Form 4: Upland Software CEO John T. McDonald Awarded Performance Share Units Following Shareholder Approval of 2024 Omnibus Incentive Plan

Upland Software's CEO, John T. McDonald, received performance share units (PSUs) after shareholders approved the 2024 Omnibus Incentive Plan, with vesting contingent on achieving specific total shareholder return (TSR) goals.

Summary

• Upland Software CEO John T. McDonald was granted performance share units (PSUs) on June 5, 2024.
• This grant was contingent upon shareholder approval of the 2024 Omnibus Incentive Plan, which was obtained on the same date.
• The PSUs, totaling 500,000, may vest between 0% and 100% based on the company's total shareholder return (TSR) performance between February 28, 2024, and February 28, 2027.
• The vesting percentage is determined by a tiered TSR schedule, ranging from 0% vesting for TSR at or below 10% to 100% vesting for TSR at or above 20%, with linear interpolation used for TSR values in between.
• Due to the approval of the 2024 Omnibus Incentive Plan, the PSUs earned pursuant to the vesting schedule set forth on the Form 4/A, as filed with the U.S. Securities and Exchange Commission on March 11, 2024, are limited to 250,000 PSUs.

Sentiment

Score: 7

Explanation: The document is neutral to positive. It outlines a standard executive compensation practice (PSUs) tied to shareholder value (TSR). The shareholder approval of the incentive plan is a positive sign.

Positives

• The PSU grant aligns executive compensation with shareholder value through TSR-based vesting.
• Shareholder approval of the 2024 Omnibus Incentive Plan enables the PSU grant to proceed.

Risks

• The actual value of the PSUs is dependent on Upland Software's future TSR performance, which is subject to market conditions and company performance.
• If the company's TSR does not meet the minimum threshold of 10%, none of the PSUs will vest.

Future Outlook

The value of the PSUs is directly tied to the future TSR performance of Upland Software, incentivizing management to drive shareholder value.

Industry Context

PSUs are a common form of executive compensation in the software industry, aligning management incentives with shareholder returns. The specific TSR targets and vesting schedules vary by company.

Comparison to Industry Standards

• Many software companies use TSR as a key metric for executive compensation, often comparing their TSR to a peer group of companies.
• The vesting schedules and TSR targets are typically tailored to the specific growth expectations and risk profile of the company.
• Companies like Salesforce, Adobe, and Atlassian also utilize similar performance-based equity awards to incentivize their executives.

Stakeholder Impact

• Shareholders: The PSU grant is designed to align management's interests with shareholder value creation.
• Employees: The grant may have a positive impact on employee morale by demonstrating a commitment to performance-based compensation.

Key Dates