UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
_______________
|
Filed by the Registrant
x
|
Filed by a Party other than the Registrant
o
|
||||
| Check the appropriate box: | |||||
| o | Preliminary Proxy Statement | ||||
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||||
| x | Definitive Proxy Statement | ||||
| o | Definitive Additional Materials | ||||
| o | Soliciting Material under §240.14a-12 | ||||
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
| Payment of Filing Fee (Check all boxes that apply): | |||||
| x | No fee required | ||||
| o | Fee paid previously with preliminary materials | ||||
| o | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11 | ||||
Dear Fellow
Stockholders,
We are pleased to invite you to attend our Annual Meeting of stockholders of Clearwater Analytics Holdings, Inc. (“Clearwater” or the “Company”) to be held on Monday, June 23, 2025, at 2:00 p.m. Eastern Time (the “Annual Meeting”). The Annual Meeting will be conducted virtually. In order to attend the Annual Meeting, you must register in advance by Saturday, June 21, 2025, at 5:00 p.m. Eastern Time at www.proxydocs.com/ CWAN.
Upon
completing
your
registration, you
will
receive
further
instructions
via
email,
including
your
unique links that will allow you to access the meeting and will also permit you to submit questions.
The
accompanying
proxy
statement provides
information about
the
matters we
will
ask
you
to
consider
at the Annual Meeting, which are:
1.
to
elect
three
nominees
identified in
the
accompanying
proxy
statement to
serve
as
Class
I
directors until the 2028 Annual Meeting and until their successors are duly elected and qualified;
2.
to
ratify
the
appointment
of
KPMG
LLP
as
the
Company’s
independent
registered
public
accounting firm for the year ending December 31, 2025; and
3.
to transact
other business as may properly
come before the meeting
or any adjournment
of the
meeting.
Our Board of Directors (the “Board”) has set the record date as April 25, 2025. Only stockholders that owned
shares
of
the
Company’s
common
stock
at
the
close
of
business
on
that
day
are
entitled to
notice
of
and may vote at this meeting or any adjournment or postponement thereof.
Your
vote is
important.
Whether or not
you plan to attend the
virtual
Annual Meeting, we urge
you to
vote.
You may vote by proxy over the Internet, by telephone, or by mail by following the instructions on the proxy card.
Voting
by
proxy
will
ensure
your
representation at
the
Annual
Meeting
regardless of
whether
you
attend.
Sincerely,
/s/
Sandeep
Sahai
Sandeep Sahai
Chief Executive
Officer
777 W. Main St., Suite 900, Boise, ID 83702
NOTICE
OF
2025
ANNUAL
MEETING
OF
STOCKHOLDERS
The
2025
A
nnual
M
eeting
of
stockholders of
Clearwater
Analytics
Holdings,
Inc.
will
be
held
live
via
the Internet on Monday, June 23, 2025, at 2:00 p.m. Eastern Time for the following purposes:
1.
to
elect
three
nominees
identified in
the
accompanying
proxy
statement to
serve
as
Class
I
directors until the 2028 Annual Meeting and until their successors are duly elected and qualified;
2.
to
ratify
the
appointment
of
KPMG
LLP
as
the
Company’s
independent
registered
public
accounting
firm for the year ending December 31, 2025; and
3.
to transact other business as may properly come before the meeting or any adjournment of the meetin
g.
In accordance with Securities and Exchange Commission rules that allow us to furnish our proxy materials over
the
Internet, we
are
mailing
to
most
of
our
stockholders a
Notice
of
Internet Availability of
Proxy
Materials, instead of a paper copy of the proxy materials, on or about April 29, 2025. The notice contains instructions on how to access the proxy materials over the Internet and how to submit your proxy via the Internet. If you would like to receive a paper copy of our proxy materials from us instead of downloading a printable version from the Internet, please follow the instructions for requesting a paper copy of such materials included in the notice, as well as in the accompanying proxy statement.
We have adopted a virtual format for our Annual Meeting. In order to attend the Annual Meeting, you must register in advance by Saturday, June 21, 2025, at 5:00 p.m. Eastern Time at www.proxydocs.com/CWAN. Upon completing
your
registration, you
will
receive
further
instructions
via
email,
including
your
unique
links
that
will allow you access to the meeting and will also permit you to submit questions. Please be sure to follow instructions found
on
your
proxy
card
and/or
Voting
Authorization Form
and
subsequent
instructions that
will
be delivered to you via email. You will find more information on the matters for voting in the proxy statement on the following pages. If you are a stockholder of record, you may vote by mail, by toll-free telephone number or by using the Internet.
Your vote is important! We strongly encourage you to exercise your right to vote as a stockholder. Please sign,
date
and
return
the
enclosed
proxy
card
or
voting
instruction card
in
the
envelope
provided,
call
the
toll-free number or log on to the Internet. You may revoke your proxy at any time before it is exercised.
You
will find
instructions
on how
to vote on
page
3.
By Order of the Board
,
/s/
Alphonse
Valbrune
Alphonse Valbrune
Chief Legal Officer & Corporate
Secretary
Important
Notice
Regarding
the
Availability
of
Proxy
Materials
for
the
Stockholder
Meeting
T
o
Be
Held on June 23, 2025.
This proxy statement and our annual report to stockholders are available on the Internet at www.proxydocs.com/CWAN. On this site, you will be able to access our 2025 proxy statement and our 2024
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended
December
31,
2024,
and
all
amendments
or supplements to the foregoing material that are required to be furnished to stockholders.
TABLE
OF
CONTENTS
GLOSSARY
As
used
in
this
Proxy
Statement,
the
terms
identified
below
have
the
meanings
specified
below
unless otherwise noted or the context indicates otherwise:
•
“
Company,” “we,” “us,” “our,” “Clearwater” and similar references refer to Clearwater Analytics Holdings, Inc., and, unless otherwise stated, all of its direct and indirect subsidiaries, including CWAN Holdings, LLC.
•
“2024
Annual
Report”
refers
to
our
Annual
Report
on
Form
10-K
for
the
fiscal
year
ended December 31, 2024, filed on February 26, 2025, as amended by the Form 10-K/A filed on March 7, 2025.
•
“Continuing
Equity
Owners”
refers
collectively
to
direct
or
indirect
holders
of
LLC
Interests
and/or
our Class C common stock and/or Class D common stock, including certain of the Principal Equity Owners and certain of our directors and
their
respective
Permitted
Transferees
who
may
exchange
at
each
of
their
own
options, in whole or in part from time to time, their LLC Interests (along with an equal number of shares of Class C common stock (and such shares shall be immediately cancelled)) for newly issued shares of our Class A common stock or our Class D common stock,
as
the
case
may
be,
and
additionally holders
of
shares
of
our
Class
D
common
stock
may
convert such shares at any time for newly issued shares of our Class A common stock, on a one-for-one basis (in which case their shares of our Class D common stock will be cancelled on a one-for-one basis upon any such issuance).
•
“Exchange Act” refers to the Securities Exchange Act of 1934, as amended.
•
“IPO” refers to our initial public offering which closed in September 2021.
•
“LLC
Agreement”
refers
to
CWAN
Holdings,
LLC’s
Third
Amended
and
Restated
Limited
Liability Company Agreement.
•
“LLC Interests”
refers
to the common units of CWAN
Holdings,
LLC.
•
“NYSE”
refers
to the New York Stock
Exchange.
•
“Other
Continuing
Equity
Owners”
refers
to
any
Continuing
Equity
Owners
who
are
not
also
Principal Equity Owners.
•
“Permira”
refers
to Permira
Advisers LLC
.
•
“Permitted Transferee” refers to, subject to the provisions of the LLC Agreement, (a) with respect to any
Principal
Equity
Owner,
any
of
such
Principal
Equity
Owner’s
affiliates and
(b)
with
respect
to
any Other
Continuing
Equity
Owner,
any
such
Other
Continuing
Equity
Owner’s
affiliates or,
in
the
case
of individuals, members of their immediate family.
•
“Principal
Equity
Owners”
refers
to
Welsh
Carson,
Warburg
Pincus,
Permira
and
their
respective affiliates and Permitted Transferees. .
•
“SEC” refers
to the Securities
and Exchange
Commission.
•
“Securities Act” refers
to the Securities
Act of 1933, as
amended.
•
“Warburg
Pincus”
refers
to
Warburg
Pincus
LLC
.
•
“Welsh
Carson”
refers
to
Welsh,
Carson,
Anderson
&
Stowe,
one
of
our
largest
owners
through holdings by its affiliates.
1
COMMONLY
ASKED
QUESTIONS
AND
ANSWERS
ABOUT
THE
ANNUAL
MEETING
Q:
Why did I receive these
materials?
The
board
of
directors of
the
Company
(the
“Board”) is
soliciting your
proxy
to vote at our 2025 Annual Meeting of stockholders (or at any postponement or adjournment of the meeting). Stockholders
who
own
shares
of
our
common
stock
as
of
the
record
date,
April
25
,
2025
(the
“Record
Date”),
are entitled to vote at the Annual Meeting. You should review these proxy materials carefully as they give important information about the proposals that will be voted on at the Annual Meeting, as well as other important information about the Company.
Q: Who will be entitled to
vote?
Stockholders who own shares of
our common stock as of
the close of business on
the Record
Date
(April
25
,
2025)
are
entitled to
vote
at
the
Annual
Meeting.
As
of
the
Record
Date,
the
Company
had
254,584,339
shares of Class A common stock outstanding, 12,542,110 shares of Class C common stock outstanding and 16,155,059 shares of Class D common stock outstanding. Holders of outstanding shares of Class A common stock are entitled to one vote per share. Holders of shares of Class C
common stock and Class D
common stock are entitled to ten votes per share. Cumulative voting is not permitted with respect to the election of directors or any other matter to be considered at the Annual Meeting.
Q:
What will I be voting
on?
You
will
be
voting:
1.
to
elect
three
nominees
identified in
this
Proxy
Statement to
serve
as
Class
I
directors until
the
2028
Annual Meeting and until their successors are duly elected and qualified;
2.
to
ratify
the
appointment
of
KPMG
LLP
as
the
Company’s
independent
registered
public
accounting
firm for the year ending December 31, 2025; and
3.
to transact
other business as may properly
come before the meeting
or any adjournment
of the
meeting.
Q: How does the Board recommend I vote on these matters?
The Board recommends
you
vote:
1.
FOR
the election of Mukesh Aghi, Jacques Aigrain and Lisa Jones as Class
I
directors;
and
2.
FOR
the
ratification of
the
appointment
of
KPMG
LLP
as
our
independent
registered
public
accounting
firm for the year ending December 31, 2025.
Q:
How
do
I
access the
proxy
materials,
including
the 2024
Annual
Report
and this
Proxy
Statement?
We are pleased to take advantage of SEC rules that allow us to furnish our proxy materials, including our 2024 Annual Report and this Proxy Statement (the “Proxy Materials”), over the Internet. As a result, we are mailing to
most
of
our
stockholders a
Notice
of
Internet Availability of
Proxy
Materials (the
“Notice”) instead
of a
paper
copy
of
the
Proxy
Materials. The
Notice
contains
instructions on
how
to
access
those
documents
over
the Internet and how to submit a proxy via the Internet. The Notice also contains instructions on how to request a paper copy of the Proxy Materials. All stockholders who do not receive the Notice will receive a paper copy of the Proxy Materials by mail or an electronic copy of the Proxy Materials by e-mail. This process allows us to provide our stockholders with the information they need in a timelier manner, while reducing the environmental
impact
and
lowering
the
costs
of
printing
and
distributing
the
Proxy
Materials.
This
Proxy Statement and our 2024 Annual Report are available at www.proxydocs.com/CWAN.
Q:
What is householding and how does it affect me?
The Company is sending only one copy of this proxy statement to stockholders who share the same last name and address, unless they have notified the Company that they want to continue receiving multiple copies. This practice, known as “householding,” is designed to reduce duplicate mailings and save significant printing and postage costs.
If you received a household mailing and you would like to have additional copies of this proxy statement mailed to you or you would like to opt out of this practice for future mailings, we will promptly deliver such additional copies to you if you submit your request to the Company’s Corporate Secretary in writing at 777 W. Main Street, Suite 900, Boise, Idaho 83702, Attn: Chief Legal Officer and Corporate Secretary or call us at (208) 433-1200. You may also contact us in the same manner if you received multiple copies of this proxy statement and would prefer to receive a single copy of future mailings.
2
Q:
How do
I cast
my
vote?
Beneficial or “Street Name” Stockholders
. If you hold your shares through a broker, trustee or other nominee,
you
are
a
beneficial stockholder,
otherwise
referred to
as
a
“street name”
holder.
In
order
to
vote
your shares, please refer to the materials forwarded to you by your broker, bank or other nominee for instructions on how to vote the shares you hold as a beneficial stockholder.
Registered
Stockholders
.
If
you
hold
shares
in
your
own
name,
you
are
a
registered stockholder
and
may vote your shares as follows:
•
By
Mail:
Sign, date and return the enclosed proxy card in the postage paid envelope
provided.
•
By
Telephone
or
Internet:
Call
the
toll-free number
listed
on
your
proxy
card,
log
on
to
the
website listed on your proxy card or scan the QR code on your proxy card and follow the simple instructions
provided.
•
By
Attending
the Annual
Meeting on
the Internet:
Vote
at the
Annual Meeting
via the
Internet.
The telephone and Internet voting procedures are designed to allow you to vote your shares and to confirm that
your
instructions have
been
properly
recorded
consistent with
applicable law.
Please
see
your
proxy
card
for specific instructions.
Q:
How
do
I
participate in
the
Annual
Meeting?
The Annual Meeting will be accessible through the Internet. We believe a virtual-only meeting format facilitates stockholder attendance and participation by enabling all stockholders to participate fully and equally using an Internet-connected device from any location around the world. In addition, the virtual-only meeting format
increases our
ability
to
engage
with
all
stockholders, regardless of
size,
resources
or
physical
location,
and enables us to protect the health and safety of all attendees. You are entitled to participate in the Annual Meeting if you were a stockholder as of the close of business on the Record Date or hold a valid proxy for the meeting. In order to attend the Annual Meeting, you must register in advance by Saturday, June 21, 2025 at 5:00 p.m. Eastern Time at www.proxydocs.com/CWAN. Upon completing your registration, you will receive further instructions via email, including your unique links that will allow you access to the Annual Meeting and to vote and submit questions during the meeting. Please be sure to follow instructions found on your proxy card and/or voting authorization form and subsequent instructions that will be delivered to you via email.
On
the
day
of
the
Annual
Meeting,
stockholders may
begin
to
log
in
to
the
virtual-only Annual
Meeting
15 minutes prior to the Annual Meeting.
The Annual Meeting will begin promptly
at 2:00 p.m. Eastern
Time.
Our virtual Annual Meeting will allow stockholders to submit questions before and during the Annual Meeting.
During
a
designated
question
and
answer
period
at
the
Annual
Meeting,
we
will
respond
to
appropriate questions submitted by stockholders.
Q:
How may I change or revoke my
proxy?
Beneficial
Stockholders.
Beneficial
stockholders
should
contact
their
broker,
trustee
or
nominee
for instructions on how to change their proxy vote.
Registered
Stockholders.
Registered
stockholders
may change a proxy at any time before its
exercise:
•
By delivering
a written notice of revocation
to the Secretary
of the
Company;
•
By
executing and delivering
another proxy that bears a later
date;
•
By voting by telephone
at a later
time
•
By voting over the Internet
at a later time;
or
•
By voting in person at the meeting on the
Internet.
Q:
Why
is
the
Annual
Meeting
virtual
only?
Hosting
a
virtual
meeting
makes
it
easy
for
our
stockholders to
participate from
any
location
around
the
world.
In
addition,
having
a
virtual
meeting
helps
to
protect
the
health
and
well-being
of
the
attendees
(employees, directors, stockholders and the general public). We are excited to embrace this technology to provide ease of access, real-time communication, and cost savings for our stockholders and the Company.
3
Q:
What
is
the
required
quorum
to
conduct
business
at
the
Annual
Meeting?
As of the Record Date, the Company had 254,584,339 shares of Class A common stock outstanding, 12,542,110 shares of Class C common stock outstanding and 16,155,059 shares of Class D common stock outstanding. The presence of the holders of record of a majority of the voting power of the issued and outstanding shares of common stock of the Company entitled to vote at the Annual Meeting, present in person or represented by a proxy, will constitute a quorum. A quorum is required in order to hold and conduct business at the Annual Meeting. Your shares are counted as present at the Annual Meeting if you:
•
Are present in person at the virtual
Annual Meeting;
or
•
Have properly submitted
a proxy card by mail or submitted
a proxy by telephone
or over the
Internet.
If you submit your proxy, regardless of whether you abstain from voting on one or more matters, your shares will be counted as present at the Annual Meeting for the purpose of determining a quorum. If you are a beneficial stockholder, your shares are counted as present for purposes of determining a quorum if your broker, bank, trust or other nominee submits a proxy covering your shares. Your broker, bank, trust or other nominee is entitled to submit a proxy covering your shares as to certain “routine” matters, even if you have not instructed your broker, bank, trust or other nominee on how to vote on those matters. Abstentions, withhold votes and broker
non-votes
are
counted
as
shares
present
and
entitled to
vote
for
purposes
of
determining a
quorum.
Please see below under “— What is the voting requirement to approve each of the proposals, and how are the votes
counted?”
Q: What is a “broker non-
vote”?
A “broker non-vote” occurs when a broker or other nominee holding shares for a beneficial owner has not received voting instructions from the beneficial owner and does not have discretionary authority to vote the shares.
If
you
are
a
beneficial holder
and
do
not
provide
voting
instructions to
your
broker
or
other
nominee,
your shares will be considered to be broker non-votes and will not be voted on any proposal on which your broker or other nominee does not have discretionary authority to vote. Shares that constitute broker non-votes will be counted as present at the Annual Meeting for the purpose of determining a quorum, but will not be considered entitled to vote on the proposal in question. Brokers generally have discretionary authority to vote on the ratification of the appointment of KPMG LLP as our independent registered public accounting firm. Brokers do not have discretionary authority, however, to vote on the election of directors to serve on our Board.
Q:
What is
the voting requirement to approve
each of the
proposals, and
how are the
votes
counted?
PROPOSAL
1 —
ELECTION
OF
DIRECTORS
A plurality of the votes cast by the shares of common stock present in person or represented by proxy at the meeting and entitled to vote thereon is required to elect each nominee named herein. This means that the three nominees
receiving
the
highest
number
of
votes
at
the
Annual
Meeting
will
be
elected,
even
if
those
votes
do
not constitute a majority of the votes cast. Withhold votes and broker non-votes will not impact the election of the nominees, although they will be considered present for purposes of determining the presence of a quorum.
PROPOSAL 2 — RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The affirmative vote of the holders of a majority of the voting power of the shares of common stock present in
person
or
represented by
proxy
and
entitled to
vote
on
the
subject
matter is
required to
approve
the ratification of KPMG LLP as our independent registered public accounting firm. Abstentions
and
withhold
votes
will
be
counted
as
present
and
entitled to
vote
on
the
proposals
and
will
therefore have
the
effect of
a
negative vote.
Brokers
generally have
discretionary authority to
vote
on
the
ratification of
the appointment of KPMG LLP as our independent registered public accounting firm. Therefore, we do not expect that there will be broker non-votes with respect to the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2025.
4
The
following
table
summarizes
the
voting
requirements
and
the
effects
of
broker
non-votes
and
“withhold” votes or abstentions on each of the proposals to be voted on at the Annual Meeting:
| Proposals |
Vote Required to Adopt the Proposal
|
Effect of Broker
Non-Votes |
Effect of
Withhold Votes or Abstentions |
||||||||||||||||||||
| 1) | Election of Directors |
The three nominees who receive the most "FOR" votes will be elected.
|
None | None | |||||||||||||||||||
| 2) | Ratification of Independent Registered Public Accounting Firm |
The affirmative "FOR" vote of a majority of the shares present and entitled to vote is required to ratify the selection of KPMG LLP.
|
Not applicable | Against | |||||||||||||||||||
Q:
How will
my shares be
voted if I
sign and return
my proxy card
with no votes
marked?
If
you
sign
and
return your
proxy card with
no votes
marked, your
shares will be
voted as
follows:
a)
FOR
the election
of
all nominees
for director
identified
in this Proxy
Statement
(Proposal
1); and
b)
FOR
ratification
of
the
Company’s
independent registered
public
accounting firm
(Proposal
2).
Q: How will the results of the vote be
tabulated?
All
votes
will
be
tabulated
by
the
inspector
of
election
appointed
for
the
Annual
Meeting,
who
will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
Q: When will the results of the vote be
announced?
The
preliminary voting
results
will
be
announced
at
the
virtual
Annual
Meeting.
The
final
voting
results
will be published in a Current Report on Form 8-K filed with the SEC within four business days of the Annual
Meeting.
Q:
What
is
the
deadline
for
submitting
a
stockholder
proposal
or
director
nomination
for
the
2026
Annual
Meeting?
Stockholder proposals pursuant to SEC
Rule 14a-8 for the Company’s annual meeting of stockholders to be held
in
2026
(the
“2026
Annual
Meeting”) must
be
received
by
the
Company
at
our
principal executive
offices
at 777 W. Main St., Suite 900, Boise, ID 83702 no later than December 30, 2025.
In addition, our bylaws permit stockholders to nominate candidates for director and present other business for consideration at our annual meeting of stockholders. To make a director nomination or present other business for consideration at the 2026 Annual Meeting, you must submit a timely written notice in accordance with the procedures described in our bylaws. To be timely, a stockholders’ written notice must be delivered to the Secretary of the Company at the principal executive offices of the Company no later than 90 days nor earlier than 120 days prior to the date of the first anniversary of the preceding year’s annual meeting. Therefore, to be presented at our 2026 Annual Meeting, such a proposal must be received on or after February 23, 2026, but not later than March 25, 2026. If the date of the 2026 Annual Meeting is advanced by more than 30 days, or delayed by more than 70 days, from the anniversary date of the 2025 Annual Meeting, to be timely, notice by the stockholder must be so delivered not earlier than the 120th day prior to the 2026 Annual Meeting and not later than the close of business on the later of the 90th day prior to the 2026 Annual Meeting or the tenth day following the day on which public announcement of the date of the 2026 Annual Meeting is first made. If the number of directors to be elected to the Board at an annual meeting is increased and there is not a public announcement by the Company naming all of the nominees for director or specifying the size of the increased Board at least 100 calendar days prior to the first anniversary of the 2025 Annual Meeting, notice by a stockholder will be considered timely, but only with respect to nominees for any new positions created by such increase, if it is delivered not later than the close of business on the tenth calendar day following the day on which such public announcement is first made. Any such proposal will be considered timely only if it is otherwise in compliance with the requirements set forth in our bylaws.
In addition to satisfying the foregoing requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than our nominees must provide
notice
that
sets
forth
the
information required
by
Rule
14a-19
under
the
Exchange
Act.
Since
our
bylaws impose an earlier deadline for such a notice than Rule 14a-19(b)(1), the noticing stockholder’s proposal must be received by the Company in compliance with our bylaws in order to be timely delivered.
5
PROPOSAL
1
–
ELECTION
OF
DIRECTORS
Our
Board is composed of ten
individuals,
including
our
chair.
Our certificate of incorporation provides that our Board is divided into three classes of directors, with
the
classes
to
be
as
nearly
equal
in
number
as
possible,
and
with
the
directors serving
three-year terms. The Board is currently divided among the three classes as illustrated in the table below:
| Name | Class | Age | Position | Director Since Fiscal Year | Current Term Expires Fiscal Year | Expiration of Term For Which Nominated | ||||||||||||||||||||||||||||||||
| Jacques Aigrain | I | 70 | Director | 2021 | 2025 | 2028 | ||||||||||||||||||||||||||||||||
| Kathleen A. Corbet | I | 65 | Director | 2021 | 2025 | |||||||||||||||||||||||||||||||||
| Lisa Jones | I | 63 | Director | 2022 | 2025 | 2028 | ||||||||||||||||||||||||||||||||
| Jaswinder Pal Singh | I | 60 | Director | 2022 | 2025 | |||||||||||||||||||||||||||||||||
| Christopher Hooper | II | 44 | Director | 2021 | 2026 | |||||||||||||||||||||||||||||||||
| D. Scott Mackesy | II | 56 | Director | 2022 | 2026 | |||||||||||||||||||||||||||||||||
| Sandeep Sahai | II | 62 | CEO & Director | 2021 | 2026 | |||||||||||||||||||||||||||||||||
| Eric Lee | III | 53 | Chair | 2021 | 2027 | |||||||||||||||||||||||||||||||||
| Cary Davis | III | 58 | Director | 2021 | 2027 | |||||||||||||||||||||||||||||||||
| Andrew Young | III | 47 | Director | 2021 | 2027 | |||||||||||||||||||||||||||||||||
As
illustrated above,
upon
the
recommendation
of
the
Nominating
and
Corporate
Governance
Committee, the full Board has considered and nominated Jacques Aigrain and Lisa Jones to serve as Class I Directors for a three-year term expiring in 2028. In addition, upon the recommendation of the Nominating and Corporate Governance Committee, the full Board has considered and nominated Mukesh Aghi to serve as a Class I Director for a three-year term expiring in 2028. Action will be taken at the Annual Meeting for the election of these three Class I Director nominees.
It was mutually agreed that Kathleen Corbet and Jaswinder Pal Singh will not stand for re-election upon expiration of their terms at the Annual Meeting. We extend our sincere gratitude to Ms. Corbet and Mr. Singh for their outstanding contributions to the Board, including Ms. Corbet’s service as Audit Committee Chair and Special Committee member in connection with the Company’s buyout of its Tax Receivable Agreement and Mr. Singh’s valuable insights regarding the Company’s technology. We wish them continued success in their future endeavors. In order to continue benefitting from Ms. Corbet and Mr. Singh’s valuable insights, we have entered into advisory agreements pursuant to which they will serve as Senior Advisors to the Company. See “Certain Relationships And Related Party Transactions.”
Effective upon the expiration of Ms. Corbet's and Mr Singh's terms at the Annual Meeting, the Board will reduce the size of the Board by one seat such that the full Board will consist of nine directors and one of the Class I director seats will be eliminated. Following such reduction, the Board may increase the size of the Board in accordance with our certificate of incorporation, our bylaws and the Stockholders’ Agreement discussed below.
Unless otherwise instructed, the persons named in the form of proxy card (the “proxyholders”) included with
this
Proxy
Statement intend
to
vote
the
proxies
held
by
them
“FOR”
the
election
of
the
director nominees. All of the nominees have indicated that they will be willing and able to serve as directors. If any of these nominees ceases to be a candidate for election by the time of the Annual Meeting (a contingency which the Board does not expect to occur), such proxies may be voted by the proxyholders in accordance with the recommendation of the Board.
6
Nominees for Election to the Board
in
2025
The
following
information describes
the
offices
held,
other
business
directorships and
the
term
of
service
of each director nominee, as well as the experiences, qualifications, attributes or skills that caused the Nominating and Corporate Governance Committee and the Board to determine that the director nominee should serve as a director. Beneficial ownership of equity securities for these director nominees is shown under “Security Ownership of Certain Beneficial Owners and Management” below.
Class I Director Nominees to Serve for a Three-Year Term Expiring at the 2028 Annual Meeting.
Dr. Mukesh Aghi
is a director nominee that will join our Board and Audit Committee upon his election at the Annual Meeting. Dr. Aghi has served as the President and Chief Executive Officer of the US - India Strategic Partnership Forum since 2017. He has also served as the Executive Chairman of Kore.ai since September 2023. Previously, over the course of ten years Dr. Aghi served as the President of the US – India Business Council, the Chief Executive and director at L&T Infotech, and the Chairman and CEO of the Asia-Pacific region of Steria, Inc. (India). Dr. Aghi is the founding CEO of Universitas 21 Global. Earlier in his career, Dr. Aghi served as President of IBM India for IBM Corporation, and spent time working with Ariba, Inc. and JD Edwards & Co. Dr. Aghi holds several degrees, including an advanced management diploma from Harvard Business School, a Ph.D. in international relations from Claremont Graduate University, an MBA in international marketing from Andrews University, and a BA in business administration from the Middle East College, Beirut, Lebanon. He also currently serves as a trustee at Claremont Graduate University.
We believe that Dr. Aghi’s extensive experience as a chief executive officer and leader of global technology companies, including in particular his current role as the Executive Chairman of Kore.ai, an agentic generative AI company in the enterprise space, qualifies him to serve as a director of our Board.
Jacques Aigrain
has been a Director since February 2021 (including service as a director of CWAN Holdings, LLC prior to the IPO). Mr. Aigrain has served as Chairman of the board of directors at LyondellBasell NV since 2011. He has served as Chairman of the board of directors at TradeWeb Markets Inc. since July 2023 and has served as a director there since August 2022. Mr. Aigrain was a director of the London Stock Exchange Group (LSEG Ltd) until April 2022 and WPP Plc until May 2022, both since 2013. Mr. Aigrain was also the Chairman of Singular Bank SAU from February 2019 to July 2024. Mr. Aigrain worked for nine years at SwissRe AG, including as Chief Executive Officer, and spent 20 years in global leadership roles at JP Morgan Chase & Co. in New York, London and Paris. Mr. Aigrain holds a master’s degree in economics from Paris Dauphine University and a PhD in economics from Sorbonne University.
We believe Mr. Aigrain’s extensive experience in finance and as a chief executive officer, and his
experience
on
the
audit
committees of
public
companies,
including
as
chair,
qualifies him
to
serve
as
a
director of our Board.
Lisa Jones
has been a Director since September 2022. Ms. Jones has been the Head of the Americas, President
and
Chief
Executive
Officer
of
Amundi
US,
Inc.
since
August
2014.
She
is
also
President
of
Amundi Distributor, Inc., head of the US Executive Committee and US Management Committee, and member of the Global Executive Committee at Amundi US, Inc. Ms. Jones’ past roles include President and Chief Executive Officer at Pioneer Investments, Managing Director and Global Head of Distribution at Morgan Stanley Investment Management, Head of Institutional Business at Eaton Vance Corporation, and President of the Institutional Division at MFS Investment Management. Ms. Jones holds a degree in economics from Trinity College.
We
believe
Ms.
Jones’
deep
expertise in
the
financial services
and
asset
management sector
serving
markets all over the world, and her experience as a chief executive officer, qualifies her to serve as a director of our
Board.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF EACH OF THE DIRECTOR NOMINEES NAMED ABOVE.
7
Continuing Directors
The following information describes the offices held, other business directorships, the class and term of each director whose term continues beyond the Annual Meeting and who is not subject to election this year, as well as the experiences, qualifications, attributes or skills that caused the Board to determine that the director should serve as a director. Beneficial ownership of equity securities for these directors is also shown under “Security Ownership of Certain Beneficial Owners and Management” below.
Class II Directors (terms expiring in fiscal year 2026)
Christopher Hooper
has been a Director since July 2017 (including service as a director of CWAN Holdings, LLC prior to the IPO). Mr. Hooper has served since 2017 as a General Partner in the Technology Group at WCAS, is a member of the Management Committee and leads the firm’s San Francisco office, having originally joined WCAS in 2005. He currently serves as a Director at Green Street and LINQ. Earlier in his career, Mr. Hooper worked as a Principal at Golden Gate Capital in San Francisco and as an Analyst at Lazard in New York. Mr. Hooper holds a bachelor’s degree from Colgate University.
We believe Mr. Hooper’s expertise in technology investments, finance and mergers and acquisitions qualifies him to serve as a director of our Board.
D. Scott Mackesy
has been a Director since December 2022. Mr. Mackesy is the managing partner of Welsh Carson and is a member of its management committee, having joined Welsh Carson in 1998. Mr. Mackesy focuses on overall firm strategy at Welsh Carson. Mr. Mackesy currently serves on the board of directors for several of Welsh Carson’s portfolio companies, including LINQ, CenterWell Primary Care, Emerus and Valtruis. Prior to joining Welsh Carson, Mr. Mackesy worked for Morgan Stanley Dean Witter for six years. Mr. Mackesy holds a Bachelor of Arts degree from the College of William & Mary.
We believe Mr. Mackesy’s expertise in technology investments, finance and mergers and acquisitions, as well as his leadership experience as the managing partner of Welsh Carson, qualifies him to serve as a director of our Board.
Sandeep Sahai
has been our Chief Executive Officer since July 2018 and a Director since September 2016 (including service as the Chief Executive Officer and a director of CWAN Holdings, LLC prior to the IPO). During his tenure, the Company has grown across both its core markets and new regions. From a largely single office business, the Company now has offices and operating centers around the world and serves large and complex global customers. Before Clearwater, he held the title of Chief Executive Officer of Solmark from 2014 to June 2018, an investment partnership where he was the lead partner. Previously, Mr. Sahai worked for Headstrong from 2004 to 2011, including as President and Chief Operating Officer from 2007 to 2009, and President and Chief Executive Officer from 2009 to 2011. After Headstrong’s acquisition by Genpact in 2011, Mr. Sahai served as Senior Vice President of IT Solutions and Capital Markets at Genpact from 2011 to 2014. Mr. Sahai also held directorships at AIM Software (Austria) from 2015 to 2019, Simeio Solutions from 2015 to 2020 and Magic Software from 2014 to 2018. In addition, he served as an Operating Partner at Welsh Carson beginning in 2014. Mr. Sahai holds an engineering degree from the Indian Institute of Technology, Varanasi and an MBA from the Indian Institute of Management, Kolkata.
We believe Mr. Sahai’s successful leadership of Clearwater into a period of strong and consistent growth, his deep understanding of the Company, technology operations and the investment accounting industry, and his experience as an entrepreneur and business leader, qualifies him to serve as a director of our Board.
Class III Directors (terms expiring in fiscal year 2027)
Eric Lee
has been the Chair of our Board since September 2016 (including service as the chair of CWAN Holdings, LLC prior to the IPO). Mr. Lee joined Welsh Carson in 1999 and is a General Partner at the firm. He has served on the firm's Management Committee, Investment Committee and Finance Committee and helped lead the firm's Technology investment team. Before joining Welsh Carson, he worked at Goldman Sachs & Co. in the Mergers & Acquisitions and High Technology investment banking groups from 1995 to 1999. Mr. Lee holds a bachelor’s degree from Harvard College.
We believe Mr. Lee’s experience in technology investments (and more specifically, with SaaS/software and financial technology companies), corporate finance and mergers and acquisitions, and extensive governance experience serving on corporate (and non-profit) boards (including executive, audit, compensation, acquisition, and governance committees), qualifies him to serve as a director of our Board.
Cary Davis
has been a Director since November 2020 (including service as a director of CWAN Holdings, LLC prior to the IPO). Mr. Davis joined Warburg Pincus in 1994 and is responsible for technology investments in the Software and Financial Technology sectors. He currently serves as a Director of Crowdstrike and several private
8
companies. Mr. Davis is Chairman Emeritus of the American Academy in Rome, a Trustee of the Andy Warhol Foundation and a Trustee of The Trinity School in New York City. Prior to joining Warburg Pincus, Mr. Davis was an Executive Assistant to Michael Dell at Dell Computer and a consultant at McKinsey & Company. He has also been an adjunct professor at the Columbia University Graduate School of Business, Chairman of the Jewish Community House of Bensonhurst and Chairman of the Boys Prep Charter School. Mr. Davis holds a bachelor’s degree in economics from Yale University and an MBA from Harvard Business School.
We believe Mr. Davis’ experience in technology investments, finance and mergers and acquisitions qualifies him to serve as a director of our Board.
Andrew Young
has been a Director since November 2020 (including service as a director of CWAN Holdings, LLC prior to the IPO). Mr. Young joined the London office of Permira Advisers in 2011 and relocated to Menlo Park in 2018, where he currently works as a Partner. He also serves on the boards of Zwift, Seismic, Carta and Reorg Research. Prior to joining Permira, Mr. Young worked for Pacific Equity Partners as an investment executive in their Sydney and New York offices. Before that, he worked as an associate at Citi. Mr. Young holds a bachelor’s degree in Finance from University of Technology, Sydney and an MBA from London Business School.
We believe Mr. Young’s experience in technology investments, finance and mergers and acquisitions qualifies him to serve as a director of our Board.
Directors Not Standing For Re-Election To The Board Of Directors In 2025
Kathleen A. Corbet
, who is not standing for re-election when her term expires at the Annual meeting, has been a Director since March 2021 (including service as a director of CWAN Holdings prior to the IPO). She also serves as principal at Cross Ridge Capital, LLC, a venture capital and management consulting firm she founded in 2008 for early-stage venture firms, government agencies, municipalities and non-profit enterprises. Ms. Corbet has served on the board of directors of Massachusetts Mutual Life Insurance Company since 2008. In addition, she served as President of Standard & Poor’s from 2004 to 2007. Ms. Corbet held several executive positions with AllianceBernstein from 1993 to 2004, including Chief Executive Officer of the Alliance Fixed Income division from 2000 to 2004. She also held directorships at BlackRock TCP Capital Corp., CEB Inc. and AxiomSL. Ms. Corbet holds a bachelor’s degree in computer science and marketing from Boston College and an MBA from New York University Stern School of Business.
Jaswinder Pal Singh
, who is not standing for re-election when his term expires at the Annual meeting, has been a Director since July 2022. Dr. Singh is a tenured full professor of computer science at Princeton University, holding an endowed university chaired professorship. He currently serves as Chairman at 8x8, Inc. and as a director at Hiro Systems, PBC. Dr. Singh is the co-founder of CaaStle and Trust Machines. He has also served as a consultant to Intel, Microsoft and the United States government. Dr. Singh graduated from Princeton University with degrees in electrical engineering and computer science and obtained his master’s and PhD degrees from Stanford University.
9
BOARD
OF
DIRECTORS
AND
CERTAIN
CORPORATE
GOVERNANCE MATTERS
Our
business
and
affairs are
managed
under
the
direction of
our
Board,
which
is
composed
of
ten individuals, including our chair. Effective upon the expiration of the terms of Ms. Corbet and Mr. Singh at the Annual Meeting, the Board will reduce the size of the Board by one seat such that the full Board will consist of nine directors and one Class I director seat will be eliminated. Our Board has three standing committees: the Audit Committee; the Compensation Committee; and the Nominating and Corporate Governance Committee.
Our certificate of incorporation provides that our Board is divided into three classes of directors, with
the
classes
to
be
as
nearly
equal
in
number
as
possible,
and
with
the
directors serving
three-year
terms.
Our Boards’ policy is to encourage selection of directors who will contribute to the Company’s overall corporate goals. The Board is composed of individuals that have experience in a number of areas deemed important to the Company’s success, including technology investments and operations, leadership, strategy and strategic planning, finance, risk management, cybersecurity, corporate governance, mergers and acquisitions, diversity
and
inclusion
and
entrepreneurship.
The
Company’s
Nominating
and
Corporate
Governance
Committee believes that all directors must, at a minimum, meet the Company’s Code of Ethics and Corporate Governance Guidelines, which include the following criteria:
•
directors should be persons of good reputation and character who conduct themselves in accordance with
high
personal
and
professional
ethical
standards,
including
the
policies
set
forth
in
the
Company’s Code of Ethics;
•
directors should have the educational background, experience, qualifications and skills relevant for effective
management
and
oversight
of
the
Company’s
management,
which
may
include
experience
at senior executive levels in comparable companies, public service, professional service firms or educational institutions;
•
directors must
have
the
time
and
willingness
to
effectively carry
out
their
duties
and
responsibilities;
and
•
the Board as a whole should consider
its diversity,
including
gender, race and
ethnicity.
Although
the
Board
does
not
have
a
specific diversity target
or
policy,
we
value
diversity and
six
of
our
current
ten Board members (prior to giving effect to the election of directors at the Annual Meeting) identify as female, a racial or ethnic minority or a member of the LGBTQ+ community.
The Nominating and Corporate Governance Committee has determined that all of our directors meet the criteria and
qualifications set
forth
in
the
Company’s
Code
of
Ethics,
the
Corporate
Governance
Guidelines
and the criteria summarized above for director nominees.
Subject
to
any
earlier resignation or
removal
in
accordance
with
the
terms
of
our
certificate of
incorporation, our bylaws and the Stockholders’ Agreement, our Class I directors will serve until the Annual Meeting, our Class II directors will serve until the annual meeting of stockholders to be held in fiscal year 2026, and our Class III directors will serve until the annual meeting of stockholders to be held in fiscal year 2027. In addition, our
certificate of
incorporation provides
that
as
long
as
our
Principal Equity
Owners
beneficially own
(directly or indirectly) 50% or more of the voting power of the Company entitled to vote, directors may be removed with or without cause upon the affirmative vote of at least a majority of the voting power of our outstanding shares of stock entitled to vote thereon. However, once our Principal Equity Owners cease to beneficially own in the aggregate (directly or indirectly) 50% or more of the voting power of the Company, our directors may be removed only for cause upon the affirmative vote of at least 66 2/3% of the voting power of our outstanding shares of stock entitled to vote thereon.
Stockholders’
Agreement
Our current directors were nominated in accordance with the Stockholders’ Agreement described under “Certain Relationships and Related Party Transactions— Stockholders’ Agreement,” under which, while we were still a controlled company, our Principal Equity Owners had the right to designate all of the nominees to our Board subject to the maintenance of certain ownership requirements. We were a controlled company at the time our current directors were nominated to our Board.
As a result of decreases in the ownership of our outstanding common stock by Permira and Warburg Pincus following their sales or transfers of our common stock, the Stockholder's Agreement terminated with respect to Permira and Warburg Pincus and we are no longer a controlled company. As we are no longer a controlled company, pursuant to the Stockholder's Agreement, Welsh Carson has the right to designate two members of our Board so long as it and its affiliates own more than 5% of our outstanding common stock. The Stockholders’ Agreement provides that the
10
authorized number of directors will not increase
above
eleven
for
so
long
as
the common stock by Welsh Carson and its affiliates continue to exceed such 5% threshold.
Stockholder Recommendations for Director
Nominees
The Nominating and Corporate Governance Committee will consider stockholder nominations for membership on the Board. For the 2026 Annual Meeting, nominations may be submitted to 777 W. Main St., Suite
900,
Boise,
ID.
83702,
Attn:
Chief
Legal
Officer
and
Corporate
Secretary,
and
such
nominations will
then be forwarded to the Chair of the Nominating and Corporate Governance Committee.
Subject
to
the
terms
of
our
certificate of
incorporation and
bylaws,
as
well
as
the
Stockholders’ Agreement, the Nominating and Corporate Governance Committee will identify the desired skills and experience of a new director and will nominate individuals who it believes can strengthen the Board’s capabilities and further diversify the collective experience represented by the then-current directors. The Nominating and Corporate Governance Committee may engage third parties to assist in the search and provide recommendations. Also, directors are generally asked to recommend candidates for the position. The candidates will then be evaluated based on the process outlined in our Corporate Governance Guidelines and the Nominating and Corporate Governance Committee Charter, and the same process will be used for all candidates, including candidates recommended by stockholders.
Our
Human
Capital
Management
and
Culture
We have a team-oriented culture and encourage candor from our employees, which we believe helps us to succeed and drive operational excellence. We also seek to, and have a history of, promoting from within our organization as
well
as
hiring
top
talent
from
outside
of
our
company
to
expand
our
capabilities.
We aim to hire individuals who share our passion, commitment and entrepreneurial spirit. We are also committed to
diversity and
inclusion
because
we
believe
that
diversity leads
to
better
outcomes
for
our
business and enables us to better meet the needs of our clients. We recognize the importance of diversity in leadership roles within our company.
We encourage our employees
to operate by a common set of values, which includes
being:
•
Infectiously
passionate
about
Clearwater;
•
Intensely
committed
to our
clients;
•
Devoted to building an outstanding,
engaged
team;
•
Focused on execution and dedicated
to getting things
done;
•
Continuously innovative and
improving;
•
Dedicated
to
building
truly
differentiated
offerings;
and
•
Committed
to having values
beyond
reproach.
We
believe
that
operating
with
purpose,
passion
and
creativity
benefits
our
clients,
stockholders,
employees and suppliers, as well as the communities where we operate, and the environment.
Environmental,
Social
and
Governance
(“ESG”)
Clearwater has adopted ESG objectives designed to create long-term value and manage risks.
Clearwater’s Board of Directors has delegated oversight of development and implementation of the Company’s focus and objectives regarding environmental, social, and governance and sustainability matters to the Nominating and Corporate Governance Committee and has also delegated oversight of human capital management, including corporate culture and diversity and inclusion, to the Compensation Committee. Clearwater has also launched individual committees for Environmental, Social and Governance with members across functions and geographies.
Clearwater has a number of on-going ESG initiatives and has demonstrated progress in several of these areas, including offering employee benefits that promote responsible transportation, volunteerism and charitable contributions, and transitioning to a cloud-based server provider. Clearwater has a diverse Board of Directors that
is
60%
comprised
of
directors who identify as a
female,
a
racial
and
ethnic
minority,
or a member of the
LGBTQ+
community
.
Clearwater
has also instituted leading information security practices to meet the high security expectations of its client base.
Clearwater is particularly proud of Clearwater Cares, our corporate social responsibility program, through which we have worked with our employees to identify three company-wide priorities: science, technology, engineering and mathematics (or STEM) education, human services and sustainability. For example as part of Clearwater’s “Season of Giving” initiatives, in Boise, Idaho, over one hundred employees continue to donate a portion of each paycheck to the
11
Idaho STEM Action Foundation and Idaho Food Bank. In addition, employees have volunteered at an Hour of Code event helping local students build their STEM knowledge and learn more about career opportunities. Clearwater donated additional funds to the Idaho STEM Action Foundation for classroom tools for robotics and game design. Clearwater has donated to food drives in Boise, Idaho, Seattle, Washington, London, England, Edinburgh, Scotland and Noida, India; and donated to children’s charities and animal care programs in our other office locations. In India, we have partnered with the “Salma Public School” and “Happy Children’s Library,” where employees conduct teaching sessions, science days, sports days, education tours and other activities. Clearwater also donated to “Teach for India,” supporting the organization’s mission to provide an excellent and equitable education for children from low-income communities. Employees have also worked with a local non-governmental agency to donate winter essentials to the underprivileged.
We
offer
our
employees
16
hours
of
paid
time off to perform volunteer services and have matched employee donations to company identified charities.
Board
Meetings and
Committees
As noted above, we are no longer a controlled company under the applicable NYSE listing rules. Our Board has an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance
Committee. In
the
future,
our
Board
may
establish other
committees, as
it
deems
appropriate, to assist it with its responsibilities.
In 2024, our Board held 8 meetings, the Audit Committee held 9 meetings, the Compensation Committee held 4 meetings and the Nominating and Corporate Governance Committee held 4 meetings. Directors are encouraged to attend the annual meeting of stockholders and all or substantially all of the Board meetings and meetings of committees on which they serve. In 2024, each director attended at least 75% of the meetings of the Board
during
such
director’s tenure
and
the
total
number
of
meetings
held
by
any
of
the
committees of
the
Board on which the director served.
Each
of
our
standing
committees
has
a
written
charter,
which,
together
with
our
Corporate
Governance Guidelines and Code of Ethics, are available on the Investor Relations page of our website at https:// investors.clearwateranalytics.com. Our website is not part of this Notice and Proxy Statement.
The table below
sets
forth the composition of our Board committees as of April 29, 2025:
| Board Member | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |||||||||||||||||
| Eric Lee, Chair | X(Chair) | X(Chair) | ||||||||||||||||||
| Jacques Aigrain | X | |||||||||||||||||||
| Kathleen A. Corbet | X(Chair) | |||||||||||||||||||
| Cary Davis | X | X | ||||||||||||||||||
| Christopher Hooper | X | |||||||||||||||||||
| Sandeep Sahai | ||||||||||||||||||||
| Andrew Young | X | X | ||||||||||||||||||
| Lisa Jones | X | |||||||||||||||||||
| Jaswinder Pal Singh | ||||||||||||||||||||
| D. Scott Mackesy | X | |||||||||||||||||||
Audit
Committee
Our Board has established an Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act that is responsible for, among other matters: (1) appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; (2) discussing with our
independent
registered
public
accounting
firm
its
independence
from
us;
(3)
reviewing
with
our
independent registered public accounting firm the matters required to be reviewed by applicable auditing requirements; (4) approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; (5) overseeing the financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the SEC;
(6)
reviewing
and
monitoring
our
internal
controls,
disclosure
controls
and
procedures
and
compliance
with legal and regulatory requirements; (7) establishing procedures for the confidential anonymous submission of concerns regarding questionable accounting, internal controls, auditing and federal securities law matters; (8) reviewing and approving related person transactions and (9) providing risk oversight, including with respect to
cybersecurity risk.
The
foregoing
is
a
summary
of
the
responsibilities of
the
Audit
Committee. For
a
full
list
of responsibilities, please refer to our Audit Committee charter, which can be found on the Company’s website, https://clearwateranalytics.com/, by
12
clicking on “Investors” and then clicking on “Governance Documents.” Information contained on this website is not a part of this Proxy Statement, and the inclusion of this website address in this Proxy Statement is an inactive textual reference only.
Our
Audit
Committee
currently
consists of
Ms.
Corbet,
Mr.
Aigrain
and Ms.
Jones,
with
Ms.
Corbet
serving
as
chair.
Our Board previously determined at the respective times of their appointment that each current member of our Audit Committee meets the definition of “independent
director”
under
Rule
10A-3
under
the
Exchange
Act
and
NYSE
rules.
Additionally,
our
Board previously determined that each of Ms. Corbet, Mr. Aigrain and Ms. Jones is an “audit committee financial expert” as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable NYSE rules and regulations. Following the election of new directors at the Annual Meeting, we expect the Audit Committee to consist of Mr. Aigrain, Mr. Aghi and Ms Jones, with Mr. Aigrain serving as Chair. The Board has determined that Mr. Aghi meets the definition of “independent director” under Rule 10A-3 under the Exchange Act and NYSE rules and
is an "audit committee financial expert" as defined by applicable SEC rules and has the requisite financial sophistication as defined under the applicable NYSE rules and regulations.
Compensation Committee
Our Compensation Committee is responsible for, among other matters: (1) reviewing officer and executive compensation
goals,
policies,
plans
and
programs;
(2)
reviewing
and
approving
or
recommending
to
our
Board
or the independent directors, as applicable, the compensation of our directors, Chief Executive Officer and other executive officers; (3) reviewing and approving employment agreements and other similar
arrangements between us and our officers and other key executives; and (4) appointing and overseeing any compensation consultants.
Our
Compensation
Committee consists
of
Mr.
Lee,
Mr.
Davis,
Mr.
Mackesy
and
Mr.
Young,
with
Mr.
Lee serving as chair. Our Board has determined that each member of our Compensation Committee meets the requirements for independence under current rules and regulations of the SEC and NYSE.
Each member of the Compensation Committee is a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Exchange Act, and an outside director, as defined pursuant to Section 162(m) of the Internal
Revenue Code of 1986, as amended (the
“Code”).
Nominating and Corporate Governance Committee
Our
Nominating
and Corporate Governance Committee
is responsible for, among other
matters:
(1) identifying individuals qualified to become members of our Board, consistent with criteria approved by our Board; (2) overseeing the organization of our Board to discharge the board’s
duties
and
responsibilities properly
and
efficiently; and
(3)
developing
and
recommending
to
our
Board a set of corporate governance guidelines and principles.
Our Nominating and Corporate Governance Committee consists of Mr. Lee, Mr. Davis, Mr. Hooper and Mr. Young, with Mr. Lee serving as chair. Our Board has determined that each member
of
our
Nominating
and
Corporate
Governance
Committee
meets
the
requirements
for
independence under current rules and regulations of the SEC and NYSE.
Board
Leadership
Structure
The
following
section
describes
our
Board
leadership
structure,
the
reasons
our
Board
considers
that
this structure is appropriate at this time, the roles of various positions, and related key governance practices. Our Board believes that the mix of experienced independent directors, both affiliated and unaffiliated with our Principal Equity
Owners
that
currently make
up
our
Board,
the
composition of
our
Board
committees and
the
separation of the roles of Chair and Chief Executive Officer benefit the Company and its stockholders and are appropriate based on the size and nature of our business.
Independence
Our Board has affirmatively declared that all of the directors except for Sandeep Sahai, the Company's Chief Executive Officer, are independent under the current rules and regulations of the NYSE. Audit Committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, which requires that the Audit Committee consist exclusively of independent directors for purposes of Rule 10A-3. Our Board
has
determined that
each
of
Mr.
Aigrain,
Ms.
Corbet
and
Ms.
Jones,
each
of
whom
currently serves
on
the Audit Committee, as well as Mr. Aghi, who is nominated for election at the Annual Meeting and following such election will replace Ms. Corbet on the Audit Committee, is an independent director for purposes of Rule 10A-3. As a result, a majority of the members on our Board are independent and we have a fully independent Audit Committee, a fully independent Compensation Committee and a fully independent Nominating and Corporate Governance Committee.
13
Chair and Chief Executive Officer
With respect to the roles of Chair and Chief Executive Officer, our Corporate Governance Guidelines provide
for
the
separation of
the
roles.
The
Board
believes
that
separating the
roles
of
Chair
and
Chief
Executive Officer
is
the
most
effective leadership structure because
it
allows
for
Mr.
Sahai
to
focus
on,
among
other
things, executing our
strategic plans and
overseeing day-to-day operations. Meanwhile, in
his
capacity as
chair, Mr.
Lee can focus on leading the Board, ensuring that it provides strong oversight of management and that all directors have access to the resources required to discharge their duties appropriately.
Self-Evaluation
Using survey materials and Board and committee discussions, our Nominating and Corporate Governance Committee annually coordinates performance evaluations of our Board, Audit Committee, Compensation
Committee
and
Nominating
and
Corporate
Governance
Committee
to
determine
whether
the Board, these committees and management are functioning together effectively. The 2024 evaluations were conducted in February 2024 and the 2025 evaluations will be conducted in the second half of 2025.
Code
of
Ethics
We
maintain a
Code
of
Ethics
that
is
applicable to
all
our
directors, officers and
employees,
including
our Chief Executive Officer, Chief Financial Officer and other senior officers. The Code of Ethics sets forth our policies and expectations on a number of topics, including conflicts of interest, corporate opportunities, confidentiality, compliance with
laws
(including
insider
trading
laws),
use
of
our
assets
and
business
conduct
and fair dealing. The Code of Ethics may be found on our website at https://investors.clearwateranalytics.com under Governance: Governance Documents: Code of Ethics.
If we make any substantive amendments to, or grant any waivers from, the Code of Ethics for our principal executive
officer,
principal
financial
officer,
principal
accounting
officer
or
persons
performing
similar
functions, or any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.
Insider Trading Arrangements and Policies
We have
adopted
an Insider Trading Policy governing the purchase, sale, and/or other dispositions of our securities by our directors, officers, employees and others that we believe is reasonably designed to promote compliance with insider trading laws, rules and regulations. A copy of our Insider Trading Policy was filed as Exhibit 19.1 to the 2024 Annual Report.
Anti-Hedging and Anti-Pledging
Policy
The Company’s Insider Trading Policy requires executive officers and directors to consult the Company’s Chief Legal Officer, Chief Financial Officer or Chief Executive Officer prior to engaging in transactions involving the Company’s securities. In order to protect the Company from exposure under insider trading laws, executive officers and directors are encouraged to enter into pre-programmed trading plans under Exchange Act Rule
10b5-1.
The
Company’s
Insider
Trading
Policy
prohibits
directors
and
employees
(including
officers)
from trading in publicly traded options, puts and calls or similar instruments on the Company’s securities or selling such securities short. In addition, absent pre-approval, directors and employees (including officers) are prohibited from pledging the Company's equity securities or engaging in any
transactions (including
variable
forward
contracts, equity
swaps,
collars
and
exchange
funds)
that
are designed to hedge or offset any decrease in the market value of the Company’s equity securities.
Anti-Corruption
Policy
The
Company’s
Anti-Corruption
Policy
requires
compliance
with
all
laws,
domestic
and
foreign,
including, but
not
limited to,
the
U.S.
Foreign
Corrupt
Practices Act
of
1977
and
the
UK
Bribery
Act,
prohibiting improper payments or inducements to any person, including government officials. The Anti-Corruption Policy provides guidance on the types of improper payments that the Company prohibits and how to recognize and deal with corruption, bribery, and other unethical conduct.
Board’s
Role
in
Risk
Oversight
Our management is responsible for identifying and managing risks facing our Company. Our Board is responsible for understanding
the
principal risks
associated with
our
business
on
an
ongoing
basis
and
for
overseeing
the key risk decisions of management. The Board accomplishes this oversight both directly through its interactions with management, including through periodic detailed operating performance reviews, and through its Audit Committee, Compensation
14
Committee and Nominating and Corporate Governance Committee. The Board considers this information and provides feedback, makes recommendations, and, as appropriate, authorizes or directs management to address exposures to risk.
The
Audit
Committee
reviews
and
discusses
with
management
and
the
Company’s
auditors,
as
appropriate,
the
Company’s
major
risk
exposures
and
the
steps
taken
by
management
to
monitor
and
control
these
exposures, including
the
Company’s
procedures
and
related
policies
with
respect
to
risk
assessment
and
risk
management.
The
Compensation
Committee
reviews
the
compensation
arrangements
for
the
Company’s
employees
to evaluate whether incentives and other forms of pay encourage unnecessary or excessive risk taking.
The
Nominating
and
Corporate
Governance
Committee
oversees
and
reviews
the
Company’s
major corporate governance risks.
Board Oversight of Cybersecurity Risks
Our Board considers cybersecurity risk as part of its overall enterprise risk oversight function and has delegated to the Audit Committee primary oversight of cybersecurity and other IT risks. The Audit Committee oversees management’s implementation of our cybersecurity risk management program.
Our Chief Information Security Officer regularly briefs the Audit Committee on our cybersecurity program and threat posture. These sessions may address a wide range of topics including recent developments, emerging threats, vulnerability assessments, third-party and independent reviews, and information security considerations arising with respect to our vendors and other third parties.
The Audit Committee periodically reports to the full Board regarding its activities, including in relation to its oversight of cybersecurity risks. The full Board also discusses cybersecurity matters with management at least annually.
Compensation
Committee
Interlocks
and
Insider
Participation
None of our executive officers currently serves, or in the past fiscal year has served, as a member of the board
or
compensation committee of
any
entity
that
has
one
or
more
executive
officers serving
on
our
Board
or our Compensation Committee.
Communications
by
Stockholders
and
Other
Interested
Parties
with
the
Board
Stockholders and other interested parties may contact an individual director, the Board as a group, or a specified Board
committee or
group,
including
the
independent
directors as
a
group,
by
sending
regular
mail
to:
Clearwater
Analytics
Holdings,
Inc.
777 W. Main St, Suite
900
Boise,
ID
83702
Telephone:
(208)
433-1200
Attention:
Board
of
Directors
c/o Chief Legal Officer and Secretary
Each
communication
should
specify
which
director
or
directors
the
communication
is
addressed
to,
as
well as the general topic of the communication. The Company will receive the communications and process them before forwarding them to the addressee. The Company may also refer communications to other departments within
the
Company.
The
Company
generally
will
not
forward
to
the
directors a
communication that
is
primarily commercial in nature, relates to an improper or irrelevant topic, or requests general information regarding the
Company.
Director
Compensation
For 2024, the Compensation Committee and the Board used compensation information regarding the Peer Group identified in the “Executive Compensation – Compensation Discussion and Analysis” section of this Proxy Statement to review director compensation and left it unchanged from 2023. Each director not affiliated with a Principal Equity Owner is eligible to receive an annualized cash retainer equal to $40,000 per calendar year for serving on the Board. In addition, Mr. Aigrain and Mses. Corbet and Jones are each currently, and when appointed to the Audit Committee Mr. Aghi will be, eligible to receive an annualized cash retainer equal to $10,000 for serving on the Audit Committee, and Ms. Corbet is currently, and Mr. Aigrain will be following the Annual Meeting, eligible to receive an annualized cash retainer equal to $20,000 for serving as the chair of the Audit Committee.
Each director not affiliated with a Principal Equity Owner is eligible to receive an annual grant of time-based restricted stock units ("RSUs") having a value equal to $200,000 (the "Annual Director Equity Retainer Amount"), with the number of RSUs to be granted to be calculated by dividing the Annual Director Equity Retainer Amount by the 10
15
trading-day average closing share price leading up to the date of grant. Grants will be made annually on the date of the annual stockholder meeting and will vest at the next annual general stockholder meeting. Consistent with our director compensation policy, on June 11, 2024, the date of our 2024 Annual Meeting, Mr. Aigrain, Ms. Corbet, Ms. Jones and Dr. Singh each received 10,334 RSUs that will vest at our Annual Meeting, at which time Mr. Aghi, Mr.Aigrain, and Ms. Jones will receive RSU grants that will vest at our 2026 Annual Meeting.
In February 2025, in connection with its annual review of director compensation, upon the recommendation of the Committee, the Board resolved to grant to any new directors joining the Board (not affiliated with a Principal Equity Owner) RSUs valued at 1.75 times the Annual Director Equity Retainer Amount at the time of joining the Board, which grant will vest as to one-third on each of the first three anniversaries of the date of the grant. In light of this structure for new directors, upon the recommendation of the Compensation Committee, the Board resolved to issue to each serving director (not affiliated with a Principal Equity Owner) at the time of the Annual Meeting, an additional grant of RSUs valued at 0.75 times the Annual Director Equity Retainer Amount, which grant will vest as to one-third on each of the first three anniversaries of the date of grant.
All of our directors will also continue to be reimbursed for their reasonable out-of-pocket expenses related to their Board service.
The
following
table
presents
the
total
compensation for
each
person
who
served
as
a
member
of
our
Board during 2024. Messrs. Lee, Davis, Hooper, Mackesy and Young are affiliated with Principal Equity Owners and did not receive any compensation for their service on the Board.
| Name |
Fees Earned or
Paid in Cash
(1)
($)
|
Option Awards
(2)(3)
($)
|
Stock Awards
(3)(4)
($)
|
Total ($) | ||||||||||||||||||||||
| Jacques Aigrain | 50,000 | — | 207,713 | 207,713 | 257,713 | |||||||||||||||||||||
| Kathleen A. Corbet | 156,000 | — | 207,713 | 207,713 | 363,713 | |||||||||||||||||||||
| Lisa Jones | 146,000 | — | 207,713 | 207,713 | 353,713 | |||||||||||||||||||||
| Jaswinder Pal Singh | 40,000 | — | 207,713 | 207,713 | 247,713 | |||||||||||||||||||||
| Eric Lee | — | — | — | — | ||||||||||||||||||||||
| Cary Davis | — | — | — | — | ||||||||||||||||||||||
| Christopher Hooper | — | — | — | — | ||||||||||||||||||||||
| Andrew Young | — | — | — | — | ||||||||||||||||||||||
| D. Scott Mackesy | — | — | — | — | ||||||||||||||||||||||
(1)
Amounts
in this
column reflect
the cash
compensation
earned by
directors
in
2024. For Kathleen A. Corbet and Lisa Jones, these amounts reflect $96,000, at a rate of $3,000 per meeting, paid to them in connection with service on a Special Committee in relation to the Company's TRA Buyout.
(2)
We did not grant any stock options to our directors in 2024.
(3)
The
aggregate
number
of
options
outstanding
and
aggregate
number
of
stock
awards
outstanding
held
by our non-employee directors as of December 31, 2024, are set forth in the table below.
| Name |
Number of Option Awards
Outstanding |
Number of Stock
Awards
Outstanding
|
||||||||||||
|
Jacques
Aigrain
|
69,800 | 10,334 | ||||||||||||
| Kathleen A. Corbet | 70,960 | 10,334 | ||||||||||||
| Lisa Jones | — | 10,334 | ||||||||||||
| Jaswinder Pal Singh | — | 10,334 | ||||||||||||
(4)
Amounts
reported
in
this
column
reflect the
aggregate
grant
date
fair
value
of
RSUs made to our directors in 2024,
computed
in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures).
16
PROPOSAL
2
–
RATIFICATION
OF
APPOINTMENT
OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Audit
Committee
has
appointed
KPMG
LLP
to
serve
as
our
independent
registered
public
accounting firm for 2025.
Although
ratification is
not
required
by
our
bylaws
or
otherwise,
the
Board
is
submitting the
appointment of KPMG LLP to our stockholders for ratification because we value our stockholders’ views on the Company’s independent registered public accounting firm. If our stockholders fail to ratify the appointment, it will be considered as notice to the Board and the Audit Committee to consider the appointment of a different firm. Even if the appointment is ratified, the Audit Committee, in its discretion, may appoint a different independent registered public accounting firm at any time if it determines that such a change would be in the best interests of the Company and our stockholders.
A
representative of
KPMG
LLP
is
expected
to
attend
the
Annual
Meeting.
The
representative will
also
have the opportunity to make a statement if he or she desires to do so, and the representative is expected to be available to respond to appropriate questions.
The
shares
represented by
your
proxy
will
be
voted
“FOR”
the
ratification of
the
appointment of
KPMG LLP unless you specify otherwise.
Fees
and
Services
The
following
table
summarizes the
aggregate
fees
for
professional audit
services
and
other
services rendered by KPMG LLP for the years ended December 31, 2024 and 2023:
| 2024 | 2023 | |||||||||||||
|
Audit
fees
(1)
|
$ | 2,002,000 | $ | 2,235,000 | ||||||||||
|
Audit-related
fees
(2)
|
624,000 | 542,000 | ||||||||||||
|
Tax
fees
(3)
|
503,000 | 566,000 | ||||||||||||
| All other fees | — | — | ||||||||||||
| Total | $ | 3,129,000 | $ | 3,343,000 | ||||||||||
(1)
Audit
fees
include
fees for
our
annual integrated audit
and
quarterly
review
procedures and fees related to services for other regulatory filings.
(2)
Audit-related fees
include
fees
for
attestation services.
(3)
Tax fees include fees primarily
for tax compliance
services.
All
of
the
services
shown
in
the
table
above
were
pre-approved
by
the
Audit
Committee. In
considering
the nature of the services provided by the independent auditor, the Audit Committee determined that such services are compatible with the provision of independent audit services.
Pre-Approval
Policy
for
Services
of
Independent
Registered
Public
Accounting
Firm
Consistent
with
SEC
requirements
regarding
auditor
independence
and
the
Audit
Committee’s
charter,
the Audit Committee has responsibility for engaging, setting compensation for and reviewing the performance of KPMG LLP. In exercising this responsibility, the Audit Committee has established procedures relating to the approval of all audit and non-audit services that are to be performed by KPMG LLP and pre-approves
all audit
and permitted
non-audit services provided
by KPMG
LLP
prior to
each
engagement.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2025.
17
REPORT
OF
THE
AUDIT
COMMITTEE
The Audit Committee operates pursuant to a charter which is reviewed annually by the Audit Committee
and
Board.
Additionally,
a
brief
description of
the
primary
responsibilities of
the
Audit
Committee is included in this Proxy Statement under “Board of Directors and Corporate Governance—Board Meetings and Committees—
Audit Committee
.” Under the Audit Committee charter, our management is responsible for preparing the Company’s financial statements, determining that they are complete, accurate, and in accordance with generally accepted accounting principles and establishing satisfactory disclosure controls and internal
control over financial reporting. The
independent registered public accounting firm is responsible for expressing an opinion on the conformity of the audited financial statements with U.S. generally accepted accounting principles. The Company’s internal and outside counsel are responsible for compliance
with laws and regulations and the Company’s corporate governance policies.
In the performance of its oversight function, the Audit Committee reviewed and discussed the audited financial statements of the Company with management and with KPMG LLP. The Audit Committee also discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. In addition, the Audit Committee received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements
of
the
PCAOB
regarding
the
independent
registered
public
accounting
firm’s
communications
with the
Audit
Committee
concerning
independence and
discussed
with
the
independent
registered
public
accounting firm their independence.
Based upon the review and discussions described in the preceding paragraph, the Audit Committee recommended to
the
Board
that
the
audited
financial statements of
the
Company
be
included
in
the
2024
Annual Report.
Submitted
by
the
Audit
Committee
of
the
Company’s
Board:
Kathleen A.
Corbet
, Chair
Jacques
Aigrain
Lisa
Jones
18
EXECUTIVE OFFICERS
Below
is
a
list
of
the
names,
ages,
positions,
and
a
brief
account
of
the
business
experience
of
the individuals who serve as the executive officers of the Company as of April 25, 2025:
| Name | Age | Position(s) Held | ||||||||||||
| Sandeep Sahai | 62 | Chief Executive Officer and Director | ||||||||||||
| Jim Cox | 53 | Chief Financial Officer | ||||||||||||
| Scott Erickson | 45 | Chief Revenue Officer | ||||||||||||
| Souvik Das | 53 | Chief Technology Officer | ||||||||||||
| Subi Sethi | 49 | Chief Operating Officer | ||||||||||||
Sandeep
Sahai
has
been
our
Chief
Executive
Officer
since
July
2018
and
a
Director
since
September
2016 (including service as the Chief Executive Officer and a director of CWAN Holdings, LLC prior to the IPO). During his tenure, the Company has grown across both its core markets and new regions. From a largely single office business, the Company now has offices and operating centers around the world and serves large and complex global customers. Before Clearwater, he held the title of Chief Executive Officer of Solmark from 2014 to June 2018, an investment partnership where he was the lead partner. Previously, Mr. Sahai worked at Headstrong from 2004 to 2011, including as President and Chief Operating Officer from 2007 to 2009, and President and Chief Executive Officer from 2009 to 2011. After Headstrong’s acquisition by Genpact in 2011, Mr. Sahai served as Senior Vice President
of
IT
Solutions
and
Capital
Markets
at
Genpact
from
2011
to
2014.
Mr.
Sahai
also
held
directorships at AIM
Software
(Austria) from
2015
to
2019,
Simeio
Solutions
from
2015
to
2020
and
Magic
Software
from
2014 to 2018. In addition, he served as an Operating Partner at Welsh Carson beginning in 2014. Mr. Sahai holds an engineering degree from the Indian Institute of Technology, Varanasi and an MBA from the Indian Institute of Management, Kolkata.
Jim Cox
has been our Chief Financial Officer since April 2019. Prior to Clearwater, Mr. Cox served as the Chief
Financial
Officer
at
Advent
Software
from
2009
until
Advent’s
sale
to
SSNC
in
2015
and
remained
with the company until 2016. He also served as Chief Financial Officer at Lithium Technologies,
Glassdoor and
Doximity. Mr. Cox began his career in public accounting at PricewaterhouseCoopers. Mr. Cox holds a bachelor’s degree in economics from Ohio University.
Scott
Erickson
has
been
our
Chief
Revenue
Officer since
April
2023.
Prior
to
that,
Mr.
Erickson
was
our President, Americas and
Asia
since December 2022,
and
our
President, Americas and
New
Markets from June 2021 to December 2022. Before that, he served as our Chief Operating Officer from June 2017 to June 2021. Mr. Erickson joined Clearwater in 2005 and has served in a number of roles leading multiple Clearwater departments,
such
as
Director
of
Operations
and
Client
Services,
Director
of
Product
Management,
Director
of both Client Services and Product Management, and Director of Sales. Mr. Erickson holds a bachelor’s degree from Whitman College and an MBA from Northwest Nazarene University.
Souvik Das
has been our Chief Technology Officer since August 2021. Mr. Das served as Chief Technology Officer at Zenefits from October 2017 to July 2021, where he was responsible for leading engineering, information security, IT, and business technology teams. Prior to Zenefits, he served as SVP Engineering at Grand Rounds from May 2016 to September 2017. Mr. Das holds a bachelor’s degree in computer
s
cience
and
e
ngineering
from
the
Indian
Institute of
Technology,
Kharagpur,
and
a
master’s degree
in computer science from the University of Georgia, Athens.
Subi
Sethi
has
been
our
Chief Operating Officer since April 23, 2025. Prior to being named Chief Operating Officer, Ms. Sethi was our
Chief
Client
Officer
since
January
2020.
Before
joining
Clearwater,
Ms.
Sethi
led the
end-to-end
operations
at
UnitedHealth
Group’s
Optum
Global
Solutions
from
March
2014
to
January
2020. Prior to joining Optum Global Solutions, she worked with Genpact from 2005 to 2014 across various leadership positions in functions like Operations, Quality, Transitions and Technology. Ms. Sethi holds a degree in mathematics from Delhi University and a degree in Advanced Management from the Institute of Management Technology, Ghaziabad.
19
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
This Compensation Discussion and Analysis ("CD&A") describes the philosophy, goals, process, components and other aspects of our
2024
executive compensation program and is intended to be read in conjunction with the tables that immediately follow this section, which provide further compensation information for the following named executive officers, or NEOs, for 2024:
| Name | Title | ||||
| Sandeep Sahai | Chief Executive Officer | ||||
| James Cox | Chief Financial Officer | ||||
| Scott Erickson | Chief Revenue Officer | ||||
| Souvik Das | Chief Technology Officer | ||||
| Subi Sethi |
Chief Operating Officer*
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Subi Sethi was named Chief Operating Officer in late April 2025. Prior to being named Chief Operating Officer, and at the time of the compensation decisions described herein, Ms. Sethi was our Chief Client Officer.
I. EXECUTIVE SUMMARY
Company Overview
Clearwater is a leading provider of SaaS-based solutions that bring transparency to the opaque world of investment accounting and analytics through a single instance, multi-tenant technology platform. Our cloud-native software provides investment accounting and reporting, performance measurement, compliance monitoring, planning and order management and risk analytics solutions for our clients, which include asset managers, insurance companies and large corporations. Our platform provides comprehensive accounting, data and advanced analytics, as well as highly configurable reporting for global investment assets, on a daily or on-demand basis.
We aim to hire individuals who share our passion, commitment and entrepreneurial spirit. We are also committed to our team-oriented culture, as well as supporting the well-being and inclusivity of all our employees because we believe that the well-being of our employees leads to better outcomes for our business and enables us to better meet the needs of our clients. We believe that operating with purpose, passion and creativity benefits our clients, stockholders, employees and suppliers, as well as the communities where we operate.
Executive Compensation Program Objectives
The primary objectives of our executive compensation program are to:
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Link pay to performance over short- and long-term periods;
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Align executive officers’ interests with those of the Company and our stockholders over the long term, generally through the use of equity as a key element of our executive compensation program;
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Establish components of the program that have purposes and goals that are aligned with our business strategy and objectives; and
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Deliver market competitive compensation to attract, motivate and retain executive talent.
Considering these objectives, our 2024 executive compensation plan is designed to reward our executive officers for generating performance that achieves established Company goals and for increasing stockholder value. If we fall short of achieving Company and individual goals, we expect our executive officers’ compensation to reflect that performance accordingly.
2024 Select Financial Results
We
had a strong 2024, with revenue ("Revenue") growth of 23%, while also meaningfully improving both non-GAAP gross profit ("Non-GAAP Gross Profit") and adjusted EBITDA ("Adjusted EBITDA").
• Total revenue was $451.8 million, an increase of 23% from $368.2 million for 2023.
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• Annualized recurring revenue ("Annualized Recurring Revenue" or "ARR"), was $474.9 million, an increase of 25% from $379.1 million from 2023. ARR is calculated at the end of a period by dividing the recurring revenue in the last month of such period by the number of days in the month and multiplying by 365.
• Gross revenue retention rate ("Gross Revenue Retention Rate") was 98% as of December 31, 2024, consistent with the Company’s Gross Revenue Retention Rate as of December 31, 2023. The Company has reported a Gross Revenue Retention Rate of at least 98% for 23 of the past 24 quarters. Gross Revenue Retention Rate represents annual contract value (“ACV”) at the beginning of the 12-month period ended on the reporting date less client attrition over the prior 12-month period, divided by ACV at the beginning of the 12-month period, expressed as a percentage. ACV is comprised of Annualized Recurring Revenue plus contracted-not-billed revenue, which represents the estimated annual contracted revenue for new and existing client opportunities prior to revenue recognition.
• Net revenue retention rate ("Net Revenue Retention Rate") was 116% as of December 31, 2024, compared to 107% as of December 31, 2023. Net Revenue Retention Rate is the percentage of recurring revenue from clients on the platform for 12 months and includes changes from the addition, removal, or value of assets on our platform, contractual changes that have an impact on Annualized Recurring Revenue and lost revenue from client attrition.
• Net income in 2024 was $427.6 million, compared with net loss of $(23.1) million in 2023.
• Income from operations in 2024 was $12.2 million, compared with loss from operations of $(16.7) million in 2023.
• Adjusted EBITDA in 2024 was $145.7 million, up 38% from $105.9 million in 2023. Adjusted EBITDA is defined as net loss plus (i) interest income, net, (ii) depreciation and amortization expense, (iii) equity-based compensation expense and related payroll taxes, (iv) tax receivable agreement expense, (v) transaction expenses, (vi) amortization of prepaid management fees and reimbursable expenses, (vii) provision for (benefit from) income taxes, and (viii) other income, net.
• Adjusted EBITDA margin ("Adjusted EBITDA Margin") in 2024 was 32% as compared to 29% in 2023. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue.
For a reconciliation of non-GAAP measures, see Appendix A to this Proxy Statement
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II. EXECUTIVE COMPENSATION OBJECTIVES
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Pay-for-performance
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Our executive compensation program is designed to motivate our executive officers to achieve key business goals by linking their performance and the Company’s performance to the compensation our executive officers receive. As such, we intend for a significant portion of the total compensation of our executive officers to be based on measures that support our Company goals. To strengthen this link, we define clear and measurable quantitative objectives that are designed to foster achievement of results and returns to stockholders.
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Alignment of executive officers’ interests with those of the Company and its stockholders
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A significant portion of our NEOs’ overall compensation is in the form of equity-based compensation. We use equity as the form for long-term incentive opportunities in order to motivate and reward the NEOs to (i) achieve multi-year strategic goals, and (ii) deliver sustained long-term value to stockholders. Equity compensation creates strong alignment between the interests of our executive officers and those of our stockholders in stock price performance. Further, it fosters an ownership culture among our NEOs by making our NEOs stockholders with a personal stake in the stockholder value they are being incentivized to create.
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Alignment of executive officers’ incentives with the execution of our business strategy and achievement of key business goals
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In order to accomplish our strategic and long-term business and stockholder value creation goals, we structure our executive compensation program to incentivize our executive officers to execute the key steps in our corporate strategy and to achieve our long-term corporate goals. We believe that the majority of an executive’s total target compensation should be variable and tied to achievement of measurable financial and strategic objectives. Performance measures are reviewed annually to ensure that we continue to align our pay programs with our business strategy, create sustainable value, and motivate the right behaviors.
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Provide market competitive pay to attract and retain talent
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In our dynamic industry, we must compete in the market for executive talent. We seek executive officers and managers to implement our business strategy and lead our business who have diverse experience, expertise, capabilities and backgrounds. In recruiting our executive officers and determining competitive pay levels, we reference the compensation structures of executive officers of the companies in our peer group. Executive officers’ total compensation may vary from the level referenced in the peer group in order to attract or retain certain individuals or reflect their respective characteristics or performance.
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Compensation Program Governance
The Compensation Committee (the “Committee”) assesses the effectiveness of our executive compensation program from time to time and reviews risk mitigation and governance matters, which includes maintaining the following best practices:
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What We Do
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Pay for Performance
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The majority of total executive compensation opportunity is variable and at-risk.
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Independent Compensation Consultant
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The Committee engaged an independent compensation consultant to provide information for use in its decision-making.
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Clawback Erroneous Awarded Incentive Compensation
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We have instituted a clawback policy designed to recoup erroneous awarded incentive-based compensation paid to covered executives in the event of an accounting restatement of the Company's financial statements.
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Stock Ownership Guidelines
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Executive officers are required to maintain meaningful levels of share ownership.
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Peer Data Review
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We develop a peer group of companies based on industry, revenue, and market capitalization to reference for compensation decisions.
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What We Don’t Do
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No Excessive Perks
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We do not provide any significant perquisites to executive officers that are not offered to our broader employee population.
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No Hedging or Pledging of Company Shares
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We do not permit our executive officers and directors to hedge or pledge their Company shares.
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No Guaranteed Performance Bonuses
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We do not provide guaranteed performance bonuses to our NEOs at any minimum levels of payment under our annual cash incentive plan.
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No repricing of stock options or grant of discounted stock options
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We do not reprice options without stockholder approval or grant discounted options.
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III. COMPENSATION DETERMINATION PROCESS
Role of the Board and Committee
The Committee establishes our compensation objectives and determines the structure, components and other elements of executive compensation. The Committee believes that the total compensation paid to our executive officers should be fair, reasonable and competitive, and that a significant portion of the total compensation should be tied to our annual and long-term performance.
For our annual cash incentive program, the Board obtains input from executive officers regarding the annual operating plan, expected financial results, anticipated operating achievements and related risks. Based on this information, the Board then establishes the performance-based metrics and targets for the annual incentive program.
In accordance with its charter, the Committee reviews and evaluates the performance of the CEO and develops recommendations regarding the base salary and aggregate amount of incentive compensation to be paid to the CEO, including the number and mix of PSUs and RSUs to be issued. While our CEO typically attends meetings of the Committee, the Committee meets outside the presence of our CEO when discussing his compensation. The Committee makes recommendations to the Board regarding CEO compensation, and the Board ultimately approves the compensation to be paid or granted to the CEO.
With the input of the CEO and our Chief Human Resource Officer (CHRO), the Committee also reviews and evaluates the performance of all the other executive officers, including the other NEOs, and develops recommendations regarding the base salary and aggregate amount of incentive compensation to be paid to them, including the number and mix of PSUs and RSUs. As part of this process, the CEO and our CHRO evaluate the market competitiveness of the various components of compensation and the performance of the other executive officers to make recommendations to the Committee regarding the compensation of each executive officer. The Committee makes recommendations to the Board regarding executive officer compensation, and the Board ultimately approves the compensation to be paid or granted to the executive officers.
Role of the Independent Compensation Consultant
The Committee recognizes the importance of obtaining objective, independent expertise and advice in carrying out its responsibilities. The Committee has the authority to retain an independent compensation consultant to assist it in the performance of its duties and responsibilities.
Since October 2023, the Committee has engaged Aon’s Human Capital Solutions practice, a division of Aon, plc (“Aon”), as its independent compensation consultant to advise on executive compensation matters. Aon reports directly
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to the Committee, and the Committee has the sole authority to retain, terminate and obtain the advice of Aon at the Company’s expense.
While the Committee takes into consideration the review and recommendations of its compensation consultant when making decisions about our executive compensation program, ultimately, the Committee makes its own independent decisions about compensation matters, and recommendations to the Board.
The Committee has assessed the independence of Aon pursuant to SEC and NYSE rules. In doing so, the Committee considered each of the factors set forth by the SEC and the NYSE with respect to a compensation consultant’s independence. The Committee also considered the nature and amount of work performed for the Committee and the fees paid for those services in relation to the firm’s total revenues. Based on its consideration of the foregoing and other relevant factors, including an assessment received from Aon, the Committee concluded that there were no conflicts of interest with Aon, and that Aon is independent.
Compensation Peer Group and Peer Selection Process
In making determinations about executive compensation, the Committee believes that obtaining relevant market data is important, because it serves as a reference point for making decisions and provides helpful context. When making decisions about the structure and component mix of our executive compensation program, the Committee takes into consideration the structure and components of, and the amounts paid under, the executive compensation programs of other comparable peer companies, as derived from public filings and other sources.
On December 8, 2023, the Committee, with the assistance of Aon, reviewed and revised the compensation peer group to be used in connection with 2024 executive compensation decisions to more closely align the peer group to the Company’s market profile and to remove companies that have been acquired. The primary criteria used to determine the peer group included US-based companies with the following characteristics:
Sector: Fintech and related application software companies
Market Cap: $1.6 billion to $14.1 billion with multiples of 0.3x to 3.0x projected FY2023 revenue
Revenue: $100 million to $1.1 billion, or 0.3x to 3.0x projected FY2023 revenue
Headcount: 600 to 5,200 employees, or a multiple range of 0.3x to 3.0x Clearwater’s then current headcount
Based on these criteria and considerations, the Committee approved a peer group for decisions relating to 2024 executive compensation that consisted of the following 20 companies:
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Alkami Technology, Inc. (ALKT)
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Confluent, Inc. (CFLT)
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Paylocity Holding Corporation (PCTY)
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AppFolio, Inc. (APPF)
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DoubleVerify Holdings, Inc. (DV)
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Q2 Holdings, Inc. (QTWO)
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Asana, Inc. (ASAN)
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Everbridge, Inc. (EVBG)
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Smartsheet, Inc. (SMAR)
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BlackLine, Inc. (BL)
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JFrog Ltd. (FROG)
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Sprout Social, Inc. (SPT)
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Braze, Inc. (BRZE)
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Guidewire Software, Inc. (GWRE)
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Varonis Systems, Inc. (VRNS)
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C3.ai, Inc. (AI)
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nCino, Inc. (NCNO)
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Vertex, Inc. (VERX)
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CCC Intelligent Solutions Holdings Inc. (CCCS)
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PagerDuty, Inc. (PD)
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Role of the CEO
The Committee works with our CEO to set the target compensation of each of our executive officers, including the other NEOs. As part of this process, the CEO, working with our CHRO, evaluates the market competitiveness of the various components of compensation and the performance of the other executive officers annually and makes recommendations to the Committee in the first quarter of the year regarding the compensation of each executive officer.
The CEO’s input is particularly important in connection with base salary adjustments and the determination of each executive officer’s goals under the annual cash incentive program. The Committee gives significant weight to the CEO’s recommendations in light of his greater familiarity with the day-to-day performance of his direct reports and the importance of incentive compensation in driving the execution of managerial initiatives developed and led by the CEO. While the Committee will consider the CEO's input, the Committee makes the ultimate determination regarding its recommendations with respect to compensation for the executive officers.
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Shareholder Say on Pay Vote
At our 2024 Shareholders Meeting held in June 2024, approximately 92% of the votes cast approved of the compensation of our named executive officers on an advisory basis. While the Committee believes this outcome reflects that there is strong alignment between the goals of our executive compensation program and the interests of our shareholders, the Committee has taken feedback from shareholders regarding the amount of stock based compensation paid by the Company, and has reduced the size of the equity grants to the NEOs in 2024 and started a transition to an annual grant cadence to reduce the Company’s stock based compensation as a percentage of revenue over time. The Committee intends to continue to consider shareholder concerns in determining executive compensation.
IV. COMPENSATION PROGRAM COMPONENTS
2024 Compensation Components and Mix
The Committee selected the components of compensation set forth in the chart below to achieve our executive compensation program objectives. The Committee regularly reviews all components of the program to verify that each executive officer’s total compensation is consistent with our compensation objectives and that the component is serving a purpose in supporting the execution of our strategy. The majority of each executive officer’s compensation is variable and at-risk, with a meaningful portion that is performance-based.
Long-term incentive equity awards are prospective in nature and intended to tie a substantial portion of an executive’s pay to creating long-term stockholder value. In the year ended December 31, 2024, the Committee structured the long-term incentive opportunity with PSUs and RSUs, in order to motivate executive officers to achieve multi-year strategic goals and deliver sustained long-term value to stockholders, and to reward them for doing so.
| Element | Description | Rationale | ||||||
| Base Salary |
Fixed cash compensation.
Determined based on each executive officer’s role, individual skills, experience, performance and external market value.
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Base salaries are intended to provide stable compensation to executive officers, allow us to attract and retain skilled talent and maintain a stable leadership team. | ||||||
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Short-Term Incentives: Annual Cash Award Opportunities
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Variable cash compensation based on the level of achievement of
predetermined annual corporate goals.
Performance metrics include several financial and operating objectives.
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Annual cash incentive opportunities are designed to ensure that executive officers are motivated to achieve
established annual goals and to reward them for doing so; payout levels are generally determined based on actual financial results and the degree of achievement.
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Long-Term Incentives: Equity-Based Compensation
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Variable equity-based compensation:
PSUs
RSUs
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Designed to motivate and reward executive officers to achieve strategic goals and objectives and to deliver sustained long-term value to stockholders, as well as to attract and retain executive officers.
Links with stockholder value creation; aligns with stockholders.
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For 2024, the Committee and the Board used compensation information regarding the Peer Group and its judgment to establish a total compensation program for each NEO that is a mix of current, short- and long-term incentive compensation, and cash and non-cash compensation. In addition, in setting the elements of compensation, the Committee considered prior compensation paid and amounts realizable from prior stock-based awards, as well as other benefits provided by the Company. For 2024 the Committee also prioritized reducing the Company’s stock based compensation as a percentage of revenue and moving towards an annual grant cadence as the Company’s compensation practices mature.
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Consistent with the Committee’s pay-for-performance philosophy, the majority of annual target total compensation is variable, at-risk pay. The Committee considers compensation to be “at-risk” if it is subject to operating performance or if its value depends on our stock price.
Each compensation element is discussed in more detail below and in the 2024 Summary Compensation Table and 2024 Grants of Plan-Based Awards table below.
Base Salary
Base salaries provide fixed compensation to executive officers and help to attract and retain the executive talent needed to lead the business and maintain a stable leadership team. Base salaries are individually determined according to each executive officer’s areas of responsibility, role and experience, and vary among executive officers based on a variety of considerations, including skills, experience, achievements and the competitive market for the position.
The base salaries for each of our executive officers in effect for 2024 and 2023, and the percentage change, are as follows:
| 2023 Base Salary | 2024 Base Salary | Change | |||||||||
| Named Executive Officer | ($) | ($) | (%) | ||||||||
| Sandeep Sahai | 653,400 | 653,400 | —% | ||||||||
| James Cox | 425,000 | 425,000 | —% | ||||||||
| Scott Erickson | 425,000 | 425,000 | —% | ||||||||
| Souvik Das | 425,000 | 440,000 | ~3.5% | ||||||||
| Subi Sethi | 325,000 | 350,000 | ~7.7% | ||||||||
From time to time, the Committee considers and approves base salary adjustments for executive officers. The main considerations for a salary adjustment are similar to those used in initially determining base salaries but may also include a change in the competitive market, a change of role or responsibilities, recognition for achievements or market trends. These factors were considered in determining the change in base salary for Mr. Das and Ms. Sethi for 2024.
Annual Cash Incentive
The annual cash incentive for 2024 is a cash-based program that rewards the NEOs for their achievement of key short-term objectives. The structure of the annual cash incentive program incentivizes the NEOs to achieve annual financial and operational results that the Committee views as critical to the execution of our business strategy. The amount of the payout, if any, under the annual cash incentive is based upon achievement relative to Company performance targets, which are described in greater detail below.
Target Opportunities
For 2024 and 2023, the target annual cash incentive opportunity for each of our NEOs (as a fixed dollar amount) is set forth below:
| Named Executive Officer |
2023 Target Incentive ($)
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2024 Target Incentive ($) | ||||||
| Sandeep Sahai | 784,080 | 784,080 | ||||||
| James Cox | 400,000 | 400,000 | ||||||
| Scott Erickson | 290,000 | 325,000 | ||||||
| Souvik Das | 225,000 | 264,000 | ||||||
| Subi Seti | 225,000 | 250,000 | ||||||
Performance Metrics: Scorecard
The annual cash incentive performance metrics are derived from the Company's performance goals or "scorecard," which are established by the Board based on our corporate strategy, striking an appropriate balance between establishing financial, strategic and operational goals that are rigorous and challenging, while also achievable. The Company's performance goals align with the goals that are applicable to the CEO on his scorecard. In order to drive achievement of the Company's scorecard, the CEO allocates performance metrics thereunder to each of the NEOs, as further described below. We use this scorecard approach because it is aligned with the view that the NEOs must drive advances on a range of fronts at the same time in order to execute our strategy and achieve our financial and other goals that are critical to our long-term success.
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Certain of the performance metrics, such as various measures of revenue, apply to several NEOs' scorecards, as described below, because they are key drivers of the Company’s near-term financial and operational success, and serve as the building blocks to create long-term stockholder value. No amount will be paid out with respect to any annual cash incentive opportunity if the performance is below the threshold, which is equal to 75% of performance targets, and achievement in excess of target performance may result in an increased payout without an established maximum.
The Board determined the targets for the Company, which are correspondingly the CEO’s performance metrics, in December 2023. These metrics were then used to determine corresponding metrics for each NEO by the CEO. The Board monitors the Company’s performance against the metrics set in December throughout the year. Based on each NEO’s performance against the performance metrics and individual performance goals set forth on his or her scorecard, the Committee recommends, and the Board determines, payouts.
Company Metrics in Scorecard
The table below sets forth certain key financial performance metrics included in the scorecards of multiple NEOs and the Company’s actual results. The targets for each of these metrics reflected very significant growth from the prior year, and for each of these metrics, the rigorous goal was exceeded.
| Target | Actual Results | Achievement % | |||||||||
| Financial Performance Metric | ($ in millions) | ($ in millions) | |||||||||
| Revenue | 432.7 | 451.8 | 104 | ||||||||
| Adjusted EBITDA | 135.4 | 145.7 | 108 | ||||||||
| Non-GAAP Gross Profit | 335.1 | 353.5 | 105 | ||||||||
For a reconciliation of Net income (loss) to Adjusted EBITDA, see Item 7. "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Financial Measures” of the 2024 Annual Report.
A reconciliation of Gross Profit to Non-GAAP Gross Profit is presented below:
| Amount | |||||
| ($ in millions) | |||||
| Gross profit | 328.8 | ||||
| Adjustments: | |||||
| Equity-based compensation expense and related payroll taxes | 14.5 | ||||
| Depreciation and amortization | 10.1 | ||||
| Gross profit, non-GAAP | 353.5 | ||||
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In addition to these key financial performance metrics, the individual scorecards contain a number of additional metrics, including operating metrics specific to the NEO’s area of focus, which we believe drive behaviors that lead to a competitive advantage for the Company. The performance metrics and rationale for each metric included in the 2024 scorecards of the NEOs, collectively, are set forth below:
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Performance Metric
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Rationale for Use as an Incentive Measure
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Revenue (including for certain NEOs Revenue from Bookings in 2024, Revenue from 2023 Booked Not Billed, Revenue from certain geographies and Revenue from Growth Opportunities)
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Primary measure of top line growth and best gauge of efforts to maintain and grow market share. In certain cases subsets of revenue that may drive more effective transition of sales to revenue are also measured.
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Adjusted
EBITDA; Non-GAAP Gross Profit
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Gauges profitability, which motivates the NEOs to prioritize not just growth but profitable growth.
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Net Revenue Retention Rate (NRR)
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A key measure of our success in expanding client relationships, which we believe is an important driver of growth.
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| Net Promoter Score (NPS) | We believe that high customer satisfaction drives a high Gross Revenue Retention Rate and Net Revenue Retention Rate, which in turn helps drive growth and increase gross margins; in addition, in a financial services business that is built on trust, customer satisfaction and reference-ability also help drive sales, and NPS is an indicator of those things. | ||||
| Booking | Drives growth of our Annualized Recurring Revenue and a leading indicator for increases in market share and future revenue growth. | ||||
| Platform Stability (Client SLA and Website Availability) | Drives uptime and client satisfaction, which are key to support the foundational elements of the Company’s business and client retention. | ||||
| Stat Reporting and Compliance | These elements were added in 2024 to drive remediation of the Company’s material weakness reported for 2023 and to promote investor confidence. | ||||
| Employee Satisfaction Score (ESS) | A measure of employee satisfaction. We believe a high employee satisfaction is important to reducing attrition. | ||||
Mr. Sahai’s scorecard metrics consisted of (i) Revenue, (ii) Bookings, (iii) EBITDA, (iv) Non-GAAP Gross Profit, and (v) NPS. Mr. Cox’s scorecard metrics consisted of (i) Revenue, (ii) Bookings, (iii) EBITDA, (iv) Non-GAAP Gross Profit, (v) NRR, (vi) Stat Reporting and (vii) Compliance. Mr. Erickson’s scorecard metrics consisted of (i) Bookings, (ii) Revenue from 2024 Bookings, (iii) Revenue from 2023 Booked not Billed, (iv) Bookings from North America, and (v) Bookings from the Company’s Growth Opportunities. Mr. Das’s scorecard metrics consisted of (i) Revenue, (ii) Bookings, (iii) Bookings from the Company’s Global Growth Opportunities, (iv) Revenue from 2023 Booked not Billed, (v) NPS, (vi) ESS, (vii) Platform Stability: Client SLA, and (viii) Platform Stability: Website Availability. Ms. Sethi’s scorecard metrics consisted of (i) Revenue, (ii) Bookings, (iii) Revenue from 2023 Booked not Billed, (iv) Non-GAAP Gross Profit, (v) Revenue from 2024 Bookings, (vi) NPS, and (vii) ESS.
Payout Determination
The Committee determined the annual cash incentive payout based on achievement of the scorecard performance metrics described above, in accordance with each NEO’s weighting for each element in their individual scorecard. For Mr. Sahai, this resulted in a scorecard achievement of 105%, which was applied to a target annual incentive amount of $784,080, resulting in a total payout of $823,284. Mr. Sahai’s payout was particularly positively affected by the Company’s strong revenue, EBITDA, gross margin and NPS results. For Mr. Cox, this resulted in a scorecard achievement of 104%, which was applied to a target annual incentive amount of $400,000, resulting in a total payout of $416,000. Mr. Cox’s payout was particularly positively affected by the Company’s strong revenue, EBITDA, and NRR results. For Mr. Erickson, this resulted in a scorecard achievement of 95%, which was applied to a target annual incentive amount of $325,000, resulting in a total payout of $308,750. Mr. Erickson’s payout was particularly positively affected by the Company’s strong North America and Company bookings. For Mr. Das, this resulted in a scorecard achievement of 90%, which was applied to a target annual incentive amount of $264,000, resulting in a total payout of $237,600. Mr. Das’ payout was particularly positively affected by strong NPS, ESS and Platform Stability: Website Availability results.
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For Ms. Sethi, this resulted in a scorecard achievement of 102%, which was applied to a target annual incentive amount of $250,000, resulting in a total payout of $255,000. Ms. Sethi’s payout was particularly positively affected by the Company’s strong revenue and strong NPS and ESS results.
In recognition of the Company’s extraordinary 2024 achievements, as detailed in the Executive Summary above, the NEOs’ collective efforts to realize such outcomes and the NEOs’ potential to create significant shareholder value, in 2025 the Committee recommended, and the Board approved, special, one-time bonus payouts of $200,000 for Mr. Sahai, and of $100,000 for each of Messrs. Cox, Das and Erickson and Ms. Sethi. The Committee believes that the exercise of discretion based on a qualitative assessment of non-financial, non-formulaic factors, such as those noted above, are consistent with our Company’s culture, compensation philosophy, and objectives. The Committee also believes, however, that the exercise of this type of discretion would be limited to unique or extraordinary circumstances.
Long-Term Incentives
The third and largest component of our executive compensation program is long-term incentive equity grants. Long-term incentive equity awards are prospective in nature and intended to tie a large portion of an executive’s pay to the creation of long-term stockholder value. The Committee has designed the long-term incentive equity grants as an opportunity to motivate and reward executive officers to achieve multi-year strategic goals and to deliver sustained long-term value to stockholders. Long-term incentive equity grants create a strong connection between payouts and performance, and strong alignment between the interests of executive officers and those of our stockholders. Long-term incentive equity grants also promote retention, because the executive officers will generally only receive value if they remain employed by us over the required term. These equity incentives are also intended to foster an ownership culture among our executive officers by making them stockholders with a personal stake in the value they are intended to create.
Equity Vehicles and Fiscal 2024 Mix: PSUs and RSUs
The mix of long-term incentive equity granted to the NEOs in 2024 consisted of 50% PSUs and 50% RSUs granted pursuant to our Omnibus Incentive Plan (the "2021 Plan"), as shown in the following table:
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Equity Vehicle
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2024 Allocation
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Vesting
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Rationale for Use
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PSUs
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50% |
33.33% for each year of the 3-year performance period based on 1-year Revenue growth rate
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• Primary measure of top line growth
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RSUs
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50% |
25% per year over four years, subject to continued employment.
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• Aligns with stockholder interests
• Promotes retention
• Provides value even during periods of stock price or market underperformance
|
||||||||
In late 2022 and early 2023, about a year after the Company’s IPO, the Committee analyzed the equity holdings of our executive officers to ensure that they offered both an appropriate amount of motivation to achieve key strategic goals as well as a sufficient amount of retentive “glue,” or holding power, to keep our leaders employed with the Company. In 2024, the Committee decided to focus on reducing the Company’s stock-based compensation expense as a percentage of revenue, as well as to start to transition to an annual grant cadence. As it has done with other compensation decisions, the Committee reviewed, as a reference point, peer company average share usage and equity grant amounts as a percentage of total market capitalization in order to determine the size of equity grants to the full employee population, including the NEOs. Based on these 2024 priorities, the Committee determined the size of the grants of PSUs and RSUs to make to the NEOs and other executive officers, who received the largest portion of this pool. The number of PSUs and RSUs granted to the NEOs in 2024 represented significant reductions when compared to the number of PSUs and RSUs granted in 2023.
The following table summarizes the 2024 and 2023 grants to our NEOs:
29
| PSUs (#) | RSUs (#) | ||||||||||||||||||||||
| NEO | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Sandeep Sahai | 200,615 | 805,830 | 200,616 | 805,831 | |||||||||||||||||||
| James Cox | 50,000 | 308,678 | 50,000 | 308,679 | |||||||||||||||||||
| Scott Erickson | 50,000 | 250,000 | 50,000 | 250,000 | |||||||||||||||||||
| Souvik Das | 75,000 | 300,000 | 75,000 | 300,000 | |||||||||||||||||||
| Subi Sethi | 125,000 | 200,000 | 125,000 | 200,000 | |||||||||||||||||||
PSUs
The Committee selected the PSU performance metric of one year revenue growth because it is a key indicator of our growth in terms of acquisition and retention of our customers and utilization of our products. The Committee’s view is that the Company has a unique opportunity in the market and that it is imperative to incentivize growth. It selected this metric, even though revenue is a component of the NEO scorecards in the annual cash incentive program, because it focuses executive officers on the Company’s most critical strategic priority of top line revenue growth, and aligns the incentives for the CEO and other NEOs with the goals of growing the business and increasing market share.
The Committee defined payout levels representing the number of PSUs to be earned by executive officers based on the level of actual performance relative to the annual revenue growth targets.
The Committee determines the Company’s performance achievement percentage for each one-year period. The performance achievement percentage is then converted to an earning percentage as set forth below and, if at least the threshold level is achieved, such PSUs are earned and vested in the amounts set forth below, subject to continued employment through the applicable payment date.
These PSUs reflect the right to receive between 0% and 110% of one-third of the target number of PSUs granted to the NEO and are earned based on the Company's achievement of annual revenue growth for each calendar year in the performance period (i.e., in each of 2024, 2025 and 2026), subject to the NEO’s continued employment with the Company through the applicable payment date. Failure to achieve the annual revenue growth targets for any calendar year will result in forfeiture of any PSUs that were not earned in respect of the relevant calendar year.
|
Level of Achievement of Objectives
|
Performance Achievement %
|
Earning Percentage
|
||||||
|
Below Threshold
|
Less than 18%
|
—% | ||||||
|
Threshold
|
At least 18% and less than 20%
|
80% | ||||||
|
Target
|
At least 20% and less than 23%
|
100% | ||||||
|
Maximum
|
23% or greater
|
110% | ||||||
RSUs
In addition to motivating performance through PSUs, the Committee structured the balance of the equity vehicles and the relative weight assigned to ensure some amount of value delivery through RSUs, which have upside potential but also deliver some value even if revenue does not grow, while reinforcing an ownership culture and commitment to us.
Time-based RSUs vest 25% per year over four years, subject to the NEO's continued employment with us.
PSUs Vesting
For fiscal year 2024, the Company produced an annual revenue growth rate of 22.7%. The 33.33% portion of the PSU grant made in February 2024 relating to 2024 thus achieved target performance, translating to 100% of such PSUs being earned, subject to certification by the Committee and continued employment through the date of payment, which occurred in February 2025.
Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi received grants of PSUs in 2021 and 2023, and Mr. Das received a PSU grant in 2022, in each case, having terms similar to those that applied to the PSUs granted in 2024. The 33.33% of such grants relating to the fiscal year 2024 annual performance period had performance achievement at target, translating to 100% of such PSUs being earned, subject to certification by the Committee and continued employment through the date of payment, which occurred in February 2025.
30
In the case of the PSUs granted to the NEOs in 2021, 2022, 2023 and 2024, as applicable, the Committee certified the performance against the applicable annual revenue growth targets relating to performance during the 2024 performance period on February 19, 2025 as set forth below:
| PSUs | |||||
| NEO | (#) | ||||
| Sandeep Sahai | 393,759 | ||||
| James Cox | 173,786 | ||||
| Scott Erickson | 125,231 | ||||
| Souvik Das | 118,750 | ||||
| Subi Sethi | 90,100 | ||||
Equity Grant Timing and Practices
Since prior to our IPO, the Company has not granted any option awards to any NEO, employee, and director. The Company’s practice has been to grant our NEOs RSUs and PSUs under the 2021 Plan on a predetermined schedule, typically occurring during the Committee’s February meeting for such fiscal year, on the date that the Committee certifies our annual revenue growth rate. The Committee determines the amount of these awards, as well as the mix of time- and performance-based awards. This grant timing allows for consideration of full-year financial results and scorecard achievement for the most recently completed fiscal year, as well as full consideration of priorities for the current fiscal year, prior to making the grants. From time to time, the Committee may make off-cycle grants to NEOs to recognize mid-year promotions or other circumstances. Officers who join the Company after February in a given year may be granted equity awards following their start date. The Committee does not take material nonpublic information into account when determining the timing and terms of equity awards, and the Company does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
TRA Bonus Agreements
As described in the section titled “Certain Relationships and Related Party Transactions—Tax Receivable Agreement and TRA Amendment,” in connection with the IPO we entered into a Tax Receivable Agreement with certain of the Continuing Equity Owners and the Blocker Shareholders. In addition, in connection with the IPO we entered into TRA Bonus Agreements substantially concurrently with or prior to the consummation of the IPO, pursuant to which certain executive officers, including Messrs. Sahai, Cox and Erickson and Ms. Sethi, subject to the terms and conditions of his or her TRA Bonus Agreement, received a cash bonus payment (the “TRA Bonus”).
Pursuant to the terms of the TRA Bonus Agreements, when the Continuing Equity Owners and the Blocker Shareholders were paid pursuant to the Tax Receivable Agreement (including in the event of a change of control (as defined in the TRA Bonus Agreements)), the TRA Bonus recipients, including Messrs. Sahai, Cox and Erickson and Ms. Sethi, were eligible to receive an amount up to 4.6% in the aggregate of the payments that would have been made to certain of the Continuing Equity Owners and Blocker Shareholders under the Tax Receivable Agreement but for the amounts payable under the TRA Bonus Agreements, subject to each TRA Bonus recipient’s continued employment through the applicable payment date.
On November 4, 2024, the Company entered into the TRA Amendment, which amended the TRA to provide for one-time settlement payments in a gross amount of approximately $72.5 million, inclusive of $3.3 million in TRA Bonus Payments (the “TRA Bonus Payments”) to be paid to certain executive officers of the Company, including Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi. As a result of the TRA Amendment, the Company will have no further payment obligations (past, current, or future) to make, and Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi will no longer receive any TRA Bonuses. The TRA Bonus Payments made to Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi in relation to the TRA Amendment are shown in “
EXECUTIVE COMPENSATION TABLES
- 2024 Summary Compensation Table” of this Proxy Statement.
Post-Employment Compensation
Health and Welfare and Other Benefits
We offer a broad range of benefits, which include medical, dental, vision, life, and disability plans to our employees, including our NEOs.
31
We believe the benefits described above are necessary and appropriate to provide a competitive compensation package to our NEOs and are entirely aligned with benefits provided to all of our employees.
Qualified Retirement Plan
We offer a tax-qualified 401(k) defined contribution plan covering substantially all of our U.S. employees, including our NEOs. Eligible employees may make voluntary pre-tax and post-tax contributions and are eligible for matching Company contributions. The plan also permits discretionary Company contributions. All contributions to the plan are subject to certain limitations under the Code.
Severance and Change in Control Provisions
Our NEOs are entitled to certain payments and benefits upon certain qualifying terminations of employment and in connection with a change in control. See "Potential Payments upon a Termination or Change in Control" below for more information.
Relocation Allowances and Cost of Living Adjustment Subsidy
In connection with Ms. Sethi’s relocation from Gurgaon, India to Boise, Idaho, Ms. Sethi is entitled to an annual cost of living adjustment subsidy ($75,000 for 2024) for as long as Ms. Sethi remains in Boise.
Mr. Erickson relocated to New York, and in connection with that move the Company provides an annual $100,000 cost of living
adjustment subsidy for as long as Mr. Erickson remains in New York.
V. ADDITIONAL COMPENSATION POLICIES AND PRACTICES
Clawback Policy
The Board adopted a clawback policy that complies with the NYSE’s clawback rules promulgated under Section 10D of the Exchange Act and the rules promulgated thereunder. In the event the Company is required to prepare an accounting restatement of its financial statements due to the Company’s material noncompliance with any such financial reporting requirement, the clawback policy requires that covered executives must reimburse the Company or forfeit, any excess incentive-based compensation "received" (as defined in the Clawback Policy) by such covered executive during the three completed fiscal years immediately preceding the date on which the Company is required to prepare the restatement. Executives covered by the clawback policy are current and former executive officers, as determined by the Board in accordance with Section 10D of the Exchange Act and the NYSE listing standards. Incentive-based compensation subject to the clawback policy includes any cash or equity compensation that is granted, earned or vested based wholly or in part on the attainment of a financial reporting measure. The amount subject to recovery is the excess of the incentive-based compensation received based on the erroneous data over the incentive-based compensation that would have been received had it been based on the restated results.
Executive and Director Stock Ownership Guidelines
We believe that the Company and our stockholders are best served when executive officers manage the business with a long-term perspective. As such, the Company has implemented executive stock ownership guidelines, as we believe stock ownership is an important tool to strengthen the alignment of interests among our executive officers and our stockholders, to reinforce executive officers’ commitment to us and to demonstrate our commitment to sound corporate governance. The guidelines require that within five years of being appointed to a covered position, the CEO and the other executive officers hold a minimum value of Company shares that equates to a multiple of the value of their annual base salary.
| Position |
Multiple of Base Salary
|
||||
| Chief Executive Officer | 6x | ||||
| Other Executive Officers | 2x | ||||
For this purpose, RSUs (whether vested or not) and Company shares directly or beneficially owned by the executive officer, or the executive officer’s immediate family members, will count for purposes of satisfying the ownership requirement, but PSUs are not counted. After the initial five-year phase-in period, compliance with the ownership requirement will be measured as of the last trading day of each calendar year.
We similarly believe that alignment of interests between directors and stockholders is important to promoting Board oversight in the long-term interests of stockholders.
Accordingly, we also have stock ownership guidelines requiring
32
directors not affiliated with Welsh, Carson, Anderson & Stowe, Warburg Pincus or Permira to hold a minimum value of Company shares equal to five times their annual cash retainer within a five-year phase in period that began in September 2022.
We will also measure compliance with the ownership requirement for directors as of the last trading day of each calendar year.
Anti-Hedging and Anti-Pledging Policy
The Company has adopted an insider trading policy that prohibits employees (including our NEOs) and directors from engaging in any hedging transactions (including transactions involving prepaid variable forward contracts, equity swaps, collars and exchange funds) that are designed to hedge or speculate on any change in the market value of the Company’s equity securities without first obtaining pre-approval. It also explicitly prohibits employees (including our NEOs) and directors from engaging in transactions involving publicly-traded options, including transactions in put options, call options or other derivative securities, on an exchange or in any other organized market, to avoid the appearance of trading based on material nonpublic information. Short sales of the Company’s equity securities, which are inherently speculative in nature and contrary to the best interests of the Company and its stockholders, are also prohibited. The Company’s insider trading policy also prohibits employees (including our NEOs) and directors from pledging the Company’s securities in any circumstance, including by purchasing Company securities on margin or holding the Company’s securities in a margin account, without first obtaining pre-approval.
Risk Oversight and Compensation Risk Assessment
The Committee conducted a review of the compensation program and arrangements for the Company’s executives and other employees to evaluate whether incentives and other forms of pay encourage unnecessary or excessive risk taking. This assessment by the Committee included a review of the design of our incentive plans and policies, and the impact of risk mitigation features in these plans or policies. Based on this analysis, the Committee was satisfied that any risks arising from our compensation programs are not reasonably likely to have a material adverse effect on the Company.
Accounting Considerations
We follow Financial Accounting Standards Board ASC Topic 718 for our stock-based compensation awards. In accordance with ASC Topic 718, stock-based compensation cost is measured at the grant date, or with respect to performance-based awards, the service inception date, based on the estimated fair value of the awards using a variety of assumptions. This calculation is performed for accounting purposes and, as applicable, reported in the compensation tables, even though recipients may never realize any value from their awards. We record this expense on an ongoing basis over the requisite employee service period. Accounting rules also require us to record cash compensation as an expense at the time the obligation is incurred.
VI. COMPENSATION COMMITTEE REPORT
This Compensation Committee Report shall not be deemed to be incorporated by reference into any filing made by the Company under the Securities Act of 1933, as amended, notwithstanding any general statement contained in any such filing incorporating this Proxy Statement by reference, except to the extent the Company incorporates such Report by specific reference.
The Committee has reviewed and discussed the Compensation Discussion and Analysis with the management of the Company. Based on this review and these discussions, we have recommended to the Board that the Compensation Discussion and Analysis be included in the 2024 Annual Report and this Proxy Statement.
The preceding report has been furnished by the following members of the Committee:
The Committee
Eric J. Lee, Chair
Cary J. Davis
D. Scott Mackesy
Andrew Young
33
EXECUTIVE COMPENSATION TABLES
2024 Summary Compensation Table
The
following
table
summarizes the
compensation paid
to,
awarded
to,
or
earned
by
the
named
executive officers for our last three most recently completed fiscal years.
| Name and Principal Position | Year |
Salary
(1)
($)
|
Bonus
(2)
($)
|
Stock Awards
(3)
($)
|
Non-Equity Incentive Plan Compensation
(4)
($)
|
All Other Compensation
(5)
($)
|
Total
($) |
||||||||||||||||||||||||||||||||||
| Sandeep Sahai | |||||||||||||||||||||||||||||||||||||||||
| Chief Executive Officer | 2024 | 653,400 | 200,000 | 7,799,931 | 823,284 | 1,647,216 | 11,123,831 | ||||||||||||||||||||||||||||||||||
| 2023 | 653,400 | — | 30,605,442 | 777,807 | 263,565 | 32,300,214 | |||||||||||||||||||||||||||||||||||
| 2022 | 653,400 | — | — | 787,420 | 277,802 | 1,718,622 | |||||||||||||||||||||||||||||||||||
| Jim Cox | |||||||||||||||||||||||||||||||||||||||||
| Chief Financial Officer | 2024 | 425,000 | 100,000 | 1,944,000 | 416,000 | 601,246 | 3,486,246 | ||||||||||||||||||||||||||||||||||
| 2023 | 425,000 | — | 11,723,609 | 388,000 | 112,559 | 12,649,168 | |||||||||||||||||||||||||||||||||||
| 2022 | 425,000 | — | — | 384,852 | 115,391 | 925,243 | |||||||||||||||||||||||||||||||||||
| Scott Erickson | |||||||||||||||||||||||||||||||||||||||||
| Chief Revenue Officer | 2024 | 425,000 | 100,000 | 1,944,000 | 308,750 | 603,741 | 3,381,491 | ||||||||||||||||||||||||||||||||||
| 2023 | 425,000 | — | 9,495,000 | 240,700 | 183,013 | 10,343,713 | |||||||||||||||||||||||||||||||||||
| 2022 | 362,500 | — | — | 309,074 | 134,349 | 805,923 | |||||||||||||||||||||||||||||||||||
| Souvik Das | |||||||||||||||||||||||||||||||||||||||||
| Chief Technology Officer | 2024 | 440,000 | 100,000 | 2,916,000 | 237,600 | 129,398 | 3,822,998 | ||||||||||||||||||||||||||||||||||
| 2023 | 425,000 | 99,500 | 11,394,000 | 220,500 | 29,494 | 12,168,494 | |||||||||||||||||||||||||||||||||||
| 2022 | 375,000 | — | 1,612,500 | 148,501 | 25,845 | 2,161,846 | |||||||||||||||||||||||||||||||||||
| Subi Sethi(*) | |||||||||||||||||||||||||||||||||||||||||
| Chief Operating Officer | 2024 | 350,000 | 100,000 | 4,860,000 | 255,000 | 339,211 | 5,904,211 | ||||||||||||||||||||||||||||||||||
| 2023 | 312,198 | 102,750 | 7,596,000 | 227,250 | 140,347 | 8,378,545 | |||||||||||||||||||||||||||||||||||
(*)
Ms. Sethi was not a named executive officer for fiscal year 2022. Ms. Sethi was named Chief Operating Officer in late April 2025. Prior to being named Chief Operating Officer, and at the time of the compensation decisions described herein, Ms. Sethi was our Chief Client Officer.
(1) Amounts
reported
in
this
column
reflect the
actual
base
salaries paid
to
our
named
executive
officers for our fiscal year ended December 31, 2024, fiscal year ended December 31, 2023 and fiscal year ended December 31, 2022.
(2) Amounts reported reflect a special, discretionary bonus granted by the Board upon the recommendation of the Committee.
(3) Amounts reported in this column reflect the aggregate grant date fair value of RSUs and PSUs, computed in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures), made to our named executive officers in fiscal year 2024, fiscal year 2023 and fiscal year 2022. The PSUs are valued based on the probable outcome of the performance-based vesting conditions. The grant date fair value of the 2022 RSUs subject to performance- based vesting conditions assuming maximum performance is achieved would be $886,875 for Mr. Das. The grant fair date value of the 2023 PSUs assuming maximum performance is achieved would be $15,302,712, $5,861,814, $4,747,500, $5,697,000 and $3,798,000 for Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi. The grant fair date value of the 2024 PSUs assuming maximum performance is achieved would be $4,289,951, $1,069,200, $1,069,200, $1,603,800 and $2,673,000 for Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi. Assumptions used in the calculation of these amounts are included in the notes to our financial statements included in the 2024 Annual Report.
(4) Amounts reported in this column reflect (i) with respect to fiscal year 2024, annual bonuses paid in February 2025 in respect of fiscal year 2024 performance, (ii) with respect to fiscal year 2023, annual bonuses paid in February 2024 in respect of fiscal year 2023 performance, and (iii) with respect to fiscal year 2022, annual bonuses paid in February 2023 in respect of fiscal year 2022 performance.
34
(5) All Other Compensation paid in fiscal year 2024 is comprised
of the
following:
| Name | Year | 401(k) Contribution(a) ($) | Other Personal Benefits(b) ($) | TRA Bonus(c) ($) | ||||||||||||||||||||||
| Sandeep Sahai | 2024 | 13,800 | 16,457 | 1,616,959 | ||||||||||||||||||||||
| Jim Cox | 2024 | 13,800 | 16,080 | 571,366 | ||||||||||||||||||||||
| Scott Erickson | 2024 | 13,800 | 116,080 | 473,861 | ||||||||||||||||||||||
| Souvik Das | 2024 | 13,800 | 16,098 | 99,500 | ||||||||||||||||||||||
| Subi Sethi | 2024 | — | 83,762 | 255,449 | ||||||||||||||||||||||
(a)
Amounts
reported
in
this
column
represent the
amount
of
Company
matching
contributions made
to
each named executive officer’s account under our 401(k) plan.
(b)
Amounts
reported
in
this
column
represent health
insurance
premiums paid
by
the
Company
on
behalf
of each of our named executive officers. In the case of Mr. Erickson, an annual
$100,000
temporary cost
of
living
adjustment subsidy
is
included,
which
Mr.
Erickson
is
eligible to receive so long as Mr. Erickson remains in New York. In the case of Ms. Sethi, a $75,000 of temporary cost of living adjustment subsidy is included so long as she remains in Boise.
(c)
Amounts reported in this column represent
amounts earned in relation to the TRA
Bonus as described in the section titled "TRA Bonus Agreements".
35
Grants of Plan-Based Awards for Fiscal Year 2024
The following table sets forth certain information regarding grants of plan-based awards to our NEOs for fiscal year 2024 under our compensation programs and plans.
|
Estimated Future Payouts under Non-Equity Incentive Plan Awards
(1)
|
Estimated Future Payouts Under Equity Incentive Plan Awards
(2)
|
All Other Stock Awards:
|
Grant Date Fair Value of Stock and Option Awards
|
|||||||||||||||||||||||||||||
|
Grant Date
|
Threshold | Target | Maximum | Threshold Performance Shares | Target Performance Shares | Maximum Performance Shares |
Number of Shares of Stock or Units
|
|||||||||||||||||||||||||
| Name |
($)
|
($) |
($)
|
(#) | (#) | (#) |
(#)
(3)
|
($)
(4)
|
||||||||||||||||||||||||
| Sandeep Sahai | 2/28/2024 | 588,060 | 784,080 | — | — | — | — | — | — | |||||||||||||||||||||||
| 2/28/2024 | — | — | — | 150,461 | 200,615 | 220,677 | — | 3,899,956 | ||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | — | — | 200,616 | 3,899,975 | ||||||||||||||||||||||||
| Jim Cox | 2/28/2024 | 300,000 | 400,000 | — | — | — | — | — | — | |||||||||||||||||||||||
| 2/28/2024 | — | — | — | 37,500 | 50,000 | 55,000 | — | 972,000 | ||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | — | — | 50,000 | 972,000 | ||||||||||||||||||||||||
| Scott Erickson | 2/28/2024 | 243,750 | 325,000 | — | — | — | — | — | — | |||||||||||||||||||||||
| 2/28/2024 | — | — | — | 37,500 | 50,000 | 55,000 | — | 972,000 | ||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | — | — | 50,000 | 972,000 | ||||||||||||||||||||||||
| Souvik Das | 2/28/2024 | 198,000 | 264,000 | — | — | — | — | — | — | |||||||||||||||||||||||
| 2/28/2024 | — | — | — | 56,250 | 75,000 | 82,500 | — | 1,458,000 | ||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | — | — | 75,000 | 1,458,000 | ||||||||||||||||||||||||
| Subi Sethi | 2/28/2024 | 187,500 | 250,000 | — | — | — | — | — | — | |||||||||||||||||||||||
| 2/28/2024 | — | — | — | 93,750 | 125,000 | 137,500 | — | 2,430,000 | ||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | — | — | 125,000 | 2,430,000 | ||||||||||||||||||||||||
(1)
These columns reflect the bonus opportunities under their scorecards for fiscal year 2024. No bonus is payable to our NEOs if performance is achieved below the threshold performance level, which is equal to 75% of the relevant Company performance target.
(2)
The amounts in these columns reflect the PSUs granted to the NEOs under the 2021 Plan during fiscal year 2024. These PSUs reflect the right to receive between 0% and 110% of one-third of the target number of PSUs granted to the NEO and are earned based on the Company's achievement of annual revenue growth target described above in the CD&A. See "COMPENSATION PROGRAM COMPONENTS—Long Term Incentives—PSUs."
(3)
The amounts in this column reflect the RSUs granted to the NEOs under the 2021 Plan during fiscal year 2024. These RSUs vest 25% per year over four years, subject to continued employment with us.
(4)
The amounts reported in this column for RSUs reflect the aggregate grant date fair value of RSUs computed in accordance with FASB ASC Topic 718, excluding the effect of estimated forfeitures. The amounts in this column for PSUs were calculated based on the probable outcome of the performance condition as of the grant date, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718, excluding the effect of estimated forfeitures. For the values of the PSU awards, the amount reflected in the table represents
the number of shares payable determined based on achievement at 100%.
The actual value, if any, that each NEO will realize for these PSUs is a function of the value of the shares if and when the awards vest.
36
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
See
"—
Compensation Discussion and Analysis
—COMPENSATION PROGRAM COMPONENTS" and "—EXECUTIVE
COMPENSATION
TABLES—Potential Payments Upon Termination or Change in Control" for disclosure relevant to the Summary Compensation Table and Grants of Plan-Based Awards Table.
Outstanding Equity Awards at 2024 Fiscal Year End
The
following
table
summarizes the
outstanding
equity
awards
held
by
our
named
executive
officers as
of December 31, 2024, using the closing stock price on such date of $27.52.
37
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date |
Number of
securities underlying unexercised options (#) exercisable |
Number of
securities
underlying
unexercised
options (#)
unexcercisable
(1) (5)
|
Option
exercise price ($) |
Option
expiration date |
Number of
shares or
units of
stock that
have not
vested
(#)
(2)(5)
|
Market
value of
shares or
units of
stock that
have not
vested
($)
(3)
|
Equity
incentive plan
awards: number of
unearned
shares, units
or other rights
that have not
vested (#)
(4)(5)
|
Equity
incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested ($) |
|||||||||||||||||||||||||||||||||||||||||||||||
| Sandeep Sahai | 11/28/2018 | 1,641,354 | — | 4.40 | 11/28/2028 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/21/2020 | 567,457 | 103,720 | 4.40 | 1/21/2030 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/8/2021 | 1,321,875 | 28,125 | 12.40 | 3/8/2031 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 187,722 | 5,166,109 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 125,148 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 604,373 | 16,632,345 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 268,610 | — | 295,471 | 8,131,362 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 150,462 | 4,140,714 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 66,872 | — | 147,117 | 4,048,668 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Jim Cox | 5/20/2019 | 568,395 | — | 4.40 | 5/20/2029 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/21/2020 | 175,948 | 32,161 | 4.40 | 1/21/2030 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/8/2021 | 428,385 | 9,115 | 12.40 | 3/8/2031 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 106,341 | 2,926,504 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 70,894 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 231,509 | 6,371,128 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 102,892 | — | 113,182 | 3,114,777 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 37,500 | 1,032,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 16,667 | — | 36,666 | 1,009,057 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Scott Erickson | 11/2/2017 | 185,385 | — | 4.00 | 11/2/2027 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 4/10/2018 | 69,338 | — | 4.00 | 4/10/2028 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 1/1/2019 | 42,294 | — | 4.40 | 1/1/2029 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 1/21/2020 | 87,226 | 16,393 | 4.40 | 1/21/2030 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/8/2021 | 428,385 | 9,115 | 12.40 | 3/8/2031 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 62,847 | 1,729,549 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 41,898 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 187,500 | 5,160,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 83,334 | — | 91,666 | 2,522,657 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 37,500 | 1,032,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 16,667 | — | 36,666 | 1,009,057 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Souvik Das | 8/2/2021 | 416,667 | 83,333 | 17.84 | 8/2/2031 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 9,375 | 258,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 6,250 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/18/2022 | — | — | — | — | 18,750 | 516,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/18/2022 | — | — | — | — | 12,500 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 225,000 | 6,192,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 100,000 | — | 110,000 | 3,027,200 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 56,250 | 1,548,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 25,000 | — | 55,000 | 1,513,600 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Subi Sethi | 1/2/2020 | — | 41,875 | 4.40 | 1/2/2030 | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||
| 1/21/2020 | — | 6,701 | 4.40 | 1/21/2030 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 3/8/2021 | 141,461 | 3,125 | 12.40 | 3/8/2031 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 35,150 | 967,328 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 9/24/2021 | — | — | — | — | 23,433 | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 150,000 | 4,128,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/20/2023 | — | — | — | — | 66,666 | — | 73,334 | 2,018,143 | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 93,750 | 2,580,000 | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||
| 2/28/2024 | — | — | — | — | 41,667 | — | 91,666 | 2,522,657 | ||||||||||||||||||||||||||||||||||||||||||||||||
38
(1)
Option
awards
in
this
column
are
all
subject
to
time-vesting conditions. Options granted prior to fiscal year 2021 are eligible to vest in 20% increments annually, subject to continued employment. For options granted in fiscal year 2021,
25%
of
the
options
awarded
are eligible to vest on the first anniversary of the grant date, and 75% are subsequently eligible to vest on a monthly basis over
the remaining three-year period of employment.
(2)
The stock awards in this column consist of (i) RSUs granted in fiscal year 2024 that will vest in equal quarterly installments with the first vesting on March 31, 2024, (ii) RSUs granted in fiscal year 2023 that will vest in equal annual installments on each of the first four anniversaries of January 1, 2023, (ii) RSUs granted in fiscal year 2022 that will vest in equal installments on each of the first four anniversaries of January 1, 2022, (iii) RSUs granted in fiscal year 2021 that will vest in equal annual installments on each of the first four anniversaries of January 1, 2022, subject to continued employment, and (iv) PSUs granted in fiscal year 2021, 2022, 2023 and 2024 for which a performance period concluded in 2024 but remained subject to certification by the Committee (which occurred in February 2025) and continued employment through the payment date.
(3)
The amounts reflected in this column reflect the market value of unvested RSUs, determined by multiplying the number of such awards by the market price of our common stock at the close of the last trading day of fiscal year 2024, which was $27.52 per share.
(4)
The stock awards listed in this column consist of PSUs that are subject to certain performance-based vesting requirements based on annual revenue growth rate, and calculated based on maximum earning percentage of 110%. PSUs granted in fiscal year 2024 vest in equal annual installments on each of the first three anniversaries of January 1, 2024, subject to continued employment through the payment date. PSUs granted in fiscal year 2023 vest in equal annual installments on each of the first three anniversaries of January 1, 2023, subject to continued employment through the payment date. PSUs granted in fiscal year 2022 vest in equal annual installments on each of the first three anniversaries of January 1, 2022, subject to continued employment through the payment date. PSUs granted in fiscal year 2021 vest in equal installments on each of the first three anniversaries of January 1, 2021, subject to continued employment through the payment date.
(5)
The options, RSUs and PSUs are subject to accelerated vesting on certain qualifying terminations and/or a change in control, as described below in "Potential Payments Upon Termination or Change in Control".
Option Exercises and Stock Vested During Fiscal Year 2024
The following table presents, for each of our NEOs, the shares of our common stock that were acquired upon the exercise of vested stock options and the vesting of RSUs and the related value realized during fiscal year 2024.
| Option Awards | Stock Awards | ||||||||||||||||
|
Number of Shares Acquired on Exercise
|
Value Realized on Exercise
|
Number of Shares Acquired on Vesting
|
Value Realized on Vesting
|
||||||||||||||
| Name | (#) |
($)
(1)
|
(#) |
($)
(2)
|
|||||||||||||
| Sandeep Sahai | 533,014 | 10,949,637 | 739,233 | 14,685,609 | |||||||||||||
| Jim Cox | 256,655 | 5,191,372 | 316,626 | 6,267,173 | |||||||||||||
| Scott Erickson | 66,880 | 1,365,590 | 231,655 | 4,593,851 | |||||||||||||
| Souvik Das | — | — | 226,562 | 4,509,504 | |||||||||||||
| Subi Sethi | 150,000 | 2,481,861 | 188,925 | 3,800,226 | |||||||||||||
(1)
Calculated by multiplying the number of corresponding shares acquired by the difference between the exercise price and the market price of the underlying common stock at the time of exercise.
(2)
Calculated by multiplying the number of corresponding shares acquired by the closing price of the common stock as reported on the NYSE on the vesting date (or on the last trading day prior to the vesting date if the vesting date was not a trading day).
We do not provide guaranteed retirement benefits or contribute to non-qualified deferred compensation plans.
Potential Payments Upon Termination or Change in Control
In the event of a qualifying termination of employment and/or the occurrence of a change in control of the Company, each of our NEOs are entitled to certain payments and benefits under their employment agreements and/or their outstanding equity incentive awards. For a detailed summary of these payments and benefits, see the narrative description that follows the table below.
The table below sets forth the amounts of the payments and benefits that each NEO would have been entitled to receive upon a qualifying termination of employment by the Company and/or the occurrence of a change in control, in each case assuming the relevant event occurred on December 31, 2024. The values reflected in the table below relating to the
39
acceleration of equity awards are based on the last closing price of our common stock as of December 31, 2024 ($27.52 per share) (in the case of options, minus the applicable exercise price).
In addition to the amounts set forth in the table below, upon any termination of employment, each NEO would also be entitled to receive all payments generally provided to salaried employees on a non-discriminatory basis on termination. Amounts payable to the NEOs may be subject to reduction under Sections 280G and 4999 of the Code.
|
Termination without Cause by Company or for Good Reason by NEO NOT in Connection with a Change in Control
|
Termination without Cause by Company or for Good Reason by NEO in Connection with a Change in Control
|
Change in Control NOT in Connection with Termination without cause by Company or for Good Reason by NEO
|
||||||||||||
| Name | Benefit Description | ($) |
($)
(1)
|
($)
(2)
|
||||||||||
| Sandeep Sahai |
Cash severance
(3)
|
1,437,480 | 1,437,480 | — | ||||||||||
|
Accelerated Vesting of equity awards
|
— | 40,942,455 | 2,823,256 | |||||||||||
| Jim Cox |
Cash severance
(4)
|
212,500 | 212,500 | — | ||||||||||
|
Accelerated Vesting of equity awards
|
— | 15,334,847 | 881,381 | |||||||||||
| Scott Erickson |
Cash severance
(5)
|
212,500 | 212,500 | — | ||||||||||
|
Accelerated Vesting of equity awards
|
— | 11,970,088 | 516,825 | |||||||||||
| Souvik Das |
Cash severance
(6)
|
110,000 | 110,000 | — | ||||||||||
|
Accelerated Vesting of equity awards
|
— | 13,861,463 | 806,663 | |||||||||||
| Subi Sethi |
Cash severance
(7)
|
87,500 | 87,500 | — | ||||||||||
|
Accelerated Vesting of equity awards
|
— | 13,386,455 | 1,170,327 | |||||||||||
(1)
Amounts represent the vesting of all of the NEO's unvested options, granted under the 2017 Plan upon the change in control and the vesting of RSUs and PSUs pursuant to the 2021 Plan (if assumed or substituted in connection with a change in control) in the case of a termination without cause by the Company or for good reason by NEO in connection with such change in control.
(2)
Amounts represent the vesting of all of the NEO's unvested options only in the case of a change in control without a termination of employment pursuant to an amendment to the acceleration terms of options then held by the NEOs at the time of our IPO to provide for accelerated vesting of any then unvested options outstanding at the time of the consummation of the IPO to the earlier of a “Change in Control” (as defined in the 2017 Equity Incentive Plan) or the date that WCAS and its affiliates own less than 5% of the common stock of the Company.
(3)
Amounts represent a cash severance payment equal to Mr. Sahai's annual base salary and annual target bonus as of December 31, 2024.
(4)
Amounts represent a cash severance payment equal to six months of Mr. Cox's annual base salary as of December 31, 2024.
(5)
Amounts represent a cash severance payment equal to six months of Mr. Erickson's annual base salary as of December 31, 2024.
(6)
Amounts represent a cash severance payment equal to three months of Mr.Das's annual base salary as of December 31, 2024.
(7)
Amounts represent a cash severance payment equal to three months of Ms. Sethi's annual base salary as of December 31, 2024.
Employment Agreements
We are party to employment agreements with Messrs. Sahai, Cox, Erickson and Das and Ms. Sethi, which provide for at-will
employment,
subject
to the severance
entitlements
described
below, and set
forth
each named
executive
officer’s initial annual
base
salary
and
target
annual
bonus
opportunity, among other terms and conditions.
The
employment
agreements
provide
that,
upon
termination
of
a
named
executive
officer’s
employment
by us for any reason other than for “cause,” or by the named executive officer for “good reason,” each as defined therein and summarized below, subject to the named executive officer’s execution, delivery and non-revocation of a general release of all claims in favor of the Company, the named executive officer is entitled to severance. The Committee believes these severance payments and benefits are important from a recruiting perspective to provide some level of protection to our executive officers from having their employment terminated without cause, and that the amounts are reasonable when compared with similar arrangements adopted by comparable companies.
40
For Mr. Sahai, severance consists of (i) 12 months of continued base salary payments and (ii) target annual bonus for the year of termination, based on our achievement of target bonus performance measurement for the year of termination and payable at the time that annual bonuses for the applicable fiscal year are paid generally. In addition, upon termination of employment (other than for “cause”), Mr. Sahai’s vested options remain outstanding
until
the
earlier
of
(i)
a
Change
in
Control
(as
defined
in
the
2017
Equity
Incentive
Plan)
transaction, upon which the vested options are canceled in exchange for cash consideration or (ii) the expiration of the term. Mr. Sahai’s employment agreement also provides that upon a transaction that consists of a final sale of the Company or a substantial sale of our equity or assets, the Company may, at our discretion, grant a transaction bonus to Mr. Sahai.
For
Mr.
Cox
and
Mr.
Erickson
severance
consists
of
six
months
of
continued
base
salary
payments.
For Mr. Das and Ms. Sethi severance consists of three months of continued base salary payments.
Under Mr. Sahai’s employment agreement, “cause” generally means: (i) material breach by Mr. Sahai of
any term of the employment agreement, or the Company’s policies, his fiduciary duties to the Company, Clearwater
Analytics,
LLC
or
any
of
their
affiliates, or
of
any
law,
statute,
or
regulation, (ii)
misconduct
which
is materially injurious to the Company, Clearwater Analytics, LLC or any of their affiliates, either monetarily or otherwise, or which impairs his ability to effectively perform his duties or responsibilities, (iii) personal conduct which materially impairs his ability to perform his duties or manage subordinate employees, including but not limited to the abuse of alcohol or controlled substances, sexual harassment and discrimination, (iv) habitual or repeated neglect of his duties or responsibilities, (v) failure to comply with any valid and legal directive of the Board, which failure has a material impact on the Company, (vi) appropriation of (or attempted appropriation of) a business opportunity of the Company, Clearwater Analytics, LLC, or their affiliates,
including attempting to secure or securing any personal profit in connection with an transaction by the Company or its affiliates, (vii) commission or conviction for (or the procedural equivalent or conviction for), or entering of a guilty plea or plea of no contest with respect to any felony or a crime, which in the Company’s reasonable judgment, involves moral turpitude, (viii) willful unauthorized disclosure (or attempted disclosure) of confidential information, (ix) intentional injury of another employee or any person in the course of performing services for the Company or (x) any conflict of interest, including, but not limited to solicitation of business on behalf of a competitor or potential competitor or breach of any fiduciary duty to the Company, Clearwater Analytics, LLC or any of their affiliates. With respect to clauses (i) through (iii), if capable of cure, Mr. Sahai must be given a reasonable opportunity to comply with such policy or cure his failure or misconduct to the satisfaction of
the
Board
within
the
reasonable
time
prescribed by
the
Board
to
cure such failure or misconduct as set forth in a written notice of such breach from Board.
Under the employment agreements of Messrs. Cox, Erickson and Das and Ms. Sethi, “cause” generally means the named executive officer’s: (i) material breach of any term of the employment agreement, or the Company’s policies,
the named executive officer's
fiduciary duties
to
the
Company,
Clearwater
Analytics,
LLC
or
any
of
their
affiliates, or
of
any
law, statute or regulation, (ii) misconduct which is injurious to the Company, Clearwater Analytics, LLC or any of their affiliates, either monetarily or otherwise, or which impairs the named executive officer's ability to effectively perform his or her duties or responsibilities, (iii) personal conduct which reflects poorly on the Company, Clearwater Analytics, LLC or named executive officer, or which impairs his or her ability to perform his or her duties or manage subordinate employees, including but
not
limited to
the
abuse
of
alcohol
or
controlled substances, sexual
harassment and
discrimination, (iv) habitual or repeated neglect of his or her duties or responsibilities, (v) failure to comply with any valid and legal directive of the Company or the chief executive officer of the Company, (vi) appropriation of (or attempted appropriation of) a business opportunity of the Company, Clearwater Analytics, LLC
or their affiliates, including attempting to secure or securing any personal profit in connection with any transaction by the Company or its affiliates, (vii) commission or conviction for (or the procedural equivalent or conviction for), or entering of a guilty plea or plea of no contest with respect to any felony or a crime, which in the Company’s reasonable judgment, involve moral turpitude, (viii) willful unauthorized disclosure (or attempted disclosure) of confidential information, (ix) intentional injury of another employee or any person in the course of performing services for
the Company or (x) any conflict of interest, including, but not limited to solicitation of business on behalf of a competitor or
potential competitor or
breach
of
any
fiduciary duty
to
the
Company,
Clearwater
Analytics,
LLC
or any of their affiliates. With respect to clauses (i) through (iii), if capable of cure, the named executive officer
must be given a reasonable opportunity to comply with such policy or cure his or her failure or misconduct to the satisfaction of the Company within the reasonable time prescribed by the Company to cure such failure or misconduct as set forth in a written notice of such breach from the Company.
Under Mr. Sahai’s employment agreement, “good reason” generally means the occurrence of any of the following: (i) a reduction, without Mr. Sahai’s consent, of his base salary or target annual bonus opportunity, unless
the
reduction
is
generally
applicable to
substantially all
senior
executives
of
the
Company,
(ii)
a
relocation of Mr. Sahai’s principal place of employment by more than 50 miles, (iii) material breach of the employment agreement by the Company or (iv) a substantial diminution in Mr. Sahai’s authority or duties that is materially inconsistent with his position of Chief Executive Officer without his consent.
41
Under the employment agreements of Messrs. Cox, Erickson and Das and Ms. Sethi, “good reason” generally means the
occurrence
of
any
of
the
following:
(i)
a
material reduction,
without
the
named
executive
officer’s consent,
of the named executive officer's
base
salary
or
target
annual
bonus
opportunity, unless
the
reduction is
generally applicable to
substantially all senior employees of the Company, (ii) a material breach of the employment agreement by the Company or (iii) a substantial diminution in the named executive officer’s authority or duties that is materially inconsistent with the named executive officer's position without the named executive officer's consent.
Each
named
executive
officer
is
subject
to
non-competition
covenants
during
employment
and
for
12
months
thereafter, non-solicitation covenants during employment and for 18 months thereafter
(12 months
with
respect
to Mr. Sahai), as well as perpetual confidentiality, assignment of inventions covenants and non-disparagement
covenants (mutual non-disparagement, with respect to Messrs. Sahai, Cox and Erickson and Ms. Sethi).
The employment agreements also provide that in the event that any compensation, payment or distribution to the NEO under the employment agreement (the “Parachute Payments”) would be subject to the excise tax imposed by Section 4999 of the Code, then such Parachute Payments will be reduced (but not below zero) to the extent necessary so that the maximum Parachute Payments will not exceed the Threshold Amount (as defined in the applicable employment agreement).
Equity Awards
Prior to the Company's IPO, the NEOs were granted options under the 2017 Equity Incentive Plan. In connection with our IPO, the Board of CWAN Holdings amended the options then held by the NEOs to provide for accelerated vesting of any then unvested options outstanding at the time of the consummation of the IPO to the earlier of a "Change
in
Control" (as defined in the 2017 Equity Incentive Plan)
or
the
date
that
WCAS
and
its
affiliates own
less
than
5%
of
the
common
stock
of
the Company.
In the event the RSUs and PSUs granted under the 2021 Plan are assumed or substituted in connection with a “change in control” (as defined in the 2021 Plan),
such
awards
will
not
accelerate by
reason
of
the
change
in
control
unless
the
NEO
also experiences an involuntary termination as a result of the change in control. Such awards held by a NEO who
experiences an
involuntary termination as
a
result of
a
change
in
control will
immediately vest as of the date of such termination.
A NEO will be deemed to experience an involuntary termination as a result of a change in control if the NEO experiences a termination by the Company other than for “cause” (as defined in the 2021 Plan) or for “good reason” (as defined in the 2021 Plan), or otherwise experiences
a
termination
under
circumstances which
entitle
the
NEO
to
mandatory
severance payment(s) pursuant to applicable law, at any time beginning on the date of the change in control up to and including the second anniversary of the change in control.
CEO Pay Ratio for 2024
General
Under the rules adopted by the SEC pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”), we are required to calculate and disclose the total compensation paid to our median paid employee, as well as the ratio of the total compensation paid to the median employee as compared to the total compensation paid to our CEO. We describe our methodology and the resulting CEO pay ratio below.
Methodology
The methodology and the material assumptions, adjustments and estimates used to identify the median of the annual total compensation of all our employees were based on the following:
Our median employee was identified from all full-time and part-time employees as of December 31, 2024 (other than our CEO). As of December 31, 2024, we and our consolidated subsidiaries employed 1,915 individuals. We did not include any contractors or other non-employee workers in our employee population. Aside from four interns, we did not have any temporary or seasonal employees as of December 31, 2024.
To identify our median employee from our employee population, we calculated the aggregate amount of each employee’s (i) base salary or gross wages paid, (ii) bonuses and cash incentives paid, and (iii) the grant date fair value, calculated in accordance with ASC Topic 718, of equity awards granted during the calendar year, for which compensation measure was consistently applied. Amounts under items (i) and (ii) above were annualized for any permanent employees who commenced work during 2024. We annualized the base salary or wages of all permanent (full-time and part-time) employees who were employed by us for less than the entire calendar year. We selected the foregoing compensation
42
elements because they represented our principal broad-based compensation elements. Compensation not paid in U.S. dollars was converted to U.S. dollars using the foreign exchange rates in effect as of December 31, 2024.
Calculation
Once we identified our median employee using the aforementioned methodology, we then calculated the annual total compensation of this employee for 2024 in accordance with the requirements of the Summary Compensation Table. We determined our CEO’s annual total compensation for 2024 as reported in our 2024 Summary Compensation Table.
The median of the annual total compensation of all our employees, excluding our CEO, was $84,713. The annual total compensation of our CEO, as reported in the Summary Compensation Table for 2024, was $11,123,831. The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all our employees was 131 to 1.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on the methodology described below. The SEC rules for identifying the median compensated employee and calculating the pay ratio allow companies to adopt a variety of methodologies, apply certain exclusions, and make reasonable estimates and assumptions that reflect their compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may utilize different methodologies, exclusions, estimates, and assumptions in calculating their own pay ratios.
Pay Versus Performance Disclosure
In
accordance
with rules adopted by the SEC pursuant to the Dodd-Frank Act, we provide the following disclosure regarding executive compensation for our principal executive officer (“PEO”) and Non-PEO NEOs and Company performance for the fiscal years listed below. The Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown.
| Year |
Summary Compensation Table Total for PEO¹
($) |
Compensation Actually Paid to PEO¹˒²˒³
($) |
Average Summary Compensation Table Total for Non-PEO NEOs
1
($)
|
Average Compensation Actually Paid to Non-PEO NEOs
1,2,3
($)
|
Value of Initial Fixed $100 Investment based on:
4
|
Net Income⁵
($ Millions)
|
Revenue
6
($ Millions)
|
|||||||||||||||||||
|
TSR
($) |
Peer Group TSR
($) |
|||||||||||||||||||||||||
| 2024 |
|
|
|
|
|
|
|
|
||||||||||||||||||
| 2023 |
|
|
|
|
|
|
(
|
|
||||||||||||||||||
| 2022 |
|
(
|
|
(
|
|
|
(
|
|
||||||||||||||||||
| 2021 |
|
|
|
|
|
|
(
|
|
||||||||||||||||||
1.
Sandeep Sahai
was our PEO for each year presented. The individuals comprising the Non-PEO NEOs for each year presented are listed below.
| 2022 | 2023 | 2024 | ||||||
| Jim Cox | Jim Cox | Jim Cox | ||||||
| Scott Erickson | Scott Erickson | Scott Erickson | ||||||
| Souvik Das | Souvik Das | Souvik Das | ||||||
| Subi Sethi | Subi Sethi | |||||||
2.
The amounts shown for Compensation Actually Paid have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs. These amounts reflect the Summary Compensation Table Total with certain adjustments as described in footnote 3 below.
3.
Compensation Actually Paid to PEO reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. In calculating the amounts shown for Compensation Actually Paid to PEO , the fair value or change in fair value, as applicable of the equity award adjustments included in such calculation was computed in accordance with FASB ASC Topic 718. The valuation assumptions used to calculate such fair values did not materially differ from those disclosed at the time of grant.
43
| Year |
Summary
Compensation Table Total for Sandeep Sahai ($) |
Less, Grant Date
Fair Value of Stock and Option Awards Reported in the Summary Compensation Table ($) |
Plus, Year-End Fair Value of Awards Granted in the Covered Fiscal Year that are Outstanding and Unvested ($) | Plus, Change in Fair Value of Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) | Plus, Vesting Date Fair Value of Awards Granted in the Covered Fiscal Year that Vested in that Year | Plus, Change in Fair Value Year of Awards Granted in Prior Years that Vested in the Covered Fiscal Year (From Prior Year-End to Vesting Date) | Less, Prior Year-End Fair Value of Awards Granted in Prior Years that Failed to Vest in the Covered Fiscal Year | Plus, Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included | Compensation Actually Paid to Sandeep Sahai ($) | ||||||||||||||||||||
| 2024 |
|
(
|
|
|
|
|
|
|
|
||||||||||||||||||||
| Year |
Average Summary
Compensation Table Total for Non-PEO NEOs ($) |
Less, Average Grant Date
Fair Value of Stock and Option Awards Reported in the Summary Compensation Table ($) |
Plus, Average Year-End Fair Value of Awards Granted in the Covered Fiscal Year that are Outstanding and Unvested ($) | Plus, Average Change in Fair Value of Awards Granted in Prior Years that are Outstanding and Unvested (From Prior Year-End to Year-End) | Plus, Average Vesting Date Fair Value of Awards Granted in the Covered Fiscal Year that Vested in that Year | Plus, Average Change in Fair Value Year of Awards Granted in Prior Years that Vested in the Covered Fiscal Year (From Prior Year-End to Vesting Date) | Less, Average Prior Year-End Fair Value of Awards Granted in Prior Years that Failed to Vest in the Covered Fiscal Year | Plus, Average Value of Dividends or Other Earnings Paid on Equity Awards Not Otherwise Included |
Average Compensation Actually Paid to Non-PEO NEOs ($)
|
||||||||||||||||||||
| 2024 |
|
(
|
|
|
|
|
|
|
|
||||||||||||||||||||
4.
The Peer Group Total Shareholder Return ("TSR") set forth in this table utilizes the S&P Information Technology Sector Index, which we also utilize in the stock performance graph required by Item 201(e) of Regulation S-K included in the 2024 Annual Report. The Company TSR and the Company's Peer Group TSR reflected in these columns for each applicable fiscal year is calculated based on a fixed investment of $100 at the applicable measurement point on the same cumulative basis as is used in Item 201(e) of Regulation S-K.
5.
Represents the amount of net income reflected in the Company's audited GAAP financial statements for each applicable fiscal year.
6.
Represents the amount of revenue reflected in the Company’s audited GAAP financial statements for each applicable fiscal year. We determined
Revenue
to be the most important financial performance measure used to link Company performance to Compensation Actually Paid to our PEO and Non-PEO NEOs in 2024. This performance measure may not have been the most important financial performance measure for prior years and we may determine a different financial performance measure to be the most important financial performance measure in future years.
44
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Company and Peer Group TSR
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of
Compensation
Actually Paid to our Non-PEO NEOs, the Company’s cumulative TSR over the four most recently completed fiscal years, and the S&P Information Technology Sector Index TSR over the same period.
45
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Net Income
The following chart sets forth the relationship between Compensation Actually Paid to our PEO, the average of
Compensation
Actually Paid to our Non-PEO NEOs, and our net income during the four most recently completed fiscal years.
46
Relationship Between PEO and Non-PEO NEO Compensation Actually Paid and Revenue
The following chart sets
forth
the relationship between Compensation Actually Paid to our PEO, the average of Compensation Actually Paid to our Non-PEO NEOs, and our revenue during the four most recently completed fiscal years.
Tabular List of Most Important Financial Performance Measures
The following table presents the financial performance measures that the Company considers to have been the most important in linking
Compensation
Actually Paid to our PEO and other NEOs for 2024 to Company performance. The measures in this table are not ranked.
|
|
||
|
|
||
|
|
||
|
|
||
47
Equity Compensation Plan Information
|
Plan Category
|
Number of securities
to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average
exercise price of
outstanding options,
warrants and rights
(3)
|
Number of securities
remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) |
|||||||||||||||||
| (a) | (b) | (c) | ||||||||||||||||||
|
Equity compensation plans approved by security holders
(1)
:
|
||||||||||||||||||||
| 2021 Omnibus Incentive Plan |
21,690,451
(2)
|
$8.42 |
33,347,354
(4)
|
|||||||||||||||||
| 2021 Employee Stock Purchase Plan | — | N/A |
7,260,919
(5)
|
|||||||||||||||||
|
Equity compensation plans not approved by security holders
|
— | — | — | |||||||||||||||||
| Total | 21,690,451 | 40,608,273 | ||||||||||||||||||
(1)
We
have
two
equity
compensation
plans
that
have
been
approved
by
our
stockholders:
the
2021
Plan and the 2021 Employee Stock Purchase Plan (the “ESPP”).
(2)
Consists
of 9,514,741 shares
of
Class
A
common
stock
issuable
upon
the
exercise
of
stock
options,
and 12,175,710 shares of our Class A common stock issuable upon the settlement of RSUs.
(3)
The weighted
average
exercise
price
relates
only
to
stock
options.
(4)
Consists of shares of our Class A common stock available for future stock-based awards under our 2021 Omnibus Incentive Plan which may include the grant of stock options, stock appreciation rights, restricted stock, RSUs, bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards. The number of shares remaining available will
be
increased
on
the
first
day
of
each
fiscal
year
during
the
term
of
the
2021
Plan
commencing with the 2022 fiscal year by 5% of the total number of shares of common stock outstanding on the last day of the immediately preceding fiscal year or a lessor amount determined by the Committee. In each of 2023 and 2024, the Committee determined that there were sufficient shares of Class A common stock available for future stock-based awards and hence the number of shares available did not increase on either of January 1, 2024 or January 1, 2025.
(5)
The number of shares remaining available under the 2021 ESPP will be increased on the first day of each calendar year
beginning
in
the
2022
fiscal
year
and
ending
in
and
including
the
2031
fiscal
year,
by
an
amount
equal to the lessor of (i) 1.0% of the shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as identified by the Committee. In each of 2023 and 2024, the Committee determined that there were sufficient shares remaining available under the 2021 ESPP and hence the number of shares available did not increase on either of January 1, 2024 or January 1, 2025.
48
SECURITY
OWNERSHIP
OF
CERTAIN
BENEFICIAL
OWNERS
AND
MANAGEMENT
The
following
table
sets
forth
certain
information regarding
the
beneficial ownership
of
our
Class
A common stock and Class D common stock as of April 25, 2025 with respect to:
•
each
person known by us to beneficially
own 5%
of any class of our outstanding
shares;
•
each member
of and nominee to our Board
and each named executive
officer;
and
•
the members
of our Board
and our executive
officers
as a
group.
The
percentage
of
beneficial ownership
of
shares
of
our
Class
A
common
stock,
our Class C common stock and Class D common stock is based on 254,584,339 shares of Class A common stock, 16,155,059 shares of Class D common stock and 12,542,110 LLC Interests (together with the corresponding shares of Class C common stock), in each case outstanding as of April 25, 2025. The shares of Class C common stock have no economic rights, but each share entitles the holder to ten votes on all matters on which stockholders of the Company are entitled to vote generally (dropping to one vote upon the automatic conversion of the shares of Class C common stock to Class B common stock (each having no economic rights) upon the earlier of Welsh Carson owning less than 5% of the common stock or seven years from the IPO). The shares of Class D common stock have
the
same
economic rights
as
shares
of
Class
A
common
stock,
but
each
share
entitles the
holder
to
ten
votes on all matters on which stockholders of the Company are entitled to vote generally (dropping to one vote upon the automatic conversion of the shares of Class D common stock to Class A common stock upon the earlier of Welsh Carson owning less than 5% of the common stock or seven years from the IPO).
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the
footnotes
below,
we
believe,
based
on
the
information furnished
to
us,
that
each
person
or
entity
named
in
the table below has sole voting and investment power with respect to all shares of common stock that he, she or it beneficially owns, subject to applicable community property laws.
Except
as
otherwise
noted
below,
the
address
of
each
beneficial owner
listed
in
the
table
below
is
c/o Clearwater Analytics Holdings, Inc., 777 W. Main Street, Suite 900, Boise, Idaho 83702.
49
| Named of Beneficial Owner |
Class A of Common Stock Beneficially
Owned
(1)
|
Class D of
Common Stock
Beneficially
Owned
(1)(2)
|
Combined Voting
Power
(3)
|
|||||||||||||||||
| 5% Stockholders | ||||||||||||||||||||
|
Entities affiliated with Welsh Carson
(4)
|
— | 18,958,356 | 35.0 | % | ||||||||||||||||
|
Entities affiliated with Permira
(5)
|
— | 7,983,533 | 14.7 | % | ||||||||||||||||
|
The Vanguard Group
(6)
|
18,423,753 | — | 3.4 | % | ||||||||||||||||
|
Wasatch Advisors, Inc.
(7)
|
12,416,206 | — | 2.3 | % | ||||||||||||||||
|
Blackrock Fund Advisors
(8)
|
12,303,342 | — | 2.3 | % | ||||||||||||||||
|
Kayne Anderson Rudnick Investment Management LLC
(9)
|
11,037,860 | — | 2.0 | % | ||||||||||||||||
|
William Blair Investment Management LLC
(10)
|
9,411,306 | — | 1.7 | % | ||||||||||||||||
|
Named Executive Officers, Directors and Director
Nominees: |
||||||||||||||||||||
|
Sandeep Sahai
(11)
|
4,099,558 | — | * | |||||||||||||||||
|
Jim Cox
(12)
|
1,438,730 | — | * | |||||||||||||||||
|
Souvik Das
(13)
|
616,911 | — | * | |||||||||||||||||
|
Scott Erickson
(14)
|
830,477 | — | * | |||||||||||||||||
|
Subi Sethi
(15)
|
403,684 | — | * | |||||||||||||||||
|
Eric Lee
(16)
|
531,457 | — | * | |||||||||||||||||
|
Jacques
Aigrain
(17)
|
92,762 | — | * | |||||||||||||||||
|
Kathleen A. Corbet
(18)
|
108,426 | — | * | |||||||||||||||||
| Cary Davis | — | — | — | % | ||||||||||||||||
|
Christopher Hooper
(19)
|
229,305 | — | * | |||||||||||||||||
|
Lisa Jones
(20)
|
29,065 | — | * | |||||||||||||||||
|
D. Scott Mackesy
(21)
|
545,250 | — | * | |||||||||||||||||
|
Jaswinder Pal Singh
(22)
|
33,575 | — | * | |||||||||||||||||
| Andrew Young | — | — | — | % | ||||||||||||||||
|
All executive officers and directors as a group
(14 individuals) |
8,959,200 | — | 1.7 | % | ||||||||||||||||
*
Represents
less than 1
.0% of outstanding
shares or voting power, as
applicable.
(1)
Each holder of Class C common stock and Class D common stock is entitled to ten votes per share and each holder of Class A common stock is entitled to one vote per share on all matters submitted to
our
stockholders for
a
vote.
Our
Class
C
common
stock
do
not
have any of the economic rights (including rights to dividends and distributions upon liquidation) associated with our Class A common stock and Class D common stock.
(2)
The numbers of shares of Class D common stock beneficially owned and percentages of beneficial ownership
set
forth
in
the
table
assume
that
all
LLC
Interests
(together
with
the
corresponding
shares
of Class
C
common
stock)
held
by
all
Principal
Equity
Owners
have
been
exchanged
for
shares
of
Class
D common stock.
(3)
Percentage
of
voting
power
represents voting
power
with
respect
to
all
shares
of
our
Class
A
common
stock, Class C common stock and Class D common stock voting together as a single class (subject to class-specific weightings) and as calculated on a fully diluted basis.
(4)
Includes 10,121,624 shares of Class C common stock directly held by WCAS XIII Carbon Analytics Acquisition, L.P., 665,206 shares of Class C common stock directly held by WCAS GP CW LLC, and 8,171,526 shares of Class D common stock directly held by WCAS XIII Carbon Investors, L.P.(together, the “WCAS Entities”). The general partner of WCAS XIII Carbon Analytics Acquisition, L.P. and the managing member of WCAS GP CW LLC is WCAS XIII Associates LLC. Investment and voting decisions with respect to the shares held by the WCAS Entities are made by a committee comprised of three or more individuals and all members of such committee disclaim beneficial ownership of the shares. The address of the foregoing persons is c/o Welsh, Carson, Anderson & Stowe, 599 Lexington Avenue, 18th Floor, New York, New York 10022. The foregoing information is based solely on a Schedule 13G filed by the WCAS Entities,WCAS XII Associates LLC and WCAS XII Associates Cayman, L.P. with the SEC on February 14, 2025.
50
(5)
Includes 7,983,533 shares of Class D common stock held by Galibier Purchaser, LLC. Galibier Holdings, LP is the sole member of Galibier Purchaser, LLC. Galibier Holdings GP, LLC, is the general partner of Galibier Holdings, LP. Gali SCSp is the sole member of Galibier Holdings GP, LLC. Permira VII GP S.a r.l. is the general Partner of Gali SCSp. The address for each of Galibier Purchaser, LLC; Galibier Holdings, LP; and Galibier Holdings GP, LLC is 320 Park Avenue, 28th Floor, New York, New York 10022, USA. The address for each of Gali SCSp and Permira VII GP S.a r.l. is 488, route de Longwy, Luxembourg. The foregoing information is based solely on a Schedule 13G filed by the foregoing entities with the SEC on February 13, 2025.
(6)
Represents shares beneficially owned by The Vanguard Group, 100 Vanguard Blvd., Malvern, PA 19355. The foregoing information is based solely on a Schedule 13G filed by The Vanguard Group with the SEC on November 12, 2024.
(7)
Represents shares beneficially owned by Wasatch Advisors, Inc., 505 Wakara Way, Salt Lake City, UT 84108. The foregoing information is based solely on a Schedule 13G filed by Wasatch Advisors, Inc. with the SEC on February 11, 2025.
(8)
Represents shares beneficially owned by BlackRock, Inc., 50 Hudson Yards New York, NY 10001. The foregoing information is based solely on a Schedule 13G filed by BlackRock, Inc. with the SEC on November 8, 2024.
(9)
Represents shares beneficially owned by Kayne Anderson Rudnick Investment Management LLC, 2000 Avenue of the Stars, Suite 1110, Los Angeles, CA 90067. The foregoing information is based solely on a Schedule 13G filed by Kayne Anderson Rudnick Investment Management LLC with the SEC on February 13, 2025.
(10)
Represents shares beneficially owned by William Blair Investment Management LLC, 150 North Riverside Plaza, Chicago, IL 60606. The foregoing information is based solely on a Schedule 13G filed by William Blair Investment Management LLC with the SEC on February 12, 2025.
(11)
Includes options to purchase 3,222,804 shares of Class A common stock that are exercisable within 60 days of April 25, 2025, gross of shares to be withheld for taxes.
(12)
Includes options to purchase 1,079,845 shares of Class A common stock that are exercisable within 60 days of April 25, 2025, gross of shares to be withheld for taxes.
(13)
Includes options to purchase 479,167 shares of Class A common stock that are exercisable within 60 days of April 25, 2025, gross of shares to be withheld for taxes.
(14)
Includes options to purchase 818,523 shares of Class A common stock that are exercisable within 60 days of February 21, 2025, gross of shares to be withheld for taxes.
(15)
Includes options to purchase 193,162 shares of Class A common stock that are exercisable within 60 days of February 21, 2025, gross of shares to be withheld for taxes.
(16)
Consists of (i) 235,849 shares of Class A common stock and 166,771 shares of Class C common Stock held directly by Eric Lee; and (ii) 75,471 shares of Class A common stock and 53,366 shares of Class C common stock held by Eric J Lee 2014 Irrevocable Trust.
(17)
Includes options to purchase 69,800 shares of Class A common stock that are exercisable within 60 days of April 25, 2025, and 10,334 RSUs that will vest within 60 days of April 25, 2025, in each case gross of shares to be withheld for taxes.
(18)
Includes options to purchase 70,960 shares of Class A common stock that are exercisable within 60 days of April 25, 2025, and 10,334 RSUs that will vest within 60 days of April 25, 2025, in each case gross of shares to be withheld for taxes.
(19)
Consists of 117,703 shares of Class A common stock and 111,602 shares of Class C common stock held by The Hooper Family Trust.
(20)
Includes 10,334 RSUs that will vest within 60 days of April 25, 2025, gross of shares to be withheld for taxes.
(21)
Consists of (i) 197,092 shares of Class A common stock and 159,063 shares of Class C common stock held directly by D Scott Mackesy; and (ii) 108,029 shares of Class A common stock and 81,066 shares of Class C common stock held by The D Scott Mackesy 2014 Irrevocable Descendants Trust.
(22)
Includes 10,334 RSUs that will vest within 60 days of April 25, 2025, gross of shares to be withheld for taxes.
51
SECTION 16(a) REPORTS
Section 16(a) of the Exchange Act requires our directors, executive officers and persons who beneficially own more than 10% of our outstanding common stock to file reports of their stock ownership and changes in their ownership of our common stock with the SEC. Directors, executive officers, and persons who beneficially own more than 10% stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. We have identified the following reports required to be filed by insiders under Section 16(a) of the Exchange Act that were not filed in a timely manner:
•
Form 4 filed March 1, 2024 relating to shares acquired from the vesting of performance-based restricted stock units ("PSUs”) for Souvik Das;
•
Form 4s filed February 21, 2024 relating to shares sales effected pursuant to a Rule 10b5-1 trading plan for James S Cox and Sandeep Sahai;
•
Form 4s filed April 4, 2024 relating to tax withholding obligations in connection with vesting and settlement of RSUs for Sandeep Sahai, Scott Stanley Erickson, James S Cox, Souvik Das and Subi Sethi; and
•
Form 4s filed June 20, 2024, relating to vesting of RSUs for Lisa Jones, Jaswinder Pal Singh, Kathleen A Corbet, and Jacques Aigrain.
52
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
The
following
is
a
summary
of
transactions to
which
we
are
a
party
in
which
the
amount
involved
exceeded or exceeds $120,000 and in which any of our directors, executive officers, holders of more than 5% of any class of our voting securities or any member of the immediate family of any of the foregoing persons had or will have a
direct
or
indirect
material
interest,
other
than
compensation
arrangements
with
directors
and
executive
officers, which are described under “Executive Compensation.”
Review, Approval or Ratification of Transactions with Related Persons
The Audit Committee has primary responsibility for reviewing and approving transactions with related parties.
Our
Audit
Committee charter
provides
that
the
Audit
Committee shall
review
and
approve
in
advance any related party transactions.
Our Related Parties policy entered into at the time of the IPO provides that our executive officers, directors, nominees for election as directors, beneficial owners of more than 5% of any class of our voting stock, any member of the immediate family of any of the foregoing persons, and any firm, corporation or other entity in which any of the foregoing persons is employed, is a general partner or principal or in a similar position, or in which such person has a 5% or greater beneficial ownership interest, is not permitted to enter into a related party transaction with us without the consent of our Audit Committee, subject to the exceptions described below. In approving or rejecting any such proposal, our Audit Committee is to consider the relevant facts and
circumstances available and deemed relevant to our Audit Committee, including whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances and the extent of the related party’s interest in the transaction. Our Audit Committee has determined that certain transactions will not require Audit Committee approval, including certain employment arrangements of executive officers, director compensation, transactions with another company at which a related party’s only relationship is as a non-executive employee or beneficial owner of less than 5% of that company’s shares, transactions where a related party’s interest arises solely from the ownership of our common stock (on an as-adjusted basis)
and
all
holders
of
our
common
stock
(on
an
as-exchanged
basis)
received
the
same
benefit
on
a pro rata basis, and transactions available to all employees generally.
Services Agreements with Entities Affiliated with the Principal Equity Owners
We have received professional, consulting and advisory services from WCAS XIII Carbon Analytics Acquisition, L.P. and WCAS Management Corporation, each of which are affiliates of Welsh Carson, and from Warburg Pincus LLC, and from Permira. In the years ended December 31, 2024 and 2023, CWAN Holdings recognized management fees to such affiliates of Welsh Carson, Warburg Pincus LLC, and Permira of approximately $2.0 million and $2.6 million, respectively. During January 2021, CWAN Holdings made payments in relation to management fees of $6 million to Welsh Carson and $1.8 million to each of Warburg Pincus
and
Permira.
These
prepaid
management fees
relate
to
the
four-year period
subsequent
to
the
completion of the Recapitalization in November 2020 and are being amortized and recognized as expense over four years. The services agreements pursuant to which such fees have been paid terminated in accordance with their terms upon consummation of our IPO, and no such services will be provided afterward. As of March 18, 2025, Warburg Pincus sold all of its remaining common stock in the Company and is no longer a shareholder of the Company.
LLC Agreement
In
connection
with
the
Transactions,
Clearwater
and
the
Continuing
Equity
Owners entered into the LLC Agreement.
As a result of the Transactions, including the entry into the LLC Agreement, we hold LLC Interests in CWAN Holdings and are the sole managing member of CWAN Holdings. Accordingly, we operate and
control
all
of
the
business
and
affairs of
CWAN
Holdings and,
through
CWAN
Holdings and
its direct and indirect subsidiaries, conduct our business.
As the sole managing member of CWAN
Holdings, Clearwater has the right to determine when distributions will be made to the holders of LLC Interests and the amount of any such distributions (subject to the requirements with respect to the tax distributions described below). If Clearwater
authorizes a
distribution, such
distribution will
be
made
to
the
holders
of
LLC
Interests, including Clearwater,
pro
rata
in
accordance with
their
respective ownership
of
CWAN Holdings.
Upon the consummation of the Transactions, Clearwater became a holding company and its principal asset is a controlling equity interest in CWAN Holdings. As such, Clearwater has no independent means of generating revenue. CWAN Holdings is treated as a partnership for U.S. federal income tax purposes and, as such, is generally not be subject to U.S. federal income tax. Instead, taxable income is allocated to holders of LLC Interests, including
53
Clearwater Accordingly, Clearwater incurs income taxes on its allocable share of any net taxable income of CWAN Holdings and also may incur expenses related to its operations. The LLC Agreement requires “tax distributions,” as that term is defined in the LLC Agreement, to be made by CWAN Holdings to its “members,” as that term is defined in the LLC Agreement, unless certain exceptions apply. Tax distributions generally are made quarterly to each member of CWAN Holdings, including us, on a pro rata basis among the holders of LLC Interests based on CWAN Holdings’s net taxable income and without regard to any applicable basis adjustment under Section 743(b) of the Code, which means that the amount of tax distributions are determined based on the holder of LLC Interests who is allocated the largest amount of taxable income on a per LLC Interest basis and at a tax rate that is determined by us, but is made pro rata based on ownership of LLC Interests. Thus, CWAN Holdings will be required to make tax distributions that, in the aggregate, will likely exceed the amount of taxes that it would have paid if it were taxed on its net income at the tax rate applicable to a similarly situated corporate taxpayer. The tax rate used to determine tax distributions applies regardless of the actual final tax liability of any such member. Tax distributions are also made only to the extent all distributions from CWAN Holdings for the relevant period were otherwise insufficient to enable each member to cover its tax liabilities as calculated in the manner described above. Clearwater causes CWAN Holdings to make distributions or, in the case of certain expenses, payments in an amount sufficient to allow Clearwater to pay its taxes and operating expenses, including
distributions
to
fund
any
ordinary
course
payments
due
under
the
Tax
Receivable
Agreement
described
below.
The LLC Agreement generally does not permit transfers of LLC Interests by Continuing Equity Owners, except for transfers to Permitted Transferees, transfers pursuant to the redemption right described below and transfers approved in writing by us, as sole managing manager, and other limited exceptions. Permitted Transferees include (a) with respect to any Principal Equity Owner, any of such Principal Equity Owner’s affiliates and (b) with respect to any Other Continuing Equity Owners, any such Other Continuing Equity Owner’s affiliates or, in the case of individuals, members of their immediate family. In the event of a permitted transfer, such Continuing Equity Owner will be required to simultaneously transfer shares of Class
C
common
stock
to
such
transferee equal
to
the
number
of
LLC
Interests that were transferred. The LLC Agreement also provides that, as a general matter, a Continuing Equity Owner will not have the right to transfer LLC Interests if Clearwater determines that such transfer would be prohibited by law or regulation, would violate other agreements with Clearwater to which such Principal Equity Owner or Continuing Equity Owner, as applicable, may be subject or would cause or increase the possibility for CWAN Holdings to be treated as a “publicly traded partnership” taxable as a corporation for U.S. federal income tax purposes, as further described in the LLC Agreement.
The
LLC
Agreement
allows
holders
of
LLC
Interests to
exchange
their
LLC
interests for
shares
of
Class
A common stock or, if applicable, shares of Class D common stock, on a one-for-one basis or, at our election, for an amount of cash equal to the fair market value of such shares, as calculated in accordance with the LLC Agreement though we may settle any such exchange in cash only to the extent that we have cash available at least equal to the cash price that was received pursuant to a contemporaneous public offering or private sale.
The
Continuing
Equity
Owners
may
from
time
to
time
(subject to
the
terms
of
the
LLC
Agreement) exercise a right to require redemption of LLC Interests in exchange for cash or, at our election, shares of our Class A or Class D common stock (as the case may be) on a one-for-one basis. We may alternatively acquire such LLC Interests for cash in connection with any exercise of such right. We intend to treat such acquisitions of LLC Interests as direct purchases of LLC Interests from the Continuing Equity Owners for U.S. federal income and other applicable tax purposes. CWAN Holdings (and each of its subsidiaries classified as a partnership for U.S.
federal
income
tax
purposes)
intends
to
have
in
place
an
election
under
Section
754
of
the
Code
effective for each taxable year in which an exchange of LLC Interests for Class A common stock or Class D common stock
(as the case may be) or cash occurs. As a result, an exchange of LLC Interests is expected to result in (1) an increase in our proportionate share of the existing tax basis of the assets of CWAN Holdings and its flow- through subsidiaries and (2) an adjustment in the tax basis of the assets of CWAN Holdings and its flow- through subsidiaries reflected in that proportionate share.
Any increases in our share of the tax basis of the assets of CWAN Holdings and its flow-through subsidiaries as
a
result
of
the
purchase
of
LLC
Interests or
LLC
Interest exchanges
will
generally
have
the
effect of reducing the amounts that we would otherwise be obligated to pay thereafter to various tax authorities. Such basis increases may also decrease gains (or increase losses) on future dispositions of certain assets to the extent tax basis is allocated to those assets.
Each Continuing Equity Owner’s exchange and redemption rights are subject to certain customary limitations, including the expiration of any contractual lock-up period relating to the shares of our Class A common
stock
and
Class
D
common
stock
(as
the
case
may
be)
that
may
be
applicable to
such
Continuing
Equity Owner (including a lock-up period of not more than 180 days in connection with any registration of our equity securities) and the absence of any liens or encumbrances on such LLC Interests redeemed. In addition, Continuing Equity Owners cannot
54
exercise exchange or redemption rights during applicable blackout periods if the Company or CWAN Holdings reasonably determines in good faith that the exchange or redemption would be prohibited by law or regulation or would not be permitted under the Company’s written policies, including its insider trading policy. We may impose additional restrictions on exchanges or redemptions that we determine to be necessary or advisable so that CWAN Holdings does not risk being treated as a “publicly traded partnership” for U.S. federal income tax purposes.
As a holder exchanges LLC Interests and Class C common stock for shares of Class D common stock, or a redemption transaction is effected, the number
of
LLC
Interests held
by
Clearwater
is
correspondingly increased
as
it
acquires the exchanged LLC Interests or funds the redemption transaction, and a corresponding number of shares of
Class C common stock is canceled.
The
LLC
Agreement
also
requires
that
CWAN
Holdings,
LLC
take
actions
with
respect
to
its
LLC
Interests, including issuances, reclassifications, distributions, divisions, or recapitalizations, such that (i) we at all times maintain a ratio of one LLC Interest owned by us, directly or indirectly, for each share of Class A common stock or Class D common stock issued by us, and (ii) CWAN Holdings at all times maintains (a) a one-to-one ratio between the number of shares of Class A common stock or Class D common stock issued by us and the number of LLC Interests owned by us and (b) a one-to-one ratio between the number of shares of Class C common stock owned by the Continuing Equity Owners and the number of LLC Interests owned by the Continuing Equity Owners. As such, in certain circumstances we, as their sole managing member, have the authority to take all actions such that, after giving effect to all issuances, transfers, deliveries, or repurchases, the number of outstanding LLC Interests we own equals, on a one-to-one basis, the number of outstanding shares of Class A common stock and Class D common stock.
This
summary
does
not
purport
to
be
complete
and
is
qualified in
its
entirety by
the
provisions
of
our
form of LLC Agreement, a copy of which was filed as Exhibit 10.6 to the 2024 Annual Report.
Tax Receivable Agreement and TRA Amendment
In connection with the IPO and related transactions, we entered into a TRA with the Continuing Equity Owners and the Blocker Shareholders that, prior to the TRA Amendment, provided for the payment by us of 85% of certain tax benefits that we realized, or in some cases were deemed to realize, as a result of Tax Attributes, as defined in the Tax Receivable Agreement.
On November 4, 2024, the Company entered into the TRA Amendment, which amended the TRA to provide for one-time settlement payments in a gross amount of approximately $72.5 million, inclusive of approximately $69.2 million to be paid to the TRA Parties (net of the TRA Bonus Payments) and approximately $3.3 million TRA Bonus Payments to be paid to certain executive officers of the Company (collectively, the “TRA Settlement Payments”), plus approximately $6.5 million in third-party expenses. Upon the payment of the TRA Settlement Payments, the TRA Parties will have no further rights to receive payments (past, current, or future) under the TRA, and the Company will have no further payment obligations (past, current, or future) to the TRA Parties under the TRA. Most of the TRA Settlement Payments were made in December 2024. The remaining TRA Settlement Payments are expected to be made in the first quarter of 2025. Refer to Note 17 “Tax Receivable Agreement Liability” to the consolidated financial statements included in Part II, Item 8 of the 2024 Annual Report.
Registration Rights Agreement
In
connection with
our
IPO,
we
entered
into
a
second
amended
and
restated registration rights
agreement, or the “Registration Rights Agreement,” with certain of the Continuing Equity Owners, including certain members of our management. Subject to certain conditions, the Registration Rights Agreement provides certain of the Continuing Equity Owners with “long-form” demand registrations and “short-form” demand registration rights, as well as shelf registration rights. The Registration Rights Agreement also provides certain of the Continuing Equity Owners with customary “piggyback” registration rights. The Registration Rights Agreement contains provisions that require the parties thereto to coordinate with one another with respect to sales of our common stock and contains certain limitations on the ability of certain of the Continuing Equity Owners and certain members of our management party to the Registration Rights Agreement to offer, sell or otherwise dispose of shares of our common stock. The Registration Rights Agreement provides that we will pay certain expenses of these holders relating to such registrations and indemnify them against certain liabilities which may arise under the
Securities Act.
This
summary
does
not
purport
to
be
complete
and
is
qualified in
its
entirety by
the
provisions of our form of Registration Rights Agreement, a copy of which was filed as Exhibit 10.2 to the 2024 Annual
Report.
Stockholders’ Agreement
In
connection
with
the
IPO,
we
entered
into
the
Stockholders’ Agreement
with
the
Principal
Equity
Owners (and their respective permitted transferees thereunder party thereto from time to time). Pursuant to the Stockholders’
55
Agreement, for so long as the Company is a “controlled company” under the NYSE standards, the Board will be comprised of no more than ten directors, and (i) Welsh Carson will have the right to designate five nominees for election to our Board, of which one must be an “independent director,” as defined under the rules of NYSE and qualify as an independent director for purposes of Rule 10A-3 under the Exchange Act and NYSE rules requiring us to have one independent Audit Committee member upon the listing
of our Class A common stock (an “Audit Committee Independent Director”), (ii) Permira will have the right to designate one nominee so long it owns at least 33.3% of the shares of our common stock that it holds
immediately following the consummation of this offering (the “Closing Shares”), (iii) Warburg Pincus will have the right to designate one nominee so long as it owns at least 33.3% of its Closing Shares, (iv) Permira and Warburg Pincus will each have the right to designate (by mutual agreement for so long as both have such right and if only one of Warburg Pincus or Permira have such right, the one that has such right) one nominee who would qualify as an Audit Committee Independent Director so long as each owns at least 50% of its Closing Shares, (v) Welsh Carson, Permira and Warburg Pincus will each have the right to designate (by mutual agreement so long as more than one stockholder has such right and if only one of Welsh Carson, Warburg Pincus or Permira have such right, the one that has such right) one nominee who would qualify as an Audit Committee Independent Director so long as, in the case of Permira and Warburg Pincus, it owns at least 33.3% of its Closing Shares and (vi) the Chief Executive Officer of the Company must be nominated as a director.
For so long as the Company is not a “controlled company” under the NYSE standards, pursuant to the Stockholders’
Agreement,
the Board
would be comprised
of no more than eleven directors,
and
(i) Welsh Carson will have the right to designate two nominees so long as it owns at least 5% of the outstanding shares of our common stock, (ii) Permira will have the right to designate one nominee so long as it owns at least the greater of 33.3% of its Closing Shares and 5% of the outstanding shares of our common stock, (iii) Warburg Pincus
will
have
the
right
to
designate
one
nominee
so
long
as
it
owns
at
least
the
greater
of
33.3%
of
its
Closing Shares and 5% of the outstanding shares of our common stock and (iv) the Chief Executive Officer of the Company must be nominated as a director. Due to reductions in the shares held by Welsh Carson, Warburg Pincus and Permira, we are no longer a “controlled company”. As of the date of this report, Welsh Carson continues to have the right to designate two director nominees and neither Warburg Pincus nor Permira have rights to designate director nominees to our Board.
The Stockholders’ Agreement also provides that (i) so long as Permira beneficially owns at least 50% of its Closing Shares and is otherwise entitled to designate at least one nominee under the Stockholders’ Agreement, one Permira director nominee will be entitled to be on all committees and Permira will be entitled to appoint up
to two non-voting observers at Board meetings; (ii) so long as Warburg Pincus beneficially owns at least 50% of its
Closing
Shares
and
is
otherwise
entitled to
designate
at
least
one
nominee
under
the
Stockholders’ Agreement, one Warburg Pincus director nominee will be entitled to be on all committees and Warburg Pincus will be
entitled to appoint up to two non-voting observers at Board meetings; and (iii) the Welsh Carson director nominees will be entitled to be on all committees and, so long as Welsh Carson is otherwise entitled to designate at least one nominee under the Stockholders’ Agreement, Welsh Carson will be entitled to appoint up to two non-voting
observers
at
Board
meetings.
The
committee
designation
rights
are
subject
to
exceptions
with
respect to any such committee whose function relates solely to arrangements with the relevant Principal Equity Owner and to the extent that such membership would violate applicable securities laws or the NYSE standards. Due to reductions in the shares held by Warburg Pincus and Permira, as of the date of this report, neither Warburg Pincus nor Permira have committee designation rights.
No board member designated in connection with the Stockholders’ Agreement
will
be
required
to
immediately tender
his
or
her
resignation upon
the
loss
of
rights
by any
Principal
Equity
Owner
responsible for
his
or
her
designation,
and
each
such
director may
continue
to
serve until
the
end
of
his
or
her
then
current
term.
The
board
member
designation rights
pursuant
to
the
Stockholders’ Agreement will have the effect of making it more difficult for stockholders to change the composition of our Board.
Under
the
Stockholders’
Agreement,
prior
to
the
Trigger
Event,
directors
nominated
by
a
Principal
Equity Owner and serving as a director shall not be removed by the other Principal Equity Owners without cause.
Under the Stockholders’ Agreement, we have agreed, subject to certain exceptions, to indemnify the Principal Equity Owners, and various affiliated persons and indirect equity holders of the Principal Equity Owners from certain losses arising out of any threatened or actual litigation by reason of the fact that the indemnified person
is
or
was
a
holder
of
our
common
stock
or,
prior
to
the
completion of
the
Transactions, of equity interests in CWAN Holdings.
This
summary
does
not
purport
to
be
complete
and
is
qualified in
its
entirety by
the
provisions
of
our
form of Stockholders’ Agreement, a copy of which was filed as Exhibit 10.3 to the 2024 Annual Report.
56
Advisory Agreements with Kathleen Corbet and Jaswinder Pal Singh
In connection with their not standing for re-election to the Board, to continue benefitting from Ms. Corbet and Mr. Singh’s valuable insights, in April 2025 we entered into advisory agreements with Ms. Corbet and Mr. Singh. Pursuant to the advisory agreement with Ms. Corbet, she will serve as a senior advisor to the Company with respect to our go-to-market strategy in the insurance and asset management sectors for a period of 12 months following the Annual Meeting. Pursuant to the advisory agreement with Mr. Singh, he will serve as a senior advisor to the Company with respect to our technology and cybersecurity strategy for a period of 12 months following the Annual Meeting. In consideration for Ms. Corbet's and Mr. Singh’s service as a senior advisor, the Company will issue to each of them an RSU grant equal to $200,000 divided by the 10 trading-day average closing share price leading up to the date of grant, vesting on the one-year anniversary of the grant.
Limitation of Liability and Indemnification of Officers and Directors
Our certificate of incorporation and bylaws provide that we shall indemnify each of our directors and officers to the fullest extent permitted by Delaware General Corporate Law. We have also entered into customary
indemnification agreements
with
each
of
our
executive
officers
and
directors
that
provide
them
with customary indemnification in connection with their service to us or on our behalf.
57
OTHER MATTERS
We are not aware of any matters other than those discussed in the foregoing materials contemplated for action at the Annual Meeting. The persons named in the proxy card will vote in accordance with the recommendation of
the
Board
on
any
other
matters incidental to
the
conduct
of,
or
otherwise
properly
brought before, the Annual Meeting. The proxy card contains discretionary authority for them to do so.
WHERE TO FIND ADDITIONAL INFORMATION
We
are
subject
to
the
informational
requirements
of
the
Exchange
Act
and
in
accordance
therewith,
we
file annual,
quarterly
and
current
reports
and
other
information
with
the
SEC.
Such
information
may
be
accessed electronically
by
means
of
the
SEC’s
home
page
on
the
Internet
at
www.sec.gov.
We
are
an
electronic
filer,
and
the
SEC
maintains
an
Internet
site
at
www.sec.gov
that
contains
the
reports
and
other
information
we
file
electronically.
These
filings
are
also
available
on
our
corporate
website
at
https://investors.clearwateranalytics.com.
Please
note that
our
website
address
is
provided
as
an
inactive
textual
reference
only.
We
make
available
free
of
charge,
through our
website,
our
annual
report
on
Form
10-K,
quarterly
reports
on
Form
10-Q
and
current
reports
on
Form
8-K,
and all
amendments
to
those
reports
as
soon
as
reasonably
practicable
after
such
material
is
electronically
filed
with
or furnished
to
the
SEC.
The
information
provided
on
or
accessible
through
our
website
is
not
part
of
this
Proxy
Statement.
COST OF PROXY SOLICITATION
The Company is paying the expenses of this solicitation. The Company will also make arrangements with brokerage
houses
and
other
custodians,
nominees
and
fiduciaries
to
forward
proxy
materials
to
beneficial
owners of stock held as of the Record Date by such persons, and the Company will reimburse such persons for their reasonable out-of-pocket expenses in forwarding such proxy materials. In addition to solicitation by mail, directors, officers and other employees of the Company may solicit proxies in person or by telephone, facsimile, email or other similar means.
58
APPENDIX A
Non-GAAP Financial Measures
This Proxy Statement contains information regarding financial measures that are not calculated in accordance with GAAP. We believe that these non-GAAP financial measures are appropriate to enhance an overall understanding of our fiscal year 2024 performance in relation to the principal elements of the Company’s annual executive compensation program considered by the Compensation Committee, as described in the “Executive Compensation Discussion and Analysis” section of this Proxy Statement.
However, non-GAAP financial information is presented for supplemental informational purposes only, has limitations as an analytical tool, and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP. In addition, other companies, including companies in our industry, may calculate similarly-titled non-GAAP measures differently or may use other measures to evaluate their performance, all of which could reduce the usefulness of our non-GAAP financial measures as tools for comparison. A reconciliation is provided below for certain-GAAP financial measures to the most directly comparable financial measure stated in accordance with GAAP. Investors are encouraged to review the related GAAP financial measures and the reconciliation of such non-GAAP financial measures to their most directly comparable GAAP financial measures.
Management encourages stockholders and others to review Clearwater’s financial information in its entirety and not rely on a single financial measure.
Income from operations, non-GAAP
We
define income from operations, non-GAAP as GAAP income (loss) from operations excluding equity-based compensation and related payroll taxes, depreciation and amortization, amortization of prepaid management fees and reimbursable expenses and transaction expenses.
The following table presents our non-GAAP financial results for the years ended December 31, 2024 and 2023 (in thousands):
| Year Ended December 31, | ||||||||||||||
| 2024 | 2023 | |||||||||||||
| Revenue | $ | 451,803 | $ | 368,168 | ||||||||||
| Gross profit | $ | 328,816 | $ | 261,041 | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 14,546 | 12,734 | ||||||||||||
| Depreciation and amortization | 10,137 | 7,999 | ||||||||||||
| Gross profit, non-GAAP | $ | 353,499 | $ | 281,774 | ||||||||||
| As a percentage of revenue, non-GAAP | 78 | % | 77 | % | ||||||||||
| Cost of Revenue | $ | 122,987 | $ | 107,127 | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 14,546 | 12,734 | ||||||||||||
| Depreciation and amortization | 10,137 | 7,999 | ||||||||||||
| Cost of revenue, non-GAAP | $ | 98,304 | $ | 86,394 | ||||||||||
| As a percentage of revenue, non-GAAP | 22 | % | 23 | % | ||||||||||
| Research and development | $ | 150,558 | $ | 123,925 | ||||||||||
| Adjustments: | ||||||||||||||
59
| Equity-based compensation expense and related payroll taxes | 41,356 | 25,627 | ||||||||||||
| Depreciation and amortization | 736 | 1,044 | ||||||||||||
| Research and development, non-GAAP | $ | 108,466 | $ | 97,254 | ||||||||||
| As a percentage of revenue, non-GAAP | 24 | % | 26 | % | ||||||||||
| Sales and marketing | $ | 67,254 | $ | 60,365 | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 16,017 | 16,419 | ||||||||||||
| Depreciation and amortization | 638 | 589 | ||||||||||||
| Sales and marketing, non-GAAP | $ | 50,599 | $ | 43,357 | ||||||||||
| As a percentage of revenue, non-GAAP | 11 | % | 12 | % | ||||||||||
| General and administrative | $ | 98,770 | $ | 93,496 | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 39,042 | 53,298 | ||||||||||||
| Depreciation and amortization | 670 | 297 | ||||||||||||
| Amortization of prepaid management fees and reimbursable expenses | 1,990 | 2,592 | ||||||||||||
| Transaction expenses | 8,308 | 2,052 | ||||||||||||
| General and administrative, non-GAAP | $ | 48,760 | $ | 35,258 | ||||||||||
| As a percentage of revenue, non-GAAP | 11 | % | 10 | % | ||||||||||
| Income (loss) from operations | $ | 12,234 | $ | (16,745) | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 110,961 | 108,078 | ||||||||||||
| Depreciation and amortization | 12,181 | 9,929 | ||||||||||||
| Amortization of prepaid management fees and reimbursable expenses | 1,990 | 2,592 | ||||||||||||
| Transaction expenses | 8,308 | 2,052 | ||||||||||||
| Income from operations, non-GAAP | $ | 145,674 | $ | 105,906 | ||||||||||
| As a percentage of revenue, non-GAAP | 32 | % | 29 | % | ||||||||||
| Net income (loss) | $ | 427,585 | $ | (23,083) | ||||||||||
| Adjustments: | ||||||||||||||
| Equity-based compensation expense and related payroll taxes | 110,961 | 108,078 | ||||||||||||
| Depreciation and amortization | 12,181 | 9,929 | ||||||||||||
| Tax receivable agreement expense | 53,181 | 14,396 | ||||||||||||
| Amortization of prepaid management fees and reimbursable expenses | 1,990 | 2,592 | ||||||||||||
| Transaction expenses | 8,308 | 2,052 | ||||||||||||
|
Tax impacts of adjustments to net income (loss)
(1)
|
(496,779) | (28,545) | ||||||||||||
| Net income, non-GAAP | $ | 117,427 | $ | 85,419 | ||||||||||
| As a percentage of revenue, non-GAAP | 26 | % | 23 | % | ||||||||||
| Net income per share - basic, non-GAAP | $ | 0.54 | $ | 0.43 | ||||||||||
60
| Net income per share - diluted, non-GAAP | $ | 0.46 | $ | 0.33 | ||||||||||
| Weighted-average common shares outstanding - basic | 219,316,625 | 199,691,873 | ||||||||||||
| Weighted-average common shares outstanding - diluted | 254,362,539 | 255,750,590 | ||||||||||||
(1)
The non-GAAP effective tax rate was 25% for years ended December 31, 2024 and 2023, and has been used to adjust the provision for income taxes for non-GAAP net income and non-GAAP basic and diluted net income per share.
61
62
63
TABLE OF CONTENTS
GLOSSARYCOMMONLY ASKED QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETINGQ: Why did I receive these materials?Q: Who will be entitled to vote?Q: What will I be voting on?Q: How does the Board recommend I vote on these matters?Q: How do I access the proxy materials, including the 2024 Annual Report and this Proxy Statement?Q: What is householding and how does it affect me?Q: How do I cast my vote?Q: How do I participate in the Annual Meeting?Q: How may I change or revoke my proxy?Q: Why is the Annual Meeting virtual only?Q: What is the required quorum to conduct business at the Annual Meeting?Q: What is a broker non-vote?Q: What is the voting requirement to approve each of the proposals, and how are the votes counted?Q: How will my shares be voted if I sign and return my proxy card with no votes marked?Q: How will the results of the vote be tabulated?Q: When will the results of the vote be announced?Q: What is the deadline for submitting a stockholder proposal or director nomination for the 2026 Annual Meeting?PROPOSAL 1 ELECTION OF DIRECTORSNominees for Election to the Board in 2025Continuing DirectorsDirectors Not Standing for Re-election to the Board of Directors in 2025BOARD OF DIRECTORS AND CERTAIN CORPORATE GOVERNANCE MATTERSStockholders AgreementStockholder Recommendations for Director NomineesOur Human Capital Management and CultureEnvironmental, Social and Governance (ESG)Board Meetings and CommitteesBoard Leadership StructureCode of EthicsInsider Trading Arrangements and PoliciesAnti-Hedging and Anti-Pledging PolicyAnti-Corruption PolicyBoards Role in Risk OversightBoard Oversight of Cybersecurity RisksCompensation Committee Interlocks and Insider ParticipationCommunications by Stockholders and Other Interested Parties with the BoardDirector CompensationPROPOSAL 2 RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMFees and ServicesPre-Approval Policy for Services of Independent Registered Public Accounting FirmREPORT OF THE AUDIT COMMITTEEEXECUTIVE OFFICERSEXECUTIVE COMPENSATIONCompensation Discussion and AnalysisI. EXECUTIVE SUMMARYCompany Overview