DEF 14A: Vertex, Inc. Announces 2024 Annual Meeting of Stockholders and Executive Compensation Details

Vertex, Inc. has scheduled its 2024 Annual Meeting of Stockholders as a virtual event on June 12, 2024, and released details regarding executive compensation and corporate governance.

Summary

• Vertex, Inc. will hold its 2024 Annual Meeting of Stockholders virtually on June 12, 2024, at 9:00 a.m. EDT.
• Stockholders of record as of April 17, 2024, are entitled to vote.
• The meeting will include the election of three directors (Amanda Westphal Radcliffe, Stefanie Westphal Thompson, and Bradley Gayton), ratification of Crowe LLP as the independent auditor, an advisory vote on executive compensation ('Say-on-Pay'), and an advisory vote on the frequency of the Say-on-Pay vote.
• The Board recommends voting FOR the election of the director nominees, FOR the ratification of Crowe LLP, FOR the approval of executive compensation, and FOR every three years as the preferred frequency for future Say-on-Pay votes.
• Executive compensation includes base salary, cash-based incentive compensation, and equity-based compensation.
• In 2023, Vertex achieved revenue growth of 16.4% year-over-year, driven by a 15.7% increase in software subscriptions revenue.
• The CEO's salary was $589,654 in 2023, and total compensation was $7,531,591.
• The median annual total compensation of all employees (other than the CEO) was $132,107, resulting in a CEO pay ratio of 57 to 1.
• The company has adopted a Policy for Recovery of Erroneously Awarded Compensation (Clawback Policy) in July 2023.
• The company has a Stock Ownership Policy adopted by the Board on December 7, 2022, requiring certain officers to maintain a minimum level of beneficial ownership of the company's common stock.

Sentiment

Score: 7

Explanation: The document presents a balanced view with positive growth metrics and a commitment to corporate governance, but also acknowledges potential risks and control concentrations.

Positives

• The company achieved significant revenue growth of 16.4% year-over-year in fiscal year 2023.
• The company is committed to sustainability, reducing its carbon footprint through remote work and efficient cloud services.
• The company invests in communities through philanthropy and social impact programs, investing approximately $1.5 million since 2020.
• The company fosters a culture of diversity, equity, inclusion, and belonging through Business Resource Groups.
• The company prioritizes security and data privacy, employing rigorous security measures and supporting regulations that protect cross-border data transfer.
• The company offers competitive compensation and benefits to employees, including market-based compensation, long-term equity incentives, and wellness resources.

Risks

• The Stockholders Agreement gives significant control to certain stockholders, potentially limiting the influence of other stockholders.
• As a 'controlled company,' Vertex is exempt from certain corporate governance requirements, which may reduce protections for stockholders.
• The company's former S-Corp status may result in future tax liabilities and indemnification obligations.

Future Outlook

The company intends to continue evaluating the mix of base salary, short-term incentive compensation, and long-term incentive compensation to appropriately align the interests of its named executive officers with those of its stockholders.

Industry Context

The document provides insights into executive compensation practices within the software and services industry, benchmarking against a peer group of companies with similar business and financial profiles.

Comparison to Industry Standards

• The Human Capital Committee analyzed a comparative framework of external market data comprised of both specific peers in the software and services industry with similar business and financial profiles as us, as well as size-appropriate comparisons in the software product services and tech industry.
• The Human Capital Committee analyzed the public company market data for executive compensation as a general indicator of relevant market conditions and pay practices, focusing on revenue, market capitalization, industry and talent competitors.
• The Human Capital Committee reviewed compensation data from the following peer group as a reference source, developed in consultation with AON: ACI Worldwide Inc., Everbridge, Inc., Alarm.com Holdings Inc., Fair Isaac Corporation, Altair Engineering Inc., Five9 Inc., Alteryx Inc., Manhattan Associates Inc., AppFolio Inc., Microstrategy Inc., Aspen Technology Inc., Momentive Global Inc., Avalara Inc., New Relic Inc., Blackbaud Inc., Pegasystems Inc., BlackLine Inc., Q2 Holdings, Box Inc., Smartsheet Inc., Commvault Systems Inc., Workiva Inc., Coupa Software Inc., and Yext inc.

Management Changes

Corporate Governance

Related Party Transactions

• The Stockholders Agreement outlines transfer restrictions, right of first offer/refusal, subscription rights, registration rights, standstill provisions, and director designation rights for certain stockholders.
• The company may be required to make payments to former S-Corp stockholders with respect to any incremental income taxes resulting from an adjustment to the company's taxable income for any period beginning after the company's S-Corp status terminated.
• The company has entered into indemnification agreements with all of its directors and executive officers.

Stakeholder Impact

• Stockholders have the opportunity to vote on key proposals, including the election of directors, ratification of the independent auditor, and executive compensation.
• Employees benefit from competitive compensation and benefits, including health and welfare plans, retirement benefits, and wellness resources.
• Customers benefit from the company's commitment to security and data privacy.
• Communities benefit from the company's philanthropy and social impact programs.

Next Steps

• Stockholders are urged to vote their shares via the telephone number or over the Internet, as described in the proxy statement.
• Stockholders who intend to have a proposal considered for inclusion in the company's proxy materials for presentation at the 2025 Annual Meeting of Stockholders must submit the proposal to the Secretary in writing not later than December 30, 2024.
• Stockholders intending to present a proposal at the 2025 Annual Meeting of Stockholders, but not to include the proposal in the proxy statement, or to nominate a person for election as a director, must comply with the requirements set forth in the company's Bylaws.

Key Dates

Keywords

executive compensation, annual meeting, corporate governance, proxy statement, board of directors, stockholders, voting, directors, audit committee, sustainability, diversity, inclusion, equity compensation, related party transactions, risk management, clawback policy, stock ownership policy, crowe llp, independent auditor, say-on-pay