules, to identify our median employee, the Company elected to use the annual total cash compensation of each employee as of the end of 2023. For these purposes, annual total cash compensation included annual salary or hourly wages, 2023 grants of RSUs (grant date “fair value” per ASC 718), 2023 bonus earned, commissions paid, and comparable cash elements of compensation in non-U.S. jurisdictions and was calculated using internal human resources records with all foreign currencies converted to U.S. dollars. All amounts were annualized for permanent employees who did not work for the entire year. The Company identified our median employee from 1,285 full-time and part-time workers who were included as employees on our payroll records during 2023. We did not exclude any employees pursuant to any permitted exclusion.

  57. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Act, and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of the Company. For further information concerning the Company’s variable pay-for-performance philosophy and how the Company’s aligns executive compensation with the Company’s performance, refer to “Executive Compensation – Compensation Discussion and Analysis.” In accordance with the SEC’s Pay Versus Performance (“PvP”) rules, below is the required tabular disclosure for the Principal Executive Officer (“PEO”) and the average NEO (excluding the PEO) for reporting years 2020, 2021, 2022 and 2023.

  58. Pay Versus Performance Table

    Pay Versus Performance Table

  59. Pay Versus Performance Table

    | | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year(1) | Summary Compensation Table Total for PEO(2) ($) | Compensation Actually Paid to PEO(1)(3) ($) | Average Summary Compensation Table Total for Non-PEO NEOs(1)(4) ($) | Average Compensation Actually Paid to Non-PEO NEOs(1)(5) ($) | Total Shareholder Return(6) | Peer Group Total Shareholder Return(7) | Net Loss ($, in millions) | Adjusted EBITDA ($, in millions) | | 2023 | 2,915,546 | 1,065,152 | 1,286,574 | 604,442 | 11.9 | 221.1 | 179.9 | 64.4 | | 2022 | 8,330,437 | 1,666,533 | 2,023,148 | 571,224 | 20.0 | 132.8 | 68.4 | 97.1 | | 2021 | 9,090,588 | (33,614) | 4,395,365 | 1,078,429 | 50.2 | 206.8 | 58.2 | 96.7 | | 2020 | 8,626,209 | 10,369,020 | 5,125,166 | 5,742,921 | 128.5 | 150.0 | 51.2 | 99.9 |

  60. Pay Versus Performance Table

    (1) The PEO in all reporting years is John T. (Jack) McDonald. The NEOs in the 2023 reporting year are: Michael D. Hill, Daniel Doman, Oliver Yates, and Paul Miller. The NEOs in the 2022 reporting year are: Michael D. Hill, Kin Gill, Daniel Doman, Ian Burk and Rodney C. Favaron. The NEOs in the 2021 reporting year are: Michael D. Hill, Kin Gill and Rodney C. Favaron. The NEOs in the 2020 reporting year are: Michael D. Hill, Rodney C. Favaron and Timothy W. Mattox. (2) The dollar amounts reported are the amounts of total compensation reported for Mr. McDonald for each corresponding year in the “Total” column of the Summary Compensation Table (“SCT”). Refer to “Executive Compensation — 2023 Summary Compensation Table.” (3) The dollar amounts reported represent the amount of compensation actually paid (“CAP”) to Mr. McDonald, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. McDonald during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following “Pay Versus Performance Calculation Detail” table displays the adjustments made to Mr. McDonald’s total compensation for each year to determine the CAP. (4) The dollar amounts reported represent the average of the amounts reported for the Company’s NEOs as a group (excluding the PEO) in the “Total” column of the SCT in each applicable year. (5) The dollar amounts reported represent the average amount of CAP to the NEOs as a group (excluding the PEO), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding the applicable PEO) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following “Pay Versus Performance Calculation Detail” table displays the adjustments made to the NEOs’ (excluding the applicable PEO) total compensation for each year to determine the CAP. (6) Represents the year-over-year value, as of the end of the applicable fiscal year, of a hypothetical initial investment of $100 made on December 31, 2019 in the Company. The Company has not paid any cash dividends and, therefore, the Cumulative TSR calculation on its Common Stock is based solely upon stock price appreciation or depreciation and does not include any reinvestment of cash dividends. (7) The peer group used for this purpose is the Nasdaq Computer Technology Index, which is consistent with the disclosure required under Regulation S-K Item 201(e).

  61. Pay Versus Performance Calculation Detail

    Pay Versus Performance Calculation Detail

  62. Pay Versus Performance Calculation Detail

    | | PEO | | | | NEO AVERAGE | | | | | | 2023 | 2022 | 2021 | 2020 | 2023 | 2022 | 2021 | 2020 | | Summary Compensation Table Total | $2,915,546 | $8,330,437 | $9,090,588 | $8,626,209 | $1,286,574 | $2,023,148 | $4,395,365 | $5,125,166 | | Less: Reported Fair Value of Equity Awards(a) | $(2,325,000) | $(7,749,375) | $(8,319,184) | $(8,035,196) | $(910,013) | $(1,724,570) | $(3,989,417) | $(5,056,500) | | Add: Year-End Fair Value of Equity Awards Granted in the Year and Remain Unvested | $845,997 | $1,132,023 | $744,002 | $8,502,148 | $306,673 | $367,775 | $982,933 | $3,824,243 | | Add: Change in Fair Value of Equity Awards Granted in Prior Years and Remain Unvested | $(259,791) | $(221,378) | $(617,667) | $610,800 | $(114,190) | $(127,923) | $(776,423) | $254,500 | | Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in the Year | $139,336 | $439,625 | $746,243 | $769,776 | $151,527 | $247,244 | $945,402 | $1,636,069 | | Add: Changes in Fair Value of Equity Awards Granted in Prior Years that vested in the Year | $(250,936) | $(264,799) | $(1,677,596) | $(104,717) | $(116,129) | $(214,450) | $(479,431) | $(40,557) | | Compensation Actually Paid | $1,065,152 | $1,666,533 | $(33,614) | $10,369,020 | $604,442 | $571,224 | $1,078,429 | $5,742,921 |

  63. Pay Versus Performance Calculation Detail

    (a) The grant date fair value of equity awards represents the total of the amounts reported in the “Stock Awards” columns in the Summary Compensation Table for the applicable year. Refer to Executive Compensation — Summary Compensation Table.

  64. Analysis of the Information Presented in the Pay versus Performance Table

    Analysis of the Information Presented in the Pay versus Performance Table As described in more detail in the section “Executive Compensation – Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a variable and at-risk pay philosophy, with a significant portion of our named executive officer’ pay tied to our stock price performance, which is reflected in the CAP amounts shown in the tables above and below. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table.

  65. Compensation Actually Paid and Cumulative TSR

    Compensation Actually Paid and Cumulative TSR The relationship between (a) the amount of compensation actually paid to Mr. McDonald and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. McDonald) and (b) the Company’s cumulative TSR over the period is reflected below.

  66. Compensation Actually Paid and Net Loss

    Compensation Actually Paid and Net Loss The relationship between (a) the amount of compensation actually paid to Mr. McDonald and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. McDonald) and (b) the Company’s net loss for the years ended December 31, 2020, 2021, 2022 and 2023 is reflected in the graph below.

  67. Compensation Actually Paid and Adjusted EBITDA

    Compensation Actually Paid and Adjusted EBITDA As described above, Adjusted EBITDA as net income (loss), calculated in accordance with GAAP, adjusted for depreciation and amortization expense, interest expense, net, other expense (income), net, provision (benefit) for income taxes, stock-based compensation expense, acquisition-related expenses, non-recurring litigation costs, purchase accounting adjustments for deferred revenue and impairment of goodwill. While the Company uses numerous financial and non-financial performance measures for the purpose of evaluating performance for the Company’s compensation programs, the Company has determined that Adjusted EBITDA is the financial performance measure that, in the Company’s assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by the Company to link compensation actually paid to the Company’s NEOs, for the most recently completed fiscal year, to Company performance. The Company utilizes Adjusted EBITDA when setting goals in the Company’s short-term incentive compensation program, as well as for setting goals for the performance-based RSUs that are awarded to the NEOs. The relationship between (a) the amount of compensation actually paid to Mr. McDonald and the average amount of compensation actually paid to the Company’s NEOs as a group (excluding Mr. McDonald) and (b) the Company’s Adjusted EBITDA for the years ended December 31, 2020, 2021, 2022 and 2023 is reflected below.