DEF 14A of PagerDuty, Inc., May 2, 2023

DEF 14A of PagerDuty, Inc.

Filed May 2, 2023 · FY20230001568100-23-000021

Open on EDGAR

  1. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Jennifer Tejada AGE: 52 DIRECTOR SINCE: 2016 | Ms. Tejada has served as our Chief Executive Officer and as a member of our Board since July 2016. From July 2013 to July 2015, Ms. Tejada served as President and Chief Executive Officer at Keynote Systems, Inc., a software company specializing in digital performance analytics and web and mobile testing. Ms. Tejada currently serves on the board of directors of The Estée Lauder Companies Inc., a multinational manufacturer and marketer of beauty products, and she previously served on the board of directors of UiPath, Inc., global software company that develops a platform for robotic process automation, from September 2020 until April 2023. Prior to her role at PagerDuty, Ms. Tejada was the CEO of Keynote Systems where she led the company to strong profitable growth before its acquisition by Dynatrace in 2015. Before Keynote, Ms. Tejada was Executive Vice President and Chief Strategy Officer at the enterprise software company Mincom leading its global strategy up to its acquisition in late 2011 by ABB. She has also held senior positions at Procter & Gamble and i2 Technologies (acquired by JDA Software). Ms. Tejada holds a B.A. in Business Management and Organizational Behavior from the University of Michigan. Ms. Tejada was selected to serve on our Board because of the experience and perspective she provides as our Chief Executive Officer, as well as her broad executive experience successfully leading, scaling, and optimizing global technology companies. |

  2. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Sameer Dholakia AGE: 49 DIRECTOR SINCE: 2019 | Mr. Dholakia has served on our Board since December 2019. Mr. Dholakia has served as a partner at Bessemer Venture Partners, a venture capital and private equity firm, since May 2022, and has served as the Chief Executive Officer of Twilio SendGrid at Twilio, Inc., a cloud communication platform, from Twilio’s acquisition of SendGrid, Inc., a customer communication platform, in February 2019 to June 2020. From 2014 to February 2019, he served as the Chief Executive Officer and a member of the board of directors of SendGrid, Inc. and as Chairman of the board from September 2017 to February 2019. Prior to joining SendGrid, Mr. Dholakia served at Citrix Systems, Inc., an enterprise software company, as Group Vice President and General Manager of the Cloud Platforms group from 2011 to 2014 and as the Vice President of Marketing from 2010 to 2011. He joined Citrix in 2010 following Citrix’s acquisition of VMLogix, Inc., a provider of virtualization management software, where he served as Chief Executive Officer from 2007 to 2010. Mr. Dholakia has also served on the board of directors of ServiceTitan, Inc., a software company, since 2021. Mr. Dholakia holds a B.A. in Economics and an M.A. in Organizational Studies from Stanford University and an M.B.A. from Harvard Business School. Mr. Dholakia was selected to serve on our Board because of his wealth of knowledge in building and scaling great companies, extensive experience working in the technology sector, and senior leadership experience at technology companies. |

  3. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | William Losch AGE: 61 DIRECTOR SINCE: 2022 | Mr. Losch has served on our Board since August 2022. He has been an advisor to Okta, Inc., an identity management platform for enterprises, since his retirement as Chief Financial Officer of Okta in March 2021. From June 2013 until his retirement in March 2021, he served as Chief Financial Officer of Okta, and from June 2007 to June 2013, he served as Chief Financial Officer at MobiTV, Inc., a technology platform provider of multiscreen video delivery services. From October 2004 to May 2007, he served as the Chief Accounting Officer at DreamWorks Animation, SKG, Inc., an animation company. From March 1998 to July 2003, he served in various finance positions, most recently as Vice President of Finance and Chief Accounting Officer, at Yahoo! Inc., an internet company. Mr. Losch currently serves on the boards of directors of two private companies: Druva, Inc., a cloud data protection and management as a service and Onfido, Inc. an identity verification and authentication provider. Mr. Losch holds a B.A. in Economics from the University of California, Los Angeles. Mr. Losch was selected to serve on our Board because of his more than three decades of successful experience providing financial and operational leadership for high-performing SaaS companies. |

  4. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Alec Gallimore AGE: 59 DIRECTOR SINCE: 2020 | Dr. Gallimore has served on our Board since November 2020. Dr. Gallimore has served as the Robert J. Vlasic Dean of Engineering at the University of Michigan since 2016 and the Richard F. and Eleanor A. Towner Professor of Engineering at the University of Michigan since 2015. He has held various positions of increasing responsibility at the University of Michigan since joining the institution in 1992. Starting on July 1, 2023, Dr. Gallimore will serve as Duke University’s next provost and chief academic officer. Dr. Gallimore has served on several NASA and U.S. Department of Defense boards and studies, including as a member of the United States Air Force Scientific Advisory Board. He is a fellow of the American Institute of Astronautics and Aeronautics and a member of the National Academy of Engineering. Dr. Gallimore currently serves on the board of directors for ANSYS, Inc., an engineering simulation software company, on the board of trustees for the Institute for Defense Analyses (a not-for-profit entity), and as a non-executive director for Bechtel Corporation, an engineering, procurement, construction, and project management company. Dr. Gallimore holds a B.S. in Aeronautical Engineering from Rensselaer Polytechnic Institute and an M.A. and Ph.D. in Aerospace Engineering, with a focus on plasma physics, from Princeton University. Dr. Gallimore was selected to serve on our Board because of his extensive technical expertise and experience, and leadership in engineering R&D and education. |

  5. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Rathi Murthy AGE: 57 DIRECTOR SINCE: 2019 | Ms. Murthy has served on our Board since March 2019. Since June 2021, Ms. Murthy has served as the President & Chief Technology Officer of Expedia Group, managing all of product and technology. Ms. Murthy previously served as the Chief Technology Officer of Verizon Media, a division of Verizon Communications, Inc., a telecommunications company, from January 2020 until May 2021. Ms. Murthy served as Chief Technology Officer at Gap Inc., a clothing and accessories retailer, from March 2016 to January 2020. From September 2012 to March 2016, Ms. Murthy served in various roles at American Express Company, a multinational financial services company, including Senior Vice President and Chief Information Officer of Enterprise Growth from January 2015 to March 2016 and Vice President, Technology from September 2012 to January 2015. Ms. Murthy holds a B.S. in Electrical Engineering from Bangalore University and an M.S. in Computer Engineering from Santa Clara University. Ms. Murthy was selected to serve on our Board because of her extensive technology and engineering experience, developing and building platforms and products for emerging technologies, and senior leadership experience in technology at public companies. |

  6. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Alex Solomon AGE: 40 DIRECTOR SINCE: 2010 | Mr. Solomon co-founded our company and has served as our General Manager of Flexible Platform since January 2021, and as a member of our Board since November 2010. Mr. Solomon served as our Chief Technology Officer from July 2016 to January 2021, and as our Chief Executive Officer from May 2010 to July 2016. Mr. Solomon holds a B.S.E. from the University of Waterloo. Mr. Solomon was selected to serve on our Board because of his experience as our co-founder and former Chief Executive Officer. |

  7. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Elena Gomez AGE: 53 DIRECTOR SINCE: 2018 | Ms. Gomez has served on our Board since October 2018. Ms. Gomez is currently the Chief Financial Officer of Toast, Inc., a cloud-based restaurant software company. From May 2016 until May 2021, Ms. Gomez served as Chief Financial Officer at Zendesk, Inc., a global company that builds software for customer service and engagement. From July 2010 to April 2016, Ms. Gomez served in senior finance roles at Salesforce, Inc., a global enterprise software company, including Senior Vice President Go To Market Distribution from July 2015 to April 2016, Vice President Sales and Support and Marketing Finance from June 2011 to June 2015, and Senior Director Marketing and General and Administrative Finance from July 2010 to June 2011. Prior to that, she held finance roles at Visa Inc., a financial services company, and The Charles Schwab Corporation, a brokerage and banking company. Ms. Gomez currently serves on the board of directors of Smartsheet Inc. and on the board of directors of the Haas School of Business at the University of California, Berkeley. Ms. Gomez holds a B.S. in Business Administration from the Haas School of Business at the University of California, Berkeley. Ms. Gomez was selected to serve on our Board because of her financial expertise as well as her extensive experience working in the technology sector and senior leadership experience at technology companies and public companies. |

  8. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Zachary Nelson AGE: 61 DIRECTOR SINCE: 2018 | Mr. Nelson has served on our Board since June 2018. Since December 2021, he has served as Chief Executive Officer of ZE Investments, a private investment company. From July 2002 to June 2017, Mr. Nelson served as the Chief Executive Officer at NetSuite Inc., a business management software company that was acquired by Oracle Corporation, a computer technology company, in November 2016. Since August 2021, Mr. Nelson has served on the board of directors as well as the audit committee of Freshworks, Inc., a software solutions company. Since January 2022, he has served on the board of directors of Snyk Limited, a provider of developer-first tooling and security intelligence. Mr. Nelson holds a B.S. in Biological Sciences and an M.A. in Anthropology from Stanford University. Mr. Nelson was selected to serve on our Board because of his experience building and scaling high-velocity cloud software companies and senior leadership experience at technology companies. |

  9. WHEN ARE STOCKHOLDER PROPOSALS AND DIRECTOR NOMINATIONS DUE FOR NEXT YEAR’S ANNUAL MEETING?

    | Bonita Stewart AGE: 65 DIRECTOR SINCE: 2021 | Ms. Stewart has served on our Board since January 2021. Since 2006, Ms. Stewart has served in various roles at Google, Inc., a wholly-owned subsidiary of Alphabet Inc., a global technology company, including her current role as Board Partner for Gradient Ventures, Google’s early stage venture fund investing in artificial intelligence enabled companies. At Google, Ms. Stewart previously served as Vice President, Global Partnerships from July 2016 to June 2020; as Vice President, Americas, Partner Business Solutions from August 2012 to December 2015; as Vice President, U.S. Sales and Operations from 2011 to 2012; as Managing Director, U.S. Sales from 2009 to 2010; and as Industry Director, U.S. Automotive from 2006 to 2009. Ms. Stewart has served on the board of directors of Deckers Outdoor Corporation, a footwear design and distribution company, since September 2014. She also served on the boards of directors of PluralSight, Inc., a leading cloud- based technology skills development platform, from October 2018 to April 2021, and Volta, Inc., an electric vehicle charging infrastructure network, from August 2021 until March 2023. Ms. Stewart holds a B.A. degree in Journalism from Howard University and an M.B.A. degree from Harvard Business School. Ms. Stewart was selected to serve on our Board because of her extensive experience leading multi-billion dollar operations, accelerating digital technology adoption and driving business transformation for major corporations in the IT, automotive and technology fields. |

  10. CONSIDERATIONS IN EVALUATING DIRECTOR NOMINEES

    CONSIDERATIONS IN EVALUATING DIRECTOR NOMINEES Our Nominating Committee uses a variety of methods for identifying and evaluating potential director candidates. In its evaluation of director candidates, including the current directors eligible for re-election, our Nominating Committee will consider the current size and composition of our Board and the needs of our Board and the respective committees of our Board. Some of the qualifications that our Nominating Committee considers include, without limitation, experience of particular relevance to us and our Board, accomplishments, superior credentials, independence, area of expertise, and the highest ethical and moral standards. Although our Board does not maintain a specific policy with respect to board diversity, our Board believes that the Board should be a diverse body, and the Nominating Committee considers a broad range of backgrounds and experiences. Our Board regularly assesses the diversity of its members and nominees as part of its annual evaluation process. Our Board believes that our directors represent a diverse and broad range of attributes, qualifications, experiences, and skills to provide an effective mix of viewpoints and knowledge. Our Board includes four female directors and a majority of the directors on our Board are from underrepresented minority groups. In making determinations regarding nominations of directors, the Nominating Committee may take into account the benefits of diverse viewpoints. Any search firm retained by our Nominating Committee to find director candidates would be instructed to take into account all of the considerations used by our Nominating Committee. After completing its review and evaluation of director candidates, our Nominating Committee recommends to our full Board the director nominees for selection.

  11. STOCKHOLDER RECOMMENDATIONS FOR NOMINATIONS TO THE BOARD OF DIRECTORS

    | Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1)(2) | Stock Awards ($)(1)(2) | All Other Compensation ($) | Total ($) | | Sameer Dholakia | 51,048 | — | 184,988 | — | 236,036 | | Alec Gallimore | 45,000 | — | 184,988 | — | 229,988 | | Elena Gomez | 55,000 | — | 184,988 | — | 239,988 | | William Losch(3) | 21,699 | — | 449,988 | — | 471,687 | | Rathi Murthy | 50,500 | — | 184,988 | — | 235,488 | | Zachary Nelson | 54,000 | — | 184,988 | — | 238,988 | | Alex Solomon(4) | — | — | 904,640 | 281,646 | 1,186,286 | | Bonita Stewart | 49,000 | — | 184,988 | — | 233,988 |

  12. FISCAL 2023 EXECUTIVE COMPENSATION RESULTS

    (the “2019 Equity Plan”) that may be earned based on the achievement of the annual net new annual recurring revenue (“nnARR”) growth target for fiscal 2023 and satisfaction of a three-year time-based vesting schedule. We granted PSU awards with a target grant value in the amount of $10,000,000 to Ms. Tejada and with a target grant date value of $2,100,000 to each of Messrs. Wilson and Justice, and in July 2022 as part of her new hire award, we granted a PSU award to Ms. Webb with a target grant date value in the amount of $1,665,000. Ms. Giamalis did not receive a grant in fiscal year 2023 in light of her termination. Because we did not meet our threshold performance level of 80% of target necessary to earn 50% of the target PSUs, our NEOs did not earn any payout under their PSU awards for fiscal 2023, and accordingly, the PSU awards were canceled for no consideration. •Long-Term Incentive Compensation – RSU Awards – Equity compensation opportunities in the form of time-based restricted stock unit (“RSU”) awards with a four year time-based vesting under 2019 Equity Plan that may be settled for shares of our common stock with a target grant date fair values in the amount of $10,000,000 to Ms. Tejada and with target grant date values of $4,900,000 to each of Messrs. Wilson and Justice. In July 2022, as part of her new hire award, we granted RSU awards with a target grant date value in the amount of $3,885,000 to Ms. Webb.

  13. EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES

    EXECUTIVE COMPENSATION PHILOSOPHY AND OBJECTIVES Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary objectives: ▪Provide market competitive compensation and benefit levels that will attract, retain, motivate, and reward a highly talented team of executive officers within the context of responsible cost management; ▪Establish a direct link between our financial, operational, and strategic objectives and results, as well as our values, and the compensation of our executive officers; ▪Align the interests and objectives of our executive officers with those of our stockholders by linking the long-term incentive compensation opportunities to stockholder value creation and their cash incentives to our annual performance; ▪Ensure that our executive compensation philosophy is built on the foundation of equitable pay and that we maintain pay equity considering each executive officer’s role, commensurate experience and skills; and ▪Offer total compensation opportunities to our executive officers that are competitive, fair, and equitable. We structure the annual compensation of our NEOs using three principal elements: base salary, annual short-term incentive compensation opportunities and long-term incentive compensation opportunities in the form of equity awards. While the pay mix may vary from year to year, the ultimate goal is to achieve our compensation objectives as described above. While we have not adopted strict year-to-year policies or guidelines for allocating compensation between current and long-term compensation, between cash and non-cash compensation, or among different forms of non-cash compensation, we believe our executive compensation program is reasonable, competitive and appropriately balances our goals and aligns NEOs’ interests with those of our stockholders. To ensure this alignment and to motivate and reward individual initiative and effort, a substantial portion of our NEOs’ target annual total direct compensation opportunity is both variable in nature and “at-risk.” Our compensation philosophy emphasizes variable compensation that appropriately rewards our NEOs through two separate compensation elements: ▪First, we provide the opportunity to participate in our annual short-term incentive compensation plan (or, in the case of our Chief Revenue Officer, a sales commission plan), which provides cash payments based on the level of attainment of the short-term financial, operational, and strategic objectives set forth in our annual operating plan. ▪Equity awards comprise the primary “at-risk” portion of our NEOs’ compensation packages. In order to strengthen our pay-for-performance philosophy, the fiscal 2023 PSU awards comprise a majority of our NEOs’ target total direct compensation opportunities, the value of which depends entirely on a rigorous internal performance metric that drives long-term growth and influences the appreciation in the value of our common stock, thereby further incentivizing our NEOs to build sustainable long-term value for the benefit of our stockholders. Each year, these variable pay elements ensure that our NEOs’ target total direct compensation is variable (rather than fixed), such that the amounts payable are commensurate with our actual performance and aligned with stockholder value creation. We believe that this design provides balanced incentives for our NEOs to drive financial performance and long-term growth.

  14. STOCKHOLDER ADVISORY VOTES ON NEO COMPENSATION

    A majority of stockholders expressed a concern regarding a limited ratio of performance-based equity incentives in our CEO’s long-term incentive program design, which the Compensation Committee addressed by increasing the ratio of PSUs in fiscal 2023 to 50% (from 17% in fiscal 2022) of the CEO’s annual target long-term incentive award opportunity. The same ratio of PSUs was maintained for fiscal 2024 equity awards. Specific feedback that we received from our stockholders and our responses to their perspectives are summarized below.

  15. STOCKHOLDER ADVISORY VOTES ON NEO COMPENSATION

    | What we heard | What we did in response | | A majority of stockholders expressed a preference to see at least 50% of the CEO’s long-term incentive opportunities delivered in the form of PSUs | Consistent with the stockholder feedback obtained prior to our 2022 annual meeting, for fiscal 2023, the Compensation Committee increased the ratio of PSUs for our Chief Executive Officer to 50% from 17% of the long-term incentive opportunity to foster a stronger alignment with the interests of our stockholders. Underscoring the rigor of the performance targets and our commitment to our pay-for-performance philosophy, fiscal 2023 PSUs were canceled in full based on the achieved performance results that fell below the aggressive target and threshold performance level. In response to stockholder feedback obtained following our 2022 annual meeting, the Compensation Committee maintained the 50% ratio of PSUs for our CEO’s long-term incentive program in fiscal 2024. In addition to the Compensation Committee maintaining the 50% ratio of PSUs for our CEO’s long-term incentive program, the Compensation Committee also maintained the other NEOs 70%/30% ratio of RSUs and PSUs to ensure there is a sufficient ratio of performance awards for all NEOs. | | Several stockholders expressed a preference to see diversified and expanded performance metrics in the long-term incentive program design to align with our broader long-term growth priorities | In response to stockholder feedback, for fiscal 2024 the Compensation Committee has added a relative TSR metric to our PSU awards to incentivize our relative TSR performance as compared to the S&P Software & Services Select Index. We believe that this enhancement will strengthen the alignment between the long-term incentive compensation opportunity provided to our CEO and our other named executive officers with creating sustainable long-term stockholder value while maintaining net new ARR as our leading objective for generating future growth. Net new ARR remains a key driver of our long-term growth and has been the financial performance measure used in our PSU awards for the past two fiscal years. We believe that using annual net new ARR growth goals encourage our named executive officers to work diligently to perform at “stretch” performance levels each year. The two performance measures for our fiscal 2024 PSU awards have been weighted 60% for net new ARR and 40% for relative TSR. | | Several stockholders inquired about the rigor of the net new ARR metric for the PSU awards | The Compensation Committee goal in setting executive compensation is to balance aligning our executive compensation to stockholder value and long-term growth priorities as well as retaining the executives. The Compensation Committee believes that the performance goals were suitably rigorous, as demonstrated by the fact that the PSU awards granted to our NEOs in fiscal 2023 did not pay out because the threshold performance level was not achieved despite the company exceeding guidance and consensus expectations consistently. The Compensation Committee seeks to ensure that the target levels established for our PSU awards are sufficiently rigorous such that achievement requires a high level of performance by our named executive officers. |

  16. SETTING TARGET TOTAL DIRECT COMPENSATION

    SETTING TARGET TOTAL DIRECT COMPENSATION The Compensation Committee reviews the base salary levels, annual short-term incentive opportunities, and long-term incentive compensation opportunities of our NEOs and all related performance criteria at the beginning of each year, or more frequently as warranted. Adjustments are generally effective in the first quarter of the fiscal year. In making decisions about the compensation of our NEOs the Compensation Committee relies primarily on the general experience of its members and subjective considerations of various factors, including the following: •our executive compensation program objectives; •our performance against the financial, operational, and strategic objectives established by the Compensation Committee and our Board; •each individual NEO’s knowledge, skills, experience, qualifications, and tenure relative to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •the scope of each NEO’s role and responsibilities compared to other similarly-situated executives at the companies in our compensation peer group and in selected broad-based compensation surveys; •the performance of each individual NEO, based on a subjective assessment of his or her contributions to our overall performance, ability to lead his or her business unit or function, and work as part of a team; •the potential of each individual executive officer to contribute to our long-term financial, operational, and strategic objectives; •our CEO’s compensation relative to that of our NEOs, and pay equity among our NEOs; •our financial performance relative to our compensation and performance peers; •the compensation practices of our compensation peer group and reflected in selected broad-based compensation surveys and the positioning of each NEO’s compensation in a ranking of compensation levels based on an analysis of competitive market data; •the feedback received from our stockholders and the results of our annual say-on-pay advisory votes of our stockholders; and •the recommendations of our CEO with respect to the compensation of our other NEOs. These factors provide the framework for compensation decision-making and final decisions regarding the compensation opportunity for each NEO. No single factor is determinative in setting compensation levels, nor is the impact of any individual factor on the determination of pay levels quantifiable. The Compensation Committee does not weight these factors in any predetermined manner, nor does it apply any formulas in developing its compensation recommendations. The members of the Compensation Committee consider all of this information in light of their individual experience, knowledge of the Company, knowledge of the competitive market, knowledge of each NEO, and business judgment in making their recommendations. The Compensation Committee also considers the potential risks in our business when designing and administering our executive compensation program, and we believe our balanced approach to performance measurement and pay delivery works to avoid misaligned incentives for individuals to undertake excessive or inappropriate risk.

  17. ROLE OF MANAGEMENT

    ROLE OF MANAGEMENT In discharging its responsibilities, the Compensation Committee works with members of our management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, competitive market data, and management’s perspective and recommendations on compensation matters. Typically, our CEO will make recommendations to the Compensation Committee regarding compensation matters, including adjustments to annual cash compensation, long-term incentive compensation opportunities, and program structures, for our NEOs, except with respect to her own compensation. At the beginning of each year, our CEO reviews the performance of our other NEOs based on such individual’s level of success in accomplishing the business objectives established for him or her for the prior year and his or her overall performance during that year, and then shares these evaluations with, and makes recommendations to, the Compensation Committee for each element of compensation as described above. The annual business objectives for each NEO are developed through mutual discussion and agreement between our CEO and the other NEOs and are reviewed with our Board. The Compensation Committee reviews and discusses these recommendations and proposals with our CEO and uses them as one factor in determining and approving the compensation for our other NEOs. Our CEO often attends meetings of our Board and the Compensation Committee at which executive compensation matters are addressed, and makes recommendations to our Compensation Committee regarding the total compensation of the other NEOs, but is not present during discussion, deliberation and decisions regarding her own compensation. The Compensation Committee then reviews the recommendations and other data and makes decisions as to the total compensation for each NEO, as well as the allocation of the amount of total compensation between base salary, short-term incentives, and long-term incentives.

  18. ROLE OF COMPENSATION CONSULTANT

    ROLE OF COMPENSATION CONSULTANT The Compensation Committee engages an external compensation consultant to provide information, analysis, and other advice relating to our executive compensation program, to assist the Compensation Committee in developing appropriate incentive compensation plans for our executive officers, to provide it with advice and ongoing recommendations regarding material executive compensation decisions resulting from its annual executive compensation review, and to review the compensation proposals of management. The compensation consultant reports directly to the Compensation Committee and its chair, and serves at the discretion of the Compensation Committee, which reviews the engagement annually. For fiscal 2023, the Compensation Committee retained Compensia, Inc. (“Compensia”), a national compensation consulting firm, to serve as its compensation advisor to advise on executive compensation matters, including competitive market pay practices for our NEOs, and with the data analysis and selection of the compensation peer group. During fiscal 2023, Compensia attended the meetings of the Compensation Committee (both with and without management present) as requested and provided various services, including the following: •consulting with the Compensation Committee chair and other members between Compensation Committee meetings; •providing competitive market data based on the compensation peer group and data cuts from selected broad-based compensation surveys for our NEO positions and evaluating how the compensation we pay our NEOs compares both to our performance and to how the companies in our compensation peer group and the broad-based compensation surveys compensate their executives; •reviewing and analyzing the base salary levels, annual incentive short-term incentive opportunities, and long-term incentive compensation opportunities of our NEOs and other executive officers; •reviewing and analyzing the cash and equity compensation levels for the non-employee members of our Board; •assessing executive compensation trends within our industry, and updating on corporate governance and regulatory issues and developments; •reviewing competitive market design and practices for short-term incentive compensation and long-term incentive compensation programs in the software sector;; •reviewing competitive market design and practices for stock ownership policies; •projecting equity usage in fiscal 2023 and conducting a “burn rate” and “equity overhang” analysis;

  19. ROLE OF COMPENSATION CONSULTANT

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  20. ROLE OF COMPENSATION CONSULTANT

    •reviewing our executive compensation disclosure assisting with the preparation of our CEO pay ratio disclosure; •reviewing and updating the compensation peer group; •assessing compensation risk to determine whether our compensation policies and practices are reasonably likely to have a material adverse impact on the Company; and •supporting other ad hoc matters throughout the year. Compensia did not provide any services to us in fiscal 2023 other than the consulting services to the Compensation Committee. The Compensation Committee regularly reviews the objectivity and independence of the advice provided by its compensation consultant on executive compensation matters. The Compensation Committee has evaluated Compensia’s engagement, and based on the six factors for assessing independence and identifying potential conflicts of interest that are set forth in Exchange Act Rule 10C-1(b)(4), the listing standards of the NYSE, and such other factors as were deemed relevant under the circumstances, has determined that Compensia is independent and that its relationship with Compensia and the work of Compensia on behalf of the Compensation Committee did not raise any conflict of interest or similar concerns.

  21. COMPETITIVE POSITIONING

    COMPETITIVE POSITIONING For purposes of assessing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a select group of peer companies. This compensation peer group consists of technology companies that are similar to us in terms of revenue, market capitalization, geographical location, and industry sector. The companies in the compensation peer group for fiscal 2023 were approved by the Compensation Committee in August 2021 on the basis of their similarity to us, as determined using the following criteria: •Location – public companies headquartered in the United States, with a preference for California-based companies; •Industry Sector – companies in the software or internet services sector; •Revenue – approximately 0.4x to approximately 2.5x our last four fiscal quarters revenue of approximately $227 million (approximately $90 million to $570 million); •Market Capitalization – approximately 0.3x to approximately 3.0x our then current 30-day average market capitalization of approximately $3.5 billion (approximately $1.0 billion to $10.4 billion); •Growth – companies with one-year revenue growth greater than 10%; and •Market Status – preference for companies having recently completed their initial public offering of equity securities. In selecting the fiscal 2023 compensation peer group, we selected companies that, as a group, have a median revenue and market capitalization similar to our revenue and market capitalization. Our compensation peer group for fiscal 2023 included the following companies:

  22. COMPETITIVE POSITIONING

    | Alteryx | Domo | Rapid 7 | | Anaplan | Everbridge | Smartsheet | | AppFolio | Fastly | Sprout Social | | Asana | Five9 | Workiva | | Bill.com Holdings | JFrog | Yext | | BlackLine | Momentive Global | Zuora | | Coupa Software | New Relic | |

  23. COMPETITIVE POSITIONING

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  24. COMPETITIVE POSITIONING

    Our Compensation Committee considered, as a guide, the compensation practices of the compensation peer group to assess the competitiveness of each compensation element and overall compensation levels (base salary, target short-term incentive opportunities, and long-term incentive compensation). To analyze the compensation practices of the companies in our compensation peer group, Compensia gathered data from public filings (primarily proxy statements) of the peer group companies, as well as from a peer custom cut (other than Domo and Sprout Social which do not participate in the survey) of the Radford Global Technology Survey covering our primary and reference peer groups. This market data was then used as a reference point for the Compensation Committee to assess our current compensation levels in the course of its deliberations on compensation forms and amounts. The Compensation Committee reviews our compensation peer group each year (unless there have been significant changes to either our business model or market capitalization or our peer companies’ business model or market capitalization or significant merger and acquisition activity involving our peer companies, in which case the Compensation Committee may review our compensation peer group more frequently) and makes adjustments to its composition if warranted, taking into account changes in both our business and the businesses of the companies in the peer group. Executive Transition

  25. COMPENSATION ARRANGEMENTS FOR MS. WEBB

    COMPENSATION ARRANGEMENTS FOR MS. WEBB In connection with her appointment as our Senior Vice President, Legal and General Counsel, we entered into an employment offer letter dated March 25, 2022 (the “Employment Letter”) with Ms. Webb. Pursuant to the Employment Letter, our initial compensation arrangements with Ms. Webb were as follows: •an initial annual base salary of $400,000; •a target annual cash bonus amount equal to 55% of her annual base salary and representing approximately 35% of total cash compensation; •an RSU award granted on July 2, 2022 under our 2019 Equity Plan with a target grant value of $3,885,000 that will vest and settle as to 1/16th of the total number of units subject to the award on each quarterly anniversary of July 2, 2022, subject to her Continuous Service (as defined in our 2019 Equity Plan) through each applicable vesting date; and •a PSU award granted on July 2, 2022 under our 2019 Equity Plan with a target grant value of $1,665,000 that is subject to the same performance conditions and vesting requirements as the PSU awards granted to our other NEOs on April 2, 2022. Ms. Webb was also designated as a Tier 2 participant in the Severance Policy. Ms. Webb’s Employment Letter was approved by the Compensation Committee. In establishing her initial compensation arrangements, we took into consideration the requisite experience and skills that a qualified candidate would need to assume the legal and related responsibilities for a growing business in a dynamic and ever-changing environment, the competitive market for similar positions at other comparable companies based on a review of compensation survey data, and the need to integrate her into the executive compensation structure that we had developed since our initial public offering of our equity securities, balancing both competitive and internal equity considerations. For a summary of the material terms and conditions of Ms. Webb’s post-employment compensation arrangements, see “Executive Compensation – Potential Payments upon Termination or Change in Control.”

  26. SHORT-TERM INCENTIVE AWARDS

    SHORT-TERM INCENTIVE AWARDS In March 2022, the Compensation Committee approved the Fiscal 2023 Short-Term Incentive Program (the “Fiscal 2023 Bonus Plan”) under the PagerDuty, Inc. Cash Incentive Bonus Plan to provide financial incentives to participants (including each NEO other than Mr. Justice, who participated in a separate sales commission plan) to achieve our key annual financial, operational, and strategic objectives as set forth in our fiscal 2023 annual operating plan and to maximize individual performance. The Compensation Committee approved the Fiscal 2023 Bonus Plan after taking into consideration the objectives set forth in our fiscal 2023 annual operating plan approved by our Board. The Fiscal 2023 Bonus Plan provided for annual cash bonus payouts to each of our NEO participants based entirely on our level of achievement with respect to designated corporate performance objectives. To be eligible to earn a bonus under the Fiscal 2023 Bonus Plan, a participant had to commence employment with us no later than 90 days from the end of the applicable program period, which aligned to our fiscal year, and] remain continually employed by, and in good standing with, us through the applicable payout date of the bonus.

  27. TARGET ANNUAL CASH BONUS AMOUNTS

    TARGET ANNUAL CASH BONUS AMOUNTS For purposes of the Fiscal 2023 Bonus Plan, the amount of the annual cash bonus payout each participant was eligible to earn was based upon a percentage of such participant’s annual base salary as of the beginning of the fiscal year. In March 2022, the Compensation Committee reviewed the target annual cash bonus amounts of our executive leadership team and direct reports to Ms. Tejada, including our other NEOs, taking into consideration the competitive market analysis prepared by its compensation consultant, the recommendations of Ms. Tejada (except with respect to her own target annual cash bonus amount), and the other factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. Following this review, the Compensation Committee maintained the target annual cash bonus amounts (as a percentage of base salary) for Ms. Tejada, Mr. Wilson and Ms. Giamalis at their fiscal 2022 levels, with such amounts to be effective for fiscal 2023. In connection with her appointment as our Senior Vice President, Legal and General Counsel in July 2022, the Compensation Committee approved a target annual cash bonus amount for Ms. Webb equal to 55% of her annual

  28. TARGET ANNUAL CASH BONUS AMOUNTS

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  29. TARGET ANNUAL CASH BONUS AMOUNTS

    base salary and representing 35% of her total cash compensation based on a review of market data from the compensation consultant. The target bonus amounts of our NEOs (other than Mr. Justice) for purposes of the Fiscal 2023 Bonus Plan were as follows:

  30. TARGET ANNUAL CASH BONUS AMOUNTS

    | NEO | Fiscal 2023 Target Bonus (as a Percentage of Base Salary) (%) | Fiscal 2023 Target Bonus (as a Percentage of Total Cash Compensation) (%) | Fiscal 2023 Target Bonus Amount ($)(1) | | Ms. Tejada | 100 | 50 | 600,000 | | Mr. Wilson | 70 | 41 | 319,118 | | Ms. Webb (2) | 55 | 35 | 220,000 | | Ms. Giamalis (3) | 40 | 29 | 135,816 |

  31. TARGET ANNUAL CASH BONUS AMOUNTS

    (1)The Target Bonus Amount for our NEOs (other than Mr. Justice) is based on the NEO’s ending annualized base salary for fiscal 2023. (2)Ms. Webb’s Fiscal 2023 Target Bonus Amount is shown as if Ms. Webb started at the beginning of fiscal 2023. (3)Ms. Giamalis’ employment with us terminated on May 6, 2022 and, therefore, she was not eligible to receive a bonus payment under the Fiscal 2023 Bonus Plan. Potential bonus payouts for our NEOs under the Fiscal 2023 Bonus Plan could range from zero to 200% of their target annual cash bonus amount, as determined by the Compensation Committee.

  32. CORPORATE PERFORMANCE MEASURES

    CORPORATE PERFORMANCE MEASURES The Compensation Committee selected GAAP revenue and Non-GAAP operating margin as the corporate performance measures under the Fiscal 2023 Bonus Plan because the Compensation Committee believed that these measures were the best indicators of our successful execution of our annual operating plan. The Compensation Committee carefully selected rigorous performance targets in order to provide significant incentives to our NEOs if they achieved the target performance levels. For purposes of the Fiscal 2023 Bonus Plan, revenue was to be weighted as 75% of the target annual cash bonus amount and operating margin was to be weighted at 25% of the target annual cash bonus amount. The actual bonus amounts attributable to each of the performance measures could be greater or less than the target level established for revenue of $363 million and for operating margin of (5%), as reflected in the following graphs:

  33. CORPORATE PERFORMANCE MEASURES

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  34. CORPORATE PERFORMANCE MEASURES

    For purposes of the Fiscal 2023 Bonus Plan: •“Revenue” meant our GAAP revenue as defined in our periodic reports filed with the Securities and Exchange Commission for fiscal 2023. •The actual bonus amount attributable to the revenue performance measure could be greater or less than the target established for revenue of $363 million. Achievement of less than 90% of the target established for revenue would result in a bonus payout of 0%. Achievement of 90% of the target established for revenue would result in a bonus payout of 50% of target. Achievement of 108% of the target established for revenue would result in a bonus payout of 200% of target. •“Operating margin” meant our non-GAAP operating margin(1) as defined in our periodic reports filed with the Securities and Exchange Commission for fiscal 2023. We define “non-GAAP operating margin” as GAAP operating margin excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and restructuring costs. We believe that these expenses are not necessarily reflective of operational performance during a period. In particular, we believe the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses. •The actual bonus amount attributable to the operating margin performance measure could be greater or less than the target established for operating margin of (5%). Achievement of less than 80% of the target established for operating margin would result in a bonus payout of 0%. Achievement of 80% of the target established for operating margin would result in a bonus payout of 50% of target. Achievement of 200% of the target established for operating margin would result in a bonus payout of 200%. (1)To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use certain non-GAAP financial measures. For a full reconciliation of the U.S. GAAP to non-GAAP measures, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Non-GAAP Financial Measures” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2023. Each measure is independent of the other. The payout for attainment between any two achievement levels for the revenue and operating margin performance measures described above would be determined on a straight-line interpolation basis.

  35. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    FISCAL 2023 SHORT-TERM INCENTIVE AWARD In March 2023, the Compensation Committee determined the annual cash bonus payouts under the Fiscal 2023 Bonus Plan for our employees, including our NEOs who participated in the Fiscal 2023 Bonus Plan. The Compensation Committee reviewed our actual performance against the aggressive goals on accelerated growth that it set for fiscal 2023 and certified that we achieved revenue representing attainment of 102.2% of our revenue target for the year resulting in a payout percentage of 121.6%. The Compensation Committee also certified that we had achieved an operating margin representing

  36. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

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  37. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    218% of our operating margin target for the year resulting in a payout percentage of 200%, the maximum achievable payout. These achievements were even more exceptional when considering that the Compensation Committee established aggressive goals in the beginning of the year that if achieved would ensure revenue growth on a larger base, and they laid a path to improve long term operating leverage. Both our revenue and operating margin goal targets were higher than our target and actual achievement levels for fiscal 2022.

  38. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    | | FY23 Revenue (GAAP) | | | | | Payout (%) | Performance to Target (%) | Financial ($M) | | Minimum Threshold | 50 | 90 | 326.7 | | Target | 100 | 100 | 363.0 | | | 120 | 102 | 370.3 | | | 140 | 104 | 376.5 | | Maximum | 200 | 108 | 392.0 | | Actual | | 102 | 370.8 |

  39. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    | | FY23 Op Loss Margin (Non-GAAP) | | | | | Payout (%) | Performance to Target (%) | Op Loss Margin (%) | | Minimum Threshold | 50 | 80 | (6.0) | | Target | 100 | 100 | (5.0) | | | 120 | 120 | (4.0) | | | 140 | 160 | (2.0) | | Maximum | 200 | 200 | — | | Actual | | 200 | 0.9 |

  40. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    Based on the respective weighting of each corporate performance measure, the Compensation Committee approved bonuses for each of our NEOs who participated in the Fiscal 2023 Bonus Plan equal to approximately 141.2% of their target bonus amounts, as reflected below:

  41. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    | NEO | Target Annual Cash Bonus Payout ($)(1) | Actual Annual Cash Bonus Payout ($) | Percentage of Target Annual Cash Bonus Actually Paid (%) | | Ms. Tejada | 587,068 | 828,941 | 141.2 | | Mr. Wilson | 363,623 | 445,660 | 141.2 | | Ms. Webb(2) | 169,972 | 240,001 | 141.2 |

  42. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

    (1)Target annual cash bonus payout amounts for the NEOs listed in the table above are calculated based on their annualized base salary, and not their base salary amounts earned in fiscal 2023. (2)The Bonus payable to Ms. Webb is pro-rated for the period of time in which Ms. Webb was eligible to participate in the Program during the Program Year when hired by the Company.

  43. FISCAL 2023 SHORT-TERM INCENTIVE AWARD

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  44. SALES COMMISSION PLAN

    SALES COMMISSION PLAN As our Executive Vice President, Chief Revenue Officer, Mr. Justice’s short-term incentive compensation was based primarily on his ability to drive annual sales results and secondarily on meeting our non-GAAP operating margin performance goal described above under our Fiscal 2023 Bonus Plan. Pursuant to our Fiscal 2023 Sales Compensation Plan (the “2023 Sales Plan”) under the PagerDuty, Inc. Cash Incentive Bonus Plan, Mr. Justice was eligible to earn a target variable commission equal to 100% of his fiscal 2023 annual base salary, or $450,000 In fiscal 2023, 80% of Mr. Justice’s annual commission was based on our sales team’s performance in achieving our annual nnARR bookings target for the year. This amount was measured and paid monthly based on our actual performance against our nnARR targets for the year. This commission amount was to be paid linearly until he reached our target performance level for the year, at which point various accelerators would be triggered that could pay anywhere from two and one-half times the commission rate if we exceeded the target performance level up to 110% of the target performance level, up to three times the commission rate if we exceeded 110% of the target performance level up to 120% of the target performance level, and up to four times the commission rate if we exceeded 120% of the target performance level up to 130% of the target performance level, with payout capped at 200% of the sales team’s target performance level. The “commission rate” was calculated as the target commission divided by the nnARR target. Mr. Justice earned an aggregate payout for fiscal 2023 of $352,468 by meeting 80% of the target with respect to this 80% portion of his commission. The performance target levels for annual nnARR are not disclosed because we believe to do so would be competitively harmful, as it would give competitors insight into our strategic and financial planning processes. The Compensation Committee set the target for the nnARR performance measure at a level that it determined to be rigorous and challenging and that would require extraordinary efforts, excellent leadership, effective leveraging of our competencies, and a focus on driving results. In addition, the Compensation Committee selected a nnARR target that exceeded our prior year performance. The remaining 20% of Mr. Justice’s annual commission for fiscal 2023 was dependent on our operating margin performance based on the same performance target and payout methodology that was established for the Fiscal 2023 Bonus Plan as described above. This amount was to be measured and paid after the end of the year based on actual performance against our operating margin target under the Fiscal 2023 Bonus Plan. As under the Fiscal 2023 Bonus Plan, this payout was also capped at 200% of our operating margin performance. Since we achieved operating margin representing 218% of our operating margin target for the year, Mr. Justice earned a payout of $180,000 with respect to this 20% portion of his commission. Based on this performance, for fiscal 2023, Mr. Justice earned a cash bonus under his sales commission plan in the amount of $532,467, or 118% of his target variable commission. The annual short-term incentive compensation payments made to our NEOs for fiscal 2023 are set forth in the “Summary Compensation Table for Fiscal Year 2023” below under the heading “Executive Compensation.”

  45. LONG-TERM INCENTIVE COMPENSATION

    LONG-TERM INCENTIVE COMPENSATION We view long-term incentive compensation in the form of equity awards as a critical element of our executive compensation program. The realized value of these equity awards bears a direct relationship to our stock price, and, therefore, these awards are an incentive for our NEOs to create value for our stockholders. Equity awards also help us retain qualified executive officers in a competitive market. We currently grant equity awards under the PagerDuty, Inc. 2019 Equity Incentive Plan (the ‘2019 Equity Plan”). Long-term incentive compensation opportunities in the form of equity awards are granted to our executive officers, including our NEOs, by the Compensation Committee. The amount and forms of such equity awards are determined after considering the factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. The amounts of the equity awards are also intended to provide competitively-sized awards and resulting target total direct compensation opportunities that the Compensation Committee believes are reasonable and appropriate taking into consideration the factors described in the preceding sentence. In addition, the Compensation Committee’s goal of increasing the long-term incentive compensation was to reinforce retention considering our CEO’s high vested percentage and low unvested value. The Compensation Committee’s decision to update the ratio of our RSU and PSU grant mix was a result of the committee balancing market practice and stockholder value creation.

  46. LONG-TERM INCENTIVE COMPENSATION

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  47. ANNUAL EQUITY AWARDS

    ANNUAL EQUITY AWARDS In March 2022, the Compensation Committee decided to grant PSU awards and RSU awards that may be settled for shares of our common stock to our NEOs under the 2019 Equity Plan. The PSU awards strengthen our “pay-for-performance” philosophy, because PSUs are only earned upon achievement of a key performance goal that drives our business and our stockholder value. Therefore, these awards increase the alignment between the interests of our executive officers and stockholders. The Compensation Committee also decided to increase the CEO’s annual target long-term incentive award opportunity PSU ratio from 17% of the equity award being PSUs for fiscal 2022 to 50% for fiscal 2023 after reviewing market data as well stockholder alignment. Payout of the fiscal 2023 PSU awards was directly contingent upon the Company’s achievement of a rigorous performance metric. RSU awards that vest over a multi-year period also remain an important part of our executive compensation program. While RSUs also serve as a “pay-for-performance” tool as the awards appreciate in value as stock price increases, the RSU awards provide more stability to equity-based incentive awards and encourage retention over a multi-year period. The target grant value of the equity awards and the allocation between PSU awards and RSU awards granted to our executive officers, including our NEOs, in March 2022 were determined by the Compensation Committee after considering the intensely competitive talent market in which we operate, the value of our highly experienced executive team led by Ms. Tejada, the market data and recommendations provided by our compensation consultant, including data regarding the cost of replacing executives and recommendations regarding the retentive, unvested value of current holdings for each executive, as well as the other factors described in “Compensation-Setting Process – Setting Target Total Direct Compensation” above. Ms. Tejada’s equity incentive opportunity reflected her overall responsibility for our performance and success. In addition, further differentiation was made among our NEOs based on the Compensation Committee’s review of the competitive market data for their respective positions and its desire to smooth transition to a normalized annual grant program. The equity awards granted to our NEOs (other than Ms. Giamalis, due to her termination of employment, and Ms. Webb whose equity awards were granted July 2, 2022 due to her April 25, 2022 hire date) effective April 2, 2022 were as follows:

  48. ANNUAL EQUITY AWARDS

    | NEO | RSUs (Number of Units) (#)(1) | RSU (Target Grant Value) ($)(2) | PSUs (Target Number of Units) (#)(1) | PSUs (Target Grant Value) ($)(2) | | Ms. Tejada | 311,029 | 10,000,000 | 311,029 | 10,000,000 | | Mr. Wilson | 152,404 | 4,900,000 | 65,316 | 2,100,000 | | Mr. Justice | 152,404 | 4,900,000 | 65,316 | 2,100,000 | | Ms. Webb | 154,256 | 3,885,000 | 66,109 | 1,665,000 |

  49. ANNUAL EQUITY AWARDS

    (1)The number of units subject to the RSU awards and the PSU awards was determined by dividing (i) the RSU award target grant value or the PSU award target grant value, as applicable, by (ii) the average of the closing price of our common stock on The New York Stock Exchange for the 30 trading days prior to the date of grant, rounded down to the nearest whole number of units. We use an average closing price to determine the number of shares, rather than the share price on the date of grant, to mitigate the impact of one-day or short-term stock price fluctuations. Each unit granted pursuant to these RSU awards and PSU awards represents a contingent right to receive one share of our common stock for each unit that is earned and/or vests. (2)Target grant value represents the value used by the Compensation Committee to calculate the number of shares subject to each NEO’s equity awards at the target performance level. This target total value differs from the values reflected in the Summary Compensation Table for Fiscal Year 2023 for several reasons, including the manner in which we determine the number of units, as described in the footnote above. The values in the Summary Compensation Table for Fiscal Year 2023 represent the aggregate grant date fair value of each NEO’s equity awards calculated in accordance with ASC Topic 718 based on the single day closing price of our common stock on the date of grant and, for the PSU awards, assuming the probable outcome of the performance conditions. RSU Awards – In the case of the RSU awards granted in April 2022 to our NEOs, 1/16th of the total number of units subject to the awards will vest on each quarterly anniversary of April 2, 2022, subject to such NEO’s Continuous Service (as defined in our 2019 Equity Plan through each applicable vesting date. PSU Awards – In the case of the PSU awards granted in April 2022 to our NEOs, the units subject to the awards were to be earned, if at all, based upon our level of achievement of a pre-established, rigorous performance condition (that is, nnARR)

  50. ANNUAL EQUITY AWARDS

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  51. ANNUAL EQUITY AWARDS

    and vest, if at all, based upon each NEO’s Continuous Service (as defined in the 2019 Equity Plan) through a three-year time-based vesting schedule as set forth hereafter, and subject to the terms of the 2019 Equity Plan.

  52. DESIGN OF FISCAL 2023 PSU AWARDS

    DESIGN OF FISCAL 2023 PSU AWARDS Performance Condition. A percentage of the target units set forth in each NEO’s PSU grant notice (the “Target PSUs”) ranging from 0% to 200% were to become eligible to vest on the certification date based on our level of achievement of the nnARR performance target (the “Performance Target”) over the period commencing February 1, 2022 and ending January 31, 2023 (the “Performance Period”) as calculated in the following table:

  53. DESIGN OF FISCAL 2023 PSU AWARDS

    | Net New Annual Recurring Revenue | Number of Eligible PSUs | | 80% of the Performance Target (“Threshold”) | 50% of Target PSUs | | 100% of the Performance Target (“Target”) | 100% of Target PSUs | | 110% of the Performance Target (“10% Stretch”) | 150% of Target PSUs | | 115% of the Performance Target (“15% Stretch”) | 175% of Target PSUs | | 120% of the Performance Target (“Maximum”) | 200% of Target PSUs |

  54. DESIGN OF FISCAL 2023 PSU AWARDS

    If nnARR was between Threshold and Target, Target and 10% Stretch, 10% Stretch and 15% Stretch, or 15% Stretch and Maximum, then the resulting number of Eligible PSUs were to be linearly interpolated between such levels of nnARR as set forth in the table above. The number of units actually eligible to vest as determined by the Compensation Committee on the certification date were the “Eligible PSUs.” Any units which did not become Eligible PSUs on the certification date were to immediately terminate and be forfeited. We utilized a single nnARR performance period due to challenges in setting reliable longer-term performance targets in a dynamic and fast-moving industry environment in which we operate. Annual goal-setting supports the rigor of our program and enables us to set appropriate goals for each performance period to incentivize consistent year-over-year stretch performance levels that support our long-term growth objectives. To foster alignment with long-term interests of our stockholders, earned PSU shares, if any, are subject to a three-year time-based vesting requirement. Time-Based Vesting Condition. Thirty-three percent of the aggregate number of Eligible PSUs were to vest on April 2, 2023, the first anniversary of the date of grant of the PSU award, and the remainder of the Eligible PSUs will vest in eight equal quarterly installments on each of January 2nd, April 2nd, July 2nd, and October 2nd, subject to the NEO’s Continuous Service as of the applicable vesting date. Our fiscal 2023 PSU awards are also subject to potential acceleration, as further described in “Executive Compensation— Potential Payments Upon Termination or Change in Control.”

  55. DESIGN OF FISCAL 2023 PSU AWARDS

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  56. RESULTS OF FISCAL 2023 PSU AWARDS

    RESULTS OF FISCAL 2023 PSU AWARDS On March 8, 2023, the Compensation Committee determined that our nnARR for fiscal 2023 was attained at 79.3% of the Performance Target. As shown in the foregoing table, this resulted in 0% of the Target PSUs granted to our NEOs becoming Eligible PSUs, and as a result, all of the PSUs granted to our NEOs in fiscal 2023 were canceled in their entirety:

  57. RESULTS OF FISCAL 2023 PSU AWARDS

    | NEO | Target Number of PSUs (#) | Actual Payout Percentage (%) | Eligible PSUs (Actual Number of PSUs eligible to vest under time-based vesting condition) (#) | | Ms. Tejada | 311,029 | — | — | | Mr. Wilson | 65,316 | — | — | | Mr. Justice | 65,316 | — | — | | Ms. Webb | 66,109 | — | — |

  58. RESULTS OF FISCAL 2023 PSU AWARDS

    Disclosure of the target and actual nnARR amount would cause us meaningful competitive harm, but we have provided the percentage of the Performance Target attained as a meaningful key metric that conveys the key nature of the goal set and our achievements against it. These aggressive Performance Target ranges were set with a view to sustainable growth beyond delivering revenue only for fiscal 2023, and hence would require significant effort to achieve. It should be noted that the targets for this PSU award were even more aggressive than those for the annual cash bonus program.

  59. EQUITY AWARD FOR MS. WEBB

    EQUITY AWARD FOR MS. WEBB As previously described above, in connection with her appointment in April 2022 as our Senior Vice President, Legal and General Counsel, on July 2, 2022 the Compensation Committee granted Ms. Webb an RSU award with a target grant value of $3,885,000 for 154,256 units and a PSU award with a target grant value of $1,665,000 for 66,109 units, both under our 2019 Equity Plan, which were to vest upon the same terms as the RSU and PSU awards granted to our other NEOs in fiscal 2023. The equity awards granted to our NEOs during fiscal 2023 are set forth in the “Summary Compensation Table for Fiscal Year 2023” and the “Grants of Plan-Based Awards” table below under the heading “Executive Compensation.” Welfare and Health Benefits We maintain a tax-qualified defined contribution retirement plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “Code”), that provides eligible U.S. employees, including our NEOs, with an opportunity to save for retirement on a tax advantaged basis. Eligible employees may defer eligible compensation on a pre-tax and/or post-tax basis, up to the statutory annual limits on contributions under the Code. Employee contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participant’s directions. Participants are immediately and fully vested in their contributions. Our Section 401(k) plan provides for discretionary matching of employee contributions. For fiscal 2023, we made employer matching contributions of up to two percent of each participant’s employee contributions of up to two percent of eligible wages during the period as defined in the Section 401(k) Plan. Additional benefits offered to all employees, including our NEOs, include medical, dental and vision insurance, business travel insurance, an employee assistance program, a mental health benefit, health and dependent care flexible spending accounts, basic life insurance, accidental death and dismemberment insurance, short-term and long-term disability insurance, commuter benefits and a monthly electronics allowance. During 2023, we also offered specific home office related reimbursements to our newly hired employees, including Ms. Webb. We design our employee benefits programs to be cost effective, scalable, and competitive in relation to the market as well as compliant with applicable laws and practices. We adjust our employee benefits programs as needed based upon regular monitoring of applicable laws and practices and the competitive market.

  60. EQUITY AWARD FOR MS. WEBB

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  61. EQUITY AWARD FOR MS. WEBB

    Perquisites and Other Personal Benefits In general, we do not provide significant perquisites or other personal benefits to our NEOs except as generally made available to our employees, or in special circumstances where the Compensation Committee believes it is appropriate to assist an individual in the performance of his or her duties, to make him or her more efficient and effective, and for recruitment and retention purposes. PagerDuty offers the NEOs certain health and life insurance, as well as payment of certain transportation costs, and corporate travel fee costs when the Compensation Committee determines that such arrangements are appropriate and consistent with the Company’s business objectives. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as those described in the preceding paragraph. All future practices with respect to perquisites or other personal benefits will be approved and subject to periodic review by the Compensation Committee. Employment Arrangements We have entered into a written amended and restated employment offer letter with Ms. Tejada (the “Tejada Letter”) and into either a confirmatory employment agreement or employment offer letter with each of our other NEOs. Each of these arrangements was approved on our behalf by the Compensation Committee or our Board at the recommendation of the Compensation Committee. We believe that these arrangements were necessary to induce these individuals to forgo other employment opportunities or leave their then-current employer for the uncertainty of a demanding position in a new and unfamiliar organization. In filling each of our executive positions, our Board or the Compensation Committee, as applicable, recognized that it would need to develop competitive compensation packages to attract qualified candidates in a dynamic labor market. At the same time, our Board and the Compensation Committee were sensitive to the need to integrate new executive officers into the executive compensation structure that we were seeking to develop, balancing both competitive and internal equity considerations. Each of our employment arrangements provides for “at will” employment and sets forth the initial compensation arrangements for the NEO, including an initial base salary, a target annual bonus opportunity, eligibility to participate in our employee benefit programs, and severance payments and benefits upon a qualifying termination of employment. Further, each of our NEOs has executed a form of our standard proprietary information and inventions assignment agreement. Under the terms of the Tejada Letter, Ms. Tejada is eligible to receive certain specified severance payments and benefits in connection with certain terminations of her employment, including in connection with a change in control of our Company. This post-employment compensation arrangement is discussed in “Executive Compensation – Potential Payments upon Termination or Change in Control.” For detailed descriptions of the employment arrangements we maintained with our NEOs during fiscal 2023, see “Executive Compensation – Potential Payments upon Termination or Change in Control.”

  62. SEVERANCE AND CHANGE IN CONTROL BENEFITS

    SEVERANCE AND CHANGE IN CONTROL BENEFITS Other than Ms. Tejada, each of our NEOs is eligible to participate as a Tier 2 participant in the Executive Severance and Change in Control Policy (the “Severance Policy”). The Severance Policy provides these individuals with severance benefits in the event of certain terminations, including an involuntary termination following a change in control of our Company. These severance arrangements provide reasonable compensation to our NEOs if they leave our employ under certain circumstances to facilitate their transition to new employment. We also believe that these arrangements help maintain our NEOs’ continued focus and dedication to their assigned duties to maximize stockholder value if there is a potential transaction that could involve a change in control of our Company. Under the Tejada Letter and with respect to the NEOs covered by the Severance Policy, all payments and benefits in the event of a change in control of our Company are payable only if there is a subsequent loss of employment by an executive officer (a so-called “double-trigger” arrangement) or in the case of equity acceleration, with respect to RSUs, upon a change in control if the acquiring company refuses to assume, continue, substitute for, or cancel for a specified per-share amount the outstanding awards. Our fiscal 2023 PSU awards are also subject to potential acceleration, as further described in “Executive Compensation – Potential Payments Upon Termination or Change in Control.”

  63. SEVERANCE AND CHANGE IN CONTROL BENEFITS

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  64. SEVERANCE AND CHANGE IN CONTROL BENEFITS

    The Severance Policy will remain in effect until April 11, 2025, except that if on the date the Severance Policy is set to expire we have entered into an agreement that would cause a change in control to occur, then the Severance Policy will remain in effect until the consummation of the transaction constituting the change in control. If any of the payments or benefits provided for under the Tejada Letter and the Severance Policy or otherwise payable to a NEO would constitute a “parachute payment” within the meaning of Section 280G of the Code and could be subject to the related excise tax, a NEO would receive either full payment of such payments and benefits or such lesser amount that would cause no portion of the payments and benefits being subject to the excise tax, whichever results in the greater after-tax benefits to our NEO. We do not use excise tax payments (or “gross-ups”) relating to a change in control of our Company and have no such obligations in place with respect to any of our executive officers, including our NEOs. The receipt of severance payments and benefits upon a qualifying termination of employment under the Tejada Letter and the Severance Policy is contingent upon each NEO signing and not revoking a general release of claims, our NEOs must sign and not revoke a general release of claims in our favor. In addition, under the Tejada Letter, in order for Ms. Tejada to receive severance payments and benefits for which she is eligible, she must resign from our Board and return all of our property in her possession. We believe that having in place reasonable and competitive post-employment compensation arrangements in the event of a change in control of our Company is essential to attracting and retaining highly qualified executive officers. The Compensation Committee does not consider the specific amounts payable under the post-employment compensation arrangements when determining the annual compensation for our NEOs. We do believe, however, that these arrangements are necessary to offer compensation packages that are competitive. For a summary of the material terms and conditions of the post-employment compensation arrangements we maintained with our NEOs during fiscal 2023, as well as an estimate of the potential payments and benefits that they would have been eligible to receive if a hypothetical change in control or other trigger event had occurred on January 31, 2023 and, with respect to Ms. Giamalis, the payments made to her as a result of her termination in fiscal 2023, see “Executive Compensation - Employment Agreements with our Named Executive Officers” and “Executive Compensations – Potential Payments Upon Termination or Change in Control.”

  65. SEVERANCE AND CHANGE IN CONTROL BENEFITS

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  66. SEVERANCE AND CHANGE IN CONTROL BENEFITS

    Other Compensation Policies

  67. HEDGING AND PLEDGING PROHIBITIONS

    HEDGING AND PLEDGING PROHIBITIONS Our Insider Trading Policy prohibits our employees (including our NEOs) and the non-employee members of our Board from engaging in derivative securities or hedging transactions. This prohibition extends to publicly traded options, such as puts and calls, and other derivative securities with respect to our securities (other than stock options and other compensatory equity awards issued to our employees (including our officers) and the non-employee members of our Board by our Company). This includes any hedging or similar transaction designed to decrease the risks associated with holding our common stock. Similarly, our Insider Trading Policy prohibits our employees (including our officers) and the non-employee members of our Board from using our securities as collateral for loans, pledging our securities as collateral for loans, or holding our common stock in a margin account.

  68. EQUITY GRANT TIMING PRACTICES

    EQUITY GRANT TIMING PRACTICES We generally grant equity awards on fixed dates determined in advance, although there may be occasions when grants are made on other dates, such as new hires or other special circumstances. The timing of equity award grants to our executive officers is not coordinated in a manner that intentionally benefits our executive officers. The Compensation Committee approves all equity award grants to our NEOs on or before the grant date. The Compensation Committee’s general practice is to complete its annual executive compensation review and determine performance goals and target compensation for our NEOs, and then equity awards are granted to NEOs and become effective. This process is further described above under the section titled Compensation-Setting Process. Accordingly, annual equity awards are typically granted to our NEOs in April of each fiscal year. On a limited occasion, the Compensation Committee may grant equity awards outside of our annual grant cycle for new hires, promotions, recognition, retention or other purposes. While the Compensation Committee has discretionary authority to approve equity awards to our NEOs outside of the cycle described above, the committee does not have a practice or policy of granting equity awards in anticipation of the release of material nonpublic information and we do not, in any event, time the release of material non-public information in coordination with grants of equity awards in a manner that intentionally benefits our NEOs.

  69. EQUITY GRANT TIMING PRACTICES

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  70. EQUITY GRANT TIMING PRACTICES

    Tax and Accounting Considerations We take the applicable tax and accounting requirements into consideration in designing and operating our executive compensation program.

  71. ACCOUNTING FOR STOCK-BASED COMPENSATION

    ACCOUNTING FOR STOCK-BASED COMPENSATION The Compensation Committee takes accounting considerations into account in designing compensation plans and arrangements for our executive officers and other employees. Chief among these is ASC Topic 718, the standard which governs the accounting treatment of certain stock-based compensation. Among other things, ASC Topic 718 requires us to record a compensation expense in our income statement for all equity awards granted to our executive officers and other employees. This compensation expense is based on the grant date “fair value” of the equity award and will be recognized ratably over the award’s requisite service period (which, generally, will correspond to the award’s vesting schedule), with the exception of PSUs which are recognized using the accelerated attribution method. The Company accounts for forfeitures as they occur. This compensation expense is also reported in the compensation tables below, even though recipients may never realize any value from their equity awards.

  72. ACCOUNTING FOR STOCK-BASED COMPENSATION

    | Name | Fiscal Year | Salary ($) | Bonus ($)(1) | Options Awards ($)(2) | Stock Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) | | Jennifer Tejada Chief Executive Officer | 2023 | 586,667 | — | — | 21,286,825 | 828,941 | 14,864 | 22,717,297 | | | 2022 | 508,333 | — | — | 11,867,582 | 884,730 | 7,923 | 13,268,568 | | | 2021 | 450,000 | — | — | 5,646,686 | 588,150 | 2,058 | 6,686,894 | | Howard Wilson Chief Financial Officer | 2023 | 450,735 | — | — | 7,450,378 | 445,660 | 15,698 | 8,362,471.3 | | | 2022 | 420,833 | — | — | 5,480,722 | 512,507 | 5,032 | 6,419,094 | | | 2021 | 400,000 | — | — | 2,971,938 | 365,960 | 5,891 | 3,743,789 | | Shelley Webb(5) Senior Vice President, Legal, General Counsel, and Secretary | 2023 | 308,333 | — | — | 5,603,882 | 240,001 | 7,569 | 6,159,785.51 | | David Justice(6) Executive Vice President, Chief Revenue Officer | 2023 | 441,667 | — | — | 7,450,378 | 532,467 | 8,125 | 8,432,636.95 | | | 2022 | 391,667 | — | — | 5,975,214 | 550,737 | 4,384 | 6,922,002 | | | 2021 | 350,000 | 58,333 | — | 984,703 | 289,667 | 4,878 | 1,687,581 | | Stacey Giamalis(7) Former Senior Vice President, Legal, General Counsel, and Secretary | 2023 | 91,958 | — | — | — | — | 228,267 | 320,224.99 | | | 2022 | 337,363 | — | — | 1,906,883 | 234,749 | 3,117 | 2,482,112 | | | 2021 | 326,480 | — | — | 1,238,308 | 169,100 | 4,339 | 1,738,227 |

  73. CEO PAY RATIO FOR FISCAL 2023

    CEO PAY RATIO FOR FISCAL 2023 •The median of the annual total compensation of all our employees, excluding our CEO, was $271,876; •The annual total compensation of our CEO, as reported in the Summary Compensation Table for Fiscal Year 2023 included in this Proxy Statement, was $22,717,297; and •The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was 84 to 1. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules.

  74. Required Tabular Disclosure of Pay Versus Performance

    Required Tabular Disclosure of Pay Versus Performance

  75. Required Tabular Disclosure of Pay Versus Performance

    | | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for PEO ($)(1) | Compensation Actually Paid to PEO ($)(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers ($)(3) | Average CompensationActually Paid to Non-PEO Named Executive Officers ($)(4) | Total Stockholder Return ($)(5) | Peer Group Total Stockholder Return ($)(6) | Net Loss Attributable to PagerDuty, Inc. (in thousands) ($)(7) | Company-Selected Measure – Non-GAAP Operating Margin (%)(8) | | Fiscal 2023 | 22,717,297 | 5,284,214 | 5,818,780 | 2,306,198 | 127.74 | 116.71 | (128,423) | 1% | | Fiscal 2022 | 13,268,568 | (1,510,440) | 5,274,403 | 1,884,137 | 141.60 | 142.87 | (107,455) | (8)% | | Fiscal 2021 | 6,686,894 | 39,741,417 | 2,389,866 | 9,459,672 | 208.96 | 147.32 | (68,903) | (8)% |

  76. Required Tabular Disclosure of Pay Versus Performance

    (1)Represents the amount of total compensation reported for Ms. Tejada (our “PEO”) for each covered fiscal year in the “Total” column of the Summary Compensation Table for such fiscal year. Please refer to “Executive Compensation Summary Compensation Table for Fiscal Year 2023.” (2)Represents the amount of executive “compensation actually paid” to our PEO, as computed in accordance with Item 402(v) of Regulation S-K for each covered fiscal year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to our PEO’s total compensation for each covered fiscal year to determine the compensation actually paid:

  77. Required Tabular Disclosure of Pay Versus Performance

    | Year | Reported Summary Compensation Table Total for PEO ($) | Deduct: Reported Value of Equity Awards ($)(a) | Add: Equity Award Adjustments ($)(b) | Compensation Actually Paid to PEO ($) | | Fiscal 2023 | 22,717,297 | 21,286,825 | 3,853,682 | 5,284,214 | | Fiscal 2022 | 13,268,568 | 11,867,582 | (2,911,426) | (1,510,440) | | Fiscal 2021 | 6,686,894 | 5,646,686 | 38,701,209 | 39,741,417 |

  78. Required Tabular Disclosure of Pay Versus Performance

    (a)These deductions are the amounts listed in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table and represent the grant date fair value of the equity awards for each covered fiscal year. (b)The equity award adjustments for each covered fiscal year include the addition (or subtraction, as applicable) of the following: (i) addition of the year-end fair value of any equity awards granted in the covered fiscal year that are outstanding and unvested as of the end of the covered fiscal year; (ii) addition of the amount equal to the change as of the end of the covered fiscal year (from the end of the prior fiscal year) in fair value (whether positive or negative) of any equity awards granted in any prior fiscal year that are outstanding and unvested as of the end of the covered fiscal year; (iii) addition, for equity awards that are granted and vest in the same covered fiscal year, of the fair value as of the vesting date; (iv) addition, for equity awards granted in any prior fiscal year for which all applicable vesting conditions were satisfied at the end of or during the covered fiscal year, of the amount equal to the

  79. Required Tabular Disclosure of Pay Versus Performance

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  80. Required Tabular Disclosure of Pay Versus Performance

    change as of the vesting date (from the end of the prior fiscal year) in fair value (whether positive or negative); (v) subtraction, for equity awards granted in any prior fiscal year that are determined to fail to meet the applicable vesting conditions during the covered fiscal year, of the amount equal to the fair value at the end of the prior fiscal year; and (vi) addition of the dollar value of any dividends or other earnings paid on stock or option awards in the covered fiscal year prior to the vesting date that are not otherwise included in the total compensation for the covered fiscal year. The valuation assumptions used to calculate the fair values of the stock options held by our PEO that vested during or were outstanding as of the end of each covered fiscal year materially differed from those valuation assumptions disclosed at the time of grant in the following respects: the expected term assumptions varied from 1.48 years to 5.65 years, the stock price volatility assumptions varied from 41.95% to 55.32%, and the risk-free interest rate assumptions varied from 0.09% to 4.35% , depending on the specific stock option the fair value of which was being recalculated. The valuation assumptions used to calculate the fair values of the time-based restricted stock unit (“RSU”) awards and performance-based restricted stock unit (“PSU”) award held by our PEO that vested during or were outstanding as of the end of each covered fiscal year (including the probable outcome of any such awards subject to performance conditions) did not materially differ from those valuation assumptions disclosed at the time of grant. The amounts deducted or added in calculating the equity award adjustments in accordance with the SEC methodology for determining compensation actually paid are as follows:

  81. Required Tabular Disclosure of Pay Versus Performance

    | Year | Year End Fair Value of Equity Awards Granted in Covered Year ($)(a) | Add: Year over Year Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years ($) | Add: Fair Value as of Vesting Date of Equity Awards Granted and Vested in Same Year ($) | Add: Year over Year Change in Fair Value of Equity Awards Granted in Prior Years that Vested in Covered Year ($) | Deduct: Fair Value at End of Prior Year of Equity Awards that Failed to Meet Vesting Conditions in Covered Year ($) | Add: Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value or Total Compensation(a) ($) | Total Equity Award Adjustments ($) | | Fiscal 2023 | 7,528,201 | (1,829,091) | 1,459,118 | (3,304,546) | — | — | 3,853,682 | | Fiscal 2022 | 8,494,281 | (7,822,641) | 1,790,485 | (5,373,551) | — | — | (2,911,426) | | Fiscal 2021 | 14,069,861 | 21,433,599 | 2,206,341 | 991,407 | — | — | 38,701,208 |

  82. Required Tabular Disclosure of Pay Versus Performance

    (a)Year-end fair value does not include performance stock unit (“PSU”) awards that were granted in April 2022 or July 2022. Because such awards did not achieve threshold performance level as of the end of fiscal 2023 (which was the end of the applicable performance period), the fair value of such awards was $0 as of the end of fiscal 2023. (3)Represents the average of the amounts of total compensation reported for our named executive officers (our “NEOs”) as a group (excluding Ms. Tejada, who has served as our PEO since 2012) for each covered fiscal year in the “Total” column of the Summary Compensation Table for such fiscal year. Please refer to “Executive Compensation – Summary Compensation Table for Fiscal Year 2023.” The names of each NEO (excluding our PEO) included for purposes of calculating the average of the amounts of total compensation in each covered fiscal year are as follows: (i) for fiscal 2023, Howard Wilson, our Chief Financial Officer, David Justice, our Executive Vice President, Chief Revenue Officer, Shelley Webb, our Senior Vice President, Legal and General Counsel; and Stacey Giamalis, our former Senior Vice President, Legal, General Counsel, and Secretary; (iii) for fiscal 2022, Howard Wilson, our Chief Financial Officer, David Justice, our Executive Vice President, Chief Revenue Officer, and Stacey Giamalis, our Senior Vice President, Legal, General Counsel, and Secretary; and (iii) for fiscal 2021, Howard Wilson, our Chief Financial Officer, David Justice, our Executive Vice President, Chief Revenue Officer, and Stacey Giamalis, our Senior Vice President, Legal, General Counsel, and Secretary.

  83. Required Tabular Disclosure of Pay Versus Performance

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  84. Required Tabular Disclosure of Pay Versus Performance

    (4)Represents the average of the amount of executive “compensation actually paid” to our NEOs as a group (excluding our PEO), as computed in accordance with Item 402(v) of Regulation S-K for each covered fiscal year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the average of the total compensation of such NEOs with respect to each covered fiscal year to determine the compensation actually paid, using the same methodology described above in Note 2(b):

  85. Required Tabular Disclosure of Pay Versus Performance

    | Year | Average Reported Summary Compensation Table Total for Non-PEO Named Executive Officers ($) | Deduct: Average Reported Value of Equity Awards ($)(a) | Add: Average Equity Award Adjustments ($)(b) | Average Compensation Actually Paid to Non-PEO Named Executive Officers ($) | | Fiscal 2023 | 5,818,780 | 5,126,160 | 1,613,578 | 2,306,198 | | Fiscal 2022 | 5,274,403 | 4,454,273 | 1,064,007 | 1,884,137 | | Fiscal 2021 | 2,389,866 | 1,731,650 | 8,801,456 | 9,459,672 |

  86. Required Tabular Disclosure of Pay Versus Performance

    (a)These deductions are the amounts listed in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table and represent the grant date fair value of the equity awards for each covered fiscal year. (b)The valuation assumptions used to calculate the fair values of the stock options held by our NEOs as a group (excluding our PEO) that vested during or were outstanding as of the end of each covered fiscal year materially differed from those valuation assumptions disclosed at the time of grant in the following respects: the expected term assumptions varied from 0.32 years to 6.07 years, the stock price volatility assumptions varied from 40.82% to 61.11%, and the risk-free interest rate assumptions varied from 0.09% to 4.35%, depending on the specific stock option the fair value of which was being recalculated. The valuation assumptions used to calculate the fair values of the RSU awards held by our NEOs as a group (excluding our PEO) that vested during or were outstanding as of the end of each covered fiscal year did not materially differ from those valuation assumptions disclosed at the time of grant. The amounts deducted or added in calculating the average equity award adjustments in accordance with the SEC methodology for determining compensation actually paid are as follows:

  87. Required Tabular Disclosure of Pay Versus Performance

    | Year | Average Year End Fair Value of Equity Awards Granted in Covered Year ($)(a) | Add: Year over Year Average Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Years ($) | Add: Average Fair Value as of Vesting Date of Equity Awards Granted and Vested in Same Year ($) | Add: Year over Year Average Change in Fair Value of Equity Awards Granted in Prior Years that Vested in Covered Year ($) | Deduct: Average Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in Covered Year ($) | Add: Average Value of Dividends or other Earnings Paid on Stock or Option Awards not Otherwise Reflected in Fair Value ($) | Average Equity Award Adjustments ($) | | Fiscal 2023 | 2,565,895 | (266,887) | 558,589 | (406,221) | (837,798) | — | 1,613,578 | | Fiscal 2022 | 3,268,291 | (1,640,522) | 447,608 | (1,011,370) | — | — | 1,064,007 | | Fiscal 2021 | 4,503,513 | 3,346,650 | 548,342 | 402,951 | — | — | 8,801,456 |

  88. Required Tabular Disclosure of Pay Versus Performance

    (a)Year-end fair value does not include performance stock unit (“PSU”) awards that were granted in April 2022 and July 2022 which did not achieve threshold performance level as of the end of fiscal 2023. (5)Total stockholder return (“TSR”) is determined based on an initial fixed investment of $100 on January 31, 2020. Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our share price at the end and the beginning of the measurement period by our share price at the beginning of the measurement period. (6)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. The peer group used for this purpose is the following published industry index: the S&P Software & Services Select Industry Index. (7)The dollar amounts reported represent the amount of net loss attributable to PagerDuty, Inc. reflected in our audited financial statements for each covered fiscal year.

  89. Required Tabular Disclosure of Pay Versus Performance

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  90. Required Tabular Disclosure of Pay Versus Performance

    (8)“Operating Margin” is defined as our non-GAAP operating margin as defined in our periodic reports filed with the Securities and Exchange Commission for fiscal 2023. We define “non-GAAP operating margin” as GAAP operating margin excluding stock-based compensation expense, employer taxes related to employee stock transactions, amortization of acquired intangible assets, acquisition-related expenses, and restructuring costs. We believe that these expenses are not necessarily reflective of operational performance during a period. In particular, we believe the consideration of measures that exclude such expenses can assist in the comparison of operational performance in different periods which may or may not include such expenses. While we use numerous financial and non-financial performance measures for the purpose of evaluating performance for our executive compensation program, we have determined that operating margin is the financial performance measure that, in our assessment, represents the most important performance measure (that is not otherwise required to be disclosed in the table) used by us to link compensation actually paid to our PEO and other NEOs, for the most recently completed fiscal year, to our performance.To supplement our consolidated financial statements, which are prepared and presented in accordance with U.S. GAAP, we use certain non-GAAP financial measures. For a full reconciliation of the U.S. GAAP to non-GAAP measures, please see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” of our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 16, 2023. Financial Performance Measures As described in greater detail in “Compensation Discussion and Analysis,” our executive compensation program is designed to reflect our variable “pay-for-performance” philosophy. The performance measures that we use for both our short-term and long-term incentive award programs are selected based on an objective of incentivizing our PEO and our other NEOs to increase the value of our enterprise for our stockholders, and are among the most important financial performance measures used by us to link executive compensation actually paid to our PEO and our other NEOs, to our performance for the most recently completed fiscal year. Overall, the most important financial performance measures for the most recently completed fiscal year are as follows: n Non-GAAP operating margin n Revenue n Net new annual recurring revenue n Net loss attributable to PagerDuty, Inc.

  91. REQUIRED DISCLOSURE OF THE RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND FINANCIAL PERFORMANCE MEASURES

    REQUIRED DISCLOSURE OF THE RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND FINANCIAL PERFORMANCE MEASURES As described in more detail in “Compensation Discussion and Analysis,” our executive compensation program reflects a variable “pay-for-performance” philosophy. While over the years we have used several different performance measures to align executive compensation with our performance, not all of these performance measures are presented in the Pay-Versus-Performance Table. Moreover, while we generally seek to prioritize long-term performance as our primary incentive for our PEO and our other NEOs, we do not specifically align our performance measures with compensation that is actually paid (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between the information presented in the Pay-Versus-Performance Table.

  92. REQUIRED DISCLOSURE OF THE RELATIONSHIP BETWEEN COMPENSATION ACTUALLY PAID AND FINANCIAL PERFORMANCE MEASURES

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  93. COMPENSATION ACTUALLY PAID AND COMPANY TSR AND COMPANY TSR AND PEER GROUP TSR

    COMPENSATION ACTUALLY PAID AND COMPANY TSR AND COMPANY TSR AND PEER GROUP TSR The graph below compares our TSR and CEO and other NEO compensation actually paid for the three fiscal years beginning with fiscal 2021. As illustrated in the following graph, the amount of the compensation actually paid to our PEO and the average amount of compensation actually paid to our other NEOs as a group (excluding our PEO) is generally directionally aligned with our TSR for the period presented in the Pay-Versus-Performance Table.

  94. COMPENSATION ACTUALLY PAID AND NET LOSS ATTRIBUTABLE TO PAGERDUTY, INC

    COMPENSATION ACTUALLY PAID AND NET LOSS ATTRIBUTABLE TO PAGERDUTY, INC The graph below compares our net loss attributable to PagerDuty, Inc. and CEO and other NEO compensation actually paid for the three fiscal years beginning with fiscal 2021. We do not use net loss attributable to PagerDuty, Inc. as a financial performance measure in our overall executive compensation program, so there is, at best, only an indirect correlation between our profitability and the various financial performance measures which we use when setting goals in our short-term incentive compensation program.

  95. COMPENSATION ACTUALLY PAID AND NET LOSS ATTRIBUTABLE TO PAGERDUTY, INC

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  96. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN The graph below compares our Non-GAAP Operating Margin and CEO and other NEO compensation actually paid for the three fiscal years beginning with fiscal 2021. As illustrated by the graph, the amount of compensation actually paid to our PEO and the average amount of compensation actually paid to our other NEOs as a group (excluding our PEO) is generally directionally aligned with the changes in our Non-GAAP Operating Margin over the period presented in the Pay-Versus-Performance Table.

  97. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

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  98. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    Security Ownership of Certain Beneficial Owners and Management The following table sets forth certain information regarding the ownership of the Company’s common stock as of March 31, 2023 (or as of the date otherwise indicated below) by: (i) each director and nominee for director; (ii) each of the executive officers named in “Executive Compensation—Summary Compensation Table for Fiscal Year 2022; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its common stock. We have based percentage ownership of our common stock on 87,359,232 shares of our common stock outstanding as of March 31, 2023. Unless otherwise indicated, the address of each beneficial owner listed below is c/o PagerDuty, Inc., 600 Townsend St., Suite 200, San Francisco, CA 94103.

  99. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    | | Common Stock | | | Name of Beneficial Owner | Number (#) | Percentage (%) | | 5% Stockholders | | | | ARK Investment Management LLC(1) | 10,097,244 | 11.6 | | BlackRock, Inc.(2) | 8,376,760 | 9.6 | | The Vanguard Group, Inc.(3) | 8,057,944 | 9.2 | | Nikko Asset Management Americas, Inc.(4) | 5,361,415 | 6.1 | | Named Executive Officers and Directors | | | | Jennifer Tejada(5) | 2,865,147 | 3.3 | | Howard Wilson(6) | 647,380 | 0.7 | | Shelley Webb(7) | 11,624 | * | | David Justice | 100,103 | * | | Stacey Giamalis | 101,439 | * | | Alex Solomon(8) | 2,737,101 | 3.1 | | Sameer Dholakia | 22,784 | * | | Alec Gallimore | 13,157 | * | | William Losch | — | — | | Elena Gomez(9) | 168,689 | * | | Rathi Murthy(10) | 156,430 | * | | Zachary Nelson | 306,008 | * | | Bonita Stewart | 6,830 | * | | All directors and executive officers as a group(11) (11 persons) | 6,935,150 | 7.9 |

  100. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    * Represents beneficial ownership of less than 1%. (1)Based upon the information provided by ARK Investment Management LLC (“ARK”) in a Schedule 13G/A filed on February 10, 2023. According to the filing, ARK has sole voting power with respect to 9,242,698 shares of common stock, shared voting power over

  101. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

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  102. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    555,997 shares of common stock, sole dispositive power over 10,097,244 shares of common stock, and no shared dispositive power. The principal business address of ARK is 200 Central Avenue, St. Petersburg, FL 33701. (2)Based upon the information provided by BlackRock, Inc. (“BlackRock”) in a Schedule 13G/A filed on February 24, 2023. According to the filing, BlackRock has sole voting power with respect to 7,989,341 shares of common stock, sole dispositive power over 8,376,760 shares of common stock and no shared voting or dispositive power. The principal business address of BlackRock, Inc. 55 East 52nd Street, New York, NY 10055. (3)Based upon the information provided by The Vanguard Group, Inc. (“Vanguard”) in a Schedule 13G/A filed on February 9, 2023. According to the filing, Vanguard has shared voting power over 145,238 shares of common stock, no sole voting power, sole dispositive power over 7,831,414 shares of common stock, and shared dispositive power with respect to 226,530 shares of common stock. The principal business address of Vanguard is 100 Vanguard Blvd., Malvern, PA 19355. (4)Based upon the information provided by Nikko Asset Management Americas, Inc. (“Nikko Americas”) in a Schedule 13G/A filed on February 10, 2023. According to the filing, Nikko Americas has shared voting power with respect to 3,467,925 shares of common stock and shared dispositive power over 5,361,415 shares of common stock, and no sole voting or dispositive power. The principal business address of Nikko Americas is 605 Third Avenue, 38th Floor, New York, NY 10158. According to a Schedule 13G filing filed on February 3, 2023, Sumitomo Mitsui Trust Holdings, Inc. (“SMTH”) and Nikko Asset Management Co., Ltd. (“Nikko”) each have shared voting and dispositive power over the shares beneficially owned by Nikko Americas. The Schedule 13G/A contained information as of December 31, 2022 and may not reflect current holdings of our common stock. The principal business address of SMTH is 1-4-1 Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan, and the principal business address of Nikko is Midtown Tower, 9-7-1 Akasaka, Minato-ku, Tokyo 107-6242, Japan. (5)Consists of (i) 72,072 shares each held indirectly by Jennifer Tejada, as Trustee of the Tejada 2022 Grantor Retained Annuity Trust - I and Jennifer Gail Tejada, as Trustee of the Tejada 2022 Grantor Retained Annuity Trust - II, (ii) 144,500 shares held indirectly by Jennifer Tejada, as Trustee of the Langford Isand Trust (iii) 2,514,047 shares subject to options exercisable within 60 days of March 31, 2023, and (iv) 56,663 shares issuable upon the settlement of RSUs releasable within 60 days of March 31, 2023. (6)Consists of(i) 420,956 shares subject to options exercisable within 60 days of March 31, 2023, and (ii) 25,720 shares issuable upon the settlement of RSUs releasable within 60 days of March 31, 2023. (7)Consists of 9,641 shares issuable upon the settlement of RSUs releasable within 60 days of March 31, 2023. (8)Consists of 1,322 shares issuable upon the settlement of RSUs releasable within 60 days of March 31, 2023. (9)Consists of 161,140 shares subject to options exercisable within 60 days of March 31, 2023, all of which are fully vested as of such date. (10)Consists of 148,881 shares subject to options exercisable within 60 days of March 31, 2023, all of which are fully vested as of such date. (11)Consists of (i) 6,935,150 shares owned by our current executive officers and directors, (ii) 3,245,024 shares subject to options exercisable within 60 days of March 31, 2023 and (iii) 93,346 shares issuable upon the settlement of RSUs releasable within 60 days of March 31, 2023. Delinquent Section 16(a) Reports Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of the copies of such forms furnished to us and written representations from these officers and directors, we believe that all Section 16(a) filing requirements were met during the year ended January 31, 2023, except for one late Form 4 filing by each of Mr. Wilson and Ms. Gomez due to clerical errors with the broker of the transactions.

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    Transactions With Related Persons and Indemnification Related Person Transactions Policy and Procedures We maintain a written related-person transaction policy (the “Related-Person Transaction Policy”) that sets forth our procedures for the identification, review, consideration and approval or ratification of related person transactions. For purposes of our policy only, a related person transaction is a transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we and any related person are, were or will be participants and in which the amount involved exceeds $120,000. Transactions involving compensation for services provided to us as an employee or director are not considered related party transactions under this policy. A transaction, arrangement or relationship in which a related person’s participation is solely due to such related person’s position as a director of an entity that is participating in such transaction, arrangement or relationship would not be considered a related party transaction under this policy. A related person is any executive officer, director or beneficial owner of more than 5% of any class of our voting securities, including any of their immediate family members and any entity owned or controlled by such persons. Under the Related-Person Transaction Policy, if a transaction has been identified as a related person transaction, including any transaction that was not a related person transaction when originally consummated or any transaction that was not initially identified as a related person transaction prior to consummation, our management must present information regarding the related person transaction to the Audit Committee, or, if Audit Committee approval would be inappropriate, to another independent body of the Board, for review, consideration and approval or ratification. The presentation must include a description of, among other things: all of the parties to the transaction; the material facts of the proposed transaction; the interests, direct and indirect, of the related persons; the purpose of the transaction; the benefits to us of the transaction; whether the transaction is on terms that are comparable to the terms available to or from, as the case may be, an unrelated third party or to or from employees generally; and management’s recommendation with respect to the proposed transaction. Under the Related-Person Transaction Policy, we will collect information that we deem reasonably necessary from each director, executive officer and, to the extent feasible, significant stockholder to enable us to identify any existing or potential related person transactions and to effectuate the terms of the Related-Person Transaction Policy. In addition, under our Code of Conduct, our employees and directors have an affirmative responsibility to disclose any transaction or relationship that reasonably could be expected to give rise to a conflict of interest. In considering related-person transactions, the Audit Committee, or other independent body of the Board, will take into account the relevant available facts and circumstances including, but not limited to: •the risks, costs and benefits to the Company; •the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated; •the terms of the transaction; •the availability of other sources for comparable services or products; and •the terms available to or from, as the case may be, unrelated third parties or to or from employees generally. The Related-Person Transaction Policy requires that, in determining whether to approve, ratify or reject a related-person transaction, the Audit Committee, or other independent body of the Board, must consider, in light of known circumstances, whether the transaction is in, or is not inconsistent with, our best interests and those of our stockholders, as the Audit Committee, or other independent body of the Board, determines in the good faith exercise of its discretion.

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  106. COMPENSATION ACTUALLY PAID AND NON-GAAP OPERATING MARGIN

    Certain Related-Person Transactions The following is a summary of transactions since February 1, 2022, to which we have been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of our directors, executive officers or holders of more than five percent of our capital stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest, other than compensation arrangements which are described in the sections titled “Executive Compensation” and “Director Compensation—Non-Employee Director Compensation.”

  107. EQUITY GRANTS TO DIRECTORS AND EXECUTIVE OFFICERS

    EQUITY GRANTS TO DIRECTORS AND EXECUTIVE OFFICERS We have granted options and RSUs and PSUs to certain of our directors and executive officers. For more information regarding the stock awards granted to our directors and NEOs see “Executive Compensation” and “Security Ownership of Certain Beneficial Owners and Management.”